# The future of Australian property prices



## Joe Blow (15 November 2009)

This new property thread replaces the previous property threads which have now been closed. Hopefully this new thread will also signal a new beginning in the level of courtesy shown to others.

Please feel free to post your research, analysis, relevant information or opinions on Australian property in this new thread. However, please do not deliberately provoke or personally attack or insult other thread participants. 

The moderators and I will be closely monitoring this thread and we urge those participating in it to use the "Report a Post" feature to report any posts that are in violation of site rules or are overly disruptive.

Looking forward to some polite and constructive debate.


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## robots (15 November 2009)

hello,

good evening brothers, a wonderful day

apologies for the late reporting:

melbourne clearance rate 81%, massive run now with i think 18 weeks of above 80%

paradise

peace out to all

thankyou
professor robots


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## nunthewiser (15 November 2009)

robots said:


> hello,
> 
> good evening brothers, a wonderful day
> 
> ...





Would this have anything to do with it Docfessor Robots?




> Official data released during the week shows the number of home loans surged in September, after two straight months of decline, as first home buyers raced to beat the October 1 roll back of the first home owner grant.
> 
> But economists are expecting a sharp pull-back in October and November as interest rates rise.
> 
> ...


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## nunthewiser (15 November 2009)

> But economists are expecting a sharp pull-back in October and November as interest rates rise.
> 
> "It does look very much like a last hurrah for first home buyers getting into the market," Nomura Australia chief economists Stephen Roberts said earlier this week.
> 
> "I would expect a reasonably sharp decline in October and November."




I did find this prediction rather funny though


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## Gordon Gekko (15 November 2009)

Here is the future of Australian housing.

http://www.sfgate.com/g/pictures/2007/04/27/ga_surreal_img_2705.jpg

And *most* will be able to afford it.

Sunshine and lolly pops brothers

Yeah 


G


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## wayneL (15 November 2009)

As far as I'm concerned the future of nominal house prices is no longer clear due to the  Keynesian "stimulus" outrage. I'm sure that real prices will reduce over time, but if inflation gallops off into the sunset, it will take nominal prices with it.

There is still argument over whether there will be deflation or high inflation and I think we are on the twilight zone end of chaos theory as far as predicting the final outcome.

In other news, Britain's most high profile buy to let gurus, Fergus and Judith Wilson, are in serious arrears and appear to be in deep doo-doo. 

http://www.dailymail.co.uk/news/art...uple-rode-buy-let-boom-estimated-350-000.html


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## robots (15 November 2009)

hello,

what a great start to the thread, this is fantastic

thankyou
professor robots


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## theasxgorilla (15 November 2009)

The future of Australian property prices?  Up, up, up and away.

We will be proud to call ourselves one of the most expensive countries to live on earth, and foreigners will say, "I've heard it's really expensive in Australia, but the people are really nice and the weather is great, and I think you get paid a lot".

Love to know if anyone can see a real trend bender here, but I'm afraid I just can't.  Inspite of obvious asset and consumer price rises Australia is still cheap.


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## theasxgorilla (15 November 2009)

wayneL said:


> As far as I'm concerned the future of nominal house prices is no longer clear due to the  Keynesian "stimulus" outrage. I'm sure that real prices will reduce over time, but if inflation gallops off into the sunset, it will take nominal prices with it.[/url]




Indeed!  I thought the formula was becoming clear though:

1. Borrow
2. Inject
3. Inflate (ie. reduce debt base)
4. Spread the remaining liability over many years (ie. increase taxes)
5. In parallel to steps 1-4, boom, bust, boom, bust, boom, bust to _coda_ or _ad finitum_, whichever comes first


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## explod (15 November 2009)

robots said:


> hello,
> 
> what a great start to the thread, this is fantastic
> 
> ...




Yep. off to a good start.

Ole Pal, can you please explain to me what high clearance rates have got to with property prices?  and the future of?

To my mind it is an even sum game.  For every willing buyer there is a willing seller.  High clearance rates could be seen as sellers capitulating and accepting less and vice versa of course.  So the emphasis on *clearance rates* per se appears meaningless unless we analyse the locations propety types (encompassing demograhpics in fact), adinfanitum???


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## billv (15 November 2009)

robots said:


> hello,
> 
> good evening brothers, a wonderful day
> 
> ...




Melbourne is in bubble territory IMO.
From memory, last time the Melbourne market was so hot a significant price correction followed.


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## drsmith (15 November 2009)

wayneL said:


> As far as I'm concerned the future of nominal house prices is no longer clear due to the  Keynesian "stimulus" outrage. I'm sure that real prices will reduce over time, but if inflation gallops off into the sunset, it will take nominal prices with it.



Trot into the sunset might be better or at least a pace that does not require a rapid response via interest rates.


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## Beej (15 November 2009)

explod said:


> Yep. off to a good start.
> 
> Ole Pal, can you please explain to me what high clearance rates have got to with property prices?  and the future of?
> 
> To my mind it is an even sum game.  For every willing buyer there is a willing seller.  High clearance rates could be seen as sellers capitulating and accepting less and vice versa of course.  So the emphasis on *clearance rates* per se appears meaningless unless we analyse the locations propety types (encompassing demograhpics in fact), adinfanitum???




Auction clearance rates are an historical leading indicator of what's going on in a particular residential property market, based on the "sample" of total sales at a particular point in time that are reported immediately as auction results are. There's actually a good article on this today in the (printed) Sydney Sun Herald news paper. 

For Sydney, usually a sustained auction clearance rates of 60%+ provide a leading indicator that prices are rising strongly. Rates < 50% normally indicate falling or stagnant prices. This has applied for as long as I have been following property (20+ years), and if you look at what happened last year and this year to both auction clearance rates and prices (both last years falls and this years rises), the pattern is clear. The low clearance rates last year preceded the stats indicating falling prices. The high clearance rates that started to emerge from Feb/Mar this year preceded all the stats that confirmed rising prices from that period on. The auction median price is also a good indicator of the market segments where all the action (or lack of it) is.

PS: Sydney preliminary clearance rate for this weekend was reported as 68% (175 sold / 259) with a median sale price of $745k (indicating lot's of sales in the mid/upper price ranges - auction median has been steadily rising in Sydney over the past 12 months from mid $500ks up to the current median). This suggests to me that Sydney prices at least are still rising and the stats that come out for the spring quarter over the next few months will all indicate that. The ABS median may rise quite strongly as the bias of sales is shifting from the FHB end to the mid range and upper end.

Cheers,

Beej


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## theasxgorilla (16 November 2009)

Beej said:


> Auction clearance rates are an historical leading indicator of what's going on in a particular residential property market, based on the "sample" of total sales at a particular point in time that are reported immediately as auction results are. There's actually a good article on this today in the (printed) Sydney Sun Herald news paper.




Further to that, in my opinion you can adapt a little bit of the volume analysis approach in share markets to real estate markets.  In an uptrend (yes, that which the Melbourne property is in), stagnation or a slight retreat in prices on lower volume (transactions) is healthy... lets call it consolidation or simply "taking a breather".  Higher clearance rates (high volume) in an uptrend suggests a market that is steaming up, up and away.

And all this information is telling us is something about the current sentiment in the market and the ability of buyers to offer up the finance that get deals over the line at prices acceptable to both seller and themselves.


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## GumbyLearner (16 November 2009)

Gordon Gekko said:


> Here is the future of Australian housing.
> 
> http://www.sfgate.com/g/pictures/2007/04/27/ga_surreal_img_2705.jpg
> 
> ...




ROFL

Or more so like this....


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## Mofra (17 November 2009)

Gordon Gekko said:


> Here is the future of Australian housing.
> 
> http://www.sfgate.com/g/pictures/2007/04/27/ga_surreal_img_2705.jpg
> 
> ...



Think of the development potential, it's metres away from each property boundary


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## robots (17 November 2009)

hello,

good evening, just got home from pedaling the bike to and from the city, great evening, plenty out and about, snuck in a couple of ruski's, new Australians everywhere, just great

enjoying the place

just some analysis on the Melbourne scene:

up, up, up and up it goes

word out to MrBurns hope all's well and we havent lost a fabulous contributor at ASF

look out to the stars tonite

thankyou
Doctor Robots


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## satanoperca (17 November 2009)

Good Evening All,

Was also out on the bike with my little man on the back riding around the docklands, beautiful evening. New buildings everywhere.

Just caught a week old article thought was of interest.



> Australia's fiscal-financial system has become increasingly dysfunctional in giving tax preference to land-price ''capital'' gains and hence property speculation rather than tangible capital formation. Instead of raising living standards by producing more, what passes as post-industrial ''wealth creation'' takes the form of inflating asset prices on credit. The result is a bubble economy. And inasmuch as asset-price gains are fuelled by debt leveraging, wealth creation is more accurately viewed as debt creation.




http://www.theage.com.au/business/fall-in-housing-starts-to-impact-prices-20091110-i7qk.html

Saw Michael Hudson speak at the Melbourne town hall. 

Cheers


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## Vizion (17 November 2009)

An excellent post santa that reinforces my own opinions 100%.


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## Dowdy (17 November 2009)

satanoperca said:


> Good Evening All,
> 
> Was also out on the bike with my little man on the back riding around the docklands, beautiful evening. New buildings everywhere.
> 
> ...




excellent article.

The problem with today's market is that people look at the prices and think that's the way things are meant to be. Where there are markets in which _higher prices justify higher prices_, they always come crashing down


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## Fleeta (17 November 2009)

Dowdy said:


> excellent article.
> 
> The problem with today's market is that people look at the prices and think that's the way things are meant to be. Where there are markets in which _higher prices justify higher prices_, they always come crashing down




Yes, but when do we run out of 'greater fool's and why? I don't see why the current trend can't continue. Do people just decide wait, this can't go on - collectively??


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## satanoperca (17 November 2009)

RE prices are largely determined by 

1) Availability of credit - mortgage
2) Avalability of money to service above debt
3) Return on Capital through rental income &/or capital growth
4) Government intervention

Any of the above can affect the price of property.

1) Banks reduce LVR's, interest rates go up, all reduce lending capacity
2) Unemployment +/-
3) Rental returns &/or CG become less than other asset classes
4) Who knows with the govnuts, they provide the most uncertainty in trying to determine future price action of RE.

Cheers


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## jbocker (18 November 2009)

Anyone seen any good correlations with property price medians for state capitals over the years against things like inflation rate; interest rates; asx200; or other factors.
I think I recall that when interst rates were high (16%) property prices were increasing (but it may have been when the interest rates slumped just after the peak interest rates - I think the increases actually escalated). 
I see quoted _"..always come crashing down"_. I am interested in what people think is a "crash" is in property value terms, my thoughts are 30 to 50% is a crash. I appreciate that this can easily happen in specific markets (eg mining town, ) but never in Aussie city median prices. Interested in your thoughts.


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## satanoperca (18 November 2009)

Would agree Jbocker.

A crash is a price drop of the median price of 30-50% would be a crash.
A drop of 10-20% would be a correction.

I for one believe that the next two reported qtrs of property statistics will show further gains. Only if interest rates increase over the next six months and unemployment stays the same or increases will a correction be seen.


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## Mofra (18 November 2009)

satanoperca said:


> RE prices are largely determined by
> 
> *1) Availability of credit - mortgage*
> 2) Avalability of money to service above debt
> ...



Not sure if you meant to list these in order, but I definately agree with no 1 being the most important factor.

Bearing that in mind, it is interesting to see the Australian securitisation market strengthening (queue scaremongering & the assumption that Aussie & US CDOs/MBS's were issued under the same criteria):

http://www.theage.com.au/business/investors-warm-to-mortgage-debt-rba-20091118-ikx0.html



> The Reserve Bank says there are ''signs of life'' in the Australian mortgage-backed securities market, but it is unlikely investor interest will return to the levels seen before the financial crisis.
> 
> ''The future is looking brighter for securitisation, but I would not expect a return to the heady days of earlier this decade,'' said RBA assistant governor Guy Debelle in speech this morning.


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## Mofra (18 November 2009)

Worth noting the rate in the rise in rents too, houses & units:

http://www.theage.com.au/business/rents-rise-across-the-country-20091118-il2l.html


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## lasty (18 November 2009)

satanoperca said:


> Would agree Jbocker.
> 
> A crash is a price drop of the median price of 30-50% would be a crash.
> A drop of 10-20% would be a correction.
> ...




Too many waiting for the crash so they can snap up the bargains.
The dirty little vultures.
Those vultures might get their wings clipped as panic buying starts and thats when you see a crash but the key point is where from?
It could be 10 or 20 pct higher from here. It could be from here.
thats the punt you take.


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## Beej (18 November 2009)

lasty said:


> Too many waiting for the crash so they can snap up the bargains.
> The dirty little vultures.
> Those vultures might get their wings clipped as panic buying starts and thats when you see a crash but the key point is where from?
> It could be 10 or 20 pct higher from here. It could be from here.
> thats the punt you take.




Or, in cities like Sydney (where median prices fell in real terms by 20% between 2003 and 2008), the "crash" might have already happened (right under everyone's nose!), and prices may have bottomed out late last year/early this year  The next serious correction for Sydney residential property therefore might be many years away.

It could be useful in this thread to consider the different regional markets separately; As has clearly been seen in the past 11 months, every city/region can and often does march to their own tune. I have a very different outlook/expectation for property in different cities/regions across the country.

Mofra - good article on rising rents! There were many adamant predictions made last year that rents would stagnate and fall from 08 onwards. I also note in the latest ABS wage price index which tracks hourly rates of pay excluding bonuses (http://www.abs.gov.au/ausstats/abs@.nsf/mf/6345.0?OpenDocument), that average hourly rates have continued to rise through the Sep 09 quarter - up 3.4% y/y nationally. Curious to see the next batch of average full time earnings stats.

So pushing house prices higher we have: rising rents, rising wages, rising consumer and business confidence, an unemployment rate that appears to be peaking/leveling off, with actual employment and total hours worked now growing a little as well. Countering these factors we have rising interest rates (from a very low base), and FHB stimulus withdrawal/reduction. The question should be when will an equilibrium be reached? 

The only factor I can see coming that could place real downward pressure on house prices is if interest rates really get cranked up fast and hard (variable mortgage rates of 9%+) and we start seeing a rise in defaults and forced sales, especially in the low end of the market. Watch western Sydney and outer Melbourne closely for signs of this trend emerging (if it does).

Cheers,

Beej


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## shortlist (18 November 2009)

Let's see what a few years of interest rate rises do.


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## Mofra (18 November 2009)

Beej said:


> I also note in the latest ABS wage price index which tracks hourly rates of pay excluding bonuses (http://www.abs.gov.au/ausstats/abs@.nsf/mf/6345.0?OpenDocument), that average hourly rates have continued to rise through the Sep 09 quarter - up 3.4% y/y nationally. Curious to see the next batch of average full time earnings stats.



Worth noting AWOTE (specifically, FTAOTE) is also up again, although the lowest annual figure available is 4.4% from May 07 to May 08 (annual increases by most recent quarter are 6.0%, 5.6%, 4.9%, 4.4% & 5.0%). 

Hopefully inflation & earning power don't continue to be confused on this thread.


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## robots (18 November 2009)

hello,

oh yeah, top data out today on rents 

more fantastic news for owners and surely helps underpin the current situation, just amazing

cycled into the city again this arvo and just great seeing all the new australians out while others just put it all in the too hard basket

thats life though, great place we in, up up and away

thankyou
doctor robots


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## nunthewiser (18 November 2009)

Hi Robots.

I too went for a ride today but on an old freshly rewired chopped up sporty ....... I rode from north of the city all the way around tarcoola beach and out to the airport and then back. On the way i had to break a padlock on a shed one of my ex ladies owned as she could not find the key and needed to get her chainsaw out..........

I saw quite a few properties that have been listed for over 12 months and i wondered if they would need to lower there prices if they actually wanted to sell them .

I also rode out to my newly purchased "distressed sale" block and took a few photo,s , while i was there i met another guy that bought a block about 500 metres up the road but he paid a bit more than me , he seemed a bit peeved that i bought it privately and that he didnt even know it was for sale at the time ......... I didnt have the heart to tell him that i paid 2/3 of the price he did and got more land.

After leaving there i rode like the wind to the Geraldton beach hotel for a quick bourbon and to catch up on the goss around the joint , i was surprised to see numerous guys i know that were supposed to be at work today but through a lack of work they had to spend the day in the pub telling people about it instead.

Anyways thats life and yes it was a great day riding around free as a bird and living life.

Sunshine and lollipops my fellow rambling brother.


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## robots (18 November 2009)

hello,

fantastic post Nun, thats the sort of analysis which much of the print and online media miss out on

riding the roads on the chopper, big apes, full throttle out in the open, helping out the public, supporting the economy

paradise, 

thankyou
doctor robots


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## nunthewiser (18 November 2009)

No apes m8 .......there for them nasty biker types..... prefer the straight bars actually ..... 

Lots of movement up here on newer listed blocks and houses that are priced right BUT the older overpriced listings staying stagnant as there seems to be a new price level agreed on currently up here.........


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## robots (19 November 2009)

hello,

oh yeah, no worries Nun sorry for mentioning the apes

good evening and welcome to any new members and guests who maybe reading for the first time,

some more research i conducted today, from an online joint:

http://www.theage.com.au/executive-style/luxury/melbournes-20m-mansion-20091119-inlm.html

just the humble home, has that joint doubled every 7-10yrs brothers?

city update tomorrow as I didnt get there this arvo, apologies

thankyou
professor robots


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## Luscord (19 November 2009)

theasxgorilla said:


> Further to that, in my opinion you can adapt a little bit of the volume analysis approach in share markets to real estate markets.
> 
> I like it! I have never seen volume analysis/research on property, although I have done some myself.
> 
> ...


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## Macquack (19 November 2009)

robots said:


> some more research i conducted today, from an online joint:
> 
> http://www.theage.com.au/executive-style/luxury/melbournes-20m-mansion-20091119-inlm.html
> 
> professor robots




*Melbourne's $20m mansion
641 Orrong Road, Toorak*

Have to laugh, some sucker pays $20 million and then discovers there is a bus stop being constructed at their door step. Have a look on www.maps.google.com (street view). 

Bloody public transport using peasants probably just devalued the property by at least a million bucks.


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## Wysiwyg (19 November 2009)

Macquack said:


> *Melbourne's $20m mansion
> 641 Orrong Road, Toorak*
> 
> Have to laugh, some sucker pays $20 million and then discovers there is a bus stop being constructed at their door step. Have a look on www.maps.google.com (street view).
> ...



One on both sides of the road now. I'm sure buses won't be a problem but it perplexes me why people want to live in the city when they can afford a huge piece of coast with cleaner air and more nature. Must be happy hunting grounds or some other tribal mechanism.


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## jbocker (20 November 2009)

Future of Aussie property prices. I would theorise that property prices will still increase in future, but _nothing _like what we have seen in most states, over the last 5-7 years. The main driver for the increases in the recent past, would be cashed up 'baby boomers' earning their peak dollars and accessing massive equity. As they transition to retirement along with the fallout of the GFC boomers will be spending (investing) far more modestly.

The other influence on prices in the recent years is the 'triple boom' where employment/work in housing, mining and oil have ALL been going gang busters. I have never seen all three boom simultanously, having worked in the resources industry most of my life when mining was 'up', oil was 'down' and vice versa and housing seemed to be independent of both (but confess to not watching that closely). While there could be busts in these sectors - it appears that Aus has been let down far more gently than nearly all other nations, (start to appreciate our title "lucky country"). Add to this our banks seemingly have proved quite resilient to the greater GFC.

So why not a big drop in house prices with boomers tuning out and potential employment busts in mining etc, mainly that the GFC has whacked our super and shares and people probably may stay with good old bricks and mortar. House prices increasing but quite modestly for the next few years.

Well thats my crystal balling on things, always interested in others theory, discussion opinion or challenge.


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## Beej (20 November 2009)

Mofra said:


> Worth noting AWOTE (specifically, FTAOTE) is also up again, although the lowest annual figure available is 4.4% from May 07 to May 08 (annual increases by most recent quarter are 6.0%, 5.6%, 4.9%, 4.4% & 5.0%).
> 
> Hopefully inflation & earning power don't continue to be confused on this thread.




Aug 09 figures released yesterday - OTE up 5.2% y/y, total earnings up 4.6% y/y (those are the seasonally adjusted numbers). Incidentally average OTE are now over $1200/week ($62.5k/year) and total average earnings are $1248/week (about $65k/year).

Cheers,

Beej


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## Mofra (20 November 2009)

Wysiwyg said:


> One on both sides of the road now. I'm sure buses won't be a problem but it perplexes me why people want to live in the city when they can afford a huge piece of coast with cleaner air and more nature. Must be happy hunting grounds or some other tribal mechanism.



Perhaps they work in the city and can't afford to catch a helicopter to work?
Cuts down commuting time. You can't buy time (yet)


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## Nyden (20 November 2009)

Mofra said:


> Perhaps they work in the city and can't afford to catch a helicopter to work?
> Cuts down commuting time. You can't buy time (yet)




Yet, are able to afford a $20mil mansion?


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## gman027 (20 November 2009)

Is the basic concept of supply and demand is relevant here?

1. In Melbourne for one, there seems to be a shortage of rental properties, rent prices are going up (I think the population is increasing) so there's security in buying for investment, this would create buying competition, thereby sustain prices.

2. With the growing popularity of bicyles and public transport, and fuel prices climbing again - I know some professionals who don't even bother to own a car any more - the inner city lifestyle seems set to continue to gain favour.

3. The uncertainty surrounding beachside properties re the global warming scenario would have to undermine value of those properties (I heard insurance companies are starting to factor this in?), it would have to support value of other real estate which is not affected?

I have heard an argument that Australia will experience a real estate bust such as USA did just delayed, but somehow the idea does not tally with what I see happening around me.

Any thoughts any one?

G


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## Temjin (20 November 2009)

gman027 said:


> Is the basic concept of supply and demand is relevant here?




Not really, most ignore the concept of price within the supply and demand equation.

That is, price will always rise because demand will ALWAYS be greater than supply. Anyone could find any argument to build their case on forever increase in demand. From that logic, it means the level of price will NEVER matter because houses are always "cheap" based on the supply and demand equation. It is never expensive. 

Their logic, end of story.  



			
				gman said:
			
		

> I have heard an argument that Australia will experience a real estate bust such as USA did just delayed, but somehow the idea does not tally with what I see happening around me.
> 
> Any thoughts any one?
> 
> G




Considering how much government intervention was involved in propping up the market through low interest rates and first home buyer grant, as well as the amount of stimulus in internal capital investment in China which has greatly benefit our economy, it's no longer it has not yet happened. 

But does it mean it will NEVER happen? 

I don't need to discuss the intervention parts. Sooner or later the artificial boost will be gone, but perhaps it would extend further. It's a human choice in this one.

And onto our economy being so resilient to the GFC largely thanks to China. Is their massive capital investment really sustainable? I am certainly not that convinced.

http://www.pivotcapital.com/reports/Chinas_Investment_Boom_the_Great_Leap_into_the_Unknown.pdf


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## robots (20 November 2009)

hello,

but Temjin, US has extremely low IR's and the housing market is still smacked because of guns, crack, crooklyn, absolute terrible way of life

many forget or discount what is out the front door in Australia, Utopia, paradise, a way of life which exceeds all others

the whitelight, an endless feeling of euphoria

sorry sorry, thats what my research indicates

thankyou
professor robots


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## TOBAB (20 November 2009)

robots said:


> hello,
> 
> but Temjin, US has extremely low IR's and the housing market is still smacked because of guns, crack, crooklyn, absolute terrible way of life
> 
> ...




Hhhhmmmm, not so sure about your logic. Sounds great.

Anyhow back to the real world. Listened to a rather pre-eminant economist on the subject on Wed and his logic is somewhat different: the US in most mkts has had a shocker, but not all (EG NY). In his opinion coastal or financial center cities tend do do much better in a downturn (if get affected at all). Note nearly every major city in this country. Also in particular Melb and Syd get the double whammy due to their being financial centers. He also stated that per capita income was not as an important indicator as in the past due to dual incomes (or more) per household. Also non-recourse loans had an impact. China. Supply. Etc, etc.

In sum he stated would not be surprised if prices came off at little in the New Year but that would be all.

Interesting.


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## Gerkin (21 November 2009)

I have read heaps of crap on the closed threads, dont make it like them. The mods should just delete irrelevant.

Anyway, I suppose put my 2 bobs worth in.

Housing prices will remain stable and continue to grow, just to mention a few of my reasons including.
Wage Growth released yesterday showed a 5% increase to wages.
Net Migration to Australia, particulary Victoria will keep house prices boosted.
Generation Y stating to move out of home and buy/rent
The older people living longer.

These are my reasons,no please feel free to shoot me down.

I did read something interesting from a private wealth group recently that stated that if you should only consider your property portfolio as the amount of deposit and holding costs you outlay. Now this was referring back to benchmark asset allocation for investment portfolios, but i belive this can be applied to many younger peoples on here portfolios.
Think about this.

Go get a 5% deposit for your a property, prob 1 year saving for alot of couples who dont have the big expenses. Then this deposit becomes your property investment. The interest that you outlay is your holding cost as youd be paying rent anway, and your excess cash princial repayents is discretionary investment. You could run the loan interest only and your princiapl payments could be put into the sharemarket or other things.

Now you have achieved two things by doing the above.
1) Satisfied a need of shelter
2) Bought a long term growth asset - property 
3) divirsified your portfolio by building assets around your property.

Now anyone care to comment?, Any thoughts on this theory??


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## trainspotter (21 November 2009)

_JUSTINE Kain has come to dread weekends. The prospective first home buyer has spent most Friday nights this year on her computer looking at apartment listings for under $320,000._

http://www.theage.com.au/business/n...ouse-prices-to-keep-rising-20091030-hpyx.html  ......... For the full article. 

Houses over $1.4 million and units over $850,000 had the greatest price growth in the September quarter. In leafy Armadale 34 houses were sold in the September quarter ”” prices have doubled in the past year; and Surrey Hills, in the east, had 39 sales in the quarter, which bought with them a *24.9 per cent price jump *for the period.

I have a vague recollection of typing that residential real estate has the ability to gain 20% IN CERTAIN AREAS .... if my memory serves me correctly?


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## MACCA350 (21 November 2009)

trainspotter said:


> In leafy Armadale 34 houses were sold in the September quarter ”” prices have doubled in the past year; and Surrey Hills, in the east, had 39 sales in the quarter, which bought with them a *24.9 per cent price jump *for the period.
> 
> I have a vague recollection of typing that residential real estate has the ability to gain 20% IN CERTAIN AREAS .... if my memory serves me correctly?



Do you know how much(if any) those suburbs dropped previously?

Just had a quick look at REIV for those suburbs, below are the charts. 
Surray Hills has pulled back to near 07 median, but Armadale has surpassed the 07 median.

cheers


----------



## sails (21 November 2009)

MACCA350 said:


> Do you know how much(if any) those suburbs dropped previously?
> 
> Just had a quick look at REIV for those suburbs, below are the charts.
> Surray Hills has pulled back to near 07 median, but Armadale has surpassed the 07 median.
> ...




Does anyone know where to get charts like this for Queensland?  I had a look at the REIQ site, but can't seem to find it.

BTW, I am glad this thread has been re-opened.  Provided offending posters are dealt with accordingly, hopefully this thread can be kept on track and provide useful information similar to other threads here at ASF.


----------



## trainspotter (21 November 2009)

MACCA350 said:


> Do you know how much(if any) those suburbs dropped previously?
> 
> Just had a quick look at REIV for those suburbs, below are the charts.
> Surray Hills has pulled back to near 07 median, but Armadale has surpassed the 07 median.
> ...




Thanks MACCA350 ....... similar to shares I guess. When the blood runs in the street is always the best time to buy. Other than a marriage breakdown of course. Still some good rates of return out there and YES there is some property that you would not touch. I repeat myself, IN CERTAIN AREAS.


----------



## gav (21 November 2009)

trainspotter said:


> _JUSTINE Kain has come to dread weekends. The prospective first home buyer has spent most Friday nights this year on her computer looking at apartment listings for under $320,000._
> 
> http://www.theage.com.au/business/n...ouse-prices-to-keep-rising-20091030-hpyx.html




Obviously Justine doesn't know how to use a computer.  There are plenty of units in Melb under $320K.


----------



## robots (21 November 2009)

hello,

great post Gerkin, thats the path to paradsie alright brother

and just to add to your list I BELIEVE many realise we living in one beautiful country, 

beaches, shopping, lifestyle, fine dining, top class governments, bicycle paths, just utopia

these are MY reasons, so shoot me down i am ready

to all concerned, will get the auction clearance rates up as soon as Enzo the Legend bangs them up

thankyou
robots


----------



## nunthewiser (21 November 2009)

robots said:


> and just to add to your list I BELIEVE many realise we living in one beautiful country,
> 
> beaches, shopping, lifestyle, fine dining, top class governments, bicycle paths, just utopia




Cant argue with that Brother Robots........


----------



## robots (21 November 2009)

hello,

good evening again, some new data:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=652&nav2=162

massive day, 80% so a fantastic situation, well done

more $ in the pocket by the looks of it, good stuff

thankyou
robots


----------



## billv (23 November 2009)

Gerkin said:


> Housing prices will remain stable and continue to grow, just to mention a few of my reasons including.
> Wage Growth released yesterday showed a 5% increase to wages.




Where do these statistics come from?
Maybe they are last year's because this year employers have the upper hand.
I have yet to find 1 person who got more than 3% % payrise this year


----------



## billv (23 November 2009)

Gerkin said:


> Go get a 5% deposit for your a property, prob 1 year saving for alot of couples who dont have the big expenses. Then this deposit becomes your property investment. The interest that you outlay is your holding cost as youd be paying rent anway, and your excess cash princial repayents is discretionary investment. You could run the loan interest only and your princiapl payments could be put into the sharemarket or other things.
> 
> Now you have achieved two things by doing the above.
> 1) Satisfied a need of shelter
> ...



Gerkin

Something is not right with your post.
If you've bought an investment property how are you satisfying your need for shelter as per your point 1?


----------



## prawn_86 (23 November 2009)

billv said:


> I have yet to find 1 person who got more than 3% % payrise this year




Off topic, but this year i got a 4% pay rise for my current casual job, and the job i am going to just gave me a 10% payrise before i have even started...


----------



## Tink (23 November 2009)

sails said:


> BTW, I am glad this thread has been re-opened.




Yep, I agree.

Good to see this thread back up and running : )


----------



## OzWaveGuy (23 November 2009)

some insights from Trends Research on property....
http://www.globalresearch.ca/index.php?context=va&aid=14680

The Commercial Real Estate Bubble
......
.....Gerald Celente, the head of the Trends Research Institute, the major trend-forecasting agency in the world, wrote in May of 2009 of the “bailout bubble.” Celente’s forecasts are not to be taken lightly, as he accurately predicted the 1987 stock market crash, the fall of the Soviet Union, the 1998 Russian economic collapse, the 1997 East Asian economic crisis, the 2000 Dot-Com bubble burst, the 2001 recession, the start of a recession in 2007 and the housing market collapse of 2008, among other things.

On May 13, 2009, Celente released a Trend Alert, reporting that, “The biggest financial bubble in history is being inflated in plain sight,” and that, “This is the Mother of All Bubbles, and when it explodes [...] it will signal the end to the boom/bust cycle that has characterized economic activity throughout the developed world.” Further, “This is much bigger than the Dot-com and Real Estate bubbles which hit speculators, investors and financiers the hardest. However destructive the effects of these busts on employment, savings and productivity, the Free Market Capitalist framework was left intact. But when the 'Bailout Bubble' explodes, the system goes with it.”

Celente further explained that, “Phantom dollars, printed out of thin air, backed by nothing ... and producing next to nothing ... defines the ‘Bailout Bubble.’ Just as with the other bubbles, so too will this one burst. But unlike Dot-com and Real Estate, when the "Bailout Bubble" pops, neither the President nor the Federal Reserve will have the fiscal fixes or monetary policies available to inflate another.” Celente elaborated, “Given the pattern of governments to parlay egregious failures into mega-failures, the classic trend they follow, when all else fails, is to take their nation to war,” and that, “While we cannot pinpoint precisely when the 'Bailout Bubble' will burst, we are certain it will. When it does, it should be understood that a major war could follow.”

http://www.trendsresearch.com/forecast.html


----------



## Beej (23 November 2009)

billv said:


> Where do these statistics come from?
> Maybe they are last year's because this year employers have the upper hand.
> I have yet to find 1 person who got more than 3% % payrise this year




Bill- figures are published by the ABS - latest release here (data to Aug 2009):

http://www.abs.gov.au/AUSSTATS/abs@...7F76D15354BB25D5CA2575BC001D5866?OpenDocument

PS: This is why we collect stats - you may not know anyone who got more than a 3% payrise, but your "sample" will be biased based on where you live, the industry in which you work, your age and so on. Personally, I know many people who got a lot more than a 5% payrise this year (including myself).

The ABS stats give us the big picture, rather than just our own personal view-point. The facts are that wages have continued to grow over the last year, even as the *rate* of unemployment was heading upwards, however the rate of wage growth does seem to be slowing rather than accelerating.



OzWaveGuy said:


> some insights from Trends Research on property....
> http://www.globalresearch.ca/index.php?context=va&aid=14680
> 
> The Commercial Real Estate Bubble
> ...




OzWaveGuy - doesn't all that seem to apply in the US rather than Australia though? Australia hasn't been bailing out banks or other companies willy nilly, or printing money and so on - so how do you see a supposed "bail-out" bubble affecting the Australian residential market?

PS: ~70% auction clearance rate in Sydney on the weekend again - good volume and a median auction price around $750k.

Cheers,

Beej


----------



## OzWaveGuy (23 November 2009)

There will be blow back from the US in several forms....

http://www.propertyoz.com.au/Blog/archive/2009/03/03.aspx

and more recently

http://www.abc.net.au/am/content/2009/s2739192.htm

How much all this will have on property values...I really don't know yet.


----------



## robots (23 November 2009)

hello,

check check:

http://www.theaustralian.com.au/kor...-office-building/story-e6frg8zx-1225801836421

further evidence of the power of this joint (Australia), paradise brothers and all here on the ride man, enjoy it

thankyou
robots


----------



## Gerkin (23 November 2009)

Billy,
To clarify my post.
Check any paper with a business section last Thursday for the ABS figuers on wage growth.

Secondly, its not an IP, I said run the loan interest only and divert the principal repayments to other assets. 

BTW, I mean the term "property Investment" as any property, be it PPOR, or IP


----------



## gfresh (24 November 2009)

Most in the public service receive at least ~3% pay rise per year, indexed to CPI, or years in service. Fair percentage of people out there work for the public service out there. So they receive a pay rise no matter what. These are making up for the lack of rises in the private sector. 

http://www.news.com.au/business/story/0,27753,26367799-462,00.html



> The Australian Bureau of Statistics' wage price index showed private-sector wage costs crawled to a rate of 3.2 per cent, a level not seen in seven years.
> 
> *But in stark contrast public-sector wage growth accelerated by 4.6 per cent, the fastest pace in five years.*


----------



## Mofra (24 November 2009)

gfresh said:


> Most in the public service receive at least ~3% pay rise per year, indexed to CPI, or years in service. Fair percentage of people out there work for the public service out there. So they receive a pay rise no matter what. These are making up for the lack of rises in the private sector.
> 
> http://www.news.com.au/business/story/0,27753,26367799-462,00.html



gfresh,

It's also worth noting that the ~3% payrise doesn't include the upgrade in payscale that occurs independant of annual payrises; for example, an APS6 will normally have 4 paypoints (6.1, 6.2 etc) which correspond to an additional payrise for the first 4 years a person is in a level 6 position. Actual payrises for a large portion of APS staff will be above the ~3% increase.

Cheers


----------



## drsmith (24 November 2009)

Pay points though should not distort the overal public service pay rise figures as when someone retires from a position it will most likely be from the highest pay point and the replacement will start at the lowest paypoint (depending on how much they have acted at that level beforehand).


----------



## satanoperca (24 November 2009)

'Bogey mansion' bought for $10m discount or 37% discount on previous sale price

http://www.news.com.au/business/money/story/0,28323,26393981-5013951,00.html

and even better.
*
 Interest rate rises send house prices into reverse*

http://www.domain.com.au/Public/Art...est rate rises send house prices into reverse



> Residex has placed responsibility squarely on the blunt weapon of RBA interest rate increases and the fear-inducing spectre of their use.




IR up 0.5% big deal. If and when the IR's go back to normal, it will be interesting to see how buoyant the market really is.


----------



## Mofra (25 November 2009)

satanoperca said:


> IR up 0.5% big deal. If and when the IR's go back to normal, it will be interesting to see how buoyant the market really is.



True, although how quickly they do return to normal levels will also have a big impact on prices.


----------



## MACCA350 (25 November 2009)

Mofra said:


> True, although how quickly they do return to normal levels will also have a big impact on prices.



I say jack the rates back up to where they were pre GFC and let the market sort itself out.

.............I mean we're different here right, and we never went into recession..............it's all sunshine and lollipops...........so why can't I get a half decent return on cash in the bank

If they want to talk the talk.........then why not walk the walk



Don't worry, it's all sunshine and lollipops*

cheers





*subsidised by yours truly........Krudd


----------



## Beej (26 November 2009)

http://www.smh.com.au/business/hous...th-it-says-rba-20091125-jrta.html?autostart=1

Some selected quotes:



> *House prices to rise further but they're worth it, says RBA*
> PETER MARTIN
> November 26, 2009, SMH
> 
> ...




So this RBA dude saying it's likely house prices will be rising further into the future due to ongoing economic growth and corresponding real wage growth. But argues that we are in fact getting more value for our higher prices than in the past, as the housing stock has been improved considerably compared to periods past (an argument I have consistently made on the housing threads here as well).

Also points out (correctly) that a reason why our average/median prices are higher than countries like the US and others because we are more urbanised, and I also note that all our stats measure the capital city prices only, and therefore ignore all the more affordable regional centres around the country, whereas the US and UK stats includes a much larger number of cities/regional centres as they have more evenly distributed populations.

Anyway interesting to read a key RBA guys views - and I think this article is spot on with respect to this threads title! 

Cheers,

Beej


----------



## satanoperca (26 November 2009)

Read the same article Beej and first thoughts were inline with yours but my second thought was that the RBA were just making room, softening the environment for further rate rises.

Don't worry property prices are going to keep going up, oh and we are going to rise interest rates back to normal very quickly.

Always two sides to a coin.

Cheers


----------



## Quincy (26 November 2009)

satanoperca said:


> Read the same article Beej and first thoughts were inline with yours but my second thought was that the RBA were just making room, softening the environment for further rate rises.
> 
> Don't worry property prices are going to keep going up, oh and we are going to rise interest rates back to normal very quickly.
> 
> *Always two sides to a coin.Cheers*







> http://www.smh.com.au/business/bhp-surprised-by-strength-of-chinas-recovery-20091126-jt11.html
> 
> *BHP surprised by strength of China's recovery *
> November 26, 2009 - 1:37PM
> ...






> http://www.theaustralian.com.au/china-bubble-puts-our-recovery-in-doubt/story-e6frg8zx-1225803955693
> 
> Rowan Callick, Asia-Pacific editor From: The Australian November 26, 2009 12:00AM
> 
> ...






> http://www.theaustralian.com.au/bus...-says-upbeat-rba/story-e6frg926-1225803729121
> 
> *Australian economy is new upswing after 18-years of expansion, says upbeat RBA*
> 
> AUSTRALIA'S 18-year economic expansion will continue for years to come, bolstered by an expanding mining sector and growth at its Asian trading partners, Reserve Bank of Australia deputy governor Ric Battellino said today.




Contradicting articles.

If China's bubble bursts then Australian government revenue and Australian mining and associated jobs would be adversely affected and would have a significant affect on the Australian economy and could flow on to parts of the housing sector and house prices.


----------



## MACCA350 (28 November 2009)

Reiv Auction Results shows a 78% clearance rate for this week

This is the first time it's dropped below 80% for a while now............maybe that's why Robots forgot to post them:

cheers


----------



## satanoperca (29 November 2009)

Went to two auctions over weekend in South & Port Melbourne both selling well above there listed price. In one case 25% and not fit for man or beast. 

It would seem that both were bought by Chinese. Whether they were Australian Chinese or Chinese Nationals is impossible to determine without asking.

It would seem that real estate is in the process of a major up thrust at the moment and the bargains that came onto the market at the start of the year are long since gone.

Looking at the current environment to determine the masses musicology I noted :

1) Australia did not go into a recession unlike nearly everyone else in the world
2) Interest rates are still extremely low historically and for them to be increased is only a vote of confidence that the economy is recovering and will be returning the pre GFC GDP grow
3) Residential property as an asset class has weathered the storm better than any other asset class
4) RE has shown high CG in the last two reported qtrs in most major cities
5) The top end has rebound and record prices are being paid
6) Along with the normal stuff like increasing population, lack of supply, govnuts determination to support property prices in Oz, overseas investors, using super to buy etc.
7) Unemployment still relatively low
8) Credit(Debt) still available with relatively little contraction over the year

So from this I can see why property prices are were they are today. 

But next years is another story. Many FHB have been seduced into the market with fattened up FHBG and low interest rate rises over the last year, demand from this market will be the first to show any signs of weakness especially if IR's continue to climb. 

Cheers


----------



## overule (29 November 2009)

Just my opinion.

There's always a boom and recession in any economy. 
Looking at the history, Property in Australia is doing very well.
I am in for the long term and prices will only go up.


----------



## schnootle (29 November 2009)

overule said:


> I am in for the long term and prices will only go up.




Isn't that what created the GFC


----------



## overule (29 November 2009)

schnootle said:


> Isn't that what created the GFC




I'll never win trying to talk you guys over. 
I am just saying. If you keep worrying about things like GFC, you'll never buy a single property.

Remember the 1990s recession in asia? Everyone is saying property prices are going to crash or the late 80s where interest rates are so high.

if you're not into property. Go for GOLD. DYOR.


----------



## UBIQUITOUS (30 November 2009)

overule said:


> I am just saying. If you keep worrying about things like GFC, you'll never buy a single property.



...and if you don't worry about things like the GFC, you may end up with a property which you may end up working to the bone to make payments for, due to inevitable high interest rates. All in the HOPE of some capital gains 30 years down the track. 

It's not the life for me.







.


----------



## aleckara (30 November 2009)

It's easy to predict housing movements.

Stop looking at fundamentals. Just look at the trend of debt growth. If it is still rising you can bet that housing is rising. If it isn't it's falling. Any subsidy only serves to support the debt growth trend and in turn rising house prices.

I think housing will rise. The government definitely saved the housing market last year though with the FHOB and lower interest rates. Moral hazard is rife now "if the government will save me from the GFC I better get in before I can't afford it at all". Sad the government is encouraging poor financial decision making from households.

House prices will fall eventually but how much and when no one here really knows. Everyone knows that a house at today's prices isn't worth it but unfortunately you need a home; most people don't have the luxury of saying no to buying/renting a home.


----------



## kenny (30 November 2009)

Do people really think the price of residential property will fall in the long term?

I'm referring more to the average $400K - $800K range properties rather than the waterfronts that seem to change hands at volatile prices depending on who suddenly needed to cash up.

As long as their is a growing pool of renters keeping the rental return steady, I would have thought most landlords would choose to ignore a 10 - 20% drop in valuation as long as it was impacting their LVR% and forcing foreclosure. Given the costs of selling up and buying back later, it's not a decision made as lightly as acting on a stop-loss trade.

Cheers,

Kenny


----------



## Beej (30 November 2009)

Well, turns out Australians are now building the biggest houses in the world - some selected quotes from the article included below:

http://www.smh.com.au/national/home...hen-it-comes-to-mcmansions-20091129-jyva.html



> *Home truths: Australia trumps US when it comes to McMansions*
> Peter Martin
> November 30, 2009, SMH
> 
> ...




In Sydney these big houses are the ones built out in the new outer suburbs - so you really get the choice here to live closer to the CBD or other existing infrastructure in a smaller house or a unit/semi/townhouse (but pay more for the location) or further out in a bigger house.

Also, Sydney preliminary auction clearance rate was 68% for the weekend, with a median price of $730k. That's the first weekend with a sub 70% clearance rate after 5 months of 70%+, and apparently the only better run than that occurred allt he way back in 1997. (See http://www.smh.com.au/business/feverish-auction-activity-begins-to-subside-20091129-jysp.html for further analysis/info on this).

Cheers,

Beej


----------



## cutz (30 November 2009)

kenny said:


> Do people really think the price of residential property will fall in the long term?




The Australian property market has reached a constantly high plateau.


----------



## Mofra (1 December 2009)

cutz said:


> The Australian property market has reached a constantly high plateau.



* Applauds the 1929 reference *

"Stock prices have reached what looks like a permanently high plateau."
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929


(Serious answer - depends if we are talking total returns or inflation adjusted)


----------



## Aussiejeff (1 December 2009)

cutz said:


> The Australian property market has reached a constantly high plateau.




With the KRudd mantra of "Eternal Growth For All" ringing dailly in our ears, I would totally agree.

eg..

Constantly High Immigration Rate = Constantly High Ongoing Demand For Housing.

Stop the immigration and it would be a different matter entirely. Japan as a comparison springs to mind. Since we've had massive immigration since the First Fleet landed, I don't see any policy shift there in the short term!

So, you can forget these piddly 25 BP rises in interest rates. They would have to rocket up by 4-6% or more to really start hurting most FHB's and investors. I don't hear too many complaining or marching on Parliament House yet. 

IMHO

aussiejeff
[robots for PM]


----------



## drsmith (1 December 2009)

Aussiejeff said:


> So, you can forget these piddly 25 BP rises in interest rates.



Westpac obviously have.

http://www.theaustralian.com.au/bus...age-rate-by-45bp/story-e6frg96f-1225805837339


----------



## Nyden (1 December 2009)

Aussiejeff said:


> With the KRudd mantra of "Eternal Growth For All" ringing dailly in our ears, I would totally agree.
> 
> eg..
> 
> ...




I thought that it was fairly obvious that rates will rocket up by 4-6%? Obviously not over a period of 3 months, but I can honestly see rates back at 6-8% by next Christmas.

The RBA have made history today. Three consecutive rate rises - I'd say that was a fairly strong message.

I don't believe we'll have any real falls, but one must throw some caution out there. I know of at least 2 couples, that were it not for all of these First time buyer grants, would not have otherwise been able to afford a property. They've now each got themselves property at near all-time high prices, and are probably already a little financially strained. Slap on another 4%, and we're nearly talking about an extra $15-30,000 a year in interest. Nah, that's piddly, right?


----------



## MACCA350 (1 December 2009)

Nyden said:


> The RBA have made history today. Three consecutive rate rises - I'd say that was a fairly strong message.



Yippeee!!! ............but if they want to get serious, whack on a few 1% rises and lets get back to a 6-7% cash rate ...........come on we're not in recession and housing has been going gangbusters, you know, sunshine and lolliepops and all that

BTW where's Robots lately..........the thread's getting boring .........hope nothing untoward has happened to you mate.





			
				drsmith said:
			
		

> Westpac obviously have.



Yeah but the savings rate hasn't moved yet ............as usual quick on the mortgage rate but slow on the savings rate 

cheers


----------



## drsmith (1 December 2009)

MACCA350 said:


> Yeah but the savings rate hasn't moved yet ............as usual quick on the mortgage rate but slow on the savings rate
> 
> cheers



It will be interesting to see how quickly these move.

http://www.infochoice.com.au/banking/savings-account/online-savings.aspx


----------



## satanoperca (1 December 2009)

Nyden said:


> I don't believe we'll have any real falls, but one must throw some caution out there. I know of at least 2 couples, that were it not for all of these First time buyer grants, would not have otherwise been able to afford a property. They've now each got themselves property at near all-time high prices, and are probably already a little financially strained. Slap on another 4%, and we're nearly talking about an extra $15-30,000 a year in interest. Nah, that's piddly, right?




It is this market segment that will be the one to watch.

FHB that bought with minimal deposit on high LVR's who took advantage of the historically low interest rates and who at the time believed that IR's would not be increasing for some time but reducing further.

Just how the FHVG (first home vendors grant) created demand in the low end which in-turn saw prices increase with up-graders who sold to the FHB's resulting in prices increases up the ladder, the same can occur in reverse. FHB start getting into difficulty resulting in a increase in supply at the low end which cannot be meet with demand due to the higher interest rates and lack of govnuts handouts.

Everything cycles and the next few years will be great to study.

Note : RPdata figures out, property is flying at the moment, maybe the IR increase will apply the brakes.


----------



## MACCA350 (1 December 2009)

satanoperca said:


> Note : RPdata figures out, property is flying at the moment, maybe the IR increase will apply the brakes.



Spoke to a mate who is a real estate agent, he said 1 in 2 contracts he signs are to international buyers......even he(who is earning a bucket load due to this) is concerned about the ramifications.

cheers


----------



## Nyden (1 December 2009)

MACCA350 said:


> Spoke to a mate who is a real estate agent, he said 1 in 2 contracts he signs are to international buyers......even he(who is earning a bucket load due to this) is concerned about the ramifications.
> 
> cheers




Why the heck are our laws so relaxed about international property ownership? We're going to be paying all of our rent to bloody foreigners soon enough.


----------



## Mofra (2 December 2009)

Nyden said:


> Why the heck are our laws so relaxed about international property ownership? We're going to be paying all of our rent to bloody foreigners soon enough.



Quite a bit more of it too:

http://www.news.com.au/money/proper...bn-in-extra-rent/story-e6frfmd0-1225805320887

*Landlords 'to pocket $1.9bn in extra rent' *


Rents to rise by 5.8pc over next three years 
Landlords will pocket extra $1.9bn 
Supply of housing has "plunged"

Now, where was all that derision for _Australian_ landlords coming from?


----------



## robots (2 December 2009)

hello,

good evening brothers, great day in Melbourne and tomorrow is all set 

went away for the weekend to help friend in 24hr mountain bike race, huge event in Forrest, a great time

the beats were going strong at the support tent

things still doing well on the property front, still 8x average income and tenants seem to be sticking to the one property for many years now as opposed to previous when they departed after 12mths

as Mofra identified the rent increases will be easy over the coming years, cleaning up

thankyou
robots


----------



## gfresh (3 December 2009)

The one consequence of such rapid rate rises will be renters are going to get smashed at their next renewal as costs are passed on. I wouldn't be surprised to see 10% rises for many renters, many of which already aren't in the best financial situation  While it won't be easy for recent buyers, it's not going to be any easier for renters either. 

Government policy has utterly failed, and nobody seems willing to step forward to fix it. I am very disappointed in the entire country to be honest 

As an aside, apparently the median in my area has increased by 15% since I bought about 4 months ago. Does it make me feel any better? nope.. on the other side of the fence now, still don't quite understand what the obsession with owner occupiers really giving a **** what their place is worth?


----------



## Mofra (3 December 2009)

gfresh said:


> As an aside, apparently the median in my area has increased by 15% since I bought about 4 months ago. Does it make me feel any better? nope.. on the other side of the fence now, still don't quite understand what the obsession with owner occupiers really giving a **** what their place is worth?



Access to cheap credit, if they know what they're doing. Otherwise, it's just another pissing contest


----------



## Beej (3 December 2009)

Interesting article by Chris Joye (RP_Data/Rismark) debunking a popular housing bear myth re the Australia house price to income ratio currently being pushed again by Crikey's Adam Schwab:

http://www.businessspectator.com.au...ment&src=blb&is=property&blog=concrete detail

Selected quotes:



> *Is home-ownership really out of reach?*
> 
> Crikey’s Adam Schwab should stick to his day job and quit writing factually flawed missives about housing.
> 
> ...




I particularly agree with the last points quoted - if houses were really as totally expensive/unaffordable as some claim,  then how come AU has managed to maintain one of the highest rates of home ownership in the world? With possible the lowest default rates in the world? And prices continuing to rise even after years of what many argue are unsustainably high prices? Literally millions of Australians must have entered and/or upgraded within the market in the past 6 years since the income/dwelling price ration peaked?

Attached is an RBA graph showing the historical Australian disposable income to national median dwelling price ratio.

Cheers,

Beej


----------



## satanoperca (3 December 2009)

Thanks for the link Beej.

Looks like semantics by both parties to me, but cannot access the Crickey report.

Firstly from Rpdata  - National $496,398. 

Secondly, must watch the detail 



> Based on the RBA’s estimates, Australia’s capital city *dwelling price-to-income ratio *is just under 4.5x (more recent data puts it at 4.8x). Now how on earth does that reconcile with Schwab’s estimate of 9x incomes? Of course, it does not.




& then 



> RBA’s disposable household income definition




The key being "household income", that be it two incomes. Fanatastic country we live in, very forward thinking were the major care giver of a family must work also to put a roof over the families head. No wonder childcare is in such high demand.

If it was just one income, then maybe x9 is about right. I thought most ratio where based on the average income of an individual.

Which is true I do not know, but unless there is a major change in the variables that effect house prices then I do not seem them stagnating or falling in the future (1-2years).

Cheers


----------



## drsmith (3 December 2009)

Beej said:


> I particularly agree with the last points quoted - if houses were really as totally expensive/unaffordable as some claim,  then how come AU has managed to maintain one of the highest rates of home ownership in the world?



Debt.

While below it's peak the percentage of household income that is used to service loans is still very high, higher than during the interest rate peaks of the late 80's IIRC from RBA information I posted in one of the earlier property threads a few months ago.


----------



## joeyr46 (3 December 2009)

Household income can be any number not just 2 and with kids staying home longer is not necessarily a good way to measure income to house price but then neither is 1 income because most wifes work at least part time. Possibly a more accurate way to measure sustainability of prices is debt (not just mortgage debt but all debt ) and the percentage of income required to service that debt.Because house prices are based on supply / demand on one hand and liquidity on the other IMHO, not just supply demand


----------



## robots (4 December 2009)

hello,

oh yeah:

http://www.theage.com.au/national/migration-numbers-at-record-high-20091203-k8tf.html

this is fantastic data for australian title holders, plenty more space for people to come so hopefully the government keeps it going

thankyou
robots


----------



## Aussiejeff (4 December 2009)

robots said:


> hello,
> 
> oh yeah:
> 
> ...




Yes, fantastic.

Hopefully Oz can get to 50 million by 2050 with cities 3x current populations!

Wonderful opportunity for endless growth & fun times.

[size=-3]PS - Thank gawd I will be pushing daisies well and truly by then![/size]


----------



## Beej (4 December 2009)

drsmith said:


> Debt.
> 
> While below it's peak the percentage of household income that is used to service loans is still very high, higher than during the interest rate peaks of the late 80's IIRC from RBA information I posted in one of the earlier property threads a few months ago.






joeyr46 said:


> Household income can be any number not just 2 and with kids staying home longer is not necessarily a good way to measure income to house price but then neither is 1 income because most wifes work at least part time. Possibly a more accurate way to measure sustainability of prices is debt (not just mortgage debt but all debt ) and the percentage of income required to service that debt.Because house prices are based on supply / demand on one hand and liquidity on the other IMHO, not just supply demand




Yep, both very good points, and certainly supply/demand needs the available liquidity to work and push prices higher. In terms of household debt serviceability, yes there is more absolute household debt than in the 80s peaks etc now, but I recall seeing data showing that serviceability is actually easier now compared to the 80s? Especially say 1990/91 when rates hit 17%+, as the prevailing interest rates have been far lower over the past 10 years than earlier.

So the key really is long term interest rate trends, relative to wage inflation of course (as opposed to real wage growth, which just adds cream to the affordability equation and therefore prices). Ie if interest rates go high and stay high (say 10% plus), and there is no corresponding wage inflation, then many aussie households would be in trouble (as would property prices).

However I see this as a very unlikely scenario - I reckon that if we do move into a higher interest rate environment in the future, it will be *because* there has been a break out of wage inflation, so even though debt servicing costs will rise in nominal terms, debt/income ratios  and serviceability ratios will fall due to the inflationary effects, and prices will hold and/or continue to rise in line with that inflationary pull at least, but like the 80s would probably not grow much in real terms (on average) in this scenario.

The most likely scenario for the next few years though I think for Australia is continuation of fairly low interest rates, continued real wage growth/household income growth, and a steady, but not dramatic rise in property values accordingly. I think 2009 was more about undoing the 08 correction, helped along with a bit of government stimulus, so 2010 will see more subdued growth, but growth none-the-less, in most segments, with the possible exception of the lower 25% which could pull back a bit IMO.

Cheers,

Beej


----------



## MACCA350 (4 December 2009)

Just thinking out loud.............

Assuming the RBA takes into account house prices and sales volumes etc and adjusts the cash rate higher to keep the housing market in check(among other things). 

Let's say that international buyers have been increasing and is currently around 50% of properties sold. 

These international buyers will be using international monies and not really affected by our interest rates changes.

So........wouldn't we get to a point where the RBA cannot affect the housing market..........I mean if they increase rates it only affects local buyers with mortgages and has no effect on international buyers.

There must be a tipping point, ie if the split is 10/90%(local/international) then the RBA rate would have an effect, if the split were 90/10% then surely the RBA rate would have virtually no effect. 

The problem then would be that housing could become disjointed from the local population and have no direct correlation to the prosperity of the local community. In other words local incomes could stagnate, interest rates could climb to historic highs yet housing prices could still go through the roof since demand is not local and not subject to local issues.

I know this hypothetical seems extreme, but recent events makes you wonder what the end game is.

cheers


----------



## prawn_86 (4 December 2009)

Macca,

Those international investors would have to convert their currency to AUD so in the conversion the interest differential is taken into account. The only way interest rates would not have an effect on them is if they paid the property off in full.


----------



## MACCA350 (4 December 2009)

prawn_86 said:


> Macca,
> 
> Those international investors would have to convert their currency to AUD so in the conversion the interest differential is taken into account. The only way interest rates would not have an effect on them is if they paid the property off in full.



Not sure I follow, is the currency conversion directly related to the local interest rate? I didn't think it was. 

If they had a mortgage wouldn't it be serviced by their bank in their country, so the only conversion would be when their bank pays for the property in full then they pay their bank in their local currency subject to their countries interest rate.

Or do I have this all wrong and international buyers who wish to buy here and need a mortgage have to take it out through our banks?

cheers


----------



## prawn_86 (4 December 2009)

MACCA350 said:


> Not sure I follow, is the currency conversion directly related to the local interest rate? I didn't think it was.
> 
> If they had a mortgage wouldn't it be serviced by their bank in their country, so the only conversion would be when their bank pays for the property in full then they pay their bank in their local currency subject to their countries interest rate.
> 
> ...




Yes, the exchange rate is a direct relationship between the IRs of the 2 countries.

Its a common misconception that you can borrow overseas, pay the cheaper rates, and then invest at a higher yield everywhere. If it was that simple, everyone would be doing it.

Essentially the overseas investors could take out a loan from their bank if they wanted, but they would then need to change their currency into AUD to purchase the property here, so then the repayments for that property (which are in AUD) change each time interest rates change, as does the value of the exchange rate, so they are paying the equivilant amount as having an AUD loan.

Essentially this is what people tried to do back in the early 90's with the Swiss Franc carry trade. Where it came unstuck was that they didnt hedge out their positions and then it all ended up blowing up, because all they were doing in essence was betting on the exchange rate.


----------



## robots (4 December 2009)

prawn_86 said:


> Yes, the exchange rate is a direct relationship between the IRs of the 2 countries.
> 
> Its a common misconception that you can borrow overseas, pay the cheaper rates, and then invest at a higher yield everywhere. If it was that simple, everyone would be doing it.
> 
> ...




hello,

why so Prawn86 when taken out loan in origin country

for example, friends purchased paris apartment several years ago, loan with a big 4, 

500k (aussie) converts into 300K (euro), buy apartment, loan repayments still in aussie

yes, return (weekly, monthly, yearly etc) and asset value currency dependent

hope everyone having a beautiful day

thankyou
robots


----------



## MACCA350 (4 December 2009)

Thanks for clearing that up ............and maybe disregard my whimsical thoughts

cheers


----------



## robots (4 December 2009)

hello,

no worries man, thats why i am here to help out fellow man in their pursuit of happiness

i hope one day in the future ASF might allow question time back, like what used to occur evening time during the week, great participation from all

thankyou
robots


----------



## prawn_86 (4 December 2009)

robots said:


> 500k (aussie) converts into 300K (euro), buy apartment, loan repayments still in aussie
> 
> yes, return (weekly, monthly, yearly etc) and asset value currency dependent




As usual, i cant understand what your saying. Are you agreeing or disagreeing with me?

In this example it means the 500k outlay is now subject to currency variations if not hedged, so is a bet on the currency as opposed to the property. So if the Euro fell and the property was sold then you might get back way less. 

Any unhedged overseas investment with a loan originating in another country will be a bet on forex rather than the property market. And any hedged investment will cancel out any yeild differences.


----------



## Wysiwyg (4 December 2009)

robots said:


> hello,
> 
> why so Prawn86 when taken out loan in origin country
> 
> ...




Say an American took out a loan in America and bought an Australian property. (exchanged to aud from usd) The loan would be serviced in America while the house would be effectively owned in Australia. If currency exchange rates move appreciably in favour of the American investor by the time they wanted to sell, then they could make extra profit on top of the probable property capital gains. 

Yes?


----------



## prawn_86 (4 December 2009)

Wysiwyg said:


> Say an American took out a loan in America and bought an Australian property. (exchanged to aud from usd) The loan would be serviced in America while the house would be effectively owned in Australia. If currency exchange rates move appreciably in favour of the American investor by the time they wanted to sell, then they could make extra profit on top of the probable property capital gains.
> 
> Yes?




Yep. And same goes for a loss if the currency moves unfavourably.

As you are now exposed to currency risk as opposed to just market risk from property. So there are now 2 types of risks present.


----------



## robots (4 December 2009)

hello,

my post is there to assist Macca350, i dont know what you are going on about Prawn86

please re-read my post regarding Paris example, its all there ie.currency risk

please see post #108, bold section regarding post

thankyou
robots


----------



## prawn_86 (4 December 2009)

robots said:


> hello,
> 
> my post is there to assist Macca350, i dont know what you are going on about Prawn86
> 
> ...




Ok i just couldnt tell if you were agreeing or disagreeing.

thanks


----------



## robots (4 December 2009)

hello,

no worries

thankyou
robots


----------



## Wysiwyg (4 December 2009)

prawn_86 said:


> Yep. And same goes for a loss if the currency moves unfavourably.
> 
> As you are now exposed to currency risk as opposed to just market risk from property. So there are now 2 types of risks present.




Property maintenance dollars such as council rates or body corporate fees would be have to be converted yearly from USD to AUD. Alternatively, the foreign owner has a bank account in Australia to pay for property maintenance thus avoiding exchange rates during the ownership.

True?


----------



## robots (4 December 2009)

hello,

yes thats right, its a currency issue when you "bring it back" either return or asset sale profit/loss

prawn86, how would someone hedge buying a property in the Paris example?

thankyou
robots


----------



## robots (5 December 2009)

hello,

paradise:

http://www.news.com.au/couriermail/story/0,1,26442202-952,00.html

great family photo, what an asset class

thankyou
robots


----------



## satanoperca (5 December 2009)

Hello,

*Property prices on way down, warns bank*

http://www.smh.com.au/business/property-prices-on-way-down-warns-bank-20091204-kays.html



> THE National Australia Bank forecasts a 5 per cent decline
> in property prices by the end of next year, following higher interest rates and unemployment.






> NAB envisages 25-point cash rate increases at the February and March meetings of the Reserve Bank taking the cash rate to 4.25 per cent.
> 
> After a pause of about six months, rates would rise to 4.75 per cent by late in the year and 5.5 per cent by mid-late 2011




So an increase of over 30% on mortgage payments with a small correction on prices. The FHB segment of the market will be the one to watch, those who purchased with the lowest interest rates in 50 years & with high LVR's and high RE prices. 

Cheers


----------



## robots (5 December 2009)

hello,

they didnt get it right previously so I imagine this time will be no different, but stay true to the cause and follow what you think is right

no vision, they cant see things that I and others who called it can (a shame that one has left ASF)

great day

thankyou 
robots


----------



## robots (5 December 2009)

hello,

oh yeah:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=652&nav2=162

bumper end to the year by the looks of it, 82% clearance today, SOLID

great asset class

thankyou
robots


----------



## satanoperca (5 December 2009)

robots said:


> they didnt get it right previously so I imagine this time will be no different,




Thats correct, they lower the rates to far for a recession we never had and are now realising their mistake and taking action promptly. We are different, no GFC affected country here.

You can also thank Labor for overspending, who would have thought, for part of the reason those rates are increasing. Goto to save those to big to fall.

It is sunshine and lolipops for all, including savers with banks offer increasing rates on term deposits.

Cheers


----------



## cutz (5 December 2009)

satanoperca said:


> It is sunshine and lolipops for all, including savers with banks offer increasing rates of term deposits.




Exactly,

Can't believe the clowns in government are busy bagging the banks for lifting rates and going about their business.

I'm sure there are plenty of people out there sitting on cash who would be welcoming a few more rate rises.

10% anyone ?


----------



## robots (5 December 2009)

hello,

was commenting about Nab article, 

thankyou
robots


----------



## Beej (6 December 2009)

satanoperca said:


> Hello,
> 
> *Property prices on way down, warns bank*
> 
> ...




Interesting article - may well be on the money (some moderate price falls across the board for late 2010). If things panned out like that then we would be following the 1988 - 1993 pattern almost exactly, with this year (09) being a bit like 1991 0r 92 from that period. So could be some good buying ops late next year for those on the ball 

Cheers,

Beej


----------



## Airfireman (6 December 2009)

Much talk out there about the economy and interest rate rises, people locking there mortgage at fixed interest rates..house prices to fall...but its not looking that way at the moment!!!!.next year will see me return to the mortgage game after being burned in 89,90...i would love some hindsight if anyone out has a bit they can spare,,,

Tim


----------



## Nyden (6 December 2009)

Airfireman said:


> Much talk out there about the economy and interest rate rises, people locking there mortgage at fixed interest rates..house prices to fall...but its not looking that way at the moment!!!!.next year will see me return to the mortgage game after being burned in 89,90...i would love some hindsight if anyone out has a bit they can spare,,,
> 
> Tim




Oh well. Looks like the housing market is going to crash after all


----------



## MACCA350 (6 December 2009)

cutz said:


> 10% anyone ?



Yes Please

cheers


----------



## Quincy (7 December 2009)

cutz said:


> Exactly,
> 
> Can't believe the clowns in government are busy bagging the banks for lifting rates and going about their business.
> 
> ...






> *New warning on mortgages*
> 
> http://www.smh.com.au/business/new-warning-on-mortgages-20091206-kcti.html
> 
> ...






> But Mr Norris told businessday that potential changes in liquidity rules could put more pressure on variable mortgage rates.
> 
> ''New liquidity rule requirements will have potentially two impacts,'' he said. *''One will be interest rates continuing to increase at a faster rate than the official cash rates*, and secondly, the issue around the availability (of funds).''





Reading through the above referenced article, it looks like the Banks' interest rates during the next 12 months may well rise more often and higher than the RBA's declared official cash rates.  

Will be interesting to see whether or not this has a significant adverse affect on property prises in Australia.


----------



## Mofra (7 December 2009)

Beej said:


> Interesting article - may well be on the money (some moderate price falls across the board for late 2010). If things panned out like that then we would be following the 1988 - 1993 pattern almost exactly, with this year (09) being a bit like 1991 0r 92 from that period. So could be some good buying ops late next year for those on the ball



Beej,

As someone who was a young 'un in those days, I don;t have a great handle on price movements in these years. Do you mind for the benefit of the thread providing a brief rundown of how things panned out year to year (in your opinion)?


----------



## Beej (7 December 2009)

Mofra said:


> Beej,
> 
> As someone who was a young 'un in those days, I don;t have a great handle on price movements in these years. Do you mind for the benefit of the thread providing a brief rundown of how things panned out year to year (in your opinion)?




Happy to! My view at that time was more Sydney-centric, and I've attached an article that pretty much shows what happened then in Sydney as well. So these comments pertain more to the Sydney market rather than the national one.

* 87-89; massive gains with prices on average increasing by 100% or more, and much more in some area's. Prevailing interest rates were around the 10% mark, and inflation was 5-10% pa as well. This period makes the rate of the price rises of the past 10 years look insignificant to me....

* 90/91; recession in full swing, interest rates peaked at 17%, property market stalled significantly, forced sales due to high interest rates and few buyers, prices fell back by 10-15% on average, and some top end area's saw greater falls (just like last year).

* 92/93; Pretty stable/stagnant market, but rising confidence and volumes, falling interest rates, inflation below 5% and looking like staying low. With encouragement of parents Beej decides to make first property purchase while still in early 20s 

* 94 onwards; prices start to steadily rise, interest rates keep coming down as inflation stays low, real wage growth starts kicking in, banks start lending larger multiples as low inflation/low interest rates look like staying for quite a while..... by 96 things were really starting to get going again and the boom was on.

The rest is history! I think in this modern age with a more mobile population, increased communication and a less stratified economy, that the other cities markets behave more like Sydney now than they used to (also why they have started to catch up to Sydney prices IMO). I reckon last year was like 90, this year is like 91, and next year might be a bit like 92/93 (where prices pull back a bit before the next steady up trend). 

Cheers,

Beej


----------



## satanoperca (7 December 2009)

Will make it a little more difficult to services those huge mortgages.

*Business StoryWorkers take pay cuts to stay employed*

http://www.news.com.au/business/workers-take-pay-cuts-to-stay-employed/story-e6frflwr-1225802028060

Isn't this referred to as wage deflation. Coming to a business near you.



> The market expects this week's unemployment rate to rise slightly to 5.9 per cent.




Seems unemployment could continue on its merry trend given business loans continue on their descent downward of ten months

Cheers


----------



## inenigma (7 December 2009)

theasxgorilla said:


> 5. In parallel to steps 1-4, boom, bust, boom, bust, boom, bust to _coda_ or _ad finitum_, whichever comes first






I thought it was Gloom, Boom & Doom......

But, what do I know ???


----------



## adobee (7 December 2009)

THE MARKET - December 2009
Sydney City & Inner Rings

Media focus over the past twelve months has mainly concentrated on strong growth within the first home buyer market; we continue to find demand from owner occupiers and investors exists for properties which are well located. Key buyer considerations appear to currently rate in the following order of preference being location; price; property condition; rental returns; growth forecasts.

First home buyers are by far the most active market segment with many looking to purchase whilst interest rates remain at low levels and they are able to take advantage of the increased government incentives. 

Buyer inquiry has substantially increased for residential apartments up to $600,000 however the enquiry beyond this price point is somewhat subdued; in comparison residential home sales up to $1million have shown increased popularity amongst owner occupiers.

We are yet to see the affects of the most recent increases to the cash rate however feel that lending criteria has eased since the first quarter of 2009 and that the small variation will have little affect upon those looking to enter the residential property market.

The economic crash of 2008 and high interest rates of the earlier part of that (2008) year appear to have been long forgotten in the minds of many prospective purchasers and economists whom are now predicting an upturn in property prices and accelerated growth in the later part of 2010 and into 2011. We would suggest that such forecasts will largely depend on both the RBA leaving rates on hold throughout the majority of 2010 and continued positive influences of economic growth.


----------



## adobee (7 December 2009)

BIS SHRAPNELS THOUGHTS
EXECUTIVE SUMMARY HOUSING OUTLOOK OCT 2009

Following substantial decreases in the second half of 2008, property prices recovered over the first half of 2009. High interest rates had initially created a sharp decline in turnover, and the Reserve Bank of Australia (RBA) sought to dampen demand inflationary pressures emerging from strong economic growth. The Global Financial Crisis led to a sharp and rapid shift in economic conditions, with interest rates cut heavily in response. The 425 basis point reduction in the cash rate by the RBA (and 380 basis point decline in the standard variable rate) between September 2008 and April 2009 alleviated the pressure on many households, while also bringing housing affordability back to its most attractive level for almost a decade across most state capitals. Improved affordability and the introduction of the Federal Government’s First Home Owner’s Grant Boost Scheme (FHOGBS) in October 2008 (as well as various other State Government incentives) has driven a surge in first home buyer demand at the more affordable end of the market.
This has had the effect of stabilising the falls in house prices that were coming through in the second half of 2008. The FHOGBS provided the impetus
for movement of renters to owner occupation, and this is likely to continue after the incentive has expired, albeit at a more moderate rate. The lead times in ramping up construction means that new dwelling activity will be below underlying demand in the short term, particularly in the apartment
sector, where the tight credit environment has meant that developers have found it difficult to obtain finance to proceed””even in projects that would otherwise be financially viable. The shortfall in supply will continue to underpin
tight vacancy rates and further rental growth, which should ensure that the owner occupation versusrent equation continues to remain attractive in the current low interest rate environment. The surge in first home buyer
demand is now slowly permeating through to greater demand from upgraders who are trading over to their next dwelling after selling to the buoyant first home buyer market. In addition, the strong rental environment and stabilisation of prices is also beginning to attract investors back into the
market. Activity from these two groups should continue to gather momentum through the remainder of 2009, being the main driver of demand from the start of 2010 and offsetting some of the decline in first home buyer demand after the FHOGBS expires. Nevertheless, the weakened economic Environment is expected to continue to dampen price growth in 2009/10, as further negative influences on the national economy maintain concerns about the employment outlook. In addition, household income overall is being
undermined by the reduction in working hours, even though the peak unemployment rate may not now reach the levels initially feared at the start of the year. Price growth is consequently forecast to be limited in 2009/10,
before accelerating into 2010/11 and 2011/12 as economic growth begins to gather momentum. Price growth will be driven by low interest rates. After raising the cash rate by 25 basis points in October 2009, and a further increase forecast before the end of 2009, the RBA is expected to pause efore lifting rates again in the second half of 2010. With few positive influences on economic growth expected in 2009/10, it is anticipated that the RBA will be keen to encourage an upturn in residential construction to help drive the economy. Stronger rate rises are expected in 2010/11 and in 2011/12, as the
RBA restores the cash rate from the current highly stimulatory level to a more neutral setting. Price growth is forecast to ultimately slow from 2012/13, as further rises to interest rates, in response to lower unemployment and emerging inflationary pressures, begin to impact on affordability and demand.


----------



## robots (7 December 2009)

hello,

good evening brothers, fine day

http://www.morrellandkoren.com.au/topend/

great reading as usual, fair

like the one about if you aint on it (missed out), its a bubble but really its all just plain old vanilla LIFE

thankyou
robots


----------



## Gerkin (7 December 2009)

Wy are there so  many people on this forum who want property investors to fail?

The bottom line is if the property market fails in Australia, the sharemarket will also fail. Australian culture is built on owning property, if the market fails consumer sentiment is going to be very low, leading to reduced spending etc etc, can you people see where im going. You have to hold a very distinct portfolio to be protected by any property crash.


----------



## Gordon Gekko (7 December 2009)

You have to hold a very distinct portfolio to be protected by any property crash.[/QUOTE]


How about cash?


----------



## joeyr46 (7 December 2009)

Gerkin said:


> Wy are there so  many people on this forum who want property investors to fail?
> 
> The bottom line is if the property market fails in Australia, the sharemarket will also fail. Australian culture is built on owning property, if the market fails consumer sentiment is going to be very low, leading to reduced spending etc etc, can you people see where im going. You have to hold a very distinct portfolio to be protected by any property crash.




Why do you think people want property investors to fail. when many just have a realistic idea of debt and servicing that debt. If you mean property investors we all wish you well but if you mean joining the ponzi scheme of forever higher prices without any value then no we dont wish you well as this serves no one and only destroys real wealth by destroying the value of our currency or falsely creating the illusion of wealth without producing anything for it. Before you say "SOUR GRAPES" I have benefited from this process over the years but now feel it has gone too far price wise and also feel that it is not in the best interests of society as a whole to price so many out of the market and to have tax concessions for investors that are not available to owner occupiers. I guess the other thing is nothing keeps going up for ever markets don't work like that and fundamentals won't let you know when the correction is coming


----------



## satanoperca (7 December 2009)

joeyr46 said:


> Why do you think people want property investors to fail. when many just have a realistic idea of debt and servicing that debt. If you mean property investors we all wish you well but if you mean joining the ponzi scheme of forever higher prices without any value then no we dont wish you well as this serves no one and only destroys real wealth by destroying the value of our currency or falsely creating the illusion of wealth without producing anything for it. Before you say "SOUR GRAPES" I have benefited from this process over the years but now feel it has gone too far price wise and also feel that it is not in the best interests of society as a whole to price so many out of the market and to have tax concessions for investors that are not available to owner occupiers. I guess the other thing is nothing keeps going up for ever markets don't work like that and fundamentals won't let you know when the correction is coming




Absolute brilliance


----------



## joeyr46 (7 December 2009)

satanoperca said:


> Absolute brilliance




I'll take that thank you


----------



## overule (7 December 2009)

joeyr46 said:


> Why do you think people want property investors to fail. when many just have a realistic idea of debt and servicing that debt. If you mean property investors we all wish you well but if you mean joining the ponzi scheme of forever higher prices without any value then no we dont wish you well as this serves no one and only destroys real wealth by destroying the value of our currency or falsely creating the illusion of wealth without producing anything for it. Before you say "SOUR GRAPES" I have benefited from this process over the years but now feel it has gone too far price wise and also feel that it is not in the best interests of society as a whole to price so many out of the market and to have tax concessions for investors that are not available to owner occupiers. I guess the other thing is nothing keeps going up for ever markets don't work like that and fundamentals won't let you know when the correction is coming




Yeah yeah.. I heard it a hundred times. Property in Australia is going to crash since the 90s. See who's going to come out on top. Renter? lol

If property is going to crash, then the economy is really in a deep trouble and everyone suffers not just property investors!!


----------



## joeyr46 (8 December 2009)

overule said:


> Yeah yeah.. I heard it a hundred times. Property in Australia is going to crash since the 90s. See who's going to come out on top. Renter? lol
> 
> If property is going to crash, then the economy is really in a deep trouble and everyone suffers not just property investors!!




I don't think anyone disagrees with that but you still have to face reality even if you would prefer not to, and yes the economy is in deep trouble if the stockmarket charts are telling us what the future holds. However when we come out the other side  we will still have a better lifestyle than our parents just a dose of reality for getting too far ahead of our productive capacity IMHO


----------



## Mofra (8 December 2009)

Gordon Gekko said:


> How about cash?



It's a depreciating asset that will suffer from savage interest rate cuts if the property market falls over.


----------



## TOBAB (8 December 2009)

joeyr46 said:


> I don't think anyone disagrees with that but you still have to face reality even if you would prefer not to, and yes the economy is in deep trouble if the stockmarket charts are telling us what the future holds. However when we come out the other side  we will still have a better lifestyle than our parents just a dose of reality for getting too far ahead of our productive capacity IMHO




Can you please supply some of these charts. I have recently heard a nos of the country's leading economists talk. They are all of one invoice - things are pretty good, not brilliant, but pretty good. One stated the AUD may fall a bit, another it will go up to parity. All the same on property - will stabilise with a possibly slight downward trend. 

Would sincerely loved to be proved wrong but can not see it and have looked at hundreds of charts lately none indicating significant concern for oz.


----------



## joeyr46 (8 December 2009)

TOBAB said:


> Can you please supply some of these charts. I have recently heard a nos of the country's leading economists talk. They are all of one invoice - things are pretty good, not brilliant, but pretty good. One stated the AUD may fall a bit, another it will go up to parity. All the same on property - will stabilise with a possibly slight downward trend.
> 
> Would sincerely loved to be proved wrong but can not see it and have looked at hundreds of charts lately none indicating significant concern for oz.




Only 2 this is off topic if the economy is off topic for house prices long term trend lines broken and rallied back is that good enough?


----------



## robots (8 December 2009)

hello,

can you please keep the stock/business charts to the relevant stock thread,

that business has no association with property what so ever

thankyou
robots


----------



## matty2.0 (8 December 2009)

property ain't gonna crash. the fundamentals don't support a crash theory right now.
but it can go higher from here and get out of hand. hence why the RBA is raising rates.


----------



## overule (8 December 2009)

joeyr46 said:


> Only 2 this is off topic if the economy is off topic for house prices long term trend lines broken and rallied back is that good enough?




I am totally confused .

How's this chart has anything to do with Property prices? 

I don't know where you are going at.


----------



## robots (9 December 2009)

hello,

yes Overule, its the same strawman details of previous years

its the fairest and most open system going around and society benefits enormously from housing

look around in the office/workplace and you will identify the person doing a bit less, smoke breaks all day, doesnt finish their reports, shovel holds them up

are they the ones that can be better off in society if house prices are different?

thankyou
robots


----------



## wayneL (9 December 2009)

matty2.0 said:


> property ain't gonna crash. the fundamentals don't support a crash theory right now.
> but it can go higher from here and get out of hand. hence why the RBA is raising rates.



I reckon the fundamentals of house prices are crap, but other fundamentals will support prices. 

I think people want an inflation hedge, they suspect inflation will break into a canter, property seems to fit the bill. I still don't have a view of where nominal prices are going in the next 5 years, 'cept that I don't think they will crash from here. Might oscillate a bit, maybe some small falls, plateauing etc, but no crash.

Equally, prices could break in a racing pace gallop if inflation and wages break out.

N.B. Comments apply more to UK and now NZ markets... don't know squat about the Aussie market anymore. But suspect the same factors at play.


----------



## kincella (9 December 2009)

to Robots, Beej, other property investors...
I wish you a merry christmas and have a prosperous new year...
keep up the good work....
I do check in from time to time to see how you are going...
it has become very quiet on here...
anyway all the best...
cheers


----------



## overule (9 December 2009)

robots said:


> hello,
> 
> yes Overule, its the same strawman details of previous years
> 
> ...




All i am saying was houses will not crash easily. It might fall a little in value but i don't expect a crash. 

If house prices crashed, no one is going to be better off.


----------



## Investor82 (9 December 2009)

I have been very active in property investment for the last 7 years. Going up, coming down, or moving sideways....gee almost sounds like the share market  and Im new to the share game. 

Lets look at the facts here. 

Just like shares, property prices move, however, it is generally slower than the sharemarket. Look around you and you will see people who have lost money in the property market. Beginers (first home owners) hear how "easy" it is and jump in, 5 years later, their house is barely worth more than they paid for it 
Since being on this forum I have seen a number of people say "success comes with time, and practice" "it took me 3 years before I consitently made profits" etc etc etc. 

Property is no different. It is just a different asset class. Personally speaking I love "property busts" I make a lot of money during these times. Personally I battled during the boom, it was no good for me. 

To the "neysayers" here, look within. You make money in shares - why? not because the sharemarket is stable, consistant or otherwise. It is because you learnt do's and donts, developed a system and stuck by it. Removed emotion from your decision making and made (mostly) rational decisions. 
Do the same with property and reap the rewards. 
Its not better or worse - just different. 

Wishing you all the best. 

Tony


----------



## robots (10 December 2009)

kincella said:


> to Robots, Beej, other property investors...
> I wish you a merry christmas and have a prosperous new year...
> keep up the good work....
> I do check in from time to time to see how you are going...
> ...




hello,

thanks Kincella, will keep the flame going for equality 

Merry christmas and all the best for the festive season

thankyou
robots


----------



## SM Junkie (10 December 2009)

I was wondering what areas people are interested in buying property in?

Personally I've just bought a property here in the Pilbara.  Why?

Although a high entry costs, properties are generally positively geared.
Karratha and Port Hedland to be developed as cities.
State Government putting loads of money into infrastructure.
No longer boom or bust for mining towns.
Increased population.
Insufficient housing to meet demand.
Expansion of Port facilities
New mines opening will continue to increase.
BHP have stopped building homes for their employees.

Where do others see potential?


----------



## Timmy (10 December 2009)

kincella said:


> to Robots, Beej, other property investors...
> I wish you a merry christmas and have a prosperous new year...
> keep up the good work....
> I do check in from time to time to see how you are going...
> ...




Yes, good to see your name Kincella. 
Wish you and your furry friend a great Christmas.


----------



## Investor82 (10 December 2009)

SM Junkie said:


> Where do others see potential?




Everywhere - depends on your strategy.


----------



## SM Junkie (10 December 2009)

Investor82 said:


> Everywhere - depends on your strategy.




So far I have only invested in WA, I've gone for affordable areas with easy walking distances to public transport. But WA is easy given the resources boom. Property prices are bouncing back here very fast. Even in yesterdays press there was a new record set at the high end of the market.

I have not bought interstate because it would mean stepping outside what I know. The general chatter about stats or reports is not giving me a feel for what is happening over east.  I'd just like to know what is attracting property investors to other areas?


----------



## Investor82 (10 December 2009)

I currently only have property in WA also. However I have been looking at inner city townhouse in Melbourne. This is a very biased decision though becuase the only reason I am considering it is that I like Melbourne as a place to live - and there are some beutiful townhouses I have seen at affordable prices (under $700k). You can also get some older places which would suit renovation really cheaply. 
The idea would be to rent it out for a couple of years then move over there . I am too young to live in perth  
Over the next 5 years I dont think you will go wrong in the Pilbra.
At the moment demand exceeds supply by a significant percentage, however on whole numbers its not so raw. It would only take one or two major development in some areas to bring it back to equalibrium. In which case rents will come back, as will property prices. Its the only reason I didnt go there. 
I like Geraldton atm and bought there about 2 years ago. Geraldton has been flat for about the last 3 years, following a massive spike and I think it will be pretty flat for the next 3-4 years. There are 100's of vacant blocks either on the market or proposed. So supply is exceeding demand at the moment. Interestingly rentals values have held up ok. But long term I think it will become a pretty major hub for mining companies. 
My most recent purchase though has been close to the city (7kms). Mainly because it was a deal I couldnt walk away from.


----------



## 1q2w3e4r (10 December 2009)

Property has to be the only investment where people say "I made 10%" or 20% etc and conveniently choose to forget that if your property went up X, so did the place next door.   It makes it hard to obtain value over the long term unless your investing in different markets.

If you make 20% on a property in say 2-3 years, you can invariably bet you'll have to pay substantially more for the next property than you would have 2-3 years earlier.  

Everyone should own their own place if they can, however its a bit of a joke that interest payments on investments are tax deductible, but not on a principle place.


----------



## Temjin (10 December 2009)

Australian properties? Blah, buy properties in China instead! Much better paradise there. But of course, the government there is looking to stop it too.



> China Squeezes Property Speculators, Extends Consumer Stimulus
> Share Business ExchangeTwitterFacebook| Email | Print | A A A
> By Bloomberg News
> 
> ...




Hey, at least the Chinese government admits there is a bubble over there.


----------



## TOBAB (10 December 2009)

joeyr46 said:


> Only 2 this is off topic if the economy is off topic for house prices long term trend lines broken and rallied back is that good enough?




Thanks. Must admit not so sure what these are showing me though.


----------



## TOBAB (10 December 2009)

SM Junkie said:


> I was wondering what areas people are interested in buying property in?
> 
> Personally I've just bought a property here in the Pilbara.  Why?
> 
> ...




Personally I like inner Melb. Take a long term view and can't go wrong. Melb's population expected to surpass Sydney within 15 years - people have to live somewhere, and aspire to live somewhere else.

Know absolutely nothing about WA. Would appreciate some info


----------



## Investor82 (10 December 2009)

1q2w3e4r said:


> Property has to be the only investment where people say "I made 10%" or 20% etc and conveniently choose to forget that if your property went up X, so did the place next door.   It makes it hard to obtain value over the long term unless your investing in different markets.
> 
> If you make 20% on a property in say 2-3 years, you can invariably bet you'll have to pay substantially more for the next property than you would have 2-3 years earlier.
> 
> Everyone should own their own place if they can, however its a bit of a joke that interest payments on investments are tax deductible, but not on a principle place.




This point is valid, but only if a) you sell and b) you buy again. 
You could say the same about shares. I bought abc company made $100k, sold them for $2 each. But if you want to buy that same asset back it will cost you $2, plus you have lost tax, buying fees etc. How is it different? 

Why would you sell one investment property to buy another? It doesnt make viable commercial sense. 
Are you confusing investment property with personal place of residence (PPR)? PPR is not an investment.


----------



## TOBAB (10 December 2009)

1q2w3e4r said:


> Everyone should own their own place if they can, however its a bit of a joke that interest payments on investments are tax deductible, but not on a principle place.




Not really. The deal is that you can not have your cake and eat it too. Investment property is subject to CGT other tax (eg on the rent) your principal place is not. Therefore you get the deduction for the investment (just like shares) and not for the PPR.

Bottom line you ought to be able to get a deduction for a genuine expense that has been incurred to generate taxable income.

To change this basic fundamental would cause untold of implications.


----------



## Macquack (10 December 2009)

TOBAB said:


> Bottom line you ought to be able to get a deduction for a genuine expense that has been incurred to generate *taxable income*.




Negative gearing does not produce taxable income, rather, a tax loss.

Suprises me the number of people that dont understand they are going backwards with negative gearing and are relying on future capital gain to offset that loss.


----------



## TOBAB (10 December 2009)

Macquack said:


> Negative gearing does not produce taxable income, rather, a tax loss.
> 
> Suprises me the number of people that dont understand they are going backwards with negative gearing and are relying on future capital gain to offset that loss.




OK to get technical taxable revenue. If your revenue is taxable then your expenses must be deductible. If not you will start distorting mkts in a significant way. 

BTW I agree regards future capital gains offsetting losses - not a good way to go.


----------



## 1q2w3e4r (11 December 2009)

Investor82 said:


> This point is valid, but only if a) you sell and b) you buy again.
> You could say the same about shares. I bought abc company made $100k, sold them for $2 each. But if you want to buy that same asset back it will cost you $2, plus you have lost tax, buying fees etc. How is it different?
> 
> Why would you sell one investment property to buy another? It doesnt make viable commercial sense.
> Are you confusing investment property with personal place of residence (PPR)? PPR is not an investment.




With shares if you sell one block to buy another, you can sell one high and buy one low much easier than property.

Not confusing investment property with PPR.  PPR is a tax effective investment IMO if you own.



TOBAB said:


> Not really. The deal is that you can not have your cake and eat it too. Investment property is subject to CGT other tax (eg on the rent) your principal place is not. Therefore you get the deduction for the investment (just like shares) and not for the PPR.
> 
> Bottom line you ought to be able to get a deduction for a genuine expense that has been incurred to generate taxable income.
> 
> To change this basic fundamental would cause untold of implications.




Yes, I realise that.  I've owned investment property in the past.  There are heaps of outgoings as you've listed, CGT on sale, potential GST, rates, land tax, maintenance, agents fees and commission when you sell along with stamp duty on the way in.  Of these its the land tax, and stamp duty that get me most.  The commission you have to wear as part of doing business.

What untold implications?  It would affect all the people who buy investment property so they can gear it for a tax "break"?

I'm all for property, its just not a very liquid asset class and you only get the value of what someone will pay, no inbuilt intrinsic value.  I'd rather live in it than invest in it.  That may change though at a later date, everyone's different though.  It'd be boring if we were all the same 

I think prices in Sydney's Inner West will come back, they have really rocketed within the last 6 months.



Macquack said:


> Negative gearing does not produce taxable income, rather, a tax loss.
> 
> Suprises me the number of people that dont understand they are going backwards with negative gearing and are relying on future capital gain to offset that loss.




Agreed, I still haven't quite worked out the big attraction to negative gearing.


----------



## adobee (11 December 2009)

Macquack said:


> Negative gearing does not produce taxable income, rather, a tax loss.
> 
> Suprises me the number of people that dont understand they are going backwards with negative gearing and are relying on future capital gain to offset that loss.




You can have positive income and still get the tax right off from your depreciation etc..

Ie.. I have some units which are on interest only loans.. 
Interest $3000 a month
Rental Income $4000 a month
Outgoings about $500 a month
Net Income in the pocket $500 a month
Depreciation about $8000 per annum
Tax loss about $2000 per annum


----------



## robots (11 December 2009)

hello,

this one's going out to you Kincella:

http://www.theage.com.au/business/p...es-to-extend-into-2010-apm-20091211-kobu.html

paradise for title holders, and yeah grant boost wound up, no affect, anything else you want wound up?

have a treat on chapel st tomorrow for you and friend

top effort man and well done to those holding this asset class

thankyou
robots


----------



## wayneL (11 December 2009)

Bloody Hell!

It's too sickly sweet being a property bull. I'm going back to being a bear so I don't keep getting reflux in my mouth!

Turn it down a bit FFS!


----------



## robots (11 December 2009)

hello,

grab a dose of pure aussie residential RE for that reflux WayneL, will be sorted in minutes

anyone else need assistance?

thankyou
robots


----------



## wayneL (11 December 2009)

robots said:


> hello,
> 
> grab a dose of pure aussie residential RE for that reflux WayneL, will be sorted in minutes
> 
> ...



No thank you. I may partake across the ditch, but not Oz.


----------



## robots (11 December 2009)

hello,

thats fantastic, and those who participate in aussie RE will take the ride and the glory

sure you feelin' good when a trade goes well

thankyou
robots


----------



## satanoperca (12 December 2009)

Hi,

Posted this response on another site with the thread titled 
*
We're building towards a home construction boom *



> Wouldn't it be logical to see a home construction boom after the events of the last 12months.
> 
> Huge cash incentives to FHB for new homes coupled with 50years historical low IR's and a large increase in lending to the mortgage sector by the banks.
> 
> ...



I'm upon for discussion.


----------



## Wysiwyg (12 December 2009)

satanoperca said:


> Hi,
> *
> We're building towards a home construction boom *
> 
> ...



So you want to prey on FHB's that can't afford to pay off their mortgage due to high interest rates?


----------



## joeyr46 (12 December 2009)

Wysiwyg said:


> So you want to prey on FHB's that can't afford to pay off their mortgage due to high interest rates?




Prey? I would have thought the guvmint was the one doing the preying that were not called on to bail FHB's out of the mess the guvmint got them into.
Or would you rather noone bought the property. and let the bank reposses and sell for whatever and pursue the FHB or whoever else it is for the rest of the debt. I have seen repossession auctions in tough times , everybodies after a bargain.
Unfortunately it is not usually higher rates that causes the problem but a lack of financial acumen and an expectation that 
1 Prices rise forever (never happened before prices fluctuate all the time even on a yearly basis but not noticed by most) only when one is forced to sell.
2 Job security (for both and in terms of hours worked etc)
3 Bills that suddenly appear like rates, insurance, plumber or electrician callouts that before were taken care of etc.
4 car just blew up or needs replacing, House price has gone up use te equity and never get out of debt. ie rent fro bank instead of landlord.
But as santa says higher rates are likely to be blamed by both the papers and the couple


----------



## robots (12 December 2009)

hello,

OH YEAH:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=652&nav2=162

81% clearance rate, thankyou very much brothers

just amazing words cannot explain it, anymore tests coming up?

thankyou
robots


----------



## Macquack (12 December 2009)

robots said:


> hello,
> 
> OH YEAH:
> 
> 81% clearance rate, thankyou very much brothers




Congratulations on selling you property, robots.


----------



## satanoperca (12 December 2009)

Wysiwyg said:


> So you want to prey on FHB's that can't afford to pay off their mortgage due to high interest rates?




At what point did I mention preying on FHB? I put it simply so some could understand that this segment of the market will be the first to show any signs of weakness. 

If you wish to attack anyone look no closer than the govnuts who will have created this problem at the cost of tax payers.

If FHBers bought without adaquate deposit and did not account for interest rates returning to normal at some stage or minor corrections in the property market and as a result have over extended themselves I have no sympathy at all. That is life, simply risk and reward. Take the loss on the chin and get on with it.

Cheers


----------



## satanoperca (12 December 2009)

robots said:


> anymore tests coming up?




Yes, the same one that saw property price revert late last year, 2009 and it was not the GFC but high interest rate rising slowing eating away at our debt ridden society.

So the test will be how will segments of the market handle rising interest rates in 2010. 

I suppose of beloved Governuts could sell the whole of Australia to the highest bidder to keep prices rising at the cost of our children and grand children.

One again I will say, we need to be a country driven by innovation, efficiency and productivity. Creating high RE prices based on gratuitous amounts of debt does not benefit society now or in the future.

Cheers

Beautiful evening in Melbourne tonight


----------



## MACCA350 (12 December 2009)

robots said:


> just amazing words cannot explain it, anymore tests coming up?



I'll have a go......

1 - Foreign investment regulations relaxed
2 - FHBG Boost ends in 19 days

How's that

cheers


----------



## kincella (13 December 2009)

Robots, and here is another one for you...its the same old mantra...only a couple of us predicted the way it would play out...

Beware real estate boom: 
economistNATALIE CRAIG AND MARC PALLISCO
December 13, 2009 
extract only.......

AUSTRALIAN house prices are likely to boom for at least three years following a record month for auctions and sales of nearly $1 billion yesterday, according to a leading economic forecaster.

''This is only the beginning,'' warned BIS Shrapnel chief economist Frank Gelber.

''The market will continue to grow, maybe not at this frenetic pace, but we need to build more to satisfy demand and we're not doing that. By the time this is over in three or four years' time, we will have built momentum into a boom … and if we're not careful, a price bubble.''

(and this piece....do any of you recall, some of us have been expecting the investors to take over again...been saying that for ages....been there and done that...history repeats...)
extract.......
But Dr Gelber says it is upgraders and investors who are now fuelling demand, and it will take more than the 1 per cent interest rate rise forecast for 2010 to dampen their appetites.

He added that price rises were necessary in order to fuel much-needed construction.

But economist Alan Moran warned impending price rises would only worsen the situation for desperate first-time buyers.

http://www.theage.com.au/national/beware-real-estate-boom-economist-20091212-kppq.html

Chapel st is crazy...must be all the xmas shoppers......
I am buying bayside in 2010....no climate change worries for me...call me a sceptic....
cheers...


----------



## suhm (13 December 2009)

I have been working through the numbers of buying a house vs renting and just can't see how buying works out better.  

Due to the desire to be close to work i've been looking at inner city melbourne on the north side. I also want to live in a nicer place as well.

To buy prices are like 350-450k for a 1br and 600-750k for a 2br place, then you have stamp duty and have to pay rates, maintenance and other outgoings. To break even after the 1st year you'd need about 10% cap gains and 5+% after that for the negative gearing and inflation.

To rent prices are about $300-400pw and $500-600pw so far less than interest in mortgage repayments.

Now the price of housing may go up 20+% and you make a lot of money but that's because of the incredible amount of leverage. A lot of individual shares would go up 20+% but no bank is gonna lend me even close to 90% to buy shares.

Maybe as an investment property it would work as the cashflow negativity might not be so bad as I can borrow 90% without mortgage insurance but I don't see how prices can sky rocket from here sustainably given the low rental yields and because it takes such a large percentage of couples incomes to service a mortgage these days.

I've been thinking that for about 6 years now so I'm probably wrong or maybe its because i see a home as a necessary expense not my castle.


----------



## overule (13 December 2009)

suhm said:


> I've been thinking that for about 6 years now so I'm probably wrong or maybe its because i see a home as a necessary expense not my castle.




No offense but obviously you are wrong.
House prices almost doubled in those 6 years alone not just 20% you stated.

How many people can pick the right shares? Overall, it's safer to go with Property.


----------



## Investor82 (14 December 2009)

overule said:


> No offense but obviously you are wrong.
> House prices almost doubled in those 6 years alone not just 20% you stated.
> 
> How many people can pick the right shares? Overall, it's safer to go with Property.




I disagree - this is a trap many fall into. 

Your principal place of residence should be recognised as an expense - NOT an asset. Here is why  
First, you earn no income from your PPR. Second, it costs you money to live in it - yet, you pay tax on the property (Stamp duty, rates, etc). Lastly - you see NO real increase in value. If you sell your property - when you buy another one, you pay the same increased prices. You are actually no better off, unless you downgrade. 

The right investment property will leave you out of pocket for the first year only. 
The out of pocket cost of buying an investment property and renting will barely be diffent to buying your own house in the first year.


----------



## Beej (14 December 2009)

Investor82 said:


> Your principal place of residence should be recognised as an expense - NOT an asset. Here is why
> 
> First, you earn no income from your PPR. Second, it costs you money to live in it - yet, you pay tax on the property (Stamp duty, rates, etc). Lastly - you see NO real increase in value. If you sell your property - when you buy another one, you pay the same increased prices. You are actually no better off, unless you downgrade.




No - you do effectively earn income from your PPOR - it's the equivalent of the rent you would otherwise have to pay (this works the same way as the principle of opportunity cost). The net income is the equivalent rental cost/value, less the expenses you mention. Any analysis that ignores this is flawed, as for 99% of us, we only have two alternatives, own a PPOR or rent.

As for being no better off with increased prices, you said it yourself - that capital can absolutely be realised if you downgrade, so therefore is it is very very real, especially to someone who may be planning their retirement. And even if upgrading, you are still better off, given the alternative is to rent, and given that whether you owned or rented that property prices will still have gone up; so by owning your PPOR you could afford the 'better' property whereas if you had been out of the market you likely could not (as you had no exposure to the property market to hedge against future price rises).

Cheers,

Beej


----------



## suhm (14 December 2009)

overule said:


> No offense but obviously you are wrong.
> House prices almost doubled in those 6 years alone not just 20% you stated.
> 
> How many people can pick the right shares? Overall, it's safer to go with Property.




I meant 20%+pa, also house prices doubling in 6 years is a return of around 12% a year, is good for a less risky investment. The thing is the return for housing is not 12% a year. You have your stamp duty, negative gearing, maintenance, insurance, rates, land tax, selling agent fees and whatever renovations that have been done. That would reduce your return by around at least 2-4%pa, so your real return is something <10%pa.

That is still ok but its not exactly stellar but I don't see how housing is not a risky investment (I lived for a year in the UK 3 years ago and the people there were saying how property was a safe investment because it never really goes down in price) and given a 10% drop in price would wipe out my equity and i don't have enough money to not be putting all my eggs in one basket.  

I also just don't see how the price increases can be repeated in the next 6 years given interest rates are at their lowest in a generation, FHB were given their deposits handed to them and even though lending criteria has tightened people are still borrowing to the hilt unless there is some serious inflation.


----------



## Investor82 (14 December 2009)

Beej said:


> whereas if you had been out of the market you likely could not (as you had no exposure to the property market to hedge against future price rises).




Beej - in my post I was only refering to two alternatives, not the third which you have included here. I agree - you are better off being in the market than out of it (be it PPR or investment). 

Though I disagree that 99% of the population can't afford an investment property. Most just dont know how to afford it. Just like everyone can make money in the stock market, most just dont know how to (consistently). 

I'll give you the opportunity cost part, which yes, needs to be considered. However is only applicable for your first investment property 

I have never looked at my annualised figures on a % basis, however would guess that for your standard property (over the last 10years) I think it looks about right (10-12%). I budget on doubling prices every 7-10years with neutral gearing within 12-18months and positive within 3 years. 
The right property can also return significantly higher % returns with some good searching, and some hard work (same as shares I guess).


----------



## Wysiwyg (14 December 2009)

A big rise in owner-occupied housing finance commitments to take advantage of the historically low interest rates this year. Expect that trend to come back to average as we resume the inevitable rise of financing costs to battle inflation and the easing of additional government assistance from Jan. 2010 for first home buyers.


> *The number of finance commitments for the construction of dwellings **for owner occupation* (trend) rose 3.9% in October 2009 compared with September 2009, following an increase of 4.3% in September 2009. The seasonally adjusted series rose 9.2% to 8,016, the highest level since August 1994.


----------



## satanoperca (14 December 2009)

Thanks for the above graph.

So up until 2008 finance for the construction of dwellings for owner occupation was relatively flat, slight trend upwards. 

2008 saw interest rates peak around 9% and resulted in a significant trend down.

Then another reversal upwards on the change of two variables :
1) FHBG doubled - seems to had quite an impact
2) Rapid reduction in IR's to 50 year historical lows

Result a doubling in construction finance.

This is fantastic from a supply point of view with more new homes to become available from 2009 and into 2010. Hopefully reducing the shortage so often spoken about.

But here we are again and the above two variables are changing once more back to pre 2008 levels, will this result in the trend changing once again and what impact will this see on prices.

Cheers


----------



## Mofra (15 December 2009)

satanoperca said:


> If FHBers bought without adaquate deposit and did not account for interest rates returning to normal at some stage or minor corrections in the property market and as a result have over extended themselves I have no sympathy at all.



The lending calculators tend to assume rates are 2% higher than the non-discounted SVR at the time, so there is a fair bit of fat built into affordability calculations. Given AWOTE is running at > 5% annually, there does seem to be a bit of leeway in the (likely) event of rising interest rates provided the rises are reasonably gradual.

The unemployment rate is the more pertinent measure IMO - some areas have a high proportion of employment concentrated in one or two industries, so a large number of people losing their job at once, concentrated in a single area, would spell disaster for that area's house prices.

Outlying areas that you've mentioned would be more suseptable as well IMO as FHBs tend to use the majority (or all) of their cash reserves in acquiring the property in the first place, so can't survive as long without employment.


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## robots (16 December 2009)

hello,

good evening,

and this out today:

http://www.theage.com.au/business/dovish-reserve-bank-stuns-markets-20091216-kx51.html

you could see this on the wall a mile away, fantastic and must thank the banks for doing a great job for the community

oh yeah, great day

thankyou
robots


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## wayneL (16 December 2009)

robots said:


> hello,
> 
> good evening,
> 
> ...



Which community?

Not savers, that's for sure.


----------



## kincella (16 December 2009)

Robots,
Victoria leading the charge again with new homes...
http://www.theage.com.au/business/property/housing-boom-spreads-20091215-kuk9.html

and apparently Perth is just so hot...in the resi market
cheers


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## robots (16 December 2009)

hello,

thanks Kincella, Victoria doing well as usual thanks to ever body helping out, doing their bit for society

Government letting fellow humans from around the globe join our wonderful community

can always put your money else where if you dont like the deposit rates offered by banks, also debentures and associated type investments (hahahaha beware the small print)

thankyou
robots


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## gfresh (17 December 2009)

Latest (November) figures from Residex. Looks like QLD is becoming the cheapest of the states yet again... Looks a bit similar to late 90's, early 2000's where Sydney and Melb did well, a few years before QLD really took off again. Will be interesting to see if that gap widens, to say Melb being $100k more than Bris. 

http://www.residex.com.au/newsletter/source2009_12bMC.html

Going on their figures at least:

*House Median*

1. Sydney - $617,500
2. Melbourne - $532,000 
3. Perth - $492,500
4. Brisbane - $459,500
5. Adelaide - $392,500

*Unit Median*

1. Sydney - $432,000
2. Melbourne - $403,000
3. Perth - $392,000
4. Brisbane - $363,500
5. Adelaide - $304,500

Also interesting to see price rises tapering off (with the exception of those whacky Melbournians) last month.. interest rate rises finally starting to kick? Or the dropoff in FHB? GDP also lower than expected last quarter, slowed down from last figures also.

2010 will be slower and less growth focused than people expect IMO, after this "relief rally" has worn off.


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## Bill M (18 December 2009)

Just an update from my area of investment, the Northern Beaches in Sydney. We decided to rent out our 80 sqm unit. The agent had the unit open for inspection for 15 Minutes. By the end of the day we had an application in and the tenants moved in last Saturday. I got a 6 Month lease and $420 per week rental. There are no shortage of tenants wanting to rent property in my area.

Just recently they sold a weatherboard 3 br house up here for over $1.4 Million. There is no more vacant land left around this area and this can only mean one thing, that prices will be going up. More people and less supply. Here is a link to some recent activity in my area.

----------------

"Doyle Spillane also sold a classic weatherboard home at 177Ocean St, and only 50m from the beach, recently for a sum believed to be considerably more than $1.4million."

Full story here: http://manly-daily.whereilive.com.au/real-estate/story/why-everyone-wants-to-get-in-on-the-ocean-st-narrabeen/


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## UBIQUITOUS (18 December 2009)

Bill M said:


> Just an update from my area of investment, the Northern Beaches in Sydney. We decided to rent out our 80 sqm unit. The agent had the unit open for inspection for 15 Minutes. By the end of the day we had an application in and the tenants moved in last Saturday. I got a 6 Month lease and $420 per week rental. There are no shortage of tenants wanting to rent property in my area.
> 
> Just recently they sold a weatherboard 3 br house up here for over $1.4 Million. There is no more vacant land left around this area and this can only mean one thing, that prices will be going up. More people and less supply. Here is a link to some recent activity in my area.
> 
> ...





Oh dear....anecdotal evidence? YAWN!!!

Okay, lets level the playing field on this debate:

I bought some $400k worth of BCC stock @ 4cents in September, only to sell in November for 16cents. My 2months profit was $1.2million @ 300%

Property bulls...should I have invested in real estate? Did I do wrong? Well did I? Should I have tried to make a loss so I could write it off against my tax?


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## robots (18 December 2009)

hello,

no you didnt do wrong Ubi, you did what you wanted and if you made a motza then well done, great effort man you cleaned up

similarly, well done to any property owners who have cleaned up, well done

thankyou
robots


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## Airfireman (18 December 2009)

Well done UBIQUITOUS on a 400% profit in shares... please let me know what your next investment will be  

They say that real estate prices double in 6 or 7 years...so if you bought your first home and never moved into another house until you died (say 60 years) then you would have 1000% increase for your investment,,plus a roof over your head 

Tim


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## Bill M (19 December 2009)

UBIQUITOUS said:


> I bought some $400k worth of BCC stock @ 4cents in September, only to sell in November for 16cents. My 2months profit was $1.2million @ 300%
> 
> Property bulls...should I have invested in real estate? Did I do wrong? Well did I? Should I have tried to make a loss so I could write it off against my tax?




BCC, what and who is that? I have never heard of it so I looked it up. It is an oil exploration company based in Houston. It does not pay any dividends and has only been around 2 years or so. You could have just as easily blown your 400K in a failed company. I am not into that sort of risk taking thank you. I am retired and currently live in a nice little house and collect weekly income from a safe investment that will be around for many many years to come. As inflation goes up so will my rental income. You did very well with your profits and I wish you heaps more success but for me I will stick with the investments that have already given me retirement and a relatively safe income, good luck.


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## UBIQUITOUS (19 December 2009)

Guys, thanks, but I must apologise. I forgot to mention that I was making it all up to make a point.

People talk about particular suburbs or particular types of residence performing well, and then using this as evidence that the whole RE sector is performing admirably and worth investing in. 2006 - "Look at Perth boom, RE is the place to be". 2009 "Look at Melbourne boom, RE is the place to be".

So whats so different with extrapolating individual stocks or sectors and applying this to the market as a whole? 

In my opinion the stock market will ALWAYS provide greater wealth for the learned than the RE sector will. Afterall, in Australia, without certain booming sectors in the stock market, there would be no house price appreciation.


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## kincella (19 December 2009)

*melb house prices up 20% year not down 40%*

most of my fellow property investors have moved on,they no longer post here...I dont blame them, all those debates about how prices would fall, all those 'pigs might fly' scenarios the bears were forecasting.....

we all spent so much time, in our attempts to guide them in the right direction.....but all to no avail...
we did not predict a 20%+ rise in a year....but we did suggest modest rises and gave detailed reasoning to support our claims...
so there you go...a vindication....

I came across this from Alan Greenspan, in his book, (this has been my own theory for many years, and I have mentioned it on this forum many times )....

"the wealthiest investors are best at gauging shifts in human psychology, rather than forecasting earnings from Exxonmobile"

hint...so some studies in psychology may be more advantageous in your quest for wealth, and you should become more sceptical of the MSM, if using that media for your research alone.....

extract only.........

What $525,000 can buy you in Melbourne
MARIKA DOBBIN
December 19, 2009 
A MELBOURNE house costs at least $100,000 more than it did a year ago.

The population boom and housing shortage pushed the median price to $525,000 in October, compared with $415,000 last October. The median is the middle value when all sale prices are listed from lowest to highest.

Apartment and unit prices grew more slowly, with a $429,250 median in October, up from $361,000 the previous October.

Price growth for houses- as well as units and apartments - has been greatest in Melbourne's middle band of suburbs 10-20 kilometres from the CBD.

And the Real Estate Institute of Victoria predicts the November median will be up to 10 per cent higher again once the remaining private sales are calculated.

Property adviser Monique Wakelin says the $525,000 median would have bought a modest house in the inner suburbs just two years ago but not any more, except for a few rare cases in the inner west.

''If you did manage to find a house for that money in the inner city, odds are that it will need major structural work and a lot of extra capital spent on it,'' she said. ''You are really looking at an apartment on that budget.''

http://www.theage.com.au/business/property/what-525000-can-buy-you-in-melbourne-20091218-l5vi.html 

note to ubiquitous...
your example....with BCC, is an outright gamble...it is not investing, you could have lost the lost....
as Warren Buffett has stated...his favourite holding period is forever....

there is absolutely no comparison between an investment in property,with an investment in a spec stock.......
that type of comparison lies within the 'pigs might fly' basket.....
you will need a gigantic amount of good luck with your theory to make it work....but the odds are against you by about 2 million to one...
cheers


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## nunthewiser (19 December 2009)

> most of my fellow property investors have moved on,they no longer post here...I dont blame them, all those debates about how prices would fall, all those 'pigs might fly' scenarios the bears were forecasting.....





Blah blah blah ........... You keep whinging at how bad this joint is and whinging about how everyone not posting on this thread but yet you continue to post here ...............

Porquoi ?

No offence intended of course , just intrested in the nuts and bolts of it all.......


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## satanoperca (19 December 2009)

Hi Kincella,

Good to see that you have stated posting again.

The Age article while headline grabbing does not provide any credible sources of its statistics.

Just checking the REIV and RPdata sites and they have medians around $480K a little bit short of the $525 quoted. 

REIV reports Jun qty 2008 $450,000 to October qty 2009 $480,000 -  6.7% increase, not bad by any standards, just cannot see where the $100K increase is. Investors don't need to be worried about detail, The Age told them so.

As for shares giving a greater return lets just have a look at a few that are not spec's and their returns this year if you could have picked the bottom.

JB Hifi 300%
David Jones 400%
WestFarmers 200%
BHP 200%
RIO 300%

Just to pick a few. The difference with shares over property is there cannot be any blurring and manipulation of figures.

Cheers and have a good weekend


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## satanoperca (19 December 2009)

And further to add all it not what it seems and property can be just as speculative as shares.

http://www.smh.com.au/national/tenants-are-being-made-homeless-as-investors-default-on-mortgages-20091207-kffj.html



> Ms Maund said she recently sold some mortgagee in possession apartments. ''They paid $700,000 or $800,000 for them, and then they sold for $500,000,'' she said.
> 
> The general manager of O'Meara Property, Daniel O'Meara, said properties that people had paid $950,000 to buy were now on the market for $350,000.




Wow that is a hair cut.


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## joeyr46 (19 December 2009)

Kincella you are right property has had a run recently (in line with increasing liquidity as always) 
And you are probably sick of hearing 40% loss stories 
Question? Has the bell been rung at the top
News story on TV last week (Main headline news not hidden on property page so to speak) about ten minutes interviewing buyers, prospective buyers and renters.
I know usual junk but everytime I have seen these stories take over as headline news the top is either in or about to be called. Time will tell. 
No it doesn't mean 40% fall may just be a resting place for a few years.
However with debt at the moment falls could be greater than anytime in recent history.
 As for that shortage have yet to see figures to demonstrate just rhetoric to say we need to build so many houses a year and were not acheiving it by a long shot. Same story back in 1990 only to find a huge surplus in 91/92 coupled with a dramatic 45% price drop in outer areas (I'm talking about Brisbane here) even though inner city stayed flat or even moved slightly hire.
Debt higher this time so we will wait and see but these are definitely exciting times to be in the marketplace


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## overule (19 December 2009)

UBIQUITOUS said:


> Guys, thanks, but I must apologise. I forgot to mention that I was making it all up to make a point.
> 
> ...
> ...
> ...




Well, i thought you risked $400K to invest in Shares. 
If you have done so, i would solute you for your courage.

if you ALWAYS pick the right shares. Share markets give you greater returns. Please tell us the secret if you know how or done so!!!


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## overule (19 December 2009)

kincella said:


> *melb house prices up 20% year not down 40%*
> 
> most of my fellow property investors have moved on,they no longer post here...I dont blame them, all those debates about how prices would fall, all those 'pigs might fly' scenarios the bears were forecasting.....




I don't get your point. Those that said property going to crash are properly not property investors.


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## robots (19 December 2009)

UBIQUITOUS said:


> Guys, thanks, but I must apologise. I forgot to mention that I was making it all up to make a point.
> 
> People talk about particular suburbs or particular types of residence performing well, and then using this as evidence that the whole RE sector is performing admirably and worth investing in. 2006 - "Look at Perth boom, RE is the place to be". 2009 "Look at Melbourne boom, RE is the place to be".
> 
> ...




hello,

good afternoon brothers, 

I like this one, why did all the Storm people get squashed then, they were in the share market, on the ride to GREATER wealth apparently

if its so easy why didnt they just ride it out, oops, thats rights the banks only loan 60-70% LVR's because of RISK

RISK of the great unknown, management, boards, regulations, governments, competition, people stealing money

oh yeah, great day

thankyou
robots


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## robots (19 December 2009)

hello,

oh yeah, fantastic end to the year with another weekend with 83% clearance rate

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=652&nav2=162

just amazing, unbelievable, awesome, well done brothers, walk tall

thankyou
robots


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## condog (19 December 2009)

:horse: This debate is like flogging a dead horse...

Both property and shares are great and or poor investments at different points in time....each out performs at differnet times and that depends entirely on which property and which shares are selected....and a multitude of other micro and macro economic factors.....

Clearly some people in here have either pre-concieved ideas or experiences that lead them to believe one is better then the other, and thats their perogative....but, you are wasting your time trying to change other peoples beliefs or convictions....

I suggest put your money where your mouth is and invest in the one you believe in rather then trying to convince others one is better then the other...its a fruitless exercise, achieves nothing and to me at least displays a level of niavity......

Perhaps start discussing exactly which property markets are currently set for exceptional or poor growth and why, exactly which shares are set to under or out perform and discuss reasons why, rather then trying to change each others beliefs or convictions..............that way we all stand to gain from intelligent discussion and debate...


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## Bill M (19 December 2009)

condog said:


> Perhaps start discussing exactly which property markets are currently set for exceptional or poor growth and why, exactly which shares are set to under or out perform and discuss reasons why, rather then trying to change each others beliefs or convictions..............that way we all stand to gain from intelligent discussion and debate...




That is exactly what all the property commentators have been doing all along. With all due respect, people like Robots, Kincella, many others including myself only quote from own experiences. What somebody could have, might have or did on the sharemarket is really of little relevance to this topic, well noted thank you.

Now back to some real experiences. In 1996 I went and looked at a 2 br unit on the Northern beaches in Sydney, it was 160K then. Exactly 6 years later (in 2002) that unit went up for auction and I attended and it sold for 320K. That unit today would be around 400K. The future of Australian property prices is clear, they will head up as they have throughout  the history of our nation.


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## singlefished (20 December 2009)

nunthewiser said:


> Blah blah blah ........... You keep whinging at how bad this joint is and whinging about how everyone not posting on this thread but yet you continue to post here ...............
> 
> Porquoi ?
> 
> No offence intended of course , just intrested in the nuts and bolts of it all.......




It's just a pity Nun that these self professed property experts rely so much on the fabrication of the media and the views of those with vested interest rather than basing their argument on fact...



> *Victorian home prices overstated*
> 
> AVERAGE house prices have been overstated by up to 18 per cent by the real estate industry, *official statistics show*.
> 
> http://www.heraldsun.com.au/news/victoria/victorian-home-prices-overstated/story-e6frf7kx-1225811878623




$480K - REIV 3rd qtr median
$413K - Valuer-General 3rd qtr median

hmmmm....


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## robots (20 December 2009)

hello,

fantastic data singlefished,

so, through the GREATEST financial event since 1929 the world has ever seen the median dropped just over 5%, and is now back over the previous figure prior to GREATEST financial event since 1929

and the all ords? 

great post Bill M

thankyou
robots


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## kincella (20 December 2009)

Satanopera
couple of points....my post was distinctly Melbourne...not Australia, Timbuktoo, or Barnawatha....
...Newcastle is a long way from Melb and a whole lot different...
population of less than 500,000...or 10% of the size, compared to Melb of almost 5 million...its also a working class area...it has its problems with infrastructure....and other problems, relative to the mining industry..
I looked up Nelson Bay as an exercise...
median price for the suburb is 382,000 and for the region its 325,000...
so there appears to have been some 'fun and games' going on, with selling units for 900,000....believe there is more to that story than the article provides...
they were not locals but investors...so a 'pig might fly' in there somewhere..
in relation to the fancy prices...
I dont have the time nor the inclination to research Newcastle....but I recall they are having some large problems....with bottlenecks at the ports, damns, and of course they have the nsw labor party to contend with, and related union problems..
http://www.domain.com.au/Public/SuburbProfile.aspx?mode=buy&suburb=NELSON BAY&postcode=2315

singlefished...and others...
we do not rely on the media...we look around to the neighbour's houses being sold next to ours, and note the increases for ourselves.....far more research goes into our decisions, note improvements and changes to the suburb as a whole etc...
one suburb I invest in, has seen the central CBD expanding at a rapid growth, and the CBD is moving even closer to my houses...
facilities and services are closer, more convenient, which increase the value of my properties...the closer to the city centre, the more expensive the property value.....
however if I were to post my own research and findings on here....you would most likely scotch the idea....hence the reference to media reports....

and selective articles to suit your agenda...REIV stated......
"Their median price is always lower than ours for the very simple reason that they get every single property sale in Victoria and we don't," he said.

almost no one would make reference to the valuer generals list of house prices....which covers every tiny hamlet , in every corner of the state...to arrive at that figure....
only Melbourne was used in my post....not Bendigo, Ballarat or any other regional city or town...
I could show you houses in vic for prices of 60-70,000, but you may not be interested in living, or investing there...

Interesting , all the while you spend here debating and suggesting figures are fudged, ponzi schemes abound etc etc etc....the market is rolling along and getting further away from you.
I saw an article this week...WA has gone gang busters, they are getting $3000pw for a 2 br fibro shack..in one of the mining towns...
some lucky PI over there....
some of you need to up the ante ...if you really want to truly debate the housing market....
and like any other market, not everyone is a winner, and some treat it as a gamble...but that is more of an attitude, an affliction...
the majority just look for a suitable roof over their heads to match their lifestyle


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## Macquack (20 December 2009)

kincella said:


> and *selective articles* to suit your *agenda*...REIV stated......
> "Their median price is always lower than ours for the very simple reason that they get every single property sale in Victoria and we don't," he said.




Kincella, the Valuer-General (Victoria) figures are not selective, the REIV figures are selective. 

The figures in the article refer to the whole state of Victoria, so the question is not about regional Victoria dragging down the average/median house prices but rather the inaccuracy of the REIV figures.

Is it an "agenda" to want to know the truth?


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## UBIQUITOUS (20 December 2009)

robots said:


> hello,
> 
> good afternoon brothers,
> 
> ...




Risk? You can say that again Robots. Did you hear about that unfortunate group of people who bought homes in Lyndhurst only to find out that a landfill site is being planned for there, and the banks still lent to them. I guess they are the real estate equivelent of Storm Financial investors!

http://www.epa.vic.gov.au/waste/lyndhurst_landfill.asp

There's risk everywhere, but if you look carefully at the stock market you can find stocks which are pretty much derisked and have an upside that NO property investment can give. Only for the learned though Robots!


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## UBIQUITOUS (20 December 2009)

singlefished said:


> It's just a pity Nun that these self professed property experts rely so much on the fabrication of the media and the views of those with vested interest rather than basing their argument on fact...
> 
> 
> 
> ...




Thanks for that link Singlefished. It just goes to show what many of us knew all along i.e the data is nothing but a con scheme to whip up some more froth on this bubble.


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## jbocker (20 December 2009)

The Henry review apparently expores the possiblility of a land tax that will very likely tax the family home. Apparently it will replace the state based stamp duties. Didnt I read that same argument when the GST was introduced.
Should make for some interesting debate. 
But I dont think Rudd and Swan would want to implement such a political timebomb in an election year.

There is also talk of a congestion tax for vehicles driven in overcrowded city centres.  Interested to know how they implement that. Makes for increases on property values close to public transport.


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## robots (20 December 2009)

UBIQUITOUS said:


> Thanks for that link Singlefished. It just goes to show what many of us knew all along i.e the data is nothing but a con scheme to whip up some more froth on this bubble.




hello,

since you like the valuer's general data could someone please post the table up,


thankyou
robots


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## UBIQUITOUS (20 December 2009)

robots said:


> hello,
> 
> since you like the valuer's general data could someone please post the table up,
> 
> ...




I don't like them Mr Bot. Those valuations are still way over the mark. Poor Joe Public


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## Dowdy (20 December 2009)

robots said:


> hello,
> 
> fantastic data singlefished,
> 
> ...




the market didn't bottom in 1929. It rebounded after the 29 crash and bottomed in 32 but the depression lasted way after WW2 ended.




The problem with hosing investors is that they don't look at the big picture. You may of doubled your money in 10years but that money hasn't gained value. Your money that you *think* you made a profit still only buys you the same amount of land/house 10years later.


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## wayneL (20 December 2009)

Dowdy said:


> The problem with hosing investors is that they don't look at the big picture. You may of doubled your money in 10years but that money hasn't gained value. Your money that you *think* you made a profit still only buys you the same amount of land/house 10years later.




Only if you paid cash.

If you levered it and didn't have to chuck in too much over your deposit, you're quids in.

In very basic terms.

1/

You've got 100k and buy one house for cash, it doubles over 10 years.

You've got $200,000 equity plus the income received.

2/ 

You buy two 100k houses with $50k deposit each and the rents cover the mortgages and costs, they both double over the ten years.

Now you've got $300,000 equity plus any principal paid off and income coming in due to rent increases.

Inflation works for you when levered. The only caution is not to become over committed.


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## Mofra (21 December 2009)

Macquack said:


> Kincella, the Valuer-General (Victoria) figures are not selective, the REIV figures are selective.
> 
> The figures in the article refer to the whole state of Victoria, so the question is not about regional Victoria dragging down the average/median house prices but rather the inaccuracy of the REIV figures.
> 
> Is it an "agenda" to want to know the truth?



The point is moot if the valuer general figures are also showing returns above the inflation rate - the question is are we comparing like with like?


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## joeyr46 (21 December 2009)

Dowdy said:


> the market didn't bottom in 1929. It rebounded after the 29 crash and bottomed in 32 but the depression lasted way after WW2 ended.
> 
> 
> 
> ...




Your right but that was only the stockmarket real estate continued down till around the 40's depending on location and some properties never regained were they were in 29/30 till 68 but thats history and it can't happen again (we can control it), or is it "this time it's different"
Trouble with all the property bulls they say were wrong because it's gone up I don't know about anyone else but I'd say you have to allow a 5 year time frame at least for a correction anything else is just a correction of last couple of years not of the movement since 1972.


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## So_Cynical (21 December 2009)

UBIQUITOUS said:


> Oh dear....anecdotal evidence? YAWN!!!




Some more anecdotal evidence...my mums been trying to sell her house for 9 months now, i was on the phone with her this afternoon and she's going to drop the price again this month for the last time, the price has come down about 15% from the first list price.

Keep in mind my mum has made millions buying and sell and sometimes developing real estate...she's had prob 20 houses over the last 30 years, and she has never had any trouble like this selling a house..she's a little dumbfounded by it all.


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## joeyr46 (21 December 2009)

So_Cynical said:


> Some more anecdotal evidence...my mums been trying to sell her house for 9 months now, i was on the phone with her this afternoon and she's going to drop the price again this month for the last time, the price has come down about 15% from the first list price.
> 
> Keep in mind my mum has made millions buying and sell and sometimes developing real estate...she's had prob 20 houses over the last 30 years, and she has never had any trouble like this selling a house..she's a little dumbfounded by it all.




Move it to Melbourne


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## So_Cynical (21 December 2009)

joeyr46 said:


> Move it to Melbourne




She reckons Melb is real estate hell...who the hell would pay good money to live there.


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## Glen48 (22 December 2009)

Your Mum has to realise the R E market has nothing to do with is going on at present she is trying to sell a consumable item in credit bubble that just about to pop.. Tell he to sell at any cost not follow the market down .


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## Bill M (22 December 2009)

So_Cynical said:


> Keep in mind my mum has made millions buying and sell and sometimes developing real estate...she's had prob 20 houses over the last 30 years, and she has never had any trouble like this selling a house..she's a little dumbfounded by it all.




Something doesn't sound right here, what suburb and what price is the house? Is it on the market at a fair price or is she aiming a bit high? Has it got stale? This can happen too. I'm sure your Mum has the real answers, can you share them with us?

It also happened to a mate of mine when the GFC was in full fling but he just ended up renting it out and got very good rent for it. Since then the agents have been hounding him to put it back on the market but he is content renting it out for the time being.


----------



## wayneL (22 December 2009)

So_Cynical said:


> Some more anecdotal evidence...my mums been trying to sell her house for 9 months now, i was on the phone with her this afternoon and she's going to drop the price again this month for the last time, the price has come down about 15% from the first list price.
> 
> Keep in mind my mum has made millions buying and sell and sometimes developing real estate...she's had prob 20 houses over the last 30 years, and she has never had any trouble like this selling a house..she's a little dumbfounded by it all.




From possibly the hottest real estate agent in the world.

Why won't my house sell

Houses go stale.


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## So_Cynical (22 December 2009)

Bill M said:


> Something doesn't sound right here, what suburb and what price is the house? Is it on the market at a fair price or is she aiming a bit high? Has it got stale? This can happen too. I'm sure your Mum has the real answers, can you share them with us?
> 
> It also happened to a mate of mine when the GFC was in full fling but he just ended up renting it out and got very good rent for it. Since then the agents have been hounding him to put it back on the market but he is content renting it out for the time being.




House is one street back from the beach, has no ocean views but has super easy access to the beach, its in a Mid sized beach town in WA, POP over 10.000 (Rio and i believe FMG do FIFO from this town...so there's plenty of money about) there's a boat ramp, pub and very small shopping centre within 170 meters...house is about 3 years old, 4 bedroom, central Aircon, double garage, in a cul de sac with in-ground solar heated pool, large shed, its got everything....its a Gorgeous house.


I think its a little over priced for the market and that's because that's the way mums sold all her houses over the last 30 years....The GFC hasn't affected her and so is sorta irrelevant in her thinking, she's never seen a real estate bear market, she didn't even link the mining boom and real estate prices a few years ago and still struggles to see the link.

The last time i looked at the house online there was 3 or 4 pages of listings in her price range so plenty of competition...lots of sellers and no buyers, anyway she's going to Nth America for a 8 week holiday next year and then straight back up north for 4 months in Broome etc so she will rent it if it hasn't sold by February.



wayneL said:


> From possibly the hottest real estate agent in the world.
> 
> Why won't my house sell
> 
> Houses go stale.



 After 20 odd houses its a given she knows how to sell a house, the house has been on and off the market in between agents....over the years she's built many spec houses and always builds her own houses....my mums no real estate nub.


----------



## wayneL (22 December 2009)

So_Cynical said:


> After 20 odd houses its a given she knows how to sell a house, the house has been on and off the market in between agents....over the years she's built many spec houses and always builds her own houses....my mums no real estate nub.




Not suggesting she's a noob, but given the market conditions, there is still only 3 reasons a house won't sell.

If it's a little overpriced, there's the answer.  

Simples.


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## Bill M (22 December 2009)

So_Cynical said:


> House is one street back from the beach, has no ocean views but has super easy access to the beach, its in a Mid sized beach town in WA, POP over 10.000 (Rio and i believe FMG do FIFO from this town...so there's plenty of money about) there's a boat ramp, pub and very small shopping centre within 170 meters...house is about 3 years old, 4 bedroom, central Aircon, double garage, in a cul de sac with in-ground solar heated pool, large shed, its got everything....its a Gorgeous house.
> 
> 
> I think its a little over priced for the market and that's because that's the way mums sold all her houses over the last 30 years....The GFC hasn't affected her and so is sorta irrelevant in her thinking, she's never seen a real estate bear market, she didn't even link the mining boom and real estate prices a few years ago and still struggles to see the link.
> ...



Thanks for the response, sounds nice. I can't add anything but I'm sure she will play out the game to her satisfaction in the end, good luck.


----------



## awg (22 December 2009)

satanoperca said:


> And further to add all it not what it seems and property can be just as speculative as shares.
> 
> http://www.smh.com.au/national/tenants-are-being-made-homeless-as-investors-default-on-mortgages-20091207-kffj.html
> 
> ...






kincella said:


> Satanopera
> 
> ...Newcastle is a long way from Melb and a whole lot different...
> population of less than 500,000...or 10% of the size, compared to Melb of almost 5 million...its also a working class area...it has its problems with infrastructure....and other problems, relative to the mining industry..
> ...




Nelson Bay area is somewhat of an anomaly, in that many of the rentals are holiday units, in fact, there was an oversupply of older units and prices had been very soft for at least 5 years ( for older units).

Then a glut of new glitzy higher rise units hit the market all at once, just before GFC. A very brief bubble occured... it has now popped, as the oversupply of older units is still not fully cleared, holiday rentals are only good for short times and the local fulltime rents are relativly low. Many retirees live there.

Its no surprise that some firesales are taking place at the top end of the unit market, as cashflows could not cover costs.

Dont think there has been any problems in the free standing house sector


----------



## kincella (23 December 2009)

*FHB's Area a lot more savvy than the average Bear*

I say congratulations to all these savvy FHB's, they are not falling into a trap, their are actually a lot smarter than most bears gave them credit for...

buying lower valued properties, toning down their lifestyle, putting money aside....they will not be caught out, or a default risk....

in fact they are doing the exact opposite, to the bears scenario's on here past 2-3 years or more....

I would like to think some of them followed my advice, since this is exactly the advice I suggested...except for the low number of viewers on this forum...
so there must be a lot of mums and dads out there, who gave them similar advice....

...........................................

Canny first buyers want a home rather than a statement 
From: AAP December 23, 2009 4:07AM 

 POTENTIAL home buyers have become more canny with their money because of the economic downturn, searching for cheaper and smaller homes further from city centres, a new survey has found. 

Research by Bankwest-Mortgage and Finance Association of Australia (MFAA) found that nearly half (47.9 per cent) of first time buyers are now looking to purchase a cheaper property than they originally intended to break into the housing market.

"The financial crisis has changed the aspirations of home buyers, effectively downsizing the great Australian dream,'' MFAA CEO Phil Naylor said, releasing the findings today.

About a third (32.3 per cent) of the 850 people surveyed said they were looking for a smaller property, while 24 per cent were seeking out an older property rather than moving to a new home, and 31.3 per cent said they were looking for properties further from city centres.

"While Australia has the largest new home sizes, it seems first time buyers are turning their back on the McMansion dream,'' Mr Naylor said.
"(They) are looking at buying a home instead of a super-sized property that makes a statement about their lifestyle or prestige.''

The survey also found 43.8 per cent of first time buyers are toning down their lifestyle and putting money aside in case the economy deteriorates.

"In contrast to claims that first time buyers are likely to default on their loans as interest rates increase, these figures suggest ... people are more strategic than they are given credit for,'' Bankwest head of mortgages Dean Gillespie said.

Just over two thirds (67.2 per cent) of renters say renting is too expensive and 40.3 per cent they feel stuck in a rental rut.

Only one in five renters said they were happy to keep renting so they could maintain their current lifestyle and avoid sacrificing home size, location and proximity.

"Some renters seem perfectly happy to continue renting, but they are clearly still in the minority,'' Mr Gillespie said. 

http://www.news.com.au/national/can...than-a-statement/story-e6frfkvr-1225812976793


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## satanoperca (23 December 2009)

The title of above linked article :



> McMansions out of favour after grant slashed




So FHB are looking at buying less expensive property because they are smart?

The title says it all, grant slashed and interest rates increasing, result:  lending capacity reduced so have to look for cheaper properties.

Pretty much a no brainer.

Also, I think you will find that the average FHB mortgage increased this year which was the direct result of the increase of the FHBG.

When are govnuts going to govern and stop wasting tax payers money propping up industries. Better schools, health care, public infrastructure is what is required not artificially inflated home prices.

Beautiful day in Melbourne today. Everyone enjoy.


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## Gerkin (23 December 2009)

I would just like to thank the Federal Labor & Victorian Labor Government for paying m $32K for me to build a property.


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## wayneL (23 December 2009)

Gerkin said:


> I would just like to thank the Federal Labor & Victorian Labor Government for paying m $32K for me to build a property.



You are thanking the wrong people.

Thank the taxpayer, it is they who have paid you.


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## joeyr46 (23 December 2009)

Gerkin said:


> I would just like to thank the Federal Labor & Victorian Labor Government for paying m $32K for me to build a property.




Your thanking the wrong people it's not their money, it's the taxpayers money and I certainly have never given them the right to waste it (not that your to blame) And at some point we will want it back so be prepared to pay it back in one way or another


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## wayneL (23 December 2009)

joeyr46 said:


> Your thanking the wrong people it's not their money, it's the taxpayers money and I certainly have never given them the right to waste it (not that your to blame) And at some point we will want it back so be prepared to pay it back in one way or another



SNAP!


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## noirua (23 December 2009)

Australia needs new cities instead of expanding the present ones.  At some stage a city needs to be built inland with all the necessary desalination plants. More money should be spent on upgrading South Australia and the towns served by the Ghan.


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## Nyden (23 December 2009)

noirua said:


> Australia needs new cities instead of expanding the present ones.  At some stage a city needs to be built inland with all the necessary desalination plants. More money should be spent on upgrading South Australia and the towns served by the Ghan.




How far inland though? Nobody _really_ wants to live in the desert. And, I simply can't envision any city being built out there. Las Vegas, you say? Well, it's my understanding that irrigation allowed that city to prosper, but we have such a shortage of water in Australia ... surely what little we have couldn't be pumped out there?


----------



## cutz (23 December 2009)

Gerkin said:


> I would just like to thank the Federal Labor & Victorian Labor Government for paying m $32K for me to build a property.




Actually it was a disservice,

That 32K was capitilized into a higher property price so it's the banks that will be thanking you, in particular the big four.


----------



## Gerkin (23 December 2009)

cutz said:


> Actually it was a disservice,
> 
> That 32K was capitilized into a higher property price so it's the banks that will be thanking you, in particular the big four.




Your wrong.

I already had the land.

I just ad to find a builder. And after pricing for 2 years, i can tell you prices actually came down due to competition.


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## Gerkin (23 December 2009)

joeyr46 said:


> Your thanking the wrong people it's not their money, it's the taxpayers money and I certainly have never given them the right to waste it (not that your to blame) And at some point we will want it back so be prepared to pay it back in one way or another




Okay. I will thank you. Please pass on my thanks to your extended family for allowing me  32K to fund my home.

What a great country we live in, not even means tested

We are all going to love paying this back via taxes, me, you,  your next door neighbour.


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## Gerkin (23 December 2009)

Also, on another note, all my tradie mates are hapy as pigs in sh*t.. They are on track for a 150K year.


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## prawn_86 (23 December 2009)

What was the payment/subsidy you got? Do you have a link for it?


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## Gerkin (23 December 2009)

Prawn.
21K from Federal Government as FHOG & Boost due to Recession for building contract up until 30 Sept.
11K from Victorian State Govt for building a new house.

Sorry no links, try respective SRO, 

interrsting enough if you built in rural Vic, your grant was 36K


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## jancha (24 December 2009)

Nyden said:


> How far inland though? Nobody _really_ wants to live in the desert. And, I simply can't envision any city being built out there. Las Vegas, you say? Well, it's my understanding that irrigation allowed that city to prosper, but we have such a shortage of water in Australia ... surely what little we have couldn't be pumped out there?




There certainly isn't shortage of water at the top end.
Was thinking about buying a property up in Darwin as i'm currently renting atm & if anyone who has lived or stayed here would know it is one of the most expensive cities to live in. Rent & house prices go hand in hand. 
An average unit is around 500k - 600k ( 2-3 bedrooms ) with a rental return of between $650 - $750 per week.
Anyway i was reading an article in the paper that the local Governments aim is to make Darwin the most affordable city within a decade.
Part of that criteria would be making housing more affordable true?
My question is so why would you want to buy an apartment or unit at the current prices when the government is taking steps in making them more affordable. 
It's a bit like buying a share at it's peak. Any thoughts.
By the way wasn't one of the governments sweeteners for the introduction of the GST to scrap stamp duty? 4.5%


----------



## noirua (24 December 2009)

Nyden said:


> How far inland though? Nobody _really_ wants to live in the desert. And, I simply can't envision any city being built out there. Las Vegas, you say? Well, it's my understanding that irrigation allowed that city to prosper, but we have such a shortage of water in Australia ... surely what little we have couldn't be pumped out there?




Not correct though. There is a lot of water in South Australia's sub-bitumous coal, about 16%. Several desalination plants would be needed. Though there is Lake Phillipson that indicates just how much water is available in the outback.
Unfortunately it is a longway from Canberra and SA is seen more for future diesel from coal plants.

At the moment there is the new railway, listed as one of the wonders of the world in 2004. It needs to be taken more seriously by Rudd and co who appear, at times, to think Australia has only three States.


----------



## joeyr46 (24 December 2009)

Gerkin said:


> Prawn.
> 21K from Federal Government as FHOG & Boost due to Recession for building contract up until 30 Sept.
> 11K from Victorian State Govt for building a new house.
> 
> ...




Well so glad we only had to fork up 21 and the victorians shouted the rest


----------



## Nyden (24 December 2009)

noirua said:


> Not correct though. There is a lot of water in South Australia's sub-bitumous coal, about 16%. Several desalination plants would be needed. Though there is Lake Phillipson that indicates just how much water is available in the outback.
> Unfortunately it is a longway from Canberra and SA is seen more for future diesel from coal plants.
> 
> At the moment there is the new railway, listed as one of the wonders of the world in 2004. It needs to be taken more seriously by Rudd and co who appear, at times, to think Australia has only three States.




That would make for some *very* expensive water, though - wouldn't it? I could be wrong, but at least from my perspective - you couldn't pay me enough to live out there. Depending on where the city was, just imagine the heat. Certainly not for me, and perhaps certainly not for any sort of real non-mining business?

Most folk want to be near the coast, perhaps an unrealistic expectation? You bet - but that doesn't mean it's going to change any time soon.


----------



## prawn_86 (24 December 2009)

Nyden said:


> Most folk want to be near the coast, perhaps an unrealistic expectation? You bet - but that doesn't mean it's going to change any time soon.




I think you mean most _city_ folk. I know thousands of people who are happy living inland near a river/lake/other body of water.


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## Gerkin (24 December 2009)

joeyr46 said:


> Well so glad we only had to fork up 21 and the victorians shouted the rest




Well thats partly true, the state gov revenue is made up of a mixture of things inclding state land taxes, stamp duties and GST revenues it recieves from the Federal Government.
So you did infact help me out.


----------



## joeyr46 (24 December 2009)

Gerkin said:


> Well thats partly true, the state gov revenue is made up of a mixture of things inclding state land taxes, stamp duties and GST revenues it recieves from the Federal Government.
> So you did infact help me out.




I knew that,  just glad we could help
As someone else said I also thought Stamp duty supposed to be scrapped after GST can you recall if that was correct or not


----------



## Nyden (24 December 2009)

prawn_86 said:


> I think you mean most _city_ folk. I know thousands of people who are happy living inland near a river/lake/other body of water.




Yes, but isn't that the sort of folk one would expect to find ... in a city? I thought we were talking about building a proper city inland here. You know, one with skyscrapers and the like. 

Perhaps I've misinterpreted what was suggested, though.


----------



## prawn_86 (24 December 2009)

Nyden said:


> Yes, but isn't that the sort of folk one would expect to find ... in a city? I thought we were talking about building a proper city inland here. You know, one with skyscrapers and the like.
> 
> Perhaps I've misinterpreted what was suggested, though.




If there was a large body of water nearby (like a lake or river) i dont see why anyone would be opposed to living inland


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## Gerkin (24 December 2009)

joeyr46 said:


> I knew that,  just glad we could help
> As someone else said I also thought Stamp duty supposed to be scrapped after GST can you recall if that was correct or not




I did remember hearing something about it, however if it were to be scrapped, it would have to be made up elsewhere.


----------



## jancha (24 December 2009)

Gerkin said:


> I did remember hearing something about it, however if it were to be scrapped, it would have to be made up elsewhere.




Whats that got to do with the price of eggs?
If there were no stamp duty on houses the market would be more free flowing.


----------



## Gerkin (24 December 2009)

jancha said:


> Whats that got to do with the price of eggs?
> If there were no stamp duty on houses the market would be more free flowing.




We were referring to taxes an Government revenues from the last few posts.


----------



## joeyr46 (24 December 2009)

jancha said:


> Whats that got to do with the price of eggs?
> If there were no stamp duty on houses the market would be more free flowing.




Why would it be more free flowing it is just another cost factor like inspections application fees and conveyancing fees and if only a small deposit mortgage insurance


----------



## jancha (24 December 2009)

joeyr46 said:


> Why would it be more free flowing it is just another cost factor like inspections application fees and conveyancing fees and if only a small deposit mortgage insurance




Conveyancing & inspection costs don't add up to 30k for one thing.
When buying a property where your jobs sends you for eg. you have to consider the 30k in stamp duty. Say things didn't work out with the job & you had to sell & move on. You would lose 30k unless you picked up a bargain. 
I think less people would rent & more would buy which in that case it would free up the market.


----------



## explod (24 December 2009)

Nyden said:


> Yes, but isn't that the sort of folk one would expect to find ... in a city? I thought we were talking about building a proper city inland here. You know, one with skyscrapers and the like.
> 
> Perhaps I've misinterpreted what was suggested, though.





Waste of time and thought.   A decent city to take the strain off Melbourne for example needs to be on the sea and have a deep sea port.   Shipping access gives the grunt required to sustain it.

Portland in Western Victoria joined to Warrnambool would do the job and what a lovely bit of coast and rich land nearby too.   When I sit in the chocking traffic on the Monash Freeway I think of the concept all the time, why does the penny not drop on a few more.


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## joeyr46 (24 December 2009)

jancha said:


> Conveyancing & inspection costs don't add up to 30k for one thing.
> When buying a property where your jobs sends you for eg. you have to consider the 30k in stamp duty. Say things didn't work out with the job & you had to sell & move on. You would lose 30k unless you picked up a bargain.
> I think less people would rent & more would buy which in that case it would free up the market.




Yes from that point of view and then to sell there is the agents fee$15000 plus depending on price $500000 property stamp duty legal fees and etc and commission thats approx 10% 
2 things stand out first the state governments can't afford there to be even a slow down in sales let alone a fall in prices
secondly if someone is forced to sell and accept an offer say 10% lower than they paid they are $100000 out of pocket roughly 
Dont know that it would free up the market but it certainly is in our best interests as a society for us all to own our own home and not give the wasteful state governments money


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## satanoperca (27 December 2009)

> Aussies $1.2 trillion in debt






> Reserve Bank figures show mortgage, credit card and personal loan debts now stand at $1.2 trillion, up 71 per cent from just five years ago



http://au.news.yahoo.com/thewest/a/-/national/6623991/aussies-1-2-trillion-in-debt/

Property boom has been a direct result of a massive increase in private debt.

How much more debt can Aussie households take on before it goes pop?

2010 will certainly be a interesting year for this asset class.

What will the govnuts do to keep the market afloat?

How will the govnuts pay back the stimulus and how will this effect consumption and the greater economy?

Cheers


----------



## cutz (27 December 2009)

Yeah satanoperca,

It's a very unsettling situation, personally i think we are sitting on a knife edge.

No crash and the debt situation will keep spiraling out of control, a crash happening now will also cause significant destruction, maybe even a few banks will feel the pain.

But I can see how easy it is to get caught up in it all, the property market is appearing to defy gravity and what's the bet that many have been sitting on the sidelines waiting for a property market correction now giving up and jumping in.

Interesting times indeed.


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## Soft Dough (27 December 2009)

satanoperca said:


> http://au.news.yahoo.com/thewest/a/-/national/6623991/aussies-1-2-trillion-in-debt/
> 
> Property boom has been a direct result of a massive increase in private debt.
> 
> ...




but we are different.

We have a prime minister who will continue to bail out housing as his political future depends on it.


----------



## Gerkin (27 December 2009)

Okay, if the debt bubble popped, what will happen to the rental property market.

As there is net + migration to Melbourne, the rental market will still be quite demanding as these people have to live somewhere. Therefore the rental yields cold possibly be forced up?

There is a complete difference to America. They had an oversupply of housing. Melbourne doesn't.

Also, when interest rates hit that 8.5% some 18 months ago, it only forced some people to sell, so if it hits again or go higher, it will get rid of the botom tier of people only.

Australians are very proud when it comes to keeping there property.


----------



## cutz (27 December 2009)

Gerkin said:


> As there is net + migration to Melbourne, the rental market will still be quite demanding as these people have to live somewhere.




Where is the hard evidence that migrant inflow is contributing to the housing bubble, sure the REIV uses this line as an explanation to why house prices are spiraling out of control but where is the evidence ?

Perhaps rampant speculation coupled with easy credit is the major contributing factor.

Take care out there, sometimes we seek what we wanna hear.


----------



## Beej (27 December 2009)

satanoperca said:


> http://au.news.yahoo.com/thewest/a/-/national/6623991/aussies-1-2-trillion-in-debt/
> 
> Property boom has been a direct result of a massive increase in private debt.
> 
> ...




Ah yes that article is a good one - quotes our old friend Associate Professor Steve Keen, who is actually a lecturer at UWS, not UNSW as the article states.

Regardless, when looking at debt, shouldn't you also look at assets?? (Ie compute level of gearing, as you would for a company/stock you were looking at), and also revenue/income, which tells you the capacity of people to service their debt?

Assets: Australian households own just under $6B worth of assets (property, superannuation, shares, cash in the bank). So the current household debt level of $1.2B gives an average LVR of just over 20%. Most would actually consider that pretty conservative if you were looking at a company. In fact super alone at $1.2T could pay off 100% of our private debt in an instant if we needed it to. As for income, Australian households earn something around $700B per year in income. That's more than enough income to comfortably service the current private debt isn't it? Even at 10% interest the interest bill would be $120B/year = 17% of total household income? At current interest rates it takes less than 10% of our income to cover interest on average.

Additionally,gross/nominal private debt in modern times is likely to have been inflated due to structural factors that actually cause many people (myself included) to "appear" to carry more debt than is the reality. For example, currently I have a novated lease vehicle through my employer, that counts as private debt on the RBA books. The reality is that I only have finance on the new car I bought for tax purposes as it ends up making the car cheaper vs paying with cash due to distortions in our stupid tax system in AU. Next year I'll pay the lease residual in full. In the meantime the cash is sitting in the bank, meaning from a balance sheet perspective the net loan figure goes to zero, yet the gross amount (value of the car) still counts in the 100.4% of GDP RBA figure that everyone likes to get all panicy about! 

Same goes for credit cards. People like me pay for everything on credit, earn FF points, get 55 days interest free, then pay the balance in full. I'd average anything from $3k up to $10k+/month in CC "borrowing" due to this - as I also put all my business travel expenses and so on (which are re-imbursed in full) on the card as well.

Similarly, for the past 10-15 years I have always maintained various equity manager loan accounts (for significant amounts) against my properties. Even if these are actually at zero balance (as they often have been), the full amount still counts in the national debt figures, and in other cases there have been loan accounts that maintain a high loan balance, but have associated and very healthy offset accounts, but again the cash in the offset accounts (as an asset) are not included in the gross debt figure being discussed, so the gross debt is counted in the RBA number, rather than the net (Ie, loan outstanding minus offset account cash). Also, I never actually discharge my mortgage facility, even when they are technically paid off in full, and even when I've moved PPOR etc (you change house, keep the same loan), as that way I just keep the loans going and have capital available for other purposes (say renovation projects or other investments) when required at the stroke of a few keys on the computer, without the need to apply for any new loans. I am sure many people operate in a similar fashion. This approach can be very conservative, in that the net debt position (based purely on cash in the bank vs loan account values only, not even counting asset values) can often be zero, even with that large gross debt number "on the RBA stat books" causing people like Steve Keen to fret. In the past only the very wealthy had access to such finance structures from the banks, but this is not the case any more, and I see that as a "good thing" if used wisely.

So I just don't buy the Steven Keen "panic" about current private debt levels. I think there are benign systemic issues such as those I provide examples of above, in the way finance has changed in modern times, that are in part the reason why the gross numbers have grown in the past 5 years.

Cheers,

Beej


----------



## joeyr46 (27 December 2009)

Soft Dough said:


> but we are different.
> 
> We have a prime minister who will continue to bail out housing as his political future depends on it.




His political future does depend on it. when the bubble bursts there is no way we have the funds to bail out people caught in it 
The worst thing is he guaranteed bank deposits and allowed banks to lend recklessly mainly into mortgages (because there safe)instead of into self liquidating loans which produces something for the economy.
as Satan says we are probably past the point of no return but just when it becomes apparent to the mainstream is anyone's guess


----------



## bellenuit (27 December 2009)

Beej said:


> Assets: Australian households own just under $6B worth of assets (property, superannuation, shares, cash in the bank).




Are you using US Billion (1,000,000,000)?  That would seem exceedingly low, just $714 per household. This assumes 21M people and average household size of 2.5 people. English billion would seem more correct, but still seems a bit high at $714K per household


----------



## bellenuit (27 December 2009)

Beej said:


> Assets: Australian households own just under $6B worth of assets (property, superannuation, shares, cash in the bank). So the current household debt level of $1.2B gives an average LVR of just over 20%. Most would actually consider that pretty conservative if you were looking at a company. In fact super alone at $1.2T....




Beej, I'm confused by your figures. If total assets is $6B and that includes super, how could super be a higher figure of $1.2T?


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## Beej (27 December 2009)

bellenuit said:


> Are you using US Billion (1,000,000,000)?  That would seem exceedingly low, just $714 per household. This assumes 21M people and average household size of 2.5 people. English billion would seem more correct, but still seems a bit high at $714K per household






bellenuit said:


> Beej, I'm confused by your figures. If total assets is $6B and that includes super, how could super be a higher figure of $1.2T?




Sorry total household assets should be $6T (not $6B - just a typo on my part) - thanks for pointing that error out! In summary:

Total private debt:     $1.2T
Total private assets: ~$6T
Total private income: ~$700B

Cheers,

Beej


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## Soft Dough (27 December 2009)

Beej said:


> Regardless, when looking at debt, shouldn't you also look at assets?? (Ie compute level of gearing, as you would for a company/stock you were looking at), and also revenue/income, which tells you the capacity of people to service their debt?




You can, but some asset classes in Australia are at historically high levels eg housing, and your argument is exceptionally simplistic and does not take into effect a snowballing effect whereby people with high LVR are forced to sell, dropping prices and causing the next level of asset owner to sell etc.


----------



## So_Cynical (27 December 2009)

Soft Dough said:


> We have a prime minister who will continue to bail out housing as his political future depends on it.




Don't know about that....Labor's political future is fairly secure with the coalition in full self destruct mode. 



Gerkin said:


> Okay, if the debt bubble popped, what will happen to the rental property market.
> 
> As there is net + migration to Melbourne, the rental market will still be quite demanding as these people have to live somewhere. Therefore the rental yields cold possibly be forced up?




Some anecdotal opinion...i work with a few Indian guys who came here as students and payed big money for degrees in accounting and engineering, these guys work as casual labourers in a warehouse because they cant get jobs as engineers and accountants.

There all pretty pissed off about it and i get the felling that at some point they will give up and go home (there parents are all loaded) now if these guys and there situation is representative of the wider community, its not hard to see rental demand easing as they start to pack up and leave.


----------



## wayneL (27 December 2009)

So_Cynical said:


> Don't know about that....Labor's political future is fairly secure with the coalition in full self destruct mode.



Labor's future is in figuring out its own method of self destruction. Meanwhile, the Libs are "rebooting"

It is an impossibility for Labor's political future to be secure. Social Democratic tax and spend ALWAYS fails in the end.


----------



## Dowdy (27 December 2009)

Gerkin said:


> Okay, if the debt bubble popped, what will happen to the rental property market.
> 
> As there is net + migration to Melbourne, the rental market will still be quite demanding as these people have to live somewhere. Therefore the rental yields cold possibly be forced up?
> 
> ...





If the housing market pops, rental prices wont increase. I'm sure investor will try to increase their rent but people wont pay it. People are only willing to pay what they can afford. If they couldn't pay their home and lose it, what makes you think they can afford high rental. Worst case scenario, the government will put price ceilings on rent and that will cause all sorts of chaos and corruption in the rental market.

Melbourne doesn't have an oversupply, but an over debt which can be just as bad. 
If the government clamps down on immigrants then there will be an oversupply



> Australians are very proud when it comes to keeping there property.




I think it's more arrogance. They believe it's their RIGHT to own a home, rather then the result of hard work and saving. These first home buyers getting a property in a new estate, rather then starting out in a small unit/flat, and buying everything on interest free.


----------



## wibbly pig (27 December 2009)

Gerkin said:


> Australians are very proud when it comes to keeping there property.




So were many North Americans and Europeans before their property bubble spectacularly popped. I think if you're depending on this then you're relying on blind faith.


----------



## Beej (27 December 2009)

Soft Dough said:


> You can, but some asset classes in Australia are at historically high levels eg housing, and your argument is exceptionally simplistic and does not take into effect a snowballing effect whereby people with high LVR are forced to sell, dropping prices and causing the next level of asset owner to sell etc.




How is it "exceptionally simplistic" to consider several data points and the whole picture rather than focus on a single ratio (gross debt/GDP) and expect to find the explanation of past/present and future there?

Anyway my main point was to show how there are reasons why the "simple" debt/GDP ratio may have increased in the past 5-10 years, without it necessarily implying a corresponding change in actual household gearing or net debt levels. You have to look at the whole picture to get a read on that (household super, savings, finance structure/facilities used, distortions of the tax system that can promote the use of debt to reduce cost of items like cars and so on,  plus of course assets owned as well as debt).

Cheers,

Beej


----------



## So_Cynical (27 December 2009)

wayneL said:


> Labor's future is in figuring out its own method of self destruction. Meanwhile, the Libs are "rebooting"
> 
> It is an impossibility for Labor's political future to be secure. Social Democratic tax and spend ALWAYS fails in the end.




I see warming denial is not the only issue your are in denial over.  as long as Labor don't control the senate they cant self destruct....Labor's power base is the centre, the centre the libs rejected.


----------



## wayneL (28 December 2009)

So_Cynical said:


> I see warming denial is not the only issue your are in denial over.  as long as Labor don't control the senate they cant self destruct....Labor's power base is the centre, the centre the libs rejected.




Oh, ripped a new one! Oh my! Your kindergarten arguing skills are amazing. 

Unfortunately, ability to discern your opponent's actual argument is still at nursery school level. Keep at it though. One day in the distant future, with practice, you may be able to craft a straw man argument and people won't laugh in your face. 

Until then, you shouldn't attempt this with adults. Although you may not realize it yourself, it is somewhat humiliating for you.

Just trying to help.


----------



## Soft Dough (28 December 2009)

Beej said:


> How is it "exceptionally simplistic" to consider several data points and the whole picture rather than focus on a single ratio (gross debt/GDP) and expect to find the explanation of past/present and future there?
> 
> Anyway my main point was to show how there are reasons why the "simple" debt/GDP ratio may have increased in the past 5-10 years, without it necessarily implying a corresponding change in actual household gearing or net debt levels. You have to look at the whole picture to get a read on that (household super, savings, finance structure/facilities used, distortions of the tax system that can promote the use of debt to reduce cost of items like cars and so on,  plus of course assets owned as well as debt).
> 
> ...




I have 10 million in cash, and no other assets.  my 4 neighbours have no cash and each have no other assets and housing loans of 2.5 million on houses "worth" 2.5 million,

but all is ok because they have no gearing as I have 10 million in cash.

that is why it is overly simplistic, and not a reflection of what can happen when people are overgeared into overvalued asset classes.


----------



## robots (28 December 2009)

Soft Dough said:


> I have 10 million in cash, and no other assets.  my 4 neighbours have no cash and each have no other assets and housing loans of 2.5 million on houses "worth" 2.5 million,
> 
> but all is ok because they have no gearing as I have 10 million in cash.
> 
> that is why it is overly simplistic, and not a reflection of what can happen when people are overgeared into *overvalued asset classes.*




hello,

in your opinion, and with the opinions of most who have come to the property forums clearly being pie in the sky stuff

guess thats why most have disappeared

thankyou
robots


----------



## robots (28 December 2009)

Dowdy said:


> If the housing market pops, rental prices wont increase. I'm sure investor will try to increase their rent but people wont pay it. People are only willing to pay what they can afford. If they couldn't pay their home and lose it, what makes you think they can afford high rental. Worst case scenario, the government will put price ceilings on rent and that will cause all sorts of chaos and corruption in the rental market.
> 
> Melbourne doesn't have an oversupply, but an over debt which can be just as bad.
> If the government clamps down on immigrants then there will be an oversupply
> ...




hello,

sounds more like jealousy because they are doing hard work, saving and putting in for the country which allows them to purchase a property 

while others who dont purchase hit the internet, but hey, all follow the leader (dr keen) to see how its done

wasnt the government going to slash immigration the other year when the GFC hit? numbercruncher told us, oh didnt occur

thankyou
robots


----------



## robots (28 December 2009)

hello,

poster couple for the affordability campaign across the globe:

http://www.heraldsun.com.au/news/br...year-in-benefits/story-e6frf7jx-1225814032602

yeah right, handout crew

thankyou
robots


----------



## Gerkin (28 December 2009)

cutz said:


> Where is the hard evidence that migrant inflow is contributing to the housing bubble, sure the REIV uses this line as an explanation to why house prices are spiraling out of control but where is the evidence ?
> 
> Perhaps rampant speculation coupled with easy credit is the major contributing factor.
> 
> Take care out there, sometimes we seek what we wanna hear.




http://www.dse.vic.gov.au/CA256F310024B628/0/1F19C83E83514824CA25751A00005C96/$File/Accessible+Victoria+in+Future+Fact+Sheet.doc

273,000 up between 01 on 06 census. 

They have to live somewhere


----------



## satanoperca (28 December 2009)

Thanks Beej for your detailed response. 

It does put a different perspective to the argument.



satanoperca said:


> How much more debt can Aussie households take on before it goes pop?




If by Beej's contribution we are at 20% LVR, what will be the limit. 30% 40% 50%. How much debt can society take on before it is unservicable.

Has the increase in housing prices been directly proportional to the rise in household debt?

I also agree with some of the poster that Steve Keen's opinions are a little extreme but they still are relevant to explore in regards to the future direction of property prices to prevent potential situation arising like in the US, Ireland, Spain & UK.

As yes we are different here, we have KRUDD at the helm.


----------



## Gerkin (28 December 2009)

So_Cynical said:


> Don't know about that....Labor's political future is fairly secure with the coalition in full self destruct mode.
> 
> Some anecdotal opinion...i work with a few Indian guys who came here as students and payed big money for degrees in accounting
> 
> and engineering, these guys work as casual labourers in a warehouse because they cant get jobs as engineers and accountants.There all pretty pissed off about it and i get the felling that at some point they will give up and go home (there parents are all loaded) now if these guys and there situation is representative of the wider community, its not hard to see rental demand easing as they start to pack up and leave.




Thats true, its because hese employers do not want an indian working for them, unless they are clearly the best. Usually the Indians hired in those areas are ones who have been here since they were children.

I've got a mate who has a very long and clearly Sri Lankan surname. He couldnt even get a graduate interview, he changed his surname and got heaps of interviews and a job with a pretty good firm.

You have to remember the client base that that these graduates will be working with, most of the time they cannot be hired as they do not have the interaction skills that a Australian would have.

Also, got a mate whose Indian, and from a very rich family who I met whilst I was over there. Hes got an accounting degree however doesnt want to work in that area, he would rather make his 50K in the pub/pokies that he works at. Anway the Fed Gov tried to deport him as he was working in an area that he wasnt trained for as per his visa, mind you 5 years later. Anyway, he stayed as he was captain of his cricket team (all aussies) and he proved to them he was part of the community, this is an example of anIndian student who chooses to stay because he enjoys life here in Australia as an average bloke who can enjoy a drink when he wants.


----------



## robots (28 December 2009)

hello,

yeah, they all want to race back to the punjabi region

thankyou
robots


----------



## Gerkin (28 December 2009)

Dowdy said:


> If the housing market pops, rental prices wont increase. I'm sure investor will try to increase their rent but people wont pay it. People are only willing to pay what they can afford. If they couldn't pay their home and lose it, what makes you think they can afford high rental. Worst case scenario, the government will put price ceilings on rent and that will cause all sorts of chaos and corruption in the rental market.
> 
> Melbourne doesn't have an oversupply, but an over debt which can be just as bad.
> If the government clamps down on immigrants then there will be an oversupply
> ...





There is no oversupply of housing in Melbourne. And if the housing market goes pop, you wil see some people selling. These people have to live somewhere, therefore they will become renters. At this time
there will be the same amount of houses. Now these people will be prepared to pay rent, so instead of paying say 800 bucks a week onto there mortgage they will now be paying 400 a week rent. I didnt say that rent will increase. I said that renal yields wouldincrease as property prices drop, and rent stays the same thus briging up the yield.


I'm one of these people who are building in a newish estate, I'm not arrogant and I have every right in the world to spend my money and borrow as much as I want to. I have saved very hard and have been working full time since I graduated Uni. You are just stereo typing these people in these areas


----------



## Gerkin (28 December 2009)

Dowdy said:


> I think it's more arrogance. They believe it's their RIGHT to own a home, rather then the result of hard work and saving. These first home buyers getting a property in a new estate, rather then starting out in a small unit/flat, and buying everything on interest free.




Further to the above post. I would like to get some opinions on what an acceptable level of debt is.

Lets use a debt to household income ratio.

Therefore a $300,000 debt, to a household net income of $80,000 is 3.75

*My question is what do you think is acceptable and sustainable?*

I'll post my say best 5 mates ratios after I get some answers


----------



## Dowdy (28 December 2009)

Gerkin said:


> I'm not arrogant and I have every right in the world to spend my money and borrow as much as I want to.




Do you see the irony in what you just said....




> I have saved very hard and have been working full time since I graduated Uni. You are just stereo typing these people in these areas




Yes i was stereotyping. If you saved alot and put 20% down then you can afford your home and hopefully afford the repayment and i wish you well but if you put anything less then 20% and buy everything on credit/interest free and live pay check to pay check and eat out all the time etc. then maybe you should look again at being a home owner 



> Further to the above post. I would like to get some opinions on what an acceptable level of debt is.




I believe in the saying _It's not what you earn, it's what you save_. So what is the acceptable level of savings, the question should be.

A 20% down payment with enough cash/liquid investment reserves to last 3-6months. 

People always going on about acceptable level of debt, yet you get people who earn 6 figure salaries with not a cent to their name, living pay check to pay check


----------



## Gerkin (28 December 2009)

Dowdy said:


> Do you see the irony in what you just said....
> 
> Yes I see it, but it doesn't change the fact that I still have the right to do it as a responsible member of society.
> 
> ...





Thats a fair point about savings, but it still if interest rates went sky high and youve got two couples, both with debt of 400K, income of 120 and 70. Im pretty sure the ones on 120K will be in a lot better position, they might have to cut spending, however they still can afford there mortgage, the other ones might not be able to.

Therefore, Let me ask again, what do you think an acceptable level of debt is?


----------



## wayneL (28 December 2009)

Gerkin said:


> Further to the above post. I would like to get some opinions on what an acceptable level of debt is.
> 
> Lets use a debt to household income ratio.
> 
> ...




It varies according to the income strata. What might be acceptable and sustainable to a person on an assured income of $200k would not be acceptable to someone on $40k.

Traditionally the ratio has been somewhere between 3 and 4. Long term, this has shown to be about right IMO.


----------



## robots (28 December 2009)

hello,

this guy normally has some ordinary writings but this one sums up a lot:

http://www.theage.com.au/business/t...-australias-world-go-round-20091227-lg9z.html

although many have heard it before as members of ASF

i know in my lifetime it will be probably the greatest event i will witness the demise of the United States of America

yes we are different

thankyou
robots


----------



## Gerkin (28 December 2009)

Gerkin said:


> Further to the above post. I would like to get some opinions on what an acceptable level of debt is.
> 
> Lets use a debt to household income ratio.
> 
> ...




Further to Dowdy post about new estates with debt, here are my 5 of my mates with there debt to net income.

3.6
2.2
2.3
3.5
1.85

These figures are all true as I seen all incomes and debts levels as they regulary throw around ideas with me. Also interesting to note, only 5 of the 10 people above have a credit card, and all of these people do not spend up big on here credit cards.

More interesting i find is that alot of my uni mates cannot afford to buy property. They are all on god incomes 50-80K, but after rent, car payments and credit card debt they cant afford to. These are the so called educated people as well who have done accounting degrees.


----------



## wayneL (28 December 2009)

robots said:


> hello,
> 
> this guy normally has some ordinary writings but this one sums up a lot:
> 
> ...




So now it's " If China sneezes, we catch a cold".

The truly remarkable thing in the transfer of economic power to Asia, is that it has been gifted to them by the North Atlantic Muppetocracies through sheer arrogance and stupidity.

I'm not going to underestimate the Yanks yet, but at this stage it doesn't look good.


----------



## Beej (28 December 2009)

Soft Dough said:


> I have 10 million in cash, and no other assets.  my 4 neighbours have no cash and each have no other assets and housing loans of 2.5 million on houses "worth" 2.5 million,
> 
> but all is ok because they have no gearing as I have 10 million in cash.
> 
> that is why it is overly simplistic, and not a reflection of what can happen when people are overgeared into overvalued asset classes.




Well that sort of example can be created for anything where you are looking at a gross national statistic of course. So I really don't see your point. You are still fretting about a single stat - gross private debt/GDP, without considering all the other pertinent stats like assets and income. Even in your example, if the 4 neighbours with $2.5M in loans each (which you would be getting the interest on technically via the bank), all earned good incomes from export related activities such that they can easily service their loans, and own houses worth $5M each, then everybody wins. They live the lifestyle they want and will in the future have no debt. You perhaps choose to live more frugally, maybe not working at all but live off the interest that your neighbours in effect pay you through their export derived productive earnings.  Bottom line is if the whole balance sheet adds up then your little neighbourhood nation example can get along just fine!



wayneL said:


> It varies according to the income strata. What might be acceptable and sustainable to a person on an assured income of $200k would not be acceptable to someone on $40k.
> 
> Traditionally the ratio has been somewhere between 3 and 4. Long term, this has shown to be about right IMO.




Interesting - so currently the average mortgage in Australia is about $280k according to RBA figures. The average household disposable income is something around $80k, which gives an "average" ratio of 3.5. Even using the average full time wage (which according to ABS is currently $65k) gives 4.3.

Doesn't seem like Australia is in any great danger with average income/debt ratio's square in this "sustainable" range? 

PS: I agree with that range as guideline as well for what it's worth, and have never personally borrowed outside that range myself in the past. Remember that FHBs in the first 2-3 years of home ownership are the ones likely to be the most "leveraged" with respect to housing debt, but that group only ever represents a small proportion of total home owners at any one time (would be in the order of 2-3% of total property owners, ie, ~200k-300k out of 8.8M dwellings).

Cheers,

Beej


----------



## UBIQUITOUS (28 December 2009)

robots said:


> i know in my lifetime it will be probably the greatest event i will witness the demise of the United States of America




You are 7 years old and plan to live for another 100+?

How close am I ?


----------



## robots (28 December 2009)

hello,

thanks to beej, 

so at average mortgage of 280k, average income of 65k , and as most inform us here at ASF people have huge LVR's (and no savings) then the house price may of been 310-320k

so wage to price of 4-5, *gee i am so relieved *that we are at historical average, the birth right

its all in order

thankyou
robots


----------



## robots (28 December 2009)

robots said:


> hello,
> 
> thanks to beej,
> 
> ...




hello,

above research basically bangs the nail in the coffin for a lot of the carry on regarding people owning property,

is the tall poppy syndrome the last remaining item for people carrying on about people who own property/and do well with property?

any thoughts 

thankyou
robots


----------



## wayneL (28 December 2009)

robots said:


> hello,
> 
> *gee i am so relieved *that we are at historical average




Be careful of averages. On average each family has 2.3 children. So, what? Every family has one girl, one boy and a 13 week old foetus in the freezer? pffft!

Likewise with property. There will be a substantial number of people with ratios well below the average. There will also be a substantial number with ratios well above the average. In fact average ratios at those figures shows conclusively that many have very high levels of debt.

Prices are set at the margins, so there is reason for concern about gearing levels. I'm not a bear atm for the reasons set out earlier in this thread, but still have an eye on such things.


----------



## satanoperca (28 December 2009)

robots said:


> hello,
> 
> is the tall poppy syndrome the last remaining item for people carrying on about people who own property/and do well with property?
> 
> ...




I've heard it all now. Read the title of the thread, that's what people are discussing and I see no tall poppy syndrome.

Just discussion of the various aspects that could affect the future of property prices in Australia including debt ratios to income.

Cheers


----------



## robots (28 December 2009)

hello,

i have heard it all for the past five years, been great reading

hope the prophecies continue

thankyou
robots


----------



## wayneL (28 December 2009)

satanoperca said:


> I've heard it all now. Read the title of the thread, that's what people are discussing and I see no tall poppy syndrome.
> 
> Just discussion of the various aspects that could affect the future of property prices in Australia including debt ratios to income.
> 
> Cheers




Agree. People should respect each others opinions (if expressed with courtesy and containing some overriding logic) whether they agree or not. Economies and house prices are part of a chaotic system. Nobody knows the future and anything can happen.

But because of the way our monetary system is constructed (i.e. intentional inflation and debasement of fiat), the bulls will be right most of the time.

What is amusing is that someone with one or two suburban piles considers themselves a tall poppy.


----------



## Smurf1976 (28 December 2009)

Beej said:


> Interesting - so currently the average mortgage in Australia is about $280k according to RBA figures. The average household disposable income is something around $80k, which gives an "average" ratio of 3.5. Even using the average full time wage (which according to ABS is currently $65k) gives 4.3.



I've had a strong dislike for that "disposable income" term ever since I realised how qutie a few Gen Y's interpret it.

In short, it's taken to mean "money to throw away" or in other words, what your left with after essentials (housing, basic food etc) and the idea being that you should spend the lot - hence the term "disposable", as in "to get rid of it". 

The notion of saving or even making additional payments on a mortgage seems to be somewhat out of fashion - better to throw it away on junk it seems. And with that "disposable income" term so widely used, it seems that quite a few think that's what everyone, or at least the majority, does.

The cynic in me thinks the media, government etc are well aware of this and use the term as a subtle means of encouraging consumer spending. It's a somewhat obscure term after all.

It didn't worry me until I realised it was more than one individual thinking this way and is somewhat common.


----------



## So_Cynical (28 December 2009)

wayneL said:


> Oh, ripped a new one! Oh my! Your kindergarten arguing skills are amazing.
> 
> Unfortunately, ability to discern your opponent's actual argument is still at nursery school level. Keep at it though. One day in the distant future, with practice, you may be able to craft a straw man argument and people won't laugh in your face.
> 
> ...




Good to see your keeping it touch with your sensitive, feminine side.


----------



## robots (28 December 2009)

wayneL said:


> Agree. *People should respect each others opinions (if expressed with courtesy and containing some overriding logic) *whether they agree or not. Economies and house prices are part of a chaotic system. Nobody knows the future and anything can happen.
> 
> But because of the way our monetary system is constructed (i.e. intentional inflation and debasement of fiat), the bulls will be right most of the time.
> 
> What is amusing is that someone with one or two suburban piles considers themselves a tall poppy.




hello,

yeah i agree brother,

perhaps some should go over to GHPC and re-read some of the responses the minute someone declared they owned a property or 2 or 3 or 4, tall poppy alright

very very amusing,

oh yeah, paradise here man

walk tall brother, enjoy the day

thankyou
robots


----------



## cutz (28 December 2009)

robots said:


> is the tall poppy syndrome the last remaining item for people carrying on about people who own property/and do well with property?
> 
> any thoughts




Hi robots,

No tall poppy syndrome here, I too own my piece of the aussie dream but I am very skeptical of a continuing boom.

The so called housing shortage seems like a load of baloney, it's a developers paradise around Melbourne at the moment, you just gotta open your eyes. High rise developments going up left right and center, it's like there's a scramble to get projects built before inevitable occurs.

Anyway I'm no guru, just putting 2 and 2 together.

Good luck with it all bro.


----------



## wayneL (28 December 2009)

robots said:


> perhaps some should go over to GHPC and re-read some of the responses the minute someone declared they owned a property or 2 or 3 or 4, tall poppy alright




What has GHPC got to do with the price of eggs?


----------



## robots (28 December 2009)

hello,

what inevitable? world ends

no worries bro

thankyou
robots


----------



## robots (28 December 2009)

hello,

read post #314

thankyou
robots


----------



## wayneL (28 December 2009)

robots said:


> hello,
> 
> read post #314
> 
> ...



Oh Gawd!

It's Groundhog Day!


----------



## cutz (28 December 2009)

robots said:


> what inevitable




The purge to end all purges.


----------



## robots (28 December 2009)

hello,

what should i do to prepare? 

i weathered the storm recently through the 9% interest rates and then GFC when interest rates went to the lowest in 40yrs, 

and median prices fell approximately 5% and then BOOMED back over previous highs, easy stuff

many advised to get out of debt during that time, showed not to be a wise decision 

thankyou
robots


----------



## cutz (28 December 2009)

robots said:


> what should i do to prepare?




Hi robots,

I take it that you're not over-geared so realistically all you need to do is sit tight, many are not in such a fortunate position and those are the ones I fell sorry for.


----------



## robots (28 December 2009)

hello,

no worries will sit tight and go with the flow man

thankyou
robots


----------



## Soft Dough (28 December 2009)

Beej said:


> Well that sort of example can be created for anything where you are looking at a gross national statistic of course. So I really don't see your point. You are still fretting about a single stat - gross private debt/GDP, without considering all the other pertinent stats like assets and income. Even in your example, if the 4 neighbours with $2.5M in loans each (which you would be getting the interest on technically via the bank), all earned good incomes from export related activities such that they can easily service their loans, and own houses worth $5M each, then everybody wins. They live the lifestyle they want and will in the future have no debt. You perhaps choose to live more frugally, maybe not working at all but live off the interest that your neighbours in effect pay you through their export derived productive earnings.  Bottom line is if the whole balance sheet adds up then your little neighbourhood nation example can get along just fine!




I love it how you forget that it is not my example that you are disregarding, as all I did is restate what you said, but using alternative figures. Plus you then changed the figures, eg tdoubled the value of the houses etc. and laughingly stated that people were working in jobs which are export related, which very few people are actually involved in.


It is similar to robots ridiculous post where he calculates the cap rate of houses, I just hope he was just joking and actually didn't believe his post.

btw robots, by what percentage do you think housing will rise by the end of 2010?   or are you still just blindly following the herd?  FYI the people who blindly followed the herd of the ASX200 during the GFC surely regretted their decisions.


----------



## Beej (28 December 2009)

Soft Dough said:


> I love it how you forget that it is not my example that you are disregarding, as all I did is restate what you said, but using alternative figures. Plus you then changed the figures, eg tdoubled the value of the houses etc. and laughingly stated that people were working in jobs which are export related, which very few people are actually involved in.
> 
> 
> It is similar to robots ridiculous post where he calculates the cap rate of houses, I just hope he was just joking and actually didn't believe his post.
> ...




*Sigh* - Of course I deliberately changed the example to show that based on the stats you used, it could all be very rosy (hence my choice of using export income, low LVRs etc etc). Similar to how you can use the same example and paint a very gloomy picture if you presume no productive income and no export derived income and high LVRs. I'm sure across the national averages the reality is somewhere in the middle.

My point was (and still is) that you can't just look at a single number/stat/ratio in isolation and declare the inevitability of the world coming to an end - you need to look a little broader and deeper at the picture to understand what is really happening.

PS: Re the herds, the ASX200 and the GFC - are you talking about the people that sold during the panic and locked in all their losses? Or are you talking about people that didn't sell out prior to the crash and rode through the whole thing to date?

Cheers,

Beej


----------



## Soft Dough (29 December 2009)

Beej said:


> My point was (and still is) that you can't just look at a single number/stat/ratio in isolation and declare the inevitability of the world coming to an end - you need to look a little broader and deeper at the picture to understand what is really happening.
> 
> PS: Re the herds, the ASX200 and the GFC - are you talking about the people that sold during the panic and locked in all their losses? Or are you talking about people that didn't sell out prior to the crash and rode through the whole thing to date?
> 
> ...




Just because someone else has zero gearing does not help someone else geared up to the eyeballs,

just like the ASX200 herd who were geared up and who were _forced_ to sell their investments.

btw you make it sound like selling out was a bad thing, I sold out at around 5700-5800 and have never looked back. Still mainly in cash waiting to buy robot's properties


----------



## robots (29 December 2009)

Soft Dough said:


> Just because someone else has zero gearing does not help someone else geared up to the eyeballs,
> 
> just like the ASX200 herd who were geared up and who were _forced_ to sell their investments.
> 
> btw you make it sound like selling out was a bad thing, I sold out at around 5700-5800 and have never looked back. Still mainly in cash *waiting* to buy robot's properties




hello,

yes, waiting waiting waiting waiting

while i am riding the endless wave of glory (perhaps that may answer your question)

and the herd has been on the sideline thanks to people like yourself and the more they listen the worse the situation will be, but hey

thats life

thankyou
robots


----------



## Beej (29 December 2009)

Soft Dough said:


> Just because someone else has zero gearing does not help someone else geared up to the eyeballs,
> 
> just like the ASX200 herd who were geared up and who were _forced_ to sell their investments.
> 
> btw you make it sound like selling out was a bad thing, I sold out at around 5700-5800 and have never looked back. Still mainly in cash waiting to buy robot's properties




All fine, but re gearing to the eyeballs and housing, firstly define "geared to the eyeballs?", and what makes you think that a large number of people are in this situation? What proportion of mortgage holders across the country does this represent, and is that estimate somehow based on the single debt/GDP ratio number that we have been discussing? Put some numbers on it and show us how you work this out. Do you think household income comes into assessing the level of risk faced by these people at all?

As for the stock market, you did well do sell out at 5700/5800, assuming you had been in for a while prior to that - well done! Nothing wrong with that move, or holding the cash since, especially if you intend to buy property sometime soon with the capital  But what about the people who sold at 3100? Do you think they regret that decision now? 

Just for a comparison, I have a diversified stock portfolio which I held through the whole thing. Currently with the ASX200 back around 4800, the value of this portfolio is now within 5% of it's value at the market peak of 6800, due to dividends (all reinvested) and the many discounted rights issues that occurred during the past 18 months. If I had sold at 5700, I'd be 15% down off peak value + cash return of say 7.5% (5%pa - so let's say 5% net after tax over 18 months), net result still 10% down from peak. So you and I probably got pretty similar outcomes so far from the ASX200 following 2 very different herds  

The people that killed both of us though were those who sold at 5700 and then bought back in at 3100/3200  My old man did that with all his super (he's 70 and retired) and now has 50% more super than he had 18 months ago.

By the way in hindsight wouldn't it have been an awesome move if you had used your cash to get into say Melbourne or Sydney property in late 2008? 

Cheers,

Beej


----------



## Dowdy (29 December 2009)

cutz said:


> Hi robots,
> 
> No tall poppy syndrome here, I too own my piece of the aussie dream but I am very skeptical of a continuing boom.
> 
> ...




CNBC had a documentary on the other day called _*The Bubble Decade*_. First part talked about the dot com bubble and the second part talked about the real estate.

The aussie housing bubble hasn't popped yet but in the documentary they talked to (former) developers and right before the bubble popped they were trying to get their developments completed as quickly as possible as they could feel the _tension in the air_ that things were about to go, as they said.

But this is paradise isn't it. This time it's different


----------



## robots (29 December 2009)

hello,

this would be like me telling you about child care

thankyou
robots


----------



## Glen48 (29 December 2009)

Robots:  after the cash you will be in the Fetal position on the floor you will need child care..


----------



## robots (29 December 2009)

hello,

oh yeah, finished man

thankyou
robots


----------



## Beej (29 December 2009)

Dowdy said:


> CNBC had a documentary on the other day called _*The Bubble Decade*_. First part talked about the dot com bubble and the second part talked about the real estate.
> 
> The aussie housing bubble hasn't popped yet but in the documentary they talked to (former) developers and right before the bubble popped they were trying to get their developments completed as quickly as possible as they could feel the _tension in the air_ that things were about to go, as they said.
> 
> But this is paradise isn't it. This time it's different




You don't think that the fact that the US massively over-built from 2002-2007 might explain why some US developers saw things the way they did near the end? Contrast that to Australia, where we are not building enough dwellings to meet under-lying demand due to strong population growth and demographic needs. In that respect, it "is different here". Of course there was also sub-prime and all that in the US, but let's not worry about that too much either! No two economies are exactly the same - shocking I know, but there you go! 

PS: Actual new dwelling completions have since fallen well short of what was forecast in the below chart.

Cheers,

Beej


----------



## So_Cynical (29 December 2009)

Beej said:


> PS: Actual new dwelling completions have since fallen well short of what was forecast in the below chart.
> 
> Cheers,
> 
> Beej




Beej is that a US or Aust chart...and a link please to where you found it.


----------



## Beej (29 December 2009)

So_Cynical said:


> Beej is that a US or Aust chart...and a link please to where you found it.




AU chart - from Chris Joyes blogs here: http://www.businessspectator.com.au...ment&src=blb&is=property&blog=concrete detail

Cheers,

Beej


----------



## So_Cynical (29 December 2009)

Thanks Beej

Some interesting reading on that link and googling Dr David Gruen the chart author.

Here,s another one of his charts (and comment) from this document.

http://www.treasury.gov.au/document...s_Economists_Annual_Forecasting_Conf_2009.pdf



			
				Dr David Gruen said:
			
		

> Combined with lower interest rates, the introduction of the First Home Owners Boost in October 2008 saw a huge rise in finance commitments by first home buyers (Chart 6).







So it would seem obvious that its these people, the recent first home owners who are the most at risk when it comes to falling house prices, and i imagine its also obvious that its these people being forced to sell that would drive the overall market lower.

Because people not selling or under any pressure to sell have little or no impact on prices, as we recently saw in the stock market crash...Now if we consider for just a moment that with interest rates raising and the economy hitting a short term peak, if there's any broad event that gives us a little knock backward and these FHO start selling and have to sell at a loss.

Then its easy to see how the banks will just stop any marginal lending and that will accelerate the fall...because the recent rises are unquestionably based on handouts and easyish credit (rising, holding prices)

No matter how you try and dress up the recent housing debt numbers...its still a matter of you just putting a positive spin on a negative (for housing) event....there's just no way around that.IMO


----------



## robots (29 December 2009)

So_Cynical said:


> Thanks Beej
> 
> Some interesting reading on that link and googling Dr David Gruen the chart author.
> 
> ...




hello,

what negative event is that? 

the medians BOOMING above the previous highs

thankyou
robots


----------



## So_Cynical (29 December 2009)

robots said:


> what negative event is that?




Robbie your kidding right? You think the FHO debt binge is a positive when looking at the housing big picture...not the auction clearance rates.



			
				news.com.au said:
			
		

> FAMILIES have plunged dangerously into the red - for the first time owing more in household debt than the entire economy earns in a year...The record credit binge – fuelled largely by the first-home buyer's grant – means every adult, on average, owes more than $74,000.






			
				news.com.au said:
			
		

> "It shows we are living beyond our means."
> Mortgages account for almost 90 per cent of annual GDP, up from 17 per cent in 1990.




http://www.news.com.au/couriermail/story/0,1,26527418-952,00.html


----------



## SM Junkie (29 December 2009)

I will watch with interest because I'm not certain that FHB will start selling when interest rates start to rise.  Lending criteria is so much tighter now and I'm sure the banks have only lent to FHB who will be able to weather any downturn.

I'm not a FHB, but I know even when I went for another mortgage, I had to provide so much more information then previously. I think property is sound at the moment and I'm afraid I just don't get all this doom and gloom.


----------



## Gerkin (29 December 2009)

Alot of first home buyers/builders in my area (melbournes north east) are people who live with there family until they buy. They earn good money but have stayed at home because of there european heritage, mind you 2nd and 3rd generation. I think these people will be fine if interest rates do rise.

My concern for the prooperty market is in Melbournes West, Point Cook, Wyndam Vale. The demograpic is different, alot of immigrants in these areas, and the median incomes in these areas are lower than other FHB areas.


----------



## robots (29 December 2009)

hello,

yes, just people securing a rare commodity and coughing up the $ required to get your name on the title

the LVR's, wage to price ratio's are no different to 10yrs ago, links are always thrown up to indicate houses can be bought to satisfy this apparent birth right

its all hype and about bringing down fellow man

thanks
robots


----------



## So_Cynical (29 December 2009)

robots said:


> hello,
> 
> yes, just people securing a rare commodity and coughing up the $ required to get your name on the title
> 
> ...




Robots...Just for the record are there any negatives at all for Australian residential property investors? can anything go wrong? are there any negatives?

Is an investment in Australian residential property a risk free investment?


----------



## robots (29 December 2009)

hello,

apologies for the delay had to complete the dishes

no, no negatives for Aussie residential property 

there are issues or shall we call them "micro" factors that may determine outcomes for different properties

paradise man

thankyou
robots


----------



## UBIQUITOUS (29 December 2009)

robots said:


> hello,
> 
> 
> 
> ...




BULL!!!
Of course I mean to say that you are Bullish and no way full of bull. Yes thats definitely what I mean. There is no insulting of other points of views here no matter how wrong


----------



## satanoperca (29 December 2009)

robots said:


> its all hype and about bringing down fellow man




A little bit dramatic don't you think



robots said:


> there are issues or shall we call them "micro" factors that may determine outcomes for different properties




& markets which is what the discussion is often about.

Housing commitment starts up is fantastic news whether you are bear or bull.

Adding to the supply is always good news but at what cost present and future is debatable.

Cheers


----------



## Dowdy (29 December 2009)

UBIQUITOUS said:


> BULL!!!
> Of course I mean to say that you are Bullish and no way full of bull. Yes thats definitely what I mean. There is no insulting of other points of views here no matter how wrong




Well, the guy is a robot, after all. Should probably think about upgrading his cpu


----------



## Macquack (29 December 2009)

satanoperca said:


> Housing commitment starts up is fantastic news whether you are bear *or bull*.
> 
> Cheers




Satanoperca, I dont know about that. Some of the permabulls around here would probable prefer if not another single dwelling were constructed in Australia. That way housing prices would keep rising forever. I think this concept is referred to by robots as "paradise", man.


----------



## Beej (30 December 2009)

So_Cynical said:


> Thanks Beej
> 
> Some interesting reading on that link and googling Dr David Gruen the chart author.
> 
> ...




All fair enough comments, and the FHB surge of the past year is certainly clear - the only point I disagree with you on is the likely impact on prices in your scenario of rising interest rates.

Firstly, interest rates, while likey to rise yes, are probably only going to rise fairly slowly from here, maybe 1% in the next year is being touted, and what happens after that will really depend greatly on the global economy. Remember only 18 months ago we had mortgage rates just a bee's dick under 10%, compared to ~6.5% now, and maybe 7.5% by late next year. So I don't think those levels will be enough to start a wave of forced selling, even on the FHB margins. As others have stated the banks have been stricter in their lending criteria in the past 18 months compared to the prior 5 years.

Secondly, we have seen what happens already when high LVR FHBs get squeezed by rising interest rates - it happened in western and south western Sydney through 05/06/07. What happens is prices in the lower ranges come off a bit, so I would agree that could happen next couple of years for the same reasons, if rates got high enough fast enough (say 8%+ variable rates). However the mid range and top end kept steaming along nicely, as FHB forced sellers do not drive the market further up the ladder - they are selling to get out, so the fact they got less money does not effect prices in the next tier. So what happens is the "gap" get's stretched. Now in 08, the top end and mid range properties were hit with bigger price falls than the low end, and then the low end rose strongly due to FHB boost/low interest rate driven demand etc. So the "gap" narrowed. In your scenario, IMO all that will happen is that gap will widen again - so it really depends what price range you are looking at as to whether you would benefit or not from that rising interest rates/recent FHB forced selling scenario. - which like I said I think is unlikely to occur in the next year anyway.

My opinion anyway! Good discussion.

Cheers,

Beej


----------



## robots (30 December 2009)

hello,

as all the noise continues on, please landlords keep increasing those rents collectively

3-4% per annum at least and if someone wants to re-sign lease get at least a 10% rise

its all about getting a return on your investment 

the new property thread is going really well, great stuff

thankyou
robots


----------



## DB008 (30 December 2009)

I personally think that it's good to have a "mix" of both property and shares.
If l really wanted to toot my horn, l would be bragging how I'm up over 110% on RIO at the moment and 1 of my investment properties is also up around 80% too, all bought within 5 years.
To pick out 1 single spec stock and say, yeah, l bought BCC 2 months ago at 4cents and sold at 16cents, IMO, is just stupid. That could have easily have just gone the other way and ended up with nothing. It would be like buying a cardboard box and selling it for a huge 400% profit. I hear so many people on these forums saying, yeah, l'm up 100% on this and 120% on this. Ok, on how much capital? I think that if your serious about shares, you need at least 100k-200k in something and a decent return, like 10%p.a. to keep up with a property investment.

The biggest sticking point with shares, is volatility! ANZ compiled data from the last 20+ years on property and shares. They both came to within the same returns over a time period, but with a _volatility _factor put in, property won, hands down. Some people like to buy an investment and can sleep better at night knowing that it ain't going to crumble to nothing when they wake up in the morning, which shares can easily do. But, therein lie the big opportunities too. 
Now, using the above example, of BCC, l know people who bought units in Cottesloe, W.A, beach front in early 2000 for around 100k, now worth over a million, and not to mention receiving rent in the mean time.

I've heard arguments on both sides of the fence;
1) Friend of mine bought shares, he's down 30% at the moment
2) Friend bought shares, he's up over 100%
3) Friend got a unit, he's down 15%
4) Friend got a house, he's up 75%

The property was in different parts of Australia, much like the shares, which were in different sectors. 

What do l think personally about property prices. Sydney+Melbourne are going to surge because they've been stagnant for the last 5 years and there isn't a lot of construction happening. With demand rising, and not much supply entering the market, prices only have 1 way to go, up.
Brisbane l think will have a little boom like W.A. did because there is a lot of natural resource+LNG projects that are starting to take shape in the next few years.

The housing council of Australia estimates that we need to build something like 150,000 houses a year and we are only building something like 120,000. So, a little bit of a shortfall at the moment.

Just my thoughts, please don't kill me.


----------



## UBIQUITOUS (30 December 2009)

DB008 said:


> To pick out 1 single spec stock and say, yeah, l bought BCC 2 months ago at 4cents and sold at 16cents, IMO, is just stupid.




Read my post just after that one and then judge whether my post is stupid or not (the one where I explain that I was making a hypothetical point). Besides, I think it is extremely naive, but common, to class some stocks as speculative and other not. Is there no specuation with RIO? Are investors, such as yourself, not speculating that China's demand for Iron will continue?




DB008 said:


> What do l think personally about property prices. Sydney+Melbourne are going to surge because they've been stagnant for the last 5 years




I don't usually lol....but just for you....LOL!!!! Can this technique be applied to all investments? or just real estate????


----------



## DB008 (30 December 2009)

UBIQUITOUS said:


> Read my post just after that one and then judge whether my post is stupid or not (the one where I explain that I was making a hypothetical point). Besides, I think it is extremely naive, but common, to class some stocks as speculative and other not. Is there no specuation with RIO? Are investors, such as yourself, not speculating that China's demand for Iron will continue?
> I don't usually lol....but just for you....LOL!!!! Can this technique be applied to all investments? or just real estate????




Don't be so hard on yourself. I was just using BCC as an example too. I did read your next post and did in fact understand that it was just an example. 
It's pretty naive to "LOL" on an issue about property considering some parts of the East Coast have NOT moved in a very long time. Sooner or later, they have to move, oh yeah, that's right, they are starting to move... Let's just wait and see what happens instead of turning this into a "I said, he said/tit 4 tat" game.


----------



## nth brisbanite (30 December 2009)

DB008 said:


> I personally think that it's good to have a "mix" of both property and shares.
> 
> The biggest sticking point with shares, is volatility!
> 
> Just my thoughts, please don't kill me.




I've been following this thread for a long time as I am predominantly a property investor although I have few bucks in shares.  To do well in shares, you either have to be lucky or put a lot of work into it and even then, there is no guarantee that you'll do well.  

I've found that by being a _buy and hold investor_ :in both quality shares and well located houses (not apartments) that I've been able to have a balanced life. I have a job that I enjoy, sleep well at night, have a family life and pursue other interests.  

DB008, your post made a lot of sense and no, I won't kill you


----------



## kincella (30 December 2009)

invest $10 each in the latest mags...Investment Property Jan 2010, and Property Investor Jan 2010...for the FHB...get  Your Mortgage....$10...

all 3 have the hottest suburbs for 2010... between 20-40 Australia wide....
stacks of info and tips for all...
++++ including the $100,000 NRAS grants...from the govt for investors in new homes, yes thats tax free money, returned to you over 10 years, per house... wow....its worth looking into....

and then there are the capital growth returns per suburb,,,,some are returning 14% pa and  over 40% + in 3 years....

happy investing


----------



## Gerkin (30 December 2009)

DB008 said:


> What do l think personally about property prices. Sydney+Melbourne are going to surge because they've been stagnant for the last 5 years and there isn't a lot of construction happening.




No disrespect, but have you seen Melbournes property prices over the past 5 years?? Stagnant, I think not.


----------



## So_Cynical (30 December 2009)

Gerkin said:


> No disrespect, but have you seen Melbournes property prices over the past 5 years?? Stagnant, I think not.



And the 10 years before that?...Melb is the Aussie capital of stagnant.


----------



## Gerkin (30 December 2009)

So_Cynical said:


> And the 10 years before that?...Melb is the Aussie capital of stagnant.




Over 15 years, many suburbs are about 4 x growth and more. Many investors only expect prices to doubles every 10 years, they've had a good run.


----------



## Fleeta (30 December 2009)

DB008 said:


> What do l think personally about property prices. Sydney+Melbourne are going to surge because they've been stagnant for the last 5 years and there isn't a lot of construction happening. With demand rising, and not much supply entering the market, prices only have 1 way to go, up.




I bought a house in Melbourne in Jan 2004 for $420k and sold for $520k in July2007...and its prob worth $570k now. Please explain how is that a stagnent market???? nice 3 bedroom house in inner city melbourne now hard to find for under $1m - I can't see why it would keep going up unless we had some serious wage inflation. There are plenty of housing developments out west of Melbourne. I think it is Chinese investors pushing prices up and when the banks start to reign in the credit, not sure where the next greater fools will come from.


----------



## MACCA350 (30 December 2009)

DB008 said:


> Sydney+Melbourne are going to surge because they've been stagnant for the last 5 years








That's a 5 year chart for Melbourne median..........Up $100,000 almost 30% including the GFC...........Up over 16% in the last 6 months...........not what I'd call stagnant, looks a tad volatile over the last 3 years.

cheers


----------



## kincella (31 December 2009)

whats old is new again....recall following the year 2000....they did it then, they will do it again...
some investors have had enough of the global financial con jobs, so dont count on a reprieve after the FHB grant reduces after today.....in 2010 it will be investors returning to the markets, add the foreign investors for competition....
I note Porter Davis homes have $43000 for FHB's....enjoy
..................................
Punters prefer property and shun shares 
By Sara Rich From: The Australian December 30, 2009 11:22AM 

Shares and managed funds are the least popular investments, a new survey shows.  
AUSTRALIANS' love affair with property shows no signs of faltering, with 74 per cent believing now is a good time to invest in bricks and mortar. 

According to the latest Citibank Australian Wealth Report, most people feel an investment property is the best place to park their money, followed by a savings account, fixed-term deposit or cash management trust (68 per cent) and superannuation (63 per cent), 
Shares and managed funds were the least popular (less than 50 per cent). Citibank's survey was conducted by Newspoll, with a national sample of 1085 people aged 25 and over

http://www.news.com.au/money/punters-prefer-property-and-shun-shares/story-e6frfmdr-1225814658194


----------



## MACCA350 (31 December 2009)

kincella said:


> I note Porter Davis homes have $43000 for FHB's....enjoy



Where did you see that..........this from their website ends today.


----------



## kincella (31 December 2009)

their TV ad last night...$43,000 as I stated....note they have a new sales campaign starting 3.1.2010
the ad on the web site...for 32,000 ends 31.12.09
obvious they are adding another 11,000 to the booty


----------



## MACCA350 (31 December 2009)

kincella said:


> their TV ad last night...$43,000 as I stated....note they have a new sales campaign starting 3.1.2010
> the ad on the web site...for 32,000 ends 31.12.09
> obvious they are adding another 11,000 to the booty



Did they mention if it covers house purchases or just their house and land packages?

cheers


----------



## Mc Gusto (5 January 2010)

hello

thought you all may find this interesting, hope it is not a double post

http://www.economist.com/businessfinance/displayStory.cfm?story_id=15179388

Thanks

Gusto


----------



## UBIQUITOUS (5 January 2010)

kincella said:


> their TV ad last night...$43,000 as I stated....note they have a new sales campaign starting 3.1.2010
> the ad on the web site...for 32,000 ends 31.12.09
> obvious they are adding another 11,000 to the booty




Lets me guess.......they increased build prices across the board by...........$11k?

An architect friend of mine pointed something out about these houses - Over the last couple of years the proportion of glass to brick has substantially increased because bricks cost more per area on cost and labour. When I had a look, he wasn't wrong. Soon they'll be offering greenhouses and calling them contemporary homes....


----------



## Mofra (5 January 2010)

Mc Gusto said:


> thought you all may find this interesting, hope it is not a double post
> 
> http://www.economist.com/businessfinance/displayStory.cfm?story_id=15179388



Interesting article - just waiting now for someone to use it as an argument for the "chonically low rents" we pay in Australia


----------



## Ozymandias (5 January 2010)

UBIQUITOUS said:


> An architect friend of mine pointed something out about these houses - Over the last couple of years the proportion of glass to brick has substantially increased because bricks cost more per area on cost and labour. When I had a look, he wasn't wrong. Soon they'll be offering greenhouses and calling them contemporary homes....




A very interesting observation. When you say you had a look, where? Does someone publish stats on this sort of thing?

I'm quite surprised by the lack of innovation in building techniques and materials for homes here in Australia. Especially here in the west, it's brick and tile / colourbond, or nothing. There are a number of materials that could cut down on build time and costs, especially for houses where the brickwork is hidden by render anyway...


----------



## UBIQUITOUS (5 January 2010)

Ozymandias said:


> A very interesting observation. When you say you had a look, where? Does someone publish stats on this sort of thing?




Homeworld Sydney. We went there to help out a mutual friend who was looking to build. I built a house a few years back and the same builder had the same homes on offer but with different facades. It was pretty clear to see what they were upto once I had it pointed out.


----------



## MACCA350 (5 January 2010)

UBIQUITOUS said:


> It was pretty clear to see what they were upto once I had it pointed out.



To some extent that is probably part of the motivation............but on the other hand lifestyles and people have changed over the years and I'd say larger window areas have also been driven by the consumers. 

Look at a 90yo house and they are poky, dingy and dark due to few small poorly placed windows......the feeling you get in a place like that is not pleasant. Walk into current homes and the many well place large windows along with big glass sliding/bi-fold doors gives you a very different feeling. I know which I prefer to live in.

cheers


----------



## satanoperca (5 January 2010)

Macca, I think you will find the reason was not due to lighting but heat.

Back 90 years ago no central heating and cooling. Unless windows are double glazed they are poor insulators.

As the Europeans do, all windows should be double glazed but then the cost would be equal to brick.

All in all our building designs and technology are crap compared to the Japanese & Europeans.

Australians like Americans are more concerned with size than quality.

Larger windows have become popular due to cost. It is nice that houses have become more light filled but no good if your window is 1mtr from your neighbors.

I would like to see more production orientated building where homes are fabricated in factories giving greater efficiency and cost reductions while improving design.

Cannot believe we have seen more posts on how the market has dramatically turned around over the last year. 

The only way is up for property, forget debt, let some else care for that.

Cheers


----------



## satanoperca (6 January 2010)

Doesn't look like investors are stepping in to replace FHB as being suggested by many.

The big squeeze is upon us.

Cheers


----------



## UBIQUITOUS (6 January 2010)

satanoperca said:


> Doesn't look like investors are stepping in to replace FHB as being suggested by many.
> 
> The big squeeze is upon us.
> 
> Cheers




It doesn't matter. Somebody will be along soon with a story of how their mate's mother-in-law sold an IP somewhere at 12% above last year's value, and how this should be applied to the market as a whole.


----------



## Beej (6 January 2010)

satanoperca said:


> Doesn't look like investors are stepping in to replace FHB as being suggested by many.
> 
> The big squeeze is upon us.
> 
> Cheers




We shall see - ABS figures (http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0) up to Oct certainly show a flattening of housing credit growth over the past few months, so we are hitting the top of this part of the cycle. However ABS had been showing continued investor finance growth. The AFG figures are a different sort of sample and may have some biases in them as they are a mortgage broker - also Dec would be a "slow" month for housing finance (without any seasonal adjustment like ABS do) due to less selling weeks etc, holidays and so forth.

We can't expect to see 12% (Sydney), 17% (Melbourne) pa housing price growth every year forever!  I expect (and have said so here many times) price growth in most cities to slow through 2010. I think Sydney will still grow maybe 5%, but most of the action will be in the mid range and top end, lower end properties (houses < $500k) may not see any growth (ie may even see small smalls on average) due to reduced FHB demand. Even if the investors move in, they will come in and pick up the softness rather than drive price growth in that segment IMO. Look at what happened in Sydney during 1992/1993, that's pretty much how I see it playing out through 2010/11.


Cheers,

Beej


----------



## MACCA350 (6 January 2010)

Anyone notice this at the end of RP Data's latest press release?



> **The median price is the 50th percentile observation based on all pooled home sales over the three months to end November 2009. This is different to the medians reported by other parties for several reasons. First, where appropriate it includes all property types (ie, not just detached houses, like the ABS). Second, the median value reported by the likes of APM is calculated using a ‘stratification technique’, which is different to the simple 50th percentile observation used here. RP Data-Rismark’s previously reported ‘median values’ must also be interpreted differently. These are the index values attributable to the RP Data-Rismark ‘hedonic index’, which was originally based at inception on median automated property valuation estimates (ie, the median of a statistical valuation of all capital city homes). The change in the index value over time reflects the underlying capital growth rates generated by residential property in the relevant region. These growth rates are not influenced by capital expenditure on homes, compositional changes in the types of properties being transacted, or variations in the type and quality of new homes manufactured over time. The RP Data-Rismark ‘median values’ are not, therefore, the same as the ‘simple median price’ associated with all homes sold during a given period. *In future, we will report simple median prices to avoid any further confusion.*




Seems they are changing their methods, wonder why?

cheers


----------



## Go Nuke (6 January 2010)

Well after much looking around Brisbane, my partner and I have decided to buy a block of land and build a new dwelling 

We set ourselves a limit of about $410K so to hopefully not overextend ourselves. But don't get me wrong....$400K is still ALOT of money for the average person to repay!

We just couldn't find anything "nice" enough for that price anywhere near Brisbane or surrounding suburbs. Anyone who knows Brisbane will surely agree that $400K doesn't get you much of a house.

We decided that for that price we could get a brand new house and live approximately 20-25Kms from Brisbane CBD.

I will say though that I am concerned about rising interest rates and how FHB will go when they have been lured into the market with histocialy low interest rates and the FHB grant.
If FHB start to default on their morgages, couldn't that start a slide in property prices? or will investors just step in and buy them to rent back to them? (which I think would mean the gap between rich & poor would grow)

I know the banks have apparently tightened their lending and that they factor in rate rises (not sure how many though), but I reckon that wages/salaries have remained pretty stagnant lately due to the GFC.

I know the crap comapny I work for (Tyco) has frozen my wage for a second year running now and I'm earning below the national average (about $57K or something?) which will lead me to look for employment elsewhere once I have secured my home loan. And it seems Im not the only one. I think I heard something on the news last nigth about 78% of employees will be seeking new employment in 2010.....probably for the same reasons as me. We all know the cost of living waits for noone!

So....does anyone think that there will be a wages breakout this year with the economy "strong" and to keep up with rising rents/morgages?

I myself an also an investor, but is anyone else concerned about how their children, or their children's childen will afford housing in Australia in the future?
They most certainly WONT want to do the "menial" jobs like cleaning etc in this country if they ever want to buy a home.


----------



## MACCA350 (6 January 2010)

Go Nuke said:


> but is anyone else concerned about how their children, or their children's childen will afford housing in Australia in the future?
> They most certainly WONT want to do the "menial" jobs like cleaning etc in this country if they ever want to buy a home.



Yep, I've mentioned these concerns earlier in either this or the last thread. We have 3 kids and I have been feeling an increasing burden that we will need to support their future housing needs. 

cheers


----------



## nth brisbanite (6 January 2010)

Go Nuke said:


> I know the banks have apparently tightened their lending





The banks have certainly tightened their lending to developers but for salary and wage earners it's still pretty easy getting loans.  Their criteria is a little tighter but still not that bad.


----------



## kincella (10 January 2010)

*My Modest 10% pa Growth Projections Over a 5 year Plan..*
this post will give you an insight into the mind of a property investor....it will give similar results for home owners who intend to stay put while raising a family

lets look at how the figures stack up, growing at 10% pa over 5 years, for either a single house or a portfolio

a 300 k house, becomes 480k's = +180k
a 500k same deal becomes 800k = + 300k
1 million becomes 1,600,000 = + 600k
2 million becomes 3 million = + 1,000,000

now do you get the idea, just how easy it can be done...

can you see why some of us are not the least bit worried about an annual rental income, in the early years after purchase.....its the bigger fish we are catching.....
can you see how the mortgage becomes ...well immaterial after a couple of years.....
can you guess, or estimate the growth of the rental income
after just 2-3 years
now can you understand why some of us are very reluctant to ever sell....

most of us have a plan to sell at least one out of five or more in the portfolio.....and wipe out the debt, or take a big slice off the debt against the other properties...:

its a nice little cash cow....all that extra equity enables one to buy more cash cows, without putting in more cash, or hands in the pocket....
or they may take some of the equity and place it into other avenues for growth...

 *** same parents can afford to help the kids purchase an affordable property, out in the burbs, which they can afford.....
same parents may end up selling up and heading for the cheaper home, in the tree or sea change locations.....
and just because as a child you grew up in a suburb, does not mean you need to live in same for  the rest of your life.....you can move around

no wonder some of us prefer property as the main investment vehicle...
some can use this as a guide to where house prices will be in 5 years time....

ps dont tell me how unaffordable it will be for the kids, property at least keeps pace with inflation , well actually about 2% above....
and I don't notice everyone complaining about the price of food, petrol, electricity, health care and everything else considered a necessity in life, I guess they are happy with those weekly costs.....

I hope you all have a cool and prosperous 2010....
cheers
.............................................................................................

The owner of McDonalds once asked Harvard students if anyone knew how he made his money.
They answered easy, making hamburgers. 
No he replied. I own the best real estate in every capital city in the world>*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
Jack Miller


----------



## Dowdy (10 January 2010)

kincella said:


> *My Modest 10% pa Growth Projections Over a 5 year Plan..*
> this post will give you an insight into the mind of a property investor....it will give similar results for home owners who intend to stay put while raising a family
> 
> lets look at how the figures stack up, growing at 10% pa over 5 years, for either a single house or a portfolio
> ...




One thing i wanted to ask you, since you're a property investor.

Have you or any any investor you know actually sat down and worked out what your *REAL* return is every year?

And what i mean by that is - Property growth of the suburb minus interest repayments/ rate minus water/council/power rates? 

I didn't include general maintenance since those numbers are harder to get but things like the interest rate and council/water/power rates are easy to keep track of.

So have you or any investor every done it. I would like to think they do since 10%pa turns out to be only 3%pa when you include those costs.

To me it would be like running a business without including your overheads in your profit margin.





> I don't notice everyone complaining about the price of food, petrol, electricity, health care and everything else considered a necessity in life, I guess they are happy with those weekly costs.....




On another note.... You must no go out often if you think no one complains about that.


----------



## kincella (10 January 2010)

you are getting mixed up.... between income less expenses.....versus capital growth..and capital profits
of course we know what our costs are....we need to account for it in  our tax returns every year....and if the costs exceed the income, we receive a refund back from the govt....
its not an airy fairy game....where one would not know what the expenses are...its a deadly serious game...
plus we claim building allowance and depreciation expenses,,,,which are book entries, they are non cash...so it increases our expense claims...therefore increasing our tax refund
people who have lower mortgage costs or zilch interest expenses are usually cash flow positive
some of my props run about break even for the year...before the allowance and depreciation claims...so all expenses are covered....it costs me nothing to hold on an annual basis...
the capital growth gains are not subject to tax until the property is sold, and then only half the profit is taxable...assuming held for more than a year

so the expenses are offset against the income each year....
the 10% capital growth I am referring to is all profit 
your 3% costs are offset against the rental income
with the commercial property, the tenant pays all outgoings ...expenses...
but not the interest expense if there is a loan


----------



## UBIQUITOUS (10 January 2010)

kincella said:


> *My Modest 10% pa Growth Projections Over a 5 year Plan..*
> this post will give you an insight into the mind of a property investor....it will give similar results for home owners who intend to stay put while raising a family
> 
> lets look at how the figures stack up, growing at 10% pa over 5 years, for either a single house or a portfolio
> ...





Hahahahahahaahahahahaha......(pauses to wipe away the tears).....hahahahahahahahahahaha.

5 years? Is that all? Why not got the whole hog and extrapolate your numbers even further? That same 500k house will be worth $3.4million in 20 years. Meanwhile over half of the mortgage on that fibro house in Sydney's West will have been paid down buy renters paying $3.5k per week, which will of course have been funded by the average annual factory worker's wage rise of 10%pa. Even if the wages don't rise by that amount, its okay because as long as they wish they owned a house they will always find money to pay for it. Yep folks, quite simply supply is not meeting demand.

Does anybody have anymore tissues?


----------



## wayneL (10 January 2010)

kincella said:


> ]My *[UModest 10% pa[/U]* Growth Projections





I wouldn't call that modest.


----------



## satanoperca (10 January 2010)

Hi,

Just a simple question that somebody may be able to answer concerning RPdata figures.

RPdata currently shows the median price in Mebourne $450K +16.7% year to date. 

Does this imply that the median price in Melbourne Dec 2008 was $450- 16.9% ($76K) = $373K

However their figure was $421 Dec 08 Melbourne Median. Far short of $373K. 

Based on their data it shows a rise year to date of 6.5%.

Can anyone confirm the 16.7% rise that is being claimed.

Just after the facts, no boom or gloom theories.

Cheers


----------



## Beej (11 January 2010)

satanoperca said:


> Hi,
> 
> Just a simple question that somebody may be able to answer concerning RPdata figures.
> 
> ...




The latest release (http://www.rpdata.com/images/storie...rismark_home_value_index_december_31_2009.pdf) has this note against the reported median values:



> *The median price is the 50th percentile observation based on all pooled home sales over the three months to end November 2009. This is different to the medians reported by other parties for several reasons. First, where appropriate it includes all property types (ie, not just detached houses, like the ABS). Second, the median value reported by the likes of APM is calculated using a ‘stratification technique’, which is different to the simple 50th percentile observation used here. *RP Data-Rismark’s previously reported ‘median values’ must also be interpreted differently* These are the index values attributable to the RP Data-Rismark ‘hedonic index’ which was originally based at inception on median automated property valuation estimates (ie, the median of a statistical valuation of all capital city homes). The change in the index value over time reflects the underlying capital growth rates generated by residential property in the relevant region. These growth rates are not influenced by capital expenditure on homes, compositional changes in the types of properties being transacted, or variations in the type and quality of new homes manufactured over time. The RP Data-Rismark ‘median values’ are not, therefore, the same as the ‘simple median price’ associated with all homes sold during a given period. In future, we will report simple median prices to avoid any further confusion.




I'm not sure if that clears it up or not, but it would appear that they have started reporting a different thing now - basic median price, vs the RP-Data Hedonic index value in the past, so that's why the numbers don't seem to add up?

It looks like the prices reported are the "simple median", but the growth figures (+16.7% etc) are based on the hedonic index maybe?

PS: Your maths are not quite right! If the current Melbourne median is $450k ,and the price has increased by 16.7%, then the previous median should be 450/1.167 = $386k. Still doesn't match up though.

PPS: Don't forget also that RP-Data talks all dwelling medians (ie houses and units).

Cheers,

Beej


----------



## satanoperca (11 January 2010)

Thanks for the response Beej.

Still does not make sense. ABS has year on year for Sep of 5.9% for Melb. Must have been a huge quarter to rise it up to %16. 

I will wait for the ABS figures to be released as RPdata seem to be playing games.

ABS results for the last qtr of 2009 out the 1/2/2009.

I will assume that they will differ to RPdata as usual.

Cheers


----------



## Mofra (13 January 2010)

> *Rents set to soar*
> 
> Renters should prepare to pay more this year, as landlords pass on the costs of interest rate rises and tax increases to tenants, a research group says.




http://www.theage.com.au/business/rents-set-to-soar-20100113-m5dy.html

Interesting note about rental increases:



> "Melbourne rents should resume their long-term upward trend and are expected to rise by to 5 per cent to 7 per cent, in line with their long-term growth rate,'' Mr Bell said.




If that is the long term rate, that outstrips both CPI and AWOTE


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## MACCA350 (13 January 2010)

Good luck with that, I guess we'll see more people living on the streets..........but don't worry, it's all sunshine and lolliepops eh

Not all landlords need to up the rent to cover a mortgage, we've only had one increase in 9 years and that was about 3 years ago, BTW we're paying less than half what is being asked for equivalent rentals in our suburb.............and you wonder why we've been here so long

cheers


----------



## UBIQUITOUS (13 January 2010)

Mofra said:


> http://www.theage.com.au/business/rents-set-to-soar-20100113-m5dy.html
> 
> Interesting note about rental increases:
> 
> ...




What is interesting is that APM who came out this prediction, and the SMH are both owned by fairfax. I am surprised that they included these FACTS in the article.


"The Tenants Union of NSW said renters should be wary of predictions of rental increases especially from groups with a stake in the property industry.

Steep increases had been predicted in 2009 but had never eventuated, the policy officer, Chris Martin, said.

Sydney's average rental vacancy rate rose to a two-year high of 1.6 per cent in November 2009, according to the most recent figures from the institute.

The most recent data available from the Department of Housing, for the September 2009 quarter, showed rents for a two-bedroom flat increased from between 2.8 per cent to 6.5 per cent."


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## Mofra (14 January 2010)

MACCA350 said:


> Good luck with that, I guess we'll see more people living on the streets..........but don't worry, it's all sunshine and lolliepops eh



No, but people will still need to pay a premium for living in better suburbs.

re: "sunshine & lollipops" - robots been getting to you?




MACCA350 said:


> Not all landlords need to up the rent to cover a mortgage, we've only had one increase in 9 years and that was about 3 years ago, BTW we're paying less than half what is being asked for equivalent rentals in our suburb



I'm in a similar boat (actually, I'm paying about 60% compared to next door) - it's a contributing factor to owning only investment property & still renting where I live.


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## Mofra (14 January 2010)

UBIQUITOUS said:


> What is interesting is that APM who came out this prediction, and the SMH are both owned by fairfax. I am surprised that they included these FACTS in the article.



Even Fox News _ pretends _to be balanced


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## satanoperca (14 January 2010)

> Double home owners' grant, real estate industry says



http://www.theaustralian.com.au/business/news/double-home-owners-grant-real-estate-industry-says/story-e6frg90f-1225819278802

They have just worked it out, bright sparks the RE industry. Give free handouts of your taxpayers money to keep the industry afloat.

Looks like RE is going the way of the Car Industry. Without govnuts assistance it cannot be sustained at these levels.

Parasites is the only word the comes to mind.

Cheers


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## nunthewiser (14 January 2010)

Mofra said:


> re: "sunshine & lollipops" - robots been getting to you?
> 
> 
> 
> .




I would like to point out that I Nunthewiser was the original perpetrator of the saying " sunshine and lollipops" here at ASF on the other property threads .

I have consulted my legal team and Robots will be handing over the keys to his St Kilda mansion on 1/2/10 as compensation for using said phrase in an out of context manner .

Thankyou.


----------



## Dowdy (14 January 2010)

I dont think we'll see Robots on here for awhile. 
He's busy trying to work out the new Miki system


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## Mofra (15 January 2010)

nunthewiser said:


> I would like to point out that I Nunthewiser was the original perpetrator of the saying " sunshine and lollipops" here at ASF on the other property threads



My Sincerest Apologies, hell hath no fury like a nun scorned 



nunthewiser said:


> I have consulted my legal team and Robots will be handing over the keys to his St Kilda mansion on 1/2/10 as compensation for using said phrase in an out of context manner .



Like you'd leave your Western Paradise anyway for anything other than a patch of land down in Tassie


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## Mofra (15 January 2010)

Dowdy said:


> I dont think we'll see Robots on here for awhile.
> He's busy trying to work out the new Miki system



He's in St Kilda - he'll have to learn to walk everywhere. Heaven knows driving around there is a nightmare. 

Traffic (with affordability) is probably the only potential leveller that stops the inner city strongly outperforming middle suburbs.


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## Temjin (15 January 2010)

satanoperca said:


> http://www.theaustralian.com.au/business/news/double-home-owners-grant-real-estate-industry-says/story-e6frg90f-1225819278802
> 
> They have just worked it out, bright sparks the RE industry. Give free handouts of your taxpayers money to keep the industry afloat.
> 
> ...




Aren't we all surprised to hear that? 



> "The latest ABS housing finance figures show a direct link between the assistance and the number of first home buyers," REIV chief executive Enzo Raimondo said in a statement.
> 
> "There was an 18.6 per cent drop in the number of loans to first home buyers in November.
> 
> "The number of first home buyers will continue to drop as the assistance continues to be reduced," he said.




Isn't it extremely obvious, even to the uneducated, that there is a DIRECT LINK between the assistance and the number of first home buyers!!! By saying that is almost an insult to the intelligence of common Australian. 

But when do we stop there after we doubled the first home buyer grant again? Say the same thing, there is a direct link, so it shouldn't be stopped and should be tripled again!

I remembered that I once say the first home buyer grant will most likely be extended and increased after it ends in 2009. (for political reasons!) Looks like it will happen soon. Paradise forever! Hurray!


----------



## kincella (16 January 2010)

Way back in the dark ages, when I bought my first home, there was no such grants, bonuses or incentives....
I paid out my ex, raised 2 children, paid off my first home on a single wage....it was not easy, it never has been...
ask your parents, grandparents  etc.....
buying your first home has not been easy for any generation....
all the noise about the current situation.....
today they want the first home in the most expensive places....not in the cheaper outer suburbs, like most of us had to...
what makes the kids think things are any different.....
there are plenty of affordable houses out there........
you all have choices....
I think some are happy to rent...and so they should be, just be happy with their decisions....
but some  feel the need to justify why they rent....and hence raise the argument about housing being expensive....
in my case it was a roof over our heads.....and we had a good life....

the other point that gets missed is the cost....you either buy, or rent...there is no free ride for your whole life....
I have done the calculations over the years....on a 300k loan using 7% interest expense,  and capital growth for the houses of 10%...
it works out the home owner walks away with closer to 300k cash after 10 years, after deducting the interest cost....the renter has nothing to show for their rent costs of 158,000 assuming they paid the 3% as rent on the same costs.....


----------



## satanoperca (16 January 2010)

kincella said:


> buying your first home has not been easy for any generation....
> all the noise about the current situation.....
> today they want the first home in the most expensive places....not in the cheaper outer suburbs, like most of us had to...




I totally agree with your statement. Example was shown on the news this week with a young FHB couple complaining/winging about further interest rate increases. Boo hooo. They were filmed in front of their two garage, two story brand new houses, most likely 4 bedrooms 2 bathrooms with no kids. What was even more disturbing was when they were filmed inside, all new furniture. Talk about wanting everything now. I have no sympathy for this group of home owners, they have had the lowest interest rates in 50 years, they should be grateful and govnuts handouts.





kincella said:


> I have done the calculations over the years....on a 300k loan using 7% interest expense,  and capital growth for the houses of 10%...
> it works out the home owner walks away with closer to 300k cash after 10 years, after deducting the interest cost....the renter has nothing to show for their rent costs of 158,000 assuming they paid the 3% as rent on the same costs.....




While I can see your argument, if it was to be a far comparison the following should be considered.

Ownership 7% interest p.a + 1.5 % outgoings( insurance/rates/maintenance) = 8.5%
Rent 3% no outgoings
If the renter was treating the situation like for like the renter should be putting the difference 5.5% into an investment, term deposit, shares or even a investment property. Approx $16,500 pa. over ten years with a return of 4% = $206K no taxes taken out.

So the renter does not end up with 0. Unfortunately most renters do not do this.

Can you also provide some evidence that property has on general seen a 10%increase p.a over the last 10 years. I not disputing this figure, just wondering if it is factually correct. I would have thought 5-7%p.a would be more accurate.

Cheers

P.S My calculation does not take into account the important aspect of inflation that benefits the mortgagee over time nor does it take into account rental increases.


----------



## UBIQUITOUS (16 January 2010)

kincella said:


> I have done the calculations over the years....on a 300k loan using 7% interest expense,  and capital growth for the houses of 10%...




Did I not give you enough "Haha's" in post 381 at the top of this page? Here's a few more....Hahahahhahahaha.

Perhaps you can provide evidence of this mystical property market with gives 10% capital growth over the long term?


----------



## MACCA350 (16 January 2010)

kincella said:


> and capital growth for the houses of 10%...



Looking at REIV 5 year median from $370-480k that works out to about 5% pa compound capital growth

Though using the same REIV medians and you baught in Dec 04 and sold in Mar 09 using the same median figures $370-405 you'd have pulled less than 2% pa compound capital growth over a 4.5 year period.

So where does this 10% pa growth expectation come from, what period of time? 

Here's a real long term example: 
Property bought 90 years ago 3.6km from Melbourne CBD for 12k pounds(1963 Australia changed to Dollars at an exchange rate of 1pound=2dollars) so for simple sake we'll make the buy price $24k. Property sold in 2008 for $795k

That's a long term compound capital growth of about 3.97% pa
From Here(graph 4, source ABS) we see the 100 year(1900-2000) actual average inflation rate is 4.5% pa

So...........does that mean that the property is actually worth less than it was 90 years ago

cheers


----------



## UBIQUITOUS (16 January 2010)

kincella said:


> I have done the calculations over the years....on a 300k loan using 7% interest expense,  and capital growth for the houses of 10%...
> it works out the home owner walks away with closer to 300k cash after 10 years, after deducting the interest cost....the renter has nothing to show for their rent costs of 158,000 assuming they paid the 3% as rent on the same costs.....




Kincella, I really believe that your 'logic' epitomizes why housing is unaffordable for the majority of people and so many property speculators have got themselves into trouble. You simply got lucky and rode the wave, but are now putting it down to insight with your 'calculations'.

You have managed to borrow money with a view that housing with provide capital growth of 10% pa. Now, if I went into the same bank, looking to borrow money for a business, and showed obviously incorrect figures which fly in the face of the truth, I am sure that I would be asked to come back with realistic expectations.


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## MACCA350 (16 January 2010)

MACCA350 said:


> Here's a real long term example:
> Property bought 90 years ago 3.6km from Melbourne CBD for 12k pounds(1963 Australia changed to Dollars at an exchange rate of 1pound=2dollars) so for simple sake we'll make the buy price $24k. Property sold in 2008 for $795k
> 
> That's a long term compound capital growth of about 3.97% pa
> ...



One extra note, to keep up with inflation it should have sold for $1.26M compared to the $795k it actually sold for..........that's a minimum(not including costs) inflation adjusted $465k loss after 90 years!! 

Not what I'd call a good investment

cheers


----------



## bellenuit (17 January 2010)

A short article in today's "Sunday Times" (Perth) stated that Australian property prices were overvalued by 50% according to The Economist, based on long term price to rent ratios.

I have found The Economist report here:

http://www.economist.com/businessfinance/displaystory.cfm?story_id=15179388

I can't find an online version of the Sunday Times story, but it went on to say that based on this finding a $620K house should just be $310K.

I would have thought that 50% overvalued would mean a $620K house should be fairly valued at $413.33K. *Overvalued*, means how much the price is *over its value* so the base used in the calculation is the real value. If that were $310K, then $620K is 100% overvalue.

That aside, how do others view The Economist assumptions that the long term price/rent ratio is fairly constant. I can't quantify it, but several stories over the past few years have mentioned that young people are staying at home much longer than before. I would guess that such people would most likely have been renters rather than buyers, so that trend would take pressure off rental prices, but not off property prices, accounting for some of the upward divergence in the ratio.


----------



## Go Nuke (17 January 2010)

> ps dont tell me how unaffordable it will be for the kids, property at least keeps pace with inflation , well actually about 2% above....
> and I don't notice everyone complaining about the price of food, petrol, electricity, health care and everything else considered a necessity in life, I guess they are happy with those weekly costs.....




What makes you think wages keeps up with inflation?

Hands up who got a payrise that reflected the CPI in the last couple of years?
Not me.

And if thats the case why are more kids living at home with parents longer and longer...I think it might have to do with the high price of rent/morgage repayments.
Because lets face it, your not earning a great deal as a student or apprentice. Even if you share accomodation I doubt there would be much money left over to spend.


----------



## UBIQUITOUS (17 January 2010)

In my opinion, the inevitable appreciation of the Yuan will pull the rug out from this 'miracle economy'. The house of cards will then collapse. Its only a matter of when. My call is 2011..


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## Mofra (18 January 2010)

MACCA350 said:


> One extra note, to keep up with inflation it should have sold for $1.26M compared to the $795k it actually sold for..........that's a minimum(not including costs) inflation adjusted $465k loss after 90 years!!



So property in Australia is chronically underpriced and prices should rise immediately?


----------



## MACCA350 (18 January 2010)

Mofra said:


> So property in Australia is chronically underpriced and prices should rise immediately?



Either that or:
1, it was overpriced when it was bought 90 years ago
3, being new 90 years ago the price was about right, being old and only worth the land value now(even though it has been renovated and extended over the years) it's not really undervalued.
2, the 4.5% average inflation figure cannot be directly applied to house prices

If you've read any of my previous posts you'll note I don't believe house prices are undervalued. But looking at the example I presented it does make you wonder whether inflation has any real relation house values, and if it doesn't then how can it reflect the real increase in living costs.

It's interesting that none of the property spruikers in the thread have commented on it...........especially since it blows their 10% pa capital growth expectation, at least for the long term, out of the water:

cheers


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## Mofra (18 January 2010)

MACCA350 said:


> But looking at the example I presented it does make you wonder whether inflation has any real relation house values, and if it doesn't then how can it reflect the real increase in living costs.



Which measure of inflation? Property Prices in recent memory can lag behind AWOTE stats even during some "boom" times. Inflation's effect on RBA rates probably represent the bulk of impact inflation has anyway.



MACCA350 said:


> It's interesting that none of the property spruikers in the thread have commented on it...........especially since it blows their 10% pa capital growth expectation, at least for the long term, out of the water:



I think only 1 person has noted 10% - in any case, pacing with inflation would be a solid result for many property investors, taking into account the effect of inflation on the debt used to acquire the property itself. The after-tax returns on the contribution to the purchase (rather than the PP) would be a better measure, however such results are highly individualistic.


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## kincella (18 January 2010)

my theory has proven correct for me over 20 or more years....
so your concept did not change my mind..

apprentices and uni students are usually not fhb's....but more likely to live with their family ...rather then rent...except for the country students who need to go to the city for uni studies

the regular property bloggers have either left or are on holidays....
so this forum has been very quiet.....
not even robots posting of late

another way for you to look at the price rise scenario....is your dollar is devalued each year....so you need more dollars to buy the same thing
think I read somewhere, your 1930 dollar power now buys only 5%...it has devalued by 95%


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## MACCA350 (18 January 2010)

Mofra said:


> Which measure of inflation? Property Prices in recent memory can lag behind AWOTE stats even during some "boom" times. Inflation's effect on RBA rates probably represent the bulk of impact inflation has anyway.



I thought inflation was the measure of the increase of the cost of living over time. In which case it would stand to reason that to compare something from 90 years ago to today's monitory value you would need to adjust for the increase in the cost of living(ie inflation) to achieve a true representation of the equivalent value.




> I think only 1 person has noted 10%



You may be right, but it seems to be the number used by the media and almost every property investor and real estate agent from here to Timbuktu



> in any case, pacing with inflation would be a solid result for many property investors, taking into account the effect of inflation on the debt used to acquire the property itself.



If inflation is a true representation of the increase in the cost of living then surely just keeping pace means there is no capital gains in real terms



> The after-tax returns on the contribution to the purchase (rather than the PP) would be a better measure, however such results are highly individualistic.



Which would reflect the individuals investment return, once inflation adjusted. But my example was only with regard to the properties value itself. 

I guess what this shows is that there is no capital gain on property over the long term in, and the only way an long term investor would make money on the deal is in the rental return.


If I take that approach using current rental returns for similar properties in the area lets see if that makes a difference.

Similar properties in the area range from $235-550pw rental so let's say $350pw(which is probably a tad high for the condition).
$350pw accumulated over 90 years taking into account inflation works out to a total of $415k..........which if you take off the $465k adjusted capital loss still works out to an adjusted $50k loss for an investor over 90 years...........and that doesn't include costs(ie rates, utilities, maintenance, estate agent fees, etc).

So what's the deal, I can't see a reason for property as a long term investment other than for a public service or to store some cash, unless you were able to purchase and rent it out with the proceeds and tax benefits being enough to cover the majority of the costs. 

It would seem that if you had the cash to purchase an investment property in full you'd be much better off putting it in the stock marked than housing. If we take the DJIA as the comparison from 1920-2010 it went from 105-10600pt which is a compound interest increase of 5.26% pa which means that same $24k(12k pounds) would be worth $2.42M giving you an inflation adjusted profit of $1.16M with negligible costs over the 90 years.

cheers


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## MACCA350 (18 January 2010)

kincella said:


> my theory has proven correct for me over 20 or more years....
> so your concept did not change my mind..



Are you referring to my example? 
If so, it's not a concept, it's an actual property purchase and sale.



> another way for you to look at the price rise scenario....is your dollar is devalued each year....so you need more dollars to buy the same thing
> think I read somewhere, your 1930 dollar power now buys only 5%...it has devalued by 95%



Which is why I used the long term(100yr) inflation figure of 4.5%(you'll see from the link I gave is sourced from the RBA). Since this is an asset not cash, it does not devalue as cash does, surely we use inflation to ascertain it's current equivalent value.

cheers


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## Mofra (18 January 2010)

MACCA350 said:


> If inflation is a true representation of the increase in the cost of living then surely just keeping pace means there is no capital gains in real terms



Disagree - if the property is tracking inflation, the debt used to purchase the property is reducing in real terms due to the effect of inflation on the debt.



MACCA350 said:


> I guess what this shows is that there is no capital gain on property over the long term in, and the only way an long term investor would make money on the deal is in the rental return.



That would depend - if a $400k property is still worth $400k in real terms in 20 years' time, the debt would be $400k (assuming I/O payments) minus the effect of deflation on the debt over that time.



MACCA350 said:


> It would seem that if you had the cash to purchase an investment property in full you'd be much better off putting it in the stock marked than housing. If we take the DJIA as the comparison from 1920-2010 it went from 105-10600pt which is a compound interest increase of 5.26% pa which means that same $24k(12k pounds) would be worth $2.42M giving you an inflation adjusted profit of $1.16M with negligible costs over the 90 years.



I'd agree on a like for like basis, even before you take into account (using Australian examples) holding costs, imputation credits, peridoic vacancies, etc. 

Housing really has a massive cheap credit advantage over other forms of investment which is why so many people still use it as a wealth creation platform.


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## MACCA350 (18 January 2010)

Mofra said:


> Disagree - if the property is tracking inflation, the debt used to purchase the property is reducing in real terms due to the effect of inflation on the debt.



Yes, but the cost of the debt(ie interest rate, fees, mortgage insurance) over the repayment term would surely be higher than the rate of inflation, so wouldn't this make matters worse or at least moot?


Here's a 40 year graph:


I'd say the average would be around 8-10% for that 40 years. But to be fair you would need to look at a longer term average

cheers


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## johnnyg (18 January 2010)

I'd thought I'd share a current situation my friends in, guess its all relative to the thread.

A friend of mine is currently very close to buying her first home. She is looking at the lower end of the market which where we live is $150-200K range. 6 months ago (been attending a few open houses in this price range for the time period) you would go to any open house in this price range and there would be 20-30 people at each open house, pretty much going crazy, it was almost bizarre.

Fast forward 6 months and the property she is thinking about which is in the price range only attracted 5 people through on open house, a huge contrast to 6 months ago. She feels that the demand for these lower prices homes has significantly decreased, more then likely to the FHB grant being reduced.

The property she is interested in needs a reasonable amount of work, but this is not a problem as she has friends who can do 90% of the work.

She has a reasonable deposit saved, and will use this money to do the renovations if it comes off, plus leave almost a full years worth of repayments in savings should any unforeseen circumstances arrive.

After she has lived in it for a period of 6-12 months and the renovations are finished she will look at renting it out for an amount which should be reasonably close to covering the repayments. Best case scenario is that its positively geared, a bad case (being I.R's raise to 8% and the rent amount is lowered to a silly amount compared to what similar houses are being rented for) is that she has to find anywhere from $50-$150 per week.

She feels that the city she lives in has excellent growth potential, + the fact that she feels the house is cheap compared to alot of other houses on the market which helps make the decision.

Happy to hear thoughts/opinions and questions (if any?).


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## SM Junkie (18 January 2010)

Johnnyg, I would recommend that whilst your friend is renovating, that she considers what a tenant would need.  I find most of my properties are at the higher end of rental in their areas because I put a bit more into them.  This includes things like lock up garages, security alarms, reverse cycle airconditioners as an example. Tenants love security, so I find by adding these features the properties keep a good occupancy and I can get a bit more rental in return.

Providing her property is also in a good area with ease of access to public transport and facilities, she should do fine.

Wish her luck, it's great to see more women getting into property.


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## UBIQUITOUS (18 January 2010)

SM Junkie said:


> Johnnyg, I would recommend that whilst your friend is renovating, that she considers what a tenant would need.  I find most of my properties are at the higher end of rental in their areas because I put a bit more into them.  This includes things like lock up garages, security alarms, reverse cycle airconditioners as an example.




...and GAS COOKERS! Can anybody please explain to me why so many rental properties have old electric hotplate cookers? Surely people don't like cooking with electricity as a fuel source? I would have thought having gas cooking available is a worthy investment. Surely a rent hike of $10 per week to cover this 'luxury' wouldn't mean that the property would go untenanted? 

Landlords must really be 'doing it tough'.


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## cornnfedd (18 January 2010)

when a 'life time home loan' becomes normally in Australia I will start to worry about the price of housing.... right now I am bullish on realestate simple because of a few different factors, population growth, economy etc


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## moses (18 January 2010)

Your friend sounds very conservative and appears to be taking a very low risk. So low that my caution alarm comes on and says "are the prices and the risks so low because the house is in an area/city that isn't worth anything and has no future?" If so, then the apparent low risk may be a high risk in fact.

So the answer to that would be to ensure she is doing a realistic assessment of the potential for capital growth.


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## johnnyg (18 January 2010)

Thanks for the replies so far, I'll be sure to pass them on.

Moses - Area is pretty good, is on a main drag ~ 2 kms to CBD. House is set nicely off the street and has ample off street parking. House in Double Brick, is in need of resto work however this is of no concern.

As for the town/city (pop ~ 25000) we have a number of major employers, along with retail majors buying up and developing large amounts of land in the CBD, also is situated in a growth corridor between 2 Capital cities. Hopefully there is a bright future ahead.

Regarding Capital Growth, if she can get the house for the price she is hoping too, and spend 20-30K getting it upto standard I feel she would have no trouble making 10-15% in 12 months, however this is not her thinking, its more so a long term investment, with a great opportunity for the house to go pretty close to paying for itself.


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## Mofra (19 January 2010)

MACCA350 said:


> Yes, but the cost of the debt(ie interest rate, fees, mortgage insurance) over the repayment term would surely be higher than the rate of inflation, so wouldn't this make matters worse or at least moot?



Only during the initial term of the loan - eg. 20 years ago Melbourne's median house price was $140k. A debt of $140k today, at rates of 8%, would equate to $933 pm which would either be easily affordable for the majority of wage earners or covered by current rental income.

Without this debt deflation, in most cases the numbers simply don't stack up for property as an investment class.


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## SM Junkie (19 January 2010)

Mofra said:


> the numbers simply don't stack up for property as an investment class.




Obviously you either love property as an investment vehicle or not.  For me it is far simpler, all I'm concerned about is how much it will cost me on a monthly basis.  At the moment my outlay is basically the cost of a standard mortgage, then come tax time and my deductions and depreciation are done and the costs are negated. Now I have built a fairly substantial portfolio that someone else pays for.

So property can make you money.  It also provides a more tangable asset and I like to have investments across several asset classes.


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## kincella (19 January 2010)

ubiquitus
you showed just how much you dont know about this subject...
for a start do you really think the banks dont know what is happening with property prices....when so much of their income is generated from home loans...
secondly as an investor....the bank's view the customers ability to service a loan...simple...if your income can support a loan, plus they will factor in the rent one expects to receive....allowing for 4 months vacancy...youre in, you get the loan...
entirely different for a business owner, seeking business funding...where they need projections, and past performance etc...
the two types of loans are vastly different....if one has had experience they would know the difference
as far as luck playing a part.....sure there was some luck, in that properties that I purchased in 2000 to 2002, tripled in value in 2004....so rather than hold for 10 years, I dumped   half of them...at a considerable profit...
no one else was in the market when I purchased in 2000- to 2002....I bought a stack of bargain priced properties...
I had a plan when I started investing in property, a long term plan, which will continue on for another 30 or more years....
good luck and bad luck is not included in the plan....its a straight forward plan , using historical figures to justify it....it has worked brilliantly so far...
and will continue to into the future...


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## MACCA350 (19 January 2010)

Mofra said:


> Only during the initial term of the loan - eg. 20 years ago Melbourne's median house price was $140k. A debt of $140k today, at rates of 8%, would equate to $933 pm which would either be easily affordable for the majority of wage earners or covered by current rental income.
> 
> Without this debt deflation, in most cases the numbers simply don't stack up for property as an investment class.



Ok, take today's rates:
Inflation 1.3%
Mortgage 6.06%

Inflation being far below the mortgage rate, that cash debt is costing more than it is deflating, so as I said before, this point is moot.

It stands to reason that any bank will never allow their mortgage rate to be below the inflation rate(at least over a medium to long term), since if it were they would effectively be making a loss on the deal.

cheers


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## Mofra (19 January 2010)

SM Junkie said:


> Obviously you either love property as an investment vehicle or not.  For me it is far simpler, all I'm concerned about is how much it will cost me on a monthly basis.  At the moment my outlay is basically the cost of a standard mortgage, then come tax time and my deductions and depreciation are done and the costs are negated. Now I have built a fairly substantial portfolio that someone else pays for.
> 
> So property can make you money.  It also provides a more tangable asset and I like to have investments across several asset classes.



SM, I also hold investment property - you've only quoted part of my post. 
What I said/meant was it doesn't stack up compared to other asset classes without the effect of inflation (in this case, highlighting the effect deflation has on the debt in the longer term).

The other side of the coin is the access to cheap credit available once some equity has been built up, making investment in other asset classes easier as well.


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## Mofra (19 January 2010)

MACCA350 said:


> Ok, take today's rates:
> Inflation 1.3%
> Mortgage 6.06%



Macca, I understand your point (including the argument regarding holding costs impacting on teh debt servicing), but you seem to be slightly misunderstanming mine.

Deflation over the long term devalues cash, it also devalues the value of debt _independant of mortgage rates_.

 $20,000 cash (or $20,000 debt) would have been a significant sum in 1967 (enough to purchase a proprty); it is not such a significant sum today.


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## MACCA350 (19 January 2010)

Mofra said:


> Macca, I understand your point (including the argument regarding holding costs impacting on teh debt servicing), but you seem to be slightly misunderstanming mine.
> 
> Deflation over the long term devalues cash, it also devalues the value of debt _independant of mortgage rates_.
> 
> $20,000 cash (or $20,000 debt) would have been a significant sum in 1967 (enough to purchase a proprty); it is not such a significant sum today.



Yes, but that is represented by inflation, is it not?

cheers


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## UBIQUITOUS (19 January 2010)

kincella said:


> ubiquitus
> 
> I had a plan when I started investing in property, a* long term plan, which will continue on for another 30 or more years....*
> good luck and bad luck is not included in the plan....its a straight forward plan , using historical figures to justify it....it has worked brilliantly so far...
> and will continue to into the future...





Kincy,

With statements like the following, I don't think you are in a position to accuse others of lack of knowledge on this:



kincella said:


> My *Modest 10% pa* Growth Projections Over a 5 year Plan.




I am still waiting for you to provide the 10% *long term* capital appreciation. So if you are in it for the long term (which you have stated you are), then why only do a 5 year plan at 10% pa?

I'll do the maths for you, seeing you are so adverse to providing it (for whatever reason):

An average Sydney home valued today at $550k house, appreciating at 10% pa for the next 30 years wil be worth *$9.6million in 30 years*

Meanwhile, the average salary of $50k pa, IF it appreciated at an inflation busting 5% pa, for all of those years, would be *$216K in 30 years*.

So the average house price in Sydney based on the Kincella model will *cost 44x average earnings*.

Based on  a 100% mortgage (which I am sure you will say will be available for borrowers of $10million), the* repayments for the average worker would be $64k per month* which they would pay from their *$18k(gross) per month salary.*

Mate, even robots wouldn't go that far. I also notice that you aren't getting any backup form Beej.


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## Mofra (19 January 2010)

MACCA350 said:


> Yes, but that is represented by inflation, is it not?



Not quite - the real capital value is represented/impacted by inflation, however the impact of deflation on the debt is rarely mentioned and is also a driver in equity-creation, which is probably a better way of measuring performance than purely on capital return.


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## MACCA350 (19 January 2010)

Mofra said:


> Not quite - the real capital value is represented/impacted by inflation, however the impact of deflation on the debt is rarely mentioned and is also a driver in equity-creation, which is probably a better way of measuring performance than purely on capital return.



Not sure I follow, deflation is the effect of inflation on cash(debt). 

The cost of servicing the debt(ie interest, etc) will always be greater than the effect of deflation(if it were not, the banks would go bust).........which in the end means that using debt to purchase property will always cost more in real terms than using cash up front(ignoring other factors like tax write-off's)

cheers


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## Fleeta (19 January 2010)

UBIQUITOUS said:


> An average Sydney home valued today at $550k house, appreciating at 10% pa for the next 30 years wil be worth *$9.6million in 30 years*
> 
> Meanwhile, the average salary of $50k pa, IF it appreciated at an inflation busting 5% pa, for all of those years, would be *$216K in 30 years*.
> 
> ...





You've hit on a good point here. House price growth in % terms cannot exceed wage growth in % terms without adversly impacting the ratio of cost to average earnings. This ratio increased as households became duel income - but cannot continue to increase beyond its current all time high - so in my view house price growth is constrained to wage growth. If we get another social change (i.e. people decide they value time more than 2 incomes) then this ratio will decline and house prices with it!


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## Mofra (20 January 2010)

MACCA350 said:


> The cost of servicing the debt(ie interest, etc) will always be greater than the effect of deflation(if it were not, the banks would go bust).........which in the end means that using debt to purchase property will always cost more in real terms than using cash up front(ignoring other factors like tax write-off's)



The cost of servicing the debt is reducing in real terms though - 8% of $100k in today's dollars is much cheaper than 8% of $100k in 1980 dollars. The deflation is having a real effect on serviceability, before we consider rents track more closely to AWOTE in capital cities than to CPI, or capital growth will generally track at ~inflation.

Cash up front would make purchasing an individual property cheaper overall, however your ROI would then be measured on the entire acquisition costs rather than your % contribution to it. As a pure asset class, residential property lags behind many others on a dollar for dollar basis so if I wanted to pay cash for an asset, I'd prefer something else.


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## Mofra (20 January 2010)

Fleeta said:


> You've hit on a good point here. House price growth in % terms cannot exceed wage growth in % terms without adversly impacting the ratio of cost to average earnings.



This depends on the area - on a market-wide basis I agree with you, however we exist in a society where the gap between low & high wage earners is increasing, so there are some areas which will grow faster than average wage growth (conversely, some "entry'level" suburbs with higher proportions of FHB will underperfrom the market LT)


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## kincella (20 January 2010)

*House Prices*
here are just two examples....real prices...
in 1966 a house purchased in a regional city in Vic cost 12,000....it doubled in price every 10 years for the next 40 years to 2006....sold for 192,000

same time a house bought  in Melbourne, Armadale for 12,000, it tripled in price every 10 years, after 40 years, the land alone was valued at 1,000,000

sounds like there was something wrong with the prices to begin with....either the city house was very cheap or the country house was expensive....
never the less....in hindsight one would have purchased the city house in preference to the country house....
unless the country house was used as a holiday retreat...

using an annual growth rate of only 7% pa, the price will double every 10 years....

*Wages*
wages back in 1966 were about $50 pw or 2600 pa....so the house price of 12,000 was above the 4 times mark
fast forward 40 years....that 50 pw is now about 1200 pw....
so what is stopping the same movement or increase over the next 40 years....nothing...
its just getting your mind around the figures....
it will buy you the same thing...same purchasing power....just bigger numbers to deal with...

or if they decided the dollar is only worth half....and split it....nothing would change, just lower numbers to get your head around


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## UBIQUITOUS (20 January 2010)

Kincy I reckon you are severely underestimating the intellect of readers of this forum if you believe that providing obscure examples can be applied to anywhere near a majority of the market.

It would be akin to somebody saying that because Paladin Resources has provided 10000% returns over 10 years, people should buy resource stocks.


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## kincella (20 January 2010)

ubuity....not at all...
but look at you, using figures for an infamous mining company like posiedon as your example.....
then comparing same to housing and wages....


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## UBIQUITOUS (20 January 2010)

kincella said:


> ubuity....not at all...
> but look at you, using figures for an infamous mining company like posiedon as your example.....
> then comparing same to housing and wages....




WHAT???!!??? 

Please address the my challenge of your model. It has been written here in black and white, so no snaking out it like a politician?

Provide me with a suburb which has given 10% per year over the last 40 years and I will happy to never challenge your models again.


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## kincella (20 January 2010)

well if you can find a free site, where you can plug in the postcode ...I can name a few suburbs....

in the meantime....this link shows 20 years  to 2006, with median prices...returning 8.3% every year...
now there are suburbs that beat the median growth....they are not the median price...buying at the  lower end...
my 10% growth is based on actual examples....with family and friends
actually I think it will be almost impossible to find a 40 year chart...
there used to be a graph for actual house prices over 100 years in australia, not fudged with cpi and any other stuff....cannot find it now....just the schiller graph from the us comes up...adjusted for this adjusted for that etc


http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


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## UBIQUITOUS (21 January 2010)

kincella said:


> well if you can find a free site, where you can plug in the postcode ...I can name a few suburbs....
> 
> in the meantime....this link shows 20 years  to 2006, with median prices...returning 8.3% every year...
> now there are suburbs that beat the median growth....they are not the median price...buying at the  lower end...
> ...





..and this is the whole point which I am getting at. 

Here you have actual data of Australia as a whole at 8.3%, but you would rather go with odd examples of family and friends at 10%. Why not be conservative with your model? It is standard practice to do so.

I've given you the stockmarket equivalent i.e picking a stock that has performed well historically and then assuming that future growth will continue.

I don't disagree with the premise of buying a property and having somebody else pay of your loan. However, if the timing is wrong, then capital losses can be unrecoverable during a lifetime. As an example look at the 1890's Melbourne property crash which took decades to recover from.

The bottom line is the old adage: "Past performance is no guidance to future performance"


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## MACCA350 (22 January 2010)

kincella said:


> *House Prices*
> here are just two examples....real prices...
> in 1966 a house purchased in a regional city in Vic cost 12,000....it doubled in price every 10 years for the next 40 years to 2006....sold for 192,000
> 
> same time a house bought  in Melbourne, Armadale for 12,000, it tripled in price every 10 years, after 40 years, the land alone was valued at 1,000,000



Take into account inflation at 5%(rough average from here) and you get:

$12k-$192k in 40 years is 7.3%pa, apply inflation and you have a real capital growth of 2.3%pa

$12k-$1M in 40 years is 12%pa, apply 5%pa inflation and you have a real capital growth of 7%pa


Do the same for the property(3.6km from Melb CBD) I mentioned earlier(which you seem to have missed):

$24k(12k pounds)-$795k in 90 years is 4.02%pa, apply 4.5% inflation(as mentioned earlier, ABS 100yr) and you have real capital LOSS of 0.48%pa!!
Just to keep up with inflation that property should have sold for $1.2M




> fast forward 40 years....that 50 pw is now about 1200 pw....



It's interesting that based on 5%pa inflation that $50pw is only worth $335pw by today's currency, yet that was the average wage back then and now it's $1,200. 

Also interesting that in 1977 it was $200 which is a 15%pa increase, if it continued at that rate we'd have an average income of almost $12,600pw

I'm not old enough to remember the 60's(considering I wasn't even born) but was there some kind of a recession around that time, and subsequent recovery in the early 70's?
Seems something happened around the mid 70's as inflation hit it's all time high around 17%pa

source






cheers


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## MACCA350 (22 January 2010)

Mofra said:


> The cost of servicing the debt is reducing in real terms though - 8% of $100k in today's dollars is much cheaper than 8% of $100k in 1980 dollars. The deflation is having a real effect on serviceability,



I'm not saying its having no effect, I'm saying it's not enough to counter the cost of servicing the loan..........ie interest will always be higher than inflation(over the medium to long term) in which case, as I mentioned, it is moot for my example.



> Cash up front would make purchasing an individual property cheaper overall, however your ROI would then be measured on the entire acquisition costs rather than your % contribution to it.



In which case if you paid it off in full over the term it would cost you more than if you paid cash up front in full. Hence once again, for my example, the effects of deflation are moot.........or even increase the capital loss.

Any way you look at it, the costs of servicing the debt are higher than the effects of deflation whether it be on a year on year basis or over the long or full term.



> As a pure asset class, residential property lags behind many others on a dollar for dollar basis so if I wanted to pay cash for an asset, I'd prefer something else.



Can't argue with that, just as it should be, since housing is first and foremost to provide shelter and not purely an investment..........though many would argue that fact 

cheers


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## Sidamo (22 January 2010)

MACCA350 said:


> Seems something happened around the mid 70's as inflation hit it's all time high around 17%pa




1973 oil crisis: http://en.wikipedia.org/wiki/1973_oil_crisis


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## Go Nuke (23 January 2010)

Here's an article that would make Robots happy..

http://www.news.com.au/couriermail/story/0,23739,26624513-5003402,00.html

Just a shame the "average" person won't be able to afford it.

Better open up the borders for some more foreign money to come in.


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## kincella (23 January 2010)

this should scare the socks off anyone....Malvern Vic the poorer suburb (compared to Armadale which was up about 82%)
houses up 56% in the past 4 years
units up about 40%

I note home ownerwhip...outright with no mortgage is around the 40% mark

choose a suburb that interest you and find out how it faired

http://www.myrp.com.au/viewFreeRepo...ir=&postcode=3143&email=&fsrName=&widget=true

then look at this one....in regional vic...how affordable is this....basically been stagnant...past 4 years....
home ownership is a whopping 47%....it must be the oldies staying put

big horse stud is moving there
not sure how much rain they had recently to break the drought....

http://www.myrp.com.au/viewFreeRepo...ir=&postcode=3143&email=&fsrName=&widget=true


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## UBIQUITOUS (23 January 2010)

Go Nuke said:


> Here's an article that would make Robots happy..
> 
> http://www.news.com.au/couriermail/story/0,23739,26624513-5003402,00.html
> 
> ...




Yep, that never ending escalator just goes on and on. Just jump on for easy money. Life is easy. No excuse for being poor.


----------



## CamKawa (24 January 2010)

Here's one for the bears

Tighter credit rules to halve home loans 

With every politician in the world jumping on the box and saying the GFC is over how can this be? What are Westpac doing? Don't they watch TV or read The Age newspaper??? lol

The real question is will the other 3 banks follow?


----------



## gav (24 January 2010)

Go Nuke said:


> Here's an article that would make Robots happy..
> 
> http://www.news.com.au/couriermail/story/0,23739,26624513-5003402,00.html
> 
> ...




There are opportunities for those willing to look.  There are house and land packages in Melton (Melbourne) at the moment that are barely over $200k (with FHBG).  40mins from the city centre.  If you can't afford that, then maybe it's time to look at your spending habits.


----------



## satanoperca (24 January 2010)

> It was this same tightening of credit that led to the collapse of property prices in the UK in 2008, even though the country was still suffering from a massive shortgage of homes at the time.




From above linked article.

Gav, couldn't agree more if homeownership is a priority in your life.

Cheers


----------



## Dowdy (24 January 2010)

CamKawa said:


> Here's one for the bears
> 
> Tighter credit rules to halve home loans
> 
> ...




87% is still too high. It should always be a 20% deposit. Can't afford that, then you can't afford the house


----------



## Fleeta (27 January 2010)

Has anyone read the latest DHI report on housing affordability??

http://www.demographia.com/dhi.pdf

Where on earth do they get their median household income of $60,000 for Melbourne from? Does this imply that most households only have 1 person working? This seems like a strange figure to me, all the households I know have incomes > $100k.

Interesting report nevertheless and I guess it points to a few things:
1. Median house prices should be assessed against projected incomes as opposed to past incomes - i.e. places like Detroit will have declining incomes if (when) their industry goes broke - similarly Aussie incomes will rise if the China boom continues
2. Property does not track fundamentals of earnings well and goes further to prove the aussie house market has been inflated on the back of debt and not equity
3. Will we (or should we) end up in equilibrium - i.e. Chinese stop investing in Oz properties and start investing in US properties until they have pushed the level where there is comparability?


----------



## MACCA350 (27 January 2010)

When does REIV start their weekly auction results again?

It's been over 5 weeks since we've seen some auction results...........I'm starting to have withdrawals

cheers


----------



## Fleeta (27 January 2010)

Of course my last comment gets back to where a few of us differ in our assumption that housing is homogenous. Also probably flawed in that foreign ownership is probably isn't a level playing field accross nations either. And then there is that issue of chinese currency not being floated....maybe a chinese yuan appreciation might trigger a recovery in US house prices as they become even cheaper for chinese investors??


----------



## CamKawa (28 January 2010)

MACCA350 said:


> When does REIV start their weekly auction results again?
> 
> It's been over 5 weeks since we've seen some auction results...........I'm starting to have withdrawals
> 
> cheers



Mid Feb was when they started again last year.


----------



## kincella (28 January 2010)

here is some history for the past 4 years....note the big spikes in some suburbs in 2007, before the GFC crisis of 2008.....note the FHB dried up after the stimulous was cut on Oct 2009......

the further out from the city you go....there may be no growth at all.....but here a 4 suburbs around Melb....take your pick....from 6% pa to 20% pa

6% growth...Melton...a way out suburb

http://www.myrp.com.au/viewFreeRepo...ir=&postcode=3337&email=&fsrName=&widget=true

and Nunawading averaged 10% + pa...notice the huge spike in 2007....still out on the fringe
http://www.myrp.com.au/viewFreeRepo...ir=&postcode=3131&email=&fsrName=&widget=true

Malvern almost 13% pa....an inner suburb
http://www.myrp.com.au/viewFreeRepo...ir=&postcode=3144&email=&fsrName=&widget=true

Armadale...next door to Malvern.....a whopping 20% pa growth....big spikes in 2007
http://www.myrp.com.au/viewFreeRepo...ir=&postcode=3143&email=&fsrName=&widget=true


----------



## kincella (28 January 2010)

Its not all rosy out there...there is trouble brewing .......rates will need to come back down....or stay put.....our pollies will not have learnt the lesson from 2008.....
Some hiccups on the China story...will emerge sooner rather than later....then the house of cards will come crashing down.....Australia is so reliant on China....they put all their eggs into this one basket....all the dreams of avoiding a recession are reliant on China alone....we have nothing else....

Dunn and Bradstreet report on the news today, says families are using their credit cards to buy food, and not paying off the cards......

The US have kept their rates on hold.....

Our govt and RBA continuing with the farce they played in 2008....when they kept hiking rates.....when every other country was cutting their rates.....

there is no need to spike the rates, when inflation has been kept on hold....
higher rates affect small business, and jobs.....
the banks are tightening their loan criteria for home loans, and they stopped lending to small business and developers a long time ago....

the govt is considering taxing the miners.....

Woollies sales figures showed the stimulous, then the failures...

the second wave of recession hit in Oct last year, but it takes a few months after the event before the world wakes up....
wakey wakey....its time to wake up


----------



## satanoperca (28 January 2010)

kincella said:


> Its not all rosy out there...there is trouble brewing .......rates will need to come back down....or stay put.....our pollies will not have learnt the lesson from 2008.....
> 
> Dunn and Bradstreet report on the news today, says families are using their credit cards to buy food, and not paying off the cards......




Why should they keep them low? If housing hadn't been allowed to become unfordable in the first place, a few interest point rises wouldn't be the problem. We still have historically low IR's. Inflation is on its way up because KRUDD spent to much money he didn't have. He also has created a subprime. People has knocked me for saying this but watch and see.

By protecting the people he did them a disservice, they went and borrowed more.

You still don't get it, households are over indebted. No more big TV's and new cars.

Why should my retired parents get crap returns on their term deposits so that the spec property investors can profit and families are forced out of the market.

Even with low interest rates, business lending has been declining over the last year.

Lets lower the IR's and be like America - rightly srewed.

While it seems unfair that the miners will be tax, thats what happens when you have reckless spending by govnuts.

IR's to the roof. Play the game, feel the pain. Nothing is free in life except the air we breath and that to might not be free soon.

Starting to see the bulls getting a little fearful. Welcome to GFC 11 coming to a town near you.

Cheers


----------



## MACCA350 (28 January 2010)

Watch it come crashing back to earth






cheers


----------



## UBIQUITOUS (29 January 2010)

Macca, I disagree, so have amended the graph to show what powers we are dealing with here. 

Remember the old RE speculating mantra, "its never a bad time to buy"


----------



## Bolle (29 January 2010)

HA! I haven't laughed that hard in at least a week.


----------



## MACCA350 (29 January 2010)

Nicely done:jump:

cheers


----------



## Bill M (30 January 2010)

In the paper today, some snippets.
---------------------------

SOARING Sydney property prices are killing off the great Australian dream. Latest real estate figures show the median house price in Australia's largest city has hit a record $600,000 and could reach $700,00o this year. 


*And there are predictions that house prices could rise another 20 per cent this year alone, which would push the median figure past $700,000.*

---------------------------

Full Story Here at This Link


----------



## UBIQUITOUS (31 January 2010)

Bill M said:


> In the paper today, some snippets.
> ---------------------------
> 
> SOARING Sydney property prices are killing off the great Australian dream. Latest real estate figures show the median house price in Australia's largest city has hit a record $600,000 and could reach $700,00o this year.
> ...





[/quote]Property Planning Australia CEO Mark Armstrong said an increasing number of investors would enter the market in 2010, which would lead to prices "taking off".

"There is no doubt price growth in Sydney this year will exceed 2009 levels and we could see as much as 20 per cent growth," he said.







> Off the cuff ramping with no evidence to back up what he has to say. Not surprised that he chose to ignore that fact that the boost in the FHOG grant was a catalyst last year. I wonder how long before the public realise that the rug is being pulled out from under them?


----------



## prawn_86 (31 January 2010)

http://www.news.com.au/money/proper...ot-mortgage-bill/story-e6frfmd0-1225825092977

Media now reporting FHB as 'luring' yet when it was in place they couldnt encourage people fast enough to take advantage of it. 

Why cant we just have an actual free market


----------



## CamKawa (31 January 2010)

prawn_86 said:


> Why cant we just have an actual free market



Because then prices would fall. Massive government intervention is the only thing keeping the Australian residential house price ponzi scheme going. The spruikers will sight other factors supporting prices but those factors are very minor.


----------



## jbocker (31 January 2010)

prawn_86 said:


> http://www.news.com.au/money/proper...ot-mortgage-bill/story-e6frfmd0-1225825092977
> 
> Media now reporting FHB as 'luring' yet when it was in place they couldnt encourage people fast enough to take advantage of it.
> 
> Why cant we just have an actual free market




Curious to know what would a free market look like? 
The FHB grant I thought was more to offset the costs of taxes to buy / build a home. Why didn't they just not charge the tax in the first place for the FHB. The 'lure of cash' would have been negated somewhat, but I guess doesnt look as generous from a Pollies point of view .

Was there also desire to stimulate the housing industry with the FHBG?

I bought my first home many years ago, and it was stress big time back then too. It is part of the deal, buying a home requires a huge commitment. Those who have endured it should be talking to the new potential home owner what it is like, particularly when the Interest rates bite. I would advise that anyone taking on a loan add 3% to the rate and pay that from day one. Survive the first couple of years you have a strong chance of seeing it through.


----------



## satanoperca (31 January 2010)

Every ponzi scheme needs new entrants to keep it going, while allowing old participants to exit with their winnings.

The FHBG or FHVG was exactly that, "get on the ladder" was a term often used. 

Falling property prices would have exposed a weakness in the Australian banking system that are heavily invested in the mortgage market.

The media which generates significant revenues from the RE market also does not want house prices to decline, reducing their revenue base.

The Govnuts cannot afford for price declines as it is as sacrilege as telling Christians of past centuries that God does not exist. Certain exile will proceed.

People only want to see what fits with their belief's, property should continually grow abate against any fundamental requirements of society and the economy.

I ask you this, if property prices have increased over the last 18 years, why has owe current account been in deficit for exactly the same time, given a decade of boom in the resources sector. Property growth outside inflation and population increase has been proportional to the rise in household debt.

Cheers


----------



## Bill M (31 January 2010)

jbocker said:


> I bought my first home many years ago, and it was stress big time back then too. It is part of the deal, buying a home requires a huge commitment. Those who have endured it should be talking to the new potential home owner what it is like, particularly when the Interest rates bite. I would advise that anyone taking on a loan add 3% to the rate and pay that from day one. Survive the first couple of years you have a strong chance of seeing it through.




Hello jbocker, you make some very good points and I would like to share my story with other readers. My wife and I bought our first house in Sydney on the Northern Beaches in the early 90's. (I had other properties before that time but they were only units or places interstate). Anyhow we took out a big mortgage to buy the place and we had a plan. I was working 2 jobs at the time and sometimes up to 70 to 80 hours per week. My wife was working full time too and attended evening college as well. We were working so hard and putting every $$ into our mortgage with one aim and that was to knock it on head as soon as possible and live in our property mortgage free. We knew the biggest expense in anyone's lifetime is their home and that had to be overcome. We did not holiday for 3 years during that time and eventually the mortgage was paid off.

I had tins of paint in the dining room for nearly 2 years before I got to use them because we were so tired working all the time. Nothing was easy then and nothing is easy now, it comes down to really hard work and commitment.

We paid 225K for that house and sold it 3 years later for 290K. If it was in it's original condition now as when we sold it, it would be worth 1 Million Dollars now. The new owners though did major renovations including a whole new second story. I think it is worth about $1.5 Million now.

In short nothing is easy but it is over for us and we live totally rent and mortgage free and that to us is very important.

I agree with you, people must factor in at least 3% mortgage rate interest increases and in the mean time work hard and pay it off as soon as possible.


----------



## Dowdy (31 January 2010)

CamKawa said:


> Massive government intervention is the only thing keeping the Australian residential house price ponzi scheme going. The spruikers will sight other factors supporting prices but those factors are very minor.





The problem with government run ponzi schemes is that they can make them last indefinitely. After all, social security payments are a ponzi scheme but that ponzi scheme will continue forever since people don't fully see the effects.

People are starting to see the housing ponzi scheme and will probably last a few more years


----------



## CamKawa (4 February 2010)

Looks like Repo's are up. Can't be good for our government's sponsored ponzi scheme. Kev's going to have to prop it up with his credit card again. Come on Kev where are you?

Repossessions and mortgage stress soar

*THE number of Queensland properties repossessed by lenders jumped 20 per cent in 2009, new figures show.*


----------



## Aussiejeff (4 February 2010)

CamKawa said:


> Looks like Repo's are up. Can't be good for our government's sponsored ponzi scheme. Kev's going to have to prop it up with his credit card again. *Come on Kev where are you?*
> 
> Repossessions and mortgage stress soar
> 
> *THE number of Queensland properties repossessed by lenders jumped 20 per cent in 2009, new figures show.*




Never fear! For sure, Krudd & his trusty sidekick Swan-ee are this very moment loading up a pile of rubber cheques into Elvis for rapid deployment to suffering Bananabenders. 

Hooray!


----------



## MACCA350 (4 February 2010)

CamKawa said:


> Looks like Repo's are up. Can't be good for our government's sponsored ponzi scheme. Kev's going to have to prop it up with his credit card again. Come on Kev where are you?
> 
> Repossessions and mortgage stress soar
> 
> *THE number of Queensland properties repossessed by lenders jumped 20 per cent in 2009, new figures show.*



And up 60% from 2007 to 2009

*"Last year, lenders took legal action to repossess 1638 Queensland properties, up from 1361 in 2008 and 1025 the year before, court records show."*

That's just Queensland though, any figures for other areas? 

cheers


----------



## CamKawa (4 February 2010)

I think this bloke is kinda bearish. Has some interesting points.

Australian Housing Bubble About to Burst, Market About to Crash


----------



## satanoperca (4 February 2010)

Camkawa,

Great article, not bearish just realistic.

Amazed that most people have a precondition that everything most grow continually at all costs both present and future.

Cheers


----------



## Beej (4 February 2010)

Yep - keep trying boys with all the same old "crash" arguments. Default rates are still minuscule - a 20% increase on a poofteenth of nothing is still pretty much a poofteenth of nothing.

In the meantime, *ABS stats show house prices across Australia rose 13.6% in 2009* (http://www.abs.gov.au/AUSSTATS/abs@...A50B6B8CF85F0474CA25722900179E3F?OpenDocument). APM/Residex and RP-Data all showing rents increasing last year by 5% on average as well. So much for the crash.......

Attached is a graph that shows the cost of servicing the average mortgage over 30 years from the average household disposable income. As you can see, households are on average are no more mortgage stressed now that they have been historically through the 80s and 90s (with various ups and downs through all periods), and in fact the un-affordability peak of the late 80s boom was far worse for affordability than the more recent 2007 peak. Right now mortgage serviceability is at the same levels it was in the early 80s relative to average household incomes.

This to me does not suggest any great mortgage default wave coming to Australia, especially given the RBA has left interest rates for now, and are on the record stating that they see current levels of interest rates as "neutral" (partly because the banks did some independent tightening already for them!).

I've also attached a graph that shows the household disposable income to house price ratio. Again, while we clearly had a systemic shift in that ratio in the late 90s (due to prevalence of dual incomes, shift from high inflation/high interest rate to low inflation/low interest rate economy etc), if there was a bubble it already peaked 7 years ago and has been slowly deflating since. However, commensurate with this has been continuing rises in nominal house prices (which which picked up pace last year after a 3-4% fall in 2008 - Satanoperca that shows that no-one expects prices to grow continuously for ever, there are corrections from time to time but the long term trend IS up). 

These charts demonstrate that there is no big bubble in AU residential real estate; it's business as usual from here for a while I think, and watch out for a possible construction boom kicking off mid this year.

Cheers,

Beej


----------



## Beej (4 February 2010)

CamKawa said:


> I think this bloke is kinda bearish. Has some interesting points.
> 
> Australian Housing Bubble About to Burst, Market About to Crash






satanoperca said:


> Camkawa,
> 
> Great article, not bearish just realistic.
> 
> ...




The problem with the linked article, is it forms a view based on the flawed Fujistsu consulting "mortgage stress" measure, which says that mortgage stress exists of a household is paying more than 30% of their gross income to cover the mortgage, regardless of what that income is. There are so many flaws with this I'm not sure where to start?? How about:

1) When people first buy their first home, their mortgage (and like the cost of servicing their mortgage) will be the highest it will ever be at any other time in the life of their loan, and their income will likely be the LOWEST it will ever be.

2) Banks typically use 30% of gross income as the crtiteria for what they will lend - which they consider conservative. So if you go and survey a bunch of recent FHBs, and declare them in "mortgage stress" if they have to use 30%+ of their income to cover the mortgage, then it's a foregone conclusion that you will get a large propertion "in stress" - in fact I'm surprised it's as low as 47%!

3) A household on $200k/year paying 30% of their income to service the mortgage HAS IT EASY. A household on $50k/year may be struggling a bit more. The point is, a blanket number like 30% is meaningless as the general cost of living is pretty much a constant for everyone, but every household has a different level of income available.

So the bottom line is if you think the AU market is in a bubble and going to crash on the basis of an article that uses that Fujistsu report/methodology to assess the level of "mortgage stress", then you are likely going to come to the wrong conclusion.... yet again.... 

CamKawa for example, you've been calling the crash for what - 3? Maybe 4 years here now? Longer even? How much have house prices continued to rise in that time? a 20-30% crash now would probably just get prices back to where they were when you first started calling the crash!  But regardless, it is not going to happen, Not this year anyway.


----------



## Taltan (4 February 2010)

Beej

I'm pretty sure you'll find your graph is comparing the median house price to the mean incomes. That is a flawed comparision unless Macquarie's bankers need multiple homes. I'm pretty sure if you compared median prices to median incomes you would find the ratio has increased more. 

With the nationwide median now at $390,000 I find it hard to believe that nationwide household income is at (390,000/4.5) $86,667


----------



## Beej (4 February 2010)

Taltan said:


> Beej
> 
> I'm pretty sure you'll find your graph is comparing the median house price to the mean incomes. That is a flawed comparision unless Macquarie's bankers need multiple homes. I'm pretty sure if you compared median prices to median incomes you would find the ratio has increased more.
> 
> With the nationwide median now at $390,000 I find it hard to believe that nationwide household income is at (390,000/4.5) $86,667




I believe the graphs are based on average GROSS household income (I think I wrote disposable in my original post which is not correct). I would think such analysis has to use average income as I don't think median figures for income are available? But despite Macquarie bankers etc the average the mean are not all that different when you look at income stats (but they can be a little different yes). 

Regardless I think $86k would be about right for the average household with a mortgage? AWOTE for a single full time worker is $65k, so if you had one average full time earner + a partner working part time there's your $86k easy. I'll dig into the RP-data stats and try and find out exactly how they work out their household income figure though.

Cheers,

Beej


----------



## gfresh (4 February 2010)

Would be interested to see what the median income is actually.. I have a feeling the mean is pulled up by a number of $1m+ earners, of which their salary may be  equal to 20 poor saps who have to live off $50k a year.

Put half above, and half below (the median) and may tell a different story.


----------



## gfresh (4 February 2010)

yup.. notice the near $100 difference between mean and median figures here. 

http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6523.0Main+Features12007-08?OpenDocument



> While the mean equivalised disposable household income of all households in Australia in 2007-08 was $811 per week, the median (i.e. the midpoint when all people are ranked in ascending order of income) was somewhat lower at $692 (shown as P50 in Table 1). This difference reflects the typically asymmetric distribution of income where a relatively small number of people have relatively very high household incomes, and a large number of people have relatively lower household incomes, as illustrated in the following frequency distribution graph.




S5. DISTRIBUTION OF EQUIVALISED DISPOSABLE HOUSEHOLD INCOME, 2007-08


----------



## Trade wind (4 February 2010)

Beej said:


> The problem with the linked article, is it forms a view based on the flawed Fujistsu consulting "mortgage stress" measure...




Fujitsu, isn't that an air-conditioner? The property market could do with some cooling. But seriously, are you saying property is good value? Would you buy an investment property now?



Beej said:


> 3) A household on $200k/year paying 30% of their income to service the mortgage HAS IT EASY. A household on $50k/year may be struggling a bit more...




The median household income is around $65K a year - for all Australians not just first home buyers - with an average mortgage around $350K. In other words, most buyers are indeed "struggling a bit", and will be struggling a lot more if interest rates rise.

It is pretty obvious that the government's stimulus package overshot the mark. Slashing interest rates and pump priming property via the FHB grant has further bloated an already overheated market.

Rudd got it wrong, and interest rates should rise, but elections are won and lost in the swinging seats of the mortgage belt, aka "working families" (formerly the Howard battlers). Better to see Australia's foreign debt skyrocket than suffer the political backlash of rising interest rates.

We'll see, but even media financial advisers are now warning first home buyers to stay out the market. I can't see a crash but I'd suggest we need a correction. Remember the GFC?


----------



## Sidamo (4 February 2010)

Beej said:


> These charts demonstrate that there is no big bubble in AU residential real estate; it's business as usual from here for a while I think, and watch out for a possible construction boom kicking off mid this year.




So Rismark are claiming it takes 25% of income to service a mortgage?

So, if median price for whole of Oz is $390k and assuming a 20% deposit (unlikely for FHB) that leaves a mortgage of $321k, which currently costs $2137.95 per month (ANZ), or $25,655 of after tax income per annum. Are Rismark claiming the median household in Oz has an after tax income of $102k??

Rismark are also claiming a median house prices of $540k for Melbourne or something, aren't they? Doing the maths would suggest an after tax household income of $140k in that case.

Smells to me like they're pulling figures out of their ****.


----------



## satanoperca (4 February 2010)

I agree with Beej.

We are not in a bubble as long as the following stays constant :

1) IR stay low 
2) The govnuts step in with our tax payers money the first sign of trouble to prop up a market
3) Local council remain ego driven and do not allow land to be developed
4) Land banking continues
5) Taxes do not go up to pay for KRUDD deficit
6) Foreign credit to the banks is available
7) The $AU stays high
8) That the GFC has finished and recovery is on its way.
9) The average person believes property is a way to financial freedom
10) Soft lending requirements
11) China is telling the Truth about growth

Nothing much to it really.

Cheers


----------



## SusanW (4 February 2010)

Mr. Joye and his index play a little deception imho. 

Firstly, household income, as he uses it, is not a constant, but a dependent variable of house price. 
i.e. when house prices go up, people adapt by 
- forming larger households such as when adult children stay at home more or separated couples cohabitate
- residents seek more hours of work, such as by part time or non working partners increasing paid work.
- retirees put off retirement

This is born out in Mr Joye's stats. He says household disposable income went up 44% from 2003 until now. However, the average full time wage went up around 3/4 of that. 

Secondly, Mr. Joye chooses to mask affordability by using house price, rather than debt serviceability. Hence, when rates move up from their recent and ongoing historical lows, his index won't show it.

In my view, the least misleading measure across time is derived from 
- median full time weekly wage (excluding overtime) 
- cost of average 25 year mortgage on median property.
These figures will unmask that most people now borrow more than the historical 80% LVR and many are taking out interest only rather than principal and interest loans.

Finally, if affordability is improving, why have the banks been tightening credit for some time by lower DSRs?


----------



## MACCA350 (4 February 2010)

gfresh said:


> yup.. notice the near $100 difference between mean and median figures here.
> 
> http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6523.0Main+Features12007-08?OpenDocument
> 
> ...



Looking at that graph the majority of households have an equivalised disposable income somewhere between $300 and $800, taking the middle ground of $550 that works out to a gross equivalised household gross income of $33k (that's no where near the $65k average wage). 

Take an average household of 2 adults and 2 young children we have a weighting of 2.1 which equates to an disposable household income of $1155, split that 80/20 between main earner and spouse and you have gross incomes of $60k and $13k with combined gross household income of of $73k for a dual income or $77k for a single gross income.

Using Westpac's borrowing power calculator, that dual income household with no liabilities or credit cards can borrow $305k max

Take the same scenario but using the Median equivalised disposable income of $692 they can borrow $465k max

Given the above, the current Melb median house price of $540k has overshot the mark and I'd expect it to pull back. If it doesn't I'd be wondering who is buying, because those levels are out of reach for the majority of Australian households as clearly shown above.

cheers


----------



## adobee (4 February 2010)

I can say first hand that the sydney housing market is pretty hot right now.. there is hardly any new supply on the market this year and a huge amount of buyers..  Houses are definetly strong in inner & western rings out to around parramatta (beyong here I am not on the pulse)..  With the pressure I am seeing I would believe without a interest rate rise price could increase 10%+ in the next 6 months easily ..


----------



## SusanW (4 February 2010)

MACCA350 said:


> Given the above, the current Melb median house price of $540k has overshot the mark and I'd expect it to pull back. If it doesn't I'd be wondering who is buying, because those levels are out of reach for the majority of Australian households as clearly shown above.




The Melbourne median income would be higher than the australian median income. Regional areas pull the median down (apart from mining towns).

The bank calculators unfortunately don't do one's risk management. 
Be safer to plug in the average interest rate for the last two economic cycles.


----------



## Beej (4 February 2010)

Trade wind said:


> Fujitsu, isn't that an air-conditioner? The property market could do with some cooling. But seriously, are you saying property is good value? Would you buy an investment property now?






I think there was some value around back in late 2008/early 2009, but those value buys are gone for now. There may be some good opportunities later in the year, but we will have to see how things pan out. So no I wouldn't purchase an IP right now unless something exceptional came up.



> The median household income is around $65K a year - for all Australians not just first home buyers - with an average mortgage around $350K. In other words, most buyers are indeed "struggling a bit", and will be struggling a lot more if interest rates rise.
> 
> It is pretty obvious that the government's stimulus package overshot the mark. Slashing interest rates and pump priming property via the FHB grant has further bloated an already overheated market.
> 
> ...




The FHBG boost certainly had an impact, and the low interest rates an even greater one again, yes. But remember the RBAs job is not really to try and control house prices, although given the situation in the US etc it is something that they are now keeping more of an eye on than in the past. However I think their main focus is the economy in general, inflation etc, and with housing they have made many noises signalling state government to get their act together to provide incentives for more houses to be built - so their interest is primarily in the supply side with housing.

I expect the next couple of years to be "cooler" than last year - so a bit of a correction in "real" prices, and maybe even another small pull back year in there somewhere, but I also don't see any crash coming. Obviously different markets/regions may perform differently as well.

Cheers,

Beej


----------



## Dowdy (4 February 2010)

What percentage do you consider a correction BJ


----------



## Beej (4 February 2010)

satanoperca said:


> I agree with Beej.
> 
> We are not in a bubble as long as the following stays constant :
> 
> ...




1) As long as rates stay below 8-9%, business as usual. Above that and prices to start to come under pressure - especially the FHB segment as we saw in early 2008. However, if a shift to high interest rates is commensurate with an inflation break-out, then nominal prices will still continue to rise.
2) Not required.
3)/4) Not required as if more dwellings are built median can stay steady/fall without effecting value of existing property.
5) Unless there were massive tax increases, non issue. Bracket creep etc which is the usual method to increase taxes happens slowly and will not impact housing market materially.
6) Will always be available as we are small fish in the global capital pond, as we don't actually need that much anyway (Check APRA stats)
7) No - lower $AU provides even better value for o/s investors and returning ex-pats so pushes prices UP
8) Yes
9) This is Australia - it's the great Australian dream!
10) Yes
11) Well something is going on in China that's for sure! But yes the AU economy is linked heavily to the China story.

So in summary, the only things that could trigger a big housing correction IMO from here are:

1) Shift from low interest rate environment long term to a high one (10%+), without corresponding high inflation (highly unlikely scenario)
2) A GFC Mark 2
3) Banks significantly tighten lending criteria and tighten credit availability across the board (probably would only happen ig\f there was GFCII)
4) China collapses and takes the AU economy down into deep recession with it.

I think the above summary represents the true risks.



Dowdy said:


> What percentage do you consider a correction BJ




Any year with flat-ish or mildly falling prices is a correction in real terms and/or nominal terms.

Cheers,

Beej


----------



## drsmith (4 February 2010)

I'm eagerly awaiting the March update to the RBA's Financial Stability Review which contains stats on housing affordability as previously discussed.

https://www.aussiestockforums.com/forums/showthread.php?p=503070&highlight=tightrope#post503070

The RBA links from that discussion are broken but the September 2009 FSR can be accessed from the link below.

http://www.rba.gov.au/publications/fsr/index.html


----------



## satanoperca (4 February 2010)

Beej said:


> 1) As long as rates stay below 8-9%, business as usual. Above that and prices to start to come under pressure - especially the FHB segment as we saw in early 2008. However, if a shift to high interest rates is commensurate with an inflation break-out, then nominal prices will still continue to rise.
> 2) Not required.
> 3)/4) Not required as if more dwellings are built median can stay steady/fall without effecting value of existing property.
> 5) Unless there were massive tax increases, non issue. Bracket creep etc which is the usual method to increase taxes happens slowly and will not impact housing market materially.
> ...




Thanks Beej for taking the time to respond. It is appreciated even if we do not agree on all aspects of the property market.

1) Disagree, if interest rates were to go back to 8-9% I believe that a lot of the first rung on the property ladder (current FHB) will suffer mortgage stress and a larger than normal would default. 9% IR's would see approx a 40% increase in property payment for those that bought last year. Please look at the current debt to household income ratios. 10% IR's and property wont be a priority, supporting business that employee people will. This country like many others is way to dependant on property increasing every year. 
Even the current increases have people screaming. It was the FHB + FHVG that was part of this latest property price rise.
2) If not necessary, why was the FHBG necessary in the first place if the market is robust. Sounds like a ponzi, smells like a ponzi, is a ponzi. 
3,4) Adequare town planning and local council more willing to allow development is necessary to add to supply. Making develops release land or pay a tax will add to the supply also.
Your response doesn't make sense, adding to the supply equal to population increases will result in existing properties seeing price declines.
5) Increases taxes will slowly eat away at disposable income effecting not only housing but also retail and many other markets that employee people. Have to pay back the govnuts debt somehow.
6) Ok believe what you will. 
7) Fanatastic, sell out a basic need of future generations so the ponzi scheme can keep going. Gee, mothers now have to work to provide a home, why not send the children out to work as well.
8) You better go inform the share market that all is well.
9,10) While lending has been free and easy and credit cheap. What was that credit crunch thing that just happended and required the majority of world leaders to cooperate or else hell might have frozen over.
Dream, thats what the Aboriginals thought before white man arrived. All things can change and will, it is just a matter of time.
11) We agree

Response to your points 
1) I am unable to predict what will happen in the future but I hope we do not go down the path of Japan and the US will almost 0% interest rates, as it is a failed concept.
2) Soon to arrive some time later this year, early next at the shock of the govnuts who think all is ok.
3) Slowly happening, no or reduced availability of low doc loans, Westpac moving from 95% LVR's to 87%. Banks increasing rates above the RBA.
4) That is a big question, but I think the knock on effect will be the result of the dying empire, The USA.

Cheers


----------



## Mofra (5 February 2010)

MACCA350 said:


> Given the above, the current Melb median house price of $540k has overshot the mark and I'd expect it to pull back. If it doesn't I'd be wondering who is buying, because those levels are out of reach for the majority of Australian households as clearly shown above.



So you're assuming that most FHBs starting at the median price bracket? 
That's not an assumption I'd be brave enough to make.


----------



## MACCA350 (5 February 2010)

Mofra said:


> So you're assuming that most FHBs starting at the median price bracket?
> That's not an assumption I'd be brave enough to make.



I made no mention of the FHB market. It was a simple observation using the graph.

cheers


----------



## SM Junkie (6 February 2010)

What would you do?

A local real estate agent in my town is trying to double the price of real estate overnight.  Here is the story:-

Property A has one old asbestos 3 x 1 house on 1240 sqm and just sold this month for $1.8 million.  Property B next door is currently for sale.  Property B is strata titled and only 709 sqm with an old 3 x 1 asbestos property.  Property B is listed for sale at $1.87 million, but with about half the land size of A. Propety C (opposite side of court to B) sold in October for $2.3 million, but it's size is 1330 sqm and has an old 8 x 2 asbestos house.

By my estimation, property B should have a value of between $900 and $1.1 million? Based on historical sales data. 

So is it ok for real estate agents to be driving the market so high.  Is his actions legal?  If you think it is illegal, would you do anything about it?


----------



## explod (6 February 2010)

SM Junkie said:


> What would you do?
> 
> A local real estate agent in my town is trying to double the price of real estate overnight.  Here is the story:-
> 
> ...




Real Estate Agents and anyone else can put any price they want on anything for sale (Should be the vendor's choice however).   Its a free country

In reality, agent tells the vendor its a bit dear and the other bloke in the office tells the buyer its a bargain.

All about turn over, price varaiations small but lots of commissions large and good for end of year xmas party at the agents office.


----------



## Go Nuke (6 February 2010)

MACCA350 said:


> Looking at that graph the majority of households have an equivalised disposable income somewhere between $300 and $800, taking the middle ground of $550 that works out to a gross equivalised household gross income of $33k (that's no where near the $65k average wage).
> 
> Take an average household of 2 adults and 2 young children we have a weighting of 2.1 which equates to an disposable household income of $1155, split that 80/20 between main earner and spouse and you have gross incomes of $60k and $13k with combined gross household income of of $73k for a dual income or $77k for a single gross income.
> 
> ...




Thank you, thank , thank you MACCA.
Great post.

There are 2 or more lots of figures around, the govenment and other select groups choose to showcase the best looking figures.....not always the most accurate ones!



> Given the above, the current Melb median house price of $540k has overshot the mark and I'd expect it to pull back. If it doesn't I'd be wondering who is buying, because those levels are out of reach for the majority of Australian households as clearly shown above.



+1 to that mate!
Immigration helping to pay those prices? Family putting together to buy a place to live in?
Perhaps?

Something I just read today,

http://www.news.com.au/couriermail/story/0,23739,26673347-5011140,00.html

Comes as no suprise to me.

If I may use some of my own circumstances.

Bought a block of land, building a house this year.
Land was $220K and 604sqm block.

Because of covenants we have to build a minimum house of 220sqm's. (about 23 squares I think that is)
This means the price is partialy set by the size of the house.

In all not getting all the fancy trimmings like stone benchtop etc, it looks like its going to cost us about $415K - $420K.

About 20K over our budget.

Not to get into banking details but basicaly I'll be looking at making repayment with an interest rate of 10% on $400K borrowed.

Thats $877/week!

Thats ALOT I think for the average person.


----------



## SM Junkie (6 February 2010)

explod said:


> Real Estate Agents and anyone else can put any price they want on anything for sale (Should be the vendor's choice however).   Its a free country.




Under section 52 of the Trade Practice Act, agents cannot over or under appraise a property. The law stipulates that owners should be able to rely on agents to provide accurate research, advice and information.

The Real Estate agents are supose to work to a Code of Conduct and under several Acts. Which seems like a lot of bull to me if they can really do what they want.


----------



## IFocus (6 February 2010)

satanoperca said:


> 2) If not necessary, why was the FHBG necessary in the first place if the market is robust. Sounds like a ponzi, smells like a ponzi, is a ponzi.
> 
> Cheers




FHBG increases were about Treasury fears the world was going to end putting a floor under housing prices to protect the banks capitalization levels.


----------



## Aussiejeff (6 February 2010)

IFocus said:


> FHBG increases were about Treasury fears the world was going to end putting a floor under housing prices to protect the banks capitalization levels.




Applying that logic 100%, maybe Treasury should start significantly ramping up the FHBG in coming months, as the unholy spectre of _End Of The Worlde Part Deux_ seems to be rattling in the closet somewhere over the near horizon.

Best to be on the front foot, eh?


----------



## MACCA350 (6 February 2010)

Go Nuke said:


> Thank you, thank , thank you MACCA.
> +1 to that mate!
> Immigration helping to pay those prices? Family putting together to buy a place to live in?
> Perhaps?



I'd add Krudd's change in international buying restrictions to that list, and probably stick it at the top of the list.

And no doubt family are helping, in fact we are helping my mother purchase an investment property



> If I may use some of my own circumstances.
> 
> Bought a block of land, building a house this year.
> Land was $220K and 604sqm block.



Interestingly we purchased an 800sq block for $225 last year. Currently there are no blocks available in that size and location. Judging on other blocks for sale in the area our block is now worth around $300k+, that's 33%+ in less than a year :screwy:



> Because of covenants we have to build a minimum house of 220sqm's. (about 23 squares I think that is)
> This means the price is partialy set by the size of the house.



Same here, I'd have to check the paperwork for the exact figure but from memory its around the same size. Not to mention there are numerous exterior design regulations that can have a similar effect.

cheers


----------



## MACCA350 (7 February 2010)

Surprised the usual suspects haven't posted this yet to facilitate the gloating:

Reiv 6th Feb, 161 auctions and 82% clearance rate

I guess those international buyers are outbidding themselves

cheers


----------



## Mofra (8 February 2010)

MACCA350 said:


> I made no mention of the FHB market. It was a simple observation using the graph.



It sounded like it was implied as median house prices are being discussed in conjunction with median salary and no proceeds of sale (released equity) used to finance.


----------



## Mofra (8 February 2010)

Thought this was an interesting article, shows that irrespective of asset class buying poorly is still buying poorly:

http://www.theage.com.au/business/w...have-an-unplanned-downside-20100207-nktw.html



> *When buying off the plan turns out to have an unplanned downside MARIKA DOBBIN *
> 
> Beware the many pitfalls that come with purchasing property before it is built.
> 
> ...


----------



## tech/a (8 February 2010)

> The future of Australian property prices




Where there is demand prices will continue to maintain or rise.
Where demand is weak prices will continue to drop.
Where demand dries up prices will fall dramatically.

Increase in interest rates will dampen demand and price rises.
Accelerate weakening in prices where demand is slow or dries up.
Increase in stimulas (packages) will have the opposite effect.
Buy and hold will remain flat for investors.
Developement will remain a viable profit source to satisfy demand.
Follow infastructure.

Austraila does not have a surplus of supply in housing.


----------



## satanoperca (8 February 2010)

tech/a said:


> Australia does not have a surplus of supply in housing.




Weren't building approvals up 38% last year. If that be the case, no surplus now but maybe later in the year. A building boom is underway.

Cheers


----------



## tech/a (8 February 2010)

How does an increase in approvals relate to an increase in supply.

The figures quoted relate to a 38% increase (if thats right) over last years/months approvals.

These approvals are attempting to satisfy demand.

Every year we have a deficit in housing relative to demand for occupancy across the board.
In some areas there is over supply (limited--some inner city high density) and in others dramatic under supply.
5000 allotments were released 12 mths ago South of Adelaide all sold in months.

You wont be seeing a glut in our lifetime.


----------



## Trembling Hand (8 February 2010)

tech/a said:


> You wont be seeing a glut in our lifetime.




Is supply/demand related to population or credit though?

I too think that if we have increasing demand through population vs restricted supply that makes sense.

But there is a good argument that that doesn't matter on a leveraged game, which new property property is. The deciding factor is credit supply.

Something that may not come into most thinking? (See discussion about the colour of swans or something like that )


----------



## tech/a (8 February 2010)

Trembling Hand said:


> Is supply/demand related to population or credit though?
> 
> I too think that if we have increasing demand through population vs restricted supply that makes sense.
> 
> ...




Yes true.
Demand population growth and while this will slow possibly ---supply will indeed be limited to some extent by available credit and terms of that credit.

Developement in my view is the focus for those wishing to make a few $$s from property with minimum risk---if you have enough capital and accumin.


----------



## satanoperca (8 February 2010)

tech/a said:


> How does an increase in approvals relate to an increase in supply.




Increase in approvals for builds would mean an increase in supply. Whether this supply will meet demand I did not say, just we will have to what until later in the year.

Credit is the key to house prices, but my opinion may be bias.

Cheers


----------



## Dowdy (8 February 2010)

tech/a said:


> Increase in interest rates will dampen demand and price rises.




A house will only sell as much as someone can afford to pay off.

How would prices rise if people will have a harder time paying it off?

Show me a graph where interest rate have risen and it's lead to a price rise in houses?


----------



## tech/a (8 February 2010)

satanoperca said:


> Increase in approvals for builds would mean an increase in supply. Whether this supply will meet demand I did not say, just we will have to what until later in the year.
> 
> Credit is the key to house prices, but my opinion may be bias.
> 
> Cheers




Yes sorry, of course there will be an increase in supply.
But not a guarentee of an over supply or a meeting of demand.


----------



## Trembling Hand (8 February 2010)

Dowdy said:


> Show me a graph where interest rate have risen and it's lead to a price rise in houses?




At a guess from early 2002 to 2008


----------



## tech/a (8 February 2010)

Trembling Hand said:


> At a guess from early 2002 to 2008






> Increase in interest rates will dampen demand and price rises.




Read AND dampen price rises at least initially.
Increase in interst rates generally mark an increase in inflation which in turn add to the price of goods which in turn adds to the price of building which leads to increase in the price of housing.

If we get a good dose of inflation in the future you dont want to be a renter holding cash waiting for housing to fall through the floor.


----------



## Beej (8 February 2010)

I know it's looking in the rear-view mirror, but here is an interesting article summarising the performance of the residential housing market in Australia over the past decade, inlcuding price and volume stats: http://www.smartcompany.com.au/prop...-property-market-s-last-decade-in-review.html



satanoperca said:


> Credit is the key to house prices, but my opinion may be bias.
> Cheers




On this - credit is a *factor* yes, but without the underlying demand available credit will not be used up - no one holds a gun to people's heads and forces them to borrow as much as they possibly can to buy a house. 

I don't think credit availability becomes a factor for house price in the upwards direction until basic demand causes people to make use of available credit. And in the downwards direction only when credit availability becomes a restriction; Ie people who can afford to and are happy to borrow larger amounts to get the "better" house cannot because the $$ are not available to them, despite easily meeting serviceability requirements - so they buy cheaper. Over time ( 1 year+) if this situation persists then the market may start to adjust down. Despite some mild tightening of lending criteria etc in Australia in the past 1-2 years, I don't see us as being anywhere near a serious credit rationing scenario at this stage that would switch us to the downwards price pressure situation. There seems to be plenty of money to go around, with raw demand seeming to be winning the price direction struggle once again.

Cheers,

Beej


----------



## satanoperca (8 February 2010)

tech/a said:


> If we get a good dose of inflation in the future you dont want to be a renter holding cash waiting for housing to fall through the floor.




This is the bit that makes it tricky. Will govnuts trying erode the debt away with inflation.

If inflation goes up, property debt will be king as long as you can service it as IR's will follow and savings will be eroded.

Strange world we live in.

Cheers


----------



## Aussiejeff (8 February 2010)

After the new immigration laws come into effect (essentially cutting the intake of "unwanted" skills such as hairdressers, cooks, accountants etc and replacing these with doctors, engineers, scientists etc) I expect the new mix of much wealthier immigrants will significantly pump up house prices across Australia over coming years.

Mr KRudd WILL be pleased!


----------



## satanoperca (8 February 2010)

Beej said:


> I know it's looking in the rear-view mirror, but here is an interesting article summarising the performance of the residential housing market in Australia over the past decade, inlcuding price and volume stats: http://www.smartcompany.com.au/prop...-property-market-s-last-decade-in-review.html



Written by Tim Lawless is the Director of Property Research at RP Data. No vested interest in manipulating stats possible with RPdata.


Beej said:


> On this - credit is a *factor* yes, but without the underlying demand available credit will not be used up - no one holds a gun to people's heads and forces them to borrow as much as they possibly can to buy a house.



They don’t need a gun, people are by nature greedy, they, the masses will take the maximum they can get as a rough generalisation. Remove easy and cheap credit and see how prices hold old. 
The FHBG is a perfect example of how a little leveraged up can inflate prices. Looking forward to the tripling of the FBHG coming soon.
The most valid statement today was from Tech/A. There is money to be made developing property, value adding to it. This I totally agree with.
Cheers


----------



## Calliope (13 February 2010)

The tipping point is not far off.



> Yet on Wednesday one of the unpalatable and less obvious side-effects of Australia's inflating house prices - now deemed by the Economist magazine to be overvalued by 50 per cent - became clearer. The rise in the number of Australian households who are in so much difficulty with their mortgage repayments that they are facing selling up - or being sold up - is continuing its ascent beyond the 200,000 mark reached in November. By this year's end, some 270,000 Australian households will be in severe mortgage stress.
> 
> Defaults on mortgage repayments will rise to 35,500 by December - considerably above the present yearly total of about 28,000 households.
> 
> ...




http://www.smh.com.au/world/stressed-out-waiting-for-the-bubble-to-burst-20100212-nxjf.html


----------



## Bushman (16 February 2010)

Prof. Steven Keen has lost the well-publicised bet that house prices in Australia would be higher than their September 2008 level a year later. So now he has to walk from Sydney to Mt. Kosciousko. 

He has created a web-site with some interesting housing stats. Second part of his bet is a 40% fall over a 10-15 year period. 

www.keenwalk.com.au


----------



## satanoperca (16 February 2010)

He might have lost the fight but not the war.

It is conceivable that prices could fall up to 40% given their historic rise last year and the momentum to push them higher this year.

So at the end of the year, if they rose 10% a fall of 30-40% would only put prices back to 2007-2008 levels. No biggy really.

Cheers


----------



## ROE (16 February 2010)

satanoperca said:


> He might have lost the fight but not the war.
> 
> It is conceivable that prices could fall up to 40% given their historic rise last year and the momentum to push them higher this year.
> 
> ...




I cant predict house price or stock price dont know where it end up but
a rise of 30% does not equate to a fall of 30% and you break even

to keep it simple
stock/house decline 50% you need to gain 100% for you to break even.


----------



## Soft Dough (16 February 2010)

satanoperca said:


> He might have lost the fight but not the war.
> 
> It is conceivable that prices could fall up to 40% given their historic rise last year and the momentum to push them higher this year.
> 
> ...




Then the banks panic

Then the believers panic

Then the foreign investors panic

Then the businesses fail 

Then unemployment rises

Then FINALLY Robots eats humble pie 


I like the fact that banks are improving their balance sheets and reducing the Gearing ratios for borrowers, at the same time that the government is reducing the first home buyers vote grab.

I'd kill three fluffy seal pups to read the henry report recommendations, I'm sure there is some good stuff in it for people who are cashed up.

Mostly cashed up waiting for the fall... and proud of it.


----------



## Beej (17 February 2010)

Soft Dough said:


> I like the fact that banks are improving their balance sheets and reducing the Gearing ratios for borrowers, at the same time that the government is reducing the first home buyers vote grab.
> 
> I'd kill three fluffy seal pups to read the henry report recommendations, I'm sure there is some good stuff in it for people who are cashed up.
> 
> Mostly cashed up waiting for the fall... and proud of it.




Ha! You should have bought during the falls of late 2008/early 2009 when myself and others were trying to tell everyone here that things were about as good as they get for a residential property buyer......  

IMO you won't see a market with the opportunities that were presented at that time for many years. The low end may stagnate/soften for a while (more sensitive to grants, interest rates and banks LVR policies etc), but you won't see 20%+ discounts off previous market price for the well located premium properties like we saw 12/18 months ago..... Not until the next significant down part of the price cycle anyway, which as I said is probably sometime in the next 5-10 years.

Cheers,

Beej


----------



## wayneL (17 February 2010)

Beej said:


> Ha! You should have bought during the falls of late 2008/early 2009 when myself and others were trying to tell everyone here that things were about as good as they get for a residential property buyer......
> 
> IMO you won't see a market with the opportunities that were presented at that time for many years. The low end may stagnate/soften for a while (more sensitive to grants, interest rates and banks LVR policies etc), but you won't see 20%+ discounts off previous market price for the well located premium properties like we saw 12/18 months ago..... Not until the next significant down part of the price cycle anyway, which as I said is probably sometime in the next 0-10 years.
> 
> ...



Corrected to reflect true possibilities.


----------



## Soft Dough (17 February 2010)

Beej said:


> Ha! You should have bought during the falls of late 2008/early 2009 when myself and others were trying to tell everyone here that things were about as good as they get for a residential property buyer......
> 
> IMO you won't see a market with the opportunities that were presented at that time for many years. The low end may stagnate/soften for a while (more sensitive to grants, interest rates and banks LVR policies etc), but you won't see 20%+ discounts off previous market price for the well located premium properties like we saw 12/18 months ago..... Not until the next significant down part of the price cycle anyway, which as I said is probably sometime in the next 5-10 years.
> 
> ...




Hope you have locked in your profit, you might see it slip away really soon.


----------



## Fleeta (19 February 2010)

Can anybody believe that the media print this stuff?????

http://www.heraldsun.com.au/news/broadmeadows-million-dollar-future/story-e6frf7jo-1225832359213

THIS IS PROPAGANDA! YOUNG AND UNEDUCATED PEOPLE ARE [MAYBE] STUPID ENOUGH TO BUY HOUSES IN BROADMEADOWS THINKING THIS IS TRUE!! THIS TYPE OF REPORT SHOULD BE ILLEGAL!

Can anybody explain how this report could report could actually be true in the absense of either (1) an explosion of wages (and inflation) or (2) banks dishing out 50 or 75 year loans?????

You can protect the sheep from the wolves, but you can't protect the sheep from themselves...


----------



## joeyr46 (20 February 2010)

Fleeta said:


> Can anybody believe that the media print this stuff?????
> 
> http://www.heraldsun.com.au/news/broadmeadows-million-dollar-future/story-e6frf7jo-1225832359213
> 
> ...



I would think this is proof positive that a bubble will not occur in housing as it already has occurred just like the Dow in 2000 when we had books coming out about dow 50000 and when oil was $147 we had people in the industry writing about peak oil and how high it was going to go. Not rational arguments about prices going up but irrational arguments that took no real notice of (a) what causes prices to be what they are or (b) not having an understanding that all things are connected and not isolated
 the two things all these irrational arguments use is
(1) the belief that supply / demand drives prices as opposed (a) to peoples belief in what prices should be driven by psychology and (b) liquidity in the system
(2)Prices always go in 1 direction ie. they always extroplate the current trend to an extreme


----------



## prawn_86 (21 February 2010)

I know therew has been plenty previously, but i forgot to save them to my comp.

Would someone be so kind as to provide a spreadsheet they have made up for thier property decisions?


----------



## ROE (21 February 2010)

Fleeta said:


> Can anybody believe that the media print this stuff?????
> 
> http://www.heraldsun.com.au/news/broadmeadows-million-dollar-future/story-e6frf7jo-1225832359213
> 
> ...




Ah the good old famous quote house price double every 7-10 years 

there is no need to protect anyone from anything, it's the nature of capitalism.

it is wisely sum up by Uncle Warren Buffett and Uncle Charlie Mungers

"Certainly at the high end of the real estate market in some areas, you've seen extraordinary movement.... People go crazy in economics periodically, in all kinds of ways. Residential housing has different behavioral characteristics, simply because people live there. But when you get prices increasing faster than the underlying costs, sometimes there can be pretty serious consequences."


----------



## prawn_86 (21 February 2010)

Does anyone have any experience investing in resorts/serviced apartments?

We are considering a small entry investment and think we have located a few decent priced properties to suit our budget, but a lot of them are actually units within a resort. Is there anything in particular we should look out for? Obviously vacancy rate is one thing, but looking for other ideas.

Thanks


----------



## Tysonboss1 (21 February 2010)

prawn_86 said:


> Does anyone have any experience investing in resorts/serviced apartments?
> 
> We are considering a small entry investment and think we have located a few decent priced properties to suit our budget, but a lot of them are actually units within a resort. Is there anything in particular we should look out for? Obviously vacancy rate is one thing, but looking for other ideas.
> 
> Thanks




Treat it as you would treat a commercial property, the strength of the property as an investment is going to come from it's lease or management contract.

Some things to look at are,

Is the total rent received from all the rooms divided between all the owners or do you only recieve rent when your room is let, If so How do they cycle the rooms, are some rooms going to be constantly let while others remain vacant.

What are the management fees and charges imposed on you,

Is the management company professial and succesful, how long is their contract to manage the place for, 

You are also opening your self up to alot more business risks than a standard residensial property investment has, What so of people rent the apartment,
Is it a holiday type tourism venture, an over night motor inn, an inner city short stay business type property, all this properties have pros and cons and operate differntly.

Can you get finance for it, somtimes these types of properties require larger deposits from lenders.

Does the price you pay leave enough margin of safty to allow for the added risks you are taking.

Can you see infomation on the last serveral years income statment for the property.


----------



## prawn_86 (21 February 2010)

Thanks Tyson, good advice there


----------



## moses (21 February 2010)

prawn_86 said:


> Does anyone have any experience investing in resorts/serviced apartments?
> 
> We are considering a small entry investment and think we have located a few decent priced properties to suit our budget, but a lot of them are actually units within a resort. Is there anything in particular we should look out for? Obviously vacancy rate is one thing, but looking for other ideas.
> 
> Thanks




Be careful. Too many people buy units within resorts on the self pretence it is an investment but the real driver is that they want to own the holiday unit they want to stay in. This can put the price up artificially and can make these units a poor investment.


----------



## prawn_86 (21 February 2010)

moses said:


> Be careful. Too many people buy units within resorts on the self pretence it is an investment but the real driver is that they want to own the holiday unit they want to stay in. This can put the price up artificially and can make these units a poor investment.




Based on back of the envelope calcs the ones we are looking at make sense financially. IE get a long term tennant and its close to cash flow positive off the bat.  

I guess we are just wondering what some of the downfalls are.

So far have:
1. not being able to get long term tennants. ie high vacancy
2. What happens if resort gets sold/renovated
3. What room for movement in prices in there. I looked at some of these a year ago and prices havnt moved since then.
4. Management worries/costs as Tyson has alluded to already


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## Soft Dough (21 February 2010)

prawn_86 said:


> Based on back of the envelope calcs the ones we are looking at make sense financially. IE get a long term tennant and its close to cash flow positive off the bat.
> 
> I guess we are just wondering what some of the downfalls are.
> 
> ...




I have looked at this personally and would go residential property as for me :

It 

1. Is secure vs recessions / downturns
2. Is not drastically affected if there are new properties / hotels opened down the road.
3. Should be cheaper to maintain.
4. Gives YOU control over cashflow, taxation decisions and renovation decisions.
5. Is not subject to as much corruption as occurs in managed resorts.
6. Capital appreciation is usually greater.
7. Can usually be sold more easily in downturns/recessions
8. Easier to base investment decisions around as cashflow is usually more secure.

I personally NEVER give up the decision making of any of my investments to third parties.  Hence I believe that point 4 is the most obvious reason as to why I would never do it.

BUT the only advice I offer is that you should talk to your accountant about it first to see how a decision like this affects your circumstances.


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## bellenuit (21 February 2010)

A question for those of you who think property prices are likely to fall in the not too distant future. 

Since property is land and buildings, in regards to new property, if there is a correction, on average is the effect likely to be equally shared by each component. So if a typical inner suburb development today consists of land ready for building worth $500K and building costs of $500K, and there is a 20% correction, would this likely mean that the same development after the correction would be $400K and $400K or would one component hold value better than the other.

It may seem a strange question, but  I am toying with building two town-houses at the rear of my house which is on a block zoned R60. My intention is to retain both new properties and rent out. However, it will be a major investment and talk of a collapse in property prices is worrying.

If an imminent collapse in prices is going to predominantly effect the land component, then that should not be of great concern. Since I already own the land, that component will go down in value whether I develop or not and so long as I am not selling then I won't be realising a lesser value than otherwise. However, if it is the building costs that will predominantly fall, then it would make sense to hold off for a while and see what happens. It might be a lot cheaper to do the building a year or so from now.


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## So_Cynical (21 February 2010)

Prawn are you considering this because you cant afford a proper property?


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## tywo (22 February 2010)

Hi all,

I thought i might do a detailed Elliott Wave analysis on home prices in Sydney (this should cover a similar trajectory for all property prices in Australia). For those who are not familiar with the Elliott Wave principle, it is based on collective investor psychology to help forecast future market trends. My analysis can be found at 

http://www.tradeyourwayout.com/2010/02/elliott-wave-analysis-on-sydney-home.html

please feel free to comment


----------



## drsmith (22 February 2010)

tywo said:


> please feel free to comment



A log scale as opposed to linear over that time frame ?


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## prawn_86 (22 February 2010)

So_Cynical said:


> Prawn are you considering this because you cant afford a proper property?




lol what is a 'proper' property? :

Considering it as we are just beginning to look at our options at the moment and it may be a good stepping stone investment. Bascially we want to get something cash-flow positive as soon as possible and it seems this may be one way. I mean if it stacks up as an investment then why not, but as others have mentioned there are a lot of different issues to standard residential property, so will need to find out the full details

EDIT - does someone have the property spreadsheet that was floating around one of these threads?


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## Taltan (22 February 2010)

bellenuit said:


> A question for those of you who think property prices are likely to fall in the not too distant future.
> 
> Since property is land and buildings, in regards to new property, if there is a correction, on average is the effect likely to be equally shared by each component. So if a typical inner suburb development today consists of land ready for building worth $500K and building costs of $500K, and there is a 20% correction, would this likely mean that the same development after the correction would be $400K and $400K or would one component hold value better than the other.




Generally if prices drop it is the land that drops more than the building. The building remember needs to be built (eventually rebuilt) and so an alternative has a built-in cost. 

So in a 200k fall your 500k land becomes 400k and your 400k building becomes 400k however in a 200k rise your 500k building is still 400k its your land thats now worth 800k.

Buildings don't really appreciate in value unless you renovate, just the land does. Thus should a bust occur its also the land that goes down because it is the more speculative element of property prices


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## Bolle (22 February 2010)

hence the phrase: location, location, location.


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## Dowdy (22 February 2010)

Bolle said:


> hence the phrase: location, location, location.




Now the new phrase is speculation, speculation, speculation.


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## Bill M (22 February 2010)

prawn_86 said:


> lol what is a 'proper' property? :
> 
> Considering it as we are just beginning to look at our options at the moment and it may be a good stepping stone investment. Bascially we want to get something cash-flow positive as soon as possible and it seems this may be one way. I mean if it stacks up as an investment then why not, but as others have mentioned there are a lot of different issues to standard residential property, so will need to find out the full details




Hello Prawn, I feel I need to say something about this. Mate the biggest killer is LEVYS and Management fees. I own an apartment in Sydney with no resort style facilities. The only things we have that resorts/holiday units have is a lift and security door entry and security garage access. We pay $70 per week for levys. On top of that for a "proper rental property" we pay 6.6% agents management fees. The total for the 2 fees is *$100 PER WEEK.*

In a resort/holiday rental they usually offer much more, like pools, saunas, gyms, BBQ areas, manicured gardens and so on. You will pay much more for your levys and management fees for all these services. This could end up costing you up to $200 per week. Even if you have no holiday makers you must pay at least the levys! What if management is a bit corrupt? It can happen as some owners could be on better terms with the management than others and could get favourable treatment to your detriment. Sure they will tell you it is all fair and documented but how could you ever really know?

I thought about it a long time ago and decided against for all the above risks and I bought residential property instead, nothing better than that regular weekly income. Just be careful that's all mate, good luck.


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## Soft Dough (22 February 2010)

bellenuit said:


> So if a typical inner suburb development today consists of land ready for building worth $500K and building costs of $500K, and there is a 20% correction, would this likely mean that the same development after the correction would be $400K and $400K or would one component hold value better than the other.




In my experience, it is the value of land which has been the main driver.

What was the average "value" of land in 2000 vs 2005.  Why and how can such increases be charged / accepted?

The increases in tradesmen's extortionate rates has been offset by cheaper imported junk fittings and by strong Aussie dollar.

So as you can see, on multiple fronts there is room for correction, and if Krudd did not ridiculously stimulate a housing market already in a bubble and effectively subsidise tradesmen's wages at the behest of the unions

1. house approvals fall.
2. Tradesmen supply and demand corrects
3. Tradesmen wages fall.
4. Construction prices fall.

5. Builders actually need to compete for jobs
6. Builder margins fall.

7. Land developers need to quickly clear tied up cash to improve cashflow in GFC.
8. Land prices plummet.

9. House prices fall, triggering banks to readjust balance sheet, calling in bad debts from people who purchased at the top of the market.
10. Further, forced house price falls.

11. This causes a positive feedback loop, almost exactly the same as which the sharemarket was allowed to experience ( yes, you know the vehicle that funds the companies that a lot of australians work for, and which generate export revenue  - yet our stupid pm, for popularist politics, allows that to fall, in preference for a vote grabbing political stunt )

So I think both would fall, but in the above scenario, land would come under the most pressure imo.


Edit - waiting in keep and highly cashed up anticipation to see the fallout over this year, especially with banks massive decreases in LVR.... should be interesting.


----------



## Fleeta (22 February 2010)

Looks like our friend 'professor' robots has been over posting at www.keenwalk.com.au. No mods to keep his ranting in check over there as well. Go and check it out for a laugh.

The arguments for higher prices are wearing thin, yet it appears to be onwards and upward, particularly in Melbourne...it is surprising how far herd mentality can go!


----------



## Soft Dough (23 February 2010)

Fleeta said:


> Looks like our friend 'professor' robots has been over posting at www.keenwalk.com.au. No mods to keep his ranting in check over there as well. Go and check it out for a laugh.




Perhaps A/prof Keen will challenge the legitimacy of his qualifications and identify him.


----------



## Timmy (23 February 2010)

Bushman said:


> Prof. Steven Keen has lost the well-publicised bet that house prices in Australia would be higher than their September 2008 level a year later. So now he has to walk from Sydney to Mt. Kosciousko.
> 
> He has created a web-site with some interesting housing stats. Second part of his bet is a 40% fall over a 10-15 year period.
> 
> www.keenwalk.com.au




SMH article on Keen's losing bet - he will be wearing a T-shirt with the words: *"I was hopelessly wrong on house prices. Ask me how."* (And he wasn't the only one).

Now the bet is a fall over 10-15 years (see article for details).  At least he is making time-based, measurable predictions, so there is some degree of accountability, but not too much (standard commentator practice is to keep pushing the timeframe out if you are wrong).


----------



## Timmy (23 February 2010)

Fleeta said:


> Looks like our friend 'professor' robots has been over posting at www.keenwalk.com.au.




I went over for a look, found this:



> hello,
> yeah top effort Keen, special shout out to all my friends at ASF i hope some can get along to support Steve in April
> 
> look out the window into the sky and the street and you will see how Australia is there brothers
> ...




Legendary stuff.  
Hope some followed robots' advice and reaped some property profits in the last year or so - plenty there!


----------



## Bigukraine (23 February 2010)

Soft Dough said:


> In my experience, it is the value of land which has been the main driver.
> 
> What was the average "value" of land in 2000 vs 2005.  Why and how can such increases be charged / accepted?
> 
> ...




Hi,

Being a sub-contractor and working for myself and also have associate's who are developers a few factors imo that you should consider have been missed and should be assessed :

1)  Trade rates may seem high but you have to factor alot of things regarding overhead costs to a self employed person such as insurance,travel,account holding costs (materials),bad debt,public liability, licence costs,downturn in trade etc etc. the modern trade person is a mini company witha ceo that does EVERYTHING by himself. ps left out super and workcover costs.

2)  Your work now is now more than ever open to scrutiny and possible litigation due to increasing amounts of product suppliers giving guarantee's regarding application and instalation protacals that must be adhere to to get a 5-10-15 year guarantee. If you follow their instructions the task/job would have a 20-50% extra cost factor that the customer isn,t prepared to absorb so a fine line of workmanship and cost is walked with every job and the posibility of the supplier sueing you for rectification is very real.

3) It is not that easy to get a trade lic, ageing population and hardly any apprentice's taken on doesn't make for a cheaper scenario also if the govt has a change of heart and relaxes regulation it would lead to disaster eg look at the instalation debarcal. More i could add but think i made my piont.

4)  developers face ever increasing costs due to the govt over the last ten years waking up to the cash cow that developing can provide. eg augmentation costs, title issue costs ,the list goes on and on and it equates to a large cost component before you factor in land cost development cost and the biggie holding costs.
The local councils now also have there hand out re their cotributions to the proceess and this is another extra costs.


in summery the govt would have to change a lot of the revene stream from the above and a whole lot of cashed up tradies with the right qualifictions will have to appear from no-where before trade prices and the current land price(now maybe a freeze at the current levels) would change in the near future imo.


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## Mofra (23 February 2010)

"Well derr" - it appears overpaying for an asset in a cr@p location is not a good idea. I wonder if anyone will still challenge the notion that there are different segments to the residential property market.

http://www.news.com.au/money/proper...eralds-big-crash/story-e6frfmd0-1225832939381



> *House price surge heralds big crash *
> 
> OUTER Melbourne's surging house prices are at risk of a correction, mirroring the boom-and-bust scenario that hit Sydney's outlying suburbs between 2003 and 2005.
> 
> ...


----------



## MichaelG (23 February 2010)

ithink australian prpperty is heading towards bubble zone...but the last part of the rally is always the steepest. so enjoy the ride. i still own my investment properties but it feels too easy to make money!


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## Bushman (23 February 2010)

MichaelG said:


> ithink australian prpperty is heading towards bubble zone...but the last part of the rally is always the steepest. so enjoy the ride. i still own my investment properties but it feels too easy to make money!




There are parts/sectors in Melbourne which have leapt up 30-50% in the past few years (i.e inner city units in the north/west and some established outer suburbs). There are longer term demographic terms at play but that is crazy. I am thinking a West Sydney type bubble bursting at some stage (that stage being mortgage stress induced by Mr Stevens pulling on that lever).


----------



## Mofra (23 February 2010)

Bushman said:


> There are parts/sectors in Melbourne which have leapt up 30-50% in the past few years (i.e inner city units in the north/west and some established outer suburbs). There are longer term demographic terms at play but that is crazy. I am thinking a West Sydney type bubble bursting at some stage (that stage being mortgage stress induced by Mr Stevens pulling on that lever).



I agree there will be a pullback in outlying suburbs - anywhere that has a high proportion of FHBs tends to be more of a "stepping-stone" suburb than a place people want to spend decades in. I still think that desireable locations in close proximity to public transport/the CBD will weather any storm and outperform the wider market in the long term.


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## satanoperca (23 February 2010)

Nothing to see here folks, move along.

No potential subprime in the Aussie market.



> 47% SLUMP IN MORTGAGE SALES: AFG WARNS RBA ON
> ANOTHER RATE RISE





Boo hoo, how about them savers. Sorry forgot, saving was a thing of the past, debt is King.

http://corporate.afgonline.com.au/idc/groups/public/documents/web_content/mortgageindex-feb10-national.pdf

Aug 09 Average loan size $347k FHB 20.9% Average Equity 11.9% Intro Rates 17.7% Fixed Rates 5.1%.

So most FHB used the govnuts fee money as equity it would seems.

Will intro rates resetting as we speak, could get interesting if IR's go up another 1-2%.

Cheers


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## ROE (23 February 2010)

satanoperca said:


> Nothing to see here folks, move along.
> 
> No potential subprime in the Aussie market.
> 
> ...




But I thought investors going to fill in the gap when FHB exit 
damn it where are those investors, buy up, fill the gap keep the economy going


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## joeyr46 (23 February 2010)

ROE said:


> But I thought investors going to fill in the gap when FHB exit
> damn it where are those investors, buy up, fill the gap keep the economy going




Investors wouldn't buy property at $400000 to get rent of $400 a week Would they?
what is that as a return 
$20800 a year less rates say $3000 insurance $500 repairs (maintenance) $2000
agents fees (or cost of collecting rent in your time) say 8% $1664 so we clear $13636. That does not take account of vacancy periods advertising etc, less than 3.5% Clearly hoping for capital gains. lets borrow 75%at say 6.5% $19500 interest a year
That's $100000 not earning anything 
Can't really call that an investment. 
Also anecdotal evidence that rents are starting to top, tenants starting to bargain and getting offers accepted, Know of 2 cases personally
so yes were are those pesky investors, cause there clearly not buying RE (Robots not championing the cause any more thats the problem)


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## prawn_86 (23 February 2010)

joeyr46 said:


> Investors wouldn't buy property at $400000 to get rent of $400 a week Would they?
> what is that as a return
> $20800 a year less rates say $3000 insurance $500 repairs (maintenance) $2000
> agents fees (or cost of collecting rent in your time) say 8% $1664 so we clear $13636. That does not take account of vacancy periods advertising etc, less than 3.5% Clearly hoping for capital gains. lets borrow 75%at say 6.5% $19500 interest a year
> ...




Yeh, having doen the sums on a few investment apartments as of late and it appears saving cash is a better/safer investment.

We worked out we would be ahead by about 3% buying a property after 4years, but for all the hassles its just not worth it, we are better just saving the cash instead of putting it into a mortgage.

Basically it comes down to relying on capital gains, which you can get with cash in a term deposit anyway. Yes maybe not as much, but its less worries etc


----------



## Tysonboss1 (23 February 2010)

prawn_86 said:


> Yeh, having doen the sums on a few investment apartments as of late and it appears saving cash is a better/safer investment.
> 
> We worked out we would be ahead by about 3% buying a property after 4years, but for all the hassles its just not worth it, we are better just saving the cash instead of putting it into a mortgage.
> 
> Basically it comes down to relying on capital gains, which you can get with cash in a term deposit anyway. Yes maybe not as much, but its less worries etc




I would put the invest the cash rather than try stock piling it, Cash is a terrible investment. did you take account of inflation and tax doing your calculations. You don't have to put it into an over leveraged property the stock market would do just fine.

Investing for a deposit is better than saving for a deposit.

By chance I just came accross this youtube video, which explains the way I have always thought of cash.

http://www.youtube.com/watch?v=2epTX1LtCuU&NR=1


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## Tysonboss1 (23 February 2010)

satanoperca said:


> Boo hoo, how about them savers. Sorry forgot, saving was a thing of the past, debt is King.




Encouraging people to stock pile money is not a good idea, Why should holding cash be some sort of favoured class that generates a return while also being next to risk free.

I think the way our system sort of holds saving in limbo by taking the interest back in the form of tax and inflation is good. It forces people who want their money to be productive to actually invest in productive assets.

It's not natural that money should grow from money, it is unsustainable and bad for an economy. Civilizations have fallen because of usury and the hording of the money supply.

Any one that sits on a large pile of cash and don't want to expose it to risk do not deserve to see it grow in spending power in any real terms, They deserve to have it sit and ever so slowly erode.


----------



## Soft Dough (23 February 2010)

Bigukraine said:


> Hi,
> 
> Being a sub-contractor and working for myself and also have associate's who are developers a few factors imo that you should consider have been missed and should be assessed :
> 
> ...




Points are fair, but what people fail to realise that all professions are required to do work which is not paid for, such as continuing education, and also registration fees, professional indemnity, amongst other things.

These same people are not fortunate enough to be able to set themselves up as a company, and hence do not reap the benefits of tax deductability on items used for personal use such as

mobile phones, fuel, V8 utes, clothing, home improvements.

I have brought this up on multiple occassions and have failed to EVER have an ASF self-employed tradesperson admit what is the hourly rate, call-out fees etc which they charge.

I have, however just recently seen that pay rates for electricians and plumbers are over $100 per hour ( in a newspaper over the last month or so )  How does this compare to other jobs, I mean ones that have not had their wages propped up by the first home vendors boost.

Tradies and unions have a lot to thank Krudd for..... oh and the naivity of the general public.


----------



## prawn_86 (24 February 2010)

Tysonboss1 said:


> I would put the invest the cash rather than try stock piling it, Cash is a terrible investment. did you take account of inflation and tax doing your calculations. You don't have to put it into an over leveraged property the stock market would do just fine.
> 
> Investing for a deposit is better than saving for a deposit.
> 
> ...




I should have been clear. By cash a meant a mix of term deposits and investing in shares, which would deliver a return > than inflation


----------



## Bigukraine (24 February 2010)

Soft Dough said:


> Points are fair, but what people fail to realise that all professions are required to do work which is not paid for, such as continuing education, and also registration fees, professional indemnity, amongst other things.
> 
> These same people are not fortunate enough to be able to set themselves up as a company, and hence do not reap the benefits of tax deductability on items used for personal use such as
> 
> ...




As far as i am concered its a supply and demand issue, if you want a trade person how much you pay is relivant to how many around to choose from. In your previous quote you said more compertion was needed to bring price,s down which i agree in principle , but i remember the days prior to 2000 when builders and private people were screwing the trades price wise due to the lack of work avaliable to a point that it was worse than the average weekly wage but with the same overheads and risk as of today.

So what happened ??? the cost of putting on apprentaces was prohibative, no one put them on and hey presto 15 years on hardly any young tradies around. To sum it up the customer and the builder's are now paying for somthing of their own creation and now winging about it ??? They are now paying for their short term artifical cost for trade services that was too low and will now take a number of years to rectify numbers back to a acc level.

In regards to professinals not being able to use the advantages of a company imo most professions can work as a company eg accountants set up a practace , marketing prof can set up a pr firm etc etc its a matter if they want the associated risks of running a company so if they choose the save haven of being an employee then that is their choice .  Also take offence to my profession being proped up by fhb as mine and a majority of trades do resto and work to existing dwellings.

Health professionals charge like wounded bulls because of the investment of education , hex and the years it takes to obtain qualification as well as other areas that you highlighted but do you complain about them ???

ok if i out line my charges to you for what advantage to me will it be and how will it help you personally and or in this thread. if you give your intentions for use of this info then i will disclose if i feel your reasons intentions are valid


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## Mofra (24 February 2010)

prawn_86 said:


> Basically it comes down to relying on capital gains, which you can get with cash in a term deposit anyway. Yes maybe not as much, but its less worries etc



How on Earth do you manage to obtain capital gains on a depreciating asset (ie cash)?


----------



## prawn_86 (24 February 2010)

Mofra said:


> How on Earth do you manage to obtain capital gains on a depreciating asset (ie cash)?




Through an interest rate in a high interest saver or term deposit. I did not mean cash stuffed under my mattress


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## Mofra (24 February 2010)

prawn_86 said:


> Through an interest rate in a high interest saver or term deposit. I did not mean cash stuffed under my mattress



a.  That's not a capital return upon disposal/maturity of the asset
b.  Most term deposits (for people on higher tax rates) provide a guaranteed _loss_ in real terms (after tax/inflation are taken out, even ignoring opportunity costs)


----------



## cuttlefish (24 February 2010)

I see that having is crebility shot to pieces after his failed predictions hasn't stopped Steve Keen from commenting on property lol.  

http://www.smh.com.au/business/property/australias-mortgage-debt-blowout-20100224-p1ex.html


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## cutz (24 February 2010)

cuttlefish said:


> I see that having is crebility shot to pieces after his failed predictions hasn't stopped Steve Keen from commenting on property lol.
> 
> http://www.smh.com.au/business/property/australias-mortgage-debt-blowout-20100224-p1ex.html




Good article but I wouldn't go so far to say that his credibility has been shot to pieces.

As with any bubble, clear thinkers have had a history of ridicule by the mainstream, eventually his prediction will prevail, pinpointing an exact date is pure guesswork.


----------



## michael_t_f (24 February 2010)

soft dough, here on the Gold Coast if you were a electrician charging $100 per hour you would find it hard to get work. Most are between 60-85 per hour no call out and wages are around 30- 35 per hour. As a sparky myself I find it hardly worth working for yourself unless you had a good contract with a builder to keep you working or you are already a well established business. You also have to take into consideration that if you are self employed that some weeks you might not be getting your 38 hours a week.


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## Beej (24 February 2010)

cutz said:


> Good article but I wouldn't go so far to say that his credibility has been shot to pieces.
> 
> As with any bubble, clear thinkers have had a history of ridicule by the mainstream, eventually his prediction will prevail, pinpointing an exact date is pure guesswork.




His credibility WAS shot to pieces because he WAS running around the media in late 2008 telling everyone their house was about to crash in value by 40%! To prove his conviction he even sold his own unit in Surry Hills and rented - implying very much that he believed such a crash was imminent. 

If he had been more circumspect and recognised the folly of making such predictions on national TV, then he might have retained some credibility.


----------



## Dunger (24 February 2010)

Beej said:


> His credibility WAS shot to pieces because he WAS running around the media in late 2008 telling everyone their house was about to crash in value by 40%! To prove his conviction he even sold his own unit in Surry Hills and rented - implying very much that he believed such a crash was imminent.
> 
> If he had been more circumspect and recognised the folly of making such predictions on national TV, then he might have retained some credibility.




Keen was silly to put his money where his mouth was in predicting a downturn in a market that has plenty of government stimulus to keep things turning over and add to that the hype that stems from the media to the general community talking about property investing. He does garner a little respect for following through with the lost bet.

Disclosure: I rent and I can gurantee that I won't be putting myself into huge amounts of debt for a home and spend most of my working life working by proxy for the bank and being at the mercy of interest rates. I'll risk my hard earned in other asset classes thank you.

I also earn above the average wage and live in Sydney and I can't afford to buy a median priced house in Sydney.


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## Dunger (24 February 2010)

I also read (note read - not participate) a property forum... Man they make most Bulls look like Bears. 

It's all blue sky. 

I've read threads where if times are good, rent goes up and if times are tough, rent goes up. 

It doesn't matter what the market or governments do, prices can only go up for them.

If you even sound like a bear you're ridiculed to no end!


----------



## SM Junkie (24 February 2010)

michael_t_f said:


> soft dough, here on the Gold Coast if you were a electrician charging $100 per hour you would find it hard to get work. Most are between 60-85 per hour no call out and wages are around 30- 35 per hour. As a sparky myself I find it hardly worth working for yourself unless you had a good contract with a builder to keep you working or you are already a well established business. You also have to take into consideration that if you are self employed that some weeks you might not be getting your 38 hours a week.




If I was a tradie I think I'd be heading over to the Gordon Project.  Minimum wage of $150,000 for unskilled workers.  More if you have a trade behind you.  Then there will be the inevitable shortage of tradies in the city and their wages also dramatically increase. The cycle is starting all over again.


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## Soft Dough (24 February 2010)

Bigukraine said:


> Also take offence to my profession being proped up by fhb as mine and a majority of trades do resto and work to existing dwellings.
> 
> Health professionals charge like wounded bulls because of the investment of education , hex and the years it takes to obtain qualification as well as other areas that you highlighted but do you complain about them ???
> 
> ok if i out line my charges to you for what advantage to me will it be and how will it help you personally and or in this thread. if you give your intentions for use of this info then i will disclose if i feel your reasons intentions are valid




You take offense to being subsidised by FHBG, but you are as FHBG is propping house prices up and allowing people to gear to renovate etc.  It is a fact which not many people here would disagree with.

You think health professionals charge?? how much do you think a GP makes?  How much do you think a hospital doctor makes?

Considerably less than tradespeople in a lot of cases, and the competition to get in is fierce, it takes a minimum of 10 years to become fully qualified and the job is a LOT more stressful.

I want to know how much tradesmen charge from their own mouth, I just like to point out that there is an obscene amount of fat that can be sloughed off the cost of building a house if tradesmen charged a reasonable amount for their work ( and their businesses are essentially tools in the back of a truck, for a vast majority of building subcontractors, and their overheads are very very minimal )


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## MACCA350 (24 February 2010)

Dunger said:


> I also read (note read - not participate) a property forum... Man they make most Bulls look like Bears.
> 
> It's all blue sky.
> 
> ...



Did you see the "Robots lives here" sign:

cheers


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## Bigukraine (24 February 2010)

Soft Dough said:


> You take offense to being subsidised by FHBG, but you are as FHBG is propping house prices up and allowing people to gear to renovate etc.  It is a fact which not many people here would disagree with.
> 
> You think health professionals charge?? how much do you think a GP makes?  How much do you think a hospital doctor makes?
> 
> ...




Great to see you only took what was important to you in my whole reply how about answering the other half ???"? On top of that i would like to see you in twenty years time when due to doing the work of my choosen trade my hands are riddled with arthritis my back (off which i am getting treatment for already due to degeneration because of the tasks i do) ps the chrio i see now charges $47.50 per 15 mins , and all of this will be self funded as i allow for this as a part of my charges. Now tell me i charge to much !!!! Your view of "tools from the back of a truck" is very simplistic and insulting as well as the over heads being minimal beggers belief. I am sorry but imo you views are at least very jaded, but thats what forums are about, different views anyway have a nice life


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## Soft Dough (24 February 2010)

Bigukraine said:


> Great to see you only took what was important to you in my whole reply how about answering the other half ???"? On top of that i would like to see you in twenty years time when due to doing the work of my choosen trade my hands are riddled with arthritis my back (off which i am getting treatment for already due to degeneration because of the tasks i do) ps the chrio i see now charges $47.50 per 15 mins , and all of this will be self funded as i allow for this as a part of my charges. Now tell me i charge to much !!!! Your view of "tools from the back of a truck" is very simplistic and insulting as well as the over heads being minimal beggers belief. I am sorry but imo you views are at least very jaded, but thats what forums are about, different views anyway have a nice life




I addressed things which you wrote which I disagreed with. Please lose that kind of attitude as you did not address every single point which I made.

For example,I agree that the government and society thought university education was important ( which it is not ) and hence there are many BA out there not using their qualifications. From the many older tradespeople I know, it was the lack of apprentices that was the problem, not the lack of funding to pay their $3.50 per hour first year rates.

On the arthritis issue, perhaps you think that it is more significant than being a medical practitioner with the highest level of mental health issues amongst all professions?  It is extremely stressful making many decisions per day that can mean life or death.  So in answer no, I think arthritis is not a significant problem.

$47-50 for a 15 minute chiropractor consult.

1. Never go to a chiro, they will cause more problems than they could possibly cure, this from my many physiotherapist colleagues.
2. Sorry but you were ripped off, no allied health professional makes almost $200 per hour, except pharmacists who need to own businesses that cost $1million plus to make any real money. 

You get insulted easily.

I know many plumbers, painters and electricians who work with a single truck, and I have seen the books of my brothers in law, and as you are well aware, the overheads ARE quite low, their net profit was very nice.... as you probably know but are not prepared to admit. 

Though it is off topic, I know diesel fitters who work from the back of a truck, no store rooms, no workshops required.  The availability of parts and a well set up truck negate the need


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## Tysonboss1 (24 February 2010)

Dunger said:


> I've read threads where if times are good, rent goes up and if times are tough, rent goes up.




The main drivers for rental growth are  

1,inflation 
2,population growth ( or more so the growth in house holds which has been out pacing actual population growth in recent years)

both of these remain fairly constant through good times and bad, So rental growth will probally remain constant also.


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## Tysonboss1 (24 February 2010)

Soft Dough said:


> $47-50 for a 15 minute chiropractor consult.
> 
> 1. Never go to a chiro, they will cause more problems than they could possibly cure, this from my many physiotherapist colleagues.
> 2. Sorry but you were ripped off, no allied health professional makes almost $200 per hour, except pharmacists who need to own businesses that cost $1million plus to make any real money.




I think you need some business training, you seem to think that the amount in which people charge per hour equals = Take home profit, This is simply untrue.

the chiro probally does charge $200 dollars an hour, but from this figure has to come rent of the building, electric, gas and phone bills, he probally has a receptionist who's hourly rate, holiday pay, super, sick days all have to come from the $200 fee, 

Not to mention insurance, advertising, stationary, printer cartridges etc.etc.

The same is said for lawyers, mechanics, accountants, trades people and any other class where people complain about the high hourly fee.

I think tradies deserve their pay ( I am not a tradie ), alot of their work is hard yakka especially in summer. I don't want to be outside moving bricks around in the middle of summer, do you, thats hard work, so they deserve every thing they get.

At the end of the day we live in a free market that sets the prices, and if there is limited people available to do a job we need the price to go up to attract more to the profession.

If their job is so easy, why don't you just become a tradie your self.


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## Tysonboss1 (24 February 2010)

Soft Dough said:


> the overheads ARE quite low, their net profit was very nice.... as you probably know but are not prepared to admit.




what business are you in, 

Can you give us a break down of what the business that pays your wages charges, and why you think it's pricing structure is so much fairer than the average tradie.

You will probally find if you try and break down the prices that any business charges based on the cost price of the product compared to the retail price every business looks like they are ripping people off,

Thats why so many businesses do not reveal the cost price to the customers, because it always gives off the impression of un fair profits.

It's like a cafe charging $4.50 for a coffee where the ingredients only cost $0.36 cents thats a 1200% market up, that seems totally unfair right, well not really when you factor in the Gst, Staff wages, electricity gas, rent, shop fit out, wastage, insurance, etc.etc

It's when you factor in the many other costs that you start to see it's quite fair.


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## Soft Dough (24 February 2010)

Tysonboss1 said:


> what business are you in,
> 
> Can you give us a break down of what the business that pays your wages charges, and why you think it's pricing structure is so much fairer than the average tradie.
> 
> ...




Well I have 2 posts to respond to so I may miss some points as I want to keep this to 1 post.

1. I have owned businesses, small and large, and am very competent wrt overheads, staffing, GP% in retailing etc. I have also seen the accounts of tradesmen and have a realistic understandiing of the low overheads that a subcontractor experiences compared to other small businesses ( and for single employee entities I use the term small business very loosely )

2. If it was with that intent that the OP was referring to chiropractors, which I cannot just assume, then it is a requirement to compare apples with apples  when comparing rates with subcontracting tradesmen, who are often single employee entities ( or at least single worker entities without spousal redirection of profits etc ).  To compare a business which requires a premises is just ridiculous.

3. The reason that a tradesperson is in a much better position is little capital outlay and more importantly, lower outgoings to chew up cashflow.  The above cafe requires leases, which for example in many shopping centres, for a cafe size site can be more than $100k per year, along with higher business risks of negative cashflow, especially during downturns.

4. I work in health, hence I also have an idea what health professionals earn. I also refrain from using markups / margins of, for example retail health professionals ( eg pharmacists ) as their capital outlay requires a ROI and their overheads are of a business nature and not of a single employee pseudo-business nature.

Perhaps comparing a GP to a plumber would be a better example, as both are employees of pseudo companies ( and in fact the tradesman has many more avenues available to legally minimise tax ) 

A GP will often earn 60% of their billings which are around $30 per consult and can perform 4 consults per hour.  

So a GP earning $72 per hour    vs       a plumber earning $100 per hour.  The higher overheads of the plumber being offset by the ability to claim many more items as tax deductions etc, means that there is a real difference.

It is much easier to become a plumber, to work as a plumber, plumbing has no more shortage in supply than GPs, plumbing takes 6 years less to qualify than a GP.... so please, explain, if it is not from propping up demand by government intervention, why does a plumber out earn a GP?

5. I could become a tradesperson, but to take a paycut is not really an option I find appealing.


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## So_Cynical (24 February 2010)

SM Junkie said:


> If I was a tradie I think I'd be heading over to the Gordon Project.  Minimum wage of $150,000 for unskilled workers.  More if you have a trade behind you.  Then there will be the inevitable shortage of tradies in the city and their wages also dramatically increase. The cycle is starting all over again.




My step father is a sparky and spent 5 months in Karratha last year working for an electrical mob up there...clearing 3 grand a week working 5 days a week with a company vehicle...needless to say he's going back next winter for another 5 months.


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## nunthewiser (24 February 2010)

So_Cynical said:


> My step father is a sparky and spent 5 months in Karratha last year working for an electrical mob up there...clearing 3 grand a week working 5 days a week with a company vehicle...needless to say he's going back next winter for another 5 months.




And paying 2k a week rent? or was he lucky enough to bunk down with others ?


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## drsmith (24 February 2010)

So_Cynical said:


> My step father is a sparky and spent 5 months in Karratha last year working for an electrical mob up there...clearing 3 grand a week working 5 days a week with a company vehicle...needless to say he's going back next winter for another 5 months.



Real estate is very expensive up there in the desert.

http://www.realestate.com.au/reales...+headland+port+hedland/zpcayz/page2/106227106

Compare that to John Denver's favourite country;

http://www.kaym.com/view_property.php?lid=52&p=3

Even after currency conversion it's still cheaper.


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## nunthewiser (24 February 2010)

drsmith said:


> Real estate is very expensive up there in the desert.
> 
> http://www.realestate.com.au/reales...+headland+port+hedland/zpcayz/page2/106227106
> 
> .





Yep .

Got a mate up there pulling in 3.5k /week .. got a mortgage in perth and paying 2.2k/week rent up in karratha..... after 2.2k PLUS his mortgage he would be just as well off working from the city and be with his family .... But hey it sounds nice.


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## drsmith (24 February 2010)

This has to take the cake.

http://www.realestate.com.au/reales...+headland+port+hedland/zpcayz/page2/106197020


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## drsmith (24 February 2010)

nunthewiser said:


> Yep .
> 
> Got a mate up there pulling in 3.5k /week .. got a mortgage in perth and paying 2.2k/week rent up in karratha..... after 2.2k PLUS his mortgage he would be just as well off working from the city and be with his family .... But hey it sounds nice.



I lived up there for a few months in winter in the mid 90's. Weather was nice as was the view from the sea-front split-level house in Port Hedland (Sutherland Street). The climate up there for most of the year however is extremely harsh, even on the coast.

Whoever located and designed South Hedland however should be put up against a wall, shot, propped up against the wall again and given another round. It has to be the second most awful place on earth (assuming there's somewhere else that's worse).

Investors in that market won't want China to stumble.


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## Tysonboss1 (24 February 2010)

Soft Dough said:


> 5. I could become a tradesperson, but to take a paycut is not really an option I find appealing.




If you already earn more than a trades man what is your problem, why do you care what they earn.

And remember a trades man books may look like they have low over heads because their own labour does not show up as an outgoing expense, I tell you I wouldn't be lugging bricks around in the middle of summer with out a decent pay check on pay day.

Just because they didn't spend 6 years smoking bongs and chasing skirt at uni doesn't mean they don't spend the best part of their life slogging out hard labour, the deserve all they earn

Are you simply being so arrogant that you feel because they don't have a UNI degree they should be on minimum wage.

Trades men do earn what looks to be a large hourly rate for their labour but you have to think about how many hours in the average day they can charge that they may only be able to book 3 or 4 hours labour once traveling between jobs, picking up supplys and doing quotes is factored in.

And they still may have to pay a book keeper and some one to answer the phones etc.


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## drsmith (24 February 2010)

Is that the world's smallest violin I hear playing ?


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## Soft Dough (24 February 2010)

Tysonboss1 said:


> Just because they didn't spend 6 years smoking bongs and chasing skirt at uni doesn't mean they don't spend the best part of their life slogging out hard labour, the deserve all they earn
> 
> Are you simply being so arrogant that you feel because they don't have a UNI degree they should be on minimum wage.




I love this comment. Obviously you have never completed a medical degree.  It is constant and makes the content of any other bachelor degree ( with the exceptions of dentistry and vet science ) seem laughable.

Arrogant regarding UNI degrees??  Of course not.  If you can recall from my previous post, I think UNI degrees are over-rated.  I respect any training people have undertaken, as it shows committment to their chosen career and a willingness to improve themselves.

I have no problem paying whatever a tradesman charges AS LONG AS IT IS NOT GOVERNMENT SUBSIDISED.

ie I have no problem paying my mechanic or butcher, but hate paying too much for building tradies as they have received artificially propped up supply and demand due primarily John Howard's poor foresight and Kevin Rudd's plain stupidity.


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## SM Junkie (24 February 2010)

drsmith said:


> I lived up there for a few months in winter in the mid 90's. Weather was nice as was the view from the sea-front split-level house in Port Hedland (Sutherland Street). The climate up there for most of the year however is extremely harsh, even on the coast.
> 
> Whoever located and designed South Hedland however should be put up against a wall, shot, propped up against the wall again and given another round. It has to be the second most awful place on earth (assuming there's somewhere else that's worse).
> 
> Investors in that market won't want China to stumble.




The lady who designed South Hedland committed suicide many years ago.  It's designed like a rose, so it is full of dead ends.


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## nunthewiser (24 February 2010)

Soft Dough said:


> I have no problem paying whatever a tradesman charges AS LONG AS IT IS NOT GOVERNMENT SUBSIDISED.
> 
> ie I have no problem paying my mechanic or butcher, but hate paying too much for building tradies as they have received artificially propped up supply and demand due primarily John Howard's poor foresight and Kevin Rudd's plain stupidity.





You just dont get it ..........

The propping up of the Building trade has ramifications on near on EVERY trade/occupation/business out there .right from the  cleaner to the mechanic to the manufacturers to the tyre salesman to the tv repairman ...... 

They all making a part of there cash from a direct flow on from the stimulas and govverment subsidised building game........

But hey i didnt go to uni so what  would i know.


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## drsmith (24 February 2010)

SM Junkie said:


> The lady who designed South Hedland committed suicide many years ago.  It's designed like a rose, so it is full of dead ends.



Sad she committed suicide but at the same time she should have realised a rose does not flourish in the desert.


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## Soft Dough (25 February 2010)

nunthewiser said:


> You just dont get it ..........
> 
> The propping up of the Building trade has ramifications on near on EVERY trade/occupation/business out there .right from the  cleaner to the mechanic to the manufacturers to the tyre salesman to the tv repairman ......
> 
> ...




Love the last line, good try   ..  oh please tell me your spelling was intentional to get me to bite 

Yes you are right that there are ramifications for everyone.

Pity your response is framed to make it sound like a good thing

The response for ALL is INFLATION

The response for the few is positive, as in $$$, which is highly skewed towards the tradesmen, suppliers, importers, and ancillary service sector.  Too much of this money goes to consumption, and the subsidy of the wages feeds into increased housing prices which leads to parking of money in assets which are essentially unproductive.

But then again, there are always 2 sides to a good, or poor argument.


I agree that spending money is good at times, but would prefer our brain donor treasurer and prime minister to spend it on things that actually have a return on investment, eg rail infrastructure, port infrastructure, education ( well targetted ) etc, rather than plonking it in upright sticks and stones ( houses ) and plasma tvs.


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## Tysonboss1 (25 February 2010)

Soft Dough said:


> I love this comment. Obviously you have never completed a medical degree.  It is constant and makes the content of any other bachelor degree ( with the exceptions of dentistry and vet science ) seem laughable.




No I have never completed a medical degree, But I guess it's worth the few years study when you get to sit in air conditioning earning top $ while you scribble out prescriptions and writing dodgy doctors certificates for the rest of your life. ( just Kidding, I think surgens etc are worth their weight in gold).

"It is constant and makes the content of any other bachelor degree seem laughable"

So is thirty years of lugging bricks.


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## drsmith (25 February 2010)

While the physical work may be hard it has historically been easier to learn a trade than a profession. It then stands to reason that tradies get paid less.

Anything else represents an economic imbalance.


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## satanoperca (25 February 2010)

Tradies are over paid and if it wasn't for the credit free for all then they would recieve an equal days pay for an equals day work.

I have also found that tradies are like soccers players, they cry at the slightest injury.

Laying bricks does not equate into being a doctor. Get over it. 

End of storey.


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## Fleeta (25 February 2010)

satanoperca said:


> End of storey.




How is your spelling??


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## Tysonboss1 (25 February 2010)

drsmith said:


> While the physical work may be hard it has historically been easier to learn a trade than a profession. It then stands to reason that tradies get paid less.
> 
> Anything else represents an economic imbalance.




the free market sets the prices should never be set by how much study you have to do, it should be set by the supply and demand of that trade, If there is a shortage of skilled labour then tradesman can be picky about which jobs they wish to take and ask for higher prices, This should then encourage more into that trade which should over time raise the supply to where the tradesmen have to fight a bit hard for jobs and this should lower prices.

However if a trade is genuinely such hard yakka that even big pay cheaques don't encourage more people to enter the trade, then it probally means that the ones who are prepared to do the job deserve the larger pay off.


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## Beej (25 February 2010)

Tysonboss1 said:


> I think you need some business training, you seem to think that the amount in which people charge per hour equals = Take home profit, This is simply untrue.
> 
> the chiro probally does charge $200 dollars an hour, but from this figure has to come rent of the building, electric, gas and phone bills, he probally has a receptionist who's hourly rate, holiday pay, super, sick days all have to come from the $200 fee,
> 
> ...




Hear hear! I was going to write a similar post but Tysonboss1 has summed it up pretty well IMO.



Soft Dough said:


> Perhaps comparing a GP to a plumber would be a better example, as both are employees of pseudo companies ( and in fact the tradesman has many more avenues available to legally minimise tax )
> 
> A GP will often earn 60% of their billings which are around $30 per consult and can perform 4 consults per hour.
> 
> So a GP earning $72 per hour    vs       a plumber earning $100 per hour.  The higher overheads of the plumber being offset by the ability to claim many more items as tax deductions etc, means that there is a real difference.




I don't know where you find GPs that only charge $30 per consult that also only do 4 consults an hour? In Sydney, if you can even find a bulk billing GP, they would do at least 8 consults an hour or more and so earn more like double what you are suggesting. However, most GPs in this town charge $65-$80 a consult (and we pay the difference between medicare rebate and their charge), and so all earn considerably more than you are estimating. I have never met a poor doctor. I won't even mention my 2 friends (married couple) who are both neurologists and the HUGE amounts they earn - but that's because I think they deserve every cent of it! 

Cheers,

Beej


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## Bigukraine (25 February 2010)

Beej said:


> Hear hear! I was going to write a similar post but Tysonboss1 has summed ti up pretty well IMO.
> 
> Cheers,
> 
> Beej




Just wan't to say thanks to tysonboss 1 , nun and all the others for putting their views on this subject re the trades. supply and demand in a nutshell is it,stimulus or not. soft d forgets that what he hates about the pesant un uni workforce is that they have made his Sydney home (example only) double over the last ten years (prob more) due to the Howard/ Rudd factor and their labour. soft d hope you don't choke on you "grange" and the supply of cavair is nice and constant for you.


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## moXJO (25 February 2010)

Soft Dough said:


> Points are fair, but what people fail to realise that all professions are required to do work which is not paid for, such as continuing education, and also registration fees, professional indemnity, amongst other things.
> 
> These same people are not fortunate enough to be able to set themselves up as a company, and hence do not reap the benefits of tax deductability on items used for personal use such as
> 
> ...




Are you still harping on about this. Your problem is you just don't like the idea that tradies are not slave labor. The $100 per hour does not go in your pocket; it is to cover business expenses. You can not make improvements to your home apart from the labor or your house gets tied in as part of the business if you get sued. Clothing  yeah because stubbies and hard yakka shirts are awesome to wear everywhere. That $100 an hour has to cover Workers comp, public liability, phone ,safety costs, advertising , car running costs, tools, electricity and other related business expenses, plus the costs of further training. Also the fact that work is not consistent through the year but the bills are. 
 Business money and personal money are two different things. 
And don't feed me the BS that trades are rolling in money I know plenty that are highly skilled and only make the base. They take a risk working on job sites; they can be injured, fined up to $250k and even charged with workplace manslaughter which is not a factor for the majority of wage slaves. The ones that are rich employ a lot of people and take on the bigger jobs. But a lot of jobs fall over the main contractor goes bust and you lose your house or are instantly bankrupted.

So you don't take a risk on business to make less than wages
Comparing trades to doctors c’mon at least tradies fix the problems:

Professionals can set themselves up as companies and claim phone, internet or whatever their business may use.

Tradies over paid  yeah that’s why there is a current shortage.

You could have got a cheaper quote.


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## drsmith (25 February 2010)

Tysonboss1 said:


> the free market sets the prices should never be set by how much study you have to do, it should be set by the supply and demand of that trade, If there is a shortage of skilled labour then tradesman can be picky about which jobs they wish to take and ask for higher prices, This should then encourage more into that trade which should over time raise the supply to where the tradesmen have to fight a bit hard for jobs and this should lower prices.
> 
> However if a trade is genuinely such hard yakka that even big pay cheaques don't encourage more people to enter the trade, then it probally means that the ones who are prepared to do the job deserve the larger pay off.



My point was very much about supply and demand. Physical work (hard yakka) is easier to learn than a profession hence there will be more underlying supply. Demand/supply imbalances can occur but they are just that, imbalances.


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## Bigukraine (25 February 2010)

drsmith said:


> My point was very much about supply and demand. Physical work (hard yakka) is easier to learn than a profession hence there will be more underlying supply. Demand/supply imbalances can occur but they are just that, imbalances.




Our society now is very swayed to obtaining higher education and due to this the "value" of doing a trade is lost to the perception that it is beneath ones station after obtaining uni ,tafe, qualifications. We are becoming an older country(ageing population) and this has been the case for ove a decade now so the supply/demand "imbalance" seems to becoming the norm , not just a tempoary "imbalance.


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## michael_t_f (25 February 2010)

If a trade is so easy go do a couple of weeks labouring for a tradie. I am 100% sure you will see why they charge what they do. 
If you earn as much as you claim to, why is paying a tradie such an issue for you? Just go to work for the day, do your super intelligent job, get paid heaps, go home to pay the tradie for the simple, easily learnt job he did that you of course can't comprehend even where to start.
Or go line up with the women doing the Bunnings courses and do your own half assed job.


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## drsmith (25 February 2010)

Bigukraine said:


> Our society now is very swayed to obtaining higher education and due to this the "value" of doing a trade is lost to the perception that it is beneath ones station after obtaining uni ,tafe, qualifications. We are becoming an older country(ageing population) and this has been the case for ove a decade now so the supply/demand "imbalance" seems to becoming the norm , not just a tempoary "imbalance.



Long term the remuneration of tradesman cannot be higher than that of  professionals as this is a flawed hierarchy.

Consider for example the construction of a bridge (or any structure). There are professionals (engineers) who design the structure and the tradies who build it. If the bridge builders get paid more than the engineers then obviously the smarter people will gravitate towards building the bridge. Any structure is only as good as it's design regardless of who builds it so the implications here are obvious.

Changing demographics can alter supply/demand balance but this too would only present a temporary departure from the above equilibrium (that is an equilibrium that continues to foster the growth of our civilisation).

I suspect that our perception of economic well being has been a stronger factor in the current supply/demand situation for tradies. Who wants to do crap work (what most people consider to be crap work) when we can pay someone else to do it ?
The problem is that a considerable portion of this attitude has been financed by debt and the fall out will most likely be a shorter term influence than changing demographics. 

No one though can realistically blame tradies for taking advantage of a supply/demand relationship in their favour.  Tradies though would be well advised to think of themselves like a farmer that is harvesting a bumper crop and squirrel some of the proceeds away in case of leaner times.


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## Bigukraine (25 February 2010)

drsmith said:


> Long term the remuneration of tradesman cannot be higher than that of  professionals as this is a flawed hierarchy.
> 
> Consider for example the construction of a bridge (or any structure). There are professionals (engineers) who design the structure and the tradies who build it. If the bridge builders get paid more than the engineers then obviously the smarter people will gravitate towards building the bridge. Any structure is only as good as it's design regardless of who builds it so the implications here are obvious.
> 
> ...




Well put responce and agree with you overall except the thought that we are in bumper harvest time. The problem is how are the gaps that need to be filled to bring things to an equal footing going to be obtained ?? This is also assuming that the trade industry is overpriced and also you are forgeting we are a transiant industry only called upon when required and not even thought about if not needed. This is also a segment that is factored into our charges.
We all have views on this subject and seem to want to blame the govt for the fhog for this situation so if it is the case (both parties adopted this policy) so time for a third party ??? This is getting a little off topic and i will now leave this thread to get back on course and thank everyone for their input to both sides of this "tradie" topic.


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## Soft Dough (25 February 2010)

Bigukraine said:


> Just wan't to say thanks to tysonboss 1 , nun and all the others for putting their views on this subject re the trades. supply and demand in a nutshell is it,stimulus or not. soft d forgets that what he hates about the pesant un uni workforce is that they have made his Sydney home (example only) double over the last ten years (prob more) due to the Howard/ Rudd factor and their labour. soft d hope you don't choke on you "grange" and the supply of cavair is nice and constant for you.




lol another post whereby someone claims that I have put down the qualifications of 1 job versus another.

Perhaps your intellect finds this a justifiable angle for an argument, but please don't insult other people on the forums.


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## Soft Dough (25 February 2010)

moXJO said:


> Are you still harping on about this. Your problem is you just don't like the idea that tradies are not slave labor. The $100 per hour does not go in your pocket; it is to cover business expenses. You can not make improvements to your home apart from the labor or your house gets tied in as part of the business if you get sued. Clothing  yeah because stubbies and hard yakka shirts are awesome to wear everywhere. That $100 an hour has to cover Workers comp, public liability, phone ,safety costs, advertising , car running costs, tools, electricity and other related business expenses, plus the costs of further training. Also the fact that work is not consistent through the year but the bills are.
> Business money and personal money are two different things.
> And don't feed me the BS that trades are rolling in money I know plenty that are highly skilled and only make the base. They take a risk working on job sites; they can be injured, fined up to $250k and even charged with workplace manslaughter which is not a factor for the majority of wage slaves. The ones that are rich employ a lot of people and take on the bigger jobs. But a lot of jobs fall over the main contractor goes bust and you lose your house or are instantly bankrupted.
> 
> ...




First of all M, as you have no doubt read all my posts relating to this particular line in the thread, I pointed out that a decrease or abolition of government intervention in the housing market would make houses more affordable.  As others have failed to deduce I have also stated that education is irrelevant and that it is the government intervention and lack of market forces that is my focus.

If being self employed as a tradesman is not an attractive proposition, can you please then explain why a disproportionate number of tradesmen are self-employed and not wage earners.

I fail to see the arguments for eg being done for $250k for mistakes. Are you aware of the many professionals ( especially in health ) who can be taken for considerably more and who don't have the ability to amortise the costs as effectively since they are wage earners.

other arguments are flawed

1. House being taken... pty ltd anyone?  Obviously you have never owned a company before.
2. Business expenses are minimal eg electricity??? huh how much electricity does a tradesperson pay for when the use on the site power.  Tools are one off set up expenses.  Phone, car, clothing are often rorted for personal use, as are some input materials etc for self work.
3. Tradies overpaid so that is why there is a shortage??  No I said tradies are overpaid as there is artificial demand being driven by government intervention, and hence the geared proceeds of this intervention.

Perhaps you could offer an opinion as to what would happen to their wages if no government stimulus was available in the housing market. 

I look forward to your reply.


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## Soft Dough (25 February 2010)

Beej said:


> Hear hear! I was going to write a similar post but Tysonboss1 has summed it up pretty well IMO.
> 
> 
> 
> ...




I love the neurologist bit.  How many neurologists do you think are trained in Australia per year? They are an elite group, comparing an F1-11 to a spitfire is not relevant.

Neurology is around 12-15 years training, you do NEED to charge a lot to catch up to anyone who started work at 15 years old.

General practice consults are free, and easily accessed by no doubt 90% of Australia's population every day of the year. Perhaps if you don't want to wait for a consult, then you can choose to pay for the service.  There is no building alternative to this.

I think that you also failed to recognise that you pay $60 for the consult and get $30 back too, so in that effect, although it is not quite clear from your writing, they do not earn medicare as well as your contribution.

Unfortunately I work with doctors, and I think it is the perception that they are wealthy, of course some have decent incomes ( eg $120-200k per year ) but most are 30 before they fully qualify, with minimal assets to their name. I also use an extreme example, comparing one of the most elite groups, where only a small proportion of individuals can actually qualify for and complete the training with an occupation where majority of the population would be able to do the training to become qualified ( and this is not being disrespectful, just stating it as a fact )


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## Tysonboss1 (25 February 2010)

Soft Dough said:


> I also use an extreme example, comparing one of the most elite groups, where only a small proportion of individuals can actually qualify for and complete the training with an occupation where majority of the population would be able to do the training to become qualified ( and this is not being disrespectful, just stating it as a fact )




But it doesn't come down to the percentage of the population that are "capable" of doing the training and taking up the profession, What counts is how many people Actually do the training and take up the profession compared to the amount of people willing to pay for their services.


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## Soft Dough (25 February 2010)

Tysonboss1 said:


> But it doesn't come down to the percentage of the population that are "capable" of doing the training and taking up the profession, What counts is how many people Actually do the training and take up the profession compared to the amount of people willing to pay for their services.




I agree, it was just the example I had previously used to illustrate the point that it is not necessary to provide stimulus to a sector that does not need it and results in a wages explosion.

As I have posted, I have no problem paying for services, no matter from whom, I just have a problem when it is artificially inflated due to government intervention.

And don't get me wrong, medicos are not immune to price manipulation. Some doctors were exploiting the medical safety net, which the government closed.  Not a direct comparison I admit, but just highlighting the fact that my problem is not with tradies taking advantage of the situation, but the fact that the government is stupid enough to make a situation which can be taken advantage of ( and as I have and will continue to spruik, has little positive effects for the economy compared to alternative spending, and also increases debt of the country, both government and personal )


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## MACCA350 (25 February 2010)

Tysonboss1 said:


> What counts is how many people Actually do the training and take up the profession compared to the amount of people willing to pay for their services.



What also counts is the number of 1st year apprentices that are kicked out and replaced by another 1st year apprentice by the tradie simply to keep paying lower wages. 

My cousin started a first year building apprenticeship but subsequently left after finding his chances of remaining employed to completion of his apprenticeship was unlikely(among other personal decisions) 

Not sure what measures are in place to discourage this but whatever they are they're not working..........I'm not saying all tradies do this, but many are.

cheers


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## rcm617 (25 February 2010)

We're all ripping to much out of the system, which is great for all of us while we're getting pots of money for our quarry products. However in the meantime we're destroying all our other industries that are actually producing something we can export. Manufacturing is almost non existent, agriculture is still there but slowly becoming internationally uncompetive. What else is there? If China has a hiccup and cuts back on minerals where's the money going to come from. I dont think it was magnificent economic management by the government that saved our economy, we were lucky China kept growing. I wonder where our house prices will be if that were to end.
By the way I think medicare is a massive subsidy for the health care practitioners.


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## Soft Dough (25 February 2010)

the best post I have read in a long time.  You are absolutely right on the money with our squandering of mining boom proceeds, and as I always point out, it is best to invest it in productive assets and infrastructure, rather than divert the proceeds into short term political points eg handouts for imports and boosts to encourage people to invest in asset classes that do nothing to generate export dollars ( by this i strongly mean residential housing )

Being involved in health, I was attracted to this a lot.



rcm617 said:


> By the way I think medicare is a massive subsidy for the health care practitioners.




And it is inefficient, unfortunately in its current guise appeals to the socialists out there, and just like the first home vendors boost, it only ends in tears when the funding runs low/out.

The fix?   Not sure, as I think that it is of benefit for a community to have access to good healthcare.  We do not however all need Mcmansions.

Personally, I am quite happy to have a user pays system, because at least that way our hospital doctors will be able to earn a decent living, it would encourage good practitioners to stay in very highly stressful jobs, and would enable world class facilities and research opportunities ( which can actually lead to good revenue )


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## Idiode (25 February 2010)

What has all this got to do with "the future of Australian property prices"???

Try to keep to the thread please.


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## rcm617 (25 February 2010)

Idiode said:


> What has all this got to do with "the future of Australian property prices"???
> 
> Try to keep to the thread please.




Excessive income leads to excessive property prices. If that income drops because of lack of international competitiveness, property prices drop. At the moment we're insulated from that because of resource demand from China but it will not always be thus.


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## joeyr46 (25 February 2010)

Idiode said:


> What has all this got to do with "the future of Australian property prices"???
> 
> Try to keep to the thread please.




Funnily they are probably the key to were property prices go in future
Healthy economies produce healthy populations with fundamentally healthy relationships between wages and prices of goods.
Once we start to pay people for not producing because of government intervention(or any other reason) then we create bubbles 
So yes very relevant


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## moXJO (25 February 2010)

Ok I'll break it up



> If being self employed as a tradesman is not an attractive proposition, can you please then explain why a disproportionate number of tradesmen are self-employed and not wage earners.




Because it costs too much(plus excess book work) for the main contractor to put you on wages. The workers comp alone for a decent wage is up to and over $9k on $60k wages add super and taxes and it's easier to just hire subbies.
So the majority of the time unless you have an abn then you don't get work. Oh and the going rate for a lot of tradies in this situation is $35 an hour.




> I fail to see the arguments for eg being done for $250k for mistakes. Are you aware of the many professionals ( especially in health ) who can be taken for considerably more and who don't have the ability to amortise the costs as effectively since they are wage earners.



That 250k is for maximum work cover fines for a major safety breach, not being sued. 
As an example; If I have 3 guys above 2.1 meters with no harness then that’s 5k a pop and $500 personal fine for them. And the rules and regulations are many. If someone is doing something stupid, falls and dies I am up for manslaughter and $250k. Given that workers will do something without thinking fines can add up even with good safety systems in place.




> 1. House being taken... pty ltd anyone?  Obviously you have never owned a company before.




Oh I've never run a company Obviously someone hasn't
Umm this is where you’re talking out your A$$. The house often goes up as security for material accounts even if it’s in your wife’s name 
And if you start mixing business with personal assets you lose the personal assets.
Eg: I buy material and use it on the house, or pay tradies from the company to fix up the house. I then go bankrupt over a bad debt. They will link it and deem the house up for grabs. I know this because my friend got done in this exact manner. You keep the business separate from personal assets.




> 2. Business expenses are minimal eg electricity??? huh how much electricity does a tradesperson pay for when the use on the site power.  Tools are one off set up expenses.  Phone, car, clothing are often rorted for personal use, as are some input materials etc for self work.




What are we??? Fu*ken hippies that live out of vans. Are you the type of dolt that thinks we run off with a hammer and a ute and get work all day? FFS for someone that has such a concrete idea of how tradies go about business of making money to roll in, your actual business strategy for us is lacking. You are talking about guys on what more or less equates to wages or less because they get stiffed with insurances, gst and their own book work. There is a long list of expenses exactly the same as any other business. You are also talking about guys that rort the tax system and let me tell you they don't last long. And yes there are a lot of real scum bag trades out there. But a lot are the average business owner with average business problems.

Good luck with prices coming down. There is a whole safety industry full of bureaucratic BS leaching off us. These are the ex union guys, ex pollies and a host of others that happily make life more costly for you. It increases costs and time spent on the job and it's not going away. As a tradie you get wrapped up in that much red tape from unions or workcover that it's amazing any work gets done. The latest thing seems to be training courses you have to participate in if you want to work in certain conditions (eg: at heights, tagging elec tools, ewp and so on).
There was plenty of work before the FHOG and will be plenty after. So long as the mining boom is going there will be a shortage of tradies. Unless we get massive deflation don't be holding your breathe for prices to come down

Why I argue with someone that obviously has no idea about the construction business yet thinks he does is beyond me: You get me riled up soft D, but we always have Rudd bashing to bond over
Oh and another thing building a reasonable size houses is cheap. Building a fricken McMansion that could double as an elephant enclosure and football field ain't.


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## joeyr46 (25 February 2010)

moXJO said:


> Ok I'll break it up
> 
> 
> 
> ...


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## So_Cynical (25 February 2010)

nunthewiser said:


> And paying 2k a week rent? or was he lucky enough to bunk down with others ?




Combination of the 2 caravan parks and house sitting for friends while they had a 6 week holiday in Hawaii....apparently the maximum time you can stay in a caravan park is 6 weeks.


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## Soft Dough (25 February 2010)

moXJO said:


> Because it costs too much(plus excess book work) for the main contractor to put you on wages. The workers comp alone for a decent wage is up to and over $9k on $60k wages add super and taxes and it's easier to just hire subbies.
> So the majority of the time unless you have an abn then you don't get work. Oh and the going rate for a lot of tradies in this situation is $35 an hour.
> .




I get this point, but the goal posts for arguments keep changing.  There is a difference between doing purely subcontractor work and working for yourself, and at times both of us use whichever side we see best illustrates our point.

$35 per hour, which trade are you referring to?



moXJO said:


> That 250k is for maximum work cover fines for a major safety breach, not being sued.
> As an example; If I have 3 guys above 2.1 meters with no harness then that’s 5k a pop and $500 personal fine for them. And the rules and regulations are many. If someone is doing something stupid, falls and dies I am up for manslaughter and $250k. Given that workers will do something without thinking fines can add up even with good safety systems in place.
> .




Goalposts have moved again, in this situation you have employees.  I have stated that my goalposts are around a 1 man show. 

But here I go anyway.

OH&S applies tp any business. If I was a GP and instructed my practice nurse to sterilise an instrument and they failed to do so, my company still takes the fall, I get fined, sueued and quite possibly deregistered.



moXJO said:


> Oh I've never run a company Obviously someone hasn't
> Umm this is where you’re talking out your A$$. The house often goes up as security for material accounts even if it’s in your wife’s name
> And if you start mixing business with personal assets you lose the personal assets.
> Eg: I buy material and use it on the house, or pay tradies from the company to fix up the house. I then go bankrupt over a bad debt. They will link it and deem the house up for grabs. I know this because my friend got done in this exact manner. You keep the business separate from personal assets..




Giving personal guarantees are we?  tsk tsk. Perhaps this is a warning to people to put the asset in the correct name when starting a business.  Not all houses need to be in personal names, and the house in the personal name can be encumbered with the asset value being in a non-personal, untouchable entity.

the PTY LTD should protect you.  





moXJO said:


> What are we??? Fu*ken hippies that live out of vans. Are you the type of dolt that thinks we run off with a hammer and a ute and get work all day? FFS for someone that has such a concrete idea of how tradies go about business of making money to roll in, your actual business strategy for us is lacking. You are talking about guys on what more or less equates to wages or less because they get stiffed with insurances, gst and their own book work. There is a long list of expenses exactly the same as any other business. You are also talking about guys that rort the tax system and let me tell you they don't last long. And yes there are a lot of real scum bag trades out there. But a lot are the average business owner with average business problems.
> 
> Good luck with prices coming down. There is a whole safety industry full of bureaucratic BS leaching off us. These are the ex union guys, ex pollies and a host of others that happily make life more costly for you. It increases costs and time spent on the job and it's not going away. As a tradie you get wrapped up in that much red tape from unions or workcover that it's amazing any work gets done. The latest thing seems to be training courses you have to participate in if you want to work in certain conditions (eg: at heights, tagging elec tools, ewp and so on).
> There was plenty of work before the FHOG and will be plenty after. So long as the mining boom is going there will be a shortage of tradies. Unless we get massive deflation don't be holding your breathe for prices to come down
> ...




M, I have seen mechanics run multimillion dollar businesses out of 1 ute ( and they work on heavy machinery ) Plumbers, electricians, painters etc have no need for anything more than a ute, and a household shed, evidenced by the large amount who conduct good businesses with nothing more.

Please tell me truthfully that the internet connection and computer you are using to respond to me are not being used as a tax deduction. Tell me that you only use your mobile for work use, your ute for work etc.  luxuries not available to others. Small business owners rort the system.

If you are confident that the work will be there, that wages will remain as they are if a government competent enough to see that the first home vendors boost is a negative for the economy removes it, why do you defend it.  Or am I misinterpreting your posts, and you think that it does not have an effect on tradies incomes.


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## Soft Dough (25 February 2010)

joeyr46 said:


> and unlike the medical profession your supposed to actually finish the job succesfully with a guarantee, whereas they ask you to try this and if your stil ill come back next week end try something else
> User pays sounds good but only if a successful outcome, Yes all for it




Haha, the eternal argument. Have you heard of specificity, sensitivity, likelihood ratios etc. They are terms which allow health professionals to make the best possible diagnosis of a condition with the evidence available. Inherent in their definitions is that they are not 100% accurate, and in reality can never be.

Unfortunately, the practice of medicine revolves around uncertainty of diagnosis and response to treatment as the human body is highly variable, infinitely exquisite and unfortunately most of the important information comes from the patient and recall/interpretation is very unreliable.

Please refrain from only classifying "successful outcome" as ideal outcome as all the steps, even unsuccessful treatment is utilised in the treatment plans of a human being.  Treatments do need to be given a time to ascertain efficacy, and patient variability, as explained by the genetic, mental and social variables ( to name a few ) is extraordinary.

I am sure that you, doing a tough job which includes assessment and treatment and takes 3 hours, still charge the 3 hours even if the actual "effective work" only takes 10 minutes.  

Caution is also paramount as decisions are made that can affect not only lives, but also quality of life. Not easy to do.


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## Macquack (25 February 2010)

Soft Dough, just out of interest, what is your actual occupation.


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## drsmith (25 February 2010)

drsmith said:


> This has to take the cake.
> 
> http://www.realestate.com.au/reales...+headland+port+hedland/zpcayz/page2/106197020



If anyone wants to pay me $1mil a piece for these I'll see what I can pick up.

At that price expected rental returns of approximately 8.5% per annum coupled with great depreciation benefits represents an excellent investment. You won't get that from a bank. 

For the first three buyers I'll include a complimentary Chinese flag as part of the deal.


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## Soft Dough (25 February 2010)

Macquack said:


> Soft Dough, just out of interest, what is your actual occupation.




Retired, yours.


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## Macquack (25 February 2010)

Soft Dough said:


> Retired, yours.




Building contractor. What was your actual occupation prior to retiring?


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## Julia (25 February 2010)

rcm617 said:


> By the way I think medicare is a massive subsidy for the health care practitioners.



Really?  So how would you prefer them to be paid?  Do you think all their patient base would be able to pay the cost of a visit to a GP, e.g., when you consider income for the doctor, tax, all the practice expenses, etc etc?

There is already a huge group of people who can only afford to visit a doctor if he/she bulk bills.

If we as taxpayers are not prepared to fund the health system, I don't know what you would consider to be a more appropriate use of our tax dollars.

(Apologies to those who find this a hijacking of the thread topic.)


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## moXJO (26 February 2010)

> I get this point, but the goal posts for arguments keep changing.  There is a difference between doing purely subcontractor work and working for yourself, and at times both of us use whichever side we see best illustrates our point.




Again you don't understand the business. Construction workers source their work from where ever the work is at a given time. That means a mix of subbie or your own jobs no work is generally consistent. It is rare for people to stick it out as subbie for one company likewise if times are lean you tend to subbie out. Of course there can be a lot of other factors or reasons. The goal posts ain't moving it's just that you take on what work is best at any given time for whatever reason.



> Goalposts have moved again, in this situation you have employees.  I have stated that my goalposts are around a 1 man show.
> 
> But here I go anyway.
> 
> OH&S applies tp any business. If I was a GP and instructed my practice nurse to sterilise an instrument and they failed to do so, my company still takes the fall, I get fined, sueued and quite possibly deregistered.




Wrong again.... In a pty ltd company you are deemed as an employee so all those lovely fines apply to you too. Sole trader can escape that wrath to a degree. But then we wouldn't follow your other rules of pty ltd. As for the doctor different kettle of fish I'm not talking about being sued. Construction industry is unique in the fines they give out regarding workplace. It is very rare you would get a work cover official in a doctor’s office. But on a construction site handing out fines daily can be the norm. And man do they love handing out fines.



> Giving personal guarantees are we?  tsk tsk. Perhaps this is a warning to people to put the asset in the correct name when starting a business.  Not all houses need to be in personal names, and the house in the personal name can be encumbered with the asset value being in a non-personal, untouchable entity.
> 
> the PTY LTD should protect you.




Yes and you can wrap it up anyway you like and still lose it No guarantee no material. Suppliers have generally seen these schemes before. You can get away without them depending on how much you need. And if your lucky and on the small amount side the cheap solution can be the house in wifes name. 
But the thing about ITSA if they want it they will find the link between business and asset and get it. If you leave trace of a link they will find it. Pty Ltd will not protect you in a lot of cases. You can talk these schemes up but it is a different case in reality for a number of reasons.



> Please tell me truthfully that the internet connection and computer you are using to respond to me are not being used as a tax deduction. Tell me that you only use your mobile for work use, your ute for work etc.  luxuries not available to others. Small business owners rort the system.



The internet no, but the phone is, and so is the utes and vans (and yes only used for work). Not sure where your living but tax deduction are available to anyone not just tradies. If I trade shares for a living I can claim the net.



> M, I have seen mechanics run multimillion dollar businesses out of 1 ute ( and they work on heavy machinery ) Plumbers, electricians, painters etc have no need for anything more than a ute, and a household shed, evidenced by the large amount who conduct good businesses with nothing more.




I dunno... multimillion dollar and in a household shed and a ute 



> If you are confident that the work will be there, that wages will remain as they are if a government competent enough to see that the first home vendors boost is a negative for the economy removes it, why do you defend it.  Or am I misinterpreting your posts, and you think that it does not have an effect on tradies incomes




Yeah I don't actually care about FHOG and could care less if they take it away. I actually don't see it affecting wages that much considering you have to chase the work in the first place. If anything the School building has made a bigger shortage of trades in some areas atm. But the schools are a major pain in the a$$ due to the total lack of any organization or structure, and the amount of paper work and bs that goes on. In other areas tradies are real quiet. But it’s always been a mix. I don't see trades wages changing that much if they are positioned right. All the minnows may panic and get desperate at times but normally bounce back

 My issue is with the illusion that all tradies are making a fortune which is just not anywhere near the case. It's the same with any business if you run it well and look after the customer you make money. There are some shonks and others that provide a good service the same as any business. I think there are bigger factors at play then just govt stimulus affecting house prices. However govt interference along with China/ mining boom and the trickle down is another matter.


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## rcm617 (26 February 2010)

Julia said:


> Really?  So how would you prefer them to be paid?  Do you think all their patient base would be able to pay the cost of a visit to a GP, e.g., when you consider income for the doctor, tax, all the practice expenses, etc etc?
> 
> There is already a huge group of people who can only afford to visit a doctor if he/she bulk bills.
> 
> ...




We certainly need a safety net for those who cannot afford to go to a doctor, but the present setup is a recipe for inefficiencies and only helps to push up wages to unacceptable levels. Just look at the recent cataract surgery rebate debacle, when opthalmologists used their elderly patients as publicity to stop the government reducing their rebate from $620 for a 20 min procedure, despite new technology making this a relatively simple procedure. If thats not gouging the taxpayer from these highly paid individuals I dont know what is. We would have a far more efficient system if those that can afford to pay, paid and those who couldnt had to pay a percentage. Maybe they would then take a bit of responsibility for their own health.
 As it is now a lot of people in the bush dont have much of a  health service because practitioners would rather work part time in the city rather than go to the bush. Our hospitals dont cope with emergency cases waiting to get admitted for hours.
Apologies also as this is starting to stray from the thread.


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## kincella (27 February 2010)

gee, just popped in to say

 hi to robots, and the other property people...

boy have you other guys  gone way off topic.....

just wondering , are you all  expecting another rate rise next week..?

I am not....but then I cannot trust stevens to read the economy correctly...
but he will get it right eventually....its anything but rosy out there....

he should wait until most of the data comes out in mid April....to get a true reading....

some might need to put on a hard hat.....for when the brakes come on...

how are the grasshoppers these days.....


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## Investor82 (27 February 2010)

Wow - justed popped in for a look too. Do you think we could start a new thread on the price of contractors? And keep this thread on property prices...? 

Rates, I think, are likely to screw me again on tuesday! I have a lot of debt, and earn USD - so I am coping in from both ways with this current market. 
(whats that I hear - a violin )

I have my fingers crossed that they will take pity on me, and wait until April data. 

Im not sure about grasshopers? but have you seen the price of mops lately???


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## Smurf1976 (27 February 2010)

Soft Dough said:


> Haha, the eternal argument. Have you heard of specificity, sensitivity, likelihood ratios etc. They are terms which allow health professionals to make the best possible diagnosis of a condition with the evidence available. Inherent in their definitions is that they are not 100% accurate, and in reality can never be.
> 
> Unfortunately, the practice of medicine revolves around uncertainty of diagnosis and response to treatment as the human body is highly variable, infinitely exquisite and unfortunately most of the important information comes from the patient and recall/interpretation is very unreliable.



Exact same situation applies to servicing of electrical control systems etc. Very hard to know what's wrong when the fault is intermittent, happens once every few days and you've never seen it happen yourself but must fix it anyway.

And yes, stuff ups with such things may also endanger human life depending on the situation.

If the trades were so great then it wouldn't be hard to get apprentices and there wouldn't be the constant exodus of trades people to other careers. In my experience, the ones who stick at it for the long term (more than 20 years) are either small time contractors who've established a good reputation and can charge accordingly (and not worry about knocking back unpleasant jobs) or have established careers with large organisations offering continuous work. Most of the rest get sick of it and do something else because it's not as great as it looks to outsiders.


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## Bill M (27 February 2010)

A few bits and pieces from The Daily Telegraph Today.
Full Story by clicking this link here.
----------

*Sky's no limit for real estate prices across Sydney* 

SYDNEY'S property market is heating to unprecedented levels, with prices soaring even though more real estate is for sale than ever before. 

In suburban Sydney, growth during the latter half of 2009 pushed annual averages close to or just past previous peaks. 

APM economist Matthew Bell said the real estate market was now as hot as it was in late 2003 and early 2004.

"If things continue in the same vein as they did over the last six months it will be in the strongest we've seen," Mr Bell said.


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## CamKawa (28 February 2010)

I'm a bit surprised to see the media talking about this as it may damage the relationship it has with it's advertising revenue property spruikers. Looks very risky for business to me. Also, how's the house price ponzi scheme supposed to suck in new buyers with articles like this? The name of the author of the article has been suppressed I see - interesting...

Homeowners 'overpaid' for houses

A QUARTER of Sydney homeowners who bought and sold their properties during the past five years lost money.


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## Soft Dough (1 March 2010)

Smurf1976 said:


> Exact same situation applies to servicing of electrical control systems etc. Very hard to know what's wrong when the fault is intermittent, happens once every few days and you've never seen it happen yourself but must fix it anyway.




And i bet if there are multiple visits required the customer is charged for all visits not just the inital one.


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## Tysonboss1 (1 March 2010)

Soft Dough said:


> And i bet if there are multiple visits required the customer is charged for all visits not just the inital one.




They would only charge if they planned on feeding their families that day.


----------



## UBIQUITOUS (2 March 2010)

Now that rates have been raised yet again, and will continue to be raised, I wonder if the 250k new homeowners over the past year, will be voting for Rudd next year. 

Will they really be thanking him for the FHOG bribe? Will they really care that the RBA is a non political body?

I can see some social unrest coming. No doubt, the papers with vested interests in the property market, will not cover this.


----------



## Bigukraine (2 March 2010)

UBIQUITOUS said:


> Now that rates have been raised yet again, and will continue to be raised, I wonder if the 250k new homeowners over the past year, will be voting for Rudd next year.
> 
> Will they really be thanking him for the FHOG bribe? Will they really care that the RBA is a non political body?
> 
> I can see some social unrest coming. No doubt, the papers with vested interests in the property market, will not cover this.




Back off envelope stuff but if borrowed $250k that eq to $365 per wk to be on the path to own your own home. In my mind that is about or near to the ave rent (dep which state you live) and i know ownership has its on costs v renting but better to have some asset at the end than not ???? Its the old argument rent money is dead money and i know some will make the point that with what you "could" save it might be better invested elsewhere but in this "i've got to have that new plasma" age and Australians being noted for not being the best savers in the world  and home ownership has been the kill two birds with one stone asset (roof over head, investment) for years and imo will take a huge correction event to change the mindset.


----------



## satanoperca (2 March 2010)

Great news IR's up.

Fantastic our economy has survived the GFC and is on the path to recover

Hope to see them back around 5% by the end of the year.

Oh, forgot about all those teaser rates offered to FHB last year, they must start resetting soon.

Oh well, they did get free taxpayers money of KRUDD and the govnuts.

Cheers


----------



## treeman (2 March 2010)

I heard a few fho at my work place sqeeling today when the raise was announced. Those that were foolish enough to take loans of 400 - 450 at the lure of the grant will have alot more sqeeling to do with future rises.

Makes me wonder how much longer the bubble can stretch. It is usually when market is at full pace and confidence that the walls start to shake ....


----------



## Mofra (3 March 2010)

treeman said:


> I heard a few fho at my work place sqeeling today when the raise was announced. Those that were foolish enough to take loans of 400 - 450 at the lure of the grant will have alot more sqeeling to do with future rises.



Bank affordability calculators are all set at 2% higher than the non-discounted standard variable rate. Still plenty of fat factored in for newer homebuyers. 

This bear fantasy that 0.25%, 0.5% of a full 1% is enough to precipitate a crash to the entire market (even the more vulnerable outer suburban markets) is amusing.


----------



## joeyr46 (3 March 2010)

Mofra said:


> Bank affordability calculators are all set at 2% higher than the non-discounted standard variable rate. Still plenty of fat factored in for newer homebuyers.
> 
> This bear fantasy that 0.25%, 0.5% of a full 1% is enough to precipitate a crash to the entire market (even the more vulnerable outer suburban markets) is amusing.




I agree I don't think interest rates will be the cause of the coming correction, just the fact we have too much debt. Of course we can go on a bit longer but judging by the mainstream media stories on property it feels like a major top.
Can't remember this many stories in  papers and current affair programs about how housing is just going to keep rising etc
So called supply/demand 
Can anyone tell me how many houses and units there are out there? because we know the population, all we ever hear is there is a short fall in the number of houses being built but not how many there are.


----------



## gav (3 March 2010)

satanoperca said:


> Great news IR's up.
> 
> Fantastic our economy has survived the GFC and is on the path to recover
> 
> ...




Don't forget the value of their properties has gone up 10% already.  And thats tax free profit too


----------



## satanoperca (3 March 2010)

Mofra said:


> Bank affordability calculators are all set at 2% higher than the non-discounted standard variable rate. Still plenty of fat factored in for newer homebuyers.
> 
> This bear fantasy that 0.25%, 0.5% of a full 1% is enough to precipitate a crash to the entire market (even the more vulnerable outer suburban markets) is amusing.




Interesting, you need to analyze the amount of indebtedness of mortgagee holders against income. Think you will find that how it was in the past is not how it is today. In the 90's rates raised above 10% but if this happened today many many would fold as their debt to income ratio has greatly changed.

Anyhow.

Let us not forget that many FHB bought on intro rates of around 4.5% last year, discounted for the first year. These are starting to reset.

Current variable rates from the majors seem to be around 6.8%. This would see a 50% increase in mortgage repayments. Even if they took the normal rate on average of 5.3% would still see an increase of 

Hmmm 2% leeway from the banks when calculating the max mortgage amounts seems to have already disappeared for the many FHB's that bought with 90 LVR's and mortgage intro rates last year.

I would also challenge the validity of the assumption that the banks 2% leeway is fair and correct in today volatile economic community.

I for one have been surprized every time my wife and I have asked the banks how much we can borrow. It has always been greater than what we could reasonable expect to service unless we become air eating humans.

Cheers


----------



## treeman (3 March 2010)

Im not really living any bear fantasy since I am not in a position where it will make much difference to me. 

It just amuses me when I hear 90% of the population around saying "wow property you can't lose and it will never stop going up" lol


I just cannot see it going much higher, who is going to keep buying out houses at 400 - 500k with average incomes of 60k. Once there is no fresh meat to keep passing the parcel down the prices will come to a halt.

If interest rates get too hot for those that rushed in, mixed in with the realisation that the dream of quick cash is gone, some selling might start.

I know everybody is saying, supply and demand - sure there might be lots of demand but if its not affordable then demand in itself won't matter.

Then I hear about overseas investors, with Aussie dollar strong as ever this just makes the investors capital weaker and lets not forget practically most other western countries are cheaper then Aus making them a smarter investment.

Don't get me wrong Im not trying to paint a picture of a great crysis, even if all these factors were to happen I doubt the housing market would totally crash, but no doubt correct to more affordable prices for the average Joe.

Probably alot of people will get angry at my reply because everybody seems to be rushing in the housing market trying to desperately secure what the media has painted as "the last chance ever to own the Aussie dream"

P.S If I was a non owner right now I would rather rent and save my money.


----------



## MR. (4 March 2010)

ASIA
http://www.google.com/hostednews/afp/article/ALeqM5hyB5z-lxr4bPS-fa2NIwI-MisffQ


> Beijing has tightened lending, requiring buyers of second homes to put up a downpayment of at least 40 percent





> In Singapore,.......... Home buyers are also now limited to borrowing up to 80 percent of the property's value, instead of 90 percent.




AUSTRALIA
http://www.investmentpropertycalcul...-its-loan-to-valuation-ratios-lvr/2010/01/21/


> Westpac Banking Corporation has tightened its mortgage loan criteria ………. from 92 per cent to 87 per cent including two per cent for lenders’ mortgage insurance.




The  Commonwealth, ANZ and NAB continue to promote lending of up to 97% (including insurance) for investment properties.  Beijing's LVR is 60% for investment properties. 

Bring on the global "guide lines". If our government's arn't ever going to step in!


----------



## Trembling Hand (4 March 2010)

MR. said:


> Bring on the global "guide lines". If our government's arn't ever going to step in!




Oh god thats the solution. More government guide lines and regulations!!


To fix what? The previous actions of government to inflate the bubble?

Why do Aussies always want the government to solve problems in spite of all evidence that they just make it worst?


----------



## Aussiejeff (4 March 2010)

Trembling Hand said:


> Oh god thats the solution. More government guide lines and regulations!!
> 
> 
> To fix what? The previous actions of government to inflate the bubble?
> ...




A: Because fawning media images of our pretty pollies slobbering all over... errr.... sorry.... "kissing" lots of babies, smiling & joking with pre-teen schoolers & promising to fix EVERYTHING make us all feel soooo warm & fuzzy inside?

Mmmmmm....


----------



## MACCA350 (4 March 2010)

MR. said:


> The  Commonwealth, ANZ and NAB continue to promote lending of up to 97% (including insurance) for investment properties.  Beijing's LVR is 60% for investment properties.
> 
> Bring on the global "guide lines". If our government's arn't ever going to step in!



Our government would never step in and force such a thing.........think of all the revenue they would loose. They have a direct interest in higher prices and higher transactions. 
What we need in this regard is to break that government reliance on income from the housing sector.


On a side note, If you look at what portion of a property is increasing the most, it's the land. Problem, as I understand it, here is that the government has been slow to release and rezone land. What does become available gets snapped up by the major developers(usually before they are rezoned since they have inside info) who then drip feed it to the public to keep land values high. 

What's the answer, I'm not an expert in the area, but I'd assume that an increase in the release of land - TO THE PUBLIC - should release some of that upward pressure.

Imagine if there were a flood of cheap($20-$50k) land available in new surrounding suburbs over the next few years. If Rudd wanted to stimulate things why not put those billions into developing new affordable suburbs to rebalance this seeming imbalanced of supply/demand. But then again that would never happen given my opening statement.

cheers


----------



## awg (4 March 2010)

MACCA350 said:


> On a side note, If you look at what portion of a property is increasing the most, it's the land. Problem, as I understand it, here is that the government has been slow to release and rezone land. What does become available gets snapped up by the major developers(usually before they are rezoned since they have inside info) who then drip feed it to the public to keep land values high.
> 
> What's the answer, I'm not an expert in the area, but I'd assume that an increase in the release of land - TO THE PUBLIC - should release some of that upward pressure.
> 
> ...




That would involve the govt in large scale public property development, something they seem to have largely moved away from over the last 30yrs.

It takes much money and patience to develop medium/large scale new developments, including surcharge for power, water, sewerage, and internal roads etc.

I have a distant family member who is a hugely wealthy property developer.

He buys land and holds it for years, all the time working to get it rezoned and developed. He wins most but loses some. He obviously needs deep enough pockets to pay the land holding costs for years, absorb the ones he loses, and then pay the development costs, which per block, are enormous.
Very many obstacles to overcome

My personal opinion is that prices will continue higher due to supply/demand,
and increasing cost pressures, until and if a credit contraction eventuates.


----------



## Bigukraine (4 March 2010)

MACCA350 said:


> Our government would never step in and force such a thing.........think of all the revenue they would loose. They have a direct interest in higher prices and higher transactions.
> What we need in this regard is to break that government reliance on income from the housing sector.
> 
> 
> ...




Just like to weigh in re developers trust me when i say it not to easy for them to obtain funding in this post gfc world and i know of some projects that have been mothballed because of this also councils require money held in trust for services now as well as an increase in lvr for projects funding,title costs and infrastructure makes it hard to develop. ps at current govt,council and infrastructure ,title costs $20-50k + would only cover th cost to make the land you would have to add holding costs of funding and initial cost of the project land plus profit. it is getting near impossable to produce land for under $100k these days (live in sa so info supplied re this state)


----------



## MR. (4 March 2010)

Trembling Hand said:


> Oh god thats the solution. More government guide lines and regulations!!




Of course, let us not follow the path of the US.



Trembling Hand said:


> To fix what? The previous actions of government to inflate the bubble?




No, to stop further property speculation due to these low interest rates.  



Trembling Hand said:


> Why do Aussies always want the government to solve problems in spite of all evidence that they just make it worst?




I hope it’s not “all evidence” of making things worse! 
Since the free market didn’t get to run its course governments now better step up to the plate since things are perceived to be returning to “normal”.




MACCA350 said:


> Our government would never step in and force such a thing.........think of all the revenue they would loose. They have a direct interest in higher prices and higher transactions.
> What we need in this regard is to break that government reliance on income from the housing sector.




You may be right, and the RBA is independent from the government for a reason. Which will it be? Which will cause the least grief? What's the carry trade really doing to our economy?


----------



## Mofra (4 March 2010)

satanoperca said:


> Interesting, you need to analyze the amount of indebtedness of mortgagee holders against income. Think you will find that how it was in the past is not how it is today. In the 90's rates raised above 10% but if this happened today many many would fold as their debt to income ratio has greatly changed.
> 
> Anyhow.
> 
> ...



It's a fair & reasoned response, however there are a few factors I believe are in homebuyer's favour:

a.  AWOTE has been increasing at above inflation rates for years so anyone who has bought greater than 12 months ago could reasonably expect to have an even greater income to service the existing debt

b.  Lending ratios are much tighter than they were just 3 years ago

c.  Many homebuyers maintain normal repayments during a honeymoon period to reduce the principal

d.  Our delinquency rates are still amongst the lowest in the Western world.


In all honesty I don't see rates as the driving factor in homeowners falling into arrears - the employment rate (and the less accurate under employment rate which is just as important IMO) is a much greater factor - the majority of delinquencies I had seen during my time in finance were due to unemployment.


----------



## Go Nuke (7 March 2010)

> a. AWOTE has been increasing at above inflation rates for years so anyone who has bought greater than 12 months ago could reasonably expect to have an even greater income to service the existing debt




Sorry I can't agree with that.
I haven't seen a pay increase for 2 years now apparently due to the GFC (thx Tyco). So my ability to service a loan has actually decreased dramaticaly over that time with the rise in costs of everything else.

My partner is in a similar boat.
Bonuses and O/T goneski.

As someone who is getting ready to buy a block of land and build I do think interest rates rising is going to send the FHB to the wall...and very soon.

They were suckered into the market with low interest rates and high property prices reletive to income.
There might be some cold comfort for them though because they might be able to sell their property and still come out at the very least debt free.
Unless they all start to default at the same time and the market gets flooded with properties from distressed homeowners.

MACCA350, I think your right about the land being released too slowly.
We have a contract on a block now and were lucky to get that. Everything we hear now from the developer and people walking through display villages is that there is no more land coming up for release and everything that was available was gone very quickly.

Worse still the developers are now reducing the size of the blocks to make up for the extra costs the government keeps slugging them with.

At Noth Lakes here in QLD I see house and land packages on a 312sqm block of land!!



> I just cannot see it going much higher, who is going to keep buying out houses at 400 - 500k with average incomes of 60k. Once there is no fresh meat to keep passing the parcel down the prices will come to a halt.



+1 to that!
But keep in mind, the "average" might be $60K but I bet the "median" income is closer to about $48K.
I personaly don't know that many people on $60K or more.
The government likes using those figures to make it out like we are all doing so well.


----------



## wayneL (7 March 2010)

In the US:

Second wave of mortgage blow-ups due.

Any effect on AUS?


----------



## So_Cynical (7 March 2010)

wayneL said:


> In the US:
> 
> Second wave of mortgage blow-ups due.
> 
> Any effect on AUS?





Scott Pelley reports on the mortgage crisis that's far from over, with a second wave of expected defaults on the way that could deepen the bottom of the U.S. recession.............*14 December 2008*


----------



## MR. (9 March 2010)

31/3/2010 the US Fed stops buying mortgages. 
If correct, it is a worry with further loan resets due, as per the prediction in the above video.

30/4/2010 is the end of the US 1st time home owners grant of $8000-.

The Future of Australian Property Prices?


----------



## Mofra (9 March 2010)

Go Nuke said:


> Sorry I can't agree with that.
> I haven't seen a pay increase for 2 years now apparently due to the GFC (thx Tyco). So my ability to service a loan has actually decreased dramaticaly over that time with the rise in costs of everything else.
> 
> My partner is in a similar boat.
> Bonuses and O/T goneski.



That may be the case for yourself and your partner, but the weight of statistic evidence is differs from your personal circumstances. FTR I have had increases in salary every year for the past few years, including upgrading salary upon changing jobs.


----------



## >Apocalypto< (9 March 2010)

*Re: The future of Australian property prices*


up, up, up and more bloody UP! :1zhelp:


----------



## James58209 (9 March 2010)

From the Herald Sun :

CBA tightens screws on lending

Is this the beginning of the credit crunch we had to have?


----------



## satanoperca (9 March 2010)

Got to love news articles.

http://www.news.com.au/business/breaking-news/investors-grab-bigger-share-of-home-loans/story-e6frfkur-1225838677078



> Investors grab bigger share of home loans




As a percentage yes as FHB leave the market. The first step in the ladder is eroding away.

But the most important facts :



> The number of loans dropped 18 per cent over the same 12 months, to 6294 from 7673.






> The figures showed the total value of loans recorded by AFG remained below year-ago levels, with $2.275 billion of new mortgages in February 2010 compared with $2.674 billion a year before, *a fall of 15 per *cent.




are often overlooked.

So number of loans is down, total value of loans is down but dont worry the market is going to keep on going up.

And then this 



> UPDATE: James Glynn DRAMATIC growth in job advertising and a surge in business confidence have lifted the chances of another interest-rate rise in April.




Bring it on. 

Happy debt induced comas are coming to a house near you.

Cheers and have a good evening.


----------



## Trembling Hand (10 March 2010)

Poor stats on home loan approvals. Biggest month on month decline in a long time. For a boom there's not much business being done?


----------



## trainspotter (10 March 2010)

Could be a housing bubble coming up ? OR it could be the best time to buy?


----------



## UBIQUITOUS (10 March 2010)

I'd say that it's a good time to sell. I wonder how FHBers who succumbed to the bribe are now feeling? Expect quite a few reposessions in the outer suburbs of many cities this year.


----------



## joeyr46 (10 March 2010)

So number of loans is down, total value of loans is down but dont worry the market is going to keep on going up.

Simple its Supply/ Demand 
No supply plenty of demand will drive prices up as the bulls keep saying
2004 or there abouts I can remember looking in the local RE office and there was 1 house for sale everything else in the window was either sold or under contract, but there is plenty for sale at the moment so it can't be caused by lack of supply and plenty of demand




Cheers and have a good evening.[/QUOTE]


----------



## bellenuit (10 March 2010)

joeyr46 said:


> So number of loans is down, total value of loans is down but dont worry the market is going to keep on going up.




I haven't looked into the detail, but loans could be down because there isn't enough land being made available to build on, hence low demand for loans. But demand for established houses can still be high keeping the price up.

I read today that blocks available to build on in WA is way down on just a few years ago.


----------



## satanoperca (10 March 2010)

More good news. 

Where is Robots?

http://www.heraldsun.com.au/business/cba-tightens-screws-on-lending/story-e6frfh4f-1225838448648



> CBA tightens screws on lending






> The bank has written to mortgage brokers advising them that loan to value ratios will be reduced to 80 per cent from 90 per cent on a range of investment home loans.




Only 10% change in LVR's or 50% change in borrowing capacity.

Cannot see those investors flooding back to the market as everyone predicted.

This year is going to be fun.

FHB, KRUDD has suckered you into the biggest ponzi, not productive scheme in Australia and it looking like you will pay more than the free money you recieved.

How long before the rest of the four pillars of greed follow suit?

Abbott could have funded his proposed maternity leave with the KRUDD's FHBG for four years or more.

High property prices are a false illusion of wealth.

Cheers and have a good evening.


----------



## chops_a_must (10 March 2010)

bellenuit said:


> I haven't looked into the detail, but loans could be down because there isn't enough land being made available to build on, hence low demand for loans. But demand for established houses can still be high keeping the price up.
> 
> I read today that blocks available to build on in WA is way down on just a few years ago.




Why on earth would they be releasing land when demand in Perth is the lowest in a decade and vacancy rates are the highest in 15 years?


----------



## bellenuit (10 March 2010)

chops_a_must said:


> Why on earth would they be releasing land when demand in Perth is the lowest in a decade and vacancy rates are the highest in 15 years?




The Urban Development Institute's Deborah Goostrey says more land should be released as the population jumps in Perth and demand increases.

http://www.abc.net.au/news/audio/2010/03/10/2841657.htm?site=perth


----------



## jbocker (10 March 2010)

chops_a_must said:


> Why on earth would they be releasing land when demand in Perth is the lowest in a decade and vacancy rates are the highest in 15 years?




Hi Chops,
Where have you heard this from? Not challenging it - just hadnt heard anything about that. Mind you I havent opened a paper or turned on a TV for a couple of days....


----------



## bellenuit (10 March 2010)

chops_a_must said:


> Why on earth would they be releasing land when demand in Perth is the lowest in a decade and vacancy rates are the highest in 15 years?




*Land in short supply as the population jumps*

_Updated March 10, 2010 11:06:00
The State Government is coming under pressure to release more land for housing as the state enters another mining boom.
The Urban Development Institute says there are currently fewer than 1400 blocks of land for sale in Perth.
The Institute's Debra Goostrey says that's 40 per cent fewer than in the last boom in 2006, when people were camping out for weeks to try to secure a block of land.
"We need to keep the supply up to keep the prices down. Just like happened last time, as soon as you start to run into short supply the prices start to go up."
She says demand will escalate as there are 1200 people a week moving into Western Australia.
But, the Real Estate Institute believes there are a lot of speculators sitting on land waiting for prices to improve before releasing them for sale.
REIWA's President Alan Burke says the shortage will impact on prices.
"We're not going back to the boom. It will be a good year for anyone owning a home, their value will improve but it won't skyrocket out of control."_

http://www.abc.net.au/news/stories/2010/03/10/2841587.htm?site=perth


----------



## chops_a_must (10 March 2010)

jbocker said:


> Hi Chops,
> Where have you heard this from? Not challenging it - just hadnt heard anything about that. Mind you I havent opened a paper or turned on a TV for a couple of days....




http://www.markhay.com.au/news-opin...-vacancy-rate-at-14-year-high---September-Qtr



bellenuit said:


> *Land in short supply as the population jumps*
> 
> _Updated March 10, 2010 11:06:00
> The State Government is coming under pressure to release more land for housing as the state enters another mining boom.
> ...




I'm not sure about the 1200 people a week. That sounds like a copy and paste job from 2007 numbers.


----------



## jbocker (11 March 2010)

Thanks Chops_a_must. I can see Bellenuits quotation too. Interestingly both from the same REIWA President Oct'09 and Mar'10. His comments seem to reflect the state of flux that Australian (Perth at least) property is currently experiencing, largely I daresay impacted by the FHOG status. I find it hard to fathom where things will go from here, debt is a major issue, but I think this is across the board in all investments. No doubt people have been stung badly with shares and super and maybe turne to investing in good old 'bricks and mortar'. Are the prices over inflated, I dont know, if they are inflated I suspect that capital growth may stagnate for quite some time (which it periodically does in cycles anyway). Maybe this time for a little longer, I dont see a major collapse in prices, because Aussies tend to hang on and ride it out. Yep they are going to go without, go hungry, they will be tested and there will be some pain. 

I did exactly the same as a FHB nearly 28 years ago. My parents the same 30 years before that. It has never been easy.


----------



## UBIQUITOUS (11 March 2010)

The spruiking media articles are almost daily now. I smell a combination of Fear and BS 

http://www.smh.com.au/business/sydney-house-prices-tipped-to-push-higher-20100311-q0em.html



> Sydney house prices tipped to push higher
> March 11, 2010 - 12:21PM
> Property prices in Sydney’s inner and middle rings could rise by up to 10 per cent this year, according to an industry association.
> 
> ...


----------



## Soft Dough (11 March 2010)

Mortgage pain on the increase 

http://www.theage.com.au/business/mortgage-pain-on-the-increase-20100311-q0q3.html

Add to this, LVR changes and decreased access to capital and it looks like the government fuelled ponzi scheme is coming nearer to an end.

Where is robots and his commentary?

Perhaps he is suffering mortgage stress and can't afford his internet connection?

Happy days cashed up brothers

Paradise


----------



## TOBAB (11 March 2010)

jbocker said:


> Thanks Chops_a_must. I can see Bellenuits quotation too. Interestingly both from the same REIWA President Oct'09 and Mar'10. His comments seem to reflect the state of flux that Australian (Perth at least) property is currently experiencing, largely I daresay impacted by the FHOG status. I find it hard to fathom where things will go from here, debt is a major issue, but I think this is across the board in all investments. No doubt people have been stung badly with shares and super and maybe turne to investing in good old 'bricks and mortar'. Are the prices over inflated, I dont know, if they are inflated I suspect that capital growth may stagnate for quite some time (which it periodically does in cycles anyway). Maybe this time for a little longer, I dont see a major collapse in prices, because Aussies tend to hang on and ride it out. Yep they are going to go without, go hungry, they will be tested and there will be some pain.
> 
> I did exactly the same as a FHB nearly 28 years ago. My parents the same 30 years before that. It has never been easy.




Agree with these sentiments. People do not hand over the keys to banks readily. Banks do not want to accept the keys either. WE have full recourse loans. Prices may continue to increase or they may stagnate, perhaps even fall a little.

Have yet to hear anything that has convinced me a collapse is going to occur.


----------



## TOBAB (11 March 2010)

Soft Dough said:


> Mortgage pain on the increase
> 
> http://www.theage.com.au/business/mortgage-pain-on-the-increase-20100311-q0q3.html
> 
> ...




Hi Soft Dough,

A 90% LVR would seem very risky, no wonder banks are cutting back (as they should!)

Do you really believe in the ponzi scheme - a home is clearly an asset? What sort of fall are you predicting and where?

I do believe that prices are high - a good time to sell. A collapse is a bit far fetched though (a period of stagnation more like it) and your desire for one is frankly quite disturbing?


----------



## satanoperca (11 March 2010)

What is a collapse exactly?

More than 50% off current prices

A correction?

Between 0-20%

A fall?

20-50%.

Need to have a sticky on this thread with a guideline as to what exactly determines these things.

Cheers


----------



## explod (11 March 2010)

satanoperca said:


> What is a collapse exactly?
> 
> More than 50% of current prices
> 
> ...




In the US about 80% in worst effected areas in the last six years.  Not suggesting that sort of thing here, but that was a crash for you.


----------



## Soft Dough (11 March 2010)

TOBAB said:


> Hi Soft Dough,
> 
> A 90% LVR would seem very risky, no wonder banks are cutting back (as they should!)
> 
> ...




Well obviously different areas will experience hugely different problems ( eg gold coast and cairns have been stuffed for years already), holiday destinations and  investment areas are always the next to go, then closer to home.

I think 20% is definately on.    That is unless the government decides to go into more debt to keep the bubble inflated until the election is over.

Housing growth is being driven by credit growth, credit growth that is unsustainable..   People rely on higher and higher LVR to fuel increasing prices.  Also, the way LVRs work means that 90 -> 80 makes a HUGE dent in what someone can borrow, just as it made for huge increases on the way up.

This coupled with decreased lending, removal of the first home vendors boost ( which was geared up multiple of times ) and increasing interest rates is something I would not like to be a part of.  In fact if the prices only stagnate, it could be for a whole economic cycle.

What is wrong with a house price crash?

It makes housing more affordable, makes living costs and conditions better.  The kinds of things an uncontrolled boom ( being artificially stimulated by a deluded prime minister ) destroys.


----------



## CamKawa (11 March 2010)

Soft Dough said:


> People rely on higher and higher LVR to fuel increasing prices. Also, the way LVRs work means that 90 -> 80 makes a HUGE dent in what someone can borrow, just as it made for huge increases on the way up.



You can see the effect of that in the latest Housing Finance figures. Looking a little bit bearish aren't they.


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## kincella (11 March 2010)

hi there all,
just wondering, hows it all going with the housing.....whilst waiting for the crash.....
looks like the banks are making it hard for the kids, with the higher LVR.s etc
thought the RBA went too hard as usual with all the rate rises.....the real test for the economy commenced in January, after Xmas and will struggle through for the next 6 months.....
expect some turmoil in this an election year....
who knows whats coming in the may budget....
I have been surprised with the Melb market, news out from last weekends auctions, what with people paying 100-150 k's higher than estimated.....must be those pesky foreigners....

I miss my friend Robots....I do hope he is happy and well

I saw this article today....I thought it was funny...
I posted it on another site..........just a copy... hope you get a laugh
.........................................................................
TIC...this is a great article....
on a serious note.....maybe its not as far fetched as some might think...
since the current govnuts have been providing a tent city for the extra visitors on xmas island.....recently

Government launches First Tent Owners Scheme due to crippling house prices 
CHARLES PURCELL 
March 11, 2010 - 10:50AM 

extracts only...............
He would also pass legislation so that housing prices in Sydney drop by law down to their 1990 levels. Anyone who tried to sell a house at more than six times the average wage, would, in the Roman tradition, be sold into slavery, or exiled to a tiny island (such as New Zealand

http://www.theage.com.au/opinion/po...-to-crippling-house-prices-20100311-q02j.html


----------



## joeyr46 (11 March 2010)

TOBAB said:


> Hi Soft Dough,
> 
> A 90% LVR would seem very risky, no wonder banks are cutting back (as they should!)
> 
> ...




Why is a home clearly an asset I would have classed it as a consumption item,
A 2nd house would be an asset,but the first house is just like your car (there for your use). Cash is an asset until you use it and of course you can raise cash against the house then the house becomes a liability.
As for ponzi scheme, for homeowners no they just want their own home but those buying homes to rent out and borrowing way too much to be paid by the renter hoping to sell and make a capital gain then that is similar to a ponzi scheme were the previous investors only get paid if new investors come to the party.
How far a price correction? hard to say but there are ways that we can get an idea. Over decades (not just the last few years ) a reasonable price for a house was 2.5 to 4 times average earnings (dependant on which city and how close to the city and of course quality of house etc) So we could start looking at say $150000 to $240000 roughly if wages dont go up substantially.


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## satanoperca (11 March 2010)

Hi Kincella,

Nice to see ya posting again.

Can you explain why ?


kincella said:


> thought the RBA went too hard as usual with all the rate rises..... [/url]




I see it the other way. RBA went to hard reducing rates to low and encouraging people to leverage up instead of deleveraging as the world economies struggle to grow under the weight of debt.

Property investors and owners have seen an extraordinary return on their investment over the last year. Melbourne +15%.

Cheers and have a nice evening.

PS. Please read new signature. Bulls are part of the ying and yang of the debate.


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## UBIQUITOUS (11 March 2010)

joeyr46 said:


> Why is a home clearly an asset I would have classed it as a consumption item,
> A 2nd house would be an asset,but the first house is just like your car (there for your use). Cash is an asset until you use it and of course you can raise cash against the house then the house becomes a liability.
> As for ponzi scheme, for homeowners no they just want their own home but those buying homes to rent out and borrowing way too much to be paid by the renter hoping to sell and make a capital gain then that is similar to a ponzi scheme were the previous investors only get paid if new investors come to the party.
> How far a price correction? hard to say but there are ways that we can get an idea. Over decades (not just the last few years ) a reasonable price for a house was 2.5 to 4 times average earnings (dependant on which city and how close to the city and of course quality of house etc) So we could start looking at say $150000 to $240000 roughly if wages dont go up substantially.




Property is an asset. However, a mortgage is a liability. Rent is an expense.


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## trainspotter (11 March 2010)

kincella said:


> hi there all, just wondering, hows it all going with the housing.....whilst waiting for the crash ..... I miss my friend Robots....I do hope he is happy and well




What hapened to robots? I too miss his effervescent retorts. 

No doubt he has gone to Utopia on the profits that he has made from real estate in Banana Republic.


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## joeyr46 (11 March 2010)

UBIQUITOUS said:


> Property is an asset. However, a mortgage is a liability. Rent is an expense.




Agreed property is an asset but a home is a consumption item just like your car boat or furniture and yes they do have a value and when you go to a bank you can put them in the asset column 
I guess it depends on your description of asset or consumption items, I suspect we'll have to agree to disagree on this one


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## MR. (11 March 2010)

MACCA350 said:


> supply/demand.
> cheers






rcm617 said:


> Excessive income leads to excessive property prices.




I transferred near 4 years of monthly "new" and "established" dwelling sales from the ABS to a spread sheet and chart. 

Looking at the chart:
- Why did property demand increase once the stock market crashed? Transfer of money from stocks to property perhaps as I've mentioned before? 

- Why did property demand decrease in October last year? I thought it would have carried through to December when the Gov' grant expired? 

I added near 4 years of monthly interest rates to the spread sheet chart. I then tripled each rise and fall in "interest rates" to make the changes more visible on the chart. 

Top line = Interest rates.    Middle line = Established dwellings.    Lower line = New dwellings.




Sept 07 – Beginning of interest rate rise - 8.05% to 8.3%, New dwellings started dropping quickly in demand, 7 months later April 08 the interest rate was peaking at 9.35%, demand for both Established and New dwellings were dropping fast.  

Oct 08 – Beginning of interest rate drop after stock market crash – 9.45 to 9.3, right away demand for property increased, 4 months later Feb 09 the interest rate had dropped to 5.65% with demand for properties rising.

Oct 09 – Beginning of interest rate rise – 5.5 to 5.74, New dwelling demand dropping right away like the other two changes,  Jan 2010 the interest rate is 6.65% 

With all the ifs and buts about supply and demand in property, the conclusion appears to be simply:

*Interest rates = Demand*

The RBA controls property prices.

The Gov' may not need to step in if all the banks followed Westpacs lead! Thought the CBA said they wouldn't be following Westpac's lead?
http://www.creditmart.com.au/news-detail-Other-majors-reject-Westpac-â€˜s-LVR-tightening-9092533.htm
ie: CBA now requesting 20% deposits instead of 10% for investment properties.

.


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## MACCA350 (12 March 2010)

Interesting graph there MR. 
Would like to see a house price trace in there also if you could

What region are those sales numbers for?

cheers


----------



## UBIQUITOUS (12 March 2010)

Funny how this news was slipped in way down the page on the SMH. They can't avoid publishing negative news, so why not put it somewhere that it's not attention grabbing

Do were have a chartist who can explain the trend in clearance rates please?


http://www.smh.com.au/nsw/record-nu...s-gloss-off-auction-prices-20100311-q1lc.html



> *Record number of homes for sale takes gloss off auction prices*
> 
> SYDNEY'S auction market has lost some sheen.
> 
> ...


----------



## MR. (12 March 2010)

MACCA350 said:


> Interesting graph there MR.
> Would like to see a house price trace in there also if you could
> 
> What region are those sales numbers for?
> ...




I'd like to see a house price trace also. I imagine it lags the ABS dwelling sales. 

The region from the ABS I believe is Australia Wide.
http://www.abs.gov.au/AUSSTATS/abs@...sues&prodno=5609.0&issue=Dec 2009&num=&view=&


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## Mofra (12 March 2010)

satanoperca said:


> I see it the other way. RBA went to hard reducing rates to low and encouraging people to leverage up instead of deleveraging as the world economies struggle to grow under the weight of debt.
> 
> Property investors and owners have seen an extraordinary return on their investment over the last year. Melbourne +15%.



Rates are no longer the only instrument that is used to curb lending though - the government itself now has a second lever, the capital requirements for banks & lending institutions. Unfortunately for savers, the government now can curb credit without the need for RBA intervention (or unwittingly alter the market by adding 12 month capital guarantees)


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## Mofra (12 March 2010)

TOBAB said:


> I do believe that prices are high - a good time to sell. A collapse is a bit far fetched though (a period of stagnation more like it) and your desire for one is frankly quite disturbing?



I'd class stagnation as a fall in real terms for many property holders, although the debt deflation will still help those who are geared.


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## kincella (12 March 2010)

I agree with MR.........firstly the departure from the stock market to the safety of bricks and mortar, then the interest rates profound impact on the market.

Regarding the FHB scheme....it was boosted by an extra $7000 to $14000 for old homes and to $21,000 for new homes.....half of that boost ended Sep 30, the balance Dec 31....so you should see a drop by Sep 30, and the same time the interest rates went up.....
interest rates have been hiked 4 times in the past 6 months....a repeat of the rate rises in 2008....when our govnuts said our economy was immune from the rest of the world....until the sudden realisation in Sep 08, that in fact we were not immune...

The govnuts then repeated that rubbish again a year later...Oct 09....about the same time Obama was saying there were green shoots everywhere....
The only real green shoots out there, are the real thing, the grass shoots after the big rains we have seen since Jan.....some locations started seeing rain in Nov....after years of drought....
I could be very wrong.....but looking around my local shopping centres, there are a lot of empty shops, some closed before xmas.....most stayed waiting for the xmas rush , which never came...now since closed.

The only thing out there has been the rorting of the insulation scheme, the rorting and rip offs in the school building scheme, and now we find out about the hot water rip offs......the govt figures for building and construction, is basically about the school building....not much else going on out there...

have a look here, you will not find the truth in the LSM...lame stream media...

http://blogs.news.com.au/heraldsun/andrewbolt/index.php/

Anyone notice none of the state govnuts nor the feds, are interested in building homes, or public housing, to house the poor......Brumby made a promise today,,,,but thats because it is an election year.....so good  luck with waiting for the govnuts to do anything to bail anyone out......

The only thing I see that could shatter some of the higher inner city prices....is if the foreigners have a crisis back home, and sell the inner city pads.
The outer suburbs are alive and well, with more than enough affordable homes, to cater for most tastes.
Now of course I could be way out....but I believe the GFC has legs, and a W shape....it will have an impact for most of this year.
btw what happened to robots.... was it a self imposed abstinence ?


----------



## TOBAB (12 March 2010)

joeyr46 said:


> Agreed property is an asset but a home is a consumption item just like your car boat or furniture and yes they do have a value and when you go to a bank you can put them in the asset column
> I guess it depends on your description of asset or consumption items, I suspect we'll have to agree to disagree on this one




HI Joey 46,

Most assets are consumed in some shape or form. Very simply the use is accounted for by what is called "depreciation" This is an expense. By defintion a car, boat, furniture, watch are ALL assets. If you consume something within an accounting period (usually a month) it is an expense. A house if never a liability the debt on the house is and the house is collateral.


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## kincella (12 March 2010)

I wonder how many of these jobs are still there.....since the insulation rort was stopped........................
***note the retail jobs layoff...............what stimulous will continue to prop up the next quarters numbers......oh, almost forgot....it will be all the electricians inspecting the million houses....to see if a, they are faulty, or b, if any work was actually done....apparently the rorters just gave the govnuts an address, and it was paid out..............there was no insulation done there... how cools is that............

I can smell interest rates will not keep rising.....they may even take another fall.....but the economists see it the opposite....
like they estimated a rise of 2% in figures reported about something this week, but results fell 8%...they were out by 10%

extract only................................
Men seeking full-time work had won most of the jobs created since last October, with an additional 76,000 full-time positions. Full-time employment for women has fallen by almost 14,500 in that period.

Mr Meer said the employment of full-time men was being driven by construction with the Government's schools and public housing stimulus programs providing most of the growth.

"As the benefit of fiscal stimulus has shifted to construction and away from the direct boost to consumer spending, the resulting slowdown in retail and related spending has seen demand for these traditionally more female-dominated industries wane and hours worked cut," Mr Meer said.

The only jobs growth for women in February was in part-time positions.

http://www.news.com.au/business/men-win-big-in-jobs-recovery/story-e6frfm1i-1225839849830


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## Beej (12 March 2010)

satanoperca said:


> More good news.
> 
> Where is Robots?
> 
> ...




Keen-o-nomics eh?? The problem with your theory is that the LVR for investment loans doesn't matter that much too investors as they usually get the difference from another loan/LOC against their PPOR or other property where they have plenty of equity.

Cheers,

Beej


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## James58209 (12 March 2010)

Beej said:


> Keen-o-nomics eh?? The problem with your theory is that the LVR *for investment loans* doesn't matter that much too investors as they usually get the difference from another loan/LOC against their PPOR or other property where they have plenty of equity.




OK, so it's just investors pushing the prices up then?  First home buyers and government bribes have nothing to do with it?

http://www.keenwalk.com.au/wp-content/uploads/2010/02/IMG0029_613062.PNG


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## aleckara (12 March 2010)

Beej said:


> Keen-o-nomics eh?? The problem with your theory is that the LVR for investment loans doesn't matter that much too investors as they usually get the difference from another loan/LOC against their PPOR or other property where they have plenty of equity.
> 
> Cheers,
> 
> Beej




I would have to agree with this statement to an extent. I think changing this value a year and a half ago would have caused a major price fall or stagnation (depends on how much of the market is first home buyers or investors). Different suburbs also will have different sensitivities to this figure as different proportions of FHB's to investors.

Overall however the LVR affects how much equity needs to go into homes. As a country I'm sure with house prices the way they are we are below the 80% threshold so yes still plenty of room for investors to jump onto the bandwagon as per usual. All it means of course is that things will get harder for FHB's - as always though. The person who gets in last; well they don't have much chance.

During the GFC the market had very little investors so LVR was highly important back then. Hence the governments intervention to boost confidence in the property market; adding confidence to investors. Once investors were borrowing again no need for the FHBG.


----------



## kincella (12 March 2010)

Beej is correct, in my case across all properties....I have 70% equity....
so as an investor its easy for me to use the equity in another property to meet the 20% deposit...or equity....and I never ever take loan mortgage insurance.....what a joke that is, you pay to protect the bank, if you default...

now back to my theme today.....
credit card spending dropped 22 % last month back to 2005 figures

so no retail therapy going on there....consumers are not consuming....not on their cards....they look like they are being safe....having to pay for the 4th rate hike in 6 months....they are not going to lose their shirts, or their houses...
Credit card transactions slump 22pc From: AAP March 12, 2010 12:14PM 

THE total value of credit and charge card transactions, including advances, fell by 22 per cent in January, Reserve Bank figures released today show. 
Australians spent $17.1 billion on their credit and charge cards, compared to $22 billion in December.

While transactions typically decline in January after December's Christmas rush, this was the biggest monthly fall since January 2005.

Total credit and charge card balances outstanding declined by 1.6 per cent to $46.1 billion from $46.9 billion.

Balances outstanding rose by 5 per cent over the past 12 months, compared with an average annual increase of 1 per cent for the preceding five years.
http://www.news.com.au/business/bre...tions-slump-22pc/story-e6frfkur-1225839987374 

--------------------------------------------------------------------------------


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## Soft Dough (12 March 2010)

Beej said:


> Keen-o-nomics eh?? The problem with your theory is that the LVR for investment loans doesn't matter that much too investors as they usually get the difference from another loan/LOC against their PPOR or other property where they have plenty of equity.
> 
> Cheers,
> 
> Beej




Yes, and that their increase in "equity" is linked to morons continuously increasing gearing levels as recent history has shown.

Stagnation in house price increases stangates the ability of investors to expand.

So without that extra leverage coming into the market, it causes price pressure.


----------



## Beej (12 March 2010)

Soft Dough said:


> Yes, and that their increase in "equity" is linked to morons continuously increasing gearing levels as recent history has shown.
> 
> Stagnation in house price increases stangates the ability of investors to expand.
> 
> So without that extra leverage coming into the market, it causes price pressure.




Perhaps to a small extent yes, but nowhere near the extent suggested by the Keen-o-maths figures satanoperca quoted (where 90-80% LVR requirements reduces available funds by 50%).

Also, only a very small proportion of PIs own more than one PI, the majority are mum and dad investors with a single PI only, so again can't see a great impact there.

If this sort of LVR reduction was being forced across the board on all residential mortgages by all banks, then the Keen-o-maths might carry more weight.

Cheers,

Beej


----------



## satanoperca (12 March 2010)

Beej,

The figures I showed had nothing to do with Steven Keen, just simple maths, but I do find it interesting that you keep referencing Mr Keen. 

No more no less.

I was with my bank manager yesterday, yes, CBA and asked about the change in LVR rates. He confirmed the reduction but also stated quite clearly that the other major change in investment loans is servicablity of the loan regardless of the assets backing it.

You can have $1M of assets and ask for a $200K loan for property but unless you have the income outside any rental income it will no longer be approved. This he stated is a recent change and would not have been the case six months ago.

He also confirmed the recent trend that the number of mortgagees being approved has reduced since last year.

As to your quote that the majority of PI's only have one PI then are you able to provide some statistical evidence of this.

Nearly all the PI's I know have multiple properties.

Cheers

Oh, Kincella you still have not addressed my simple question of why do you believe the RBA has increased rates to fast?

Cheers


----------



## Soft Dough (12 March 2010)

Beej said:


> Perhaps to a small extent yes, but nowhere near the extent suggested by the Keen-o-maths figures satanoperca quoted (where 90-80% LVR requirements reduces available funds by 50%).
> 
> Also, only a very small proportion of PIs own more than one PI, the majority are mum and dad investors with a single PI only, so again can't see a great impact there.
> 
> ...




I agree,

it is just the combination at the moment that excites me.

A very exciting time ahead with elections, vote grabbing, interest rate rises, banks cutting back etc.

Anyone who makes predictions makes them with current knowledge ( eg Steve Keen ) he was just thwarted by Kevin Rudd's vte grabbing, otherwise house prices would have fell and nobody would have been walking.


----------



## Bronte (12 March 2010)

satanoperca said:


> As to your quote that the majority of PI's only have one PI then are you able to provide some statistical evidence of this.
> Nearly all the PI's I know have multiple properties.



This may help  sorry the figures are pre boom:
Hopefully, somebody may post some more up to date data...
ABS 1997 Household Investors in Rental Dwellings
Nil. 93.50%
1 4.90%
2 to 4 1.49%
5 to 10 0.10%
11+ 0.01%
From an old 'Property Investment' thread here at ASF:
https://www.aussiestockforums.com/forums/showthread.php?t=5831


----------



## kincella (12 March 2010)

small business, retailers, the construction industry (not involved in the school building, insulation rorts) are doing it tough out there....it was the toughest since the 80's....they have not recovered....
the cash bonus kept china going with its exports to OZ....
retailers resorted to having 'post xmas type sales'...to keep them afloat in november and december leading up to xmas......some retailers rely soley on their xmas sales each year for the profits.....
some closed up shop, cause those huge mark downs did not save them....others struggled thru xmas and have closed down after xmas...

the hype by all and sundry about the recovery, is in my opinion nonsense.

you will not see  some affect come out in the numbers until the March quarter figures are released, and the full affect until the June qtr....figures 

the rba was wrong to raise rates so early....based on the hype of Obama calling the green shoots thing... to make matters worse, the rba raised the rates 4 times in 6 months....not once have they waited to see the affect of this.....they may as well have just bombed the small business and retailers...
pounded them into oblivion....
its the same crowd who did the same thing a year earlier.....then they panicked and dropped the rates....
its the foreign money spending up big on inner city housing....together with the upgraders who sold to the fhb's....
all the construction figures are loaded with the school building rorts...
its a W shaped recession.....and it has another year or more to run....
this is my opinion only......like history repeating itself......
the job numbers out this week....again represented those building the schools...the women in retail lost their jobs...
I just take notice around my area....watch the shops close down .....listen to people in business etc.....and its not rosy, nor even green shoots out there....
the kids are still hanging out in Chapel St.....but some of the shops have closed, suddenly in the last few weeks....or they are completely empty...

now to add to the depression out there....the news about the govnuts spending rorts, the mish mash and waste of money, that will have to be paid back.....the elections due this year....
then to top it off....china is curbing its credit and spending...
all the hype in OZ is that China will save us....resources etc.....
but who will save China.....and what if China hiccups.....then its all bets off for us...
so buckel up....hang on for a ride...maybe tighten your belts......
oh, and no more stimulous cash to save us.....the govt debt is hangin over all of us...
I stopped spending in June 07, tightened my belt.....have the rainy day plans in order...so far there is no sunshine on the horizen.....
I sound gloomy now.....but confident it will turn around....and I will be ready for it....


----------



## James58209 (12 March 2010)

James58209 said:


> OK, so it's just investors pushing the prices up then?  First home buyers and government bribes have nothing to do with it?
> 
> http://www.keenwalk.com.au/wp-content/uploads/2010/02/IMG0029_613062.PNG




I may have misunderstood that you guys were only talking about LVRs in the context of Investment Loans (as tightened by the CBA recently).  I guess I was thinking about what seems like a logical next step - tightening LVRs for first home buyers as well.  

The reason why I would come to the defense of people arguing that LVRs are significant is that I find that so often people talk about demand for housing in the context of Supply vs Demand and appear to forget that in economics, demand is a relationship between quantity and price.  If you only talk about quantity-related influences of demand (e.g. ageing population, immigration), without considering the availability of credit, then you are missing a critical part of the equation.

A quick Google search reveals a definition of "demand", which does of course make reference to the availability of finance (below).  But you don't need an economic definition of demand, to see why consideration of financing is essential.  Common sense tells me that without that information, there is no way that arguments about "demand" can be used to justify a price based on Supply vs Demand reasoning.



> *Definition:* Demand is the want or desire to possess a good or service _*with the necessary goods, services, or financial instruments necessary to make a legal transaction for those goods or services*_.




http://economics.about.com/cs/economicsglossary/g/demand.htm


----------



## TOBAB (12 March 2010)

kincella said:


> small business, retailers, the construction industry (not involved in the school building, insulation rorts) are doing it tough out there....it was the toughest since the 80's....they have not recovered....
> the cash bonus kept china going with its exports to OZ....
> retailers resorted to having 'post xmas type sales'...to keep them afloat in november and december leading up to xmas......some retailers rely soley on their xmas sales each year for the profits.....
> some closed up shop, cause those huge mark downs did not save them....others struggled thru xmas and have closed down after xmas...
> ...




Gee that's all a bit doom and gloom. I'm from Melb too and have not seen these indicators. Do agree with your China comment though. If China sneeze's will get the swine flu for sure.


----------



## satanoperca (12 March 2010)

Bronte said:


> This may help  sorry the figures are pre boom:
> Hopefully, somebody may post some more up to date data...
> ABS 1997 Household Investors in Rental Dwellings
> Nil. 93.50%
> ...




Cheers Bronte, tried to find some more update figures.

Maybe Beej can locate them as he seems to be able to find his way around the ABS well.

I would assume over the last 13 years this figures have changed upwardly somewhat.

Cheers


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## kincella (12 March 2010)

Tobab...Melb is a big place.....have you been looking around your own patch....
Tooraks most popular eatery is empty most days and has been for the year...
think they own the premises...so they will probably hang in there until it recovers...
if the most popular patch is empty...the rest must be having a really hard time


----------



## joeyr46 (12 March 2010)

TOBAB said:


> HI Joey 46,
> 
> Most assets are consumed in some shape or form. Very simply the use is accounted for by what is called "depreciation" This is an expense. By defintion a car, boat, furniture, watch are ALL assets. If you consume something within an accounting period (usually a month) it is an expense. A house if never a liability the debt on the house is and the house is collateral.




That really only applies for businesses not your personal home or car. Sure they depreciate but you have to save the difference or borrow the difference when you replace. And yes houses (homes) depreciate but we spend lots of money lavishing new kitchens, bathrooms etc on them but don't count that when we sell, Probably because  due to land appreciation and maintenance done the home has kept up with everyone else's houses and the price we sell for bears no resemblance to what we paid so we just accept it without thinking about it.
Yes strict definition says a house (PPOR or otherwise) is an asset but sometimes it pays to think outside the box and not just accept mainstream ideas. 
That way we neither feel richer than we are or poorer if the price fluctuates dramatically.It's the same house.


----------



## kincella (12 March 2010)

joey....I buy old period homes...built in the 1920 era....most have had a small upgrade in the kitchen and bathroom since originally built, but that is about it....
the rest of the house is gorgeous, in original condition...thats the way I like them...
to upgrade costs about $5000 max.....we are not talking huge amounts of money....
the house value will hold its own against all the new stuff....its not just the land value.....its the location ...right in the middle of town...all the newer houses have had to be built on the outskirts of town....

a new roof, some air, electicity overhaul.....no big deal.....
an extension....
stunning garden with mature trees...all add to the value

most modern houses will stand like that, for the test of time.......


----------



## Beej (12 March 2010)

kincella said:


> Tobab...Melb is a big place.....have you been looking around your own patch....
> Tooraks most popular eatery is empty most days and has been for the year...
> think they own the premises...so they will probably hang in there until it recovers...
> if the most popular patch is empty...the rest must be having a really hard time




Must be a Toorak thing! My wife and I recently went to one of most pretentiouos/expensive/popular restaurants in Sydney - Tetsuyas, $300/head (fortunately was given a gift voucher, as I would never pay that when I know dozens of restaurants offering equivalent or better food/service/ambience/experience for half to one third the money). Anyway, to get LUNCH on a weekend we had to book 3 months in advance.......


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## joeyr46 (12 March 2010)

kincella said:


> joey....I buy old period homes...built in the 1920 era....most have had a small upgrade in the kitchen and bathroom since originally built, but that is about it....
> the rest of the house is gorgeous, in original condition...thats the way I like them...
> to upgrade costs about $5000 max.....we are not talking huge amounts of money....
> the house value will hold its own against all the new stuff....its not just the land value.....its the location ...right in the middle of town...all the newer houses have had to be built on the outskirts of town....
> ...




A I said land value . Right in the middle of town Always has higher land value and yes original condition if it has been kept in good condition has a definite appeal but many of the features if they need replacing will cost a lot more than $5000 unless or sometimes even if you do the work yourself. However I was talking about how people get emotionally caught up in their house and the cost when they pay to get the work done


----------



## Tysonboss1 (13 March 2010)

TOBAB said:


> HI Joey 46,
> 
> By defintion a car, boat, furniture, watch are ALL assets. If you consume something within an accounting period (usually a month) it is an expense.




None of the above items are assets. Unless you are renting them out and getting income from them they are liabilities.

If you own a car, you probally had to fork out thousands of dollars for it, pay insurance, rego and maintance. Now unless you are renting it out, or using it as a taxi to provide you with income then it is a liability.

When people list personal items such as these as assets they are kidding them selves. they are false assets.

Same with the family home, it is not an investment it is a liability. It costs you money. 

Now after a few years a family home that you own will be a much cheaper liabilty than a leased home so is still a good idea. But it should not be considered an asset till you sell it.


----------



## UBIQUITOUS (13 March 2010)

Tysonboss1 said:


> None of the above items are assets. Unless you are renting them out and getting income from them they are liabilities.
> 
> If you own a car, you probally had to fork out thousands of dollars for it, pay insurance, rego and maintance. Now unless you are renting it out, or using it as a taxi to provide you with income then it is a liability.
> 
> ...




Mate, they are all assets. It's a simple as that. Too many people tend to formulate their own definitions of what an asset is. 

The running of them may be an expense but that has no bearing on whether the item is an asset or liability. 

Loans on those assets are liabilities.


----------



## Soft Dough (13 March 2010)

UBIQUITOUS said:


> Mate, they are all assets. It's a simple as that. Too many people tend to formulate their own definitions of what an asset is.
> 
> The running of them may be an expense but that has no bearing on whether the item is an asset or liability.
> 
> Loans on those assets are liabilities.




I agree totally,

Too many people get caught up in accounting conventions, which are good for working out taxation, but are not reflective of the real world. I have seen some good businessmen get some lousy advice from incompetent accountants who cared too much about the books and not the real world.

Sure "liabilities" depreciate, but unless prices grow, everything is depreciating due to inflation. 

I consider everything that has a value ( that I can sell ) as an asset, IDC what my stupid accountant thinks.  I can still sell my liabilities  to pay my expenses or purchase more assets.

For me the most important things are "assets" ROI and cashflow.  If my personal vehicle takes me to work to earn a living, it has a purpose, is it a liability?  I can sell it, so for me it is clearly an asset.  The only thing is that a $15000 car does the same for me as a $150000 car, so I guess that a $15000 car is an asset, and a $150000 car is still worth $150000 cut has an opportunity cost of the ROI on $135000 for me.


----------



## UBIQUITOUS (13 March 2010)

Soft Dough said:


> I agree totally,
> 
> Too many people get caught up in accounting conventions, which are good for working out taxation, but are not reflective of the real world. I have seen some good businessmen get some lousy advice from incompetent accountants who cared too much about the books and not the real world.
> 
> ...




You have written that you agree with me and then go onto disagree with that I wrote!!! My definition is the accounting view.

Assets can be ascribed a value. These can be tangible (eg land) or intangible (eg goodwill).

Assets can be depreciated but can also be revalued upwards. The depreciation goes on a separate line on the balance sheet called 'Accumulated depreciation'. The other side is expensed in the Profit and Loss.

Liabilities are NOT depreciated. They are amortized (eg mortgage) and also expensed to the P&L

Just because an item is expensed or has related expenses, doesn't define whether the item is an asset or liability.

It is what it is, and is not subjective.

ps inflation has nothing to do with whether an item is an asset or a liability.


----------



## Tysonboss1 (13 March 2010)

UBIQUITOUS said:


> Mate, they are all assets. It's a simple as that. Too many people tend to formulate their own definitions of what an asset is.
> 
> The running of them may be an expense but that has no bearing on whether the item is an asset or liability.
> 
> Loans on those assets are liabilities.




Assets put money in my pocket and liabilities take money out of my pocket it's as simple as that. If every month somthing is generating a negative cashflow it is a liability. If some day that liability is sold, only then is it an asset.

If I own a house and rent it out it becomes an asset because it is producing income and putting money into my pocket. But if I kick the tenant out and move in myself that same house now becomes a liability because it is not producing any income but it takes money each year out of my pocket.

Money in - asset
money out - liability


----------



## Quincy (13 March 2010)

Tysonboss1 said:


> Assets put money in my pocket and liabilities take money out of my pocket it's as simple as that. If every month somthing is generating a negative cashflow it is a liability. If some day that liability is sold, only then is it an asset.
> 
> If I own a house and rent it out it becomes an asset because it is producing income and putting money into my pocket. But if I kick the tenant out and move in myself that same house now becomes a liability because it is not producing any income but it takes money each year out of my pocket.
> 
> ...




Simplistically stated, assets are things of value that can be readily converted into cash

http://en.wikipedia.org/wiki/Asset


----------



## UBIQUITOUS (13 March 2010)

Tysonboss1 said:


> Assets put money in my pocket and liabilities take money out of my pocket it's as simple as that. If every month somthing is generating a negative cashflow it is a liability. If some day that liability is sold, only then is it an asset.
> 
> If I own a house and rent it out it becomes an asset because it is producing income and putting money into my pocket. *But if I kick the tenant out and move in myself that same house now becomes a liability because it is not producing any income but it takes money each year out of my pocket.*
> 
> ...




NO

It doesn't matter whether it is producing income or not. An asset is an asset. A liability is a liability. They do not morph from one to the other.

Nothing personal - but many make the same mistake as you ie go through life using the wrong words to describe things and then finding it difficult to unlearn what they believed was right for their whole life.

If something can be valued in monetary terms, it is an asset.


----------



## Beej (13 March 2010)

Tysonboss1 said:


> Assets put money in my pocket and liabilities take money out of my pocket it's as simple as that. If every month somthing is generating a negative cashflow it is a liability. If some day that liability is sold, only then is it an asset.
> 
> If I own a house and rent it out it becomes an asset because it is producing income and putting money into my pocket. But if I kick the tenant out and move in myself that same house now becomes a liability because it is not producing any income but it takes money each year out of my pocket.
> 
> ...




I would see your definition of an asset as more a definition of an "investment". It just depends on how you look at it really. I tend to think of anything that I can convert to cash as an asset, even if it is a depreciating asset. Obviously it is better to acquire appreciating and/or income producing assets than depreciating ones that cost you a lot to own and use! Plus it's not such a great idea to borrow money to acquire depreciating assets either! 

Cheers,

Beej


----------



## drsmith (13 March 2010)

Tysonboss1 said:


> If I own a house and rent it out it becomes an asset because it is producing income and putting money into my pocket. But if I kick the tenant out and move in myself that same house now becomes a liability because it is not producing any income but it takes money each year out of my pocket.



When you live in that house you are not paying rent so it is still generating a return even though it is not generating income.


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## CamKawa (13 March 2010)

The Age never lets bad data get in the way of good news. Just keep spinning it boys! 

Banks put squeeze on housing


----------



## Soft Dough (13 March 2010)

UBIQUITOUS said:


> You have written that you agree with me and then go onto disagree with that I wrote!!! My definition is the accounting view.
> 
> Assets can be ascribed a value. These can be tangible (eg land) or intangible (eg goodwill).
> 
> ...




Firstly I can't see, from the quotation I used, where I disagreed, but anyway, it is irrelevant.

I know the realities of the accounting convention , I have spent a lot of money paying accountants to effectively do the taxation for my businesses.

The fact is that the only relevant thing that accountants do is cash flow projections and KPIs( which I have always done on my own anyway ).  All the rest is just really for BAS / taxation..

Most have NFI about business, and often have no idea what value something is, can never ascertain the worth of processes and objects and misrepresent the real world.

I don't care if a liability can only be amortised, and assets depreciated. I don't care about the convention at all.

The convention is, and only is, of any use for taxation means.

I make no money from it, I make lots of money utilising assets and liabilities alike.  I try to explain it to my accountants, but most accountants do not know how to make lots of money, so what do I care what they think.


----------



## tech/a (13 March 2010)

Soft Dough said:


> Firstly I can't see, from the quotation I used, where I disagreed, but anyway, it is irrelevant.
> 
> I know the realities of the accounting convention , I have spent a lot of money paying accountants to effectively do the taxation for my businesses.
> 
> ...




Change accountants.

Your right in that most are aspiring to be as wealthy as some of their clients.
But find an accountant or better a firm of accountants that put into practice for their own wealth creation those things that their clients do and you'll never moan about their fees again.


----------



## UBIQUITOUS (13 March 2010)

Soft Dough said:


> Firstly I can't see, from the quotation I used, where I disagreed, but anyway, it is irrelevant.
> 
> I know the realities of the accounting convention , I have spent a lot of money paying accountants to effectively do the taxation for my businesses.
> 
> ...




Respectfully, I disagree with half of what you say and strongly disagree with the rest.

It would appear that you do not really understand the diversity of different accounting roles due to the fact that you only use tax accountants.

Just because you use tax accountants in your business  doesn't mean that all accountants are tax accountants. There are Tax accountants(public), Tax accountants (private) Project accountants, Systems accountants, Forensic accountants, Management accountants, Commercial accountants, ......and so on.

Your view on accountants is akin to the following view on doctors "I been to visit a few GPs over the years and they all have no idea about how to perform neurosurgery! All doctors are therefore stupid!"

It doesn't matter whether you care about convention at all or not. An asset is an asset. A liability is a liability.

Seeing that you are a businessman, here are some business definitions. Take your pick:

http://www.businessdictionary.com/definition/asset.html

http://www.businessdictionary.com/definition/liability.html


----------



## UBIQUITOUS (13 March 2010)

tech/a said:


> Change accountants.
> 
> Your right in that most are aspiring to be as wealthy as some of their clients.
> But find an accountant or better a firm of accountants that put into practice for their own wealth creation those things that their clients do and you'll never moan about their fees again.




I agree. Some are just glorified bookkeepers masquerading as accountants. I use a public accountant just because I cannot be bothered with the admin. One shouldn't expect too much from them outside of preparing your tax return and, if good enough, some effective tax planning. It's well worth paying for a decent accountant once a year.


----------



## kincella (13 March 2010)

ouch.....why am I surprised by the total lack of understanding on this thread....(apart from the few exceptions who do understand accounting terms and concepts)

unbelievable.....the misconceptions about what an asset is.....
and to make things worse, you are here debating probably the biggest asset most people hold....their house or home....


----------



## satanoperca (13 March 2010)

*The future of Australian property prices*

Can we please keep the discussion to the title of the thread, not what is an asset or liability is, good/bad accountants, how busy Chapel Street is, expensive restaurants etc etc unless it is related to the above title before this thread is closed again.

Cheers


----------



## wayneL (13 March 2010)

kincella said:


> ouch.....why am I surprised by the total lack of understanding on this thread....(apart from the few exceptions who do understand accounting terms and concepts)
> 
> unbelievable.....the misconceptions about what an asset is.....
> and to make things worse, you are here debating probably the biggest asset most people hold....their house or home....




It's Kiyosaki's fault.


----------



## Tysonboss1 (13 March 2010)

UBIQUITOUS said:


> NO
> 
> It doesn't matter whether it is producing income or not. An asset is an asset. A liability is a liability. They do not morph from one to the other.
> 
> ...




I am not talking about strict accountanting terms. I am talking about how one should look at their own belongings and what the are putting their money into.

Many of the things that people call assets have no long term value, and constantly strip the person of cash flow.

Here is a video that explains what I mean.

http://www.youtube.com/watch?v=byRSKEw0oa8


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## Tysonboss1 (13 March 2010)

drsmith said:


> When you live in that house you are not paying rent so it is still generating a return even though it is not generating income.




Yes so it is a smaller liability than a lease would be, So it is a great idea to own your own home but you are still paying rates, insurance, upkeep etc. So it is a liability all the same.


----------



## Soft Dough (13 March 2010)

UBIQUITOUS said:


> Just because you use tax accountants in your business  doesn't mean that all accountants are tax accountants. There are Tax accountants(public), Tax accountants (private) Project accountants, Systems accountants, Forensic accountants, Management accountants, Commercial accountants, ......and so on.
> 
> Your view on accountants is akin to the following view on doctors "I been to visit a few GPs over the years and they all have no idea about how to perform neurosurgery! All doctors are therefore stupid!"
> 
> It doesn't matter whether you care about convention at all or not. An asset is an asset. A liability is a liability.




No an asset to an accountant is different to an asset as defined by an intelligent businessman. A Liability to an accountant is different to a liability as defined by an intelligent businessman.  Just because it is a definition that the accountants use, to allocate in their applicable spreadsheet, does not dictate its practical use.

Just as an anaesthetist may use an anaesthetic to relieve pain and a cardiologist may use it to relieve arrythmias. It is still an anaesthetic, but also an anti-arrythmic.

And no, to use your analogy.  My experience with accountants is like this:

Going to a GP and wanting my left fingernail removed, but removing my right toenail because the picture in Murtagh's of onychomycosis shows it on the right toenail.


----------



## drsmith (13 March 2010)

Tysonboss1 said:


> Yes so it is a smaller liability than a lease would be, So it is a great idea to own your own home but you are still paying rates, insurance, upkeep etc. So it is a liability all the same.



You pay rates, insurance, upkeep etc on any property regardless of whether it is owner occupier or investment (rented).

Think of it like this.

*Balance sheet:*
Property is an asset. Loans attached to a property are a liability.

*Income statement:*
Rent is income. For an owner occupier this is represented by the rent saved in not having to rent a similar property. Loan interest, rates, insurance, upkeep etc are expenses.


----------



## UBIQUITOUS (13 March 2010)

Tysonboss1 said:


> I am not talking about strict accountanting terms. I am talking about how one should look at their own belongings and what the are putting their money into.
> 
> Many of the things that people call assets have no long term value, and constantly strip the person of cash flow.
> 
> ...




I understand what you mean, but that logic as explained in the video is seriously flawed. A home has a monetary value and is therefore an asset. It can't be both just because there are expenses attached. Assets and Liabilities are balance sheet items. The balance sheet definition that all self respecting businesses use is: Assets = liabilities + equity . Assets are differentiated from liabilities.

I can see why he came out with his view - controversy sells.

By his logic, our stomachs are liabilities because we have to fill them with bought food. I would say that my stomach is an asset because it keeps me alive.


----------



## Tysonboss1 (13 March 2010)

drsmith said:


> You pay rates, insurance, upkeep etc on any property regardless of whether it is owner occupier or investment (rented).
> 
> Think of it like this.
> 
> ...




Say a person owns a $2M dream home with no debt and it is their sole "asset". They are 65 and have spent their life contiunally trading up and putting money into their biggest "investment" the family home.

If you looked at their balance sheet you would think they are financally free because they have $2M worth of property debt free. However they can't stop working because once they stop working they will have no income to feed themselves and pay the rates and maintance on this dream home.

So I don't consider this $2m dream home an asset, Offcourse they can spend the next 20 years contiunally down sizing or taking out equity loans to fund their life style. But I can't see this as an ideal situation.

But a person that also had $2m worth of property in the form of 5 $400K houses and lived in one would be in a much better positon.

I would count their 5 houses as 1 x life style liabilty and 4 x income producing assets.


----------



## Julia (13 March 2010)

Tysonboss1 said:


> Say a person owns a $2M dream home with no debt and it is their sole "asset". They are 65 and have spent their life contiunally trading up and putting money into their biggest "investment" the family home.
> 
> If you looked at their balance sheet you would think they are financally free because they have $2M worth of property debt free. However they can't stop working because once they stop working they will have no income to feed themselves and pay the rates and maintance on this dream home.
> 
> ...




I understand what you're saying, but isn't it a matter of personal choice?

Your aging couple may much prefer to live in the $2M home they dearly love, using reverse mortgages to fund their existence as required, than to live in a place they don't enjoy nearly as much, and having all the hassle of tenants and managing IP's.

I've only read the last few posts in this thread and feel that, particularly in this example, the non-tangible benefits of particular types of home ownership versus IP's are not being taken into account.

Surely we want to make money with the ultimate purpose of providing ourselves with enjoyment in life, not simply for the sake of making that money.


----------



## drsmith (14 March 2010)

Tysonboss1 said:


> Say a person owns a $2M dream home with no debt and it is their sole "asset". They are 65 and have spent their life contiunally trading up and putting money into their biggest "investment" the family home.
> 
> If you looked at their balance sheet you would think they are financally free because they have $2M worth of property debt free. However they can't stop working because once they stop working they will have no income to feed themselves and pay the rates and maintance on this dream home.
> 
> ...



What then of the asset status of the 4x income producing properties if they largely financed by debt and costs (including interest)equals or exceeds income (rent) under your definition ?
The lifestyle status is then the same (or worse) than the income poor person with the $2m home.

You are trying to define the asset status of property based on factors external to the property itself which is wrong. Its status as an asset is defined only by it's economic worth to others. The economic value of an owner occupier home lies in the fact that the owner does not have to pay someone else rent for a roof over their head.


----------



## Tysonboss1 (14 March 2010)

drsmith said:


> What then of the asset status of the 4x income producing properties if they largely financed by debt and costs (including interest)equals or exceeds income (rent) under your definition ?
> The lifestyle status is then the same (or worse) than the income poor person with the $2m home.
> 
> You are trying to define the asset status of property based on factors external to the property itself which is wrong. Its status as an asset is defined only by it's economic worth to others. The economic value of an owner occupier home lies in the fact that the owner does not have to pay someone else rent for a roof over their head.




If it is negativly geared it's a liability, 

Yes an owner occupied home does have value to the occupier, Because it covers the basic human need of shelter at a lower longterm cost than a leased shelter would.

And I know that if I drew up a personal balance sheet then most accountants would let me list my home on the asset side (along with my scuba gear, watches, rings,cars etc.etc).

How ever if you want to analise your true position in terms of wealth or how close to financel independance you are you should not list the items you hold for personal consumption.

Offcourse the owner occupied house if held debt free adds alot to your financel inderpendance because it covers your basic need for shelter for probaly $5000 / year instead of $30,000 / year.

The differance with me is I would include my home on the liability side as a $5000 expense rather than a $400,000 asset If I were trying to get a true idea of my personal finamcel independance. ( I know it's not what they teach at accounting school, but it gives a better picture of whats actually happening)

If one day you did set up some sort of annuity from your home in the form of a reverse mortgage. then by all means add the income from this to the asset side. But not until it is happening.


----------



## kincella (14 March 2010)

tyson....there are thousands of people in that position....their modest little houses in the inner suburbs, been living there for 40 plus years, the owners paid around 10,000......years later same house is worth easily 2 million plus...

and guess what....they are entitled to receive the aged pension....the family home is excluded from the criteria
think a single person receives about 670 pf, and 1012 pf for a couple

what some oldies have done is sell up , cash in, and buy a smaller place, even an apartment....which leaves them with a stack of cash left over....


----------



## lioness (14 March 2010)

Robots,

Are you around? Can you provide the latest weekend results please. Thanks.


----------



## MACCA350 (14 March 2010)

lioness said:


> Robots,
> 
> Are you around? Can you provide the latest weekend results please. Thanks.



REIV 83%

cheers


----------



## UBIQUITOUS (14 March 2010)

> There were 673 auctions reported this weekend, of which 561 sold resulting in a clearance rate of 83 per cent. There were 112 homes passed in, of which 70 were passed in on a vendors bid. This is substantially better than this weekend last year when there were 418 auctions and a   clearance rate of 74 per cent.
> 
> There are around 2000 auctions scheduled over the next two weekends




Interesting. From 673 auctions this weekend to around 2000 over the next 2 weekends. It would appear there is about to be a substantial increase in the number of people wanting to dispose of their assets (probably to pay off their liabilities!).


----------



## lioness (14 March 2010)

MACCA350 said:


> REIV 83%
> 
> cheers




Thanks Macca.


----------



## drsmith (14 March 2010)

Tysonboss1 said:


> If it is negativly geared it's a liability,



Again you are trying to define the asset status of a property based on factors external to the property itself which is wrong.

The property is an asset and the loan is a liability.



Tysonboss1 said:


> Yes an owner occupied home does have value to the occupier, Because it covers the basic human need of shelter at a lower longterm cost than a leased shelter would.
> 
> And I know that if I drew up a personal balance sheet then most accountants would let me list my home on the asset side (along with my scuba gear, watches, rings,cars etc.etc).
> 
> ...



Assets do not necessarily equate to financial independence. They are just one component of financial independence.

You can define white as black and black as white if you wish but such a definition would be unique to you and of no value to anyone else.


----------



## So_Cynical (14 March 2010)

drsmith said:


> Again you are trying to define the asset status of a property based on factors external to the property itself which is wrong.
> 
> The property is an asset and the loan is a liability.




So if you need the loan to have the asset...how come the asset is not a liability, i mean if you cant have one without the other then there the same thing.


----------



## drsmith (14 March 2010)

There is some seriously bad weed going around.


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## CamKawa (15 March 2010)

It's official, property is for bogans. 

Residential Property Investment


----------



## gfresh (15 March 2010)

Isn't the boom just around the corner? But wait...

http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0?OpenDocument



> JANUARY KEY POINTS
> 
> 
> JANUARY 2010 COMPARED WITH DECEMBER 2009:
> ...


----------



## satanoperca (15 March 2010)

UBIQUITOUS said:


> Interesting. From 673 auctions this weekend to around 2000 over the next 2 weekends.




This will be an excellent test of the markets resilience.

Anything less than 75% will in my eyes be considered bearish, above the drive for higher prices will continue for a little while longer.

Cheers


----------



## MACCA350 (15 March 2010)

satanoperca said:


> This will be an excellent test of the markets resilience.
> 
> Anything less than 75% will in my eyes be considered bearish, above the drive for higher prices will continue for a little while longer.
> 
> Cheers



I doubt it will drop below 75%, in fact I'd say it won't drop below 80% over the next 2 weeks...........too many international buyers.

Since October last year it's only dropped below 80% once(28/11/09, 997 Auctions, 78% clearance) two weeks later there were 1008 Auctions with an 81% clearance rate..........though I missed two weeks in Feb data I don't recall a drop below 80% (if anyone has the REIV data for the 13th & 20th of Feb, let me know)

I'd agree though that a drop below 75% will be a major break from the current trend.

cheers


----------



## Mofra (16 March 2010)

CamKawa said:


> It's official, property is for bogans.
> 
> Residential Property Investment



Quality 


On another tack, interesting article in The Age this morning that points to a planning failures in Melbourne (something pertinant to all major cities) with at least one expert confirming my personal opinion that there is no "single" property market in the big cities (or at least, there wont be):



> RMIT University associate professor Michael Buxton, who advised the Victorian government on its planning strategy Melbourne 2030, warns that unless planning changes quickly, Melbourne could evolve into two cities: wealthy inner suburbs with good services, and those in the outer ring, car-dependent and with fewer choices of schools and hospitals.





http://www.theage.com.au/victoria/the-outer-limits-20100315-q9un.html


----------



## Beej (16 March 2010)

gfresh said:


> Isn't the boom just around the corner? But wait...
> 
> http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0?OpenDocument




Yes - this data is quite bearish. However it is worth noting that the AFG (mortgage brokers), also published data showing a big drop-off in mortgages written by them in January before the ABS Jan data came out. Since then , the AFG data has shown a strong rebound. So I am currently expecting a rebound in the ABS housing finance data for Feb as well - ie a bit of a statistical blip I think and while there may still be softening in this data over the next few months, I don't think the downtrend will be as severe as the Jan data might suggest on it's own.



satanoperca said:


> This will be an excellent test of the markets resilience.
> 
> Anything less than 75% will in my eyes be considered bearish, above the drive for higher prices will continue for a little while longer.




I wouldn't be expecting to see any real downwards pressure on prices unless clearance rates drop to 50% and below. Remember what the clearance rates were like in late 2008? We discussed them enough here!

Cheers,

Beej


----------



## Beej (16 March 2010)

Beej said:


> I wouldn't be expecting to see any real downwards pressure on prices unless clearance rates drop to 50% and below. Remember what the clearance rates were like in late 2008? We discussed them enough here!




Further to my "guestimate" above, and also in relation the often discussed relationship (if any) between reported auction clearance rates and price pressures, check out these charts that Macquarie bank just put together for their 2010 residential housing market outlook.

Spooky yea?? I think these charts show something that Sydney/Melbourne property market followers (where auctions are common and a good/timely indicator of the market action) have always kind of instinctively known.

Cheers,

Beej


----------



## satanoperca (16 March 2010)

Cheers Beej for the graph.

So if I'm right it is saying that as clearance rates go up so do prices.

This would seem quite logical.

There must be a clearance range whereby RE agents stop putting properties up for auction and back to private sale.

I assume price leads auction rates, the higher price growth the greater the clearance rate.

Cheers


----------



## satanoperca (16 March 2010)

Finally a main stream media publication that draws the facts and costs of rising RE prices and the benefits(cough) to society.

A good read including some of the comments.

http://www.theage.com.au/opinion/politics/dazzled-by-housings-magic-rise-20100315-q9ld.html?autostart=1

Cheers


----------



## kolothuk (16 March 2010)

An updated article by Steve Keen.

http://www.businessspectator.com.au...nt&src=mp&is=Property&blog=Keensian Economics


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## Go Nuke (16 March 2010)

> so no retail therapy going on there....consumers are not consuming....not on their cards....they look like they are being safe....having to pay for the 4th rate hike in 6 months....they are not going to lose their shirts, or their houses...
> Credit card transactions slump 22pc From: AAP March 12, 2010 12:14PM
> 
> THE total value of credit and charge card transactions, including advances, fell by 22 per cent in January, Reserve Bank figures released today show.
> Australians spent $17.1 billion on their credit and charge cards, compared to $22 billion in December.




Hmmm no suprise there.....dispite what the government says I see average people all around me doing it tough! Especially after all these rate hikes.

The government is full of BS when they spruke about how well everyone is doing imo.


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## TOBAB (16 March 2010)

satanoperca said:


> Finally a main stream media publication that draws the facts and costs of rising RE prices and the benefits(cough) to society.
> 
> A good read including some of the comments.
> 
> ...




Quite right a good read. The only point I would add is that increased LAND prices ought to  encourage multi dwellings where there used to be only 1 (obviously STCA). This better use of our land resources would save a lot in infrastructure costs and perhaps get prices back to realistic levels.


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## mythos (16 March 2010)

TOBAB said:


> Quite right a good read. The only point I would add is that increased LAND prices ought to  encourage multi dwellings where there used to be only 1 (obviously STCA). This better use of our land resources would save a lot in infrastructure costs and perhaps get prices back to realistic levels.




I agree that higher density is the only option for Australian cities. However NIMBYism will fight it at every stage. We are seeing several suburbs protesting now over the Brisbane city councils changes to zoning in areas are major transport hubs. Also we need better quality multi dwelling units, having lived in Europe for 10 years, apartments there are much better than what gets built here.


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## satanoperca (16 March 2010)

Go Nuke said:


> Hmmm no suprise there.....dispite what the government says I see average people all around me doing it tough! Especially after all these rate hikes.




Hi Go Nuke,

May ask were these people mortgage holders before 2009 and if so how did they manage when interest rates were significantly higher?

If they purchase in 2009, did they expect that IR's would stay at historical lows?

Cheers


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## gfresh (17 March 2010)

ABS Dwelling Commencements out today.. some strong rises in construction which may please the bulls, or maybe the opposite if they enjoy the shortage continuing  We need new homes if we're going to keep immigration at the rate the Government is allowing, so it's a good thing really. Will this be the start of the construction boom everybody is after? 

http://www.abs.gov.au/ausstats/abs@.nsf/mf/8750.0?OpenDocument

Anyhow, was curious, so have put together a pretty chart for Dwelling Commencements for the States going back to 1984 until the Dec 09 qrtr. 

If you look at it from a simple housing demand vs supply only argument.. .You've got some big rises in VIC, which you would wish for with the strong population growth going on. May help prices subdue somewhat. NSW maybe leading to some further price growth there if the construction doesn't improve very quickly. QLD and WA starting to uptick again, again maybe some supply pressures could appear there too. 

What would be quite interesting is dwellings vs population growth per state, but that somebody else can do that one, would take a bit of time to put together.


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## Go Nuke (17 March 2010)

satanoperca said:


> Hi Go Nuke,
> 
> May ask were these people mortgage holders before 2009 and if so how did they manage when interest rates were significantly higher?
> 
> ...




Hi,

I guess I was speaking generally.
When interest rates were high, property prices were high (or for lack of a better term "unaffordable" and it looked like people were doing it tough.

But now we haveslightly higher interest rates but property prices are now even more "unaffordable" so it doesn't take much of an increase in rates to cause more pain...especially for those that recently entered the morgage market.

The $400K we will be borrowing is going to consume almost all of my income, so we will live of my partners income. $400K doesn't get you much these days in Brisbane (house) Thats paying more than the ANZ variable rate of about 6.91%.

This might explain what I mean...

http://www.theaustralian.com.au/bus...se-a-bit-further/story-e6frg926-1225841899447

Note the "higher household debt" comment.

Got to run sorry...


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## satanoperca (17 March 2010)

From above link


> RESERVE Bank of Australia assistant governor Guy Debelle said today interest rates were likely to rise further but noted that higher levels of household debt meant changes to monetary policy had a larger impact than in the past.




So when do we reach debt saturation/inability to service debt in the property market?

Small changes in IR's are starting to have a great negative effect on a larger percentage of the market than before?

Cheers


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## drsmith (17 March 2010)

From the RBA's Sept 2009 financial stability review;

http://www.rba.gov.au/publications/fsr/2009/sep/graphs/graph-63.html

At that point the RBA's cash target was 3% compared to 4% now.

The March update to this graph will be interesting.


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## MR. (17 March 2010)

Go Nuke said:


> The $400K we will be borrowing is going to consume almost all of my income, so we will live of my partners income. $400K doesn't get you much these days in Brisbane (house) Thats paying more than the ANZ variable rate of about 6.91%.




I can’t begin to explain the absurdity of house prises rising over the past 12 months. Among other things a major contributor was the fact of lower interest rates.  I can’t comprehend loaning near 400k but do understand any disappointment that you might have with high and higher prices. 

To my demise the RBA might just stop raising interest rates from where they stand. "Kincella" appears to have the same instinct. This will no doubt help with your endeavours if rates are now held steady. However probability equates to, houses will keep rising if rates stay where they are. Not right away, but sooner rather than later once the change of tone sets in of rates being steady. The outcome would conclude in rates rising further if the economy is sound. If the banking sector can curve property investment by revising LVR’s etc, this may do the trick to cool the property market.

Just my opinion.


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## TheBigSponge (18 March 2010)

Good to see properties reaching crazy inflated prices. Very happy


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## kincella (18 March 2010)

My motto this month is...can you think outside the square you live in  ?

I just love the mantra of rising interest rates...with no regard for the conseqences....loss of jobs, business shuts down.....yadda yadda 
same as the last time these fools at the RBA kept raising them month after month.....obviously smoking bad weed, living in fairlyand....then the mud hit the fan, they dropped the rates 3% bang....that was a really bad dose of weed that day
........back to the real world....excluding the govts and the press...

so not everyone is stuck with the obsessive Melb median price, as a guide to buy their homes....they moved further out, now showing 20% gains year on year for their trouble...with a rise of over 200% for 10 consistent years
they are smart people....thank goodness, not all are stuck in the "closed box mode", feeling helpless....

extract only

North and western suburbs lead Melbourne 's thriving property market Katie Bice From: Herald Sun March 18, 2010 12:00AM 
NORTH and western suburbs are the rags to riches story of Melbourne's thriving property market. 
Formerly downtrodden suburbs are now darlings with buyers who have pushed median prices up as much as 240 per cent in a decade.

Areas north and west of the city are leading the charge with prices skyrocketing in Broadmeadows, Maidstone, Sunshine, Glenroy and Thomastown.

They outstripped ritzy addresses like Canterbury for 10-year growth.

Real Estate Institute of Victoria research manager Robert Larocca said buyers were searching for value for money close to the city.

"Places that were undervalued and didn't create a lot of excitement or interest from buyers 10 years and more ago have become much more highly treasured and sought after and in demand," he said.


http://www.heraldsun.com.au/news/no...-property-market/story-e6frf7jo-1225842079723


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## kincella (18 March 2010)

copied my post from another site...
where we have been discussing other things, including the merits of sniffing out opportunities, like where a massive black coal site is proposed, in a little hick town in regional Australia....if it goes ahead, 20 year mine life, a block of land can be found for between 11,000 to over 30,000 in that place or surrounding towns....a new workforce of 650.... etc...
.............................................................................................
going by some of the articles I posted today...there is definately a different culture, and movement, going on out there in suburbia and the regionals......

people are turning their backs on the emphasis and depression of the inner city mantra, and high cost of housing......
they are obviously not going to play that silly game....

they are out there buying affordable housing, and are intent on having a normal healthy lifestyle.....

basically telling the govnuts and the banks to get stuffed....
with those two so focused on destroying family lives and values..all for the personal greed of those involved at the highest levels...with their flocks of sheep following, herded into the helpless mentality, destinied to follow the mantra of stupidity, straight off the cliff....into a slave like existence....of just paying off a mortgage, where all other aspects of family life are destroyed.

its like turning the clock back 20 years, to affordability levels....


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## satanoperca (18 March 2010)

kincella said:


> I just love the mantra of rising interest rates...with no regard for the conseqences....loss of jobs, business shuts down.....yadda yadda
> same as the last time these fools at the RBA kept raising them month after month.....
> 
> so not everyone is stuck with the obsessive Melb median price, as a guide to buy their homes....they moved further out, now showing 20% gains year on year for their trouble...with a rise of over 200% for 10 consistent years
> ...




Little bit lost with your arguement Kincella.

Low interest rates saw housing prices climb fast, now that they are returning to  *normal* it is no good. The RBA doesn't know how to do it job?

Didn't see you complaining when they dropped interest rates to historically low to keep the market afloat.

How does high house prices benefit people. the more they have to pay the less they have to spend.

Parents are now working two jobs while the kids are in childcare.

Pensioners are struggling because of the low interest rates, but who cares about them as long as property keeps on going up, f---k everyone else.

If the property market is not in a bubble and is working on fundamentals then a return to normal interest rates should not effect it. But we all know without low interest rates and govnuts handouts it cannot sustain the current levels of growth.

If more people focused less on property and more on innovation and creativity in the market place this country would be a whole lot more wealthy.

Oh that right, property is the path to financial freedom for all.

Cheers


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## kincella (18 March 2010)

of course you dont get my argument....
I have never stated it is good to pay high prices in the inner subrubs....where most of you focus your effort on regarding prices....and hence the mantra to raise interest rates to lower the prices in the inner suburbs.....that seems to be the only reason......
if you shifted focus to the outer suburbs...there is no reason to raise rates....
none at all....
the prices are a damn side less in the outer suburbs....dare I say even very affordable....and that is where the shift is heading......

nothing wrong with a rise of 10% in the outer suburbs house prices....it just keeps pace with inflation....inflation affects all suburbs....

the other side is so many on these forums are waiting for a massive correction, and then they are afraid if house prices drop more after buying, they are afraid of so many ifs and buts...like a rabbit in the glare of headlights...frozen in time
they would never dream of going to a cheaper suburb....where prices will not suffer a massive loss
whilst the rest of society finds a solution and gets on with their lives...
higher rates equals less disposable income for retail therapy.....huge amount of job losses in all small business....so is that the spin off that you desire

pensioners can get good rates of between 6-8% most of the time.....on longer term deposits....with a pension which increases each quarter....
but god help them if they are still renting in the private market...public housing costs only a 1/4 of their pension...
I dont just earn my income from housing.....but being innovative with housing earns some good returns.....
most of the workers out there have no time for innovation...just barely keeping their heads above water....cause they are stuck in this ...high priced inner city mantra....merry go round


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## satanoperca (18 March 2010)

kincella said:


> the other side is so many on these forums are waiting for a massive correction, and then they are afraid if house prices drop more after buying, they are afraid of so many ifs and buts...like a rabbit in the glare of headlights...frozen in time




Where are all these people on this forum that are waiting for a massive correction?

If inner city prices go down, do you think out suburbs prices will hold?

Cheers


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## drsmith (18 March 2010)

Port Hedland and Karratha are as outer suburban as it gets and a graphic example of property price madness.


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## nunthewiser (18 March 2010)

Currently up here we have mineworkers doing 2 on 1 off ...on there week off they are driving taxi,s , working at a roadhouse and others forgoing there week off just to make ends meet ......... There partners are also having to work fulltime ..........childcare centres are benefitting tho.

All this while intrest rates remain low 


Sunshine and lollipops ? or a case of biting off more than one can chew?

Looks like the "great australian dream" has turned into more of a nightmare for a few of our younger familys.

Lucky country?


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## Investor82 (18 March 2010)

Nun
Interesting comments - I have a couple of friends up north, they moved there about 5 years ago cos he landed a good job. Between the two of them they are on about $350k/pa. They are running around investing like mad, with a goal to quit working forevever within the next 3-5 years (before she hits the ripe old age of 30 no less). 
Its interesting that I came through the "white collar" system (uni - office job - management etc) and did very well at it. Meanwhile most of my mates took the "blue collar" system (tech school - trade - apprentiships), and now all earn double (sometimes tripple) my salary and only work 50% of the year. Meanwhile I was putting in 60-70hour weeks and would get 4 weeks leave (if I was lucky). 

I guess Im just pointing out that there is always a flip side!

Regards
82


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## enigmatic (18 March 2010)

Read this recently.. allthough couldn't find the exact quote however this one will do..

"During the past 18 months, more than 135,000 first-home buyers have entered the market, encouraged by the generous grants and stamp-duty relief.

As a result, more than 50 per cent of first-home owners are forecast to be in the "mortgage stress" category by the end of this year."

This is what i have been expecting to happen. especially with Rising utility costs.

so it will be these Outer suburbs that have recently been driven up in price by the swarm of FHB that will dive by huge amounts as they sell to cover themselves from all there debt..

DYOR, please note i will be a FHB but plan not to fall into this category my purchase is planned on 10% interest rates from the bank


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## newbie trader (18 March 2010)

Around 3 million for this...quite an interesting house...

http://www.theherald.com.au/news/lo...ad-between-stroud-and-bulahdelah/1756260.aspx

N.T


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## pilots (18 March 2010)

Was in Queenstown NZ last month, mate has just bought a flat over looking the lake for 620k, it was sold two years ago for 1.2mil, the top end of the market in NZ  looks bad.


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## Dowdy (18 March 2010)

enigmatic said:


> "During the past 18 months, more than 135,000 first-home buyers have entered the market, encouraged by the generous grants and stamp-duty relief.
> 
> As a result, more than 50 per cent of first-home owners are forecast to be in the "mortgage stress" category by the end of this year."





I went to visit an old mate on the weekend who recently got married. He's a first home buyer and he went and bought a 400K home and his wife is unemployed.

Why do first home owners want everything now? Start off small in a 2br home and work your way up. I highly doubt anyone will live in their first home until they retire and that's the mentality that alot of first home owners have...


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## drsmith (18 March 2010)

nunthewiser said:


> Currently up here we have mineworkers doing 2 on 1 off ...on there week off they are driving taxi,s , working at a roadhouse and others forgoing there week off just to make ends meet ......... There partners are also having to work fulltime ..........childcare centres are benefitting tho.
> 
> All this while intrest rates remain low
> 
> ...



It's seriously fantasy land up there.

http://www.realestate.com.au/proper...eal+estate-+port+headland+port+hedland/zpcayz

An asking price of almost $1mil for a dog box in need of TLC.


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## skcots (18 March 2010)

Dowdy said:


> I went to visit an old mate on the weekend who recently got married. He's a first home buyer and he went and bought a 400K home and his wife is unemployed.
> 
> Why do first home owners want everything now? Start off small in a 2br home and work your way up. I highly doubt anyone will live in their first home until they retire and that's the mentality that alot of first home owners have...




At the moment, the cheapest 2 bedroom house on the market in my not very desirable area is $365,000.


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## drsmith (18 March 2010)

newbie trader said:


> Around 3 million for this...quite an interesting house...
> 
> http://www.theherald.com.au/news/lo...ad-between-stroud-and-bulahdelah/1756260.aspx
> 
> N.T



How much would that cost to build ?


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## newbie trader (18 March 2010)

to be honest i would have thought a lot more than 3 million hahaha...it has a tennis court, lift, indoor pool etc etc etc etc etc etc etc etc etc etc

N.T


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## Go Nuke (19 March 2010)

Investor82 said:


> Nun
> Interesting comments - I have a couple of friends up north, they moved there about 5 years ago cos he landed a good job. Between the two of them they are on about $350k/pa. They are running around investing like mad, with a goal to quit working forevever within the next 3-5 years (before she hits the ripe old age of 30 no less).
> Its interesting that I came through the "white collar" system (uni - office job - management etc) and did very well at it. Meanwhile most of my mates took the "blue collar" system (tech school - trade - apprentiships), and now all earn double (sometimes tripple) my salary and only work 50% of the year. Meanwhile I was putting in 60-70hour weeks and would get 4 weeks leave (if I was lucky).
> 
> ...




I'm a boilermaker, 31 and am on $53K/year {38hr week}  (though earnt slightly more with O/T...so there is yet another flip side to your argument 

Not all blue collar works get the big dollars your quoting. Only the ones that go to the mines.....the rest of us who work in the city earn alot less.



> I can’t begin to explain the absurdity of house prises rising over the past 12 months. Among other things a major contributor was the fact of lower interest rates. I can’t comprehend loaning near 400k but do understand any disappointment that you might have with high and higher prices.
> 
> To my demise the RBA might just stop raising interest rates from where they stand. "Kincella" appears to have the same instinct. This will no doubt help with your endeavours if rates are now held steady. However probability equates to, houses will keep rising if rates stay where they are. Not right away, but sooner rather than later once the change of tone sets in of rates being steady. The outcome would conclude in rates rising further if the economy is sound. If the banking sector can curve property investment by revising LVR’s etc, this may do the trick to cool the property market.
> 
> Just my opinion.




Thanks for your thoughts MR 

The shame is its been a double edged sword. Trying to save a decent deposit whilst absorbing the ever increasing rent from landlords over the last couple of years.
My wages certainly haven't kept up with the cost of living.

The other thing is....


> However probability equates to, houses will keep rising if rates stay where they are. Not right away, but sooner rather than later once the change of tone sets in of rates being steady.




this....is what lured first home buyers in.
As someone who has been looking to buy for 18months+ now, its the one thing I heard again and again...."Just buy something...get into a property" we got told. They wont go down much...only up because of supply demands"

We have had a stoke of lucky with the block of land my partner and I are buying. We have part of the contract signed but due to all the rain, it keeps getting pushed back till registration...we we have secured the block but had 3 extra months to save our arses off whilst not paying a morgae of the block yet.

Its all less we have to borrow from the bank :>

New job with more $$$$ this year anyway. Thats my goal anyway.


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## Go Nuke (19 March 2010)

drsmith said:


> It's seriously fantasy land up there.
> 
> http://www.realestate.com.au/proper...eal+estate-+port+headland+port+hedland/zpcayz
> 
> An asking price of almost $1mil for a dog box in need of TLC.




Yeah but rent it out at $1200/week, and that $62400K/yr!
Single guys in the mines team up and rent it together. 2 guys $600 each, on say $2K/ week each...that leaves em with $1400 for everything else.

Still not bad money.

If your an investor already, you might have enough equity is other homes to cover some of the costs.


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## Go Nuke (19 March 2010)

Dowdy said:


> I went to visit an old mate on the weekend who recently got married. He's a first home buyer and he went and bought a 400K home and his wife is unemployed.
> 
> Why do first home owners want everything now? Start off small in a 2br home and work your way up. I highly doubt anyone will live in their first home until they retire and that's the mentality that alot of first home owners have...




This is why...

http://loanmarket.com/?p=2741

The age of first home buyers is increasing.
I again take myself as a classic example. My partner and I are in our 30's.
We want to start a family and not raise kids in a unit...but something with a backyard... and a sandpit for the kids...something like I grew up with (like many of us in our 30's)

We have NO intetion of moving anytime soon. What we are buying now will be our home for years to come.

Beside...I'm helping the economy by building a new house...doin my bit for Australia 

Just a suggestion as to why we want the best now.


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## WaveSurfer (19 March 2010)

Dowdy said:


> I went to visit an old mate on the weekend who recently got married. He's a first home buyer and he went and bought a 400K home and his wife is unemployed.
> 
> Why do first home owners want everything now? Start off small in a 2br home and work your way up. I highly doubt anyone will live in their first home until they retire and that's the mentality that alot of first home owners have...




Bought my first home for 81k. Spent 20k on reno's. Sold it for 260k.

Did it again 3 times and bought a 600k home outright. I'm only 31 too.

So we're not all like that 

It was painful, we lived in one for 3 months with one liveable room (tiny bedroom), one power point, no bathroom/toilet/shower/kitchen and a wad load of dust.

Gave me enough leverage though to quit my job as a builder and go to Uni.


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## Go Nuke (19 March 2010)

WaveSurfer said:


> Bought my first home for 81k. Spent 20k on reno's. Sold it for 260k.
> 
> Did it again 3 times and bought a 600k home outright. I'm only 31 too.
> 
> ...




Well done mate!
You made the right choices in life.

Helps being a builder with the reno's though doesn't it :> Most people have to pay for laboour cost.

Well done once again


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## WaveSurfer (19 March 2010)

Go Nuke said:


> Well done mate!
> You made the right choices in life.
> 
> Helps being a builder with the reno's though doesn't it :> Most people have to pay for laboour cost.
> ...




Cheers Nuke. You're not wrong about the choices mate.

I wanted a nice home, but didn't want to pay the bank for the next 30 years to get it. Suffered the pain of living in a dog box (almost literally for bit there LOL) and have not looked back since.

Building is in the blood which made it a little easier. The old man had me sweeping floors on his sites from the age of 6, so I had enough background to get the job done at minimal cost. Makes it easier dealing with the other tradies (plumbers, electricians etc..) to make sure you get the most bang for your buck.

That said, I have a few friends (with no carpentry/building skills whatsoever) who did much the same and still came out well on top. So it's definitely the choices mate, all about choice.

Cheers again buddy.


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## moXJO (19 March 2010)

WaveSurfer said:


> Gave me enough leverage though to quit my job as a builder and go to Uni.




What did you study at uni?


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## WaveSurfer (19 March 2010)

moXJO said:


> What did you study at uni?




Still there plugging away moXJO. Studying health science and computer science (major in software engineering).


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## drsmith (19 March 2010)

Go Nuke said:


> Yeah but rent it out at $1200/week, and that $62400K/yr!
> Single guys in the mines team up and rent it together. 2 guys $600 each, on say $2K/ week each...that leaves em with $1400 for everything else.
> 
> Still not bad money.
> ...



There should be a sign on the approach roads saying "Welcome to the boom town".

God help the poor fools that buy anywhere near the top because it will be a long, hard and fast ride down from those stratospheric rents and prices.


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## GumbyLearner (19 March 2010)

drsmith said:


> There should be a sign on the approach roads saying "Welcome to the boom town".
> 
> God help the poor fools that buy anywhere near the top because it will be a long, hard and fast ride down from those stratospheric rents and prices.




Well at least someone has said it.


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## drsmith (19 March 2010)

newbie trader said:


> to be honest i would have thought a lot more than 3 million hahaha...it has a tennis court, lift, indoor pool etc etc etc etc etc etc etc etc etc etc
> 
> N.T



If what's around it is typical suburban housing then it does appear to be, well, slightly (cough)  overcapitalised.


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## nunthewiser (20 March 2010)

drsmith said:


> God help the poor fools that buy anywhere near the top because it will be a long, hard and fast ride down from those stratospheric rents and prices.





Yep.

Its looking fairly obcene up thataway...........yet the dollars keep rollin ......

for now


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## Dowdy (20 March 2010)

Go Nuke said:


> This is why...
> 
> http://loanmarket.com/?p=2741
> 
> ...




That's fair enough, it's your decision but one thing I should point out.

An economy grows by savings and then using that savings to buy assets. Did you leverage up to the max to buy your home. If you did, as with many other first home buyers do then it isn't helping the long term economy.


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## Tysonboss1 (20 March 2010)

Dowdy said:


> An economy grows by savings and then using that savings to buy assets. Did you leverage up to the max to buy your home. If you did, as with many other first home buyers do then it isn't helping the long term economy.




Sorry you are wrong on that point. 

Savings do not help grow the economy as much as you would think.

If you took all the debt out of the economy we would suffer a depression larger than the great depression.

If all the debt was repayed in Australia our money supply would shrink to about 1% of what it currently is. and it would result in a shrinking economy.


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## SM Junkie (20 March 2010)

drsmith said:


> There should be a sign on the approach roads saying "Welcome to the boom town".
> 
> God help the poor fools that buy anywhere near the top because it will be a long, hard and fast ride down from those stratospheric rents and prices.




I'm happy to be called a fool.  But given properties are achieving $2,500 pw and are positively geared it's sitting good at the moment.

As for dropping, no chance in hell.  I've watched this market for 10 years and it has never been so stable and secure.  There is a hell of a lot of money flowing in through the States Royalties for Regions scheme and from the mining companies.

Then there is the current plans to turn Pilbara towns into cities.  Currently Port Hedland has plans for a new town centre, new marina, new hotels a new hospital is currently being built. BHP has funded rapid expansion 6. Port Authority is expanding the number of berths (obviously hightly sought after, see Atlas Iron and Aurox merge). Council are increasing zoning density to try and cope with demand for housing. Rationalisation Plan has identified possible areas where land could be released in Port Hedland, which is finite. 

The financial crisis has basically paused this market and any drop in rents or prices has since corrected back to to pre crisis levels.  The only thing I'm really noticing is that those that are trying to get into these towns are having a hard time with the banks, lots of finance falling through.

Long term I think this ticks all the boxes for an investor. So this fool is more than happy to put it's money into the Pilbara property market.


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## Tysonboss1 (20 March 2010)

SM Junkie said:


> Long term I think this ticks all the boxes for an investor. So this fool is more than happy to put it's money into the Pilbara property market.




Atleast for the life of the mining projects and other sources of high paying jobs.

I wouldn't invest in this asset class myself because I don't have a clear understanding of these mining towns. But it sure does seem to be alot of cash being made by people that got in early.

The main risk I can see is the supply demand risk. If part of these new "cities" you say they are planning includes construction of alot of new modern dwellings in the form of apartments with all the mod cons, then you may find downward rental pressure on the older style houses, and if you over paid thinking the ultra high rents were guranteed for life you may find that positively geared buffer shrink along with the asset price.

But offcourse if you got in early and paid a low price the ultra high rents would be fantastic.

Last time I was in port hedland (passing through on a military op), it seemed like a bit of a hole. However if you look forward say 30 years, it would not be unlikely that a town will develop in northern WA that could be of a scale of townsville.


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## kincella (20 March 2010)

sm junkie...you are spot on with your investments....no fool at all...
am sure I posted something here recently....they are short of 150,000 workers for the Gorgon project...they stated they will need to build cities to cater for it....20 plus years for the project... 

I saw houses over your way, that were worth about 100,000 10 years ago, now they sell for over a million dollars....only the people who sold early are unhappy...

we are looking at a similar growth for regional nsw...with coalworks and the black coal project....at Urana....land there for between 11000-40,000 a block now...some nearby towns are popping already....small towns with not much  stock available
have a read of this report.....its copyright so no copies...
..I use a capital growth figure of 10% pa for my portfolio, over here on the East....guess what Residex shows, its even better growth
try looking at the capital cities results...

** wow look at Hedland growth  units 267% in 4 years.......houses over  100%
no wonder the others are frightened by those figures

Melb 10% growth last 10 years, 16% last year, 2.85 last quarter and 1.54 the last month....all growth there

Sydney only 6.6 growth x 10 years, 13.2 last year 2.63 last qtr
Adelaide its fine
Brissy and Perth the fastest growing, one took a 2% drop one added a 2% rise for the last qtr...a tiny less than 1% drop for the last month...
australia wide for the last qtr was a rise of 1.42%, indicates growth of 5.68 for the year
use the qtr figures, melb is in line for another 11.4 growth this year...2.85 x 4

conclusion....Melb and Vic country will grow the usual 10% pa.....Sydney a fraction less....I have no interest in the others...but it should be similar to the 10 year trend..
and in light of the housing shortage....only ever pre election promises over here on the east....nothing actually happens....and the immigration increases...the growth could be higher than the past...

http://www.residex.com.au/newsletter/source2010_03aMC.html

now have a look at the growth on this site for Hedland....massive and the renters 61%

http://www.myrp.com.au/viewFreeRepo...ir=&postcode=6721&email=&fsrName=&widget=true


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## Dowdy (20 March 2010)

Tysonboss1 said:


> Sorry you are wrong on that point.
> 
> Savings do not help grow the economy as much as you would think.
> 
> ...





That's due to the fractional reserve banking system which is a flawed system.

 “Paper money eventually returns to its intrinsic value ---- zero.” -  Voltaire (1694-1778) 


You do need some debt for investment (ie starting a business) but if we keep running up these high leveraged housing mortgages then we will have a depression 

A growing economy isn't necessarily a productive one, epically if it involves government schemes - housing scheme, insulation scheme and now the school rebuilding scheme is starting to find holes in it


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## SM Junkie (20 March 2010)

Tysonboss1 said:


> Atleast for the life of the mining projects and other sources of high paying jobs..




So most mines have predictions of 30 years plus on their current leasings.  There is a lot of area still being explored.  The vast diversity of minerals that come from this area is impressive - iron ore, copper, manganese, molybdenum, gold, just off the top of my head.  Then there are other developments such as gas being explored off the NW shelf. I'll be watching Carnarvon Petroleum with interest as their lease is 150km north of Port Hedland. So gas may come through this Port in the future.

[/QUOTE] The main risk I can see is the supply demand risk. If part of these new "cities" you say they are planning includes construction of alot of new modern dwellings in the form of apartments with all the mod cons, then you may find downward rental pressure on the older style houses, and if you over paid thinking the ultra high rents were guranteed for life you may find that positively geared buffer shrink along with the asset price..[/QUOTE]

This is where you need to be aware, so yes buying the newer properties will give you better tenants and higher rents.  The prices will remain high as families all try to live in Port Hedland rather than South Hedland. It is also likely that your tenants will be companies housing their staff.  Some take on leases for 5-10 years with options.

If you do buy an older property then it is better to look at it's development opportunity.


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## Go Nuke (20 March 2010)

Dowdy said:


> That's fair enough, it's your decision but one thing I should point out.
> 
> An economy grows by savings and then using that savings to buy assets. Did you leverage up to the max to buy your home. If you did, as with many other first home buyers do then it isn't helping the long term economy.




Thats true I guess.
We wont be helping the economy from a reatil point of view, because we wont have the money to spend.

Really its not much different to right now!
We are so busy saving for our deposit, that my attitude is that everyone else can get stuffed...they aren't getting my hard earned dollars in their shops because I rather the banks earn as little interest as possible out of me.

I hate banks! (yes, yes...even though without them I wouldn't get a loan...blah, blah, blah) The profit they make and salaries they earn are obscene imo.



> An economy grows by savings and then using that savings to buy assets



We all know how well Australians are at saving  Most I know almost live from week to week these days with the rising costs of living.


----------



## Go Nuke (20 March 2010)

> ....they are short of 150,000 workers for the Gorgon project...




Really??

Wow..well If they want to fly me to and from QLD for work...I'll take it!
But I grew up in Tom Price so I'm not that keen to live in the North West again.

Rather they employ me than use those bloody 457 visa


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## MR. (20 March 2010)

Go Nuke said:


> I'm a boilermaker, on $53K/year
> 
> My wages certainly haven't kept up with the cost of living.




53K a year IMO isn't that bad. Down here on the Gold Coast similar trades appear to be getting 42 - 45k per year. 



WaveSurfer said:


> I have a few friends (with no carpentry/building skills whatsoever) who did much the same and still came out well on top. So it's definitely the choices mate, all about choice.




and "timing". 



SM Junkie said:


> I'm happy to be called a fool.  But given properties are achieving $2,500 pw and are positively geared it's sitting good at the moment.
> 
> As for dropping, no chance in hell.  I've watched this market for 10 years and it has never been so stable and secure.
> 
> ...




Hell, everyones watched all property markets being stable and secure over the past 10 years! This convinces so many more to sign up to property. As you have pointed out a few concerns above, you are not blind.  



kincella said:


> sm junkie...you are spot on with your investments....no fool at all...




You'd have to wonder why BHP is leveraged only 15% and state that higher leverage is too risky for them in these current times. Just 15% leverage. 

Should all properties owners in mining towns reduce their leverage to just 15%? 



kincella said:


> I saw houses over your way, that were worth about 100,000 10 years ago, now they sell for over a million dollars....only the people who sold early are unhappy...




No doubt, ......... but do you really think the above is a good investment now? Obviously you do!
and obviously I don't.

I feel I was left behind like so many others over the last years. I still do not buy IP's.  "You have to be in it to win it" but it still looks like a bubble to me. It ain't easy not following the herd. 

In Go nukes position as a FHB I don't know what i'd do. It's all seems so close! 

This is now the top. 

The only thing that I can see is going to save the property market is lower interest rates not higher.


----------



## MR. (20 March 2010)

Go Nuke said:


> I rather the banks earn as little interest as possible out of me.
> 
> I hate banks! (yes, yes...even though without them I wouldn't get a loan...blah, blah, blah) The profit they make and salaries they earn are obscene imo.




I'd rather the banks didn't have any of my savings. But they do. I didn't know two years ago that banks could lend out so much more than deposits! Because of this so many FHB's etc. Are forced to pay such high prices. 

Can't wait to see the day that the majority of my savings are removed from the bank.


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## WaveSurfer (20 March 2010)

MR. said:


> ....and "timing"...




It helps, but it's not necessary. I still find bargains all the time, even in highly sought after areas such as Byron, the Gold Coast and the Sunny Coast.

SEEK AND YE SHALL FIND.

Problem with most is that they have a set of blinkers attached to their noggin. They have an ideal stuck in their head and can't look past it.

Believe me I know, I'm married to one of the above. LOL (Still love her to death)


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## MACCA350 (20 March 2010)

satanoperca said:


> This will be an excellent test of the markets resilience.
> 
> Anything less than 75% will in my eyes be considered bearish, above the drive for higher prices will continue for a little while longer.
> 
> Cheers






MACCA350 said:


> I doubt it will drop below 75%, in fact I'd say it won't drop below 80% over the next 2 weeks...........too many international buyers.
> 
> Since October last year it's only dropped below 80% once(28/11/09, 997 Auctions, 78% clearance) two weeks later there were 1008 Auctions with an 81% clearance rate..........though I missed two weeks in Feb data I don't recall a drop below 80% (if anyone has the REIV data for the 13th & 20th of Feb, let me know)
> 
> I'd agree though that a drop below 75% will be a major break from the current trend.



REIV 835 auctions, 87%

cheers


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## Go Nuke (20 March 2010)

WaveSurfer said:


> It helps, but it's not necessary. I still find bargains all the time, even in highly sought after areas such as Byron, the Gold Coast and the Sunny Coast.
> 
> SEEK AND YE SHALL FIND.
> 
> ...




I did think to myself Wavesurfer after reading about your success that it was good timing and being a builder that helped you reach your goal.

Anyone that practicaly bought anything BEFORE the property boom would have done ok. Some better than others depending on where the property is located.
And of course being a builder can help source good help and perhaps discounts on materials to renovate with. Something most of us couldn't source.



> 53K a year IMO isn't that bad. Down here on the Gold Coast similar trades appear to be getting 42 - 45k per year




Wow really...that sounds like a council job. They have pathetic pay on offer for tradespeople.
53K won't get you much of a morgage I can tell you that! Certainly not to service a loan these days...unless you buy a unit or something and once again depending on location.
Oh and I live in QLD where to government is in the process of raping us through higher taxes, higher tolls, scrapping the fuel subsity etc etc.

Check this article out..

http://www.couriermail.com.au/money...-mortgage-stress/story-e6freqoo-1225843130252

"In Melbourne, a 5 per cent deposit would mean a lump sum of about $27,000 for the median house plus insurance costs, plus other buying costs and stamp duty."

Thats a pretty big amount to save whilst paying increasing rents.
I know my friends would laugh if I asked them if they had 27K saved.

Have a good weekend all


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## Go Nuke (20 March 2010)

> 835 auctions, 87%




Yeah look at Brisbanes...

Clearance rate of 42.5%
31 sold prior to auction
37 sold at auction
5 Vendor Bid
9 Highest Bid
89 Passed in
10 Withdrawn

I always feel that properties get passed in because the seller wants more than the buyers are willing to pay, or because they are asking much more than its worth.

There's a place just around the corner from me. 

http://www.realestate.com.au/property-house-qld-chermside-106107257?tm=1269077541&c=47525909&t=res

From memory about....4 months ago they were asking for about $515K.
Obviously they missed the boat of stupidity when people would pay anything to get into RE.
Units and townhouses were selling for $485+....so guess that makes this house look cheap?


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## Wysiwyg (20 March 2010)

Everything has a price??

I am neutral on the good or bad front with Chinese owning stakes in Aus. mines because once the resource is depleted that will be the end of the deal.

However selling big chunks of Australia feels a bit not right. 



> Teenager Scott Dodd seals Hope Island deal with Hui-Dong Pty Ltd, thanks to rainbows
> 
> A TEENAGER has clinched one of the Gold Coast's biggest property deals of the year with the help of the Chinese buyer's feng shui master, the timely appearance of two rainbows and a well-placed fig tree.
> 
> Scott Dodd, the entrepreneurial 17-year-old son of Consolidated Properties project partner Mike Dodd, has negotiated the $23 million sale.






> It is Hui-Dong's first investment in a property development in Australia and it plans to market and sell the homes to Chinese buyers.




http://www.couriermail.com.au/prope...hui-dong-pty-ltd/story-e6frequ6-1225842554159


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## drsmith (20 March 2010)

SM Junkie said:


> I'm happy to be called a fool.  But given properties are achieving $2,500 pw and are positively geared it's sitting good at the moment.
> 
> As for dropping, no chance in hell.  I've watched this market for 10 years and it has never been so stable and secure.  There is a hell of a lot of money flowing in through the States Royalties for Regions scheme and from the mining companies.
> 
> ...



Everyone thought the Titanic ticked all the boxes as a cruise ship before............

When demand for commodities stumbles the fallout will be very ugly in that market. It's impossible to pick the top but when you hear the bell it will be too late.

Consider investor psychology and hit the exit before the herd do. That way someone else will be the fool.


----------



## SM Junkie (20 March 2010)

drsmith said:


> Everyone thought the Titanic ticked all the boxes as a cruise ship before............
> 
> When demand for commodities stumbles the fallout will be very ugly in that market. It's impossible to pick the top but when you hear the bell it will be too late.
> 
> Consider investor psychology and hit the exit before the herd do. That way someone else will be the fool.




Hasn't that already happened? 

Very minimal impact on prices.  Long term leases will get me through any stumble and keep the lifeboat afloat.

If I believed all the doubt and fear spread on these threads, I'd be a poor little pup to frightened to take a chance.

Remind me of that well know guy who sold his property because the boat was about to sink and thought the property market was doomed??
Or those that said the stockmarket crash was the next big depression and would take years to recover?

Are we not all here to take a certain element of risk? I'll take my chance of the ship sinking and keep my finger on the wheel.


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## WaveSurfer (21 March 2010)

Go Nuke said:


> I did think to myself Wavesurfer after reading about your success that it was good timing and being a builder that helped you reach your goal.
> 
> Anyone that practicaly bought anything BEFORE the property boom would have done ok. Some better than others depending on where the property is located.
> And of course being a builder can help source good help and perhaps discounts on materials to renovate with. Something most of us couldn't source.




Alright, I'm half cut on the p1ss so this may come back to haunt me 

Na mate, being a builder has its pros and cons. You know you can do anything and everything, so it becomes difficult to not overcapitalise. One place we reno'ed, I was that close to knocking down in the end because it was getting very close to going ballistic in costs and being cheaper to knock down and start again. Friends have made just as much as I did (even more) by paying for a new kitchen (installed), bagging the outside and slapping some paint on. Viola, near new house.

I also did it outside of my local area (couldn't afford it where I was from). So I couldn't get trade price on most of the materials. If you stick with one hardware/supplier, they'll eventually get to know and look after you.

Timing had absolutely nothing to do with it (except that I started young). My money was made because I hunted and I hunted like a dog. Willing to sacrifice whatever I had to (I sacrificed the coast - my surfing, hardest thing I've ever had to do). The main boom was after we bought this place we're in now. I plan to retire here so I don't give a hoot what happens in the next 30-40 odd years. Places around us are going for nearly 2-3 times what we paid. Someone could offer me 10 times what we paid and I still wouldn't sell. On the other hand, price could drop below what we paid for it and I still wouldn't care. I can afford to do this though.

I'm done with my buy, renovate and sell (all new from here on). I don't want to be breaking my back before I hit 40. When I'm that age, I'll pay someone else to do it, build new that is, not renovate. This is partially why I'm here. I want to know how to invest my cash myself when the time comes (when I'm getting a bit old and mouldy). Until then, I don't intend to make millions from a few grand tiddly winking with the markets. I'm a student of the markets and will be for the next 10-15 years.

This BTW is directed at no-one in particular. Just a little history on myself.

I once started as a whiner. I remember saying to my old man, "Ahhh I have missed the boat. All these properties you buggers bought on the beach front under 10k, sub-divide and sell each for a cool mill or two are long gone. How are we going to get ahead when all of those opportunities are gone?".

His almost exact words were "You little f'n pr**k, if you're gonna whinge all your life, you're going to be a "gonna" man and become one of the 95 percent'ers. If you on the other hand are a do'er, you'll own your own house outright by the time you're 25. Pay the price and the rewards will come in good time. If you fail, get up and try again until you do succeed.

You little pr**cks just want it all, and want it now. You can buy your nice beach house and work for the bank, living paycheck to paycheck for most of your life. Or you can spend 5-10 years doing it tough, pay the price and own your beach house outright with the money you make.

What's it gonna be boy? CHOICE is yours.".

His "pay the price" calls were not monetary, the price could be time, sacrifice, labour (living in dust with no services LOL).

I still to this day remember that conversation as clear as day. Because it was those words that completely changed my tune.


You hear all this doom and gloom prices are gonna drop like a rock, yadda, yadda, yadda. Funny I heard the same thing 13 years ago. And where are we now? Population in Oz is on the increase and will be for a long, long time. Sure we'll see a correction in prices, but nothing like many are predicting. Demand will always be there. It's the high flyers that get caught in their mortgaged million $ homes. Maxed-out gold credit cards, the spankin new SS also owned by the bank. These are the ones that will suffer most.

Sure it's a hard game to play, I never said it was easy. Everyone is scared of buying at the top. But where is the top??

Whiskey time. I can't even remember why I started this rant LMAO. Guess I'll find out lateron.


----------



## drsmith (21 March 2010)

The top is just before you realise you are about to taste the whiskey a second time. 

After that it's too late.


----------



## So_Cynical (21 March 2010)

drsmith said:


> Everyone thought the Titanic ticked all the boxes as a cruise ship before............
> 
> When demand for commodities stumbles the fallout will be very ugly in that market. It's impossible to pick the top but when you hear the bell it will be too late.
> 
> Consider investor psychology and hit the exit before the herd do. That way someone else will be the fool.




Slightly off topic but.

So true about the Titanic...however we are in a minerals super cycle and its got at least 10 years to run, maybe 15 :dunno: not to say there wont be stumbles along the way.


----------



## MR. (21 March 2010)

WaveSurfer said:


> Bought my first home for 81k. Spent 20k on reno's. Sold it for 260k.
> 
> Did it again 3 times and bought a 600k home outright. I'm only 31 too.






WaveSurfer said:


> Timing had absolutely nothing to do with it (except that I started young).
> 
> You hear all this doom and gloom prices are gonna drop like a rock, yadda, yadda, yadda. Funny I heard the same thing 13 years ago.




13 years ago "1997" looked better than now for property.

Yadda yadda yadda..... what happened to stocks after many said stocks were at their peek.

Who knows what is going to happen to property prices.

All the best.


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## WaveSurfer (21 March 2010)

MR. said:


> 13 years ago "1997" looked better than now for property.
> 
> Yadda yadda yadda..... what happened to stocks after many said stocks were at their peek.
> 
> ...




Who's to say that in 2023, people won't be saying that 2010 looked better  Only time can answer that one.

Yes, people love picking tops and bottoms. Many of them get stinky fingers too :headshake

Agreed on who knows what's next. I'm not going to procrastinate about it either.

I'm still buying the golden nuggets I find. I do have a soft landing if it crashes on me, which enables me to take more risk. I did however pay the price to be able to do this. Could easily start from the bottom again. I know the pathway, so it would be easier. Travelling blind is always scary.

I think some people can't look past the square they live in. All of Australia's property does not boom at the same time. Sydney's boom and crash happened well before it exploded up this way.

A friend said to me about 6 months back.. I'm waiting for the property bubble to burst so I can buy a waterfront home in Noosa for a bargain. I said so are about a million others


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## WaveSurfer (21 March 2010)

Let me clarify what I said above about still buying property...

I know we're in uncertain times. With the U.S. on the brink of collapse and China's resource demand keeping us afloat, I agree the Risk is much greater now than it was 10 years ago. I'm not doing anything ludicrously stupid risking my gains and then some. I'll only buy when I see potential. Call it R:R. Ironically, the potential is still there, just not in many of my (or my wife's) "ideal" areas. Much the same situation when I first bought years ago.


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## Go Nuke (21 March 2010)

Wavesurfer, thank you very much for sharing your thoughts mate.

I see now how you got to be where you are today.
I was like the 95% of young people...spend too much money on cars,drugs, ladies and grog 
Houses were always something for "old" people to be interested in 

I feel lucky in some scence that by the age of about 27 I grew out of all the stuff I mentioned above  (I'm 31 now). Some of my mates are still at it. Guess thats fine because they are living life how they want.
For me the prospect of renting and starting a family is NOT where I want to be.

Thanks once again.


----------



## WaveSurfer (21 March 2010)

Go Nuke said:


> Wavesurfer, thank you very much for sharing your thoughts mate.
> 
> I see now how you got to be where you are today.
> I was like the 95% of young people...spend too much money on cars,drugs, ladies and grog
> ...




Cheers buddy. I was a tad intoxicated when I wrote it, but it still makes perfect sense today hew:

I hear you there on the being young. I certainly was no angel myself and my life wasn't always this rosy. I was just lucky that I woke up early. I now find (from Uni) that "statistically" the way I started in life I should have either been dead, in jail or a smack addict by the time I was 18. Good old statistics hey....

Realising that I could achieve my goal sooner rather than later by doing it tough for a while is hard to swallow at the time, but you will reap the rewards in the long run.

Congrats on growing up early yourself. You might think it's late, but it's not. I know people much older than us both who still haven't grown up. They most likely never will.

Let me just throw a bit of dirt in the mix here. Sure property prices have exploded in the past few years. But do remember that a lot of this bubble is contained in the idealistic areas. The range across Sydney is a good example. Here in some areas you have property worth millions. Others lucky to be 200k-300k. It's these idealistic areas that have caused the median line to shoot up (because everyone wants a piece of the action). I like Tom Williams' take in regards to the markets "THE HEARD MENTALITY". No-one wanted to buy in Redfern, they all wanted Darling Point.

It's the fall in these areas that will cause the price to come back towards the median. Majority of people in the __most popular__ areas are like I mentioned, mortgaged to the hilts, trying to compete with Joe next door with his spankin new SS and the PowerCat sports fisher parked for all to view in the driveway. All owned by the bank mind you


----------



## newbie trader (21 March 2010)

Wave,

I'm still young also and my mindset is that if I put my head down and work work work in the short term then hopefully the long term will be a bit more relaxed than others my age who go out and party 4 or 5 times a week (spending hundreds).

I was flicking through the paper today and was startled...it had 5 pages or so of the median house prices from 2009 with 3, 5 and 10 year forcasts for each area (a few hundred suburbs were listed). I'm 18 now and i'm not sure when i'll want to buy my own home but the 2009 price for the areas in which i'd like to live are about 500-800k...in 10 years however all the prices in most suburbs seem to be between 1.1-1.6m...are these prices relative to what people will be earning in 10 years? Or is the dream of owning my own home fanciful?

N.T


----------



## explod (21 March 2010)

newbie trader said:


> Wave,
> 
> I'm still young also and my mindset is that if I put my head down and work work work in the short term then hopefully the long term will be a bit more relaxed than others my age who go out and party 4 or 5 times a week (spending hundreds).
> 
> ...




I read that article also.   No one can predict the future, the article in my view is fanciful rubbish and no doubt driven by the Real Estate Industry.   We have in the last few years had a servere stock market correction.   There are signs that interest rates have furthern to rise.  It is getting harder to borrow money also and there are many other signs that indicate the surge in property for instance cannot continue without considerable change.

In the great crash of 1929, things came good for a couple of years and then in the early 1930's everything crashed again; and in fact there is so much to that period that it is worth Googling or reading up on it.    

In my view there is as much chance of property going up as reported in that article as there is a crash.


----------



## IFocus (21 March 2010)

WaveSurfer said:


> I'm a student of the markets and will be for the next 10-15 years.




Very few come to the market with this time frame in mind you stand a fair chance of success.


Good luck


----------



## Go Nuke (21 March 2010)

Back to the question at hand... The future of Australian property prices.... imo I think wages need time to catch up to real estate.

Due to the GFC I'm sure alot of salaries/wages were either frozen or not inline with the real cost of living ( that being rent/morgage, electricity, rates, toll road {SE QLD anyway}.

If interest rates contine to climb, surely people are so highly leveraged that they will either have to,

a) Find a better paying job (thats me)
b) find a second job
c) sell their house and downgrade to something more affordable
d) put of having kids in order to fund the house/unit so desired, because they can't manage to do both pay a morgage AND have children

I think realestate will continue to hum along but not like it has over the last 5 years.
Though I do think it wouldn't take much to tip the balance for people already under morgage stress or close to it. I think its very real thing to factor into the future as a possible risk.
It will be like what happened in Western Sydney only worse.
That would then have me worried about the massive exposure our big 4 banks have to the morgage market. POP.

Affordability is the big issue here.

I'd like to know that my kids don't need a Phd one day just to earn enough to buy a house in this country.

Time will tell.
In the mean time, I don't plan on over extending myself


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## Bronte (21 March 2010)

Average Perth house to cost $1 Million in ten years. 
http://www.perthnow.com.au/news/wes...lion-in-10-years/story-e6frg13u-1225843172776


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## Investor82 (21 March 2010)

Bronte said:


> Average Perth house to cost $1 Million in ten years.
> http://www.perthnow.com.au/news/wes...lion-in-10-years/story-e6frg13u-1225843172776




Dont stress - the report was prepared by the Sunday Times. You watch in the next two weeks there will be a similar report on Today Tonight and ACA - you can ignore those also.


----------



## drsmith (21 March 2010)

So_Cynical said:


> Slightly off topic but.
> 
> So true about the Titanic...however we are in a minerals super cycle and its got at least 10 years to run, maybe 15 :dunno: not to say there wont be stumbles along the way.



All booms have further to run at the top or so most think.

I have no idea where the top will be but it will be interesting to see where we are in, say, a couple of years.


----------



## Tysonboss1 (21 March 2010)

Dowdy said:


> That's due to the fractional reserve banking system which is a flawed system.
> 
> “Paper money eventually returns to its intrinsic value ---- zero.” -  Voltaire (1694-1778)
> 
> ...




Flawed or not it is the system we have, And by design we need the capital that is created by debt.

Housing is the most basic of human needs so we will always need to be encourging people to continue to build more, and we will always have to encourge investors to own more properties to rent out.

After a person has taken out a loan to buy a house worth $300,000. The total money supply is increased by $300,000. However as loans are repaid, the money supply is decreased by that amount.

If the total debt started to decrease, then so would our money supply which would lead to deflation and we would head into depression as banks shut down and people horded $$$, 

Remember People hording $$$ = Bad
People spending $$$ so others can earn them = Good.

An economy that slowly inflates it's money supply discourages hording, and encourges investment in real things.

An economy that deflates it's money supply discourges spending and encourages hording and usary which brings about social unrest and economic collapse.

Hording money is not productive, So you have to have a system that discourages it. Private hording of the money supply was a big factor in the fall of rome.


----------



## Tysonboss1 (21 March 2010)

MR. said:


> I'd rather the banks didn't have any of my savings. But they do. I didn't know two years ago that banks could lend out so much more than deposits! Because of this so many FHB's etc. Are forced to pay such high prices.
> 
> Can't wait to see the day that the majority of my savings are removed from the bank.




you may enjoy this video, it's number 2 in a series of 5

http://www.youtube.com/watch?v=sanOXoWl0kc

When you remove your money from the bank what are you going to do with it. You should really spend it. Money is not somthing that a person should hold for very long. 

Money is supposed to be used as a shorterm store of value to be used as a medium of exchange. The idea that savers should be some favoured class that produce high risk free earnings by simply holding a portion of the money supply is flawed. Hence the reason usary is outlawed in the bible.

( I am not saying spend all your cash on personal comsumption, I am saying buy assets with it )


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## Tysonboss1 (21 March 2010)

Go Nuke said:


> Affordability is the big issue here.
> 
> I'd like to know that my kids don't need a Phd one day just to earn enough to buy a house in this country.
> 
> ...




They will if the want a 1/4 acre block 10kms from the CBD like their great grand parents generations idea of normal was.

It constantly amazes me how people who know that the population of australias capital cities has grown steadily over the last 50 years are some how shocked that the price of land also increased steadily.

Obviously the average persons home is going to have to take up less land (town houses and apartments), Offcourse houses will still exist, But they will become more and more expensive as the total amount of people who want to live in one increases, while the total supply shrinks as they are bulldozed to make way for high density structures.

The simple answer is if you really have your heart set on a large home on a decent sized block, You will have to move out side the capital cities.

You can't expect to have the same housing that was available in a city when it had a population of 1 million to still be available when it has a population of 3 million of 5 million or 10 million, At some point and average joe is not going to be able to out bid his rivals for a decent slice of land and he will have to lower his expectations or get out.


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## Wysiwyg (21 March 2010)

Go Nuke said:


> Back to the question at hand... The future of Australian property prices.... *imo I think wages need time to catch up to real estate.*
> Due to the GFC I'm sure alot of salaries/wages were either frozen or not inline with the real cost of living ( that being rent/morgage, electricity, rates, toll road {SE QLD anyway}.




And with raised salaries comes increased prices for products and services as companies raise prices to compensate. Something of an endless circle but asking for more money isn't necessarily going to make things more affordable.  

Maybe avoiding the Briz tolls or Briz altogether would help.


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## SM Junkie (21 March 2010)

This topic makes me reflect on Asian countries.  High density living, high proportion of renters and many that cannot afford to own housing. Is this what our future will become as land becomes more scarce and our cities continue to grow.  As the single dwelling becomes more unaffordable, the cheaper alternative is usually units.  Young people (with the exception of our younger members here) seem to delay thinking seriously about settling down until they are in their 30's. Are we seeing the gap between the have and have not continue to widen, hell a social change might just be upon us.


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## MR. (22 March 2010)

Wysiwyg said:


> And with raised salaries comes increased prices for products and services as companies raise prices to compensate. Something of an endless circle but asking for more money isn't necessarily going to make things more affordable.




Raised salaries increases inflation and then perhaps interest rates. Work longer hours perhaps?



drsmith said:


> All booms have further to run at the top or so most think.
> 
> I have no idea where the top will be but it will be interesting to see where we are in, say, a couple of years.




Will be very interesting.    



Tysonboss1 said:


> When you remove your money from the bank what are you going to do with it. You should really spend it.




Should hide it under the house. That’ll upset the banking apple cart. 

We were just on a roll bagging banks in that post you responded to. It doesn’t matter who holds what money, it all ends up back in the banks hands. IMO low interest rates have made property prices what they are today. Supply and demand were reasons but prices escalated by the low interest rates and promotion.    



> Money is supposed to be used as a shorterm store of value to be used as a medium of exchange.



I agree



Tysonboss1 said:


> The idea that savers should be some favoured class that produce high risk free earnings by simply holding a portion of the money supply is flawed. Hence the reason usary is outlawed in the bible.




Savers are a “favoured class”?  Huh?

Good you’re up on the bible! If usury is outlawed in the bible what does it say about landlords renting houses to the poor for financial gain? Employers that profit from their employees? Consumers buying exports from poorer countries?  Share trading?



> I am saying buy assets with it



Cheers.


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## Tysonboss1 (22 March 2010)

MR. said:


> Good you’re up on the bible! If usury is outlawed in the bible what does it say about landlords renting houses to the poor for financial gain? Employers that profit from their employees? Consumers buying exports from poorer countries?  Share trading?
> 
> 
> Cheers.




Usury refers more to making money by simply holding money, which is not the same as holding a productive asset which contributes to the economy such as other forms of investment.

Even banks are under pressure to spend their interest earnings on real things like wages, dividends and other investments rather than compound their total holding of our money supply.

And we saw in the GFC that once banks started to hoard their cash rather than pass in on they were subjected to huge pressure from government bodies,


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## Tysonboss1 (22 March 2010)

SM Junkie said:


> This topic makes me reflect on Asian countries.  High density living, high proportion of renters and many that cannot afford to own housing. Is this what our future will become as land becomes more scarce and our cities continue to grow.  As the single dwelling becomes more unaffordable, the cheaper alternative is usually units.  Young people (with the exception of our younger members here) seem to delay thinking seriously about settling down until they are in their 30's. Are we seeing the gap between the have and have not continue to widen, hell a social change might just be upon us.




In Australia Land is not scarce (except for the capital cities), We have the most sparcely populated land mass on earth. All people have to do is get out of the idea that they are trapped in the capital city.

There are so many fantastic towns dotted around Australia that would provide great quality of life to famililes outside of the cities.


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## WaveSurfer (22 March 2010)

newbie trader said:


> Wave,
> 
> I'm still young also and my mindset is that if I put my head down and work work work in the short term then hopefully the long term will be a bit more relaxed than others my age who go out and party 4 or 5 times a week (spending hundreds).




Hey NT, nice one mate. Your mindset is right on-track there. You're doing better than majority already. 



newbie trader said:


> I was flicking through the paper today and was startled...it had 5 pages or so of the median house prices from 2009 with 3, 5 and 10 year forcasts for each area (a few hundred suburbs were listed). I'm 18 now and i'm not sure when i'll want to buy my own home but the 2009 price for the areas in which i'd like to live are about 500-800k...in 10 years however all the prices in most suburbs seem to be between 1.1-1.6m...are these prices relative to what people will be earning in 10 years? Or is the dream of owning my own home fanciful?
> 
> N.T




No and No mate.

The average wage now is like 50k (or round abouts). Take note of the comments on that article though. 



> WOW - what job pays that, where can I apply. Where these figures come form is beyond me.




As I pointed out in the last post in relation to the popular areas skewing the mean, it's probably the massive earners skewing the results there. Statistics can be futile. Large deviations from the mean can distort the real picture. I'd say in _reality_ the actual figure is more likely around the 30-40k mark.

I can't see that increasing too much in 10 years. I'm no expert on this so, what's a deer with no eyes? lol, yer get my point I hope.


Is your dream fanciful? No, it's as fanciful as you make it. Believe you will achieve it, and chances are that you will. Believe it's the impossible and it will be just that.

It was the end goal that drove me and kept me in focus. No matter how far out of reach it felt.

Not saying that "wishful thinking" and sitting on your backside will get you over the line (i.e. hoping to win the 10mil lottery one day). Willingness to do anything (within reason of course) to get you there, goes a long, long way buddy. When the 110% determination is present, you start to see all these pathways that were not (apparently) present before.

Take if from a high school drop out. I have (still am) been told by the "experts" that I was destined to be dead, in jail or a smacky by the time I was 18. Chances are zip that I'd even pass a Uni degree (hmmm, last set of results we're all HD's).

As they say, actions speak louder than words.

I'm not smart, by all means. I don't have a photographic memory and have to read stuff numerous times before it sinks in to this block head. Bottom line is that I work hard, never lose sight of the end goal, and it pays.


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## WaveSurfer (22 March 2010)

IFocus said:


> Very few come to the market with this time frame in mind you stand a fair chance of success.
> 
> 
> Good luck




Cheers mate. I know I'll succeed. Won't stop until I do 

That could be a costly assertion


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## Beej (22 March 2010)

Tysonboss1 - just catching up on posts over the past few days, but wanted to say to you "great posts" and I agree with what you have written. It is very important that people actually understand the system in which we live and how you make the most of it.

Cheers,

Beej


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## SM Junkie (22 March 2010)

Tysonboss1 said:


> In Australia Land is not scarce (except for the capital cities), We have the most sparcely populated land mass on earth. All people have to do is get out of the idea that they are trapped in the capital city.
> 
> There are so many fantastic towns dotted around Australia that would provide great quality of life to famililes outside of the cities.




And a lot of land that is not inhabittable. Then there is the cost of living in these towns.

Agree we do have a lot of great towns and I in particular am one that could not return to city living, but for most people country living is not where the work is (except for mining of course). So although some will complain about the affordability of housing, they are unlikely to move to locations where although they can afford a house, they may not get employment.

What do our younger members here think? Is moving to the country on your plan if you could not afford a house within transit distance to the city?

Same issues apply to Asia, people still flock to the cities from regional areas to get work.


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## wayneL (22 March 2010)

SM Junkie said:


> And a lot of land that is not inhabittable. Then there is the cost of living in these towns.
> 
> Agree we do have a lot of great towns and I in particular am one that could not return to city living, but for most people country living is not where the work is (except for mining of course). So although some will complain about the affordability of housing, they are unlikely to move to locations where although they can afford a house, they may not get employment.
> 
> ...




Yep.

And the towns where there is plenty of work are still very expensive... or relatively very expensive compared to local wages.


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## Dowdy (22 March 2010)

Tysonboss1 said:


> After a person has taken out a loan to buy a house worth $300,000. The total money supply is increased by $300,000. However as loans are repaid, the money supply is decreased by that amount.




Our money system doesn't work like that

http://www.youtube.com/watch?v=vVkFb26u9g8




> Remember People hording $$$ = Bad
> People spending $$$ so others can earn them = Good.
> 
> Hording money is not productive, So you have to have a system that discourages it.




The only time hording is bad is when you keep it under the bed. Putting money in the bank is not considered hording




> An economy that slowly inflates it's money supply discourages hording, and encourges investment in real things.
> 
> An economy that deflates it's money supply discourges spending and encourages hording and usary which brings about social unrest and economic collapse.





You talk about social unrest and economic collapse happening in an economy that deflates it's money supply but you contradict yourself if you just look at the world around you. US, EU, Dubai - what do you think caused their situation??


NOW BACK ON TOPIC

Anyone sense any irrational madness in the market?

http://www.smh.com.au/business/redhot-melbourne-market-starts-to-glow-white-20100321-qo82.html



> ''It is staggering that for a house that hasn't been touched in the 42 years since it was built, people are paying upwards of $800,000.




Reminds me of the dot-com boom


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## Dunger (22 March 2010)

Dowdy said:


> Anyone sense any irrational madness in the market?
> 
> http://www.smh.com.au/business/redhot-melbourne-market-starts-to-glow-white-20100321-qo82.html
> 
> ...




I wonder if the purchaser was a cashed up, foreign investor where the AUD makes the $800k a $600k hit combined with really low interest rates?


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## demiser (22 March 2010)

SM Junkie said:


> What do our younger members here think? Is moving to the country on your plan if you could not afford a house within transit distance to the city?




I'm just about to move to cairns in about a week, sure cairns isnt exactly a country town, but it's not exactly big either.

The main reason for the move is a better job, but as for moving somewhere even more remote, yes I would, but as others have mentioned, it comes back to work, and with both myself and my parter working in fairly specialised fields, it rather limits our options.


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## MR. (22 March 2010)

Tysonboss1 said:


> Usury refers more to making money by simply holding money, which is not the same as holding a productive asset which contributes to the economy such as other forms of investment.
> 
> Even banks are under pressure to spend their interest earnings on real things like wages, dividends and other investments rather than compound their total holding of our money supply.
> 
> And we saw in the GFC that once banks started to hoard their cash rather than pass in on they were subjected to huge pressure from government bodies,




I see where you are going and I agree with Beej's knowing the system in which we live.

Since this is the property thread how is buying property at inflated prices, due to debt, productive? 

Buying manufacturing machinery is productive, but there is the problem of industrial property valuations to work from.  Due to the high costs associated with industrial properties it is unproductive for those businesses to compete. Importing cheap components makes paying the bills easier but where does our money end up? Productive?


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## Investor82 (22 March 2010)

SM Junkie said:


> What do our younger members here think? Is moving to the country on your plan if you could not afford a house within transit distance to the city?




I am not sure if I still fit into the "younger" category (27) but when I was 18 I moved out of the city. From what I have seen the the general belief that there is no work in country area's is a myth. Most companies in rural areas are screaming for new talent, who are willing to comitt to the town/area. 
I moved all around WA in various roles, from trades to office work. It was always a challenge to find good staff. 
I ended up in a brilliant city about 4 hours north of Perth. Renting a 3bed house with ocean views for $200/wk (probably about $300/wk nowadays). I could get to work (on the other side of the town) in 13 minutes. Town centre in 7mins, walk to the beach etc. By the time I left I had figured out that I could actually ride my bike most places quicker than I could drive there. 
I bought a block of dirt there, which I will build on sometime in the near future. I have designed my 'retirement' home and hope to move back there sometime in the next 5-10years. 
In the last 10 years I have only spent 2 years in the city, and have no intentions of returning. 

10 years ago, if you had of asked if I would want to live outside the city, the answer would have been "no way" but now, I think if you are under 25, you are nuts if you live in the city!


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## nunthewiser (22 March 2010)

Investor82 said:


> I ended up in a brilliant city about 4 hours north of Perth. Renting a 3bed house with ocean views for $200/wk (*probably about $300/wk nowadays*). I could get to work (on the other side of the town) in 13 minutes. Town centre in 7mins, walk to the beach etc. By the time I left I had figured out that I could actually ride my bike most places quicker than I could drive there.
> I bought a block of dirt there, which I will build on sometime in the near future. I have designed my 'retirement' home and hope to move back there sometime in the next 5-10years.
> !




More like around 400 now 

Good place Geraldton....... has its negatives but the positives far outweigh them......and yes plenty of opportunities up here for those that are willing to give it a go!

Same with any other regional city anywhere in oz i spose ........ good and bad in all.


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## Tysonboss1 (22 March 2010)

I 28 and currently live in sydney and will leave when I sell my business. Who Knows where I will end up. Probally some where within 2 hrs of brisbane.


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## Investor82 (22 March 2010)

nunthewiser said:


> More like around 400 now




Ok, I have been out for a couple of years now 

If that is the case I better get building!


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## Tysonboss1 (22 March 2010)

Dowdy said:


> Our money system doesn't work like that




Yes it does, If you watched the series of 5 videos that you gave me the link to and then sequel called "money as debt promises unleashed" you would see it describes the system in exactly the way i explained it.

Every time a bank writes a loan it is putting fresh "debt money" into the system and increasing the money supply by the size of that loan. every time a loan is paid off it reduces the money supply by the size of that loan.

Here is video four of "money as debt Promises unleashed" (the sequel to the vid to showed me).

http://www.youtube.com/watch?v=0-O_yGEI_0U

I would recommend you what the sequel if you enjoyed the first viedeo series.


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## Tysonboss1 (22 March 2010)

MR. said:


> I see where you are going and I agree with Beej's knowing the system in which we live.
> 
> Since this is the property thread how is buying property at inflated prices, due to debt, productive?




Whether property prices are over inflated is not something you can say in a broad brush type statement, It's only really something that time will uncover.

However property investment in general benefits the economy in many ways.

Firstly as I said earlier it provides the basic needs of housing to renters, as well as housing other businesses that rent their premises, without property investors willing to commit funds to buy a house to rent to other families there would be alot of people living in shanty towns.

It is the source high paying jobs for those employed in building and construction, and this flows onto everyone else in every other sector from mechanics, car dealers, hardware stores, transport industry, hookers, breweries, dentists, clothing stores and pretty much every single industry.

The loans generated by property investment also keep our debt based money supply going and also causes many people to commit to the work force and work productively so as to repay their debt and interest commitments.

There are so many benefits I could possibly go on to list them all.


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## Tysonboss1 (22 March 2010)

SM Junkie said:


> Agree we do have a lot of great towns and I in particular am one that could not return to city living, but for most people country living is not where the work is (except for mining of course). So although some will complain about the affordability of housing, they are unlikely to move to locations where although they can afford a house, they may not get employment.
> .




Thats where you just have to way up the benefits of continuing to live in a large city vs the cons.


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## Tysonboss1 (22 March 2010)

Dowdy said:


> Our money system doesn't work like that




watch this vid from the 5min 10 sec mark.

http://www.youtube.com/watch?v=6MwHgpFSQMo&feature=related


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## MR. (22 March 2010)

Tysonboss1 said:


> Whether property prices are over inflated is not something you can say in a broad brush type statement, It's only really something that time will uncover.
> 
> However property investment in general benefits the economy in many ways.
> 
> ...




It appears to be productive to everyone else but the purchaser. 
Which is my point. As long as you arn't the purchaser you're doing OK!

Can't factor in speculative property gains because that's also something that time can only uncover. However I bet that's not what the purchases are led to believe. Just pick up a paper from the weekend.


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## kincella (23 March 2010)

some snippets to ponder... (for the higher interest rates brigade)
extracts only...you really should read the whole article
ps...the asterisks are mine

Interest rates rose three times in the year before, yet prices in three cities -- Brisbane, Adelaide and Melbourne -- rose more than 20 per cent.
So, despite the fear and rhetoric, evidence that property prices automatically fall when interest rates move up is hard to find. In fact, there has only been one instance in the past 30 years of high interest rates and falling real house price arriving together: the dark days of the early 1990s, which brought crushing interest rates of 17 per cent and more.

A more profound reason for the resilience of house prices is that when rates rise they usually go up in small increments and property demand merely switches over to a different type of buyer.

** Cashed-up investors and equity-rich buyers often emerge even as rates rise, taking a larger share of the market from ****equity-poor, interest-rate-sensitive first homebuyers. We have seen this quite clearly over the past six months when, despite three consecutive interest rate rises, upgraders and investors returned to the market in droves.

****Higher rates tend to separate the wheat from the chaff, as financially resourced buyers are nothing if not discerning, favouring well-serviced inner-urban locations. That is why it would be no surprise to me to see inner-urban property prices remain firm as rates rise, even if this leads to the overall market moderating or prices on our far-flung urban frontiers falling
http://www.theaustralian.com.au/bus...rates-not-so-bad/story-e6frg9gx-1225842032129


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## kincella (23 March 2010)

I have found the answer.....
pack 10 people into a 3brd house.....example recently with the Indian community
so of course those 10 people can afford more than you....
what if it becomes a trend....10 people in a single story house, 20 in a 2 story....etc
sounds like fun....
but not the way australians are used to....maybe the govts have this is mind....
how does it work with parking cars....
how do the neighbours feel about this type of accommodation style in OZ

and this post over on the 'asx general thread' from trendtrading today
extract..............................
As a further example it is common in Pakistan to add another floor to a building as the extended family grows. So you have an 8 storey house with maybe 60-70 people in it. That is an enormous source of money to finance one person to establish in another country. So the house price rises are not all coming from Jack and Jill setting up house together.


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## kincella (23 March 2010)

some of you have some really funny ideas about housing......

all the jobs that would be lost if we simply lived in a hut or a cave....
the companies who make the building materials, who employ  hundreds of thousands of workers....all those jobs gone

the builders employ similar numbers

the manufacturers of all the things that furnish a house...there goes China

the maintenance people....who keep the house in good order, or refurbishment, including the gardeners,cleaners, landscapers etc

you would probably lose half the workforce....if we lived in a cave
I have not mentioned all the other related industries....ie; financial including the banks, the estate agents etc

and all those jobs that rely on the housing industry to support them....if they were not there, you would not have a thriving metropolis...actually life as you know here in OZ....

it would be like the poor in India, China ,Africa and all those other god forsaken countries..


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## UBIQUITOUS (23 March 2010)

The party is over. The music has stopped. Looking at clearance rates though it would appear that some fools are still dancing.

http://www.ibtimes.com.au/services/pop_print.htm?id=119945&tb=bh



> *Westpac announces the end of low interest rates *
> 
> Posted 23 March 2010 @ 09:00 pm AEST
> 
> ...


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## drsmith (23 March 2010)

> The chairman of Westpac, Ted Evans, has admitted that interest rates would continue to rise independent of official RBA rate hikes for at least the next five years.
> 
> In an interview with The Australian Financial Review, published today, Evans warned that the RBA cash rate was no longer the primary guide for bank interest rate movements.
> 
> “Other influences are simply that much more important at the moment, because of what’s happening globally,” he said. “That will remain the case for many years to come, may even remain the case forever.”



The market rate for cash is well above 5% which is itself well above the RBA cash target of 4%.


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## Dowdy (23 March 2010)

kincella said:


> some of you have some really funny ideas about housing......
> 
> all the jobs that would be lost if we simply lived in a hut or a cave....
> the companies who make the building materials, who employ  hundreds of thousands of workers....all those jobs gone
> ...





Your going a bit extreme there but there's several thing wrong with that.

If home are built for the SAKE of building then you're simply destroying one industry to appease another but what's happening here is the opposite. 

Home *need* to be built while the government and major developers are not using the land so the opposite happens. Companies want to build but since the land isn't released it creates imbalances. It inflates the price due to supply and demand and people aren't working to their full productive capacity. 

So in turn people are being left out of jobs that would otherwise be there if homes were available for them, like the people you mentioned gardeners, cleaners, landscapers etc

The government probably doesn't release based on the assumption that there is a certain amount of work people can do but in reality there is no limit to what can be done and hence the imbalances.


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## professor_frink (23 March 2010)

UBIQUITOUS said:


> The party is over. The music has stopped. Looking at clearance rates though it would appear that some fools are still dancing.
> 
> http://www.ibtimes.com.au/services/pop_print.htm?id=119945&tb=bh




What about the other banks and non bank lenders? Are they all joining westpac in declaring the RBA irrelevant?


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## kincella (23 March 2010)

apparently you missed the following.....and you also missed the news last month...Westpac does not want fhb loans on their books, hence the reason they lowered the lvr and raised rates above the rba hike...

Kelly was with St George before she joined WBC....St George had failed miserably as a home lender, under her watch....history repeating itself for Kelly...
and this extract from that article.............

But, in a private briefing to big shareholders, Mrs Kelly suggested that the prospect of a political backlash from Canberra could make it difficult to hit home loan and business customers in a federal election year.


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## UBIQUITOUS (23 March 2010)

professor_frink said:


> What about the other banks and non bank lenders? Are they all joining westpac in declaring the RBA irrelevant?




Whether they all declare it or not, all of the banks are subject to the same high wholesale funding rates. I have more respect for Westpac (as much as I can have for a bank) than I do for the others who are being covert with their views in an attempt to capture market share.


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## UBIQUITOUS (23 March 2010)

kincella said:


> But, in a private briefing to big shareholders, Mrs Kelly suggested that the prospect of a political backlash from Canberra could make it difficult to hit home loan and business customers in a federal election year.




Quite right. If we weren't coming upto and election years, rates (both RBA and Bank rates) would be much higher. Does anybody have any analysis on how RE has performed in the run up to elections?


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## professor_frink (23 March 2010)

UBIQUITOUS said:


> Whether they all declare it or not, all of the banks are subject to the same high wholesale funding rates. I have more respect for Westpac (as much as I can have for a bank) than I do for the others who are being covert with their views in an attempt to capture market share.




Did the rest of the big 4 join westpac after they raised over and above the RBA in December last year? I haven't been paying too much attention so may have missed it if they did.

Here's some recent news that seems to contradict that a bit FWIW

http://news.smh.com.au/breaking-new...s-on-entry-level-mortgages-20100321-qnvl.html



> A stronger securitisation market has enabled AMP Bank Ltd to lower interest rates on its entry level home loan products after hiking mortgage rates earlier this month.
> 
> AMP Bank dropped the interest rate on its basic variable home loan by 22 basis points to 6.27 per cent, and cut the rate on its introductory variable mortgage by 45 basis points to 5.94 per cent.


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## enigmatic (23 March 2010)

Dropping interest rates is a sure sign of trying to increase market share..
They will soon increase them back once they have captured the suckers 

I think a few people are missing the point aswell
on a $300,000 loan weekly interest was assuming 4.75% interest rate introductory rate was $274 interest only which was very cheap compared to rent $350-400
now that they are no longer on the introductory rate and on 6.27% as of AMP not using the high Westpac there paying $361 just to cover the interest repayments.
looks like those who just came of renting as houses were cheaper are no longer finding it cheaper..


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## drsmith (23 March 2010)

AMP is currently offering 5.75% for cash and the comparison rate for their base variable rate home loan (6.27%) is 6.29%.

That strikes me as a rather slender margin.


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## Tysonboss1 (23 March 2010)

drsmith said:


> AMP is currently offering 5.75% for cash and the comparison rate for their base variable rate home loan (6.27%) is 6.29%.
> 
> That strikes me as a rather slender margin.




that would be the minimum margin, You have to also think that they are making much higher margins on other products.

Also if they have a deposit of $1000(real money) that they pay 5.75% on, it may allow them to lend out over $5000(bank credit/fictional money) at 6.29%.


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## drsmith (23 March 2010)

Tysonboss1 said:


> that would be the minimum margin, You have to also think that they are making much higher margins on other products.



That's true although one would think that serious depositors would be chasing the higher rates.



Tysonboss1 said:


> Also if they have a deposit of $1000(real money) that they pay 5.75% on, it may allow them to lend out over $5000(bank credit/fictional money) at 6.29%.



How though does that affect the interest margin ?

A simplistic bank balance sheet is made up of assets (mostly loans and the remainder being shareholder's equity) minus liabilities (deposits).


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## Tysonboss1 (23 March 2010)

drsmith said:


> That's true although one would think that serious depositors would be chasing the higher rates.




In regards to the other products I mean loan products, For example only a portion of the total loan book is written out as low interest variable loans at 6.27%, There would be many other business loans @ 10%, margin loans @ 8%, personal loans @ 12%, credit cards @ 13%-18% etc, etc.


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## Tysonboss1 (23 March 2010)

drsmith said:


> That's true although one would think that serious depositors would be chasing the higher rates.
> 
> 
> How though does that affect the interest margin ?




Because it not like a depositor banks $1000 @ 5.75% and the bank then lends that depostors $1000 @ 6.29% making a small gross profit of $5 from a 0.5% margin.

The bank takes the depositors $1000(real cash) @ 5.75%, they then lend out up to $9000(bank credit) at a mimimum of 6.29% making a gross profit of over $500, this profit is made even bigger if they can lend it out via higher interest products such as personal loans or credit cards.


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## drsmith (23 March 2010)

The following comments (Dec 2009) on bank funding by the Deputy Governer of the Reserve Bank make for interesting reading.

http://www.rba.gov.au/speeches/2009/sp-dg-161209.html

Net interest margins have increased in the past 12 months as loan rates overall have outstripped deposit rates however I note the following comment in relation to the cost of deposits (graph 3)



> The increased competition by banks for deposits has added substantially to their cost of funds. It used to be the case that on average banks paid about 125 basis points less than the cash rate on deposits. *Now they are paying interest rates that are on average in line with the cash rate *(Graph 3).



With online at call accounts offering close to 200 basis points higher than the cash rate it will be interesting to see how this graph trends through this year (or how the interest rate premium on the online accounts change).

I also found this comment on net interest margin (graph 5) interesting.



> Between 2000 and 2007, the net interest margin on the major banks’ Australian operations had narrowed by about 100 basis points (Graph 5). This was driven by competition, and was made possible by sizeable reductions in banks’ operating costs over that period, which allowed banks to continue operating profitably despite falling margins.



No mention of increased household debt (lower interest margins but on bigger debt pie).:dunno:

Perhaps Wespac feels that in the longer term household debt cannot continue to increase in relation income and in fact may decrease resulting in a situation where interest margins have to increase to maintain reasonable profit growth.


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## MR. (23 March 2010)

Tysonboss1 said:


> Because it not like a depositor banks $1000 @ 5.75% and the bank then lends that depostors $1000 @ 6.29% making a small gross profit of $5 from a 0.5% margin.
> 
> The bank takes the depositors $1000(real cash) @ 5.75%, they then lend out up to $9000(bank credit) at a mimimum of 6.29% making a gross profit of over $500, this profit is made even bigger if they can lend it out via higher interest products such as personal loans or credit cards.




Tyson, do you have any further information on the above? Although I see where you are coming from, can this be right? If it is deposit rates can go alot higher than loan rates! 



drsmith said:


> Perhaps Wespac feels that in the longer term household debt cannot continue to increase in relation income and in fact may decrease resulting in a situation where interest margins have to increase to maintain reasonable profit growth.




I recall Gail speaking about this about a year ago. She at the time appeared very cautious on the outlook.


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## drsmith (23 March 2010)

MR. said:


> Tyson, do you have any further information on the above? Although I see where you are coming from, can this be right? If it is deposit rates can go alot higher than loan rates!



Not in relation to interest margins as they are relative to total assets and liabilities, not just depositors funds.


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## MR. (24 March 2010)

kincella said:


> some snippets to ponder... (for the higher interest rates brigade)
> extracts only...you really should read the whole article
> ps...the asterisks are mine
> 
> ...




Lets have a closer look at that article. (Added the red)



> Higher Interest Rates Not So Bad
> 
> Looking at the track record, the answer is not as clear as you might expect. It's true that residential property prices stopped growing during the last interest rate peak, (April 08 to August 08) but a worldwide financial calamity also peaked during the 2008 spring market (Sept - Nov 08), when 40 per cent of Australia's property transactions (usually) take place. (So if the GFC didn't happen properties were going up in those months? OK... ) Interest rates rose three times in the year before, (so that makes it 2007 when they appear to have risen twice not three times) yet prices in three cities -- Brisbane, Adelaide and Melbourne -- rose more than 20 per cent.




The market went 10 months in 2007 with one interest rate rise in the 8th month.

The author’s a bit of a try hard!
Mind you 4 rises in a row followed in Jan, Feb, March and April 08. I bet that slowed things down for the RBA .... But no, it was the financial calamity thingy! That made the poor yearly return.  That’s right.                   



drsmith said:


> Not in relation to interest margins as they are relative to total assets and liabilities, not just depositors funds.




Ok not "interest margin" as that is relative to the amount of their assets.


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## UBIQUITOUS (25 March 2010)

It looks like the time is nigh. I wouldn't want to be in the position of a recent FHB


http://www.smh.com.au/business/bubble-risk-rates-set-to-rise-rba-says-20100325-qxo8.html?autostart=1



> *Bubble risk: Rates set to rise, RBA says*
> March 25, 2010 - 10:32AM
> Comments 76
> Loading player
> ...


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## MR. (25 March 2010)

Tysonboss1 said:


> The bank takes the depositors $1000(real cash) @ 5.75%, they then lend out up to $9000(bank credit) at a mimimum of 6.29% making a gross profit of over $500, this profit is made even bigger if they can lend it out via higher interest products such as personal loans or credit cards.






MR. said:


> Tyson, do you have any further information on the above?




No answer?    Why?

It now appears funny to me, your assumed smart remark on the following thread (post 6)  https://www.aussiestockforums.com/forums/showthread.php?t=15145&highlight=WHO+OWNS+THE+MONEY

Why do I watch conspiracy videos, Gullible?  I’m certainly not alone. 

Who cares about Fractional Reserve Banking it is just the percentage of “cash” held by the banks basically for withdrawal at anytime. The RBA can fully print all the money if you like but what is the point in that? Almost all that money will just sit in vaults. The current reserve system would have to be abolished and all banks would have to have the paper cash on hand to equal loans. Nothing has really changed.

That $1000- which turned into $9000- by magic or whatever has “already” happened. So there are depositors and the like for every loan. In fact it is more like that $10,000- was already on the books or “in existence” and so the RBA made a percentage of that available for cash withdrawals like $1000-. 

Wonder why we get confused!

Simple stuff really. 
I laugh at myself for filling my head with crap!

http://www.theaustralian.com.au/bus...e-for-a-spanking/story-e6frg9io-1225844478939


> There are about $1.6 trillion in bank loans outstanding in Australia, growing at about 8 per cent a year, and $960 billion in deposits, growing at 5 per cent.
> 
> That funding gap must be closed in the wholesale market, and Westpac is the sixth-biggest borrower in the global wholesale market.


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## drsmith (25 March 2010)

Rates won't go up much more in the short to medium term as loan interest costs relative to household income is still high. 

The RBA also considers rates to be in the lower end of normal range as of Dec 2009 and we have allready had a rise of 0.25% since.

http://www.rba.gov.au/speeches/2009/sp-dg-161209.html



> *What Does This Mean for Monetary Policy?*
> 
> Taking these considerations into account, it would be reasonable to conclude that the overall stance of monetary policy is now back in the normal range, though in the expansionary segment of that range.




Another 0.5% over the remainder of 2010 would be my guess. The tightrope remains very skinny.


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## satanoperca (25 March 2010)

drsmith said:


> Rates won't go up much more in the short to medium term as loan interest costs relative to household income is still high.




The ASX 30 Day Interbank Cash Rate Futures is steadily climbing to the side of another interest rate rise in April. 55% 

I do agree that interest rates do not need to go up much to start to effect our overly indebted RE market. 

I can hear the distant screams of those overly indebted already, complaining that it will break them and destroy the economy.

Locking up so much capital in a relatively non productive asset will destroy the economy. Paying ridiculous amounts in interest payments to the banks does not benefit anyone else but the govnut protect banks. Less money to the banks means more money spent on creating business, eating out, spending on luxury items, holidays etc etc all that benefit a wider spectrum of the community.

As per a previous link, the banks have no become money casinos.

FHB are at the coal face this year seeing mortgage repayments going up >30% in a single year.

I have watched like for like properties in my area go from $700K to $900 in a little over 1.5years. These same properties have also gone from 5% gross rental returns to around 3% while vacancy rates continue to increase.

Cheers and have a pleasant evening

6 days & counting


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## bellenuit (26 March 2010)

chops_a_must said:


> I'm not sure about the 1200 people a week. That sounds like a copy and paste job from 2007 numbers.




Actually the latest figures confirm that number for WA. Today's "The West Australian" quotes new ABS statistics that show WA's population increased by 64,300 over the previous year. That equates to 1,236 per week, up 2.9% on the previous year, making it the fastest growing state. 

And that is before the Gorgon and other massive projects properly kick in.

If that rate is maintained, the population will double in just 25 years.


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## kincella (26 March 2010)

well well well...
Qld building industry estimated to lose 37000 jobs this year.....

what do you think they will do about that....
what happened to all the school building programs ??? did Qld miss out...or is it the same situation for the other states

hmmmmm....a stimulus might be on the cards....

I estimate there will be another boost to the fhb...at least for new homes...I am guessing $30,000 this time

http://news.theage.com.au/breaking-...ion-job-losses-loom-report-20100326-r231.html

Swan says there is no relief in sight for the housing shortage....and he is not critical of the negative gearing regime...as some in the community have suggested

the only way is for them to boost spending..since the states dont care....the states will care if they can get the kids money or FHB grant

http://www.theage.com.au/business/no-relief-in-sight-for-housing-shortage-swan-20100326-r24c.html

I predict there will not be many rate rises this year.....its actually all looking a bit shaky out there....lets wait unti August, see how bad things really are..if they have the first half year figures by then...
remember they did this last year....racked up the rate rises, told the world Aust was immune from the GFC...that we live in fairyland...lalala....then the mud hit the fan about August...and they hit the panick stations...
short memories for these cowboys....
4 rate rises in 6 months.....they never wait to see the affect. of last months rise...just up it again....because they believe its fairyland out here on the desert, middle of the ocean, little water, half a million immigrants pouring in each year.....just throw the arms up in the air....throw money out the window, or at dodgy schemes....


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## satanoperca (26 March 2010)

Kincella,

A 16% increase in RE Vic 2009 says to me everything is fine and the economy must be Bubbling along. The RBA trying to keep an economy from overheating through interest rate rises seems fair.

Unless, all is not what it seems and high property prices at any cost do not benefit greater society? But the facts are, RE is steaming along.

Cheers

Robots returns in days 
as it seems that *Australia is truly the land of sunshine and lollipops.*
:70: :70: :70:


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## kincella (27 March 2010)

*27000 Australian Businesses at risk of Collapse*
due to the banks not lending....this is a dreadful state of affairs....what a joke the banks are...they will not provide finance for the businesses who employ the workers, but they will provide finance to home buyers, willy nilly, who look like they will lose their jobs.......
are the bankers, all collectively insane...or just like to follow each other like sheep over a cliff...or smoking some bad weed.....
and where is our fiscal team now.....
oh yes, there they are, hiding behind the scam of the furphy health system (which they could not be bothered to fix, whilst they wasted billions on insulation and the building schools rort)

......................................
More companies at risk of collapse, despite brighter outlook 
Scott Murdoch From: The Australian March 27, 2010 12:00AM 
A GROWING number of Australian firms are at risk of collapse this year despite the bright economic outlook and strong corporate profits, as the result of the major banks crunching the availability of credit to businesses. 

A study conducted exclusively for The Weekend Australian by Dun & Bradstreet, the debt agency, found almost half of 55,000 companies examined had operated with a negative cashflow position last year.

The failure rate for firms with negative cashflow is 214 per cent higher than those with a positive position.

The negative result is expected to lead to an increased number of firms collapsing this year.

The D&B research showed there had been a 12 per cent increase in the number of firms with negative cashflow over the past two years.

It also found that more than 80 per cent of business failures were related to cashflow pressures rather than general business performance or poor sales.

extract only...read the full report.......... 
http://www.theaustralian.com.au/bus...brighter-outlook/story-e6frg8zx-1225846168262


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## kincella (27 March 2010)

Satan....there are thousands of houses available, at very affordable prices...they are just not in the inner suburbs...they are within 30 minutes commuting travel to the CBD...
but since not everyone works in the CBD...there are plenty of happy house campers out there...with an affordable mortgage, enjoying their life

...you could have bought a house here in Toorak for $200,000 in 2000, which became $400,000 by 2004, then $660,000 in  2007, now  $900,000 in 2009......sure some were in busy Williams Rd, or tucked behind in a quiet street....just a modest little 3 bdr, nothing over the top, on a small block....but they were not the workers cottages, you see all over the inner suburbs , where you would be hard pressed to swing a golf club in the living room

the people that did buy in 2000, with a mortgage of $180,000, are probably looking at a mortgage now of only $100,000 against a mv of $900,000....no wonder they seem a bit smug...not worried like some of you doomsdayers....
but being their home, a roof over their heads, they would not be too worried about where the price is..or where its going...
and with so much equity, they can afford to buy an investment property, start a business, help the kids into their own home....etc etc etc..
I really dont like your chances of picking up a cheap house in the inner suburbs, whilst waiting for that 20,30,40,50% drop in prices in the next decade or two...
well not unless the govnuts, suddenly removed all immigrants that came here in the past 5 years and sent them home....then it may be a different story....
its like waiting, watching the sky....looking for the flying pigs...


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## satanoperca (27 March 2010)

kincella said:


> *27000 Australian Businesses at risk of Collapse*



That sounds a bit doom and gloomy. I would rather stay on the sunny side, RE up 16% in a year. Economy must be flying along as the money must be following to support such growth in an asset sector.


kincella said:


> Satan....there are thousands of houses available, at very affordable prices...they are just not in the inner suburbs...they are within 30 minutes commuting travel to the CBD...



Agreed, there are thousands of affordable outer suburbs as inner suburbs are totally unaffordable, so the outer ones are perceived as affordable.


kincella said:


> ...you could have bought a house here in Toorak for $200,000 in 2000, which became $400,000 by 2004, then $660,000 in  2007, now  $900,000 in 2009......sure some were in busy Williams Rd, or tucked behind in a quiet street....just a modest little 3 bdr, nothing over the top, on a small block....but they were not the workers cottages, you see all over the inner suburbs , where you would be hard pressed to swing a golf club in the living room
> 
> the people that did buy in 2000, with a mortgage of $180,000, are probably looking at a mortgage now of only $100,000 against a mv of $900,000....no wonder they seem a bit smug...not worried like some of you doomsdayers....



Well if that isn’t sunshine and lollipops I do not know what is. Fantastic news, a 5 fold increase in asset value in 10 years. Wonderful, so why the doom and gloom. As property has increased so much everyone must be prosperous and wealthy so a few business hitting the wall should not be any setback for the majority.

Who are these doomsdayers? I hope I’m not grouped into this category, as I’m I have been reborn  a Debtaholic and have joined the masses.
Property is flying, unemployment is low, and Australia by passed the GFC, Labor Govnuts think that they will have the budget back in surplus faster than any previous govnuts, the share market is recovering strong. 
Looks all good from where I sitting, maybe you have become a little sceptical that not all is what it seems.

Australia is the land of sunshine and lollipops.


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## kincella (27 March 2010)

just continuing my theory, that we are still in a recession, its a W shape, it has more legs than the 'fools' in govt and the media, would have you believe.

A replica of 2008-2009 is in front of us....this time with much larger implications, a bigger dip, and the economy is less able to recover than last year....you can only go for so long, before the last straw breaks the camels back.....
we have been in this recession for almost 3 years, businesses are hurting...bleeding...and the banks refusal to lend, is compounding the problem.....

underemploment is rising...all the people who now only have 20 hours not 40 hours work a week, full time jobs are being lost, while only part time jobs are replacing them

interest rates will not keep rising....well like last year, they do here in LA LA land, until it all comes to a screeching halt  

will the govt try another disastrous stimulous package after all the waste with the insulation and school building rip off...or $900 to spend on imported TV and games from China...it will not work this time

will Toyota shut down for good with its disastrous problem, will other car makers follow....or will someone actually fix the problem....or is it too late for the damage to the Toyota brand name...how many hundreds of thousands of worker will be laid off

Will Obama start another war, to divert attention away from their economic woes...at home..

and who exactly is responsible for the rising house prices in Melb....some foreign buyers...who may panic and sell at the first hint of a hiccup back home....it happened with FNQ in the 80's with the Japanese
or will it be the other immigrants, who stack 12 adults into a 2 or 3 bdr house....with so many wage earners, they can afford to buy a million dollar mansion,on borrowed money....and turn the street into a slum, or a 5 bdr where they can fit in 20 adults .....welcome to fairyland...where fairytales are the order of the day

.............................extract...
Agency Marshall White says buyers from mainland China and Hong Kong kick-started Melbournes prestige property market last year and still account for a third of its sales. 

Mandarin-speaking sales executive Michael Liu, who was hired by the agency to deal with overseas buyers, said a few streets in the eastern suburbs of Kew and Balwyn were now 80 per cent Chinese-owned.

http://blogs.news.com.au/heraldsun/.../comments/rudd_lets_china_buy_up_our_suburbs/


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## MR. (27 March 2010)

kincella said:


> *27000 Australian Businesses at risk of Collapse*
> due to the banks not lending....this is a dreadful state of affairs....what a joke the banks are...they will not provide finance for the businesses who employ the workers, but they will provide finance to home buyers, willy nilly, who look like they will lose their jobs.......
> are the bankers, all collectively insane...or just like to follow each other like sheep over a cliff




Come on those 27000 odd businesses are booming, that's their fault they're a bit short on cash not any of us four. They shouldn't be expanding so much! What did they do? Buy new machinery with the extra 50% tax deductions last year? 

Stuff lending extra money to business anyway! Didn't ya see business stock values crash last year! Business can go broke! Plenty... PLENTY of time to get back to them, it's all about locking individuals up into property loans they can't get away from just now. We are talking incomes for 30 years here, not some high risk, short term, business loan. 

We four are in the top eight in the world! We will not have any trouble obtaining money from international money markets as we are AA. Ya seen our interest rates? We are set, we will not even need Rudbank. It's only 640 billion anyway!

Look if anything goes wrong with businesses in the mean time we've got plenty of room to move interest rates down. Not that we will lend more to business, that's risky, but guess what that does to property prices and payments? Can't lose! Unlike some of those other countries with lower interest rates. 

All part of the plan........ All part of da plan.



satanoperca said:


> Australia is the land of sunshine and lollipops.


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## GumbyLearner (27 March 2010)

kincella said:


> just continuing my theory, that we are still in a recession, its a W shape, it has more legs than the 'fools' in govt and the media, would have you believe.




I have to agree kincella, W has looked likely for a while now. If the US market takes another big hit then the ripples of the second financial tsunami will reach Australia. 

http://www.bloomberg.com/apps/news?pid=20601010&sid=aVYxPZ56vjys
BY John Gittelsohn Bloomberg

*Half of U.S. Home Loan Modifications Default Again*

March 25 (Bloomberg) -- *More than half of U.S. borrowers who received loan modifications on delinquent mortgages defaulted again after nine months*, according to a federal report.

The re-default rate of loans modified in the first quarter of 2009 was 51.5 percent by the end of the year, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a joint report today. The figure, which measures payments at least 30 days late, climbed to 57.9 percent for changes made in the prior 12 months.

U.S. homeowners are struggling to make payments as depressed housing prices leave them owing more than their properties are worth. About 24 percent of properties with a mortgage were underwater in the fourth quarter, First American CoreLogic said last month. The median price of a U.S. home was $165,100 in February, down 28 percent from its peak in July 2006, according to the National Association of Realtors.

Modifications are “clearly not working well and it’s not a surprise,” said Sam Khater, a senior economist at First American CoreLogic in Tysons Corner, Virginia. “It’s pointless to rewrite these loans because they’re underwater.”

The number of homes with mortgage payments at least 60 days late climbed 2.39 million in the fourth quarter, up 13.1 percent from the prior three months and 49.6 percent from the year earlier period, the quarterly Mortgage Metrics report said.


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## MR. (27 March 2010)

Gumby, what are you thinking? 

post from kincella:


> just continuing my theory, that we are still in a recession, its a W shape, it has more legs than the 'fools' in govt and the media, would have you believe.



W shape? ha ha ha You have to be kidding! We are on the up and up we have China!  



> A replica of 2008-2009 is in front of us....this time with much larger implications, a bigger dip, and the economy is less able to recover than last year....you can only go for so long, before the last straw breaks the camels back.....
> we have been in this recession for almost 3 years, businesses are hurting...bleeding...and the banks refusal to lend, is compounding the problem.....



No way, plenty of time to fund any risky businesses. Who exactly has been in a recession for 3 years?  


> underemploment is rising...all the people who now only have 20 hours not 40 hours work a week, full time jobs are being lost, while only part time jobs are replacing them



The unemployment figures are fine. What are you insinuating exactly? 



> interest rates will not keep rising....well like last year, they do here in LA LA land, until it all comes to a screeching halt



Inflation, it’s all about inflation! Have to control it! 
Don’t you do any homework?

Property is as safe as houses, don’t worry about that!
The following is just complete propaganda:
http://74.125.155.132/search?q=cach...+property+1989+crash&cd=8&hl=en&ct=clnk&gl=au



> and who exactly is responsible for the rising house prices in Melb....some foreign buyers...who may panic and sell at the first hint of a hiccup back home....it happened with FNQ in the 80's with the Japanese



Ha ha ha, Rightttt, but the Japanese don’t own as much property now in the land of Oz. That just can’t happen again. 
Think... Think.... people.

It is the Chinese not Japanese! China is booming, nothing’s going to stop China! No shortage of spending there! No bubbles either! Look at the price of metals including the coming iron ore contracts. That’s because China wants it.

China wants minerals, Oz gets rich, China gets rich, China sustains Oz property and jobs with ozeyssss!


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## satanoperca (27 March 2010)

kincella said:


> conclusion....Melb and Vic country will grow the usual 10% pa.....Sydney a fraction less....I have no interest in the others...but it should be similar to the 10 year trend..




You have lost me. 



> just continuing my theory, that we are still in a recession, its a W shape, it has more legs than the 'fools' in govt and the media, would have you believe.
> 
> *A replica of 2008-2009 is in front of us....this time with much larger implications, a bigger dip*, and the economy is less able to recover than last year....you can only go for so long, before the last straw breaks the camels back.....




So dispite all the doom and gloom property is still going to increase, keeping the largest family asset growing. Not much else to live for, off to the bank Monday to get me some more leverage and increase PF.

Love living in this great country where the impossible is possible. We are truly different.

Cheers


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## MACCA350 (27 March 2010)

What's going on Kincella? I'm starting to confuse you with a property bear

cheers


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## kincella (27 March 2010)

you are confused
....I am still a bull...interest rates will come down, more turmoil in the stock market....will drive investors to the safety of bricks and mortar....

now this should blow your mind...and might go some way to explaining why the Chinese are buying up here in OZ in droves....

China has been trying to curb their RE bubble...now they are 
all buying up here, cause they are freezing the sale of land in China, and  curbing investment in RE over there....
absolutley amazing....story

http://www.thedailybell.com/918/Imploding-China-Forbids-Sale-of-Land.html


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## MACCA350 (27 March 2010)

kincella said:


> China has been trying to curb their RE bubble...now they are



So they are being prudent and we are allowing them to screw up our market instead...........who's the bigger fool

cheers


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## MR. (27 March 2010)

kincella said:


> you are confused
> ....I am still a bull...interest rates will come down




Interest rates will come down
Interest rates will come down
Interest rates will come down, I thi..
Interest rates will come down, they have too!
Interest rates will come down



> now this should blow your mind...and might go some way to explaining why the Chinese are buying up here in OZ in droves....
> 
> they are all buying up here, cause they are freezing the sale of land in China




Really, that was fast! .... Since yesterday? .... Told you we have no fear with the Chinese, Geez they're quick. 
The Chinese ban is going to be lifted when? Early April .... 2020? no think it was 2010. Long way away......

How's the home work going? 
Did the RBA really lift interest rates four times because of the risks of inflation in general? Or could there have been other reasons?



> Interest rates will come down
> Interest rates will come down
> Interest rates will come down


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## MR. (27 March 2010)

Where's that property graph?

Here it is... the graph which clearly explains how stupid people are!

Top line are the interest rates (x 3) so to see the movements.
The other two are the change in property volumes from the ABS.

Hmmm......







> Interest rates will come down
> Interest rates will come down
> Interest rates will come down


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## MR. (27 March 2010)

Did someone bring up Japan?

Did Japan have any land supply problems? .... You've heard that one .... sorry ..... How many years was it .... Geez! ..... Fixed now though, right ????? 

No worries, we have China 

satanoperca, don't encourage him!


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## tech/a (27 March 2010)

Once every 3 mths I have a look here.
Always the same.

Those that have Property Investment love it and make full use of it.

Those who dont look for every reason why you shouldnt buy property and have and will most likely do so for their entire life.

Some of us continue to buy and sell freeholding what we can as we go and watch on threads like this as the battle rages.

The real reason of course for those who cant bring themselves to buy property is FEAR.
The greatest enemy of human growth.


----------



## kincella (27 March 2010)

agree tech/a
....some of us have been thinking about Oaklands in regional NSW where the Coalworks black coal mine may be a goer....and invigorate the locals in the surrounding towns....big opportunites there for anyone interested in housing and providing accommodation for the 650 expected workers

the other town is in Mortlake in regional Vic...with a planned  resources project......
both projects will require loads of tradies, workers accommodation, and lots of people with some 'get up and go'
see extract at end of post

*then look at those yanks, scary stuff, got a mortgage, no worries, we will re-write the books, make the taxpayers fund your mortgage....give you another free ride on main st....*

......the following is a copy from another forum...no link...just google it...................


Obama administration expands mortgage assistance.

The new scheme would help people who owe more on their mortgages than what their homes are worth.

Negative equity in a home's value would be forgiven in this program, which would be subsidized by government funds obtained from tax payers.

"If we could just get to the target of helping 4 million borrowers, we could make a material difference in the markets," said Farrell. 

So if you have worked hard to reduce your home loan - now you can work even harder to reduce everyone else's loan too.
..............................................................

extract only......*MORTLAKE VIC *

There is now nothing to rent in Terang, a larger town 25km south of Mortlake, and some workers are travelling as far as Camperdown, about 50km from Mortlake.

The demand has pushed rents in Terang up to $350 a week and modest homes in Mortlake that previously fetched $135-$140 a week are now being let for more than $320.

Farmers are opening up shearers' quarters, vacant cottages and other buildings to accommodate workers from the power station. Caravan parks are doing good trade.

It'll be great while it lasts, but it won't.

Most of the workers hail from the Melbourne area, the Latrobe Valley east of Melbourne, or interstate.

http://www.theaustralian.com.au/bus...l-housing-demand/story-e6frg9gx-1225844930660


----------



## leedskalnin (27 March 2010)

tech/a said:


> Once every 3 mths I have a look here.
> Always the same.
> 
> Those that have Property Investment love it and make full use of it.
> ...




more like, there could well be a bargain to be made in months to come by holding off buying now. my guess only.


----------



## kincella (27 March 2010)

well I know posters who sold at what they thought was the top back in 2000, they are still waiting to buy back cheaper now..
10 years  later...
and see my post today...could have bought a house for 200k's in year 2000...now same house is 900k's

the way some of you are going, you will end up like my elderly neighbour...he ended up renting for over 50 years....he was always waiting for the price to come down....

property investors love 'good' renters....we dont want everyone to be an owner, we would be out of business....but since that is highly unlikely...with all the immigrants coming in...the ratio may turn back to owners 60% renters 40%

don't worry...just make a choice, and be happy with it....


----------



## leedskalnin (27 March 2010)

I sold just prior to the GFC. pure luck maybe. but I would have preferred to sell 6 months before. but hey can't complain.


----------



## MR. (27 March 2010)

tech/a said:


> Those who dont, look for every reason why you shouldnt buy property and have and will most likely do so for their entire life.
> 
> The real reason of course for those who cant bring themselves to buy property is FEAR.
> The greatest enemy of human growth.




Thanks for dropping in wise old man! Drop in again in another 3 months.



kincella said:


> agree tech/a
> ....some of us have been thinking about Oaklands in regional NSW where the Coalworks black coal mine may be a goer....and invigorate the locals in the surrounding towns....big opportunites there for anyone interested in housing and providing accommodation for the 650 expected workers
> 
> the other town is in Mortlake in regional Vic...with a planned  resources project......






MR. said:


> No worries, we have China






kincella said:


> don't worry...just make a choice, and be happy with it....




Who isn't happy



leedskalnin said:


> I sold just prior to the GFC. pure luck maybe. but I would have preferred to sell 6 months before. but hey can't complain.




Or 6 months after. But hey, we under estimated how stupid people can be with low interest rates!


----------



## leedskalnin (27 March 2010)

MR. said:


> Thanks for dropping in wise old man! Drop in again in another 3 months.
> 
> 
> 
> ...



MR , i have just joined this forum , why do you call me stupid.


----------



## nunthewiser (27 March 2010)

leedskalnin said:


> MR , i have just joined this forum , why do you call me stupid.





READ the contexts of the posts he has neither called you wise NOR stupid.


----------



## leedskalnin (27 March 2010)

nunthewiser said:


> READ the contexts of the posts he has neither called you wise NOR stupid.




I have re read his or her posts , I'm nun the wiser . ??? I will have to sit back , play a few tunes on my guitar and see where I have missed the plot, but up until now I am still on the same path.


----------



## explod (27 March 2010)

nunthewiser said:


> READ the contexts of the posts he has neither called you wise NOR stupid.




In the literal sense yes, but leaning a bit to sacastic insinuation IMHO; and on which one could surmise that one is being projected, to other passive observers, as stupid.

cheers explod


----------



## nunthewiser (27 March 2010)

leedskalnin said:


> I have re read his or her posts , I'm nun the wiser . ??? I will have to sit back , play a few tunes on my guitar and see where I have missed the plot, but up until now I am still on the same path.




you a nun too ? ...... all cool enjoy the forums , just pointing out that he wasnt insulting ya .



explod said:


> In the literal sense yes, but leaning a bit to sacastic insinuation IMHO; and on which one could surmise that one is being projected, to other passive observers, as stupid.
> 
> cheers explod





Geez explod i failed first grade engrish and i can still work it out ......

Nothing indepth about it.


----------



## leedskalnin (27 March 2010)

MR. said:


> Thanks for dropping in wise old man! Drop in again in another 3 months.
> 
> 
> 
> ...



MR do you think the property market will return to levels seen in 2007 ?? that is my underlying question.??


----------



## cudderbean (27 March 2010)

Not sure if this is the appropriate thread for this question, but you are all interested in property prices so maybe one of you will know. I'll start a new thread elsewhere if you think i would get better response.

One's own home is just about the biggest investment most people make and yet there is so little computer data available compared with the stock market. 

I wrote to Personal Investment magazine about 15 years ago requesting perhaps 10 years of monthly back data for the median price in all the capitals (suburb by suburb would have been nicer), and thereafter an update in the monthly mag. The letter was published and a reply from the editor.. they'd see what they could do, but nothing ever came of it.

I'd just love to run some of my stock market indicators over even the rawest of median prices and volumes.... what an edge you'd have, because there's a much longer time lag for market tops and bottoms than there is trading shares. Real Estate agents have all the very latest sales in databases they guard jealously... the land titles office info is usually only published quarterly retrospectively.

These figures are often published every month or so in newspapers, but I'm interested in back data and ease of import in say .csv format to a spreadsheet

2 questions:

1. Does anyone know a source (would willingly pay for data) for up to date computer importable figures on house prices that are published regularly.

2. It's easy of course to enter data into Excel to produce a chart. Does anyone know of any software that does *the opposite* i.e. scan a chart from a newspaper and have the software deconstruct the middle/darkest pixels from the chart and convert it however crudely into real figures for each axis, that one could import into Excel, and thereafter update manually if necessary. One might have to run a cursor roughly over the chart to help the software recognize what it is you want it to convert, then it snaps to the middle darkest pixels, and perhaps manually enter one or two key data points on the chart so that it could translate the chart and scale.

I notice there is software around that will help you make a phone wire vanish from a favourite snapshot, so surely such sort of dark pixel recognition software is technically possible. If it has already been developed, I'd certainly buy it. Any ideas please.

Thanks for your help.

:bier:


----------



## MACCA350 (27 March 2010)

leedskalnin said:


> MR do you think the property market will return to levels seen in 2007 ?? that is my underlying question.??



Past that........





REIV

cheers


----------



## leedskalnin (27 March 2010)

MACCA350 said:


> Past that........
> 
> 
> 
> ...




looks like a natural gas graph, sooner or later , pressures will drop , and pressure will drop to zero


----------



## MR. (27 March 2010)

Thanks Macca, needed that! 



leedskalnin said:


> MR , i have just joined this forum , why do you call me stupid.




Didn't call you any such thing. Prices are now higher on average than when you sold. I was just saying that I (and perhaps you) under estimated the growth in property prices in the past 12 months when interest rates became so low.



nunthewiser said:


> you a nun too ?



Still making me laugh!


----------



## leedskalnin (27 March 2010)

MR. said:


> Thanks Macca, needed that!
> 
> 
> 
> ...




my apologies MR ,


----------



## tech/a (27 March 2010)

leedskalnin said:


> more like, there could well be a bargain to be made in months to come by holding off buying now. my guess only.




If you have a look at the first posts on this thread (Property Thread the big one) back in 2003 the feeling was just the same as it is today.

The best time to buy property is NOW.

It was in 2003,2004,2005,2006,2007,2008,2009, and NOW.
Now I'm not saying EVERY property DYOR


----------



## MR. (27 March 2010)

tech/a said:


> The best time to buy property is NOW.
> 
> It was in 2003,2004,2005,2006,2007,2008,2009, and NOW.
> Now I'm not saying EVERY property DYOR




"Past performance is no indication of future returns"


----------



## cutz (28 March 2010)

The way eveybody is banging on, property seems to be a sure bet ATM, time to jump on board, 

Gotta luv it, a country as huge as oz, yet there is a property shortage, talk about being taken for a ride.


----------



## tech/a (28 March 2010)

MR. said:


> "Past performance is no indication of future returns"




Really.
Has been throughout my Father and my lives--86 yrs.
If you look at the majority of people with serious wealth they *WILL* have a background of Property.

But hey I'm not here to convince you if your happy with your lot and that doesnt include a property portfolio---then thats all that matters.

Back in 3 mths---or so.


----------



## kincella (28 March 2010)

cutz....lets be clear on the shortage....

The shortage of houses, is confined to the cities, where due to state and local govt policies, govnuts have been restricting the release of land available for new housing for decades. That situation is not about to change soon. Brumby and Madden made a big noise about releasing land more than a year ago, but that project has now been stopped.

There is no shortage of houses outside of the cities.

The majority of people want to live in the city.  

There is a news article out today regarding the release of land for housing in NSW, it is the first release in over a decade....people camped on the site for days, to buy a block of land for between 185-250 k's...young ones expect the finished house and land package will cost them a minimum of 600K's...
cannot find the article now...an old car racing circuit in Sydney's west.

It seems no one wants to make the change and move out of the city, where there is really affordable and cheap housing, and a wonderful lifestyle available for all.

Last year on this forum I suggested Euroa in Vic would be a great investment, and a lifestyle change. The Lindsay Park Stud from SA was moving to that town. There would be increased interest in the town, from the visitors to the stud, and the tourism etc.  All the really cheap houses have gone, some have been renovated and are back on the market at double the original price. There is still plenty of affordeable houses, there...its only 1.5 hours from Melb.
With the drought breaking in inland Nsw and Vic, there will be a resurgence of jobs and opportunites there again.

The regional areas have a lot to offer...no more public transport that does not work, not stuck in traffic for hours each day, clean air, plenty of jobs for the tradies and those willing to have a go etc
Just a move to the outer suburbs, could make you very rich, by the huge saving from not paying half your wage into a mortgage, freeing up the money for what ever you like.


Melbournes growth today, is an increase of about 325 people a day, over 2200 pw, 9000 + pm....almost 119000 people per year.


----------



## UBIQUITOUS (28 March 2010)

kincella said:


> Melbournes growth today, is an increase of about 325 people a day, over 2200 pw, 9000 + pm....almost 119000 people per year.




Yeh, and none of them are students, children or people who don't want to/can't afford to buy property.


----------



## WaveSurfer (28 March 2010)

tech/a said:


> .....*The best time to buy property is NOW*.
> 
> It was in 2003,2004,2005,2006,2007,2008,2009, and NOW.
> Now *I'm not saying EVERY property* DYOR




Have to agree with you there tech.

I bought a nice parcel of land with a dog box on it in the Sunny Coast hinterland last year. Received approval from the council to splice her up into 6 spacey lots just before chrissy (about 1.5 acres each lot). The first slab is ready to be poured next week.

I paid at least 1/2 the price it was actually worth too (so the bank told me ). I guess I saw the potential that others has missed. I was stunned that someone had not snapped it up.

As I said previously, the little gems are still out there. Just gotta be prepared look outside the box


----------



## kincella (28 March 2010)

all the people who like to use a graph to show the rise in house prices, for the last 10,20,50 or 100 years....and complain that the rise cannot be sustained into the future, should do this simple experiment....

simply turn the graph upside down....

now look at it, this will give you a good idea of just how much the dollar has deflated in the same period.....together with the true cost of inflation
or to put it another way, the buying power of the dollar reduces each year...it buys you less and less
The dollar has lost its buying power by over 95%...so yesterdays dollar now buys you only 5 cents......
so how does the graph look now..
viewed from a different perspective....ie; the diminishing value of the dollar
the true CPI is running at over 10% pa...and could be as high as 15%

then add the massive amount of money the govnuts world wide have been throwing out the window since the commencement of the GFC ...I would think the dollars diminishing buying power would have acclerated enormously in the past 3 years.


City house prices should still show a premium compared to houses in the outer suburbs.. like comparing a Jaguar car to a Honda jazz.

ps I did not actually have a graph and turn it upside down....to prove this point....just figure it should give you a simple, easy example of looking at the subject from the other side.


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## satanoperca (28 March 2010)

REIV Weekend Results

TOTAL AUCTIONS

This week: 881
Last weekend:  854
This time last year: 382

S Sold at Auction: 619
SB Sold before Auction: 115
SA Sold after Auction: 4
Passed in: 143
Passed in on vendor's bid: 71

Clearance rate: 84%

Fantastic result.

I say it again, Australia is truly the land of sunshine and lollipops. 

Take Tech's advice and *now* is the time to buy.

Surely with a little more effort we can all get mortgage debt to be 200% of GDP, I know I'm helping.


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## satanoperca (28 March 2010)

> Mums and dads adding to the great Australian nightmare




http://www.smh.com.au/opinion/society-and-culture/mums-and-dads-adding-to-the-great-australian-nightmare-20100326-r2zd.html



> An astonishing one in seven taxpayers is a landlord or landlady, new figures from the Tax Office show.






> 1.7 million people have two, three or more properties.






> Almost 1.2 million Australians in 2008 reported losses on their investment properties, allowing them to claim those losses against their taxable income. The tax breaks saved property investors about $4 billion, The Australian Financial Review reported. No comparable country is as generous.




Come and join the masses, dont be left behind.

Cheers


----------



## satanoperca (28 March 2010)

> Housing starts surge most since 2001






> Housing starts in the final three months of last year rose to the highest level since September 2001, offering a glimmer of hope for the nation's housing shortage






> Year-on-year, seasonally adjusted housing starts rose 26 per cent in the December quarter, the ABS said.




http://www.theage.com.au/business/property/housing-starts-surge-most-since-2001-20100317-qdxm.html

More fantastic news, our economy just keeps on powering on.

Cheers


----------



## Hello_ (28 March 2010)

Auctioned/Sold 27th of March.

Brisbane 31/8
http://www.homepriceguide.com.au/saturday_auction_results/Brisbane.pdf

Melbourne 533/445
http://www.homepriceguide.com.au/saturday_auction_results/Melbourne.pdf

Sydney 426/337
http://www.homepriceguide.com.au/saturday_auction_results/Sydney.pdf

Adelaide 43/31
http://www.homepriceguide.com.au/saturday_auction_results/Adelaide.pdf



Brisbane fastest growing suburbs.
1	Brookwater	$450,000	 +30%
2	Kensington Grove	$370,000	 +19%
3	Hendra	$731,000	 +16%
4	Kenmore Hills	$750,000	 +15%
5	Corinda	$582,000	 +15%

Sydney fastest growing suburbs.

1	Point Frederick	$600,000	 +76%
2	Sylvania Waters	$1,258,000	 +48%
3	Glenorie	$919,000	 +38%
4	Palm Beach	$2,600,000	 +36%
5	Malabar	$1,240,000	 +33%


Would it be possible for Brisbane prices to deflate? Since not much is selling? 

I haven't seen previous week's data.


----------



## UBIQUITOUS (28 March 2010)

satanoperca said:


> http://www.theage.com.au/business/property/housing-starts-surge-most-since-2001-20100317-qdxm.html
> 
> More fantastic news, our economy just keeps on powering on.
> 
> Cheers




The Australia RE market is the world's biggest casino. There are going to be a LOT of people who will have ruined their lives by getting sucked into this 'bigger fool' market. 

The music will have to stop at some point, and only the naive will believe that at worst there will be stagnation in the market until incomes catch up. The rises have happened too steeply and for too long for stagnation to happen.  The correction will be severe. There WILL be a rush for the exits. Infact, by seeing these record numbers of properties for auction, I would say that the smart money is already leaving. The dumb money believes that the smart money is entering the market. Reality check time I think.

Then again, gains of 30% a year means that if we all buy, we can double our money every 3 years. Sound too good to be true?


----------



## drsmith (28 March 2010)

UBIQUITOUS said:


> The music will have to stop at some point, and only the naive will believe that at worst there will be stagnation in the market until incomes catch up.



History has shown that managing a slow decline in real asset values relative to income is indeed difficult.


----------



## UBIQUITOUS (28 March 2010)

drsmith said:


> History has shown that managing a slow decline in real asset values relative to income is indeed difficult.




That would be due to the herd mentality of investors.


----------



## 1q2w3e4r (28 March 2010)

UBIQUITOUS said:


> The Australia RE market is the world's biggest casino. There are going to be a LOT of people who will have ruined their lives by getting sucked into this 'bigger fool' market.
> 
> The music will have to stop at some point, and only the naive will believe that at worst there will be stagnation in the market until incomes catch up. The rises have happened too steeply and for too long for stagnation to happen.  The correction will be severe. There WILL be a rush for the exits. Infact, by seeing these record numbers of properties for auction, I would say that the smart money is already leaving. The dumb money believes that the smart money is entering the market. Reality check time I think.
> 
> Then again, gains of 30% a year means that if we all buy, we can double our money every 3 years. Sound too good to be true?




We are getting out for exactly the reasons you list above.  It's simply not sustainable at the current rate.


----------



## Go Nuke (29 March 2010)

> So although some will complain about the affordability of housing, they are unlikely to move to locations where although they can afford a house, they may not get employment.




Spot on!
That ugly four letter word.......WORK:horse:


----------



## Go Nuke (29 March 2010)

> I predict there will not be many rate rises this year.....its actually all looking a bit shaky out there....lets wait unti August, see how bad things really are..if they have the first half year figures by then...
> remember they did this last year....racked up the rate rises, told the world Aust was immune from the GFC...that we live in fairyland...lalala....then the mud hit the fan about August...and they hit the panick stations...
> short memories for these cowboys....
> 4 rate rises in 6 months.....they never wait to see the affect. of last months rise...just up it again....because they believe its fairyland out here on the desert, middle of the ocean, little water, half a million immigrants pouring in each year.....just throw the arms up in the air....throw money out the window, or at dodgy schemes....




Love your thoughts mate 

I keep hearing about how great the Aus economy is blah,blah,blah...Ive yet to see it or meet anyone that agrees.
Our work has dropped off and its going to be quiet for the next 2 months ( servicing the Alumina industry)

I thought inflation was well under control? Is there no better way to stop an asset bubble from forming in RE than jacking up interest rates over and over? Its not like there's that many Australians who will benefit as we all all hopeless savers (pouring it all into morgages/banks)


----------



## Bill M (29 March 2010)

WaveSurfer said:


> Have to agree with you there tech.
> 
> I bought a nice parcel of land with a dog box on it in the Sunny Coast hinterland last year. Received approval from the council to splice her up into 6 spacey lots just before chrissy (about 1.5 acres each lot). The first slab is ready to be poured next week.
> 
> ...



Well done Waversurfer, you are right, there are plenty of opportunities out there. You just got to think for yourself (as you do) and never follow the crowd, good luck.


----------



## Bill M (29 March 2010)

> So although some will complain about the affordability of housing, they are unlikely to move to locations where although they can afford a house, they may not get employment.






Go Nuke said:


> Spot on!
> That ugly four letter word.......WORK:horse:




I live just over an hours drive from Sydney on The Central Coast. The quailty of houses out here are just unbelievable and you can still buy a nice house less than 10 years old for 350k. If you were happy with an older style timber cottage you can pick that up for less than 250k. Jobs are plentiful in Sydney, what's wrong with just over an hours drive to get to work? Some people spend that long in a bus just going to work there.

There is plenty of cheap housing in Australia if you are prepared to do a little travel.

Disclosure: I own rental property in Sydney and receive income from it.


----------



## Go Nuke (29 March 2010)

> There is plenty of cheap housing in Australia if you are prepared to do a little travel.




Yeah its always a bit of a tradeoff I guess.

You have to weigh up the extra costs spent on fuel, wear and tear, time spent sitting in traffic rather than at home earlier (good if you have a family) rather than coughing a little more up to live a little closer to work.

I'll be building 21klms from Brisbane CBD, which during peak hour would probably take about anywhere between 1-2 hrs.
No trains near where I'll be living either as its a relatively new area.

Guess lifes all about trade offs.
Being in our 30's with no kids because too busy saving for a deposit has been one of them.
And my Mrs didn't meet me earlier :>


----------



## Bill M (29 March 2010)

Go Nuke said:


> I'll be building 21klms from Brisbane CBD, which during peak hour would probably take about anywhere between 1-2 hrs.
> No trains near where I'll be living either as its a relatively new area.
> 
> >




Sorry Nuke, I don't follow the thread too closely but if you own a plod 21 kms out and are planing to build then you will do ok, no probs there. 21 kms is inner city in Sydney and it won't be long before they say that for Brisy too, good luck.


----------



## Dowdy (29 March 2010)

Anyone see the interview with Glenn Stevens today on Sunrise?

http://au.tv.yahoo.com/sunrise/video/play/-/6994337/em-rba-em-governor-glenn-stevens/

When the man who writes the rules says to not over leverage in real estate then you know there is a bubble. He's of-course not going to admit there is one but you can tell he doesn't like the current situation RE is in.


"I think it is a mistake to assume that a riskless easy guarantee way to prosperity is just to be leverage up into property..." - Glenn Stevens


----------



## Bill M (29 March 2010)

Dowdy said:


> "I think it is a mistake to assume that a riskless easy guarantee way to prosperity is just to be leverage up into property..." - Glenn Stevens




Yes, I agree with this too. People borrowing in the hope of making a quick buck in a short time could end up in disaster. Just ask all those who bought shares on a margin loan and then had to sell at massive losses during the GFC!


----------



## Bill M (29 March 2010)

OK, time to get back on the thread. 3 Weeks ago I met an old ex navy man in Manly. We got talking about stuff when I asked him where he lived, he told me he lived in Beacon Hill. Beacon Hill is roughly 25 kms from the Sydney CBD, it is not serviced by train and is totally reliant on buses and private motor vehicle for transport.

This man told me than in 1967 he had an agent try to convince him to by the house off the plan in Beacon Hill for $6,000. It took the agent all day to convince him that is was a good idea. He told me he was so scared to do it and that it was just so much money and that he was uncomfortable about it all. He said the only thing that convinced him was that a few Navy mates had already done it and that is was a good idea. In the end he decided he would go for it. He put down the deposit and from that time on his weekly salary paid for the repayments.

The man was not bragging but he said it was the best thing he ever done.

Now this Timber home on brick foundations is worth $800,000.....  Will property prices rise in future? Absolutely no doubt in my mind.


----------



## Buckfont (29 March 2010)

Bill M said:


> OK, time to get back on the thread. 3 Weeks ago I met an old ex navy man in Manly. We got talking about stuff when I asked him where he lived, he told me he lived in Beacon Hill. Beacon Hill is roughly 25 kms from the Sydney CBD, it is not serviced by train and is totally reliant on buses and private motor vehicle for transport.
> 
> This man told me than in 1967 he had an agent try to convince him to by the house off the plan in Beacon Hill for $6,000. It took the agent all day to convince him that is was a good idea. He told me he was so scared to do it and that it was just so much money and that he was uncomfortable about it all. He said the only thing that convinced him was that a few Navy mates had already done it and that is was a good idea. In the end he decided he would go for it. He put down the deposit and from that time on his weekly salary paid for the repayments.
> 
> ...




Bill M, I am perhaps of the old school, where sometimes it is wise to be prudent to scan the horizon first and wait for oncoming ships so to speak,that may show that, when they arrive whether their sails have been ripped to shreads, they still arrive to a new day.

I have a long holding on many assets, and as my home in Nth Avoca bought in 1994 for $140000.00, on 1200sqm, is testament to the holding power. 

Same with equities. BHP , CBA, and the rest are all great buys if  you get in early. Sometimes its that just tooo late.


----------



## MR. (29 March 2010)

Dowdy said:


> Glenn Stevens: "I think it is a mistake to assume that a riskless easy guarantee way to prosperity is just to be leverage up into property..."




Look at the past decade of rising property prices.
*The problem is the masses think the "way to prosperity is just to be leverage up into property". *

It's one thing to say he "thinks it is a mistake" but what exactly is Mr. Stevens going to do about it? 

Raise rates by 0.__%?  
IMO It's not enough...


----------



## So_Cynical (29 March 2010)

LOL there's an Australian property bubble wiki 

http://en.wikipedia.org/wiki/Australian_property_bubble



			
				wiki link said:
			
		

> The Australian property bubble is an observation that real estate prices in Australia appear to be great inflated (when compared to most other developed economies, when compared to the long-term historical average, when compared to rental yields, and when compared to average income), and that this may constitute a real estate bubble.




Just do a google for "property bubble Australia" and you will find obscure forums with pages and pages of debate just like ASF...its strange.


----------



## Fleeta (29 March 2010)

Bill M said:


> OK, time to get back on the thread. 3 Weeks ago I met an old ex navy man in Manly. We got talking about stuff when I asked him where he lived, he told me he lived in Beacon Hill. Beacon Hill is roughly 25 kms from the Sydney CBD, it is not serviced by train and is totally reliant on buses and private motor vehicle for transport.
> 
> This man told me than in 1967 he had an agent try to convince him to by the house off the plan in Beacon Hill for $6,000. It took the agent all day to convince him that is was a good idea. He told me he was so scared to do it and that it was just so much money and that he was uncomfortable about it all. He said the only thing that convinced him was that a few Navy mates had already done it and that is was a good idea. In the end he decided he would go for it. He put down the deposit and from that time on his weekly salary paid for the repayments.
> 
> ...




What's that disclaimer that fund managers use again...something like 'past performance is not indicative of future returns'...

If I told you that the price of something was $10 in the year 2000 and in the year 2020 it was expected to be $20 and in the year 2010 it was $19, would you assume there was still $10 growth in the second ten years or would you assume it would 'revert back to expected value'. I think I would be in the latter camp, but by the sound of it many here are in the former camp.


----------



## So_Cynical (29 March 2010)

Dowdy said:


> Anyone see the interview with Glenn Stevens today on Sunrise?
> 
> http://au.tv.yahoo.com/sunrise/video/play/-/6994337/em-rba-em-governor-glenn-stevens/
> 
> ...




quoting my link below.

RBA issues warning to homebuyers

The nation's top central banker has taken the *unprecedented step* of being interviewed on commercial television, warning property buyers not to borrow too much.

http://skynews.com.au/national/article.aspx?id=445631


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## drsmith (29 March 2010)

So_Cynical said:


> The nation's top central banker has taken the *unprecedented step* of being interviewed on commercial television, warning property buyers not to borrow too much.



He wanted to make a point, that's for sure.

He didn't go as far as quoting Alan Greenspan. Perhaps he should have.


----------



## TheBigSponge (30 March 2010)

drsmith said:


> He wanted to make a point, that's for sure.
> 
> He didn't go as far as quoting Alan Greenspan. Perhaps he should have.




What would he know? I advocate everyone to borrow as much as possible and buy the dream before it is too late. Not long now before the average homw will be worth half a million. Good luck to the suckers who still rent


----------



## TheBigSponge (30 March 2010)

So_Cynical said:


> LOL there's an Australian property bubble wiki
> 
> http://en.wikipedia.org/wiki/Australian_property_bubble
> 
> ...




Yes all rubbbish. BUY BUY BUY


----------



## mythos (30 March 2010)

From http://en.wikipedia.org/wiki/Australian_property_bubble


> The Treasurer (in 2004) who told Australians: "Work for a living and we’ll tax you at close to 50 cents in the dollar; speculate and we’ll only take 25 cents. Not only that but, as a special deal - while stocks last - we’ll pay half your speculating costs."




Interesting Costello back then saw the crazy way we advantage property investment over other forms of investment in this country. I know that you can negatively gear shares too, however the vast majority of the punters out there only leverage property. 

Funny how he didn't bother to try to do anything to change things.


----------



## kincella (30 March 2010)

a couple of points to ponder....
I thought it was the cashed up Asians who were driving up the prices.....in cash, no loans or mortgages with australian banks involved....
so what is the point of raising rates and making all the borrowers pay, when they have no involvment in this scheme....

is stevens just another voice to support the labor mantra,( his boss the treasurer, demanded he go out there and push the lie) that the GFC is over and our economy is still booming, hence the need to raise rates...
compared to all the other countries who have kept their rates on hold at zero %
purely a repeat of the same rubbish a year ago, when swan and mates were glowing about how rosy our economy was, and stevens upped the rates month on month, until finally they woke up, (they would not have woken up, fact and figures were the opposite of their rubbish mantra)...then they dropped the rates by about 3% just as suddenly...
history is repeating itself here, those two are still pushing a lie, to pretend the labor govnuts doing a great job, and should be re-elected...
no more no less no different...
the banks are still not lending to business...and the govnuts are not doing anything about it...
lets see what comes out, with figures due this week...


----------



## kincella (30 March 2010)

I wonder if all those Asians, who are buying up here in OZ, are doing so...due to their communist govnuts crackdowns....what was the news out last week...was it they banned any sales of RE for a month.....
...................................todays news, an extract....

China bans property loans to 78 state-owned companies 
Liu Li From: The Wall Street Journal March 29, 2010 11:58AM


CHINA'S banking regulator banned new property loans to 78 companies owned by the central government in an effort to control risks in property credit and curb asset bubbles, which pose a threat to the country's strong economic recovery. 
The measures, together with a recent restriction by the state-owned assets regulator, are aimed at state-owned companies that have helped push up asset prices. The 78 companies were banned Friday from investing in property because property isn't their core business.

http://www.theaustralian.com.au/bus...-owned-companies/story-e6frg90x-1225846843585


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## satanoperca (30 March 2010)

kincella said:


> a couple of points to ponder....
> I thought it was the cashed up Asians who were driving up the prices.....in cash, no loans or mortgages with australian banks involved....
> so what is the point of raising rates and making all the borrowers pay, when they have no involvment in this scheme....




I agree with your sentiment Kincella. Raising rates is not going to affect the overseas buyers but rather normal Aussie mums and dads that just want a roof over their heads for their family.

If anything it is going to prevent more Australians buying a home.

As KRUDD has sold out current and future Australians, an act of treason to support this ever growing ponzi scheme, peoples rage and anger should be directed at him and his party. Shelter is a basic need and should only be available to those that are residents of this country.

My grandfather and great grandfather would be turning in their graves, having given up their lives to defend this great country in years gone past.

They lost their lives and now we have govnuts who support those people who they fort against coming and buying a home next to their families.



Cheers


----------



## Captain G (30 March 2010)

Another factor for higher prices: Why is there no Captital Gains Tax for foreign property owners ?? This I have read in may articles. If there is no CGT, WILL they pay any form of tax on their profits?? If not, this is crazy & no wonder they're buying in droves.
I know at least 3 couples, who on many occassions who have lost out to oversea's cash buyers, who are making unrealistic offers, especially around Sydney's inner west. How do properties $750k properties go up by $250-300k to over a $1 Mill in 12 months ?? Exactly, 12 months since Oz Govt changed the foreign ownership rules. Sure 10%+ I can understand, but 30-40%, this is mad.


----------



## kincella (30 March 2010)

I believe the tax laws are there to cover all australian assets, and income derived here....nothing has changed....
however my concern is with the current govnuts...ability to monitor and administer the new laws...

prior to the changes, under the former Firb, foreign residents needed to apply and receive approval to purchase new residential property, and it was mainly 'off the plan' property....to encourage building and investing in more property in OZ..

under the new laws, foreigners are not required to apply and receive approval.....so there is no data base to follow up
or to check on changes in ownership...

I doubt very much these new owners will bother with lodging the Australian tax returns, requird to be lodged by non residents, to account for the  income and capital gains on these properties.
An administration nightmare has been allowed to develop...but what else  do you expect from a govt that dreams up policy overnight, with no safeguards, checks or balances to match.


----------



## kincella (30 March 2010)

I note an article out this morning...Swan is standing by his argument that we need to increase immigration....the  related topic of providng housing for same is ommitted from the discussion.
I guess all those immigrants must be cramming 12 or more into a house....since we supposedly have a housing shortage in the inner suburbs...
there was a piece on tv last year, about the housing shortage...and they were showing the segment to prove how greedy and nasty landlords were. It was an Indian landlord (which was only acknowledged at the end,of the segment, at the beginning it was portrayed as an obviously white) but the tenant was subletting, he had 20 indians living in the 3 bdr house, they took turns sleeping, when there was not enough beds...etc it was an old one kitchen, one bathroom, ordinary resi..they appeared to be all males in that house...
I saw it as ...the beginning of a slum culture...or how to turn
what we deem as normal living conditions, into a slum hole culture.


----------



## Beej (30 March 2010)

drsmith said:


> History has shown that managing a slow decline in real asset values relative to income is indeed difficult.




Really?? Which history is that?? I think you find the opposite is in fact the case......at least for Australia anyway?

Satanoperca - have you been possessed by the soul of Robots until his return??? 

Cheers,

Beej


----------



## MR. (30 March 2010)

Dowdy said:


> RBA Glen Stevens :
> "I think it is a mistake to assume that a riskless easy guarantee way to prosperity is just to be leverage up into property..."






MR. said:


> Look at the past decade of rising property prices.
> *The problem is the masses think the "way to prosperity is just to be leverage up into property". *






TheBigSponge said:


> What would he know? I advocate everyone to borrow as much as possible and buy the dream before it is too late. Not long now before the average home will be worth half a million. Good luck to the suckers who still rent




Exactly what would he know? .... Seriously!  If interest rates aren’t going back near the 2008 highs in the near future for obvious reasons, then it will continue to fuel the property boom.  Enough verbal warnings Mr. Stevens!

Interest rates have only returned 1% of the 4% drop. IMO make a punch, hit with 0.5% - 1% rise next meeting before more take the bait. 
Rates dropped that quick! 

I believe share traders say “breakout” The breakout this time appears to be in property. It appears to be continuing from the recent publicised property price growth from last year when interest rates increased only in the last quarter from historic lows.

One of those programs last night stated that property could double in the next 4 years. My guess is, if interest rates stayed near half the 2008 highs it makes some sense!

 Oh, the fear of being left behind!



kincella said:


> I thought it was the cashed up Asians who were driving up the prices.....in cash, no loans or mortgages with australian banks involved....
> so what is the point of raising rates and making all the borrowers pay, when they have no involvment in this scheme....



I guess you would like to think that but my guess is you know better....


----------



## tech/a (30 March 2010)

You guys have a warped view of rising interest rates in property.

It WILL slow sales
It WILL increase the prices of property.
It WILL decrease affordability.

You'll still be theorising when the average home is $500K
Just as you were when they were $250K


----------



## drsmith (30 March 2010)

Beej said:


> Really?? Which history is that?? I think you find the opposite is in fact the case......at least for Australia anyway?



History has shown many times that economic bubbles pop rather than slowly deflate.

Australia is not immune to this.


----------



## MR. (30 March 2010)

tech/a said:


> You guys have a warped view of rising interest rates in property.
> 
> It WILL slow sales
> It WILL increase the prices of property.
> It WILL decrease affordability.




Higher interest rates will "increase the prices of property"

got it!


----------



## tech/a (30 March 2010)

MR. said:


> Higher interest rates will "increase the prices of property"
> 
> got it!




Havent worked it out have you!


----------



## 1q2w3e4r (30 March 2010)

tech/a said:


> Havent worked it out have you!




Explain it to me, I'm curious as to how rising interest rates have a positive impact on housing prices.


----------



## trainspotter (30 March 2010)

The number of Australia home loans approved for investment purposes jumped to 34.1% of all mortgages in February, up from 27.1 per cent in August and the highest level of investor interest in the four-year history of the AFG mortgage index.

This has baffled the many analysts who have cautioned that the Australian property market is experiencing the formation of a bubble. It is even more worrying when looked at against the fact that loans to first time buyers fell from 20.9% to 11.3% during the same 6 month period.

AFG sales and operations general manager Mark Hewitt said:

"People had been sitting on their hands in relation to property investment," Mr Hewitt said. "They've been in and out of the share-market, but that's still seen as a bit risky.

"They have regained confidence in property being a sound investment -- that's the feeling we're getting."

Australian property prices fell nowhere near as much as those in say, the UK, US, Dubai or Latvia, and have rebounded more sharply than most as well. It is a fairly safe bet that it is this proven resilience that is now proving a draw to investors, with the absence of the bargains that are attracting investors elsewhere.

It is entirely possible though, that Australia's current heat could come to be seen as the pride before a fall, many markets that never saw a real (bubble pop) crash are now looking likely to overheat and crash in the months to come, which would be catastrophic for the markets involved. That said: Australia is a strong market, with strong demand fundamentals, and provided the banking system continues to regulate itself as it currently is it should be ok.


----------



## tech/a (30 March 2010)

1q2w3e4r said:


> Explain it to me, I'm curious as to how rising interest rates have a positive impact on housing prices.




Cost of construction rises as costs----normally wages are passed on---.
If Interest really rockets to curb inflation then its even worse for the non home owner as his money's buying power is eroded.


----------



## trainspotter (30 March 2010)

Interest rates are used as the lever to curb inflation. If inflation is going up means median houes prices are rising ........... DOH ! PLUS what tech/a wrote and some other factors thrown in like bracket creep and CPI as well to name a few.


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## MR. (30 March 2010)

tech/a said:


> Havent worked it out have you!




Ha, it’s always the way isn’t it. Some have the answers and others don’t.
You could have (instead of the warped comment) pointed out why higher interest rates cause higher prices with property, but no. The last post before your last post claimed that property will continue because of 2003 2004 2005 etc. and people were questioning them then so that’s the reason they are going to continue up and up. Great reason Tech! 

I had my thoughts as to where you were going with your comment and didn’t bother.  I think the prices at the development stages are not really the main influence with property prices in general. If costs of developments increase, no doubt, so does the land selling price. If costs are higher it may even deter investment in new developments restricting supply further.

As I haven’t worked it out and you are itching tell me.

Just noticed you just answered the question


----------



## 1q2w3e4r (30 March 2010)

tech/a said:


> Cost of construction rises as costs----normally wages are passed on---.
> If Interest really rockets to curb inflation then its even worse for the non home owner as his money's buying power is eroded.




Wages don't rise as fast as property prices.  I get the argument for inflation leading to rising costs and therefore property prices, I think its artificial unsustainable growth however and doesn't flow down to Mum and Dad or Joe Blow down the street.  

Wages haven't increased enough to curb the cost of housing increases.  If you argue the point that property doubles every 7-10 years whatever, that's great.  So does the guys house who lives next door to you.  You don't actually gain any value over and above anyone else.

The way I see it, the Govt gave a whole bunch of people a leg up onto the property ladder who couldn't really afford it.  That in turn gave everyone else a push up to the next rung of the ladder.  All or the large majority of it is funded by debt.


----------



## Beej (30 March 2010)

drsmith said:


> History has shown many times that economic bubbles pop rather than slowly deflate.
> 
> Australia is not immune to this.




But that wasn't your original statement - you said "_*History has shown that managing a slow decline in real asset values relative to income is indeed difficult*_". History has shown nothing of the sort, especially not the history of the Australian residential  real estate market.


----------



## Beej (30 March 2010)

1q2w3e4r said:


> Wages haven't increased enough to curb the cost of housing increases.




Actually they have - see these charts. One show the median house price to average household disposable income ratio - as you can see that has remained nearly constant for the past 8 years. The other chart plots the proportion of household income required to service the average mortgage since the 70s.


----------



## 1q2w3e4r (30 March 2010)

Beej said:


> Actually they have - see these charts. One show the median house price to average household disposable income ratio - as you can see that has remained nearly constant for the past 8 years. The other chart plots the proportion of household income required to service the average mortgage since the 70s.




Thanks for that, interesting chart, I've learned something new   I don't know of too many people getting paid double what they did 10 years ago though

Its interesting as it would seem there is a disconnect between the data and people saying they aren't going to be able to pay their electricity bills when this increase goes ahead.  Increased living expenses and travel (at least in Sydney) with all the toll roads is quite large. 

I hope the rates continue to go up, it'll make the TD rate when we flick our place and look for land to build more attractive 

There is something crazy going on in the housing market though, I know multiple people who have all sold their houses within 4 days of listing for over the asking price, that screams desperation to me.


----------



## kincella (30 March 2010)

hmmmm...this affect is often missing from the bubble argument....
and I suspect it can be interpreted as a black swan event...
something which happens, out of the blue, and then becomes the norm....

** the increase in single person and child free households continue to rise...
in inner city Brissy alone, the population has increased 50% to 100,000 people
it is becoming a copycat of melb and syd
whether they are renting or buying...its blowing the 'unaffordable issue' out the window...
single income families...****do not have dual incomes...
funny...since the inner suburbs are the most expensive, whether for renting or buying...

Single-person households up in Brisbane 
http://news.theage.com.au/breaking-...-households-up-in-brisbane-20100330-r99s.html


----------



## kincella (30 March 2010)

so why did 4 of your mates sell their houses, were they upgrading, cashing in and going out to rent, leaving the country


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## 1q2w3e4r (30 March 2010)

kincella said:


> so why did 4 of your mates sell their houses, were they upgrading, cashing in and going out to rent, leaving the country




Multitude of reasons, a few were (are upgrading) another was as a result of divorce.   All got, or were told to expect vastly more than they were asking.


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## UBIQUITOUS (30 March 2010)

Beej said:


> Actually they have - see these charts. One show the median house price to average household disposable income ratio - as you can see that has remained nearly constant for the past 8 years. The other chart plots the proportion of household income required to service the average mortgage since the 70s.




Great! Another chart from that unbiased think tank RPData
I wonder where they get their figures from.


----------



## Go Nuke (30 March 2010)

UBIQUITOUS said:


> Great! Another chart from that unbiased think tank RPData
> I wonder where they get their figures from.




Absolutely Ubiquitous!

That chart to me looks like ABSOLUTE :bs:

I'm reading about people losing bonuses, getting pay cuts, hours of work cut back and myself the overtime is gone and payfreeze for almost 2 and a half years now.

Income have not kept up with the avergae home loan.



> The other chart plots the proportion of household income required to service the average mortgage since the 70s.




So does the chart factor in servicability when interest rates were going up and down?
Because surely there will be a gap forming anytime soon now.



> The number of Australia home loans approved for investment purposes jumped to 34.1% of all mortgages in February, up from 27.1 per cent in August and the highest level of investor interest in the four-year history of the AFG mortgage index.
> 
> This has baffled the many analysts who have cautioned that the Australian property market is experiencing the formation of a bubble. It is even more worrying when looked at against the fact that loans to first time buyers fell from 20.9% to 11.3% during the same 6 month period.




Is the scary part about this that investors are using the new equity in their existing portfolios of properties to fund the purchase of more properties?

Talk about a house of cards if the bubble pops.
Its only the lack of supply that has saved our bacon thus far compared to the U.S and U.K.
Maybe thats Swans intention...keep the bubble growing by allowing more/same amount of imigration?
No, no...I'm sure thats because he doesn't want another wages blowout occuring. Heaven forbid it if I could get paid more money for my job.
Bring in more 457's to stop that from happening!


----------



## Go Nuke (30 March 2010)

Here look.....I'll show you how stupid graphs are sometimes...


----------



## tech/a (30 March 2010)

1q2w3e4r said:


> Wages don't rise as fast as property prices.  I get the argument for inflation leading to rising costs and therefore property prices, I think its artificial unsustainable growth however and doesn't flow down to Mum and Dad or Joe Blow down the street.




Been answered



> Wages haven't increased enough to curb the cost of housing increases.  If you argue the point that property doubles every 7-10 years whatever, that's great.  So does the guys house who lives next door to you.  You don't actually gain any value over and above anyone else.




If you think like the majority and just own on property.
If you own 2,3,+ then your so in front of your neighbour its impossible for him to ever catch you.



> The way I see it, the Govt gave a whole bunch of people a leg up onto the property ladder who couldn't really afford it.  That in turn gave everyone else a push up to the next rung of the ladder. All or the large majority of it is funded by debt.




Of course its funded by debt.
Everyone of my properties are funded by debt and I get all the interest back as a tax deduction.
People pay my mortgages.
I claim just about everything other than clothes and food.
I get the CAPITAL GAIN.


----------



## Macquack (30 March 2010)

tech/a said:


> Everyone of my properties are funded by debt and *I get all the interest back as a tax deduction.*




You don't get "all the interest back" just because it is a tax deduction.

You get a tax benefit to the extent of your marginal tax rate.


----------



## drsmith (30 March 2010)

Regarding graphs and stats the March 2010 Financial Stability Review from the RBA is now available.

http://www.rba.gov.au/publications/fsr/2010/mar/html/contents.html

Of interest is graph 61 (Household Income and Interest Payments, p42). As expected interest payments as a percentage of household disposable income is trending up again as interest rates rise. This is from a trough that was above the late 80's peak.  again.

Also of interest is the extent to which disposable household income has been proped up by government stimulus since the GFC. Household income from employers is still going backwards in real terms.


----------



## Dowdy (30 March 2010)

tech/a said:


> Cost of construction rises as costs----normally wages are passed on---.





I guarantee it wont! 

You said it yourself - there will be fewer sales.

So in turn you'll have more builders competing for fewer jobs. When there is more competition in any field, prices drop to gain your business.

Fewer worker will be hired/more workers will be fired due to the lesser workload and ultimately you'll have cheaper houses. 


BTW, most of the price of property comes from the land value.


----------



## tech/a (30 March 2010)

Dowdy said:


> I guarantee it wont!
> 
> You said it yourself - there will be fewer sales.
> 
> ...




I'm happy to have a side bet.

I'm actually a Builder and have been for 30 yrs.
Your actually missing a very important aspect.

Demand.
Not everything is sold.
It aint going anywhere and never has.(Demand)

Still believe what you wish---I'll keep building and selling----same old same old.

This thread will remain the same for the next 10 yrs---same old same old.




> BTW, most of the price of property comes from the land value




Really.
I have say 3000 square meters at say on the esplanade for 1.6 mill.
I can place 9 X 2 story 260 meter Apartment/Town houses on it.
I build them at $1500/ square meter.
I sell them for average of $950k each.

Id say your argument is pretty poor!


----------



## satanoperca (30 March 2010)

tech/a said:


> Really.
> I have say 3000 square meters at say on the esplanade for 1.6 mill.
> I can place 9 X 2 story 260 meter Apartment/Town houses on it.
> I build them at $1500/ square meter.
> I sell them for average of $950k each.




$1.91M profit = (9x260x1500 building cost)-$1.6M intial setup

Australia is truly the land of sunshine and lollipops for those with no fear, persistence and persecution.

+ you are helping a social need, more housing abet a little over the median house value but still helping the cause.

Cheers and have a good evening


----------



## 1q2w3e4r (31 March 2010)

tech/a said:


> Been answered
> 
> 
> If you think like the majority and just own on property.
> ...




Then are you in investment property for the gearing?  As it appreciates just as fast or slow as the property next door.  So you have no real net gain whenever you sell as you still need to allocate the capital somewhere to make a return unless you just buy and hold?

Not trying to start an argument I'm just interested.


----------



## tech/a (31 March 2010)

1q2w3e4r said:


> Then are you in investment property for the gearing?




Yes of course  



> As it appreciates just as fast or slow as the property next door.  So you have no real net gain whenever you sell as you still need to allocate the capital somewhere to make a return unless you just buy and hold?
> 
> Not trying to start an argument I'm just interested.




Its a business.

Some buy and hold after freehold or close to it.
The rest for capital gain allocated elsewhere---some better than others.
The end result for me is passive income and wealth accumulation.

I am at the age where I can retire.
I could retire but would be bored out of my pea brain. Next stop coffin---not for me just yet anyway.
I have a passion for business that will see me to my grave.
I have a great love for life and enjoy every second---the good the bad and the ugly---its not all business.
I have seen too many retire only to see their accumulated wealth erode at a massive pace as the cost of living increases faster than their savings can be replenished through dubious investment. My Mother and Father who are still here being one.
Passive income will do a great deal toward keeping in front of this erosion problem.


----------



## Beej (31 March 2010)

Go Nuke said:


> Here look.....I'll show you how stupid graphs are sometimes...




I don't see your point? What is that graph? Where is it from?

PS: Re RP-Data graphs, ignore their data if you wish, but it is all pretty much correct, and has been proven to be so. I always consider informatino from all sources, whether I agree with what it tells me or not. Of course like any data, you need to understand what it means, and how it might differ from other data you look at. But to just write it off with no analysis is foolish IMO and will only lead you to ignore solid facts and reach wrong conclusions.

PPS They have picked each inflection point in the market accurately over the past 2-3 years, and well before APM, Residex or the ABS..... And, dare I say it, most of the posters on ASF housing market threads!! .


----------



## stokie (31 March 2010)

Just a quick question about overseas residential property investors:

Is there really no regulation regarding their ability to borrow and invest in a house here? I mean, banks overseas are offering money at ridiculously low rates so the advantage they have over local investors is huge. So can they really just borrow from their own country and buy property here with no additional taxes compared to local buyers?


----------



## Go Nuke (31 March 2010)

Hi Beej 

The graph is from Mycareer.com. A online job agency. (displayed at the bottom of the chart)
My point about how silly graphs can be was directed at this graph showing the "Average Australian Salary" as titled....being around 90K.

I find that to be :bs:

Thats all


----------



## Dowdy (31 March 2010)

tech/a said:


> Really.
> I have say 3000 square meters at say on the esplanade for 1.6 mill.
> I can place 9 X 2 story 260 meter Apartment/Town houses on it.
> I build them at $1500/ square meter.
> ...





Your argument means nothing if you just picked those numbers from a lucky dip. Give me a source.

And if you're a builder then you should know that a 4br double story home cost the same weather it's built in Sydney beachfront property or middle of the bush. (same size block of land)
And when it sells the only thing that determines it's price is the land value.


----------



## cutz (31 March 2010)

satanoperca said:


> $1.91M profit = (9x260x1500 building cost)-$1.6M intial setup
> 
> Australia is truly the land of sunshine and lollipops for those with no fear, persistence and persecution.
> 
> ...




Yeah,

Right on bro, i'm sick of paying more than my fair share of taxes, time to get on that negative gearing train.

Err, then again perhaps not.


----------



## robots (1 April 2010)

hello,

good morning everybody, great to be back in the mix

apologies to all concerned, great holiday and have completed a huge amount of research over the past 3 mths, time flies man

hows this one:

http://www.heraldsun.com.au/news/melbournes-property-market-leaps-ahead/story-e6frf7jo-1225848238308

Melbourne up almost 20%, hehehehehehehehehe, get 2 cases of ruski's for the weekend, utopia

thankyou
robots


----------



## tech/a (1 April 2010)

Dowdy said:


> Your argument means nothing if you just picked those numbers from a lucky dip. Give me a source.
> 
> And if you're a builder then you should know that a 4br double story home cost the same weather it's built in Sydney beachfront property or middle of the bush. (same size block of land)
> And when it sells the only thing that determines it's price is the land value.




What  do you mean give you a scource!
They are *actual* figures. What do you want the block involved the building contract and the sales contracts.
5 parties involved.

Well seeing your obviously NOT a builder you have no idea (mentioning a 4 bedroomed home) how to make $$s out of property. You wouldnt be building a 4 bedroom home!

All you want to do is poke holes in real property investment,rather than learn--frankly its beyond the scope of most here and not worth the time in replying.

Some of us DO most including yourself DONT.

Cutz
Where is the negative gearing in that scenario!


----------



## kincella (1 April 2010)

Tech, you spot on.......
"All you want to do is poke holes in real property investment,rather than learn--frankly its beyond the scope of most here and not worth the time in replying."

Robots, good to see you back.

Another reason for the interest in real estate.....extract
only, read the full article for the bigger picture

Super changes 'pushed people into property' Glenda Korporaal From: The Australian April 01, 2010 12:00AM


INVESTMENT and Financial Services Association chief executive John Brogden yesterday blamed the federal government's changes to superannuation last year for prompting people to turn to investment properties for their retirement savings. 
In an interview with The Australian, Mr Brogden said there was also a concern that there would be further cuts in the May budget to the caps on allowable contributions to superannuation beyond the compulsory 9 per cent superannuation guarantee levels.

He said concern about the Rudd government's superannuation changes, following the surprise measures in last year's budget and uncertainty about the federal government's plans for superannuation, had encouraged people who had some extra savings to look for other means of investment, including investment properties.


http://www.theaustralian.com.au/bus...le-into-property/story-e6frg8zx-1225848228175


----------



## kincella (1 April 2010)

blogger on another forum has the view that we should turn back time to the year 2000.....
he seems to be trapped in a time warp
I suspect he is like others, who in 2000 claimed they had bragging rights on property....
they believed that property was in a bubble, sold their homes, turfed the wife and kids out into a rental, were sitting on the cash, and would re-enter the market for half the price.....
Several posters claimed they did that, put their money where their mouth was.
A couple have since claimed they did re-enter the market, in a different suburb and far more expensive...they were priced out of their former suburb. The others are still waiting to get back in, and some have given up.
You will see these bloggers out there, still waiting to get back in at the 2000 prices. No wonder they are trapped in a time warp.

I on the other hand did the opposite, I thought property was undervalued, I went on a bargain  buying trip and purchased several properties.
At the time I figured, a lot of people would have been burnt by the tech wreck, they would seek the safety of bricks and mortar for future investments. 
Well they turned up in droves in 2003-2004, so I sold some of those little bargains, for a stunning profit. I kept the rest for the long term. 
I am a contrarian.
I believe there are still some great bargains out there, but not in the inner suburbs. Go further out, with easy commuting to the city, pay a third of the price, and spend a couple hours of day travelling, until you wisen up and find a job closer to your new home.


----------



## trainspotter (1 April 2010)

robots said:


> hello,
> 
> good morning everybody, great to be back in the mix
> 
> ...




*GREAT* to see you back robots. I hope you enjoyed your sabbatical. 

Real Estate = go you good thing !  Got the champagne on ice to celebrate !


----------



## kincella (1 April 2010)

Glen Stevens is looking goofy again....still repeating his mistakes of a year ago, the raising of interest rates so fast it kills any chance of a recovery......and all the silly ones who follow the media only goofy show....with their mantra of higher interest rates to scare you out of property.....I am beginning to feel like the Joker...I get the last laugh....at the foolish ones....
if you take a close look around, you will see its very subdued out there....even the kids have slowed their spending...

more proof its not roses out there....
there goes the interest rates rises some have been predicting.....
this index is at 50.2...just .2 above the line...at 50 its at the contraction stage and going under, its fallen 3.6 in March alone... I believe it will head down further for a another 8 months or more
rising interest rates are like the green shoots myth, it was just a fairytale

...........extract only........

Manufacturing activity slows The pickup in manufacturing activity slowed in March as weak demand, a strong local currency and higher interest rates dampened demand, a survey says.
.01.04.2010 09:38 AM 

The pickup in manufacturing activity slowed in March as weak demand, a strong local currency and higher interest rates dampened demand, a survey says.

The Australian Industry Group-PricewaterhouseCoopers performance of manufacturing index (PMI) fell 3.6 index points in March to 50.2 points.

The index remained above the key level of 50, which separates expansion from contraction, for a third straight month.

The report found the pace of growth in new orders weakened in March, while levels of production activity, hiring and inventories contracted
http://www.thebull.com.au/articles_detail.php?id=10539


----------



## wayneL (1 April 2010)

kincella said:


> Glen Stevens is looking goofy again....still repeating his mistakes of a year ago, the raising of interest rates so fast it kills any chance of a recovery......and all the silly ones who follow the media only goofy show....with their mantra of higher interest rates to scare you out of property.....I am beginning to feel like the Joker...I get the last laugh....at the foolish ones....
> if you take a close look around, you will see its very subdued out there....even the kids have slowed their spending...




Recovery?

By rewarding the profligate and screwing savers and fixed income investors?

This will come at a dire cost later. No! Glen Stevens is looking smarter again.


----------



## WaveSurfer (1 April 2010)

Dowdy said:


> ....And if you're a builder then you should know that a 4br double story home cost the same weather it's built in Sydney beachfront property or middle of the bush. (same size block of land)
> And when it sells the only thing that determines it's price is the land value.




Cost of building depends on access to products and services. What happens if you're building in Bourke and have to import a heap of stuff from Sydney or BrizVegas? I'll tell ya what, the cost can double, treble, even more!

Land value determines the price? Maybe on the shores of Noosa Hastings street. One of my properties I sold, the land alone was valued at 60k. I sold it for over 4 times that.

Supply and Demand determines the price. Always has, and forever will


----------



## WaveSurfer (1 April 2010)

Dowdy said:


> .....So in turn you'll have more builders competing for fewer jobs. When there is more competition in any field, prices drop to gain your business.
> 
> Fewer worker will be hired/more workers will be fired due to the lesser workload and ultimately you'll have cheaper houses......




I can speak for all of us (builders), we will not work for FREE!!!!!

Cost of materials go up = so do house prices. Builders need to pay the bills, and that they'll do by increasing prices.

To end this argument once and for all, look at the interest rate chart and compare it to median housing prices. Maybe Beej can help us out with the median house prices, but here's the interest rates over that past 50 odd years....





Couldn't find any long term charts for housing prices, but this gives you an idea:

http://www.econ.mq.edu.au/research/2004/Abelson_9_04.pdf
From: http://www.econ.mq.edu.au/research/research_papers/2004_research_papers2

Rising interest rates did not equal lower house prices...

Up, up and away in my beautiful, my beautiful Balloooooon


----------



## mythos (1 April 2010)

Interesting article on the British housing affordability crisis at the moment:

http://www.businessspectator.com.au...n-Brown-pd20100329-3Z5XQ?OpenDocument&src=sph


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## kincella (1 April 2010)

I took these figures from a govt inquiry in 2006, sourced from the ABS and put them onto excel........
I have used the highest interest rates on my loans from 2007-2010
note the rates were not that all year...just the highest rate paid at some point in that year 
the rate does not seem to reflect a drop in house prices 
20 years history should satisfy most people, it covers all the modern day dramas and crisis that commenced in the 80's


	Interest	house prices		house prices		                Growth rate              @
	rates	established	FHB		8.25%

1986	15.5	80800		67400		80800
1987	15	86200		68400		87466
1988	13.5	101600		87000		94682
1989	17	138600		107400		102493
1990	16.5	139100		112400		110949
1991	13	136400		115200		120102
1992	10.5	139800		117200		130011
1993	9.5	143000		119400		140736
1994	8.75	148100		127900		152347
1995	10.5	153700		134600		164916
1996	9.75	160500		141300		178521
1997	7.2	170600		154300		193249
1998	6.7	191400		175400		209193
1999	6.5	204600		185200		226451
2000	7.8	229900		205700		245133
2001	6.8	245700		194300		265357
2002	6.55	290800		229400		287249
2003	6.55	336300		291300		310947
2004	7.05	389800		330500		336600
2005	7.3	387600		337000		364369
2006	7.55	396400		350000		394430
2007	7	429103				
2008	8	464503				
2009	9	502826				
2010	6	544309


----------



## robots (1 April 2010)

hello,

good evening, another great day man

thanks for the support ,has been overwhelming, the sabbatical was out of control, goof balls, g, ruski's, arctic, trains and trams

it was amazing, the whitelight engulfed me again, showed a new path of euphoria

many thanks to the true contrarian Kincella, i have actually found a property to buy in a satellite city (contracts signed), may move out of St Kilda for a while as rents are going strong 

do the same as the other joint and get a few bunk beds in each room

paradise

thankyou
robots


----------



## kincella (1 April 2010)

are you turning the house into a share accommodation Robots ?
if its a satelite city, should I assume its a new house
good on you
where is it ?


----------



## robots (1 April 2010)

hello,

no will just let out as normal, who knows the tenant might put in bunk beds

old joint but still in solid condition, windows good, weatherboards sound, stumps good

decorative cornice, reasonable ceiling height, about 600sqM, shed, good neighbours either side

tenant in already, half way through second year there, who is desperate to stay on, plan to get up there by early next year for a tree change brother 

thanks
robots


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## MR. (2 April 2010)

Go Nuke said:


> Income have not kept up with the avergae home loan.



Official inflation figures haven’t kept up with property prices either:  Why not?

Latest ABS Inflation figures:
http://www.ausstats.abs.gov.au/ausstats/meisubs.nsf/0/F38A42DA428E0160CA2576B6000FFEED/$File/64010_dec%202009.pdf

Notice the inflation figure of 2.1% is an “average” of increases in Food, Alcohol, Clothing, Housing etc.  How the hell can the percentage change in Alcohol (amongst other things) be averaged with the percentage change in Housing? 

Let’s just assume for this example Alcohol in a year decreased by 5.5%. Let’s compare that to the current HOUSING increase of 5.5%. They would average each other out as a measure of CPI.

If Alcohol cost $1000- in a year and the pretend decrease of 5.5% would conclude with a saving of $55-



> HOUSING:
> Over the twelve months to December quarter 2009 the housing group increased 5.5%
> mainly due to rises in rents (+5.4%), electricity (+15.7%), house purchase (+2.4%) and
> water and sewerage (+14.1%).




Last quarter House purchase increased by 2.4% eg: ( $400,000 to $409,600 = $9600 out of pocket) 
or what about rents increasing by 5.4% eg: ($20,000 to $21080 = $1080 out of pocket) 
How could you drink $21k worth of booze because that’s what was blown on rent? So why do they even partially compared in this way? 

The increase in housing costs are not projected with actual cost weightings! 

How can an increase of a $1000- in rent be averaged with an estimated saving of $55- in booze cancelling each other out? 

How can the ABS’s “cpi” used by the RBA when setting interest rates be expected to control property prices? 

They obviously can’t! 

The RBA can't control house prices as it hardly even enters their CPI equation. Glenn Stevens doesn’t appear to have the power to do anything about it. IMO we need a 0.5% - 1% rate increase now, but it's simply not going to happen.



wayneL said:


> Recovery?
> By rewarding the profligate and screwing savers and fixed income investors?
> This will come at a dire cost later. No! Glen Stevens is looking smarter again.



I have a chart which I’ve put together comparing the CPI to the cash rate from mid 2001 to date. The average margin between “CPI” and the “cash rate” before the GFC was 2.55% and now it is 1.46% a loss of more than one percentage point or 40% in margin for savers. 

Here is a "photo" of that chart, like Kincella, I don’t have the software to convert from Excel.


----------



## robots (2 April 2010)

hello,

good morning and a fantastic day ahead

top article:

http://www.theaustralian.com.au/bus...le-into-property/story-e6frg8zx-1225848228175

one of the biggest scams going around Super (unless you in government fund) and many are getting out of it, for anybody under 40 stay clear of it

thankyou
robots


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## nunthewiser (2 April 2010)

Gday Robots.

nice to have you back 

sunshine and lollipops brother.

Dont you think using your pad as an upmarket brothel and taking a large cut would be more finacially viable than renting it out to some hippy?


----------



## robots (2 April 2010)

hello,

pimpin aint easy,

no hippy, yobbo yuppie, you know the ones with the collar shirts, polo shirts, thongs, or those flat nosed dress shoes, 2 iphones in the pocket

thankyou
robots


----------



## kincella (2 April 2010)

just doing some history of property posts on hc...
cannot seem to pull up any before about 2002
they did not always have the different forums ie property
however if I track a poster as below, found more posts
I was looking for around the year 2000 mark...when there was a lot of noise then 

but look at this one thread 11.01.04 all doom
'stocko' was one of those who sold his house and was still waiting to get back in...of course he was screaming prices would fall by 50%
sounds like the same posts today
look at the prices, he sold in 2000-median price was 230k, by 2003 =330k, 2004 =390k, 2010 = 545k

http://www.hotcopper.com.au/post_threadview.asp?fid=4&tid=79911&msgno=82236#82236

then this one saying rates would rise to 17% in dec 03

http://www.hotcopper.com.au/post_threadview.asp?fid=4&tid=76838&msgno=79747#79747

may 2002 still predicting a crash
http://www.hotcopper.com.au/post_single.asp?fid=4&tid=1551&msgid=5005

of course he had a following....just like today
actually it is hilarious....they either did not buy back in 2000, or they sold, and just sat back and watched the prices double 
and its different again today


----------



## Go Nuke (2 April 2010)

> Latest ABS Inflation figures:
> http://www.ausstats.abs.gov.au/ausstats/meisubs.nsf/0/F38A42DA428E0160CA2576B6000FFEED/$File/64010_dec%202009.pdf
> 
> Notice the inflation figure of 2.1% is an “average” of increases in Food, Alcohol, Clothing, Housing etc. How the hell can the percentage change in Alcohol (amongst other things) be averaged with the percentage change in Housing?




As I said on another thread....I'm confused.

Alcohol and cigs have increased......well the government taxes them twice a year, EVERY year don't they? So of course they have increased


----------



## MR. (3 April 2010)

Go Nuke said:


> Alcohol and cigs have increased......




Ok confusing......
Try again!  ........ I’ll stick with the inflation figures as released above.

Between all 11 CPI percentage groups the average is taken to produce the 2.1% increase in inflation. The RBA then adjusts interest rates by monitoring the inflation rate.


Financial and insurance services decreased by 6.3% for the year.
Housing increased by 5.5% for the year.
If these were the only two groups used to produce an inflation figure the official CPI figure would be -0.4%.

My point is the increase in Housing as a cost would far outweigh the decrease in Financial and insurance costs. The rent increase alone of 5.4% would be (approx $1000-) for a lot of families. The savings in the Financial and insurance group would only total (approx $200-) Many end up paying an extra $800- for the year but the CPI figure would still be -0.4%. As the -0.4% figure is calculated by using just the change in percentage of each group.

comments?


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## UBIQUITOUS (3 April 2010)

MR. said:


> comments?




The cost of living is increasing by far in excess of 2%. I would guess it is 5-10%. This is compounded further in that wages and benefits are not increasing by far less than 5%. The RBA would have us believe that they are doing all that the can to counter inflation. 

Glenn Stevens' recent unprecedented warnings about the RE market are a VERY clear sign as to how small that gap is between the rock and the hard place. He doesn't want to have to property market collapse by increasing interest rates by as much required (to 8%+), but instead just wishes to slowly cool the overheated market by warning people to borrow less and thus avoid further mortgage stress.

The RE market is in for a major correction, and there is not a thing anybody can do about it.


----------



## tech/a (3 April 2010)

> The RE market is in for a major correction, and there is not a thing anybody can do about it




Yes that's very true.
In fact it has been since 1973 which was the first I heard of it.


----------



## WaveSurfer (3 April 2010)

Go Nuke said:


> As I said on another thread....I'm confused.
> 
> Alcohol and cigs have increased......well the government taxes them twice a year, EVERY year don't they? So of course they have increased




Someone once told me that during a financial crisis, the best stocks to invest in are tobacco and alcohol suppliers. Because consumers won't stop spending on those items, while cutting back on almost everything else. I guess those stats prove the theory to be right.

I'm going to check some stock charts to see if it's reflected there.

Oh here you go. This sort of says the same thing


> People may pull back on discretionary spending when they're wallet is feeling light but they're unlikely to cut back as substantially on basics like food, drinks and household products.



http://money.cnn.com/2008/05/30/markets/thebuzz/index.htm


----------



## robots (3 April 2010)

hello,

good morning all, great easter weekend as usual in Australia, chapel st was rocking yesterday with plenty out and about

more reasons why Australia top of the tree in my opinion:

http://www.theaustralian.com.au/new...two-dead-15-hurt/story-fn3dxity-1225849113899

and i opened  a new bank account on thursday at CBA but they didnt give me a shotgun like in the United States, whats going on, you get them in the US so you must get one here, ooohh noooo

thankyou
robots


----------



## MR. (3 April 2010)

UBIQUITOUS said:


> The cost of living is increasing by far in excess of 2%. I would guess it is 5-10%............
> 
> Glenn Stevens' .........  He doesn't want to have a property market collapse by increasing interest rates by as much required (to 8%+)




Perhaps 8% for property but not 8% for CPI. Remember the RBA's job is to keep the CPI within a target range and property appears to be just a tiny percentage in the CPI mix. The RBA has very little control over property! 

IMO the continued warnings from Glenn Stevens voices concerns that when CPI increases so will interest rates. Very little consideration will be given to highly leveraged up property investors. Housing doesn't appear to have enough of the mix in the CPI equation, so what has promoted recent property gains can quickly be undone. If inflation starts getting a grip Glenn Stevens can't help property investors.  

I imagine for now the CPI target will be in the RBA's lower range.



> The RE market is in for a major correction, and there is not a thing anybody can do about it.






tech/a said:


> Yes that's very true.



Lets take that comment out of context


----------



## Bill M (3 April 2010)

robots said:


> hello,
> 
> good morning all, great easter weekend as usual in Australia, chapel st was rocking yesterday with plenty out and about
> 
> more reasons why Australia top of the tree in my opinion:



Welcome back robots, nice to see you around mate. I'm up on the Gold Coast right now visiting family, they report that house prices have shot through the roof up here. Houses are put on the market and snapped within a few days and they are getting top prices. 

Went for a walk along the Burleigh Beach front this morning, full of people excersing and enjoying the wonderful sun. What a nice place this is, could easily live here too...


----------



## kincella (3 April 2010)

here is a good article for home buyers and investors...the naysayers will not like it....
in the Uk they have kept acurate records for the past 919 years...
property has increased at a compound rate of over 10% for every one of those years
Australia has kept records, accurate or not for only 120 years with similar results

the article is copyright....but the author is a former Reserve Bank of Sydney economist, and Australia Post, and former treasurer of Telstra

of course some can disregard the info coming from a property investing site
http://www.propertyplanet.com.au/cms-investors/why-invest-in-melbourne.phps
graph showing the decline 2007-2010....for those who want to dispute the 10% average rise......by the time it picks up and increases in the future, it will make up for that short period of decline
so history will still record an average growth of 10% in the future...when you look back in hindsight

http://news.bbc.co.uk/2/hi/8386796.stm
http://www.propertyplanet.com.au/cms-investors/why-invest-in-melbourne.phps

*re the CPI figures*
....they are dodgy, all involved know that, a decrease in the price of weetbix, or a tv set is recorded, and increase in interest rates and house prices is excluded...
look back to the Whitam era for a more accurate CPI/ Inflation figure, when the interest cost was included in the CPI and interest rates were around  10-12%,
Whitlam 15%-72-75
Fraser  10% 75-83
Keating  5% 83-96 ******note 1
Howard  2.5% 96-07 *** note 2      

note 1..notice the big drop in inflation and CPI, interest was removed from CPI about 89-90, yet interest rates were still high, as in 15.5% to 17% in 89, then 13% in 1991, 10% in 1995

note 2...understandable as interest rates came down from 10% in 95 to an average of 6.5-7% since 1997

http://www.aph.gov.au/library/pubs/rp/2007-08/08rp04.htm#Wages

http://www.loansense.com.au/historical-rates.html


----------



## robots (3 April 2010)

hello,

thanks Bill M, 

great site Kincella:

http://www.propertyplanet.com.au/cms-investors/why-invest-in-melbourne.phps

2 time winner of most liveable city, great effort

thankyou
robots


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## Bronte (3 April 2010)

robots said:


> great site Kincella:
> http://www.propertyplanet.com.au/cms-investors/why-invest-in-melbourne.phps



A very interesting read:
"The result is that, for 919 years, property prices have raised at a compound rate of increase of 10.2% per annum. The Rule of 72 states that any number which increases at 10% p.a. compound, doubles every 7.2 years. So, for over 900 years, property prices in England have been doubling, on average, every 7 years."_ From the above link_.
We had a "Rule of 72" thread here at ASF 
https://www.aussiestockforums.com/forums/showthread.php?t=11991&highlight=The+Rule


----------



## drsmith (3 April 2010)

Bronte said:


> A very interesting read:



No more interesting than any other spruiker's website.


----------



## joeyr46 (3 April 2010)

Bronte said:


> A very interesting read:
> "The result is that, for 919 years, property prices have raised at a compound rate of increase of 10.2% per annum. The Rule of 72 states that any number which increases at 10% p.a. compound, doubles every 7.2 years. So, for over 900 years, property prices in England have been doubling, on average, every 7 years."_ From the above link_.
> We had a "Rule of 72" thread here at ASF
> https://www.aussiestockforums.com/forums/showthread.php?t=11991&highlight=The+Rule




Does that mean the GBP has halved every 7 years


----------



## Bronte (3 April 2010)

joeyr46 said:


> Does that mean the GBP has halved every 7 years



Not sure what you mean Joey. You must be joking, right ? 



drsmith said:


> No more interesting than any other spruiker's website.



Can you please give us another interesting example ?


----------



## drsmith (3 April 2010)

Bronte said:


> Can you please give us another interesting example ?



Their information is biased because they are in the business of selling the stuff. In that respect they are no different to a real estate agent or a car salesman.


----------



## Bronte (3 April 2010)

25 years ago,we took note of similar sources of information as this and started buying 
real estate in Australia and England. Sure pleased we did, drsmith.
Do you or have you not bought from any real estate or automobile spruiker's ?


----------



## satanoperca (3 April 2010)

Bronte said:


> A very interesting read:
> "The result is that, for 919 years, property prices have raised at a compound rate of increase of 10.2% per annum. The Rule of 72 states that any number which increases at 10% p.a. compound, doubles every 7.2 years. So, for over 900 years, property prices in England have been doubling, on average, every 7 years."_ From the above link_.
> We had a "Rule of 72" thread here at ASF
> https://www.aussiestockforums.com/forums/showthread.php?t=11991&highlight=The+Rule




So if this is true given an average house price of $500K in 2010, then property in 1830 would have cost 1 cent. Yes just 1 cent and going on population theory, wages x 4 = average house price. Average house price = x 4 Average Salary, thus being 0.33 of a cent pa. Likely not.

If you apply the same theory over say the last forty years, there may be some truth in it.

It seems if it is printed on a website it must be true.

Interesting peoples perceptions of reality.

Still if your not 200 years old, then the sun is shining on RE and a splendid day in Melbourne today.


----------



## Bronte (3 April 2010)

Yes I agree, there is a flaw in the equation over 200 years.
We read in Jan Somers "Building Wealth" _First released in Feb 1992_
Almost 10% for more than 900 years (since records started from the Domesday Book of 1066) 
This was good enough for us, so we found suburbs close to major cities and water and started
buying properties, one or two (if we could manage it) every year.


----------



## drsmith (3 April 2010)

Bronte said:


> This was good enough for us, so we found suburbs close to major cities and water and started
> buying properties, one or two (if we could manage it) every year.



Are you still buying and are you gearing your purchases to the max ?


----------



## Bronte (3 April 2010)

drsmith said:


> Are you still buying and are you gearing your purchases to the max ?



No drsmith, those days are over for us.
We used to borrow the lot, including set up costs and all.
Just before Christmas we bought a Perth house with a million dollar water view, bank not required.


----------



## nunthewiser (3 April 2010)

Yes Satan totally agree . the amount of utmost dribble and crap that gets swallowed by the punters because its on a webpage is just unbelievable ....... 

Mind you i spose its the same for Forums also and all the bignoting salami slapping it produces on occasion 

No offense to any previous posters of course ........... just pointing out that this IS the internet and i can be Elvis today.


----------



## Bronte (3 April 2010)

Also Michael Jackson tomorrow, nunthewiser....that is dead at 50


----------



## nunthewiser (3 April 2010)

Bronte said:


> Also Michael Jackson tomorrow, nunthewiser....that is dead at 50





Yep lifes too short to be a mushroom.


----------



## robots (3 April 2010)

hello,

good evening, good evening

gives me great pleasure to post up the auction results for todays proceedings:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

huge 72%, just fantastic, gee the auctioneers do a great job 

goes out to you largesse,

thankyou
robots


----------



## MR. (3 April 2010)

kincella said:


> *re the CPI figures*
> ....they are dodgy, all involved know that, a decrease in the price of weetbix, or a tv set is recorded, and increase in interest rates and house prices is excluded...



I question if all involved really know that! Such a vital part of the economy and it's true weight is not reflected in CPI and the young wonder why they are being left behind. Property not having enough weight in CPI may just be the trigger. 

Hey UK property prices are now increasing instead of decreasing!  

UK Inflation over the last 6 months. 
September 2009  1.1%
October 2009       1.5% 
November 2009   1.9% 
December 2009   2.9%
January 2010        3.5% 
February 2010      3% 
Bank of England’s target inflation is 2%.
Interest rates still remain at *0.5%* in the UK.... 




satanoperca said:


> So if this is true given an average house price of $500K in 2010, then property in 1830 would have cost 1 cent.




That can't be right it was written by former Reserve Bank of Sydney economist, and Australia Post, and former treasurer of Telstra!

Drsmith, see you got your answer! It's the debt age thingy. Point is though if ya wanna pay cash for a million dollar prop' you gota take some risks! So leverage leverage leverage people! Timing may not be right but like the stock market it will come back!

72% come in spinner!
wot a whole 19 props sold! Not worth the post bots. Happy Easter!


----------



## kincella (3 April 2010)

re the CPi...of course the average Joe Blow does not know, nor would he care...
but the govnuts world wide know exactly why it was changed, and the implications....the noise about CPI, as if they are trying to keep a lid on it

the whole idea was to deceive the population
the population that relies on the CPI figures for the increase in their pensions, wages etc, that is supposed to compensate them for the increased costs....
ask any pensioner today, how the pension keeps pace with inflation.....they will tell you its way behind, they get further behind every month....
no wonder when the real figures are higher than 10%

the govnuts worked out it would become too expensive to keep paying at the real CPI rate, they had to bring it down to an affordable level...so they use the fraud rate of 3%

as for the 1 cent....yeh thats so funny....what no relatives around to advise you of the house prices ages ago

my mother paid $3000 pounds in 1942 for a small house on 20 acres
she renovated the small house, turned it into 4 bedrooms, then built the extension, large dining, modern kitchen, modern bathroom,  huge living, and hall way, verandah etc
the original bathroom was a separate room, as was most of the early houses....so that was converted to a large laundry

the land was subdivided, and the quarter acre blocks were sold for $3000 pounds each in the mid 60's....

most of those graphs, charts you see today have a starting point of 100....
regardless that we know of prices of $1000 pounds, or $100 pounds
or $5 pounds...

btw just scoffing at believing everything one sees on the net, seems a cop out....
do you not believe govt web sites, or reputable sources....
historical societies and libraries have gone to a lot of trouble to scan documents and put them out there on the net...

its wading through all the rubbish posts by the bloggers that makes the job 1000 times more difficult than it should be


----------



## satanoperca (3 April 2010)

robots said:


> huge 72%, just fantastic, gee the auctioneers do a great job




This week: 40
Last weekend:  965
This time last year: 505

Figures even down as a % on last week are relatively meaningless given the volume.

But still,  good figures.



kincella said:


> as for the 1 cent....yeh thats so funny....what no relatives around to advise you of the house prices ages ago




Just working of what was stated, just figures no more, no less that disprove what was being stated. 

Got to keep it real, don't we.



kincella said:


> btw just scoffing at believing everything one sees on the net, seems a cop out....
> do you not believe govt web sites, or reputable sources....
> historical societies and libraries have gone to a lot of trouble to scan documents and put them out there on the net...




Fail to see how someone stating that something published on a commerical site can easily be proven mathematically to be incorrect also encompasses all that is published on the internet to be false. 

But believe that you wish to believe sunshine.



kincella said:


> its wading through all the rubbish posts by the bloggers that makes the job 1000 times more difficult than it should be




Useless to some, valuable to others, make of it what you will or just don't look. 

On the record, you may bag the RBA all you want, but they have more education, knowledge and information available to them than many/and or all of us.

Cheers


----------



## MR. (3 April 2010)

kincella said:


> btw just scoffing at believing everything one sees on the net, seems a cop out....
> do you not believe govt web sites, or reputable sources....
> historical societies and libraries have gone to a lot of trouble to scan documents and put them out there on the net...
> 
> its wading through all the rubbish posts by the bloggers that makes the job 1000 times more difficult than it should be




Don’t think the nun was knocking govt sites there Kincella. Don’t know about anyone else, but it’s a bit strange you mention in the same post the CPI conspiracy with the govnuts being in on it!  Thanks for the reply, but it isn't one of your best.

Few holes in those reputable articles of yours as well, including the one about house prices rising on higher interest rates!

Of course the RBA is trying to keep a lid on inflation and the inflation rate is as the ABS states! What is the point otherwise? A few questionable products like computers no doubt! 

My point was the disconnection between property prices and the CPI figure which I concluded with an explanation. 

Interest rates are a major factor in the change in property prices. However, interest rates are governed by CPI which doesn't reflect enough change in property prices.

Anyone else see the danger here?


----------



## robots (4 April 2010)

hello,

no, i do not see any danger here

inflation is a given in life just like the sun coming up and going down and thats why you have to put in place strategies to deal with it

everyone has the opportunity to do that or they can suffer from inflation

thankyou
robots


----------



## satanoperca (4 April 2010)

> THE federal government will consider slashing Australia's annual migration intake to help tackle concerns about traffic congestion, housing, hospitals, water and the environment




This would obviously make the biggest impact to future property prices if immigration was reduced to the current global level, Australia is currently at twice that.

The Govnuts are a smart bunch, they obviously do not travel from outer suburbs into the cities each day to work and realize the current transport infrastructure cannot support current transport requirements of citizens let alone double those levels today.

Just a little suggestion to the pollies, fix the public transport system first. Owe they have attempted that in Victoria and guess what they have failed.

Cheers


----------



## MR. (4 April 2010)

robots said:


> hello,
> 
> no, i do not see any danger here




Robots, agree with keeping up with inflation but maybe you have missed my point. My fault perhaps....

Guess the questions are:
What is the likelihood for higher inflation?  
What will high inflation do to the highly leveraged? 

http://www.smh.com.au/business/beware-its-the-negativegearer-right-next-door-20100403-rkzv.html


> Rising house prices and rising interest rates create the perfect climate for negative gearing, a way of getting tax deductions on the excess of expenses over rental income on an investment property.



I just don’t get it! Locking low interest rates in makes more sense!


----------



## drsmith (4 April 2010)

MR. said:


> Drsmith, see you got your answer!



He's got more brains than those gearing into the current market.


----------



## drsmith (4 April 2010)

MR. said:


> I just don’t get it! Locking low interest rates in makes more sense!



That article makes the common sense suggestion of capping the deductions associated with negative gearing.

I wonder though whether the government now fears that this in itself could prick the bubble. 

The time to do it was the 90's after interest rates had fallen but before the current long term property boom.

High interest rates could be of benefit to property investment but only after capital values had adjusted (higher yield from longer term expectations of higher interest rate/inflation). If this were to occur it would represent a retraction of that part of the price appreciation that came from the longer term expectation of lower interest rates/inflation.


----------



## Quincy (5 April 2010)

> THE Rudd government has sought to hose down concerns that foreigners are buying up Australian homes and pricing locals out of the market, but has conceded it is investigating an emerging trend.






> Real Estate Institute of Victoria research manager Robert Larocca said there was an urgent need to compile figures on foreign investment in the resident property market in Melbourne. The suburbs that were attracting the biggest investment from overseas were suburbs in the inner east that had a high concentration of private schools.




http://www.theaustralian.com.au/pol...-property-buyers/story-e6frgczf-1225849640862

This trend is also happening in Sydney, particularly in the north western  metropolitan area. Whole suburbs in the north west of Sydney have become predominantly Chinese occupied now (eg. Ryde, Eastwood, Epping, Carlingford).  Many shops and businesses in the area now display Chinese signage (English translation is shown in smaller type below the predominant Chinese type) and it is obvious that they are marketing their businesses to the increasing number of Chinese speaking customers in the area.


----------



## Paulo30 (5 April 2010)

Yeah this has been happening for some time.. and not just NW.. even areas in the South, such as Hurstville are now largely Chinese owned (HK, and mainland), although it doesn't take a genius to work that out when walking down the street there.

Foreign ownership of land, esp. in Sydney where there is a housing shortage, has to be *the most irresponsible thing any government has ever done*.. when there is an over supply of migrants, a baby-boom, adding foreign investment into the demand not only forces prices up, but forces locals and CITIZENS to then have to move 2 hours out of Sydney into the sticks in order to afford a place to live.

I know of at least 2 friends, originally from HK, who came here, liked it, bought a place in Flemington outright (another foreign ownership hot spot), and now are applying for PR. If this is just a few that I personally know about.. then how many times is this happening? 

I don't want to be negative, but I don't hold much optimism for the kids of today in this country owning a property.. 



Quincy said:


> http://www.theaustralian.com.au/pol...-property-buyers/story-e6frgczf-1225849640862
> 
> This trend is also happening in Sydney, particularly in the north western  metropolitan area. Whole suburbs in the north west of Sydney have become predominantly Chinese occupied now (eg. Ryde, Eastwood, Epping, Carlingford).  Many shops and businesses in the area now display Chinese signage (English translation is shown in smaller type below the predominant Chinese type) and it is obvious that they are marketing their businesses to the increasing number of Chinese speaking customers in the area.


----------



## MR. (5 April 2010)

drsmith said:


> That article makes the common sense suggestion of capping the deductions associated with negative gearing.
> 
> I wonder though whether the government now fears that this in itself could prick the bubble.
> 
> ...




"Rising house prices and rising interest rates create the perfect climate for negative gearing" stated the article. With rising house prices the yield would certainly have some catching to do! 

Not sure how much the governments reallocation of public housing to private investors would have had back in the 90's. But somewhere along the way definitely.


----------



## Go Nuke (5 April 2010)

Paulo30 said:


> Yeah this has been happening for some time.. and not just NW.. even areas in the South, such as Hurstville are now largely Chinese owned (HK, and mainland), although it doesn't take a genius to work that out when walking down the street there.
> 
> Foreign ownership of land, esp. in Sydney where there is a housing shortage, has to be *the most irresponsible thing any government has ever done*.. when there is an over supply of migrants, a baby-boom, adding foreign investment into the demand not only forces prices up, but forces locals and CITIZENS to then have to move 2 hours out of Sydney into the sticks in order to afford a place to live.
> 
> ...




+1 to all you have said!:iagree:

Put a stop to foreign investment so Aussies can afford houses!

Racist, protectionism...call it what you like..I don't care.
Its more about the chance my kids (which i don't have yet), have of affording a home in Australia.

utthedoor:


----------



## Go Nuke (5 April 2010)

robots said:


> hello,
> 
> good evening, good evening
> 
> ...




Hi Robots,

Although i find you to be a very hard person to read....I'd like to know what you think about Brisbanes auction clearence rates?

Why are they so low etc?

Thx in advance.


----------



## UBIQUITOUS (5 April 2010)

Go Nuke said:


> Hi Robots,
> 
> Although i find you to be a very hard person to read....I'd like to know what you think about Brisbanes auction clearence rates?
> 
> ...




I'm not so sure that Robots realizes that there is a world outside of Melbourne. I will therefore answer your question:

Brisbane has low auction clearance rates because sellers are setting reserves at futuristic guaranteed house price levels. Buyers need to start the bidding at 30% above the expected price to have a chance of joining the escalator to never-ending easy wealth generation.


----------



## UBIQUITOUS (5 April 2010)

Go Nuke said:


> +1 to all you have said!:iagree:
> 
> Put a stop to foreign investment so Aussies can afford houses!
> 
> ...




"Forin investmunt...it's dem migrunts...blah blah blah".  I'm hearing this quite a bit recently. It certainly flavour of the month. Yes, they're not helping matters, but the problems were around well before this latest bit of finger pointing. I prefer to blame the root cause which is the never ending willingness of lenders to push (and borrowers to take) debt. Everything else is just a sideshow.


----------



## drsmith (5 April 2010)

MR. said:


> "Rising house prices and rising interest rates create the perfect climate for negative gearing" stated the article. With rising house prices the yield would certainly have some catching to do!



Or alternatively the value of the property falling.



MR. said:


> "
> Not sure how much the governments reallocation of public housing to private investors would have had back in the 90's. But somewhere along the way definitely.



My reference was not to that but to the capping negative gearing. This would obviously reduce the allocation of government funds to private housing investment.

I think back to Paul Keating's experience in the mid 80's when he went the whole hog and abolished negative gearing only to retract that decision a relatively short time later. He combined going too far at a time when interest rates were high and so the impact on residential investors was too large.

If he (or Howard/Costello) acted in the 90's instead when interest rates had fallen and applied a cap (say, deductions to a maximum of 150% the property's income for example) then the impact would have been much less and it may have worked. This would have then reduced one element on the supply side fuelling the current boom. Costello actually made things worse by introducing the 50% CGT discount for investments held for more than one year fuelling shorter term speculation.


----------



## Dowdy (5 April 2010)

There's nothing wrong with Asians owning property *IF* they live in it.

The problem is the Chinese buying property and leaving them empty.


----------



## MR. (5 April 2010)

drsmith said:


> My reference was not to that but to the capping negative gearing.




Yes, I did realize that and do agree.  

Three friends very recently purchased investment properties. Not surprisingly their purchases were all about the negative gearing while they waited for their properties to increase in value. With one (age 40), I wasn’t surprised, but I just found out that the second (age 52) still has a hefty mortgage on their own home as well! The third (age 53) is now looking at buying a second highly leveraged investment property with his reasons mainly being the negative gearing.

Capping negative gearing certainly will have an impact. Too much of an impact? We will have to wait and see....


----------



## drsmith (5 April 2010)

One thing about a cap is it is more flexible than complete removal. It can be set a level to achieve a particular outcome like discouraging investment decisions driven largely by tax. Another possibility that comes to mind is different tax treatment for negative gearing between the construction of residential property and investing in established property.

I can't see a cap (or any other tangable restriction to negative gearing) being applied prior to the completion of the current boom/bust cycle. Governments themselves are too addicted to the punch in the residential property bowl.


----------



## tech/a (5 April 2010)

MR. said:


> Yes, I did realize that and do agree.
> 
> Three friends very recently purchased investment properties. Not surprisingly their purchases were all about the negative gearing while they waited for their properties to increase in value. With one (age 40), I wasn’t surprised, but I just found out that the second (age 52) still has a hefty mortgage on their own home as well! The third (age 53) is now looking at buying a second highly leveraged investment property with his reasons mainly being the negative gearing.
> 
> Capping negative gearing certainly will have an impact. Too much of an impact? We will have to wait and see....




All well and good if he is making $250K a year or more.
Other than that he's/they are punching above their weight.


----------



## MR. (5 April 2010)

drsmith said:


> I can't see a cap (or any other tangable restriction to negative gearing) being applied prior to the completion of the current boom/bust cycle. Governments themselves are too addicted to the punch in the residential property bowl.



We realize the fine line the RBA is running and I still don't really see inflation taking too much of a grip either. However, plenty of people continue to speak of high inflation. Latest property sales have identified the majority of the current buyers, so would it be unexpected if something is changed to negative gearing if the RBA fails to pull the speculation in?


----------



## CamKawa (5 April 2010)

Cash in the bank looks like the way to go doesn't it?
Tight rental market starting to ease 

Oh and more good news from Qld. 
Construction industry faces disaster: experts


----------



## robots (5 April 2010)

hello,

good evening great day on the planet, 

thanks to Ubiquitus for stepping in and answering a question, great effort and reinforces what ASF is about: helping each other out

tough for a few years but before you know it values creep up and loan value creeps down

5 yrs, 10yrs, 15yrs pass and you punching above your weight, and in some cases even easier leaving the joint empty than putting someone in

just fantastic,

thankyou
robots


----------



## MR. (5 April 2010)

Go Nuke said:


> I'd like to know what you think about Brisbanes auction clearence rates?
> 
> Why are they so low




Brisbane and SE Qld don't do alot of auctions because they don't really seem to work well here. I don't know why exactly! I know that some agents go to auction with the intention just to pass the property in at the venders bid and then promote the property as being passed in at $$$ afterwards. That will upset the Qld figures but I have no reason why that isn't practiced Australia wide anyway. 

Once as a vendor I instructed the auctioneer to keep dropping the price until he got a bid. I wanted the concept to work. He got a bid eventually but a second bidder still didn't step up to the plate. Another person from that auction ended up paying 50% more than the bid, a week later.



robots said:


> tough for a few years but before you know it values creep up and loan value creeps down
> 
> 5 yrs, 10yrs, 15yrs pass and you punching above your weight, and in some cases even easier leaving the joint empty than putting someone in
> robots




Since most people can't save committing to a property makes them commit to save. Can be a good thing.


----------



## drsmith (6 April 2010)

Dowdy said:


> Anyone see the interview with Glenn Stevens today on Sunrise?
> 
> http://au.tv.yahoo.com/sunrise/video/play/-/6994337/em-rba-em-governor-glenn-stevens/
> 
> ...



Up 0.25%.

http://www.rba.gov.au/media-releases/2010/mr-10-06.html

How does "considerable buoyancy" compare with "irrational exuberance" ?


----------



## tech/a (6 April 2010)

drsmith said:


> Up 0.25%.
> 
> http://www.rba.gov.au/media-releases/2010/mr-10-06.html
> 
> How does "considerable buoyancy" compare with "irrational exuberance" ?




Taking a ship across the English Chanel or swimming.


----------



## Go Nuke (6 April 2010)

UBIQUITOUS said:


> I'm not so sure that Robots realizes that there is a world outside of Melbourne. I will therefore answer your question:
> 
> Brisbane has low auction clearance rates because sellers are setting reserves at futuristic guaranteed house price levels. Buyers need to start the bidding at 30% above the expected price to have a chance of joining the escalator to never-ending easy wealth generation.




This is what I figured Ubiquitous.

So obviously people are not paying what the sellers want. Because they aren't getting sold after the auction either.

Thank you

It seems strange doesn't it.
We KNOW we need to build more houses...but interest rates just keep going up.
Won't thins hamper efforts to build more houses? Or will it lure investors back with higher rates of return?


----------



## robots (7 April 2010)

MR. said:


> Since most people can't save committing to a property makes them commit to save. Can be a good thing.




hello,

same thing happens with the leveraged person as well, they jump in and work at to get things in a good position

may take 5yrs but this is nothing in ones life

thankyou
robots


----------



## robots (7 April 2010)

hello,

http://www.heraldsun.com.au/enterta...-our-attractions/story-e6frf96x-1225850660152

oh yeah, they come and just want to stay, they all hooking up with aussies just fantastic and in my opinion why we No.1

we offer things no other joints offer and so aus doesnt go on those lists

just paradise, 

thankyou
robots


----------



## satanoperca (7 April 2010)

With another small rates rise yesterday, thank our govnuts that they didn't create the mess with mortgages like in the US.




Cheers


----------



## Tink (7 April 2010)

robots said:


> hello,
> 
> http://www.heraldsun.com.au/enterta...-our-attractions/story-e6frf96x-1225850660152
> 
> ...






Good to see you back Robots : )


----------



## satanoperca (7 April 2010)

Australia is different, it is the land of sunshine and lollipops.



> Mortgage borrowers can absorb much higher interest rates, says Moody's






> Moody's argues borrowers on a $300,000 mortgage would still be saving $415 a month compared to March 2008 when rates were at 7.25 per cent.




So really no one can complain. No pain and all to gain.

Fantastic.


----------



## damien275x (7 April 2010)

Wow, I've read through half of this thread and feel as though I'm no better off. All you get is one argument, followed by another which contradicts the first, etc etc. This had led me to develop a severe case of analysis paralysis. 20 years old, decent income, want to do something with my money but the more I read the more I am scared off. For now it is safely locked up in term deposits, (yes.. I am aware money in the bank is 'going backwards' but you know what - money in the bank is better than spending 99.999% of my paycheck each week just to get by)

I have come to the conclusion that life is a ripoff. Simple as that. As such, I plan to live at home paying minimal board for as long as my parents will have me. I don't use a lot of power, a lot of water, or eat their food. They would live here in this home regardless so I'm not really a burden on them financially by choosing to stay here. 

At the end of the day, a home to me is a place to sleep and I don't need my own. You all spend hundreds of thousands of dollars on them but let me ask you something - how many hours do you actually spend in them? Take away the time you spend sleeping, and the time you spend chained to your desk to earn your measly wage to pay the damn thing off and is it really worth it?

Maybe in 5-10 years when everything turns to absolute shiet again I'll be all cashed up and ready to take advantage of the situation, without a loan from some stupid bank. Life should be about living it up and having fun. I find it incredibly sad that we all get caught up in such mundane bullcrap just to get by, and that no matter how much we acquire, it's never enough and we continue to work for more, more, more. Jesus F*** christ.

My dad has plenty of money yet keeps working a job he hates, you can see the $$$ signs in his eyes.
It's like, you know what -you'll be dead in 20 years, what a waste of your life.


----------



## prawn_86 (7 April 2010)

I still dont get why people think having money in the bank means your savings are being eroded by inflation 

Providing your interest returns are > than the inflation rate, and you are compounding your savings, then why isn't that keeping pace (or growing faster) than inflation?


----------



## satanoperca (7 April 2010)

prawn_86 said:


> I still dont get why people think having money in the bank means your savings are being eroded by inflation
> 
> Providing your interest returns are > than the inflation rate, and you are compounding your savings, then why isn't that keeping pace (or growing faster) than inflation?




No. Interest Rates - Marginal Tax rate must be greater than inflation rate for you to stay ahead.

It sucks savings in the bank are tax and that is why debt is king.

Cheers


----------



## MR. (7 April 2010)

damien275x said:


> For now it is safely locked up in term deposits, (yes.. I am aware money in the bank is 'going backwards' but you know what - money in the bank is better than spending 99.999% of my paycheck each week just to get by)




Good on you and welcome to the warm fuzzy feeling only a TD can produce. 



> I plan to live at home paying minimal board for as long as my parents will have me. I don't use a lot of power, a lot of water, or eat their food. They would live here in this home regardless so I'm not really a burden on them financially by choosing to stay here.




Seems like a good decision for now.


----------



## awg (7 April 2010)

robots said:


> hello,
> 
> http://www.heraldsun.com.au/enterta...-our-attractions/story-e6frf96x-1225850660152
> 
> ...




Hi robots

Are you the guy that commented at 7.42am on that link?


----------



## TOBAB (7 April 2010)

damien275x said:


> I have come to the conclusion that life is a ripoff. Simple as that. As such, I plan to live at home paying minimal board for as long as my parents will have me. I don't use a lot of power, a lot of water, or eat their food. They would live here in this home regardless so I'm not really a burden on them financially by choosing to stay here.
> 
> Ever heard of independance???
> 
> ...


----------



## Dowdy (7 April 2010)

satanoperca said:


> It sucks savings in the bank are tax and that is why debt is king.
> 
> Cheers





Debt turns you into a slave. You find out you're working jobs you hate at hours you don't want to work all to get money. Not my idea of being king.





awg said:


> Hi robots
> 
> Are you the guy that commented at 7.42am on that link?




Robot's making that comment would be like me writing a Shakespeare.


----------



## satanoperca (7 April 2010)

Dowdy said:


> Debt turns you into a slave. You find out you're working jobs you hate at hours you don't want to work all to get money. Not my idea of being king.




Hi,

Agree with your sentiments, but the fact is savings are taxed at full marginal rate and CG on a asset using debt to leverage up being only 50% of your marginal rate, the system is designed for debt to be King.

I don't agree, nor adhere to it but it is how it is.

Add in inflation and debt wins again.

Cheers


----------



## robots (7 April 2010)

awg said:


> Hi robots
> 
> Are you the guy that commented at 7.42am on that link?




hello,

no wasnt me, but great writings from that individual

just like the awakening of China much of this story to you brothers is the emergence of Australia, the people, the culture, the way of life

its going to be a supercycle

chill damien275x, just relax man but to you start "squirelling" it away now man

thankyou
robots


----------



## awg (7 April 2010)

damien275x said:


> I have come to the conclusion that life is a ripoff. Simple as that.




lol, things could be worse



damien275x said:


> As such, I plan to live at home paying minimal board for as long as my parents will have me. I don't use a lot of power, a lot of water, or eat their food. They would live here in this home regardless so I'm not really a burden on them financially by choosing to stay here.
> 
> At the end of the day, a home to me is a place to sleep and I don't need my own. You all spend hundreds of thousands of dollars on them but let me ask you something - how many hours do you actually spend in them? Take away the time you spend sleeping, and the time you spend chained to your desk to earn your measly wage to pay the damn thing off and is it really worth it?




Some would opine your circs now are the best time to buy, if you can live at home and rent the property out, that can be very advantagious, not everyone can do that



damien275x said:


> Maybe in 5-10 years when everything turns to absolute shiet again I'll be all cashed up and ready to take advantage of the situation, without a loan from some stupid bank. Life should be about living it up and having fun. I find it incredibly sad that we all get caught up in such mundane bullcrap just to get by, and that no matter how much we acquire, it's never enough and we continue to work for more, more, more. Jesus F*** christ.




If things go that pear-shaped, inflation may wipe out your savings..do they still teach about Weimar Germany at school, or Zimbabwe for a more recent example..or the banks could go bust, fiat currency collapse



damien275x said:


> my dad has plenty of money yet keeps working a job he hates, you can see the $$$ signs in his eyes.
> It's like, you know what -you'll be dead in 20 years, what a waste of your life.




yes goddam, no-one shows any gratitude, almost enough to make a bloke grumpy


----------



## robots (7 April 2010)

Tink said:


> Good to see you back Robots : )




hello,

thanks Tink, listening to any Offspring recently

thankyou
robots


----------



## Go Nuke (7 April 2010)

satanoperca said:


> Australia is different, it is the land of sunshine and lollipops.
> 
> So really no one can complain. No pain and all to gain.
> 
> Fantastic.




http://www.theaustralian.com.au/bus...ates-says-moodys/story-fn4xq4v1-1225850875159

Yeah man.....I don't know WHICH planet this dude is living on :screwy:
He's so out of touch with "average" people imo

I'll take Bill Even's prediction thanks.


----------



## explod (7 April 2010)

robots said:


> hello,
> 
> thanks Tink, listening to any Offspring recently
> 
> ...




Starting to lose the faith in you ole pal, twice now and in a p/m reply to you have canvassed that meeting for a coffee break you promised and for a good old jaw bone down here in the Penisular when next you visit your Mum (and I am paying).  And do not fear, my dear wife will keep me well under the thumb. With your determination personified and my own pig headedness it is sure to have great repercussions.   Maybe there are some other ASF'ers in the area that may like to join in the fray.   Feel free to P/M

Maybe we could organise the property balloon over the MCG on the next Collingwood game and get Lee Matthews of Devine to hold the pin in pace at the landing platform.   t/h could anchour me on top to maximise the explosive pop.   It would surely be a most memorable day.   Probably need another 5 basis point rise in the loan rate but it may comne sooner than we think so lets get off of our ars.. s and get going on it.


----------



## robots (7 April 2010)

hello,

no worries, i am in Mt Martha now and for the next few days so saturday could be on the go

early riser explod?

i reckon a mid year hook-up with a few from ASF could be goer, Transport Bar at fed square a great place

thankyou
robots


----------



## GumbyLearner (7 April 2010)

robots said:


> hello,
> 
> no worries, i am in Mt Martha now and for the next few days so saturday could be on the go
> 
> ...




How about The Supper Club at 161 Spring St across from Parliament? I'm sure it would appeal more to your locale and tastes.


----------



## $20shoes (7 April 2010)

Just finished reading some interesting links that started over at Colin Twigg's forum and had me read on. 

Its testing my limited knowledge on economics but is an enlightening, albeit gloomy, outlook. 

What I find concerning is the lies we're fed. For example why does Hometrackaustralia feel we have a had a build up of excess stock of housing in the past six years and yet the mainstream media are shouting SHORTAGE.

http://www.incrediblecharts.com/economy/keen_debt_gdp.php

http://www.debtdeflation.com/blogs/


http://www.centreforeconomicstability.org/2010/01/12/how-expensive-is-housing/

(this one is particularly interesting) - 
http://www.centreforeconomicstability.org/2009/04/06/lies-damned-lies-and-housing-statistics/

IMHO, I'll use CBA as my Toll Bell - 60% of their lending book is mortgages running at a 20 times leverage ratio. If anything happens in the property market you'll see CBA's price collapse before the real estate data starts coming through.


----------



## robots (8 April 2010)

hello,

i wouldnt take to much notice of information from economists, most of them are just social commentators now, they run with the handout crew

they are like Alan Kohler on the abc news, great at pulling up a graph after the event has occurred

the true purveyors of forward thinking are onboard here

thankyou
robots


----------



## $20shoes (8 April 2010)

You have a point Robots. But I still prefer a good argument ( which it was, and was well researched) over the hyperbole that is often presented on forums and media. 


The only forward thinking I can see is the market itself. For example, why is there distribution in CBA right now? It does not correlate to a mortgage market that is undersupplied.


----------



## Mofra (8 April 2010)

satanoperca said:


> With another small rates rise yesterday, thank our govnuts that they didn't create the mess with mortgages like in the US.
> 
> 
> 
> ...



ARMS can be nasty little suckers - some of the more devious lenders in the US used fine print that was smaller than some of their customers could accurately read, with 4-5% jumps as of the reset date.

Say what you will about Australia; for all our flaws our consumer safeguards are miles ahead of those in the US.

FWIW I'd love a pullback in prices.


----------



## robots (10 April 2010)

hello,

good afternoon fellow members, superb day

forgot about this research website:

http://www.morrellandkoren.com.au/topend/

good data from a down on the ground crew instead of the closet bloggers

beautiful weather today, great to be alive and cycling around the streets,

great mix of architecture in The Economist rated, 3rd most liveable city in the world

thankyou
robots

ps. clearance rate coming to you around 7.30pm brothers


----------



## robots (10 April 2010)

hello,

good evening, stumbled across this a minute ago:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

WOW 85%, Grand Job

this goes out to all those holding, well done, great investment decisions and keep up the work

oh well, so much for the collapse once the First Home Owners Boost Bribe finished, whats the next reason for collapse?

thankyou
robots


----------



## cutz (10 April 2010)

robots said:


> WOW 85%, Grand Job




Wow,

Top job,

Congratulations to all you people bailing out at the top.

You've got the midas touch.


----------



## UBIQUITOUS (10 April 2010)

> It is interesting that in two out of the last three years demand and results from residential auctions have improved in the two months after Easter, the only exception was *in 2008 when demand cooled as a result of oversupply and interest rates.* There is no indication of any softening of demand this year.




Hey Enzo, what I do find interesting is that you have said that there was an oversupply in 2008, and never mentioned it back then. I wonder why.



> Common perception may be for buyer’s interest to cool off in the face of projected interest rate increases however that perception does not take into account the underlying factors driving the market – a significant gap between the housing needs of our growing population and our ability to provide them the homes they need to live in.




Enzo, you seem concerned about something. Was you analysis really necessary? I guess you are saying 'buy, buy, buy (please).


----------



## robots (10 April 2010)

hello,

good night everybody, sleep well and will catch up with you in the morning

dreamtime

thankyou
robots


----------



## robots (11 April 2010)

hello,

just rolls on and on brothers:

http://www.theage.com.au/entertainm...full-of-beans-in-brew-york-20100410-rzyb.html

great stuff, and mostly its the people who keep this joint rolling on and the property prices will tag along slow and steady

thankyou
robots


----------



## Bolle (11 April 2010)

that links to an article about melbourne-style coffee shops in new york... what does that have to do with property prices?


----------



## robots (11 April 2010)

hello,

we give the clowns in America a taste, holy cow, this is it man, lets get over to Australia

sun, surf, trees, beaches, way of life that floats a mile high above any other joint

then they stay, rent a place, buy a place become one with all the other brothers, fantastic

also realise they dont need to keep a 9mm in the console of the car or a tayser near the back door

paradise and plenty of room for others to join us on the ride 

thankyou
robots


----------



## greebly24 (11 April 2010)

Hey damien275x. Enjoyed your post. If you're young and earning good money, my advice would be to have as much fun as you can, while you still can. Save up and travel and party! Sleep with lots of beautiful young women who don't care about your income and assets. When you're older and got commitments & dependents & health problems, you'll look back on those times as the best of your life.

You will be constantly bombarded with crap like "life begins at 50", to which you should reply "yeah but it ends at 75" (the funniest things are the TV commercials which shows a retiree going surfing --- yeah right). This is just garbage from people trying to make money from you. Retirement is the beginning of the end of your life, not something to waste your youth on.

It depends on how much freedom you want in your youth but only consider buying an investment property if it is positively geared. Otherwise, do you really want to be paying a mortgage while you are backpacking around the world? But if you can find one that is near break-even, then the additional expense will be very beneficial in the long run. If not, and you've got some savings, consider diversifying. Keep some in term deposits, buy some speculative shares, some growth shares and some dividend shares. And maybe some gold. Make your capital more productive. Educate yourself in financial matters. There are easier ways to financial independence than being a wage slave and paying a huge mortgage.


----------



## robots (12 April 2010)

hello,

good day brothers, another amazing weekend

check this research article:

http://www.theage.com.au/business/p...on-recordbreaking-auctions-20100411-s0ut.html

fantastic, slow and steady

an asset class all australians should have in there portfolio

thankyou
robots


----------



## UBIQUITOUS (12 April 2010)

> * REIV chief executive Enzo Raimondo says listings for the next few weeks are almost double what they were this time last year




Yep, you said it Enzo. Plenty for sale!!!!


----------



## robots (12 April 2010)

hello,

does anybody actually have any NEW research as to why property prices will fall?

anyone?

thankyou
robots


----------



## drsmith (12 April 2010)

Why is obvious. That economic history lesson will not change.

When as always is the more difficult question. Perhaps when China takes a stumble along its path of economic growth.

As with all bubbles most won't see a problem until the punch bowl is empty. When it is there will be a rush for the exit and the government take from new party goers coming through the entry door will be severly reduced.


----------



## trainspotter (12 April 2010)

Nope ...... but I bet the guys who wrote this paper will be hiding in a closet somewhere?

http://cama.anu.edu.au/macroworkshop/Mark Crosby.pdf

I like point 5.) Conclusions the best myself !


----------



## robots (12 April 2010)

hello,

what bubble though

the legend Shadow continually provides evidence that aus does not have the highest price/income ratio in the world, many more countries have way higher prices and far less to offer

just appears to be all normal to me, non issue, got some $ buy a place, no $ then do something else

plenty of joints around to rent or buy

thankyou
robots


----------



## treeman (12 April 2010)

i agree with those that say they rather live their life then be stuck paying 95% of their pay towards a house that they might call their own when they are 60.

Back 10 years ago the property market was a great thing to get into. With the price of houses being quiet affordable, working hard it was possible to pay off a house in 5 - 10 years. Now the story is totally different. Buy some half ruin for 400k, spend 90% of your pay on bills and repayments and call the house "yours". The truth is you are paying rent either way, to the bank (interest) or the landlord.

You are either paying 40% or 90% of your wage, paying maintenance or having somebody else pay maintenance, sitting home eating instant snacks and not being able to afford to go to the pub constant in stress of meeting repayments, or living life being young, but wise!

You only live once and you are young once, like it was said before you are not going to be surfing at 50 or sleeping with beatifull 20 something women.

Its such a propaganda machine for the young thesedays, get yourself a fulltime job, get locked into a mortgage which you can barely pay off and live life 9-5 until your 50. Go on your annual holidays to queensland for 2 weeks each year and do the same thing with the same people for xmas.  

This is what you are told by those that need this whole scheme going in order for their own investments to be sustained. The trends are slowly turning, alot of young people are not materialistically motivated, they prefer to travel and see the world, meet other cultures, experience real adventures and simply live their life! Its just not the same as having your Clubsport Hsv on credit in your house on credit taking it for a spin on a Sunday lol.

Anyway my point is the housing market might not crash, it might not correct (unlikely) but in the end we are all born with nothing and leave with nothing. It makes me laugh and saddens me at the same time when I see another 20 year old fho saying how they plan to make 100k in 5 years or 10 years from their investment. Little do they realise the only people that benefit from them are their future kids and the ones who bought in to the property market 5 - 10 years ago.

Lets face it property prices might of went up 300% yet wages did not. If you buy a house for 600k today who in their right mind is going to be able to afford it and buy for 750k in 2 years? Investors from china? thats everobody's response. If I was to invest 750k id want to get more then 500 bux per week return on it lol. Its all about group mentality, its 2010 wonder if the next decade will still be stuck in the thinking of "the aussie dream"

please don't misunderstand its not a attempt at downramping the property market, I know heaps of people have a very big stake set on it including many honest families! It is my observation of the changing mentality of the new generation to come and the emerging bubble.


----------



## robots (12 April 2010)

hello,

thanks treeman, wonderful writings brother

and spot on, make a choice in life man, no big deal, it will be neither right nor wrong

i picked a path and the tingly feeling i get everyday is just amazing, its an aura that lifts me high into the sky, 

thankyou
robots


----------



## Uncle Festivus (12 April 2010)

robots said:


> hello,
> 
> does anybody actually have any NEW research as to why property prices will fall?
> 
> ...




consumer debt at 174% of GDP
outstanding balances on credit cards up from $44.7 billion to $45.2 billion
government guarantee of banks borrowing has supplied cheap funds for property
It's still all about debt, but never about how to pay it back and have an acceptable quality of life - working for the banks more like it ....



> One in five (19%) Australians with debt finding it difficult to make repayments, or unsure how they will make their next repayment.
> The study, conducted by Galaxy research, found four in five (82%) Australians worry about the ability to repay debt over the next 12 months - up from 76% of Australians in September 2009.
> 
> This is the highest level of debt stress in the past two-and-a-half years of this study.
> ...




Unaffordable for the locals ie Australians - sell it to foreigners.....



> The most recent first-home buyer affordability index plummeted 18.4 per cent in the final quarter of 2009 to a reading of 120.1 from 147.1 in the September quarter, on HIA and Commonwealth Bank numbers, as more Australians found themselves priced out of the housing market.




China stimulis credit, though Chinese investors, flows into our prices too, as it will 'unflow' when stimulis is reduced



> Property prices in China rose at the fastest pace in almost two years in February, spurring warnings of asset bubbles. Hedge fund manager James Chanos said last week that China is “on a treadmill to hell” and that the land market is a bubble that may burst as early as this year. Pan Shiyi, chairman of Soho China Ltd., said April 10 excess capital has driven rapid gains in auction prices paid for land and fueled a bubble.




http://www.businessweek.com/news/20...is-overheated-nomura-asset-says-update1-.html

Rising local interest rates - seeing the stragglers arive to the party.....who just happen to be - <investors> - who supplant first home buyers, who are now priced out of the market. And so we move further up the unaffordability ladder. 



> April 12 (Bloomberg) -- Australian home-loan approvals fell in February for a *fifth straight month* after central bank Governor Glenn Stevens boosted borrowing costs and the government cut grants to first-time buyers.
> Waning demand for approvals adds to evidence that Governor Stevens’ decision to boost the benchmark interest rate five times in six meetings is cooling domestic demand.




http://www.businessweek.com/news/20...home-loan-approvals-decline-1-8-update1-.html

Australian banks have had their fill of 'easy' loan growth with easy, cheap funding? To the point of overexposure and at the expense of business?


----------



## UBIQUITOUS (12 April 2010)

robots said:


> hello,
> 
> what bubble though
> 
> ...




Hey Robots,

Here's one for you from today, which is especially worrying as the person it comes from is no Stevo Keen.

http://www.smh.com.au/business/the-china-bubble-20100412-s34b.html

The horror stories are now coming thick and fast. Even your buddy Enzo seems to be affected.


----------



## robots (12 April 2010)

hello,

oh yeah, ramp it down so you get a few more buying into your funds, CFD's, futures, forex

usual vested interest article, most bloggers fall into this

hidden deals in companies

thankyou
robots


----------



## Uncle Festivus (12 April 2010)

Tempted to sell yet Myra?


----------



## kincella (12 April 2010)

Hi Robots,
the funny thing is that China is trying to curb its own property growth, by clamping down....
but the Chinese are over here, buying up OZ property.....,with their cheap money...they are not using the OZ bank's high rates...
see the article liniked over in the interest rate thread today....could not see many asians in that photo though....and really high prices

they all forget, they are all trying to climb into the honeypot together, resticted to the honey in the inner suburbs....
but there are bargains galore out side that pot...

I put a lot of the problems today down to the 'dumbing down of society' thats been going on for the past 30 years....


----------



## trainspotter (12 April 2010)

Not sure about a bubble but possible a slow down due to increased interest rates. I do not forsee a freefall similar to USA or Hong Kong etc. basically due to the regulatory policies in place with the banks servicing criteria, as well as Lenders Mortgage Insurers who insist on independent valuations to cover the price point and they must be accredited panel valuers who have Professional Indemnity. SO therefore if the market does hit the wall then the Insurance companies covering the valuers will be hit in the nads. UNLIKELY !

http://www.thebull.com.au/articles_detail.php?id=1372

We do not have sub prime lenders in Australia nor do we have No recourse loans here. If you sign up for debt then the banks can follow you to the ends of the earth to get their money. Both personally or by way of Guarantees over the directors of companies or the companies themselves with a fixed and floating charge.

Stick to your guns robots. Like you say ..... it's about personal choice. If you have the $$$$ put it into property. If not ... put it where you think it would will make you money. Funny how in here it is OK for everyone to naysay in regards to property but you are not allowed to ramp down stocks?? HA hah ah ahha ha ha aaaaaaaaaaa ???


----------



## awg (12 April 2010)

Probably should have a thread of its own

checked your electricity bill lately?

my last one was $700+ with forecasts of 62% rise over next 3 years.

With thermally inneficient housing in Western Sydney (and many other places)
I can guarantee many will be unable to cope with the massive double whammy of increased bills plus UNDOUBTED interest rate increases.

And their yards are too small to grow enough grass to eat:

I predict a large surge in defaults in certain areas, and that could be contagious.

Of course the high end will not be affected as much by increased costs,  because, like me (just), they can afford to pay. 

I am not sure exactly how bad the increase will be in other states, as the driving forces behind the NSW increases are the politics and economics of the portended sale of Elec assets, and the inept and disgraceful mismanagement of power infrastrucure maintenance


----------



## MR. (12 April 2010)

robots said:


> hello,
> 
> does anybody actually have any NEW research as to why property prices will fall?
> 
> anyone?




ABS Housing Finance Feb 2010 released today.  
http://www.abs.gov.au/AUSSTATS/abs@...05DBCE56402EC566CA25723D000F2999?opendocument

Property sales volumes are still falling. 

June 2009 56,265 existing homes sold (recent peak cash rate 3%)
Feb 2010  42,156 existing homes sold

Sept 2009 2,723 new homes sold (recent peak cash rate 3%)
Feb 2010 2,193 new homes sold 

Updated the chart below with current and more accurate data.
http://www.abs.gov.au/AUSSTATS/abs@...sues&prodno=5609.0&issue=Feb 2010&num=&view=&
http://www.rba.gov.au/statistics/cash-rate.html

Housing volumes still seem to be governed by interest rates! 
Still expect prices to follow volumes. Will be interesting!


----------



## satanoperca (12 April 2010)

robots said:


> hello,
> 
> oh yeah, ramp it down so you get a few more buying into your funds, CFD's, futures, forex
> 
> ...




Think you are being a little off the mark there. 

Uncle Festivus simply tried to answer your question, didn't see any mention of CFD, futures, forex.

You may have just provided a contrarian indicator for the property market, a bull not liking the facts.

Cheers


----------



## robots (12 April 2010)

hello,

that reply was to Ubiquit who posted an article form the chancelor who runs a fund business

so yes, negative comments to property equal $ heading into the fund

good info MR, i hope sales decrease even more

thankyou
robots


----------



## Uncle Festivus (12 April 2010)

trainspotter said:


> Not sure about a bubble but possible a slow down due to increased interest rates. I do not forsee a freefall similar to USA or Hong Kong etc. basically due to the regulatory policies in place with the banks servicing criteria, as well as Lenders Mortgage Insurers who insist on independent valuations to cover the price point and they must be accredited panel valuers who have Professional Indemnity. SO therefore if the market does hit the wall then the Insurance companies covering the valuers will be hit in the nads. UNLIKELY !




Are you sure? I don't think Professional Indemnity works that way? In any event, are you saying prices can't go down (below what a valuer has priced them at) because the insurers will get all upset and such???



trainspotter said:


> We do not have sub prime lenders in Australia nor do we have No recourse loans here. If you sign up for debt then the banks can follow you to the ends of the earth to get their money. Both personally or by way of Guarantees over the directors of companies or the companies themselves with a fixed and floating charge.




That must be why the banks have put aside $35 BILLION for non performing loans? Ever heard of Bankruptcy or Mortgagee In Possession sales??



trainspotter said:


> Stick to your guns robots. Like you say ..... it's about personal choice. If you have the $$$$ put it into property. If not ... put it where you think it would will make you money. Funny how in here it is OK for everyone to naysay in regards to property but you are not allowed to ramp down stocks?? HA hah ah ahha ha ha aaaaaaaaaaa ???




Not naysay, just balancing up the Botmeisters perpetual ramp ups


----------



## satanoperca (12 April 2010)

> Interest rates heading for 10 per cent, experts warn




http://www.news.com.au/money/interest-rates-heading-for10-per-cent/story-e6frfmci-1225852259386



> economists at Macquarie Bank and Commsec, the Commonwealth Bank's investment arm, have both forecast the cash rate will hit "pre-crisis highs" of 7.25 per cent by 2012 if the economy continues to perform so strongly.
> 
> Since banks have expanded their profit margins during the financial crisis, that translates to variable mortgage rates of 10.1 per cent - the highest since 1996.




Good to here that some people believe the economy is going great guns and will continue to do so.

Fantastic news. We live in a great country.

Cheers


----------



## trainspotter (12 April 2010)

Uncle Festivus said:


> Are you sure? I don't think Professional Indemnity works that way? In any event, are you saying prices can't go down (below what a valuer has priced them at) because the insurers will get all upset and such??
> 
> That must be why the banks have put aside $35 BILLION for non performing loans? Ever heard of Bankruptcy or Mortgagee In Possession sales??
> 
> Not naysay, just balancing up the Botmeisters perpetual ramp ups




1) I am saying that if a valuer places a value on a certain property and if there is LMI involvement and a bank forecloses then the Valuer is liable for the LOSS made by the LMI (in certain mitigating circumstances) The insurers will pursue the Valuer involved if he has placed a value on the property and the financier/LMI suffers a loss.

2)Yes I have but there is a recourse in place ... that's why they are called bankruptcy and Mortgaee in Possession sales. A non- recourse loan means you can walk in to the bank, borrow money, not pay it back, default then hand back the keys and NO REPURCUSSIONS. NO BANKRUPTCY, NO BAD DEBT, NO CRAA.

3) robots is of an idealogy that has it's place in here and he believes in property. Balance is required for sure but if you read between the lines the blogger has not been wrong yet. No bubble, no reversing of prices, auction rates still clearing at high %. What more do you want?


----------



## MR. (12 April 2010)

robots said:


> i hope sales decrease even more




Decrease in sales volumes = More demand for the limited supply?

Could be,.... but I doubt it!  More like:

Decrease in sales volumes = More not buying overpriced property!


So, what's driving the recent auction results? 
Publicity from the end of year property price increases and investors are flocking in?


----------



## robots (12 April 2010)

hello,

those with the $ are in and always around

big thing i believe is the way the government is changing "Super" (rules)

all minor issues which add up to a major issue when one wants to kick back prior to being 65 (or is that 67?)

upsize the family home (no tax at end of game), buy a little joint in the city, treechange or seachange

sell something, hold something, get some income and capitol growth, plod along, pay tax on 50% of capital gain and put in wife's name or when you decide to take year off

most of all YOU in control and the miniscule amount of tax you pay for this is irrelevant 

the auction activity is just people getting it

thankyou
robots


----------



## ands (12 April 2010)

MR. said:


> Decrease in sales volumes = More demand for the limited supply?
> 
> Could be,.... but I doubt it!  More like:
> 
> ...




People have to live somewhere.


----------



## MR. (12 April 2010)

robots said:


> the auction activity is just people getting it




In addition to your reasons, wonder if the media hype over last year's gains, have encouraged a few more side liners to jump in "all of a sudden"?  



ands said:


> People have to live somewhere.




Yes, but did they sleep outside or did they have a roof over their heads last night?


----------



## robots (12 April 2010)

hello,

maybe so, the media is still pumping up the negatives more than anything i believe

would be 5 negative to 1 positive article, been that way for a long time because of the vested interests the media outlets have (ie. fund businesses/interests)

thankyou
robots


----------



## Scalper23 (12 April 2010)

A property investor said that investment property loans are similar to margin loans on shares. If the value of the property falls under the loan value by x amount, the bank wants the difference. If the investor cant pay, this property and other assets may be liquidated to cover the shortfall, could include their primary residence. 
With home loan rates forecast to rise upwards of 10% and investment loans higher are investors locking themselves into a dangerous situation?

If rates go too high as in late 80s early 90s the average home price  in melbourne may drop dramatically causing a domino effect in forced sales.

your thoughts appreciated.


----------



## CamKawa (13 April 2010)

Got to laugh at Fairfax media. A few weeks ago they were saying

Red-hot Melbourne market starts to glow white 
"MELBOURNE'S property market is shaping up to record its strongest pre-Easter results due to insatiable demand."

now they are saying

Housing market to weaken as buyers retreat 
"BUYERS are retreating from the Melbourne property market at the rate of 600 a month, causing real estate professionals to predict an ''exhausted market'...'

lol


----------



## Dowdy (13 April 2010)

robots said:


> hello,
> 
> maybe so, the media is still pumping up the negatives more than anything i believe
> 
> ...






CamKawa said:


> Got to laugh at Fairfax media. A few weeks ago they were saying
> 
> Red-hot Melbourne market starts to glow white
> "MELBOURNE'S property market is shaping up to record its strongest pre-Easter results due to insatiable demand."
> ...





Then going by Robots logic then that would mean a few weeks ago the media was run by people invested in the RE market which would explain all the good news.

Due to the recent stories about the weakening RE market does it means that the media has had a takeover bid and it is now owns by the evil hedge funds.


----------



## Mofra (13 April 2010)

An interesting byline to the property debate - will the flood of Chinese borrowers collapse at some stage?

http://www.theage.com.au/business/the-china-bubble-20100412-s34b.html



> *The China bubble *
> 
> Edward Chancellor, a member of the asset allocation team for Boston-based GMO and, interestingly, the author of a recent Financial Times piece on Australian property, is a financial historian and bubble expert.
> 
> His 1999 book, Devil Take the Hindmost: A History of Financial Speculation, examined past speculative manias. Perhaps you've read articles comparing the tech boom and 1990s' bull market to tulipmania in 1630s' Holland.


----------



## Beej (13 April 2010)

Scalper23 said:


> A property investor said that investment property loans are similar to margin loans on shares. If the value of the property falls under the loan value by x amount, the bank wants the difference. If the investor cant pay, this property and other assets may be liquidated to cover the shortfall, could include their primary residence.
> With home loan rates forecast to rise upwards of 10% and investment loans higher are investors locking themselves into a dangerous situation?




Urban myth - totally false. Most investment loans work just like regular mortgages - make the payments and all is sweet. The bank can/will only perform a re-valuation/LVR assessment etc if you want to change something in the loan contract (like borrow some new funds against equity and so on). Not at all like a share margin loan.

Cheers,

Beej


----------



## Uncle Festivus (13 April 2010)

trainspotter said:


> 1) I am saying that if a valuer places a value on a certain property and if there is LMI involvement and a bank forecloses then the Valuer is liable for the LOSS made by the LMI (in certain mitigating circumstances) The insurers will pursue the Valuer involved if he has placed a value on the property and the financier/LMI suffers a loss.




Only if the valuer is proven to be negligent in his methodology of valuation, which is then a court case, so as far as being an issue if property prices fall, it is a non issue if the valuer has valued correctly. It (insurers having to pay up) in itself has no bearing or influence on property prices...



trainspotter said:


> 3) robots is of an idealogy that has it's place in here and he believes in property. Balance is required for sure but if you read between the lines the blogger has not been wrong yet. No bubble, no reversing of prices, auction rates still clearing at high %. What more do you want?




He has been wrong, as property prices fell last year. If it's not a bubble are you or would you be buying at these prices? At the very least it's not sustainable, a symptom of bubbles..


----------



## satanoperca (13 April 2010)

I know of three couples in recent years who were asked by the banks to come foward with extra money as they were over their LVR's on investment properties.

All three cases were the same, retired couples who had drawn equity out of their PPOR to by risky off the plan apartments.

In one case, the IP was sold by the banks and the couple had to give the bank the difference about $20K

Second case, bank sold the IP and the PPOR and the couple were down about $200K.

Third case, couple paid the bank the extra money and later sold the IP for break even.

So it can happen, depends on how leveraged up you are and how well you can service the debt.

Note : in all three cases the couples were retired, so income was an issue.

Cheers


----------



## robots (13 April 2010)

Uncle Festivus said:


> He has been wrong, as property prices fell last year. If it's not a bubble are you or would you be buying at these prices? At the very least it's not sustainable, a symptom of bubbles..




hello,

yes robots got it wrong, the melbourne median dropped a MASSIVE 6% during the BIGGEST financial/economic event since 1929

thats right brothers a HUGE 6% and now reached even higher figures than pre-GFC, oh yeah paradise (hope macca can repost that graph)

go with the flow brothers, yeah i'm in for another one right at the moment, 100% LVR thanks to working hard, reducing debt and not sitting out the front of coles 

thankyou
robots


----------



## Beej (13 April 2010)

satanoperca said:


> I know of three couples in recent years who were asked by the banks to come foward with extra money as they were over their LVR's on investment properties.
> 
> All three cases were the same, retired couples who had drawn equity out of their PPOR to by risky off the plan apartments.
> 
> ...




Sounds to me like in your examples their were serviceability issues - miss a payment and the bank has the right to review everything.


----------



## Uncle Festivus (13 April 2010)

robots said:


> go with the flow brothers, yeah i'm in for another one right at the moment, 100% LVR thanks to working hard, reducing debt and not sitting out the front of coles
> 
> thankyou
> robots




Another property? How much are you paying for it, house, unit or ?? Maybe we can follow along for the whole cycle from buy to sell again? Hit us with some details Robots


----------



## trainspotter (13 April 2010)

Uncle Festivus said:


> Only if the valuer is proven to be negligent in his methodology of valuation, which is then a court case, so as far as being an issue if property prices fall, it is a non issue if the valuer has valued correctly. It (insurers having to pay up) in itself has no bearing or influence on property prices...
> 
> He has been wrong, as property prices fell last year. If it's not a bubble are you or would you be buying at these prices? At the very least it's not sustainable, a symptom of bubbles..




Note I did write and even placed it in brackets (in certain mitigating circumstances) - hopefully this has cleared it up for you Uncle. Ummmm ... where did I mention that this would influence property prices? You mentioned that PI did not work this way? I mentioned that there is a clawback for the bank, the LMI and that the Valuer would ultimately be reposnsible and the client would be responsible for their debt to the bank and the bank has a legal right to pursue the person/company/entity that borrowed the money.

robots was wrong ?? Prices fell exactly where last year? Have you got a graph or a pie chart or a link to a website to back this statement? 

*Adviser Edge research director Louis Christopher said it was very unusual for the level of housing finance to be falling at the same time as auction clearances remain strong, with prices rising. *

http://www.theaustralian.com.au/bus...loans-in-decline/story-e6frg9gx-1225852932552

The softening of housing loans should allay any fear of bubble territory IMO.


----------



## robots (13 April 2010)

hello,

yes, i think you right Trainspotter

they actually went down a MASSIVE 6% in 2008, how time flies, and now they up BIGGER and BETTER than pre-GFC

the BIGGEST and BADDEST financial/economic event since 1929

more details will come Uncle Fest, contracts exchanged, i hope you still around at ASF in twenty years time because i wont be even considering selling till then

thankyou
robots


----------



## kincella (13 April 2010)

trainspotter...the puzzle with falling finance but rising house prices.....indicates to me...
1. it is quite obvious....there are cash buyers out there...they have no need for finance...they are cashed up...probably foreigners.....
2. I know of couples, who have traded up, the equity gained from the first home purchased 5 years ago, say plus 300k's, meant their loan remained the same....hence no increase in finance

the chinese may be land banking, others are also providing a home for their student children.....there is no requirement on them to sell the house when the situation changes......(another goof up by the policy makers)
the indians and other groups are pooling resources, accordingly they can afford to pay more and are sqeezing 10 or more into one house....

in china, fhb have to put up 20-30% deposit, 40% for a 2nd home, 60% for a 3rd house....so there is an incentive for them to come over here and do what they like, without such restrictions...
they have removed any discounts for those buyers......
just google 'chinese housing market'....for a variety of comment...

http://wallstreetpit.com/22962-no-housing-bubble-in-china


----------



## Uncle Festivus (13 April 2010)

robots said:


> hello,
> 
> yes robots got it wrong, the melbourne median dropped a MASSIVE 6% during the BIGGEST financial/economic event since 1929
> 
> ...






trainspotter said:


> Note I did write and even placed it in brackets (in certain mitigating circumstances) - hopefully this has cleared it up for you Uncle. Ummmm ... where did I mention that this would influence property prices? You mentioned that PI did not work this way? I mentioned that there is a clawback for the bank, the LMI and that the Valuer would ultimately be reposnsible and the client would be responsible for their debt to the bank and the bank has a legal right to pursue the person/company/entity that borrowed the money.
> 
> robots was wrong ?? Prices fell exactly where last year? Have you got a graph or a pie chart or a link to a website to back this statement?
> 
> ...




Um, according to Robots prices fell a HUGE 6%.

I can assure you that the valuers won't be held responsible for valuing a property at the prevailing conditions. Actually I don't understand where you are going with this??

I might add, further to Robots request for new reasons as to why property is due for a fall - perhaps a hard landing - and that is a credit crunch is unfolding right now globally. The Fed purchased $1.25 Trillion in MBS, but has now stopped. Global competition for credit will take Australian interest rates much higher in order to compete with the rest of the world. 

Along with the unwinding of the low interest currency carry trade which will start to look at the relative safety of US Treasuries out of Australian instruments ie local banks funding requirements. Tis only a matter of time "brothers"?


----------



## Trembling Hand (13 April 2010)

Uncle Festivus said:


> Along with the unwinding of the low interest currency carry trade which will start to look at the relative safety of US Treasuries out of Australian instruments ie local banks funding requirements. Tis only a matter of time "brothers"?




Unless the Yuan gets revalued then the Skippy will be a proxies for it and become super charged. Leading to Risk trade on steroids!!


----------



## robots (13 April 2010)

MACCA350 said:


> Past that........
> 
> 
> 
> ...




hello,

i knew macca350 (probably busy back at school) had posted this up earlier in the thread, OH YEAH

going down to get a slab of ruski's

thankyou
robots


----------



## trainspotter (13 April 2010)

And to which the prices have now surpassed pre GFC? GOSH ! Some shares went down 50% and Superannuation went down 30% and certain parts of Melbourne property dropped 6% ??? If robots says this has happened then it must be true !

Got any documentary proof of the "free fall"or "hard landing" as you put it?

You asked the question in relation to PI for valuers and if they are reposnsible for a shortfall. I am not driving this buggy anywhere? You asked a question and I provided an answer as to WHY the housing market in Australia has mechanisms in place unlike USA with their sub prime lending and NO RECOURSE loans. AND that LMI rely on panel valuers who have PI in place as another layer to reduce the impact of a repo sale.

If Australia is at 4.25% IR and America is at .25% an Japan is at .01% interest rates WHY would there be a funding shortfall for Global competition for credit? Surely they would be lining up at the door to get their grubby little mits onto such high rates??


----------



## kincella (13 April 2010)

couple of more interesting points.....
our % of household debt....as a % of assets...is only around the 17% mark
equals equity of 83%....see graph 3
thats the affect high house prices  have on that little old loan, taken out years ago

http://www.bis.org/publ/bppdf/bispap46e.pdf

I note our debt as a % of disposable income is at 135%....
see graph 2 of the link above......comparable with the US and UK...

but see China at only 40%  (Australia is not in this graph)...link below

http://wallstreetpit.com/22962-no-housing-bubble-in-china

I guess everyone can take things out of context...focus on the adverse side...
but at the end of the day...when you see the ratio of debt to assets...it looks very different...

also,  as the news of 10% rates as in yesterdays news....one would think the banks would be factoring in those giant fixed rates by now....they are not, so maybe they are conditioning the kids to lock in some fixed rates...that part of the market has been lagging......
see how the banks manipulate the players....

....their books are full...they dont want any more home loans at the moment...
neither do they want to lend to business.....not when they have it so easy with the credit cards....also they have the govt attacking for rate rises....so the best ploy is to get the worker drones into the higher fixed rate market

interesting times we live in


----------



## trainspotter (13 April 2010)

*Lender Product Rate *
ANZ 3 year Fixed 7.83% 
Citibank 3 year Fixed 7.99% 
Commonwealth Bank 3 year Fixed 7.74% 
Heritage Building Soc 3 year Fixed 7.75% 
ING DIRECT 3 year Fixed 7.59% 
RAMS Home Loans Fixed Rate 3yr 7.54% 7
St George Bank 3 year Fixed 7.69%  

If rates are going to 10% then why are the lenders still offering under 8% for a 3 year fixed rate? It does not make sense? Banks NEVER lose.


----------



## cutz (13 April 2010)

trainspotter said:


> If rates are going to 10% then why are the lenders still offering under 8% for a 3 year fixed rate? It does not make sense? Banks NEVER lose.




Rates will slowly grind up, 

Banks will lock you in for 3 years, who cares, they have already sourced the cheap funding (check out the 3 year term deposits) and even *if* rates eventially do go up to ten percent, you will have already paid the bank's cost plus more averaged over the term of the loan.

Remember the 363 rule,

Borrow at 3, lend at 6, golf course at 3.


----------



## Mofra (13 April 2010)

satanoperca said:


> Note : in all three cases the couples were retired, so income was an issue.



So they weren't standard mortgage products? They sound like reverse mortgages which have much more stringent LVR restrictions than standard products.


----------



## kincella (13 April 2010)

I agree Mofra....they fall outside the consumer credit code....and off the plan would fall into that category....plus as another poster suggested, if you refinance etc its all up for review....
I noticed some ridiculous valuations from the scaredy cat valuers  at the height of the GFC....in one case a difference of 100k within 3 months from 2 different valuers..of course prop prices never went down to those levels....which makes them look pretty stupid...
also know of a valuer that is no longer contracted to the big banks.....he kept getting it so wrong....
so if you are unlucky enough to be caught in that scenario....no wonder some lose out....
some times its best to just keep quiet...dont make any changes in borrowings...wait for the tide to go out...wait for  sense to return to the market


----------



## satanoperca (13 April 2010)

Mofra said:


> So they weren't standard mortgage products? They sound like reverse mortgages which have much more stringent LVR restrictions than standard products.




I believe they were all interest only investment loans that utilised existing equity in full owned PPOR's,

Cheers


----------



## MACCA350 (13 April 2010)

robots said:


> hello,
> 
> i knew macca350 (probably busy back at school) had posted this up earlier in the thread, OH YEAH
> 
> ...



Yeah, sorry Robots, dropped the ball on that one...........been busy. I'm chuffed you think I'm still a school goer must be young at heart 

Here it is again
REIV





One can flick through different suburbs.

I should correct you on one point though............it was an almost 14% drop from the peak in Dec 07 to the low in Mar 09.

Since then there's been a 33% increase in just 9 months and an increase of almost 15% over the 07 peak............I don't know but that just seems like bubble territory to me.

cheers


----------



## robots (13 April 2010)

hello,

sorry brothers, just back from tennis 

thanks Macca350, i thought you are actually a school teacher and with school starting back you may be fine tuning the year's curriculum

thankyou
robots


----------



## Beej (13 April 2010)

Uncle Festivus said:


> Um, according to Robots prices fell a HUGE 6%.




That was in 2008 UF - we are nearly half way through 2010 now! How time flies, and how house prices just keep on rising......Sydney and Melbourne in particular doing very well. Also no real sign of a great credit induced price bubble based on the soft ABS housing finance numbers of the past 7 months - in fact credit growth has been quite low compared to 10/20 years ago (see this graph: http://www.businessspectator.com.au...dyhtml/0.2354!OpenElement&FieldElemFormat=jpg)

So it would appear something more fundamental is driving the market currently (pent up demand, cashed-up buyers, foreign buyers perhaps to some extent and so on).



> I might add, further to Robots request for new reasons as to why property is due for a fall - perhaps a hard landing - and that is a credit crunch is unfolding right now globally. The Fed purchased $1.25 Trillion in MBS, but has now stopped. Global competition for credit will take Australian interest rates much higher in order to compete with the rest of the world.
> 
> Along with the unwinding of the low interest currency carry trade which will start to look at the relative safety of US Treasuries out of Australian instruments ie local banks funding requirements. Tis only a matter of time "brothers"?




I know you believe in all that stuff pretty passionately, but there are no signs of any great credit crunch heading our way in Australia. Our capital requirements are pretty small fish on the global scale, and as others have pointed out our relatively high interest rates make us an attractive destination for all the capital we need. No risk of sovereign default etc or even any likely issues with our big 4 banks either, especially compared to elsewhere - we are a safe haven!

Personally I don't see interest rates heading too much higher from here for next couple of years. Maybe another 0.5% max more by the end of the year.

If/when the current high dollar/high interest rate carry trade does unwind, the biggest impact will be a falling aussie dollar, which actually reduces our banks capital needs on EUR or $US terms, helping to ease the situation quite a bit. It's all quite self correcting actually, but nothing is certain. The odds are stacked in favour of a situation normal -> continuing to improve terms-of-trade/capital availability outcome for Australia though, rather than the scenario you see panning out IMO.

Cheers,

Beej


----------



## MACCA350 (13 April 2010)

robots said:


> hello,
> 
> sorry brothers, just back from tennis
> 
> ...



Not me, but my father is which I may have mentioned in the past and that may be where you got that idea 

cheers


----------



## So_Cynical (13 April 2010)

Beej said:


> That was in 2008 UF - we are nearly half way through 2010 now! How time flies, and how house prices just keep on rising......Sydney and Melbourne in particular doing very well. Also no real sign of a great credit induced price bubble based on the soft ABS housing finance numbers of the past 7 months




Still rising? 



			
				SMH Link said:
			
		

> *Buyers are deserting the Sydney property market at the rate of 1000 a month*, causing real estate professionals to predict an ''exhausted market'' with prices plateauing for the rest of the year.
> 
> House prices to plateau as buyers flee in droves






			
				SMH Link said:
			
		

> High auction clearance rates and record prices notwithstanding, official figures show *the number of loans to buy houses in NSW slipped from 19,600 in September to just 14,300 in February after sliding in each of the past five months. *




http://www.smh.com.au/news/domain/a...-flee-in-droves/2010/04/13/1270924378270.html

So im concluding that its cashed up buyers cos new loans have fallen for 5 months in a row, we all know the FHB's have deserted the market and according to stock market volumes there's still alot of money not in the market, so assume some of its finding its way into housing and the assumed safety of that asset (super conservative money)

I think the fed Govt and the reserve bank are now prepared to let the real estate market fall a little, the GFC is over so nows the time to let the market go soft and keep that cash in the bank so they can totally drop the guarantee....and the Tax review out soon, perhaps negative gearing only on new housing??


----------



## MR. (14 April 2010)

kincella said:


> couple of more interesting points.....
> our % of household debt....as a % of assets...is only around the 17% mark
> equals equity of 83%....see graph 3
> thats the affect high house prices  have on that little old loan, taken out years ago
> ...




Does sound safe as a whole having on average 83% equity. Reminds me of my comment regarding BHP's leverage of just 15%.   



Beej said:


> That was in 2008 UF - we are nearly half way through 2010 now! How time flies, and how house prices just keep on rising......Sydney and Melbourne in particular doing very well. Also no real sign of a great credit induced price bubble based on the soft ABS housing finance numbers of the past 7 months - in fact credit growth has been quite low compared to 10/20 years ago (see this graph: http://www.businessspectator.com.au...dyhtml/0.2354!OpenElement&FieldElemFormat=jpg)
> 
> So it would appear something more fundamental is driving the market currently (pent up demand, cashed-up buyers, foreign buyers perhaps to some extent and so on).




Interesting link, just concluded before reading your post a 17.55% credit growth over the last two years (ie: 8% per annum) Credit is still growing even with the FEB10 figures. (ie: divide "owner occupied" volume into m$ amount and as of Feb10 $284,382 up from $235,514 two years earlier. (GREEN)) 

House prices are increasing and is reflected in those House Finance figures from the ABS per dwelling (GREEN) and ABS house sales (PURPLE). We don't know if more houses are actually selling though do we?. We know there have been some high clearance rates at auctions in some states of late! 

House loan sale volumes (RED) are down a lot, perhaps from interest rates (DARK BLUE) but prices are still climbing.  Why? I don't know, as you and others have stated or "Perhaps people are just still dancing" Loan volumes dropping must make an impact and did prior to the GFC (PURPLE) when christmas came to many as interest rates reduced. 
Loan credit per dwelling kept growing consistantly through the whole period apart from a slight pause during the GFC. (GREEN)

(LIGHT BLUE) Investment loans for housing in total $ terms. Just for an idear of where it's at.

All data from the ABS and RBA.


----------



## UBIQUITOUS (14 April 2010)

So_Cynical said:


> Still rising?
> 
> 
> 
> ...





I reckon that those clearance rates are absolute bull. I wouldn't put it past the various RE institutes.

As for negative gearing, it's looking like a plain awful reason to buy an investment property right now.

http://www.smh.com.au/business/rent...use-despite-interest-rises-20100413-s7m9.html



> ''Affordability is a brake on rising rents,'' he said. ''At least one quarter of the rental market is in housing stress. The idea that rents can keep going up regardless of people's income or affordability is wrong.''


----------



## MR. (14 April 2010)

Are "Investment Loans" just returning to normal of 30 - 31% of total housing loans? 

Some figures from before Jan08
July 07 = 32.5%
Jan 07 = 29.3%
July 06 = 30.5%
Jan 06 = 30.9%
July05 = 31.5%
Jan 05 = 34.3%
July 04 = 34.8%

This can't be Glenn Steven's concern can it?

Data from ABS
http://www.abs.gov.au/AUSSTATS/abs@...sues&prodno=5609.0&issue=Dec 2009&num=&view=&


----------



## Uncle Festivus (14 April 2010)

Some 'what the!' facts - 

The Big 4 Banks reduced mortgage lending by 82% in March while non-traditional lenders doubled their lending.
37% of March mortgage lending was for refinancing purposes
The banks grew their loan book in residential housing by $75 billion in the last 18 months.
The Big Four Aussie banks expanded their control over the Aussie mortgage market from 65% to 75% in the last 18 months.


----------



## Beej (14 April 2010)

Uncle Festivus said:


> Some 'what the!' facts -
> 
> The Big 4 Banks reduced mortgage lending by 82% in March while non-traditional lenders doubled their lending.
> 37% of March mortgage lending was for refinancing purposes
> ...




Got links for those "facts"?? The first one looks very unlikely to be true to me. The others could be correct. Re refinancing, what's the normal amount of re-financing done in any given month??


----------



## MR. (14 April 2010)

http://www.afgonline.com.au/
http://www.lendingcentral.com/tag/afg-mortgage-index/

"AFG data also shows lending by the major bank groups (i.e. the ‘Big Four’ banks and their subsidiaries) reduced to 82% during March, with the non majors accounting for 18% of all new loans."

Still, from 92.5% for the big four down to 82%!


----------



## Uncle Festivus (14 April 2010)

Beej said:


> Got links for those "facts"?? The first one looks very unlikely to be true to me. The others could be correct. Re refinancing, what's the normal amount of re-financing done in any given month??




Woops, should be 'to' instead of 'by'

http://corporate.afgonline.com.au/i.../web_content/mortgageindex-apr10-national.pdf


----------



## TOBAB (14 April 2010)

Uncle Festivus said:


> Re the fall in prices, I was pointing out an error in some claims from a previous erroneous post.
> 
> What we are seeing now is a combination of the effects of reflation efforts globally and flawed government policy which distorts property prices ie negative gearing & subsidies, along with the usual RE industry hype along the lines of 'buy now or miss out'. The buying pool is fast diminishing, down to local & Chinese & Indian investors. A local petrol station was bought by a family of Indians who promptly sacked all the employees and staffed the place with family members - not many locals use them anymore.




I find the discussion on negative gearing interesting. It would seem there is intent on either removing or making it specific to new builds. From a mkt based economic rationale this does not make sense. If you remove the deductibility of interest you must likewise remove the CGT component. If not there is a massive distortion to the market and good luck with anyone investing in property at all! Rental mkt gone, building industry stuffed, plenty of people on the streets.

Also would there not be a similar removal of deductibilty on margin loans, business loans etc. Why is it that property is deemed in some ways different?

I am not proponent of wholesale negative gearing as some sort of way to print money. It is frought with cashflow dangers. If you have a decent income then may be a good option, if not, then forget it. Yields of between 3 and 5% along with agents commissions, annoying renters, cost and timeframe of sales etc etc make property investment very illiquid and not as billiant as some believe. However, in the right circumstances as part of an overall strategy it can be good.

You distort the market at your own peril. (As a side CGT should be at a higher rate, and the FHBG was crazy - my 2 cents)


----------



## Bushman (14 April 2010)

Uncle Festivus said:


> [*]The Big Four Aussie banks expanded their control over the Aussie mortgage market from 65% to 75% in the last 18 months.[/LIST]




Part of the reason why Don Argus said the Big 4 are at risk of becoming building societies. 

I saw those facts on the downturn on lending. 

Why anyone would chase residential with a large LVR now is a mystery to me. Interest rates are rising and incomes are not rising at 10-15% a year. Real estate values are a lagging indicator. So your risk of negative equity has increased, not decreased and most ressie yields do not cover the cost of capital? Ultimately why chase a hot market?  

You should never become emotionally attached to an investment or an investment class. 

In the long-term, Australia needs to work out its under supply of housing. So the political risk has increased as well with housing affordability set to be a key election issue. So I wonder what the future for relaxing foreign ownership rules and negative gearing are? I'll be watching with interest.


----------



## satanoperca (14 April 2010)

TOBAB said:


> I find the discussion on negative gearing interesting. It would seem there is intent on either removing or making it specific to new builds. From a mkt based economic rationale this does not make sense. If you remove the deductibility of interest you must likewise remove the CGT component.




How does NG on existing properties help reduce the undersupply of homes, it does not.

How does NG on existing properties help the construction industry, they are already built.

It is an assumption that if you remove NG that the rental market will dry up unless you have specific studies that prove otherwise.

NG on existing properties only benefits the investor at the expense of the tax payer.

If NG was removed maybe housing might become more affordable and people could use the extra disposable income for investments that are productive.

Cheers


----------



## MR. (14 April 2010)

If negative gearing was made specific to new builds only, one could imagine a boom in new dwellings. However, would there be an imbalance between occupants in new and older areas? 

Would new estates become filled with renters?


----------



## TOBAB (14 April 2010)

satanoperca said:


> How does NG on existing properties help reduce the undersupply of homes, it does not.
> 
> How does NG on existing properties help the construction industry, they are already built.
> 
> ...




Totally disagree. You mess with the free mkt at your peril.

An example straight off the top of my head. If we wipe out NG on existing. This will then reduce the buying mkt (no investors) for all existing dwellings - that's the theory anyhow, agreed? Immediate problem is that it also reduces the saleability of current new dwellings in a few years time as again investors will not purchase (Reduced CG reduces incentive). Therefore investors will either: flee this mkt too; or increase yields to the point where some people will be unable to afford to rent say to 8 or 9%. If they leave then a large chunk of developement will dry up.

I do not need studies to prove my point. For mine I would not invest in a mkt that had little or no chance of gain at a yield of 3 to 5%. Just put the money into the bank or invest in shares. Not too sure if even robots would like property under those circumstances?

You talk about existing and future dwellings as if they are not linked which is untrue. Land is the ultimate scarce resource and we need to utilise it a hell of a lot better than currently. Havn't got the time to check but would be very surprised if Melb, Syd and Bris land values in comparison to equivalent cities os is actually expensive. Would be very interested if any data out there.


----------



## TOBAB (14 April 2010)

MR. said:


> If negative gearing was made specific to new builds only, one could imagine a boom in new dwellings. However, would there be an imbalance between occupants in new and older areas?
> 
> Would new estates become filled with renters?




Don't think so. When it comes time to sell - who will buy? I for one am not that crazy to buy into something without considering the get out. More than likely looking at a capital loss under those circumstances and unless yielding huge nos why would you even bother. Doubt I am an island on this one.


----------



## Uncle Festivus (14 April 2010)

TOBAB said:


> Totally disagree. You mess with the free mkt at your peril.




That's the whole point - it's not a free market. If it truly were a free market we wouldn't have the gov continually propping it up through tax incentives, subsidies, grants and rest, and it would find a natural price level. 

A price level that would hopefully remove it as some kind of growth asset for baby boomer retirement funds and make it just another basic necessity that the population can afford without paying an arm & a leg for?


----------



## satanoperca (14 April 2010)

Uncle Festivus said:


> That's the whole point - it's not a free market. If it truly were a free market we wouldn't have the gov continually propping it up through tax incentives, subsidies, grants and rest, and it would find a natural price level.
> 
> A price level that would hopefully remove it as some kind of growth asset for baby boomer retirement funds and make it just another basic necessity that the population can afford without paying an arm & a leg for?




Agree.

An intersting article on NG

http://www.abc.net.au/news/stories/2010/04/13/2871852.htm?section=justin



> Top economists want tax loopholes closed




Cheers


----------



## kincella (14 April 2010)

regardless of negative gearing....which was basically introduced when the state govts stopped building more public housing for the poor....
but look, Nsw and Qld are both rushing through new public housing, for the first time since about 1970.....think there is one place near Cairns...the locals are up in arms about....putting poorly built public housing, high rise units, right next to an elite estate... miles away from schools and shopping centres....
just rushing this through...to appear to be doing something

which would you rather have....great big ugly boxes, of substandard housing provided by the fed govt....or ordinary houses, built by the average builder
the govt do not have a good record of financial management with any thing they do
so either pay higher taxes and allow the govt to provide the housing...or give a tax incentive for the better manager...as in a taxpayer..

do you recall the riots at Meadow Heights in SW Sydney....whole suburbs of public housing....the suburbs turn into ghettos.....
most people would not want to live in such a suburb...I know of people who had a temp public house in SW Sydney....it was a nightmare....all the neighbours were from overseas.....they threw the rubbish out the kitchen window....dirty nappies included...
have a look at the ghettos of high rise public housing in Prahran...just behind Chapel St....or Carlton...
if you care to do a study of house prices as far back as you like to go...before negative gearing came in....you will see house prices were still rising on the average trend..
I dont believe the govt should give fhb any incentives....nor baby bonus handouts, nor family tax benefit cash handouts...nor maternity leave...


----------



## robots (14 April 2010)

hello,

good afternoon brothers, some more research:

http://www.theage.com.au/business/rent-rises-accelerate-nationwide-20100414-scjm.html

oh yeah, free market at work, dont like the increase then move on

still plenty of scope for rent increases in my opinion, especially Melbourne the most liveable place on the planet

why should housing be dirt cheap, only have to look at housing commission areas to see what happens when people get stuff for nothing

thankyou
robots


----------



## UBIQUITOUS (14 April 2010)

Thanks Robots for the research. Hope you don''t mind me quoting the highlights. It validates what most of us on here are saying - Property is due for a major correction.



> However, the March quarter data shows rent yields falling in three of the eight capital cities, according to APM, making the prospect of investing less attractive to landlords.
> 
> Investment in real estate has been slumping, most recently by 1.1 per cent in February, the last month for which data is available.
> 
> And rental yields have been lacklustre over the past year




Quite right buddy. If property investors don't like it, best to move on to a country where yields are better.


----------



## robots (14 April 2010)

MACCA350 said:


> Yeah, sorry Robots, dropped the ball on that one...........been busy. I'm chuffed you think I'm still a school goer must be young at heart
> 
> Here it is again
> REIV
> ...




hello,

i guess it should be read in conjunction with this graph, rent looks like a little bit of extra froth

thankyou
robots


----------



## TOBAB (14 April 2010)

Uncle Festivus said:


> That's the whole point - it's not a free market. If it truly were a free market we wouldn't have the gov continually propping it up through tax incentives, subsidies, grants and rest, and it would find a natural price level.
> 
> A price level that would hopefully remove it as some kind of growth asset for baby boomer retirement funds and make it just another basic necessity that the population can afford without paying an arm & a leg for?




OK fair call. Agree with you on the grants and like but if you remove the tax incentive (as you call it) on this asset class then it must apply across the board for all investments, otherwise you are infact creating distortions. Why use leverage to invest in property when you can gain the tax benefits from deductions if investing in shares. If this situation developed then nobody in their right mind would invest in property and then vis-a-vie supply of housing would fall. Remove it from shares and developement in infrastructure would slow to a trickle (unless we allow further foreign investment) = OMG this is doing my head in.

Not 100% that you realise the can of worms that could be opened by removing NG. Far better to increase CGT to a balanced level. ATM it is far better to achieve Capital Growth than generate income (25% Vs 48%) no brainer really - IMHO you are looking at it the wrong way around. Whilst I'm at it the Baby Boomers are investing in property through SMSF's (not just NG) and paying no tax on the rent - similarly with shares. 

Personally I can't see NG being the "cure all" there are far too many other lurks and tax avoidance methods that warrant investigation.


----------



## satanoperca (14 April 2010)

robots said:


> why should housing be dirt cheap, only have to look at housing commission areas to see what happens when people get stuff for nothing
> 
> thankyou
> robots




It shouldn't be, it should be affordable.

Cheers


----------



## UBIQUITOUS (14 April 2010)

Bro, as we're not interested in the past but in the future, I've continued the graph to help you out. Don't mention it. Happy to give a fellow ASFer a hand.


----------



## TOBAB (14 April 2010)

satanoperca said:


> Agree.
> 
> An intersting article on NG
> 
> ...




Good article. Let's really remove distortions and not mess about. A true free market would either have interest payments IN or OUT as a deduction - unilateral across the board (blind freddy can see the distortions start if asset classes are somehow differentiated in this regard). This includes the purchase of any asset - family home, car, shares, investment property. Then ALL GAINS AND INCOME taxed at a prevailing rate. No GST, no tax brackets, no tax on cigs or booze - nothing. A flat rate. Would be interesting - no so good for the poor though.

Chance of removing distortions = zero

This guy seems to want to create distortions and remove distortions - quite strange really.


----------



## -Bevo- (14 April 2010)

robots said:


> why should housing be dirt cheap, only have to look at housing commission areas to see what happens when people get stuff for nothing




Why should borrowing money be dirt cheap, only have to look at the bubbles
that happen when people get money for nothing.


----------



## UBIQUITOUS (14 April 2010)

The research is coming thick and fast. Thanks to the Age newspaper. I wonder what Melburnians will make of this?

http://www.theage.com.au/business/w...es-surge-fuel-bubble-fears-20100414-sd25.html




> China's property market in is in a bubble that may burst by as early as this year, hedge fund manager James Chanos said in an interview last week.
> 
> *The country is "on a treadmill to hell," *according to Chanos, who said in January the nation is Dubai times a thousand. "They can't afford to get off this heroin of property development. It is the only thing keeping the economic growth numbers growing."


----------



## TOBAB (14 April 2010)

UBIQUITOUS said:


> The research is coming thick and fast. Thanks to the Age newspaper. I wonder what Melburnians will make of this?
> 
> http://www.theage.com.au/business/w...es-surge-fuel-bubble-fears-20100414-sd25.html




I'm from Melbourne and as usual I have no idea about anything coming out of China. Their figures whether good or bad are dubious at best, at worst completely distorted to what suits their needs at a particular point in time. Never forget they are a dictatorship that can issue whatever data they want. 

Infomation from China lol.


----------



## satanoperca (14 April 2010)

TOBAB said:


> Never forget they are a dictatorship that can issue whatever data they want.




And they are buying up our resources and land at an ever increasing rate.

But obviously no concern to many in Australia.

Hope you all have enrolled in Mandarin as it will become the second language in Oz very soon.

Yes, I am learning Mandarin both written and spoken.


----------



## MR. (14 April 2010)

http://www.theaustralian.com.au/bus...sh-down-property/story-e6frgac6-1225853330816

"What goes up could crash down" 

Hmmm, that title is a bit like Steve Keen's latest claim (after property didn't crash within the year) "property is to crash by 40% sometime in the next 15 years!" Fifteen years!!!! I'm sure people are kicking his **** all the way to the top of that mountain! 

Robots "media digging in again" but up she still goes!

From the link above:



> In the US, the average home is now worth less than it was in 1980.






> Japan has 128 million people to squeeze into a land area half the size of NSW, " says Hoffman. But fall they did: Organisation for Economic Co-operation and Development data shows real Japanese property prices are more than 40 per cent lower than their 1992 peak.






> German property prices falling since 1991. Again, it's a country where mortgage rates are lower than rental yields, but past experience is scaring off investors.






> The Swiss endured 11 straight years of falling property prices through the 90s and into this decade. There has been some relief in recent years, but those who bought in 1990 are still a long way under water.






> Australians need to be wary of the most dangerous thought in investing: that property prices cannot fall.




and ya gota luv dis:


> Australian house prices rose 13.6 per cent last year ....... That's even stronger than in China where house prices are up 10.7 per cent during the past year.




and



> Australian housing is expensive but points out that it is supported by an undersupply....... Worsening affordability is likely to constrain average house price growth to around 5 per cent over the year ........ the absence of higher unemployment, much higher interest rates or a big supply increase, a US-style collapse in Australian house prices is unlikely. None of these seem likely in the short term. In fact, none of these seem likely any time soon."




Now, Shane Oliver knows his property!


----------



## Uncle Festivus (14 April 2010)

TOBAB said:


> OK fair call. Agree with you on the grants and like but if you remove the tax incentive (as you call it) on this asset class then it must apply across the board for all investments, otherwise you are infact creating distortions. Why use leverage to invest in property when you can gain the tax benefits from deductions if investing in shares. If this situation developed then nobody in their right mind would invest in property and then vis-a-vie supply of housing would fall. Remove it from shares and developement in infrastructure would slow to a trickle (unless we allow further foreign investment) = OMG this is doing my head in.




I'm not sure we can compare NG with other investments as it is a unique beast. It's fairly easy for the average person to have several million dollars in NG RE loans on which they can immediatly reduce their weekly tax ie taxpayer subsidised, to practically zero. While it's possible and does happen, I can't see banks lending out several million dollars to someone to margin into equities in the same numbers as RE loans - there just aren't that many sophisticated equity investors out there? Whereas generally any numbskull who can fill out a loan application can get a loan to buy RE - a no brainer is an apt term for it . 



TOBAB said:


> I'm from Melbourne and as usual I have no idea about anything coming out of China. Their figures whether good or bad are dubious at best, at worst completely distorted to what suits their needs at a particular point in time. Never forget they are a dictatorship that can issue whatever data they want.
> 
> Infomation from China lol.




And this is what the future prosperity of Australia is reliant apon unfortunatly


----------



## robots (14 April 2010)

REIV






hello,

its not that easy Uncle Fest,

tough man, filling in the forms, speaking to the bank on the phone, going to the open for inspections, driving around

exhausting

thankyou
robots


----------



## MR. (14 April 2010)

hello,

its not that easy,

tough man, filling in the forms, getting them the right way up, looking to the future and not the past!

exhausting


----------



## robots (14 April 2010)

hello,

top effort MR, its a pity they wont allow access to my posts in 2005 on the king of all property threads

all about the future

still here helping out at ASF, 

thankyou
robots


----------



## Uncle Festivus (14 April 2010)

robots said:


> REIV
> hello,
> 
> its not that easy Uncle Fest,
> ...




I think we sort of get the idea with the chart. No doubt there is some sort of tax deduction for each of your burdens also?


----------



## timeout (15 April 2010)

hi

anyone know when reiv trend chart update to march will be 
on line......


----------



## robots (15 April 2010)

hello,

good morning Timeout, i think it is out this week or next 

should be amazing data

any other questions fire away

thankyou
robots


----------



## robots (15 April 2010)

hello,

oh yeah:

http://www.theage.com.au/business/keens-long-march-to-lower-house-prices-20100414-sdn0.html

off he goes the leader of the handout crew who got it so so so so wrong, yeah i reckon people would be happy they followed the failed prophecies of this guy

embarrassment to the world of economics, its apparent these guys are mostly like Alan Kohler on the ABC1, good at putting up a graph after the event

follow ASF for the true thinkers

thankyou
robots


----------



## professor_frink (15 April 2010)

Robots,

No need for that graph in every post


----------



## UBIQUITOUS (15 April 2010)

Thanks again Robots. September is only 5 months away. Tick Tick Tick...



> ....*evidence of local price drops should appear by September.*
> 
> The only factor that could mitigate the falls is overseas investment from China, which itself has become a contentious issue.
> 
> But Keen doesn’t believe it will be enough to stave off price falls. *He notes even Chinese investors are likely to get nervous about the shape of Australia’s housing price market,* as he was told when interviewed by a local Mandarin-language newspaper.


----------



## satanoperca (15 April 2010)

robots said:


> hello,
> 
> oh yeah:
> 
> ...




Sorry Robots, but he may have got the housing decline timing wrong but he still may be proven correct over the next couple of years.

He did predict the GFC, cannot say to many ASF or other economist were able to do so.

Way berate someone who has a different opinion to yours, how is he part of the handout crew?

It seems that you as a PI believe that you are providing some good wholesome benefit to the community by providing rental accommodation when really it is the taxpayers who allow you this benefit.

Cheers


----------



## MR. (15 April 2010)

robots said:


> any other questions fire away
> 
> thankyou
> robots






Uncle Festivus said:


> Another property? How much are you paying for it, house, unit or ?? Maybe we can follow along for the whole cycle from buy to sell again? Hit us with some details Robots LVR?



Found some questions above!
.........

Two associated comments by turning a graph upside down, but none from two graphs on page 58 which took 100 times longer to put together. 

I think Robots, even that (Shane Oliver "finally") has got things worked out. Should have read your convincing posts back in 2004 hey Robots! Have noticed your chart reflects that period. However IMO it's not 2004 now as much as Tech/a and some others would like to think.

Here's my take:
We are a long way from Japan, US or UK with their interest rates. If anything catastrophic happens here or to "China" I can imagine what the interest rates are going to do here since we have a lot of room to move. We have seen the result of low interest rates of late in relation to property and the rates have not near returned half of their fall and aren't likely to. High property prices are likely to be sustained..... More and more debt. Sad chain of events really...... 

Time to be positive and for me to simply buy something else......


----------



## MR. (15 April 2010)

> But Keen doesn’t believe it will be enough to stave off price falls. He notes even Chinese investors are likely to get nervous about the shape of Australia’s housing price market, as he was told when interviewed by a local Mandarin-language newspaper.




Keen has gone from a crash in one year down to fifteen years! 
Great Keen's narrowed it down! No more air time for him.......


----------



## kincella (15 April 2010)

I have a brother...he has been predicting the doom for the past 30 years, every now and again he gets it right...as in 2008/2009.....but every other year he is wrong....it must be an abnormal gene thing....the rest of the family just get on with life....

there were plenty of forecasters out there advising caution...way before Keen...however they were conservative in their wisdom....good wholesome advice for the unwary...

Keen was writing a book, and looking forward to the 'conference and talking circuit; to bolster his income....hence the 'way out in your face' statements to gain him free media attention....to support his endeavour

if you want to worship someone, or seek out a mentor, make sure that mentor has achieved the credentials, backing and performance that you seek for yourself...

otherwise its like worshipping a false god
I suspect some of his followers suffer the 'tall poppy' problem behind the scenes. Keen is exploiting that scenario, syndrome....posing as a Robin Hood type character.....
Buffett would tell you to look in the rear vision, to glean insight into the future....plenty of evidence to support that theory, especially in relation to property

some need a property mentor, someone with the experience and proof to back up his claims, and be holding that asset......there are plenty of successful property investors out there, with substantial holdings behind them...
Keen has nothing....he sold his PPOR when he and his partner split....that same prop has probably gone up another 100k since he opted out..


----------



## MACCA350 (15 April 2010)

MR. said:


> iIf anything catastrophic happens here or to "China" I can imagine what the interest rates are going to do here since we have a lot of room to move. We have seen the result of low interest rates of late in relation to property and the rates have not near returned half of their fall and aren't likely to. High property prices are likely to be sustained..... More and more debt. Sad chain of events really......



Not sure the RBA has that option, we've already seen the banks move away from their targets due to their cost of obtaining international credit. Sure if they didn't need to compete internationally for funds(ie more local deposits) then there would be no need to stray too far from the RBA targets. But since local debt far outstrips required deposits they have no choice but to purchase funds from international markets to fund local debt, in which case RBA target rates have no relevance.

I think it's fair to say that as local debt increases and local deposits do not increase in proportion the RBA's influence on interest rates is reduced. So it stands to reason that if we were to have a catastrophic price crash the RBA will be powerless to do anything about it. They must be aware of this as their latest rate increase seems to have followed the banks rather than lead. 

At least that's how I understand it..............though I could be barking up the wrong tree

cheers


----------



## MR. (15 April 2010)

kincella said:


> Keen was writing a book, and looking forward to the 'conference and talking circuit; to bolster his income....hence the 'way out in your face' statements to gain him free media attention....to support his endeavour




His media attention helped convince me at the time to take an offer on a property with no help from "my" agent, far below what it was worth just a month earlier. It has since sold again for a 100K more and now is on the market yet again for a listed price far beyond that. With all those figures and charts Keen couldn't put together what those low interest rates could do.  

Lessons learnt there. 

Movin' on, I can't imagine buying more property now and facing potential falls in price if any of the predictions "now" decide to come true. Lots of talk about but it's only talk.....

macca, interest rates in other countries are below us. I realize its not that simple but as Beej pointed out makes sense to me that we shouldn't have too much of a funding supply. Japan has trillions locked up in their postal system returning like 0.5%


----------



## UBIQUITOUS (15 April 2010)

MR. said:


> Here's my take:
> We are a long way from Japan, US or UK with their interest rates. If anything catastrophic happens here or to "China" I can imagine what the interest rates are going to do here since we have a lot of room to move. We have seen the result of low interest rates of late in relation to property and the rates have not near returned half of their fall and aren't likely to. High property prices are likely to be sustained..... More and more debt. Sad chain of events really......
> 
> Time to be positive and for me to simply buy something else.....




MR. In a collapsing property market, people do not buy even if interest rates are lowered. Have a look at ALL other countries as examples. 




			
				kincella said:
			
		

> I have a brother...he has been predicting the doom for the past 30 years, every now and again he gets it right...as in 2008/2009.....but every other year he is wrong.




Then again we might not have a collapse because Kincella's brother is  a barometer for the global economy


----------



## kincella (15 April 2010)

traps for players...he has done more harm than good....I guess you were swayed with the media focus....anyway, proof how one can lose money in any market, if you take the wrong turn, or listen to the wrong people...
like buying high, selling low....you are eventually wiped out...
unless of course one takes it as a lesson learned....
in that market....I would have been buying ...not selling....plenty of time in the future to sell when the market is right...
the absolute bargains are not there everyday
I had my eye on a couple of bargains...prices were down 80k to the rest of the market...screamed they were panick sellers....but then I got tied up in another matter, took my eye off the ball for a moment...then they were gone

100k is too much to lose.....I would never consider losing 10k let alone 100k
grrrrrrrrrrrrrrrrrrrrr
but good luck with any other investments


----------



## satanoperca (15 April 2010)

Kincella, how did Keen cause harm. He simply highlighted to people the gross indebtness of this nation. It is up to the individual to make informed decisions.

KRUDD caused more harm with the doubling of the FHVG. 

The RBA caused harm by reducing IR's to low and now having to raise them back to normal.

If property is to fall does that mean that all RE agents caused harm by spruiking the benefits of RE as an investment vehicle.

While I do not agree with all of Keens statements, he certainly has made me aware that RE does not make the world go round but debt does.

Cheers


----------



## robots (15 April 2010)

hello,

great posts Kincella, keep them coming brother

superb and great to have you here man

thankyou
robots


----------



## MR. (15 April 2010)

UBIQUITOUS said:


> MR. In a collapsing property market, people do not buy even if interest rates are lowered.



 Seen the situations in other countries but not happening here.... yet, I've found!



kincella said:


> or listen to the wrong people...
> like buying high,




Yes, lessons learned, not learnt!

Kincella, is property high now? 

Looking forward to Robot's response to UF's questions?


----------



## kincella (15 April 2010)

Robots thanks mate...

attitude is more important...re my brother and people like him..

some of you focus on debt....completly ignoring the other side of the equation....some of the links I posted here past week show on average in Aus our debt equates to 17% of our assets....meaning the   other side of the argument is 83% net assets....or equity....

you focus on the wrong side of the argument.....I focus on growing my wealth, ie assets and equity....not on my debt....which in my case started  off years ago with the deposit I put down...20-30% asset and 70% debt against an asset....( I repeated this several times adding to the portfolio)
over time the debt has reduced in my case to around 20% and the assets have increased from the original 100% to 400%

the debt is easily managed on an annual basis.....the underlying assets just keep performing as they have done for the past 50-100 years......

of course I would never dream of paying 500k's or more for a property with 400k debt.....all mine were below 300ks....
I may have to pay 500k's in the future....but it would be with substantial equity and a loan of 200k or less.....my portfolio value would be reflecting similar values for houses at that time...
my time frame is around 30 years....so I dont care if there is a hiccup in the short term, or now and again....the long term is my goal....then I will pass most of it onto my children, and family as required.....
it is a well proven strategy.....with more than sufficient data and records to prove same for the past 50 or more years...out there on the net for all to access.
cheers
ps you should be more concerned with govt debt, being imposed on all of us now, to be repaid in taxes in the future, versus the home buyer debt market


----------



## Beej (15 April 2010)

satanoperca said:


> Kincella, how did Keen cause harm. He simply highlighted to people the gross indebtness of this nation. It is up to the individual to make informed decisions.




No, Keen did a lot more than just "highlight indebtedness". He was swanning all over the mainstream media in mid/late 2008 - newspapers, TV (60 minutes, 7:30 report, Lateline), telling Australian's to sell their houses now before values fell by 40% in the next year or two. It was grossly irresponsible, and undermined confidence in the housing market for no good reason, effecting many ordinary people directly.

If he had stuck to writing books/papers and perhaps the odd blog here and there, then good on him, but his media-whoring did a lot of damage. He *may* even have been directly responsible for the government decision to introduce his hated FHBG boost......

By the way, does everyone know that Prof Keen starts his walk from Canberra to Mt Kosciusko today??? The one where because of the bet he lost he has to wear a T-shirt that says "I was hopelessly wrong on house prices, ask me how!"


----------



## satanoperca (15 April 2010)

kincella said:


> Robots thanks mate...
> 
> some of you focus on debt....completly ignoring the other side of the equation....some of the links I posted here past week show on average in Aus our debt equates to 17% of our assets....meaning the   other side of the argument is 83% net assets....or equity....




From linked article that Kincella supplied 



> Over the past two decades, Australian households’ debt levels have increased noticeably
> and are now fairly high by international standards.




Nothing to worry about because we are different to the rest of the world



> Housing debt accounts for the bulk of the increase, with the ratio of
> housing debt to disposable income rising from 31% to 134% over the period.




Nothing to be concerned about, surely with a little effort we can get it to 200%.



> Since 1990, annual growth in housing debt has averaged 15%, with
> particularly strong growth in 1988–89, 1994 and 2002–04 (Graph 4). This is appreciably
> faster than the annual growth in household disposable income, which has averaged only 6%
> over this period.




Again nothing to see here. Just stay focused on the other side.

Cheers


----------



## trainspotter (15 April 2010)

http://www.debtdeflation.com/blogs/ for the facts and figures.

Sort of adds a bit of credence to robots character IMO !


----------



## Uncle Festivus (15 April 2010)

robots said:


> any other questions fire away
> 
> thankyou
> robots




How's your latest purchase going - any details yet? When are you due to settle?



robots said:


> hello,
> 
> embarrassment to the world of economics, its apparent these guys are mostly like Alan Kohler on the ABC1, good at putting up a graph after the event
> 
> ...




I notice someone else is fond of graphs after the event also 

Just checking out Robots local socialising venue, the REIV, who for some reason have a rose coloured view of the benefits of NG?



> It is important to appreciate that negative gearing doesn’t  just have a private benefit, it plays a critical role in encouraging  private investors to buy and rent out *affordable* accommodation. In the  current housing market there is a significant shortage of homes for both  owner–occupiers and renters; as a result there is an important role for  private investors to play, providing much-needed rental homes.



Sounds like private investors are not playing that important role of buying and renting out _affordable_ accommodation, for they then somewhat contradict themslve by saying there is a shortage of homes for both  owner–occupiers and renters? The NG system has failed by their own admission.



> This investment alone is not the cause of rising prices; rather, it  is a failure to provide enough homes. Consequently, any ideas about  modifying or changing negative gearing must be viewed in the context of  the overall housing market and broader economy and not looked at in  isolation.



So NG firstly plays a 'critical role' in providing homes, then they say there are not enough homes? NG failed again....



> According to the latest tax office statistics released on March 23  a   stunning one in 10 taxpayers already uses negative gearing.
> 
> Ten per cent of taxpayers get deductions for mainly pumping up property  prices that every other home buyer must pay for …
> 
> Moreover, the ''negative-gearer next door'' is claiming  more tax deductions every year. The figures reveal the amount claimed -  $8 billion-plus a year - has been growing at an annualised clip of 40  per cent.




This alone will ensure that the gov will put some sort of controls on NG - it's bleeding them dry!

http://www.smh.com.au/business/beware-its-the-negativegearer-right-next-door-20100403-rkzv.html


----------



## robots (15 April 2010)

hello,

three weeks, alls going well

might see if can extend it to 15yrs, hehehehehehehehehe

thankyou
robots


----------



## TOBAB (15 April 2010)

I have made my position clear on NG. Now a quick question to the ASF people who want to play around with the tax laws: What is your definition of NG? And what is your take on simply gearing?


----------



## satanoperca (15 April 2010)

robots said:


> hello,
> 
> three weeks, alls going well
> 
> ...




Congratulations.

If you make it to four, I will shout ya at the local, need some exercise on the bike.

:alcohol::alcohol::alcohol::alcohol:


----------



## MR. (15 April 2010)

kincella said:


> I would never consider losing 10k let alone 100k



Different circumstances perhaps? If property happened to fall just a percent or two there goes your 10k just in one property alone, you didn’t even get to consider the loss. 


kincella said:


> our debt equates to 17% of our assets....meaning the   other side of the argument is 83% net assets....or equity....



Valued on current property prices which have tripled. 


kincella said:


> of course I would never dream of paying 500k's or more for a property with 400k debt.....all mine were below 300ks....
> I may have to pay 500k's in the future....but it would be with substantial equity and a loan of 200k or less.....my portfolio value would be reflecting similar values for houses at that time...



So you would enter the current $500k market with 60% equity for the purchase and with even more equity in you other properties. That could equate to higher than 90% equity in your investment properties as a total. That’s a pretty safe bet! Perhaps you don't have any other income, now days which is fair enough. 


kincella said:


> my time frame is around 30 years....so I dont care if there is a hiccup in the short term, or now and agaIn....the long term is my goal....then I will pass most of it onto my children, and family as required..... .



 Good on you, a hiccup or two in the future is not going to affect you very much with your current leverage. Your time frame is around 30 years but the bottom of your post states you “hold for 10 years or the mv reaches my sell figure” Perhaps there is no real reason for you to sell at all.



kincella said:


> you should be more concerned with govt debt, being imposed on all of us now, to be repaid in taxes in the future, versus the home buyer debt market



 Yes it affects us all, from the tenants in our houses, to maintaining property prices.


Beej said:


> No, Keen did a lot more than just "highlight indebtedness". He was swanning all over the mainstream media in mid/late 2008 - newspapers, TV (60 minutes, 7:30 report, Lateline), telling Australian's to sell their houses now before values fell by 40% in the next year or two.



Exactly, he did a superb job discouraging buyers at the time. Needless to say, what I think of him now, when he claims sometime in the next fifteen years property will fall by 40%. Ha ! Is that after another 40% rise?


> By the way, does everyone know that Prof Keen starts his walk from Canberra to Mt Kosciusko today??? The one where because of the bet he lost he has to wear a T-shirt that says "I was hopelessly wrong on house prices, ask me how!"



Seems like an appropriate day to bag the guy to me.


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## MR. (15 April 2010)

TOBAB said:


> I have made my position clear on NG.




So you did! I don't imagine gov' doing anything with NG. It will upset the apple cart alright!

Just put NG on new houses only and be done with it. Existing arrangements still to be met though! 

All properties will fall a bit, they'd come back though! Tax savings in place for new land lords in new houses and by the time the years pass no capital loss. Not my fault people entered into the prop' market when the tenants return is just 3-4% and leverage is in excess to Kincella.


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## kincella (15 April 2010)

you have to sell to realise a loss.....a temporary book loss means little...in the greater scheme of things.....like most property people...we just leave it to sit there and simmer a bit longer...until the market turns...

no reason to sell, no intention of selling in the shorter term.....however I may consider it down the track, when it has tripled in value again......
when I may decide to cash it in .....in order to buy a new car, take a holiday, splurge it on the family etc......
since I am holding several properties  ,the idea of  giving up one is  a possibility, for an extreme event....

the portfolio is my retirement fund...I am in charge, manager, no worries about the govnuts coming in and changing rules, force me into pension mode etc...

I know awhile back the kids thought all the boomers would be cashing in their IP's  as they retired, and leave it stuck in a cash deposit.....
that would be the worst possible advice or action for a retiree...
all my boomer mates, intend to hold, just live off the rentals....which should keep pace with inflation and the CPI....unlike the deposits, which stagnate against inflation...
so we have no intention of selling, and will probably pick up a couple more bargains to hold for the long term....
its boring I know....but gives one time to get a life, and do other things

ps I still have a good professional income, coming in to keep my mind in top condition, although I no longer work full time...the escalation in the rental income has afforded me the opportunity to reduce my working hours....much earlier than I anticipated......
so for example today, I went on a shopping spree, picked up some lovely bargains on offer for the family....
then I need to take some time off in the next few weeks, to chill out.....before the next financial year consumes my time again. 
All that hard work in the earlier days well and truly pays off....
cheers
ps about the signature..... ie the ten year plan for pay day....sometimes it comes within 3 years....one should have a minimum 10 year plan, then review the plan after that time frame , to check that it still fits the criteria.


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## UBIQUITOUS (15 April 2010)

TOBAB said:


> I have made my position clear on NG. Now a quick question to the ASF people who want to play around with the tax laws: What is your definition of NG? And what is your take on simply gearing?




TOBAB, the vast majority of NGers don't know exactly how it works. They don't even question the logic in it being the only business model in existence where losing money is the name of the game, just to save tax.

What they also don't know is that there are opportunities which are no more risky which can give way more than 10% a year. 

Can't lose with bricks and mortar? Well try negative equity and the very strong likelihood now of eventual bankruptcy.


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## robots (15 April 2010)

kincella said:


> you have to sell to realise a loss.....a temporary book loss means little...in the greater scheme of things.....like most property people...we just leave it to sit there and simmer a bit longer...until the market turns...
> 
> no reason to sell, no intention of selling in the shorter term.....however I may consider it down the track, when it has tripled in value again......
> when I may decide to cash it in .....in order to buy a new car, take a holiday, splurge it on the family etc......
> ...




hello,

great post Kincella, hehehehe thats right every boomer was going to offload all their properties and cause a crash

just fabulous the thoughts many come out with, i like it boring too Kincella, plain old vanilla style real estate investment, slow & steady

with the tenant nibbling away at the principle, and presto 20yrs have passed and we are LARGE

thankyou
robots
ASF Investor of the Year 2005,06,07,08,09,10


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## drsmith (15 April 2010)

My favourite graphs.

Under what economic environment is the rise in interest payments (relative to household disposable income) and household gearing measures sustainable ?


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## kincella (15 April 2010)

on the contrary....all those 30%  PI people know exactly how it works, its quite simple really,,,,first couple of years it may be negative, showing a loss which is offset against other taxable income.... then as the years roll on, the capital on the loan is  reduced, the interest cost reduces accordingly, the rental income increases and before you know it, its postively geared and showing a profit.....

oh, and lurking in the background is the capital growth.....just because I use a figure of 10% does not mean thats the best one can do.....last year in 2009 there were plenty of suburbs that grew 30-40%.....bingo in just one year.....
bit like feeding plants on a regular basis, after awhile...a sudden spurt of green shoots and growth appears...
most investors never see the line some of you doomsdayers take.......
its when the same investors takes off into the risky world of margin loans, and borrowing to fund depreciating assets, that brings them down....
not the PI investment....
look at storm investors, hocked their PPOR to the hilt, handed the money over to some shonks to invest in shares...or whatever risky plans....
there are plenty of Bernie  Maddoffs and Storm type people out there to relieve you of your money...

at the opposite side of the fence, there is plenty of data to prove the house price growth...year in year out.....just 1986 to 2006...prices went from 80,000 to 400,000.....what is it now after the GFC.....450k's or 540k's

I guess you could not get your mind around an investment that has shown capital growth of 700-800% in 8 years, and returns a decent annual income, the original loan is miniscule compared to the asset growth......
its only returning a 5 figure sum atm, but it wont be long and it will be a 6 figure return.....that is just one example.....in my portfolio......

the others are the boring estimated 10% growth babies.....they do not require attention on a daily basis.....just normal nurturing and attention a couple of times a year...


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## MR. (15 April 2010)

kincella]our debt equates to 17% of our assets[/QUOTE] Drsmith has kindly pointed out a graph which clearly indicates "Debt as a percentage of assets" as being 30% in housing. That's near double what you wished to imply.
 
[QUOTE=kincella said:


> you have to sell to realise a loss



 Although not a realized loss really, I bet many stock owners wished they did something sooner than to see their "loss" in paper absorb half of their holdings! 



kincella said:


> like most property people...we just leave it to sit there and simmer a bit longer...until the market turns...



 Which could be many years......



kincella said:


> the escalation in the rental income has afforded me the opportunity to reduce my working hours....much earlier than I anticipated......
> so for example today, I went on a shopping spree, picked up some lovely bargains on offer for the family....
> then I need to take some time off in the next few weeks, to chill out.....before the next financial year consumes my time again.




Ha Ha Ha, Thanks for explaining what a "reduction in working hour’s means".  You enjoy this kind of talk! ? ........ Clearly you explain how great your investments have been, so should I/we be envious of you? ....... You have also explained the expense in a 500k house and you'd need equity of in excess of 60% "if" you enter this market now....... Poor form really.........


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## MR. (15 April 2010)

satanoperca said:


> While I do not agree with all of Keens statements, he certainly has made me aware that RE does not make the world go round but debt does.
> 
> Cheers




I do like Keen pointing out the debt levels in housing. I underestimated how stupid people can be with low interest rates and maybe that was his down fall as well.



robots said:


> ASF Investor of the Year 2005,06,07,08,09,10




I like that. Should drop the "10" though, stick it back up at the end of the year.


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## kincella (16 April 2010)

MR methinks you would just rather argue any point than take notice of the other side....you dont seem to get it...
smiths chart shows housing debt 30% with total debt 20% but the ref to those numbers is missing..., the chart I put up clearly showed it was below 20%
most of you that are against property have been raving on for yonks about how much debt property people are sitting on.....so it all must come crashing down
even 30% debt means 70% equity or asset...the other side of the coin...
this 20-30% is a far cry from what you guys have been perpetuating, and more in line with my own facts and figures

you guys go on about how can a fhb afford to buy a house at 540k....so prices must come crashing down.....well if the fhb is stupid enough to believe he can afford to pay the interest on a 400k plus loan....than he deserves to lose....that is a high risk play....and assuming he is on the low double income household....
I suggested I would not take on a debt of more than 200 k's...thats where the difference lies.....a debt of 200ks is manageable for me.....regardless of how much money I earn or how much cash I have....I would never take on what I deem a higher risk...
I dont expect anyone to be envious....it is just an example of my low risk approach to investing.....for all the other readers out there...who are looking for information and options in the property market


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## UBIQUITOUS (16 April 2010)

kincella said:


> well if the fhb is stupid enough to believe he can afford to pay the interest on a 400k plus loan....than he deserves to lose....that is a high risk play....and assuming he is on the low double income household....




well if the property speculator is stupid enough to believe that capital gains can be achieved from a neverending supply of people who can afford to pay the interest on a 400k plus loan....then he deserves to lose....that is a high risk play....


well if the property speculator is stupid enough to believe that tenants will keep on paying whatever landlords demand...then he deserves to lose....that is a high risk play....


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## MR. (16 April 2010)

Kincella, 20-30% housing debt as an average is not a far cry from what I/we have been perpetuating. Individual investor/owners with higher leverage are the concern! As you point out as well.

Nothing wrong with your leverage levels! What would happen if everyone else did similar! If everyone now took on your suggested leverage, property is going to stagnate for more than a while! You are just relying on others stupidity to fuel your further gains in the short to medium term. 

Your past gains are examples of what is going to happen again in the future, but not for a long while unless interest rates are going to go down.

There really is little argument!


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## kincella (16 April 2010)

those graphs tell the full story....on the whole the population has a low debt, and high equity.....so what if there is an individual sprinkled here and there that is not in that situration.....its certainly not going to affect the bulk of the population...
nor of house prices
there are figures for a potential .06% home owners at risk...that is not even 1%...just over half of 1%...how that will impact on the other 99%

good luck with your arguments of a half of a % making much difference


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## drsmith (16 April 2010)

The graphs are from the RBA's latest financial stability review. They demonstrate the extent to which debt has fuelled money supply and hence real estate.

An economic shock, when it comes, will be magnified as a consequence of this.


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## Dowdy (16 April 2010)

kincella said:


> those graphs tell the full story....on the whole the population has a low debt, and high equity.....so what if there is an individual sprinkled here and there that is not in that situration.....its certainly not going to affect the bulk of the population...
> nor of house prices
> there are figures for a potential .06% home owners at risk...that is not even 1%...just over half of 1%...how that will impact on the other 99%
> 
> good luck with your arguments of a half of a % making much difference




Well, subprime loans in the USA made up only a small proportion of the market and look how that ended


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## kincella (16 April 2010)

you guys are funny...USA and subprime and throw away the keys, 30,000 cities in the US...more than 3/4 are just big country towns hundreds of miles away from nothing, gun toting hill billies.....who shoot anything and anyone
you may as well compare it with Africa.....90% dont have a job, a mobile phone, a bank card, or the internet.....
but good luck with waiting for the housing crash


----------



## Dowdy (16 April 2010)

kincella said:


> you guys are funny...USA and subprime and throw away the keys, 30,000 cities in the US...more than 3/4 are just big country towns hundreds of miles away from nothing, gun toting hill billies.....who shoot anything and anyone
> you may as well compare it with Africa.....90% dont have a job, a mobile phone, a bank card, or the internet.....
> but good luck with waiting for the housing crash




You want to rephrase that.

All i understood was *good luck with waiting for the housing crash*


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## trainspotter (16 April 2010)

Not that this will ever happen here ! Have posted previously too many regulations and mechanisms in place to fall tragically. Also have posted that due to the softening demand of finance due to interest rate hikes will also reduce likelihood of bubble territory. Steady as she goes boys and girls.


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## MR. (16 April 2010)

Those gun slingin yankies have near 50% better rental yields than the fairy tale “land of Oz”

http://www.prosper.org.au/2010/04/0...o-negative-equity-someones-going-to-get-hurt/


> • An end to negative gearing. Ronald Reagan, pin-up boy of the conservatives, did just this in the USA. And the release of this table before the Henry Review is made public signals the same for Australia.



 NG hasn’t produced as much new housing as hoped! ...... What if housing investment loans creep even higher? ......  Keep raising interest rates?


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## SBH (16 April 2010)

kincella said:


> the portfolio is my retirement fund...I am in charge, manager, no worries about the govnuts coming in and changing rules, force me into pension mode etc...





The rules can also change on property you know. Youve got a heap of assets that cant be hidden from view and a future where those with many houses will be in a small minority.... youre going to be a golden goose for the government


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## UBIQUITOUS (16 April 2010)

MR. said:


> Those gun slingin yankies have near 50% better rental yields than the fairy tale “land of Oz”
> 
> http://www.prosper.org.au/2010/04/0...o-negative-equity-someones-going-to-get-hurt/
> 
> NG hasn’t produced as much new housing as hoped! ...... What if housing investment loans creep even higher? ......  Keep raising interest rates?




Thanks for the article. 



> The picture drawn is not pretty: it shows the nation’s ‘aspirational’ landlords, heavily weighted with borrowings, perched on a twig, waiting for the tree to grow under them.


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## Tysonboss1 (16 April 2010)

MR. said:


> It now appears funny to me, your assumed smart remark on the following thread (post 6)
> 
> http://www.theaustralian.com.au/bus...e-for-a-spanking/story-e6frg9io-1225844478939




If you mean "smart" as in "smart a$$" it wasn't. That was a genuine question, I was genuinely seeking answers and get a better understanding of our system.

If you look at the date of the post it was from quite some time ago, when I first became interested in the topic.


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## MACCA350 (16 April 2010)

drsmith said:


> My favourite graphs.
> 
> Under what economic environment is the rise in interest payments (relative to household disposable income) and household gearing measures sustainable ?



What happened in 1990? Was there a change in legislation on negative gearing or related tax changes?

Seemed to be floating around 10% then started climbing to 30%. Would like to see a long term graph say over the last 100 years. 

cheers


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## MR. (16 April 2010)

UBIQUITOUS said:


> Thanks for the article.




Must be April fools with that date!



Tysonboss1 said:


> If you mean "smart" as in "smart a$$" it wasn't. That was a genuine question, I was genuinely seeking answers and get a better understanding of our system.
> 
> If you look at the date of the post it was from quite some time ago, when I first became interested in the topic.




I also (not you) failed grade one engrish and your comment appeared clear to me. Unless someone is prepared to step up to the plate for you, let it be. 

Less than two hours after the insinuation another of your posts appeared as a continuation more on a serious note ie “In short the money belongs to.........” 

Either no one bothered at the time to answer your original question because no one knew the answer, no one at ASF was kind enough to help you, or you were simply being a smart a$$ like a few of the others so you didn’t need to even ask the question again!

Or you really didn’t get it as near a year later showed, so why didn’t you ask again? 

https://www.aussiestockforums.com/forums/showthread.php?t=15145&highlight=

Nothing is wrong with not knowing something. Nothing wrong with asking questions either. 
Geez, I still think property is going to fall.......


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## MACCA350 (16 April 2010)

kincella said:


> those graphs tell the full story....on the whole the population has a low debt, and high equity.....so what if there is an individual sprinkled here and there that is not in that situration.....its certainly not going to affect the bulk of the population...
> nor of house prices
> there are figures for a potential .06% home owners at risk...that is not even 1%...just over half of 1%...how that will impact on the other 99%
> 
> good luck with your arguments of a half of a % making much difference



Yeah, that over the last 20 years housing gearing as a percentage of assets has increased a whopping 200%

And when you consider the increase in asset value over the last 20 years and the effective percentage reduction that has on older mortgages, that's a huge increase.

I'd like to see a graph showing the spread of the population in gearing levels. I don't believe your suggestion that only 0.06% of home buyers would be at risk due to high gearing levels.

Have you considered that many of those with low gearing are only on the list because they've had to use their equity to(among other things) pay the deposit on their children's loan?

Say for instance a parent 100% owns a 1M property.
Child purchases a $400k property and needs help with the deposit
Parent loans them $40k to boost their current 10% deposit to 20% to reduce LMI and satisfy the banks lending criteria.

On paper:
Parent now has a reported gearing of 4%
Child now has a reported gearing of 80%
That's an average gearing of 25%

In reality:
Parents have no debt, the child owes the debt
Child owes $360k on a $400k property 
That's a gearing of 90%

If I were to quote you a 25% gearing for these to people you'd assume they were responsible and should not have troubles in the future, I mean that's lower than the average for the whole of Australia right?

But look behind the curtain and you have 1 that is fine and wouldn't have a problem but the other 1, I wouldn't be so sure...........and that's 50% of the owners in the figures, far from 0.06%

I know it's simplistic, but my point is you can't assume that such a low percentage are highly geared based on an average gearing of 30%

cheers


----------



## Fleeta (16 April 2010)

Anyone believe this? 7 o'clock or 12 o'clock?

http://www.heraldsun.com.au/business/property-clock-is-ticking/story-e6frfh4f-1225854104139


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## satanoperca (16 April 2010)

MR. said:


> Those gun slingin yankies have near 50% better rental yields than the fairy tale “land of Oz”
> 
> http://www.prosper.org.au/2010/04/0...o-negative-equity-someones-going-to-get-hurt/




Great article showing who is paying for the speculations to obtain wealth without work, the taxpayers.



> The ATO says people earning between $30,000 and $75,000 represented the largest group of taxpayers who held property investments and they claimed $3.6 billion in losses




This alone is scary & in 2008 69% of IP's ran at a loss. 

I too find the argument of 0.06% of people could get in trouble extremely far fetched.

From Wiki



> Deduction of negative gearing losses on property against income from other sources for the purpose of reducing income tax is *illegal* in the vast majority of countries, the exceptions being Canada, Australia, and New Zealand.




Isn't it interesting, no NG property market crashes, with tax payers support, no property correction.

The argument that if NG is removed it will lead to a shortage of houses seems not the case as we just have to look at the US as an example.

Cheers


----------



## cutz (16 April 2010)

Fleeta said:


> Anyone believe this? 7 o'clock or 12 o'clock?
> 
> http://www.heraldsun.com.au/business/property-clock-is-ticking/story-e6frfh4f-1225854104139




Tick Tock it's 12 O'Clock.


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## Tysonboss1 (16 April 2010)

MR. said:


> Must be April fools with that date!
> 
> 
> 
> ...




Ok, Now I am just confused.

I really don't know the point you are getting at.


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## MR. (17 April 2010)

Tysonboss1 said:


> That was a genuine question, I was genuinely seeking answers




Ok... movin on!


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## CamKawa (17 April 2010)

Good luck Robots.

*REIV releases March quarter median prices*

MELBOURNE house prices dropped $10,000 on average in the first three months of the year as rising interest rates priced many buyers out of the market.


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## kincella (17 April 2010)

a drop of  2% after a rise of 29.5% for the year, and after a rise of 52% in 5 years.....for houses
units rose another 2% in the quarter, 25% for the year, 54% over past 5 years....
but you guys are waiting for prices to return to the 1980's....or 2000 at the worst...
you might need to consider all those Asians buying up here....the more China tries to cool its market, the more the investors will be attracted to the Aus market...


----------



## satanoperca (17 April 2010)

CamKawa said:


> Good luck Robots.
> 
> *REIV releases March quarter median prices*
> 
> MELBOURNE house prices dropped $10,000 on average in the first three months of the year as rising interest rates priced many buyers out of the market.




Should read :

MELBOURNE house prices dropped $10,000[/URL] on average in the first three months of the year as historically low interest rates priced many buyers out of the market.

Cheers


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## MACCA350 (17 April 2010)

And here's the graph:
REIV





Historically December quarter is a peak which then drops off in the March quarter, I think if there is a drop next quarter that would show a significant change in the upward trend. 

cheers


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## kincella (17 April 2010)

so can you understand from that graph...just why some of us are happy with this type of investment


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## CamKawa (17 April 2010)

If the best data manipulation REIV can come up with is a -2% loss then house prices across Melbourne must have really tanked.


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## MR. (17 April 2010)

News Flash:



> After further investigations by some of the leading ASF members it was found that of the 128 primary school children surveyed by “international property spruikers, estate agents, Colliers International” in south western Africa the majority didn’t know where Australia was. The majority didn’t seem to care either!
> 
> This has lead to further investigations by ASF and it was found that the questions asked used the “play school” clock  and some 60% of the grade 3 children said the time at the property of Australia would be 7 o’clock when the Southern African property time was 9.


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## drsmith (17 April 2010)

MACCA350 said:


> What happened in 1990? Was there a change in legislation on negative gearing or related tax changes?
> 
> Seemed to be floating around 10% then started climbing to 30%. Would like to see a long term graph say over the last 100 years.
> 
> cheers



The 90's was a period where long term inflation expectations fell and interest rates became sustainably low. IIRC, bank margins on home loans relative to the RBA cash target also fell during the 90's (only to have risen again recently).


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## UBIQUITOUS (17 April 2010)

CamKawa said:


> Good luck Robots.
> 
> *REIV releases March quarter median prices*
> 
> MELBOURNE house prices dropped $10,000 on average in the first three months of the year as rising interest rates priced many buyers out of the market.




That means that FHBers who bought at the end of last year have had their FHOGs ripped out of their hands after taking possesion of their homes. 

Looking at the number of properties up for auction, it looks like property values have been crashing on high volume. Scary!!


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## robots (17 April 2010)

hello,

good afternoon, apologies for not being around yesterday

could anybody tell  me how units went in that latest data as I have two of them

much appreciated, paradise

thankyou
robots


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## CamKawa (17 April 2010)

UBIQUITOUS said:


> That means that FHBers who bought at the end of last year have had their FHOGs ripped out of their hands after taking possesion of their homes.
> 
> Looking at the number of properties up for auction, it looks like property values have been crashing on high volume. Scary!!



Instant negative equity.  I just hope they acknowledge their greed rather than blame the government.


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## UBIQUITOUS (17 April 2010)

CamKawa said:


> Instant negative equity.  I just hope they acknowledge their greed rather than blame the government.




Or another way of looking at it is: 100% loss of capital!

Let's hope that no ASFers acted upon the 'easy money' brigade's posts on here.


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## robots (17 April 2010)

hello,

hey hey hey, another superb auction day:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

massive 85% clearance rate brothers, good stuff

i also found the result for the March 2010 quarter, units up 2%, thats right units 2%, well done robots

get all the up to date info here at ASF

thankyou
robots


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## gav (18 April 2010)

Looks like property is going gangbusters in NSW.  $500K profit in less than 24 hours?  Even Goldman Sachs would be proud of this one! 

http://www.news.com.au/business/inq...000-on-unit-sale/story-e6frfm1i-1225855013745

_"AN inquiry has been ordered into how a real-estate agent's wife made $500,000 from taxpayers by buying a block of units for $2.5 million and selling it on to the NSW Government the same day for $3 million."_


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## gav (18 April 2010)

*Our outer suburbs are poverty traps *

http://www.heraldsun.com.au/news/vi...re-poverty-traps/story-e6frf7kx-1225854963435

Apparently 10% of Melbournians are living below the poverty line; and the rich are getting much richer, and the poor are becoming poorer.

What I find amusing is the photo in this article: husband, wife and 2 kids - but what's that in the background?  A brand new mcmansion and a brand new four wheel drive?  Can't be doing it too tough!


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## joeyr46 (18 April 2010)

I may have missed some posts but so far I havn't seen anyone say why house prices will fall regardless of gearing. Once a house has been bought it has no real bearing on where prices go in the future (Bear with me I know we use last sale price as a guide for the next house price that is similar but that really only gives people confidence that they are abut right as far as price is concerned)
The real driver of house prices is liquidity in the system, if liquidity is good then demand or supply will come into the picture, and prices will fluctuate by up to 15% or so at any given time in the year depending on a lot of other factors such as buyer impatience or seller desperation.
Back to gearing it really doesn't matter if the bank lends me 150% or just 60% as long as i do not have to sell, and if I do then if the market is strong and there is good liquidity then the price will be strong and not be an issue.
So what will cause prices to collapse (lets talk about 50% being a collapse)
Answer is simply credit inflation. If we just print money then we  have inflation and the prices go up as the value of money goes down(maybe not in perfect harmony) but if we create credit then prices go up but always throughout history come collapsing down when the debts have to be paid. But we are talking about systemic problems not just mortgages. We generally reach this point when the amount of interest becomes so great that we can no longer be productive enough to maintain payments, and so the price of all assets comes down (including Gold). 
As these occasions are usually so far apart that no one can remember them clearly we keep making the same old mistakes. So I would argue that house prices are not seperate from the rest of the economy and now that our financial sector is almost the only sector that is profitable then we are almost there


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## UBIQUITOUS (18 April 2010)

joeyr46 said:


> I may have missed some posts but so far I havn't seen anyone say why house prices will fall regardless of gearing. Once a house has been bought it has no real bearing on where prices go in the future (Bear with me I know we use last sale price as a guide for the next house price that is similar but that really only gives people confidence that they are abut right as far as price is concerned)
> The real driver of house prices is liquidity in the system, if liquidity is good then demand or supply will come into the picture, and prices will fluctuate by up to 15% or so at any given time in the year depending on a lot of other factors such as buyer impatience or seller desperation.
> Back to gearing it really doesn't matter if the bank lends me 150% or just 60% as long as i do not have to sell, and if I do then if the market is strong and there is good liquidity then the price will be strong and not be an issue.
> So what will cause prices to collapse (lets talk about 50% being a collapse)
> ...





Firstly, it's a question of value. Better value can be had in other asset classes as opposed to real estate. This will result in the correction which is happening as we speak as money flows to find a better reward to risk ratio.

Secondly, any asset class with artificially supported prices should be questioned as an investment. Would one be wise to invest in stock in a company where the share price is supported by erroneous forces? I think not. So why should real estate be any different?


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## robots (18 April 2010)

hello,

here we go, great analysis man, many could probably replace Alan Kohler on the ABC news bulletin

but its all way beyond interest rates, inflation, reward/risk ratio's,

thankyou
robots


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## cutz (18 April 2010)

gav said:


> Apparently 10% of Melbournians are living below the poverty line; and the rich are getting much richer, and the poor are becoming poorer.




Yep the rich are getting richer on the backs of the taxpaying class.

I wonder if we'll ever have a government with the courage to pull negative gearing, came across some figures somewhere recently, the amount claimed on this practice is ridiculous.


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## MR. (18 April 2010)

MACCA350 said:


> What happened in 1990? Was there a change in legislation on negative gearing or related tax changes?




In addition to Drsmith's reply

*July 1985 the government quarantined negative gearing interest expenses (on new transactions), so interest could only be claimed against rental income on existing and newly built houses, not other income. (Any excess could be carried forward for use in later years.) The result was a considerable dampening of investor enthusiasm. 

*September 1985, just two months later, the 50% capital gains tax was introduced. Before that no CGT existed. This perhaps contributed, with fewer landlords, rents rose. But house prices rose or continued to rise too, apparently because less new construction for investors kept the market tight (the factor of fewer investors competing with owner-occupiers to buy was apparently overwhelmed).

*July 1987, two years later, negative gearing could be used again to offset tax from other forms of income.  The immediate effect however was only further house price rises as investors returned to the market before new construction could catch up.

http://en.wikipedia.org/wiki/Negative_gearing_(Australia)
http://taxes.suite101.com/article.cfm/capital-gains-tax-cgt

You’d have to wonder if just a change to Negative Gearing on existing houses (similar to July 1985) would help the speculation of ever higher house prices and not enough new dwellings! Will also help with some extra gov' funding.



joeyr46 said:


> Back to gearing it really doesn't matter if the bank lends me 150% or just 60% as long as i do not have to sell, and if I do then if the market is strong and there is good liquidity then the price will be strong and not be an issue.




Yes and interest rates may not return to where they were just 20 months ago. IMO the low interest rates now appear to be a major driving factor in the current housing speculation. IMO something else needs to be done like a slight change to Negative Gearing. 
Who knows what will be the cause of any actual crash of 50%......


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## UBIQUITOUS (18 April 2010)

The tactic employed by the REIV to mask over the deteriorating values of house prices is very basic in the extreme, but is plain to see by anybody who *compares the quarterly reporting and their unrevised numbers.*

This was what was reported for the Dec09 quarter:



> http://www.reiv.com.au/news/details.asp?NewsID=890]
> The REIV December quarter Property Update has revealed a new record high *median house price of $540,500*, an increase of 15 per cent from $470,000 in the September quarter.




And this is what is now being reported for the March10 quarter:



> http://www.reiv.com.au/news/details.asp?NewsID=923
> The REIV March quarter Property Update reveals that Melbourne has recorded the strongest March quarter for seven years and the median price of a house is now $524,500, a two per cent reduction from the *revised median of $535,000 in the December quarter of 2009*.




So what the REIV are infact doing is 'accidentally' increasing the median house price reporting for a current quarter to make thinks look rosy, and then revise down the previous quarter, to make it look as though house prices are increasing. By the time the following quarter's numbers arrive, the bet is that nobody will look back to what was claimed in the last report.

So if we take the last 2 quarters as an example, the fall is infact 3% and not the 2% as reported. I expect the March quarter to be revised downwards again when reported at the end of this quarter, to create further misconceptions. 

Happy days to all expect the money renters.


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## robots (18 April 2010)

hello,

and units? oh yeah

happy days for the money renters, utopia Ubiquitous

thankyou
robots


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## drsmith (18 April 2010)

gav said:


> Looks like property is going gangbusters in NSW.  $500K profit in less than 24 hours?  Even Goldman Sachs would be proud of this one!
> 
> http://www.news.com.au/business/inq...000-on-unit-sale/story-e6frfm1i-1225855013745
> 
> _"AN inquiry has been ordered into how a real-estate agent's wife made $500,000 from taxpayers by buying a block of units for $2.5 million and selling it on to the NSW Government the same day for $3 million."_



I can recall an article in the AFR about the NSW ALP government from a few years ago. To this day it is the most scathing article I have ever read on any Australian government. 

The way it was worded was priceless. It should have been framed.


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## drsmith (18 April 2010)

robots said:


> hello,
> 
> and units? oh yeah
> 
> ...



Enjoy the punch while it lasts.

The RBA is being somewhat cautious in diluting it and governments are welcoming new party goers through the door and happily clipping their entry fee.

Maintain a keen ear and senses though for any rumblings. That might be China with a bout of economic indigestion.


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## KateMelb (18 April 2010)

cutz said:


> I wonder if we'll ever have a government with the courage to pull negative gearing




I doubt it. The cost of building public housing is just too great and there are too many competing public services that require huge investments (such as health and transport). All of this with a massive budget deficit!

A far cheaper alternative to government-funded housing is privately-funded and investors are incentivised to fund housing through negative gearing. This way governments can actually gain revenue through CGT, stamp duty etc and pay for other government services.

Whether we like it or not, negative gearing is the best idea we've got to increase housing stock. Unfortunately the Reserve Bank is spoiling the party with trigger-happy monetary policy. Investors can't contribute more housing stock if it's too expensive to build/buy.


***************************
I DIY manage with Rentwise.


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## Trembling Hand (18 April 2010)

KateMelb said:


> Whether we like it or not, negative gearing is the best idea we've got to increase housing stock. Unfortunately the Reserve Bank is spoiling the party with trigger-happy monetary policy. Investors can't contribute more housing stock if it's too expensive to build/buy.




Sorry Kate that doesn't stack up. In fact its actually laughable. Clearly housing demand is fixed by roughly by population. You are not likely to have greater than 1 house for every household - logical.

But

If investors who can negative gear arrive at sale time they are able to out compete  people who are using the house as a place of residence thus forcing up house & land cost and pushing would be owners into forever renters. 

Its a complete load of BS the "negative gearing is the best idea we've got to increase housing stock." Its the worst.

 Cheap prices is the best "best idea we've got to increase housing stock" not investor with tax breaks competing against home owners.


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## CamKawa (19 April 2010)

Some intersting reading.

Rentals showing poor yield

''You can put money in the bank and get 5.5 per cent without any maintenance costs, insurance and repairs.''


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## UBIQUITOUS (19 April 2010)

CamKawa said:


> Some intersting reading.
> 
> Rentals showing poor yield
> 
> ''You can put money in the bank and get 5.5 per cent without any maintenance costs, insurance and repairs.''




but investors aren't in this business for yields/income. They are in it for the hope of capital gains. What a business model!!!


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## cutz (19 April 2010)

KateMelb said:


> A far cheaper alternative to government-funded housing is privately-funded and investors are incentivised to fund housing through negative gearing. This way governments can actually gain revenue through CGT, stamp duty etc and pay for other government services.




Incorrect,

The vast majority of interest and maintenance deductions comes from investors that have purchased existing homes, how does this help with increasing housing stock?

The revenues gained via stamp duty/CGT is far outweighted by deductions from expenses.

Negative gearing is an increasing load on society that needs to be scrapped ASAP.


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## cutz (19 April 2010)

Trembling Hand said:


> If investors who can negative gear arrive at sale time they are able to out compete  people who are using the house as a place of residence thus forcing up house & land cost and pushing would be owners into forever renters.




This has created a new underclass where the mother and father both need to work extreme hours just to keep afloat if they choose to outbid/overcommit and buy,surely this does not have a positive impact on their children.


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## satanoperca (19 April 2010)

cutz said:


> This has created a new underclass where the mother and father both need to work extreme hours just to keep afloat if they choose to outbid/overcommit and buy,surely this does not have a positive impact on their children.




This is the most relevant issue to housing affordability and the effect on NG.

Children are shipped of to daycare, then before and after school care, then in high school, allowed to roam the streets during school holidays because both parents have to work to afford even a basic mortgage.

The stress this is putting on relationships is incredible with the children in between.

Cheers


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## UBIQUITOUS (19 April 2010)

satanoperca said:


> This is the most relevant issue to housing affordability and the effect on NG.
> 
> Children are shipped of to daycare, then before and after school care, then in high school, allowed to roam the streets during school holidays because both parents have to work to afford even a basic mortgage.
> 
> ...




Yes, and what is the end financial cost on society when an increasing lack of guidance from parents results in a fall in Aussies gaining the required skills for the workplace. Property speculators blaming migrants for creating unaffordable housing is just silly. If we spent more time educating our young rather than letting them do whatever, then maybe we wouldn't have so much of a skills shortage. We are our own worst enemies


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## MR. (19 April 2010)

KateMelb said:


> I doubt it. The cost of building public housing is just too great and there are too many competing public services that require huge investments (such as health and transport). All of this with a massive budget deficit!
> 
> A far cheaper alternative to government-funded housing is privately-funded and investors are incentivised to fund housing through negative gearing. This way governments can actually gain revenue through CGT, stamp duty etc and pay for other government services.
> 
> Whether we like it or not, negative gearing is the best idea we've got to increase housing stock.






> In Australia in 2007,  9 out of 10 negatively geared properties are for existing dwellings, so the creation of rental supply comes almost entirely at the expense of displacing potential owner-occupiers. Thus, if negative gearing is to exist, it should only be applied to newly constructed properties.



http://en.wikipedia.org/wiki/Negative_gearing_(Australia)



> Landlords
> 2005 =  net loss -$4.1bn .......... % of all landlords making a loss 65.4%
> 2006 =  net loss -$5.088bn ....... % of all landlords making a loss 66.5%
> 2007 =  net loss -$6.372bn ....... % of all landlords making a loss 67.9%
> 2008 =  net loss -$8.63bn ......... % of all landlords making a loss 69.4%




http://www.prosper.org.au/2010/04/0...o-negative-equity-someones-going-to-get-hurt/


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## TOBAB (19 April 2010)

satanoperca said:


> This is the most relevant issue to housing affordability and the effect on NG.
> 
> Children are shipped of to daycare, then before and after school care, then in high school, allowed to roam the streets during school holidays because both parents have to work to afford even a basic mortgage.
> 
> ...




I am all for affordable housing but altering the NG rules aint it! I have put my argument before, many times and have yet to get a response that will change my opinion.

Your argument seems to be that by allowing NG on future builds it will somehow encourage property investors to focus on this end of the mkt only. These people are not stupid and as correctly pointed out they consider capital growth when purchasing. CG will be greatly limited by no investors purchasing when the original investor sells. Result a huge fall off in property investors not just in exiting but in future properties as well. Effect of this will be reduced builds, effect of this will be increasing rental yields due to lack of supply and maintained demand. Effect of this will be both parents working to pay the rent etc etc etc.

Guys I don't think you have considered all the implications.


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## ChilliBlue (19 April 2010)

There will always be a section of the population that should never their own home and unfortunately these people do not get the message.

You cannot have it all. People want to live in a large property within 5-10km from their main city, have 2 new cars, and continue eating out and going on holidays.

The furniture has to be new and the electronics updated every 2-3 years.

If you want to buy property then you need to spend less than you earn and set your expectations lower.

There is affordable property 20km outside of city limits but there is a reason why they are affordable - no one wants an older style home away from their restaurants and lifestyle.

I work as a commercial agent and time and time again have friends whinge and moan about interest rates and how they cant afford to buy a property similar to that they are renting.

In the inner and eastern suburbs of Sydney, you are better off renting and buying an investment property that has capital growth as well as income.

My parents and many of their generation paid off homes at 10-15% interest rates on one income.

They did it with hand me downs, smaller properties and less lifestyle choices not spending more than what they earnt.

Property is affordable and attainable and like shares, you need to set reasonable expectations, do your research and buy in the dips.


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## Trembling Hand (19 April 2010)

TOBAB said:


> Guys I don't think you have considered all the implications.




lol.

You make it like investors are THE demand. They are the EXTRA demand due to on going tax breaks and government intervention.

The real demand for houses is from occupiers. If NG is removed investor nic off and put money where it should be - PRODUCTIVE ASSESTS/ business not speculation in the non productive greater fool game. (see all financial crisis since the beginning of time for his outcome)

No NG investors - prices fall, marginal renters can buy easily, very quickly taking up the slack.

Its not rocket science. The cheaper the product the more people purchase it. thats where demand comes from not higher prices due to tax concession to a few.


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## UBIQUITOUS (19 April 2010)

TOBAB said:


> I am all for affordable housing but altering the NG rules aint it! I have put my argument before, many times and have yet to get a response that will change my opinion.
> 
> Your argument seems to be that by allowing NG on future builds it will somehow encourage property investors to focus on this end of the mkt only. These people are not stupid and as correctly pointed out they consider capital growth when purchasing. CG will be greatly limited by no investors purchasing when the original investor sells. Result a huge fall off in property investors not just in exiting but in future properties as well. Effect of this will be reduced builds, effect of this will be increasing rental yields due to lack of supply and maintained demand. Effect of this will be both parents working to pay the rent etc etc etc.
> 
> Guys I don't think you have considered all the implications.




Negative gearing should be abolished entirely at the same time as foreign purchases of residential real estate. If the government really want to tamper with a free market, then they should not release land to developers (who end up land banking) and should instead have a nationalized organization for land developments. They wouldn't have to make any profit as they would be recouping plenty of tax revenue from the negative gearers. 

At the same time this would bring forward construction and provide employment in areas where the government decide development is required, and not where the Stocklands of this world wish to purchase land.

We have seen what negative gearing has 'contributed' to affordability. Now it's time to scrap this radical idea.


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## ChilliBlue (19 April 2010)

UBIQUITOUS said:


> then they should not release land to developers (who end up land banking) and should instead have a nationalized organization for land developments.




Just so that everyone is aware, Westfields will often landbank for a period of 30-50 years.

Stocklands anything between 10-40 years.

Woolworths will land bank greenfield sites 10-30 years.

I personally have no problem with governments releasing land but is should be the government owned Landcom and controlled in the interest of the population not profit.

However, developers pay substantial donations to all parties and until that is removed, profits by non government organisations will occur.


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## todster (19 April 2010)

Who on here using NG would want it removed,maybe with comments people could disclose if they are using it.
PS not me


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## Calliope (19 April 2010)

The prices of luxury houses, luxury cars and boats have received a big boost from the $4 billion creamed off the BER by the building industry.


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## Ruincity (19 April 2010)

I read and have read this thread (and it's peers) for quite some time now.
In this period I have succumbed and actually bought my own property just recently..  Within this period I have also witnessed prices just continue to go up and up with a small dip amidst the GFC.

What the GFC taught me is that the government will do it's utmost best to ensure that property prices DO NOT FALL in too radical a fashion..  The government and especially THE BANKS - have far too much to lose and society as we know it will suffer dramatically.

Have I paid too much for my first home - ALMOST CERTAINLY!
Will it be worth more in 10 years - I believe so. 
Do I want to rent all my life be unable to make changes and live at the beck and call of a landlord while paying his or her bills - No I have had enough...

Housing is expensive, research points to it NEVER being cheap though (in relative terms)..  I don't subscribe to me "doubling my money in 10 years time" I feel that the economy, investors and demand has little upside in the near term..  A correction very well be nigh (great timing on my behalf yes).
However I believe within the longer time frame as inflation, demand, population and wages increase I am confident that the price of my inner city HOME will increase - if I'm lucky and have bought right - maybe even significantly..

Moral of the story, timeframes, risk profile and intent of purchase make this discussion or thread a little too broad.


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## TOBAB (19 April 2010)

Trembling Hand said:


> lol.
> 
> Its not rocket science. The cheaper the product the more people purchase it. thats where demand comes from not higher prices due to tax concession to a few.




OK so you elimate the extra demand, prices fall, as prices fall the obvious consequence (perhaps I should not be so presumptuous) is that building reduces (less of a margin for developers/builders, oh and they can not hang on to the property and rent out because they will not be able to claim the interest as a legitimate deduction unlike every other asset class)

It would be a very strange world.

Would you let investors gear up at all? I am assuming you wouldn't. I have asked this before of the NG critics but havn't noticed any response.


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## TOBAB (19 April 2010)

todster said:


> Who on here using NG would want it removed,maybe with comments people could disclose if they are using it.
> PS not me




I use it but personally think it is a cash killer. I'll be getting out of my IP as it takes way too large a % of my portfolio. I believe in NG as a notion because of the std accounting principal: if taxing on the sell side you must be able to receive deductions whilst holding.

Personally I think we should increase CGT to whatever the individual's marginal rate happens to be. Seems a lot fairer to me.

Also I think property as an investment is over-rated prelu from the headache of it all: you've got tenants, estate agents and a very illiquid product. Why not just buy ANZ shares, take your 5% fully franked and be happy about it. Plenty of Capital Growth, easy in, easy out, paid on time, don't have to repaint, change security alarms etc etc.


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## Trembling Hand (19 April 2010)

TOBAB said:


> Would you let investors gear up at all? I am assuming you wouldn't. I have asked this before of the NG critics but havn't noticed any response.




Absolutely. Let them gear up to their nutz. Nothing wrong with idiots risking there own cash.

Trouble is in a true market you wouldn't have the government also spending tax dollars on gearing up the same punters via the sellers grant & then a tax that encourages "investment" in a non productive asset. 

There is no benifit to the economy by having punters get business like deductions on dwellings.

I just don't buy the added supply line, its added demand that results. Supply comes from the end user. Whether they rent or own outside of pure speculation there is no other demand. Supply will always match demand. No need to worry about reduced development. If it drops prices rise untill they match.


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## TOBAB (19 April 2010)

Trembling Hand said:


> Absolutely. Let them gear up to their nutz. Nothing wrong with idiots risking there own cash.
> 
> Trouble is in a true market you wouldn't have the government also spending tax dollars on gearing up the same punters via the sellers grant & then a tax that encourages "investment" in a non productive asset.
> 
> ...




I may not have been clear. So you let people gear up but do not allow the deduction? Is that the plan? Or is it just negative gearing which irks you, in which case you can borrow up to the point where income equals outgoings. Gee changes in the ROI will cause a few problems for people with this model.

What about deductions on margin loans? There not business. Do we have a go at them next?

BTW if only supply always matched demand. I do agree that prices may ultimately rise, however, this may be on the back of fast increasing rental yields. Investors would most likely do this en masse to cover. Either way I believe we'll end up back in the same spot and those less fortunate will get screwed.


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## Trembling Hand (19 April 2010)

TOBAB said:


> What about deductions on margin loans? There not business. Do we have a go at them next?



Before we go there could you tell me if you think that there is a benifit to the economy by having punters get business like deductions on dwellings.


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## MR. (19 April 2010)

What was it ? ... 6 weeks ago? The change to 40% for the Chinese property speculators to come up with as a downpayment to buy a second home. 

Guess what! they now need 50%. Our pollies haven't even goten outa bed yet...  

http://news.xinhuanet.com/english2010/china/2010-04/15/c_13253001.htm


> BEIJING, April 15 (Xinhua) -- The Chinese government has raised the down payment for second-home buyers to a minimum 50 percent of the value from 40 percent, in a bid to curb property speculation.
> 
> The decision was announced in a statement released Thursday after conclusion of an executive meeting of the State Council, the Cabinet, presided over by Premier Wen Jiabao, on Wednesday.
> 
> First-home buyers must pay no less than 30 percent of the the property price if the area is above 90 square meters, the statement said.


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## drunkestdriver (19 April 2010)

Australia is not keeping up with housing demand now, if there was no negative gearing investors wouldnt be building.
That would mean less rentals on the market, so higher rents.


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## satanoperca (19 April 2010)

drunkestdriver said:


> Australia is not keeping up with housing demand now, if there was no negative gearing investors wouldnt be building.
> That would mean less rentals on the market, so higher rents.




Can you please provide some evidence that this would be the case.

It would seem the only thing NG does is allow property prices to stay artificially high at the cost of taxpayers. 

As I previously mentioned, USA has no NG but has a housing oversupply and falling prices. 

Cheers


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## drsmith (19 April 2010)

CamKawa said:


> Some intersting reading.
> 
> Rentals showing poor yield
> 
> ''You can put money in the bank and get 5.5 per cent without any maintenance costs, insurance and repairs.''



Rental yield is perhaps not straight forward.

Residential/commercial land has a value but does not attract an income (it does in Monopoly but not very much). Land is perhaps like a commodity. It's real value increases as demand (relative to supply) increases but earns no income.

The infrrastructure (buildings) on the land earn the rent. The apprioriate income (rent after expenses) would therefore be represented by the capital cost of the building (plus maintainance) over it's economic lifetime plus a return on that capital investment. This should be greater than a risk free rate but once the value of the land is added it may not.


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## drsmith (19 April 2010)

Argument around negative gearing often revolves around have/have not when the answer most likely lies somewhere in between.


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## joeyr46 (20 April 2010)

MR. said:


> In addition to Drsmith's reply
> 
> 
> 
> ...




Low interest rates are not the cause of rising house prices they were low for years before the 70's and house prices were relatively stable.
Interest rates in Japan have been low for a couple of decades and house prices have been falling 
It is true that low interest rates allow us to borrow more on a particular income and from that perspective they allow prices to rise further.
But why would you pay more because interest rates are lower.
We dont pay more for say a commodore because the repayments are lower, but we may buy a more expensive car.


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## Trembling Hand (20 April 2010)

Joey you cannot be serious? Interest rate adjustments then do what? Provide something for the punters to read about in the papers but have no effect on the economy?

lol.


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## robots (20 April 2010)

hello,

who cares what happens/or has happened in Japan or US or Germany or UK

its all irrelevant, walk out the door look around, no guns no crack

just pure whitelight 

thankyou
robots


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## MR. (20 April 2010)

joeyr46 said:


> Low interest rates are not the cause of rising house prices they were low for years before the 70's and house prices were relatively stable.
> Interest rates in Japan have been low for a couple of decades and house prices have been falling
> It is true that low interest rates allow us to borrow more on a particular income and from that perspective they allow prices to rise further.
> But why would you pay more because interest rates are lower.
> We dont pay more for say a commodore because the repayments are lower, but we may buy a more expensive car.




Joey, perhaps people before the 70's didn't feel that they were going to miss out on securing property! If you were Japanese why would you put your money into an asset which keeps falling? The majority of the Japanese public keep their savings in deposits returning just 0.25%  We can't imagine the circumstances in "OZ" which would lead to such decisions. 

"Why would you pay more because interest rates are low?" Perhaps because the wife really really wants that house! Or because the property spruikers have convinced further investors to sign up with low interest rates while the figures are looking great. Perhaps it's the promise that prices will double again and they have missed out until now. It's a good question Joey, perhaps "it's just the fear of missing out!...." If we happened to acquired the mindset of the Japanese, the opposite would be happening. As robots states "who cares" this is "Oz". 

Joey would you do me a favour and have a look at this past post. Although this chart is only "volumes of sales" we can see the volume change with interest rate changes. Volume has to have an impact on prices at some stage. It's my graph and it's how I concluded to my opinion. 
https://www.aussiestockforums.com/forums/showpost.php?p=539679&postcount=688


Although I have read figures of only 2% from international investors I have wondered if this figure is greater because of the way the Chinese government has increased the deposit for a second home in China to 40% then 50% all within 6 weeks. 

Carry trade and buying "OZ" property? Sure thing.......?


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## MR. (20 April 2010)

Those recent clearance rates of some 85% or so may have increased the total volumes of late so the red arrow could even be pointing the wrong way just now. You have to wonder what is driving this sudden demand? Foreigners/low interest rates/property spruikers with last years sales increases.....


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## satanoperca (20 April 2010)

MR. said:


> Those recent clearance rates of some 85% or so may have increased the total volumes of late so the red arrow could even be pointing the wrong way just now. You have to wonder what is driving this sudden demand? Foreigners/low interest rates/property spruikers with last years sales increases.....




Greed and the allure of easy money, herd mentality.

Cheers


----------



## Dowdy (20 April 2010)

Interesting story on Bloomberg. 

China to Damp Property Prices With `Draconian' Moves: Video 

http://www.youtube.com/watch?v=AwDtZshzzTQ&playnext_from=TL&videos=LcaTeC5qlqw&feature=sub


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## UBIQUITOUS (20 April 2010)

Dowdy said:


> Interesting story on Bloomberg.
> 
> China to Damp Property Prices With `Draconian' Moves: Video
> 
> http://www.youtube.com/watch?v=AwDtZshzzTQ&playnext_from=TL&videos=LcaTeC5qlqw&feature=sub




With the Ken Henry tax reforms due next week (which are touted as being the biggest in 50 years, I would be very surprised if the money renters aren't left high and dry. If China are cooling their own market, you can bet the Chairman Rudd will most definitely follow!


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## joeyr46 (20 April 2010)

Trembling Hand said:


> Joey you cannot be serious? Interest rate adjustments then do what? Provide something for the punters to read about in the papers but have no effect on the economy?
> 
> lol.




I never said they have no effect on the economy. House prices are not the economy just a small part of it.  IMO House prices are no different to any other auction type market where buyers and sellers enter into agreements with (lets call them fundamentals) data that is not necessarily accurate but is the only data available at the time, people buy and sell on emotion and a perception of what is happening. In the house market at the moment fear of missing out is probably one of the emotions driving the market. If interest are lower it may allow more people to participate but it doesn't matter if interest rates go up or Krudd puts cigarettes up $6 a packetit still means less money to bid house prices up


----------



## joeyr46 (20 April 2010)

robots said:


> hello,
> 
> who cares what happens/or has happened in Japan or US or Germany or UK
> 
> ...




OK so you moved out of St Kilda


----------



## Dowdy (20 April 2010)

robots said:


> hello,
> 
> who cares what happens/or has happened in Japan or US or Germany or UK
> 
> ...




You know what they say - *The one thing that we have learnt from history is that we have learnt nothing from history*

And what is happening in Japan or US or Germany or UK is less then 5 years old, so it's still current so if you choose to ignore that then you're only doomed to repeat it.


----------



## kincella (21 April 2010)

Dowdy....can we assume you are not a property owner....
so another inexperienced property investor is telling a very experienced property investor what to do...
I take very little notice of lame street media regarding property.....they are out to sell news....truth is irrelevant, facts are distorted to suit their story
we certainly never take any notice of the 'pigs might fly' sprouters
on average our debt in Aus represents 20% of our total assets.....


----------



## Pivotonian (21 April 2010)

joeyr46 said:


> But why would you pay more because interest rates are lower.
> We dont pay more for say a commodore because the repayments are lower, but we may buy a more expensive car.




Um, OK.  You're clearly lacking in some of the fundamentals here.

Here are a couple of questions for you.  How does buying a Commodore differ from buying a house?  And how does supply of Commodores differ from supply of real estate?


----------



## Beej (21 April 2010)

Dowdy said:


> You know what they say - *The one thing that we have learnt from history is that we have learnt nothing from history*
> 
> And what is happening in Japan or US or Germany or UK is less then 5 years old, so it's still current so if you choose to ignore that then you're only doomed to repeat it.




So what do you think should be learned form history, re the relationships between the property markets in say Australia, the US, the UK, Japan and Canada?? Tell us about the historic correlation of all those markets please, using say the post WWII period? (1950 -> now).


----------



## joeyr46 (21 April 2010)

Joey would you do me a favour and have a look at this past post. Although this chart is only "volumes of sales" we can see the volume change with interest rate changes. Volume has to have an impact on prices at some stage. It's my graph and it's how I concluded to my opinion. 
https://www.aussiestockforums.com/forums/showpost.php?p=539679&postcount=688




Carry trade and buying "OZ" property? Sure thing.......?[/QUOTE]

Did you a favour
My reading of that chart is that house sales (I take it it is sales as opposed to prices) slowed 6 mths or so (new homes earlier) before interest rates dived and that the demand on money created by this slowing of demand was the raeson interest rates came down and when demand picked up so did interest rates rather than the other way round


----------



## Dowdy (21 April 2010)

Beej said:


> So what do you think should be learned form history, re the relationships between the property markets in say Australia, the US, the UK, Japan and Canada?? Tell us about the historic correlation of all those markets please, using say the post WWII period? (1950 -> now).




What you should learn from those countries is why their property market collapsed and since they all collapsed recently it shouldn't be ignored... but hey, this time it's different, right?


----------



## UBIQUITOUS (21 April 2010)

With the 'Ken Henry' tax review a week or so away, I am surprised that there is no discussion here on something which could have the largest impact on the    RE market since negative gearing was introduced.

Any thoughts on what it will include in relation to RE?


----------



## Beej (21 April 2010)

Dowdy said:


> What you should learn from those countries is why their property market collapsed and since they all collapsed recently it shouldn't be ignored... but hey, this time it's different, right?




Well for a start, Canada has not really had a property collapse. The UK had one from about 2007 but has since recovered more than half of that correction. The US is down about 20-30%, but we all know why (sub-prime debacle, NINJA loans, non recourse loans, over-building, deep recession = unemployment at 10% etc etc). Japan has had a long slow decline on the back of a systemic banking crisis still not fully dealt with from a decade ago, plus an ageing and declining population, and despite their "crash" cities like Tokyo still have the most expensive real estate on a per square metre basis than just about anywhere else on the planet!

Regardless of all that, so what? All those markets have had major corrections, and massive booms in the past and ours hasn't. Likewise our market has had it's own booms and busts in the past (in different regions even at different times as well), without any correlated boom or bust on the markets of those other countries either.

The only ones arguing that "it's different this time" are those (like you) who expect that after 50 years+ of essentially non-correlated real estate markets, that suddenly the residential property markets in each country have "gone global" and should all track each other, regardless of local market factors and fundamentals?? 

Me, I don't think it is/will be different this time, in fact I think it will be the same as "every other time" where the UK or the US may crash or boom, and we may not, or vice versa. I watch the local factors to understand what has happened and is likely to happen around here. The facts are that after a small decline of < 5% across the board in 2008, Australian real estate prices have risen more than 13.6% on average in 2009 (ABS figures), and still rising by all accounts, with Melbourne and Sydney market having done especially well on the back of large population growth, pent up demand and very limited supply of stock for sale in sought after locations, and not enough new building. I don't see those fundamentals changing much any-time soon.



UBIQUITOUS said:


> With the 'Ken Henry' tax review a week or so away, I am surprised that there is no discussion here on something which could have the largest impact on the    RE market since negative gearing was introduced.
> 
> Any thoughts on what it will include in relation to RE?




I expect no changes to NG. The thing with NG is there is actually no special legislation that allows it for property, it is really a general tax mechanism available for anyone who incurs costs, including interest costs, related to ANY income producing investment. To remove it, you would have to remove it from everything, and I don't see that happening. The actual impact of NG is more likely that it keeps rental yields (and therefore rents) lower, rather than pushing property prices higher IMO anyway. This was proven pretty well in the 80s when it was last tinkered with by Hawke/Keating.

Cheers,

Beej


----------



## So_Cynical (21 April 2010)

Beej said:


> I expect no changes to NG. The thing with NG is there is actually no special legislation that allows it for property, it is really a general tax mechanism available for anyone who incurs costs, including interest costs, related to ANY income producing investment. To remove it, you would have to remove it from everything, and I don't see that happening. The actual impact of NG is more likely that it keeps rental yields (and therefore rents) lower, rather than pushing property prices higher IMO anyway. This was proven pretty well in the 80s when it was last tinkered with by Hawke/Keating.
> 
> Cheers,
> 
> Beej




You cant have genuine tax reform and leave NG alone...and the Henry review was all about reform...hows the saying go, don't have an inquiry unless you already know the answers.


----------



## satanoperca (21 April 2010)

Hi Beej,

While I agree with the majority of your statement I would like to highlight the following to the discussion.

Japan, while it has an aging population, they also have a very limited supply of buildable land and incredible low interest rates. This has had not affect on the  decline in property prices.

The UK, while having regained some of the losses the latest stats show that property prices are declining again. They also have very limited land for new buildings and very favourable IR's. This has been confirmed by friends who are full time property investors in the UK.

While property might not be connected globally, finance/credit/debt is certaintly connected globally with our four pillar of banking borrowing on average 50% of the funding overseas. Credit and availability of it does determine price increases.

The small decline in property prices in 2008 was quickly corrected with the govnuts using taxpayers money to prop up the market, FHBG and the RBA slashing interest rates to historical lows to stop the country falling into recession. How much IR's impact on prices will be determined over the next year as the RBA pushes IR's back to normal levels and possibly above as the mining sector thrives. Also adding to increases is the fact that KRUDD and his team have sold out our land to any cashed up foreigner. This I see as treason and I fail to understand why my grandfather and Uncle went to war to only find out that the people they fought can buy the land they were defending. 

As for statement not enough new buildings, you will find that the number of new starts over the last 12months has been higher than the past and will add to supply. A change in public sentiment can quickly have the pollies changing immigrations levels.

As for prices continuing to rise, current evidence shows this is not the case with a small and I do say small decline in prices in Melbourne over the last three months. Only time will tell in the coming months if this is just a blimp or a change in the trend.

On the case of NG, I think it is fine to have NG on property but any loss should only be able to be offset against any profit in the same asset class as is found in shares, not against other incomes. Any loss should be able to be carried forward for several years. Please correct me if I'm wrong.

The only point I do question is the belief/assumption that if NG was removed it would lead to a rental shortage and rental price increases. I do ask for some supporting evidence to this assumption, rather than a short period in time during the Keating era when the rules changed. I look at the USA that has no NG and an oversupply of property. I do find it interesting that the countries with NG on property have had no real corrections in property prices during and after the GFC, this includes Canada.

If NG was removed wouldn't it lead to lower property prices and affordability, allowing more people to own and less pressure on rental demand.
It might also force people to invest in product assets. Sorry but buying an established IP is hardly productive. 

The one thing that has pricked up my ears is a very recent interview with the CEO of NAB who is concerned that lending is to heavily weighted in the RE sector, on average 50% and not enough lending to business to develop, grow and employ. Without business growth how are people to pay mortgagees?

Cheers


----------



## MACCA350 (21 April 2010)

Beej said:


> I expect no changes to NG. The thing with NG is there is actually no special legislation that allows it for property, it is really a general tax mechanism available for anyone who incurs costs, including interest costs, related to ANY income producing investment. To remove it, you would have to remove it from everything, and I don't see that happening. The actual impact of NG is more likely that it keeps rental yields (and therefore rents) lower, rather than pushing property prices higher IMO anyway. This was proven pretty well in the 80s when it was last tinkered with by Hawke/Keating.



That's the thing, they're investors not traders. 

Each are treated differently with regard to the stock market and one needs to decide which way they would like to be taxed. 

If you trade frequently you are better off being seen by the ATO as a TRADER whereby you relinquish the ability to claim the 50% discount on Capital Gains of stocks held for longer than 12 months for the benefit of offsetting losses against income(etc).

If you trade less frequently and prefer to hold stocks over 12 months you are better off being seen by the ATO as an INVESTOR whereby you relinquish the ability to offset losses against income(etc) for the benefit of claiming the 50% discount on Capital Gains held for longer than 12 months.


As I see it Property INVESTORS are having it both ways

What would happen if the stock market tax rules applied equally to the property market?

cheers

Disclaimer: None of this post should be taken as advice, seek financial/tax advisers if needed


----------



## MR. (22 April 2010)

joeyr46 said:


> Did you a favour




Top effort.... thanks.... "House volumes dictate interest rates"  


Satanoperca, great post. 


satanoperca said:


> ...........On the case of NG, I think it is fine to have NG on property but any loss should only be able to be offset against any profit in the same asset class as is found in shares, not against other incomes. Any loss should be able to be carried forward for several years. Please correct me if I'm wrong.




IMO not wrong, however Beej might not agree with your conclusion though!

Also if you have a loss within a single company in different divisions often the losses from one division can't be offset against another for tax. It is the same with training. If business training is different to the usual business, that training can only be claimed once an income is made from that new venture. The loss from training is carried forward. I don't see why NG of investment properties is any different and should be changed! 
Only 1 out of 10 NG properties are new dwellings, so what's the point? Surely not to displace existing owners?


----------



## drsmith (22 April 2010)

If NG for residential property was removed for all investors (existing and new investors), that would be like declairing prohibition on the punchbowl. There would be a rush for the exit.

If it was removed for new investors this would be like restricting new entrants to water. Not an attactive proposition particularly post entry charge (stamp duty). This may also lead to a rush for the exit.


----------



## MACCA350 (22 April 2010)

drsmith said:


> If NG for residential property was removed for all investors (existing and new investors), that would be like declairing prohibition on the punchbowl. There would be a rush for the exit.
> 
> If it was removed for new investors this would be like restricting new entrants to water. Not an attactive proposition particularly post entry charge (stamp duty). This may also lead to a rush for the exit.



What about my suggestion and treating the property market like the share market. 

It would allow those who turnover quicker(and even those who don't as they have the choice) to claim losses against income(etc). 

While those who hold long term can do the above knowing they have to pay CGT on all their capital gains, or they can decide to not claim their losses against income(etc, but can still carry it forward for 3 years) and have the 50% CGT reduction once they sell.

Seems pretty fair to me, you either claim the loss OR you get a discount of CGT but NOT both!!

Would certainly put some brakes on runaway pricing. 

A Trader can claim losses against income(etc), but will pay 100% CGT even if they sell after 1 year

An Investor cannot claim losses against income(can against CG and can carry the loss forward 3 years) but can get the 50% CGT reduction after 1 year.

It's a trade off. Simply it means that someone looking to buy property can have the choice. Either they accept that they have to pay 100% CGT if they wish to claim losses against income OR they accept the loss can only be carried forward 3 years and can only be put against income or CG on the property but they get the bonus of a 50% CGT discount

What impact would this have? 
I'd say pretty much everyone who is negatively gearing will decide to be a Trader to offset losses against income, in which case pay more CGT. 
Those who are positively geared will decide to be an Investor as they don't need to offset against income, in which case they get a discount on CGT.

Surely it's a good thing, it's not a complete abolishing, but reduces the tax payer funded speculation. It allows negative gearing for those who need it just with reduced capital gains incentive, but it incentives positive gearing.
All this in a way that reduces the burden on the taxpayers.

cheers


----------



## MR. (22 April 2010)

drsmith said:


> If NG for residential property was removed for all investors (existing and new investors), that would be like declairing prohibition on the punchbowl. There would be a rush for the exit.
> 
> If it was removed for new investors this would be like restricting new entrants to water. Not an attactive proposition particularly post entry charge (stamp duty). This may also lead to a rush for the exit.




I/we have no doubt the outcome of the examples above. Those changes surely wouldn't be change for those reasons. Or thirdly, a simple clause of No NG for existing newly purchased properties from a date. Will have its implications no doubt as well but would be the better of the three.


----------



## robots (22 April 2010)

satanoperca said:


> Hi Beej,
> 
> While I agree with the majority of your statement I would like to highlight the following to the discussion.
> 
> ...




hello,

if Aus has the same situations as Japan and UK, then whats keeping it all going well Satanoperca?

its whats out the front door, the sun the sand the surf, docklands, southbank, the dandenongs, Uluru, gold coast, great ocean road, collins st, little collins street, frankston, dandenong and all the rest

paradise and something no other country comes close to offering

just people grabbing a part of it, and if some are able to AFFORD to get more then good luck to them

thankyou
robots


----------



## satanoperca (22 April 2010)

robots said:


> hello,
> 
> if Aus has the same situations as Japan and UK, then whats keeping it all going well Satanoperca?




Where did I state that we have the same situations as Japan and the UK. I was just highlighting the aspect of their markets which could influence prices, like land shortages.

It seems ironic that Australia has plenty of land but rising prices and the UK and Japan have declining prices and a shortage of land.

The only thing connecting us is the global economy and finance.


Cheers


----------



## robots (22 April 2010)

satanoperca said:


> Where did I state the we have the same situations as Japan and the UK. I was just highlighting the aspect of there markets which could influence prices, like land shortages.
> 
> It seems ironic that Australia has plenty of land but rising prices and the UK and Japan have declining prices and a shortage of land.
> 
> Cheers




hello,

we dont have plenty of land, we have exactly the same circumstances as UK and Japan (and every other city in the world)

thankyou
robots


----------



## Beej (22 April 2010)

satanoperca said:


> Hi Beej,
> 
> While I agree with the majority of your statement I would like to highlight the following to the discussion.




Good morning to all!

Several valid points made. I'll respond to the parts I have something to add to or disagree with:



> While property might not be connected globally, finance/credit/debt is certaintly connected globally with our four pillar of banking borrowing on average 50% of the funding overseas. Credit and availability of it does determine price increases.




True to a point. I would add that the actual o/s funding proportion for ALL Australian bank lending is actually around 25%, and that mortgage lending constitutes about 2/3 of total loans outstanding. The figures can be derived from the APRA website here (http://www.apra.gov.au/Statistics/Monthly-Banking-Statistics.cfm) quite easily. Also an article the cites similar figures here: http://www.bankers.asn.au/default.aspx?ArticleID=1366

The be clear though, the financial "link" is purely related to the cost of money from o/s, which will be an input to the cost of credit (interest rates) here. It is a factor yes, but only one of many more fundamental factors.



> [snip Foreign property buyer stuff]. This I see as treason and I fail to understand why my grandfather and Uncle went to war to only find out that the people they fought can buy the land they were defending.




The treason call is a more than a little bit extreme!! For a start your (and my) grand-fathers went to war for far more dubious and ambiguous reasons than you cite.....especially in the case of WWI. Also I don't recall us being at war with the Chinese in WWI or WWII? Or the UK? Or the US? Or India? Are the Germans in fact buying up all our land at the moment?? Regardless, not just ANY cashed up foreigner can buy established property here - they have to at least have a temporary visa of 12 months duration or more (like a 457 visa etc), or be a permanent resident, and in those cases have to be buying to live in it. In fact these people could always buy property - they just needed FIRB approval, and apparently in 95% of cases always got it in the past anyway.  

There is a lot of hype about this issue at the moment - I personally think the impact is being over-played by people with other agenda's, but will wait until the data becomes clearer before making a final judgement (there's some sort enquiry under-way right now I believe).



> As for prices continuing to rise, current evidence shows this is not the case with a small and I do say small decline in prices in Melbourne over the last three months. Only time will tell in the coming months if this is just a blimp or a change in the trend.




True - I have said many times I expect the market to cool significantly this year for several reasons, including rising interest rates, but it will look more like 1992/93 than 1930/31 .



> On the case of NG, I think it is fine to have NG on property but any loss should only be able to be offset against any profit in the same asset class as is found in shares, not against other incomes. Any loss should be able to be carried forward for several years. Please correct me if I'm wrong.




That is actually not correct, and several posters here seem to have the same mis-undertsanding. You CAN negative gear the net "operational" costs (eg interest costs minus dividends)  of a leveraged share portfolio against income from other sources, just as you can with property. I think you are thinking of CAPITAL losses, which can only be regained via offset against future capital gains (if you are an  investor) vs a trader who can offset capital losses as an operational loss like a business can.



> If NG was removed wouldn't it lead to lower property prices and affordability, allowing more people to own and less pressure on rental demand.
> It might also force people to invest in product assets. Sorry but buying an established IP is hardly productive.




I don't think so. I think you would see rising rents as a result. Perhaps in the long term lower relative prices at the low end for property but there would be a lot of pain in between.



> Without business growth how are people to pay mortgagees?




Businesses have other sources of capital, including the share market - they made great use of that during the GFC, and the banks didn't want to lend to business then and they were calling in, not rolling over loans, leaving business with no choice but to go elsewhere for capital, which they did. I think that has resulted in a bit of a distortion on the lending stats now compared to "normal". Things will move back to "normal" over the next few years.



MACCA350 said:


> That's the thing, they're investors not traders.
> As I see it Property INVESTORS are having it both ways
> 
> What would happen if the stock market tax rules applied equally to the property market?




The tax rules are applied equally, and property investors to not get it both ways - see my above point on this topic. i think there are several mis-understandings around.

Cheers,

Beej


----------



## robots (22 April 2010)

hello,

awesome work Beej,

and this:

http://www.theage.com.au/business/a...lobal-forecast-20100421-t024.html?autostart=1

the leaders again

and so many americans coming to our shores or hooking up with aussies, just fantastic, i guess grabbing a piece of the action

thankyou
robots


----------



## UBIQUITOUS (22 April 2010)

robots said:


> hello,
> 
> awesome work Beej,
> 
> ...




Thanks Robots for the great news. The IMF are just confirming what we all know already: Interest rates are going to be jacked up BIG TIME 

Who in their right mind would be buying a unit in St Kilda right now?


----------



## robots (22 April 2010)

hello,

those who can afford it, they do exist

many on good dollars and they can pay to get in, simple

or they can pay to rent it, superb

or might just leave it empty (probably best solution)

thankyou
robots


----------



## satanoperca (22 April 2010)

robots said:


> hello,
> 
> those who can afford it, they do exist
> 
> many on good dollars and they can pay to get in, simple




This is very true, still lots of money out there and lots of people on good incomes.

Robots would have no problem at the moment selling his St Kilda apartment for a tidy profit. Demand is still high.

Someone said to me the other day, how would you invest $10M?

Regardless of IR's, NG and everything else, a proportion of it would go into realestate.

Cheers


----------



## UBIQUITOUS (22 April 2010)

satanoperca said:


> This is very true, still lots of money out there and lots of people on good incomes.
> 
> Robots would have no problem at the moment selling his St Kilda apartment for a tidy profit. Demand is still high.
> 
> ...




I agree, that a cashed up person should hold some property. But what if you had less than $100k like the majority of home buyers? Would you borrow the other $400k on an uptrend in interest rates?


----------



## satanoperca (22 April 2010)

UBIQUITOUS said:


> I agree, that a cashed up person should hold some property. But what if you had less than $100k like the majority of home buyers? Would you borrow the other $400k on an uptrend in interest rates?




No, I would wait until interest rates looked like peaking, at a guess between 8-10%. If they go higher than 10%, I dont think the economic outlook would be pretty and would be more concerned with keeping my income/job.

Cheers


----------



## Mofra (22 April 2010)

UBIQUITOUS said:


> With the 'Ken Henry' tax review a week or so away, I am surprised that there is no discussion here on something which could have the largest impact on the    RE market since negative gearing was introduced.
> 
> Any thoughts on what it will include in relation to RE?



Realistically it is hard to speculate, because regardless of the recommendations the political realities will prevent some of the recommendations from passing through both houses of parliament without significant amendment.


----------



## Dowdy (22 April 2010)

Beej said:


> Regardless of all that, so what? All those markets have had major corrections, and massive booms in the past and ours hasn't. Likewise our market has had it's own booms and busts in the past (in different regions even at different times as well), without any correlated boom or bust on the markets of those other countries either.
> 
> The only ones arguing that "it's different this time" are those (like you) who expect that after 50 years+ of essentially non-correlated real estate markets, that suddenly the residential property markets in each country have "gone global" and should all track each other, regardless of local market factors and fundamentals??





 There are so many things affecting house prices but we do live in a global economy and if countries like China falter we'll feel the brunt of it. Australia doesn't live in a bubble, we are connected. It only depends on how major companies invested abroad.




> The facts are that after a small decline of < 5% across the board in 2008, Australian real estate prices have risen more than 13.6% on average in 2009 (ABS figures), and still rising by all accounts, with Melbourne and Sydney market having done especially well on the back of large population growth, pent up demand and very limited supply of stock for sale in sought after locations, and not enough new building. I don't see those fundamentals changing much any-time soon.




You forget to ask why. Why did house prices rise are a <5% decline?

Because the government handed out more money to FHB, the RBA slashed rates. You said you don't see the fundamentals changing soon but they have already slashed the FHB grant and Stevens said himself that IR will be returning to normal levels.

You should pay more attention to politics then _local factors_ as it's the government who has inflated the bubble and can easily pop with a few changes of regulation


----------



## -Bevo- (22 April 2010)

Dowdy said:


> There are so many things affecting house prices but we do live in a global economy and if countries like China falter we'll feel the brunt of it. Australia doesn't live in a bubble, we are connected. It only depends on how major companies invested abroad.




On the subject of China anyone catch Marc Faber interview on bloomberg,
He talks about China property and mentions Australia housing.

http://www.bloomberg.com/avp/avp.ht...//media2.bloomberg.com/cache/vmN_XglahCZk.asf


----------



## MACCA350 (22 April 2010)

Beej said:


> several posters here seem to have the same mis-undertsanding. You CAN negative gear the net "operational" costs (eg interest costs minus dividends)  of a leveraged share portfolio against income from other sources, just as you can with property. I think you are thinking of CAPITAL losses, which can only be regained via offset against future capital gains (if you are an  investor) vs a trader who can offset capital losses as an operational loss like a business can.
> 
> The tax rules are applied equally, and property investors to not get it both ways - see my above point on this topic. i think there are several mis-understandings around.



Yep, I see where I tripped up, thanks for pointing that out.

There just seems to be an imbalance somewhere, I mean why would someone purposefully purchase an asset with an expected yearly running loss. We all know it's not about helping out the community with rental housing, but purely the belief they are guaranteed exceptional capital growth that far outweighs the intermediate operational loss.

Sure the same rules apply to shares, I can see that now, but the volatility of the share market means that capital gain is not perceived as guaranteed in the same way as the property market. So the investor is less likely to cop an intermediate loss, and hence I'm assuming this is less of a burden on tax payers.

Surely this significant difference between asset classes should draw differences in the tax implications, especially when one has become such a burden on the tax payer. Maybe the 50% CGT deduction should be scrapped for property investment, this would reduce the speculation and reduce the tax burden.

What adverse effects would this cause

cheers


----------



## drsmith (22 April 2010)

MACCA350 said:


> What about my suggestion and treating the property market like the share market.



For that to be effective different volume thresholds would need to apply to each asset class given shares are far more liquid than property. That would be a serious argument in itself.

I wasn't referring to CGT specifically in my comment on NG but serious reform of property taxes (or investment tax as a whole) obviously requires reviewing all elements and not just NG or CGT in isolation.

The Howard government in shaving capital taxes by the introduction of the 50% discount did it with an axe rather than a razor. It was poor policy made worse by not having a taper (say, 3 or 5 years) for investors to realise the full value. That obviously wasn't considered sufficiently electorally popular. The blood from the use of ths axe is currently on the faces of those wanting to enter an inflated property market.

To make matters worse, he screwed long term investors with this change by not maintaining CPI indexation as an alternative to claiming the discount. If inflation is over 4.1% pa over 10 years (>2%/20yrs, >8.4%/5yrs), the CGT discount is worth less than than the CPI discount it replaced. The discount was effectively funded by increasing shorter term speculation (more turnover) and higher CGT on longer term investors. Poor economic policy but good politics in that he was able to shout about a big tax cut which was in reality an illusion. That illusion will become a much sharper reality for many investors should inflation rise.

A better economic solution (broadly speaking) would have been to maintain CPI indexation of the cost base but cap the rate of CGT at the corporate tax rate (currently 30%) or similar (an overall internationally competitive rate). This though may have been too costly on the budget so at the same time he could have managed this by limiting (but not necessarily removing) deductions associated with negative gearing.


----------



## drsmith (22 April 2010)

Dowdy said:


> You should pay more attention to politics then _local factors_ as it's the government who has inflated the bubble and can easily pop with a few changes of regulation



The government stimulus can clearly be seen in the household income graph below.

Not only during the GFC but also during the latter Howard years.

Have we reached the point where governments are now trapped into maintaining the bubble as long as they can ?
The alternative is, well, not electorally ideal amongst other things.


----------



## MACCA350 (22 April 2010)

Thanks for the background info DrSmith I wasn't aware there was a CPI indexation back then. Was that also the case for the stock market?

cheers


----------



## drsmith (22 April 2010)

MACCA350 said:


> Thanks for the background info DrSmith I wasn't aware there was a CPI indexation back then. Was that also the case for the stock market?
> 
> cheers



Yes. History of CGT in Australia;



> Capital gains tax was introduced in Australia on 20 September 1985, one of a number of tax reforms by the Hawke/Keating government. The tax applies only to assets acquired after that date. Gains (or losses) on earlier assets, called pre-CGT assets are ignored.
> 
> The rules introduced initially allowed the cost of assets held for 1 year to be indexed by the consumer price index (CPI) before calculating a gain (calculation of a loss used only the unindexed cost though). This meant the part of a price rise due only to inflation was not taxed.
> 
> ...



Source: Wikipedia


----------



## Tysonboss1 (22 April 2010)

CamKawa said:


> Some intersting reading.
> 
> Rentals showing poor yield
> 
> ''You can put money in the bank and get 5.5 per cent without any maintenance costs, insurance and repairs.''




When you subtract the 4% that your money/capital has been devalued because of inflation, your 5.5% gain is really only 1.5%. and if you also subtract tax on the interest you will end up breaking even or losing.

See the main benefit of property is that it is naturally hedged against inflation as with most real assets, cash however is not.


----------



## mythos (22 April 2010)

This is a very interesting video on the Financial Times website. 

http://www.ft.com/cms/86a30e34-dfd5-11dc-8073-0000779fd2ac.html?_i_referralObject=15762261&fromSearch=n%20%3Chttp://www.ft.com/cms/86a30e34-dfd5-11dc-8073-0000779fd2ac.html?_i_referralObject=15762261&amp;fromSearch=n%3E

The guy is saying out of the last 34 bubbles he has studied, there are only two in the world that have not currently popped. The UK and Australian housing bubbles.


----------



## drsmith (22 April 2010)

-Bevo- said:


> On the subject of China anyone catch Marc Faber interview on bloomberg,
> He talks about China property and mentions Australia housing.
> 
> http://www.bloomberg.com/avp/avp.ht...//media2.bloomberg.com/cache/vmN_XglahCZk.asf



He's not too keen to drink from our punchbowl to say the least.

It's a pity the interviewer didn't have a greater financial intelect.


----------



## Dowdy (22 April 2010)

drsmith said:


> He's not too keen to drink from our punchbowl to say the least.
> 
> It's a pity the interviewer didn't have a greater financial intelect.





There no need. Marc Faber is probably the best economist/investor/forecaster in my opinion. When he talks, pay attention

He predicted the crash, the bottom (on the exact day it happened), the boom that followed, the new highs in the stock market - and that was just the last 24months

Some economist predicted the crash but didn't predict what happened after.


----------



## robots (23 April 2010)

Dowdy said:


> There no need. Marc Faber is probably the best economist/investor/forecaster in my opinion. When he talks, pay attention
> 
> He predicted the crash, the bottom (on the exact day it happened), the boom that followed, the new highs in the stock market - and that was just the last 24months
> 
> Some economist predicted the crash but didn't predict what happened after.




hello,

oh come on, what about that guy that was around at ASF: Associate Professor Robots

he's got it right year after year as well by the looks of it

thankyou
robots


----------



## drsmith (23 April 2010)

robots said:


> oh come on, what about that guy that was around at ASF: Associate Professor Robots



Just for you


----------



## robots (23 April 2010)

hello,

oh yeah:

http://www.theaustralian.com.au/bus...erest-rate-rises/story-e6frg926-1225857524478

what a great article from the australian, so interest rates back up to where they want them is just fantastic, just let them plod along for a while

thankyou
robots


----------



## drsmith (23 April 2010)

Mr Stevens is very wary of diluting the punch too much as he does not want to see the party goers rush for the door trampling the government door charge collectors on the way out.


----------



## UBIQUITOUS (23 April 2010)

robots said:


> hello,
> 
> oh yeah:
> 
> ...




The longer that interest rates stay low, the higher that they will eventually have to go. The noose is tightening!

So last quarter, there were capital losses and net income losses. All for the sake of saving some tax. Hilarious!!


----------



## Dowdy (23 April 2010)

robots said:


> hello,
> 
> oh come on, what about that guy that was around at ASF: Associate Professor Robots
> 
> ...





Being a biased property bull with nothing insightful to say about the market makes you alot of things,  but definitely not an Associate Professor, wouldn't even make you an Undergraduate! 

Weren't you banned for a few months because you gave yourself BS titles?


----------



## drsmith (23 April 2010)

Assuming a continued growth path for civilisation as a whole, the bulls will be right more often than the bears but in this instance I wouldn't be betting the house on the house.


----------



## UBIQUITOUS (24 April 2010)

http://m.smh.com.au/national/foreigners-face-tighter-rules-on-property-ownership-20100423-tj3q.html

...and about time!!!
The downward pressure on property prices just grows and grows!!!


----------



## cutz (24 April 2010)

drsmith said:


> Assuming a continued growth path for civilisation as a whole, the bulls will be right more often than the bears but in this instance I wouldn't be betting the house on the house.




That's right,

The bulls are correct most of the time, the bears are incorrect most of the time but when the bears are correct it's usually in a huge way.

It's in the math.


----------



## kincella (24 April 2010)

the US housing crash, was fabricated by a bear, who stood to earn billions, by making his prediction come true...they made up fabricated CDO's, sold them off, then bet the CDO.s would fail....he had his hand in the whole process.......and all those bets could be made against just ONE mortgage...
I bet he is not the only one who fabricated a derivative to snare the players, and pretend his bearish predictions were correct...

extract....
But if you're looking for heroes of the crash on Wall Street who called it, better read the government's suit charging Goldman Sachs Group Inc. first. It claims the bank defrauded investors in the process of helping one of those prescient housing bears make his negative bets.
The suit alleges Paulson & Co, run by billionaire John Paulson, secretly helped construct a package of mortgage-linked derivatives designed to blow up so he could make a fortune. So-called short sellers, like Paulson, profit 
when stocks, mortgages or other assets they bet against lose value.

http://www.theage.com.au/business/m...sh-cassandras-of-the-crash-20100422-tblq.html


----------



## kincella (24 April 2010)

so Stevens has stated the interest rates are now at about the long term average that he was seeking.....what are they then ? 6.5 - 7% or lower...

so all the noise and fuss and bad predictions of rates going over 10% by the other side was just another case of how out of touch with the big picture on economics some people really are....
those predictions were wrong and to the extreme.....as many of the conservative people stated here time and time again

the other news today about the govt proposal to levy 5 billion dollars of tax on the mining industry, should ensure that tax will kill off any blue sky...or pigs might fly scenarios regarding the resources boom continuing....


----------



## cutz (24 April 2010)

kincella said:


> the US housing crash, was fabricated by a bear, who stood to earn billions, by making his prediction come true...they made up fabricated CDO's, sold them off, then bet the CDO.s would fail....he had his hand in the whole process.......and all those bets could be made against just ONE mortgage...
> I bet he is not the only one who fabricated a derivative to snare the players, and pretend his bearish predictions were correct...




I haven’t read the book but how does a derivative that’s based on a particular market but not directly linked to it exacerbate the problem.

For example using a hypothetical situation, I make a bet with you that the oz housing market will collapse, a bank has whipped the contract for a fee, I’m betting down you’re betting against me, the housing market eventually collapses and I collect, how does our side bet that affect the property market ? 

The article mentions that the contracts merely make reference to the housing market and it also states they made the overall losses bigger, can’t see how it works.

No really wants to admit that maybe the property market was overheated, fuelled by rampant speculation/bad debt, bit like what's happening in oz.


----------



## robots (24 April 2010)

hello,

good morning Kincella, great commentary

some good rain yesterday night, you been up to Kyneton recently?

was up there at easter the joint has become one nice area with a lot more to happen i believe

thankyou
robots


----------



## kincella (24 April 2010)

Morning Robots,
I have not been to Kyneton for yonks, I should go there, I lived there once as a child, I adored the place....I had my little Kelpie working dog with me, and used to put him in the competitions they held across the road at the showgrounds.....those were the days my friend...
very affordable housing there when I looked last year.....
Have a daughter staying with me, we have been on shopping sprees everyday this week, and we are not finished yet....doing a total makeover for her, she needed some TLC...
some thanks due to my tenants who contribute to the bank account, that enables shopping sprees of course...
thought about looking bayside while she is here....to see if she wants to re-locate down there.....
have some work to catch up on, in the meantime.....

looking like some form of sense is returning to those in power in govt.....ie the IR news, and the recording of foreign buyers....(but that is all they are doing, the flood gates are still open, and am doubtful of any slowing down)
I note the chinese banks are lending to them at very low rates, to buy up Australia...wish I could get my hands on loans at 2%

Unless our locals look outside of the cities, I think they will be locked out of the market for a long time.
Cheers


----------



## robots (24 April 2010)

hello,

piper st very boutique with some classic cafe's/restaurants doing well, i think it will head around the corner to the main strip in the near future as many grand buildings there

train gets there in about 1.1hrs, heaps of people on it and all within walking distance

i wont be around much the next few weeks as settlement approaches on regional purchase, loan contract all signed, deposit paid.

Once all done will sit tight until new year, kick back have a latte

suns out for another great day

thankyou
robots


----------



## robots (24 April 2010)

hello,

http://www.theaustralian.com.au/bus...ad-for-the-hills/story-e6frg9gx-1225856561460

based on Sydney and QLD, but very much applies in Victoria

some awesome places around, bendigo, ballarat, shepparton, moe, warragul, geelong

just fantastic

thankyou
robots


----------



## drsmith (24 April 2010)

kincella said:


> I note the chinese banks are lending to them at very low rates, to buy up Australia...wish I could get my hands on loans at 2%



I would be interested in further information on this if you could provide links.


----------



## jerome (24 April 2010)

Yes more information on this would be fascinating.


----------



## TheBigSponge (24 April 2010)

http://www.theage.com.au/business/hammer-falls-on-foreign-investors-20100423-tjcy.html

Does the Krudd government have any idea about anything? They seem to back flip on everything they implement


----------



## Mofra (24 April 2010)

TheBigSponge said:


> http://www.theage.com.au/business/hammer-falls-on-foreign-investors-20100423-tjcy.html
> 
> Does the Krudd government have any idea about anything? They seem to back flip on everything they implement



I agree with the backflip on this one - the initial decision was a horrendous one.


----------



## robots (24 April 2010)

hello,

good evening brothers,

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162#B

HUGE 83% even with all the foreign/chinese buyers gone, still going strong

just amazing

thankyou
robots


----------



## UBIQUITOUS (24 April 2010)

robots said:


> hello,
> 
> good evening brothers,
> 
> ...




Hey Robots, they haven't gone.....yet. The buyers are those who already have received approval. Expect this clearance rate to drop over the coming weeks as the foreign buyers drop off due to the restrictions and the local buyers drop off due to the interest rate hikes. It looks like the RE will be getting hit from all angles


----------



## noirua (24 April 2010)

The Government are increasingly keen to push short term residents to sell-up on their properties in Australia and to clamp down on land banking. If this is rigorously enforced then this could well weaken land and property values.

Funds that invest in Australian property and particularly land, as a land bank, have investors from abroad who often own large chunks of these funds and when acting together bypass the laws and regulations.

This appears to be a tax and law against individuals that would not include property funds.


----------



## Bintang (25 April 2010)

*Australian Bubble Forum*

The following link might interest a few of you guys:

http://bubblepedia.net.au/tiki-index.php?page=homepage

Not sure if it has already been mentioned in this forum but I did do a search to check before posting this.


----------



## robots (26 April 2010)

*Re: Australian Bubble Forum*



Bintang said:


> The following link might interest a few of you guys:
> 
> http://bubblepedia.net.au/tiki-index.php?page=homepage
> 
> Not sure if it has already been mentioned in this forum but I did do a search to check before posting this.




hello,

Bintang, could you also disclose who Bubblepedia are and the associations they have with fund managers, cfd providers, hedge funds, 401k's, investment banks etc.

as its fairly evident in the world we live in plenty out there doing things behind the scenes,

sites like Bubblepedia influence many to direct there hard earned into the hands of others for exploitation

thankyou
robots


----------



## Dowdy (26 April 2010)

*Re: Australian Bubble Forum*



robots said:


> hello,
> 
> Bintang, could you also disclose who Bubblepedia are and the associations they have with fund managers, cfd providers, hedge funds, 401k's, investment banks etc.
> 
> ...





From the website;



> Bubblepedia is a wiki
> It's early days, but a few pages are already proving to be useful for educational link backs, and collating the crazy quotes of spruikers and politicians. *If you like the information you see here, we'd love you to contribute to it. *




You don't like what's on there. Then why don't you add to the site your wonderful 'knowledge' on the RE market and why you were self proclaimed _ASF Investor of the Year 2005,06,07,08,09,10 _.

Also add why you were banned for a few months too, that'll get the conspiracy nuts going. It could only be because the forum admin must of had a associations with fund managers, cfd providers, hedge funds, 401k's, investment banks etc.


----------



## Bintang (26 April 2010)

*Re: Australian Bubble Forum*



robots said:


> hello,
> 
> Bintang, could you also disclose who Bubblepedia are and the associations they have with fund managers, cfd providers, hedge funds, 401k's, investment banks etc.
> 
> ...




You are welcome to do your own research on this and form your own independent judgement. I have simply provided the link as information for those who might be interested. If you don't like it don't read it.


----------



## robots (26 April 2010)

hello,

yes, thats right i didnt read it when I noticed the links to Mr Minack articles from *Morgan Stanley*, 

now what was that back in 2008 everything was going to crash by 40-50%

even the cheek of bubblepedia to accept donations is an indicator of the things that must go on

thankyou
robots


----------



## kincella (26 April 2010)

Robots,
Those that make their money from stock research, which they sell to their clients, appear to be the most vocal against the property market.
IMO they are jealous of the amount of money spent on housing, they would just love to have clients hand over the same amount for  buying stocks.

And talk about one sided, they dont show endless charts on all aspects of the stock market, as compared to the figures they come up with for the property market
...if the stock chart dips its a buy....if it rises ...its still a buy, unless its a sell, for which they will have another buy to replace it.

From my observations on property forums over the years, we have a lot of stock traders, who intend to make their fortune on the stocks, and then eventually pay cash for the property.  They also expect the property market to mirror the stock market, with houses going up and down on a weekly or monthly basis, and according to the daily news reports.

In the meantime, whether it is 10 or 20 years later, all those doomsday predictions are still out there everyday, whilst the housing market just continues to remain on its slow and steady rise, and out of reach for that mindset.
The rest of the community continues to buy, sell, move, rent, upgrade and raise a family etc.
Cheers


----------



## Bintang (26 April 2010)

robots said:


> hello,
> 
> yes, thats right i didnt read it when I noticed the links to Mr Minack articles from *Morgan Stanley*,
> 
> ...




Well I did begin my post with: "The following link might interest a few of you guys:" So you are obviously not one of the few but for someone so uninterested it is amusing how vociferously you need to advertise the fact.  And before you give me the kind of broadside I see you giving other forum members I will just point out that I am not passionate about either side of this property prices debate. But I do find the discussion interesting and sometimes even entertaining.


----------



## cutz (26 April 2010)

*Re: Australian Bubble Forum*



Bintang said:


> I have simply provided the link as information for those who might be interested.




Hi Bintang,

Thanks for the link, looks like an interesting site.

FWIW, I personally think that the oz market is in huge bubble territory, question is will it slowly deflate or crash, best case senario would be for a long term flattening with the long term average eventually catching up but I do doubt that.

A lot is at stake here.


----------



## Temjin (26 April 2010)

Here is a short video from Jeremy Grantham on "bubbles".

http://link.brightcove.com/services/player/bcpid71778049001?bclid=69928231001&bctid=79128759001

He specifically mentioned Australia of course.

And of course, the property spuikers would argue he is absolutely wrong DESPITE the fact that as a wise OLD man, extremely famous and respected in the investment community, manage over $100 billion worth of funds and had made, and was right on several occasions, predictions on previous bubbles including the tech dot com and the current GFC. 

He specifically said if the Australia's property bubble did not eventually manage to burst, it would be the first in the entire 100 years of history. 

But then what's the point. We all know it is impossible to sway the beliefs of the faithful property spuikers here because they simply have too much vested interests both financially and emotionally. It's human nature to reject ANY facts/evidences that does not conform to one's beliefs. Beside, riding along a bubble makes perfect rational sense , with the exception of the same belief that they could all INDIVIDUALLY get out before it burst and make their share of profit. (which technically, is impossible to happen to EVERYONE) 

So enjoy the video and ignore him at your own peril.


----------



## satanoperca (26 April 2010)

Cheers Timjin for the interesting link, however, I think that Jeremy Grantham  overlooked one key fact, we are different in Oz.

It seems others have housing shortages :



> “The Californian Building Industry Association (CBIA) continues to express alarm over what it calls an ongoing housing crisis in Southern California. Alan Nevin, the association’s chief economist, projected in a 2006 CBIA Housing Forecast that only 185,000 to 205,000 building permits will be granted this year, far short of the 240,000 new homes needed each year.”




And from our fateful, HIA :



> “The report finds that if current building trends persist, then Australia’s cumulated housing shortage would reach 466,000 dwellings by 2020… Housing to 2020, which focuses on future housing demand and the number of dwellings required in meeting this demand, highlights a current housing shortage that already numbers over 109,000 dwellings.”




Cheers


----------



## So_Cynical (26 April 2010)

Temjin said:


> Here is a short video from Jeremy Grantham on "bubbles".
> 
> http://link.brightcove.com/services/player/bcpid71778049001?bclid=69928231001&bctid=79128759001
> 
> ...




Saw this video the other day and found it compelling...problem with the true believer's here as ASF is that there in bubble denial.


----------



## Bintang (26 April 2010)

satanoperca said:


> Cheers Timjin for the interesting link, however, I think that Jeremy Grantham  overlooked one key fact, we are different in Oz.





Yeah, that housing shortage in California was back in 2006. Maybe after that the builders pulled out their collective fingers and built like that clappers until supply exceeded demand.  W'ont happen in Oz.   Vive la difference !!!


----------



## cutz (26 April 2010)

So_Cynical said:


> Saw this video the other day and found it compelling...problem with the true believer's here as ASF is that there in bubble denial.




The thing that gets me is that many highly geared property market speculators look at stock market investors and hedgers thinking that we are the gamblers, nothing could be further from the truth.

Some even goes so far as to mock derivative instruments, the very things that many use for protection. These same property gurus don't even realize that they themselves are sitting on unhedgable instruments of financial pain.

Talk about not being able to see the forest through the trees.


----------



## MACCA350 (26 April 2010)

Thanks for the link

This was particularly interesting:


> *  There is a shortage of housing
> 
> Between the last two censuses, the number of people in NSW rose by 3.8%, the number of dwellings rose by 6.1% and the number of empty dwellings rose by 13.3% to 9.5% of the total. Check the numbers for your area and list them here; OverbuildingByLocation. In fact the shortage story has been a feature of the bubble all around the world. The HousingShortage wiki page gives examples from around the world of similar claims of a housing shortage as we are seeing here. (Please feel free to add in others that you find)
> 
> ...



Data pulled from the likes of ABS

cheers


----------



## cutz (26 April 2010)

Huge LOL.

The land shortage fallacy.

Get on google earth; look down on Australia, looks like there’s plenty of land to me.


----------



## robots (26 April 2010)

hello,

yes plenty of land all around OZ, cheap as chips blocks which blow the affordability/bubble crisis out the door

go and buy a 10k or 20k or 30k block which are all over the country, just here in Victoria you can buy houses 40km from GPO in Melton for 250k, Cranbourne 280k

the bubble is in the number of bloggers who have no idea (and no money)

this is all fantastic, same arguments back in 2005 and since then my unhedged financial instrument has continued to go sky high, yeah man i am in a whole world of financial pain, hahahahahahahaha

thankyou
robots


----------



## robots (26 April 2010)

hello,

there you go:

http://www.realestate.com.au/buy/property-land-between-0-50000/list-2

heaps all around australia, go for it, plenty of variety and prices

thankyou
robots


----------



## robots (26 April 2010)

hello,

here's a ripper at Linton, 98K:

http://www.realestate.com.au/property-residential+land-vic-linton-2748688

mud brick hut, good scope to improve, get a few water tanks, solar, vegie patch, presto got  a home

thankyou
robots


----------



## Dowdy (26 April 2010)

robots said:


> hello,
> 
> the bubble is in the number of bloggers who have no idea (and no money)
> 
> this is all fantastic, same arguments back in 2005 and since then my unhedged financial instrument has continued to go sky high, yeah man i am in a whole world of financial pain, hahahahahahahaha





Lets answer that with a previous post from another member



Temjin said:


> Here is a short video from Jeremy Grantham on "bubbles".
> 
> http://link.brightcove.com/services/player/bcpid71778049001?bclid=69928231001&bctid=79128759001
> 
> ...





Well, he ain't no blogger and he's got a heck of alot of money


----------



## robots (26 April 2010)

hello,

and could be managing 300 billion if made some better investments

never heard of this guy, who is he

from australia?

thankyou
robots


----------



## GumbyLearner (26 April 2010)

I have found this a useful site for Aussie expats

http://www.smats.net


----------



## satanoperca (26 April 2010)

Dowdy said:


> Lets answer that with a previous post from another member
> 
> 
> 
> ...




*touchÃ©*


----------



## cutz (26 April 2010)

robots said:


> yes plenty of land all around OZ, cheap as chips blocks which blow the affordability/bubble crisis out the door




Robots,

Don't take what I said personally, it wasn't aimed at you.

What I'm getting is a lot of property investors fall for the line that there's a land shortage on at the moment, you gotta buy close to the city, population growth is on the way up and up, the big squeeze is on, building is not keeping up with demand and *numerous other myths ect.ect*. They fall for it, then before they know it they are up to their eyeballs in debt getting < 2% yield.

It's all an illusion.

Major capitol citys are redlining, why is it so ?


----------



## drsmith (26 April 2010)

kincella said:


> I note the chinese banks are lending to them at very low rates, to buy up Australia...wish I could get my hands on loans at 2%



Apologies if I've missed it in the posts since but I'm still interested in more info on the above.


----------



## Temjin (26 April 2010)

robots said:


> hello,
> 
> and could be managing 300 billion if made some better investments
> 
> ...




No doubt you haven't heard from him because your "investment" knowledge is pretty...well....."lacking" and "unsophisticated".  

He would simply be laughing at your lowly amount of wealth and the lack of ability to make billions. Not to mention he probably make his first billion before your mother was probably even born.  

Touche eh? 

Sorry, off topic, just having some "fun" here. Love playing with ego though. hah


----------



## robots (27 April 2010)

Temjin said:


> No doubt you haven't heard from him because your "investment" knowledge is pretty...well....."lacking" and "unsophisticated".
> 
> He would simply be laughing at your lowly amount of wealth and the lack of ability to make billions. Not to mention he probably make his first billion before your mother was probably even born.
> 
> ...




hello,

http://www.gmo.com/America/About/People/_Departments/BoardofDirectors.htm

there he is, and works at GMO who "manages" 107 billion of "clients money"

looks like Keen and Minick all over again, 

thankyou
robots


----------



## satanoperca (27 April 2010)

robots said:


> hello,
> 
> http://www.gmo.com/America/About/People/_Departments/BoardofDirectors.htm
> 
> ...




Come on, your clutching at straws now.

Mr. Grantham co-founded GMO in 1977. He must be no good, only $107B of other peoples money he manages. They all must be stupid, when the can invest with the ASF Investor of many years.

He would have much wealth himself, expect him to be on the average salary.

Can see the comparison with Keen, Not.

Cheers


----------



## trainspotter (27 April 2010)

Bricks and mortar - safe as houses ! She'll be right mate.  

Aussie banks have already started to change their approval criteria. Just wait until July 1st when NEW guidelines are in ! This will stop the bubble monster !

*Big Brother banks watching our lives*

MAKING big cash withdrawals, having a flutter at the TAB or getting pregnant could make you uncreditworthy under tough new lending laws. 

The rules, to take effect on July 1, will allow banks and brokers to analyse all spending habits of borrowers, not just a person's income and fixed outgoings.

The aim is to uncover any potential financial strains such as a growing family, hidden debts or even gambling and drugs problems.

"Qualifying for a mortgage is not just a matter of assessing what debts you have anymore," Dean Rushton, CEO of broker Loan Market Group, said.

"If bank statements show there's a lot of money being spent at the casino or TAB, then that's obviously going to ring alarm bells.

"Giving credit to somebody after having seen they have a gambling habit could be a difficult position to defend under the new laws."

http://www.news.com.au/money/bankin...tching-our-lives/story-e6frfmcr-1225857910392


----------



## Temjin (27 April 2010)

robots said:


> hello,
> 
> http://www.gmo.com/America/About/People/_Departments/BoardofDirectors.htm
> 
> ...




Ohh no no robots, I believe in you.

In all your wisdom, please specifically detail the "COMMONALITY" between Steven Keen and Jeremy Grantham.

At the same time, please tell me why Jeremy Grantham is so much more richer than you if you felt your level of investment knowledge/skill is no less than him. 

*still having fun*


And back on topic a little bit, here is the link to his latest newsletter.

http://www.zerohedge.com/sites/default/files/JGLetter_ALL_1Q10.pdf


----------



## satanoperca (27 April 2010)

This would be credit tightening would it?

And with this today :


> But National Australia Bank (NAB) said the broadly positive results should urge the Reserve Bank to lift its interest rate one per cent by the end of calendar 2010.




Going to be interesting year. All those FHBers who bought last year, I hope the investors start coming into the market even if the returns aren't the best as there cannot be to many FHBers who can pay current prices with rising IR's and reduce FHBG.

There is always the chance that aliens might replace all those overseas buyers.

Just have to wait and see.

Cheers


----------



## robots (27 April 2010)

MACCA350 said:


> Here it is again
> REIV




hello,

i wonder if Jeremy from GMO has an equity graph like the above,

couldnt find any details on his website, oh well he knows best because has a video on the world wide web

thankyou
robots


----------



## nunthewiser (27 April 2010)

robots said:


> hello,
> 
> i wonder if Jeremy from GMO has an equity graph like the above,
> 
> ...






Well done on winning the ASF investor awards 6 years in a row bro. I do hope they recognise your achievement and give you back the "professor "title you so rightly deserve.


----------



## MACCA350 (27 April 2010)

No need to sulk there Robots...........just stick your head back in the sand, repeat "sunshine and lollipops" until all is right with the world:

hehe, all in jest mate

cheers


----------



## robots (27 April 2010)

hello,

thanks Nun, bloody hard going to win 6yrs and i am striving for a seventh title

i might get the recognition then, what do others think? 

tear up the neighbourhood man

thankyou
robots


----------



## professor_frink (27 April 2010)

nunthewiser said:


> Well done on winning the ASF investor awards 6 years in a row bro. I do hope they recognise your achievement and give you back the "professor "title you so rightly deserve.




nah won't happen, only a select few can call themselves a professor on ASF


----------



## satanoperca (27 April 2010)

This thread has once again gone to the crap house.

A man who founders a company that controls net investments of over $107B is being compared with someone who may own say a couple of IP's.

The chart that you are so proudly showing Robots clearly demonstrates that property acts and reacts like any other asset class and will and can have corrections when it gets overcooked. 

The question is do you wish to invest at the top of the cycle and have to wait many years to see a return on your investment.

Get CSL was looking good last week, this week not so good.

The old question of when to enter and when to exits is trying to be explored.

Can please we keep it on track before this thread is once again closed down.

Cheers


----------



## nunthewiser (27 April 2010)

Deleted last post as pointing out Hypocrisy from posters is not usually constructive in a thread .


----------



## Dowdy (27 April 2010)

satanoperca said:


> Can please we keep it on track before this thread is once again closed down.
> 
> Cheers





If it does get closed down it'll be due to one man's off topic jargon (coffee is great by the sunset, eating lollipops, chewing bubblegum and riding public transport etc etc etc) and what little info he does bring in, it's just the same chart and praising someone when they have an informative response.


----------



## nunthewiser (27 April 2010)

Please keep on topic Dowdy and Satan


----------



## Dowdy (27 April 2010)

nunthewiser said:


> Please keep on topic Dowdy and Satan




Don't worry, i know what's on topic and what's not. Some people I was pointing out don't


----------



## nunthewiser (27 April 2010)

> Rental vacancy rate high
> 
> 26th April 2010, 10:00 WST
> 
> ...




I own property in Geraldton WA , i have a very happy tenant that pays WELL below current market rental prices. They are happy, i am happy , they have been and are improving my property over the years they have been in the place .

The above article does not affect me but may affect the " new " investors to the city.

I really cannot whinge ,as like robots here we have both seen value in the past and now happy cruising along living large and still on the lookout for value which DOES appear if one is patient and if one is financially at the ready when the opportunities arise.

ok back to my latte.


----------



## nunthewiser (27 April 2010)

On the flip side i currently have a tenant in the Huon Valley tasmania .

She is not happy,she is being charged less than rental market value also.She pays the rent intermittantly and whinges about every damn thing known to man .

It is a step up from the previous tenant that did not pay rent for 3 months and also stole my Huon pine doors i had dotted throughout the house ( along with other damage).

I put up with the current tenant intermittant tendencies as the property is a free carry from the land that came with it and was subsequently subdivided and sold leaving me with a house and a prime riverfront block. ( seperate titles) and i would rather have someone in there paying eventually and not destroying the old place.

If it was a new investment and not bought for a song in the first place i would be rather worried about the situation.


----------



## nunthewiser (27 April 2010)

So.............. What does some guru,s opinion that has a video and manages other ppls money have to do with me ?

absolutely bugga all.


----------



## kincella (28 April 2010)

neighbour bought a unit in Toorak Mar 09, original condition, unrenovated since the 1960's for $400.ooo ks....another unit in the same block is on the market for 550 - 600 ks' now...we figure the reno's worth about 20k's...
neighbour is rather happy with her purchase


----------



## trainspotter (28 April 2010)

Dowdy said:


> If it does get closed down it'll be due to one man's off topic jargon (coffee is great by the sunset, eating lollipops, chewing bubblegum and riding public transport etc etc etc) and what little info he does bring in, it's just the same chart and praising someone when they have an informative response.




But he hasn't been wrong ! Sunshine and lollipops man. Is it his particular style of contributing that goads people into the negative response? I personally find his contributions a positive force. He believes in the great Australian dream of everyone owning their own home, property prices are continuing to go up and he is defending his right to have this opinion  !

Until the "Great Housing Bubble" happens (can't see it myself due to a number of reasons which I wont go into now as I have already posted previously only to be flamed) you will just have to put up with PROFESSOR robots and his positive vibe man. :bowdown: to the guru !


----------



## Mofra (28 April 2010)

trainspotter said:


> MAKING big cash withdrawals, having a flutter at the TAB or getting pregnant could make you uncreditworthy under tough new lending laws.



How is this news? Many lenders have been doing it for years, and LMIs look at these issues as well when deciding to grant LMI to an applicant.

Our credit criteria has always been much more stringent than the US.


----------



## trainspotter (28 April 2010)

Mofra said:


> How is this news? Many lenders have been doing it for years, and LMIs look at these issues as well when deciding to grant LMI to an applicant.
> 
> Our credit criteria has always been much more stringent than the US.




Ummmmmmm not sure where you are getting your intel from Mofra but new laws on July 1st will be discrimantory towards this kind of dealing. Banks look at Debt Servicability Ratios and Surplus income as well as LVR's etc etc. PLUS the pregnant thing?? Does this mean that if you are a woman and it is likely that you are of a conceivable age therefore the banks can now say "Sorry we cannot use your income to assess this dealing as you have a bun in the oven?" WTF ?

News actually came from here http://www.news.com.au/money/bankin...tching-our-lives/story-e6frfmcr-1225857910392

Totally agree with this statement Mofra The big 4 Aussie pillars of money are nothing like the US counterparts due to VERY LITTLE EXPOSURE TO SUB PRIME LENDING ........ which is what started the GFC meltdown!! But you all knew this right?


----------



## CamKawa (28 April 2010)

More pressure on house prices ahead. You can't say house prices are trading on fundamentals, unless of coarse you think that government bribes are fundamental. lol 


Mortgage applications plunge

Residential mortgage applications plunged in the March quarter after the government’s first home owner’s grant was wound back to pre-financial crisis levels, a survey found.

Total mortgage applications *fell 15 per cent* in March quarter compared with the corresponding period a year earlier, the quarterly consumer credit demand index by consumer credit check company Veda Advantage showed.


----------



## TOBAB (28 April 2010)

CamKawa said:


> More pressure on house prices ahead. You can't say house prices are trading on fundamentals, unless of coarse you think that government bribes are fundamental. lol
> 
> 
> Mortgage applications plunge
> ...




No idea whether there will be a crash, correction or stagnation (expect one of these though). But this article tells me absolutely nothing. The nos of applications fell (no sh*t) vastly reduced FHBG will do that. Of greater interest is the amount of money that has been reduced (if any).

A good graph would be one which excluded FHB completely and re-adjusted everything over the past 12 months accordingly. We might get some real data then. Fanciful though, as I think we all can agree Real Estate data is not very transparent or reliable. This applies on both the up and down side.


----------



## trainspotter (28 April 2010)

Anyone considered that 12 months ago that interest rates were at historic lows, property prices were rising and the FHB grant was part of the mix. Fast forward 12 months later and the rates are rising, prices have recovered greater than the highs of the 2007 summer and the FHB has been reduced.

No wonder they amount of loans have declined?

The strong economy has helped drive up house prices, with the increases exacerbated by lags in housing construction. The nation’s population is on track to swell to 36 million by 2050 from 22 million, potentially straining housing affordability even more.

“The reality in many regions and cities in Australia is that affordable, well-located land is not available or abundant,” said HIA senior economist Ben Phillips. “Planning restrictions, higher taxation on new housing relative to existing dwellings, labour shortages, and onerous regulation biased toward new housing all add to the problem.”

Hmmmmmm ...... stagflation?


----------



## robots (28 April 2010)

hello,

great day brothers, thanks trainspotter kind words

just putting in trying to help out the community

i put my hand up for a new investment loan which will probably go through in next round of stats

in my town Melbourne, just see soooo much potential in the regional towns/suburbs namely Geelong, Ballarat, Bendigo, Melton, Corio or anything else where the train stops

slow and steady

for people working in exhibition st, docklands, st kilda rd, collins st you into city in 1-1.5hr with a ticket that also allows you travel on the metro network

houses for 180-230k, 600-800sqM and probably more services than the new estates on the fringes

things like schools, parks, skate parks, hospitals etc

this goes out to you dowdy

thankyou
robots


----------



## Dowdy (28 April 2010)

Probably one of your best/ most informative post i've seen you do. Lets celebrate! 

:bananasmi :jump::bananasmi




> “The reality in many regions and cities in Australia is that affordable, well-located* land is not available or abundant*,” said HIA senior economist Ben Phillips. “Planning restrictions, higher taxation on new housing relative to existing dwellings, labour shortages, and onerous regulation biased toward new housing all add to the problem.”




I'll disagree. There's plenty of land within 30km from the city and if you got the dough, you can buy 30, 45 even 200+ acre blocks. I'm guessing it goes back to government and it's planning restrictions but they can easily back-flip on those decisions.


----------



## robots (28 April 2010)

hello,

its official Satanoperca, thread back on track man

thankyou
robots


----------



## UBIQUITOUS (28 April 2010)

robots said:


> hello,
> 
> its official Satanoperca, thread back on track man
> 
> ...




Robots,

You have been posting A LOT on this thread over the past week or so, ever since:

1.March quarterly falls in RE prices
2.Falls in borrowing
3.Recent tightening in bank lending criteria
4.Government u-turn against foreign purchase requirements
5.Looming Tax reforms
6.Looming further interest hikes
7.Increase in inflation

Thanks for your contributions


----------



## satanoperca (28 April 2010)

robots said:


> hello,
> 
> its official Satanoperca, thread back on track man
> 
> ...




Cheers, you recent post was helpful, informative and back on track.

Thank-you

& your portrait is splendid. Always nice to see a man with a smile on his face.


----------



## trainspotter (28 April 2010)

Still does not detract from the common theory that house prices are continuing to rise in Australia.

Looking for evidence of prices falling thus far and have not seen too many stats or pie graphs or charts or ?


----------



## MACCA350 (29 April 2010)

Not sure if this is a Victoria specific grant but on June 30th the First Home Bonus will be removed.

The Bonus is currently $11,000 for new homes and $2,000 for established.

So in Victoria for a FHB purchasing a new home, the grant will be reduced from $18,000 to $7,000 for building contracts signed after June 30.

I doubt the $2k reduction for established purchases will have any effect on auction clearance rates.

cheers


----------



## Mofra (29 April 2010)

trainspotter said:


> Ummmmmmm not sure where you are getting your intel from Mofra but new laws on July 1st will be discrimantory towards this kind of dealing. Banks look at Debt Servicability Ratios and Surplus income as well as LVR's etc etc. PLUS the pregnant thing?? Does this mean that if you are a woman and it is likely that you are of a conceivable age therefore the banks can now say "Sorry we cannot use your income to assess this dealing as you have a bun in the oven?" WTF ?



My information is from 8 years in the industry as a lender/credit manager at both securitised and bank lenders.

With the exception of the pregnancy, everything else listed in the initial article is something that has been taken into account for years. In some circumstances if there was a pregnancy involved in a dual application, we'd include the unborn child as a dependant as part of the serviceability criteria. 



trainspotter said:


> News actually came from here http://www.news.com.au/money/bankin...tching-our-lives/story-e6frfmcr-1225857910392
> 
> Totally agree with this statement Mofra The big 4 Aussie pillars of money are nothing like the US counterparts due to VERY LITTLE EXPOSURE TO SUB PRIME LENDING ........ which is what started the GFC meltdown!! But you all knew this right?



Not sure what you're getting at here - the sub prime lending exposure destroyed the securitised lending market in Australia and reduced competition to the bank lenders - worth noting that LMI lending criteria was tightened months before the GFC even hit.


----------



## trainspotter (29 April 2010)

Mofra said:


> My information is from 8 years in the industry as a lender/credit manager at both securitised and bank lenders.
> 
> With the exception of the pregnancy, everything else listed in the initial article is something that has been taken into account for years. In some circumstances if there was a pregnancy involved in a dual application, we'd include the unborn child as a dependant as part of the serviceability criteria.
> 
> ...




Congratulations Mofra ! You have your finger on the pulse. I started in the industry as a mortgage originator in 1992 and have never heard of a bank knocking back someone because they liked a flutter on the TAB. But then again I am not sure if any of my clientelle had a gambling problem? Oh well ... splitting hairs again. I do remember that Keystart Loans would only qualify 50% of the income of the female applicant due to her propensity to get pregnant and also banks would not lend you money passed the age of 65. Aaaaaaaaaaahhhhhh the good "ol days eh ! This has all changed though. No discrimation allowed etc etc Politically Correct bulldung. 

Not going naywhere with the GFC meltdown, banks in Australia had little exposure to subprime toxic debt so therefore were not slammed like the lenders in America like Fannie Mae and Fannie Mac (weird names for lenders BTW) was what I was pointing out. YES competition for our big 4 to borrow money from to onlend to the little aussie battlers was reduced. No question here on this matter. 

Anyway back to the topic of property prices. Living the dream man, just living the dream.


----------



## Mofra (29 April 2010)

trainspotter said:


> I do remember that Keystart Loans would only qualify 50% of the income of the female applicant due to her propensity to get pregnant and also banks would not lend you money passed the age of 65. Aaaaaaaaaaahhhhhh the good "ol days eh ! This has all changed though. No discrimation allowed etc etc Politically Correct bulldung.



Glad to have someone who knows what they're talking about contributing!

The age 65 rule was still in vogue just a few years ago at one major bank I worked for 

We actually had to shorten loan contracts so they wouldn't expire past the date the eldest borrower reached age 65. Never mind the industry average loan term was under 7 years at that stage.

FWIW if serviceability was borderline we would look at the spending habits of a client and if there were multiple ATM withdrawels/cash advances in a single day from an RSL or Leagues Club, that would be taken into account. The excuse was always "serviceability criteria" rather than "I think your client may have a gambling problem", safer reason to give


----------



## robots (29 April 2010)

hello,

good day brothers, Melbourne killing it again

well been a great couple of weeks, settlement on the 6th May 2010

CBA and solicitor got it all under control, just fantastic, 

thankyou
robots


----------



## Macquack (29 April 2010)

robots said:


> Attached Images P4120033.JPG (147.2 KB, 20 views)




Congratulations Robots on your train purchase, or was it the railway station?


----------



## Beej (30 April 2010)

UBIQUITOUS said:


> 1.March quarterly falls in RE prices




Were there? ABS stats out soon but APM has national median UP by 3.1% for Q1 2010?? All cities median price up except Brisbane which was basically flat. 

http://www.smh.com.au/business/sydn...but-rivals-are-closing-gap-20100428-tsfj.html



> 2.Falls in borrowing




Really? Are you sure it's just not the rate of growth in borrowing that is falling? Over-all borrowing has still been increasing every single month. A slowing in the rate of borrowing will slow price growth ( we had 13% just last year remember!), but it would have to drop off a lot more to stop price growth at this point. Also o/s cash that may or may not be flowing into property does not show up in the national finance stats.



> 3.Recent tightening in bank lending criteria




ANZ has just loosened - LVR back up to 95% for existing customers.



> 4.Government u-turn against foreign purchase requirements




They can still buy just have to get a FIRB rubber stamp, and student vias holders don't get the $300k cap back that used to apply. The whole things was a storm in a tea-cup anyway with the impact of the reversed changes being massively over-stated IMO.



> 5.Looming Tax reforms
> 6.Looming further interest hikes
> 7.Increase in inflation




5 and 6 are probably the only true property price head-winds in your list. Although I wouldn't be holding my breath for NG changes. 

On 7, Rising inflation will only ultimately feed back into property prices big time (ie make them rise).

Cheers,

Beej


----------



## drsmith (30 April 2010)

Macquack said:


> Congratulations Robots on your train purchase, or was it the railway station?



It might be Kings Cross Station.

$50 when you land on it IIRC.


----------



## drsmith (30 April 2010)

Beej said:


> Rising inflation will only ultimately feed back into property prices big time (ie make them rise).



Rising inflation would also feed into deposit rates and ultimately bond yields thereby demanding a greater yield from other investments.

This could initially trigger a correction in other asset classes including property.


----------



## MACCA350 (30 April 2010)

Beej said:


> Were there? ABS stats out soon but APM has national median UP by 3.1% for Q1 2010?? All cities median price up except Brisbane which was basically flat.



Might be referring to the REIV figures(Q1 -2%)

And here's the chart, just because Robots loves seeing it:






cheers


----------



## Beej (30 April 2010)

drsmith said:


> Rising inflation would also feed into deposit rates and ultimately bond yields thereby demanding a greater yield from other investments.
> 
> This could initially trigger a correction in other asset classes including property.




I would agree this is a possibility, however, in this scenario wouldn't it scream buying opportunity to you if it happened??? How long would any inflation driven downward price correction last? Only until the rental yields started rising even further from their "adjusted" level right, then prices would take off again with almost 100% certainty.


----------



## drsmith (30 April 2010)

Beej said:


> I would agree this is a possibility, however, in this scenario wouldn't it scream buying opportunity to you if it happened???



It would but that's not now.


----------



## Beej (30 April 2010)

drsmith said:


> It would but that's not now.




Right - that scenario (rising inflation, interest rates, bank returns and falling property prices with rising rental yields) is not now, I agree. but it is a situation to be on the look-out for.


----------



## Bintang (1 May 2010)

Is this the smart money starting to head for the exits ?

"A RECORD 2560 auction listings this month will test the resilience of the Sydney residential market.

It is well above the 1700 May auction average of the past five years and the previous record of 2160 in May 2002, according to Australian Property Monitors."

http://www.smh.com.au/business/reco...s-will-test-anxious-agents-20100430-tza0.html


----------



## Bigukraine (2 May 2010)

Bintang said:


> Is this the smart money starting to head for the exits ?
> 
> "A RECORD 2560 auction listings this month will test the resilience of the Sydney residential market.
> 
> ...




one thing this thread seems to miss is that life and realestate investments do exsist outside of vic ,qld,wa,nsw . money to be made elsewhere dyor .......


----------



## UBIQUITOUS (2 May 2010)

We didn't get Robots' usual REIV auction clearance rate spruik yesterday. I guess the reason is in the details below:

http://reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162



> This is shaping up as the busiest May for auctions on record. In the past 4 years Melbourne has averaged around 560 auctions a weekend in May compared to 800 this year.
> 
> The auction market has recorded a reasonably strong result from the 775 auctions held today with a clearance rate of 82 per cent being recorded.




775 so far this week. That is a LOT of people wanting to sell!!!!!
Number of auctions increasing. Clearance rate falling. Oh dear


----------



## robots (2 May 2010)

hello,

yes sorry brothers for not reporting in last night with the clearance rates,

pre-occupied with sorting things out for the move, its going to be great with the tenants in my 2 places covering expenses on new place, 

and if need a boost then will get down to Harvey's joint and pickup a new set of bunk beds, sneak a few in

maybe work 6-7mths of the year, kick back, ride the trains, the pushie, grow some vegetables, gee life is easy

it is sunshine and lollipops Nun,

thankyou
robots


----------



## UBIQUITOUS (2 May 2010)

robots said:


> pre-occupied with sorting things out for the move, its going to be great with the tenants in my 2 places covering expenses on new place,
> 
> robots




I'm glad that you have seen sense and are not negatively geared on your new purchase. The old Robots would have tried to buy 2 properties with that deposit but times are tough. It's never wise to over extend yourself especially with the grim outlook ahead.


----------



## robots (2 May 2010)

hello,

grim outlook in your mind,

with the time off next year i might take it upon myself to chase down a few legends of ASF that have disappeared:

Numbercruncher - QLD somewhere, 

Knocker - internet cafe in Europe or on cruiser

Pepperoni - sydney somewhere

kimosabi - WA

chops a must - WA, combine this with Kimosabi

going to be great

thankyou
robots


----------



## kincella (2 May 2010)

Morning Robots, 
daughter went to a couple of inspections in Toorak yesterday, first one a 2 bdr they want $600 k's, heaps of asians interested, second a 1 bdr for , originally 350...now its going to auction....lots of asians again...
prices last year were 200k's below the current asking prices....she has decided she wants to live in Toorak now too.....
also, there is one across the road in Sth Yarra for 500k's.....50 yards away...better value....
however I bet they all go for above the asking prices

cheers


----------



## UBIQUITOUS (2 May 2010)

With today's announcement that this government will increase employer super contributions to 12% over the next 10 years, it is sure to have a negative effect on the already weak wage growth.

With increasing interest rates, how can anybody now justify buying an investment property with the view of negative gearing? 

First FHBers were priced out of the market. Then foreign investment criteria became stricter. Now investors have their main incentive for buying property seriously weakened. Yet there are still people out there who think RE prices will keep on rising and rising at a rate in excess of inflation.


----------



## robots (2 May 2010)

hello,

good arvo Kincella,

yes I reckon most agents are advertising about 50-80k off the mark at the moment

great area everything around, thats the price though man and if she grab one will be on the road to utopia

walkin the tan, sipping latte's, getting a zinger burger from KFC, enjoying the greatest city on earth

thankyou
robots


----------



## Go Nuke (3 May 2010)

kincella said:


> Morning Robots,
> daughter went to a couple of inspections in Toorak yesterday, first one a 2 bdr they want $600 k's, heaps of asians interested, second a 1 bdr for , originally 350...now its going to auction....lots of asians again...
> prices last year were 200k's below the current asking prices....she has decided she wants to live in Toorak now too.....
> also, there is one across the road in Sth Yarra for 500k's.....50 yards away...better value....
> ...




Sounds great doesn't it.
Australians having to compete against Asians when buying a home! F^&(#n fantastic!

$600K for a 2 bedroom unit. Wow, thats well above the average wage to pay that sucker off 

I wonder if this guy knows what he's talking about....

http://www.theaustralian.com.au/bus...-price-implosion/story-e6frg9gx-1225861304871

He doesn't mention the supply issue but touches on some great points I think.


----------



## robots (3 May 2010)

hello,

a couple of things he doesnt touch on either Go Nuke:

a. go shopping at Walmart and as you picking up the 5 gal dip, 5 gal coke, 5 gal dorito's, 5 gal sour cream grab yourself am AK47, an Uzi, grenade launcher, rambo knife, taser, silicencer for the 9mm

b. they live in a concrete jungle, here we have trees and birds and special people who make this place one great joint

c. yeah man roll on the treadly down to Brooklyn and hook yourself up some crack, every street corner, pipes, caps

but i am glad they exist because people get an understanding of the paradise we have here

apologies, I forgot Mr Burns on the list the other day

thankyou
robots


----------



## robots (3 May 2010)

hello,

cant believe no-one posted this up:

http://www.theage.com.au/business/home-prices-surge-record-20-20100503-u2im.html?autostart=1

OH YEEEEEEAAAAAAH, well done brothers holding the assets, keep plugging away at things

great decisions you have made at a time when the media and people with vested interests tried to ridicule us, poke a stick at us, bully boy us,

hang onto those title slips, walk tall man

thankyou
robots


----------



## satanoperca (3 May 2010)

And the ball is back in your court Robots with 


> Housing tipped for price implosion




http://www.theaustralian.com.au/business/property/housing-tipped-for-price-implosion/story-e6frg9gx-1225861304871



> Mr Chancellor, whose Crunch Time for Credit? was published in 2005, estimates Australian house prices are more than 50 per cent above their fair value -- a once in 40-year event. " If house prices were to revert to their historic long-term average (ratio of average price to average income) they would fall quite considerably," he told The Australian.






> However, "given the great growth in private sector credit and the vulnerability of the housing market . . . Australia is not out of the woods. It hasn't even entered the woods."




Cheers and a great day in the market today, got to love a bit of panic.


----------



## Dowdy (3 May 2010)

robots said:


> hello,
> 
> b. they live in a concrete jungle, here we have trees and birds and special people who make this place one great joint




It a bit hard for you to comment on another country since trains don't go overseas




> c. yeah man roll on the treadly down to Brooklyn and hook yourself up some crack, every street corner, pipes, caps




Sure you didn't mean Braybrook? 

Or StAlbans, which you apparently have a IP there. You don't know the town very well, do you.


----------



## drsmith (4 May 2010)

In relation to commercial property (retail), Westfield's latest quarterly report contains some interesting information in specialty store rents from the countries in which it operates.

Australia: $AUD 1,376 psm
New Zealand: $NZ 1060 psm
UK (pounds): 626 psm
USA: $US 42.87 psf (~$US 430 psm)

On a constant currency basis, all are much more expensive than the USA but Australia is now significantly higher than the UK and NZ.


----------



## MACCA350 (4 May 2010)

RBA cash rate up .25% to 4.5%

cheers


----------



## drsmith (4 May 2010)

http://www.rba.gov.au/media-releases/2010/mr-10-07.html



> With the risk of serious economic contraction in Australia having passed some time ago, the Board has been adjusting the cash rate towards levels that would be consistent with interest rates to borrowers being close to the average experience over the past decade or more. The Board expects that, as a result of today’s decision, rates for most borrowers will be around average levels. This represents a significant adjustment from the very expansionary settings reached a year ago.



Interest rates are now neutral......



> The Board will continue to assess prospects for demand and inflation, and set monetary policy as needed to achieve an average inflation rate of 2–3 per cent over time.



for an inflation rate of 2–3 per cent.....



> In both underlying and CPI terms, inflation over the most recent 12 months was around 3 per cent. Nonetheless, the extent of decline from here may not be quite as much as earlier forecast and inflation now appears likely to be in the upper half of the target zone over the coming year.



averaged over time.

With inflation now at the top of the target range, the RBA appears to be going to flirt with letting it slip over the top of that range for a bit in the hope that the can retrieve it later, possibly after the election. 

At the very least, near term interest rate responses to inflation will be reactive rather than proactive.

The inflation monster with it's paw out of an ajar cage door is eying an RBA looking ever more wobbly on its tightrope.


----------



## MACCA350 (4 May 2010)

MACCA350 said:


> Not sure if this is a Victoria specific grant but on June 30th the First Home Bonus will be removed.
> 
> The Bonus is currently $11,000 for new homes and $2,000 for established.
> 
> ...



Scratch that, Victoria's State budget just released has actually increased the FHB Bonus for newly constructed homes by $2,000 instead of scrapping it.

So for Victoria instead of dropping to $7,000 after June 30 it's going up to $20,000 which includes both state and federal grants.

cheers


----------



## Uncle Festivus (5 May 2010)

robots said:


> hello,
> 
> good day brothers, Melbourne killing it again
> 
> ...




Might have to cut back on your daily cuppachino then coz - 



MACCA350 said:


> RBA cash rate up .25% to 4.5%
> 
> cheers




That's quietened them down a bit - pop goes the bubble(s) 



MACCA350 said:


> Scratch that, Victoria's State budget just released has actually increased the FHB Bonus for newly constructed homes by $2,000 instead of scrapping it.
> 
> So for Victoria instead of dropping to $7,000 after June 30 it's going up to $20,000 which includes both state and federal grants.
> 
> cheers




They are _that_ desperate to keep the bubble going? More good taxpayers money propping up the ponzi scheme called negative geared property investment?


----------



## kincella (5 May 2010)

I have been estimating a FHB grant of between 30,000 to 40,000 for new homes....so Vic State govnuts have led the way with 20,000, lets see what the feds put up in the May budget....
theres no money left for cash handouts....and both the feds and state gvts rely on huge money in taxes on property transactions....so they will need to entice the buyers, to keep feeding their dependence on these taxes...

the mining supertax will not pass muster...or if it does....so do our miners, and all the tax money that fed into our system.....they will flee overseas...
accordingly the China  syndrome will dissapear....leaving us bankrupt...

looks like the PIIGS countries will bring down the Euro dream/nightmare...
Spain is in trouble....Australia...which no one dares mention....is looking almost as bankrupt.....with not one competent person in sight, or in charge, just a gaggle of the most incompetent people , that call themselves the labor party


----------



## UBIQUITOUS (5 May 2010)

kincella said:


> I have been estimating a FHB grant of between 30,000 to 40,000 for new homes....so Vic State govnuts have led the way with 20,000, lets see what the feds put up in the May budget....
> theres no money left for cash handouts....and both the feds and state gvts rely on huge money in taxes on property transactions....so they will need to entice the buyers, to keep feeding their dependence on these taxes...
> 
> the mining supertax will not pass muster...or if it does....so do our miners, and all the tax money that fed into our system.....they will flee overseas...
> ...





Kincy, they offer the grant knowing full well that they get it back through stamp duty. All they are doing is pulling forward demand. What do you think will happen when demand slows, and prices/interest rates are higher? Keep increasing the grant? This would be hilarious to watch if it wasn't for so many young families having their futures destroyed.


----------



## wayneL (5 May 2010)

http://www.news.com.au/money/intere...ore-pain-to-come/story-e6frfmn0-1225862329941

The couple in the photo not exactly living in squalor though eh?


----------



## Bushman (5 May 2010)

wayneL said:


> http://www.news.com.au/money/intere...ore-pain-to-come/story-e6frfmn0-1225862329941
> 
> The couple in the photo not exactly living in squalor though eh?




They might have to hoc the flat screen when mortgage rates hit 9% in 12-months or so. Welcome to the new socialist paradigm.


----------



## wayneL (5 May 2010)

Bushman said:


> They might have to hoc the flat screen....




  Wash your mouth out with soap!!!!!


----------



## TOBAB (5 May 2010)

wayneL said:


> http://www.news.com.au/money/intere...ore-pain-to-come/story-e6frfmn0-1225862329941
> 
> The couple in the photo not exactly living in squalor though eh?




Very funny! They look so unhappy.


----------



## cutz (5 May 2010)

TOBAB said:


> Very funny! They look so unhappy.




Not a good situation,

I feel sorry for these young people, the property bubble should have been popped before too many innocent first home buyers got swept up, homes should not be used as tools for speculation.

Negative equity must be a horrible feeling.


----------



## kincella (5 May 2010)

both state and fed govnuts have their 'snouts in the trough of taxes'
apparently the general population would rather their neighbours cough up and pay those giant tax rip offs....instead of all of us being hit with another giant tax to replace it...
so the govnuts will continue to 'gift' a grant to new home buyers....knowing full well it guarantees the giant tax stamp duty rip off, is paid up front and in full....
its really just a round robin....states handout 20,000 to fhb.....who immediately hands back 20,000 to the state govnuts...

alternatively the states will demand the feds cough up more taxes to pay for both govnuts excesses....for the pollies overseas jaunts...I mean holidays...

it has a dual purpose....it make the pollies appear to be helping fhb, and increasing the housing supply...
so all in all....pollies and fhb walk away with a warm and fuzzy feeling....
and it makes the pm and team look good....

the average Joe will not wake up to this scam....nor the average mums and dads....
so you can bet it will continue...


----------



## matty77 (5 May 2010)

I think the real worry is if China does slow down, the 'super tax' from the miners will dry up and confidence will leave this country like you have never seen it before. It just worries me when the only people keeping this country afloat at the moment are the same ones the government is trying to screw over.

Interest rates to drop in 18 months time?  said it here first.


----------



## tech/a (5 May 2010)

cutz said:


> Not a good situation,
> 
> *I feel sorry for these young people, the property bubble should have been popped before too many innocent first home buyers got swept up, homes should not be used as tools for speculation*.
> Negative equity must be a horrible feeling.




Get a grip.

These interest rates are due to excessive Govt Spending which has in turn caused inflation which could get much worse when Greece/Spain/ Portugal
all get bailed out by world banks---knock on effect---inflation!--Cost of money.

You reckon they have a long face.

Bet you have no sympathy for those of us with multiple holdings!!

But *all to happy *to see the self funded retiree not drain the Govt/Public Coffers!


----------



## kincella (5 May 2010)

Tech you are right of course....some of us are saving for our retirement, not spending then waiting for the govt to kick in with a flamin pension later...
or waiting for the govt to protect us, with hand outs, or cover our backs...

I believe the RBA got it horribly wrong...with 6 rate rises in 7 months...
I feel for the kids who just wanted a roof over their heads.....the economy is not flying along or going well at all....its just spin to pretend the govt is doing a good job and should be re-elected.....
****I bet rates come down within 3 months......or remain unchanged as the hiatus sets in........
.............................on another note I copied my post from another site....in response to posters who think high interest rates are good for the economy......

unlike some, I care about the whole community...not just my own back...
whereas in contrast most of the chatter on this site, is for interest rates to go high, so some other poor bugger will lose his house, in order for some of you to buy it cheaply...
......there is a bigger community spirit that some of us adhere to, its called looking out for our fellow man....and family, not just the selfish looking after oneself scenario...

if the interest rates are crucifying the rest of the community, small business etc....that will in turn create unemployment, small business are the biggest employers in this country....when small business closes its doors it affects everyone in each of those communities.....


----------



## satanoperca (5 May 2010)

Some good news that might ease the shortage.



> BUILDING approvals hit a six and a half year high in March on a boost in flats and townhouses






> In the year to March, building approvals were up 51.6 per cent.




Cheers


----------



## Bill M (5 May 2010)

Greece, Portugal, interest rates up, mining shares down but the good old real estate is still a winner in Sydney.

Here is a screen shot from the digital edition of The Manly Daily.

========

Full Story here at today's date 5th May 2010.


----------



## Neutral (5 May 2010)

The government needs to abolish negative gearing on exisiting properties 
& restrict it purely to new builds only on new/released land. Demolition of existing housing to build new would not qualify for negative gearing either as the land is not new.

This will curtail the soaring property prices while providing housing for the increasing population. As a secondary effect, new communities will be established around the new properties which = new jobs, opportunities etc.

Like I've said in another thread, when the demand from China declines or their bubble bursts Australia will not be prosperous anymore, and therefore not attractive for international investors. Australia's prosperity is only due to the mining boom, and the housing boom is a direct result of this. It's not rocket science.


----------



## tech/a (5 May 2010)

> Australia's prosperity is only due to the mining boom, *and the housing boom is a direct result of this.* It's not rocket science




Ke!?


----------



## Neutral (5 May 2010)

tech/a said:


> Ke!?[/Q]
> 
> What don't you understand?


----------



## Dowdy (5 May 2010)

kincella said:


> I believe the RBA got it horribly wrong...with 6 rate rises in 7 months...
> I feel for the kids who just wanted a roof over their heads.....the economy is not flying along or going well at all....its just spin to pretend the govt is doing a good job and should be re-elected.....
> ****I bet rates come down within 3 months......or remain unchanged as the hiatus sets in........




Didn't hear anyone (who have a vested interest in property) complain when the RBA dropped rates dramatically? - although i could be wrong
This is looking very familiar to the US housing market. Just like in the US when they dropped rates to 1% after 9/11 which led to the housing boom, although ours was slightly different. We were already in a bubble but the RBA dropped rates dramatically to sustain the babble and ultimately making it worst when it pops. 





> unlike some, I care about the whole community...not just my own back...
> whereas in contrast most of the chatter on this site, is for interest rates to go high, so some other poor bugger will lose his house, in order for some of you to buy it cheaply...
> ......there is a bigger community spirit that some of us adhere to, its called looking out for our fellow man....and family, not just the selfish looking after oneself scenario...
> 
> if the interest rates are crucifying the rest of the community, small business etc....that will in turn create unemployment, small business are the biggest employers in this country....when small business closes its doors it affects everyone in each of those communities.....




If you did care about the community then wouldn't housing affordability be the goal? As it is for the housing pessimists who want to see free markets control the price - not government manipulated schemes.

The only thing I see you caring about is sustaining or hoping for growth with ultra high prices. That doesn't help the average joe.


----------



## tech/a (6 May 2010)

Neutral said:


> tech/a said:
> 
> 
> > Ke!?[/Q]
> ...


----------



## Mofra (6 May 2010)

Uncle Festivus said:


> They are _that_ desperate to keep the bubble going? More good taxpayers money propping up the ponzi scheme called negative geared property investment?



First Home Buyers are all owner-occupiers, not negatively geared property investors.


----------



## Mofra (6 May 2010)

Bushman said:


> They might have to hoc the flat screen when mortgage rates hit 9% in 12-months or so. Welcome to the new socialist paradigm.



Queue Baby Boomers reminiscing about "living off sausages" and "using sheets as curtains" :


----------



## robots (6 May 2010)

hello,

good evening all, apologies to the community for not being around yesterday

big day, has been great the past week, working at a school which is building a new facility (julia's big gig), it is name your price on these joints, just fantastic

i feel like a farmer or a person involved in the car/manufacturing industry (people who have been forever getting handouts)

anyhow, australia still going strong, bit of a shakeup on the shonk exchange going on, 

lock it in Eddie

thankyou
robots


----------



## trainspotter (6 May 2010)

Given the current climate of the negative territory globally we find ourselves in at the moment I believe robots has us on toast ! Real estate is the leading light in this wind down. Hmmmmmmm ...... where art thou bubble critics?


----------



## drsmith (6 May 2010)

http://au.finance.yahoo.com/q/bc?s=000001.SS&t=3m

If this trend continues, how much longer before there are ripples in the punchbowl ?


----------



## So_Cynical (6 May 2010)

drsmith said:


> http://au.finance.yahoo.com/q/bc?s=000001.SS&t=3m
> 
> If this trend continues, how much longer before there are ripples in the punchbowl ?




The one year chart tells a different story...much like our story, channelling and currently visiting the bottom of the channel...as we/they have done on previous pull backs.

http://au.finance.yahoo.com/q/bc?t=1y&s=000001.SS&l=on&z=m&q=l&c=&c=^AORD


----------



## cutz (6 May 2010)

trainspotter said:


> where art thou bubble critics?




Sorry,

Been to busy managing derivative positions and catching falling knives.

Later.


----------



## Uncle Festivus (7 May 2010)

Mofra said:


> First Home Buyers are all owner-occupiers, not negatively geared property investors.




True, but it's all about 'creating' demand, so if one section of the market is priced out then you get the flow on effects to the rest - so keep the tax payer subsidies going to as many 'types' as possible.

Cash and liquidity will be king as the debt contagion spreads - Aus will be hammered severely when the foreign buying pressure totally evaporates - it happened before with the Japanese back in the good ol' days.

The government can only artificially prolong the property Ponzi and only delay the inevitable crushing bust with subsidies, grants & flawed immigration policies but in the end Aus will not be immune from what's going on in the rest of the world.

I can see A Current Affair doing stories with the 'poor me' types shown above and how the government has failed them etc etc

I wonder what the 'new capitalism' will be like?


----------



## robots (7 May 2010)

hello,

oh yeah, every house has been sold to a foreign person

look at all the chow shops we have in Australia maybe those people (and descendants) are buying property, get over it

buying the dream and rewarding themselves from the hard work they have done in their lives, 

unfortunate that most australians are like the girl from Willie Wonka, I want it now daddy

great day brothers, gotta thank Kevin and ministers for once again stirring the ship in the right direction

thankyou
robots


----------



## Fleeta (7 May 2010)

robots said:


> great day brothers, gotta thank Kevin and ministers for once again stirring the ship in the right direction
> 
> thankyou
> robots




Not sure if it was intentional, but I think you may have meant 'steering' the ship. You are the expert at 'stirring the ship' robots!!

I don't think it matters which way you steer a ship if you are heading into a tropical cyclone as well mate, but hopefully 'paradise' as you call it, remains largely unaffected.


----------



## robots (7 May 2010)

hello,

yes thanks Fleeta, an error

could be another round of flight to safety, instead of the precious yellow metal the bricks and mortar asset class may come under closer scrutiny

get a yield from it too

thankyou
robots


----------



## kincella (8 May 2010)

brrrrr its a bit cold over on the stockmarket these days, bit like being caught in a snow storm, wearing summer gear.....and trying to dodge the thin ice over a river ....one can be sucked down into a vast hole, at any moment...

compared to the warm and fuzzy feeling of being surrounded by bricks and mortar.....
wonder just how many more investors will turn away from the gambling den, never to return......
on top of the lingering GFC of 2008, we have the GFC mark2 to contend with, together the our own AFC concocted by the PM, and then factor in the EFC....european financial crisis....that may wind its way over the the west...

Marcus Padley has an interesting article in the Age today.....
me, I am looking forward to interest rates coming down, the only green shoots some of our so called leaders saw, must have been the weeds they were smoking, and getting high on...
have a great weekend.....and spoil your mum tomorrow..
cheers


----------



## Uncle Festivus (8 May 2010)

That warm and fuzzy feeling is from getting burned in the property bubble. 

The property market is peaking now - the ill-informed and 'last-on Lemmings' will take it to blow off top then watch the scramble unfold........

Rising rates may be due to 'other' factors beyond the RBA's control....the requirement to attract money in a credit contraction.

From the BIS



> Governments may find it hard to place debt if market participants expect the underlying balance to remain negative for years to come. Under such circumstances, funding costs could rise suddenly, forcing them to cut spending or raise taxes significantly. External constraints could also bind for some countries. *Particularly in smaller and more open economies [e.g. Australia], pressure on the currency could force central banks to follow a tighter policy than would be warranted by domestic economic conditions.*


----------



## kincella (8 May 2010)

festivus...you sound like your emotions are getting in the way....I generally find posters who feel the need to revert to, or denigrating fellow man...are lacking in the ability to debate  the subject in a constructive manner....

so onto the debate..... where are the facts regarding all the property people getting burned.....not the vested interests of the stock market prophets looking jealously over their shoulders at the money invested in property....using their crystal balls....that are cracked and broken...


australia has a culture of home ownership, nothing wrong with the kids having a go....except in this instance the RBA and govnuts pulled the rug out from under them....(RBA made a gigantic mistake, and a repeat of the same mistake they made in 08) by raising interest rates 6 times in as many months....when it was not warranted....
retail spending is the bottom line that tells the true story of an economy...and those figures were lousy, and will only get worse
come the June figures....watch the interest rates plummet again....

then the AFC mining disaster tax has sent shock waves thru the market...
forget China saving us with its massive appetite....the 40% additional tax will mean China will look elswhere....and we will be left with nothing..
just a massive tax bill to pay for the excesses of the most incompetent govt in history...


----------



## robots (8 May 2010)

hello,

afternoon Kincella, and property will probably just roll along on its merry way

slow and steady and still very much available to everybody

have a great day, suns out

thankyou
robots


----------



## gav (8 May 2010)

Slow and steady robots?

I just got back from an inspection from the town house directly behind mine.  This place is pretty much the same as mine - built at the same time by the same builder (3 large blocks subdivided and a group of town houses built).

Only differences are: it has 1 less bathroom and toilet, and 2 of the 3 bedrooms are smaller than mine, plus I have a front lawn and small backyard (where as they just have a concrete driveway out front and an even smaller backyard).  *Asking price range is 25% to 33% higher than I paid just one year ago.*   Massive turnout for the inspection, and whilst I was there one guy put in an offer for more than the minimum asking price.  It's only been on the market 3 days.

This isn't a one off either, I've been to quite a few open inspections in my area of this suburb - most places are on the market for a month or less, and selling significantly higher than I would expect.  Last year I was tempted to wait and keep saving so I had a bigger deposit - so glad I didn't, my savings would not have kept up with the growth - and even if they did, my mortgage would be significantly larger (in dollar terms).

How long can this keep going?  Sunshine and lollipops!


----------



## UBIQUITOUS (8 May 2010)

..and the evidence keeps on coming (Real evidence and not made up irrelevant one off anecdotal stuff). This time from Domain

I sure wouldn't want to be a leveraged investor who bought recently. Much better to take a 10% hit on the stockmarket than 100%+ in RE.

http://smh.domain.com.au/real-estat...r-house-prices-20100507-ujab.html?autostart=1



> ''We’ve had what looked like bubble-like prices, which always are pretty unstable when you get to that position and we’ve had government changes to foreign purchases of housing and we’ve had six interest rate hikes in a row,’’ he said.
> 
> ''The housing affordability index has collapsed... it’s just about the most savage collapse we’ve seen in recent times.’’
> 
> ...


----------



## ASPwild (8 May 2010)

This morning was at a property auction in the Eastern Suburbs of Sydney.  I knew the owners and I was curious to see how it panned out.  When auction started and the reserve was announced all heads went to gaze at the ground and nothing happened - I  am sure the owner got the property professionally valued.  I wonder what would have happened if the auction was held two weeks ago?


----------



## Bill M (8 May 2010)

ASPwild said:


> This morning was at a property auction in the Eastern Suburbs of Sydney.  I knew the owners and I was curious to see how it panned out.  When auction started and the reserve was announced all heads went to gaze at the ground and nothing happened - I  am sure the owner got the property professionally valued.  I wonder what would have happened if the auction was held two weeks ago?




I have never been to an auction where "the reserve was announced", it usually gets announced when it is reached.  So if the bidding did get to reserve then someone would have won the auction and the property would have been sold. Can you give more details like a link to the property as I am sure if this auction was run professionally it would be on the net somewhere, thanks.


----------



## cutz (8 May 2010)

Bill M said:


> I have never been to an auction where "the reserve was announced", it usually gets announced when it is reached.  So if the bidding did get to reserve then someone would have won the auction and the property would have been sold. Can you give more details like a link to the property as I am sure if this auction was run professionally it would be on the net somewhere, thanks.




I think he may have confused the reserve with the opening vendor bid.


----------



## robots (8 May 2010)

gav said:


> Slow and steady robots?
> 
> I just got back from an inspection from the town house directly behind mine.  This place is pretty much the same as mine - built at the same time by the same builder (3 large blocks subdivided and a group of town houses built).
> 
> ...




hello,

i wouldnt be too concerned about how things will go Gav, just go with the flow brother and set yourself up for a good retirement

stats will show in many years that aussie wealth will still be in bricks & mortar for those who got the $, same as it is today and same as it was yesterday

plod along for five years, get a promotion or save money increasing the in hand $, then kick off again, buy a shack in the bush, keep it principle and interest

this way its like capital growth going up the escalator while loan size going down the escalator, awesome result

day on the trams today, just superb mixing it with all the new aussies, afghanies, indians, sudanesie, iraqies, englishman and irishman, what a place

thankyou
robots


----------



## Uncle Festivus (8 May 2010)

kincella said:


> festivus...you sound like your emotions are getting in the way....I generally find posters who feel the need to revert to, or denigrating fellow man...are lacking in the ability to debate the subject in a constructive manner....
> 
> so onto the debate..... where are the facts regarding all the property people getting burned.....not the vested interests of the stock market prophets looking jealously over their shoulders at the money invested in property....using their crystal balls....that are cracked and broken...
> 
> ...




I'm really not sure what to make of your posts - you tell us how well off you  are and how good property is then go on to list reasons why the economy is so bad?

That incompetent gov just handed property investors a free ticket out of what was going to be a normal cooling off of prop prices, but just couldn't help themselves.

What should the RBA rate be, if going from 3% to 4.5% is not warranted?


----------



## robots (8 May 2010)

hello,

i reckon the interest rate should be the same as US, has to be

everything that happens in US must happen in Aus, surely

why is it different?

thankyou
robots


----------



## Dowdy (8 May 2010)

robots said:


> hello,
> 
> i reckon the interest rate should be the same as US, has to be
> 
> ...





I suppose you also want a housing crash, just like the USA?

everything that happens in US must happen in Aus, surely

why is it different?


You don't put much thought into your post, do you?


----------



## robots (8 May 2010)

hello,

i just thought that interest rates must be the same as the US because for soooooooo many years a HUGE number of people have been telling us that what happens in the US MUST happen in Aus

but wait, Interest rates arent the same, house prices arent the same, the shelves at Walmart/Kmart arent the same, the cars on the road arent the same

it is different, different by a long long way

thankyou
robots


----------



## wayneL (8 May 2010)

robots said:


> it is different, different by a long long way
> 
> thankyou
> robots




Tell us why you think Oz is so different.


----------



## drsmith (8 May 2010)

robots said:


> it is different, different by a long long way



While the dynamics of individual economic bubbles differ, they all go.....
*pop*

.....in the end.

The US's residential property bubble was popped by sub-prime. Ours will most likely be popped by a Chinese economic slowdown.


----------



## medicowallet (8 May 2010)

robots said:


> hello,
> 
> i wouldnt be too concerned about how things will go Gav, just go with the flow brother and set yourself up for a good retirement




Exactly.

Just go with the herd and suck up gullible money whilst you can.

The only thing is, you need to be smart and get out before they start to panic.


----------



## MACCA350 (9 May 2010)

Hey Robots, you didn't post this week's auction clearance rates mate

It's alright, I'll help you out:................78% Link

And this little tid bit:


> The impact of 6 rate rises, affordability concerns and the unseasonally high stock levels are clearly having an impact on demand.



Are some starting to head for the exits? 

cheers


----------



## robots (9 May 2010)

hello,

thanks macca350 for helping out in the thread, sometimes the workload is rather large for this thread

probably see a few auctions get cancelled now, accept a pre-offer

I am glad you asked WayneL, my belief is:

Australia is paradise, no guns at kmart, no extremists, no crackheads on every street corner, a place where all are accepted and with plenty of room for more to join us (plenty of land right?)

we give our new migrants a go and for this we are rewarded with experiencing there cultural ways, this all integrates to create one magic place

yes it is different, fantastic and its great reading about the same doom and gloom prophecies that have persisted for many years

went over to GPHC.com to see if any new readings but the joint is gone, taken the money and run apparently

thankyou
robots


----------



## kincella (9 May 2010)

Morning Robots,
they were good auction results, considering the mayhem out there in the finance world, with the stock market in freefall,  the UK election fiasco, and Australia's own GFC with the attack on the mining industry....

Festivus....the bankers are liars....and their policies erode my profits, my wealth....an old saying...'look after the pennies and the pounds look after themselves ' is even more appropriate today...

Gail Kelly of WBC has been screeching about how the banks were hurting, hence they needed to raise rates above the RBA rate....then 6 months later they produce massive profits, up 30% to 3 billion dollars.....warning bells were ringing the whole time, to me, during the GFC..
the banks were borrowing overseas at those lovely low rates, but hiked our rates....liars...
this article states the banks gouged on average an extra 733 from customers, but more likely about 3000 from each of us...
extract follows..............
The $733 increased cost per customer is the average across all 15 million bank customers. But because the APRA data only applies to the big four banks, the actual figure for customers could be more than $3000 a year, according to InfoChoice.

"It's a simple function of passing on more of the hikes on the way up and less of the cuts on the way down," said InfoChoice chief executive Shaun Cornelius.

http://www.news.com.au/money/how-ba...-at-your-expense/story-e6frfmci-1225864049320

ps Still out on a spending spree, catching some great bargains..
Daughter made a leather bikers jacket for the dog....with studs etc looks great...


----------



## UBIQUITOUS (9 May 2010)

MACCA350 said:


> Hey Robots, you didn't post this week's auction clearance rates mate
> 
> It's alright, I'll help you out:................78% Link
> 
> ...




Thanks Macca. That clearance rate is dropping fast. Word on the street is that auction houses are running at max capacity and more and more sellers are heading for private sales, with only the fairest priced houses being pushed for auction.

Yet all the while, clearance rates plummet.


----------



## Uncle Festivus (9 May 2010)

kincella said:


> Festivus....the bankers are liars....and their policies erode my profits, my wealth....an old saying...'look after the pennies and the pounds look after themselves ' is even more appropriate today...




Their policies give property investors their profits I would have thought? In cahoots with the Fed Gov they have over-extended their mortgage books and have indicated that they are 'full' - there is an imbalance between their property & business portfolios.


So we have the perfect storm brewing for property - 
Banks tapering off housing loans (changing LVR's?)?
Interest rates rising - starting to hurt already, even though rates are still 'behind the curve'?
An increase in supply eg unit construction
Policy changes - to do a back flip on foreigners holding property
Governmenbt subsidies - the Fed is out of easy money, now looking for ways to replentish the coffers via resources & banks?
1% a month price appreciation - unsustainable. As prices go up it is harder to get the same return, tapering returns for a huge liability and illiquidity?
Your arms length disdain for the equity markets is from a veiwpoint of not utilising all available methods - I'm doing 30% a month just from going exclusively short. I'd be shorting Aus property too if only Goldman Sachs would make up a derivitive for it 

Property prices will be lower 12 months from now........


----------



## cutz (9 May 2010)

kincella said:


> Festivus....the bankers are liars....and their policies erode my profits, my wealth....an old saying...'look after the pennies and the pounds look after themselves ' is even more appropriate today




Banks have always been very helpful with dealings i've had with them, remember rates are still below the long term average. If the market can't sustain a few more tweeks, trouble must be brewing in paradise.

Perhaps for the benefit of those too young to remember, what were the banks like before deregulation (anyone) ?


----------



## MACCA350 (9 May 2010)

robots said:


> probably see a few auctions get cancelled now, accept a pre-offer



Yes, no doubt. Our next door neighbor was due for auction, but they ended up taking an offer after the second inspection so it never reached the auction date. 

I'm sure there are many who have been given reasonable offers above what they were expecting and so are happy to pull the plug on the auction for a quick sale.

cheers


----------



## medicowallet (9 May 2010)

kincella said:


> then 6 months later they produce massive profits, up 30% to 3 billion dollars.....warning bells were ringing the whole time, to me, during the GFC..
> the banks were borrowing overseas at those lovely low rates, but hiked our rates....liars...
> ...




I don't mind the banks getting their fair share out of the housing bubble. 

Banks make money, home owners make money, government goes into debt, home owners go into debt, banks take on risk.

What is wrong with this?  If people don't want to use a loan to increase their profits, then they can quite easily fund the purchase out of their own money, or not make the purchase. 

Nobody is holding a gun from k-mart up to their heads to accept the loan.


----------



## cutz (9 May 2010)

It’s astounding how people have to scoff at bank profits, our massive property bubble needs funding, who else is going to provide it ?

Massive private debt goes hand in hand with massive bank profits, so what’s the big deal, we should be happy we have solid financial institutions making good dough.


----------



## Bill M (9 May 2010)

gav said:


> Slow and steady robots?
> 
> This isn't a one off either, I've been to quite a few open inspections in my area of this suburb - most places are on the market for a month or less, and selling significantly higher than I would expect.  Last year I was tempted to wait and keep saving so I had a bigger deposit - so glad I didn't, my savings would not have kept up with the growth - and even if they did, my mortgage would be significantly larger (in dollar terms).
> 
> How long can this keep going?  Sunshine and lollipops!




You did the right thing gav buying your place and you are in front already. One thing for sure your property will not crash 10% in 2 weeks like the ASX has (more to come tomorrow too). You will always have that roof over your head whilst the tyre kickers pay rent. Sunshine and lollipops? You bet, it's your own place and you paid last years price for it, well done.


----------



## trainspotter (9 May 2010)

Uncle Festivus said:


> Their policies give property investors their profits I would have thought? In cahoots with the Fed Gov they have over-extended their mortgage books and have indicated that they are 'full' - there is an imbalance between their property & business portfolios.
> 
> So we have the perfect storm brewing for property -
> Banks tapering off housing loans (changing LVR's?)?
> ...




Please define WHERE you believe the prices will be lower. Across the board or in certain areas? How much are you predicting the housing market will fall in a percentage term?  I am happy you are utilising all available methods of deriving income in these uncertain times. 30% shorting is a good haul. How long will this last? What dollar value are you risking to earn this amount? 

Not attempting to be antagonostic ... more on a fact finding mission.


----------



## UBIQUITOUS (9 May 2010)

Bill M said:


> You did the right thing gav buying your place and you are in front already. One thing for sure your property will not crash 10% in 2 weeks like the ASX has (more to come tomorrow too). You will always have that roof over your head whilst the tyre kickers pay rent.




You're right Bill, property will not crash over 2 weeks, but over a much longer period. Remind us how well property performed from 1989-1999.

As well as this? 

http://203.15.147.66/products/pdf/share_price_movements.pdf


----------



## robots (10 May 2010)

hello,

thats where many shot themselves in the foot, for an asset class which many believe performs so poorly yet the have-nots across the globe spend a LOT of time discussing it

keep the entertainment coming brothers

thankyou
robots


----------



## UBIQUITOUS (10 May 2010)

robots said:


> hello,
> 
> thats where many shot themselves in the foot, for an asset class which many believe performs so poorly yet the have-nots across the globe spend a LOT of time discussing it
> 
> ...




Dear student Robots. Here is your mid term exam:

Examine the following link:

http://theworldsrichest.com/

Q1. How many on this list have made it big from negatively gearing property, as opposed to investing in companies?


----------



## trainspotter (10 May 2010)

Must be something to this property thingy. Afterall, Mohamed Al Fayed, the flamboyant businessman who has controlled the Harrods department store in London for a quarter-century, sold the landmark business and iconic building to Qatari investors on Saturday, for a reported £1.5 billion. Must be money in real estate then !


----------



## UBIQUITOUS (10 May 2010)

trainspotter said:


> Must be something to this property thingy. Afterall, Mohamed Al Fayed, the flamboyant businessman who has controlled the Harrods department store in London for a quarter-century, sold the landmark business to Qatari investors on Saturday, for a reported £1.5 billion. Must be money in real estate then !




He bought it for 800million quid, 25 years ago. Hardly great capital appreciation. Australia's different though. You can buy a unit in StKilda today and in 5 years it will be worth less than it is now.


----------



## kincella (10 May 2010)

700 million profit....you can really sneeze at that one....
most of you bears would be lucky to make a couple of thousand by retirement.....and you would still need the pension to support you...


----------



## trainspotter (10 May 2010)

UBIQUITOUS said:


> He bought it for 800million quid, 25 years ago. Hardly great capital appreciation. Australia's different though. You can buy a unit in StKilda today and in 5 years it will be worth less than it is now.




 Talk about a bad deal ! Must have had a lot of floor stock and apparently jewels worth millions went missing from a safety deposit box ! Maybe Fayed was like ALan Bond was to Packer? You mean he only doubled his money in 25 years?? What a shame. He should be taken outside and flogged with a cat o' nine tails dipped in salt and vinegar !! How dare he !

Can I buy 5 of these units please UBI ? One for Santa Claus, one for the Easter Bunny and one each for the three ugly sisters. No wait ....... these are mythical creautres. You get my drift.


----------



## UBIQUITOUS (10 May 2010)

kincella said:


> 700 million profit....you can really sneeze at that one....
> most of you bears would be lucky to make a couple of thousand by retirement.....and you would still need the pension to support you...




You would be happy with just over 100% in 25 years?  I don't reckon I know ANYBODY who would be. Then again, I guess investing in real estate moulds some people to have low expectations.


----------



## wayneL (10 May 2010)

kincella said:


> 700 million profit....you can really sneeze at that one....
> most of you bears would be lucky to make a couple of thousand by retirement.....and you would still need the pension to support you...




A non sequitur and frankly, a foolish and puerile comment.

Property bear <> poor investor.


----------



## Uncle Festivus (10 May 2010)

trainspotter said:


> Please define WHERE you believe the prices will be lower. Across the board or in certain areas? How much are you predicting the housing market will fall in a percentage term?  I am happy you are utilising all available methods of deriving income in these uncertain times. 30% shorting is a good haul. How long will this last? What dollar value are you risking to earn this amount?
> 
> Not attempting to be antagonostic ... more on a fact finding mission.




FWIW, I believe generally lower than now, take Sydney as a reference if needed - what measure would you like? Not willing to put a figure on it. 30k play money on cfd's...rest in cash @6% and 10% gold bullion, and the house I live in. Liquid, instantly redeemable and withdrawable.....apart from the house & land, but it will be utilised for food production.


----------



## Aussiejeff (10 May 2010)

kincella said:


> 700 million profit....you can really sneeze at that one....
> most of you bears would be lucky to make a couple of thousand by retirement.....and you would still need the pension to support you...




Sorry.

Couldn't help this one. Too much bile rising....

No-one is backing up with FACT. 

Dear kincella - direct from the National Archives Currency Converter...http://www.nationalarchives.gov.uk/currency/results1.asp#mid

1.00 pound in 1985 = *2.01* pounds today

So, 800 Million purchase in 1985 is actually worth *1.608 Billion* today.

Throw in fees, taxes etc....??

So, FACT = He sold at a relatively LARGE LOSS OF MONETARY VALUE after 25 years.

Please, do research before posting.

Thankyou.

Goodbye.


----------



## wayneL (10 May 2010)

Aussiejeff said:


> Sorry.
> 
> Couldn't help this one. Too much bile rising....
> 
> ...




Yeah, and just chucking the dosh into the SP500 would seen a 5 or 6 bagger, crashes 'n all.


----------



## trainspotter (10 May 2010)

Uncle Festivus said:


> FWIW, I believe generally lower than now, take Sydney as a reference if needed - what measure would you like? Not willing to put a figure on it. 30k play money on cfd's...rest in cash @6% and 10% gold bullion, and the house I live in. Liquid, instantly redeemable and withdrawable.....apart from the house & land, but it will be utilised for food production.




Thanks Uncle. Maybe major capital CITIES as you refer to will feel the pinch in future due to bearish current markets fueled by FHOG's, overseas buyers and such like inflationary pressures. Good to see a diversified portfolio. Major asset being the house I see is a definite plus with residential security backing.


----------



## kincella (10 May 2010)

at least it kept pace with inflation, all the holding costs are tax deductible....or the tenant pays all those costs.....
it was commercial property....a bit different from the ordinary house....

so there is the devaluation at work...today you need 1.6 billion to buy the same thing that cost 800 million....only 25 years ago
on average the dollar devalues 95% in 70 years....looks like its devaluing faster now

he will still have to pay capital gains tax on the difference.....
good luck with waiting for our property prices to drop.....if the UK is pound is anything to go by


----------



## robots (10 May 2010)

UBIQUITOUS said:


> Dear student Robots. Here is your mid term exam:
> 
> Examine the following link:
> 
> ...




hello,

exactly Ubiquitous, whats your interest in property then, who is negative geared? its like that guy who was here a few years ago who owned every company in australia (stop the clock?)

surely investing in companies is the way to go yet strangely this far profitable route (apparently) closed out all the Storm investors, banks margin loan only 70% or a lot less against the security, yet its the golden egg

great posts Kincella, you hit the nail on the head brother and even after all we do for the community through education many will still be putting the hand out at retirement, especially those in the 20-30 age bracket now

thankyou
robots


----------



## kincella (10 May 2010)

yes Robots,,,,I tried to get them to take a different approach awhile back...to show them just how fast the dollar devalues....
its not so much house prices rising......or electricity costs up 30%, or food up 15%....
its the other side of the coin.....the devaluation of the dollar, and what it can buy now or later.....
so the longer they wait, the less it buys, or the more dollars required, to buy the same old thing...
god help those who leave it sitting in the bank....watching it dwindle away without even touching it, apart from giving the taxman his cut....
unless they are good workers, and put away a whole load of stash to compensate for the dwindling dollar...
btw the govnuts have been spending so hard and fast lately, they will need to print some more money...to devalue it even further...
lets see the bad news due out tomorrow...


----------



## satanoperca (10 May 2010)

kincella said:


> btw the govnuts have been spending so hard and fast lately, they will need to print some more money...to devalue it even further...
> lets see the bad news due out tomorrow...




And this is one of the reasons IR's will continue to rise, because the Govnuts reckless spending is addition to inflationary pressures.

I agree, the Fed Budget will finally give us some idea of how stupid Chairman KRUDD and Co have been with future taxpayers dollars.

Cheers


----------



## robots (10 May 2010)

kincella said:


> yes Robots,,,,I tried to get them to take a different approach awhile back...to show them just how fast the dollar devalues....
> its not so much house prices rising......or electricity costs up 30%, or food up 15%....
> its the other side of the coin.....the devaluation of the dollar, and what it can buy now or later.....
> so the longer they wait, the less it buys, or the more dollars required, to buy the same old thing...
> ...




hello,

yes thats right Kincella and its a given for the rest of our lives

fantastic posts by the way, yes maybe bad news for some tomorrow but thats why me and you brother make our own path

get to kick back, spend time with family, educating and helping the community, 

thankyou
robots


----------



## Tysonboss1 (13 May 2010)

UBIQUITOUS said:


> Dear student Robots. Here is your mid term exam:
> 
> Examine the following link:
> 
> ...




I would like to ask a similar question.

Q1, How many of the guys listed made their money "Share *Trading*".


----------



## Tysonboss1 (13 May 2010)

kincella said:


> yes Robots,,,,I tried to get them to take a different approach awhile back...to show them just how fast the dollar devalues....
> its not so much house prices rising......or electricity costs up 30%, or food up 15%....
> its the other side of the coin.....the devaluation of the dollar, and what it can buy now or later.....
> so the longer they wait, the less it buys, or the more dollars required, to buy the same old thing...
> ...




Thats right,

Property investing is all about securing an inflation hedged income stream,

The income stream from an investment property is not the biggest in percentage terms, But it is by far the safest income stream that remains hedged against inflation. Not to mention it is paid weekly.

Most of the arguments against property are in relation to debt, But this is a separate topic that affects all asset classes.


----------



## Uncle Festivus (14 May 2010)

Tysonboss1 said:


> But it is by far the safest income stream that remains hedged against inflation. Not to mention it is paid weekly.
> 
> Most of the arguments against property are in relation to debt, But this is a separate topic that affects all asset classes.




It remains to be seen if it is a _safe_ investment, backed by nothing more than the 
belief by the general public that 'property prices never go down", and aided by flawed government policies ie immigration, subsidies and NG? And the banks contribute the most by indebting a large swathe of the population to mortgage stress. And a little bit of supply and demand imbalance again caused by flawed gov policies? Plenty of cheap land in better lifestyle regional areas.

"hedged against inflation" - that would apply only if the return is above inflation? You don't see property investors subtracting out the loss from inflation when they do their sums on how much money they made from an investment? 

I think the sweet spot for property (low rates, foreign investment, gov subsidies) has passed and is on the top taper now (blow off tops from the stragglers buying), the stress wave is working it's way up from the bottom, as it did just before the GFC.


----------



## Tysonboss1 (14 May 2010)

Uncle Festivus said:


> It remains to be seen if it is a _safe_ investment, backed by nothing more than the
> belief by the general public that 'property prices never go down", and aided by flawed government policies ie immigration, subsidies and NG? And the banks contribute the most by indebting a large swathe of the population to mortgage stress. And a little bit of supply and demand imbalance again caused by flawed gov policies? Plenty of cheap land in better lifestyle regional areas.
> 
> "hedged against inflation" - that would apply only if the return is above inflation? You don't see property investors subtracting out the loss from inflation when they do their sums on how much money they made from an investment?
> ...




The income stream is very safe, The tenant pays weekly and you are in control so there is no risk of a company director slashing dividends.

the rent will also increase over time atleast in pace with inflation and the capital you have invested will also increase atleast with inflation.

So if you were to compare putting $300K into a rental property Vs $300K into a term deposit, over time the rental will perform better due to the fact assets increase with inflation so your weekly income and the capital value is protected where as with the term deposit invested capital and income remain the same and steadily lose buying power.


----------



## Tysonboss1 (14 May 2010)

Aussiejeff said:


> Sorry.
> 
> Couldn't help this one. Too much bile rising....
> 
> ...




To know the true return on investment you would have to know the cashflow return it has received over time.

You can't tell whether an investment was viable based solely on it's capital gain. It may have been returning an income steam of 10% being a commericial property.

Now if I owned a piece of real estate that was returning 10%p/a in rent that increased with inflation, while my invested capital was keeping pace with inflation I would consider that a great investment.


----------



## drsmith (14 May 2010)

Tysonboss1 said:


> The income stream is very safe, The tenant pays weekly and you are in control so there is no risk of a company director slashing dividends.
> 
> the rent will also increase over time atleast in pace with inflation and the capital you have invested will also increase atleast with inflation.



Safest of all income stream investments are Treasury CPI indexed bonds.

http://www.aofm.gov.au/content/statistics/transactional_data.asp

These like any other investment can become overpriced. 

Would you accept a yield of 2.7% on such a bond ?


----------



## Tysonboss1 (14 May 2010)

drsmith said:


> Would you accept a yield of 2.7% on such a bond ?




To be honest I don't know much about the product. 

However I think I would rather accept a little bit more market risk and double my yield to 5.25%.


----------



## explod (14 May 2010)

Tysonboss1 said:


> To be honest I don't know much about the product.
> 
> However I think I would rather accept a little bit more market risk and double my yield to 5.25%.




Since 2006 gold is up 200% and there are a lot of other investements that have done much better.   To have a family home and own it is an entirely  different matter.    However in the wonderful rise of property over the last few years and the leveage of cheap money it has been excellent but as it begins to turn sour, those who thought they had a great deal in the furture could be very quickly disappointed and in quick sand.


----------



## medicowallet (14 May 2010)

robots said:


> hello,
> 
> yes thats right Kincella and its a given for the rest of our lives
> 
> ...




Oh yes, please print more money. That would make inflation rise, and with that, interest rates will rise.


----------



## trainspotter (14 May 2010)

Go into a bank and try and borrow some money. First words out of their mouth is "Do you own your own home?" ... residential security ... wins hands down. 60% Low Doc loans ... no income man ... but I have a green title. Banks will lend. I have cash and shares ... not interested. Sell them and put DEPOSIT into RRE and bingo ....... Utopia .... manna from heaven. Banks give you the money. Hello?


----------



## medicowallet (14 May 2010)

trainspotter said:


> Go into a bank and try and borrow some money. First words out of their mouth is "Do you own your own home?" ... residential security ... wins hands down. 60% Low Doc loans ... no income man ... but I have a green title. Banks will lend. I have cash and shares ... not interested. Sell them and put DEPOSIT into RRE and bingo ....... Utopia .... manna from heaven. Banks give you the money. Hello?




That is misleading, and the kind of misrepresentation you tend to get from people who don't understand why this is so. I am sure you do and are framing your argument for the sake of your position.

Banks like to hold mortgages over houses for the money that they lend you as it is easy to sell if you go broke. Cash on the other hand is poor security for a loan, as it can be transferred.

Banks would lend 100% LVR for cash if they could have a mortgage over it, so it is actually the mortgage, and not the asset class which offers the bank security.


----------



## Bill M (15 May 2010)

UBIQUITOUS said:


> You're right Bill, property will not crash over 2 weeks, but over a much longer period. Remind us how well property performed from 1989-1999.



I honestly don't know why you even asked me this question, we all know house prices went up during that time. Maybe you just wanted to give me some homework.

In 1989 average house prices were 162k and in 1999 they were 219k and that is from a Government source. You may click this link here to check.


----------



## Bill M (15 May 2010)

Tysonboss1 said:


> To know the true return on investment you would have to know the cashflow return it has received over time.
> 
> *You can't tell whether an investment was viable based solely on it's capital gain*. It may have been returning an income steam of 10% being a commericial property.
> 
> Now if I owned a piece of real estate that was returning 10%p/a in rent that increased with inflation, while my invested capital was keeping pace with inflation I would consider that a great investment.



Spot on Tyson, I own in a unit in Sydney and I have no mortgage on it. I pull $420 per week rent from it. In the 6 Months I have been renting it out the unit has gone up 30k in price. The capital gain is a bonus and unexpected and I won't be selling this investment any time soon.


----------



## trainspotter (15 May 2010)

medicowallet said:


> That is misleading, and the kind of misrepresentation you tend to get from people who don't understand why this is so. I am sure you do and are framing your argument for the sake of your position.
> 
> Banks like to hold mortgages over houses for the money that they lend you as it is easy to sell if you go broke. Cash on the other hand is poor security for a loan, as it can be transferred.
> 
> _Banks would lend 100% LVR for cash if they could have a mortgage over it, so it is actually the mortgage, and not the asset class which offers the bank security._



_

I am sure you are a very good Doctor but a lousy analyst. In what way was this misleading? Banks do not take mortgages over cash or shares. FULL STOP. They take mortgages over houses, green title, commercial property, strata title, farm land, dirt, bricks and mortar ... ad infinitum. 

Not the asset class that offers the bank security, it is the mortgage? WTF ... no seriously WTF? The mortgage is worthless without the asset class medicowallet. Now before everyone gets on their high horse and says BUT what about chattel mortgages over plant and equipment and motor vehicles etc blah blah bloody blah this is the case of course. Remember we are talking about what the banks would lend against. Homes or cash. Homes win hands down. _


----------



## kincella (15 May 2010)

Trainspotter, spot on.....and another wee hint why the banks dont want your term deposit as security for a mortgage......they need to maximise their earnings, and require an asset that increases with inflation over time....
or to put it another way....that does not devalue..
cause rather than house prices going up as the 'crowd' understands.....its the reverse....the devaluation of the dollar...that is behind it....

thats why the banks prefer to lend over other asset classes, or risk it with derivatives, anything but reliance on your cash deposit to generate a return...
cause the cash deposit keeps losing its value, bit by bit, every day, and has less buying power against inflation...
most home loans have an average life of about 15 years....thats when people pay them out....not the initial 25-30 years as the contract states...
so if a bank expects to lend against an asset that covers a decade or more, it really wants to be able to recover any debt on a current dollar basis after inflation...
it will not get that security from cash...cash will be worth less than half the value after 15 years....


----------



## cutz (15 May 2010)

trainspotter said:


> Go into a bank and try and borrow some money. First words out of their mouth is "Do you own your own home?"




Yep,

That's why property is the collateral of choice for funding the dream,  the fact that it’s not marked to market daily is a bonus, LVR is harder to track and the banks hold the title so it’s win win . 

Stock can be used as collateral but generally used to fund more stock not the dream.  A lot easier to hedge but max LVR can’t be exceeded.

Whatever rocks your boat I guess.


----------



## So_Cynical (15 May 2010)

trainspotter said:


> Go into a bank and try and borrow some money. First words out of their mouth is "Do you own your own home?"
> ... residential security ... wins hands down.






cutz said:


> Yep,
> 
> That's why property is the collateral of choice for funding the dream




All very true of course but what else is there. :dunno: the big run up in profits for the Aussie banks over the last 25 years has been mostly due to housing and the increasing price of housing.

I mean its not like the banks could expect borrowers to have Bullion deposits or some sort of royalty income...our modern banking system is built around borrowing for housing and the only realistic collateral for that is property/housing.


----------



## Investor82 (15 May 2010)

trainspotter said:


> Banks do not take mortgages over cash or shares. FULL STOP.




Not 100% accurate. Banks will take a "cash security bond" and lend 100% against cash. 
Normally the funds are placed into a fixed deposit account - and is controlled by the bank, so you have no access to the money. 
It is not commonly used because you earn about 3% on the cash but pay about 8% on the loan - so you are -5%, it doesnt often make sense. 

When I was in the bank though we used it when the cash holder and the borrower were not the same person/company. As an example there was a partnership developing some land, and one of the partners was very cashed up. We put his money on deposit, and lent to the partnership. If the development fell over, he would lose his money. If the development succeeded (which it did) he kept his cash seperate to the partnership. 

There are many different forms of secuirty which banks use. After cash - residential security is the most common form, and provides the highest LVR. 

Cheers
I82


----------



## gooner (15 May 2010)

trainspotter said:


> I am sure you are a very good Doctor but a lousy analyst. In what way was this misleading? Banks do not take mortgages over cash or shares. FULL STOP. They take mortgages over houses, green title, commercial property, strata title, farm land, dirt, bricks and mortar ... ad infinitum.
> 
> Not the asset class that offers the bank security, it is the mortgage? WTF ... no seriously WTF? The mortgage is worthless without the asset class medicowallet. Now before everyone gets on their high horse and says BUT what about chattel mortgages over plant and equipment and motor vehicles etc blah blah bloody blah this is the case of course. Remember we are talking about what the banks would lend against. Homes or cash. Homes win hands down.




Banks WILL lend against cash and shares. But, you are right they do not take mortgages over them.  With cash, they will simply freeze the cash deposit to stop you paying it out. With shares, not sure how it works as have never got a margin loan. But they regularly check you are below you maximum LVR. If not, and you do not put up cash, BANG, there go your shares


----------



## trainspotter (15 May 2010)

OK OK OK  ...... I might have fudged the FULL STOP bit. YES banks will take a "lien" over cash and shares. My big sorry to all and sundry. BUT they will freeze the asset so therefore it is no longer liguid. Reduced LVR as well I might add (correct me if I am wrong gooner) When you propose to lend from a banks point of view then residetial real estate WINS hands down. Up to 95% I believe. 60% on commercial. 30% chattel mortgage over stock, plant and equipment yadda yadda yadda. 

Bwahahahahahaaaaa ... no wait .... Bawaahahahahaahaha ... Me thinks robots has got it right. No funny money going on here ! Real estate is the only TRUE economy when it comes to lending.


----------



## medicowallet (15 May 2010)

trainspotter said:


> I am sure you are a very good Doctor but a lousy analyst. In what way was this misleading? Banks do not take mortgages over cash or shares. FULL STOP. They take mortgages over houses, green title, commercial property, strata title, farm land, dirt, bricks and mortar ... ad infinitum.




Have a read of what I posted.

The reason banks will lend vs a house is because they have a mortgage over it and you cannot sell it without their approval.

Cash can be shunted around and that is the reason why they do not lend against it as freely.

Banks would prefer cash over property any day as it is a face value asset, which carries no transaction costs and has no time delay.

In all they don't care about it being a house.  All they care about is their control over their new asset (mortgage = they have control)


----------



## trainspotter (15 May 2010)

medicowallet said:


> Have a read of what I posted.
> 
> The reason banks will lend vs a house is because they have a mortgage over it and you cannot sell it without their approval.
> 
> ...




So therefore you are in agreeance with me that the asset is more important than the mortgage? After all I am using your words for asset to mortgage control from a banks point of view.

You wrote "Banks would lend 100% LVR for cash if they could have a mortgage over it, *so it is actually the mortgage, and not the asset class which offers the bank security.*"

So which is it Doctor?


----------



## medicowallet (16 May 2010)

trainspotter said:


> So therefore you are in agreeance with me that the asset is more important than the mortgage? After all I am using your words for asset to mortgage control from a banks point of view.
> 
> You wrote "Banks would lend 100% LVR for cash if they could have a mortgage over it, *so it is actually the mortgage, and not the asset class which offers the bank security.*"
> 
> So which is it Doctor?




NO

You obviously cannot understand what I am saying. The asset does not matter, it is the fact that the bank mortgages it readily that matters. As long as the bank has rights to the asset, it does not matter what it is, and as a previous poster outlined, you can get 100% LVR for cash. This confirms your original post misleading.

Banks need to approve sale of a car under finance.

So are you saying that a car is a good investment?

Diagnosis: myopia

It is easier to get a loan against a house, but that does not make a house a better asset to take a loan out against, just more convenient.


----------



## robots (16 May 2010)

kincella said:


> Trainspotter, spot on.....and another wee hint why the banks dont want your term deposit as security for a mortgage......they need to maximise their earnings, and require an asset that increases with inflation over time....
> or to put it another way....that does not devalue..
> cause rather than house prices going up as the 'crowd' understands.....its the reverse....the devaluation of the dollar...that is behind it....
> 
> ...




hello,

good morning fellow ASF members and guests, great day on the cards

outstanding posts from Kincella and Trainspotter the last couple of days, especially this one above, superb

apologies for not posting this week have been in Inverloch on assignment and dont have computer, looks like might have to get a netbook

well my settlement is all complete with the banks handing over a cool 100% (hahahahahahaha), its just fantastic as once I move i still wont be negative geared (hahahahahahaha)

so, a special thankyou to my tenants

i'm with you BillM

thankyou
robots


----------



## UBIQUITOUS (16 May 2010)

Buying at the top Robots? It certainly looks like it.

This is from your mentor, Enzo:



> http://reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162
> 
> Stock levels are so high that there have only been three months
> with more auctions, October 2007, December 2007 and 2009, all in
> ...


----------



## trainspotter (16 May 2010)

medicowallet said:


> NO
> 
> You obviously cannot understand what I am saying. The asset does not matter, it is the fact that the bank mortgages it readily that matters. As long as the bank has rights to the asset, it does not matter what it is, and as a previous poster outlined, you can get 100% LVR for cash. This confirms your original post misleading.
> 
> ...




YES!

You are obvioulsy not explaining it well enough for me to understand. You also obviously missed this post from me *"OK OK OK ...... I might have fudged the FULL STOP bit. YES banks will take a "lien" over cash and shares. My big sorry to all and sundry. BUT they will freeze the asset so therefore it is no longer liquid"*

Where in blue blazes did I say a car is a good investment or even try to suggest this? Once again ... your words and not mine. Unless you bought a XY GT HO 351 Super Roo in 1972 for about $3,500 and are now worth over $500,000. OFF TOPIC I KNOW!

Diagnosis: Splitting definitives

Give me real estate any day so I can get a loan from a bank on it.


----------



## robots (16 May 2010)

UBIQUITOUS said:


> Buying at the top Robots? It certainly looks like it.
> 
> This is from your mentor, Enzo:




hello,

yeah, people were buying at the top in 1999, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009

look at Gav's result buying at the top last year (already 20-30% up), hahahahahahaha

will just increase the rents or get another bunk bed to offset any issue

thankyou
robots


----------



## satanoperca (16 May 2010)

REIV clearance rate for the weekend 76%. A small decrease on previous weeks but still a good result.



> given the unseasonably high number of auctions this
> May. Stock levels are so high that there have only been three months
> with more auctions, October 2007, December 2007 and 2009, all in
> spring when around 8-900 auctions over the weekend are a regular
> feature.




Found this comment interesting. Why the unusually high number of auctions?
Interest rates ain't even at normal, so it cannot be that. 
People taking profits? Maybe

Only time will tell.

Congratulations to Robots new purchase, wishing you all the best and hope the dream continues.

Cheers

Fog lifted in Melbourne to reveal a splendid day.


----------



## kincella (16 May 2010)

does not sound like much of a good investment to me....
I lend the bank some cash and they pay me about 5%...at top rates, they lend me back the same money and charge me 7%......


have a great day
I am off to the million paws walk today


----------



## UBIQUITOUS (16 May 2010)

kincella said:


> does not sound like much of a good investment to me....
> I lend the bank some cash and they pay me about 5%...at top rates, they lend me back the same money and charge me 7%......





Got to agree with you there Kincy. Only if the ATO allowed that loss to be offset against other income, would it be a fantastic investment


----------



## drsmith (16 May 2010)

One should never bet the house on being able to just increase the rent to offset any issue.

That at some point may not be to Mr Market's liking.


----------



## medicowallet (16 May 2010)

trainspotter said:


> YES!
> 
> You are obvioulsy not explaining it well enough for me to understand. You also obviously missed this post from me *"OK OK OK ...... I might have fudged the FULL STOP bit. YES banks will take a "lien" over cash and shares. My big sorry to all and sundry. BUT they will freeze the asset so therefore it is no longer liquid"*
> 
> Where in blue blazes did I say a car is a good investment or even try to suggest this?




I apologise that you cannot understand that the bank doesn't care what asset you put up against a loan, as long as they have control over it to recover their losses. (which you have admitted, but wont admit to me that you admitted)

It is quite obvious to me that you are just arguing for argument's sake. It is typical internet attitude that to just keep ignoring fact makes your pathetic counter argument correct.

Also I never said that you said that a car was a good investment. If you consider that there is a question mark, then you can deduce that. What I was pointing out, is that a poor investment (exceptions obviously) still attracts a loan from the bank, as long as they can control the asset.

I find it mildly amusing that you keep trying to defend your incorrect position, which has been pointed out to be flawed, just to save face.


----------



## robots (16 May 2010)

UBIQUITOUS said:


> Got to agree with you there Kincy. *Only if the ATO allowed that loss to be offset against other income, would it be a fantastic investment*





hello,

what a classic, so if can claim the loss against income, "CASH" becomes a fantastic investment, Oh Yeah

great day brothers, went down to South Melbourne for usual shopping trip, plenty from the paws walk around

good to see the auction clearance % down as the RBA uses this as a leading indicator for setting monetary policy,

thanks Satanoperca, will catch up soon

thankyou
robots


----------



## MACCA350 (16 May 2010)

This is a little interesting. I've merged two of REIV's graphs, Quarterly Median(5yr) and Finance Commitment on Secured Housing(5yrs, sourced from ABS). I've lined up the time axis as close as I can as they seem to be reported one month different from each other.

cheers


----------



## drsmith (16 May 2010)

MACCA350 said:


> This is a little interesting. I've merged two of REIV's graphs, Quarterly Median(5yr) and Finance Commitment on Secured Housing(5yrs, sourced from ABS). I've lined up the time axis as close as I can as they seem to be reported one month different from each other.
> 
> cheers



Interest rate rises have bitten early when compared to the long rising phase pre GFC.

It will get very interesting if the RBA has to keep responding with higher interest rates to contain inflation.


----------



## cutz (16 May 2010)

drsmith said:


> Interest rate rises have bitten early when compared to the long rising phase pre GFC.
> 
> It will get very interesting if the RBA has to keep responding with higher interest rates to contain inflation.




Very worrying indeed, 

Looking at official RBA data the cash rate is still at the lower level of the 4-8% band, just lifted from a historically low level. I’m also very concerned that many won’t have much room to maneuver as rates do have to go up further.

Another phenomena that has gained momentum over the past decade is the funding of big ticket items via the family home, things like cars, holidays, kitchens, boats ect. ect. So it’s good and well to say that the banks will only lend against property at favorable rates but are they really doing you a favour ?

What I need to research next is how much exposure our banks have to marginal loans as a percentage, any pointers ?


----------



## medicowallet (16 May 2010)

robots said:


> [/B]
> 
> what a classic, so if can claim the loss against income, "CASH" becomes a fantastic investment, Oh Yeah




Cash is a fantastic investment. 

You just need plenty of shares and a lot of property to go with it 

You are correct, housing is an excellent investment, but always beware the investor who puts all their eggs in the one basket.

Housing has to stop somewhere, but when it happens the people who have only 40% or so of their value in it ride it out much more nicely than those who are highly geared and exposed to an ever increasing bubble.


----------



## medicowallet (16 May 2010)

cutz said:


> What I need to research next is how much exposure our banks have to marginal loans as a percentage, any pointers ?




When our property market corrects or stagnates, and interest rates increase, people may well flock to cash.

Our banks might find things interesting then.
Lower revenue from property loans, pummelled balance sheet, increased cost of funding.

Could be self perpetuating.


----------



## robots (16 May 2010)

medicowallet said:


> Cash is a fantastic investment.
> 
> You just need plenty of shares and a lot of property to go with it
> 
> ...




hello,

whys that?

thankyou
robots


----------



## cutz (16 May 2010)

robots said:


> hello,
> 
> whys that?
> 
> ...




Less downside risk, that's the one to keep an eye on.


----------



## cutz (16 May 2010)

medicowallet said:


> Housing has to stop somewhere




Correct,

It's in the math, 

2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, ? , ?, ?, ?, ?, ?, ? .....


----------



## robots (16 May 2010)

hello,

just let it slow down a bit? stabilize? downside risk?

thankyou
robots


----------



## drsmith (16 May 2010)

cutz said:


> Very worrying indeed,
> 
> Looking at official RBA data the cash rate is still at the lower level of the 4-8% band, just lifted from a historically low level. I’m also very concerned that many won’t have much room to maneuver as rates do have to go up further.



The current cash rate of 4.5% is regarded as neutral by the RBA from a borrower's perspective. 

http://www.rba.gov.au/media-releases/2010/mr-10-07.html

Any further rises over the next several months (pre election) will be in response to inflation/inflation expectations. These are rises I suspect the RBA will be very reluctant to make. Only a reactionary response if core inflation sneaks over the top of the target range (3%) I suspect.



cutz said:


> Another phenomena that has gained momentum over the past decade is the funding of big ticket items via the family home, things like cars, holidays, kitchens, boats ect. ect. So it’s good and well to say that the banks will only lend against property at favorable rates but are they really doing you a favour ?



A likely contributing factor to the rise in household interest expense relative to household income over the same period.


----------



## medicowallet (16 May 2010)

robots said:


> hello,
> 
> just let it slow down a bit? stabilize? downside risk?
> 
> ...




I'd prefer a slowdown. Slightly below realistic growth. 

It protects our investments and stops shocks. However I have got a bit of money involved, I don't mind it going on as it was, I am just not expecting it to do so.

I win either way. I just would prefer to be slightly less of a winner and reduce the risk of being a big loser.


----------



## robots (16 May 2010)

medicowallet said:


> I'd prefer a slowdown. Slightly below realistic growth.
> 
> It protects our investments and stops shocks. However I have got a bit of money involved, I don't mind it going on as it was, I am just not expecting it to do so.
> 
> I win either way. I just would prefer to be slightly less of a winner and reduce the risk of being a big loser.




hello,

good for you Medicowallet, 

what is realistic growth? surely it has nothing to do with income

and why do things have to follow a "formula" "history" "birth right"

thankyou
robots


----------



## UBIQUITOUS (16 May 2010)

Did anybody catch this today?



			
				Enzo Rampmondo said:
			
		

> http://reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162
> 
> There were a total of 701 auctions reported this weekend of which 529 sold
> and 172 were passed in, 113 of those on a vendors bid. *The clearance
> rate was 75 per cent.*




Yesterday's clearance rate was 76%, and today's down to 75%. That's a 1% fall overnight. I would say that sellers are entering & buyers leaving the market in droves.


----------



## medicowallet (16 May 2010)

robots said:


> hello,
> 
> good for you Medicowallet,
> 
> ...




Realistic growth. Many things determine it: population, income, political decisions etc. Trends show what is reasonable. I'd like to see us pull back towards trend over the next five to ten years or so.

"formula"/"history"

I ask myself the same question sometimes. The thing is, that from my experience, human nature has as much to do with returns than does the underlying fundamentals of an investment. It is human nature which determines trends. At some point people will look at home ownership and stop paying too much.

It is ludicrous to have house prices soaring off the back of a strong economy, where one of the indicators of the same economy (sharemarket being a proxy for it) has tanked. 

Emotion, greed, naivety, fear etc seem to play as much of a role in herd mentality as do fundamentals, especially australian stockmarket at the moment. Housing suffers this too, but people need a place to live, so as you know, they are prepared to ride it out, and it takes a huge shock to uproot it, but it can be uprooted (US).


----------



## robots (16 May 2010)

UBIQUITOUS said:


> Did anybody catch this today?
> 
> 
> 
> Yesterday's clearance rate was 76%, and today's down to 75%. That's a 1% fall overnight. I would say that sellers are entering & buyers leaving the market in droves.




hello,

i will send that straight up to the RBA Ubiquitous, good data

should have a good impact on monetary policy

thankyou
robots


----------



## trainspotter (16 May 2010)

medicowallet said:


> I apologise that you cannot understand that the bank doesn't care what asset you put up against a loan, as long as they have control over it to recover their losses. (which you have admitted, but wont admit to me that you admitted)
> 
> It is quite obvious to me that you are just arguing for argument's sake. It is typical internet attitude that to just keep ignoring fact makes your pathetic counter argument correct.
> 
> ...




I am pathetic??? Lollolol ... Sorry old chum I have more important things to do than counter your peurile attempt at a neuter point. Like count my money in real estate whilst you felch around trying to disprove me wrong in my attempt to educate you in the finer things in life. 

It is what it is ... the ball is in your court if you wish to Tally Ho and continue this but I doubt that it would have any effect on this thread other than produce you as a dunce .... Your call.

Just for old times sake ... If you place cash or shares as collateral then the bank will take a lien on this for 100%. They will lend you 100% of the value of the "ASSET". If you want to go an buy something with the "CASH" then you have EXACTLY the same amount you started with to begin with. Are you understanding what I am putting down here???? No point. If you want to TRADE IN the value you must go cap in hand to the bank to get your money back, "Please Sir can I have my money back" ???: LOLOOLLOL Why did you not just use your cash in the first place?? HAhahhahah hA A AH HAh hah ah a !

The advantage of real estate is it INCREASES in value and you can loan against it readily without the BANK telling you what you can do with your titled money. If you decide to sell it you do not need the banks approval to sign the documents to sell.

OOOOOOOOOOOOPPPPPPPPPSSSSSSSIEEEEEEESSSSSSS !!

I have been in real estate and finance for over 20 years. How long have you been a Doctor??

*Banks need to approve sale of a car under finance.

So are you saying that a car is a good investment?*  Your words are written ... not mine !


----------



## medicowallet (16 May 2010)

trainspotter said:


> I am pathetic??? Lollolol ... Sorry old chum I have more important things to do than counter your peurile attempt at a neuter point. Like count my money in real estate whilst you felch around trying to disprove me wrong in my attempt to educate you in the finer things in life.
> 
> It is what it is ... the ball is in your court if you wish to Tally Ho and continue this but I doubt that it would have any effect on this thread other than produce you as a dunce .... Your call.
> 
> ...




This post is gold. I especially love the part about house prices rising. Cash also rises in a bank account, so do shares. This is not a point made with any credibility.

Please don't go and say how much money you have, anyone can have anything over the internet. Is that response meant to make me jealous? or is it meant for me to take your erroneous post more seriously.

I responded to your lack of understanding as to how you can borrow money against security. I identified (even before I knew you had twenty years experience as a finance professional) that you probably knew this and were misleading other posters. I guess that you were not expecting someone to question your inaccurate representation.


I think I will take your invitation to discontinue my discussion with you. It has indeed been most educational. I find it interesting how you admitted you were wrong, yet vehemently defend your position with a different poster. 

I would like to hope that ASF is not full of people with internet driven responses such as your own.


----------



## trainspotter (16 May 2010)

medicowallet said:


> This post is gold. I especially love the part about house prices rising. Cash also rises in a bank account, so do shares. This is not a point made with any credibility.
> 
> Please don't go and say how much money you have, anyone can have anything over the internet. Is that response meant to make me jealous? or is it meant for me to take your erroneous post more seriously.
> 
> ...




With pleasure Doctor ! With pleasure ! It is a pity you have chosen to take this antagonistic path. I never said I had money medico wallet (your words again ... not mine) I will gladly disclose to all and sundry what I am worth if you care to ask. Ho HO ! 

My complete apologies for my lack of understanding in this matter and I deeply and humbly apologise for any inference, misoconception, erratum, misnomer and whatever the hell you want to call it.

I wish you all the best medicowallet in your endeavours. Good bye.


----------



## MACCA350 (16 May 2010)

UBIQUITOUS said:


> Did anybody catch this today?
> 
> Yesterday's clearance rate was 76%, and today's down to 75%. That's a 1% fall overnight. I would say that sellers are entering & buyers leaving the market in droves.



He's actually added 41 auctions to the data. I've never actually noticed the posted numbers being revised ............though each weeks "last week" numbers show that there are always more auctions than what is originally posted. 

I'd like to see the revised clearance rates going back a while to see what they actually ended up as compared to what was posted initially.

One other thing, every now and then they must post incorrect numbers as they don't add up as stated........like yesterdays numbers.........and I'm not talking small inaccuracies(ie based on yesterdays data the clearance rate was 97% ) just plugged in the new numbers and they now add up. But funny enough the reported "last week" numbers have changed from 846 to 871 and last week they were reported as 790.............so what were the revised clearance rates??? probably lost in the Bermuda triangle.

Every week, based on the actual numbers the posted clearance rate is constantly bloated by 3-7%............for example, based on the latest numbers the actual clearance rate was 71.24% not 75%. It wouldn't be much of a problem if the bloating was consistent.

Somebody tell me I've got my calculations wrong because surely they'd get things right

cheers


----------



## MR. (16 May 2010)

View attachment Investment loans as a % of Total Housing Loans $.pdf


Investment loans increased by a further 1.1% in March while owner occupied housing fell a further 3.7%
http://www.abs.gov.au/AUSSTATS/abs@...05DBCE56402EC566CA25723D000F2999?opendocument

Wonder what higher interest rates of 0.25% in April and 0.25% in May will bring?


----------



## gav (17 May 2010)

robots said:


> look at Gav's result buying at the top last year (already 20-30% up), hahahahahahaha




And the "For Sale" sign has a big fat "Under Contract" sticker on it already.  On the market for just 6 days.


----------



## So_Cynical (17 May 2010)

gav said:


> And the "For Sale" sign has a big fat "Under Contract" sticker on it already.  On the market for just 6 days.




Well done Gav.  i had to wait 9 years for my big real estate pay day.


----------



## Tysonboss1 (17 May 2010)

explod said:


> Since 2006 gold is up 200% and there are a lot of other investements that have done much better.




Gold produces no income and it costs money to store it, for me that equals a terrible investment.

I know there are investments out the that have performed better than property. My comment was that as a stable income steam it is fantastic.


----------



## Tysonboss1 (17 May 2010)

medicowallet said:


> Cash is a fantastic investment.
> 
> .




Cash is another terrible investment, 

Sure it may earn 5% but that 5% is taxed so the actual return is less than the inflation rate, and both your invested capital and monthly cashflow will lose buying power over time.

The only investment worse than cash is gold, 

With gold you pay one person to dig it out of the ground, 
then you pay another to smelt it for you, 
then you pay another one to bury it and gaurd it for you,

And all this time it produces no weekly income, and you live in hope that it will rise in value and keep pace with inflation.

If you put $100K into Gold in 1980 and worked out what it was worth today then subtract all the storage fees you paid over 30 years you would have far less than you would if you put $100K into property and collected rent for 30years.


----------



## UBIQUITOUS (17 May 2010)

Tysonboss1 said:


> The only investment worse than cash is gold,
> 
> With gold you pay one person to dig it out of the ground,
> then you pay another to smelt it for you,
> ...




You are missing the whole point about Gold. It was traditionally invested in as a safe store of wealth (ie a currency) as opposed to cash and speculation of Real Estate & and the Stockmarket. However, I do think that there is quite a bit of speculation in gold now but that's the nature of the beast when there is far too much cheap money floating about which is not backed by gold reserves. It has to find a home somewhere.


----------



## Tysonboss1 (17 May 2010)

UBIQUITOUS said:


> You are missing the whole point about Gold. It was traditionally invested in as a safe store of wealth (ie a currency) as opposed to cash and speculation of Real Estate & and the Stockmarket. However, I do think that there is quite a bit of speculation in gold now but that's the nature of the beast when there is far too much cheap money floating about which is not backed by gold reserves. It has to find a home somewhere.




I would say a block of land achieves the same as gold when it comes to being a store of value, with the added bonus it generates an income and nobody can steal it.

Yes the lands value may fluctuate slightly, But so to does the gold.


----------



## explod (17 May 2010)

Tysonboss1 said:


> I would say a block of land achieves the same as gold when it comes to being a store of value, with the added bonus it generates an income and nobody can steal it.
> 
> Yes the lands value may fluctuate slightly, But so to does the gold.




Aha little grasshopper, you express the light.   Down here on the Mornington Peninsula a lot of vacant land is being purchased lately, the twitchy stock market will continue to see a drift to good property and its called land banking, gold is the same, they are just preservers of wealth.  They are tangible assets and a way to store away your money with no debts to anyone..


----------



## skcots (17 May 2010)

Tysonboss1 said:


> I would say a block of land achieves the same as gold when it comes to being a store of value, with the added bonus it generates an income and nobody can steal it.
> 
> Yes the lands value may fluctuate slightly, But so to does the gold.




I can make a phone call and in 5 minutes buy say $20,000 worth of bullion. It costs nothing for storage (if I am happy with an unallocated account) or I pay a little bit per month for an allocated account (less then stamp duty + council rates on property). If I choose, I can make a phone call and sell a small portion of my gold (e.g. 5%, 15% or whatever) immediately at the market rate.

I agree that property is a good investment and usually generates an income though its not equal with gold as a store of wealth.


----------



## Dowdy (17 May 2010)

Tysonboss1 said:


> Cash is another terrible investment,
> 
> Sure it may earn 5% but that 5% is taxed so the actual return is less than the inflation rate, and both your invested capital and monthly cashflow will lose buying power over time.
> 
> ...




Lets clear up some gold myths:


With gold you *don't* pay one person to dig it out of the ground, 
then you *don't* pay another to smelt it for you, 
then you *don't* pay another one to bury it and gaurd it for you

When you buy physical gold you only pay spot price. All other cost are included. Like when buying a house. The final house price includes land, labour and materials.

Gold is extremely liquid (and i'm not talking about contracts, i'm talking about physical bullion). A house can stay on the market for months while waiting to get your money. Gold you can take a few kilos and start fresh in another country. ie. It's recognised as a currency everywhere in the world.

The only thing you pay for storage is a good vault. I wouldn't trust it in a bank safety deposit box as they have in the past in collapsing countries, sized all assets.

The only disadvantage with owning gold is that there are no dividends but in most cases, if you put the money into gold stocks it would of done just as good and you get dividends


----------



## wayneL (17 May 2010)

Tysonboss1 said:


> I would say a block of land achieves the same as gold when it comes to being a store of value, with the added bonus it generates an income and nobody can steal it.
> 
> Yes the lands value may fluctuate slightly, But so to does the gold.




A block of land cannot generate income unless:

a/ it is productive e.g. cropping

b/ you can lease it because someone else has a use for it... eg it has a house on it etc

The bloke sitting on the empty house block of land (AKA in NZ as a siction [which I am reliably informed is spelt "section"]) 3 doors down from me isn't getting any income from it.


----------



## moXJO (17 May 2010)

Don't you also still pay rates on a vacant block of land?


----------



## Tysonboss1 (17 May 2010)

wayneL said:


> A block of land cannot generate income unless:
> 
> a/ it is productive e.g. cropping
> 
> ...




Exactly, so you just buy one that has a house on it.

I only refered to it as a block of land because it's the land that is the important bit when it comes down to the store of value side of things, the house wears out.


----------



## Uncle Festivus (17 May 2010)

Tysonboss1 said:


> Exactly, so you just buy one that has a house on it.
> 
> I only refered to it as a block of land because it's the land that is the important bit when it comes down to the store of value side of things, the house wears out.




And it's such good value at the moment - that 5m X 20m block of land in inner Sydney, which also has an annoying unit on it, goes for about $1M+ these days . Same for those other suburbs where the average is $1M+.

Right now, property is all about selling to the bigger fool, although there is a hint, from the *auction clearance rates*, that some people are actually just starting to realise they don't want to be the bigger fools? 10% in a week!?



> THE Sydney housing market has shown the first signs of slowing as climbing interest rates and sky-rocketing prices scare off potential buyers.
> Residex figures show auction clearance rates dropped by more than 10 per cent last Saturday to 62.5 per cent, down from 73.5 per cent the weekend before.



 OR 30% for May ....so far....


> Independent auction house Cooley Auctions saw clearance rates *plunge from 80 per cent to 50 per cent* in the first week of May alone.
> "There are early signs that the heat's coming out of the market," auctioneer Damien Cooley said


----------



## satanoperca (17 May 2010)

What is this 



> Population growth to ease, report says






> BIS Shrapnel says annual net overseas migration – which includes permanent migration and longer-term but temporary stays – will fall from its pace of 298,900 in the year to June 2009 to 240,000 in the year to June 2010. It will fall more dramatically to 175,000 in 2010-11 and 145,000 in 2011-12




It cannot be, that is what we are led to believe has been one of the driving forces of property growth.

Next the MSN will be saying "We don't have a housing Shortage"

Cheers


----------



## CamKawa (17 May 2010)

satanoperca said:


> It cannot be, that is what we are led to believe has been one of the driving forces of property growth.
> 
> Next the MSN will be saying "We don't have a housing Shortage"
> 
> Cheers



lol


----------



## UBIQUITOUS (17 May 2010)

Obviously the writer of this doesn't visit ASF - the last bastion of Property Spruikers.
An excellent article.



> http://www.moneymorning.com.au/20100517/property-spruikers-quiet.html#more-3195
> 
> *The Property Spruikers Have Been Awfully Quiet*
> by KRIS SAYCE on MAY 17, 2010
> ...


----------



## trainspotter (17 May 2010)

*"We’ve always pointed out that the Australian housing sector is inextricably linked to the Australian banking sector. Right now, despite the propaganda, the Australian banks are bloodied and bruised on the ropes"*. .......


Haha ah aha a a ... 2.88 BILLION dollars in 6 months for Westpac is on the ropes? 1.9 billion for 6 months for ANZ is a bruise? NAB Net profit fell to $2.095 billion for the six months to March 31 ... haha ha ahaha ha bloodied ! Commonwealth felched out a lousy 2.91 billion to Dec 31st 2009 is really bad propoganda.

Oh Dear ! A journalist with a hack point of view is a dangerous weapon.


----------



## satanoperca (17 May 2010)

trainspotter said:


> $2.88 BILLION dollars in 6 months for Westpac




Fair call, just if you have it to hand what was their rate on return of capital?

If it was 8% then Ok, if it was 15% fantastic, if was 50%, introduce a new banking tax of 40% as all Australian are paying for their profits.

Cheers


----------



## explod (17 May 2010)

trainspotter said:


> *"We’ve always pointed out that the Australian housing sector is inextricably linked to the Australian banking sector. Right now, despite the propaganda, the Australian banks are bloodied and bruised on the ropes"*. .......
> 
> 
> Haha ah aha a a ... 2.88 BILLION dollars in 6 months for Westpac is on the ropes? 1.9 billion for 6 months for ANZ is a bruise? NAB Net profit fell to $2.095 billion for the six months to March 31 ... haha ha ahaha ha bloodied ! Commonwealth felched out a lousy 2.91 billion to Dec 31st 2009 is really bad propoganda.
> ...




Its all past tense Champ, the winners will be those who can evaluate and act on what is happening now.


----------



## trainspotter (17 May 2010)

explod said:


> Its all past tense Champ, the winners will be those who can evaluate and act on what is happening now.




I will await my winning dividends when they are due then Portnoy. I have seen the future and it doesn't work. 

What might your evaluation and actions be then?


----------



## trainspotter (17 May 2010)

satanoperca said:


> Fair call, just if you have it to hand what was their rate on return of capital?
> 
> If it was 8% then Ok, if it was 15% fantastic, if was 50%, introduce a new banking tax of 40% as all Australian are paying for their profits.
> 
> Cheers




I do not have the figures you command satanoperca. Does it not strike you as stange that these were the very same banks crying foul during the GFC and requested backup from the Govt to shore up their stocks and stopping people from withdrawing their cash? These are the same banks that bleat that they have to increase margins because they are being squeezed on global lending and the profits are inadequate.

When will we wake up to this BS ?? And now we have people saying that the property market is going to the wall because it happened in the US and Japan (nevermind these were completely different sets of regulatory lending) just because a journalist writes a couple of paragraphs?  so.. IMO ... safe as houses brothers .. bricks and mortar ... there is no place like home, home sweet home.

There you go Champs. Evaluate on this.


----------



## explod (17 May 2010)

trainspotter said:


> I will await my winning dividends when they are due then Portnoy. I have seen the future and it doesn't work.
> 
> What might your evaluation and actions be then?




Wish I could see into the the future like that, can only go by the now.  Have little in property, just a Property Shopping Centre Trust that has been good.   Probably lost a lot by getting out early but my other investments have more than offset.   However good for you trainspotter, but think there maybe more down than up looking ahead for awhile.


----------



## So_Cynical (17 May 2010)

I was reading in today's paper that the big banks have about 125 billion in debt to roll over in the coming months...money that will cost them significantly more to borrow than the debt its replacing..debt from 3, 4 and 5 years ago.


----------



## robots (20 May 2010)

hello,

good afternoon, great day 

how's the week going, any surprises or major events happening?

all's normal, good

spot on Trainspotter, the banks rolling in it and nothing wrong with that, thats life,

Usual socialist talk from Kris Sayce, attack the banks, attack the wealthy, try and bring them down, take from the rich and give to the poor bleaters (non property owners)

how about article on wealth creation instead of propaganda

thankyou
robots


----------



## robots (20 May 2010)

explod said:


> Wish I could see into the the future like that, can only go by the now.  Have little in property, just a Property Shopping Centre Trust that has been good.   Probably lost a lot by getting out early but my other investments have more than offset.   However good for you trainspotter, but think there maybe more down than up looking ahead for awhile.




hello,

thats okay explod, just read ASF brother where you can tune into those ahead of the pack man

the ones looking down the road and not over their shoulder like Kris Sayce, alan kohler, s. keen, Hired Goon

thankyou
robots


----------



## robots (20 May 2010)

hello,

gee, whats happening?

oh well everybody must be consumed with other things

thankyou
robots


----------



## robots (20 May 2010)

hello,

oops, 

sorry, dinner and neighbours

thankyou
robots


----------



## nunthewiser (20 May 2010)

Great day for the Bewtiful ppl tho 



> WA's first-homebuyer market has plummeted, sparking fears the State's housing industry is about to stall.
> 
> Data from the Office of State Revenue on first-homeowner grants show that there were 1334 fewer first-home buyers in April this year compared with the same month last year. "The artificial boom of first-time buyers triggered by the Commonwealth grant has now well and truly ended," Real Estate Institute of Western Australia president Alan Bourke said.
> 
> ...




Its all good Bro.



> Regional WA has not been spared, with figures showing sales dropping in Mandurah, Bunbury and Geraldton during April.
> 
> Listings increased in all regional centres, with Mandurah-Murray increasing by six per cent over the past six weeks to 1750 properties while Bunbury was also up six per cent to 1300 properties.
> 
> Listings in Geraldton-Greenough have risen by 20 per cent to 650 properties.




http://au.news.yahoo.com/thewest/a/-/wa/7262099/first-homebuyers-disappear/


----------



## Uncle Festivus (20 May 2010)

robots said:


> hello,
> 
> oops,
> 
> ...




Suddenly gone quiet in here - trying to drum up some enthusiasm ? Lonely at the top robots?

Exchange rates taking a tumble, makes for more expensive imports = more lowering of standard of living for the mortgage slaves?

The top is in....and passed?


----------



## drsmith (21 May 2010)

nunthewiser said:


> Its all good Bro.



The canary in the coal mine for residential real estste in Australia I suspect will be the sunny Pilbara coastal towns in WA's northwest.

http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp&s=wa&u=port+hedland


----------



## nunthewiser (21 May 2010)

drsmith said:


> The canary in the coal mine for residential real estste in Australia I suspect will be the sunny Pilbara coastal towns in WA's northwest.
> 
> http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp&s=wa&u=port+hedland





Is that a double top on the unit chart ?

Mate of mine currently working up there , his employer could not find him ANY accomodation he reckons so bought a caravan for my mate to tow up and use for his stint!Just being a cheapskate? or is accomodation really that tight at the mo?


----------



## drsmith (21 May 2010)

nunthewiser said:


> Is that a double top on the unit chart ?



Hold your breath when you check the annual graph. The air is very thin in the stratosphere.



nunthewiser said:


> Mate of mine currently working up there , his employer could not find him ANY accomodation he reckons so bought a caravan for my mate to tow up and use for his stint!Just being a cheapskate? or is accomodation really that tight at the mo?



Rents (fuelled by the commodities boom) up there are astronomical.


----------



## BigAl (21 May 2010)

Where For Art Thou Robots Insightful <cough> rubbish <cough> comments regarding Clearance Rates?

Are the crickets chirping?

You are welcome to send your skid marked undies, care of of Kevin Dudd, if you fail to find an escape clause at the bank on your latest IP a few weeks back.

Sunshine & Lollipops to those that realised the madness of this market.

No sympathy for those are highly debt dependant and got greedy on the housing market.

Have a Good Brothers

Regards
Professor Reality


----------



## cutz (21 May 2010)

Take it easy BigAl,

Many have been caught up in the debt trap / instrument of financial destruction through no fault of their own.


----------



## Mofra (21 May 2010)

Uncle Festivus said:


> Suddenly gone quiet in here - trying to drum up some enthusiasm ? Lonely at the top robots?
> 
> Exchange rates taking a tumble, makes for more expensive imports = more lowering of standard of living for the mortgage slaves?
> 
> The top is in....and passed?



I would expect stangantion / a fall in real terms until at least the end of the year. Rising interest rates vs falling clearance rates are a no-brainer.
If the economy starts to struggle again (and it looks like a distinct possibility) we at least have interest rate falls to look forward to.

I seriously doubt a pullback is unhealthy for long term prices though - a period of consolidation will be quite healthy in the greater scheme of prices.


----------



## trainspotter (21 May 2010)

BigAl said:


> Where For Art Thou Robots Insightful <cough> rubbish <cough> comments regarding Clearance Rates?
> 
> Are the crickets chirping?
> 
> ...




You don't say much do you Big Al? But when you do it is worth reading for comedy purposes only. Real estate slowing in sales does not mean values are plummeting? I believe most of the <cough> rubbish <cough> comments are direct from RP DATA. Surely they are not fudging statistics?

If you read robots post you will see even with the purchase of the second IP he is not in any danger of defaulting or clawback from bank due to massive equity in first property.

Oh well ...... each to their own I guess. Glad I dumped ALL my stock quite a while back and put the lot into property. GOSH ! Look at that lead sled Goooooooooooooooooo !


----------



## BigAl (21 May 2010)

trainspotter said:


> You don't say much do you Big Al? But when you do it is worth reading for comedy purposes only. Real estate slowing in sales does not mean values are plummeting? I believe most of the <cough> rubbish <cough> comments are direct from RP DATA. Surely they are not fudging statistics?
> 
> If you read robots post you will see even with the purchase of the second IP he is not in any danger of defaulting or clawback from bank due to massive equity in first property.
> 
> Oh well ...... each to their own I guess. Glad I dumped ALL my stock quite a while back and put the lot into property. GOSH ! Look at that lead sled Goooooooooooooooooo !



But But But

House prices always go up, never stagnate, never tread water, never a correction, always on the up and up towards sunshine & lollipops for my fellow gay freinds.

But But But, this time its different.


Edit: Just helping my Fellow ASF'rs.  Wouldn't like anyone get to get caught holding the hot potato when the giant Ponzi scheme falls apart at the seams.


----------



## trainspotter (21 May 2010)

BigAl said:


> But But But
> 
> House prices always go up, never stagnate, never tread water, never a correction, always on the up and up towards sunshine & lollipops for my fellow gay freinds.
> 
> But But But, this time its different.




Hahahahaaa .... we will see when the prices start dropping (if they do?) ....... until then property is looking OK at the moment. Naughty Mr. Property Bubble might just be in the closet with his gay mates but is not making his presence felt just yet. Definitely there has been a retreat in the activity of sales and FHO have disappeared quicker than a chocolate cake at a Weight Watchers convention but it still leaves room for investors to buy buy buy as people will have to rent rent rent cause they can't afford to buy their own home. Nirvana awaits the property gurus. Just give it time.


----------



## MR. (21 May 2010)

cutz said:


> Many have been caught up in the debt trap / instrument of financial destruction through no fault of their own.




Sad and true...



Mofra said:


> If the economy starts to struggle again (and it looks like a distinct possibility) we at least have interest rate falls to look forward to.




Yes as it appears, we are the lucky country for the greedy property investor!

ps: Hello all (and from the revived threads) cloudy day... anyone for the yen?


----------



## kincella (21 May 2010)

I am expecting another rush to the exit door from the stock market/cum gambling den......and a quiet entry into the property market....
it happens everytime....
but the GFC mark2 is even worse than the last one....what with the great big resources tax to scare off any investor, company....and the European debt crisis...
hmmm, the warm fuzzy feeling of bricks and mortar....to soothe the
 head aches from the gamblers den

and am looking forward to the drop in interest rates....back down to 5% lending rates, at this rate
pity those with money tied up in the retail superfunds....with the kids at the wheel, managing your future , with the emphasis on the gambling den


----------



## cutz (21 May 2010)

kincella said:


> stock market/cum gambling den......and a quiet entry into the property market....




LOL,

Far from it mate,

Tell me something, how do you hedge an IP geared to 60%/70%/80%/100% ?

Makes me cringe when a property guru assumes the market is akin to a gambling den.


----------



## robots (21 May 2010)

hello,

yes spot on Kincella, those with the dough will clear out of the ASX for a long time

thats why I am soooooo glad i dont have to have my wage/earnings go into a Superfund, most have failed there customers miserably, 

18,000 licensed financial advisors yet not one of them could claim the property run, dont buy direct property bang it in a fund, hahahahahaha

oh yeah, ASX up over pre GFC levels? sorry sorry sorry i know no-one who owns property on the forbes richlist

thankyou
robots


----------



## kincella (21 May 2010)

yes Robots....the other posters dont get it either....charts I saw earlier this year show the average debt on housing is below 30% of the value, on average it was 20%....so its 70-80%  equity....or an asset for those who dont understand

but then maybe some posters still think equity is debt....like another poster on another forum...he thought equity was bad for you....he had it mixed up 

so why do they go on about over 70% in debt.....they should state the new fhb's can expect that much debt in the first few years...
but the rest of us, have only 20% debt on average.....which is excellent
and the kids will eventually catch up


----------



## robots (21 May 2010)

hello,

yes, could be another round of "get out of debt" "get out of debt"

remember S.Keen, get out of debt, sell your house/unit, yet at the same time he was forecasting Interest Rates to go to 1%

just fabulous Big Al, great day man

thankyou
professor robots


----------



## UBIQUITOUS (21 May 2010)

A friend of a friend knows Enzo quite well. Anyway, to cut a long story short, the final draft of tomorrow's REIV clearance rate report states that the rate will be down to 73%. 

You heard it here first.


----------



## robots (21 May 2010)

hello,

good to hear from Ubiquitous, big week

yep, you got us man the clearance rate down, we are finished, gone, hell we might even drop back to the median prior to the GFC

do you think you can post something regarding wealth creation from anyone?

must close to changing the signature Ubiquitous, "promises of safety of principle"

thankyou
robots


----------



## drsmith (21 May 2010)

Robots,

Have you considered purchasing an investment property in Port Hedland ?


----------



## robots (21 May 2010)

hello,

no, 

good joint?

thankyou
robots


----------



## explod (21 May 2010)

robots said:


> hello,
> 
> do you think you can post something regarding wealth creation from anyone?
> 
> ...




Plenty on ASF post up opportunities better than property and they have been quoted to you but recieve silence.

Your content is just a yeeee haaaa without substance on which to approach wealth creation.   I have deliberately stayed away from this thread for good reasons of the past with you Robots but sometimes I cannot resist.

You still have not responded to our agreement to get together for a coffee down here at Mount Martha Villiage sometime.

How bout some substance ole Pal


----------



## robots (21 May 2010)

hello,

what you mean, my posts are full of substance, show me one thats not

yes, sorry back in Mornington next week so it will be on man, new cafe at the village isnt there

thankyou
robots


----------



## MACCA350 (21 May 2010)

robots said:


> hello,
> 
> what you mean, my posts are full of substance, show me one thats not
> 
> ...



This one for starters perhaps:

cheers


----------



## Dowdy (22 May 2010)

robots said:


> hello,
> 
> what you mean, my posts are full of substance, show me one thats not
> 
> ...




Try these 2 for starters.




robots said:


> hello,
> 
> gee, whats happening?
> 
> ...






robots said:


> hello,
> 
> oops,
> 
> ...






1/3 of your post are praising other members on their post, 1/3 is telling everyone it's Sunshine and lollipops and how great Australia is and the other 1/3 is you talking about your mediocre adventures - having coffee, retail outlets etc etc


----------



## robots (22 May 2010)

hello,

oh come on, 

gee what a day now in melbourne with the temperature heating up, grab a 5x weekend ticket and hit the trains

any predictions on the clearance rate this weekend, post them up,

thankyou
robots


----------



## satanoperca (22 May 2010)

robots said:


> hello,
> 
> oh come on,
> 
> ...




I agree, it is a magnificent day in Melbourne, just returning from Jnr Soccer.

Clearance rate will be less than last week, that is my prediction, however sunshine makes people do silly things, so who knows.

Cheers


----------



## nunthewiser (22 May 2010)

Bucketting Down in Geraldton today ......

Makes it hard to do anything on the block.

Great day for Bourbon and countermeals later.

The real estate listings section of the local paper sure getting a lot thicker these days .. in fact nearly twice as thick as 6 months ago....Quite a few properties sitting stagnant on the market up here over the last 6 months/year.

But yes a countermeal sounds like a great idea whilst i ponder how to create a kick ass BMX track for the young bloke and his seedy feral friends.


----------



## satanoperca (22 May 2010)

Ah, something with some substance to debate about the future of Australian house prices.

http://www.scribd.com/doc/29520921/How-to-Profit-From-the-Coming-Aussie-Property-Crash-and-Banking-Crisis



> In his book, Prof. Garnaut stridently argues against the typical hype surrounding our housing market. 1. He is unequivocal in his view that Australian house prices have been driven primarily by speculation; and
> 2. Garnaut is skeptical that there is any actual shortage of housing




From Glen - RBA :


> “ 16 How is it that in a country this big in area and this small in numbers of
> people we can't manage to make the marginal price of a dwelling lower
> than it is? It seems to me quite high.




Just another side of the story. Some statements correct, some stretch the truth.

Some fishing looks on the cards today.

Cheers


----------



## MACCA350 (22 May 2010)

robots said:


> hello,
> gee what a day now in melbourne with the temperature heating up



After the cold morning it's turned out quite nice



> any predictions on the clearance rate this weekend, post them up,



UBIQUITOUS is predicting 73%



UBIQUITOUS said:


> A friend of a friend knows Enzo quite well. Anyway, to cut a long story short, the final draft of tomorrow's REIV clearance rate report states that the rate will be down to 73%.
> 
> You heard it here first.



One question, How would they know what the report states when it's based on auctions that hadn't taken place yet

cheers


----------



## medicowallet (22 May 2010)

Dowdy said:


> 1/3 of your post are praising other members on their post, 1/3 is telling everyone it's Sunshine and lollipops and how great Australia is and the other 1/3 is you talking about your mediocre adventures - having coffee, retail outlets etc etc




I am only new, but at least it seems he is consistent.

It seems he is a property bull, and proud to be so!  I find the posts funny, and it is nice to have a light hearted side to somewhat polarising posts.


----------



## robots (22 May 2010)

hello,

going to be a huge night on ASF i reckon based on my adventures today, 

went passed 2, both passed in, and an open for inspection where agent was standing out the front constantly

my estimate is under 70%, just all good news for the wider community though as the RBA will be delighted with its efforts, 

great outing to the city, there is a guy running a marathon in the city square as part of the Next Wave Festival:

http://2010.nextwave.org.au/festival/projects/102-fun-run

massive dance tracks getting pumped out all afternoon. goes til around 6.30pm

thankyou
robots


----------



## robots (22 May 2010)

hello,

good evening all, i thought long and hard today when i went out and will try to improve my substance in posts,

OH YEAH:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

a fantastic effort 75%, just amazing, the week when GFC2 hit the world, the double dip recession, the end of the world, unemployment to hit 5000%, Interest rates to 0%

mass lines at the local CBA, soup kitchen at the church, Marc Faber giving us usual false prophecies

well done to Enzo getting the data together

thankyou
professor robots


----------



## So_Cynical (22 May 2010)

robots said:


> hello,
> 
> good evening all, i thought long and hard today when i went out and will try to improve my substance in posts,
> 
> ...




Following the link to look at the results and interested in bargains .. couldn't help but notice in the TOP 5 BARGAIN HOUSES list.


*1. 55 Daisy Street, Essendon $245,000*
2. 25 Olive Road, Eumemmerring $291,500
3. 9 Windoo Street, Frankston North $300,000
4. 18 Crossley Crescent, Coolaroo $330,000
5. 14 Sunlander Way, Doreen $335,000

realestate .com has it as "Price Guide: $880,000 - $950,000"  is it a simple typo ? i would of though Enzo or someone there would of picked up on something as obvious a blunder as that...or am i missing something??

http://www.realestate.com.au/property-house-vic-essendon-106486549


----------



## UBIQUITOUS (22 May 2010)

..and the carnage continues.

Last Saturday's REIV reported clearance rate - 76.06%
Today's REIV reported clearance rate - 74.57%

It's funny how the rounding up and down masks what is really going on. 

Anyways, has anybody seen anything like this? It looks like those who asked for auctions a few weeks ago are finally getting their day. I would expect next month's figures to be even more shocking.



> Vendors will have plenty of opportunity and choice in the next two weekends with *just over 1860 auctions scheduled*, an unprecedented number for this time of the year.




Opportunity for vendors? Don't you mean 'buyers'? Hahaha. Looks like Enzo is so under pressure, he's spun himself into a knot.


----------



## UBIQUITOUS (22 May 2010)

So_Cynical said:


> i would of though Enzo or someone there would of picked up on something as obvious a blunder as that...or am i missing something??




As I just wrote SC, Enzo is under severe pressure to keep on spinning. Each week, expect to find more and more 'mistakes'. Of course, it's not his fault, it's the RE agents who 'accidentally' supply the wrong figures. The Melbourne RE market is suffering badly. Pity anybody who believes these figures and goes and buys a unit based on them.


----------



## Dowdy (22 May 2010)

robots said:


> hello,
> 
> good evening all, i thought long and hard today when i went out and will try to improve my substance in posts,
> 
> ...




75%. Down on last week but I never pay too much attention to that on a week to week basis. Look at it on a month to month basis for a more accurate indication on the housing market.

As with Faber's predictions, earlier this year he said the AUD/USD dollar would peak around April/May and have a look on how that prediction is going - nearly 10c down in 2 weeks! You should listen to him more/once if you actually want to have a go at the guy

Also, you're not a professor. Remember how that ended up last time - you got banned for a few months


----------



## MACCA350 (22 May 2010)

UBIQUITOUS said:


> As I just wrote SC, Enzo is under severe pressure to keep on spinning. Each week, expect to find more and more 'mistakes'. Of course, it's not his fault, it's the RE agents who 'accidentally' supply the wrong figures. The Melbourne RE market is suffering badly. Pity anybody who believes these figures and goes and buys a unit based on them.



No doubt. Here's a few in this weeks report:


> There were 704 auctions reported today, of which *525 sold*
> 
> S Sold at Auction: 431
> SB Sold before Auction: 192
> ...






> Last weekend: *703*
> *Actually reported last weekend and showing on the website as late as this afternoon = 701*




With mistakes like that, and the many more I've found over the last year, I wonder whether the whole report and stated clearance rates are just a complete fudge. I mean for a report to be respected the numbers contained within it should at least compute.............don't tell me..........fat fingers right

cheers


----------



## robots (22 May 2010)

hello,

what Faber has actually called something, amazing 20000 predictions in the newletters, get one

oh well, another great day, hows the bmx track coming along Nunthewiser? photos?

thankyou
professor robots


----------



## nunthewiser (22 May 2010)

nunthewiser said:


> But yes a countermeal sounds like a great idea whilst i ponder how to create a kick ass BMX track for the young bloke and his seedy feral friends.






robots said:


> hello,
> 
> 
> oh well, another great day, hows the bmx track coming along Nunthewiser? photos?
> ...




You want photo,s of me eating and pondering ?


----------



## robots (22 May 2010)

hello,

yes, 

oh well good night brothers, pleasant dreams

cant wait to see the sun in the morning

thankyou
professor robots


----------



## cutz (23 May 2010)

kincella said:


> yes Robots....the other posters dont get it either....charts I saw earlier this year show the average debt on housing is below 30% of the value, on average it was 20%....so its 70-80%  equity....or an asset for those who dont understand




Hi kincella,

Appreciate it if you can throw up those charts for curiosities sake, averages can be manipulated to whatever you like. For instance, as an average, what does the total population of Australia owe per person on housing ?? Not much at all. 

If anyone is interested, search” HOUSEHOLD DEBT 2009” on the ABS site, makes for interesting reading.

BTW watch out for those outliers.


----------



## UBIQUITOUS (23 May 2010)

MACCA350 said:


> With mistakes like that, and the many more I've found over the last year, I wonder whether the whole report and stated clearance rates are just a complete fudge. I mean for a report to be respected the numbers contained within it should at least compute.............don't tell me..........fat fingers right
> 
> cheers




Macca, what will happen is that last week's clearance rates will be revised downwards. However, this will not happen until the the data becomes old and people are no longer looking at this information. It's the same old trick over and over again.

As time passes, the illusion becomes harder to maintain especially when more and more people question those figures.


----------



## robots (23 May 2010)

hello,

another myth BUSTED:

http://www.theage.com.au/national/foreign-property-fear-exaggerated-20100522-w317.html

the list of myths and failed prophecies just goes on and on, fabulous

gee its exciting

thankyou
professor robots


----------



## explod (23 May 2010)

robots said:


> hello,
> 
> another myth BUSTED:
> 
> ...




Well I think the rumour helped to spread a belief that property would continue to go to the sky so was a *very good ramp*.  

Strewth *Confessor* Robots, now that the truth is out the collapse in prices will probably escalate.


----------



## robots (23 May 2010)

hello,

so all the crew from GPHC, ASF and all the other anti-property blogger sites were pumping up the same asset they so dearly want to buy at 1907 prices

amazing, oh well strange how things work

thankyou
robots


----------



## Dowdy (23 May 2010)

robots said:


> hello,
> 
> another myth BUSTED:
> 
> ...





There's not much to go by on that article since it contains alot of claims and little numbers so lets get and article that does....


*Cashed-up foreigners snap up homes*
http://www.news.com.au/money/property/cashed-up-foreigners-snap-up-homes/story-e6frfmd0-1225870016929

_#  Foreigners buy $14.9b in property
# Victoria most sought-after state _

_CASHED-UP foreigners snapped up $14.9 billion worth of houses and land in Australia last year, including $2.49 billion worth of existing homes. _

_It shows the Government issued 4827 real-estate approvals to foreign investors last year for commercial and residential properties._

*But the figures are incomplete, because the Government changed the rules in April last year so foreigners no longer had to notify the FIRB if the property was to be their principal place of residence.*

_In 2007-08, the biggest foreign investment in both residential and commercial real estate in Australia was made by buyers from the US, Britain and the United Arab Emirates._


----------



## satanoperca (23 May 2010)

robots said:


> hello,
> 
> another myth BUSTED:
> 
> ...




Hardly an exhaustive investigation, sample size of 58 properties, hmmmmm. A political wash over to cover another back flip by KRUDD.



robots said:


> hello,
> 
> so all the crew from GPHC, ASF and all the other anti-property blogger sites were pumping up the same asset they so dearly want to buy at 1907 prices
> 
> ...




That crew are not anti-property (we all need shelter) per say, the are anti-high-prices-don't benefit society bloggers. Some may naively believe that if a crash occurs then they will be able to snap up bargains but in reality if a crash occurs what will be a bargain, environment will have changed, there may not be a bounce to profit from their purchase.

Cheers


----------



## bellenuit (23 May 2010)

robots said:


> hello,
> 
> another myth BUSTED:
> 
> ...




I'm not on any side of the boom bust argument but that article looked at "unlawfully" bought houses. I read recently that many Chinese were clubbing together and using a family member resident in Australia to purchase properties on their behalf for investment. I presume these are lawful purchases, but against the intention of the legislation.


----------



## robots (23 May 2010)

hello,

really, so they just lobbing $ to somebody to buy a property, no name on title

just pulling the cash out from matteress or are they getting a line of credit against house/property in China

keep ramping it up, explod's keen for it

thankyou
robots


----------



## poverty (23 May 2010)

robots said:


> hello,
> 
> really, so they just lobbing $ to somebody to buy a property, no name on title
> 
> ...




They're a tiny percentage, but considering it's a percentage of ~1.2billion or so people there must be quite a lot of them and the rich upperclass in china are seriously, stupidly rich.


----------



## robots (23 May 2010)

poverty said:


> They're a tiny percentage, but considering it's a percentage of ~1.2billion or so people there must be quite a lot of them and the rich upperclass in china are seriously, stupidly rich.




hello,

so the rich upperclass who are seriously stupidly rich are joining up with 3,4,5 others and buying a 700k house in doncaster or box hill, not getting name on title

just here have some cash and buy the joint down the road

thankyou
professor robots


----------



## poverty (23 May 2010)

robots said:


> hello,
> 
> so the rich upperclass who are seriously stupidly rich are joining up with 3,4,5 others and buying a 700k house in doncaster or box hill, not getting name on title
> 
> ...




What I'm saying is that there are people in china who really do just have cash lying around and could afford to buy an Australian house.  Whether they really are teaming up to buy multiple properties under family members names or not I have no idea, but if I was a rich chinese I would certainly look at ways of diversifying my money out of china as a bit of a fallback, wouldn't you?


----------



## explod (23 May 2010)

robots said:


> hello,
> 
> so the rich upperclass who are seriously stupidly rich are joining up with 3,4,5 others and buying a 700k house in doncaster or box hill, not getting name on title
> 
> ...




In the last year or so there have never been more homes sold in the higher up areas of Melbourne and record prices of all time too, in Toorak, Brighton and Armadale I have noted prominent people selling out where they have lived for long periods, they have sold very well because of the three LLL's of course but I note there was often the story that they were going to rent for awhile, wonder why? Eh, its how the rich get very much richer, sell at around the top, wait for awhile and then strike a bargain.

It can be seen in a lot of ways this property business.


----------



## MACCA350 (23 May 2010)

UBIQUITOUS said:


> Macca, what will happen is that last week's clearance rates will be revised downwards. However, this will not happen until the the data becomes old and people are no longer looking at this information. It's the same old trick over and over again.
> 
> As time passes, the illusion becomes harder to maintain especially when more and more people question those figures.



Revised Reiv Clearance Rate *74%*

With an extra 54 auctions added to the numbers, now everything adds up correctly(funny though the 'sold before' has reduced from 192 to 101) ..........as a matter of interest, if you take out the 'Sold Before' and 'Sold After' and only account for those that sold on the auction day you end up with a clearance rate of 70%

cheers


----------



## Aussiejeff (24 May 2010)

> *In Brisbane, only $6.5 million of property sold at auction over the weekend, about half of the $12.8m auctioned the previous weekend. The city's 21.7 per cent clearance rate was 14 percentage points lower this week.*






> Real Estate Institute of Australia president David Airey cited consecutive interest rate rises, tighter lending criteria and the continuing financial crisis in Europe as contributing to the softer clearance rate.
> 
> "In March, based on the figures, I predicted this was going to be a very strong year for real estate; now I have to review my thinking," Mr Airey said.
> 
> ...




http://www.news.com.au/money/proper...-clearance-rates/story-e6frfmd0-1225870309574

Discuss.


----------



## UBIQUITOUS (24 May 2010)

> In Melbourne, APM figures showed just $93.3m in property sold over the weekend, down substantially from $239.3m the previous weekend.




What's there to discuss? Melbourne has crashed. Not a slowdown, but a fully fledged capitulation!! 

Which means that either Enzo's figures are false or that it is a MASSIVE firesale which is explaining the clearance rates. I would say that it is a combination of both. Vendors are taking what they can get while they can.

But hang on....I thought this could only happen when interest rates reach 10%


----------



## MACCA350 (24 May 2010)

> In Melbourne, APM figures showed just $93.3m in property sold over the weekend, down substantially from $239.3m the previous weekend



REIV last weekend auctions $399.58mil...........this weekend $411.59mil

That's a far cry from the APM figures

cheers


----------



## Aussiejeff (24 May 2010)

MACCA350 said:


> REIV last weekend auctions $399.58mil...........this weekend $411.59mil
> 
> That's a far cry from the APM figures
> 
> cheers




APM Phatt Fingas?


----------



## MACCA350 (24 May 2010)

Aussiejeff said:


> APM Phatt Fingas?



Yeah, there's some fat fingers somewhere in there

cheers


----------



## explod (24 May 2010)

MACCA350 said:


> Yeah, there's some fat fingers somewhere in there
> 
> cheers




Yep, we need the great *Confessor* Robots to put things straight.

Getting withdrawals, where are you *Confessor*


----------



## robots (24 May 2010)

hello,

good evening, well I would be delighted to help out if possible

it wasnt that long ago I conducted Q & A of an evening here at ASF, many members got lots of questions answered 

we will keep it to tradition and kick off around 7.00pm

great day again

thankyou
professor robots


----------



## trainspotter (24 May 2010)

In Sydney the auction clearance rate was up 2.5% to 63.2% ... still down on the 70% clearance rate recorded in the first quarter. Adelaides increased by 6% to 51.4%. Maybe auctions are beginning to show their age and the people are going back to the good old offer and acceptance method. Any data on this ? Auctions in WA are not the rage at all and most property is sold by private treaty and settlement agents handle the documents rather than solicitors. Clearance rates falling does not necessarily mean the price is falling. It could mean that the greedy Real Estate Agents have coached their vendor to a higher selling position which is unatainable in this current market.


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## explod (24 May 2010)

trainspotter said:


> . Clearance rates falling does not necessarily mean the price is falling. It could mean that the greedy Real Estate Agents have coached their vendor to a higher selling position which is unatainable in this current market.




Some 12 months ago when I suggested that high clearance rates do not  indicate higher prices I was howled down.   

And Real Estate Agents trying to help vendors to achieve higher prices, you have to be joking, high turnover is achieved by getting vendors to reduce prices.   And high turnover at 2%, which 2% attracts, brings in much more for the bottom line if the turnover is double for the year, than a few sales at 3%. 

Pull the other leg.


----------



## satanoperca (24 May 2010)

trainspotter said:


> It could mean that the greedy Real Estate Agents have coached their vendor to a higher selling position which is unatainable in this current market.




Ha, real estates are interesting in selling, they work on turnover. The difference to their commission of an extra 5% on selling price is hardly worth their time.

The lower clearance rate is selling not accepting current prices.

While on the discussion of Auction clearance rates, it is hard to determine anything substantial really. Once clearance rates drop to a certain level, most real estate agents will convince sellers to go private. 

Auctions gain momentum when prices are rises. 
It would seem that is not the case at the moment.

Real estate agents dont want to suggest going to auction if the clearance rate is low. 

I think auctions are a bit of a circus and the only way I will bid is after asking the auctionier (often many times) is the property on the market. Until it is declared on the market, why bother. Once on the market, you have a chance, until then it is a fluff and feathers.

Looking forward to Q & A with our local Professor of RE.

Cheers


----------



## robots (24 May 2010)

hello,

gee i thought Explod would of stuck around, quick break probably

Punter 1: why do you think it is different in Australia Professor Robots? 

Professor Robots: its our way of life, many years ago it was identified by our larrikin/ocker/casual lifestyle but it has since evolved into a way of life which is highly valued around the globe, wanted

Punter 2: but surely Professor there must be more?

Professor Robots: yes there is more, the government over many years both local and state have done a remarkable job, superb, offering a democratic society which is envied by many 

Punter 1: you often talk about the difference between US & Aus as simple as guns and crack, is it really that simple?

Professor Robots: yes, "yo g after a cap of crack" on every corner, on our corners a cafe, sipping latte's, you walk into Kmart in US and get yourself an uzi, here you get yourself a pushbike

just letting you know the sort of questions i have already been asked, so if we can keep them more orientated to direct property issues

thankyou
professor robots


----------



## satanoperca (24 May 2010)

Hello Professor Robots,

1. Do you think the govnuts inaction to release land has increased property prices?

2. Do you think that global economic activity including overindebtness can effect Oz property prices?

3. Have you ever been to the USA to make such assumptions that the whole country has crack available on every street corner?

4. Does the availability of credit effect property prices?

5. Where do you see IR's heading in the next 3,6 & 12months?

6. What was the cause of this latest property boom?

7. Do you think that the boom in building that has occurred in the last 12months will ad to supply and have a downward effect on property prices?

8. Do you see the Australian banks as safe?

9. What is an acceptable LVR for your first PPOR in the current environment?

10. How do you see the govnuts propping up RE prices if we enter GFC 11?

11. Is the global debt problem able to be resolved without seeing a slow down in the so called recovery?

12. If I was a FHB who bought last year on 5% IR's and is now at 7.5% (40% increase in mortgage repayments) and getting financial stretch, can only live on bread on water for so long, what should I do? Sell or stick it out.

13. What % increase do you see on Melbourne property this year?

Sure I will have some more questions. But that should get things started.

Cheers

Note : Anything written by myself or the Prof is to be construed as financial advice and acted upon. Risk your own money and decisions at your own peril.


----------



## Dowdy (24 May 2010)

Take it easy Satanoperca.

You have to talk veeerrrryy sslooowww to the professor.


----------



## robots (24 May 2010)

satanoperca said:


> Hello Professor Robots,
> 
> 1. Do you think the govnuts inaction to release land has increased property prices?
> Professor: no, plenty across australia for great prices
> ...




hello,

great effort, keep them coming

thankyou
robots


----------



## satanoperca (24 May 2010)

robots said:


> hello,
> 
> great effort, keep them coming
> 
> ...




Thanks for the response.

Only like to mention your response to Q10. Wouldn't increasing the FHBG by both Fed and State Govnuts be seen as assisting or propping up the property market?

Cheers


----------



## Dowdy (24 May 2010)

satanoperca said:


> Thanks for the response.
> 
> Only like to mention your response to Q10. Wouldn't increasing the FHBG by both Fed and State Govnuts be seen as assisting or propping up the property market?
> 
> Cheers




and easing standards on foreign buyers...


----------



## Fleeta (24 May 2010)

robots said:


> 9. What is an acceptable LVR for your first PPOR in the current environment? Professor: i think it is more an issue of employment, 95% is acceptable, take it to 100% if they give it
> 
> 13. What % increase do you see on Melbourne property this year?
> Professor: 2%
> ...




Robots - I am fast losing respect for your "professor" status. So you suggest first home owners leverage to 100% at an interest rate of 7%+ in order to get a return of 2%! Wow, that's a great way to make money mate...

My question is do you think that house prices can continue to grow above wage growth. If so, why? 

And as a secondary question, if so, will Oz have 50-75 year loans in order for the next generation to buy property.


----------



## trainspotter (24 May 2010)

explod said:


> Some 12 months ago when I suggested that high clearance rates do not  indicate higher prices I was howled down.
> 
> And Real Estate Agents trying to help vendors to achieve higher prices, you have to be joking, high turnover is achieved by getting vendors to reduce prices.   And high turnover at 2%, which 2% attracts, brings in much more for the bottom line if the turnover is double for the year, than a few sales at 3%.
> 
> Pull the other leg.




By whom? A clearance rate is not necessarily indicative of a downward pressure on pricing structure? It means the market is not ready to continue paying higher prices in general.

Real Estate Agents are employed by the vendor to get the HIGHEST PRICE for the vendor. If they reckon the value is high then they appeal to the vendor to list with them. ERGO they have "bought" the listing to go to auction. The big day arrives and guess what ...... (insert answer here) 

They are after all paid on commission ...... herein lies the problem ..... they reckon they can get a "higher price" then the vendor lists with them to go to auction. The house does not sell at auction and sells under private treaty a few weeks later at a lower price perhaps. The Real Estate Agent gets paid 2% or 3% or whatever. Instead of 770k they settle for 730k or whatever the case may be ?? The RE is losing $800 on the transaction. F*CK ALL in fact BUT they still had the listing to start with? Do you see my point !!


----------



## trainspotter (24 May 2010)

satanoperca said:


> Ha, real estates are interesting in selling, they work on turnover. The difference to their commission of an extra 5% on selling price is hardly worth their time.
> 
> The lower clearance rate is selling not accepting current prices.
> 
> ...




Agreed with most of your summation. RE's require listings so therefore they will "BUY" the listing with an unrealistic price (auction or otherwise) Therefore the price is inflated and fails at auction only to be sold later under private treaty. It is a catch 22 situation. RE's must list to sell to eat. So they must put a bigger price to get the vendor to go with them. If it does not sell at auction but does sell later is a bonus to them as they got their greedy little mitts all over the property in the first place. HELLO ??????????

AGREE  on the Auction tactics as well. I prefer to wait until the fall of the second hammer then up the bid by 10k .......... *QUIET* after that ..... ahahhaahahhahhaaaaaaaaaa ! I win the property in the end.


----------



## explod (24 May 2010)

I think clearance rates are worth a lot of thinking about.  In the stock market for example low volume (sales of shares) usually sees the market plodding along sideways for a change and often signals the arrival of a change of direction or a rest before resuming the previous direction, wether that be up or down.

I am suggesting that the current fall in clearance rates, and I think you indicated that trainspotter, is a dropping of in interest, and in this case it would be the interest in buyers.   If a fall in price does get underway, as in shares, we may see a new rise in clearance rates (probably the best would be total sales on a weekly basis) which would indicate that sellers are dropping down to the market price.   If others see this drop and then do the sums sellers may well then offer even lower to compete with greater volume of sales.    It would be the same but in reverse of what we have just experienced in the last couple of years.

Certainly clearance rates can be a strong indicator of price but they can also be an indicator of many other things and particularly turns in the financial cycle.   It has been so good for so long that some may not be adjusting to other possible realities.

The direction of course only the market itself at the time will tell.

And down here on the Mornington Peninsula, *the holiday home strip*, real estate broking is about volume of sales, holidays, a good time and plenty for the staff xmas party at the end of the year.


----------



## satanoperca (24 May 2010)

trainspotter said:


> Agreed with most of your summation. RE's require listings so therefore they will "BUY" the listing with an unrealistic price (auction or otherwise) Therefore the price is inflated and fails at auction only to be sold later under private treaty. It is a catch 22 situation. RE's must list to sell to eat. So they must put a bigger price to get the vendor to go with them. If it does not sell at auction but does sell later is a bonus to them as they got their greedy little mitts all over the property in the first place. HELLO ??????????
> 
> AGREE  on the Auction tactics as well. I prefer to wait until the fall of the second hammer then up the bid by 10k .......... *QUIET* after that ..... ahahhaahahhahhaaaaaaaaaa ! I win the property in the end.




It is funny the tactics of RE agents to get you to sign. Last property I sold I had three RE come and give me their spiel.

1) We list a low price to get people in and then get prospective buyers to bid up the price. The RE agents from the 1st firm came in a group of three tall men, tried pressure tactics and intimidation. Didn't like their tactics and told them so. They got a little upset that I was unwilling to eat what came out of their asses.

2) We list a high price because it gives you room to move. Allows potential buyer to think they are getting a bargain when you drop the price by $50K. I also have a dart board. No go

3) We list at a price that we think is fair and reasonable based on past sales and current RE environment. Their list price was smack on in between the above two.
Went with them after negotiating the commission.

Funny that the other two just didn't give up, even reducing their commission by 50%. Laughed at them, saying, so you were willing to rip me off the first time, what makes me think if I give you the contract that you want try again.

End result, rather happy with the result of the RE agent & firm but for the money they receive they really don't work for it.

Cheers


----------



## trainspotter (24 May 2010)

satanoperca said:


> It is funny the tactics of RE agents to get you to sign. Last property I sold I had three RE come and give me their spiel.
> 
> 1) We list a low price to get people in and then get prospective buyers to bid up the price. The RE agents from the 1st firm came in a group of three tall men, tried pressure tactics and intimidation. Didn't like their tactics and told them so. They got a little upset that I was unwilling to eat what came out of their asses.
> 
> ...




Fortunately for you satanoperca you are a "sophisticated investor" who understands the wily ways of the RE's. Most people do not and greed is the greater good as they think they will get the higher price for their property. FAIL.

At the end of the day they are just order takers and if you had the nous you can do the same for yourself. Bang a for sale sign out the front with a phone number on it and see what happens. Place an advert in the local rag and see what develops? Oooooooooopsies is this too easy a way to make money?


----------



## TOBAB (25 May 2010)

Real Estate Agents, Used car salesman, Flea circus operators. They are all the same. They sell you an illusion. The illusion being that they care about you. Could not be furtherest from the truth. They care ONLY about turnover and getting your business. BTW I know of a recent story where one encouraged their single mother to buy a 2.5MIO property without having sold. Now unable to sell original home and stuck with a massive debt and stressed out. Incredible.


----------



## satanoperca (25 May 2010)

I went to an open inspection, told the RE agent I had just inheritted some money and I worked as a storeman. He then proceeded to tell me I could no loose on this property as an investment. I negotiated a small deduction in price, really just a token and said I was willing to buy today. Could he check with the owner if they would accept the offer. He replied yes and off we went to his offices to sign contracts. He was excited and so was his boss.

When it came to signing the contract I asked why they had no included the clause, "I cannot loose on this investment". They looked blankly at me. I said I was unable to sign as this was part of the contract agreed to verbally.

They turned from elated to angry very quickly, trying every trick in the book to get me to sign. I refused to sign unless the original agreement was meet. After 15min of discussion they realised I would not sign. 

I walk out of their office with a smile on my face. 

Dont promise what you cannot deliver I replied when they said I had wasted their time. My time was well spent. The owner may not have been as happy.

Cheers


----------



## Mofra (25 May 2010)

satanoperca said:


> I think auctions are a bit of a circus and the only way I will bid is after asking the auctionier (often many times) is the property on the market. Until it is declared on the market, why bother. Once on the market, you have a chance, until then it is a fluff and feathers.



You're not interested in being the highest bidder which gives you rights of negotiation?

Just curious. I've only been in the situation to negotiate with the vendor when I'm making pre-auction offers.


----------



## explod (25 May 2010)

Mofra said:


> You're not interested in being the highest bidder which gives you rights of negotiation?
> 
> Just curious. I've only been in the situation to negotiate with the vendor when I'm making pre-auction offers.




Untill the property is knocked down to a buyer, negotiation with the vendor is open.

If you really want a property, stay silent till it is stated *on the market.*  I have seen auctions in which no bid was offered and as all were leaving a buyer negotiated an aggreable price;   and it will often realise a result within a day or so.  The vendor's acceptance of the situation,  ie. reality of the market price is the key here.    And *the market price *is only as high as what is offered.   

By speaking up early you are showing your hand and in spite of the rules will be ramped up by agents acting for the vendor.


----------



## tech/a (25 May 2010)

Mofra said:


> You're not interested in being the highest bidder which gives you rights of negotiation?
> 
> Just curious. I've only been in the situation to negotiate with the vendor when I'm making pre-auction offers.






> If you really want a property, stay silent till it is stated on the market




Sorry disagree
An important position(Last bid before handing in) one which has gained me more than one property at well below reserve.

As for selling.

I like to place the selling price (I tell my agent the selling price,I only use one and she is brilliant) at slightly below market.
I just sold a cottage at Moana here.
I set price at $300-$320 this was about right and if anything the $300 was attractive to developement (not for me but others).
It went for $317 cash deal.

A good agent is worth their commish--just a matter of finding one.
If South/West of Adelaide then I can recommend 2 terrific agents.Both Female and both very experienced in property sales.


----------



## explod (25 May 2010)

> Sorry disagree
> An important position(Last bid before handing in) one which has gained me more than one property at well below reserve.




If there are other bidders, however till it is said *to be on the market*, and when that is said all players (stated or not) may take part.  If you want the property in this situation, on being passed in, yes you need to be the last bidder to further negotiate.


----------



## tech/a (25 May 2010)

If there are other bidders,--*and bidding is above the reserve *---- it is said to be on the market, 

Big difference.
Prior to hitting reserve it is not "on the market" regardless of number of bidders.


----------



## explod (25 May 2010)

tech/a said:


> If there are other bidders,--*and bidding is above the reserve *---- it is said to be on the market,
> 
> Big difference.
> Prior to hitting reserve it is not "on the market" regardless of number of bidders.





We are splitting hairs now, but below the reserve is as you say, if bids are not meeting reserve the Auctioneer will consult vendor and can then announce *property is for sale* on vendors agreement.  This will usually create the situation where the sale will ultimately meet reserve anyway.  Anyway that's Victoria, only ever owned one place interstate and that was QLD

My purpose earlier today was to the question of a buyer and the answer was to give the options on not being, or appearing to be, too keen.


----------



## robots (25 May 2010)

hello,

sorry brothers, will get some answers up for the questions soon

tuesday a busy day with tennis of an evening, thanks for understanding

thankyou
professor robots


----------



## billv (25 May 2010)

Is anyone here still buying property?

I've got my hands on some equity and I'm wondering if I should buy 1 more property with it or if I should take advantage of the difficult times and buy shares instead


----------



## So_Cynical (25 May 2010)

billv said:


> Is anyone here still buying property?
> 
> I've got my hands on some equity and I'm wondering if I should buy 1 more property with it or if I should take advantage of the difficult times and buy shares instead




See the post above yours...robots will tell you all you need to know about property investment...apparently investor of the year, 6 years in a row.


----------



## medicowallet (26 May 2010)

billv said:


> Is anyone here still buying property?
> 
> I've got my hands on some equity and I'm wondering if I should buy 1 more property with it or if I should take advantage of the difficult times and buy shares instead




There is the option to keep it in cash and see what happens. I guess it depends on your risk profile and what kind of returns you are after. That requires planning, and often professional advice, which is unlikely to come from a public forum.

There is no knowing what is going to happen at the moment, with greece, korea, Labor government. Things could be very interesting until these settle down and the liberals win government.


----------



## So_Cynical (26 May 2010)

medicowallet said:


> Things could be very interesting until these settle down and the liberals win government.




LOL so we have to wait at least 5 years for the Liberals to win before things settle down...so we should all just lock away our money in a TD for 5 years at what 7%...great strategy.


----------



## medicowallet (26 May 2010)

So_Cynical said:


> LOL so we have to wait at least 5 years for the Liberals to win before things settle down...so we should all just lock away our money in a TD for 5 years at what 7%...great strategy.




I can't recall saying to lock money into a term deposit.

I was saying that some may find now, not a great time to purchase anything. Shares, in particular mining, will be easier to understand after the election, no matter who wins, however I admit some may be purchasing in the hope that the liberals get up.

And who knows, with a potential GFC2 upon us, amid a housing bubble and volatility in shares, 7% guaranteed for the 5 years may not be too bad. Not that I would be locking my money away if it was in cash, as it limits the opportunity to pick up bargains.


----------



## -Bevo- (26 May 2010)

So_Cynical said:


> LOL so we have to wait at least 5 years for the Liberals to win before things settle down...so we should all just lock away our money in a TD for 5 years at what 7%...great strategy.




Well according to our government anything above 6% is a super profit


----------



## jbocker (26 May 2010)

billv said:


> Is anyone here still buying property?
> 
> I've got my hands on some equity and I'm wondering if I should buy 1 more property with it or if I should take advantage of the difficult times and buy shares instead




Yes Bill. I am buying. Right in the middle of the Perth CBD. Planning to live there for 6 years. Just waiting on finance.
I know there is a lot of talk about bubbles, but personally I like bricks and mortar, historically been reasonably safe but appreciate that there are no guarantees.


----------



## billv (26 May 2010)

Thanks guys
A term deposit is not an option as I'll be borrowing the money at 7%.
Property is an option as a long term buy and hold investment but I was thinking of shares in case I could double the money in the short term.

*Lbocker,*
Good idea, buying a PPOR is usually the best investment we ever make because it is capital gains tax free.


----------



## satanoperca (26 May 2010)

billv said:


> Thanks guys
> I was thinking of shares in case I could double the money in the short term.




And the quickest way to loose your money. Go the PPOR.


----------



## trainspotter (26 May 2010)

*RBA : No housing bubble in Australia*

18th May 2010 - Luci Ellis, Head of Financial Stability Department for the Reserve Bank of Australia today said “Recent data suggest that we do not have a credit-fuelled speculative boom on our hands” after data from the Australian Bureau of Statistics out earlier this month showed house *prices surged 20 percent across the nation, and as high as 27.7 percent in Melbourne this year.*

In fear of the current situation turning into a bubble, Ms Ellis said “It will therefore be important for lenders to remain prudent in their standards.” She indicated demand side drivers were low interest rates and lower than expected unemployment.

Safe as houses mate. Only worry is the clearance rates have shown signs of getting the speed wobbles. Is that smoke on the horizon?


----------



## billv (26 May 2010)

Here is some more options for all you rich landlords out there 


> Home buyers get roof, not the land
> Priced out of the market by the rollercoaster ride taken by land prices, home buyers are to be offered the chance to purchase at least part of what they really want - they will be able to buy the roof over their heads but not the ground under their feet.
> 
> Schemes in the US similar to the newly created, Bondi-based, Waratah Community Land Trust Association have halved the cost of buying a home, but the biggest obstacle to getting so-called community land trusts up and running is acquiring suitable properties



http://news.domain.com.au/domain/re...yers-get-roof-not-the-land-20100525-w8o3.html


----------



## billv (26 May 2010)

satanoperca said:


> And the quickest way to loose your money. Go the PPOR.



I know but I'm willing to take the risk and with blue chip shares I've got some control over the situation


----------



## robots (26 May 2010)

hello,

good evening all, great day

no all clear Trainspotter, just normal market conditions i know macca350 has that graph which shows properties awful performance (not the reiv one, but that long term one)

thankyou
professor robots


----------



## robots (26 May 2010)

satanoperca said:


> Thanks for the response.
> 
> Only like to mention your response to Q10. Wouldn't increasing the FHBG by both Fed and State Govnuts be seen as assisting or propping up the property market?
> 
> Cheers




hello,

good evening, great day

with the huge response at Q & A the other night i wasnt able to get all the answers to the community, so just following them up know, thanks for understanding

to above:
no, the federal government introduced the grant to cover the ridiculous stamp/property duty the states impose, then the states realised the votes at stake and added a bit

seriously, you dont pay 5% of purchase price when you buy a second hand mattress from the Trading Post

thankyou
robots


----------



## robots (26 May 2010)

Fleeta said:


> Robots - I am fast losing respect for your "professor" status. So you suggest first home owners leverage to 100% at an interest rate of 7%+ in order to get a return of 2%! Wow, that's a great way to make money mate...
> 
> My question is do you think that house prices can continue to grow above wage growth. If so, why?
> 
> And as a secondary question, if so, will Oz have 50-75 year loans in order for the next generation to buy property.




hello,

good evening, great day

Q1. In my research and studies, wage growth to house appreciation or income to house price is irrelevant and appears to be an "emotional" issue/subject attached to housing due to the recent emergence of what i describe as the socialist blogger

Q2. Banks may well introduce that type of product for their customers. People do not have to take that type of loan but some people may.

Cleared up a few things for people as they seem to be very common questions.

I have been given special permission to keep Q & A going so anybody who missed out has another chance.

Thankyou
Professor Robots


----------



## explod (26 May 2010)

robots said:


> I have been given special permission to keep Q & A going so anybody who missed out has another chance.
> 
> Thankyou
> Professor Robots




And who bestowed the special permission there *Confessor*


----------



## Fleeta (26 May 2010)

robots said:


> hello,
> 
> good evening, great day
> 
> ...




Thanks for the insightful response professor robots. Good to see you doing your bit for the investment community. Question about picking which house to buy for you. If there is a house I can get for like $700k which is pretty sweet 3 bed 6kms from the city - but then you can go just to the next street and get the same thing for like $600k but it is on a main road and has a big double story next door that blocks sunlight - how do you identify which one is a better buy? Do you think capital appreciation will be effected by living on a busy road - say, I might only get 100% over the next 5 years instead of 200%?

Oh yeah, and I got a mate bought a house in Craigiburn. And another mate in Kensington. And another mate in Dromana. Which one do you reckon will fare best??


----------



## billv (27 May 2010)

Fleeta said:


> Do you think capital appreciation will be effected by living on a busy road - say, I might only get 100% over the next 5 years instead of 200%?



Busy roads usually mean a slower sale when buying and less buyer interest when you're trying to sell.
If buyers are falling over themselves to buy properties as they're doing today then it's not a big issue but situations do change.

Don't pay too much.
I remember the mad panic of 2002/2003 in Sydney when people in certain suburbs paid too much and then saw little growth in the next decade as prices were adjusting down to normal levels.

Now regarding growth, 200%?, 100%? or 0%?
This year IMO we've been lucky the whole world is in trouble so expats and overseas people want to come and live here
otherwise we'd be giving property away 

Nevertheless, strong growth is unsustainable.
It would be nice if it kept going but it can't so we should forget price doubling for a while.
My guess is for price pull back and then slow growth till wages and rents have caught up.


----------



## jbocker (27 May 2010)

Fleeta said:


> Thanks for the insightful response professor robots. Good to see you doing your bit for the investment community. Question about picking which house to buy for you. If there is a house I can get for like $700k which is pretty sweet 3 bed 6kms from the city - but then you can go just to the next street and get the same thing for like $600k but it is on a main road and has a big double story next door that blocks sunlight - how do you identify which one is a better buy? Do you think capital appreciation will be effected by living on a busy road - say, I might only get 100% over the next 5 years instead of 200%?
> 
> Oh yeah, and I got a mate bought a house in Craigiburn. And another mate in Kensington. And another mate in Dromana. Which one do you reckon will fare best??




Sorry Fleeta and Robots for chipping in, if I may. Fleeta there is a reason already 1 is $700K as opposed to $600K. It is the old adage Location Location...
Your mates in the 3 locations, which one will fare best is based on a lot of factors. (I dont know the areas specifically) Firstly your mate who buys with the best price discount will start off well, the one who has access to good infrastructure (particularly if built after the purchase) can also do very well. The mate who can improve the property for a gain with least outlay will do well too. The mate who can do all three regardless of location is the smart cookie.


----------



## kincella (27 May 2010)

Robots, you are in good company with the likes of the BRW  top 200 richest people...Frank Lowry on top, and Triguboff at top fifth (they are property people for those who do not know)
.... of the top 200, property accounted for 59, mining 25, and other investors at 23.....
almost 30% made their money in property...
and some think property people are stupid.......

http://www.theage.com.au/executive-...ining-magnates-in-the-dust-20100526-we91.html


----------



## UBIQUITOUS (27 May 2010)

kincella said:


> Robots, you are in good company with the likes of the BRW  top 200 richest people...Frank Lowry on top, and Triguboff at top fifth (they are property people for those who do not know)
> .... of the top 200, property accounted for 59, mining 25, and other investors at 23.....
> almost 30% made their money in property...
> and some think property people are stupid.......
> ...




Hey Kincy, this appears as one of the headlines. How come you missed it when cherrypicking your link?

http://www.theage.com.au/business/higher-interest-rates-ahead-oecd-20100526-we7s.html



> AUSTRALIANS are being told to brace themselves for much higher interest rates, with the Organisation for Economic Co-operation and Development predicting at least four more increases in the year ahead and most likely five.
> 
> The report describes the increase in Australian real estate prices as ''marked'' and says it leaves Australia with the highest house prices relative to income of any member other than New Zealand.




Property investors stupid? Nahhhh....just damn gamblers. Not surprising in a nation of pokies and tabs.


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## Mofra (27 May 2010)

UBIQUITOUS said:


> Property investors stupid? Nahhhh....just damn gamblers. Not surprising in a nation of pokies and tabs.



Fairly ignorant comment to label all property investors as gamblers.

What about equities? Gambling as well? I expect cash would be, considering it is a depreciating asset and we can't accurately predict inflation.


----------



## trainspotter (27 May 2010)

*WESTFIELD property tycoon Frank Lowy *has defended his wealth after topping BRW magazine's latest Rich 200 list, saying "I don't work for nothing". 

Mr Lowy's fortune rose by $840 million to $5.04 billion, taking him to the *top of the BRW Rich 200* list for the first time after several years at number two.

But the chairman and founder of Westfield Group told shareholders at its AGM today he's deserving of his pay.

"I don't work for nothing ... I'm entitled to get paid," he said.

Nope ...... no money in property. Put the lot on black 13 IMO you bunch of gamblers !


----------



## robots (27 May 2010)

hello,

great post trainspotter, well done Frank great effort, 

yes you work you get rewarded, bum and you get nothing

fairest system going around, then its up to the individual to spend, save, invest however they like

and that may involve bidding up or paying the asking price for something someone else owns, easy

thankyou
professor robots


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## Tysonboss1 (27 May 2010)

kincella said:


> .Frank Lowry on top,
> 
> http://www.theage.com.au/executive-...ining-magnates-in-the-dust-20100526-we91.html




Lowy,

He's name is lowy, not Lowry.


----------



## cutz (27 May 2010)

Hate to break it to you boys but those guys are in a different league, i.e. they don't gear up to the max and hope for the best on rentals hoping the little ball doesn't land on red.

They buy up big blocks of land and put skyscrapers/shopping centres on them, then lease them out, value adding as such, different ball game.


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## medicowallet (28 May 2010)

cutz said:


> Hate to break it to you boys but those guys are in a different league, i.e. they don't gear up to the max and hope for the best on rentals hoping the little ball doesn't land on red.
> 
> They buy up big blocks of land and put skyscrapers/shopping centres on them, then lease them out, value adding as such, different ball game.




A bit like comparing Warren Buffet to, well, um, me.


----------



## trainspotter (28 May 2010)

cutz said:


> Hate to break it to you boys but those guys are in a different league, i.e. they don't gear up to the max and hope for the best on rentals hoping the little ball doesn't land on red.
> 
> They buy up big blocks of land and put skyscrapers/shopping centres on them, then lease them out, value adding as such, different ball game.




Yeah ! Same ideals and ethos. He started somewhere ..... guess what ... it is all property.... mogul. Buy residential real estate and leverage against it and go again just like PROFESSOR robots. You have to start somewhere. OH OH ..... Is that the smell of money ?

They still have to rent their floor space to make it commercially viable BEFORE they "buy up big blocks of land and put skyscrapers/shopping centres on them, then lease them out," ...... oh well ..... no money in real estate. Frank Lowy did not "build it and they will come" Field of Dreams style ...... like he says .... he EARNED it !


----------



## jbocker (28 May 2010)

cutz said:


> Hate to break it to you boys but those guys are in a different league, i.e. they don't gear up to the max and hope for the best on rentals hoping the little ball doesn't land on red.
> 
> They buy up big blocks of land and put skyscrapers/shopping centres on them, then lease them out, value adding as such, different ball game.




Hi Cutz do you think he simply bought a big block and put a sky scraper on it and alas became THE richest person in the land?? What didnt he gear up at some point? He and others geared up their heart and soul and became a league of their own. He took a gamble, but he his darn best not to take casino odds Red or Black. He and others took a gamble, they geared up, they just never gave up
Many (and I mean many) others have failed probably more because they gave up, or couldnt get another chance.
I bet deep down Cutz you overcame something significant to you where others had given up. That to a large degree IS the difference (the different ball game).
Lowy and a few others are inspirational. Have a read (dated but still relevant)..
Cheers.


Rags To Riches – The Australian Story
by Avinash Lakhan, BFA/LLB. C.A. - #60

There are many people in this world who have achieved and accumulated a fortune starting from very humble beginnings. One way to achieve inspiration is to follow the characteristics of these people.

It has been said that Australia is a land of opportunities and everyone is entitled to a “fair go”. This has been demonstrated by the many migrants who have arrived in Australia with virtually nothing and now are millionaires or even billionaires.

Frank Lowy is one of them. Born in Czechoslovakia in 1930 and surviving the Holocaust, Frank Lowy moved to Australia in 1952. Frank Lowy now is the second richest person in Australia, second only to James Packer. Forbes magazine estimates his current wealth to be in the vicinity of the $US4 billion mark.

Frank Lowy started from very humble beginnings by working in a delicatessen. In 1959 Frank Lowy with his then partner John Saunders who was also a migrant, and is now deceased, opened their first Westfield shopping store in Blacktown. Back then the move of opening shopping centres in the suburbs was a risky concept. But this gamble paid off handsomely.

In 1959 the majority of the immensely popular stores in Sydney were located in the CBD. Stores such as Anthony Horderns, Farmers, Snow, Winns, Buckinghams, Bebarfalds, David Jones, Grace Bros, Waltons, John Martin, Buckley and Nunn, Gowings, Mantons, Cox Bros, and Allan and Stark were all based in the Sydney CBD.

However, such was the popularity of the Westfields concept that the majority of the abovementioned big stores that failed to embrace the shift in consumer sentiment have subsequently perished. The consumers embraced the concept of mega shopping centres, and the rest is history. Frank Lowy recognised the needs of mass consumers and his calculated gamble has been rewarded handsomely.

Success is not limited to migrants. There are also many Australian born entrepreneurs who have battled hardship and are now very successful. Gerry Harvey the well known Chairman of Harvey Norman comes to mind. Gerry Harvey has a motto of never give up and has famously been quoted as saying:

“I went to the brink many times. A couple of times I thought I'm gone; this is it. But then you would just keep working. I think if you're close to the brink and just make sure that you work twice as hard and put twice as much effort into everything and the people around you and everything, you should come through.”

The persistence and the determination of Gerry Harvey have paid off. Today there are over 200 Harvey Norman stores worldwide. Gerry Harvey commenced business by selling goods door to door in the 1960’s with a friend Ian Norman and by 1982 they had 42 stores. In that year these stores were purchased by a consortium led by Alan Bond. Gerry and Ian started again with a single store in Auburn.

Although he is now 67 years of age he recently said that, the last thing he wanted to do was to end up being a "boring bastard in a retirement home". Instead of looking at retirement he has embarked upon a plan to challenge the big retailers in the U.K market, recently stating that "We're that far behind them they mightn't even 
notice us coming. Now what a challenge in life, when you take on the giants like that, in the UK market, and in 10 or 15 years from now … they'll say 'Harvey Norman, they crept in'."

Another Australian success story is Aussie John Symonds. John Symonds grew up working at his parent’s fruit shop and learnt at an early age that customer satisfaction was the key to success. Hard times came upon John Symonds when a joint venture with a subsidiary of the Bank of South Australia failed. The lesson John Symonds learnt from this experience was to ‘when you are knocked down, learn from the experience and have the guts to get up and keep going'. John Symonds got back from this setback and now has totally revolutionised the home lending market.

With all due respect to Frank Lowy, Gerry Harvey and John Symonds, their intellectual capability in the normal literary sense would not entitle them to be the brightest students in their school. However these people have set high goals for themselves. They have created their own opportunities in life. They have not been afraid to go that extra mile and to do the dirty work. Many times in their life they were in a situation where a lesser man with a higher intellectual capacity may have given up. Hard times were overcome through hard work, persistence and a belief in themselves. 

They embraced challenges and surrounded themselves with the right people. They have put their heart into achieving their goals and objectives and have achieved what another person would have thought to be impossible.

So have the opinion ‘nothing is hard – it is merely hard work’. Never give up. Try hard, work hard and give it your best shot. If you encounter failure try harder. Go again! Learn from your mistakes. Treat failure as merely a detour to success and Go For It. Remember Champions are losers who never give up.


----------



## explod (28 May 2010)

cutz said:


> Hate to break it to you boys but those guys are in a different league, i.e. they don't gear up to the max and hope for the best on rentals hoping the little ball doesn't land on red.
> 
> They buy up big blocks of land and put skyscrapers/shopping centres on them, then lease them out, value adding as such, different ball game.




And of course they float companies out of their shopping centres etc., on the stock market and due to their inside idea of what is going on they can leverage into those at statiegic times so that at the eend of the day they have multiple streams of income across many different types of investing alternatives.   Bullet proof.


----------



## UBIQUITOUS (28 May 2010)

explod said:


> And of course they float companies out of their shopping centres etc., on the stock market and due to their inside idea of what is going on they can leverage into those at statiegic times so that at the eend of the day they have multiple streams of income across many different types of investing alternatives.   Bullet proof.




Muppet property speculators and billionaires like Lowy are like chalk and cheese. 
For starters, I bet he has always tried to make a profit, unlike the negative gearers out there who are happy to make income losses and hope for a capital gain.


----------



## kincella (28 May 2010)

Lowy would be claiming the same losses on a massive scale...
you dont get rich by paying more tax than is necessary...same rules open to larger taxpayers as smaller players...
his capital gains would be whoppers....
its a smart game...and been played very successfully for the past 50 more years..


----------



## Tysonboss1 (28 May 2010)

UBIQUITOUS said:


> Muppet property speculators and billionaires like Lowy are like chalk and cheese.
> For starters, I bet he has always tried to make a profit, unlike the negative gearers out there who are happy to make income losses and hope for a capital gain.




The thing is that most property investors are not "muppet peoperty speculaters". 

The Against crowd on here seem to have an idea in their head that the average peoperty investor is an over leveraged sterotype property speculater who has bought properites on 100% finance interest only loans.

They then use this sterotyped clinche over leveraged investment model to make judments on whether the underlying asset class has merit. this is simple flawed thinking.

Here's the thing Property investment does not generate a negative cashflow, it generates a positive cash flow, it's only when you layer debt on it that it can become negative cashflow, But that is true with all investments.


----------



## robots (28 May 2010)

hello,

good afternoon, CHECK THIS:

http://www.theage.com.au/business/w...rged-with-defrauding-stars-20100528-wi5j.html

just thought i would post this up so people could see how a Ponzi Scheme operates,

often used to describe the property market by the doomers of society

thankyou
professor robots


----------



## explod (28 May 2010)

robots said:


> hello,
> 
> good afternoon, CHECK THIS:
> 
> ...




Yep there are all different types of Ponzie schemes.   I do think that the talk up of property say six months back with the FHBG to people buying well beyond their means was also a Ponzie but the best Ponzie to study is the great one from 1929 posted up by Uncle Festivus earlier in the day.  This I think exposes the fact that we are now again well into the greatest ponzie of all time where money will mean absolutely nothing, we will be hungry but not able to buy food and property.   In particular where Herbert Hoover refused to allow any more lending.   But the coralation with what is occuring today is scary stuff

In my humble opinion, as always.

the link:   http://www.nowandfutures.com/great_depression.html


----------



## cutz (28 May 2010)

Hi boys, 

I don’t deny that there is money to be made in property, many do it. On a small scale developers buy blocks or old houses in the inner burbs,  demolish, build several townhouses or sometimes multi story apartments (AKA flats) then flog them off to the negative geared set, apparently there’s good money in it (from the developer’s perspective). 

On a larger scale and I touched on it previously you have the big boys, shopping centres and skyscrapers.

The point I was trying to make is you can’t compare investment rentals to what the developers are doing, after all they are flogging off their offering to property investors.

As for being in the company of the likes of Lowy, forget about it.


----------



## robots (29 May 2010)

hello,

classic, must thank developers for being around, just awesome

they help the plod along crew enormously, developers also hold many of the places they build

look at Trig from Meriton, has enormous private holdings, many developers will hold 5-10% of build stock

once again you assume everyone who buys property is negatively geared,why? many who buy kick in dollars and are neutral or positive, pay down and go again

anyway, whats the problem with negative gearing? you dont run a campaign on NG which is used on any income producing asset (businesses, shares etc,etc)

telling you its all about kickin the true holders of wealth

thankyou
S.Keen


----------



## kincella (29 May 2010)

Morning Robots....
I note these poor suckers did nothing at all, just bought their houses, lived in them whilst working and raising their families....and presto..the houses are worth a million bucks or more.....
in the print edition it stated  one family paid 16,000 many years ago...they will never move...cause they love the street, the area, their neighbours...they just love Essendon....no amount of money will entice them to move away....(hints to those who believe most are hocked to the hilt, and will have to sell out)
on the other hand,,, the renters would have coughed up about half a million in rent over the same period.....with nothing to show for it....still renting...

the owners on the other hand, can elect to sell up, buy something cheaper, and have half a million sitting in the bank.....that is a prime example of the real difference....everyone has the choice on the road trip in life....

extract only follows....
One in seven live on millionaire's row in Melbourne By Terry Brown From: Herald Sun May 29, 2010 8:31AM Increase Text SizeDecrease Text SizePrintEmail Share 
Add to DiggAdd to del.icio.usAdd to FacebookAdd to KwoffAdd to MyspaceAdd to NewsvineWhat are these?IF you think your home looks a million bucks, there's a one in seven chance you're right if you live in Melbourne. 
About 148,000 Melbourne houses are $1 million-plus now, out of just over a million in the whole of Melbourne.

And the surge in property prices has created thousands of new Millionaire Rows in the space of a year.

As of April, Melbourne had 4222 streets with a $1 million median house price, from just 1734 last year.

To be sitting on a cool million, you don't need neighbours called Smorgon or Lew.

Melbourne got its first million-dollar street early in 1990.

Now one-time battler suburbs such as Port Melbourne have cracked the mark, and far-flung parts including Wonga Park and Dandenong figure in the list.

But Toorak has bragging rights, with the three dearest streets, 10 of the top 20 and 31 in the elite 50.
http://www.heraldsun.com.au/money/o...row-in-melbourne/story-e6frfh5f-1225872803957


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## UBIQUITOUS (29 May 2010)

robots said:


> hello,
> 
> 
> anyway, whats the problem with negative gearing? you dont run a campaign on NG which is used on any income producing asset (businesses, shares etc,etc)
> ...




With RE, people are allowed to offset the losses against a totally DIFFERENT income stream. This is not allowed with losses on other asset classes such as shares and nor should it be allowed with RE. Any investment decision just to save tax should be punished, not rewarded. The pain will come though. It always does, except that this time it is going to be a lot worse. 

Bubbles pop. Balloons deflate. This is a bubble of gigantic proportions.


----------



## robots (29 May 2010)

UBIQUITOUS said:


> With RE, people are allowed to offset the losses against a totally DIFFERENT income stream. *This is not allowed with losses on other asset classes such as shares *and nor should it be allowed with RE. Any investment decision just to save tax should be punished, not rewarded. The pain will come though. It always does, except that this time it is going to be a lot worse.
> 
> Bubbles pop. Balloons deflate. This is a bubble of gigantic proportions.




hello,

really? sure about that? maybe comeback with the correct information

oh yeah, we are finished (this is the 5th yr i have been going to be finished) amazing

morning Kincella, yes and as they head into retirement they can sell (capital gains free), buy a place in a town like Ballarat, have a 1mil in change, catch the train to the city, sip lattes, goto theatre, chill out

thankyou
S.Keen


----------



## medicowallet (29 May 2010)

UBIQUITOUS said:


> Bubbles pop. Balloons deflate. This is a bubble of gigantic proportions.





According to LaPlace's law, bubbles in fact implode.

There is a bubble, and it will most likely implode.

Anyone who cannot see people offloading their investment properties, holiday homes and their personal home (if highly geared) are living in a false reality.

The overconfidence will turn into fear, and the fear will drive people to run away. There will be huge "paper losses" for people who hang around, but as always people look at paper losses from the bubble peak, and not return on investment since their purchase.  I agree, with this in mind, that people who purchased well will not go backwards, they will just not be as far forwards as they thought they would be.

The problem is that a lot of consumption in Australia is driven by "capital growth", and hence people fund their retail committments assuming that their house will keep going up in value. If this falters, then consumption drops, and unemployment will surely rise, putting more pressure on houses. This coupled with businesses such as banks, cutting staff in the attempt to maintain profit in an environment of falling loan approvals and increasing bad debts, will help fuel the effect.

The thing which saved us from this kind of scenario was the mining sector. Now our prophetic (or is that pathetic) PM wants to sabotage the ability of the industry to expand and invest, all to pay for his inefficient and ineffective, poorly targetted and thought out wasteful politically motivated sweeteners. When the miners stop employing and investing, and start moving their capital offshore, then it will also put pressure on Australia.


----------



## medicowallet (29 May 2010)

robots said:


> hello,
> 
> really? sure about that? maybe comeback with the correct information
> 
> ...




One must be careful not to gloat too much, especially after advertising that they just purchased a property (and if I recall correctly on 100% finance).  For it may well be you who has egg on your face, especially if you are not diversified into other asset classes, which may well outperform residential property over the medium term.

I hope that I am wrong, as I am also invested in property, but it would be sad to see such a bull be neutered.


----------



## robots (29 May 2010)

hello,

my post was regarding how many like Ubiquitous didnt know that interest can be claimed against income if you have purchased shares and run at a loss to interest cost

now many go on about productivity regarding property investment, show me the productivity created when an individual buys shares, negative gears its, claims interest against income

SAME THING

the whole issue is about the rich vs. the poor

thankyou
S.Keen


----------



## medicowallet (29 May 2010)

robots said:


> now many go on about productivity regarding property investment, show me the productivity created when an individual buys shares, negative gears its, claims interest against income
> 
> SAME THING
> 
> ...




Well that is a different discussion.

If someone uses their equity in their house to purchase a TV or a car, then that does not really create as many jobs in Australia as opposed to BHP using its equity to fund expansion of a mining project. 

It is absolutely not the same thing, and hence why we need to make sure that neither housing or business enter bubbles. One of these bubbles has been dealt with, the other is actually supported by the government, in their misunderstanding of how to make money.


----------



## MACCA350 (29 May 2010)

robots said:


> hello,
> yes and as they head into retirement they can sell (capital gains free), buy a place in a town like Ballarat, have a 1mil in change



And what happens when the many baby boomers start doing just that en masse?

We all know the baby boomers are hoarding many IP's which will start to hit the market as they begin offloading to fund the later years of their retirement, or get sold through their estate. Do you think there is enough demand to absorb all those properties without putting downward pressure on prices? Maybe there is, maybe that's why KRudd changed the international investment rules.........to cope with that upcoming supply.

Just random thoughts

cheers


----------



## medicowallet (29 May 2010)

MACCA350 said:


> And what happens when the many baby boomers start doing just that en masse?
> 
> We all know the baby boomers are hoarding many IP's which will start to hit the market as they begin offloading to fund the later years of their retirement, or get sold through their estate. Do you think there is enough demand to absorb all those properties without putting downward pressure on prices? Maybe there is, maybe that's why KRudd changed the international investment rules.........to cope with that upcoming supply.
> 
> ...




The same can be said of shares. I honestly think that the BB generation will leave the economy in a much worse state then they enjoyed for the majority of their working lives.

I think in the current climate, more will be willing to sell down their super to fund their lifestyle before investment properties.

However it will probably depend on the amount in each investment and the taxation implications of having an investment property vs annuity etc.  A bit complicated.


----------



## MACCA350 (29 May 2010)

medicowallet said:


> The same can be said of shares. I honestly think that the BB generation will leave the economy in a much worse state then they enjoyed for the majority of their working lives.
> 
> I think in the current climate, more will be willing to sell down their super to fund their lifestyle before investment properties.
> 
> However it will probably depend on the amount in each investment and the taxation implications of having an investment property vs annuity etc.  A bit complicated.



Especially given many baby boomers seem to subscribe to the SKI(Spend the Kids Inheritance) club, I'd say the BB's as a generation will be more likely to sell out and spend up compared to earlier generations.

It does make one wonder what the effects on our economy will be with all those funds being freed from IP's and super and spent on other more self indulgent areas in the economy.

cheers


----------



## explod (29 May 2010)

MACCA350 said:


> Especially given many baby boomers seem to subscribe to the SKI(Spend the Kids Inheritance) club, I'd say the BB's as a generation will be more likely to sell out and spend up compared to earlier generations.
> 
> It does make one wonder what the effects on our economy will be with all those funds being freed from IP's and super and spent on other more self indulgent areas in the economy.
> 
> cheers




Yeh, the coffee and cafe strips but the big one is poker machines.  Just do a walk through Crown, even any afternoon during the week and it is horrifying to see the money going down the drain from the BB group.   Not sure its going to help economy any.

Know a bloke who had a home and two investment properties, thought he had a foolproof gambling system and lost the lot in just five years trying to prove it.    About my age 64


----------



## Dowdy (29 May 2010)

Here's an interesting story i came across. People have been faking prices in order to prop up the real estate market.




> AN elaborate scheme ratcheted up the prices of some of Australia's most coveted beachfront properties, misleading valuers and duping banks, finance companies and the buyers who parted with millions of dollars




http://www.theaustralian.com.au/news/nation/options-scheme-duped-banks-and-buyers-in-queensland/story-e6frg6nf-1225872730218


----------



## Macquack (29 May 2010)

Dowdy said:


> Here's an interesting story i came across. People have been faking prices in order to prop up the real estate market.
> 
> 
> 
> ...




Ironic that it was a real estate agent that fell for a real estate scam. I think that is call "karma".


----------



## robots (29 May 2010)

medicowallet said:


> Well that is a different discussion.
> 
> If someone uses their equity in their house to purchase a TV or a car, then that does not really create as many jobs in Australia as opposed to BHP using its equity to fund expansion of a mining project.
> 
> It is absolutely not the same thing, and hence why we need to make sure that neither housing or business enter bubbles. One of these bubbles has been dealt with, the other is actually supported by the government, in their misunderstanding of how to make money.




hello,

what are you going on about, 

how does a share investor who can negative gear and thus claim losses against gross income (yes that happens Ubiquitous) help productivity?

bhp doesnt get the cash, people just dont like the fact that others make money in property and its all through hardwork

thankyou
professor robots


----------



## medicowallet (29 May 2010)

robots said:


> hello,
> 
> what are you going on about,
> 
> ...




I think I made my point quite clearly. I think you are choosing to ignore the fact that a strong shareprice helps drive business investment, where a strong home price helps drive consumption.


----------



## UBIQUITOUS (29 May 2010)

Hello Mr Hello, What do we have here? How come you didn't post it this week?

http://reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162



> There has been a shift in the residential property market in Melbourne over the past month, with *six successive interest rates and unseasonably high auction numbers having an impact.*
> 
> The number of homes on offer at auction is at the same level we normally see in the spring selling season and, in that context, clearance rates remain very healthy, *this does provide buyers with a better opportunity than was the case earlier this year.*
> 
> ...




The second paragraph is hilarious. What a schmuck of a ramper this Enzo is!!!


Oh, by the way Enzo, the clearance rate is actually 72.612197928653624856156501726122%, and falling!!!!


----------



## robots (29 May 2010)

hello,

so how does a ng share investor help productivity and business investment, they dont, zip

But yet wont find 1 blog on the internet about it vs 5mil on ng propert investment

Business provide anything for consumptiom


----------



## medicowallet (29 May 2010)

robots said:


> hello,
> 
> so how does a ng share investor help productivity and business investment, they dont, zip




I think I will leave it where it is. As I said, it is clearly laid out in my previous posts.


----------



## UBIQUITOUS (29 May 2010)

So 775 auctions on the first weekend of this month, 900 next weekend, and 1000 the weekend after. Can somebody plot this on a graph for me please?

These seem to be awfully high numbers. 

Perhaps the cash rate is causing it. Can somebody please tell me what the cash rate is please...10%..12%...15%?

If the clearance rate doesn't plummet faster with this sudden jacking up in the number of auctioned houses, it can only mean one of two things.

1. Vendors are lowering their reserves/expectations
2. The numbers are being fudged.

Higher numbers of properties being available for sale does not lead to more buyers.


----------



## explod (29 May 2010)

UBIQUITOUS said:


> Higher numbers of properties being available for sale does not lead to more buyers.




It may indicate that more want to sell as they can not afford to hold on anymore with the recent interests rates and cost of living increases.   If this is so then some vendors will reduce prices to get out which will then lead to more people seeing values drop and want to get out too.  Then we may have a panic by spring and the bubble will have popped.

The next few weeks will tell the tale.


----------



## MACCA350 (29 May 2010)

73% Reported
72.61% Actual based on their figures
68.01% Actual based on what sold at auction.

..........let's wait for the revised figures shall we

cheers


----------



## Dowdy (30 May 2010)

robots said:


> hello,
> 
> so how does a ng share investor help productivity and business investment, they dont, zip
> 
> ...





Stock market investors don't *AIM* to make a loss. They don't buy a share in order to make a loss as opposed to a NG property.

Name one stock investor (there are 100's on this forum) who's main aim is to make a loss.

And BTW, buying stock in a company DOES help the company and hence help productivity and job creation. 


On another note,
any look at the Realestate.com.au figures. It's got Melbourne clearance rate at 69%

http://www.rs.realestate.com.au/cgi-bin/rsearch?a=ars


----------



## nunthewiser (30 May 2010)

Robots.

The top is in for now .


Thankyou.


----------



## robots (30 May 2010)

Dowdy said:


> Stock market investors don't *AIM* to make a loss. They don't buy a share in order to make a loss as opposed to a NG property.
> 
> Name one stock investor (there are 100's on this forum) who's main aim is to make a loss.
> 
> ...




hello,

how? please explain

i dont buy a property to make a loss either, so share yields are the same as interest costs

gee why is everyone so focused on clearance rates, for 5 yrs people have been telling me i am a loser for posting them up 

they mean nothing, now you all want to hang your hat on it, amazing

thankyou
professor robots


----------



## MACCA350 (30 May 2010)

Dowdy said:


> another note,
> any look at the Realestate.com.au figures. It's got Melbourne clearance rate at 69%
> 
> http://www.rs.realestate.com.au/cgi-bin/rsearch?a=ars



Now that's interesting.

23/5/10
RP Data: 756 Auctions = 69.4% clearance rate
REIV (revised): 756 Auctions = 74% clearance rate

One note, they both calculate the rate in the same way. The differences were in the reported sales.


cheers


----------



## UBIQUITOUS (30 May 2010)

robots said:


> hello,
> 
> gee why is everyone so focused on clearance rates, for 5 yrs people have been telling me i am a loser for posting them up
> 
> ...





Robots, you are right...the clearance rates don't mean much...as they are falsified in the case of the REIV. But the *number of sellers* does mean a lot.

600 auctions a week....700....800....900....and now 1000 week after next.
It means that sellers are swamping the market. Where will it end? 3000 a week?


----------



## Dowdy (30 May 2010)

robots said:


> hello,
> 
> how? please explain




One reason why a company releases an IPO is to raise capital for research/ development or to get a project up and running.

This is particularly true with mining companies. They release an IPO in order to raise capital to fund a project.

That's why alot of mining and health companies are spec stocks as the only reason they list their company on the ASX is to raise capital for projects and research. Occasionally you get lucky when their mining project discover a big field and then their company turns into a blue chip instead of a spec stock.

Take Fortescue for example. When they had their IPO, shares were 1c. Now their company is worth $4.19 a share and they employ thousands of people which help the economy.   






> gee why is everyone so focused on clearance rates, for 5 yrs people have been telling me i am a loser for posting them up
> 
> they mean nothing, now you all want to hang your hat on it, amazing
> 
> ...




They mean nothing on a week-to-week basis. Only on a month to month to me because housing should be regarded as a long tern investment....

But you on the other hand were all hoping around and doing cartwheels when the clearance rate was above 80%. So suddenly we were in paradise and now it's irrelevant. Can't have it both ways, pal.


----------



## UBIQUITOUS (30 May 2010)

> But you on the other hand were all hoping around and doing cartwheels when the clearance rate was above 80%. So suddenly we were in paradise and now it's irrelevant. Can't have it both ways, pal.




Anybody who bought a positively geared property recently eg an apartment in Melbourne's bayside must really be sweating A LOT over interest rates and these recent clearance rates. Quite conceivably next year, those persons may end up negatively geared and in negative equity. Talk about buying a the wrong time!


----------



## robots (30 May 2010)

hello,
Exactly, cant have it both ways

Whats IPO's got to do with it, what about when i buy bhp tomorrow on 75% margin, yield is nothing, NG is enormous and you can claim same tax benefits as PropInvest

And prop investor would provide more employment


----------



## robots (30 May 2010)

hello,
who bought bayside Ubiquitous? 

thankyou
Professor robots


----------



## explod (30 May 2010)

robots said:


> hello,
> Exactly, cant have it both ways
> 
> Whats IPO's got to do with it, what about when i buy bhp tomorrow on 75% margin, yield is nothing, NG is enormous and you can claim same tax benefits as PropInvest
> ...




Few would in the current market and most certainly not on margin.   I have never used margin or any form of loan monies to buy shares and after the ruffle of the last few years a lot of people would be in the same boat.   

And on the type of investor and employment I do not see how you can say that.  Buying shares and therefore supporting a company such as Woolworths, BHP, Wesfarmers and even the banks to name a few would be very supportive of employment.  And the 4 or 5% return is usually pre tax paid (fully franked dividends) so for all the bother of owning units etc including liquidity I would go the shares by a long shot at the moment.

And bit of maintenance on an investment property and the property manager and agents fees would be a very small input to employment in the bigger picture.  So its all a bit debatable in my humble view ole Champ.


----------



## UBIQUITOUS (30 May 2010)

Can somebody check Enzo's figures please? It seems as though he is FOS because I make it a shocking 68%.

http://reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162



> Weekly Auction & Sales Results, Market Overview
> 
> Week ending Sunday May 30th 2010
> 
> ...


----------



## robots (30 May 2010)

explod said:


> Few would in the current market and most certainly not on margin.   I have never used margin or any form of loan monies to buy shares and after the ruffle of the last few years a lot of people would be in the same boat.
> 
> And on the type of investor and employment I do not see how you can say that.  Buying shares and therefore supporting a company such as Woolworths, BHP, Wesfarmers and even the banks to name a few would be very supportive of employment.  And the 4 or 5% return is usually pre tax paid (fully franked dividends) so for all the bother of owning units etc including liquidity I would go the shares by a long shot at the moment.
> 
> And bit of maintenance on an investment property and the property manager and agents fees would be a very small input to employment in the bigger picture.  So its all a bit debatable in my humble view ole Champ.




hello,

i see why none of you want to address the issue, stop banging on about negative gearing for property when exactly the same rules apply to share purchases on margin

and shares purchases provide no productivity AT ALL, lets see, i buy 100 bhp shares tomorrow, the seller gets the money i get the shares, the yield is less than interest, i claim it to ATO AGAINST INCOME, presto i get a tax deduction

have i created any productivity buying those shares? created any work? no zip absolutely zip ole Pal

thankyou
professor robots


----------



## MACCA350 (30 May 2010)

UBIQUITOUS said:


> Can somebody check Enzo's figures please? It seems as though he is FOS because I make it a shocking 68%.
> 
> http://reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162



Ahhh, the revised figures.

Nope, 72.94% based on the way they calculate it..........68.39% if you only count those sold on the auction day(ie exclude 'sold before' and 'sold after')

cheers


----------



## MACCA350 (30 May 2010)

robots said:


> have i created any productivity buying those shares? created any work? no zip absolutely zip ole Pal



So you're saying shares have no value to the economy. Any idea what would happen if every listed company was forced to payback ALL shareholders the current value of their holding?

Could they continue employing, producing, servicing our population? Or would we see thousands of companies bankrupt(or at least downsized substantially) and millions of employees made redundant?

cheers


----------



## BigAl (30 May 2010)

robots said:


> hello,
> 
> i see why none of you want to address the issue, stop banging on about negative gearing for property when exactly the same rules apply to share purchases on margin
> 
> ...



Touchy Touchy

The Titanic <cough> Real Estate Ponzi Scheme <cough> is going down and someone is panicking.

Regards
Professor Reality


----------



## Tysonboss1 (31 May 2010)

robots said:


> i see why none of you want to address the issue, stop banging on about negative gearing for property when exactly the same rules apply to share purchases on margin




Well Mate, They can't think of anything wrong with investing in property in itself. So they have to attack the method in which some investors use debt to invest. Which as you have quite rightly pointed out is a separate topic entirley.

Using this arguement against property based on negative gearing is like saying the share market has no value as an investment grade asset class because all those over leveraged storm financel customers lost out when they bought at the top of the market using margin.

By far most property investors out there are positivly geared.


----------



## Beej (31 May 2010)

robots said:


> hello,
> 
> i see why none of you want to address the issue, stop banging on about negative gearing for property when exactly the same rules apply to share purchases on margin
> 
> ...






Tysonboss1 said:


> Well Mate, They can't think of anything wrong with investing in property in itself. So they have to attack the method in which some investors use debt to invest. Which as you have quite rightly pointed out is a separate topic entirley.
> 
> Using this argument against property based on negative gearing is like saying the share market has no value as an investment grade asset class because all those over leveraged storm financel customers lost out when they bought at the top of the market using margin.
> 
> By far most property investors out there are positively geared.




Yup! Both these guys are exactly spot on! The hypocrisy of some posters on this issue is amazing! Personally I have used NG to invest in both property and shares in the past - I see no difference between the two. In ALL cases my aim and intent is to make money, not lose it.

As for IPOs etc and the stock market, well the obvious property analogy there are people/investors who buy/build new houses vs existing. But with shares, just like houses, the bulk of the exchanges are for existing securities.

Cheers,

Beej


----------



## Mofra (31 May 2010)

UBIQUITOUS said:


> With RE, people are allowed to offset the losses against a totally DIFFERENT income stream. This is not allowed with losses on other asset classes such as shares and nor should it be allowed with RE. Any investment decision just to save tax should be punished, not rewarded. The pain will come though. It always does, except that this time it is going to be a lot worse.



a.  Margin loan interest is treated exactly the same as any other investment loan interest
b.  You're assuming that property investors are just trying to reduce tax? 
You know what they say about assumptions...


----------



## cutz (31 May 2010)

Mofra said:


> a.  Margin loan interest is treated exactly the same as any other investment loan interest




Correct,

But in my humble opinion, debt to equity on a margin loan generally doesn't allow interest to exceed dividend stream, if it does you're playing with fire.

Also, FWIW, whether your dealing with margin loan or IP, deductions should not be allowed to written off against other income, that tax rule is a joke.


----------



## wayneL (31 May 2010)

Beej said:


> Yup! Both these guys are exactly spot on! The hypocrisy of some posters on this issue is amazing! Personally I have used NG to invest in both property and shares in the past - I see no difference between the two. In ALL cases my aim and intent is to make money, not lose it.




Point of order.

IIRC, in any normal business where there is no intention of making a trading profit, that is a profit or loss on your trading statement, are not permitted to deduct these losses from other income.

Most housing investments and certainly negatively geared ones intentionally have no hope of a trading profit for some number of years.

Any profit during this time is on the balance sheet. Meanwhile, the taxpayer is subsidizing you.

This is special taxation treatment not available to industry, the symptom of which is overvaluation.


----------



## Tysonboss1 (31 May 2010)

cutz said:


> Correct,
> 
> But in my humble opinion, debt to equity on a margin loan generally doesn't allow interest to exceed dividend stream, if it does you're playing with fire.




Well if that is your personal investment mantra good for you, Alot of property investors share that same mantra.

However you can borrow up to 75% of the value of BHP on margin, and BHP's tiny dividend wouldn't come close to the 8.85% interest rate on the margin loan.

Also with Property you don't run the risk of directors cutting dividends, and you will also have a lower interest rate and no risk of a margin call.


----------



## tech/a (31 May 2010)

> the symptom of which is overvaluation




Please explain


----------



## Tysonboss1 (31 May 2010)

wayneL said:


> IIRC, in any normal business where there is no intention of making a trading profit, that is a profit or loss on your trading statement, are not permitted to deduct these losses from other income.




Compare apples with apples wayne.

you have to compare property investors with share investors and property traders with share traders.

Professial Property traders have different taxation rules to property investors just like professial share traders have different taxation rules to share investors.

Any one holding trading stock whether it be property or shares is treated differently in taxation.


----------



## wayneL (31 May 2010)

tech/a said:


> Please explain




We've been through the valuation numbers a hundred times Tech. Some accept the argument, some don't. 

If negative gearing was not allowed, or only allowed if there is a reasonable prospect of trading profit within, say, 3-5 years, house prices would definitely be substantially lower.


----------



## wayneL (31 May 2010)

Tysonboss1 said:


> Compare apples with apples wayne.
> 
> you have to compare property investors with share investors and property traders with share traders.
> 
> ...




One could equally argue the same about the lofty valuations of most shares. Same thing.

My argument is not a property versus shares one, rather a investment in non production versus production.


----------



## kincella (31 May 2010)

most small businesses have loans, they claim the interest as a deduction....
why is the same loan, when applied to a property investor, a tax rort...
as some on this forum suggest....
some of us have several properties, we run it just like any other business...its a business of investing in rental properties....

oh, and if you cared to check the rise of house prices for the past 50 or so years, it appears to be a very profitable business......

I note the NSW Tenancy tribunal states 1 in 4 people in Nsw are renters...


----------



## kincella (31 May 2010)

any tax incentives are offset by the govnuts...non spending on public housing....
who is better able to provide cost efficient housing to the public...the state or federal govts or private individuals..
almost no public housing has been provided since the 1970's, hence the incentive provided to individuals to provide the housing...

how many of you would prefer to live in an established house in any suburb, compared to the little ugly boxes, stacked on top of each other, as in any public housing estate....or the other ugly housing commission homes, where the whole suburb consists of only housing commission boxes...

as seen recently with the federal govnuts BER schools program....totally rorted, costing or spending up to 4 times the market price for a similar building provided by the private sector...
I know which alternative  most taxpayers prefer, and renters....


----------



## wayneL (31 May 2010)

kincella said:


> most small businesses have loans, they claim the interest as a deduction....
> why is the same loan, when applied to a property investor, a tax rort...
> as some on this forum suggest....
> some of us have several properties, we run it just like any other business...its a business of investing in rental properties....
> ...




[Sigh] 

It is a tax deduction providing the loan is for the purpose of facilitating a "trading" profit (as distinct from capital gains). Businesses intentionally run at a loss do not have their deductions allowed. Negative geared property is a business intentionally run at a loss for an indeterminate time.

Positive or neutrally geared is a very different matter. 

BTW, if you were adept at listening you'd know that:

a/ I have a couple of piles myself over in the Old Dart and well aware of some of the advantages of property investment.

b/ I was careful to make the distinction between trading profits and capital (balance sheet) gains.


----------



## wayneL (31 May 2010)

kincella said:


> any tax incentives are offset by the govnuts...non spending on public housing....
> who is better able to provide cost efficient housing to the public...the state or federal govts or private individuals..
> almost no public housing has been provided since the 1970's, hence the incentive provided to individuals to provide the housing...
> 
> ...




It's a valid argument. I have no problem at all with private sector supply of rental accommodation. I certainly 100% support it over social housing.

However as currently configured, it skews the economy in way that will bite us on the bum... indeed is beginning to do so now.

My opinion - over and out for now.


----------



## Bushman (31 May 2010)

wayneL said:


> We've been through the valuation numbers a hundred times Tech. Some accept the argument, some don't.
> 
> If negative gearing was not allowed, or only allowed if there is a reasonable prospect of trading profit within, say, 3-5 years, house prices would definitely be substantially lower.




A recent example would be the agribusiness MIS schemes. Most have since collapsed. 

Negative gearing is no different and if it was removed there would be a substantial price correction followed be a period of deleveraging. 

Simple really and you should never invest in something for a tax write off as you will pay the price when the music stops. 

NG reform will never happen as NG is a sacred cow in Australia and will remain an efficient form of middle-class welfare for the forseeable future.


----------



## robandcoll (31 May 2010)

Just thought I would way into the argument with this one:-

Bleak prediction for house prices Jessica Holzer From: The Australian May 28, 2010 10:24AM 25 

AN IMF economist predicts sharp falls in house prices, and estimates Australia and New Zealand have the biggest price misalignment. 
International Monetary Fund economist Prakash Loungani has found plenty of reasons to remain glum.

Mr Loungani, at a National Economists Club in Washington today, presented his analysis of housing busts since 1970 in the countries that make up the Organisation for Economic Co-operation and Development.

His prediction: home prices will fall much farther and for much longer.

On average, the previous housing slumps lasted 18 quarters, with prices dropping 22 per cent from peak to trough. By contrast, the current housing slump has lasted only 14 quarters, during which prices have dropped just 15 per cent.




But the latest boom was so much bigger than the previous ones that it's logical to anticipate an even more brutal downturn, Mr Loungani argued. Prices rose 113 per cent over 41 quarters, compared with 39 per cent average price increase over 39 quarters seen in the previous booms.
Mr Loungani likened the current cycle to a rollercoaster that has roared up a steep hump and now needs to come down again.

"A lot of adjustment has taken place in house prices, so we shouldn't discount that. But it's true that we shouldn't declare victory too soon. We've now had a fresh shock from what's happening in Europe," he said after the luncheon.

Mr Loungani marshalled other evidence that home prices are still inflated. 
He found that prices in OECD countries in 2009 were substantially out of whack with rents and incomes in those countries, compared to average values from 1970 to 2000. In the long run, he argued, incomes and rents will act as weights on home prices, bringing them back to earth.

Price-to-rent and price-to-income ratios were well above historical values in all OECD countries, except Japan, Germany and Switzerland, according to Loungani's analysis.

Australia, New Zealand, the Netherlands and Belgium saw the biggest misalignment with historical price-to-income values, while Canada, Sweden, Norway and Australia saw the largest gaps in price-to-rent values.

Mr Loungani said his analysis of prices and rents in US metro areas suggests that many markets on the West coast and in parts of the US Northeast could yet see prices plummet a further 30-40 per cent.


----------



## kincella (31 May 2010)

what is the problem then....tax on a capital gain after a couple of years, will far outweigh any miserly tax on the passive yearly income....its not trading income for a start....its a passive investment
the average Joe Blow with a positive geared property....earning about 10,000 net profit after costs....might pay tax of 3000 pa
or saves the same on a loss
but a capital gain can rake in 20,000 tax in one hit on a net 50.000 taxable gain


----------



## Tysonboss1 (31 May 2010)

wayneL said:


> We've been through the valuation numbers a hundred times Tech. Some accept the argument, some don't.
> 
> If negative gearing was not allowed, or only allowed if there is a reasonable prospect of trading profit within, say, 3-5 years, house prices would definitely be substantially lower.




Maybe be true, But most property investors are not negativly geared.

By far the largest portion of property investors are recieving positve weekly income because their loans (if infact they have loans) are small compared to the rent income.


----------



## Tysonboss1 (31 May 2010)

You see what most people miss is this,

(example of one of my properties)

I have a house worth $480,000 which currently rents at $395 / week. The average person here will say " Ha, what a bad investment, he would be negatively geared because the interest on $480,000 is $33,600 / year and the rent is only $20,540"

But if you look deeper you will see the following.

I bought in 2001 for $218,000 with a deposit of $30,000 so the loan was only $188,000 and over the space of 10 years I have reduced it to less than $130,000.

So the current interest bill is $9,100 and the rent is $20,540 so there is positive cashflow of about $10,000 / year.

So I have a $480,000 asset that requires no further capital input from me paying it's self off.

So over all I invested $30,000 + $7000 stamp duty etc and then funded the initial neg cashflow in the first three years, Now I have a steady income stream that will continue to build as the loan decreases and it will grow with inflation.

So yes property is a very sound investment


----------



## cutz (31 May 2010)

Tysonboss1 said:


> However you can borrow up to 75% of the value of BHP on margin, and BHP's tiny dividend wouldn't come close to the 8.85% interest rate on the margin loan.




Correct,

However as I previous hinted at, an astute equities investor won’t put BHP on 75% margin; you will probably find that most will stick to around 50%.

At 75% you’re dicing with a margin call the following day, at 50% income is greater than expenses plus you have a level of buffer.


----------



## awg (31 May 2010)

A question to the more informed:

re Auction numbers, as mentioned earlier in this thread around Melbourne.

figures show an increasing number of auction sales, and there has been big price rises recently

So why are more properties going to auction?

Is it because the sellers are getting desperate, ie cant sell ?

Or hopeful of a higher price ? ie bull market conditions

It was my understanding these 2 opposite forces are what drives auction numbers up, as selling via RE agents etc was the prevailing method in "normal" circs


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## Tysonboss1 (31 May 2010)

cutz said:


> Correct,
> 
> However as I previous hinted at, an astute equities investor won’t put BHP on 75% margin; you will probably find that most will stick to around 50%.
> 
> .




Still neg cashflow at 50%.


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## kincella (31 May 2010)

couple of points.....I bought a property, when everyone else shunned the property market....it is returning 30% pa in very positive income.....versus the cost price...or only 6% on the current market value price.....
the loan is sitting at 1/10th of the market value....showing 90% equity...
and some of you guys think property is a bad investment....

you would be very surprised at what sort of figures are actually out there in property land....
versus the media screaming headlines, just to sell a paper.....or the limited experience or knowledge from the average Joe Blow.....

the question about sellers....I suspect some will be cashing in on the high prices, while the foreigners are still out there with their bags of cheap money buying up, like there is no tomorrow...
those sellers will need to rent, or buy in another suburb.....they still need a house to live in...
its the down time for sales in that industry...the peaks are in spring time and prior to Easter...
otherwise I have no idea.....
but will those same sellers, be on here spruiking how they sold at the top of the market, now waiting for prices to crash, again....ps some are still waiting after 10 years, still out there waiting for the crash...
and some have been wishing for higher interest rates, to force down prices...
but history shows that is not the case....prices still rise, regardless of the rates..
have a good day


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## satanoperca (31 May 2010)

> Dollar lower at noon on strong homes sales trends






> New homes sales surged 6 per cent in April due to strong growth in Victoria, a Housing Industry Association report shows.
> 
> Meanwhile, home values were flat in April as heat came out of the housing market.




http://www.theaustralian.com.au/business/news/australian-dollar-lower-at-noon-on-strong-homes-sales-trends/story-e6frg90f-1225873534792

Prices are flat, supply is being added to and record number of auctions in Victoria in the following weeks. 

This should lead to some price movement.

Agree with those that believe property is a good investment, it has proven so in the past, but we are discussing the future. 

So has a peak been reached?.

Cheers


----------



## wayneL (31 May 2010)

Tysonboss1 said:


> You see what most people miss is this,
> 
> (example of one of my properties)
> 
> ...




Property was much better value in 2001.


----------



## skc (31 May 2010)

Tysonboss1 said:


> You see what most people miss is this,
> 
> (example of one of my properties)
> 
> ...




At $10K cash flow on $480K house yields 2.1%.

Sell the house and put $480K in term deposit may yield 6% ($28K)

Even if you pay $100K CGT on the sale, you can still have $380K at 6% which generates $22K pa.

So property is a very sound investment only when the property value goes up...


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## Aussiejeff (31 May 2010)

kincella said:


> *snip* you would be very surprised at what sort of figures are actually out there in property land....
> versus the media screaming headlines, just to sell a paper.....*or the limited experience or knowledge from the average Joe Blow.....* *snip*




Oh dear. AFAIK there are Joe Blows & then there are Joe Blows. 

I sincerely hope you are not calling into question the experience or knowledge of our very own _esteemed_ Joe Blow?


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## Tysonboss1 (31 May 2010)

wayneL said:


> Property was much better value in 2001.




The price to earnings ratio is still about the same as it was in 2001, 

Yes the price has gone up since then, but so has the rent.


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## c-unit (31 May 2010)

Our national housing market is a government subsidized ponzi scheme. Negative gearing should be abolished and only apply for new housing developments, not existing homes.

I look forward to the day our property bubble pops. Will bring a smile to my face to see all those baby boomers who took the "property prices only go up" approach and overextended themselves make big losses. I will also enjoy seeing overextended first home buyers face negative equity. Orgasmic stuff. Fiscal prudence has dissapeared in AUS, but it will return after we all get a giant wake up call.


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## Beej (31 May 2010)

skc said:


> At $10K cash flow on $480K house yields 2.1%.
> 
> Sell the house and put $480K in term deposit may yield 6% ($28K)
> 
> ...




You might want to re-read Tysonboss's post again and re-do your numbers. You are WAY off the mark with your calcs in the above post.

Cheers,

Beej


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## Buckfont (31 May 2010)

c-unit said:


> Our national housing market is a government subsidized ponzi scheme. Negative gearing should be abolished and only apply for new housing developments, not existing homes.
> 
> I look forward to the day our property bubble pops. Will bring a smile to my face to see all those baby boomers who took the "property prices only go up" approach and overextended themselves make big losses. I will also enjoy seeing overextended first home buyers face negative equity. Orgasmic stuff. Fiscal prudence has dissapeared in AUS, but it will return after we all get a giant wake up call.




Hey mate, I wouldn`t put BBers in that boat solely, because there are definitely investors from other generations who have thought prices would improve. It`s a naive comment, and if people get burnt its probably cause the greed factor took over.


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## Tysonboss1 (31 May 2010)

skc said:


> At $10K cash flow on $480K house yields 2.1%.
> 
> Sell the house and put $480K in term deposit may yield 6% ($28K)
> 
> ...




You don't get it at all,

The $480,000 house earns over $20K in rent, but after i have paid interest on the loan of $130,000 it leaves me with $10K casflow/profit.

Resi property earns about 4%, so you will always have people make really silly statments saying that your money is better in a term deposit earning 6% but this is really flawed thinking.


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## explod (31 May 2010)

c-unit said:


> Our national housing market is a government subsidized ponzi scheme. Negative gearing should be abolished and only apply for new housing developments, not existing homes.
> 
> I look forward to the day our property bubble pops. Will bring a smile to my face to see all those baby boomers who took the "property prices only go up" approach and overextended themselves make big losses. I will also enjoy seeing overextended first home buyers face negative equity. Orgasmic stuff. Fiscal prudence has dissapeared in AUS, but it will return after we all get a giant wake up call.




c-unit that is a very sick attitude towards anyone, to enjoy the demise of others who were only following the big money ideas of the financial industry and government.   If you were given and promised leads to financial success and excess I am sure you would follow that path too.  As a baby boomer I have been conservative and safe and most baby boomers in my circle have been the same.

I get a bit obstropalis and cranky at times but never to wish anyone bad.  We should and do on ASF try our best to give inputs that help us all to think things out from the ground up so that together we can all do better.  

Comments such as yours are not welcome here ole pal.


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## Tysonboss1 (31 May 2010)

If you put $100,000 in a term deposit at 6% you would earn $6000.

If you put $100,000 into resi property it would earn about $4000.

So this would suggest that your money is better sitting in a term deposit right. wrong.

Your money in the term deposit may produce more cashflow in the first few years, But inflation will raise the rent over the years to the point that the property is generating far more cashflow than your term deposit.

Secondly, Your capital of $100K will not grow so it will steadily lose buying power with inflation, where as the capital invested into the property should increase atleast with inflation over the years.

My Nanna made this mistake, when my poppy died in the 70's she sold their investment property because she could get more in interest than in rent, she sold the property for $4000 because she thought the interest would help support her. the funny side to this is she still has that term deposit of $4000 earning $240 a year.

the property would have risen with inflation and growth to be worth over $350,000 and generate $18,000 in rent per year.


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## c-unit (31 May 2010)

explod said:


> c-unit that is a very sick attitude towards anyone, to enjoy the demise of others who were only following the big money ideas of the financial industry and government.   *If you were given and promised leads to financial success and excess I am sure you would follow that path too*.  As a baby boomer I have been conservative and safe and most baby boomers in my circle have been the same.
> 
> I get a bit obstropalis and cranky at times but never to wish anyone bad.  We should and do on ASF try our best to give inputs that help us all to think things out from the ground up so that together we can all do better.
> 
> Comments such as yours are not welcome here ole pal.




Perhaps a little "sick" and generalising, but the concept is what is important. But unfortunately nothing will change until people experience some short term pain. The best thing for this nation is for the property bubble to pop and the housing market to be cleansed. Whilst I will, and do, pursue avenues of financial success and excess (as you mentioned), I would have enough sense to remain within the limits defined by my own financial situation. Those who used common sense with their investments should not be influenced too terribly from a housing correction. Only those who went too far. 

Daily people in the financial industry (bankers in particular) have to put up with being labelled greedy capitalists with no moral purity etc, and quite often the ones criticising greedy financiers are the ones with numerous negatively geared property investments and are themselves as hypocritical and as greedy as anyone. Why doesn't the mainstream media get stuck into main street Australian greed? 

Do you pity the investments banks, Mac, Citi, Lehman etc for their circumstances during the financial crisis? But they were only following big money promised by the government and financial sector? I bet you don't. But accordingly we should pity property investors who borrowed too much to finance their own investments in a house of cards housing market?


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## trainspotter (31 May 2010)

Still lauging at the house of cards housing market statement c-unit. Has not corrected just yet .... this is your opinion and not a fact. Do we feel pity for all those people who got sucked dry by the finance gurus telling us to put our money with the likes of Storm Financial Group? I don't for a start because they got greedy. Do I feel sorry for the ones that placed money with Tim Johnston and Firepower? Nup - Would I feel sorry that someone actually showed some kahunas and borrowed some money to buy a second property to try and get ahead the old fashioned way of bricks and mortar. Probably .... depending on their circumstances. I still cannot believe in this day and age that people never listen. "If it is too good to be true then it probably is !" It's all a game of chance and you have to limit your exposure. Fortunately the volatility has not hit the housing sector unlike the share market. Let us pray that it does not over correct and prefers to stagnate for a looooong period of time.


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## c-unit (31 May 2010)

trainspotter said:


> *Still lauging at the house of cards housing market statement c-unit*. Has not corrected just yet .... this is your opinion and not a fact. Do we feel pity for all those people who got sucked dry by the finance gurus telling us to put our money with the likes of Storm Financial Group? I don't for a start because they got greedy. Do I feel sorry for the ones that placed money with Tim Johnston and Firepower? Nup - Would I feel sorry that someone actually showed some kahunas and borrowed some money to buy a second property to try and get ahead the old fashioned way of bricks and mortar. Probably .... depending on their circumstances. I still cannot believe in this day and age that people never listen. "If it is too good to be true then it probably is !" It's all a game of chance and you have to limit your exposure. Fortunately the volatility has not hit the housing sector unlike the share market. Let us pray that it does not over correct and prefers to stagnate for a looooong period of time.




Mate, house prices are no longer based on fundamentals, they are now priced as a function of access to debt, which is the concern. My sis (a 25 y.o nurse) was offered a first home buyers loan up to $600k ffs. Fortunately she has common sense and borrowed less than half that. Lending standards have deteriorated rapidly in this country. Like the US, if we see a contraction in the economy and some job losses then POOF goes the housing market.


----------



## robots (31 May 2010)

c-unit said:


> Our national housing market is a government subsidized ponzi scheme. Negative gearing should be abolished and only apply for new housing developments, not existing homes.
> 
> I look forward to the day our property bubble pops. Will bring a smile to my face to see all those baby boomers who took the "property prices only go up" approach and overextended themselves make big losses. I will also enjoy seeing overextended first home buyers face negative equity. Orgasmic stuff. Fiscal prudence has dissapeared in AUS, but it will return after we all get a giant wake up call.




hello,

what a great day today, was working on Royal Pde, Parkville, a beautiful tree lined road, many birds enjoying the trees too, fantastic

i say ban NG from society as well, i agree c-unit, let developers build new places and those with existing can just go for the ride man

85sqm apartments this year, 82sqM apartments next year, 79sqM apartments the next year, no parking the following year  

gee, you can tell GPHC has closed down

thankyou
professor robots


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## trainspotter (31 May 2010)

c-unit said:


> Mate, house prices are no longer based on fundamentals, they are now priced as a function of access to debt, which is the concern. My sis (a 25 y.o nurse) was offered a first home buyers loan up to $600k ffs. Fortunately she has common sense and borrowed less than half that. Lending standards have deteriorated rapidly in this country. Like the US, if we see a contraction in the economy and some job losses then POOF goes the housing market.




c-unit, your sister must be on some phenomenal money to be able to qualify for a 600k loan amount as a first home owner with ZERO peripheral debt. She would be required to be on a minimum wage of $100,000 minimum to get anywhere near this amount?? Does a nurse get this much these days?? Last time I checked the banks were tightening and certainly not throwing money out the door willy nilly ?? We are not the US of A !! We have a completely different banking systme in Banana Republic Land. We do not have any non recourse loans available to the general public. We have Lenders Mortgage Insurers covering any loss of sale due to insolvency. 

This thread has gone full circle. This must be the third time I have explained this already.


----------



## robots (31 May 2010)

hello,

yes, i think we need Explod to post up one of his jokes just to get everyone to relax, laugh, chill out, take it easy

thankyou
professor robots


----------



## satanoperca (31 May 2010)

Getting back on to the topic of the future of Australian property prices.



> Flood of property listings to hit Melbourne market




http://theage.domain.com.au/real-estate-news/flood-of-property-listings-to-hit-melbourne-market-20100531-woh9.html?autostart=1



> The Real Estate Institute of Victoria is predicting 1210 auction listings over the next two weeks, the most on record for that period




Interesting, plenty of stock available,maybe there never was a real shortage.



> "The six interest rate rises totalling 1.5 per cent are now impacting on the market," said REIV CEO Enzo Raimondo




Oh, FFS, it is only 1.5% increase from historical lows. If this has an impact, the market is as inflated as possible with debt given we still have relatively low levels of unemployment.



> A 50 per cent increase of new home listings expected over the next three weekends comes as auction clearance rates begin to falter on pricier home loans and weaker buyer confidence.




That would be referred to as a flood of supply, can the smart money (aka investors) soak up this supply to hold prices. Hmm we will see.



> Home loans, however, have slumped for the six months to March, to hit a nine-year low, as rising interest rates and the expiration of last year's First Home Owners Grant boost cut slowed the market's momentum.




Telling sign, no one is willing to take on more debt or excessive levels of debt to keep the momentum flowing of property prices.

What is a crash, 20% fall this year. No,  call that a small correction as it is only coming back to prices in Victoria in 08/09 and a smart investor would be able to easily cope with a fall of the size. 

However, there are 150K FHB last year, I wonder how they are coping with 40% higher IR's and the possibility of shrinking equity. 

So the question is, what percentage of property owners (PPOR & IP) does it take to sellout to cause a fall greater than 20%.

Cheers


----------



## trainspotter (31 May 2010)

Why are they selling out ? Australia has an internationally high rate of home ownership (around 70 per cent at the time of the 2006 Census). Yet we also have amongst the lowest mortgage default rates in the world with just 0.66 per cent of the five million borrowers with a loan materially behind on their repayments. This is nearly one-tenth or one-quarter of the default rates observed in the US and UK, respectively. I really do not believe we are ready to have a "lemming off the cliff" style exodus from the property market. The Real Estate Agents are doing their job and obtaining listings. If they don't sell at auction how do we know this is going to cause financial ruination? Why don't they hang onto the home and DOH ... I DUNNO rent it out if it is an IP. If it is their PPOR why are they selling it again? To upgrade or downgrade or leave the country? If they don't sell the home just stay living in the damn thing. Because we do not know the circumstances behind the sale we cannot soothsay (unless it is the 0.66 per cent of the five milion who default due to financial stress) that this is the end of the line for property.

GOSH !


----------



## satanoperca (31 May 2010)

trainspotter said:


> Why are they selling out ? Australia has an internationally high rate of home ownership (around 70 per cent at the time of the 2006 Census). Yet we also have amongst the lowest mortgage default rates in the world with just 0.66 per cent of the five million borrowers with a loan materially behind on their repayments. This is nearly one-tenth or one-quarter of the default rates observed in the US and UK, respectively. I really do not believe we are ready to have a "lemming off the cliff" style exodus from the property market. The Real Estate Agents are doing their job and obtaining listings. If they don't sell at auction how do we know this is going to cause financial ruination? Why don't they hang onto the home and DOH ... I DUNNO rent it out if it is an IP. If it is their PPOR why are they selling it again? To upgrade or downgrade or leave the country? If they don't sell the home just stay living in the damn thing. Because we do not know the circumstances behind the sale we cannot soothsay (unless it is the 0.66 per cent of the five milion who default due to financial stress) that this is the end of the line for property.
> 
> GOSH !




You ask why, I have two words : FEAR & GREED.

Why not rent it out, because rental returns are dismal at the moment and if there is little chance of capital gain, why hold especially on the prospect of even higher prices.

Property has become no different to shares, there are those that invest and those that speculate (trade). What % is speculation, have a guess as I have no idea.

Just like the share market, fundamentally sound stocks can be effected both up and down by speculation.

Interesting times ahead.

Cheers


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## trainspotter (31 May 2010)

satanoperca said:


> You ask why, I have two words : FEAR & GREED.
> 
> Why not rent it out, because rental returns are dismal at the moment and if there is little chance of capital gain, why hold especially on the prospect of even higher prices.
> 
> ...





70% home ownership is up there internationally. I don't believe that people buy homes as a PPOR as a speculation? I thought they wanted to live the Australian dream of home ownership. The increase in value over time is the bonus as they "unintentioanlly" build up equity during the course of the home loan. I think on average a home loan lasts between 7 - 9 years before it is refinanced to gain access to the equity in the property to purchase "other" things or just plainly debt consolidate. OR they just simply sell due to financial pressure or change in circumstances, or possibly they sell to buy something bigger or smaller which frees up that person who just sold to go and buy something else. Different financial tiers and a knock on affect as well.

Agreed we have interesting times ahead in the property market. Interest rates have plateaued for the time being. Auction clearance rates have slowed. People are listing and not selling. Looks like to me a market that has run out of puff. Having trouble wrapping my tiny brain around a colossal meltdown in prices of 20% across the board. YES there will be some attrition due to people selling for lower prices for reasons outlined above. Hardly a bubble IMO !


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## Tysonboss1 (1 June 2010)

trainspotter said:


> Having trouble wrapping my tiny brain around a colossal meltdown in prices of 20% across the board. YES there will be some attrition due to people selling for lower prices for reasons outlined above. Hardly a bubble IMO !




Don't stress Bud.

When it comes to property you don't have to over analize things.

If you own property and are happy with the rental return, just sit their and collect rent.

If you are living in the property and are happy with the life style just sit there and enjoy the life style.

There is no need to trade property to try and time the market. the only factors that you need to believe to be a property investor is as follows.

The area you invest in will continue to have people wanting to rent dwelling in the future.

and

The rent that you are able to charge will increase with inflation.

and if you want capital gains ahead of inflation then you have to believe that the population will grow in your area.

Most populated parts of australia tick the above boxes


----------



## satanoperca (1 June 2010)

trainspotter said:


> Having trouble wrapping my tiny brain around a colossal meltdown in prices of 20% across the board. YES there will be some attrition due to people selling for lower prices for reasons outlined above. Hardly a bubble IMO !




Never mentioned it was a bubble and 20% is only the last years growth and that is my point. Even if 20% was wiped off prices, it would essentially only effect those that bought in the last year. This is why it is such a good investment for those who got in pre GFC. If 20% can be added to prices so fast then why can it not be taken away just as fast.

As for people speculating on PPOR, ask young families if they would have both parents working to pay off a large mortgage if there was no chance of capital gains for the next five years. Answer, no. Australians have become the greatest speculators of property in the world, how else do you explain the massive growth in prices last year, fundamentals, ha. No the speculation of missing out, no getting on the property ladder, being priced out forever, rent is dead money etc etc etc.


Cheers


----------



## haraldc (1 June 2010)

Tysonboss1 said:


> You see what most people miss is this,






Tysonboss1 said:


> I have a house worth $480,000 which currently rents at $395 / week. The average person here will say " Ha, what a bad investment, he would be negatively geared because the interest on $480,000 is $33,600 / year and the rent is only $20,540"
> 
> But if you look deeper you will see the following.
> 
> I bought in 2001 for $218,000 with a deposit of $30,000 so the loan was only $188,000 and over the space of 10 years I have reduced it to less than $130,000.




So your current equity is 350,000.

How much you paid 10 year ago is irrelevant here. You mark to market and your current investment is 480k - 130k = 350k.

The idea is that you leveraged 30k over 10 years and brought it to 350k. That is a rate of return of 27.8%. Not bad 

OK actually is not that: you have to subtract interest, compound value of that interest, maintenance and repairs, BCC bills, and all other frictional costs (e.g. buying/selling = entry/exit). But you probably done well 

But be careful leverage works both ways.



Tysonboss1 said:


> So the current interest bill is $9,100 and the rent is $20,540 so there is positive cashflow of about $10,000 / year.




So you get 10k for a 350k investment. This is about 2.85% return.

ANZ currently offer 6% on term deposits on 1 year, at maturity.

You could double your return 



Tysonboss1 said:


> So I have a $480,000 asset that requires no further capital input from me paying it's self off.




I don't understand: it doesn't need repairs, maintenance, BCC rates, utilities (water), etc ? (when I was renting it was the landlord paying this, who's doing it now ?)



Tysonboss1 said:


> So over all I invested $30,000 + $7000 stamp duty etc and then funded the initial neg cashflow in the first three years, Now I have a steady income stream that will continue to build as the loan decreases and it will grow with inflation.
> 
> So yes property is a very sound investment




Maybe, it depends on the development over the life of the investment.

The question is not if the investment returns something or not but:

1. How much it returns compared to a risk-free investment ? (normally that would be some AAA government bonds)

Currently your investment is under-performing.

In order for it to perform you need at least 3.5% more (to match the risk-free investment) plus some more to cover the ongoing costs and justify the risk taken. The more part may come from CG, rent or both.

How much is worth it is a matter of personal choice.

2. What is the risk / reward ?

What is the capital at risk under various scenarios and what is the projected return (realistic scenarios required 

3. Are there better investments ? (better is user-defined here)

Regards


----------



## cutz (1 June 2010)

Tysonboss1 said:


> Still neg cashflow at 50%.




Hi Tysonboss, 

I need help with some basic math,

A good mix of top 10 stocks will get you a yield *conservatively* estimated at 5%* not including franking credits*.

Therefore yield on a 100k (using nice round numbers) portfolio at a conservative 5% is $5000, *not including franking credits*.

Expense on a 50k loan using an unusually high interest rate of 9% (remember this can be negotiated and can be done for much less, esp. if using a LOC) is $4500.

But anyway, that's not the point I was trying to make, my point is negative gearing for both stocks and IP is a joke.


----------



## Tysonboss1 (1 June 2010)

cutz said:


> Hi Tysonboss,
> 
> I need help with some basic math,
> 
> ...




My example was BHP which is only 2.5% yeild not 5%.

Negative gearing has it's place, It should only ever be considered as a shorterm option though, just to get you started.

The property that I used in the example a few pages back, was negatively geared for the first three years but now provides a strong positive income stream.

Once you are over the hurdle of making your first property positive cashflow, you can use that extra cashflow to help bring another property into positive cashflow.


----------



## Tysonboss1 (1 June 2010)

haraldc said:


> So you get 10k for a 350k investment. This is about 2.85% return.
> 
> ANZ currently offer 6% on term deposits on 1 year, at maturity.
> 
> ...




See the point of buying a property is that you are buying an inflation hedged income stream. This is the biggest point that gives property a huge advantage over a cash investment.

If you don't understand that your rental return and capital value of the investment will increase with inflation over time (through the ups and downs), but the value of your cash investment and the cashflow will not increase, then you don't understand property investment at all.

When I said it does not require any further capital from me I mean that the property is now self funding, the rent covers all costs including maintance, So it is providing an income stream net of costs.


----------



## cutz (1 June 2010)

Tysonboss1 said:


> Negative gearing has it's place, It should only ever be considered as a shorterm option though, just to get you started.




Hi Tysonboss1,

You're still missing my point,

Negative gearing is a joke because the taxpayer is funding your own get rich scheme, why should that be the case ?


----------



## medicowallet (1 June 2010)

cutz said:


> Hi Tysonboss1,
> 
> You're still missing my point,
> 
> Negative gearing is a joke because the taxpayer is funding your own get rich scheme, why should that be the case ?




The taxpayer is not being affected much, if any.

If there wasn't negative gearing, the investor pays too much tax. 

Directly by tax on the income received and indirectly by the taxation on bank profit / the flowthrough taxation from banking processes on the interest paid.


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## basilio (1 June 2010)

Property prices are crazy at the moment. There is just no way the majority of people could finance houses at 600k plus. And the last 3-4 interest rate rises are  going to make that abundantly clear.

I suggest that what has happened is that for the last 6 months there has been some very keen overseas purchasers with plenty of money and no understanding of appropriate local house prices. They have jumped into the  market and with probably only a few thousand sales have raised the prices by 15-20%. 

So,perhaps naturally, many investors and even home owners have decided that if there are still buyers out there willing to pay these astronomical prices it's time to cash in.  Hence the rush of property to market.  There may also be a case for suggesting that some desperate home owners and some pushy banks/lending agencies are trying to get their money back from overextended borrowers. (it would be interesting to know how many upcoming auctions were forced sales - either overtly or covertly)

So what are the possibilities?  If there are sufficient overseas buyers to  create competition and keep prices up then the market will hold. On an ongoing basis however we would see an emerging problem with housing shortages and affordability because the higher cost of housing would simply be out of the reach of the majority of people. Just can't see how this would benefit anyone else except Real Estate agents and similar entities.

Many Real Estate agents are actively marketing our property in Asia. I suspect that the created bubble of the last 6 months may still be sufficient to entice enough buyers to keep this scam sorry - "investment opportunity" going a bit longer -  maybe.. Again it will interesting to see if the Governments changes to the capacity of overseas purchasers to buy are meaningful or simply another insignificant hurdle for the Real Estate agents bent on greed and glory.


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## Mofra (1 June 2010)

c-unit said:


> Daily people in the financial industry (bankers in particular) have to put up with being labelled greedy capitalists with no moral purity etc, and quite often the ones criticising greedy financiers are the ones with numerous negatively geared property investments and are themselves as hypocritical and as greedy as anyone. Why doesn't the mainstream media get stuck into main street Australian greed?



Perhaps the "greedy bankers" as you put it are using the trust & capital of others, whilst your average property investor is adopting 100% of the risk themselves?

Apples and oranges argument.


----------



## Mofra (1 June 2010)

Tysonboss1 said:


> See the point of buying a property is that you are buying an inflation hedged income stream. This is the biggest point that gives property a huge advantage over a cash investment.
> 
> If you don't understand that your rental return and capital value of the investment will increase with inflation over time (through the ups and downs), but the value of your cash investment and the cashflow will not increase, then you don't understand property investment at all.
> 
> When I said it does not require any further capital from me I mean that the property is now self funding, the rent covers all costs including maintance, So it is providing an income stream net of costs.



It is worth mentioning at this point the effect inflation has on deflating the debt burden over time. A property matching the inflation rate geared at any significant amount performs over time simply because the inflation on asset, combined with the deflation on debt, accelerates the equity growth.


----------



## Tysonboss1 (1 June 2010)

haraldc said:


> In order for it to perform you need at least 3.5% more (to match the risk-free investment) plus some more to cover the ongoing costs and justify the risk taken. The more part may come from CG, rent or both.
> 
> How much is worth it is a matter of personal choice.
> 
> ...




Property is returning over 4%, so that is above your benchmark of 3.5%.

But as I continue to say, Property income rises with inflation, that AAA government bond income does not rise with inflation it is fixed.

The value of the property also increases with inflation, But again the government bond does not. When you subtract the inflation rate your AAA bond produces nothing and it is actually negative after tax so the property is producing much more.

Offcourse there are investments that produce a higher return than property, I am invested in the share market and businesses also. But owning some property gives the rest of your portfolio alot of stability.

I believe a portfolio with property, shares and businesses is best.


----------



## Tysonboss1 (1 June 2010)

cutz said:


> Hi Tysonboss1,
> 
> You're still missing my point,
> 
> Negative gearing is a joke because the taxpayer is funding your own get rich scheme, why should that be the case ?




No they aren't.

The goverment does not actually give you money, when I first bought my property I was earning about $1000 a week, and the property had a negative cashflow of about $50 / week, so I paid tax on $950 instead of $1000. Not really a big loss in tax revenue for the government, and that was just the first 3 years.

But I am providing homes that other wise would have to be provided by public housing. So for a loss in tax revenue of $15 / week (based on $50) for three years the government gets a house provided for 20 years. Now it would cost alot more than that for them to supply.

Also the Banks are paying tax on the interest they earn from the loan, which is more that $15 / week that i was deducting.

and now that it is positive cash flow I am paying tax of more than $15/ week for the last 7 years.


----------



## skcots (1 June 2010)

Tysonboss1 said:


> My example was BHP which is only 2.5% yeild not 5%.
> 
> Negative gearing has it's place, It should only ever be considered as a shorterm option though, just to get you started.
> 
> ...




When I first read your example I did some calculations just to satisfy my curiosity over the property vs shares debate. I calculated what would of happened if you just bought a big blue chip with out a loan. I chose WOW shares.

I deleted my calculations but they went on the lines of this:
1.) 2001 you buy $37000 worth of shares (equiv of 30k deposit + 7k stamp duty)
2.) Over the next three years you annually buy WOW shares to the equivalent amount of the minimum payment on a $188,000 mortgage calculated at 7.5% interest over 30 years
3.) at the end of the each year you reinvest the dividend ignoring the franking credits.

The result was an income in 2010 (assume the second half dividend remains the same as the first half) of about $11000 + franking credits ($14000 pa). I cant remember the share value.

Considering there is no debt, no work and no ongoing costs this sounds like a win to me. BHP shares might not have produced the same result but I doubt anyone with a bit of common sense would put all their money into a single blue chip anyway.

I am not saying property is a bad investment but its not as great as its made out to be. Unless you are a person who is prepared to work or knows the market well.


----------



## cutz (1 June 2010)

Tysonboss1 said:


> The goverment does not actually give you money, when I first bought my property I was earning about $1000 a week, and the property had a negative cashflow of about $50 / week, so I paid tax on $950 instead of $1000. Not really a big loss in tax revenue for the government, and that was just the first 3 years.




Tysonboss1,

Your still missing the point,

You personal situation doesn't concern me, negative gearing is a joke because interest expenses from a get rich scheme can potentially wipe out all income from other sources.

I can't see why this should be allowed.

Someone mentioned that the money trail flows into banks which then gets taxed at their end but I still fail to see the point.


----------



## Dowdy (1 June 2010)

satanoperca said:


> Never mentioned it was a bubble and 20% is only the last years growth and that is my point. Even if 20% was wiped off prices, it would essentially only effect those that bought in the last year. This is why it is such a good investment for those who got in pre GFC. If 20% can be added to prices so fast then why can it not be taken away just as fast.
> 
> As for people speculating on PPOR, ask young families if they would have both parents working to pay off a large mortgage if there was no chance of capital gains for the next five years. Answer, no. Australians have become the greatest speculators of property in the world, how else do you explain the massive growth in prices last year, fundamentals, ha. No the speculation of missing out, no getting on the property ladder, being priced out forever, rent is dead money etc etc etc.
> 
> ...





A 20% gain and a 20% loss doesn't mean you break even.

It's grade 5 maths. 

100+20%=120

120-20%=96

You're down 4% on your original price.


----------



## Tysonboss1 (1 June 2010)

skcots said:


> When I first read your example I did some calculations just to satisfy my curiosity over the property vs shares debate. I calculated what would of happened if you just bought a big blue chip with out a loan. I chose WOW shares.
> 
> I deleted my calculations but they went on the lines of this:
> 1.) 2001 you buy $37000 worth of shares (equiv of 30k deposit + 7k stamp duty)
> ...




Big Flaw,

You failed to use the rent on the property in your calcs, but you used the dividend on the stock

I only added $50 per week out of my own pocket for the first threee years, Not the minimum payment on a $188,000 loan you calculated, because the rent covers the bulk of the paymnet


----------



## Tysonboss1 (1 June 2010)

cutz said:


> Tysonboss1,
> 
> interest expenses from a get rich scheme can potentially wipe out all income from other sources.




No it can't,

this is how it works,

Person works and earns $100,000 income from their job,

They also lease out a rental property for $50,000.

on their tax return they will now have $150,000 income, However like any business you don't pay tax on total revenue you pay tax on profit.

So they can then deduct the $55,000 costs involved which leaves them $95,000 taxable income.

For a person to deduct their entire $100,000 pay check they would have to be suffering massive losses and would probally be starving to death, It simply doesn't happen.


----------



## sinner (1 June 2010)

satanoperca said:


> Never mentioned it was a bubble and 20% is only the last years growth and that is my point. Even if 20% was wiped off prices, it would essentially only effect those that bought in the last year. This is why it is such a good investment for those who got in pre GFC. If 20% can be added to prices so fast then why can it not be taken away just as fast.




The question is no longer, "what happens to those who bought at the top". (re: negative equity)

The question now is: what happens to the loan books of companies like CBA and WBC if property values decline even 6%? 

This is a rock and a hard place. Either house prices return to historical affordable mean (3-5x avg annual income) or Australian standard of living decreases. We cannot have it both ways anymore.

Australian banks are so fully levered into real estate that even a small but sustained decline in price could completely wipe them out.

Why do you think house prices have been propped up to the extent they have? Certainly no other government in the world has gone to the effort and spent the money that ours has to support the domestic housing market. Let's not fool ourselves into thinking the government gives a crap about the first home owner or property investor. The interest groups here are: banks, property developers, REITs, etc.


----------



## cutz (1 June 2010)

Tysonboss1 said:


> on their tax return they will now have $150,000 income, However like any business you don't pay tax on total revenue you pay tax on profit.




I know exactly how it works but I don't think all property investors are so conservative.

If that were the case, why does government baulk at cutting negative gearing ?


----------



## skcots (1 June 2010)

Tysonboss1 said:


> Big Flaw,
> 
> You failed to use the rent on the property in your calcs, but you used the dividend on the stock
> 
> I only added $50 per week out of my own pocket for the first threee years, Not the minimum payment on a $188,000 loan you calculated, because the rent covers the bulk of the paymnet




I thought it didn't makes sense. I recalculated and ended up with a 2010 dividend of $6500 + franking ($8450) and a value of $162,500.

Considering I already had the number on the screen I was curious to know what would happen if I used the $225,000 as capital and did not reinvest any of the dividends. Lets assume like the rent they are paying off the loan. I know this may not replicate the real world but as I said its just to satisfy my curiosity.

The worth in 2010 is $741,000 and a dividend of $29661 + franking ($38500).

Still doesn't want make me want to rush out and buy property.


----------



## explod (1 June 2010)

I think sometimes its good to go back to pure basics.    In 1970 my first house cost $10,000,  a fairly humble place, average home then probably about $13,000   Stand to be corrected but that type of home, outer suburbs would be about $350,000 today, so a rise of about 27 times in 40 years.

On the US dropping the gold standard it was allowed to float from 1970 when it was $35 per ounce, today it is around $1200 per ounce which equals a rise of about 34 times.

In spite of what governments or the banking system say or try to do about it, gold is a base currency, but what it really reflects is the overall inflation of tangible value ie. paper money losing value.   So we think we may have done very well over the years with the rising value of our home or investment property when in fact all we are doing is preserving our wealth at a flat rate against what money can buy.

The real winers in this world are the bankers or those taking good commissions or running a business in a niche provision of needs and/or large scale developers and/or creators of things.   Property like gold merely preserves what we have, no more and no less.   Of course if you can trade the highs and lows of cycles that is a whole new ball game but it seems few on this thread approach it this way.


----------



## Tysonboss1 (1 June 2010)

skcots said:


> Still doesn't want make me want to rush out and buy property.




For me it is not Property vs Shares thing.

I don't invest in property because I believe it will out perform the best performing shares when i look back in 10 years. I invest in property because I want a stable safe income stream inside my portfolio.

I also have a large share portfolio and I own a successful business. But having a weekly income stream from a property portfolio really helps balance out the fluctuations of share prices and risk of directors cutting dividends.

If I can retire owning my own home with passive income from another couple of debt free properties as well as having dividends and growth from shares I think I will have a much better 'All weather' portfolio than some one who focuses on one or the other.


----------



## medicowallet (1 June 2010)

Tysonboss1 said:


> For me it is not Property vs Shares thing.
> 
> I don't invest in property because I believe it will out perform the best performing shares when i look back in 10 years. I invest in property because I want a stable safe income stream inside my portfolio.
> 
> ...




An excellent post

Something which commission based financial planners forgot (eg storm) and something which, as one transitions into different stages in their life requires only minor tweaking (ie you can structure trusts, companies etc around this from an early age)

I agree wholeheartedly that one should diversify, sure you are guaranteed to pick the loser each year, but you also get the winner, and the protection of your capital is almost guaranteed.


----------



## skcots (1 June 2010)

Tysonboss1 said:


> ...
> I also have a large share portfolio and I own a successful business. But having a weekly income stream from a property portfolio really helps balance out the fluctuations of share prices and risk of directors cutting dividends....




Sounds like a winning formula.


----------



## So_Cynical (1 June 2010)

sinner said:


> The question is no longer, "what happens to those who bought at the top". (re: negative equity)
> 
> The question now is: what happens to the loan books of companies like CBA and WBC if property values decline even 6%?




Add to this the need of the big 4 Banks to roll over 100+ billion in 3, 4 and 5 year loans over the next 18 months and its not to hard to see some foreign lenders being a little reluctant to take the risk that the Aussie housing market wont keep falling.


----------



## robots (1 June 2010)

hello,

good day brothers, robots here

yes thats my plan to TysonBoss1, trying to secure a comfortable retirement with seachange and treechange options in the cruisier times of life

and dont want to bludge of the taxpayer in later years when i have had every chance to earn money and support myself like people should, easy

and thats where too many people are focused on property or shares, instead brothers focus on your income as the $$ coming in from weekly pay or business are the easiest of them all, risk free normally

thankyou
professor robots


----------



## robots (1 June 2010)

hello,

oh well, looks as though another myth has been busted regarding property ownership and investment,

negative gearing is available to ALL ASSETS and has been for many many many years

and we all know the Federal Government introduced the FHOG because of the cruel stamp duty state governments imposed

so something going on

skcots, still cant understand why Storm investors went to the wall, werent they on the money being invested heavily in shares, oh well i guess some things in life just dont add up

thankyou
professor robots


----------



## UBIQUITOUS (1 June 2010)

Robots, any guesses what Enzo is going to decide on for this coming weekend's clearance rate? I reckon he will decide on 71% for this weekend and 70% for the weekend after.


----------



## robots (1 June 2010)

UBIQUITOUS said:


> Robots, any guesses what Enzo is going to decide on for this coming weekend's clearance rate? I reckon he will decide on 71% for this weekend and 70% for the weekend after.




hello,

no sorry Ubiquitous, just do what i do every weekend and wait for the official results to come out on saturday evening around 7-7.30pm

Enzo does a great job collating all the data, good operator

thankyou
professor robots


----------



## nunthewiser (1 June 2010)

> Perth's real estate recovery has stalled, with the western suburbs falling hardest and some sellers offering six-figure reductions to offload their homes.
> 
> Research by consultancy RP Data-Rismark shows the value of homes fell 0.9 per cent across the metropolitan area in April, and by 0.6 per cent in the first quarter.
> 
> ...




http://au.news.yahoo.com/thewest/a/-/newshome/7324471/big-price-cuts-to-perth-real-estate/

Sweet as bro.


----------



## MACCA350 (1 June 2010)

robots said:


> hello,
> 
> no sorry Ubiquitous, just do what i do every weekend and wait for the official results to come out on saturday evening around 7-7.30pm
> 
> Enzo does a great job collating all the data, good operator





MACCA350 said:


> Now that's interesting.
> 
> 23/5/10
> RP Data: 756 Auctions = 69.4% clearance rate
> ...




Yep, great job indeed

Cheers


----------



## satanoperca (1 June 2010)

robots said:


> skcots, still cant understand why Storm investors went to the wall, werent they on the money being invested heavily in shares, oh well i guess some things in life just dont add up




I'll give you a hint, it starts with L and lots of it. 

Cheers


----------



## UBIQUITOUS (2 June 2010)

satanoperca said:


> I'll give you a hint, it starts with L and lots of it.
> 
> Cheers




Lollipops!


----------



## Mofra (2 June 2010)

There have been a few complaining about the tax treatment of residential property on this thread; interesting artcile pops up today:

http://www.news.com.au/money/shares-ahead-of-property-in-tax-treatment/story-e6frfmdr-1225874372015

Shares ahead of property in tax treatment 



> IN discussions about residential property the talk often turns to how generous the government is with tax breaks and other incentives for this asset class and how this has helped fuel property prices in Australia.
> 
> But we often forget shares' generous tax treatment, especially compared with other countries, The Australian reported.


----------



## Dowdy (2 June 2010)

UBIQUITOUS said:


> Lollipops!




Don't forget the sunshine


----------



## sydneysider (2 June 2010)

nunthewiser said:


> http://au.news.yahoo.com/thewest/a/-/newshome/7324471/big-price-cuts-to-perth-real-estate/
> 
> Sweet as bro.




I spent ten years in Sydney real estate working as an attorney mostly on inner Sydney office building conversions such as Broughton House and a host of other buildings and lots of auction sales of harborside properties. I recall that you could buy a shotgun house in the inner West for $20,000. Now live in Atlanta. You can buy near new 2,000 sq foot home with 3 bedrooms, 2 bathrooms, good quality carpets and  fittings, two car garage, fully AC for both summer and winter, fully insulated with double glass windows in Gwinnett County which (was)is in the middle of one of the fastest growing metro areas in the USA for $120-150,000. No stamp duty and mortgage interest is fully tax deductible to the owner/occupier. Rents for about $1,100 per month. That gives a gross return of about 9% on a 10% vacancy factor.

Australian real estate does not make any sense as it seems to be very high priced and the quality is not there (bathrooms with cheap/small fittings, front doors with no imsulation etc). Many developments are so small that it is very difficult to manouver a decent sized car around garages and into narrow streets. Trying to get around Sydney now makes me car sick as most of the old neighborhoods have many roundabouts and speed bumps. Old neighborhoods like Burwood and Strathfield have been pillaged of their beautiful homes that were built before WW1. It is a damn shame. I know that a lot of the "overprice" is due to kooky zoning and building regulations. I recall trying to renovate some huge mansions across the other side of Parramatta Road from Sydney University. They remained in trashy condition because the owner was supposed to make part of the property available for the poor folk in the area if you wanted to upgrade. At the end of the day I took off for the U.S. In Roswell (three U.S. Presidents lived here at one time) you can buy a 5,000 sq foot home with five bedrooms, three full bathrooms, several dining and entertaining areas, two car garage, movie theatre that seats 16 people with its own fully equipped bar, on a decent sized lake 30 feet deep for swimming and multiple decks off the house in a golf course community and still have a little change out of $500,000.


----------



## robots (2 June 2010)

hello,

should of kept yourself at least 100k man for an uzi, grenade launcher, ak47, armoured Hummvee, kevlar bullet proof vest, 3030, night goggles, 2 dobermans, 24hr security guard

man you in trouble, why do people have to keep comparing Aus with US?, the joint is a hole

its like Alan Kohler who keeps pulling up graphs from Debtwatch highlighting our prices to US, the place is finished

thankyou
professor robots


----------



## wayneL (2 June 2010)

robots said:


> hello,
> 
> should of kept yourself at least 100k man for an uzi, grenade launcher, ak47, armoured Hummvee, kevlar bullet proof vest, 3030, night goggles, 2 dobermans, 24hr security guard
> 
> ...




Wrong neighbourhood 'bot.


----------



## tech/a (2 June 2010)

> Australian real estate does not make any sense




Perhaps
Sydney real estate (in your opinion) does not make any sense-----would make more sense to the rest of Australia.


----------



## medicowallet (2 June 2010)

robots said:


> skcots, still cant understand why Storm investors went to the wall, werent they on the money being invested heavily in shares, oh well i guess some things in life just dont add up
> 
> thankyou
> professor robots




Like some of the "property" based listed companies in australia which went belly up during the GFC. I guess some things don't add up.


----------



## robots (2 June 2010)

hello,

Yes, "property" listed cpmpanies medicowallet

Boards, managers, major shareholders, shareholders (who are irrelevant), lenders

Thankyou
Robots


----------



## todster (2 June 2010)

wayneL said:


> Wrong neighbourhood 'bot.




I thought he was talking about Sydney!


----------



## medicowallet (2 June 2010)

robots said:


> hello,
> 
> Yes, "property" listed cpmpanies medicowallet
> 
> ...




But wasn't it you who was singing the praises of WESTFIELD and Frank Lowy, and the other owners of "property" based listed companies on the stock exchange?


----------



## trainspotter (2 June 2010)

medicowallet said:


> But wasn't it you who was singing the praises of WESTFIELD and Frank Lowy, and the other owners of "property" based listed companies on the stock exchange?




Nope ..... that was me to point out the Number one person on the BRW is Frank Lowy who claims he had earned it (the right to be there) as well as paying himself millions of dollars for the privelige. Just so happens to be a property mogul with Westfield.


----------



## explod (2 June 2010)

medicowallet said:


> But wasn't it you who was singing the praises of WESTFIELD and Frank Lowy, and the other owners of "property" based listed companies on the stock exchange?




Yep, Confessor Robots was the one and turns with the breeze.  Trouble is the breeze's gone from lilacs to smelly stuff a bit lately.

Selective investments in all catigories are the go as has been pointed out in some good posts over the last few days.

Have been in a property trust for 12 years which is to be sold as it matures at the end of this financial year.   Has been paying an annual dividend of 10%on original investment of $1 per unit.  Sale and wind up expected to return unitholders nearly $4 per unit.   Top retail property inner Sydney.

No one can say what is best, you can only go your own way on putting the ruler over it many times.


----------



## medicowallet (2 June 2010)

trainspotter said:


> Nope ..... that was me to point out the Number one person on the BRW is Frank Lowy who claims he had earned it (the right to be there) as well as paying himself millions of dollars for the privelige. Just so happens to be a property mogul with Westfield.




I know it was you who started it, but he jumped on the bandwagon as well. Plus a quick scroll can let me see that he has said it in previous posts as well. Took a bit of finding though!


----------



## nunthewiser (2 June 2010)

I enjoy Dr Robots posts.

But he knows that i know that we have seen the top of the market for now and the cycle is due for a backpeddle.

Thats fine by me .....i own property and happyto continue(i have also sold properties within the last 2 years), probably will buy more at a later date also.

Great stuff is real estate.


Do feel concerned for our young and overextended tho but i doubt that will stop me nailing some poor sucker to the wall come negotiation time for the next ones


----------



## medicowallet (2 June 2010)

nunthewiser said:


> I enjoy Dr Robots posts.
> 
> But he knows that i know that we have seen the top of the market for now and the cycle is due for a backpeddle.
> 
> ...




You hit the nail on the head.

A pullback is due, and as long as you are not overcommitted with a recent purchase spurred by the governments ill timed and conceived bailout of realestate, then you are a winner no doubt.

We have to correct, as the world has seen that we are overvalued, the banks will no doubt look to limit their exposure as well. 

Like you, I am looking forward to any bargains which pop up, but I don't expect any real return on housing for quite some time.


----------



## robots (2 June 2010)

hello,

why they all out to get me Nun, every corner i turn someone is having a go

i notice the Doom spruikers are still claiming prices should be 3.4-4x average wage, shame they cant operate realestate.com.au

so the "boss" of Westfield at top of the list, how are the shareholders travelling

i am just a guy trying to help out others on their path, robotism, paradise, a euphoria that lasts all day long

as high as high can be

thankyou
professor robots


----------



## nunthewiser (2 June 2010)

robots said:


> hello,
> 
> why they all out to get me Nun, every corner i turn someone is having a go
> 
> ...





Dunno Dr R, 

seems a few maybe jealous of your title as being a legend in ASF as the dude that got it right for at least 5/6 years in a row?

Dunno , got me beat actually.

Perhaps you should visit your local nunnery and share the love


----------



## cutz (2 June 2010)

robots said:


> so the "boss" of Westfield at top of the list, how are the shareholders travelling




OK i guess,

Just going through a period of consolidation after the rebound, could be touch and go from here.


----------



## gordon_gecko (2 June 2010)

Hey Guys first time writer long time reader,

I have an economic and law background and have been doing a bit of research into this particular area and have concrete views. I am not sure if this theory has been discussed but it is quite simple and impossible to argue against. 

Anyone that understands economics knows that wages rise with CPI and inflation which is currently around 3% (2-3% target), which is restricting affordability.

However history shows that property prices are increasing by 7-10% p.a. and due to compounding this difference is magnified.

The average wage in Australia is $60K, therefore with a 3% increase compounded per year for 50 years, the average wage would become $260,000, wow quite an increase.

But when you realise that on 7% growth of property prices the average property price of a house in australia will go from $400k to $12 million and on 10% growth will achieve a median of almost $50 million, you realise that the increase of the median wage is far outmatched by the increase in property values.

Sustainable. . . .clearly not. Affordability is at its lowest EVER in australian history and a correction in the property market. Honestly, if anyone has a ACCURATE explaination for why this isnt the case, please explain because i have nothing.

Thanks guys really appreciate the feedback


----------



## gordon_gecko (2 June 2010)

I believe a correction of 20% within the next 2-3 years followed by a consistent long term plateau. The banking sector is too regulated to allow "100 year mortgage" as in korea so a correction is inevitable.


----------



## robots (2 June 2010)

hello,

good day Gordon, great posts man

it surely is a strange occurrence, just keep in mind you have to be in it to win it 

nothing scary about 100yr loans, just a product the banks may introduce to their customers

try not to get caught in "numbers" and averages etc as they are figures which the Doom Spruikers continually put up and after seeing there leader Dr S.Keen fail dramatically i am surprised many more havent dropped of the radar like GHPC

although looks as though a guy from Crikey is doing his best

thankyou
professor robots


----------



## uahmad (2 June 2010)

gordon_gecko said:


> Hey Guys first time writer long time reader,
> 
> I have an economic and law background and have been doing a bit of research into this particular area and have concrete views. I am not sure if this theory has been discussed but it is quite simple and impossible to argue against.
> 
> ...





Im 100% with you here, Im not in the office but I will post a link to a research done recently talking about the above tomorrow.

I would say a min of 20% correction is required..


----------



## gordon_gecko (2 June 2010)

Thanks professor,

i just find it hard not to look at the progressions of the prices vs wages. even if demand is through the roof with great infrastructure, transport opportunities. . .bla bla bla, all the growth "factors", but at the end of the day something is only worth what someone is willing to and able to pay for it. the perfect property everyone might LOVE and do anything for, but at $50mil a pop, no one will be able to afford.

I doubt 100 year loans will eventuate in this country, banking sector is far too regulated to accommodate the change, fiscal and monetary policy will intervene before this happens.


----------



## satanoperca (2 June 2010)

robots said:


> hello,
> 
> why they all out to get me Nun, every corner i turn someone is having a go
> 
> ...




Cheer up old mate, the bears are just a little hungry and no food for the last six years of your reign as ASF Investor of the Year has made them a little feisty.

Property in the long run will always come up trumps, I think that has been well and truly established, the question is what is the future of property prices in 1 yr, 2yr, 5yrs etc.

Maybe they are just a little touchy you are claiming this year as another win before it is over.

I have my beliefs as to what will happen so I am taking every opportunity to short the Banks who I believe are most exposed if property sees a correction or change in trend.

I wonder if I gamble as much as a median house on shorts on the banks whether my return in the next year will be as great as the return this year on property. Hmmm 20%, seems possible, ANZ $22 to $11, 50% return. WBC $23 to $14 40%. 

And for those that wonder, I will be NG my shorting investment and the only question will be can I hold the shorts for more than a year for my CG deduction.

Cheers


Got to love L.


----------



## cutz (2 June 2010)

satanoperca said:


> I wonder if I gamble as much as a median house on shorts on the banks whether my return in the next year will be as great as the return this year on property. Hmmm 20%, seems possible, ANZ $22 to $11, 50% return. WBC $23 to $14 40%.




If you hang on a little longer you can short the real deal.

Still waiting for this proposed product to come online http://www.smh.com.au/business/betting-on-the-house-20090513-b3cs.html , seems to be taking longer than expected.


----------



## Tysonboss1 (3 June 2010)

gordon_gecko said:


> Hey Guys first time writer long time reader,
> 
> I have an economic and law background and have been doing a bit of research into this particular area and have concrete views. I am not sure if this theory has been discussed but it is quite simple and impossible to argue against.
> 
> ...





Let me start by saying I agree that property (atleast the market I study) is properly due for some stagnation or possible down ward pressure. but who knows what will i happen short term, I certainly don't.

However, I don't fully agree with your idea that it is impossible for property to grow faster than the rate of inflation longterm.

Over time land uses and population densities change and this gives rise to price increases that are out of wack with with normal affordabilty calculations.

For example, what was considered an average family home in the 60's and was affordable to someone of average means may now sell for upwards of $2M and be way out of reach of someone of average means, Does this mean that the property in over valued and will some how fall in value to better reflect the rate of inflation. probally not.

The property could attain a $2M price tag because over the past 50 years density may been increasing and developers will buy this property and put 10 apartments on it and sell or rent the apartments to those of average means, or high income earners that don't want to live in apartments will bid up the prices of the areas that aren't being developed.

you can see examples of this all over sydney, I have seen a house sold in my suburb that was in an unlivable condition for $2.3M, along with the 2 houses either side it was turned into an apartment building, While on the other side of the suburb houses that aren't in the correct zoning to be developed still sell for over $2M because there are high income earners willing to pay that much not to live in an apartment but still live close to the city.


----------



## Tysonboss1 (3 June 2010)

gordon_gecko said:


> but at the end of the day something is only worth what someone is willing to and able to pay for it. the perfect property everyone might LOVE and do anything for, but at $50mil a pop, no one will be able to afford.




they can afford it when I developer buys it and puts 200 Apartments on it.

Times change, 150 years ago parramatta was farm land using your formula land in parramatta would never be worth $5M a hectare because no farmer could produce enough cattle off that land to beable to pay that price.

But fast forward 150 years and you see a 5 level westfield shopping centre and 20 story apartment buildings and suddenly $5M a hectare seem cheap as chips.


----------



## wayneL (3 June 2010)

Tyson,

That's not a valid argument. You are talking land use and zoning changes. That inner city workers cottage is no longer a workers cottage, it's redeveloped by a totally different demographic. Everyone recognises this phenomenon and everyone tries to see far enough ahead to capitalize, if so inclined.

Inner city suburbs of a rabidly growing and prosperous city will have additional dynamics that will push prices much higher because of extraneous value factors as you detailed.

The affordability argument is about average family homes of more or less equal demographic.


----------



## schnootle (3 June 2010)

gordon_gecko said:


> Thanks professor,
> 
> i just find it hard not to look at the progressions of the prices vs wages. even if demand is through the roof with great infrastructure, transport opportunities. . .bla bla bla, all the growth "factors", but at the end of the day something is only worth what someone is willing to and able to pay for it. the perfect property everyone might LOVE and do anything for, but at $50mil a pop, no one will be able to afford.




This is what I have always thought, simple maths says it is a matter of when not if prices stop growing relative to wages. But apparently housing in Australia is "different" (like pets.com)


----------



## gordon_gecko (3 June 2010)

Tysonboss1 said:


> Let me start by saying I agree that property (atleast the market I study) is properly due for some stagnation or possible down ward pressure. but who knows what will i happen short term, I certainly don't.
> 
> However, I don't fully agree with your idea that it is impossible for property to grow faster than the rate of inflation longterm.
> 
> ...





To be honest their Tyson, what your saying makes no sense what so ever im sorry to say. Its quite evident that wages rise with CPI (agreed. . . clearly), and the governments goal is to keep Inflation between 2-3% and they WILL do so in means of fiscal or monetary policy, that is a guarantee. Therefore this is highly unlikely to change. Its evident that the inflation does fluctuate above and below the governments goal, however this happens within all economic variables in the SHORT TERM- ie. unemployment, GDP vs potential GDP.

Your second argument stating that houses were just as affordable in the 60's and now are worth 2M is is not correct. Houses were much cheaper agreed, but that was not matched by a similar percentage change in the wage. People often say that houses were 1000 pounds but it still took people 30 years to pay off. Far from the truth, My parents bought a house in the fifties on average wages, and paid the house off in 5 years, not possible in todays climate even with strict extra principal payments.

The argument that your putting forward is the 60's house prices vs wages are relative to todays house prices vs wages. But mate what you have to realise is my compunding theory doesnt just work forwards it works backward too. Look on the RBA website and see historic data on CPI and inflation in the LONG TERM, short term fluctuations (wars, recession) are always corrected in teh long term.


----------



## Beej (3 June 2010)

gordon_gecko said:


> To be honest their Tyson, what your saying makes no sense what so ever im sorry to say
> 
> [snip]




Gordon_Gecko - What Tysonboss wrote is 100% correct. It has nothing to do with how long it took an average wage earner to pay off their house in the 60s vs now. His point was that specific property and specific sub-markets can and do increase in value at a rate greater than inflation, and it is because the "exclusivity" if you like of a location/piece of land increases over time as population density increases and a city grows. In theory a market response to this to address affordability should be the provision of more housing in areas with lower land value, including the growth of smaller towns into future cities. This does eventually happen but is a macro/long term response.

The other thing you are forgetting is productivity growth. Since 1900 wages have compounded by a rate in excess of CPI consistently due to productivity improvements: The result being that a far smaller proportion of an average wage (which is actually $66k now by the way) is now needed for the basics of living (food/clothing/transport etc) today than in the past. Another way to say this is that DISPOSABLE income can and does grow at a rate in excess of inflation, and this is likely to continue to be the case. *House prices are driven more by disposable household income than by the gross single wage*.

Anyway we have actually been through many of these points on this forum many times before. Go back and read the "House prices to fall for years" and the "House prices to rise for years" threads, especially the first few pages, and you will see all these things and more discussed 2-3 years ago, then see who turned out to be right .

EDIT: Just to add more to my points above, here's a statement from the latest RP-Data house price release:



> If we take overall disposable household incomes between end 2007 and end 2009, growth has been 11.5 per cent. In comparison, capital city house prices have risen by nine percent. Amazingly, the rest of state markets have grown by just 3.2 per cent between end 2007 and end 2009. On a per household basis, the disposable income growth over this period was about 7.6 per cent.




What this shows, is that the over-all national house price growth figures can mask some interesting trends. The above shows that right now, the big and high growth cities have house prices rising far more rapidly than in the regions. Affordability over time will cause a drift towards the more affordable centres, skewing median stats etc accordingly, but that won't stop values in the big and high growth cities from growing well in excess of inflation over the long term.

PS: In the short term, I have no doubt that are currently somewhere near a "top", which means an end to the big growth numbers seen last year. A minor correction may ensure, in the order of 5-10% IMO, but then things will steady in most cities and start to slowly grow again. Sydney may out-perform IMO, due to it already having seen a 20% correction in real terms between 2003 and 2008.

Cheers,

Beej


----------



## Mofra (3 June 2010)

gordon_gecko said:


> Hey Guys first time writer long time reader,
> 
> I have an economic and law background and have been doing a bit of research into this particular area and have concrete views. I am not sure if this theory has been discussed but it is quite simple and impossible to argue against.
> 
> ...



Sorry, had to pull you up on the bolded bit - AWOTE has been increasing faster than inflation for years, and I would expect that the property price growth (once the current period of property price consolitaion/stagnation is factored in) would come close to matching the average AWOTE rate for the first announcement next year.


----------



## gordon_gecko (3 June 2010)

Beej said:


> Gordon_Gecko - What Tysonboss wrote is 100% correct. It has nothing to do with how long it took an average wage earner to pay off their house in the 60s vs now. His point was that specific property and specific sub-markets can and do increase in value at a rate greater than inflation, and it is because the "exclusivity" if you like of a location/piece of land increases over time as population density increases and a city grows. In theory a market response to this to address affordability should be the provision of more housing in areas with lower land value, including the growth of smaller towns into future cities. This does eventually happen but is a macro/long term response.
> 
> The other thing you are forgetting is productivity growth. Since 1900 wages have compounded by a rate in excess of CPI consistently due to productivity improvements: The result being that a far smaller proportion of an average wage (which is actually $66k now by the way) is now needed for the basics of living (food/clothing/transport etc) today than in the past. Another way to say this is that DISPOSABLE income can and does grow at a rate in excess of inflation, and this is likely to continue to be the case. *House prices are driven more by disposable household income than by the gross single wage*.
> 
> ...




I have to admit i do agree with your theory of the market response leading to development of smaller towns and growth in those regions, however i do no agree with your disposable income theory. Even if we reduce the HPI level by 5% per year (increasing affordability) and continue with current LPI growth(which btw is quite consistent with CPI over the past 100 years) it still does not offset the increase in house proces. It also does somewhat relate to the correlation between affordability now and 100 years ago. If we take into account productivity growth, (inconsistent and many economists believe that this will reduce in growth due to a reduction in global government investment) as well as LPI and house prices, the gap is clearly closing. The RBA has announced that house prices are the least affordable they have ever been and banks are feeling the pinch with first home buyers down 2.3% due to affordability.

You talk about 2-3 years ago and house prices are still flourishing and who is right, this issue is becoming increasingly volatile and it may not happen today, it may not happen tomorrow, but there will be a major correction within the next few years especially in capital cities, regardless of productivity and GDP growth.

Not only that, disposable income has a direct relationship with the consumer price index. As disposable income increases (due to productivity growth) so does DEMAND for goods and services. Therefore using the simple demand and supply law as demand increases, so does prices. 

Cheers


----------



## Tysonboss1 (3 June 2010)

wayneL said:


> Tyson,
> 
> Inner city suburbs of a rabidly growing and prosperous city will have additional dynamics that will push prices much higher because of extraneous value factors as you detailed.
> 
> The affordability argument is about average family homes of more or less equal demographic.




As a city like sydney grows and houses are demolished and replaced with apartments, The total number of "Family Homes" is decreasing while the number of people who would like to live in them is increasing So obviously the highest income earners will bid up the price to secure one for their family.


----------



## Tysonboss1 (3 June 2010)

gordon_gecko said:


> Your second argument stating that houses were just as affordable in the 60's and now are worth 2M is is not correct.




Thats not what I am saying,

What I am saying is that Houses in suburbs within 10k's of the city, were once affordable 3 bed family homes that were affordable on an average wage.

However with the density increases, those properties from the 60's have increased faster than inflation to the point where they are completed unaffordable on the average wage.

But that doesn't mean a person of average means can't live in that suburb.

Because as I said developers will knock down the house and put 10 apartments on it, and suddenly a $2M block of land is really affordable when the cost of the land is shared between 10 apartments that know sell for $390,000 each.

And the houses where the Zoning doesn't allow developers to build up will also grow invalue as people that refuse to live in apartments bid up the price to secure a family home.

To expect every one in sydney should be able to afford their own 1/4 block on the average wage is crazy, their is simple not enough land in sydney.

But feel free to move to a regional area.

Your arguement only works in a city that has no growth in population or density.


----------



## gordon_gecko (3 June 2010)

Tysonboss1 said:


> Thats not what I am saying,
> 
> What I am saying is that Houses in suburbs within 10k's of the city, were once affordable 3 bed family homes that were affordable on an average wage.
> 
> ...




Ok, sorry i misunderstood your argument, but we have examples to portray that population growth does not affect affordability.

Look at thriving asian countries, population growth was so erratic that fiscal policy was put in place to reduce the number of children being born. Whats happening with the house prices there? They are so unaffordable that even the wealth are only able to afford with extreme loan terms, 100 year terms as 30 year terms are simple not affordable for the households there. I understand that their GDP per person is not as high as it is in western countries, but it does not reflect the housing situation.

Also density and popluation growth, resulting in increasing housing prices has to be supplied with an ever growing industrial market to facilitate this growth. I know this may be possible in Sydney, but Adelaide will never be able to facilitate this growth. Apartments have grown just as fast over the past 50 years as housing and units, so why wouldnt it continue. House prices soar to 25 million for a standard home and you think developers will buy the land and sell each individual apartment for even 1 million. Not likely when the current correlation is that apartments are on par if not more expensive than the average house price. 

Cheers


----------



## Tysonboss1 (3 June 2010)

gordon_gecko said:


> Not likely when the current correlation is that apartments are on par if not more expensive than the average house price.
> 
> Cheers




Well I have no idea about adelaide, But the figures in my suburb of sydney are similar to the ones I used in the example,

Houses in my suburb are generally over $2M and apartments in the same suburb start at around $390,000.

Offcourse just like houses, apartment prices vary with quality and location,

You can't compare a penthouse apartment with veiws of the harbour bridge with a two bedroon ex housing commision home in the a$$ end of the western suburbs, and say I told you apartments are just as expensive as houses.

But my description of housing density growth is happening all over sydney,


----------



## Tysonboss1 (3 June 2010)

gordon_gecko said:


> House prices soar to 25 million for a standard home and you think developers will buy the land and sell each individual apartment for even 1 million. Not likely when the current correlation is that apartments are on par if not more expensive than the average house price.
> 
> Cheers




That has happened if you look at the price of land in sydney cbd, land can be $50M so the developer puts a 40 story building on it,


----------



## gordon_gecko (3 June 2010)

Tysonboss1 said:


> Well I have no idea about adelaide, But the figures in my suburb of sydney are similar to the ones I used in the example,
> 
> Houses in my suburb are generally over $2M and apartments in the same suburb start at around $390,000.
> 
> ...




So your telling me that a property in Sydney is worth 2M when an apartment with similar attributes and similar quality is worth 390K, tell me where to sign bud


----------



## UBIQUITOUS (3 June 2010)

gordon_gecko said:


> So your telling me that a property in Sydney is worth 2M when an apartment with similar attributes and similar quality is worth 390K, tell me where to sign bud




Plenty of North shore/Northern suburbs like this. Houses are ridiculously priced.


----------



## Beej (3 June 2010)

gordon_gecko said:


> So your telling me that a property in Sydney is worth 2M when an apartment with similar attributes and similar quality is worth 390K, tell me where to sign bud




The house will come with probably 1000m2 of prime, torrens titled land and a nice big house. The apartment will be a 1 bedder of 60-70m2. For $500k you can probably get a nice big 2 or even 3 bed apartment of 80-100m2. Good value really, but people will still happily pay $2M for the house/land. The example given is very realistic for Sydney.

Tysonboss - sounds like you are on the north shore somewhere?? 

Cheers,

Beej


----------



## Tysonboss1 (3 June 2010)

gordon_gecko said:


> So your telling me that a property in Sydney is worth 2M when an apartment with similar attributes and similar quality is worth 390K, tell me where to sign bud




To give a real world example, 

A house that is in a suburb 10kms from the sydney CBD, that had every window broken, the roof was falling in and 1/4 of the roof tiles were on the floor, the grass (actually they were weeds) was about 1M high, and vandals had spray painted all over it, Sold for the Bargain basement Price of $2.3M.

At the same time apartments were selling in a new development for $390,000.

That house that sold for $2.3 now as I said in an earlier post has apartments on it, it was bulldozed within 3 months of a developer buying it.

Obviously $2.3M was considered a fair price buy the developer for the land alone, if it had a better house on it it could have sold for more


----------



## Tysonboss1 (3 June 2010)

Beej said:


> Tysonboss - sounds like you are on the north shore somewhere??
> 
> Cheers,
> 
> Beej




Yes, you got me.


----------



## Tysonboss1 (3 June 2010)

UBIQUITOUS said:


> Plenty of North shore/Northern suburbs like this. Houses are ridiculously priced.




but they are expensive for a reason,

it's close to the city, close to good schools, beaches, low crime rate, good rail transport.

People on high incomes (company execs) would much rather spend >$2M and have all the above than save a measly $1.5 and subject their families to what the consider a lower standard of living in the crime filled western suburbs.

Any one with a house near a train line has been crying though in recent years as the north shore is seeing mass development along  the train line as these Million dollar homes are being bulldozed to make way for Apartments, Which in turn is putting more upward pressure on the prices of houses away from the development which is mainly focused along the train line out to hornsby.


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## sptrawler (3 June 2010)

There is one thing for sure when everybody is saying this is going to last for ever and it is different this time. It is time to watch out, consumer spending is dropping like a rock and the RBA are going to push it, or maybe the banks will drop their bundle and tighten lending. Maybe something will come out of the blue and everyone say S#!+ I never saw that, but one thing is for sure nothing is forever.


----------



## Tysonboss1 (3 June 2010)

sptrawler said:


> There is one thing for sure when everybody is saying this is going to last for ever and it is different this time. It is time to watch out, consumer spending is dropping like a rock and the RBA are going to push it, or maybe the banks will drop their bundle and tighten lending. Maybe something will come out of the blue and everyone say S#!+ I never saw that, but one thing is for sure nothing is forever.




Who is saying that it is going to last forever and it is different this time.

I haven't heard any one say that here.


----------



## skcots (3 June 2010)

Tysonboss1: I dont know much about the North shore but if the million dollar properties are being bulldozed in favour for affordable apartments. This would certainly change the desirability of the area in the long term. Maybe its worth investigating where the next generation of rich execs will be moving. If you have the means that is.


----------



## Tysonboss1 (3 June 2010)

skcots said:


> Tysonboss1: I dont know much about the North shore but if the million dollar properties are being bulldozed in favour for affordable apartments. This would certainly change the desirability of the area in the long term. Maybe its worth investigating where the next generation of rich execs will be moving. If you have the means that is.




they are not just running a bulldoze over the entire north shore, The main developments are running along the train line and pacific highway, so there will be alot of areas that are unaffected.

But I don't own property in sydney, and I don't think I ever will. I prefer Brisbane thats where I invest.


----------



## trainspotter (4 June 2010)

*The RP Data-Rismark Home Value Index *released this week showed that capital city home values increased by just 0.2% during April 2010 after recording growth of 1.3% in March. For houses outside of the capital cities, values fell by -0.2% over the month. Despite the softening growth rates, capital city property values have increased by 11.9% over the last 12 months whilst those areas outside of capital cities have recorded rates of growth less than half this, at 5.6% over the year. 

No doubt these latest results showing a* slowdown in the rate of property value growth* along with weakening housing finance data, a significant fall in consumer sentiment, easing auction clearance rates and a run of interest rate hikes, has weighed heavily on the decision by the Reserve Bank to keep interest rates on hold this month. The results certainly seem to show that the rate hikes to-date have had the desired effect of slowing the rate of growth in residential property however, evidence suggests that these hikes are now stifling new construction.

Dwelling approvals data released this week showed a significant fall, with approvals for private homes falling by -13.5% during April 2010. This was the biggest monthly fall since July 2000. Total dwelling approvals fell by -14.8%, their greatest monthly fall since November 2002. Meanwhile, private unit approvals were down -5.4% for the month.

Yep ....... it was smoke on the horizon afterall. Still believe that we are not heading into negative territory on a cataclysmic scale. Can see that foreclosures will definitely surge if rates are on the move upward. Listings will increase as the RE's do their job. General slowdown across the board is good for the industry.

I enjoy robots positivity in this thread. Try a bit of leniency when it comes to retaliatory posts on the man. He is living the dream and believes strongly in property investment on a scale that suits him. His style may not suit the "sophisticated investor" status of some of us in here but you have to give him credit for his unwavering viewpoint.


----------



## medicowallet (4 June 2010)

trainspotter said:


> * The results certainly seem to show that the rate hikes to-date have had the desired effect of slowing the rate of growth in residential property however, evidence suggests that these hikes are now stifling new construction.
> 
> Dwelling approvals data released this week showed a significant fall, with approvals for private homes falling by -13.5% during April 2010. This was the biggest monthly fall since July 2000. Total dwelling approvals fell by -14.8%, their greatest monthly fall since November 2002. Meanwhile, private unit approvals were down -5.4% for the month.
> 
> *



*

They always panic about this.

When I last went to build (about 2 years back), there was a 6 month wait before they could start to build.

I would not panic about approvals unless they keep low for as long as the average lag time is. However if they do, then builders and developers will no doubt offer discounts to encourage people to keep investing, this will keep people employed and produce downwards pressure on prices. Everybody is a winner, except the developer/builder.*


----------



## medicowallet (5 June 2010)

Wow 

I was shocked to see 30/5/2010

Melb
881 = 68.8% clearance
Syd 
642 = 62.2% clearance

Could be another interesting weekend.


----------



## robots (5 June 2010)

hello,

oh yeah, another great day in melbourne

yes probably mid 60's, fantastic result

dont know why there is all this new found interest in the clearance rates, 

like i mean, only losers post up the results dont they? any bet on what time Ubiquitous will be logging in?

thankyou
professor robots


----------



## explod (5 June 2010)

medicowallet said:


> Wow
> 
> I was shocked to see 30/5/2010
> 
> ...




Just posted up on Channel 9, clearance rate 72% and expected to stay around 75% for some months, so I'm with the *Confessor*,   noooo  worrries, we will get through this.


----------



## robots (5 June 2010)

hello,

oh thanks explod, legend man

its exciting, everyone is logging in to get the results

any chance of one of those jokes Explod? cheer all the melbuornians up

thankyou
professor robots


----------



## robots (5 June 2010)

hello,

and here it is brothers:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

70% on this fine day, awesome, oh well

the RBA will be happy, all's normal and just plodding along fine, well done Enzo

gee the country doing well

thankyou
professor robots


----------



## medicowallet (5 June 2010)

robots said:


> hello,
> 
> and here it is brothers:
> 
> ...




Yes. We'll have to wait a week for the real figures though. I'll post them then.


----------



## UBIQUITOUS (5 June 2010)

> The clearance rate from today’s 808 reported auctions was 70 per
> cent, a good result given *Melbourne has never seen as many auctions
> held on a winter weekend.*




Why? To give buyers an opportunity no doubt

1020 auctions on the weekend after next. Looking pretty scary indeed. I'm betting that when we get to spring we will be looking at around 1500-2000 per weekend.


----------



## Beej (5 June 2010)

UBIQUITOUS said:


> Why? To give buyers an opportunity no doubt
> 
> 1020 auctions on the weekend after next. Looking pretty scary indeed. I'm betting that when we get to spring we will be looking at around 1500-2000 per weekend.




Unlikely, and I'm not sure what you see as scary in those results? Unless you mean scary to housing market bears??   To provide some context, including private treaty sales there would be in the order of 1500-2000 properties changing hands in Melbourne each and every week of the year on average anyway. The "hot" market there is probably encouraging a larger proportion of sellers to go down the auction route at the moment. If/when the market softens there a bit (which is of course inevitable), then auction numbers will drop off, back to more "normal" levels.

Cheers,

Beej


----------



## UBIQUITOUS (5 June 2010)

Beej said:


> Unlikely, and I'm not sure what you see as scary in those results? Unless you mean scary to housing market bears??  * To provide some context, including private treaty sales there would be in the order of 1500-2000 properties changing hands in Melbourne each and every week of the year on average anyway. *The "hot" market there is probably encouraging a larger proportion of sellers to go down the auction route at the moment. If/when the market softens there a bit (which is of course inevitable), then auction numbers will drop off, back to more "normal" levels.
> 
> Cheers,
> 
> Beej




This is a major assumption and I would like to see evidence of this. Are you saying that there has been a decrease in the number of properties up of sale by private treaty?


----------



## satanoperca (6 June 2010)

Beej said:


> The "hot" market there is probably encouraging a larger proportion of sellers to go down the auction route at the moment.




Or a whole lot os sellers wanting to liquidate quickly and auctions would be seen as the fastest route.



Beej said:


> then auction numbers will drop off, back to more "normal" levels.




What are normal levels.

I went to three auctions yesterday, mad rush between them, but they were all passed in on vendor bids. All seemed to be priced at the peak of the market which was many months ago when IR's were lower, the threat of Europe imploding was less,the share market was not falling and backflip KRUDD was trying to strangle the largest export sector in Oz. The crowds were smaller but it was a crap day in Melbourne.

I will continue watching, investigating and waiting for an opportunity to purchase some RE, but that time is not know for me, others may see it differently.

Cheers


----------



## robots (6 June 2010)

hello,

yes although auction process (if sells) is probably the simplest for both sellers and buyers you still need to get property ready, advertise and run open for inspections

so any of the pro's here sold at the top?

thankyou
professor robots


----------



## medicowallet (6 June 2010)

robots said:


> so any of the pro's here sold at the top?
> 
> thankyou
> professor robots




Sorry never sell any property. I ride it out.


----------



## robots (6 June 2010)

hello,

what are you holding onto Medico, house, investment properties, 1, 2, 10, regional, capital city, commercial?

http://www.theage.com.au/business/why-shares-are-down-down-under-20100605-xlyg.html

thanks
professor robots


----------



## medicowallet (6 June 2010)

robots said:


> hello,
> 
> what are you holding onto Medico, house, investment properties, 1, 2, 10, regional, capital city, commercial?
> 
> ...




A mix of personal, major regional and capital.  I don't have any interests in commercial anymore.

I don't see the point in selling as I can comfortably take the losses which are coming, as I don't have any loans. I also have enough money in shares in my SMSF.

Basically I never sell anything. Never sell shares, never sell property. I am a long term player, and choose well (ie I did not lose much in the GFC as I had mainly banks, miners and retailers, unfortunately had MFS! (the property company which went bust))

How about you?


----------



## robots (6 June 2010)

hello,

ppor and 2 others, having just purchased in Ballarat

just keeping the options open for later in life, country and city living, have been selling shares of recent to have cash in bank

not sure what loans have to do with it, if pandemonium hits you think IR will same as now?

thats why i couldnt understand why S.Keen and many others wanted to get out of "debt", it gets cheaper to have a roof over the head

have all the foreign buyers disappeared or people onto the next myth

thankyou
professor robots


----------



## robots (6 June 2010)

hello,

off out for lunch brothers so have a great day, chill out, relax or go hard if your on

thankyou
professor robots


----------



## medicowallet (6 June 2010)

robots said:


> hello,
> 
> ppor and 2 others, having just purchased in Ballarat
> 
> ...




If I don't have any loans, I don't have any pressure to sell. I find that if I ever sell, I sell too late, and always buy for more than I sold for! I am absolutely rubbish at picking tops or bottoms, but I am good at picking quality 

Economists do not know what interest rates will do. I really am unsure what they will do, but think Australians can cope with another 1% rise (they are predicting exceptional growth over the next few years)

I agree with other posters here - bit stagnant, perhaps up to 20% falls in value. In the big scheme, it is warranted and should only cause minimal problems. We can't have the massive years without a correction or retraction.


----------



## Beej (6 June 2010)

UBIQUITOUS said:


> This is a major assumption and I would like to see evidence of this. Are you saying that there has been a decrease in the number of properties up of sale by private treaty?




My numbers are from a simple back of the envelope type calculation. Last year, 700,000 dwellings were sold/changed hands in Australia. this number varies from year to year but is generally in the range of 500,000 - 750,000 at the moment. Melbourne has about 15% of Australia's population, so it stands to reason that on those sorts of numbers roughly 15% of transactions will be in Melbourne. That's gives 2000/week sales rate for the whole of last year. In a softer year it would be 1500/week. That's where my numbers come from. 

As for the proportion of auction vs private treaty currently, that is speculation/supposition on my part, but we do know how many auctions there are each week, and so may get a reasonable immediate picture on the current proportions from that data.



satanoperca said:


> I went to three auctions yesterday, mad rush between them, but they were all passed in on vendor bids. All seemed to be priced at the peak of the market which was many months ago when IR's were lower, the threat of Europe imploding was less,the share market was not falling and backflip KRUDD was trying to strangle the largest export sector in Oz. The crowds were smaller but it was a crap day in Melbourne.
> 
> I will continue watching, investigating and waiting for an opportunity to purchase some RE, but that time is not know for me, others may see it differently.




Fair approach to wait and see. Keep an eye on the passed in properties, when I was buying last in late 2008 when the market was correcting downwards and GFC panic was abounding, and auction clearance rates were 40-something% (not 70 like now!), I found that many properties that passed at auction sold in the 1-2 weeks following for something around the current market price for the area. Some passed-in properties were removed from the market. Few sold at a significant discount to the *market* in my experience - although that doesn't mean that the owners might have had an inflated idea of the market to begin with! 

What is going on now just sounds like the typical phase in the property cycle where prices have been rising rapidly, and now they are stopping rising and pulling back a little. Auction clearance rates fall on rising volume as the market takes a while to adjust to the change in conditions. Soon volumes for sale/auction will start to fall again, and clearance rates and prices will stabilise for a while as that occurs. There is no particular trigger evident for anything other than this regular market cycle IMO.

Cheers,

Beej


----------



## satanoperca (7 June 2010)

> From an overall perspective the residential market is more in
> balance than it was earlier this year and that *means that buyers are
> facing the best conditions in over a year.* This is likely to continue
> with over 1000 auctions the weekend after Queens Birthday.




http://reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

Or sellers are facing the worst conditions in over a year. Doesn't say much about the current market.

Cheers

Those shorts on banks doing me a favour today.


----------



## MissMoneyPenny (8 June 2010)

> *New home buyers big winners *
> 
> New home buyers and investors are the big winners in the NSW budget, with the state government planning to use its early return to surplus to boost the ailing home building market.
> 
> ...




A first home owners type grant will continue after July. Any thoughts.....


----------



## robots (8 June 2010)

hello,
Yes about time they got rid of it, hope other states follow, ridiculous amout of Tax just for purchasing a home

Tax raising should be equally contributed by all
Thankyou
Robots


----------



## satanoperca (8 June 2010)

robots said:


> Tax raising should be equally contributed by all




Good to see ya Robots.

If the states were to abolish stamp duty on new homes, where do you think they could make up the lost revenue?

Are you thinking that is should be abolished for all home purchases?

Where do you see an imbalance in the contribution of taxes in the community?

Cheers


----------



## Dowdy (8 June 2010)

satanoperca said:


> Good to see ya Robots.
> 
> If the states were to abolish stamp duty on new homes, where do you think they could make up the lost revenue?
> 
> Cheers





Maybe they would learn to spend the money more wisely if they knew less was coming in.


Miki anyone?


----------



## MACCA350 (8 June 2010)

robots said:


> hello,
> Yes about time they got rid of it, hope other states follow, ridiculous amout of Tax just for purchasing a home



I thought that was the case already for FHB in NSW. From the look of it they are extending it to all new home buyers, not just FHB. 

Cheers


----------



## MissMoneyPenny (9 June 2010)

> http://www.smh.com.au/business/property/home-loans-drop-to-9year-low-20100609-xuxy.html




A graph from the SMH today.


----------



## satanoperca (9 June 2010)

That graph tells me prices cannot defy gravity for to much longer.

Would be interesting to overlay the increase in mortgage debt which I will assume has been trending up strongly in the last few years.

So number of loans down, amount loaned up. The greater fool is at play.

Cheers


----------



## Aussiejeff (9 June 2010)

satanoperca said:


> That graph tells me prices cannot defy gravity for to much longer.
> 
> Would be interesting to overlay the increase in mortgage debt which I will assume has been trending up strongly in the last few years.
> 
> ...




Which is why State & Federal gummints are DESPERATELY piling so much financial assistance into the residential housing sector. I'm sure they are well aware of that yawning gap shown on the graph and the consequences if they withdraw massive support now. The whole house of cards, as it were, is riding on one tiny sector of the Oz economy.

So, do your bit to support your gummints. BUY, BUY, BUY!!! Keep those prices soaring!


----------



## robots (9 June 2010)

hello,

gee, you need to let your mind open up brothers

why do the lines have to follow each other, isnt it "past performance no indication of future performance"

what support do they offer? zero, one gov (fed) gives you money to cover the other gov's (state) outrageous tax imposed on you for buying a secondhand product 

yeah, a grant of 7k is holding up a 230k secondhand house in melton south, amazing 

what a great day, superb rain in melbourne, fantastic riding bike to Parkville this morning at 6am, all the lights of the city just as it is awakening

thankyou
professor robots


----------



## cutz (9 June 2010)

Party is over boys.

It was good while it lasted.


----------



## satanoperca (9 June 2010)

Mortgage debt up 30% in three years.
No. of loans falling fast
Price stalling
Record number of properties hitting the auction circuit
GFC is coming back from its lunch break after dinning on stimulus from govnuts

Property to the moon is the only obvious answer.


----------



## robots (9 June 2010)

hello,

thats it brothers, all over

oh well

thankyou
professor robots


----------



## Bill M (9 June 2010)

satanoperca said:


> Mortgage debt up 30% in three years.
> No. of loans falling fast
> Price stalling
> Record number of properties hitting the auction circuit
> ...



Well mate compared to shares going down the toilet and countries defaulting on their debts give me bricks and mortar with a tenant anytime, it's a far far safer bet. Good luck with GFC 2....

PS: My tenant moved out after the 6 Month lease expired, one 15 minute open for rental inspection and I got a new one, same rent no probs.


----------



## satanoperca (9 June 2010)

robots said:


> hello,
> 
> thats it brothers, all over
> 
> ...




Bit dramatic. 



Bill M said:


> Well mate compared to shares going down the toilet and countries defaulting on their debts give me bricks and mortar with a tenant anytime, it's a far far safer bet. Good luck with GFC 2....
> 
> PS: My tenant moved out after the 6 Month lease expired, one 15 minute open for rental inspection and I got a new one, same rent no probs.




Fantastic Bill.

Still got to finish entries before getting onto main course.

Bill are you buying now? 

Cheers


----------



## Bill M (9 June 2010)

satanoperca said:


> Bill are you buying now?
> 
> Cheers




No, I bought where I am living now in Sept. last year. The unit I am renting I have owned for 7 years.


----------



## Mofra (10 June 2010)

MissMoneyPenny said:


> A graph from the SMH today.



Hope those figures are Australia wide. I believe we are ready for a period of property price softness and intend to buy on the pullback.


----------



## nunthewiser (10 June 2010)

Geraldton Guardian (print edition)




> Ray White real estate principle Ian Wheatland said sales had dropped 50% in May whilst listings rose 7.5% in that month.





If one wants a copy of this please send $1.20 for paper and $150.00 for postage and handling.


----------



## kincella (10 June 2010)

just back from a week in a country retreat....and going back there again next week.....
went there to do an inspection after the tenant moved on to an older persons unit......agents want me to sell or rent....but decided the place is just too nice.....so may keep it for myself as a country house....or I may change my plans and retire there instead....
they are half the price of Melb houses....and just a 3 hour trip on the old freeway
its so nice to take a break from  work.....and the blogging on the side

I note Robots and friends have been keeping up the good argument for the rest of us....
I am assuming there will be so many more investors looking at the safety of bricks and mortar, after another appalling week in the gambling den....
I note NSW is assisting FHB with stamp duty relief.....
and then of course the bottom falling out with no confidence left for investors, with building approvals down......that should frighten the daylights out of the banks and govnuts.....and rightly so....
after Stevens rate hikes....
I will check in from time to time.....but taking a break until mid to late July
cheers to Robots and the fellow property people


----------



## satanoperca (10 June 2010)

kincella said:


> that should frighten the daylights out of the banks and govnuts.....and rightly so....
> after Stevens rate hikes....




Can you please explain to me why Glenn should have left rates at emergency rates/historical low while inflation started to march forward and RE went to the moon?

Cheers


----------



## robots (10 June 2010)

hello,

good stuff Kincella, kick back brother, take it easy

yes thats what i plan to do in the coming years have plenty of options in life, country or city, the government should reward us more for our achievements

glenn stevens has done exactly the same as last time, pushed things way to far to quick, just hang in

and have high IR's busted inflation? no never do and never will, inflation is a given man (or as Kincella puts it the devalue of the $)

just like the sun coming up in the morning

as its a topic many cant grasp we might run a special Q & A on the topic of inflation/devalue of $ tonite

thankyou
professor robots


----------



## satanoperca (10 June 2010)

Cannot wait for Q&A tonight.

Might see if Glenn can provide some questions.

Cheers


----------



## satanoperca (10 June 2010)

Yes we are different here.



> Brazil lifts rate to 10.25%, meeting expectations




http://www.marketwatch.com/story/brazil-lifts-rate-to-1025-meeting-expectations-2010-06-09-1916100



> Annual inflation now stands at 5.22%, above the central bank's target of 4.5%



. 

Gee Glenn get on with it, those rates need to be higher.

Cheers


----------



## robots (10 June 2010)

hello,

good evening all, fire away

here to help, we will have an interval around 8.30pm for some light entertainment where Explod is going to hit us all up with some of his jokes

thankyou
professor robots


----------



## nunthewiser (10 June 2010)

love ya work


----------



## satanoperca (10 June 2010)

robots said:


> high IR's busted inflation? no never do and never will, inflation is a given man




If this is case, then how would you control inflation?

Do you believe Glenn dropped rates to far encouraging people to go further into debt instead of reducing?

What do you see as a fair inflation rate p.a?

Do you see the current IR's to high and should not be increased just to control inflation?

As a property investor, inflation is your friend, do you think you answers will show bias?

Cheers


----------



## robots (10 June 2010)

satanoperca said:


> If this is case, then how would you control inflation?
> 
> Do you believe Glenn dropped rates to far encouraging people to go further into debt instead of reducing?
> 
> ...




hello,

1. increase competition (fruit & vegetables)

2. no, people have a choice to go into debt or not

3. dont have a figure

4. maybe too high by 0.5%

5. no, my income is my friend

i know WayneL has been running long term threads on the true inflation rate in the community, its enormous and happens year after year, 

when retail lending rates went to 9.5% the other year did your grocery bill go down? power supply cost go down?

forget about inflation it happens year on year

thankyou
professor robots


----------



## satanoperca (10 June 2010)

robots said:


> hello,
> 
> when retail lending rates went to 9.5% the other year did your grocery bill go down? power supply cost go down?
> 
> ...




Hi,

Was hoping for me of a turn out but anyway.

No, my utility bills have gone up since we have had historically low IR's.

How would you increase competition for fruit and veg?

People dont have a choice, greed is a basic human emotion, even more so if they have to pay less for it.

An you may be proven correct if we see IR's reduced by 0.5% in coming months, but given inflation is outside the RBA band and unemployment is on its way back down I believe there is a greater chance of them being increased.

IR's also have a strong correlation with carry trade. Drop them to low and watch the money bleed out of the land from Oz.

Cheers


----------



## robots (10 June 2010)

hello,

oh well, people probably plotting the next trade, not to worry Satanoperca

and my power bills went up even when we had high rates, amazing

the issue with fruit and vegetables is they are an exception to inflation, i bought a kg of banana's for 1.69 last year and the year b4 and the year b4 that and the year before that

amazing

has Explod been around today? i had him booked for 8.30pm but hasnt shown, oh well, must be working on material

thankyou
professor robots


----------



## medicowallet (11 June 2010)

robots said:


> hello,
> 
> oh yeah, another great day in melbourne
> 
> yes probably mid 60's, fantastic result




Well Done Robots.  Although a little under: 

melb clearance = 67.6%
Syd clearance = 62.3%

if you average the two = 64.45%, so pretty darn close!!


----------



## robots (12 June 2010)

hello,

oh yeah thanks Medicowallet, 

just doing the usual community focused work for all at ASF, helping out all the brothers

there's a few prophets in this particular thread, keep an eye out for them

great winter weekend in Melbourne, the place to be

some good snow falls so should be good season
thankyou
professor robots


----------



## kincella (12 June 2010)

the true inflation rate is over 10%...so forget the rubbery figures of 3% designed to fool you....
the following is a copy I posted on another forum....

the dodgy figures used by the bankers worldwide...as 3% is for an alternative purpose....
most pensions, wage rises etc are tied to the inflation rates....
the govnuts worldwide cannot afford to pay pensions and all the other payments at the true inflation rate of 10%, hence they con the workers and the poor into believing the 3% rate....and so pay the lower rates....

interest rates themselves were removed in the early 90's from the inflation figure....so go figure that one out
and housing costs for mortgaged homes were also removed...
not sure what dodgy figures they use now to assess the cost of housing in the inflation figures..
it all sounds nice....if you really were mushrooms....as thats how they treat you...keep you in the dark and feed you mushy stuff
are your electricity costs up over 30'%, even after most of us have cut our usage ??
if you ever go food shopping at the 2 big stores , and are familiar with food prices you would know they have risen by way above 10% every year...
so go figure....housing, food, petrol and energy are the biggest weekly expense for most households, and those costs are way above the silly 3% the RBA uses....
some of you really need to delve a bit deeper into research, rather than relying on the 'spin' used by most institutions, that have something to hide

all other banks in the developed world have kept their interest rates at the low levels....for good reason.....but our current incompetent govnuts lifted them for a reason....to fool you into believing our economy is different, and the current OZ govnuts are good economic managers.....
the asians were the players paying top prices in only certain inner city locations...which drove house prices high....
cause again the incompetent govnut opened the gates to foreign buyers....

now out there in the real world, consumer confidence is at it's lowest level in a decade,...some of us are not surprised...some of you would be....

the destruction coming from GFC mark2 in the stockmarket, coupled with the mining tax, will have forced many conservative people back into property, they will leave the gambling den to the high risk takers....

so do not expect house prices to crash....people with their own superfunds will be out there buying both resi and commercial.....within the safety confines of bricks and mortar.....
they will not be buying overpriced housing stock....like me, they will seek out bargains, a replicate of the 2000-2004 period....

****Inflation running at over 10% pa, means your dollar is devaluing at the same rate...


----------



## damien275x (12 June 2010)

Hello,

If you believe property is the way to go, acquire your investment properties and shut up.
If you believe there is a housing bubble waiting to go bang, sell up, or hold off purchasing (oh, and shut up)

Why anyone bothers to influence complete strangers online is beyond me.

Come to your own conclusion, and do what you think is best for you.

Regards, me.


----------



## explod (12 June 2010)

damien275x said:


> Why anyone bothers to influence complete strangers online is beyond me.
> 
> Regards, me.




A good point and I think raised by someone recently with me, may have been Julia I think,  a lot of ASF is about feeding ego's and illuminates those unable to make a decision or uncertain.

I have had the belief that through discussion we may in fact help each other and learn together.    Perhaps there is a thread on the topic, if not could be one for someone enterprising to start up.


----------



## robots (12 June 2010)

hello,

good afternoon everyone,

gee Damien relax man, take it easy in Life

you might be surprised how many are not actually strangers, many have meet-up, spoke on the phone, gone surfing together, helped each other out

i am professor robots:


----------



## explod (12 June 2010)

> robots Re: The future of Australian property prices
> hello,
> 
> good afternoon everyone,
> ...




That a photo of you there Prof., grat pic and that building behind you, understand they cannot move with so many people anymore, how much is the yield on them Bro.,

Oh and a bit off topic, ever thought of getting your ego measured, could be some kind of record I reckon

Brevit, (self appointed) Commissioner explod


----------



## robots (12 June 2010)

hello,

hehehehehehehehehehe

yeah thats me, 

thankyou
professor robots


----------



## robots (12 June 2010)

hello,

good evening all, gee looks as though a lot gone away for the weekend

OH YEAH:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

top effort, what a rebound

thankyou
professor robots


----------



## schnootle (13 June 2010)

I would love to see this thread resurrected in 10 years, reading some of these posts with the benefit of hindsight could be good fun. Quite a few people will be very wrong either way.


----------



## Beej (13 June 2010)

schnootle said:


> I would love to see this thread resurrected in 10 years, reading some of these posts with the benefit of hindsight could be good fun. Quite a few people will be very wrong either way.




There is an ASF property thread that is at least 5 years old already (see here; https://www.aussiestockforums.com/forums/showthread.php?t=1977&highlight=stagnate. Have a read of that thread if you want some good laughs!

There are also two other closed threads (_Property prices to rise for years_ and _Property prices to fall for years_) that are about 2 1/2 years old now - also both good reads! 

Cheers,

Beej


----------



## drsmith (13 June 2010)

Economic history tells us that the bursting of bubbles is typically sudden, spectacular and uexpected by the vast majority. The latter is obvious as punters would allready have their money invested elsewhere if they saw it coming.


----------



## Bill M (13 June 2010)

Beej said:


> There is an ASF property thread that is at least 5 years old already (see here; https://www.aussiestockforums.com/forums/showthread.php?t=1977&highlight=stagnate. Have a read of that thread if you want some good laughs!




Thanks beej, I had a bit of a read of that thread. Here is what an ASF member had to say back in 2005: (post 2 from that link)



> So why bother buying into a flat housing market?
> 
> The boom is over!
> 
> ...




Now wasn't that person so wrong. The median Sydney house price was $500,000 back then, now that person must pay $600,000 for the same house. It's the same old story year after year, it's too dear, I'll wait but as time goes on prices only go up. Chart attached for the non believers.

Source at this link.


----------



## medicowallet (13 June 2010)

robots said:


> hello,
> 
> good evening all, gee looks as though a lot gone away for the weekend
> 
> ...




Yeah, great rebound!

Would have expected for it to stay lower. However on low volumes.

Hopefully it stabilises over the next few months. I can see a couple more interest rate rises with the good economic data, and after we get a new prime minister (don't know whether it will be labor or liberal though  )


----------



## UBIQUITOUS (13 June 2010)

Even Residex seem to have given up talking up the market. Game over for those who bought in recently. I think the only people left talking up the property market must be a few stragglers on online forums who believe that denial will help their cause

http://www.theage.com.au/business/p...-for-a-home-starts-to-slow-20100612-y4ni.html



> *Balloon deflates as race for a home starts to slow*
> CHRIS VEDELAGO
> June 13, 2010
> MELBOURNE'S property boom appears to be over as buyer demand softens in the face of interest rate rises and soaring house prices.
> ...


----------



## SM Junkie (13 June 2010)

damien275x said:


> Hello,
> 
> If you believe property is the way to go, acquire your investment properties and shut up.
> If you believe there is a housing bubble waiting to go bang, sell up, or hold off purchasing (oh, and shut up)
> ...





...and forums would go out of business.  Come on people love to argue and this thread is a classic for it and always keeps me entertained.  Be honest you love it, otherwise you would not be here??


----------



## singlefished (14 June 2010)

Bill M said:


> Thanks beej, I had a bit of a read of that thread. Here is what an ASF member had to say back in 2005: (post 2 from that link)
> 
> 
> Now wasn't that person so wrong. The median Sydney house price was $500,000 back then, now that person must pay $600,000 for the same house. It's the same old story year after year, it's too dear, I'll wait but as time goes on prices only go up. Chart attached for the non believers.
> ...





A fantasticaly skewed misrepresentation of the figures there Bill M.

The ironic thing is that the guy wasn't really that far off the money..... definately more right than wrong!

Your example of a $500K median Sydney property has only really grown at rate of about 3.65% P.A. to rise to its present $600K median. Probably about the same as inflation unless you subscribe to the 10% theory....

*EXAMPLE 1 - based on many assumtions*
In the last 5 years a 10% ($50K) deposit would have grown to a whopping $140K deposit if they continued thier saving strategy of say $1000 per month in a savings account returning 6.5%.

Thier present day mortgage of $460K would no doubt be a lot easier to service on their present day salary when compared the the previous $450K mortgage on thier salary 5 years ago....

*EXAMPLE 2 - again, based on assumtions*
If they had enough money to buy outright 5 years ago then growth (as above) equates to only 3.65% P.A.

If the $500K was placed in a 5 year term deposit at 6.5% then it would have grown to just over $691K.


So, without starting a debate on holding costs, tax liability on interest, opportunity costs, my own assumptions, etc, etc, etc,  your stagnant 3.65% growth rate doesn't really rate a mention when you use the Sydney market as an example...

Just needed to point this out to anybody reading this 10 years from now


----------



## Bill M (14 June 2010)

singlefished said:


> So, without starting a debate on holding costs, tax liability on interest, opportunity costs, my own assumptions, etc, etc, etc,  your stagnant 3.65% growth rate doesn't really rate a mention when you use the Sydney market as an example...
> 
> Just needed to point this out to anybody reading this 10 years from now




You have conveniently missed out one crucial calculation, what about the rent? Or assuming he did pay cash and lived in it, he lived at market price rent free.

For a 500k property it is easily achievable to get $500 p/w rent, probably more but lets use the lower end as the assumption.

Rent for 2005 to 2006 at $500 p/w = $26,000
Rent for 2006 to 2007 at $520 p/w = $27,040
Rent for 2007 to 2008 at $540 p/w = $28,080
Rent for 2008 to 2009 at $560 p/w = $29,120
Rent for 2009 to 2010 at $580 p/w = $30,160

Total rent for the 5 years is *$140,400*

So in fact not only did his property go up a 100k he received $140,400 in rent as well. 

Total return is more like 48% for 5 years or about 8.2% annualised. 
*Note* That is a gross return, taxes and fees have not been deducted and would depend on your personal circumstances.

To me a return of 240k for my 500k invested is not that bad. It keeps pace with inflation and really it is quite a passive investment.


----------



## kincella (14 June 2010)

Morning all.
love the media headline below, but if you actually read it, it states its the investors that are the interested parties, or disgruntled stock investors looking for the alternative....
seems its the transfer of money from the poor to the wealthy again......
the weak investors selling out......into the hands of the astute investors...

http://www.heraldsun.com.au/news/se...victorian-market/story-e6frf7jo-1225879171288

ps been having fun in Melb this weekend, and another spending spree at all the end of year sales, then off to the country for some R &R till the end of the month
it cannot get much better than this


----------



## explod (14 June 2010)

kincella said:


> it cannot get much better than this




Yeheyeer good point , and it probably wont.

Nice that you are partying too by the way, life's short and the poor mugs sold down the tubes by the spruikers.

Great social responsibility and care for our fellows.


----------



## Beej (14 June 2010)

Bill M said:


> You have conveniently missed out one crucial calculation, what about the rent? Or assuming he did pay cash and lived in it, he lived at market price rent free.
> 
> For a 500k property it is easily achievable to get $500 p/w rent, probably more but lets use the lower end as the assumption.
> 
> ...




Excellent point! They always forget about rent otherwise being paid, being received or NOT being paid in the case of an OO  The other thing not accounted for is the additional mortgage principle that can be paid down in lieu of saving the "$k/month" for the renting case.

Additionally, if you DO account for taxation in the calcs (as you should) then the owning scenario comes out way ahead even more due to the fact that capital gains are tax free for OOs, or only half marginal rate for an investor (worse case), plus rent not paid for OO is an after tax saving. Compare that to paying the full marginal rate on a term deposit - someone on the 38% tax bracket would only be receiving < 4%pa after tax total return on their cash.

I've actually got a fairly detailed spreadsheet that models this type of comparison calculation properly, accounting for ALL costs/factors/tax etc for the rent vs OO case. Here's how this scenario pans out.

Inputs: 

* House purchased for $500k 5 years ago, no stamp duty paid (FHB exemption in NSW), plus $7k FHBG, with a $50k deposit
* House appreciates at 3%pa giving a value of $600k after 5 years
* Essential maintenance on house = 0.5% (~$2.5k) average/year
* Rental cost for equivalent property = 4.5% of value
* Mortgage interest rate = 7%
* Term deposit rate = 6.5%pa before tax
* Marginal tax rate = 38% + 1.5% medicare levy
* Disposable income (income after tax, living expenses etc but before rent/mortgage payments) = $35k/year (equals enough to save about $1k/month when renting in this scenario)
* Income and other costs increase at CPI = 3%

Outcome after 5 years (note I've rounded some numbers to the nearest $1k for simplicity):

* Both have earned a total of $186k disposable income over the 5 year period

* *Owners equity = $164k*
* Owner has $438k left on mortgage, house worth $600k
* Total $ paid in interest = $155k
* Total $ paid in rates/insurance/maintenance = $26k
* Principle paid off mortgage = $5k

* *Renter has $127k cash in the bank* (Started with $50k, added $61k in additional savings, earned  $15.6k in after tax interest earnings)
* Total rent paid = $121k, + $3.5k spent on having to move a couple of times over the period.


*Conclusion: Owner ahead by $37k*

The longer you model this, even with very moderate house price appreciate, the better off the OO get's, as their interest bill reduces every year, their house appreciates over the long term, while the renters rent increases every year over time, and tax ravages their savings returns.

PS: The exact same scenario where we start with the $500k cash up front for outright purchase, *results in the OO being ahead by a whopping $105k after the 5 years!!!*

Bill was right, that poster from 5 years ago was WAAAAAY off the mark I'm afraid.

Cheers,

Beej


----------



## Beej (14 June 2010)

Quick PPS: House appreciation rate above used was 3.7%, not 3%, to give a final value of $600k.


----------



## UBIQUITOUS (14 June 2010)

http://www.news.com.au/money/proper...ce-rates-fall/comments-e6frfmd0-1225879274233



> *Victoria sees record number of homes up for auction as clearance rates fall
> By staff writers June 14, 2010 7:08am 116 comments*
> 
> REAL estate auction clearance rates plummeted to a 52-week low in Melbourne on Saturday, with the dramatic slide attributed to rising interest rates, changes to the foreign investment rules and the downturn for the long weekend.
> ...




GAME OVER


----------



## satanoperca (14 June 2010)

TOTAL AUCTIONS REIV 

This week: 268
Last weekend: 908
This time last year: 527

S Sold at Auction: 139
SB Sold before Auction: 63
SA Sold after Auction: 5

Passed in: 61
Passed in on vendor's bid: 31

Clearance rate: 77%


Postponed: 1
Withdrawn: 1
*Auctions with no result: 72*

One must assume that they were not recorded as there was no sale. If 50% of the no results we included in the clearance rate as no sale, the clearance rate goes down to 68% and if all of them we included as no sale then it is further reduced to 60%.

Cheers


----------



## robots (14 June 2010)

hello,

good evening everyone, great Queens birthday holdiday

fabulous discussion today

can we please have a show of hands as to who believes auction clearance rates are relevant to the market, rba or anyone else?

great to see Melbourne at the top of the table again (property council), the place to be brothers

thankyou
professor robots


----------



## singlefished (14 June 2010)

Bill M said:


> You have conveniently missed out one crucial calculation, what about the rent?




Funny, I personally would assume that most people saving a deposit to buy a property are *NOT* cashed up investors... as you are well aware, investors use equity from existing holdings! This guy did discuss saving for a deposit *before* entering the market....



Bill M said:


> Total rent for the 5 years is $140,400




Total mortgage repayments for 5 years = $190,800 + holding costs (even more if you didn't provide 10% up front)

Ooooops! Conveniently forgot about paying your debts didn't you.... and if you sold after the 5 years you'd be up for CGT.




Beej said:


> Excellent point! They always forget about rent otherwise being paid, being received or NOT being paid in the case of an OO  The other thing not accounted for is the additional mortgage principle that can be paid down in lieu of saving the "$k/month" for the renting case.




See above..... 



Beej said:


> Additionally, if you DO account for taxation in the calcs (as you should) then the owning scenario comes out way ahead even more due to the fact that capital gains are tax free for OOs, or only half marginal rate for an investor (worse case), plus rent not paid for OO is an after tax saving. Compare that to paying the full marginal rate on a term deposit - someone on the 38% tax bracket would only be receiving < 4%pa after tax total return on their cash.
> 
> I've actually got a fairly detailed spreadsheet that models this type of comparison calculation properly, accounting for ALL costs/factors/tax etc for the rent vs OO case. Here's how this scenario pans out.
> 
> ...





You've been very generous with your rental assumptions and haven't compensated the savings to provide for the same monthly outlay of servicing a $450K mortgage allowing for a direct comparison.

* Repayments on a 450K morgtgage is $3180
* 4.5% return on $500K = $1875 PCM rent
* Renters savings $1000 per month

A renter paying $1875 rent and saving $1000 couldn't afford the $450K mortgage monthly repayments of $3180 + holding costs....

Try using real rental medians instead from Housing NSW.

Housing NSW figures for Sydney back in June 2005 provide median rent of $260 PW rising to $380 PW March 2010 (middle ring, 2 bedrooms). Assume $320 average over 5 years.

Equivalent savings now corrected to $1793 (approx) over the same 5 year period (mortgage repayment $3180 PCM minus the average $1387 PCM rental of $320 PW 5 year average)

5 years owner has equity of $164K (your figures)

5 year renter has grown his $50K deposit to $180K after tax (generously assume owner-occupier costs = renters moving costs of $2500 per year) if outgoings are equal between the 2 parties

*Conclusion - renter wins....*​

5 year owner with house paid 100% deposit and same disposible income saves $3180 PCM After tax savings = $211K + $100K appreciation = $311K

5 year renter saves $1793 per month after rent payments totalling $732K after tax savings.

*Conclusion - owner wins*​

So, I was wrong on the second scenario with tax being considered.... but that's beside the point since I haven't heard of too many home buyers with 100% deposit!

*Conclusion, the original poster from 5 years was right on the money and I state again, Bill is wrong.*

In summary, the 5 year renter hasn't missed the boat by waiting for 5 years since he has now saved up a much bigger deposit combined with smaller mortgage repayments if he decides to jump in now!

The mortgage would now only be for $420K providing additional capacity to save or pay at a rate equivalent to a $450K mortgage....

Cheers....

PS:


----------



## Beej (14 June 2010)

singlefished said:


> You've been very generous with your rental assumptions and haven't compensated the savings to provide for the same monthly outlay of servicing a $450K mortgage allowing for a direct comparison.
> 
> * Repayments on a 450K morgtgage is $3180
> * 4.5% return on $500K = $1875 PCM rent
> ...




Not correct - I have used the EXACT same income in both scenarios. The income level required by the renter to save $1k/month is enough to cover the interest on the $443k mortgage (because they got the $7k grant remember), and some principle, so therefore good enough for an apples to apples comparison. Interest @ 7% (average rate over the 5 years is probably actually less than this but anyway) = $2584/month, so your $1875k + $1k IS in fact enough to cover that interest and some principle. Completely valid figures to use for comparative purposes. We could even have used interest only if we want to keep it very simple! The result is about the same for the interest only loan by the way (renter closes gap by about $2.5k only).

If I up the income level so there is enough to cover your calculated mortgage payment + other costs (which is $40k pa disposable by the way), then the renter equivalent savings lift to an average of about $1.4k/month. Fine - in this scenario by my calcs the OO comes out even further ahead due to the reducing interest from more loan principle being paid off than in the original scenario.



> Try using real rental medians instead from Housing NSW.
> 
> Housing NSW figures for Sydney back in June 2005 provide median rent of $260 PW rising to $380 PW March 2010 (middle ring, 2 bedrooms). Assume $320 average over 5 years.
> 
> Equivalent savings now corrected to $1793 (approx) over the same 5 year period (mortgage repayment $3180 PCM minus the average $1387 PCM rental of $320 PW 5 year average)




Totally unrealistic. Median rental property is NOT equivalent to the median Sydney house. For a start, median rents include units, which constitute the bulk of rental properties in Sydney, median house price does not include units. As we are using a median house price figures here, we need to use rent for something more than a middle ring 2 bed flat!! 4.5% is a very realistic rental return for median priced property in Sydney over the past 5 years. I think your rental figures are from fantasy land!



> 5 years owner has equity of $164K (your figures)
> 
> 5 year renter has grown his $50K deposit to $180K after tax (generously assume owner-occupier costs = renters moving costs of $2500 per year) if outgoings are equal between the 2 parties
> 
> *Conclusion - renter wins....*​




That calculation is wrong. You have not increased the home owners equity at the end of the period due to the higher mortgage payment you have now assumed as being required ($3180/month). *So paying that much results in the OO equity at the end of the 5 years increasing to $192k.*

Then, even using your incredibly generous and totally unrealistic rental assumptions, (which equates to a 3.33% rental return), the OO was still $12k ahead. Of course using realistic/equivalent rents they were $37k ahead as I originally demonstrated. 



> 5 year owner with house paid 100% deposit and same disposible income saves $3180 PCM After tax savings = $211K + $100K appreciation = $311K
> 
> 5 year renter saves $1793 per month after rent payments totalling $732K after tax savings.
> 
> ...




At least you acknowledge you were wrong on that front. I notice you don't say by how much though! Even by your calcs the owner is in front by $80k!



> In summary, the 5 year renter hasn't missed the boat by waiting for 5 years since he has now saved up a much bigger deposit combined with smaller mortgage repayments if he decides to jump in now!




Not correct, even with your incredibly cheap rental cost assumptions the OO is ahead by $12k. Realistic rents take that figure to $37k. Either way the OO was in front. The bigger the deposit the more ahead the OO is, and the more time that passes the further in front they would get.

Final question - how do you think this calculation would pan out for Melbourne????? 

Cheers,

Beej


----------



## Scalper23 (14 June 2010)

Every bubble in history has always ended in a crash. This property  market will be no different. Trees don't grow to the sky. Every debt fueled rally always ends in a crisis. You cannot continually value property prices by similar sales in the same area in a bull market.


----------



## singlefished (14 June 2010)

Beej said:


> Not correct - I have used the EXACT same income in both scenarios. The income level required by the renter to save $1k/month is enough to cover the interest on the $443k mortgage (because they got the $7k grant remember), and some principle, so therefore good enough for an apples to apples comparison. Interest @ 7% (average rate over the 5 years is probably actually less than this but anyway) = $2584/month, so your $1875k + $1k IS in fact enough to cover that interest and some principle. Completely valid figures to use for comparative purposes. We could even have used interest only if we want to keep it very simple! The result is about the same for the interest only loan by the way (renter closes gap by about $2.5k only).




Twisted to suit your argument.... why don't you compare apples with apples (outgoings to outgoings, *P&I* to Rent+Savings) instead of apples to oranges (Interest only to Rent+Savings).

I could have gone down the road of piling his savings into the share market for 5 years but I didn't.... better to keep the analysis unsophisticated and assume simple typical scenarios like P&I mortgage repayments.

Please recalculate with typical repayments for P&I, not the investor style interest only.

I didn't really worry about the 7K FHB grant in my analysis.... why does it have to be a FHB? It doesn't make that much difference to the outcome, $50 PM on their P&I repayments...



Beej said:


> If I up the income level so there is enough to cover your calculated mortgage payment + other costs (which is $40k pa disposable by the way), then the renter equivalent savings lift to an average of about $1.4k/month. Fine - in this scenario by my calcs the OO comes out even further ahead due to the reducing interest from more loan principle being come paid off than in the original scenario.




This is where you assume that the renter is currently renting the property they want to buy. Most people don't even consider the potential rental returns when contemplating the purchase of a PPOR. If they are saving up to buy then they are more than likely living in cheaper rental accommodation or still at home with mum and dad.

All renters (and former renters) I've ever known manage to minimise thier outgoings (rent) to maximise thier savings (deposit), that's how it works, simple as that. It's a little bit too brave to assume otherwise... but please correct me if I'm wrong.

Outgoings such as cost of living, lifestyle, etc cancel each other out as they are common to both scenarios so no need for either of us to back calculate desirable income levels to bolster your point.




Beej said:


> Totally unrealistic. Median rental property is NOT equivalent to the median Sydney house. For a start, median rents include units, which constitute the bulk of rental properties in Sydney, median house price does not include units. As we are using a median house price figures here, we need to use rent for something more than a middle ring 2 bed flat!! 4.5% is a very realistic rental return for median priced property in Sydney over the past 5 years. I think your rental figures are from fantasy land!




Well, you can waste time and argue with housing NSW, I'm not taking it all that seriously...

Rent tables June Quarter (Excel, 240Kb) from here:
http://www.housing.nsw.gov.au/About+Us/Reports+Plans+and+Papers/Rent+and+Sales+Reports/Back+Issues/2005/June.htm

I've used $260 which is all dwellings..... $263 if you only want to assume they are renting in a house, $255 if it's a unit.

It's not fantasy land, It's Sydney 




Beej said:


> That calculation is wrong. You have not increased the home owners equity at the end of the period due to the higher mortgage payment you have now assumed as being required ($3180/month). *So paying that much results in the OO equity at the end of the 5 years increasing to $192k.*!




I'd actually calculated their equity to be $189,770.31 with an initial mortgage of $450K. Please don't lambast me for quoting your own figures back at you.... I really couldn't find the orifice you pulled the $164K from so assumed I was making a mistake because you have some sooper-dooper all encompasing spreadsheet. Silly me for failing to realise you were adopting a _typical investor style interest only loan_ in a discussion about an owner occupied situation.... I'll know better next time eh 



Beej said:


> Then, even using your incredibly generous and totally unrealistic rental assumptions, (which equates to a 3.33% rental return), the OO was still $12k ahead. Of course using realistic/equivalent rents they were $37k ahead as I originally demonstrated.




As outlined above, why would they burn big money on renting instead of saving it? The rents quoted probably DO return 4.5% but on lower value rental stock....



Beej said:


> At least you acknowledge you were wrong on that front. I notice you don't say by how much though! Even by your calcs the owner is in front by $80k!




I honestly thought you were smart enough to do your own simple arithmetic. I was right!!!



Beej said:


> Not correct, even with your incredibly cheap rental cost assumptions the OO is ahead by $12k. Realistic rents take that figure to $37k. Either way the OO was in front. The bigger the deposit the more ahead the OO is, and the more time that passes the further in front they would get.




^^^^^^ LOOK UP ^^^^^^




Beej said:


> Final question - how do you think this calculation would pan out for Melbourne?????




Different story for Melbourne but I wanted to keep it on topic and address the statements and timeframe presented.

Final question for you.... obviously you have assumed a FHB since you capture the 7K grant. Please tell me why you assume they are renting prior to buying instead of staying at home until 30yrs old and bludging of mum and dad which is now reported as the norm 

In this situation $272K savings after tax sort of makes it an even better discussion 

Cheers.....


----------



## qldfrog (15 June 2010)

Beej,
am I missing it or did you also forgot to add council rates to the figure?
If similar to qld, for such a property you will easily pay 2k/year as an owner vs included in rent as a renter?
In any case, in my opinion (only) the bubble is popping and I just have to wait a 15 to 20% discount before entering the RE for investment (here in Brisbane): either as price fall or after 3 years due to inflation vs flat RE price; time will tell
But I am sure Robot will see it very differently ;-)

I do appreciate the debate and the will to put some figures


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## Beej (15 June 2010)

qldfrog said:


> Beej,
> am I missing it or did you also forgot to add council rates to the figure?
> If similar to qld, for such a property you will easily pay 2k/year as an owner vs included in rent as a renter?




Rates are included in my calculatins for the oo, as is insurance and maintenance.


----------



## schnootle (15 June 2010)

Scalper23 said:


> You cannot continually value property prices by similar sales in the same area in a bull market.




Well put, at some point the music stops. Reminds me of George Bush's famous "Nothing will stand in the way of the American way of life", yeah tell that to nature.


----------



## Beej (15 June 2010)

singlefished said:


> Twisted to suit your argument....




Umm - pot, kettle, black....



> why don't you compare apples with apples (outgoings to outgoings, *P&I* to Rent+Savings) instead of apples to oranges (Interest only to Rent+Savings).
> 
> Please recalculate with typical repayments for P&I, not the investor style interest only.




Please re-read my post and analysis. I DID NOT use interest only calculations, and my comparison was a true "apples to apples" one. I simply started with the figures that YOU originally used, which resulted in the renter saving $1k/month. I simply worked backwards from your numbers and created a scenario where the income spent on rent + savings was exactly the same as the income used by the OO to service the mortgage and pay holding costs. 

Additionally, as I pointed out, there would be no point in me using interest only as that is actually the most favourable outcome for the renting scenario, although the OO still comes out in front. I then went on to use your new numbers anyway and the outcome is even more in favour of the OO, so not sure what you are really arguing here anymore?



> I didn't really worry about the 7K FHB grant in my analysis.... why does it have to be a FHB? It doesn't make that much difference to the outcome, $50 PM on their P&I repayments...




Well $7k is $7k - it's a fair chunk of change and worth taking into consideration I think.



> This is where you assume that the renter is currently renting the property they want to buy.




So now after going on about apples-apples comparisons, you want to change the comparison (which you originally brought up) to apples to oranges??



> Outgoings such as cost of living, lifestyle, etc cancel each other out as they are common to both scenarios so no need for either of us to back calculate desirable income levels to bolster your point.




Again, please re-read my analysis. There is no "point bolstering" going on, we are in violent agreement on this point and have both made this assumption! All I do is work out how much income you need to have "left over" to pay the rent + savings or the mortgage + holding costs in each scenario and ensure I use the EXACT same figure for both.



> Well, you can waste time and argue with housing NSW, I'm not taking it all that seriously...
> 
> I've used $260 which is all dwellings..... $263 if you only want to assume they are renting in a house, $255 if it's a unit.
> 
> It's not fantasy land, It's Sydney




You are completely ignoring my point regarding the difference between a median rental property and a median house. Yours is not an apples to apples to apples comparison. Anyone who lives in Sydney knows that you cannot rent any dwelling that today is worth $600k for less than $500/week today. 5 years ago maybe you got that house for $400/week.

 Regardless, as both I, and yourself have now shown, even using your low rents for comparison the OO comes out in front.



> I'd actually calculated their equity to be $189,770.31 with an initial mortgage of $450K. Please don't lambast me for quoting your own figures back at you....




*OK so I'll lambast you for being dis-ingenious and mis-representing your OWN calculations, which in fact showed that the OO was in front!*!

My $164k OO equity figure, as I clearly explained, came from using YOUR initial comparison income level of rent + $1k/month savings. Clearly, if you increase the renters savings/OOs mortgage payments to a higher level, then the OO will pay off MORE of their mortgage principle than in the first scenario! And you have the hide to make snide remarks about my intelligence and maths skills!

*So now with your last post an astute reader will realise that you have actually proven both your previous conclusions to be wrong. In both the $50k deposit scenario, and the 100% purchase scenario, the OO ends up in front!*

In the $50k deposit case, by at least $10k (using your fantasy rents and your own OO equity calc ignoring FHBG) and more likely $37k using realistic/comparative rents etc, and in the 100% purchase case by between $80k (your calcs) and $100k.

Thankyou.

Cheers,

Beej


----------



## medicowallet (15 June 2010)

robots said:


> hello,
> 
> can we please have a show of hands as to who believes auction clearance rates are relevant to the market, rba or anyone else?
> 
> ...




I don't think so on a couple of levels.

1. They are often manipulated
2. Agents tend to auction houses that will sell
3. Clearance rates maintain when people are forced to sell at lower prices
4. Clearance rates maintain when there is a bull market.

and many more I don't have the want to list.

It is just too difficult for me in my office to know which of many variables is influencing the clearance rate. 

I think growth in debt is a better indicator, as we all know that house price growth is driven by debt.


----------



## singlefished (15 June 2010)

Beej said:


> Please re-read my post and analysis. I DID NOT use interest only calculations




Well, you have quoted repayments of $2584/month on a $443K mortgage and almost unbelievably, every online mortgage calculator for interest only repayments comes up with the same figure....




Beej said:


> I simply started with the figures that YOU originally used, which resulted in the renter saving $1k/month. I simply worked backwards from your numbers and created a scenario where the income spent on rent + savings was exactly the same as the income used by the OO to service the mortgage and pay holding costs.




Figures I originally used were without detailed analysis and many, many assumptions (originally stated) and wouldn't feasibly support purchase of a $500K property. The "rent" part of the equation was introduced by yourself and I've therefore had to revist the analysis with "actual" repayment costs and "actual" rental median prices, not investor orientated expected returns.




Beej said:


> Additionally, as I pointed out, there would be no point in me using interest only as that is actually the most favourable outcome for the renting scenario, although the OO still comes out in front. I then went on to use your new numbers anyway and the outcome is even more in favour of the OO, so not sure what you are really arguing here anymore?




Don't have my spreadsheets available but a quick fag packet calc for interest only provides CG of 100K + 5 years of savings $596/month (P&I - IO) = probaly just over $140K.... From an earlier post, the renters after tax savings of 180K compares favourably.




Beej said:


> So now after going on about apples-apples comparisons, you want to change the comparison (which you originally brought up) to apples to oranges??




You already opened the door on this one and answered your own question by stating that "units constitute the bulk of rental properties in Sydney". Why do you continue to analyse our example numbers as if you are gauging rental return on an investment property when "the bulk" of renters getting into the market are typically not coming from this type of property? It's unrealistic since "the bulk" are likely coming from units...





Beej said:


> Again, please re-read my analysis. There is no "point bolstering" going on, we are in violent agreement on this point and have both made this assumption! All I do is work out how much income you need to have "left over" to pay the rent + savings or the mortgage + holding costs in each scenario and ensure I use the EXACT same figure for both.




Agreed, but your numbers reflect adoption of a typical investor style interest only loan as outlined above.





Beej said:


> You are completely ignoring my point regarding the difference between a median rental property and a median house. Yours is not an apples to apples to apples comparison. Anyone who lives in Sydney knows that you cannot rent any dwelling that today is worth $600k for less than $500/week today. 5 years ago maybe you got that house for $400/week.





See above




Beej said:


> Regardless, as both I, and yourself have now shown, even using your low rents for comparison the OO comes out in front.




So, a fistful of dollars makes the original poster of 5 years ago more right or more wrong? That's the case I've been presenting since my first post on the subject...




Beej said:


> OK so I'll lambast you for being dis-ingenious and mis-representing your OWN calculations, which in fact showed that *, ditto, ditto,*  case, by at least $10k (using your fantasy rents and your own OO equity calc ignoring FHBG) and more likely $37k using realistic/comparative rents etc, and in the 100% purchase case by between $80k (your calcs) and $100k.
> 
> Thankyou.
> 
> ...




I will bow to your reverence once you sort out the interest only figures in your analysis and please accept my apologies for your use of my fag packet figures in the first instance...

Anyway, back to work


----------



## robots (15 June 2010)

hello,

gidday everybody, beautiful day across the country

are there any stats to show how renters are actually doing, ie. do any ASF members who look at investment in the manner singlefished describes got the candy

anyone? have you saved 150k in the last five years?

i know phil ruthen from IBISworld reckons its the gig renting and investing, i buy it for 5-10yrs but i reckon any longer and you are stitched up

looks as though rates on hold for a while Kincella, they should let them go for a while

thankyou
professor robots


----------



## prawn_86 (15 June 2010)

robots said:


> anyone? have you saved 150k in the last five years?




im renting and i saved near 10k last yr while i was at uni and will save >20k this year as im now working. (Not sure what wage was assumed in the initial discussions)

At my stage of life renting makes more sense. We just needed our hot water system replaced at short notice on a weekend, that would have cost about 2 weeks of rental income, plus we have had a new dryer, so there's another week worth. So just in repairs in the last 4 months the owner has had to pay about 20% of the income he has recieved from us.

Saving the difference and investing in a mixture of high interest bank accounts, decent yeild stocks and a small amount of spec stocks.


----------



## robots (15 June 2010)

hello,

http://www.theage.com.au/victoria/h...ce-jobs-to-move-to-regions-20100615-ybop.html

great work by the government, fantastic news for property owners in these regions and just shows how many "markets" exist with property just like the shonk exchange 

its what drove me to Ballarat, housing for 200k, good vline service with line duplication happening, Ballarat University, Ballarat Hospital, Lake Wendouree to be filled and maintained

a very historic regional town

and after the success of TAC's move to Geelong, decentralisation has to continue, any public sector could head out to regional centres, like i mean its only office flog's

thankyou
professor robots


----------



## drsmith (15 June 2010)

Perhaps the ATO might decentralise to Iron Knob.


----------



## singlefished (15 June 2010)

singlefished said:


> Don't have my spreadsheets available but a quick fag packet calc for interest only provides CG of 100K + 5 years of savings $596/month (P&I - IO) = probaly just over $140K....




Should be just over $190K.... forgot about the 50K deposit (need a bigger fag packet  )

Still, just over 10K difference over the last 5 years is not that compelling an argument to sway one way or the other.


----------



## robots (15 June 2010)

hello,

whats everybody going on about then, only 10k out of pocket if rented vs. owning

the press, online, blogger sites, debtwatch have been OFF the radar with propaganda just for the sake of 10k

this is amazing

thankyou
professor robots


----------



## schnootle (16 June 2010)

While it seems news articles citing local analysts are split between "sunshine and lollipops" and "crash and burn". It seems any article from an international analyst is almost always "crash and burn", like this one

http://www.theaustralian.com.au/bus...5880119320?from=igoogle+gadget+compact+bi_rss

Why is this?

Do the international big shots not understand our situation?, or are we getting too bogged down in talking about supply and demand, shortages etc to step back and realise on an international scale the numbers say we are f**ked.


----------



## Mofra (16 June 2010)

Because an article predicting a gentle stagnation or property prices underperforming AWOTE in the near future is not emotive enough to sell newspapers?

People are attracted to big news, so predictions that aren't exciting enough will struggle for print space.


----------



## CamKawa (16 June 2010)

schnootle said:


> Do the international big shots not understand our situation?,



I think international observers understand the Australian house price bubble very well. They tend to be more independent than our local press interviewing a "market analyst" from one of the big 4 banks.


----------



## satanoperca (16 June 2010)

There is no bubble in Oz, the RBA said so.

Unemployment down
Inflation up

IR's up again. 

Cheers


----------



## sinner (16 June 2010)

Let's try and take some fundamental academic definitions of a bubble, as coined by those who's job it is to look back upon the past bubbles in history (which were all so easy to identify in hindsight):


The first definition is given as:
A bull market means that the price rise of a particular asset or asset class is driven by the natural, free market dynamics of buyers and sellers. As we know from "Economics 101" (or hope we know), when there are more buyers than sellers of a given asset (or product or service), all things being equal, the price of that given asset will rise. If there are more sellers, then of course the price of it will fall. In other words, "bull markets" are natural and healthy events that can easily last months, years or decades.
A bubble occurs when a normal bull market gains artificial stimulus typically from expansive credit and/or money supply infusions. This artificial stimulus usually comes from increased "injections" of new credit; new money creation that originates from governmental sources (such as a nation's central bank or perhaps from other central banks). The artificial stimulus can also come when the central bank lowers (again, artificially) interest rates to levels below realistic market levels. It may also come from the government's Treasury.

Re: the simple sell, that this is all an issue of supply and demand has been debunked repeatedly by not only the likes of Steve Keen but even the Governor of the RBA has stated it is extremely improbable that house prices are rising due to an imbalance in demand.

http://www.debtdeflation.com/blogs/2010/05/11/is-it-all-“supply-demand”/

So let's drop the supply/demand argument right now, and leave it here for the likes of Macquarie Group analysts still trying to sell REIT shares to people.

What about the difficult sell? That this is a bubble? Let's tick the boxes
* Artificial stimulus typically from expansive credit/money supply infusions: TICK
 - FHOG (and expansions thereof)
 - Huge money supply to the banks in 2008
* new money creation that originates from governmental sources: TICK
Please see YoY Australian M3 Money Supply between 1991 and 2007
http://www.datadiary.com.au/2010/05...upply-march-2010/australian-yoy-change-in-m3/
* Central bank lowering rates: TICK
What do interest rates in Ausland look like for the last 30 years?


* Artificial stimulus from the Treasury: TICK
http://www.treasury.gov.au/documents/1431/PDF/Design_and_operational_parameters_281008.pdf

The second definition comes from politicalcalculations.blogspot.com:
By our operational definition, for an economic bubble to exist, the price of an asset that may be freely exchanged in a well-established market (houses in this case) first soars then plummets over a sustained period of time at rates that are decoupled from the rate of growth of the income that might be realized from owning or holding the asset. For housing, that income is called rent.

However, we've since found that what people pay in rent, or housing in general, is itself a strong function of income. That observation is confirmed by a 2008 paper by Quan Gan and Robert J. Hill, who found that a strong linear relationship exists between house prices and income percentiles for housing markets Sydney, Australia, Dallas, Texas and the state of Texas.

I am using this definition because it is a functional definition. That is to say: it posits that house prices (in a normal supply/demand driven market) are influenced heavily by the main factors of: construction costs, household income (servicing the debt) and rent (Return On Investment).

So let's look at a chart comparing these factors. I couldn't find a newer one but I am sure it looks pretty much the same.



In the first circled area we can see a normal supply/demand driven market. House prices are higher than their main cost factors but you can see they are also heavily constrained by them. 
In the second circled area we can plainly see that house prices have completely decoupled from their main cost factors. Which means either we missed a cost factor which facilitates the prices to decouple so far or our model is completely wrong. 

Is our model completely wrong? Hell no. House prices are indeed mainly affected by construction costs, household income and rent.

So what exactly could account for the huge rise in house prices shown on this chart considering household income has not increased proportionally and we have identified the main "bubble factors" to be present in our first definition? We had a normal bull market which had all the "bubble" boxes ticked.

:



It is plain to see that Australian household debt is the "missing cost factor" that has allowed house prices to decouple from reality. 

Is this level of Australian household debt sustainable by householders? Is this level of Australian household debt sustainable by banks?

To my mind, these are the only two questions which matter and the answer is: NO.

House prices go up until they don't. In Australia we have the worst of both worlds, in a recession there will be no credit available for those wishing to enter the market and if there is no recession then all those WA miners will push property prices and IR back up at which point those in Sydney and Melbourne (not to mention FHOG recievers all over the country who didn't lock rates in) will be back where they were in 2008 - complaining bitterly about affordability every time the RBA knocks the rate up another notch - while our standard of living decreases.

That is honestly how I see it in Australia:
Either we take the recessions deflationary pain now in all those sectors propped up by cheap credit, or we ALL take a huge standard of living decrease within the next 10 years and a toiletbowl economy.


----------



## nunthewiser (16 June 2010)

Now call me silly but that chart on the Intrest rates looks to me like forming one bewt "cup and handle " formation ...

GO LONG BOYS GO LONG!


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## wayneL (16 June 2010)

Mofra said:


> Because an article predicting a gentle stagnation or property prices underperforming AWOTE in the near future is not emotive enough to sell newspapers?
> 
> People are attracted to big news, so predictions that aren't exciting enough will struggle for print space.




Do they pay for these articles? I predict Oz housing will be like Detroit, only far worse. 

Where do I send it?


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## sinner (16 June 2010)

satanoperca said:


> There is no bubble in Oz, the RBA said so.
> 
> Unemployment down
> Inflation up
> ...




Hahahahaha. Haha.



In Australia, if you get paid for 1 hour of casual work per fortnight you are considered employed by the ABS.

I am sure their inflation statistics on the other hand are completely honest and unmanipulated numbers derived from an objective reality based model


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## satanoperca (16 June 2010)

Sinner,

No need to bang you head you might heart yourself.

I no longer get deeply involved in the debate on our property prices. 

A wise man once said to me, do argue, just look to how you can profit from it.

I cannot short property per say but I can short those companies who are largely involved in the supply of huge amounts of credit/debt to the sector, our banks until KRUDD & Co place a ban on these golden angels once more.

Thank-you for your write up. It was clear and concise.

Cheers


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## robots (16 June 2010)

hello,

how is that guy from GMO, crikey give it up man

usual tactics to get people to divert their $ into his funds, amazing, people will follow like sheep

Satanoperca, so you shorting with CFD's, would be the ultimate bet, put 500k on it, they will take the bet 

great day

thankyou
professor robots


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## satanoperca (16 June 2010)

robots said:


> hello,
> 
> 
> Satanoperca, so you shorting with CFD's, would be the ultimate bet, put 500k on it, they will take the bet




Sorry Robots I will leave those size bets to PI's. 

I do fail to understand what you problem is with financial instruments to trade, you use them, they are called banks.

Cheers


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## robots (16 June 2010)

satanoperca said:


> Sinner,
> 
> I cannot short property per say but I can short those companies who are largely involved in the supply of huge amounts of credit/debt to the sector, our banks until KRUDD & Co place a ban on these golden angels once more.
> 
> Cheers




hello,

just relating to this statement, you can short the banks without carrying stock and i understand now you arent doing that (but would like to?)

no problem with financial instruments (financial betting) i was doing it with IG Markets (spread betting) on the SPI and also with Tricom Futures (no longer) with futures

fascinating stuff, like a whole "gambling sector" in itself like TAB or Sportsbet

thankyou
professor robots


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## satanoperca (16 June 2010)

Incorrect, but keep on assuming.

Gee, put down 10% deposit and buy and IP, that seems like betting to me.

Everything is a gamble it just depends on how much risk you can tolerate.

Cheers


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## robots (16 June 2010)

hello,

which part am i incorrect on?

thankyou
professor robots


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## sinner (16 June 2010)

satanoperca said:


> Incorrect, but keep on assuming.
> 
> Gee, put down 10% deposit and buy and IP, that seems like betting to me.
> 
> ...




Hi satano,

You give a good example of leverage on the retail side of the market, i.e. those taking out loans.

I put it to you and all others on this forum that the question we as Australian citizens - who through the Treasury have guaranteed the huuuuuuuge amounts of debt of the Big 4 banks (especially all the new foreign currency denominated debt they have issued for huge profits since 2008 guarantee came in place) - should be asking is what about the leverage of our banks?

Especially CBA and WBC who hold as more than half the "assets" on their books as mortgage debt. Banks are fully leveraged into the real estate trade - which has traditionally been "buy short sell long" or buy short term debt and sell long term debt. They have sold a lot of this debt into foreign currency denominated bonds and the like. 

What will the market cap/asset book of CBA or WBC look like if house prices decline by say, 5% (so I am not accused of picking a sensational number) in a contracting credit environment where they cannot find bidders for new debt? Please ask yourself if the global market for debt is contracting or increasing.

We have already allowed these banks to take bad/nonperforming assets off their balance sheets, otherwise they would already be insolvent. So let's ignore those assets just like they do, and pretend all is rosy for a second then ask the hypothetical two part question:

1. What is the actual leverage of our big 4 banks in the residential Aus RE and Aus CRE market? Domestic demand for Aus government debt is not especially high compared to say US Treasuries, Japanese Government Bonds or German Bunds. So our banks did, do and will continue to fund our RE appetite on international debt markets. Is this leverage and method of obtaining funding sustainable from a macro perspective and ethical from our citizens perspective as debt guarantors to these banks?
2. Assuming this is not a bubble, but rather a healthy bull market, we can also assume house prices make a healthy correction of 5% at some future point before making new highs. What will happen to the balance sheets of our big 4 banks in such a correction scenario? What would be the trigger for such a correction? Are the banks or even Australian society prepared for such a trigger event?


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## robots (16 June 2010)

hello,

what percentage do the banks get from overseas sinner? isnt the race on for deposits from the local community 

man some spruiking goes on

thankyou
professor robots


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## sinner (16 June 2010)

robots said:


> hello,
> 
> what percentage do the banks get from overseas sinner? isnt the race on for deposits from the local community
> 
> ...




Sorry robots, I think you have misunderstood the situation. Our banks sell debt on the markets to be purchased by investors. You "get a percentage" by buying debt. Banks traditionally buy short term debt and sell long term debt. Obviously in the case of our banks, a large portion remains on their balance sheet.

The race might very well be on for domestic deposits, those savers demand a rate of yield from the bank, where does the bank get that rate from? By selling your deposit as leveraged debt.

There isn't inherently wrong with that process, it has simply gotten way out of hand. To my mind, overleveraged would be an understatement.


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## So_Cynical (16 June 2010)

While we are on the subject of debt, there was something on the ABC news the other nite that caught my attention...apparently about 75% of Australians personal debt is held by people earning over 75K per annum...so it would seem that the vast majority of personal debt is reasonably well serviced by our high income earners and thus low risk.


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## satanoperca (16 June 2010)

So_Cynical said:


> While we are on the subject of debt, there was something on the ABC news the other nite that caught my attention...apparently about 75% of Australians personal debt is held by people earning over 75K per annum...so it would seem that the vast majority of personal debt is reasonably well serviced by our high income earners and thus low risk.




Sorry but this makes no sense as you have not enough facts to make this assumption - "Low Risk". When the GFC kicked in, it was the high income earners that I knew who were overleverage that got burnt badly, no the average Joe.

It depends on how much debt each individual carries that is important. Someone on $75K with $1M is in trouble.

I to heard the same thing but seemed to be in contrast to a report I had read that stated most of the mortgage debt for IP's was held by people earning between $50K and $80K, but i could be wrong.

Cheers


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## satanoperca (16 June 2010)

sinner said:


> Hi satano,
> 
> You give a good example of leverage on the retail side of the market, i.e. those taking out loans.
> 
> ...




I feel that it will take more than 5% for the banks to start to feel real pain, but that is not to say that their share price cannot drop with a 5% correction.

Yes our govnuts used $8B of your future tax dollars to by RMBS's. Why they continue to play market puppet is beyond me.

What I am full aware of is the Govnuts will step in with my 4 years olds future tax dollars to sure up the banks when GFC comes back from lunch.

Like your choice of banks, the main two I'm shorting in a long term hold approach, WBC and CPA as I believe their business model is overweighted in the RE sector. Given loans are falling, IR's have increased, like to see how they are going to pull the rabbit out the hat with huge profits come the next few reporting seasons.

Cheers


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## lioness (16 June 2010)

For all you property bulls living in a fools paradise, click on this link and pay attention to slides 21-22.

http://www.debtdeflation.com/blogs/...presentation-on-scribd-on-australian-housing/

Enjoy while it lasts.

CBA and WBC have >50% in residential mortgage debt on their books, USA and UK banks were in a healthier state before their collapse. Lookout below.


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## Beej (17 June 2010)

lioness said:


> For all you property bulls living in a fools paradise, click on this link and pay attention to slides 21-22.
> 
> http://www.debtdeflation.com/blogs/...presentation-on-scribd-on-australian-housing/
> 
> ...




What's wrong with banks carrying mortgage debt? That's the safest/lowest risk (in terms of default risk) loans banks can have on their books! If mortgage debt was only 20% of their book, what do you think would constitute the other 80%? And how risky do you think those other types of loans might be?? I think you are looking at the risks back to front!

Also you have to remember that in countries like the US most housing loans are securitised anyway (Freddie/Fanny etc), and so don't tend to be carried as assets on the banks books like they do here, whereas in AU securitisation only occurs for a small proportion of the market.

PS: That presentation has been floating around for years now, much of it's information is out of date and even wrong. But it certainly gets housing bears blood rushing!


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## satanoperca (17 June 2010)

Beej,

I do see the banks falling over as they are heavily exposed to the RE sector, just cannot see them writing huge amounts of loans like they did last year without govnuts assistance.

Cheers


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## schnootle (17 June 2010)

This debate annoys me for the same reason the climate change debate annoys me. You are either a believer or a denier, its all one or the other, why can't the people in control hedge our bets.

My attitude to the house price "bubble" is the same as for climate change , even the most passionate property fans will probably agree that there is a small possibility of a keen style meltdown, in the same way climate deniers will probably agree to a small possibility of man made destruction.

If in the future climate change bites, people will look back on us as negligent. If the housing market crashes and takes a bank with it we will be seen as negligent.

I wish a government would look forward more than 3 months.


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## Aussiejeff (17 June 2010)

satanoperca said:


> Beej,
> 
> I do see the banks falling over as they are heavily exposed to the RE sector, just cannot see them writing huge amounts of loans like they did last year *without govnuts assistance.*
> 
> Cheers




Since a significant part of our economy is entirely dependent on RE & mortgage-based financial instruments, it is hard to see govnuts of any colour or persuasion NOT continuing to use substantial amounts of taxpayer's funds to support the RE financing industry. 

For example, even without the federal govnuts FHOB (Boost), NSW alone still forked out *$780 Million* in $7,000 FHOG's (Grant) in the 12 mths between start Jun 2009 & end May 2010. http://www.osr.nsw.gov.au/lib/doc/stats/fhb_top20.pdf 

With all the other states as well as NSW still running that $7,000 FHOG scheme into the foreseeable future, that is a substantial whack ($Billions) of govnut support Australia-wide being continually pumped each year in to the RE sector. 

Catch-22. How can they possibly stop offering that huge cash splash without burning their own electoral fingers?


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## singlefished (17 June 2010)

Aussiejeff said:


> Catch-22. How can they possibly stop offering that huge cash splash without burning their own electoral fingers?




One word.... "Referendum"

Now that would be an interesting proposition


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## Beej (17 June 2010)

Aussiejeff said:


> For example, even without the federal govnuts FHOB (Boost), NSW alone still forked out *$780 Million* in $7,000 FHOG's (Grant) in the 12 mths between start Jun 2009 & end May 2010. http://www.osr.nsw.gov.au/lib/doc/stats/fhb_top20.pdf
> 
> With all the other states as well as NSW still running that $7,000 FHOG scheme into the foreseeable future, that is a substantial whack ($Billions) of govnut support Australia-wide being continually pumped each year in to the RE sector.
> 
> Catch-22. How can they possibly stop offering that huge cash splash without burning their own electoral fingers?




And how many *$$billions$$ in REVENUE* was reaped by the NSW government (and other states ) in property stamp duty charges?? The FHO grant is simply re-distributing a small portion of that massive stamp duty rip off from established home owners trading up and investors to people just starting out in life and buying their first home. Seems like a perfectly fair and reasonable thing to do to me???

FHOGs do not cost you as a tax-payer anything in reality, because if you think they prop up house prices, and were removed, "thus" resulting in big property price correction, then stamp duty revenues would plummet over-all and you would end up paying more taxes in other ways anyway as the state governments found other ways to tax you and maintain their revenue.




singlefished said:


> One word.... "Referendum"
> 
> Now that would be an interesting proposition




Really? Which part of the constitution exactly would you propose to be amended by your referendum???


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## Bigukraine (17 June 2010)

singlefished said:


> One word.... "Referendum"
> 
> Now that would be an interesting proposition




Only problems with "referendums" is that govt,s word the usual 2 choice's in a way that pushes you to one side or the other....(the side they want you to go) eg;

have a look at what they did when they asked Australia if it wanted to become a republic !!!! the choice"s were heavily weighed to keeping the stat quo .


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## singlefished (17 June 2010)

Beej said:


> Really? Which part of the constitution exactly would you propose to be amended by your referendum???




_Obviously the part of the constitution I am referring to is on a completely different page to anything that you would likely refer to...._

I wasn't proposing any amendments. I was providing a response to the catch 22 situation Aussiejeff brought up.


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## satanoperca (17 June 2010)

Beej said:


> And how many *$$billions$$ in REVENUE* was reaped by the NSW government (and other states ) in property stamp duty charges?? The FHO grant is simply re-distributing a small portion of that massive stamp duty rip off from established home owners trading up and investors to people just starting out in life and buying their first home. Seems like a perfectly fair and reasonable thing to do to me???
> 
> FHOGs do not cost you as a tax-payer anything in reality, because if you think they prop up house prices, and were removed, "thus" resulting in big property price correction, then stamp duty revenues would plummet over-all and you would end up paying more taxes in other ways anyway as the state governments found other ways to tax you and maintain their revenue.
> 
> ...


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## sinner (17 June 2010)

Beej said:


> FHOGs do not cost you as a tax-payer anything in reality, because if you think they prop up house prices, and were removed, "thus" resulting in big property price correction, then stamp duty revenues would plummet over-all and you would end up paying more taxes in other ways anyway as the state governments found other ways to tax you and maintain their revenue.




This is an extremely short sighted and probably logically incorrect argument. I would prefer that both State and Federal Governments kept their fingers out of this pie, which would therefore cost me literally nothing as a taxpayer (as opposed to your magical $7000+ grant that costs me nothing "in reality") as well as return the real estate market to the influence of the laws of supply and demand.

If politicians wish to levy new or otherwise exotic taxes as a result of decreased revenues, they can *try* and then see if they remain elected for another term. 

Nonetheless, reality does not match up with your claims of what a State Government would do as stamp duty revenue has fallen significantly in QLD without any new taxes being levied on the citizens to make up the shortfall.

Here is a piece on demographics in which BIS Shrapnel argues against the "immigration" sell: "buy now because there will be more and more people every year coming here":

http://www.businessday.com.au/business/population-growth-to-ease-report-says-20100516-v6cx.html

I believe they released a follow up report to the above linked one within the last week but can't seem to find a copy.


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## Aussiejeff (17 June 2010)

Beej said:


> And how many *$$billions$$ in REVENUE* was reaped by the NSW government (and other states ) in property stamp duty charges??




RE is not the only sector to be "robbed blind" by guvnuts, ya know.

And how many *$$billions$$ in REVENUE* was reaped by the Federal Gov't in savings account interest tax that should be re-distributed 100% to honest, hard-working savers - but unlike RE sector FHOG's, isn't?? 

And how many *$$billions$$ in REVENUE* was reaped by the Federal Gov't in petrol taxes that should be re-distributed 100% to fixing roads and other road safety initiatives, but unlike RE sector FHOG's, isn't??

On and on it goes....

Did anyone say RE "Negative Gearing" is a bonus too?

As far as free govnut handouts go (related to taxes received) the RE sector & FHOGS when compared to most other sectors of the economy seem to be specifically benefitting quite nicely, thankyou, IMO!

Afterthought: Maybe, just maybe, that *$780 Million* thrown at FHOG's by the NSW govnuts last year would have been better spent on behalf of ALL residents in significantly improving the NSW economy in many other areas - health, roads, education, infrastructure etc, etc?


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## robots (17 June 2010)

hello,

good afternoon, great day as usual

thought would be good to get the thread back on track, i chose Ballarat just recently and Trainspotter has his eye on Geraldton

so what other towns/suburbs are people watching?

big up for Ballarat again with John Brumby announcing a further 500 jobs into the town, just fantastic, going to be great for Victoria

on the flip side i read yesterday Asciano cut its dividend, oh well, try and oust the board, new management or just continue to get ripped, what you reckon Kincella?

thankyou
professor robots


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## medicowallet (17 June 2010)

Beej said:


> And how many *$$billions$$ in REVENUE* was reaped by the NSW government (and other states ) in property stamp duty charges?? ???




Not sure, but since you are sure it is such a high figure in NSW, can you please enlighten us.


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## satanoperca (18 June 2010)

Sorry to bring up the discussion on negative gearing again but I thought this chart clearly shows that NG does not add to the rental supply and thus PI provide some civic service to the community.




As a business yes, NG should apply to property just like in other business forms. To argue that it adds to the rental supply is clearly untrue.

Cheers


----------



## Bigukraine (18 June 2010)

robots said:


> hello,
> 
> good afternoon, great day as usual
> 
> ...




Normanville, Carrickalinga S.A ,own a house there near the beach great location 80k south of Adelaide 40k from the suburb of Norlunga and about same distance from Victor hbr
Features ,rural setting close to Adelaide ,Links lady bay sandbelt course and 4 star acc resort,due to lay out of the area very restrictive for any further development beaches unreal ,35k from ferry at Cape jervois to get to Kangaroo island.A bit like your Mornington pen. Oh and about 30k from the Mclaren vale wine district.


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## kincella (18 June 2010)

Hi Robots, I dont follow the stock market these days....
but there are some good articles out today.....Rick Battellino and busting all the property myths, including the banking myths....as propogated by the doomsdayers....
Rick Battellino busted all the myths on aussie homes...
read it at your peril, for the otherside....the property people know what they are doing....no need for them to read it...since they are cashed up, and unlikely to be concerned....
of course the media did not take it up.....it would not sell the mania, they need

http://www.theage.com.au/business/rba-myth-busters-explode-debt-headlines-20100618-yk37.html
then the other article about our house prices with asia growing at 20%, but europe and the rest are down.....
http://www.theage.com.au/business/property/property-investors-on-top-of-the-world-20100617-yjus.html
and finally the media grabbing the article about how credit card risk is higher than housing mortgages.....but the poll that follows totally disputes that rubbish......with over 4500 pollsters

as far as location....Wodonga near the nsw border missed out on brumbys new deals....but the black coal mine at Oaklands should be good for the area anyway...
I believe the current govnuts will be thrown out at the election, together with the sticken new mining tax.....it may well be too late for confidence in the mining industry.......however the location on the nsw/vic border will always hold its own, for tourists and travellers......
I am happy with my investments there.....in hindsight i should have stuck with inner city only, for the stunning capital growth......but I will be the first to return, if the prices were to plunge 40%.....that is unlikely to happen, so better to have IPs anywhere....rather than not be in that market....
oh and no problems with.. travel or transport here.....its a laid back area, fresh country air....
I will need a constant city hit, for the retail therapy....
cheers


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## satanoperca (18 June 2010)

kincella said:


> Hi Robots, I dont follow the stock market these days....
> but there are some good articles out today.....Rick Battellino and busting all the property myths, including the banking myths....as propogated by the doomsdayers....
> Rick Battellino busted all the myths on aussie homes...
> read it at your peril, for the otherside....the property people know what they are doing....no need for them to read it...since they are cashed up, and unlikely to be concerned....
> ...




You crack me up Kincella. One day the RBA has no idea what they are doing and the next you are congratulating them. Bias besides a better man.

PS. dont you think it might be the RBA softening the way for another rate rise to control inflation.

PS2. RBA debunks the myth that NG provides more rental properties (see above post)


Cheers


----------



## Mofra (18 June 2010)

robots said:


> thought would be good to get the thread back on track, i chose Ballarat just recently and Trainspotter has his eye on Geraldton
> 
> so what other towns/suburbs are people watching?



Bendigo. 7,000 smaller than Ballarat, however it has a higher proportion of renters than the state average (30% compared to 23%) and is only 50km away from Heathcote, an area that produces the most consistently high quality of Shiraz out of almost any other wine region in Australia IMO


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## nunthewiser (18 June 2010)

Bowen. QLD


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## sinner (18 June 2010)

kincella said:


> but there are some good articles out today.....Rick Battellino and busting all the property myths, including the banking myths....as propogated by the doomsdayers....
> Rick Battellino busted all the myths on aussie homes...
> read it at your peril, for the otherside....the property people know what they are doing....no need for them to read it...since they are cashed up, and unlikely to be concerned....
> of course the media did not take it up.....it would not sell the mania, they need
> ...




What myths does this article bust exactly? After reading the article and its proposed myths I have noted the article states plainly:

* Proposed myth: Australian banks fund huge amounts of their lending on foreign debt markets. 
NOT A MYTH We certainly do fund huge amounts of lending on the foreign debt markets and it is stated plainly in the article. The Dep.Gov. of the RBA states that we can do this because of our high investment rate and because the majority of the debt is denominated in AUD. The fact is that without the Treasury debt guarantee that foreign demand for Australian dollars would be extremely low. If 2008 showed us anything it is that bond vigilantes will always be long the "guaranteed" debt over non-guaranteed (see Irish debt as example). Financing of debt on the scale that currently takes place would be literally impossible without this guarantee. If foreign investors are so happy to hold our debt then why do we need the Treasury guarantee? Due to the Eurozone crisis cracks in the ability to finance debt have already started:


> The current euro-zone debt crisis has caused costs to blow out on funding markets, and this is expected to have an effect on some of the Australian banks.
> NAB and the Commonwealth Bank are fully funded for the next few months.
> However, the ANZ Bank and Westpac still need to raise between $8bn and $13bn by the end of September.
> The cost of raising five-year term debt has increased by at least 60 basis points in the past two months.



From http://www.news.com.au/business/for...-local-banks-rba/story-e6frfm1i-1225880209530
Not to mention the 11% drop in the price of the AUD in less than a month. I am sure we will never be bitten on the **** funding our debt like this. 


* Proposed myth: We are bad savers. NOT A MYTH
We are only not bad savers when compared to Europe (as a whole) or the USA with their all time historical low current saving rates (which are increasing!). Compared with China or Japan or France we are saving at roughly one third the rate.
* Proposed myth: We have a high household debt. NOT A MYTH
As plainly stated in the article:
*“Household debt has risen significantly faster than household income since the early 1990s,” Battellino said. “At that time, households on average had debt equal to half a year's disposable income; by 2006, debt had risen to around one and a half years' income. Since then, however, the ratio of debt to income has stabilised. “Most of the rise was due to housing debt, including debt used to fund investment properties.*
Hmmm...let's take a look at the actual numbers:
1990: Australian household debt 85% of GDP
December 2009: Australian household debt 100% of GDP
http://www.news.com.au/money/money-...e-for-first-time/story-e6frfmd9-1225813961183

So there we go. All the proposed myths seem to be fact after all. Only the reporter from "The Age" seems to think they are busted, other reporters on this article definitely seem more skeptical, one I read today went so far as to say *"While Battellino gave a cautious no to his own questions; he didn't spell out that all this turned on one huge all-encompassing assumption. Forget about the US; that China keeps on trucking"*. The Dep.Gov reckons "everything is fine here, nothing to see, move along". That is what he is saying. We have no issues with foreign debt funding on a huge scale, we have no issues with household debt, we have no issues with saving, everybody who loaded up on debt in the last 24 months can handle it. Just move along, everything is fine.

Meanwhile, analysts at JPM and Fujitsu seem to be busting some real myths:
http://www.theaustralian.com.au/bus...affect-1-million/story-e6frg9gx-1111116815756


> MORTGAGE stress levels in Australia are tipped to reach more than 1 million homes by December, amid dire predictions that more than 53,000 jobs will disappear from small- to medium-sized businesses.
> ...
> His message came with a warning that Australian banks could be entering a loan loss cycle not seen since the 1990s -- more casualties from the global credit crunch, further interest rate rises from the banks beyond any central bank movement and some fee increases, in areas such as loan applications.
> ...
> ...




That article meshes with my feelings much better. Australian banks will soon have trouble funding debt like they currently do on foreign capital markets. They will be crowded out as bigger banks, companies and even the US Treasury constantly issue huger and huger new amounts of debt. I read today BP is trying to sell $10bn in debt right now. I expect the debt market to become fully saturated. Therefore Aus banks will charge rates higher than the RBA - as the market will demand higher rates and there is low domestic demand for Aus debt.


----------



## nomore4s (18 June 2010)

My personal opinion is that property in Oz will continue on it's merry way (although I'm skeptical that we will see the same returns in the next 10 years as we have seen in the last 10 years) until there are issues servicing the debt, then both property prices and banks are probably in a little bit of trouble.

I also think there won't be any trouble servicing the debt until we get a round of high unemployment. With the general population so deep in debt it won't take long for :fan when people start losing their ability to earn the type of wages we have become accustomed too. The wild card could be if we see a round of serious deflation.

But until we see high unemployment I think property will continue to tick along as the general population still regards it as a safe investment and nearly an essential part of Aust life really. Until something changes that or our ability to take on and service debt I can't see too much changing in the property market.


----------



## robots (18 June 2010)

hello,

great suggestions, keep them coming brothers

i will probably look at Bendigo in a few years time, pay down a bit and kick off again

i reckon St Kilda/prahran/elwood/richmond here in Victoria would have to be on hotspotting, especially 1-bedders which will provide good solid returns, get one in a good spot in the building with carpark

fantastic day

word out to Glen48, smoking must of got him

thankyou
professor robots


----------



## kincella (19 June 2010)

monica wakelin on abc this morning suggests Geelong 1st, then bendigo ballarat
rick bettellino deputy rba, provides a more informative view on finance and housing than his boss, the ugly Stevens.....it often appears to me to be somewhat contrary to Stevens views....
Stevens has bad body language, avoiding eye contact with his viewers or listeners, which implies to me, that he is lying, or untruthful....or receiving directions, or advice from the pm....
I usually make reference, or imply to Stevens as being wrong, he being the head of the rba....oh my goodness, did I refer to the RBA without specifically noting Stevens......

whatever, housing in OZ is sound, no great drops, and probably an increase in the next few years, as the conservative investor departs the gambling den of the stockmarket, and heads to the safety of bricks and mortar...
and whilst around 1500 immigrants head into melb each week from their god forsaken countries....they must be envious of our high standards of living, and particularly envious of our housing......
at the same time, unable to comprehend the cost of housing here.....


----------



## UBIQUITOUS (19 June 2010)

kincella said:


> whatever, housing in OZ is sound, no great drops, and *probably an increase in the next few years,* as the conservative investor departs the gambling den of the stockmarket, and heads to the safety of bricks and mortar...




Kincy, you don't appear to be nearly as bullish as the long term 10% pa return you are on record as banking on  (mentioned on here by you a few months back).Howcome the change in sentiment?


----------



## kincella (19 June 2010)

no change in sentiment......I am talking non inner city housing......which will grow at the usual rate...
inner city housing may grow at a slower rate until the 2nd GFC pans out, or with removal of the foreign ownership new rules.....with a change in govnuts....
there will be plenty of astute investors buying non inner city housing, as they flee from the gambling den....
rents will keep rising, whilst we allow 1500 or more immigrants in each week to melb and sydney.....
since investors have stopped building new houses, where will all those immigrants go.....well some of the immigrants will replicate their former housing arrangements, by piling 10-12 into 2 or 3 bedroom houses
the resources tax and the most incompetent govnut in our history will dampen any incentives for investors for a couple of years, or until they are removed from office.....
10% or more growth rate will be easily achievable for the outer suburbs and the regional areas....
nothing the state govnuts are promising pre election will ever become a reality....no fast trains, no more housing or jobs.....absolutley nothing will be done to fix the current problems......until we have changes at both a state and federal level
enjoy your day, as it is now, its about as real as it can get......


----------



## nunthewiser (19 June 2010)

Negative growth of median house prices over the next 3-5 years? 

Nah could never happen


----------



## satanoperca (19 June 2010)

kincella said:


> nothing the state govnuts are promising pre election will ever become a reality....no fast trains, no more housing or jobs.....absolutley nothing will be done to fix the current problems......until we have changes at both a state and federal level
> enjoy your day, as it is now, its about as real as it can get......






nunthewiser said:


> Negative growth of median house prices over the next 3-5 years?
> 
> Nah could never happen




Completely agree and it just might happen.

Beautiful day in Melbourne.


----------



## Bill M (19 June 2010)

kincella said:


> -
> there will be plenty of astute investors buying non inner city housing, as they flee from the gambling den....
> rents will keep rising, whilst we allow 1500 or more immigrants in each week to melb and sydney.....
> since investors have stopped building new houses, where will all those immigrants go.....well some of the immigrants will replicate their former housing arrangements, by piling 10-12 into 2 or 3 bedroom houses
> ...




Well kincella I think you are right on here. A 38 y/o mate of mine, single good job and with references is finding it extremely difficult to secure a rental unit on the Northern Beaches Sydney. He says every time he turns up for a inspection there are 20 other would be tenants all trying to get the same place, he says he might end up sharing accommodation again.

In my case I got a 12 Month contract with my new tenants at $420 a week for an 80 sqm unit. Only a one week gap from the tenant moving out to the new one moving in. Agents are quite good these days and open the unit up 1 Month before the tenants move out to secure the new ones.

As for the GFC, when the first one hit I went to several open for inspections (sales) in the Northern Beaches a great deal of buyers were older investors 50's to 70's looking for secure investments. Went for a walk about in the area the other day and there is nothing available to buy any more. With this sort of pressure on housing it will only mean prices going up.

However.... at The Central Coast (an hours drive from Sydney) you can still buy a 3 bedroom brick veneer home for 299k. Not bad and there are still some available to buy. Brand new homes can be bought for 335k, good deal with the stamp duty being axed on them. 

Anyhow a couple of links for some reasonably priced housing just an hour out of Sydney.

http://www.realestate.com.au/property-house-nsw-hamlyn+terrace-106354176

and

http://www.realestate.com.au/property-house-nsw-hamlyn+terrace-106545773


----------



## UBIQUITOUS (19 June 2010)

Bill M said:


> Well kincella I think you are right on here. A 38 y/o mate of mine, single good job and with references is finding it extremely difficult to secure a rental unit on the Northern Beaches Sydney. He says every time he turns up for a inspection there are 20 other would be tenants all trying to get the same place, he says he might end up sharing accommodation again.
> 
> In my case I got a 12 Month contract with my new tenants at $420 a week for an 80 sqm unit. Only a one week gap from the tenant moving out to the new one moving in. Agents are quite good these days and open the unit up 1 Month before the tenants move out to secure the new ones.
> 
> ...




Cherry picked anecdotal 'evidence'. Yawwwnnn. It really shows how desperate things are becoming for the RE bubble cheerleaders.

Well while you're are it, I just made some up as well...ahem...I mean heard about these genuine stories. "My mate's mate just secured a rental for 50% off, and his mate bought a place for 75% off the asking price."


----------



## Bill M (19 June 2010)

UBIQUITOUS said:


> Cherry picked anecdotal 'evidence'. Yawwwnnn. It really shows how desperate things are becoming for the RE bubble cheerleaders.
> 
> Well while you're are it, I just made some up as well...ahem...I mean heard about these genuine stories. "My mate's mate just secured a rental for 50% off, and his mate bought a place for 75% off the asking price."




Ubi you can believe what you like as I really don't care but I will rehash an old article from way back in 1994, it said: 

"*The table on this page demonstrates how far off the doom and gloom merchants were, when, as they did in 1983 and more recently in 1992, they predicted that price increases were a thing of the past. Whilst caution is wise, undue caution could see some buyers miss out on excellent opportunities*."

Nothing has changed since then, the doom and gloom merchants are out there in force again. Please note in 1994 the median Sydney House Prices were 216K now it is over 600k, it has trebled. That is what everyone needs to know, the evidence is there.


----------



## explod (19 June 2010)

Bill M said:


> Ubi you can believe what you like as I really don't care but I will rehash an old article from way back in 1994, it said:
> 
> "*The table on this page demonstrates how far off the doom and gloom merchants were, when, as they did in 1983 and more recently in 1992, they predicted that price increases were a thing of the past. Whilst caution is wise, undue caution could see some buyers miss out on excellent opportunities*."
> 
> Nothing has changed since then, the doom and gloom merchants are out there in force again. Please note in 1994 the median Sydney House Prices were 216K now it is over 600k, it has trebled. That is what everyone needs to know, the evidence is there.




What has the past got to do with the future of Australian property prices anyway.   A trend that is current can give direction, no more or less.  The trend has stalled so *beware a bit.*

Fundamentals will rule, business, jobs, tourism, exports, manufacture and on and on.   They all look a bit dodgy at the moment, sooo *beware a bit  *

On the TV news tonight a bit of alarm at a drop in clearance rates today.  *beware a bit*

No doom and gloom in any of these statement, just *beware a bit*


----------



## tech/a (19 June 2010)

Nice post Bill.

Of course the "mob" cant possibly comprehend housing at $1mill (average)
or average wage $150K a year.

I remember a Pack of Smokes 80c
Now $15

I was buying 4 bedroom homes in 96 for $92K
Friends thought I was crazy. (bought 8 over 5 yrs) still have 5.

This crazy I can certainly live with.

South of Adelaide we have the freeway being expanded to 2 way 
Railway line to seaford and housing still under $300K within a K of the beach.
Eastern buyers are falling over thmselves buying----
In 5 yrs you wont get anything of much value under high $400ks.
But "The Mob" wont recognise value even when its printed in front of them.


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## lioness (19 June 2010)

Robot and friends,

Where is the link to the clearance rates? Bit slow today.


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## Bill M (19 June 2010)

explod said:


> No doom and gloom in any of these statement, just *beware a bit*




I agree explod, we all have to be careful in doing any investments.



tech/a said:


> I remember a Pack of Smokes 80c
> Now $15




Yeah I remember flogging my Mum and Dads smokes, anyone remember "Park and Drive"? 33c a pack.



> I was buying 4 bedroom homes in 96 for $92K
> Friends thought I was crazy. (bought 8 over 5 yrs) still have 5.




Well done!

I have never mentioned this before but I will now. My first house I bought was in Para Hills West (Adelaide) it was in 1978, it cost $22,750, it was a 3 bedroom double brick house. How much would that be today?



> South of Adelaide we have the freeway being expanded to 2 way
> Railway line to seaford and housing still under $300K within a K of the beach.
> Eastern buyers are falling over thmselves buying----
> In 5 yrs you wont get anything of much value under high $400ks.
> But "The Mob" wont recognise value even when its printed in front of them.



Maybe I should move back there, sounds great. Adelaide is certainly progressing a lot, putting in a lot of infrastructure UNLIKE poor old Sydney with useless Governments blowing our money. Anyhow, well done tech.


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## robots (19 June 2010)

hello,

good day brothers, superb day and just back in

here we go:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

fantastic 67%, great prices achieved

great result in St Kilda with 80% clearance rate (8 from 10), especially like the one on chapel st (635k) as just down from my joint

paradise

* special congratulations to the 2000 new citizens at the MCG today, well done and hope to see many more in the future (maybe 20 mil)

thankyou
professor robots


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## lioness (19 June 2010)

robots said:


> hello,
> 
> good day brothers, superb day and just back in
> 
> ...




Thanks robots, good to hear you are still sinking the cranskies and vodka and limes.


----------



## schnootle (19 June 2010)

tech/a said:


> In 5 yrs you wont get anything of much value under high $400ks.
> But "The Mob" wont recognise value even when its printed in front of them.




And if that is the case then little old Adelaide will have one of the highest median income housing multiples in the world, can any one see anything wrong with this.


----------



## robots (20 June 2010)

schnootle said:


> And if that is the case then little old Adelaide will have one of the highest median income housing multiples in the world, can any one see anything wrong with this.




hello,

no, like if it doesnt suit you grab a jet to the United States of Crapola man 

cheap houses, cheap guns, highest homicide rate in the world, get kitted up at Walmart, uzi's, 9mm, ak47 all of them

drive the pick-up on the highways, upsize at the drive thru

lucky the world has places like Adelaide and the rest of Australia

thankyou
professor robots


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## UBIQUITOUS (20 June 2010)

robots said:


> hello,
> 
> no, like if it doesnt suit you grab a jet to the United States of Crapola man
> 
> ...




On the subject of Crapola, can you provide evidence for all of these 'facts'?


----------



## electronicmaster (20 June 2010)

I can't wait to see what has happened to the Melbourne auctions thats taken place this weekend.

At least 1000 Houses on Auction?  Housing oversupply lol


----------



## Aussiejeff (20 June 2010)

electronicmaster said:


> I can't wait to see what has happened to the Melbourne auctions thats taken place this weekend.
> 
> At least 1000 Houses on Auction?  Housing oversupply lol




See Robot's post #2028 above.

67% (not sure if this is for Sat ONLY or for whole week 14-19 Jun including Sat 19th, yesterday - see my underline below). Bit confusing as this is what is on the REIV website below the initial blurb.
http://www.reiv.com.au/home/inside.asp?ID=142



> AUCTION RESULTS
> 
> Results are compiled by THE REAL ESTATE INSTITUTE OF VICTORIA. Agents should supply auction and private sale data to phone: 1300 858 788 or e-mail: salesresults@reiv.com.au
> 
> ...




Make of that what you will.


----------



## electronicmaster (20 June 2010)

Aussiejeff said:


> See Robot's post #2028 above.
> 
> 67% (not sure if this is for Sat ONLY or for whole week 14-19 Jun including Sat 19th, yesterday - see my underline below). Bit confusing as this is what is on the REIV website below the initial blurb.
> http://www.reiv.com.au/home/inside.asp?ID=142
> ...




Thanks Aussiejeff


67% yesterday vs 87% same time last year? And this is the most houses auctioned in a single weekend for some time?  ok 

And more to come with similar numbers next week?  Nice


----------



## UBIQUITOUS (20 June 2010)

Basically, not all of the auction results are included. The REIV would claim that they aren't reported. Eventually when they do 'come in', the clearance rate is revised downwards. Have a look back at every previous month. 

The conclusion is that auction results which aren't included just so happen to be mostly 'passed in' auctions, which would bring the clearance rate down, *and are never  mostly sales*

Coincidence that month after month the revision is downwards and never upwards? NO CHANCE!!


----------



## Aussiejeff (20 June 2010)

UBIQUITOUS said:


> Basically, not all of the auction results are included. The REIV would claim that they aren't reported. Eventually when they do 'come in', the clearance rate is revised downwards. Have a look back at every previous month.
> 
> The conclusion is that auction results which aren't included just so happen to be mostly 'passed in' auctions, which would bring the clearance rate down, *and are never  mostly sales*
> 
> Coincidence that month after month the revision is downwards and never upwards? NO CHANCE!!




Seems there is an inherent problem with REIV's reporting in that they rely on agents who are asked to phone in their results. So, if some agents want to make themselves appear more successful at auctioning, they simply report only successful sales rather than pass-ins. 

There doesn't seem to be any official auditing of ALL actual auction listings/sales by REIV? So it is entirely up to the agents as to what they report??


aj


----------



## robots (20 June 2010)

UBIQUITOUS said:


> On the subject of Crapola, can you provide evidence for all of these 'facts'?




hello,

goto latest newspaper site, another round of shootings in a restaurant, if you reckon its wrong you pull up some facts

HIGHEST HOMICIDE RATE IN THE WORLD.

they have no respect for fellow man and the rest of the world is waking up to their irrelevance, probably caused the housing collapse over there

but hey, get over there if you like cheap housing

thankyou
professor robots


----------



## satanoperca (20 June 2010)

http://www.nationmaster.com/graph/cri_mur_percap-crime-murders-per-capita

Murders (per capita) (most recent) by country 
24 - IOU's of A 0.0428 per 1000 people
43 - Ozzie Ozzie Ozzie 0.01503 per 1000 people.

Cheers


----------



## robots (20 June 2010)

hello,

thats a junk website satanoperca out of the IOU's of A,

thankyou
professor robots


----------



## satanoperca (20 June 2010)

robots said:


> hello,
> 
> thats a junk website satanoperca out of the IOU's of A,
> 
> ...




Cannot please everyone.


----------



## robots (20 June 2010)

hello,

i reckon real estate agents (REIV members of course) should have to notify the REIV of auctions for the forthcoming weekend and then results can be matched.

The auction process is still a bit of theatre until the sig is  on the contract. Great well to buy and sell though.

80% clearance for st kilda, must be outer suburbs dragging the overall down

Thankyou
Professor Robots


----------



## drsmith (20 June 2010)

tech/a said:


> South of Adelaide we have the freeway being expanded to 2 way
> Railway line to seaford and housing still under $300K within a K of the beach.
> Eastern buyers are falling over thmselves buying----
> In 5 yrs you wont get anything of much value under high $400ks.
> But "The Mob" wont recognise value even when its printed in front of them.



Even when the Southern Expressway is duplicuted and the Northern Expressway, connector and South Road Superway are completed, there will still a lot of goat track in between dressed up as a main aterial. 

That's going to be one very expensive problem to overcome as Adelaide grows.


----------



## beachlife (20 June 2010)

If the guy at www.thegreatbustahead.com is right then the next 15 years is not going to be good for property anywhere.  He might be wrong though.  Time will tell.


----------



## Mofra (21 June 2010)

electronicmaster said:


> 67% yesterday vs 87% same time last year? And this is the most houses auctioned in a single weekend for some time?  ok



With more stock on the market & failing to sell, the rise has obviously come to a halt, especially with at least one more rate rise ont he cards for the end of the year.
Not a shuddering crash, merely a halt (with the likelyhood of a slow pullback in coming months). 

Where's the panic?


----------



## Mofra (21 June 2010)

beachlife said:


> If the guy at www.thegreatbustahead.com is right then the next 15 years is not going to be good for property anywhere.  He might be wrong though.  Time will tell.



The guy who has made the same prediction for 7 years and is trying to sell his book, you mean?

Yeah, pass thanks.


----------



## beachlife (21 June 2010)

Mofra said:


> The guy who has made the same prediction for 7 years and is trying to sell his book, you mean?
> 
> Yeah, pass thanks.




That's what I used to say until I read it.  I'm sure you have heard of Harry Dent Jr, famous for predicting the bull run based on demographics.  Well this book is a summary of what Harry thinks is coming.  I have read it and it all makes sense and I can now see signs of it starting everywhere.

Like I said he (they) might be wrong but the question that everyone should consider is what if these guys are right?  Can I handle my debts if my property values fall?  Can I handle my debts if my properties wont sell?  Can I handle my debts if the banks stop lending?  All of these happened during the GFC.

The GFC showed that many out there couldnt because they were too highly geared and too reliant on equity redraw to cover repayments.

For me the anwsers were this.
If these guys are right I will be in the proverbial,
If they are wrong I will miss out on some profit.

I would rather miss some profit than risk losing everything so I have sold up and wont be touching real estate for a long time.  And considering the hassles of dealing with agents, tenants and magistrates, probably never again. 

BTW the prices I actually got were all well below the banks value and some houses took over 12 months to sell.  My real wealth turned out to be a lot less than my paper wealth.

Just my 2c.


----------



## explod (21 June 2010)

beachlife said:


> That's what I used to say until I read it.  I'm sure you have heard of Harry Dent Jr, famous for predicting the bull run based on demographics.  Well this book is a summary of what Harry thinks is coming.  I have read it and it all makes sense and I can now see signs of it starting everywhere.
> 
> Like I said he (they) might be wrong but the question that everyone should consider is what if these guys are right?  Can I handle my debts if my property values fall?  Can I handle my debts if my properties wont sell?  Can I handle my debts if the banks stop lending?  All of these happened during the GFC.
> 
> ...




An absolutely excellent post.    I was howled down a few years ago for recommending such reading and espousing the messages.   So I have stopped posting it.   

I sold all of my real estate for the same reasons.   Stock market and gold has been very good and safe.   Gold up 30% per year since.   You can move things around fast also.

You can take a donkey to water but you cant make it think.


----------



## wayneL (21 June 2010)

Mofra said:


> The guy who has made the same prediction for 7 years and is trying to sell his book, you mean?
> 
> Yeah, pass thanks.




And how many years have CBs been flushing money into the system?

7ish?

The big question is how many more years they can keep doing it.


----------



## Mofra (21 June 2010)

beachlife said:


> Like I said he (they) might be wrong but the question that everyone should consider is what if these guys are right?  Can I handle my debts if my property values fall?  Can I handle my debts if my properties wont sell?  Can I handle my debts if the banks stop lending?  All of these happened during the GFC.
> 
> The GFC showed that many out there couldnt because they were too highly geared and too reliant on equity redraw to cover repayments.



Equity redraw to cover repayments?
Perhaps yes if you're considering the lunatics in the US that were signing up unemployed types to NINJA loans in a non-recourse environment, but Australian lending standards were much higher than the US and continue to be so.
It's worth noting that the LMI providers enacted the bulk of their tightening measures in Australia _before_ the crisis hit. 



beachlife said:


> For me the anwsers were this.
> If these guys are right I will be in the proverbial,
> If they are wrong I will miss out on some profit.
> 
> I would rather miss some profit than risk losing everything so I have sold up and wont be touching real estate for a long time.  And considering the hassles of dealing with agents, tenants and magistrates, probably never again.



Congrats, you've amended your investment portfolio to match your appetite for risk which is really what everyone should aim for.
Given the e-book site you linked to is written in the same formula as every other sales pitch I've seen for an e-book, I'll be happy to base my decisions on a multitude of other information thanks.


----------



## Mofra (21 June 2010)

wayneL said:


> And how many years have CBs been flushing money into the system?
> 
> 7ish?
> 
> The big question is how many more years they can keep doing it.



Arguably many years longer but there's a can of worms that could take up it's own thread in itself (dominated at least one of the other property threads from memory).


----------



## tech/a (21 June 2010)

Until the supply problem is solved your not going to see a decline (Other than in areas of over supply) in house prices of any appreciable number.


----------



## explod (21 June 2010)

Mofra said:


> Arguably many years longer but there's a can of worms that could take up it's own thread in itself (dominated at least one of the other property threads from memory).




And of course it is the big issue going forward.  The basic fundamentals of money supply and its costs.   When the nitty gritty is pointed out people begin to get very cross, and yes it destroys sensible debate.

But on effecting property price direction it cannot be sidestepped.


----------



## robots (21 June 2010)

explod said:


> *An absolutely excellent post. I was howled down a few years ago for recommending such reading and espousing the messages.   So I have stopped posting it.*
> 
> I sold all of my real estate for the same reasons.   Stock market and gold has been very good and safe.   Gold up 30% per year since.   You can move things around fast also.
> 
> You can take a donkey to water but you cant make it think.




hello,

i was in the same position as you Explod, howled down, ridiculed, physically abused for talking about property and 6 fantastic years have almost past, i thought my career was over

so i kept posting to help the wider community and others like myself just do it to help out fellow man

we not selling books or asking for donations (a la S.Keen), the rises have been great

the money supply is no different to 10, 20 or 30yrs ago, go to the bank and get a loan, pay it down, get a new one, 

thankyou
professor robots


----------



## wayneL (21 June 2010)

robots said:


> the money supply is no different to 10, 20 or 30yrs ago,




I just nearly asphyxiated myself laughing at that one.


----------



## nunthewiser (21 June 2010)

robots said:


> hello,
> 
> i was in the same position as you Explod, howled down, ridiculed, *physically abused *for talking about property and 6 fantastic years have almost past, i thought my career was over
> 
> ...




? you got physically abused for talking about property?


----------



## poverty (21 June 2010)

nunthewiser said:


> ? you got physically abused for talking about property?




Trip report on this one please robots


----------



## robots (21 June 2010)

poverty said:


> *Trip* report on this one please robots




hello,

yes, i was on the pushie and came across a Same Sex Marriage Rally at the corner of Bourke & Swanston St in Melbourne

the socialist party had a table set up and i was discussing "Life" with one of the attendants, next minute he had me in the submission hold and slammed me head first into the pavement, just left me there

it was straight out of WWE, amazing

thankyou
professor robots


----------



## wayneL (21 June 2010)

robots said:


> hello,
> 
> yes, i was on the pushie and came across a Same Sex Marriage Rally at the corner of Bourke & Swanston St in Melbourne
> 
> ...



He must have been an ASF member and figured out who you are.


----------



## nunthewiser (21 June 2010)

robots said:


> hello,
> 
> yes, i was on the pushie and came across a Same Sex Marriage Rally at the corner of Bourke & Swanston St in Melbourne
> 
> ...




 Truly amazing

And ya reckon oz is the place to live?

At least in the U.S.A ya coulda busted a cap in his @ss


----------



## satanoperca (22 June 2010)

Thought this was an interesting article pertaining to the banks and mortgage lending.

http://www.theaustralian.com.au/business/mortgage-windfall-will-end-says-nab/story-e6frg8zx-1225882481763



> The sudden windfall arose because Basel II enabled banks to hold less capital against more secure home lending due to lower historical loss rates.






> "There are super profits in mortgage lending because the banks, with the transition to Basel II, took more than half the capital off the table and the margins never adjusted down to reflect that."




So they have been writing more debt and have required less capital to do so. 

Dangerous if the market changes direction.

Shorts on the banks will remain on. 

Cheers


----------



## Aussiejeff (22 June 2010)

> The sudden windfall arose because *Basel II* enabled banks to hold less capital against more secure home lending due to lower historical loss rates.




Is he related to Basel Fawlty?


----------



## sinner (22 June 2010)

tech/a said:


> Until the supply problem is solved your not going to see a decline (Other than in areas of over supply) in house prices of any appreciable number.




Chronic undersupply of housing is just something bandied around by property spruikers. Certainly something that has been debunked quite easily over the last 2 years:

http://www.thirdwavegroup.com.au/tidal-report/tidal-report-20-mar-2010-the-myth-of-undersupply/
http://www.moneymorning.com.au/20100323/no-evidence-of-a-chronic-undersupply-of-housing.html
http://www.businessspectator.com.au...ge-myth-pd20100510-5B62B?opendocument&src=rss
http://cij.inspiriting.com/?p=458
http://www.crikey.com.au/2009/12/02/housing-shortage-two-parts-myth-zero-parts-reality/

Article after article after article (and only one of them by Steve Keen) using data from all over Australia to show plainly that there is no structural or chronic housing shortage.

On the other hand tech, do you have any references to back up your claim of this housing shortage?

I also put it to you tech, that London and many other cities in England had an *actual* chronic undersupply of housing unlike our *manufactured* undersupply of housing and that this did not stop home price decline in those cities and shires by one iota. In fact they still have a chronic undersupply and house prices declining 2.8%YoY. You can go look at the BBC "house prices" website for confirmation.

Easy credit spells excess demand. If there is an imbalance in supply/demand it is without a doubt due to the expansive monetary policy of the RBA and global central banks of the last 10-15 years. 

But supply/demand holds nothing big to this issue IMHO. The issues now are:
1. Mortgage repayment stress due to interest rates
2. Leverage of the big 4 banks
3. LVR reductions by the big 4 banks (negative feedback loop)
4. "Greater fool" theory definitely running shorter and shorter on the pool of fools due to 3 - less and less fools paying a higher and higher price.
http://globaleconomicanalysis.blogspot.com/2010/02/pool-of-greater-housing-fools-in.html
5. The balance sheet of the RBA itself

Tulips used to be in high demand. Eventually a price is reached that nobody will pay - especially in an easy credit environment. House prices will go up until they don't. And then they won't.


----------



## sinner (22 June 2010)

PS: I am currently looking for a prospective new home to rent and I can definitely point out some areas of Melbourne with huge realtime supply overhang. 

RE agents are offering 3 months discounted rent and similar to get people in the door of these places because there are soooo many of them.


----------



## Trembling Hand (22 June 2010)

sinner said:


> PS: I am currently looking for a prospective new home to rent and I can definitely point out some areas of Melbourne with huge realtime supply overhang.




Oh? where you looking? I'm still amazed at the lineups come open for inspection around my place for rentals.


----------



## Bushman (22 June 2010)

sinner said:


> PS: I am currently looking for a prospective new home to rent and I can definitely point out some areas of Melbourne with huge realtime supply overhang.
> 
> RE agents are offering 3 months discounted rent and similar to get people in the door of these places because there are soooo many of them.




Must disagree here. Friends of mine last week had to send a CV to a prospective landlord to even get on the short-list for a rental property in Richmond. Inner city Melbourne has huge pent-up demand for rental properties. 

Sure if you are talking some of the new estates or apartment developments there is over supply.


----------



## satanoperca (22 June 2010)

No problem down here in the Docklands, plenty of rentals but they are hardly for the average income earner or could be deemed affordable.

Cheers


----------



## Mofra (22 June 2010)

sinner said:


> PS: I am currently looking for a prospective new home to rent and I can definitely point out some areas of Melbourne with huge realtime supply overhang.
> 
> RE agents are offering 3 months discounted rent and similar to get people in the door of these places because there are soooo many of them.



Care to mention them? I recently had a vacancy, had another tenent in one week after it was vacant at a 22.8% increase in rent. The first tenant had been there for years and was an excellent tenant but wasn't paying _that_ much under market rent at the review last year.


----------



## satanoperca (22 June 2010)

Trembling Hand said:


> Oh? where you looking? I'm still amazed at the lineups come open for inspection around my place for rentals.




Great illusion by RE's. Have a 15minute window to have a look, hence people lining up. Not like the good old days of picking up the keys.

Available rentals in Richmond Qty 154. Make of it what you will.

Cheers


----------



## sinner (22 June 2010)

Trembling Hand said:


> Oh? where you looking? I'm still amazed at the lineups come open for inspection around my place for rentals.




I have been looking everywhere, just as a matter of curiosity.



> Must disagree here. Friends of mine last week had to send a CV to a prospective landlord to even get on the short-list for a rental property in Richmond. Inner city Melbourne has huge pent-up demand for rental properties.




Gee it sounds like I said "I can definitely point out *ALL* areas of Melbourne with huge realtime supply overhang" ...but I didn't. 

Anywhere west of Footscray is a really good example of huge realtime supply overhang. I will leave it to curious readers and enquiring minds to think about the demographics and what a complete lack of demand for housing in Melbournes only real expansion zone means.

On a completely unrelated note, here is co-founder of GMO Jeremy Grantham calling the Australian housing market a time bomb on June 16.
http://www.news.com.au/money/proper...rket-a-time-bomb/story-e6frfmd0-1225880221197
Cliffs notes of the article:


> *Australia, UK only two housing bubbles left
> *Would need to fall 42pc to return to trend
> *"As soon as rates go up, the game is over"


----------



## Trembling Hand (22 June 2010)

satanoperca said:


> Available rentals in Richmond Qty 154. Make of it what you will.



exactly!! as the biggest suburb in Melbourne with very high density thats a tiny amount would you not agree?


----------



## satanoperca (22 June 2010)

Trembling Hand said:


> exactly!! as the biggest suburb in Melbourne with very high density thats a tiny amount would you not agree?




Dont agree or disagree I have not all the information at hand.

Eg Number of rental properties in Richmond, how many have been on the market and for how long etc 

Did a search on Richmond and surrounding areas and returned 1664 available properties. Again this information is pretty useless without knowing total number of rentals in the search area.

Cheers


----------



## Bolle (22 June 2010)

Wonder if this is Robots at work:

http://www.thecourier.com.au/news/l...at-property-sells-for-12-million/1864851.aspx

I know he's set his sights on the Rat lately...


----------



## kincella (22 June 2010)

well some of us just would not even look at Richmond....regardless of how many rentals are there.....mainly awful little workmens cottages from a bygone era...you could not swing a golf stick in the living room....
its still a working class suburb...and looks that way..
it would be lucky to offer 10% of the whole area, as well, worthy of a rental for most people....probably more like old footscray....

on the other hand, the kids offer a higher than asking rent, just to nab a place in Toorak...
its suburb by suburb, nothing equal or comparable, most are miles apart, in the question of what is a nice suburb, then  look at each street, one street is good, the next is bad ...they are not all equal....
good luck with lumping the whole of melb together as if it were just the one suburb


----------



## Trembling Hand (22 June 2010)

LOL..... Toorak... I prefer to surround myself with the living and those not nursing their hip replacements.


----------



## Bushman (22 June 2010)

kincella said:


> its still a working class suburb...and looks that way..
> it would be lucky to offer 10% of the whole area, as well, worthy of a rental for most people....probably more like old footscray....
> 
> on the other hand, the kids offer a higher than asking rent, just to nab a place in Toorak...




Mate no-one under 35 would rent in Toorak. You obviously are not Gen Y or X. 

Richmond has pockets around the council estates that are still 'working class'. The rest has been seriously gentrified and one of those awful mining cottages you speak of wenty for over $1m the other day. 

Lol, Toorak!


----------



## wayneL (22 June 2010)

Don't you just love thinly veiled snobbery? 

I like both suburbs for different reasons... there ain't nuttin' wrong with Richmond.


----------



## satanoperca (22 June 2010)

Trembling Hand said:


> LOL..... Toorak... I prefer to surround myself with the living and those not nursing their hip replacements.




Couldn't agree more.

Toorak has some f---king ugly homes. People may have money but dont have style and taste in that suburb.

Cheers


----------



## sinner (22 June 2010)

More debunking of the Australian housing undersupply myth using home utilisation and unoccupied dwellings data as well as puts to rest the "underlying demand" argument.
http://www.unconventionaleconomist.com/2010/05/debunking-australian-housing-shortage.html

Meanwhile, a new paper released by the RBA today puts the limelight back on the banks balance sheets:
http://www.smartcompany.com.au/property/20100622-commercial-property-outlook-uncertain-rba.html


> Bad loans in the commercial property sector are a greater threat to financial institutions than mortgage stress and the outlook for the sector remains uncertain, a new Reserve Bank of Australia paper argues.
> The message comes as another property expert says the commercial market will continue to struggle this year as secondary markets trail behind recovery in primary developments, such as office buildings and shopping centres.
> 
> ...
> ...


----------



## UBIQUITOUS (22 June 2010)

satanoperca said:


> Couldn't agree more.
> 
> Toorak has some f---king ugly homes. People may have money but dont have style and taste in that suburb.
> 
> Cheers




Toorak is soulless and doesn't even look nice. Any of the suburbs next door are head and shoulders above Toorak when it comes to vibrancy and looks - especially Malvern and Hawthorn.


----------



## explod (22 June 2010)

UBIQUITOUS said:


> Toorak is soulless and doesn't even look nice. Any of the suburbs next door are head and shoulders above Toorak when it comes to vibrancy and looks - especially Malvern and Hawthorn.




Dunno, give me a couple blocks in Lansell Road anytime.

But Armadale is well worth considering.


----------



## robots (22 June 2010)

hello,

check this guy out brothers:

http://www.unconventionaleconomist.com/2010/05/debunking-australian-housing-shortage.html

got a whole section on vacant homes! like lets lay claim to someone else's property and in most cases hard work

someone might enjoy just driving past their PROPERTY each day enjoying the particular style of architecture or the garden

putting the key in the door anytime they please, sleeping there one night a year, letting others use it now and again, hands off freeloaders

thankyou
professor robots


----------



## satanoperca (22 June 2010)

Robots, 

What the above linked article states may be correct but the reality is property prices have increased.....due to myth, legend, fundamentals, lies truths.

Why they have increased to me is of far greater significance and it isn't because there is a shortage. Expansion of debt, maybe on 17% increase in mortgage debt in the last year. Then the question needs to be asked, how much debt can be absorbed by the market for it to max. out, no more growth?

Cheers

PS there will always be people who take without consideration


----------



## robots (22 June 2010)

hello,

they havent gone up by astronomical rates though, its just around 8-9% per annum, nothing

replacement cost maybe, the opportunities still exist for everybody out in society, just carry on, 

15 minutes of fame for the likes of GMO Fund, right at the time when he lands in Australia looking for new takers to send him $

yeah all interesting stuff, storm in a tea cup

thankyou
professor robots


----------



## kincella (23 June 2010)

as far as conspiracy theories encompassing the whole property market.....
if you really did your research, why is the current govnuts, paying $$$$ of dollars per week, housing the new arrivals, in 4 and 5 star motels, hotels....at taxpayers expense.....if there really were hundreds of thousands of vacant houses available to the govnuts, to house them......

or is every RE agent a liar, dishonest etc.....and not one out there honest enough for you to deal with, to get that house.....
even your other hero Jenman, makes money, earns his income, from signing up RE agents to his sytem.....earning money, his income from the sale of houses.......
I love it, when these unknown stock market crappers, need recognition for their australian tour....instant PR success is easily provided....just mention the housing boom myth...and voila....

comment from another site............which may help some of you, although I doubt it....
"Some food for thought,

I saw on the news the other night some land for sale in Bentleigh East which is about 20km sth east of melbourne, it was an old factory site knocked down and there was 100+ blocks auctioned off in a local scout hall.

All were snapped up and the que was out the door, $800-900k for small housing blocks.

They panned the camera's around the room and i couldn't help notice that not one person in the crowd was anglo saxon or first generation Aussies, going by looks anyway.

Most were Asian and many looked to be Indian/Sri lankan descent. Your typical migrant countries accepted into Australia." 

http://www.hotcopper.com.au/post_single.asp?fid=273&tid=1196158&msgid=6717462


----------



## UBIQUITOUS (23 June 2010)

kincella said:


> comment from another site............which may help some of you, although I doubt it....
> "Some food for thought,
> 
> http://www.hotcopper.com.au/post_single.asp?fid=273&tid=1196158&msgid=6717462





You've helped me out Kincy...with some bellyaching laughter!! 
 Haha..a random post on Hotcopper as your source? You come out with some classic 'research' but this really takes the cake Kincy. Keep it up


----------



## kincella (23 June 2010)

not research....just another board with similar type mania comments about wishing a 40% drop....
however sometimes there are snippets of infor, that you wont find in lame stream media, about facts out on main street....
bit like Dandenong is called Asia...and Broady is now the new Pakistan...


----------



## UBIQUITOUS (23 June 2010)

kincella said:


> not research....just another board with similar type mania comments about wishing a 40% drop....
> however sometimes there are snippets of infor, that you wont find in lame stream media, about facts out on main street....
> bit like Dandenong is called Asia...and Broady is now the new Pakistan...




snippets of INFO? You're hilarious mate. Any chance of something relevant for a change? 

Finding titbits of anecdotal gossip from another forum and extrapolating it to support your view on the entire Australian property market is ridiculous. :screwy:

Keep them coming Kincy:jump:


----------



## robots (23 June 2010)

hello,

great posts Kincella, 

more real life than the tidbits that come from the likes of S.Keen, Grantham GMO, unconventional economist (not much unconventional actually, typical cliche commentary)

great day

thankyou
professor robots


----------



## nunthewiser (23 June 2010)

robots said:


> hello,
> 
> great posts Kincella,
> 
> ...





I,m currently in Carnarvon WA.......... you dont wanna hear any of the "real life tidbits" from here. no sunshine and lollipops on the housing front (  goverment or private ).

A lot of waste of resources and lack of communication between those that have influence on these matters.

Nice place tho and could be the star of the gasgoyne, investment wise if one could change the world.

Plenny fish


----------



## medicowallet (24 June 2010)

http://www.theage.com.au/business/big-rise-in-the-number-of-australias-megarich-20100623-yz7w.html

"AUSTRALIA'S mega-rich are shunning the real estate market for equities, believing property prices are too high and no longer have much bang for buck, a study shows"


Is the smart money leaving the bubble?


----------



## robots (24 June 2010)

medicowallet said:


> http://www.theage.com.au/business/big-rise-in-the-number-of-australias-megarich-20100623-yz7w.html
> 
> "AUSTRALIA'S mega-rich are shunning the real estate market for equities, believing property prices are too high and no longer have much bang for buck, a study shows"
> 
> ...




hello,

good arvo Kincella, hows this news article above hey man?

more spruiking from a fund manager, looks as though they overtaking real estate agents and the REIV

and with MacBank talking about "trading conditions" today they all giving it a good go, get $ from people, no responsibility for up or down movements in capital (actually no guarantee you get any money back!)  

oh yeah they all picked it though

thankyou
professor robots


----------



## kincella (24 June 2010)

Hi Robots....
heady days...or it was today with the PM coup....I got a bit sidetracked there...
I saw the article, but did not bother to read it....I just guessed it was coming from the gamblers....they are like 'ad-editorials' where its really an advertisement, made to look like news.....
am finding it harder to access the truth these days, so much spruiking from the media,,,,
best to just follow some of the individuals, or at least the industry groups, or failing that, just keep watch on main street and sum it up yourself...
most of us property people buy and hold anyway, so we dont need a daily update of the market movements, nor the predictions from all and sundry...
most economists and analyists get it wrong constantly...so why bother with them...
I note the local builders here have new homes starting around 350k's, which is higher than the city....interesting....
wonder how the new pm will say thank you to her building union mates....either embark on massive public housing or encourage fhb;s, to keep her mates in work,,,,got nothing to do with any of the housing issues...should be good for the kids...not sure how long she will last though
cheers


----------



## MR. (26 June 2010)

satanoperca said:


> Expansion of debt, maybe on 17% increase in mortgage debt in the last year. Then the question needs to be asked, how much debt can be absorbed by the market for it to max. out, no more growth?




Updated the chart. 

View attachment Investment loans as a % of Total Housing Loans $ pdf.pdf


Are housing investment loans as a percentage of total housing loans in Australia the highest ever? 

Investment loans for housing are still increasing at an alarming rate. The rise in "Total Housing Loans" on the above chart in April was purely from the increase in "Investment Loans" for housing. In fact finance for owner occupied housing still decreased.


----------



## lioness (26 June 2010)

Robots,

Any link yet? I am sweating on a few results and look forward to your usual prompt link for results.

Enjoy the cranskies.


----------



## robots (26 June 2010)

hello,

no worries man, about 7-7.30pm they will come in

takes a bit of time for the real estate agents to collate the days action, get it on a piece of paper and bang in the facsimile,

great day, plenty at the sth melbourne market, picked up a 300g bag of mixed bullets for $3 and two slices of pizza for $5

thankyou
professor robots


----------



## Aussiejeff (26 June 2010)

robots said:


> hello,
> 
> no worries man, about 7-7.30pm they will come in
> 
> ...




Full metal jackets for your urban Uzi?


----------



## robots (26 June 2010)

hello,

yes because i fear for my life if I run into this again:

http://sa.org.au/melbourne/details/223

concerned, as last time a member of the Socialist crew put me in the submission hold and slammed me into the pavement

they cant have normal discussion and debate, bullies

thankyou
professor robots


----------



## robots (26 June 2010)

hello,

OH YEAH:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

here they are, 65% which is a fantastic result, great prices

the rba will be pleased, 

thankyou
professor robots


----------



## UBIQUITOUS (26 June 2010)

robots said:


> hello,
> 
> OH YEAH:
> 
> ...




Awful result, even with fudged numbers. At this rate, we'll be down to 50% by the end of next month (with the true clearance rate being MUCH lower)

Anyways Robots, it looks like even your mentor sees the writing on the wall;



> Open letter on stamp duty and first home buyers from REIV CEO
> 
> 
> 23-Jun-2010
> ...


----------



## todster (26 June 2010)

robots said:


> hello,
> 
> OH YEAH:
> 
> ...



Always be wary of groups that have institute  in there name think PONDS institute


----------



## robots (28 June 2010)

hello,

Morning kincella

Banks are dropping there fixed rates on offer, fantastic news

Thankyou
Professor Robots


----------



## UBIQUITOUS (28 June 2010)

robots said:


> hello,
> 
> Morning kincella
> 
> ...




Great Robots. Got a link to that?

Also while we're at it, Kincy got a link to you claim that Asians were borrowing at 2% abroad and then buying up here?

Thanks in advance guys.


----------



## robots (28 June 2010)

hello,

Oh yeah like i would make it up 

Beautiful day

Thankyou
Professor Robots


----------



## Timmy (28 June 2010)

UBIQUITOUS said:


> Great Robots. Got a link to that?




This in today's SMH:
*Banks target fixed-rate market*


> THE big banks are engaged in a race to cut long-dated fixed mortgage rates, ...



http://www.smh.com.au/business/banks-target-fixedrate-market-20100627-zbzo.html


----------



## satanoperca (28 June 2010)

Is it really that hard to use Google.

http://www.smh.com.au/business/big-four-jostle-to-cut-deals-for-fixedrate-mortgages-20100627-zc0e.html



> Big four jostle to cut deals for fixed-rate mortgages


----------



## robots (28 June 2010)

hello,

Yeah, you should of googled it Ubiquitous

Easy man, just type in: aussie banks reduce fixed rate mortgages 2010

Thankyou
Professor Robots


----------



## UBIQUITOUS (28 June 2010)

And there I was thinking that we were supposed to provide a link to information so readers don't have to go around googling to verify claims.

I heard that banks will be increasing them again within a couple of months. You want a link? Here you go: www.google.com.au


----------



## trainspotter (28 June 2010)

*Housing starts set to stall: HIA *
CHRIS ZAPPONE  June 28, 2010 - 12:23PM

http://www.smh.com.au/business/property/housing-starts-set-to-stall-hia-20100628-zdgq.html

Although the underlying population is growing, rising interest rates deter both new construction and potential buyers at a time when the national median city home price is $460,000.

Loan volumes and auction clearance rates are both slumping, signals which in the past have pointed to falling house prices. 

Auction clearance rates fell below the 60 per cent mark in Sydney and Melbourne this weekend, suggesting further falls in home prices to come, Australian Property Monitors said. 

Clearance rates dipped to 58.6 per cent in Sydney from 60.7 per cent the weekend before, while in Melbourne, the clearance rates fell to 57.4 per cent - a new low over the past year - from 63.3 per cent the previous week.

Try here for more search engine related information:- http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/06/27/BUKS1E55N5.DTL#ixzz0s8FA087L

Search engines get major tuneups. James Temple, Chronicle Staff Writer San Francisco Chronicle June 28, 2010 04:00 AM


----------



## UBIQUITOUS (28 June 2010)

trainspotter said:


> *Housing starts set to stall: HIA *
> 
> Loan volumes and auction clearance rates are both slumping, signals which in the past have pointed to falling house prices.
> 
> ...




I don't understand. The REIV were claiming a much higher clearance rate. The correct figures are shocking - a 6% fall in 1 week

Anyways, the party is over in Melbourne. In truth, it was a long time ago. the comedown will be a real bitch


----------



## Timmy (29 June 2010)

UBIQUITOUS said:


> And there I was thinking that we were supposed to provide a link to information so readers don't have to go around googling to verify claims.




Good point.


----------



## kincella (29 June 2010)

as a rule of thumb, I do post the links to articles mentioned, unless of course it is simply my opinion.....
to come back months later and suggest you want the link, is just as time consuming and annoying, as if the link was never made.....
who can really recall the date of the post with the link to it, after several months have passed....that exercise is just as time consuming to find the post...as it is to sort through google hits


----------



## robots (30 June 2010)

hello,

Gee, gone a bit quiet

Oh well must be other investment news from around the country and world

No world tours by fund managers or investment banks

GMO head must of slipped out of the country quietly, hahahahaha
Thankyou
Professor robots


----------



## kincella (30 June 2010)

Investors flee stocks in global sell-off June 30, 2010 - 6:05AM
http://www.theage.com.au/business/markets/investors-flee-stocks-in-global-selloff-20100630-zjpo.html

Morning Robots,
the headline above offers a bit of reality setting in, (as I expected, and predicted a while ago), this phase 2 of the GFC, has months to go, since the deadly figures for retail sales will not be known for another couple of months, today being the last day here in OZ ......

you should all be familiar with my theories by now......investors flee the stock market and look for property, for safety.........in these times...

no wonder the Asians are land banking both in Asia and Aus......with inflation at 3-4%, lousy deposit rates barely covering inflation rates, makes sense to land bank....at least your investment keeps pace with inflation...
and no tenants to complicate things, in some cases..........
ps land banking is not confined to just land, but encompasses house and unit stocks.....with or without tenants.....a hedge against inflation....

http://en.wikipedia.org/wiki/Land_banking

ps forget auction results....the auction period runs from spring to easter...thats it...kaput.....the rest of the year is for the newbies, stragglers and the like ....anyone with any money takes holidays now....in the sun...
like the sell in may and go away theory........


----------



## UBIQUITOUS (30 June 2010)

kincella said:


> Investors flee stocks in global sell-off June 30, 2010 - 6:05AM
> http://www.theage.com.au/business/markets/investors-flee-stocks-in-global-selloff-20100630-zjpo.html




Awesome news. Dividend yields on stocks have just increased again!! 

Here we go again - lending criteria to tighten, loans to become more expensive, second homes to go on the market. It's looking very ominous for the RE market, and all of this with rising interest rates. In times of uncertainty, people move to cash, and not jump out of the frying pan (stock market) and into the fire (RE market).

Scary times ahead for the leveraged


----------



## Fleeta (30 June 2010)

C'mon Ubi - are people really over-leveraged? I think this says it all

http://au.biz.yahoo.com/100629/31/2dynh.html

As my economics lecturer used to say - you can protect the sheep from the wolves, but you can't protect the sheep from themselves!


----------



## explod (30 June 2010)

Fleeta said:


> C'mon Ubi - are people really over-leveraged? I think this says it all
> 
> http://au.biz.yahoo.com/100629/31/2dynh.html
> 
> As my economics lecturer used to say - you can protect the sheep from the wolves, but you can't protect the sheep from themselves!




Not if the wolves dress up and tell fairy tales.   And that is exactly what the guvmints and the financial industry have been doing for some years now.


----------



## medicowallet (30 June 2010)

kincella said:


> Investors flee stocks in global sell-off June 30, 2010 - 6:05AM
> http://www.theage.com.au/business/markets/investors-flee-stocks-in-global-selloff-20100630-zjpo.html
> 
> Morning Robots,
> ...




Time always tells, but it seems that you and Robots are setting yourselves up for a big fall from grace. 

GFC2 will not be able to be funded from government coffers, and may see the fall in Real estate we all know is coming. The smart seem to have offloaded over the past 3-4 months, and the herd is still believing in unrealistic returns remining forever.

It is also easy to make money in a falling sharemarket, and to protect equity. Most heavily geared property investors will suffer the same fate that the overly geared sharemarket investors suffered during GFC1.

I am not buying any more properties for a very long time, and am fortunate that I own all my assets outright, so I can take the losses I see coming to RE.


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## UBIQUITOUS (30 June 2010)

UBIQUITOUS said:


> Awesome news. Dividend yields on stocks have just increased again!!




Of course what I meant is that the dividend yield on *amount invested*, has increased.  Though I won't be touching any of the dividend paying stocks yet, and especially not banks!


----------



## Beej (30 June 2010)

Well despite all the prophets of doom spreading their usual wares freely here on ASF, property prices in all Australian capital cities (except Perth) have continued to rise during May this year according to RP Data:

From: http://www.rpdata.com/images/storie...ata_rismark_home_value_index_june_30_2010.pdf



> Key RP Data – Rismark Index Statistics
> •National city dwelling values up 0.6% (0.5% s.a.) in month of May
> •National city dwelling values up 1.9% (1.9% s.a.) in quarter
> •National city dwelling values up 12.1% over last 12 months
> ...




Cheers,

Beej


----------



## explod (30 June 2010)

Beej said:


> Well despite all the prophets of doom spreading their usual wares freely here on ASF, property prices in all Australian capital cities (except Perth) have continued to rise during May this year according to RP Data:
> 
> From: http://www.rpdata.com/images/storie...ata_rismark_home_value_index_june_30_2010.pdf
> 
> ...




Who talks doom?   There are many who speak in fundamental terms and question real value, but spreading doom, not so.

And a month (*May)* is a long way away on the changing of the tide.   The quarterly report around September may indicate what is really happening now.


----------



## UBIQUITOUS (30 June 2010)

Beej said:


> Well despite all the prophets of doom spreading their usual wares freely here on ASF, property prices in all Australian capital cities (except Perth) have continued to rise during May this year according to RP Data:
> 
> From: http://www.rpdata.com/images/storie...ata_rismark_home_value_index_june_30_2010.pdf
> 
> ...




Did you not notice the title Beej?



> *Australian housing market continues to cool in month of May*




Forget the quarter until May. That's like saying the 10 years until May 2010 have shown 100% appreciation. No fool is buying that kind of spin anymore.

What actually counts is May's results when compared to the previous month. 
The growth was an anemic 0.5% in May. Care to post a link to an article showing April's numbers, and possibly March's?

Also any guesses as to what June's will be?

Thanks


----------



## Beej (30 June 2010)

UBIQUITOUS said:


> Did you not notice the title Beej?
> 
> Forget the quarter until May. That's like saying the 10 years until May 2010 have shown 100% appreciation. No fool is buying that kind of spin anymore.
> 
> ...




Of course the market is cooling! If you read back to posts from as long as 2 years ago you will find that this has all played out pretty much as I expected back in mid 2008, except that the growth in 2009 was far higher than I had anticipated. 

The May figure of +0.6% is still a healthy rise, which translates to an annual pace of +7.2% nationally. Houses grew at a faster rate than this in all cities while units under performed, so expect the ABS stats to show even higher growth numbers for the June quarter than RP-Data. 

Yes the rate of growth is slowing, June will likely show slightly positive (+0.2/0.3% maybe), flat, or possibly even slightly negative growth, although I don't think the auction clearance rates yet suggest negative growth, and housing finance growth seems to be bottoming out also based on today's RBA figures, so most likely outcome will be flat to slightly up again for June I think.

More interesting quotes from the article:



> According to RP Data’s Tim Lawless, Melbourne’s value growth has been spectacular.
> 
> “When you include the strong capital gains recorded prior to the GFC, which was 21 per cent over the 2007 calendar year, Melbourne home values have risen by 51 per cent in less than 3 and a half years. The gap between Melbourne and Sydney dwelling prices is now just 7.2 per cent, which is the narrowest on record.”
> 
> ...




So during the period that ASF has been discussing house prices and many have been predicting a massive crash, prices in Melbourne have increased by over 50%!!!! So a 33% correction now (which just does not look like happening) would still only take prices in Melbourne back to where they were at the beginning of 2007.

Plus for sale volumes are steady year over year, so no big rush for the exits evident, no wave of interest rate induced forced selling, and no significant increase in default rates etc etc etc. And more on this from the article:



> “The market’s underlying fundamentals are such that any material fall in home values is unlikely. Housing supply remains very low at a time when housing demand is healthy, interest rates appear to be on hold for the foreseeable future, and the Australian economy is performing well compared to all other developed countries”, he said.
> 
> Consistent with the moderation in housing market conditions, Rismark’s latest estimate of Australia’s “dwelling priceto-income ratio” remained steady at 4.6 times. This is in line with Rismark’s estimate of the average national dwellingprice-to-income ratio since the end of 2003 of 4.4 times. In a recent speech, the Deputy Governor of the RBA Ric Battellino confirmed this analysis, which is the first to compare all-regions dwelling prices with all-regions incomes, commenting:




Oh so if we look at all dwellings across the country we see that the average price to  household income ratio is 4.6?? Barely unchanged since 2003 when is was 4.4?? Didn't some US hedge fund manager recently tour Australia telling us that our houses were 7.5 times family income? Sounds like he really had no idea what he was talking about??

Cheers,

Beej


----------



## CamKawa (30 June 2010)

New home sales slump, prices stagnate

RP Data says ""With disposable household incomes forecast to increase by only around 5 per cent in 2010, we have long predicted subdued dwelling price performance for this year," he noted in the report."

Really? :headshake


The spruikers are really struggling now..

"There is no sustained upward momentum in new home sales in 2010 because higher interest rates and concerns over the threat of further rate hikes are dampening demand," he noted in the report. "

Is that code for we need more free taxpayer money (FHBG) to prop us up?


----------



## UBIQUITOUS (30 June 2010)

CamKawa said:


> New home sales slump, prices stagnate
> 
> RP Data says ""With disposable household incomes forecast to increase by only around 5 per cent in 2010, we have long predicted subdued dwelling price performance for this year," he noted in the report."
> 
> ...




Cam, well said.

This is all happening with the cash rate at only 4.5%. The drivers for price growth have disappeared. No wonder the likes of the REIV are begging for zero stamp duty for FHBers.

I am guessing that the spring selling season will exacerbate matters.


----------



## kincella (30 June 2010)

and the PM's partner Tim Mathison is a ...wait for it........RE salesman.....
I doubt she will be the PM after the next election....but then again I could not believe the crowd would vote Rudd in....so I could be wrong on the political front


----------



## UBIQUITOUS (30 June 2010)

kincella said:


> and the PM's partner Tim Mathison is a ...wait for it........RE salesman.....
> I doubt she will be the PM after the next election....but then again I could not believe the crowd would vote Rudd in....so I could be wrong on the political front




Kincy, are you saying that Gillard won't be getting any action unless she maintains the RE price bubble for her partner?

D E S P E R A T I O N


----------



## MR. (30 June 2010)

Beej said:


> Of course the market is cooling! If you read back to posts from as long as 2 years ago you will find that this has all played out pretty much as I expected back in mid 2008, except that the growth in 2009 was far higher than I had anticipated.




Mid 2008 "before the GFC" and it played out as expected? Was that just luck?

If growth in 2009 was far higher than you anticipated, would that have anything to do with interest rates being at their lowest levels ever? 

No need to answer, we know it was. It comes second to any people rolling their money over from shares.


----------



## robots (30 June 2010)

hello,

yes Camkawa, the FHOG should be increased to be exactly the same as stamp duty

ridiculous a person pays 4-5% of purchase price in stamp duty, cut the FHOG and cut the stamp duty 

lets see, on the Melb median of 480k stamp duty around 23k, the FHOG at 7k is still way out of whack

and the 7k is holding the market up! hahahahahahaha

23k for buying a secondhand house, zero them both

thankyou
professor robots


----------



## UBIQUITOUS (30 June 2010)

robots said:


> hello,
> 
> yes Camkawa, the FHOG should be increased to be exactly the same as stamp duty
> 
> ...




Why not just print a load of cash and drop it from a helicopter? Hang on...


----------



## trainspotter (30 June 2010)

kincella said:


> and the PM's partner Tim Mathison is a ...wait for it........RE salesman.....
> I doubt she will be the PM after the next election....but then again I could not believe the crowd would vote Rudd in....so I could be wrong on the political front




WRONG on the RE salesman remark - Mr Mathieson says his rural background and his 30 years experience as a hairdresser make him uniquely suited to the role. "Let's face it at the hairdressing salon women or men open up way better than they do with a psychologist, a psychiatrist or in a doctors or GPs," he said.

http://www.dailytelegraph.com.au/li...e-than-a-handbag/story-e6frf00r-1111118137859 By Sue Dunlevy From: The Daily Telegraph November 25, 2008 12:00AM 

He now is a glorified manbag to the PM.


----------



## robots (30 June 2010)

hello,

why not get rid of them both? $0 grant $0 stamp duty

let everyone pay tax for any short fall, thats the socialist model everyone wants here, lower prices on RE so all can enjoy, 

let the bludger at your office get a free ride, the guy always hiding in the toilet or the one on 10 smoke breaks (+lunch and morning tea),  

its like public(free) housing, you have to contribute 

thankyou
professor robots


----------



## kincella (30 June 2010)

Gillard's partner, Tim Mathieson, is a real-estate agent employed at a company owned by Melbourne developer Albert Dadon, a well-known supporter of Israel, according to the report.

http://www.jpost.com/International/Article.aspx?ID=179898

I am inclined to believe she would be influenced ......
he has not been a hairdresser for years


----------



## trainspotter (30 June 2010)

kincella said:


> Gillard's partner, Tim Mathieson, is a real-estate agent employed at a company owned by Melbourne developer Albert Dadon, a well-known supporter of Israel, according to the report.
> 
> http://www.jpost.com/International/Article.aspx?ID=179898
> 
> ...




I stand corrected ..... more investigating is going to be required on this matter. It appears in 2009 he quit hairdressing and was an ambassador for beyondblue?

"Tim's commitments as a men's health ambassador take up most of his time and he's no longer a hairdresser. *Already in 2009,* he has spoken at seven men's health forums with many more planned."

http://www.beyondblue.org.au/index.aspx?link_id=59.1159

Maybe he has seen the light on real estate and decided to get a piece of the action?


----------



## trainspotter (30 June 2010)

Aaaaaaaaah Kincella ..... I should have known better to doubt you !

*PRIME Minister Julia Gillard has defended the right of her partner Tim Mathieson to work for a property group owned by a pro-Israel lobbyist. 

Mr Mathieson is employed as a real estate salesman at a company owned by Melbourne developer Albert Dadon, a prominent pro-Israel lobbyist.*


Read more: http://www.news.com.au/breaking-new...es/story-e6frfku0-1225885615313#ixzz0sKGEq16c

:bonk:


----------



## singlefished (30 June 2010)

Wiki is your friend...

http://en.wikipedia.org/wiki/Tim_Mathieson

Over 30 years hairdressing, only the last 6 months or so in RE, a position he will now more than likely be stepping down from according to The Australian.


----------



## drsmith (30 June 2010)

It's a pity the RBA's financial stability review is 6-monthly and not 3-monthly.


----------



## MR. (30 June 2010)

More from the RBA’s Deputy Governor Ric Battellino

http://www.rba.gov.au/speeches/2010/sp-dg-150610.html



> As you know, household debt has risen significantly faster than household income since the early 1990s.






> Most of the rise was due to housing debt, including debt used to fund investment properties.





> All countries have experienced rises in household debt ratios over recent decades. Clearly, therefore, the forces that drove the rise in household debt ratios were not unique to Australia. The two biggest contributing factors were financial deregulation and the structural decline in interest rates.



Therefore sustainable property prices will be unique to Australia then?



> This structural decline in interest rates has facilitated the increase in household debt ratios because it reduced debt-servicing costs (Table 1). Households have therefore found that they can now service more debt than used to be the case.





> are Australian households over-geared?
> 
> I don’t think it is possible to give simple ‘yes’ or ‘no’ answers to these questions.
> 
> However, looking at a broad range of financial data, and considering the fact that the Australian economy and financial system have exhibited a high degree of stability over many years, despite the many global events that have tested their resilience, is, I think, grounds for confidence that the economic and financial structure that has evolved in Australia is sustainable.




There we have it, Australia is sustainable "economically" and "financially". 

So, no property crash....... 

But will there be more property growth without further interest rate reductions? That's what these new property investors should be considering.


----------



## medicowallet (30 June 2010)

robots said:


> hello,
> 
> why not get rid of them both? $0 grant $0 stamp duty




No, jua remove the FHBG and keep stamp duty, like in the good old days.


Or scrap them both, and introduce CGT and index it (for both property and shares).

CGT 50% has fuelled speculation in both the sharemarket and property, and it should be reversed.


----------



## drsmith (30 June 2010)

MR. said:


> More from the RBA’s Deputy Governor Ric Battellino
> 
> http://www.rba.gov.au/speeches/2010/sp-dg-150610.html.



Interesting that the ratio of household income to interest payments is missing from that analysis.

http://www.rba.gov.au/publications/fsr/2010/mar/graphs/graph-61.html

Reduced debt servicing costs my foot.


----------



## wayneL (1 July 2010)

robots said:


> hello,
> 
> why not get rid of them both? $0 grant $0 stamp duty
> 
> let everyone pay tax for any short fall, thats the socialist model everyone wants here,




Errrr... 0% grant and 0% stamp duty would be Austrian School laissez faire economic policy, not Socialism. I support that wholeheartedly. Just cut a bit of the huge amount of unnecessary spending to plug the hole.



> ...lower prices on RE so all can enjoy, let the bludger at your office get a free ride, the guy always hiding in the toilet or the one on 10 smoke breaks (+lunch and morning tea),
> 
> its like public(free) housing, you have to contribute
> 
> ...




Ahhh here the non-sequitur rant starts. Correct valuation of property has nothing to do with smokos etc. It is simply about value.


----------



## robots (1 July 2010)

hello,
Just joining in with everybody else WayneL, its all rant too from the gloom groupies

Most will take the rant and the increasing property prices and rents

Me and a few others are like watching a DrDoom interview, plenty of rant but gets it right
Thankyou
Robots


----------



## sinner (1 July 2010)

drsmith said:


> Interesting that the ratio of household income to interest payments is missing from that analysis.
> 
> http://www.rba.gov.au/publications/fsr/2010/mar/graphs/graph-61.html
> 
> Reduced debt servicing costs my foot.




Yeah thanks Dr Smith.

Property bulls are going to be quoting the DepGov of the RBA for years to come "but Battellino said we are all good!". Why didn't they listen to the RBA Gov who said it's ridiculous to expect capital gains like we have seen for essentially no productive input (sic)?

I mean, come on property bulls, do you *really* believe your "50% gain since the crisis started" to be based on any sort of fundamental factor other than a huge expansion in household debt which was funded only by the ability of our banks to fund debt on the foreign money markets - an ability that has increased severalfold since the 2008 Treasury guarantee of this debt.

The numbers flat out disagree with the DepGov. All he has proven really is that those earning more are taking on more debt than everyone else. Supposed to be comforting? Even worse is that it all hinges on this assumption that China will just keep our standard of living up forever.

Good luck with that.


----------



## CamKawa (1 July 2010)

Building Approvals, Australia, May 2010








These figures have just been released by the ABS. Here you can see graphically how house prices are dying.


----------



## Beej (1 July 2010)

sinner said:


> Yeah thanks Dr Smith.
> 
> Property bulls are going to be quoting the DepGov of the RBA for years to come "but Battellino said we are all good!". Why didn't they listen to the RBA Gov who said it's ridiculous to expect capital gains like we have seen for essentially no productive input (sic)?
> 
> I mean, come on property bulls, do you *really* believe your "50% gain since the crisis started" to be based on any sort of fundamental factor other than a huge expansion in household debt which was funded only by the ability of our banks to fund debt on the foreign money markets - an ability that has increased severalfold since the 2008 Treasury guarantee of this debt.




You never ask yourself "why has household debt expanded"?? Housing market bears typically have a view that fundamentally there is some easy to calculate, deterministic intrinsic value to housing across the board, like "prices should always be 3 x average income" etc. And that if prices in some areas go up it must be because of some artificial debt/monetary based inflation. But you never think that people are actually borrowing that money to get something they want (demand) that has limited supply!

No-one holds a gun to peoples heads and makes them go to the bank and borrow to the max to buy a house they like! Or to decide to leverage into a property investment for their long term future retirement? Houses are important to most people, they represent the centre of their lifestyle and standard of living (in the OO case), so they pay what they need to in the market to get what they want, or what they can afford. If this underlying demand was removed then prices would fall, regardless of the availability of credit. Likewise if demand remains strong and supply remains limited/constrained then prices will rise up to the limit of local/demographic affordability in every given area that is subject to that high demand/limited supply. At this point prices are sustained/driven by growth in household income, as we have been seeing in Sydney for the past 5-6 years.

And of course disposable income growth is typically ignored by housing bears. As pointed out in an above post, since 2003 the ratio of the national city median house price to disposable household income has remained pretty much constant, meaning that the bulk of price rises we have seen since then have been driven primarily by household income growth being used to satisfy the above mentioned demand. 

Sinner, all this is why posters with view like yours and CamKawas (and many others, some still here, some long gone) etc etc, who have been saying the same things for the 3+ years I have been a member of these boards, seem to mostly get it wrong when it comes to calling the direction of the housing market. You mis-understand and mis-interpret the fundamentals at play, just like Prof Steve Keen famously did as well in 2008, and had to walk to the top of Mt Kosciusko as a result!

I know I'm not going to change your mind on this or your views, but I've put it out there anyway! 



> The numbers flat out disagree with the DepGov. All he has proven really is that those earning more are taking on more debt than everyone else. Supposed to be comforting? Even worse is that it all hinges on this assumption that China will just keep our standard of living up forever.




No, what he has shown is that the there is no great sub-prime style systemic risk ala the US with Australia's household debt structure. Ie the bulk of the growth in debt has been taken on by high income earning households in line with the real growth in their incomes (which have exceeded CPI by a large margin for the past decade).

Yes the AU economy is currently experiencing some good conditions in part due to the ongoing rapid growth of China, but we have done Ok in the past without that as well, plus there is India yet to move into high gear on that front - over-all much more upside risk than downside in terms of our dependence on the large developing economies IMO.



CamKawa said:


> These figures have just been released by the ABS. Here you can see graphically how house prices are dying.




What do the rate of new housing starts have to do with house prices do you thnik? Hint - less new houses being built (due to systemic/artificial constraints on land release and new developments) + high demand for housing = a greater demand/supply imbalance = upwards pressure on prices. So I'm not really sure what point you are trying to make with that indicator?

Also RBA released finance data yesterday which showed that private housing finance grew in April and May, after it had been falling for a few months prior to that. Couple this with reasonable auction clearance rates and a fairly constant numbers of properties for sale (indicated by RP-Data stats posted above), and conditions are still set for steady to slightly rising prices in most areas. I think Melbourne has to cool some more, Perth is already falling a bit and may have more to go, so Brisbane, Sydney, Adelaide etc will see that moderate growth going forward from here IMO. The risk is some major shock resulting in rapidly rising unemployment, defaults etc.

Cheers,

Beej


----------



## drsmith (1 July 2010)

Beej said:


> You never ask yourself "why has household debt expanded"??



Household debt has expanded due to the availability of cheap credit and a false sense of security that comes with a long period or relatively stable economic expansion.

More to the point, household debt has actually increased beyond the availability of cheap credit as noted by the long term upward trend in interest payments relative to household income. 

The fallout from a shock to household income and/or credit costs would therefore be significantly amplified.


----------



## sinner (1 July 2010)

Beej said:


> You never ask yourself "why has household debt expanded"?? Housing market bears typically have a view that fundamentally there is some easy to calculate, deterministic intrinsic value to housing across the board, like "prices should always be 3 x average income" etc. And that if prices in some areas go up it must be because of some artificial debt/monetary based inflation. But you never think that people are actually borrowing that money to get something they want (demand) that has limited supply!




I think you've got it *all* backwards mate.

1. I am not a property bear, to me this is not an issue of saying "ha ha housing is going down I was right", to me this is a fundamental issue of our economy. If anything I am a "reckless debt" bear.
2. Easy to calculate, deterministic intrinsic value equations show that we are *historically overvalued*, that is to say, we can quantify house prices as overvalued in relation to previous housing cycle price rules that have held true for extremely long durations of time. If you believe I said that house prices should be 3x average income simply because they were then you are just not listening.
3. Re: "must be because of some artificial debt inflation" I actually already addressed this issue in a previous post which quantifies the factors influencing housing prices. So no, you are wrong, I did factor demand, and no, it doesn't fit. What does happen to fit however, is increasing house prices based on increasing availability of "cheap credit".



> No-one holds a gun to peoples heads and makes them go to the bank and borrow to the max to buy a house they like! Or to decide to leverage into a property investment for their long term future retirement? Houses are important to most people, they represent the centre of their lifestyle and standard of living (in the OO case), so they pay what they need to in the market to get what they want, or what they can afford.




Look mate, again, don't get me wrong. I am not a property bear. My issue is that rampant speculation in property as well as intervention by the Government into property markets has removed the ability of a large chunk of society to obtain something "important to most people" or "what they need" for anything resembling a historically reasonable price. Our definition of "historically reasonable" floats using measures such as the one you disparaged above so as to take into account the difference between contemporary and historically factors of influence on housing prices. 

I take issue here as both someone to whom owner occupied housing *of the majority of citizens of this country* is important, and as a tax paying citizen who is being butt-raped to support these huge and most likely to b proved completely ineffectual distortions in normal supply and demand by the Government such as: 50% CGT, negative gearing, FHOG, state discounts on stamp duty, etc.



> If this underlying demand was removed then prices would fall, regardless of the availability of credit. Likewise if demand remains strong and supply remains limited/constrained then prices will rise up to the limit of local/demographic affordability in every given area that is subject to that high demand/limited supply.




Thanks for the lesson mate, I had no idea about fundamental supply and demand  ...but I do find it ironic you accuse "property bears" of not looking at the whole picture but you seem to ignore the availability of credit as a factor which influences demand and supply itself here. Certainly you aren't claiming everyone is buying their house in cash now? You must acknowledge credit, the cost and availability thereof are major if not the most major factors affecting supply and demand in housing. 



> At this point prices are sustained/driven by growth in household income, as we have been seeing in Sydney for the past 5-6 years.




Usually when someone makes a claim like this, it is a good idea to take them with a grain of salt unless they provide a reference.

In fact, I have actually shown in previous posts that the rise in house prices has not been correlated to a rise in household income but rather a rise in household *debt*. Yes, there has been a rise in household income, but certainly not enough to justify the increases in house prices without a large amount of leverage applied by the average household! Just look at the chart, you will see what I mean. 



> And of course disposable income growth is typically ignored by housing bears. As pointed out in an above post, since 2003 the ratio of the national city median house price to disposable household income has remained pretty much constant, meaning that the bulk of price rises we have seen since then have been driven primarily by household income growth being used to satisfy the above mentioned demand.




Surely you jest? Any housing bear or bull worth their salt would of course ignore the ratio "house price to disposable household income" because that sort of ratio is logically incorrect. Disposable income does not have a causal and quantifiable effect on house prices. However, property bulls and bears worth their salt do not ignore the ratio "debt servicing to disposable income", which in fact drsmith posted a good chart of within the last 48 hours:
http://www.rba.gov.au/publications/fsr/2010/mar/graphs/graph-61.html

Because guess what, disposable income does have a causal and quantifiable effect on ability to service debt.

As you can plainly see, the story told by that chart is quite different.



> Sinner, all this is why posters with view like yours and CamKawas (and many others, some still here, some long gone) etc etc, who have been saying the same things for the 3+ years I have been a member of these boards, seem to mostly get it wrong when it comes to calling the direction of the housing market. You mis-understand and mis-interpret the fundamentals at play, just like Prof Steve Keen famously did as well in 2008, and had to walk to the top of Mt Kosciusko as a result!




*You* are the one who gets it wrong Beej. I am not salivating over the idea of a property market crash. However I also don't share your "everything is just fine here, nothing to see, move along" type view. My concern on this topic is with *the welfare of a country as a whole*. If a crash came I would say "good, it is the one we had to have, now maybe we can go about things in a sustainable way".

If you can *prove* that Steve Keen lost his bet for any other reason than a huge Government intervention into the property market then I will probably offer to do the walk myself! As it stands, me and you, the Australian taxpayer who now (involuntarily, in my case) guarantees debt on the foreign money markets who have caused Steve Keen to lose his bet. Certainly not any misunderstanding or misinterpreting of fundamentals on his part. 

If you believe the guarantee is just a small inconsequential thing, you can look at say how much funding the Big 4 banks were able to churn out post Sep08 but pre guarantee and other countries like Ireland who experienced huge capital inflows the day they instituted guarantees. I am making the argument here that it is the Australian taxpayer guarantee which has allowed banks to continue funding debt at levels even exceeding the financial crisis which has allowed property prices to remain inflated against historical measures. Otherwise we would be in the same funding ****hole as all those European banks right now.



> I know I'm not going to change your mind on this or your views, but I've put it out there anyway!




It's obvious to me that your views on what my views are will be the thing that remains unchanged. You believe I am a rabid property bear, simply because I don't hold your view that all is well or will be well on the Australian economic landscape.



> No, what he has shown is that the there is no great sub-prime style systemic risk ala the US with Australia's household debt structure. Ie the bulk of the growth in debt has been taken on by high income earning households in line with the real growth in their incomes (which have exceeded CPI by a large margin for the past decade).




Funny, I sort of remember Greenspan and Bernanke showing Congress there was no great sub-prime style systemic risk in 2007. They said, we have high demand and low supply, growth in debt will be fine, bla bla bla. 

All that **** is fine, I mean, fine in the sense that it will continue working until it doesn't. Even if all is good here, Australia should still be looking at the US, UK and hell even NZ as an example of what occurs when politicians kick their cans down the road. But that is a huge if. 

PS: Again please provide a reference for real growth in incomes exceeding CPI for the last say, 5 years.



> Yes the AU economy is currently experiencing some good conditions in part due to the ongoing rapid growth of China, but we have done Ok in the past without that as well, plus there is India yet to move into high gear on that front - over-all much more upside risk than downside in terms of our dependence on the large developing economies IMO.




Historically it is easy to quantify that when we are in the periods of "in the past without that" housing prices have been constrained by normal supply/demand effects on the market. Please view previous posts where I have shown this. If you are arguing for a return to that, then hey buddy, join the club! But that also means a return to 3-4 median multiple housing *OR* a proportional decrease in our standard of living.


----------



## robots (1 July 2010)

hello,

what a top post Beej,just superb man

i wish i could present the data and situation in the line you do, Beej is a true master of the written word

Could all the property bears please stop pulling up S.Keen as a reference. All predictions/revelations/prophecies have proven false (and its not because of the government).

Banks loan money just like they have always done, they take deposits write loans. 

And plenty of houses 3-4x average income for sale but most want to ignore those.

Thankyou
Associate Professor Robots


----------



## sinner (1 July 2010)

robots said:


> h
> Banks loan money just like they have always done




Your statement intrigued me so I hit up the RBA website to see if banks were loaning "just like always"...this chart is generated using data from 
http://www.rba.gov.au/statistics/tables/index.html
current till May.


----------



## robots (1 July 2010)

hello,

thats right, they writing loans from deposits they take, same as always

beautiful graph, nothing right or anything wrong with it, just a graph

thankyou
associate professor robots


----------



## wayneL (1 July 2010)

Meanwhile across the dutch, rare honesty from a gu'mint minister:



http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10655715



> New Zealand's housing market is "still way overpriced" by international measures and is likely to struggle for some time, says Finance Minister Bill English...
> 
> ...And New Zealand's housing market, *along with Australia's*, was overpriced by international measures, higher than China's, and would likely be "damp" for some time, he said....


----------



## sinner (1 July 2010)

robots said:


> hello,
> 
> thats right, they writing loans from deposits they take, same as always
> 
> ...




It is pretty beautiful, does it look familiar to you? To me it looks like the exponential equation y = e^x


----------



## robots (2 July 2010)

sinner said:


> Your statement intrigued me so I hit up the RBA website to see if banks were loaning "just like always"...*this chart is generated using data from *
> http://www.rba.gov.au/statistics/tables/index.html
> current till May.




hello,

went to the link and yes a whole range of info, then i noticed above "this chart is made up using data from:"

i bet you pulled it from "bubblepedia" or "demographia" or "i'm a failed economist.com.au"

amazing

thankyou
associate professor robots


----------



## Uncle Festivus (2 July 2010)

sinner said:


> It is pretty beautiful, does it look familiar to you? To me it looks like the exponential equation y = e^x




Or in simple terms - unsustainable?

Ditto to what Sinner has stated.

The 'Big 4' banks are now 'too big to fail' with their overexposure to domestic RE as per post several months ago. The only problem is that there is zip all the Oz gov can do about it when the crunch time arrives ie the undeliverable deposit insurance farce. 

And arrive it will as we are a one horse country, putting all our eggs in the commodities basket, and then double up on our reliance on China (who's bubble is about to pop loudly).

An immigration policy shift from the new PM, consumers maxed out on debt etc

The signs that the peak in property prices has passed are there, only the timeline to a meaningful correction is in doubt because of continual artificial stimulus from the government from direct grants & subsidies to inequitable favourable property investing policies.

Stress is evident now, so what happens when interest rates get back to 'normal'? My view is that global events will dictate where IR go so the bias will be down, if only because things will deteriorate faster than expected?

RE might be seen as the last bastion of safe investing for growth but the forces at play globally will ensure that Oz RE will not escape from the coming turmoil. Ignore at your peril......


----------



## sinner (2 July 2010)

robots said:


> hello,
> 
> went to the link and yes a whole range of info, then i noticed above "this chart is made up using data from:"
> 
> ...




Surely the mods are recognising this as a troll? 

As stated in the original post: I generated the chart from the RBA provided spreadsheet "Bank lending classified by sector" columns E and F, data current till May-10 using OpenOffice 3.0 anyone can generate the same chart using any spreadsheet program.

If it looks like a goddamn y=e^x that isn't my fault is it!


----------



## Uncle Festivus (2 July 2010)

sinner said:


> Surely the mods are recognising this as a troll?
> 
> As stated in the original post: I generated the chart from the RBA provided spreadsheet "Bank lending classified by sector" columns E and F, data current till May-10 using OpenOffice 3.0 anyone can generate the same chart using any spreadsheet program.
> 
> If it looks like a goddamn y=e^x that isn't my fault is it!




He's an associate professor - when the formula doesn't work, diffuse and distract with sunshine & lollipops waffle?  Must have regretted buying the last property at the peak though Robbie?


----------



## drsmith (2 July 2010)

I think it might be y = (2**(x+1))/2.

Whether it's assets or income, their increase is a power function but what is not sustainable in the long term is one increasing out of proportion with the other.


----------



## robots (2 July 2010)

hello,
No, i bought a home to live in with my rents covering the mortgage

A 210k joint to kick back at and grow vegetables, plant trees to attract the birds&possums

Could Bill M please post that article from when the last top was called
Thankyou
Professor robots


----------



## Buckfont (2 July 2010)

robots said:


> hello,
> No, i bought a home to live in with my rents covering the mortgage
> 
> A 210k joint to kick back at and grow vegetables, plant trees to attract the birds&possums
> ...




robots, if you want to grow vegetables, attracting possums is the last thing you need. I have some here that you`re most welcome to.

Any fruit and vege grower will tell you the are the scourge.

A few mixed messages here.


----------



## trainspotter (2 July 2010)

Possum seen heading to robots house. 

Still waiting for this earth shattering 20% plus similar to the Japanese and USA freefall in housing industry that the naysayers are predicting. Meanwhile speculation RBA tipped to drop rates as economy shows signs of weakening and rental income increasing in certain areas. GOSH ... all doom and gloom ! LOLOLOL.


----------



## robots (2 July 2010)

hello,

plenty of vegies for me and the possums buckfont,

plus the birds, the flora, possums and nature in all its glory helps my schizophrenia, bi-polar, manic depressive behaviour and alzbergers

it keeps me as high as high man, the euphoria that spreads through my body as i put out a carrot or apple to the crew here in st kilda is amazing

thankyou
associate professor robots


----------



## drsmith (2 July 2010)

trainspotter said:


> Possum seen heading to robots house.



It did well to get to the USA.


----------



## jbocker (3 July 2010)

trainspotter said:


> Possum seen heading to robots house.
> 
> Still waiting for this earth shattering 20% plus similar to the Japanese and USA freefall in housing industry that the naysayers are predicting. Meanwhile speculation RBA tipped to drop rates as economy shows signs of weakening and rental income increasing in certain areas. GOSH ... all doom and gloom ! LOLOLOL.




I have a couple of friends in retail (computers, software etc), and they have been telling me they aint selling much, especially in June when you expect 'tax deductible items' to be selling well. That _suggests_ to me that the economy is slowing up and/or people already have enough tax write-offs by way of losses.
*Interested to hear others views, do you think housing and other markets have cooled significantly*?

Absolutely love that picture too trainspotter one of my all time favourites - I recall it being winner of the "Not My Job" award.


----------



## MR. (3 July 2010)

sinner said:


> this chart is generated using data from
> http://www.rba.gov.au/statistics/tables/index.html
> current till May.




https://www.aussiestockforums.com/forums/attachment.php?attachmentid=37741&d=1277975228



sinner said:


> I generated the chart from the RBA provided spreadsheet "Bank lending classified by sector" columns E and F, data current till May-10




Looking at that data from columns E and F, lending reversed once in May 2007. Right through the GFC lending increased at approx' the same rate as usual. Does this seem questionable? It might be right it just seems a little questionable to me! In the last year loans have increased 119 billion in housing?


The following is from the ABS:
http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/5609.0Main+Features1Apr 2010?OpenDocument

From the "summary of findings" from the above link:


> The total value of owner occupied housing commitments (trend) fell 2.4% (down $327m) in April 2010, following a decrease of 3.3% in March 2010. Decreases were recorded in commitments for the purchase of established dwellings (down $249m, 2.1%), the construction of dwellings (down $70m, 4.7%) and the purchase of new dwellings (down $8m, 1.2%). The seasonally adjusted series for the value of owner occupied commitments rose 0.6% in April 2010, after falling in each of the previous six months.




The data from APRA heads only in one direction. ???

Perhaps the APRA figure is the total of loans when the ABS is monthly figures only and a decrease is just a decrease from the last month but total loans still increased? So why would the APRA figures increase 119 billion in one year when if the ABS figures were totalled at over 20 billion per month the total would be 240 billion +. Perhaps the APRA figures have deducted repaid loans?

Hmmm MR. just nod and smile! 

Those APRA figures only point to doom...... 



MR. said:


> Updated the chart.
> 
> View attachment 37664


----------



## trainspotter (3 July 2010)

drsmith said:


> It did well to get to the USA.




It was immigrating from the USA to get to robots vegetable garden. Just quite did not make it. Still believe the doomsday cult people have over exaggerated the property market. A slowing of the cycle is all we are seeing. 

Agree with jbocker. With so little money being spent in the local economy, business and retailers are bearing the brunt of the cut back in spending. This is likely to result in jobs loses as the crisis continues to deepen, only exacerbating the problem

Interesting articles abound here:- http://www.whocrashedtheeconomy.com/blog/?p=1061

My favourite paragraph "The study conducted by the University of Western Sydney and supported by the Reserve Bank of Australia interviewed people suffering mortgage stress. It found “people are literally eating the bare minimum - just rice - obviously looking after their children, but putting the repayment of the mortgage above every other thing that they could possibly devote an expenditure to” according to Professor Phillip O’Neill from the University of Western Sydney. He points out this is not just in the past tense - it is still happening."


----------



## kincella (3 July 2010)

am really looking forward to the big drop in interest rates that will come again....
just 2 days out from the year end, and all those horrid figures coming out so soon...just wait for all the worst figures to be reported in the next 3 months
retail spending is the worst in 25 years....etc

those 6 rate hikes in as many months cruelled the economy....Swan and Rudd had no idea, so with all the pressure from them the RBA kept upping the rates...in order to substantiate Swan and Rudds foolish lies, that the economy was strong under their leadership....

am afraid Gen Y has finally succumbed to the reality that they are not affected by the GFC.....notice a large number of shops in Chapel st have closed their doors....so the kids have stopped spending

the banks have tightened lending, so it will be harder for the kids....
they will have a chance again with the coming lower interest rates, but they need to get out of the inner suburbs, and buy affordable houses  in the outer suburbs......just an easy half hour drive on our great freeways....

due to the political fiasco of the past 2 years, and now the looming elections, investors have held tight.....hence the low building approval numbers...means less housing available in the future...
with a federal election in the coming months, most investors will  probably wait for the result before making a move....
but others will be gearing up, ready to pounce with the lower rates....and the prime house sales period of Spring should surprise the average punter....

the kids who took advantage of the low rates in 2008, and ignored the doomsdayers warning, are feeling pretty smug now, with average 20% gains..those who missed it last time, will not miss it this time.....

just another window of opportunity.....all other developed economies have not raised their rates after dropping them in 2007.....australia was the only mug country to raise rates.....we can blame the gang of 4 for that disaster...
so whilst the GFC phrase 2 plays out for another year or two, astute investors will be preparing for the next bonanza, as the world recovers from the GFC.....
there will be some stunning opportunites for the smarter ones, who are cashed up and can obtain finance.....
the small superfund investors have started buying commercial properties  again...and the asians are in on this too....spending 23 million in just a day or so...
http://www.theaustralian.com.au/bus...s-shopping-again/story-e6frg9gx-1225886373571

ps... that fiasco with the mining tax yesterday is not a done deal....just more smoke and mirrors to suck in the voters.....watch out for the angst from the small miners, and the backlash on that front.....it will not be good for the stock market....


----------



## kincella (3 July 2010)

these property forums are a prime example of why the worlds wealth is in the hands of 10% or less of the population......the other 90% have no idea, or the wrong strategies for accumulating wealth....
note the majority here are waiting for a crash or some other 'out of the blue' lightning bolt to help them to get into the market......


----------



## CamKawa (3 July 2010)

kincella said:


> these property forums are a prime example of why the worlds wealth is in the hands of 10% or less of the population......the other 90% have no idea, or the wrong strategies for accumulating wealth....
> note the majority here are waiting for a crash or some other 'out of the blue' lightning bolt to help them to get into the market......



lol

Which property spruiking seminar told you that?


----------



## UBIQUITOUS (3 July 2010)

kincella said:


> am really looking forward to the big drop in interest rates that will come again....




I bet you are!

But the cash rate is only 4.5%, why the clamouring so early?


----------



## drsmith (3 July 2010)

A significant fall in interest rates in the present environment would signifiy renewed fears of deflation.

That would be bad for both shares and property.


----------



## robots (3 July 2010)

hello,

good evening, great day

how's this:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

clearance rate of 67%, RBA will like this, down they go Kincella

awesome, oh yeah buying at the top (top of the interest rate cycle by the looks of it), hahahahahaha

thankyou
associate professor robots


----------



## MR. (4 July 2010)

robots said:


> hello,
> 
> good evening, great day
> 
> ...




Bots,
What 60’s again....?  Where are the 80’s from last year week after week?

“RBA will like this”..... Yep, agree with you there, businesses too!

“Down they go”?  Ha, for a second there I thought you meant interest rates! 
You must mean ....... property prices?

As if interest rates are going to come down because of property clearance rates! 
No chance.... 

The RBA will be more careful before venturing back there again, even with a slight fall in the economy. Maybe a hold on interest rates, for sometime at best!

So you remember that chant of Kincella’s! 
Would it help if we all chanted it together?


----------



## sinner (4 July 2010)

kincella said:


> the kids who took advantage of the low rates in 2008, and ignored the doomsdayers warning, are feeling pretty smug now, with average 20% gains..those who missed it last time, will not miss it this time.....




Property "investors" believe in 20% gains in two years as sustainable and fundamentally rational...



> australia was the only mug country to raise rates.....we can blame the gang of 4 for that disaster...




Actually, we have what is called an "Independent Central Bank"...do you know what that means? 



> ps... that fiasco with the mining tax yesterday is not a done deal....just more smoke and mirrors to suck in the voters.....watch out for the angst from the small miners, and the backlash on that front.....it will not be good for the stock market....




Property "investors" give "advice" on the stockmarket. I thought it was a casino, kincella?


----------



## medicowallet (4 July 2010)

kincella said:


> the kids who took advantage of the low rates in 2008, and ignored the doomsdayers warning, are feeling pretty smug now, with average 20% gains..those who missed it last time, will not miss it this time.....




I think you are deluding yourself.

They probably had 10% deposit, so the return on their investment is MUCH higher than 20%.

However, perhaps if you realised that Australia is not confined to the optimum, you would realise a lot of these kids have experienced zero capital growth, have paid far more than they would have for rent, and are possibly staring towards GFC2.

I sincerely hope that the kids are prepared for the banks knocking on their door, and hope they blame the government for bribing them into purchasing into a bubble.


----------



## robots (4 July 2010)

hello,

oh yeah, the banks are going to close people up and keep their money in term deposits

thankyou
professor robots


----------



## explod (4 July 2010)

robots said:


> hello,
> 
> oh yeah, the banks are going to close people up and keep their money in term deposits
> 
> ...




Do you mean the banks money?

The banks do not have any money.   The money they have comes from depositors which they then lend out to borrowers.  If everyone paid the debts and withdrew deposits the banks theoretically would have no money.

Thats why banks hate gold holders.   It is why they encourage reverse mortgages to the elderly.   Lend say for example at 8% and pay depositors 5%


----------



## robots (4 July 2010)

explod said:


> Do you mean the banks money?
> 
> The banks do not have any money.   The money they have comes from depositors which they then lend out to borrowers.  If everyone paid the debts and withdrew deposits the banks theoretically would have no money.
> 
> Thats why banks hate gold holders.   It is why they encourage reverse mortgages to the elderly.   Lend say for example at 8% and pay depositors 5%




hello,

just cannot believe how many bankers we have here at ASF, amazing

fantastic they all find time to post here and at GPHC and all the other forums

thankyou
professor robots


----------



## Quincy (5 July 2010)

kincella said:


> am really looking forward to the big drop in interest rates that will come again....
> 
> the banks have tightened lending, so it will be harder for the kids....
> they will have a chance again with the coming lower interest rates, but they need to get out of the inner suburbs, and buy affordable houses  in the outer suburbs......




Based on the below referenced article published today, it might be a while before interest rates start heading south again.




> *Inflation risks building: survey *
> 
> AN indicator of inflation in Australia rose for the eighth straight month in June, supporting the view that price pressures are building.
> 
> ...


----------



## UBIQUITOUS (5 July 2010)

Quincy said:


> Based on the below referenced article published today, it might be a while before interest rates start heading south again.




Awww... and it was only yesterday that one or two on here were partying over lower interest rates. Oh well, it looks as though rice is going to be on the menu for quite a while!!


----------



## Quincy (5 July 2010)

Quincy said:


> Based on the below referenced article published today, it might be a while before interest rates start heading south again.
> 
> http://www.theaustralian.com.au/busi...-1225887932391




Another news item out today to support the view that interest rates may not be going down any time soon.



> *Banks under pressure to raise interest rates independent of RBA hikes
> 
> *Enda Curran From: Dow Jones Newswires July 05, 2010 3:14PM
> 
> http://www.theaustralian.com.au/bus...ent-of-rba-hikes/story-e6frg926-1225888113241


----------



## nunthewiser (5 July 2010)

robots said:


> hello,
> 
> just cannot believe how many bankers we have here at ASF, amazing
> 
> ...




 and some just make it up as they go along.Is there such a profession as " pretend banker" ?

Beutitiful day in sunny Geraldton by the way ...... quite a few older listings dropping their prices but still sitting unloved.

Glad i picked the Top and informed you  of it ..... would hate for me to be confused with the crystal ball crew from 3/4 years back.

Have a great day Doc


----------



## explod (5 July 2010)

robots said:


> hello,
> 
> just cannot believe how many bankers we have here at ASF, amazing
> 
> ...




I think you spelt bankers wrong there confessor, did you not mean to start with a W on that.

Bankers are not going to profess the truth objectively IMVHO, so perhaps to fill the gap they need a little help from the skarkers.

Gees ole pal that clearance rates not looking too good if you go back over the last month.  Also notice some Euro countries increased rates further the last week or two so poor ole Glen must be feeling the heat leading up to the morrow.

Of course if you own your home there is no problem, I only worry for those with investments on the banks money.


----------



## robots (5 July 2010)

hello,

good day everybody, hows it going

yes the auction clearance rates have dropped off ole pal from the peninsula, 

i dont know why i am just reporting the results like the way Bigdog gives everyone the market wrap

oh well, great at the moment as i can walk to walk and save a few $ just incase the rates increase

i kept a couple of apple cores from fellow workers today for the possums at home, they gonna love'em, a pink lady and a granny smith

thankyou
professor robots


----------



## Bigukraine (5 July 2010)

robots said:


> hello,
> 
> good day everybody, hows it going
> 
> ...




I think you ment "walk to work" anyway i'm in your position too...... i walk to work.... my office is down the hall second bedroom on the left i put on my lap top and start trading the asx.....what a life....work my own hours and watch the world go by with my trusty little dog sitting on my lap......

have an investment property too...... hey there's a thought everyone ,how about diversifying your investments over shares and property....wow !!!


----------



## robots (5 July 2010)

hello,

thanks, yes spot on Bigukraine

kick back and relax man

thankyou
professor robota


----------



## drsmith (5 July 2010)

UBIQUITOUS said:


> Awww... and it was only yesterday that one or two on here were partying over lower interest rates. Oh well, it looks as though rice is going to be on the menu for quite a while!!



The tightrope the RBA is on is getting skinnier and skinnier.


----------



## joeyr46 (5 July 2010)

drsmith said:


> The tightrope the RBA is on is getting skinnier and skinnier.



Could be a knife edge


----------



## UBIQUITOUS (6 July 2010)

It looks like big brother is doing something about it's housing bubble. That just leaves the 'unlucky country'.



> http://biz.thestar.com.my/news/story.asp?file=/2010/7/6/business/6611527&sec=business
> 
> *Minister: China property prices will fall before long
> *
> ...


----------



## MR. (6 July 2010)

drsmith said:


> The tightrope the RBA is on is getting skinnier and skinnier.




Raising rates to cool inflation without causing too much stress to the leverage property owner?... Yes!
(Even though we are only half way back to where interest rates were.)

Raising rates to cool any property speculation left and crippling the economy? 
No, the rope perhaps is beginning to look more like a plank!

http://www.theaustralian.com.au/bus...-on-hold-at-45pc/story-e6frg926-1225888541771
Interest rate on hold today at 4.5%


----------



## robots (6 July 2010)

hello,

How the rates go today? amazing people cant accept property prices, dont have to buy

Move to another country if its a major issue in your life,

Oh well, no change in cash rate and banks cutting fixed rates, well done Kincella
Thankyou
Professor robots


----------



## Buckfont (6 July 2010)

robots said:


> hello,
> 
> How the rates go today? amazing people cant accept property prices, dont have to buy
> 
> ...




Hey robots,

Whats the dodgy web site below your last post. Dont like getting bum steers


----------



## robots (6 July 2010)

hello,

Its a website about my research undertaken in the field of Contracts for Difference.

Similar to my highly successful self-funded research regarding australian property i am coming to the end of self-funded research on CFD's (contracts for difference)

Thats right, i Self Fund my research and dont ask for donations like other associate professors. Oh well.

Seem to be having trouble with the host server at the moment.

What a great day tuesday the 6th July in the year 2010

Thankyou
Associate Professor Robots


----------



## UBIQUITOUS (6 July 2010)

robots said:


> hello,
> 
> Its a website about my research undertaken in the field of Contracts for Difference.
> 
> ...




Can anybody tell me whether today's decision will bring down the rampaging inflation numbers to within the RBA target?

Word is that there will be at least another 2 rate rises this year.

Good time to buy? If only loans were non recourse.


----------



## robots (6 July 2010)

hello,

hi ubiquitous, no

my research is predominately australian property but i did do a paper some time ago on inflation (it was like mythbusters style)

of course did i mention all my research is SELF-FUNDED, not sure how any of my fellow associates could put the hand out like the guy out the front of Coles, Prahran.

Well done Kincella, spot on man.

Thankyou
Associate Professor Robots


----------



## Buckfont (6 July 2010)

robots said:


> hello,
> 
> Its a website about my research undertaken in the field of Contracts for Difference.
> 
> ...




robots, the website does not compute. Click on it, Bigpond comes up with a blank. Google it..... comes up with a blank. It`s credibility leaves me in the blank.

Just one question. Why is it there if it and the contents can`t be accessed?

I smell a rat, otherwise be up front.


----------



## robots (6 July 2010)

hello,

the host server isnt communicating with me, so not sure what the problem is

i am sure i sent my last payment but will check my records, i may of missed a payment as its tuff when you SELF-FUND your research papers

good to see the RBA supporting working families today

thankyou
associate professor robots


----------



## Buckfont (6 July 2010)

With all your properties, I thought you owned the host server, and if not, be so influential you could pull a few strings to hurry the process up and give them a tip for their quick action.

Can`t wait


----------



## robots (6 July 2010)

hello,

just a battler from the street man, 

i cant wait either, its a herculian effort when you SELF-FUND your research papers and to get it out into the media is a rewarding experience

looks as though the RBA got the message about helping working families

thankyou
associate professor robots


----------



## Craglet (6 July 2010)

Hey robots just a quick non property question. Why is it that you're only an associate professor now? Why did you get demoted?

You didn't lose your position of asf investor of the year did you?

Cheers,


----------



## robots (6 July 2010)

hello,

Nunthewiser advised me a few months ago it could be the reason i have been getting bullied and picked on which ended in physical violence at the Same Sex Marriage rally a month ago

got slammed head first into the pavement by a guy from the socialist crew

i also wanted to launch my research in CFD's here first at ASF so i put the link in (although host server down)

a new path

thankyou
associate professor robots


----------



## nunthewiser (6 July 2010)

robots said:


> hello,
> 
> Nunthewiser advised me a few months ago
> 
> ...





wax on wax off professor san.


----------



## Mofra (7 July 2010)

UBIQUITOUS said:


> Good time to buy? *If only loans were non recourse*.



hey Ubi, that's not a sly begrudging admission that our market is different to the overseas markets that have non-recourse loans is it?


----------



## sinner (7 July 2010)

Here it is from Mish after a 30% drop in home sales Vancouver and 42% drop in Calgary.

http://globaleconomicanalysis.blogspot.com/2010/07/vancouver-home-sales-drop-30-percent.html


> Housing Collapse Cascade Pattern
> 
> * Volume drops precipitously
> * Prices soften a bit
> ...




So how about the property bulls and bears, right now, stop their arguing and we use the above model to quantify where we are as a country.

I will use tonight to try and compile charts for 
1. Major city home sales
2. Major city home prices
3. Major city inventory levels
4. High end home prices in major cities

so we can update these at appropriate intervals over the coming months.

It would also be wise to keep an eye out for articles about:
* "Business as usual" spruiks by the RE industry
* "Solid housing fundamentals" articles by the MSM
* Developer/Builder incentives to get people into properties
* Distressed seller incentives to get people into properties
* Central bank comments on housing

I think that way everyone on this thread can agree on a set of quantifiable metrics and sentiment indicators. We can use these to gauge "the future of Australian property prices" without arguing so much. 

Now (new financial year/quarter, RBA rate decision just passed, most financial data up to date) is a good time to start this sort of analysis and this thread is as good a place as any to follow it.

Charts to follow...


----------



## explod (7 July 2010)

Interesting article there Sinner, would say we are at about step 5 as an average across our sector.


----------



## trainspotter (7 July 2010)

Last time I checked we are not in the USA with the non recourse loan and toxic debt situation where banks were unloading that kind of debt to "others"  Last time I checked we still had Lenders Mortgage Insurers and APRA taking the moral high ground as well as adding another layer of safety to the industry.

http://www.apra.gov.au/Statistics/upload/MBS-May-2010.pdf go here to check out the May statistics of how "fiscally sound" our banks are compared to what happened in the good ol USA.

Also note that people will eat brown rice and kerosene before they will have the "shame" of having their house sold.

Still waiting for this naysayer trainsmash to occur. Must be going on 8 years now. Slow moving train I am thinking. 

All for pie charts and demographics and PDF files and navel gazing analysis. Bring it on. Time is going to be the telling factor. You can pear hunt all the financial data you want.


----------



## sinner (7 July 2010)

While conducting some research today in regards to Australian homeowners equity as a % of mortgage value (if anyone was curious the value is roughly 50%) - I came across this Feb 2009 paper from RMIT:

I will include the conclusion here, readers are encouraged to view the full paper and draw their own conclusions. Anyone with half a brain would see that a 10% decline in prices is not unreasonable in even a healthy bull market but if the numbers on this paper are correct (and from my understanding, they are) then the consequences of a 10% decline in house prices could be *huge* for Australia. Certainly puts to rest the rubbish that Battellino was spouting about those taking on most of the debt being the most able to service it "if you average it out across the whole country". Boo Battellino! At least Glenn Stevens has his head screwed on.

http://mams.rmit.edu.au/jq98xwbgf0fpz.pdf


> Concluding Comments
> Price declines of 10 percent could leave over 300,000 Australians with negative equity in their homes. The majority of those with negative equity own their primary residence and have no other property investments. They are typically younger couples who have taken out large mortgages to establish themselves as home buyers during a period when house prices were booming. Though most are employed in either full time or part time jobs, they lack savings that they can fall back on in times of financial stress,
> and will have to repay relatively high credit card balances and other loans (e.g. car loans) that jeopardise their financial position. These findings suggest that there is a group of young home buyers vulnerable to default and repossession if labour markets deteriorate. Loss of employment with such high levels of debt and negative equity in their homes could be devastating. Policy makers might be advised to consider emergency measures to help these people stay in their homes. There are good economic reasons for such intervention in addition to the social policy concerns raised by the danger of default and repossession. Evidence from the United States suggests that mortgage foreclosures have particularly adverse impacts on housing market activity and prices. Substantial declines in house prices at a time when households have already suffered large wealth losses due to falling share prices, could seriously weaken domestic
> consumption, and increase the prospects of serious recession. In the longer run governments might consider ways in which mortgagors might insure their housing equity, and avoid the kind of risks that now threaten the wellbeing of tens of thousands of younger Australian homeowners.




It is worth remembering an argument I had with a cousin of mine (working at Macquarie Bank at the time as someone who allocates rich peoples money into assets) in 2008, post Lehman but pre AIG where she emphatically stated to me that:
"subprime is only a tiny tiny portion of the US RE market, and of that tiny tiny portion only a tiny tiny portion are in negative equity".

"Well true" I said, "cousin o mine, unfortunately the real estate trade has been leveraged to the eyeballs so all that's required for a shock is a tiny tiny decline". I was discounted as nothing less than a fool at the time - but reality didn't take long to catch up with euphoria in the end.


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## trainspotter (7 July 2010)

LOLOLOL Sinner. Your "cousin o mine" voiced an OPINION and you have taken this and turned it into how clever you are at picking the RE market?

PMSL ..... 18% - 21% is hardly a tiny, tiny portion of subprime lending. Let's not forget the lending also had a ratchet involved called an "adjustable rate" whereby the banks can increase interest rates at will. LOLOL

You are funny ! WE DO NOT HAVE SUB PRIME LENDING OR NON RECOURSE LOANS IN AUSTRALIA. If you have any CRAA the banks will not give you a loan. If you do not meet criteria set by APRA and the banks as well as LMI's YOU DO NOT GET THE LOAN. Don't get me started on VALUATIONS .. all part of the CRITERIA to get a loan to buy a house.

Get some facts. Try here for a start ... http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

P.S. ... Have been in the RE industy as well as a MORTGAGE ORIGINATOR for over 20 years. (you know the guy that goes to the bank on your behalf to get the loan so you can buy the house of your dreams so technicaly I have no freaking idea what I am talking about)


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## sinner (7 July 2010)

trainspotter said:


> LOLOLOL Sinner. Your "cousin o mine" voiced an OPINION and you have taken this and turned it into how clever you are at picking the RE market?




Mate, I didn't "pick" anything, nor do I view my thoughts on the RE market as clever, just plain commonsense. In any case, she did not voice an opinion, she voiced what she believed to be fact as a professional: "tiny tiny portion of subprime is in negative equity therefore there is nothing to worry about". It might interest you to know I saw her about a month ago and her attitude has changed vastly.



> PMSL ..... 18% - 21% is hardly a tiny, tiny portion of subprime lending. Let's not forget the lending also had a ratchet involved called an "adjustable rate" whereby the banks can increase interest rates at will.




Errr 18-21% was not the number of homes in negative equity when the house price collapse started in the US. The number was far far lower than that. Negative equity ratcheted up only *once* house price declines kicked in.



> LOLOL
> 
> You are funny ! WE DO NOT HAVE SUB PRIME LENDING OR NON RECOURSE LOANS IN AUSTRALIA. If you have any CRAA the banks will not give you a loan. If you do not meet criteria set by APRA and the banks as well as LMI's YOU DO NOT GET THE LOAN.




Trainspotter, please calm down. I did not claim we have subprime in Australia or that the quality of our loans is subprime. I was merely trying to illustrate using an example that in once leverage levels are extremely high in any trade then only a small % downmove has the ability to do severe damage. In any market. 



> Get some facts. Try here for a start ... http://en.wikipedia.org/wiki/Subprime_mortgage_crisis
> 
> P.S. ... Have been in the RE industy as well as a MORTGAGE ORIGINATOR for over 20 years.




Please show which statements I have construed as fact which are not. Or calm down. Either would be good.

Fact, from your own wikipedia link: In March 2008 roughly 10% of US homeowners had negative equity. Not 20%.

But we can also find another great quote from your wikipedia link:


> Economist Stan Leibowitz argued in the Wall Street Journal that although only 12% of homes had negative equity, they comprised 47% of foreclosures during the second half of 2008. He concluded that the extent of equity in the home was the key factor in foreclosure, rather than the type of loan, credit worthiness of the borrower, or ability to pay.


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## trainspotter (7 July 2010)

Nope ... go back and read your post. "*subprime is only a tiny tiny portion of the US RE market,* and of that tiny tiny portion only a tiny tiny portion are in negative equity". 18% to 21% of ALL the loans in America were of a subprime nature ...... is hardly a small figure IMO.

From wikipedia "As *adjustable-rate mortgages* began to reset at higher rates, mortgage delinquencies soared. Securities backed with *subprime mortgages,* widely held by financial firms, lost most of their value. The result has been a large *decline in the capital of many banks* and U.S. government sponsored enterprises, tightening credit around the world."

My hypothesis is that due to the likes of APRA and LMI like Genworth and QBE underwriting the banks for losses for deafults it is extremely unlikely to see the negative downward spiral the naysayers are so willing to spew forth.

Using leverage and negative equity as your thesis to predict this catastrophic "oncoming decline" of RE in Australia then what percentage do you believe are in negative territory and at what leverage rate?

The LMI will have to fork out to the banks thusly saving the capital of the lenders from becoming toxic therefore decreasing the risk of interest rates being increased from the lenders to cover this shortfall.


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## trainspotter (7 July 2010)

Moreover, since the dawn of RE and buyers and sellers this same "conclusion" has been around like an albatross around ones neck. I remember when I bought my first house at the tender age of 21 in 1991 .... the block was 20k and the house was 50k. Everyone and I mean everyone told me not to buy it as I will go broke because I am too young (FHB) I will lose my job, prices will crash, my car loan would break me ...... sound familiar? BTW ... it was a Government loan and I borrowed 100% of the money. Leveraged my @rse off to get in there.

Sure ..... some of the people I know did a similar thing and had to sell their homes due to marriage breakdowns, loss of job, having only one income due to babies etc. ad infinitum. Sound familiar?

History never repeats ...... or does it?

Using the American model you can clearly see that the lenders were their own worst enemies by ratcheting the interest rates to cover the toxic debts they carried. Whooooooooopsies. You can see it now can't you ?  Kinda like a snail cam effect or even better a knock on effect. Get me?


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## finnsk (7 July 2010)

What will happen if or when interest rates goes up another 2% or more, how many home owners and or investors will be in financial trouble?
How many of them will have to sell?
How big a proportion of the real estate market is that?
What is a safe level of leverage in case of a 2%, 2.5% or 3% increase in interest?


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## sinner (7 July 2010)

trainspotter said:


> Nope ... go back and read your post. "*subprime is only a tiny tiny portion of the US RE market,* and of that tiny tiny portion only a tiny tiny portion are in negative equity". 18% to 21% of ALL the loans in America were of a subprime nature ...... is hardly a small figure IMO.




Is this a joke? I was quoting something that was said to me, as an anecdotal example. I did not make the claim that subprime was a tiny portion of the market. 



> My hypothesis is that due to the likes of APRA and LMI like Genworth and QBE underwriting the banks for losses for deafults it is extremely unlikely to see the negative downward spiral the naysayers are so willing to spew forth.




Right. Insurance companies will always pay out in full on RE blowouts no worries.



> Using leverage and negative equity as your thesis to predict this catastrophic "oncoming decline" of RE in Australia then what percentage do you believe are in negative territory and at what leverage rate?




Sorry, where did I predict a catastrophic decline? You use quote marks as if that is actually something I said?

Right now the negative equity rate is extremely low as to be negligible in Australia. The paper I posted was to model what would happen in case of a hypothetical 10% decline in house prices. It is for interested parties to examine, that is all!

I want to have a discussion, repeating myself is extremely boring.



> The LMI will have to fork out to the banks thusly saving the capital of the lenders from becoming toxic therefore decreasing the risk of interest rates being increased from the lenders to cover this shortfall.




I am going to have this framed.


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## trainspotter (7 July 2010)

No joke ... you placed the conversation forward and I remind you she is a MACQUARIE EXPERT ! "It is worth remembering an argument I had with a cousin of mine (working at Macquarie Bank at the time as someone who allocates rich peoples money into assets) in 2008.

Worth remembering for WHOM??? I wasn't there at the time ... ROFL.

Your words not mine. It was HER opinion "cousin o mine" that led you to your conclusion.

Do you know anything about banking regulations in Australia? APRA for example, LMI to underwrite LVR as well as surplus incomes?? DSR's ?? LOLOL do you actually knbow what you are talking about? 

YOU admit that "negative equity" is extremely low in OZ but you throw up US as the example??  HENNY PENNY THE SKY IS FALLING .. PMSL   ...This  is the basis for your posts for "examination" ??????

I would love nothing better than to have a conversation as to what is ACTUALLY  happening in OZ ... it appears that your "hypotheticall" research paper is nothing more than that.

I want to have a discussion also ... based on fact ... not some grab bag of bovine extreta that is thrown up here for the masses to be taken as fact because you have an OPINION because a "cousin o mine" had an epiphany.


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## trainspotter (7 July 2010)

finnsk said:


> What will happen if or when interest rates goes up another 2% or more, how many home owners and or investors will be in financial trouble?
> How many of them will have to sell?
> How big a proportion of the real estate market is that?
> What is a safe level of leverage in case of a 2%, 2.5% or 3% increase in interest?




Yeppers finnsk .... when do you believe this will happen? What are the indicators for this to happen? If interest rates go down in the same magnitude what will be the same result? More excessive borrowings? Which is the more likely to happen?

How many will have to borrow more? Or less as the case may be? It is more likely due to GLOBAL macro economics (there is that naughty words again) that it is unlikely for our market to overheat to the levels you  are describing.

Ahhhhhhhh welll ...... property is bliss. How I wish for the 17% of the Keating years........ lolol


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## electronicmaster (7 July 2010)

*DETERIORATING funding conditions for Australia's banks will likely prompt rate hikes independent of any RBA move, a senior banker says. *

Stories found on these two links

WSJ_World_MIDDLEHeadlinesAsia

theaustralian.com.au


Wait until you see the china issues that is coming, we have seen nothing yet.


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## trainspotter (7 July 2010)

Yadda yadda yadda ........ more white noise ........ we aint seen nothing yet ... blah blah blah ..... Banking confidence down in the minors like Bank of Queensland !! Pffffffffffffft ..... What is the loan book worth?? I will toss you for it and I still wont be late home for dinner. Get a grip.


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## MR. (8 July 2010)

sinner said:


> Here it is from Mish after a 30% drop in home sales Vancouver and 42% drop in Calgary.
> 
> http://globaleconomicanalysis.blogspot.com/2010/07/vancouver-home-sales-drop-30-percent.html
> 
> ...




Well the idea was there until the train derailed.


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## MR. (8 July 2010)

explod said:


> Interesting article there Sinner, would say we are at about step 5 as an average across our sector.






> * Volume drops precipitously
> * Prices soften a bit
> * Inventory levels rise slowly
> * High-end home prices remain relatively steady for a brief while longer
> ...




Yep, could be or maybe IMO we are at point 7 or 8.

The RBA deputy governor Ric Battellino might have us at point 15. 
http://au.biz.yahoo.com/100615/2/2dmvv.html


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## MR. (8 July 2010)

trainspotter said:


> Last time I checked we are not in the USA with the non recourse loan and toxic debt situation where banks were unloading that kind of debt to "others"  Last time I checked we still had Lenders Mortgage Insurers and APRA taking the moral high ground as well as adding another layer of safety to the industry.




Yep and basically so does Canada. Guess they shouldn't be looking at any list gathered from US data either. Point of the article? Canada (like Australia) had not experienced property falls. The article reports how some Canadian cities are now showing property falls. 

The list appears based from the US, as pointed out, some of those items should not be included for Australia or even for Canada. You want to edit it?

So what was the point to "cus Macquarie"? Was it, like you, cus Mac' laughed at others opinions? Don't we all have a story or two like this? Point is "on property" YOU along with others ARE STILL RIGHT. 

Or is the table turning and that's what has fired you up so much?

I have watched for months property volumes drop even with higher investment property sales. 
Prices have a good chance of following lower.   



trainspotter said:


> Yadda yadda yadda


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## GumbyLearner (8 July 2010)

I just hope none of you leveraged dudes go on strike. If you do, then we are all in for a world of hurt. If you don't go on strike, then maybe it won't hurt as much. Taking one for the team is so much better for the unleveraged. We'll just sit back and help you out in your time of need.


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## Mofra (8 July 2010)

sinner said:


> I will include the conclusion here, readers are encouraged to view the full paper and draw their own conclusions. Anyone with half a brain would see that a 10% decline in prices is not unreasonable in even a healthy bull market but if the numbers on this paper are correct (and from my understanding, they are) then the consequences of a 10% decline in house prices could be *huge* for Australia.



Over what timeframe?

Personally I am bullish long term but I expect prices to soften to the end of the year at least - possibly until we have confirmed the next peak in the rate cycle. 10% in a few months would be a major issue, over a longer term it would be seen as a far softer landing and set the stage for the next upleg. 

AWOTE traditionally rises faster than CPI so the time frame of any pullback _does_ impact on the measure household earnings as a multiple of house prices that some here love so much.


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## Uncle Festivus (8 July 2010)

electronicmaster said:


> *DETERIORATING funding conditions for Australia's banks will likely prompt rate hikes independent of any RBA move, a senior banker says. *
> 
> Stories found on these two links
> 
> ...






trainspotter said:


> Yadda yadda yadda ........ more white noise ........ we aint seen nothing yet ... blah blah blah ..... Banking confidence down in the minors like Bank of Queensland !! Pffffffffffffft ..... What is the loan book worth?? I will toss you for it and I still wont be late home for dinner. Get a grip.




Huh?? You are not making making much sense there nor in your other posts ie not reading Sinners posts correctly? 



GumbyLearner said:


> I just hope none of you leveraged dudes go on strike. If you do, then we are all in for a world of hurt. If you don't go on strike, then maybe it won't hurt as much. Taking one for the team is so much better for the unleveraged. We'll just sit back and help you out in your time of need.




The fiat system & fractional reserve banking are not racist when it comes to over-allocating those freshly printed notes to be mis-allocated into unproductive property bubbles both here and in China. Both countries banks have indicated that the show is over as far as their respective weighting to the property sector is concerned, irrespective of where rates go.

Just a matter of time brothers.....


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## nunthewiser (8 July 2010)

All sweet bro.



> Experts say home rental income in Perth has not budged since March despite rising costs for landlords.
> 
> Property research firm RP Data said the median house rental price was $380 a week in the quarter to June 30, with the price for units at $330.
> Real Estate Institute of WA president Alan Bourke said the State had an almost two-year-long plateau in rental prices. He said a vacancy rate of about 3 per cent struck about the right balance between supply and demand, but the rate now was about 4.5 per cent, which put downwards pressure on rent.
> ...




http://au.news.yahoo.com/thewest/a/-/mp/7540478/wa-landlords-feel-the-pinch/

The last paragraph gave me a giggle tho ...... better get out those pom poms guys


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## UBIQUITOUS (8 July 2010)

nunthewiser said:


> All sweet bro.
> 
> 
> 
> ...




"Throw in a DVD"?

Not even a DVD player. 

It looks like landlords are "doing it tough"


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## UBIQUITOUS (8 July 2010)

Not looking good at all for the property sector. Expect to see some further squealing by the like of the HIA in the coming weeks.

I reckon that the last 2 years have been about the government buying the banks time to shore up their balance sheets. Now it's time for a culling of the weak - banks and property speculators.



> http://news.smh.com.au/breaking-new...-stark-contrast-to-others-20100708-1020c.html
> 
> The strength of the report saw *financial markets price out any chance of an interest rate cut this year*, a move that had been toyed with given the uncertainty generated by Europe's debt problems.
> 
> "The ongoing strength in the labour market confirms our view that the RBA still has a tightening bias, given that falling unemployment is likely to put pressure on wages with the potential to *add to inflationary pressures next year,*" Ms Emmett said.


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## MR. (8 July 2010)

> RBS Australia senior economist Felicity Emmett said the Reserve Bank may "sit on its hands" if global financial markets continue to sharply deteriorate, but she thought a rate cut was unlikely unless the world economy slipped back into recession.




Oh Felicity, will you stop reading ASF and come up with your own material.

With thanks,
Associate Banker
MR.

HA HA HA what a total useless waste of a post this was. 
Will try harder to post content in future.


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## robots (9 July 2010)

hello,

yes ordinary writings from another economist, fascinating

anyhow great day, sun shining strong, the energy it gives you when the rays hit the body is phenomenal 

great news with Vic State Gov announcing some Vicroads departments going to Ballarat and some more action in Bendigo

just kicking off, get on it

200k for a house up there still

thankyou
professor robots


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## MR. (11 July 2010)

Another economist just making a living......

Hey, where's the Bigdog thingy?

It looked up a bit this week didn't it?


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## Wysiwyg (11 July 2010)

robots said:


> 200k for a house up there still
> 
> thankyou
> professor robots



Hi botsy , 

Can you answer this question for me please. 

Case: A house is bought in 1990 for 200k and is now 20 years later sold for 500k. During that time council rates have cost 15k,  house maintenance costs about 30k (painting, guttering, fencing, pergola built, plumbing repairs, new carpet, stairs, electrical repairs, termite treatment, concrete slabs and sheds erected, numerous one off items).

Question: Considering prospective next homes have also increased in time value, where is the capital appreciation?


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## MR. (11 July 2010)

Wysiwyg said:


> Case: A house is bought in 1990 for 200k and is now 20 years later sold for 500k. During that time council rates have cost 15k,  house maintenance costs about 30k (painting, guttering, fencing, pergola built, plumbing repairs, new carpet, stairs, electrical repairs, termite treatment, concrete slabs and sheds erected, numerous one off items).
> 
> Question: Considering prospective next homes have also increased in time value, where is the capital appreciation?





Bots must be out strolling along the Port Phillip, enjoying life, in the sun and all.....

Assume this house is hypothetical! 
500k – 200k – 15 and 30k would equate to $255k which is approx 4% compounding appreciation minus inflation if you want!  
The answer would be to own at least one or more wouldn't it?


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## Wysiwyg (11 July 2010)

MR. said:


> Bots must be out strolling along the Port Phillip, enjoying life, in the sun and all.....
> 
> Assume this house is hypothetical!
> 500k – 200k – 15 and 30k would equate to $255k which is approx 4% compounding appreciation minus inflation if you want!
> The answer would be to own at least one or more wouldn't it?




What I failed to mention was the interest on mortgage came to 90k on a 150k loan over the 20 years. So 255k - 90k = 165k additional in the pocket after 20 years. 

For sure an investment property is lucrative because rental income covers  aforementioned property maintenance but the only people I can see benefiting from a non investment property are the next of kin.


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## MR. (11 July 2010)

News flash

_“The property tip of the year”
“The real estate market will crash” _

http://www.jenman.com.au/news_item.php?id=60

_“So we wrote near the end of 2001 in a series of four articles called Boom & Bust. Since then the real estate market has continued to boom. 
Our real estate critics have laughed."_

and P’ssed em selves, popped arteries, forgotten to breath and turned blue in hysterics!


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## MR. (11 July 2010)

Wysiwyg said:


> What I failed to mention was the interest on mortgage came to 90k on a 150k loan over the 20 years. So 255k - 90k = 165k additional in the pocket after 20 years.
> 
> For sure an investment property is lucrative because rental income covers  aforementioned property maintenance but the only people I can see benefiting from a non investment property are the next of kin.




A non investment property owner wouldn't be paying rent, but would be paying that interest instead. 

If the question's now, on the next of kin, it's going to be a matter of time!


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## Wysiwyg (11 July 2010)

Onwards and upwards I say. : The ultimate chart pattern.

Australian Property Prices


----------



## Wysiwyg (11 July 2010)

Sigh. Inflation is the key here. 

Australian Property Prices (Inflation Adjusted)


----------



## Chief Wigam (11 July 2010)

Hi Wys, I just came across this thread. From where did you get this chart?


----------



## Wysiwyg (11 July 2010)

Chief Wigam said:


> Hi Wys, I just came across this thread. From where did you get this chart?




Wig, The website is at the bottom right hand corner of either chart.


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## MR. (11 July 2010)

House shortage! What house shortage?

http://www.theaustralian.com.au/bus...unlikely-to-dive/story-e6frg9gx-1225889995260



> It said while 150,000 houses had been built each year since 2005, the population had grown by more than 350,000 a year.




How many people on average live in a house?


> AVERAGE HOUSEHOLD SIZE
> The average household size in Australia is projected to decline from 2.6 people per household in 2001
> Australia's household size (2.5) in 2011 is projected



http://www.ausstats.abs.gov.au/Ausstats/subscriber.nsf/0/DF2989BFFA7392E1CA256EB6007D63F4/$File/32360_2001%20to%202026.pdf


150,000 houses x 2.5 people per household = 375,000

No house shortage here! Although it did say more than 350,000


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## trainspotter (11 July 2010)

Question for MR and Wsiwyg. Do you own property? Either PPOR or RI ? Got any commercial RE assets to speak of? What about a strata title unit or two? Any vacant land? Maybe a development block? Just interested if you have property as part of your portfolio?


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## UBIQUITOUS (12 July 2010)

Everywhere I look, I see bad bad news for the RE sector, as foretold on ASF.



> In Sydney and Melbourne, auctions hit a 52-week low of 49.8 per cent and 55.6 per cent respectively, according to Australian Property Monitors. On the corresponding weekend last year, Sydney auctions cleared 70.5 per cent of homes and Melbourne's clearance rate was a healthy 78 per cent
> 
> http://www.smh.com.au/business/clearance-rate-slumps-as-supply-surges-20100711-105lk.html
> 
> ...


----------



## trainspotter (12 July 2010)

Interesting to note that the increase in *pre-auction sales* - accounting for 25 per cent of those listed for the weekend. Factor in the 50 per cent clearance rate and the answer is? Property is slowing down? So therefore if 25% of the market is sold prior to auction of 100% then this leaves 75% of houses that at auction a 50% clearance rate was achieved? Is this how it works? HUH?


----------



## Bigukraine (12 July 2010)

trainspotter said:


> Interesting to note that the increase in *pre-auction sales* - accounting for 25 per cent of those listed for the weekend. Factor in the 50 per cent clearance rate and the answer is? Property is slowing down. So therefore if 25% of the market is sold prior to auction of 100% then this leaves 75% of houses that at auction a 50% clearance rate was achieved? Is this how it works? HUH?




Housing finance up 1.9% in may for owner occupied rose for the first time in months.... don't worry about clearance rates....they will fall...not for the fact that the housing market is crashing... but for the fact the ability for the banks to lend is drying up... why do you think that the major banks are being re-rated down.... because their cost centre to supply funds is rising sharpley and the money is not there to lend....why do you think the fight is on to obtain deposits from punters ?

In summary it means to me get a loan now before you won't be able to borrow!!!

confucious say..."man who drive car and keep looking in rear view mirror for danger miss the train in front"


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## sinner (12 July 2010)

Wysiwyg said:


> Sigh. Inflation is the key here.
> 
> Australian Property Prices (Inflation Adjusted)




That chart assumes you believe the official measure of inflation (CPI) to be "real".

Just as the chart you showed "House Price Index" was adjusted to "House Real Price Index" after adjusting for inflation, there should be a third adjusted chart showing returns "House Real-Real Price Index" after adjusted for real inflation!

Hell, even the RBA is rubbishing CPI these days
http://www.news.com.au/business/rba-says-cpi-data-not-representative/story-e6frfm1i-1225842175839

I advise everyone to look at that article, as it has a chart showing Australian "underlying inflation" - you can see the RBA has failed to keep within their "target rate" since Sep 2007 if you use underlying inflation. Even after six-in-a-row panic rate cuts in 2008.  Readers are encouraged to think and make up their own minds why the RBA seems to lack the monetary policy controls to keep inflation within their target band.

As you can see if we were adjusting your stubbornmule chart for "real inflation" then "real real" returns on housing would be even lower than 2.1%. FHOG is probably a very good explanation as to why 2008/2009 capital gains could be less than 0 after adjusted for inflation!


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## UBIQUITOUS (12 July 2010)

trainspotter said:


> Interesting to note that the increase in *pre-auction sales* - accounting for 25 per cent of those listed for the weekend. Factor in the 50 per cent clearance rate and the answer is? Property is slowing down? So therefore if 25% of the market is sold prior to auction of 100% then this leaves 75% of houses that at auction a 50% clearance rate was achieved? Is this how it works? HUH?




What I do know is that it's a buyers market, and buyers are holding off from buying. There are too many conflicting indicators here in Oz. Uncertainty means that  people aren't putting their hands in their pockets.


----------



## trainspotter (12 July 2010)

UBIQUITOUS said:


> What I do know is that it's a buyers market, and buyers are holding off from buying. There are too many conflicting indicators here in Oz. Uncertainty means that  people aren't putting their hands in their pockets.




AGREE 100% ... this is a time of uncertainty and volatility in the real estate market place. The rate clearance is down but the pre sales is through the roof. Works out to still 62.5% of volume turnover. Some places have sold for more than the asking price at auction whilst others on a presale contract have just fallen short of the asking price but still gone to settlement?? 

Sure aint sunshine and lollipops for the greedy property developers ... a bit more like "Cloudy with a chance of holding costs"?


----------



## Bigukraine (12 July 2010)

trainspotter said:


> AGREE 100% ... this is a time of uncertainty and volatility in the real estate market place. The rate clearance is down but the pre sales is through the roof. Works out to still 62.5% of volume turnover. Some places have sold for more than the asking price at auction whilst others on a presale contract have just fallen short of the asking price but still gone to settlement??
> 
> Sure aint sunshine and lollipops for the greedy property developers ... a bit more like "Cloudy with a chance of holding costs"?




The last time i looked we were in a capitalist society .....you know make profit from property develop,trade shares.....just general wealth building.....

unfortuatley "GREED" is part of it.... yes..... no.... comprendey...


----------



## trainspotter (12 July 2010)

Bigukraine said:


> The last time i looked we were in a capitalist society .....you know make profit from property develop,trade shares.....just general wealth building.....
> 
> unfortuatley "GREED" is part of it.... yes..... no.... comprendey...




You missed the tone of the post Bigukrane. I am completely for making a profit on any kind of transcation whether it be property or shares or horse trading. 

The GREEDY property developers have a chance of holding costs due to lack of sales due to over priced, end sale structure. If the pricing was in a generalised margin and foreseen as good value to the market place then turnover would be forthcoming *ie* a profit. Maybe not the killing they thought they were going to make but nevertheless a profit.

Milk the cow slowly and it will give you a return all it's life. Rip it's teets off and ......... well you know the rest.


----------



## Bigukraine (12 July 2010)

trainspotter said:


> You missed the tone of the post Bigukrane. I am completely for making a profit on any kind of transcation whether it be property or shares or horse trading.
> 
> The GREEDY property developers have a chance of holding costs due to lack of sales due to over priced, end sale structure. If the pricing was in a generalised margin and foreseen as good value to the market place then turnover would be forthcoming *ie* a profit. Maybe not the killing they thought they were going to make but nevertheless a profit.
> 
> Milk the cow slowly and it will give you a return all it's life. Rip it's teets off and ......... well you know the rest.




sorry about that and i agree with you on milking the cow slowly,the problem i see with most developers is that in the begining of the upward trend (started around intro of the GST ...2000) finance was cheap and plentiful and in one form or another remained so until the  US subprime domino.....the problem is they borrow with the intention to sell a bit.... real or sureal sales and then go back to the lending institution ,show the sales refinance then sell abit more etc etc so ends up like a pyramid and them backing themselves into a corner..... some came in with reasonable capital and get in and out quick some end up like the above scinario .... some time's not all there faults.. (got to love councils) but the point being a lot of projects for the fhb would not of even got of the ground if not for some over leveraged developers that now if they tried to get the project of the the ground in 2009-2010 wouldn't have a hope in hell........i think some developers are greedy but some that due to the situation in the early 2000' ens .....that had a good old aussie crack have now been left short ...in trouble.. and to the detriment of project development in this country...... its economics... if you can't make a dollar you don,t do it , so to me it means no finance to get projects of the ground = not many land releases

=existing cost of established houses goes up

=holding and or rising of housing prices upto the point of max affordability

 we are there now and due to no cheap finance avaliable to fhb or established owners due to the gfc and a short fall of banks ability to lend the chance of getting a loan is harder and harder.

Just my opinion housing at the top end pullback abit.... housing around the medium to lower end will hold more or less.. people who have loans for housing now will fight tooth and nail to keep it even if it means to eat rice !!!!


----------



## robots (12 July 2010)

sinner said:


> That chart assumes you believe the official measure of inflation (CPI) to be "real".
> 
> Just as the chart you showed "House Price Index" was adjusted to "House Real Price Index" after adjusting for inflation, there should be a third adjusted chart showing returns "House Real-Real Price Index" after adjusted for real inflation!
> 
> ...




hello,

exactly Sinner, and for over 6yrs now at ASF and the bloggo-sphere people have been carrying-on about house prices

why are you and others so interested in an asset that performs so poorly? 

surely all the research you have conducted makes you put a line through property as its only returning 2.1%/yr, 

i bought and settled a month ago, got finance from the CBA

what a surprise, someone has mentioned uncertainty

thankyou
associate professor robots


----------



## robots (12 July 2010)

hello,

more grreat news out for regional victoria with the state gov fast tracking works on the regional link, does this include *BALLARAT* any one know?

thanks again to all the bankers for contributing here at ASF

thankyou
associate professor robots


----------



## MR. (12 July 2010)

Bigukraine said:


> Housing finance up 1.9% in may for owner occupied rose for the first time in months....




Giday all,

Not seasonally adjusted the number of houses fell by 1.2% from last month. Seasonally adjusted owner occupied is up 1.9% which is a first for some time. Both finance figures fell for owner occupied though.
http://www.abs.gov.au/AUSSTATS/abs@...05DBCE56402EC566CA25723D000F2999?opendocument

I have updated the chart which I put together to see the impact of interest rates on new housing finances. (below) Last years boom was in line with interest rates being so low.

The data used was the raw data not seasonally adjusted. Do you think the data should have been seasonally adjusted in the charts? 

Check it out!
View attachment Investment loans as a % of Total Housing Loans $.pdf


----------



## explod (12 July 2010)

robots said:


> hello,
> 
> exactly Sinner, and for over 6yrs now at ASF and the bloggo-sphere people have been carrying-on about house prices
> 
> ...




When you have been hurt yourself you tend to try and warn others from not doing the same.   I made a lot of money over the years out of real estate but also have been burned.  As a result I went to the books and learnt the real story behind economics.  Certainly called it too early but do know a lot of people sadly will be burnt from property in the not too distant future. 

We are just a ballance Confessor to the rampers.  And Bankers are crooks.


----------



## robots (12 July 2010)

hello

no-one here at ASF ramps property explod, 

plenty like Bigdog, just putting in a daily or weekly report 

data like what Sinner produces further indicates we not in a bubble but just rolling along

maybe the real issue is wages, but looking at most people i see working their "worth" is about right

thankyou
associate professor robots


----------



## UBIQUITOUS (12 July 2010)

robots said:


> maybe the real issue is wages, but looking at most people i see working their "worth" is about right
> 
> thankyou
> associate professor robots




I thought that the real issue (as spruiked by cheerleaders on ASF) was that there a shortage of properties. Shouldn't that mean 100% clearance rates?


----------



## explod (12 July 2010)

robots said:


> hello
> 
> no-one here at ASF ramps property explod,
> 
> ...




Bigdog does not ramp at all.   He merely lifts and posts the daily news report from Google on how the US market, namely the Dow performed overnight.

And it will be there again in the morning as a service to many on ASF

cheers explod


----------



## trainspotter (12 July 2010)

UBIQUITOUS said:


> I thought that the real issue (as spruiked by cheerleaders on ASF) was that there a shortage of properties. Shouldn't that mean 100% clearance rates?




Supply and demand does not necessarily mean vendors price is equivalent to purchasers price therefore equalling 100% clearance rates.


----------



## UBIQUITOUS (12 July 2010)

trainspotter said:


> Supply and demand does not necessarily mean vendors price is equivalent to purchasers price therefore equalling 100% clearance rates.




But it does mean that the disparity between what vendor's want and prospective purchasers are willing to pay.


----------



## MR. (13 July 2010)

> There were 528 auctions reported this weekend with a total of 361 selling and 167 being passed in, 96 of those on a vendors bid. The clearance rate from this weekend’s auctions is 68 per cent. This weekend last year saw 293 auctions reported and a clearance rate of 85%.  Next weekend the REIV expects 590 auctions.
> 
> Enzo Raimondo
> 
> CEO, REIV




http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162


----------



## robots (13 July 2010)

hello,

thanks MR. for posting up the data,

just took the weekend off from the responsibilities, i just chilled out, went for a walk, stroked the cats, watched television and listened to some music

thankyou
associate professor robots


----------



## trainspotter (13 July 2010)

UBIQUITOUS said:


> But it does mean that the disparity between what vendor's want and prospective purchasers are willing to pay.




Agreed with this statement of fact. This has always been the law of the jungle. "Vendors are benders and Buyers are liars". As a vendor I get talked into a ridiculously high price by the RE Agent and decide to list with them. It does not sell prior to auction or even at auction because it is listed too high in the first place. Rule # 1. Take the emotion out of the equation and think with your head and not with your heart.


----------



## MR. (13 July 2010)

trainspotter said:


> Question for MR and Wsiwyg. Do you own property? Either PPOR or RI ? Got any commercial RE assets to speak of? What about a strata title unit or two? Any vacant land? Maybe a development block? Just interested if you have property as part of your portfolio?




Yes.
PPOR.
No. but by renting I am helping the landlord make his repayments. 
No.
No.
No.
No. not including PPOR.

Does this help?
What about you?



UBIQUITOUS said:


> What I do know is that it's a buyers market, and buyers are holding off from buying.




Because property might be priced too high for the current and potential upward loan interest rates on offer. I wouldn't be surprised if demand from the speculators has been dropping off of late. 



robots said:


> hello,
> 
> thanks MR. for posting up the data,
> 
> ...




Understandable, ya gota try and keep it consistent, rain hail or shine......


----------



## MR. (15 July 2010)

http://www.smh.com.au/business/banks-housing-bias-bad-for-economy-nab-banker-20100715-10bwt.html



> Joseph Healy, business banking head of National Australia Bank.......
> Mr Healy delivered a speech on business lending to the American Chamber of Commerce in Sydney this afternoon..........
> 
> In 2000, every $1000 of home lending was matched by roughly the same amount for business. That ratio has since shifted so that today, for every $1000 of home lending, only about $600 is available for business, according to NAB research........
> ...




Hear Hear my old friend........


----------



## robots (15 July 2010)

hello,

Oh yeah, couple of ordinary refernces there MR., 

Yeah, like NAB one to listen too and Steve who?

Thankyou
Professor Robots


----------



## MR. (16 July 2010)

Yeah, what would an NAB business loan manager know about property loans! 

Steve, you'd know him better as Kosciusko perhaps, that's how I know him.


----------



## robots (16 July 2010)

hello,

good, looks as though all the trolls that have been trolling on this thread have disappeared

so who's buying at the moment, got a bargain, located a bargain or adding value, bumped up the rent?

thankyou
professor robots


----------



## robots (17 July 2010)

hello,
Good morning everyone, the weekends come

Anyone know where to get the latest REIV 2010 June Qtr figures?

Oh yeah, have a great day brothers
Thankyou
Associate professor robots


----------



## robots (17 July 2010)

hello,

Anyone around?

People probably working on their congratulations post.

Oh well, another quarter results out, the goliath continues

Thankyou
Associate professor robts


----------



## kincella (17 July 2010)

Morning Robots, 
had a sleep in this morning.....bit tired after supervising some reno's on a country property this week....so am back in town to catch up on some business here, then back to the country next week, for some more R& R and
oversee more reno's.....on a lovely little californian bungalow, in a beautiful tree lined street in the heart of the city...

my mantra of suggesting home buyers and investors go to the outer burbs...seems to be ringing true for the savvy ones...

then there was the article this week, property investors increased borrowing by 47%....thats a whopping amount.....and the other article about investors dumped over a trillion into cash deposits......all that money taken out of the stockmarket....and placed into cash or property.......
...........................................winners and losers there....devalue of the dollar means cash declines in value, whilst property increases the dollar value....
the reality of the property market, makes a huge contradiction to the fairy tales constantly promoted on this forum....
see the extract below.......sth yarra fell 26%, but dandy rose 31%....I consider both burbs to be rather ugly, and sth yarra is full of units, or ugly little workers cottages, but the wannabe crowd want to live there anyway, cause its next door to toorak.....makes them feel good
so there you have it.....an almost 30% fall in one suburb...
yet the median for Melb still increased almost 30% for the year......
I note savvy buyers are heating up the outer suburbs.....

extract follows....


*Outer suburbs stay hot in cooling market *

Quarterly figures released by the Real Estate Institute of Victoria show the median price in South Yarra fell 26.4 per cent to $1,287,500, down from $1,750,000 in March.

But the median price in multicultural Dandenong was up 31.5 per cent, bayside Rosebud 18 per cent and Broadmeadows by 16.4 per cent.

The property market traditionally slows in winter, but the median house price was $559,000 in the June quarter, 26.8 per cent higher than this time last year.

http://theage.domain.com.au/real-es...tay-hot-in-cooling-market-20100716-10ec0.html


----------



## kincella (17 July 2010)

thought I might add some more info on Sth Yarra.....its doubled its price in 7 years....looks to have been a bit erratic by the prices......but then we dont have the info to compare the few stately houses that may have sold, against the hundreds of little workers cottages......
http://www.myrp.com.au/viewFreeRepo...ir=&postcode=3141&email=&fsrName=&widget=true

but look at Dandy....its prices also doubled in the past 7 years.....at the opposite end of the scales, and way out in the burbs.....
http://www.myrp.com.au/viewFreeRepo...ir=&postcode=3175&email=&fsrName=&widget=true


----------



## robots (17 July 2010)

hello,
yeah, spot on Kincella 

Great effort brothers, reward yourself this weekend

Buy your loved one a special treat.
Thankyou
Associate professor robots


----------



## robots (17 July 2010)

hello,

good evening brothers, 

will get the auction results out as soon as possible for everybody, should be around 7.30pm

i am nice and refreshed after having last week off from doing the report

oh yeah, PARADISE

thankyou
associate professor robots


----------



## kincella (17 July 2010)

Hi Robots,
just bought another pc, for the country retreat....was sharing daughters laptop....but decided I need my own...
its a desktop...but only the size of a large laptop....no tower...just a 18.5"screen, with a full keyboard and mouse...its magic...and trying telstra wireless bb again....

so will just have a pc in each house....with the wireless modem...to go from one to the other...
cheap too...$588 Compaq at Officeworks..in the latest catalogue.....

am considering moving from my toorak pad, live permanently in the country, and work remotely from there, then just travel to Melb to see clients....
will trial that idea for a few months....prefer Melb weather though, its milder...it is more extreme in NE Vic....much hotter in summer and colder in winter..
I might look at Wallan, under an hours drive to the city by freeway...new houses there under 300k's.....or look at bayside....
you just have to be pretty satisfied with the housing market...cannot get much better than this
cheers


----------



## robots (17 July 2010)

hello,

Good stuff Kincella, yeah enjoy all that you own man.

Went to Ballarat today to have a wander around, plenty happening. Still plenty at open for inspections for good properties. Those that require work are very hit and miss though.

Thats probably how i am running in the new year, half in St kilda half in Ballarat.

Thankyou
Professor Robots


----------



## robots (17 July 2010)

hello,

here it is brothers

oh yeah:
http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

fantastic 72% today, gee gone a bit quiet

oh well, footy, winter, people making up graphs, 

thankyou
professor robots


----------



## robots (17 July 2010)

hello,

sorry i missed that, 

prices are dropping next month? Steve Who said what? every house in australia is up for sale? look at Japan? interest rates are going to 25%?

oh yeah, well done brothers

thankyou
professor robots


----------



## robots (18 July 2010)

hello,

Good morning everyone, had a great sleep, fantastic dreamtime

must be a bankers meetup on this weekend, oh well

Brumby also building a new section of road out on th western hwy, so much choice
Thankyou
Professor Robots


----------



## robots (18 July 2010)

hello,

oh well, sunshine and lollipops brothers

anyone head from Knocker or Ubiquitous?

great day

thankyou
associate professor robots


----------



## Bigukraine (18 July 2010)

robots said:


> hello,
> 
> oh well, sunshine and lollipops brothers
> 
> ...




Had to say hello robots yes sunshine and lollipops and i have mine and yes i think in all states go abit country amazing value and infrastucture around and the one thing you can't buy the good old slower country life style


----------



## Fleeta (19 July 2010)

robots said:


> hello,
> 
> oh well, sunshine and lollipops brothers
> 
> ...




nice results on the weekend bots but personally I still think the increasing levels of stock point to some serious issues in the coming months as these stock levels fail to clear. I also think the economy ticking along nicely will result in increased interest rates this year which will not be a bad thing as a smooth deleveraging process will be beneficial for all. A change in expectations appears to be happening which is great because illusions are created when people are brainwashed.

Congrats on buying in Ballarat, really great spot and you have given yourself a good chance to get a good return given the capital cities currently do not represent great value and rental yields appear much higher in regional areas. If I was living in Oz right now I would be looking in the regional centres for value too.


----------



## Quincy (19 July 2010)

> *Melbourne expected to lead big residential property price falls *
> 
> A SWAG of Melbourne houses are expected to be put on the market by the end of year.
> 
> ...




Hmmm.


----------



## tech/a (19 July 2010)

> "Melbourne is a candidate to record price falls in the September or December quarters this year," Mr Christopher said.
> 
> These, however, *were only likely to be between 1 per cent and 1.5 per cent *each quarter.




*PANIC!!!*

Gee those 40-50% gains will be eroded a few %.

Look on the bright side

*OPPORTUNITY!*


----------



## trainspotter (19 July 2010)

MR. said:


> Yes.
> PPOR.
> No. but by renting I am helping the landlord make his repayments.
> No.
> ...


----------



## Timmy (19 July 2010)

Here is Rory Robertson (you may remember him as the scourge of Steve "We'll all be rooned" Keen, loser of the bet) in Saturday's copy of _The Australian_.

*Extreme predictions on house prices will continue to be wrong*
http://www.theaustralian.com.au/bus...inue-to-be-wrong/story-e6frg9if-1225892981265



> My strongest view on house prices is that the extremists -- in both directions -- will continue to be wrong.
> ...
> Most observers can see positives -- including a growing economy and limited new housing supply despite rapid population growth -- and negatives, including higher mortgage rates recently alongside funding stresses and deleveraging in local and global financial systems.





I don't know what _The Australian_ and Robertson are playing at with this article.  Reasonable & rational doesn't sell newspapers!


----------



## robots (19 July 2010)

hello,

fantastic effort Trainspotter, superb

thankyou
associate professor robots


----------



## trainspotter (19 July 2010)

robots said:


> hello,
> 
> fantastic effort Trainspotter, superb
> 
> ...




Thanks robots .........  I try to keep it real. There is still good coin to be made in safe RE investments. Look around. It is not all doom and gloom. Profit is not a dirty word.


----------



## MR. (19 July 2010)

Timmy said:


> I don't know what _The Australian_ and Robertson are playing at with this article.  Reasonable & rational doesn't sell newspapers!




MACQUARIE Bank again?
Last week Macquarie and the Australian reported this lack of housing:
http://www.theaustralian.com.au/bus...unlikely-to-dive/story-e6frg9gx-1225889995260


> It said while 150,000 houses had been built each year since 2005, the population had grown by more than 350,000 a year.




150,000 houses built x 2.5 people per household = housing for 375,000 people! What's their point exactly, we have too many houses?

Now they report:


> Then there's the collision of Australia's record immigration -- near 300,000 a year recently, about three times the usual -- with our tendency to build only about 150,000 new homes a year.




Near 300,000 a year recently, from immigration only?

http://www.citizenship.gov.au/learn/facts-and-stats/


> In 2008-09, 118 196 people were approved to become Australian citizens




Ok, so 300,000 a year recently means "just this year". Ok.. Hope their facts work better for them this week.

How's this quote from the same recent article:


> The good news is that -- contrary to some claims -- not everyone is overgeared. Some 60 per cent of younger households -- many with steady jobs and good incomes -- do not have a mortgage at all.




That's good news? Nah.... That's great news. 
They have all paid their homes off? Some 60% of younger households? That's great, good on them.......

Sorry what's that? ... They don't have a home! Oh.....  

However "Good news is not everyone is overgeared" the article said.
So is everyone "else" overgeared then? 

I'm gettin a little confused here. I thought these articles from Macquarie's PR department with no vested interests were proving how rock solid and safe the property market was/is.

Need some sleep perhaps...... 
and good on ya, trains, Bots, Kincella


----------



## sinner (20 July 2010)

MR. said:


> Ok, so 300,000 a year recently means "just this year". Ok.. Hope their facts work better for them this week.




Think you are a little mixed up here, MR. Citizenship will only be a portion of total permanent immigration. To that must be added permanent residency visas and citizens from the UK and NZ.

However, there is an article from the ABS in May regarding projected immigration rates:
http://au.ibtimes.com/articles/2502...grants-long-term-migrants-immigration-pol.htm


> Citing changes in federal government policies and uncertain economic conditions, figures furnished by the Australian Bureau of Statistics (ABS) on Wednesday showed that net overseas migration (NOM) to the country reached 305,900 in the past 12 months leading to end of March 2009, and should slide down by end of the year.
> Immigration Minister Chris Evans affirmed that the number of people migrating to Australia, which comprised both permanent migrants and long-term temporary migrants, would drop further by 20 percent by the end FY2010 and thanks to government reforms in immigration policies and shifting economic conditions.
> He revealed that the immigration department is anticipating that up to 56,000 would drop out from visa applications to enter Australia and basing on the latest available data, "by the end of 2009-2010, we expect the NOM to have fallen to between 230,000 and 250,000."


----------



## CamKawa (20 July 2010)

Some interesting reading.

Thousands of first home cheats 

MORE than 3000 NSW residents have been caught rorting first-homebuyer concessions, leading to a record haul last year of $7.5 million in swindled stamp duty alone and some of the rorters even being jailed.


----------



## MR. (20 July 2010)

sinner said:


> Citizenship will only be a portion of total permanent immigration. To that must be added permanent residency visas and citizens from the UK and NZ.




Fair enough......  thanks

This 250k should keep some pressure on demand.


----------



## skcots (20 July 2010)

I wonder how many people are migrating out of Australia?
Looking for sunshine and lollipops abroad. Or uzis in the US as Robots puts it.

I am sure its far less then the intake but still relevant when talking about supply of dwellings.

I know migrants who came here as international students and are intending to return to their home countries when they pay off their student loans. I am pretty sure they are on permanent resident visas.


----------



## Timmy (20 July 2010)

skcots said:


> I wonder how many people are migrating out of Australia?
> ...
> relevant when talking about supply of dwellings.




Good question.  I don't think it would be too hard to find out,
but I have taken the lazy way out: 
What is the net effect of migration (to and from Australia)?

Answer is at the Australian Bureau of Statistics *Population clock* webpage
http://www.abs.gov.au/ausstats/abs@...1647509ef7e25faaca2568a900154b63?OpenDocument (my bolding of the net migration number)



> On 20 July 2010 at 11:09:20 AM (Canberra time), the resident population of Australia is projected to be:
> 
> 22,393,075
> 
> ...




All the assumptions behind these figures are on the page, for those with questions.

(ps. The grammar on this ABS page seems pretty poor ... but who am I to throw stones? )


----------



## robots (24 July 2010)

hello,

good evening everybody, hope you have had a good day

will get the REIV results as soon as I can brothers, its been a great week

i think Ubiquitous must be on holidays, oh well

thankyou
associate professor robots


----------



## kincella (24 July 2010)

just heard a sneak preview for tomorrows herald sun....vic will announce a new AFL ground at a regional city in victoria......I bet its Bendigo...thats where Brumby has a house....
so that should spark an interest in houses...at whatever regional city....
another boom or opportunity for those interested...it will be good for tourism and accommodation providors too

and the train service to Maryborough commenced again.....more good news for those living out in the sweet country air....can travel to the city
again ....good news to invigorate regional towns.....at 2.5 hours it s not for the workers.....but just having access to the city is a great plus

they said Mildura is still waiting for their rail service to resume after a decade....brumby said they were still looking into it....hahahahaha


----------



## robots (24 July 2010)

hello,

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

oh yeah, 67% clearance, top effort

great data which the RBA will like

i reckon Ubiquitous might of just got back from holidays, oh well

thankyou
associate professor robots


----------



## robots (25 July 2010)

kincella said:


> just heard a sneak preview for tomorrows herald sun....vic will announce a new AFL ground at a regional city in victoria......I bet its Bendigo...thats where Brumby has a house....
> so that should spark an interest in houses...at whatever regional city....
> another boom or opportunity for those interested...it will be good for tourism and accommodation providors too
> 
> ...




hello,

well done Kincella,

Ballarat scored again, well done Robots top effort man

little bit more boost for the town, state government doing a great job

thankyou
associate professor robots


----------



## MACCA350 (25 July 2010)

> Buyers continue to have the upper hand; homes selling at auction are not exceeding vendors’ reserves in the same way that they were before Anzac Day.




Cheers


----------



## robots (28 July 2010)

hello,

good afternoon,

didnt know where to post this so placed here:

http://www.theage.com.au/business/modest-cpi-is-gillards-gain-20100728-10v92.html?autostart=1

well done Kincella, picked it again, what a great day

thankyou
associate professor robots


----------



## Mofra (29 July 2010)

kincella said:


> just heard a sneak preview for tomorrows herald sun....vic will announce a new AFL ground at a regional city in victoria......I bet its Bendigo...thats where Brumby has a house....
> so that should spark an interest in houses...at whatever regional city....
> another boom or opportunity for those interested...it will be good for tourism and accommodation providors too



Have been looking at Bendigo myself actually - the % of renters is higher than elsewhere in Victoria, not too much smaller than Ballarat and it's a half-hour down the road to Heathcote for some of the most consistently high quality shiraz of an region in Australia.


----------



## tehnoob (30 July 2010)

House prices are down in June, everywhere but Adelaide. With interest rates seemingly on hold can we expect this to stabilise over the coming months?



> The data represents "a striking deceleration" in the quarterly rate of increase in home values, said Christopher Joye, managing director at Rismark.




Courtesy of today's Australian:

http://www.theaustralian.com.au/bus...-adelaide-survey/story-e6frg926-1225898958839


----------



## robots (30 July 2010)

hello,

oh well, who knows tehnoob what will happen

just plod along, i dont know, so many different opinions out there but thanks for the data

i post the weekly auction clearance rates for this thread, normally around 7.30pm saturday, just helping out like BigDog, 

what it all means wouldnt have a clue

thankyou
associate professor robots


----------



## UBIQUITOUS (30 July 2010)

hello,

good evening,

i didn't know where to post this so placed it here.

http://www.smh.com.au/business/home...nths-of-gains-20100730-10yup.html?autostart=1

well done to all of those who didn't buy this year. what a great day.

thankyou


----------



## satanoperca (30 July 2010)

Hi,

Go Robots, you are on the right path.

A little correction is hardly anything on the road to financial security.

A major correction will prick my ears up, but at the moment cannot see that happening. Maybe it is the calm before the storm, or maybe it is just a little rest stop before the continued march upwards.

Only time will tell.

Cheers


----------



## trainspotter (30 July 2010)

UBIQUITOUS said:


> hello,
> 
> good evening,
> 
> ...




LOLOL Ubi ....... is this it? This is your response to robots years of campaigning? POINT ZERO .8 PERCENT ??? ROFL ... hahahhahah .......... How much did the schonk market tank today?? IN ONE DAY ??? PMSL....

Oh my !!!!!!!!! I should rush out and sell everything I own in real estate on this catastrophic news !! 

*sorry my guts is hurting from laughing too much* 

good evening Ubi ... hello 

I did not know where to place this so I put it here ....

A rare residential site on Hong Kong's ritzy Victoria Peak fetched $US1.3 billion ($1.5 billion) at auction on Wednesday, boosting one of the world's most dizzying luxury property markets.

http://www.smh.com.au/executive-style/luxury/elite-hk-land-auction-fetches-15b-20100729-10wfl.html

Yes it is Honkers ........ hahahhhahahah a

Oh well ......... how about this then. 

HOUSE price growth *continues to rise *in most capital cities, but the pace of growth is slowing, says online real estate data group Australian Property Monitors.

House prices grew 2.4 per cent around the country in the June quarter, but the annual rate was still strong at *15 per cent.* Prices of home units also rose 2.4 per cent in the quarter, with an annual rate of 12.2 per cent.

http://theage.domain.com.au/real-es...-still-rising-but-slowing-20100729-10wsw.html

sunshine and lollipops for all ...... thank you. Oh yeah ...... it's a great day. Going to have breakfast tomorrow on the strip. Eggs Benedict and the sun will be shining ..... keep smiling.

supporter of robots associate professor Trainspotter


----------



## UBIQUITOUS (31 July 2010)

trainspotter said:


> LOLOL Ubi ....... is this it? This is your response to robots years of campaigning? POINT ZERO .8 PERCENT ??? ROFL ... hahahhahah .......... How much did the schonk market tank today?? IN ONE DAY ??? PMSL....
> 
> Oh my !!!!!!!!! I should rush out and sell everything I own in real estate on this catastrophic news !!
> 
> ...




What a strange knee jerk post. I'm pretty sure those Melburnians who bought at the beginning of June aren't laughing

The numbers aren't that hard to work out assuming a 'healthy' 15% deposit on a PPOR:

Purchase Price on June 1: -$600k
Deposit: $90k
Mortgage (inc fees etc):$510k
Stamp Duty: -$31k
Legal Fees: - $2k
% fall in June: -1.4%
June 30 value: $591k
Total Profit/Loss in June: -$42k
*% Profit/Loss on $90k capital outlay: -47%:*

Oh, and to get out of this financial ruin spiral, the agent will have to be paid about $10k-$15k, and the seller would have to probably sell below market value.

Can you please tell me which stocks (including purchase fees) in the ASX 200 lost 47% in June? Can you also tell me how long it take to sell an ASX 200 stock?

Yes, all sunshine and lollipops. Don't look and it's not happening


----------



## SM Junkie (31 July 2010)

Who would expect any profit holding property over such a short time.  I don't get this argument. 

It's a long term hold and as far as an investment (not a Primary Place of Residence) goes, the costs are deductible over a set period of time. 

When you look for a property that has a growing population, increased infrastructure, employment growth, etc, you sometimes have to wait for these factors to come into play before you can determine the success of your investment decision.  You can't judge property on such a short timeframe.  

Now just to show how it can work...A relative of mine built in a popular mining town 12 months ago.  Overall cost of construction and expenses came to $900,000.  Current rent $2,500 pw.  Property next door just sold for $1,850,000 (bit older, comparable in size otherwise).  Another property on the same street on the market for $1,750,000 (only a single storey).  So at current prices, this person is looking at close to $1million profit in 12 months and the mortage is paying for itself.

So for every doom and gloom post I read on here about property tanking, there are examples everywhere of it working.  You just need to be smart about your choices!!


----------



## drsmith (31 July 2010)

SM Junkie said:


> A relative of mine built in a popular mining town 12 months ago.  Overall cost of construction and expenses came to $900,000.  Current rent $2,500 pw.  Property next door just sold for $1,850,000 (bit older, comparable in size otherwise).  Another property on the same street on the market for $1,750,000 (only a single storey).  So at current prices, this person is looking at close to $1million profit in 12 months and the mortage is paying for itself.



SELL!

Leave a little profit for someone else. Popularity of mining towns tends to come and go.


----------



## robots (31 July 2010)

hello,

good evening everybody,

here they are:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

top effort, 71%

its all about the rich and the poor really, the banks and those who have the $, thats what the discussion is all about, 

knocking the one who has it, tall poppy syndrome

i got headbutted and then elbowed in the head muay thai style at the last same sex marriage rally the minute i mentioned property, amazing reaction

thankyou
associate professor robots


----------



## trainspotter (2 August 2010)

UBIQUITOUS said:


> What a strange knee jerk post. I'm pretty sure those Melburnians who bought at the beginning of June aren't laughing
> 
> The numbers aren't that hard to work out assuming a 'healthy' 15% deposit on a PPOR:
> 
> ...




Something wrong with your maths Ubi. I only see .8% retraction from your article so therefore the 600k house is now valued at $595,200. A mere $4,800 loss and not 47%?? This is hardly likely to cause me to suddenly want to sell sell sell ?? Property is long term. Minimum 7 years I believe.

Lets use the 1.4% factor then .... $8,400 negative. Hmmmmm ..... financial ruination ?? I hardly think so. 

I also notice the words "probably" used in your post to quantify the sale of the property. How about they probably keep the home and don't sell. 

As for the stock quip. DYOR. They are hard to sell when they are in freefall or suspended Ubi. Hahhahahah aha  ah ahaaa


----------



## Bushman (2 August 2010)

trainspotter said:


> Something wrong with your maths Ubi. I only see .8% retraction from your article so therefore the 600k house is now valued at $595,200. A mere $4,800 loss and not 47%?? This is hardly likely to cause me to suddenly want to sell sell sell ?? Property is long term. Minimum 7 years I believe.
> 
> Lets use the 1.4% factor then .... $8,400 negative. Hmmmmm ..... financial ruination ?? I hardly think so.
> 
> ...





U's point is that high gearing and high upfront transaction costs means that it doesn't take much of a move south in asset prices to be in 'negative equity' position. 'Negative equity' means that if you were forced to liquidate, you have done your dough and owe the bank some. To some investors, this is not an attractive proposition. 

Off course, no need to sell if you can meet the interest costs and are taking a long-term view. Property is a long-term investment blah blah blah.


----------



## nunthewiser (2 August 2010)

> New home sales across WA have plummeted for the third consecutive month, new industry figures reveal, in further confirmation the property sector is struggling under current interest rate settings.
> 
> Ahead of tomorrow's Reserve Bank board meeting, the Housing Industry Association reported new detached sales in June fell 5.2 per cent to its lowest level since the height of the global financial crisis.
> 
> ...




http://au.news.yahoo.com/thewest/a/-/wa/7686472/new-home-sales-plummet-in-wa/

Yep nailed that top a bewty robots .

but its all good i read it right here......... sunshine and lollipops brothers


----------



## wayneL (2 August 2010)

Prices in NZ are dropping FWIW.


----------



## robots (2 August 2010)

hello,

well done Nunthewiser, superb effort

my apologies for not posting up much recently the trauma from my last run in with the socialist crew has taken its toll

just cant understand why they cant discuss and debate things, oh well

sit tight brothers, alls good for tomorrow

thankyou
professor robots


----------



## explod (2 August 2010)

robots said:


> just cant understand why they cant discuss and debate things, oh well
> 
> thankyou
> professor robots




Because every time you are tossed a tough question you never answer it, or you say "well done brothers"

And I have requested we get together for a cofee and yarn down here at Mount Martha three times, each time you said you would then have never heard again.   Apart from two spiteful type p/m's.

So prove me wrong Confessor to give everyone a good report of a fair person.

This post has nothing to do with property as also do many of Robots posts too.


----------



## cutz (2 August 2010)

nunthewiser said:


> http://au.news.yahoo.com/thewest/a/-/wa/7686472/new-home-sales-plummet-in-wa/
> 
> Yep nailed that top a bewty robots .
> 
> but its all good i read it right here......... sunshine and lollipops brothers





Hi nun.

Did you manage to offload property into the peak ? 

If so congratulations.

Hopefully it's gonna be a soft landing but I do have my doubts.


----------



## nioka (2 August 2010)

UBIQUITOUS said:


> What a strange knee jerk post. I'm pretty sure those Melburnians who bought at the beginning of June aren't laughing
> 
> The numbers aren't that hard to work out assuming a 'healthy' 15% deposit on a PPOR:
> 
> ...




Anyone buying a house in June and wanting to sell it in July is a super super optimist and shouldnt operate in the real world. It is like buying a new car and expecting that it retains its value after it is driven out the door. Property is seldom a short term proposition. The costs attached to buying and selling kill that.


----------



## robots (2 August 2010)

hello,

so there you go, for not answering a tough question have a headbutt, muay thai style elbow to the head, submission hold and then suplexed onto the pavement

amazing, probably get the chair in the back from the socialist crew if i cant answer the tough question at the next rally, oh well

weird and wonderful world, so exhilarating to be part of it

thankyou
professor robots


----------



## nunthewiser (2 August 2010)

cutz said:


> Hi nun.
> 
> Did you manage to offload property into the peak ?
> 
> ...




Posted in the "other" property threads my exploits and sales of tassy subdivision and other stuff .

I do currently still hold property and also some land but in a rather fortunate position wise these days on them and not fuseed where the market goes NOR where intrest rates go.

I am concerned for the welfare on a few of the buyers sucked in a while back with the FHBG etc but hey if ppl want to overextend themselves finacially , more power to them .....

IN saying this believe you me .... i will be in line with the rest of us blood sucking vultures to pick through the bones of these  "overextended nailed to the wall " homeowners if they have to dumpem


----------



## robots (2 August 2010)

hello,

have also been a bit concerned about catching up with Explod now he has the terrier x (pit bull maybe?)

with the thread about his new dog and wanting it to "man up" a bit more i worry i might be the test case, oh well

thankyou
professor robots


----------



## nunthewiser (2 August 2010)

robots said:


> hello,
> 
> have also been a bit concerned about catching up with Explod now he has the terrier x (pit bull maybe?)
> 
> ...




Better move to Detroit and buy an uzi doc.


----------



## UBIQUITOUS (2 August 2010)

nioka said:


> Anyone buying a house in June and wanting to sell it in July is a super super optimist and shouldnt operate in the real world. It is like buying a new car and expecting that it retains its value after it is driven out the door. Property is seldom a short term proposition. The costs attached to buying and selling kill that.




You miss the point. See Bushy's post further up.

Would you buy a stock for the long term if you were going to be 10% out of pocket from the get go? I doubt it.


----------



## drsmith (2 August 2010)

The RBA I imagine will be happy with some cooling. For now at least, they are still on the tightrope.


----------



## Mofra (3 August 2010)

UBIQUITOUS said:


> You miss the point. See Bushy's post further up.
> 
> Would you buy a stock for the long term if you were going to be 10% out of pocket from the get go? I doubt it.



That depends - are you going to live in the stock?


----------



## moXJO (3 August 2010)

Mofra said:


> That depends - are you going to live in the stock?




That depends if the New York Stock Exchange traded *PLA* will let me


----------



## robots (3 August 2010)

hello,

well done Kincella, interest rates on hold brother

anyone know when they going to zero? s.keen said they are, 1yr, 2yr or 5yrs

oh well, great day

thankyou
associate professor robots


----------



## CamKawa (3 August 2010)

Gee Brisbane is looking a bit quite at the moment with a clearance rate of just 6%.


----------



## Timmy (3 August 2010)

CamKawa said:


> Gee Brisbane is looking a bit quite at the moment with a clearance rate of just 6%.




And here's the collapse in prices all the bears have been waiting on for about a million years ... median price is $0!



http://www.homepriceguide.com.au/saturday_auction_results/brisbane.pdf


----------



## wayneL (3 August 2010)

Timmy said:


> And here's the collapse in prices all the bears have been waiting on for about a million years ... median price is $0!




I'm holding out for further falls.


----------



## MACCA350 (3 August 2010)

classic


----------



## Timmy (4 August 2010)

wayneL said:


> I'm holding out for further falls.




I have my loan application in. 
$0 should be within my credit limit.


----------



## electronicmaster (4 August 2010)

*THE INTERNATIONAL FORECASTER WEDNESDAY, AUGUST 4, 2010*

*THE INTERNATIONAL FORECASTER
WEDNESDAY, AUGUST 4, 2010
*

_*New home sales fell for a second straight month* in June to a 17-month low, as
rising interest rates continued to erode demand.

The Housing Industry Association's home sales index dropped 5.1 per cent in
June, following a 6.4 per cent drop in May, as the lingering effects of pricier loans
acted as a deterrent to new buyers entering the market.
Victoria fared the worst, with house sales sliding 10 per cent, while New South
Wales posted a 2.2 per cent fall. Sales of houses dropped 5.2 per cent in Western
Australia and 5.1 per cent in Queensland, HIA said. In South Australia new home sales
went backwards by 4.2 per cent.
HIA chief economist Harley Dale said the drop in sales highlighted the
problems facing the housing construction sector.
''Australia's dwelling shortage will continue to increase, pushing up existing
house prices and disadvantaging households seeking to purchase or rent a dwelling,''
Mr. Dale said.
"Lack of readily available land and hefty infrastructure charges have combined
with a chronic lack of development finance to put the brakes on sales and
development activity," he said.
The nation faces a 200,000 home shortfall according to federal government
estimates.
The figures come as national home prices, measured by RPData-Rismark
dropped in June, marked the first decline in 18 months. The median national home
price declined by 0.8 per cent in June, in original terms, from a 0.6 per cent increase in
May, according to RP Data-Rismark.Nationwide, private house sales also dropped to a
17-month low, falling 6.6 per cent in June to 6,847. Meanwhile, purchases of multi-unit
dwellings increased by 10.3 per cent, HIA said.How Australia's banks could trigger a
property crash:_http://www.smh.com.au/business/property/how-australias-banks-could-trigger-a- property-crash-20100802-1125e.html

_*Building approvals have fallen *for the third consecutive month, dropping
3.3 per cent in June. That follows on from a revised 6.4 per cent fall in May.
Approvals fell 3.3 per cent to 13,267 units in June, seasonally adjusted, from
an upwardly revised 13,721 units in May, the Australian Bureau of Statistics said.
In the year to June, building approvals were up 13.2 per cent, following an upwardly
revised 29.7 per cent gain in May. The median market forecast was for building
approvals to have risen 2 per cent in the month.
"This will raise concerns about supply demand imbalances leading to higher
prices, but in the meantime (it) is presenting a picture of weaker housing
construction/activity in coming months," said 4Cast Ltd chief economist Ray Attrill.
Private sector house approvals dropped 2.5 per cent in June, seasonally
adjusted, while multi-unit dwellings approvals increased 2.7 per cent, the ABS said.
"There is little in today’s report to alter the perception that the housing market is
feeling the pinch following the one-two punch of fiscal and monetary stimulus
withdrawal, namely the expiration of the expanded FHBs’ (First Home Buyers’) grant
and the return of borrowing rates to long-run average levels," said JP Morgan
economist Ben Jarman.
In New South Wales approvals dropped 6.2 per cent but in Victoria they rose
1.4 per cent in the month. In Queensland they dropped 8.1 per cent but in Western
Australia they increased 1.4 per cent.
In the month, total dwellings in South Australia went backwards by 25.4 per
cent, while in Tasmania they rose 21.3 per cent, according to the ABS.
The release came before the Reserve Bank revealed the outcome of its board
meeting on monetary policy this afternoon, keeping interest rates on hold at 4.5 percent for the third consecutive month.

The Australian dollar fell about 0.2 of a US cent, and bonds rose slightly, after
the report and another that showed retail trade was also lower than expected.
Higher interest rates and global economic uncertainty slowed but did not
stop Australians from shopping more in June.
Retail sales rose 0.2 per cent in June, seasonally adjusted, following a 0.2 per
cent increase in May, according to the Australian Bureau of Statistics. In dollar terms,
that was $20.184 billion, compared with a downwardly revised $20.146 the previous
month.
The read on consumer activity, itself a barometer of the Australian economy,
rose for the fourth consecutive month. Analysts had tipped a 0.4 per cent increase for
June.
“The underlying picture is of fairly decent momentum in retail sales,” said ICAP
economist Adam Carr.
In the three months to June, retail sales minus inflation expanded 0.8 per cent
from 0.1 per cent in the March quarter, the ABS said – slightly more than the 0.7 per
cent expected._


----------



## kincella (7 August 2010)

*melb grew 24% last year syd 21*%

hmmm.....makes my modest budget growth estimate of 10% year in year out, look very very modest....

in the case of the Melb median....its added almost another $100,000 to the price......in just one year....
no wonder some of us are happy with this asset class...
plus you have a life...just set and forget for most of the time...
ps....no changes to the current situation....neither political party is interested in helping out home buyers....

all the above growth after 6 consecutive interest rate rises....

http://theage.domain.com.au/real-estate-news/one-year-adds-98000-to-house-20100804-11fn7.html


----------



## electronicmaster (7 August 2010)

kincella said:


> *melb grew 24% last year syd 21*%
> 
> hmmm.....makes my modest budget growth estimate of 10% year in year out, look very very modest....
> 
> ...




Yep, sounds like the bubble has just started to burst. 



> The figures provide welcome news for first home buyers, indicating the growth in property prices has peaked and is now declining.


----------



## cutz (7 August 2010)

electronicmaster said:


> Yep, sounds like the bubble has just started to burst.




Indeed,

Interesting article in today’s fin talking about an unusually high increase in winter listings in addition to increased stock, reading between the lines it sounds like many are heading for the exits before the spring rush.


----------



## robots (7 August 2010)

hello,

gidday Kincella, good to hear from you

i probably wont get the auction clearance rate in to everyone tonite until around 9pm, 

one of my favourite movies is on at 6.30pm ch 7 Grease, due to finish at 8.50pm so will get em on after that, great dancing 

thanks for understanding

thankyou
associate professor robots


----------



## kincella (7 August 2010)

Hi Robots,
agree about Grease, John Travolta is a top actor, dancer and a good guy
saw him in another dance movie recently...

see this post I copied from the other forum......
You obviously don't keep a very close eye on the market. The values in my street and 2 neighbouring, have increased from $725k to $1,002 in just over 12 months with 6 sales in that time (each sale increasing by $50k-80k increments approx). They are all single storey bungalows ex housing commission style. In Sydney especially there is no stock in the mid-range price pockets.

Not sustainable but reality.
.......
this group studied super returns....its not a superfund industry figure...interesting........
retirement savings going backwards.....superfunds returning only 3%
funny.....housing returns about 10% capital growth....plus about 3-4 % annual income
I know which I would rather have.....plus I manage it all myself....no fees for some shonk to stuff it up for me either....
commercial property has been the outperformer in my portfolio....
http://au.biz.yahoo.com/100804/31/2etb1.html

hmmm.....am craving for that top cake...tiramisu at the ''special recipe'' cafe in chapel st...will have to pop down there tomorrow...
its interesting living in 2 parts of the country at the moment....and a bit exhausting....not sure if I can give up melb
cheers


----------



## MACCA350 (8 August 2010)

robots said:


> hello,
> i probably wont get the auction clearance rate in to everyone tonite until around 9pm,



Here you go: 

Clearance rate: 67%

cheers


----------



## cutz (8 August 2010)

kincella said:


> retirement savings going backwards.....superfunds returning only 3%
> funny.....housing returns about 10% capital growth....plus about 3-4 % annual income




So what,

Any figure can be baked up,

The 3% report covers the period from the tech wreck to the bottom of the recent crisis compared to a bull run in housing.

When the bubble pops we can bring up another set of numbers.


----------



## Mofra (9 August 2010)

cutz said:


> Interesting article in today’s fin talking about an unusually high increase in winter listings in addition to increased stock, reading between the lines it sounds like many are heading for the exits before the spring rush.



Some pullback in prices in real terms appears inevitable in this cycle. I don't think we'll see the mass panic some of the bears are predicting but this could well be the top until we are well underway in the next RBA cutting cycle. A few abnormal market indicators starting to tick.


----------



## ginar (9 August 2010)

The number of home loans in Australia has fallen for the tenth time in the past year as the overall housing market softens.

Total loans for owner-occupied homes dropped 3.9 per cent in June, following a 1.9 per cent increase in May, according to the Australian Bureau of Statistics.

Analysts had expected a 2 per cent drop in the month.

http://www.smh.com.au/business/property/home-loans-fall-as-market-softens-20100809-11s22.html


http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0?OpenDocument


----------



## UBIQUITOUS (10 August 2010)

ginar said:


> The number of home loans in Australia has fallen for the tenth time in the past year as the overall housing market softens.
> 
> Total loans for owner-occupied homes dropped 3.9 per cent in June, following a 1.9 per cent increase in May, according to the Australian Bureau of Statistics.
> 
> ...




Yes Ginar. It's all part of the deleveraging process, as explained by Robot's mentor last week.

http://www.finnewsnetwork.com.au/ar...85b81-FNN_Investor05_08_2010&utm_medium=email



> Steve Keen: Well the good news is that it finally seems to have stopped rising and that turndown in prices might be happening. The trouble is, with that good news comes a very bad bang bad news. I know from political feedback that both sides of Parliament believe that the reason the financial crisis occurred in the rest of the world, was because house prices fell. And therefore, they’re doing their best to support it which is why the first vendors boost was brought in and why. There were no objections from the Liberal Party when that was done. Now - all they did was inflate it by an extra 20% and give it more to fall from ultimately and add more debt to the system as well.
> When it starts coming down, there will then be some of the feedback effects people are worried about because the real cause of the crisis wasn’t how house prices then falling, it was the debt that drove the house prices up in the first place - stopping rising then going down, causing what is now being widely called the de-leveraging. And when you de-lever, you spend less than you earn because you are using part of your income to pay your debt down, so there’s a drop in aggregate demand – that’s what actually causes the crisis. So the good news of falling house prices unfortunately has a bad news punch that when it starts to happen, there’ll be people who start reducing their debt levels and by doing that there’ll be less demand in the economy, and we’ll start facing the same sort of downturn that we’ve seen in America.


----------



## robots (10 August 2010)

hello,

oh yeah, continue to allow people to post rubbish like above, writings from a failed economist, no mentor of mine but many in bloggosphere love him

on par with UWS

great he coming out with more silly commentary, fantastic

thankyou
associate professor robots


----------



## explod (10 August 2010)

robots said:


> hello,
> 
> oh yeah, continue to allow people to post rubbish like above, writings from a failed economist, no mentor of mine but many in bloggosphere love him
> 
> ...




So you would prefer we hide the truth and not give people a chance to readjust according to possible problems in the offing.

And that the truth may be silly.   Tell us more on your truth so that we may be able to measure or comment on it dear Robots?

So just sunshine and lollipops forever Joe


----------



## robots (10 August 2010)

hello,

so prices higher than pre-GFC, higher than 2001 when everyone was waiting for the crash anymore TRUTH you want to discuss

then doomsdayers like Keen, demographia, bubblepedia, GPHC came along and cost thousands across Australia hundreds of thousands of dollars, yeah thats the truth

yet the true phrophets of society are ridiculed, beaten, banned and mocked 

but the money box is full, fabulous, how goods this

havent seen Dowdy around for a while, oh well

thankyou
associate professor robots


----------



## trainspotter (10 August 2010)

Anyone considered that the Govt borrowing 100 million a day from overseas is not helping this drying up of credit from the banks. Plenty of people still want to buy but the banks have tightened to a point whereby it is nigh impossible to get money from them. 80% LVR, 2.5 times income with residual debt DSR's, zero tolerance for CRAA. If the Govt is out there borrowing money in competition to the banks (Govt gets better rate due to AAA rating) then the banks are surely going to pass on the higher costs of funding to the nupties. As the banks have less access to wholesale funds then they can be picky and choosy on who they lend to. 

Now remember we are talking about *FINANCE* for owner-occupied housing falling 3.9 percent for the month of June. Inquiry level on the other hand has gone through the roof ! BUT the banks will only lend to the gilt edge securitised people who have to jump through burning hoops of fire to be able to obtain the funding. 

We are not talking about the *VALUE* of the properties falling, we are not talking about the market in a *FREEFALL*, we are talking about the level of loans for owner occupiers dropping by 3.9% for a one month period. GOSH ..... let me see now ??? The RSPT gave the market the jitters with investors pulling out in droves. Ummmmmmm ........ there is an election going on and TELL ME WHEN does the housing market go gangbusters when an election is on??

Keep a perspective peoples

In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions decreased 1.9%.

http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0


----------



## Mr Z (10 August 2010)

I am noticing quite a stock build up in the areas I look at. Also a much greater number of "must be sold" type desperation ads. Given the current income multiple this market must run out of legs OR income must rise. I place a lesser chance of the later looking at the global climate. We look setup to take a hit IMO, this bull is long in the tooth and long overdue for a decent correction.

Trainspotter... I think the level of OO loans has been dropping for close to ten months. Look at the charts below. That has been against a background of rising prices for at least the first six or so of those months. Something is wrong with that picture!


----------



## matty77 (10 August 2010)

I am noticing a lot more "price reduced" ads around, also had a real estate agent call me back the other day - amazing!


----------



## satanoperca (10 August 2010)

Go Robots,

Somebody keeping the bastards honest.

I will not consider the market in retreat until at least 15% is knocked off the median house price and only then will it be back to early last years levels.

Keep on soldering on Robots, I should have paid more attention to your ramblings.

Cheers


----------



## explod (10 August 2010)

robots said:


> hello,
> 
> so prices higher than pre-GFC, higher than 2001 when everyone was waiting for the crash anymore TRUTH you want to discuss




Yes they are,  however because of the GFC the Government increased incentives to sustain the building and Real Estate industries.   And these efforts did just that but as the incentives have been decreased so too have the increases in the housing sector decreased.



> then doomsdayers like Keen, demographia, bubblepedia, GPHC came along and cost thousands across Australia hundreds of thousands of dollars, yeah thats the truth




I am fairly certain that as a percentage, the people who listen to or subscribe to these economists would be a small fraction of the cooling property sector.   The doomsayers as you describe them have been at it since as far back as 02, we may say some have been off the mark but if it had not been for government interventions I wonder, and at the end of the day perhaps those stimulas methods may see an end result yet to play out to be far worse.



> yet the true phrophets of society are ridiculed, beaten, banned and mocked




It is not about trying to ridicule, on ASF in particular it is about sharing insights so as to protect and help each other forward.   Property in its time has been wonderful for my family and many others, however on measuring current economic circumstances I feel there is better value at this time in other financial sectors.



> but the money box is full, fabulous, how goods this




Thats good Robots and hope that our mutual discussions help you to continue to meet your objectives.


----------



## trainspotter (10 August 2010)

Mr Z said:


> Trainspotter... I think the level of OO loans has been dropping for close to ten months. Look at the charts below. That has been against a background of rising prices for at least the first six or so of those months. Something is wrong with that picture!




OO's have been dropping for closer to 12 months Mr Z. 28.4% annualised from June to June in fact. What have prices done in this time? Australian house prices have fallen for the first time in 17 months ..... a massive seasonally adjusted ........ wait for it ............  0.7% !!!!!!

Meanwhile capital city home prices are still up 10.5 per cent (seasonally adjusted) over the past year. RP Data has been forecasting a slowdown in residential property price growth to around 5 per cent this year. 

The title of the thread is relevant.


----------



## MACCA350 (11 August 2010)

Mr Z said:


> Trainspotter... I think the level of OO loans has been dropping for close to ten months. Look at the charts below. That has been against a background of rising prices for at least the first six or so of those months. Something is wrong with that picture!



Govt changes in international property investment rules and cashed up investors could help to explain that divergence.

cheers


----------



## bellenuit (11 August 2010)

If we were to assume that there is a house price bubble and that house prices fall 40% (which I think has been the worst case scenario forecast), what would be the likely effect on rents. 

The reason I ask is that I am close to committing to having two townhouses built at the rear of my existing block. So long as rents don't collapse by a similar percentage, I should be able to hold both properties at just about break even, so I wouldn't be forced to sell.

The land value component would be about 50% of the overall value of the completed townhouses at today's prices.


----------



## CamKawa (11 August 2010)

Hope this gets off the ground soon so I can short it.

Regulator considers betting market for houses


----------



## Agentm (11 August 2010)

its a numbers game

“BIS Shrapnel says annual net overseas migration – which includes permanent migration and longer-term but temporary stays – will fall from its pace of 298,900 in the year to June 2009 to 240,000 in the year to June 2010. It will fall more dramatically to 175,000 in 2010-11 and 145,000 in 2011-12.”

game over for some imho


----------



## basilio (11 August 2010)

I can't help feeling that property prices are in an unaffordable bubble that cannot be sustained. It just comes down to asking how many families can pay 7% interest on $400-500k worth of mortgage.  (which in fact is still well below  80% of housing valuation in Melb/Sydney).

There is an interesting story in todays Age on the situation in USA where  a number of people are trying to buy a new house before walking away from their old one on which they owe hundreds of thousands more than it is worth. They simply can't/don't want to keep making repayments on houses that are underwater.

Apparently in a number of areas in USA prices have dropped by 30% in the last 3 years.
Here  of course it's different. If our house goes underwater we are still liable for any  deficit on the sale price. Nice little weight to keep carrying around ??



> * 'Buy and bail' homeowners get past loan hurdles*
> August 11, 2010 - 8:28AM
> 
> Harvey Collier, a mortgage broker in Fort Lauderdale, Florida, says he gets as many as 10 calls a month from people planning to default on their loans. The twist: They first want financing to buy another home.
> ...



.

http://www.theage.com.au/business/buy-and-bail-homeowners-get-past-loan-hurdles-20100811-11ymn.html


----------



## Mr Z (11 August 2010)

trainspotter said:


> OO's have been dropping for closer to 12 months Mr Z. 28.4% annualised from June to June in fact. What have prices done in this time? Australian house prices have fallen for the first time in 17 months ..... a massive seasonally adjusted ........ wait for it ............  0.7% !!!!!!
> 
> Meanwhile capital city home prices are still up 10.5 per cent (seasonally adjusted) over the past year. RP Data has been forecasting a slowdown in residential property price growth to around 5 per cent this year.
> 
> The title of the thread is relevant.




Yet you don't see a problem with that sort of divergence? All the while its against the background of a very very mature bond bull market that is over due to turn bear. Housing stock is building, volume is falling and the money supply is drying up. Unless you can think of a reason wages are going to surge, banks are going to loosen up I think that a correction is unavoidable. 

If China has a hiccup that may well turn into a bit of a crash as the "risk trade" leaves Australia once again. I don't think that China is close to a major hiccup quite yet but it will come, the last 2 months action in the Baltic Dry have been a cause for concern although it is stabilizing now. 

I think we can thank the influx of overseas investors for the relative strength of our capital cities, while that may suit you I am seeing lower prices than a year ago in some areas I look at. 

The bottom line is that the average man needs to be able to afford the average house, given the price/income multiples we are at and that the only logical direction for interest rates is up (just ask Bill Gross!). 

I would be very wary about basing future plans on any significant capital growth for at least the next handful of years. This market is overdue to cycle down in real terms and this time I think that will result in a decent nominal price decline as well.

JMO

The title of the thread is relevant..... er well yes, of course it is


----------



## Mr Z (11 August 2010)

basilio said:


> It just comes down to asking how many families can pay 7% interest on $400-500k worth of mortgage.  (which in fact is still well below  80% of housing valuation in Melb/Sydney).
> 
> There is an interesting story in todays Age on the situation in USA where  a number of people are trying to buy a new house before walking away from their old one on which they owe hundreds of thousands more than it is worth. They simply can't/don't want to keep making repayments on houses that are underwater.
> 
> Apparently in a number of areas in USA prices have dropped by 30% in the last 3 years.




With the global stimulus efforts that have been going on double digit interest rates are assured sooner or later. Unlike the early 80's we don't have a suitable economic back drop to live with that, although I think that Australia will fare quite well given the USA's prospects.

Some areas of the US have dropped by 90%, some house's near places like Detroit where offered for a $1 + costs. The banks are withholding stock in areas to keep the price as high as is possible. Banks are also refusing to foreclose in many cases because they don't want to incur the costs on an unsaleable property. That has left land tax revenues falling ---> the ex-owner says its not mine, I am in default and have given the keys back (its so common its called jingle mail!) the bank say we don't own it look at the paper work! LOL... house's lost in space! In many area's forced sales out number organic sales significantly.The scene is much worse over there than our media, or theirs for that matter are reporting.

Mark Hanson is probably the best US housing analyst I have come across, goes by Mr Mortgage for the free stuff he puts out on the Internet. He has been very prescient over the last five years or so that I have kept up with his work. 

Anyway, if we have half the problem that the US have had we have a big problem!


----------



## Mr Z (11 August 2010)

Agentm said:


> its a numbers game
> 
> “BIS Shrapnel says annual net overseas migration – which includes permanent migration and longer-term but temporary stays – will fall from its pace of 298,900 in the year to June 2009 to 240,000 in the year to June 2010. It will fall more dramatically to 175,000 in 2010-11 and 145,000 in 2011-12.”
> 
> game over for some imho




Many of the migrants counted in any given period are already here for a significant amount of time before they are counted (years!). They are counted when the paperwork is done and they are official but they are very often here on sponsored working visa's well before that. Anyway, the point is that the immigration figures lag badly in many cases, working visa's issued is more of a real time indication of what is going on now. At least that is my understanding of the situation.


----------



## Mofra (11 August 2010)

CamKawa said:


> Hope this gets off the ground soon so I can short it.
> 
> Regulator considers betting market for houses



Could have a negative impact on the Mt Kosciusko tourist market though Cam


----------



## trainspotter (11 August 2010)

basilio - When houses drop by 30% in Australia please let me know. Your example of the USA is exactly why it wont happen here. We do not have non recourse loans. If anyone above 80% LVR goes under than Lenders Mortgage Insurance looks after the banks on the shortfall. This means the banks are not taking a hit like the banks in the USA. But you are right .... the banks will pursue you for the loss as well. Hopefully you would have sold prior to this happening??

Mr Z - it is cycling down ........... 0.7% already. Some areas of Melbourne down 2.5% for the year. Not over yet. But bear in mind we have had over 10.5% increases in capital cities then it is not that much of a correction. There are still plenty of jobs. China is still buying our iron ore and LNG deposits at a furious rate. Labor is still in power to keep spoon feeding the punters money. Interest rates WILL go up which will slow the housing market further. We are talking about the rate of sales now and not the property prices. Prices will remain modest for quite some time IMO. YES there will be foreclosures on those people who have over extended themselves to get into the market. YES the naughty greedy developers will get caught holding stock again. Ho hum ....... just another cycle really.

The relevance of the title of the thread is "property prices" ..... not clearance rates at auctions, not housing affordability, nor is it about declines in OO's borrowing money from the banks. YES these are relevant to the topic BUT we have not seen the MASSIVE downward corrections that some have been squawking about. Wake me up form my slumber when it happens will you please?


----------



## Mr Z (11 August 2010)

trainspotter said:


> The relevance of the title of the thread is "property prices" ..... not clearance rates at auctions, not housing affordability, nor is it about declines in OO's borrowing money from the banks. YES these are relevant to the topic BUT we have not seen the MASSIVE downward corrections that some have been squawking about. Wake me up form my slumber when it happens will you please?




You cannot discuss price without discussing the things that underpin price, to do so is a one line statement of fact and a trifle boring! Price in the short term is often irrational, I invest on the fundamentals, the discussion has been around measures of the fundamentals. I can't see why you would not want to go there if you have a genuine interest in the subject.

I was "a greedy property developer" (???!), now I am very cautious to the point I no longer own any property. Why would you given the current risk reward profile? I can't make sense of it!


----------



## trainspotter (11 August 2010)

Mr Z said:


> You cannot discuss price without discussing the things that underpin price, to do so is a one line statement of fact and a trifle boring! Price in the short term is often irrational, I invest on the fundamentals, the discussion has been around measures of the fundamentals. I can't see why you would not want to go there if you have a genuine interest in the subject.
> 
> I was "a greedy property developer" (???!), now I am very cautious to the point I no longer own any property. Why would you given the current risk reward profile? I can't make sense of it!




I repeat ... "*YES* these are relevant to the topic BUT we have not seen the MASSIVE downward corrections that some have been squawking about." So let me know when this massive housing bubble is gonna pop then ??? My statement was this "Mr Z - it is cycling down ........... 0.7% already. Some areas of Melbourne down 2.5% for the year. Not over yet."

I also mentioned the word "naughty" as well when I described the property developers. 

This is how we are perceived in the market place by the punters ... "Oh you are a property developer are you?? Oh you must be making a killing then !! You must be ripping me off as well" 

This is how we are perceived by the banks "Oh goody ... we can place this guy on a margin loan for 12 months at 3.75% above base rate PLUS ongoing fees and charge him a $4000 pplication fee" Oh yeah forgot to tell him unless he has a 40% deposit in this we aint playing" ..... sound familiar?

I invest on price and screw the fundamentals. If I listened to all the naysayers in the market place I would be at home wrapped in cotton wool.

P.S. - I still own a lot of property just in case you haven't figured it out yet.


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## Mr Z (11 August 2010)

trainspotter said:


> I invest on price and screw the fundamentals.




Good luck.


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## trainspotter (11 August 2010)

Mr Z said:


> Good luck.




Thank you Mr Z. Appreciated.


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## explod (11 August 2010)

> P.S. - I still own a lot of property just in case you haven't figured it out yet.




Your passion has made it very hard to detect there Trainspotter.

If we have gone from what some say in some places was up to 25% in some areas late last year on an annual basis, this would then make a levelling out a huge difference.  If this continued then a 25% drop over the next 12 months could be on the cards.

May not, but could, I do not wish these things and it is not being a doomsayer to consider them.

The same as interest rates, they have been going up for some time so they too could contiue to go up.


----------



## trainspotter (11 August 2010)

Hey explod ....... only time will tell. My prediction is for modest gains in "some" areas as well as falls in others. Not sure on a 25% drop but like you say it could be "possible". If interest rates do go up this means the RBA is trying to curb inflation. If inflation is going up then so is your house price. What I am more worried about is stagflation. Interest rates on hold, prices on hold with small blips in the market as people drop away. Nil velocity in purchasing means the heat has gone from the market as the "punters" fall away which IMO is a good thing. Investors buying then flogging for a higher price does not do the average "Joe Blow" trying to get into the market place any good at all !!!!!!!

RE is not everyones cup of tea. I buy some to hold and rent, some to speculate and some for long term investment. It is the holding costs and capital tied up is the killer for most "naughty greedy developers". 

Just like the sharemarket. Some are risky and speculative and others are blue chip. It depends on what you want to get out of it I suppose.


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## MACCA350 (11 August 2010)

And you don't think a recent 25% increase in house prices is inflationary?

Cheers


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## trainspotter (11 August 2010)

MACCA350 said:


> And you don't think a recent 25% increase in house prices is inflationary?
> 
> Cheers




Which is why interest rates went up I am guessing? Note the 25% is only in some areas. Seasonally adjusted figures are only 10.5% for capital cities for the previous 12 months as per ABS advice.


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## prawn_86 (11 August 2010)

Once again our rent has not gone up this year.

Not sure where the rent rise figures come from, but since i have been renting, we have had one 5% increase in the last 5 yr (across 2 different places/states)


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## Mr Z (11 August 2010)

Typically rates are driven by the bond market regardless of what the various central banks are doing. The CB's do influence rates with in a spectrum when things are hunky dory but as soon as the pressure comes on they lose their power rapidly. Witness the situation recently when the RBA was cutting rates and the banks where raising... the bond market determines cost of funding...period, end of story. When the US ten year yield starts to rise again we will see more interest rate pressure, depending on what the AUD is doing. Our interest rates stabilizing has had more to do with easing bond market yields allowing the RBA some scope to move. These recent Euro zone troubles and concomitant "flight to safety" (gold and UST's) have in fact eased the pressure on our mortgage holders. There is however a growing realization that the US is in fact unable to meet its commitments now and that more QE is inevitable. Once that unavoidable outcome is discounted the bond market will drag the central banks rates higher (kicking and screaming all the way!) then we will start to see a much larger upward pressure on general price levels including the price of money. Real estate will respond positively eventually but the first response is down as the cost of money rises. The only remaining question is when does it become clear that the UST market has turned? For now it is the deepest, most liquid bolt hole available but to describe it as a long term safe harbor is real stretch!

Having said that the US bond market has remained remarkably resilient for some time now, I would argue it is in over reach and ripe for a catalyst to trip it up, but as has been said, markets can remain irrational longer that you can remain solvent! So I'd not be shorting it just yet!

Mind you it is looking overbought from a T/A stand point!


----------



## UBIQUITOUS (11 August 2010)

http://smh.domain.com.au/real-estat...market-slows-new-research-20100809-11t6i.html

So what happens in spring, when even more properties come onto the  market? Anybody? 



> *Supply outstrips demand as market slows: new research*
> August 9, 2010
> Comments 36
> An increase in the number of online property advertisements in July is further evidence the housing market is slowing, research suggests.
> ...


----------



## Mr Z (11 August 2010)

UBIQUITOUS said:


> So what happens in spring, when even more properties come onto the  market? Anybody?




I was wondering that the other day, the stock build seems large considering its winter. What of the traditional spring rush we have here in the south? I am going to watch with interest.


----------



## trainspotter (11 August 2010)

OK ...... I'll play along. "Experts suggest the market also backs off during election campaigns."

Ummmmmm ..... guessing the auction clearance rate will drop to around 50%. BUT with contracts being presented after close of auction making the effective rate around 70% as usual.

Some will drop prices to sell once again pulling the median average down a further 0.7% over the period of 20 months to a staggering 1.4% drop overall nationally.

Real Estate Agents will not be able to afford their kids orthodontist bills and put petrol in the Porsche due to lack of sales.

Banks will only lend to gilt edge clientelle furthering the slowdown effect which will keep the RBA happy and not pull the trigger on rates again.

People will still live in their houses and pay their mortgages to the banks. 

Naughty, greedy property investors will feel the pinch as holding costs begin to bite as they speculated rather than figured out it is better to hold and rent in this climate.

I could go on but I am boring myself with one liners now.


----------



## satanoperca (11 August 2010)

trainspotter said:


> I could go on but I am boring myself with one liners now.




And me to, maybe you are just trying to convince yourself everything will be OK.


----------



## Mr Z (11 August 2010)

Expert cherry picking!


----------



## robots (11 August 2010)

hello,

gidday trainspotter, thats the thing, you take a "product" to the people, sell it and make 100k, 500k or 1mil and you are a legend

surely the mods can delete these posts with information from failed researchers to ensure the reputation of ASF, like we dont want it to become a bucket shop forum like creditcrunch, GPHC et al

GPHC still going?

thankyou
professor robots


----------



## trainspotter (11 August 2010)

satanoperca said:


> And me to, maybe you are just trying to convince yourself everything will be OK.




Why thank you vey much satanoperca. Only time will tell I spose. We will then see who is swimming naked when the tide goes out.

Mr Z - More like expert pear hunting. :

Gidday robots ... just keeping it real brother. Hang onto those green titles (banks will lend you money to buy shares with them when you own them outright) !


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## electronicmaster (11 August 2010)

*Home loans sink to a nine-year low *


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## UBIQUITOUS (11 August 2010)

electronicmaster said:


> *Home loans sink to a nine-year low *




9 year low? As in 'NINE'? Nein! This cannot be. It must be because everybody is so wealthy that they are buying with cash.


----------



## electronicmaster (11 August 2010)

UBIQUITOUS said:


> 9 year low? As in 'NINE'? Nein! This cannot be. It must be because everybody is so wealthy that they are buying with cash.




lol, that idea is in the works for a later date,  got Gold and Silver?  :guitar:


----------



## trainspotter (11 August 2010)

ROFL ...... talk about telling the same story twice? This is the same report that said "Total loans for owner-occupied homes dropped 3.9 per cent in June, reversing a revised *3 per cent increase in May*, according to the Australian Bureau of Statistics." 

Yeppers ... seasonally adjusted to 1.9% nationally. Boring stuff here.

''It's a pretty consistent story, whereby tightening from Reserve Bank has flowed through into softer demand among Australian households and we're seeing that in housing finance numbers,'' Macquarie economist Ben Dinte said.

*New figures from the Australian Bureau of Statistics reveal the weighted average of housing prices in Australia's eight capital cities grew by 20% over the 12 months to March 2010. *

http://www.smartcompany.com.au/econ...-months-abs-figures-show-economy-roundup.html

Ho hum .... it's that perspective thingy again !! LOLOLOL


----------



## UBIQUITOUS (11 August 2010)

trainspotter said:


> *New figures from the Australian Bureau of Statistics reveal the weighted average of housing prices in Australia's eight capital cities grew by 20% over the 12 months to March 2010. *
> 
> http://www.smartcompany.com.au/econ...-months-abs-figures-show-economy-roundup.html
> 
> Ho hum .... it's that perspective thingy again !! LOLOLOL




Can anybody tell me which month we are in now? Are we still in March? Must be that perspective thingy again!!


----------



## trainspotter (11 August 2010)

UBIQUITOUS said:


> Can anybody tell me which month we are in now? Are we still in March? Must be that perspective thingy again!!




LOLOL ... so now we are in June statistics and the headlines are that numbers are falling for home loans in JUNE. BUT in March the gains were over 20% capital growth !! Now let me see ........ the title of the thread is what again? 

Oh yeah .. that's right "prices" and not "loans", SO if we take off the 1.9% off the 20% figures for March the answer is? ( insert answer here )

Amazing what a quarter will do to a persons perspective isn't it? 

Now come up with a rational answer as to WHY home loans have dropped and we can probably have a conversation Ubi ! I have placed forward my edict. I am still waiting for yours BTW.


----------



## electronicmaster (12 August 2010)

trainspotter said:


> LOLOL ... so now we are in June statistics and the headlines are that numbers are falling for home loans in JUNE. BUT in March the gains were over 20% capital growth !! Now let me see ........ the title of the thread is what again?
> 
> Oh yeah .. that's right "prices" and not "loans", SO if we take off the 1.9% off the 20% figures for March the answer is? ( insert answer here )
> 
> ...





Oh,  you must of missed the video on the same linked article that details the price drops on some homes.


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## trainspotter (12 August 2010)

electronicmaster said:


> Oh,  you must of missed the video on the same linked article that details the price drops on some homes.




Oh, you must have missed my post where I agreed that the prices have dropped 0.7% nationally over a 17 month period and that parts of Melbourne have dropped 2.5% on "some" homes.

You must have missed my earlier post that said this as well ... "Some will drop prices to sell once again pulling the median average down a further 0.7% over the period of 20 months to a staggering 1.4% drop overall nationally."

Did you notice that Tasmania has bucked the trend and has risen 1.1% for the June quarter? Huh ?

What do you think the stockmarket is going to do today? How much did it fall yesterday? This is on a daily basis.

The beauty of property is it is steady. But then again you knew all of this?


----------



## UBIQUITOUS (12 August 2010)

trainspotter said:


> Oh, you must have missed my post where I agreed that the prices have dropped 0.7% nationally over a 17 month period and that parts of Melbourne have dropped 2.5% on "some" homes.
> 
> You must have missed my earlier post that said this as well ... "Some will drop prices to sell once again pulling the median average down a further 0.7% over the period of 20 months to a staggering 1.4% drop overall nationally."
> 
> ...




Trainspotter, you seem to be taking any negative views on property as an investment very personally.

 Don't worry about what the stockmarket is doing.  This is not an 'us vs them' debate. It's simply about the future of property prices.


----------



## Mr Z (12 August 2010)

trainspotter said:


> Did you notice that Tasmania has bucked the trend and has risen 1.1% for the June quarter? Huh ?




Financially challenged baby boomers sliding down the scale, property arb is one of the few avenues left to them if they have blown themselves up in other ventures. After the GFC this is not an uncommon story, I know of quite a few Sydney siders that have made that leap when they find themselves surplus to requirements or worse still their small business splutters its last breath. Anyway, I would guess that is a major factor in Tassie beating the odd's, it is a certainly dominant theme among the people I know of. LOL either that or they move to the country and buy acreage for "the dream" only to sell two years later because they cannot deal with the work! The amazing thing is they never seem to learn from each others mistakes...  Me I am taking notes


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## trainspotter (12 August 2010)

UBIQUITOUS said:


> Trainspotter, you seem to be taking any negative views on property as an investment very personally.
> 
> Don't worry about what the stockmarket is doing.  This is not an 'us vs them' debate. It's simply about the future of property prices.




Not at all UBI ..... not at all. I am trying to balance the naysayers in this thread. You guys are saying it is falling and loans have fallen to the lowest in 9 years.

I have agreed with these statements of FACT in my previous posts and evidenced the actual amounts they have fallen by. I have asked you to explain to me as to WHY has housing loans fallen away seeing as you bought the subject matter up.

I am not after an "us vs them" debate at all UBI. As you have so eloquently put "It's simply about the future of property prices." SO therefore I am putting up the FACTS of the "property prices" and not the "housing loans" nor the "auction clearance" rates.

If you note all I have done is reponded to you guys in exactly the same manner as to what you have posted. Kinda like a chameleon style but you think I am taking it personally? Now it is my turn to be


----------



## Mr Z (12 August 2010)

I still don't get how you can focus on price alone. By all means the other numbers can be indicative of a number of conditions but they are none the less real and reflecting potential price influencing realties. Its my belief we are way to dependent on foreign money at the moment, both directly and indirectly. The danger here being that the situation can turn on a dime and if it does we don't appear to have enough domestically sourced money or buyers at these prices to fill the void. Price moves at the margin, it actually does not take a big change in % terms to swing this thing around.

The other thing is given what has happened around the world we'd need to build a very strong case that we should legitimately be the exception. After all we have traveled the same path as the UK, US, Ireland etc in terms of debt levels and loose lending. How we get out of it without some damage is beyond me, I do think we have mitigating factors but I suspect that in the end they will only really count in some areas of Oz.... basically not the SE corner so much. Anyway, I see us a better off but not miraculously so as it appears to have been so far.

We will see in the next few years!


----------



## Mr Z (12 August 2010)

This is key IMO...


----------



## trainspotter (12 August 2010)

Mr Z said:


> This is key IMO...




Please read post #2344 where I wrote this "Anyone considered that the Govt borrowing 100 million a day from overseas is not helping this drying up of credit from the banks. Plenty of people still want to buy but the banks have tightened to a point whereby it is nigh impossible to get money from them. 80% LVR, 2.5 times income with residual debt DSR's, zero tolerance for CRAA. If the Govt is out there borrowing money in competition to the banks (Govt gets better rate due to AAA rating) *then the banks are surely going to pass on the higher costs of funding to the nupties. As the banks have less access to wholesale funds then they can be picky and choosy on who they lend to*. 

And now from Mr Z's article http://www.theage.com.au/money/rules-of-the-game-20100810-11xfi.html

"The Reserve Bank left interest rates unchanged last week but it is only a matter of time before rates rise again. The banks are making noises again about how much they have to pay for *funds that are sourced from overseas*. The banks are probably waiting until the election is over to lift their mortgage rates independent of any increases in the official cash rate"

GREAT !! So what will this do to prices of homes you ask? Go and read post #2372 again where I also said this amazing bit of crystal balling ....

 "Experts suggest the market also backs off during election campaigns."


----------



## UBIQUITOUS (12 August 2010)

trainspotter said:


> Please read post #2344 where I wrote this "Anyone considered that the Govt borrowing 100 million a day from overseas is not helping this drying up of credit from the banks. Plenty of people still want to buy but the banks have tightened to a point whereby it is nigh impossible to get money from them. 80% LVR, 2.5 times income with residual debt DSR's, zero tolerance for CRAA. If the Govt is out there borrowing money in competition to the banks (Govt gets better rate due to AAA rating) *then the banks are surely going to pass on the higher costs of funding to the nupties. As the banks have less access to wholesale funds then they can be picky and choosy on who they lend to*.
> 
> And now from Mr Z's article http://www.theage.com.au/money/rules-of-the-game-20100810-11xfi.html
> 
> ...




What's your point?

That you know everything that is going to happen in the future and everything that everybody writes, here and in the media, must be incorrect if it doesn't agree with your view of endless price rises?

Weird


----------



## Mr Z (12 August 2010)

You are right in that governments compete for funding and can dry up private sector funding. What is not as clear is on what terms this money would be available to the private sector, i.e. price and quantity if it where not for the various governments in the market. The banks are telling us clearly that they want no weak hands on their books, their actions tell us that they fully expect the market to be tested. This is exactly to course of action I would take, along with securitising and selling any weaker mortgages I owned. Off loading them in any fashion I could really! I don't know what the big 4 are up to in this regard but it seems logical given their other actions which scream lack of confidence in RE to me.


----------



## Mr Z (12 August 2010)

trainspotter said:


> GREAT !! So what will this do to prices of homes you ask? Go and read post #2372 again where I also said this amazing bit of crystal balling ....
> 
> "Experts suggest the market also backs off during election campaigns."




but in all likelihood this will come to bear post election and just further restrict the amount being loaned, assuming that there is no loosening of criteria. As I mentioned before it is the US bond market that will drag the RBA higher come the time. Given the length of the US bond bull (I dunno, what is it now 30 years?) it is due for a major bear market. All the fundamentals are aligned behind that idea and most market players seem to be pause for the when fully understanding the why. When this game ends it can easily result in a quantum shift in a short period of time, for the moment it supports most players but given the right catalyst that can change rapidly. (game theory, stable disequilibrium) This looks primed for a fast move IMO and given the nature of RE one that could be impossible to duck by liquidating in a hurry. It truly seems to be a question of when not if, until then many property bears will seem foolish.... I can live with that. LOL I bought gold @ 270 so I am used to being called daft, funnily it doesn't happen so often anymore


----------



## trainspotter (12 August 2010)

UBIQUITOUS said:


> What's your point?
> 
> That you know everything that is going to happen in the future and everything that everybody writes, here and in the media, must be incorrect if it doesn't agree with your view of endless price rises?
> 
> Weird




PMSL UBI ! So when I write that I agree with you that prices have fallen and yes they will keep falling and yes interest rates will rise and yes there is a softening in the market somehow make me incorrect because I agree with you ?? 

Oh deary deary me UBI ... You are the one that went off on the tangent asking for anyones opinion as to what will happen when spring comes around and there is a flood of homes on the market. I answered this for you.

You then come out with home loans at there lowest level for 9 years and I explained to you my opinion as to WHY I thought this was the case with interest rates rising and how the process works with the banks. I then asked for your opinion which has not been forthcoming.

You then went onto some weird German slant about "NINE NEIN" we are in denial and must be paying with cash ?? YOU UBI ... not me. And you reckon I am weird ?? 

I have answered your posts with rational responses that have been backed up with links and hard FACTS (ABS STATISTICS) Your posts are more of what you have found on the internet from the naysayers like Keen & Co. (who lost the bet btw and had to walk to Mt Kosciusko) rather than an actual opinion from yourself.

What actual experience do you have on this subject matter UBI ?? Huh??


----------



## robots (12 August 2010)

hello,

bit hypocritical there Ubi, you where bringing up the stock market just the other week with some fine example about if you bought property today vs shares

maybe play that one with the share market for the last couple of weeks (down 5% is it)

and hopefully the government can introduce the same stamp duty rates as per RE for shares transactions, think Julia should run with that

or cut it out on all assets, oh well, well picked Kincella on the interest rates

what a surprise we have a poster who bought some gold with A CBA money box

thankyou
robots


----------



## Mr Z (12 August 2010)

LOL... a touch more than a CBA money box old chap, but whatever, keep the attitude to yourself! It has killed any property investment from around the same period. If you can use a calculator that should be apparent & we look like we are revving up for another decent run in gold heading into early next year.

Is that all you have?

Looking forward to these listed property vehicles, LOL then I can short property


----------



## trainspotter (12 August 2010)

Here is a good article written by Rory Robertson who is an economist at Macquarie Bank. He touches on WHY prices will not drop 30% and also WHY the price to income ratio is structural and not cyclical. Also answers the question about over gearing. Might not be relevant to some as it was written on the 17th July 2010. 26 days is a loooong time in property. 

*"DOOMSDAY" economist Steve Keen had to leg it 230km from Canberra to the top of Kosciuszko, after losing a bet on Australian house prices. *

Awkwardly for him, average house prices went up rather than down 40 per cent, after the Reserve Bank -- fearing a big recession in 2009 -- collapsed mortgage rates from 9% to 5%.

http://www.theaustralian.com.au/bus...inue-to-be-wrong/story-e6frg9if-1225892981265


----------



## robots (12 August 2010)

hello,

oh yeah, another gold bug brothers, how's that hey Kincella, maybe a couple of money boxes then, sorry

have all come before and will fall like Rome as usual,

well done on the interest rates brothers, looking good, just helps knock the principal and interest loan down

what a fantastic day 50mm overnight in Ballarat just great

thankyou
associate professor robots


----------



## Mr Z (12 August 2010)

I love the ignorant souls who use the term goldbug! Anyway, what are we in? Year nine or so of the gold bull with not one down year yet. Compounding at around 17% and yet we still have ignorant detractors who can't tell a bug from and investor.... all in all a good sign! 

Pls don't try and belittle me Robot's, you'd poop if you new the truth.... LOL and I made my initial stake in property, which makes it all the more amusing to me.


----------



## Mr Z (12 August 2010)

> These downshifts in inflation and interest rates are structural rather than cyclical. So don't expect the price-to-income ratio ever to return to three times, a level typical in Australia's long gone, bad old days of high inflation.




That is just BS, plain and simple! Major inflation is on its way, that much is unavoidable with what has happened globally across the last decade. This guy is living in a bubble if he truly believes that! Its about the only thing that will save the nominal price of housing if it takes hold rapidly enough. I suspect it will not but that is another story, anyway I am interested in the real price of housing so its the relative appreciation of other assets and wages that interests me.

Sounds like a this time its different argument! You know they thought the same way in Ireland, they now have empty suburbs! Not that I think we are going to be hit that hard but they used many of the same arguments presented here.

LOL... in terms of gold its falling, that I like


----------



## robots (12 August 2010)

Mr Z said:


> I love the ignorant souls who use the term goldbug! Anyway, what are we in? Year nine or so of the gold bull with not one down year yet. Compounding at around 17% and yet we still have ignorant detractors who can't tell a bug from and investor.... all in all a good sign!
> 
> Pls don't try and belittle me Robot's, you'd poop if you new the truth.... LOL and *I made my initial stake in property,* which makes it all the more amusing to me.




hello,

classic, 

oh well lets us know then, 1 bar, 2 bars, 10 bars? or you got stocks? tell us

many here have disclosed interests, whats yours

thankyou
professor robots


----------



## robots (12 August 2010)

hello,

good evening everyone

can we please keep the thread on track "the future of house prices"

any gold discussion should be conducted in the commodities thread or over at the bucket shop forums on the www

my apologies, thanks for understanding

thankyou
associate professor robots


----------



## Mr Z (12 August 2010)

Why? Would you believe me even if I saw fit to tell.


----------



## trainspotter (12 August 2010)

Mr Z said:


> That is just BS, plain and simple! Major inflation is on its way, that much is unavoidable with what has happened globally across the last decade. This guy is living in a bubble if he truly believes that! Its about the only thing that will save the nominal price of housing if it takes hold rapidly enough. I suspect it will not but that is another story, anyway I am interested in the real price of housing so its the relative appreciation of other assets and wages that interests me.
> 
> Sounds like a this time its different argument! You know they thought the same way in Ireland, they now have empty suburbs! Not that I think we are going to be hit that hard but they used many of the same arguments presented here.
> 
> LOL... in terms of gold its falling, that I like




How long you been an economist with Macquarie bank there Mr Z ? Notice he refers to the Reserve Bank as his source of info as well. Are they wrong and you are right?

WHY is major inflation on it's way Mr Z ? I thought we just had bit of major inflation which is why interest rates went up to curb this phenomenon of rising house prices. (20% from March to March over a 12 month period according to the ABS) It certainly worked with borrowing levels dropping to their lowest in 9 years.

You say you made your money out of property and now have switched to gold. Gold has been bullish for 9 years you say? How long has property been doing the same Mr Z ?


----------



## Mr Z (12 August 2010)

robots said:


> hello,
> 
> good evening everyone
> 
> ...




Hey you started the slinging, don't go complaining to mum!


----------



## trainspotter (12 August 2010)

Mr Z said:


> Why? Would you believe me even if I saw fit to tell.




I would if you posted the truth in the "Gold where is it heading" thread.


----------



## robots (12 August 2010)

hello,

just discussion and debate Mr Z, hit the ignore button man

top posts trainspotter

thankyou
associate professor robots


----------



## robots (12 August 2010)

hello,

just in case Ubi doesnt get back to us tonite i happened to catch Alan Kohler on ABC news just then

sharemarket down 4.25% since Monday 9th August 2010, not sure what total down is from when Ubi posted up, oh well

and when Julia G introduces stamp duty equivalents to RE it creates an interesting situation

anyone heard from Dowdy?

thankyou
professor robots


----------



## Mr Z (12 August 2010)

trainspotter said:


> How long you been an economist with Macquarie bank there Mr Z ? Notice he refers to the Reserve Bank as his source of info as well. Are they wrong and you are right?
> 
> WHY is major inflation on it's way Mr Z ? I thought we just had bit of major inflation which is why interest rates went up to curb this phenomenon of rising house prices. (20% from March to March over a 12 month period according to the ABS) It certainly worked with borrowing levels dropping to their lowest in 9 years.
> 
> You say you made your money out of property and now have switched to gold. Gold has been bullish for 9 years you say? How long has property been doing the same Mr Z ?




1. Show me the respect I have shown you and take my claims at face value. I have taken you at your word, you take me at mine.

2. There is no way you can know with certainty any claims I make are true so it makes making them redundant, just as I cannot know for sure what you say is true. It should become apparent over time that I know my stuff when it comes to gold... call me out if you feel I am lying.

3. Property yes, small developments, townhouses in premium suburbs - small subdivisions and niche housing where we found lack of supply in the market eg: Five bedroom houses in Brighton where catching over the odds for a while, busy exec's, lots of loot and very little supply at the time. Definitely not big time but the market was great and it was very rewarding. I was also holding down a job at the time, frankly it amazed me we could achieve what we achieved... in a normal market we'd have not been nearly as successful, but hey the sun was shinning and all that.

4. I started with gold in 2001, but as you should be aware if you have "lots of property" changing your investment mix and commitments is a gradual process, its not like swapping 100K of equity in a house for a stack of the yellow stuff the week after settlement. Its been a process of learning the gold market in detail, stocks, metal, futures etc.

5. Economists that work for banks are *****'s that talk their employers book. Follow anyone of them for a while and you soon come to realize that.

6. Mac Bank are only here because of the deposit guarantee, they almost blew themselves up, there was some heavy short betting on the fact that they would if you remember. Much of it US based.... the analysts over there really saw them as a great risk. So are they the ones to listen too?

7. What passes for economics in this country is largely a distorted version of Keynesianism. Yes I have studied economics and late in life I have come to realise just how much clap trap is being taught. Why then is it being taught? Its a view that suits the banking and government interests in a western democracy. It is really that simple in the end. For my money the Austrian School makes the most sense and has by far the best track record, unfortunately they preach discipline and thus are totally incompatible with modern democracies...: 

8. Yes property has been in the last leg of its bull market since the early nineties, another reason why it is likely close to its end. Gold is ten years in and will likely be done and dusted by the 17 to 22 odd year mark. 20 years for the sake of round numbers.

9. Inflation is an the increase in the money supply, although its not quite that simple. Typically people are discussing CPI when they refer to inflation, a rising CPI is just one of the many possible effects of an overly inflated money supply. It typically shows up late in the process, the first part of the process involves, well to put it simply a party for all, with strong asset prices all round (ringing bells?) Its the second half that really bites and when it starts it is like being a little pregnant... its too late, the deed is done. Now take a look at the things in your life with true pricing power. Medical Insurance, medical anything, power bills, basic food stuff's like meat, government charges etc etc (yes even housing to a degree, although it tends to lose traction as things heat up for a couple of reasons)... that is the true reflection of the rate of inflation in the system. Its on its way, it is unavoidable and the pain for property will come when the bond markets discount it and the central banks are forced to fight it.... of course we could go Zimbawee, but then the whole nominal vs real debate arises! This is not an if, its a when.... especially if they continue to pull all the stops in fighting collapsing credit, which is deflationary but there we enter into a discussion of the various parts of the money supply and what is impacted by what type of money. Like I said its not actually that straight forward.

Anyway, don't take my word for it... in a handful of years it should be becoming quite evident, however at the time other arising issues will be used to obscure the matter, sharply rising energy prices for one. Which BTW is my bet for the next great bull market, which is good and bad. We will be living in interesting times FWIW.

Now I am out of time... CYA.


----------



## explod (12 August 2010)

robots said:


> hello,
> 
> classic,
> 
> ...




Problem seems to me Robots is that you only know and have your stakes in just property.   A lack of diversification is dangerous.

Most onto the gold story hold the physical metal, I hold silver as the primary.   But I also have property investments as well as Resource Stocks.

And yes gold has outdone property by a huge amount since 2001.  And the way governments are printing money there is still plenty of time to get on the gold train yet.

Oh no.... this thread is all about property, where were we, uh oh property not looking too bright and raising a bit of blood pressure I can see.

Tut tut there brothers, tomorrow is another day.


----------



## robots (12 August 2010)

Mr Z said:


> 1. Show me the respect I have shown you and take my claims at face value. I have taken you at your word, you take me at mine.
> 
> 7. What passes for economics in this country is largely a distorted version of Keynesianism. *Yes I have studied economics *and late in life I have come to realise just how much clap trap is being taught. Why then is it being taught? Its a view that suits the banking and government interests in a western democracy. It is really that simple in the end. For my money the Austrian School makes the most sense and has by far the best track record, unfortunately they preach discipline and thus are totally incompatible with modern democracies...:




hello,

ooohhhh noooooo, look out

special shout out to Kincella, hope alls well and you get a chance to log on tomorrow

thankyou
professor robots


----------



## brebre (12 August 2010)

robots said:


> hello,
> 
> ooohhhh noooooo, look out
> 
> ...




Very mature 'professor', where is the respect?

I for one got something out of your post Mr Z - thank you


----------



## Mr Z (12 August 2010)

Do you ever say anything of value Robots?


----------



## robots (12 August 2010)

hello,

hehehehehehehe, you set that one up for me MrZ

yes, buy property

thankyou
associate professor robots


----------



## Buckfont (12 August 2010)

Mr Z said:


> Do you ever say anything of value Robots?




Mr Z, I cannot but agree, short invaluable posts that amount to not much at all. 

I hold no property apart from my home, but for months I have been trying to access the link beneath all Robots` posts, all to no avail.

Says to me there is a certain lack of substance.


----------



## robots (12 August 2010)

hello,

yes and i post up the Melbourne auction clearance rate every saturday night at approximately 7.30pm, sometimes its a bit later if Enzo takes a little longer than usual to put them up 

thankyou
professor robots


----------



## robots (12 August 2010)

hello,

my apologies regarding the link, something fishy going on with the server so to Do The Right Thing i have removed it

its not easy self-funding your own research as many completing their master or phd would be aware, i just cant come to terms with the rudeness of creating a website and asking for donations

thankyou
associate professor robots


----------



## Mr Z (12 August 2010)

Yeah Buckfont I tried that and got nowhere.

The hardcore say that a home is a home and not an investment. As long as you are not strung out keeping it, in a good job etc its one of life's necessitates in this country.

Ironically I am forestalling the purchase of a house right now, I don't want to do it just yet but other circumstances are putting pressure on me. Swallowing a loss on a domestic property will really stick in my craw but it is looking increasingly unavoidable. Maybe this time next year if I keep ducking and weaving to keep domestic harmony 

Life is a funny thing! and you know the moment I settle on a place the fore told will come about, just cause Murphy is a bastard!


----------



## nunthewiser (12 August 2010)

brebre said:


> Very mature 'professor', where is the respect?
> 
> I for one got something out of your post Mr Z - thank you






Mr Z said:


> Do you ever say anything of value Robots?






robots said:


> hello,
> 
> hehehehehehehe, you set that one up for me MrZ
> 
> ...






luv you longtime.......

by the way well done on being ASF investor of the year 5 years running  .

glad you took note of my "top " call tho


----------



## Mr Z (12 August 2010)

nunthewiser said:


> luv you longtime.......
> 
> by the way well done on being ASF investor of the year 5 years running  .
> 
> glad you took note of my "top " call tho




and he is having troubles funding himself? Oh please....

Point me to this competition if you will, I would like to read up just for fun.


----------



## Buckfont (12 August 2010)

robots said:


> hello,
> 
> my apologies regarding the link, something fishy going on with the server so to Do The Right Thing i have removed it
> 
> ...




Sorry Mr bots that excuse was made ages ago and nothing has changed, and I cant be bothered with sourcing it at the moment, however I do remember bringing it to your attention. If there is any substance there I`d soon as hell change that particular server. It`s not that difficult.

Sell a property, you`ll be right to fund your education then and you wont have to worry about all those mountainous maintenance and upkeep bills.


----------



## robots (12 August 2010)

nunthewiser said:


> luv you longtime.......
> 
> by the way well done on being ASF investor of the year 5 years running  .
> 
> glad you took note of my "top " call tho




hello,

thanks Nun and well done on calling it, superb result

the link to the competition seems to be having issues like my other link, so if it gets going will put up

good night everybody, sweet dreams, recharge for tomorrow

thankyou
professor robots


----------



## trainspotter (12 August 2010)

RE post #2409

My answers are as below but instead of hogging thread room I thought I would just repond with my answers to Mr Zs repost.

1) Show me where I have not shown you respect?  At all times I have answered your posts with the respect they deserve. 

2) It is not my word that is doing the talking by the way. I am posting links to the ABS, Economists, newsprint articles and various websites that support what I have typed. You were the one that mentioned that I would not believe you if you told me the truth in regards to the gold holdings and mentioned that robots would poo himself if you told him the truth. I suggested I would be happy to read what you have got in the “Gold price where is it heading” thread.

3) Well done you ! So you understand property then?  The sun is still shining. You just have to know where to look is all.

4) Nothing to add here other than I started in property in February 1991.

5) The economist I quoted was voicing his opinion in regards to property and it had nothing to do with Macquarie’s bank perspective? He was freelance writing for the Australian.

6) No, you misinterpreted my post, it does not matter who the economist is or for which bank they work for. I was asking YOU if you were an economist and the economist I quoted also referenced the RESERVE BANK as guidance. Are they ALL wrong?

7) Nevertheless it is the economics we have. Why are you sprouting this BLAH? The topic is about house “prices” and not what is wrong with the teachings of Keynesianism that suits a Western democracy? HUH ?? BIG red herring here ? 

8) Seriously WTF …. No seriously WTF?? Have you been asleep at the wheel when property lit up in the last 12 months?? Ummmm 20% according to ABS figures in some capital cities?? WTF ?? 

9) Man you speak some sheete. It is that simple but you have somehow made it extremely complicated by the verbosity you have displayed with your nonsensical answer.

And now for this  ........ Energy prices have been rising for the past 3 years and will continue to rise to prop up the inefficiencies of the industry. 

Now back on track to the title of the thread ...... house prices and where are they heading. I have written that prices have fallen by 0.7%, I have written that interest rates will rise, I have written that prices will more than likely stagnate for the next few years. All with links to respected sources. WTF ?? and you want to bang on about gold?


----------



## trainspotter (12 August 2010)

Mr Z said:


> The hardcore say that a home is a home and not an investment. As long as you are not strung out keeping it, in a good job etc its one of life's necessitates in this country.
> 
> Ironically I am forestalling the purchase of a house right now, I don't want to do it just yet but other circumstances are putting pressure on me. Swallowing a loss on a domestic property will really stick in my craw but it is looking increasingly unavoidable. Maybe this time next year if I keep ducking and weaving to keep domestic harmony
> 
> Life is a funny thing! and you know the moment I settle on a place the fore told will come about, just cause Murphy is a bastard!




If you had purchased in March last year you would have been up to 20% in front of where you are now !! Murphy is a right bastrd alright !! So is karma.

You start the post saying it is a necessity in this country to own a home if you can afford it but reading between the lines you do not own a PPOR yourself? (_Maybe this time next year if I keep ducking and weaving to keep domestic harmony, Ironically I am forestalling the purchase of a house right now_) but but but you told me you had been a property investor and had made a motzah in real estate and placed it all into gold?? How is it that you do not own the last bastion of a tax free regime? No CGT on the sale. Enough equity and you can borrow against it to buy "other" receivables like shares or more gold for instance.


----------



## UBIQUITOUS (13 August 2010)

Mr Z said:


> Yeah Buckfont I tried that and got nowhere.
> 
> The hardcore say that a home is a home and not an investment. As long as you are not strung out keeping it, in a good job etc its one of life's necessitates in this country.
> 
> ...





Good on ya Mr Z. As they say, only fools rush in. Pity the poor people who bought in June and have seen their deposit/equity all but disappear. If they had put into the sharemarket over the same period, on average they would have been 3% up.

Now lets think about that - 75% down (average equity in property), or 3% up (average equity in shares)? Hmmmmmm


----------



## trainspotter (13 August 2010)

UBIQUITOUS said:


> Good on ya Mr Z. As they say, only fools rush in. Pity the poor people who bought in June and have seen their deposit/equity all but disappear. If they had put into the sharemarket over the same period, on average they would have been 3% up.
> 
> Now lets think about that - 75% down (average equity in property), or 3% up (average equity in shares)? Hmmmmmm




UBI .. can you please post a link as to where the math is coming from for the 75% drop in equity? Last time I checked and supplied links to the ABS property is down nationally 0.7% for a 12 month period. This is despite a national average increase of 10.5% from June 2009 until June 2010. SO therefore property has risen nationally (According to the Australian Bureau of Statistics) 9.8% overall. 

YES UBI ..... IF you had bought property in June 2010 you would be slightly miffed that your home on a national average has dropped this amount. Oh Dear ... let me do the maths. I buy a $600,000 home and it is now worth $4200 less. If this amount of money is going to break the deal then I should not have been able to afford a 600k house to begin with. No need to panic sell UBI. No need at all. Property is loooooooong term investment if you know what you are doing.

Just like Mr Z reckons he is the full bottle on gold ! 

Now a few posts ago you squealed that this thread is about "property prices" when I asked why is the share market in retreat at the moment. Now you are comparing shares to the property market.

You cannot have it both ways UBI.


----------



## Agentm (13 August 2010)

trainspotter said:


> UBI .. can you please post a link as to where the math is coming from for the 75% drop in equity? Last time I checked and supplied links to the ABS property is down nationally 0.7% for a 12 month period. This is despite a national average increase of 10.5% from June 2009 until June 2010. SO therefore property has risen nationally (According to the Australian Bureau of Statistics) 9.8% overall.
> 
> YES UBI ..... IF you had bought property in June 2010 you would be slightly miffed that your home on a national average has dropped this amount. Oh Dear ... let me do the maths. I buy a $600,000 home and it is now worth $4200 less. If this amount of money is going to break the deal then I should not have been able to afford a 600k house to begin with. No need to panic sell UBI. No need at all. Property is loooooooong term investment if you know what you are doing.
> 
> ...




trainspotter

i see your getting pretty hot about anyone having an opposite view on property

i absolutely think its a huge bubble right now, at about 3.2 times GDP,, 

At 3.2 times GDP, Australia's housing bubble has surpassed both the United States and Hong Kong housing bubbles, but remains below both the Japanese and Chinese bubbles. 

as with all the previous bubbles, the theme is always the same. and your rightly point out that, prices been increasing still further in many regions and retracting in others. but overall the theme on housing is that it continues to rise at alarming rates..

like all bubbles, the most common theme is that people always say "this one is different, this isnt a bubble.."  and then site continual remarks on how different it is, how much its growing and how the bubble is not one at all but based on many good sound fundamentals..

trainspotter, with being condescending nor insulting, can you perhaps enlighten me as to why the australian property bubble is not going to burst, and in your view, if i invest in property today, can i expect $100k increase in my property in the coming 12 months on an average property purchase in inner city melbourne?

TIA


----------



## trainspotter (13 August 2010)

Agentm said:


> trainspotter
> 
> i see your getting pretty hot about anyone having an opposite view on property
> 
> ...




Not at all Agentm .. I am not hot at all about people having an opposing view. I am just trying to acknowledge the FACTS and not hearsay opinions with nil statistical proof. 

I absolutely believe we are not in a bubble cycle which will pop and prices to drop 30% blah blah blah. I have written that the market has dropped .7% for 12 months and will more than likely drop a further .7% over the next 8 month period and parts of capital city prices will drop even further IMO. I have written this for all to see??? I have written that interest rates are beginning to bite and slow the lending. I have also given reasons as to why this lending has stopped with banks having less access to wholesale funds. I have asked others to proffer their views as to why this is happening.

IT IS NOT RISING AT ALARMING RATES NOW AND IS RETRACTING OR STAGNATING. How many times do I have to write this? I even gave the link to the ABS evidencing this FACT !!

Agentm – I believe that the market will soften even further as the banks dry up lending due to their inability to access wholesale funds at the right price. I think that some people will have to sell their houses due to financial hardship because they over extended themselves in the wrong end of the market. This is a normal cycle of events. I have seen this several times in the property market already since 1991.

As to why the Property market will not burst like a bloated bit of road kill in the hot sun – 
1) We do not have non recourse loans in Australia – no jingle mail.
2) Our banks do not have toxic debt and there are no ratchet loans on their books.
3) High employment means that people can afford to pay their mortgages.
4) It is unlikely Australia is going to have a double dip recession.
5) Australian property owners either soldier on servicing their mortgage or take their lumps by selling up before the bank forces them to.
6) Go and click on the link I provided from Rory Robertson in previous post.

Why on earth would you expect a 100k increase on a property in inner city Melbourne in the next 12 months? I have not espoused this view? I have repeatedly written that it has RISEN according to the ABS and that is now declining and that I believe that it will stagnate over the next few years. I have also written that this is the time for people who hold investment property to RENT them out rather then speculate.

This is also to do with the great Australian Dream of home ownership. You are buying a home to live in to bring up kids and make a life for yourself and to put down roots. 

Or am I missing something here?

Sorry to you all if my writing is deemed condescending or insulting. It is not meant to be taken this way. Please read it for what it is and do not take it personally. I certainly am not.


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## trainspotter (13 August 2010)

And now more factual info from RP DATA:

Housing finance data released this week by the Australian Bureau of Statistics (ABS) shows that demand for housing finance continues to decline. In seasonally adjusted terms, the total number of housing finance commitments for owner occupiers fell by -3.9% during June following a 3.0% increase in May. Total owner occupier finance commitments have been trending lower since July 2009 and during June 2010 there were large falls recorded amongst finance commitments for the construction of new homes (-5.0%) and for the purchase of new homes (-4.5%). Housing finance data also showed that the total value of finance commitments for investors eased during June as investors committed to $7.3 billion worth of finance compared to $7.6 billion in May. Increasing investor activity had been the main positive to come out of the housing finance data over recent months, with owner occupier activity retreating, *it will be important to see if the lower levels of property value growth* results in fewer investors. 

We are still waiting to see if the declinal of OO loans is going to have an adverse affect on "property prices". I believe that it will have a negative affect on prices and they will retreat even further. Not to doomsday levels of 30% ... more like 2.5% or thereabouts. When taken into consideration of the ABS figures of a rise of 10.5% for last fiscal year means that prices IMO will be lower for the 2011-2012 fin year. FWIW.


----------



## UBIQUITOUS (13 August 2010)

trainspotter said:


> YES UBI ..... IF you had bought property in June 2010 you would be slightly miffed that your home on a national average has dropped this amount. Oh Dear ... let me do the maths. *I buy a $600,000 home *and it is now worth $4200 less. If this amount of money is going to break the deal then I should not have been able to afford a 600k house to begin with. No need to panic sell UBI. No need at all. Property is loooooooong term investment if you know what you are doing.




That $600k property usually leveraged to the hilt. So how much is your loss on your deposit, taking into account stamp duty, buying costs etc? I would guess that many people who bought a $600k property in June have seen 100% of their deposit disappear within a month. Not exactly sterling returns?

It's all about the leverage. Great when things are going up, but a lifetime tragedy if buying at the top.


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## trainspotter (13 August 2010)

UBIQUITOUS said:


> That $600k property usually leveraged to the hilt. So how much is your loss on your deposit, taking into account stamp duty, buying costs etc? I would guess that many people who bought a $600k property in June have seen 100% of their deposit disappear within a month. Not exactly sterling returns?
> 
> It's all about the leverage. Great when things are going up, but a lifetime tragedy if buying at the top.




UBI ... banks wont lend to the hilt anymore ??? They have tightened right up on LVR's. Let's say that they did manage to get finance with a 5% deposit. This is a $30,000 deposit. They then have to pay $32,000 stamp duty. Then settlement costs of say $8,000. Now Lending Mortgage Insurance get involved - another $17,000 Insurance premium to them. So therefore they have placed in $87,000 of their own money. This has to be a genuine savings history of 3 months or the finance will not be approved. The applicant has to be on a minimum of $130,000 with no other debts or CRAA. Loan with bank is now $570,000.

If you can find me a person who is willing to go to these risk levels to buy a home then I would forever be in your debt.

OK .. so now we lose lets say 2.5% value because we are in crisis. The home is now worth $585,000. They have to sell immediately instead of trying to pay it off. SO therefore they have lost the stamp duty but they get their LMI back because they have sold within a 12 month period. They sell the home for $585,000 less RE commission of say $15,000 leaving $570,000 to go back to the bank. Debt is paid to the bank. LMI refund $17,000. Settlement costs of $8,000 again. Leaving them $9,000 in their hand from an original $87,000 saved deposit. EEEEEEEEEEEEK !!  

Now this is a terrible tragedy and I have agreed that it is possible for this to happen. But why oh why are they selling when they have such good income to service debt? Have they lost their job? Have one of the primary income earners droped dead? It is possible UBI .. do not get me wrong.

I have written that some of the people will be in this position. It DOES happen. But the percentage of loans that are in this category are extremely low. The bank is covered because they got their money back so no toxic debt to them. LMI will stump up the cash if their is a loss as well.

Now compare this to shares. How many people have been in ASF telling us they have lost over 100k in 2 to 3 months? It is subjective as well. People who know what they are doing on the stock market / property market tend to buy well and sell even better. People who don't (insert answer here)

I am in complete agreeance with you UBI. This has never been in doubt. There are a very small proportion that do their dough in property. The equivalent can be said about the stockmarket. 

Now the reason that this is not going to bubble and pop like the good ol USA is that the bank does not lose here. They are not taking a hit for the team on defaulting loans. They are able to pursue you for the money etc. USA had over 10% unemployed, we have 5%. I have written my reasons previously.

Once again I reiterate .... just the facts please.


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## Mr Z (13 August 2010)

trainspotter said:


> If you had purchased in March last year you would have been up to 20% in front of where you are now !! Murphy is a right bastrd alright !! So is karma.
> 
> You start the post saying it is a necessity in this country to own a home if you can afford it but reading between the lines you do not own a PPOR yourself? (_Maybe this time next year if I keep ducking and weaving to keep domestic harmony, Ironically I am forestalling the purchase of a house right now_) but but but you told me you had been a property investor and had made a motzah in real estate and placed it all into gold?? How is it that you do not own the last bastion of a tax free regime? No CGT on the sale. Enough equity and you can borrow against it to buy "other" receivables like shares or more gold for instance.




If you back out buying costs in the great state of Victoria with our eye watering stamp duty and the fact the gains have not been across the board, mainly concentrated in the low end of the areas I am interested in. I would have been closer to mid single digit gains in the area and type of house I will probably buy if I chose wisely... if not then... hmmmm. My other investments have well eclipsed a 20% return, it has been an excellent 12 months all things considered, net I am still very much in front of property returns... LOL, I can use a calculator and I do have my best interest at heart... thanks for worrying about it though!

I didn't tell you I put it all into gold, you assumed that, as it appears you are prone to do.

I made no claim of the size of gains made in property (as per your hyperbole) other than to say at the time it was ludicrously easy to coordinate a development, stay 'clean hands' and make a good profit. Too easy when you considered what I actually added to the equation. I'm sure it is probably tougher going these days, I have no interest in finding out.

A home is a home... not an investment. As a property developer you should know the difference. If we are just discussing homes here we are not talking to 'property investors'.... we are talking to emotional involved home owners, I thought you where an investor/developer?

How is it I don't own a house? Many reasons one of which is we are relocating, the others are personal and frankly none of your business. As you can see from what I have told you I believe I don't feel pressure from this market to hurry the process, and I won't.

You seem to be on the attack, I was candid with you... that was a mistake. I gave you more credit than you are due.

Karma indeed, your fate awaits you.

Goodbye.


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## Mr Z (13 August 2010)

trainspotter said:


> 1) Show me where I have not shown you respect?  At all times I have answered your posts with the respect they deserve.




You where inferring I was misrepresenting myself.



trainspotter said:


> 2) It is not my word that is doing the talking by the way. I am posting links to the ABS, Economists, newsprint articles and various websites that support what I have typed. You were the one that mentioned that I would not believe you if you told me the truth in regards to the gold holdings and mentioned that robots would poo himself if you told him the truth. I suggested I would be happy to read what you have got in the “Gold price where is it heading” thread.




You missed the point totally... you CLAIM to be a big property holder, I have taken that at face value as a fact. Given the tone of previous posts I was suggesting you provide me the same courtesy.



trainspotter said:


> 3) Well done you ! So you understand property then?  The sun is still shining. You just have to know where to look is all.
> 
> 4) Nothing to add here other than I started in property in February 1991.




Try not to condescend... you are not the only successful person out there.



trainspotter said:


> 5) The economist I quoted was voicing his opinion in regards to property and it had nothing to do with Macquarie’s bank perspective? He was freelance writing for the Australian.




Sorry, my eyes glazed over when he started on about structural not cyclical... might as well have said "new paradigm", its different this time.



trainspotter said:


> 6) No, you misinterpreted my post, it does not matter who the economist is or for which bank they work for. I was asking YOU if you were an economist and the economist I quoted also referenced the RESERVE BANK as guidance. Are they ALL wrong?




Have you not noticed that most are most of the time? They don't call it the dismal science for nothing.... YES most of them are wrong and if they where not hacks they would be wealthy, after all how could you not be if your insight was good?



trainspotter said:


> 7) Nevertheless it is the economics we have. Why are you sprouting this BLAH? The topic is about house “prices” and not what is wrong with the teachings of Keynesianism that suits a Western democracy? HUH ?? BIG red herring here ?




LOL... What? That somehow means its valid and aligned with reality? Its not blah, it is key to the environment you operate in and in fact key to the reason property has worked so well in this country. I am quite sure you don't even really understand the true reason property has been a good investment.



trainspotter said:


> 8) Seriously WTF …. No seriously WTF?? Have you been asleep at the wheel when property lit up in the last 12 months?? Ummmm 20% according to ABS figures in some capital cities?? WTF ??




20% is a cherry picked headline number disregarding costs, property type etc etc... many investments have out preformed in the last 12 mths. Don't WTF me, you are being a tad myopic.



trainspotter said:


> 9) Man you speak some sheete. It is that simple but you have somehow made it extremely complicated by the verbosity you have displayed with your nonsensical answer.




You are ignorant.



trainspotter said:


> And now for this  ........ Energy prices have been rising for the past 3 years and will continue to rise to prop up the inefficiencies of the industry.




Ahuh.... LOL. 



trainspotter said:


> Now back on track to the title of the thread ...... house prices and where are they heading. I have written that prices have fallen by 0.7%, I have written that interest rates will rise, I have written that prices will more than likely stagnate for the next few years. All with links to respected sources. WTF ?? and you want to bang on about gold?




Nope gold was mentioned in passing, I would hardly call it banging on.

I have posted plenty with relevance to property price yet you in your own words are only interested in price with complete disregard to fundamentals. A fool knows the price of everything and the value of nothing. You demand we talk about price alone, talk about dogma.

I have no more time for you.


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## trainspotter (13 August 2010)

Mr Z said:


> If you back out buying costs in the great state of Victoria with our eye watering stamp duty and the fact the gains have not been across the board, mainly concentrated in the low end of the areas I am interested in. I would have been closer to mid single digit gains in the area and type of house I will probably buy if I chose wisely... if not then... hmmmm. My other investments have well eclipsed a 20% return, it has been an excellent 12 months all things considered, net I am still very much in front of property returns... LOL, I can use a calculator and I do have my best interest at heart... thanks for worrying about it though!
> 
> I didn't tell you I put it all into gold, you assumed that, as it appears you are prone to do.
> 
> ...




Now wait a minute here Mr Z. How much are you renting for? Seeing as you are making 20% gains in other areas and admit that single digits would have been possible in RE BUT you are renting?? HUH ?? Did you factor this "dead" rent money into your matrix?

YOU were the one that said you made your money out of property and put it into gold. I recall you said to robots that he would "poo" himself over the size of your holdings. YOU were the one that said it was easy money playing the property sector. The amount of developments you listed that you stayed "clean hands" on SHOULD have returned a handsome reward.

A home is a home and not an "investment" ? WTF?? I buy and sell property to MAKE money. I also have my PPOR which I can sell TAX FREE !! If this is not the greatest "investment" then I don't know what is?? 

I really don't give a toss if you own your home or not BUT you sure seem to have a lot to say for someone who does not have a financial stake in property. The pressure you are receiving to buy your own PPOR is how did you put it? _"Maybe this time next year if I keep ducking and weaving to keep *domestic harmony*"_ Happy wife, happy life dude. You stick to your guns there Big Fella.

I am far from going on the attack. I have answered your posts with candour and also with a slight touch of gullibility because I actually believed what you were posting. I am waiting to see robots "poo" himself actually.

It appears my Karma has run over your Dogma.

And a good day to you to Sir !


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## Bushman (13 August 2010)

trainspotter said:


> As to why the Property market will not burst like a bloated bit of road kill in the hot sun –
> 1) We do not have non recourse loans in Australia – no jingle mail.
> 2) Our banks do not have toxic debt and there are no ratchet loans on their books.
> 3) High employment means that people can afford to pay their mortgages.
> ...




Very good summary. I would add our top four banks are still AA-rated and we have APRA doing a fab job. Also population growth into a supply challenged property market and full employment. 


We will not have a 30% pull back unless unemployment goes much higher than 5.3% or mortgage rates go above 9-10%. 

For the first to happen, you need China to correct severely. For the latter, bank wholesale funding costs to go through the roof (i.e. US/Japan debt default scenario). 

At these levels, inner city in CBD locations will range trade for the next 6-12 months or so and then push up again due to pent-up demand. If the last spike is anything to go by, this will happen sooner rather than later but you don't need to chase the market either.  

Ultimately, ressie is a symbiotic relationship between demand (good but affordability an issue for the schleps), supply (very good for the vendors, very bad for the new entrants/renters) and debt (not so good unless you have assets).


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## Mr Z (13 August 2010)

trainspotter said:


> Now wait a minute here Mr Z. How much are you renting for? Seeing as you are making 20% gains in other areas and admit that single digits would have been possible in RE BUT you are renting?? HUH ?? Did you factor this "dead" rent money into your matrix?




Again assumptions... I am not renting. LOL, work that out smart man.



trainspotter said:


> YOU were the one that said you made your money out of property and put it into gold. I recall you said to robots that he would "poo" himself over the size of your holdings. YOU were the one that said it was easy money playing the property sector. The amount of developments you listed that you stayed "clean hands" on SHOULD have returned a handsome reward.




I never gave percentages or any hint of asset allocation.

LOL... it depends what you call a motza, does it not? Yes it was worthwhile.

For a guy trying to belittle someone with CBA money box references and the suggestion of owing a bar or two being the size of it making him poop shouldn't take a whole lot... with all due.




trainspotter said:


> A home is a home and not an "investment" ? WTF?? I buy and sell property to MAKE money. I also have my PPOR which I can sell TAX FREE !! If this is not the greatest "investment" then I don't know what is??




You don't know what is then.



trainspotter said:


> I really don't give a toss if you own your home or not BUT you sure seem to have a lot to say for someone who does not have a financial stake in property. The pressure you are receiving to buy your own PPOR is how did you put it? _"Maybe this time next year if I keep ducking and weaving to keep *domestic harmony*"_ Happy wife, happy life dude. You stick to your guns there Big Fella.




So current ownership is qualification for having an opinion? Come now... more foolishness.

My wife is happy... again you assume too much.



trainspotter said:


> I am far from going on the attack. I have answered your posts with candour and also with a slight touch of gullibility because I actually believed what you were posting. I am waiting to see robots "poo" himself actually.




Nope, you are an aggressive little...



trainspotter said:


> It appears my Karma has run over your Dogma.
> 
> And a good day to you to Sir !




Ahhhh the righteous...


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## robots (13 August 2010)

hello,

gidday everybody, robots in da house

oh well great writings again today on the property thread, its still looking good a troll from one of the bucket shop joints on the www, you know the gold bug types

just amazing they everywhere in society now, oh well

plenty of homes still around for 200k-300k, 3-4x average income ratio so no bubble in my view and I know Sinner has the data to indicate that

thankyou
associate professor robots


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## trainspotter (13 August 2010)

I thought you had said your Goodbyes Mr Z ? 

Still waiting for robots to poop himself BTW.

I will be on my launch drinking to your heath. Tootlepip Mr Z.


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## ginar (13 August 2010)

how the hell do i put this whole thread on ignore , its always on the top of latest posts and like a car accident im drawn to reading it . if i cant see it i wont look at it  .......... i need help   ......... 

its like politics or AFL threads  ... full of one eyed supporters that "" generally "" fail to see both points of view  .....


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## robots (13 August 2010)

hello,

classic trainspotter

here's my launch, but i dont have a couple of bottles of top class, just a plastic bag and can of chrome spray paint, hehehehehehehe

thankyou
associate professor robots


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## trainspotter (13 August 2010)

ginar said:


> how the hell do i put this whole thread on ignore , its always on the top of latest posts and like a car accident im drawn to reading it . if i cant see it i wont look at it  .......... i need help   .........
> 
> its like politics or AFL threads  ... full of one eyed supporters that "" generally "" fail to see both points of view  .....




Thanks ginar .... I will "generally" try and see the one eyed suporters POV. But it seems I have throat infection in my eyeballs. I cannot see what they are saying.

Boy am I gonna look stooopid when the RE market falls by 40% Mr Keen.


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## Mr Z (13 August 2010)

Ohhhhhh... a 'launch'.... WOW! I am just blown away 

I really prefer my 'stick and rags' but to each their own. 

What? You thought jealousy perhaps? 

Oh and you know I for one have not made any large % predictions about changes in the property market. Merely stated that the fundamentals favor the bears.... but then price is all that counts eh? : Not really sure what  old spotty has been railing against, seems to like seeing polarization of discussion. Anyway I have found the ignore so toodle pip spotty knickers! I said goodbye to YOU dear heart, not the thread.

Robots you look like an alter ego, a sock puppet... I'd not bandy about the word troll too much dear heart.

Have we considered demographics people. Who owns what, when they are likely to want to sell and in what shape the following generations are, size, financial strength etc.... Boom boom boom.... Boomers are passionate about their property, especially the late ones...  Just a thought.... the big fat self fulfilling prophecy that they have been!

High interest rates are probable... its just a matter of time, apparently the whole bond market bubble has been lost on some. We can't afford to buy into the idea of continued cheap funding.... in fact it appears that the bank are already taking mitigating steps in seeking higher credit quality.

Oh my.... he used the term "one eyed" jeeze.... gimme a break LOL


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## trainspotter (13 August 2010)

You still here Mr Z ? Would you care for a glass of champers perhaps?

Did you agree with me when you wrote this? _"We can't afford to buy into the idea of continued cheap funding.... in fact it appears that the bank are already taking mitigating steps in seeking higher credit quality."_


when I wrote this _"I have written that interest rates are beginning to bite and slow the lending. I have also given reasons as to why this lending has stopped with banks having less access to wholesale funds. I have asked others to proffer their views as to why this is happening."_

Still waiting for robots to lose his bowels. I think he is made of sterner stuff.


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## robots (13 August 2010)

hello,

here we go, onto the bond market now

fascinating, how much money do the banks source offshore? 10% 20% 30% 60%

workmate just settling on another joint next thursday, plenty still around

thankyou
associate professor robots


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## Mr Z (13 August 2010)

Sock puppets are sock puppets... they don't really exist now do they?

You are hung up on the poop line.... what pouting because I will not brag? It's not very becoming. 

Why am I still getting emails when you post, how annoying.

Don't do bubble's, no class... dreadful stuff!

You never stopped to consider that I have not attacked a lot of what you have said.... you seem to like charging windmills Don! Ranting about 30% corrections and the like... certainly claims not made in our discussion.

I think you just like peeing up walls.


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## Mr Z (13 August 2010)

robots said:


> here we go, onto the bond market now




yeah cause like he just started ranting about the bond market  like that has anything to do with houses  man these old dudes are sooooo stoooooopid. 


You know that although there are many non recourse states when it comes to mortgage debt in the US the act of default still carries a stiff penalty in terms of credit rating. Once a jingle mailer has jingled they are likely to hit penalty rates on credit cards (yes even if its and unrelated default... read the fine print) and of course they will not be able to finance diddley swat for many years afterwards. Aside from the fact that they may preserve more wealth (if they have it) the experience would not be that dissimilar to going through a personal bankruptcy given most people circumstances. The difference in that area is not as great as the glib on liner would have it, the devil is in the detail. 

Unless you are crafty enough to have re-bought prior to default... people are doing that! New house new mortgage, roll all the cc and car debt into the old house then default. I know of people that have sat down done the sums and decided to do it for no other reason than the sums made sense and they where too far upside down on the current house. We are talking, employed good payers here! Just blind siding their bank... LOL only in the US!

Whoops sorry... its not directly about the price fish at todays market.... naughty me.


----------



## nunthewiser (13 August 2010)

*WARNING*

Low content post to follow.


ROFLMAO 

love this thread


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## robots (13 August 2010)

Mr Z said:


> and he is having troubles funding himself? Oh please....
> 
> *Point me to this competition if you will, I would like to read up just for fun.*




hello,

oh yeah Nun, its just awesome the thread and this one got me on the floor last night

whats a sock puppet? and thanks MrZ for your contributions to the thread

thankyou
robots


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## Mr Z (13 August 2010)

I presume "ASF investor of the year" is the result of some competition... eh?

So where is the record of it? Just curious and too lazy to try finding it.

Should it be "ASF investor of the financial year"...? Can't be of the year now can it really cause 2010 is not done yet, and that would just be presumptuous 

How is it that "investor of the year", 5 years running has issues with funding? Just curious, you never did say.

A researcher that can't use google to determine the meaning of a colloquial term like "sock puppet"....hmmmm interesting.

http://www.urbandictionary.com/define.php?term=sock+puppet

I'm settling on my custom fitted 737 next week  Whats that you say? Not very credible?


----------



## nunthewiser (13 August 2010)

MrZ dont let it worry ya.

I wouldnt lie to you , so when i say robots is a living legend there is no need for me to provide proof

you could always try google tho if you wish to enquire further into this competition thats been running since around 2004........ a good researcher would find it.

thankyou for the giggles tho


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## trainspotter (13 August 2010)

Has robots sheeted gold bricks yet? It is hard to keep up with his status these days ... I tell ya ! Legend one day ... mere associate professor the next.

Mr Z ... did you pay for your custom 737 with gold? Credibility still intact mind you. I  am that gullible.

Ahem ... house prices eh? Yeah ... fundamentally it would not be a good idea to invest in property seeing how the Reserve Bank has increased interest rates to curb the breakaway property prices of late. Seems to be working too.
Also has stifled inflation and has put of alot of FHB out of action with the reduction of the grant. Noted that prices nationally have dropped by nearly 1% over a twelve month period. 

Government went hard at FHB with the 21 thousand dollars to leverage them into owning a home. (part of the stimulus package I believe) NOW RBA has upped the rate of affordability to slow down this dangerous runaway train wreck that "could" go into dangerous territory if the moons and stars align.

See Bushmans post as to WHY this could possibly happen, which has my vote as post of the month in the property thread.

Has robots taken a golden dump yet? Anyways ... like Mr Z said ... _"man these old dudes are sooooo stoooooopid."_

Nothing like experience over youth IMO.


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## Mr Z (13 August 2010)

Errrrrrr why yeah, sure I paid with gold, what ever you want 

I'm in the presences of property royalty then, living legends as it where.

So what do we think of what has been going on in the IRS market?


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## trainspotter (13 August 2010)

Heyyyyyyyy ..... you said you had me on ignore. ??? Kewl that you paid for a refitted 737 in gold. I once paid for 4000 litres in diesel in loose nuggets of approx the same value. That is my extent in gold trading.

Anyways ... robots is the guru when it comes to property.

What do I think has been happening with IRS market?  Are we talking about the USA market or the Australian one here? Or are you talking about Credit Default Swaps? I reckon it is the single largest source of systemic risk in the global financial markets and is why Lehman brothers et al made their coin on the riduclulous rents they charged on the swaps.


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## Mr Z (14 August 2010)

Interest Rate Swaps.... dig a little CYA.


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## Mr Z (14 August 2010)

nunthewiser said:


> you could always try google tho if you wish to enquire further into this competition thats been running since around 2004........ a good researcher would find it.




Why waste time? Seriously... no fun in it, no gain in it. If I don't get spoon fed this one I can't be bothered.


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## trainspotter (14 August 2010)

Mr Z said:


> Interest Rate Swaps.... dig a little CYA.




Why don't you start a new thread with the same title then? I will be more than happy to discourse with you there as well. You can tell everyone about 30 day bills and 10 year future swaps. I can offer my opinion as to what a pivotal role CDS played in the GFC. 

Meanwhile back at the ranch:- *Australia currently has a two-speed property market whereby demand remains strong in Melbourne and Sydney but is faltering everywhere else, a real estate specialist has said.*

http://mozo.com.au/home-loans/articles/expert-australia-has-a-two-speed-property-market/800025360

Western Australia and Queensland sales on the other hand are retreating at a rapid rate. Vendors are having to adjust their prices down to suit the economic demand.

Now we wait.

P.S. Has robots evacuated his rear end yet?


----------



## kincella (14 August 2010)

*Dick Smiths documentary on why too large population growth has affected house prices....*
all the people waiting for the house price crash, or a slowdown....really should have a look at dick smith's documentary...was on the abc last night
he cited the example of half a million new residents in one year alone....130k's natural births, the rest were immigrants...
key points...the govnuts are not building any infrastructure eg houses, hospitals, shopping centres to cater for the increase...
if you put all of the 500,000 new residents together in one place, it would be a decent sized major suburb....which would require everything people would expect
instead of the govnuts closing land for parks, they should be releasing more land for housing
only if they cut the immigration intake dramatically, and build hundreds of thousands of new homes...will the prices come down...
not one state govnut, or federal govnut is proposing to do anything to the change the status quo....
until they do...and it is dramatic....
you will need a plan B now....if you keep waiting, you will be too old, as in an aged pensioner, and then the banks wont lend to you, when you find that house in your price bracket...
ps the building industry represents 10% of the economy...which all govnuts are aware of, no wonder they keep turnng out stimulous packages....
ps a hint for those with a keen eye on house prices...
there will be a steady flow of immigrants to regional centres, cause the housing is cheaper out there....
the droughts broken in central nsw and vic, the dams are now full, the cockies will be spending and hiring again

the only problem in some places is the current govt resources tax...get rid of that govnut and that tax,,,and it will be rosy again


----------



## kincella (14 August 2010)

look at this article....units jumped 50% in price in sydney...so the kids can stay closer to work and the cbd
some great money being made there...
extracts only.....
THE capital growth of apartments continues to outstrip houses, with some rising in value by more than 50 per cent in less than a year. 
One woman who purchased a Bondi Junction apartment a year ago for $335,000 sold the property for $532,000 in April, according to McGrath.

Investor Christine Miller, who made $170,000 this month on the unit she bought in Summer Hill during 2006 for $275,000, said she had used the money to purchase two small investment properties in Punchbowl in Sydney's west. "They were very cheap and the returns were very good," she said. Already, those units had appreciated in value 20 per cent, she added
and in brissy....
Over the past five years, units have recorded average annual value growth of 7.4 per cent compared with 7.1 per cent for houses, according to RP Data.

(oh whats this...the magical 10% growth figure I use)

In the past 10 years, average annual value growth of houses has been 9.9 per cent compared with 8 per cent for units.
http://www.theaustralian.com.au/new...houses-in-growth/story-e6frg6nf-1225905090064


----------



## kincella (14 August 2010)

Morning Robots and other property investors....
the idea of living in the country has posed a few problems,a  change of lifestyle that I will need to adapt to.....
after living in a unit in the heart of Melb....geez
suddenly I have to look after the garden, I had forgotten how much time and effort was involved there....regardless if one has a maintenance person to look after the lawns etc.....
the costs really start adding up when you have a couple of properties....
$50 bucks an hour is not bad money for running a lawn mower around every week , all the wind and storms here lately, the damn leaves all over the place....grrrr
so now I am looking at an artificial lawn....good for between 5-10 years...big cost savings to be had there...so the lawn maintenance on just one house, with the tiniest lawn area, plus the nature strip say $75 x 52 is $3900 pa
whereas with an artificial lawn laid...estimated to cost about $4000.....
so say 10 years savings on maintenance at $3900 pa = $39000
for an initial cost of only about one tenth.....
lost all my initial set up costs for the garden on 2 houses....about $10,000 after the drought wiped out all the lawns...and the  water restrictions that applied...lost some stunning old trees too
artificial lawn will not be affected by the drought, if it arrives again...
big savings on the water bill too....
I think this is a great way to go...and more country people should be looking at artificial grass.....
I will still need a maintenance person, or  gardener to look after the balance of the garden....but less often...
one property is on a corner block...with a massive nature strip up to 5 metres deep on one side and 4 metres on the other side.....70 metres, wide and deep
that one is far too costly to go artificial......not sure what I will do with that one...


----------



## Mr Z (14 August 2010)

This takes time but its worth it...

http://www.youtube.com/watch?v=F-QA2rkpBSY

Its a great lecture on the nature of exponential growth.

It is the most serious problem facing man kind IMO, most other issue's are greatly compounded by this single yet politically untouchable issue. The Chinese got it.... there are counter arguments but I can't fully buy into them.

Side issue, but?

Just because we have population growth it does not mean we will have price growth in the short to mid term, there are many other factors in the equation. Eventually yes it is an important fundamental but it can be mitigated by a number of issues, at least for a while.


----------



## So_Cynical (14 August 2010)

kincella said:


> ps a hint for those with a keen eye on house prices...
> there will be a steady flow of immigrants to regional centres, cause the housing is cheaper out there....




Wrong

The flow will be alot more like a trickle....immigrants stick together and like city's, some students will go to the country side to pick fruit etc but will head back to the city's at the first opportunity...immigrants rent or pay crazy prices for new units, there are unit blocks in parts of Sydney with over 80% Chinese occupancy.


----------



## drsmith (14 August 2010)

Mr Z said:


> This takes time but its worth it...
> 
> http://www.youtube.com/watch?v=F-QA2rkpBSY
> 
> ...



Politicians understand exponential growth. That's why they don't index income tax brackets.

We need new sources of energy to support our growth rate before we hit the wall with non-renewables.


----------



## Mr Z (14 August 2010)

drsmith said:


> We need new sources of energy to support our growth rate before we hit the wall with non-renewables.




Yes but many other resources are also finite... so carrying capacity is? The "Club of Rome" came up with 2B sustainable...????! That was passed a while ago... are we in over reach or is the sustainable number yet to be reached? Will our technology triumph or will we hit the wall???


----------



## robots (14 August 2010)

hello,

gidday Kincella, man you got the best of both worlds though bro, city country city country city country, oh i dont know

before you dig up the turf, have a think about planting ground cover in a portion of the lawn

reduce the work in mowing, still helping get rid of CO2 and great for the birds and insects, colour, natives are very popular now and many tenants are also passionate about the garden

plant trees everywhere

thankyou
associate professor robots


----------



## explod (14 August 2010)

Mr Z said:


> Yes but many other resources are also finite... so carrying capacity is? The "Club of Rome" came up with 2B sustainable...????! That was passed a while ago... are we in over reach or is the sustainable number yet to be reached? Will our technology triumph or will we hit the wall???




Markets are driven number one by *sentiment,,* which after a bit of a story boils down to greed.   Everyone one wants their peice, and as those that came before him, so he should have it.

So whether we have passed it or not probably makes little difference now.  The Indians and the Chineses all want a home, and as our esteemed Robots would say "so they should too" and to go with it a car each as well.

Just lets party brothers, as tomorrow if it comes will be another day.


----------



## Mr Z (14 August 2010)

I fear a different, non market outcome... but this is not the thread for it.


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## robots (14 August 2010)

hello,

gidday everyone, great day

well i happened to come across the same sex rally in Melbourne again today, amazing, there was a very happy vibe 

i was still a bit cautious though when i got to the socialist crew table after they *bashed* me last time for mentioning plenty of affordable places around and Aus is different 

but made it home in one piece on the pushie, oh well

just a reminder 7.30pm log on for the auction clearance results

thankyou
professor robots


----------



## robots (14 August 2010)

hello,

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

oh yeah, 68% clearance rate 

fantastic effort, just normal market conditions by the look of it

RBA will be happy and see what happens with interest rates but looking good Kincella

no bubble no worries

thankyou
robots


----------



## Mr Z (14 August 2010)

Gay couples normally blitz affordability... LOL, I remember friends being criticized for the heinous crime of  buying in Paddo and doing their place up to the hilt back when the first wave of gentrification was in full swing. Two professionals no kids... not uncommon but not typically your battlers, often business owners often smart operators while I am busy with stereotypes... LOL.

How do you define a bubble? General question... it normally meets with some interesting answers.


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## MR. (15 August 2010)

Latest figures from the ABS still has finance strong for investment properties with the number and finance of owner occupied perhaps still falling.

View attachment Investment loans as a % of Total Housing Loans $.pdf


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## Mr Z (15 August 2010)

What are we looking at in terms of rental yield these days? I mean your experience, not the official numbers.


----------



## robots (15 August 2010)

hello,

check out realestate.com.au

am i allowed to go to the toilet yet?

thankyou
professor robots


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## trainspotter (15 August 2010)

Dropped any gold bars yet robots? Talk about the goose that laid the golden egg ! Keep on trucking Mr Bots. You da man !


----------



## Mr Z (15 August 2010)

Hmmmm... well thanks for the obvious, but we are still left approximating yield as we are not certain of the property values. Which is why I asked for peoples current experience, their real YIELD % .... you know backing out costs etc.


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## robots (15 August 2010)

hello,

yes, go to the open for inspections, get the vendors statements, check out the costs

see what the rent is, see what the return is for money put up, work it all out

if you dont like it dont buy, simple really

do any of the bloggers from the bucketshop forums actually do any research? amazing

thankyou
professor robots


----------



## Mr Z (15 August 2010)

Hmmmm again with the attempts to belittle.

So I am left to assume you don't know your numbers... if indeed you actually are what you say you are.

It's a passing interest at this point I am hardly going to "go to the open for inspections, get the vendors statements, check out the costs" as I have no intention of becoming a landlord anytime soon.  

Now folks wouldn't you expect that a truly decent property investor would say... hmmm yes I get x% or I aim for a minimum of y% depending of things like say the potential I think the property has for capital gain etc etc.

Not like I am asking for specifics like the value of your holdings now is it?


----------



## robots (15 August 2010)

robots said:


> hello,
> 
> yes, go to the open for inspections, get the vendors statements, check out the costs
> 
> ...




hello,

here it is again for you, assume what you like

you have no intention of becoming a landlord

thankyou
professor robots


----------



## Mr Z (15 August 2010)

So that makes a question to a supposed "real estate investor" invalid? Maybe you'd surprise me, maybe you would get me thinking "hmmm I might take another look at this", at worst maybe you would encourage someone else to look at it. But no.... low content attitude is what comes back. Why? Feeling insecure about your investment religion?

I must say that you have an adversarial outlook considering the little I have actually said about where I think prices are going. My appraisal has been simply that I think the odds favour the bears. Even the esteemed Mr Spotter concurs with that although maybe we would probably differ on degree. That I am still trying to come to terms with.

Its kinda hard to take you seriously given your responses. You claim I am from a bucket forum (what ever you think that is?) yet the most meaningful thing you post is a clearance rate, which really is not that informative without supporting data, and its something we can all look up easily.... unlike a real bonafide RE investors real net yield.


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## cutz (15 August 2010)

Lets do some simple sums as robots has suggested,

Starting with investment grade inner city (within 10k melb. CBD radius) small single front house on it's own block, prices for this type of property range from about 700K to 1200K, income from same seems to range between 350-550 PW.

Taking the midpoint of both, ((450*52)/950000)*100=2.46% *not* including property purchase expenses/financing interest/property management fees/missed rent/damage/appliance breakdowns/legal fees associated with bad tenants and whatever else I've missed.

The figures I came up with was from a quick scan on real estate dot com, the figures don't really stack up, how do you guys do the math ?


----------



## robots (15 August 2010)

hello,

no worries, thanks for your thoughts

dont take things personally its just discussion and debate that will go on for centuries

thankyou
professor robots


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## Mr Z (15 August 2010)

I always figured it cost me around 1% to keep the place, rates, repairs etc...

I was always lucky with tenants but I did screen them personally, however I was hardly Ian Kiernan!

So Cutz, capital gains would be the sole motivator given those sorts of yields! Discounting of course the "tax problem" motivated negative gearers! I always aimed for positive gearing myself.

Last time I took a serious feet on the ground look at it I came up with 3% gross discounting capital gains for the Bayside area in Melbourne. When I first bought rentals country properties could achieve 8%, albeit with a very modest capital gain outlook at the time... but boy did that turn around!


----------



## Mr Z (15 August 2010)

robots said:


> dont take things personally its just discussion and debate that will go on for centuries




Ha.... LOL the guy infers that you are a low value, low rent poster on more than one occasion then says don't take it personally its a 'debate'. Yet he refuses to even discuss the reality of his experience or give the benefit of his wisdom.

Good going Mr Bots...

What about we hit the reset, drop the us and them and you try talk us fence sitters into the market.... can you make a good case looking forward from here? It should be easy if you are actually investing because surely you have made the case for yourself? Really you have it all to gain, you are only going to reinforce your position and talk others into the market... that is if you are right. Otherwise you may just raise concerns that could impact your strategy moving forward. It always pays to be introspective and challenge your own assumptions when investing your hard earned. At least that is my humble opinion, but then I am human and I do stuff it up every so often... like most 

Low yields would seem to be indicative of a stretched market FWIW.


----------



## wayneL (15 August 2010)

Mr Z said:


> Ha.... LOL the guy infers that you are a low value, low rent poster on more than one occasion then says don't take it personally its a 'debate'. Yet he refuses to even discuss the reality of his experience or give the benefit of his wisdom.
> 
> Good going Mr Bots...
> 
> ...




But it's different this time. :band


::


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## cutz (15 August 2010)

Mr Z said:


> I always figured it cost me around 1% to keep the place, rates, repairs etc...




Gotcha Mr Z,

Now the yield drops to sub 1.5% *not* including interest expenses based on my original numbers, that’s nowhere near the amount of compensation required to be holding such a high amount of concentrated risk, lady luck may be on your side but so is the risk of a huge failure (blowup in trader talk).

A good case study on property bubbles is the Irish one, makes for interesting reading, parallels between theirs (now popped) and ours seem to become apparent.


----------



## Mr Z (15 August 2010)

Interestingly the Irish pundits where saying many of the things our pundits have been saying about our market.

Many moons ago when I got going %7 was considered the 'right' return, but you have to factor in rates etc. We have moved a long way from that!

One hard lesson I learn once is that its not the absolute interest rate its the direction that counts. If rates are going up it will always put pressure on at the margin despite the fact that the absolute rate may still be low and in theory manageable all other things considered. Also consider that every point up is a greater % leap from the low end of the scale. 0.25% is a big deal @ 2% where as at 10% it is not such an issue.

Just some random thoughts.

%1.5, yikes Mr Cutz! Thats not appealing.... I wonder if Mr Bots is topping that?


----------



## trainspotter (15 August 2010)

Agreed that yields are low at the moment on residential real estate and are unlikely to be showing anything above the 2-3 percent range for awhile (2-3 years possible)

Still good value to be found in country areas but who wants to live in the country unless you are looking for a "lifechange". The ten year Government bond rate is around 5.40% but if you have commercial property it is possible to get around 9% RoR. (based on the 2 commercial properties I have now)


----------



## MR. (15 August 2010)

Mr Z said:


> Many moons ago when I got going %7 was considered the 'right' return, but you have to factor in rates etc. We have moved a long way from that!
> 
> One hard lesson I learn once is that its not the absolute interest rate its the direction that counts. If rates are going up it will always put pressure on at the margin despite the fact that the absolute rate may still be low




We are basically at the average interest rate of the past 12 years. 

View attachment Interest rates 50 years.pdf


Rental 15-20 years ago returned 7%, today it’s down to half that. If these rental yields were looked upon with a Price/Earnings ratio the market is factoring in a huge return. Where is the money going to come from? Even lower interest rates! Rents must be going to near double then?

Since more than a third of mortgages today are for investment properties, there should be more than a few who can explain where the gains are going to come from!


----------



## drsmith (15 August 2010)

While this debate has gone on, the fundamentals of residential real estste have not changed. Prices are being proped up by a commodities boom and cheap credit. When there is a sustained turnaround in either of the above, the bubble will burst.

The only question will be the extent to which governments try to stop the tide going out.


----------



## robots (15 August 2010)

hello,

what an afternoon of enlightenment, i know 11yrs ago when i bought the yield was 5.8% so tell us more on the 7% properties you owned MrZ

not much changed really,

is there any chance the mods can have a word to MrZ about getting a photo of the bullion or some scanned share certificates, i need to push out real soon

oh yeah, it is different, have house prices crashed in Australia?

thankyou
professor robots


----------



## robots (15 August 2010)

drsmith said:


> While this debate has gone on, the fundamentals of residential real estste have not changed.* Prices are being proped up by a commodities boom and cheap credit*. When there is a sustained turnaround in either of the above, the bubble will burst.
> 
> The only question will be the extent to which governments try to stop the tide going out.




hello,

and word has it the commodity boom has got many more years left to run (well at least gold apparently)

fantastic, 

thankyou
professor robots


----------



## drsmith (15 August 2010)

The punch tastes best just before that sickening feeling.

By then, it's too late.


----------



## awg (15 August 2010)

robots said:


> hello,
> 
> gidday everyone, great day
> 
> ...




Hi robots,

manage to dodge the bullets on Lygon St

Thought you reckon that stuff only happens in good ole USA

The paper reported locals "are sick of gunfire..it happens all the time":


----------



## robots (15 August 2010)

hello,

oh yeah big day on friday, but probably would of been 100 dead in the USA and 5000 injured from gunshots

dont know what the paper is on about, the carlton crew got smashed in the underworld war so its been very quiet in Carlton

thankyou
professor robots


----------



## UBIQUITOUS (15 August 2010)

MR. said:


> We are basically at the average interest rate of the past 12 years.
> 
> View attachment 38464
> 
> ...




I've read some nonsense in my time.

Firstly, if you are going to talk about us being at average interest rates, perhaps you would also like to give the evidence that we are also at average borrowing levels over the last 12 years?

Secondly, it is ludicrous to assume that a p/e is a crystal ball. It is far more likely that the high p/e in the RE sector represents a major speculative over valuation, rather than the herd being correct that the p/e is a signal for future growth. If not, then why not go and invest in a stock with a p/e of 1000 - You'll be make a motza! 



> Since more than a third of mortgages today are for investment properties, there should be more than a few who can explain where the gains are going to come from!




Easy. From the next sucker into Australia's biggest ever Ponzi scheme:


----------



## robots (15 August 2010)

hello,

gee go easy on one of your brothers there

what is p/e? and a CDO? sounds interesting

p/e of 1000

anyone heard from Mr Burns, gee the list goes on and on

thankyou
professor robots


----------



## robots (15 August 2010)

hello,

"promises safety of principal and an adequate return"

not looking too good there Ubi on either the recovery from the GFC or the June purchases

and with Julia Gillard looking into introducing stamp duty rates on par with property purchases

i reckon the favorable tax treatment for share transactions is costing the public massive amounts of tax

thankyou
professor robots


----------



## trainspotter (15 August 2010)

OK ... I am gonna let you guys into what I am up to in the RE world.

Firstly residential speculation. I can go and go and buy a residential  block of land for $140,000 in a higher socio economic estate. I then build a 4 bedroom 2 bathroom "turnkey" (landscaping, fencing, finished completely) home for $300,00 with any local builder. Total spend $440,000. Settlement costs and bank fees are approx 5k on the block of land and building contract. I then build the home over an 8 month period and this leaves me 4 months to sell. 12 month program here.

Assuming 20% deposit of $88,000. I then sell the home for $485,000 (no real estate agent involved as a simple sign out the front will work just as well) I have made $45,000 Gross profit. Assuming a 20k interest component (tax deductible) and 5k of fees I have netted $25,000 over a 12 month period. 

So therefore my $88,000 has turned an interst rate of 28.41 % CGT is a factor but it depends on how you are structured. Do a couple of these a year and it is good coin.

Secondly commercial. I can go and buy a 2000m2 commercial property (vacant land) for $300,000. I then spend 250k building 2 sheds on the property for rental purposes. As banks want 40% deposit on commercial it costs $220,000 to play. Also approx 10k for fees to setup. My loan is $330,000 at say 8% (margin lending) = $26,400 per annum.  I then rent these sheds for 25k each per annum. I am now positively geared to the tune of $23,600. Take out rates and outgoings of say $5000 per year I am in front by approx $18,600 per year. 8.45% return I believe. This is not allowing for capital growth either of say CPI at 3.1%

So tell me again what is so wrong with property?


----------



## UBIQUITOUS (15 August 2010)

robots said:


> hello,
> 
> "promises safety of principal and an adequate return"
> 
> ...




Robots, this is a property thread, and it is looking pretty bleak. Hot of the press:

http://www.couriermail.com.au/prope...-a-buyers-market/story-e6frequ6-1225905044210



> *Flood of house listings in Queensland mean a buyer's market*
> 
> by Michelle Hele From: The Courier-Mail August 14, 2010 12:00AM 4
> 
> ...


----------



## robots (15 August 2010)

hello,

Louis christopher! Hahahahahahahahahahahahahahahaha

Keep listening to failed researchers man, thats right its a property thread so leave the stock comparisons out then

asx recovered from the GFC, nope, principal gone oh yeah
Thankyou robots


----------



## cutz (15 August 2010)

UBIQUITOUS said:


> Robots, this is a property thread, and it is looking pretty bleak. Hot of the press:




Agree UBI,

Looks like it's going to be a slow long painful grind, I pity the fool who is overleveraged into this property bubble.


----------



## trainspotter (15 August 2010)

cutz said:


> Agree UBI,
> 
> Looks like it's going to be a slow long painful grind, I pity the fool who is overleveraged into this property bubble.




Agree cutz .... "overleverge" is the adverb in this sentence that needs to be most taken heed of. There will be blood in the street. I can't wait.


----------



## Mr Z (15 August 2010)

robots said:


> what an afternoon of enlightenment, i know 11yrs ago when i bought the yield was 5.8% so tell us more on the 7% properties you owned MrZ




Oh gee a whole 11 years ago... WOW, all of history virtually! 



robots said:


> not much changed really,




So do I take that as a claim that you are still getting 5.8%?



robots said:


> is there any chance the mods can have a word to MrZ about getting a photo of the bullion or some scanned share certificates, i need to push out real soon




Errrr ahem, maybe you mean contract notes, or CHESS holding statements. Pictures of bullion.... LOL. My dear chap only goldbugs keep bullion at home and take photo's.... remember, investor not bug. You will not find an oz anywhere near me... I like big vaults in safe insured places, gives me a warm fuzzy feeling.

I tell you what, after you scan and upload some evidence of your property holdings.... are you insane enough to do that?



robots said:


> oh yeah, it is different, have house prices crashed in Australia?




Not yet.... so what you think that means it is not possible? Hmmmmmm... never say never! Just suppose we had a CDO type debacle in the IRS market, man that would put the big 4's nuts in a vice, all sorts of interesting fallout could happen. Just suppose.... but I mean, that'd never happen... right? Like subprime was 'contained' to a small market 

Anyway, multiples, yields, income ratios etc do tend to be mean reverting... in fact they tend to overshoot, after all that is how we get a mean number. There is always someone saying "its different this time", its structural, its a new paradigm yada yada yada..... that much is true.

Do you remember the big, short sharp correction we had when the Savings and Loans debacle was on? That was an interesting event, talk to an old agent.... you might be surprised at what went down with some deals!


----------



## MR. (15 August 2010)

UBIQUITOUS said:


> I've read some nonsense in my time.




Ubi has anyone ever warned ya about posting after spending the arvo down the local?  



UBIQUITOUS said:


> Firstly, if you are going to talk about us being at average interest rates, perhaps you would also like to give the evidence that we are also at average borrowing levels over the last 12 years? Why would I do that? What change will that have on the average interest rates?
> 
> The RBA warned of interest rates returning to "normal"? I guess normal could be about now, so no real direction in rates. But thanks for your interest.
> 
> ...


----------



## robots (16 August 2010)

hello,
Thought we had lost you for a while there MrZ. Always get a lot who come on to ASF spouting the usual doom and gloom

False prophecies, then they walk. Most times they are just mere followers of failed prophets.

Oh well, prices crashed yet?
Thankyou
Robots


----------



## MR. (16 August 2010)

drsmith said:


> Prices are being proped up by a commodities boom and cheap credit. When there is a sustained turnaround in either of the above, the bubble will burst.
> 
> The only question will be the extent to which governments try to stop the tide going out.




An example is the flood gates being opened to massive increases in immigration in recent times. Price crash may just not happen.... More to the point, a failed price crash just makes realestate (on average) look like a terrible investment for the near future. 



trainspotter said:


> I can go and buy a 2000m2 commercial property (vacant land) for $300,000. I then spend 250k building 2 sheds on the property for rental purposes. As banks want 40% deposit on commercial it costs $220,000 to play. Also approx 10k for fees to setup. My loan is $330,000 at say 8% (margin lending) = $26,400 per annum.  I then rent these sheds for 25k each per annum. I am now positively geared to the tune of $23,600. Take out rates and outgoings of say $5000 per year I am in front by approx $18,600 per year. 8.45% return I believe. This is not allowing for capital growth either of say CPI at 3.1%
> 
> So tell me again what is so wrong with property?



 Where do you buy commercial land (industrial) for $150- per metre?

The outlay of 550k with a 50k return isn't bad. Massive tin sheds rented out at what $50- per metre. Rental price sounds attractive too. Where are we?



robots said:


> Always get a lot who come on to ASF spouting the usual doom and gloom
> 
> False prophecies, then they walk. Most times they are just mere followers of failed prophets.



Oh yeah, left to wonder the worlds, lost in limbo.....


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## Mr Z (16 August 2010)

Now a 'what if' is a prophecy... and a false one a that. If it where, which its not, you'd not really be able to invalidate it until sufficient time has past for it to be tested. Sounds to me like some congenital property guru's around here had no real understanding of how close the 'GFC' came to destroying a few property dreams. They kinda remind me of the guy at the bar who has just a enough to feel 'ten foot tall and bullet proof', LOL, it may turn out to be just as illusory.

For anyone interested take a look at the way Interest Rate Swaps have mushroomed in open interest, take a look at what they mean for countries like Australia. Now its not too much of a leap of faith to imagine that the same optimistic modeling that became the Achilles heel of the CDO and CDS markets exists in the IRS market. It seems that the moral hazard here is that the more optimistic and less conservative the assumptions in the model that determines the pricing the greater the bonus received for writing the contract! This is a pile of derivatives that dwarf the others and have never been tested. They have been written in the benign climate of the latter years of a bond bull market. When the bond markets turns (yes Johnny they are cyclical) the consequences for this market could be quite interesting... interesting in a challenging way...: Now like all derivatives it is an opaque and arcane world full of geeks and quants so its impossible to know how it will play out if a failure occurs BUT just like CDO's, CDS's and the Carry Trade it looks like another accident waiting to happen. Not to worry, its not like these geeks are dumb eh? Its not like they would be silly enough to blow themselves up now is it? They are smart guys... so all is well. Its funny how LTCM looks like a minor blip now... it came so close too kaboom... the quants first big day out! 

But hey, bonds, IRS's.... boring eh? Nothing to do with property eh?

So why are all these people selling in winter? Don't they know its quiet season? What gives with all this stock on the market?

Proziac Bots, its good stuff eh?


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## Mr Z (16 August 2010)

MR. I suspect we are somewhere up north in the direct line of fire of the mining boom. Certainly not a lot there I can relate too, RE markets are local in many/most respects.


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## Agentm (16 August 2010)

Mr Z said:


> Now a 'what if' is a prophecy... and a false one a that. If it where, which its not, you'd not really be able to invalidate it until sufficient time has past for it to be tested. Sounds to me like some congenital property guru's around here had no real understanding of how close the 'GFC' came to destroying a few property dreams. They kinda remind me of the guy at the bar who has just a enough to feel 'ten foot tall and bullet proof', LOL, it may turn out to be just as illusory.
> 
> For anyone interested take a look at the way Interest Rate Swaps have mushroomed in open interest, take a look at what they mean for countries like Australia. Now its not too much of a leap of faith to imagine that the same optimistic modeling that became the Achilles heel of the CDO and CDS markets exists in the IRS market. It seems that the moral hazard here is that the more optimistic and less conservative the assumptions in the model that determines the pricing the greater the bonus received for writing the contract! This is a pile of derivatives that dwarf the others and have never been tested. They have been written in the benign climate of the latter years of a bond bull market. When the bond markets turns (yes Johnny they are cyclical) the consequences for this market could be quite interesting... interesting in a challenging way...: Now like all derivatives it is an opaque and arcane world full of geeks and quants so its impossible to know how it will play out if a failure occurs BUT just like CDO's, CDS's and the Carry Trade it looks like another accident waiting to happen. Not to worry, its not like these geeks are dumb eh? Its not like they would be silly enough to blow themselves up now is it? They are smart guys... so all is well. Its funny how LTCM looks like a minor blip now... it came so close too kaboom... the quants first big day out!
> 
> ...






nice post


was looking at the broyhill letter a little while back, thought that grantham and these guys had some great views on things..

you can download the letter here i believe.. worth a read..

broyhill letter

now where have i seen the sentiment expressed in the first part of this quote around here??

_"Australia has gone two decades without a serious downturn, leading most to believe that house prices move only in one direction, despite historical data which clearly indicates that the ratio of home prices to income has always  ﬂuctuated around a stagnant long term average. The reason is that income acts as an anchor limiting the price home owners are able to pay, and has always pulled prices back to earth in every instance. It is only a matter of time"_


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## Mr Z (16 August 2010)

Agentm said:


> you can download the letter here i believe.. worth a read..
> 
> broyhill letter




Thanks, that is a new one on me... I will take a look see


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## Bushman (16 August 2010)

Mr Z said:


> Its kinda hard to take you seriously given your responses.




Robots has been bullish property since the pre GFC. Track record is on this thread. He stared down Stephen Keen and Keeno blinked. 

Go Robots. Investment is as often a 'smell test' as a complex quant model where your bias gives you the valuation that proves your bias right! Robots smelt the market in 2006/2007 and it smelt good! You made plenty brother, an ASF legend and a Victorian to boot!! God speed.


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## MR. (16 August 2010)

MR. said:


> Oh yeah, left to wonder the worlds, lost in limbo.....




Wonder/wander whatever!



Mr Z said:


> MR. I suspect we are somewhere up north in the direct line of fire of the mining boom. Certainly not a lot there I can relate too, RE markets are local in many/most respects.



 With some of the reported prices of homes one might imagine industrial land would be well up there as well, not $150- per metre!

Must be in some small town that has no covenants or a council which wants built any quality. Perhaps the example is from a few years ago. If not, got to wonder if there's even enough work in town for the tenant to pay the lease!

ps: Bots is the man!


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## trainspotter (16 August 2010)

MR. said:


> Wonder/wander whatever!
> 
> With some of the reported prices of homes one might imagine industrial land would be well up there as well, not $150- per metre!
> 
> ...




26th March 2009 settlement date on 2012m2 commercial land. Sheds completed October 2009. Block across the road on the market 1878m2 for 280k. 

Pest control company in the front shed on a 5 x 5 with 5% increase rental increase every year. They also pay all outgoings !!

Rear shed leased out 3 x 3 with 2 year option to fishing company. 

Ooooopsies no mining companies here boys and girls. YET.

Council is unbelieveably strict with wheelchair access, all water runoff to be retained on block, car parking bays, landscaped areas and the sheds had to be of colorbond and not zincalume. Shed sizes are 330m2 and rented for $75 per metre.

Yep, country hick town alright ! Small population of 31,000 on the coast. Mining has not kicked in yet. Town is self sufficient. 

Also have property in QLD performing similar. 

HAHAHAHA HAH HAAAAAAAAA ... living the dream. Look around people. Not just in your own backyard.


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## Mr Z (16 August 2010)

From Broyhill...



> While prices at home have already fallen 30% from their peak, they’d have to fall another 45% just to reach the long term trend, *which according to Robert Shiller, has been flat in real terms for three and a half centuries!!*




I love that quote! I still maintain that 99% of property investors don't understand why property works as an investment. Logically if they don't get what the major driver is then they will not recognize when it becomes a head wind. The phrase "in real terms" is critical! Invariably when asked people will point to the many local issues or even national ones that while they are a factor they are not the underlying truth of properties magic when its working well.


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## explod (16 August 2010)

Mr Z said:


> From Broyhill...
> 
> 
> 
> I love that quote! I still maintain that 99% of property investors don't understand why property works as an investment. Logically if they don't get what the major driver is then they will not recognize when it becomes a head wind. The phrase "in real terms" is critical! Invariably when asked people will point to the many local issues or even national ones that while they are a factor they are not the underlying truth of properties magic when its working well.




What is your understanding or definition of "in real terms" and the best way you measure it Mr Z ?


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## Mr Z (16 August 2010)

*Rambling thoughts... apologies to the impatient, I suggest you just don't read it!*



explod said:


> What is your understanding or definition of "in real terms" and the best way you measure it Mr Z ?




Short answer is I don't know the single best way to work it out.

Long answer: Basically we are talking truly inflation adjusted (not CPI adjusted!) prices, easily said but not so easy to do because everything in our economy is in a constant state of flux. The idea is to compare the price of a house like for like over time and work out how much of todays price is due to inflation and how much is down to some other changing fundamental. For example in 1972 a house we once owned in WA sold for 12K, looking things up now a similar place would probably be 250-70K. Now we all intuitively know that isn't actually a 22.5 times increase in value as almost every other value in our economy has also moved significantly. So what is the true value comparison? We have very little that is constant to measure these things against! If you looked at Shillers methodology for arriving at a constant value basis on which to compare things I am sure that you could dispute his findings.

Some like to use measures like gold, but I think that is a little delusional.* I would say that the fairest measure is actually the family income multiple. *After all the average house cannot stray to far for to long from the average family wage earners ability to pay for it. *However I can think of problems with doing that!* CPI would understate it, most other value comparisons in terms of real goods are not valid due to technology improvements and general real price declines, cars for example are much cheaper now on a relative basis.

I guess that is what makes it such a contentious and interesting topic.

Numbers like M3 vs total housing stock would be interesting to see. Anywhooo I'd be surprised if someone could come up with a tight number, so in lieu I look at all the ratios.

This one is interesting...




It would suggest that my 12K house that is now say 250K probably should be around 125K (it would be below average now!) to have maintained its value in real terms. That would align with the rough multiples of wages we are at as I remember them.  Now is that reflective of a stretched valuation or some other fundamental that has real changed on a permanent basis. What we really need to understand is what is underpinning that 125K extra... and how solid it is. The chart suggests we are stretched all round, I am sure there are local mitigating factors in many areas but?!

One thing to note is that during the inflationary 70's the price of a house was generally under the cost to build, (makes sense!) but look where we have come since easy Al started up in 1987! Something is wrong with that picture!

In the end its kinda simple IMO... you have...

1. Wages
2. Rents
3. Prices

In some combination they adjust to get us back to the long term ratios at some point. So if you are a bull and you expect line 3 to rise you must also make a case for lines 1 & 2 to rise further and faster. If you are a moderate bear you also must make the case for 1 & 2 to rise but nowhere near the same amount. If you are a real bear and you expect wages to fall then lines 2 & 3 must plummet! I suspect that prices will fall, wages and rents will rise with inflation, but how to assign %'s?

Anyway if you go from and income multiple of 6 to one of 3 and the house goes up say a further 30% are you really in front? The way some count around here the answer is yes, I am not so sure... I guess the answer depends on how wise you where with the money if it where invested elsewhere.

  : 

I will get to the other thing Explod... maybe tomorrow.

Cheers
Z


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## trainspotter (16 August 2010)

Oh well .... I'll keep making money out of real estate and the theorists can keep on theorising.


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## explod (16 August 2010)

*Re: Rambling thoughts... apologies to the impatient, I suggest you just don't read it*



Mr Z said:


> I will get to the other thing Explod... maybe tomorrow.
> 
> Cheers
> Z




A good take IMO Mr Z, look forward to your continued evaluation and thanks for your obvious efforts.


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## robots (16 August 2010)

hello,

yeah thanks MrZ top presentation

thanks Bushman, yeah great place Victoria still plenty of scope too and just trying to help others in life 

graph source? so 12k into 250-270k, what suburb by the way MrZ? yeah thats flat as per shiller's view, get outta here, what a stooge

thankyou
professor robots


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## robots (16 August 2010)

Mr Z said:


> From Broyhill...
> 
> I love that quote! I still maintain that 99% of property investors don't understand why property works as an investment. Logically if they don't get what the major driver is then they will not recognize when it becomes a head wind. *The phrase "in real terms" is critical!* Invariably when asked people will point to the many local issues or even national ones that while *they are a factor they are not the underlying truth of properties magic when its working well.*



*
*
Hello,

Strange this preceded the explanation on "real terms" and we have to wait for part two. Couple of interesting items in bold.

Oh well, i'm with you trainspotter, just keep rolling along actually doing something.

Thankyou
Professor Robots


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## Mr Z (16 August 2010)

Why strange, I was asked.

I think you are missing my point.... intentionally I suppose.

Ya like my gold robot? 

PS: It quotes sources on the bottom of the chart ABS, RBA, REIA --> you didn't think I would post a questionable source now did you. More fun stuff where than came from!


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## trainspotter (16 August 2010)

Thank you Prof Robots. Ever heard of the saying "Those who can't do, teach" ? If I listened to everyone else telling me NOT to do something I would have nothing. In 1991 I bought my first house at the tender age of 21. ALL my family and everyone told me not to do it. Now they come to me for money. Strange how things work out ?

Yes property prices are showing signs of softening. 0.7% I believe over a 17 month period. Yes auction rates have begun to evidence a downward trend of approx 20% BUT it does not show how many were sold under contract after the auction has finalised. YES there is an oversupply in QLD and YES OO loans are at their lowest in 9 years. 

AND YES the IRS and housing wages to affordability to the kafoopsies to the blah blah blah are all over the shop and the sky is gonna fall and we are all doomed. In real terms that is.

BUT IT HASN'T HAPPENED NOW HAS IT ? Mr Keen had to walk to Kosciusko. Everyone is having bubble thoughts and screaming that it's gonna blow cause it's got a head o' steam and we can't control it anymore. Ummm ya don't think the RBA and the Govt does not know this?? HUH? Ummmm do you think this is why they lifted interest rates to stifle the market before it went supernova?

Do you honestly think the banks want this kind of toxic debt on their hands? Are they that stooopid they loaned all these people billions on a "PONZI SCHEME" ? So all the checks and balances in place mean diddly squat does it? Maybe another reason as to why the banks have altered their lending criteria to avoid this alleged train smash.

Hammer on all you want with pie charts and non affordability graphs and go and hide under the table. I am out there making things happen and assisting people to own their own home as well as making a bit of coin.

Now is that really that bad?


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## MR. (17 August 2010)

trainspotter said:


> 26th March 2009 settlement date on 2012m2 commercial land. Sheds completed October 2009. Block across the road on the market 1878m2 for 280k. ............
> 
> Shed sizes are 330m2 and rented for $75 per metre.
> 
> ...




The population might just expand on the 31,000 if you have chosen the right town on the coast. The return is holding its own, so that is a good position to be in with or without capital growth. (Which is unlike so many other real-estate investments) With any luck capital growth will come as well, but you are in a position to give it time. 

Do you live in this town or nearby? 



Mr Z said:


> ............Anyway if you go from and income multiple of 6 to one of 3 and the house goes up say a further 30% are you really in front? The way some count around here the answer is yes, I am not so sure... I guess the answer depends on how wise you where with the money if it whre invested elsewhere.
> 
> Cheers
> Z




One would assume that if the income multiple of 6 became 3 (which is relative to house prices I assume) the 30% house growth is already part of the equation. But to the point, 30% growth over a period of wages growth of more than 100% may not be so good as even the price of every day consumables would have doubled in that time. The question is can money be invested more wisely? and I expect so....   

There doesn't need to be a property crash for the investment to have been un-wise. The poor performance can only be measured against the other investment chosen. 




robots said:


> [/B]
> 
> Oh well, i'm with you trainspotter, just keep rolling along actually doing something.
> 
> ...




What is it that you do exactly?



trainspotter said:


> Do you honestly think the banks want this kind of toxic debt on their hands? Are they that stooopid they loaned all these people billions on a "PONZI SCHEME" ?




Is that a real reason? "The banks lent the money so it must be good" I can bring up a few other banks which no longer exist. Blah, blah, blah. You'd think some of the world’s oldest banks would have known better. 

Hah... OK, that's not here...  Still should have known better though.



trainspotter said:


> Hammer on all you want with pie charts and non affordability graphs and go and hide under the table. I am out there making things happen and assisting people to own their own home as well as making a bit of coin.
> 
> Now is that really that bad?



 Better than doing nothing!


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## trainspotter (17 August 2010)

MR. said:


> The population might just expand on the 31,000 if you have chosen the right town on the coast. The return is holding its own, so that is a good position to be in with or without capital growth. (Which is unlike so many other real-estate investments) With any luck capital growth will come as well, but you are in a position to give it time.
> 
> Do you live in this town or nearby?
> 
> ...




Predictions is for 50,000 within a 5 year period due to mining expansion. THEN we will see some real action on the RE front for commercial rents as the little core business's that service the mining industry come to town need a place to rent. Never mind the need for residential housing.

I live in this town for about 10 months of the year and the rest is spent O/S.

The world oldest banks were not holding green titles now where they? Wasn't it some rogue trader that exposed their flaws causing them to crumble? EVEN NATIONAL BANK lost 800 million to rogue traders. So therefore it is not the housing that made them bad. Now before everyone jumps on the bandwagon about look look look what happened in the USA with Fanny Mae and Freddie Mac. They were playing a dangerous game of Credit Default Swaps - Now that is a PONZI SCHEME. Non recourse loans did not help the situation either.

It is a little bit of money here and there. NO you are not going to make 100k every deal BUT what is wrong with making 25k four times a year? Risky IF the bottom falls out of the market but if it is "priced right and presents well it will sell."


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## Mr Z (17 August 2010)

MR. said:


> The question is can money be invested more wisely? and I expect so....




This is the nub of it, betting on a crisis is not sensible as they are quite rare in reality. Although lately... LOL.

The thing to remember with banks is that they are a little like sharks. They must always move forward and lend or else the business model stops working. They will always compete to lend to the most credit worthy in any given environment BUT they will never stop lending completely based on a poor outlook. If they did stop lending they would become a self fulfilling prophecy and destroy the very markets they hold as collateral. So would a bank make a loan that in other circumstances they would choose not to, yes, absolutely, they need to make their books work... this means constant new lending. They will lend to the best of the worst if the risk environment is high, it is a calculated risk vs if they stop playing, certain failure.

I like property coming off of high rates, going into higher rates does not thrill me at all. Lend when the payments make you eyes water and the CPI is moderating for the wind will soon be at your back. Sometime in the future here I expect an ideal set up... then people will call me mad! That much might be true.

It all meanz beanz when you are fertilizer so enjoy


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## trainspotter (17 August 2010)

*Aussie Home Loans announced a challenge to the big banks today with the reduction of its three year fixed rate home loans to below seven per cent.*

http://www.theadviser.com.au/breaking-news/4108-lenders-drop-fixed-rates

Hmmmmmmmm ...... that will not even dent the market as fixed rate loans are less than 2% of overall borrowings. 

Talk of lenders intending to increase mortgage interest rates independently of the Reserve Bank’s cash rate cycle is doing nothing to increase the attractiveness of fixed rates, says Mortgage Choice, Australia’s largest independently-owned mortgage broker.

http://www.australianhousehunters.com.au/blog/fixed-rates-drop-to-2-of-all-home-loan-approvals/

Market getting the jitters or is it a case of good old fashoined competition?


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## MR. (17 August 2010)

trainspotter said:


> Predictions is for 50,000 within a 5 year period due to mining expansion.
> 
> I live in this town for about 10 months of the year and the rest is spent O/S.
> 
> ...




Although you have claimed to look out side your back yard, I thought these factories must have been close to home if the population is just 31,000. You'd have to know some about the area and its people. Good luck there. 
I read you have other investments out of the area.

My point was that banks can make mistakes. Just because the banks hold the titles over the loans and their customers can't walk away doesn't mean that property prices aren't over priced!


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## MR. (17 August 2010)

Mr Z said:


> The thing to remember with banks is that they are a little like sharks. They must always move forward and lend or else the business model stops working. They will always compete to lend to the most credit worthy in any given environment BUT they will never stop lending completely based on a poor outlook. If they did stop lending they would become a self fulfilling prophecy and destroy the very markets they hold as collateral. So would a bank make a loan that in other circumstances they would choose not to, yes, absolutely, they need to make their books work... this means constant new lending. They will lend to the best of the worst if the risk environment is high, it is a calculated risk vs if they stop playing, certain failure.




Exactly.....


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## trainspotter (17 August 2010)

MR. said:


> Although you have claimed to look out side your back yard, I thought these factories must have been close to home if the population is just 31,000. You'd have to know some about the area and its people. Good luck there.
> I read you have other investments out of the area.
> 
> My point was that banks can make mistakes. Just because the banks hold the titles over the loans and their customers can't walk away doesn't mean that property prices aren't over priced!




Sure thing MR. I have previously stated I own property outside of my own little backyard. The warehouses are a close to home investment I admit but the leases are still real whether or not I live in the same vicinity. They are still legally binding in every way. The reason I actually chose to develop this particular model is because of what I wrote previously in regards to the mining that is about to  happen in this sleepy little fishing town. Might be a small growth in commercial rents and prices. Now in this instance it wont do me any good on the rents as they are for a long period of time. BUT who is to say that an investor might buy them for a lot more than what it cost me due to the long term rents and nearly 9% return?

Yes MR ... property prices are overpriced in SOME areas. They are showing signs of going backwards right now. I completely agree with you on this matter. BUT there are still places that just tick along under the radar. Parts of Adelaide and Collie in WA are some good areas to look at. IMO Geraldton is a particular hot spot with mining companies gearing up to pluder iron ore through a yet to be built port backed by thte state and federal Govt. 

Julia Gillard has come out and said she wants to make the towns in the NW of WA more "family friendly" (meaning more houses)  Like they are not overpriced monoliths waiting to take a hit for the team.


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## MR. (17 August 2010)

trainspotter said:


> The warehouses are a close to home investment I admit but the leases are still real whether or not I live in the same vicinity. They are still legally binding in every way. ............
> 
> BUT there are still places that just tick along under the radar.




Wasn't claiming anything to be wrong with your warehouses. In fact its good for them to be so close.

There will always be areas under the radar. However it's always easier and safer the closer to home. I have just chosen a different path for the time being.


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## Mr Z (17 August 2010)

Link --> Morgan Stanley analyst bearish on housing market...



> "I'm not persuaded by arguments that houses are sustainably priced; I'm not persuaded by the view that debt is not a problem; and I'm not persuaded that policy-makers could prevent collateral damage to banks," he said.




I think I lean toward his view...


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## trainspotter (17 August 2010)

I think I lean toward his view ... From the same article posted by Mr Z.

On the positive side, Mr Minack said the most plausible trigger for a correction in the Australian housing market -- broad-based jobs losses -- doesn't appear likely in the near term. *This means big price declines in the near term "seems low".*

Which is what I have been manic street preaching for awhile now.

Go Robots ... hows the trains coming on brother? Got that new spur line to the outer suburbs working yet?


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## Bushman (17 August 2010)

trainspotter said:


> I think I lean toward his view ... From the same article posted by Mr Z.
> 
> On the positive side, Mr Minack said the most plausible trigger for a correction in the Australian housing market -- broad-based jobs losses -- doesn't appear likely in the near term. *This means big price declines in the near term "seems low".*
> 
> ...




Short-to-medium term unemployment will be the main driver. However it should be a range trade for the next 6-12 months as investors face a 'wall of worry' and a bubble feedback loop. Also the outlook for Melbourne/Sydney inner city will be much different to Perth, Brisbane and Adelaide suburbs. 

You cannot just say 'ressie will drop'. 

Longer-term I agree with Minack's catalyst of Boomer investors bailing on a non-income producing asset as they need to fund their retirement/ailing health etc. There needs to be a generational change given it is a long-term asset.  Question is will pent-up demand mop up supply? Also there is the inheritance factor. Hard to call this at the moment. 

If you stick with long-term demographic trends you should still do well i.e. gentrification of inner city, medium density, affordable housing, green economy, ageing population, mining projects etc. The trend is your friend with housing as with any long-term investment.


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## Mr Z (17 August 2010)

> This means big price declines in the near term "seems low".




So who has been saying that we crash tomorrow?!

It is still a poor outlook with better places to graze, in the midterm it looks certain that you will drawn down, possibly significantly. Inevitably that period of time will be when you are under greatest pressure to hold those properties. You may be OK with conservative gearing levels but many will not be. Those getting into the market now will be using higher gearing, given the risks of higher rates and lower prices you'd want to be very sure of your prospects.

Making money out of getting a builder to build a house and marking it up is not some heroic contribution to the economy, investing in productive companies is a much better contribution in many ways. So far as helping out and making coin goes it really is low down on the scale. We'd be better off as a nation if people bought land and had the same place built. Don't go holier that thou on that one, ultimately a home is a consumer durable and not a productive asset that builds an economy. The fact that government put the housing industry ahead of many others speaks volumes about their bias of politics over economics.

Robots seems to be unable to post any meaningful comment, I think my first assessment was the correct one on that score.


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## trainspotter (17 August 2010)

Some of your previous posts allude to this. I think it went along the lines that it "can turn on a dime". 

Haven't we been over this one about 47 times already and we all agree to agree ? I note the RBA scribblings are making a case for leaving rates on hold for awhile. Aussie Home Loans dropped their 3 year fixed rate to under 7% today? Oh well.

So me building houses doesn't contribute to the economy? Try telling that to the 23 subcontractors that work on the house and get paid for their labour. Try telling that to the 30 or so suppliers who contribute to the construction of the home by supplying product. Try telling that to the manufacturers who supply the suppliers with product. Try telling that to the builder who is employing 17 staff. Nope ... no contribution there at all is there ?? What about the utilities and rates for councils that increase from vacant land to OO? Don't they employ people either? 

Holier than thou ? Man you have some bent leanings.


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## Mr Z (17 August 2010)

Nope you are ignorant... building houses does not build an economy, think about it for a bit... they are not a productive asset! They are a consumable, Australia will not grow no many how many extra house we build!!! Thinking like that is a nonsense in economic terms.

You getting into the middle of a housing deal by clean hands developing really only adds to the cost of the house... you contribute nothing other than buying risk for the duration of the 'development' without you the house would still be built for the end user directly at a lesser cost. All things being equal and in a normal market there is very little profit in clean hands developing single dwellings, that is how it should be as there is no real value add there. Larger projects where you create new titles and buy a reasonably large amount of risk is different story but the bottom line is you are still creating a consumer durable. That is not what builds an economy, LOL unless like Germany you export houses in boxes. Technology, plant, equipment, raw material, research, development etc etc provide the basis of economic development, development that allows us to afford decent houses, not the other way around.

There is nothing bent about it, your ego is blowing your contribution out of all proportion, all those people would still be working tomorrow it you dropped dead.

That fact that you can pull 40K out of a single house development more points to a market where money is still to easy and the local builders are either working too cheap or brain dead. Who gives away 40K for virtually nothing? Down here you'd have speccies going up left right and center for an extra 40K, that is a very healthy % increase on std profit.

Any market can turn on a dime in the right conditions, should some of the possibilities discussed come about I have no doubt it will. That is a long way from a prediction of a catastrophic decline in the near term. I was reading about and discussing the potential problems of the Carry Trade, CDO's and CDS's for a good three years prior to it unfolding. The IRS market contains some serious concerns BUT I have no doubt it will roll on for much longer than most expect before it hits real trouble. 

I don't think that the outcome is predictable in terms of timing or degree so I will bide my time before buying investment property again. It is simply a case of playing the most favorable odds IMO.

To each there own, that is what makes a market.


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## trainspotter (17 August 2010)

Mr Z said:


> Nope you are ignorant... building houses does not build an economy, think about it for a bit... they are not a productive asset! They are a consumable, Australia will not grow no many how many extra house we build!!! Thinking like that is a nonsense in economic terms.
> 
> You getting into the middle of a housing deal by clean hands developing really only adds to the cost of the house... you contribute nothing other than buying risk for the duration of the 'development' without you the house would still be built for the end user directly at a lesser cost. All things being equal and in a normal market there is very little profit in clean hands developing single dwellings, that is how it should be as there is no real value add there. Larger projects where you create new titles and buy a reasonably large amount of risk is different story but the bottom line is you are still creating a consumer durable. That is not what builds an economy, LOL unless like Germany you export houses in boxes. Technology, plant, equipment, raw material, research, development etc etc provide the basis of economic development, development that allows us to afford decent houses, not the other way around.
> 
> ...




I am in awe of your sagacity on this subject matter. I will immediately shut down my small building arm and property development business on this amazing insight. 

*Australia will not grow no many how many extra house we build!!!* Have a look at what you have just written Mr Z. So where do we house the people then Mr Z ? In a cardboard box?

Have you even considered for one moment that I might be able to negotiate a better deal than the average Joe Schmoe off the street thusly passing on the "real term" cost to the purchaser? Nope ... too wrapped up in trying to pull me down rather than seeing it for what it is.

"Technology, plant, equipment, raw material, research, development etc etc provide the basis of economic development, development that allows us to afford decent houses, not the other way around." This statement beggars belief. What is the point of having a technological marvel house that no one can afford to live in? All the research and the palava you carry on about HAS ALREADY BEEN DONE. We  are bulding houses here ... NOT nuclear physics. FOR CHRISSAKE you are full of it. AND you reckon I am ignorant. 

40k has not been given away. It is called profit and risk. Something that you seem to be able to fail to grasp. Why bother playing for such small numbers unless you are going to make a profit? Do you think for one moment that this is all about me? Have you even considered that the bricklayer on the job also is a mate of mine? HUH ?? Man you are narrow minded. How about this for a mind blowing concept. Have you even considered that I might have an interest in the building company? Ohhhhhhhhhhh ....... the lights are coming on now. My ego indeed ! So if I back out of the market you reckon that the bricklayer might not have a "few" more houses NOT to build? So the income I pay him wont HELP pay his kids school fees? There is more to life than thinking of yourself.

Go and hide under your rock and wait for when you think it is the "right time" to dip you toe in the market. By then it will be too late.

and I finish on this "should some, would some, could some" IF IF IF only this bubble would burst I will be proven right.


----------



## explod (17 August 2010)

Mr Z said:


> Robots seems to be unable to post any meaningful comment, I think my first assessment was the correct one on that score.




The self annointed Associate Professor is so ahead of the pack that his sense of meaning seems to be beyond the reach scholarship.   

But Brothers, the propety run in that time has been something so perhaps one day when we look back we could make him an honorary.


----------



## trainspotter (17 August 2010)

Go the Botman ! He ROCKS ! :


----------



## MR. (17 August 2010)

trainspotter said:


> Go and hide under your rock and wait for when you think it is the "right time" to dip you toe in the market. By then it will be too late.
> 
> and I finish on this "should some, would some, could some" IF IF IF only this bubble would burst I will be proven right.





Ha Ha Ha,  So when I and others have chosen not to invest in any investment properties should we just simply move on then?  However this tread is the “Future of Australian property prices”. I’m interested in the future prices as I’m betting it’s not going to move upwards by much. 

What’s the recent talk all about when referring to a crash? My logo there on the left even shows a picture of a young man waiting for the property boom. No crash referred to! A neighbour used to talk about this picture of the old man who on the original before I butchered it read “The young man who waited for property to come down” My joke, but if you think it’s going to be too late by the time I want to buy something thanks for the warning! 

In the mean time I have rolled the extra money over into even larger machinery instead of property. Making something seems far more productive than betting on continued property price increases!  

But the banks or all those financing for investment properties can't be wrong hey!

ps: The botman's recent purchase is me measuring stick....


----------



## Mr Z (17 August 2010)

Explod LOL...

TS... I am currently out pacing property in returns, I have no concerns about returning to the market when it makes sense. I am not hiding under anything I am simply invested elsewhere.

MR. Real investment, good to see!


----------



## trainspotter (17 August 2010)

MR. said:


> Ha Ha Ha,  So when I and others have chosen not to invest in any investment properties should we just simply move on then?  However this tread is the “Future of Australian property prices”. I’m interested in the future prices as I’m betting it’s not going to move upwards by much.
> 
> What’s the recent talk all about when referring to a crash? My logo there on the left even shows a picture of a young man waiting for the property boom. No crash referred to! A neighbour used to talk about this picture of the old man who on the original before I butchered it read “The young man who waited for property to come down” My joke, but if you think it’s going to be too late by the time I want to buy something thanks for the warning!
> 
> ...




I concur with the statement of my learned colleague MR. when he stated thusly "I’m betting it’s not going to move upwards by much. " Much has been written and agreed to in regards to this fact. It has been written by people far wiser than me that interest rates have stifled the market, growth has slowed according to the ABS by 0.7% and other such like nuances.

It has been written by the sages of this thread that property is faltering and is not the idylic paradise of money printing it used to be and not possible to be spruiked by the naysayers any further.

Well done you and your Massey Ferguson type machinery that is larger than property. There are plenty of opportunities out there to manhandle into a winning formula. I am looking into carbon credits myself and how I can offset the pollution I am currenly offing into the market place.

I wish the banks the best of luck when the ferryman asks for his toll. I will be long gone and onto another venture and ride the next wave of propsperity.

Keep up the good work MR. May the force be with you. 

P.S. Robots is happy with what he has. Living the dream man.


----------



## trainspotter (17 August 2010)

Mr Z said:


> Explod LOL...
> 
> TS... I am currently out pacing property in returns, I have no concerns about returning to the market when it makes sense. I am not hiding under anything I am simply invested elsewhere.
> 
> MR. Real investment, good to see!




Read the post above in regards to where you are at and where I am at. Once I have fulfilled my discourse into this venture no doubt my John Deere machinery will open it's sleepy eye. Oh well.  BUT now is not the time for me either. SIP principle again.


----------



## MR. (17 August 2010)

Try and keep on the rails there Trains smash!

When I bought the "Massey" the salesman was talking all about how he was going to buy another investment property. His first one had done well and he wanted to add another. His actions weren't to reassuring.

He bought more property with his money as I bought machinery with mine. 

I questioned his purchase and it appeared, it was all about the tax incentives!
Amazing the investment just to save a little tax!


----------



## nunthewiser (17 August 2010)

MR. said:


> Try and keep on the rails there Trains smash!
> 
> When I bought the "Massey" the salesman was talking all about how he was going to buy another investment property. His first one had done well and he wanted to add another. His actions weren't to reassuring.
> 
> ...




Depreciation on machinery and plant is a doozy 

Dry hire on *new* machinery a nice lil number . Older machinery a pain in the neck.

every dodgy diversified investor type should consider this strategy if they get the urge to look outside the box 

I hold machinery


----------



## trainspotter (17 August 2010)

MR. said:


> Try and keep on the rails there Trains smash!
> 
> When I bought the "Massey" the salesman was talking all about how he was going to buy another investment property. His first one had done well and he wanted to add another. His actions weren't to reassuring.
> 
> ...




Sorry ... was having an out of body experience for a second there MR. You don't buy property to get a tax incentive these days do you? Surely not? Machinery on a chattel mortgage perhaps as long as it is income producing ... anyways I am getting off track here ... AHEM ... property prices eh ??

Out of interest what kind of machinery do you have ?


----------



## trainspotter (17 August 2010)

nunthewiser said:


> Depreciation on machinery and plant is a doozy
> 
> Dry hire on *new* machinery a nice lil number . Older machinery a pain in the neck.
> 
> ...




Welcome aboard there NUN ! Long time no see. Do my boats count as machinery? No wait ... I don't hire them out anymore.


----------



## nunthewiser (17 August 2010)

trainspotter said:


> Welcome aboard there NUN ! Long time no see. Do my boats count as machinery? No wait ... I don't hire them out anymore.





 im just sitting back chillin with Dr Bots and enjoying some of the creative arguing and banter that appears in the meantime.


----------



## MR. (18 August 2010)

trainspotter said:


> You don't buy property to get a tax incentive these days do you? Surely not?




Me? no..... Others perhaps! ..... Not you? What do you mean "these days"
I'd think more than a few are negative geared!



> Machinery on a chattel mortgage perhaps as long as it is income producing ...




Oh yeah, she has to be income producing. New, if she's high tech.

Me plough has lights!


----------



## Mr Z (18 August 2010)

MR. said:


> Amazing the investment just to save a little tax!




That is common among the people I know, they'd not see the point of a positively geared portfolio which of course is the route you need to travel if you are going to get to any size. They typically have one or two properties depending on the size of their tax 'problem'. 

I guess it helps the renters out! Remember what happened to rents when Hawke stopped negative gearing, boy did they back out of that fast as it blew up in the blue collar rents face with instantly higher rents! I think it last like 6 months.

Not what I call a real 'investment', its a tax dodge really, but certainly a factor in containing rents, which does hinder those trying to build a bigger portfolio.


----------



## Uncle Festivus (18 August 2010)

nunthewiser said:


> im just sitting back chillin with Dr Bots and enjoying some of the creative arguing and banter that appears in the meantime.



Iz been chillin through winter too nunster, but stumbled back in here for a dose of deja vue - or deja moo - same ol' bs.....

I liked the bit about banks having to continually 'grow' their business by lending - the bedrock ponzi scheme if ever there was one? Just shows that the current system is one giant Ponzi waiting for a 'Madoff Moment'?


----------



## Mr Z (18 August 2010)

Banks always need to lend that is true, largely because debt is constantly being retrenched. They are in control of the 'need' to grow but the market does pressure them to grow. Technically a bank could aim to stay stable and merely turn over its portfolio, slightly growing or shrinking as the rates etc dictated BUT you'd not want to be the CEO presiding over it! We are after all addicted to growth.

Overall the system does need to grow, that is true... if it does not our banking system kinda stops working, at least in the long run. I suppose that is why deflation is the enemy.

The concept of a zero growth stable economy is something that requires a major rethink of our methods, yet as we grow to the limits of the planet the need to contain ourselves in a sustainable way becomes an imperative. At least if it is to be resolved civilly. 

Cripes I sound like a hippy, a capitalist one at that... talk about conflicted ! 

That should get a smirk on the face of a few.

Enjoy


----------



## Mr Z (18 August 2010)

*Mr Pascoe you surprise me!*



> *''Moreover, this underscores an obvious point: while we can debate the macro risks surrounding housing, it is likely to be a very poor investment given current valuations.* House prices can - indeed, often do - show no growth in real terms for a very long period. *To take an extreme example, real house prices in Melbourne did not surpass their 1891 peak until 2001. Buying a bubble is an extremely bad investment.* I expect that the real returns on residential investment will be negative over the next decade.''




Housing bubble trouble for the middle class...

Housing investors running from the dangerous stock market will become a danger to themselves in the property market IMO. Running with the herd means start early, finish early... now where is that finishing line. Mum? Are we there yet? Are we there yet? Are we there yet? Are we there yet? Are we there yet?  Hmmmmmm.... $64 question!


----------



## trainspotter (18 August 2010)

Taken from the same article as Mr Z provided.

Minack reckons the* RBA appreciates the risk *of our housing bubble and that capping house prices was a key aim of RBA policy tightening earlier this year. 

''Better to slowly deflate a bubble than to see it pop. If Australia could achieve a cycle where house prices are steady or see moderate nominal declines, while growing incomes at a trend 6 per cent growth rate, it could reduce the over-valuation and financial risks associated with excess debt,'' Minack writes.

Ummmm ..... GOSH .... I dunno then .... he seems to be having a bob each way on this one? I am sure I wrote all of this about 20 pages ago? But it must be true if Minack says so. And Keen.


----------



## Mr Z (18 August 2010)

If this does qualify as a bubble slow deflation is not the normal outcome, I know it has been done but its not the safe bet.

So is it a bubble, seeing as we can't define a bubble here I am not sure we would know!

Either way, a pop or a slow grind lower in real terms... they both do nothing for me!

RBA's benign rates view they appear to be in the walking on egg shells phase of the rate cycle... to use a medical maxim "first do no harm"!


----------



## Temjin (18 August 2010)

While we are still debating on whether house prices will collapse here, our fellow Canadians are starting to see their own bubble to pop soon.

http://westernstandard.blogs.com/shotgun/2010/08/canadian-real-estate-bubble-officially-pops.html

We have had a massive drop in sales lately, and they are experiencing exactly the same thing. A coincidence perhaps? 

But I was told that they have a severe supply shortage as well! So perhaps their house prices will go to the moon as well.

Anyway, we are different because we have kangaroos.


----------



## trainspotter (18 August 2010)

Yep, just like Canada we are ......

CREA asserts that not all provinces will feel the effects of fluctuating real estate prices equally. Some provinces will have a more profound move in housing prices than others. Here is one of their predictions:

In 2011, Canada will experience an overall *decline of 0.9% *in home prices. Simply put, if a home is worth $100,000, it will fall by an additional $900 of value in 2011. _Again, in some areas the price of homes might actually increase while other areas might see prices fall two or three times this much._

What is another housing price forecast for 2011?

The Canadian Real Estate Association expects a 7.3% decline in home sales
While the real estate prices might remain fairly stable, the buying activity is expected to slow down significantly. This means that homeowners in a panic to sell may have to drop their prices substantially in order to liquidate. Others may need to wait longer than in previous years to sell.

Read more at Suite101: 2011 Canadian Real Estate Market Forecast and Prediction http://buyingsellingahome.suite101....market-forecast-and-predictions#ixzz0wvlR0DUJ

Except they have otters and we have platypuses. :


----------



## robots (18 August 2010)

hello,

well good afternoon, another fantastic day in real terms

great discussion, another aspect often over looked is the benefit of the tenant paying of your principle and interest loan in real terms

its just fantastic, as the years roll on you cleaning up in real terms

utopia in real terms

its like sitting at the shopping centre and watching the escalators, a light bulb moment in real terms

oh well, 

thankyou
professor robots


----------



## Mr Z (18 August 2010)

Utopia yet... 

Well I will be... and its so risk free!

Do you know of Ian Kiernan?

Just wondering.

:


----------



## robots (18 August 2010)

hello,

yeah, we should get him into ASF to do some work

thankyou
professor robots


----------



## Mr Z (18 August 2010)

Yep... he is good at cleaning out old dumps! Could even give some good advice on the dangers of investing long and borrowing short.

Wouldn't ya love to get the sort of mortgages they have in the US, 30 year fixed... I mean talk about making things more secure for the investor! All the while we get a few years fixed at the most and what the yanks call ARMS. They hate ARMS over there... We are all ARMS... another one of the major differences between our markets. The more ARMS you have the more pressure can be applied.... ask Ian, they ripped his bloody ARMS off! Poor bugger, I think he had some thing silly like 1000 houses at the time! At least that is the number I have heard touted, you can't say he didn't throw himself into it, what an effort! The guy is passionate! Anyway his bust lead to the clean up Australia thing so he put his notoriety to excellent use! Full marks for that!!

More fodder... Banking on unexpected rate rises


----------



## UBIQUITOUS (18 August 2010)

trainspotter said:


> Yep, just like Canada we are ......
> 
> CREA asserts that not all provinces will feel the effects of fluctuating real estate prices equally. Some provinces will have a more profound move in housing prices than others. Here is one of their predictions:
> 
> ...




Trainspotter, I reckon that once your whole street's prices decline by 20%, you will say something like "I'm not selling, so the price of my house has not declined at all."


----------



## robots (18 August 2010)

hello,

special hello to Kincella hope you enjoying the fresh air, take it easy brother

every things going really well

anyone have any data indicating Aussie house prices have crashed?

thankyou
professor robots


----------



## Mr Z (18 August 2010)

*Ruh oh!*

Kohler is onto bonds! Gotta be close to a top!

The season to consider bonds! By Alan Kohler


----------



## robots (18 August 2010)

hello,

yeah, all that keeps coming up is data indicating that house medians in Australia have risen to levels greater than pre GFC, just amazing since it has been the biggest financial event since 1929, howzat hey

and even during the GFC (the biggest financial event since 1929) medians dropped around 7-8%, yeah thats all, you ask 

sifting through the data has been tuff, alot of data comes up on financial matters,  but i noticed a lot of very very ordinary graphs still exist even 2yrs on from the GFC (biggest financial event since 1929!)

oh well, real terms

thankyou
professor robots


----------



## trainspotter (18 August 2010)

UBIQUITOUS said:


> Trainspotter, I reckon that once your whole street's prices decline by 20%, you will say something like "I'm not selling, so the price of my house has not declined at all."




Hahahahaha UBI more than likely .... that is if there is anybody to sell to? 

Surley they all would have self sacrificed with a bottle of Gin, a warm bath and a packet of razorblades by then?

Hopefully the house price has gone up by 20% .... no wait .... it already has ... so therefore if it goes down by 20% it has not declined at all. It is exactly what I paid for it 12 months ago.

Like my Granpappy used to say to me "If you are fearful of flying, don't get on the plane"


----------



## Mr Z (18 August 2010)

Spell stimulus! 

Spell temporary! 

Crikey mate that is like snorting coke and declaring a new and sustainable state of being, get real!

It was blindingly obvious that the money running from the share market and the stimulus combined where going to give housing a short sharp boost. Any num nut could have made that call, it was the Australian flight to 'safety'. The stimulus has almost run its course! Its now that we start to find out just how many are swimming naked. Unless of course we muddy the waters with bucket loads more debt and stimulus, which will just increase the problem down the track. This market needs to settle out to see just how strong it really is, I don't think anyone really knows yet, but to make that sort of declaration and ignore the artificial influences in this make is just plain mad.

You are playing tiddlywinks with yourself there!


----------



## trainspotter (18 August 2010)

Mr Z said:


> Spell stimulus!
> 
> Spell temporary!
> 
> ...




So how many houses did you buy to take advantage of this short sharp boost of 20% in 12 months? Do you not think the RBA has raised interest rates to do exactly that - settle out with corrections. DOH. I must have written this about a gazillion times now. I even put up a cartoon so you could understand it back in post # 2553

So num nut - did you make the call?


----------



## robots (18 August 2010)

Mr Z said:


> Spell stimulus!
> 
> Spell temporary!
> 
> ...




hello,

hehehehehehehehehehehehehehehehe classic

thankyou
professor robots


----------



## Mr Z (18 August 2010)

trainspotter said:


> Hopefully the house price has gone up by 20% .... no wait .... it already has ... so therefore if it goes down by 20% it has not declined at all. It is exactly what I paid for it 12 months ago.




errr um... +20% then -20% = -4%

100 + 20 (20%) = 120
120 - 24 (20%) = 96 or 100 - 4%

Just sayin.... tis all. You have to make more than you lose on a percentage basis, share trading 101.

I like the way that a 20% move up is perfectly OK and to be expected yet talk of a 30% decline and its just not possible! Most markets can move down faster than they move up when the panic sets in. Brighton lost 40% in the Savings and Loans crisis... locals panicked, Pyramid tanked and we all paid more for our petrol. Mind you it did recover very quickly as they stabilized the problem, talk to an older agent in the area... some have good stories. What a buying op that would have been!


----------



## robots (18 August 2010)

trainspotter said:


> *So how many houses did you buy to take advantage of this short sharp boost of 20% in 12 months?* Do you not think the RBA has raised interest rates to do exactly that - settle out with corrections. DOH. I must have written this about a gazillion times now. I even put up a cartoon so you could understand it back in post # 2553
> 
> *So num nut - did you make the call?*




hello,

NO COMMENT

thankyou
professor robots


----------



## Mr Z (18 August 2010)

trainspotter said:


> So how many houses did you buy to take advantage of this short sharp boost of 20% in 12 months? Do you not think the RBA has raised interest rates to do exactly that - settle out with corrections. DOH. I must have written this about a gazillion times now. I even put up a cartoon so you could understand it back in post # 2553
> 
> So num nut - did you make the call?




Yes! I did.... and none, its a bit like buying the last spike of a share move. Dangerous territory that you are foolish to buy into until at least you have seen the dust settle. Again trading 101 you always leave some on the table, only mugs try for the highs and lows. Its always unpredictable stuff in terms of the size of the move, not the fact that there will be a reaction, but the size of the reaction.

The RBA drives using the rear vision mirror, LOL, if they had known that they fed a 20% move in RE they'd have jump on the brakes a lot sooner! You seriously credit the RBA with more sense and power than it actually has! They have a moderate degree of control while things are stable, things go wrong and they get dragged kicking and screaming by the market.

Yes you have said it a gazillion times and yet you still don't really understand it, that much is obvious!!!


----------



## Mr Z (18 August 2010)

robots said:


> hello,
> 
> yeah, all that keeps coming up is data indicating that house medians in Australia have risen to levels greater than pre GFC, just amazing since it has been the biggest financial event since 1929, howzat hey
> 
> ...




LOL oh yeah I almost forgot to mention it... gold in AUD terms into the crisis was +72% at one point. That is what you call real terms.... 

Then there was the opportunity to roll into insanely cheap gold stocks!

Oh and guys... don't try and tell me you captured the +20% in real estate, -8% from pre GFC +20% now is only a 10.4% gain on pre GFC so if lose 20% from here you are more than likely 11.7% down on pre GFC prices. For real estate its volatile that is for sure but its not like you used stop losses and rolled back in lower like a stock trader could. On top of that Bots is buying stalling highs? Brave or...what?

Where as most gold investors would have been buying pre GFC just on the seasonal factors, without trying to be some market savant. Just like the last couple of weeks has been buying time again for the season in the new year.

Now my favorite gold stock that is up 800% from GFC lows, now you are talking gains 

You know, while we are cherry picking numbers and all....

Relatively there where much better places to be. Even if you rode gold back down after it cracked you still did +22% at the subsequent lows and where back to +66% at the recent highs.

Better places to be boys, better places to be!



CYA!


----------



## trainspotter (18 August 2010)

Mr Z said:


> errr um... +20% then -20% = -4%
> 
> 100 + 20 (20%) = 120
> 120 - 24 (20%) = 96 or 100 - 4%
> ...




Hahahah aaaa hahaa ... yeppers you got me a beauty there Mr Z. I had my mouth open and everything for full effect. Nice catch.

I am yet to see a chart or graph evidencing a 30% decrease. I have seen plenty where there are 20% increases in RE though. What is making this catastrophic call of falling is where I splutter. It is going to take several things to happen;-

1) Wholesale job losses - then people cannot afford to pay their mortgage.
2) Massive increase in interet rates - yet RBA scribblings deny this is going to happen.
3) One of the big 4 banks falling over - unlikely but possible. (Govt backed I believe)
4) Toxic debt and non recourse and ratchet loans kicking in - We don't have ANY of these.
5) Secondary wave of GFC - possible but unlikey due to this Guvmint printing money to prop the industry up.

Anyone else got any other ideas? IRS is valid but unlikely as the rest of the world is operating at 0% and we are on a 10 year Govt bond rate of 4.5%.

I remember Pyramid very well. As I was shovelling money in the front door the manager was shovelling it out the back. They don't exist anymore. For a very good reason.

We have come a loooong way since those days. AND you know it.


----------



## MR. (18 August 2010)

What a fantastic 24 hours. I’m chuffed. All me favourites have popped in. UF, Nun, Temjin, Bots this is just great.  

Now I just need Alan Kohler to put up a few charts on property,  Tech to pop in on his 3 month roster and the confession that Kincella’s offloaded the property portfolio!


----------



## trainspotter (18 August 2010)

Mr Z said:


> Yes! I did.... and none, its a bit like buying the last spike of a share move. Dangerous territory that you are foolish to buy into until at least you have seen the dust settle. Again trading 101 you always leave some on the table, only mugs try for the highs and lows. Its always unpredictable stuff in terms of the size of the move, not the fact that there will be a reaction, but the size of the reaction.
> 
> The RBA drives using the rear vision mirror, LOL, if they had known that they fed a 20% move in RE they'd have jump on the brakes a lot sooner! You seriously credit the RBA with more sense and power than it actually has! They have a moderate degree of control while things are stable, things go wrong and they get dragged kicking and screaming by the market.
> 
> Yes you have said it a gazillion times and yet you still don't really understand it, that much is obvious!!!




So according to your theory we should have bought property when? When the buying signals were there or when they weren't? Just want to make sure is all as obviously even though I have written it clearly a gazillion times I still do not understand. 

So the RBA has no power eh? Bwaahahaahhahaaa ... you make me laugh. Nearly gagged on this gem. Nearly as good as the *"A home is a consumable and not an investment" * statement.

*con·sum·a·ble* (kn-sm-bl) adj. 
1. That can be consumed: consumable energy.
2. Able or meant to be consumed, as by eating, drinking, or using: consumable goods.


----------



## Mr Z (18 August 2010)

trainspotter said:


> We have come a loooong way since those days. AND you know it.




You do know what is happening in the US don't you? You do know that we are under a government backed deposit guarantee protecting the banking system don't you? You do understand that a market can collapse from a simple debt over burden without any notable trigger don't you?

Just like it was a basic call that property would gain interest after our stock market fell apart and stimulus was poured on from up high (seriously this is Australia, what is the basic investment cycle? Where does scared stock money always run? What you think that took some effort to deduce?) It now a basic call to say this market is in danger, all the numbers point at it! Guessing amplitude is a mugs game, so lets not go there.

Here is a call for you, you are about to see a reversal of favor with RE falling and commodity based stocks (mainly) on a tear into next year. Some good gains to be had in the next 9 months or so IMO. A less obvious call, string me up if its wrong!


----------



## Mr Z (18 August 2010)

trainspotter said:


> So according to your theory we should have bought property when? When the buying signals were there or when they weren't? Just want to make sure is all as obviously even though I have written it clearly a gazillion times I still do not understand.




Early 90's... when the market fell and stabilized. Fundies supported it back then. There have been better places to be since early 2000's 2003/4 say. Not to say property was done but there where better things to do at lower risk fundamentally speaking.



trainspotter said:


> So the RBA has no power eh? Bwaahahaahhahaaa ... you make me laugh. Nearly gagged on this gem. Nearly as good as the *"A home is a consumable and not an investment" * statement.
> 
> *con·sum·a·ble* (kn-sm-bl) adj.
> 1. That can be consumed: consumable energy.
> 2. Able or meant to be consumed, as by eating, drinking, or using: consumable goods.




Look up consumer durable, a house is a consumer durable.... land is not. What else do you think it is laughing boy? An everlasting magic pudding?

The RBA has limited power mainly when the situation is stable (alot of the time) it has influence with in limits... don't you remember just recently when the banks led them up saying tough! --> funding cost are driving this and you can do jack about it. Wayne pulled his little saber out and rattled it but the RBA moved with the banks wishes. THE BOND MARKET IN THE US LARGELY DETERMINES RATES AND ALL ELSE FLOWS FROM THERE. To believe that the RBA has control over anymore than the short rate is a fundamental misunderstanding of our system. Sure the RBA can push the short rate down or up but if the market does not sponsor the move i.e. its the wrong thing to do the market will win and the RBA will look foolish. Learn a little so that when it happens you will understand why all of a sudden they are talking of the need for higher rates and not saber rattling. YOU CAN'T TELL BIG MONEY HOW MUCH IT MUST TAKE AS A RETURN.... it votes in a market, the bond market. It is crucial to your real estate future and its in a monster bubble, it should concern you... but it doesn't. Go figure...


----------



## robots (18 August 2010)

hello,

Ubi can you please tell MrZ this is a property thread and if wants to discuss gold go to the commodities zone

Oh yeah MR isnt life a ride man and i also must take time out to thank everyone here, you wouldnt change it for a second
Thankyou
Robots


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## Mr Z (18 August 2010)

MR. said:


> Now I just need Alan Kohler to put up a few charts on property




Alan is my hero, for all the wrong reasons!    :


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## trainspotter (18 August 2010)

MR. said:


> What a fantastic 24 hours. I’m chuffed. All me favourites have popped in. UF, Nun, Temjin, Bots this is just great.
> 
> Now I just need Alan Kohler to put up a few charts on property,  Tech to pop in on his 3 month roster and the confession that Kincella’s offloaded the property portfolio!




This is how you "Reinvigorate ASF" by having an intelligent, constructive debate on a highly topical subject matter with people who are willing to go with the ebbs and flows and not sulk in the corner because they are not being understood or getting their point across. Good to see the old flames ready to fire again.

Or we can do this:-

"I think stock ZXT will go to $1.00 in the next few months" - contestant A
"I think it will go to $2.00 soon BUT IT WILL GO" - contestant B
"I have been holding the ZXT since 2003 so I want it to go up" - contestant C

Yeppers ... that is a great stock analysis going on right there.

Joe Blow thunders " I hope you boys got good *reasons* as to why you are writing this."

Contestant A "Naaahhhh just wishful thinking"

If I want this kind of stimulus I will bugger off to Hot Flopper.

Last decent discussion on stock is in the CFU thread. IMO. Fair judgement and lots of information.


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## Mr Z (18 August 2010)

Hot Flopper... that is funny. 

On the consumer durable house thing... that is why you can depreciate a new rental dwelling, it has a life like a fridge or car.... albeit a long life but hey it needs $$$$ chucked at it to stay in shape! 

I think BHP will go to $54 in the next 10 months :

Nighty night!


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## trainspotter (18 August 2010)

Mr Z said:


> Hot Flopper... that is funny.
> 
> On the consumer durable house thing... that is why you can depreciate a new rental dwelling, it has a life like a fridge or car.... albeit a long life but hey it needs $$$$ chucked at it to stay in shape!
> 
> ...




LOLOL ... now you getting with the spirit !

One of the most common of all *consumer durables* would be the furniture found in the home. This would include items such as sofas, chairs, tables, bed frames, and storage pieces such as chests of drawers and bookshelf units. While once thought to be limited to only items made of sturdy metal or wood, any type of furniture today that is intended for use over the period of at least a few years can rightly be classified as consumer durables. 

Another common example of customer durables in the possession of most households is appliances. These items may include ovens, refrigerators, toasters, and gas or electric water heaters. Consumer durables of this type are intended for use on a continuing basis, and often are sold with some type of warranty or service contract that helps to ensure the appliance will continue working for an appreciable period of time. 

The family car is also understood to be among the various consumer durables owned by many households. Considered a major investment by many consumers, the expectation is that the vehicle will remain operational for at least the amount of time it takes for the consumer to pay off any loans associated with the acquisition. Further, consumers anticipate that the vehicle can be utilized on a regular basis without fear of being destroyed by the frequent usage. 

http://www.wisegeek.com/what-are-consumer-durables.htm

A house indeed !! Pffffffffffffft !


----------



## Mr Z (18 August 2010)

robots said:


> hello,
> 
> Ubi can you please tell MrZ this is a property thread and if wants to discuss gold go to the commodities zone
> 
> ...




42 Bots, 42!

Jeez... achtung! you vill be myopic for the purposes of this thread! 

Sleep tight, don't let the hookers bite.


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## Mr Z (18 August 2010)

trainspotter said:


> A house indeed !! Pffffffffffffft !




So classify it then... smarty!

I had a car that was older than some houses ever saw, better build as well! The car is a consumer durable and the building we call a house is not??? WTF? It is consumed over time and it is durable.... Pfffffffffffffffffffffffffft all you want, that is the correct economic reference for it. Go look at a dilapidated 100 year old weather board and tell me with a straight face that it is not used up! HA!


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## trainspotter (18 August 2010)

Mr Z said:


> So classify it then... smarty!
> 
> I had a car that was older than some houses ever saw, better build as well! The car is a consumer durable and the building we call a house is not??? WTF? It is consumed over time and it is durable.... Pfffffffffffffffffffffffffft all you want, that is the correct economic reference for it. Go look at a dilapidated 100 year old weather board and tell me with a straight face that it is not used up! HA!




I thought you said Nighty Night? Your logic has me bluffed. I have googled, binged, asked Jeeves, answers.com and they all give me the same answer. Houses are not classified as a consumer durable. I will call my accountant in the morning to clarify this situation. She could do with a laugh.

Goods that have a useful life of more than three years. Orders for durable goods, which are tracked by the Commerce Department on a monthly basis, indicate the extent to which businesses and manufacturers are willing to invest capital for future needs Several months of increases in durable goods orders are a sign of a strong economy, and vice versa. 

Long-lasting merchandise such as televisions, appliances, hardware, furniture, or recording equipment; also called hard goods. 

http://www.answers.com/topic/durable-goods

But if you want to call it that for sake of continuing the discussion I will allow it. Just this once, just to be sociable. OK.

My 1993 Landcruiser is better built than most houses these days but you did not hear that from me.


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## Mr Z (19 August 2010)

With all due respect to your accountant they don't know their 'a' from their elbow when it comes to economics! They are good with rules and calculators! While you are at it why don't you ask her what the main ideological clashes between Keynes and the Austrian School of Economics are. She will be a rare bird if she knows!

You will not find a lot of things in the definition for consumer durable because its a list of examples... 

1. It must be eventually consumed.
2. It must be reasonably durable (things like shoes don't make it!)

You will find that it is not included in statistics as a consumer durable because housing is treated separately, mainly I think because the land content would distort the data making it meaningless considering what they are trying to learn when looking at consumer durables. Also its such a large body of $$$ there is merit in treating it separately, unlike say washing machines   You could argue that for statistical purposes they are not and I think that is quite sensible.

Regardless the building we call a house, not the property its on, meets the definition of a consumer durable. They deteriorate, they depreciate and they are eventually replaced. Over the long run the house tends to loses value but because the land typically more than compensates due to growth in our cites etc, many people tend to ignore or just not consider that fact. They are purchased by consumers to meet a long term need... its not so hard is it?

Anyway... *semantics*! Way to subvert the point :


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## MR. (19 August 2010)

Mr Z said:


> You will find that it is not included in statistics as a consumer durable because housing is treated separately, mainly I think because the land content would distort the data making it meaningless considering what they are trying to learn when looking at consumer durables.




Mr Z, which data do you speak?

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6401.0

Although, a percentage change in Housing can be offset by a percentage change in Clothing and Footware, the "amount" changed could be quite different!


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## Mr Z (19 August 2010)

When you see references specifically to "consumer durable" sales.

And yes... the devil lives in the detail of the numbers that is for sure.


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## Mr Z (19 August 2010)

Yeah BABY! go on click the link, you know you want to!

Hmmmmmmm... it is definitely not the sign of a bottom, I know that much.


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## Temjin (19 August 2010)

Source: Gerard Minack, Morgan Stanley Research (via Money Morning) (data sourced from ATO public source)


Source: Gerard Minack, Morgan Stanley Research (via Money Morning) (data sourced from ATO public source)

Great charts from Gerard Minack who originally posted the article about ponzi scheme on real estate properties.

Pretty self explanatory. 

However, it does show the interest cost of investment properties have been rising disproportionately over the last two decades and largely contribute to the increasingly "negative" net rental return on investment properties. 

Great investments really.  Time to buy more properties with negative rental return and wait for capital appreciation to double in less than 7 years!


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## electronicmaster (19 August 2010)

Temjin said:


> Source: Gerard Minack, Morgan Stanley Research (via Money Morning) (data sourced from ATO public source)
> 
> 
> Source: Gerard Minack, Morgan Stanley Research (via Money Morning) (data sourced from ATO public source)
> ...




Ouch..


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## robots (19 August 2010)

hello,

thats great, dont buy then and invest elsewhere no big deal right

oh yeah, thanks for your opinion Gerard Minack, how have your funds performed that you want me to invest in? will you stop redemptions at any point?

gee everyone has blown Keen now you onto this next spruiker Minack

oh well

thankyou
professor robots


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## Agentm (19 August 2010)

robots

what part of Gerard Minack's report is inaccurate or incorrect.

i read the report today myself and the opinions looked sound.

just curious which part of the opinions you dont agree with?

TIA


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## robots (19 August 2010)

hello,

a. australian house prices are in a bubble

b. RE is/has been a dud investment

c. "inflation adjusted" or "in real terms" prices in 1891 have just been surpassed/or matched in 2001 in Melbourne

just a few I quickly picked out, i did read it the other day

shiller all over again

thankyou
professor robots


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## trainspotter (19 August 2010)

Minacks report is sound and he speaks with forked tongue. He claims we are in a bubble but he also quantifies the RBA decision to stall growth. Read the full article. He also claims it wil be a deflation rather than a pinprick.

I have said all along that for this RE to burst many things must happen.

1) Wholesale job losses - then people cannot afford to pay their mortgage.
2) Massive increase in interet rates - yet RBA scribblings deny this is going to happen.
3) One of the big 4 banks falling over - unlikely but possible. (Govt backed I believe)
4) Toxic debt and non recourse and ratchet loans kicking in - We don't have ANY of these.
5) Secondary wave of GFC - possible but unlikey due to this Guvmint printing money to prop the industry up.

Minacks summary only concudes that No #1 is most prevelant but also must unlikely. I have referenced the data about 20 or so posts ago.

UNTIL one of you can produce the hardship you are so KEEN to quantify I will proffer my backing with Profesor Robots. Afterall .... he has got it right. 

Meanwhile back at the ranch:- property that I own is going to setllement. I signed tha land transfer today ... A tidy sum of speculation of 23% within 12 months. Oh well ... must be real terms before I know what I am doing.


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## trainspotter (19 August 2010)

Mr Z said:


> When you see references specifically to "consumer durable" sales.
> 
> And yes... the devil lives in the detail of the numbers that is for sure.




My accountant had a hysterectomy at your association of words to try and count houses as a consumer durable. It took a full 2 minutes of guffaws before she was in a mean state to talk rationally to. UMMMM NOPE. According to the ATO what you are talking about is a throw away item. It has a shelf life for tax deductibility and is a negative asset. 

A house does not meet these criteria. Oh and by the way she is a CPA with 600 clients. Just to really push the point home she is also my sister. Oh well ... what the hell would she know?


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## electronicmaster (19 August 2010)

Anyone have Charts of Housing priced in Gold and/or Silver?

Please post them here.


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## trainspotter (19 August 2010)

> Great investments really.  Time to buy more properties with negative rental return and wait for capital appreciation to double in less than 7 years!




Clearly you have not been keeping up with this thread. It has been decided by the quorum that we agree to agree that property has stagnated. We also agree that it has shown signs of reversal and into negative equity in certain areas. It has dipped NATIONALLY in a seasonally adjusted terms  ... wait for it ... wait for it ..... 0.7% overall. (by the ABS)

Can anyone tell me what happend in the stockmarket over the same period of time? HUH ... anybody? Lets go say ....... I dunno ....... overall nationally seasonally adjusted 3 years ago as to what happened and how much did it lose in this period?

Now for all those people who say isn't it wonderful I am in base metals and going at 800% on certain stocks !! WELL DONE YOU !!! I kiss the living earth at your feet .. you are so clever! Yo have a piece of paper in a company that is making a profit and it is reflected on the stock market.

But alas it is not for me. You see when I invest in property I am employing people, people that matter. Their kids play with my kids at school. I have a vested interest in their future (and mine because I want to make money) No point having a businees unless you are in  it for profit.

Now which would you prefer ? Holding a piece of paper and sprouting I made 800% return or spreading the wealth and keeping people employed.

Your choice .. you decide. I have made my choice. You choose yours.


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## Mr Z (19 August 2010)

TS..

Is it good or a service?
Do consumers or producers purchase it?
Does it last more than three years?

Consumer Durable Good 

So why is it different in an economic sense from any other durable good consumers purchase? You need to argue that it is different to impact the argument I was making... bright spark!

What the ATO thinks is irrelevant.... seriously, I can't see the great economic thinkers saying oh bugger we have to revise our ideas because the ATO says for tax purposes x is y. So you base your economic thinking on ATO definitions and accountants, what a narrow outlook. I also find it kinda quaint that you have so much faith in the RBA, their numbers and capabilities. You do love authority don't you? Hell why not,  we should all take what they tell you as gospel! Easier than thinking!

Seriously accountants count beans and play with  rules, and I am glad they do, it is mind numbing bullchit that they wade through, but I am afraid when it comes to economics they are ignorant, CPA's are not known for their great macro calls now are they really? It amuses me that you felt the need to ask your CPA! No really, it does!

Well done you with the house! Who is a clever boy then!?... Now back inflation out of the 23% and you will find you made a gain in real terms. Stuns me that you and bots can't deal with that concept...  speaks volumes really.

So, anyway what has that got to do with the prospects going forward? If you where the last guy to sell say Hotdog before the whole tech boom went bang did that make you smart or lucky? You know? Get it? Just because you made it doesn't make what you did clever... but apparently it makes you think you are clever. LOL, never believe your own press.

Nope, I don't think you will get it...

I am getting bored... have you got anything interesting?


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## Mr Z (19 August 2010)

trainspotter said:


> Clearly you have not been keeping up with this thread. It has been decided by the quorum that we agree to agree that property has stagnated. We also agree that it has shown signs of reversal and into negative equity in certain areas. It has dipped NATIONALLY in a seasonally adjusted terms  ... wait for it ... wait for it ..... 0.7% overall. (by the ABS)
> 
> Can anyone tell me what happend in the stockmarket over the same period of time? HUH ... anybody? Lets go say ....... I dunno ....... overall nationally seasonally adjusted 3 years ago as to what happened and how much did it lose in this period?
> 
> ...




What a holier than thou BS! You clearly don't understand capital markets and their function. People who buy stocks and finance these companies create more in terms of jobs and real wealth for this country than speculators that mark up properties. Face it all you are doing is making a given property more expensive than it needs to be. All well and good while the market lets you get away with it but for cripes sake don't go puffing yourself up over it! Talk about the pot screaming black at the kettle, you are playing pocket billiards there pal. Taking the moral high ground on that is just sickening. Why are you on a stock forum anyway?


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## trainspotter (19 August 2010)

Mr Z said:


> TS..
> 
> I am getting bored... have you got anything interesting?




AAAAAhhhhhhh grasshopper ... you have so much to learn.

With a "consumer durable" once it has finished it's life it has gone. UNLIKE houses which have a BLOCK OF LAND ATTACHED. OOooopsies call the ATO and quantify it yourself. HAR HAR.

I will pass on your dismissive to my accountant who will also take great mirth in your perspective. She will also pass on your findings to the ATO who will gladly take up the cause. Ask for a rectal probe and ye shall recieve, THEN we shall see how mighty and powerful they are. LOLOL ...... even better yet ... ask for a "betterment statement" and see how you go!! ROFL.

SO ... now down to the engine room. The ATO according to you is what again? Ask all those people who invested their money in a tax deducitble ATO allowed TREE FARM and guess what ? They changed their mind ! And guess what ? They retrospectively individually REAMED them for everyting. Toothless Tigers EH ?? HAR HAR #2

Accountants I pay (my sister included) are employed to maximise my profitability. I will not say anymore on this as I am sure I do not need a rectal probe on my finances from the ATO. HAR HAR # 3

RBA sets monetary policy which defines Governments. Unless you want me to go on a massive PiÃ¨ce de rÃ©sistance about the intracacies of their involvement in this country and it's govermnents I suggest we drop this subject matter now as it will get very boring and involved from my perspective. HAR HAR #4

OK .. take out real inflation of say 8% overall which is a staggering figure for anyomes terms. I still made 15% on my money. I wrote that I only play with 20% of ingoings and usually return around 28% NETT allowing for EVERYTHING, and I still cleared 23% this time in a FALLING market.
But you must have missed that post. HAR HAR #5

Getting bored yet? Go and sell a hotdog.


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## trainspotter (19 August 2010)

Mr Z said:


> What a holier than thou BS! You clearly don't understand capital markets and their function. People who buy stocks and finance these companies create more in terms of jobs and real wealth for this country than speculators that mark up properties. Face it all you are doing is making a given property more expensive than it needs to be. All well and good while the market lets you get away with it but for cripes sake don't go puffing yourself up over it! Talk about the pot screaming black at the kettle, you are playing pocket billiards there pal. Taking the moral high ground on that is just sickening. Why are you on a stock forum anyway?




Just LOL on this one. You seem to be responding to me just fine Mr Z.

So 4 billion wiped of Telstra in one day in a sell down HELPED WHO ??? The mum and dad investors ... no wait .. the guys that shorted it ? ... no wait .. the people that work for Telstra?


How about Western Kingfish and all the people that invested their money with them? How they doing now ?? Just cheesy I bet.

Just when I thought you were getting somewhere you go and fail me yet again.


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## mazzatelli (19 August 2010)

trainspotter said:


> OK .. take out real inflation of say 8% overall which is a staggering figure for anyomes terms. I still made 15% on my money. I wrote that I only play with 20% of ingoings and usually return around 28% NETT allowing for EVERYTHING, and I still cleared 23% this time in a FALLING market.
> But you must have missed that post.




Your percentage figures should by 4, 7.5, 14 and 11.5% respectively. There is a 50% spouse entitlement fee


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## trainspotter (19 August 2010)

mazzatelli said:


> Your percentage figures should by 4, 7.5, 14 and 11.5% respectively. There is a 50% spouse entitlement fee




Not when it is a sole director company.


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## nunthewiser (20 August 2010)

Would like to just point out that theres money in hot dogs regardless of how its viewed in the grand scale of things.

in fact some have found more money in hotdogs than property, machinery, art and gold put together.

i will not include stocks as thats whats paved the way.

nothin wrong with hotdogs


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## wayneL (20 August 2010)

trainspotter said:


> Just LOL on this one. You seem to be responding to me just fine Mr Z.
> 
> So 4 billion wiped of Telstra in one day in a sell down HELPED WHO ??? The mum and dad investors ... no wait .. the guys that shorted it ? ... no wait .. the people that work for Telstra?
> 
> ...




So property speculators/developers never lose money/go broke? I know quite a few just in my circle of acquaintances... also many who've done exceptionally well.

Comparing the short term fortunes of a single stock to an entire property market is not valid. It would be like comparing the fortunes of one of my friends who crashed and burned on property to the entire AllOrds.

The thing to remember TS is that the game doesn't have an end siren. Certainly property has had the majority of possession recently and lots of folks are kicking goals up till now, but ultimately the pendulum swings.

How's your defensive play?


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## MR. (20 August 2010)

http://www.bloomberg.com/news/2010-...s-on-bubble-concerns-morgan-stanley-says.html

Nah, not our banks?


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## tech/a (20 August 2010)

> but ultimately the pendulum swings.




As it does in every business.
Property/Trading/Business should always have plan "B" "C" "D".

There are times in all of the above to batten the hatches (Consolidate) and to go hard (Speculate).

Doom and Gloom is for those who never do anything due to crippling fear and an inherent inability to think outside of their comfort bubble.

Entrepreneurs *DEVELOP* new and exciting ways of survival and ultimately growth.

Most of course *WATCH*commenting knowingly and with impressive authority.

Many years ago a mentor at the time said to me you wouldnt learn a great deal until you go broke---at least once.
I had 2 cracks at it---he was right I learnt more about survival and business skill in those years than most others.
_Its good to look back on and not forward to._


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## trainspotter (20 August 2010)

wayneL said:


> So property speculators/developers never lose money/go broke? I know quite a few just in my circle of acquaintances... also many who've done exceptionally well.
> 
> Comparing the short term fortunes of a single stock to an entire property market is not valid. It would be like comparing the fortunes of one of my friends who crashed and burned on property to the entire AllOrds.
> 
> ...




Not what I typed WayneL. There are inherent risks in any venture. The trick is to minimise your exposure for when things do turn South.

My Telstra response to Mr Z was an attempt to evidence that NOT everything is **** hot and shiny on the Stocks market. It was also in reference to that I am contributing to the economy by employing people, suppliers and manufacturers by building houses. He reckons that buying stock in a particular company HELPS the economy and the company. My perspetive is that by being involved with "housing the people", creates wealth and also increses the velocity of the money in the system going around. In other words the money they make goes and buys food, pays for school fees, buys cars, supports the community ... get my drift?

The pendulum has swung WayneL ... it is rapidly going the other way with auction clearances percentages dropping, longer to sell houses blah blah blah ... I have written this FACT about 20 times already.

My defensive position is just fine thanks. I have scaled back from where I was 5 years ago. Minimal risk and not a lot of money exposed.


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## Mr Z (20 August 2010)

Well alright then, lets just rename the thread... how to speculate and win in property in any market!... somehow that same logic does not apply to the share market.

ATO obsession... very interesting! I do have trouble connecting that with the concept I was trying to illustrate. Ain't that just the way though, get hooked up on a definition and piss up the wall about it. Should I still be on about your abilities with a calculator? I know % are confusing.... I hope you worked out the 23% right.

Hotdog... infamous tech company, if you don't remember.

Yes LAND, it has been mentioned a number of times that I was talking about the building so either you willfully ignore or you have comprehension trouble. Guess what you are only partially right in that, its not so much the land... think about it! Think real hard Forest.

Look guys, as far as the property cohort are concerned this conversation is what it needs to be so that they can be right forever. We can't talk fundamentals becuase that is not price and price is all that counts (classic bubble mentality by the way!). When the price is flat suddenly its about speculating and the success (or not?) of a local single dwelling development. If that qualifies as a development, I was always a little more circumspect with that one, single dwelling is a speccy in my book you don't even get your junior developer badge until you are creating at least one new title (there is a clue).

Jeeze I wonder what sort of response you'd get if you where screaming 50% correction... in real terms of course... but then all that counts is the number of dollars right? Not what they can buy right? Hey here is an idea, you should have gone to Zimbabwe, man did they know how to do it right! In nominal terms that is.



> RBA sets monetary policy which defines Governments.




Yep go on... do it. Why don't you explain the 80's interest rate spike and how it had nothing to do with the US bond market and US monetary policy. I repeat... in reality the RBA has limited scope of influence when things are stable. With in that context the RBA does have an effect on politics but if it where seen to be undue you would hear our politicians scream the roof down. Most of the time this is the case but even then you will find that they take their guidance from the short bond rates. When stresses build and the bond market reacts, central banks have no real choice but to follow, well actually they have one choice but it is of limited effect.

Interestingly the Fed looks about ready to use that choice. QE or direct monetization of their bond market, by the way, just in case you didn't know that is how they create money over there... it is loaned into existence and the system. So the Fed will blip up some new money from nothing, go buy some UST's with it and the US people end up owing the Fed the money plus interest, interest on something that was created from nothing! Even Zimbabwe didn't have that handicap (US Fed is a private institution by the way, just a side note!) Yippeee I hear property speculators say! This will support the bond price and keep yields and rates low! Now while that is true it pays to consider this... a large amount of UST's are owned overseas and when direct monetization of the bond market occurs bond holders step to the logical conclusion, inflation which will destroy the pitiful yield on offer so they sell driving rates back against the Feds efforts to keep them lower. Typically when they sell a % the money goes back off shore sending the USD lower which also impacts on price inflation and the value of all other OS held bonds. Now if most of these holders held the bonds for purely economic reasons (which they don't) trouble would show up in the form of higher rates quite soon, either that or insane levels of money printing by the Fed to support the market but that would be pointless becuase they are already experiencing the "pushing on a string" effect, you can only borrow so much even at 0%. One saving grace is that many of these bonds are held by foreign governments that are more interested in maintaining the value of their currency relative to the USD. Basically keeping it low so that the US can buy goods easily, it also has the happy side effect of keeping rates in check so that they can lend as well as spend on all those lovely things you export to them. Anywhoooo.... at some point that games ends, at some point direct monetization breaks the deal because the US consumer becomes of less value to the Asians and the investment at risk out weighs their value. We are entering that period of time... the end result will be high rates or high inflation both of which will impact the cost of money. Since we rely on OS money it will drive our rates higher, quite probably not as much as the AUD should be stronger but by enough to stress the debt laden.



> UNTIL one of you can produce the hardship you are so KEEN to quantify I will proffer my backing with Profesor Robots. Afterall .... he has got it right.




It is a false assumption to suggest that hardship is required, over extension in good times has sent many people to the wall. We are extended in terms of debt NOW, it actually only requires us to reach a tipping point. It could be as simple as some necessity going up in cost basic things, electricity, food, medical etc. When there is no stretch left in credit that is all it takes, a small movement at the margin. It would show up subtly at first but in time could compound if underlying conditions don't change. I suspect we might be there ATM, in the build up. I don't know, I am watching.

Anyway Trainsmash, I know you don't do subtlety, only price. Price of everything and the value of nothing and all that.



> 5) Secondary wave of GFC - possible but unlikey due to this Guvmint printing money to prop the industry up.




WTF you don't recognize that alone as a major danger?!



> 3) One of the big 4 banks falling over - unlikely but possible. (Govt backed I believe)




Yeah look the banks can still go broke. The deposits are guaranteed by gov to stave off bank runs. This does not mean that they can't still blow up, if they did it would put pressure on rates. It is likely that they would nationalize a failing bank but its not a given. Regardless either event would be rate negative and would be paid for by the population as a whole via tax or newly minted money (inflation) which would further compound any debt stress in the market. Given the exposure I would think we are going to end up nationalizing at least one of the big four before this is done, my bet is the Commonwealth FWIW.

Watching 4 Corners on Monday? I wonder what they will focus on!



> 4) Toxic debt and non recourse and ratchet loans kicking in - We don't have ANY of these.




Yep no liars loans ever happened here did they? Fact is we don't know just how toxic these loans may or may not be. Non recourse... LOL, its called personal bankruptcy in this country. Not a first choice but there is no recourse. Interestingly enough in the US they made credit card debt recourse... it even survives bankruptcy... now that is a powerful lobby group! Most Americans don't even know that the change happened. Anyway, talk to a few boat builders about it... you'd be surprised how many have gone bust in their name, their wives name and even in their kids name.. it was all the rage late 70's into the 80's. Recourse means little if you actually hit the wall which is why most jingle mail happens. People don't tend to walk away while there is social stigma attached. The problem in the US is that it is so common it has just about lost its stigma.



> Can anyone tell me what happend in the stockmarket over the same period of time? HUH ... anybody? Lets go say ....... I dunno ....... overall nationally seasonally adjusted 3 years ago as to what happened and how much did it lose in this period?




Now why is it you insist on cherry picking the real estate numbers and opportunities but want to treat the entire and very diverse stock market as a whole?

Anyway... on it goes!


----------



## trainspotter (20 August 2010)

I will get the ATO to call you in regards to your dillema of being unable to recognise the correct terminology.

"Hotdog... infamous tech company, if you don't remember." LOL .... you are still unable to understand that I was mocking you. "Go and sell a hotdog" was in reference to just that. DERRRRRRRR.

Are you jealous that I am out there making coin and employing people and doing it in all of a place known as "property"? Get over it man. You don't see me ranting that you should sell all of your gold CHESS statements because I think it is overheated and it is a crisis bubble waiting to happen? HUH ? Now do ya?

For the record Mr Z ... Below is a 10 unit development that I took from single green title to vacant strata to under construction. Do I qualify for my junior developers badge yet? Here's a clue, it's not the first time I have done this.  Wanna buy one? There are 2 left. Sold off the plan as well.


----------



## Mr Z (20 August 2010)

tech/a said:


> As it does in every business.
> Property/Trading/Business should always have plan "B" "C" "D".
> 
> There are times in all of the above to batten the hatches (Consolidate) and to go hard (Speculate).




You would not think that here, there is only plan A, plan B is scoffed at.



tech/a said:


> Doom and Gloom is for those who never do anything due to crippling fear and an inherent inability to think outside of their comfort bubble.




Not so... you prepare and plan. There is almost always a winning course, your job is to find it. You may remember, me from StockCentral days talking about the rising issues that lead to the GFC and starting to buy some gold. Then again you may not, it was popular to deride anyone who considered 'problems'. So far it has worked out well as a hedge... especially in the lead up to the GFC. FWIW. Yeah I know real men hate gold.



tech/a said:


> Entrepreneurs *DEVELOP* new and exciting ways of survival and ultimately growth.




Exactly, they don't stay on rails when the outcome is foreseeable. Which is probably why the small business failure rate sits at around 80%



tech/a said:


> Most of course *WATCH*commenting knowingly and with impressive authority.




Nope... most are commenting knowingly and with impressive authority with 20/20 hindsight and never take risk. If this where 20/20 hindsight we'd not be arguing.... oh wait, +20% from the GFC bottom, yep there is that 20/20. I am arguing looking forward and my money is where my mouth is. People see the calls as negative as they judge them against their exposure when in fact they are opportunity. In reality eventually I think a lot of positive will come out of a crappy financial situation. This will make a better society in the end IMO.



tech/a said:


> Many years ago a mentor at the time said to me you wouldnt learn a great deal until you go broke---at least once.
> I had 2 cracks at it---he was right I learnt more about survival and business skill in those years than most others.
> _Its good to look back on and not forward to._




I've never hit the wall but have come close, learned a lot about how rapidly conditions in business can change.

Anyway... I am sure that the best developers in Oz will make money regardless but as we keep getting reminded the thread title is the future of property prices not 'how to survive as a small time property developer', hell even stats like price income ratios are deemed irrelevant here! *Price level concerns me*, the fact that the fittest developers will survive and in all likelihood grow does not. That is talking as an investor looking to put new money to work today, not as a property developer or speculator.


----------



## Mr Z (20 August 2010)

trainspotter said:


> I will get the ATO to call you in regards to your dillema of being unable to recognise the correct terminology.




Sure you do that... 



trainspotter said:


> "Hotdog... infamous tech company, if you don't remember." LOL .... you are still unable to understand that I was mocking you. "Go and sell a hotdog" was in reference to just that. DERRRRRRRR.




You don't seem to get that I was ignoring you! 



trainspotter said:


> Are you jealous that I am out there making coin and employing people and doing it in all of a place known as "property"? Get over it man. You don't see me ranting that you should sell all of your gold CHESS statements because I think it is overheated and it is a crisis bubble waiting to happen? HUH ? Now do ya?




You don't see me ranting that you should sell all your property! WTF... The holier than thou stuff is pukesome and disrespectful of other contributions but that is to be expected.



trainspotter said:


> For the record Mr Z ... Below is a 10 unit development that I took from single green title to vacant strata to under construction. Do I qualify for my junior developers badge yet? Here's a clue, it's not the first time I have done this.  Wanna buy one? There are 2 left. Sold off the plan as well.




Well done you! Again! Then you should know there is more value in the title than the land itself. The creation of new title is as more a part of the gain than the building itself. Which was the point I was making... compare Torrens title units to strata title units to company title units. Its the paper from the government that is the attached value more so than the LAND. Just making a subtle point. 

What the heck has this to do with the future of Australian Property prices? Puffing yourself up don't really help us out now does it? What is the argument? I'm so good and your so jealous I must be right?

Awwww come on... lets look forward. This chest thumping is just a bit poxy, what about some solid analytical reasoning? So far I don't buy your logic...

LOL so what eh? You don't buy mine... to each there own and live and let live. I am not telling you to do anything, I know I can be very wrong so I make provision for that. You do as you will.... but don't try and suggest that you are some how better than those that walk a different path to yours.


----------



## trainspotter (20 August 2010)

Quite correct Mr Z, an epiphany of truly orgasmic proportions. The title of the thread is "The future of Australian property prices". I have agreed with all and sundry as to things are not very stable and that the pendulum has swung into negative territory, even given reasons as to why, even concurred with you Mr Z on several occasions. Words fail me that it seems impossible for my explanation to be misinterpreted as to something that it is not.

WE ALL AGREE WITH YOU MR Z ! 

I am merely pointing out that it is still possible to make money out of RE. You went off on the tangent about Gold and 800%. I advised that I am making 23% returns. No that difficult really. You play the man and not the ball on too many occasions. For a while there you were actually making sense until you had to go back to the personal jibes. 

Oh well ... you keep on them gold stocks and I will play with my small time property development arm. The 10 unit development known as "Ellengrove Heights" is approx 3.95 million $ worth at end game. Chump change really.


----------



## Mr Z (20 August 2010)

trainspotter said:


> I am merely pointing out that it is still possible to make money out of RE. You went off on the tangent about Gold and 800%. I advised that I am making 23% returns. No that difficult really. You play the man and not the ball on too many occasions. For a while there you were actually making sense until you had to go back to the personal jibes.
> 
> Oh well ... you keep on them gold stocks and I will play with my small time property development arm. The 10 unit development known as "Ellengrove Heights" is approx 3.95 million $ worth at end game. Chump change really.




You took the gloves off very early in the piece.... don't come whining back cause some one stood up to you! You are the only person who here who gets that level of respect, you earned it pal.

Nope I merely mentioned that there where better places to be invested across that period of time and investment is about relative value not absolute value. Then you did the whole repulsive "my investment is more moral than yours cause I employ people in my local community" stuff! Slighting every Aussie who has ever invested in Australian companies developing real wealth, real jobs and real leverage to build our economy. Don't get me wrong, some one has to do property, hell its fun!, but for Christ sake don't be thinking it elevates you above us ordinary investor folk.

$4 million turn over in a development is not what you call significant, in some parts of country Australia it will barely buy an upmarket house. I hope you netted a decent sum. 10 places, 3.95 million, Ellen Grove, Hmmmmmmm OK.

You seem so desperate to project the BSD image... yes pet you are good but how does that help us out *looking forward!*

You seem to constantly duck, evade or ignore most of the background discussion as to why rates etc likely will rise. You keep coming back with well I did this or that, then you bitch when you get a competing well I did this! (its a property thread nah nah nah!) Oh give me a break... if you want to play the ball then, then play the ball, and put your 10 units back in your pants.

Congrats by the way, nice looking development. If I was to do anything around here that sort of single level retirees villa is getting over the odds. Some are doing better than single level small houses if you can credit it. Makes sense though, at that time in life they just want it now! In truth most of them could buy a house, knock it down, split it into two (way conservative) retirement villa type properties, sell one and get a large chunk of their unit for free... but they don't. I have said why not to a few I have met (inlaws friends) but it seems there are few if any risk takers at that time of life. I wonder how long that little niche will roll on, even the local builders don't seem to have exploited it fully over the last few years. Maybe there are issues getting it done, Ive not dealt with this council yet and they can be painful on other issues... so! Anyway if you have to/want to buy the property then why not?

Anyway... sorry, I was almost nice to you, will not happen again, I know its not what you are paying me for. :


----------



## trainspotter (20 August 2010)

Mr Z said:


> You seem to constantly duck, evade or ignore most of the background discussion as to why rates etc likely will rise. You keep coming back with well I did this or that, then you bitch when you get a competing well I did this! (its a property thread nah nah nah!) Oh give me a break... if you want to play the ball then, then play the ball, and put your 10 units back in your pants.
> 
> Anyway... sorry, I was almost nice to you, will not happen again, I know its not what you are paying me for. :




LOL ... just simply LOL. What part of this do you fail to understand?

_"I have agreed with all and sundry as to things are not very stable and that the pendulum has swung into negative territory, even given reasons as to why, even concurred with you Mr Z on several occasions. Words fail me that it seems impossible for my explanation to be misinterpreted as to something that it is not.

*WE ALL AGREE WITH YOU MR Z !"*_

This discussion you wish to keep rehashing has been done a thousand times before on this thread by others as well. I agreed with them then too!

I will take your advice and place my 10 units firmly back in my pants where they belong. Afterall it is not about property in this thread anymore. It is about the machinations as to why it will fall quicker than the Roman Empire.

Good luck with your discussion with the ATO and with your gold shares returning 800% Mr Z.

I will plod away in the sandpit with my rinkydink toys that do not contribute to the economy. No sweat.

How does Nun say it? Avva good day.

P.S. It was post #2394 I wrote this "So when I write that I agree with you that prices have fallen and yes they will keep falling and yes interest rates will rise and yes there is a softening in the market somehow make me incorrect because I agree with you ?? "


----------



## wayneL (20 August 2010)

trainspotter said:


> The pendulum has swung WayneL ... it is rapidly going the other way with auction clearances percentages dropping, longer to sell houses blah blah blah ... I have written this FACT about 20 times already.




I would argue that it is not yet rapidly going the other way at all (not in Aus at least), but has merely reached the pinnacle of its swing and in that momentary pause before changing direction.... JMO of course.

Same story here in NZ.



> My defensive position is just fine thanks. I have scaled back from where I was 5 years ago. Minimal risk and not a lot of money exposed.




Cool.

Many folks lose the game through lack of defence, despite a great offence.


----------



## Bushman (20 August 2010)

Wow, can you two please just get a room and be done with it?


----------



## Mr Z (20 August 2010)

trainspotter said:


> LOL ... just simply LOL. What part of this do you fail to understand?
> 
> _"I have agreed with all and sundry as to things are not very stable and that the pendulum has swung into negative territory, even given reasons as to why, even concurred with you Mr Z on several occasions. Words fail me that it seems impossible for my explanation to be misinterpreted as to something that it is not._




LOL... yeah then in the next breath you attack the very same things, honestly looks a little bipolar. I really don't think I fail to understand any of it and frankly I think you are a little confused as to my position.



trainspotter said:


> _*WE ALL AGREE WITH YOU MR Z !"*_




LOL that just makes me paranoid  !  



trainspotter said:


> This discussion you wish to keep rehashing has been done a thousand times before on this thread by others as well. I agreed with them then too!




Oh sorry, I was not here... does that make it better?



trainspotter said:


> I will take your advice and place my 10 units firmly back in my pants where they belong. After all it is not about property in this thread anymore. It is about the machinations as to why it will fall quicker than the Roman Empire.




Yes please.... I wanna see you walk like John Wayne.

Yeah Rome, OK if you say so... huh?



trainspotter said:


> Good luck with your discussion with the ATO and with your gold shares returning 800% Mr Z.




How this is relevant I don't know, somehow in the way your mind works... you got around to what? Threatening me with what? An ATO reaming for what? I pay my tax, when it comes due, LOL I don't even feel the need to attempt to minimize it. You have to drop that fixation, it seems unhealthy!



trainspotter said:


> I will plod away in the sandpit with my rinkydink toys that do not contribute to the economy. No sweat.




My don't we have a glass jaw! Nowhere did I say its not a contribution BUT for you to hold yourself above others that technically speaking are making a greater contribution to the real wealth of this country is obscene. Calm down nobody is saying you aren't spinning then money go round, just don't infer others are doing worthless things. Man I guess I forget property is religion in Australia! When I lived in Sydney it was an obsession, viewing house was weekend sport for the bored and boring. I just went sailing... 



trainspotter said:


> How does Nun say it? Avva good day.
> 
> P.S. It was post #2394 I wrote this "So when I write that I agree with you that prices have fallen and yes they will keep falling and yes interest rates will rise and yes there is a softening in the market somehow make me incorrect because I agree with you ?? "




Its funny to see you hedge bets... then come back for a swipe. You don't wanna play nice yet?

Here is another bone...

Charlie Aitken who is a good analyst for Southern Cross, has a nice track record by my observation. He is talking property +9%  over the next three years with unemployment falling to 4.5%. Hmmmmmm he dose not expand on it enough for me to get a full grip on it other than he is very bullish Australia in the near term. I agree with a lot of his calls, can't fault his logic on many companies.

One thing that does concern me is we are getting to much negative press which probably means we are going the other way for a little while longer. Hmmmmmm maybe this stimulus has a little life left in it. With my traders hat on that this press is a warning signal... even seeing stuff like this...

http://www.bloomberg.com/news/2010-...s-on-bubble-concerns-morgan-stanley-says.html

Whatever happens they rarely announce it in the paper ahead of time!

I will be watching the spring action very closely!

Big wads of OS dough heading our way on a commodities bet could end up underwriting a bit more growth in the cities and mining areas. Now that I would buy as a short term stimulus. You have to worry when even the property bulls are flat on prospects. The initial phases of US QE2 could run better than they logically should, mainly because when it comes to depth and liquidity there are few places to park billions with the speed and safety that you can in the UST market. That fact alone has been a big help to keep rates lower than the fundies should dictate. Flight to safety, LOL yeah right, but at least you should get most of it back in the short term. Rates went negative in the crisis, now that is scared money! The question is will we feel rich enough to keep pushing out the boat for property? Hmmmmm when, when, when will it turn? Three more years in a commodity driven frenzy? Too many people calling for a stockmarket crash this year as well.

Oh well, maybe 1,000,000 flies will be right this time.

Chin up Trainwreck!

Three more good years! That would be nice eh?

Maybe we walk the tight rope between Asia and the US without a slip... man that would be cool!


----------



## Mr Z (20 August 2010)

Bushman said:


> Wow, can you two please just get a room and be done with it?




Will a Villa do? :


----------



## Bushman (20 August 2010)

Mr Z said:


> Will a Villa do? :




Only if it returned a nominal return of 10% p.a. over the last five years!


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## trainspotter (20 August 2010)

Keep em coming low down gun slinger. YOU DA MAN. I have changed my vapid ways and now have become your disciple. A picture of what will hapen to property in the very near future as reported right here in ASF to keep all the naysayers happy.


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## Mr Z (20 August 2010)

It is a bit like that in England.

Did you actually read my post? Sometimes I wonder, maybe that is the root of the main problem.



trainspotter said:


> Keep em coming low down gun slinger. YOU DA MAN.




You have a whole alpha dog thing going on don't cha?

Buy growth!

Go Australia!

Go Charlie!


----------



## Mr Z (20 August 2010)

Bushman said:


> Only if it returned a nominal return of 10% p.a. over the last five years!




I think motel rooms do better than that!   : 

Build a motel in a mining town TS... that should be a winner regardless!


----------



## Mr Z (20 August 2010)

*China... a bone of contention.*

China's GDP and Questions of Strength

Like it or lump it we are tied closely to China... this is one of the big unresolved issues that could blow back on us. Can they transition seamlessly from a codependent US relationship to internally fueled growth. Honestly so many opinions on that one its crazy! China weak, China strong... every time they bury us on the back of China's 'weakness' they come back swinging and so do we. Maybe when the China bears give up we should worry about Aussie property?


----------



## Bushman (20 August 2010)

ANZ Property Outlook - supply issues to 'absorb' the followers of Gerard Minack. PS: remember when Gerard was calling for a 20% correction this year after we had already had a RSPT-inspired 15% pull-back? Lol ... 

View attachment ANZ Australian Property Outlook August 2010.pdf


RESIDENTIAL PROPERTY
With interest rates expected to rise, we expect house price growth will (temporarily) slow to low single digits in 2011. Nonetheless, in the absence of a major economic downturn, a critical shortage of housing will see house prices and rents grind ever higher and housing affordability and availability will become major social and political issues in the decade ahead


----------



## trainspotter (20 August 2010)

Mr Z said:


> It is a bit like that in England.
> 
> Did you actually read my post? Sometimes I wonder, maybe that is the root of the main problem.
> 
> ...




So when you wrote this _"My appraisal has been simply that I think the odds favour the bears. Even the esteemed Mr Spotter concurs with that although maybe we would probably differ on degree. " _and Post #2393 and #2400 added in for good measure adds up to what again? That I agreed with you that property prices were in decline but you differed on degree? 

So you are not talking it down now but are now saying "C'mon Aussie C'mon"? 

Man you are confusing as a guru to follow !


----------



## trainspotter (20 August 2010)

Mr Z said:


> I think motel rooms do better than that!   :
> 
> Build a motel in a mining town TS... that should be a winner regardless!




2 storey, 100 room brothel in Kalgoorlie would be worth a look at if you could get planning approval. More interested in the building side then the business side myself. :


----------



## trainspotter (20 August 2010)

*The latest from RP DATA:*

The minutes of the Reserve Bank’s (RBA) August Board meeting were released this week. The minutes stated the following on house prices: 

“There had been further signs of a cooling in the established housing market after a year of strong price increases. Housing prices had shown little growth over the past few months, with prices falling in June, including in Melbourne where price growth had earlier been strongest. Auction clearance rates in Sydney and Melbourne had declined significantly, to around average levels. Housing loan approvals were estimated to have declined further in June and housing credit growth had moderated. These developments suggested that the earlier increases in lending rates were having an effect on household behaviour.” 

Without explicitly stating, the Board were clearly referencing the RP Data-Rismark Home Value Index results which showed values were down -0.2% over the June quarter and had fallen by -0.8% over the month of June.

The Housing Industry Association (HIA) and Commonwealth Bank (CBA) reported that housing affordability deteriorated in most capital cities and regional areas over the June quarter. The HIA-CBA Housing Affordability Index fell by -6.1 per cent in the June 2010 quarter to be -30.4 per cent lower compared to the same period last year. The Index combines interest rates, household incomes, and home prices to determine affordability conditions. Affordability declined by -6.5 per cent over the June 2010 quarter across the nation’s capital cities and was down by- 3.5 per cent in Regional Australia. The largest falls were recorded in Sydney (-9.1 per cent), Regional Victoria (-9.0 per cent), Regional Tasmania (-8.8 per cent), and Adelaide (-8.7 per cent). 

Which is what I have been typing now for several months but but but ... Oh nevermind.


----------



## Mr Z (20 August 2010)

trainspotter said:


> Man you are confusing as a guru to follow !




LOL... over the long term the bears win I think (given the current numbers) but in this environment with the liquidity fire hose squirting around the world you simply cannot rule out short term moves in any market. Three years is short in my world, for property, you may disagree. I think any market can surprise here and run against some seemingly negative fundamentals. This is the trouble with such wholesale money creation, you distort moneys roll as a measure and making sense of things gets tricky. All the while the market seems to make sure that the most people possible are wrong! So if you can show me where the money is coming from I can believe that we will get a short term reaction. Property is bubble like, but the one thing we have learned since Easy Al took over the Fed is that bubbles can be remarkably persistent and calling there demise by betting against them can be very dangerous. Sorry but when I see articles calling for the public to short banks on an obvious property call the hairs on the back of my neck rise. I give Charlie good odds in the short term mainly because of the sound case he makes for growth equities... that same thinking can flow through to property. Maybe you will be calling +30% since the GFC in a couple of years before the top is finally in. I dunno my jury is out and watching for spring and life to come back into this market. Maybe we get a bit of a head fake for the bulls then we go as the bullish factors kick in. Watch commodities... IMO FWIW.

Mate if I am a guru people are in deep do do!

Anyway... too much anti property press to feel comfortable that now is the turning point, even though it makes sense.

I reckon things are going to get more volatile all round generally over the next decade or so... should be fun.





trainspotter said:


> So you are not talking it down now but are now saying "C'mon Aussie C'mon"?




Yeah... talking certain stocks... but yeah, in the end it could all be good, even property if the capital flows get strong enough.

One thing to consider is that there are not a lot of good news stories around really. We are a safe first world commodity driven economy, we could come in for a lot of attention here! I am liking that call more and more.


----------



## Mr Z (20 August 2010)

Time to look at Perth again if you are dead set on staying in property!

Brothels... LOL you have to build them strong :

Motels are U drive brothels.... no?


----------



## trainspotter (20 August 2010)

Mr Z said:


> I reckon things are going to get more volatile all round generally over the next decade or so... should be fun.
> 
> 
> 
> ...




In the next decade or so I will be in my Villa in Bali full time and long gone out of property in OZ. 

AHA ..... you have hit the nail on the head with the commodity statement. The worlds thirst for our LNG, Brown Coal and Iron Ore keeps us ticking along globally. Like you stated previously this all depends on Chinas appetite for our soon to be dug up wealth.

Uranium and our 23% world deposit will be next on the hit list to be plundered more than what it is now. As the Governement of the day is required to pay the ageing population to stay alive and feed all of the self made blackholes of dependency driven social workers, reduce debt with ridiculous timeframes driven by insatiable bad press I reckon their palms will be itchy to get their hands on the last bastion of our economy.

As soon as you hear that the Government green lights more symbol U developments you will well and truly know we are on the ropes as a fiscally sound country. 

Then the blood will run in the street. So another 3 years HUH ? Might go and buy some more property on the strength of that.


----------



## robots (20 August 2010)

hello,

spot on today Trainspotter, its pure jealously, tall poppy syndrome which most australians participate in

the job creation in housing is enormous, you and me can see it because of our abilities

what a great day

thankyou
professor robots


----------



## Mr Z (20 August 2010)

robots said:


> hello,
> 
> spot on today Trainspotter, its pure jealously, tall poppy syndrome which most australians participate in
> 
> the job creation in housing is enormous, you and me can see it because of our abilities




Yeah that'd be it! Pure jealousy  Oh dear.... 

Job creation maybe so but at the end of the day house's are not the building blocks of a nation, they don't represent real wealth, real wealth is the productive capacity of our nation. Econ 101 dude....

But I forget myself, being in the presence of property royalty and all.

Now if there is a another surge here what boats float first?

Melbourne has had a dash, so do we look elsewhere.

Please do tell mr property guru?


----------



## robots (20 August 2010)

robots said:


> hello,
> 
> *thats great, dont buy then and invest elsewhere no big deal right
> *
> ...




hello,

here's one from yesterday, i can understand you might of missed it being busy running the ruler over other people's work

thankyou
professor robots


----------



## Mr Z (20 August 2010)

> thats great, dont buy then and invest elsewhere no big deal right




Yep OK... I will, its all relative, right. You go hard though!

Minack is probably not wrong, just early. 

Is that all we get?

Come on Mr Bots... some insight please! What where when how, you know quality content.

What about Perth eh?

What about other fly out cities eh?

Make sense or just so much more crap... after all... eh?

Don't be shy...

Any property CFD's yet? LOL Now they could be fun!


----------



## robots (20 August 2010)

hello,

agentM asked me what was wrong with Minacks article and this post i followed with, Minack is wrong on the following (and others):



robots said:


> hello,
> 
> a. australian house prices are in a bubble
> 
> ...




but we know spruikers are about getting your cash and looks as though they have a host of suckers out in the community

when you look at the dollars they have under management with no obligation what so ever

thankyou
professor robots


----------



## Mr Z (20 August 2010)

You kinda need to show why? You know, show your working, like at school. For credibilities sake? You know credibility... right?

Like with say c. pull up the stats and show us why he is wrong. You have done the work haven't you? I mean that is how you know isn't it?


----------



## trainspotter (20 August 2010)

Shonk Market down 1.1% Botman. Hows the property going out East? Must be due for a drive buy and watch the tenants pay the rent by now eh?

Glorius us property people ... just housing the poplulation and keeping them out of cardboard boxes in the street.

Will be in Melbourne in November. Must catch up for coffee.


----------



## robots (20 August 2010)

hello,

no need man, not interested in credibility just interested in the truth

anyone have a definition of "real terms"? "inflation adjusted"?

thankyou
professor robots


----------



## robots (20 August 2010)

trainspotter said:


> Shonk Market down 1.1% Botman. Hows the property going out East? Must be due for a drive buy and watch the tenants pay the rent by now eh?
> 
> Glorius us property people ... just housing the poplulation and keeping them out of cardboard boxes in the street.
> 
> Will be in Melbourne in November. Must catch up for coffee.




hello,

no worries, 

i'm with you man, we just helping out fellow man, the good guys in society providing shelter 

thankyou
professor robots


----------



## trainspotter (20 August 2010)

Just gotta say a very heartfelt respect to Joe Blow and the Mods for letting this tete' de tete' develop it's course. RESPECT !

Greatly appreciated on all fronts. Mine inclusive. 

There has been many theorists come on here that do not back up what they claim. Mr Z is ONE of the first to have a forefront view that actually makes a modicum of sense. Backed up with sound knowledge and a straight forward opinion. (not saying that Ubi and "others" didn't make sense) sorry if this offends but he actually offered an opinion rather than just headlining.

Once again Joe Blow and the Mods .. a gratuitous thanks for letting this run it's course. In a ice hockey sense we went the whole "5 Hole trap". 

This doesn't mean that I am wearing my rainbow jacket. Keep up the good work. Ahem.

I will continue to push forward with my measly minions (or is that millions) and make money out of pro ' per TEY' .

Hey robots ... keep fighting the good fight .... we gotta future to build !

Bing Bang Boom ... we got a pachyderm !


----------



## Mr Z (21 August 2010)

robots said:


> hello,
> 
> no need man, not interested in credibility just interested in the truth
> 
> ...




Generally I find that the truth is credible. FWIW. Where as he is wrong because I say so is well... like everyone else's opinion.

Real terms is easy! The value of the item in real purchasing power, inflation adjusted is just an attempt to measure real growth. The trouble comes when you try to nail real terms down to the $, that cannot be done IMO, only approximated. Dude I thought we covered this off ages ago! What is the point of having any investment if it doubles when everything else triples. The headline number gives you bragging rights BUT you can buy 1/3 less with the value you now have. Now it is never that cut and dry but when we get extremes in any market it can take a while to get back to them in real terms. A house in the 60's cost around 10K, don't tell me that you'd expect to swap your $400,000 unit for 40 of them.... you know that you actually have 40 times the value - get real!

It's like you got turrets with real terms...

Sad really that we cannot use $ for this but then again constantly adding 0's makes use all feel like investment heros (is there a cheesy Moving Pictures song in that? ) Man I am good I am worth X much more than dad.... as your granddad winks and smiles!

GET REAL!

HA!

Well its been real arguing at you TS!

Happy oyster irritating 

Try Chinta Ria Soul iffun ya eat with the sock dude... it was good... mebe it still is! oih, what am I thinking, property moguls, you guys will be wanting Donovans ---> now that is how you run a restaurant! Love that place, relaxed, understated but top shelf all the way. Have fun!


----------



## Agentm (21 August 2010)

trainspotter said:


> Just gotta say a very heartfelt respect to Joe Blow and the Mods for letting this tete' de tete' develop it's course. RESPECT !
> 
> Greatly appreciated on all fronts. Mine inclusive.
> 
> ...




very nicely put TS

for me, i have no doubts on the bubble, the opinions have been brilliant, and i agree the expressions have been on the edge..

but the best aspect is that there has been an ability to be thick skinned enough to deal with it, which imho is healthy, but totally beyond what most in the forum would tolerate.

but the gist of it all is that the future of property seems to be indicating a peak in the bubble has been met and possibly passed in my view


----------



## Mr Z (21 August 2010)

The article is not that significant, nothing we don't know but it illustrates an emerging theme of selling Australia to US punters.

One of the frustrating things about gold stocks in Oz is that they never seem to hit US valuations. The OS interest has never been there, I'd say that goes for a lot of our market. Question is, is this the tide turning? Will we actually become a hotter destination again? and for the purposes of this thread. If so how long till that flows to property. Second wind coming? Will this be an 80's rerun when we where bitching about Japan buying us? Local politics gearing itself up to blame the world for our high house prices? Hmmmmm how silly could this get?

Venture a punt anyone?

Hey its a bubble, it is going to burst but.... as my grand pappy says don't confuse inevitable with imminent! Or as is oft quote in stock circles --> The market can stay irrational longer than you can stay solvent!




The Brighter Future...


----------



## kincella (21 August 2010)

just checking in, saying hello to my friendly property investors.....
sun is shining out here in the country....
historical day today...with the election....
had some good rain in central vic and nsw....its broken the 15 year drought...
the cockies and farmers are happy again.....they will have money to spend, they will invigorate their local community, start employing again...its an amazing transformation....about to take place.....
I have not followed up on coalworks, the company that is expecting to start mining the black coal in Oaklands, regional NSW....since the labor govnut proposed the great big mining tax....but if the mine is still going ahead, there will be opportunites galore for property people in the surrounding district....
blocks of land in that area had doubled in price,,,,due to the early birds and worms.....
if only we had a govnut that would build the fast trains, to move freight and passengers from brissy to melb...more people would feel comfortable moving out to regional areas, with its very affordable housing, and the ability to have fast travel to work.... the mythical housing bubble due to everyone wanting to live in the middle of the city, would subside.....
 after the tech crash of 2000, there was a huge exodus of boomers, who sold their city houses, and moved to the tree change and sea change areas.....
did that exodus result in a drop in prices as some would expect.....
no in fact prices have kept rising .......
you can get two houses in the regionals for the price of one in the city......
this is a great land of opportunity...for those with their eyes wide open....
cheers


----------



## robots (22 August 2010)

hello,

good morning all, fantastic day upon us again

yeah great commentary Kincella, HERE WE GO:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

oh yeah, 76% yesterday, great result for the community, well done to all who hold titles 

paradise brothers, gonna be a busy day on Chapel st, and a special walk tall everybody shout out

thankyou
professor robots


----------



## UBIQUITOUS (22 August 2010)

Robots, I think you, '10% per year Kincella' and Craig James are the only ones left. Even your mentor Kochie is hearing the music. Hope you pick up a 'bargain' down Chapel Street. Remember, it should be worth less by the time you get home.



> http://www.kochie.com.au/20100815199/your-money-the-very-real-risk-of-deflation-in-the-us
> 
> While not nearly as bad as the US, there are quite a few deflationary signs starting to emerge here in Australia.
> 
> ...


----------



## trainspotter (22 August 2010)

Morning robots,

Truly remarkable result on the auction front ! Go Enzo !

Beautiful day here, gonnna checkout some Display Homes in the morning and take the family to the Maitland Park Fair in the afternoon.

Rates on hold, plenty of work, stable banks = Utopia.

ABS evidencing drop of 0.7 % over 12 months ... no biggy when this has happened:-

_Preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities increased 18.4% in the year to June quarter 2010. _

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0


----------



## MR. (22 August 2010)

trainspotter said:


> .......
> Once again Joe Blow and the Mods .. a gratuitous thanks for letting this run it's course. In a ice hockey sense we went the whole "5 Hole trap".




Oh yeah, and let me conclude! 



trainspotter said:


> I will continue to push forward with my measly minions (or is that millions) and make money out of pro ' per TEY' .




and from the red corner:



Mr Z said:


> Hey its a bubble, it is going to burst
> .......
> The market can stay irrational longer than you can stay solvent!




You can say that again!


Hey "Train Spotter", so at least now you've seen the train! 
No worries then.... 
As you were..... 
http://www.youtube.com/watch?v=xCbOUgr_r-E&feature=related


----------



## trainspotter (22 August 2010)

Thanks MR. for telling me what I already know. It was a waste of time discuss the future of property with Mr Z as it seems you did not get what we were banging on about. Oh well. Thanks again to the linesmen and ballboys that participated. You know who you are.

I also typed to WayneL that I have pulled back from where I was 5 years ago. I also stated that the money exposed I can afford to rollover on a 90 day bill. No biggy. Limited exposure.

I also explained that I am in a delicious position of having involvement in the building company. This must have escaped you as well.

I will type this one more time just to enucleate my position. "If you have a fear of flying, don't get on the plane".


----------



## MR. (23 August 2010)

trainspotter said:


> Thanks MR. for telling me what I already know. It was a waste of time discuss the future of property with Mr Z as it seems you did not get what we were banging on about.




Ha ha ha, so you wrote all that just for the readers, for me? Gee thanks.... But TS half the time I didn't know what you were going on and on about. As for Mr Z he could have finished with his writtings long ago but someone has to keep blowin their trumpet. As UF claimed same old BS.

I thought you might have understood the youtube clip. But I'm not so sure....

O'l no here we go again


> I also explained that I am in a delicious position of having involvement in the building company. This must have escaped you as well.



 Musta missed that, was that by you being their customer and creating jobs for them, their kids at school and all, or was that the unit block? Either way it must be delicious if it's in regard to property! 



> I will type this one more time just to enucleate my position. "If you have a fear of flying, don't get on the plane".




**** no and I bet a few miners wished they didn't as well.


----------



## trainspotter (23 August 2010)

You go for it MR. ! Most Likely You Go Your Way And I'll Go Mine - Bob Dylan.

I forgot this thread is only for the naysayers who are more committed to greed and the stockmarket gains. Let's not try and make money out of building something now shall we! Better off with bits of paper in our hands rather than a roof over our heads.


----------



## Timmy (23 August 2010)

Off topic, so will be brief.



trainspotter said:


> I will type this one more time just to *enucleate *my position.




TS - this is a brilliant choice of word here.  Exquisite.  
My hat goes off to you.
:bowdown:


----------



## trainspotter (23 August 2010)

Timmy said:


> Off topic, so will be brief.
> 
> TS - this is a brilliant choice of word here.  Exquisite.
> My hat goes off to you.
> :bowdown:




"Why thank ya very muuuch" .... in my best James Cagney voice.


----------



## Mr Z (23 August 2010)

Building houses, building mines, building energy infrastructure... it's all in the money go round. Spin the wheel some ones loses some one gains and then we go again. Capitalism does not care so long as you are right  The more right you are the more fun tickets you get! Winners are grinners and all that, so on with the show!

Me... MR. I am here because I like the sound of my own keyboard  I'm an ego driven closet megalomaniac with secret desires to annex Indonesia and all the bothersome little places in between and that is just for practice. I will be known as The Farter! :

Yeah Timmy! Only a pearl dude would use that one.... big werds are cool! The English language is such a powerful and subtle one. I lament my lack of skill in my native tongue and positively despair the language devolution that appears to be going on! Then again I am a freak  :

OFF TOPIC! I hear the mods yelling... yeah yeah OK, but its not like this one is innocent eh? 

So we have done the election and spring is on its way! Is the tide on the turn or still on its way in? Watch this space.... more stats anyone?

Happy Monday YA ALL!


----------



## Mr Z (23 August 2010)

*Hung Parliament*

Good, bad or indifferent for property?

I'm looking at it this way... the Australian public has handed the government a piece of paper with PTO on both sides and said now stay the heck outta the way and let us get on with it! In many ways this could be the ideal way to get the government to "first do no harm" .... LOL!

The Mad Monk and Witchy Poo with a cigarette papers thickness between them! I wish they would get a room! That would settle who is on top!

Anyway... good bad or ugly? What say you?


----------



## UBIQUITOUS (23 August 2010)

Things are not looking good at all for RE as a viable investment.



> http://smh.domain.com.au/real-estate-news/new-risks-threaten-house-price-bubble-20100822-13auc.html
> 
> New risks threaten house price bubble
> 
> ...


----------



## trainspotter (23 August 2010)

Personally in my opinion I reckon the property price for Australia for the long term is down nationally overall. Not the raving lunatic harbringers of doom and gloom style but more of a deflation than a massive POP. 3 - 5 % would be realistic terms.  

This being said there will be places that will suffer Chernobyl style meltdowns. Ipswich in Brisbane for one is going through "mortgage stress" right now. DYOR. 

Also there will be isolated pockets that will keep ticking over and returning modest returns. Pick places on the coast that are not entirely overheated and maybe have a future plan of infrastructure type projects in front of them.

I know this is sitting on the fence style of running commentary and not really telling everybody what they don't already know. The truth is we really will not know for another few years as the market levels out. Lotsa factors to consider from outside influences that will determine whether it is flight or fight time for the RE housing regime of Australalia. (no that is not a typo ... announciate it in your head)

P.S. Mr Z - When you embark on your world domination and takeover Indonesia and the pesky Islands in between can I please buy Bali from you when you are done?


----------



## Mr Z (23 August 2010)

trainspotter said:


> P.S. Mr Z - When you embark on your world domination and takeover Indonesia and the pesky Islands in between can I please buy Bali from you when you are done?




Yep sure, I need a despotic leader for "Pleasure Island", think you can handle it?

For god sake stop being moderate! You will kill this thread iffun you keep that up!

I was wondering if there was a wider measure of mortgage stress than just looking at payments in arrear. Many people take action before they get to that point without ever missing a payment but still feeling the heat of other commitments. I don't know what the heck you'd look at as a broader indication although I think that mortgages holders CC information (in aggregate of course) could be a good indication. Not just the headline growth number, payment info etc, some detail.


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## Mr Z (23 August 2010)

*The state of the consumer.*






















​
Interesting!


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## tech/a (23 August 2010)

Very


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## KurwaJegoMac (23 August 2010)

Nice collection of graphs there Mr. Z. Thanks for sharing that.

Interesting results -  from 2000 to present, Household Interest Payments have been on a rapid increase, with investor housing declining heavily since 2003 to present. 

So average joe is using rapidly increasing amounts of his disposable income to pay off loans, while investors are rapidly reducing their investment levels - am I right in thinking... uh-oh?


----------



## KurwaJegoMac (23 August 2010)

Although that being said disposable income has grown in the last year... so I'm probably overreacting :dunno:


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## drsmith (23 August 2010)

*Re: The state of the consumer.*



Mr Z said:


> Interesting!



Those graphs look like they are from the RBA's Financial Stability Review.

http://www.rba.gov.au/publications/fsr/2010/mar/html/contents.html

Latest edition is March 2010. There are some comments in this thread on them, about 300 pages back.


----------



## Mr Z (23 August 2010)

Yes they are late 2009, here are some updated ones... should spent more time digging eh? 

























​


----------



## Mr Z (23 August 2010)

The increase in gearing is interesting and the hours worked seem to be in a constant decline against rising employment. Have we all gone part time? CC accruing interest also on a healthy romp! Some conflicting numbers!

They tell me this RE market is all investors but the house hold credit components say that investor and OO housing credit has been falling for a while, so how is the gap being filled with a rising market. Has volume fallen that much or? Anyone got a existing house sales chart?


----------



## KurwaJegoMac (23 August 2010)

That household gearing one is nasty


----------



## trainspotter (23 August 2010)

I especially liked the share market vs dwelling prices graph  Not that I am fixated with prices mind you.


----------



## KurwaJegoMac (23 August 2010)

trainspotter said:


> I especially liked the share market vs dwelling prices graph  Not that I am fixated with prices mind you.




Yeah it's a good one - I'd go so far as to say if you smooth out the 2004-2010 share market asset prices they're pretty much on par with property! 

Still, it's quite amazing how much asset prices have increased since about 1998. Everything was nice and smooth with a slight up trend and bam - exponential growth from there onwards


----------



## Mr Z (23 August 2010)

trainspotter said:


> I especially liked the share market vs dwelling prices graph  Not that I am fixated with prices mind you.




Yeah but notice the swings under and over... from a contrarian stand point it is saying look at stocks... FWIW.


----------



## trainspotter (23 August 2010)

Completely concur with statements by Mr Z and KurwaJegoMac. The trick is going to be which one is going to rise and which one is going to fall or even better yet stay stable. House prices to stagnate and sharemarket to continue rising IMO. (must have written this about 30 times so far)

A case point argument could be argued for both. Hey ... wait a minute ... we have already done that ! I have already placed forward my view.


----------



## Mr Z (23 August 2010)

trainspotter said:


> I have already placed forward my view.




Yeah... but I am here to talk you around, then if I succeed, get deep concerned by that fact!

:


----------



## robots (23 August 2010)

hello,

good afternoon, great day

gee quite a few irrelevant posts on the thread today, oh well take the good with the bad in life i guess

thankyou
professor robots


----------



## Buckfont (23 August 2010)

robots said:


> hello,
> 
> good afternoon, great day
> 
> ...




And that`s just added another one. Quite an irrelevant day for some.


----------



## Timmy (23 August 2010)

Mr Z, thanks for the RBA graphs - good data !


----------



## trainspotter (24 August 2010)

Well here is a success story if I ever heard one !

So where does this inspirational woman go from here, “I’m continuing to grow Ccorp to be the largest and most diverse property development company in Australia. I’ve got an assortment of projects in the pipeline, so the next few years are going to be exciting and challenging and we  just want to keep giving more! ” Carly said. 

To call her an over achiever, would be an understatement, *superwoman *would be more suitable. (LOLOL at this one)

http://www.ccorp.com.au/about.html

Will be interesting to see if this is "sustainable" ???? Very clever to run seminars that give you a clear head shot at your victims (ahem ... I mean investors) to sell your product to. I have been to several of these property guru seminars and I always come away with the feeling I have been to an AMWAY meeting. Too much Ta-ra-ra - *BOOM* - dee-ay! for my liking. 

Still ...... she has the runs on the board.


----------



## Mr Z (24 August 2010)

trainspotter said:


> *Will be interesting to see if this is "sustainable" ???? *Very clever to run seminars that give you a clear head shot at your victims (ahem ... I mean investors) to sell your product to. I have been to several of these property guru seminars and I always come away with the feeling I have been to an AMWAY meeting. Too much Ta-ra-ra - *BOOM* - dee-ay! for my liking.
> 
> Still ...... she has the runs on the board.




Yes, sustainable? Swimming naked and all that. Not that the bank will let you go over knee deep these days!

Love Amway meets.... it is like traveling to another universe! Planet USA... way too much coffee! Interesting they had a business model that could have used the Internet to leveraged themselves onto a whole new level yet they failed to use it to full advantage. IMO anyway! last time I looked they had all but ignored it... looked like a classic missed opportunity to me back there in the 90's.

BTW, this sort of stuff screams top or close FWIW. Yes I consider a few years close in a market like RE... after all, 6 months round trip is as close as you get to a day trade! Did that once!

Remember that condo flip web site in the US, dedicated to the skill of buying a condo on as long a settlement as you could find and flipping it before you settled! Man that was a trip of a site... I wonder if it is still there? Doubt it somehow!

Watching grass grow... spring is close... boing or boom? No takers on a short term punt? Just for the hell of it, nuthing we can crucify you over? I am going for boing with a slight edge, not a lot in it IMO.


----------



## trainspotter (24 August 2010)

Depends on interest rates. If the banks jack the margin on the wholesale funds due to costing overruns and short supply my money will be on a boing. OR are they just profiteering again? Supposedly the biggest GFC in history and the big 4 are coming out with pregnant profits like never before. They have been rooting someone to get this fat.

Then again spring sale and market confidence may just overcome this fait accompli. Interest rates rising are good right ? Means inflation is going up right? Which means your house price is going up right?

Or are they doing this to take the heat out of the market and cause it to slowly deflate? Stringent lending has taken care of at least 60% of the market already. Another rate rise will tackle at least another 20% of OO's. IMO.


----------



## basilio (24 August 2010)

trainspotter said:


> Will be interesting to see if this is "sustainable" ???? Very clever to run seminars that give you a clear head shot at your victims (ahem ... I mean investors) to sell your product to. I have been to several of these property guru seminars and I always come away with the feeling I have been to an AMWAY meeting. Too much Ta-ra-ra - *BOOM* - dee-ay! for my liking.
> 
> Still ...... she has the runs on the board.




Now where did we last hear of such a brilliant, successful property developer?? That's right the one and only Henry Kaye who  singlehandedly sent property into orbit 10 years ago and left hundreds of investors in outer space and under water.  (Don't you love mixed metaphors )

Check out his little adventures and count the similarities.



> *How Henry Kaye fuelled the property boom*
> 
> September 22, 2003
> 
> ...




http://www.theage.com.au/articles/2003/09/21/1064082867568.html


----------



## trainspotter (24 August 2010)

Same but different basilio -

*GIO agreed to Kaye's request, provided he sign a waiver releasing GIO's obligations to pay Kaye the equivalent of a deposit for each purchaser who defaulted at settlement. 

But under the deal, the developer faced the possibility of an uninsured Kaye being unable to pay it for the apartments it built.*

I think the banks and insurers have changed lending practices since then. It was 2003 afterall and the mood has swung against this kind of operation.


----------



## Mr Z (24 August 2010)

trainspotter said:


> Depends on interest rates. If the banks jack the margin on the wholesale funds due to costing overruns and short supply my money will be on a boing. OR are they just profiteering again? Supposedly the biggest GFC in history and the big 4 are coming out with pregnant profits like never before.




The profits are explainable and not sustainable, witness the market reaction to CBA's profit. GFC worked out better than expected and going defensive yielded short term gains. At least that was my quick read of it... but I am not following the banks closely.

The scuttlebutt is that anything written at todays rates is actually underwater and while it may make sense in a strategic fashion over the whole book (??? yeah I dunno but experts tell me it can) the loan will not be in the black until rates rise. This is a part of the reason for the focus on quality not quantity ATM, they are looking down the road. 

I prefer my bank profiting considering the alternate! Just so long as I am not over a barrel with a grimace on my face.


----------



## satanoperca (24 August 2010)

Hi,

Didn't see this post before even though a  week old but it seems Robots mentor Dr Steven Keen has a brother.



> LOCAL property investors have become "Ponzi borrowers" in a market *40 per cent overvalued*, according to a Morgan Stanley strategist.
> In a bearish note to clients this morning, Morgan Stanley strategist chief strategist Gerard Minack warned Australia's housing "bubble" could be pricked should banks tighten credit or "loss-making" middle-class landlords start to sell.




http://www.theaustralian.com.au/business/property/morgan-stanley-analyst-bearish-on-housing-market/story-e6frg9gx-1225906316683

Cheers


----------



## MR. (24 August 2010)

trainspotter said:


> You go for it MR. ! Most Likely You Go Your Way And I'll Go Mine - Bob Dylan.
> 
> I forgot this thread is only for the naysayers who are more committed to greed and the stockmarket gains. Let's not try and make money out of building something now shall we! Better off with bits of paper in our hands rather than a roof over our heads.




It may be just me but you don't seem to build anything there TS. Didn't you explain how you make a quick buck out of getting a building company to build a house on your land, you mark it up and bingo, easy money!  I think Mr Z would be correct is saying that if you didn't do it perhaps the home owner would and the price would be a little cheaper. Even with your screw down the builder's discount.

I don't know where all this is coming from but you assume I don't build anything! As I had already claimed, machinery had been purchased over property. Unlike many other people I know including the machinery salesman have all bought property recently.(repeating because sometimes you don't listen) 

Now you can't compare what you do in building to me. I'm building something in the true meaning of the word. (Don't need a dictionary to look that one up) You appear to be just the middle man, similar to importers, do very little and collect the coupons at the expense of good old Oz. Who cares how anyone gets the coupons, hey? Wrong......

ps: I'm not a fan of juggling bits of paper either!


----------



## trainspotter (24 August 2010)

One more time just for comedy purposes.

I have an *involvement* in the building company.  A "quick" buck indeed !! LOLOL .... try a bit of risk why dontcha. Every venture must have a profit on it ear marked for "profit and risk" or you will fail. You think I am doing this for love? 

So I take MY money and go and BUILD something which employs people which I then sell at a market driven price to the purchaser.

So therefore I am increasing the velocity of the money in the community by paying subcontractors to work on the projects who in turn spend it in the retail outlets and pay taxes etc.. So how is this at the expense of "good ol OZ" ? 

I go and BUILD a house and you go and BUY a piece of machinery. How is it that I am not BUILDING something here MR.  So when you BOUGHT your bit of machinery did it do the same? The salesman got a commission, the mechanics get to service it, the dealership gets a kickback from the manufacturer. What's the difference?

You said this _"I'm building something in the true meaning of the word."_ what does this mean exactly unless the machinery you are using is BUILDING roads or dams or infrastructure?

You mentioned your plough had lights on it? This means to me general farming or tilling soil?

It seems that I am not the only one who fails to read the written word.


----------



## Mr Z (24 August 2010)

FWIW... the paper that is shares and the secondary market that is the ASX allows for and sets the price for raising capital  for companies that do exactly what you do MR... LOL and what TS does sometimes as well. Underdeveloped or worse still no capital markets mean much less opportunity to build this nation. As pointed out there is a lot of risk in it, most lose, but those that get it right are playing an essential role in directing the allocation of resources in this economy. People disparage it and to man that I have asked they have no idea of its true role. There may come a time MR when you will appreciate people juggling paper if you ever grow to the degree you need capital well beyond your capabilities. The you will be telling us you are the best bet in town no doubt 

I can't believe we are getting into investment tribalism with a righteous moral overtone! The fact is we need it all in the correct proportions, the argument is just over how much of what and how much is too much! MR making unwanted widgets as bad as TS making unneeded houses. Loose money distorts all these markets and gives us all bad signals, any of us could be setting our foot down in the wrong place.

So what, I buy stock in enterprises that employ real people in real projects in the real world with real risks... it is not so evil really.

Lets stay off of this territory, it is probably not helpful.

Cheers
Z


----------



## trainspotter (24 August 2010)

Now I am really confused?

TS = building houses and making profit

MR. = buying machinery and making profit

MrZ = buying shares on the stockmarket and making profit

And the title of this thread is what again?

FWIW I am not trying to come across as a sanctimonious windbag and saying you are all doing it the wrong way for crying out loud. FFS.

I was merely explaining to the proletariat MY STRATEGY in the property market and how I make my coin. 

P.S. - Not trying to provoke you there MR. I asked you previously what kind of machinery you have but I did not get a response. Perhaps if you explained to me what you do I might get a better grip on your reasoning.


----------



## robots (24 August 2010)

Hello,

yes pretty ordinary state of affairs on the thread at the moment Trainspotter,

basically its been hijacked, oh well 

some know the effort they put into building Australia

thankyou
professor robot


----------



## Mr Z (24 August 2010)

Conversations ebb and flow, get over it. Hijacked my butt considering your contributions!

TS, you did go the moral high ground back there, there is no such thing in capitalism. You are either right or wrong, broke or solvent or paying the market to learn... what ever the market.


----------



## Agentm (24 August 2010)

trainspotter said:


> Now I am really confused?
> 
> TS = building houses and making profit
> 
> ...




nice post

TS,, your very much in the development of property, i see in geelong, the coach of the AFL geelong cats has had a hand in starting that journey, i saw an article where he and 3 others put in $400,000 each and today bomber thompson is said to be worth $10 mill for his share..  thats after 4 years of getting approvals for the massive site

with property prices being at an astronomical peak right now, will you expect that trend to remain?  

how do you plan for and buy property and develop good profit with your outcomes in a peaked or slightly declining market?  

is it a case of finding real cheap land only and working in that domain or are you expecting developers to make it good still in a declining market regardless of the property (land) price?


----------



## trainspotter (24 August 2010)

Mr Z said:


> Conversations ebb and flow, get over it. Hijacked my butt considering your contributions!
> 
> TS, you did go the moral high ground back there, there is no such thing in capitalism. You are either right or wrong, broke or solvent or paying the market to learn... what ever the market.




Sorry to all and sundry if the moral high ground was perceived in my repost. It was not meant to be taken in such a manner. I was merely purveying to the edjumacted peoples how I make money in RE. Not about building national wealth by ulterior means.


----------



## robots (24 August 2010)

Mr Z said:


> FWIW... the paper that is shares and the secondary market that is the ASX allows for and sets the price for raising capital  for companies that do exactly what you do MR... LOL and what TS does sometimes as well. Underdeveloped or worse still no capital markets mean much less opportunity to build this nation. As pointed out there is a lot of risk in it, most lose, but those that get it right are playing an essential role in directing the allocation of resources in this economy. People disparage it and to man that I have asked they have no idea of its true role. There may come a time MR when you will appreciate people juggling paper if you ever grow to the degree you need capital well beyond your capabilities. The you will be telling us you are the best bet in town no doubt
> 
> I can't believe we are getting into investment tribalism with a righteous moral overtone! The fact is we need it all in the correct proportions, the argument is just over how much of what and how much is too much! MR making unwanted widgets as bad as TS making unneeded houses. Loose money distorts all these markets and gives us all bad signals, any of us could be setting our foot down in the wrong place.
> 
> ...




hello,

now thats interesting, its all Tall Poppy Syndrome trainspotter, keep helping the community man

thankyou
professor robotos


----------



## trainspotter (24 August 2010)

Agentm said:


> nice post
> 
> TS,, your very much in the development of property, i see in geelong, the coach of the AFL geelong cats has had a hand in starting that journey, i saw an article where he and 3 others put in $400,000 each and today bomber thompson is said to be worth $10 mill for his share..  thats after 4 years of getting approvals for the massive site
> 
> ...




Gooooooo Bomber Thompson. Not only will he win another flag (Collingwood supporters FLAME ON !) but he has managed to hit the ground running on a property development that has turned a staggering 124% compound interest over 4 years. Now before we all get our panties in a bunch this does not take into account development costs or overheads such as administration and or advertising blah blah blah. 

I do not expect this kind of trend to stay solvent for at least the next 5 years IMO due to the market in decline. ABS figures don't BS. Anything above 20% is good money in my world.

I ask for expressions of interest first. Let's say I own a 15,000 sqm unit development site (which I do BTW) I spend about 15k on advertising for people to inquire about the development and send them the information to gauge what kind of response and what level they are interested in. If they say they would like a piece of the action BUT they have to sell their house first or they require finance you can gauge the market by looking at what is selling and how many bother to inquire about the said development. Pretty easy really.

Land price is not the only factor. One of the main issues is the rezoning for high density housing or changing the R codes or how far away the utilities are such as power, water, sewerage and what costs are going to be involved to get it serviced. Can the development be staged in increments of building and what are the costs involved with these items. No good buying cheap land only to find out it requires 240k worth of rock breaking to get the services in or that the sewerage stops 300m up the road and the water authority want a cool 500k to extend the pipeline.

Many factors are involved in such dealings. There is a little bit more to it than meets the eye. AND NO they all do not make money, some are better just leaving as vacant land whilst the market readjusts. 

OR you can get all the developments approvals and costings in place, add a premium onto the purchase cost and SELL it to a bigger fish who has the firepower to absorb these kinds of overheads.

P.S. I also have a matrix programme that tells me what the property is worth once you include ALL costs associated with it. Place in development costs, overhead and risks, advertising, interest component, holding costs, building costs, the whole 9 yards and BINGO it tells me what the property is worth to buy (this is only for large scale productions and not single green Torrens titles)


----------



## todster (24 August 2010)

robots said:


> Hello,
> 
> yes pretty ordinary state of affairs on the thread at the moment Trainspotter,
> 
> ...




Look for the common denominator


----------



## robots (24 August 2010)

hello,

will do, thanks

thankyou
professor robots


----------



## UBIQUITOUS (24 August 2010)

robots said:


> hello,
> 
> will do, thanks
> 
> ...




hello,

yes

thank you

sunshine

lollipops

goodbye

:sleeping:


----------



## Mr Z (24 August 2010)

robots said:


> hello,
> 
> now thats interesting, *its all Tall Poppy Syndrome trainspotter*, keep helping the community man
> 
> ...




Why yeah... must be!

Where is my brush cutter, lets do this right... actually no, hockey mask and chain.....  

Meanwhile back at the ranch we have two bets for a short term pop. Anymore for anymore?


----------



## trainspotter (24 August 2010)

Mr Z said:


> Why yeah... must be!
> 
> Where is my brush cutter, lets do this right... actually no, hockey mask and chain.....
> 
> Meanwhile back at the ranch we have two bets for a short term pop. Anymore for anymore?




Jason ... is that you? .............

Put down the chainsaw Jason .... JASON !

There was movement at the station, for the word had passed around
That the colt from old Regret had got away,
And had joined the wild bush horses - he was worth a thousand pound,
So all the cracks had gathered to the fray.

Hahahahhahaaaaa ...... too late ..... party is over. Already leveraged my way to Nirvana. Property HUH? Who would have thunk it? 

I wonder how C Corp is going? or what about J Corp now I think about it?


----------



## trainspotter (24 August 2010)

UBIQUITOUS said:


> hello,
> 
> yes
> 
> ...




hello,

minack and keen is my hero 

i have no input other than a headline 

i can't back anything up with an opinion no matter how many times i am asked

thank you

UBI

:burn:


----------



## UBIQUITOUS (24 August 2010)

trainspotter said:


> hello,
> 
> minack and keen is my hero
> 
> ...




No need to back up the obvious fella. Here's another one for you to disagree with. And remember, if you don't believe its true, it can't be.

http://www.prosper.org.au/


----------



## trainspotter (24 August 2010)

UBIQUITOUS said:


> No need to back up the obvious fella. Here's another one for you to disagree with. And remember, if you don't believe its true, it can't be.
> 
> http://www.prosper.org.au/




Who is David Collyer again? Minack proportions? Nup... how about Rory Robertson proportions? Nup ??? I give up. Just another blogger.

_USA is nearly four years post-bubble and their experience holds grim lessons for Australia._

Especially cracked me up. Australalia (Oz - trey - LA - LIA ) has 0% lending with jingle keys. We have GSE banks do we? freddie mac and fannie mae to the rescue ....... LOLOL

Ummmm ...... nope .... FFS ...... give me something to work with here UBI ... I am trying to assist you here and this is what I get??

We are not in the USA ..... robots is right .... we are not in the USA.

I am trying to break this down to the simplest form and yet I am still here sabre rattling with ghost writers.

If your point is to just take up bandwidth then you are doing a great job of smelling poor. If you want to have a meaningful conversation about WHY you think that property is going in the negative or positive area WHY DONT YOU HAVE AN OPINION ?????????

Please please please try and humour me and actually let me know your experience. 

OR I can also post internet spam in here rather than actually writing of my experience to try and advise how it is possible to make money out of RE.

You do want to learn how to make money right? Just as much as I look at the charts in the stock section. Just as much as I look at the teachings of tech/a and Trembling Hand and others that show WHY they make money in shares. NO ??? Mr Z also gives me reasons as to WHY I need to change my thinking as well. NO ?? Julia offers crystalline responses that make me think about who and where I am as a person. NO ??? Garpal Gumnut brings me back to reality and lowers it to the lowest common denominator and makes me think about true positives. NO ???

Robots keeps it real for me and reminds me WHY I am involved in property and is a TRUE believer . NO ???

OR I can just f*ck off completley and leave you to argue amongst yourselves about how special you really are. FFS come up with something that wont jinx the thread and keep it alive and make some sense for a change instead of grab bagging and head lining ! It is getting boring.


----------



## wayneL (25 August 2010)

Meanwhile "O'er _in_ the land of the free and the home of the brave":

http://www.bloomberg.com/news/2010-...more-than-estimated-to-3-83-million-rate.html



> U.S. Existing Home Sales in Record Plunge
> By Courtney Schlisserman - Aug 25, 2010 5:14 AM GMT+1200
> 
> 
> ...


----------



## Mr Z (25 August 2010)

*It begs the question...*



trainspotter said:


> Hahahahhahaaaaa ...... too late ..... party is over. Already leveraged my way to Nirvana. Property HUH? Who would have thunk it?




Why are you still here then?


----------



## Mr Z (25 August 2010)

wayneL said:


> Meanwhile "O'er _in_ the land of the free and the home of the brave":
> 
> http://www.bloomberg.com/news/2010-...more-than-estimated-to-3-83-million-rate.html




It's a train wreck over there! Going to take some time to heal those wounds. So, does China wean herself off of the USA in one seamless movement or do they fumble the ball? A pause to change gears would be quite normal... that will impact us. Sofa so good, midterm all signs are pointing up, meanwhile we seem wed to the US  equity markets. Not making that much sense really, however I have noticed of late that we do lead direction more and more.

Will spring see the normal rush from both vendors and buyers? If so buyers should be spoilt for choice!

No we are not the US, then again we are not Asia. We have a foot in each camp, the western debt disease and the Asian growth frenzy. A bipolar economy in many ways as well!

More fun...

Lollipops for all!

Foight! Foight! Foight! Foight! Foight! Foight! Foight! Foight!


----------



## UBIQUITOUS (25 August 2010)

Soft landing? ROTFL!!!



> http://www.news.com.au/money/proper...ck-housing-gains/story-e6frfmd0-1225909165963
> 
> Investors 'disappointed' over quick housing gains
> 
> ...


----------



## Mr Z (25 August 2010)

*???!*



> One in four investors sells within 12 months.




That is one hell of a number?!

Wonder if that includes property developers or they are just talking your garden variety working, negative gearing property investor.


----------



## Mr Z (25 August 2010)

*Interesting...*

Banks loosen the vault hinges


----------



## Mr Z (25 August 2010)

*Bottom in sight?*

US predator sniffs wind


----------



## Bushman (25 August 2010)

*Re: ???!*



Mr Z said:


> That is one hell of a number?!
> 
> Wonder if that includes property developers or they are just talking your garden variety working, negative gearing property investor.




Property developing is a lot different to a 'buy and hold' investor? 

Property development is a business where you buy a block of land, subsivide (adds value) and then build a series of dwellings (add value) which you sell for a profit (or loss if you are no good at it). Like any business, you are producing a good/service which you are then selling to your customers. Like any business, it is affected by cyclical factors. 

It is not 'buy and hope for a gain' property investing where you buy at a price where you will get a 3-4% yield and hope for a capital gain.


----------



## Mr Z (25 August 2010)

Errrr... well thanks for that!

Yes I have developed real estate and I do understand the difference.

I was talking about the number and what they saw fit to include in it! If a private buyer of a city block that builds, subdivides and sells in 12 months is considered an investor then that will skew the number. *IF* it is 25% of all traditional 'long term' buy the property and lease it out type investors then its one hell of an attrition rate, don'tcha think?


----------



## Bushman (25 August 2010)

Mr Z said:


> Errrr... well thanks for that!
> 
> Yes I have developed real estate and I do understand the difference.
> 
> I was talking about the number and what they saw fit to include in it! If a private buyer of a city block that builds, subdivides and sells in 12 months is considered an investor then that will skew the number. *IF* it is 25% of all traditional 'long term' buy the property and lease it out type investors then its one hell of an attrition rate, don'tcha think?




Goodo, just wanted to make sure as it gets hard to follow who knows what in the property 'stream of consciousness' thread. 

Yep a 25% attrition rate would be up there with the Somme . I see no reason for 'buy and hold' to deliver above trend returns at these levels and expect there to be a generational change of ownership as Baby Boomers sell up investment properties to chase yield and fund theire retirements. 

My outlook for subdivisions in 'hot spots' is more bullish if you are buying into either of the following demographic trends - 
1. delivering medium density to the inner city on the back of gentrification; 
2. delivering affordable housing close to jobs/transport; or
3. servicing the mining boom towns. 

Land banking in the 'well heeled' suburbs is the best 'buy & hold' for me. 

Property is a many headed beast so there will always be opportunities in most markets. If you are simply gearing up, buying anything that comes to hand and hoping for a capital gain (you know, like those property magazines advocate) then the outlook is not so bright IMO.


----------



## Mr Z (25 August 2010)

Bushman said:


> Yep a 25% attrition rate would be up there with the Somme .




Yeah, ain't it but  I would want to see the details on that one, gotta be a catch.



Bushman said:


> I see no reason for 'buy and hold' to deliver above trend returns at these levels and expect there to be a generational change of ownership as Baby Boomers sell up investment properties to chase yield and fund their retirements.




So do I and if we are relying on demographics to take up that slack it ain't going to happen. The following generations are smaller, bad savers, not as inclined to invest in property. To continue to fly beyond the Boomer boom this thing needs immigration.



Bushman said:


> Land banking in the 'well heeled' suburbs is the best 'buy & hold' for me.




Yes, eventually you will have a good outcome. The question becomes when and can I hold for the duration. The boomer effect is something we have not really got a handle on IMO. So many things could exacerbate or moderate it however if selling gains momentum in that demographic it could be a nasty feedback loop. So far the boomers have been at the heart of a number of 'booms' they have been the ultimate self fulfilling prophecy --> $64 Q, does it turn negative and if so how negative. Some investment guru's think it is quite a problem, most don't mention it?!


----------



## MR. (25 August 2010)

Mr Z said:


> FWIW... the paper that is shares and the secondary market that is the ASX allows for and sets the price for raising capital  for companies that do exactly what you do MR... LOL and what TS does sometimes as well........




We do know this Z, I just preferr to be pulling the levers. I like to always know what the true state of affairs are and not hanging off the next quarter's results etc. etc. Although with my decision the down side is the eggs are more so in the one basket but perhaps no worse than some property owners.    



Mr Z said:


> The fact is we need it all in the correct proportions, the argument is just over how much of what and how much is too much! MR making unwanted widgets as bad as TS making unneeded houses. Loose money distorts all these markets and gives us all bad signals, any of us could be setting our foot down in the wrong place.




Yep, unwanted widgets would be as bad as unneeded houses. Hopefully we can all end up follow the demand. All, will not. 

TS, we are manufacturing anything where demand takes us in the steel industry. No, John Deere or Massey Ferguson sorry! There is demand in housing. Buyers usually know that if they bought land and built their own house they would get it cheaper. You supply the finished product and we want it now! Over more than the past few years every (building) trades person and their dog seemed to be on selling houses. They did very little but juggle the money. You appear to be more involved in the building business, ok.. 

Movin on....

Oh no. Is this really happening? An old friend and their family just called in, they're staying a few days. He brings up this investment property they are looking at. (I think I've just about run out of friends which don't own investment properties) I don't see anything special about it or the location. (But would I anyway?) They're buying it for their kids "for the future" because of prices and all. Jeez, I even mentioned Ballarat and Bendigo as alternatives, I must be sick. 

I wonder where some of the demand comes from 
"The fear of being left behind" ?

As Dick Smith the other night said on his population program: 
"If this chart was from the stock market, we all know what happens next!"


----------



## MR. (25 August 2010)

Problem is, what makes me right! I've simply been wrong and could continue to be. "Sure, sounds great, go buy that little money maker"


----------



## Bigukraine (25 August 2010)

MR. said:


> Problem is, what makes me right! I've simply been wrong and could continue to be. "Sure, sounds great, go buy that little money maker"




It's all about percieved value and as in any market opportunity allways show's it self ....... it's a matter in a rising or falling mkt to identify "a good deal"
just because you couldn't see value in your friends potential investment property purchase doesn't mean it won't be a good buy short or long term


----------



## robots (25 August 2010)

MR. said:


> We do know this Z, I just preferr to be pulling the levers. I like to always know what the true state of affairs are and not hanging off the next quarter's results etc. etc. Although with my decision the down side is the eggs are more so in the one basket but perhaps no worse than some property owners.
> 
> 
> 
> ...




hello,

good work MR, great towns and infrastructure already in place

bob katter reckons its the way

thankyou
professor robots


----------



## Mr Z (26 August 2010)

MR. said:


> We do know this Z, I just prefer to be pulling the levers.




Me too sometimes...

'Paper' often gets disparaged without a thought as to what it actually is/means. Irritates me a little on the odd occasion.

Anywhooooo....

A likely catalyst moving forward--->

Morgan Stanley Says Government Defaults Inevitable

The US can't do what it has committed to do, the maths just will not work... some form of default is coming and will be met with higher rates. However the first option is always 'print more money' (really a form of default), when the market twigs to the fact that direct monetization is going to be on going.... then it gets interesting.

Anyway, it all means rates go on a fly sometime.... $64 Q, when?

It is a bond bubble really, all else is servant to that.



Hi Robots.... spring is almost here! Melbourne about to 'spring' into life, happy times.

LOL... screw it all, cars where the place to be!


----------



## trainspotter (26 August 2010)

Gotta watch right to the end to get the "real picture" LOL


----------



## MR. (26 August 2010)

http://www.youtube.com/watch?v=oZFt46aQyQ8

From the 2 minute mark "should about do it" LOL


----------



## trainspotter (26 August 2010)

Isn't it funny that the posts we have put in here are to do with the US and UK house prices and not the Australian house prices?

Thought I might post a few links to the Australian prices.

1) AVERAGE house price values have fallen for the first time in 17 months as interest rate hikes begin to bite. 0.7% ABS has quantified this FACT.

Read more: http://www.news.com.au/money/proper...08/story-e6frfmd0-1225899002446#ixzz0xgVy6QNK

2) "DOOMSDAY" economist Steve Keen had to leg it 230km from Canberra to the top of Kosciuszkol, after losing a bet on Australian house prices. Awkwardly for him, average house prices went up rather than down 40 per cent, after the Reserve Bank 

http://www.theaustralian.com.au/bus...inue-to-be-wrong/story-e6frg9if-1225892981265

3) The case for why property prices will not collapse in Australia.

http://www.shareswatch.com.au/blog/...s-debate-part-2-why-prices-will-not-collapse/

4) This is because a very large percentage of the residential mortgages in Australia is money borrowed from the international market using a process called securitization. Since the Global Financial Crisis, the securitization market is almost closed or too expensive for just about any lender to raise more money. Even if there is demand for housing due to the current shortage of housing in Australia, people cannot buy houses without credit.

http://blog.sli-smsf.com/2009/11/23/australian-house-prices-in-2010/

Oh well .... But it is different here !


----------



## Mr Z (26 August 2010)

trainspotter said:


> Isn't it funny that the posts we have put in here are to do with the US and UK house prices and not the Australian house prices?




YES ! The Australian  housing market has none of the same dependencies or relationships to other financial markets. Its a veritable island in a storm, unique and virtuous.

Get with the program TS


----------



## trainspotter (26 August 2010)

Mr Z said:


> YES ! The Australian  housing market has none of the same dependencies or relationships to other financial markets. Its a veritable island in a storm, unique and virtuous.
> 
> Get with the program TS




ZZZZZZzzzzzzzzzZZZZZZZ .. *what* HUH ??? Sorry ... I was too busy transferring money overseas to notice !


----------



## Mr Z (26 August 2010)

Huh... I had you pegged for a trench coat with oz's sewn into the liner. :

or a yachetee with a golden keel!

Our property market is special silly! Have you not been paying attention? Sleeping I see... !

I think I am gunna buy a farm.... look out sheepies!!!!


----------



## MR. (26 August 2010)

Did ya notice the choices with the UK thingy? 
Like who cares both point to great investments!  

What the? *Wikipedia has a "Australian Property Bubble" *
Must be true then! 
http://en.wikipedia.org/wiki/Australian_property_bubble



> Another factor in the surge in house prices and rush to invest in particular, is the active promotion within the real estate seminar industry



As if! Where does this rubbish come from!

"House price indicator based on property cost versus rent"
http://upload.wikimedia.org/wikiped...s_rent_as_percentage_over_or_under-valued.pdf

Now that looked good!


----------



## MR. (26 August 2010)

> In what must be a world first and indicative of a trend of property ownership possibly becoming the almost exclusive domain of investors, it was noted that in Victoria (Aug 2010): “*For the first time, lending to property investors in Victoria outstripped borrowing by people wanting to purchase existing homes”. *




How did this slip by?


----------



## Bushman (26 August 2010)

Mr Z said:


> Me too sometimes...
> 
> 'Paper' often gets disparaged without a thought as to what it actually is/means. Irritates me a little on the odd occasion.
> 
> ...




From the MS article

“Outright sovereign default in large advanced economies remains an extremely unlikely outcome, in our view,” the report said. “But current yields and break-even inflation rates provide very little protection against the credible threat of financial oppression in any form it might take.”


----------



## Mr Z (26 August 2010)

Bushman said:


> From the MS article
> 
> “*Outright* sovereign default in large advanced economies remains an extremely unlikely outcome, in our view,” the report said. “But current yields and break-even inflation rates provide very little protection against the credible threat of financial oppression in any form it might take.”




*Outright* is the operative word! It does need to be anything like outright to cause problems. QE is a form of default by incremental devaluation, they may even attempt a formal devaluation or any number of other debt restructuring measures. The fact remains they are borrowing more and they cannot pay back current commitments if you include all unfunded liabilities. It is very simple to conclude that some form of default will occur as there is no alternate save some China like growth rate and no concomitant growth in government. Even that may not do it when you consider than the US government is approaching 50% of GPD. Another unsustainable trend point toward default. No, no outright default but big, big QE at the very least.

JMO


----------



## robots (26 August 2010)

Hello,

yes thats right Trainspotter, the thread has been hijacked by continual postings regarding bonds, IRS, defaut swaps, CD Obligations and the issues facing the UK and US

man we are different, its paradise here everywhere you go, no matter which corner you stand on

only a few here see this, oh well, the doomers just flog the line in bloggosphere, followers

thankyou
professor robots


----------



## UBIQUITOUS (26 August 2010)

Can somebody please tell me if it will always be a good time to buy property with money which I don't have? Because that's the impression I get from some posters on here.

It sure seems like a no brainer. If so why isn't everybody at it? Hang on.....


----------



## robots (26 August 2010)

hello,

yes, why arent you on it Ubiquitous? apparently it was a given prices were going to skyrocket yet not many "traders" got on, oh well

thankyou
professor robots


----------



## trainspotter (26 August 2010)

robots said:


> hello,
> 
> yes, why arent you on it Ubiquitous? apparently it was a given prices were going to skyrocket yet not many "traders" got on, oh well
> 
> ...




Horses for courses robots. Those that chase the paper trail and make money know no other way. Sure there is money to be had in shares. Tech/a and Trembling Hand have proven this. Not for me. Mr Z has good case point arguments that make sense and he obviously is making money. 

UBI on the other hand will remain forlorn and out in the wilderness unable to commit to one way or another. Too busy navel gazing.

Nevermind robots ... we all need a roof over our heads. Mine is made out Bristile Clay and my walls are brick. Got the gas heater on and putting my feet up in the lounge room. Aaaaaaaah I am feeling the afterglow of property right now.


----------



## trainspotter (26 August 2010)

UBIQUITOUS said:


> Can somebody please tell me if it will always be a good time to buy property with money which I don't have? Because that's the impression I get from some posters on here.
> 
> It sure seems like a no brainer. If so why isn't everybody at it? Hang on.....




WOW UBI .. even for YOU this post is a bit platitudinous. Would you buy shares if you have no money? Would you go to a store and buy product with no money? 

Me thinks you are really scratching for traction now. Try a different approach ... Help a brother out and actually advise us of your experience.

I await with my retinas stretched to capacity.


----------



## Mr Z (26 August 2010)

Bricks..... hmmmm

We build our houses inside-out! Don't get me started LOL


----------



## trainspotter (26 August 2010)

_R.I.P kimosabi, mr burns, medicowallet, numbercruncher, pepperoni, singlefished, Tom R, chops a must, dowdy, oh well_

I am sure there are a few more we could name and shame Professor robots ... afterall it has been a few years or so of naysayers pulling it down. I am still waiting for this so called "bubble" to burst. More like a slowdown in velocity. The banks have already taken care of the wannabes.

But we have already agreed on this matter. Where is Professor Keen on this matter?

Walk tall robots ... walk tall.


----------



## Mr Z (27 August 2010)

Not quite old bean...

Keen may still be right about degree of correction dependent on how and when the bond market corrects its bubble. When the bond market turns and our property market hangs together then you can do a victory dance. Until then it is all speculation.

The other defacto rate rise coming is high oil prices (again!), by around 2014 we should be seeing a lot more price pressure generally due to energy cost. That is totally aside from what the manics have done with our money supply.

A few hurdles to negotiate yet...!

If we do it with even a mild 10% correction (in real terms of course!) we will have done well IMO.

Anyway... first lets get through spring!


----------



## MR. (27 August 2010)

http://newsstore.fairfax.com.au/app...&cls=506&clsPage=1&docID=AGE1008127P1CH7LARVS



> lending to investors by Australia's banks in May and June in Victoria has for the first time exceeded loans given to owner-occupiers.




Better bring back the FHOG and make it $40k! no $50k. There's plenty of money left in the coffers.....
Just don't go touching NG and changing the tracks!


----------



## Mr Z (27 August 2010)

Remember when Hawk hit the 'rich' by removing negative gearing? That lasted, what, all of 6mths...  I was amazed that they thought it would have no impact! I have read here that people have that view currently... gobsmacking to me


----------



## trainspotter (27 August 2010)

MR. said:


> http://newsstore.fairfax.com.au/app...&cls=506&clsPage=1&docID=AGE1008127P1CH7LARVS
> 
> Better bring back the FHOG and make it $40k! no $50k. There's plenty of money left in the coffers.....
> Just don't go touching NG and changing the tracks!




I wonder if the investors are buying these houses that are being sold due to "mortgage stress" from the FHB? I wonder if the very same people are renting these homes back so they have a roof over their heads?

Are they off the plan type dwellings or are they older homes/units etc?

If they are off the plan loans we are in a world of pain. The days of "flipping" are loooong gone. If they are purchasing existing stock and people have to rent rather than buy it is not so bad. All power to the landlords !

I dunno about the Guvmint handouts to FHB being any more than they are now. $7,000 is more than enough IMO.

2014 eh Mr Z ? 3 more years of Utopia then ? Time to make hay whilst the sun shines I guess.


----------



## Agentm (27 August 2010)

The-Elusive-Canadian-Housing-Bubble-Summer-2010

an interesting article on the canadian bubble, which may have peaked, and the australian bubble appears to be perpetually growing

as much as i would absolutely love to own a property, i still have a huge reluctance to add to the bubble and bid on a property at levels 7.5+ income

i am inclined to think that despite the ability for australians to borrow vast sums of debt and be completely comfortable in inflating the bubble further, i have to abstain from that insanity..

cant say i am happily waiting for the inevitable collapse, as many friends and family have invested heavily in supporting the current bubble, and i think it will hurt big time when it finally peaks and falls.. which may be sudden or may well be decades long,, but blindly spending the largest sum of capital that most people loan on a property that in all likelihood will depreciate is not my idea of a wise move

ts or robots, am i seeing it all wrong? or can you explain what factors or arguments can be presented in convincing bears like me to invest in property right now?


----------



## Mr Z (27 August 2010)

trainspotter said:


> 2014 eh Mr Z ? 3 more years of Utopia then ? Time to make hay whilst the sun shines I guess.




High energy prices are a defacto rate rise... keep your eye on the oil market there are supply issues that are being masked ATM IMO.

In oil +3% is a glut, -3% a crisis... it is the ultimate just in time supply chain, storage in the system is negligible really. When supply issues become apparent it will seem to be quite fast.

Anyway... if the bond market is kept 'on the reservation' this is the other one that will cause grief and yes 2014 looks like a reasonable guess from what is known publicly.

Might not have to wait that long, some radical things are being bandied about to 'solve' the USA's issues, even speculation of a formal devaluation around the end of the year. I would normally scoff at that one, just how you formally devalue a floating dollar is unclear to me but the source of that little gem has hit the target too often to be totally ignored. The implications are big!? The 'nationalization' of mortgages, and I guess in the process Fannie and Freddie, would be an amazing thing for the champions of the free market to undertake. Mind you they are half way there with all this GSE crap anyway. I really don't know if that will bring the stability intended, I am guessing it will produce a flight from US bonds because it all but assures QE on a grand scale... but it is not like that market is in rational territory at the moment... so?

If only a small percentage of the smoke becomes fire it could be a very interesting year end.

*Here is hoping that it is boring.*

Yes maybe, 2-4 years of on trend performance.... maybe. Who really knows?


----------



## trainspotter (27 August 2010)

Agentm said:


> The-Elusive-Canadian-Housing-Bubble-Summer-2010
> 
> an interesting article on the canadian bubble, which may have peaked, and the australian bubble appears to be perpetually growing
> 
> ...




Sorry Agentm .... we have given you many reasons, theories, motion of discoveries, charts, pie graphs, matrix's, and many more researched data over the last 137 pages. Even gave links to web pages where people far more cleverer than me and the Botman have elucidated the knowledge you seek.

But let me leave you with this gem - *AVERAGE house price values have fallen for the first time in 17 months as interest rate hikes begin to bite. 0.7% ABS has quantified this FACT.* a whopping 0.07%. Nevermind they have risen over 20% nationally. 

ABS AND RBA figures also state that it is not 7.5 times wages either. I think it is about 5 times.


----------



## Mr Z (27 August 2010)

We have covered this before... the +20% is more like +10%.

GFC -8%, Post GFC +20% = Pre GFC + 10.4%

The other thing is that the ABS and RBA are not the be all and end all of stats, I mean seriously are the costs in your life moving at anything like the quoted CPI number? I for one would love to have my cost basis moving that slowly! They do gain a bias when it suits them... Mind you they can explain the bias with a nice statistical theory but that does not pull your health insurance cost down one iota! On the other hand it may just bump GDP numbers and reduce government cost basis for all the CPI related stuff... but nope, no incentive to skew numbers there!

Now the 5 times thing... can we find that somewhere? I have seen sooooo many different numbers!

What are that talking around 72K as an average wage? Gives 360K as a median figure using 5x? Christ mate... nowhere near here has that sort of number?! 

Some city medians v implied earnings at 5x

Sydney 590K - 118K
Brisbane 480K - 96K
Perth 500K - 100K
Melbourne 500K - 100K
Darwin 530K - 106K
Hobart 340K - 68K

Avg 490K - 98K which is around the national median including country areas! Actually it is knocking on 500K I think.

Even taking household income in total the last number I have is around 66K median in 2008. This would imply a 20+% PA growth rate to hit 98K!?

Help me out here? Do you really think that 5x is real? and we now have a median household income of around 100K nationally?

I really need to see the numbers on this.

Mebe I am spectacularly ignorant! Long time since I have look that closely at this ratio, basically been taking what I read as about right.

I would expect a median household 2010 income of around 75K vs the median house price of around 500K giving a national ratio of 6.666666....... That is a high number for us so if we are to accept that as the new norm we really must come up with an excellent 'structural change' argument. None I have seen so far really convince me!


----------



## trainspotter (27 August 2010)

Mr Z said:


> We have covered this before... the +20% is more like +10%.
> 
> GFC -8%, Post GFC +20% = Pre GFC + 10.4%
> 
> The other thing is that the ABS and RBA are not the be all and end all of stats, I mean seriously are the costs in your life moving at anything like the quoted CPI number? I for one would love to have my cost basis moving that slowly! They do gain a bias when it suits them... Mind you they can explain the bias with a nice statistical theory but that does not pull you health insurance cost down one iota!




Ummmm "That's a negative ghostrider, the pattern is full" ... The 20% is in regards to the June qrt 09 to June qrt 10

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0

Sorry the chart is only to 2007 ... feeling a bit insouciant today.

Another reason that the deflation will be just that is that the good old Aussies don't like NOT paying back the banks. The buggers hardly default. They will sell their Grandma before they miss a payment. 

Clothing and footwear have gone down thusly affecting CPI ... :

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6401.0


----------



## Mr Z (27 August 2010)

Nah... + 10% pre GFC is about right, give or take a smidgen.

Yeah look that ratio chart does not tally with any of their own numbers, I would like see a break down.


----------



## Mr Z (27 August 2010)

Also...

Your charts...

Chart 1 should worry you given the historic correlation. Price will always lag loans, I am thinking we are no where near out of those woods!

Chart 2 just kind looks like we are lagging again not really evidence we are out of the woods.

Chart 3 kinda suggests we had a bigger bubble withstanding the fact that we seem to carry a higher multiple generally.

My chart... if it where a stock the volume numbers look concerning, falling volume v rising price points to coming correction. The market is quietening down significantly, this normally points to a fast move coming up. Down or up?  I can't make the case for up, aside from and big OS liquidity rush?! and the ask line looks like it is getting crowded, I think we need to see a resumption of more normal volume levels again before we can say cya to the woods.


----------



## MR. (27 August 2010)

Mr Z said:


> Remember when Hawk hit the 'rich' by removing negative gearing? That lasted, what, all of 6mths...  I was amazed that they thought it would have no impact! I have read here that people have that view currently... gobsmacking to me




July 1985 that Hawk government quarantined negative gearing interest expenses (on new transactions), so interest could only be claimed against rental income on existing and newly built houses, not other income. (Any excess could be carried forward for use in later years.) The result was a considerable dampening of investor enthusiasm. 

September 1985, just two months later, the 50% capital gains tax was introduced. Before that no CGT existed. This would have contributed, with fewer landlords, rents rose. But did they? Some studies suggest rents only rose in Sydney and Perth. The other capital cities remained flat.

That NG change lasted near two years before it was abolished. The 50% capital gains tax, as you’d realize, remained.

Property speculation by the loss of tax revenue? 
A tweaks overdue me thinks! 


Yes, Spring is almost upon us. You can almost feel the excitement as vendors come outside after a cold winter ready to make their killing. The suspense is almost like the MCG on grand final day. You can feel it in the air. The grounds almost a thumping. Agents are polishing their hammers and counting their unearned commissions already. What a great place this is. This place of opportunity. Will more Australian property investors appear on the stats?  The seminars are a running day and night and you bet that gold ya got stashed under the bed they will.


----------



## singlefished (27 August 2010)

trainspotter said:


> _R.I.P kimosabi, mr burns, medicowallet, numbercruncher, pepperoni, singlefished, Tom R, chops a must, dowdy, oh well_
> 
> I am sure there are a few more we could name and shame Professor robots ... afterall it has been a few years or so of naysayers pulling it down. I am still waiting for this so called "bubble" to burst. More like a slowdown in velocity. The banks have already taken care of the wannabes.
> 
> ...




*RIP?*
Addiction to persistent bickering about the property market on web forums can be cured.
You should give it a try and report back a month from now....


----------



## Agentm (27 August 2010)

trainspotter said:


> Sorry Agentm .... we have given you many reasons, theories, motion of discoveries, charts, pie graphs, matrix's, and many more researched data over the last 137 pages. Even gave links to web pages where people far more cleverer than me and the Botman have elucidated the knowledge you seek.
> 
> But let me leave you with this gem - *AVERAGE house price values have fallen for the first time in 17 months as interest rate hikes begin to bite. 0.7% ABS has quantified this FACT.* a whopping 0.07%. Nevermind they have risen over 20% nationally.
> 
> ABS AND RBA figures also state that it is not 7.5 times wages either. I think it is about 5 times.




one down ...  wow... that was pretty easy, just ask a simple question and get no answer,,  so i get to claim TS as wiped out in this debate.. 

but it is a shame, as the 137 pages of this thread are pretty much just taking the p#ss out of people i think, and i really want to discuss the future of property as i will invest in the sector one day


TS.. i would have thought that given your dedication to this single thread, and the insults thrown at anyone who has an opposing view, that you may be able to deliver a few words of wisdom, just a brief summary of the 137 pages in a brief summation of whats so good about me buying into the bubble right now?

i guess i will have to miss out on an well informed answer and assume it cant be presented,,

so to anyone else out there.. here is my question again,,


_as much as i would absolutely love to own a property, i still have a huge reluctance to add to the bubble and bid on a property at levels 7.5+ income

i am inclined to think that despite the ability for australians to borrow vast sums of debt and be completely comfortable in inflating the bubble further, i have to abstain from that insanity..

cant say i am happily waiting for the inevitable collapse, as many friends and family have invested heavily in supporting the current bubble, and i think it will hurt big time when it finally peaks and falls.. which may be sudden or may well be decades long,, but blindly spending the largest sum of capital that most people loan on a property that in all likelihood will depreciate is not my idea of a wise move_


hoping for a reply and an interesting discussion on the future of australian property prices which is of extreme importance to me before i decide to buy..


----------



## UBIQUITOUS (27 August 2010)

Agentm said:


> *TS.. i would have thought that given your dedication to this single thread, and the insults thrown at anyone who has an opposing view,* that you may be able to deliver a few words of wisdom, just a brief summary of the 137 pages in a brief summation of whats so good about me buying into the bubble right now?




Careful Agent, or TS will follow you onto a thread where you hold stock (but he doesn't) and start goading you there, as he has tried to do to me on TZL. It is a sad that he takes discussion on such a broad asset class SO personally, that he feels that he has to behave in this manner. 

TS, I really think you should take a bit of a break from posting, because you are only coming across as a bit of a troll. There is no need to be so antagonistic on a forum for adult discussion




trainspotter said:


> No problemo dude. All glory to you if you can rip the scab off this one and not even flinch ! You must clank when you walk.
> 
> Your commitment to TZL is admirable to say the least. I really do hope you do well so that way you can place all your money into property and join the "darkside" with me.
> 
> ...


----------



## Mr Z (27 August 2010)

Thanks MR... I certainly remember it hitting rents but then I was in Sydney at the time.


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## trainspotter (27 August 2010)

trainspotter said:


> Personally in my opinion I reckon the property price for Australia for the long term is *down nationally overall*. Not the raving lunatic harbringers of doom and gloom style but more of a deflation than a massive POP. *3 - 5 % would be realistic terms.*
> 
> This being said there will be places that will suffer Chernobyl style meltdowns. Ipswich in Brisbane for one is going through "mortgage stress" right now. DYOR.
> 
> ...




Please read post # 2672 as well.

WHY OH WHY would you buy now Agentm? How many times do I need to write this Agentm? This discussion has been done to death over 137 pages. I have agreed with all and sundry that it is on the backslide for crying out loud?

In your own words you have called it an "insane bubble" so why would you risk getting on the plane if you have a fear of flying??

You have picked me right Agentm ... I am neither a stalker nor a troll. 

Goad all you like and call it a "scalp" if you must. 

I have pointed out *how* I make money out of RE and it is not for everyone as they do not have the capacity of manufacture like I do. 

Thank you UBI for your concern ... I thought you said you would be doing me a favour and not repsonding to my posts? I thought we had an accord on this matter? AND YES I did come into your stock world of TZL and asked you about the state of play and what strategies you are using there. AND I also congratulated you on your endeavours ... if you need to take this as some bitter and twisted perforated bowel syndrome then so be it. I can't help you anymore.

Post #573 in the TZL thread I wrote this "Originally Posted by UBIQUITOUS 
I have averaged down since $4, with over half of my shares being acquired around 40cent. I now have close to 1 million shares, at an average of about 60c. This pyramiding is a strategy which will work for me .

*Good luck UBI ! May the force be with you on this one. I mean this sincerely BTW. I hope you do make good ...... truly.*

Quick maths lesson .... 1 million shares at 60 cents is $600,000 AUD right?"


----------



## Mr Z (27 August 2010)

trainspotter said:


> Quick maths lesson .... 1 million shares at 60 cents is $600,000 AUD right?"




Yike's.... and I thought my spec positions where brave!  That is going out of the park if you connect


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## robots (27 August 2010)

Hello,

good afternoon everyone, oh yeah great discussion

gee many out to get you TS, 

we all trolls arent we, me you and all the other fans 

agentM, buy for tomorrow brother, 5yr 10yr or 40yr down the road

pump the repayments for 4-5yrs, bit of growth here and there 

but first concentrate on getting a good wage/job as this is the key man, so easy, risk free $ every week, go somewhere for 8hrs do a few tasks 

then go home, soooo easy man and its in your hand

thankyou
professor robots


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## UBIQUITOUS (27 August 2010)

Mr Z said:


> Yike's.... and I thought my spec positions where brave!  That is going out of the park if you connect




I expect it will. The technology and upside was good enough to tempt Mark Bouris out of his  'mortgage man' comfort zone to become chairman of a tech company. And we all on this thread should know good Mark Bouris is in small business. 

Under his leadership, the company at 27 cents last week was a far better proposition than at its high under the former board of $7.20. I expect a share price in the hundreds of dollars (if the technology isn't sold off at an earlier date).

Anyway, this is a property thread and its all about leveraging yourself to make money and without much grey matter needed.


----------



## trainspotter (27 August 2010)

Hey robots .... I obviously deserve it with my fervent high squealing pitch that we should all rush into buying property NOW like lemmings off a cliff and making 500% returns on our money in 6 months.

Yeah right ...... Pffffffftttttt ! 

Or my obviously insulting repsonses when I ask people to give a reason why they think property in Australia is going to fall 40% A' LA Steven Keen style rather than just blasting a headline from some notable rag of a paper shouting on the front page.

At least Mr Z had some very critical information and an opinion as to why he holds his beliefs. Factual and relevant information BTW. Has certainly made me look over my shoulder a bit more than I used to.


----------



## Agentm (27 August 2010)

robots said:


> Hello,
> 
> good afternoon everyone, oh yeah great discussion
> 
> ...




thanks robots,

but can you answer the question?  why am i buying into a peak of a bubble again? if it goes down by 40% over a decade, wont it be pretty lousy return?

can you present some pro's for taking a huge leap into the peak of the bubble? - other than making a developer real happy


cheers

btw, i apologise to ts about the scalp comment.. i received a infraction for that and i was not aware i was offending, i meant it tongue in cheek..


----------



## robots (27 August 2010)

hello,

no worries AgentM, i normally run question & answer after 7pm but the moderators have just given me permission to kick it off a bit early which is fantastic

firstly, we in no bubble in Australia, Sinner has presented data indicating compound return is just some 2.2% for property, so not bubble 

yes certainly, think of the next 30-40yrs of your life and grab something you can afford, lock it in and forget about it

plenty of second-hand places around

please keep them coming

thankyou
associate professor robots


----------



## trainspotter (27 August 2010)

Agentm said:


> thanks robots,
> 
> but can you answer the question?  why am i buying into a peak of a bubble again? if it goes down by 40% over a decade, wont it be pretty lousy return?
> 
> ...




Sure thing Agentm ... if it goes down 40% over 10 years it would definitely qualify as a "lemon" ..... the thing is and this is what we have been typing in here is that it also depends where you buy the property, how much you are geared for, the condition of the property (new/used/renovator), how secure your job is, what your goals are etc etc. 

I recommend NOT to buy property as an investment tool thinking you are going to make a quick buck out of it. YOU ARE NOT. Property is now a long term hold with a negative trend. If it is to be your PPOR then it is going to be long term anyhow (one would hope) 

It is a HUGE financial commitment and it is very risky stuff if bought incorrectly (just like shares) The escape route of onselling when mortgage stress hits is getting very narrow about now. The vendors are backing up at the gates getting ready to offload their properties that are non performing. I reckon any astute property investor right now would be going through his portfolio and weeding out "potential" underwaters. Look at anything that has got less than 10% equity in as a BIG risk. Sell it and get out whilst you still can.

We are in for a correction for sure. As to the extent of it only time will tell. Depends on interest rates, bond rates, "real inflation", lots of factors to be considered. IMO we are in for a very testing time in property in Australia. 

Ipswich in Brisbane right now is hurting (1538 homes on the market) already gone backwards 13% due to dodgy developers spruiking (present company excluded of course) fantastic RoR's. Most of WA stagnating or declining. 

Everywhere else is flatlining.

Only Melbourne and Sydney seem to be bucking the trend ATM 

Sorry about the infraction Agentm.


----------



## Agentm (27 August 2010)

trainspotter said:


> Please read post # 2672 as well.
> 
> WHY OH WHY would you buy now Agentm? How many times do I need to write this Agentm? This discussion has been done to death over 137 pages. I have agreed with all and sundry that it is on the backslide for crying out loud?
> 
> ...




ts. i actually do respect your opinion, and i was asking a genuine question.  i dont agree on your opinions on keen or grantham, i tent to think that the governments desire to inflate RE prices with lockdown of the suburbs and the policy of immigration has had a lack of foresight, sure  it lock value into the RE market, but every bubble needs to deflate. i find it hard to subject myself to a massive investment into an inflated market, regardless of its form.

my view is that the current developers dream run is great for the economy, but is the 7.5 income prices in melbourne right now going to esculate perpetually? are we all going to get wages increases and be able to afford to inflate this bubble more?  is this insane market going to just rise for decades to come?

i look at the pressures on wages to increase and dont see it happening, i cant see world wide growth, i see contraction.

if i was to buy now, will i be real happy in 10 years when i have paid off this loan, that the prices have dropped by 40%?  or am i to expect a 100% rise again in the next decade?


----------



## Agentm (27 August 2010)

robots said:


> hello,
> 
> no worries AgentM, i normally run question & answer after 7pm but the moderators have just given me permission to kick it off a bit early which is fantastic
> 
> ...




the prices imho are in a bubble, canada, china and australia imho have them..

if the average prices were 3.5 to income, i would be thinking different, but if the prices are not in a bubble as you say, then income must be way way deflated in australia.

its not as though there is any land shortage, imho the policies and desire to protect the banks and lock down the 2 major cities is totally one sided, profits for developers and banks for sure, as well as for the local concils collecting rates.. but the stress on the economy is what also concerns me, sure we can rely on high profits from miners to pay the pensions, but real spending is being absorbed by the bubble imho.. at 3.5 income i would be happy.. but 7.5 is off the dial, less and less can afford the jump into RE, and its hardly like switzerland here where they protect the rental market..  

i still cant see the pro's of jumping into a bubble that will be pressured to deflate over the coming decade(s)


----------



## robots (27 August 2010)

hello,

no, you can buy a place in melton, frankston nth or a host of other places for 4x

but its not a birth right or citizen right this income to median thing, its just nonsense that its brought up

no worries man, myself and others just comment on the state of the real estate market

and 2yrs after the biggest financial event since 1929 RE prices have moved higher than pre-GFC while most other assets have continued to fail, OH WELL

please dont discount your position in 30-40yrs time

thankyou
professor robots


----------



## So_Cynical (27 August 2010)

robots said:


> hello,
> 
> no, you can buy a place in *melton, frankston nth* or a host of other places for 4x




2 of the most hellish places in oz...the thought that people go deep into debt to live there is simply chilling. :headshake

Ballarat FTW


----------



## Mr Z (28 August 2010)

Angst-on 

Some parts of it are OK.

Gold did quite well as well Mr Bots FWIW, if you look at it in AUD terms.

Considering what the AUD did through the GFC in USD terms everything here copped a hammering! I only wish I'd been set up to go for UST's at the time! I could have switched back into anything Oz for a big discount. But alas my BSD is not so B or S!

The weekend! Lollipops and sunshine... we hope! 

Cheers people!
Z


----------



## MR. (28 August 2010)

trainspotter said:


> Post #573 in the TZL thread I wrote this "Originally Posted by UBIQUITOUS
> I have averaged down since $4, with over half of my shares being acquired around 40cent. I now have close to 1 million shares, at an average of about 60c. This pyramiding is a strategy which will work for me .






UBIQUITOUS said:


> I expect it will. The technology and upside was good enough to tempt Mark Bouris out of his  'mortgage man' comfort zone to become chairman of a tech company. And we all on this thread should know good Mark Bouris is in small business.
> 
> Under his leadership, the company at 27 cents last week was a far better proposition than at its high under the former board of $7.20. I expect a share price in the hundreds of dollars (if the technology isn't sold off at an earlier date).
> 
> Anyway, this is a property thread and its all about leveraging yourself to make money and without much grey matter needed.




Mate I read that TZL thread, lets not go discussing grey matter. (bit of a cross thread thingy here but will be brief, besides Ubi brought it here) If there was ever someone who knew what was going on and really knew nothing. It's a bit sad read really, such dedication to have in a company.... Ever thought of pulling the levers yourself? Ever thought of buying some property?

Now you claim the TZL share price should be in the hundreds of dollars? What a promoter! Are you for real?

Prawn gave some good opinions early on, along with others as time went on. What do you need? A 50% gain to think you have your money back before spewing a million shares? 

Ubi you claim 







> The technology and upside was good enough to tempt Mark Bouris out of his  'mortgage man' comfort zone to become chairman of a tech company.




Mark Bouris started Wizard home loans and sold out in 2004 for something like half a billion dollars. Joined TZL in 2009 when the share price was $1- and has seen it fall to high 20's and back to say 40. The upside is so good that Mark Bouris and Ken Ting have purchased no shares excluding Ken's 72,725 which he came to the table with. They have both been given a few I see. 

Hope it turns out as you expect!


----------



## trainspotter (28 August 2010)

Meanwhile back at the ranch ..... ANZ and the ABS reckon we have a chronic shortage of houses? Can this help sustain the prices of homes in Ozzie Land? Does it even contribute to the overall picture? Is it a classic case of supply and demand? All these questions and more will be revealed in the next few years. Could be sooner if and when the banks put up the rates !


----------



## UBIQUITOUS (28 August 2010)

Geee...that's an awful lot of land and homes



> http://www.premier.vic.gov.au/component/content/article/11321.html
> 
> 
> HOME BUYERS WINNERS IN BOUNDARY MOVE
> ...


----------



## MR. (28 August 2010)

ABS or ABA?

2008? Got anything new?


----------



## Mr Z (28 August 2010)

BIS are going for a +30% over the next 3 years  Man they are going to be bitching about affordability if that comes to pass!

LOL... from -40% to +30% ! my god, what a spread 

Who's crystal balls are good?

Roll on spring!


----------



## trainspotter (28 August 2010)

MR. said:


> ABS or ABA?
> 
> 2008? Got anything new?




Sorry MR. - you are right again. It is the ABA and not the ABS. Must get me a manicure so I can hit the keyboard better. I have the ANZ document for 2010 on my desk in a PDF format. Have not had a chance to read it fully. Will post on Monday once I have disseminated the information.

Good post UBI !! That should take care of the "supply" part of the equation for sure.


----------



## cutz (28 August 2010)

I vaguely recall the US had a perceived housing shortage long before the market headed south. This may have been a reason why buyers were comfortable loading up on debt, the thinking may have been that the shortage will create demand, push up prices, and debt to equity will be restored to reasonable levels ect. ect.

This rest is history.

In my opinion bubbles are not driven by many of the stats previously mentioned on this thread , the fear of missing out is the biggest driver, many here believe the shortage is a myth including myself.


----------



## Mr Z (28 August 2010)

cutz said:


> I vaguely recall the US had a perceived housing shortage long before the market headed south. This may have been a reason why buyers were comfortable loading up on debt, the thinking may have been that the shortage will create demand, push up prices, and debt to equity will be restored to reasonable levels ect. ect.
> 
> This rest is history.
> 
> In my opinion bubbles are not driven by many of the stats previously mentioned on this thread , the fear of missing out is the biggest driver, many here believe the shortage is a myth including myself.




Ireland had a 'shortage' as well.... government often has a way of moving to solve a 'problem' just at the wrong time?! Is the timing good in VIC... we C!

Bubbles are a beast of loose credit pure and simple. When you get over leveraged supply meeting over leveraged demand the potential to leave  the rails and travel to an unrealistic place presents itself. People being what people are tend to cease caring about reality at that point, well all but one reality --> the price! It is the over leverage that provides the pop! I laugh at many of the times the term 'bubble' is misapplied... as far as journos are concerned if we want it to go up then its not a bubble, if we don't like it going up then it is a bubble.

At the moment the credit supply in housing would argue against us being in full bubble territory, it is just too tight. You can argue extended market but I don't think we are running on rocket fuel and about to flame out. Having said that it does not preclude a decent size correction, but... I think, not the US type wreck of 40%-90% carnage, depending on where you look. Yes some places got hit for 90%... some worse if you wanna really talk wreckage (very small minority)! but 40%-50% is not hard to find and just occasionally some places that never went up much are doing much better.

Anywhoooo... I wonder if the volatility that has come to most markets will find its way into realestate to one degree or another.


----------



## robots (28 August 2010)

hello,

oh yeah, they back on it Trainspotter

this happened in US, UK, Ireland and in a few more minutes Spain will get a mention, hehehehehehehe

amazing, 

thankyou
professor robots


----------



## Mr Z (28 August 2010)

Yes.... truly


----------



## electronicmaster (28 August 2010)

OK.   When the USD devalues 50% by the end of this year.  What will happen to home prices then?  After the rest of the currencies get adjusted down I mean.

Would people listen to this man?


*Bubble John Symond "it's different here"*


----------



## electronicmaster (28 August 2010)

electronicmaster said:


> OK.   When the USD devalues 50% by the end of this year.  What will happen to home prices then?  After the rest of the currencies get adjusted down I mean.
> 
> Would people listen to this man?
> 
> ...





Oh I see, this is the plan:-

*Revealed: The home loan that could save you a fortune *

http://www.news.com.au/money/proper...ve-you-a-fortune/story-e6frfmd0-1225870019522



> HOMEBUYERS are to be offered never-ending mortgages in a bid to overcome Australia's affordability crisis.
> 
> ING Direct, Australia's fifth largest lender, is preparing to sell loans that have no fixed term and no requirement to repay any capital along the way.
> 
> ...




Another words
*NEW AGE SLAVERY *

It is evil I say  

:bricks1:


----------



## nunthewiser (29 August 2010)

robots said:


> hello,
> 
> oh yeah, they back on it Trainspotter
> 
> ...





I would like to graciously say that since *MY* calling of the top a while back in this thread that house prices have not risen past my call and in fact as pointed out MANY pages ago some have even fallen more than 20%+ in that time.

i am a legend

thankyou


----------



## Mr Z (29 August 2010)

electronicmaster said:


> OK.   When the USD devalues 50% by the end of this year.  What will happen to home prices then? * After the rest of the currencies get adjusted down I mean.*




If this happens there will be no net change and it will be status quo.

Devaluing only really means something if you manage it unilaterally!

+ nobody seems to be saying *HOW* the US will devalue in a formal sense, in a world of floating currencies that is a hard trick. 

If the market devalues the USD by that amount places like Australia will be the net recipient of capital flows, this will not in itself cause major dramas and should underpin our markets in general... after all the money has to go somewhere.

50% is huge, and yes I am aware of the rumor, BUT I would not bet on it... and I still don't see how they formally devalue.


----------



## Mr Z (29 August 2010)

nunthewiser said:


> i am a legend




I love this thread, I normally don't get to hang with royalty! 



i am a chit kicker 




How can you tell he is the king?

Well he is the only one not covered in chit, isn't he?

MP


----------



## robots (29 August 2010)

nunthewiser said:


> I would like to graciously say that since *MY* calling of the top a while back in this thread that house prices have not risen past my call and in fact as pointed out MANY pages ago some have even fallen more than 20%+ in that time.
> 
> i am a legend
> 
> thankyou




hello,

yes well done Nun, good to see you back around

i have mentioned that numerous times just recently but my posts keep getting removed, hopefully this one stays up

apparently the USD, Gold, CDO's, IRS, US, UK, Spain and Ireland are of more benefit to Aussies than the situation with regard to aussie property prices

oh well

thankyou
professor robots


----------



## trainspotter (29 August 2010)

This 50% USD devalue thingy by the end of the year. Is this the correction we had to have? What will cause this plunge? What are the tells for a currency collapse? If a tree falls in the woods and no one is there to hear it fall .... did it really make a noise??

Is this the end of the world and we should all start stocking up on supplies as everything in 2011 will be worthless?

Ludwig von Mises's rule: the first job of an economist is to tell governments what they cannot do.

John Symonds role is to *sell* money under the auspicious title of "Aussie Home Loans" .... get it ?? From what I can make out he does a pretty good job of it.


----------



## Mr Z (29 August 2010)

There is speculation that in the 6 odd day break across xmas that the US will somehow (????) formally devalue the USD significantly (50%). I would totally discount it if it where not for the source. He is a bit of a hysteria queen but he has not got such a bad track record...  He knows people who knows people....  

I don't see the market doing it at anywhere near that speed?! and I don't know what the world will make of it if they did (trust shattering??!) but they do seem to be getting desperate to apply a fix that will work.


----------



## trainspotter (29 August 2010)

There are differences between most countries property markets that result in anomalies to their relative performance. 

1) Relative population growth rates (high in Australia, but much lower in the US and UK and negative in Japan)

2) Mortgage default rates ”” the 90 day default rate on Australian home loans is about 15 and 30 per cent of the level of equivalent default rates on US and UK loans despite historically higher interest rates.

3) Tax treatment of housing - in the US capital gains tax is levied on owner-occupied housing while mortgage interest repayments are tax deductible, neither applies to Australia. 

4) Size of their public housing markets - the public housing market share in the UK is far larger than Australia, which in turn has a much bigger private rental market.

5) Rates of home ownership (APPROXIMATES ONLY - 54 per cent in the Netherlands, 42 per cent in Germany, and 35 per cent in Switzerland, but about 70 per cent in Australia) 

6) Responsiveness of housing supply to changes in demand - low in supply-constrained countries such as Australia, but higher in many countries such as the US, which has had a problem of excess supply.

7) Urbanisation of their population living in their largest cities as measured by the so-called “Zipf curve” (high in Australia but considerably lower in the US, UK)

*Zipf's law*, an empirical law formulated using mathematical statistics, refers to the fact that many types of data studied in the physical and social sciences can be approximated with a Zipfian distribution, one of a family of related discrete power law probability distributions. 

http://en.wikipedia.org/wiki/Zipf's_law

Some of the reasons as to why "It's different here" - Now this does not mean we are bullet proof to a possible correstion but are some "reasons" that IMO believe when the rates start biting and the IRS & CDF's and USD falter then we have a slightly stronger model that the "other countries". Then again I could be completely wrong and the whole housing market will collapse by 40% at 11.37am on the 11th January 2011 compliments of Steven Keen. 

Pretty boring stuff these informative posts. Can't we go back to the name calling again?


----------



## Mr Z (29 August 2010)

Nice post TS!

I have always argued we are relatively stronger all though I don't buy all the reasons that are put forward for that. The difficulty is in putting a hard number on it! *IF* the 30%+ comes true it will be  very damaging due to the average Aussies love of the castle (high ownership!). That is a government changer if ever there was one, I expect that will be fought with all weapons available, traditional and non.

How we manage to get by without a scratch.... or duco shining as BIS has it (+30%?! 3 years?!), while the rest of our brothers are in the panel shop still has me a bit nervous about the prospects for the BIS outlook. Some smart guys (smarter than me anyway!) have money on it. Maybe at worst we will only slip into neutral for a while... but those ratios do need to unwind a bit!!! Bifurcated market? Mining states on the rampage while the SE corner slips? We saw that starting to develop a few years ago.

Hmmmmm....

Oh yeah...

YA IDJIGIT! WTF U TIN U ARE SAYIN MAN! IFFUN I HAD A DAWG AS BUTT UGLY AS U I B SHAVIN ITS BUTT AND TELLING IT WALK BACKWARDS! U IS 1 DUM MF!

Better?

Love
Z


----------



## trainspotter (29 August 2010)

Aaaaaaaaaaaaaahh .... the serenity of home ownership ! 

LOL @ Mr Z ... yeppers much improved ... your Spanglish is coming along nicely!


----------



## electronicmaster (29 August 2010)

trainspotter said:


> This 50% USD devalue thingy by the end of the year. Is this the correction we had to have? What will cause this plunge? What are the tells for a currency collapse? If a tree falls in the woods and no one is there to hear it fall .... did it really make a noise??




I've seen two different sources that say the USD is to devalue.  First source got the info from the people who control the world (from last year), and says the USD will devalue minimum 30% Maximum 50%. 

The other source (this year) is from the insiders of the Federal Reserve, and says the USD will devalue 50% (they can do it in 16 days or if they wanted 6 days).  This source also warned of the collapse of the three major Banks AIG, Freddie Mac and Fannie Mae ahead of time due to his inside sources.

If people here like to see more info on this, see :- https://www.aussiestockforums.com/forums/showpost.php?p=577044&postcount=106

and 

https://www.aussiestockforums.com/forums/showpost.php?p=576864&postcount=104




trainspotter said:


> Is this the end of the world and we should all start stocking up on supplies as everything in 2011 will be worthless?




I think it is a easer way to pay of the $206 Trillion dollar debt, and introduce the *SDR* globally.  

Basically, the USD is no longer the reserve currency of the world.




trainspotter said:


> Ludwig von Mises's rule: the first job of an economist is to tell governments what they cannot do.




In this case the economist is the Elite families that owns the Central Banks and have small clubs that control all the governments of the world. One is Known as The Builderburg Group 



trainspotter said:


> John Symonds role is to *sell* money under the auspicious title of "Aussie Home Loans" .... get it ?? From what I can make out he does a pretty good job of it.




Oh ok. That is interesting to know.


----------



## Mr Z (29 August 2010)

Freddie and Fannie are GSE's not banks? and they have already failed and are operating in conservatorship, they are all but nationalized, which is very likely IMO.

AIG is an insurance company, again not a bank! and well, ... it has been saved once! God knows what its books look like now but you would have to imagine, given its humungus roll in the derivatives scene, that they would sooner nationalize it than let it actually fail. The financial world believes it cannot let AIG, Freddie or Fannie go. The short term damage and pain would be too much for them to bear... so they will not fail, they will be underwritten by the system. 

As for banks... yep well, just watch this list! Dropping like flies! 

USD down... sure, by how much and when... who knows for sure!


----------



## So_Cynical (29 August 2010)

trainspotter said:


> There are differences between most countries property markets that result in anomalies to their relative performance.
> 
> 1) Relative population growth rates (high in Australia, but much lower in the US and UK and negative in Japan)




Half wrong Tranny :nono:

According to Wiki, Australia's per annum population growth is 


1.2% ~ ranked #127 (United Nations)
1.01% ~ ranked #112 (CIA world fact book) 

United States of America


0.97% ~ ranked #131 (United Nations) 
0.98% ~ ranked #129 (CIA world fact book) 

The United Kingdom


0.42% ~ ranked #170 (United Nations)  
0.28% ~ ranked #175 (CIA world fact book) 

So while Australia's population growth is slightly higher than the US and significantly higher than the UK...the figures suggest that population growth is pretty much insignificant when it comes to housing bubbles...especially when you consider the following.

Peoples republic of China  


0.58% ~ ranked #156 (United Nations) 
0.66% ranked #147 (CIA world fact book) 

The Central African nation of Burundi has one of the highest annual population growth rates (3.8%)...and i cant find anything about a real estate bubble there. 

http://en.wikipedia.org/wiki/List_of_countries_by_population_growth_rate


----------



## electronicmaster (29 August 2010)

Mr Z said:


> Freddie and Fannie are GSE's not banks? and they have already failed and are operating in conservatorship, they are all but nationalized, which is very likely IMO.




Yes correct.  And they did they fail years ago.



Mr Z said:


> AIG is an insurance company, again not a bank! and well, ... it has been saved once! God knows what its books look like now but you would have to imagine, given its humungus roll in the derivatives scene, that they would sooner nationalize it than let it actually fail. The financial world believes it cannot let AIG, Freddie or Fannie go. The short term damage and pain would be too much for them to bear... so they will not fail, they will be underwritten by the system.




Yes correct, an insurance company.  Synthictic CDOs and CD's is the derivatives your talking about I think.


I Can't remember everything lol


----------



## robots (29 August 2010)

hello,

OH yEAH, lets get this thread back on track brothers:

http://www.reiv.com.au/home/inside.asp?ID=142

71%, just normal market conditions by the looks of it, paradise

is this thread about "The Future of Australian property prices" or whether US businesses are going to go under? oh well

thankyou
professor robots


----------



## trainspotter (29 August 2010)

Excellent retorts electonicmaster and So_Cynical ... some great information gathering there chaps ! Simply superb !

*Electro* - Can you give any links outside of ASF to further these claims. Sure the USD is likely to falter but we have had Bernacke come out and claim he will stand behind the product he sells. Market has reacted strongly in an upward trend on his words. The problem that I see it is ... if they do disappear down this path it will take out too may players (China for a start)  and devalue the USD to this point of no return then there will be nothing left to recover from. It's a confidence thing. If they wipe off the trilions of debt in this manner then I will start stocking up on tinned food. 

*So_Cynical* - I am the glass half full kind of guy. Sure you might give me an inch but I am gonna take a mile !  I am of the opinion that the immigrants that arrive in the other countries mentioned end up in state housing (read ghettos) but in good old Aussie land they have the opportunity to BUY their homes here ! 

I am off to Burundi ... they might need houses built there !

Fantastic news robots ..... 71% eh? Business as usual brother !


----------



## electronicmaster (29 August 2010)

trainspotter said:


> *Electro* - Can you give any links outside of ASF to further these claims. Sure the USD is likely to falter but we have had Bernacke come out and claim he will stand behind the product he sells. Market has reacted strongly in an upward trend on his words. The problem that I see it is ... if they do disappear down this path it will take out too may players (China for a start)  and devalue the USD to this point of no return then there will be nothing left to recover from. It's a confidence thing. If they wipe off the trilions of debt in this manner then I will start stocking up on tinned food.




Bernanke is liar.   Gold and Silver are near all time highs.  That is after failing to depress the prices last week during Options expiry.  He wants to print money big time because the market is in a deflationary spiral.  Unemployment numbers are increasing big time as well.   

Bernanke can't print money (at this time) otherwise Gold and silver will take off big time.   The market will catch on too quickly and then it will be game over. 


I've been documenting outside links on the Conspiracy thread.   I don't place links unless I think the information is true and valid.  I have done a lot of research to find out why our governments are acting dumb in regards to economics and why they already have made the country into a police state.  And why the media lies to us all or has chosen to ignore whats really happening.

This link details the future of the USD:-

*Devalue of the USD that will effect the Oil price*

This link details how the Chinese are already acting Bearish on US Treasuries:-

*On the Edge with Joern Berninger *


----------



## trainspotter (30 August 2010)

OH SHEEESH ...... I wrote some really good stuff prior to the meltdown.

Placed links to ANZ 2009 forecasts and all kinds of non replicant posts.

Aaahaahahhahhha ... even responded with associated cross quotes to evidence my stance involved with purist theories. Game on !


----------



## knocker1 (30 August 2010)

trainspotter said:


> OH SHEEESH ...... I wrote some really good stuff prior to the meltdown.
> 
> Placed links to ANZ 2009 forecasts and all kinds of non replicant posts.
> 
> Aaahaahahhahhha ... even responded with associated cross quotes to evidence my stance involved with purist theories. Game on !




Good stuff trainspotter. How's that boat going mate?


----------



## trainspotter (30 August 2010)

knocker1 said:


> Good stuff trainspotter. How's that boat going mate?




Absolutely fantastic thanks ....... just got it back from the Doctors and she is doing fine.

www.zeewykpearl.com.au .. that is me second from the right. LOL


----------



## knocker1 (30 August 2010)

trainspotter said:


> Absolutely fantastic thanks ....... just got it back from the Doctors and she is doing fine.
> 
> www.zeewykpearl.com.au .. that is me second from the right. LOL




Yeppa. Just flogged my old boat and have now graduated to something bigger ;-)  Nothin like trading the forex


----------



## trainspotter (30 August 2010)

knocker1 said:


> Yeppa. Just flogged my old boat and have now graduated to something bigger ;-)  Nothin like trading the forex




Congratulations my man ! Maybe this conversation belongs in the "hobbies" thread or similar? Would love to chat about your new aquisition and talk about fuel ratios to rpm and navigation systems.


----------



## knocker1 (30 August 2010)

trainspotter said:


> Congratulations my man ! Maybe this conversation belongs in the "hobbies" thread or similar? Would love to chat about your new aquisition and talk about fuel ratios to rpm and navigation systems.




Yes ok. Anyway, just my two bobs worth re realestate there. It is about to take a big hit. Just thought you would like to know.


----------



## trainspotter (30 August 2010)

knocker1 said:


> Yes ok. Anyway, just my two bobs worth re realestate there. It is about to take a big hit. Just thought you would like to know.




Thanks knocker1 ... have been writing the same thing for about 30 pages now. Depends on your exposure I guess.


----------



## knocker1 (31 August 2010)

trainspotter said:


> Thanks knocker1 ... have been writing the same thing for about 30 pages now. Depends on your exposure I guess.



As long as one does'nt owe money it should be ok, positive gearing is the way to go. Anyway won't be too long before the aussie starts to nose dive, then I'll be back over there. Goto love currency trading ;-)


----------



## trainspotter (31 August 2010)

knocker1 said:


> As long as one does'nt owe money it should be ok, positive gearing is the way to go. Anyway won't be too long before the aussie starts to nose dive, then I'll be back over there. Goto love currency trading ;-)




PM me for details ...... afterall this is the property thread !


----------



## satanoperca (31 August 2010)

Hi,

Just curious, does anyone have any stats on the growth in mortgage debt against the growth in prices for the last two years?

Just interested if the current prices rises have been a direct result of increasing debt levels and if so, if this debt growth cannot be sustained would it result in prices coming back down to earth and a few people getting burnt fingers.

It seems our friends and allies in the US had unprecedented debt growth which resulted in super charged price increases, as that growth in debt has receded so have prices.

Cheers


----------



## Mr Z (31 August 2010)

*Interesting interest rates....*

The TNX looks like it is trying to put in a bottom... some volatile action today, be interesting to see if it has more legs or if we are in flame out territory.

This is also an interesting development on the Australian banking scene...

Major banks are chasing cash with high rates

... they want your money but the don't want to pay for it! Reminds me of some other life situations... sprats, mackerels, tender traps and others 

In a nut shell... someone is very wrong about interest rates. I think that they will move higher... gently or sharply is the question? The Fed seem divided on the correct course to plot, QEII appears for all the world to be a damned if they do and damned if they don't!

Its a Clash!

A sharp move could cause an RE 'panic' despite the other positives in our market. Say what you will there is enough stress currently to fuel a correction.

Rates, rates, rates... be the key! and the Fed be the key master, for now. If they have any say we will stay low... if they retain the ability or should I say credibility to steer the markets. This, I think, is the source of the indecision at the Fed, I think they know that they are at the edge of what can be achieved in a free....ish market.

I have paling imprints in my bum and this fence is uncomfortable... this thing could go either way here, we could buy a few more years... but this could easily end up in a surprise as well!


----------



## trainspotter (31 August 2010)

satanoperca - I think Mr Z posted some terrific stats you are chasing a few pages ago. Damn near took up the whole page !

Anyways ........ Mark Bouris eh? Who would have thunk it that he has started his own home loan company ???

"Established in 2007, Yellow Brick Road is owned by Mark Bouris and several members of the senior management team. Mark was the founder and chairman of Wizard Home Loans, which grew to be one of the largest non bank lenders in Australia.  Mark’s purpose in establishing Yellow Brick Road was to help all Australians access the quality financial advice they deserve."

http://www.ybr.com.au/homeloans/index.cfm for the home loan comparisons.

*BUT WAIT THERE IS MORE !!!!!! *

As of this morning Mark Bouris claims that "unaccountable" deposits will not affect savings history to apply for a loan with his company ???

_*ie*_ gift from Mummy & Daddy for deposit or money laundering into kids accounts to evidence "savings".

Follow follow follow the Yellow Brick Road.


----------



## robots (31 August 2010)

Hello,

how's it going? beautiful day

does anyone know if you get any boost for buying off the plan?

thankyou
professor robots


----------



## Mr Z (31 August 2010)

Come now bots, you know the answer to that!


----------



## robots (31 August 2010)

hello,

oh yeah, i know everything

anyone put me in the right direction, couldnt find much about it

thankyou
professor robots


----------



## trainspotter (31 August 2010)

*Australian home values stablise in July after June losses*

After a large 1.0% seasonally-adjusted fall in June, Australian home values changed little in the month of July, recording an increase of +0.1% (up +0.4% seasonally-adjusted).

According to the market-leading RP Data–Rismark Hedonic Home Value Index, Australia’s capital city home values remained relatively flat in the month of July recording a modest, seasonally-adjusted increase of 0.4% (on a raw basis home values were up only +0.1% in the month).

The July results follow a 1.0% seasonally-adjusted decline in the month of June; *the first negative movement in Australian capital city home values in 17 months*.

Don't you just LOVE RP DATA ???


Will do some research for you robots and post tomorrow on the boost question.


----------



## robots (31 August 2010)

Hello,

Now that is just fantastic news Trainspotter. 

Well done everybody.

Thankyou
Professor Robots


----------



## Mr Z (1 September 2010)

trainspotter said:


> *Australian home values stablise in July after June losses*
> 
> After a large 1.0% seasonally-adjusted fall in June, Australian home values changed little in the month of July, recording an increase of +0.1% (up +0.4% seasonally-adjusted).
> 
> ...




Do we actually have a lead on the hedonics that they use? That can be used to substantially mask the real trend. The US CPI number has been slashed by dodgy ideas employed in the hedonic modeling... its not real but its politically expedient so reality gets trashed. Not saying they are doing it BUT it pays to understand what the hedonic adjustments are.

Side note.... attached is a table tallying the explosion in OTC interest rate derivatives used in Oz. I think that we have an unhealthy dependency in that area, trouble in that market spells big trouble for Oz RE IMO FWIW... one to keep an eye on... yeah I know obsessive compulsive broken record yada yada yada! Anyway a fast move in rates could lever this market out of the water.... to keep in mind, that tis all.


----------



## Mr Z (1 September 2010)

robots said:


> Hello,
> 
> how's it going? beautiful day
> 
> ...




Well depends what you mean by boost! The first and most obvious thing that comes to mind is lower stamp duty, here in VIC at least. If you buy before build you can end up only paying the land value stamp duty which is charged at a lower rate on a lower value due to the progressive scale. Can save 10's of thousands.


----------



## trainspotter (1 September 2010)

Mr Z said:


> Do we actually have a lead on the hedonics that they use? That can be used to substantially mask the real trend. The US CPI number has been slashed by dodgy ideas employed in the hedonic modeling... its not real but its politically expedient so reality gets trashed. Not saying they are doing it BUT it pays to understand what the hedonic adjustments are.
> 
> Side note.... attached is a table tallying the explosion in OTC interest rate derivatives used in Oz. I think that we have an unhealthy dependency in that area, trouble in that market spells big trouble for Oz RE IMO FWIW... one to keep an eye on... yeah I know obsessive compulsive broken record yada yada yada! Anyway a fast move in rates could lever this market out of the water.... to keep in mind, that tis all.




Not sure where Bismarc RP DATA obtain info on or how they disseminate into hieroglyphics for the punter to understand? Still only a broad brush approach IMO ... some suburbs have dropped 20% for sure but it does not reflect in the overall "big picture, seasonally adjusted" figures.

Wait until December / January when the Eurozone banks need to readjust a coupla trillion dollars in the market place. THEN we will see some heat come on interest rates ! NAB and Westpac squawking wholesale funds are hurting bottom line and will need to increase cost of borrowings onto the mortgage belt.


----------



## Beej (4 September 2010)

satanoperca said:


> Hi,
> 
> Just curious, does anyone have any stats on the growth in mortgage debt against the growth in prices for the last two years?
> 
> ...




Just checking in here after not reading the forum much for a while (I've been busy on some other things!). Hope everyone is well!

Anyway Satanoperca, the RBA recently published some data that might be what you are looking for here in a recent speech - (http://www.rba.gov.au/speeches/2010/sp-dg-150610.html). An interesting chart is this one:




As you can see, relative to average household income at least, average housing debt has not really grown at all for about the past 4-5 years - so this does not suggest a credit fueled price bubble to me.

There is another RBA paper that I can't find at the moment that looks at this specific issue using the total credit growth data - and it showed that prices recently had increased at a much faster rate than the growth in credit. I'll have to dig around and see if I can post that up later.

Cheers,

Beej


----------



## cutz (4 September 2010)

Hi Beej,

Depends how you read the numbers, even a flatlining at 150% is alarming.

Are the figures averaged out over the whole population ?

I doubt the majority of the population is running at 150% debt to disposable income so there must a  section of the community with a disproportional high ratio.

Curious to know who's included in the mix.


----------



## Beej (4 September 2010)

cutz said:


> Hi Beej,
> 
> Depends how you read the numbers, even a flatlining at 150% is alarming.
> 
> ...




Hi Cuts - yep the paper/speech goes into the distribution of the debt - turns out that most of it by far is held by the highest income earning households. Ie ~50% of total debt held by the top 20% of income earning households, and ~75% held by the top 40% of earners. The bottom 40% of earners only hold < 10% of the total debt.






Cheers,

Beej


----------



## Beej (4 September 2010)

Here's some more data from Business Spectator:







Shows that for the past 2 years housing credit growth has been much lower than for the preceding 20 years, yet despite this house prices have seen steady gains since the end 2008/early 2009 slump. Again - this strongly indicates that the recent price rises in Oz are NOT being driven primarily by credit growth (ie house prices have actually increased more than outstanding credit for the past few years).

That chart is from this article, which is good read as well: http://www.businessspectator.com.au...eve-Keen-pd20100831-8TTJ2?OpenDocument&src=is

Cheers,

Beej


----------



## Mr Z (4 September 2010)

Beej said:


> Again - this strongly indicates that the recent price rises in Oz are NOT being driven primarily by credit growth (ie house prices have actually increased more than outstanding credit for the past few years).




Yeah no....

% change is telling you that the rate of exponential credit growth is slowing, but because it is compounding significantly you really need to look at total $ flows vs total $ available housing stock. The slowing rate could just be an indication that we are maxing out our borrowing ability BUT only when that results in a total negative $ flow will the market as a whole correct. The percentages as a whole mean little as you are assuring a whole bunch of other things... e.g. If borrowing is quite low against v available housing stock a 50% credit growth rate will do little to price. If borrowing is quite high against v the available housing stock then a 2% increase could still conceivably drive price. Price is set at the margin so low credit growth or even contraction means little without considering supply numbers and then we need to deal with it in absolute $ flows terms.

So yes slowing growth in credit can still be driving price because a smaller % of a $ larger base can still out weigh total housing $ supply in $ terms even though in % terms house prices are out stripping % credit growth. 

Logically credit increasing at a decreasing rate should cross the faster increasing house price at some point and produce negative price pressure. It seems that we have not hit that point yet and* I guess nothing says we have to*. If credit starts to flatten or increase its growth rate in line with house prices the whole thing may find a comfortable balance.

Anyway, I don't think you can really infer to much from that alone... JMO


----------



## MACCA350 (4 September 2010)

Beej said:


> Shows that for the past 2 years housing credit growth has been much lower than for the preceding 20 years, yet despite this house prices have seen steady gains since the end 2008/early 2009 slump. Again - this strongly indicates that the recent price rises in Oz are NOT being driven primarily by credit growth (ie house prices have actually increased more than outstanding credit for the past few years).



May also indicate house prices have been driven by international buyers, ie our housing market is diverging from locally driven factors.

Cheers


----------



## robots (4 September 2010)

hello,

good evening everyone, superb day and another week almost passed 

here we go:

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

72% clearance rate, please note: i have do idea what it all means just helping everyone with the data

just rolling along by the looks of it with class doing well and the rubbish being sorted out

thankyou
associate professor robots


----------



## robots (5 September 2010)

*


trainspotter said:



Australian home values stablise in July after June losses

After a large 1.0% seasonally-adjusted fall in June, Australian home values changed little in the month of July, recording an increase of +0.1% (up +0.4% seasonally-adjusted).

According to the market-leading RP Data–Rismark Hedonic Home Value Index, Australia’s capital city home values remained relatively flat in the month of July recording a modest, seasonally-adjusted increase of 0.4% (on a raw basis home values were up only +0.1% in the month).

The July results follow a 1.0% seasonally-adjusted decline in the month of June; the first negative movement in Australian capital city home values in 17 months.

Don't you just LOVE RP DATA ??
		
Click to expand...


*


trainspotter said:


> ?




hello,

Just researching the thread and thought some might be interested in this post from the other day. Especially those with superannuation questions.

Here to help.

Thankyou
Professor Robots


----------



## robots (6 September 2010)

trainspotter said:


> *Australian home values stablise in July after June losses*
> 
> After a large 1.0% seasonally-adjusted fall in June, Australian home values changed little in the month of July, recording an increase of +0.1% (up +0.4% seasonally-adjusted).
> 
> ...




hello,

gidday everybody, how's it going

a few good articles in the weekend papers, some fantastic results still for places 

oh well, not much else happening brothers

thankyou
professor robots


----------



## trainspotter (7 September 2010)

*RBA KEEPS RATES ON HOLD*

Economists say inflation pressures have remained reasonably well contained, despite the obvious strength of the economy from last week's June quarter national accounts that showed gross domestic product (GDP) *bounding along at its fastest pace in three years*. 

"The mid-year return to trend GDP growth, the income surge arising from the terms of trade boom and ongoing tight labour market are yet to translate into worrisome price pressures," TD Securities senior strategist Annette Beacher said.

While TD Securities' monthly inflation gauge released yesterday showed annual inflation at 3.0 per cent, at the top end of the Reserve Bank's two to three per cent inflation target, *underlying inflation was a more modest 2.3 per cent.*


Read more: http://www.news.com.au/business/bre...ld/story-e6frfkur-1225915342827#ixzz0yoef4Ql1


----------



## robots (7 September 2010)

trainspotter said:


> *RBA KEEPS RATES ON HOLD*
> 
> Economists say inflation pressures have remained reasonably well contained, despite the obvious strength of the economy from last week's June quarter national accounts that showed gross domestic product (GDP) *bounding along at its fastest pace in three years*.
> 
> ...




Hello,

hows that hey brothers! on hold for another month

well done everybody great outcome for the community

thankyou
professor robots


----------



## robots (7 September 2010)

trainspotter said:


> *RBA KEEPS RATES ON HOLD*
> 
> Economists say inflation pressures have remained reasonably well contained, despite the obvious strength of the economy from last week's June quarter national accounts that showed gross domestic product (GDP) *bounding along at its fastest pace in three years*.
> 
> ...




hello,

gee that inflation looks like its under control at 2.3%

i just got 3 1Lt bottles of Pepsi for $3, so it all makes sense

TD Securities do a good job with the data i reckon

thankyou
professor robots


----------



## Mr Z (8 September 2010)

CPI is *NOT* inflation! Inflation has been *HUGE* when and how that eventually manifests itself in the economy is another thing entirely. *CPI* lags *INFLATION*, reacting to CPI is like driving a car looking in the rear vision mirror. For now it appears than in Australia the truly *MASSIVE INFLATION* we have seen of global money supplies will first find its way into asset markets. If this is so the AUD should go on a tear along with Stocks and Real Estate (with qualifications!). RE should lag stocks as it is not as liquid & interest rates are on the rise in the US. How this hits our banks funding cost will depend on how they have their current book hedged. *IF* they have forecast this correctly then it should result in little or no rate pressure. If not there will be some short term pressure on funding costs, I suspect the latter because they have probably gone for a very 'safe' position and not taken a directional bet on OS rates. That should be short term pressure as they will readjust to the market... that makes the short to mid term play equities over real estate *BUT* it means that the outlook for real estate is good *DESPITE* its apparent over valuation. Equities on the other hand are coming from a position of relative under valuation, those exposed to 'new world' growth anyway!

My short term expectation is another move from RE to stock as the market realizes the reality of the situation, then RE should follow. The dangerous thing here is the potential to set up a bigger fall in the Australian housing market when/if it eventually materializes. This IMO depends on how the RBA handles it, while they can do little to fight rising rates they have capacity to force rates higher and level any credit 'bubble'. *IF* the RBA are serious about keeping Australian private debt in check, and manage to be effective, that could see a muted property market going forward. That would be the most politically astute way to work off the excesses in the RE market while keeping as many people hole as possible with out leading more into a potential credit trap chasing a 'bull' market.

A large part of what we are about to experience in our markets is the result of INFLATION only we don't call it that when it hits asset prices first... we call it prosperity. Truth is that it dislocates society and makes the rich richer and the poor poorer... you will see more and more about the income 'divide' over the coming years BUT that is a whole new subject! We are entering into a period of money depreciating at a higher than normal rate, the trade will be anything tangible or related until it settles again. These markets will become partly driven by the fundamentals of the 'real world' but more so driven by the fundamentals of the currencies we use to measure them in. This is where people with bearish tendencies will get a nasty surprise, deflation will not persist, it will always be a short term credit driven event in a world of FIAT currencies, a crunch if you will. For deflation to persist we'd need to have sound money, we don't!!!! 

Sooooooo....

Watch the Australian Dollar and get long risk until it all gets really silly again... 

Itssssssh a roll-her-coast-her, ready for an exciting ride?

The future of RE prices? Is still looking flat to up, up is RBA dependent, with a possible near term dip depending on these banks and what the heck they have done with IRS's etc. This is all sans some fatal accident in the IRS market!

BTW, apparently The Bank of America is looking dodgey... the FDIC are concerned that they currently could not handle it going bang and that it has system breaking potential. They are aware that it is an issue, that means it will likely be 'rescued' albeit with a sea of newly minted 'free' money. If it blows watch for flames on the IRS scene, we can only guess at the connections... if it is saved.... well then get ready to ride the QEII wave.

All JMO...



:





Have a brilliant day Bots! U 2 TS and crew 

Cheers
Z


----------



## trainspotter (8 September 2010)

Australian housing finance commitments for owner-occupied housing rose 1.7 per cent in July, seasonally adjusted, to 47,511, the Australian Bureau of Statistics said on Wednesday.

The median market forecast was for a one per cent rise in housing finance commitments in the month.

Total housing finance by value rose by 0.7 per cent in July, seasonally adjusted, to $20.854 billion.

http://www.heraldsun.com.au/news/breaking-news/housing-finance-rose-17/story-e6frf7ko-1225915804947

The Aussie Dream is alive and kicking I see. Just keeps on keeping on.


----------



## Mr Z (8 September 2010)

Kultural thang... like beer but cheaper over a life time.....


----------



## trainspotter (8 September 2010)

People must be feeling very secure in their jobs to buy into PPR right now or the banks must have relaxed lending criteria?

The mantra of home ownership runs deep in the veins of the psyche of the little Aussie battler. The industry is geared up to expose this tingling nerve and drive them into a roof over their heads. TV has shows like "Hot Property" and "Better Homes and Gardens" adding fuel to the fire. Spring Sales have not kicked in yet. Will be interesting to see what the data implies.


----------



## Mr Z (8 September 2010)

I would hate to be in government come the day that mantra is given a rattle  Man would you get a hot poker from da peeps! Fair or not it would be a government changer in Oz... IMO.


----------



## KurwaJegoMac (8 September 2010)

trainspotter said:


> The mantra of home ownership runs deep in the veins of the psyche of the little Aussie battler. The industry is geared up to expose this tingling nerve and drive them into a roof over their heads. TV has shows like "Hot Property" and "Better Homes and Gardens" adding fuel to the fire. Spring Sales have not kicked in yet. Will be interesting to see what the data implies.




No to mention the constant, rehashed news stories on how housing is 'fast becoming out of reach for most Australians' causing panic and an "I must get in lest i'm left behind" mentality. 

Uh oh... I just realised I don't own any property!!!! (*&#(*^#$(@$@$###% :asdf: brb... just going to visit the real estate agent and lock me into giving out 30% of my household income for the next 30 years coz like you know, i need a big house for, like, all me stuff. interest rate rises? 

pfft i'll be fine mate


----------



## KurwaJegoMac (8 September 2010)

P.S. I love you shiny golden robot man and scary choof choof train and omg dont even get me started on that professor without the picture :O



robots said:


> Hello,
> 
> hows that hey brothers! on hold for another month
> 
> ...




I would have spat my coffee all over the screen after reading this comment had I been a coffee drinker.

Alas I am not, i'm sorry.

Still, that comment made my day. It's the little things in life that one must appreciate. 

Like cheese.

God i love cheese.

btw largely resiliant Australian economy, interest rates still able to drop further to cushion downturns, large generation (population size) of baby boomers set to retire and possibly sell down, constant immigration, poorly designed cities,short-sighted government policy and planning annnnd the crazy "i have to buy a mansion even though I can't afford it mentality" should see housing continue to rise steadily.

IMO.

Then again I'm a young, naive Gen Yer who doesn't even own any property yet.

So ignore my ramblings. Clearly i'm having an exceptionally busy day at work today.


----------



## Mr Z (8 September 2010)

Dude....

Go buy a house you good fur nuthin long haired layabout!


----------



## cutz (8 September 2010)

KurwaJegoMac said:


> Then again I'm a young, naive Gen Yer who doesn't even own any property yet.




Hang in there bro,

The time will come, you'll have your chance.


----------



## Mr Z (8 September 2010)

Yeah... don't force it. A time will come when all of a sudden it seems very achievable... then don't hesitate, buy a house and lever up on investment property.... especially if everyone is telling you not to because its risky.

For now I would not sweat it one little bit.


----------



## KurwaJegoMac (8 September 2010)

In all seriousness now, I'm taking it easy with regards to property. Been trading in the market for the past three years, building up a capital base to either purchase a home or jump into an investment property - I have a good situation at home which has enabled me to save a lot, but I don't want to burden my parents much longer (although i do pay board and do chores and all that sort of thing)

Just keeping an eye on the market now, and tossing up between starting on an investment property first - putting money into your own home is a relatively poor investment choice as it generates no income and you're relying solely on capital appreciation. I see no sense in forking out a lot of my weekly pay to pay for a house that is going to give me lower returns than an investment property or the sharemarket. 

That being said i'd jump into property more aggressively if the bubbled 'popped' so to speak but I just dont see any major factors over the next decade or so that will cause house prices to drop significantly - I mean there is a possibility they may become stagnant, but even during the worst of the GFC house prices barely stagnated - yes some areas fell slightly but on the whole the residential market remained quite strong. So that begs the question: What sort of cataclysmic event would be required for house prices to really drop? Outside of a black swan - not going to happen. 

I'll keep crunching the numbers and wait until it's viable. In the mean time it's save and invest in the sharemarket for me


----------



## explod (8 September 2010)

KurwaJegoMac said:


> What sort of cataclysmic event would be required for house prices to really drop? Outside of a black swan - not going to happen.
> 
> I'll keep crunching the numbers and wait until it's viable. In the mean time it's save and invest in the sharemarket for me




How about interest rates at 18%    It happenned 30 years ago and if they keep printing money around the globe as the US in particular is at the moment then the value of money in some of the so called developed countries is going to be nearly worthless, so that real money with substance is going to cost a great deal more.

Not saying it will but some fundamantal dynamics point to it and in my view that would be your "cataclysmic event".   I am happy to be renting and keeping my powder dry for the moment.


----------



## UBIQUITOUS (8 September 2010)

explod said:


> How about interest rates at 18%    It happenned 30 years ago and if they keep printing money around the globe as the US in particular is at the moment then the value of money in some of the so called developed countries is going to be nearly worthless, so that real money with substance is going to cost a great deal more.
> 
> Not saying it will but some fundamantal dynamics point to it and in my view that would be your "cataclysmic event".   I am happy to be renting and keeping my powder dry for the moment.




Supply and Demand Explod....supply and demand. As long as people want  something enough all they have to do is tap their heels together and say "there's no place like home, there's no place like home, there's no place like home, "


----------



## Mr Z (8 September 2010)

I think energy will be the problem. Rising energy cost are defacto rate rises, by 2014 oil should be heading higher, much higher. It will hurt a lot of other markets because we are not nearly prepared enough to wean ourselves off oil. All other things staying on the reservation, no derivate accidents or anything silly energy is the unavoidable one.


----------



## sorcar (8 September 2010)

I've been hearing that the US is headed for another recession - one that was worst then the last and that if it doesn't happen now its only being delayed - Do they need to crash and burn?

If this is the case are our current house prices near peak.. ready to come down?


----------



## robots (8 September 2010)

hello,

yeah ring the bell man,

this is the exact time when you should be buying something Kurwa (either property or share), get a home loan or margin loan and get some assets

not 5yrs or 10yrs down the path, now when the yrs will disappear before your eyes and presto the $ are in your hand

thankyou
professor robots


----------



## explod (8 September 2010)

robots said:


> this is the exact time when you should be buying something Kurwa (either property or share), get a home loan or margin loan and get some assets
> 
> 
> thankyou
> professor robots




And exactly why is it the best time Professor *self proclaimed*?


----------



## tech/a (8 September 2010)

explod said:


> And exactly why is it the best time Professor *self proclaimed*?




Simply because.
Last year was the best time
So was the year before that
and 5 yrs before that and
10 yrs ago and 15 yrs ago was 
better still as was 25 yrs ago.

Next year wont be as good as 
now and 5 yrs wont be either 
neither will it be in 10 yrs.

Take this thread when it started it was
a better time to buy than now and
in 3 yrs I'll be saying the same thing.

I'm still buying and developing.
But then thats what I do! (well one of them)


----------



## sorcar (8 September 2010)

Tech,

When you develop do you stick to set suburbs?  I.e only buy in 10 different suburbs that you have listed   'good areas' to develop


----------



## trainspotter (8 September 2010)

explod said:


> And exactly why is it the best time Professor *self proclaimed*?




Like the man said .... NOW is the best time to buy. There will be no other time. 5 years ago, 10 years ago. Not gonna happen. Where do you think it will be in the next 5-10 years?? I bought my first property on an average wage of 25k per annum and 17% interest. Was then a good time to buy? You betcha. No time like the present. DEPENDS WHAT AND WHERE YOU BUY !!


----------



## singlefished (8 September 2010)

trainspotter said:


> I bought my first property on an average wage of 25k per annum and 17% interest. Was then a good time to buy? *You betcha*.




Wow.... sounds like you bought right at the peak with interest rates @17%! I bet at the time most people thought they were about to miss the boat whilst others were spruiking that NOW was a good time to buy ehh?

According to the Treasury Economic Roundup (summer of 2003/2004) :



			
				Treasury said:
			
		

> _Despite the general perception that house prices can only go up, Australia has actually experienced falls in house prices, especially in real terms. Between March 1989 and December 1990, *real house prices fell by 8 per cent and did not recover to the same levels until a decade later*. Some individual markets in Australian cities recorded greater falls in the early 1990s. Dwelling prices in Melbourne fell by 22 per cent in real terms between March 1989 and March 1996._




http://www.treasury.gov.au/documents/780/HTML/docshell.asp?URL=03_Housing_Market.asp

Doesn't really give much credence to either your or tech/a arguments does it?



trainspotter said:


> DEPENDS WHAT*, WHEN* AND WHERE YOU BUY !!


----------



## tech/a (8 September 2010)

sorcar said:


> Tech,
> 
> When you develop do you stick to set suburbs?  I.e only buy in 10 different suburbs that you have listed   'good areas' to develop




Yes.
Industrial there are only a few choices South of Adelaide.
Apartment development Southern Beaches---where I live.
Also the end of SA's one way freeway set to become a dual carriage way
thanks to those genius pollies!
And the end of the New Rail link set to be started in 2011.
I look for Corner Blocks big enough for 3 min so that's 1100 Squ mtrs.
Ill demolish if the numbers add up.
I use project builders---I cant build them as cheap as they do!,and I'm a builder.

*Its ALL about the numbers!!*


----------



## trainspotter (8 September 2010)

LOLOL singlefished ... I will let my bank balance perform the credence walk in real terms. Everything I own I can trace back to a single house purchased in 1991. That lousy 3 bedroom, 1 bathroom dog box which everyone told me not to buy. Interest rates at 17% ... Hmmmmmmm How stooopid was me ??

Actually everyone else was slashing their wrists to get into property. No one else thought they had missed the boat. FAR FROM IT ! None of them SOLD their asset BTW. AHhahahhahaha ahah a ahahah *gasp* ahhahahhha aa a 

I am glad you took note of WHERE AND *WHEN* TO BUY. 

The difference that you seem to struggle with between yourself and Tech/a and myself is that we play the property market similar to the stockmarket. We see an opening and utilise market forces to dictate our goals. 

Go and see a bank manager and try and borrow money. What do you think the first words out of their mouths are???       "DO YOU OWN UNENCUMBERED PROPERTY" ....... Ohhhhhhhh yeah babababayayy !!


----------



## singlefished (8 September 2010)

trainspotter said:


> LOLOL singlefished ... I will let my bank balance perform the credence walk in real terms. Everything I own I can trace back to a single house purchased in 1991. That lousy 3 bedroom, 1 bathroom dog box which everyone told me not to buy. Interest rates at 17% ... Hmmmmmmm How stooopid was me ??
> 
> Actually everyone else was slashing their wrists to get into property. No one else thought they had missed the boat. FAR FROM IT ! None of them SOLD their asset BTW. AHhahahhahaha ahah a ahahah *gasp* ahhahahhha aa a
> 
> ...




Well, good for you!

Please can you contact Treasury, tell them their data was wrong and have them update the figures to reflect your own personal circumstances.

Your swelling bank balance, which I'm sure has now climbed almost as high as your horse, can be the yardstick for all future economic analysis.


----------



## trainspotter (8 September 2010)

singlefished said:


> Well, good for you!
> 
> Please can you contact Treasury, tell them their data was wrong and have them update the figures to reflect your own personal circumstances.
> 
> Your swelling bank balance, which I'm sure has now climbed almost as high as your horse, can be the yardstick for all future economic analysis.




No problem singlefished ... ask the Treasury to contact me by helicopter because I will be at my pearl farm at the time they call.

NO-ONE was doubting what you had posted or the Treasury figures.

PROPERTY DOES FALL. INCOME TO DEBT RATIOS DO FAIL. WE HAVE WRITTEN THIS OVER 30 PAGES !! WE ALL AGREE WITH YOU !!!

My horse and myself are doing fine by the way. Let me know when your horse gets gelded. I fear it is too late. My income from property is actually factored into the statistics of the Australian future economic analysis. If I am failing ... SO ARE YOU !


----------



## KurwaJegoMac (10 September 2010)

Came accross this chart in Wiki (not the most credible source I know 

But for the last 10 years house prices have been 7-9 times average wage, compared with a historic average of 3-4.5. I don't know about you, but I find that a bit scary. If it were a stock chart, it'd look like the peak of a bull run. I have been keeping money in the sidelines for investing in property and definitely know the mantra "the best time to buy was yesterday" but in this particular case i'm not too sure.

Paralysis from over-analysis?


----------



## Mr Z (10 September 2010)

*Interesting*

http://www.demographia.com/dhi.pdf


----------



## KurwaJegoMac (10 September 2010)

Wow... just wow...

Thanks for sharing that Mr Z. That was one sobering paper.


----------



## MACCA350 (10 September 2010)

<waits for Robots to have another hernia about demographia>

Having said that, notice Australia starts rankings at no. 2 in the most unaffordable cities and takes out 6 of the top 10 spots...........by now we've probably taken out top spot.

cheers


----------



## tech/a (10 September 2010)

Z

Given me some reading for the W/E.

Noticed this though



> The only genuine measure of scarcity or abundance is price. The problem is that there is not a
> sufficient supply of affordable land, because of the market distortions created by urban
> consolidation.




In the body of the text as I was browsing.

Therin lies the problem grab a greenie and show him!


----------



## robots (10 September 2010)

hello,

is that the site by schiller and stapledon? amazing

they still around, oh well

but Kurwa, dont buy bro, no big deal

no surprise with the results Macca, we on top of the world and as others have indicated its not a supply issue

its called Utopia, paradise, the true democratic society and thanks everybody for making it a great place

thankyou
professor robots


----------



## Mr Z (10 September 2010)

tech/a said:


> In the body of the text as I was browsing.




Yes that is true... kinda. (the price thingy)

Price has four components the first two are supply and demand of/for the item in question... that speaks to scarcity of the item itself. The second two are supply and demand of/for the currecny that is used price the item in question... that has little to do with scarcity of the item. Where those four balance price settles, it is rarely at a point that is a pure measure of supply and demand for the item, there is always some monetary component there. So as we have seen (often it seems!), monetary inflation, including credit inflation can distort price in any market. Are we there now?

Hey Tech, what do you think you could build yourself a place for per square. Subbing it all out and going for reasonably good quality?


----------



## bellenuit (10 September 2010)

KurwaJegoMac said:


> But for the last 10 years house prices have been 7-9 times average wage, compared with a historic average of 3-4.5. I don't know about you, but I find that a bit scary.[/IMG]




What I would like to see in the Demographia report is not the comparison of average house prices against the average wage across the various countries, but against the average wage of those that own the houses. 

There was an article in the paper today (can't remember which one as I have read 3) where Commonwealth Bank was responding to some of the concerns raised by foreign investors in relation to the impact a housing crises would have on Australian Banks. I'm going from memory, but I thinks these were some of the figures mentioned.

- House prices are on average only 4.5 times the average wage of those that own the houses.
- 70% (seems too high, so I may be wrong) of mortgages are held by the top 20% of income earners.
- Borrowers are on average 7 months ahead on their repayments.
- The fact that US loans are non-recourse was a major contributor to its problems.


----------



## robusta (10 September 2010)

CBA seems to think everyting is ok and they may be right but it is a bit like asking your stockbroker if it is a good time to buy shares - go on try it anytime.

http://www.heraldsun.com.au/busines...-is-still-robust/story-e6frfh4f-1225917155455


----------



## Mr Z (10 September 2010)

Yes...

Apparently the Commonwealth Bank cherry picked numbers from Demographia, they chose to use income multiples for Oz from a different source because it supported the argument they wanted to make. Not what you call intellectually honest! Mix and match you data sources to suit, LOL, sounds like Al Gore. 

That said I think that the Demographia income multiples are high, from the info I could dig up it would suggest closer to 7 where they have 9.


----------



## tech/a (10 September 2010)

> Hey Tech, what do you think you could build yourself a place for per square. Subbing it all out and going for reasonably good quality?




Ive toyed with the idea a couple of times.
But in the ned I cant believe what these project builders will build a fair home (for an IP) at.
Over here Hickinbothams/Fairmonts/Week Peacock are all around 680/ squ mtr  single story and $880 double on around 200 square mtrs.(brick veneer)

And they project manage the build.
Cant beat that.


----------



## Mr Z (10 September 2010)

Yikes... that is cheap.

Last time I did the exercise it was around 1K sqm for good quality and 1.5K for top draw. I was thinking that was well out of date now! but maybe it is still doable. 

I would be very happy with sub 1K for what I have in mind.

Cheers
Z


----------



## -Bevo- (10 September 2010)

robusta said:


> CBA seems to think everyting is ok and they may be right but it is a bit like asking your stockbroker if it is a good time to buy shares - go on try it anytime.
> 
> http://www.heraldsun.com.au/busines...-is-still-robust/story-e6frfh4f-1225917155455




LOL Yeah whats that saying, When they tell you not to panic thats when you panic. :


----------



## tech/a (11 September 2010)

Mr Z said:


> Yikes... that is cheap.
> 
> Last time I did the exercise it was around 1K sqm for good quality and 1.5K for top draw. I was thinking that was well out of date now! but maybe it is still doable.
> 
> ...




Certainly common rule of thumb.
But when your developing you dont
want rule of thumb.
Have a look at the
biggest project builder in your area
and I'm sure you'll be suprised at the quality and the price 
(For an IP). Be interested to know what you find.


----------



## Mr Z (11 September 2010)

I did that exercise the other day on some advertised prices... came up with around $650 m2. I thought that I was missing something, must be some on costs there I said! Have not looked further yet, it was just out of curiosity.

I want to build something that is a bit different in construction terms so I can't go 'off the rack' but I figured that I could get some rough idea from their prices even though I know I will not come close to them in terms of cost. This is not a development it will be a keeper so I would like to get it spot on.

Cheers
Z


----------



## tech/a (11 September 2010)

Mr Z said:


> I did that exercise the other day on some advertised prices... came up with around $650 m2. I thought that I was missing something, must be some on costs there I said! Have not looked further yet, it was just out of curiosity.
> 
> I want to build something that is a bit different in construction terms so I can't go 'off the rack' but I figured that I could get some rough idea from their prices even though I know I will not come close to them in terms of cost. This is not a development it will be a keeper so I would like to get it spot on.
> 
> ...




Just built my own Ponderosa.
Came in at $1900/squ mtr but has Undercroft parking/Lift/Other luxuries so IPs a PPRs are different.


----------



## robots (11 September 2010)

hello,

oh yeah coming to you live from chapel st brothers,

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

fantastic result 70% today, just amazing

great day, joint was pumping, city packed

thankyou
professor robots


----------



## cutz (12 September 2010)

robots said:


> fantastic result 70% today, just amazing




Yeah,

That's great robots but was does it really mean ?

Does the clearance rebound just mean that the sellers are hitting the buyers before the spring surge, are sellers lowering their expectations ?


----------



## tech/a (12 September 2010)

cutz said:


> Yeah,
> 
> That's great robots but was does it really mean ?
> 
> Does the clearance rebound just mean that the sellers are hitting the buyers before the spring surge, are sellers lowering their expectations ?




It simply means 70% of properties were sold above their reserve.
Clearance rates at best "indicate" some supply and demand.


----------



## Dunger (12 September 2010)

Why isn't Australian property subject to market cycles like other markets? 

Sure there was a brief reprieve during the GFC but things seem to be steaming along. I think we have a 3 geared economy, housing, mining and the rest.

When you take into account house prices are increasing faster than wages and salaries, and the percentage of money invested in houses compared to business (going by the big 4 banks loan books), business must be receiving less and less investment as servicing a huge loan compared to your salary prevents spending and servicing a PPOR loan is not as productive as shares, and most IPs are negatively geared, surely something's got to give? 

Immigration may partially be keeping things going but diminishing business investment relative to housing investment isn't going to create enough jobs and that's not a good scenario.


----------



## tech/a (13 September 2010)

Dunger said:


> Why isn't Australian property subject to market cycles like other markets?
> 
> Sure there was a brief reprieve during the GFC but things seem to be steaming along. I think we have a 3 geared economy, housing, mining and the rest.
> 
> When you take into account house prices are increasing faster than wages and salaries, and the percentage of money invested in houses compared to business (going by the big 4 banks loan books), business must be receiving less and less investment as servicing a huge loan compared to your salary prevents spending and servicing a PPOR loan is not as productive as shares, and most IPs are negatively geared, surely something's got to give?




Not as productive as shares??? 
Most IPs are negatively geared??
Business receiving less and less??



> Immigration may partially be keeping things going but diminishing business investment relative to housing investment isn't going to create enough jobs and that's not a good scenario.




Scarcity of supply in areas of demand is the issue and what is keeping property buoyant.Where supply is fine and demand is = or< supply price can move down and or stay stagnant.


----------



## Agentm (13 September 2010)

this article in 2006 is worthy of a good read.. 

Abstract

Housing-bubble discussions generally rely on indirect barometers such as rapidly increasing prices, unrealistic expectations of future price increases, and rising ratios of housing price indexes to household income indexes. These indirect measures cannot answer the key question of whether housing prices are justified by the anticipated cash flow*. We show how to estimate the fundamental value of a house and use unique rent and price data for matched single-family homes in ten metropolitan areas to illustrate this approach. These data indicate that the current housing bubble is not, in fact, a bubble in most of these cities in that, under a variety of plausible
assumptions, buying a house at current market prices still appears to be an attractive long-term investment.* Our results also demonstrate the flaw in models that gauge bubbles by comparing movements in housing price indexes to movements in other indexes or to values predicted by regression models.

anyways,, we all know what a bubble is..  its just what type of spin you want to put on it really..


----------



## tech/a (13 September 2010)

Agentm said:


> interesting figures for one to gloss over imho




Looks pretty ok to me.
Nothing alarming.


----------



## c-unit (13 September 2010)

tech/a said:


> Not as productive as shares??? *Indeed. Property doesn't increase productive capacity. I am guessing by shares he is assuming IPOs, not shares bought off the secondary market *
> Most IPs are negatively geared?? *Indeed, roughly 70% IIRC*
> Business receiving less and less?? *Indeed, businesses are being crowded out by home loan books.*






tech/a said:


> Scarcity of supply in areas of demand is the issue and what is keeping property buoyant.Where supply is fine and demand is = or< supply price can move down and or stay stagnant.




This demand/supply argument has been used in every property bubble in history. When pricing fundamentals become irrational, demand and supply makes no difference.


----------



## tech/a (13 September 2010)

c-unit said:


> This demand/supply argument has been used in every property bubble in history. When pricing fundamentals become irrational, demand and supply makes no difference.




Are you telling me that fundamental irrationality WONT alter supply and or demand?

Not as productive as shares.
Speaking for myself I have used funds to both generate employment and as a consumer neither of which would have been at the level it is had it not been for property.

Would be interested in seeing the IP gearing figures. I will be suprised if investors were nett negative.

Business being squeezed by home loans?
Your kidding me Ive not had a bank say sorry we dont have the funds to lend you in your business!
Unless you dont meet their criteria.


----------



## prawn_86 (13 September 2010)

Ok to all those who say now is usually always the best time to purchase:

WHy should i borrow a large amount and put it into property? Why not borrow and put it into stocks?

Top 5 reasons for investng in property over stocks please (and vice versa for the bears if they want)


----------



## tech/a (13 September 2010)

Why one or the other?
Stocks have many advantages.
Why not both?


----------



## cutz (13 September 2010)

prawn_86 said:


> (and vice versa for the bears if they want)




As an investment property sucks because,

1. Property is not optionable,

2. Yield on property is unfranked,

3. Property transaction and maintenance costs are extreme,

4. Property is unhedgeable,

5. Property is boring.




robots said:


> fantastic result 70% today,




Can't even get consistant numbers, here the clearance is a lot lower http://www.news.com.au/money/proper...e-air/story-e6frfmd0-1225920033724?area=money


----------



## jonojpsg (13 September 2010)

prawn_86 said:


> Ok to all those who say now is usually always the best time to purchase:
> 
> WHy should i borrow a large amount and put it into property? Why not borrow and put it into stocks?
> 
> Top 5 reasons for investng in property over stocks please (and vice versa for the bears if they want)




You've got buckleys and none of getting a bank to lend you $300k to buy shares with  IMO this is where tech is wrong too - there are very few bank lenders who will lend small businesses money without property to back it up - I've tried, albeit not very hard, but they all want with houses or commercial property to secure the loan.

Australian financial system is VERY focussed on housing and if the bubble does burst or even deflate a little (5-10%), I reckon there'll be some nervous CEOs around - see CBA is doing a global fly around trying to shore up support from international lenders.


----------



## skcots (13 September 2010)

tech/a said:


> Why one or the other?
> Stocks have many advantages.
> Why not both?




Depends on your financial situation. Not everyone can afford to service a mortgage (or two if your an owner occupier) as well as a decent share portfolio.


----------



## prawn_86 (13 September 2010)

tech/a said:


> Why one or the other?
> Stocks have many advantages.
> Why not both?




Because at this stage of our life we have circa 30k saved already and if we want to buy into property it means putting that whole amount down (and more) for a deposit.

I would love to have both, but cant do at the moment, perhaps in 5 or so yrs time


----------



## trainspotter (13 September 2010)

prawn_86 said:


> Because at this stage of our life we have circa 30k saved already and if we want to buy into property it means putting that whole amount down (and more) for a deposit.
> 
> I would love to have both, but cant do at the moment, perhaps in 5 or so yrs time




What kind of coin do you think can be made from shares? Will your 30k invested in shares be equivalent to property? Is the property positively geared? If it is negatively geared ... by how much? What are your tax deductibilities? Is it to be your PPOR or an IP? Will the bank lend you 300k into shares? When you sell your shares or property how are you set up for taxability? If it is to be a IP where is it and how much rent as well as capital gain are you expecting to receive?

PROPERTY HAS THE SAME PRINCIPLES AS SHARES !! Do The research !

Too many questions ! 

cutz wrote "5. Property is boring." hahahahha aa  ,,,,,,, good one !

Quick question prawn_86. If you have 30k saved is it in shares or cash in the bank?


----------



## trainspotter (13 September 2010)

jonojpsg said:


> You've got buckleys and none of getting *a bank to lend you $300k to buy shares with*  IMO this is where tech is wrong too - there are very few bank lenders who will lend small businesses money without *property to back it up* - I've tried, albeit not very hard, but *they all want with houses* or commercial property to secure the loan.
> 
> Australian financial system is VERY focussed on housing and if the bubble does burst or even deflate a little (5-10%), I reckon there'll be some nervous CEOs around - see CBA is doing a global fly around trying to shore up support from international lenders.




Hahahhahahhahaa *gasp* hahahahhahhahahha a ahahaha aahhahahaa *gag* hahahahhahaaa aahahaaa

Post of the century right there !!

Good old fashioned PROPERTY eh ??? Makes me want to go and buy more after that scintillating insight into how banks work. LOLOLOL


----------



## prawn_86 (13 September 2010)

trainspotter said:


> What kind of coin do you think can be made from shares? Will your 30k invested in shares be equivalent to property? Is the property positively geared? If it is negatively geared ... by how much? What are your tax deductibilities? Is it to be your PPOR or an IP? Will the bank lend you 300k into shares? When you sell your shares or property how are you set up for taxability? If it is to be a IP where is it and how much rent as well as capital gain are you expecting to receive?
> 
> PROPERTY HAS THE SAME PRINCIPLES AS SHARES !! Do The research !
> 
> Quick question prawn_86. If you have 30k saved is it in shares or cash in the bank?




Indeed it does have the same principle as shares but with a bit of better tax treatment. Correct me if im wrong but essentially all you are doing is leveraging up to buy one asset. In theory you could do the same with a margin loan for share/s.

To answer your other Q's TS:
1. Am currently getting approx 6% pa dividends from my share portfolio. This shouidl increase with inflation as should rents on an IP. Not taking into account any capital gains
2. Negatively geared investment property. About $80 pw negative to start with. Would have it neutral after 1 yr
3. Tax deductibilities are my next step. Talking to accountant tomoz
4. Gross yield on property is 5.2% and ned to look into CG potential further

Im just trying to do the sums and it seems (at this stage before talking to a good aco****ant) very line ball between leveraging into shares and leveraging into property. I guess the major difference is the volatitlity between the 2 asset classes.


----------



## trainspotter (13 September 2010)

In theory YES .... margin loan will attract higher rate of interest due to nature of purchase but.

Talk to a good accountant and they will have an opinion completely contradictory to what you went to see them for and you will leave more confused.

Make a decision based on what suits your needs. Volatility is the key. Which way are you leaning? Volatility of shares or what all the Steven Keens are saying of a 40% drop in property?


----------



## prawn_86 (13 September 2010)

trainspotter said:


> Which way are you leaning? Volatility of shares or what all the Steven Keens are saying of a 40% drop in property?




I dont think it will drop off that much. Maybe stagnate, but pick the wrong shares and it will do the same thing.

To be honest its seeming like six of one, half dozen of the other at the moment, hence i have no leaning as of yet. I guess we have to take the plunge somewhere along the line...


----------



## Agentm (14 September 2010)

jonojpsg said:


> You've got buckleys and none of getting a bank to lend you $300k to buy shares with  IMO this is where tech is wrong too - there are very few bank lenders who will lend small businesses money without property to back it up - I've tried, albeit not very hard, but they all want with houses or commercial property to secure the loan.
> 
> Australian financial system is VERY focussed on housing and if the bubble does burst or even deflate a little (5-10%), I reckon there'll be some nervous CEOs around - see CBA is doing a global fly around trying to shore up support from international lenders.




just for the fun of it, can you post up the charts that the CBA are using on their roadshow please..

would love to chat on their very optimistic charts used in their presentation.. indeed its that bad i fear they may actually embarrass themselves globally touting the figures i have seen on their presentation thus far.. be pretty far fetched to assume anyone they speak to will swallow a single word of what they are spruiking..

lol... may be a good signal to short cba..


----------



## Mofra (14 September 2010)

Gearing is perhaps the major advantage property has over equities - the LVRs are higher and the interest rates are generally lower. Even Comm is a few pips cheaper than my margin loan, although portfolio LVRs are similar for those who have the bulk of their portfolio in blueys.

Margin loans are much easier to set up - my last two increases have been done online and were applied within 24 hours. 

Don't know why there has to be a pissing contest between the two to be honest.


----------



## prawn_86 (14 September 2010)

Mofra said:


> Don't know why there has to be a pissing contest between the two to be honest.




I agree, its just when you are young you need to make a decision to go one way or the other, as savings can only support a deposit, not both a depsoti and a share portfolio.

Im know both have pros and cons im just trying to get opinions so as to help me make my decision


----------



## Mofra (14 September 2010)

prawn_86 said:


> I agree, its just when you are young you need to make a decision to go one way or the other, as savings can only support a deposit, not both a depsoti and a share portfolio.
> 
> Im know both have pros and cons im just trying to get opinions so as to help me make my decision



I'd argue that investing early will help you obtain a deposit, but everyone has their own tolerances to investment risk and we have enough arguments here already


----------



## prawn_86 (14 September 2010)

Mofra said:


> I'd argue that investing early will help you obtain a deposit, but everyone has their own tolerances to investment risk and we have enough arguments here already




Exactly what we have done, but at some point there comes a time where (for your 1st property at least) you have to cash in those investments and use them as a deposit. We are at that stage at the moment and trying to decide if it is worthwhile from an investment perspective


----------



## robots (14 September 2010)

Hello,

dont forget the "home" aspect of it, you can soon kick of the share/trading side of your investment strategy again

thankyou
professor robots


----------



## Agentm (14 September 2010)

sell everything and get your self the hell into the aussie home market

check this one out.. from the cba


----------



## Mofra (15 September 2010)

Agentm said:


> sell everything and get your self the hell into the aussie home market
> 
> check this one out.. from the cba



Cheers agent, interesting info. I wonder if it it'll spark another circular bulls vs bears debate about medians again, as if the entire home buying population is on a median income & buying property at the average price point?

PS: Interesting to note the CBA is using a 150 basis point buffer for serviceability calculations. The NBLs who securitise teh majority of their loan book tend to use a 200 point margin. I guess when you're holding billions of $$$ as deposits you get to adjust the figures somewhat.


----------



## UBIQUITOUS (15 September 2010)

Mofra said:


> Cheers agent, interesting info. I wonder if it it'll spark another circular bulls vs bears debate about medians again, as if the entire home buying population is on a median income & buying property at the average price point?
> 
> PS: Interesting to note the CBA is using a 150 basis point buffer for serviceability calculations. The NBLs who securitise teh majority of their loan book tend to use a 200 point margin. I guess when you're holding billions of $$$ as deposits you get to adjust the figures somewhat.




I don't think that is where the debate it. If all is good, then that begs the questions as to why the CBA is resorting to such strategies:



> http://www.smh.com.au/business/debate-rages-over-property-data-20100914-15avs.html
> 
> *Debate rages over property data*
> Eric Johnston
> ...


----------



## nunthewiser (15 September 2010)

Yes great unbiased info from the CBA 

Not like they have any ulterior motives behind that report..

Not like they would ever dream of producing numbers to suit.

Thats the great thing about facts and figures ...... pick and choose the ones that fit best.

Blessem.


----------



## explod (15 September 2010)

nunthewiser said:


> Yes great unbiased info from the CBA
> 
> Not like they have any ulterior motives behind that report..
> 
> ...




And dont' forget our wonderful Professor there Nunn, those great clearance rates say it all.


----------



## Mofra (15 September 2010)

nunthewiser said:


> Thats the great thing about facts and figures ...... pick and choose the ones that fit best.



True - fortunately I am able to use results


----------



## robots (15 September 2010)

Hello,

and why cant australian places be more expensive than US, UK, France, or any other joint?

get over it, spread the doom and gloom in those joints when you checking into Walmart for a rocket launcher and a 9mm glock

why do you think the likes of Oprah, Tiger are coming here, groups that havent been out to our shores for 20-30yrs are rocking up

a tribe called quest, bran nu heavies, all sorts

but hey keep listening to failed fund managers who are going to get you 4%/pa over a 10yr period, fantastic performance

how the all ords vs RE medians, pick and choose

thankyou
professor robots


----------



## robots (16 September 2010)

hello,

oh, gidday everybody

great day again, just sitting down for some cheese and crackers and thought i would log on to see how things going

looks like we got an "interest rate cut" with how petrol prices are travelling, just amazing, how's that hey

what happened to peak oil, oh well bit more disposable for the properties, regionals looking even better

thankyou
professor robots


----------



## cutz (16 September 2010)

robots said:


> looks like we got an "interest rate cut" with how petrol prices are travelling, just amazing, how's that hey




Ah well, this article sounds a bit more promising, http://www.news.com.au/money/intere...lian-home-owners/story-e6frfmn0-1225923429389.

Looking forward to getting a bit more for my savings.

BTW, re peak oil, it's common knowledge that oil is a diminishing resource, consumption is forcast to increase, put 2 and 2 together, what do you get ?


----------



## Mr Z (16 September 2010)

Oh yeah peak oil, that got postponed... seems that the abiotic oil crowd where right, the earth has a self replenishing core of oil! Amazing eh? Who'd thunk it!


----------



## robots (16 September 2010)

hello,

yeah, i am looking forward to making a bit more on my properties 

and with petrol going down to a $1 and stable interest rates, alls looking good

add a bit of value to them over some weekends, utopia

thankyou
professor robots


----------



## Mr Z (17 September 2010)

This is the one that will do it...  when they cycle we are over leveraged. Until then we are probably OK.


----------



## Robi Robot (17 September 2010)

robots said:


> hello,
> 
> yeah, i am looking forward to making a bit more on my properties
> 
> ...




Really? Do you want 50 cents so you can call someone who cares?


----------



## Robi Robot (17 September 2010)

Mr Z said:


> This is the one that will do it...  when they cycle we are over leveraged. Until then we are probably OK.




This is a good link. why bother with realestate, may as well jump into the market


----------



## robots (17 September 2010)

Robi Robot said:


> Really? Do you want 50 cents so you can call someone who cares?




Hello,

yeah thanks, is that you knocker?

dont bother with it then Robi Robot, do something else, jealous

thankyou
professor robots


----------



## Peak Debt (17 September 2010)

robots said:


> and why cant australian places be more expensive than US, UK, France, or any other joint?




Because its not different here despite what the spruikers say.

House prices can't detach from incomes forever.

They learned that the hard way in America, UK, Japan, Spain et al

The only thing different here is the timing!


----------



## Mr Z (17 September 2010)

robots said:


> is that you knocker?




yup tis Mr Bots!

We love big knockers around here.... oh yeah... and Benny Hill


----------



## trainspotter (17 September 2010)

Here we go again   ....  Its the timing thing again  .... Just you wait and see. Been waiting awhile now. How much longer to go? I am busting with anticipation ! !!


----------



## trainspotter (17 September 2010)

Mr Z said:


> yup tis Mr Bots!
> 
> We love big knockers around here.... oh yeah... and Benny Hill




Damn your golden nads Mr Z. .... I have that stooopid Benny Hill theme music playing in my head now and a mental image of a dirty old man in a grey overcoat chasing some tart with big knockers    ( o )( o )


----------



## kincella (18 September 2010)

hello muppets.....
spring is sprung, birds are singing, and life is looking good again....now the drought has broken....nature replenshes herself, life  cannot get much better than this......and now the news, those smart people that became millionaires, since the dreaded GFC commenced.....really who would have thought that would happen......
certainly not the property bears, they were beating the drum, prices falling 50% plus, and how they would make a killing......whoops, wrong again....
ps...actually being a millionaire is no big deal anymore.....considering how easy it has become......and remember those forecasts of melb house price median will be in the one million figure within a few short years......
being a multi millionaire will be the norm......
........................................................... 
property and business makes some millionaires......it is the opposite to what all the bears were forecasting.. or more like wishing and hoping for on this forum....
wrong again, time after time..... I guess the morbid forecasts sounded comforting......but actually getting it so wrong, puts them way behind the line ball...again

actually its relatively easy to become a millionaire here in OZ....no wonder everyman and his two dogs wants to get into the action and live here...

extract only......

But where the sharemarket was the great wealth creator during the resource boom from 2002-2006, property and entrepreneurship has become the chief avenue to riches since the onset of the GFC.

Capital city property prices rose upwards of 20 per cent in the 12 months to April 2009, elevating many Australians to millionaire status on their bricks and mortar alone.



Read more: http://www.news.com.au/money/money-...es/story-e6frfmd9-1225925679787#ixzz0zpCTDO1I


----------



## kincella (18 September 2010)

hmmm, wonder how many more will surface after the GFC mark 2 is past us....
it has another year or so to run.....it will test the resiliance of most, but its how one reacts and can deal with problems, that bring out the best in people....

its the innovators and people that work harder, take risks, and they do not follow the sheep....nor rely on a catastrophic event to bring them into line...

extract....

What?s noteworthy about the report is that India is among a select group of countries whose millionaire ranks (defined as people who have more than $1 million in investible assets, not including primary residence and consumer durables) are now above levels at the end of 2007, before the Great Recession.

Globally, millionaire numbers jumped 17% to 10 million people holding total assets of $39 trillion. Growth was strongest in the Asia-Pacific region, where there were just over 3 million high-net worth individuals in 2009 (up 26%) with $9.7 trillion in assets. The number of Asian millionaires overtook Europe?s tally for the first time last year, the report said.

http://blogs.wsj.com/indiarealtime/2010/06/24/india-mints-millionaires/


----------



## banska bystrica (18 September 2010)

_"Capital city property prices rose upwards of 20 per cent in the 12 months to April 2009, elevating many Australians to millionaire status on their bricks and mortar alone."_

You cannot eat bricks and mortar.


----------



## nunthewiser (18 September 2010)

kincella said:


> hello muppets.....
> ]




Hi Wombat.


----------



## c-unit (18 September 2010)

Kincella - a country cannot become millionaires from rising house prices. Rising overall house prices are not real wealth.


----------



## wayneL (18 September 2010)

In all other Anglo Saxon countries, there is an open admission that house prices became, and are, overvalued and a resignation that at best there will be an extended stagnation of prices.

Is Oz so different?


----------



## robots (18 September 2010)

hello,

yes it is different

thankyou
professor robots


----------



## wayneL (18 September 2010)

robots said:


> hello,
> 
> yes it is different
> 
> ...




Perhaps you can explain.


----------



## tech/a (18 September 2010)

c-unit said:


> Kincella - a country cannot become millionaires from rising house prices. *Rising overall house prices are not real wealth*.




Funniest thing Ive ever read on a forum.



> overvalued and a resignation that at best there will be an extended stagnation of prices.




Agree
Its happened before and will happen again.
When it does hopefully people will see the signs and be better prepared.

Seeing Housing at a median price of 1 million is not so far fetched.
In 1963 a house was under 10K.
Wages will be over 100K and a good wage 200K Id say within 20 yrs.
Millionaires will be a dime a dozen and Multi Millionaires will be the financially secure with the wealthy being Billionaires.

The impossible isn't all that impossible.
Thinking outside the square seems *more difficult *for most.


----------



## IFocus (18 September 2010)

wayneL said:


> In all other Anglo Saxon countries, there is an open admission that house prices became, and are, overvalued and a resignation that at best there will be an extended stagnation of prices.
> 
> Is Oz so different?




This time is different 

Seriously though its as hard to see the bubble not busting and its just as hard to see what will trigger it.

Thought this was interesting

*Stalling NZ economy threatens Australian recovery*



> New Zealand unemployment has started to rise again and house prices have started to fall. Rising bad debts in the New Zealand banking system overflow to Australia as most of the mortgage debt in New Zealand is owned by the Australian banks.




http://www.abc.net.au/unleashed/stories/s3012400.htm


----------



## wayneL (18 September 2010)

IFocus said:


> *...and its just as hard to see what will trigger it.*



A salient point.



> Thought this was interesting
> 
> *Stalling NZ economy threatens Australian recovery*
> 
> http://www.abc.net.au/unleashed/stories/s3012400.htm




I can tell you that the market here is not so rosy. Not catastrophically bad, well priced properties are moving in reasonable time, but there are quite a lot that need to sell, but can't get the price they need to come out OK, so these properties languish at "aspirational" asking prices.

If the economy deteriorates further, I can see some ever more desperate sellers chasing fewer and cagier buyers.

Analyst on the radio said that banks would like to lend more, but fewer are able to qualify for a loan.


----------



## kincella (19 September 2010)

morning grasshoppers.....
It is easy to draw you out, in unison, to rally against any good news on the housing front......
you know you have lost the battle.....when the banks start loosening their stance, TV shows start popping up again, and developers are advertising their new home deals......
the property market is simmering along just nicely.......and spring has only just begun.....the election is over, the drought has been stopped, and the grass is green again.....

the cockies are happy, abundance of food and water in the central areas of NSW and Vic.....after the worst drought that lasted between 15-20 years....

regional and country  towns are buzzing, and a hive of activity......
those of you who are so focused on inner city prices, as if it were the only housing market indicator, may as well walk around with a blindfold on.......

the cockies are hiring workers again, the recent rains and floods will ensure prosperity  for the farmers, graziers and those in the big food bowls....

tourism is bouncing back with the rivers full again, all those recreational lifestyles and activities that rely on water, will be revived.....

its all good, in fact stunning......plenty of work, interest rates at the standard average rate, and people are confident with the housing market, whether its buying, renovating or upgrading.....
it may pay some of you to get away from your PC, get out and take a drive, have a good hard look, as if you were a tourist......go somewhere you have never been before......
have a look at some of the bigger regional areas....jobs, lifestyles and affordable housing, its all there....
cheers


----------



## robots (19 September 2010)

Hello,

spot on Kincella,

Paradise

Thankyou 
Professor Robots


----------



## kincella (19 September 2010)

Morning Robots,
 guess you are pretty happy with St Kilda today....
it will be an exciting game with Collingwobbles...
cheers


----------



## nunthewiser (19 September 2010)

kincella said:


> morning grasshoppers.....




morning cheech


----------



## drsmith (19 September 2010)

The September edition of the Financial Stability Review from the RBA can't be too far away now.


----------



## robots (20 September 2010)

Hello,

hi everyone and what a fantastic day, 

going to be interesting with The Block kicking off on ch9 on wednesday night, hows that hey!

this is a link to a site on buildings I read, and this one on a particular architectural style:

http://www.walkingmelbourne.com/forum/viewtopic.php?f=4&t=6295

fantastic homes/buildings and their "value" becoming ever so important, cream brick houses, fascinating

thankyou
professor robots


----------



## Tink (22 September 2010)

Ooh I like that site Robots, and those old black and white photos, thanks for sharing : )


----------



## kincella (25 September 2010)

Hi Robots and fellow PI's..
...just getting in early....I have just become a Saints supporter, watched my first footy match ever, on the edge of my seat the whole time, stunning result....I was barracking for the saints....what a great team they are....
shame we have to go thru it all again....so thats in my diary for next sat arvo....
geez lots of activity in the property arena....if you are out there on the street you will notice it...reminds  me of the 2005-2006 era...methodical frenzy....hive of activity, buildings being torn down for development, others coming to completion, plenty of people at the auctions....
commercial property is going great guns....
god help anyone who relies on the media for the market news
cheers all


----------



## MR. (26 September 2010)

http://www.abc.net.au/news/stories/2010/09/24/3021480.htm?section=business



> CBA has waged its war against what it believes are housing doomsayers with graphs, numbers and international comparisons.
> 
> In its presentation, the bank rejects arguments that Australia's housing is relatively expensive compared to incomes.
> 
> ...







> However, as Australia's largest home lender, the Commonwealth Bank has one of the biggest vested interests in house prices rising.
> 
> It effectively owns a massive swathe of Australian housing as security for its home loans as well as many small business loans.
> 
> ...


----------



## kincella (26 September 2010)

they quote demographia.....* and UBS 
demographia has its own agenda.....to open up huge areas of land for housing.....but without the cost of supporting infrastructure to make it attractive...or actually liveable
they are against building high rise apartments, in areas that already have the support of existing infrastructure....
they seem to support the US situation.....where thousands, in fact millions of houses were built....without the support of providing jobs, schools hospitals etc...
their reports have massive problems coded in....they do not differentiate between the size of houses, type etc....all houses are lumped together as if it was one easily recognisable unit....
at least cba and others  show a fibro 2 bdr unit, is not the same value as a 4 bdr mcmansion with 2 bathrooms...or that a house in an area with a population of 1000, is comparable with a city population of 5 million...
duh, dunces...anyone with half a brain could deduce there is no comparison

their idea that a house in towoomba is comparable with new york...and costed accordingly shows how ridiculous and meaningless their reports are...
I cannot be bothered with actual correct name of the towns they compared with major cities world wide.....it was just so laughable...

but it is great reading for the gullible amongst us out there in lah lah land


----------



## robots (27 September 2010)

hello,

good afternoon everyone, what a great year it has been so far

anyone catch that article from M.Pascoe today, SQM man forecasting rental increases of 5-8% for Syd, probably get the same in Melb, Adel and Perth I reckon

what you think?

definitely doesnt look like dropping, which is in stark contrast to the many "companies" who reduced there dividend, amazing

oh well, 

thankyou
professor robots


----------



## robots (27 September 2010)

Hello,

Louis Christopher, sorry thats the guy from SQM

yeah about time rents got back to the long term average i reckon, its all been out of whack recently

should be around 8-9%, good yield

thankyou
professor robots


----------



## satanoperca (27 September 2010)

robots said:


> Hello,
> 
> Louis Christopher, sorry thats the guy from SQM
> 
> ...




That is achievable, property retraces 40% of it high and you will see those returns but find it hard to believe that rents will increase 100% in the next few years.

Cheers


----------



## sinner (27 September 2010)

wayneL said:


> In all other Anglo Saxon countries, there is an open admission that house prices became, and are, overvalued and a resignation that at best there will be an extended stagnation of prices.
> 
> Is Oz so different?




No it is the same as everywhere else, but worth noting not *all* other Anglo Saxon countries are openly admitting, Canada springs to mind as a counter example where the scenario roughly equates to Australia right now.

The equation here is slightly different though. The link posted by Mr Z regarding Dr. Lowes warnings highlight this.

The trade-off is slightly more complicated than your average rock/hard place scenario, the components are:

1. Interest rates. These are influenced by three key factors:

a) The RBA target cash rate. However let us not forget that the RBA is not in control of rates. Global money markets are what dictate rates. Who really thinks it's a coincidence that Australian interest rates are at decade lows on the exact same timescale as the rate shenanigans occurring out of the US Federal Reserve?
b) The ability of big 4 banks to sell their debt on the foreign markets. This has its own dependent factors, namely the Treasury guarantee on this debt and a hope that the huge global sovereign debt issuance which has been going on since 2008 is not about to crowd any relatively small players such as our banks out of the market.
c) Real (rather than nominal) inflation/deflation. I make no claim as to know which way this real number is going in the future, but sooner or later rates will take notice of it.​
2. The ability of Australian exports to compete on global markets with the Aussie dollar vis-a-vis any other floating currency. Much noise is made about China and India fueling our boom and decoupling us from the US but let's face it, Chinese demand for Australian commodities stems mostly from US and European demand for Chinese manufactured goods (yes, even domestic growth in China is dependent on this demand). So decoupling is a big phooey. Each cent the AUD ticks up against the likes of the USD and EUR is a cent less competitive on all of our exports. Food exports might be immune to this due to insatiable global demand for staples, but the rest of our economy certainly is not.

3. Global commodity prices.

2 and 3 might seem sort of similar, and relatively small in a big picture, but the numbers show that global commodity demand and our ability to compete is the juice that has kept the Australian economy on life support.

So how do I see it playing out?

Well...

Either, everything is fine and dandy all over the world:

AUD up to 1.34 against the USD, commodities up, real inflation up. Rates converge and we start having weekly articles about "mortgage stress" again. Most likely in this scenario, real wages do not keep pace with real inflation (are they now? No.), and within 5 years from that mark we have a decreased standard of living in Australia as everyone is putting too much of their money into rent or mortgage payments (assuming a mortgage stress event doesn't just pop the whole market).

Or, everything is exactly the same as it was in 2008 (i.e. very very bad), the only difference between now and then being huge sovereign intervention into every market imaginable:

AUD is way way overvalued and heads back to 0.6 against the USD quick smart, commodities down, real inflation down. Rates diverge and the property market poops out with wave after wave of mining layoffs (no manufacturing layoffs since our whole manufacturing industry which used to contribute 10% to GDP is pretty much dead already), tax increases to make up the shortfall of property and mining taxes, and investment property selloffs as "astute property investors" realise there is no way the yield they forecast is going to come to pass over a 10 year horizon. Say hello to a decreased standard of living in Australia within 5 years of this occurring.

Basically, what I am trying to say is that Australia has an inflationary collapse (and accompanying decrease in standard of living for the majority) coming no matter what happens. You can be sure that the coming change in board of the RBA will only accelerate this.

I stopped coming on this thread, because the property bulls seem to think that railing against the complete and utter sell-out of our future as Australian citizens has me rubbing my hands with the glee that I would enjoy being right about either scenario. Which of course is their cue to shout down anyone who might have a different viewpoint. I find that idiotic, and mostly boring, so I'm sure this will be my last post on this thread for another few months. Unless, you know, you guys want to actually discuss things.


----------



## robots (27 September 2010)

Hello,

yeah no worries Sinner, i feel the same way as you a lot of the time on this thread

its very evident why Australia is doing so well and I have regularly posted those prophecies but continually get abused. oh well life goes on

by the way, Mr Z on school holidays? or GPHC opened up again

thankyou
professor robots


----------



## singlefished (27 September 2010)

robots said:


> SQM man forecasting rental increases of 5-8% for Syd, probably get the same in Melb, Adel and Perth I reckon
> 
> what you think?






robots said:


> Louis christopher! Hahahahahahahahahahahahahahahaha
> 
> Keep listening to failed researchers man




Yeah, keep listening man.......


----------



## trainspotter (29 September 2010)

Hmmmmmmm ....... all quiet in here? Where are all the naysayers tearing down the property bubble ?? **POP** That was me opening another bottle of champagne and not the property bubble bursting ..... hahahhahahaaaa.

Steady as she goes skipper .... rate hike on the horizon.


----------



## wayneL (29 September 2010)

***wonders the mental age of some of the posters in this thread.


----------



## UBIQUITOUS (29 September 2010)

Here we are!

It looks like Joe Public is going to get the true story, as opposed to the one put out by the banks, HIA, REIV, media, forum spruikers etc etc. Worried? You should be!



> http://www.smh.com.au/business/housing-stress-test-spooks-market-20100929-15x2u.html
> 
> 
> Housing stress test spooks market
> ...


----------



## robots (29 September 2010)

Hello,

hehehehe, spruikers, yeah i agree WayneL some posters

goldmans sach says overvalued, so come buy into one of our managed funds and we give you 5.5% p/a over the next 10yrs with no obligation to ever return your money

hahahahahahahahahaahahahhahhhhhhahahaaaaaaahhhaaaaaaahhahhahahhhhhhahhhhhhhhahhhhaaaaaaaaaahahahahaha

got any hard disappointments on the property front gloomers?

thankyou
robots


----------



## UBIQUITOUS (29 September 2010)

..and here the monthly pre RBA meeting pleading from the Ponzi Posse.



> http://www.smh.com.au/business/new-home-sales-drop-for-fourth-month-20100929-15wji.html
> 
> New home sales drop for fourth month
> 
> ...




The reality is the landlords won't be able to jackup the rents to offset the loan repayments and capital depreciation.


----------



## wayneL (29 September 2010)

robots said:


> Hello,
> 
> hehehehe, spruikers, yeah i agree WayneL some posters
> 
> ...






wayneL said:


> ***wonders the mental age of some of the posters in this thread.




Honestly folks, can we keep the tone of the thread slightly more dignified than kindergarten style taunting?

Facts, figures, educated guesswork etc would be good.


----------



## robots (29 September 2010)

Hello,

no worries,

* property prices well higher then PRE-GFC after the biggest financial meltdown the world has seen since 1929

* new home sales drop for the fourth month

thankyou
professor robots


----------



## wayneL (29 September 2010)

robots said:


> Hello,
> 
> no worries,
> 
> ...




Thanks

But as the thread is about the FUTURE of Australian property prices, some prognostications, predictions, soothsaying etc is probably more on topic.


----------



## nukz (29 September 2010)

Credit ratings agency Fitch says it will stress-test the impact of steeper home prices on Australian banks' debt, sending shudders through financial stocks.

Fitch this afternoon said it’s probing the potential impact of a spike in mortgage defaults or drop in house prices on the portfolio of Australian residential mortgage-backed securities and banks it rates.

"Over the last few months, Fitch has received numerous enquiries as to the sustainability of Australian residential property prices and the possible impacts of a correction,” said Ben McCarthy, managing director for Australia.

“While over the short-to-medium term, a downturn is not Fitch's central expectation, the agency is performing its stress test exercise on ratings impact under the hypothesis of an imminent housing market correction.”

Australia’s capital city home prices have risen 41 per cent since June 2006, on official Australian Bureau of Statistics data. Over the same period prices plunged in the US, UK, Ireland and Spain.

An estimated 60 per cent of Australian banks’ loan books is secured by residential property, leading pundits and international investors to question the sustainability of house prices.

The announcement this afternoon put pressure on Australian bank stocks, according to CMC Markets.

“The banks seemed to be weighed upon by this news, with all four in the red following being in positive territory in the morning," said CMC Markets institutional equities dealer David Barrett-Lennard.

Bank stocks closed down 0.8 per cent for the day, as the benchmark S&P/ASX 200 index dropped 0.5 per cent, or 24.8 points, to 4645.

"A housing bubble is the one overhang of the Australian economy, with proponents arguing that with Australian banks having 60 per cent of their loan books secured by residential property, the entire Australian economy is very highly leveraged to a domestic asset bubble," he said.

There is growing wariness internationally about Australian house prices.

Several months ago The Economist published a report on the local real estate market saying prices were the most overvalued in the world. And investment bank Goldman Sachs last week said Australian house prices were overvalued by up to 35 per cent.

The Fitch report on the outcome of its stress-test analysis is due later this year.


----------



## electronicmaster (29 September 2010)

nukz said:


> Credit ratings agency Fitch says it will stress-test the impact of steeper home prices on Australian banks' debt, sending shudders through financial stocks.
> 
> Fitch this afternoon said it’s probing the potential impact of a spike in mortgage defaults or drop in house prices on the portfolio of Australian residential mortgage-backed securities and banks it rates.
> 
> ...




I suppose the whole world wants to see a Australian housing price correction then?  

Look what Goldman Sachs had to say about housing prices in that article.  Is that an attack threat on Australian Housing, Banks and (effect) security Markets?


----------



## So_Cynical (29 September 2010)

I've been thinking that perhaps the bubble wont burst, that perhaps some contrarian thinking mite be required :dunno: Can the bubble simply deflate over time by levelling off...i mean if a trend line shifts sideways and simply waves along going sideways (over time) then the bubble is no longer.

Perhaps the combination of the mining boom, china, our strong domestic economy, our dollar, immigration hangover, under supply of new house starts etc will be enough to stop the bubble popping (falling of a cliff ) and a couple/few years of general sideways movement in house prices will follow.

Just a thought.


----------



## jbocker (30 September 2010)

So_Cynical said:


> I've been thinking that perhaps the bubble wont burst, that perhaps some contrarian thinking mite be required :dunno: Can the bubble simply deflate over time by levelling off...i mean if a trend line shifts sideways and simply waves along going sideways (over time) then the bubble is no longer.
> 
> Perhaps the combination of the mining boom, china, our strong domestic economy, our dollar, immigration hangover, under supply of new house starts etc will be enough to stop the bubble popping (falling of a cliff ) and a couple/few years of general sideways movement in house prices will follow.
> 
> Just a thought.




Hopefully if the bubble were to 'deflate', the general sideways movement would be more manageable all round than a confidence sapping bursting.


----------



## Mofra (30 September 2010)

So_Cynical said:


> I've been thinking that perhaps the bubble wont burst, that perhaps some contrarian thinking mite be required :dunno: Can the bubble simply deflate over time by levelling off...i mean if a trend line shifts sideways and simply waves along going sideways (over time) then the bubble is no longer.
> 
> Perhaps the combination of the mining boom, china, our strong domestic economy, our dollar, immigration hangover, under supply of new house starts etc will be enough to stop the bubble popping (falling of a cliff ) and a couple/few years of general sideways movement in house prices will follow.



I thought that had already been happening in certain areas. 
AWOTE has been running at close to double the headline inflation rate since 07 so even matching inflation the true household income to servicing ratios should decline which will reduce the stress rate (even using the low 30% rate as the benchmark).

I'm assuming prices will remain flat in the short term and medium term as well, with the market waiting for the next bottom of the interest rate cycle (which appears to be years away) to be formed for any real upward pressure on prices.


----------



## prawn_86 (30 September 2010)

Building approvals down 4.7% compared to expecations of data being flat


----------



## trainspotter (30 September 2010)

*Building approvals drop prompts rates warning*

The Master Builders Association says the latest housing figures send a clear warning to the Reserve Bank of Australia (RBA) to not raise interest rates.

Figures released by the Australian Bureau of Statistics (ABS) reveal total building approvals across the nation fell by a seasonally adjusted 4.7 per cent in August to 13,049 units.

The data shows demand to build new homes plunged in August as fewer people sought to take out a mortgage.

By state, New South Wales suffered the worst decline, *down 16 per cent.*

Building approvals for homes in Western Australia, however, rose 12 per cent, but Masters Builders Association executive director Michael McLean says the housing market is flat and the increase in WA is off a low base.

http://www.abc.net.au/news/stories/2010/09/30/3026065.htm?section=business

*RBA hints rates will move up*

The RBA has hinted interest rates will move up as policy makers manage a 'robust economic upswing'. Reserve Bank governor Glenn Stevens also said, in a speech today, that while Australia's economic growth should be above trend in 2011, the low rate of inflation seen over the past two years was near its trough.

Read more: http://www.news.com.au/money/intere...ba/story-e6frfmn0-1225926825229#ixzz10yu76E8u


----------



## trainspotter (30 September 2010)

wayneL said:


> ***wonders the mental age of some of the posters in this thread.




*Mental age test result *
Your mind is 37 years old ...... Hmmmmm and I am 42 chronologically. Go figure?

http://en.nienteansia.it/tests/mental-age-test.html


----------



## trainspotter (30 September 2010)

*Seasonally-adjusted Aussie home values decline*

Australian capital city home values declined -0.2 per cent (seasonally-adjusted) in August (0.0 per cent in unadjusted terms) while the ‘Rest of State’ markets realised 0.0 per cent growth (seasonally-adjusted and raw). Total gross returns remain positive with improving yields on units (4.9 per cent) and houses (4.0 per cent).

In August the seasonally-adjusted RP Data-Rismark Capital City Home Value Index fell by 0.2 per cent. On a non-seasonally adjusted basis the index remained unchanged in August. (Residential data are ‘seasonally-adjusted’ to remove the influence of the seasonal swings that occur at various times of the year.) Since the market peak in May 2010, the RP Data-Rismark Capital City Home Value Index has declined by 1.2 per cent (raw and seasonally-adjusted). Over the year to end August 2010, *capital city home values have risen by 8 per cent.* The median dwelling price in all capital cities is $457,000.

Thank you RP DATA


----------



## Quincy (30 September 2010)

trainspotter said:


> *Building approvals drop prompts rates warning*
> 
> The Master Builders Association says the latest housing figures send a clear warning to the Reserve Bank of Australia (RBA) to not raise interest rates.
> 
> ...




Housing figures are only part of the mix that the RBA would take into consideration with regard to their position on interest rates.

Notwithstanding that it is the Master Builders Association making the statement, to say in isolation that the latest housing figures should send a clear warning to the RBA not to raise interest rates is in my opinion a very narrow minded and ignorant postion to take.


----------



## sinner (30 September 2010)

So_Cynical said:


> I've been thinking that perhaps the bubble wont burst, that perhaps some contrarian thinking mite be required :dunno: Can the bubble simply deflate over time by levelling off...i mean if a trend line shifts sideways and simply waves along going sideways (over time) then the bubble is no longer.
> 
> Perhaps the combination of the mining boom, china, our strong domestic economy, our dollar, immigration hangover, under supply of new house starts etc will be enough to stop the bubble popping (falling of a cliff ) and a couple/few years of general sideways movement in house prices will follow.
> 
> Just a thought.




The point is it doesn't matter anymore.

Housing pop or not, Australians can expect a decrease in their standard of living whatever happens, mostly thanks to current/past Government policy coupled with voter apathy to this knowledge, or perhaps even antipathy to anyone who would dare rock the boat. 

The mathematics is on the wall, the capital is already misallocated, so to speak. Our collective futures have been sold downriver to keep housing in this country going, so whether or not a few manage to eke a couple of % of yield over the coming years is completely irrelevant.

The attitude of many of those participating in this thread can only be labelled with one word:

HUBRIS.



> In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.
> 
> "South Florida," he said, "is working off of a totally new economic model than any of us have ever experienced in the past" according to a realtor who predicted that a land shortage will support higher prices indefinitely."
> 
> New York Times. March 29, 2005




Now Florida has tent cities to cope with all the homeless, and Florida is a lot bigger than just the Miami-Dade area. At least our mate Ron Shuffield was 100% right about the "new economic model than any of us have ever experienced in the past".

It's like everyone has forgotten those stupid Commonwealth Bank ads in the late 90s early 00s "Equity maaaaate". If Australia is so different to the US housing market, why did we have those ads? I bet people here treated their home value like an ATM just like their US brethern. In the end it isn't about the financially responsible ones, because it is the financially irresponsible ones who start the big ball of **** rolling downhill.


----------



## Mofra (30 September 2010)

sinner said:


> Now Florida has tent cities to cope with all the homeless, and Florida is a lot bigger than just the Miami-Dade area. At least our mate Ron Shuffield was 100% right about the "new economic model than any of us have ever experienced in the past".



With non-recourse loans and abysmal lending standards, it was never going to end any other way. Australia is well ahead on both counts.


----------



## robots (30 September 2010)

hello,

further on the US:

abysmal everything over in that joint, crack, 9mm stuffed down every cats pocket, fat asses galore, oh yeah lets invade another country because they have weapons of mass destruction and Saddam in charge of a powerful army

look out, saddam was found in a hole in the ground, the joints pathetic and surely the mods need to start deleting any articles which are posted regarding that place

who gives a stuff about florida, "the future of australian property prices"

thankyou
professor robots


----------



## Dowdy (1 October 2010)

robots said:


> hello,
> 
> further on the US:
> 
> ...






Wow, you seem to know so much about the USA. I find that comment interesting. Have you ever been there?


----------



## UBIQUITOUS (1 October 2010)

Dowdy said:


> Wow, you seem to know so much about the USA. I find that comment interesting. Have you ever been there?




Give the chap a break. He'd get a nosebleed if he left Melbourne. Besides, you don't have to go there to know what it's all about. Just tune into Judge Judy and Cops.


----------



## robots (1 October 2010)

Dowdy said:


> Wow, you seem to know so much about the USA. I find that comment interesting. Have you ever been there?




hello,

no, and just to remind everybody the thread is about aussie property prices, not spain, italy, ireland, US, Uk or New Zealand

so hopefully those posts with data/info regarding any of the above listed countries is swiftly removed from the thread to keep it on track

otherwise a "mega" property thread maybe an idea, although the true visionaries of society will probably still get victimised

thankyou
professor robots


----------



## wayneL (1 October 2010)

robots said:


> hello,
> 
> no, and just to remind everybody the thread is about aussie property prices, not spain, italy, ireland, US, Uk or New Zealand




There is some degree of correlation in western property markets. As such, comments, analysis, projections etc of these markets may have some relevance to the Oz market .


----------



## explod (1 October 2010)

robots said:


> hello,
> 
> 
> thankyou
> professor robots




And the thank you is not required Professor, we thank you for the circus entertainment.

How high can it all go Champ, looking for some real insight from you this weekend.


----------



## robots (1 October 2010)

Hello,

i gave my prediction just the other night and it got deleted explod, how's that hey? oh well

so the US has non-recourse loans, NINJA loans, build whole suburbs then plonk them on the market, invade other countries for no reason, carry on

any correlation with Australia yet? no worries

must say though Explod, you are definitely the most improved poster here at ASF, the change i have witnessed in you is outstanding, well done man

thankyou
professor robots


----------



## wayneL (1 October 2010)

robots said:


> any correlation with Australia yet?




Oz prices went down pretty much in line with the rest of the western world in 2008.

The correlation factor is of course not 1.0, but a degree of correlation is obvious.


----------



## robots (1 October 2010)

hello,

yeah went down a little, but i dont think st kilda units hit that 50% drop! remember that one WayneL

oh well, and back up a little in 2009 and 2010, any other countries kicking along like Aus?

thankyou
professor robots


----------



## wayneL (1 October 2010)

robots said:


> hello,
> 
> yeah went down a little, but i dont think st kilda units hit that 50% drop! remember that one WayneL



Neither did 4 bedroom Somerset detached houses... or Wimbledon apartments, or Auckland houses



> oh well, and back up a little in 2009 and 2010, any other countries kicking along like Aus?




As property investors are fond of saying, there are markets within markets. Some markets are doing OK, even in the US.


----------



## financialdonk (2 October 2010)

robots said:


> Hello,
> 
> so the US has non-recourse loans, NINJA loans, build whole suburbs then plonk them on the market, invade other countries for no reason, carry on
> 
> any correlation with Australia yet? no worries




You do realise that Australia has been in collaboration with the US invading other countries don't you?

I read this thread regularly and find your sign offs and general waffle extremely tedious.  I am not saying you should stop, but why do you bother?  It saddens me.


----------



## Dowdy (2 October 2010)

robots said:


> hello,
> 
> no, and just to remind everybody the thread is about aussie property prices, not spain, italy, ireland, US, Uk or New Zealand
> 
> ...





Well, i know what it's like first hand in the USA. I'm travelling there now and seen the effects on how bad it is and how bad is isn't


----------



## nunthewiser (2 October 2010)

Dowdy said:


> Well, i know what it's like first hand in the USA. I'm travelling there now and seen the effects on how bad it is and how bad is isn't




A very close friend of mine lives in L.A, He travels the continent quite a bit and has lived in various citys in the U.S.

Not once has he had any caps busted in his a$$ , but he did tell me about a crack ho he was married to for a while.

He also mentioned the massive developments and suburbs sitting empty and derelicted even tho there is massive homelessness problems in these areas.

could never happen in australia tho apparently because everyone here can afford a roof over there heads 

Have fun in your travels


----------



## Dowdy (2 October 2010)

nunthewiser said:


> A very close friend of mine lives in L.A, He travels the continent quite a bit and has lived in various citys in the U.S.
> 
> Not once has he had any caps busted in his a$$ , but he did tell me about a crack ho he was married to for a while.
> 
> ...





No worries, thanks for that.

I've been to LA, NYC, Washington DC, Philly, Miami, Orlando, PA, Texas, Memphis, Tenasee and i'm going to a few more in the next few weeks.

I'll tell you what it's like here....

The bad: there are homeless people alot everywhere. The most disturbing thing though is that some of them look no older then me (25) and they have signs saying "lost my job, have no money. Will take abuse for money..." and then you get the funny homeless in NYC "need money for alcohol and weed... at least i'm not bull****ting you." There were alot of homeless people in Philly in the local park in the city - It would be like going down to the Botanical Gardens and seeing about 50 people around the running track. 
Alot of the local strip shops are empty and bordered up. To put into perspective, it'll be like going down to melton or carlton with their strip shops and seeing them bordered up. The worst area i've been to is Niagra Falls - alot of houses were bordered up (whole streets actually) and the place has gone downhill. I haven't seen any tent cities in LA but i haven't been around the bad areas in LA and don't know where they are.

The good: the night life is still very active and restaurants look very busy all the time and the big shopping centres are still full of people. I guess it's hard for them to ease up on their 70-80% consumption lifestyle but there's no incentive to save when interest rates are so low. The best airport i've been to was in Detroit. Didn't get to explore the town since it was on a stop over


----------



## robots (2 October 2010)

Hello,

its probably also a bigger issue at the moment FinancialDonk because everyone else has disappeared and I am keeping the show going for ASF. I am up to 20 now who just vanished, amazing, i dont know whats going on

although hang on, havent heard from MrZ for a while, so 21, oh well

so its just my informative posts "standing" out a bit more i guess, cheer up man

whats that got to do with Aussie property though Dowdy? could you do us a favor, get into walmart and check out the guns, take sum photos with an Uzi, 9mm or a Bazooka

thankyou
Professor Robots







financialdonk said:


> You do realise that Australia has been in collaboration with the US invading other countries don't you?
> 
> I read this thread regularly and find your sign offs and general waffle extremely tedious.  I am not saying you should stop, but why do you bother?  It saddens me.






Dowdy said:


> Well, i know what it's like first hand in the USA. I'm travelling there now and seen the effects on how bad it is and how bad is isn't


----------



## nukz (3 October 2010)

Sounds like somebody has a vested interest in property eh robots, most your posts don't really make any sense but as long as ya happy that's ok.

With a sharp rise in real estate prices in 2009 we are not going to see anything like that for quite sometime i see it as being two options, either intrest rates will bite and investors will bail on property's which will cause a domino effect. 

The only other thing i can think of is almost negative growth for the next 4-5 years on property here so the market 'catches up with prices' if you will. This option could also turn out to be a long downturn cycle.

I'm quite wary of the appartment/unit market in Melbourne especially in the CBD as there are thousands of places being built right now and who knows who is going to fill them my thinking is that history will repeat itself with another CBD oversupply like in 2000.

That being said inner suburbs that are dependent on immigration(eg. eastern suburb's and inner suburbs & West/Northern suburbs) could also be hit as i see there was a article in the age last week stating net immigration has dropped 37% this year.


----------



## kincella (3 October 2010)

the property bears outnumber the bulls.....it is a free country, freedom of choices, freedom of speech....for both sides.....
if it were not for Robots keeping the thread going,  ASF would lose its advertising sponsors..... so it is in the interests of ASF to keep the forum going.....
I would ask ASF to stop the personal attacks against Robots....posters should be able to argue the point of the subject.....without the use of a personal attack against another poster, and his beliefs...
I suspect many came across from the global houseprice crash forum...after it closed down for lack of interest.....it was so full of bears, that any bull could not be bothered posting....and the bears lost interest  when they had no one to argue with... is this really what you want.....
to close down the thread.....
ASF bosses may beg to differ...it is in their interest to keep it going....


----------



## tech/a (3 October 2010)

Those who prosper in property will continue to do so.
Those who are afraid/don't understand "their" risk exposure wont.
Same for those in business and those who trade shares/futures/precious metals/
art/coins-----


----------



## Dowdy (3 October 2010)

robots said:


> Hello,
> 
> 
> whats that got to do with Aussie property though Dowdy? could you do us a favor, get into walmart and check out the guns, take sum photos with an Uzi, 9mm or a Bazooka
> ...





Because you keep making these dummy comments on a country you've never been to or seen before. If you want to learn something new, don't be so narrow with generalised comments 




> suspect many came across from the global houseprice crash forum...after it closed down for lack of interest.....it was so full of bears, that any bull could not be bothered posting....and the bears lost interest when they had no one to argue with... is this really what you want.....
> to close down the thread.....




Threads don't get closed down for lack of interest. It was most likely closed down due to trolls on the forum. You know, those people who make claims like they're professors and such.....


----------



## explod (3 October 2010)

Dowdy said:


> Threads don't get closed down for lack of interest. It was most likely closed down due to trolls on the forum. You know, those people who make claims like they're professors and such.....




Yep its the empty tin can that makes the most noise.   Or was that "vessels"

May not hear you for the din though.

Wonderfull sunny day at Mount Martha for a change.  Lovely properties along the water front here and are bullet proof.  No debt, no worries.


----------



## c-unit (3 October 2010)

nukz said:


> The only other thing i can think of is almost negative growth for the next 4-5 years on property here so the market 'catches up with prices' if you will. This option could also turn out to be a long downturn cycle.
> 
> *I'm quite wary of the appartment/unit market in Melbourne especially in the CBD as there are thousands of places being built right now and who knows who is going to fill them my thinking is that history will repeat itself with another CBD oversupply like in 2000.*




Would like to hear a few more of your thoughts regarding this area of Melbourne's market nukz. I'm looking to buy my first place, an apartment in Southbank within 5 years but am waiting for when/if prices to come down. 

I see the volume of new apartment building constructions when I go in to work each day, but as I'm only young I am not sure how this compares with the 2000 oversupply you mentioned (which I believe was in Docklands?).

Cheers


----------



## robots (3 October 2010)

c-unit said:


> Would like to hear a few more of your thoughts regarding this area of Melbourne's market nukz. I'm looking to buy my first place, an apartment in Southbank within 5 years but am waiting for when/if prices to come down.
> 
> I see the volume of new apartment building constructions when I go in to work each day, but as I'm only young I am not sure how this compares with the 2000 oversupply you mentioned (which I believe was in Docklands?).
> 
> Cheers




Hello,

yes there is  5 billion of "new" apartment construction in the pipeline for the next few years scattered around melbourne CBD and inner c-unit

a "distressed" sale maybe a very real option in that sector but poor performance may still continue with the ease at which a tower can be built

satanoperca can give us some input into the docklands area

thankyou
professor robots


----------



## sinner (3 October 2010)

tech/a said:


> Those who prosper in property will continue to do so.
> Those who are afraid/don't understand "their" risk exposure wont.
> Same for those in business and those who trade shares/futures/precious metals/
> art/coins-----




Thanks Captain Obvious? Of course the profitable will remain profitable and the unprofitable will remain unprofitable in all markets of supply and demand. But what is your take on the future of Australian property prices, tech/a? 

To everyone - these are the sort of things we should be talking about:

* Do you believe markets like housing to be long-term cyclical in nature? Do you think house prices viewed cyclically are overbought or oversold? 
* What are the contributing factors to the current upward trend, are these factors simple or complex, are they sustainable?
* What are the current mitigating factors on this trend? Are they going to increase or decrease in severity?
* Acknowledging we can't predict the future, but also the value of evaluating possible likely outcomes: What are the consequences of this upward trend continuing (and at what velocity)? Are always uptrending house prices actually good? What are the consequences of this upward trend ending/reversing (and at what velocity)?  Will a correction be rough or soft, will it be healthy or unhealthy?

Trotting out pundit quotes, anecdotes and even statistics are useless if you are just bringing them here to win a tick for "your side". The data needs to be framed in the context of the above questions, as an aide in trying to answer them.

We should all try harder.


----------



## wayneL (3 October 2010)

tech/a said:


> Those who prosper in property will continue to do so.
> Those who are afraid/don't understand "their" risk exposure wont.
> Same for those in business and those who trade shares/futures/precious metals/
> art/coins-----



Nothing is ever so black and white, them and us.

I've known plenty who have "prospered" in property go broke, and those afraid of risk eventually take the plunge and change their circumstances.

There are a whole gamut of results due to skill, lack of skill, good timing, bad timing, and just plain old randomness.


----------



## tech/a (4 October 2010)

It wont come as a surprise to either of you that I don't agree with your comments in direct respect to myself. Cant speak for others.



sinner said:


> Thanks Captain Obvious? Of course the profitable will remain profitable and the unprofitable will remain unprofitable in all markets of supply and demand. But what is your take on the future of Australian property prices, tech/a?
> 
> To everyone - these are the sort of things we should be talking about:
> 
> ...




My take is the obvious which if not that obvious I'm happy to expand.I believe most people over analyse opportunity.They complicate a simple scenario.Complication leads to confusion, hesitation and often lost opportunity at best and fear of making *any* decision at worst.

You see it doesn't matter what *I* think in general terms.What does matter is what *I* do with an opportunity when it presents itself to *me*.
For everyone else it is the exact same for *them* as it is for me in my own reality.



wayneL said:


> Nothing is ever so black and white, them and us.
> 
> I've known plenty who have "prospered" in property go broke, and those afraid of risk eventually take the plunge and change their circumstances.
> 
> There are a whole gamut of results due to skill, lack of skill, good timing, bad timing, and just plain old randomness.




Wayne in my world EVERYTHING is either black or white.
In any endeavour I'm either right or wrong.If wrong I get the hell out of the wrong as quick as possible.If right I stay there as long as I remain so or favour another opportunity. I'm wrong more often than right but the small % of rights far outweigh the higher % of wrongs.
Making a decision is a snap and I never procrastinate.Something I have consciously trained myself to do when I was much younger.

I agree with what your saying but for me it remains black or white right or wrong regardless of "how" the situation has come about.


----------



## kincella (4 October 2010)

Tech I do agree with you...
Quote
"You see it doesn't matter what I think in general terms.What does matter is what I do with an opportunity when it presents itself to me.
For everyone else it is the exact same for them as it is for me in my own reality.

Wayne in my world EVERYTHING is either black or white.
In any endeavour I'm either right or wrong.If wrong I get the hell out of the wrong as quick as possible.If right I stay there as long as I remain so or favour another opportunity. I'm wrong more often than right but the small % of rights far outweigh the higher % of wrongs.
Making a decision is a snap and I never procrastinate.Something I have consciously trained myself to do when I was much younger.

I agree with what your saying but for me it remains black or white right or wrong regardless of "how" the situation has come about.ch...I agree with you.... end Quote


----------



## kincella (4 October 2010)

*NEWS OF MASSIVE FRAUD BY US BANKS ON MORTGAGES....FORECLOSURES STOPPED IN 23 SATES....GFC NO 2 AND NO 3 WILL HIT*
so the freefall in the US housing market was due to the banks process of foreclosing, and forcing down the house prices......now it is revealed the foreclosures were based on fraud..........

news finally seeping out about the massive mortgage fraud in the US....it will hit the US banks...world wide affects to seep thru.....
will labors budget withstand this next night mare....
swan, why has he been silent....I guess he ...as usual...has no idea...
some of the big US banks have stopped foreclosures in some 23 states.....judges are stating it is fraud...

and some 60 million home owners in the US may be able to keep their homes....and not have to repay the banks....
all due to the massive fraud....
watch out below.....
this subject will have massive ramifications and reactions world wide.....
the labor budget will be affected....our banks might have to look at their own books.....
I believe some of our banks use a similar processing facility...like the MERS system in the US at the heart of the problem....
I know RAMS used a service providor to handle their mortgage process.... with one of my loans.....they made several mistakes, including sending me another borrowers mortgage and details.....
http://www.examiner.com/real-estate...test-action-and-inaction-on-foreclosure-fraud

and this one
http://www.msfraud.org/law/lawarticles/Could62MillionHomesBeForeclosure-Proof.pdf 

--------------------------------------------------------------------------------


----------



## KurwaJegoMac (4 October 2010)

kincella said:


> *NEWS OF MASSIVE FRAUD BY US BANKS ON MORTGAGES....FORECLOSURES STOPPED IN 23 SATES....GFC NO 2 AND NO 3 WILL HIT*
> so the freefall in the US housing market was due to the banks process of foreclosing, and forcing down the house prices......now it is revealed the foreclosures were based on fraud..........
> 
> news finally seeping out about the massive mortgage fraud in the US....it will hit the US banks...world wide affects to seep thru.....
> ...




I don't think this will go so far as to cause a "GFC 2 or 3" - a lot of the downwards pressure on American homes is due to the high rates of defaults and subsequent foreclosures. If mortgage owners' homes were/are being incorrectly foreclosed, then all this will serve to do is lower the number of houses being foreclosed and reverse existing foreclosures and therefore reduce housing supply and bank 'fire sales' of foreclosed property. This will potentially start to put a floor on house prices and therefore start to slowly stabilise consumer confidence.

That being said, if the banks get hit with a class action, they will probably have to pay damages but even so, doubtful it'd be enough to cause a GFC 2 - only hamper the bank's bottom line for a bit.


----------



## TabJockey (4 October 2010)

KurwaJegoMac said:


> I don't think this will go so far as to cause a "GFC 2 or 3" - a lot of the downwards pressure on American homes is due to the high rates of defaults and subsequent foreclosures. If mortgage owners' homes were/are being incorrectly foreclosed, then all this will serve to do is lower the number of houses being foreclosed and reverse existing foreclosures and therefore reduce housing supply and bank 'fire sales' of foreclosed property. This will potentially start to put a floor on house prices and therefore start to slowly stabilise consumer confidence.
> 
> That being said, if the banks get hit with a class action, they will probably have to pay damages but even so, doubtful it'd be enough to cause a GFC 2 - only hamper the bank's bottom line for a bit.




Agreed, nobody in the USA is too eager to smack thier banks around too hard.


----------



## Agentm (5 October 2010)

the old "this bubble is different" talk that always floats about in every bubble scenario keeps rearing its ugly head, with the rba and its new mandate from swan keeping up appearances

i wonder if they have been reading this book?


----------



## KurwaJegoMac (5 October 2010)

Agentm said:


> the old "this bubble is different" talk that always floats about in every bubble scenario keeps rearing its ugly head, with the rba and its new mandate from swan keeping up appearances
> 
> i wonder if they have been reading this book?




You know you're in trouble when books like that are popping up...

Still, house prices accelerate and plateau all the time. People's fascination with focusing on an ever increasing median house price and shouting "the sky is falling - house prices are double what they were 10 years ago and triple what they were 15 years ago!!!" have obviously never heard of the exponential function.


----------



## UBIQUITOUS (5 October 2010)

**Newsflash**

Rates on hold.


**Newsflash**

Robots and Kincy still hiding behind the sofa


----------



## Mr Z (5 October 2010)

robots said:


> although hang on, havent heard from MrZ for a while, so 21, oh well




Sorry bots... its cash making season in gold stocks I'm busy skinning bears... get back to me around May next year.


----------



## trainspotter (5 October 2010)

tech/a said:


> I believe most people over analyse opportunity.They complicate a simple scenario.Complication leads to confusion, hesitation and often lost opportunity at best and fear of making *any* decision at worst.




Genius level tech/a. I used to procrastinate once but now I am not so sure.


----------



## robots (5 October 2010)

hello,

oh fantastic, well done Kincella superb effort brother

well there you go

thankyou
professor robots


----------



## explod (5 October 2010)

KurwaJegoMac said:


> Still, house prices accelerate and plateau all the time. People's fascination with focusing on an ever increasing median house price and shouting "the sky is falling - house prices are double what they were 10 years ago and triple what they were 15 years ago!!!" have obviously never heard of the exponential function.




Good point, gold has done more than that in eight years.  More than trippled since 2002 and looking stronger by the day.  By the discussions here there appears to be some doubts creeping in about property prices though.

Anyway, if you have a home and own it outright, *no worries.*


----------



## Agentm (5 October 2010)

worth a watch if you dont know much about the subject


http://www.cnbc.com/id/15840232?video=1607245632&play=1


----------



## KurwaJegoMac (5 October 2010)

explod said:


> Good point, gold has done more than that in eight years.  More than trippled since 2002 and looking stronger by the day.  By the discussions here there appears to be some doubts creeping in about property prices though.
> 
> Anyway, if you have a home and own it outright, *no worries.*




True - but what if you're a young man who doesn't own your own home?  Well in my case i'm biting the bullet and buying an investment property - not getting a PPOR yet, will look at getting one in a few years. Right now just focusing on investment properties and ensuring i have appropriate risk margins in my loans and income to cover excessive interest rates.


----------



## wayneL (5 October 2010)

KurwaJegoMac said:


> Still, house prices accelerate and plateau all the time. People's fascination with focusing on an ever increasing median house price and shouting "the sky is falling - house prices are double what they were 10 years ago and triple what they were 15 years ago!!!" have obviously never heard of the exponential function.




That's not really the point. We all know house prices will increase as the currency is debased via inflation, but what housing bears point to is relative value. This is unquestionably above trend.


----------



## KurwaJegoMac (5 October 2010)

wayneL said:


> That's not really the point. We all know house prices will increase as the currency is debased via inflation, but what housing bears point to is relative value. This is unquestionably above trend.




How is it not the point? YoY growth of Australian property has approximately averaged 9% from 1950's-2009* ! Adjusting for inflation that equates to about 3.1% YoY*. So hardly some scary number even without adjusting for inflation. Look at the price of most consumer goods and services and they've been averaging 6-8% inflation per year. People see a graph of historic house prices and start frothing at the mouth and whip themselves up into a frenzy as they watch the line on the right climb so steep relative to the last 50 years.

But what they fail to account for is simple arithmatic. If you understand the exponential function and apply it to house prices and the average prices of consumer goods you'll see they're largely in line and hardly anything scary.

As for house prices being relative? Relative to what? The price of a house or any other asset is determined by how much value a person places in the worth of that asset. What asset is relative to a house? Only other houses. It boils down to supply and demand. It doesn't matter how expensive it becomes, if there is insufficient supply to meet demand prices will remain expensive. 







*Published paper: http://search.informit.com.au/documentSummary;dn=062035829122703;res=IELBUS


----------



## wayneL (5 October 2010)

KurwaJegoMac said:


> How is it not the point? YoY growth of Australian property has approximately averaged 9% from 1950's-2009* ! Adjusting for inflation that equates to about 3.1% YoY*. So hardly some scary number even without adjusting for inflation. Look at the price of most consumer goods and services and they've been averaging 6-8% inflation per year. People see a graph of historic house prices and start frothing at the mouth and whip themselves up into a frenzy as they watch the line on the right climb so steep relative to the last 50 years.
> 
> But what they fail to account for is simple arithmatic. If you understand the exponential function and apply it to house prices and the average prices of consumer goods you'll see they're largely in line and hardly anything scary.
> 
> As for house prices being relative? Relative to what? The price of a house or any other asset is determined by how much value a person places in the worth of that asset. What asset is relative to a house? Only other houses. It boils down to supply and demand. It doesn't matter how expensive it becomes, if there is insufficient supply to meet demand prices will remain expensive.




Well you aren't familiar with the arguments here, _c'est la vie_.

Good luck with it.


----------



## KurwaJegoMac (5 October 2010)

wayneL said:


> Well you aren't familiar with the arguments here, _c'est la vie_.
> 
> Good luck with it.




Excuse me! There's no need to be so arrogant and presumptious! I've been following this thread closely and I am aware of the arguments presented here. This is a forum and I am allowed to disagree with general consensus and present MY view on property prices. 

You present no debate or adequate resppnse to ideas that challenge your own, merely posting that you disagree and that's end of story.


----------



## hobo-jo (5 October 2010)

KurwaJegoMac said:


> As for house prices being relative? Relative to what? The price of a house or any other asset is determined by how much value a person places in the worth of that asset. What asset is relative to a house? Only other houses.



How about the price of a house is relative to how much it costs to rent it...?

Recently while the capital gains tap has been flowing many buyers have been happy to pay the premium to buy over rent as they will make the difference back and more via capital growth. What happens when that scheme starts to fail and buyers are instead looking at stagnant prices (or even falling ones), do you think they will still be prepared to pay the premium to buy over rent?

Houses in capital cities currently have an average rental return of 4% on purchase price.... with mortgage interest rates around 7% and ongoing costs to buy running in at over 1% on purchase price this means that renters can live in a home for approximately half the cost of buying.

Some smart cookies (myself included) have sold property to rent while it makes sense to do so, investing capital into more prospective opportunities waiting for the right time to buy again.


----------



## wayneL (5 October 2010)

KurwaJegoMac said:


> Excuse me! There's no need to be so arrogant and presumptious! I've been following this thread closely and I am aware of the arguments presented here. This is a forum and I am allowed to disagree with general consensus and present MY view on property prices.
> 
> You present no debate or adequate resppnse to ideas that challenge your own, merely posting that you disagree and that's end of story.




Dude! 


Nobody said you couldn't disagree
Nobody said you couldn't present your view
I've debated throughout this thread, no point going over old ground.
I wished you good luck, and that was genuine.

Sheesh! Take a Valium mate!


----------



## KurwaJegoMac (5 October 2010)

hobo-jo said:


> How about the price of a house is relative to how much it costs to rent it...?
> 
> Recently while the capital gains tap has been flowing many buyers have been happy to pay the premium to buy over rent as they will make the difference back and more via capital growth. What happens when that scheme starts to fail and buyers are instead looking at stagnant prices (or even falling ones), do you think they will still be prepared to pay the premium to buy over rent?
> 
> ...




You quote an average rental return of 4% on purchase price - but historically, rental yields have averaged 4% (refer to the document linked in my post above as well as DYOR). So relative to rental yields we're not overpriced and you need to consider another comparison.


----------



## wayneL (5 October 2010)

KurwaJegoMac said:


> but historically, rental yields have averaged 4%




ROTFLMAO


----------



## KurwaJegoMac (5 October 2010)

wayneL said:


> ROTFLMAO




ROFLCOPTERZOMFGWTFBBQ










 Guess I can't read graphs. My bad.

Interest rates below:




Also quite funny how 'coincidentally' the period of high interest rates from the 1980's to 1990's coincided with the highest rental yields (>7%)...

...and now that interest rates are low we're experiencing low rental yields (<4%) but the average across both periods has been 4%...

ROTFLMAO LOOK AT ME I DONT PROVIDE ANY EVIDENCE I JUST WRITE STUPID THINGS ROFLLMAOWTFBBQYAYPEWPEWLAZERRRZZZZZ

ROTFLMAO


----------



## trainspotter (5 October 2010)

*Congratulations to all the ASFers for bumping this thread over the magical 3000 mark. *

And now for some facts.

_1) House prices are starting to fall in Australia, with the median national house price falling 0.2 percent in August according to the RP Data Riskmark Index.

2) In Melbourne, house prices fell 1.5 percent reducing the median house price to $470,000.

3) Brisbane house prices fell 2.3 percent to $434,000 for the quarter while Perth witnessed falls of 4.8 percent, wiping $22,000 of their medium house price in three months. Perth’s median price now sits at $460,000.

4) Also recording falls was Adelaide, down 0.2 percent and Darwin down 1.4 percent._

Now a lot of these facts are tremendously skewed as most of the falls were in the higher bracket price range which IMO were tremendously over valued to start with. 

Now I can probably cope with the slight deflation we are currently witnessing in the RE market which is a far cry from the 40% "bug on a windscreen" wailing we were hearing not so long ago. The next thing to rise will be rents as the greedy property developers want a better rate than 4% on their return. This amongst other factors will keep the prices steady for awhile. Depends on RBA's next move on the IRs as well. If we see rates increase more than .5% in the next 6 months we will see a further leaking of the average home price. If you look at the graph you can see the value of prices vs rental income is not enough to sustain the price of houses.


----------



## wayneL (5 October 2010)

KurwaJegoMac said:


> ROFLCOPTERZOMFGWTFBBQ




I'd like to see how those figures are derived please.


----------



## mazzatelli (5 October 2010)

wayneL said:


> I'd like to see how those figures are derived please.




Context
http://bubblepedia.net.au/tiki-index.php?page=GerardMinackArticle


----------



## trainspotter (5 October 2010)

*Gerard Minack from Morgan Stanley is a dill. Here he is on one hand telling us not to invest in property and then he goes and does this !*

THE US-based Morgan Stanley Real Estate fund that owns a stake in one of Australia's biggest office landlords, Investa Property Group, may face $US5.4 billion ($5.79bn) in losses through poor property investments. 

The Wall Street Journal reported yesterday that it had reviewed documents showing soured investments by the $US8.8bn fund, Msref VI International, which has a stake in Investa.

If the Morgan Stanley fund did lose $US5.4bn in bad property deals, it would be the *biggest dollar loss in the history* of private-equity real estate investing, the Journal said.

http://www.theaustralian.com.au/bus...risks-579bn-loss/story-e6frg9gx-1225853802331


----------



## mazzatelli (5 October 2010)

trainspotter said:


> *Gerard Minack from Morgan Stanley is a dill. Here he is on one hand telling us not to invest in property and then he goes and does this !*




Just to be clear:
The link is in reference to the figures Wayne is asking about - Exhibit 3: Yield as support

Who/what to trust, eh? :


----------



## KurwaJegoMac (5 October 2010)

WayneL my sincerest apologies for my behaviour over the past few posts. Very immature and you by no means deserved any of that attitude from me.

Had a particularly bad day at work today, and was in a foul mood whilst posting. Still, that's no excuse. An investor should maintain a clear and level head at all times right? 

Once again, I'm very sorry and I will curb my stupid behaviour.


----------



## explod (5 October 2010)

trainspotter said:


> *Gerard Minack from Morgan Stanley is a dill. Here he is on one hand telling us not to invest in property and then he goes and does this !*
> 
> THE US-based Morgan Stanley Real Estate fund that owns a stake in one of Australia's biggest office landlords, Investa Property Group, may face $US5.4 billion ($5.79bn) in losses through poor property investments.
> 
> ...




If you read into the article properly you will see that the losses stemmed from the GFC of 2008.  So Gerard Minack, having been burnt is passing on his hard earned lesson.


----------



## KurwaJegoMac (5 October 2010)

mazzatelli said:


> Just to be clear:
> The link is in reference to the figures Wayne is asking about - Exhibit 3: Yield as support
> 
> Who/what to trust, eh? :




Also that data and analysis from Exhibit 3 is from 2008 and Trainspotter's article is from April 2010. 2 years can make a difference in outlook I guess. But you're right, who and what to trust?


----------



## trainspotter (5 October 2010)

explod said:


> If you read into the article properly you will see that the losses stemmed from the GFC of 2008.  So Gerard Minack, having been burnt is passing on his hard earned lesson.




Article was written on April 15th 2010 explod. I was pointing out that he is incorrect on many occassions on his assessments.

Here he is again caught by his tongue. 

In a note to clients this morning, Mr Minack recants: *“Seems I was wrong to be so bearish on Australia.”*

But the economist also thinks that while he might have been too pessimistic, markets are now too optimistic, especially in their forecast of a quick return to tighter monetary policy from the Reserve Bank.

http://www.theage.com.au/business/big-bear-recants-i-was-wrong-20090731-e3s3.html


----------



## nunthewiser (5 October 2010)

What a great thread 

all this banter and not one cap busted in anyones A$$

bless you all.


----------



## Uncle Festivus (6 October 2010)

I can just imagine the boardroom meetings at the Big 4 banks this morning, not having an excuse to bump their rates up under the cover of the RBA. Having put more of their loan portfolio eggs into the resi prop market, from 43% to 58% over the last 10 years, they now find that they have to either put their rates up independently or take a hit to their (rather bloated) bottom line.

Not to mention prop prices are down again, 4 months in a row now.


----------



## tech/a (6 October 2010)

Contracts prepared for an Industrial property in the Seaford Rise Industrial Park
in Adelaide---another addition to my super fund.
Will eventually build 3 sheds on it for small business.


----------



## financialdonk (6 October 2010)

Posted this on another forum, but fits here just aswell

There is one factor that is going to cause more problems than any other.  I will preface my comments by stating I am a property bear.

Regardless of short to medium term price movements within the next 12-48 months, there has got to be alarm at who is going to be capable of taking over the market to ensure price increases occur.  Nearly all the people who were not in the market prior to the increasing FHOG's are now in the market.  The only people not in the market are either incapable of taking any form of finance (either unemployed, have other debts, don't wish to buy in areas that would be affordable) or are bearish on property.  My partner and I were both employed in good jobs (income of around 130k after tax combined), no children, mid 20s and were house hunting in Perth around May last year.  We were looking at suburbs around 7-10km from the CBD (as that is where my partner worked) and could not find anything that I would deem worth the money that would be paid for it.

For $550k in Perth you get a 3x1 on a 2 house block front/back about 8km from the city,  older house with design flaws. After going to a couple of home openings I could not justify taking on a loan of approx 500k even though I was given preapproval for an amount greater than that without including my partner's wage in the process.  To me at least, working away, and my partner working in the city we do not view living 30km from CBD in the suburbs as desireable and I could not see myself 'living' between a surbuban development and a Westfields shopping centre for the next 30 years of my life.  The concept seems absurd.  Anyway, 18 months on and I am glad we came to the decision we did.  I shifted our money that would have been going towards a property into PM's and we are either going to wait it out, or find alternate arrangements (live overseas). 

My point is, with an increasingly aged population, and Australia's fatal fear of all things foreigner where does the growth come from?  Baby boomers with multiple properties will be beginning to sell on masse as they downsize need funds live out their retirement years, or they will hold onto their property to pass onto their kin as inheritance.  Immigration is always a hot topic and the general populace have raised severe concerns (regardless whether they are legitimate or not) about the current immigration intake.  

If no one is buying how can prices continue to grow? If the only people who are largely left in the market are either bears or people pretending it is 2005 and thinking leveraging is still a significantly good move (because house prices never drop) then what is to become of Australian property prices?  The large scale international investment in Australia may also see the rising AUSD as an excellent time to exit leaving the market open to a significant drop in a short space of time.

That our banks are so exposed to housing mortgages does not bode well for anyone.  I am sure when they start to get itchy feet they will raise rates irrespective of the RBA and the market is likely to suffer from interest rate rises as opposed to mass unemployment (although this is possible if mining continues to be strong but retail collapses in the Eastern States).  That so many jobs are caught up in housing from real estate to trades, a huge drop in building houses due to lack of demand could prove extremely costly.  How many people laiden with debt and multiple properties are tradesman with a partner in retail?  I shudder to think of how many people I know in this exact predicament.

The whole housing market scenario seems like a house of cards waiting for just one variable to send it crashing to the ground.

Very interesting times.


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## tech/a (6 October 2010)

> The whole housing market scenario seems like a house of cards waiting for just one variable to send it crashing to the ground




To those crippled with fear it has seemed that way for around 10 yrs.
Then It was that way in the late 80s
Then again in the late 60s
It will remain that way through out time.

You'll either do something or do nothing.
Most do nothing and get the required result--nothing.
Understand risk--do due diligence.
Think outside the buy and hold square (although that's also fine if geared correctly).
Find a property/mentor and un shackle the fear.


----------



## Uncle Festivus (6 October 2010)

financialdonk said:


> That our banks are so exposed to housing mortgages does not bode well for anyone.  I am sure when they start to get itchy feet they will raise rates irrespective of the RBA and the market is likely to suffer from interest rate rises as opposed to mass unemployment (although this is possible if mining continues to be strong but retail collapses in the Eastern States).  That so many jobs are caught up in housing from real estate to trades, a huge drop in building houses due to lack of demand could prove extremely costly.  How many people laiden with debt and multiple properties are tradesman with a partner in retail?  I shudder to think of how many people I know in this exact predicament.
> 
> The whole housing market scenario seems like a house of cards waiting for just one variable to send it crashing to the ground.
> 
> Very interesting times.




Deja vu al la USA - humans never learn from their mistakes?

A variable variable = China?


----------



## Uncle Festivus (6 October 2010)

tech/a said:


> To those crippled with fear it has seemed that way for around 10 yrs.
> Then It was that way in the late 80s
> Then again in the late 60s
> It will remain that way through out time.
> ...




It's called financial headroom - who's going to step up to the plate to ensure the returns from property continue at the pace we have seen? The headroom that existed in the past allowed the price increases, but it's harder to get 10% on $1M plus that it is on $500k ie diminishing returns the higher prices go, irrespective of whether wages keep up?

The banks are in a hard place now - charge borrowers at the market rate or make less profits. All on an expanded (unsustainable?) domestic property base. If they start moving outside the RBA then they risk a bank induced recession?


----------



## trainspotter (6 October 2010)

Uncle Festivus said:


> The banks are in a hard place now - charge borrowers at the market rate or make less profits. All on an expanded (unsustainable?) domestic property base. If they start moving outside the RBA then they risk a bank induced recession?




Could be the outlier that causes the Black Swan Event.

Reasons as to why it wont happen;-

1) Too much employment - Got a job and a mortgage? Mortgage gets paid.
2) CPI is under control - Inflation is not hurtling towards the stratosphere.
3) Export - Not the beer eeeejits - China wants what we got.
4) Low National Debt - Compared to other countries we are doing fine.
5) Regulated Banking System - Do the research peoples.
6) Government LOVES the housing system. Keeps the people in check and broke.
7) Aussies pay their mortgages - Granny is sold before defaulting on your house payment.
8) There are only 22 million people in OZ. The amount of debt carried by household finance is miniscule. EVERYONE would have to go broke to have an impact.
9) I could go on and on but I will leave my powder dry for the next round.

Now this is some of the conditions we currently have. It would be quite a few of the above list to happen before the property market gets the speed wobbles.


----------



## KurwaJegoMac (6 October 2010)

trainspotter said:


> Could be the outlier that causes the Black Swan Event.
> 
> Reasons as to why it wont happen;-
> 
> 6) Government LOVES the housing system. Keeps the people in check and broke.




Love that point and oh so true! 

Let's not forget that we have room to move in our interest rates, should the economy/housing market start to slow down. That would serve to potentially prop up prices by investors by increasing the rental yield as rates come down . Not to mention give confidence for non-home owners to enter the market (rightly or wrongly)


----------



## Temjin (6 October 2010)

http://www.smh.com.au/business/investors-could-create-housing-bubble-rba-20101006-166wh.html 


> Reserve Bank head of financial stability Luci Ellis, in an address to a CPA Australia conference in Brisbane, said lower rental yield will mean there is a limit on how far house prices can go.
> 
> Asked if the lower yields meant a limit to the rate of price appreciation, Dr Ellis said: "The short and simple answer is - yes".
> 
> ...




Really? I'm surprised to actually hear all this from the RBA. She might get fired for going rogue just for this.

See the latest Comsec report on property too.

http://www.filedropper.com/housingreport

Ohhh, remember what Craig James actually said 5 months ago?



> _“If it’s [the housing shortage] not addressed soon we’ll have a serious problem in Australia, some would say it’s already too serious… There’s only so much they can do with a strong demand for housing and the fact that supply isn’t keeping up.”_





Now he says



> _“But it is important to note that the supposed under-building is largely a NSW and Queensland phenomenon. Approvals are actually above decade averages in Victoria, South Australia and Tasmania. In fact the annual total of non-NSW dwelling approvals hit record highs in August._
> 
> _“While economists generally believe that Australia is not building enough new homes to meet demand, that view doesn’t stand up when there is an assessment of regional trends. Add in the fact approvals and home prices are both slipping and vacancy rates are gradually lifting. In addition Australians are making better use of their big homes (the biggest in the world) while the slide in migration levels is taking momentum away from the housing market_.”




He really just make up his mind already. 

So much for the uber supply shortage of housing in Australia that would drive prices up forever and ever.

As for the debate on "it's better to take actions than not because the latter will guarantee you nothing in return", I would say I will take actions with my money on other opportunities that have much better reward/risk. 

As Van Tharp say, never ever fell in love with a particular position. This applies equally to anyone investment properties.


----------



## tech/a (6 October 2010)

> As for the debate on "it's better to take actions than not because the latter will guarantee you nothing in return", I would say I will take actions with my money on other opportunities that have much better reward/risk.




All good and those not adverse to risk or understanding of an opportunity would do/are doing the same.

The point made in my statement which was not meant as a debatable topic was and still is.
*DO SOMETHING!*

Those frozen by fear will live in fear all their lives and look back at missed opportunities and a wasted life---which is available to only a few in the world.
Those in Australia being one of the few.
Many just never get the opportunity they----simply live.

If your one of those who strive just to exist in my view this is a great travesty.*EVERYONE* has opportunity in this country---you just have to get off your ar$e and* DO IT!*


----------



## satanoperca (6 October 2010)

tech/a said:


> If your one of those who strive just to exist in my view this is a great travesty.*EVERYONE* has opportunity in this country---you just have to get off your ar$e and* DO IT!*




When is your book coming out? Just want to make sure I can get a copy before it is sold out, could always see if I can get into one of your ultra expensive motivation seminars.

Finally someone that makes sense, just need to listen.

Cheers Tech/A and don't stop posting.


----------



## financialdonk (6 October 2010)

KurwaJegoMac said:


> Love that point and oh so true!
> 
> Let's not forget that we have room to move in our interest rates, should the economy/housing market start to slow down. That would serve to potentially prop up prices by investors by increasing the rental yield as rates come down . Not to mention give confidence for non-home owners to enter the market (rightly or wrongly)




With the US ramping up QE measures do you think the Australian banks will be able to reduce interest rates when o/s inflation gets out of control?  Remember they are miniscule in the scheme of things and will not be able to decouple from international events.  The banks will always try and save themselves first and the RBA will be meaningless.


----------



## financialdonk (6 October 2010)

tech/a said:


> All good and those not adverse to risk or understanding of an opportunity would do/are doing the same.
> 
> The point made in my statement which was not meant as a debatable topic was and still is.
> *DO SOMETHING!*
> ...




They way you are referencing *DO SOMETHING* reminds me of the way that contestants claim they are *not playing the game* but just being themselves in the Big Brother house.  The fact that they are inside the house means that they *ARE* playing the game (regardless of whether they believe themselves to be so or not), just that their tactics involve acting themselves rather than sabotage, mystery, evil etc.

In the same way, doing nothing is effectively doing something.  In not making a decision you have effectively made a decision (possibly unbeknowst to you).  Just as a proactive decision has varying degrees of failure to success so does indecision.  If you do not make a decision then variables can change that may be favourable or unfavourable in the future from which you can benefit.  Hence doing nothing is always doing something and *doing something is unavoidable*.

Just my


----------



## trainspotter (6 October 2010)

financialdonk said:


> With the US ramping up QE measures do you think the Australian banks will be able to reduce interest rates when o/s inflation gets out of control?  Remember they are miniscule in the scheme of things and will not be able to decouple from international events.  The banks will always try and save themselves first and the RBA will be meaningless.




When is the O/S inflation going to get out of control? They are having trouble kickstarting the economy they have even with trillions being spent to stimulate. Unemployment is rampant and interest rates are at ZERO %. More like stagflation or possible double dip recession IMO.

Oh yeah ..... they are consumer economies. They export NOTHING. We truly are the lucky country with Asian markets greedy for our mineral wealth.


----------



## trainspotter (6 October 2010)

financialdonk said:


> If you do not make a decision then variables can change that may be favourable or unfavourable in the future from which you can benefit.  Hence doing nothing is always doing something and *doing something is unavoidable*.




Sounds to me you have commitment issues.


----------



## KurwaJegoMac (6 October 2010)

financialdonk said:


> They way you are referencing *DO SOMETHING* reminds me of the way that contestants claim they are *not playing the game* but just being themselves in the Big Brother house.  The fact that they are inside the house means that they *ARE* playing the game (regardless of whether they believe themselves to be so or not), just that their tactics involve acting themselves rather than sabotage, mystery, evil etc.
> 
> In the same way, doing nothing is effectively doing something.  In not making a decision you have effectively made a decision (possibly unbeknowst to you).  Just as a proactive decision has varying degrees of failure to success so does indecision.  If you do not make a decision then variables can change that may be favourable or unfavourable in the future from which you can benefit.  Hence doing nothing is always doing something and *doing something is unavoidable*.
> 
> Just my




What you're saying is right - doing nothing in itself is also doing something _however_ that's provided you have made a concious decision to take the 'do nothing' approach. 

What I believe Tech/A is trying to get at, is that you shoudn't be letting fear paralyse you and you should be doing something - even if you do nothing you need to ensure that _you_ made the decision to do nothing because that was the best option given the current circumstances.

What you want to avoid is passively doing nothing because you are too afraid to make a choice and see it through.


----------



## tech/a (6 October 2010)

financialdonk said:


> They way you are referencing *DO SOMETHING* reminds me of the way that contestants claim they are *not playing the game* but just being themselves in the Big Brother house.  The fact that they are inside the house means that they *ARE* playing the game (regardless of whether they believe themselves to be so or not), just that their tactics involve acting themselves rather than sabotage, mystery, evil etc.
> 
> In the same way, doing nothing is effectively doing something.  In not making a decision you have effectively made a decision (possibly unbeknowst to you).  Just as a proactive decision has varying degrees of failure to success so does indecision.  If you do not make a decision then variables can change that may be favourable or unfavourable in the future from which you can benefit.  Hence doing nothing is always doing something and *doing something is unavoidable*.
> 
> Just my




Anyone who watches Big Brother let alone analyses the thought process of those involved--*In my view *needs to get a life.

Those who do nothing _from a fear base or one of ignorance _are and will always fall into the catagory of longterm procrastinators who inevitably get the result their effort afford them in life---*Mediocrity*.

If thats satisfactory then its a very simple achievement with over 98% of Australians successful in achieving mediocrity.

With 11,000,000 in the work force and 185,000 millionairs.----.0168% reach the magic number which is fast becoming less than magical.


----------



## skcots (6 October 2010)

So... some people are doing stuff, others are too scared and others are watching big brother reruns. Where are property prices heading?


----------



## explod (6 October 2010)

skcots said:


> So... some people are doing stuff, others are too scared and others are watching big brother reruns. Where are property prices heading?




Hard to get a clear picture, but on an average of what is coming across, including an increased persistence by the perma bulls on this forum, I would say it is going sideways.

Better plays elsewhere; IMVHO.


----------



## wayneL (6 October 2010)

OK lets suppose that the bears overcome their fear or whatever the bulls think the reason is that bears are bears.

What would you suggest is the type of property opportunity to be pursued and why?


----------



## tech/a (6 October 2010)

wayneL said:


> OK lets suppose that the bears overcome their fear or whatever the bulls think the reason is that bears are bears.
> 
> What would you suggest is the type of property opportunity to be pursued and why?




High equity 30-40% at this time is in my view advisable regardless of "type" of investment.

As for my *prefered type *it is currently both Industrial and Domestic property developement.

*Why.*
There is a shortage of available industrial developements currently in my area and what is available is being released very slowly with the developer knowing that once released thats it---plus the area is at the end of the freeway widening programme and rail line.This release was 12 block all sold I have one.
12 mths ago 50 were released for $125K each
These $195K and smaller sold in 2 weeks.
The next are expected to be smaller again and $245K in a few mths.
Held in SMSF Trust and will be developed for passive income and capital gain----best keep the Super working---65% is in property 10% in Stocks and 25% in cash currently.

Domestic am looking for suitable property in my area to take 4 apartments 1 and 2 bed.
*Why*
There arent enough those that come up are selling at stupid prices relative to cost to hold and construct---I'm blogging the exercises on "the other site" if interested.All is revealed there as far as developement costs hints and progression of the 2 investments.


----------



## financialdonk (6 October 2010)

tech/a said:


> Those who do nothing _from a fear base or one of ignorance _are and will always fall into the catagory of longterm procrastinators who inevitably get the result their effort afford them in life---*Mediocrity*.




We are in agreeance on fear and ignorance.  Those who entered the market last year for fear of 'not being to get into the market later' or those who ignorantly continue to enter the market without concern for current situations will inevitably get the result their efforts afford them.


----------



## financialdonk (6 October 2010)

KurwaJegoMac said:


> What you're saying is right - doing nothing in itself is also doing something _however_ that's provided you have made a concious decision to take the 'do nothing' approach.
> 
> What I believe Tech/A is trying to get at, is that you shoudn't be letting fear paralyse you and you should be doing something - even if you do nothing you need to ensure that _you_ made the decision to do nothing because that was the best option given the current circumstances.
> 
> What you want to avoid is passively doing nothing because you are too afraid to make a choice and see it through.




I agree conscious decisions generally end up being better than unconcious.  Although that is not to say that being paralysed by fear does not turn out to be better in individual cases in the long run.  It's just difficult to see recent examples of this in a debt leveraged bull market.


----------



## jonojpsg (6 October 2010)

tech/a said:


> With 11,000,000 in the work force and 185,000 millionairs.----.0168% reach the magic number which is fast becoming less than magical.




Hey tech, just to be picky, 185000/11000000 actually is 1.68% NOT 0.0168%   Means almost 2 in 100 are millionaires as opposed to 2 in 10000!


----------



## tech/a (6 October 2010)

jonojpsg said:


> Hey tech, just to be picky, 185000/11000000 actually is 1.68% NOT 0.0168%   Means almost 2 in 100 are millionaires as opposed to 2 in 10000!




Yes thought .0168% was as you say.
But see the confusion.
Tardy on my part.


----------



## tech/a (6 October 2010)

financialdonk said:


> I agree conscious decisions generally end up being better than unconcious.  Although that is not to say that being paralysed by fear does not turn out to be better in individual cases in the long run.  *It's just difficult to see recent examples of this in a debt leveraged bull market*.




If thats the reason you see for increased property values over the last 10 yrs and going forward.

If like myself others dont see this as a valid reason then its simply an excuse for more procrastination.


----------



## explod (6 October 2010)

wayneL said:


> OK lets suppose that the bears overcome their fear or whatever the bulls think the reason is that bears are bears.
> 
> What would you suggest is the type of property opportunity to be pursued and why?




This is a hard one because bears and even bulls can change their minds at any moment.

As a bear, at the moment, I have *no fear *of property, in fact at one stage eight years ago I held five investment properties at the one time, small time granted, but for a number of reasons, one of which I got my fingers burnt in a trickey subdivision deal, I became a bear;  because I wanted to know why I went wrong, hit the books and for the first time in my life realised that property is not always one way.  (from first home in 1968 it was yeehaa for 30 years)

Of course by hitting the books I found out that good money can be made with little downside risk in other plays too, and you can get out at the click of the mouse, not three plus months.  You get my idea.

So bull or bear I be, depending.

Didgja see silver go last night, yeehaa.


----------



## robots (6 October 2010)

tech/a said:


> To those crippled with fear it has seemed that way for around 10 yrs.
> Then It was that way in the late 80s
> Then again in the late 60s
> It will remain that way through out time.
> ...




Hello,

Just letting everybody know I will stick my hand up for anybody who needs a property mentor.

My background:

* been invested in RE for the past 11yrs
* have been awarded an Associate Professorship by Melbourne University for research undertaken on residential property (all self funded to by the way).
* one of only five of the true visionaries of society who have consistently called it.
* interest rate strategist 

Just pop me a PM or post any questions you may have on the forum.

Thankyou
Professor Robots


----------



## prawn_86 (6 October 2010)

robots said:


> Hello,
> 
> Just letting everybody know I will stick my hand up for anybody who needs a property mentor.
> 
> ...




Can you prove that Professorship? :


----------



## robots (6 October 2010)

wayneL said:


> OK lets suppose that the bears overcome their fear or whatever the bulls think the reason is that bears are bears.
> 
> What would you suggest is the type of property opportunity to be pursued and why?




Hello,

oh great, for those interested in the buy and hold job i believe the regional towns of Ballarat and Bendigo offer enormous potential

houses on 600-700sqM with some reasonable features

Kyneton has a long way to go as it attracts all the surplus plus others from the Daylesford area. Piper st already tight to get in and I expect the main st to change for the better also.

Thankyou
Associate Professor Robots


----------



## wayneL (6 October 2010)

robots said:


> Hello,
> 
> oh great, for those interested in the buy and hold job i believe the regional towns of Ballarat and Bendigo offer enormous potential
> 
> ...




Why?

What're the figures?


----------



## explod (6 October 2010)

robots said:


> Hello,
> 
> Just letting everybody know I will stick my hand up for anybody who needs a property mentor.
> 
> ...




Just a couple of holes there ole champ.

Post Graduate Research opening the way to an Associate Professorship cannot be brought, it is either a scholarship funded by the Institution or private sector, in this case perhaps the Real Estate Insititute.

If you are an Associate Professor you are not entitled to use the title of Professor.

You are not trying on those old porkies of the past there Confessor, *are you?*


----------



## wayneL (6 October 2010)

explod said:


> Just a couple of holes there ole champ.




More like a great yawning chasm.


----------



## Mr Z (6 October 2010)

I love it... you make a rational decision to invest elsewhere based on the available data and somehow you are "crippled with fear".... oh do me a favor and stop playing pocket billiards!


----------



## robots (6 October 2010)

wayneL said:


> Why?
> 
> What're the figures?




Hello,

the figures are as everyone knows, 5-7% gross yield, hoping for capital growth 

just like buying shares actually, try and pick a good one, do the research on the stock or the town, suburb etc

only difference is with a property its in your hands with equity in other peoples hand, oh well

thankyou
associate professor robots


----------



## wayneL (6 October 2010)

robots said:


> Hello,
> 
> the figures are as everyone knows, 5-7% gross yield, hoping for capital growth
> 
> ...




1/ Can you give examples of these gross yields?

2/ What is the nett yield?


----------



## skcots (6 October 2010)

robots said:


> Hello,
> 
> the figures are as everyone knows, 5-7% gross yield, hoping for capital growth
> 
> ...




As you said you pick the investment. Its nice not having to arrange tradespeople to repair termite damage done to your shares.

Another difference is if a better opportunity arises you can sell your equity in 2 seconds. oh well


----------



## explod (6 October 2010)

robots said:


> just like buying shares actually, try and pick a good one, do the research on the stock or the town, suburb etc
> 
> thankyou
> associate professor robots




Get the impresion you know little about shares, for example I never collect dividends, just take the profits on trades.


----------



## prawn_86 (6 October 2010)

prawn_86 said:


> Can you prove that Professorship? :




No answer. As i thought. Mis-representation of a title


----------



## wayneL (6 October 2010)

tech/a said:


> I'm blogging the exercises on "the other site" if interested.




Can't even if I wanted to. I seem to have been banned for something I said on this forum. :dunno:


----------



## tech/a (6 October 2010)

wayneL said:


> Can't even if I wanted to. I seem to have been banned for something I said on this forum. :dunno:




I seen to suffer similar fates here from time to time.
Nature of the beast.


----------



## trainspotter (6 October 2010)

wayneL said:


> Can't even if I wanted to. I seem to have been banned for something I said on this forum. :dunno:




Or no response? Hmmmmmmmmm?


----------



## trainspotter (6 October 2010)

So what is the future for Australian Property prices? Patchy at best. Do the research seems to be the most common aspect of this jewel. Pick where you are going to buy. Have good equity (Like tech/a 30% to 40% deposit) behind you is another. Income is supreme. If you can't afford it then don't do it is a recurring theme. Many, many things make property investing a black science. Some you lose, and some you don't make as much money as you thought. Having the ready reserve of cash to prop the construct time and or rates etc (outgoings or holding costs) is another. It is not Utopia. It is not for everybody to invest in. You have to know what you are doing.

robots has his PPOR and an IP and he is happy.
Tech/a is out buying industrial land in Adelaide with his SMSF.
Kincella has taken a treechange and is extremely happy with his purchase.
Trainspotter has a couple of unit developments and houses under construction.


YES house prices are on the wane for 4 consecutive months now. We all agree on this subject matter at hand. LOOK on the bright side. The housing slump has caused the RBA to leave interest rates on hold.

It must be true. I read it here. http://www.theage.com.au/business/housing-slump-may-help-keep-rates-on-hold-20100930-15zbv.html

*AUSTRALIA'S housing recovery has vanished. *Dwelling approvals plunged again in August to their lowest level in a year, throwing serious doubt on the prospects of another rate rise soon.

With the federal government's stimulus programs coming to an end, the banks turning away builders, and six rate rises in the past year deterring buyers, seasonally adjusted housing approvals fell *4.7 per cent in August *to 13,049.


----------



## satanoperca (6 October 2010)

trainspotter said:


> The housing slump has caused the RBA to leave interest rates on hold.




Oh please, what bloody slump, a whole 2% decrease after increases of 10% p.a in the last year.

You are being insulting to property bears, go cover yourself in honey and let them gorge.

And secondly when was it the RBA directive to control property price growth through interest rates. If this is the case, then we are stuffed.

Cheers


----------



## financialdonk (7 October 2010)

Something must give: ANZ Eric Johnston 
October 7, 2010
 .ANZ has warned that ''something has to give'' on interest rates, as chief executive Mike Smith left the door open for a repricing of mortgages even though the official cash rate remains on hold.

Mr Smith also responded to comments by Treasurer Wayne Swan that banks had no justification for pushing through out-of-cycle rises, saying this was a matter of opinion.

''He's quite entitled to his views as I am mine,'' Mr Smith said.

Advertisement: Story continues below The Reserve Bank's decision on Tuesday to keep the cash rate on hold was a setback for the big banks, which had wanted to increase mortgage rates by more than the RBA's rise to recoup higher funding costs.

Although some may be tempted to increase rates, most big banks, including ANZ, have indicated they are likely to leave them steady for now.

Westpac has gone a step further by saying it would defer any decision about interest rates until after next month's RBA meeting, which is scheduled for November 2.

In recent days, Mr Swan warned the banks they could not be justified in raising interest rates.

''(The bank's) profits at the moment are healthy, their net interest margins are back to the level that was last seen prior to the global financial crisis, and some of their liabilities are much less than they thought would have occurred some time ago,'' Mr Swan said.

But Mr Smith, speaking after a Australian Institute of Company Directors briefing yesterday, said funding costs were clearly putting margins under pressure. *''The fact of the matter is we're paying 160 basis points more for deposits than we were pre-crisis and we're only up 100 basis points for mortgages,'' he said. ''Something has to give at some stage.''*
When asked if ANZ would increase its mortgage rates, he said: ''We just continue to monitor the situation.''

ANZ and National Australia Bank are not under as much pressure to raise rates compared with their bigger rivals. Both have a relatively modest mortgage portfolio, meaning the bulk of their earnings is generated from business loans.

Mr Smith also pointed to signs that business is starting to borrow again, ending the near two-year drought in demand for credit.

''We're beginning to see demand from the capex side, which is encouraging because that shows there is an increasing amount of optimism in the business community,'' Mr Smith said.

His comments came as ANZ detailed plans to pay a $4000 childcare allowance to employees as part of measures aimed at recruiting and retaining women. The plans will also include superannuation on all forms of paid parental leave.

Separately, Mr Smith said ANZ was going ahead with due diligence on South Korea's Korea Exchange Bank. But he declined to comment on whether ANZ would be forced to undertake a capital raising to help fund such a move.

ANZ has previously confirmed it is inspecting the books of Korea Exchange Bank to buy a 57 per cent stake, valued at about $4.5 billion at present market prices.

Source: The Age


----------



## trainspotter (7 October 2010)

satanoperca said:


> Oh please, what bloody slump, a whole 2% decrease after increases of 10% p.a in the last year.
> 
> You are being insulting to property bears, go cover yourself in honey and let them gorge.
> 
> ...




Irony escapes you doesn't it satanoperca. When I wrote "It must be true. I read it here" folowed by a link to The Age didn't ring any alarm bells for you?

And secondly the RBA has been using interest rates to stimulate/stagnate the property prices of Australia for years as well as the economy. Remember Paul Keating telling us he had his hands firmly on the levers to the RBA ??? NO ???

I will now go and cover myself in sweet yellow liquid produced by bees and wait for the property bears to feast upon my unworthy carcass, to which I will continue to insult them further. :


----------



## Quincy (7 October 2010)

trainspotter said:


> I will now go and cover myself in sweet yellow liquid produced by bees and wait for the property bears *to feast upon my unworthy carcass*, to which I will continue to insult them further. :




It is more likely that those bears will be giving you a damn good tongue lashing.

It looks like the the currency domino in China is really starting to wobble now - quick - sell all your non-essential property holdings and batten down the hatches before it's too late.



> CHINESE premier Wen Jiabao asked EU leaders to tone down their attacks on Beijing in an escalating battle over the value of key currencies.
> 
> *"If the yuan is not stable, it will bring disaster to China and the world,"* he said last night in a speech to top EU officials and businesspeople, who have recently joined the US in publicly demanding that Beijing let the value of its currency appreciate.






> *China, too, has too much to lose by floating its currency, Mr Wen argued.* "If we increase the yuan by 20 per cent or 40 per cent, as some people are calling for, *many of our factories will shut down and society will be in turmoil*," he said.




http://www.theaustralian.com.au/bus...emier-wen-jiabao/story-e6frg90x-1225935233723


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## robots (7 October 2010)

hello,

just letting everyone who has PM'd me in regards to the property mentoring i will be out of action for a few days (fri-mon) as going to support friend at world solo 24hr mtb race in canberra

still around tonite for any live action though

thankyou
associate professor robots


----------



## todster (7 October 2010)

robots said:


> hello,
> 
> just letting everyone who has PM'd me in regards to the property mentoring i will be out of action for a few days (fri-mon) as going to support friend at world solo 24hr mtb race in canberra
> 
> ...




Sure Robots really your a bogan and going to bathurst for the weekend


----------



## wayneL (7 October 2010)

Meanwhile, back in The Old Dart:

http://www.telegraph.co.uk/finance/...e-prices-fall-by-record-3.6pc-in-a-month.html



> UK house prices fall by record 3.6pc in a month
> The UK housing market has suffered a shock as figures from the Halifax revealed the average price of a property dropped more than £6,000 in September.
> 
> A surge in the supply of properties for sale contributed to a record monthly drop in prices, Halifax said.
> ...


----------



## UBIQUITOUS (7 October 2010)

wayneL said:


> Meanwhile, back in The Old Dart:
> 
> http://www.telegraph.co.uk/finance/...e-prices-fall-by-record-3.6pc-in-a-month.html




I came on here to post that!
That is what you call a crash. Enough to make potential buyers think twice? I think so!


----------



## -Bevo- (7 October 2010)

wayneL said:


> Meanwhile, back in The Old Dart:
> 
> http://www.telegraph.co.uk/finance/...e-prices-fall-by-record-3.6pc-in-a-month.html




Those poor poms should have put there money in Australian Property


----------



## singlefished (7 October 2010)

-Bevo- said:


> Those poor poms should have put there money in Australian Property




Also consider how the GBP has nosedived over recent years and is now bouncing off 25 year lows....

9 October 2008 : 1 GBP = 2.66 AUD
7 October 2010 : 1 GBP = 1.61 AUD

July 2008 UK Average All Dwellings : 214,867 GBP = 571,546 AUD
July 2010 UK Average All Dwellings : 212,878 GBP = 342,733 AUD
(the latest 2 years available for comparison published 14/09/10)

From Bondi to Blacktown in 2 years!!!


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## c-unit (8 October 2010)

A Current Affair had a puff piece tonight on how we should all look to invest in property because it always goes up, and with 10-20% gains per annum with no chances of losses, it is the perfect investment.

Probably as good a sign as any that property prices have peaked


----------



## UBIQUITOUS (11 October 2010)

c-unit said:


> A Current Affair had a puff piece tonight on how we should all look to invest in property because it always goes up, and with 10-20% gains per annum with no chances of losses, it is the perfect investment.
> *
> Probably as good a sign as any that property prices have peaked *




Naahh, the biggest indicator is that I haven't seen Robots around the traps recently. Isn't spring the season where buyers are rampant? Well it looks as though the sellers are coming out in mass



> http://reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162
> 
> The REIV expects around 1900 auctions over the next fortnight* including 1170 in a fortnight,* a number sure to test the level of underlying demand.




Spruik imminent:



> The REIV will release the September quarter median prices next weekend, *providing buyers and sellers with important intelligence on the current state of the market* at a suburb level.


----------



## danwalker86 (11 October 2010)

hi, new member here so please go easy.

i have just sold my investment property and made a gain of 25% in 18 months.

i simply think the aussie resi. market is not sustainable, and figured i was better to get out with a large gain than face negative equity within 12-24 months.

i have around $50k i can now use to start building my share portfolio. what would be the advice of anyone here? i was thinking of a term deposit for 6 months whilst i research (yes, im spending 2-3 hours a day on this forum in the beginners section) 

do you think this would be a good idea so i do not enter the market hastily and make mistakes?

in advance, all your advice is much appreciated.


----------



## KurwaJegoMac (11 October 2010)

danwalker86 said:


> hi, new member here so please go easy.
> 
> i have just sold my investment property and made a gain of 25% in 18 months.
> 
> ...




Hi Danwalker86 and welcome to the forum  

Congratulations on your success with your property. That being said we cannot offer advice as to what you should do with your money - you need to consult with a licensed financial advisor if you would like that sort of information.


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## c-unit (11 October 2010)

> The government has invested in $11.3 billion worth of low-risk mortgage securities and been a cornerstone investor in several major transactions in a bid to boost investor confidence after the securitisation market stalled in 2008.






> Mr Dalton has called on the AOFM to also broaden its scope to invest in the so-called ''B-class notes'', or subordinated debt, which forms part of a securitisation issue. This will avoid crowding out the senior debt, where demand is becoming more robust.




http://www.theage.com.au/business/small-lenders-securitisation-bid-20101010-16e1s.html

Does this concern anybody else? B-class notes, the Australian equivalent of sub prime debt? I was aware we had a small RMBS market here in Australia but the thought of our government buying them to prop up the market worries me...


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## sinner (11 October 2010)

Housing Collapse Cascade Pattern (updated):


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## moXJO (11 October 2010)

Housing costs in my area have gone crazy with 20% plus rises in a matter of months. They are also selling in a matter of 1-2 weeks in the better areas (lower end of town not moving very fast). The locals are getting priced out by the Sydney investors. I hope it is a bubble because the cost of living is getting stupidly high with rents.


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## trainspotter (12 October 2010)

The biggest news of the week was the decision by the Reserve Bank Board to keep official interest rates on hold at 4.5%. Following a number of speeches during the last month by senior bank officials who highlighted that interest rates would most likely need to increase, most commentators had been predicting a 25 basis points increase however, this did not come to fruition. Looking back at the data releases over the last month, property value growth was weak as was housing finance, building approvals and growth in retail trade was sluggish. The next key piece of data that will provide some guidance on where interest rates are going will be the release of CPI Data on 27 October. This information will factor most heavily in the RBA’s next interest rate decision on Melbourne Cup Day.

Data released by the ABS late last week detailing building approvals for August 2010 showed continuing weakness, in particular for new private sector house approvals. Over the month, total approvals fell by -4.7% with private sector house approvals down -4.3% whilst private sector unit approvals increased by 1.4%. Overall, approvals are once again beginning to *trend lower which is a worrying sign for a recovery in the home building sector*, particularly if interest rates start increasing again.

The RP Data Quarterly Rental Review was released this week and the results showed that rental rates were flat over the quarter both nationally and across the capital city markets. With rental markets tightening, the prospect of higher interest rates and fewer first home buyers, RP Data anticipates that *landlords will be looking to increase rents* upon lease renewal.

SYDNEY (Dow Jones)--*Australian house prices will rise for the next three years on the back of the country's robust economy, *an industry report commissioned by a large Australian mortgage insurer said Tuesday. 

The report, commissioned by QBE and written by BIS Shrapnel, forecast median house price growth of 20% in Perth, Sydney and Adelaide over the next three years with prices in every major city in Australia rising by 9% or more. 

http://online.wsj.com/article/BT-CO-20101011-710974.html

Things are definitely cooling off in a downward trend. Classic perfect storm if interest rates increase and landlords try to gain higher returns by squeezing the tenants for more money. Aussie dollar is punching big holes in the budget means company profits to be down thusly affecting tax income for the Govt.

Interesting times ahead !!


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## explod (12 October 2010)

trainspotter said:


> Things are definitely cooling off in a downward trend. Classic perfect storm if interest rates increase and landlords try to gain higher returns by squeezing the tenants for more money. Aussie dollar is punching big holes in the budget means company profits to be down thusly affecting tax income for the Govt.
> 
> Interesting times ahead !!




Now I know we get howled down for making unwanted comments on this thread but surely more would be seeing the light in that in Australia we are not an island to the rest of the world.  Sure it should not become as(and god forbid we do not want it) bad as in The States and the UK.  

But money, its value and availabilty is becoming a world wide problem, the banks (big four too) are being sqeezed in the difficulties of working with offshore funding (up to half I understand).

From virtually zero rates in the US and Japan there is only one way from here, they may continue to hold it back for awhile but when they do break upwards things in my view will become more difficult.

And if you think that the banks will care two hoots about housing problems when the bottom line looks bad then you would have to be dreaming.  And also if you think Governments have any control over the situation either and interest rates in particular.  Remember the old song "sailing down the swaarrrnnneeeiiii"  sounds just like the effect of our good treasurer.

And of course you have the old problem of sentiment, banks are not lending and many businesses are not looking to borrow either.

Interesting times indeed.


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## StentorMedia (13 October 2010)

I recently came across your post or comments and have been reading along. I thought I would leave my first comment. I don't know what to say except that it caught my interest and you've provided informative points. I will visit this forum often and I'm looking forward to know you better.. all of you..


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## satanoperca (13 October 2010)

trainspotter said:


> RP Data anticipates that *landlords will be looking to increase rents* upon lease renewal.




This made me laugh, when dont landlords try to increase rents, nothing new here, it is all a case of supply and demand. Rents are determined by what people can pay not what people can borrow.

Thanks for the facts Trains, keep them coming. 

Cheers


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## kincella (13 October 2010)

caught up with a friend, they bought their suburban Melb prop about 5 years ago for under 300k's.....they started nesting, now about to sell to upgrade to a bigger place, they are expecting to get over 600 k's for it....
they did minimal reno's in that time.....
they used to be renters with the inner city crowd, with no chance of buying at the inner city prices.....they took my advice and went outside....
never in their wildest dreams would they have ever saved or made that amount of money.....
they have big dreams for the next house......and they intend to stay in the outer leafy suburbs.......
they are very happy former  FHB's....now they are called upgraders...


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## Uncle Festivus (13 October 2010)

c-unit said:


> http://www.theage.com.au/business/small-lenders-securitisation-bid-20101010-16e1s.html
> 
> Does this concern anybody else? B-class notes, the Australian equivalent of sub prime debt? I was aware we had a small RMBS market here in Australia but the thought of our government buying them to prop up the market worries me...




And the property permabull spuikers reckon our property market bares no resemblance to the US? Looks suspiciously like a carbon copy of US government sponsored enterprises going by the name of Freddie Mac & Fanny Mae? And we all know how well they are going! So about $20BILLION in subsidies so far and wanting more to prop the market up, and that's after the all the grants and other artificial stimulis.

Talk about going down the same path to ruin. With further calls to increase funding into more dodgy types of securitised packaged loans, bundle them up & sell em to dopey Ma & Pa Public looking for yield? 

So we have the 4 pillars overexposed on their domestic residential mortgages and then have the government propping up the rest of the market that the big boys don't want? 

With the currency wars just heating up, you want to hope China doesn't blink first?

Even the RBA thinks it's a bubble - 




> Asked  if the lower yields meant a limit to the rate of price  appreciation,  Dr Ellis said: "The short and simple answer is -  yes".



Story here
​


----------



## trainspotter (14 October 2010)

Canada is rising by 3.8% http://www.thestarphoenix.com/House+prices+rise+city/3669876/story.html

Ho ho ho ...... what have we here? 15% in 3 years??? http://www.couriermail.com.au/prope...g-outlook-report/story-e6frequ6-1225937845321

But wait ........ property is failing??????????

http://www.smh.com.au/business/property/house-prices-up-20-20101012-16hr6.html

20 % .......... unheard of stuff??? Over three years ......... you dont say???

http://www.smh.com.au/business/prop...ld-jump-20-forecasts-show-20101012-16h40.html

And here as well ??????? My goodness. I might have to get the green titles out of the safe to see if the bank manager would want to borrow me some more money !!!!!!!!!!!!!!

http://www.watoday.com.au/business/property/house-prices-up-20-20101012-16hr6.html?from=smh_ft

C'mon naysayers ......... Go and buy some property.

AHhahahahhahahahhahah *gasp* ahahshahsahhahahahhahahhah


----------



## trainspotter (15 October 2010)

Uncle Festivus said:


> And the property permabull spuikers reckon our property market bares no resemblance to the US? Looks suspiciously like a carbon copy of US government sponsored enterprises going by the name of Freddie Mac & Fanny Mae?




When do you understand that these financiers are not available in Australia??  HUH???????????

Have a real look at the tripe you are spreading. Have you any clue of the substance of your post?? HUH? 

Tell me where in the banking industry (in Australia) that we have this kind of finance available to the masses???

It is not possible for this kind of finance to be available????????

Go and get a navel and stare into it.


----------



## trainspotter (15 October 2010)

http://www.news.com.au/business/bre...es-to-surge-20pc/story-e6frfkur-1225938032242

More of the same ??? GOSH !!!!!!!! Get me a paper bag !!!!!!!!

http://www.smartcompany.com.au/econ...ee-years-new-bis-shrapnel-report-reveals.html

NOOOOOOOOOOOOO stop the rot !! .......... No more house prices to rise???

hahhahahahahah .... *gagggg* ... hahhahahah hehhhehehehehhe

Oh well ........ glad you can borrow against scrips

http://www.rivkin.com.au/g2w/Intern...k_2weektrial?gclid=CKOJxLi40qQCFQUdbgodwlNmJw

WHOOOOOOOOOOO ...... Reneee Rivikin???

Hahhahahahhahahahaaaaaaaaaa

Give me property any day.


----------



## c-unit (15 October 2010)

Had a bit of wacky tobaccy tonight, TS? :


----------



## trainspotter (15 October 2010)

c-unit said:


> Had a bit of wacky tobaccy tonight, TS? :




no ... just sick and tired of the bovine excreta that people call "intelligent" posts.

TRY SOME FACTS !!!!!!!!!!!!!!!!!!!!!!!!


----------



## wayneL (15 October 2010)

trainspotter said:


> no ... just sick and tired of the bovine excreta that people call "intelligent" posts.
> 
> TRY SOME FACTS !!!!!!!!!!!!!!!!!!!!!!!!




Well TS, the bulk of your facts turn out to be nothing more than a prediction of the future (Several regurgitations of the same one in fact). It may happen, it may not, but it ain't fact. 

As far as the Canada link, if one looks to overseas, one should consider the anglosphere _in toto_. IOW Canada, USA, Ireland, UK, NZ etc. The picture is a bit more mixed don't you think?

Now, about those intelligent posts....


----------



## sinner (15 October 2010)

trainspotter said:


> When do you understand that these financiers are not available in Australia??  HUH???????????
> 
> Have a real look at the tripe you are spreading. Have you any clue of the substance of your post?? HUH?
> 
> ...




When is this obnoxious behaviour going to stop?!

Here are the *facts* trainspotter:

Australian banks hold just under $3 trillion in on balance sheet assets. What sort of assets go on a balance sheet? Traditional loans. 
Australian banks hold just under $13 trillion in off balance sheet assets. What sort of assets go off a balance sheet? Anything where the bank has passed the risk on and become a facilitator. i.e. securitised loans! 

Australian banks have securitised Australia's housing market 13 years of GDP worth into the future sold to foreign debt markets!

These sort of financiers *are* available in Australia, they are called the big 4 banks, and just because their actions are sanctioned, doesn't make them smart/sustainable/sane.


----------



## robots (15 October 2010)

hello,

oh gidday everybody, apologies for the extended absence just took a bit longer getting back from our wonderful capital city

yeah right, next time you going past Coles grab the down n' outer and take him into the nearest CBA branch to get a 500k NINJA loan (yes brothers remember those ones!)

No Income No Job or Asset, hehehehehehe yeah man the banks handing them out to the masses

thankyou
professor robots


----------



## Mofra (15 October 2010)

sinner said:


> Australian banks hold just under $3 trillion in on balance sheet assets. What sort of assets go on a balance sheet? Traditional loans.
> Australian banks hold just under $13 trillion in off balance sheet assets. What sort of assets go off a balance sheet? Anything where the bank has passed the risk on and become a facilitator. i.e. securitised loans!
> 
> Australian banks have securitised Australia's housing market 13 years of GDP worth into the future sold to foreign debt markets!
> ...



You do understand that whether a loan is securitised or unsecuritised, that is a seperate issue to credit quality right? 
In addition, in Australia securitised loans are almost entirely protected by LMI - yes even those with < 80% (generally done so on a bulk scale).
LMI charges are small on a per-loan basis below 80% and fully securitised lenders pay this on behalf of the lender as part of their costs of doing business. Secruitised lenders struggled during the GFC due to the cost of funds squeezing margins, not due to any rise in delinquencies (which in Australia are amazingly low compared to other countries aas well).

In any case, credit quality is infinately higher in Australia than the US (where I believe NINJA & ARMS constituted well over 20% of the market) and our loans don't have the "jingle mail" recourse danger the US and other countries have as well.

I guess thread-wise we're now back to *not* making the distinction between different markets, assuming all FHBs buy at the median price on a median household income, etc etc.


----------



## sinner (15 October 2010)

Mofra said:


> You do understand that whether a loan is securitised or unsecuritised, that is a seperate issue to credit quality right?




Of course I realise this! Yet, credit quality has nothing to do with the Australian market like it did in the US (this is an issue of debt being rated AAA when it wasn't, but that isn't what I'm referring to!), so comparing credit quality is a useless metric.

The risk to Australian banks is rather in access to cheap, available foreign liquidity to keep the ball rolling. House prices can't go up if the bank can't loan money for Joe Public to bid higher than the last guy and the bank can't loan money domestically without foreign demand for that debt or much much much higher interest rates.

This huge securitisation process, to the tune of $13 trillion dollars, is simply a product of the *fact* that we rely on this foreign credit to keep the housing market propped. It is *testament* that if access to this credit stopped (say, through some sort of liquidity or credit crisis), housing credit would dry up overnight and momentum would be negative within a week.



> In addition, in Australia securitised loans are almost entirely protected by LMI - yes even those with < 80% (generally done so on a bulk scale).
> LMI charges are small on a per-loan basis below 80% and fully securitised lenders pay this on behalf of the lender as part of their costs of doing business. Secruitised lenders struggled during the GFC due to the cost of funds squeezing margins, not due to any rise in delinquencies (which in Australia are amazingly low compared to other countries aas well).
> 
> In any case, credit quality is infinately higher in Australia than the US (where I believe NINJA & ARMS constituted well over 20% of the market) and our loans don't have the "jingle mail" recourse danger the US and other countries have as well.




All I have to say to the continued repetition of statements like this:

If it's true, then please remove the Australian taxpayer guarantee immediately and explain why we needed one in the first place!



> I guess thread-wise we're now back to *not* making the distinction between different markets, assuming all FHBs buy at the median price on a median household income, etc etc.




IMHO we are beyond that sort of dicussion. It just doesn't matter anymore whether there are some smart buyers amongst the herd or not, because there have been more than enough dumb buyers to start the ball rolling on a bad slope for everyone else.


----------



## Mofra (15 October 2010)

sinner said:


> Of course I realise this! Yet, credit quality has nothing to do with the Australian market like it did in the US (this is an issue of debt being rated AAA when it wasn't, but that isn't what I'm referring to!), so comparing credit quality is a useless metric.



The sudden tightening of lending standards (from the previous standard of stupidly lax) was part of the double shock that precipitated the major decline in US house prices; Australia, even under conditons of a declining market, is unliekly to receive any such shock in changing lending conditions because teh standards are already reasonably good.



sinner said:


> The risk to Australian banks is rather in access to cheap, available foreign liquidity to keep the ball rolling. House prices can't go up if the bank can't loan money for Joe Public to bid higher than the last guy and the bank can't loan money domestically without foreign demand for that debt or much much much higher interest rates.
> 
> This huge securitisation process, to the tune of $13 trillion dollars, is simply a product of the *fact* that we rely on this foreign credit to keep the housing market propped. It is *testament* that if access to this credit stopped (say, through some sort of liquidity or credit crisis), housing credit would dry up overnight and momentum would be negative within a week.



It's not entirely foreign credit, and there are signs of the securitisation market regaining some of the past volumes - the volumes are, of course, rated towards countries that have a higher quality of credit standard and some measure of lending protection to the portfolio. We're in the box seat in this regard. 
Not _all_ of the securitisation is foreign funds as I understand it, I don't have the exact figures although I would assume the lions' share is offshore. 



sinner said:


> All I have to say to the continued repetition of statements like this:
> 
> If it's true, then please remove the Australian taxpayer guarantee immediately and explain why we needed one in the first place!



I wasn't a fan of the guarantee in the first place - it exacerbated the redcution in lending competition in the marketplace as people flocked to the institutions protected by the guarantee. Short term protectionism has wrought longer-term pain in the form of reduced competition.



sinner said:


> IMHO we are beyond that sort of dicussion. It just doesn't matter anymore whether there are some smart buyers amongst the herd or not, because there have been more than enough dumb buyers to start the ball rolling on a bad slope for everyone else.



I'm not convinced of any above-inflation growth in the short term or medium term (I'd tipping a fall in prices adjusted for CPI) but I certainbly don't think we have the conditions for a crash in Australia that many keep pointing to.


----------



## sinner (15 October 2010)

Mofra said:


> The sudden tightening of lending standards (from the previous standard of stupidly lax) was part of the double shock that precipitated the major decline in US house prices; Australia, even under conditons of a declining market, is unliekly to receive any such shock in changing lending conditions because teh standards are already reasonably good.




Exactly. I am not attempting to argue this point. All I am trying to highlight in this case is that in any sort of liquidity crisis, Australian banks are going to be locked out of the debt markets macro style. How can momentum continue up in housing without this lending? 

It can't!



> It's not entirely foreign credit, and there are signs of the securitisation market regaining some of the past volumes - the volumes are, of course, rated towards countries that have a higher quality of credit standard and some measure of lending protection to the portfolio. We're in the box seat in this regard.
> Not _all_ of the securitisation is foreign funds as I understand it, I don't have the exact figures although I would assume the lions' share is offshore.




Never said it was entirely foreign credit. But at $13 trillion we can definitely assume the majority of demand is coming from bigger markets than our own!



> I wasn't a fan of the guarantee in the first place - it exacerbated the redcution in lending competition in the marketplace as people flocked to the institutions protected by the guarantee. Short term protectionism has wrought longer-term pain in the form of reduced competition.




Um what? What I was asking, specifically, was if lending standards are so damn good, do we even need a guarantee for protection? Protection from what? According to you we need no protection!



> I'm not convinced of any above-inflation growth in the short term or medium term (I'd tipping a fall in prices adjusted for CPI) but I certainbly don't think we have the conditions for a crash in Australia that many keep pointing to.




Make no mistake, I am not pointing to a crash (except in the possibility of an inflationary crash). I have said over and over again that the end game (regardless of path taken) is a reduced standard of living across the board for Australians. This could be in either an environment of high property prices, or low property prices. Doesn't make a difference. We as a nation will pay the future price for present follies of those we apathetically left in charge.


----------



## robots (15 October 2010)

hello,

oh gidday, sorry to bother everyone again

could someone please point me in the direction of a bank offering a NINJA loan as I want to get down there first thing in the morning to sign up, just a no frills one, lowest rate possible

preferably in the Prahran area but I dont mind travelling to the CBD, its gonna be a good day for tram riding

thankyou
professor robots


----------



## robots (16 October 2010)

robots said:


> hello,
> 
> oh gidday, sorry to bother everyone again
> 
> ...




hello,

anyone know? does "which" bank have them?

oh well

thankyou
professor robots


----------



## Uncle Festivus (16 October 2010)

trainspotter said:


> When do you understand that these financiers are not available in Australia?? HUH???????????
> 
> Have a real look at the tripe you are spreading. Have you any clue of the substance of your post?? HUH?
> 
> ...




HUH??? What are you trying to say? That there isn't an RMBS system here in Aus? Because that's what we are talking about here. Otherwise I don't have a clue what you are on about?

Yes it is possible & it's a fact - if only you would read the entire post and read the supporting linked article, which obviously you haven't? You do understand that the Fed Gov is pumping money into 'the system' to keep resi mortgages outside the big 4 to keep liquid don't you?? Ignorance by many allows the few to profit from reality & facts?

I'll make it easy for you - here's a part of the article - 



> REGIONAL banks and other small lenders have begun talks with the Gillard government seeking a third extension to the $16 billion residential mortgage-backed securitisation program, which forms a key funding source for the sector.
> 
> The smaller banks are hoping to capitalise on recent concerns raised by Treasurer Wayne Swan about the state of competition in the market, amid speculation that some of the bigger banks could push through an out-of-cycle interest rate rise.
> 
> ...




You have to now prove that the Aus Fed Gov does not provide funding to the residential mortgage-backed securitisation program for your points to be valid? I'm not sure you can? 



> The Australian Office of Financial Management (AOFM) has been directed by the Treasurer to invest temporarily in Australian Residential Mortgage-Backed Securities (RMBS) to support competition in mortgage lending from a diverse range of lenders.



http://www.aofm.gov.au/content/rmbs.asp

In summary, an Australian government agency has been given the authority to purchase up to $16BILLION of Residential Mortgage-Backed Securities (RMBS), and to hold them till the 'price is right' ie indefinatly ie efffectively underwriting/subsidising the private housing market. 



robots said:


> hello,
> 
> oh gidday, sorry to bother everyone again
> 
> ...




The Fed Gov is basically underwriting the property market, so any bank is capable of giving you 'subsidised' loans? BTW, how is that IP you bought at the top of the market 4 months ago going? And, why do you need to ride around in circles on the trams all day - shouldn't you be out on your yacht or doing what ever the idle rich do these days?



> COMMONWEALTH Bank chief Ralph Norris signalled yesterday that the CBA could be one of the first to lift interest rates.
> In a hard-hitting speech, Mr Norris detailed the increased funding pressure on the banking system and said rate rises were inevitable.
> "There is no doubt, when we look at the current funding costs, rates are going to increase," he said after speaking at a lunch of the Committee for Economic Development of Australia.
> "The additional cost of liquidity and the additional cost of capital is going to put upward pressure on interest rates going forward."
> ...




The talk is at least 15 bp's

Click on this link for the full story


----------



## Beej (16 October 2010)

sinner said:


> Australian banks hold just under $3 trillion in on balance sheet assets. What sort of assets go on a balance sheet? Traditional loans.
> Australian banks hold just under $13 trillion in off balance sheet assets. What sort of assets go off a balance sheet? Anything where the bank has passed the risk on and become a facilitator. i.e. securitised loans!




These figures *may* be facts, although I'd like to see a link/source backing these figures up, as they seem far higher than any reading of figures from APRA etc that I have every seen - especially the $13T one. Also regardless you would be talking about total assets, not just residential housing loans, securitised or not. Ie business loans, hard assets, good will and so on and so forth.



> Australian banks have securitised Australia's housing market 13 years of GDP worth into the future sold to foreign debt markets!




This statement is completely false. Total residential mortgages in Australia are in the order of $1.2T or about 1 years worth of GDP according to APRA and RBA data. Where do you get this $13T fugure from exactly?

Also, only 5-10% of Australian mortgages are securitised - the vast bulk are traditional loans with traditinonal banks held on balance sheet.

EDIT/PS: $16B in government supported RBMS = about 30,000-40,000 transactions, or about 5% of the annual residential property turnover nationally - spread over several years by the way. Not really that big a deal. What's more the reason for this intervention was quite clear - the collapse of overseas funding sources/credit markets during the GFC resulted in the effective shutdown of the Australian RBMS/securitisation markets - as a result all non bank lenders pretty much went t1ts-up. The government as a part of the whole stimulaus program wanted to provide some liquidity to that market for a number of reasons, including letting RBMS based funds be able to sell some securities to cover demand for redemptions and so on, which would have otherwise remained frozen. Not so evil really and nowhere near as big a deal as made out by the property bears.

Cheers,

Beej


----------



## robots (17 October 2010)

hello,

oh gidday, yeah everything going fine thanks

i enjoy the trams, trains and buses and lots of us on them, those living large

the train to Canberra the other week full of nomads as well, awesome

oh well

thankyou
professor robots


----------



## nunthewiser (17 October 2010)

robots said:


> hello,
> 
> oh gidday, yeah everything going fine thanks
> 
> ...




ahha brother robots.....good to see all is well in nirvana.

me....... i went for a ride this morning ........just rumbling around the suburbs, catching the breeze and makin a noise..... 

did notice how many houses and blocks were sitting stagnant(some 2 years) and unloved.... who knows eh.......may have to start putting in some ridiculous offers just to keep myself occupied in these "buyers market"times.
maybe i,ll just go on another ride......dont seem to be any hurry to add to property just yet........screws need a few more turns for the pain to really sink in for some.

VulturesRus seems like a great idea for an investment group ya reckon?

geez that nun fella shore picked that top to a tee...


----------



## explod (17 October 2010)

nunthewiser said:


> ahha brother robots.....good to see all is well in nirvana.
> 
> me....... i went for a ride this morning ........just rumbling around the suburbs, catching the breeze and makin a noise.....
> 
> ...




Lendary there Nun, in fact none wiser, have been following you for some time and think you may be on the right track.

Keep up the good work, will be looking for a cheap quality property myself down the track.  So will be watching the direction and looking forward to your continued good calls.

Bit out of tram country myself but the public busses wonderfull down here in Far Far Away Land


----------



## Slipperz (17 October 2010)

The rise of the Aussie dollar could well dampen down the higher end of the Sydney property market.

By all accounts there has been a lot of foreign investment of recent and that may cool off given the surging value of the Aussie dollar.

Suits me fine. I'm looking to buy into the Northern Beaches outright in a few years. My strategy is to develop my portfolio and buy outright and give the banks the finger.

IMHO the way the banks operate is disgraceful. The less money I give them and the less I have to deal with them the better.


----------



## robots (17 October 2010)

hello,

oh come on Slipperzz, the banks offer a product and everyone has the right to take it or leave it

they take deposits and loan it out like they have done for millions of years, no big deal, i find most people who dislike the banks are jealous yet they would trade places in a heart beat with R.Norris

oh well, bank bashers

yeah well done Nun, gee Explod i never got any congratulations like that from you, i dont know man

thankyou
professor robots


----------



## Slipperz (17 October 2010)

robots said:


> hello,
> 
> oh come on Slipperzz, the banks offer a product and everyone has the right to take it or leave it
> 
> ...




I am far from jealous of the banks. Not a basher either. I just don't like the way they operate and prefer to give them as little money as possible.

I intend to buy my house outright without paying a bank the value of the property again through interest. 

So far it's all going according to plan. The traditional 30 year mortgage scam model doesn't necessarily apply to everyone.

As the old saying goes there's more than one way to skin a cat.


----------



## robots (17 October 2010)

Slipperz said:


> I am far from jealous of the banks. Not a basher either. I just don't like the way they operate and prefer to give them as little money as possible.
> 
> I intend to buy my house outright without paying a bank the value of the property again through interest.
> 
> ...




hello,

yeah thats right, most mortgage's are paid out earlier, heaps earlier

they operate fairly and yes you give them as little as possible, same here

thankyou
professor robots


----------



## explod (17 October 2010)

robots said:


> hello,
> 
> , gee Explod i never got any congratulations like that from you, i dont know man
> 
> ...




Oh shucks there *Con*fessor, please do not feel out of it.

*BUT YOUR BODGEY,  AND (in emphasis) FAULSE PROFESSORSHIP* makes you a mockery.   Either come down to earth with us mere mortals or *go away*

Had a few wines tonight, but on my re-reading, think I am fair enough.

Your name on here is "robots" and mine is "explod" so just live with it Pal and perhaps you may one day deserve a pat on the back.

Property is stagnant to going down this week *IMVHO*.


----------



## robots (17 October 2010)

explod said:


> Oh shucks there *Con*fessor, please do not feel out of it.
> 
> *BUT YOUR BODGEY,  AND (in emphasis) FAULSE PROFESSORSHIP* makes you a mockery.   Either come down to earth with us mere mortals or *go away*
> 
> ...




hello,

hehehehehehehehehehehehehehehehehehehehe, no worries but i aint going down the track of the many many many bearheads who disappeared

the list so far:

chops a must
mr burns
pepperoni
kimosabi
Tom R
numbercruncher
knocker
knocker1
s.keen
mr fujitsu consulting
crikey.net.org.au
singlefished 
mrZ

thankyou
professor robots


----------



## Slipperz (17 October 2010)

robots said:


> hello,
> 
> yeah thats right, most mortgage's are paid out earlier, heaps earlier
> 
> ...



Operate fairly don't make me laugh.

They gouge whatever they can hope to get away with and then some. 

Fees for this and fees for that. They even charge a fee to walk in the door and give them money across the counter. What a great business model that is.

The best part of the whole banking industry is that absolutely none of them not one single Australian banker had anything to do with the whole sub prime mess.

They are all completely absolved from the whole greedy mess and happy to blame the Americans.

Funny how none of their overpaid analysts managed to sound an alarm bell or two about how their "globalised industry" had a rat in the ranks when they were all making shedloads of money onselling thin air to local councils and the like.

They just leave the little people to foot the bill and let the taxpayer guarantee their business model when their greed overran their sense..



But it wasn't the banks fault.



Honest.


----------



## Aussiejeff (18 October 2010)

robots said:


> hello,
> 
> hehehehehehehehehehehehehehehehehehehehe, no worries but i aint going down the track of the many many many bearheads who disappeared
> 
> ...




Glad to see you didn't add me to your bagged bear heads trophy list.

_You'll never take me alive, you creaking tinman!_

*MWA-HA-HAAA-HAAAA!!  *

Yours, forever lurking....

aj

PS: _grrroooooowwwwwlllllll!_


----------



## Mofra (18 October 2010)

sinner said:


> Exactly. I am not attempting to argue this point. All I am trying to highlight in this case is that in any sort of liquidity crisis, Australian banks are going to be locked out of the debt markets macro style. How can momentum continue up in housing without this lending?
> 
> It can't!
> 
> Never said it was entirely foreign credit. But at $13 trillion we can definitely assume the majority of demand is coming from bigger markets than our own!



Assuming the figures are correct, perhaps. Do you have a source?



sinner said:


> Um what? What I was asking, specifically, was if lending standards are so damn good, do we even need a guarantee for protection? Protection from what? According to you we need no protection!



I don't agree with the policy, so why are you asking me to justify it?




sinner said:


> Make no mistake, I am not pointing to a crash (except in the possibility of an inflationary crash). I have said over and over again that the end game (regardless of path taken) is a reduced standard of living across the board for Australians. This could be in either an environment of high property prices, or low property prices. Doesn't make a difference. We as a nation will pay the future price for present follies of those we apathetically left in charge.



SOL has been on a steady upwards trend since the middle ages, that is one helluva macro trend break that would need to be broken. 

In an environment of increasing wages and stagnating house prices (which is my expectation) I also see the chances of a crash reducing, not increasing.


----------



## nukz (18 October 2010)

Are there any realestate index's in Australia? atleast then i can add something to my shorts if its available. 

It's already starting to crumble if you don't see it you have a large vested intrest in property or are a property developer. Woudn't be supprised if Robots was one of those.


----------



## medicowallet (19 October 2010)

robots said:


> hello,
> 
> hehehehehehehehehehehehehehehehehehehehe, no worries but i aint going down the track of the many many many bearheads who disappeared
> 
> ...




I feel insulted and overlooked!

Oh, by the way, what was the auction clearance rate for last week?

You must have forgotten to post it.

I am sure it is continuing at 80%+

and what are your predictions for the weekend?


----------



## awg (19 October 2010)

robots said:


> hello,
> 
> hehehehehehehehehehehehehehehehehehehehe, no worries but i aint going down the track of the many many many bearheads who disappeared
> 
> ...




Christ mate, 

reminds me of that film where the dude they bullied at school has the " to be murdered" list on his bedroom wall :


----------



## cutz (19 October 2010)

nukz said:


> Are there any realestate index's in Australia? atleast then i can add something to my shorts if its available.




If you are serious there is a sector that can act as a proxy, you may need to figure it out for yourself.


----------



## Dowdy (20 October 2010)

cutz said:


> If you are serious there is a sector that can act as a proxy, you may need to figure it out for yourself.




THere are ETFs listed on the ASX.

Code: SLF, VAP


----------



## nukz (20 October 2010)

Dowdy said:


> THere are ETFs listed on the ASX.
> 
> Code: SLF, VAP




Awsome, thanks for the help : ) But can you short ETF's in Aus?


----------



## Tysonboss1 (20 October 2010)

explod said:


> will be looking for a cheap quality property myself down the track.




I am in the same boat, my powder in nice and try waiting for some good buys to arise.

I have found that a good sign is when gross yields are at or over 6% it generally is a good time to buy


----------



## So_Cynical (20 October 2010)

Dowdy said:


> THere are ETFs listed on the ASX.
> 
> Code: SLF, VAP




I would be really surprised if SLF and VAP fell significantly, the valuations that property stocks have to do are cycling up, the commercial property bottom coincided with the GFC...i mean commercial property values fell maybe 10 > 15% during the GFC when residential lost only 5% or so. 

I would think that if residential property falls 20% then commercial would probably only fall a little if at all....anyway im still of the view that the residential bubble will end in more of a sideways trend than falling of a cliff.


----------



## TheAbyss (21 October 2010)

Question - Is it possible to borrow overseas to purchase Australian property at their lower interest rates?

I imagine not but was wondering.
cheers


----------



## prawn_86 (21 October 2010)

TheAbyss said:


> Question - Is it possible to borrow overseas to purchase Australian property at their lower interest rates?
> 
> I imagine not but was wondering.
> cheers




This is essentially a carry trade and leaves you exposed to currency fluctuations.

In theory (not reality) the interest rate differential is priced into the 2 currencies so there is no real benefit of doing it.


----------



## nukz (21 October 2010)

TheAbyss said:


> Question - Is it possible to borrow overseas to purchase Australian property at their lower interest rates?
> 
> I imagine not but was wondering.
> cheers




Great question, i did look into this quite a few years ago and did find Lloyds Singspore did offer loans at Japanese intrest rates for property in Australia(because japan rates where very very low even then).

The only catch was the intrest would need to be payed in Yen and principle in Dollars(Depends on your loan product P&I / I only)


----------



## sinner (21 October 2010)

Interesting view presented here by Nori Lietz

http://www.theaustralian.com.au/bus...into-real-estate/story-e6frg9gx-1225941389367

Not sure I can agree with some of the premises, but interesting nonetheless. She views almost $200bn in capital waiting on the sidelines to invest in something.

I don't believe in sideline cash.


----------



## TheAbyss (21 October 2010)

prawn_86 said:


> This is essentially a carry trade and leaves you exposed to currency fluctuations.
> 
> In theory (not reality) the interest rate differential is priced into the 2 currencies so there is no real benefit of doing it.






nukz said:


> Great question, i did look into this quite a few years ago and did find Lloyds Singspore did offer loans at Japanese intrest rates for property in Australia(because japan rates where very very low even then).
> 
> The only catch was the intrest would need to be payed in Yen and principle in Dollars(Depends on your loan product P&I / I only)




Thanks guys. So basically all things being equal, i am chasing a piece of shiny tin foil which wont change much and expose further risk (currency fluctuations).

If it was a winner we would have an influx of advertisers via the web etc and our local bnaks wouldnt be raking in the billions that they are.

Cheers


----------



## Tysonboss1 (21 October 2010)

TheAbyss said:


> Question - Is it possible to borrow overseas to purchase Australian property at their lower interest rates?
> 
> I imagine not but was wondering.
> cheers




how difficult would it be to make the payments if the aussie dollar dropped to 50c US again, on a 30 year loan you have to consider that it will happen


----------



## awg (21 October 2010)

TheAbyss said:


> Question - Is it possible to borrow overseas to purchase Australian property at their lower interest rates?
> 
> I imagine not but was wondering.
> cheers




When I was a youth, a bunch of local wealthy folk borrowed low interest loans denominated in Swiss francs.

Some time after that, an adverse currency movement resulted in their near ruination, and there was a long court case, regarding lack of warning to them etc. 

That was a long time ago, but I dont know whether you could mitigate that risk somehow these days


----------



## prawn_86 (21 October 2010)

awg said:


> That was a long time ago, but I dont know whether you could mitigate that risk somehow these days




You could take an option or a forward contract, but that effectively then would negate the benefits due to the pricing of both these products taking the interest rate differential between the 2 currencies into account.


----------



## robots (22 October 2010)

awg said:


> Christ mate,
> 
> reminds me of that film where the dude they bullied at school has the " to be murdered" list on his bedroom wall :




hello,

yeah thats bullying, amazing

have been gathering lots of "data" over the years, and with Kincella as star witness i am ON i reckon

oh well, big weekend ahead on the auction front although in my neighbourhood not much around, must be out in the suburbs

thankyou
associate professor robots


----------



## trainspotter (22 October 2010)

Can't wait for the ABS figures to be released on November 1st for the House Price Index. http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0

ANNUAL CHANGES (JUNE QUARTER 2009 TO JUNE QUARTER 2010)

Preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities *increased 18.4%* in the year to June quarter 2010. 
Annually, house prices rose in Melbourne (+24.3%), Sydney (+21.4%), Canberra (+19.6%), Darwin (+14.6%), Perth (+13.0%), Adelaide (+11.6%), Hobart (+10.8%) and Brisbane (+8.5%).

Wonder what will happen on November 2nd with the RBA? Up or stagnant? Banks have indicated that irrespective of RBA decision they will be raising rates to cover the cost of the OS funds they are so committed to. This will curb appetite for home ownership and the rental market will become undersupplied. Rates rising will be forcing investors to increase rents to cover borrowing costs etc etc.

Haven't we had this conversation before?? 

I am still waiting for this "alleged" massive Ponzi scheme to come crashing down around the collective ears of the home owners of Australia. Wait a minute? 70% home ownership since 1971?? This can't be right?? What about all the other world crises we have had in the last 30 years??? Why didn't this whole house of cards falll down then???? Banks have been screwed on the international borrowing front before? Wage to price ratios have not changed that dramatically. Interest rates have been above 17% previously. Not many went weak at the knees then and bailed out??? Dollar is almost at parity. Employment is strong. Economy is in good shape. National debt is manageable whilst the mining boom is on ..... ad infinitum.

Home ownership rates have been fairly stable at around 70% for many decades. As measured in the ABS Census of Population and Housing, in 1971 the home ownership rate was 69% and in 2006 it was 70%, with small fluctuations around 70% in the intervening Censuses. 

http://www.abs.gov.au/ausstats/abs@...~2010~Chapter~Levels of home ownership (5.4.3)

WHERE IS THE PROBLEM PEOPLES??? FLAME ON !!!!!!!!! :bigun2:


----------



## electronicmaster (22 October 2010)

trainspotter said:


> Can't wait for the ABS figures to be released on November 1st for the House Price Index. http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0
> 
> ANNUAL CHANGES (JUNE QUARTER 2009 TO JUNE QUARTER 2010)
> 
> ...




Do people enjoy the inflation play going on?

Food and Electricity is also going up in price.  So are the counsel rates

link is giving an error 404


----------



## robots (23 October 2010)

electronicmaster said:


> Do people enjoy the inflation play going on?
> 
> Food and Electricity is also going up in price.  So are the counsel rates
> 
> link is giving an error 404




hello,

goes up every year EM, its a given bro like the sun coming up in the morning

no big deal really, oh well

thankyou
professor robots


----------



## medicowallet (23 October 2010)

robots said:


> hello,
> 
> goes up every year EM, its a given bro like the sun coming up in the morning
> 
> ...




Hello Robots,

I found the auction clearance rates for melbourne for 17/10/10

Sitting at 61.8%.

What does this mean?

And what do you think they will be like this weekend?


----------



## medicowallet (23 October 2010)

trainspotter said:


> Can't wait for the ABS figures to be released on November 1st for the House Price Index. http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0
> Banks have indicated that irrespective of RBA decision they will be raising rates to cover the cost of the OS funds they are so committed to. This will curb appetite for home ownership and the rental market will become undersupplied. Rates rising will be forcing investors to increase rents to cover borrowing costs etc etc.
> 
> Haven't we had this conversation before??
> ...




All of this is out of our hands.

It all depends on how the limitless printing of money flows through, the effects of inflation and access of our banks to cheap funding.

We have guarantees from the government for the ponzi scheme. 

We have a strong dollar which will impact our industries.

Our government is in debt, and we are wasting $43 billion dollars on an investment which will not increase prodcutivity, but for which we will all have to pay off.

We have a government which is penalising our successful companies with a mining tax

We have a government which is going to help cripple our competitiveness with an ETS

And america is bleeding again.

We are not out of the woods yet.


----------



## cutz (23 October 2010)

Reality check in today's fin,

Read all about it !!!


----------



## wayneL (23 October 2010)

cutz said:


> Reality check in today's fin,
> 
> Read all about it !!!




Linky linky?


----------



## robots (23 October 2010)

medicowallet said:


> Hello Robots,
> 
> I found the auction clearance rates for melbourne for 17/10/10
> 
> ...




Hello,

i wouldnt have a clue MW, i just post them up like Bigdog does the wall street report

then people make all sorts of judgements about me, bully me, lay the smackdown on me and all sorts of other degrading actions towards me

oh well, what a great day on chapel st, joint pumping, went up to Victoria st on the bus (246) just great and then back home on the tram, sun was out

thankyou
professor robots


----------



## Agentm (23 October 2010)

lol robots

your loitering in my home turf

plenty of sun this afternoon, and record auctions

will they spend up big

great front cover story in the fin review.. 

i agree they lay into you, but when you chalk up list of whom you say you have slayed, then like buffy, you have to keep a close watch over your shoulder

keep your chin up and maybe we should have a ale together in chapel..


----------



## explod (23 October 2010)

Agentm said:


> keep your chin up and maybe we should have a ale together in chapel..




Dont' like your chances, I have been trying to line em up for a coffee down here at Mount Martha for years, and I'm shouting, so what's wrong.

Record number of auctions this weekend, sounds like a lot trying to get out, hope they dont' start getting jammed at the gates.   Next quarters figures will be very interesting IMHO.


----------



## robots (23 October 2010)

explod said:


> Dont' like your chances, I have been trying to line em up for a coffee down here at Mount Martha for years, and I'm shouting, so what's wrong.
> 
> Record number of auctions this weekend, sounds like a lot trying to get out, hope they dont' start getting jammed at the gates.   Next quarters figures will be very interesting IMHO.




hello,

the problem is Explod, 

after the guy from the socialist party slammed me into the ground at the same sex marriage rally, laid the boot in and finished me off with a squirt from his water bottle 

i have been very hesitant to meet up with people who share similar ideology for fear of my safety, i am still scarred from that incident and i was just talking to him about real estate

oh well

thankyou
professor robots


----------



## medicowallet (23 October 2010)

robots said:


> Hello,
> 
> oh well, what a great day on chapel st, joint pumping, went up to Victoria st on the bus (246) just great and then back home on the tram, sun was out
> 
> ...




Hard to put a price on that isn't it!!


----------



## trainspotter (23 October 2010)

robots said:


> hello,
> 
> the problem is Explod,
> 
> ...




Keep fighting the good fight Professor robots. I admire your positivity for property and calling the game as to how you see it. Living the Great Australian Dream is as easy as 1,2,3. All you have to do is get on the bus and watch the world go by. Too easy man. RESPECT ! I will be in Melbourne early November for a quick overnighter before heading to Brizvegas for a fundraiser. PM me if you want dates for a coffee.


----------



## nunthewiser (23 October 2010)

trainspotter said:


> ! I will be in Melbourne early November for a quick overnighter before heading to Brizvegas for a fundraiser. PM me if you want dates for a coffee.




You going Cup ?

 me too 

Robots what you doing professorbro?


----------



## Dowdy (24 October 2010)

robots said:


> hello,
> 
> the problem is Explod,
> 
> ...




Why are you scared confessor?

i thought it was all paradise in your little bubble


----------



## robots (24 October 2010)

hello,

good morning, great day

i am available any Sat or Sun, i am not in Melbourne Mon-Fri for the next 4-5 mths, will keep you posted on mon & tues of Cup week, yeah thanks no worries

oh well, auction day went as expected yesterday and the RBA will no doubt like the figures reported, parardise

thankyou
professor robots


----------



## trainspotter (24 October 2010)

nunthewiser said:


> You going Cup ?
> 
> me too
> 
> Robots what you doing professorbro?




Maybe ?????? LOLOL ...... now that would be a very bad thing at the Cup. The Trainman and the Nun on the prowl with a Professor under our wing. OH OH ........ It's Danger Island !

Back on topic. My link to the ABS website on my previous post does not worK? Error 404 I believe? 70% home ownership for the last 40 years and STABLE. Only 12.5 million people in Australia in 1970 and they all had the SAME issues we have now. Interesting to note tht the population of Australia rises approximately ONE MILLION people per every 5 years. SO therefore 200,000 new people looking for a home per annum. Breaking it down even further this requires at a rate of 70% home ownership takeup value ....... 140,000 owner occupied homes every year for the last 40 years. Hmmmmmm ???

All this happened through deregulation of the banking system, stock market crash in 1987, oil wars, missile crisis, no China to trade with, Asia crisis 1998, Nixons 1971 refusal to redeem dollars for gold, Currency fallout and just about every other damn thing you can throw at this "alleged" house of cards waiting to tumble. 

Yes, yes, yes the rest of the worlds real estate has taken a tumble but they were using a different model. High risk debt ratios, NINJA loans, country of origin in massive debt and ripe for a correction, unscrupulous developers, blah blah blah and yadda yadda yadda.

This thread reminds me of the 3 little pigs. We all know the story don't we? It would appear that Australia has built their home out of bricks. Yes, we are going to lose a few tiles off the roof and yes the market is slipping sideways. NO QUESTION. It has happened before, it will happen again. No biggy.

Everyone is RAVING about affordability. LOL. Try getting a housing loan in 1989 when IR's were at 17%.

And the old chestnut - House price to income ratios. These measures typically suffer from a range of shortcomings, including the fact that they ignore non-capital city regions. *Nearly 40 per cent of homes are located outside of the capital cities.* They also only examine wages as opposed to “household incomes”, and frequently restrict the analysis to detached, or greent titled homes when one quarter of all homes are semis, terraces, and apartments. Slightly flawed data.

But you knew all of this didn't you?


----------



## kincella (24 October 2010)

good to see some friendly banter on this forum ...for a change....
I will look forward to catching up with Robots, and friends, in our fav place at some stage...in Chapel st....

about the horse races.....
I like the big races...not the crowds, and my focus is on the horses....to photogragh them etc....I prefer the lead up races to the Melb cup, especially the WS Cox plate....I believed it would be a history making race yesterday with that outstanding stallion So you think racing ( I never believed the Sydney horse had a chance).....
I had intended to drive back from the country to go and see this magnificent horse in the flesh....
persuaded not to go, due to the big crowds....
so I went to the local races instead....
boy what an eye opener that was...guess the poor attendance and low prize money has something to do with TAB interference and NSW govnut, a few years back....
in a nutshell, it looked like a bunch of ferals, no one dressed up, most were hovering around the booze or the betting, the horse trainers and attendants looked like they were in their dirty work clothes.... no big deal for race day...
prize money was only $10,000 first prize.....
I would think it would cost around $1500 or so a week to keep a horse in training....so the prize money would hardly cover costs for most horses...
anyway, I am unlikely to go back to a country meeting now.....it is so different to what they were like in the past.....it was a huge eye opener to what was once a stunning day out.....just another case of cutting off funding for regional Australia...and put it all in the city...( I could be very wrong, but something has gone badly wrong here) 
back on topic.....otherwise I am loving this part time country living, no great travel problems,  plenty of affordable housing......
and the local tradesmen are too busy.....earning their $100-$200 k's, so one has to wait a few weeks or longer to get any jobs done.....not aware of the 4 month waiting program, as it was a few years ago up here....I think we have more tradesmen to address that problem now..... 
I am rather surprised by the extent of wealth up here too.....I guess this area has grown and developed much faster in the past couple of years.....faster than I ever imagined
I now need to open my eyes  a bit more, take a closer look at what is driving this area.....or I am spending too much time up here....
just an easy 3 hours drive from house to house.....I could live in both places
you do get a bigger house for your bucks up here....or out in any regional area, compared to the city....
cheers


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## Gerkin (24 October 2010)

Asset Allocation and Divirsification

I am a big believer in divirsfying assets based on asset classes but also in respect to the divirisification within that class. Take shares as an example, consmer discretionary, staples, financials,lpts, exploration etc etc, same as property and fixed interest.

What i believe alot of people get wrong as they are guided by there own feelings is that they believe that one asset class is better than another, eg property investors buying only residential in the same area, or share investors buying only shares and ignoring the property market.

There are alot of people, young professionals in my opinion who throw all their cash at shares and by the time they hit say 33, they are renting in inner city 2 bedroom apartment, own no property whatsoever, and have a share portfolio worth xxx.

Now they have missed out on 10 years of property gains and are still renting
Can anyone see whats wrong here. These intelligent people who invest in the stockmarket have not bought an property, I see smething really wrong here.

Now, what these people should of done - saved for 12 months, bought a joint say at 90%lvr, pay interest only to keep  it neat and repaymets jst over rent levels and then invets in the market.

I would like to hear peoples tories in respect to there or people they know who do something simialar or have done it themselves and has it worked, has it not worked.
.


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## mazzatelli (24 October 2010)

Gerkin said:


> Now, what these people should of done - saved for 12 months, bought a joint say at 90%lvr, pay interest only to keep  it neat and repaymets jst over rent levels and then invets in the market.




I politely disagree. Young people should try to excel themselves in their chosen career paths or businesses [if self employed] before taking on an obligation that gives little chance of manoeuvrability.

I've seen friends who wanted to study further or open a business but could not do so since they were tied to an investment property. Before they knew it - kids, family and a dead-end in career prospects stared them in the face.


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## prawn_86 (24 October 2010)

Gerkin said:


> I would like to hear peoples tories in respect to there or people they know who do something simialar or have done it themselves and has it worked, has it not worked.
> .




Where we live it is a lot cheaper to rent than it would be to own the property by the time you took interest, costs, maintenance tec etc.

We simply invest the difference (plus more) into shares. At our age early 20's, there is no point tying ourselves down with a large long term loan that leaves us with few options should we need to move cities, overseas, travel etc etc


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## Dowdy (24 October 2010)

mazzatelli said:


> I politely disagree. Young people should try to excel themselves in their chosen career paths or businesses [if self employed] before taking on an obligation that gives little chance of manoeuvrability.
> 
> I've seen friends who wanted to study further or open a business but could not do so since they were tied to an investment property. Before they knew it - kids, family and a dead-end in career prospects stared them in the face.





I agree. I didn't waste my money in buying a home.

I'm happy to live with my parents in the meantime.

I started my own home based ebusiness which has grown 300% in one year.

Also the money i saved from not buying a home, I invested in silver bullion and just look at how well the price of silver has done this year...

If I was locked into a mortgage, I would of lost several freedoms, like travelling to the USA for 3 months, which has been the best time! 
Back home in a few days 

I will eventually look for a home, although I have my eyes set on an industrial lot for my business but will wait until I have at least a 40-50% deposit and until the value of property is 4x my income


----------



## trainspotter (24 October 2010)

Left home at 16. Purchased my first home at 21. Paid it off when I was 25. Used this to leverage into other properties (rental, developments and commercial) Travelled extensively around Australia. Did not get into shares until I was 35. Would I jump in the Hot Tub Time Machine and change anything I did? NO WAY ! I would have bought more property if I could.

Now this worked for me. Does not mean it will work for you. Everyones circumstances are different. If you can stay at home and live with your parents and create an ebusiness. Good for you. If you can rent at a cheaper rate than buying property in CBD Sydney then good for you as well.

Do what you know best that works for you. Stick to your core business.


----------



## robots (24 October 2010)

hello,

good to see Kincella on today,

anyone catch the article in the Sunday Age about the "foreign buyer" issue the other month, hehehehehehehe

ANOTHER FALSE ONE

oh well, beautiful day again

thankyou

professor robots


----------



## Gerkin (24 October 2010)

prawn_86 said:


> Where we live it is a lot cheaper to rent than it would be to own the property by the time you took interest, costs, maintenance tec etc.
> 
> We simply invest the difference (plus more) into shares. At our age early 20's, there is no point tying ourselves down with a large long term loan that leaves us with few options should we need to move cities, overseas, travel etc etc




thats the way i used to think too, renting in the inner city.
what about 10km out from the inner city when your yield starts to look more attractive and would cover the mortgage when coupled with depreciation if you had to travel,move cities etc?

ive seen it many times that the more financilay successful person in there ealry thirties has had a home for about 10 years


----------



## electronicmaster (24 October 2010)

This thread is looking too much like a Ponzi scheme these days.


----------



## Agentm (24 October 2010)

robots said:


> hello,
> 
> good to see Kincella on today,
> 
> ...




lol

its very curious how its done.. you dont have the buyer evident in the auction, there are ways to get around it later..
i dont think these guys are on the front line at the auction, its a process very much done in very clever ways..

i tend not to believe everything i read in the press..particularly the sunday editions, they are the lowest of lows..

 but i do know the way its done is not evident to those investigating.. thats for sure..


----------



## explod (24 October 2010)

electronicmaster said:


> This thread is looking too much like a Ponzi scheme these days.




When the number one hangman adds the scalps to his belt list is it any wonder.


----------



## prawn_86 (24 October 2010)

Gerkin said:


> thats the way i used to think too, renting in the inner city.
> what about 10km out from the inner city when your yield starts to look more attractive and would cover the mortgage when coupled with depreciation if you had to travel,move cities etc?
> 
> ive seen it many times that the more financilay successful person in there ealry thirties has had a home for about 10 years




We live about 6k's from the city and love the lifestyle we have. Place next door (exact same floor plan) just sold for 450k this week. We pay $360 a week rent, doesnt even cover 2 thirds of the mortage (assuming 7%pa loan), then take into account costs (have had new blinds, hot water system and dryer this year), body corp etc plus trying to pay of the principal of the loan...

I also think certain inner city areas may begin to plateau. Im not against property just at this stage of our lives dont want to be invested in only one assett class with low liquidity and hgh entry/exit costs, and have to take huge leverage to gain entry into that asset.

If we were to buy property it would be as an investment, not a PPOR, and certainly wouldnt be inner sydney


----------



## Mofra (25 October 2010)

Gerkin said:


> Now, what these people should of done - saved for 12 months, bought a joint say at 90%lvr, pay interest only to keep  it neat and repaymets jst over rent levels and then invets in the market.
> 
> I would like to hear peoples tories in respect to there or people they know who do something simialar or have done it themselves and has it worked, has it not worked.
> .



Buying property as investment only, renting myself and investing in shares (with the odd bit of net-credit derivative spread fun when the numbers add up) is my strategy and I'm more than satisfied. I really don't know many people who choose only one asset class anyway, save for owner occ purchasers in the first few years of ownership.


----------



## againsthegrain (25 October 2010)

Is it just me or have people missed the key piece of info, back when he bought the house and paid it off in 5 or 6 years it was possible, house prices and wages were a much closer ratio. Good for him back then, but now for a young person in early to mid 20s it is more of a 20 - 30 year prison term. 

I am in my mid 20s and I see too many opportunities around that would be closed off instantly with going into a mortgage, if every buying a property my plan is to enter with no less then 70% deposit and I see it as a realistic goal


----------



## prawn_86 (25 October 2010)

againsthegrain said:


> Is it just me or have people missed the key piece of info, back when he bought the house and paid it off in 5 or 6 years it was possible, house prices and wages were a much closer ratio. Good for him back then, but now for a young person in early to mid 20s it is more of a 20 - 30 year prison term.




I think it does depend on where you live and where you buy.

Personally im not willing to commute for hours to get to work, so would never live in outer suburbs (although i may buy as an investment).

But yes, for me to buy the apartment where i live at the moment would cost 450k. Even if we put all our money into it and had no holiday etc the maximum we could pay off is 50 - 60k pa. Certainly not going to have it paid off in 6 yrs thats for sure


----------



## KurwaJegoMac (25 October 2010)

The Age said:
			
		

> About 58 per cent of Brisbane residents with mortgages now meet the "stress test", up from 36 per cent a decade ago, according to a National Centre for Social and Economic Modelling. That tops the 56 per cent ratio for Sydney mortgage-holders, a level little changed over the period.
> Advertisement: Story continues below
> 
> Melbourne's ratio, meanwhile, has jumped to 53 per cent from 36 per cent, as the city's house prices surged.






			
				The Age said:
			
		

> Today, almost one in two first-home buyers, or 47 per cent, pay more than 30 per cent of their disposable income to housing in 2010, up from 43 per cent in 2000, NATSEM said.




http://www.theage.com.au/business/mortgage-stress-jumps-bites-brisbane-hard-20101025-16zlf.html

Mortgage stress over 50% already, at such historically low interest rates? 

Wow....


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## againsthegrain (25 October 2010)

apparently thats paradise lol


----------



## satanoperca (25 October 2010)

This is a wonderful thread. 

Have to agree with the rants of TS however even though I do believe that high property prices provide no benefit to our society.

No trigger has been pulled for property prices to drop yet :-
A) unemployment to rise, yes QLD may get hit with tourism and the dollar 
B) Interest rates to get above 8%
C) the world to come crashing down due to the burden of debt.

Until I see one or all of the above being triggered can I see property prices retracing. Again, even a retrace of 10% is nothing in the grand scheme of price increases over the last few years.

Good luck to the bears but I think the bulls are still in control.

Cheers


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## Beej (26 October 2010)

prawn_86 said:


> But yes, for me to buy the apartment where i live at the moment would cost 450k. Even if we put all our money into it and had no holiday etc the maximum we could pay off is 50 - 60k pa. *Certainly not going to have it paid off in 6 yrs thats for sure*




Well that's not really the case, because you will likely find that as young professionals your income will increase a lot over the next 5 years or so. Also you are probably not allowing in your calculations that your interest costs would reduce every year as you pay more principle off. We could also have some periods of lower interest rates (also risk of higher of course). Bottom line is even at $50k-$60kpa coming off the principle, you would be done in 7.5-8 years - not bad. Allow for income growth and I bet you would be paid off in 6 years or less. 

Imagine how great life would be then? You would be under or barely 30, and would not have to pay any rent anymore - maybe even never again for the rest of your life if you wanted? How much would you save then and how great would your lifestyle be? Your capacity to grow wealth by investing in other assets because you have property taken care of? Travel whenever you want, have kids and so on. You would also be hedged against general property prices over time in case you want to upgrade in the future.

Anyway - just pointing out that it might not be as bad an idea to take the leap as you might think. It took me 7 years to pay my first house off which I bought when I was 23 - so owned a house outright mortgage free by 30 - and was in the very situation described above - I have never looked back.

Cheers,

Beej


----------



## medicowallet (27 October 2010)

Beej said:


> W
> 
> Imagine how great life would be then? You would be under or barely 30




And would have done nothing in your twenties, oh and wait. Your kitchen, bathrooms, carpet and paint need to be replaced. Now you find out that the 3 bedroom showbox cannot house the 3 kids you barely managed to feed over the past 4 years as your P&I was so high, so you need to buy another house.


----------



## againsthegrain (27 October 2010)

Given that the average income is around 60k, after tax and if spend nothing the average aussie would be left with just under 50k. You need to spend at least 10k on essentials so for the average aussie living sleeping and trying not to breathe for the best part of their life 40kpa could be used to pay off the mortgage.

Taking out a martgage of about 450k you would be paying interest for the first few years. So in reality the payments off the 450k would start in the mid to late 20s. add another 10 - 15 years of the stress life style and your house might be paid off.


I like how the baby boomers who bought their houses for 150 - 200k 10 years ago compare their success to the current situation. 

The world changes, people need to change with it 

The whole put yourself in debt as soon as you turn 21 and spend your life feeding the banks is just 1 big propaganda that alot of the young are trapped into by bad advice and promise of quick riches.

5 or 10 years ago it might of been wise, now it is not


----------



## Beej (27 October 2010)

medicowallet said:


> And would have done nothing in your twenties, oh and wait. Your kitchen, bathrooms, carpet and paint need to be replaced. Now you find out that the 3 bedroom showbox cannot house the 3 kids you barely managed to feed over the past 4 years as your P&I was so high, so you need to buy another house.




I'm not sure I see your points? 

I did heaps in my 20s while I had a house and mortgage - built a successful professional career and did loads of interesting things. I travelled extensively (just rented my house out for 12 months), partied heaps, chased the ladies, and always had somewhere to take them back to  The percieved impact of what I am suggesting is nowhere near as great as most imagine. You just have to think outside the square a little.

As for the house needing renos etc all of a sudden - well usually no-one ever *has* to replace a kitchen or bathroom, people do that because they want to 90% of the time. Carpet?? I'd rip it up and polish the floorboards anyway. Painting you can do yourself if you don't want to spend too much dosh. Anyway a few years of living rent and mortgage free will leave most people with enough spare cash to do all these things comfortably if they want.

Also re a 3 bedroom house + 3 kids, well you don't *have* to move. You might choose to, but there's nothing wrong with 2 kids sharing a room - in fact most want to and enjoy it! If you really want you could extend your house, which you could do probably with an amount equivelent to 2-3 years rent (which you don't have to pay now remember EVER again if you choose - that's 40-50 years of no rent.....). And that expenditure also adds value to your house - so when you sell you get it back, unlike rent. And even if you move, at least you already own a big chunk of housing equity to use to fund that lifestyle upgrade.

Cheers,

Beej


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## againsthegrain (27 October 2010)

Its either you are paying rent or interest, thesedays you pay more interest then rent not to mention fees, maintenance etc


----------



## robots (27 October 2010)

hello,

gidday everybody, coming to you from sunny Geelong

Great inflation numbers out today, what you reckon? Well done Kincella you called it again brother
Thankyou
Professor robots


----------



## robots (27 October 2010)

hello,

Gidday again, beautiful day

Spot on Beej, mortgage gets easier as the days roll on, b4 you know it 10yrs gone and cruising

Oh well, paradise
Thankyou
Professor robots


----------



## medicowallet (27 October 2010)

Beej said:


> I'm not sure I see your points?
> 
> I did heaps in my 20s while I had a house and mortgage - built a successful professional career and did loads of interesting things. I travelled extensively (just rented my house out for 12 months), partied heaps, chased the ladies, and always had somewhere to take them back to  The percieved impact of what I am suggesting is nowhere near as great as most imagine. You just have to think outside the square a little.
> 
> ...




Of course, when I purchased my first house, prices were actually reasonable.

They are not now.  

Most people, and in the scenario posed included, will struggle to live a nice lifestyle and pay off a mortgage quickly.

I was saying that a renter never has to renovate, pay rates, insurance etc.

Of course you could never see the point I am making, as you are particularly biased with your rose coloured glasses on.

Not that I say people should not purchase property, but to pay it off that fast AND have a lifestyle is plainly ridiculous for most people (interns and registrars included )


----------



## Beej (27 October 2010)

medicowallet said:


> Not that I say people should not purchase property, but to pay it off that fast AND have a lifestyle is plainly ridiculous for most people (interns and registrars included )




But that's not true in the case of the post I originally replied to - read it again - Prawn86 stated that if they had a $450k mortgage he and his partner could pay off $50k-$60k of principle per year if they really went for it, so they could achieve *exactly* what I am saying. QED.


----------



## againsthegrain (27 October 2010)

450 / 50 = 9 

and you would also be paying back the bank about 150 - in interest over that time

150 / 50 = 3

so around 12 years given he never upgrades his car, goes on a holiday, has no  other expenses such as kids, not to mention rates and interest rates will only be going up form here.

What if he loses his job?

Now decrease the 50k to about 20 - 30k for the very average aussie, subtract a bit of travel, kids? that 12 years now stretches to 30 if they are lucky so first home paid off at 50 ... time to start living lol


----------



## Beej (27 October 2010)

againsthegrain said:


> 450 / 50 = 9
> 
> and you would also be paying back the bank about 150 - in interest over that time
> 
> ...




I read the figures stated as being after paying interest on the hypothetical loan.

As for your "what ifs" - if you are stuck paying high rent then those "what ifs" stuff your lifestyle up just as badly. If you own a house and things go pear shaped you can always sell it anyway........ funny thing is 98% of people never have to based on the long term arrears figures for Australia.


----------



## doctorj (27 October 2010)

Beej said:


> As for your "what ifs" - if you are stuck paying high rent then those "what ifs" stuff your lifestyle up just as badly.



Only if the rental payments on a property exceed what the mortgage payments would have been, though obviously this is not usually the case.


----------



## Agentm (28 October 2010)

hello...

"85 per cent of the additional $985 billion of mortgage debt accumulated
since 1986 predominantly has inflated house prices"

now who said that?  lol

and more pertinent, would anyone dare disagree..??  

emotive daily robotic remarks about the sheer obvious benefits of the current bubble and how comfortable one is with current wealth/debt nation wide being locked into the current bubble is really not debating what the future of property prices is, nor how it was caused, the size of the bubble now, and what the consequence is for australian property investment in "*the future*", as it all ends in tears..

imho if the debate turned away from the robotic public ridicule of asf members, and entered into a proper discussion of how long this current bubble could possibly be sustained, then imho the real value of moving the discussion away from where it is, to discussing what caused it and how devastating the end game is.. then imho your really discussing "the future of Australian property prices"

but i dare say no one would be prepared to debate the reasons for this sorry mess in australia.. its just about beating your chest and laughing at those who see it for what it really is..

imho there needs to be a thread debating "*the future* of australian prices"..  

pity there isnt one.. 

so back to ridicule and chest beating on how the clearance rates are going. while having a latte.

lol

its like watching a freight train approaching..

wow.. look at the speed of it, look at how big its getting.. lovin' how great my day is seeing it coming up the track at me.. everyone is buying tickets and getting on board and making a killing at the speed its going..


OMG   splat


anyone want to discuss what damage that fright train will cause as it flies over the cliff? and what is causing the massive freight train to keep on driving at the speed its going?

imho *the future* of australian property prices will be universally felt by all in australia.. and imho the consequences of that future will be not as happy for the mug punter.. 

i only see australian institutions, aussie banks, and the rba saying "this one is different"..  i see daily reports that this is not a bubble..

but i see no evidence presented in why it isnt a bubble. no research, no facts.. just generalised remarks on the prices.. they are flattening out,, they are stable.. lol .. to bring confidence to the masses.. its ok.. its all ok.. lets all hope for a happy spring clearance..

where is the debate on the future of the property prices once it all falls in a heap?  what will the consequence be for those in it now? their retirement? 


do androids dream of electric sheep?  or electric property prices?


----------



## Mofra (28 October 2010)

Agentm said:


> but i see no evidence presented in why it isnt a bubble. no research, no facts.. just generalised remarks on the prices.. they are flattening out,, they are stable.. lol .. to bring confidence to the masses.. its ok.. its all ok.. lets all hope for a happy spring clearance..



a.  Property is at 4.6x _household_ income - the constant comparison to ave salary is less relevant
b.  AWOTE has a trend of tracking higher than CPI; AWOTE is the more relevant indicator in terms of capacity to pay
c.  Worldwide trends show property within 50km of a coastline attracts a premium over landlocked cities. Guess where the majority of Australians live?
d.  Our lending standards are infinately higher than the US and much higher than most countries around the world
e.  96% of our mortgage loans pre-GFC were written by conforming lenders, and the non-conformers as a market share have been almost wiped out since
f.  We don't write non-recourse loans - no jingle mail in Australia


There are a number of reasons why the Australian market is different to overseas markets. Do I believe we will have rises in property prices in the short or medium term? No. Is there overwhelming, compelling evidence for a crash?  Apart from the "it happened elsewhere" crowd failing to take into account domestic issues, no there aren't.

It's not as exciting a scenario, but wage growth over time reducing the % of fixed income required to service a loan, whilst prices stagnate/pullback slighty is a likely bet. Sorry, I don't see a major crash.


----------



## Alex Barton (28 October 2010)

Mofra said:


> There are a number of reasons why the Australian market is different to overseas markets. Do I believe we will have rises in property prices in the short or medium term? No. Is there overwhelming, compelling evidence for a crash?  Apart from the "it happened elsewhere" crowd failing to take into account domestic issues, no there aren't.





Couldn't agree more. Tracking sideways is the most likely outcome for Australian house prices from here.


----------



## R35 (28 October 2010)

TheAbyss said:


> Question - Is it possible to borrow overseas to purchase Australian property at their lower interest rates?
> 
> I imagine not but was wondering.
> cheers




This is possible but not recommended unless you have an income in that currency..so I'm paying 1.6% on my JPY loans for my aussie property but i have a JPY salary - without it this strategy is very risky and max LVR is like 70% anyway.


----------



## robots (29 October 2010)

hello,

Well another great week, its tuff getting an early morning latte down here in Geelong

Oh well, things just plodding along and please think about securing a roof over your head for the later years of your life

No worries
Thankyou
Professor robots


----------



## medicowallet (29 October 2010)

Beej said:


> But that's not true in the case of the post I originally replied to - read it again - Prawn86 stated that if they had a $450k mortgage he and his partner could pay off $50k-$60k of principle per year if they really went for it, so they could achieve *exactly* what I am saying. QED.




Oh so are you referring to this post?



prawn_86 said:


> But yes, for me to buy the apartment where i live at the moment would cost 450k. Even if we put all our money into it and had no holiday etc the maximum we could pay off is 50 - 60k pa. Certainly not going to have it paid off in 6 yrs thats for sure




I particularly like the bit about no holiday etc.

ROSE
COLOURED
GLASSES


----------



## matty77 (29 October 2010)

robots said:


> hello,
> 
> Well another great week, its tuff getting an early morning latte down here in Geelong
> 
> ...




such informative and entertaining posts. 

I look forward to your next one "another great week, latte at the river was great, oh and buy property"

...

Maybe you could enlighten us with some reasons why you are still pushing property?


----------



## againsthegrain (29 October 2010)

Robots = Paris hilton? The posts sound like something that Paris or Britney would say lalalala


----------



## nunthewiser (29 October 2010)

> House prices across Perth dropped another 1 per cent in September, new figures released today show, with home values tumbling more than 4 per cent over the past quarter.
> 
> The RP Data-Rismark measure of prices, considered the most accurate in the country, shows the median price of a house in Perth is now at $480,000, down 2.8 per cent since the start of the year
> 
> ...




http://au.news.yahoo.com/thewest/a/-/mp/8222496/perth-house-prices-drop-another-1pc/

Sunshine and lollipops 

or whisky and denial for some instead ?

geez that nun fella sure picked that top a bewty!


----------



## Dowdy (30 October 2010)

nunthewiser said:


> http://au.news.yahoo.com/thewest/a/-/mp/8222496/perth-house-prices-drop-another-1pc/
> 
> Sunshine and lollipops
> 
> ...






Wait a minute!!!

Does that mean RPData is now a CFD manager since he's bad mouthing property!


----------



## Beej (30 October 2010)

medicowallet said:


> Oh so are you referring to this post?
> 
> 
> 
> ...




So what? Have a few holidays then and take an extra year to pay off the loan? It's all about choices - but those that make more sacrifices early will be the winners financially down the track, and it has always been so.

Cheers,

Beej


----------



## medicowallet (30 October 2010)

Beej said:


> So what? Have a few holidays then and take an extra year to pay off the loan? It's all about choices - but those that make more sacrifices early will be the winners financially down the track, and it has always been so.
> 
> Cheers,
> 
> Beej




The difference is that in my generation, it was a choice, and now it is necessary.

I don't really care, I own property.

It is just that, unfortunately unlike others of my generation, I am not greedy, and would like to see government implement SUSTAINABLE policies which improve affordability and lifestyle for current and future younger generations.

By that I do not mean narrow sighted strategies such as first home buyers grants etc.

How about

1. Release truck loads of land
2. Cheap to developers
3. Cheap access to council infrastructure ( eg sewerage )
4. Very limited time for the developers to offload said parcels.
5. Removal of FHBG.
6. Removal of stamp duty concessions.
7. Import 5000-10000 builders on work permits from america on good pay (while our dollar is so strong)

and build some bloody houses, instead of being held to ransom by labourers, electricians etc.

But then again, this would make my generation feel "hard done by" as house prices moderate to values we had access to.  

Selfish older generations, yes I am ashamed of us.


----------



## againsthegrain (30 October 2010)

This is right about time that cyborg would usually say gidday coming to you from the sunny race track sipping a late, beautiful day at the races even better day to buy property


----------



## nunthewiser (30 October 2010)

againsthegrain said:


> This is right about time that cyborg would usually say gidday coming to you from the sunny race track sipping a late, beautiful day at the races even better day to buy property




your obsession with doctor bots is bordering on unhealthy

please seek medication or professional help

thankyou.


----------



## medicowallet (30 October 2010)

nunthewiser said:


> your obsession with doctor bots is bordering on unhealthy




it is PROFESSOR bots.

Please don't insult him by referring to him as a mere doctor.

He deserves the title, as one cannot fault him. He was only one of 2-3 people who correctly predicted exactly what would happen over the GFC.


----------



## medicowallet (30 October 2010)

Clearance rate: 67%

Don't know what this means, but just posting it, as the usual poster is unusually quiet about it atm.

Next 3 weeks have 2600 auctions.

Anyone have any predictions of the clearance rates? 

I do not profess to have any knowledge of such things, just posting the facts.

Top end of the market looks quite flat, I wonder if the value is falling, or if the market is stagnant.


This weekend *last year* saw 338 auctions reported and a clearance rate of 83 per cent.



Just keeping it real for the good folks of ASF

Sunshine and fluffy rainbows and lollipops and sprinkles and bubbles


----------



## robots (31 October 2010)

hello,

thanks for posting up that data Medicowallet, fantastic

watch out though, here at AussieSF you will get called a slumlord, specuvestor, money renter, permabull and all other sorts of words for posting up that data

RBA will enjoy seeing those figures

what a great weekend so far, heaps of rain, the plants which are coming alive around our neighbourhood is amazing, all creatures are going to really enjoy it

thankyou
professor robots


----------



## explod (31 October 2010)

medicowallet said:


> He was only one of 2-3 people who correctly predicted exactly what would happen over the GFC.




Yeh, great stuff, was it the good confessor who informed you of that.

It's good to keep up with all the sources, makes for sound investments.


----------



## electronicmaster (1 November 2010)

medicowallet said:


> Clearance rate: 67%
> 
> Don't know what this means, but just posting it, as the usual poster is unusually quiet about it atm.
> 
> ...




What I'd like to know is who is Selling, Who is Buying and who is lending the Money?

I'm very suspect on the clearance rate numbers.  They seem too consistent.

Investors?  Or Home buyers?

The numbers are not making any sense for normal Home Buyers considering the high interest rates with Australian Banks.

Or is the money coming from overseas?

EDIT:  Could it be possible the BANKS (Australian or overseas) are buying it all up?


----------



## Quincy (1 November 2010)

> electronicmaster - Today, 08:35 AM    #3190
> 
> Or is the money coming from overseas?




In my region - north western Sydney - the Chinese are continuing to buy up anything that they can get their hands on.

A Chinese friend of mine tells me that many don't need to borrow and just pay cash (including + $ Million properties).


----------



## medicowallet (1 November 2010)

Quincy said:


> In my region - north western Sydney - the Chinese are continuing to buy up anything that they can get their hands on.
> 
> A Chinese friend of mine tells me that many don't need to borrow and just pay cash (including + $ Million properties).




A policy disaster which will not become apparent to the general public (read dimwits) for another 20-30 years. Another in the long list of stuff ups of the Rudd Government, which will be his legacy, as one of the most useless PMs Australia has ever seen.


----------



## Mofra (1 November 2010)

medicowallet said:


> How about
> 
> 1. Release truck loads of land
> 2. Cheap to developers
> ...



"Truckload of land" will be a disaster for capital cities - Melbourne is one of the largest cities in the world by geographic area, and all for a population of 4 million. Infrastructure costs rise exponentially in outer suburbs with low population density. 

Increasing employment opporunities in rural areas which still have affordable housing would be a much better policy - house prices would be a secondary conern in this agenda as well. As the baby boomers retire and move to less populated areas this should ease demand as well.


----------



## electronicmaster (1 November 2010)

medicowallet said:


> A policy disaster which will not become apparent to the general public (read dimwits) for another 20-30 years. Another in the long list of stuff ups of the Rudd Government, which will be his legacy, as one of the most useless PMs Australia has ever seen.




Then it appears we are in really big trouble, sooner than I was expecting.  

The USA is going to be in that stage soon (or more so) too.  This should become apparent after they have the next big Bailout.

You all seen the mortgage fraud going on over there.  I wonder if it is true for Australia as well. Well, in relation to the Chinese anyway.

Funny how no one seems to confront the issue (not even the media).  

very strange  (But not surprised)


----------



## medicowallet (1 November 2010)

Mofra said:


> "Truckload of land" will be a disaster for capital cities - Melbourne is one of the largest cities in the world by geographic area, and all for a population of 4 million. Infrastructure costs rise exponentially in outer suburbs with low population density.
> 
> Increasing employment opporunities in rural areas which still have affordable housing would be a much better policy - house prices would be a secondary conern in this agenda as well. As the baby boomers retire and move to less populated areas this should ease demand as well.




ok an edit

0.5 = Competent town planning (but this will probably never happen!)

Plus I agree totally with the rural area opportunities so

1. Govt departments move from cities (well we are wasting $43 billion on faster pr0n.. oh I mean internet capabilities) to rural areas

2. Lower taxation for businesses to relocate a certain proportion of their business to regional/rural areas.

Problem is that these kinds of policies would cost votes, so even though they would be AWESOME, they will never, ever happen.


----------



## explod (1 November 2010)

electronicmaster said:


> Then it appears we are in really big trouble, sooner than I was expecting.
> 
> The USA is going to be in that stage soon (or more so) too.  This should become apparent after they have the next big Bailout.
> 
> ...




You will be aware that a number on ASF are aware.

Yes, the USA is broke to say the least.  Our story has in the last couple of years been China.  China are now having their own difficulties and a number of these are USA related, the moneys owed and the falling value of the US$.

Although there has been *some asserted *restraint since the GFC there are a large number of home mortgages since 2002 to 2008 that have been low doc with and without FHBG's.

The financial industry as a whole encompases the whole gambit of investing and they as a group cromprise the banks, real estate industry and financial services ie. AMP, Stockbrokers etc, and the media which rises or falls on advertising to us sheeple.  So there will be little real truth coming from this quarter.

The very big and complexing question that no-one is game to ponder, publicly yet that is, is our system of adding fuel to the fire by what we have come to know as quantitative easing.  In a sense Krudd did it with the insulation thingo and the GFC around the planet was said to be cured by it.  The only problem, and why eyebrows are lifting now, is that it does not seem to be cured.   So the US is about to do some more of it, the last time to the tune of some 350 billion this time they say from 2 to 4 trillion of it.  So we can see we must be fast approaching the brick wall here.  But getting back to the press (which is the lot intoto described above), they suddenly see the keynesian system is breaking down (as Marx and more recently Von Misers) said it would.   The debts are finally so big over the planet that we can no longer continue to expand enough to pay it all back.

If anyone thinks that we are going to be immune in the good old Aus., then I say (as in "The Castle" Cations said)  "ya gotta be dreamin"

My reading of the current situation says that property prices are at best moving sideways towards a very big hole in the ground.

Time will tell.


----------



## electronicmaster (1 November 2010)

explod said:


> If anyone thinks that we are going to be immune in the good old Aus., then I say (as in "The Castle" Cations said)  "ya gotta be dreamin"
> 
> My reading of the current situation says that property prices are at best moving sideways towards a very big hole in the ground.
> 
> Time will tell.




I just got a email talking about the new National Consumer Credit Protection Act rules.



> _Hi Everyone,
> 
> 
> 
> ...




And the Banks are reporting record profits?

Something is going on, and it is not looking good on the surface


----------



## bellenuit (1 November 2010)

House price growth cools: ABS

http://www.theaustralian.com.au/bus...growth-cools-abs/story-e6frg9gx-1225946098300


----------



## Mofra (1 November 2010)

electronicmaster said:


> I just got a email talking about the new National Consumer Credit Protection Act rules.



The second one you've highlighted wont effect too much of the Australian market - ~95% of lenders (by market volume) wouldn't accept servicing guarantors anyway.

The statement requirement for Low Doc is interesting - will this apply to No Docs too? 
No Docs traditionally maxed at 70% LVRs (80% for Low Doc) but the odd lender was going for 80%. 

Thanks for sharing.


----------



## robots (1 November 2010)

hello,

Gidday, great day brothers

Just a reminder with all the posts, please keep in mind the title of the thread, i think we need to get some action on those posts referencing China or the USA

Yeah, give the regional towns a boost i reckon, Ballarat, Bendigo, Moe and plenty others

Good infrastructure around already

Thankyou
Professor robots


----------



## explod (1 November 2010)

robots said:


> Just a reminder with all the posts, please keep in mind the title of the thread, i think we need to get some action on those posts referencing China or the USA
> 
> Thankyou
> Professor robots




Yep, and a reminder too that we are not an island and our trade with other nations is essential to our financial situation.   In anticipating the direction of property prices *in Austraia*, it would be a fool indeed that is not focused on the entire picture.

Major General Plod

Five star (self proclaimed)


----------



## Alex Barton (1 November 2010)

Today's ABS data shows priced down in five cities, and up in three, but a slight positive national figure (due mainly to strong Melbourne result). The question is what happens from here. Will Q4 be the first quarter to show a national fall. If so, that just might spook the public and falls could accelerate. But it prices rise in Q4 then the public will think the worst is over and we're back on an uptrend. Public sentiment is everything. To be honest I don't think the political will exists for more housing stimulus. Both parties are too weak, they've got more important things to think about, and frankly I'd wager they're happy with this flat result. A 'soft landing' is exactly what the RBA and government wanted to achieve, and that's what they've got here.


----------



## UBIQUITOUS (2 November 2010)

Alex Barton said:


> The question is what happens from here. Will Q4 be the first quarter to show a national fall.




No falls here. Never forget that in Australia there can only be a 'slight softening' in house prices.

Regards

Craig James


----------



## Uncle Festivus (2 November 2010)

robots said:


> Just a reminder with all the posts, please keep in mind the title of the thread, i think we need to get some action on those posts referencing China or the USA



It's entirely relevant, probably even more so now as the market reaches liquidity saturation?

Just for the youngsters, a reminder that a similar thing happened about 25 years ago, only the people buying up all the land and properties were Japanese. Their wealth too was from liquidity induced property booms in their own country, and promptly, busted spectacularly and essentially they have not recovered since with nearly 3 decades of stagflation if not deflation.

China is no miracle - it's still the weight of printed money that keeps them afloat - when the day comes for those bubbles to pop, Australia will be the hardest hit. They are madly exchanging worthless $USD's for things of hard value like iron ore & coal, financed from trade surplus and their very own little known quantitative easing. Wherever goes China so too does Australia!


----------



## Dowdy (2 November 2010)

> No Bank Loan needed – New Home (House and land package)
> 
> ** Low deposit / imperfect credit / self employed / recent arrival – OK!! **
> 
> ...





And who saids our lending standard are high?!

http://melbourne.gumtree.com.au/c-Unit-House-Real-Estate-property-for-sale-No-Bank-Loan-Home-Eynesbury-W0QQAdIdZ238877603


----------



## startrader (2 November 2010)

Quincy said:


> In my region - north western Sydney - the Chinese are continuing to buy up anything that they can get their hands on.
> 
> A Chinese friend of mine tells me that many don't need to borrow and just pay cash (including + $ Million properties).




Even if they do borrow, the interest on their loans is ridiculously low compared to here, (Hong Kong and Singapore it is less than 1%) so not much interest to worry about.  What an unlevel playing field when buying a house in your own country you're competing with foreigners who have such an unfair advantage.  What sort of government is this that is letting this situation continue - just appalling.


----------



## drsmith (2 November 2010)

The RBA has cranked the interest rate lever another notch forward.

http://www.rba.gov.au/media-releases/2010/mr-10-26.html


----------



## medicowallet (2 November 2010)

robots said:


> RBA will enjoy seeing those figures




Obviously not.

Interest rates up again.

Perhaps you, and your fellow academics got it wrong this time. What university is your degree from?

and what are your projections for the coming 12 months?

Can you give me some links to your published articles, so that I can see what your research interests are? I assume it is in economics.


----------



## matty77 (2 November 2010)

Dowdy said:


> And who saids our lending standard are high?!
> 
> http://melbourne.gumtree.com.au/c-Unit-House-Real-Estate-property-for-sale-No-Bank-Loan-Home-Eynesbury-W0QQAdIdZ238877603




How do you pay no stamp duty? I thought that is basically impossible if the sale is happening? Unless you are somehow buying the land only, then some weird contractural arrangement you get a house as well down the track, (so reduced SD) but it would have to be legit to get the FHOG, so I dont get how this can work.


----------



## drsmith (2 November 2010)

And the CBA responds with some additional sign language for Joe Hockey thrown in for good measure.

http://www.businessspectator.com.au...y-45bps-pd20101102-AT7E3?OpenDocument&src=rab


----------



## Aussiejeff (2 November 2010)

drsmith said:


> And the CBA responds with some additional sign language for Joe Hockey thrown in for good measure.
> 
> http://www.businessspectator.com.au...y-45bps-pd20101102-AT7E3?OpenDocument&src=rab




LOL. I can hear not-so-distant screeching from the 1,000's of CBA FHBG mortgage holders already......

I note the cash rate for CBA deposits only goes up by 25 basis points.

It's all good robonomics.

Double LOL.


----------



## medicowallet (2 November 2010)

drsmith said:


> And the CBA responds with some additional sign language for Joe Hockey thrown in for good measure.
> 
> http://www.businessspectator.com.au...y-45bps-pd20101102-AT7E3?OpenDocument&src=rab




I wonder if this will have much of an effect upon the 2600 or so auctions in Melbourne over the next 3 weekends.

Anyone have any predictions for the auction percentages over the next 3 weeks?

Perhaps Robots could make a prediction, I mean if he could predict the exact circumstances of the GFC, including government bailouts of the housing market, then I am sure that he can predict what will happen over the next 3 weeks.

I agree, some conned FHB will never forgive Kevin Rudd for the poisoned chalice he offered them.

I am very glad I have not purchased any property in Australia recently. I am currently in regional australia, and, man it is hurting badly.

One prediction I am prepared to make:

Over the next 6 months, we will see some builders having to discount or add "$50000 of bonus stuff" to their packages, or else they will hurt.


----------



## UBIQUITOUS (2 November 2010)

medicowallet said:


> I wonder if this will have much of an effect upon the 2600 or so auctions in Melbourne over the next 3 weekends.
> 
> Anyone have any predictions for the auction percentages over the next 3 weeks?




I will go for a 90% foreign buyer clearance rate.


----------



## againsthegrain (2 November 2010)

> Major General Plod
> 
> Five star (self proclaimed)





Put me down for Supreme Komendant please


----------



## medicowallet (2 November 2010)

UBIQUITOUS said:


> I will go for a 90% foreign buyer clearance rate.




Our dollar may make it less appealing for them over time though.

PS 

Of course it was what I meant.

Do any Australians actually purchase anything at auction anymore?

or is it overseas government subsidised stealth purchasing to recoup mineral wealth over the long term?

(I find it amazing, we dig it up, sell it to them, purchase worthless trinkets from them, then their govt purchases our properties and gain a revenue generating rent stream..... Long term wealth generation is not something that Australians consider... but at least we all have 50" plasmas... for the moment)


----------



## robots (2 November 2010)

hello,

Oh gidday brothers, another great day

Just of the phone to RBA, amazing stuff, its apparrent Swan is going to have to get going on the mining tax across the board asap and add some more onto it

Should be good, great posts pretty much substantiates what the debate is all about

Thankyou
Professor robots


----------



## medicowallet (2 November 2010)

robots said:


> Just of the phone to RBA, amazing stuff, its apparrent Swan is going to have to get going on the mining tax across the board asap and add some more onto it




Pretty much sums up the bullyboy unionistic tactics of the labor party.

The great thing about the labor party is that when they go down, they pull everyone and everything with them.


I love bank profits. They partially come to me as dividends. 

Perhaps our treasurer should advise people to purchase shares in the banks if he thinks they are earning too much money.  I do however think that this is beyond his mental capacity to understand.  

Instead they incentivise naive people into a bubble market and then get angry when they start to look like fools when things start to unravel.

The one thing the most bent banana bender fails to realise is that, if Australians did not have such a ridiculous dependence on the banks (which Labor helped foster) then the banks would not be such demons.

Banks rising interest rates makes no effect on many, as they have no debt.


----------



## robots (2 November 2010)

hello,
Thats great medicowallet, nothing wrong with making money or is there? 

Basically, the government needs to slow down WA, so introduce the tax get the companies heading offshore

Great, easy stuff
Waiting on someone from the board to call back otherwise will give them a call wednesday
Thankyou
Professor robots


----------



## Temjin (2 November 2010)

robots said:


> Just a reminder with all the posts, please keep in mind the title of the thread, i think we need to get some action on those posts referencing China or the USA




lol So Australia is now a totally isolated country and its economy is completely independent of China and USA, or the rest of the world? 

Trying to censor what you don't want to hear may not be the best way to tackle the debate.  

Now onto interest rate, I am geninuely surprised at the rise, and also at how fast CBA announced to go even further. I certainly know the global credit cost has increased due to the renew worries with banks/government insolvencies over in Europe, but didn't expect it to go that fast. 

Oh well, happy days for us.


----------



## medicowallet (2 November 2010)

robots said:


> hello,
> Thats great medicowallet, nothing wrong with making money or is there?
> 
> Basically, the government needs to slow down WA, so introduce the tax get the companies heading offshore
> ...




You pretty much summed it up professor.

Instead of working out how to make victoria and NSW more productive, they penalise other states.

Instead of alerting people to their own foolishness, they syphon the petrol from the harvester instead of telling the children not to lie in the field at harvest time.

But, politicians are not very bright, and I'm sure nobody on ASF will disagree with me on that!!


----------



## againsthegrain (2 November 2010)

> Banks rising interest rates makes no effect on many, as they have no debt.




Im happy collecting Interest on my savings each month, a healthy 6% maybye soon 6.25%? pays 1/4 of my rent so far 

There is going to be alot of wingers at work tomorrow, oh no my 500k debt on my 45k income went up again

amazing stuff, going to have a dirty long black with no sugar or milk on my balcony 

Supreme Komendant


----------



## medicowallet (2 November 2010)

againsthegrain said:


> Im happy collecting Interest on my savings each month, a healthy 6% maybye soon 6.25%? pays 1/4 of my rent so far
> 
> There is going to be alot of wingers at work tomorrow, oh no my 500k debt on my 45k income went up again
> 
> ...




only 6%, perhaps you should shop around!!

However there are believers that when interest rates go up, so do house prices... so if you believe their logic, then you can expect rent to go up too.


----------



## explod (2 November 2010)

againsthegrain said:


> Im happy collecting Interest on my savings each month, a healthy 6% maybye soon 6.25%? pays 1/4 of my rent so far
> 
> There is going to be alot of wingers at work tomorrow, oh no my 500k debt on my 45k income went up again
> 
> ...




Yeh great post there againstthegrain.   Borrow borrow borrow was the call.  Oh well "you can take a donkey to water..."

Anyway, silver up 25% the last month.  Robots is on to it, told him to buy round 50 cent 1966 coins a week and a half ago so up 5% plus already.

Happy cup day, lovely latte in Main Street, Mornington this morning.   Lot of nice properties around the 2 to 5 mill selling along the beaulevard here, good mate picking up heathy fees, 2.5% so all smiles.   Some pretty amazing people starting to sell.   All party and bubbles.

General, 5 star plod (self proclaimed)


----------



## Uncle Festivus (2 November 2010)

medicowallet said:


> only 6%, perhaps you should shop around!!




So who gives the best 'at call' rate, excluding the 'dodgy' ones? Getting 6.2% at call with St George, hopefully 6.45 soon? (negotiated rate ie ring them up and haggle!)


----------



## prawn_86 (2 November 2010)

Uncle Festivus said:


> So who gives the best 'at call' rate, excluding the 'dodgy' ones? Getting 6.2% at call with St George, hopefully 6.45 soon? (negotiated rate ie ring them up and haggle!)




Virgin money has a 4 month intro rate at 7%


----------



## againsthegrain (2 November 2010)

The only reason im still on 6% with nab isaver is that  there is no lock in and unlimited withdraws/deposits so if I need to access my money today for instance if I want to buy shares I can and I won't be penalized.

Interesting about the Virgin 7% rate, might need to investigate that, thanx for the tip prawn

At 6% it is $60 from every 10k, so if my rent goes up by the time my 1 year contract is up (which i expect it to regardless of rates going up or down) I will have another 15 - 20k if not more saved up, so another $120 extra interest per month. I would be expecting my rent to go up $20 - 50 max for another yearly lease so I still see myself ahead.

p.s regardless of interest rates up or down rents always go up, never down


----------



## Julia (2 November 2010)

medicowallet said:


> Instead they incentivise naive people into a bubble market and then get angry when they start to look like fools when things start to unravel.



Exactly.  And the government then seeks to divert attention from this very fact by demonising the banks.



> Banks rising interest rates makes no effect on many, as they have no debt.



Quite so.  And Mike Smith said last week that there are in fact more Australians who have bank deposits than those who have variable mortgages.
CBA have announced their basic deposit rate will rise by .25 %.



Temjin said:


> lol So Australia is now a totally isolated country and its economy is completely independent of China and USA, or the rest of the world?
> 
> Trying to censor what you don't want to hear may not be the best way to tackle the debate.



Ably encouraged by the government, of course.  Let's blame the banks.



> Now onto interest rate, I am geninuely surprised at the rise, and also at how fast CBA announced to go even further. I certainly know the global credit cost has increased due to the renew worries with banks/government insolvencies over in Europe, but didn't expect it to go that fast.



I can't help wondering if this extraordinary move by CBA includes an element of their way of saying to Swan and Hockey "you can't touch us, and you know you can't",  i.e. a direct calling of their bluff on recent bank bashing statements.

They've been warning about the need to raise lending rates because of their increased funding costs for some time.  I expect, in order to maintain their profits, they do need to do this, but wouldn't be surprised if there was just a thought of "sticking it to the government" amongst it.

Wayne Swan's response was notably that there really wasn't much government could do about it.

Joe Hockey, meantime, speciously alleged CBA's move was entirely due to the government's policies.
Yeah, right.  You, of course, Joe, would be able to do things quite differently?



againsthegrain said:


> The only reason im still on 6% with nab isaver is that  there is no lock in and unlimited withdraws/deposits so if I need to access my money today for instance if I want to buy shares I can and I won't be penalized.



I think you'll find most of the online rates operate under the same conditions.


----------



## GumbyLearner (2 November 2010)

Julia said:


> Exactly.  And the government then seeks to divert attention from this very fact by demonising the banks.
> 
> 
> Quite so.  And Mike Smith said last week that there are in fact more Australians who have bank deposits than those who have variable mortgages.
> ...




I agree with your post for the most part Julia. But I think competition is still an important issue in Australia. The smaller banks haven't had it anywhere near as easy during the GFC as their larger rivals. Just my 2 cents.


On access to wholesale funding
http://www.theage.com.au/business/b...by-cost-of-wholesale-funds-20091026-hgtf.html

On the banking guarantee
http://www.theage.com.au/business/b...-in-bank-funding-guarantee-20090406-9uw4.html

Bendigo can't blame all its woes on the higher costs it faces for funding — more of this later — but there is some legitimacy in its claim that it continues to be left out of a process aimed at keeping all banks — big and small — well funded.

Since its introduction, smaller banks have barely tapped the funding guarantee, given *they are still paying a significantly high cost of funds relative to the major banks.* Bendigo, with its BBB-credit rating, must pay more than twice the amount to rent the Government's AAA balance sheet compared with a major such as Commonwealth Bank that has a AA rating. At the same time, Bendigo must remain competitive on deposits and loans. The result is that smaller banks' interest margins are crunched.


----------



## Mofra (3 November 2010)

againsthegrain said:


> At 6% it is $60 from every 10k, so if my rent goes up by the time my 1 year contract is up (which i expect it to regardless of rates going up or down) I will have another 15 - 20k if not more saved up, so another $120 extra interest per month. I would be expecting my rent to go up $20 - 50 max for another yearly lease so I still see myself ahead.
> 
> p.s regardless of interest rates up or down rents always go up, never down



Have you factored in deflation at ~3% pa on your original investment (cash)?


----------



## againsthegrain (3 November 2010)

Yes, I am aware of that. I guess you can't win them all, usually deflation would be offset by the compounding interest but in this case I already said it covers 1/4 of rent. So the only thing I can compare deflation of investment to is house maintenance, council rates and eventual renovation if owning.

At the moment with house prices going sideways interest would be eating capital and overall profit from purchase if selling within the next few years would be just as bad as deflation on savings/investment - if I was to enter the home owners scene at this time, but that is just me.   


Supreme Komendant


----------



## UBIQUITOUS (3 November 2010)

The party is over for real estate I'm afraid. Why would anybody now borrow to buy a property when the lenders are concerned about property prices? Roll up, Roll up, get your mortgages while they're hot!!



> http://www.smh.com.au/business/house-bubble-risks-behind-rate-moves-aba-20101103-17czs.html
> 
> The Australian Bankers' Association, the industry's main lobby group, today attributed worries about Australian house prices on overseas markets as part of the reason for any extra rate hikes by its members.
> 
> ...


----------



## Dowdy (3 November 2010)

Probably the reason why the CBA nearly doubled the rate rise of the RBA.....Since they know the bubble is nearly popped, they want less people to apply for loans and the ones that do apply better be able to afford the higher rates of the CBA


----------



## prawn_86 (3 November 2010)

We asked to renew our lease for another year. inner West of Sydney and they came back saying they will renew it straight away for a year and dont want an increase.

That means in 6 years of renting we have had one increase by less than 5% at the time. 

Obviously it's not a representative sample, but 5% over 6 years has been great for us.


----------



## robots (3 November 2010)

hello, 

I guess no replies is a strong indication that you are 1 out there prawn,  great stuff

i wouldnt be renewing any lease at the moment either,  oh yeah alls well againstthegrain, great  day

Anyone know how Melbourne went in the latest ABS figures?

The problem is the RBA, ring them on 02 9551 8111

Thankyou
Professor robots


----------



## sinner (3 November 2010)

prawn_86 said:


> We asked to renew our lease for another year. inner West of Sydney and they came back saying they will renew it straight away for a year and dont want an increase.
> 
> That means in 6 years of renting we have had one increase by less than 5% at the time.
> 
> Obviously it's not a representative sample, but 5% over 6 years has been great for us.




In Sydney I lived in a townhouse approx 30 mins from the city. 2 story concrete filing cabinet, 3br, tiny tiny backyard (really just a courtyard with grass). Nothing even remotely interesting to do 10-20ks in any direction (standard suburbia). When I moved in, 2006 I think, rent was $300/wk. By the time I moved to Melbourne last year was $360/wk.

In Melbourne living approx 30 mins from the city (takes me 26min on the tram to work) in a huge awesome house 2br, 2 living rooms, with huge beautiful backyard right near all possible amenities for any sort of person. Vibrant community, awesome food/pub/cafe/music culture. $350/wk, no other applicants in 3 weeks of listing. We had 10-20 houses to pretty much choose from in the area in our price bracket. Could've had an almost identical but slightly less awesome/conveniently located house for $300/wk no worries. Friends who moved recently report the same. Plenty to choose from, eager to be rented out, at whatever rate can be reasonably had.

My experience has generally been of $300/wk for a $300,000ish house, $400/wk for a $400kish house, etc. You could safely see the houses described selling in the $400-500k bracket in todays market, which indicates a bit of a gap, rents are definitely cheaper than owning for now in this area.


----------



## explod (3 November 2010)

robots said:


> Anyone know how Melbourne went in the latest ABS figures?
> 
> The problem is the RBA, ring them on 02 9551 8111
> 
> ...




That comment sounds a bit socialist there *C*onfessor.   

A bit of a turn in the market and you are suddenly a Marx fan.   

Great here on the Peninsula today after the last few days of rain.   Green vegies bursting out of the ground.  Fat baby magpies skawking bubbles and lolliepops.  Max my new dog lazing in the sun. 

Self Proclaimed five star Major General plod.


----------



## Temjin (3 November 2010)

robots said:


> hello,
> 
> I guess no replies is a strong indication that you are 1 out there prawn,  great stuff
> 
> ...




Just wondering, what exactly would you like RBA to do? Or what will you be asking, or rather, demand, when you make the call? 

http://www.abc.net.au/news/stories/2010/11/03/3055920.htm



> Building slide worsens as Reserve 'gets it wrong'
> 
> "The weak housing outlook is compounded by yesterday's interest rate hike by the Reserve Bank which, due to the additional independent 20 basis point increase by the Commonwealth Bank, will act like a sledgehammer on confidence and economic activity in the non-resource sectors," he said in a statement.
> 
> ...




Ok, so the mainstream economists are saying the RBA got it wrong. 

Tell them to lower interest rate back down?

But then I thought house prices never drop regardless of what the interest rates would be? Demand is always higher than supply right? 

If so, then what RBA did should not affect house prices anyway.

I'm pretty sure the happy days will continue if RBA raises the rate by another 5%. Always foreign investors going to buy our great country, and international lenders will always lend money to us at a very cheap rate cos US is crap, and Australia is great. 

Happy days indeed.


----------



## KurwaJegoMac (4 November 2010)

The RBA did not get it 'wrong' like that silly article stated. The main role of the RBA is to control inflation. Last time they met it was at the top of their target band - Meaning unless conditions deteriorated, an upcoming rate rise was necessary to avoid inflation going over the target band.


----------



## Mofra (4 November 2010)

sinner said:


> My experience has generally been of $300/wk for a $300,000ish house, $400/wk for a $400kish house, etc. You could safely see the houses described selling in the $400-500k bracket in todays market, which indicates a bit of a gap, rents are definitely cheaper than owning for now in this area.



Personally I have a very good relationship with my landlord so pay well below market rates, but happily do the small maintenance around the house and keep the place in order.

Even if I was paying market rates of ~$400 to $450pw I would still be better off (after tax) renting and owning investment property than I would trying to pay off my own home.


----------



## trainspotter (5 November 2010)

Mofra said:


> Even if I was paying market rates of ~$400 to $450pw I would still be better off (after tax) renting and owning investment property than I would trying to pay off my own home.




Please explain? How does this work? Rent is DEAD money and pays off investment mortgages for people like me. You keep on renting and pay off my mortgage for me. Thanks.

If I sell my PPOR there is no capital gains tax. The equity in my PPOR allows me to leverage against it to buy other "stuff".

$450 per week x 52 weeks = $23,400 per annum or $1950 per month. RENT

$322,500 x 7.25% Interest Only = $1950 per month. HOME OWNERSHIP

So you are happy to get rid of $2000 per month of DEAD money instead of investing into the lowest taxable form of investment available in Australia?


----------



## againsthegrain (5 November 2010)

Those figures are wrong, 320k does not get $450 rent per week so the whole equation does not balance.

Rent is DEAD money is a myth created by property developers such as Metricon who are in big debt

Supreme Komendant


----------



## Mofra (5 November 2010)

trainspotter said:


> Please explain? How does this work? Rent is DEAD money and pays off investment mortgages for people like me. You keep on renting and pay off my mortgage for me. Thanks.
> 
> If I sell my PPOR there is no capital gains tax. The equity in my PPOR allows me to leverage against it to buy other "stuff".
> 
> ...



Rent is dead money? Wow, people still use those sort of 80s catchcries 

If rent is dead money, so is *non-deductable bank interest* (which is generally higher than rent anyway).

In any case, lets look at the renter who buys investment property vs the homeowner. Lets assume that the investor buys only one property.

Lets look at a $500k property that would be earning earning $450k pw rent on a 90% lend with other fees covered by deposit.

$450k mortgage at 7% over 30 years ~ $3,000 pm repayments, rates $1.5k pa, $500 other charges (water, sewerage, etc) and 0.5% and insurance & maintenance = $2.5k pa. All of these charges are non-deductable.
$40,500 pa in after tax income is being used on the property, or ~$58k pa in pre-tax income.

Lets take the renter in the same scenario.
$3,000 repayments (as per the above), $450pw rent paid, $450pw rent earned with, say $20pw in management fees deducted. Other maintenance costs the same.

Outgoings are $1,040 higher so $41,540. Of this, ~$31k interest is deductable as is $4.5k in maintenance as is $1,040 in management fees. 
That's a $36,540 deduction that the investor obtains that the O/O purchaser doesn't - again at the 30% tax rate, that's $10,962 back in my pocket over the O/O purchaser.

The only advantage the O/O purchaser over the renter & inv. purchaser has is CGT exemption, which is less important for someone who intends to hold the property indefinately as a source of income/available credit. Given the extra cash in pocket on an annual basis, it makes it easier to service the seond property when the time comes too 

Bear in mind these are simple numbers crunched on the back of an envelope - worth paying your accountant/adviser his hourly rate to crunch the numbers properly in a spreadsheet which makes the picture much clearer.


----------



## KurwaJegoMac (5 November 2010)

againsthegrain said:


> Those figures are wrong, 320k does not get $450 rent per week so the whole equation does not balance.
> 
> Rent is DEAD money is a myth created by property developers such as Metricon who are in big debt
> 
> Supreme Komendant




Depends on your definition of 'dead' money. Personally I see rent as dead money because you receive 0 return on that money. Same goes for most expenses. Anything that does not generate an income is 'dead' money (i.e. it's a liability and not an asset)

That being said, even though it's 'dead' money, it's not necessarily a bad thing - everyone needs somewhere to live and in certain economic environments you might be better off renting, but this is the exception rather than the norm. If you can generate more income from the 'savings' left over after renting, compared to buying a property, then you're better off renting obviously. But as I said before, this is the exception rather than the norm.


----------



## KurwaJegoMac (5 November 2010)

Mofra said:


> The only advantage the O/O purchaser over the renter & inv. purchaser has is CGT exemption, which is less important for someone who intends to hold the property indefinately as a source of income/available credit. Given the extra cash in pocket on an annual basis, it makes it easier to service the seond property when the time comes too




Quite right! 

Funny thing is most people are led to believe that buying a PPOR is a good investment.

An inv. property is a good investment, PPORs are not exactly for those reasons you mentioned above.

Put simply - PPOR do not provide you with an income stream. What a wonderful 'investment'.


----------



## Mofra (5 November 2010)

KurwaJegoMac said:


> Quite right!
> 
> Funny thing is most people are led to believe that buying a PPOR is a good investment.
> 
> ...



The after-tax dollars required to service an O/O property go close to servicing two Inv. properties when median are taken into account, and if looking at a lower than median second pr third property (yields are often slightly higher as well) the financial argument makes sense.

Yes, I am fully aware the bears will be upset that this does rely on government deductions to be true


----------



## wayneL (5 November 2010)

Mofra said:


> Rent is dead money? Wow, people still use those sort of 80s catchcries




Yep. They work on the financially illiterate a treat.


----------



## Uncle Festivus (5 November 2010)

As of about 4 months ago ie 'The Top', buying your own home became 'dead money' as well - buying a depreciating 'asset' AND paying for all the rest of the outgoings with no return?

So now the predictions are for a 40% drop in Chinese (& Indian?) student numbers - frees up a lot of rental space? So investors can't keep increasing rents now but still have to pay higher interest rates? A perfect storm brewing?

http://www.universityworldnews.com/article.php?story=20101103144018462


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## Mofra (5 November 2010)

Uncle Festivus said:


> So now the predictions are for a 40% drop in Chinese (& Indian?) student numbers - frees up a lot of rental space? So investors can't keep increasing rents now but still have to pay higher interest rates? A perfect storm brewing?
> 
> http://www.universityworldnews.com/article.php?story=20101103144018462



The indirect effects of a 40% drop will be more more prevalent than the direct effect on the rental market. We are talking about a massive drop in earnings in Australia's third largest income producing activity (after exports of coal & iron ore). 

Not good news at all.


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## cutz (5 November 2010)

Overleverage starting to bite back ??

Rates returning to normal levels pi$$ing you off ??

Here's a solution http://www.news.com.au/money/proper...llar-a-week-rent/story-e6frfmd0-1225947501042


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## matty77 (5 November 2010)

QLD is doing well.

http://www.news.com.au/money/money-...aults-hit-record/story-e6frfmd9-1225948145480



> THE number of homes and businesses repossessed by banks has reached an all-time high in Queensland as record numbers of owners default on mortgage repayments.
> 
> Justice Department figures show lenders lodged 193 claims to repossess homes and businesses in the state's courts during August.
> 
> ...


----------



## trainspotter (5 November 2010)

Mofra said:


> Rent is dead money? Wow, people still use those sort of 80s catchcries
> 
> If rent is dead money, so is *non-deductable bank interest* (which is generally higher than rent anyway).
> 
> ...




GREAT STUFF Mofra !!! Now when you walk cap in hand to the bank manager and ask for money what is the first words out of his/her mouth? 

"Do you own your own home?" ........ all downhill after that. The lending system is geared to loan money on the PPOR. Period. Rightly or wrongly it is a fact of life. The banks look for stability. This is the model that they use. Not my rules. THEIRS.

Now this is not to say there is nothing wrong with renting. It depends on the individuals circumstances. It is very expensive in certain areas to buy property and it also a commitment or contract to provide you with "notional rent”. For people looking to get in to the home market, home ownership may represent a poor alternative for their scarce financial resources. They are better off staying renting and investing in shares or their career path which may require flexibility in choices or just blowing the lot on having a good time.

Borrowing to purchase a home is a form of forced saving. Money that might otherwise have been totally allocated to consumption, with nothing to show for it twenty years later, was used to repay mortgage debt.

You could win lotto or you could be hit by a bus. 

Let's say house prices increase by 10 percent over the next five years. Using a median national house price of $558,540, it would be worth $614,394. You would have paid $119,460 in mortgage repayments compared to if you were renting you would have spent $91,200 if rents don't rise (using the above national scenario). That means you would have made about $28,000 in five years by choosing a mortgage over renting.

(Figures above are representative of interest rates being stable, no outgoings applicable, a rubber chicken was used and your rent did not go up etc)

Average rent for a house: $380 per week ($1520 per month) 
Average mortgage: $280,420. Repayments: $1991 per month 
Difference: $471 cheaper to rent per month

The Australian house price index rose 0.1 per cent in the September quarter, the Australian Bureau of Statistics said. That's right peoples ...... upward trending pattern. LOLOL ..... try stagnant.

http://www.abs.gov.au/AUSSTATS/abs@.nsf/MF/6416.0


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## KurwaJegoMac (5 November 2010)

trainspotter said:


> GREAT STUFF Mofra !!! Now when you walk cap in hand to the bank manager and ask for money what is the first words out of his/her mouth?
> 
> "Do you own your own home?" ........ all downhill after that. The lending system is geared to loan money on the PPOR. Period. Rightly or wrongly it is a fact of life. The banks look for stability. This is the model that they use. Not my rules. THEIRS.




Agree with the rest of your post but this part isn't true. I do not own a PPOR, yet have had no issues getting a loan for an investment property - offerred up to 95% LVR from a Big4 bank, they didn't even bat an eyelid when I mentioned I didn't own my PPOR.

The investment property itself is the security for the loan, you don't need a PPOR to act as a security.


----------



## trainspotter (5 November 2010)

KurwaJegoMac said:


> Agree with the rest of your post but this part isn't true. I do not own a PPOR, yet have had no issues getting a loan for an investment property - offerred up to 95% LVR from a Big4 bank, they didn't even bat an eyelid when I mentioned I didn't own my PPOR.
> 
> The investment property itself is the security for the loan, you don't need a PPOR to act as a security.




Care to name the bank KJM ?? I find this one hard to fathom. Associate of mine is a mortgage originator and I have had 15 years as a finance broker experience. NEVER have I heard of a Big 4 going 95% LVR on a IP. 10% has always been the rule for the Big 4 and then you have to get past LMI. Servicability was another issue as well as saving history as well as job longevity and debt servicability ratios and other credit facilities and CRAA and blah blah blah ad infinitum.


----------



## Julia (5 November 2010)

Mofra said:


> Personally I have a very good relationship with my landlord so pay well below market rates, but happily do the small maintenance around the house and keep the place in order.
> 
> Even if I was paying market rates of ~$400 to $450pw I would still be better off (after tax) renting and owning investment property than I would trying to pay off my own home.



So Mofra, you don't count the 'emotional investment' in having your own home?
i.e. the security of knowing no landlord can toss you out, the capacity to make what improvements you think you'd enjoy, just the sense of coming home to somewhere that's actually yours?

None of that matters to you?


----------



## medicowallet (5 November 2010)

Julia said:


> So Mofra, you don't count the 'emotional investment' in having your own home?
> i.e. the security of knowing no landlord can toss you out, the capacity to make what improvements you think you'd enjoy, just the sense of coming home to somewhere that's actually yours?
> 
> None of that matters to you?




This is an excellent point.

The problem is that the "good will" has grown substantially, and I think that there is a large room for correction, now that building approvals have come to a halt and developers and builders will need to cut margins to keep their employees happy. The AUD is helping with decreased prices too.

Now, let us see if it actually feeds through to the naive consumer.


----------



## againsthegrain (5 November 2010)

> the security of knowing no landlord can toss you out




Technically you don't own the house until it is paid off, so the moment you miss a few repayments the bank will toss you out, all it takes is losing your job for a month, getting downgraded to part time or waiting until you find a new position. 

The same can happen with renting, your loan will not get renewed or you lose your job or a earthquake will strike. Life is unpredictable and too many people are motivated by fear. (find a cheaper rental no loses)

It is a great selling point for developers,
1. own your own  do as you please
2. rent money is dead money

If I was a developer id definately use the above as selling points, the reality is you won't be taking your property or the extra non council approved hush hush bedroom which is paid off when you are 65 with you to your grave.

At the moment there is plenty or rental opportunities around with many more to be soon available, the housing shortage is a bit of a myth. 

Each to their own, some people need the illusion on paper to say they own a piece of land that has been there before we came and will be there after we leave.

I was raised in several east european countries, when I was young and back 20 years ago over there was no such thing as owning a house, I have rented so far all my life while being able to save, invest, travel and live my life. I have big plans ahead of me and plan to buy a property by my mid 30s (I am 27 now) with at least 70 - 80 % deposit. 

About 2 years ago I nearly bought a house, lost a small deposit but did not go through with it and everyday I am thankful that it did not go through. 
I still see my alternate self paying off this 400k modern pile of rubbish that would cave in after 5- 10 years while the developer goes bust.

I would be travelling to work 1 hr + have bags under my eyes, lost all my savings,  and investment power in the deposit became a wife beater and be locked into a 30 year loan.

Right now I live within 15 kms to the cbd vs 50 kms, pay alot less rent then mortgage and able to save quiet a bit, invest and enjoy life before hitting 30

Supreme komendant


----------



## trainspotter (5 November 2010)

againsthegrain said:


> About 2 years ago I nearly bought a house, lost a small deposit but did not go through with it and everyday I am thankful that it did not go through.
> I still see my alternate self paying off this 400k modern pile of rubbish that would cave in after 5- 10 years while the developer goes bust.
> 
> I would be travelling to work 1 hr + have bags under my eyes, lost all my savings,  and investment power in the deposit *became a wife beater* and be locked into a 30 year loan.
> ...




WTF ??????????? Buying a house makes you a wife beater?

Go and buy some shares ..... it can evaporate just as quickly if not quicker in most cases. YOU make the decisions. Do the research. Locked into a 30 year loan???? WTF ??????? Ummmmmmmm ..... so if you buy a home you are not allowed to sell or go travelling or save money or have a good time beacuse you are a slave to a mortgage?? HUH ????? 

Stay renting dude. Home ownership is not your cup of tea from what I can make out.


----------



## KurwaJegoMac (5 November 2010)

trainspotter said:


> Care to name the bank KJM ?? I find this one hard to fathom. Associate of mine is a mortgage originator and I have had 15 years as a finance broker experience. NEVER have I heard of a Big 4 going 95% LVR on a IP. 10% has always been the rule for the Big 4 and then you have to get past LMI. Servicability was another issue as well as saving history as well as job longevity and debt servicability ratios and other credit facilities and CRAA and blah blah blah ad infinitum.




Happy to. It was ANZ, with a 95% LVR and LMI (amounted to about 3k).

Perhaps my case was an exception for some of the reasons you mentioned - i had a demonstrated savings history, with a 20% deposit saved up. No debts (save for HECS) and demonstrated a relatively stable employment history. I also earn above median wage and am in my mid 20s - so perhaps they see me as lower risk? *shrugs*

I know my parents struggled to get an IP loan in their 40s, and they almost fully owned their PPOR. 

Anyway thats my experience, and perhaps my case was an exception given my circumstances.


----------



## trainspotter (5 November 2010)

KurwaJegoMac said:


> Happy to. It was ANZ, with a 95% LVR and LMI (amounted to about 3k).
> 
> Perhaps my case was an exception for some of the reasons you mentioned - i had a demonstrated savings history, with a 20% deposit saved up. No debts (save for HECS) and demonstrated a relatively stable employment history. I also earn above median wage and am in my mid 20s - so perhaps they see me as lower risk? *shrugs*
> 
> ...




Very peculiar for ANZ to offer 95% LVR for an IP ?????? Never heard of it before. Exceptional circumstances it must have been.

ANZ has lifted its LVR to 95% for its existing customers who have a strong credit history in an attempt to claw back some of the market share it lost to CBA and Westpac last year. (PPOR only)

“We have a strong risk profile in our mortgage portfolio, having chosen to sit out much of the first-home buyers' market in 2009,” a spokesperson to Broker News.

ANZ was the first Australian bank to tighten credit policies in response to the GFC, and has maintained the most conservative position on LVRs now for 16 months.

“With the improved economic outlook, we have taken a decision allow mortgage *lending up to 95% LVR for some existing customers* where they have a strong credit history,” the spokesperson said. “All applications that are above 90% LVR will require a full valuation.”

LMI is included in the 95% LVR cap and the spokesperson said the bank is conscious of loan serviceability in an environment of rising interest rates. The bank uses an interest sensitivity buffer and has also recently raised its default living expenses in the credit assessment process.

http://www.brokernews.com.au/news/anz-lifts-lvr-to-95/41346


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## againsthegrain (5 November 2010)

> Stay renting dude. Home ownership is not your cup of tea from what I can make out.




Yes, for now it is not. - I like to think outside the square "block" we live in lol you should try it


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## KurwaJegoMac (5 November 2010)

trainspotter said:


> Very peculiar for ANZ to offer 95% LVR for an IP ?????? Never heard of it before. Exceptional circumstances it must have been.
> 
> ANZ has lifted its LVR to 95% for its existing customers who have a strong credit history in an attempt to claw back some of the market share it lost to CBA and Westpac last year. (PPOR only)
> 
> ...




Hmm thats quite interesting. I certainly am not an existing customer, except for the fact that i have all my accounts and credit cards with them for the past 3 years - is that what they mean about existing customers?


----------



## trainspotter (5 November 2010)

againsthegrain said:


> Yes, for now it is not. - I like to think outside the square "block" we live in lol you should try it




Commitment phobia at it's best. I have tried the "block" and I like it.


----------



## trainspotter (5 November 2010)

KurwaJegoMac said:


> Hmm thats quite interesting. I certainly am not an existing customer, except for the fact that i have all my accounts and credit cards with them for the past 3 years - is that what they mean about existing customers?




Would not cut it from a brokers POV. 95% LVR IP and ANZ does not compute ... *fizzle* .... PPOR would stack up from the details you have told me. Possible. LMI would scrutinize within an nth of your life. Maybe you got them at a weak moment??


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## againsthegrain (6 November 2010)

> Commitment phobia at it's best. I have tried the "block" and I like it.




There is not much else to be said, I unlike others like to think big and ahead, some like to change used light bulbs and call them new and others like to go further, what are we arguing over anyway  some will make a mil before a deadline and others wont


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## trainspotter (6 November 2010)

againsthegrain said:


> There is not much else to be said, I unlike others like to think big and ahead, some like to change used light bulbs and call them new and others like to go further, what are we arguing over anyway  some will make a mil before a deadline and others wont




No worries againsthegrain ....... You keep thinking big and make God speed be with you on your way to being a millionaire. The light bulb idea was to get people to think about the morality of business and the eithics involved. It was also about small seed capital business ideas and if anyone else had a viable going concern to make money. Never mind. I am not arguing with you on any point. I found it interesting that you associated home ownership with wife beating and bags under the eyes. A million these days is not enough. I prefer Bollinger in the morning and Moet in the arvos myself. Good to see you have a plan. Stick to it.


----------



## GumbyLearner (6 November 2010)

Morality? there is no morality. It's all about returns. Time to move on from the dumb as a door knob robo-sector. Goodbye to access to cheap credit bubbles!

How's life going there Professor Robots?

Buy Gold Doyen of everything, Master of nothing?

And welcome to reality from a LEGENDARY INVESTOR!!!!!



"Tim somebody"  LOL "Robots somebody" ROTFLMAO


----------



## GumbyLearner (6 November 2010)

*CEO of Commonwealth Bank of Australia Ralph Norris is a SOOK.*

*Bank bashing unnerving foreign investors: Commonwealth chief
Eric Johnston and Peter Martin
*
November 6, 2010

http://www.theage.com.au/national/b...estors-commonwealth-chief-20101105-17hjm.html 

COMMONWEALTH Bank chief Ralph Norris has warned Australia is developing an international reputation as a tough place to do business as a result of government assaults on banks and the mining sector.

Speaking for the first time since Commonwealth’s surprise decision to lift mortgage rates by nearly double the Reserve Bank’s hike this week, Mr Norris hit out at Canberra for engaging in short-term populism.

He said the government attacks were making foreign investors nervous.   ‘‘I have had a lot of negative comments from international investors in recent weeks that Australia does not look like a particularly business friendly environment.’’ 

THE AD THE BANKS DON'T WANT YOU TO SEE


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## tech/a (6 November 2010)

GumbyLearner said:


> Morality? there is no morality. It's all about returns. Time to move on from the dumb as a door knob robo-sector. Goodbye to access to cheap credit bubbles!
> 
> How's life going there Professor Robots?
> 
> ...





Poor selection.
This was back when the XJO was 4000 and DJIA 8300
Lot has changed most everywhere else Australia has PROVEN to be more resilient than most.

I'm afraid the reality is staring you right in the face and many are petrified by fear.
Few like against the grain will make their million and more--The first is the hardest.
Once there keeping it working for you with an eye on catastrophic risk then becomes a factor.


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## MR. (6 November 2010)

Raw data from http://www.abs.gov.au and http://www.loansense.com.au/historical-rates.html

Also the addition of 7.85% from "which bank?" will the other three soon follow?
"Business is business and business must grow, regardless of crummies in tummies you know"

The correlation between interest rates and house sales


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## Dowdy (6 November 2010)

tech/a said:


> Poor selection.
> This was back when the XJO was 4000 and DJIA 8300
> Lot has changed most everywhere else Australia has PROVEN to be more resilient than most.




But if you took his advice back then and invested in commodities and the currencies he mentioned you would of made a killing!




> I'm afraid the reality is staring you right in the face and many are petrified by fear.




The opposite of fear, confidence is just a ponzi scheme in disguise 

Prices always revert back to their fundamentals once all the smoke and illusion clears. What you call fear is mainly just the market going back to their fundamentals


----------



## robots (6 November 2010)

hello,

oh yeah, Gumby we have all been waiting for you to pop up in the AFL Premiers 2010 thread

grand final day the past 2yrs have been awesome, best days of my life, "bottle this boys"

did riewodlt, hayes, del santo, milne, kosi, gram, baker actually play against collingwood, hehehehehehehe

wow, melbourne second best city on the planet as by UN, fantastic achievement, oh well

thankyou
professor robots


----------



## MR. (6 November 2010)

medicowallet said:


> Clearance rate: 67%
> 
> Next 3 weeks have 2600 auctions.
> 
> Anyone have any predictions of the clearance rates?




An 0.45% interest rate hike must reduce the amount being borrowed. Would be at least 20k.

Right me down for 61%


----------



## robots (6 November 2010)

MR. said:


> An 0.45% interest rate hike must reduce the amount being borrowed. Would be at least 20k.
> 
> Right me down for 61%




hello,

means nothing anyway, remember

thankyou
professor robots


----------



## tech/a (6 November 2010)

Dowdy said:


> But if you took his advice back then and invested in commodities and the currencies he mentioned you would of made a killing!
> 
> 
> 
> ...




Yen and Swiss Franc both continued to drop--still are.
Gold yes
Equities which he avoided ---yes.

*Prices always revert back to their fundamentals*

The fact that they actually do this well after people realise that the fundamentals as "they" see them have changed so dramatically that they miss the boat---has made me a motzza over the years.
I find fundamentalists get "Value" wrong more often than not.
Bless their little cotton socks.


----------



## medicowallet (6 November 2010)

robots said:


> hello,
> 
> means nothing anyway, remember
> 
> ...




No predictions professor?

I predict 72%.

Would like to know like for like values of property for Melbourne over the past few months to now.


----------



## medicowallet (6 November 2010)

tech/a said:


> Yen and Swiss Franc both continued to drop--still are.
> Gold yes
> Equities which he avoided ---yes.
> 
> ...




Of course they reset all the time.

Most often they overshoot either way.

late 1990s the housing market was undervalued, now it is overvalued.

It rose nicely from then till now and will either stagnate or drop from now to whenever.

Then again, anyone here old enough has seen it all before, in property and stocks, and bonds, and hem lines.


----------



## wayneL (6 November 2010)

tech/a said:


> Yen and Swiss Franc both continued to drop--still are.




You're looking at them the wrong way. Yen and Franc are quoted as USD/JPY & USD/CHF

as opposed to EUR/USD, AUS/USD, GBP/USD etc.

Look at the futures charts and how they are quoted i.e JPY/USD & CHF/USD. These charts have risen.

This means that yen and franc have in fact appreciated against the USD.


----------



## tech/a (6 November 2010)

wayneL said:


> You're looking at them the wrong way. Yen and Franc are quoted as USD/JPY & USD/CHF
> 
> as opposed to EUR/USD, AUS/USD, GBP/USD etc.
> 
> ...




Yes of course.
 Hem--lines should be short at all times.


----------



## MR. (6 November 2010)

robots said:


> hello,
> 
> means nothing anyway, remember
> 
> ...




Means nothing if venders willingly reduce their reserves.   

Any pattern here?



Raw data from http://www.abs.gov.au and http://www.loansense.com.au/historical-rates.html


----------



## explod (6 November 2010)

MR. said:


> Means nothing if venders willingly reduce their reserves.
> 
> View attachment 39532
> 
> Raw data from http://www.abs.gov.au and http://www.loansense.com.au/historical-rates.html




Or start *having* to.  

Buyers will begin holding back from this weekend IMHO and so expect a drop in the clearance rate, I will say 62% and less next week.

A lot of news media doom and gloom recently.  However we shall see.


----------



## MR. (6 November 2010)

explod said:


> However we shall see.




Put some "House Sales from Eight Capital cities" (ABS) into the chart and this is how it looked. 

I remember Bots..... House prices are all about "supply and demand" not interest rates!


----------



## robots (6 November 2010)

hello,

thats great MR, in my 5yrs of posting at ASF i have never mentioned Supply & Demand and believe it plays no role what so ever

but yes I have mentioned some of the following:

parardise, utopia, the supreme whitelight

i am only reporting the auction clearance rates, so wouldnt have a clue man, 

all i know is i would hate to be 55+ on the pension and not OWN the roof over my head 

thankyou
professor robots


----------



## So_Cynical (6 November 2010)

robots said:


> wouldnt have a clue man,
> 
> all i know is i would hate to be 55+ on the pension and not OWN the roof over my head.
> 
> robots




LOL robots

At last something we can agree on.


----------



## Dowdy (6 November 2010)

tech/a said:


> Yen and Swiss Franc both continued to drop--still are.
> Gold yes
> Equities which he avoided ---yes.
> 
> ...




So where do you see the fundamentals in the housing sector going?


----------



## tech/a (6 November 2010)

Said it before and Ill say it again.

There will be pockets of sharp pullbacks and pockets of opportunity but in general a buy and hold strategy will see the majority in my view Flat.

Best to develop in these times in areas of demand.
Doing OK off industrial and just purchased the next Parcel for industrial development.

Those of us holding are enjoying excellent return on old investment (1996-2001).
Not to mention the capital gain.
Gearing even with the new Property is 38%.


----------



## MR. (6 November 2010)

robots said:


> hello,
> 
> thats great MR, in my 5yrs of posting at ASF i have never mentioned Supply & Demand and believe it plays no role what so ever
> 
> ...




Sorry there Bots lost me way there a little with all the guessing.
There is no place like OZ, I agree........ 

Hey, time to report the auction clearance rates is it?

Hey, I think we have a clear winner.


----------



## robots (6 November 2010)

hello,

well done MR. superb call brother 61%

amazing, what a great day

i reckon you should get a bottle for that one

thankyou
professor robots


----------



## MR. (6 November 2010)

Cheers, drop it in on your way past.....


----------



## medicowallet (6 November 2010)

*"The interest rate increase has certainly had an impact on buyer confidence this weekend with a clear drop in the clearance rate compared to the past few months.

Some buyers will be concerned that more banks will increase rates independent of the Reserve Bank.

This also means November is shaping as a month with good opportunities for buyers; with 588 auction results reported this weekend, 920 expected next weekend followed by two weekends with just over 1000 auctions. This will see around 3600 auctions in November, the highest number of auctions in any month this year.

The clearance rate from this weekends auction is 61 per cent. There have been 588 auctions reported, 359 sold, 229 passed in, 152 of those on a vendors bid.

This weekend last year saw 524 auctions with a clearance rate of 81 per cent."*


I posted the report for everyone to glance at.

Professor, what does it mean when:
a) last year it was 81% now it is 61%
b) Interest rates are not even up for the other banks
c) 3600 Auctions this month

I look forward to your input.

Kind regards, with plenty of sparkles, rainbows, bubbles and fruity pop pops


Medicowallet


----------



## nunthewiser (7 November 2010)

> The Perth housing market has endured its worst three-month price drop in 20 years, wiping $20,000 off the value of median-priced homes across the metropolitan area.
> 
> Perth median house prices fell 4 per cent to $480,000 in the three months to September, with the mortgage belt and battler suburbs of Wellard and Orelia the hardest hit with drops of about 4.5 per cent.
> 
> ...




http://au.news.yahoo.com/thewest/a/-/mp/8268708/perth-housing-market-slumps-to-20-year-low/

all sunshine and lollipops brothers..

great call nun


----------



## robots (7 November 2010)

hello,

yeah well done Nun, another ASF legend

wouldnt have a clue MW, i am just like Bigdog reporting the data 

all just reinforces the silly move by the RBA during the week

thankyou
professor robots


----------



## wayneL (7 November 2010)

robots said:


> hello,
> 
> yeah well done Nun, another ASF legend
> 
> ...




Why was it a silly move?


----------



## CamKawa (7 November 2010)

explod said:


> Buyers will begin holding back from this weekend IMHO and so expect a drop in the clearance rate, I will say 62% and less next week.



Only out by 1% not a bad forecast.


----------



## Dowdy (7 November 2010)

CamKawa said:


> Only out by 1% not a bad forecast.




what's the forecast for next week - down, up, flat?


----------



## Mofra (8 November 2010)

trainspotter said:


> GREAT STUFF Mofra !!! Now when you walk cap in hand to the bank manager and ask for money what is the first words out of his/her mouth?
> 
> "Do you own your own home?" ........ all downhill after that. The lending system is geared to loan money on the PPOR. Period. Rightly or wrongly it is a fact of life. The banks look for stability. This is the model that they use. Not my rules. THEIRS.



Absolutely and utterly wrong Transpotter - the question should be "do you have any equity?".

I have worked for both securitised and non-securitised lenders (big 4 bank) and existing residential property ranks equally as equity regardless of being for Investment or O/O purposes - industry wide practice.



trainspotter said:


> http://www.brokernews.com.au/news/anz-lifts-lvr-to-95/41346



Might pay to read the article; although it isn't strictly relevant to the discussion at hand it doesn't mention ANZ discrimninating against whether a property is for O/O or Investment purposes


----------



## MR. (8 November 2010)

medicowallet said:


> The clearance rate from this weekends auction is 61 per cent. There have been 588 auctions reported, 359 sold, 229 passed in, 152 of those on a vendors bid.




Saturday only REIV auctions (above) had a 61.05% clearance rate.

Saturday and Sunday:


> The clearance rate from this weekends auction is 61 per cent. There have been 633 auctions reported, 383 sold, 250 passed in, 166 of those on a vendors bid.




That clearance rate calculates to 60.506% just one house off a quoted 60% clearance rate. Last week had a clearance of 67% before the interest rate rise. 

Professor, 







> "means nothing anyway, remember"


----------



## explod (8 November 2010)

Dowdy said:


> what's the forecast for next week - down, up, flat?




There will be a great deal on the value of property in the media this week, huge ramping.  However there will also be a further awakening among people with debt and who are struggling.   This is an ugly scenario and I feel very sorry for those not educated in finance who were sucked in.

On that basis I am going for a further drop but not as great,  58%


----------



## cutz (8 November 2010)

Yeah it's looking rather creepy, http://www.news.com.au/money/proper...all-on-rate-rise/story-e6frfmd0-1225949385174 .

But surely, clearance rates should recover once vendors start slashing prices.


----------



## KurwaJegoMac (8 November 2010)

cutz said:


> Yeah it's looking rather creepy, http://www.news.com.au/money/proper...all-on-rate-rise/story-e6frfmd0-1225949385174 .
> 
> But surely, clearance rates should recover once vendors start slashing prices.




What's also interesting to note, is that the previous weekend had over 1,000 auctions and cleared 67% whereas this weekend had 633 auctions and cleared only 61%.

What that equates to is:

Approx 670 auctions sold last week and only 383 sold this week.

Hmm....


----------



## explod (8 November 2010)

cutz said:


> Yeah it's looking rather creepy, http://www.news.com.au/money/proper...all-on-rate-rise/story-e6frfmd0-1225949385174 .
> 
> But surely, clearance rates should recover once vendors start slashing prices.




An interesting point.  There is an old trading adage that goes like this, "never try to catch a falling knife"

The big one is sentiment, like when the Beetles were in favour, every young fellow had to have long hair and of course the reverse applies.   If prices have levelled out buyers will consider they have time and instinctively hold back and the sentiment builds on itself.  When prices were rising there was a feeling to rush in before prices went too high which of course drives it higher, it is self fulfilling.

The psycological effects are the same across all types of markets and in trading too.  However only more time will tell.


----------



## nukz (8 November 2010)

I was talking about the impending collapse to a colleage at work today and he told me something interesting. 

In the Melbourne suburbs of Point Cook where he lives he exlpained to me atleast 15 houses around his that where purchased last year are now back on the market again.

I see it as one of the following:

1/ Mortgage stress and getting out before it gets too hard
2/ Default/foreclosure
3/ Cashing in on market?

Interesting though, i wonder if anybody else has similar story's to this in there area's


----------



## MR. (8 November 2010)

The other banks must be just letting the CBA take more of the heat as they still have not released their new would be similar loan rates. 

Can the government really force lower/cap at $900- or even scrap exit fees on existing mortgages? Or just new ones?

http://money.ninemsn.com.au/article.aspx?id=8120373&rf=true


> It might soon get easier for mortgage holders to switch banks, with reports three of Australia's big four banks could scrap exit fees to avoid government intervention.




Wonder which three?


----------



## cutz (8 November 2010)

MR. said:


> Can the government really force lower/cap at $900- or even scrap exit fees on existing mortgages? Or just new ones?




This is a populist move, can the general public see this 

Most fees can be negotiated out already, a discount on the advertised rate can be applied.

The banks are providing an excellent service in difficult times, what is the government planning on achieving (other than votes) ?


----------



## medicowallet (8 November 2010)

nukz said:


> I was talking about the impending collapse to a colleage at work today and he told me something interesting.
> 
> In the Melbourne suburbs of Point Cook where he lives he exlpained to me atleast 15 houses around his that where purchased last year are now back on the market again.
> 
> ...




I would not be surprised if they are not owned by australians.


----------



## MR. (8 November 2010)

cutz said:


> This is a populist move, can the general public see this
> 
> Most fees can be negotiated out already, a discount on the advertised rate can be applied.
> 
> The banks are providing an excellent service in difficult times, what is the government planning on achieving (other than votes) ?




I would question negotiating an exit fee but a rate closer to their competition would be achievable. However, the higher the exit fee the less negotiating power the customer has. 

Yes, it's about votes, but will they do anything which will make much of a difference though? If they did anything at all that is? No... All the banks will end up similar and raise their rates anyway.

The CBA sold the most new mortgages when interest rates were low adding fuel to that final property spike and now once all are aboard they are first to put rates up an extra 0.2%


----------



## JTLP (8 November 2010)

MR. said:


> I would question negotiating an exit fee but a rate closer to their competition would be achievable. However, the higher the exit fee the less negotiating power the customer has.
> 
> Yes, it's about votes, but will they do anything which will make much of a difference though? If they did anything at all that is? No... All the banks will end up similar and raise their rates anyway.
> 
> The CBA sold the most new mortgages when interest rates were low adding fuel to that final property spike and now once all are aboard they are first to put rates up an extra 0.2%




Surely the scrapping of exit fees will just mean an increase in start up costs? Banks aren't stupid/going to let people get away with running for free


----------



## MR. (8 November 2010)

JTLP said:


> Surely the scrapping of exit fees will just mean an increase in start up costs? Banks aren't stupid/going to let people get away with running for free




If another bank wanted your business they wouldn't have an excessive start up fee. 

Often the exit fee is over looked when a customer takes out a loan because the customer seeks a good interest rate etc.


----------



## CamKawa (9 November 2010)

Good one Ralph get stuck into them. 

Commonwealth Bank customers will lose homes


----------



## MR. (9 November 2010)

Raw data from the ABS.

Melbourne certainly looks out there on a limb! 
Must be time for Perth and Brisbane to catch up!


----------



## Uncle Festivus (9 November 2010)

The banks have enough resi business, they are chasing business now, so they don't care to chase new resi loans?

Not sure if already posted, but.....and they don't mince their words when it comes to who they think is the problem.....



> AFG, Australia’s largest mortgage broker, has called for leadership from Canberra to shake the fear out of a stalling mortgage market as the company reported its worst October mortgage sales for four years.  AFG arranged $2.2 billion of mortgages in October – down 17.5% in volume compared to October 2009 and 4.3% lower than last month, which was already subdued.
> 
> NSW was the worst affected state, where mortgage sales fell 13.1% month on month.  Victoria and WA saw falls of 3.9% and 4.3% respectively, while QLD and SA bucked the trend, with rises of 6.4% and 5%, although on relatively low, September figures.
> 
> Commenting on current market conditions, Brett McKeon, Managing Director of AFG says: ‘The idea of holding some sort of commission into banking competition and rate setting is farcical.  Everyone knows that  the best way to keep rates keen is to promote competition.   But by allowing the 5th and 6th largest banks to be taken over by the Big Four, and by structuring the AOFM to benefit only the Big Four, no one has more effectively sabotaged lender competition in Australia than this Government.  If it goes ahead with a commission, to avoid self-incrimination the Government will have to restrict  the terms of its inquiry so much that its findings will be meaningless.



http://corporate.afgonline.com.au/news/NOV10-MORTGAGEINDEX.html


----------



## UBIQUITOUS (9 November 2010)

Uncle Festivus said:


> The banks have enough resi business, they are chasing business now, so they don't care to chase new resi loans?
> 
> Not sure if already posted, but.....and they don't mince their words when it comes to who they think is the problem.....
> 
> http://corporate.afgonline.com.au/news/NOV10-MORTGAGEINDEX.html




Wow, worse than the height of the GFC

Time for another first home owners boost. Hang on, how much money do we have in the coffers?


----------



## Verge32 (9 November 2010)

Hi All,

Ive been keeping a really close eye on property in Oaklands NSW since Coalworks started their work out there a couple of years.

Ive seen land prices go from $5k a block 5 years ago to $40k a block just recently.

Im thinking about freeing up some other property to invest there, as news on the ground is all go go go.

I guess thats the key to property, getting in early.

Having friends out that way, Ive been impressed with how quickly blocks and sold, but apparently there is also a shortage of rentals, so Im thinking a house on a decent sized block might be the go, with room for subdivision so I can at least get some income while I wait.

The only problem appears to be quality of housing available for sale.  

Has anyone else had a look at this region?


----------



## medicowallet (9 November 2010)

Verge32 said:


> Hi All,
> 
> Ive been keeping a really close eye on property in Oaklands NSW since Coalworks started their work out there a couple of years.
> 
> ...




Or ramping something up.

Is that allowed on ASF?


----------



## cutz (9 November 2010)

medicowallet said:


> Or ramping something up.
> 
> Is that allowed on ASF?





Hi medicowallet,


I think that guy is on the wrong forum, no one really gives a toss, especially after that spring blowoff we just had.


----------



## againsthegrain (9 November 2010)

> I guess thats the key to property, getting in early.




Missed the boat, or got on just before the last stop?


----------



## Julia (9 November 2010)

JTLP said:


> Surely the scrapping of exit fees will just mean an increase in start up costs? Banks aren't stupid/going to let people get away with running for free



Exactly right, JTLP.  ABC Radio had an interview a couple of days ago with the spokesperson from the Australian Bankers Assn (or whatever the proper name is).  He said that the exit fees simply represent a portion of the set-up costs of establishing a mortgage which the banks choose to postpone charging until they ascertain how long the mortgage runs for.
e.g. he said if a customer decided to withdraw and change banks after just a couple of years, then yes, he would be charged the balance of the set-up fee.
But if the customer let the mortgage run for a substantial amount of its term, then a break free would rarely be applied.

I have no idea.  Am simply quoting what I heard.
However, I think any notion by the government or the opposition that they will punish banks by any particular measure is entirely pointless.  They will always find a way to extract the fees they need to maintain profitability.

Customers should not be sucked in my politicians' utter hot air.

And I have to add that this whole argument is completely unbalanced in that no credence is being given to all those depositors who are actually benefiting from higher rates.
I'm a bit sick of the endless emphasis that's given to borrowers, while people who have been prudent are not expected to ever reap any benefits.


----------



## satanoperca (9 November 2010)

Julia;590704 I'm a bit sick of the endless emphasis that's given to borrowers said:
			
		

> :holysheep: someone making sense.
> 
> In regards to exit fees,  you enter into an agreement you wish to go elsewhere then you should have to pay a price to do so. A contract is a contract, people are so pathetic these days.
> 
> ...


----------



## medicowallet (10 November 2010)

satanoperca said:


> people are so pathetic these days.
> 
> 
> Cheers




The government has created this monster.

They should stay out of the housing market all together. What happened to market forces?  

Whenever things look gloomy, they all go crying to the govt to increase homebuyers grants, or to pressure banks.

All the time the developers and builders are lining their pockets with GDP which would be better invested elsewhere.

This is the biggest example of australia squandering its mineral wealth, and government is to blame for this (tax cuts and bribes)


----------



## tech/a (10 November 2010)

> All the time the developers and builders are lining their pockets with GDP which would be better invested elsewhere.




Ahh
I love my industry.


----------



## Uncle Festivus (10 November 2010)

No such thing as a free lunch? Time to pay the piper.......



> offshore borrowings by depository corporations has exploded over the  past 20 years, from around $50 billion in 1988 to nearly $700 billion  currently.
> 
> Currently, depository corporations have around $300  billion of short-term foreign borrowings maturing within 12 months, in  addition to another $380 billion of longer-term foreign borrowings  outstanding. Other things equal, this $300 billion of short-term foreign  borrowings must be refinanced within 12 months just to maintain the  current level of credit within the Australian economy (let alone  increase it).



The CBA domestic mortgage loan book is full?



> The Commonwealth Bank has been building up its domestic mortgage book at  an anaemic rate while mounting a fierce argument that the nation has  not suffered a housing bubble.
> 
> Data from the banking regulator  [APRA] suggests that Australia's biggest mortgage lender is increasingly  averse to new lending, growing its home loan book at the slowest rate  among the major banks.
> 
> CBA's total mortgage lending grew by just  0.36 per cent in September -- the same month that chief executive Ralph  Norris travelled abroad to assure investors there was no property bubble  in Australia.



http://seekingalpha.com/article/235...posed-to-a-sudden-liquidity-shock?source=feed

The $100M bubble bet....



> *CHRISTOPHER Joye, an Australian   property market bull, yesterday offered US guru Jeremy Grantham a $100  million bet on house prices.                                  *                               .Mr Joye, managing director of property research group Rismark  International, challenged his equally vocal sparring partner, GMO  Capital founder and chief investment strategist Mr Grantham, to put his  "money where your mouth is" on the issue of whether Australia really is  in a property bubble.
> Mr Grantham's downbeat views on Australia's home prices were "sensationalist and spurious", Mr Joye said.
> He  challenged Mr Grantham to bet the $100m over a three-year term, basing  the outcome of the bet on movements in the RP Data-Rismark Australian  Capital Cities Dwelling Price Index.



http://www.theaustralian.com.au/bus...100m-housing-bet/story-e6frg8zx-1225948548559


----------



## tech/a (10 November 2010)

I do my Company banking through CBA.

I have their Business Manager chacing me for my Housing portfolio,Infact I have a very good written offer void of fees to move on my desk currently.

My current lenders St George and Bank SA are just as keen to keep it.
Both have opened up a negotiation with me I didnt instigate.
The result will be a better deal for me.
Great!


----------



## Mr Z (10 November 2010)

tech/a said:


> I do my Company banking through CBA.
> 
> I have their Business Manager chacing me for my Housing portfolio,Infact I have a very good written offer void of fees to move on my desk currently.
> 
> ...




Savor it! After all how often do they beg?


----------



## tech/a (10 November 2010)

They never beg!

They do however like decient business.
I have had many run ins with banks and dont like them as a business.
Individuals are good people on the whole but like everything the holder of the pay check can alter good peoples personalities.

National Bank came close to Bankrupting me in the 80s---tough and emotionally taxing times--
I learnt more from hardship than Id ever learnt in prosperity.
One of the reasons Ill spread and stay spread between lenders.

I remember my Solicitor saying to me.
If you want the best position of negotiation with a bank make sure that you owe enough to hurt them if you have difficulty and they consider writing you off!

Its been sound advice.


----------



## Mr Z (10 November 2010)

tech/a said:


> They never beg!




Then you just have not borrowed enough! 

Ahhhhhhhhhhhhhh the 80's what fun! Just as well I was younger and full of energy!

Anyway, where is my property bear hat?

Doomed, doomed we are all doomed! The market is crumbling! 

How is Bot's BTW?

Are we still doing this good guys bad guys thing?

Sorry... off topic, as you where men! and lady men! errrr I mean not men


----------



## nukz (10 November 2010)

tech/a said:


> I learnt more from hardship than Id ever learnt in prosperity.




This is so true, i have had very much the same experience before. It can also change the way you make decisions in the future in short learning from possible mistakes.


----------



## MR. (11 November 2010)

http://bigpondnews.com/articles/TopStories/2010/11/10/ANZ_lifts_variable_mortgage_rate_537480.html



> ANZ Banking Group has lifted the interest rate on its standard variable home loans by 0.39 per cent to 7.8 per cent and scrapped its exit fee for mortgages






> ANZ said it would scrap its deferred establishment fee, or exit fee, on mortgages and would waive loan approval fees for all new and existing mortgage customers applying for the three-year fixed rate mortgage by December 31.




Establishment fees up then or not?


----------



## Mr Z (11 November 2010)

Sounds like an invitation for the 'weak hands' to leave the ANZ if they find a better deal.

Either the government does not understand the funding pressure here or the banks are getting greedy. I think that the gov is willfully ignoring reality. The UST ten year note looks to be establishing an up trend in response to QEII. It is the cornerstone of the US mortgage market, you have to assume that currency risk is hedged away so that leaves upward rate pressure.

Rate direction is more important than absolute level...!


----------



## Verge32 (11 November 2010)

medicowallet said:


> Or ramping something up.
> 
> Is that allowed on ASF?




I had seen earlier on the thread that Kincella had also spoken of the Murray region in regards to the property in that area around the Coal developments.

I was just wondering is anyone else had looked at the potential for that area.

I have clearly missunderstood the thread.  I thought it was talking about areas and the future of property prices, not the banks.

Most other forums that discuss this topic discuss potential areas where prices are due to have major shifts in prices.

My apoligies.


----------



## Mr Z (11 November 2010)

That be because maybe banks and interest rates have something to do with it?


----------



## UBIQUITOUS (11 November 2010)

'Surprise' jump in the jobless rate today I wonder how many of those got conned by the FHOG and now are losing their homes? Sad sad sad. Shame on you property spruikers


----------



## tech/a (11 November 2010)

UBIQUITOUS said:


> 'Surprise' jump in the jobless rate today I wonder how many of those got conned by the FHOG and now are losing their homes? Sad sad sad. Shame on you property spruikers




No problems they can rent one of mine


----------



## Mr Z (11 November 2010)

You evil capitalist! :


----------



## Mofra (12 November 2010)

Mr Z said:


> You evil capitalist! :



Depends how you look at it - if rent is set at market rates and is below the non-deductable interst component of a loan they would pay anyway (minus maintenance) then tech/a is doing them a service by adding stock into the rental market to keeps rental rates reasonable


----------



## Mr Z (12 November 2010)

I look at it with my tongue firmly in my cheek.

Government has no place in the market . end of story.


----------



## medicowallet (12 November 2010)

tech/a said:


> They never beg!
> 
> They do however like decient business.
> I have had many run ins with banks and dont like them as a business.
> ...




This post is the best I have seen on this forum

The bankers are your best friends when you are making them money.

When you are going down, they are your worst nightmare.

I spread my exposure and often jam it up them just for fun. Why? because I can!


----------



## robots (12 November 2010)

Verge32 said:


> I had seen earlier on the thread that Kincella had also spoken of the Murray region in regards to the property in that area around the Coal developments.
> 
> I was just wondering is anyone else had looked at the potential for that area.
> 
> ...




hello,

good afternoon, yeah spot on Verge32

action should of been taken regarding the issue you raise as alot of this thread is about the banks now

and with ONLY 30% of their funding coming from overseas its another one of those myths in life, they loan just like they did 10, 20, 30, 50yrs ago

just whingers man, and probably why we wont get a response from Kincella or others as to what they are doing with property

thankyou
professor robots


----------



## Mr Z (12 November 2010)

WOW only 30%!

Price pressure comes at the margins! As in attracting or securing the marginal extra $


----------



## robots (12 November 2010)

Mr Z said:


> WOW only 30%!
> 
> Price pressure comes at the margins! As in attracting or securing the marginal extra $




hello,

i see what you mean alright Verge32, ONCE AGAIN

"the future of australian property prices"

thankyou
professor robots


----------



## MR. (12 November 2010)

http://www.abc.net.au/news/stories/2010/11/12/3064998.htm


> The standard variable mortgage rates for the big four banks are:
> 
> NAB - 7.67 per cent
> ANZ - 7.80 per cent
> ...




Let Barbara explain it! 
http://www.youtube.com/watch?v=VPQlFE8NCTI&feature=related

62% tomorrow, go on have a stab!


----------



## Dowdy (12 November 2010)

robots said:


> hello,
> 
> good afternoon, yeah spot on Verge32
> 
> ...




Well, the guy wanted to know any areas where prices would breakout and i've never seen you make any post about that (now would be a good time to do it). 
I mean, all you seem to post is the clearance rates (which you now say mean jack) and post your little trips to the coffee shop...

So who is really posting worthless post?

After all, the banks have nearly everything to do with housing, without them how will people buy houses with only the FHOG as the deposit....like the good ol days


----------



## robots (12 November 2010)

Dowdy said:


> Well, the guy wanted to know any areas where prices would breakout and i've never seen you make any post about that (now would be a good time to do it).
> I mean, all you seem to post is the clearance rates (*which you now say mean jack*) and post your little trips to the coffee shop...
> 
> So who is really posting worthless post?
> ...




hello,

well thats what people told me over the past 5yrs of posting the clearance rates:

"they mean jack", now you all want to claim them, amazing

i tell you Dowdy its tuff getting a latte down in Geelong man, no 7grams in that joint, oh well

and fifty years ago banks werent around? they loaned money then just like today

i can understand people are looking for answers

thankyou
professor robots


----------



## Agentm (13 November 2010)

6 days for a 15 story hotel..  amazing!!


----------



## MR. (13 November 2010)

http://www.heraldsun.com.au/money/e...y-auctions-slump/story-e6frfh5f-1225952955621



> Revised figures released by the Real Estate Institute of Victoria show the clearance rate last weekend was 59 per cent - two percentage points lower than initially published - because 76 estate agents failed to report properties that had passed in.






> The REIV was forced to phone the agents, some of whom said they thought the properties would sell after the auction, to get the missing results during the week.




Think Satanoperca had a good look at these "revised" figures a few months back and they were consistantly revised down!

What will today bring?


----------



## satanoperca (13 November 2010)

Yes Mr, the figures are generally revised down and some variance must be placed on them anyway. I would say the real clearance rate is at leat 5% lower than the published.

Robots, the clearance rates are hard to interpret week from week but when they were above 80% a few months ago and have dropped below 60% then you could summarise that 

A) there has been a significant drop in demand as a result of sellers not meeting current buyers expectation on price and/or buyers simply not being able to access as much credit due to expanding interest rates
B) foreign buyers have left the market due to the high $AU and some have turned into sellers adding to supply
C) Supply has been added to significantly and demand has remand constant.

The more interesting thing is the large volume spike in supply. Why are so many people trying to sell, maybe poor rental returns, maybe many are over committed or that some cannot see property growing at the rates it has over the last two years. 

As it is property and cycles are long, only time will tell how resilent the market is. I assume we will start hearing cries for govnuts to waste more money propping up this market.

Cheers

No sunshine today in Melbourne, that is for sure.

Look forward to you reporting Robots, easily under 60% this weekend.


----------



## MR. (13 November 2010)

satanoperca said:


> Yes Mr, the figures are generally revised down and some variance must be placed on them anyway. I would say the real clearance rate is at leat 5% lower than the published.




Possibly, but for all accounts, as I'd expect you'd agree, as long as these factors remain constant a rise is a rise and a fall is a fall.



> A) there has been a significant drop in demand as a result of sellers not meeting current buyers expectation on price and/or buyers simply not being able to access as much credit due to expanding interest rates
> B) foreign buyers have left the market due to the high $AU and some have turned into sellers adding to supply
> C) Supply has been added to significantly and demand has remained constant.




All very plausable.



> The more interesting thing is the large volume spike in supply.




The amount of auctions is higher than previous weeks, but are they higher than the average November? These auctions would have been set well before the interest rate rise so any change there is yet to be felt on the volume side. How much has the volume spiked?



> easily under 60% this weekend.




Vendors would have been pressured by the agents and with the media on their side had convinced the vendors to take a good look at their reserves.


----------



## robots (13 November 2010)

hello,

oh yeah, everyone's on the edge of their seats waiting for the results

explod told me it all means nothing anyway, so oh well, and we cant trust them when they are 80% so cant trust them when they are 58%

what a great day again, got some more trees for the building, fantastic the wildlife going to love them

thankyou
professor robots


----------



## Mr Z (13 November 2010)

Neither number means much without the surrounding data.  Never did, never will....

Historically speaking, it sounds low... what are stock levels like?


----------



## MR. (13 November 2010)

Beej said:


> Auction clearance rates are an historical leading indicator of what's going on in a particular residential property market...................
> 
> For Sydney, usually a sustained auction clearance rates of 60%+ provide a leading indicator that prices are rising strongly. Rates < 50% normally indicate falling or stagnant prices.




Last week:
In Sydney, just 58 per cent of the 316 homes under the hammer sold, with $161.7 million total weekend auction revenue compared with $218.4 million on the same Saturday last year.

http://www.news.com.au/money/proper...all-on-rate-rise/story-e6frfmd0-1225949385174


----------



## lioness (13 November 2010)

MR. said:


> Last week:
> In Sydney, just 58 per cent of the 316 homes under the hammer sold, with $161.7 million total weekend auction revenue compared with $218.4 million on the same Saturday last year.
> 
> http://www.news.com.au/money/proper...all-on-rate-rise/story-e6frfmd0-1225949385174




Any update on Melbourne's result?


----------



## MR. (13 November 2010)

Mr Z said:


> what are stock levels like?




Melbourne auction volumes last week were 11% higher than the same time the year before. This week they are 7% higher. Other weeks? 

The next three weeks will bring more than 1000 auctions each week.

yes lioness, but not for me to post......


----------



## medicowallet (13 November 2010)

This week: 778
Last Weekend: 669
This time last year: 734

S Sold at Auction: 387
SB Sold before Auction: 81
SA Sold after Auction: 7

Passed in: 303
Passed in on vendor's bid: 193

Clearance rate: 61%


Last year 81%


I don't know why it is down by 25%.  Perhaps you can explain why Professor?


----------



## robots (13 November 2010)

hello,

wouldnt have a clue MW, i just report the figures like you

got a feeling though the REIV has changed its reporting methodology from last year, oh well

thanks to Enzo for getting the results together

my research is and always been on the future of australian property prices and i advise my clients on suburbs, towns and techniques to grow their wealth with property 

thankyou
professor robots


----------



## lioness (13 November 2010)

robots said:


> hello,
> 
> wouldnt have a clue MW, i just report the figures like you
> 
> ...




Where is the link professor?


----------



## Dowdy (14 November 2010)

robots said:


> hello,
> 
> my research is and always been on the future of australian property prices and i advise my clients on suburbs, towns and techniques to grow their wealth with property
> 
> ...





Care to share this research so if you are right, you can be self proclaimed to god/ omnipotent/ one above all


----------



## satanoperca (14 November 2010)

medicowallet said:


> I don't know why it is down by 25%.




The only variable to change is cost of credit, maybe that is attributing to how much people can afford.

Would love to hear a professors thoughts?

Cheers


----------



## MR. (14 November 2010)

Hey MW, that house of yours is positioned precariously on the edge of a cliff. Whenever there's erosion of the sort and if you’re not alone, the Government usually takes measures to prop your house back up. 

Or is that council? Perhaps just earthworks are required!


----------



## Agentm (14 November 2010)

medicowallet said:


> This week: 778
> Last Weekend: 669
> This time last year: 734
> 
> ...




reiv deliberately misquotes..

last week they proclaimed 61%, BUT ACTUAL WAS A LOT LOWER

it was way worse than reported, at 59%

today they are reporting at bogus figure of 61% for saturday, with 139 of the 778 not reported as usual

my guess it that history will repeat and the actual will be a revision far lower than the all important psychological 60%


----------



## MR. (14 November 2010)

Agentm said:


> reiv deliberately misquotes..
> 
> last week they proclaimed 61%, BUT ACTUAL WAS A LOT LOWER
> 
> ...




IMO the REIV isn't deliberately misquoting Saturdays results as that is the information at hand. Is it the REIV's fault some agents drag their feet to report their outcomes? 

What I find misrepresenting by the REIV is when the REIV claims:


> The clearance rate this weekend is 61 per cent, compared to last weekends 59 per cent.




Oooh The result is much better than last week 
The market must be getting better! 2% up!

Fine if the figure stays at 61% but it isn't! (last week's initial report was also 61% before it dropped to 59% but the REIV isn't telling us that bit this week)

Agentm, what do you mean "139 not reported as usual"? 
Do you mean the 193 ?


----------



## medicowallet (14 November 2010)

MR. said:


> Hey MW, that house of yours is positioned precariously on the edge of a cliff. Whenever there's erosion of the sort and if you’re not alone, the Government usually takes measures to prop your house back up.
> 
> Or is that council? Perhaps just earthworks are required!




Oh that is just representative of, I dunno, perhaps an investment property purchased within the last 6 months or so.

Purchased up there in the sky, and poised to fall down a bit.

Man, I wouldn't have wanted to have purchased anything over the past 6 months or so, as the values are going to be coming under pressure, and with increasing interest rates, servicing the debt becomes troublesome.

I have no housing debt, so falls in price do not bother me.

Plenty of sunshine, lollipops, sherbet, icecream and bubble gum.


----------



## UBIQUITOUS (14 November 2010)

kincella said:


> *am really looking forward to the big drop in interest rates that will come again..*..
> just 2 days out from the year end, and all those horrid figures coming out so soon...just wait for all the worst figures to be reported in the next 3 months
> retail spending is the worst in 25 years....etc
> 
> ...




Hey Kincy, rates appear to be moving in the opposite direction to what you foretold 4 months ago. Does this mean that you were completely wrong? Because from what I am seeing, those who bought this year are screaming. I mean all this hoo hahh and interest rates are only 4.75%! Can you explain it please? I heard a rumour that it's no good thinking 'property is for the long term', if you can't afford to keep hold of it in the short term. Must be rubbish. Property doubles every 7 years at least!

By the way, how's your '10% a year every year' capital growth model coming along? Are you going to revise it this year?


----------



## Quincy (14 November 2010)

> A quarter of Australian home borrowers will be under severe financial stress or forced to sell their homes if interest rates rise by another 100 basis points next year, research shows.







> One in 20 said they’d be forced to sell, with baby boomers under the most stress - 15 per cent of borrowers aged 50 to 65 years say they’d have to sell.
> 
> http://www.smh.com.au/business/mortgage-stress-to-intensify-if-rates-jump-20101112-17qwd.html





ohh dear !


----------



## MACCA350 (15 November 2010)

Money Morning headline:


> *Aussie House Price Crash Has Begun*




Are we starting to see the media turn bearish? If statements like that start popping up in mainstream media it will have an effect on both buyers and sellers, almost like a self fulfilling prophecy. 
Market sentiment can have a profound effect, just as the 'get in before you're priced out of the market' thinking pushed buyers into a feeding frenzy forcing prices up.

One interesting graph shows mortgage debt has risen since 1990 from 17% of GDP to a whopping 90% of GDP.
That sounds bad to me, but what does it really mean? Is it really a bad situation, is it sustainable, have we overextended, or is it simply a useless comparison that has no real value?

Cheers


----------



## explod (15 November 2010)

Looking for that clearance rate for the weekend there Professor....  ole pal. 

Usually get our kick before this.   Was I far out with my 58% prediction?


----------



## nukz (15 November 2010)

Where is robots while all this is going on? lol


----------



## Mr Z (15 November 2010)

MACCA350 said:


> That sounds bad to me, but what does it really mean? Is it really a bad situation, is it sustainable, have we overextended, or is it simply a useless comparison that has no real value?




We owe too much, it means we are not going to be that resilient when our economy receives its next real shock. Interest rates? Direction seems to have changed despite QEII efforts.?! We have no room to move, lets hope we don't have to.


----------



## explod (15 November 2010)

nukz said:


> Where is robots while all this is going on? lol




Could be out organising a few sales before the Crissy break.

Got to keep the bubbles flowing and the birds singing in the trees, oh and did you hear our ole mate Doyle is going to bring in the owls to chase out the possums around the city.  Great stuff Brothers/sisters.

Of couse its mostly doomsayers like yours truly that have caused it all.


----------



## robots (15 November 2010)

hello,

great day brothers, looking forward to new ASF as i am mobile at the moment brothers

So a bit difficult, i wont run like a bear

Thankyou
Professor robots


----------



## Quincy (16 November 2010)

Mr Z said:


> Interest rates? Direction seems to have changed despite QEII efforts.?! We have no room to move, lets hope we don't have to.







> *Higher funding costs eat into big four's margins - Big four banks may opt for more rate rises*
> 
> By Danny John - November 16, 2010
> 
> ...






> A quarter of Australian home borrowers will be under severe financial stress or forced to sell their homes if interest rates rise by another 100 basis points next year, research shows.
> 
> http://www.smh.com.au/business/mortg...112-17qwd.html





=>  The future of Australian property prices IMO over the next 12 - 24 months ?   :bad:


----------



## MR. (16 November 2010)

The week before the 13/11/2010 weekend the REIV claimed there would be 920 auctions on the 13/11/2010 weekend. Only 836 were reported. What happened to the other 9% or 84 houses? Does this always occur?

The average over the last 6 weeks has a discrepancy of 10.5% per week, from what was said to be auctioned the following week, to what took place. What happened to these 10.5% of homes? Were they taken off the market or sold prior?

Five months ago the average over 6 weeks from 6/6 to 10/7 produced a discrepancy of just 6.8% per week. It appears the discrepancy has risen since then by approximately 50%.

IMO the increase could be from vendors cancelling, postponing or changing to private sale. If these properties are being postponed or becoming a private sale there must be a build up of stock appearing! (not good for property bulls)

Professor of REIV long time, winner of countless years, or other vanishing property bulls. What is your take apart from the REIV has changed their calculation methods of late?


----------



## Mofra (16 November 2010)

MR. said:


> Professor of REIV long time, winner of countless years, or other vanishing property bulls. What is your take apart from the REIV has changed their calculation methods of late?



I'm not sure if I qualify as a bull anymore given my comments on likely short term moves in prices, but they are clearly fudging the figures (or attempting to). 
The story of the revision down to 58% last week after a bunch of agents "forgot" to post their results is a pretty flimsy excuse in anyone's language, and means even less coming from Enzo.


----------



## cutz (16 November 2010)

Hi MR,

There's a bit of a burst in this article regarding the discrepancies, http://www.news.com.au/money/proper...y-auctions-slump/story-e6frfmd0-1225952955621


----------



## Mr Z (16 November 2010)

Mofra said:


> ....but they are clearly fudging the figures (or attempting to).




Awwwwww come now, the next thing you will be telling me is that the goobermint fudges CPI numbers. 

I suppose you wanna have a go at Santa and the Easter Bunny as well! :

Damit I will not have it!


----------



## trainspotter (16 November 2010)

Lotta white noise and palava so far. As reported before ... some areas will slide due to mortgage stress and other areas will continue to bracket creep. Monetary tightening and Guvmint interference is starting to bite hard. Post GFC jitters means the proletariat have gone weak at the knees when it comes to spending. The recession we have to have perhaps? Cost of living is going through the roof and Princess Joolyah is STILL spending stimulus money like an American Sailor on shore leave. Double whammy all round.

Will the property prices collapse similar to the other Western civilised democracies? Unlikely IMO. Banks are solid profit makers, history of Aussie battlers in the mortgage belt selling Grandma before defaulting, many and varied reasons which have been covered previously in this thread.

The RBA also has enough capacity in rates to DROP them if necessary to soften the blow. The Guvmint does not want to cause the banks stress who hold the $$$ and the mortgages to the future prices of Australian property.

Yes there will be a fair bit of road kill on the highway of life. It will depend on how quickly the scavengers can clean up the carcass's to keep it constant.

Lest we forget these numbers: ESTABLISHED HOUSE PRICES

Quarterly Changes

Preliminary estimates show the price index for established houses for the weighted average of the eight capital cities *increased 0.1%* in the September quarter 2010. 
The capital city indexes increased in Melbourne (+2.7%), Perth (+0.4%) and Darwin (+0.3%), and decreased in Sydney (-0.9%), Brisbane (-2.1%), Adelaide (-1.4%), Hobart (-1.4%) and Canberra (-0.4%).

Annual Changes (September quarter 2009 to September quarter 2010) 

Preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities *increased 11.5%* in the year to September quarter 2010. 
Annually, house prices rose in Melbourne (+18.8%), Sydney (+11.0%), Canberra (+11.0%), Darwin (+9.8%), Perth (+9.4%), Adelaide (+6.3%), Hobart (+4.2%) and Brisbane (+3.0%).

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0


----------



## satanoperca (16 November 2010)

trainspotter said:


> Will the property prices collapse similar to the other Western civilised democracies? Unlikely IMO.




But not impossible.

Banks - hmmm solid profit earners as long as the govnuts give them a helping hand. Be interesting in round 2 if the govnuts have to support them again and the public outcry this time after they all raised rates above the RBA.

Cheers


----------



## moXJO (16 November 2010)

Damn it, am I the only one living in an area that just keeps going up. The house sold two doors up in less than 3 weeks. The house across the road from that sold in two days. In fact most are only lasting 1-4 weeks on the market. And the prices are just ridiculous. Something has to give; I am seeing places that use to be slum areas selling in the $700 thousand range. And all while I was trying to buy.

There are heaps trying to sell at the moment. Even my parents are selling two (going on market next week).


----------



## satanoperca (16 November 2010)

moXJO said:


> And the prices are just ridiculous. Something has to give; I am seeing places that use to be slum areas selling in the $700 thousand range. And all while I was trying to buy.
> 
> There are heaps trying to sell at the moment. Even my parents are selling two (going on market next week).




Hmm wouldn't that be the definition of the peak of a high volume upthrust, can see those strong hands selling into those weaker ones.

Just a thought, it is all about volume, price spread and time, this bar is only at half time.

Cheers


----------



## Aussiejeff (17 November 2010)

http://www.news.com.au/money/proper...estate-in-sydney/story-e6frfmd0-1225954693751



> Major real estate firms are cashing in on the trend, promoting Australian properties in Asian hubs like Hong Kong and Singapore, luring cashed up investors with promises of safe, secure growth opportunities.
> 
> *The most recent figures from the Federal Government's Foreign Investment Review Board, collected during the worst of the global financial crisis in 2008-09, reveal foreigners picked up $23.4 billion in Australian real estate assets including 3639 new and existing homes, and 988 parcels of land.*




Those figures were BEFORE the full effect of the massive RE industry bailout courtesy of FHBG & state grants. I wonder how much of THAT cash has/is being soaked up by "foreign interests"? I'd love to know the figures right NOW rather than 2 year old crap.


----------



## Quincy (17 November 2010)

moXJO said:


> Damn it, am I the only one living in an area that just keeps going up. The house sold two doors up in less than 3 weeks. The house across the road from that sold in two days. In fact most are only lasting 1-4 weeks on the market. And the prices are just ridiculous. Something has to give; I am seeing places that use to be slum areas selling in the $700 thousand range. And all while I was trying to buy.
> 
> There are heaps trying to sell at the moment. Even my parents are selling two (going on market next week).




As a matter of interest moXJO, do you know whether the purchasers are from around the area (locals) or are they overseas' buyers ?


----------



## wintermute (17 November 2010)

moXJO said:


> Damn it, am I the only one living in an area that just keeps going up. The house sold two doors up in less than 3 weeks. The house across the road from that sold in two days. In fact most are only lasting 1-4 weeks on the market. And the prices are just ridiculous. Something has to give; I am seeing places that use to be slum areas selling in the $700 thousand range. And all while I was trying to buy.
> 
> There are heaps trying to sell at the moment. Even my parents are selling two (going on market next week).




No not the only one moxjo, my supberb has gone up around 30% in the last 12 months (but then it had been stagnant for about 8 years, so in reality it is just playing catch up).   Properties have been selling the day they are listed.  We looked at one decided we would like to put an offer on it (the day it was listed) and we were told we were too late deposit had already been taken, and we only left it for about 3 hours to make that decision... any house in our area with good presentation sells VERY quickly.  

We ended up deciding to buy a brand new 1.5 bed as an investment.  435K ouch... I have been wary about property falls for too long (no doubt will tank now we have bought) settle tomorrow, tennant moves in Sunday 12 month lease.  $495/week rent... absolutely crazy!!  We were thinking $400 / week would be ok and even that seemed a lot (though not a lot compared to the price of the unit).  

Paid down the morgage on the our place and overall after fees etc our repayments should be around the same as they were before (even with the latest interest rate hike) so I'm feeling reasonably comfortable. 

Our decision was to buy for future income, not for capital gains. unless the rental market tanks I think we should be ok   we will be paying off our own place as aggresively as possible without cuasing stress. 

Tony.


----------



## MR. (17 November 2010)

trainspotter said:


> The RBA also has enough capacity in rates to DROP them if necessary to soften the blow. The Guvmint does not want to cause the banks stress who hold the $$$ and the mortgages to the future prices of Australian property.
> 
> 
> Lest we forget these numbers: ESTABLISHED HOUSE PRICES
> ...




Our high interest rates might just save all our bacon. The RBA does have alot of room to move.  

Melbourne is propping up the countries average! As for the year on year figures, think you're in the wrong thread!


----------



## nukz (17 November 2010)

There are possible signs that rise in Melbourne could drop off with the recent article in the age stating a 37% drop in international student numbers along with market volatility in china and the strong AUD.

As some people here form Melbourne would know allot of the suburbs are almost completly reliant on immigration eg. all the estern suburbs and point cook, northern/western suburbs.


----------



## moXJO (17 November 2010)

Quincy said:


> As a matter of interest moXJO, do you know whether the purchasers are from around the area (locals) or are they overseas' buyers ?




They are Sydney buyers snapping up everything in sight. I have done a few repairs on houses just sold, so end up chatting with the owner. The majority from personal experience is IP.


----------



## CamKawa (17 November 2010)

Some people just don't think of the risks involved in property. When it goes up its all fine and dandy, but when it falls the losses are horrendous.

All at sea as couple loses $2 million on Bondi sale


----------



## Bigukraine (18 November 2010)

CamKawa said:


> Some people just don't think of the risks involved in property. When it goes up its all fine and dandy, but when it falls the losses are horrendous.
> 
> All at sea as couple loses $2 million on Bondi sale




very extreme example though.....and as a way to try and obtain a whole block they went about it a bit stupidly....all you needed was one to hold out and hey presto your stuffed.... should of put a lot of loud ,obnoxious tennants around them and they might of been a chance....::


----------



## SusanW (18 November 2010)

More generally, Oz property prices will always be determined most by the cost and availability of credit, because most people cannot pay cash and a steady stream of cash poor first home buyers will always need to enter the market to replace those exiting. 

Population dynamics are influential, but much less so than rates. It is possible to see flat and falling property values in the face of population growth. In fact, that has been the case in many regional towns in the last few years, Perth since april 2008, Brisbane since feb 2010, Sydney  jan 2004 to 06.

New housing supply/demand is also important, but within the limits of affordability.

I don't think most property investors understand yet the tenuous direction Australia is moving in. Lenders are becoming evermore dependent on foreign capital to sustain property values which carries risks not understood well by most. The risks are born out in Aussie banks' tighter lending criteria to developers despite apparent housing undersupply.

Pre 1990s, housing credit supply was at least 85% sourced from Australian savings. Today some say it is 50% foreign sourced and climbing.

I think the RBA's drive with rates at the moment is to encourage more domestic capital into attractive interest rate deposit accounts, and slow the growth of foreign credit dependent debt. This will help buffer Australia against future global credit tightening, which seems to be a growing possibility. 

Based on all of the above, I think the future of passive property investing is unattractive. I expect growth to average less than 3-5%pa over the next 5-10 years in all capitals. I attribute this primarily to the fact that debt growth will be more tightly aligned with wage growth and rates are unlikely to decrease unless there's another serious global credit freeze. 

So what does this mean for rent levels? There will be upwards pressure, but that will be capped by wages. I also think the govt will revisit negative gearing, and reduce the incentive for investors to accumulate property, such as negative gearing benefits be limited to new construction.

Finally, I don't see a drop in nominal values >15-20% like some bears. However, in real terms over the next 10 years, that may very well be what happens.


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## sinner (18 November 2010)

SusanW said:


> M*ore generally, Oz property prices will always be determined most by the cost and availability of credit, because most people cannot pay cash and a steady stream of cash poor first home buyers will always need to enter the market to replace those exiting. *
> 
> *Population dynamics are influential, but much less so than rates*. It is possible to see flat and falling property values in the face of population growth. In fact, that has been the case in many regional towns in the last few years, Perth since april 2008, Brisbane since feb 2010, Sydney  jan 2004 to 06.
> 
> ...




Great post SusanW, on the mark on all counts IMHO. Bolded the bits I liked the most. The first paragraph is key to understanding Australian property market.

You mention the 5-10 year timeframe. 

What is your view on the standard of living in this country over that timeframe? Do you expect that emerging markets will align their standard of living with ours (due to say, a large uptick in Chinese domestic demand or similar)? Or will we be forced to align our standard with theirs?


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## trainspotter (18 November 2010)

SusanW said:


> More generally, Oz property prices will always be determined most by the cost and availability of credit, because most people cannot pay cash and a steady stream of cash poor first home buyers will always need to enter the market to replace those exiting.
> 
> Population dynamics are influential, but much less so than rates. It is possible to see flat and falling property values in the face of population growth. In fact, that has been the case in many regional towns in the last few years, Perth since april 2008, Brisbane since feb 2010, Sydney  jan 2004 to 06.
> 
> ...




OMFG !!!!!! I think I am in love with the sagacity and clarity of this sublime post. SusanW I am in awe of the way you have enucleated the subject matter at hand for all to understand.


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## SusanW (18 November 2010)

sinner said:


> What is your view on the standard of living in this country over that timeframe? Do you expect that emerging markets will align their standard of living with ours (due to say, a large uptick in Chinese domestic demand or similar)? Or will we be forced to align our standard with theirs?




A tough call Sinner. I think EMs have decoupled more than I expected 5 years ago. But I think they are still considerably dependent on the European and US consumer. China will remain reliant on foreign income (trade surplus) for internal growth for at least another decade in my view. If they are wise, the Chinese will use that surplus to buffer their economy against the ongoing inescapable deleveraging in Europe and USA.

I think Australia's std of living is already falling. Many think we don't have a two speed economy here, but that is bunk in my view. The casualization of our workforce, youth unemployment, longer f/t working week, and the cost of housing in average wage multiples bear that out. Our inability to grow and maintain infrastructure with population growth is a red flag (consider public transport, water supply, law and order) . Things like local governments front loading headworks costs on new sub divisions is indicative we are unable to afford the same level of public service we are accustomed.


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## sinner (18 November 2010)

SusanW said:


> A tough call Sinner. I think EMs have decoupled more than I expected 5 years ago. But I think they are still considerably dependent on the European and US consumer. China will remain reliant on foreign income (trade surplus) for internal growth for at least another decade in my view. If they are wise, the Chinese will use that surplus to buffer their economy against the ongoing inescapable deleveraging in Europe and USA.
> 
> I think Australia's std of living is already falling. Many think we don't have a two speed economy here, but that is bunk in my view. The casualization of our workforce, youth unemployment, longer f/t working week, and the cost of housing in average wage multiples bear that out. Our inability to grow and maintain infrastructure with population growth is a red flag (consider public transport, water supply, law and order) . Things like local governments front loading headworks costs on new sub divisions is indicative we are unable to afford the same level of public service we are accustomed.




SusanW, you are spinning gold here, please keep it up.

Your view is actually more bearish than mine in that case, but very well based.


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## MR. (18 November 2010)

SusanW said:


> I also think the govt will revisit negative gearing, and reduce the incentive for investors to accumulate property, such as negative gearing benefits be limited to new construction.




I like this gale!


MR. said:


> Just put NG on new houses only and be done with it.





MR. said:


> You’d have to wonder if just a change to Negative Gearing on existing houses (similar to July 1985) would help the speculation of ever higher house prices and not enough new dwellings!




If the economy slows here in OZ (more like when) and the RBA reduces interest rates (again) I think that change needs to be made to negative gearing. 



sinner said:


> SusanW, you are spinning gold here, please keep it up.




Gold as in gold I trust not gold!


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## robots (18 November 2010)

hello,

oh come on, why this thread got to have all the trash lobbed in it

no wonder Verge32 hasnt returned, its all about banks, EM's, and standard of living, what about plain old vanilla style real estate?

oh well, another great day, upsized to a mega-large latte this morning

thankyou
professor robots


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## Mr Z (18 November 2010)

In reference to Susan's China comment...

You know, I don't believe that China is as export dependent as is commonly believed. One interesting stat I tripped over the other day --> 95% of China's billionaires made their money on the domestic market. I think that they have just about reached the point that they can grow primarily on the internal momentum they have generated. Much like the US did at one point.... its just an opinion.


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## Mr Z (18 November 2010)

robots said:


> oh come on, why this thread got to have all the trash lobbed in it




It is the universe dude... it's all connected... like wow man, ya dig it?  We are just following the threads of life.... BTW... Nice threads dude!


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## Alex Barton (19 November 2010)

Here is an article about the Australian Housing Bubble that I had published on Ezines. The bulls most probably won't agree with any of it, so fire away with your criticism, I can take it! 

Australian Housing Bubble



> The question of whether Australian house prices are overvalued has been an extremely polarising issue for some time. Many observers believe property values in Australia are severely overpriced relative to other countries, relative to historic trends, relative to incomes, and relative to rental yields. Such observations have led some people to believe that a speculative housing bubble may be growing in Australia.
> 
> Normally in an unregulated economy, housing values should meet an equilibrium based on availability versus demand. When values increase, this suggests that availability has reduced or demand has increased (or both). In fact in Australia, both events have occurred......
> 
> ..... continues here: http://ezinearticles.com/?Australian-Housing-Bubble




I'm interested to hear what people think about the article. Thanks!


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## SusanW (19 November 2010)

robots said:


> what about plain old vanilla style real estate?




Well here's 30 years of plain old vanilla style real estate growth.









This is a nice chart I just found on a property forum. Highlights well the cyclical nature of property growth, and how Brisbane 10 year rolling av annual growth is beginning a downtrend.

Note that average annual growth through the 90s was less than 4%. 
Combine that with 10 years of negative cash flow and your internal rate of return will suck - all in the face of 12% population growth!

Alternatively, the all ords achieved 9.2%pa in the same time frame, without considering dividends or their reinvestment. With 70% margin or equity loans now available for equities, one really needs to model carefully comparison of timing vs buy and hold approaches to asset allocation (property and shares).


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## CamKawa (19 November 2010)

All good stuff I reckon.

Victorian home owners losing it all 

Those seeking assistance can phone their banks, MoneyHelp (1800 149 689) or Lifeline (131 114).


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## nukz (19 November 2010)

I remember in years between 2004 - 2009 there was a perception between property buyers(residential) that no matter what the location, cost ect it would'nt matter because "it would double in a year or 2".

I think with the increase of the first home owners grant pushing up prices it really confirmed that for some people. There will have to come a time when all that phony growth contracts. 

I think proberbly the ticking time bomb will be a slowdown in China or the US slipping back into recession ect. I'm not ushally the one to put a date on something but i would be thinking sometime between Q3 2011 and Q3 2012.


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## SusanW (19 November 2010)

These charts from a Somersoft member are also excellent.

Perth has gone no where since 2007. 
Brisbane is down 2.5% this year. 
Sydney is down from a June 2010 peak. 
Melbourne, Canberra, and Adelaide are flattening. 

The Gold and Sunshine Coasts are train wrecks, as are most regional towns not directly benefiting from mining related growth.

Those who argue population growth is the key driver of property prices would need to explain the decrease in Sydney prices between 04-06 and Perth since mid 2008.






Below, the higher frequency of high amplitude negative monthly changes since GFC indicate the unprecedented pressure on Brisbane house prices. The abnormality of 2001-2004 growth is also apparent.






The third chart gives some indication of how property investing lending has outpaced owner occupiers in the last 20 years. My view is if credit is not used to expand national productivity sufficiently to cover interest repayments (and principal in a timely manner), an economy is impoverished and the trend is unsustainable...economics 101. 






Unarguably Australia would be better off if the credit used to bid up Australian house prices was instead used to increase economic productivity, maybe as pharmaceutical research and patents, realistic green tech, robotics, etc. Resi housing doesn't generate sustainable jobs.

Anyway, I might end it there as I presume savvy share traders realize all this stuff anyway.


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## Agentm (19 November 2010)

this is the one that hurts and the one that will stop the bubble clean in its tracks..

it should come under notice that the rates are not decreasing, but indeed increasing.. 

as with all things, what goes up must come down, and *the future of australian property prices* are certainly being talked up by the likes of the cba and rba, and many here... saying its all good.. but i think the sheep are waking up to the fact they paid a bucketful too much for a property that they not be able to afford if the trend continues..

good luck to the dreamers whom keep touting the rosy future and the sipping of lattes..


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## Mr Z (19 November 2010)

Something to keep in mind is that it is not the absolute rate that counts so much as the direction rates are taking.


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## dhukka (19 November 2010)

SusanW said:


> Unarguably Australia would be better off if the credit used to bid up Australian house prices was instead used to increase economic productivity, maybe as pharmaceutical research and patents, realistic green tech, robotics, etc. Resi housing doesn't generate sustainable jobs.




If only someone behind the levers of power understood this simple concept.


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## againsthegrain (19 November 2010)

> oh well, another great day, upsized to a mega-large latte this morning




Most likely its still a small but watered down by the business owner who is under financial stress, this is starting to be a normal practice overcharge for half the job. Similar trend property up, prices up, overall quality down. 

Soon you might be drinking upsized tap water in a 800k termite infested 2 bed room metricon house with aldi brand 2.5D tv


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## nukz (19 November 2010)

Does Robots actully hold any property or has he ever? or is this just some 12 y/o kid in the basement of his parents place talking crap.

I'm kinda curious..


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## satanoperca (19 November 2010)

dhukka said:


> If only someone behind the levers of power understood this simple concept.




Victoria govnuts could never understand this simple concept with $3.8B in stamp duty revenue from last year. How would they replace it? Tax productive industries more.

Bit of a joke really, high cost of housing does not make a country wealthy.

Cheers


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## satanoperca (19 November 2010)

nukz said:


> Does Robots actully hold any property or has he ever? or is this just some 12 y/o kid in the basement of his parents place talking crap.
> 
> I'm kinda curious..




Answer is Yes he does.

Cannot knock him, his simple approach to investing has been financial rewarding for him over the years whether he is a 12 or 100 year old.

Cheers


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## nukz (19 November 2010)

satanoperca said:


> Answer is Yes he does.
> 
> Cannot knock him, his simple approach to investing has been financial rewarding for him over the years whether he is a 12 or 100 year old.
> 
> Cheers




What's the approach, i came into this threat at around page 70 and all i've ever seen is random comments and rarely a comment that even refers to property lol

So does he own property? lol or has he at one stage held property? i asked this same sorta question about 15 pages back and never got a answer from him lol

It makes me really curious who this guy is and if hes for real lol


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## Agentm (19 November 2010)

nukz

unlike the other threads, this one you can ramp the heck out of your case without proof, you can claim to be a "developa maate"  and sight all these fanciful profits and the like, and no one will call you up for it. its almost like your getting investment advice from a real estate agent, rather than a debate on the future of australian property prices

imho the future of australian property prices is following the same monotonous  track.. you have the kill list of robots, and the stayers whom see and identify a bubble

everyone makes a killing in a bubble, thats not the issue for me,  what concerns me is that i know a hell of a  lot of folk whom are property owners whom have a huge sum of capital to pay off on what i believe to be vastly inflated prices..  despite the usual suspects refusing to acknowledge the impact rising interest rates have on the bubble housing market, i steadfastly maintain the bubble is there and the consequence of the interest rates rises will be severe in the present market..

but the latte drinkin developas will keep it all off topic and i am certain the debate will continue with ridicule.. but there is a possibility the bubble will burst.. and that will be major problem for not only the housing market, but also the lenders. and ultimately the guvamen..  i am sure the riskier the market becomes, the higher the rates that the pillar banks will be delivered..

lets wait and see..


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## trainspotter (19 November 2010)

Robots is the real deal. His approach is a different strategy to most. I personally enjoy his positivity that he brings to this thread. I think he lives by the KISS rule. 

Oh BTW Agentm .... if you need proof just ask the mods to request from the perpetrator for some evidence of their outlandish claims. Quite easy really.

I concur with your statement that there is a _possibility_ that the bubble could burst. It is also possible that it will continue to slant sideways for several years. It is also possible that some areas will be hit very hard with mortgage stress and that some areas will continue to evidence good growth.


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## satanoperca (19 November 2010)

trainspotter said:


> I concur with your statement that there is a _possibility_ that the bubble could burst.




What a second, are you know admitting that there is a bubble? 

And secondly, if some suburbs get hit hard, cannot see others defying the trend and growing, rather just not declining as much.

Cheers


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## trainspotter (19 November 2010)

satanoperca said:


> What a second, are you know admitting that there is a bubble?
> 
> And secondly, if some suburbs get hit hard, cannot see others defying the trend and growing, rather just not declining as much.
> 
> Cheers




Nope ..... not what I typed. I concurred that there is a _possibility_ of a flaw in the system and that "the" bubble could be bursting. It would appear that there are hard times ahead. Not necessarily in property either.

Some suburbs will be hit hard and others will continue to perform fait accompli.  Same as buying shares. There are non performers in a portfolio and others that require a massage to get them moving.


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## MR. (19 November 2010)

robots said:


> come on, why this thread got to have all the trash lobbed in it
> 
> no wonder Verge32 hasnt returned




Do you mean that travelling saleman Verge32 who has now moved on to sell somewhere else? His post was straight out of a salesman's manual. 


Verge32 said:


> .......Ive seen land prices go from $5k a block 5 years ago to $40k a block just recently.
> 
> ........ news on the ground is all go go go.
> 
> ...


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## MR. (19 November 2010)

trainspotter said:


> Nope ..... not what I typed. I concurred that there is a _possibility_ of a flaw in the system and that "the" bubble could be bursting.




I can see John Clarke and Brian Dawe debating this one satanoperca .


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## MR. (19 November 2010)

http://www.youtube.com/watch?v=y0b6pkGNeI0&feature=related


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## SusanW (19 November 2010)

From the mouth of Glenn Stevens in March this year. 

"It's a mistake to assume a riskless, easy, and guaranteed way to prosperity is just to leverage to property," he said.

“These (house) prices are getting quite high,” Mr Stevens said. “I’ve  got kids that within not too many years are going to want somewhere of  their own to live and you wonder how is that going to be afforded.”

Well Glenn, for the last 6 years the RBA have been saying house price growth has not been an issue. Then all of a sudden in March this year it is???? Isn't it funny how these things just creep up on you without warning. 

The more I hear from the RBA, the more sense the Austrian School of Economics' explanation of asset price inflation makes.


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## wayneL (19 November 2010)

SusanW said:


> From the mouth of Glenn Stevens in March this year.
> 
> The more I hear from the RBA, the more sense the Austrian School of Economics' explanation of asset price inflation makes.





Yep.

Of course it always made perfect sense anyway.


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## nukz (20 November 2010)

*Treasury warning on home price 'bubble'*

A SENIOR Treasury official has sounded the alarm over Australia's property market.

He has warned that the prospect of a sudden and dramatic drop in prices is "the elephant in the room" and should not be ignored by the federal government.

While the government and Reserve Bank insist Australia does not have a housing bubble - as some economists and the International Monetary Fund suggest - it remains such a worrying concept that Treasury has privately sought reassurance from its analysts that prices are not artificially high and that Australia does not face the kind of house price collapse that has hit Britain and the US.

Documents obtained by The Weekend Australian under Freedom of Information laws show the Treasury officials preparing the so-called Red Book of briefs for the incoming government were as divided as private sector economists about the strength of the property market.
Phil Garton, the manager of Treasury's Macro Financial Linkages Unit, sent colleagues a draft paper on the rise in household debt, prospects for further growth in the debt-to-income ratio and the potential implications of slower household debt growth.

His email prompted an exchange with Steve Morling, currently the general manager of the Domestic Economy Division, who argued the paper should "make a bit more about the risks".

"The elephant in the room is house prices or more specifically the risk of a precipitous drop in them, perhaps from an external shock or perhaps from their own internal dynamics when affordability constraints or capacity debt levels see prices and expectations of house prices start to move in the opposite direction," Mr Morling wrote on June 15.

"(I) know there are very supportive fundamentals, but prices rose by 50-60 per cent in three to four years in the early part of this decade, with largely unchanged fundamentals, so they can have a life of their own.

"And given what's happened elsewhere I'm far less sanguine about this - and the interplay with debt - than in the past."

Mr Garton agreed that there would be risks if the fundamentals of low interest rates, unemployment, and financial deregulation "reversed significantly". But he maintained the price growth in the early 2000s was based on a "lagged response" to improvements in the fundamentals, and questioned how Australia could have maintained a bubble for more than six years.

Mr Morling said other bubbles had lasted that long, and the fundamentals were often used to justify price rises - including in Britain where a debate over lack of supply drove property prices higher "before the British property bubble burst".

"(I) think price expectations  can take over from the fundamental drivers that you have identified for extended periods, including generating house price falls," he wrote.

With house prices static at best - the market is particularly soft in the capital cities - there are renewed doubts over the boom of the past decade and whether prices are sustainable.

Average house prices doubled in the 2000s and, despite the global financial crisis, remain 20 per cent higher than levels three years ago. The latest figures from the Australian Bureau of Statistics showed prices rose just 0.1 per cent overall in the September quarter - and fell in all capital cities except Melbourne, Perth and Darwin - but were still 11.5 per cent higher over the past year. Treasury's Household Demand Unit is re-examining the fundamentals in the property market to determine factors that have driven, or sustained, prices.

A spokesman for Wayne Swan said yesterday the Treasurer retained the view that Australia did not have a property bubble, citing recent reports and statements by Westpac and the RBA. "Of course, we expect our officials to test and debate policy within the department - it is an important and normal process of government," the spokesman said. "However, it is the considered position of the Treasurer and the Treasury that our housing market reflects the fundamentals of supply and demand and not a bubble - specifically that Australia is simply not building enough new houses."

The RBA was concerned by double-digit price growth earlier this year, especially in Melbourne, but now expects interest rate rises to moderate demand and keep prices at a realistic level.

The RBA has gone to great lengths to pull apart claims of a housing bubble by the IMF, Morgan Stanley economist Gerard Minack, legendary US investor Jeremy Grantham and The Economist magazine, even comparing and contrasting their modelling.

On Thursday, RBA deputy governor Ric Battellino sought to reassure the market that the slowing in growth of household debt would lessen the risks to the economy.

"The current picture is one where borrowing for housing is broadly growing in line with income, house prices are stable and there is little appetite for other forms of debt," Mr Battellino said. "From the Reserve Bank's perspective, this seems to be a satisfactory state of affairs."

The RBA believes demand was responsible for the early rise in property prices, and government restraint on housing supply prevented a US-style slump.

The OECD report on the Australian economy released at the weekend did not identify a "bubble" but warned that house prices could not keep rising faster than household incomes.

"Caution is advisable, given the experience of other countries," the report said.

Source - http://www.theaustralian.com.au/bus...ome-price-bubble/story-e6frg9gx-1225956866267


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## FxTrader (20 November 2010)

SusanW said:


> From the mouth of Glenn Stevens in March this year.
> 
> "It's a mistake to assume a riskless, easy, and guaranteed way to prosperity is just to leverage to property," he said.
> 
> ...




Unfortunately Mr. Stevens has his hands on the interest rate levers and can help bring about a correction in the property market that he so desires for his kids by continuing to jack up rates in the guise of controlling inflation. Under this theory of economics, forcing many to buy home brand products from Woolies because they can barely afford their mortgage payments (or even bring about defaults) due to rate rises is good economic management. Funny thing is, property prices go down, but mortgage payments increase so it's little help to the poor home buyer.

Why not focus on the factors that are contributing to rising house prices like land supply, local council and govt urban policy, speculation by local and overseas investors (due to tax breaks) and population demographics/growth for instance. 

I live in Melbourne's outer east surrounded by large properties with huge paddocks on flat land. Most are empty paddocks with a few horses used as lawn mowers and for agistment revenue that can't be subdivided. A friend has a 10 acre property he is not allowed to subdivide by council decree so the best use he has for this land is to agist horses. Planning for growth is the key, without it price pressure remains.

There is little doubt that recent price growth in property (in some areas) is unsustainable but predicting a crash or collapse in prices is scaremongering. The GFC did not cause a crash in house prices here, for a variety of reasons, so what cataclysmic event are the doomsayers predicting that would precipitate such an outcome I wonder, more RBA rate rises perhaps?


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## drsmith (20 November 2010)

SusanW said:


> From the mouth of Glenn Stevens in March this year.
> 
> "It's a mistake to assume a riskless, easy, and guaranteed way to prosperity is just to leverage to property," he said.
> 
> “These (house) prices are getting quite high,” Mr Stevens said. “I’ve  got kids that within not too many years are going to want somewhere of  their own to live and you wonder how is that going to be afforded.”



I suspect that what Glenn Stevens would like to see is a gradual decline in house prices relative to household income. In this sense, gradual would mean that house prices would would continue to rise in nominal terms. This would be bad for heavily geared investors as the capital growth may not be sufficient to cover income losses after tax. This though would avoid pain for owner-occupiers and lower geared investors.

A gradual deflation of the bubble though has history against him. Also against him is the fact that the last term of the Howard Government and this Government have effectively lost the plot when it comes to fiscal management.



> Economist Ross Garnaut told the hearing that the government should have been running large budget surpluses since the resource bonanza began in 2005, excepting only the years of the global financial crisis.




http://www.smh.com.au/business/beware-the-dutch-disease-20101119-1812g.html


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## MR. (20 November 2010)

FxTrader said:


> Unfortunately Mr. Stevens has his hands on the interest rate levers and can help bring about a correction in the property market that he so desires for his kids by continuing to jack up rates in the guise of controlling inflation. .........




It's not a conspiracy. House prices do form part of the CPI equation which the RBA's uses in their interest rate settings! The last two quarters CPI rose 3.1% and 2.8% which is on the upper band. 

IMO the percentage change in house prices doesn't show enough clout in the CPI figures. That's one sure reason why house prices are where they are today by not having enough exposure in the CPI average. Now, if house prices fall a percent or two a quarter the CPI calculation can easily still add pressure for further rate hikes. It's just how it is!

Too many people do think the sure way to make money above inflation is in property. Those low interest rates sure sucked more than a few investors into properties of late. 

Yes, there was underlying demand and the number one reason was hype. Property has been red hot for such a long time.


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## sinner (20 November 2010)

FxTrader said:


> Under this theory of economics, forcing many to buy home brand products from Woolies because they can barely afford their mortgage payments (or even bring about defaults) due to rate rises is good economic management. Funny thing is, property prices go down, but mortgage payments increase so it's little help to the poor home buyer.




Strange logic you employ. Why did home buyer enter into a property with such a large relative cost to his income that it stopped them from purchasing food on the basis of sequential rate hikes? If home buyer doesn't like it, they are advise to sell and rent instead.



> Why not focus on the factors that are contributing to rising house prices like land supply, local council and govt urban policy, speculation by local and overseas investors (due to tax breaks) and population demographics/growth for instance.




Because any real focus on any of those things would probably collapse the market overnight.



> I live in Melbourne's outer east surrounded by large properties with huge paddocks on flat land. Most are empty paddocks with a few horses used as lawn mowers and for agistment revenue that can't be subdivided. A friend has a 10 acre property he is not allowed to subdivide by council decree so the best use he has for this land is to agist horses. Planning for growth is the key, without it price pressure remains.




This is weird speculator logic again isn't it? Why on earth buy a piece of land to subdivide it, when you know you can't subdivide it? On the assumption that you would be allowed to subdivide it? 



> There is little doubt that recent price growth in property (in some areas) is unsustainable but predicting a crash or collapse in prices is scaremongering. The GFC did not cause a crash in house prices here, for a variety of reasons, so what cataclysmic event are the doomsayers predicting that would precipitate such an outcome I wonder, more RBA rate rises perhaps?




Please name the reasons. None of them are sustainable either. You cannot solve a problem by adding more of the same problem to the pile.


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## FxTrader (20 November 2010)

MR. said:


> It's not a conspiracy. House prices do form part of the CPI equation which the RBA's uses in their interest rate settings! The last two quarters CPI rose 3.1% and 2.8% which is on the upper band...
> 
> ...Too many people do think the sure way to make money above inflation is in property. Those low interest rates sure sucked more than a few investors into properties of late.




I am not suggesting RBA interest rate policy is a conspiracy, it's however guided by commonly held notion that manipulating interest rates is the proper tool for managing economic activity and inflation. If this idea was credible, then the U.S., with its extremely low interest rates should have a booming hyper inflated economy with skyrocketing price inflation by now.

I've always wondered, with respect to prices and inflation, what control does a central bank have over the rising price of commodities like oil, metals, fertilizer and other inputs of production? Answer, very little, other than make Australian goods more expensive and less competitive. What they can do is bring out their big club and smash consumers over the head with higher rates to drive down retail consumption to bring their measure of inflation (the CPI) down; this is a deception IMO.

Frankly I think central banks are largely useless and simply a self serving tool of the banking and finance industry. But they have been very successful at convincing a gullible public of the necessity of their continuing existence and importance.

As for low interest rates fueling property price rises, this is just one factor of many contributing to property demand. Affordable home prices are not aided by RBA rate rises.


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## FxTrader (20 November 2010)

sinner said:


> Strange logic you employ. Why did home buyer enter into a property with such a large relative cost to his income that it stopped them from purchasing food on the basis of sequential rate hikes? If home buyer doesn't like it, they are advise to sell and rent instead.




Strange to you perhaps and I did't say it stopped people from buying food, just more expensive brand name products. Many home buyers don't factor the potentially large rising cost of a mortgage into their budget calculations. Unless they do this or fix their loan for a long period they get caught out. This is very common, and numerous stories in various media attest to this. And who wants to be forced out of their home into a tight rental market? Not a very sympathetic person are you.



sinner said:


> Because any real focus on any of those things would probably collapse the market overnight.




Hardly, the reality is that changing local, state and govt policy is proving to slow and unresponsive to changing demographics.



sinner said:


> This is weird speculator logic again isn't it? Why on earth buy a piece of land to subdivide it, when you know you can't subdivide it? On the assumption that you would be allowed to subdivide it?




I am not a speculator (in the property market), so the answer is no. You missed my point entirely and beat a straw man instead. The point was that there are vast tracks of land around me that are used for nothing more than horse grazing. Allowing some of this land to be subdivided would help ease the supply problem in this area.


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## explod (20 November 2010)

Hello Brothers, great sunny day here on the peninsula, garage sales and fetes all over the place.

Not sure that I saw the clearance rate posted up for last weekend.

Understand the good ole *C*onfesssor was tied down somehow.

Anyhow reading the Financial Review down at the Library this morning stated that last weekend was 56%.

Sorry I was two points out there Brothers at 58%, but a bit hard as I understated it by one point the week before.

Its all taking my breath away, whew, oh well silver put in a great recovery the last week.   So lots of cheers, pats on the back, with froth and bubles there comrades.


----------



## MR. (20 November 2010)

explod said:


> Anyhow reading the Financial Review down at the Library this morning stated that last weekend was 56%.
> 
> Sorry I was two points out there Brothers at 58%, but a bit hard as I understated it by one point the week before.




Thought it was Saturday's REIV we were looking at there explod! 

Which still makes you 3% out last week and 1% the week before. But now you want to look at "revised" figures. That would make it 3% out last week (unless you supply a REIV link) and 3% the week before! Which way is it?  

http://webcache.googleusercontent.c.../2010+auction+houses&cd=8&hl=en&ct=clnk&gl=au


----------



## UBIQUITOUS (20 November 2010)

MR. said:


> Thought it was Saturday's REIV we were looking at there explod!
> 
> Which still makes you 3% out last week and 1% the week before. But now you want to look at "revised" figures. That would make it 3% out last week (unless you supply a REIV link) and 3% the week before! Which way is it?
> 
> http://webcache.googleusercontent.c.../2010+auction+houses&cd=8&hl=en&ct=clnk&gl=au




I bet they fudge them this weekend (again) and state something like ' clearance rates hold steady as buyers come to the fore'.


----------



## medicowallet (20 November 2010)

This week: 834
Last Weekend: 862
This time last year: 710
S Sold at Auction: 410
SB Sold before Auction: 90
SA Sold after Auction: 3

Passed in: 331
Passed in on vendor's bid: 215

*Clearance rate: 60%*

Can any professors here explain why it is less than thet 81% from last year?


----------



## Dangerous (20 November 2010)

There could be some auctions tomorrow (usually about 30 or so I think)

*Forecast* is number of auctions REIV report on the proceeding Thurs
The *actual* column is the clearance rate on the forecast number
*Clearance* is what REIV report as clearance

Weekend	       Forecast    Reported   Cleared  "Clearance"   Actual
13-14 Nov       '920	     '836	     '508	     61%	         55%
20-21 Nov      '1009	     '834	     '503	     60%	         50%


----------



## Dangerous (20 November 2010)

apologies could not edit last post

Summary on thurs REIV said there would be over a thousand auctions on each of the next four weekends.  They have reported 834 today and calculated clearance on that.

cheers.


----------



## explod (20 November 2010)

MR. said:


> Thought it was Saturday's REIV we were looking at there explod!
> 
> Which still makes you 3% out last week and 1% the week before. But now you want to look at "revised" figures. That would make it 3% out last week (unless you supply a REIV link) and 3% the week before! Which way is it?
> 
> http://webcache.googleusercontent.c.../2010+auction+houses&cd=8&hl=en&ct=clnk&gl=au




They are not numbers I study at all but just enjoy the banter on this thread and would not at all be concerned or surpised to be out 10% either way.  So 3% or so near to the number two weeks running is probably a good fluke.


----------



## Agentm (21 November 2010)

as expected. the sunday age prints what i have telling my mates all week will be a safe 60% clearance rate.. the all important psychological 60 threshold remains.. 

and presto.. there it is!!

175 no results!!

and as usual, the hidden figures and bulldust prevail, like last week, when they postured an typical above 60% clearance rate in the sunday media, from an actual of 56% when those dastardly "no result" were put into the equation..

LOL

i tip a 55% actual for melbourne for this weekend going by the usual pattern.. 

back to the latte sipping developas to make a mockery of you all on this very entertaining thread..

hype up the bubbles and sip that latte.. lol


----------



## Dowdy (21 November 2010)

Interesting article I came across

*Treasury sounds the alarm on 'property bubble'*



> A SENIOR Treasury official has sounded the alarm over Australia's property market.
> 
> He has warned that the prospect of a sudden and dramatic drop in prices is "the elephant in the room" and should not be ignored by the Federal Government.




http://www.news.com.au/money/property/treasury-sounds-the-alarm-on-property-bubble/story-e6frfmd0-1225956971546


----------



## SusanW (21 November 2010)

FxTrader said:


> There is little doubt that recent price growth in property (in some areas) is unsustainable but predicting a crash or collapse in prices is scaremongering.
> 
> And outright denying a crash is greedmongering.
> 
> The GFC did not cause a crash in house prices here, for a variety of reasons, so what cataclysmic event are the doomsayers predicting that would precipitate such an outcome I wonder, more RBA rate rises perhaps?





FX, why do you think there's an undersupply of dwellings? 

In Brisbane, current listings are up 50% on last year. Why are 50% more people trying to sell property this year than last if there's undersupply? 

Melbourne's auction volume is at an all time high and clearances historically weak. That does not support low supply, high demand. 

Did the population, employment rate, or average wage decrease by 50%? no. 

If there's undersupply, why aren't the banks lending to developers? 
If our economy is as strong as the RBA and Treasury say, why aren't the banks lending to small business? 

Even if housing supply/demand was better matched in your mind, would that reduce bank funding costs or China's demand for Australian commodities? 

The last RBA rate rise was 25bp. Which banks raised their rates by only that much? 

My view is property prices are most controlled by cost and availability of credit. 40-50% of that credit is now by necessity foreign sourced. and those creditors are strongly influenced by global risk on/off climate. 

Can you explain why Australia's cash rate is so high compared to the rest of the world's when our economy is tied to China's world strongest GDP growth?

Personally, I don't believe there will be a crash in prices, unless global credit contracts significantly. However, as many are suggesting, credit conditions may easily see a repeat of the 1990s or worse.


----------



## nukz (21 November 2010)

Under-supply is a myth created by real estate agents and the property bulls, there are places in South Yarra & Melbourne(CBD) that have been for sale for at least 5 months now. These property's i know off because they where for sale just after i sold my property's.

If you have a look in your area you will most likely notice houses that have been for sale for extended periods of time now. I was down visiting parents place the other day in Mornington and there are 2 houses in their street up for rent that have been trying to get tenants for around 8 months now.


----------



## Dangerous (21 November 2010)

nukz said:


> Under-supply is a myth created by real estate agents and the property bulls, there are places in South Yarra & Melbourne(CBD) that have been for sale for at least 5 months now. These property's i know off because they where for sale just after i sold my property's.
> 
> If you have a look in your area you will most likely notice houses that have been for sale for extended periods of time now. I was down visiting parents place the other day in Mornington and there are 2 houses in their street up for rent that have been trying to get tenants for around 8 months now.




I spent some time using ABS figures to ascertain whether or not there is a shortage.  

since 1984 for every 2.47 increase in population a "new dwelling unit" has been approved.  In the last few years it is 4:1.  What is interesing is that there has been between 85,727 and 130,914 since approvals have been tracked in 1984. The average is 106,750 new dwelling units approved per annum.  (I realize that not all approvals would result in new dwellings but assume this would be a very small percentage.)

My view is that there has been an oversupply of housing for many years in Australia and things are about right now - where are all the people living in a tent because of the shortage?  Strong demand has been confused with undersupply.  

The reason why rental vacancies are now healthy is because since 2006 we have averaged pop. increase of 403,000.  From 1982 to 2004 the average increase was 226,000. (2005 jumped to 292,000 and I have excluded that).

The concerning thing is that the promoters of the undersupply theory would, or should, know the stats I have outlined above.

The only undersupply here in Melbourne is on those red and white auction flags.


----------



## MR. (21 November 2010)

Dangerous said:


> since 1984 for every 2.47 increase in population a "new dwelling unit" has been approved........  The average is 106,750 new dwelling units approved per annum.  (I realize that not all approvals would result in new dwellings but assume this would be a very small percentage.)
> 
> From 1982 to 2004 the average (population) increase was 226,000.




Since an average of 2.6 people live in each house hold (ABS), your figures suggest that between 1982 and 2004, 87,000 new units were needed but 106,750 were approved. ie: 20,000 surplus approvals per year x 12 years = 240,000 surplus approvals. 

2005 population increased was 292,000
2006 to 2010 population increase was 403,000 on average.
        Therefore:2005 - 2010 the total population increased by 2,300,000.

2005 to 2010 using your average of 106,750 units being approved = 640,500 new units. 
Added to the surplus units of 240,000 = 880,500  units.

So with the population increase above average totalling 2,300,000 over the last 6 years does 880,500 approvals house them at 2.6 people per household? Yes at 2.61

As you pointed out "things are about right now" it appears so! However, "not all approvals would result in new dwellings" so on these calculations there is an undersupply.... Is it enough to sustain the prices of 8 million homes?


----------



## SusanW (21 November 2010)

Dangerous said:


> since 1984 for every 2.47 increase in population a "new dwelling unit" has been approved.  In the last few years it is 4:1.  What is interesing is that there has been between 85,727 and 130,914 since approvals have been tracked in 1984. The average is 106,750 new dwelling units approved per annum.  (I realize that not all approvals would result in new dwellings but assume this would be a very small percentage.)




We did a similar analysis last year. chart below. It compares cumulative population growth with cumulative new dwelling commencements. If you divide the former by the latter, that gives the cumulative new residents per cumulative new dwelling. Note it is under 1.7, while the official average household size is around 2.5.

That indicates enough dwellings are being built.


----------



## MR. (21 November 2010)

http://www.smartcompany.com.au/econ...tralia-s-average-household-really-shrink.html




> people occupying dwellings will ease over the 25-year period from 2.6 people per household to around 2.4-2.5 people.




0.1 people x 8,000,000 homes = 800,000 people looking for new dwellings. Divided by 2.5 people per dwelling = 320,000 additional new dwellings needed over 25 years.  12,800 on average per year.

Is it enough to sustain the prices of 8 million homes?


----------



## FxTrader (21 November 2010)

SusanW said:


> FX, why do you think there's an undersupply of dwellings?




I never said there was. My main point concerned land release and urban planning. There is very little land available in Melbourne's outer east where I live, this is simply a fact and due primarily to govt policy. Land prices here reflect the imbalance in supply and demand with price expectations riduculous at the moment. I would like to see prices come down but not with RBA intervention in the market with their blunt instrument.



SusanW said:


> In Brisbane, current listings are up 50% on last year. Why are 50% more people trying to sell property this year than last if there's undersupply?





Without a survey who knows with any certainty, perhaps they are tired of living in Brisbane. Or perhaps many owners want to lock in capital gains since the RBA is hell bent on clubbing them with rate rises to supress price growth. 



SusanW said:


> Melbourne's auction volume is at an all time high and clearances historically weak. That does not support low supply, high demand. Did the population, employment rate, or average wage decrease by 50%? no. If there's undersupply, why aren't the banks lending to developers? If our economy is as strong as the RBA and Treasury say, why aren't the banks lending to small business? The last RBA rate rise was 25bp. Which banks raised their rates by only that much?





Sorry, but you make no apparent point or substantiated assertion worth commenting on with these mostly rhetorical questions.



SusanW said:


> Even if housing supply/demand was better matched in your mind, would that reduce bank funding costs or China's demand for Australian commodities?





Yet another rhetorical question. I have one for you, does the RBA rate rise have any influence on the cost of such things as energy, food production and goods and services? Yes, it puts upward pressure on them. These rate rises only serve to smash consumer spending and drive down consumption by making goods, services and financing etc. more expensive in the name of managing to a CPI measure.



SusanW said:


> My view is property prices are most controlled by cost and availability of credit. 40-50% of that credit is now by necessity foreign sourced. and those creditors are strongly influenced by global risk on/off climate.





Credit availability is a factor for sure and easy and irresponsible credit was not a significant feature of the lending landscape here as it was in the U.S.



SusanW said:


> Can you explain why Australia's cash rate is so high compared to the rest of the world's when our economy is tied to China's world strongest GDP growth?





Yep, that self-justifying, all knowing, all powerful and largely unaccountable arm of the finance and banking industry called the RBA. A propaganda machine operating at peak efficiency. Why not let the market decide what the cost of money should be instead of the RBA?



SusanW said:


> Personally, I don't believe there will be a crash in prices, unless global credit contracts significantly. However, as many are suggesting, credit conditions may easily see a repeat of the 1990s or worse.





On this point we can agree.


----------



## MR. (21 November 2010)

SusanW said:


> Note it is under 1.7, while the official average household size is around 2.5.
> 
> That indicates enough dwellings are being built.




Required dwellings have been out pacing population growth for 30 years by more than 50% ???  Should this be questioned?

The population has increased by some 7.3 million in the past 30 years. We would now have some 1.5 million empty homes if 2.6 people on average live in each of them! 

However, in 1982 more people lived in each household and was an average of 3.

http://www.fahcsia.gov.au/about/publicationsarticles/research/facssheets/Documents/facssheet6.pdf

That's 0.4 people per household looking for a new dwelling from 1982 which is approx' 800,000 new dwellings! 

So are there 700,000 empty homes additional to the early 80's? 
That's 1 additional empty in 12. 

Additional Holiday homes and holiday units perhaps?


----------



## Uncle Festivus (21 November 2010)

Yes, there is no reason why we can't get returns of 10% per year ad infinitum - so long as the Manic Money Makers continue to Fund the Ponzi? 
Chart created from RBA Table B02 - Bank 'Assets' ie loans........in Millions.


----------



## Dangerous (21 November 2010)

MR. said:


> So are there 700,000 empty homes additional to the early 80's?
> That's 1 additional empty in 12.
> 
> Additional Holiday homes and holiday units perhaps?




perhaps we need to analyse it more closely to work out where all the dwellings are - the gold coast is without a doubt one of them.

The other analysis we need is what banks have the greatest exposure and how big a contraction they can stomach.  Especially if it is true that they are having strife obtaining o/s funding because of the belief Oz has a bubble.


----------



## Dangerous (21 November 2010)

The HIA have premised this whole note on the fact that we are not the same as the US.  E.g the US had 1.7 starts per person increase and Australia on 0.5... that is still one house for every two people.

I smell trouble.... if i do any more research this weekend I will need a gas mask.  Over and out


----------



## MR. (21 November 2010)

Dangerous said:


> The HIA have premised this whole note on the fact that we are not the same as the US.  E.g the US had 1.7 starts per person increase and Australia on 0.5... that is still one house for every two people.




HIA states between "2000 and 2009" one house was built for every two increase in population. The HIA would be using those higher population increases of late as well. 

Average people per dwelling in Oz is 2.6 people, claims the ABS. 

People arn't wandering the streets looking for somewhere to sleep!


----------



## robots (21 November 2010)

hello,

http://www.theage.com.au/victoria/labor-eases-stamp-duty-for-victorians-20101121-182c4.html

good evening brothers, well its been a great day, gotta thank Explod for filling in for me this weekend. bloody legend man

thanks for the data Medicowallet

SusanW, cant understand you, on one hand you comment how poor performing RE has been(especially in Bris) then you comment that the RBA wants to stop the bubble,

what is it, Bubble or poor performing asset? no bubble, i reckon just run of the mill cost of replacement scenarios

spot on FXTrader in relation to the RBA and infact they are only compounding the issue of capital inflows into the country by increasing

oh well, great week coming up

thankyou
professor robots


----------



## robots (21 November 2010)

hello,

oh hello, just a reminder as it keeps coming up of recent

aussie banks get 30% of their funding from overseas organisations, thats all, not much

so yeah, lending is all as per normal, house prices as per normal, oh well 

thankyou
professor robots


----------



## robots (21 November 2010)

hello,

oops, sorry forget the Grand Final of X-Factor is on and people may be watching the show

will check back in later

thankyou
professor robtos


----------



## wayneL (21 November 2010)

Over here in NZ, (in my neck of the woods at least) there are bargains popping up all over the place.

Lots of folks who MUST sell and in a very slow market means they're being taken to the woodshed and <censored>. I'm talking about 30 - 40% off peak 2007 "value".

wayneL will be buying real estate very soon


----------



## FxTrader (21 November 2010)

Uncle Festivus said:


> Yes, there is no reason why we can't get returns of 10% per year ad infinitum - so long as the Manic Money Makers continue to Fund the Ponzi?



The "Ponzi" is fuelled by market distorting govt policy that gives generous tax benefits to property investors no matter how many properties they finance with other people's money-OPM. How many thousands of owner-occupier buyers have been out bid by property investors/speculators using govt subsidy and leveraging to the hilt to build their property portfolios I wonder.


----------



## againsthegrain (21 November 2010)

Didn't somebody say desperate tactics as cutting down stamp duty and developer increasing incentives are another sign of bubble bursting?


----------



## SusanW (21 November 2010)

robots said:


> SusanW, cant understand you, on one hand you comment how poor performing RE has been(especially in Bris) then you comment that the RBA wants to stop the bubble,
> 
> what is it, Bubble or poor performing asset? no bubble, i reckon just run of the mill cost of replacement scenarios




Bots, thanks to banking deregulation, total credit growth was running 10-15%pa from the early 90s until GFC, while nominal GDP rose from 5 to 7.5%pa in the same period. 

From 2000 to GFC, housing credit was expanding at 15-20%pa! That's unsustainable asset price inflation in my books because the interest pmts have to be relieved from other channels, channels growing at half to a third the rate. 

So when you ask is housing in a bubble, I retort has housing credit been in a bubble relative to the rest of the economy? I'd say unequivocally yes.  

But bubbles don't have to burst. 
They can sit inflated for years and wait for everything else to catch up. They can develop slow leaks.
They can burst in the face of an economic stressor.

In my view, flat Brisbane prices this year are entirely congruent with a bubble that lenders and/or borrowers are having difficulty inflating further. What remains to be seen is how property prices deal with an economic stressor - such as credit tighter than Joe Average could have reasonably foreseen.

Re the Glenn Stevens quote, I find it quaint that the RBA denied for years there was even the hint of a problem with house price growth. It apparently just became a problem overnight some time in March this year. 

Some charts to ponder.


----------



## SusanW (21 November 2010)

robots said:


> aussie banks get 30% of their funding from overseas organisations, thats all, not much
> 
> so yeah, lending is all as per normal, house prices as per normal, oh well




well the Aust. Banking Assocation figures from June last year say 30%. Many media reports have it at 40-50% this year. 

And not really normal Bots. In the early 90s, foreign credit made up less than 15% of bank liabilities. All to do with Aussies not increasing GDP at the same clip as credit I would say.


----------



## sinner (21 November 2010)

Spotted Andrew Harvey in a property rag on the on tram.

Had to dig a little to find the article, funny how not many media outlets printed his words in full. and those that printed any tended to have them in the second half of the article, where many readers don't venture. Like this one:

http://www.abc.net.au/news/stories/2010/11/03/3055920.htm



> *Reserve Bank 'gets it wrong'*
> The Housing Industry Association's senior economist Andrew Harvey says the figures show the Reserve Bank's rate rise yesterday was untimely.
> 
> "The weak housing outlook is compounded by yesterday's interest rate hike by the Reserve Bank which, due to the additional independent 20 basis point increase by the Commonwealth Bank, will act like a sledgehammer on confidence and economic activity in the non-resource sectors," he said in a statement.
> ...




Note how Andrew Harvey wants a "sustainable" supply solution, yeah right, release new land, but not too much, just enough, just like a cartel.

Good luck.


----------



## Aussiejeff (22 November 2010)

Agentm said:


> as expected. the sunday age prints what i have telling my mates all week will be a safe 60% clearance rate.. *the all important psychological 60 threshold remains.. *
> 
> and presto.. there it is!!
> 
> ...




Wrong! They need to retract their assertions of a "safe 60%". The dam has broken!

Straight from the horse's ar.... errr.... mouth...



> Weekly Auction & Sales Results, Market Overview
> Saturday 20th & Sunday 21st November 2010
> 
> This is the first weekend of the busiest four week period ever in the Melbourne residential auction market.
> ...



http://reiv.com.au/home/inside.asp?ID=162

I'm amazed no-one else picked up on this? Sub 60's heading to sub 50's within a month or so? Oh, that's right. The figures from Enzo are meaningless when they go south. 

Party on then, doodz....


----------



## againsthegrain (22 November 2010)

According to this article the clearance rates were





> Auction clearance rates in Sydney and Melbourne over the weekend were 51.7 per cent and 54.8 per cent respectively, according to Australian Property Monitors, with many vendors withdrawing their properties before they went under the hammer.
> 
> Read more: http://www.news.com.au/money/rising...le/story-e6frfmci-1225958145835#ixzz15xUjgOG3




oh well, beatifull day, im going to have a green tea


----------



## sinner (22 November 2010)

againsthegrain said:


> Didn't somebody say desperate tactics as cutting down stamp duty and developer increasing incentives are another sign of bubble bursting?




Since you mentioned it, been a while since we took a look at the:


----------



## robots (22 November 2010)

SusanW said:


> Bots, thanks to banking deregulation, total credit growth was running 10-15%pa from the early 90s until GFC, while nominal GDP rose from 5 to 7.5%pa in the same period.
> 
> From 2000 to GFC, housing credit was expanding at 15-20%pa! That's unsustainable asset price inflation in my books because the interest pmts have to be relieved from other channels, channels growing at half to a third the rate.
> 
> ...




hello,

yeah no worries susuanW, wouldnt have a clue what you on about but oh well

great day, just another thanks to Explod for filling in over the weekend, thats what community spirit is all about, fellow man helping fellow man

thankyou
professor robots


----------



## explod (22 November 2010)

robots said:


> hello,
> 
> yeah no worries susuanW, wouldnt have a clue what you on about but oh well
> 
> ...




No worries there *cONFESSOR*, great day on the Peninsula, 32 deg, vegies looking great, deep blue sea to the You Yangs, wonderful man.

And for the enterprising, lot of vacant rentals now, so if you want a taste of paradise come on down and I'll shout you a coffee.

Noisy buildrs were everywhere awhile back.     Aaahhh, great peace now just waiting for the onslaught of the holiday makers, that's when my better half and I take a room at the Rits to play the roulette at Crown and have xmas dinner with the Packers.

Always pleased to support you there Champ, wonder if you could give me a few letters man, always fancied myself as a Doctor or somthing like that.


----------



## satanoperca (22 November 2010)

robots said:


> aussie banks get 30% of their funding from overseas organisations, thats all, not much




As an avid fan of your investment style could you please provide some evidence, link, proof that 30% is the correct figure. given you are a professor you would be used to people questioning your facts so it should be as easy as ABC to provide.

Cheers


----------



## robots (22 November 2010)

hello,

oh yeah no worries man, here it is

bankers.asn.au

great blog on the web

thankyou

professor robots


----------



## matty77 (22 November 2010)

robots said:


> hello,
> 
> oh yeah no worries man, here it is
> 
> ...




sorry where does it say 30% for 2010?

oh that's right it doesn't, yes another fine day here too Sir.


----------



## nunthewiser (22 November 2010)

My area.

Housing still in limbo.
Rents falling
more rental supply
rental listings sitting unnocupied longer unless priced VERY below market 
for sales listed longer
some getting snapped up 20% below 2 years ago
more for sale supply

lifes getting better for the patient scavengers waiting to pick some bones


----------



## robots (22 November 2010)

matty77 said:


> sorry where does it say 30% for 2010?
> 
> oh that's right it doesn't, yes another fine day here too Sir.




hello,

see, i got that link from one of SusanW's post, just amazing you really got too watch em i tell you

amazing, who really knows whats going on, oh well

no big deal, as we know banks still loan the same way as they did 50yrs ago, and with deposit rates dropping its just business as usual

sinner got me going on re-visiting a few items as well,

still at 7-8x income to median price?
medians still greater than pre-GFC values?

OH YEAH

thankyou
professor robots


----------



## satanoperca (22 November 2010)

All smoke and mirrors to me.


----------



## prawn_86 (22 November 2010)

nunthewiser said:


> lifes getting better for the patient scavengers waiting to pick some bones




within another year or so we should have quite a nice amount built up for a deposit, hopefully prices have cooled even further by then. Property gains and falls (usually) are a lot slower than other markets so just gotta be patient


----------



## nunthewiser (22 November 2010)

prawn_86 said:


> within another year or so we should have quite a nice amount built up for a deposit, hopefully prices have cooled even further by then. Property gains and falls (usually) are a lot slower than other markets so just gotta be patient




its good to have a plan


----------



## Peak Debt (22 November 2010)

Alex Barton said:


> Here is an article about the Australian Housing Bubble that I had published on Ezines. The bulls most probably won't agree with any of it, so fire away with your criticism, I can take it!
> 
> Australian Housing Bubble
> 
> I'm interested to hear what people think about the article. Thanks!





It sounded accurate to me


I liked it, well done


----------



## FxTrader (23 November 2010)

Alex Barton said:


> Here is an article about the Australian Housing Bubble that I had published on Ezines. The bulls most probably won't agree with any of it, so fire away with your criticism, I can take it!
> 
> Australian Housing Bubble
> 
> I'm interested to hear what people think about the article. Thanks!




Since you asked for feedback...

Since the title of your article implies the existence of a "bubble" why not try and define this abused term in the context of the property market. What denotes a property bubble exactly? What measures are you using to establish the existence of this bubble and did these measures accurately forecast a collapse in other markets historically? Are they reliable predictors for our market?

Early in the article you note contributing factors to rising property prices in Australia but of course some are more significant than others. Govt subsidy, restrictions and tax incentives to investors continue to underpin price.



> Sadly, the exponential growth of property related debt in Australia has created nothing positive for most Australians. While the explosion in property credit may have boosted GDP figures, it has not manifested in any real production or productivity gains. Instead, it indicates wasteful consumption, as the vast majority of property related debt is funneled into the trading of existing dwellings, rather than the development of new housing stock."




Agree, but then this debt growth is based on the notion that residential real estate is a store of wealth and for property investors, as source of income as well. I have several friends who would not consider investing in anything other than property and are very wealthy, on paper, as a result and govt incentivizes this activity.



> Apart from providing basic shelter, housing offers little of benefit to an economy (beyond the initial construction boost). On the other hand, business investment, which furthers technological advancement and creates employment, does provide long lasting economic benefits. The vast capital flows that are currently directed towards the trading of existing dwellings in Australia could be allocated much more productively to other sectors of the economy.




As long as property investment incentives exist and the perception that property is a safe long term, income producing investment, distorted capital flows will continue. Business investment in the form of capital raisings, shares, IPOs etc. is seen as to speculative to the property investors I know.

Quoting predictions of a crash in AUS property prices of 40% (over some unknown time frame) is fodder for those twisted individuals here who would like to see this scenario unfold but it's a low probability event IMO. More likely and desirable is a gradual downturn and/or long period of stagnant property prices as we had in the late eighties.


----------



## FxTrader (23 November 2010)

Alex Barton said:


> Here is an article about the Australian Housing Bubble that I had published on Ezines. The bulls most probably won't agree with any of it, so fire away with your criticism, I can take it!
> 
> Australian Housing Bubble
> 
> I'm interested to hear what people think about the article. Thanks!




Since you asked for feedback...

Since the title of your article implies the existence of a "bubble" why not try and define this abused term in the context of the property market. What denotes a property bubble exactly? What measures are you using to establish the existence of this bubble and did these measures forecast a collapse in other markets historically? Are they applicable to our market, if so why?

Early in the article you note contributing factors to rising property prices in Australia but of course some are more significant than others. Govt subsidy, restrictions and tax incentives to investors continue to underpin price.



> Sadly, the exponential growth of property related debt in Australia has created nothing positive for most Australians. While the explosion in property credit may have boosted GDP figures, it has not manifested in any real production or productivity gains. Instead, it indicates wasteful consumption, as the vast majority of property related debt is funneled into the trading of existing dwellings, rather than the development of new housing stock."




Agree, but then this debt growth is based on the notion that residential real estate is a store of wealth and for property investors, as source of income as well. I have several friends who would not consider investing in anything other than property and are very wealthy, on paper, as a result and govt incentivizes this activity.



> Apart from providing basic shelter, housing offers little of benefit to an economy (beyond the initial construction boost). On the other hand, business investment, which furthers technological advancement and creates employment, does provide long lasting economic benefits. The vast capital flows that are currently directed towards the trading of existing dwellings in Australia could be allocated much more productively to other sectors of the economy.




As long as property investment incentives exist and the perception that property is a safe long term, income producing investment, distorted capital flows will continue. Business investment in the form of capital raisings, shares, IPOs etc. are seen as to speculative to the property investors I know.

Quoting predictions of a crash in AUS property prices of 40% (over some unknown time frame) is fodder for those twisted individuals here who would like to see this scenario unfold but it's a low probability event IMO. More likely and desirable is a gradual downturn and/or long period of stagnant property prices as we had in the late eighties.


----------



## SusanW (23 November 2010)

robots said:


> see, i got that link from one of SusanW's post,
> 
> I bet you loved playing Chinese whispers when a kid Bots.
> 
> just amazing you really got too watch em i tell you




and some you just put on ignore.


----------



## matty77 (23 November 2010)

SusanW said:


> and some you just put on ignore.




so he links something then blames someone else.. :headshake

Sunshine and lollipops here drinking my Nescafe, 2 sugars this time.


----------



## againsthegrain (23 November 2010)

Just some funny quotes by robots that I found



> My background:
> 
> * been invested in RE for the past 11yrs
> * have been awarded an Associate Professorship by Melbourne University for research undertaken on residential property (all self funded to by the way).
> ...







> yeah no worries susuanW, wouldnt have a clue what you on about but oh well



:bonk:


----------



## nukz (23 November 2010)

I love it when you ask people if they know about property(or anything) and they say they do because they have a certificate/masters/phd/bechelors lol.


----------



## prawn_86 (23 November 2010)

We all know robots is an antagonist with no known qualifications and no known holdings of property, but for some reason a lot of members seem to like it when he posts...


----------



## againsthegrain (23 November 2010)

A reply from another member to his claims:



> Just a couple of holes there ole champ.
> 
> Post Graduate Research opening the way to an Associate Professorship cannot be brought, it is either a scholarship funded by the Institution or private sector, in this case perhaps the Real Estate Insititute.
> 
> If you are an Associate Professor you are not entitled to use the title of Professor.




And he still has not replied to that


----------



## trainspotter (23 November 2010)

prawn_86 said:


> We all know robots is an antagonist with no known qualifications and no known holdings of property, but for some reason a lot of members seem to like it when he posts...




Not sure prawn86 as to why his posts are seen as invidious? I do know that he does have a PPOR and an IP. RP DATA is a wonderful thing. His qualifications are a bit on the dubious side of things but he has not wavered in his belief in RE in Australia. I admire someone who sticks to their ideals even when they are staring in the face of populist (and negative) opinions.


----------



## Buckfont (23 November 2010)

Well I`ve been involved in property going back I guess 40 plus years and from then on I`ve really had the bug. Unfortunately I have no degrees apart from a lot of experience.
One of my early purchases was in Sydney:-

vhttp://www.modelrailroads.net/cgi-bin/mrrlinks/go.cgi?id=1344


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## Agentm (23 November 2010)

trainspotter said:


> Not sure prawn86 as to why his posts are seen as invidious? I do know that he does have a PPOR and an IP. RP DATA is a wonderful thing. His qualifications are a bit on the dubious side of things but he has not wavered in his belief in RE in Australia. I admire someone who sticks to their ideals even when they are staring in the face of populist (and negative) opinions.




so you admire bernanke,,

cool


----------



## trainspotter (23 November 2010)

Agentm said:


> so you admire bernanke,,
> 
> cool




Mr. Bernanke, who unlike Mr. Greenspan shuns the Washington social circuit and lacks close ties to conservative Republicans thusly leaving himself open to the attacks on his stewardship. If he had not acted then he would have been criticized for ignoring the slow paced recovery. Lose / lose situation all round really. Raving loony Tea Party and Sarah Palin squawking about printing 600 billion dollars is not helping. It has gone political now. 

:topic


----------



## SusanW (23 November 2010)

trainspotter said:


> Not sure prawn86 as to why his posts are seen as invidious? I do know that he does have a PPOR and an IP. RP DATA is a wonderful thing. His qualifications are a bit on the dubious side of things but he has not wavered in his belief in RE in Australia. I admire someone who sticks to their ideals even when they are staring in the face of populist (and negative) opinions.




If Bot bought Melbourne RE (PPR and IP) since GFC, you might say he has convictions. 

If Bot bought these properties pre GFC and hasn't used equity to buy anything since, then he must have become a property bear or have paid well above market value. 

Either way, I skimmed his posts and all it motivated me to do was put him on ignore. 

Anyways, despite buying two properties this year, I still think the market will soften further in the short to medium term..... go figure


----------



## trainspotter (23 November 2010)

SusanW said:


> If Bot bought Melbourne RE (PPR and IP) since GFC, you might say he has convictions.
> 
> If Bot bought these properties pre GFC and hasn't used equity to buy anything since, then he must have become a property bear or have paid well above market value.
> 
> ...




I believe the Botman had his PPOR pre GFC and the IP came post GFC. He used the PPOR equity to leverage into IP. Not that hard really.

Your choice on the ignore button. 

I concur with your statement SusanW in regards to the slanting of property ATM. 2011 will be a corrective year in the building industry which in turn will force the Guvmint to offer further incentives to keep the ball rolling.


----------



## explod (23 November 2010)

trainspotter said:


> Mr. Bernanke, who unlike Mr. Greenspan shuns the Washington social circuit and lacks close ties to conservative Republicans thusly leaving himself open to the attacks on his stewardship. If he had not acted then he would have been criticized for ignoring the slow paced recovery. Lose / lose situation all round really. Raving loony Tea Party and Sarah Palin squawking about printing 600 billion dollars is not helping. It has gone political now.
> 
> :topic




Not off topic at all.   The US thingo will be the greatest financial disaster of all time.  To stay supposedly solvent for another two years the US will need to create 3 more trillion out of thin air.

The contagion, when it all comes undone will affect every part of the banking system on the planet in my view.   The capitalisation of property in Australia will not be spared thisonslaught.

Now in this there is too much to explain but if you do some research you will soon catch on.  Prof. Frink put up a very good website the other day as follows on where one could start but you really have to take blinkers off and have a good read of it all.

The link

http://pragcap.com/


----------



## Dowdy (23 November 2010)

againsthegrain said:


> Just some funny quotes by robots that I found
> :bonk:






> My background:
> 
> * been invested in RE for the past 11yrs
> * have been awarded an Associate Professorship by Melbourne University for research undertaken on residential property (all self funded to by the way).
> ...






> yeah no worries susuanW, wouldnt have a clue what you on about but oh well





I couldn't help but to laugh at that comment.

I've looked after preschoolers who have a bigger vocabulary then him and also some that lie better then him too....

I even asked him to share his so called research with everyone as he claimed 







> my research is and always been on the future of australian property prices and i advise my clients on suburbs, towns and techniques to grow their wealth with property



as a put up or shut up situation, but he didn't reply.....

I think i would rate him somewhere between a preschooler and a brick. As fun to read and watch as a preschooler with the intelligence that rivals that of a brick


----------



## professor_frink (23 November 2010)

explod said:


> Not off topic at all.   The US thingo will be the greatest financial disaster of all time.  To stay supposedly solvent for another two years the US will need to create 3 more trillion out of thin air.
> 
> The contagion, when it all comes undone will affect every part of the banking system on the planet in my view.   The capitalisation of property in Australia will not be spared thisonslaught.
> 
> ...




It's funny that you should mention that site explod, I would have thought you'd hate it, considering the commentary comes from someone that subscribes to MMT. Learn something new every day I guess!

Back on topic(sort of), what's with the robots hating today??

As another self proclaimed professor, I must say I'm deeply troubled by the questioning of profesor robots and his qualifications.

Don't you people know that if someone on the internet calls themselves a professor, then they must be one in real life! 

People on the internet never lie!


----------



## trainspotter (23 November 2010)

You have a very valid point there Professor Frink ! Wow ..... things must be pretty bad if a chap can't falsify a few qualifications here and there in an internet chat site only to be pounced upon by the fellow members. CRUMBS !


----------



## trainspotter (23 November 2010)

#45 is a RIP SNORTER ! Professor robots croooooozing the tracks checking out the property around Frankston 

https://www.aussiestockforums.com/forums/showthread.php?t=15066&page=3


----------



## professor_frink (23 November 2010)

trainspotter said:


> You have a very valid point there Professor Frink ! Wow ..... things must be pretty bad if a chap can't falsify a few qualifications here and there in an internet chat site only to be pounced upon by the fellow members. CRUMBS !




LOL


----------



## robots (23 November 2010)

hello,

oh gidday everyone, yeah thanks Trainspotter top stuff

could i put one of those shots of me at Frankston in my signature?

isnt life an absolute blast, walk tall brothers

thankyou
professor robots


----------



## MR. (23 November 2010)

Robots has been reading this "market's going to crash" crap for years. It goes back further than this thread.....

Continues to take it all in with a grain of salt and why not! I'd bet more than a few experts have popped in and advised "A crash is upon us" only for him to see them fade away into the oblivion again as property continues on its merry way. Self proclaimed Professor, interest rate strategist, whatever, the guys joking because he's read it all before and none of it disrupted the relentless rise of property values.

Ya gota take his comments in the right perspective. 

LOL it's funny..


----------



## nukz (23 November 2010)

I don't exactly agree, when the government intervenes and provides higher housing grants and more incentives then its a given prices will rise.

If the government tomorrow announced a FHOG boost upto 50k for buyers then prices would once again start to rise.


----------



## MR. (23 November 2010)

nukz said:


> I don't exactly agree, when the government intervenes and provides higher housing grants and more incentives then its a given prices will rise.
> 
> If the government tomorrow announced a FHOG boost upto 50k for buyers then prices would once again start to rise.




However, if property is falling it might just level things out! 

The "Spotter of Trains" was referring perhaps to the incentives to elude from too much of a property market correction and building will continue.


----------



## Agentm (23 November 2010)

lol

anyone can be narrow minded to call a bubble for what its effects are for all its worth, but the thread is about the consequences.. the future

can all the property owners check in and get all their value out in one hit? doubt it.

what happens when masses are forced to sell and no one can afford to buy??



once the magic carpet ride is over, the consequence is always ugly.

anyone can see how simple the robots ability to call a bubble during its rise is, man thats not rocket or robot science.. i can do that and be 100% right throughout..  all you need is a latte and a sunday age to tell you how wonderful the bubble is.. 

the point is, what is the effect of economic strain and hardship??..  can the property sector sustain it year in year out..

45 million us citizens are on food stamps right now, i cant see them  consuming us out of this mess, and they have wiped 15 years of economic gains off in 2 years.. 

and its on with QE2

i think get a grip on reality.. the chinese are keeping costs down for this christmas and giving you a very merry one, with no stress with the 30% rise in cotton, they will take all the heat.. in a few months they will put that 30% on the table, you will pay with the highest consumable, clothing going up 30%

other commodities will rise, all foods..

inflation will arrive soon..  think of the consequences of that in the equation imho before bidding up that next property sale and celebrating how expensive a home you own.. you may not enjoy the lavish lifestyle you have become accustomed to..

go,, get back to that latte machine in the kitchen and perk up another brew.. its chapel street in the lounge room in a kingdom of splendour..

if the property bubble is that sound, and australia is that sound that we are economically invincible, then how come prices are appearing to stall??

imho the cracks are appearing, and the bubble is grinding to a halt.. when nothing has really changed.. we are mighty and invincible...

lol  

or are we?  

why no 20% growth ???

i sense the faint smell of burnt toast permeating in the market..

there is a massive bubble refusing to grow with the greatest of australian economic might defying the planet and sustaining growth.. 

who is going to consume the goods as they become priced to oblivion? where will the growth come? whom will buy?  how can the households consume with rising costs?

numbers are all wonderful atm.. all in the bubble spectrum, yet the bubble stalled.. with all this prosperity...

i have sense that the market is failing for the developas.. i sense the market is less interested in paying 100k more in 12 months for the same real estate year in year out.. i sense the bubble is not a wonderful place to keep all  your wealth right now.. if the $AUS falls and property prices fall all at once, how will you buy that next meal?

just  worth


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## SusanW (24 November 2010)

trainspotter said:


> #45 is a RIP SNORTER ! Professor robots croooooozing the tracks checking out the property around Frankston
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=15066&page=3




LOL....I can't be a bot hater now. He is so cute, and smartly dressed. Glad he has a special friend to take on train trips (unless he asked a Nigel to take his pic). 

Re whether property can crash, until a few months ago I didn't think rates could go over 9.5%. Now I believe it isn't far fetched. Even with a govt guarantee, a US or European slow down or credit freeze will hit Australia as severely as everywhere else. all part of the benefits of Oz being plugged into the global economy.   GFC has driven home to me how dependent capitalist societies are on constant credit to drive current and new business, housing, whatever. We all want to consume more than we produce, and then inflate away the debt. Trouble is, everyone else is doing it too.


----------



## sinner (24 November 2010)

SusanW said:


> Re whether property can crash, until a few months ago I didn't think rates could go over 9.5%. Now I believe it isn't far fetched.* Even with a govt guarantee, a US or European slow down or credit freeze will hit Australia as severely as everywhere else.* all part of the benefits of Oz being plugged into the global economy.   G*FC has driven home to me how dependent capitalist societies are on constant credit to drive current and new business, housing, whatever. *We all want to consume more than we produce, and then inflate away the debt. Trouble is, everyone else is doing it too.




Bingo.

In a credit based economy, credit deflation is the same as deflation.

In any market, movements are generated by new money entering the equation. In the case of property, new money is largely in the form of bank loans. If Australian banks get locked out of foreign credit markets (40-60% of all Australian lending depending on who you ask) where will the new loans come from? Are we expecting a magic runup in our household savings rate, fresh deposits for the bank, from the current avg ~$7000 per household with almost 20% of households with no savings?

Are Australians, who are currently running household/personal debt to the tune of $1.2 trillion (a bit more than 1 year of GDP), expected to borrow past their eyeballs to keep the game going?

Sooner or later, simple mathematics kicks in, $50,000 bonus or not. Global credit is contracting at a rediculous rate. It shows no signs of slowing down. Certainly CDS spreads have not played along at all with the so called "green shoots rally" since 2009. So is the trend just going to stop and reverse now because Bernanke announced QE2? QE1 didn't work, why should it's successor! 

Due to this steamroller credit contraction, sooner or later the funding basis for new loans is going to be out of range of prospective homebuyers and investors. If anyone has been watching money markets this month, you can plainly see yields on everything going up already. The other option is we have another "unexpected" liquidity crisis and funding simply becomes unavailable, rather than too expensive!

Either way momentum will dry up. Prices would only stagnate if they were well priced. Otherwise the market will very quickly reposition itself to reflect a new pricing structure, one where the assumption of another party with another bank loan to bid up your investment is no longer implicit. All it takes is a few forced liquidations and distressed sellers to get the ball rolling.

Glenn Stevens, March 29 2010


> "We can't assume rates will remain low. *The relationship between the cash rate and what they pay for mortgages or small business loans is what we think is useful*," said Stevens, when asked to define normal rates in an interview with Channel Seven - his first television interview since becoming central bank chief.
> 
> "If you look back when the economy was stable and we had low inflation, the cash rate, that is the rate we decide on, the rate has been in the average of 5 per cent," he said, referring to a period since the 1990s.
> 
> "It's a mistake to assume a riskless, easy, and guaranteed way to prosperity is just to leverage to property," he said.




Curious minds can go to the RBA 
http://www.rba.gov.au/statistics/tables/index.html#money_credit

and check out the "Bank Lending to Business" series. Organised by interest rate. You can see about $238billion -almost a whole quarter of GDP- is loaned out to businesses at over the current cash rate in variable loans. The range is >5% up to 17%! I didn't even calculate the fixed rate loans in this number. 

I wonder what % of household debt is loaned out at > than the current cash rate?

Is anyone actually, honestly under the illusion that these dollars of debt are somehow translating into equivalent dollars of GDP growth when some debtors are paying 5-10% greater than the cash rate?

Good luck.


----------



## Uncle Festivus (24 November 2010)

Hello,

How about you property bears start putting up some hard facts and figures to back up your beliefs? Once again I will put forward the reasons why I think property prices will continue to increase, going forward - 

1 Coffee is cheap, lattes are nice
2 Riding on trams is a fun way to fill in your day
3 Stirring the pot without actually saying anything is fun too
4 Bears outnumber bulls on this thread (where are my usual supporters?)
5 Sunshine & lollipops will now get a government grant
6 It will become mandatory to drink beer & play skittles full time
7 Rose coloured glasses will be mandatory for property inspections
8 There will not be a cure for bank managers myopia 

Thank you,

Doctor Pollyanna_bots


----------



## Aussiejeff (24 November 2010)

Then again, if North & South Korea blows up in our faces we might see a huge rise in Korean refugee boats heading for Oz. That would help boost home demand & property prices. 

PIIGS might fly, too.


----------



## Bigukraine (24 November 2010)

Very good points and information supplied by everyone and would have to say that the grey clouds seem to be forming......

Seems to me the best investment decission i can make at the moment is to invest in the following:

 1; Debt collection agencies

 2; law firms that deal with insolvency/bankruptcy

 3; caravan park's (only place where people will be able to live)

 4; push bike manufacturer's

 5; tent manufacturer's

 6; cash converters/pawn brokers

correction will happen but where it will sit is pure guesstamation...if we are to believe all the experts and if they are anywhere near their stockbroking cousin's re the broker recommendations on stock,the end figure will be(positive or negative) poles apart from what has been stated to this point.

yes food ,utilities,clothing and all the basics (increasing in charges) will be a burden to all households but what has been stated over the last few pages of this thread the whole of the Australian economy will very soon be in a death spiral and will end up worse than the US and the PIIGS......I'll wait and see how bad it will unravel because if it's as bad as some on this thread predict ......

then we are all STUFFED


----------



## Lucky_Country (24 November 2010)

2 Speed economy !!!!

Mining areas will prosper but Capital cities will drag the rest of the market down with them.

Australian Real estate is the most expensive in the word especially with the high AU$. Overseas investors are running for the exit with the exchange rates and locking in profits.

High inflation and a rising interest rate scenario will tip alot of homeowners over the edge.


----------



## sinner (24 November 2010)

This article from Monday full of dire warnings. I have pasted some snippets, curious minds are advised to read the full article.

http://www.smartcompany.com.au/prop...as-unsold-stock-levels-soar-experts-warn.html



> Property experts are warning prices will continue to fall into 2011 as the market becomes flooded with unsold properties, as buyers remain hesitant due to higher interest rates.
> 
> The warning comes as the market recorded another lacklustre performance over the weekend, with clearance rates still in the 50s in Melbourne and Sydney. But SQM Research founder Louis Christophe says that figure could actually be much lower due to what he say is a flawed method of reporting.
> 
> ...






> SQM Research director Louis Christopher says the downward pressure on prices will be exacerbated in the upcoming Christmas period, when the demand for auctions will fall. He points to REIV figures showing over 1,000 properties were put up for auction in Melbourne – well above the long-term average.
> 
> "There's no question about it," Christopher says. "The group of buyers is very small and we are still seeing a lot of failed stock. We are expecting that prices will fall for the December quarter, and definitely going into next year, we will see more sellers than buyers."
> 
> ...




Meanwhile APM says their figures are fine, and everything is fine. Performance is commensurate, nothing to see here, move along now.

Your attention is directed to the quote "I don't think we are seeing a panic"...I know I harp on about the "housing price collapse cascade model", but this is exactly perfect behaviour to fit the model.


----------



## trainspotter (24 November 2010)

ABARE-BRS forecasts export earnings for Australian mineral and energy commodities will increase by 29.9 per cent to around $179.9 billion in 2010–11, compared with $138.5 billion in 2009–10. The main contributing factors to this forecast are higher negotiated contract prices for coal and higher export shipments and prices for iron ore. ABARE-BRS forecasts that export earnings for farm commodities will be around $31.4 billion in 2010–11, slightly up from $28.5 billion in 2009–10.

http://www.innovation.gov.au/section/aboutdiisr/factsheets/pages/australia'sexportsfactsheet.aspx

Not all doom and gloom on the Aussie economy?

Thanks MR. ...... you got what I was eluding to on the Guvmint involvement once they open their sleepy eyes as to what is going on. 

No doubt about it folks. Property is slanting sideways. Still waiting for the horrendous trainsmash predicted. Normal cycle as usual from what I can see. 1997 Asian economic crisis ring any bells? 1991 economic downturn anyone? 2001 building downturn (GST jitters) is still fresh in my memory. 1987 stockmarket crash?? HUH ??? Anybody?? Or is this the perfect storm that will decimate the housing industry and all that lays before it??


----------



## matty77 (24 November 2010)

The two speed economy is the killer.

Maybe not everyone is as confident in the mining sector, I have seen a lot of houses listed in country towns that rent to the mines for sale on RE.. .. 

Also hear the Chinese are trying to push the Iron Ore price down, cant remember where I read that.


----------



## satanoperca (24 November 2010)

trainspotter said:


> No doubt about it folks. Property is slanting sideways. Still waiting for the horrendous trainsmash predicted. Normal cycle as usual from what I can see. 1997 Asian economic crisis ring any bells? 1991 economic downturn anyone? 2001 building downturn (GST jitters) is still fresh in my memory. 1987 stockmarket crash?? HUH ??? Anybody?? Or is this the perfect storm that will decimate the housing industry and all that lays before it??




Define crash - ie percentage drop of median price and over what period of time?

There is one thing that has grown and not shrunk over all those normal cycles, debt. The big one may arrive and it may not but world debt just keeps climbing.

Cheers


----------



## trainspotter (24 November 2010)

crash 1 (krsh)
v. crashed, crash·ing, crash·es 
v.intr.
1. a. To break violently or noisily; smash.
1. b. To undergo sudden damage or destruction on impact.
2. To make a sudden loud noise: breakers crashing against the rocks.
3. To move noisily or so as to cause damage: went crashing through the woods.
*4. To undergo a sudden severe downturn, as a market or economy.*

http://www.economist.com/blogs/buttonwood/2010/06/indebtedness_after_financial_crisis 

Great webiste for debt ratios and sovereign debt plus global indebtedness.

No sweat satanoperca. Once we have these in Australia our economy will be saved !


----------



## satanoperca (24 November 2010)

I will attempt again to get a more definative response from you TS.

How would you measure a crash to determine if it was a correction or a crash?  A severe downturn is? Need reference to figures not words.

I will give you a start :
10% fall in median prices would be a correction, healthy at that.
>20% would deem a crash.

Cheers


----------



## FxTrader (24 November 2010)

trainspotter said:


> crash;
> *4. To undergo a sudden severe downturn, as a market or economy.*




Does not address the question as posed. This is a play on semantics.

Sudden - in the context of the property market, is that 3 weeks or 2 months or 1 year etc.?

Severe - is that a 5,10,20,50% drop from today's median. Or is it a certain percentage on auction clearance rates for one week. LOL

The liberal use of unquantified terms like crash and bubble by the doomsayers here allows them to appear to be right if any downward price move occurs since their definitions of such terms are so fluid and loosely defined.


----------



## trainspotter (24 November 2010)

satanoperca said:


> I will attempt again to get a more definative response from you TS.
> 
> How would you measure a crash to determine if it was a correction or a crash?  A severe downturn is? Need reference to figures not words.
> 
> ...




Why do I need to quantify what you deem a crash. I have cosistently stated that property is slanting sideways. I have told all and sundry how I make money out of property. I believe it was Steven Keene that claimed a 40% correction \ crash. .... Whatever you want to call it. I am still waiting for this to happen.


----------



## satanoperca (24 November 2010)




----------



## sinner (24 November 2010)

trainspotter said:


> ABARE-BRS forecasts export earnings for Australian mineral and energy commodities will increase by 29.9 per cent to around $179.9 billion in 2010–11, compared with $138.5 billion in 2009–10. The main contributing factors to this forecast are higher negotiated contract prices for coal and higher export shipments and prices for iron ore. ABARE-BRS forecasts that export earnings for farm commodities will be around $31.4 billion in 2010–11, slightly up from $28.5 billion in 2009–10.
> 
> http://www.innovation.gov.au/section/aboutdiisr/factsheets/pages/australia'sexportsfactsheet.aspx
> 
> ...




Hi trainspotter, since you are rattling off dates in your usual antagonistic fashion, why don't I throw out a good one that Ken Henry pointed out recently? 

1951.

I post this date in response to your mining sector earnings.

http://www.abc.net.au/worldtoday/content/2010/s3072889.htm


> KEN HENRY: Certainly there are some sectors of the economy that are growing very strongly and we would expect to see continue to grow strongly over the next several years. There are other sectors of the economy that are being affected particularly by the high exchange rate, who are finding conditions more difficult. There are businesses also if not directly affected by the high exchange rate are feeling the impact of rising interest rates and the dampening effect that those rising interest rates are having on demand.
> 
> So there is some dampening of demand evident in the Australian economy currently and we would expect to see those trends continue for some time, for quite possibly several years.
> 
> ...




Mmmm...17.5% inflation last time, this time the terms of trade shock is 3-4 times as large...what inflation rate does that translate into?

As I stated at the end of September:


sinner said:


> Basically, what I am trying to say is that Australia has an inflationary collapse (and accompanying decrease in standard of living for the majority) coming no matter what happens. You can be sure that the coming change in board of the RBA will only accelerate this.




Unless Mr Henry thinks the current terms of trade shock is going to be a positive one again (which can only happen if the Government manages the shock well and over a long period of time - going by the Howard govt boomtime policies, not gonna happen), he is surely concurring with my view. Analysts are positing the high AUD absorb the impact so that inflation won't be 17%.

My question is, what happens if the AUD goes back to 0.72? Or hell all the way back to 0.6? Would an AUD even at 1.5 absorb the level of inflation Ken Henry is telegraphing? I don't believe the analyst tripe.

P.S: There is no reason for annoying hyperbole like you continue to use trainspotter. I don't know who predicted a "horrendous trainsmash" or property decimation to happen overnight. I have categorically stated the factors I think to trigger any such event would be a second liquidity crisis or a large increase in the cost of credit. Again, just because I view these things as mathematical certainty, doesn't mean I am predicting them to happen tomorrow morning. Until then, we would appreciate you changing your posting style to something less abrasive.


----------



## Bigukraine (24 November 2010)

sinner said:


> Hi trainspotter, since you are rattling off dates in your usual antagonistic fashion, why don't I throw out a good one that Ken Henry pointed out recently?
> 
> 1951.
> 
> ...




pot's and kettles....pots and kettles.... and black one's at that


----------



## trainspotter (24 November 2010)

sinner said:


> Hi trainspotter, since you are rattling off dates in your usual antagonistic fashion, why don't I throw out a good one that Ken Henry pointed out recently?
> 
> 1951.
> 
> ...




Dear sinner,

It must be lovely sitting up on high and looking down on us mere neophytes who are in awe of your "mathematical" approach. I notice you have used the royal "we" in your repost. Have you canvassed the majority of posters in ASF and decided that you are the spokesperson for the group? HUH ?? WTF ???

So the dates I have put forward did not happen then sinner? How is this antagonistic by putting forward that these occurences on these dates did not seem to have a lasting effect on property prices in Australia? I was merely pointing out that it is "CYCLICAL". DERRRRRRRRRRRRRRRRR !!!!!!

At no stage have I said that you are wrong in what you are delivering here sinner. You seem to have taken it personally that I am doubting what you have written?? Very bizarre behaviour IMO. 

The mining sector earnings have come straight from the Guvmint website. Not my opinion sinner. The Gov's. I even placed a question mark pointing out that it might not be all doom and gloom. (sarcasm is lost here)

All these things are yet to come to fruition. I am still waiting for this to happen BTW !!!!!!!!! Not from you personally either sinner. 

GEEEEEEEEZZZZUUUUUUUUUZZZZZZZZ ..... get a grip.


----------



## trainspotter (24 November 2010)

satanoperca said:


>




I concur satanoperca. What is it that you are looking for? For me to say something like:

"I think if auction clearances go below 40% in the next 3 months and that the mean average of house prices between the 8 capital cities decline further than 20% on a pricing structure over the same period of time then I believe that this would quantify to be a CRASH !!!!"

OR 

"I think that the market trending sideways over the next 3 months to be less than between 10% to 15% and auction rates to stay above 50% then I would think that this would be called a CORRECTION."

How's that ???


----------



## schnootle (24 November 2010)

I love this thread, individual posts sometimes have dubious credibility but the ratio of bulls/bears at any given time could be a used as a new market indicator I reckon - like the famed clearance rates. The balance has definitely tipped to the bear recently.


----------



## FxTrader (24 November 2010)

trainspotter said:


> I concur satanoperca. What is it that you are looking for? For me to say something like:
> 
> "I think if auction clearances go below 40% in the next 3 months and that the mean average of house prices between the 8 capital cities decline further than 20% on a pricing structure over the same period of time then I believe that this would quantify to be a CRASH !!!!"
> 
> ...




Nice try, but the point is words like "crash" and "bubble" are essentially meaningless and subjective terms intended to instil a sense of fear and urgency to grab attention - scaremongering.

It's easily possible to argue that the Aus property market is historically overvalued by quoting many available metrics and a reversion to historic norms inevitable. However, invoking terms like crash informs us of nothing.


----------



## satanoperca (24 November 2010)

trainspotter said:


> I concur satanoperca. What is it that you are looking for? For me to say something like:
> 
> "I think if auction clearances go below 40% in the next 3 months and that the mean average of house prices between the 8 capital cities decline further than 20% on a pricing structure over the same period of time then I believe that this would quantify to be a CRASH !!!!"
> 
> ...




There you go, wasn't that hard. I would say that auction clearance rates have to many variables to determine anything meaningful except if demand is growing or easing, price action or that be it median price action is what I'm after.

Thanks for persisting.

Cheers


----------



## MR. (24 November 2010)

If I can borrow Beej again:


Beej said:


> Auction clearance rates are an historical leading indicator of what's going on in a particular residential property market



It is interesting the see the week to week changes as they unfold.

Weekend of the 20/11/2010
REIV 59% clearance
http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

APM 56% clearance (Melb)
       54% clearance (Sydney)
http://www.homepriceguide.com.au/Default.aspx

Realestate.com ? Have the week before last weeks? Anyone know when last weekends is updated.
http://www.rs.realestate.com.au/cgi...||4178404343&gclid=CKDX15fps6UCFQHabgodXSOh_g



sinner said:


> Since you mentioned it, been a while since we took a look at the:



https://www.aussiestockforums.com/forums/showpost.php?p=593025&postcount=3455

Last time you brought that list up I thought we were at the second last and I think we are still there!

22 posts today so far. Are we to read them all?


----------



## trainspotter (24 November 2010)

satanoperca said:


> A crash is a price drop of the median price of 30-50% would be a crash.
> A drop of 10-20% would be a correction.
> 
> I for one believe that the next two reported qtrs of property statistics will show further gains. Only if interest rates increase over the next six months and unemployment stays the same or increases will a correction be seen.




Written on the 18th of November 2009. Seems the writing is on the wall.


----------



## satanoperca (24 November 2010)

Cheers TS, 

So we are talking the same language. I find it hard to see a crash occurring, but to some a 20% drop will seem like one or more like a train hitting them at full speed.

Good evening


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## trainspotter (24 November 2010)

Thanks goes to you satanoperca.

Remember it is only a loss IF you have to sell. RBA could still drive rates DOWN if necessary. Inflation is under control (for now sinner) Jobless rate is 5.4% (pretty damn low) Low national debt compared to "other countries" blah blah blah. 

YES there are some very large MACRO GLOBAL concerns that "could" see a price squeeze in the future. IRS coming to end terms as well as all the other factors that sinner has pointed out are in the mix currently. Cost of funding for the banks whilst they still make billions of dollars in profit might be a soft target for the Guvmint to point out but in reality there is nothing they can do to dictate how much profit a company can make. Lotta white noise from Canberra about banks increasing rates over RBA moves etc is sabre rattling and vote grabbing at it's best.

I have typed it before and I will type it again. There WILL be defaults on mortgages and prices WILL fall in some areas. Nothing new here.


----------



## BigAl (24 November 2010)

Let me take this discussion sideways for a moment,

And discuss the state of play in the car industry, right now,

Facts and figures from Motoring Organisations on Month by Month Sales.  These figures aren't Deliveries and nor are they Licensed cars.  They are, what we call in the Car Industry a "Pre RDA".  It's a Sales stat to the Manufacturer, the car gets locked into the Dealereship and can't be traded or Dealer Transferred to another.  Remember that, not a real figure, it's not a delivery.  A Pre RDA'd car is also when the Warranty Starts.  Car sells 6 months later, so what, the Warranty started from the Pre RDA date.  And of course there a big $ Incentives to Dealerships from the Manufacturer to Pre RDA a certain number of cars at the end of a month / quarter, so the Manufacturer goes back to Japan / Korea and can say, we are doing our bit in OZ, we made RDA budget.

New Car Sales have come savagely off the pace within the last 2 months, Used Cars picked up slightly, but New deliveries are at least 20% down and the Gross's are being slashed, everywherem every Manufacturer.

If Dealerships are making budget (for the last few months), it's not because of a great trading result, it's because they had cash reserves hidden away, dummy expense accruals in the good times etc...


So what the hell has this got to with houses?

In down times, it's the luxuries that get hit hardest the fastest.  And boy are we struggling, it's like death valley at the moment.

I'd like to know how bad the boat business's are doing again.


But disregard my views...

It's all Paddlepops and Urine in my Overinflated Latte down at the Crisis Shelter.


----------



## MR. (24 November 2010)

Above is the average monthly auction clearance rates (melb) over 12 months vs Interest rates.

A lot of the demand for property was coming from pure "hype"
Higher prices clearly came from cheaper credit! 

The elephant is in the room alright!  

What happens when wide spread expectations of house prices moving in the opposite direction occurs? We may soon find out!


----------



## MR. (25 November 2010)

BigAl said:


> In down times, it's the luxuries that get hit hardest the fastest.  And boy are we struggling, it's like death valley at the moment.
> 
> I'd like to know how bad the boat business's are doing again.




Interest rates again? Interesting regarding the cars. I'm not sure the boat companies recovered! 

Most small boat yards did and are still disappearing. Mustang put off another 50 after voluntary administrators took control 5-6 months ago before Bill Barry-Cotter bought in. However, Riviera is still trading after receivers took control a year and a half ago. Went to service the boat last week to find my machanic had just vacated his new factory! But this is the Gold Coast and if the boat industry is anything like the property market they are both in the doldrums.


----------



## kotim (25 November 2010)

Australia, in terms of its capital type cities has a history of small price falls and then going basically sideways, up down round and straite ahead for years.  Regional centres are different becasue many regional areas (beach areas) are the playgorunds for thos who made it good, they have holidays homes etc.  These are the places that take the hits when bad times come.  Durubg the earlier part of the GFC many regional beach areas in Australia saw drops of easily 30% and are still seeing them.

Becasue there is so much movement to our capital cities, we just tend to have very low growth and as Susan pointed out in an earlier post.  Real losses occur becasue growth is so low that taking into consideration inflation and the holding costs then we see losses.

All in all we are in for slow growth over the next 5 years, or in real terms losses allowing for inflation etc.

The interesting thing is that bloody big growth only lasts for 2-3 years max, the other 10 or more years before usually sees no to low growth and now that I am older and hopefully a little wiser I plan to take advantage of it, only problem is that we are about antoher 10 years away from super explosive growth like we saw in the early 2000's.

There will always be isolated areas that have some advantage that make gains for whatever reasoons but most people don't know or care how to make money from those areas.


----------



## SusanW (25 November 2010)

kotim said:


> Australia, in terms of its capital type cities has a history of small price falls and then going basically sideways, up down round and straite ahead for years.




Re future price action, I think history might not be such a good guide. 
In the last 30 years, consider the unprecedented run up in mom gains from 00-04, 06-08. 

Then consider the unprecedented frequency and amplitude of the 4 falls since GFC. 

Credit growth has outpaced GDP growth by too much for too long. I agree we are in for a flat market for up to a decade. I find it interesting the RBA and Treasury keep talking about high growth, when the domestic economy is slowing down so obviously i.e. per capita house listings up over 50%; car sales and retail trade are down or flat.


----------



## Peak Debt (25 November 2010)

Alex Barton said:


> Here is an article about the Australian Housing Bubble that I had published on Ezines. The bulls most probably won't agree with any of it, so fire away with your criticism, I can take it!
> 
> Australian Housing Bubble
> 
> I'm interested to hear what people think about the article. Thanks!




Alex, the article says

_"According to recent Senate Estimates Transcripts regarding data provided by the Housing Supply Council "at any one time in Australia, there are roughly 800,000 vacant dwellings". When such investment properties are left vacant with the primary aim of accumulating capital gain, this contributes nothing to the provision of shelter in Australia."_

Should we assume the only reason to leave houses empty is capital gain


What about holiday homes


What about people who were on holiday when the census happened


Are they counted in the 800,000


----------



## explod (25 November 2010)

Just got a flyer in the letter box,

(Hidden) Harbour, land from $269,000,  House and Land $499,500

I live just a few K's from this spot and two years ago these blocks were 1 million and the packages then were no less that 2 mill.

The project was called Martha Cove on the flyer it is called "(Hidden) Harbour on the Mornington Peninsula.

Of course this is a holiday area, but by road only 55 minutes from Melbourne city.


----------



## MR. (25 November 2010)

explod said:


> Just got a flyer in the letter box,
> 
> (Hidden) Harbour, land from $269,000,  House and Land $499,500
> 
> ...



Explod, these blocks could be "dry" blocks. There is a big price difference between "wet" meaning canal frontage and "dry". Would you check?


----------



## nunthewiser (25 November 2010)

trainspotter said:


> Remember it is only a loss IF you have to sell.    :




Ive always loved these statements, in stocks AND in property.

I dont think the Banks and other lenders really give a toss how much you paid (unless the market value drops a chunk below what you owe on it)....only what its currently valued at if one wants to use the asset as collateral/to borrow against.

u pay 500k for an asset and it drops in value to 400k (market price)....then it is only worth 400k on paper or cash regardless .. it is still a loss.

anyhoo back to saving the world and drinking bourbon until my next brilliant moment.

well done DR nun on nailin that top ......... even robots agrees


----------



## MR. (25 November 2010)

nunthewiser said:


> well done DR nun on nailin that top ......... even robots agrees




*Robots*, how bout some official letters or somethin for the nun? He keeps reminding us of how great his call was!  
Great call nun. 

I know someone else who called it in May too. 
What the hell letters all round!


----------



## explod (25 November 2010)

MR. said:


> Explod, these blocks could be "dry" blocks. There is a big price difference between "wet" meaning canal frontage and "dry". Would you check?




Yep, you are correct though the wet ones have halved since the first releases.   A resale recently, original buyer lost half his original stake.

This whole project was a bit over the top in the first place and opened just prior to the GFC so does not represent a good sample.  But it does show how careful one has to be.

I am in no way a bear on property either, time and place for all things and property is something tangible in the hand.  What I did object to on this and previous property threads was the blatant ramping in front of an innocent public.


----------



## explod (25 November 2010)

MR. said:


> *Robots*, how bout some official letters or somethin for the nun? He keeps reminding us of how great his call was!
> Great call nun.
> 
> I know someone else who called it in May too.
> What the hell letters all round!




No, you dont' deserve it either.  I tried to self proclaim my self a Major General (cause I know how to wear uniforms) but no one took any notice at all.

No, we must stand back and revere the *cONFESSOR* who is the great one of property clearance rates.  Except lately he seems to have lost the numbers or sumptin like that.

Bubbles and lollies comerades.


----------



## Aussiejeff (25 November 2010)

explod said:


> No, you dont' deserve it either.  I tried to self proclaim my self a Major General (cause I know how to wear uniforms) but no one took any notice at all.
> 
> No, we must stand back and revere the *cONFESSOR* who is the great one of property clearance rates.  Except lately he seems to have lost the numbers or sumptin like that.
> 
> Bubbles and lollies comerades.




You mispelt *cONFE$$OR*


----------



## MR. (25 November 2010)

explod said:


> No, you dont' deserve it either.  I tried to self proclaim my self a Major General (cause I know how to wear uniforms) but no one took any notice at all.
> 
> No, we must stand back and revere the *cONFESSOR* who is the great one of property clearance rates.  Except lately he seems to have lost the numbers or sumptin like that.
> 
> Bubbles and lollies comerades.





I suggested letters all round! Don’t you want some letters after your name? I want letters! We deserve letters!

When you self proclaim as a Major General? You aren’t speaking of the dubious clearance rate call are you? 

Bots seemed to think the REIV has changed their calculation methods of late or sumptin. Hope he returns soon cause we want our letters, titles and badges otherwise there's going to be a mutiny. 

RPData released their clearance figures for last weekend today. 
54.5% down from 56.2 the week before last.
http://www.rs.realestate.com.au/cgi...||4178404343&gclid=CKDX15fps6UCFQHabgodXSOh_g


----------



## MR. (25 November 2010)

robots said:


> hello,
> 
> oops, sorry forget the Grand Final of X-Factor is on and people may be watching the show




What happened in the Grand Final of the "Block"

One with a reserve of 880K didn't sell and another with a reserve of $900K sold for $1,105K

Were some far better positioned than others?


----------



## Dangerous (25 November 2010)

MR. said:


> RPData released their clearance figures for last weekend today.
> 54.5% down from 56.2 the week before last.
> http://www.rs.realestate.com.au/cgi...||4178404343&gclid=CKDX15fps6UCFQHabgodXSOh_g




http://www.reiv.com.au/news/details.asp?NewsID=1022

on their site they have bumped up the auction number by 1000 but only dropped the clearance rate to 57%.

Interesting tactic.  Report a higher clearance rate for 5 days, rejig it on thurs to make this saturdays look better than it really is


----------



## nukz (25 November 2010)

explod said:


> Just got a flyer in the letter box,
> 
> (Hidden) Harbour, land from $269,000,  House and Land $499,500
> 
> ...




I remember when this development started i took a look about 3 months after starting and there was about 5 houses in total on a massive piece of land. I then visited around 6 months ago last time and not much has changed i counted approx 15-18 houses.

Wonder what happened to that housing shortage, shouldn't people be homeless because of this? Or shouldn't people be begging to get a piece of land on this site?


----------



## MR. (26 November 2010)

Dangerous said:


> http://www.reiv.com.au/news/details.asp?NewsID=1022
> 
> on their site they have bumped up the auction number by 1000 but only dropped the clearance rate to 57%.
> 
> Interesting tactic.  Report a higher clearance rate for 5 days, rejig it on thurs to make this saturdays look better than it really is






> 24-Nov-2010
> Last weekend: 1014 auctions, clearance rate of 57 per cent




REIV
Weekend of 6th & 7th: clearance 61% revised later in week to 59%.

Weekend of 13th & 14th: clearance 61% revised later in week to 59% after the REIV wrote "The clearance rate this weekend is 61 per cent, compared to last weekends 59 per cent"  

Weekend of 20th & 21st: clearance 59% revised yesterday to 57%


----------



## MR. (26 November 2010)

From Realestate.com 24/11/2010 http://reareports.realestate.com.au/showNews.do?id=431


> Spring has always been touted as the season in which to sell your property however, the data shows that more sales occur within autumn.  Coupled with this the number of properties available for sale in autumn are typically lower, as a result vendors will probably have a better chance at selling than they would during spring.




The best time to sell is now in Autumn?

From REIV 


> Sunday 21st November 2010
> This is the first weekend of the busiest four week period ever in the Melbourne residential auction market.




Hmmm. Three weeks to go!


----------



## MR. (26 November 2010)

Geez Robot's quite! Not even talking "The Block" was enough to bring him out!

Anyway,
The following chart is a real rip snorter of information. 

The chart tracks the last 8 months (on a month by month basis) of real property sentiment. 

It is an extremely good barometer of how property is really going.  

Would have thrown a few other particular ASFers in but.... Hangon, I did chart them! 

Notice the blue line spike up to 70 in August! That must have been because the clearance rate rose a few percent!


----------



## nunthewiser (26 November 2010)

ROFLMAO!! 

Pure Gold MR

but i think you need to get out more


----------



## singlefished (26 November 2010)

hahahaha 

very good MR.


----------



## SusanW (26 November 2010)

after a nice little trade on the US market tonight, thought I'd share these. 
realestate.com.au publishes a demand ratio which I find very informative. 

been a bit of a flat old spring. I'll keep my gunpowder dry til after the next RBA rate rise methinks. should shake a few wood ducks out of the trees.


----------



## MR. (26 November 2010)

Is that what it means: Rolling On Floor Laughing My A$$ Off!

Just looking for answers! I just need answers…… Robot understands…….

With this new information I do hope clearance rates pick up very soon because without Robots cheery good willed nature that is needed here, I’m going to be stringing meself up by Christmas. That’s something I also like about Teach/a his positive attitude makes you want to just get up and do something, even if it was to buy property at the top. 

Hangon, Teach/a and Bots aren’t one the same? Never mind….. 


> but i think you need to get out more



Agree and I’ve packed me bags and the authorities will be here soon……


----------



## matty77 (26 November 2010)

Forget the major cities for the moment, what do people think of the future property prices for mining towns in Australia?


----------



## sinner (26 November 2010)

SusanW said:


> after a nice little trade on the US market tonight, thought I'd share these.
> realestate.com.au publishes a demand ratio which I find very informative.
> 
> been a bit of a flat old spring. I'll keep my gunpowder dry til after the next RBA rate rise methinks. should shake a few wood ducks out of the trees.




So awesome.

Thanks for bringing those plots to our attention.

Suburb of interest to me is Epping and North Epping in Sydney NSW. Take a look at those plots! 

I wish there was a nationwide composite graph.


----------



## robots (26 November 2010)

hello,

oh gidday everybody, oh yeah more fictional graphs, just amazing

should be no worries Sinner, SusanW will whip up a few for your suburbs of interest, quick as, dodgy numbers, oh well

apologies to everyone as i am like a nomad at the moment and only have access on mobile most of the time, has been great reading

well, great week, few more til christmas, another year almost gone

thankyou
professor robots


----------



## drsmith (26 November 2010)

robots said:


> hello,



I thought you might have been at your local NAB branch bashing the counter for some of your hard earned to get a coffee.


----------



## Peak Debt (26 November 2010)

MR. said:


> The chart tracks the last 8 months (on a month by month basis) of real property sentiment.
> 
> It is an extremely good barometer of how property is really going.
> 
> ...




Too funny !


----------



## SusanW (27 November 2010)

robots said:


> oh gidday everybody, oh yeah more fictional graphs, just amazing
> 
> should be no worries Sinner, SusanW will whip up a few for your suburbs of interest, quick as, dodgy numbers, oh well




Frayed knot Botty. These numbers are all the work of realestate.com.au (where do you get your numbers?  )
Here's Eltham
Change the state and suburb to suit.

Cheer up Botty. Why so glum? Let's hope the cyclonic winds and rain don't kill auction clearances today hey? And if they do, the REIV can blame the weather and not lack of demand.


----------



## MR. (27 November 2010)

MR. said:


> Agree and I’ve packed me bags and the authorities will be here soon……




Geez, what were they parked around the corner! The matron at the hospital asked “What’s your name” and I replied MR…… She just kept on asking “who”? So didn’t get off to a good start and some goons dressed in their cricket whites picked me up and put me in this room. 

You know this room is unreal! Did you know you can run as fast as you can into a wall and it doesn’t hurt! I spent all afternoon running into walls seeing if I could run fast enough that I could bounce back and hit the other wall behind me. Out or 368 tries I was successful 246 times that’s a 66.8% success rate, that’s better than any auction clearance result! Wish they’d let me have access to a charting program then I could calculate if I’m getting better or not relative to auction clearance rates but the matron said “no”. 

If I took all me tablets “including the green ones” the matron said I could make one phone call or email/post per day or two. So here I am…... Just wishing all those auctions well today and I believes it's wet! Susan you seemed to have picked up that Robot prodding well, you been here before under a different handle?  

Anyway, I am going to be playing “Spot the Difference” on picture cards this afternoon so I’m unable to drive round putting my usual dummy bids in to get the ball rolling on some auctions. I am very much looking forward to Robot’s REIV report which I’ll read tomorrow if they let me. You guys are my eyes and ears in here, they don’t let us have too much contact with the outside world.

Anyway, just letting you know I’m having a ball. Hey, I have to get off this computer because some dude they call Kincy wants to use the phone line and unplug the dial up. Total nut case this dude is! Keeps walking up and down the corridors mumbling “interest rates will come down” or something. They should lock dudes like that up! 

Best of luck with the auctions.
regards
MR.


----------



## robots (27 November 2010)

hello,

good morning brothers, 

gee an about face by the RBA by the looks of it, Kincella on the money again i reckon

oh yeah, special word out to the Nun on picking it, fantastic effort man, get a christmas card this year from ASF i reckon

top day for getting out and about, myki ticket loaded

thankyou
professor robts


----------



## tronic72 (27 November 2010)

I have a relative in Banking, responsible for chasing debt. Apparently WA & QLD are in big trouble with huge amounts of lenders unable to service their mortgages. Just the other day I was told of a lender who's property was valued at $450,000 in 2003, $780,000 in 2007 and now $475,000! Lender is blaming the bank for loaning them the original, plus another $200K equity who now has a $650K debt on a $475K property.......that they can't sell!

We have reached a point where new money can't get into the market. Old money is to worried about paying their existing mortgages and the overseas investors have been turned away (2 years overdue).

Banks want a deposit of $20%, which on a $400,000 home just isn't possible. Gen Y's can't save for a new iPod, let alone a house! For a while, first-home lenders could mooch off their parents equity but that's dried up as has the FHBG.

It's not rocket science. Money is hard to come by and banks want a hefty deposit. The days of 110% borrowing on homes are over. Australian property is simply UNAFFORDABLE, with Melbourne being the least affordable.


----------



## explod (27 November 2010)

tronic72 said:


> It's not rocket science. Money is hard to come by and banks want a hefty deposit. The days of 110% borrowing on homes are over. Australian property is simply UNAFFORDABLE, with Melbourne being the least affordable.




Well we have a *cONFE$$OR*(thanks Aussie Jeff) on here that says very different.

He talks of nice times and things but did mention bubbles I think.   This is going to worry sheeple everywhere.

I only go to my Psych once a month MR, maybe that's not enough in these times


----------



## robots (27 November 2010)

hello,

oh gidday, no explod, no bubbles

sinner has data and presented indicating property just moving along with inflation, thats all, 

SusanW gave us all the info just the other week indicating the performance of Brisbane over 30yrs and just moving along with inflation, its a given inflation

oh well, get the Principle and Interest paid off brothers and after 10, 20, 30+ yrs you large

thankyou
Professor Robots


----------



## robots (27 November 2010)

hello,

did I mention that banks only get 30% of their funding from overseas, 

not much is it brothers, gee i thought every cent came from overseas, oh well Myth Busted

thankyou
Professor Robots


----------



## JTLP (27 November 2010)

Was reading on Bloomberg yesterday that some top dog at the RBA said that interest rates are 'about right' for Australia for the next few months (which has annoyed me as I was banking on some nice rises to support my trip overseas .

How can such claims be made if inflation can't be kept under control? Surely statements like these will look pretty silly if we get another round of flattering figures?


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## robots (27 November 2010)

hello,

yeah, write them a letter

but all figures of recent times have pointed to a flat economy, oh well

inflation a given anyway man just like the sun coming up in the morning

thankyou
Professor Robots


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## Dangerous (27 November 2010)

REIV results in.  
Auctions 932
Cleared 573
Clearnace 61%

Note on Thurs they said there would be 1065 auctions.  If only 573 of these cleared true clearance is 54%.

Did anyone notice when they revised last weeks (21/22 November) they did not say how many had actually been cleared?


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## medicowallet (27 November 2010)

Dangerous said:


> REIV results in.
> Auctions 932
> Cleared 573
> Clearnace 61%
> ...




What do these low figures mean robots?


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## SusanW (27 November 2010)

robots said:


> did I mention that banks only get 30% of their funding from overseas,
> 
> not much is it brothers, gee i thought every cent came from overseas, oh well Myth Busted




Botty, it isn't a matter of what bank foreign liabilities are at this point in time, but the *cause *of the upwards trend since 1990, when they were 12%. For house prices to continue rising above the rate of real GDP, we have to borrow an even higher percentage from offshore. And we have to understand we have less power to influence foreign creditors in a risk off global environment. 

This will make credit supply ergo property prices more volatile in the future, in my very humble view....a climate quite different to that of the last 40 years. I am always amazed so many don't get that. 

Further, one needs to keep in mind the interest paid on today's 30% foreign liabilities is wages that leave the country....no more money multiplier effect. Total bank liabilities in 2009 were 1.4 trillion, so interest on 422 billion went offshore last year. Let's say an average of 5% is being paid on medium and long term liabilities this year. That's 21 billion. Hey 2 years of that could have fully paid for NBN!!!!

Further, have a look at the primary account component of the current account. The reason we still have negative cash flow iwth the rest of the world when we  are generating the occasional trade surplus, is because of the interest we are paying to borrow foreign funds. 

Then look at the trend in Australian's net foreign debt. Foreign borrowings are the major reason for NFD trending up over the last 20 years, not trade deficits. 

Now Botty, would you like to postulate how and when Australia is going to pay down that foreign debt? and the opportunity cost of our negative cash flow with our more savvy foreign creditors?

MR, I've not been here before under a different name. A few nights ago I skimmed Botty's posts and picked up on his MO and the endearing terms in which the forum consider the sweetheart.


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## nunthewiser (27 November 2010)

SusanW said:


> A few nights ago I skimmed Botty's posts and picked up on his MO and the endearing terms in which the forum consider the sweetheart.




For someone that claims to have Robots on ignore you sure like to pull up a lot of his posts .

I reckon Robots is a sweetheart and often wonder why there is so much negativity towards his freewheelin and blogster posts.

He just tellin it how it is


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## nunthewiser (27 November 2010)

SusanW said:


> Either way, I skimmed his posts and all it motivated me to do was put him on ignore.




yep funny place the internet.


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## singlefished (27 November 2010)

robots said:


> gee an about face by the RBA by the looks of it, Kincella on the money again i reckon




and from January....



kincella said:


> .......rates will need to come back down....or stay put.....





How many rate rises have we had since then, 3 or 4? and what is it, 2 times the big 4 have raised over and above the official cash rate?

I fail to see how kincella could have been _"on the money"_ considering what has actually transpired.

kincellas selfish desire for low rates is fuelled by his over exposure to the property sector, nothing more, nothing less....

It's makes me laugh to think that there's as much, if not more, whinging about interest rates rising to 4.75% than there was when rates were pushed up to over 7% only a few short years ago....


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## MACCA350 (28 November 2010)

singlefished said:


> It's makes me laugh to think that there's as much, if not more, whinging about interest rates rising to 4.75% than there was when rates were pushed up to over 7% only a few short years ago....



Bring back the 7-10% cash rate and I for one will shift the bulk of our capital back out of stocks and sink it into our interest account. I did just the opposite when rates crashed as the return was just not worth leaving it there, especially when the deposit rate drops below the rate of inflation.

This is one thing many don't think about. Sure low rates are great for those with mortgages, and the media only ever harp on about this side of the coin, but what about those with cash? If the banks want more local deposits to fund mortgages they have to intice depositors with a decent interest rate.

Cheers


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## Agentm (28 November 2010)

REIV has again posted today a fake 61% clearance rate for melbourne on saturday

set, as usual and with ongoing monotony, above the all important psychological barrier of 60% 

120 no results reported..  Yawn..  how did that happen??? 

and as usual the sheep all go baa baa baa,, buy buy buy..

lol


we all know of the fake figures released last week sunday, is that the real clearance rate was 56%.. absolutely the worst for 2011.

the best news is of course that  the private sales are not increasing at all.. which will mean for the ones bidding the prices up at auction, the glut of 44% of the unsold properties are not selling, but we all know the disappointed owners will all be selling at the new record high prices set by the auctions that did sell.. lol

the bidders are still setting up new record prices week in week out.. so when a bidder does show up for an auction, the lamp post, the neighbours cat, and the bidder always seem to set an new high in their frenzied bidding war..

back to being a developa and sippin lattes and calling the bubble what it is..

buy buy black sheep..  its all good out there.. trust me!!!  or does that not compute???


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## Koeln (28 November 2010)

Many pessimists here. 

But assuming the market comes down, what would be the best
way to short the Australian property market ?

What would be a short that you could sit on, without loosing
if you get the timing wrong ? (like the professor who had to do the walk


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## SusanW (28 November 2010)

nunthewiser said:


> For someone that claims to have Robots on ignore you sure like to pull up a lot of his posts .




yes, I had him on ignore, but when I come to the forum, I don't auto log on, so get to see his posts anyway. Then when I realized how harmless and predictable he is, I took him off ignore. 

Now NTW, that's two posts you made without contributing to the debate.


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## SusanW (28 November 2010)

Koeln said:


> Many pessimists here.




I don't think so. There's just rational people interpreting the available data.

My emotion won't change the data, whether irrationally postive or negative.


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## nunthewiser (28 November 2010)

SusanW said:


> Now NTW, that's two posts you made without contributing to the debate.




I disagree.

The debate on your behalf seems to revolve around Robots posts it seems (even though you apparentley had him on ignore)



> Originally Posted by SusanW
> Either way, I skimmed his posts and all it motivated me to do was put him on ignore.



I just like to point out lifes lil hypocrocies which it seems there are  many of in this thread.

Anyhoo as you were.


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## explod (28 November 2010)

SusanW said:


> Then when I realized how harmless and predictable he is, I took him off ignore.




He is not harmless at all.   His dogmatic support of property, as the only way to go, reflects the mentality of the real estate agent industry.

Property has done brilliantly since the late 60's but of late we have entered a very dangerous overshoot in which we ought to be at least putting up some caution.

In my view the problems of money supply have never looked as bad for 70 years.   It is time for great caution IMHO

The qualifications for my view have been amply aired on this and other financial threads *if one wants to see it.*


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## MR. (28 November 2010)

So much time and so little to say!

The matron has given me five. Made some friends now at summer camp resort. Met them on kitchen duty, chops a must, mr burns, pepperoni, kimosabi, Tom R, numbercruncher and Knocker. 

Hey Bots do you think that Kincy fella is Kincella your lost friend? This dude keeps pacing the corridor repeating "Interest rates will come down!" Anyway, told the matron that dude doesn't deserve to be here on camp with us and should be locked up somewhere.

Explod, don't worry about seeing your psych just come visit us at summer camp!

Dangerous, you can't just go counting the "auctions with no result" as failed auctions some of those "would" have sold. These "auctions with no result" have always been there, nothing new here! However, there is a greater percentage of "auctions with no result" from earlier in the year. Think that is what Bot's means by the REIV might have changed their reporting process. 

Agentm: 57% not 56% (following not written as is from REIV)


> REIV
> Weekend of 6th & 7th: clearance 61% revised later in week to 59%.
> 
> Weekend of 13th & 14th: clearance 61% revised later in week to 59% after the REIV wrote "The clearance rate this weekend is 61 per cent, compared to last weekends 59 per cent"
> ...




The REIV revised figures are released on "Wednesday's" (someone asked) Mr. REIV bigdog could have told you that! 

REIV and APM have similar better clearances yesterday! 
I like:
http://www.rs.realestate.com.au/cgi...||4178404343&gclid=CKDX15fps6UCFQHabgodXSOh_g
released on Thursdays hopefully the matron lets me view it!

and finally, Robots, ya can't go posting 5 posts on a Saturday without ya do'en the bigdog thingy again. Secondly your posts are manipulating the stats and clearances might follow.


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## MR. (28 November 2010)

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162



> The clearance rate from the 942 auctions reported this weekend was 61 per cent, compared to 57 per cent from last weekends 1014 auctions.




WOW the maket's come up 4%


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## robots (28 November 2010)

hello,

oh gidday everyone, 

i'm all for peace love and happiness Explod, its been others that have caused mental and physical scarring amongst the ASF members

look at the socialist bloke that bashed me on swanston st, just trying to have a discussion with him and then he cracked me on the scone with his placard and then kneed me in the you know whats, amazing

like, ring up S.Keen, the Barefoot Investor, G.Minick, GPHC or any of the other anti-property "hero's" that have cost many in australia thousands and caused untold family breakdowns

oh well, thanks Nun

thankyou
Professor Robots


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## SusanW (28 November 2010)

robots said:


> like, ring up S.Keen, the Barefoot Investor, G.Minick, GPHC or any of the other anti-property "hero's" that have cost many in australia thousands and caused untold family breakdowns




you are a naughty naughty boy Botty. 
Keen hasn't cost many thousands.....The nefarious actions of REAs and auctioneers has, in addition to proponents of "too much credit is not enough" banking deregulation. 

I suggest you read up on the latter, and note carefully how our socialist brothers in Treasury and the RBA talk about it. 

They perceive that pre banking deregulation, there wasn't enough credit, so it had to be rationed. After dereg, rationing is no longer necessary, and the noughties property boom is a result of coming off rations. 

My Lord. Only a distorted ideologue could hold to such a thought. 

If you read between the lines, dereg proponents are saying housing was underpriced until dereg came along......


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## robots (28 November 2010)

hello,

oh yeah, Keen even lost out following his own failed prophecies (sold his joint), get out of debt when it actually got cheaper to hold debt amazing

keep reading my posts and from 5 others here at ASF to experience society's true prophets, enjoy them

thankyou
Professor Robots


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## Dangerous (28 November 2010)

robots said:


> hello,
> 
> oh yeah, Keen even lost out following his own failed prophecies (sold his joint), get out of debt when it actually got cheaper to hold debt amazing




Keen did the right thing actually, I dare say his cash has earnt more than 0.2% in two years

_The doomsayer economist - who forecast in 2008 that property prices could fall by 40 per cent - sold his Surry Hills apartment for $540,000 in November 2008 with recessionary fears in mind. The price of his two-bedroom Chalmers Street unit represented a 4.4 per cent annualised growth on its $480,000 purchase price. His purchase in 2006 reflected 16 per cent annual growth on its $410,000 sale in 2005.

Professor Keen's sale of the 89 sq m unit reflected $6060 a square metre.

The four sales of two bedroom units in the block so far this year reflect $6075 a square metre_


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## SusanW (28 November 2010)

robots said:


> Keen even lost out following his own failed prophecies (sold his joint), get out of debt when it actually got cheaper to hold debt amazing
> 
> keep reading my posts and from 5 others here at ASF to experience society's true prophets, enjoy them




Botty, considering you are a debt aficionado, I presume you know household and public debt are moving up simultaneously.....a fresh home baked anzac biscuit if you can tell me what sector has to reduce debt to offset that.  

BTW, household debt is 90% mortgages, even though 30% of us rent.


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## SusanW (29 November 2010)

Boy, that Enzo Raimondo is a piece of work. He's now blaming high volumes for lower clearances, when in fact, the same week last year had more auctions (1050) and higher clearance (78%) vs this week (1025 61%). 

APM has Sat's Melbourne clearance at 58%, while RPData has the previous week's clearance at 54.5%.

Of course, none of this would matter to buyers genuinely needing a dwelling to live in. They'll still be happy to secure a home.

But speculators are a different breed of cattle. They have a 'keen' nose for the smell of rotting flesh, and circle above vulture like, waiting waiting waiting for vendors to drop to their knees.

It's a vicious circle now. With the speculators motivated to wait, who's to say how far prices will fall with only the support of genuine 'undersupplied' owner occupiers. 

I'll stick with my commodities trading thankyou.


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## kincella (29 November 2010)

Morning Robots, and PI investors.....
Hmmm, all those interest rates rises by those in control, who have no interest in reality....Stevens, Swan and banker mates....
the banks are still not lending to business......like 2008 revisted, business can only hang in there for so long before they shut up shop.....

anyone noticed all the retailers and the discounting going on right now.....did you notice this is pre christmas sale time, rather than the usual no discount period....leading up to christmas......when everyman and his two dogs just has to buy all those xmas goodies......

this is different to the past years, when we became used to  the massive sell off, bargains and discounts of the post xmas sales.....

the retailers are desperate for cash flow, they need the cash now, they cannot afford to wait until post xmas to offer the discounts.....
hence all the discounts out now....
(or the massive push for 2-5 year interest free credit deals)

the shoppers are not opening their wallets, regardless of the discounts on offer.....I expect we will see some of the weakest retail figures for December in years......
the banks non lending to business is having the most damage.....
we will have to wait until the end of January for the December figures to come out.....but those in charge will still be holidaying....still on another planet....
enjoy your holidays and the festive season.....
I rarely blog about the property market these days....moved on to more interesting pursuits...I might pop in again next year...or I may not
cheers


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## nukz (29 November 2010)

Rates pain is biting back hard

    * By Peter Taylor
    * From: Herald Sun
    * November 24, 2010 12:00AM

THE proportion of "low-doc" mortgage customers behind on payments is surging towards its peak at the height of the GFC.

One in every 17 home loan customers with a low-documentation mortgage -  held usually by the self-employed or small business owners - was at least a month behind on repayments at the end of the third quarter, according to ratings agency Fitch.

But the broader landscape is better, with only a marginal increase in payment arrears among borrowers with a conventional mortgage, who account for the vast majority of home loan customers.

Fitch analyst James Zanesi said the strong increase in arrears this year proved that low-doc borrowers had "indeed felt" the 0.75 percentage point increase in the official cash rate from March to May.

The trend in low-doc delinquencies indicated that "the worst is not behind us but is actually yet to come", he said.

Across the broad "prime", or conventional, mortgage market, the effective proportion of borrowers at least a month behind on payments climbed from 1.33 per cent to 1.37 per cent - about one in every 70.

Fitch's figures are based on the performance of securitised mortgages - those bundled up by lenders and re-sold to investors.


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## againsthegrain (29 November 2010)

Bot sounds like a crazy man desperately trying to argue his point no matter what facts are stacked against him, maybye his in a straight jacket and for good behaviour gets 1 hour internet time so his repies come delayed


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## MR. (29 November 2010)

Da big Indian fella picked up the sink at breakfast this morning. Ripped it right off the wall! Water went everywhere! He then threw it through the window and was about to walk out when that corridor pacing, interest rate dude's eyes lit up and jumped out the window first and ran to greener pastures! 
Suppose now, never to be heard from again.......




There's an underlying message here I just can't put my finger on it?


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## nukz (29 November 2010)

againsthegrain said:


> Bot sounds like a crazy man desperately trying to argue his point no matter what facts are stacked against him, maybye his in a straight jacket and for good behaviour gets 1 hour internet time so his repies come delayed




He has a vested intrest i think, i suspect most the bulls here do. Theres also another group of bulls who believe that it's un-patriotic to even think the property market might collapse. 

I suspect some of the bears here are possibly FHB's who want to get into the market and are wishing to some extent it will implode. That said there are bears here who are just looking at the raw data and making investment decisions based on the data. 

Personally i've stated quite openly that i sold both my property's around March this year, but i was quite bearish on the property market for a few months before i decided to sell so you could say i was even bearish to some extent while i had property lol. 

The reason i've got out of property is purely the numbers, i'm not seeing the returns we saw in 2007-2009 anymore and i suspect we won't be seeing those kind of returns for sometime.


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## MR. (29 November 2010)

Did I tell ya! 
Da big Indian fella picked up the sink at breakfast this morning. Ripped it right off the wall! Water went everywhere! He then threw it through the window and was about to walk out when that corridor pacing, interest rate dude's eyes lit up and jumped out the window first and ran to greener pastures! 
Suppose now, never to be heard from again.......




There's an underlying message here I just can't put my finger on it?

Since I'm free too, I can repost and chart as many times as I like so to be at the top of the page!


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## Uncle Festivus (29 November 2010)

robots said:


> hello,
> 
> oh yeah, Keen even lost out following his own failed prophecies (sold his joint), get out of debt when it actually got cheaper to hold debt amazing
> 
> ...




Only 5? Maybe false prophets, like the one who _thinks_ he is a professor 



kincella said:


> Morning Robots, and PI investors.....
> Hmmm, all those interest rates rises by those in control, who have no interest in reality....Stevens, Swan and banker mates....
> the banks are still not lending to business......like 2008 revisted, business can only hang in there for so long before they shut up shop.....
> 
> ...




Sounds like a bull turning bearish? Down to 4 now?
Some compelling reasons why property prices could come under pressure.

The Powers can only bring forward future consumption bought on credit and stimulis for so long then.....we all sit back and work out how to pay for it..... a bit like after over-eating the big Christmas lunch?

I'm no Professor, but ignoring the problem is usually one of the first signs of denial?


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## financialdonk (29 November 2010)

MR. said:


> Da big Indian fella picked up the sink at breakfast this morning. Ripped it right off the wall! Water went everywhere! He then threw it through the window and was about to walk out when that corridor pacing, interest rate dude's eyes lit up and jumped out the window first and ran to greener pastures!
> Suppose now, never to be heard from again.......
> 
> View attachment 39838
> ...




Rofl! Love your work MR.  I finished reading One Flew Over the Cukoo's Nest about a fortnight ago.

Quality photoshops of post counts too!!


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## MR. (29 November 2010)

UF I see you’ve heard from that corridor pacing interest rate dude!
 Musta run straight to da nearist blog cafÃ©!  Yep, greener pastures I tell ya!



kincella said:


> I rarely blog about the property market these days....moved on to more interesting pursuits...I might pop in again next year...or I may not
> cheers




Depending on ?????? ……… %%%%% = $$$$$$$ :dunno:  :bekloppt:



Uncle Festivus said:


> Only 5? Maybe false prophets, like the one who _thinks_ he is a professor




UF every time I try to count these 5 prophets I just can't get near five!  

Let me try counting them again, one… two…....... 
Start again, one.... twooooo...... :dunno:

I’ll try again, one….  Hang on, re-count I might have counted the same prophet twice! 

 One… two….. No just can’t get to three. Either I’m counting on me arms instead of me fingers or the cONFE$$OR has been straw sipping too many lattÃ©s! Geez it's goin to be quite round hear soon......


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## c-unit (29 November 2010)

kincella said:


> Morning Robots, and PI investors.....
> Hmmm, all those interest rates rises by those in control, who have no interest in reality....Stevens, Swan and banker mates....
> the banks are still not lending to business......like 2008 revisted, business can only hang in there for so long before they shut up shop.....
> 
> ...




Agree. Good post. 

The only way I see property continuing to rise is if somehow the national credit card gets an increased limit, which under the current environment with governments defaulting and credit being rationed rather than thrown from helicopters (US aside) seems unlikely. It is all about perception. Now that foreign lenders perceive the Aussie property market to be the next to pop, the credit will stop flowing and that will do it. Glad I sold my banking shares a few months ago! I really think they will be hit hard in the next 12 - 18 months as property prices depreciate.


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## indeck (29 November 2010)

this might be short sighted of me, but if the businesses need cash flow why would not being able to get loans affect them so much?  Sure you have to spend money to make money.  You borrow to expand or possibly to refinance existing debt.  

I find it quite comical how property price threads on a number of forums for the most part are just people taking pot shots at others with opposing views.


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## singlefished (29 November 2010)

Uncle Festivus said:


> Sounds like a bull turning bearish? Down to 4 now?




ASF Property bulls crash 20%!

are there any mechanisms to short the post count index?


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## Dangerous (29 November 2010)

i went through the results of 15-20 houses from this weekends auctions.  A mix of passed in and sold... 

Still some very good prices fetched, but also a lot of stuff missing reserve by 10%... I think you would find that a lot of sellers would have been pretty happy with the results from the weekend (59% of them maybe!).  I certainly didn't find any bargains.  Stuff on big blocks still getting huge money - 650square metres in Maidstone (ugly area a little past Footscray ~12km from CBD) with dung house for 700K.... wow!


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## MR. (29 November 2010)

singlefished said:


> are there any mechanisms to short the post count index?




Blooody 'ell, now ya want da index!.......  geez I'm good to you, see attached:




Not sure about the count cause of late I've been having trouble counting past two!
Short away, Singlefished!


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## singlefished (29 November 2010)

MR. said:


> geez I'm good to you, see attached




It's not looking good MR....

Can you see the *shrinking lollipop* pattern starting to emerge?


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## satanoperca (29 November 2010)

Knock Robots as much as you want, but as a bear that lost a bet with the man over property prices several years ago, just remember he has been more right than anyone else. Property has continued to grow regardless of the figures/data which everyone keeps referring to.

As I have stated in the past, we have not seen property prices go south yet. Auction clearance results big deal, a small and I say small drop in prices hardly means the Professor is wrong, until there is at least a decent correction lay off the man and get back onto the topic of the future of property prices.

Cheers.


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## MR. (29 November 2010)

singlefished said:


> Can you see the *shrinking lollipop* pattern starting to emerge?




Ha ha didn't see it......! 



satanoperca said:


> Knock Robots as much as you want, but as a bear that lost a bet with the man over property prices several years ago, just remember he has been more right than anyone else. Property has continued to grow regardless of the figures/data which everyone keeps referring to.




What you talking bout Willis? 



> As I have stated in the past, we have not seen property prices go south yet.



"Dangerous" pointed out similar above also! and....



> Auction clearance results big deal, a small and I say small drop in prices hardly means the Professor is wrong, until there is at least a decent correction lay off the man



 Huh? Do you think Robot's would be taking something personally? Why would there need a decent correction for him to be wrong anyway!



> and get back onto the topic of the future of property prices.



 Geez we have a decending triangle lollipop perhaps forming into a melted icecream and you want us to be serious?


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## SusanW (30 November 2010)

For the clearance rate obsessives. 
Chris Joye interprets it as the housing market getting 'soggy'.






And dare we presume the Labour Price Index leads interest rates?


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## SusanW (30 November 2010)

Coming from Brisbane, I have never understood Melbourne's obsession with auctions, which are more subject to manipulation than any form of exchange in my experience, let alone a win means an unconditional contract. And so many people seem to bid  without a pest and building inspection, or confirmed bank valuation. 

My Melbourne friends say they love the theatre. My response is go to a real  theatre instead, it's cheaper. 


Chart source 22/10/10


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## MR. (30 November 2010)

SusanW said:


> For the clearance rate obsessives.




Susan, would you supply a link to where the above is located. I know of the following but it hasn't updated from the 14th auction. http://reareports.realestate.com.au/index.do

with thanks


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## SusanW (30 November 2010)

MR. said:


> Susan, would you supply a link to where the above is located. I know of the following but it hasn't updated from the 14th auction. http://reareports.realestate.com.au/index.do
> 
> with thanks




Chris Joye and Tim Lawless occasionally post the most recent RPData stats on their blogs. Despite Chris' bias, he is actually a good analyst with access to great data.

Source of above chart. 

Tim runs the rpdata blog
Chris Joye's blog


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## Mr Z (30 November 2010)

Susan,

Auctions are a game the way they do them down here. It does not take long to work out how to play it and the power of manipulation is not as strong as you may think at first blush. I've been on both sides of quite a few... IMO its more theater than anything else. In the end most serious punters know the market, know what is realistic and know when to bid. Sure when the market gets silly they get out of control, but then when the market gets silly all manor of things get out of control.



FWIW --> I would like to see a law that says the reserve must be within the quoted range and the quoted range can be no more than x% of the reserve. This whole "quote it low and watch it go" thing is just silly for anyone trying to familiarize themselves with our market.


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## SusanW (30 November 2010)

Mr Z said:


> In the end most serious punters know the market, know what is realistic and know when to bid. Sure when the market gets silly they get out of control, but then when the market gets silly all manor of things get out of control.




But unfortunately, prices are set at the margin, and serious punters aren't 'the margin' most of the time. In loose credit times, it is most often the least educated about market value who bid the most dollars.  And that only makes the market less efficient.  

IMHO, a better informed and less emotional market place benefits us all. But I suppose those who are overly emotional will eventually be separated from their money


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## Mr Z (30 November 2010)

I can't agree with your comments about the margin... we are talking houses not a financial instrument. One or two silly sales don't reprice the market in quite the same way it can occur in a stock market. You need a broader sponsorship in real estate to move price on a uniform basis. Without the serious punters that does not normally happen.... be they right or wrong in the wider time frame. Of course when the bank is giving out money they all get a little tipsy... but alas...!

Auctions work well in good markets, the theater fails in flat markets. I have seen enough of that, with agents sweating bullets and me smiling, it can cut both ways and as I said when you know how they play the game it is not so easy to manipulate, you only really end up making one or two bids at the right time... or you walk away. Auction strategy was a well covered dinner party topic, most people I know had it wired. Anyway... not such an issue, agents down here are not as smart as they really think they are.


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## Agentm (30 November 2010)




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## nukz (30 November 2010)

So in 1960-1970 we had higher population growth but affordable housing. How does this contrast to now where we have lower population growth and houses that are 8X our wages but at the same time being told prices will remain high because of population growth and a shortage of housing. 

Nice graph, it looks like we have never really had a proper downturn, i always hear people say the early 90's we had a massive slump but i can't see any evidence of that.


----------



## SusanW (30 November 2010)

Mr Z said:


> I can't agree with your comments about the margin... we are talking houses not a financial instrument. One or two silly sales don't reprice the market in quite the same way it can occur in a stock market.
> 
> I'd dispute it is only one or two silly sales. What research does 90% of the market do before attending an auction?
> 
> Auction strategy was a well covered dinner party topic, most people I know had it wired. Anyway... not such an issue, agents down here are not as smart as they really think they are.




Personally, I think auction strategy is overrated. A smart bidder just has to determine how much the property is worth to them, and start bidding below that, or not at all if others drive bidding beyond that. If a bidder doesn't win, someone else who has done more, or less, research, thinks it is worth more, end of story.


----------



## Aussiejeff (30 November 2010)

nukz said:


> So in 1960-1970 we had higher population growth but affordable housing. How does this contrast to now where we have lower population growth and houses that are 8X our wages but at the same time being told prices will remain high because of population growth and a shortage of housing.
> 
> Nice graph, it looks like we have never really had a proper downturn, *i always hear people say the early 90's we had a massive slump but i can't see any evidence of that.*




I disagree. Get that calculator out & think again.

Over the 3 years from 1990-1992 (inclusive), Melbourne median house price DROPPED around 3% from *$141,500* to *$137,800* - a LOSS of *-$3,700*. However, with cash & Term deposit rates at the time at record +17%, that _same $141,500_ invested in a Term Deposit for 3 years at 17% (compounding) would have ended up being worth *$226,628* - a GAIN of *+$85,128*!

That's a nett worth difference at the start of 1993 (when house prices started to recover positive momentum) of $85,128 - $3,700 = *$81,428*!!

Even deducting 331/3% Tax on the interest earned in the Term Deposit, it still comes out at *$54,312* better off than if the same cash had been tied up in a PPOR.

IMO that IS a massive slump in relative REAL ASSET VALUE vs Term Depositors that would take over a decade for home owners to catch up on??? It's called "opportunity cost" - and those locked into housing as an "investment" in those 3 years paid a big price for that lost opportunity to make real gains.

Chiz,

aj

P.S. Excellent graph Agentm..


----------



## Aussiejeff (30 November 2010)

This should bring Probot$ out of his semi-detached retirement.....

http://www.thebull.com.au/articles/a/15928-housing-prices-set-to-fall-in-2011.html



> RP Data research director Tim Lawless said *the capital city property market peaked in May.*
> 
> "Since the market started to cool in June the cumulative decline in dwelling values to the end of October has been less than one per cent across the capitals, suggesting a market that is slowing at a controlled pace," he said.
> 
> ...


----------



## MR. (30 November 2010)

Thanks Susan.



nukz said:


> So in 1960-1970 we had higher population growth but affordable housing. How does this contrast to now where we have lower population growth and houses that are 8X our wages but at the same time being told prices will remain high because of population growth and a shortage of housing.




Exactly! "HYPE" got it there. Both the government and/or the RBA failed to bring the hype under control. 



> Nice graph,




1999 isn't right on that graph. Property prices didn't double in four years because of any incorrect introduction of a 50% CGT.


----------



## Mr Z (30 November 2010)

SusanW said:


> Personally, I think auction strategy is overrated. A smart bidder just has to determine how much the property is worth to them, and start bidding below that, or not at all if others drive bidding beyond that. If a bidder doesn't win, someone else who has done more, or less, research, thinks it is worth more, end of story.




Have you done many auctions?


----------



## SusanW (30 November 2010)

Mr Z said:


> Have you done many auctions?




I've attended 10-60 auctions a year since the early 80s, in Brisbane, Sydney, and Melbourne. 

Have bid at about 50, won 7 and been the underbidder at around double that. 

I find a lot of bidders want to get a return on their emotional investment for an auctioned property. So they bid over their fair market value in the heat of the moment.  I don't get excited anymore. I have my price and stop bidding when I hit it. Having a list of auctions to go to on the same day removes a lot of the fanfare associated with any one auction. 

The only bidding strategies I think might have some psychological power are:

1. to start bidding early and bid up in large numbers 20-25k for a 400k property. This may stop others from going beyond their predetermined limit.

2. don't bid until on the market, and increase the price in large increments. 

The worst thing I've done was give the opposition the impression I was unsure whether I would continue bidding, by moving up in 1k increments and stalling the auctioneer. That only encouraged several to stay with me.


----------



## Mr Z (30 November 2010)

I definitely will not bid until the auction goes live and you here those magic words.

I have seen a number of tactics work quite well, one that sticks in mind was a typical "quote it low (silly low) watch go" strategy by the agency. The guy who got it came in on the opening bid at a price that turned out to be within about 2K of the reserve price. You could see the people just walk away, the auctioneer did his best but that killed it, the crowd was stunned given the silly quote. Anyway he got it at his number in the end, the agents where none to happy.  Rarely have I seen such a gambit pay such clear dividends, certainly turned the table. I think its the only one bid auction I have ever seen, it even threw the dummy for a loop, he'd probably been instructed to stop lower than the reserve, I think this guy nailed his top number...LOL

I had another as a vendor where the highest bidder refused to sign, wanted to negotiated lower.... in the mean time the agent lost the crowd. Jan was livid... needless to say the agents rivals where keen to fill the gap and did so after I called the whole thing quits. I was under the impression they had to sign up till that point.... fact is there was very little they could do or where willing to do. Needless to say the advertising bill was discussed for a long period of time.

All the fun of the theater... 

When the market is good it ties a sale up in 4 weeks, I like that aspect.

I have lost count of the number of auctions I have been to, back in the 1990's it was feeling a little obsessive... but hey it was a good time to be an amateur developer, we learned a lot just watching the opens and the crowds.


----------



## Mr Z (30 November 2010)

Aussiejeff said:


> I disagree. Get that calculator out & think again.
> 
> Over the 3 years from 1990-1992 (inclusive), Melbourne median house price DROPPED around 3% from *$141,500* to *$137,800* - a LOSS of *-$3,700*. However, with cash & Term deposit rates at the time at record +17%, that _same $141,500_ invested in a Term Deposit for 3 years at 17% (compounding) would have ended up being worth *$226,628* - a GAIN of *+$85,128*!
> 
> ...




Around the S&L Crisis time there was some real panic selling, didn't last long but it was not pretty according to the agents I was talking to.


----------



## MR. (30 November 2010)

If you don't mind me joining your convo' If you are the vendor and you have something unique or really unique an auction is certainly worth consideration. Seen a few auctions go far beyond comprehension when two bidders go head to head on a real unique plot. If the sale was a private sale I just can't imagine the vendor coming up with a price anywhere near. A property must be unique to really benefit from an auction. 

The run of the mill Qld auctions just seems to be different to down south. Why I don't know. They definitely are not as common. Most up here are private sales. Seen a few auctions up here in QLD and I can't work out if the bidders are scared or what! Many which go to auction here seem to be just to lock in the "vendors bid" so it can then be marketed further as "it was passed in at $$$ at auction"

Susan, your views are similar to many here regarding the "future" but you claimed you purchased a couple of properties earlier this year. With all those auction attendants in the past I'd say you must have a few properties still under your belt. Would you elaborate further on your position if its not too intrusive and what your intentions are!


----------



## MR. (30 November 2010)

Mr Z said:


> S&L Crisis time




S&L? Mr Z please!

got it "Savings and Loans!"


----------



## Mr Z (30 November 2010)

By all means!

Yes... crazy to watch two egos slog it out, but yes I have seen some bold developments really hit the money.

Down here the common wisdom is to sell in spring but I have done very well selling in the autumn to winter via auction. If the property you are offering is good you will get the late summer sales that have not repurchased and find themselves looking at the lean pickings of an off season market. On one occasion I bought a property that had been passed over late in the traditional selling season. It was badly presented, anyway bought it, I toyed with plans, priced the development and then got cold feet. I had too much on and the margin was not looking like what I had hoped for. I resold the same house via auction 5 months later with a minimal clean up (mebe spent $500) and got 135K more. The primary difference was the method of sale and the season, since that experience I tended towards the off season. It, in my experience, has been well bid with truly motivated home seekers about to be turfed from their house sold in the summer.


----------



## Mr Z (30 November 2010)

MR. said:


> S&L? Mr Z please!
> 
> got it "Savings and Loans!"





Solly... I will type with a septic accent next time!


----------



## robots (30 November 2010)

hello,

oh gidday, fantastic day

everyone must of skimmed over this today, oh well:

http://www.theage.com.au/business/property/home-prices-tick-higher-20101130-18ei4.html

oh yeah but in real terms (which MrZ has trouble understanding and explaining) its all no good, finished, forget about it

i reckon Keen should walk again for the trauma he has caused to people who wanted to buy a home, they just got SOLD a line by a spruiker, oh well

thankyou
professor robots


----------



## robots (30 November 2010)

hello,

yeah right Deposit Rates were 17% for three years, man the cash rate dropped 4% in one year alone

but hey, put your money in cash thats okay, its about on par with most industry super funds,

better if you could buy and also put the extra away

thankyou
professor robots


----------



## sinner (30 November 2010)

robots said:


> hello,
> 
> oh gidday, fantastic day
> 
> ...




Is the ABS release that the article is about supposed to be impressive with avg 2% declines per quarter over the last 3 quarters? Steve Keen "cost" (assuming you mean opportunity cost because not buying a house doesn't cost anything) potential investment property investors all of 3% over 2 years if they started paying attention in Sep 2008?



For those that bought in Sep 2008 with an eye to flip in Sep 2009, I only have the rude finger.


----------



## MR. (30 November 2010)

robots said:


> in real terms (which MrZ has trouble understanding and explaining) its all no good, finished, forget about it




I would like you to explain why property will now maintain growth in real terms if MrZ can't. 


My simple answer: I don't see why property will now keep up in real terms. If over the long term it keeps with inflation what has it done recently? Over shot! Look out if she doesn't keep up in real terms, why? Yields which are laughable in most cases!

Interesting the US (Oh yeah, which is nothing like our market) has rental yields near double ours and they find themselves in a property correction. Over supply perhaps vs undersupply.


----------



## Mr Z (30 November 2010)

robots said:


> oh yeah but in real terms (which MrZ has trouble understanding and explaining) its all no good, finished, forget about it




Unarmed men should not pick fights. 

Sure Bot's whatever rings your bell!


----------



## robots (30 November 2010)

hello,

i thought we might of been able to able to get part 37 of the "real terms" explanation for a bit of entertainment tonite

oh well, hehehehehehehehehe

just amazing the amount of research people put into such a poor performing asset class, oh well

thankyou
professor robots


----------



## MR. (30 November 2010)

robots said:


> hello,
> 
> i thought we might of been able to able to get part 37 of the "real terms" explanation for a bit of entertainment tonite
> oh well




Ok we now both have Mr.Z on ignore. Fire away! I'm still here.....


----------



## Mr Z (30 November 2010)

MR. said:


> Ok we now both have Mr.Z on ignore. Fire away! I'm still here.....




: My house is better than your house... neener, neener, neener


----------



## SusanW (30 November 2010)

robots said:


> just amazing the amount of research people put into such a poor performing asset class, oh well




It is only a poor performing asset class if you believe it goes up every year Botty. 

The chart below shows you would have averaged 3.4% annual growth over the 10 years to 2000, for a Brisbane property. 








High inflation and rates through that decade (the 90s) saw the internal rate of return go backwards, as it did in the early 80s. The plot below is 1980 to 2010. 








Guess what the All Ords did over the same period? 

One day I'll convince you a timing model is better than buy and hold.


----------



## MR. (30 November 2010)

shush, not now Z. 

waiting for Robot to explain why he thinks property will keep up in real terms


----------



## Mr Z (30 November 2010)

SusanW said:


> One day I'll convince you a timing model is better than buy and hold.




Most people don't get that property works because it is a leveraged bet that inflation will continue, a safe bet under most circumstances. However big valuation multiples at the bottom of a long term rate cycle is something I find a little scary.

Yes... a time and place for every investment. I want performance not religion and right now it still looks like there are better places to be.

 

MR. on my best.... promise.


----------



## Wysiwyg (30 November 2010)

Hi SusanW. Do you envisage mortgage interest rates to exceed 10% by 2012? Appears chart wise the uptrend is strengthening. ??


----------



## nunthewiser (30 November 2010)

Wysiwyg said:


> Hi SusanW. Do you envisage mortgage interest rates to exceed 10% by 2012? Appears chart wise the uptrend is strengthening. ??





You didnt ask me .... so heres my opinion 

13%(or roundabouts ) before this cycle is complete in my uneducated, unbiased and property holding opinion.

Notice i said cycle instead of giving a timeframe


----------



## SusanW (30 November 2010)

Wysiwyg said:


> Hi SusanW. Do you envisage mortgage interest rates to exceed 10% by 2012? Appears chart wise the uptrend is strengthening. ??




I'd say a 45% probability. The asx implied yield curve has been reasonably accurate in the past, and they are only forecasting 2 x 25bp by mid 2012. 

the greater risk is a tightening of foreign credit, which means higher funding costs for our lenders. 

I don't know which chart you are referring to. The first is capital growth, and it has peaked and is coming down. 

The second is IRR. As one holds property longer, rising rent contributes more and more to +CF and IRR.


----------



## SusanW (30 November 2010)

Mr Z said:


> Most people don't get that property works because it is a leveraged bet that inflation will continue, a safe bet under most circumstances. However big valuation multiples at the bottom of a long term rate cycle is something I find a little scary.
> 
> Not to forget Glenn Steven's comment that Australia is going through a 100 year event.
> 
> Yes... a time and place for every investment. I want performance not religion and right now it still looks like there are better places to be.




I was fortunate enough to pick the commodities run in response to anticipation of QE2. Risk adjusted rewards have been profoundly higher than any passive property deal I could have secured in that time. Money velocity features heavily in my investment philosophy.


----------



## MR. (1 December 2010)

sinner said:


> potential investment property investors all of 3% over 2 years if they started paying attention in Sep 2008?
> 
> For those that bought in Sep 2008 with an eye to flip in Sep 2009, I only have the rude finger.




Huh? Quarterly change would be compounding! You trying to confuse Robots?

Here ya go:
View attachment Doc1.pdf


I've waited long enough for Robots tonight, need some shut eye.


----------



## financialdonk (1 December 2010)

singlefished said:


> ASF Property bulls crash 20%!
> 
> are there any mechanisms to short the post count index?




Quality of Post Count also too a battering in the September qtr.  Writing was not on the wall so to speak.


----------



## nukz (1 December 2010)

Agentm said:


>




Does anybody have this sort of data for california or some other US states? That would be quite interesting.


----------



## MR. (1 December 2010)

SusanW said:


>





What’s so bad about that chart?
Even in 2000 property was increasing at approx’ 3.5% that would mean property kept up with inflation. 

What does it mean “10 year rolling”? In 2000 you could say “for the past 10 years property increased by approx 3.5% per year” That would be keeping up with today’s inflation so what’s the big deal?

Do I read this chart correctly?

So in 1990 I can say “property over the past 10 years has increased by near 10% per year”
In 2000 I can say “property over the past 10 years has increased by near 3.5% per year”
Hang on!

I’ll look at it one year at a time! 
In 1990 I can say “property over the past 10 years has increased by near 10% per year”
In 1991 I can say “property over the past 10 years has increased by near 8% per year”
So 10% over 10 years and in one year alone property changed from that 10% to 8% for “all those years!”

This chart doesn’t look as good now. That’s Brisbane. How’s Melbourne?


----------



## robots (1 December 2010)

SusanW said:


> It is only a poor performing asset class if you believe it goes up every year Botty.
> 
> The chart below shows you would have averaged 3.4% annual growth over the 10 years to 2000, for a Brisbane property.
> 
> ...




hello,

exactly man, just plenty of people around who cannot afford a property because they spend their money on other things

oh well, thats the decisions people make

no bubble, 

thankyou
professor robots


----------



## nukz (1 December 2010)

robots said:


> hello,
> 
> exactly man, just plenty of people around who cannot afford a property because they spend their money on other things
> 
> ...




What your saying is ludicrous, housing is 8X medium income now compared to years ago which means your parents had to save allot less than you have to purchase a property today.

And you claim there is no bubble, lol now i know you have no idea. A bubble is a large increase in prices which has happened, but that does not necessarily mean the bubble will burst. There are lots of asset classes in bubbles but that does not mean they can't continue to inflate more it just means they exist.

Also a bubble is not always a bad thing, a bubble can take years between the time it inflates and when it deflates and allot of money can be made in-between. 

Can you provide any evidence at all to suggest there is no bubble at all?


----------



## robots (1 December 2010)

hello,

yes, see post 3634, as mentioned the return is a mere 3.4% per year

oh yeah, back in 1960, 1970, 1980 people were buying houses like a pack of fags at the milkbar

its just today people spend all their money, oh well

thankyou
professor robots


----------



## nukz (1 December 2010)

robots said:


> its just today people spend all their money, oh well
> 
> thankyou
> professor robots




Don't use today tonight/current affair as your source of what the population are doing lol

Those single mums they show everyweek who loaded up on 40 months intreat free junk at harvey norman and are now being forclosed on and blame the banks for giving them the loan meanwhile they unload there furniture in a brand new 4X4 are not the real population lol.

Also your only refering to Brisbane prices, what was the Melbourne rise in 2008 / 2009? since you live in Melbourne.


----------



## robots (1 December 2010)

hello,

2008 and 2009 were fantastic years bro, 

i wonder what the the 20, 30, 40 yrs figures are, probably like brisbane

no bubble, its official

thankyou
professor robots


----------



## robots (1 December 2010)

hello,

OH YEAH:

http://www.theage.com.au/business/economic-growth-slows-20101201-18fyv.html

a big well done Kincella, top effort brother, its just amazing to be able to communicate with one of the five

fairly embarrassing for the RBA 

thankyou
professor robots


----------



## satanoperca (1 December 2010)

robots said:


> fairly embarrassing for the RBA




How is this embarrassing? 

Oh, I keep forgeting that they hire idiots for the RBA board with no understanding, education or experience in economic matters.

Maybe Robots and Kincella should try and get on the board.

Cheers


----------



## Mr Z (1 December 2010)

robots said:


> hello,
> 
> OH YEAH:
> 
> ...




So we are happy that things are slowing down because that means they will cut rates and end up supporting the real estate market.

Is that it? Is that what we are saying here?


----------



## nukz (1 December 2010)

I thought it was RBA's intention of slowing the economy hence increasing rates. They also need to unwind all the credit created when rates where dropped in 08/09.

So i don't think they are embarassed at all. Rising intrest rates are a way to encourage savings which Glenn Stevens has emphasised yesterday.

*"AUSTRALIANS should save rather than ramp up spending while the economy surfs a ''once in a century'' tidal wave of prosperity, according to Reserve Bank governor Glenn Stevens."*

Source: http://www.news.com.au/money/invest...ns/story-e6frfmdr-1225963090552#ixzz16p8EEVnK

Based on these comments i would be expecting a few more raises which is great news for people saving.

I hope higher rates are not stressing you robots


----------



## Mr Z (1 December 2010)

They have a problem, we have a bifurcated economy with a debt issue. Fact is that there is no one monetary policy setting that will satisfy all requirements here. Damned if they do... damned if they don't... we've painted the floor but there ain't no doors in our corner.  They are going to need to be lucky as well as smart here IMO.


----------



## robots (1 December 2010)

Mr Z said:


> So we are happy that things are slowing down because that means they will cut rates and end up supporting the real estate market.
> 
> Is that it? Is that what we are saying here?




hello,

yeah, got a problem with that?

nukz wants higher interest rates so make more money, i reckon thats just plain wrong, howzat helping productivity

thankyou
professor robots


----------



## robots (1 December 2010)

hello,

its embarrassing as the decision to lift was well out of order,

my research indicated exactly what is coming through, only a couple of weeks ago unemployment went up, inflation dropped, economic growth slowed

yet the RBA still lifted, clearly not up too it

thankyou
professor robots


----------



## Aussiejeff (1 December 2010)

robots said:


> hello,
> 
> yeah, got a problem with that?
> 
> ...




Wot? Have you not considered that if people get more interest on their savings, they might be tempted to spend a bit more in the economy, thus helping the productivity of a wide range of businesses? If you cannot see that prospect, you have no hope of passing Economics For Dummies 101, Confe$$or. 

Have you considered tying up vast amounts of society's wealth in static brick$ & mortar which benefits a relatively small range of businesses in the economy might not be helping that much either?

Tch, tch...

You need to get out and con$ume more.....


----------



## explod (1 December 2010)

robots said:


> hello,
> 
> its embarrassing as the decision to lift was well out of order,
> 
> ...




The RBA could not care less.  

Lets face it, the banks are all about making a profit, just like everyone else.

And the Government does not have the power or the right to do anything about it.  In fact if governments the world over got out of interfearing with the financial systems I feel sure the world would be a much better place.


----------



## againsthegrain (1 December 2010)

There is definately more interest raises in the coming months of the new year, you should not be complaining about the recent raise compared to what is coming cyborg

I have welcomed the raise on my savings interest with open hands and await more future raises, soon half my rent will be paid by interest on savings - no likely rents will be going up in the same proportion


----------



## Mr Z (1 December 2010)

robots said:


> yeah, got a problem with that?




Just finding out which shoe box you belong in Mr Bots.

You like my Ben?


----------



## Mr Z (1 December 2010)

againsthegrain said:


> There is definately more interest raises in the coming months of the new year, you should not be complaining about the recent raise compared to what is coming cyborg
> 
> I have welcomed the raise on my savings interest with open hands and await more future raises, soon half my rent will be paid by interest on savings - no likely rents will be going up in the same proportion




Awwwww now why would we want to go a reward savers when we all know its consumers that count! I mean it is not like you can save your way to prosperity is it? Its not like creating wealth means consuming less than you produce is it? We all know you can spend you way to the promised land don't we? If the USA do it then it must work, right?





Like my Ben?

He be pimpin dere a$$e$ for fresh dollahs! (You just gotta say it like you are form the hood!)


----------



## prawn_86 (1 December 2010)

againsthegrain said:


> I have welcomed the raise on my savings interest with open hands and await more future raises, soon half my rent will be paid by interest on savings - no likely rents will be going up in the same proportion




So assuming your living in Aus, your savings would be able to purchase about 35 - 45% of the property your in at the moment?


----------



## MR. (1 December 2010)

I'll shoot..... 

Just realized, I musta put Bots on ignore instead of Mr.Z (know wonder I could here Z singing) Hmmm

Geez.... Has anyone heard from Robots today and did he tell me why property is going to keep up in real terms? Think I missed it!




satanoperca said:


> they hire idiots for the RBA board ....... Maybe Robots and Kincella should try and get on the board.
> Cheers




Are you doing that Dr jekyll Mr hyde thingy? 

Let me remind you:



Joe Blow said:


> please do not deliberately provoke or personally attack or insult other thread participants.
> 
> The moderators and I will be closely monitoring this thread and we urge those participating in it to use the "Report a Post" feature to report any posts that are in violation of site rules or are overly disruptive.


----------



## Mr Z (1 December 2010)

I'm feeling marginalized and worthless so I will post a link to someone else's in ya face opinion.  

When housing hijacks an economy

Dats it, you are all on IGNORE!


----------



## againsthegrain (1 December 2010)

> So assuming your living in Aus, your savings would be able to purchase about 35 - 45% of the property your in at the moment?




No right now probably only 20% of the inflated price of the property which I think is far from what it is worth. With my interest paying more then 1/4 of the rent. 

Currently I collect 6.25% which was incereased from 6% on the last increase, and if it gets increased a few more points further then I will look around for a better 7%+ rate with another few months of savings will bring me to around getting half of rent in interest. 

I pay round 13k rent per year on a townhouse that is claimed to be worth 400k now, so yea at around 7% of round number of 100k gives 7k pa. so thats not even 30% claimed value. 

At 200k in the bank I could have the whole rent covered, so id never pay 400k for it 

Bring on the interest raises :


----------



## MR. (1 December 2010)

Mr Z said:


> So we are happy that things are slowing down because that means they will cut rates and end up supporting the real estate market.
> 
> Is that it? Is that what we are saying here?




Who the 'ell planted that stupid idea in ya head?
https://www.aussiestockforums.com/forums/showpost.php?p=543264&postcount=896

Musta been one of them May calling top dudes..... again!

Oh Negative Gearing beautiful one day, where did it go?
Not new homes only!!!


----------



## Mr Z (1 December 2010)

MR. said:


> Who the 'ell planted that stupid idea in ya head?
> https://www.aussiestockforums.com/forums/showpost.php?p=543264&postcount=896
> 
> Musta been one of them May calling top dudes..... again!
> ...




It's just a synopsis of an attitude... not an idea in my head  It is ever so slight flawed as an economic rational, but then the average modern property investor seems ever so slightly flawed..... at least to me. :

I thought I wuz being ignored.... givin me a complex you grumpy old baby boomer!


----------



## MR. (1 December 2010)

Mr Z said:


> I'm feeling marginalized and worthless so I will post a link to someone else's in ya face opinion.




Use the force young Skywalker, only make links to your own past posts!!! Haven't you been watching?

Thought you had put everyone on ignore? 

Hey the REIV auction preview 4th and 5th December should be released anytime (tells more like what happened last weekend)


----------



## Mr Z (1 December 2010)

MR. said:


> Thought you had put everyone on ignore?
> 
> Hey the REIV auction preview 4th and 5th December should be released anytime (tells more like what happened last weekend)




I dunno how to do it.... 

But seriously, I look forward to it with bait on my breath!

so what, I'm from Meeeeeeeeeeeeeelbourne!


----------



## MR. (1 December 2010)

> Last weekend: 1095 auctions, clearance rate of 59 per cent




http://www.reiv.com.au/news/details.asp?NewsID=1025

61% down to 59% again........  

Half the 4% gain promoted last Saturday, what are they real estate agents or something?


----------



## explod (1 December 2010)

MR. said:


> what are they real estate agents o... that"  dont' be knockin those agents brother


----------



## robots (1 December 2010)

hello,

bit more jealousy coming through, amazing

i guess you get the knockers when you on top, oh well

thankyou
professor robots


----------



## SusanW (1 December 2010)

MR. said:


> What’s so bad about that chart?
> Even in 2000 property was increasing at approx’ 3.5% that would mean property kept up with inflation.
> 
> 
> ...





MR, here's Melbourne. It's lowest rolling 10 yr average is 3.2%pa. 
And yes, it means that over the previous 10 years, the median Melbourne house price averaged 3.2%pa growth. 

And you highlight the importance of a timing strategy. One year can make a very big difference over a period as long as 10 years. 

Now let's consider the investor would have been negatively geared for that whole 10 years (rates averaged 9.6%pa in the 90s), and growth was 3.2%pa. That's adding up to a pretty poor internal rate of return. 

Hmmmmm.....not such a good investment in my view.....and certainly not in this day and age where stocks can be leveraged to 70% or higher. 

If investors want to tie their money up for a return like that for a decade, who am I to stop them. 

But for the 90s decade, the all ords achieved 9.2%pa, without considering reinvested divs.

My stock broker brother delayed buying a PPR from 1991 to 1998, and did bank stock options instead. He ended up a lot better off. 

Now personally, I feel we are heading back to a sub 5%pa decade. And considering yields are so much lower now than in 1990, I am not considering passive investment properties for the next 2 years at least.....but I might pick up a developable block from one of the many cash flow strapped B&Hers that I predict will be in abundance. 

Finally, why anyone into shares would touch property for a 3.2%pa decade, makes me wonder how good a share investor they are.


----------



## robots (1 December 2010)

hello,


hehehehehehehehe, oh yeah roll up roll up roll up Storm Investors, how could they go wrong, margin into stocks, why the banks close them up? surely not

opes, storm, tricom hehehehehehehe, leverage into stocks no worries, my stock broker brother cleaned up

its official again, surely thats not bubble territory

man, spruiker

thankyou
professor robots


----------



## nunthewiser (1 December 2010)

SusanW said:


> Finally, why anyone into shares would touch property for a 3.2%pa decade, makes me wonder how good a share investor they are.
> 
> ]




Um for somwhere to live, turn into a castle, park up and raise some kids then have a home for them to use when ya go wandering,somewhere to park some cash you can physically use........ etc etc etc

i hold both plus other avenues.

But im from Geraldton and have no grammar skills...what would i know..... 



robots said:


> hello,
> 
> 
> hehehehehehehehe,




totally agree


----------



## MR. (1 December 2010)

robots said:


> i guess you get the knockers when you (BUY) on top, oh well
> 
> thankyou
> professor robots




Thanks Susan, 

I'll forward the 10 year rolling chart for Melbourne onto Robots once he responds to me question on real terms. 

He should be getting back to me soon......

regards
MR.


----------



## SusanW (1 December 2010)

robots said:


> hehehehehehehehe, oh yeah roll up roll up roll up Storm Investors, how could they go wrong, margin into stocks, why the banks close them up? surely not
> 
> hahahhaahaaa......Botty, if your idea of someone into shares is a Storm Financial, Tricom, or Opes client, then you watch too many current affairs shows. It seems they were all incapable of opening a Comsec account, understanding the most basic technical analysis, and the importance of using stop losses and timing to do what Warren Buffet thinks is most important - preserve capital.
> 
> ...




Botty, the only spruiker here is your happy self. If you are a REA, I'll be sure to remember you pre June 30 next year, when I'm looking for tax deds on a property listed by some distressed FHB who listened to someone like you.


----------



## trainspotter (1 December 2010)

nunthewiser said:


> Um for somwhere to live, turn into a castle, park up and raise some kids then have a home for them to use when ya go wandering,somewhere to park some cash you can physically use........ etc etc etc
> 
> i hold both plus other avenues.
> 
> But im from Geraldton and have no grammar skills...what would i know.....




I am in total acceptance of this observation. Other than the self deprecating allegations towards oneself. 

Careful robots how you go there matey. Don't want to be kicked out of the asylum due to "baiting" people. Just drink the Kool Aid dude.


----------



## nunthewiser (1 December 2010)

> hahahhaahaaa......Botty, if your idea of someone into shares is a Storm Financial, Tricom, or Opes client, then you watch too many current affairs shows. It seems they were all incapable of opening a Comsec account, understanding the most basic technical analysis, and the importance of using stop losses and timing to do what Warren Buffet thinks is most important - preserve capital.




Geezus 

add to that list 

People too busy with other interests to nurture and learn the skills involved for direct trading.

People spreading risk on there own share trading .

some very clever people got done that are more than capable of filling in a broker form, just not there intrest but just another investment vehicle for there overall portfolio.

ETC
ETC
ETC
ETC

i created a new thread and i think you will benefit from reading it


----------



## MR. (1 December 2010)

nunthewiser said:


> totally agree




You been into the altar wine again?


Too many posts....... I can't read that fast!


----------



## explod (1 December 2010)

robots said:


> hello,
> 
> 
> opes, storm, tricom hehehehehehehe, leverage into stocks no worries, thankyou
> professor robots




Only the mugs leverage into stocks and property.  An investor measures things.

Did you get into those silver coins as I indicated you should there a few weeks back.   You are up over 15%    good work there brother.


----------



## SusanW (1 December 2010)

nunthewiser said:


> Um for somwhere to live, turn into a castle, park up and raise some kids then have a home for them to use when ya go wandering,somewhere to park some cash you can physically use........ etc etc etc




If only all those underwater US non recourse mortgage holders thought that way.

To be frank NTW, I'm talking about the various opportunities available annually in the investment sphere. 

I actually share common ground with you in that I believe the most valuable investment one can make is kids....and that a stable family home environment is more important than the best education money can buy.

Though I've met enough people who have moved (with kids) wherever the high paying work or career opportunity is, and been able to provide a stable environment, and their kids are better for it. 

Different strokes for different folks.


----------



## SusanW (1 December 2010)

nunthewiser said:


> People too busy with other interests to nurture and learn the skills involved for direct trading.
> 
> busy? you mean like spending $40k on a tinny to go fishing 8x a year, and pay $200 for a tank of fuel to catch $140 worth of fish, only to eat $30 worth and give the rest to the cat?
> 
> ...




Thanks NTW, but I've got it covered.


----------



## Mr Z (1 December 2010)

Jeezzzzzzzzzzz just call up Charlie and buy what he says... that oughta knock property into a cocked hat with no sweat... if ya wanna think, then you can do better, using T/A, timing, money management etc but you can do a lot worse real easy and ya don't even have to raise a sweat. Invest in the real Australia, not some Jennings inspired farmland munching suburban nightmare. :

*GO AUSTRALIA!*


----------



## SusanW (1 December 2010)

Hey everyone, I am going back to my cave. 
Have to change PPRs in two weeks, and Chrissy beckons. 
In the new year, my attention will be back on commodities and producer trading. 

Been fun discussing property. I've made my views clear, and would only repeat what I've already said if I posted before February next year. 
So until then.........Make it a wonderful Christmas.


----------



## nukz (2 December 2010)

*House prices slump near city*
_Simon Johanson
December 2, 2010

MELBOURNE'S residential property market turned in a patchy performance in the June quarter, with some affluent inner suburbs recording big falls in median values, while cheaper middle and outer areas maintained strong growth.

The latest snapshot from the Valuer-General shows Heidelberg West was the star performer in the three months to June 30, with the median house price shooting up 32.1 per cent from $420,000 to $555,000.

By contrast, Middle Park's median value fell 38.7 per cent from $1,910,000 to $1,170,000 in the June quarter, while South Yarra slumped 32.3 per cent from $1,920,000 to $1,300,000.
Advertisement: Story continues below

Melton South had the lowest median price of $255,000, but still recorded a substantial 7.4 per cent increase over the quarter. Toorak had the highest median price at $2,660,000.

Overall, prices of all dwellings - houses and apartments - in metropolitan Melbourne increased by 5.3 per cent in the June quarter, with the median house price rising from $470,000 to $495,000.

Across the state, the median house price was $419,700, an increase of 19 per cent over the year.

The Valuer-General's data is derived from compulsory sale notices and is therefore the most accurate available. It can differ significantly from other data provided by property analysts because it takes longer to compile and is released in a less timely fashion.

By comparison, the Real Estate Institute of Victoria, which collects results from about 70 per cent of sales but releases them earlier, puts the median metropolitan Melbourne house price in the June quarter at $560,000.

''What our data tells you is what's going on now,'' REIV spokesman Robert Larocca said.

Another property data provider, RP Data, put the June median dwelling value - for all types of homes across Victoria, not just in the metropolitan area - at $470,000, a 16 per cent increase year-on-year.

Median house prices in country Victoria remained static at $270,000 during the quarter. Over the 12 months to June, they rose 13 per cent.

The performance of seaside properties was mixed.

In Port Fairy the median house price rose 21.7 per cent but on a year-by-year basis it was up an enormous 50 per cent. Prices in Barwon Heads also increased, by 13.8 per cent.

In contrast, values at Venus Bay, Point Lonsdale and Portland all dropped significantly.

Lorne's median house price decreased 31.3 per cent to $687,500, down from $1 million in the previous quarter. But that was off the back of a 52.7 per cent increase in the March quarter._


----------



## Junior (2 December 2010)

robots said:


> hello,
> 
> 
> hehehehehehehehe, oh yeah roll up roll up roll up
> ...




prof robots gone mad, prof robots gone mad

PROF ROBOTS HAS GONE COMPLETELY MAD!!!!


(like the old ken bruce commercial)


----------



## againsthegrain (2 December 2010)

Robots pentium 2 could not handle it when he tried to install win 7 and he crapped out


----------



## robots (2 December 2010)

SusanW said:


> Hey everyone, I am going back to my cave.
> Have to change PPRs in two weeks, and Chrissy beckons.
> In the new year, my attention will be back on commodities and producer trading.
> 
> ...




hello,

yeah no worries, merry christmas, take it easy brother, walk tall

thankyou
professor robots


----------



## nukz (2 December 2010)

SusanW said:


> Hey everyone, I am going back to my cave.
> Have to change PPRs in two weeks, and Chrissy beckons.
> In the new year, my attention will be back on commodities and producer trading.
> 
> ...




Good thinking, we need more people in the commodities forum  i'm thinking it will be a great year for commodities in 2011  

Hows that latte this morning robots? have you downsized from a regular to small yet due to intrest rates?


----------



## robots (2 December 2010)

hello,

my weekly payments havent gone up yet plenty of cash sitting in it, 

no, still on the mega large, if you near richmond get into 7gms the finest around town i reckon Nukz

they open 6am, always have 3 people working on coffee department

and i reckon if you go to a coffee shop and only 1 person working the coffee you in for a dud, what you reckon?

thankyou
professor robots


----------



## Agentm (2 December 2010)

i read the age article this morning

a 32% decrease on south yarra and 38% in middle park.  but the outer burbs, are holdin the fort well..

i guess all those lamp posts and neighbours cats false bids had some impact.. the RBA said there was no bubble.. so a 3 month fall of this magnitude is of course "a softening"

i guess like blowing a bubble gum bubble, and it gets that hole, it tends to soften.. lol australia is experiencing population growth and economic growth and we have a softening in RE prices?  this is madness?  it the RBA telling pork pies to me .. they said no bubble and buy buy buy.. i mean baa baa baa

i guess this minor softening will mean there is a rebound of 64% to come in the coming weeks?

how much hot air is going to be released in the coming weeks as the fake 61% clearance rates continue to be posted, and the actual number of private sales dont increase.. the glut of properties will of course stay buoyant and bubbly,,

happy dreams for the RE bulls, happy days for the upcoming 1000 winning bidders this weekend in melbourne, shadow boxing and pumping themselves up for a massive bidding onslaught..  U2 is going to send them into a frenzy..

back to sipping lattes and being a developa maaatee


----------



## nukz (2 December 2010)

robots said:


> hello,
> 
> my weekly payments havent gone up yet plenty of cash sitting in it,
> 
> ...




I'm in the area around South Yarra/Toorak i suggest you try out Ganache at 250 Toorak rd, great coffee and nice atmosphere. :

By the way didn't somebody post the stages of the property collapse a while back and it outlined that the first propertys to slump are always the more expensive ones then the middle class are hit next.


----------



## againsthegrain (2 December 2010)

I am very curious what is going through the heads of all those poor misinformed who bought up properties for 450 - 550 k in dead end places such as cranbourne point cook etc (30 + kms from the city) on close to minimum wages.

There is already alot of noise coming about families struggling in the outer suburbs, give them 2 more interest raises and they will have to fold. sell out at 40% loss?

The question is once all the fools rush in where will more foolish fools come from to bail them out? 

Maybye cyborg should start bailing them out


----------



## explod (2 December 2010)

againsthegrain said:


> I am very curious what is going through the heads of all those poor misinformed who bought up properties for 450 - 550 k in dead end places such as cranbourne point cook etc (30 + kms from the city) on close to minimum wages.
> 
> There is already alot of noise coming about families struggling in the outer suburbs, give them 2 more interest raises and they will have to fold. sell out at 40% loss?
> 
> ...




You have hit the nail on the head.  

have a Son selling at Werribee at the moment, he almost owns his home but can see the writing on the wall from talking to his mates in the area.  Hopes to rent for awhile.   Has 2 young kids. 

But once the mail really get through the stampede will be jammed at the gate.

This is they type of reason I have been bearish the propaganda on these threads for a few years now.


----------



## nukz (2 December 2010)

againsthegrain said:


> I am very curious what is going through the heads of all those poor misinformed who bought up properties for 450 - 550 k in dead end places such as cranbourne point cook etc (30 + kms from the city) on close to minimum wages.
> 
> There is already alot of noise coming about families struggling in the outer suburbs, give them 2 more interest raises and they will have to fold. sell out at 40% loss?
> 
> ...




This may be something to work what your saying 
*
Rates pressure forces house sales

    * Maurice Dunlevy
    * From: The Australian
    * December 01, 2010 12:00AM*

_One in 10 home buyers believes the latest round of interest rises could force them to sell up.

The figure comes from a survey commissioned by one of Australia's largest mortgage brokers.

 The Mortgage Choice survey, completed before the Reserve Bank's Melbourne Cup day decision to lift the cash rate, found 9per cent of mortgage holders could not afford any increases to the repayments on their loans.

The survey found that the two further 25-basis-point increases widely tipped for next year would be enough for about 18 per cent of home buyers to consider selling._

I have a super accurate prediction for 2011 ...

There will be lots of story's on Today Tonight & Current Affair about  home-owners who are forced to sell and are now blaming the banks for lending them the money.


----------



## nukz (2 December 2010)

explod said:


> You have hit the nail on the head.
> 
> have a Son selling at Werribee at the moment, he almost owns his home but can see the writing on the wall from talking to his mates in the area.  Hopes to rent for awhile.   Has 2 young kids.
> 
> ...




Yea its deffinetly good timing i would say, i rent myself and dont have any problems with it lol  i dont understand why theres this stigma in Aus that owning a house is so important lol 

That stampede is deffinetly a worry in the future because when that starts it will be a huge problem.


----------



## MR. (2 December 2010)

May his sole RIP.

Time to be moving on …... 

Stumbled here a few years ago after being lured here under false pretences but ASF soon rectified that problem and have maintained fair ethics. While I feel a little sad in departing the family I do have to concentrate on the task at hand of the new engineering business. Money much better spent than buying property, but what do I know, even the machinery salesman just bought another IP.  Neither venture is without their risks….. If it’s any consolation I’m already down the tubes due to the importer “deposit, what deposit” and I have an empty factory clocking $200- a day with months of extra waiting…… 

Waited for the all mighty property correction “which didn’t happen”.  No blood on the streets except mine. It’s going to be the slow painful way by the looks of it, so decisions were made.  Last ABS figures stilled showed house price increases and on that note and without further a due time to humbly depart…..

Not a share trader or really a share investor and naturally question my membership here. It’s been a valued education and the money markets await my return if I come calling.

regards
MR.


----------



## MR. (2 December 2010)

Joe Blow said:


> Thanks for maintaining ASF ethics wishing you well.
> You know you shouldn’t be doing what you are doing with the posts!



Just this one time. Will not happen again……


Go Nuke said:


> See you



See ya Nuke. All the best with your decision.


Uncle Festivus said:


> Remember all I have written.



Treating it like gold UF. You know how it is you gotta sometimes try to make a break!



Timmy said:


> good luck



thanks


medicowallet said:


> Cheers and good wishes



thanks


robots said:


> No, not another one of the 12 disciples of god! Man, there will be none left soon!



Just evening up the numbers bro. Plenty you have in the kitty, renters in abundance, make the repayments. Keep on, keepin on.



Mr Z said:


> What’s happening I just took you all off ignore and no one here!



Ha ha…….



SusanW said:


> I’m going too, all the best MR.



The same to you. See ya in Brissy one day perhaps.



explod said:


> Have a good one.



Thanks explode you are one of the 12 disciples…..



MR. said:


> You are truly the best



Thanks MR.


nunthewiser said:


> You got that from me! You will not be missed.



Thanks Nun, All the best. Humour is the true remedy…….   



trainspotter said:


> cheers MR.



All the best. Keep up the oyster irritating and choice developments


Aussiejeff said:


> The world is going down the tubes



We know but gotta move forward. The sun will rise again tomorrow.


prawn_86 said:


> All the best



Thanks Prawn. All the best coming out of uni and all that and hope you find the job you seek.



satanoperca said:


> Bye



Yes satanoperca, many posts I enjoyed reading 


Dangerous said:


> catch you later



sure thing!


kincella said:


> Can I come back now?



You didn’t have to leave, think you left on your own accord. 


medicowallet said:


> bye



bye


drsmith said:


> MR. nice to have had you here



Thanks Doc, nice to have read your posts



tech/a said:


> You got the counts wrong on that last post count



I knew it! I tried and I tried! Thanks anyway teach.
Continue to keep it positive….. and don’t forget to run that multinational of yours from time to time!

Merry Christmas all.

Bye.....


----------



## trainspotter (2 December 2010)

Peace out MR. All the best for XMAS and the rest of the festive season. Nice knowing you in this cyber world. Remember one thing ....... see piccy below.


----------



## MR. (2 December 2010)

ts looks like me factory!

Guys, gather round, gather round...., "group photo"




bye bye....


----------



## Agentm (2 December 2010)

lets just dedicate the next few pages to saying good bye..


----------



## MR. (2 December 2010)

Agentm said:


> lets just dedicate the next few pages to saying good bye..




Agentm, don't ya go popping me bubble 'cause we know of no others! 

Weren't you on the list or sumting? 
Sorry, not intentional just can't list everyone.....  :xmaswave


----------



## trainspotter (2 December 2010)

More like this group photo !!! You still here MR. ????


----------



## MR. (2 December 2010)

No.... :goodnight


----------



## OK2 (2 December 2010)

explod said:


> You have hit the nail on the head.
> 
> have a Son selling at Werribee at the moment, he almost owns his home but can see the writing on the wall from talking to his mates in the area.  Hopes to rent for awhile.   Has 2 young kids.
> 
> ...




Good idea. I thought the same until you calculate the real estate agent's commission, stamp duty to buy back in to the market and costs associated with renting or moving that average 100k for an average person. I decided to stay put.


----------



## explod (2 December 2010)

OK2 said:


> Good idea. I thought the same until you calculate the real estate agent's commission, stamp duty to buy back in to the market and costs associated with renting or moving that average 100k for an average person. I decided to stay put.




He is only doing it for family.  Kids growing and current home too small.


----------



## robots (3 December 2010)

hello,

oh gidday everyone, great day in melbourne

looks as though a bit of natural selection has hit ASF, oh well, good clean out always good, only the strong survive

well great figures out from the ABS the other day, a few ups and a few downs with the median just plodding along

looks as though the auction results dont mean anything there Medicowallet, hopefully  we get some more posts on the thread about property now

thankyou
professor robots


----------



## sinner (3 December 2010)

OK2 said:


> Good idea. I thought the same until you calculate the real estate agent's commission, stamp duty to buy back in to the market and costs associated with renting or moving that average 100k for an average person. I decided to stay put.




All premised on the assumption that you have an orderly market with fair or high demand to sell into. If the above is bad, what would it be like selling into a distressed market?


----------



## electronicmaster (3 December 2010)

Is Robots is selling?

Ive been wondering why he is uplifted all this time?


----------



## Mr Z (3 December 2010)

trainspotter said:


> More like this group photo !!! You still here MR. ????




You are the big guy to the left of the crowd, on the right of the photo... I just know it!

I'm still here Bot's, just yawning too much to post.


----------



## robots (4 December 2010)

hello,

oh gidday, 

no worries with everyone departing i will keep the ship going,

oh yeah:

http://www.reiv.com.au/home/inside.asp?ID=142

fantastic result 60%, still some amazing results across the sales today

a unit in a block i am familar with sold b4 auction today for a record for the complex, just amazing

after the biggest financial event since 1929 on we go, oh well

enjoy the data

thankyou
professor robots


----------



## trainspotter (4 December 2010)

Good on ya robots !! Well done that man!

They must have got tired of waiting for the so called "bubble" to burst. Te he ! Can't wait for the December quarter stats on the 8 capital cities averaged home price. Terrific indicator of the Australian home prices.


----------



## trainspotter (4 December 2010)

Suburb in Perth called "Perry Lakes" has just been released. $650,000 for a 371m2 vacant block. A Duplex block of 742m2 went for 1.13 million AUD !! WOOOOHOOOOOOOOOOOO !!! Go you good thing !


----------



## UBIQUITOUS (4 December 2010)

robots said:


> hello,
> 
> oh gidday,
> 
> ...




It's always great to check back in here every few weeks!

Robots, are you the black knight? 

"Tis but a scratch"

"Just a flesh Wound"

One day, it'll be:

"Come back, I'll bite your legs off."


----------



## againsthegrain (5 December 2010)

> $650,000 for a 371m2 vacant block. A Duplex block of 742m2 went for 1.13 million AUD




what a rip off


----------



## Agentm (5 December 2010)

935 auctions for melbourne, and whats that?  they lost track of 135??

lol

so the all important psychological 60% rate is achieved

which will be revised down to a corrected 54-55% on friday when those pesky missing auction results get found

and i hear its all fine in st kilda.. so the world is saved..

whats this softening term i hear all the time?  bubbles cant soften..

all lies i tell you, all lies  

lol


----------



## explod (5 December 2010)

Agentm said:


> 935 auctions for melbourne, and whats that?  they lost track of 135??
> 
> whats this softening term i hear all the time?  bubbles cant soften..
> 
> ...




From 80% to 60% clearance rate in a month.  That is a huge crash in sentiment.

Dont' worry about the jigged up figures, the nearest zeros are close enough in this climate.

If silver looked like dropping 10% I would be down at the bullion dealer same day recieving my cash.  Cant do that with property.


----------



## Dangerous (5 December 2010)

some good sale prices still.  Probably only 5-10% off March/April highs.  Those who try to get an extra 5-10% ON TOP of that are failing miserably.  

I keep an eye on the west and noticed: 
- Ascot Vale and Flemington, ticking over very nicely 13 houses yest 100% clearance.  
- Essendon also almost 100%.  
- Suburbs next to the nice ones - e.g. newport, maribyrnong struggle more
- Brian Lake still not back at training:bad:

I expected clearances to tick up a bit this week after the i-rate shock despite still being off the belief that market will struggle for demand without first home-buyers and less investors... not seeing value anywhere.


----------



## electronicmaster (5 December 2010)

Good to see people are selling up here 

Fantastic stuff


----------



## robots (5 December 2010)

hello,

great post Dangerous, good data from down on the ground, well done man

yeah, location location location

anything with a bit of doubt on it or massively overinflated price is struggling, but hey if someone trys it on why not,

just like putting CBA for sale on COMSEC for $60/share, you might pull it oh well

thankyou
professor robots


----------



## UBIQUITOUS (5 December 2010)

Dangerous said:


> some good sale prices still.  Probably only 5-10% off March/April highs.  Those who try to get an extra 5-10% ON TOP of that are failing miserably.
> 
> I keep an eye on the west and noticed:
> - Ascot Vale and Flemington, ticking over very nicely 13 houses yest 100% clearance.
> ...





You sure about that? I see 4 out of 9 sold, for yesterday. 44.4% clearance.

http://realestateview.com.au/propertydata/vic/essendon/index.html


----------



## indeck (5 December 2010)

where do people normally get the clearance rate figures?

looking at the realestate.com.au website the figures look terrible. (or good depends which way you look at it)
http://www.rs.realestate.com.au/cgi-bin/rsearch?a=ars

bris 22.6%!!


----------



## -Bevo- (5 December 2010)

indeck said:


> where do people normally get the clearance rate figures?
> 
> looking at the realestate.com.au website the figures look terrible. (or good depends which way you look at it)
> http://www.rs.realestate.com.au/cgi-bin/rsearch?a=ars
> ...




Be interested to know why such low clearence rates above yet we always hear about 60% plus clearence rates from other places, me thinks somebody fudging some numbers oh well.


----------



## indeck (5 December 2010)

id expect rpdata to over exaggerate the figures if anything


----------



## robots (5 December 2010)

hello,

and how the melbourne median going? anyone? anyone? OH WELL

thankyou
professor robots


----------



## indeck (5 December 2010)

ignored, not wasting my time seeing what you have to say when you contribute nothing.

I can see syd and melb are much higher clearance rates but still around the 55% mark.


----------



## nunthewiser (5 December 2010)

anyone know how i can place myself on ignore?

seems to be the hip thing to do around ere 

lots of houses previously "under offer" around my area are back on the listings as finance fallen through etc .....

numerous listings over 1 year old.

not much moving around these parts.

oh well ...back  to watching the world eat itself for a lil bit longer


----------



## againsthegrain (5 December 2010)

Its Sunday and tomorrow is Monday, oh well waiting for soon to come interest rises to make more interest on my cash deposit from so called property investors and watch them all complain how the banks are evil, oh well another day


----------



## Wysiwyg (5 December 2010)

nunthewiser said:


> You didnt ask me .... so heres my opinion
> 
> 13%(or roundabouts ) before this cycle is complete in my uneducated, unbiased and property holding opinion.
> 
> Notice i said cycle instead of giving a timeframe



Hmmm, that is a possibility Nun over a longer time frame. It takes several years for these trends to play out. 



SusanW said:


> I'd say a 45% probability. The asx implied yield curve has been reasonably accurate in the past, and they are only forecasting 2 x 25bp by mid 2012.
> 
> *the greater risk is a tightening of foreign credit, which means higher funding costs for our lenders.*
> 
> ...



Thanks for your thoughts.  
Credit wise I notice more card deals being advertised (American Express (haven't seen an AM advert for awhile until recently), NAB, David Jones, Virgin for example) so loosening up of credit there. The chart I refer to is below.

STANDARD VARIABLE HOME LOAN RATES 1959 - 2010 AUSTRALIA


----------



## MACCA350 (6 December 2010)

againsthegrain said:


> Its Sunday and tomorrow is Monday, oh well waiting for soon to come interest rises to make more interest on my cash deposit from so called property investors and watch them all complain how the banks are evil, oh well another day



Yeah bring on 15%

cheers


----------



## explod (6 December 2010)

MACCA350 said:


> Yeah bring on 15%
> 
> cheers




If a fraction of what is being posted up on the "Conspiratory" thread is correct there will be no interest and no banks.

The system will be caput.  Might be a rise in homesteaders.  Need to bar up.


----------



## againsthegrain (6 December 2010)

> If a fraction of what is being posted up on the "Conspiratory" thread is correct there will be no interest and no banks.
> 
> The system will be caput. Might be a rise in homesteaders. Need to bar up.




In that case home ownership will be just a meaningless piece of paper and the strong will take what they need to survive by force while the old and the weak are muscled out - Mad max style bring it on lol


----------



## robots (6 December 2010)

againsthegrain said:


> Its Sunday and tomorrow is Monday, oh well waiting for soon to come interest rises to make more interest on my cash deposit from so called property investors *and watch them all complain *how the banks are evil, oh well another day




hello,

gidday, yeah well we have had over 5yrs of watching and reading how its done so should be no worries about getting it right

actually, we are still watching and reading how its done, amazing hey man

amazing the biggest financial event since 1929 and medians well higher than before this event, and the shonk markets? still in catch up mode, oh well

thankyou
professor robots


----------



## MACCA350 (6 December 2010)

explod said:


> Need to bar up.



Well, there's plenty of sites around to help with that:

I'd be concerned for those baring up in here

Cheers:couch


----------



## explod (6 December 2010)

robots said:


> hello,
> 
> amazing the biggest financial event since 1929 and medians well higher than before this event, and the shonk markets? still in catch up mode, oh well
> 
> ...




You are repeating yourself there bots, you said the same thing a few days back and I didn't bite that time, wonder.

1929 was only the biginning, the markets over the next four years continued to crash and unemlployment was such that they slepts on the roads for 20 years past that date, those that did not go to war that is.

The financial bad times are only now beginning to be noticed.   It would be great if you would take the time to read some of the other financial threads on ASF and get up to speed.   Your ignorant asertions are so tiresome and not a good look for the REIV either.


----------



## robots (6 December 2010)

hello,

yeah no thanks explod, i am about positivity not negativity which you and the rest of the population spread, doom and gloom

but oh well, i guess thats what differentiates my rhymes from yours

gee, hows the performance of property since the start of this thread?

thankyou
professor robots


----------



## explod (6 December 2010)

robots said:


> hello,
> 
> yeah no thanks explod, i am about positivity not negativity which you and the rest of the population spread, doom and gloom
> 
> ...




*Knowing* and speaking of what is really happenning is not negative at all.  It is just common sense to be alert to what is in the pipeline.  If you are not aware of it you get slaughtered.

Being positive is not going to stop some NSW towns being flooded tonight.  Need to be real there bots.


----------



## Agentm (6 December 2010)

wonder what the figures will be in 10 years from now??


People over 65 in Sydney now enjoy an 82 per cent home ownership rate, but *the proportion** of lower-middle income households in Sydney without their own home rose from 26 per cent to 40 per cent in the 45-to-64 age group between 1986 and 2006*.

more pressure on the welfare state is about to arrive for NSW

bubbles have all sorts of consequences...

anyone can call a bubble a bubble week in week out, i give that zero credibility, theres one in china also..

gotta love them bubbles hey!


----------



## GumbyLearner (6 December 2010)

explod said:


> *Knowing* and speaking of what is really happenning is not negative at all.  It is just common sense to be alert to what is in the pipeline.  If you are not aware of it you get slaughtered.




I with you explod. I think I'll stick to the unhedged gold producers rather than the hedged mortgagees. But I will not say *Oh Well*. That phrase is trademark protected by robots bubblemania enterprises etc..


----------



## TKline (6 December 2010)

robots said:


> gee, hows the performance of property since the start of this thread?




Anybody can do well in a bull run, but the tide is going out and we'll see who was swimming naked. Bull runs always end.


----------



## Taltan (7 December 2010)

One difficult variable in this debate is the housing shortage. Seeing as all stats on this come from the real estate lobby I found it interesting to have a look at Brickworks annual report. As Australia's largest brick producer you'd think they would look into the topic.

Sure enough housing approvals in Australia are up 28.5% to the year ended 31 July 2010. Not surprisingly up highest in VIC, NSW & WA. Now we may just be playing catch up here with a way long to go but it does seem the catch up has started.

Just thought I would share an objective source as although Brickworks monitor the approvals I havn't bothered to read the market share they intend to capture


----------



## Agentm (7 December 2010)

the drum last night, great interview with steve keen, and plenty of good questions fired at him and all taken with ease as usual.

just go 26 minutes in


http://www.abc.net.au/iview/?series=2955433#/view/684026

as usual he makes his remarkable clear points

what i like about steve keens own blogsite is that all his presentations are posted and all are commented on and answered by him, so if you have any doubts on any of his research your welcome to discuss it and talk it through.


----------



## Worthless Paper (7 December 2010)

Taltan, I dont buy into the debate about housing shortages. Tend to think is being used to talk new buyers into the market, gives the media something to harp on all bullish about also. The real debate is the supply and demand for credit, Steve Keen touches on this. Another top blog ive been reading lately is Leith van Onselen's......he also covers the housing bubble from the standpoint of credit availability. 

http://www.unconventionaleconomist.com/


----------



## Uncle Festivus (7 December 2010)

robots said:


> hello,
> 
> gidday, yeah well we have had over 5yrs of watching and reading how its done so should be no worries about getting it right
> 
> ...




Catch up mode? You mean like this? (From your old mate )


----------



## robots (7 December 2010)

hello,

like i say man, believe what you want from debtwatch, gphc, creditcrunch and other toxic blog sites

as its all F for fail from those doomsdayers

thankyou
professor robots


----------



## Uncle Festivus (8 December 2010)

robots said:


> hello,
> 
> like i say man, believe what you want from debtwatch, gphc, creditcrunch and other toxic blog sites
> 
> ...




.....& the Reserve Bank and Bureau Of Statistics too?

I guess the 'other' 4 will have to put forward a riposte explaining away the chart then?

This article is essential reading for property PolyAnna's - 

The 3 Stages Of Delusion


----------



## robots (8 December 2010)

hello,

yeah no worries, give us a bell when the 40% drop hits

abs up again last quarter

bad luck Againsthegrain yesterday, interest rates on hold, oh well brother have a great day

thankyou
professor robots


----------



## satanoperca (8 December 2010)

Got to love ya Robots your a legend, however



> Rismark estimates that the national median dwelling price based on sales in all regions throughout Australia, and encompassing all detached houses, semis, terraces and units, fell from $418,000 to $405,000 between June and September 2010. *The average* dwelling price also declined from $447,994 to $432,954 during this same period. *




http://christopherjoye.blogspot.com/2010/12/australian-housing-markets-valuation.html

No sun shining in Melbourne today.

Cheers


----------



## againsthegrain (8 December 2010)

> bad luck Againsthegrain yesterday, interest rates on hold, oh well brother have a great day



I said previously I await the interest raises in Feb/March as predicted, pay attention.

Ofcourse there will be no raises this year especially before xmas, it is a rule of thumb don't push too far or you will create a martyr that has nothing to lose. 
This rule applies perfectly to the unsuspecting borrower who thinks they are safe for xmas and ready to spend, while they will be hit hard at the start of next year. Oh well i am in no hurry green tea time!

p.s even the attitute in my workplace is changing, simply amazing from people that were confident that property is the only way to go and can't lose now complain about investors, rates and the mortgages being rolled over to their kids and grandkids lol simply AMAZING! oh well ho ho ho

Supreme Komendant


----------



## Agentm (10 December 2010)

those pesky unreported results???  well as usual they were not sales!!

but we all knew that

http://www.rs.realestate.com.au/cgi-bin/rsearch?a=ars&s=vic

so the actual result for lst weekend for melbourne was 56%

this weekend they will run the same lies, on sunday they will report 60% and monday again 60%..

i wonder if the actual clearance rate will be 56% next week?  i am tipping a far lower number.

i saw heaps of latte drinking developas sittin there all week in those cafes.. 

they are still smiling as the median prices are still rocketing for them..

banks are lending as recklessly as ever.. they love those bubbles.. the bigger the better.. they and the developas think the guvment will bail them when it all hits the fan..


----------



## tronic72 (10 December 2010)

We are reaching critical mass people!

At a recent lunch I mentioned that due to inflationary pressures, we might be up for an unexpected new years rate increase.

The replies I got when included:

* An angry "no they're not!"
* A concerned "don't tell me that".
* A mixture of concern and surprise "but they said we would be OK for a bit"


----------



## robots (10 December 2010)

tronic72 said:


> We are reaching critical mass people!
> 
> At a recent lunch I mentioned that due to inflationary pressures, we might be up for an unexpected new years rate increase.
> 
> ...




hello,

what a great post, thanks man

does this joint have a direct line to doomsday cults or something, oh well

thankyou
professor robots


----------



## explod (10 December 2010)

robots said:


> hello,
> 
> what a great post, thanks man
> 
> ...




Botts , have you ever considered other types of investments?

have you also considered that it is in the natural order that things go up and down and property is part of it ?

and that some doomsayers are just sensible people who are optomistic on other investments, or more correctly, on what is doing the best at the moment ?

property is sideway so certainly not the best at the moment.

now that is all that is really being said *with *some reasoning behind it.  I would love you to look at some of the reasoning botts, and respond to that.


----------



## robots (10 December 2010)

hello,

oh yeah, lets have question time again, fire away

thankyou
professor robots


----------



## robots (10 December 2010)

hello,

no worries, take your time, have dinner and get back to us

thankyou
professor robots


----------



## Macquack (10 December 2010)

robots said:


> hello,
> 
> oh yeah, lets have question time again, fire away
> 
> ...




When are ya gunna retire with the proceeds of your real estate investment bonanzas?


----------



## explod (10 December 2010)

robots said:


> hello,
> 
> oh yeah, lets have question time again, fire away
> 
> ...




So botty, you want to be spoon fed, not prepared to look at other threads and alternatives.  Not my job to educate you or anyone else.  What would I know, just a simple investor trying to help myself.

Sounds a bit lazy, as someone else said a few weeks ago, naughty naughty botty.


----------



## robots (10 December 2010)

Macquack said:


> When are ya gunna retire with the proceeds of your real estate investment bonanzas?




hello,

moving in a few weeks, and rents will cover loans and some sundries on all so this going to be fantastic

going down to 6mths work next year, will be great, help out the wildlife in my new area hopefully, watch the butterflies, birds and flowers on the trees for hours in a day

i hope thats okay

just amazing

thankyou
professor robots


----------



## robots (10 December 2010)

explod said:


> So botty, you want to be spoon fed, not prepared to look at other threads and alternatives.  Not my job to educate you or anyone else.  *What would I know, just a simple investor trying to help myself.*
> 
> Sounds a bit lazy, as someone else said a few weeks ago, naughty naughty botty.




hello,

spot on, thats a common theme with most of the posters in this thread, its all about me

then you have the likes of Professor Robots, Kincella, Beej, Trainspotter who share their ideology, visions, skills, investing experience with the goal of assisting others in life

i know the above have achieved some great results with fellow brothers

thankyou
professor robots


----------



## againsthegrain (10 December 2010)

> help out the wildlife in my new area hopefully, watch the butterflies, birds and flowers on the trees for hours in a day




working for the dole?


----------



## Uncle Festivus (10 December 2010)

robots said:


> hello,
> 
> oh yeah, lets have question time again, fire away
> 
> ...




How much have you made, after costs, on the IP you bought back in March?


----------



## robots (11 December 2010)

hello,

havent made a cent, cost me actually

thankyou
professor robots


----------



## So_Cynical (11 December 2010)

robots said:


> hello,
> 
> havent made a cent, cost me actually
> 
> ...




Hey com on where's the sunshine and lollipops?

2761 posts and now he goes all negative on us.


----------



## Temjin (11 December 2010)

Agentm said:


> the drum last night, great interview with steve keen, and plenty of good questions fired at him and all taken with ease as usual.
> 
> just go 26 minutes in
> 
> ...




Love that interview.

You just got to see the disbelief from the other interviewers who thinks first home buyers should not suffer and should be entitled to "cheaper" debt in order to get into market, and be HAPPY! LOL

Those people cannot be help until reality eventually catches up. We still a fair way from that though.


----------



## matty77 (11 December 2010)

robots said:


> hello,
> 
> spot on, thats a common theme with most of the posters in this thread, its all about me
> 
> ...




fixed.


----------



## Gringotts Bank (11 December 2010)

First cracks appearing in Melbourne real estate market.  Even the agents are saying so.  Supply is huge.  Demand ... possibly still high?


----------



## lioness (11 December 2010)

Robots,

Where is the link this week.

Keep sucking those russian vodka's!!


----------



## MACCA350 (11 December 2010)

Thought there were meant to be 1300+ auctions today, yet REIV have only reported just over 1000 for a 61% clearance rate..........up to their old tricks again

Cheers


----------



## Agentm (12 December 2010)

MACCA350 said:


> Thought there were meant to be 1300+ auctions today, yet REIV have only reported just over 1000 for a 61% clearance rate..........up to their old tricks again
> 
> Cheers




i hear they had those mystery non reported sales again.. well lets say 20% are now going to be unreported and remain out of the system..

this week 209  

i noticed in the saturday age they were reporting a 61% clearance rate for the previous week.. so they are not reporting the correct clearance rate even a day after they are issued (friday).. no one knows why it takes until friday of each week to actually figure out a result of an auction that everyone else attending had no problem understand the result of.. lol

as usual the collaboration of the newspapers and the REIV inability to report anything other than bogus sales results continues week in week out

it only on friday this week, that these pesky non reported 209 sales will become evident, and again, the all important psychological 60% lie is maintained.. 

as usual they will continue to report the highest sales as median in the select suburbs that are struggling and inflate the heck out of the market.

i bet the auctions that did clear had some great median breaking results.

all good for the latte drinkin developas..

there is a massive load of unsold properties out there now...


----------



## Aussiejeff (12 December 2010)

What is really needed to show a true picture is a Federal Government mandated weekly "Properties listed vs properties sold" reporting system to be introduced, covering EVERY property agent across the nation. Only then would the TRUE state of the RE market on a local, regional, state by state and federal basis be discernable by the public.

Of course, the "true state of the market" under such a system might be a more bitter pill to some vested interests.

So it will never, ever happen.

Party on....


----------



## c-unit (12 December 2010)

Even driving around my area, to the gym, pool, train station etc, it is really noticeable the number of for sale signs starting to go up. Things certainly aren't as rosy as the REIV would like us to believe.

Even Uncle Wayne and Auntie Julia have noticed cracks in the housing market, and have decided it needs reinforcement by increasing their investments in RMBS by $4bn to $20bn. Doesn't it feel great knowing that our taxpayer funds are in such good hands?


----------



## DB008 (12 December 2010)

W. Swan released some more info on the reforms that will be coming our way soon



> Under the government's reforms, home loan exit fees, which can run into the thousands, will be banned from July 1, 2011 and the Australian Competition and Consumer Commission will be given the power to investigate price collusion among banks.




Will this include "break fees" and/or other penalties? 

I had to refinanced a few years ago and it was $8k to break a previous 180k investment loan with RAMS. I would happily refinance away from BoQ in a heartbeat, but am reluctant to do so because of the penalties l will get slugged with. BoQ are way above the big 4 banks on their home loan rates, but l had no choice at the time l signed to them.


----------



## socrates44 (12 December 2010)

If REIV is claiming 60% clearance rates, you can be pretty sure that the true figure is well south of 40%, with unreported auctions, dweller bids, properties withdrawn, etc., all featuring. 

I have just sold my home in the middle suburbs and my agent confirmed that things are slow and I was lucky to get a good price with only 1 offer despite 20 visits and having lowered my "asking price" to attract more interest. Other agents on commission confided that they may be looking for new jobs in the near future.

We are also seeing $1.5+million properties going for 30-40% less than the  reserve, and similarly 10-20% less in the 800,000-1,000,000 range. Some of these sellers will now be in a severe debt situation, for which the banks are not entirely blameless.

Why are housing prices in a decline? One reaon has do with the actual or anticipated increase in the "cost of living", especialy with debates about bank rates and fees in the media just about every day. However, there are also real cost of living adjustments with increases in electricity prices coming in. So, housing is not as affordable and people are maintaining tight budgets.

Next, the toe-cutters are back in vogue in many organisations and so, people's jobs are not as secure, especially among middle managers. Senior execs won't give up their humble salaries and bonusus, and the people nearest the site of the actual generation of cash (e.g. miners, factory workers, tradesmen, front-line staff, etc) cannot be removed over night. So the logical decision is to cut a swathe through middle management, the very people who historically have supported housing prices, especially in the school-located middle suburbs.

Finally, there is an important distinction in housing. A "home type" property is one where the home suits the owner and there is less motivation or compulsion to sell, unless a developer comes along with an offer too good to refuse (it has happened to me only once in a lifetime and I made 100% over 1 year!). However, suck god luck is unlikely in a depressed climate unless his name is Bond and has an affection for yachts!

The other type of property is an investgment property, a stictly investment property let out for rental (currently, this favours renters), or an "owner-occupied lifestyle property" which offers much in excess of the owner's needs. 

We see the latter developments advertised, usualy at the expensive end, and with an emphasis on "lifestyle". These are most sensitive to changes in the financial fortunes of the potential or actual owner.

Then, as in my case, I found that I was living in a "lifestyle property by default", with 2 bedfooms, a formal lounge and a formal dining toom, which I  never used.

So I decided to sell now and rent over the next 12 months while I observe the market. But even then, I will probably buy a smaller property more suited to my needs, unless I can find a real bargain.

I should quickly mention several international contributors to volatility in confidence which feeds through to people's concerns about their future lives and pushing them to more cautiom, a culture of thrift, shopping for cheaper goods, etc, when it comes to spending large money. 

The US is currently printing money, with the implication of rising inflation rates and a debased currency; the Europeans are catching a similar disease, called "bailing out the PIGS" using their European reserves, but raising the question of who bails out Europe when those reseves evaporate?; the nice North Koreans are again demonstrating their friendship and solidarity with the South; and the effect of US behaviour is to export inflation to China - as China is now paying with debased US dollars - while China is already facing internal social crises due to food shortages, low incomes and increasing prices, plus having just gone through a period of historic property speculation, whose coming crunch will reverberate across the world.

I just thought it useful to add those happy ideas to provide background to what is or may happen to housing prices and the cost of living in  Australia. Even BHP will not be immune if - for a period - China savages its iron ore imports. Expect to see some bargains on the stock markets as share prices fall, not due to poor fundamentals, but a slowing in broker-expected growth rates.


----------



## explod (12 December 2010)

> socrates44
> 
> 
> Join Date: Dec 2010
> ...




Geeeeesssszzz

Our little botty will not like this.

I don't think he likes philosphers either, 

*yor'e infor rit*


----------



## robots (12 December 2010)

hello,

yeah its tuff C-unit, 

i have had to deal with taxpayer funds going into wasteful areas like farming, manufacturing, motor industry, textiles, Oprah Winifrey for many many years

just amazing, i say it again, isnt that what you all want, the socialist model, equality for all, and surely RE is part of the community

but not sure if you REALLY want the bludger in the office getting the same $ as you, you know the guy or girl going out for 20 smokes a day, or the one sitting  on the toilet for an hour at a time, 

oh well

were you a corrupt copper Explod?

thankyou
professor robots


----------



## explod (12 December 2010)

robots said:


> hello,
> 
> oh well
> 
> ...




Of course botty, you know how it is, parties, wonderfull BLF demonstrations, sunshine and lollypops.

Ran foul big time in aiding and abbetting the cause of homeless youth and organising rehabilitative interactives with junior constables and drop outs.

Our ole mate Jeff Kennet could not see it as a joke so they had to let me go.

Oh well, cast away down here on the Mornington Peninsula where I can do no harm to anyone.

Onya botty, what a great ole pal.   Keep those numbers coming, a bit late last week, in fact I did not see yours.  Encouraging and working through others is a wonderful thing.


----------



## satanoperca (12 December 2010)

robots said:


> hello,
> 
> i have had to deal with taxpayer funds going into *wasteful areas *like farming, manufacturing, motor industry, textiles, Oprah Winifrey for many many years
> 
> professor robots





Think you missed the most important waste of tax payers money :

*FHBG & RMBS *

Cheers


----------



## socrates44 (12 December 2010)

I apologise if I offend anyone, but I thought this might be an intelligent forum.

Instead, this thread seems populated by incestuous nincompoops!

Therefore can I ask those who have nothing of substance to say, to say nothing. Better there is silence than random noise.


----------



## TabJockey (13 December 2010)

socrates44 said:


> I apologise if I offend anyone, but I thought this might be an intelligent forum.
> 
> Instead, this thread seems populated by incestuous nincompoops!
> 
> Therefore can I ask those who have nothing of substance to say, to say nothing. Better there is silence than random noise.




THIS IS THE INTERNETS


----------



## explod (13 December 2010)

socrates44 said:


> I apologise if I offend anyone, but I thought this might be an intelligent forum.
> 
> Instead, this thread seems populated by incestuous nincompoops!
> 
> Therefore can I ask those who have nothing of substance to say, to say nothing. Better there is silence than random noise.




Your posts are very much appreciated by some, so persist with the good work. 

Vested interests trying to railroad constructive discussion need to be dealt with on the spot.


----------



## Junior (13 December 2010)

robots said:


> hello,
> 
> yeah its tuff C-unit,
> 
> ...




Wasteful areas like farming!  We have to eat!


----------



## Agentm (13 December 2010)

my view on the future of australian property prices remains bearish

china is the key for australia, i think the previous australian leaders have made china the most critical and single most important market, and to the detriment of all other trading partners and markets.

currently only 5% of gdp in china is exports

60% + of GDP is construction

imho the 12 to 15 million residential units being built in 2011 in china, at prices the same as the USA, will just add to "empty cities" that china has already, and only add to the problems they face. their pozi real estate scams continue unabated



you have south china shopping mall ... empty..  







"The South China Mall, which opened with great fanfare in 2005, is not just the world’s largest. With fewer than a dozen stores scattered through a space designed to house 1,500, it is also the world’s emptiest – a dusty, decrepit complex of buildings marked by peeling paint, dead light bulbs, and dismembered mannequins. “They set out to be the biggest, and hoped that being the biggest would be the attracting factor,” says David Hand, a retail analyst at Jones Lang LaSalle in Beijing, who has followed the project. “It hasn’t delivered.” "













in the southwest there is Chenggong 

a vast city of empty buildings





right now china is pressing ahead with further expansions, more empty buildings, more retail and commercial constructions, and all in a failing global economy

how long can china afford to continue this way?

bubbles are bubbles..  we all are certain china is the one thing that kept the majority of the GFC pressures off the australian economy, which boomed with the massive demand china has put out on construction..

chinese consumption to gdp has declined from 40% to 35% over the past 10 years.. their bubble is entirely construction  based

lets see how long the amazing china bubble continues and whether 2011 will remain as prosperous for the bubble in australia.

enjoy the bubbles while they last..  the chinese themselves think their real estate is overvalued by some 70% in the major cities..

of course we have no bubble in australia.. lol


----------



## skcots (13 December 2010)

Thanks for the post Agentm. Very interesting.


----------



## explod (13 December 2010)

Read through todays Melbourne Herald Sun at the coffee strip from cover to cover and for the first time in my memory I did not see one item on the property market.

Similar to this thread.

For those enticed into the market at the top I feel very sorry.   

A house near to me in Mount Marthat changed hands for $730,000    Four years ago they purchased it for $210,000.  It was just a holiday shack, spent $70,000 on an upgrade including an extension with some new gravel in the drive.  And good luck to them.

A 400 square metre vacant block at the rear (subdivision by owners for a bit of cash) and with side drive entrance for $470,000 two weeks ago.

We have insanity in this market IMHO.


----------



## Agentm (13 December 2010)

australia is different.. lol




its a religion!!

very nice work.


----------



## drsmith (13 December 2010)

socrates44 said:


> I apologise if I offend anyone, but I thought this might be an intelligent forum.
> 
> Instead, this thread seems populated by incestuous nincompoops!
> 
> Therefore can I ask those who have nothing of substance to say, to say nothing. Better there is silence than random noise.



Residential property is typically slow moving in comparison to other investment markets so, often, there is much less to say.

I appreciated your contribution and read it in full.


----------



## trainspotter (13 December 2010)

Great first post socrates44. Welcome to ASF where the incestuous nincompoops dance with gay abandon with the lunatics on the grass. I especially liked this part of your post:-

* "unless a developer comes along with an offer too good to refuse (it has happened to me only once in a lifetime and I made 100% over 1 year!). "*

I concur with the rest of your post as well.


----------



## doctorj (13 December 2010)

Agentm said:


> australia is different.. lol
> 
> 
> 
> ...




I saw this the other day - gold!


----------



## robots (13 December 2010)

hello,

good evening everyone, well great day, getting a bit closer to christmas 



socrates44 said:


> I apologise if I offend anyone, but I thought this might be an intelligent forum.
> 
> Instead, this thread seems populated by incestuous nincompoops!
> 
> Therefore can I ask those who have nothing of substance to say, to say nothing. Better there is silence than random noise.






explod said:


> Your posts are very much appreciated by some, so persist with the good work.
> 
> Vested interests trying to railroad constructive discussion need to be dealt with on the spot.




hehehehehehe, like how funny are these 2 above posts, nunthewiser has gone over this time and time again, respect other peoples opinions and beliefs

you could be spot on Explod, i reckon the thread should be around 100 posters less if things were dealt out like you reckon, good stuff 

did you deal out a bit of Biff on the spot when you in the uniform Explod

6yrs going on strong socrates44, 

oh well

thankyou
professor robots


----------



## robots (13 December 2010)

hello,

yeah welcome Socrates44, this was an early post which lists a few of the intelligient members of ASF, look out for any post by these Kings man



robots said:


> hello,
> 
> spot on, thats a common theme with most of the posters in this thread, its all about me
> 
> ...




thankyou
professor robots


----------



## tothemax6 (13 December 2010)

OK some questions for those older and wiser, since I have know about this bubble for a short while, and it concerns me and makes me edgy about owning shares given what happened in the US. [And lets not even get started on the Chinese real-estate bubble - I have seen videos of those empty cities and the people holding the over-priced estate as 'an investment' and that is FCked up, but anyway]


Does australia have the kind of securitization of mortgage debt that the US had during the bubble? That is, the packaged tranche-divided debt instruments etc.
To what extent has australian home equity been borrowed against compared to how it was in the US?
Are there any instances of negative-amortization lending?
Does australia have a similar level of government subsidization of home-ownership, as occurred in the US with fannie mae and freddie mac?
Is there a situation of increasing credit expansion in spite of increasing interest rates, as occurred in the US?
Would be good to know this, since I know very little about the australian real estate market.
Cheers!


----------



## basilio (13 December 2010)

The housing market really has to be toppy at the moment.  The pressure of rising interest rates  and in particular the last .4% in November has to cracking a number of households.

The sharp increases in electricity, gas and water costs is going to drain lots of the remaining discretionary income money from peoples pockets. So naturally the economy will flag and jobs will be put on the line.

And overriding the whole picture is the fact that far too many people are deeply in debt and simply cannot spend the money they borrowed last year and the year before. With all these factors in play how we honestly see housing prices hold the ridiculous levels they are at the moment? I think if we are really lucky we'll a 10-15% reduction over... If we are lucky 

  _________________________________________________
PS

One way out.  Throw the market open to wealthy immigrants who can and will pay top dollars. But i don't believe that is a 'good' solution for the rest of us.


----------



## TabJockey (13 December 2010)

tothemax6 said:


> OK some questions for those older and wiser, since I have know about this bubble for a short while, and it concerns me and makes me edgy about owning shares given what happened in the US. [And lets not even get started on the Chinese real-estate bubble - I have seen videos of those empty cities and the people holding the over-priced estate as 'an investment' and that is FCked up, but anyway]
> 
> 
> Does australia have the kind of securitization of mortgage debt that the US had during the bubble? That is, the packaged tranche-divided debt instruments etc.
> ...




No to all your questions to the best of my ability.

Before the GFC you still could not:

 - Get a home loan without a saved deposit and good credit rating (although you could do it on 5%). You also could not get the loan unless your income covered the payments at least 200%.

 - No such thing as "teaser" interest rates

 - Rates where pretty high, 9% as opposed to 3? percent in the US.

- We had the first home buyers grant which was government stimulus into housing. Pretty much failed to cover stamp duty on a cheap house.

 - Credit was expanding and interest rates rising, but not at a crazy rate. Boom times people borrow more, it happens, but the debt was still serviced for the most part after the GFC so I dont see that coming back with a bite now or soon.

 - There is moderate mortgage securitisation, the banks use it to raise money (BOQ is into it more than most so if you dont like it stay away from them). It is highly regulated and the CDO's created are not created out of the "worst of the worst" loans. The lack of smaller home loan lenders and the prudence of the banks means that there are very few "aussie sub prime" loans anyway, certainly not enough to make a CDO out of.

The only thing that would bring about a large number of defaults would be heavy unemployment of the middle class.


----------



## sinner (14 December 2010)

****ty numbers out for Australia today.

NAB business confidence down from 8 to 6.

QoQ housing starts down from +2.1% to -13.2% (expected -5%). 

Hefty drop.


----------



## Bigukraine (14 December 2010)

sinner said:


> ****ty numbers out for Australia today.
> 
> NAB business confidence down from 8 to 6.
> 
> ...




re housing starts down -13.2% ........ bit hard to pour concrete and lay bricks and even prepare sites/services when you have seen noah's ark float down most streets Australia wide in the last qtr......... will see flow on(pardon the pun)and better figures 2011 qtr re starts.


----------



## trainspotter (14 December 2010)

The big 4 banks are gearing up to start lending on houseboats if this rain keeps falling.


----------



## Platofx (14 December 2010)

Hello All,

It seems to me that most Aussies and market commentators are far too focused on the domestic situation (supply and demand, employment, property values to income ratios etc).

It's my view that we will see a sharp and significant property market correction in the third quarter of 2011.  Around that time I expect to see the broad Asian currencies come under sustained pressure, which in turn may begin a significant capital flight by Asian property investors as they liquidate "low-end" investment properties in Australian capital cities.  

With China's inflation breaking above 5% over the weekend, it is expected they will use fx adjustment to bring corrections, and this will undoubtedly spill over into other Asian investment currencies.  I suggest the first 2 quarters of 2011 may be a good time to remain on the sidelines for buyers.

Cheers

(I have no vested interest in the above commentary which simply represents my informed personal opinion).


----------



## Trembling Hand (14 December 2010)

Platofx said:


> With China's inflation breaking above 5% over the weekend, it is expected they will use fx adjustment to bring corrections, and this will undoubtedly spill over into other Asian investment currencies.  I suggest the first 2 quarters of 2011 may be a good time to remain on the sidelines for buyers.
> 
> Cheers
> 
> (I have no vested interest in the above commentary which simply represents my informed personal opinion).




Errrr huh?

Ya may want to double check your "informed personal opinion". The pressure is on China to move UP their currency. Have a look at the Taiwan Dollar as a china proxy,


----------



## Platofx (14 December 2010)

Hello Trembling Hand,

Yes, that's exactly my point.  China can hardly reduce rates to contain inflation - it will constrict lending and raise rates.  In contrast the US is exerting robust presure for China to lower rates, and the end result will undoubtedly be (significantly) increased  fx volatility with negative repercussions for Asia currencies.  I expect the raised rates in China will impact quite directly on Chinese property investments in Oz .... I just didn't want to write a 300 word explanation ... I simply wanted to add some informed commentary to the debate that seemed needed, from someone with broad market experience etc ...

Cheers


----------



## tothemax6 (14 December 2010)

Platofx said:


> Hello Trembling Hand,
> 
> Yes, that's exactly my point.  China can hardly reduce rates to contain inflation - it will constrict lending and raise rates.  In contrast the US is exerting robust presure for China to lower rates, and the end result will undoubtedly be (significantly) increased  fx volatility with negative repercussions for Asia currencies.  I expect the raised rates in China will impact quite directly on Chinese property investments in Oz .... I just didn't want to write a 300 word explanation ... I simply wanted to add some informed commentary to the debate that seemed needed, from someone with broad market experience etc ...
> 
> Cheers



The word 'robust' seems to be getting overused nowadays. 'Exerting robust pressure' just sounds hilarious. The US is also nagging for China to allow the yuan to appreciate, but it doesn't move. I don't see what the US has to pressure china with, so its more or less just noise. Also, I can imagine some pretty epic downturns in Australia if the chinese simply let their housing bubble go unchecked, so perhaps it is best they tighten now.


----------



## Platofx (14 December 2010)

Hello tothmax6,

The phrase "epic downturns in Australia" seems rather reduntant as well - but I think we are simply using the language of the moment as we type.  So let's not seize upon semantics or we digress from subtance.

You are completely correct.  Which is exactly my point.  I am simply wanting to suggest two points of opinion to help inform the debate and "Mums and Dad's".  Firstly, in my view, we are about to enter a period of escalating extremes in fx, and that secondly, in my view this will have direct and adverse implications for the Australian property market.  In other words, a severe property market correct driven by external rather than domestic imperitives.

On a broader canvas, we are not yet into the blue sky the politicians love to portray.

Kindly,


----------



## explod (14 December 2010)

Trembling Hand said:


> Errrr huh?
> 
> Ya may want to double check your "informed personal opinion". The pressure is on China to move UP their currency. Have a look at the Taiwan Dollar as a china proxy,




But they don't want to.  Need to keep it pegged to the US$ to support the value of what is owed to them.

Still no reports in the press or on here re weekend property results.  
must be bad out there.

Interesting


----------



## Platofx (14 December 2010)

Hello Explod,

You're quite right - they don't want to.  However, with inflation breaking north of 5%, I will be very surprised if China doesn' begin to immediately and progressively adjust the peg to raise rates.  The last thing they want is a serious inflation issue on top of the property bubble they're seeing develop.

My concern is that we are already seeing a significant and measurable slowing in the Oz property market, and it won't take much to see the Asian property investment capital start to withdraw, exacerbating the number of low-end investor properties coming onto the market.  

Melbourne clearance rate was 61% for the weekend, compared to last year at 81%  ....

Regards


----------



## Alex Barton (14 December 2010)

Platofx said:


> It's my view that we will see a sharp and significant property market correction in the third quarter of 2011.  Around that time I expect to see the broad Asian currencies come under sustained pressure, which in turn may begin a significant capital flight by Asian property investors as they liquidate "low-end" investment properties in Australian capital cities.




That sounds reasonable. Many are predicting a market downturn next year.


----------



## GumbyLearner (14 December 2010)

tothemax6 said:


> Also, I can imagine some pretty epic downturns in Australia if the chinese simply let their housing bubble go unchecked, so perhaps it is best they tighten now.




Jim Chanos shares your concerns tothemax6

Check the vid on this blokes blog

http://www.unconventionaleconomist.com/2010/12/chanos-again-warns-on-chinas-bubble.html


----------



## tothemax6 (15 December 2010)

explod said:


> But they don't want to.  Need to keep it pegged to the US$ to support the value of what is owed to them.
> Still no reports in the press or on here re weekend property results.
> must be bad out there.
> Interesting



Well if that is the goal of the chinese then good luck to them. If anyone knows anything about bernanke and his background, you also know that he is quite happy to run the printing presses until they blow up. He sees the current crisis as a copy of what happened following 1929, and he thinks that if he does the opposite of what the central bank did then, then everything will turn out fine. 


> Originally Posted by Platofx
> It's my view that we will see a sharp and significant property market correction in the third quarter of 2011. Around that time I expect to see the broad Asian currencies come under sustained pressure, which in turn may begin a significant capital flight by Asian property investors as they liquidate "low-end" investment properties in Australian capital cities.



Why would the Asian currencies come under sustained pressure?


----------



## Agentm (15 December 2010)

Australand MD rob pradolin says 30% - 40% of unit developments wont go ahead by the devolpas maate

so all those with cash deposits have to sit out up to 5 years as the sunset clause keeps their cash locked in their greedy hands..

its looking real good now for some sort of a shake up

but as we all know, the usual suspects here will be rallying hard for this bubble to continue and maintain its all good..

imho when the property market corrects, it will impact on the latte drinkin developas and of course will send plenty of cafes broke as their client base can no longer afford to sip lattes all day and be a "developa maate" anymore..

victoria is going great with the falsified weekly auction figures grossly overestimating clearance rates with mysteriously disappearing results never being corrected until friday, long forgotten as everyone believes the false 61%  clearance rates touted by the industry desperate to keep this bubble alive

who on earth is going to buy the 50% of the homes not sold at auction these past months?

its curious that the experts in the industry are seeing a different horizon to the rose coloured glass wearing developas, and the supporters of the bubble here on this forum....  in melbourne there are only 33,451 apartment up for sale right now to be built.. thats hardly a problem for the latte sippers i think.. lets see how quickly they clear that stock out..


all good... we will wait and see if 2011 will be a 20% increase in RE value for the developas or will the whole charade fall into a giant hole and a new reality come through for the bubble supporters..

i am tipping a rude awakening beckons..


----------



## indeck (15 December 2010)

Platofx, glad someone finally has something intelligent to say without attempting to patronise someone with an opposing view.

Is there any data on the amount of foreign investment on houses in Australia from overseas, specifically china?  If our housing is in a bubble why would you want to invest in that market when housing in the US is so cheap?  Is it a demographic thing? Do Asians want to own here because it’s perceived to be a better place to live?  Are they buying to live here or just buy and sell to build wealth?  How strongly linked is China's housing to ours?  I'm not necessarily looking for an answer from anyone here they're just questions on my mind.

A slowdown in Chinese construction will likely impact our exports quite heavily so I imagine the ramifications for this could be quite large.  My opinion was that without a major GFC type event the aus housing market will never pop dramatically, maybe deflate, however China may hold the pin here.


----------



## KurwaJegoMac (15 December 2010)

Agentm said:


> Australand MD rob pradolin says 30% - 40% of unit developments wont go ahead by the devolpas maate
> 
> so all those with cash deposits have to sit out up to 5 years as the sunset clause keeps their cash locked in their greedy hands..





Wow that's so nice of them to warn us like that! I'm so glad that the developers have our best interests at heart and want to warn little ol' me that about 40% of the apartments originally planned to be developed are no longer going ahead.

EGADS! That means there will be an undersupply of apartments and property because 40% less than planned will be built!!!

Quick everyone! Call your real estate agent! Call your neighbour! Call your cat and dog and tell them to buy buy buy as we're going to hit an undersupply of apartments!!!!!!!!!!!!



Note: Not taking a stab at Agentm - just don't believe the tripe being posted by these developers as they have a vested interest.


----------



## Bigukraine (15 December 2010)

Agentm said:


> Australand MD rob pradolin says 30% - 40% of unit developments wont go ahead by the devolpas maate
> 
> so all those with cash deposits have to sit out up to 5 years as the sunset clause keeps their cash locked in their greedy hands..
> 
> ...




G,day Agent

I have to say that i agree with a lot that is written on the bear side of opinion and have enjoyed reading peoples informative posts,but i must laugh at the continual ref. to Melbourne and Sydney realestate as examples... of course the prices in area's around the cbd's have hit a critical mass and a correction in what ever form will come and hit hard.

The big question is how are the rest of the non capital cities areas are going to correct...  25-40 % ??? that seems to be the general consensus overall so that being the case a non capital city home purchased now at $280 k will be worth under $200 k ....

My point is that i believe a fall will come but to a level about 4.5 times of average income for what ever demographic you live in and it will be demographic specific.

p.s. 33,451 apartments would sell even in this market as long as they were priced right but as usual a huge community/strata fee on top of council rates and LVR of about 60-70% lend 30-40% deposit is the killer for these developments.. i know i wouldn't buy one . 

Think i'll stick to living in country areas as there is not as much pressure on infrastructure,the air is cleaner,and i believe the price for housing is derisked to a degree...
On with the show


----------



## trainspotter (15 December 2010)

Agentm said:


> Australand MD rob pradolin says 30% - 40% of unit developments wont go ahead by the devolpas maate
> 
> so all those with cash deposits have to sit out up to 5 years as the sunset clause keeps their cash locked in their greedy hands..
> 
> ...




Can I have whatever drugs you are on please. Care to name a date when the property market will "correct". If so, by how much do you believe in your esteemed opinion?

Coffee shops going broke because developers sit there sipping lattes ??? WTF ... no seriously WTF kind of mind altering substances are you on? Do you know anything about property developing?? They have no time to sit around drinking the caffeine char as they are too busy working/scrambling to get their developments to approval/construction/sale/completion levels.

As for the people to buy 50% of the properties not sold at auction ???? DERRRRRRRRRRRRRRRRRR ... why sell? Or if they do have to be sold if it is due to financial hardship (PPOR) then maybe they should be sold at a reasonable price rather than the ridiculous price the Real Estate Agent has placed on the property!!!!!! HEY ........ how about this for an idea !!!!!!! If they belong to a "property developer" then maybe they could be rented out to the people who prefer to float through life rather than put down some roots and grow an asset base. 

You wrote _"in melbourne there are only 33,451 apartment up for *sale* right now to be *built*"_ HUH ??!!??! Are they up for sale or are they to be built?? Your posts are frequently not making sense Agentm. Knock off the broad leaf entertainment plant and try some facts instead of opinions in future. You are polluting this thread with rubbish that you are passing off as reputable knowledge. Oh yeah ..... get some diction and grammar lessons or try to use the capital button when talking about oneself in the first person.


----------



## againsthegrain (15 December 2010)

trainspotter, calm down as bots would say its a beatiful day brother change a light bulb or two and watch the sun shine on all the beatiful creatures


----------



## robots (15 December 2010)

hello,

Oh gidday everybody, gee no wonder Oprah likes it so much here as she doesnt have to wear those bullet proof vests like in USA, sure is different

Amazing, oh well, look i do hope that people can accept others opinions and beliefs

Like


----------



## wayneL (15 December 2010)

trainspotter said:


> hey have no time to sit around drinking the caffeine char as they are too busy working/scrambling to get their developments to approval/construction/sale/completion levels.




F### that!!!

What point is there to life if there is no time for a bloody espresso.

La Dolce Vita does not include running your @ss off.


----------



## TabJockey (15 December 2010)

Bit over the top Train, but I was thinking the same thing.

However I reckon Melbourne property prices will drop calendar year 2011. Maybe 10%, maybe 20%, but not more than that, and maybe not at all.


----------



## Dowdy (15 December 2010)

My mate is a Real Estate Agent. I saw him about a month ago and asked him how the market was and he said FLAT.

And just a few days ago I got a flyer in the mail from one of the local Real Estate Agents (Stockdale and Leggo) and they are offering a CHRISTMAS SPECIAL!!!

Free for sale board
Free internet marketing
Free professional photography


The market must be struggling if the real estate agents are giving all these BS specials to try and entice people to sell


----------



## cutz (16 December 2010)

wayneL said:


> F### that!!!
> 
> What point is there to life if there is no time for a bloody espresso.
> 
> La Dolce Vita does not include running your @ss off.




Right On.


----------



## Agentm (16 December 2010)

Dowdy said:


> My mate is a Real Estate Agent. I saw him about a month ago and asked him how the market was and he said FLAT.
> 
> And just a few days ago I got a flyer in the mail from one of the local Real Estate Agents (Stockdale and Leggo) and they are offering a CHRISTMAS SPECIAL!!!
> 
> ...





FLAT white??? 

nice article from keen last night 

"So I expect Australia to resume deleveraging during 2011, leading to recession-like conditions in sectors that are not major beneficiaries of the China Boom. We are already seeing the first casualty – retailers are discounting well before Christmas, rather than after it, and the “unexpected” drop in retail sales last month is something I expected to see when the First Home Vendors Boost wore off. Retailers’ pain will only increase through 2011.

My advices to the optimists is to take their eyes of China for a few minutes and take a good hard look at the direction credit aggregate data is moving – it’s down, and unfortunately that’s where two thirds of the Australia’s “three-speed economy” could well move next year.

Lastly, let’s also take a slightly longer term look at the relationship between our exports and imports. We are certainly benefiting from positive net exports right now. But history’s lesson is that that boost can disappear very quickly."







the pillar banks have been telling the senate inquiry they expect at least 100bp rise in the next 12 months that they will pass on.

australia is very much maxxed out in terms of debt to gdp imho

this could be problematic for the bubble to continue..


----------



## trainspotter (16 December 2010)

LOL@WayneL ....... nothing better than a CaffÃ¨ macchiato.

Much better post thanks Agentm. Is that Steve Keen the same guy who lost the bet with Macquarie Bank Rory Robertson?? He walked to Mt Kosciousko as he predicted house prices in Australia would drop by 40% !!!!!! 

They went up 20% instead. Yep ....... he knows what he is talking about !!


----------



## Mr Z (16 December 2010)

Now TS... you know being right and timing are two different things. Ask Warren Buffet about it... often right... often to early!


----------



## satanoperca (16 December 2010)

trainspotter said:


> LOL@WayneL ....... nothing better than a CaffÃ¨ macchiato.
> 
> Much better post thanks Agentm. Is that Steve Keen the same guy who lost the bet with Macquarie Bank Rory Robertson?? He walked to Mt Kosciousko as he predicted house prices in Australia would drop by 40% !!!!!!
> 
> They went up 20% instead. Yep ....... he knows what he is talking about !!




It would be naive to discredit his research & he only lost the first part of the bet and was man enough to admit that he was wrong and walk a hell of a long way.

Cheers


----------



## damien275x (16 December 2010)

Speaking hypothetically, what would be the impact on share prices if the housing market fell sharply? Would shares go down too, or would the realization that real estate investing is no longer the way to go bring people back to the share market, hence pushing prices UP?


----------



## cutz (16 December 2010)

damien275x said:


> Speaking hypothetically, what would be the impact on share prices if the housing market fell sharply? Would shares go down too, or would the realization that real estate investing is no longer the way to go bring people back to the share market, hence pushing prices UP?




For obvious reasons, banks and the housing market are closely linked.


----------



## skcots (16 December 2010)

damien275x said:


> Speaking hypothetically, what would be the impact on share prices if the housing market fell sharply? Would shares go down too, or would the realization that real estate investing is no longer the way to go bring people back to the share market, hence pushing prices UP?




Depends on how its handled. I imagine it would be very negative. A sharp fall on the financial sector would most likely carry on to every other sector, the dollar and the economy in general.


----------



## explod (16 December 2010)

damien275x said:


> Speaking hypothetically, what would be the impact on share prices if the housing market fell sharply? Would shares go down too, or would the realization that real estate investing is no longer the way to go bring people back to the share market, hence pushing prices UP?




Anecdotally down here on the Mornington Peninsula good quality investment properies rose around 30% in the 12 months following the GFC in 2008.  Solid money is still moving into it here as we speak.

This was conservative smart money shifting out of stocks but importantly also, concern at the devaluation of paper money.  It is for the same reason that we see gold on the rise, even against the Aussie dollar.

Investing in all clases and types of *things* requires in my view a total view of economics.   

To answer your question directly shares related to property would go down.  That could include a wide raft if mortgagees start going to the wall or stop spending.   Stocks attached to necessities like food usually hold their own and funnily enough stocks associated with gambling usually go up.


----------



## Mr Z (16 December 2010)

damien275x said:


> Speaking hypothetically, what would be the impact on share prices if the housing market fell sharply? Would shares go down too, or would the realization that real estate investing is no longer the way to go bring people back to the share market, hence pushing prices UP?




Investment money would look for whatever is working, if that is stocks then they will do well. I don't think you can talk generically about stocks in this environment, certain stocks would benefit benefit from any flight from investment real estate while others, like the banks, should suffer. Real estate is only a good inflation hedge in times of mild inflation, if inflation rises rapidly then it tends to suffer basically because it is difficult for rents to keep up and in a time of rapidly rising prices the marginal income left to pay the mortgage diminishes. After all it is largely a debt dependent market, so you typically find that real estate lags in harsh inflations even though it is a tangible asset. Toward the end of the inflation cycles it seems to play catch up.


----------



## indeck (16 December 2010)

54.9% clearance rate in melb last weekend.

http://www.rs.realestate.com.au/cgi-bin/rsearch?a=ars


----------



## FxTrader (16 December 2010)

explod said:


> Anecdotally down here on the Mornington Peninsula good quality investment properies rose around 30% in the 12 months following the GFC in 2008.  Solid money is still moving into it here as we speak.
> 
> This was conservative smart money shifting out of stocks but importantly also, concern at the devaluation of paper money.




Let's have a look at that "conservative smart money" for a moment. Let's say those smart punters pulled their money out of the stocks in 2008 to invest in property and achieved a 30% return a year later.

Hopefully those smart money property punters used what investment money they had left over and jumped back into the market in Mar09 when the All Ords sat at 3091.  In Sept09 that index sat at 4653. The gain in the index alone over that 6 month period was 50%! However many individual stocks performed much better (e.g. Rio +70%) over that period. Of course the use of margin leverage would have seen profits in excess of 100% on many stocks.

Let's not even mention being long using CFDs, options or warrants over that period since the profits in those instuments would have been staggering given leverage of 50:1 to 100:1 depending on your risk profile and choice of instrument.  Not a conservative investment of course.

Assuming that "smart money" did not liquidate their investment property purchases to buy back into the stock market (extremely likely), then just how smart was it actually?


----------



## GumbyLearner (16 December 2010)

FxTrader said:


> Let's have a look at that "conservative smart money" for a moment. Let's say those smart punters pulled their money out of the stocks in 2008 to invest in property and achieved a 30% return a year later.
> 
> Hopefully those smart money property punters used what investment money they had left over and jumped back into the market in Mar09 when the All Ords sat at 3091.  In Sept09 that index sat at 4653. The gain in the index alone over that period was 50%! However many individual stocks performed much better (e.g. Rio +70%) over that period. Of course *the use of margin leverage*




That's where you lost me


----------



## FxTrader (16 December 2010)

GumbyLearner said:


> That's where you lost me



Use of a margin lending facility through your broker Gumby (otherwise known as trading on margin).  On some stocks (e.g. big four banks) you can borrow up to 75% of the price of the stock towards the purchase.  The size of this facility is limited by what you qualify for given your assets and income of course.


----------



## GumbyLearner (16 December 2010)

FxTrader said:


> Use of a margin lending facility through your broker Gumby (otherwise known as trading on margin).  On some stocks (e.g. big four banks) you can borrow up to 75% of the price of the stock towards the purchase.  The size of this facility is limited by what you qualify for given your assets and income of course.




Does the same apply to mortagees?


----------



## FxTrader (16 December 2010)

GumbyLearner said:


> Does the same apply to mortagees?




Yes it can, assuming you want to avoid the use of mortgage insurance, you need to come up with at least 20% down to secure the purchase if you qualify for the loan.  There are some significant differences of course related to liquidity and transaction costs, the most onerous of those being stamp duty in buying and agent fees in selling a property.  The impact of these charges is substantial, usually necessitating a much longer holding period to achieve a profit unless you have a rapidly rising market.

Profit however is something realized on a sale after deducting all transaction and holding costs, not a price appreciation estimate based on some assumed market value.  When you sell a leveraged property (or stock), the profit is actually the cash on cash (total cash outlaid vs received) profit after deducting all costs.

Stocks prices are available in the market every day so position valuation is easy. Not so with property which is always an estimate.


----------



## GumbyLearner (16 December 2010)

FxTrader said:


> Yes it can, assuming you want to avoid the use of mortgage insurance, you need to come up with at least 20% down to secure the purchase if you qualify for the loan.
> 
> Not so with property which is always an estimate.




What happens when someone provides the 20% CASH to buy stock and they only own a 20% stake in the real estate (mortgage) they are using as equity to borrow to buy the stock and they end up defaulting on the loan?

What happens if the real estate property is overvalued? Can the bank or margin loan lender take out insurance in that situation? Where the value of the property/collateral is overvalued at the time of the loan?

Specifically, what are the statutory requirements of the Australian lender to  "inquire" into the borrowers capacity to repay the loan?


----------



## FxTrader (16 December 2010)

GumbyLearner said:


> What happens when someone provides the 20% CASH to buy stock and they only own a 20% stake in the real estate (mortgage) they are using as equity to borrow to buy the stock and they end up defaulting on the loan?



With an equity margin loan, if you don't meet a margin call the stock is sold the same day. You must then fund any shortfall.



> What happens if the real estate property is overvalued? Can the bank or margin loan lender take out insurance in that situation? Where the value of the property/collateral is overvalued at the time of the loan?



Don't know what insurance options are available to lenders to insure against bad valuations.



> Specifically, what are the statutory requirements of the Australian lender to  "inquire" into the borrowers capacity to repay the loan?



Not sure, someone else may be able to answer that question.


----------



## basilio (16 December 2010)

There a are a number of things coming together that give me a nasty feeling about the property market and our overall economic future

1) Steve Keens article really does demonstrate how hocked to the eye balls our general population is. Other analysis would show that excessive home home loans as well as credit card debt, store card debt(another variation of CC debt) are really squeezing many, many people.

2) The interest rate increases this year have to be having an effect consumers balance sheets and in particular cash flow.   $400,000 loans with an extra 1.5% interest is eyewatering.

3) The sharp increases in gas, electricity and water costs is also pressuring people. Less  net disposable income means a bigger than expected drop in retail sales. This already seems to be happening

4)  Petrol is on the increase.  Oil has gone up $10 a barrel in the last couple of months. That equals another 10c a litre at the bowser. All adds up.

It's worth remembering( and Steve Keen also pointed this out) that much of our previous economic growth was fueled by debt. We are now at the stage where this debt expansion seems incapable of being continued and in fact must contract. 

In that context i just can't see how people can continue to pay  even the current housing prices let alone any increases.

  _______________________________________________________

Obviously some people, particularly those in and around the mining industry will be okay.  I just can't see how  the rest of the population will hold it together.

Anecdotally  I can't remember a quieter Christmas around the shops.
I just can't see how


----------



## GumbyLearner (16 December 2010)

FxTrader said:


> With an equity margin loan, if you don't meet a margin call the stock is sold the same day. You must then fund any shortfall.
> 
> 
> Don't know what insurance options are available to lenders to insure against bad valuations.
> ...




Cheers mate. I know it took time but thanks for getting back to us. 

My next question is: If the borrower can't meet the shortfall and the return on the loan doesn't occur from the borrower? Should the taxpayer meet the shortfall? ala the USA fiscal bailout of the overleveraged.

Do Australian lenders have policies in place to make sure there isn't a three-peat eg US, Europe, Australia etc. of this diabolical rip-off process?


----------



## GumbyLearner (17 December 2010)

GumbyLearner said:


> Cheers mate. I know it took time but thanks for getting back to us.
> 
> My next question is: If the borrower can't meet the shortfall and the return on the loan doesn't occur from the borrower? Should the taxpayer meet the shortfall? ala the USA fiscal bailout of the overleveraged.
> 
> Do Australian lenders have policies in place to make sure there isn't a three-peat eg US, Europe, Australia etc. of this diabolical rip-off process?




Still waiting for the responses in droves....


----------



## indeck (17 December 2010)

basilio I agree, lets not forget the aud is protecting us in some ways with petrol prices.  Me personally I am saving up a 20% deposit for a house, but unless there is some sort of correction i'm not going to bother.  Has nothing to do with not being able to afford it rather refusing to pay for something clearly (in my view) overpriced.


----------



## Agentm (17 December 2010)

the usual contrived REIV results posted for melbourne were as false as ever

again those unreported auctions were actually not sold at all.. isnt that remarkable!! who would have thought??

so the actual figure was not at all the 61% bogus clearance rate

54%  is the real figure..

takes till friday to figure it all out..lol  and as usual the saturday RE sections of the papers have gone to print already so tomorrow melbournians will all read how the clearance rate last week was 61% when the buyers are blissfully unaware it was 54%

nothing like a good story to keep that bubble alive..


interestingly the buyers are on strike.. the unsuccessful  sellers are going to have to adjust to make the market. will they continue to add to the sell price or will they need to adjust down to make the market..

week in week out those unsold auctions will have to have an impact on the prices imho.. 

this from Housing: Behold the supply-side crash



Lending to individuals for acquisition of investment homes (purple curve, second from bottom) and lending for acquisition of established homes for owner-occupation (blue, third from bottom) both recovered slightly in October. The continuing upward trend in weekly sales figures (not to be confused with clearance rates) suggests that November's lending figures will again show a rise. In contrast, RP Data-Rismark reports that prices in October, although slightly higher than in September, were still below the May peak. Since October, there has been another fall in action-clearance rates, which are correlated with prices changes. The combination of rising volumes and declining prices can be explained by a supply-side rush.

The post of Nov.11 concluded:

    But whatever the explanation, prospective buyers who observe the peaking or “flat-lining” of prices will conclude that this is not the time to buy. I would expect that realization to show up as a renewed slump in lending, for both owner-occupation and investment, in the near future. Then I would expect the usual sequence — a slump in sales followed by a slump in prices — to reassert itself with a vengeance.


----------



## TabJockey (17 December 2010)

GumbyLearner said:


> Cheers mate. I know it took time but thanks for getting back to us.
> 
> My next question is: If the borrower can't meet the shortfall and the return on the loan doesn't occur from the borrower? Should the taxpayer meet the shortfall? ala the USA fiscal bailout of the overleveraged.
> 
> Do Australian lenders have policies in place to make sure there isn't a three-peat eg. US, Europe, Australia etc. of this diabolical rip-off process?




You should read up on exactly what happened in the United States. Fantastic book by Michael Lewis (Liars Poker, The Blind Side) called "The Big Short" that I highly recommend.

The Australian Prudential Regulation Authority keeps a _very_ close watch on the major banks especially, and they are subject to a virtual library of day to day regulations. Which is a stark contrast to the entrepreneurial jungle that the United States operates in.

Like I said before, if your worried about the Australian banks, the only thing that would threaten them would be high unemployment of the middle class.


----------



## Mr Z (17 December 2010)

basilio said:


> There a are a number of things coming together that give me a nasty feeling about the property market and our overall economic future
> 
> 1) Steve Keens article really does demonstrate how hocked to the eye balls our general population is. Other analysis would show that excessive home home loans as well as credit card debt, store card debt(another variation of CC debt) are really squeezing many, many people.
> 
> ...




It has been a bit of a head scratcher for simple folk like me.... but they keep saying its OK. Hmmmmmmmmmmmmmmmmmmm!?


----------



## Mofra (17 December 2010)

Puts the IMF squarely between the Steven Keen bears of the property world and the Shane Oliver perma bulls:

http://theage.domain.com.au/real-estate-news/house-prices-inflated-imf-20101217-18zx7.html



> *House prices inflated: IMF *
> 
> Australia's house prices are overvalued by 5-10 per cent but any price correction is ''likely to be orderly'' and the result of income and rent rises rather than a collapse in prices, says the International Monetary Fund.
> 
> ...


----------



## TabJockey (17 December 2010)

I am annoyed that the IMF lumps us with Ireland, the differences are enormous. Look at dynamic successful cities like new York London, hong kong and Singapore and consider their income to property price ratios. I believe the rise in worldly prominence of Melbourne and Sydney leads you to expect higher values. But I agree with their 5 to 10 percent estimates!


----------



## explod (17 December 2010)

As with the Moody's rating agencies, the IMF is a further instrument of the good ole us of A.   The voting power of the US on the IMF board, without looking it up, is around 17% and for any decision to be passed it requires an 85% majority.

Moodies downgraded the PIGS at a time when the US debts were and still are much worse.

I would not and do not take any notice of such ratings propoganda that are there to hold the big guys ponzies together and to continually fool the sheeple.


----------



## Agentm (17 December 2010)

ONE of Australia's largest apartment tower projects, the $850 million Oracle Broadbeach complex on the Gold Coast, is in receivership. The 505-apartment complex at Broadbeach was being developed by Niecon subsidiary South Sky Investments.

South Sky Investment director Michael Nikiforides placed the company into receivership.

It is the second Niecon-related business to fail.

This month the Nirvana by the Sea residential Gold Coast project was also handed over to its financier.

It is understood that the completed Oracle project collapsed because of problems with settlements of up to 400 apartments within the towers that had been pre-sold before the global financial crisis.

After the crisis hit, many were unable to come up with the cash.

The apartments had been in the process of settling since October, sources said.


----------



## Agentm (17 December 2010)

on top of chinas 64 million empty homes there are chinas empty cities

obviously australia is riding high on the back of these amazing empty cities and empty homes, but will the real estate bubble in china continue? will australia continue to be "different"..

if things do change in china and there is a change of heart in making all these empty residential homes and empty cities, imho there will dramatic changes in china dependant economies like australia, and i think the aussie housing bubble may well start to grind to a halt..
































it just goes on and on....


----------



## aramz (17 December 2010)

Great post agentM thanks for sharing.

Also thanks for sharing too Basilio.


----------



## robots (17 December 2010)

hello,

yeah thanks fella's

thankyou
professor robots


----------



## electronicmaster (18 December 2010)

robots said:


> hello,
> 
> yeah thanks fella's
> 
> ...




So Happy your still selling.  Fantastic stuff


----------



## tothemax6 (18 December 2010)

indeck said:


> basilio I agree, lets not forget the aud is protecting us in some ways with petrol prices.  Me personally I am saving up a 20% deposit for a house, but unless there is some sort of correction i'm not going to bother.  Has nothing to do with not being able to afford it rather refusing to pay for something clearly (in my view) overpriced.



Exactly how I feel. As someone said to me the other day, "I don't want to be stuck with a 1M mortgage and a 500K house".
Incidentally, does anyone know where I can find current rent/mortgage 'spreads' (for search of a better word)? I.e. how much one pays in rent for a house versus mortgage payments for the same house. If it is high I figure it would be best to put the difference in a savings account each week rather than buy the house.


> it just goes on and on....



Yes, those pictures are nuts. Again though, I think it seems to simplistic to compare housing situations in Australia and China to those in pre-2008 US. As far as I know, the Chinese government is responsible for building this stuff (and it runs surpluses as far as I know), so its more a case of government wastage than mad appreciation-speculation like what happened in the US. 
Cheers


----------



## ZSlaveski (20 December 2010)

It beggars that anyone thinks Aussie house prices can hold up when the China bubble collapses. This thing is a ticking time bomb!


----------



## Mr Z (20 December 2010)

China... bubble? I doubt it, it will have its ups and downs but bubble no.


----------



## greebly24 (21 December 2010)

This from Sunrise News this morning:

_"Interest rates may have stayed on hold this month, but mortgage holders' stress levels are still through the roof. 
Borrowers nationwide are falling behind on their repayments, after 5 interest rate-rises, in just 12 months.
A report shows Western Sydney has the highest delinquency rate.
But Western Australia and Queensland, are the worst performing states overall.
And it's probably going to get worse, with possible rate-rises next year, and Christmas, just around the corner."_

I would humbly suggest rising mortgage stress is not postive for house prices.

As for China, they refused US demands to revalue their currency upwards (it would hurt their exporters). So the US is devalueing it's own currency by printing money, which is also devalueing the pegged Yuan. This is causing increasing inflation in both countries.

But if the cost of food increases in both countries, fat Americans will have to live on less Big Macs. Skinny Chinese peasants will have to live on less rice. They can't, and social instability and chaos in China will probably ensue.

A recent story from China talked about how the cost of cabbage had gone from 3 yuan to 4 yuan, and how this was causing pain for millions of peasants earning 150 yuan a month. Imagine 6 yuan cabbage and there will be starvation and social instability.

In order to reign in inflation, China may have to raise interest rates. This will cause less investment in construction in China (less empty cities being built), which will lead to a fall in commodity prices, which would not be positive for Australia's economy.

Another way to reign in inflation would be for China to revalue it's Yuan upwards, so that each yuan buys more rice (and cabbage). But this would make Chinese exports less cheap, and its marginal exporters would begin losing out to other Asian economies.

So the Chinese picture is not all rosy. It has some major problems to deal with in the future. Banking on a continued endless boom may be unwise. This coming year China will attempt to continue maintaining high levels of investment in construction, despite the inflationary effects on basics like food. How long they can continue this for is anyone's guess?

But just remember what happened to the "let them eat cake" French aristocracy, and you can see the problems China has. We live in interesting times.


----------



## Mr Z (21 December 2010)

Your view of China is very simple... wait till March and the new five year plan, the rumors are that it contains some surprises for those that think China is export dependent.

I love this stat... 95% of Chinas billionaires have made it on the local market... no export! They have internal momentum and a billion people... this is not a bubble, it is very different in the detail to what has gone on here and in the western world. Sure they will have up and downs but to suggest it will pop in a bubble type dynamic is missing the point of what is happening across Asia.

Anyway, I don't think Oz property needs a China bust to hit a pot hole.


----------



## explod (21 December 2010)

greebly24 said:


> So the Chinese picture is not all rosy. It has some major problems to deal with in the future. Banking on a continued endless boom may be unwise. This coming year China will attempt to continue maintaining high levels of investment in construction, despite the inflationary effects on basics like food. How long they can continue this for is anyone's guess?
> 
> But just remember what happened to the "let them eat cake" French aristocracy, and you can see the problems China has. We live in interesting times.




A good post greebly24, in considering property as an investment we need to take account of the entire economic environment.

Having you own home to live in of course is an entirely different matter.  However the ramping of property that has gone on for the last few years has led a lot of unsuspecting younger couples into a troublesome trap as we see things panning out now.

Those of us who pointed these possibilities out over the last two or three years on these threads copped a considerable caning from posters who have now strangely dissappeared


----------



## explod (21 December 2010)

Mr Z said:


> Your view of China is very simple... wait till March and the new five year plan, the rumors are that it contains some surprises for those that think China is export dependent.
> 
> I love this stat... 95% of Chinas billionaires have made it on the local market... no export! They have internal momentum and a billion people... this is not a bubble, it is very different in the detail to what has gone on here and in the western world. Sure they will have up and downs but to suggest it will pop in a bubble type dynamic is missing the point of what is happening across Asia.
> 
> Anyway, I don't think Oz property needs a China bust to hit a pot hole.




As China internalises to protect itself and ups the anti on shunning the US dollar by trading with for example Russia in roubles we are going to see rates increase by the sheer competition for cashflow.

In 1981 interest rates hit 21%, in Australia.   It was of course all blamed on Keating.  In fact it was a global cost of money.    In my view we have a good chance of revisiting those types of problems again soon.   Even 10% rates would be a killer to those who took out mortgages over the last couple of years.

Now these are just my takes, but should not be discounted. 

And yes indeed we do live in interesting times


----------



## Vicki (21 December 2010)

Hi Guys,
This's a great thread, & I view it often.

With the interlectual insights on the subject, I feel hardly qualified to add anything.

I remember just a couple of years ago [lead-up to the gfc], my interest rates went from 7.95 to 11.75 before I eventually folded!

This happened all inside a few months [at least with my mortgagee].

It wasn't a welcome event, as I was already over-leveraged [through my own gullibility, re-planet wealth etc.].

But I also remember thinking at the time "just another cycle" where interest rates go up & eventually ease a little etc....Something I had wittnessed many times before, [Bought our first home in '93 when rates were still 13%.]

Any property or investment property since, I have always assumed that I might have to service loans at, at least 10%.

And If the above couldn't be comfortably accomodated, then I would revise the whole viability equasion.

My main concern with real-estate in the past couple of years has been a simplistic one. 
All these poor little first home buyers being prodded to take the first home buyers grant, & plunge head-long into mortgages of sometimes $400K+, when the rates had just been 'smacked' down to 4-5% etc.
It appeared nobody wanted to ask "o.k. but what happens when rates creep back toward say 10%?"

Now, I'm hearing nearly every day about what will happen to people if rates increase any further [approx. 8% now I think?] with every increment of 25 basis points higher, the voices grow louder etc.

Well add some of the events unfolding around the world, like what has been refered to on this thread, economies defaulting, money pos. becoming more expensive etc.
and it's not hard to imagine something has to give... [mortgage defaults].

Also, I've been hearing storys [could be wrong] of large off-shore property speculators that appear to be in love with the aussie house market, especially in Melbourne, where they've been brag'n of 20% annual appreciation etc.
The Chineese in particular [one was said to have bought 60 res. properties]

What would happen if some of these 'speculators' see a downturn in our real estate market, & start cashing in or liquidating their holdings, as dispassionately as you would,  just unloading unwanted shares etc.

This would add a lot of 'extra' stock, in a market where average people just might be trying to do the same?...& hoping to come out with something!

Is there enough local demand to compensate?

We do live in interesting times indeed!

Vicki


----------



## explod (22 December 2010)

Has anyone worked out an estimate of the clearance rate for last weekend.   

Seems very quiet around here.


----------



## CamKawa (22 December 2010)

explod said:


> Has anyone worked out an estimate of the clearance rate for last weekend.
> 
> Seems very quiet around here.



Yes it has been a bit quite around here. I don't think the perma bulls have had much to talk about. I reckon this quarter’s prices may come in pretty soft. It'll be interesting to see if REIV can manipulate the data enough to produce a calendar year profit.


----------



## kincella (22 December 2010)

Wishing you all a Merry Christmas and a properous new year......
might be time for some of you to take a break, and to get out and smell the roses.....

this spending time in the country retreat is doing my head in.... I have no time for blogging, and arguing the point on these sites anymore....

I have some visitors, a pair of grey fantails, nesting in a neighbour's tree, but spending a lot of time in my patch....I had never noticed them before in my life.....but they have my attention now....they are from the willie wagtail family, they damn well attack you, flying very close to within inches.....to scare you away from their nest....
Am spending less time in the backyard now, but have taken up the bird watching from the safety of behind the glass doors in the living room.
They feed on flying insects, and I have noticed (first time in my life) the abundance of tiny flying insects that congregate around the various trees of the neighbours yard, and more so the native frangipani in my backyard.
They are tinier than finches, they do these amazing aerobics, put on an interesting display, and they spend a lot of time watching us.  They are inquisitive and can be quite friendly...so am not always sure if they are attacking, or just feeding....
arghh....I dont have time for bird watching......but these birds spend a load of time watching me....
living in the city, guess I lost track of nature
since the rains, and now floods, I have sighted crickets...and other insects, that I have not seen for over 20 or more years....
have a look at these tiny birds here...
http://birdsinbackyards.net/species/Rhipidura-fuliginosa
see what I mean about doing my head in......
hope you all have a wonderful time, and do something different, like take a closer look at nature, all creatures great and small.....

cheers


----------



## financialdonk (22 December 2010)

Mr Z said:


> Your view of China is very simple... wait till March and the new five year plan, the rumors are that it contains some surprises for those that think China is export dependent.
> 
> I love this stat... 95% of Chinas billionaires have made it on the local market... no export! They have internal momentum and a billion people... this is not a bubble, it is very different in the detail to what has gone on here and in the western world. Sure they will have up and downs but to suggest it will pop in a bubble type dynamic is missing the point of what is happening across Asia.




Pascoe has an ASF login


----------



## robots (22 December 2010)

hello,

apologies for not posting its just when i do post i get a threatening PM, oh well

oh gidday, nice post Kincella it sure is great what the planet offers

i hope we actually get some discussion on aussie property one day, it seems China has taken over from US, UK and Spain from the previous years, oh well still plenty with no idea

and still wont do anything to the worlds only true paradise, not to worry

great prices on quality still going, thanks fella's

thankyou

professor robots


----------



## Mr Z (22 December 2010)

I want some of what you are on.... is it legal?


----------



## BigAl (22 December 2010)

kincella said:


> Wishing you all a Merry Christmas and a properous new year......
> might be time for some of you to take a break, and to get out and smell the roses.....
> 
> this spending time in the country retreat is doing my head in.... I have no time for blogging, and arguing the point on these sites anymore....
> ...



What the hell has this got to do with the Property Forum?

Google is your friend, try posting in the Hippy Haven Forum.

Thank You


----------



## TabJockey (22 December 2010)

BigAl said:


> What the hell has this got to do with the Property Forum?
> 
> Google is your friend, try posting in the Hippy Haven Forum.
> 
> Thank You




This made me laugh very hard.


----------



## kincella (22 December 2010)

TabJockey said:


> This made me laugh very hard.




I thought my post was as relevant as anything I have read on this thread over the past 3 years.....
all that opinion about prices crashing, dodgy agents, dodgy information from certain sites......conspiracy theories......
in the meantime ...................
snappy snarlies barking....
like I said....try to smell the roses or something
cheers


----------



## TabJockey (22 December 2010)

kincella said:


> I thought my post was as relevant as anything I have read on this thread over the past 3 years.....
> all that opinion about prices crashing, dodgy agents, dodgy information from certain sites......conspiracy theories......
> in the meantime ...................
> snappy snarlies barking....
> ...




No im not having a dig at you! I acutally agree with you but: Peoples comments dont have to be right, to be funny!


----------



## robots (22 December 2010)

BigAl said:


> What the hell has this got to do with the Property Forum?
> 
> Google is your friend, try posting in the Hippy Haven Forum.
> 
> Thank You




hello,

hehehehehehehe, oh yeah lets hear about China Us Uk Spain Italy Portugal instead

listen i am going to spell this out again for everybody, the thread is about Australian Property, clear, any post and poster deviating from the title will be treated accordingly 

i know we will probably loose heaps of posters but OH WELL, its got well out of hand 

its tuff but plenty of other forums around to talk about doom and gloom in bloggosphere, 

ps. dont mention police corruption

thankyou
professor robots


----------



## Vicki (22 December 2010)

> I thought my post was as relevant as anything I have read on this thread over the past 3 years.....
> all that opinion about prices crashing, dodgy agents, dodgy information from certain sites......conspiracy theories......
> in the meantime ...................
> snappy snarlies barking....
> ...




I must have missed something?....So what is your opinion on where the aussie real estate market is headed in the near future?

Conspiracy theories?....Call it what you will, but when there's money & self-interest at heart, then yes of course it's possible for shinanigans to unfold.




> Re: The future of Australian property prices
> Quote Originally Posted by explod View Post
> Has anyone worked out an estimate of the clearance rate for last weekend.
> 
> ...




I think someone posted earlier that the 'clearance rate' was closer to 50%, not sure which week he was refering to?

Alright, I'll throw a question up.

What do people here think, of the possible effects that a 10% interest rate would have on our 'aussie' R/Estate market?..[assuming rates reach that level].

Vicki


----------



## explod (22 December 2010)

robots said:


> hello,
> 
> hehehehehehehe, oh yeah lets hear about China Us Uk Spain Italy Portugal instead
> 
> ...




Well I sent Robots a P/M a few weeks ago pointing out that questions about my past career were a bit nasty.  This is off topic, but a bit on topic as I will explain further shortly)  

In the issue at hand I have no idea what my past has to do with where property is going.  These and other comments (as just referred to by Vicki) and the sunshine at St Kilda and lolliepops have no relevance whatsoever.

What is happening in China, India, the US, and many other countries has had effects on property prices in the past and the way things look around the globe they are going to have effects again.  And interest rates are just one of them.  Trade problems and jobs is another aspect.

We cannot discuss the future of Australian Property Prices without discussing economics on a wide scale.  In commerce and trade we are no longer an island.  We are in whats called the global villiage.

I did not threaten you Robots ole Son but I did hit it back as was served to me.  And I would also be most interested to hear my friend how you intend to control this thread as stated above.

And how about not beating around the bush and give us the clearance rate as you used to on a Monday.


----------



## robots (22 December 2010)

hello,

not much, look just make sure you own "a" property for retirement

its easy man, dont listen to the vested interests it will cost you big time

kincella, have been saving so many birds from cats the last couple of weeks, just great, i spend all day watching birds now, awesome 

thankyou
professor robots


----------



## GumbyLearner (22 December 2010)

robots said:


> hello,
> 
> not much, look just make sure you own "a" property for retirement
> 
> ...




You wouldn't happen to be Professor Paul Wilson would you robots?


----------



## nunthewiser (22 December 2010)

robots said:


> just great, i spend all day watching birds now, awesome
> 
> thankyou
> professor robots




Yes the freemasons hotel front bar been excellent today for that.

thankyou


----------



## robots (22 December 2010)

hello,

no, I am Professor Robots from Melbourne University

oh gidday Gumby we all still waiting to hear from you over in the AFL Premiers thread to discuss St Kilda's best performance in the AFL grand final, sorry how many goals riewoldt get?

oh well, thanks man

thankyou
professor robots


----------



## GumbyLearner (22 December 2010)

robots said:


> hello,
> 
> no, I am Professor Robots from Melbourne University
> 
> ...




Oh you mean the thread where almost everyone said the Saints had no chance to make the Grand Final let alone win it. We ended up playing Collingwood twice from memory, the AFL team with the most home games in the 2010 season and the most games at the MCG. Which has now been revealed that they also spent the most of all clubs to get it. I'm just proud we made them win almost in October!  

http://www.heraldsun.com.au/sport/a...-seal-flag-glory/story-e6frf9jf-1225971749205 



Oh well robots. Back onto property. Thankyou for your interest in my sporting interests.

I thought with such a prestigious title that of Professor Robots. You would at least correctly say you were from the University *of* Melbourne.  

Oh well, stop casting aspersions about people there old Professor, like alluding to police corruption. You might get stripped of your title or even worse sued!!


----------



## robots (22 December 2010)

hello,

played them once in my mind and got flogged, i thought it was the best day in my life until the photos came out the other day and to cap it off the most over-rated player in the league hosted that press conference, hehehehehehehehe

"i posed for the photo because i thought it was going to be deleted" hehehehehehe

and remember man its the property thread you can discuss anything like all the other posters, hell we even get satellite pics of china in this thread, amazing

thankyou
professor robots


----------



## kincella (22 December 2010)

hello,
I was insinuating that property can provide other benefits....as in getting a closer look at nature....so Robots I am still discussing property....I dont want to get outed for being off topic....
did not see the birds today, so can only assume the bloomin neighbours cats got them in the night....they did appear to be nesting... 
for those who do not know me, I have been living in the city for over 20 years....out of touch with nature, as when one lives in the country...

to answer the other poster....I do not expect interest rates to go to 10% for about another 10 years or more, if ever....the average over the past 20 years has been around the 6.5 to 7% mark....it was a couple of newbews who stuffed it up and sent it to 10% in the middle of the GFC, when every other country had dropped them to near zero....now we are seeing the results of that huge stuff up...the aftermath will last for a while yet...
now go and have a great christmas holiday or break, if you can
cheers


----------



## explod (22 December 2010)

robots said:


> hello,
> 
> played them once in my mind and got flogged, i thought it was the best day in my life until the photos came out the other day and to cap it off the most over-rated player in the league hosted that press conference, hehehehehehehehe
> 
> ...




I remember, you do not.  There is not one semblance or hint on where Australian Property is headed in you post quoted above.  You did mention the word "*property*" but without another word to give it direction it is off topic, meaningless.

In the absence of posts to the contrary it would apear that the clearance rate has dropped substancially which may indicate that the current direction of property prices in Australia at the moment is down.


----------



## Dangerous (22 December 2010)

on the mortgage stress topic.  I don't think banks will keep putting rates up in face of delinquencies.... More likely to reduce their margin and make it back when the cycle turns, whenever that may be.  Nonetheless, makes it tough for higher prices.

I can see property going sideways for a fair while with good prices being still had in certain instances (as I observed a few wks ago), unless mkts take a turn.  With a higher percentage of Australian's owning shares and managing own super i think mkt movements affect sentiment more than people realize....

Friends the other day could have been classified as "roped in first home buyers" having bought in 2006(ish)... just sold for 100% gain last weekend.... There are quite a few of these around to hold prices high for some time.

On mkts - I am a WSJ subscriber and usually read it every day.  Have been busy lately and been skipping it but when i picked it up yesterday I could not believe the amt of bearish articles on Euro and Dubai debt.... don't see mkts going much higher in Q1 2011 - I am tempted by a XJO put warrant.


----------



## Vicki (22 December 2010)

> to answer the other poster....I do not expect interest rates to go to 10% for about another 10 years or more, if ever....the average over the past 20 years has been around the 6.5 to 7% mark....it was a couple of newbews who stuffed it up and sent it to 10% in the middle of the GFC, when every other country had dropped them to near zero....now we are seeing the results of that huge stuff up...the aftermath will last for a while yet...
> now go and have a great christmas holiday or break, if you can
> cheers




Thankyou for your reply, but just out of curiousity, what do think [hypothetically of course] would be the effect of 10% rates on our r/e market?

I'll bet you a cheap bottle of 'cardonay, that rates will indeed creep higher, as they have done in the past!!

Its just now we're experiencing an increase in the 'real' cost of living, and one of the primary strategies to rien-in inflation, is increase rates [monetary policy?]
Unless there is a more effective way?

Also, as mentioned earlier, we're now more than ever a part of the 'global village', like it or not.




> Friends the other day could have been classified as "roped in first home buyers" having bought in 2006(ish)... just sold for 100% gain last weekend.... There are quite a few of these around to hold prices high for some time.




What area [city] did your friends invest in, 100% in four yrs. is very impressive!
Was that 100% of what they put in initially, or was it 100% on the initial purchase price?

Prices though, are subject to what someone is willing to pay at the time, hence if there isn't a sufficient number of buyers at a given price, then you iether accept less [if you have to sell now] or be satisfied to hold for longer.

Vicki
p.s. I would also be a little bearish on xjo next yr.


----------



## greebly24 (22 December 2010)

Thanks for the replies. Just like to repond.



Mr Z said:


> Your view of China is very simple... wait till March and the new five year plan, the rumors are that it contains some surprises for those that think China is export dependent.




Look, China is still very very export dependent. When exports plummeted due to the GFC, China pumped money into construction of housing. It keeps people employed building empty cities. This is exactly the problem the US and Europe had. They lost their exporting ability to cheaper China, so instead they created a credit bubble which created a housing bubble. It worked great for a decade. House prices rose. People felt richer. But then it stopped working.

China is pumping money into housing because it keeps the peasants busy. It holds the day of reckoning off until the global economy recovers or their internal demand rises to compensate. But that is much harder than it sounds.

I'm no expert but some simple maths might help to explain my point. The average wage in China is something like $3,000 per year. Times that by 1.2 billion Chinese and you get a market of $3.6 trillion.

Now the average wage in USA is something like $45,000. Times that by 300 million Americans and you get a market of $13.5 trillion.

So the idea that you can replace a market of $13.5 trillion with a much smaller market of only $3.6 trillion without problems doesn't make sense. The European market is probably worth another $13.5 trillion and they're having problems too.

If the US and Europe's economies drop say 10% over the next couple of years, that is a loss of say $2.7 trillion dollars. The Chinese market would have to grow 75% over the next couple of years to make up for it. I think China's growing at something like 10% per year, which doesn't make up for the potential shortfall. Might come up 65% short.

The best quote I ever read about China and the other emerging economies was that around 4.5 billion people on the planet have a great plan to get rich, selling stuff to 1.5 billion people in the advanced Western economies. Hmm.

And they're going to have to do it with dwindling fossil fuels and scarcer resources. Hmm.



Mr Z said:


> I love this stat... 95% of Chinas billionaires have made it on the local market... no export! They have internal momentum and a billion people... this is not a bubble, it is very different in the detail to what has gone on here and in the western world. Sure they will have up and downs but to suggest it will pop in a bubble type dynamic is missing the point of what is happening across Asia.




I found this stat hilarious and I don't doubt it. But it is pointless. Look, lots of property developers in the US became billionaires by simply developing property. Wow! No export! Before their housing bubble popped, they had lots of internal momentum too.

Look, if you're Chinese and want to become a billionaire it is simple. Go borrow ten billion from the bank, build a bunch of apartments and sell them for 10% profit. Hey, presto, instant billionaire. The local governments there would be happy to facilitate you, even if it means demolishing a bunch of peasants' farms. But how has the economy improved?

And finally (sorry, I can ramble), I get really scared when anyone says that this time it is different. Particularly when they use it to explain why it isn't a bubble. 

It's not a bubble cos this time it's different. Hmm. Yeah. Right. It's not really a strategy I'd be banking on. Gambling on, maybe.


----------



## BigAl (22 December 2010)

robots said:


> hello,
> 
> hehehehehehehe, oh yeah lets hear about China Us Uk Spain Italy Portugal instead
> 
> ...



Oh the irony....

There is a direct correlation between overseas market forces (Business & Property) and Oz Property.

People banging on about how pretty the pink birds are and others talking up their Latte expiditions with gay abandon.......

Put up or Shut the .... ..

Thank You
We now return you to your normal Oz Property Discussion


----------



## GumbyLearner (23 December 2010)

http://www.youtube.com/watch?v=gQS4uUBXMNY

Love this stuff. 

http://www.youtube.com/watch?v=hy2F3vQJAqc&NR=1

http://www.youtube.com/results?search_query=inxs


----------



## Aussiejeff (23 December 2010)

greebly24 said:


> The best quote I ever read about China and the other emerging economies was that *around 4.5 billion people on the planet have a great plan to get rich, selling stuff to 1.5 billion people in the advanced Western economies*. Hmm.




He he. That just about sums up the current state of the world Economy nicely IMO  

Closer to home and totally within the thread's subject brief, check out these stats for the suburb of St Kilda..  http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp&s=vic&u=st+kilda

Click on the Supply and Demand  tab to see a graph that shows the number of property detail web pages viewed per week for a particular suburb vs total number of listings per week for that suburb.

The trend for interest in purchasing St Kilda properties is DOWN around 50% from the high of 14th of Feb 2010 (12,605 property pages accessed vs 163 listings = 77 persons interested per listed property) to the latest data for 6th Dec 2010 (7,546 property pages accessed vs 192 listings = 39 persons interested per listed property). 

I have looked at 100's of other suburbs across the states and noticed most suburbs with similar or worse trends (especially outer city suburban and country) over that period.

I suspect the missing data from the last fortnight (the data seems to be about 14 days or so in arrears to current data) will only show an even worsening trend of decreasing interest vs rising listings.

Have a browse and tell me it's all wrong.........



Have a Merry Xmas.  Just in case it turns out to be a bit of a crappy New Year...


----------



## Aussiejeff (23 December 2010)

Aussiejeff said:


> He he. That just about sums up the current state of the world Economy nicely IMO
> 
> Closer to home and totally within the thread's subject brief, check out these stats for the suburb of St Kilda..  http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp&s=vic&u=st+kilda
> 
> ...




Oh dear! It must be all the Xmas spirit....

I appear to have misconstrued "pages accessed" for "persons interested"!! LOL

In actual fact, the number of "persons interested" per property would be significantly lower than the number of web "pages accessed" due to many accessing the same page multiple times in any given week! I'm sure our Esteemed and Most Eminent Pretend.....err... Confess ... or... PROfessor Robots might shed some light on where this trend might head into the New Year??? 

Anyhoo, my most humble and sincere Yuletide apology for stuffing up... 

aj


----------



## tech/a (23 December 2010)

Been actively looking for development sites for the last few months.
Have bought an industrial site.
But domestic is proving more of a challenge.
I build apartments in the beach-side southern areas of Adelaide.

Of 5 auctions I have been to not one has been sold at auction and all didn't receive anything more than a vendor bid.

There is a group of developers who frequent the same auctions and we (as you would imagine) talk and Dont out bid each other (You know honour among thieves!).
Not one property of the 5 have been bought after auction and in every case have been retained by the vendor.

In other words they are keeping rather than selling at discount prices----and these are development properties---knock downs.

Industrial is proving far more profitable particularly with massive savings on Chinese warehousing (sheds).I can get 3 x 350 square meter tenancies on a 2200 squ mtr property returning 12%
Cant get that with apartments.(well I cant)


----------



## nukz (23 December 2010)

tech/a said:


> Of 5 auctions I have been to not one has been sold at auction and all didn't receive anything more than a vendor bid.




I remember when i got my first place it originally went to auction and was passed in on vendors bids.

Then after it was over me and 2 other party's started negotiations with the agent we where both looking at a much lower price than the vendors bid.

But the agent kept telling us we had to offer a amount equal to or higher than the vendors bid lol because he said it was passed in at that amount... 

I'll never forget arguing with this agent about this and in the end telling him if the vendors bid is such a great offer then sell to them haha

This was one of the biggest agents in Melbourne as well lol


----------



## Mr Z (23 December 2010)

greebly24 said:


> Thanks for the replies. Just like to repond.
> 
> Look, China is still very very export dependent. When exports plummeted due to the GFC, China pumped money into construction of housing. It keeps people employed building empty cities. This is exactly the problem the US and Europe had. They lost their exporting ability to cheaper China, so instead they created a credit bubble which created a housing bubble. It worked great for a decade. House prices rose. People felt richer. But then it stopped working.
> 
> ...




OK... you are right  Doom, doom, China is going to pop... again. Sorry but its Xmas and I can't be bothered to argue the points with you


----------



## tech/a (23 December 2010)

> if the vendors bid is such a great offer then sell to them haha




All the R/E agents know us and know that if its passed in at vendor bid they wont hear from us.
They of course continually ask before during and after auction what its worth.

The response is ALWAYS the same.
Cheap enough to make it a profitable development.
Normally thats 15-20% lower than vendor "expectation" which for a knock down is common---they are thinking as a home owner not a developer---with a property only suitable for development---they are not targetting their market.
Eventually they do understand that.

Im sure a few here find this thread interesting.
Its like telling Usain Bolt he cant run less than 10 sec.

*Those of us involved in the industry just love to hear from those who arent---whats going to happen next!!*


----------



## Mr Z (23 December 2010)

tech/a said:


> *Those of us involved in the industry just love to hear from those who arent---whats going to happen next!!*




Hmmmmm... you are a developer looking for a margin on a product. Price should matter little to you so long as a margin is to be had. To think that qualifies anyone in 'the industry' as an expert on the longer term price prospects for real estate is hubris. After all the US housing industry was laying on some pretty heavy long bets at the wrong time, how is it you guys have it all over them for forecasting ability?

I will not argue that well thought out developments will not be profitable BUT that says little about over all price direction over then next decade.


----------



## tech/a (23 December 2010)

> how is it you guys have it all over them for forecasting ability?




Have a few mates in the US who develop and buy and hold.
Neither are in dire straits. Purely because they take care of their maths for catastrophic events.
Those here in the Industry have done the same. If your gearing is below a revalue of your holdings of - 20% and then you'll be positively geared then banks aren't going to be interested in you.
In fact they will be beating your door down for business as the CBA were for a month with myself.

*Best advise I can give anyone is ignore the postulation and get the hell on with it!!!*

Private persons who "dabble" would be best advised to operate like a pro---in any endeavor.
Property
Trading
Business.

*Its not that hard!!*


----------



## Mr Z (23 December 2010)

tech/a said:


> Have a few mates in the US who develop and buy and hold.
> Neither are in dire straits. Purely because they take care of their maths for catastrophic events.
> Those here in the Industry have done the same. If your gearing is below a revalue of your holdings of - 20% and then you'll be positively geared then banks aren't going to be interested in you.
> In fact they will be beating your door down for business as the CBA were for a month with myself.
> ...




Sure.... but you are still coming at it like an developer not a buy and hold investor. The former can do well while the latter stays still or even goes backwards. Most here are thinking like buy and hold investors, they have concerns with property on that front.... as do I. That probably means little to a canny developers income, but it does not make them wrong.


----------



## tech/a (23 December 2010)

Do you honestly believe that developers aren't in your midst as buy and hold investors?
*Its ALL about gearing*/Positive/Passive cash flow once you have that negative capital growth can come and go-----positive capital growth can be USED!

Your thinking like a deer in the headlights retail punter!

Come over to the Dark side!


----------



## Vicki (23 December 2010)

So does anyone want to humour me, with my question, what would be the possible effects of a 10% interest rate on the oz r/e market?

Vicki


----------



## CamKawa (23 December 2010)

Vicki said:


> So does anyone want to humour me, with my question, what would be the possible effects of a 10% interest rate on the oz r/e market?
> 
> Vicki



Lots of bitching in the media.


----------



## Mr Z (23 December 2010)

tech/a said:


> Do you honestly believe that developers aren't in your midst as buy and hold investors?
> *Its ALL about gearing*/Positive/Passive cash flow once you have that negative capital growth can come and go-----positive capital growth can be USED!
> 
> Your thinking like a deer in the headlights retail punter!
> ...




Hmmmm... we are tracking of course here. Thanks for the egg, I will go suck it now. Merry Xmas.


----------



## Mr Z (23 December 2010)

Vicki said:


> So does anyone want to humour me, with my question, what would be the possible effects of a 10% interest rate on the oz r/e market?
> 
> Vicki




A new government would be the biggest effect!


----------



## wayneL (23 December 2010)

tech/a said:


> Do you honestly believe that developers aren't in your midst as buy and hold investors?




Admittedly I don't hang out with a lot of develpoers, but I have known a few big swinging d~~~ed developers over the years. The minority were buy and holders.

But my comment FWIW is that the buy and hold developers have been the ones that survive the crap times; the rest tend to crash and burn eventually.

One of my current clients here owns most of the Wellington waterfront o slight embellishment there ). Has been acquiring, redeveloping and holding since the late 80's (starting at the worst time). He is is unperturbed by the terrible NZ market atm because he's not overgeared.

The other type tend to overgear and refuse to accept imminent changes in conditions.

So agree the buy and hold type developer tends to look at worst case scenarios and gear accordingly. The other type are a more gambler mindset... put all their (highly leveraged) chips on red and pray.

Just my experience.


----------



## nukz (23 December 2010)

Vicki said:


> So does anyone want to humour me, with my question, what would be the possible effects of a 10% interest rate on the oz r/e market?
> 
> Vicki




Wayne swann would come out and say hes going to get tough on the banks ... again haha


----------



## tech/a (23 December 2010)

*Wayne*
No arguement there.
I was un aware we have shared a change room!

*Vicki*
My answer
Tremendous opportunity
More so if higher.
A dose of inflation would be welcomed by myself and many like me.


----------



## Vicki (23 December 2010)

> My answer
> Tremendous opportunity
> More so if higher.
> A dose of inflation would be welcomed by myself and many like me.




Wise answer, think I read somewhere, that there could be another 'great transfering of wealth' about to occur.
Where over-leveraged households fold under higher rates etc. & thus people who are cashed up & waiting will have a great oppertunity to make money.

My friend's husband is one such person, a builder who's just bought his second mortgagee's auction property in the beach-side suburbs on Victoria's Mornington Peninsula.
I thought It wasn't all go'n to go to plan, but he's very organised...He's subdivided one block [knocked down old home] & has bearly finished building a big-**** luxury pad, & we were there when someone drove up and offered 1.2 mil!!!
Now he's just in the middle of flog'n off the other half of the land for approx. 600k.

Not bad for 18 months work?...700k at auction initially, house & devmnt. costs 400k or 1.1mil total & looking at 1.8mil in sales for an approx. profit of 700k

But he realises that he was only that successful because he was cashed up & bought in an exclusive beach side spot, where he was confident of a certain class of buyer .
[& very organised, with no lenders involved] and so could also hold If need be.

Maybe not as profitable in ordinary suburbia, but There could be some oppertunities coming up in the near future?

Vicki


----------



## greebly24 (23 December 2010)

The Australian, Thursday, December 23 2010:

_"The collapse of Ray White Broadbeach, which was placed in receivership on Tuesday with debts of up to $5 million, follows a severe market downturn..."

"The appointment of receivers to the leading agency has rung alarm bells across the property market on the Gold Coast, where beachfront values have plunged by as much as 50 per cent since the peak of the boom in 2008."_

Anyone got any property on the Gold Coast? Just wondering if anyone knows more about this?


----------



## Dowdy (23 December 2010)

There's been some talk about China having nothing to do with this thread but what do you think the mining boom is and who do you think is buy all the minerals?!

Even politicians have admitted that if it wasn't for the mining boom Australia would be in recession. 

And when did house prices last have a major fall - during the 1990 recession


----------



## sails (23 December 2010)

greebly24 said:


> The Australian, Thursday, December 23 2010:
> 
> _"The collapse of Ray White Broadbeach, which was placed in receivership on Tuesday with debts of up to $5 million, follows a severe market downturn..."
> 
> ...




We live on the Gold Coast and haven't heard that prices have plummeted to that degree....  Will ask the real estate agent who lives in our building next time I see him.

I have a recollection that it was Ray White Broadbeach that were involved in selling a Craig Gore development at Hope Island.  We looked closely at purchasing one of these very underpriced units but found there were so many other issues that the discounted price may not come anywhere near covering future expenses.  So I am wondering if that's where the 50% came from.  Perhaps RW Broadbeach bought some of these themselves and then couldn't on-sell them.  So it may only be certain buildings that are in trouble.


----------



## RaymondJ (23 December 2010)

sails said:


> We live on the Gold Coast and haven't heard that prices have plummeted to that degree....  Will ask the real estate agent who lives in our building next time I see him.
> 
> I have a recollection that it was Ray White Broadbeach that were involved in selling a Craig Gore development at Hope Island.  We looked closely at purchasing one of these very underpriced units but found there were so many other issues that the discounted price may not come anywhere near covering future expenses.  So I am wondering if that's where the 50% came from.  Perhaps RW Broadbeach bought some of these themselves and then couldn't on-sell them.  So it may only be certain buildings that are in trouble.
> 
> [/QUOTE All that glitters is on the gold coast] Well thats what a lot of developers must have thought because I think there are a few big hi rise developments that were sold and when it came time for the buyers to cough up a lot of them defaulted. Its not just one building either, apparently there were quite a few! A lot of those hi rise buildings are sold on the gold coast at very inflated prices so they need to come down a way. Its the same in a lot of cities in Australia, My brother lives in Perth and the property prices there are falling and in some places they have fallen by about 30% although this was in some of the resort towns along the coast similar but not as big as the Gold Coast. Anyway thats about all I know bye


----------



## RaymondJ (23 December 2010)

Vicki said:


> So does anyone want to humour me, with my question, what would be the possible effects of a 10% interest rate on the oz r/e market?
> 
> Vicki[/QUOTE=Redman] Were you around in the 1980's? The interest rate went to about 18%. Many Many families lost their homes and were literally put out on the streets. I personally knew some that were put on the street. So the people use to be able to put up with about 10 to 12% but after that the **** hits the fan and the banks move in. It was a very sad decade for a lot of families. Hope this helps to answer your question. Buying realestate is good but you have to be able to pay the loans easily or buy for an investment and resell!!


----------



## robots (23 December 2010)

Dowdy said:


> There's been some talk about China having nothing to do with this thread but what do you think the mining boom is and who do you think is buy all the minerals?!
> 
> Even politicians have admitted that if it wasn't for the mining boom Australia would be in recession.
> 
> And when did house prices last have a major fall - during the 1990 recession




hello,

i wouldnt mind seeing that graph again of property during the 90's, major fall yeah right

what another great day, usual laughable posts

prices still higher than pre GFC, the greatest financial shock since 1929 and nothings happened, infact they went even higher, 

you would be irresponsible to not own a piece of real estate or poor i guess 

thankyou
professor robots


----------



## Dowdy (23 December 2010)

look at the average house price for 1990-1991 (they fell)


Who in their right mind would buy a piece of property, NOW! Oh wait, I forget who i'm talking to


----------



## explod (23 December 2010)

Interesting battle going on in this thread now.

No one will give in till they have all life beaten out of them.

The bulls in propaerty have never and so will never imagine property to fail.

The bears are mostly the mugs that instead of enjoying life they ask questions.

Roll on lollie pops and sunshine along the St Kilda beach.

Interesting times.

Pebble in still waters.


----------



## wayneL (23 December 2010)

explod said:


> The bears are mostly the mugs that instead of enjoying life they ask questions.




***wonders whether there will be a role reversal at some point.


----------



## tech/a (23 December 2010)

explod said:


> Interesting battle going on in this thread now.
> 
> No one will give in till they have all life beaten out of them.
> 
> ...




*Absolutely incorrect*.

I was around in the 80s
I held 1.7 mill of Industrial property
and a PPR in the late 80s I was young and bullet proof.

My Tenants were going broke so they just walked away.
My business was suffering like everyone else's
I could not cash flow the interest especially when the banks hit me with a default interest of an extra 6 %
Really bright these bankers---Cant pay the interest as it is so add some more.* (NAB)*

Lost all bar one property (My business property) and that would have gone as well but the contract fell through!
Lost PPR
Lost Wife
Lost 70% of business.
Lost weekends as I had to work them ---7 days for 2 yrs to survive.
Paid wages out of Job deposits.

It taught me well.
No one seems to care much about what I've learnt as the comments have been brushed over with gloom and doom.
Those who are young and bullet proof will suffer the same fate as I.
Those that learn will take advantage of those that fail just as they did me in my learning phase.

Strangely to some---I would not change those hard times for anything!
Toughened up this cup cake!

*You'll also notice 20 yrs of above 10% interest rates---the NORM not the exception so get ready!!!*


----------



## greebly24 (23 December 2010)

Not sure about the Gold Coast figures either. House prices still seem to be very strong.

But there is a hell of a lot of one bedroom apartments for sale very cheap there (under $150k). Maybe the buy and hold investors can snap them all up.

_INVESTORS OPPORTUNITY - HUGE PRICE REDUCTION _

Why would someone get rid of a great investment? Probably because our high Aussie dollar has scared of the tourists. No rental income and no capital growth. Hmm. Sounds great.

_Price slashed from $150,000 to $125,000. Urgent Sale._

Who wants to catch a falling dagger? And who the hell puts the words "Urgent Sale" in their real estate ads? Isn't that like pre-lubricating your bottom? I guess after a 16.6% loss (not to mention the rising interest payments) you're willing to bend over.

_Rare opportunity!_

But the funniest ads are for the Queensland country town of Kooralbyn. Dozens and dozens of blocks for sale $80k - $140k. How it that rare? I guess because obviously people rarely buy them.


----------



## greebly24 (23 December 2010)

Thanks tech/a for your very honest post. Sorry to hear about your misfortunes back then. One of my uncles took his own life back then because he was paying 18% plus an extra 6% on half a mil for his farm. Tragic. I only hope homes become more affordable for our kids and grandkids. I don't want to see anyone lose everything. But if you've got some other investments besides just housing, you should be okay no matter what.

As for people here not understanding, I agree. I bought shares back in Nov 2007 from a stockbroker who was about 25 years old. After the GFC, I realised that this kid had never seen a crash before, and had only known good times. His whole professional life (3 or 4 years) shares had always gone up, so he thought they always would. They didn't. If you get advice from a stockbroker, make sure they're really old, cos you'll know they've seen both ups and downs.

Your chart is very very interesting. I was wondering what the median (or is it mean) rate of interest over the whole period would be? Looks like about 9-10%. The scary thing is that is usually overshoots the average before returning. Everyone better make sure they can cope with it.


----------



## robots (23 December 2010)

explod said:


> Interesting battle going on in this thread now.
> 
> *No one will give in till they have all life beaten out of them.
> *
> ...




hello,

you going on about Biffing again Explod, 

its just probably time the forum introduced some tough rules to get the trolls out of the thread, so proper discussion can remain, I suggest:

* only people who have their name on a title can post in any property thread (if company owned director proof)

*  100 points of identification (eg. medicare card, D/L No., bicycle victoria card, debit card, no centrelink/jobstart cards accepted)

* must have 1000 posts and have been long standing member of ASF for 3yrs minimum

I reckon this a good start.

Thankyou
Professor Robots


----------



## BigAl (23 December 2010)

robots said:


> hello,
> 
> you going on about Biffing again Explod,
> 
> ...



And once again you've added zilch to a thread.

Heaven help us if the above is the criteria for posting in this thread, because I can honestly say, reading through the trash you post has made me a dumber person.


----------



## explod (23 December 2010)

tech/a said:


> *Absolutely incorrect*.
> 
> I was around in the 80s
> I held 1.7 mill of Industrial property
> ...




A geat post there Tech


----------



## explod (23 December 2010)

BigAl said:


> And once again you've added zilch to a thread.
> 
> Heaven help us if the above is the criteria for posting in this thread, because I can honestly say, reading through the trash you post has made me a dumber person.




Good point, that is exactly how they want us sheeple to be.

ASF is an education program and those who think they have the right to control do not like it.

Off topic.  But I do think property prices are headed down


----------



## beachboy (23 December 2010)

tech/a said:


> *Absolutely incorrect*.
> 
> I was around in the 80s
> I held 1.7 mill of Industrial property
> ...





Only joined tonight so hope I get this right. Yes I remember the 1980s. I had not long finished Uni was working and remember getting 18% for a year on a term deposit. Then I decided to go overseas and tried to sell my car. Sold it after 3 monthes at a very low price. Why because everyone was selling their second family car to pay the interest rates on their loans. Had a mate who had some cash. He bought two good houses cheaply.


----------



## Vicki (23 December 2010)

> its just probably time the forum introduced some tough rules to get the trolls out of the thread, so proper discussion can remain, I suggest:




I thought there was some pretty good in depth discussion all round, apart from the bird watching irrelevance.

This professor robots is an interesting character, what's his story?

Is he some largess property invester type?

Forgive my ignorance, but I'm new here.

Vicki
p.s. I remember the 80's well, mum & dad split after losing the house.
Can still hear them yelling, while I hid in my room, listening to 'girls just wanta have fun' by Cyndi Lauper.


----------



## KurwaJegoMac (24 December 2010)

tech/a said:


> No one seems to care much about what I've learnt as the comments have been brushed over with gloom and doom.




I care a lot for what you've learned - it's helped me a lot during my investing. I may be 'young and hot blooded' but I've taken to heart a lot of what you write about. 

Your contributions are very much appreciated, thank you


----------



## Dowdy (24 December 2010)

tech/a said:


> No one seems to care much about what I've learnt as the comments have been brushed over with gloom and doom.
> Those who are young and bullet proof will suffer the same fate as I.




I treat everything with gloom and doom so I DON'T suffer the same fate as you once did


----------



## Vicki (24 December 2010)

Oil up to $91 usd overnight.
Wonder if this will further pressure living costs & add to the 'mortgage' stress?

Vicki


----------



## againsthegrain (24 December 2010)

> No one seems to care much about what I've learnt as the comments have been brushed over with gloom and doom.




Its good to know not everybody is born with wealth to their name and some work hard for success, good honest post opposed to the bird watching and drinking lates


----------



## explod (24 December 2010)

Dowdy said:


> I treat everything with gloom and doom so I DON'T suffer the same fate as you once did




Good one and agree.

One is then protected

And its

so is that really doom and gloom


----------



## BigAl (24 December 2010)

Vicki said:


> This professor robots is an interesting character, what's his story?
> 
> Is he some largess property invester type?
> 
> Forgive my ignorance, but I'm new here.



A washed up former Real Estate Mogul High Flyer that lost everything in the 80's Recession.

Lost his grip on reality and couldn't come to terms with / reconcile with, that sometimes property goes down.

Has been institutionalized in a Mental Asylum since.  Posts regularly from his laptop in hospital.  Goes quiet when his electric shocks occur.

Quite sad really.


----------



## tech/a (24 December 2010)

Dowdy said:


> I treat everything with gloom and doom so I DON'T suffer the same fate as you once did




30 yrs down the track and the suffering is lets say--bearable!



> Oil up to $91 usd overnight.
> Wonder if this will further pressure living costs & add to the 'mortgage' stress?




So we are all *WATCHING* this---if you get my drift!!
Just like we (Some) watched the Property boom!
The AUD fly
GOLD peak out!
XJO fall 3000 points (short play).

Gloom is good eh!!
Marriest of Xmas's everyone!


----------



## explod (24 December 2010)

tech/a said:


> 30 yrs down the track and the suffering is lets say--bearable!
> 
> 
> 
> ...




Interesting slant there tech/a.   The label of doom and gloom is bestowed by those who wish things to be a certain way on those who put up some reasons why perhaps they could be wrong sometimes.

Timing of course can give either camp substance to point at the other as wrong.

Way off topic but a  I felt may help


----------



## tech/a (24 December 2010)

I often see the argument of *"timing"*

Those who try to "Time" everything in their financial (Or personal) future will often *NEVER* make a decision.Like those here who post infinitum just waiting and Willing a *RIGHT* time to enter property.

Right now OIL  is bolting in fact it has been stirring for a few weeks all you need do is place yourself *IN FRONT* of these trains and wait for them to move off

_*With sound risk mitigation in place*_ you only need to get *ONE* right and it can change your life--

*PERMANENTLY*.

Wrong 20 times with small losses right once----------------


----------



## Vicki (24 December 2010)

> A washed up former Real Estate Mogul High Flyer that lost everything in the 80's Recession.
> 
> Lost his grip on reality and couldn't come to terms with / reconcile with, that sometimes property goes down.
> 
> ...




Is this for real, or just a gag?




> I often see the argument of "timing"
> 
> Those who try to "Time" everything in their financial (Or personal) future will often NEVER make a decision.Like those here who post infinitum just waiting and Willing a RIGHT time to enter property.




Good point, but any 'retail' property purchaser, looking at 500k homes in average suburbia & loaning upwards of 350k, may want to pause just a little longer, as there really just might be some good buys to be had, If indeed we do see a sudden & temporary reversal of the  supply and demand equasion? i.e. more homes for sale than enthusiastic buyers...[just my opinion]



> Right now OIL is bolting in fact it has been stirring for a few weeks all you need do is place yourself IN FRONT of these trains and wait for them to move off
> 
> With sound risk mitigation in place you only need to get ONE right and it can change your life--
> 
> ...




Another very good point, only wish some 'educators' could lay it out as simply as that...but then they'd have noth'n "special" to sell?

Vicki


----------



## wayneL (24 December 2010)

Oil??

pffft!

Check out the softs.


----------



## robots (24 December 2010)

explod said:


> Good point, that is exactly how they want us sheeple to be.
> 
> ASF is an education program and those who think they have the right to control do not like it.
> 
> Off topic.  But I do think property prices are headed down




hello,

just a pity on this thread Explod we got all the know it alls at the front of the class, the text book crew

the others who take on the practical end up with the top marks, oh well life goes on

gidday BigAl, bit jealous man, dont like what i write then put me on ignore, although you will be gone in a couple of months, probably just get maybe 100-200 posts then oh gee: anyone seen BigAl 

another for the list, 

a few more uniformed went down this week hey Explod? oh well, should think before you hop into the REIV, real estate agents, auctioneers etc 

thankyou
professor robots


----------



## Vicki (24 December 2010)

> hello,
> 
> just a pity on this thread Explod we got all the know it alls at the front of the class, the text book crew
> 
> ...




i'm out of the loop here.
Who is Professor robots, what's his opinion of the the oz r/e market for the near future?

What a character of intrigue.

Vicki
p.s.Merry christmas robots.


----------



## robots (25 December 2010)

hello,

yeah thanks Vicki, merry christmas 

thankyou
professor robots


----------



## explod (25 December 2010)

robots said:


> hello,
> a few more uniformed went down this week hey Explod? oh well, should think before you hop into the REIV, real estate agents, auctioneers etc
> 
> thankyou
> professor robots




No worries *con$$essor*, am sure your complaints will be heard in due course and to think does not seem to be on topic for this thread.  Maybe we could start a thread on your allegations of police corruption and my involvement in your view, it could create a lot of interest there botty.

The direction of property is a bit of a worry though, just like the stamp duty and all the other fees we need to look at the agents taking 2 and a half % plus extras for advertising mostly with the agents name in the bigger print.

So in the new year with things not looking so good and clearance rates down we need to look at a "buy and sell your home on ebay" system with some good inhouse packages including the conveyancing too.  If the vendors can save a bit more at this end of things they will be able to recover a bit more for the banks.

Maybe REIV members could display our ebay homes sales promo stickers on thier big black BMW rear windows,  just like those "save the bay from dredging" ones.   Now that would be a benevolent gesture much appreciated by the honest hard workers like yourself bots.

Lolliepop, bubbles and Christmas cheer to you there botty.


----------



## robots (25 December 2010)

hello,

yeah no worries Explod, go back through my posts as i havent alleged anything, just asked a few questions and the reaction is typical from those who throw dirt against other professions

all professions go down for dodgy practices and find it amusing, 

i am not a agent, i work in the construction industry infact just a humble labourer just trying to get by in life

merry christmas

thankyou
professor robots


----------



## Vicki (25 December 2010)

> The direction of property is a bit of a worry though, just like the stamp duty and all the other fees we need to look at the agents taking 2 and a half % plus extras for advertising mostly with the agents name in the bigger print.
> 
> So in the new year with things not looking so good and clearance rates down we need to look at a "buy and sell your home on ebay" system with some good inhouse packages including the conveyancing too. If the vendors can save a bit more at this end of things they will be able to recover a bit more for the banks.
> 
> Maybe REIV members could display our ebay homes sales promo stickers on thier big black BMW rear windows, just like those "save the bay from dredging" ones. Now that would be a benevolent gesture much appreciated by the honest hard workers like yourself bots.




As silly & absurd as it sounds, an e-bay system could work remarkably well,
combined with some flat-rate people like in my area there's a guy who for a flat fee of $1000.00 will help with paper work & showing people through etc. If you can attract a buyer.

An added e-bay 'click' calculator function amongst others, could be a simple 'clearance rate' updated daily etc.

All those guys in suits & beamers would hate that one.....The secret would be out, that most houses sell themselves, people just need to know where they are. & perhaps negotiate....Not worth a 20k fee in my book.

Think I had too much Chardonnay last night...still feeling tippsy lol.

Hve a great day.

Vicki


----------



## robots (29 December 2010)

hello,

oh gidday Professor Robots here

well another year almost over and guess what the crash didnt turn up in 2010 like all predicted, so that makes it 1970-2004, 2005, 2006, 2007, 2008, 2009 and 2010, oh well

RE hanged in there AGAIN

probably the highlight for the year is all round good guy Steve Keen who walked the path to enlightenment, hanged around and took it on the chin unlike the thousands of faceless men and women who deface internet forums then run and hide

oh well, beautiful sunny day on the cards, great day for the pushie

thankyou
professor robots


----------



## Vicki (29 December 2010)

Yes, our r/e market has held up queit well, but then again our interest rates have gone from very low to average at current levels.

If people are struggling at 7.5 to 8%, then I wonder what might happen if there are any more rate hikes?

As far as crashes, yes I did read that the dow might have had a sharp reversal by now, but on the other hand, these forcasts were also running into 2011-12.

Looking at the state of the US economy, you don't have to stretch the imagination too much, to realise this may cause a knock-on effect, that could cause some 'shocks' to other markets, ours included.

Anyway, I guess only time will tell?

Vicki


----------



## electronicmaster (29 December 2010)

robots said:


> hello,
> 
> oh gidday Professor Robots here
> 
> ...




Keep selling, this year was only the beginning of the down trend ))

Wait to see the Banks foreclose on everyone.   It is going to be magic )

:fan
:fan


----------



## Dowdy (29 December 2010)

electronicmaster said:


> Keep selling, this year was only the beginning of the down trend ))
> 
> Wait to see the Banks foreclose on everyone.   It is going to be magic )
> 
> ...





You know price are going to fall the the optimists say it's going to be FLAT/ STEADY SLOWDOWN etc....

The optimists were saying the exact same thing in the USA about 8 months before it crashed, so look around OCT, NOV or DEC next year for prices to start falling heavily.

But hey, Australia is........different.


----------



## tech/a (29 December 2010)

Dowdy said:


> You know price are going to fall the the optimists say it's going to be FLAT/ STEADY SLOWDOWN etc....
> 
> The optimists were saying the exact same thing in the USA about 8 months before it crashed, so look around OCT, NOV or DEC next year for prices to start falling heavily.
> 
> But hey, Australia is........different.




Yep sure is.
(1) You cant walk out of your house throw the keys to the bank and leave them with the debt.
(2) We Dont and never will have the over supply that the US had/has.
(3) We Dont have a government printing billions of dollars to cover its debt.
(4) We Dont have Banks closing down due to poor lending practice.

Australia is VERY different and your damned lucky to be a citizen of hers.


----------



## trainspotter (29 December 2010)

tech/a said:


> Yep sure is.
> (1) You cant walk out of your house throw the keys to the bank and leave them with the debt.
> (2) We Dont and never will have the over supply that the US had/has.
> (3) We Dont have a government printing billions of dollars to cover its debt.
> ...




Add a few more to the list:-

1) A very low default rate of 0.5% of all housing loans. 
2) A low unemployment rate of 5.3% and improving private sector wages growth. 
3) A different tax regime. No capital gains on selling PPOR unlike USA as well as interest component not tax deductible.

Gooooooooooooooooooo Professor robots !!!!!!


----------



## electronicmaster (29 December 2010)

tech/a said:


> Yep sure is.
> (1) You cant walk out of your house throw the keys to the bank and leave them with the debt.




True, so most will have to go Bankrupt



tech/a said:


> (2) We Dont and never will have the over supply that the US had/has.




Over supply is one component. There was liar loans, Synthetic CDO's, Lack of Jobs, credit card Debt, and of course Banking system Failure (The credit freeze). 

Most Banks in Australia in the past (Until 2010) lent 80% to 100% to a lot of people.  At the lower interest rates.

Housing is not an investment to the average joe.  It is just a Home. Unless you can make money (income), after all expenses.  Otherwise, most people rely on income from their jobs to pay back the interest.

Also, Money is coming in from China.  China are in control now.
Chinas interest rates are up now too.   



tech/a said:


> (3) We Dont have a government printing billions of dollars to cover its debt.



Nope, we use the Bail out money from the Federal Reserve in the USA
And interest Rates just keep on going up?

Of course we are paying high rates on stamp duty (depending on the sate you investing in), GST, legals, Insurance, and more costs to boot.

Inflation is high here in Australia.



tech/a said:


> (4) We Dont have Banks closing down due to poor lending practice.



Oh RAMS? yess?  Westpac took over their good books, god knows what happened to the bad books.

Also.  NAB, Westpac and possibly other Banks are in a poo.  And already had bail outs from... The FEDERAL RESERVE BANK back in 2008 and 2009.  And we only just found out now?  What have they not told us?  Oh,,, those massive Bank profits might be a give away.  




tech/a said:


> Australia is VERY different and your damned lucky to be a citizen of hers.




Yess.  I love my Media that details nothing and our Crook Government who work for the Bankers. Excellent stuff 

Oil is going up to 150.00 USD per Barrel and then to ~$200.00 USD.  that should make life interesting I'd say.


----------



## tech/a (29 December 2010)

electronicmaster said:


> True, so most will have to go Bankrupt




no they will do what we all did when interest rates went to 18%.
Cut down to tinned food and take any extra work we can to get through.





> Over supply is one component. There was liar loans, Synthetic CDO's, Lack of Jobs, credit card Debt, and of course Banking system Failure (The credit freeze).
> 
> Most Banks in Australia in the past (Until 2010) lent 80% to 100% to a lot of people.  At the lower interest rates.
> 
> ...




Over supply is the main component.
Too much supply you cant sell it.
Happens here in areas of over supply.
But not even remotely near the US extent.




> Nope, we use the Bail out money from the Federal Reserve in the USA
> And interest Rates just keep on going up?
> 
> Of course we are paying high rates on stamp duty (depending on the sate you investing in), GST, legals, Insurance, and more costs to boot.
> ...




It is?




> Oh RAMS? yess?  Westpac took over their good books, god knows what happened to the bad books.
> 
> *Also.  NAB, Westpac and possibly other Banks are in a poo.  And already had bail outs from... The FEDERAL RESERVE BANK back in 2008 and 2009.  And we only just found out now?  What have they not told us?  Oh,,, those massive Bank profits might be a give away.*




What planet are you on?






> Yess.  I love my Media that details nothing and our Crook Government who work for the Bankers. Excellent stuff
> 
> Oil is going up to 150.00 USD per Barrel and then to ~$200.00 USD.  that should make life interesting I'd say.





Sure will 
Long oil and Interest rates will stay stat!


----------



## electronicmaster (29 December 2010)

tech/a said:


> no they will do what we all did when interest rates went to 18%.
> Cut down to tinned food and take any extra work we can to get through.




Medium housing was not averaging $400,000 back then, and you only needed one income per house hold.









tech/a said:


> It is?




Inflation?  hell yea, We can buy the same things cheaper over seas. 




tech/a said:


> What planet are you on?




Have you not read the reports? 


NAB and Westpac's Secret 
Bailout Revealed 
Friday 3rd December, 2010 - Melbourne, Australia 
By Kris Sayce

http://www.moneymorning.com.au/20101203/nab-and-westpacs-secret-bailout-revealed.html


----------



## CamKawa (30 December 2010)

electronicmaster said:


> Have you not read the reports?
> 
> 
> NAB and Westpac's Secret
> ...



Some interesting reading indeed. Just goes to show how bent Australian media is when it comes to property. The thing that amazes me is how just how simple and native the property spruikers on this forum are.


----------



## nukz (30 December 2010)

CamKawa said:


> The thing that amazes me is how just how simple and native the property spruikers on this forum are.




Yea, sometimes i wonder that as well.

It always rings alarm bells when somebody states something will *never* happen. 

For example stating a oversupply would never happen. Regardless of if you are a bull or bear on property you should be carefull getting information from realestate agents and REIV sort of agency's because they have a obvious vested intrest.


----------



## Junior (30 December 2010)

CamKawa said:


> Some interesting reading indeed. Just goes to show how bent Australian media is when it comes to property. The thing that amazes me is how just how simple and native the property spruikers on this forum are.




I find it astonishing that this hasn't been front page news....after we've had politicians and the media harping on and on about the 'strength of our financial system' for the past 3 years.  Whereas the reality is, at least one of our big banks would likely have FAILED if it wasn't for the US fed reserve dishing out USD to anyone who put their hand out.

I wonder why this hasn't been reported...I have no doubt there's journalists out there who would love to conduct a full investigation into the behaviour of our bankers throughout the GFC.

Not to mention the ASX, these emergency loans weren't even disclosed to shareholders, at any stage.


----------



## Trembling Hand (30 December 2010)

Junior said:


> at least one of our big banks would likely have FAILED if it wasn't for the US fed reserve dishing out USD to anyone who put their hand out.




Oh god.  This is a sh!te bit of scaremongering. So what? They tapped some short term loans at a miesly interest rate because the finacial system had gone into melt down and there was no cash for short term commitments. This anit news people. *What the hell do you think all the problems where about back in 08 then?* 

Its nothing more than a "Today Tonight" journalism.


----------



## nukz (30 December 2010)

Trembling Hand said:


> Its nothing more than a "Today Tonight" journalism.




Does this story have anything to do with the following:

War widows
Single mums
weight loss
mortgage stress
fat kids

Sorry bro this story is not today tonight material lol

Unless of course the CEO/Exec's of one of Australia's big banks is a single mum... then that would be a exclusive story for today tonight haha


----------



## Dowdy (30 December 2010)

tech/a said:


> Yep sure is.
> (1) You cant walk out of your house throw the keys to the bank and leave them with the debt.
> (2) We Dont and never will have the over supply that the US had/has.
> (3) We Dont have a government printing billions of dollars to cover its debt.
> ...




1. The same outcome will happen, whoever sells the home - weather it be the bank or home owner, if they can't afford it then they'll sell at a depressed price

2. When an optimist said *NEVER WILL* to promote his product (the stock market will never crash, The housing market will never crash) etc, he's either a liar, dumb or both. And just for kicks, i'll rephrase your statement - There never was an under supply of houses to begin with, just an oversupply of speculators

3. Nope you just have an economy based on exporting to China. Replacing one form of government with another

4. Bank didn't close down in USA in 07 either






trainspotter said:


> Add a few more to the list:-
> 
> 1) A very low default rate of 0.5% of all housing loans.
> 2) A low unemployment rate of 5.3% and improving private sector wages growth.
> ...




1. The default was pretty low in 07 too in USA
2. The unemployment rate was also 5% in 07 too in US 
So those statements mean absolutely jack


----------



## FxTrader (30 December 2010)

tech/a said:


> no they will do what we all did when interest rates went to 18%.  Cut down to tinned food and take any extra work we can to get through.



Perhaps some will get by this way.  However the household debt profile is a major concern now...

From http://www.debtdeflation.com/blogs/

Figure 7: Increase in debt per house and house price







Thus even though house prices have risen substantially, household equity in houses has fallen over the last 2 decades””from above 90 percent in the late 1980s to under 70 percent (see Figure 8; the significant rise in the last two years has been caused by the increase in house prices sparked by the First Home Owners Boost). This equity is now extremely dependent on house prices remaining high, since though debt has driven house prices up, debt will not fall if house prices fall.

Figure 8: Value of household assets minus mortgage debt






As equity has fallen, the cost of entering the market has risen. Those who have recently entered the market have had to devote a prohibitive portion of their incomes to servicing their mortgage, while those considering entering must contemplate a daunting level of debt compared to their incomes.



> Over supply is the main component. Too much supply you cant sell it. Happens here in areas of over supply. But not even remotely near the US extent.




Since I have relatives in the U.S., I have continued to watch the U.S. housing market for many years (my sister-in-law is a real estate agent in Florida). The main contributor to the housing crash there was reckless lending and outright fraud (e.g. NINJA loans, teaser rates with resets etc.), the resulting loans were then securitized and sold off as AAA rated securities.  Easy credit at low rates created an artificial shortage of supply driving up prices prior to the bust. The rest is history.  Over supply is definitely a problem now and getting worse.

As for Australia, the situation for house prices in 2011 looks fragile and 2 or 3 more rate rises by the RBA (quite likely IMO) will put considerable pressure on debt laden households to offload mortgage debt.


----------



## nukz (30 December 2010)

Dowdy said:


> 2. When an optimist said *NEVER WILL* to promote his product (the stock market will never crash, The housing market will never crash) etc, he's either a liar, dumb or both. And just for kicks, i'll rephrase your statement - There never was an under supply of houses to begin with, just an oversupply of speculators




One of the best points so far for a while!



Dowdy said:


> 3. Nope you just have an economy based on exporting to China. Replacing one form of government with another




This is very true, if a slowdown in China happened at a time when our dependence on mining was still very high then.. well you have seen it all before



Dowdy said:


> 4. Bank didn't close down in USA in 07 either




This country's very naive, every country claims there **** don't stink untill they get flushed.




Dowdy said:


> 1. The default was pretty low in 07 too in USA
> 2. The unemployment rate was also 5% in 07 too in US
> So those statements mean absolutely jack




Yes thats true.

Where is Robots today? or is he waiting for the REIV daily press release?


----------



## nukz (30 December 2010)

Hey FXtrader, nice graph of household equity. It would be great if that chart could be drilled down on and seperated into generations.

The silent generation i assume would pulling that figure of equity upward because they all basiclly own their homes.

This would be true somewhat for the baby boomers.

I fear thought Gen-x & Gen-y would own nowhere near that kind of equity suggested in the graph though.

Great post by the way


----------



## tech/a (30 December 2010)

Dowdy said:


> 1. The same outcome will happen, whoever sells the home - weather it be the bank or home owner, if they can't afford it then they'll sell at a depressed price




Your completely missing the point.
You can walk away from a $500K debt in the US and leave it to the bank.
In Aust you are still liable---so who do you think will do everything possible to save their home???




> 2. When an optimist said *NEVER WILL* to promote his product (the stock market will never crash, The housing market will never crash) etc, he's either a liar, dumb or both. And just for kicks, i'll rephrase your statement - There never was an under supply of houses to begin with, just an oversupply of speculators




Its pretty obvious you haven't lived long enough to make these sort of stupid statements. Time has proven from the Great depression to the recession we and to have to now and will in the years to come housing will continue to increase in price the stock market will make new highs.
I've been in Property since 83 have a Civil Construction Company and Invest and develop Property for a living.With 8 current holdings and under construction and an LVR of 34% you would be (And 90% of those who visit this thread) to get a solid grasp of HOW to invest SAFELY in property for capital growth and Passive income.
Instead of looking at why the sky will fall learn how to profit and survive even if the sky does fall. people like me look at this thread and just shake our heads!

Been trading for 15 yrs and you should learn the exact same things.
Again we shake our heads this is a screen shot of my resource portfolio you'll note *TODAY'S P&L of $4300* (Yes today!) on a pretty moderate portfolio of $100K
$3k yeaterday---hows your holidays going! Mine are bearable!!!




In 87 I had around $5k to my name and facing bankruptcy if I had an attitude like you and all the other defeatists out there Id still have $5k to my name.*LEARN HOW TO HANDLE RISK!!!!*



> 3. Nope you just have an economy based on exporting to China. Replacing one form of government with another




China/India/Indonesia/Africa/US we are a country of 22 million with wealth beyond comprehension---go live in Africa and try and get ahead!!!



> 4. Bank didn't close down in USA in 07 either




bail out--Trillions--Billions
Not even a drop in the world economic ocean.

We are in a very strong position V the rest of the world.
*Dont stand by and watch*---95% will of course!!









1. The default was pretty low in 07 too in USA
2. The unemployment rate was also 5% in 07 too in US 
So those statements mean absolutely jack[/QUOTE]


----------



## nukz (30 December 2010)

tech/a said:


> Been trading for 15 yrs and you should learn the exact same things.Again we shake our heads this is a screen shot of my resource portfolio you'll note *TODAY'S P&L of $4300* (Yes today!) on a pretty moderate portfolio of $100K $3k yeaterday---hows your holidays going! Mine are bearable!!!




Your on a stock forum dude, you don't need to prove anything, everybody has different strategy's. 

Don't get me wrong, its great your making some money but dont assume your the only one ;-)



tech/a said:


> In 87 I had around $5k to my name and facing bankruptcy if I had an attitude like you and all the other defeatists out there Id still have $5k to my name.*LEARN HOW TO HANDLE RISK!!!!*



*

I dont think anybody is suggesting people will just let themselves go under, i think the suggestion is the debt levels/ratios are much higher than they where in '87 so it may be inevitable no matter how hard people work. 




tech/a said:



			China/India/Indonesia/Africa/US we are a country of 22 million with wealth beyond comprehension---go live in Africa and try and get ahead!!!
		
Click to expand...



So was Iceland as well if you want to use this arguement lol



tech/a said:



			bail out--Trillions--Billions
Not even a drop in the world economic ocean.
		
Click to expand...



Quote of the year *


----------



## tech/a (30 December 2010)

nukz said:


> Your on a stock forum dude, you don't need to prove anything, everybody has different strategy's.
> 
> Don't get me wrong, its great your making some money but dont assume your the only one ;-)




Making a point.
I Dont see too many doers on this thread.
Most Dont know how to DO.
The rest are as scared as hell.
Not assuming anything but I'm as sure as hell the minority are taking advantage of what this great country has to offer.



> I dont think anybody is suggesting people will just let themselves go under, i think the suggestion is the debt levels/ratios are much higher than they where in '87 so it may be inevitable no matter how hard people work.




At 18% and 24% when default interest hit there were very few that didn't feel the strain. Has happened before and will happen again.




> So was Iceland as well if you want to use this arguement lol




Its a valid argument your trivialization doesn't make it any less valid. 





> Quote of the year




US Trillions Australian ---- Australian billions not a drop in the economic ocean.
We can throw in Iceland Greece Hungary Spain Portugal---the list goes on Australia is nothing more than an economic speck.

What is your financial strategy? Nukz/Dowdy?


----------



## nukz (30 December 2010)

tech/a said:


> What is your financial strategy? Nukz/Dowdy?




I cashed out of my propertys in late '08 and early '09. Its not nessasarily because i had turned extreemly bearish on the property market it's just after that 30% gain we had in a single year(my personal gains that year alone where significantly higher though)... i just don't see any other years like that again for sometime.

Its more the prospect of better returns in other area's. In '04 and 05 i was heavily invested in mining stocks but lost interest in those and moved to property.

Now i'm out of property i traded the Swiss franc and Cotton for a while and had some fun, moved a small chunk into Silver and some into gold. 

The rest is just sitting around at this point in time, just waiting for my next move somewhat. 

I'm not really prepared to divulge any number or anything like that but i'm doing ok


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## tech/a (30 December 2010)

nukz said:


> I cashed out of my propertys in late '08 and early '09. Its not nessasarily because i had turned extreemly bearish on the property market it's just after that 30% gain we had in a single year(my personal gains that year alone where significantly higher though)... i just don't see any other years like that again for sometime.
> 
> Its more the prospect of better returns in other area's. In '04 and 05 i was heavily invested in mining stocks but lost interest in those and moved to property.
> 
> ...




I maybe wrong but I Dont see passive income as being a biggy for you.

With such equity in property I cant see why people sell!
There is more to property than capital gain particularly if geared correctly not to mention the tax implications and if you have it in Super SMSF then its even better again.

I have housing that returns $400 a week and cost me $96K in 1995.
One Industrial property returns $7K a month and is now freehold from capital gains in other property sold in the late 08s
Doesn't take long and its pretty apparent to most that selling without purpose---Freehold or lowering LVR while maintaining one of the best hedges against inflation (housing) perhaps isn't the wisest thing to do.

But hey each to their own.


----------



## nukz (30 December 2010)

tech/a said:


> Super SMSF then its even better again.




I somehow dont think you really care about super haha  if i could i would have got everything out my super already but it's not so easy(im not that old yet) lol


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## Dowdy (30 December 2010)

tech/a said:


> Your completely missing the point.
> You can walk away from a $500K debt in the US and leave it to the bank.
> In Aust you are still liable---so who do you think will do everything possible to save their home???




Regardless of who owns it, if it needs to be sold because they couldn't afford it (consumer) or they don't want it (banks) then it's going to be sold at a lower price. 





> I've been in Property since 83 have a Civil Construction Company and Invest and develop Property for a living.With 8 current holdings and under construction and an LVR of 34% you would be (And 90% of those who visit this thread) to get a solid grasp of HOW to invest SAFELY in property for capital growth and Passive income.




That's a nice story. We all know your background and your experience but stop putting it in post to try and make your argument look stronger



> Instead of looking at why the sky will fall learn how to profit and survive even if the sky does fall. people like me look at this thread and just shake our heads!




I do, I listened to reputable people in 08 and bought myself heaps of silver. I'm shaking my head alright, in joy!




> -hows your holidays going! Mine are bearable!!!




They're very good, thank you



> In 87 I had around $5k to my name and facing bankruptcy if I had an attitude like you and all the other *defeatists* out there Id still have $5k to my name. LEARN HOW TO HANDLE RISK!!!!




Actually I'm just defeating one form of investment - housing. 





> What is your financial strategy? Nukz/Dowdy?




I got a stack of silver and I collect rare coins and banknotes for a hobby

I run my own ebay business. Been doing extremely well considering I only invested $4000 to start off with. I've got a few more shipments coming in early next year and looking to expand my product range aswell.

As with housing, I'm looking to buy a industrial factory since the garage and theatre room in my parents house had been converted into my warehouse  


We all know what the bull invest in - housing but I bet if you ask the bears you'll probably find they're more financially savvy (I'm not referring to you, tech, just a few housing bulls who spend their time sipping lattes )


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## KurwaJegoMac (30 December 2010)

I'm going to preface this post by saying I'm in my early 20s, and fairly new to investing so I acknowledge I've still got a lot to learn and experience. I am an Engineer by education and financial literacy comes from what I've learned through the last few years reading. So I apologise to all the economists out there in advance 

Anyway, that being said, here is my view as to why I think we will not experience the same 40% shock that the US housing market did.

In my opinion, it all comes down to this point:



tech/a said:


> Your completely missing the point.
> You can walk away from a $500K debt in the US and leave it to the bank.
> In Aust you are still liable---so who do you think will do everything possible to save their home???




In the lead up to the GFC, banks in the US had irresponsibly lent money to those it shouldn't have. (Sub-prime mortgages and the like). While the economy was booming everything was fine, as it always is.

Then came a slight bump in the US economy and suddenly banks see some of their customers lose income and the capacity to repay. "No biggie!" says they banks and off they go and sell some of the houses. 

Queue more job cuts and more people defaulting on their loans and it reaches a stage where there is a slight oversupply of houses due to banks selling the homes of defaulting customers. As with all supply and demand, with increasing supply prices start to level off and then drop slowly.

Well prices have now dropped 10%. No big deal right? Normal property correction of course, in line with normal cycles.

Well it is a big deal to those mums and dads who just bought a home in the last few months - 'whaddya mean my house is worth 10% less? I just bought it a few weeks ago!'

So they think to themselves, 'hmm, my house is now worth 350k, down from 380k. I took out a loan for 360k... wait a minute, my house is now worth 10k less than what I borrowed! So why am I continuing to pay this loan for when I could get rid of this house and buy a similar one with a cheaper loan!' Boom, walks out of the house and leaves the key on the table. There are no selling fees or costs to pay because the law is that the bank can't chase you for the loan amount!

So now the bank is stuck with a home worth less than the loan amount. Being a bank you want to recover as much as possible so you sell the house for as much as you can get.

So now you have more houses coming onto the market and a slightly bigger oversupply than before. Prices drop again. More people suddenly have negative equity. Queue more people walking out on their loans. Banks put the homes on the market, prices drop again. etc etc.

Suddenly you have a huge oversupply and prices plummeting like mad. it's no wonder they dropped 40%. Here in Australia, you can't walk out on your loan in the same way so we won't experience that self-feeding doom spiral that America has been in. 

That being said, prices in all likelihood could come down or stagnate, but it's nothing out of the ordinary considering normal property cycles. If you engage in appropriate risk management, within your means and tolerance it shouldn't matter what the prices do over the next couple of years. (unless you're flipping homes of course but that's a whole different ball game )

Maybe my view is overly simplistic, but sometimes simple is best. Cut out all the noise and focus on the key factors. The only thing I think that could cause some grief is a high interest rate (15%+). Will see a few people burnt but as has been said on these forums before, it has happened before and will inevitably happen again. If you invest sensibly there should be no reason why you can't ride out such high interest rates. 



tech/a said:


> Australia is VERY different and your damned lucky to be a citizen of hers.




Damn right.

EDIT: P.S. please be gentle. I'm still a newbie! 

*Puts on flame-retardant suit*


----------



## KurwaJegoMac (30 December 2010)

Just in relation to my post above - i'm not saying prices will go up, down, sideways or whatever. It's just my view on why we won't experience the same plunge that the US did even though house prices have ballooned in the last decade.


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## tech/a (30 December 2010)

Kurwa

Good to see someone *gets it.*

My final word on this thread for now.

_"People shouldn't try and guess the investment vehical they are involved in.
They should learn how to turn the odds in their favour *address risk and DO IT*.
Not look at the myriad of reason why they cant/shouldn't do it---those reasons will *ALWAYS* be there. If you keep waiting to identify opportunity (in your terms) you'll never be in the position to take advantage of it"_

Enjoy your break everyone and if your caught in the floods my sympathy and wishes that 2011 brings much better conditions to you all.


----------



## FxTrader (30 December 2010)

KurwaJegoMac said:


> That being said, prices in all likelihood could come down or stagnate, but it's nothing out of the ordinary considering normal property cycles. If you engage in appropriate risk management, within your means and tolerance it shouldn't matter what the prices do over the next couple of years. (unless you're flipping homes of course but that's a whole different ball game )
> 
> Maybe my view is overly simplistic, but sometimes simple is best. Cut out all the noise and focus on the key factors. The only thing I think that could cause some grief is a high interest rate (15%+). Will see a few people burnt but as has been said on these forums before, it has happened before and will inevitably happen again. If you invest sensibly there should be no reason why you can't ride out such high interest rates.



The subject of risk management in the context of property has been mentioned here several times without being defined.  Risk management in investing has several components including limiting loss, capital allocation, gearing ratios, gov't actions and profit maximization (when to sell). 

Investment property is usually a geared investment (4 or 5:1 gearing ratio) to maximize capital gains over time using bank lending and tax offsets while normally enduring negative cash flow for years.  The negative cash flow element is how many property investors I know evaluate their risk exposure to property by factoring in potential rate rises and rent increases etc.  They tend to ignore the possibility of a significant price correction, job loss, economic downturn etc. and the impact this can have on their personal balance sheets.

For many I know, property is the only asset class they invest in (as it's the only one they think they understand). One of the dangers here is the normalcy bias, the assumption that since a large correction in the Australian property market has never occurred then it never will occur (no disaster plan necessary). Such thinking usually discounts risk management and encourages more risk taking behaviour.  How many people do you know have a written investment strategy and risk management plan for property or any other investment? Few to none perhaps?


----------



## satanoperca (30 December 2010)

Hi,



KurwaJegoMac said:


> Boom, walks out of the house and leaves the key on the table. There are no selling fees or costs to pay because the law is that the bank can't chase you for the loan amount!




Need to verify but I believe that non recourse loans did not apply in every state in the US, I believe less than 25% of states had full non recourse loans. This fact needs to be verified as it is widely assumed that every loan in the US had jingle mail attached.



KurwaJegoMac said:


> If you engage in appropriate risk management, within your means and tolerance it shouldn't matter what the prices do over the next couple of years.




The key word being "appropriate", the question being how many people are severly overleveraged and how close to the edge are budgets before a sale needs to proceed, which leads to the next point.



KurwaJegoMac said:


> The only thing I think that could cause some grief is a high interest rate (15%+). Will see a few people burnt but as has been said on these forums before, it has happened before and will inevitably happen again. If you invest sensibly there should be no reason why you can't ride out such high interest rates.




I believe this figure would crucify many home owners and investors, anything over 10% will see a swift drop in property price demand. Again, yes people who were "sensibly" should be able to ride it out but go ask the 100K's FHB of the last two years if they would be able to cope with such an increase after purchasing at max LVR on historically low IR's. First tier of the ladder is removed.

I should also add there must be 100K's of investors that have LVRs of less than 25% as property is a great place to park some cash if you have no immediate or future need for it. They do say "safe as houses".

Cheers

Great day in Melbourne.


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## Beej (30 December 2010)

Trembling Hand said:


> Oh god.  This is a sh!te bit of scaremongering. So what? They tapped some short term loans at a miesly interest rate because the finacial system had gone into melt down and there was no cash for short term commitments. This anit news people. *What the hell do you think all the problems where about back in 08 then?*
> 
> Its nothing more than a "Today Tonight" journalism.




+1 - a short term loan from a central bank, whose role after all is in part to act as "lender of last resort" is hardly a bail out or anything to get too excited about. The fact we had the GFC and a global credit crunch should more than explain the need for such loans. I for one am pleased that they occurred as this was one of many factors that enabled our financial system in Oz to emerge relatively unscathed from the crisis.

Cheers,

Beej


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## c-unit (30 December 2010)

Kurwa, good analysis but I would argue your "story" is not unique to the US, but applies elsewhere. Non-recourse loans aren't necessary for your dialogue to play out in Australia. 

I am the first to admit that I am a bear on property (and somewhat *hopeful* as a 22 year old ) but I cannot see how prices can continue rising once you look at the fundamentals. 

We are at the top of the credit cycle, the consumer deleveraging process has begun (2 years later than the rest of our Western friends). Our domestic rates are no longer controlled by the RBA and are expected to rise thanks to increasing foreign lender risk aversion and the rationing of credit as Western deleveraging continues. Even though we are near on in recession right now (non-farm economy is in recession, productivity going downhill fast), the RBA has limited control over rates. Combine higher mortgage rates with serious cost of living pressures, utility bills skyrocketing etc, and a perfect storm appears to be brewing.

In my opinion we managed to avoid a property collapse because of a few factors. We continued borrowing, facilitated by foreign lenders being happy with the perceived safety of Australian property. I put this perception down to the strength of the mining sector and the previously low level of public debt. Unfortunately that perfection has changed in recent months, as the level of indebtedness of consumers and the undiversified nature of the Australian economy becomes better understood.

The first to fall will be the FHB's who took advantage of the generous grant. I've got mates who earn $35k a year and took out a $500k mortgage and are in strife. Second will be the speculators and negative gearers. Fun fact - 30% of Australian properties are investment properties of which 70% are negatively geared. We are therefore looking at roughly 15-20% of Australian housing stock being negatively geared and relying on capital growth for profits. Those capital gains have now dried out, and interest rates are rising. The question is, how many of those properties will be put on the market?

United States, Spain, Ireland. We are next IMO, 2 years later and coinciding with the turn of the credit cycle.

Do your own research.


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## tech/a (30 December 2010)

> I've got mates who earn $35k a year and took out a $500k mortgage




How did they pass serviceability?????? ---Dont believe you!. 



> Second will be the speculators and negative gearers. Fun fact - 30% of Australian properties are investment properties of which 70% are negatively geared. We are therefore looking at roughly 15-20% of Australian housing stock being negatively geared and relying on capital growth for profits.




How many do you imagine have massive tax bills in other areas which they off set against property they Dont want liquidated gain!.

22Yr olds speaking like seasoned veterans
Wet behind the ears and no hope of drying off!

Time to bugger off.


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## KurwaJegoMac (30 December 2010)

FxTrader said:


> How many people do you know have a written investment strategy and risk management plan for property or any other investment? Few to none perhaps?




Agree with your post. Also in relation to your question above, the answer is none! People in general don't take the time to have a defined strategy and risk management plan. Mostly the reasons I hear is because property is a 'safe' investment. 

It most certainly can be a relatively 'safe' investment provided appropriate risk management strategies are in place. But no investment is ever 100% risk free and to not account for, and plan for risks is just asking for trouble!



satanoperca said:


> Need to verify but I believe that non recourse loans did not apply in every state in the US, I believe less than 25% of states had full non recourse loans. This fact needs to be verified as it is widely assumed that every loan in the US had jingle mail attached.




Can't say I know the figures exactly, and you may very well be correct. The non recourse loans did not account for all of the downturn for sure - I just feel that it was a big factor to make the sell off gather pace quickly in the beginning. Then the herd mentality and excess supply factors kick in.


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## c-unit (30 December 2010)

tech/a said:


> 22Yr olds speaking like seasoned veterans
> Wet behind the ears and no hope of drying off!
> 
> Time to bugger off.




Bit unnecessary, old timer.


----------



## KurwaJegoMac (30 December 2010)

c-unit said:


> The first to fall will be the FHB's who took advantage of the generous grant. I've got mates who earn $35k a year and took out a $500k mortgage and are in strife. Second will be the speculators and negative gearers. Fun fact - 30% of Australian properties are investment properties of which 70% are negatively geared. We are therefore looking at roughly 15-20% of Australian housing stock being negatively geared and relying on capital growth for profits. Those capital gains have now dried out, and interest rates are rising. The question is, how many of those properties will be put on the market?




Prices will eventually stagnate and/or decline slightly at some point in time. This is inevitable and part of the normal cycle. That being said, while having a high interest rate will hurt a lot of people who haven't planned for it adequately, it won't cause a property meltdown. Why?

Well after all, what are interest rate changes really trying do? The ultimate aim of the changing interest rates is to ensure that the economy gallops along at a 'healthy' rate of inflation (2-3%). How does it control inflation though? By limiting the amount of $ you have in your pocket for discretionary spending by increasing your loan repayments on your mortgage or business loan and vice versa when it wants to ramp up inflation.

So why is that significant? In the US and many other countries that are suffering, their interests are at or near 0%. They have no room to move! We of course, still do. In the event that property starts falling in price, what do you think will happen? People will start to panic and get scared and stuff their money under the mattress. So the economy starts to slow down (deflation). So what will the RBA and banks do? Drop interest rates.

Dropping interest rates will then make houses cheaper to pay off and hence attract new investors and home owners causing prices to stabilise. You can see problems in countries like the US because they can't lower their interest rates any more - they have no way to stimulate home investment any further (save for tax cuts which they cant afford to do because of their debt).




c-unit said:


> We are therefore looking at roughly 15-20% of Australian housing stock being negatively geared and relying on capital growth for profits. Those capital gains have now dried out, and interest rates are rising. The question is, how many of those properties will be put on the market?




Negative gearing is not necessarily about relying on capital growth for profits. If you're financially smart and plan accordingly, you can be negatively geared but realise a positive cash flow. In the event that interest rates do go up, it will eat into your positive cash flow. Only when interest rates are at high levels will you then be in negative cash flow territory - but if planned well, then only at levels which are well within your affordability. 

That way you can ride out any economic cycle and enjoy the good times and not be 'sold out' during the bad.


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## tech/a (30 December 2010)

c-unit said:


> Bit unnecessary, old timer.




Meaning Time for me to bugger off.


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## bellenuit (30 December 2010)

satanoperca said:


> Need to verify but I believe that non recourse loans did not apply in every state in the US, I believe less than 25% of states had full non recourse loans. This fact needs to be verified as it is widely assumed that every loan in the US had jingle mail attached.




Listen to the talk as well as view the list from this link. The talk provides greater detail on the consequences of each loan type. 

http://www.mortgagereliefformula.com/recourse/

These are all the mortgage walkaway trustee sale states, meaning they are non-judicial foreclosure states.

In those states, generally, when they foreclose on you, they cannot pursue you for their financial losses.

Many, such as California, do in theory allow a lender to choose judicial foreclosure but in those cases the lenders only do so if a borrower has significant other assets. This is the "one action" rule that lets the lender either pursue non-judicial foreclosure, at lower cost and less time, or judicial foreclosure that costs more money and takes more time but lets them go after you for their financial losses.

Alaska 
Arizona 
Arkansas 
California 
Colorado 
District of Columbia (Washington DC) 
Georgia 
Hawaii 
Idaho 
Mississippi 
Missouri 
Montana (as long as non-judicial foreclosure is used)
Nevada - note that the lender CAN get a deficiency judgment (See below)
New Hampshire 
Oregon 
Tennessee 
Texas (but even in a non-judicial foreclosure, the lender can pursue a deficiency judgment)
Virginia 
Washington 
West Virginia

These are states that also allow non-judicial foreclosure, and/or where non-judicial foreclosure is more common and deficiency judgments can be obtained more easily: 
Michigan 
Minnesota 
North Carolina
Rhode Island 
South Dakota 
Utah
Wyoming


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## TabJockey (30 December 2010)

KurwaJegoMac said:


> Well after all, what are interest rate changes really trying do? The ultimate aim of the changing interest rates is to ensure that the economy gallops along at a 'healthy' rate of inflation (2-3%). How does it control inflation though? By limiting the amount of $ you have in your pocket for discretionary spending by increasing your loan repayments on your mortgage or business loan and vice versa when it wants to ramp up inflation.
> 
> So why is that significant? In the US and many other countries that are suffering, their interests are at or near 0%. They have no room to move! We of course, still do. In the event that property starts falling in price, what do you think will happen? People will start to panic and get scared and stuff their money under the mattress. So the economy starts to slow down (deflation). So what will the RBA and banks do? Drop interest rates.




I think you are looking at rba policy with RE goggles on. Do not make the assumption that just because the real estate market drops, that will trigger a rate decrease. Its quite possible to have high core inflation pressure and falling real estate prices.

Reading the "risk management" post: There is no WAY 95% of property owners have any risk management in place. Why would you if property has been going up for 20 years?

If you are an older person with an established RE portfolio then your pretty confident you can ride out any dips, because you bought in at 1/10 of the current price and NOTHING will send RE prices that low short of a nuculear war.

But younger people on thier first and second home, you have one single asset with 80 or 90% leverage that you can just afford if you pay 2/3 of your wage into it. Any situation that forces you to sell out of the market, weather it is interest rates your did not plan for or a large drop in value is going to wipe you out. You are going to take serious capital losses. There is not much you can do really.


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## Vicki (30 December 2010)

TabJockey said:


> I think you are looking at rba policy with RE goggles on. Do not make the assumption that just because the real estate market drops, that will trigger a rate decrease. Its quite possible to have high core inflation pressure and falling real estate prices.
> 
> Reading the "risk management" post: There is no WAY 95% of property owners have any risk management in place. Why would you if property has been going up for 20 years?
> 
> ...




I couldn't have summed it up any better.

I think some politicians need a smacked bottom, for the way in which they extended or encouraged the FHB'ers grant coupled with temporarily low interest rates.

Might have looked good for the economy [or made someone look good] with the resiliance of the r/e market, but surely they must have realised if a property price increases much faster than a persons average wage, then the music will to stop eventually?

It's now possibly, going to bring about an interesting turn of events.

If there is a 'shock' of some sort, whether it be rates or erosion of current values, [LVR] that causes people to sell...Well, there's going to be some great oppertunaties to be had at their expense...For those that are ready.

Lots of houses for sale, chasing fewer 'spooked' buyers in the short term, equals lower prices.

As far as I know, people looking for rentals, stand in a queue 10 deep! 
[this queue might be added to, by people who had to sell?]

So there's a strong demand for them.[rentals]
Investors who are cashed up, will be able to buy properties at a discount to current levels, and add to their portfolio's...While rents will stay high.

Another transfering of wealth, to people who are prepared.

This may help stabalise the market to a degree...Unless they're spooked for some good reason, in which case, we may see stagnating prices for some time [in average suburbia]..

Vicki


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## tech/a (30 December 2010)

So your a young couple and you cannot afford 10%-14% interest You have a $ 450K loan over 30 yrs and you have an average wage.---what do you do?

Other than going bankrupt/not putting yourself in a position you cant maintain in the first place----what do you do?

What is your practical advice.


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## Vicki (30 December 2010)

Short of living off baked beans, or renting out your house while they move back in with mum & dad?

Negotiate some sort of interest deferance?

Try & sell whilst prices are still high enough to pay your expenses, and maybe a bit left over I guess...If they can't service the loan, then their options are limited.

Vicki


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## Junior (31 December 2010)

tech/a said:


> So your a young couple and you cannot afford 10%-14% interest You have a $ 450K loan over 30 yrs and you have an average wage.---what do you do?
> 
> Other than going bankrupt/not putting yourself in a position you cant maintain in the first place----what do you do?
> 
> What is your practical advice.




One or more of the following:

1. Sell
2. Borrow from mum and dad
3. Refinance with an interest only line of credit
4. Work more, spend less, don't have kids
5. Rent out the property, and live somewhere cheap


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## c-unit (31 December 2010)

tech/a said:


> Meaning Time for me to bugger off.




My apologies, thought it was aimed at me which I was suprised at because I normally enjoy reading and learning from your posts.


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## indeck (1 January 2011)

Vicki said:


> I couldn't have summed it up any better.
> 
> I think some politicians need a smacked bottom, for the way in which they extended or encouraged the FHB'ers grant coupled with temporarily low interest rates.




well no, first home buyers need help getting into the market.  They're probably going about it the wrong way with the grant but its better than nothing.  What they do need is to be belted about is perpetuating the price problem by allowing negative gearing.  We're one of a few countries that still have it and it should be scapped.  But politicians are spineless and it will never go.


----------



## Vicki (1 January 2011)

indeck said:


> well no, first home buyers need help getting into the market.  They're probably going about it the wrong way with the grant but its better than nothing.  What they do need is to be belted about is perpetuating the price problem by allowing negative gearing.  We're one of a few countries that still have it and it should be scapped.  But politicians are spineless and it will never go.




You raise a good discussion point, but the US have had offsets even for onwner occupied dwellings?

Maybe this could be offered to FHB's as well?

Personally, in my humble opinion, if FHB's are helped to artificially hold the value of entry level [first homes] By buying them at current levels, this also by proxy increases the price of 2nd & 3rd home buyers prices, [i.e. sell first home for more, spend even more on the 2nd etc.] & thus onwards & upwards it goes?

By letting the bottom wrung faulter, [can't afford 500k as fhb's], It could help keep property values  at a more sustainable rate?

What thoughts do others have?

Vicki


----------



## SM Junkie (1 January 2011)

indeck said:


> well no, first home buyers need help getting into the market.  They're probably going about it the wrong way with the grant but its better than nothing.  What they do need is to be belted about is perpetuating the price problem by allowing negative gearing.  We're one of a few countries that still have it and it should be scapped.  But politicians are spineless and it will never go.




Seriously, get rid of negative gearing?? What might be the consequence of this??

Investors pull out of the market once it is no longer a beneficial investment vehicle to offset the tax. Then where would renters find accommodation, oh yes it becomes the responsibility of Government.   

Or rents will go through the roof because now to make money in property I have to seek a rent that covers my costs.  I could do this because now there is probably less rental properties available.  So this would ensure people have even less money to save, which would mean they are less likely to ever afford their own home.  So probably my investment property is in good demand, hell I'm really going to make money now and put the rent right up.

This is a little tongue in cheek, but I live in a location where a crap house will cost the renter a minimum of $1,500 per week, so don't think it couldn't happen.  

I don't agree that we need to help FHB by giving them handouts.  We should help them by giving them the skills to manage money responsibility. Then maybe the example of the young person who was stupid enough to think they could even take on a $500k loan would not happen.


----------



## satanoperca (1 January 2011)

Happy new year to all bulls, bears and fence sitters.

http://www.theaustralian.com.au/news/nation/house-prices-tipped-to-slip/story-e6frg6nf-1225979670600



> THE Reserve Bank's November rate hike sparked a national fall in house prices with further declines likely over the year ahead.
> Prices had been flat for the five months since the previous rate hike in May but slipped 0.2 per cent in November.






> New lending figures released by the central bank yesterday show that growth in home lending to owner-occupiers has fallen to 7.3 per cent, its lowest level in the 20 years figures have been kept and little more than half the average growth of 13 per cent.




What is going on, a few interest rate rises and people stop borrowing, thats hardly seems right, we surely cannot have reached peak debt yet, my crystal ball told me it was to come in the year 2020.



> Rismark managing director Christopher Joye said the likelihood of further rate rises in 2011 meant it was unlikely that home owners would see any capital appreciation, with small nominal price falls a chance. *Financial markets expect three more 0.25 percentage point rate hikes this year.*




Geez, a flat year or slight falls after the last two years of fantastic growth, really nothing to worry about unless you are overleveraged or bought at the top.

Happy new year again and what will property prices in Oz do this year?

Cheers


----------



## electronicmaster (1 January 2011)

Vicki said:


> Personally, in my humble opinion, if FHB's are helped to artificially hold the value of entry level [first homes] By buying them at current levels, this also by proxy increases the price of 2nd & 3rd home buyers prices, [i.e. sell first home for more, spend even more on the 2nd etc.] & thus onwards & upwards it goes?
> 
> By letting the bottom wrung faulter, [can't afford 500k as fhb's], It could help keep property values  at a more sustainable rate?
> 
> ...




Your on the Money Vicki

More incentives from the government always becomes factored into the "cost" of owning a Home or investment property.  This also includes house prices.  This in turn makes the "value" of money worthless.   Only CEO's and maybe some Investors have adjusted incomes that can keep up with such inflation.  Not to mention rising interest rates.

Not many people seem to be aware of what inflation is, and how it is introduced into the economy.  This year the inflation increase is going beyond exponential.

Only Silver and Gold and the Gold/Silver Mines (hopefully) will be the only investments that will keep up or go beyond inflation.

Property will crash, anyone who thinks otherwise is going to be shocked to death by the results.


----------



## FxTrader (1 January 2011)

SM Junkie said:


> Seriously, get rid of negative gearing?? What might be the consequence of this??
> 
> Investors pull out of the market once it is no longer a beneficial investment vehicle to offset the tax. Then where would renters find accommodation, oh yes it becomes the responsibility of Government.



One likely consequence would be a glut of investment property hitting the market due to government subsidy being removed, making negatively geared property prohibitively expensive.  Since such a glut of property would depress prices, more renters could afford to be owners.  Less demand would then make it more difficult for landlords to hike rents.

This is usually the case with a government subsidy; it distorts markets and creates unintended consequences.  Negative gearing cost the gov't (and taxpayers) $3.9 billion in 2004-05. It also has the effect of inflating house prices as investors compete with owner-occupiers for properties since the investor can afford to pay more thanks to the subsidy. The FHB grants are yet another example of the market distorting and price inflating effects of gov't subsidy.

Changing gov't policy is always a risk with investing. Ignoring such risks can be costly.  For now the subsidy to property investors looks safe but generational change and a shrinking tax base may see proposals like limiting or removing tax concessions for negative gearing getting more attention.



> Or rents will go through the roof because now to make money in property I have to seek a rent that covers my costs. I could do this because now there is probably less rental properties available.



From a wiki...

_The popular view that the temporary removal of negative gearing caused rents to rise has been challenged by two separate studies. The first study, which examined Real Estate Institute data, found that rents rose in Sydney and Perth, but did not find any discernable increase in rents in other State capital cities[1]. The second study, which examined Australian Bureau of Statistics rental data, found that rents rose in Sydney and Perth, remained flat in Melbourne and Adelaide, but fell in Brisbane[2]. Both studies suggest that the property industry's claims about the impact of negative gearing on rents are false. Since if it was true that the abolition of negative gearing caused rents to rise, rents should have risen Australia-wide since negative gearing affects all rental markets equally.

Changes to the tax system (1987 reintroduction of negative gearing) did lead to an increasing number of investors simply chasing tax deductions via property investment. Armed with the belief that property always goes up, investors were attracted by the reduction in taxes paid (negative gearing). This trend was reinforced by the introduction of the 50% discount on any capital gain for property held for more than one year. However, the lack of any sensible relationship to long term sustainable rental yields has been ignored. This myopic strategy has “led to a surge in property investment in Australia” yet “. . total net rental income from investment properties has decreased from +$219m in 1999/00 to -$8,628m in 2007/08”, meaning that ordinary Australian taxpayers are increasingly subsidising property speculation._



> I don't agree that we need to help FHB by giving them handouts.  We should help them by giving them the skills to manage money responsibility.




Agreed, but other than making investment education mandatory in schools I am uncertain what else could be done about the financial literacy problem.


----------



## SM Junkie (1 January 2011)

FxTrader said:


> One likely consequence would be a glut of investment property hitting the market due to government subsidy being removed, making negatively geared property prohibitively expensive.  Since such a glut of property would depress prices, more renters could afford to be owners.  Less demand would then make it more difficult for landlords to hike rents.




Ok so great for a period of time there would be a glut of property available.  Then what?? What happens without the private investors?? There will always be those that cannot afford to own a home, or do not want to. Where to they go?  

Investors make money over a long period of time as they grow their equity. It is difficult to find a property that is positively geared from purchase.  If not for negative gearing, there would be a lost less investors and without them, I see a lot of social problems for the young, the old, the working class who have not been able to become the "home owners" that we all should be.


----------



## FxTrader (1 January 2011)

SM Junkie said:


> Ok so great for a period of time there would be a glut of property available.  Then what?? What happens without the private investors?? There will always be those that cannot afford to own a home, or do not want to. Where to they go?



Please review my edited post as I anticipated such questions.  



> Investors make money over a long period of time as they grow their equity. It is difficult to find a property that is positively geared from purchase



Property experts like Margaret Lomas encourage investors to seek positive cash flow (not positive gearing) when making property purchases. I agree that at currently inflated prices, it's difficult to find positive cash flow properties but not impossible, it takes time and research.  Without the subsidy though prices would need to decrease to bring investors back into the market.



> If not for negative gearing, there would be a lost less investors and without them, I see a lot of social problems for the young, the old, the working class who have not been able to become the "home owners" that we all should be.



You're making assumptions and predictions here that are unlikely outcomes IMO.  Home ownership and equity are declining in Australia due in large part to gov't (local and federal) subsidy and policy distorting the property market and inflating prices. Subsidizing property speculation was probably not the govt's intention when they reintroduced negative gearing.


----------



## SM Junkie (1 January 2011)

Interesting argument and discussion. So why was negative gearing reintroduced when the research showed its removal didn't impact on rent.

Here we go...conflicting results:

_"The Hawke Government abolished negative gearing for property in 1985 only to have it reinstated in 1987. During that period rents increased by 57.5% in Sydney, by 38.2% in Perth and by 32.0% in Brisbane. At the same time building approvals fell by 13.8%,"_
Kevin Eddy
http://www.brokernews.com.au/news/newsletter/48704

Wow it was only removed for two years.. interesting. 

and from Property Planet
http://www.propertyplanet.com.au/cms-video-archive/negative-gearing-basics.phps

_In 1985 the Hawke Government attempted to try and abolish Negative Gearing. It meant that people taking positive steps to fund their retirement were unable to recoup any losses and were left out in the dark. 

As a result, the rental market virtually closed down! Rents soared, and the cost of renting was unachievable. Investors started dumping their properties and we were *faced with a social disaster*_.

Perhaps I'm not making assumptions.


----------



## indeck (1 January 2011)

The govt needs to do one of 2 things, either remove negative gearing and replace it with another policy for investors or maybe reduce the benefit people are getting from it.


----------



## cutz (1 January 2011)

SM Junkie,

Do the claims of skyrocketed rent back in 85 only come from the property industry ? 

Do you have ABS data that can support your claim ?

I was too young to remember what impact changes to negative gearing had back then but articles I have come across mention that rent was relatively flat after 85 and changes were abolished in 87 due to property industry lobbying.


----------



## SM Junkie (1 January 2011)

Cutz, I haven't looked that far into it.  Just picked up on FxTrader's post that it was reintroduced, which I thought was interesting, then just went looking for some more info. Not my claims, just quoted some info that I came across.

I've noticed there is a thread already on Abolishing Negative Gearning.  Had a read of that, Couldn't get much from that discussion.


----------



## FxTrader (1 January 2011)

SM Junkie said:


> Interesting argument and discussion. So why was negative gearing reintroduced when the research showed its removal didn't impact on rent.
> 
> _"The Hawke Government abolished negative gearing for property in 1985 only to have it reinstated in 1987. During that period rents increased by 57.5% in Sydney, by 38.2% in Perth and by 32.0% in Brisbane. At the same time building approvals fell by 13.8%,"_
> 
> ...




No doubt the abrupt termination of government subsidy (like taking heroin away from a junkie) would cause a great deal of short term pain and disruption.  That's why it's so politically difficult to implement now, much more so than in 1985. IMO, the government should introduce limits on the negative gearing subsidy (like they do with other subsidy programs) instead of abolishing it outright.  Instead of an open ended system where there is no distinction between an investor with 1 investment property or 100, why not say place a limit on the number of investment properties that can qualify for the subsidy.

As an investor, I know how to exploit govt tax subsidy to maximum advantage and have done so on many occasions. However, in doing so I must acknowledge that other Australian taxpayers are footing the bill for my speculation.  I'm also certain that encouraging such a large proportion of private savings into property speculation is not putting such savings to their most productive use in the economy and potentially over exposes Australian's savings to one largely unproductive asset class, property. As aptly demonstrated in other countries today, reversion to the mean after a property bubble can have terrible financial consequences for a society.


----------



## robots (1 January 2011)

cutz said:


> SM Junkie,
> 
> Do the claims of skyrocketed rent back in 85 only come from the property industry ?
> 
> ...




hello,

oh yeah, here we go the usual spam sneaked in again

listen go and buy a house and live in the US, UK, Spain or Ireland if its soooo good as you buy a joint for 40k, get a flight over easy

if you want to live here in paradise you can pay the dollars to the ones who hold the title, dont like that then rent a place

the first thing that needs abolishing is stamp duty, cut stamp duty and cut all the grants and bonuses then it will be a level playing field, at this point the grant just offsets the stamp duty a little

stop underestimating the importance of the property market in our economy, most just dont like property so they believe its unproductive ( but really its because they dont earn the $ to buy a home even with how affordable they are)

thankyou
professor robots


----------



## robots (1 January 2011)

hello,

HEY HEY HEY HEY:

http://www.heraldsun.com.au/news/vi...he-way-on-houses/story-e6frf7kx-1225979744423

oh well looks as though top still going, oh well

surely its time these office flogs who keep posting were given a holiday and my requirements to post in this thread are introduced ASAP

its just tough having to deal with all the spam that gets posted on this thread throughout the day

oh well Happy New Year

thankyou
Professor Robots No. 1

ps. hang on, i know we going to get a well written post by Explod now which will end with in my view property prices are on the way down


----------



## FxTrader (1 January 2011)

robots said:


> stop underestimating the importance of the property market in our economy, most just dont like property so they believe its unproductive ( but really its because they dont earn the $ to buy a home even with how affordable they are)



Just a few sweeping generalizations backed up with no evidence there robots (that fits in with my definition of spam). Since I am a property investor I like property just fine thanks.  Yes, the property market is important to the economy, far more important than it should be.  Building *new* houses does provide economic activity but most of the housing finance today is for existing dwellings.  Property speculation by investors buying existing property is largely an unproductive activity of very little benefit to the economy, that's the point.







Since we are tossing in articles here, have a read of this one bots...

http://www.theaustralian.com.au/news/nation/house-prices-tipped-to-slip/story-e6frg6nf-1225979670600


----------



## electronicmaster (1 January 2011)

robots said:


> hello,
> 
> HEY HEY HEY HEY:
> 
> ...





Fantastic Robots 

Keep selling while you can  :bananasmi


Those ponzi journalists just keep on pumping


I have another source that states this:-




> _*Australian home prices in major cities dipped in November, from October, as
> higher mortgage rates took some further heat out of the housing market.
> Figures from property consultant RP Data-Rismark showed home prices eased
> a seasonally adjusted 0.2 percent in November, from October when they rose 0.3
> ...





Oh yes *The International Forecaster*


----------



## Vicki (1 January 2011)

Hi Robots,
Had a quick look at that site & it does indeed appear property rose .5% or some such.
Also, I managed to find these comments, [below] on the same page.

Rismark International joint managing director Ben Skilbeck forecast weakness in home prices in the months ahead due to the impact of a rise in mortgage interest rates after the Reserve Bank of Australia raised the cash rate on Melbourne Cup Day.



There is also a build-up of properties for sale, with 23 per cent more homes available for sale now than there were were 12 months ago.

``The escalation in stock levels is due to the combination of a higher than normal number of homes being added to the market at a time when market activity is slowing,'' Mr Lawless said.

``The result has been a fairly rapid increase in the number of homes for sale.

``That's great news for buyers who can take their pick and negotiate hard, but for sellers this is far from an ideal time to be listing your home.'' 


But who knows what to believe?

Affordable?...What would be considered the average household income p/w?
Also, what would be considered the average p&I mortgage payment on say 400k p/w?

Any people reading that know, could possibly give some figures.

Vicki


----------



## FxTrader (1 January 2011)

Vicki said:


> Affordable?...What would be considered the average household income p/w? Also, what would be considered the average p&I mortgage payment on say 400k p/w?



Vicki, have you read of the Demographia survey on housing affordability published last year?

http://www.demographia.com/dhi.pdf

Have a look at tables ES-3 and ES-4.  Australia has 12 of the top 20 most unafforadable housing markets in the survey and 3 out of the top 4.  As a nation, Australia ranks as the most unaffordable housing market in the survey by a significant margin and that was a year ago! How long can this continue I wonder.


----------



## againsthegrain (2 January 2011)

When this thread opened bears were highly outnumbered by bulls, seems like the situation has totally reversed now.

If I was to use the posters and their views on this thread as a random sample of the population and their views on Australian property one could come to the conclusion that Au property market is no longer a bull market.

Affordability, rates, clearance rates, living in paradise all make for good speculative points in the overall theory. However it is quiet clear that property has now became a long term play at best for those wanting to make money on it.

A very large number of people who bought into property in the last 1 - 2 years were those that had no clue about the economy, inflation rates etc They bought in on the media hype and word of mouth. Yes just like the market driven by emotional factors.

Once the promise of guaranteed per ann value increase is blown away, more and more current affair stories about struggling Aussies not being able to afford "the dream" the same motivation that made the sheep follow the pack will make them exit with the pack. Scary thought buying on top is a deadly game especially if you are locked in for 30yrs.

Alot of naive fhob are about to get screwed over and get a reality shock. Robot if you bought your ip last year you will not be seeing quick riches anytime soon.
You can sit on anything long enough to see its value rise up again but at what opportunity cost?

You haven't been drinking lates lately, putting money away for the coming rate raises?


----------



## TabJockey (2 January 2011)

This may be a scary thought, but there is no universal law that states that land in and around a major city has to be affordable to the average person. There is a mania with home ownership in Australia and the USA that borders on irrational.

It is blindly encouraged in government policy and social society. Im not saying this encouragement is wrong, it has definately been proven right in Australia over the last 20 years, but you would be foolish to believe that it will always be this way.

People believe that you should be able to afford your own home if you work hard enough, which can be a great goal to have but is not the be all and end all of financial security its often made out to be.

What it is, is an easy to understand all encompassing passive investment strategy for the average family. Subsidised by the government and encouraged by your peers.

Buy your house, forget about dealing with a land lord, pay your mortgage and one day you will collect a massive sum of money on which you will pay 0% tax. 

Sounds like an excellent plan, but something about the whole situation makes me feel uneasy.


----------



## robots (2 January 2011)

againsthegrain said:


> When this thread opened bears were highly outnumbered by bulls, seems like the situation has totally reversed now.
> 
> If I was to use the posters and their views on this thread as a random sample of the population and their views on Australian property one could come to the conclusion that Au property market is no longer a bull market.
> 
> ...




hello,

yes look at what the likes of Debtdeflation, Jenman, Demographia and all the other blogs have "COST" people over the past 5yrs, mega coin

no worries

thankyou
professor robots


----------



## nukz (2 January 2011)

Isn't there a bubble mentality going on here? in that when in a bubble one does not see it?

This was the same for people living in Canada whos property have just started dropping as well. The reason i used Canada as a example is they are almost identical to Australia and when they start to drop we will follow very soon.


----------



## FxTrader (2 January 2011)

robots said:


> yes look at what the likes of Debtdeflation, Jenman, Demographia and all the other blogs have "COST" people over the past 5yrs, mega coin



So analysing trends and doing statistical and comparative analysis is just a waste of time bots? I recall that the likes of Peter Schiff in the U.S. were scoffed at and derided for declaring the U.S. housing market was a bubble ready to crash using similar analysis only to be proven correct. Those who listened to his and others advice and analysis not only saved themselves "mega coin" but can now repurchase property at a substantial discount and are probably not collecting food stamps or bankrupt.

My sister and brother in law in Hawaii thought as you do, property is a safe investment and values will just keep rising as they have in the past (normalcy bias). They could have sold their house for a profit a year after they purchased it. Now they have stopped making payments and are just waiting for the eviction notice. Please don't waste time telling me how debt laden Australia is different, a special case, reversion to the mean just won't occur here and statistics on affordability and debt mean nothing.

As for Demographia and Debtdeflation, why not enlighten everyone here as to how their extensive analysis is flawed.

Of course other property investors need blindfolded property bulls like you to keep buying into IP while we move to reduce exposure to what is now a risky asset class. Keep holding onto your investment properties for dear life bots and spreading the message of eternal profit and reward for property investors so I and others still have eager investors to sell to.


----------



## robots (2 January 2011)

hello,

gee that first paragraph is pretty much the reverse of what happened in australia, true visionaries (although not many of them around) alluded to how beautiful australia is and the $ flowed in, amazing

the situation in US is also pretty much as predicted, people woke up to the pathetic joint it is, you need a 9mm just make it out alive from a trip to Walmart, stupidity (go back to 2004 when the original property thread started, another one right)

gee, i need an investment newsletter to sell to all the sheeple hey Explod! no. instead log into ASF for the free advice, helping out fellow man

thankyou
professor robots


----------



## Dowdy (2 January 2011)

robots said:


> hello,
> 
> gee that first paragraph is pretty much the reverse of what happened in australia, true visionaries (although not many of them around) alluded to how beautiful australia is and the $ flowed in, amazing
> 
> ...





Not to rein in on your paradise bot, but didn't you say you were bashed a few months ago and has made you scared ever since......doesn't sound like paradise to me.


And speaking of the US - I walked down to the local Walmart nearly every day in my last week in the USA past the so called bad neighborhood that my aunty told me to stay away from, at sometimes 9pm at night, by myself and never felt my life threatened. Actually it was quite a nice walk since it was so quiet and not hearing a single hoon on the road


----------



## FxTrader (2 January 2011)

robots said:


> gee that first paragraph is pretty much the reverse of what happened in australia, true visionaries (although not many of them around) alluded to how beautiful australia is and the $ flowed in, amazing



And the money will just keep flowing into paradise will it bots? Nothing wrong with affordability or debt, no bubble here.  All those foreign investors buying houses here, keeping them empty and counting on endless speculation to keep prices high are true visionaries?  



> the situation in US is also pretty much as predicted, people woke up to the pathetic joint it is, you need a 9mm just make it out alive from a trip to Walmart, stupidity (go back to 2004 when the original property thread started, another one right)



Predicted by who bots, those property bears you don't listen to?  Your detailed analysis with respect to the U.S. property market is quite thought provoking and balanced!  LOL  So Hawaii is a "pathetic joint" is it? Clearly you have never been there.

As usual here, you refuse to address the tough questions and instead point to the past as if it will always apply to the future.  Keep buying into the bubble bots, it's a sure thing.


----------



## indeck (2 January 2011)

http://www.finnewsnetwork.com.au/Display.aspx?Site=FNN02

First time I can recall hearing someone from RP data acknowledging prices will likely decline or stay stagnant for over a year.


----------



## c-unit (2 January 2011)

indeck said:


> http://www.finnewsnetwork.com.au/Display.aspx?Site=FNN02
> 
> First time I can recall hearing someone from RP data acknowledging prices will likely decline or stay stagnant for over a year.




No offense to the host, but she has to be the worst presenter/reader I have seen!

Interesting video though thanks for the post.


----------



## Beej (2 January 2011)

againsthegrain said:


> When this thread opened bears were highly outnumbered by bulls, seems like the situation has totally reversed now.




How the heck do you figure that???? I've been reading/posting on this thread and the other epic property threads here for years! Bear to bull ratio has always been about 20 to 1!! Bullish property views/posts have NEVER outnumbered bearish ones on any ASF property thread for the past 6 years! 

For years 90% of this forum were telling anyone who would listen that the big Aussie property crash of 40%+ was happening, or about to happen - dozens of these posters have disappeared never to be seen since only to be replaced by new bear posters spouting the exact same predictions/data/naive views with all the time frames moved + 1 year. If there has been a drop off in bullish postings it's simply because most of us "non crash believers" who simply commentate on normal/historical property market action and fundamentals (which seems to make you a property bull on the internet), have grown tired of having the same old arguments with each new crop of wet-behind-the-ears bearish posters who keep popping up as the old ones fade away with their tails between their legs.......

Cheers,

Beej


----------



## explod (2 January 2011)

FxTrader said:


> As usual here, you refuse to address the tough questions and instead point to the past as if it will always apply to the future.  Keep buying into the bubble bots, it's a sure thing.




No I have come to realise that our dear botty is just having a joke.  And on the direction of property, it goes wherever the meadiaandrealestatebackersofbotssayitgoes.  Dear o dear, need to be a confe$$or to set out those big words. 

He took my advice I think a few months back and started buying 1966 50 cent silver coins at Davis's just next to his tream stop in Swanston Strert, and I think you are up a good 20% there bots, great stuff.

lolliepops and roses


----------



## Beej (2 January 2011)

indeck said:


> http://www.finnewsnetwork.com.au/Display.aspx?Site=FNN02
> 
> First time I can recall hearing someone from RP data acknowledging prices will likely decline or stay stagnant for over a year.




Rubbish - RP-Data forecast (and reported) the market slowdown/price declines in 2008, and they picked the trend and reported on it before ABS, Residex, APM etc. 

Let's not re-write history please!



FxTrader said:


> As for Demographia and Debtdeflation, why not enlighten everyone here as to how their extensive analysis is flawed.




This has been done to death many times in this and the other ASF property threads. See here for a pretty comprehensive debunking by Christopher Joye of Rismark/RP-Data: http://www.businessspectator.com.au...Dogma-$pd20090129-NQTPP?OpenDocument&src=srch


Cheers,

Beej


----------



## trainspotter (2 January 2011)

tech/a said:


> How did they pass serviceability?????? ---Dont believe you!.
> 
> 22Yr olds speaking like seasoned veterans
> Wet behind the ears and no hope of drying off!
> ...




Good point tech/a ......... as I relax in my villa in Bali. Been here for 2 weeks ... just another 2 weeks to go. I enjoy my holidays very much thank you !!


----------



## startrader (2 January 2011)

TabJockey said:


> This may be a scary thought, but there is no universal law that states that land in and around a major city has to be affordable to the average person. There is a mania with home ownership in Australia and the USA that borders on irrational.
> 
> It is blindly encouraged in government policy and social society. Im not saying this encouragement is wrong, it has definately been proven right in Australia over the last 20 years, but you would be foolish to believe that it will always be this way.
> 
> ...




I personally think it is a great dream to have to want to own your own home at an affordable price - not as a future investment, but as a place to live in to call your own. I think that housing here should be far more affordable than it is.

One of the reasons housing is so expensive in Australia compared to other countries is to do with various policies of this government.  In my opinion the FHB grant was not about helping first home buyers but was intended to prop up housing prices in the GFC.  When the GFC hit the government was terrified of house prices declining.  This would have adversely affected the banks because of their high exposure to mortgages and after lobbying by the banks the Government opened up our housing market to foreign buyers.  A year later the Government reversed some of the changes it had made to foreign ownership but some still remain, such as foreign students being now able to buy property up to unlimited value (whereas previously it could be no more than $300,000) and now 100% of new apartment blocks can be sold to foreigners (previously it was 50%).  Why on earth has the government not changed this back to 50%.  The property developers must be rubbing their hands together with glee.  All this is doing is pushing up our prices, making them more unaffordable to Australians.  As you drive into Sydney now along South Dowling Street near Moore Park there are about 7 large apartment blocks about to be built.

If we have such a shortage of dwellings in Australia, which the property spruikers are always telling us is the case, what is the point of building new places which aren’t even being sold to Australians?  

There seems to be one huge FOR SALE sign on this country, which is very bad for our standard of living and future prosperity.  

Probably also negative gearing adds to housing price pressure and high rents as well.  I have read that the argument was also used in other countries that if you got rid of negative gearing housing prices and rents would increase but when the UK and US got rid of  the policy in those countries this did not happen.  I think that the Government may find it too difficult to do anything about negative gearing now, but it will be forced to do something at some stage in the future.


----------



## FxTrader (2 January 2011)

Beej said:


> See here for a pretty comprehensive debunking by Christopher Joye of Rismark/RP-Data: http://www.businessspectator.com.au...Dogma-$pd20090129-NQTPP?OpenDocument&src=srch




Thanks for the article reference. The Joye article was written in Jan09 and presumably refers to the 2008 Demographia survey so it's only partly relevant to the 2010 report.  Rather than a "comprehensive debunking" of Demographia's stats and analysis, Joye primarily takes aim at the house price-to-income ratio stats as being an insufficient predictor of house prices and instead prefers RBA and World Bank analysis dating back to 2007 (pre GFC) and 2008 respectively.  After reading the Joye article, one could be excused for believing that the median house price divided by gross annual median household income ratio could be 50 without concern.  This measure of affordability is a relative one, draw whatever conclusions you like.

Indeed, the RBA does not believe there is a house price bubble but then given the big 4 banks huge exposure to the property market, the RBA must be very cautions that their statements don't destabilize the market.  It’s much easier to jack up rates under the guise of inflation targeting when curbing speculation is also an objective.

The attempt by Joye to shoot the messenger at the start aside, questioning the methodology is fair enough.  While Joye accurately outlines other factors that influence house prices, what he’s missing with respect to future price growth is the elephant in the room – household debt levels.

While I find Demographia’s analysis interesting, I prefer Steve Keen’s analysis on Debtdeflation.  Perhaps you know of a source that “debunks” his analysis as well.


----------



## schnootle (2 January 2011)

Just to throw a potentially different element into the mix Where does climate change fit into all this?.

I just finished an excellent book called Eaarth by Bill Mckibben http://www.billmckibben.com/eaarth/eaarthbook.html, by the end I was totally convinced that at least within the next 30 yrs a lot of things in our society and the way we live needs to be repriced. I cannot fathom how something that is such a sink hole for peoples productive capacity like big mortgages on small houses can survive, when to get ourselves out of this mess every dollar will need to pull its weight.

To me guessing which way things will move over then next 5 years is a bit silly, the speculators have made their money in my opinion. If we look at a longer horizon climate change ramifications will definately have an impact. Prices for houses now are predicated on their being as much if not more money flowing around in the future. Unless we ignore climate change and trash the earth and make it unliveable in 100 years fixing the problem will seriously diminish how much money and value people place on houses. 

That book completely opened my eyes, I challenge anyone even the venerable Robots to read that book and come back and still be positive about the economics of the world let alone prices for places the sleep at night.


----------



## Beej (2 January 2011)

FxTrader said:


> Thanks for the article reference.




No worries - I agree that there are many ways to view this, but I do think the Demographia's methodology is quite flawed - the fact that in the 2008 report at least the Sunshine Coast was the most "un-affordable" area of Australia shows that something was pretty wrong don't you think??



> While I find Demographia’s analysis interesting, I prefer Steve Keen’s analysis on Debtdeflation.  Perhaps you know of a source that “debunks” his analysis as well.




Again if you do a search of the forum archives (I presume we still can?) you will find loads of discussion (some debunking!) about Ass. Prof. Steve Keen and his arguments. The main thing I note is how fundamentally wrong his widely media-spruiked views on the Aussie economy and house prices in particular have been for years. So wrong even that he had to walk from Canberra to Mt Kosciusko earlier this year wearing a T-shirt labeled "I was hopelessly wrong house prices, ask me how?", after loosing a bet in 2008 with Rory Robertson of Macquarie Bank. He predicted a crash of 40% in Oz house prices over a "few" years in 2008, instead after a drop of no more than 5% at the height of the GFC, they then rebounded over 20% and surpassed their previous peak! He still does not acknowledge the real reasons why he was so wrong, instead blaming the government stimulus via the FHBG boost etc, of course forgetting to mention that he made all his predictions, and his bet, after those policies had been announced! Also pretty naive to omit government involvement/intervention in the economy.

So I listen to what that guy has to say with a huge grain of salt. I usually find debt focussed analysis ignores/omits other important factors, like national savings rates and superannuation savings, consumer confidence, government intervention, interest rate trends etc.

Cheers,

Beej


----------



## FxTrader (2 January 2011)

Beej said:


> I agree that there are many ways to view this, but I do think the Demographia's methodology is quite flawed - the fact that in the 2008 report at least the Sunshine Coast was the most "un-affordable" area of Australia shows that something was pretty wrong don't you think??



After reading the latest Demograhia affordability survey, there is definitely a bias toward more liberal, less restrictive land regulation as a means to reduce land prices. On balance, I think much of the analysis in the latest report has merit and I would not dismiss it all on the basis that I disagree with how they calculate a metric or how accurately this metric predicts bubbles.



> So I listen to what that guy has to say with a huge grain of salt. I usually find debt focussed analysis ignores/omits other important factors, like national savings rates and superannuation savings, consumer confidence, government intervention, interest rate trends etc.



Producing evidence for something and prediction are quite different things. Making a bet that something like a property bust will happen within a certain time frame is a gamblers game - silly. It's a bit like a volcanologist trying to predict an eruption will happen in a given month, all the evidence may indicate this but such precision is just not possible. I don't ignore Keen's analysis and stats because he has failed to accurately predict the date of a property crash.

To me the weight of evidence suggests that the spike in property prices over the last two years is unsustainable and some kind of correction is due. While I don't think a 40% correction is plausible, at least 10-20% seems reasonable in some markets. I'm holding for now but am watching the property market closer than ever before as spikes in charts always make me cautious.


----------



## Beej (2 January 2011)

FXTrader - sure, I don't see anything unreasonable with what you have just written. Although as for Keen I do think he brought all his credibility problems on himself with the way he went about things a few years ago.

Cheers,

Beej


----------



## robots (3 January 2011)

hello,

yeah, he just took the wrong turn

oh well, anyone seen the crash yet? gotta happen, happened in US, UK, Spain, Ireland like we just the same as those joints

thankyou
professor robots


----------



## So_Cynical (3 January 2011)

robots said:


> oh well, anyone seen the crash yet? gotta happen, happened in US, UK, Spain, Ireland like we just the same as those joints
> 
> thankyou
> professor robots




Hey Robbie...ive recently joined a living in Panama type forum and apparently the crash hasn't happened there yet either, some posters there suggesting that it could be the laundered drug money propping it all up...ive no idea. :dunno:

Are we really just like Panama?


----------



## kincella (5 January 2011)

Look at China - shows Australia is so backward, when it comes to housing and infrastructure
I wish the Chinese could come over to OZ and show our stupid politicians...just how to build cities and associated infrastructure...all within a very short time frame, and make it happen...
instead we get committees to have a look, or a study done which take years, then they finally decide we cannot afford it....
China today, makes Australia look like not a 3rd world country, but one so out of touch with reality, we may as well be living in the 18th century....compared to the standards China has imposed.
Plus China has the added benefit, all those former unemployed poverty stricken people, are now gainfully employed, and apart from paying some taxes, also pay their own way....
I see it as a win win situation, not only for the people, but for the government to boot.

now do yourselves a favour and get hold of this book, written by a former  editor and translator of contemporary Chinese literature , before joining the BBC world service, later a correspondent in China.....Getting Rich First by Duncan Hewitt....published by Vintage Books....he lived in China from 1986 until 2002.....and watched with amazement at the total transformation.....of China..............
ps you can get if from ....dirt Cheap Books at about $5.00
an absolutley brilliant read.....think most people would be rather angry, at just how backward and slow Australia is compared to China.....but the US and other countries are even worse than OZ
cheers


----------



## explod (5 January 2011)

kincella said:


> Look at China - shows Australia is so backward, when it comes to housing and infrastructure
> I wish the Chinese could come over to OZ and show our stupid politicians...just how to build cities and associated infrastructure...all within a very short time frame, and make it happen...
> instead we get committees to have a look, or a study done which take years, then they finally decide we cannot afford it....
> China today, makes Australia look like not a 3rd world country, but one so out of touch with reality, we may as well be living in the 18th century....compared to the standards China has imposed.
> ...




Yep, good read, except people in australia and the US wont work for 14 hours a day on a bowl of rice.

Do your self a bit of a favour there Kincella, *and think*

The Egyptians, Greeks and Romans all did it with lots of people working for nothing but a feed and a place to sleep.


----------



## tothemax6 (5 January 2011)

kincella said:


> Look at China - shows Australia is so backward, when it comes to housing and infrastructure
> I wish the Chinese could come over to OZ and show our stupid politicians...just how to build cities and associated infrastructure...all within a very short time frame, and make it happen...
> instead we get committees to have a look, or a study done which take years, then they finally decide we cannot afford it....
> China today, makes Australia look like not a 3rd world country, but one so out of touch with reality, we may as well be living in the 18th century....compared to the standards China has imposed.
> ...




Australia has been around for around 300 years. China, in some form or other, has been around for 4000 years. Australia has 20-30 million people. China has >1 billion.

I'd say in terms of development, we are doing pretty good.


----------



## DB008 (5 January 2011)

kincella, you mean to build a building like this??? 



> *13-story apartment building collapsed in Shanghai*
> Reported China Journal: In the weekend’s bizarrest news, a nearly finished, newly constructed building in Shanghai toppled over, killing one worker. As can be seen in the photo below, the 13-story apartment building collapsed with just enough room to escape what would have been a far more destructive domino effect involving other structures in the 11-building complex. See original photos here.
> http://andypeach.com/2009/06/13-story-apartment-building-collapsed-in-shanghai-original-photos.html


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## johnnyg (5 January 2011)

Foundations? LOL I'm no builder but I would of thought there would be a lot more foundation under a 13 story building?  Maybe tech/a can give some insight?


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## kincella (6 January 2011)

you posters are so funny....so they have dodgy bros working in  China...and none in Aus...wow....
and the other comment about how long the chinese have been around....sure when they were all living in caves, and it took months to travel to another cave to let others know how things worked....or compared ideas and news

how does that compare to todays environment....where news is instantly flashed around the world...
oh, thats right, our BB is so slow ......it may take a minute or more....

the chinese have a fast train, about 460 k's ph, took them about 2 years to build...
our oz govnuts spent 10 years mulling the idea, wasted about 2 billion on the report, then eddington said it would cost 8 billion for Vics new fast bullet train....but bracksy and brumby said no....so here we are, still travel to the nsw border on trains built in 1960, takes over 4 hours, when they are running....they have not been running since about 2007, they use buses instead....built new tracks that are dodgy.....
I know who the dodgy ones are in OZ....its the pollies and their mate advisors
they must all share the one tiny pea sized brain...then pass it around for the next moron to use
thats so why this forum is what it is.........


----------



## nukz (6 January 2011)

kincella said:


> the chinese have a fast train, about 460 k's ph, took them about 2 years to build...
> our oz govnuts spent 10 years mulling the idea, wasted about 2 billion on the report,




In Victoria we spent around $2 billion just on a ticket system for public transport. 

I got the fast train in China last year from Shanghai to Hangzhou, its quite a amazing experiance Australia is far behind China/Europe and most of Asia in the sense of transport.


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## nunthewiser (6 January 2011)

kincella said:


> you posters are so funny....
> 
> its the pollies and their mate advisors
> they must all share the one tiny pea sized brain...then pass it around for the next moron to use
> thats so why this forum is what it is.........




LOL 

But yet you continue to post here ...... 

Funny place the internet


----------



## TabJockey (6 January 2011)

This thread has the highest percentage of crackpots out of all the threads I post in.

I used to think the Gold Price thread was bad (GOLD 10,000!?) but thats tame these days compared to some of the stuff that gets sprouted here.


----------



## nukz (6 January 2011)

TabJockey said:


> This thread has the highest percentage of crackpots out of all the threads I post in.
> 
> I used to think the Gold Price thread was bad (GOLD 10,000!?) but thats tame these days compared to some of the stuff that gets sprouted here.




lol i remember reading a Harry Dent book in which he was predicting the DOW at 30,000 around 2007 or something lol


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## Vicki (6 January 2011)

Kincella,
What's your opinion of the oz r/e market in the near future [assuming rates keep rising].

Vicki


----------



## sinner (6 January 2011)

Hi guys,

I have been conducting my own research in private because this thread is just too much to handle most of the time. I thought I would share todays findings in the hope of generating some discussion.

For the last while, my main goal has been in attempting to understand the ABS housing data better from the perspective of supply and demand, especially from the perspective of whether or not housing inventory (established and new for sale) is increasing or decreasing.

So here are the three year plots for construction and purchase of new dwellings, as well as purchase of established dwellings.




From my initial research going back some many years, the plots for purchase of new dwellings and purchase of established dwellings are highly correlated. That is to say, home investors at large generally don't care whether the property is new or established. When they are buying they are buying, and when they aren't they aren't.

What we can plainly see then is that during 2009, new dwelling construction took off in a big way, to the point that during the middle of 2009 we were adding twice as many houses per month as normal to the inventory. While composite (new+established) demand for dwellings is pretty much where it was at the beginning of 2008, during 2009 composite demand for dwellings actually declined!

This to me screams inventory buildup. Without an increase in demand, all those dwellings constructed in 2009 must still be sitting on somebodies books. 

Thoughts appreciated.


----------



## greebly24 (6 January 2011)

A few stats from _"Call of ocean remains strong in Perth"_ (Australian Financial Review Thursday 6 January 2011).

_"At the height of the boom in 2006 and 2007, there were just 4000 homes on the market."

"...there were only 11,000 homes on the market early in the year (2010), when expectations of resurgence loomed."

"But by the end of 2010, prices were declining in Perth, according to Australian Property Monitors."_

And now:

_"There are about 17,500 homes on the market..."_

So only 4,000 homes on the market during the boom, and 17,500 on the market now. Hmm. There obviously is no housing shortage in Perth. Buyers should take their time. Prices will drop. Supply and demand dictates it.


----------



## kincella (6 January 2011)

Vicki,
I dont assume rates will keep rising....however with the same silly treasurer and his mate at the rba still smoking whatever it is they do.....who knows how long this madness will go on...
we are still in the middle of the GFC....nothing has changed since june 07, when it was being felt at the beginning...
it is far worse now than I had anticipated....together with the huge bill from the floods, and the subsequent aftermath from the drought
we have a stupid  govnut in power, and swan pretending we are not privvy to the GFC is ludicrous....
shocking retail figures for dec should be a wake up call.....but I doubt if it will...
history repeats so by june 2011 we should finally have a repeat of 2008....when after raising the rates non stop, not needed, nor caution, they had to drop the rates by 3%....
the economy is in danger, no roses in sight.....
most people are cautious, no retail therapy in sight.....this may take a lot longer to recover than I had originally believed,
the banks are bleeding people dry, they are not lending to business...they are confident of a govnut handout if they get in strife....even if they are not in strife.....
cautious people are hanging onto their homes...not upgrading etc.....not moving around...
I believe there will be an exodus away from the inner city and its high house prices, out to more affordable places....(tons of them around)
only the mega rich will stay in the city, and investors....who rent to the young crowd....
if you look up my posts for the last couple of years, you may get my drift
no bubbles, a sideways  drift for a couple of years before it all picks up again....
the high prices are only in the middle of the cities.....not the other suburbs....and its all about the investors, who saw the kids were determined to stay in close, so they are accommodating the kids.....
the smart money has been moving out, but you will not hear about that, if your only source is the lame stream media, and the majority of economists....or any of the other sprouters...
there has been good growth in some other suburbs, and that trend will continue....
you will not see it, if you are only interested in the city inner burbs..
of course the usual % of high flyers, throw caution to the wind types, will get caught out, and there will still be the sheep who follow the crowd....
your  buying power diminishes year in year out, thats why the dollar is worth only 5% of what it was 100 years ago....
with all the govnut borrowing going on, it will reduce at a faster rate.....what other asset or commodity keeps price with inflation....
the current matching of the oz dollar with the us dollars...shows its junk status ...I rate both countries as low, or of a moron status
thats about enough from me for this year....


----------



## satanoperca (6 January 2011)

kincella said:


> Vicki,
> I dont assume rates will keep rising....however with the same silly treasurer and his mate at the rba still smoking whatever it is they do.....who knows how long this madness will go on...
> we are still in the middle of the GFC....nothing has changed since june 07, when it was being felt at the beginning...
> it is far worse now than I had anticipated....together with the huge bill from the floods, and the subsequent aftermath from the drought
> ...




What have you been smoking lately, are you serious. If you dont like Australia then I suggest piss off to some other country. As you state nothing has change since 07, bit far fetch arn't you, only household debt has increased significantly and property prices have increase significantly. As I see,  you would have us go down the US and Japan approach of lowering interest rates to almost zero, we can all see how that has worked out for them.

This thread does make me laugh.

Cheers


----------



## Knobby22 (6 January 2011)

My Uncle who is a property multi millionaire (he hasn't worked since he was 43, he is now 69), predicts an Australian property crash in 10 - 15 years from now. He thinks it will be a depression.

I trust his judgement.


----------



## TabJockey (6 January 2011)

sinner said:


> Hi guys,
> 
> I have been conducting my own research in private because this thread is just too much to handle most of the time. I thought I would share todays findings in the hope of generating some discussion.
> 
> ...




Great work Sinner I do love it when someone does some real research and not just blurts out opinionated crap.

I think that to make any plausible conclusions you will have to expand your scope a little bit though. Whats your hypothesis? "A significant amount of dwellings built 2007-2008 have not been sold" ?

One thing that sticks out to me is that in the last 3 years we have seen ALLOT of high density developments coming along in Melbourne. This is because there is demand for apartments in inner suburbs that is not being met atm. However a great many of these projects reach completion in q3 q4 this year and some are predicting a glut. The exact economics of this is quite a study and you need to take allot of factors into account. One thing is for certain and that is that Australian households prefer and will pay for a house with a backyard, even if its 1-2hrs drive out of the city.

For your own studies I think it would be beneficial to split apartments and "dwelling+land" assets and analyse those charts. What percentage of those new buildings are apartments, what are townhouses and what are house and lands?


----------



## TabJockey (6 January 2011)

Death to......the politicians....and the capitalists.....someone.....please get me.....some oxygen.....also I.....hate Australia........and all.....of......you


----------



## Vicki (6 January 2011)

Kincella,
Do you hold any properties that are highly geared, i.e.80-90% LVR at current values?

Vicki


----------



## kincella (6 January 2011)

when I first purchased  the resi props, I put up a minimum of 20%....I now have them on average at around 50% geared....I topped up and took equity in that period
the commercial prop was 20% deposit
overall the whole portfolio is geared at 17% using a lower market value (as if fire sale conditions applied)
some props have tripled in value, others just doubled, and another is up over 500%

ps I was buying when everyone else was waiting for a crash....the resi agents were so depressed, they had taken a big hit on the stockmarket, and showed little interest in the housing market.......


----------



## UBIQUITOUS (6 January 2011)

kincella said:


> when I first purchased  the resi props, I put up a minimum of 20%....I now have them on average at around 50% geared....I topped up and took equity in that period
> the commercial prop was 20% deposit
> overall the whole portfolio is geared at 17% using a lower market value (as if fire sale conditions applied)
> some props have tripled in value, others just doubled, and another is up over 500%
> ...




How's the market tracking your 10% a year every year property price model Kincella? Surely now you have to admit that those kind of gains are impossible over the long term?


----------



## kincella (7 January 2011)

"some props have tripled in value, others just doubled, and another is up over 500%"

you must have missed that line.....

the 10% rule is alive and well......
if for instance the gain is not 10% in one year, it will average out in the long term, due to a 20% gain in another year......
it is similar to road travel...there are dips and troughs in the ride, then a great big hill....followed by smooth straight roads.....
not dissimilar to a ships captain.....he knows where he is going using a compass.....but the actual journey brings all sorts of decisions, surprises, and unintended consequences.....that he must overcome.......


----------



## UBIQUITOUS (7 January 2011)

kincella said:


> "some props have tripled in value, others just doubled, and another is up over 500%"
> 
> you must have missed that line.....
> 
> ...




Thanks. SO in effect what you are saying is that buying at a peak can be very costly and can take a long while to realise any gains. Nice of you to come around because I'm sure previously you were saying that buying at any time is a good time. Those who over leveraged at lower interest rates a few months ago are not only sitting on capital losses, but also increasing expenses.


----------



## kincella (7 January 2011)

No, I did not say that at all......
apart from staying away from the 'inner city hype'....(just dont go there, not now, nor ever)
There are plenty of affordable properties out there, they are not in the inner city areas.
I am not talking about buyers flipping properties, just home owners, who want their own place, whilst they get on with their lives. Something with a half to one hour  commuting distance for work and rellies etc, later on after the kids become teenagers, they can upgrade to a bigger and better place.
I believe the interest rates, long term average, since Howard came to office, is around the 7% mark. You cannot expect much better than that.
They are selling new homes just north of the city of Melb, at around 250k's, 4 beds 2 baths etc, close to the tollways.
I believe the trend will move away from the inner city, and it may well stagnate.....after all they are ridiculous prices, for what is on offer.


----------



## finnsk (7 January 2011)

kincella said:


> N
> They are selling new homes just north of the city of Melb, at around 250k's, 4 beds 2 baths etc, close to the tollways.
> I believe the trend will move away from the inner city, and it may well stagnate.....after all they are ridiculous prices, for what is on offer.



I am not from Melbourne, but would like to know what suburbs you are taking about. Had a look in Wallan, Doreen, Beverage, Lilydale and Eden Park, could not find anything at that price only thing I could find was one in Wallan which is from $293.000.
Also as I live in Sydney do not believe it will be possible to find anything below $450.000


----------



## kincella (7 January 2011)

finnsk said:


> I am not from Melbourne, but would like to know what suburbs you are taking about. Had a look in Wallan, Doreen, Beverage, Lilydale and Eden Park, could not find anything at that price only thing I could find was one in Wallan which is from $293.000.
> Also as I live in Sydney do not believe it will be possible to find anything below $450.000



 Well here is just one agent.....$277,000
http://www.realestate.com.au/new-ho...in-wallan,+vic+3756/list-1?source=refinements

more here....starting from 277.000......all the 250's must have gone
http://www.domain.com.au/Search/buy...subs=1&to=300000&searchterm=wallan+vic&page=2


----------



## wayneL (7 January 2011)

kincella said:


> Well here is just one agent.....$277,000
> http://www.realestate.com.au/new-ho...in-wallan,+vic+3756/list-1?source=refinements
> 
> more here....starting from 277.000......all the 250's must have gone
> http://www.domain.com.au/Search/buy...subs=1&to=300000&searchterm=wallan+vic&page=2




"***$26500 First Home Owners Grant Has Been Deducted - Conditions Apply***"


Also - "All photos and illustrations are representative only, this proposed package is subject to engineering plans and developer’s approval (if required) and may need to be mirrored or altered to comply. Any additional costs associated will need to be added to the price as unavailable at time of advertising."


----------



## finnsk (7 January 2011)

kincella said:


> Well here is just one agent.....$277,000
> http://www.realestate.com.au/new-ho...in-wallan,+vic+3756/list-1?source=refinements
> 
> more here....starting from 277.000......all the 250's must have gone
> http://www.domain.com.au/Search/buy...subs=1&to=300000&searchterm=wallan+vic&page=2



My apologies. When i did my search had maximum price set at $1000000 normally prices start from button up but not in this case, those prices would be on page 10, when i changed to $300000 prices come up just like yours? go figure.


----------



## wayneL (7 January 2011)

finnsk said:


> My apologies. When i did my search had maximum price set at $1000000 normally prices start from button up but not in this case, those prices would be on page 10, when i changed to $300000 prices come up just like yours? go figure.




Look at my post above yours. The real price is > $300,000


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## greebly24 (7 January 2011)

What I love about property is that it never drops in price or goes down. Never ever. It only "softens".

Australian Financial Review, Property Section, Friday 7th January 2010:

_"...softening property market..."   "...cooling market will not collapse..."   "softness in demand..."   "...back to a slower market..."   "overhang of stock led to a collective intake of breath among vendors..."   "...might need a price adjustment to come to terms with the market..."_

See!!! Property never goes down. There might be an _"increase in price"_ but never ever a decrease. Impossible. Won't happen. Doesn't happen. Can't happen. It might just get a lot softer and cooler, that's all.

The article, entitled: _"Melbourne's surge loses force"_ also includes the tag line "The median home price has risen $50,000 in a year..."

I wonder what the median income is in Melbourne? Anyone here know? If it's less than $50k then all those wage slaves working for a living are morons. Quit your job tomorrow. Just buy and sell a house every year and you'll make more than the median income. Simple. And 365 days a year off.

Just cos it stopped working in the US,UK and Europe doesn't mean it won't work forever here.


----------



## robots (7 January 2011)

hello,

good evening, anyone seen BigAl?

surely now the forum must adopt the recommendations i put forward regarding being able to participate in this thread, its just a joke what gets posted, trolls

how is the median going Ubiquitous? great posts as usual Kincella, legend man, yeah that pea sized brain sure is getting handed around a fair bit hehehehehehehehe

thankyou
professor robots


----------



## Vicki (7 January 2011)

Well said Greebly,
Also, what would happen to home values, if the government allowed the further development of rural land around major cities...Something they might have to consider, If they estimate a large increase in our population in coming years?

Vicki


----------



## AzzaB80 (7 January 2011)

robots said:


> hello,
> 
> good evening, anyone seen BigAl?
> 
> ...




Troll?  Now there is the pot calling the kettle black. I've sent you this link before robots but here it is again for a refresher.
http://en.wikipedia.org/wiki/Troll_(Internet)

Sound familiar?


----------



## robots (7 January 2011)

hello,

sure does, probably applies to 90% of the posters in this thread

which is why i suggested 3 requirements to be able to post up here

anyone who supports property is verbalised, just amazing

oh well

thankyou
professor robots


----------



## explod (7 January 2011)

Vicki said:


> Well said Greebly,
> Also, what would happen to home values, if the government allowed the further development of rural land around major cities...Something they might have to consider, If they estimate a large increase in our population in coming years?
> 
> Vicki




Yeh, good idea, the last of the vegetable land.   Cities were built along rivers, streams and the coast for water and to farm nearby.  When it is gone perhaps we can eat the thin air, it will have enough solids in it by then.  A nice lead sandwich perhaps with frothy smoke on top.

We cant allow that urban sprawl to stop though, can we?

Anyway, its lolliepops here in far far away land


----------



## Vicki (7 January 2011)

robots said:


> hello,
> 
> sure does, probably applies to 90% of the posters in this thread
> 
> ...




I don't think anyone harbours any annimosity towards you [I think].

Just interested in your point of view, on the subject of Oz r/e in the near future.

Vicki
p.s. what were these three requirements you mentioned?


----------



## nunthewiser (7 January 2011)

robots said:


> great posts as usual Kincella, legend man, yeah that pea sized brain sure is getting handed around a fair bit hehehehehehehehe
> 
> thankyou
> professor robots




yeah he been posting a bit of late i noticed.

good to have hans christian anderson back online bro :


----------



## GumbyLearner (7 January 2011)

nunthewiser said:


> yeah he been posting a bit of late i noticed.
> 
> good to have hans christian anderson back online bro :




It will be great to hear what the robot doyen of the thread has to say when RE values tank and the over leveraged start to sweat. 

But I'm sure the resident robot will be posted somewhere else to encourage others for marketing purposes. On ya pollsters!


----------



## Sdajii (8 January 2011)

greebly24 said:


> What I love about property is that it never drops in price or goes down. Never ever. It only "softens".
> 
> Australian Financial Review, Property Section, Friday 7th January 2010:
> 
> ...




I know what you mean! I was talking to a woman recently, in conversation it came up that she was a property developer and I was into the stock market. She said that real estate was a better investment than shares, because shares can go down in value but properties never do.

I cited cases where property has indeed gone down in value (not like there is a shortage of examples). She said I was wrong. No, property never goes down in value, it's just that sometimes there is a lack of higher offers, so lower offers and made and sometimes these lower offers are accepted. Without getting into detail, yes, I do understand why she tried to make that claim (I assume she meant land is land, you basically can't make more of it, the population of humans isn't going down, etc), but c'mon! If there is a lack of high offers and low offers are being accepted, surely your portfolio is worth less whether it's stocks or property. If the fundamental value of stocks goes up but the share price goes down we don't brag about how much our portfolio has increased. If someone opens a brothel or factory next door to your residential property, the value is going to decrease. 

Property folk are sometimes very strange!


----------



## againsthegrain (8 January 2011)

I recently heard a woman at work say "property great investment, you can never lose on these things" and just a few weeks before that I saw a article posted here about some couple in sydney that lost 1.5 mil on a 3 mil property development they bought in bondi. 

With people like that its a 1 way conversation, 

- property, you can never lose
- oh yea but i know of a few examples where it has lost?
- yea thats right see you can't lose
... loop continues


----------



## FxTrader (8 January 2011)

greebly24 said:


> What I love about property is that it never drops in price or goes down. Never ever. It only "softens".
> 
> Australian Financial Review, Property Section, Friday 7th January 2010:
> 
> ...




At first I thought this was sarcasm or humor but just in case you're serious (as some believe you are) here is just one of many articles for you to consider...

From the Australian 2 December 2010...
*
A LOSS of $4.5 million in only two years on a Gold Coast mansion tells the grim story of the diving property market on the coast.*
_
The "Beach House" at No 247 on the glamour strip of Hedges Avenue on the beachfront near Surfers Paradise was sold at auction last weekend for $5m.

Melbourne investors John Rose and Timothy Rice bought the three-level mansion for $9.5m in February 2008, but it has been on the market since the end of last year.

The house went to auction in January this year with bidding starting at $5m and quickly rising to $6.25m, at which time Mr Rice raised the selling price to $6.45m.

If he'd have taken the $6.25m on offer in January he would have been $1.25m better off, and probably saved himself the hassle of a year waiting expectantly for the market to recover at a time when it kept going down.

In August, the owners and agents were again over-optimistic about the strength of the Gold Coast high-end market, with the house listed for sale at $7m. The property's history over the past decade charts the high-end Gold Coast market well.

It was bought in 1998 by Gold Coast shopping centre developer Norm Rix for $1.815m, and he sold it in 2003 to Canberra developer Barry Morris for $5.35m.

In September 2007, the house was sold to then 26-year-old IT tycoon Daniel Tzvetkoff for $10.25m, but he kept the house for only a matter of months before selling it in February 2008 to Walnut Peak, a company controlled by John Rose and Timothy Rice.

They probably thought they were getting a good deal by buying it at $750,000 less than Mr Tzvetkoff had paid for it only six months previously, but in retrospect Mr Tzvetkoff had form in paying well over the going price.

He sold 247 Hedges Avenue because he bought further up the avenue for $27m, but 2008 was the end of the good times for the man who that year made Business Review Weekly's young rich list with an estimated fortune of $120m.

Mr Tzvetkoff was arrested in April while at a Las Vegas internet billing conference and, if convicted, could face a 75-year jail term over an alleged $500m money laundering scheme._

Perhaps this article would interest you...

http://www.news.com.au/money/property/interest-rates-pressure-forces-house-sales/story-e6frfmd0-1225963682684

Hmm, if 10% of home owners think they could be forced out of their home by further interest rate rises what would that do to property prices I wonder.


----------



## tech/a (8 January 2011)

Extreme cases used as normal argument. Interesting

If 10% of home owners will be in stress if interest rates rise this will be no different to the 10% of home owners who were under stress when interest rates rose above 8% last time.

What happened to house prices will happen again.

They stalled then they continued forward.
Have done for around a century.

But this time is DIFFERENT---isn't it!

Be sure to let me know *when it IS time to buy property*---somehow I get the idea we wont see that EVER on this thread.

My industrial development is going well.
Despite the doom and gloom Ill pull a good drink from it while the majority here ponder on why THEY and I shouldnt!

Thats OK you ponder Ill plunder.


----------



## robots (8 January 2011)

robots said:


> hello,
> 
> you going on about Biffing again Explod,
> 
> ...




Hello,

Here it is Vicki, gee its great reading all the previous posts, superb, lots of names you dont see again, oh well

my view on property, make sure you holding a piece of real estate when you 55+, how you get there i couldnt give a stuff, whether its through shares, gold, silver, job, property flipping, property holding, property investing etc etc

thankyou
professor robots


----------



## FxTrader (8 January 2011)

tech/a said:


> Extreme cases used as normal argument. Interesting



Extreme in terms of loss but the argument is the same, buying at the top of the property cycle in any market segment is a mistake.



> If 10% of home owners will be in stress if interest rates rise this will be no different to the 10% of home owners who were under stress when interest rates rose above 8% last time. What happened to house prices will happen again. They stalled then they continued forward. Have done for around a century.




Ah, normalcy bias once again. What has happened in the past must surely continue into the future.  But tell me tech/a, is the debt situation for households and govt the same now as in the past?



> Be sure to let me know *when it IS time to buy property*



When others are selling their overpriced properties in droves, bottom of the cycle.


----------



## TabJockey (8 January 2011)

Commercial property is a different market, its on the up. Residential is a very strange beast and I am very interested to see what happens.


----------



## Dowdy (8 January 2011)

TabJockey said:


> Commercial property is a different market, its on the up. Residential is a very strange beast and I am very interested to see what happens.




What makes you think it's on the up. Just want to hear your analysis on it...


----------



## tech/a (8 January 2011)

FxTrader said:


> Extreme in terms of loss but the argument is the same, buying at the top of the property cycle in any market segment is a mistake.




Dont know about that.
If that's the only time something I WANT is for sale then I will buy it regardless of market.





> Ah, normalcy bias once again. What has happened in the past must surely continue into the future.  But tell me tech/a, is the debt situation for households and govt the same now as in the past?




Relative to earnings years gone by ---no different.




> When others are selling their overpriced properties in droves, bottom of the cycle.




Just be sure to let me know when that is.
Ill bet you wont be able to pick it.
You DONT HAVE TO---if you know what your doing.

I bought 4 bedroom houses in 1995 at $90K
and there were NO SELLERS finding a property was pretty difficult.



> Commercial property is a different market, its on the up. Residential is a very strange beast and I am very interested to see what happens.




It is How so?
I must be missing something---*please enlighten me*.
I've been doing this for 30 yrs and always looking to
learn more.
To me both are very simple.

Correct gearing /tennent/hold/or liquidate for further opportunity.

Those who do nothing more than postulate make it complex---they "think" it is thats why it scares the beejeezes out of them---frozen by fear of loss.

It's not hard!


----------



## TabJockey (8 January 2011)

Dowdy said:


> What makes you think it's on the up. Just want to hear your analysis on it...




Commercial property, and by that I mean Retail, Office and Industrial property is driven by different factors than Residential.

There are some great detailed research reports out there, I only looked into Melbourne with any depth so I cant really speak for the rest of Australia (sometiems I forget we are talking nationally in this thread).
To answer your question Dowdy:

In my view Retail prices are supported fundamentally but as everyone probably knows, retail business is probably not in for a great year this year and is unlikely to recover with a kick. So I put that aside for the moment.

Office and Industrial property however are undervalued by up to 30% on fundamentals at the moment according to several reports, with key indicators trending up such as rent per m2, building approvals and vacancy rates down.

These sectors on the improve from funamentally low prices is in my view something to look at as a buying opportunity.

*To answer your question TA:*

I agree that your simplified strategy would certainly work long term with any real property class but surely you dont argue that Commercial property prices and Residential prices are significantly interdependant?

As land goes up, as it will because it is a finite resource, both these classes will trend up, but in the medium term one can be booming and one can be lagging, presenting opportunities that will differ from class to class.

I believe Melbourne Office and Industrial property is underweight looking at a 5-10 year time frame and Melbourne Residential property is overweight in the same time frame. 

You wont loose any money on either though if you hold through the noise!


----------



## So_Cynical (8 January 2011)

TabJockey said:


> Commercial property is a different market, its on the up. Residential is a very strange beast and I am very interested to see what happens.






Dowdy said:


> What makes you think it's on the up. Just want to hear your analysis on it...




Ill put up some observations here...2 of the real estate stocks i hold (DXS & ALZ) have recently re-valued there portfolios in an upward direction (after 2 years of falling valuations) also there's been a substantial drop in new building construction and a substantial drop in commercial/retail/industrial construction in general over the last 2 years.


----------



## TabJockey (8 January 2011)

So_Cynical said:


> Ill put up some observations here...2 of the real estate stocks i hold (DXS & ALZ) have recently re-valued there portfolios in an upward direction (after 2 years of falling valuations) also there's been a substantial drop in new building construction and a substantial drop in commercial/retail/industrial construction in general over the last 2 years.




Yes and those projects have a substancial supply lag. You dont just have to hammer up 4 walls and a roof. 

Approval+Construction 2-5 years.


----------



## explod (8 January 2011)

Anecdotally down my way, Frankston North new commercial/industrial area opened up over the last few years and its very slow, most still empty blocks and some built on over the last year still empty.

Dromana industrial estate sees the same story for a doubled area expansion three years ago, 15% built on and only half that number leased.

Those two areas, the only ones near to where I live, cannot be in isolation across the country,.....or?

For dear botty, I have a part of my SMSF invested in property.  If you check back, I am not down on property, in the right times it is a good investment.   The right time/s is the key and being able to pick them is the big one.  However outragous up ramping can do a lot of damage to people trying to learn what is best.

I do become annoyed at self appointed ratbags who, it would appear, should not have been promoted beyond second hand car yard sweeper.


----------



## So_Cynical (8 January 2011)

explod said:


> Anecdotally down my way, Frankston North new commercial/industrial area opened up over the last few years and its very slow, most still empty blocks and some built on over the last year still empty.
> 
> Dromana industrial estate sees the same story for a doubled area expansion three years ago, 15% built on and only half that number leased.
> 
> Those two areas, the only ones near to where I live, cannot be in isolation across the country,.....or?




Frankston is marginal for everything, always has been...Dromana is poor man's Frankston, well actually its poor man's Mornington so even worse.


----------



## TabJockey (8 January 2011)

So_Cynical said:


> Frankston is marginal for everything, always has been...Dromana is poor man's Frankston, well actually its poor man's Mornington so even worse.




Whoever is building commercial down at frankston is thinking long term....20 years long term.


----------



## tech/a (8 January 2011)

So_Cynical said:


> Ill put up some observations here...2 of the real estate stocks i hold (DXS & ALZ) have recently re-valued there portfolios in an upward direction (after 2 years of falling valuations) also there's been a substantial drop in new building construction and a substantial drop in commercial/retail/industrial construction in general over the last 2 years.




This "fall" puts construction at an average level.
Demand dictates that it "should" be above that.



> Those two areas, the only ones near to where I live, cannot be in isolation across the country,.....




Perhaps an extreme.
The Industrial areas which have infrastructure heading their way will demand development and will not suffer as your example has. So Investors in anything should first look at *WHY* the investment is likely to remain in *DEMAND*.


----------



## BigAl (8 January 2011)

robots said:


> hello,
> 
> *good evening, anyone seen BigAl?*
> surely now the forum must adopt the recommendations i put forward regarding being able to participate in this thread, its just a joke what gets posted, trolls
> ...



Still here,

I choose to read daily, have a life and post when I feel strongly about something, rather than sit on here like a Nazi and post exerpts on Days Of Our Lives.

Since you are asking, having a fantastic weekend, scouring the Perth Property Market, seeing those desperate sellers, who got sucked in with the FHOG or into the dream that prices will continue to rocket.

Lots of sad and poor people out there, just the average family that can't make ends meet.  It's unfortunate that I'll be pouncing on another property, at the expense of the rotting carcasses of the sellers.

Bliss and Glory here in WA, overpriced Houses, Sellers can't sell their homes, Real Estate Shonks / Agents getting out in droves.


----------



## TabJockey (9 January 2011)

BigAl said:


> Still here,
> 
> I choose to read daily, have a life and post when I feel strongly about something, rather than sit on here like a Nazi and post exerpts on Days Of Our Lives.
> 
> ...




Yep the bottom definitely fell out of Perth.


----------



## FxTrader (9 January 2011)

tech/a said:


> Dont know about that.
> If that's the only time something I WANT is for sale then I will buy it regardless of market.



Well then, in the example I provided, the buyers also clearly wanted the property regardless of market and they're $4.5 million poorer 2 years later as a result. Perhaps just wanting a property regardless of price or market conditions is more about emotion than reasoned investment.



> Relative to earnings years gone by ---no different.



Strongly disagree.  Please review the graphs below and then tell me that debt and income relative to house prices is the same as in years gone by...



















> Just be sure to let me know when that is. Ill bet you wont be able to pick it.



I'll take that bet relative to cycles. Picking the exact bottom no, but close is good enough if your investment horizon is long enough. Evidence suggests that the U.S. property market has not bottomed yet but there are now some great deals to be had for the astute property investor there.


----------



## robots (9 January 2011)

hello,

are they from DebtDeflation those graphs FXTrader?

thankyou

professor robots


----------



## robots (9 January 2011)

Hello,

yeah we just like the United States of America, get outta here and they reckon Iran and Nth Korea are ordinary joints:

http://www.theage.com.au/world/us-congresswoman-shot-in-head-by-gunman-20110109-19jmp.html

times up for people who cant see the difference 

glad to be in paradise, pay up if you want a piece of it

thankyou
professor robots


----------



## Vicki (9 January 2011)

Hello Robots,
After reading that article you posted, I'm enclined to agree with you, on your opinion of Oz.

I know it might sound stupid, but I was watching [foxtel] a stand-up comedian named
'Chris Rock' do'n his thing at the Apollo Theatre in NY.

In his act, he joked about gun violence.
His comical idea was not to control guns, but rather make the bullets worth 5k a piece.
That way he joked, there'd be a lot less innocent by-standers.

Kind of makes sense.

Vicki


----------



## qldfrog (9 January 2011)

Hi,
while quite a bear on the RE market especially here in Brisbane (sorry prof robot), i am considering investing in a cheap city studio; the key incentive being the NRAS scheme;

What do you think that scheme (extra 9k/year tax deduction for 10 year vs 20% rent discount)?
On paper coupled with neg gearing, i end up with a cash positive return.

I hope this is the right thread for this.Please advise if i should create a new thread
Cheers


----------



## FxTrader (9 January 2011)

robots said:


> Hello,
> 
> yeah we just like the United States of America, get outta here and they reckon Iran and Nth Korea are ordinary joints:
> 
> ...




Exactly what does the act of one murderous lunatic have to do with property prices bots?

Since you seem to confuse murder statistics with paradise have a look at these stats...

http://www.nationmaster.com/graph/cri_mur_percap-crime-murders-per-capita

For murders per capita, among the safest places to live are Saudi Arabia and Qatar.  Perhaps you should move to one of these paradises though they won't allow you to smoke the stuff you're on at the moment.


----------



## robots (9 January 2011)

qldfrog said:


> Hi,
> while quite a bear on the RE market especially here in Brisbane (sorry prof robot), i am considering investing in a cheap city studio; the key incentive being the NRAS scheme;
> 
> What do you think that scheme (extra 9k/year tax deduction for 10 year vs 20% rent discount)?
> ...




hello,

no, this is exactly the type of posting the thread should have instead of the pea-brain  whacky tobaccie type posts that have flooded the property threads for over 5yrs now,

the problem i have with NRAS is it has to go through a manager, you cant do it yourself i believe which opens it up for fees fees and fees

if you are getting principal and interest paid off then thats a huge bonus

thankyou
professor robots


----------



## Dowdy (9 January 2011)

FxTrader said:


> Exactly what does the act of one murderous lunatic have to do with property prices bots?
> 
> Since you seem to confuse murder statistics with paradise have a look at these stats...
> 
> ...





interesting link and going by bots learned laborer unqualified brain then Greece and Indonesia are some of the best places in the world to live in.

>>>going to www.propertygreece.com to buy my share of paradise. See you at the sunshine and lollipops


----------



## Tysonboss1 (9 January 2011)

qldfrog said:


> Hi,
> while quite a bear on the RE market especially here in Brisbane (sorry prof robot),




100% of my property is in brisbane, and even I am bearish on the brissy market.

Brisbane has been kicking along for quite a while when the southern states were snoozeing.

It would be healthy for brisbane to stagnate for a few years like it did for most of the 90's.

However whether it does nobody knows, I do feel however that brisbane could get caught up in any hype associated with movements in southern markets which could see gains continue, which will add to any speculative frothyness already in the market and see any even longer protracted stagnation (or falls) in future years. So I am definately not increasing to my brisbane holdings at this stage.


----------



## Tysonboss1 (9 January 2011)

Congratulations Robots, .

After watching you get bashed by the property perma bears for 3 years it's great to see the melbourne stats I have seen this weekend have shown soild gains in your market down in melbourne. 

The majority of suburbs up over 20% in 12 months.


----------



## GumbyLearner (9 January 2011)

robots said:


> pay up if you want a piece of it
> 
> thankyou
> professor robots




Finally, we agree on something Robots.

With *whose* money! Maybe we have some conjecture on that!!!


----------



## BigAl (9 January 2011)

robots said:


> hello,
> 
> ...instead of the pea-brain  whacky tobaccie type posts that have flooded the property threads for over 5yrs now,



Confessor Numb Nuts

Take a deep breath, stand in front of the mirror and take a long hard look at yourself.

The trash that comes out of your mouth is what denegrates this thread.  100's of posts about SFA.


----------



## againsthegrain (9 January 2011)

yea drinking lates and watching seaguls, he always says the posters who oppose him dissapear while he remains on auto repeat, I guess to him its a victory.

Probably the others just grew out of that phase when they finished primary school and decided there is no point replying to little robot.


----------



## FxTrader (9 January 2011)

BigAl said:


> Confessor Numb Nuts
> 
> Take a deep breath, stand in front of the mirror and take a long hard look at yourself.
> 
> The trash that comes out of your mouth is what denegrates this thread.  100's of posts about SFA.




+1 to BigAl for telling it like it is.


----------



## Dowdy (10 January 2011)

FxTrader said:


> +1 to BigAl for telling it like it is.




I gotta find his 'rules' for people t posting on this thread amusing 

If he wants 1000 post min requirement and we work that on botty it'll probably come to this...

2788 post bots has made
99.9% are all useless trash

So by my calculations he's only made 22.88 post that had any relevance to this tread. 
Even that is probably an over estimation


----------



## kincella (10 January 2011)

this forum is all about cyber bullying

the cyber bullies are out in force again......
you all gang up, to bash robots 
thats your contribution....
and you pat each other on the back....

it is quite disgusting, from a readers point of view....
to see the personal attacks against any other poster
it shows you the posters in a very bad light
and a disgrace to the forum
grow up and debate the subject, not the poster
there is no excuse, its not fun, its simply cyber bullying


----------



## Dowdy (10 January 2011)

kincella said:


> this forum is all about cyber bullying
> 
> the cyber bullies are out in force again......
> you all gang up, to bash robots
> ...





The man is a *troll*.

His post has no meaning, no contibution and he's a liar. The guy isn't a professor, he;s a joke.

This is not a chat room, no one cares about how the birds are or how the sunshine is - atleast do that in the general chat.

Put it this way. For arguments sake, if the housing market crashed and then I started making post like "HAHA I was right. I'm the best. Everything is looking great on my side etc etc" then that type of post contributes nothing and instigates arguments and hence I would be a *troll*, and so should be banned if I or anyone else does that....

You get my drift...


----------



## sails (10 January 2011)

Dowdy said:


> The man is a *troll*....




The "ignore" function works well and helps keep the blood pressure down. 
Top right hand corner -> click on "settings" -> scroll down and click on "ignore" and then add the annoying member.

It works well.  Those that like the member can continue to read every post.  Those that don't can prevent it except for any quoted posts.

It would be nice if this thread could contain a more reasoned style of discussion on the property market without frequently being interspersed with frustration at the bot.  I have the bot on ignore, but what's the use when others keep replying in frustrations?

I fear for the future of this thread if arguments continue to dominate it.  Here is what Joe said when he reluctantly opened this current property thread:



Joe Blow said:


> This new property thread replaces the previous property threads which have now been closed. Hopefully this new thread will also signal a new beginning in the level of courtesy shown to others.
> 
> Please feel free to post your research, analysis, relevant information or opinions on Australian property in this new thread. However, please do not deliberately provoke or personally attack or insult other thread participants.
> 
> ...


----------



## Mofra (10 January 2011)

Vicki said:


> Well said Greebly,
> Also, what would happen to home values, if the government allowed the further development of rural land around major cities...Something they might have to consider, If they estimate a large increase in our population in coming years?
> 
> Vicki



Melbourne is already (anecdotally) the 11th largest city in the world by geographic area, and the services to outer established suburbs aren't great.
The current trend of virtually no growth in real terms in some outer suburban locales would continue IMO, with other desireable areas outperforming.

The ability to state governments to build infrastructure would have a large bearing on outer suburban/low density area property prices. I wouldn't be game to buy at the fringes of suburbia in our major cities, but then again I'm an investor and don't live in property I buy.


----------



## FxTrader (10 January 2011)

sails said:


> The "ignore" function works well and helps keep the blood pressure down.
> Top right hand corner -> click on "settings" -> scroll down and click on "ignore" and then add the annoying member.
> 
> It works well.  Those that like the member can continue to read every post.  Those that don't can prevent it except for any quoted posts.
> ...




Useful post and reminder sails.  Putting bots on ignore makes sense since he rarely contributes any useful information and he's just not interested in reasoned debate on the future of property prices in Aus but loves to stir with whacky statements.


----------



## Vicki (10 January 2011)

Mofra said:


> Melbourne is already (anecdotally) the 11th largest city in the world by geographic area, and the services to outer established suburbs aren't great.
> The current trend of virtually no growth in real terms in some outer suburban locales would continue IMO, with other desireable areas outperforming.
> 
> The ability to state governments to build infrastructure would have a large bearing on outer suburban/low density area property prices. I wouldn't be game to buy at the fringes of suburbia in our major cities, but then again I'm an investor and don't live in property I buy.




Yes interesting, I wonder what the federal Governments Ideas are for expanding infrastructure, to cope with the forcasted rapid population increase?

If they do it too quickley, it could effect home prices in the short term?

Vicki


----------



## explod (10 January 2011)

Dowdy said:


> The man is a *troll*.
> 
> Put it this way. For arguments sake, if the housing market crashed and then I started making post like "HAHA I was right. I'm the best. Everything is looking great on my side etc etc" then that type of post contributes nothing and instigates arguments and hence I would be a *troll*, and so should be banned if I or anyone else does that....
> 
> You get my drift...




Yep, loud and clear.   Tried very hard over the years to have his wings clipped.

His contribution to "The Future of Australian property prices" has been to thwart any form of a *common sense approach*.

My emphasis is what I would hope is a prime objective of ASF and in most threads that is the case.   For some time property discussion was closed down on ASF for these sorts of reasons.   We need to just ignore botty and continue our discussions constructively.   We do not want to lose this angle of the forum as property is one of the most important general investments at the right time for the majority of people.

Nothing at all on real estate results over the weekend in the newspapers in Victoria.  And botty does not even report the clearance rates anymore.  

Noted in a post above that Victorian Real Estate was up 20% for the last 12 months.   The figures for the last three months will be interesting when they come out,  IMHO.


----------



## Dowdy (10 January 2011)

sails said:


> The "ignore" function works well and helps keep the blood pressure down.
> Top right hand corner -> click on "settings" -> scroll down and click on "ignore" and then add the annoying member.
> 
> It works well.  Those that like the member can continue to read every post.  Those that don't can prevent it except for any quoted posts.
> ...





Thanks for that. Bots now on IGNORE. 

Now I can finally read the more sensible comments - from both sides of the argument


----------



## Mofra (10 January 2011)

Vicki said:


> Yes interesting, I wonder what the federal Governments Ideas are for expanding infrastructure, to cope with the forcasted rapid population increase?



I don't hold much faith in either party - infrastructure stalled under Howard, and it seems a fair way down the list of priorities for Labour as well so I don't think too much will happen in the short term.

City infrastructure is largely a state government repsonsibility however, and I can only speak for Victoria when I note that both sides of politics are more into self-serving and point scoring than fixing proper problems. Vic ALP had over a decade and delivered a couple of stations, no new trainlines and no significant transport upgrades, leaving the train system unable to cope with peak demand. Libs traditionally invest little in infrastructure, although Ballieu is in the infancy of his govenrment and deserves some time to settle in. 

The outer suburbs appear poorly planned and car travel is vital - someone who travels out to Caroline Springs often says the area is a nightmare with a single lane thoroughfare the main arterial inside the development, and residents couldn't dream of using public transport to the CBD for work unless they were willing to spend 3hr+ per day in travel time.

These lifestyle trade-offs will continue to be directly represented in house prices & growth stats IMO


----------



## Quincy (10 January 2011)

explod said:


> Noted in a post above that Victorian Real Estate was up 20% for the last 12 months.   The figures for the last three months will be interesting when they come out,  IMHO.




I don't live in Melbourne. Does anyone know what has been driving the market there ? It seems that the Chinese are continuing to have an interest in the Melbourne property market. 

Are the Chinese still well represented at auctions (ie. buying) ?



> A CHINA-based developer is believed to be paying more than $100 million for what is the biggest development site put to the Melbourne market in recent years.
> 
> http://zincip.biz/2010/07/13/asian-developers-betting-big-money-on-melbourne-property/







> CHINA based builder Sunnyland Investment Group has paid about $40 million for a major St Kilda Road development site which has the potential to yield at least two major apartment skyscrapers, and a ground floor shopping centre.
> 
> The purchase continues a trend of Asia-based investors swooping on inner-city sites and exploiting the state government’s problematic Melbourne @ 5 Million planning policy which encourages higher density redevelopment around existing roads and public transpo
> 
> http://www.realestatesource.com.au/...uys-major-st-kilda-road-development-site.html







> Chinese developers target Melbourne - PUBLISHED : 08 Jan 2011 12:02:53
> 
> Individuals and private companies from mainland China are keen buyers of development sites in the city and its suburbs.
> 
> http://www.afr.com/p/business/property/chinese_developers_target_melbourne_fS3TUcQXWlj62XsXseKW8H?hl


----------



## robots (10 January 2011)

Hello,

yeah thanks Kincella and mofra, i reckon you spot, bully boys

mainstream posters like those prevalent in the last 20-30 posts just cant accept other peoples opinions, simple 

i believe Australia is Utopia, Paradise, the whitelight, the heartbeat of goodwill for planet earth

amazing, some have taken on my and 4 others vision and no doubt they not looking back, well done brothers

thankyou
professor robots


----------



## Vicki (10 January 2011)

It appears we have more than one financial tie to China.

Some food for thought...What would happen if these Chinese developers experience some problems in their own economy and/or forsee problems with our r/e market, at least in the medium term?

Would they be likely to 'dump' some of their investments, adding more 'supply' to a possibly stressed market?

Vicki


----------



## robots (10 January 2011)

Hello,

dont know what the big deal is really, i keep the site ticking over while offerring those interested a step forward, another universe, a different space to the guy walking next to you 

a euphoria which rushes through the body, i guess similar to the powers Bruce Lee was given, rush

thankyou
professor robots


----------



## greebly24 (10 January 2011)

Just to let everyone know that I was being sarcastic with my post about property never dropping in price, only softening. I just wanted to make people aware of the importance in the use of language, particularly when it comes to real estate.

Media outlets rely heavily on real estate advertising and are therefore very hesitant to print negative stories about it. They don't bite the hand that feeds. But if you do see a negative story, the situation is obviously very bad and couldn't be ignored.

I work for a media outlet. Often we do real estate promo stories, like "hottest suburbs", but lately the cameramen have difficulty getting shots of anyone going to open inspections. If they do attend a couple of random auctions, they always seem to unluckily pick the ones that get passed in on vendor bids. Anecdotal, but alarming.

I also noticed the dicrepancies in the mainstream media's reporting of real estate figures. An article in the Herald Sun a few weeks ago stated that the market was booming because over 1,000 properties were up for auction over each of the next three weekends in Melbourne. They then printed the auction clearance rates on the following Monday. The result was about 450 homes out of the 800 up for auction for a clearance rate of well over 50%.

Sounds great. There is is in print so it must be true. But what happened to the other 200+ homes that were sposed to be auctioned?

If those 200+ homes sold before auction, then the clearance rate would be even better and I can't understand why this wouldn't get included. Or maybe it's because it was the other way round. An auction where no-one shows up or no-one bids can't really be counted as an auction, can it?

So as far as the media goes, good news real estate stories generate advertising dollars. Bad news stories don't. So if you read bad news, things are probably worse.


----------



## explod (10 January 2011)

robots said:


> Hello,
> 
> dont know what the big deal is really, i keep the site ticking over while offerring those interested a step forward, another universe, a different space to the guy walking next to you
> 
> ...




Yes Australia is paradise and I live in one of the best parts of it, would live nowhere else.

That does not mean we should not take care and also care of our fellows by being resonable in what we say and how we say it.

Loillies pops and roses are fine but the reality is that in spite of how god it is here and that we are reasonably insulated from the problems overseas that we still may be also having some problems.  Silence is often golden but as just mentioned in the previous post by greebly24, it *may* too indicate some forboding for awhile with property.


----------



## nukz (10 January 2011)

Been to Zurich/Geneve i would move there compared to Melbourne or any place in Australia they do kick our ass in all terms. 

But i would miss the nice weather  

This is a thread questioning the future of property prices, if indeed prices did drop here then even if you where not effected your standard of living may drop(crime rate increases, ect)


----------



## Tysonboss1 (10 January 2011)

nukz said:


> This is a thread questioning the future of property prices, if indeed prices did drop here then even if you were not effected your standard of living may drop(crime rate increases, ect)




 What, How can you justify that statement, how the hell would a correction in property prices mean Higher crime rate


----------



## Dangerous (10 January 2011)

Mofra said:


> I don't hold much faith in either party - infrastructure stalled under Howard, and it seems a fair way down the list of priorities for Labour as well so I don't think too much will happen in the short term.




interesting article on infrastructure in NSW from w/e Austrlian.... makes me wonder if it will have drag on Australian economy at some point.

http://www.theaustralian.com.au/nat...-load-of-rubbish/story-fn59niix-1225983250480


----------



## Mofra (11 January 2011)

Dangerous said:


> interesting article on infrastructure in NSW from w/e Austrlian.... makes me wonder if it will have drag on Australian economy at some point.
> 
> http://www.theaustralian.com.au/nat...-load-of-rubbish/story-fn59niix-1225983250480



Cheers Dangerous, interesting reading - and I must say, excellent avatar & location as well


----------



## nukz (11 January 2011)

Tysonboss1 said:


> What, How can you justify that statement, how the hell would a correction in property prices mean Higher crime rate




It's not that hard to justify, when people on a large scale loose equity or go bankrupt crime rates will rise ushally around theft.

If things get really bad you will see things like looting and street violence.

This is not in any way a predition though lol


----------



## Tysonboss1 (11 January 2011)

nukz said:


> It's not that hard to justify, when people on a large scale loose equity or go bankrupt crime rates will rise ushally around theft.
> 
> If things get really bad you will see things like looting and street violence.
> 
> This is not in any way a predition though lol




I don't think so, i can't see my neighbors suddenly turning to petty crime because the value of the home they own has lost 10% of it's value.

If property prices stagnate for a while or fall 10% it does not mean there would all of a sudden there would be mass bankruptcies and foreclosures. I mean as long as you keep making your payments you would not even notice any shorterm fall.

You dooms dayers paint a picture of a property market where 100% of property owners have bought their properties right at the top of the market on 100% finance and are suffering mortgage stress.

This is simple not the case, You would probably find 90% of home owner have owned their property for more than 7 years and have build up alot of equity and their current mortgage interest payments are less than it would be to rent the home.


----------



## nukz (11 January 2011)

Tysonboss1 said:


> I don't think so, i can't see my neighbors suddenly turning to petty crime because the value of the home they own has lost 10% of it's value.
> 
> If property prices stagnate for a while or fall 10% it does not mean there would all of a sudden there would be mass bankruptcies and foreclosures. I mean as long as you keep making your payments you would not even notice any shorterm fall.
> 
> ...




10% drop i agree things won't change much, i was thinking something in the 50+% range like seen in parts of the US.


----------



## Tysonboss1 (11 January 2011)

nukz said:


> It's not that hard to justify, when people on a large scale loose equity or go bankrupt crime rates will rise ushally around theft.
> 
> If things get really bad you will see things like looting and street violence.
> 
> This is not in any way a predition though lol




Ha HA HA ,...

I just had a mental picture of Mrs Stevens busting the window of my car and hot wiring it to take the gran kids to preschool.


----------



## Tysonboss1 (11 January 2011)

nukz said:


> 10% drop i agree things won't change much, i was thinking something in the 50+% range like seen in parts of the US.




It's not going to happen, the fundamentals are different. But even a large drop like that wouldn't mean foreclosures, it's not like they will do margin calls.

And most property owners would have over 50% equity anyway.


----------



## satanoperca (11 January 2011)

Tysonboss1 said:


> It's not going to happen, the fundamentals are different. But even a large drop like that wouldn't mean foreclosures, it's not like they will do margin calls.
> 
> And most property owners would have over 50% equity anyway.




That statement made me laugh, sure a 50% drop in prices would not see a wave of foreclosures, you have to be kidding it would be worse than the floods in QLD.

Cheers.


----------



## Knobby22 (11 January 2011)

Tysonboss1 said:


> It's not going to happen, the fundamentals are different. But even a large drop like that wouldn't mean foreclosures, it's not like they will do margin calls.
> 
> And most property owners would have over 50% equity anyway.




Agree - it will take a 50% drop combined with a depression causing large unemployment (15% +).


----------



## Tysonboss1 (11 January 2011)

satanoperca said:


> That statement made me laugh, sure a 50% drop in prices would not see a wave of foreclosures, you have to be kidding it would be worse than the floods in QLD.
> 
> Cheers.




foreclosure would only happen if the borrower stopped paying the mortgage payments, and why would they stop paying the mortgage payments. Considering most home owners mortagage payments are less than they would have to pay in rent else where.

Interest rate rises would cause foreclosures more than a decrease in the quoted value of the asset.


----------



## nomore4s (11 January 2011)

Tysonboss1 said:


> You dooms dayers paint a picture of a property market where 100% of property owners have bought their properties right at the top of the market on 100% finance and are suffering mortgage stress.
> 
> This is simple not the case, You would probably find 90% of home owner have owned their property for more than 7 years and have build up alot of equity and their current mortgage interest payments are less than it would be to rent the home.




This is probably something that does get overlooked. The market here is considerably different to the US because of the sub prime loans the US market was flooded with new owners who couldn't really afford to pay the repayments which was also compounded by the way the banks on-sold that debt, that hasn't really happened here. Sure there are people around that have over-extended themselves and that will feel the pinch if rates continue to rise but the only way I can see the market really dropping more than +30% is if we get mass unemployment.


----------



## explod (11 January 2011)

nomore4s said:


> This is probably something that does get overlooked. The market here is considerably different to the US because of the sub prime loans the US market was flooded with new owners who couldn't really afford to pay the repayments which was also compounded by the way the banks on-sold that debt, that hasn't really happened here. Sure there are people around that have over-extended themselves and that will feel the pinch if rates continue to rise but the only way I can see the market really dropping more than +30% is if we get mass unemployment.




Maybe not as bad as the US but I can assure you that a lot of people in the last five years, before the recent tightening, obtained low doc loans here in Aus.

Remember some were even at "no down payment at all and we will give you a holiday thrown in".

So sure not the bloodbath of the US or the UK (some down 90% mind) but we could certainly be in for a pretty big storm.

And no clearance rate report for a month now tells me something is amiss.

Cuuummmooorn there botty, how about a good undoctored update on the clearance rates.

Anecdotally I hear that very few are turning up to a lot of the autions.   Anyone else hearing that?


----------



## Tysonboss1 (11 January 2011)

explod said:


> but we could certainly be in for a pretty big storm.




I for one would welcome a fall in property prices of 50%, but it is not even remotly likly.

Fluctuations in prices in any market is completely normal, so I definaetly would not rule out a fall of a smaller scale of say less than 20%. But any correction in the property market normally comes as a very slight fall and a period of stagnation(5 years).

But this would not affect property investment's viabilty for home ownership vs renting longterm or long term property investment full stop.


----------



## sinner (11 January 2011)

nomore4s said:


> This is probably something that does get overlooked. The market here is considerably different to the US because of the sub prime loans the US market was flooded with new owners who couldn't really afford to pay the repayments which was also compounded by the way the banks on-sold that debt, that hasn't really happened here. Sure there are people around that have over-extended themselves and that will feel the pinch if rates continue to rise but the only way I can see the market really dropping more than +30% is if we get mass unemployment.




"Us doomsdayers", have pointed out repeatedly that the market doesn't require everyone to be overextended or to have bought at the top or whatever.

The point is rather, that a simple/sustainable and safe system whereby banks pay depositors 5% and charge their mortgage customers 7% to collect the spread is no longer in existence. 

We now have a system which is highly complex with many connections between the different parts are tightly coupled and interdependent, sometimes in hidden ways. Complex and interdependent systems almost always break down in catastrophic and unexpected events as they grow more complex and more interdependent.

* The Australian banking system depends on foreign funding for about a third of their continued credit growth (some numbers suggest higher). The Commonwealth Treasury noted in the 2010 "Red Book" that reliance on short term foreign debt is a key risk. Massive global debt issuance continues (WalMart 30 year 0.5% anyone?!!! ) and resets on the old stuff are still rolling. Funding costs for our banks continue to rise and they wouldn't be getting a cent without the Treasury guarantee. How do we expect our banks to issue more and more debt to keep the current property trend rolling? 
* Commonwealth Bank and Westpac both hold mortgages in excess of 50% of their loan books. At such high levels of leverage, the effects of a "normal" correction in values could be amplified.
* The AUD is running high on USD shenanigans and commodity demand rather than productivity or strong economics (over the last 10 years Australia has consistently shown lower productivity growth and higher inflation than comparable countries). 
* Earnings estimates for the industrials sector were not looking good in the last quarter of 2010.
* China is starting a much more severe monetary tightening regime in 2011 for fear of a hard landing.

"Us doomsdayers" aren't saying that everyone is under stress or that everyone bought at the top or whatever. We are pointing out the old system which was sustainable and logical is gone, replaced with another that is large, complex, tightly coupled to many entities far beyond our control and growing at a fast pace for reasons that have absolutely nothing to do with people needing a place to live.


----------



## FxTrader (11 January 2011)

Tysonboss1 said:


> If property prices stagnate for a while or fall 10% it does not mean there would all of a sudden there would be mass bankruptcies and foreclosures. I mean as long as you keep making your payments you would not even notice any shorterm fall.



A fall in price will likely result from further mortgage interest rate rises.  Household debt levels combined with higher interest rates will pressure borrowers to sell and increase unsold inventory as is now occurring in WA.  As prices fall the threat of negative equity looms for many recent purchasors. My guess is that many highly geared investors will flock to exit some of their property portfolio in such a scenario since negative equity was probably not considered a likely event in their wealth creation strategy.



> You would probably find 90% of home owner have owned their property for more than 7 years and have build up alot of equity and their current mortgage interest payments are less than it would be to rent the home.



I use to believe this as well but home equity stats tell a different story. Home equity has been steadily declining, almost certainly due to the price boom in housing since 2002.  Given that most of the mortgage payment is interest in the first half of the loan period, little equity is accrued except for hoped for price appreciation.  In the case of investors, many gear to the hilt and have little equity other than the price appreciation achieved through rising valuations (paper wealth) which they then use to purchase their next IP.


----------



## Mofra (11 January 2011)

explod said:


> Maybe not as bad as the US but I can assure you that a lot of people in the last five years, before the recent tightening, obtained low doc loans here in Aus.



Low doc lons in Australia were 80% LVR lends though, vastly different to the US model.

In any case, I think some of the discussion here is backwards, talking about falling equity and its effect on unemployment. I think the reverse is much more accurate - the delinquency rate is much more aligned to the unemployment rate than it is to RBA interest rates.


----------



## nukz (11 January 2011)

explod said:


> Remember some were even at "no down payment at all and we will give you a holiday thrown in".




This is true my first place i got on 105% which was quite easy to obtain  i wish i had a holiday thrown in as well lol

As far as equity in home and in-debtedness the last 5 years of first home buyers would have to take the cake. If there was ever a housing slump they would be hit the hardest.

I would put this down to new estates and appartment/units, as they are the most likely purchases by first home buyers.


----------



## greebly24 (11 January 2011)

Is there still a housing shortage in Australia?

http://www.smartcompany.com.au/econ...ngs-points-to-price-falls-in-2011-expert.html

_44% more properties for sale across Australia than a year ago._

Some of my assumptions:
Aust population = 22,500,000
Population growth @ 1.7% = 382,500
Divide by 2.7 persons per household = 141,660 homes required.

_328,270 residential property listings in Dec 2010._

Does that really mean there's an extra 186,000 homes across Australia that won't be needed next year? Or do we have 500,000 Asian students to fill them? Plus all the new homes being built? Am I missing something?


----------



## nukz (11 January 2011)

greebly24 said:


> Is there still a housing shortage in Australia?




Well up untill late '06 and early '07 people in Vegas and California where still being told there was a housing shortage(I know its not really relevant). This is quite a common line by estate agents and REIV type institutes.


----------



## Tysonboss1 (11 January 2011)

FxTrader said:


> A fall in price will likely result from further mortgage interest rate rises. ]






Time will tell,

I am Happy to wait and see, As I said I would welcome a price fall of 50%, However as I said it's unlikly so I will not be holding my breath.

Price fall of 20% and a few years of stagnation would be nice, but again not as likly.


----------



## Dowdy (11 January 2011)

Tysonboss1 said:


> You dooms dayers paint a picture of a property market where 100% of property owners have bought their properties right at the top of the market on 100% finance and are suffering mortgage stress.
> 
> This is simple not the case, You would probably find 90% of home owner have owned their property for more than 7 years and have build up alot of equity and their current mortgage interest payments are less than it would be to rent the home.




I highly doubt that last comment 







> 90% of home owner have owned their property for more than 7 years




The last 10 years a large chunk of the market were FHB, fulled by easy credit and government grants and with todays FHB spending habits, it's next to impossible that they OWN their home.

What will happen if prices fall is that the so called investors will be in negative equity and together with the already extremely low yield and were only relying on capital growth will sell their property. This will create an oversupply - which i've always said, there was never a shortage anyways but it will be obivious to the market and sprukers

There are so many factors that will contribute to an oversupply scenario - FHB defaulting, overseas investors retreating.

Really the question shouldn't be _why it will fall_ but _what factors will contribute to an obvious oversupply that the RE agents can't hide _


----------



## Tysonboss1 (11 January 2011)

Dowdy said:


> I highly doubt that last comment
> 
> The last 10 years a large chunk of the market were FHB, fulled by easy credit and government grants and with todays FHB spending habits, it's next to impossible that they OWN their home.
> 
> ...




As I said you appear to be a dooms dayer that has an unrealistic view of the make up of home owners,

Again you seem to think that any fall in value will see the majority of investors and home owner fall into neagtive equity,

What you have to understand is that any one who has owned their property for more than 7 years is already making interest payments smaller than the rent the would other wise have to pay, and they have built up a buffer of equity both from principle payments and capital gains in prior years.

not to mention all the people that own their home debt free, or with very low debt of less than 50% of their original purchase price.

You see the main benefit to home ownership rather than renting is that over time your rent goes up but the interest payments go down.

the pool of property owners is filled with people from all different stages of ownership, from those that have just started paying off there home through to those who have finished.


----------



## explod (11 January 2011)

Dowdy said:


> I highly doubt that last comment
> 
> The last 10 years a large chunk of the market were FHB, fulled by easy credit and government grants and with todays FHB spending habits, it's next to impossible that they OWN their home.
> 
> [/I]




Agree

What  I have witnessed, because I was involved, many spruiking organisations teaming up people to buy multiple investment properties over the last 10 years.  These people have stacked up properties as Allan Bond did in the 80's, its called parachuting.

If property values begin to weaken just a bit you will see a traffic jam of investors all trying to get out at the one time.

Its nice to look on the bright side of life but we also have to look at reality too.

And yes we can say, "do not think it will happen here" or "I dont' think so"  But just what if it does, will you be safe in a big crash?


----------



## Tysonboss1 (11 January 2011)

Dowdy said:


> What will happen if prices fall is that the so called investors will be in negative equity and together with the already extremely low yield and were only relying on capital growth will sell their property.  [/I]




You don't have to rely on over the top capital growth to profit from property.

I invest in property with the mind set that is it a safe place to park a larger sum of money and earn 5% on it while my capital is protected from inflation. So the net effect I am looking for is for it to be like an inflation headged bond or term deposit.

Any capital gains higher than the general rate of inflation is a bonus.


----------



## Tysonboss1 (11 January 2011)

explod said:


> Agree
> 
> What  I have witnessed, because I was involved, many spruiking organisations teaming up people to buy multiple investment properties over the last 10 years.  These people have stacked up properties as Allan Bond did in the 80's, its called parachuting.
> 
> ...




Well then the are not really investors then, a better term would be speculaters.

Would I be safe in a be crash? yes I would, and I would be looking to buy some property on high yields to add to my portfolio.

I am not saying prices don't or won't fluctuate, Only an idiot would believe that. I am just saying that in the range of possible outcomes the 50% decline is a very very long shot, and if it happened it would not be the end of the world.

We sore the share market have a 50% decline so what, it was the best thing to ever happen to me as far as investments go. And any property price crash would be much less brutal because your porperty won't disappear.


----------



## Tysonboss1 (11 January 2011)

If anyone is that worried about a housing price crash of 50% or more let me know and I will get my Lawyer to put together a contract and I will sell you an out of the money put option against you home.


----------



## TabJockey (11 January 2011)

Tysonboss1 said:


> If anyone is that worried about a housing price crash of 50% or more let me know and I will get my Lawyer to put together a contract and I will sell you an out of the money put option against you home.




Haha thats how the State bank of SA went broke. One out of the money put on a tower in melbourne!


----------



## Tysonboss1 (11 January 2011)

TabJockey said:


> Haha thats how the State bank of SA went broke. One out of the money put on a tower in melbourne!




What kinda p*ss weak balance sheet did they have,...

But seriously, for $20,000 or more depending on the valuation, I will write you a 5 year european out of the money put, for an amount 25% lower than what Its it's current valuation is.


----------



## TabJockey (11 January 2011)

Tysonboss1 said:


> What kinda p*ss weak balance sheet did they have,...
> 
> But seriously, for $20,000 or more depending on the valuation, I will write you a 5 year european out of the money put, for an amount 25% lower than what Its it's current valuation is.




I ran black scholes quickly:

For a 700,000 house to buy a european protective put for 500,000, 5 years time, 27% volatility (this is high to account for a prospective crash).

About 25k is a fair price.


----------



## Vicki (11 January 2011)

> Would I be safe in a be crash? yes I would, and I would be looking to buy some property on high yields to add to my portfolio.




The people who are ready, will do very well in the coming years.



> But seriously, for $20,000 or more depending on the valuation, I will write you a 5 year european out of the money put, for an amount 25% lower than what Its it's current valuation is.




I think to be fair, you'd have to offer an American style option, to give a person a chance to act on it, rather than wait 5 yrs.
In 5 yrs. the said property may well have recovered from a 25% drop?
Doesn't help much with possible negative equity in the mean time.

Vicki


----------



## Tysonboss1 (11 January 2011)

Vicki said:


> , to give a person a chance to act on it, rather than wait 5 yrs.
> In 5 yrs. the said property may well have recovered from a 25% drop?
> Doesn't help much with possible negative equity in the mean time.
> 
> Vicki




Thats kind of the point, But If it is such a short term event they don't really need to act on it.


----------



## Dangerous (12 January 2011)

finally this thread gets sensible!

Glad i didn't buy in Bulimba three years ago.  Had an offer in which they eventually accepted after I got cold feet.

Be pretty hard to sell in those previously plum areas - Norman Park, Bulimba, Hawthorn, East Bris.  Prices through there have not moved for two years so there could be negative equity arising through there.  But hey, there will always be pockets like that Eg West syd and gold coast


----------



## Tysonboss1 (12 January 2011)

Dangerous said:


> Prices through there have not moved for two years so there could be negative equity arising through there.




How exactly does steady prices generate negative equity?


----------



## Dangerous (13 January 2011)

Tysonboss1 said:


> How exactly does steady prices generate negative equity?




call me a bear but i assume buyers will have a long memory when it comes to buying houses that went under in the floods of 2011.

To be exact, but concise - prices there have not moved for two years and now they will be down.


----------



## Tysonboss1 (13 January 2011)

Dangerous said:


> call me a bear but i assume buyers will have a long memory when it comes to buying houses that went under in the floods of 2011.
> 
> To be exact, but concise - prices there have not moved for two years and now they will be down.




The same areas went under in1974, and peoples memories were pretty short then, if you live in these areas it's not a secret, I know people in these areas who will point out markings on the stumps of there house from where the water level was.

And you would think that any down turn in the areas effected by the flood, will be offset by an equal but opposite upturn in the areas not effected.

I mean people have to live some where they are going to leave brisbane and move to mars.

We live in the real world, things happen they don't change anything longterm, look at the recent passed, Bushfires in victoria, earth quake in new castle, cyclone tracy in darwin, you could name hundreads round the world, and they never seen to hav e longterm impact.


----------



## FxTrader (13 January 2011)

Tysonboss1 said:


> The same areas went under in1974, and peoples memories were pretty short then, if you live in these areas it's not a secret, I know people in these areas who will point out markings on the stumps of there house from where the water level was.



Markings on stumps is one thing, a water line on bricks and mortar (with slab underneath) is another.  Memories may fade with time but I suspect many living on the flood plain will be looking for safer ground in the future and hope to sell to those with very short memories.


----------



## Tysonboss1 (13 January 2011)

FxTrader said:


> Markings on stumps is one thing, a water line on bricks and mortar (with slab underneath) is another..




There plenty of those aswell, the 1974 floods were worse than this most recent flood.  That big dam you saw on the news doinmg it's best to control the flows was built after the 74 flood.

In breakfast creek industrial area there is plenty of units with markings high on the block walls.


----------



## Dangerous (13 January 2011)

of course people will move back there but for a number of years they'll be able to do so at significantly lower prices than they would have been able to last week.


----------



## explod (17 January 2011)

Is there anyone out there.  

Hey Botty ?

Anyone have any idea of the latest clearance rate ?

The good Doctor himself educated me on the importance of this guage and its value as an indicator of "The Future of Australian Property Prices"

There has not been a post since the 13th.  Several months back there would have been up to 20 posts on a Monday alone.  What is going on out there ?


----------



## TabJockey (17 January 2011)

explod said:


> Is there anyone out there.
> 
> Hey Botty ?
> 
> ...




Nobody knows whats going to happen? are we going to coast or are we doing to drop?


----------



## sinner (17 January 2011)

explod said:


> Is there anyone out there.
> 
> Hey Botty ?
> 
> ...




Hey explod,

All I saw since Jan started was a massive drop in building approvals from way positive to way negative for the last numbers of 2010.

The usual "free market entrepreneurs" are screaming for the government to once again intervene and save their hineys, especially in Tasmania.

That is all.


----------



## KurwaJegoMac (17 January 2011)

TabJockey said:


> Nobody knows whats going to happen? are we going to coast or are we doing to drop?




What I've noticed from watching the ASF is that the activity on the forums is closely related to market extremes. So when markets are crashing or rising exponentially you have a high volume of posts as people.

Once things are relatively flat/steady activity on the ASF drops considerably.


----------



## Aussiejeff (17 January 2011)

Dangerous said:


> call me a bear but i assume buyers will have a long memory when it comes to buying houses that went under in the floods of 2011.
> 
> To be exact, but concise - prices there have not moved for two years and now they will be down.




Seems LJ Hooker Indooroopilly has the same fears....



> LJ Hooker Indooroopilly principal real estate agent Scott Gemmell said *it could be 10 to 15 years before some flooded suburbs regain their popularity*.
> 
> "In the short period it probably scares me a little; what the flood will do to house prices," he said.
> 
> ...



http://www.heraldsun.com.au/news/br...rices-to-plummet/story-fn7ikbtj-1225989665626

Good luck to any of those poor badly inundated folk across Australia who want to relocate - but now have to likely wait months/years to get a full renovate/rebuild while their flooded suburb's popularity tanks ... there's not always a silver lining as some seem to suggest. Depends on which side of the "cloud" you are sitting?

I would guess that house flood insurance premiums down the track for anyone wanting to buy one of these badly inundated properties would be punitive?? That in itself would tend to deter potential buyers.

aj


----------



## TabJockey (17 January 2011)

KurwaJegoMac said:


> What I've noticed from watching the ASF is that the activity on the forums is closely related to market extremes. So when markets are crashing or rising exponentially you have a high volume of posts as people.
> 
> Once things are relatively flat/steady activity on the ASF drops considerably.




I think your right but its probably a lagging indicator not a leading indicator.


----------



## Vicki (17 January 2011)

> What I've noticed from watching the ASF is that the activity on the forums is closely related to market extremes. So when markets are crashing or rising exponentially you have a high volume of posts as people.
> 
> Once things are relatively flat/steady activity on the ASF drops considerably.




o.k. I'll play the devils' advodcate.

But we haven't had any extremes on the oz r/e market in recent years have we?

Just int. rates fluctuating from 4.5-10%. Noth'n to out of the ordinary?

If the average fhb's mortgage is 'round 300-400K, then so be it.
Personally, I wouldn't be keen to pay up to 30-40k per annum in interest.
Even half that would be enough.

If average suburbia keeps creeping up in value/mortgage levels, then I'm happy for the average people who can somehow afford it.

Vicki


----------



## WaveSurfer (17 January 2011)

Aussiejeff said:


> Seems LJ Hooker Indooroopilly has the same fears....
> 
> http://www.heraldsun.com.au/news/br...rices-to-plummet/story-fn7ikbtj-1225989665626
> 
> ...




Silver lining? On the banks of the brizzy river?!?!?!

Come on... If you buy in such low lying areas, you have to take into consideration that there's a chance that you'll be in 3 meters of water. Complacency mate, not silver lined.

Yes house prices will plummet. They did after 74, and I'm sure that they will again. People will buy, forget, and it (the flooding) will happen again. No doubts about that.


----------



## KurwaJegoMac (18 January 2011)

Vicki said:


> o.k. I'll play the devils' advodcate.
> 
> But we haven't had any extremes on the oz r/e market in recent years have we?
> 
> ...




Well it depends on what you count as an extreme. As you so rightly pointed out in terms of interest rates we're no where near and extreme - Yes prices are high relative to median wage, but this has been going on for the last 15 years so it's nothing new. 

My tongue-in-cheek correlation was not looking at prices and interest rates. When I wrote that comment I was thinking about auction clearance rates as well as median price growth rates.

Where for the last 2-3 years there have been very high auction clearance rates (used as an indicator of supply/demand by many on this forum) of at least 80%+ and quarter on quarter growth of house prices in relatively high percentage terms. During this period this thread has been bombarded with doomsdayers, naysayers, optimists and bears and everything in between. 

Now look at what's been happening for the last 3-4 months. There's been a real slowdown in the regularity of posts on this thread. It also comes at a time when auction clearance rates are in the range of 60-75% and we've had many areas posting relatively flat growth.

So thats how I came to that observation, of course it's all tongue in cheek and not really an accurate reflection of market sentiment...

...or is it?

*queue dramatic music*

:


----------



## explod (19 January 2011)

On 3AW this morning, short blurb that blocks of land sales have dropped 70% in latest figures.


----------



## KurwaJegoMac (19 January 2011)

explod said:


> On 3AW this morning, short blurb that blocks of land sales have dropped 70% in latest figures.




Do you have any more detail? Did they mention what states/areas? Also for what time period? Week? Month? Quarter?

That's a very big drop but can't jump to conclusions without knowing some more details.


----------



## explod (19 January 2011)

KurwaJegoMac said:


> Do you have any more detail? Did they mention what states/areas? Also for what time period? Week? Month? Quarter?
> 
> That's a very big drop but can't jump to conclusions without knowing some more details.




No more given than that.  

And yep thats a bit up in the air.


----------



## Agentm (19 January 2011)

explod said:


> No more given than that.
> 
> And yep thats a bit up in the air.




the age did a report on that

http://theage.domain.com.au/real-es...ut-prices-hit-new-heights-20110118-19v9n.html

they dont say 70% but 74%  a fair bit higher than 3 AW

but of course it all means nothing, with the land banking consortium keeping the land available in short supply we can expect prices to be held high on land..  great news for the bubble imho..


----------



## freebird54 (19 January 2011)

Extract from MM

Meanwhile…

“Floods tipped to hit house prices”, says today’s The Age.

The mainstream press has got it spot on for once.

Of course, the mainstream still denies the existence of an Aussie housing bubble.  The floods will be a scapegoat.  We can picture their argument now: “Oh, if it wasn’t for all the flooding, Aussie house prices would be up 10% this year – that’s the normal growth rate you know.”

Kris Sayce
For Money Morning Australia


----------



## damien275x (19 January 2011)

Even the dumb, uneducated bogans in my family aren't property investing anymore.
All talk about property is negative lately. Everyone I am talking to is 'holding off buying property at the moment, to wait and see what the market does' .. and well, if nobody's buying......................... what happens to prices? Down they go.


----------



## Tysonboss1 (19 January 2011)

If property prices have a correction,

What sort of rental yields do you think the average residential property will trade on.


----------



## sinner (19 January 2011)

Hi guys,

I am back with some more research numbers.

According to RPData, the total sales volumes for housing is dropping precipitously across the board.

Sydney: at 6000 Nov'10 from nearly 10000 Nov'09, ~40% decline in volume, with 5 consecutive declines in sales volume.
Melbourne: at 4000 Nov'10 from nearly 9000 Nov'09, ~55% decline in volume, with 5 consecutive declines in sales volume.
Brisbane: at ~2500 Nov'10 from nearly 5000 Nov'09 ~50% decline in volume, with 6 consecutive declines in sales volume
Perth: at ~1750 Nov'10 from nearly 3000 Nov'10 ~40% decline in volume, with 6 consecutive declines in sales volume

Adelaide is holding up significantly better on all fronts, with much lower % declines and consecutive volume declines as prices continue to rise there. Canberra and Darwin aren't looking great though.

However it is plain to see that across the board, volumes are way way down. in most cases way below pre-GFC levels!

Add to this my previous post about the large run-up in housing inventory last year, I am failing to see how all those new dwellings built last year will be consumed at this rate. Demand is simply not there. Volume drop + inventory buildup spells trouble.

I used: http://www.myrp.com.au/melbourne_house_prices.do to work the numbers out, just replace "melbourne" with the capital of your choice.


----------



## tronic72 (19 January 2011)

damien275x said:


> Even the dumb, uneducated bogans in my family aren't property investing anymore.
> All talk about property is negative lately. Everyone I am talking to is 'holding off buying property at the moment, to wait and see what the market does' .. and well, if nobody's buying......................... what happens to prices? Down they go.




.............Because it's unaffordable. Simple. The banks want a $50K deposit on a new home. Most families would take at 2 years to save that deposit   To top it off, Banks are no longer allowing buyers to use the equity of their own or families existing properties.


----------



## c-unit (19 January 2011)

tronic72 said:


> .............Because it's unaffordable. Simple. The banks want a $50K deposit on a new home. Most families would take at 2 years to save that deposit   *To top it off, Banks are no longer allowing buyers to use the equity of their own or families existing properties.*




Is that a fact? If true, then it shows the banks are nervous about the Aussie housing market. If the banks are nervous - well that's saying something.


----------



## Tysonboss1 (19 January 2011)

tronic72 said:


> To top it off, Banks are no longer allowing buyers to use the equity of their own or families existing properties.




Rubbish.


----------



## FxTrader (19 January 2011)

tronic72 said:


> The banks want a $50K deposit on a new home. Most families would take at 2 years to save that deposit



Actually the banks are bending over backwards and reducing LVRs to get people into home loans (desperation) to boost their loan book and keep the bubble ticking along.  Review this link for a no deposit home loan...

http://www.loanmarket.com.au/home-loans/no-deposit/

Also from Debtwatch...

_At present, you need a $30,000 deposit to bid $1 million for a property if you get a loan from the Commonwealth Bank, which currently has one of the highest maximum LVRs of 97%: “The maximum we will lend you is 95% of the valuation amount. We also add the Lenders Mortgage Insurance or a Low Deposit Premium to your loan (up to a maximum of 97%), so it doesn’t cost you anything upfront”.

This press release implies that you could approach St George with $20,000 in savings, be given a $1 million loan, and have it recorded as a 95% LVR loan (since St George probably has the same maximum published LVR as Westpac of 95%) where $20,000 was your actual deposit and the effective LVR was actually 98%.

The effect of this trick is to expand the pool of potential borrowers to whom St George can extend a loan, while appearing not to alter its lending standards.

From the Loan Market press release: “This is a major step forward which will also boost activity in the struggling home finance sector and we expect other lenders to follow suit.” It will enable the banks to meet their loan sale targets, by expanding the number of applicants who qualify for a loan._


----------



## sinner (19 January 2011)

FxTrader said:


> Actually the banks are bending over backwards and reducing LVRs to get people into home loans (desperation) to boost their loan book and keep the bubble ticking along.  Review this link for a no deposit home loan...
> 
> http://www.loanmarket.com.au/home-loans/no-deposit/
> 
> Also from Debtwatch...




Great info and perspective.

You can lead a horse to water but you can't make him borrow, for all efforts of desperate Government and Financials which issued massive amounts of new credit, housing finance is pretty much where it was. New borrowers (and new loans at greater amounts) are required to keep prices moving.

Total Aus housing finance since Jan 2008:



If it smells like consumer deleveraging it probably is.


----------



## RandR (19 January 2011)

mmmm.

It's my understanding that without value adding to a property, house prices should more or less just move with inflation, because people can only pay for a house what they can earn, and wages for the most part toe the line with inflation. I think baby boomers just have a skewed perception that house prices do more then move with inflation because of the following ...

- the emergence of double income households
- the lessening restrictions upon lending, making it more accessible to borrow more from the start
- the large scale use of equity and leveraging to enable the procurement of many properties for a lot of people 
- continued population growth

Its my view that all of these 4 principles are unsustainable. I believe with the lessening of these influences affecting the supply/and ease of supply housing will/should more or less move with inflation in the future. But this wont move in a nice straight line ... I think we will see a couple of years of no growth/slight retraction (less the 10%). Then a couple of years of increased growth (a period of time where appreciation in property is 5% +) Once wages have inflated to the point where property must appreciate. 

Really just a cyclical period of no growth followed by considerable growth.

At present me and my lady are saving for our first house, we are targeting a deposit of between 60,000 - 80,000. Shopping for a property somewhere in the range of 300,000 - 400, 000. Between the 2 of us saving for the deposit will take somewhere between 1 and a half to 2 years ...

I dont think that is an unreasonable timeframe at all to achieve a 20% deposit ... we are 2 avg income earners, in our early twenties, and if we are perfectly capable of achieving a 20% deposit in 1 and a half to two years of saving i dont think it is extremely difficult at all for first home buyers to enter the property market. Especially when that ss not taking into consideration the first home buyers grant. Which we see as merely a bonus and are not calculating that in to the money we'll need for a minimum 20% deposit ...

So in short, i think any suggestion property is overpriced on any massive scale is really just a load of broo ha ha... because property is not unaffordable !


----------



## Dowdy (19 January 2011)

FxTrader said:


> Actually the banks are bending over backwards and reducing LVRs to get people into home loans (desperation) to boost their loan book and keep the bubble ticking along.  Review this link for a no deposit home loan...
> 
> http://www.loanmarket.com.au/home-loans/no-deposit/
> 
> ...





There's a story about that on MTR1377 right now. 

Just inflating the bubble bigger.....stupid


----------



## explod (19 January 2011)

When are the knuckleheads going to realise that the party is over for now.

Floods, bushfires, droughts, overproduction, overpopulation and far too many idle due to industrialisation, mechanisation and technology, to make us live longer, make money in cyberspace, short circuit the dealers by buying online, and enjoying ourselves online.  Stuff the pub, too much fun here in the property thread.  In fact who needs his own house, just a shed out the back of my Son's place. 

It has to give *and I think it is starting to.*


----------



## Sean K (19 January 2011)

Property is going to crash dramatically.

I just bought one.


----------



## robots (19 January 2011)

hello,

well good evening brothers,

oh yeah tragics listening to 3AW and MTR, man put some music on

and goodluck to the holders of rental properties in QLD, uptick in the yield

thankyou
professor robots


----------



## wayneL (19 January 2011)

kennas said:


> Property is going to crash dramatically.
> 
> I just bought one.




Nonsense!

A crash will not happen till the last bear buys.
.
IOW, when I buy, it will be all over.

(wayneL is actively in the market for a PPOR )



(mind you, nobody has liked my offers so far )


----------



## Sean K (19 January 2011)

wayneL said:


> Nonsense!
> 
> A crash will not happen till the last bear buys.
> .
> ...



Hope you can make it over the ditch for the house warming Wayne.


----------



## satanoperca (19 January 2011)

robots said:


> and goodluck to the holders of rental properties in QLD, uptick in the yield
> 
> thankyou
> professor robots




Ah professor you make me laugh, renter walks away from flood effected house, sure they may have to pay a few grand more per year in rent but bets the heck out of lossing hundreds of thousands on a home that insurance will not pay out on and new planning laws will not allow to rebuild on the land again.
Always a sunny side, this time renter wins
Cheero


----------



## Tysonboss1 (21 January 2011)

Here is a great little documentery about the housing crisis in the states, This kinda of scale of foolishness just has not happened in Australia. So those banking on similar sorts of falls will probably be disappointed.

I believe some parts of Australia will stagnate, but is that really anything to worry about. I would love to see large falls as much as anybody, but its not going to happen


----------



## trainspotter (21 January 2011)

wayneL said:


> Nonsense!
> 
> A crash will not happen till the last bear buys.
> .
> ...




You could probably afford one of these WayneL. Everyone on the Brisbane River should be living in one of these !!!!!! Flash flood ..... no problem ........ just float away.


----------



## indeck (21 January 2011)

Tysonboss1 said:


> Here is a great little documentery about the housing crisis in the states, This kinda of scale of foolishness just has not happened in Australia. So those banking on similar sorts of falls will probably be disappointed.
> 
> I believe some parts of Australia will stagnate, but is that really anything to worry about. I would love to see large falls as much as anybody, but its not going to happen




If it unfolds here it will be because of the cost of living factor which I think recently is becoming increasingly worse the last few years.  Interest rates will play a part of this as they head further north.  Power, registration, food etc all seems to be going up more than ever before.  I think there are a growing number of people who are also unwilling to enter the housing market at current levels.  I'm one of them.  For me personally unless it stagnates for a few years i'm not going to bother buying a home, i'm doing too well in the share market and living relatively cheaply renting in the inner city.


----------



## wayneL (21 January 2011)

trainspotter said:


> You could probably afford one of these WayneL. Everyone on the Brisbane River should be living in one of these !!!!!! Flash flood ..... no problem ........ just float away.
> 
> 
> 
> ...



 When we were in the UK we were considering something like this -

http://www.boatshopuk.co.uk/index.php/page/sale-boat/boat_index/0912

Because of the canal system you can travel just about anywhere in one of these.


----------



## trainspotter (21 January 2011)

wayneL said:


> When we were in the UK we were considering something like this -
> 
> http://www.boatshopuk.co.uk/index.php/page/sale-boat/boat_index/0912
> 
> Because of the canal system you can travel just about anywhere in one of these.




I have watched a documentary where some crazy British celebrity drove around in the canal boats doing a massive pub crawl through Britian. It looked fantastic !! The canal boat he had was pretty swish as well, all decked out internally with groovy stuff. 

Anyways ....... here is an interesting article for the doomsayers.

*WHILE property prices ease across the country, economists are predicting Perth will buck the trend and return to a booming real estate market by mid-year. *
For those eager to get into the property market, it seems that after years of seemingly unstoppable housing growth 2011 could be the year to secure a slice of the Great Australian Dream.

http://www.perthnow.com.au/news/the...battling-aussies/story-e6frg12c-1225992388112


----------



## Shape (21 January 2011)

the recent floods will cause pressure on business and employment, which i think in the next 2-3 month would push property price dramatically down. 

The most interesting point to note is what the RBA will do on 1st of Feb- leading up to the flood crisis the RBA has hinted a possible rate increase, but would the recent flood change their minds?

increase rate + flood = bargain property to be found


----------



## c-unit (21 January 2011)

Come on TS, you are too smart to trust an economist!!


----------



## Tysonboss1 (21 January 2011)

Shape said:


> the recent floods will cause pressure on business and employment, which i think in the next 2-3 month would push property price dramatically down.




What?.

Hmmm,.. 

Do you see many unemployed tradie or labourer in the affected areas? I think they are all working over time, and their wages has to get spent at some other business.

Do you think Business will really be under pressure when every one starts spending those insurance/ government handout dollars replacing all their stuff that was lost?

Sounds like a mini stimulus package to me.

Plus in the grand scheme of things the affected areas are to small to have any real impact,

Plus any loss in the number of dwellings increases pressure on rents so rental yields in neighboring areas will rise.


----------



## drsmith (21 January 2011)

Tysonboss1 said:


> Sounds like a mini stimulus package to me.



In the absence of increased debt or, cough, "quantitative easing", the money has to come from elsewhere in the economy.


----------



## Tysonboss1 (21 January 2011)

drsmith said:


> In the absence of increased debt or, cough, "quantitative easing", the money has to come from elsewhere in the economy.




Thats right, the stock and bond market.

As the insurance companies sell off their capital holdings to fund the payouts.


----------



## So_Cynical (21 January 2011)

drsmith said:


> In the absence of increased debt or, cough, "quantitative easing", the money has to come from elsewhere in the economy.






Tysonboss1 said:


> Thats right, the stock and bond market.
> 
> As the insurance companies sell off their capital holdings to fund the payouts.




Reinsurance covers the bulk of Suncorp's liability so most of the money will be coming from Europe, Japan and the US.


----------



## Tysonboss1 (21 January 2011)

So_Cynical said:


> Reinsurance covers the bulk of Suncorp's liability so most of the money will be coming from Europe, Japan and the US.




Don't you love securitisation.


----------



## c-unit (22 January 2011)

So_Cynical said:


> Reinsurance covers the bulk of Suncorp's liability so most of the money will be coming from Europe, Japan and the US.




LOL! Poor American's can't catch a break.


----------



## robots (22 January 2011)

hello,

oh gidday everyone, great day

http://theage.domain.com.au/real-estate-news/buyers-hit-as-house-prices-peak-20110121-1a02p.html

yeah no worries, and look at the figure for ballarat and melbourne units, amazing

i know i know i know, we going to get a post that tells everyone its not looking good though for property in the future because of this and that

thankyou
professor robots


----------



## robots (22 January 2011)

hello,

yeah no worries, everyone probably watching the tennis, will check in later

thankyou
professor robots


----------



## todster (22 January 2011)

Property ads are worth about $60m a year to The Age


----------



## robots (23 January 2011)

hello,

yeah, go for a walk down the street and see what places are going for

although that never happens as most are too busy with their heads in the textbooks

thankyou
professor robots


----------



## IFocus (23 January 2011)

So much for the boom state

WA highest rate of repossessions



> Signs of mortgage stress are emerging in WA with revelations the State has the highest rate of loan delinquency in the country, with about 20 homes repossessed each week.
> 
> The latest statistics from ratings agency Fitch shows nearly two WA homeowners in every 100 were more than a month in arrears in the September quarter last year, compared with one in 100 nationally.




I wonder if the floods could trigger a problem with defaults and lower prices / valuations in flood plains down the road some time.


----------



## Agentm (23 January 2011)

robots said:


> hello,
> 
> oh gidday everyone, great day
> 
> ...





well said robots

yes we should ignore all the implications of the bubble, and just keep on reporting its impact and size... but regardless of how much its expanding, lets ignore its implication other than "we are all flithy rich on paper..waaahhhoooo!!!!!!!!" 

but despite the deplorable  50% clearance rates of the record auction numbers in spring/summer, they managed to keep an occasional  bidder alive with bids from the  uber competitive neighbours dog and the lampposts bidding hard against the completely bamboozled  solo buyer that showed for an auction..  with all the eager neighbours, all looking on with anticipation and greed as the RE auctioneer manages to get those lampposts, dogs cats and parked cars to inflate the one bidder to yet another amazing auction record for the street, postcode, and city or state.. cheering and clapping post the final fall of the hammer, swooning to the admiration and adulation of the admiring neighbours clogging the footpaths.. " hey franks lousy 2 beadroom weatherboard just went for 980k!! man thats insane, and all the crap on talk on the bubble, baloney i say.. just think, our place is bigger, its brick, we would be worth $1.3 mill...  this is fantastic!!  i am going to ring mum and tell her how good real estate is.. she will be proud of me now i am a millionaire" 

thats how i recall all the auctions i went to in the stkilda elwood prahran southmelb region...


i guess the 50% of uncleared stock that failed to clear auction of course easily sold way higher than the reserve at auction.. and in days.. lol


----------



## tech/a (23 January 2011)

> but despite the deplorable 50% clearance rates of the record auction numbers in spring/summer,




Clearance rates vary Adelaide was 70 % this week I believe.
Those that Dont sell at auction sell after auction normally at around reserve (from my experience).



> hey franks lousy 2 beadroom weatherboard just went for 980k!! man thats insane, and all the crap on talk on the bubble, baloney i say.. just think, our place is bigger, its brick, we would be worth $1.3 mill... this is fantastic!!




The extreme emotion this topic generates is amazing.
The doomsdayers are just itching to take the Robot down.

Meanwhile life and property goes on.
So it crashes------
So it keeps climbing-----

If you Dont have property you generally fall into "The Sky is falling camp"
If you do then you deal with whatever comes along.


----------



## wayneL (24 January 2011)

The latest Demographia housing affordability survey

http://www.demographia.com/dhi.pdf

FWIW


----------



## wayneL (24 January 2011)

wayneL said:


> The latest Demographia housing affordability survey
> 
> http://www.demographia.com/dhi.pdf
> 
> FWIW




A couple of interesting comments from the above:

SNIP - "Perhaps most remarkable has been the shift in Australia, once the exemplar of modestly priced, high-quality, middle-class housing, to now the most unaffordable housing market in the English-speaking world," he said. "The real issue is affordability and Australia has gone from a middle-class paradise in that regard into a more stratified society - just as we find in Britain and parts of the US."

Mr Kotkin, who has visited Australia extensively, described the trend as "neo-feudalism" that unravels the social achievement of spreading property ownership.

SNIP - Sydney ranks among the least affordable places, with a 0 out of 5 rating, on a par with San Francisco and Hong Kong, while Melbourne, Brisbane, Adelaide, and Hobart have a rating of 1. "High property prices mean investment that should be in productive infrastructure or capital is spent on property," he said, leaving the country unprepared when the mining boom ends.


----------



## CamKawa (24 January 2011)

wayneL said:


> The latest Demographia housing affordability survey
> 
> http://www.demographia.com/dhi.pdf
> 
> FWIW



Here's a report on the report.... Melbourne housing now 'severely unaffordable'

London is more affordable than Geelong.


----------



## schnootle (24 January 2011)

CamKawa said:


> London is more affordable than Geelong.




To me that says more than most of this thread has. Cut through the rhetoric, this is wrong people and it will end in tears.


----------



## c-unit (24 January 2011)

If I was a property investor, I would certainly be looking at selling off all my properties and locking in the gains. As schnootle said, this will end in tears. Particularly for the over-levered FHBs who haven't done their research before buying, instead believing the "property always goes up" mantra that the irresponsible MSM has been peddling for years.


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## KurwaJegoMac (24 January 2011)

The statement that London is more affordable than Geelong should be taken with a grain of salt. Typical sensationalist journalism to keep the masses scared and in the rat race.

Demographia base their results on the median earnings relative to median price - and that's it. Are you going to make your entire investment decisions on one ratio? It's like looking at a stock and saying "All the stocks in the ASX have a P/E of over 15. Yet London stocks are at 13 :O Australia is so unaffordable!"

What a load of tripe.

What about general living costs, taxes, lifestyle costs? Food, rents, insurance, etc etc. These all need to be factored into the equation when trying to compare two prices. London has always widely been regarded as an expensive city to live in relative to many others. In Geelong you might be buying a large house by the water, whereas in London you're buying a cramped apartment for the same amount of $$. I know which one i'd rather live in.

Affordability is related to living expenses too - not just median income relative to median house prices. You have to put all the pieces of the puzzle together to get the total picture.

And another thing that grinds my gears - in the news they're spouting the median house price as $550,000 with a median wage of $63,000. Now that's a median HOUSEHOLD wage - not an INDIVIDUAL wage. What you need to ask yourself, is what idiot with a household income of $63,000 is buying a median house of $550,000. Fools. You can find plenty of houses for $300-400K within 25km of the CBD, in leafy suburbs close to train stations. Hell, if you look hard enough you can sometimes snap one up within 10km. Of course if you're spending 80% of your household wage to service your debt you're just asking for trouble. But this doesn't make housing 'unaffordable' - it just means the massive mansion you want in the inner city suburb might be *shock horror* out of reach of low income households :O Who'd have thought??? THE BLASPHEMY! How DARE i not be able to afford a big house in an affluent suburb. This is outrageous. It's all the governments fault and those greedy investors and those First Home Buyers, and baby boomers and of course that damn old lady at the end of the street with all the cats. 

People use these ridiculous claims about affordability, relatively constant growth in prices (which is of course alllllll because of speculative investment ) and an incredibly poor understanding of negative gearing and cashflow to spout nonsense to all those that will listen because in reality *THEY'RE ALL TOO DAMN SCARED TO GET OFF THEIR A** AND EDUCATE THEMSELVES AND INVEST IN THEIR FUTURE*

Much easier to blow all your money now, whinge that everything is too expensive and convince yourself you'll jump in once houses have dropped 40%


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## Tysonboss1 (24 January 2011)

c-unit said:


> If I was a property investor, I would certainly be looking at selling off all my properties and locking in the gains.




And then what, I would rather own property than sit on a pile of cash


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## schnootle (24 January 2011)

KurwaJegoMac said:


> Much easier to blow all your money now, whinge that everything is too expensive and convince yourself you'll jump in once houses have dropped 40%




No its much easier to save your money, invest it in something else and have a stupid amount of cash on hand when the music stops.


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## c-unit (24 January 2011)

Tysonboss1 said:


> And then what, I would rather own property than sit on a pile of cash




Would rather sit on cash than negatively geared property where capital gains have dried up. 70% of Australian investment properties are negatively geared. Even if the tax breaks mean a $10k deficit is only a $5.5k or $6.2k deficit, it's still a deficit. Will these negative gearers have the balls to sit on the potential of net losses for a few years whilst they prey the gains will one day resume? They may, but I wouldn't.


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## sinner (24 January 2011)

KurwaJegoMac said:


> And another thing that grinds my gears - in the news they're spouting the median house price as $550,000 with a median wage of $63,000. Now that's a median HOUSEHOLD wage - not an INDIVIDUAL wage. What you need to ask yourself, is what idiot with a household income of $63,000 is buying a median house of $550,000. Fools. You can find plenty of houses for $300-400K within 25km of the CBD, in leafy suburbs close to train stations. Hell, if you look hard enough you can sometimes snap one up within 10km.




Just for the record:

1. Within 25km of the city, at least for Melbourne, is pretty much the entire city of Melbourne! Even in Sydney 25km is a broad brush to be painting the picture of "close to the city".

2. I just checked around where I live (about as far from the city as I'd be willing to live) as well as some cheaper suburbs for dwellings under $400k, turns out to be a very small number of overpriced apartments and that's it. Not a single house, certainly nothing near a station.



> Of course if you're spending 80% of your household wage to service your debt you're just asking for trouble. But this doesn't make housing 'unaffordable' - it just means the massive mansion you want in the inner city suburb might be *shock horror* out of reach of low income households :O Who'd have thought??? THE BLASPHEMY! How DARE i not be able to afford a big house in an affluent suburb.




Mate, you better calm down or you'll give yourself a hernia. Personally, I'm not complaining about the proportion of my household income which goes to mortgage. I am much more interested in the metric "rate of change of % of household income spent on mortgage", and what it means for the economy at large.

Let me re-iterate, not bemoaning houses being overpriced. Rather observing that these situations are structurally unsustainable and generally lead to a decreased standard of living for all.



> This is outrageous. It's all the governments fault and those greedy investors and those First Home Buyers, and baby boomers and of course that damn old lady at the end of the street with all the cats.




Yes. Government subsidies of the housing market to those who really don't need it are a big gripe for me. No denying it. I would prefer the Government assist those who need it and otherwise keep their nose out.



> People use these ridiculous claims about affordability, relatively constant growth in prices (which is of course alllllll because of speculative investment ) and an incredibly poor understanding of negative gearing and cashflow to spout nonsense to all those that will listen because in reality




I cut your shouting out of the quote because it was frankly, obnoxious.

Funny you say those who understand cashflow and negative gearing would of course just jump right into the perfect property market we are in right now. Because I've been following the adventures of one didactic guy who has spent an extremely large amount of his personal time coming up to speed with the property market and all its machinations so he could buy a property for income generation during his fast approaching retirement.

Guess what? He's abstaining from the market and staying in cash. He sees much better opportunities taking properties from weak hands in a year or two.



> Much easier to blow all your money now, whinge that everything is too expensive and convince yourself you'll jump in once houses have dropped 40%




Taking out a $400,000 30 year loan with 80% leverage doesn't count as blowing your money...but paying a fixed monthly rent less than 20% of your net income somehow is gonna blow all your money *right now* because you didn't jump into the property pool? 

Nonsensical. The reality is much simpler: if the property bears are wrong, they can simply hop into the apparently healthy property market at any time. 

What I've convinced myself is that if I saw a house I actually wanted as a PPOR, priced within 3-5x my gross income I would buy it. So far very very happy to continue renting on all fronts.


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## Tysonboss1 (24 January 2011)

c-unit said:


> Would rather sit on cash than negatively geared property where capital gains have dried up. 70% of Australian investment properties are negatively geared. Even if the tax breaks mean a $10k deficit is only a $5.5k or $6.2k deficit, it's still a deficit. Will these negative gearers have the balls to sit on the potential of net losses for a few years whilst they prey the gains will one day resume? They may, but I wouldn't.




I am not negative geared.

Where did you get the 70% of property is negative geared figure.

In your brash statement you simply said if you were a "property investor" you would sell, You didn't say if you were a "negatively geared property speculator" you would sell.

The is a big difference. Property is a longterm investment that allows you to park your wealth and recieve income similar to a bond where your capital is protected from inflation. It is not an investment where you should try and jump in and out timing the market.


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## Tysonboss1 (24 January 2011)

I bought my first house back in 2001, and it was renting for $250/week but to service the loan cost $435/week,

So the repayments were 74% higher than rent.

Today the rent is $425/week and the loan would cost $850 / week to service.

So the payments are 100% higher than rent, 

So your right the gap has widened. But the big difference that I see as causing this is that rents tend to rise steady year on year with inflation. Where as the price of houses booms and stagnates. when I bought in 2001 it was following a period of several years of stagnated prices, so the gap between rents and prices slowly narrowed.

After I bought prices boomed for serveral years widening the gap again. I think one things is clear though. rents will overtime increase and the interest you pay decreases

So given the first example 10 years later renting is still $10/week cheaper than the payments on the loan, However the owners repayments only have $252 worth of interest so $182.00 / week is repaying the loan. so reverse compound interest is on his side.

Not to mention every year the rental increases will compound against the renter, where reverse compound interst is working for the owner.

Also should he sell he would have a lump sum of over $200,000 capital gain + over $40,000 of forced savings from reduction of the loan.


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## c-unit (24 January 2011)

Tysonboss1 said:


> I am not negative geared.
> 
> *Where did you get the 70% of property is negative geared figure.*
> In your brash statement you simply said if you were a "property investor" you would sell, You didn't say if you were a "negatively geared property speculator" you would sell.
> ...




A research paper from an asset manager, read mid last year, will try find it this afternoon. And I did mean negatively geared speculators, but said "property investors" given that statistically, the majority of property investors are indeed negatively geared speculators. And that is the heart of the problem.


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## explod (24 January 2011)

schnootle said:


> No its much easier to save your money, invest it in something else and have a stupid amount of cash on hand when the music stops.




Amen


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## sinner (24 January 2011)

Tysonboss1 said:


> I bought my first house back in 2001, and it was renting for $250/week but to service the loan cost $435/week,
> 
> So the repayments were 74% higher than rent.
> 
> ...




Nothing wrong with your numbers Tyson, nothing wrong with your example of investing in property for the long term and I would actually prefer that to holding a bond.

However like all investments calls for due diligence. Did mine and decided long ago the numbers didn't stack up and that there were actually far larger implications for the country at large in the real estate market than my own personal choice of dwelling or attempts at wealth generation. Your own calculations show that so far I'm nominally no worse off (slightly better in fact) over a long horizon so so it's not like the market disagrees!

You did your dd and decided it was a good idea, nothing wrong with that imho, two views make a market, someone sold the house to you after all.

However it seems like discussions about the larger implications of the issues at hand are just nonsense and rubbish? Commonwealth Treasury views reliance on short term foreign funding as the highest risk for the banks, but here it is simply a non-issue in regards to property market funded almost entirely on the credit growth 
of these banks. 

To me that is a bright red alarm going off!


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## white_goodman (25 January 2011)

sinner said:


> Nothing wrong with your numbers Tyson, nothing wrong with your example of investing in property for the long term and I would actually prefer that to holding a bond.
> 
> However like all investments calls for due diligence. Did mine and decided long ago the numbers didn't stack up and that there were actually far larger implications for the country at large in the real estate market than my own personal choice of dwelling or attempts at wealth generation. Your own calculations show that so far I'm nominally no worse off (slightly better in fact) over a long horizon so so it's not like the market disagrees!
> 
> ...





I see no direction but down to be honest...

1) strains on foreign lending sources this year (debt more expensive for banks) ie higher mortgage rates
2) wage to house ratio is unsustainably high.
3) at the current rates of income growth, for property to double in 10 years (old myth) servicing costs would be 90% of the median wage for median house...ie impossible.
4) due to zoning policies and restrictive practices on land release and developers aswell as mainpulation at all forms of govt on the supply side has created a bubble... due to nature of the supply any reduction in demand will cause large swings in prices to the downside.
5) demographics, baby boomers who are asset rich and income poor will all head for the exit at the same time... the "baby boomer property squeeze of 2012-2016"

what we need is less govt involvement keeping this ponsi going and stop the catalyst of cheap lending.. they just started a rule allowing to use rent and deposit.. the game is up... the last trick is to let superfunds leverage up and buy large amounts of residential property.


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## white_goodman (25 January 2011)

c-unit said:


> A research paper from an asset manager, read mid last year, will try find it this afternoon. And I did mean negatively geared speculators, but said "property investors" given that statistically, the majority of property investors are indeed negatively geared speculators. And that is the heart of the problem.




then they arent investors, negatively geared is speculation... i look forward to the correction, and I have no sympathy for the retiring class.


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## sinner (25 January 2011)

Great posts white, can't help but agree with all statements, would love to hear the *discussion* of those who disagree.

To be honest, if I could buy a house using my Super and rent it to myself, I almost certainly would. Why can't people do that sort of thing?


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## FxTrader (25 January 2011)

white_goodman said:


> then they arent investors, negatively geared is speculation



Such a distinction is usually suspect without a context.  Investment incurs various levels of risk, including bonds and fixed interest just less so, and is made with an expectation of future gain.  Geared (leveraged) investing is no different just higher risk and since the govt kindly gives us a tax break for investment in certain asset classes then why not exploit it.

Speculation, when used in the negative sense, is usually more about seeking quick, short term profits without any research, strategy or plan, because an asset class is say "going up".  Such speculation is more about gambling than investing since you have no edge.  

Just because you negative gear into property doesn't necessarily mean you're a speculative gambler.  If you're just getting into the market because property always goes up or because the govt gives you a tax break then yes, this constitutes reckless speculation.  No doubt some do this but the market will shake them out eventually.


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## white_goodman (25 January 2011)

FxTrader said:


> Such a distinction is usually suspect without a context.  Investment incurs various levels of risk, including bonds and fixed interest just less so, and is made with an expectation of future gain.  Geared (leveraged) investing is no different just higher risk and since the govt kindly gives us a tax break for investment in certain asset classes then why not exploit it.
> 
> Speculation, when used in the negative sense, is usually more about seeking quick, short term profits without any research, strategy or plan, because an asset class is say "going up".  Such speculation is more about gambling than investing since you have no edge.
> 
> Just because you negative gear into property doesn't necessarily mean you're a speculative gambler.  If you're just getting into the market because property always goes up or because the govt gives you a tax break then yes, this constitutes reckless speculation.  No doubt some do this but the market will shake them out eventually.




in my eyes

investment = returning an income
speculation = any venture where you profit from appreciation

of course if you are doing some value add development style its shades of grey. The Australian property market is categorised by investors buying long term in places that return less than repayments. They are banking on appreciation generally, its also why they are forced to work until older age, effectively locked into a job to service debts.

I dont want to have to work harder for my 'investments'. However if you are able to turn the property into positive CF, through making highest and best use then renting or some other strategy it could work. The question would then be is the minimal % return that you could get compared to safely in the bank worth it, ie is the probability skewed towards appreciation or depreciation in prices.


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## Tysonboss1 (25 January 2011)

FxTrader said:


> Such a distinction is usually suspect without a context.  Investment incurs various levels of risk, including bonds and fixed interest just less so, and is made with an expectation of future gain.  Geared (leveraged) investing is no different just higher risk and since the govt kindly gives us a tax break for investment in certain asset classes then why not exploit it.
> 
> Speculation, when used in the negative sense, is usually more about seeking quick, short term profits without any research, strategy or plan, because an asset class is say "going up".  Such speculation is more about gambling than investing since you have no edge.
> 
> Just because you negative gear into property doesn't necessarily mean you're a speculative gambler.  If you're just getting into the market because property always goes up or because the govt gives you a tax break then yes, this constitutes reckless speculation.  No doubt some do this but the market will shake them out eventually.




Investment = An operation which upon thorough analysis promises safety of principle along with an adequate return.

Speculation = An operation that does not promise safety of priciple but does offer the chance of both significant gains and losses under varying likely outcomes.

I do not have a problem with using the word speculator to describe some one purchasing negativly geared property if they are banking on capital gains to make the operation turn a profit, because if the capital gains do not arise within a certain time frame the negative yield will wipe out their initial principle. So by adding excessive debt the participent has turn an otherwise sound investment into a speculative big win or big lose operation.

There can be intelligent speculation just as their is intelligent investment. But in many ways speculation is very unintelligent.

Speculating through the use of margin when the market is allready hitting high P/e's is probably not intelligent.


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## wayneL (25 January 2011)

Tysonboss1 said:


> There can be intelligent speculation just as their is intelligent investment. But in many ways speculation is very unintelligent.
> 
> Speculating through the use of margin when the market is allready hitting high P/e's is probably not intelligent.




What's the PE on property?


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## FxTrader (25 January 2011)

white_goodman said:


> investment = returning an income
> speculation = any venture where you profit from appreciation



Differing definitions and usage of terms are frequently a problem.  Investment is a far more general term in usage than "returing an income".  Speculation is about levels of risk in proportion to potential gain, short or long.



> The Australian property market is categorised by investors buying long term in places that return less than repayments. They are banking on appreciation generally, its also why they are forced to work until older age, effectively locked into a job to service debts.



It's correct to say that income is required to offset negative gearing costs but the desired end result for the true investor is positive cash flow now or in the near future.  Price appreciation is just a bonus.  Being "locked" into a job that you enjoy and/or pays well isn't a burden.

Unfortunately most of the property "investors" I know don't treat their property investments like a business investment decision but as a retirement nest egg that will hopefully pay off many years later.  Perhaps it will but property investment has many and varied risks, just ask IP owners in the flooded areas of QLD.


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## Tysonboss1 (25 January 2011)

wayneL said:


> What's the PE on property?




price to earnings ratio,


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## wayneL (25 January 2011)

Tysonboss1 said:


> price to earnings ratio,




Umm, yeah I know. The question is what is the PE on property?


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## FxTrader (25 January 2011)

Tysonboss1 said:


> Investment = An operation which upon thorough analysis promises safety of principle along with an adequate return.
> 
> Speculation = An operation that does not promise safety of priciple but does offer the chance of both significant gains and losses under varying likely outcomes.



Creative definitions Tyson but not applicable to common usage or correct by explicit definitions.  Thorough analysis can never promise safety of principle or "adequate" return (I can provide examples).  Yes, speculation is about taking considerable "calculated" risk for significant gain as opposed to gambling.



> I do not have a problem with using the word speculator to describe some one purchasing negativly geared property if they are banking on capital gains to make the operation turn a profit, because if the capital gains do not arise within a certain time frame the negative yield will wipe out their initial principle. So by adding excessive debt the participent has turn an otherwise sound investment into a speculative big win or big lose operation.



The reality is that reckless property speculation is about adding as many properties to one's portfolio as possible in the shortest period of time.  This "formula" is sold by spruikers nation wide and soaked up by the masses, it's the OPM principle taken to the extreme with the assistance of the banks and govt.  The familiar refrain, I own 5 investment properties and plan to own 10 more in the near future.  The reality, I owe the bank 2 million but hope to owe 10 million in the future.  Property is a sure thing after all!


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## matty77 (25 January 2011)

Bring a new law in and remove FHOG.

When you buy your first house you pay no stamp duty, or when you only own 1 house, you pay no stamp duty on that house.

When you buy your second house (investment, holiday house whatever) you pay 15% stamp duty.

When you buy your third house etc you pay 25% stamp duty.

What does this do? It gives the FHO a chance to get into the market, they would effectively have 25% or cheaper cost to purchase a house if they were bidding against an investor. It makes it harder for an investor to get into the market place, forcing price to slow or go lower. Everyone wins.

Discuss.


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## Agentm (25 January 2011)

The 7th ANNUAL DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY SURVEY (data 3rd Qtr 2010) has just been published and is downloadable from this link

http://www.demographia.com/dhi.pdf

extract............

SURVEY INTRODUCTION – ACCLAIMED AUTHOR JOEL KOTKIN

Joel Kotkin, a California based writer on urban issues and executive editor of New Geography, contributed the Introduction “Why Affordability Matters” stating –

“Little discussed have been the social and economic implications of such policies (strangling urban expansion). Although usually thought of as “progressive” in the English speaking world, the addiction to “smart growth” can more readily be seen as socially “regressive”. In contrast to the traditional policies of the left of center governments that promoted the expansion of ownership and access to the suburban “dream” for the middle class, today regressive “progressives” actually advocate the closing off of such options for potential homeowners.”

“……..It is a very dangerous concept, essentially promoting a form of neo feudalism which reverses the great social achievement of dispersing property ownership.”

“…..*But perhaps most remarkable has been the shift in Australia, once the exemplar of moderately priced, high quality middle class housing, to now the most unaffordable housing market in the English speaking world*.”

The Introductions to earlier Surveys had been provided by Australian environmental scientist Dr Tony Recsei (2010), American housing authority and author Dr Shlomo Angel (2009) and the former long term Governor of New Zealand’s Reserve Bank Dr Donald Brash (2008).


lets hope for a real buoyant and event filled 2011 in housing, so far we are being told property prices will flatten,,, no one believes that.. the bubble will just grow and grow.. imaging if auction clearance rates begin to increase here in melbourne..

this bubble has it own journey to follow.. the median prices just break records month in month out..

no sign of any bubble flattening in melbourne imho...

keep on buying.. lol


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## medicowallet (25 January 2011)

matty77 said:


> Bring a new law in and remove FHOG.
> 
> When you buy your first house you pay no stamp duty, or when you only own 1 house, you pay no stamp duty on that house.
> 
> ...




Discuss, it is a ridiculous idea, all it will do is allow FHB to pay more than the average person, akin to what the FHBG does. What we need is a level playing field for all investment classes, so that people make investment decisions, without making them depend on government involvement.

Market forces should be dictating the direction of investments, not government handouts and protectionism.

1. Remove SD.
2. Remove CGT exemption.
3. Remove any government involvement.
4. Never allow SMSF to purchase residential property.
5. No foreign ownership.


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## freddy2 (25 January 2011)

My solution:
Remove stamp duty
Land tax on PPOR: 1% per year
Land tax on IP : 2% per year

Would remove many distortions in the property market but unfortunately a land tax is not even close to being politically feasable.


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## prawn_86 (25 January 2011)

freddy2 said:


> Land tax on PPOR: 1% per year
> Land tax on IP : 2% per year




A % of what? Purchase price? Valuation? Who does the valuations? etc


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## matty77 (25 January 2011)

medicowallet said:


> Discuss, it is a ridiculous idea, all it will do is allow FHB to pay more than the average person, akin to what the FHBG does. What we need is a level playing field for all investment classes, so that people make investment decisions, without making them depend on government involvement.
> 
> Market forces should be dictating the direction of investments, not government handouts and protectionism.
> 
> ...




I totally agree with:
2. Remove CGT exemption.
4. Never allow SMSF to purchase residential property.
5. No foreign ownership.

would make a great difference.

I guess my point is this, how do you bridge the gap between rich investor bidding on his 10th property with money to burn and the FHB with 2 kids, bidding on his first house?


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## Tysonboss1 (25 January 2011)

wayneL said:


> The question is what is the PE on property?




I don't really understand what the exact question you are asking me is. 

As I said before pe is price to earning ratio,

Are you asking how you calculate the pe on property or what a a fair pe is to expect when purchasing.


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## freddy2 (25 January 2011)

prawn_86 said:


> A % of what? Purchase price? Valuation? Who does the valuations? etc




Valuation done by an agency set up to do the job. Varibles such as market prices and rents could be used as inputs in determining values. Sure it wouldn't be a completely perfect system but what system is. The obstacles to a land tax are not practical but political.


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## prawn_86 (25 January 2011)

freddy2 said:


> Valuation done by an agency set up to do the job. Varibles such as market prices and rents could be used as inputs in determining values. Sure it wouldn't be a completely perfect system but what system is. The obstacles to a land tax are not practical but political.




You dont think this agency would have a vested interest to quote higher valuations to ensure that gov revenue was higher? 

I dont trust current valuers let alone one set up by a government


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## Tysonboss1 (25 January 2011)

FxTrader said:


> Creative definitions Tyson but not applicable to common usage or correct by explicit definitions.  Thorough analysis can never promise safety of principle or "adequate" return (I can provide examples).  Yes, speculation is about taking considerable "calculated" risk for significant gain as opposed to gambling.
> 
> 
> !




listen to the first 1 min of this video.

The definition comes from the Book "the intelligent Investor" by Benjiman Graham, Who is considered the father of value investing and was one of the most successful investors of his time.

The funny thing is in 1934 when Ben Graham first put the definition into writting he had to defend his policy against claims that it gave to much scope to what should be considered an investment, critics claimed that common stocks could not be called investments only bonds should be considered investment grade assets.

Now, critics claim the opposite, that the definition is to liniting to what should be considered an investment

.


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## drsmith (25 January 2011)

freddy2 said:


> My solution:
> Remove stamp duty
> Land tax on PPOR: 1% per year
> Land tax on IP : 2% per year
> ...



I disagree with asset taxes generally as assets are (or should be) purchased from after tax income.

As for stamp duty, all property transaction taxes should be removed, perhaps with the exception of GST from services in relation to buying/selling property.

On the investment side, deductions from non-property sourced income (spacifically wage income) should be abolished.

The capital gains tax discount on disposal should phase in over a longer period. Investors should also have the option of CPI indexation of the cost base so that, at worst, only the real capital gain is subject to GST.

The problem with residential property in general is that state governments inparticular are up to their necks in maintaining boom prices to maintain the revenue they receive from transaction taxes such as stamp duty.


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## freddy2 (25 January 2011)

prawn_86 said:


> You dont think this agency would have a vested interest to quote higher valuations to ensure that gov revenue was higher?
> 
> I dont trust current valuers let alone one set up by a government




Of course you don't and Kerry Packer didn't like to pay tax because the government didn't the spend money well - in the end these are just self-serving rationalisations.  Already many areas of Australia apply a land tax to non-PPOR. For example in NSW the valuations are done by the Valuer General  (see http://www.osr.nsw.gov.au/taxes/land/). Although the technical analysis "head and shoulders" mumbo jumbo people here might think otherwise, valuation of assets (shares, property, etc) is a fairly straightforward process.


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## trainspotter (25 January 2011)

prawn_86 said:


> You dont think this agency would have a vested interest to quote higher valuations to ensure that gov revenue was higher?
> 
> I dont trust current valuers let alone one set up by a government




There already is the Valuers General Dept. in every state that sets the prices for GRV depending on usage of said property. The council uses this formula to set the rates applicable to the property.

There already is land tax in all states of Australia except for the Northern Territory


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## FxTrader (25 January 2011)

Tysonboss1 said:


> The definition comes from the Book "the intelligent Investor" by Benjiman Graham, Who is considered the father of value investing and was one of the most successful investors of his time.



Yep, thanks for the vid.  I am familiar with Ben Graham's book and his influence on the likes of Warren Buffett and Roger Montgomery.  However everything Graham said is not investment gospel.  I say again...

Thorough analysis can never promise safety of principle or adequate" return (I can provide examples). 

It can improve the *probability* of a successful outcome however.  Graham's definitions are outdated and represent over reliance on his interpretation of "thorough analysis" as some kind of guarantee of safety and return, nonsense.


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## bellenuit (25 January 2011)

House price expectations turn negative

http://www.theaustralian.com.au/bus...ns-turn-negative/story-e6frg9gx-1225994177425


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## FxTrader (25 January 2011)

freddy2 said:


> ...Although the technical analysis "head and shoulders" mumbo jumbo people here might think otherwise, valuation of assets (shares, property, etc) is a fairly straightforward process.



Conflicting valuation models and methodologies are abundant across many asset classes.  How in the world can you call valuation a "straightforward process"?


----------



## Tysonboss1 (25 January 2011)

FxTrader said:


> Thorough analysis can never promise safety of principle or adequate" return (I can provide examples).
> 
> .




For an individual security I aggree, But graham never said that thorough analysis of a single security and purchase there of was an example of sound investment policy, infact he says in the book that purchasing one or two stocks in isolation is speculating.

His definintion refered to the term "Investment Operation" eg. An Investment operation is one which upon thorough analysis promises safety of principle along with an adequte return.

By having a sound investment policy where your invested priciple is spread across shares, bonds, property and cash. with each individual security and property bought at a sound price with a margin of safty it is possible to build an investment operation that in it's entirety promises safety of principle and an adequte return.


----------



## Tysonboss1 (25 January 2011)

FxTrader said:


> .  Graham's definitions are outdated and represent over reliance on his interpretation of "thorough analysis" as some kind of guarantee of safety and return, nonsense.




On this point I don't agree,

Sound investment policy does not change over time, Infact those that think it does are destined to get severely burnt (the are the ones saying "it's different this time") the most recent crash was yet another example of how even 30 years after his death grahams teaching would have saved millions of people from losing their life savings, if they had just put his teaching into practice.

Here is another great video, if you dont have time to listen to the whole thing listen from the 3.00 mark. Graham is actually talking about his own hedge fund, The "gramhan newman corparation"


----------



## c-unit (25 January 2011)

bellenuit said:


> House price expectations turn negative
> 
> http://www.theaustralian.com.au/bus...ns-turn-negative/story-e6frg9gx-1225994177425




Big news, coming from NAB imo. 

Reading a lot of the comments on various property articles lately suggests there is carnage out there, and it only hasn't been reflected in property indexes because sellers haven't adjusted expectations downwards yet. But the falling clearance rates since mid 2010 suggest buyers aren't willing to pay 7 - 8 times earnings for a home. Could more 'bearish' mainstream articles like these cause a flood of negative gearers rushing to the exit?


----------



## Tysonboss1 (25 January 2011)

Tysonboss1 said:


> For an individual security I aggree, But graham never said that thorough analysis of a single security and purchase there of was an example of sound investment policy, infact he says in the book that purchasing one or two stocks in isolation is speculating.
> 
> His definintion refered to the term "Investment Operation" eg. An Investment operation is one which upon thorough analysis promises safety of principle along with an adequte return.
> 
> By having a sound investment policy where your invested priciple is spread across shares, bonds, property and cash. with each individual security and property bought at a sound price with a margin of safty it is possible to build an investment operation that in it's entirety promises safety of principle and an adequte return.




This video from the 5.20 mark explains the margin of safety,

.


----------



## white_goodman (25 January 2011)

prawn_86 said:


> A % of what? Purchase price? Valuation? Who does the valuations? etc




same person who does it atm, valuer general


----------



## white_goodman (25 January 2011)

FxTrader said:


> Conflicting valuation models and methodologies are abundant across many asset classes.  How in the world can you call valuation a "straightforward process"?




valuation of property isnt as hard as you think, but liek any valuation the data can be skewed to present what information (price) you want to.

I remember in commercial vals we'd often come up with the number prior then figure out a way to get there..


----------



## Tysonboss1 (25 January 2011)

Can some body explain why they believe a tax based on asset value would be better than a tax based on earnings.

After all any tax must be paid from earnings, so shouldn't it be based on earnings? 

I think focusing on negative gearing as the evil of all evil's in relation to property investing is a bit silly, after all it's only a temperary situation generally.


----------



## freddy2 (25 January 2011)

Tysonboss1 said:


> Can some body explain why they believe a tax based on asset value would be better than a tax based on earnings.




From http://en.wikipedia.org/wiki/Land_value_tax

"Because the supply of land is inelastic, market land rents depend on what tenants are prepared to pay, rather than on the expenses of landlords, and so LVT cannot be directly passed on to tenants. The direct beneficiaries of incremental improvements to the surrounding neighborhood by others would be the land's occupants ..."

and

"LVT is also said to act as value capture tax. A new public works project may make adjacent land go up considerably in value, and thus, with a tax on land values, the tax on adjacent land goes up. Thus, the new public improvements would be paid for by those most benefited by the new public improvements ”” those whose land value went up most."


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## Tysonboss1 (25 January 2011)

freddy2 said:


> From http://en.wikipedia.org/wiki/Land_value_tax
> 
> "Because the supply of land is inelastic, market land rents depend on what tenants are prepared to pay, rather than on the expenses of landlords, and so LVT cannot be directly passed on to tenants. The direct beneficiaries of incremental improvements to the surrounding neighborhood by others would be the land's occupants ..."
> 
> ...




I can't see any real benefits over the current system.


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## robots (25 January 2011)

matty77 said:


> Bring a new law in and remove FHOG.
> 
> When you buy your first house you pay no stamp duty, or when you only own 1 house, you pay no stamp duty on that house.
> 
> ...




hello,

FHO already have plenty of opportunity to get into the market, isnt that what they done just recently?

the grant offsets the ridiculous stamp duty tax states impose, people just dont get that

nothing broken except the record player from the socialist crew who want to take from the rich and give to the poor, the bludger, the one who goes out for fifty fags a day, or shuffles the paper at desk to make look like busy, or carry's 10 manilla folders around all day long

anyway, grreat report from demographia, of course suburbs in america are the most affordable because you have to pay for all the armoured gear just to get a sherbet bomb from the corner store

oh well, will keep all the sheeple going

thankyou
professor robots


----------



## white_goodman (25 January 2011)

who the hell still eats sherbert bombs?


----------



## tothemax6 (25 January 2011)

medicowallet said:


> Market forces should be dictating the direction of investments
> 4. Never allow SMSF to purchase residential property.






matty77 said:


> I guess my point is this, how do you bridge the gap between rich investor bidding on his 10th property with money to burn and the FHB with 2 kids, bidding on his first house?



You don't, you just leave people alone to buy what they want.

And people don't 'have' to buy housing. They can rent. Interest rates are supposed to be peoples signal to either borrow or save money. People should rent and put the difference in savings. Makes for a bigger deposit and thus less loan interest when you come to buy, or when prices are better.


----------



## hangseng (25 January 2011)

c-unit said:


> Big news, coming from NAB imo.
> 
> Reading a lot of the comments on various property articles lately suggests there is carnage out there, and it only hasn't been reflected in property indexes because sellers haven't adjusted expectations downwards yet. But the falling clearance rates since mid 2010 suggest buyers aren't willing to pay 7 - 8 times earnings for a home. Could more 'bearish' mainstream articles like these cause a flood of negative gearers rushing to the exit?




Anyone making a decision to start "rushing for the exit", or panic selling any investment not just property, based on a bankers view or anyones (in particular the media) for that matter is doomed to financial failure.

I am a diversified investor using stocks, cash and property. I won't be selling any property anytime soon and definitely not because of any "bearish mainstream article". I will just continue to enjoy the benefits of cash flow from rents received and exeventually cash in on the capital gain when I am good and ready and at the right time.

To me having a contrarian view of what is printed in "mainstream" media has generally  been of great benefit in the successful pursuit of increasing my financial wealth.

Stocks go up, stocks go down as do property prices. Investing in them requires sound investment decisions and in the case of property in particular *long term *thinking and planning. So many regard investment as a "quick buck' and get burnt accordingly.

The more the talk of impending doom the more I know it is getting close to the time to buy. When the taxi driver starts giving me stocks tips and the market and media is full of (overley) positive hype, I know it is getting near the time to sell.

I agree with the poster stating negative gearing isn't the root of all evil. I do agree that the both the benefits of doing so should be based on sound long term investment policies. Wipe out negative gearing and I would consider property to be a sell and would like to see how the government intended to make up the rental shortfall. 

They sure as hell aren't interested in being landlords, that's why they approach private owners to rent out properties in the defence housing scheme and offer owners incentives to rent at lower rentals.


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## robots (25 January 2011)

hello,

one of my great pleasures in life getting down to the Sugastation shop at Southern Cross station for a bag of lollies

handout some goodwill while i am there, listen to others opinions, and communicate some forward thinking, visions, and reveal a new dimension open to all

and you know, being able to enjoy those lollies while watching Willie Wonka and the Chocolate Factory an extra special moment in life

thankyou
professor robots


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## FxTrader (25 January 2011)

Tysonboss1 said:


> Sound investment policy does not change over time, Infact those that think it does are destined to get severely burnt (the are the ones saying "it's different this time") the most recent crash was yet another example of how even 30 years after his death grahams teaching would have saved millions of people from losing their life savings, if they had just put his teaching into practice.



What constitutes "sound investment policy" is a matter of some debate and not under examination here.  Yes you can invest in undervalued businesses that are trading at a discount to valuation for the purpose of achieving a "margin of safety".  

But as I stated before, and you have yet to refute, "thorough analysis" (however that is interpreted) is not a guarantee of safety of principle or return on investment but a part of the due dilligence process in assessing an investment.  Hence, defining the term "investment operation" the way Graham does is faulty logic IMO.


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## Bill M (25 January 2011)

Today I was listening to the news on the radio and they said that it was forecast that property would go down Australia Wide about (wait for it) .5% this year. That is not a typo they said .5%       Big Deal! My rent keeps coming in, my tenant is on a 12 Month lease, my property is walking distance to beaches, transport, supermarkets, clubs and pubs. To me a drop in price more than 20% would make me reconsider my position only because I would have to start looking to buy up again. 

What happened 4 years ago? They said subprime will come to Australia? It didn't.

Then The GFC came 2 years + ago and they said Australian property will crash, it didn't.

Some idiots were saying fiat currency was a thing of the past and a new gold standard would come, it didn't.

So while we are at it how many people on this forum are predicting _*Australian*_ property crashes of 40% like that Professor Keen said would happen? Put your signature to that to that if you are game.

See ya got to go check prices on realestate.com, I might be lucky to see a .5% reduction.


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## Bill M (25 January 2011)

hangseng said:


> To me having a contrarian view of what is printed in "mainstream" media has generally  been of great benefit in the successful pursuit of increasing my financial wealth.
> 
> Stocks go up, stocks go down as do property prices. Investing in them requires sound investment decisions and in the case of property in particular *long term *thinking and planning. So many regard investment as a "quick buck' and get burnt accordingly.
> 
> _*The more the talk of impending doom the more I know it is getting close to the time to buy*_. When the taxi driver starts giving me stocks tips and the market and media is full of (overley) positive hype, I know it is getting near the time to sell.




I couldn't agree with you more, good luck mate and Happy Australia Day.


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## wayneL (25 January 2011)

Tysonboss1 said:


> I don't really understand what the exact question you are asking me is.
> 
> As I said before pe is price to earning ratio,
> 
> Are you asking how you calculate the pe on property or what a a fair pe is to expect when purchasing.




I am asking what is the current price (or current value) to earnings ratio of residential property.


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## FxTrader (25 January 2011)

hangseng said:


> Anyone making a decision to start "rushing for the exit", or panic selling any investment not just property, based on a bankers view or anyones (in particular the media) for that matter is doomed to financial failure.



Actually notable doomsayers who were not mainstream media (like Peter Schiff) in the U.S. called the housing crash and GFC there.  The financial media (CNBC and such) didn't see it coming.  The warning signs were there for those willing to examine the data and evidence.  Keeping you head buried in the housing bubble quicksand will not serve you well. The evidence for an impending correction is mounting for those who chose to listen.



> Stocks go up, stocks go down as do property prices. Investing in them requires sound investment decisions and in the case of property in particular *long term *thinking and planning. So many regard investment as a "quick buck' and get burnt accordingly.



I am certain that the millions of property investors in the U.S., Ireland, U.K., Japan etc. also thought property was solid long term investment.  Unfortunately they were wrong.

But Aus is different we're told by the perma bulls, measures of affordability and debt don't mean anything here.  Who wants to live in London when for a little more (relative to median income) you can live in Geelong!  Perhaps we should consider Japanese style 100 year mortgages, that should keep the bubble inflated for a while longer.



> The more the talk of impending doom the more I know it is getting close to the time to buy.



Go for it, catch the falling knife, someone needs to buy on the way down to cushion the fall.


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## Tysonboss1 (26 January 2011)

wayneL said:


> I am asking what is the current price (or current value) to earnings ratio of residential property.




if you want an idea of a certain market you can you can just work it out based on median price to median annual rent. this can give you a gross yield to price ratio.

However since your probably not going to be investing in a redsidential index fund then market wide statistics are much less important. so it is best to work it out on each indiviual property. to work it out i normally use this calculation.

Gross annual rent - 20% (rates, matainance etc.) = estimated net earnings

Purchase price (or current value) / estimated earnings = P/E ratio

A P/E of less than 22.5 is desireable, less than 20 prefered.


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## robots (26 January 2011)

hello,

http://www.theage.com.au/business/inflation-rate-drops-to-decade-low-20110125-1a3if.html

oh well, not looking good againstthegrain for another rise brother,

look its just the way it goes, life is a funny journey, ups and downs but you just have to plod along

the great thing about Australia still plenty of opportunity, perhaps if you save and work a bit harder your position may change, get a promotion, dont be a slacker

thankyou
professor robots


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## robots (26 January 2011)

hello,

anyone heard from stockmad?

thankyou
professor robots


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## nukz (26 January 2011)

robots said:


> hello,
> 
> http://www.theage.com.au/business/inflation-rate-drops-to-decade-low-20110125-1a3if.html
> 
> ...




You should re-finance and buy another property, whats better than having one property making huge gains... 2 property's 

Unless your worried about a correction 

I think your looking at property as a place to live, thats why your views are different from some of the others here who look or have looked at it in the past as investment vehicles.


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## drsmith (26 January 2011)

Tysonboss1 said:


> Can some body explain why they believe a tax based on asset value would be better than a tax based on earnings.
> 
> After all any tax must be paid from earnings, so shouldn't it be based on earnings?
> 
> I think focusing on negative gearing as the evil of all evil's in relation to property investing is a bit silly, after all it's only a temperary situation generally.



The only tax on capital profit should be on realisation (CGT) and that should reward long term investment as noted earlier. Ken Henry though does not agree, preferring to tax "what cannot be moved" in the form land taxes as well. This though strikes me as a soft option. Isn't it better to deal with holes in income tax net to make that tax base more robust ?

Negative gearing needs to be considered in the context of broader tax reform on property and perhaps income as well. As it stands, unincorporated investors can claim deductions against unrelated income such as salary. Governments get at least some of this back through other property taxes such as stamp duty on transactions and land taxes on investment property. The negative gearing element though creates investment distortions in that investor decisions are taken less on the basis of investment merit and more on the basis of tax. The nett result is an artificial increase in prices made worse by a 50% discount to capital gains after one year fuelling short term speculation.

The agricultural scheme losses to both government in terms of tax revenue and to individuals should be a sobering lesson of what can go wrong. These in effect became ponzi schemes based on tax minimisation. Return on underlying investment in the schemes was in itself very poor. 

For the record, I don't consider that investors should be able to offset salary income against income losses on geared share market investments either.


----------



## white_goodman (26 January 2011)

Bill M said:


> Today I was listening to the news on the radio and they said that it was forecast that property would go down Australia Wide about (wait for it) .5% this year. That is not a typo they said .5%       Big Deal! My rent keeps coming in, my tenant is on a 12 Month lease, my property is walking distance to beaches, transport, supermarkets, clubs and pubs. To me a drop in price more than 20% would make me reconsider my position only because I would have to start looking to buy up again.
> 
> What happened 4 years ago? They said subprime will come to Australia? It didn't.
> 
> ...





i think your underestimating the power of govt to prop the market up...
forecast .5% drop, thats a forecast, its not set in stone.

Id gladly put my signature to property going down int he mid term, the only way for it to go up is for govt to step in heavily with some sort of desperate measure.

I dont know where you think this supposed demand is coming from, we are at real risk from an unemployment > real estate led recession. Not saying its 100% going to happen but you would have to have rocks in your head to think prices can continue to go up higher than the rate of real wages growth.


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## white_goodman (26 January 2011)

Tysonboss1 said:


> if you want an idea of a certain market you can you can just work it out based on median price to median annual rent. this can give you a gross yield to price ratio.
> 
> However since your probably not going to be investing in a redsidential index fund then market wide statistics are much less important. so it is best to work it out on each indiviual property. to work it out i normally use this calculation.
> 
> ...




yeh technically thats a fudged PE then, cos borrowing costs will turn that PE ratio to absolute ****, most likely negative. SO unless ur buying properties 100% in cash, im afraid its not a good calculation.

Also in property you refer to cap rates and Years Purchase, not PE. Essentially the same tho


----------



## white_goodman (26 January 2011)

also anyone that relies on negative gearing and the tax benefit of it seriously needs to help themselves to a calculator... its obvious many sections of society have been spruiked to in 'millionaire creation seminars' lol


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## Tysonboss1 (26 January 2011)

white_goodman said:


> yeh technically thats a fudged PE then, cos borrowing costs will turn that PE ratio to absolute ****, most likely negative. SO unless ur buying properties 100% in cash, im afraid its not a good calculation.
> 
> Also in property you refer to cap rates and Years Purchase, not PE. Essentially the same tho




Well the same with stocks, Obviously if you decide to use margin then that will have to factor into your calculations.


----------



## Bill M (26 January 2011)

white_goodman said:


> I dont know where you think this supposed demand is coming from, we are at real risk from an unemployment > real estate led recession. Not saying its 100% going to happen but you would have to have rocks in your head to think prices can continue to go up higher than the rate of real wages growth.




There is a shortage of supply on the Northern Beaches of Sydney (I don't know about any other areas of OZ). Any unit that is priced fairly is sold very quickly. My unit is only 80 sqm and was rented for $420 a week, several renters came through looking and it was snapped up on the first day of it being shown. I have have had 2 renters in 20 Months, it has never been empty. I do not have any mortgage on it. Once again I ask the question, if you think prices are going to fall then take guess and tell by how many % as I would like to blog the comment for further reference. If it drops as I said well in excess of 20% I may move quickly to buy another. I am not frightened by a drop in price I just don't think it will happen but if it does it only makes it a more compelling investment.


----------



## Tysonboss1 (26 January 2011)

FxTrader said:


> What constitutes "sound investment policy" is a matter of some debate and not under examination here.  Yes you can invest in undervalued businesses that are trading at a discount to valuation for the purpose of achieving a "margin of safety".
> 
> But as I stated before, and you have yet to refute, "thorough analysis" (however that is interpreted) is not a guarantee of safety of principle or return on investment but a part of the due dilligence process in assessing an investment.  Hence, defining the term "investment operation" the way Graham does is faulty logic IMO.




What you and I were debating was Grahams definition of investment which was = 

An Investment operation is one which upon thorough analysis promises safety of priniciple and an adequate return.

Under this definition the term "thorough Analysis", Is not describing security analysis.

What he is saying, is that your own capital management operation can only be described as an investment investment operation if after you have examined your portfoilio allocation  (in it's entirety) and after you have conducted this examination you find that it promises safty of principle with an adequate return over time.

I repeat yet again, he is not saying that just by conducting strict security analysis that you can be 100% sure you will not lose on any one security.

However what he is saying is that is you focus you attention on building a diversified portfolio, with each item purchased at sensible prices across varying asset classes, you will have a portfolio that with not only produce a return but also protect you capital from any loss large enough to offset the income produced over time.


----------



## Tysonboss1 (26 January 2011)

white_goodman said:


> Also in property you refer to cap rates and Years Purchase, not PE. Essentially the same tho




Thats right, but we are in a stock thread. So I used pe because it is a term everyone here would be familar with. and also it's just a more simple term really.


----------



## Tysonboss1 (26 January 2011)

Bill M said:


> . I am not frightened by a drop in price I just don't think it will happen but if it does it only makes it a more compelling investment.




I'm with you on that one brother.

I am a low debt model property investor myself. I look at property as a place to store capital longterm where it is protected from inflation and produces a return similar to bond yields ( but inflation hedged), It's like owning gold that pays weekly interest.

Offcourse it is entirely possible for prices to fluctuate, Even Gold which seems to be held on a pedistall as the best protection from inflation will flucuate in price and it produces no income.

I do believe property in some areas (brisbane for example) is at the upper limits of it's trading range and that why I have not bought any for years. But property tends to stagnate rather than crash.

But I am not at all worried, as I said I look at property as being a longterm store of value so I don't trade it trying to time the market.

When I see a good opportunity I will move some cash into property and maybe use some debt ( less than 50% lvr), when it's poor value I will refrain from buying and focus on building my other investments and clearing the small debt I have.


----------



## c-unit (26 January 2011)

white_goodman said:


> also anyone that relies on negative gearing and the tax benefit of it seriously needs to help themselves to a calculator... its obvious many sections of society have been spruiked to in 'millionaire creation seminars' lol




Which makes you wonder, how many of the sheep speculators have realised that in a flat market like the last 6 months, they are making losses?

And completely agree with your statement on the chances of a recession. It really looks like we are following the same route to recession as America. High inflation > Interest rates rising > less money spent on retail/consumer goods > job losses > FHB/low-doc/sub prime defaults...you know the story. The scary thing is that all debt statistics suggest that we are more indebted than the Americans were, and we have thousands and thousands of overgeared FHBs who were sucked in by record low interest rates and government grands in 08/09.


----------



## c-unit (26 January 2011)

Tysonboss1 said:


> I'm with you on that one brother.
> 
> I am a low debt model property investor myself. I look at property as a place to store capital longterm where it is protected from inflation and produces a return similar to bond yields ( but inflation hedged), It's like owning gold that pays weekly interest.
> 
> ...




If only there were more property investors with your attitude. You are lucky in that you are clearly in a good position to wait and snap up any forthcoming bargains. However to most, property is no longer an investment vehicle. It is a vehicle for speculation. They will be the ones in trouble, and in a few years I think there will be a big wealth redistribution in this country from the overgeared speccies to longer term, safer investors like yourself and to those sitting on a pile of cash waiting for bargains.


----------



## robots (26 January 2011)

c-unit said:


> If only there were more property investors with your attitude. You are lucky in that you are clearly in a good position to wait and snap up any forthcoming bargains. However to most, property is no longer an investment vehicle. It is a vehicle for speculation. They will be the ones in trouble, and in a few years I think there will be a big wealth redistribution in this country from the overgeared speccies to longer term, safer investors like yourself and to those sitting on a pile of cash waiting for bargains.




hello,

gotta wait a few more years now apparently, oh well

you reckon the crash will ever get here? Tech's been waiting since 1969, most here since 2004, i dunno

thankyou
professor robots


----------



## white_goodman (27 January 2011)

Bill M said:


> There is a shortage of supply on the Northern Beaches of Sydney (I don't know about any other areas of OZ). Any unit that is priced fairly is sold very quickly. My unit is only 80 sqm and was rented for $420 a week, several renters came through looking and it was snapped up on the first day of it being shown. I have have had 2 renters in 20 Months, it has never been empty. I do not have any mortgage on it. Once again I ask the question, if you think prices are going to fall then take guess and tell by how many % as I would like to blog the comment for further reference. If it drops as I said well in excess of 20% I may move quickly to buy another. I am not frightened by a drop in price I just don't think it will happen but if it does it only makes it a more compelling investment.




forecasting is a mugs game, if i put a number on it most likely ill get it wrong, if i get it right its no more than an educated lucky guess... plus its hard to forecast what intervention the govt will do.

I live on nth beaches aswell, but you are too heavily reliant on the short supply, that inelasticity of supply causes the booms and Busts... the lack of supply wont keep the market afloat.. ill link you to this article..

http://www.unconventionaleconomist.com/2011/01/never-trust-bank-economist.html

Now the big difference between you and the majority is that you are cash flow positive with no outstanding loan, thus much less vulnerable to price corrections, so yes ud be best positioned to buy a drop


----------



## FxTrader (27 January 2011)

white_goodman said:


> ... you are too heavily reliant on the short supply, that inelasticity of supply causes the booms and Busts... the lack of supply wont keep the market afloat.




How true.  Some other interesting quotes from the Unconventional Economist to consider...

_"... property bulls should not necessarily view Australia’s restrictive urban planning structure as a bullish indicator for house prices. As explained previously, unresponsive housing supply merely results in greater house price volatility – both on the way up and the way down. Therefore, when the inevitable correction arrives, say through a contraction of credit or large falls in commodity prices, Australia’s restrictive urban planning structure is just as likely to cause large house price falls, similar to those experienced in the restrictive housing markets of the United States (e.g. California_).

_"Let’s also not forget that similar housing shortage arguments were used as a reason why prices would not fall in Britain and Japan in the late 1980s / early 1990s. Both regions then experienced large house price slumps, with Japan’s house prices still less than 50% of the peak value reached two decades ago, whilst Britain’s house prices fell to their lowest multiple of income ever record in 1997."_

"_... a ToT (terms of trade) crash would be devastating for the Australian economy. Not only would unemployment rise, incomes and growth fall, and the Government’s fiscal position worsen significantly, but the Australian banks, which have borrowed heavily offshore to inflate the housing bubble, would once again find it extremely difficult to roll-over their maturing foreign borrowings. Only, unlike in 2008, the Australian Government might not be in the position to guarantee their debt given the significant other drains on the budget from diminishing tax receipts and rising welfare payments. Obviously, any resulting contraction of credit would have a devastating effect on house prices."_

_"The ANZ also conveniently ignores Australia’s ageing demographics, which are likely to significantly weigh on asset prices going forward (see here for details). They make no mention either of the fact that the availability of credit is likely to tighten significantly as the banks increasingly have to compete with foreign governments in offshore debt markets and the new stricter Basel 3 capital adequacy and liquidity requirements come into effect."_


----------



## cutz (27 January 2011)

robots said:


> you reckon the crash will ever get here?




Hopefully never,

The oz market is too big to fail.


----------



## sinner (27 January 2011)

white_goodman said:


> forecasting is a mugs game, if i put a number on it most likely ill get it wrong, if i get it right its no more than an educated lucky guess... plus its hard to forecast what intervention the govt will do.
> 
> I live on nth beaches aswell, but you are too heavily reliant on the short supply, that inelasticity of supply causes the booms and Busts... the lack of supply wont keep the market afloat.. ill link you to this article..
> 
> ...




Great link, this chart shows it all IMHO:




You can see the ratio between 3-6% is the normal cyclical model, then after Greenspan loosened the reins on global credit post Sept 2011 it didn't take long to work it's way into any interest-rate sensitive market.

I don't need to see a 40% drop to get into the market, I would rather see a return to historical norms in these sort of ratios.


----------



## medicowallet (27 January 2011)

cutz said:


> Hopefully never,
> 
> The oz market is too big to fail.




lol I think this might be the final nail in the coffin.

If our foolish PM or treasurer ever say this then I am going to run out of housing as fast as I can!!


----------



## schnootle (27 January 2011)

apropos this article about rising rents 
http://www.abc.net.au/news/stories/2011/01/27/3123022.htm?section=business

often on this forum there seems to be a debate between 

1. people that believe prices need to remain in reach of the median income, ie prices can't continue to outstrip wage growth 

2. People that think there is no reason why we cant have a return to feudalism, ie the average man doesn't even have home ownership as a option

What about rents? Rents pretty much have to remain within reach of the median income, they have to have a definite ceiling or we have will some serious third world style social problems and slums / cardboard boxes etc. Which I hope the government wouldn't ignore. So if rents have a definite ceiling, income to landlords is limited so there must come a point where buying a house to rent out is a stupid idea as the income from such a large amount of capital just isn't worth it.

I personally think that prices will continue a bit higher, landlords will keep passing the costs onto their poor suffering renters until many literally can't pay anymore. When people with decent jobs can't rent a house the whole scheme will fall apart. After a massive upheaval and a re-pricing of places to live, people will spend more of their productive capacity solving things like climate change rather than working 60 hours a week so you have somewhere to sleep.


----------



## white_goodman (28 January 2011)

schnootle said:


> I personally think that prices will continue a bit higher, landlords will keep passing the costs onto their poor suffering renters until many literally can't pay anymore. When people with decent jobs can't rent a house the whole scheme will fall apart. After a massive upheaval and a re-pricing of places to live, people will spend more of their productive capacity *solving things like climate change* rather than working 60 hours a week so you have somewhere to sleep.




and thats where you lost me...


----------



## Garpal Gumnut (28 January 2011)

I've been flying in and out of the Isa, Townsville and Mackay a fair bit since the Weather, and the numbers of passengers are down, and we know the mines are suffering, so at least here in the North I would expect house prices to fall.

Its a bit more difficult to gauge for South Queensland. 

gg


----------



## Tysonboss1 (28 January 2011)

Garpal Gumnut said:


> I've been flying in and out of the Isa, Townsville and Mackay a fair bit since the Weather, and the numbers of passengers are down, and we know the mines are suffering, so at least here in the North I would expect house prices to fall.
> 
> Its a bit more difficult to gauge for South Queensland.
> 
> gg




That comments a joke right,

How can you believe it is going to have a longterm impact.


----------



## TabJockey (29 January 2011)

The north was fragile to begin with, so you would expect a major disaster to shake **** up some.


----------



## nukz (29 January 2011)

It's quite possible if we started to see a national housing price decline (>10%) then the government might offer new incentives eg. larger FHOG or some sort of stamp duty reduction but right now the government cant even borrow to fix flood damage... so what hope is there of offering large concessions?


----------



## schnootle (29 January 2011)

white_goodman said:


> and thats where you lost me...




I was suggesting that spending so much time and money on something so basic as houses benefits no one. I would sooner see money flowing through some new industries that actually benefit the planet than people swapping houses all day.


----------



## Tysonboss1 (29 January 2011)

TabJockey said:


> so you would expect a major disaster to shake **** up some.




No I wouldn't.


----------



## Tysonboss1 (29 January 2011)

schnootle said:


> I was suggesting that spending so much time and money on something so basic as houses benefits no one. .




You lost me on that one, 

Housing as basic as the need is, it is essential to life.

Are you also suggesting we should stop focusing on other basic needs such as Food, water and clothing. so as to free up time and money for climate change.


----------



## adds4 (29 January 2011)

i dont know what is happening around the rest of the country. But i have bought a block of land in adelaide, and mananged to get 20% off the asking price. Go back a few yrs this didnt happen. People are desperate  to  sell, and there are no buyers anymore. If someone signs up subject to finance usually it falls through. One block i was looking at had been bought 5 times subject to finance, and all fell through, its been on the market for one yr now. Its for sale for $200k, so not big $.

if people dont think its a correction happening now, they are in the land of the fairies. My advice is to bargin hard and some bargins can be bought.

this notion of a land shortage is just crap, australia doesnt have the population growth of 3 yrs ago, its halved now. The only country with land shortage is the vatican.


----------



## c-unit (29 January 2011)

nukz said:


> It's quite possible if we started to see a national housing price decline (>10%) then the government might offer new incentives eg. larger FHOG or some sort of stamp duty reduction but right now the government cant even borrow to fix flood damage... so what hope is there of offering large concessions?




Agreed. But if we saw gov incentives to prop up the market in the face of falling prices, it shows that the governments rhetoric on helping affordability is just rubbish.


----------



## c-unit (29 January 2011)

adds4 said:


> i dont know what is happening around the rest of the country. But i have bought a block of land in adelaide, and mananged to get 20% off the asking price. Go back a few yrs this didnt happen. People are desperate  to  sell, and there are no buyers anymore. If someone signs up subject to finance usually it falls through. One block i was looking at had been bought 5 times subject to finance, and all fell through, its been on the market for one yr now. Its for sale for $200k, so not big $.
> 
> if people dont think its a correction happening now, they are in the land of the fairies. My advice is to bargin hard and some bargins can be bought.
> 
> this notion of a land shortage is just crap, australia doesnt have the population growth of 3 yrs ago, its halved now. The only country with land shortage is the vatican.




Interesting stuff, thanks for sharing that.

As robots would say, "good news from the ground, man."

As an aside, what do people think the chances are of tipping into technical recession if/when house prices deteriorate? Given so much of our GDP is consumption spending, and this spending grows when we have high house prices and feel wealther, am I the only one that thinks we will go into recession as soon as house price falls are recognized by the general public?


----------



## Tysonboss1 (29 January 2011)

c-unit said:


> As an aside, what do people think the chances are of tipping into technical recession if/when house prices deteriorate? Given so much of our GDP is consumption spending, and this spending grows when we have high house prices and feel wealther, am I the only one that thinks we will go into recession as soon as house price falls are recognized by the general public?




I can't see how a correction in house prices would cause a recession, Most people have no idea how much their houses are worth and they don't really kept track of them like share prices. It's not like you can sit at a computer and watch you house price update every 20minutes.

I mean I have an idea of what my properties are worth within $50K each way, but you never know so the majority of people would have no emotion to a correction.

I can see how a recession might bring about a decline in houses prices, but not the other way around.

I mean it's just like share prices, if share prices crashed >10% would it mean the country would dive into recession. Probably not. But if the country did head into recession then share prices would probably "crash" by more than 10%.


----------



## white_goodman (29 January 2011)

Tysonboss1 said:


> I can't see how a correction in house prices would cause a recession, Most people have no idea how much their houses are worth and they don't really kept track of them like share prices. It's not like you can sit at a computer and watch you house price update every 20minutes.
> 
> I mean I have an idea of what my properties are worth within $50K each way, but you never know so the majority of people would have no emotion to a correction.
> 
> ...







its not as unforeseeable as u think...

if theres a whiff of interest rate rises or china failing and unemployment increases...


----------



## Tysonboss1 (29 January 2011)

white_goodman;607935ht said:
			
		

> its not as unforeseeable as u think...
> 
> if theres a whiff of interest rate rises or china failing and unemployment increases...




Thats what I was saying when I said "a recession can cause a price decline" but "A price decline can't cause a recession"


----------



## Bill M (29 January 2011)

adds4 said:


> this notion of a land shortage is just crap, .




That is just nonsense. There are areas around the whole country where there is no more land available. Where my unit is in Sydney there is no land left. The state government is forcing the local council to work towards facilitating multi high rise apartment developments to the tune of thousands. Where is all this land you are talking about here on the Northern Beaches?


----------



## CamKawa (30 January 2011)

REIV clearance rate was just 51% yesterday. That's the lowest level I've seen since I started tracking it in June 2008.


----------



## Agentm (30 January 2011)

CamKawa said:


> REIV clearance rate was just 51% yesterday. That's the lowest level I've seen since I started tracking it in June 2008.




the good thing for the pro/no bubble folk here is that despite the 50% clearance rates since mid last year, the housing price bubble is increasing with out any sign of exhaustion.

the bubble keeps on growing and even the massive backlog of stock yet to be sold is having zero effect of it..

full steam ahead..


----------



## Dowdy (30 January 2011)

Tysonboss1 said:


> I can't see how a correction in house prices would cause a recession, Most people have no idea how much their houses are worth and they don't really kept track of them like share prices. It's not like you can sit at a computer and watch you house price update every 20minutes.
> 
> I mean I have an idea of what my properties are worth within $50K each way, but you never know so the majority of people would have no emotion to a correction.
> 
> ...






You analogy with shares is wrong mainly because of the amount of money involved and *leverage*. Mum and dads who are in the share market don't buy shares on 1:100, 1:50 or even 1:10. They buy them outright as opposed to houses. They also don't invest 400-600k on one share


Here's a real world example that happened around SEP-OCT last year:

A house near me was selling for 620k. It was on the market for about 4 months and sold for 540k. 80k seems like alot of money but it's only a 13% price drop!

Do you think someone who bought on leverage could afford an 80k price drop?


----------



## white_goodman (30 January 2011)

Bill M said:


> That is just nonsense. There are areas around the whole country where there is no more land available. Where my unit is in Sydney there is no land left. The state government is forcing the local council to work towards facilitating multi high rise apartment developments to the tune of thousands. Where is all this land you are talking about here on the Northern Beaches?




that argument is retarded, sydney cbd also has a land shortage if u look at it that way... i know northern beaches folk dont realise theres a world outside that north of the harbour bridge


(I live on nth beaches)


----------



## white_goodman (30 January 2011)

CamKawa said:


> REIV clearance rate was just 51% yesterday. That's the lowest level I've seen since I started tracking it in June 2008.




clearance rates are not as reliable as one would think for either lack or increase in demand


----------



## Dowdy (30 January 2011)

white_goodman said:


> clearance rates are not as reliable as one would think for either lack or increase in demand





They're more an indication of confidence.

And as with all ponzi schemes if confidence goes.........


----------



## adds4 (30 January 2011)

Bill M said:


> That is just nonsense. There are areas around the whole country where there is no more land available. Where my unit is in Sydney there is no land left. The state government is forcing the local council to work towards facilitating multi high rise apartment developments to the tune of thousands. Where is all this land you are talking about here on the Northern Beaches?




Most people that build a new house in sydney dont build it in the northern beaches? Most of the new (net increase in housing supply) would come from the growth area out west i would think. Inner city population growth (housing supply) is harder to obtain. It means one house has to be removed and more than two dwelling need to be put on the same land. Costly and takes time

Here in SA we are building way too many houses for our population growth. Where are these houses and who owns them. They are holiday houses. The amount of people i know that have bought a holiday house in the last eight yrs is amazing. I have an uncle that lives in adelaide that has a house he lives in one part of adelaide, and has a holiday house only 50km away, in another part of adelaide. So for two people they use up two houses. Theres your housing shortage. What would happen if he decides to put one house on the market because he can afford two, and people like him do the same?

Im sure in sydney you would have people that have holiday houses down the coast empty? or actually have a holiday house on the northern beaches, but live in inner sydney?


----------



## adds4 (30 January 2011)

adds4 said:


> Most people that build a new house in sydney dont build it in the northern beaches? Most of the new (net increase in housing supply) would come from the growth area out west i would think. Inner city population growth (housing supply) is harder to obtain. It means one house has to be removed and more than two dwelling need to be put on the same land. Costly and takes time
> 
> Here in SA we are building way too many houses for our population growth. Where are these houses and who owns them. They are holiday houses. The amount of people i know that have bought a holiday house in the last eight yrs is amazing. I have an uncle that lives in adelaide that has a house he lives in one part of adelaide, and has a holiday house only 50km away, in another part of adelaide. So for two people they use up two houses. Theres your housing shortage. What would happen if he decides to put one house on the market because he can afford two, and people like him do the same?
> 
> ...




read this from westpac http://www.westpac.com.au/corporate-banking/research/property-market


----------



## robots (30 January 2011)

adds4 said:


> Most people that build a new house in sydney dont build it in the northern beaches? Most of the new (net increase in housing supply) would come from the growth area out west i would think. Inner city population growth (housing supply) is harder to obtain. It means one house has to be removed and more than two dwelling need to be put on the same land. Costly and takes time
> 
> Here in SA we are building way too many houses for our population growth. Where are these houses and who owns them. They are holiday houses. The amount of people i know that have bought a holiday house in the last eight yrs is amazing. I have an uncle that lives in adelaide that has a house he lives in one part of adelaide, and has a holiday house only 50km away, in another part of adelaide. So for two people they use up two houses. Theres your housing shortage. What would happen if he decides to put one house on the market because he can afford two, and people like him do the same?
> 
> *Im sure in sydney you would have people that have holiday houses down the coast empty?*




hello,

so what, you own it, so use it how you like not how the socialist crew want you to

oh yeah, let the freeloaders get in there

thankyou
professor robots


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## cutz (30 January 2011)

Bill M said:


> That is just nonsense. There are areas around the whole country where there is no more land available.




Really,

Last time I flew out of Melbourne I did notice massive parcels of undeveloped land as far as the eye could see, same with Perth, Sydney, Brisbane.

Although I do have to agree with adds4, Vatican City looks pretty tight.


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## KurwaJegoMac (30 January 2011)

robots said:


> hello,
> 
> so what, you own it, so use it how you like not how the socialist crew want you to
> 
> ...




:O but Robots, I shouldn't have to work hard and save up to buy a house. The damn greedy government and damn greedy investors should stop stealing my houses!! I should be able to buy my mcmansion in a prestegious suburb using a pathetically low income whilst driving around in my brand spanking new financed car!

And dont get me started on the RBA and the banks, greedy fat bankers making squillions in profit, raising interest rates all the time how dare they! It should be fixed by the government at 1% so us aussie battlers can buy the house we deserve!!

*end sarcasm*

I dont understand where people get this sense of entitlement from. No one owes you anything. Good things should and do come from those who work harder and/or smarter. All people do is whinge and whine and hope for things to change. But hardly anyone speaks about how to find a way to make things work now, in this current climate. 

Ive missed your posts mr Robots


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## kincella (30 January 2011)

well well well,
I must admit, been spending too much time in the country retreat.....I will have to make that decision very soon....its far too expensive having two homes.....
am getting used to the slower pace in the country....and different interests taking over up there....I can still work from home wherever I am, so no big deal there
the city life is very convenient....but convience is not the greatest driver....or lifestyle required....its a cop out, an easy way...
I really like the idea of the new houses, just north of Melb city....not in the heavily treed, fire risk areas though, 2 mins to the toll/freeways, 20 mins from the city and work...
20+ square metres, 4 beds 2 baths etc, huge living areas....below $300k's

couple of points re the market.....

noticing a load of low priced houses selling in my watch list areas....so that will bring the median price down, and fool the kids to believe the whole thing is dropping...
the upgraders have not been moving on....they have stalled, no wonder, with the media hype to support the banks, to increase interest rates, with no justification whatsoever...
so the middle price market is stalled.....for now....but it will move again, as usual

I do not believe there will be a house price crash in Syd or Melb , inner city prices, for decades to come....no ifs, buts etc....
but the inner city houses or prices are not for the fhb's club.....only apartments are affordable for fhb's
....
there could be a time in the future, where some  boomers, decide to sell the inner city dog boxes, and retreat to a tree or sea change location....for a third of the price...leaving the city, to become a ' yuppy slum'.....thats where I see it going anyway.... but not in the near future.....
until these new age yuppies wake up, they can buy a house double or triple the size for the same price, further out......

heard yesterday, people around Brissy are offering $500 more pw than the asking price, to rent near the city.......assume they are checking its above the flood levels of 2011
..........................................................................................................
I posted this on another house price crash forum today....
I reckon OZ had its house price drop....correction and most of them missed it....
***check out this chart
the year to Sep 2010 Melb rose 18.8% etc
***but look at the 2nd chart below...see the dip down 3% in the 2008 year....
http://www.abs.gov.au/AUSSTATS/abs@.nsf/allprimarymainfeatures/A50B6B8CF85F0474CA25722900179E3F

so there it is...a 3% drop in 2008....not 30%, or 50% etc



from my recollection ,it was when the labor govnut came to office and swan raised interest rates every month from Jan 08 thru to about August 08....right smack in the middle of the GFC...
then by about Sep or Oct 08 they had to drop the rates by 3%....
the raising of interest rates was gross stupidity.....
dont bother saying it was not swan but the rba....swan egged on the rba....whilst pounding his chest, as a great economic manager....truth is he had absolutely no idea what he was doing

prior to the gfc, there was no bubble, we were in the middle of a mining boom, with low unemployment, thanks to the Howard govnut .....
astute people saw the GFC mid 2007, tightened their belts, and took no notice of the hot air about how great the OZ economy was....
the high rates cruelled and closed small business, and dampened the housing market.....rates went from about 7-10% in a few months...

its over...been there done that, some were so busy hyperventilating, they could not see the woods for the trees.....
the warning if it sounds too good to be true....run a mile

this forum is all about a 'too good to be true story'...a ie; a price crash so huge...every man and his two dogs will make a killing

***now here is an old chart, from 1986 to 2006...the fhb's club house in 86 was 67,400....by 2006 it was 350,000....

who is kidding who, about how good it is for the kids...the mortgage reduces each year...probably commenced at around 56,000...compared to mv of 350,000...I bet none of them complained....

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


fast forward that chart to today....the fhb value of 350,000 is probably closer to 400ks...
but note the established house index in 86 was 425k's...today about 500-600 going by recent news

todays FHB's can get a brand new 20 plus squares, 4 bdr, 2 bathroom for around 350-400, 20 minutes from Melb CBD on the outskirts of the city, on the new toll/freeways...

or choose a 8-10 square,.....pad in the city....
plenty of units and apartments cater for the fhb or lower incomes in the city....but most seem to want a big house, with a big backyard in the city.....they are just not there..or way out of your league
its all about supply and demand....
then loads of rubbish articles.... some by stock promoters to get the kids money...to gamble on shares

other articles compare the highest priced inner city pads, (that are not the domain of the fhb's club)....and squeal about the wages comparison...its like comparing duck eggs, to emu eggs....
waiting to see the year to Dec 2010 figures come out....we had a competition here last year with estimates of growth...mine was the highest at 20%....for Melb
looks like I may have won...with 18.8% to Sep...only needed a further 1.2 for Dec
summary....
the great house price crash the bears were wailing for...has been and gone at 3% in 2008...
prices will only keep rising for 2011....for the inner city

the rest of the country will do what it has always done....
dips and troughs, but overall a modest increase after 10 years.....
just use the 1986 to 2006 year charts...for the fhb's club figures, for a guide to regional areas growth forecasts...
for the next 20 years...
ps beats inflation everytime....compared to leaving cash sitting idle, being eaten up by inflation of 10% pa 

and for those gambling on the stock market to get the cash to buy a house, believe the odds are against you....
two very different types of investments.....should never be mixed....
hence the GFC in the US...people gambled on the stockmarket...the bubble of all bubbles....they thought the paper profits would convert to wealth....they borrowed more, spent the paper profits on housing etc....when the party stopped, there was no profits, but massive losses...  

--------------------------------------------------------------------------------


----------



## KurwaJegoMac (30 January 2011)

Thank you Kincella for sharing, as always it's a well informed and educated post. Of course you'll get flamed for it, most people don't like to be told that the great crash they've been waiting for is unlikely to happen. But hey, lets listen to the journos coz they obviously know what they're talking about since they publish articles in a newspaper.


----------



## TabJockey (30 January 2011)

KurwaJegoMac said:


> Thank you Kincella for sharing, as always it's a well informed and educated post. Of course you'll get flamed for it, most people don't like to be told that the great crash they've been waiting for is unlikely to happen. But hey, lets listen to the journos coz they obviously know what they're talking about since they publish articles in a newspaper.




I have only read positive articles in the mainstream media in regards to the real estate market. The AFR predicts flat or 0.5% drops.


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## KurwaJegoMac (30 January 2011)

TabJockey said:


> I have only read positive articles in the mainstream media in regards to the real estate market. The AFR predicts flat or 0.5% drops.




Depends on what your perspective of positive is - from an investors point of view it's very positive. Largely the articles are commenting on a lack of affordability, lack of housing supply, rental being pushed up, etc. Most then infer from this that it's a housing bubble, further feeding the hopefuls that a big 'correction' is due to
take place and they'll finally be able to jump into property. 

The thing is prices have been forever trending up, with small pockets of pullbacks or flat prices. This is the nature of this asset class. On balance prices will increase exponentially, as they always have and always will. 

As they say, the best time to buy a house was yesterday. People should focus less on timing an illiquid, and ever increasing market and focus more on HOW to get in profitably and have appropriate controls in place to mitigate the effects of any stgnant periods.


----------



## c-unit (30 January 2011)

KurwaJegoMac said:


> Depends on what your perspective of positive is - from an investors point of view it's very positive. Largely the articles are commenting on a lack of affordability, lack of housing supply, rental being pushed up, etc. Most then infer from this that it's a housing bubble, further feeding the hopefuls that a big 'correction' is due to
> take place and they'll finally be able to jump into property.
> 
> The thing is prices have been forever trending up, with small pockets of pullbacks or flat prices. This is the nature of this asset class. On balance prices will increase exponentially, as they always have and always will.
> ...




So Australia is different?


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## kincella (30 January 2011)

KurwaJegoMac
thank you, for the positive response

"Thank you Kincella for sharing, as always it's a well informed and educated post. Of course you'll get flamed for it, most people don't like to be told that the great crash they've been waiting for is unlikely to happen. But hey, lets listen to the journos coz they obviously know what they're talking about since they publish articles in a newspaper"
..................................................................

I have broad shoulders, so being flamed on these blogs sites, is par for the course....
This property forum, is such a small community, compared to the rest of the population...
and for all I know, most of the bears could be 15 year olds, with nothing better to do...

a bit like in the heady days of the stock market boom....when there were about 250,000 kids with an average age of 11 playing the stock market....I mean really trading shares on the internet...and taxi drivers stopping at intersections to trade shares

ref; Bubble Man, by Peter Hartcher  (an excellent read)

reading most blogs at the time....I used to scratch my head, and think ...what the....where is this rubbish coming from....I did not realise I was talking to kids, but  wondered what the hell we were talking to.....
I figured at one stage, after seeing them playing the virtual world games, of stock and property markets....and reading their blogs on same...most lived in that virtual, unreal world...and they had applied that world to report, and comment on the real world....as if it were the same...
with blogging....just take most of it with a grain of salt....
most of us can recognise the difference. between the virtual world, and the real world....
cheers


----------



## tothemax6 (30 January 2011)

c-unit said:


> So Australia is different?



It is. There are many large and tangible differences between the environment of the US sub-prime bubble, and the current Aus housing environment.


----------



## wayneL (30 January 2011)

KurwaJegoMac said:


> The thing is prices have been forever trending up, with small pockets of pullbacks or flat prices. This is the nature of this asset class. On balance prices will increase exponentially, as they always have and always will.




House prices will increase broadly in line with currency debasement, which has been the policy for some decades now.

Exponentially? Agree that price rises have been exponential as a mathematical function of government policy viz, afore-mentioned currency debasement. This is what makes leveraged property investment a winner over the long term, provided said policy prevails.

When viewed as a value vector against other vectors such as wages, rental returns etc, exponentiality exists only in short periods of time where credit is expansionary. It cannot persist in broad markets without economic and social consequences and in fact never has done... and probably never will.

I believe this is the main thrust of the bear's argument. Perhaps there is hope from the property-less that there will be a crash, but house prices over the last decade have underpinned the whole western economy as they have exported actual productivity to China. 

Ergo, gu'mints will bust their ass to support housing markets. 

However my view is that the **** is in close proximity to the fan and no matter what efforts to keep the two separate, their remains a chance the two will come into contact.

FWIW


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## c-unit (30 January 2011)

tothemax6 said:


> It is. There are many large and tangible differences between the environment of the US sub-prime bubble, and the current Aus housing environment.




And there are many, many similarities.

All it took to pop the US bubble was an increase in interest rates. Sub-prime mortgages went first, and spread to "safer" mortgages. US Sub-prime = Australian FHBs in my opinion. Aussie FHBs used government incentives as their deposit, borrowed an amount they couldn't afford, pushing up prices to unsustainable levels (Melbourne up roughly 30% since the GFC ffs). Now, as rates are rising, the first signs of stress are appearing in the FHB market.

Keep in mind we have higher relative prices, higher relative mortgage debt than the US did at their peak. We also have negative gearing.


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## schnootle (30 January 2011)

KurwaJegoMac said:


> On balance prices will increase exponentially, as they always have and always will.




Not a mathematician are we


----------



## KurwaJegoMac (30 January 2011)

schnootle said:


> Not a mathematician are we




I have a very strong grasp on mathematics, clearly you don't if you disagree that prices rise exponentially over time. 

At a basic level, conventional wisdom states that house prices rise 7% yoy. Plot that across a timeframe of greater than one year and you have exponential growth. 

Yoy growth IS exponential growth. Inflation, wages, population, energy consumption, food prices, etc ALL grow exponentially over time. 

The fact that you're using a % to calculate growth means that when you track that growth over time you get an exponential function. 

Plot a graph of house prices, inflation, median wage, whatever you want over the last 10, 20, 30 whatever years and you'll see what i mean. 

Understand yoy growth and the exponential function and you understand how silly it is to scream and cry that prices are 2 times what they were x years ago or 3 times y years ago.


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## Tysonboss1 (30 January 2011)

schnootle said:


> Not a mathematician are we




You do understand that anything that increases at a steady rate such as inflation will increase exponentially. So yes both house prices and rents will increase exponentially regardless of any short term correction


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## schnootle (30 January 2011)

KurwaJegoMac said:


> I have a very strong grasp on mathematics, clearly you don't if you disagree that prices rise exponentially over time.
> 
> At a basic level, conventional wisdom states that house prices rise 7% yoy. Plot that across a timeframe of greater than one year and you have exponential growth.
> 
> ...




Of course, discussing price rises in absolute terms is irrelevant. I thought it was fair to assume prices rises on this forum referred to something of a inflation adjusted figure. No one cares how much their house is worth in 30 years in dollars, they do care how much it is compared to their wage. yoy growth against inflation is what is impossible in the long term.


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## kincella (30 January 2011)

cutz said:


> Really,
> 
> Last time I flew out of Melbourne I did notice massive parcels of undeveloped land as far as the eye could see, same with Perth, Sydney, Brisbane.




hmm....traps for players.....
most of that 'undeveloped land' you noticed, along the east coast, is either grazing and pasture for the animals.....the food bowl....or crops....again the food bowl........
as you fly further inland, with less water and drought areas, its more likely grazing...beef, sheep etc...another food bowl, but over a greater area, due to less food or water on the ground....
it may look undeveloped to you, but in fact it is developed for the purpose it is used for.....
just because the landscape is not dotted with thousands of houses....does not mean it is not being used in a meaningful manner....
or do you think all our food is imported from overseas, or comes from a little vegetable market at the back of Werribee

if you really believe the whole of this continent could be opened up for housing, at what price would you expect to pay for it....
almost no work out there to support you, for tens of thousands of kilometers.....then the building materials, the cost to transport it out there would cost more than the house was worth, a local council will not build a road to access your remote property, nor provide any energy or telephones.....the list goes on...
thats the reason 90% of the population squeeze into the cities.....all amenities are there, established and provided for you, together with an abundance of work to choose from, and lifestyle choice....
I notice Syd and Melb constantly in the top 10 most liveable cities in the world...there is a reason for that standing.....low crime rates, low terrorism risk, huge lifestyle choices....the list is endless about how good it is here....even includes  how good it is for the lower economic groups.....I guess compared to other places world wide, this is almost heaven....

I cannot understand why more people dont venture out to explore the regional areas....that is another heaven


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## Bill M (30 January 2011)

white_goodman said:


> that argument is retarded, Sydney cbd also has a land shortage if u look at it that way... i know northern beaches folk dont realise theres a world outside that north of the harbour bridge






adds4 said:


> Most people that build a new house in Sydney dont build it in the northern beaches?



I don't know what is wrong with you blokes. This is what adds4 wrote: 



> this notion of a land shortage is just crap



and I responded by saying that *in some areas* there is no more land and there isn't, simple as that. Where can I buy land in Manly or Collaroy for example? You can't, you must buy existing dwellings which you must pay a high price for the privilege to live there. Some people have been born and bred in an area and will pay a high price to live there. They could not entertain the though of living heaps of kilometres away from their job, friends and family. They are areas in high demand and short supply. They simply can't make more land *in some areas*. Do you guys understand this? There is plenty of land in the rest of Australia but not *in some areas*. SHH





kincella said:


> I cannot understand why more people dont venture out to explore the regional areas....that is another heaven



Hello kincella nice to see you back. I did just that, live in a nice suburb 100 kms North of Sydney and rent out my Northern Beaches unit. Nice and relaxing up here and I just sit back collecting the rent, nothing beats it. It's great to be retired.


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## kincella (30 January 2011)

Bill M...thank you
I have a similar problem, relaxing with the spoils....it was not always so easy...recall the long days, and the hard slog, working when my mates were partying...
but that all seems so long ago....
you make a plan and basically stick to it....if it is a good plan, you reap the rewards....
and make some adjustments along the way...
if its a goal worth having....its worth the effort...
I must admit to being a goal driven person and then a workaholic for a period, (whilst changing my life to achieve some goals).....I just have to figure out what to do with all this free time now...
cheers, and enjoy the spoils


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## againsthegrain (30 January 2011)

> I just have to figure out what to do with all this free time now...
> cheers, and enjoy the spoils




Not going to parties and sleeping with 20yo women


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## jet328 (30 January 2011)

kincella said:


> I really like the idea of the new houses, just north of Melb city....not in the heavily treed, fire risk areas though, 2 mins to the toll/freeways, 20 mins from the city and work...
> 20+ square metres, 4 beds 2 baths etc, huge living areas....below $300k's




Do you mind me asking where this is?


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## So_Cynical (30 January 2011)

jet328 said:


> Do you mind me asking where this is?




I think he's dreamin...even Craigieburn is 300K+


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## adds4 (31 January 2011)

In most cases, if the house where bought for its purpose of being a home, house prices are irrelevant because you buy to live, not buy to pick the bottom and top of the property market. If the house purchase is for living, anythime you buy a house is the right time.

I just think people in melbourne and syndey, need to wake up and come to adelaide, where you can still buy a house less than 10km from the city under 400k, and have the same job opportunities. The traffic is less, 600sq blocks are nearly the norm still, good services and a functioning govt (how bad is the one in NSW). As a state we are poor at highlighting our liveability, every survey has adelaide as the best city to live in for lifestyle in Australia. And the best part is we dont have a housing shortage, we are building more than we need, thats why prices have remained low

i would like to know what the difference the same house built for 200k in one suburb or town compared to one thats exactly the same for 400k. House prices are always determined by how much someone is willing to pay.

The best way to have afforable housing for all, is to not allow deductions for house investing. Those deductions (money) saved by the govt, can be put into public housing. The problem is the govt is too scared because there would be a flood of houses on the market, and it would take too much time to build or buy the amount needed. Ordinary people buying a house against someone that can use it as a tax deduction is not fair. Its easier for an investor to buy a house than a fhb


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## kincella (31 January 2011)

obviously the ones I was looking at in June 2010 have been snapped up....sold out
no more 4x2 left at that price, but you can still get a 3 bdr for under 300k's....

it is normal for the developer to offer big discounts on the first homes in a new estate, so as time goes by, the discounts expire and the rest is history....

as it is, I only looked at Wallan, there are surrounding suburbs that could be of interest in the price range...over to you

http://www.realestate.com.au/buy/pr...1?includeSurrounding=false&source=refinements


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## Mofra (31 January 2011)

c-unit said:


> All it took to pop the US bubble was an increase in interest rates. Sub-prime mortgages went first, and spread to "safer" mortgages. US Sub-prime = Australian FHBs in my opinion.



Have you actually looked at the difference in lending practices between here & the US? Sub-prime being compared to PPOR purchases (where there is little difference in credit standards between FHBs and people buying their 10th property) are chalk and cheese. 

Filtered for property within 50kms of a coastal area, our property is not as overpriced as many of the broad-brush stats suggest, and a period of stagnation whilst inflation pushes wage growth with further close that gap.


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## cutz (31 January 2011)

kincella said:


> hmm....traps for players.....




Thanks for the detailed response kincella but mine was just a tongue in cheek comment playing on the fallacy of the so called "Australian Property Shortage". This is something that may appeal to the NG seminar set but fortunately there is no such thing as a property shortage is Australia. Prices in inner cities have been pushed up by the fact that people are now willing to take on bigger risks, nothing more nothing less, the fact that we have had years of low interest rates have pushed things along, double digit rates are distant memory, for many not even a memory.

The fact of the matter is there are huge parcels of undeveloped land within easy reach of the CBD near major freeways, I don’t know why I even mentioned CBD because most people don’t even work there.

Within Melbourne there are countless ex industrial/commercial lots sitting vacant just ripe for high density development.


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## kincella (31 January 2011)

C Unit....I am afraid if you rely on the wrong information...you have no hope of understanding the market...
the sub prime were the ninja loans....to people with ...no income, no jobs, no assets...
in fact it was Barack Obama as a lawyer that brought in the NINJAS loans...using the concept of racial discrimination as the excuse....so the banks and lenders were forced to give unemployed people loans....

moving on...interest rates played  a part in the bust.....but the bust was inevitable, if people were allowed to buy houses, they could not afford....had no hope of meeting the committments....
but there was a get out of jail free card,  they could throw the keys back and walk away...
that is not the case here...
plus we had the high interest rates....or didnt you notice....up to 10% by August Sept 08....
and our house prices plunged with the higher rates.....to 3% drops
all those newbie stock guru's in the US, were counting on their paper profits to pay for the houses, they borrowed against the house and the stocks...they lived like millionaires....with the paper profits in tow....when the music stopped, no profits....zilch
plus most of the so called cities in the US are nothing more than regional towns here in OZ, with a population of 100,000 at best....
people gave up their day jobs...to play the stock market, and the property market....
like sheep, they all lined up, for the trip over the cliff...
all looking for the easy money, the easy way out.....that is not how one accumulates assets or wealth


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## medicowallet (31 January 2011)

http://www.brisbanetimes.com.au/bus...ne-housing-market-plunges-20110131-1aaht.html

"Brisbane property analysts have said prices are expected to fall a further 10 per cent in the next 12 months, in the wake of the flood, before a resurgence in the first quarter of 2012."

That could put a few under pressure to sell, what with grocery prices, fuel prices, insurance premiums, a new levy, electricity price rises etc.  Could be a very interesting 12 months in SEQ, and this could start a run for the gates. Thank goodness I own no properties in Brisbane.


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## explod (31 January 2011)

medicowallet said:


> http://www.brisbanetimes.com.au/bus...ne-housing-market-plunges-20110131-1aaht.html
> 
> "Brisbane property analysts have said prices are expected to fall a further 10 per cent in the next 12 months, in the wake of the flood, before a resurgence in the first quarter of 2012."
> 
> That could put a few under pressure to sell, what with grocery prices, fuel prices, insurance premiums, a new levy, electricity price rises etc.  Could be a very interesting 12 months in SEQ, and this could start a run for the gates. Thank goodness I own no properties in Brisbane.




Did they say why there would be a resurgence ?


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## explod (31 January 2011)

kincella said:


> C Unit....I am afraid if you rely on the wrong information...you have no hope of understanding the market...
> the sub prime were the ninja loans....to people with ...no income, no jobs, no assets...
> in fact it was Barack Obama as a lawyer that brought in the NINJAS loans...using the concept of racial discrimination as the excuse....so the banks and lenders were forced to give unemployed people loans....
> 
> ...




Yep in Australia it was much different, (Financial Storm just one) with the spruikers and the books (101 properties in five years, etc.)

There is an enourmouse amount of people (and I know some of them) who have leveraged into many properties with a very small equity base.  Most of these people are in denial and are not prepared to sell below what they owe in each case.  Of course the RBA and many others are indicating that things will soon pick up.  I wonder, and what if they do not.

But anyway the banks and the govmint will not let it happen and of course it is different this time; and in Australia, "no worries"

The great depression did not have effect on the whole world but it was devestating on the developed world.  It began about 1928 and did did not really recover till about 1955.  Wont' happen, maybe not, but what if it does?   And what if it is worse.

And if replying do not scoff at the assertions, be objective and *answer the possibilities*


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## Tysonboss1 (31 January 2011)

adds4 said:


> i would like to know what the difference the same house built for 200k in one suburb or town compared to one thats exactly the same for 400k. House prices are always determined by how much someone is willing to pay.




The land it is built on,

the "house" price is actually made up of a combination of the value of the structure ( houses ) and the land.

for example if a house is selling for $350,000 it may mean the house is worth $150,000 and the land is worth $200,000. So if the same house is selling in bondi for $1M then you would assume the house is still worth about $150,000 however the land is worth $850,000.


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## Bill M (31 January 2011)

explod said:


> The great depression did not have effect on the whole world but it was devestating on the developed world.  It began about 1928 and did did not really recover till about 1955.  Wont' happen, maybe not, but what if it does?   And what if it is worse.
> 
> And if replying do not scoff at the assertions, be objective and *answer the possibilities*



Very good question explod and one that I have asked myself many times. Apart from holding a lump of gold hidden somewhere on your property and having heaps of canned baked beans in your garage and trying to grow your own vegies in your yard there isn't much left.

I kind of figured it this way. I do not believe there will be a another great depression or a major property crash. So to better protect myself for the remote possibility that it could happen I chose to sell some stocks late in 2009 in order to buy another house (where I live now). I kind of figured that in a real bad crisis at least I can still rent an inner city apartment, even if I had to drop the rent somebody would take it. I also thought that if we ever did have a similar depression like 1928 then we would all be stuffed, totally, game over. However who would find the game the toughest? The guy who owns his property outright or the guy who is renting or on the street? In a depression it doesn't matter how much money you have you will all be on rations. I would rather be on rations and in my own home than having no where to live. So in this case (worst case scenario) I would still rather being a home owner than not. This of course would only be favourable to the person who owns their home outright, cheers.


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## robots (1 February 2011)

hello,

oh gidday everyone, great day

i reckon you spot on Adds4, adelaide is a great place with plenty of upside

oh well not much happening today, IR on hold, the sun still shining

i would just like to congratulate myself for getting it right again, this time with Ballarat

i thought it would take would 5yrs, but oh well, just a lot early, well done brother

and look, can people please refrain from linking the FHBG with government intervention, stamp duty just for buying a humble home still over shadows the grant, should be 1=1

thankyou
professor robots


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## kincella (1 February 2011)

Hi there all,
yes congrats Robots...for getting it right again...and again

about the great depression...
my mother told me the story about her parents family....they had a property out Lancefield way in Vic....they were farmers, beef growers, grew all their own vegies, had orchards, milked the cows, chooks for eggs.....they were totally self sufficient anyway, before the depression hit....
when the depression came, they handed out food to so many poor buggars, who came along begging for food, they took some of them in, and gave them shelter....in the shearers quarters, they gave some jobs whenever they could.....
her family still earnt a good income from the farm...from all the produce they produced.....

.....just noting one can become self sufficient, if you really wanted to.....in lots of cases, the women stayed home and looked after the farm, while the men took to the road searching for laboring jobs...but these were country people

it would have been much harder for the city folk to be self sufficient, with barely room for a few chooks in the backyard.......
after the depression came WW2, then the men went to war........and the women went to work.....
that was the beginning of the so called dreaded 'double income family' that some scoff at, as not being the norm these days....its been going on for over 70 years

ps I think we are in for a 'double dip' recession


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## Bill M (1 February 2011)

kincella said:


> .....just noting one can become self sufficient, if you really wanted to.....in lots of cases,




I hadn't lived in a house with a yard for a long time but I decided to try grow some veggies. I planted some cucumber seeds in spring only to see them eaten by snails or just not want to grow. Then recklessly I tried 2 more seeds during summer, blow me down I got cucumbers for about 3 weeks more than what we could eat. I also haven't bought tomatoes for 3 weeks either. This winter I plan to did up some of the lawn in corner and get into this growing stuff a bit more.

Thanks for the story on the depression, my Mum also told me stories of that time. I also met and old timer in 2009 who was a boy through it and he said the GFC was nothing compared to that.




> ps I think we are in for a 'double dip' recession



We haven't had the first one yet, what you talking about? Or are we going to get them both at once.


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## Bill M (1 February 2011)

Getting back on thread, hasn't anyone thought of all this new money being printed overseas. QE1, now QE2 $trillions being released into overseas markets? Some Australian economists are saying we get some follow on from all this money printing. They have said it will flow into mining stocks and other Australian stocks. They also say we will get higher inflation here is Australia because of it. So wouldn't that mean some of that money will flow into real estate? There are extreme views regarding either inflation ahead or deflation. I personally think we will get inflation and much higher levels of it. This could also mean higher real estate prices. So what does everyone think? Inflation or deflation? house prices even higher or lower. Where is all this extra printed money going to go?


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## white_goodman (2 February 2011)

Bill M said:


> Getting back on thread, hasn't anyone thought of all this new money being printed overseas. QE1, now QE2 $trillions being released into overseas markets? Some Australian economists are saying we get some follow on from all this money printing. They have said it will flow into mining stocks and other Australian stocks. They also say we will get higher inflation here is Australia because of it. So wouldn't that mean some of that money will flow into real estate? There are extreme views regarding either inflation ahead or deflation. I personally think we will get inflation and much higher levels of it. This could also mean higher real estate prices. So what does everyone think? Inflation or deflation? house prices even higher or lower. Where is all this extra printed money going to go?




I would suggest you go have a look at the money supply (m3) of the US over past few years and whether inflation is really gonna be an issue... the lack of bank lending in the US constricted the money supply, basically the Fed was filling the void (didnt wanna recommit past sins ie Depression). I think the question is, if theres no more Fed printing, will the banks start lending enough again to stop contraction in money supply?


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## medicowallet (5 February 2011)

"This weekend there had been 149 auctions reported with a total of 91 selling resulting in a clearance rate of 61 per cent. Of the 149auctions held a total of 58 were passed in, 42 of those on a vendors bid."

Clearance of 61%, down from 85% last year on higher volume (181 auctions)

I don't have any idea what this means. I am just posting it to see what others think.

Medicowallet.

Sunshine, lollipops, fairies, disneyland and bubbles.


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## medicowallet (5 February 2011)

kincella said:


> ps I think we are in for a 'double dip' recession




If people aren't planning for this potential shock, then they only have themselves to blame.


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## SusanW (6 February 2011)

Bill M said:


> Getting back on thread, hasn't anyone thought of all this new money being printed overseas. QE1, now QE2 $trillions being released into overseas markets? Some Australian economists are saying we get some follow on from all this money printing.




Real estate is a function of credit supply. 
For the last 20 years, Australia has increased it dependence on foreign credit from 12% to almost 30%.

Most of this credit is used by Aussies to compete for housing stock. 

This chart 





imho is one of the most telling re the future of property. It reveals since the mid 90s a rapid increase in the growth of credit relative to the growth in GDP. Considering credit attracts interest, it is not a healthy or sustainable trend for credit to grow without growing GDP at a similar rate. Why? because the interest bill will end up consuming a larger portion of GDP. Some argue this isn't an issue when credit is sourced domestically. However, when the interest heads offshore, that's a different kettle of fish. 

And the interest on foreign credit paid by Australians is represented in the primary account of the current account. 




And Australia's primary income account has grown more negative in the last few decades, and now offsets our positive trade balance, thus rendering our cash flow with the rest of the world negative. Treasury and RBA boffins will tell you Australia can sustain a current account deficit indefinitely. Maths will tell you that's bunk.


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## kincella (6 February 2011)

the US will be devalued, together with hyperinflation....a combination of both
applies to most other currencies
...devalued dollar itself creates inflation....
and inflation devalues the dollar....
is it 6 of one, or  half a dozen of the other...

http://www.silverbearcafe.com/private/02.11/omg.html

if you read this article.... the US fed is already devaluing the dollar
interesting, food for thought....
those bears going on about the increasing prices of houses...have not considered or looked at the other side of the coin...the constant devaluation of our dollar....

last time I looked, our dollar was worth only 5% of its value, compared to either 50 (or 100) years ago....forget which 
so, lets say  your $50,000  held for 50 years, has the buying power of $2750 today
all that inflation each year, erodes the dollar value....
of course, one may believe that the same devaluation should apply to houses, or any other commodity...
but the inflation factor is that which erodes the dollar value
the materials costs, and labor  rises with inflation, so in fact it costs more to build the same house, as it did over 50 years ago.....you need more of those devaluing dollars to build the house....

the constant money printing that has been conducted by both the US and AUS govnuts, must erode the value of the dollar ......together with the huge borrowings...

I believe  we are currently seeing the most number of corrupt and incompetent govnuts world wide, in our history....throwing money around like confetti.....not a fiscal conservative in sight.....with the stockmarket, the next in line as the fiscal donkey...

the dreamers universe, of easy and quick trading profits on the markets, will wipe out a few more players in the next couple of years...

ps we did have a small recession, that wiped out a lot of businessess....it was overshadowed in the media with all the govt money thrown at everything.....but this time, there is no surplus money to throw around......plus we have the huge natural disasters costs to contend with....I would say Aus is almost bankrupt....if not already bankrupted....all that mining money tax, will dissapear this year....with the natural diasters, and no infrastructure spending....that was urgent, is now ended....

it will take some time for the full effect, truth to come to light.....expect a first taste by July 2011, some other facts will be delayed....it may take a year or more...
our economy is not rosy, will not have a budget surplus next year, and will take years to recover, or get back to the good years....
all simply my opinion.....just like everyone else has an opinion....
lets see how the facts eventually stack up...
I would be very careful how I spend my dollars.....


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## c-unit (6 February 2011)

Completely agree Kincella re the state of the Aus economy. We are in a lot of trouble imo. I take it you are of the belief that Aussie property will hold firm because printing press inflation needs to go somewhere, and why not property? We are already seeing it in commodities right now. I'm not quite sure that devalued currencies will support our Aus property though. Look at the US, a deflated USD has done nothing to support the housing crash. The "safe as houses" mentality has vanished over there, the only perceived safety is commodities.

Aus is in a position similar to the US in 2006 in terms of credit card debt, mortgage debt, lack of a manufacturing base etc. I think for our housing market to "crash" we need a spike in unemployment, which I wouldn't be suprised to see very soon. Tourisms is hurting, as is education, natural disasters... multifactor productivity has been falling since 2002...the only industry really pumping is mining. But a few cracks are appearing in China

Swanny is dreaming if he thinks he can give us a surplus. But word is they are looking at taxing banking "super profits" now so I guess there is always industries that he can steal from to cover his spending addictions.


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## kincella (6 February 2011)

Hmmm, I think the US is stuffed....too many dodgy bros at all levels of business and govt's....
regarding houses....
the US housing crash was excasturbated by the dodgy business of on selling the mortgages (MBS).....I believe that  circus has come to a halt.....and probably big compensation claims will eventuate....
ie the last mortgage holders, in a long line,  of deals, were too far removed from the original deal....and in the court cases so far....the mortgagors could not prove they were the holders....so were unable to sell the houses....
prior to this case, every one just sold the houses to recover the money, regardless ....

currently those who purchased foreclosed homes, thinking they had a bargain now look like they were burnt....due to the legal title being questionable.....so they cannot sell, or move on, until these cases are resolved.....
so the US housing market, together with the high unemployment, looks stuffed to me for years to come....

one might have to look closer to home, or not glued to the US as has been the case in the past....they are no longer the leaders, or financial guru's , that you should look to for advice, or use as a mentor....
the US will be a great example for 'not what to do'.....and the implications of the GFC will hang around for years to come
this is copyright....so just read it
http://problembanklist.com/court-ru...spiral-into-full-blown-financial-crisis-0278/
I agree China can hiccup and stall....they have their own problems,  and a few of the dodgy bros to boot
Unemployment in OZ  supposedly dodged a bullet, due to all the govt BER and surplus spending....which is about to come to a sudden halt...
the employment  numbers could have survived with real infrastructure spending...but that has all been shelved due to the floods....
the rebuilding stemming from the floods and cyclones....will be a hotch potch...imo not enough money to fast track real deals, in the interim probably plenty of work for tradesman....if the home owner had some insurance....for those without insurance....I have no idea....neither do the state or fed govts
I do not have any answers, very few would have.....
all I can say is.....we are in the middle of a La Nina event, it still has a few months to run....there can be more floods and cyclones before this is over....
I stated this after the first floods, before the cyclone....when the feds thought a flood levy would suffice.....
cyclones double in number during la nina....so instead of 4.7 they could have 9.4.....then all the run offs into the other states.......as we in vic have  just  experienced....
it could just repeat these last 6 weeks again, and again before this is over...for now...
ridiculous the feds have stopped the real backlogs in infrastructure that was required....


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## kincella (6 February 2011)

get a load of this....the Wodonga council, on the nsw/vic border, have allowed building approvals on a flood plain....they built the access road, and the agents have their tiny little lots marked out...
luckily for the would be home buyer....the recent weekend floods will show them just how close a flood will come to their houses...
its just down from the main drag, on the old melbourne highway.....
the bike track has been demolished, and stack of evidence of the flood, with mud and trees down, about a metre below...the road....
trick or treat.....love to know who was responsible for this....thank god no one appears to have taken up the ridiculous offer....(no sales signs on the lots)

buyers be warned....just because council allows development...does not mean it is safe to build there...just ask all the brisbane ...ites
(but the Wivenhoe dam, did the most damage)
oh, btw...went for a drive out to the Hume Dam, expecting to see a huge display of water coming out from the spillway.....you know it was full, then all the rain at the weekend....so they should be letting water out...well my simple mind thought so
 to my horror, there were no gates open....and appears to be work going on up there...with machinery up there....hmmmm
another Wivenhoe in the making ????
I mean leaving it too late to release the water, then having to release humungeous amounts to an already flooded area


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## So_Cynical (6 February 2011)

Bill M said:


> I personally think we will get inflation and much higher levels of it. This could also mean higher real estate prices. So what does everyone think? Inflation or deflation? house prices even higher or lower. Where is all this extra printed money going to go?




Printing money = inflation

It just cant work any other way.


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## BigAl (6 February 2011)

It's been a little quiet here in the last few days, even the eternal optimists are ducking for cover in the face of unrelenting data pointing towards the Australian dream quickly turning into the Great Australian Nightmare.

The market is shot here in WA.

The equilibrium point for a healthy market has been around the 12,000 Properties for Sale mark.  Perth has been running at 17,500+ for a long time now.  Real Estate figures confirm that 2,000 Properties have been removed from the market since XMas due to disgruntled sellers.  Me Thinks the Sellers still believe the Ponzi Scheme is still on the upwards.

Real Estate figures confirm that 1 in 6 properties is taking 6 months+ to sell.  A deplorable situation here.

I remember my old duck trying to sell her property in the early 90's, in Perth, 800sqm block, 8 minutes from the beach.  No one would buy, no takers, no offers.  Took 15 months to sell.

What any of the eternal optimists fail to ever answer is, if the market always goes up and never goes down, where is the continual increase in Credit (exponential Mortgage increase) going to come from?  Where is the point where the Average Consumer cannot borrow a $1 more?  Where is this point?

IMO, that was a year ago.

The latte set would say never and this time it's different.

I hope the Gov Nuts responsible for leading the FHG like lambs to the slaughter in the Great Ponzi scheme, take a good hard look in the mirror.


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## BigAl (6 February 2011)

robots said:


> hello,
> 
> good evening brothers, a wonderful day
> 
> ...



A post back in Nov 09, my how times have changed.

*NOT ANYMORE *


----------



## nunthewiser (6 February 2011)

Not so sunny up here in Gero either Al

Builders folding
listings sitting stagnant
listings gaining by the week
sales near on ground to a halt
listing prices getting slashed
mortgagee auctions appearing all over the shop


but its all good, im still waiting for the screams to get a lil bit louder 

ho hum ..sunshine and lollipops i tap my fingers too in the meantime


----------



## BigAl (6 February 2011)

Builders and Land Developers doing it tough in WA as well.

Builders have been throwing in Free Swimming Pools on New Homes in the last 3 months to try and kick-start an industry in the dumps.

Cocky Land Developers that could release a 450 Housing Site, in lots of 20 for sale every 2nd month and on postage sized blocks of 400sqm - 550sqm blocks, are now doing it tough as well.  It was reported a few months back that these upstanding corporate citizens were throwing in $5,000+ Balances on Credit Cards, on top of discounts of $10K.  News on the ground today is that Developers slashing a further $20K off Vacant Land now to try and move stock.  Still no takers and why would there be, the Average Aussie Family can see the Ponzi Scheme unravelling.

I'll be sipping my Latte as I watch these thieves (Land Developers) go belly up.


----------



## BigAl (6 February 2011)

nunthewiser said:


> Not so sunny up here in Gero either Al
> 
> Builders folding
> listings sitting stagnant
> ...



And the Real Estate Shonks sprouting here and have been for many years, how Auctions are the only way to go.

Me thinks times are so tough for them that they are desperate to try anything for a sale.  Auctions have never worked in WA, the Sandgropers can see this for what it is, a sham, bought by a gullible public in the Eastern States.


----------



## schnootle (7 February 2011)

BigAl said:


> I hope the Gov Nuts responsible for leading the FHG like lambs to the slaughter in the Great Ponzi scheme, take a good hard look in the mirror.




If it does all end in tears, it will be interesting to see how this is handled - I can see the ACA episodes and bad newspaper articles now. They did add fuel to an already roaring fire of fear about "getting into the market", "getting on the property ladder" before the door is closed for ever etc, etc. There was panic buying by FHB there for a while, it was ridiculous. From my perspective a lot of the FHB market has realised this is the top and there isn't a rush any more.

There will definately be fingers pointed at the FHB boost one day. I am astonished at the massive political swindle that scheme was, and the amount of people that think it was about the government helping young people "get into the market" - rather than the absolute opposite. On a political level it is beautiful.


----------



## FxTrader (7 February 2011)

BigAl said:


> Builders and Land Developers doing it tough in WA as well.
> 
> Builders have been throwing in Free Swimming Pools on New Homes in the last 3 months to try and kick-start an industry in the dumps.




Must be that the developers in WA have not tapped into the Chinese migrant market yet.

Have a read of this article in today's Age...

http://www.theage.com.au/business/property/developers-court-overseas-buyers-amid-fears-of-greater-urban-sprawl-20110206-1aihd.html

_MAJOR builders and developers on Melbourne's urban fringe are selling up to half of some new housing estates to overseas investors and those hoping to migrate to Australia.

Victoria's largest home builder Simonds Homes is one of several to have sold house and land packages for the Sanctuary Lakes Resort and Featherbrook estates in Melbourne's west, of which it says half of the combined total of 2500 lots were sold overseas.

Simonds general manager of sales and marketing Mark Vujovich said foreign buyers were helping to create jobs in Victoria and boost new housing supply at a time when building activity had plummeted.

However, planning critics say selling new housing estates offshore only worsens Melbourne's problems of urban sprawl and record land prices.

*Mr Vujovich predicted up to 10 per cent of its sales this year in Victoria (or 250 house and land packages) would be made in China and a much smaller number in Indonesia.*

*''We have 23 agents in China operating in five provinces including all the major cities,'' he said. ''We are introduced word of mouth through our clients and have worked hard at building relationships over there.''*

Mr Vujovich said overseas buyers were usually associated with off-the-plan apartment developments, but that house and land packages are a growing market.

''There are two types of buyers - those that want to migrate and move their children here for the education system and then there's straightout investors buying something to rent out,'' he said.

''It's about educating both types of buyers over there that you are far better off buying house and land than an apartment because, unlike in China, you can actually own that piece of land.''

*Australia's foreign investment laws encourage overseas-based investors to buy new real estate with the aim of increasing housing supply.*

A series of law changes in recent years made it easier, and then harder, for foreign investors to buy existing homes, but were mostly unconcerned with sales of new housing stock.

Simonds international sales manager Jonathan Wang said a new house purchase counted for 28 of the 150 points needed by applicants for permanent residency to qualify.

He said estates in the west were the most popular with overseas buyers because they were 23 kilometres or less from the CBD and relatively close to Port Phillip Bay.

Other estates marketed offshore include Point Cook's Saltwater Coast, The Rise and Rose Grange in Tarneit, Williams Landing near Truganina and The Grove in Cranbourne.
*
Cranbourne local George Zhang, originally from China's Guangdong province, purchased three new houses, a pizza shop and a convenience store in Melbourne in his quest for permanent residency.*
*
''A lot of Chinese people are trying to immigrate to Australia,'' he said. ''Buying property is the first stage of coming to live here.''*

Mr Zhang, his wife Rita Tian and daughter Ella, recently became Australian citizens. They are now advising friends in China about how best to buy real estate and small businesses in Melbourne.

''Australia is paradise, especially for small business people,'' he said. ''You don't have to go through a lot of hierarchy, everything is transparent and it's easy to recruit because there's a lot of students who want to work part time.''

However, RMIT planning professor Michael Buxton said companies such as Simonds were being irresponsible in courting overseas buyers.

''Some developers cry poor about the alleged lack of outer urban land while promoting sales overseas,'' he said.
*
''Overseas marketing of outer urban housing makes it harder to satisfy Melbourne's housing demand. It creates an artificial demand to increase developer profits, raises outer urban housing prices and places more pressure on the urban growth boundary.*

''We should not be expanding the outer urban areas for any reason let alone for overseas speculative purchasers. That is just outrageous and wrong and stretches the boundaries of all proper planning._

So there you have it, evidence that foreign buyers are snapping up new housing stock, contributing to the supply problem and providing support for prices on the fringe.  Wealthy foreign buyers are now a key target market for developers.  The bubble continues its expansion with the aid of foreign investment, just wonderful.


----------



## schnootle (7 February 2011)

FxTrader said:


> So there you have it, evidence that foreign buyers are snapping up new housing stock, contributing to the supply problem and providing support for prices on the fringe.  Wealthy foreign buyers are now a key target market for developers.  The bubble continues its expansion with the aid of foreign investment, just wonderful.




First we send our all our manufacturing overseas, then we let overseas companies buy out local companies, now we sell residential land piecemeal overseas. Yay, I swear one day silly white australians will be kepts as house monkeys by another country not stupid enough to sell everything.


----------



## Tysonboss1 (8 February 2011)

schnootle said:


> First we send our all our manufacturing overseas, then we let overseas companies buy out local companies, now we sell residential land piecemeal overseas. Yay, I swear one day silly white australians will be kepts as house monkeys by another country not stupid enough to sell everything.




Do you purchase goods manufactured overseas, If so you part of the problem. every time we import we are putting Australian dollars in the hands of other nations, and when they are not buying our products they will look to buy our assets.

The question is, Is is moral to accept their goods and services if we are not willing to let them spend the dollars as they wish. Think about that next time you Buy an imported beer of wine or plastic doodad, they give us a beer and we give them a little piece of the australian pie.


----------



## FxTrader (8 February 2011)

Tysonboss1 said:


> Do you purchase goods manufactured overseas, If so you part of the problem. every time we import we are putting Australian dollars in the hands of other nations, and when they are not buying our products they will look to buy our assets.



Or buy our debt with their surplus AUD.  In many cases there is no alternative but to buy goods manufactured overseas.  For instanace, how many electronics goods we consume are manufactured in Aus?  Saying that one is "part of the problem" for buying imported goods is a nonsense, the problem with trade imbalances is a dilemma for the entire world economic system.



> The question is, Is is moral to accept their goods and services if we are not willing to let them spend the dollars as they wish.



Of course it's moral, not everything in Australia is up for sale nor should it be and that's why we have the FIRB.  Allowing foreigners to buy property unrestricted here is folly as noted by Buffett in the YouTube vid.


----------



## Tysonboss1 (8 February 2011)

FxTrader said:


> Saying that one is "part of the problem" for buying imported goods is a nonsense, the problem with trade imbalances is a dilemma for the entire world economic system.
> 
> .




Offcourse you are part of the problem (I don't really see it as a problem though), Every time you buy imported products you are contributing to the problem.

Every time we import a container load of LCD TV's we have to ship a frieght train load of coal to maintain the balance. And if we import so much then they will have to spend their money on assets. 

If we were not importing so much our currency would be stronger and our assets less atracttive. 

But any way, I think if you do your research you will find many Australians Buying Property all over the world, especially NZ and USA. And many foreign companies investing in china.

So us Aussies are busy buying up the rest of the world, just as quick as they are buying here. And just because they buy Here, doesn't mean they won't eventually sell it back, no one lives forever.


----------



## Quincy (8 February 2011)

FxTrader said:


> Must be that the developers in WA have not tapped into the Chinese migrant market yet.
> 
> Have a read of this article in today's Age...
> 
> ...




Forget about interest rates affecting the future of Australian property prices (for some suburbs in Sydney and Melbourne that is). Many Chinese buyers just pay cash when buying established Oz property - no need for bank loans.

This sort of thing (see below) has been happening in a big way over the past few years in my local area. There are also, I imagine, other Sydney and Melbourne suburbs that no doubt are also being targeted by the Chinese in this way. I also know of properties that have been purchased by Chinese buyers after viewing over the internet only (local relative or friend with P.R. / Oz citizenship executes the sale). If under the threshold they have also received the first home owners grant and stamp duty discount. Great for local Aussies trying to purchase in the subject areas.   




> Another property touted as the biggest house in Palm Meadows, and built by a Japanese investor in the 1980s as a corporate retreat, sold for $2.6m to Sydney-based Chinese buyers, who flew into the Gold Coast on Saturday morning, viewed the property for the first time, and purchased it on Saturday night.
> 
> Sitting on 4095sq m at 43 Meadowlake Drive, it has five bedrooms, 12 bathrooms, three kitchens, two media rooms, a library, massage room, sauna and a 20m pool.
> 
> http://www.theaustralian.com.au/new...a-falling-market/story-fn6njxlr-1225998825087


----------



## FxTrader (10 February 2011)

Came across this assessment recently while reviewing a CBA valuation report...

_"In addition, the Australian residential property mortgage market – which
CBA is heavily leveraged to - *is characterised by one of the highest
levels of household debt in the world*. This has come about through
several years of lax lending standards (pre-GFC), government-induced
stimulus (particularly for First Home Buyers) and *an unsustainable level
of speculative investment activity*._

_Any stagnation or below-inflation returns on residential property – even
without an increase in unemployment or any external shocks to the
Australian economy – will produce lower returns in the property market.
*This will result in higher levels of stress, defaults and, critically, a lower
level (or even negative) of mortgage growth origination.* This will have a
direct impact on CBAs bottom line."_

Entering the IP market now entails much greater risk than many presume IMO.


----------



## bellenuit (12 February 2011)

For those who are interested, a very amusing and informative (and very long) article from Vanity Fair on how Ireland ended up in the pooh following the collapse of its property bubble. Whether there are parallels with Australia or not, I will let others judge.

*When Irish Eyes Are Crying*

http://www.vanityfair.com/business/features/2011/03/michael-lewis-ireland-201103?currentPage=1


----------



## BigAl (12 February 2011)

On the whole buy local vs Overseas,

Confirmation that my company is now buying goods direct from China on a myriad of items, stickers, Hats, Shirts, pens, Flags etc, stationary...  These items are internal costs and are not onsold or Retailed in the Country.  Estimated our Cost in Oz is $200M.  By reducing the middle man out of Oz, cost will be below $50M.

I've got a range of emotions on this.  Nothing is made in Oz anyway, cut out the local distributors and go China and Malaysia direct.  Saves the Company money, shareholders are happy.

But by doing this, we're cutting out local businesses, some will close business.  In turn, with these businesses we have traditionally supported, they'll either close shop or sustain themselves on less profit, and in the end spend less with us.  And of course if the public cottoned on to this, there could be a backlash and the public boycott our products.

You can talk about being good Corporate Citizens, well I'm quite disgusted with what we are doing.

I'm somewhere up there in the chain of command, but not close enough to the top to make a difference in decision making.  I'm just a small cog in the wheel.

A sign of bigger things to come?


----------



## prawn_86 (12 February 2011)

How does any of that apply to property prices BigAl?


----------



## BigAl (12 February 2011)

prawn_86 said:


> How does any of that apply to property prices BigAl?



I thought it would be obvious,

Businesses close down and / or businesses with less profit to spend in the local economy = less buying power on housing, or less people competing to buy in the marketplace.

Shift in Wealth, from OZ to China.

The post has 100% relevance to the housing market.


----------



## prawn_86 (12 February 2011)

BigAl said:


> I thought it would be obvious,
> 
> Businesses close down and / or businesses with less profit to spend in the local economy = less buying power on housing, or less people competing to buy in the marketplace.
> 
> ...




I'm not a property bull either, but one could argue that this shift of wealth has been going on for at least 2 decades (Japan then pretty much all of Asia), yet property prices have still increased


----------



## explod (12 February 2011)

prawn_86 said:


> I'm not a property bull either, but one could argue that this shift of wealth has been going on for at least 2 decades (Japan then pretty much all of Asia), yet property prices have still increased




Probably five decades, the workers/middle class rose from serfdom and the financial system has loved it.   And the efficiency of production has become near perfect.

Nostradarmus predicted the problems by calculating human growth and Marx predicted that mass production would outdo itself when there were no more workers to buy the goods.  Are we at the tipping point?

What has this to do with property ?    We will not be able to continue to pay for it or even rent it.

Leave you to argue the merits, back to the vegies.


----------



## medicowallet (12 February 2011)

"This weekend there have been 326 auctions reported and with a total of 206 selling a clearance rate of 66 per cent has been recorded. Of the 110 passed in 63 of those were passed in on a vendors bid.

This compares to the clearance rate of 54 per cent from last weekends 182 auctions and the 85 per cent reached on this weekend in 2010."

66% vs 85% last year, what this means, not sure!

Last weekend revised to 54% from 61%, not sure what this means either.

Just keeping it real for the believers.

Sunshine, fairies and fruit tingles here today. My son and I got some detergent and made bubbles, but the bigger we blew them up the more they popped, just thought I'd share that story with you all, don't know why.


----------



## Agentm (13 February 2011)

medicowallet said:


> "This weekend there have been 326 auctions reported and with a total of 206 selling a clearance rate of 66 per cent has been recorded. Of the 110 passed in 63 of those were passed in on a vendors bid.
> 
> This compares to the clearance rate of 54 per cent from last weekends 182 auctions and the 85 per cent reached on this weekend in 2010."
> 
> ...





sunshine and lollipops and all things warm and fuzzy.. these dizzy believers will swallow any story i guess.. 

its all good in the make believe land of peter pan..

but i agree.. 

lets keep it real

84 mysterious auctions went AWOL.. no one could figure out where to put those stats

last weeks fudges figures of 61% clearance went to a corrected 54%

lets not add the  auctions that are pulled on the last few days, or more commonly now, on the day itself when no one shows.. or simply forgotten in the figures and we see the numbers just melt away and vanish..

but auctions are pulled from the clearance figures week in week out, so it artificially raises the clearance rate.. simple!

6 were pulled last week, so it artificially raised the clearance rate a further 2%

so 52% is the correct clearance rate for last week, not the  fudged 61% touted by them

last weekend 203 auctions were reported, but in the actual last count, they only allowed for the results of only 182 to draw statistics from

so many properties are simply not reported, they vanish.. which is the magic that the reiv have, they just make things disappear..

keepin it real medicowallet.. keepin it real...

REIV

Real Estate Invariably Vanishes

lol


----------



## MACCA350 (13 February 2011)

> The next three weekends will see significantly more auctions with 695 next weekend followed by 980 and 910 in the following two weekends.*The high number of listings shows that sellers have a reasonable degree of confidence in their prospects, reflecting the overall health of the national and state economy.*



Said like a true property bull

Cheers


----------



## jbocker (13 February 2011)

Gday all, been off air for a few months after selling house and eventually moving into our townhouse in Perth CBD, after short stay at the inlaws. Reading the posts I feel very lucky to have sold on our first home open for a price we wanted. The place looked a treat and was sad to leave after 28 years.  I am in the midst of a complete reno .. lots of fun.
The market looks to be in a cooling mix, and I wonder what effects the disasters of late will have on the overall market.
Been trying to get tradies for various bits and pieces, and getting mixed responses busy and not busy albeit a bit difficult in the xmas and January break. Been speaking with 1 colleague and he is finding the block buy and build market easing considerably in outer NE Perth. But it is the post Xmas break, and he is 1 person.
Anyway glad to be back, and enjoying the reads.


----------



## robots (13 February 2011)

hello,

oh gidday, great update JB

i have moved up to Ballarat (and great performance on the median value up here by the way, howzat hey brothers)

just get down to st kilda on the weekend now which is just amazing, got a great project up here adding value over the next 5-10yrs, no board or management team to stuff things up

and at the same time a roof over by head

i reckon every dollar spent on value add i can make 3, what you reckon?

thankyou
professor robots


----------



## Tysonboss1 (13 February 2011)

BigAl said:


> I thought it would be obvious,
> 
> Businesses close down and / or businesses with less profit to spend in the local economy = less buying power on housing, or less people competing to buy in the marketplace.
> 
> ...




Unless it is offset by other industries, We can all work in the mines or get government jobs funded by mining tax


----------



## white_goodman (13 February 2011)

robots said:


> hello,i reckon every dollar spent on value add i can make 3, what you reckon?
> 
> thankyou
> professor robots




yes you will make exactly 3 for every 1....

is that number based on anything or just something that sounds nice?


----------



## sinner (13 February 2011)

FxTrader said:


> *critically, a lower
> level (or even negative) of mortgage growth origination.* This will have a
> direct impact on CBAs bottom line."[/I]




This is the real issue at hand.


----------



## medicowallet (13 February 2011)

robots said:


> hello,
> 
> oh gidday, great update JB
> 
> ...




So have you still got property in melbourne?


----------



## Bill M (13 February 2011)

I am thinking of buying another investment unit on the Northern Beaches of Sydney but the prices seem to be holding firm. I keep reading those free emails from a publishing company in Melbourne saying Australian housing is about to crash but it isn't happening. The doom and gloomers have been calling it for 4 years now, since the sub prime problems of 2007 in fact. So how much longer do we have to wait? And what percentage of a crash are we talking about?


----------



## medicowallet (13 February 2011)

Bill M said:


> I am thinking of buying another investment unit on the Northern Beaches of Sydney but the prices seem to be holding firm. I keep reading those free emails from a publishing company in Melbourne saying Australian housing is about to crash but it isn't happening. The doom and gloomers have been calling it for 4 years now, since the sub prime problems of 2007 in fact. So how much longer do we have to wait? And what percentage of a crash are we talking about?




You are asking the wrong question.

The question should be what is the ROI you will likely recieve in alternative investments over the next 5-10 years as opposed to property.

Investment returns, are all relative.


----------



## adobee (13 February 2011)

Bill M said:


> I am thinking of buying another investment unit on the Northern Beaches of Sydney but the prices seem to be holding firm. I keep reading those free emails from a publishing company in Melbourne saying Australian housing is about to crash but it isn't happening. The doom and gloomers have been calling it for 4 years now, since the sub prime problems of 2007 in fact. So how much longer do we have to wait? And what percentage of a crash are we talking about?




Northern beaches prices have been very stagnant in my opinion.. I think there is a real undersupply in demmand in this area and would suggest you can negotiate pretty hard.. I would steer clear of brand new units but you might be able to pick something up a year or two old at a bargain.. else I expect the much older 70s apartments will have substanially better rental returns renovated than the newer apartment complexes.. I would only buy northern beaches long term on the basis you are expecting a strong rebound in capital growth.. I would research where you choose as I am advised alot of recently overdeveloped centres have turned a bit getto ish with trouble and crime..   For capital growth I think you could have better chance with getting a really good deal on a luxurious home, if you think northern beaches will bounce back these have been slammed for last few years.. If the ecomony turns and having a million $$$ northern beaches / palm beach pad comes back into vogue there could be couple of hundred thousand $$ move on some of these homes pretty quick..  If you are looking for simple investment with good rental return I would suggest considering Sydney City fringe in short walk to CBD, say one bedroom in Surry Hills.. constant strong rental return.. or older one bedroom in Chippendale strong rents and going to move in prices as major new developements complete such as the fraser broadway site which will be asking x2 the price of and existing unit value.. (All IMO)


----------



## robots (13 February 2011)

medicowallet said:


> So have you still got property in melbourne?




hello,

yes,

yeah i reckon for every $1 spent you can make $3 when adding value to a place, so if you spend 15k i reckon you can add 45k to the price, howzat hey brothers amazing

gardening, painting, door knobs, window hardware, simple stuff gotta be stylish though, timeless

thankyou
professor robots


----------



## kincella (13 February 2011)

*cap gains is income too with the added advantage of  tax advantages *

some of us treat capital gains as a legitimate form of income...and it comes with tax advantages.....you know, specifically the capital gains tax regime.....where only half of the gain is taxable after a year.....
love it, and it converts easily into cash.....without even selling...want cash...take some equity out....


I know some posters totally dismiss capital gains as a form of regular income....and choose only a high dividend, or high interest rate...as a benchmark.....
especially when they comment on the annual rate of return, for a given asset....
after tax and inflation, their dollar value is losing pace, being devalued year in year out...

***funny how property bears promote the idea that almost anything has a better return than property.......as if.....
**the rubbish in equals rubbish out rule is so true.....
some of us really dont care where the return comes from, so long as it is a good return....and adds to the bottom line...
with my preferred asset class of property, I use the lower average capital return rate of 10% over a 10 year period....since it has worked well in the past....I expect it to work well in the future....
using the same dips and troughs that have impacted property for the past 30 years, it works well as a guide....for the conservative investor.....

I note Marcus Padley as one of the few stockbrokers I admire, with his views generally on investing....
he raises some very valid points.......regarding return on investments...in this article...

http://www.theage.com.au/business/i...-should-avoid-high-yields-20110211-1aqpf.html 

ps Robots...I just know you will be enjoying all that fresh country air, and the changed lifestyle...cheers


----------



## BigAl (13 February 2011)

robots said:


> hello,
> 
> yes,
> 
> ...



Why stop at $15K, why not try borrowing $1M from the bank?  Make $3M easy as pie and repay $1M to the bank.  Easiest $2M you'll ever make, heck, maybe you organise a syndicate here, $100K each gets 20 people in.  A Cool $2M, bank should lend us another $2M easy.  $4M made in $12M.

Heck at this rate we can own all the worlds property in a few weeks.

What's this got to do with property?  Fruit Tingles, Lollipops and a Strong Cafe Latte with a dash of Whiskey... there has to be some correlation in there.


----------



## kincella (13 February 2011)

Robots gives an example of adding value to the property........geez, and you have to ask what thats got to do with property.......
huh....hello...
stay away from property if you dont understand it


----------



## nunthewiser (13 February 2011)

yes i agree.

a lollipop in hand is worth 3 sitting in the sunshine.


----------



## trainspotter (13 February 2011)

38 Lollipop Drive, Wyndham Vale, Vic 3024

Must be something in this lollipop thing. House listed and sold WAAAAAAYYYY above median average of $277,000. Listed at $559,000 and settled not far from the mark.

http://www.realestate.com.au/property-house-vic-wyndham+vale-106788371

Two lollipops worth by the look of it ??? 

Still waiting for this horrendous property bubble to burst by the way .... HO HUM ...... back to counting my green titles I guess.


----------



## Agentm (13 February 2011)

robots said:


> hello,
> 
> yes,
> 
> ...




i disagree

if you do nothing at all, the property accrues value of $1,500 per week here in melbourne

melbourne prices rose 10.8%  in 2010

why spend $1 ???

when a bubble is expanding spending is insane..  the continuing bubble will outdo any minor painting on a window sill

you need to buy buy buy... buy property, buy with your ears pinned back, and as many as you can and strech yourself to the hilt..

imho keep the pennies and buy a lollipop and enjoy the sunshine and be happy the bubble is going to give you far better returns than any dollar you spend on improvements..



At end of every bubble there comes an admission that the “undersupply” of housing was in fact a debt driven myth that only really existed because there was an oversupply of speculators. As the market collapses these people disappear and all of a sudden there are too many dwellings on the market and not enough buyers


----------



## nunthewiser (13 February 2011)

trainspotter said:


> Still waiting for this horrendous property bubble to burst by the way .... HO HUM ...... back to counting my green titles I guess.




Might wanna have a look in ya own backyard then mate 

Builders goin bust, building quotes getting cheaper by the month.

blocks sitting unsold in some major% in newerly built subdivisions

established house listings stagnant with new listings by the day but older ones still sitting from upto 3 years ago.

prices getting slashed in the ads on a daily basis throughout the listings.

rental prices dropping by the week just to get a bite.

that nun fella shaw picked that top a bewty i reckon.....

sunshine and lollipops till the fat lady sings they say 




The above is based on the Midwest WA

thankyou


----------



## explod (13 February 2011)

BigAl said:


> Heck at this rate we can own all the worlds property in a few weeks.
> 
> What's this got to do with property?  Fruit Tingles, Lollipops and a Strong Cafe Latte with a dash of Whiskey... there has to be some correlation in there.




Make it two or three dashes of whiskey BigAl and we will round up all the Great Property Spruikers (who come to a flash local Hall near you often) get them in on the deal and they will take over in a couple of days.

We will borrow the money tomorrow (4 mill), they can get in Tuesday for 8, we can pay the bank Wensdy and take 2 mill each and we would proly only be on the sixth boddle a whiskey.(each)   Collateral, who cares, huh, we will just wave our hand from Brighton to Portsey.  Some great bargains begging at Martha Cove which is half way round, so yep, no problems, could even shout $4 bottles of bubbly for the crowd.


----------



## explod (13 February 2011)

nunthewiser said:


> sunshine and lollipops till the fat lady sings they say
> 
> The above is based on the Midwest WA
> 
> thankyou




Yep agree,, was with you all the way Nun..

 but do not apreciate being called a fat lady though.  Old potbelly yes.

Real clearance rate this weekend, predict 46%


----------



## FxTrader (13 February 2011)

kincella said:


> *cap gains is income too with the added advantage of  tax advantages *



Certainly not ordinary income since you must sell an asset (income producing or not) to realize a *gain or loss*.



> some of us treat capital gains as a legitimate form of income



And who here suggested it wasn't "legitimate" income? 



> and it comes with tax advantages.....you know, specifically the capital gains tax regime.....where only half of the gain is taxable after a year



This applies to any capital asset including shares and property.



> love it, and it converts easily into cash.....without even selling...want cash...take some equity out



How amusing, just take out a loan to recover equity. Just that easy! 



> I know some posters totally dismiss capital gains as a form of regular income....and choose only a high dividend, or high interest rate...as a benchmark.....



Capital gains is not considered "regular income" by anyone including the ATO.  Regular income would be rental return not property sales (unless you're an agent of course).



> the rubbish in equals rubbish out rule is so true



Actually that rule applies to the property spruikers who teach people that property always goes up an average of 10%/yr since the beginning of time (in Australia only of course) and you should leverage yourself to the hilt in property, that golden goose that always lays golden eggs (but to qualify again, in Australia only since we dare not mention the U.S. or Irish experience.)



> since it has worked well in the past....I expect it to work well in the future



Normalcy bias from a property bull once again here.  What has happened in the past must surely continue into the future (only in Australia though), bet your life savings on it. 

I must remember to tell my sister about your property growth expectations although I doubt she would receive it well since her house has devalued by 50% and she is just waiting for the eviction notice.

Interesting you chose that Padly article to review.  When was the last time you made a 61,000% return on property in 10 years, I'm guessing closer to 100% if you chose well.  Property returns never compare favorably with the returns available to savvy investors in the equity markets.

_"Invest in high-yielding stocks and you will never catch a life-changing investment like Fortescue Metals or Paladin that have outperformed by 61,429 per cent and 12,475 per cent over the past 10 years"_


----------



## trainspotter (13 February 2011)

nunthewiser said:


> Might wanna have a look in ya own backyard then mate
> 
> Builders goin bust, building quotes getting cheaper by the month.
> 
> ...




Absolutley there Nun ....... we are talking about the Midwest of WA specifically. These things are entirely happening. 

One builder has gone bust and fled town and the other is winding up it's operations due to loss of tradespeople to another firm who have undercut the main players by 15% trying to gain market share. The others have shown significant downturn. Building stats from the council dont tell fibs.

Developed land sitting there unloved and untouched by human hands and wallets. I can see an auction coming up soon on this one.

Spec home sold in Seacrest after 2 weeks of listing. Me no complain. Other ones that are overpriced still sitting there ........ Oh well, Depends on how much percent you want to make I guess?

Have been flooded with "private" rentals on my homes in Midwest WA ??? Maybe I am renting them too cheap?

Fat lady got fat somehow and I bet it wasn't from starving in the RE world.

Mate of mine in local RE Agency still pinging his 4 a month in both commercial and residential??? An exception to the rule of course. Lots of others not as successful.

Just my opinion of course.

TS


----------



## BigAl (14 February 2011)

My Favourite Land Developer is Offering even more Discounts in Perth today,

Back in Jan 10, this 400 Lot Site, 20km North of City Development, was being sold in following conditions:
- Finance Pre-Approved Before Deposit
- 20 Blocks released a month
- Phone Ballot System, Miss the 1st lot and you're back to square one in 2nd release, etc..
- Land Developers never returning calls
- Block Average Size 500sqm with 60% Build Ratio for $350K


Fast Forward to a few days ago:
$5K Prepaid Visa
$20K Builders Discount

Fast Forward to today:
$10K Prepaid Visa
$20K Builders Discount
50% of Normal Deposit on Land



Fruit Tingles, Lollipops, Sherbet Fizz, Sunshine and a swig of Whiskey in my Latte.  If you ask really nicely I can even conjur up a report on native birds, throw $2 at the report and I'll make you $6, it's that easy.  What that's got to do with the property market, I have no idea, but I like the sound of making $3 for $1, better than any Ponzi scheme I've seen.


----------



## moXJO (15 February 2011)

Man what happened to this bust that was suppose to be coming. Houses in my area just keep moving up. It's not even that nice of an area. But the Sydney siders must love it as they are pumping the prices of what were 120k homes 11years ago to 700k and above. Even 2mil homes popping up in what were the druggie suburbs. Crazy stuff.


----------



## Aussiejeff (16 February 2011)

moXJO said:


> Man what happened to this bust that was suppose to be coming. Houses in my area just keep moving up. It's not even that nice of an area. But the *Sydney siders* must love it as they are pumping the prices of what were 120k homes 11years ago to 700k and above. Even 2mil homes popping up in what were the druggie suburbs. Crazy stuff.




Maybe you should re-term that "Shanghai siders"? 

Not surprising given the huge boost to Oz city RE prices by a flood of immigrants over the past couple of years with bulging wallets. Here's a smattering of background to the trend..

From 2009 -



> *Chinese buyers* are snapping up some of the best luxury properties in Sydney including big homes on the harbor, and new condominium developments.
> 
> Real estate brokers and developers said *Chinese buyers* are most interested in hot properties in the inner-city and by the beach. They are attracted by new foreign ownership rules, a favorable exchange rate, and the relative stability of the Australian property market.
> 
> ...



http://www.chinadaily.com.cn/bizchina/2009-08/22/content_8602900.htm

From 2010 -


> In Sydney, too, there are anecdotes of *auctions dominated by Chinese bidders*, of well-to-do Chinese families arriving at real estate agents, their teenaged children acting as interpreter, and snapping up multimillion dollar units close to the city.
> 
> Ewan Morton, the managing director of Morton & Morton, says 16 per cent of last year's sales at his Pyrmont office were to *buyers from China who liked ''certain types of product: purpose-built, newish, brick and concrete construction, and on land''*. The buyers were ''not interested in the wharf developments''.




and FIRB rule changes to boot.....



> For example, the rule that foreigners had to be restricted to 50 per cent of units in a development marketed off the plan has now been scrapped.
> 
> Temporary visa holders with 12 months' validity do not require approval to buy established real estate as their residence. The 2008 changes lifted the $300,000 cap that applied to student purchases, and foreigners are no longer required to sell when they return home, which means it is much more attractive to buy. At the same time there has been a big increase in temporary visas. But the managing director of BIS, Rob Mellor, says the overwhelming factor driving property prices in Sydney is the failure to build enough dwellings to keep up with population growth.
> 
> ...



http://www.smh.com.au/national/chinese-whispers-theyre-driving-up-housing-prices-20100402-rjyf.html

Plenty of articles about this growing trend if you Google enough 

So, no. No real surprise as to why prices are still rising in Oz cities. Shortage of particular property (mainly inner city & suburban) + increasing pressure from wealthy foreign demand = PRICES GO UP! Until the FIRB rules are changed again, expect the Asian R/E Tsunami to continue building...

Happy daze, Botty!


aj


----------



## Agentm (16 February 2011)

huge push on the aussie bubble atm on the cities..

in melbourne i think simmonds homes said they sold 50% of their new properties directly O/S.. and then later in the article i saw they had many agents in china,  so i guess when they say asia, they mean only china, but it looks better when you say asia.. but the idea of guvment reform in protecting new properties from o/s investors is not going to happen, they snap it all up, and the prices keep on bubblin along!!

with food prices going viral..

"World Bank President Robert Zoellick says global food prices have hit "dangerous levels" that could contribute to political instability, push millions of people into poverty and raise the cost of groceries."


and with jp morgan only having 8 trading  day looses in 2010  96% success rate.. 

then one thing is certain.. the aussie bubble is going to remain until the fan is struck with that sticky stuff globally, and when "the inflation" is so big a problem that no amount of changing of the parameters (ala china yesterday with their cpi) will disguise the need for the interest rates hikes.. then i think you may see some scrambling for the sell button in r/e

and we all know global banks are all liquid and safe.. there is so much printing of the worthless currencies they cant go wrong..

but the future is now all sunshine and lollipops for the time being.. jump in and join the gang of latte drinkers imho..


----------



## explod (17 February 2011)

I dont' know, 

hired help is not the same these days.

Come on there Botty, where are those clearance rates from last weekend.  The unadjusted will be okay as we have learned to drop off 5 to 10% for the mean.

Notice the bubbles are going up a lot of late and I never liked lollies anyway.


----------



## robots (19 February 2011)

hello,

oh gidday, yeah well great week as usual

no crash this week, so a put a line through it on the REIV 2011 calender oh well

my apologies Explod, 

thankyou
professor robots


----------



## medicowallet (19 February 2011)

robots said:


> no crash this week, so a put a line through it on the REIV 2011 calender oh well
> professor robots




That is great news. 

However, may I suggest next time you purchase pens, not only get a couple of black ones like normal, but also get a couple of red ones.... might come in handy in the near future.

magnums, splices, callipos, paddlepops and bubble-o-bills... outstanding.


----------



## So_Cynical (19 February 2011)

This Months Smart investor magazine has the cover story.

"Why prices will fall"



			
				http://www.afrsmartinvestor.com/edition.aspx said:
			
		

> The great Australian property dream appears to be turning into a property nightmare. In case you haven’t heard, Australia is now one of the least affordable property markets in the world.



~


----------



## medicowallet (19 February 2011)

"This weekend there has been 646 auctions reported with a total of 417 selling resulting in a clearance rate of 65 per cent.

This is a healthy result which indicates demand is consistent with results achieved in the last quarter of 2010.

This compares to this weekend last year when there was 723 auctions and a clearance rate of 85 per cent."


Seems to me to be stable at around 60-65%. 

Anyone know why it hasn't returned to the 80%??

I don't know why we post this stuff, but I do it to keep everyone informed.

Cheers, and friends, and idol and POP-stars.


----------



## Bill M (19 February 2011)

So_Cynical said:


> "Why prices will fall"
> ~




It's a bit like good stocks, you buy on the dips, right? I'm hoping, wishing but it just doesn't seem to be happening, never mind....:dunno:


----------



## JTLP (20 February 2011)

medicowallet said:


> magnums, splices, callipos, paddlepops and bubble-o-bills... outstanding.




Streets Brand fan?

What are people's honest thoughts about where IR could end up? I'm not talking maximum - probably a longer term average. I remember a poster (i think Tech/A) saying historically IR's have been north of 10% - does anybody have an average figure?

Cheers


----------



## medicowallet (20 February 2011)

JTLP said:


> Streets Brand fan?
> 
> What are people's honest thoughts about where IR could end up? I'm not talking maximum - probably a longer term average. I remember a poster (i think Tech/A) saying historically IR's have been north of 10% - does anybody have an average figure?
> 
> Cheers




I see two problems

1. You can't trust companies and governments to give honest representations of how they are performing, so people who predict IR are doing so on potentially misleading data.

2. A high proportion of people with debt are ignorant, or can't remember the times when IR were high. They are not prepared for increases and their loan service reflects this. 

Interest rates will go high again, I just don't trust economists to get it right over the longer term as my experience with trusting them has been negative.


----------



## explod (20 February 2011)

robots said:


> hello,
> 
> oh gidday, yeah well great week as usual
> 
> ...




No apology needed there Botty, just glad I put you onto silver coins a few months back, you are already up by 20%.




> Streets Brand fan?
> 
> What are people's honest thoughts about where IR could end up? I'm not talking maximum - probably a longer term average. I remember a poster (i think Tech/A) saying historically IR's have been north of 10% - does anybody have an average figure?
> 
> Cheers Yesterday 07:53 PMBill M




Since my time of property investement intrerest rates have seen a high of aroung 18% and a low of about 6%.   Could we expect 12% average in the long term?

The big talk was that we had deflationary effects holding interest rates down, it appears the reverse is becoming the case.  I think more rises will come due to a money squeeze from lenders.


----------



## tech/a (20 February 2011)

*Historical Interest rates.*
You'll notice that the mean is around 10%
It will eventually return to the mean and oscillate toward the higher end.
You'll notice though that *rates spend most of their time* trending to or away from the mean---The mean is hardly ever maintained.The average is only afforded to those who are in the market long term.


http://www.loansense.com.au/historical-rates.html

If there is someone who would like to pace the figures in Excel we could get the number of years interest rates are at x% plus a whole heap of other interesting stats.





Those waiting for lower prices may get them with higher interest rates.
But 5,4,3,years ago you'd have had lower interest rates AND lower prices.

Waiting is not a sound investment option as you never know how long is enough----


----------



## Bill M (20 February 2011)

JTLP said:


> What are people's honest thoughts about where IR could end up? I'm not talking maximum - probably a longer term average. I remember a poster (i think Tech/A) saying historically IR's have been north of 10% - does anybody have an average figure?
> Cheers




Not exactly an average figure but here goes. From 1959 until now some 42 years later interest rates have ranged from 5% to 17.5%. During that time it was at or over 10% for around 18 years. It has not been over 10% since 1996.

My personal gut feeling tells me rates will be going up, without a doubt, but not over 10% for the immediate future. Having said that it is just pure speculation and anything can happen.

You might find the chart on this website a good guide:

http://www.loansense.com.au/historical-rates.html

EDIT: tech/a beat me to a similar post with links, apologies.


----------



## robots (20 February 2011)

explod said:


> *No apology needed there Botty, just glad I put you onto silver coins a few months back, you are already up by 20%.*
> 
> Since my time of property investement intrerest rates have seen a high of aroung 18% and a low of about 6%.   Could we expect 12% average in the long term?
> 
> The big talk was that we had deflationary effects holding interest rates down, it appears the reverse is becoming the case.  I think more rises will come due to a money squeeze from lenders.




hello,

no worries explod, i'm just glad i put a few onto property back in 2005, and its still a good BUY

a few got on board and many knocked it and suffered the consequences, oh well

really happy i helped many, something i am very proud of

thankyou
professor robots


----------



## FxTrader (20 February 2011)

tech/a said:


> Waiting is not a sound investment option as you never know how long is enough----




Sound, value based investment is all about making judgements about whether or not an investment opportunity is over/under priced and waiting until price reaches a level where investment makes sense from a value and/or income (ROI, ROE etc), perspective.  Buying into the peak of a property price boom (bubble) can hardly be considered a "sound investment option."


----------



## white_goodman (20 February 2011)

FxTrader said:


> Sound, value based investment is all about making judgements about whether or not an investment opportunity is over/under priced and waiting until price reaches a level where investment makes sense from a value and/or income (ROI, ROE etc), perspective.  Buying into the peak of a property price boom (bubble) can hardly be considered a "sound investment option."




i think the falling of China bubble and world baby boomers retiring will bring value back, im sidelined till i see some rationale


----------



## robots (20 February 2011)

FxTrader said:


> Sound, value based investment is all about making judgements about whether or not an investment opportunity is over/under priced and waiting until price reaches a level where investment makes sense from a value and/or income (ROI, ROE etc), perspective.  Buying into the peak of a property price boom (bubble) can hardly be considered a "sound investment option."




hello,

in your opinion, and thanks for it

thankyou
professor robots


----------



## tech/a (20 February 2011)

white_goodman said:


> i think the falling of China bubble and world baby boomers retiring will bring value back, im sidelined till i see some rationale




Personally I Dont think your alone.
With many permanently sidelined---petrified with fear of loss.

Thats why only 5% of the population will end up being self funded in retirement.
The other 95% sidelined by fear----will remain ---sidelined by fear.

There will NEVER be a good time to buy!

Hasnt been---according to the majority---for the life of this thread.(Thats 95% taking part in the thread) 5 % of us have always maintained---BUY NOW!

Anyway back to sleep.


----------



## white_goodman (20 February 2011)

tech/a said:


> Personally I Dont think your alone.
> With many permanently sidelined---petrified with fear of loss.
> 
> Thats why only 5% of the population will end up being self funded in retirement.
> ...





ill be sure to reiterate your comments to all the recent property buyers in US, Ireland, Spain, NZ over past few years... 

this is a comment of the aging population where stupidity, gambling and speculation were rewarded the past 40 years with the luck of being in the biggest boom in history. 

when the numbers make sense ill invest, not buying for the sake of buying cos it MUST go up. If you can make an investment case then by all means invest now...

and for the record I am investing in property just not Australia, id like to thank a painful 4 years at uni for that one doing property economics

let me guess your of the line of thinking that your PPOR is an investment?


----------



## wayneL (20 February 2011)

tech/a said:


> There will NEVER be a good time to buy!




Not while western economies rely on resi property sector to supply "growth".

Sometime in the future... could be next year (which I doubt), could be 10, 20, 50 (which I doubt) years... the game will change.

Until then it's a speculators and not an investors game, unless you value add.


----------



## tech/a (20 February 2011)

> let me guess your of the line of thinking that* your* PPOR is an investment?




Yes

Its one of 10
Its valued at 7 figures and is freehold.
I can use the capital---if I wish and have done so---much like a small bank-- and when I'm old and grey I Dont need to live in a 7 figure home
Half that would be fine---I can if I wish move.

But right now I can --enjoy it and--want to.

*Why then is it NOT an investment?*


----------



## prawn_86 (20 February 2011)

tech/a said:


> *Why then is it NOT an investment?*




One side of that argument could be the fact that you either have to sell, or pay interest in order to unlock the value. 

If you sell, then you have to pay the same or similar for a house of the same size in the same area (hence pointless), and if you take a loan against the value you have to generate a return large enough to cover the interest costs, plus your required rate of return.Doesnt sound like an investment to me...


----------



## FxTrader (20 February 2011)

tech/a said:


> Its valued at 7 figures and is freehold.



Appraised value is one thing, but what really matters is what you will be able to sell it for in the future.  Sounds like your investment portfolio is heavily exposed to property, good luck with that when the bubble bursts. Probably safe for now while the Chinese are taking up the slack in certain markets (primarily Melbourne and Sydney).



> *Why then is it NOT an investment?*



An IP and PPOR are quite different "investments" obviously, for PPOR the only tax break subsidy is no CGT on sale otherwise it generates no income except hoped for capital gain on sale minus your buying and selling costs (depending on where you live and the selling price of your PPOR these costs will be many tens of thousands of dollars.)  At least if you sell an IP for a loss there are some tax concessions.



> Thats why only 5% of the population will end up being self funded in retirement.
> The other 95% sidelined by fear----will remain ---sidelined by fear.



I must remember to share this wisdom with my sister who is in the courts in the U.S. trying to stop a finance company from evicting her from her home (it's now worth only 50% of what she paid).  Literally millions of property investors in the U.S., U.K. and Ireland thought as you do, property investment is a sure fire wealth creation vehicle - most are financially ruined, in bankruptcy and starting from scratch.

If I were going to buy another property now it would only be for lifestyle reasons and not because I think it would be good time to do so.  Let's see how those valuations hold up after the RBA slugs a debt laden public with a few more rate rises.


----------



## tech/a (20 February 2011)

> Sounds like you're investment portfolio is heavily exposed to property,




Yeh First property bought for $90K now $550K
Have Commercial Property bought and developed for $330K now $950K
and thats 2
Gearing 38% on total portfolio.

I'm not your average investor.
A 20-40% drop in property value is of no consequence to me as then all property's will be similar,I will be no worse off due to gearing and Serviceability.

All this scare mongering (Wishful scare mongering) only concerns those who Dont know how to take advantage of investments and mitigate oneself from catastrophic risk.

Money does make money (a sad but un failing fact) and those who Dont know how to safely use the stagnant capital in their PPOR will always struggle.

If it crashes and burns Ill crash and burn with all of you.
But have a mattress always at the ready----I keep adding to it regularly and heavily---SMSF you gotta love them.


----------



## medicowallet (20 February 2011)

tech/a said:


> I'm old and grey I Dont need to live in a 7 figure home
> Half that would be fine---I can if I wish move.
> 
> 
> ...


----------



## medicowallet (20 February 2011)

tech/a said:


> Yeh First property bought for $90K now $550K
> Have Commercial Property bought and developed for $330K now $950K
> and thats 2
> Gearing 38% on total portfolio.
> ...




Yet you will still have the loans you have, and have lost over 50% of your net worth.

Rental prices will likely drop and you could find yourself in an interesting position.


----------



## FxTrader (20 February 2011)

tech/a said:


> Gearing 38% on total portfolio. I'm not your average investor.
> A 20-40% drop in property value is of no consequence to me as then all property's will be similar,I will be no worse off due to gearing and Serviceability.



I would venture a guess that the vast majority of IP investors over at least the last 5 years or so are negatively geared to the hilt in property.  You may be insulated from a price decline but the vast majority are probably not.  But then who sits by comfortably watching their wealth being destroyed, no matter how low the gearing ratio, when the warning signs where there for them to consider for some time?



> All this scare mongering (Wishful scare mongering) only concerns those who Dont know how to take advantage of investments and mitigate oneself from catastrophic risk.



Yes, well I clearly remember how people like Peter Schiff, Michael Panzner and others who forecast the GFC and property bust in the U.S. were called scaremongers, doom sayers etc. only to be proven right. Listen to the property industry spruikers if you will, there is always positive spin to be had from them no matter how much evidence exists to the contrary.


----------



## tech/a (21 February 2011)

FxTrader said:


> I would venture a guess that the vast majority of IP investors over at least the last 5 years or so are negatively geared to the hilt in property.  You may be insulated from a price decline but the vast majority are probably not.  But then who sits by comfortably watching their wealth being destroyed, no matter how low the gearing ratio, when the warning signs where there for them to consider for some time?




I see it everyday.Fundamental traders watching price fall rubbing their hands together at the next buying opportunity as their stocks become Under valued.

Most arguements against property are from those who dont own extensive property and dont understand the positive implications of some who need negative gearing. Sure there are some who are over committed but by no means masses. I was around when interest rates were 18% and blood didnt flow down the street. I lost my properties at the time --- Im not 25 any more and my business is 20 times the size it was in the early 80s. gearing is 38% not 85%




> Yes, well I clearly remember how people like Peter Schiff, Michael Panzner and others who forecast the GFC and property bust in the U.S. were called scaremongers, doom sayers etc. only to be proven right. Listen to the property industry spruikers if you will, there is always positive spin to be had from them no matter how much evidence exists to the contrary.




This is an old worn arguement. The GFC has come and gone---demand remains---Rentals are less than 1% vacancy rates-----I have 15+ out bidding each other for rentals---If the S hits the fan I will remain liable for debt---in the US you just hand in the keys---so the incentive to struggle through is lost.

Look around you---*those with serious wealth *will have a base of property.
Most of those in the US who have serious wealth STILL have their base in property.
I dont see Trump on the poverty line.



> And what will happen when the baby boomers start to do this all together?
> 
> Who is going to pay for the 7 figure house?
> 
> I am more comfortable with a low 6 figure house, and my finger in many growth industry businesses, shares and low 6 figure investment properties.




To my knowledge not ALL baby boomers own 7 figure properties.
Who will buy it---Id say some 35-45 yr old high flyer who wants the lifestyle. Plenty of them--they knock on the door a few times a year wanting to know if I'm willing to sell.



medicowallet said:


> Yet you will still have the loans you have, and have lost over 50% of your net worth.
> 
> Rental prices will likely drop and you could find yourself in an interesting position.




No issue.---if it happened.
I would be in exactly the same boat as everyone else.
50% drop in capital value would STILL see me positive.
Many other irons in the perpetual fire.

*Having said that.*
I never hear alternatives to the housing dilema.
Always interested in how Joe average is going to retire self funded---without taking control of his financial future.

Which according to those here is NOT PROPERTY.


----------



## prawn_86 (21 February 2011)

tech/a said:


> I dont see Trump on the poverty line.




If i recall correctly he is in huge amounts of debt and very close to declaring bankruptcy (one of his companies already folded last year). Probably not the best example, he is all bluff imo.

Triguboff is a better example of a rich property man


----------



## tech/a (21 February 2011)

prawn_86 said:


> If i recall correctly he is in huge amounts of debt and very close to declaring bankruptcy (one of his companies already folded last year). Probably not the best example, he is all bluff imo.
> 
> Triguboff is a better example of a rich property man




There are 1000s most who arent public figures.


----------



## trainspotter (21 February 2011)

Fighting a solo battle there Tech/a I see. A lone voice in the wilderness of property.

I talk to people who do not have a share portfolio and they are stricken with "fear of buying" the same way as people without property are. But but but ... "It might go down in price" I hear them bleat "It has before, look at 1987 and what the GFC did to stocks" they cry in disdain. Sound familiar? 

Polarised into inaction or stupified into idleness they are the first to whinge as to how well I am doing when they pay their hard earned pay packet over to me in RENT MONEY. God bless their little cotton socks I say. Property ownership is not for everyone. Afterall .......  you have to live at the parents house first for as long as you can before you go and rent somewhere. LOLOLOL.


----------



## FxTrader (21 February 2011)

tech/a said:


> Most arguements against property are from those who dont own extensive property and dont understand the positive implications of some who need negative gearing.



Nonsense, property has it's place in asset allocation and for many the majority of their wealth is committed to it. I always find the argument that negative gearing, losing money every month to fund your property investment, is somehow a good thing amusing.

Since property always goes up (in Australia only of course) then it makes sense to spend extra money each month funding one's property investment portfolio. No point in paying attention to cycles, trends and valuation just get in there and buy buy buy, there's never a bad time to enter the property market. 



> This is an old worn arguement. The GFC has come and gone---demand remains---Rentals are less than 1% vacancy rates-----I have 15+ out bidding each other for rentals---If the S hits the fan I will remain liable for debt---in the US you just hand in the keys---so the incentive to struggle through is lost.



Sorry to rain on your parade but the GFC is still with us in the form of massive sovereign debts.  Pushing the can down the road with massive debt does not solve the problem, just delays the consequences.  The only "old worn argument" is that Australia is permanently immume to the global correction in debt inflated asset values and cities like Geelong, VIC deserve to be more unafforadable than London. What a joke.


----------



## white_goodman (21 February 2011)

its not a question of people for property vs not owning property...

the debate is buying blindly and ignorantly vs being aware of drivers and economics/numbers behind it. With a side debate on those that confuse dumb luck with shrewd investing.

I can tell you now, that the baby boomer generation should start to look to drop their leverage before the flood gates open because Gen X will not be paying the prices they want...

the problem is the mantra of buy now, buy at all costs actually worked in previous decades, to repeat anything like that is unsustainable at best  or near impossible at worst

tech/a reminds me a lot of the 'builder/developer' crowd with no basis in understanding the numbers that are now back renting after being multi multi millionaries, luckily the LVR and gambling doesnt seem as rampant


----------



## tech/a (21 February 2011)

trainspotter said:


> Fighting a solo battle there Tech/a I see. A lone voice in the wilderness of property.
> 
> I talk to people who do not have a share portfolio and they are stricken with "fear of buying" the same way as people without property are. But but but ... "It might go down in price" I hear them bleat "It has before, look at 1987 and what the GFC did to stocks" they cry in disdain. Sound familiar?
> 
> Polarised into inaction or stupified into idleness they are the first to whinge as to how well I am doing when they pay their hard earned pay packet over to me in RENT MONEY. God bless their little cotton socks I say. Property ownership is not for everyone. Afterall .......  you have to live at the parents house first for as long as you can before you go and rent somewhere. LOLOLOL.




Its a sad state of affairs.

Im just average scholastically--finished year 12
But wish everyone to take advantage of what this great country offers.
Life is for living and if you strive to better your life its a great place to be when you even START to succeed.

Statistics show that around 3% will ever "make it" (Self funding retiries).
So if my ramblings influence only 3% of the ASF audience then thats great.

The others can and do influence the 97%!!!

Personally I prefer being a minority!


----------



## trainspotter (21 February 2011)

white_goodman said:


> its not a question of people for property vs not owning property...
> 
> the debate is buying blindly and ignorantly vs being aware of drivers and economics/numbers behind it. With a side debate on those that confuse dumb luck with shrewd investing.
> 
> ...




Ooooooooooeeeerrrrr ....... you have not been following this thread then for very long? This argument has been done to death about indicators as to when and what to buy and sell about 30 pages ago? Several people including myself and Tech/a HAVE NOT asked anyone to buy buy buy without performing DUE DILLIGENCE on the property in question. Quite the opposite in fact.

Gen X are already paying the prices being asked for BTW. And baby boomers with their IP's will more than likely assist their kids into property by using one as collateral for the loan. Oh well ........ 

The same shrill comments I read on here about DO NOT BUY as the economic indicators are telling me it is going to fall is hilarious. If I listened to them I would not have bought my first house in 1991 when interest rates where just coming down from 18%. HOWZAT for an economic indicator?


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## tech/a (21 February 2011)

> tech/a reminds me a lot of the 'builder/developer' crowd with no basis in understanding the numbers that are now back renting after being multi multi millionaries




You wouldnt happen to have those figures handy for reference would you?
Or is this just another hypothesis?



> there's never a bad time to enter the property market




I see that you missed the Perfect opportunity to buy property late 90s early 00s

*So please be sure to let me know when its a good time to enter property.*

*On an aside*


Settlement on the latest commercial property was finalised last week.
I already have 2 of the 5 sheds rented. The sheds/Development will be built by end June.
Property return 11%---upon completion.
Capital appreciation from development $550K to $765K

There were 35 blocks available all sold within 1 mth of listing.
There is no mortgage on the property---
Perhaps I should have waited?

Currently looking for more suitable property.


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## FxTrader (21 February 2011)

trainspotter said:


> Several people including myself and Tech/a HAVE NOT asked anyone to buy buy buy without performing DUE DILLIGENCE on the property in question. Quite the opposite in fact.



Due deligence is all about analysing current and potential risk factors that will impact on the investment.  In the case of property that would include consideration of many stats including household debt, affordability, prospects for future capital growth etc.  Few of the property bulls here seem to think such information is worthy of consideration since the primary focus is always that property has gone up in the last 50 years (in Australia only) and hence should go up over the next 50 so jump in and a secure your future by buying IP.  

In 10 years your IP should be (hopefully) worth twice what you paid for it originally (excluding expenses).  Wow a 100% gain in 10 years, fantastic.  But then had you invested in Fortescue or Paladin 10 years ago you would have outperformed the market by 61,429 per cent and 12,475 per cent respectively.  Still prefer property, I don't.



> Gen X are already paying the prices being asked for BTW. And baby boomers with their IP's will more than likely assist their kids into property by using one as collateral for the loan.



Sure GenX with their 95% LVRs and massive debt burdens can pay for now, let's just see what happens when interest rates continue to rise and Chinese buyers stop proping up the market.


----------



## white_goodman (21 February 2011)

tech/a said:


> You wouldnt happen to have those figures handy for reference would you?
> Or is this just another hypothesis?
> 
> 
> ...




i know personally many builder/developers who have gone bankrupt, also my lecturer at uni (who runs a large investment/valuation firm) used to give examples often.

How silly of me not to be buying property between the ages of 7 and 12... what a noob am I


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## white_goodman (21 February 2011)

for those younger members here is something to play around with if you want to know whether to buy the PPOR or rent

http://www.nytimes.com/interactive/business/buy-rent-calculator.html


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## tech/a (21 February 2011)

> In 10 years your IP should be (hopefully) worth twice what you paid for it originally (excluding expenses). Wow a 100% gain in 10 years, fantastic. But then had you invested in Fortescue or Paladin 10 years ago you would have outperformed the market by 61,429 per cent and 12,475 per cent respectively. Still prefer property, I don't.




This is an excellent arguement.
Did you invest in either?
The gain isnt 100%  for me (In your property scenario)

With property I bought in 1996 I paid $90K and put 20K down.
When I sold it for $ 360K in 2004 (Releasing funds to freehold others) so on my 20K
I made $270k or 1350%

Not that tardy
On another I paid 117k (using housing increased equity only---nothing out of pocket) and sold for $340K
Not that tardy either.

So I agree with you if you can find a Fortesque and put say $200K on it as a trade and hold it for the whole rise!!!
Reality is ---that this is just as unlikely as anyone doing extremely well in property---the 3%

OH 
And let me know when the next Fortesque/Poisiden is ready for purchase.

Great in *theory*---just doesnt happen in practice---for the larger majority of us.


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## awg (21 February 2011)

looked at a few places recently and talked to some agents and buyers/sellers

( looking for a premises to run business out of, instead of renting)

the market here ( Newcastle) is very dichotomous, under 300k selling like hotcakes

over about 600k, sellers are being told, dont even think of listing it!

The biggest factor to me in owning at least 1 property, is seeing what happens to older persons who dont own..not good at all

as for investing the differnce between rent and mortgage, ok theory, but never seen in practice, my tenants always drive a newer car and TV than me


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## tech/a (21 February 2011)

white_goodman said:


> i know personally many builder/developers who have gone bankrupt, also my lecturer at uni (who runs a large investment/valuation firm) used to give examples often.
> 
> How silly of me not to be buying property between the ages of 7 and 12... what a noob am I




Your at UNI and personally know developers who have gone bankrupt--- and your lecturer at uni---I see.

Perhaps then you will be able to use your youth to advantage in the future.
But dont be blinded by fear!!

If you never get out of your comfort zone---you'll never get out of the 97%


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## FxTrader (21 February 2011)

tech/a said:


> This is an excellent arguement.
> Did you invest in either?



Both actually but did not hold them for 10 years.  But then I am not a buy and hold investor.  You generally make more on equities if you go short and long but there are definitely exceptions to this.



> So I agree with you if you can find a Fortesque and put say $200K on it as a trade and hold it for the whole rise!!! Reality is ---that this is just as unlikely as anyone doing extremely well in property---the 3%



No need to put down anywhere near $200k to outperform your property portfolio.  Property in general is for the conservative long term investor who believes that it will deliver over time while counting on history to repeat itself (at least in the Australian market.)



> OH And let me know when the next Fortesque/Poisiden is ready for purchase.  Great in *theory*---just doesnt happen in practice---for the larger majority of us.



Yeah, the future for all of us would be secure if we only embraced commercial property development as an occupation.  

Ride the gravy train while it lasts tech.  As for stock selection, that requires a bit more investigation and research than buying into the never ending property bubble which after all is a sure thing.


----------



## tech/a (21 February 2011)

> Ride the gravy train while it lasts tech




Property is an off shoot from my principal business--Civil Construction.
Civil construction will always be in demand.
Some will come and some will go.

The challenge of business and the rewards of being entrepenurial just make life more interesting---in both good and very bad times---been at both ends---I know the end I like to spend my time in.


----------



## Junior (21 February 2011)

Tech/a one thing I don't quite agree with, is your hint that in order to be a self funded retire, you have to own multiple properties.

I know quite a few self funded retirees.  So how have these people got themselves into a position to be able to fund their retirements?  It's not via multiple properties, although the vast majority will own a PPOR.

In my experience, in the majority of cases, it boils down to being relatively successful in their chosen professions and working hard right up until age 60.  

If both members of a couple remain in the workforce through their 50s this often results in a large amount of disposable income which can be contributed to super in the lead up to retirement age.  Usually this couple will experience their kids leaving home, and their home mortgage being paid off, resulting in a lot of disposable income which can be set aside for retirement.

The baby boomers I know who hold multiple investment properties generally have a relatively high level of gearing as well.... in many cases, it seems that as soon as they have enough equity available, and the bank approves, they will rush out and add another property to the portfolio asap.  I worry about how/when they plan on reducing this debt - higher interest rates will hurt someone in this scenario.


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## FxTrader (21 February 2011)

Junior said:


> The baby boomers I know who hold multiple investment properties generally have a relatively high level of gearing as well.... in many cases, it seems that as soon as they have enough equity available, and the bank approves, they will rush out and add another property to the portfolio asap.  I worry about how/when they plan on reducing this debt - higher interest rates will hurt someone in this scenario.



An excellent point Junior that's been generally glossed over or ignored by the IP bulls here in the past.  They tend to ignore the fact that most property spruikers advise their gullible audience to gear to the max and buy their next IP as soon as the next bank porfolio valuation permits it.  This is the wealth creation formula the masses have bought into. The fact that Australia *is characterised by one of the highest levels of household debt in the world* seems of little or no interest to the IP bulls here.

Problem is though that unlike in the U.S., jingle mail does not end the story and the banks will grab every other asset you own up to the limit the bankruptcy laws allow.


----------



## trainspotter (21 February 2011)

FxTrader said:


> Due deligence is all about analysing current and potential risk factors that will impact on the investment.  In the case of property that would include consideration of many stats including household debt, affordability, prospects for future capital growth etc.  Few of the property bulls here seem to think such information is worthy of consideration since the primary focus is always that property has gone up in the last 50 years (in Australia only) and hence should go up over the next 50 so jump in and a secure your future by buying IP.
> 
> In 10 years your IP should be (hopefully) worth twice what you paid for it originally (excluding expenses).  Wow a 100% gain in 10 years, fantastic.  But then had you invested in Fortescue or Paladin 10 years ago you would have outperformed the market by 61,429 per cent and 12,475 per cent respectively.  Still prefer property, I don't.
> 
> ...




Let me see ........ when I was 21 years old and working as a mechanic my wage was $25,000 per annum. Houses were costing between $110,000 to $150,000 depending on location. Therefore housing affordability was between 4.4 to 6 times my wage.

Last time I checked THE FINANCIER has a very large duty of care to make sure YOU CAN AFFORD to buy the aforementioned property. Debt Servicability Ratios, Loan to Valuation Ratios, Uncommitted Income Ratios, Lenders Mortgage Insurance etc et al ad infinitum.

How many FMG and PDN's are there available to the average punter? Who holds them for 10 years? Can't quite relate to the analogy you are putting out there. I have had residential property (vacant land) that I purchased for $53,000 and within 6 months sold for $93,000. Have purchased commercial property (vacant land with DA's in place) for a similar rate of return within the same timeframe. DUE DILLIGENCE. I also have property that I acquired 11 years ago that has trebled in price comfortably. Sound familiar to the share market? You can buy and sell within certain timeframes in both mediums and make coin.

I for one have stated that property is going sideways AT THE MOMENT. Certain areas will drop and certain areas will rise. OVERALL we will see a slight downward trend. But then again this would have to be about the 100th time I have written this all to no avail. I for one have always advocated that you do not rush out and buy shares on a whim so why would you do the same with property?


----------



## satanoperca (21 February 2011)

Jingle Mail.

It would seem that everyone here assumes that "Jingle Mail" or Non Recourse loans applies to all states in the US. This is both misleading and incorrect.

The main states for non recourse loans are :
Alaska
Arizona
California
Connecticut
Florida
Idaho
Minnesota
North Carolina
North Dakota
Texas
Utah
Washington

This may not be complete and other states do have some weird rulings on forecloser.

While we do not have jingle mail in Oz, people who find themselves overleveraged and in negative equity (main potential group being FHB) will simple do the same, hand back the keys and let the bank force them into bankruptcy.

Cheers


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## FxTrader (21 February 2011)

trainspotter said:


> Let me see ........ when I was 21 years old and working as a mechanic my wage was $25,000 per annum. Houses were costing between $110,000 to $150,000 depending on location. Therefore housing affordability was between 4.4 to 6 times my wage.



Here we go again, housing affordability means nothing.  Melbourne and Sydney deserve to be amongst the most unaffordable places to live in the developed world because it's a paradise - botty says so.



> Last time I checked THE FINANCIER has a very large duty of care to make sure YOU CAN AFFORD to buy the aforementioned property. Debt Servicability Ratios, Loan to Valuation Ratios, Uncommitted Income Ratios, Lenders Mortgage Insurance etc et al ad infinitum.



You're not checking hard enough, banks are bending over backwards to keep the bubble inflated and loan origination turning over by now effectively allowing up to 97% LVRs.



> How many FMG and PDN's are there available to the average punter? Who holds them for 10 years? Can't quite relate to the analogy you are putting out there. I have had residential property (vacant land) that I purchased for $53,000 and within 6 months sold for $93,000. Have purchased commercial property (vacant land with DA's in place) for a similar rate of return within the same timeframe. DUE DILLIGENCE. I also have property that I acquired 11 years ago that has trebled in price comfortably. Sound familiar to the share market? You can buy and sell within certain timeframes in both mediums and make coin.



You and tech seem to find it necessary to roll out capital gains figures from sales to justify just how profitable it can be to speculate in property (like you flipping a land purchase in 6 months for a $40k, before tax and expenses, profit.)

Trading options and FX I have made 50% to over 100% on my account in a month in some months but I am not going to publish my trades here or declare how much coin I'm making so as to suggest everyone here should do what I do.  Your profit figures don't impress me at all as a speculator.


----------



## explod (21 February 2011)

FxTrader said:


> Trading options and FX I have made 50% to over 100% on my account in a month in some months but I am not going to publish my trades here or declare how much coin I'm making so as to suggest everyone here should do what I do.  Your profit figures don't impress me at all as a speculator.




Well said and the assertions do sometimes make one wonder.

Oh, and dont' you worry about poor botty, he's onto silver now and already up a percentage point today.


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## white_goodman (21 February 2011)

the myth of property doubling every 10 years.. at current rates of wage growth, the median wage to buy the median house in Sydney will require the owner to shell out 90% of gross wage in debt servicing roughly for that to be true 10 years from now.


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## medicowallet (21 February 2011)

tech/a said:


> Statistics show that around 3% will ever "make it" (Self funding retiries).
> So if my ramblings influence only 3% of the ASF audience then thats great.
> 
> The others can and do influence the 97%!!!
> ...




Depends upon the crowd you are involved with too.

In my profession, it is probably around 10-20% who will "make it"

In my circle, it is around 75-85%.

Surround yourself with successful people (and I do not mean high income, I mean high wealth), and listen, learn and appreciate their experience.

Oh, and another thing, be VERY careful about going into business with people, especially people big on ideas and low on $$$


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## tech/a (21 February 2011)

white_goodman said:


> the myth of property doubling every 10 years.. at current rates of wage growth, the median wage to buy the median house in Sydney will require the owner to shell out 90% of gross wage in debt servicing roughly for that to be true 10 years from now.




I paid $30k for my first home.
Now 30 yrs later now 10-15 times that.
In 30 yrs time I can see wages at $5k a week and housing priced accordingly.
My father retired "wealthy" 30 yrs ago and he didnt see that in 30 yrs time he'd be a struggling pensioner.

Most people here think $500K would give you a comfortable retirement!!!
It will for 5 yrs then your Knackered!

Carry on though---just keep renting--no problems!!

When your 65 and paying $2500/week with no income your $500K nest egg wont be going far. Let alone medical bills living expenses---blah blah.


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## KurwaJegoMac (21 February 2011)

I wonder just how many people on this thread actually own investment property or have been involved in buying investment property.

All these arguments about 97% LVRs, gearing to the hilt, economic doom, high prices, FHBs, etc.

Funny how a lot of this is encountered in the stockmarket - Margin lending (can be geared to the hilt there), CFDs and other derivatives, economic doom, high prices (P/E of 12 - most stocks are around this level), FHBs are the noobies of the stock market (plenty of those around)

Not to mention most people buy a stock/option/whatever and sell it for capital gain after (speculating on a price increase). Different to property flippers? Nope.

There are a lot of similarities yet you don't see the same level of immature nonsense being spouted in the sharemarket threads.

YES some people are over leveraged.
YES there are economic forces that could impact supply and demand.
YES prices can come down.
YES there are some people who speculate.
YES there are some people who earn a steady cashflow.

So what? Doesn't mean YOU have to be over leveraged, or at 97% LVR or face bankrupty from a major economic event. The reality is that EVERY investment vehicle will suffer from similar issues. Supply, demand, economics, leverage, etc. 

The key is to devise a plan to minimise your risk in the event that things go against you. Instead of attacking every damn post that goes against your own fearful nature, stick a sock in it and listen to the people that have "been there, done that" and learn from them.

People need to shift their attitudes from focusing on what *could* go wrong to *how* they can make it work given the conditions of today.

If this is how people react to a long term, relatively stable investment vehicle then I shudder to think how emotionally wrecked you must be from the emotional roller coaster that is the share market.


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## sinner (21 February 2011)

KurwaJegoMac said:


> So what? Doesn't mean YOU have to be over leveraged, or at 97% LVR or face bankrupty from a major economic event. The reality is that EVERY investment vehicle will suffer from similar issues. Supply, demand, economics, leverage, etc.




Errrr are you serious? That is exactly the point?

Property is *not* different to any other market of supply and demand yet people act as if the rules are different? If you recognise that the property market is the same, how on earth can you believe it will continue to go up providing these absurd returns ad infinitum?



> The key is to devise a plan to minimise your risk in the event that things go against you. Instead of attacking every damn post that goes against your own fearful nature, stick a sock in it and listen to the people that have "been there, done that" and learn from them.




Are you serious *2? No **** I need a plan? No **** I want to minimise my risk? But why on earth wouldn't I want to seek out and discuss perceived market imbalances with other people interested in the same market and meanwhile not be interested in the opinions of those who say nothing but "going up"? You honestly think I am looking at the huge drops in house sales volume across pretty much the entire country over the last 12 months and not curious as to the future of that?

Guess what, long only systems fail in the stock market during a bear, and long only systems fail in a property market during a bear. Therefore the only argument certain people seem to be claiming here is that there will never be a property bear market again. At worst, we range, apparently.

In which case I *must* be a fool for not having invested in property, except as we have already run the numbers in this thread (thanks Tysonboss) it turns out that remaining in rental has been marginally more profitable over the last 10 year period with increased citizen mobility to boot! i.e. I could hop into property market tomorrow and not be any more "behind" than if I had invested 10 years ago (all other things considered equal).


----------



## tech/a (21 February 2011)

> In which case I must be a fool for not having invested in property, except as we have already run the numbers in this thread (thanks Tysonboss) it turns out that remaining in rental has been marginally more profitable over the last 10 year period with increased citizen mobility to boot!




That you are.
10 yrs ago property was at the levels you WISH they were NOW.
Many friends thought I too was a fool.
Fancy leveraging 90% on $4 mill of property!!!

Now 14 yrs later with $2.6 mill Freehold-----I'm a very happy fool.

Frankly I dont care much for this arguement I call back every 3 mths or so--and it is still the same.
Agrue your selves to oblivion while a few of us get on with it.
Fear---a terrible cross to bare.


----------



## sinner (21 February 2011)

tech/a said:


> That you are.
> 10 yrs ago property was at the levels you WISH they were NOW.
> Many friends thought I too was a fool.
> Fancy leveraging 90% on $4 mill of property!!!
> ...




You are just putting words (or in this case, the emotion of fear) in my mouth tech, you don't even know me. To me, it's *obvious* you are projecting your arguments with your so called "friends" onto the bears of this forum.

The numbers show clear as day there is no opportunity loss to have PPOR'd vs renting in the last 10 years if anything a slight profit advantage is retained by remaining in rental not to mention mobility! 

I am sure all those in the Gold Coast who leveraged 90% on 4mio are very happy with their choices right now pfffft.

As a trader, to me the price is the price. I don't wish the price was anything! If I'm in I'm in if I'm not I'm not! Plain and simple! As an Australian citizen, I don't wish the price was anything but unsupported with taxpayer subsidy. Plain and simple *2!

I am not afraid of investing in property. Why on earth would I be? I am afraid what the current idiocy exhibited means for the future of our country and people.


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## FxTrader (21 February 2011)

KurwaJegoMac said:


> The reality is that EVERY investment vehicle will suffer from similar issues. Supply, demand, economics, leverage, etc.



Well no, sounds like you need a bit more education on different investment vehicles, their risks, limits and potential rewards.  Know anyone creating a market for put options or stop loss mortgages on property, I don't.  As adequately demostrated elsewhere, there is no easy way to protect yourself from a sharp decline in the property market, the liquidity just isn't there, no stop loss and no hedge trade.



> The key is to devise a plan to minimise your risk in the event that things go against you. Instead of attacking every damn post that goes against your own fearful nature, stick a sock in it and listen to the people that have "been there, done that" and learn from them.



Sure, who should we listen to then, the eternally optimistic property spruikers here who roll out their wins (they don't talk about losses) who ignore evidence that property prices are severely over extended and assume the past will always be the future?  Just take the plunge and jump in the deep end (by that IP no matter what the market conditions) and don't mind the white pointers swimming around you, only the doomsayers worry about them.

As for fearful nature, you have no idea.  Try trading Options or Fx and see how far fear will get you, if you are fearful you should stop trading.  Investing in property is for the fearful though since many see this as a conservative and safe investment, quite naively in my view.


----------



## KurwaJegoMac (21 February 2011)

sinner said:


> Errrr are you serious? That is exactly the point?
> 
> Property is *not* different to any other market of supply and demand yet people act as if the rules are different? If you recognise that the property market is the same, how on earth can you believe it will continue to go up providing these absurd returns ad infinitum?




I never said it's any different. In my post I even go so far as to say it's the same. Take a breath and read the post before going on the offensive.




sinner said:


> Are you serious *2? No **** I need a plan? No **** I want to minimise my risk?




No need for that. If you agree with me fine, but why the profanity? Doesn't help your case very much if you're rambling and attacking somebody regarding a point you agree with.



sinner said:


> But why on earth wouldn't I want to seek out and discuss perceived market imbalances with other people interested in the same market and meanwhile not be interested in the opinions of those who say nothing but "going up"? You honestly think I am looking at the huge drops in house sales volume across pretty much the entire country over the last 12 months and not curious as to the future of that?




By all means, discuss it. But people like you attack anybody who has views apart from your own (and in your case even people who have the same views (see my comment above))



sinner said:


> Guess what, long only systems fail in the stock market during a bear, and long only systems fail in a property market during a bear. Therefore the only argument certain people seem to be claiming here is that there will never be a property bear market again. At worst, we range, apparently.




No one has said there will never be a property bear market again. It could definitely happen. But is that reason to be paralysed by fear? Are you like that every time you enter the stock market? No - you make sure you can enter a position at appropriate risk and ensure you're not over leveraged. Same as every other type of investment.

As some have pointed out, they're at 40% LVR and under - bear market or not they don't care. Why not learn from these people and see how they did it?

How about we discuss strategies for buying in the current climate? Instead of attacking everyone hmm?


----------



## awg (21 February 2011)

FxTrader said:


> You're not checking hard enough, banks are bending over backwards to keep the bubble inflated and loan origination turning over by now effectively allowing up to 97% LVRs.
> 
> Trading options and FX I have made 50% to over 100% on my account in a month in some months but I am not going to publish my trades here or declare how much coin I'm making so as to suggest everyone here should do what I do.  Your profit figures don't impress me at all as a speculator.




I cant agree with yr 1st para, especially IP, banks are demanding much higher deposit according to my information.

I do agree that FX trading is an excellent trading vehicle, as liquidity and long/short profit opportunity is much better, IF you can become proficient prior to blowing yr account unlike the "97%" who cant


----------



## KurwaJegoMac (21 February 2011)

FxTrader said:


> Well no, sounds like you need a bit more education on different investment vehicles, their risks, limits and potential rewards.  Know anyone creating a market for put options or stop loss mortgages on property, I don't.  As adequately demostrated elsewhere, there is no easy way to protect yourself from a sharp decline in the property market, the liquidity just isn't there, no stop loss and no hedge trade.




No i'm quite well educated in the risks, limits and potential rewards of investment vehicles, thank you very much. Congratulations on observing that residential property doesn't allow for put options or stop losses due to it being an illiquid investment. I'm fresh out of gold stars though sorry.

Ever considered that you can buy an investment property at a low leverage? Such as Tech's examples? Wonder how that would affect your risk...

...but then again if you can't put a stop loss on it then it's not worth investing in right? I mean - there's only one way to minimise or mitigate risk apparently. Perhaps you should re-educate yourself on risks, limits and potential rewards.



FxTrader said:


> Sure, who should we listen to then, the eternally optimistic property spruikers here who roll out their wins (they don't talk about losses) who ignore evidence that property prices are severely over extended and assume the past will always be the future?




Tech/a has many times, on many threads spoken about his losses. Both in his trades and in property. Might wanna do your research first before attacking someone. Personally i'd rather listen to those that have 'been there and done that', than the people who haven't even tried yet. Do you listen to newbies when you first started trading? I bet you didn't. And I bet every one of them talked about their successes.



FxTrader said:


> As for fearful nature, you have no idea.  Try trading Options or Fx and see how far fear will get you, if you are fearful you should stop trading.  Investing in property is for the fearful though since many see this as a conservative and safe investment, quite naively in my view.




I know all about fearful nature. I just don't let it paralyse my decisions. I realise that there are economic cycles and that certain assets will fall into and out of favour. It allows me to see with clarity rather than shrink away for fear of losing. 

I would argue that regarding property investment as investment for the fearful is naive and extremely arrogant. Plenty of people have gone bust from property and while you may see the fx or options market as appealing to your risk threshold, it doesnt mean everyone with a smaller risk threshold is fearful. Based on that all our banks must be incredibly stupid and fearful right? After all, they are the countries biggest investor in property since they provide most of the funds?


----------



## schnootle (21 February 2011)

tech/a said:


> I paid $30k for my first home.
> Now 30 yrs later now 10-15 times that.
> In 30 yrs time I can see wages at $5k a week and housing priced accordingly.
> My father retired "wealthy" 30 yrs ago and he didnt see that in 30 yrs time he'd be a struggling pensioner.
> ...




According to those figures you are saying that property will rise at 5.5% exactly in line with wage growth, for me that means I am better off staying renting.


----------



## againsthegrain (21 February 2011)

What is interesting is everybody keeps bringing up how much they paid 10 years ago and what a excellent purchase it was, yea sure if I could of bought a house when I was in highschool at those prices I would of too.

The lightglobe guy said he used to earn 25k and bought a house for 110k, so now if his wages were double and house prices were double he would be earning 50k and he could buy a house for 220k, yet right now he will have to pay around 400k for something not decent.

Whats the point of bragging of what you did 10 years ago, and now that you are established you can buy property at current inflated prices because the people you were 10 years ago starting from nothing now in 2011 you would probably not buy anything in the current situation and remain renting and saving.

Having that 500k golden egg id rather collect interest on it and have my rent paid in full with something left on the side, im happy collecting interest on my 90k covering 1/3 of my rent and the savings seem to be getting bigger and quicker the more I have, higher interest rates excite me, bring them on every .25% increase on my savings does make a difference on my monthly interest paid, alot more then my rent will be raised yearly.

Oh by the way I just had my rental contract renewed for another year, only raised by $20 per month, this is great the balcony was leaking, some seals around the windows and tiles in the toilet needed re-grouting, probably cost the owner 5k, 1/3 of the yearly rent I pay - not to mention council rates. Oh well im happy saving and sitting on my golden egg just waiting for any opportunities while im cashed up

Oh yea great example, some of my highschool mates rushed in and bought houses around 4 years ago when it was so wise to do, keysborough 300k, worth about 400k now. Funnily enough most of them have only paid 10 - 15k off the loan while just struggling to pay off interest. 4 years paying the bank, no savings, lots of over time. If they sell now after fees to agents, tax, repairs they might make a profit of 50k but then what? back to renting or living with parents. I managed to save nearly double that always renting and taking months of work at times to slow down the pace of my life.

I plan to buy a house, nobody wants to rent at 60 but being in my late 20s I give myself till mid 30s who knows what the prices will be then? definately not double what they are now unless there is some mega inflation and all our wages go up 30 - 50%

The point of my post, its a different playing field now then to when the baby boomers bought low, buy low and always risk less, buy high and risk all. The only people that can afford to buy high now are the overseas investors and cyborg with his monopoly money


----------



## schnootle (21 February 2011)

againsthegrain said:


> What is interesting is everybody keeps bringing up how much they paid 10 years ago and what a excellent purchase it was, yea sure if I could of bought a house when I was in highschool at those prices I would of too.
> 
> The lightglobe guy said he used to earn 25k and bought a house for 110k, so now if his wages were double and house prices were double he would be earning 50k and he could buy a house for 220k, yet right now he will have to pay around 400k for something not decent.
> 
> ...




Well said. I am in the same boat, I can't see prices beating other investments over the next decade. I am sitting on similar cash and will buy one day, right now the cash is good for my wellbeing, low financial stress.....


----------



## prawn_86 (21 February 2011)

schnootle said:


> low financial stress.....




This is another good point.

Personally I am diversified across, cash, shares, hybrids and precious metals all without any debt. If i was to buy property now i would have debt that i personally wouldn't be too comfortable with, especially if it was a PPOR, and would only be in one asset class...


----------



## FxTrader (21 February 2011)

KurwaJegoMac said:


> Ever considered that you can buy an investment property at a low leverage? Such as Tech's examples? Wonder how that would affect your risk...



No really, you can pay cash for a property?  No, you must be kidding!  I would never have known that unless you mentioned it.  No or low leverage, gee that must be the secret to wealth creation that I missed when studying finance.



> ...but then again if you can't put a stop loss on it then it's not worth investing in right? I mean - there's only one way to minimise or mitigate risk apparently. Perhaps you should re-educate yourself on risks, limits and potential rewards.



If putting words in my mouth and then mocking your straw man creation gives you a thrill then so be it, it says volumes about your maturity.  Let's here about your bright ideas for mitigating risk in the property market other than paying cash, I am all ears.



> Tech/a has many times, on many threads spoken about his losses. Both in his trades and in property. Might wanna do your research first before attacking someone. Personally i'd rather listen to those that have 'been there and done that', than the people who haven't even tried yet. Do you listen to newbies when you first started trading? I bet you didn't. And I bet every one of them talked about their successes



Actually I have a lot of respect for tech, where he's been and what he has achieved.  I am not attacking him at all that's more invention on your part.  IP and commercial property are not for everyone in spite of tech's success.  The current market conditions require experience and caution, not a leap of faith in the never ending property bubble.



> I know all about fearful nature. I just don't let it paralyse my decisions. I realise that there are economic cycles and that certain assets will fall into and out of favour. It allows me to see with clarity rather than shrink away for fear of losing.



Until you've put your money on the line in a highly speculative environment I say again, you don't have a clue about managing fear.



> I would argue that regarding property investment as investment for the fearful is naive and extremely arrogant.




Well, this is yet another argument you have failed to make a case for.  Most people don't buy into property considering it to be a risky investment.  Quite the contrary, but this has escaped your attention while trying your best to be an attack dog on behalf of property investors here.



> ...while you may see the fx or options market as appealing to your risk threshold, it doesnt mean everyone with a smaller risk threshold is fearful.



I never implied my risk profile meant that others are fearful by comparison.  Many of my friends are property investors and they are fearful of any other investment other than property.  Get the point yet?



> Based on that all our banks must be incredibly stupid and fearful right? After all, they are the countries biggest investor in property since they provide most of the funds?



Nope, just greedy and engaging in reckless risk management by borrowing heavily overseas to keep loan origination going and the property bubble inflated.  Their heavy exposure to property makes them extremely vulnerable to that market.  Why do you think hundreds of banks have failed in the U.S. and Europe, over exposure to debt inflated assets, primarily property.


----------



## white_goodman (21 February 2011)

yes property can be the same as any other market but with a few key differences.

- look how highly exposed our banks are to residential property in recent years as a proportion of overall revenue/business
- the amount of ordinary Australians not 'investors' who are exposed to the property market and the % that 'investment' is of their total wealth.
- lots of spruiker myths out there that property cant go down and negative gearing is the way to invest. On the note of spruikers and property industry, its funny that you can make any outlandish claim you want as they arent regulated by ASIC or the same standard as the securities industry.
- what do you think will happen when the banks no matter how high LVR they try to give cant get enough loans through the door? (to this point I input the graph below)


----------



## white_goodman (21 February 2011)

prawn_86 said:


> This is another good point.
> 
> Personally I am diversified across, cash, shares, hybrids and precious metals all without any debt. If i was to buy property now i would have debt that i personally wouldn't be too comfortable with, especially if it was a PPOR, and would only be in one asset class...




im doing the same except add foreign property. I too wouldnt be comfortable with a large amount of household debt, with the difference being with a PPOR its bad debt not good debt.


----------



## trainspotter (21 February 2011)

againsthegrain said:


> What is interesting is everybody keeps bringing up how much they paid 10 years ago and what a excellent purchase it was, yea sure if I could of bought a house when I was in highschool at those prices I would of too.
> 
> The lightglobe guy said he used to earn 25k and bought a house for 110k, so now if his wages were double and house prices were double he would be earning 50k and he could buy a house for 220k, yet right now he will have to pay around 400k for something not decent.




LOLOLLOL ...... did you even read the post? *1991 was 20 years ago* dude/dudette.

So therefore my wages are now 100k and prices are how you say it in your words ... _"will have to pay around 400k for something not decent."_ I also mentioned that the price also extended between 4.4 to 6 times wages. SO using your maths the price for a home *could* be 600k ....... Can I get something decent for that?

Don't go hating the man ..... hate the system. You will figure it out one day. 

Everybody also seems to be missing the analogy. 10 years ago and 20 years ago the same "KIND" of people were against property and circumstances were similar (18% interest rates and the usual cycle of ups and downs) as well. Noooooooooooo don't go putting that great big noose of debt around your neck. You wont afford to be able to live ...... yadda yadda yadda. HO BLOODY HUM. Heard it all before. 

Mitigating risk in the property market ........... 

1) LOCATION, LOCATION, LOCATION. No point having the best house in the sh1ttiest suburb.
2) Do not over extend your finances.
3) Effective goal setting and STICKING too it.
4) Be properly insured - Make sure the property usage meets the policy.
5) Ensure you have cash reserves to cover unforseen circumstances.
6) Calculate performance on the most conservative usage.
7) Always have an exit strategy. Be prepared to take a hit for the team if necessary.
8) Don't be afraid to take the leap. Remember ...... you can't cross a chasm in 2 jumps.
9) UNDERSTAND what you are getting yourself into.
10) Settle for something that will be good enough FOR NOW. Think apartment or 3 x 1. We all cannot have a friggin McMansion as our first home.

If only I had bought FMG and PDN 10 years ago. (AND HELD ONTO THEM) Oh well .............


----------



## white_goodman (21 February 2011)

trainspotter said:


> LOLOLLOL ...... did you even read the post? *1991 was 20 years ago* dude/dudette.
> 
> So therefore my wages are now 100k and prices are how you say it in your words ... _"will have to pay around 400k for something not decent."_ I also mentioned that the price also extended between 4.4 to 6 times wages. SO using your maths the price for a home *could* be 600k ....... Can I get something decent for that?




rebuttal


----------



## KurwaJegoMac (21 February 2011)

By posting that you're just asking for trouble trainspotter... 

"Yer kind ain't welcome 'ere boy"


----------



## trainspotter (21 February 2011)

KurwaJegoMac said:


> By posting that you're just asking for trouble trainspotter...
> 
> "Yer kind ain't welcome 'ere boy"




"Yer git tha' right KurwaJegoMac." SHEEESH ........ did they even read my post? 

Watch closely the Unions ....... I am sure they will want a wage rise soon to combat this home affordability thingymebob.

All the graphs and all the data still HAS NOT CHANGED the lie of the land. Henny Penny the sky STILL has not fallen. The banks have not gone broke (Commonwealth Bank reported a record first half net profit of A$3.05 billion) and property is still holding it's own DESPITE all the household debt and affordability models. Oh well ...........

_"What we've got here is... failure to communicate. Some men you just can't reach. So you get what we had here last week, which is the way he wants it... well, he gets it. I don't like it any more than you men." _


----------



## white_goodman (21 February 2011)

doesnt everyone know, Australian property cant go down, we are different!


----------



## medicowallet (21 February 2011)

tech/a said:


> Most people here think $500K would give you a comfortable retirement!!!
> It will for 5 yrs then your Knackered!




Well here I go

500k at 6% = 30k, split by 2 = 15k each, minimal tax

living expenses $300 rent, 160 food, 120 utilities, 100 insurance, 250 spending and fuel

So say $50k per year

So earning a declining 30k per year, with $500k capital

spending $50k per year

Please explain to me how this would run out in 5 years.

( not saying $500k is enough, (would probably say 2 mill would give good retirement, but stop exaggerating))


----------



## medicowallet (21 February 2011)

trainspotter said:


> 1) LOCATION, LOCATION, LOCATION. No point having the best house in the sh1ttiest suburb.
> 2) Do not over extend your finances.
> 3) Effective goal setting and STICKING too it.
> 4) Be properly insured - Make sure the property usage meets the policy.
> ...




Simple, but great principles to work by.

If you put some hours into each point when making an investment, it will no doubt protect you from a lot of potential heartache in the future.

I particularly like points 7 and 10.

Problem is that many "investors" would not even put 1 hour into the whole list upon a $500k purchase, let alone the many hours I would on such a purchase (and heck, these days if I am to purchase businesses worth $500k + I get cashflow projections, financing analysis and true, professional advice)


----------



## awg (21 February 2011)

white_goodman said:


> im doing the same except add foreign property. I too wouldnt be comfortable with a large amount of household debt, with the difference being with a PPOR its bad debt not good debt.




am confused

wouldnt OS property add extra layers of risk including currency, management, tax and title issues etc ?

Are you saying PPOR debt is all bad?

While I agree it is probably an outmoded model, no CGT on PPOR is the primary method most peeps have based their wealth upon.

Another thing I dont see much mention of here, but I know people who did this:

buy 1st property asap, mum&dad help with deposit, share rent it out..you dont have to tell the taxman everything.

what has become of the young entrepreneur these days ?

ps..if the property market collapses, so would shares, FX traders etc might do ok on volatility, but they probably need to have their armed militia handy.

I am by no means a property bull.  

Presently own 1 cheap IP, is neutral-geared after 4 yrs, house on block will last for at least 50yrs with almost no maintenance, could knock it down and put units on it whenever I want.  ( have previously had up to 5 IP )

I am bearish on expensive property. 

My own PPOR is definitely not over-capitalised

I would not swap my location for anywhere else I have ever been


----------



## FxTrader (21 February 2011)

white_goodman said:


> doesnt everyone know, Australian property cant go down, we are different!




Now your finally towing the line WG, you must realize by now that modelling, studies,  figures, data, cycles, charts, trends, debt funding and foreign experience etc. are meaningless and will never apply to Australia because we are special.  As trainspotter says...



> _All the graphs and all the data still HAS NOT CHANGED the lie of the land. Henny Penny the sky STILL has not fallen. The banks have not gone broke (Commonwealth Bank reported a record first half net profit of A$3.05 billion) and property is still holding it's own DESPITE all the household debt and affordability models_



So get out there and buy buy buy.  Don't be afraid, it always a good time to buy property in Aus.


----------



## FxTrader (21 February 2011)

awg said:


> ps..if the property market collapses, so would shares, FX traders etc might do ok on volatility, but they probably need to have their armed militia handy



On this point I would say you are confused.  The U.S. equity markets have been strong since mid 2009 while their property market continues to tank.  There is no evidence I know of to suggest a price decline in property would automatically lead to a sustained decline in shares.  In fact, it's more likely that as property investors flee more money will go into equities and fixed interest.

Oh yes, I love volatility, that's when I make my best returns.  Not worried about my fellow Aussies though, not enough guns in circulation to make me nervous here.


----------



## trainspotter (21 February 2011)

FxTrader said:


> Now your finally towing the line WG, you must realize by now that modelling, studies,  figures, data, cycles, charts, trends, debt funding and foreign experience etc. are meaningless and will never apply to Australia because we are special.  As trainspotter says...
> 
> So get out there and buy buy buy.  Don't be afraid, it always a good time to buy property in Aus.




LOLOL ..... so when I wrote in a previous post not that far back that IMO Aussie house prices OVERALL are on a downward trend that this somehow allows for a cheap shot by such a knowledeable investor? 

Oh well ....... each to their own. You keep on doing what you do and I will keep on buying and selling property.


----------



## awg (21 February 2011)

FxTrader said:


> On this point I would say you are confused.  The U.S. equity markets have been strong since mid 2009 while their property market continues to tank.  There is no evidence I know of to suggest a price decline in property would automatically lead to a sustained decline in shares.  In fact, it's more likely that as property investors flee more money will go into equities and fixed interest.
> 
> Oh yes, I love volatility, that's when I make my best returns.  Not worried about my fellow Aussies though, not enough guns in circulation to make me nervous here.




My basis for that assertion is that the most likely cause of major property correction in Australia would be a credit crisis/GFC...do you think we are done with that?

There are differences between USA and Oz market. It is my opinion that Oz homeowners would sell everything before the PPOR...so not automatic, but probable.

imo, if you are making satisfactory returns with a particular method, that is probably the best, but things evolve, which is why I have largely moved away from property to shares, and FX is on the radar ( just not as straightforward in SMSF, where the bulk of my liquid assets are)


Depends on your priorities as well, many years ago I made a decision that I wanted to live here, for lifestyle and family reasons. Therefore I also had to make career decisions, including turning down many opportunities.

With greater work mobility required these days, that would probably decrease home ownership


----------



## FxTrader (21 February 2011)

awg said:


> My basis for that assertion is that the most likely cause of major property correction in Australia would be a credit crisis/GFC...do you think we are done with that?



Are we done with the GFC, no as the massive debt issuance to stave off the crisis only kicked the can down the road.  The banks (and finance sector in general) will be hit hard in the event of a property downturn.  So much so that some investment houses now consider Aussie banks as no longer investment grade.



> There are differences between USA and Oz market. It is my opinion that Oz homeowners would sell everything before the PPOR...so not automatic, but probable.



Probably true but considering the debt burden of the average Australian household, selling the furniture, sleeping on the floor and eating only noodles proabably won't stave off the eviction notice. 



> ...which is why I have largely moved away from property to shares, and FX is on the radar



Good decision and be careful with Forex, trade in sim until you are consistently profitable, it's a very tough market to trade, trust me.


----------



## trainspotter (22 February 2011)

FxTrader said:


> Probably true but considering the debt burden of the average Australian household, selling the furniture, sleeping on the floor and eating only noodles proabably won't stave off the eviction notice.




*Non Performing Loans*

Australian banks have one of the lowest non-performing loans ratios of all 97 surveyed economies. Only 1.2 per cent of Australian bank loans are ‘non-performing’, meaning that only a very small proportion of loan repayments have either ceased or are excessively late. This ratio was fairly steady at 0.2% three years rising to its current figure in 2009.

Source: International Monetary Fund’s (IMF) Global Financial Stability Report April 2010 

Whale Oil Beef Hooked. They will sell their furniture and sleep on the floor and eat noodles before selling their home.


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## sinner (22 February 2011)

trainspotter said:


> *Non Performing Loans*
> 
> Australian banks have one of the lowest non-performing loans ratios of all 97 surveyed economies. Only 1.2 per cent of Australian bank loans are ‘non-performing’, meaning that only a very small proportion of loan repayments have either ceased or are excessively late. This ratio was fairly steady at 0.2% three years rising to its current figure in 2009.
> 
> ...




Yeah right, 'cos we all know the ratio of nonperforming loans is a perfect indicator, banks never underreport or crap this number. 

I mean, in the US, they had *heaps and heaps and heaps* of reported nonperforming loans which were screaming trouble before the GFC...right...right? 

Oh wait.

Nope. That's bull. Turns out that going into the housing peak the US actually held a 10 year low in nonperforming loans!







Nonperforming loans in 2005 in the US and Aus on a relative basis were pretty much identical. So um yeah to say that we have a low proportion of nonperforming loans therefore everything is cool is fallacious at best.


----------



## FxTrader (22 February 2011)

trainspotter said:


> *Non Performing Loans*
> Australian banks have one of the lowest non-performing loans ratios of all 97 surveyed economies. Only 1.2 per cent of Australian bank loans are ‘non-performing’, meaning that only a very small proportion of loan repayments have either ceased or are excessively late. This ratio was fairly steady at 0.2% three years rising to its current figure in 2009.



Yes, non-performing loan stats for Australian banks have been a positive so far.  The key issue though is the banks total exposure to housing and what effect a downturn will have on their liquidity and performance.  The excerpt from Keen's commentary below hits the nail on the head... 

"_The most obvious losers from a price downturn will be the buyers enticed into the market by the FHVB, many of whom began with 5% equity and who can therefore be easily thrown into negative equity territory by even a small price fall.

This won’t lead to “jingle mail” defaults in Australia because our housing loans are full recourse. But since a trigger for the downturn will be a decline in aggregate demand as the Credit Impulse turns negative, unemployment will rise—certainly in NSW and Victoria that don’t directly benefit from exports to China—and this will cause forced sales, though a lesser rise in bankruptcy sales than in the USA_"






"_*The second obvious group of losers will be the banks themselves, who have dramatically increased their share of profits via the huge increase in mortgage debt. A decline in mortgage originations will reduce their profitability, and their solvency since mortgages now constitute the more than a third of total bank assets and over half of all banks loans.*_"











"*Australian banks assert that they are well capitalised and that a downturn in house prices would have little impact on their liquidity, let alone their solvency. That claim has proven false after the fact of a property price crash everywhere else on the planet, and I expect Australia to be no different.*"


----------



## trainspotter (22 February 2011)

Steven Keen right? The guy that said prices will crash 40% right? Yep ... he's an expert alright?

Ummmmmmmm ........ haven't we just been through a GFC and our banks didn't even shudder? Nor did the non performing loans spike? Has something to do with employment I believe?

I REPEAT ...... we are NOT THE UNITED STATES OF AMERICA !!!

YES YES YES we have all the economic indicators and pie charts and pretty graphs BUT BUT BUT ....... IT HAS NOT HAPPENED ???????  ........ yet !


----------



## satanoperca (22 February 2011)

trainspotter said:


> Ummmmmmmm ........ haven't we just been through a GFC and our banks didn't even shudder? Nor did the non performing loans spike? Has something to do with employment I believe?




Come on TS, our banks did shutter, why else did the govnuts have to providing assistance to them. If they we so sound, they wouldn't need help. I sure you will provide some excuse for this action.

Why did the govnuts boost the FHBG, not all is what it seems. To keep the property market going as it is toooooo big to fail.

Cheers and carry on, been a good debate so far, just running out to the shops for some more popcorn and beer.


----------



## explod (22 February 2011)

trainspotter said:


> Steven Keen right? The guy that said prices will crash 40% right? Yep ... he's an expert alright?
> 
> Ummmmmmmm ........ haven't we just been through a GFC and our banks didn't even shudder? Nor did the non performing loans spike? Has something to do with employment I believe?
> 
> ...




*Yet*

The GFC started but has not ended.  Trainspotter you have been directed to the real underlying facts many times but some people just do not want to know.

The tremendouse problems coming due to Q/E can be read today (The Busines Age) in the newspapers.  In Australia tourism, manufactor and retail sectors for startes.

The pressures on supply, food in particular (real cause of current uprisings) are being felt around the globe *now*, and Australia *will not *be immune in my view.

Relying on past performance has been good but one would believe that those who are committed to R/I would be a little nervous and a tad cautious for the moment.


----------



## MACCA350 (22 February 2011)

satanoperca said:


> Come on TS, our banks did shutter, why else did the govnuts have to providing assistance to them. If they we so sound, they wouldn't need help. I sure you will provide some excuse for this action.
> 
> Why did the govnuts boost the FHBG, not all is what it seems. To keep the property market going as it is toooooo big to fail.



Not to mention they went secretly to the US Fed and borrowed billions during the GFC, just as many struggling(and ultimately bankrupt) banks did, and as our RBA did also.

Would we have fared so well if they hadn't gone begging for cash?

Cheers


----------



## trainspotter (22 February 2011)

satanoperca said:


> Come on TS, our banks did shutter, why else did the govnuts have to providing assistance to them. If they we so sound, they wouldn't need help. I sure you will provide some excuse for this action.
> 
> Why did the govnuts boost the FHBG, not all is what it seems. To keep the property market going as it is toooooo big to fail.
> 
> Cheers and carry on, been a good debate so far, just running out to the shops for some more popcorn and beer.




The Guvmint provided a "guarantee" to the financiers to stop the proletariat from pulling cash out of them in a state of panic. Nothing more and nothing less. I see they are still making billions of dollars profit and setting new records for their profitability.

Yeah sure, the powers that be introduced measures to increase "affordability" for FHB and to no one else. Seeing how FHB made up less than 10% of all housing loans then this would hardly seem such a shot in the arm for the property business? 

As you were.


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## trainspotter (22 February 2011)

explod said:


> *Yet*
> 
> The GFC started but has not ended.  Trainspotter you have been directed to the real underlying facts many times but some people just do not want to know.
> 
> ...




LOLOLLOLL ....... which is why I wrote ....... wait for it ........ "yet".

I am going to start storing tinned food and turn my backyard into a vegetable garden for when the downturn hits. Can't wait.


----------



## explod (22 February 2011)

trainspotter said:


> LOLOLLOLL ....... which is why I wrote ....... wait for it ........ "yet".
> 
> I am going to start storing tinned food and turn my backyard into a vegetable garden for when the downturn hits. Can't wait.




Beat you to it because I reckoned the downturn has already hit but few want to admit it.  Built an extended pantry area last year.

Actually you have missed a great year for rain on the vegies.

My Real Estate Agent told me this morning that things are very quiet and he didn't do any good at the Mornington races at the weekend either.

Anyway good to catch up t/s


----------



## white_goodman (22 February 2011)

trainspotter said:


> Steven Keen right? The guy that said prices will crash 40% right? Yep ... he's an expert alright?
> 
> Ummmmmmmm ........ haven't we just been through a GFC and our banks didn't even shudder? Nor did the non performing loans spike? Has something to do with employment I believe?
> 
> ...




hes still one of our best economists, many who predicted the US crash got the timing wrong, one cos its very hard, but the main reason is its hard to assess what future measures a govt will take to keep the party going... Im not 100% agreeing 40% declines or anything, but his reasoning is pretty solid


----------



## trainspotter (22 February 2011)

explod said:


> Beat you to it because I reckoned the downturn has already hit but few want to admit it.  Built an extended pantry area last year.
> 
> Actually you have missed a great year for rain on the vegies.
> 
> ...




About 30 to 40 pages ago I suggested that property is on a downward slant. Nunthewiser picked the top to perfection. I just love how these uni students and would be traders who live at home with Mummy and Daddy point to these wonderful graphs by Steven Keen. NONE of them have owned or traded property but are sitting on a whopping 90k in savings. LOLOL. 

Anyhoooooooo ........ things are very quiet in the RE world where I am as well. Sporadic would be the word that springs to mind. Possibly occasional as well.

Fortunately we have a fantastic morning market here for fruit and veges. Cheaper for me to buy them there and support local economy then to dig up the concrete in my backyard.

Great chatting to you as well explod. Take care.


----------



## trainspotter (22 February 2011)

white_goodman said:


> hes still one of our best economists, many who predicted the US crash got the timing wrong, one cos its very hard, but the main reason is its hard to assess what future measures a govt will take to keep the party going... Im not 100% agreeing 40% declines or anything, but his reasoning is pretty solid




Absolutely a great researcher WG. No doubt about it. And yes he did pick the US crash but he did get the 40% drop in OZ wrong. Yes the indicators are there and no doubt we will have to pay the piper at some stage. WE ARE FAR FROM OUT OF THE WOODS YET.

But just like trading you do not go out on a whim and buy a speculative share. RESEARCH is the key. Plus unlike trading owning property is loooooooooooong term UNLESS you are in a rising market and can "flip" whilst the going is good. Not rocket science here. been done to death over 100 or so pages.

The debate goes on.


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## white_goodman (22 February 2011)

ok this is my thoughts and circumstance.

-yes i am young and just finished uni doing property and economics
-yes ive worked/work as a trader and in commercial property and know how markets work (or so I hope)
-no I have not owned property personally, but have been advising my parents on their IP's, and I like to think I have some knowledge to give a good opinion on it. (tho buying in the US soonish)

Basically the argument from those against a correction, is that Australia is different, our economy is much better and we arent as reckless as say the US. (very debateable but anyways)

What I fail to see in the argument is why property should go up. Not the: "i bought in 1990 and it went up THIS much, look how smart I am, do the same now and itll repeat", but what demand drivers will actually push it forward. Pointing at lack of perceived supply is not a reason, and ignoring the amount of baby boomers retiring,  or the role of China I feel is also a mistake.

So i put to the property bulls a question...

why would I buy a PPOR when there is no sign for capital gains, and am far worse off then renting financially

or

why would I buy an IP with 70-80% leverage at a gross yield of approx 5-6% when costs, loan repayments etc will make it negative cash flow, yet get none of the benefits of meaningful price appreciation above inflation?

its a big world out there and i dont think if you wanna be a property owner you should be restricted to such a small market that is Australia, anyways my 2cents.


----------



## Mr Z (22 February 2011)

white_goodman said:


> (tho buying in the US soonish)







Personally I'd be a little gun shy in the US until this lot clears or at least its impact becomes apparent.


----------



## white_goodman (22 February 2011)

Mr Z said:


> View attachment 41536
> 
> 
> Personally I'd be a little gun shy in the US until this lot clears or at least its impact becomes apparent.




not all areas experience booms and bust, those areas with little local/state govt intervention in their markets never had the 'tulip mania' that places like Florida and Vegas had, despite how strong economically they are/were

ie Texas.

The US isnt one market, but yes im well aware itll be hard as **** either way, long term


----------



## nunthewiser (22 February 2011)

white_goodman said:


> What I fail to see in the argument is why property should go up. Not the: "i bought in 1990 and it went up THIS much, look how smart I am, do the same now and itll repeat",  .




Personally i would view all these internet zillionaires that brag and boast in this thread with a grain of salt.
with the exception of Trainspotter ( who i have personally met and seen most of the toys/assets he has mentioned) i would take all these claims of riches and success as merely heresay and internet bravado.
to me most of the claims and boasts here are nothing but blah blah blah trying to impress the internet world for some strange reason.

I own real estate, happy to but i do also recognise the cyclical nature of ALL forms of investment and PERSONALLY believe we still got a long way to go before this downward cycle is finished.

Only my thoughts from someone that thinks the internet is a bloody hilarious place at times


----------



## trainspotter (22 February 2011)

Why do you need to buy one or the other? Given your current circumstances I see no reason for you to buy a PPOR ?? What are the advantages? If you were married and wanted to raise some kids and the PPOR was near a school yadda yadda yadda then maybe you have a justifiable reason to own one. Never under estimate the power of the "hairy cheque book". They make you do CRAZY things. Remember there is no CGT on PPOR and funnily enough prices still (in some areas) continue to climb. No no no you wont get 20% per annum like we have just witnessed but a solid 5 to 6 percent return over a long period of time is nothing to be sneezed at. Remember this is AMORTISED as well. You know the compound interest thingymebob? Look ....... I would love nothing better to pay cash for everything including houses but it just aint gonna happen. As fast as you can save the market moves further away. (I reiterate ...... in some areas)

Why not ask your parents if you can buy 1/3rd of their going concern on one (or several) of their IP's? Why do you feel the need to buy an IP? Why did your parents buy several IP's of which you are advising them. You already know the pitfalls and seem to have all the answers?

Negative Gearing is for people with high income thresholds that require tax deductions. IMO I fail to see the sense in making a loss on an income producing investment and then get SLUGGED by CGT when you sell it?? What's the point? Unless it is for tax purposes of course.

I prefer to buy off the plan with a large deposit and onsell to a third party when I am "flipping" ...... works great in a rising market. Not so great when the market is flat. Pick your mark and hold onto your balls in some cases. I REPEAT ...... now is not the time to be buying with the intention of selling in a short term to make a profit. THINK looooooooooong term. Not for everyone I know but that is the facts of life.

Whether it is perceived or not there seems to be a "shortage" of homes and the RBA aknowledges this as well. MAYBE not on the Gold Coast etc but this is a classic example when developers get ahead of themselves. Pie in the sky stuff !!

"By contrast Australia's [huge] housing shortage is creating two classes of city dwellers; those with property who fear further residential development will compromise their lifestyles and tenants who know that home ownership is getting beyond their reach." Percy Allan (Chair of Market Timing Pty Ltd)

A country the size of Australia should not have a residential land shortage, but it does.

Allan says: "Until the concentration of population in a few state capitals is reversed, the housing crisis will grow worse since urban consolidation is meeting growing resistance in the absence of mass transit systems to alleviate metropolitan congestion."

Thusly a "perceived" shortage.

Rents will inevitably be driven up as interest rates go up and owners look for a higher yield. So renting now is great. Probably not so good in the future. IMO

Would NOT be looking at property in the USA at the moment. Still a lot more pus to be squeezed out of this market.


----------



## Mr Z (22 February 2011)

white_goodman said:


> not all areas experience booms and bust, those areas with little local/state govt intervention in their markets never had the 'tulip mania' that places like Florida and Vegas had, despite how strong economically they are/were
> 
> ie Texas.
> 
> The US isnt one market, but yes im well aware itll be hard as **** either way, long term




Yes... I'm well aware that the US is not one market, but in talking to people that live in states that didn't boom suggests to me that selling pressure is still strong in most areas. TX looks to be rolling over but as you say it didn't get that far and has been solid to date ---> must be all that oil money! However does that not suggest that the true bargains are to be found elsewhere at some point in the future?


----------



## FxTrader (22 February 2011)

Anyone interested in just how corrupted the financing side of the U.S. housing debacle is should view this vid...

[video]http://www.youtube.com/user/fiercefreeleancer#p/a/u/0/ssl5yb7FewA[/video]


----------



## robots (22 February 2011)

hello,

oh gidday everyone, professor real deal in the house

great discussion, i dont know if you can claim the top Nun, my town (ballarat) is still going strong, i dont know mate

and how's this, today i got the train from Southern Cross to Ballarat in 1hr and 4mins, EXPRESS straight up to Victoria's No.1 regional town. amazing brothers

oh well, what page all you traders up to in the text book?

thankyou
professor robots


----------



## trainspotter (22 February 2011)

robots said:


> hello,
> 
> oh gidday everyone, professor real deal in the house
> 
> ...




Heeeeeeyyyyyyyyyyy Prof robots ..... good to see the EXPRESS is running on time. Only one hour from CBD to afforadability. Amazing stuff, pays to look around from the Citycentric areas. The Premium Station on Spencer Street is lovely short stroll to Etihad Stadium as well as the Docklands. 

Not sure what page the traders are up to botman but I can assure you things are slim pickings on the RE front at the moment. Oh well ...... set and forget stage for me.


----------



## Ardyne (22 February 2011)

Hey Robots, For a useless fact the new suburb in Ballarat is named after my great grandmothers company E . Lucas & Co.


----------



## Agentm (23 February 2011)

i cant think of anything worse

the mail must be chaotic



to..  

The Manager
1 smith Street
E . Lucas & Co.
VIC 3660

imho the return to sender will be pretty high


----------



## againsthegrain (23 February 2011)

I drove to work as usual, 20 mins in traffic from Mordialloc to Toorak, what a beatiful drive, not much traffic on the freeway from Warrigal rd entry great scenery, no pushing through on a overcrowded trains or running to the station when you are about to miss the express.

Sleeping in at 8:15 every morning is great, get to stay up every night and have more free time, life just seems a breeze like this and all at a fraction cost of a mortgage. Forget stress and 5am early starts to catch the early express - life is good!


----------



## prawn_86 (23 February 2011)

1 hour each way on the train is 10 hours a week for those who work. At a very conservative time value of $20ph this means you should be 'saving' at least $200pw to live out there.


----------



## Tysonboss1 (23 February 2011)

prawn_86 said:


> 1 hour each way on the train is 10 hours a week for those who work. At a very conservative time value of $20ph this means you should be 'saving' at least $200pw to live out there.




Not to mention the cost of the commuting itself,

This could also be offset though because the benefits are not always financel,


----------



## prawn_86 (23 February 2011)

Tysonboss1 said:


> Not to mention the cost of the commuting itself,
> 
> This could also be offset though because the benefits are not always financel,




I agree you can offset with lifestyle etc, but i think you still need to put a $ value on your time, this at least allows you to quantify the lifestyle decisions.

EG is it worth $200pw in this case to live away from the main city? 

When in Adel we found it was only $40 a week more to live 15min closer to the city, so this meant 5 hours a week between 2 of us. Even valuing that time at only $10ph it worked out $10 cheaper to live closer.


----------



## zzaaxxss3401 (23 February 2011)

robots said:


> ... Ballarat ... Victoria's No.1 regional town.



What makes Ballarat so good? It's freezing in winter - it actually snows there sometimes. Up until recently it had an eye-sore of a dry lake. Sure it's got a Bunnings (1), but the freeway now bypasses it so there's no reason to stop and clearly you still have to travel to Melbourne for work.

What about Geelong or Bendigo or Shepparton or Mildura or Warrnambool?


----------



## againsthegrain (23 February 2011)

I value my time after hours at around $50 ph, being able to stay up until 1am on average compared to 10:30pm for early start is a big difference. I have decided a long time ago that I do not want to spend a big % of my life commuting, sleeping, doing over time. Life is too short, work smart not hard. Yes I run a very small part time IT business on the side part hobby part pocket money when not doing my full time job 9 - 5 so the $50 ph figure after hours is very conservative.

Starting to think cheap like how much u save by traveling 1 hour on the train is a bit like looking for trolies in coles that still have a 1 or 2 dollar coin in them or collecting fuel dockets that you find on the floor, or changing light globes at 50c per globe LOL  and I see it sometimes at the local shops.

btw, 1:04 hr is just the train ride, unless you live right across the station and your work is right across the station at the destination this is not the total travel time. On average you will be looking to add another 30 mins to travel time if doing so by public transport. Bump that 10 hrs to 15 per week, looking more and more sour, you might as well work a full 8 hour shift on Sunday at double time to offset that.


----------



## ROE (23 February 2011)

prawn_86 said:


> 1 hour each way on the train is 10 hours a week for those who work. At a very conservative time value of $20ph this means you should be 'saving' at least $200pw to live out there.




Only if you can earn $20 an hour or make use of those spare hours generating money... this argument I think is flaw..

I got so much free time that I deliberately catch bus or walk to work when I start out take me 15 minutes to drive but I don't want to drive...

and those time on the bus I read on investment and go through dozen of books that will eventually generate far more wealth for me down the track.

The knowledge I accumulate while catching the bus is just price less 

I now deliberately live far out of the city so I can drive to work longer and listen to audio book  and learn more 

This wont stop any time soon, I do this as long as I am able to read/listen and accumulate knowledge.

I love reading and I religiously read on most investment subjects
and the best time to do it is on the way to work...

no kids screaming, no one disturb you, it is a time where you
can take in some serious knowledge for those who are able and willing.


----------



## prawn_86 (23 February 2011)

ROE said:


> Only if you can earn $20 an hour or make use of those spare hours generating money... this argument I think is flaw..




Personally i hate commuting (both driving myself or via public transport) so i value my time at $20 an hour (which is significantly less than i earn at work) in order to give myself a time value to work with.

Sure when im at home im not actually making that money, but to me, the things i do at home (including reading/researching etc) are worth at least $20 ph and commuting eats into that time which i could be at home


----------



## againsthegrain (23 February 2011)

ROE said:


> Only if you can earn $20 an hour or make use of those spare hours generating money... this argument I think is flaw..
> 
> I got so much free time that I deliberately catch bus or walk to work when I start out take me 15 minutes to drive but I don't want to drive...
> 
> ...




There are things that I can't put $ value on like spending time with my family, pursuing many of my hobbies or simply sitting down and meditating - there is never enough time for all of that anyway. Maybye I am too ambitious with my time and my interests 

Personally I prefer to read in bed late at night, rather then go out of my way to sit on a bus and read, each to their own.


----------



## trainspotter (23 February 2011)

What ROE said. We all cannot live in the city. This is part of the blame as to WHY property prices are so high and you guys are screaming as to the cost of property and how the amount of wages to cost ratios blah blah blah. YOU are the cause of the problem. Doesn't anyone own a laptop or a smart phone? 

BTW .... be thankful you have a job to go to. For people without a vocation I really don't believe that travelling a pithy couple of hours would stop them from riding the public transport service to work.


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## Agentm (23 February 2011)

yeah

i like to make lollipops when the sun shines

and when the day ends i sleep, i usually brush my teeth.. i sometime snore but i noticed in the last months i have done so less

and when i wake up i ride, then i shower then i go to work.  ohh yeah, i forgot to mention i get dressed after the shower and have breakfast.. lol  nearly forgot that one..

which is why the future of the Australian property prices is a topic that cant be discussed, as its now all about daily routines

anyone cut their toe nails today?


----------



## prawn_86 (23 February 2011)

trainspotter said:


> What ROE said. We all cannot live in the city.




No, and some people dont like to. Its a personal preference but i still think people should put a value on their time.

I would love to live in a smaller city (like Cairns) but unfortunately the work is just not there, or not at this stage in my career yet. And i would rather live close to work and travel for leisure than vice versa, but everyone is different.


----------



## trainspotter (23 February 2011)

Agentm said:


> yeah
> 
> i like to make lollipops when the sun shines
> 
> ...




LOLOL ...... add a bit of input Agentm why don't ya?

Look at what the average price is and % change from last year in your capital city. +4.7% nationally. HEY ...... I thought property was going down?

 Sydney $525,000  +6.6%   
 Melbourne $505,000 + 8.4%   
 Brisbane $435,000 -1.0%   
 Adelaide $387,000  +3.6%   
 Perth $465,000 -2.3%   
 Darwin $481,000  +4.8%   
 Canberra $510,000  +2.5%   
 National $475,000  +4.7%   
 Hobart* $325,500  +1.3%   

Now the problem with these figures is the outlier does not include REGIONAL property which in some areas has TANKED. Mandurah in WA has had up to 40% wiped off apartments. Ipswich (prior to the flooding) was a massive graveyard of mortgage stress (some great bargains to be had because the vendor would rent back from you ??) 

Anyone else for some meaningful input?


----------



## againsthegrain (23 February 2011)

I don't like living in the city, would never, living in mid city suburb its ok, long term I want to live in outer suburbs. Nothing beats a nice backyard, view of the mountains and life in slow pace.

Right now its about convinience and saving money. When I am ready I will buy a house in the outer suburbs without the city premium.

BUT I will only do this once I can get a small enough mortgage not to worry about a full time job, no way I will be traveling to the city then for a job. 

Will settle for something local, part time even just to bring in enough, keep my hobbies investments and secondary means of wealth generation.

Living in the burbs is great for me, personal prefrence but I will be doing it in the right order, not buying on 100% loan in the burbs and spending most of my life traveling to the city to pay it off by the time im 50 lol

(going back to the example of my friends who bought in Keysborough and only paid off 15k in 4 years)

Definately not knocking living in outer suburbs, and I hope the rush to live in the city will just make it that much easier for me to buy in the burbs at a decent price when im ready.


----------



## awg (23 February 2011)

prawn_86 said:


> 1 hour each way on the train is 10 hours a week for those who work. At a very conservative time value of $20ph this means you should be 'saving' at least $200pw to live out there.




If you live in Sydney though, 1 hour would be standard imo

But I do agree, which is why my long-term workplace was 8 mins

Now takes 15 mins to the premises, but mostly work from home

had an argument with superior who wanted me to go work somewhere 45min drive each way, I told him without increased compensation, why the hell would I do that.
He was cranky, he drove 1hr+ each way, per day, to boost his stinking career.

So chuck in almost $100pw petrol extra.

my kids all walked to school

If I had my way, I would have a collection of shacks on good blocks.

Unfortortunately, I didnt pursue this strategy, I would have been in a better position than I am know..would have bought one last week, but it got snapped up


----------



## robots (23 February 2011)

robots said:


> hello,
> 
> oh gidday everyone, professor real deal in the house
> 
> ...




hello,

oops, didnt see anything in the above thread about work! and then off went the reply button across australia and world about travel time, time i get up etc etc

the textbooks were pulled out and the usual assumptions were made like the rest in this thread

oh well, another great day, beautiful 

thankyou
professor robots


----------



## greebly24 (24 February 2011)

My story.

I live in a popular beachside suburb in Adelaide. I board with the owner of the house and pay $150 per week rent & bills ($7800 per year). I earn $47kpa after tax. I've got $40k saved and am saving another $20k per year for a house deposit. Got cash/shares/bullion/forex invested and up 14% this financial year. Hope to have $200k with zero debt in five years time.

Got 20 weeks paid leave oweing. Not sure whether to cash some in for house deposit? Just backpacked North Queensland for a month. Wicked.

Got recent First Home Buyer friends who don't have money to do anything.

Plan on buying a home in about five years time. Think housing around here is currently overpriced. Think it might be different after five more years of baby boomers retiring with inflation & interest rates rising. 

Housemate owns our house ($500k) plus one next door ($420k). Owes $600k. Earns $100kpa (before tax). Trying to rent next door for $350/wk but no takers after one month.

Houses either side for sale. One for $450k, the other extensively renovated hoping for $600k at auction. RE Agent @ $450k home said other home dreaming, "given the current market".

Any thoughts/advice/opinions? I'll let you know about the rental/sales if anyone interested in my current Adelaide market anecdote.


----------



## KurwaJegoMac (24 February 2011)

greebly24 said:


> My story.
> 
> I live in a popular beachside suburb in Adelaide. I board with the owner of the house and pay $150 per week rent & bills ($7800 per year). I earn $47kpa after tax. I've got $40k saved and am saving another $20k per year for a house deposit. Got cash/shares/bullion/forex invested and up 14% this financial year. Hope to have $200k with zero debt in five years time.
> 
> ...




Taking the house next door as an example:

House price: $450k
Taking a conservative 5% yoy growth on the property: $22,500 from year 1, increasing every year.

Rate of savings $20,000 per year.

So taking your rate of savings away from growth, the house is going up in price a couple of $k every year more than you can save.

Of course that's assuming house prices grow at 5% every year (who knows what the future will bring). Using a growth of 3 or 4% your rate of savings will outpace the price rise but only marginally. Enough to make it worthwhile? Your choice.

If you believe that house prices will stagnate or decline, then saving is the way to go. But if you believe house prices will continue to rise, you need to predict if it will not outpace your rate of savings - otherwise you'll actually be going backwards by saving.

My advice would be to form your own opinion on the future direction of the market and whether it will decline, or whether your savings will outpace the rate of increase of the sort of property you're after.


----------



## robots (24 February 2011)

greebly24 said:


> My story.
> 
> I live in a popular beachside suburb in Adelaide. I board with the owner of the house and pay $150 per week rent & bills ($7800 per year). I earn $47kpa after tax. I've got $40k saved and am saving another $20k per year for a house deposit. Got cash/shares/bullion/forex invested and up 14% this financial year. Hope to have $200k with zero debt in five years time.
> 
> ...





hello,

top effort Greebly24, doing well brother

keep saving and remember it will most likely be "work", that beautiful risk free technique of amassing wealth that will drive your savings and subsequent financial rewards

i would look at getting a property as soon as you can, buy within your capabilities and relax man

thankyou

professor robots


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## kincella (24 February 2011)

you need to look at the bigger picture when comparing property to other assets....
especially cash......firstly consider that inflation is a constant, most of you do not consider....supposedly its running around 3% (but costs of housing are not included in that figure) housing is one of the biggest running costs for the majority out there...
use a real figure of 10% for CPI for starters....
so your dollar sitting in the bank earning 5% before tax, is actually being eroded each and every year...it has reduced buying power.....so when you take it out, it will buy 10% less every year....unless of course you keep topping it up by 10% every year

whereas houses usually keep pace with inflation.....so a house can sit there for several years, and retain its buying power when you cash it in..or it can  greatly exceed all expectations

the other side of the coin with all the arguments here....all those who make money from trading whatever.....there are  plenty of choices out there..... when using the argument to compare the other markets....gold, stocks, whatever.....to property....
seem to forget.....you cannot live  without a home.....
all still need a home to live in....either buyers or renters.......... it makes no difference

housing is like food, and energy...everyone needs it.....but they can do without stocks gold etc in their lives.....

apparently 40% of sydney siders would consider moving out to the regional centres... nsw ecocities  or similar term, 7  of them.....look it up....would be interesting if even 10% actually moved..


----------



## robots (24 February 2011)

hello,

gidday Kincella, good to see you pop in

great info, I also especially like your explanation why banks like to loan against property

gonna be a nice day tomorrow

thankyou
professor robots


----------



## kincella (24 February 2011)

Hi Robots,
I would love to have a fast train to Albury, like say 300 kph and do the trip in an hour or a bit....in the meantime its 3 hours by car, from house to house....
looks like I will be staying in Albury, its grown on me now....I should be able to work remotely, well i know I can, then just go to Melb every few months...if I have to

beautiful scenery to watch on the travels....magical transformation since the droughts gone...
I used to either read or sleep on the 4 hour train trip...then they stopped allowing the dog to travel.....so its by car now, and so much faster...
plus the little dog loves the country house, with a backyard, and garden to offer some respite from the otherwise boring days
magical working for yourself, gives you so much more choice....I work from home so there is very little travel involved....
enjoy whatever you do....this is one great country......full of opportunity for everyone
cheers


----------



## medicowallet (24 February 2011)

KurwaJegoMac said:


> Taking the house next door as an example:
> 
> House price: $450k
> Taking a conservative 5% yoy growth on the property: $22,500 from year 1, increasing every year.
> ...




Might I suggest you shop around for your cash return
At call of 6.51% = $29295 at Ubank. Term deposits would be better still.

So a part of your argument is framed to serve your purposes. I hope this wasn't intentional.

Fair enough there would be $350 in rent per week coming in, but there are also insurances, other outgoings, maintenence etc. 

This stuff has been done to death in the thread before, and even though on historical returns, property outperforms cash, at the moment there is a clear case for arguments that short to medium term, even cash can be competitive with or outperform housing.

How about you do some examples of ROI of $450k for a few of the capitals listed in the above thread.  

I have done many, and at the moment I am hold on my properties ( and expecting decent 20%+ corrections ) and heavy in cash.


----------



## Tysonboss1 (24 February 2011)

medicowallet said:


> Might I suggest you shop around for your cash return
> At call of 6.51% = $29295 at Ubank. Term deposits would be better still.
> 
> So a part of your argument is framed to serve your purposes. I hope this wasn't intentional.
> ...




Over time cash never beats property,


----------



## medicowallet (24 February 2011)

Tysonboss1 said:


> Over time cash never beats property,




Which is wrong.

because it depends upon the timeframe.

I said that historically property outperforms cash, so I fail to see why you wrote your post.

But again, there are arguments over the short to medium term that cash could outperform property.

Let's just see how the current government can pressure people into spending money on an idealistic and stupid war for which, we cannot win alone, and may not be worth fighting. Yes I am a climate realist.


----------



## Tysonboss1 (25 February 2011)

medicowallet said:


> But again, there are arguments over the short to medium term that cash could outperform property.
> 
> .




Well they are not really arguements they are facts, Over 1 year or maybe even 2 cash will beat property simple because of the entry and exit fees of property. but from 3 years on the inflation effect on the cash starts to kick in and the exponetial decay of the cash buying power will see a property investment race away.

Getting into property with a time frame of 1 or 2 years is just plain silly.


----------



## schnootle (25 February 2011)

kincella said:


> use a real figure of 10% for CPI for starters....




Gee that makes me feel a lot better about my HECS debt, by that reasoning it is exponentially deflating at 6% pa. It will be worthless soon.


----------



## medicowallet (25 February 2011)

Tysonboss1 said:


> Well they are not really arguements they are facts, Over 1 year or maybe even 2 cash will beat property simple because of the entry and exit fees of property. but from 3 years on the inflation effect on the cash starts to kick in and the exponetial decay of the cash buying power will see a property investment race away.
> 
> Getting into property with a time frame of 1 or 2 years is just plain silly.




Sorry to burst your bubble (pardon the pun)

But the inflationary effect applies to the capital in property as well.


You can keep believing that property will always beat cash over a 3 year period, but unfortunately history does not agree with you, and in the future it will defy your beliefs again.

There are surely pressures to come against housing including, but not limited to

1. China interest rates increasing
2. Great big new tax on everything
3. People overgeared
4. Food and fuel inflation

I prefer to be buffered from these risks for the medium term (well at least until the fallout of our naive attempts to stop the world warming have crystallised)

How people manage risk is their own personal choice, but some of us try to identify it and manage it, and the majority of the others have massive gearing in property at the moment.


----------



## Tysonboss1 (25 February 2011)

medicowallet said:


> But the inflationary effect applies to the capital in property as well.




Being that a property owner owns a real thing, (land with a house on it), the capital value of the house will be maintained, as the value of the paper money decreases obviously inflation devaules the cash not assets


----------



## kincella (25 February 2011)

hmmm, some people do not understand...... inflation is the result of the prices  rising, at the same time it devalues your cash....ie you need more money to buy the same item next quarter.......hence so much emphasis on the CPI by all involved

hence why property keeps rising, for other reasons apart from the devaluatiion of your cash, but also the costs of inflation on new houses, or renovations etc.....

and for others it is purely the land value that increases the value.....ie in a desired location... for eg;.there is a block in Hampton, Vic with beach views, a horrid old dump on it, not lived in for 20 years...on the market at auction for over 1 million bucks.... the sea views adds xxxxxxxx amount of a premium to the property

oh, and look at this.....those fhb's are doing pretty well....
funny ,a survey of over 800 new home buyers, who bought in the last 2 years....83% had no regrets, they are happy,63% are paying off more than they need to off their mortgages...
average mortgage size is 240k's against a 280k home...
*******what no 600k prices for these savvy buyers.....as if a fhb would, or even could, pay those sums......as some on these property forums would have you believe

I note they were older than last years fhb's 

extract only.............

When it came to the top three key motivations for buying their first home, respondents were most likely to point to ?set myself up financially for the future by getting my foot in the property market door? (68% of respondents). 42% said ?rising rents made owning a property more attractive than renting? and 26% said ?I see more benefits in investments such as property than I do in the share market?.


hmmm, obviously they did not come to these property forum sites to get advice from the bears.....
it all flies in the face of what most of the punters here have been predicting....

https://www.mortgagechoice.com.au/a...ecent-first-homeowner-survey-revelations.aspx

oh and look at this.....
2 SA suburbs, one up 45% another 38% wow, obviously there is another story over there....will check later to find out whats going on...

http://blog.mortgagechoice.com.au/
hmm food for thought, for some


----------



## Agentm (25 February 2011)

a lot of analysts see the  canada and australia property bubbles as remarkably similar

canada has the strongest banks and australia the third strongest banks

this from Capital Economics  and its Canada Economic Outlook Report (Q1 2010) 

    Because Canada emerged from the global financial crisis largely unaffected, many Canadians now appear to believe that the economy is somehow invincible. This level of hubris is disconcerting when housing valuations have lost all touch with the fundamentals, driven up by a massive surge in household debt. We’ve seen this story played out in countless other countries and it never has a happy ending…

    Relative to incomes, our calculations suggest that Canadian housing is now just under 40% over-valued, which is about the same level of excess that the US market reached before it collapsed. We have pencilled in a 25% cumulative decline in house prices over three years, mirroring what happened south of the border…

    Canadian household debt is now up to 150% of disposable income, well in excess of what we saw in the US…

    Over the last several years, growth in consumption has far outstripped income gains, as households have gone on a spending binge, funded by credit growth and home equity extraction.

    With household balance sheets stretched and house prices expected to fall, however, we forecast that growth in consumption spending will lag income growth for the next couple of years, as households focus on rebuilding their saving rate…

    The biggest downside risk is that an adverse feedback loop could develop, as it did in the US, with rapidly falling house prices leading to a contraction in both output and employment, which puts even more downward pressure on house prices…

    Unfortunately, the end of the housing boom will have a serious detrimental impact on total employment and housing activity as well as asset values…

    Overall, we anticipate that domestic demand growth will slow from 5.5% in 2010, to 2.2% in 2011 and only 1.9% in 2012…



some see the canadian bubble ending..

its obvious that the australian bubble is in full force, with the following figures for last year

Sydney $525,000 +6.6%
Melbourne $505,000 + 8.4%
Brisbane $435,000 -1.0%
Adelaide $387,000 +3.6%
Perth $465,000 -2.3%
Darwin $481,000 +4.8%
Canberra $510,000 +2.5%
National $475,000 +4.7%
Hobart* $325,500 +1.3% 

its all go go go for 2011 imho..  massive false clearance rates of 66% touted last weekend but the actual is 59.7% after those dastardly unreported properties were found.. 

all good thought for 2011, the bubble in the invincible australian property sector is not showing any signs of abating imho..

sunshine and lollipops again this weekend with some record auctions coming up..

plenty out there dead keen to soak it all up and inflate it further..


----------



## medicowallet (25 February 2011)

Tysonboss1 said:


> Being that a property owner owns a real thing, (land with a house on it), the capital value of the house will be maintained, as the value of the paper money decreases obviously inflation devaules the cash not assets






Tysonboss1 said:


> Being that a property owner owns a real thing, (land with a house on it), the capital value of the house will be maintained, as the value of the paper money decreases obviously inflation devaules the cash not assets




No,

Please show me anything that guarantees that house prices increase in line with inflation every year.

In fact, if it did we would not have the bubble we have now.

So in fact, a house growing at $20000 as in the example above, which through inference you support, the $20000 increase is chewed up by inflation, exactly the same as interest on the cash.

Because the VALUE of the house is maintained by capital gain (as is the value of the cash by interest on earnings), but the purchasing power of a house worth

$470000 after year 1 ($20000 capital growth on $450000)

is exactly the same as

$470000 in cash after year 1.

What you are obviously saying is that house prices will always outperform inflation, which is clearly wrong.

I know it is impossible for you to believe that cash can outperform property, but perhaps you were not alive during the last time it did, but as with other generation y and younger, you will see it one day, perhaps within the next couple of years ( or if you live in Brisbane or Hobart, perhaps last year)


----------



## robots (25 February 2011)

medicowallet said:


> No,
> 
> Please show me anything that guarantees that house prices increase in line with inflation every year.
> 
> ...




hello,

and thats what many have been saying MW, property is just rolling along as it does, no bubble

just plenty of people who cant afford to buy a property because they spend there money on hookers, ipods, g, iphones, nitrous, cars etc

oh well

thankyou
professor robots


----------



## againsthegrain (25 February 2011)

> just plenty of people who cant afford to buy a property because they spend there money on hookers, ipods, g, iphones, nitrous, cars etc




Don't forget most of those items are purchased on credit, and the trend is only increasing with the current generation. So who you going to offload your wooden castle onto when most people are spending on hookers?


----------



## Tysonboss1 (25 February 2011)

medicowallet said:


> No,
> 
> Please show me anything that guarantees that house prices increase in line with inflation every year.
> 
> ...




The way I look at Property investing is as if it is an inflation hedged bond. Meaning you can put say $300K into a property investment and over time the $300K will be protected from inflation, because any resulting inflation will put upward pressure on the price I can sell the house for and also inflation will increase the amount I can charge in rent.

However if you held the $300K as cash, the $300K capital will be steadily going down in value, and after tax you will only enough interest to keep pace with inflation.

So with the cash investment you would have to reinvest all earnings just to tread water, But with the property you can spend the rent left after rates and maintaince and still have your capital keep pace with inflation.

.


----------



## robots (25 February 2011)

againsthegrain said:


> Don't forget most of those items are purchased on credit, and the trend is only increasing with the current generation. So who you going to offload your wooden castle onto when most people are spending on hookers?




hello,

what the g dealer got an eftpos machine? amazing

thankyou
professor robots


----------



## againsthegrain (25 February 2011)

robots said:


> hello,
> 
> what the g dealer got an eftpos machine? amazing
> 
> ...





brothels and car dealers do, amazing technology


----------



## medicowallet (25 February 2011)

Tysonboss1 said:


> However if you held the $300K as cash, the $300K capital will be steadily going down in value, and after tax you will only enough interest to keep pace with inflation.
> 
> So with the cash investment you would have to reinvest all earnings just to tread water, But with the property you can spend the rent left after rates and maintaince and still have your capital keep pace with inflation.




I am sorry you do not understand the concepts of opportunity cost and inflation.

I am also sorry you did not read my posts, because can you see anywhere where I said rent was to be included in our argument, the points I made, were in regards to capital growth in property vs interest on cash. Please, have a read again and see for yourself.

Stop using things which I clearly said, as rebuttals against my own argument.

You fail to take history into account at your own peril.
I will make a fortune during the bust, just as I did last time.


----------



## medicowallet (25 February 2011)

againsthegrain said:


> Don't forget most of those items are purchased on credit, and the trend is only increasing with the current generation. So who you going to offload your wooden castle onto when most people are spending on hookers?




Yes, the baby boomers are going to leave the younglings in a real mess.

Baby boomers, the most selfish, self interested generation in history (and too arrogant to see it)


----------



## Tysonboss1 (25 February 2011)

medicowallet said:


> I am also sorry you did not read my posts, because can you see anywhere where I said rent was to be included in our argument, the points I made, were in regards to capital growth in property vs interest on cash.
> 
> You fail to take history into account at your own peril.
> I will make a fortune during the bust, just as I did last time.




If you don't want to include rent in your calculations then you should not be including interest. rent is to property what interest is to a cash investment.


----------



## medicowallet (25 February 2011)

Tysonboss1 said:


> If you don't want to include rent in your calculations then you should not be including interest.




I explained why I was not including rent.

If you do not want to read the content of my posts, then do not respond to them.

You just make yourself look foolish.


----------



## Tysonboss1 (25 February 2011)

medicowallet said:


> Fair enough there would be $350 in rent per week coming in, but there are also insurances, other outgoings, maintenence etc.






medicowallet said:


> I explained why I was not including rent.
> 
> If you do not want to read the content of my posts, then do not respond to them.
> 
> You just make yourself look foolish.




The above is the only reasoning I saw on why you were not including rent and that reason is a complete laugh.

The costs you mentioned are less than 15% of the total rent collected, so you still have 85% of the rental return in which to include in your calculations.

It's quite simple, if you don't include rent then don't include interest, I am sorry but it is your calculations that look foolish.


----------



## medicowallet (25 February 2011)

Tysonboss1 said:


> The above is the only reasoning I saw on why you were not including rent and that reason is a complete laugh.
> 
> The costs you mentioned are less than 15% of the total rent collected, so you still have 85% of the rental return in which to include in your calculations.
> 
> It's quite simple, if you don't include rent then don't include interest, I am sorry but it is your calculations that look foolish.




No, I was actually also referring to this.

Note how I say exactly what you are saying in the sentence. I guess you also fail to recognise this, how convenient.



medicowallet said:


> This stuff has been done to death in the thread before, and even though on historical returns, property outperforms cash, at the moment there is a clear case for arguments that short to medium term, even cash can be competitive with or outperform housing.




Obviously you are trying to save face, I understand that.

But clearly, as I explained, the interest on cash is more than the capital return that the op suggested.

Do you understand this?   or do I have to spell it out in more simple terms for you?

Please do yourself a favour and read about opportunity cost and inflation. Also learn to concentrate when you read something, so that you actually address the topic in question, and don't invent something that does not exist.

And finally, when someone actually writes what you are arguing against them about, it makes you look foolish.



Tysonboss1 said:


> It's quite simple, if you don't include rent then don't include interest, I am sorry but it is your calculations that look foolish.




As I have said before, the goalposts were set by the op, I clarified it (acknowledging that rent makes a difference) and you go to change them so that it somehow supports your futile position.

That is quite indecent in the context of the discussion, considering the fact that I have stated on a few occasions that this is the case.


----------



## medicowallet (25 February 2011)

robots said:


> just plenty of people who cant afford to buy a property because they spend there money on hookers, ipods, g, iphones, nitrous, cars etc
> 
> oh well
> 
> ...




Lucky you do things in moderation hey bots?

You also forgot to put train fares.


----------



## Tysonboss1 (25 February 2011)

medicowallet said:


> 1, No, I was actually also referring to this.
> 
> 
> 2, But clearly, as I explained, the interest on cash is more than the capital return that the op suggested.




1,The part you were refering to does not mention rental returns at all.

2, I get what you are saying but what I am saying, But you are thinking about it in the wrong context.

You are using the cashflow (interest) of one investment example ( cash investment ) to argue that it is going to perform better against another investment example, but refusing to take the cashflow of the second investment into account, which in my view is dumb, and gives your analysis bogus results.

You are yet to give a sound reason to why when comparing the probable outcomes of investing in to differrent asset classes that you would use the cashflow from one in your results but ignore the cash flow from the second.

Interest on cash is not capital gain, it is cash flow, A cash investment has zero capital gain period, adding back the interest (net of taxes) is the same as adding back the rent net of taxes and outgoings.


----------



## againsthegrain (26 February 2011)

Hold on, the example that is being discussed, is the property paid out in full or currently being paid off while rented out?

Paying interest back to the bank on a property which would definately be negatively geared if purchased in the last 1 - 2 years would be another factor to take into account.


----------



## Tysonboss1 (26 February 2011)

againsthegrain said:


> Hold on, the example that is being discussed, is the property paid out in full or currently being paid off while rented out?
> 
> Paying interest back to the bank on a property which would definately be negatively geared if purchased in the last 1 - 2 years would be another factor to take into account.




Leverage is a separate topic, again if you want to include leverage then you have to include it in the example of the cash investment, which would also be negatively geared.

I am talking about putting $300K into a property vs $300K into a cash investment.

With leverage the property would win hands down against a cash investment that uses the same leverage.

Property with 7% interest would be funded by - 4% rent cashflow + 3% Inflationary pressure on capital value + 2% growth in demand + cashflow would grow with inflation.

Cash investment with 7% interest being paid and 6% interest being earned would suffer- exponential decay of the capital from negative gearing and then exponential decay of value from inflation.


----------



## Agentm (26 February 2011)

robots said:


> hello,
> 
> and thats what many have been saying MW, property is just rolling along as it does, no bubble
> 
> ...




interesting that the top executives of the nation can see what everyone sees, a bubble, make recommendations to try and stem its impact, yet you cant see it robots..

any reason why?


----------



## robots (26 February 2011)

hello,

well done Tysonboss1 great explanations, true people's poet brother

thankyou
professor robots


----------



## schnootle (26 February 2011)

Tysonboss1 said:


> The way I look at Property investing is as if it is an inflation hedged bond. Meaning you can put say $300K into a property investment and over time the $300K will be protected from inflation, because any resulting inflation will put upward pressure on the price I can sell the house for and also inflation will increase the amount I can charge in rent.
> 
> However if you held the $300K as cash, the $300K capital will be steadily going down in value, and after tax you will only enough interest to keep pace with inflation.
> 
> So with the cash investment you would have to reinvest all earnings just to tread water, But with the property you can spend the rent left after rates and maintaince and still have your capital keep pace with inflation.




If you are happy to assume that prices are guaranteed to rise with inflation, that makes perfect sense. The argument would be no different with blue chip shares and spending the dividends, but are you happy to assume that share prices will always go up with inflation?.


----------



## Tysonboss1 (26 February 2011)

schnootle said:


> If you are happy to assume that prices are guaranteed to rise with inflation, that makes perfect sense. The argument would be no different with blue chip shares and spending the dividends, but are you happy to assume that share prices will always go up with inflation?.




Offcourse there is going to be ups and downs in the property market, just as there is in the stockmarket. ( however volitility is alot less in property and the property market moves much slower)

Nothing is guaranteed in shorterm situations, I mean you can't guarantee that property will increase at exacty the inflation rate each year. But you can guarantee that over time, all else being equal even excluding population growth. property will rise with the rate of inflation.

Again with shares regarding inflation, If the share price is backed by solid longterm assets and the assets value and cashflow rise along with inflation then yes over time there would be growth in the shareprice purely from inflationary pressure outside any business growth.


----------



## AlexG1 (26 February 2011)

Agentm said:


> interesting that the top executives of the nation can see what everyone sees, a bubble, make recommendations to try and stem its impact, yet you cant see it robots..
> 
> any reason why?




Hmm - A CGT on owner occupied dwellings.....   That seems like a particularly bad idea to me - and I very much doubt it would ever fly politically. 

Owning a PPOR is (I believe) a pretty important part of planning for life after work.  It chops out the rental income from the equation for starters, and as many have pointed out hedges the cash involved against inflation.  Many might choose to downsize - and why should they be taxed (again) on post-tax money that they put into a property.   The purpose of that property is not to 'make money' but simply to live....  One could  argue that it's a tax on the fundamental human rights article 25.

Back onto topic - I've certainly enjoyed listening to the informed opinions of many on this forum and I'm hopefully gaining an education from it .   I've been considering putting money into an investment property, but I believe the timing at the moment is pretty bad for that - so I'll keep cash reserves in high interest accounts and invest in carefully chosen shares when the opportunities arise.   Why shares?  I believe there ARE bargain shares to be had and I don't need to borrow to buy them.  I don't believe there are any bargain properties (or at least in my knowledge base there are not).

I certainly like the concept of property as a hedge against inflation, and I agree that over the long term it's more than likely to at least rise with inflation.  Seems to me it's outstripped inflation by far too much at the moment and I do wonder where continued demand for these prices can come from given the amount of private debt in the country.

I personally have friends who are so leveraged into their house that when their car broke down, they didn't have the spare funds to get it fixed.  Sure - it's an awesome place, but you need to have other things to live as well as a house...  I know of a lot of people that are leveraged to the hilt - if they can't afford to fix a car, then they can't afford a hike in interest rates......

AlexG


----------



## trainspotter (26 February 2011)

medicowallet said:


> Yes, the baby boomers are going to leave the younglings in a real mess.
> 
> Baby boomers, the most selfish, self interested generation in history (and too arrogant to see it)




LOLOL ........ this thread just gets better and better. 

The "younglings" are doing a great job of stuffing it up all by themsleves.

Wake me up when property crashes please. ZZzzzzzzzzzzzzzzzZZZZZZZzzzzzzzzz


----------



## BigAl (26 February 2011)

Anyone have the Auctions Reults?  

Haven't seen any figures posted for quite some time now.  The Latte Sippers have disappeared underground lately.


----------



## zzaaxxss3401 (26 February 2011)

As long as there is demand for property and limited by supply, property prices will continue to rise. Period. We have an increasing population. We have inflation so wages, food, electricity and house prices will continue to rise. And we have a need to live somewhere.

A crash occurs because either there is limited demand or an over supply.

The US - put very simply - over supply. Why? Because people with already bad credit ratings couldn't afford their mortgage repayments due to unscrupulous lending practices. Houses were already overvalued because credit was so easy but banks were lending to everyone and everyone was buying a home. As more an more people started to default on loans (after introductory rates ended), banks started to repossess houses and dump them at any price. Bank lending to businesses dried up and cashflow problems meant job losses, compounding the problem. An avalanche then occurred. And the demand was swamped by an over supply.

In Australia - if interest rates continue going up: 1) it will stop those that can't afford a loan to stay out of the market - reducing demand, but conversely 2) at the same time cause those that have a mortgage to encounter mortgage stress and be forced to sell. You may not even notice a price change.

In order for a property crash to occur here in Australia, we would have to have a massive disaster (fire / flood / earthquake) down the whole east coast. Or a GFC2 that causes our unemployment to skyrocket to (say) 9-10%.

Prices in some parts of Victoria are cheap now and getting cheaper. That's because people don't want to live there - lack of work opportunities, lack of water, lack of an NBN / WiMax coverage )), remoteness and/or isolation. Supply is outweighing the demand.

If you're trying to compare investments in property v's shares, then it's a personal preference and based on the risk profile of the investor. You don't need much money to get into shares but if you buy Blue Chips then you're probably better leaving it in the bank. If you like Speculative stocks then prepare to make lots or lose lots. With property you either need a large investment initially, or a large mortgage. If your personal circumstances change then you may be forced to sell when you don't want to and sell to the first bidder - regardless of the offer price. Each to their own. Or have a mixture of cash, shares, property.

I don't see any short-term reason why property prices will "crash". Bring on 17-18% interest rates of the 80's and we'll see what happens.


----------



## medicowallet (26 February 2011)

Tysonboss1 said:


> 1,The part you were refering to does not mention rental returns at all.
> 
> 2, I get what you are saying but what I am saying, But you are thinking about it in the wrong context.
> 
> ...




1. I guess you cannot comprehend that I was not using rents etc as IT HAS BEEN DONE TO DEATH BEFORE

2. I NEVER MADE THE RULES FOR THE DISCUSSION, the op did that. 

You are barking up the wrong tree tiger, I feel as though I am in an argument with a 12 year old.

Learn to read a post before replying.

I am aware of investments and their pros and cons, which is why I WAS THE ONE TO MENTION RENTS AND OUTGOINGS, please give me a break from your assumptions and beliefs.

so in conclusion, I will say again, IT WAS THE OP WHO GAVE THE CRITERIA, NOT ME sunshine.


----------



## Agentm (26 February 2011)

BigAl said:


> Anyone have the Auctions Reults?
> 
> Haven't seen any figures posted for quite some time now.  The Latte Sippers have disappeared underground lately.




lol

last weeks was 59.7% after a fudged 66% was given to the press

i went to south melbourne markets b4, and passed thru st kilda on the way back, i thought i saw robots with a tin of paint painting his windowsills turning $30 lick of paint into $3000 property improvement

i swore i saw him with a lollipop in the sunshine.. 

the latte drinkers were out in full force.. contemplating their lives as they watch the bogans walk down ackland street buying ice creams and all the latte drinkers had look in their eyes, you know the one.. the ole "you aint buyin my property bud, your in the wrong postcode" kinda look..

when i wound down my window i could hear the maddness of the ongoing bazillion auctions, all those white shiatsu's and lamp posts and parked cars bidding against the one genuine bidder, as the auctioneers  desperately get to that new median price.. 

but its sunshine and lollipops as usual in the busy inner burbs, thats for sure..


----------



## So_Cynical (26 February 2011)

zzaaxxss3401 said:


> As long as there is demand for property and limited by supply, property prices will continue to rise. Period. We have an increasing population. We have inflation so wages, food, electricity and house prices will continue to rise. And we have a need to live somewhere.




The above would also accurately describe the situation in the US and the UK...still does in fact.



zzaaxxss3401 said:


> A crash occurs because either there is limited demand or an over supply.




The US & UK crashes occurred due to an over supply of credit....asset prices cant form a bubble without the credit needed to build the bubble....supply and demand is a nonsense without the credit to drive it.



zzaaxxss3401 said:


> If you're trying to compare investments in property v's shares, then it's a personal preference and based on the risk profile of the investor. You don't need much money to get into shares but if you buy Blue Chips then you're probably better leaving it in the bank. If you like Speculative stocks then prepare to make lots or lose lots.




ILU is a ASX100 stock (considered blue chip by many) that has gone up in price by some 250% in the last 18 months...personal preference my ass, TD's and other bank deposits cannot match the returns available in the stocks market, even selective blue chips....there are no self made, term deposit millionaires!


----------



## zzaaxxss3401 (26 February 2011)

So_Cynical said:


> The US & UK crashes occurred due to an over supply of credit....asset prices cant form a bubble without the credit needed to build the bubble....supply and demand is a nonsense without the credit to drive it.



An over-supply of credit was the means with which to create the demand. A bubble formed due to a demand for housing - everyone had money to spend... and they spent it. You didn't see a Ferrari bubble. Or a jet-ski bubble. It was a housing bubble based on an over demand for housing. High demand and short supply increases the price - just as it does in the stock market.

If the stock market has low volumes of trade, does it go up or down? Could go either way if the fundamentals are ok. But if there is an oversupply of sellers, dumping shares at any cost, the price goes down. Or are you suggesting that it's because the sellers are simply closing positions and retracting their credit... and has nothing to do with the over supply of sellers. 



So_Cynical said:


> ILU is a ASX100 stock (considered blue chip by many) that has gone up in price by some 250% in the last 18 months...personal preference my ass...



And TLS is an ASX20 stock that has gone down by around 18% in the last 18 months. What's your point? In this case the investor would have been better leaving their money in cash.

Perhaps you should spend some of your "blue chip" money on reading lessons. I say again - "...it's a personal preference and based on the risk profile of the investor...". Some people shy away from the stock market because they either don't understand it, are worried that their capital may go down or they simply feel they are already exposed enough through their super fund.


----------



## Tysonboss1 (26 February 2011)

zzaaxxss3401 said:


> You don't need much money to get into shares but if you buy Blue Chips then you're probably better leaving it in the bank.




Can I ask why you would think that stockpiling cash and letting taxes and inflation eat it away is better than owning good businesses.


----------



## Tysonboss1 (26 February 2011)

medicowallet said:


> Learn to read a post before replying.
> 
> I am aware of investments and their pros and cons,




I am not sure you do. Any way good luck with things. Let me know when you have loadedup on property after you 20% crash. 

It is said that people from the medical profession make the worst investors, I am starting to see why.

Cheers.


----------



## zzaaxxss3401 (26 February 2011)

Tysonboss1 said:


> Can I ask why you would think that stockpiling cash and letting taxes and inflation eat it away is better than owning good businesses.



Why do some people like to take comments out of context? As a member of the ASF, do you think I have stockpiles of cash sitting in the bank doing nothing? Well not just yet anyway. :

It all depends on your risk profile (can you cope if your capital goes down by 20%), how long you want to invest for (6 months, 1 year, 10 years) or whether you're after income v's capital gain.

What if I'd bought: TLS, BXB, and WDC back in 2007. Current prices I'd be down between 30-60% on all stocks. Or are you suggesting that none of these ASX20 stocks are good businesses? Some people prefer bricks-and-mortar, some people prefer shares, some people prefer stocks, some people prefer gold and some people prefer blondes.


----------



## So_Cynical (26 February 2011)

zzaaxxss3401 said:


> An over-supply of credit was the means with which to create the demand. A bubble formed due to a demand for housing - everyone had money to spend... and they spent it. You didn't see a Ferrari bubble. Or a jet-ski bubble. It was a housing bubble based on an over demand for housing. High demand and short supply increases the price - just as it does in the stock market.




LOL so you agree that the over supply of credit created the demand, but the bubble formed due to demand for housing? the US and UK populations continue to rise, so why isn't the demand for housing and prices also rising?

There was a Jet-ski and Ferrari bubble too...just ask anyone who brought a Jet-ski or Ferrari in 2006/7 how much they could sell it for in 2009/10 

Rising stock prices driven by High demand and short supply? jezz that's just way to simplistic. 



zzaaxxss3401 said:


> If the stock market has low volumes of trade, does it go up or down? Could go either way if the fundamentals are ok. But if there is an oversupply of sellers, dumping shares at any cost, the price goes down. Or are you suggesting that it's because the sellers are simply closing positions and retracting their credit... and has nothing to do with the over supply of sellers.




Again way to simplistic...there's a thousand drivers in the smallest time frame, im really at a total loss to understand the nuances of human behaviour when it comes to the stock market....the prices some people sell me there shares at often leaves me in total amazement.



zzaaxxss3401 said:


> And TLS is an ASX20 stock that has gone down by around 18% in the last 18 months. What's your point? In this case the investor would have been better leaving their money in cash.



Just like housing, timing has alot to do with your success in the stock market...And if you brought TLS when i suggested it was a potential turn around stock (27/28th-September-2010 - $2.60 approx) you would of done ok.

https://www.aussiestockforums.com/forums/showthread.php?t=4270&p=582950&viewfull=1#post582950
https://www.aussiestockforums.com/forums/showthread.php?t=4270&p=582976&viewfull=1#post582976



zzaaxxss3401 said:


> Perhaps you should spend some of your "blue chip" money on reading lessons. I say again - "...it's a personal preference and based on the risk profile of the investor...". Some people shy away from the stock market because they either don't understand it, are worried that their capital may go down or they simply feel they are already exposed enough through their super fund.




Agree...however you stated that " if you buy Blue Chips then you're probably better leaving it in the bank" and that's a crock...a nonsense statement totally without foundation in reality.


----------



## greebly24 (26 February 2011)

Thanks for comments/opinions on my earlier post. Found out that median house price is ten times median household wage in my suburb. Ridiculous! Think I'll just keep having fun investing in other asset classes until the bull/bear market direction becomes clearer around here.

Good article in Aust Financial Review today, _"*Sparkling one day, gloomy the next.* The property market in once-popular Noosa Heads is all but dead..."_

House prices down 17%, units down 24%. Wow!!! Some people bought units for $750k now worth $570k. $180k gone. Bugger.

Does anyone here think it would be good to leverage up and buy one in Noosa now? Or not? Just interested, that's all.


----------



## zzaaxxss3401 (26 February 2011)

So_Cynical said:


> LOL so you agree that the over supply of credit created the demand, but the bubble formed due to demand for housing? the US and UK populations continue to rise, so why isn't the demand for housing and prices also rising?



I'm not really interested in the US or UK property market - I'm not looking to buy. But demand may have dropped due to the rising unemployment, increase in the cost of living (CPI) and severe Government spending cuts painting a very gloomy picture. If people find it difficult to pay for everyday items, they aren't going to risk committing to a mortgage. So demand is declining just like the house prices? Funny that.



So_Cynical said:


> Rising stock prices driven by High demand and short supply? jezz that's just way to simplistic.



Why over complicate things?



So_Cynical said:


> Just like housing, timing has alot to do with your success in the stock market...And if you brought TLS when i suggested it was a potential turn around stock (27/28th-September-2010 - $2.60 approx) you would of done ok.



As you suggested: "...Worth serious consideration at these prices IMO...". Investors  may have considered it, and then seen it decline further to a low of $2.56 in mid-November. That's a great return.



So_Cynical said:


> Agree...however you stated that " if you buy Blue Chips then you're probably better leaving it in the bank" and that's a crock...a nonsense statement totally without foundation in reality.



A nonsense statement totally without foundation? Huh? TLS was provided as an example and between September and November it performed worse than cash. Someone was obviously selling at the "low", so they were obviously of the opinion that it was going to go lower... unless they were "shorting it". :

(In future, please use the correct spelling for "brought / bought", "there / their / they're" and "to / too / two" in future. It detracts from the meaning of a sentence.)


----------



## robots (26 February 2011)

hello,

yeah proper spelling mate, 

thankyou
professor robots


----------



## Tysonboss1 (26 February 2011)

zzaaxxss3401 said:


> . You don't need much money to get into shares but if you buy Blue Chips then you're probably better leaving it in the bank.:






zzaaxxss3401 said:


> Why do some people like to take comments out of context? As a member of the ASF, do you think I have stockpiles of cash sitting in the bank doing nothing? Well not just yet anyway. :
> 
> What if I'd bought: TLS, BXB, and WDC back in 2007. Current prices I'd be down between 30-60% on all stocks. Or are you suggesting that none of these ASX20 stocks are good businesses? Some people prefer bricks-and-mortar, some people prefer shares, some people prefer stocks, some people prefer gold and some people prefer blondes.




I can't see how I took it out of context, You said you are better off having your money in the bank rather than buying blue chips,

I personally think buying a range of good businesses at sensible prices would be much more rewarding.

Secondly every body always mentions TLS, But what about BHP,CBA,WOW,ANZ, woodside, etc.etc there are heaps of blue chips that have had high rates of return. 

Please take note the most important part of what I have said is "good businesses" at "sensible prices". You can't buy a mediocre business at a crazy price and expect to do well.

Your example of WDC, yes it is a great business, but in 2006-2007 it was a crazy price, 2009 sensible price.


----------



## Tysonboss1 (26 February 2011)

So_Cynical said:


> Just like housing, timing has alot to do with your success in the stock market...And if you brought TLS when i suggested it was a potential turn around stock (27/28th-September-2010 - $2.60 approx) you would of done ok.




Agree with what you say, But I prefer to "pricing" rather than "timing", It's amazing how when you get the price right, you always seem to get the timing right too,


----------



## Tysonboss1 (26 February 2011)

zzaaxxss3401 said:


> (In future, please use the correct spelling for "brought / bought", "there / their / they're" and "to / too / two" in future. It detracts from the meaning of a sentence.)




Sorry I can't help myself,

Inlight of my comments earlier about the medical profession being the worst investors,  Academics don't rate highly either.


----------



## zzaaxxss3401 (26 February 2011)

Tysonboss1 said:


> Sorry I can't help myself,
> 
> Inlight of my comments earlier about the medical profession being the worst investors,  Academics don't rate highly either.



It's called English. Clearly I need to start a new topic - "Am I illiterate or just lazy because I can't spell for sh*t?"

"...Misspelling and bad grammar do not indicate stupidity, but do usually indicate laziness (except for those for whom the language is not their first language). Spelling pedants may be irritating, but again, what's so hard with proofing a write-up? If you are a student, you proof your work. If you are in any type of business, you proof your work as well. What's so difficult about proofing your work here as well before hitting submit?..." - bozon @ everything2.com


----------



## medicowallet (26 February 2011)

Tysonboss1 said:


> Sorry I can't help myself,
> 
> Inlight of my comments earlier about the medical profession being the worst investors,  Academics don't rate highly either.




Darn, I lose out in both fields


----------



## medicowallet (26 February 2011)

"This weekend there has been a total of 842 auctions reported with a clearance rate of 66 per cent. Of the 842 auctions reported a total of 559 sold and 283 were passed in, 185 of those on a vendors bid."

Last year was 87%

Why is there a difference this year?

I don't know


----------



## zzaaxxss3401 (26 February 2011)

Tysonboss1 said:


> I can't see how I took it out of context, You said you are better off having your money in the bank rather than buying blue chips,
> 
> I personally think buying a range of good businesses at sensible prices would be much more rewarding.
> 
> Secondly every body always mentions TLS, But what about BHP,CBA,WOW,ANZ, woodside, etc.etc there are heaps of blue chips that have had high rates of return.



It depends entirely on your reason for investing. If it's for a dividend return, then the banks, WOW and TLS might be good investments. But looking at the capital growth of WOW and TLS, then you *might* be better off having your money in the bank or investing in Government (guaranteed) bonds. I say *might* because you may not have bought at a (as you put it) "sensible price". Obviously WOW at nearly $35 at the end of 2007 was not a sensible price based on where it is now. So if you had waited, until it was a sensible price in mid-2008 ($23.40), where did you put your money? Timing, opportunity, ability and analysis are all critical with any type of investment.

Back to my original point - I don't see property prices bursting by any great amount, while we have low unemployment, an increasing population, reasonable interest rates and a reasonably low inflation level. Bargains will continue to exist (do-ups / deceased estates, etc) and over-priced properties will also be bought because buyers "want" the property at any cost.


----------



## FxTrader (26 February 2011)

Tysonboss1 said:


> Offcourse there is going to be ups and downs in the property market, just as there is in the stockmarket. ( however volitility is alot less in property and the property market moves much slower)



There are not just mild, low volatility "ups and downs" in the property market, it can have savage reversals just as in equities (just ask the Americans, Japanese, Irish etc.)  There is a key difference however in comparison with equities and it's called shorting.  I go short and long constantly, the returns are far greater than going long only (bear with me for those who know this already.)

Now except for some exotic instruments that few people know about or can invest in, there is no way to short property or insure your equity stake in property.  The leverage available to property investors and potential investment return is anemic in comparison with instuments such as stock options, CFDs, warrants, futures, options on futures etc.  

Let's take options for instance.  You can sell call options to earn extra income on an existing share holding (ETOs are only available on certain equities), something rarely considered in discussion of investment returns on shares.  You can also protect your capital investment in shares by buying put options.



> But you can guarantee that over time, all else being equal even excluding population growth. property will rise with the rate of inflation.



This is plainly a silly assertion, again just ask the Americans, Irish and Japanese.



> Again with shares regarding inflation, If the share price is backed by solid longterm assets and the assets value and cashflow rise along with inflation then yes over time there would be growth in the shareprice purely from inflationary pressure outside any business growth.



"Long term assets"??? What the? As you should know, the "value" of a company's assets is less important that ROA, ROE and how much debt is being used to fund the assets.  There is absolutely no guarantee that the share price of any company will respond to inflation.


----------



## BigAl (26 February 2011)

greebly24 said:


> Thanks for comments/opinions on my earlier post. Found out that median house price is ten times median household wage in my suburb. Ridiculous! Think I'll just keep having fun investing in other asset classes until the bull/bear market direction becomes clearer around here.
> 
> Good article in Aust Financial Review today, _"*Sparkling one day, gloomy the next.* The property market in once-popular Noosa Heads is all but dead..."_
> 
> ...




But But But

House Prices always go up
If you don't get in now, you'll never get in
Guaranteed Inflation Hedge
Don't worry about the timing just jump in and you'll never look back


----------



## So_Cynical (27 February 2011)

zzaaxxss3401 said:


> (In future, please use the correct spelling for "brought / bought", "there / their / they're" and "to / too / two" in future. It detracts from the meaning of a sentence.)




I know my spelling and punctuation are hopeless and thanks so much for pointing that out, my excuse is i don't give a f*#k, the fact is i was "asked' to leave school at the age of 14 due to my insistence on involving the police in a incident at school involving an assault by a group of teachers on a student that i witnessed.

This was just not the done thing in WA in the late 70's so the situation saw resolved by removing me and the assaulted student....easy fixed. 



zzaaxxss3401 said:


> As you suggested: "...Worth serious consideration at these prices IMO...". Investors  may have considered it, and then seen it decline further to a low of $2.56 in mid-November. That's a great return.




Its a woeful return if you were stupid enough to sell at a loss..the alternative of holding till now or selling at the top of around $2.95 would of seen a return of around 10% annualised at around 20% smashing any bank return. (see chart)



zzaaxxss3401 said:


> A nonsense statement totally without foundation? Huh? TLS was provided as an example and between September and November it performed worse than cash. Someone was obviously selling at the "low", so they were obviously of the opinion that it was going to go lower... unless they were "shorting it". :




Again see the chart, fact is that since late Sept there's only a couple of weeks when selling would of lost an investor money, 75% of the time (late Sept to now) the trade would of been in profit....even the most numb skull, moronic investor could of made money...hell even a under educated high school drop out like me spotted the opportunity and called it correctly.

BTW please feel free to point out any spelling and gramah mistakes ive made...as im sure it makes you feel much more better.
~


----------



## nunthewiser (27 February 2011)

robots said:


> hello,
> 
> yeah proper spelling mate,
> 
> ...




Totally agree 

thees thred gone to the dogs with all the uneducated riff raff they let in these days.


----------



## Tysonboss1 (27 February 2011)

FxTrader said:


> There are not just mild, low volatility "ups and downs" in the property market, it can have savage reversals just as in equities (just ask the Americans, Japanese, Irish etc.)  There is a key difference however in comparison with equities and it's called shorting.  I go short and long constantly, the returns are far greater than going long only (bear with me for those who know this already.)
> 
> Now except for some exotic instruments that few people know about or can invest in, there is no way to short property or insure your equity stake in property.  The leverage available to property investors and potential investment return is anemic in comparison with instuments such as stock options, CFDs, warrants, futures, options on futures etc.
> 
> ...




I found this post to be of a "waffle on" with not really anything inregards to my post except the first paragraph in which I respond as follows.

Yes, I understand and have repeated many, many times in this thread Property is subject to swings in valuation just as any other asset class is. 

My comment was that it is not as volitile and moves much slower, In this regard I refer to the property crash that took place in the US and the UK, it took months to play out, the share market can crash in a day, this doesn't happen in property.

And more often than not, Property corrections take place in the form of stagnation, meaning a 10% over shoot in upward property prices is most likely going to be corrected by 2.5years of stagnation as inflation catches up, ( offcourse this is not how it played out during the GFC for a number of reasons, but under normal circumstances property does not suffer falls larger than 5-10%, )


----------



## Tysonboss1 (27 February 2011)

FxTrader said:


> This is plainly a silly assertion, again just ask the Americans, Irish and Japanese.




Why is it silly to assume the value of a fixed asset, will not increase with inflation over time,

Please note, I am not saying that you can buy any property at any price and have it rise in value.

What I am saying is that if you purchase a property at a sensible price when compared with a conservative estimate of it's earning power over time (rent), that it is not silly to assume that as the money supply is inflated and rents increase ( along with everything else), that the value of the property will increase.

Offcourse there will still be ups, downs and stagnation with the fear and euphoria, But over time the base intrinsic value will be increasing with inflation.

I mean when the average wage is $1M per year after years of inflation, it would be crazy to assume the median property price would be $350K.


----------



## Tysonboss1 (27 February 2011)

FxTrader said:


> "Long term assets"??? What the? As you should know, the "value" of a company's assets is less important that ROA, ROE and how much debt is being used to fund the assets.  There is absolutely no guarantee that the share price of any company will respond to inflation.




What I was saying here was that if,

Woolworths sold bought 10 cans of baked beans per year for $1 per can and sold at $2 a can and in 2010 made $10 profit, the crowd may value the business at $100, because they want a 10% return.

10years later after hyper inflation woolworth buys the baked beans for $1000 a can and now sell for $2000 a can and they make a profit of $10,000 per year, the crowd will probably value the business at $100,000.

So with nothing changing in the way of sales except inflation, the fair price for the business rose from $100 to $100,000.


----------



## GumbyLearner (27 February 2011)

robots said:


> hello,
> 
> yeah proper spelling mate,
> 
> ...




I derive my inspiration solely on this guys posts. It keeps me alive man. Here's a video that explains it all.


----------



## GumbyLearner (27 February 2011)

GumbyLearner said:


> I derive my inspiration solely on this guys posts. It keeps me alive man. Here's a video that explains it all.





And don't forget the crooks!


----------



## -Bevo- (27 February 2011)

greebly24 said:


> Thanks for comments/opinions on my earlier post. Found out that median house price is ten times median household wage in my suburb. Ridiculous! Think I'll just keep having fun investing in other asset classes until the bull/bear market direction becomes clearer around here.
> 
> Good article in Aust Financial Review today, _"*Sparkling one day, gloomy the next.* The property market in once-popular Noosa Heads is all but dead..."_
> 
> ...




Interesting I have a family member who made a 400k profit in a fews years from a house sold in perth well was actually more like 250k after interest and improvements are added they purchased 1.1 mil place in Noosa just before GFC its for sale atm, there's no interest in it either there hoping market improves, after interest payments and I believe it will sell at a loss I'm betting they'll wipeout all returns and some from the perth sale Oh Well.


----------



## nulla nulla (27 February 2011)

zzaaxxss3401 said:


> TLS was provided as an example and between September and November it performed worse than cash. Someone was obviously selling at the "low", so they were obviously of the opinion that it was going to go lower... unless they were "shorting it". :




Any one reading the papers would be aware that the Future Fund has a signifigant overhang in Telstra in the market, which it is reducing on a day to day basis regardless of the price. This has had the effect of holding the price down and in some instances pushing it down.


----------



## ginar (27 February 2011)

-Bevo- said:


> Interesting I have a family member who made a 400k profit in a fews years from a house sold in perth well was actually more like 250k after interest and improvements are added they purchased 1.1 mil place in Noosa just before GFC its for sale atm, there's no interest in it either there hoping market improves, after interest payments and I believe it will sell at a loss I'm betting they'll wipeout all returns and some from the perth sale Oh Well.




Ive been looking around noosa - eumundi area again after looking there a couple years back and prices certainly have come of a bit . I reckon theres a bit more to come so im being patient and building the account . couple of bank sponsored auctions happening so the signs are good for those willing to wait to buy imo


----------



## FxTrader (27 February 2011)

Tysonboss1 said:


> I found this post to be of a "waffle on" with not really anything inregards to my post except the first paragraph in which I respond as follows.



What is waffle, and bogus, is your continuing assertion that property is an effective inflation hedge and useless prior comparisons between returns available on cash and property (unleveraged and leveraged assets.)



> My comment was that it is not as volitile and moves much slower, In this regard I refer to the property crash that took place in the US and the UK, it took months to play out, the share market can crash in a day, this doesn't happen in property.



Your careless use of terms manifests itself again, Define "crash in a day" please.  The U.S. stock market started its GFC led move down in Nov07 (with property speculation in conjunction with reckless lending and borrowing key drivers) and bottomed in Mar09 down just over 50%.  Since then it has risen about 60% and because of what, not price inflation in the economy.  And what of the property market in the U.S., still in steep decline.



> Why is it silly to assume the value of a fixed asset, will not increase with inflation over time,



Because it's plainly wrong and easily proven so.  The "price" of a NEW "fixed asset" (existing fixed assets most often depreciate which is why the ATO gives you a depreciation tax break on IP), may increase with inflation or not depending on many factors including the effects of mass production and economies of scale.  In the specifc case of property as an asset class, price inflation of goods and services in the rest of the economy does not necessarily filter through to property prices, again there are numerous examples.  I won't waste futher time here though giving you a refresher on the basic Economics.

As for the future of prices here, inflation in the economy will not be a buffer against a significant correction to the massive debt fuelled bubble the Australian property market has become.


----------



## Beej (27 February 2011)

-Bevo- said:


> Interesting I have a family member who made a 400k profit in a fews years from a house sold in perth well was actually more like 250k after interest and improvements are added they purchased 1.1 mil place in Noosa just before GFC its for sale atm, there's no interest in it either there hoping market improves, after interest payments and I believe it will sell at a loss I'm betting they'll wipeout all returns and some from the perth sale Oh Well.




They sound like chronic property flippers! I always aim to hold property for at least 5 years, preferably 10 years or more. If you turn over PPORs more frequently than this then you will often lose money due to market fluctuation plus buying/selling costs. Better off renting in this case.

Cheers,

Beej


----------



## Tysonboss1 (27 February 2011)

FxTrader said:


> What is waffle, and bogus, is your continuing assertion that property is an effective inflation hedge and useless prior comparisons between returns available on cash and property (unleveraged and leveraged assets.)
> 
> 
> Your careless use of terms manifests itself again, Define "crash in a day" please.  The U.S. stock market started its GFC led move down in Nov07 (with property speculation in conjunction with reckless lending and borrowing key drivers) and bottomed in Mar09 down just over 50%.  Since then it has risen about 60% and because of what, not price inflation in the economy.  And what of the property market in the U.S., still in steep decline.
> ...




When I said crash in a day I was refering the fact that sharemarkets routinely fall and rise in value by amounts of up and somrtimes more than 5%, this is a volitile asset class, Property does not do this, it's ups and downs take much longer to play out,

And as I have said many times when I say that property values will rise with inflation I am not saying property will not crash in the short or medium term, what I am saying is that this,

If a property's fair value (outside any bubble conditions) is $100K, That fair value will increase over time with inflation as it's rental yield also increases with inflation. That does not mean you can purchase it at any price at any time and not have it fall in value.

If speculaters push the "market price" of that $100K property well above it's "fair value" of $100K then offcourse you could expect it to suffer declines or atleast a prolonged period of stagnation while population growth and inflation raise it's value back to the market price.

The reverse is also true, if there is a long period of stagnation and inflation pushes the fair value higher than the market price eventually there will be a boom,


----------



## FxTrader (27 February 2011)

greebly24 said:


> Good article in Aust Financial Review today, _"*Sparkling one day, gloomy the next.* The property market in once-popular Noosa Heads is all but dead..."_
> 
> House prices down 17%, units down 24%. Wow!!! Some people bought units for $750k now worth $570k. $180k gone. Bugger..




Depending on the chosen time frame it's worse than that...

From: http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp&s=qld&u=noosa+heads

Date  ,   	       House Price 	          Unit Price
Feb-10, 	$650,000,             $620,000
Mar-10, 	$463,000, 	          $590,000
Apr-10, 	$670,000, 	          $522,500
May-10, 	$705,000 ,	          $500,000
Jun-10, 	$580,000, 	          $622,500
Jul-10, 	$840,000, 	          $712,500
Aug-10, 	$750,000, 	          $735,000
Sep-10,	$640,000, 	          $515,000
Oct-10, 	$1,032,500,          $742,500
Nov-10, 	$813,500, 	          $412,500
Dec-10, 	$647,500, 	          $675,000
Jan-11, 	$482,000, 	          $620,000,

From Oct10 to Jan11 (just 4 months) the median house price in Noosa Heads has fallen over 50%!  So house prices are not volatile and don't crash Tyson?  LOL


----------



## Tysonboss1 (27 February 2011)

Beej said:


> . If you turn over PPORs more frequently than this then you will often lose money due to market fluctuation plus buying/selling costs. Better off renting in this case.
> 
> Cheers,
> 
> Beej




My mate is a real estate agent in brisbane, and he paid off his home in 8 years just by flipping it every 12 months ( the longest he stayed in one was 2 years I think.

But not every one can do that effectively, he had no agent commisions because he was the agent and knows the market very,very well.


----------



## medicowallet (27 February 2011)

Tysonboss1 said:


> When I said crash in a day I was refering the fact that sharemarkets routinely fall and rise in value by amounts of up and somrtimes more than 5%, this is a volitile asset class, Property does not do this, it's ups and downs take much longer to play out,
> 
> And as I have said many times when I say that property values will rise with inflation I am not saying property will not crash in the short or medium term, what I am saying is that this,
> 
> ...




I acknowledge your changes in position, or at least agree with the many additions to your points.

However, I disagree that property is not as volatile as shares. In my opinion it is just as volatile on a day to day basis, it is just that the owners cannot see it and/or are naive to the concept.

Shares require a much stronger intestinal fortitude as you can see your wins and losses on a minute to minute basis. House volatility is artificially hidden in the fact that you only realise your gains or losses when you come to sell.


----------



## mazzatelli (27 February 2011)

Tysonboss1 said:


> If a property's fair value (outside any bubble conditions) is $100K, That fair value will increase over time with inflation as it's rental yield also increases with inflation. That does not mean you can purchase it at any price at any time and not have it fall in value.




In an inflation hedging context, is this assuming the property has been bought with cash or credit-based?


----------



## Beej (27 February 2011)

medicowallet said:


> However, I disagree that property is not as volatile as shares. In my opinion it is just as volatile on a day to day basis, it is just that the owners cannot see it and/or are naive to the concept.




This statement simply shows that you do not understand what volatility actually is. Tysonboss is 100% correct and it can be proven easily mathematically - Australian residential property is an asset class with far lower historical price volatility than the share market.

Cheers,

Beej


----------



## Tysonboss1 (27 February 2011)

mazzatelli said:


> In an inflation hedging context, is this assuming the property has been bought with cash or credit-based?






Tysonboss1 said:


> Leverage is a separate topic, again if you want to include leverage then you have to include it in the example of the cash investment, which would also be negatively geared.
> 
> I am talking about putting $300K into a property vs $300K into a cash investment.
> 
> ...




I was comparing holding $300K in property rather than say a term deposit.

As mentioned above debt is a separate topic.


----------



## FxTrader (27 February 2011)

Beej said:


> This statement simply shows that you do not understand what volatility actually is. Tysonboss is 100% correct and it can be proven easily mathematically - Australian residential property is an asset class with far lower historical price volatility than the share market.




Well let's here about your understanding of volatility and how one should react to it then shall we. 

Historical volatility over what time frame, 2,5,10,50 years? 

Is the fact that median Noosa Heads house prices have fallen 50% in four months indicative of high or low volatility, why or why not?  

What is the current implied volatility of the top housing markets in Australia and should we try a time the market based on volatility, or doesn't it matter?

Should property be purchased when current implied volatility is high for a given market (e.g. should you have purchased property in Noosa Heads when you saw prices rising sharply in early 2010 or should you purchase now that they have fallen 50% since Oct10?)


----------



## Tysonboss1 (27 February 2011)

FxTrader said:


> Should property be purchased when current implied volatility is high for a given market (e.g. should you have purchased property in Noosa Heads when you saw prices rising sharply in early 2010 or should you purchase now that they have fallen 50% since Oct10?)




focusing on one suburb is like focusing on one share, you may beable to find examples where one suburb has had large declines over a period of 12 months, But there are hundreds of example where shares have had large falls in the space of a day.

In my view, I would purchase a property when the price that you pay is sensible when compared to the future earning power (investment) or when the price is sensible when compared with the lifestyle benefits it will offer (ppor).

By the way I have not purchased a property since 2004, But I would if the right property came up at the right place and there were opportunities else where tp deploy cash.


----------



## Beej (27 February 2011)

FxTrader said:


> Well let's here about your understanding of volatility and how one should react to it then shall we.
> 
> Historical volatility over what time frame, 2,5,10,50 years?
> 
> ...




You cannot take a single suburb monthly median price stats and infer anything about the current value of a particular house in that suburb - the sample volume is just too small as there may only have been a few houses sold in a given month, and they could have been at the really expensive or the really cheap end of the market, resulting in MEDIAN price volatility, which is very different to an individual properties actual price volatility. It's a bit like inferring that your Woolworths shares have dropped in value by 50% because the Westfarmers price fell.

If you look at the price history of property as an asset class (say at a city or national level), and compare that price history to a broad stock market index over ANY period of time (take your pick, 2, 5, 10, 20 years), and look at the price volatility on a monthly or yearly basis, then it is indisputable that property prices in Australia are less volatile than ASX shares.

Cheers,

Beej


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## againsthegrain (27 February 2011)

I went to the local lender and wanted to take a loan for 10 houses, since the market always goes up I promised to pay it all back + interest in 1 year when I sell at 10% - 20% profit, but it didn't work. I even told him about robots and his guarantees, still didn't work


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## nunthewiser (27 February 2011)

againsthegrain said:


> I even told him about robots and his guarantees, still didn't work




Mmmmmmm 

your fixation on associate proffessor robots in this thread is bordering on unhealthy, and now it seems has spread to the outside world.

please see a doctor.


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## FxTrader (27 February 2011)

Beej said:


> You cannot take a single suburb monthly median price stats and infer anything about the current value of a particular house in that suburb - the sample volume is just too small as there may only have been a few houses sold in a given month, and they could have been at the really expensive or the really cheap end of the market, resulting in MEDIAN price volatility, which is very different to an individual properties actual price volatility. It's a bit like inferring that your Woolworths shares have dropped in value by 50% because the Westfarmers price fell.



Instead of answering my questions about volatility and its application, you instead  erect a straw man argument around the misuse of statistics, attack it and infer that I am generalizing about the property market as a whole when I clearly and certainly did not.  If you can't or don't want to directly answer the questions put to you then fine, but don't sink to the level of useless banter and frivolous arguments.

I gave you published statistics on the Noosa Heads property market median prices over the last 12 months.  These stats have very real meaning to the poor saps who paid over a million dollars for property in Noosa Heads just 4 months ago.  To them, there is no comfort that shares have been more volatile over the last 50 years.



> If you look at the price history of property as an asset class (say at a city or national level), and compare that price history to a broad stock market index over ANY period of time (take your pick, 2, 5, 10, 20 years), and look at the price volatility on a monthly or yearly basis, then it is indisputable that property prices in Australia are less volatile than ASX shares.




Focus only on the Australian stats does not redeem your or Tyson's arguments here.  The fact, and point, is that high volatility exists in the property market from time to time, whether or not that volatility has been less than shares over a given time frame is irrelevant.  At least with shares you can protect yourself from downside risk.


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## white_goodman (27 February 2011)

you cant look at any one suburb for stats or signs of volatility when such little transactions take place and any one sale can skew the data... its not a good argument for price volatility.


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## awg (27 February 2011)

mazzatelli said:


> In an inflation hedging context, is this assuming the property has been bought with cash or credit-based?






Tysonboss1 said:


> I was comparing holding $300K in property rather than say a term deposit.
> 
> As mentioned above debt is a separate topic.




Interesting question ( to me at least )

Can arise when neutrally geared...whats the pros and cons of pay interest-only and let the debt deflate ?


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## Beej (27 February 2011)

FxTrader said:


> Instead of answering my questions about volatility and its application, you instead  erect a straw man argument around the misuse of statistics, attack it and infer that I am generalizing about the property market as a whole when I clearly and certainly did not.  If you can't or don't want to directly answer the questions put to you then fine, but don't sink to the level of useless banter and frivolous arguments.




I erected no straw man there - I simply leveled the obvious criticisms of the specific example you put up to back your point.



> I gave you published statistics on the Noosa Heads property market median prices over the last 12 months.  These stats have very real meaning to the poor saps who paid over a million dollars for property in Noosa Heads just 4 months ago.  To them, there is no comfort that shares have been more volatile over the last 50 years.




Well why don't we look at the annual median prices from your same source?

Year	Median House Price	House Price % Change (YoY)	Median Unit Price 	Unit Price % Change (YoY)
2002	$375,000	38.9%	$430,000	8.2%
2003	$573,750	53.0%	$605,000	40.7%
2004	$595,000	3.7%	$680,000	12.4%
2005	$660,000	10.9%	$680,000	0.0%
2006	$630,000	-4.5%	$730,000	7.4%
2007	$727,500	15.5%	$690,000	-5.5%
2008	$760,000	4.5%	$707,500	2.5%
2009	$675,000	-11.2%	$565,000	-20.1%
2010	$650,000	-3.7%	$614,500	8.8%

As you can see - 16.9% decline in annual median price from the 2008 peak. hardly the 50% you are claiming from the more volatile and less statistically significant monthly figures. What's more is these figures show that anyone who bought more than a few years ago is still well in front in any case, and as pointed out in other posts you buy property for the long term not the short term. And this is in one of the "tourist/retiree" property belts of SE QLD - areas that we know are the most volatile of Australia's property markets historically anyway and currently are impacted by the struggling domestic tourism sector. Any any case, the realestate.com.au figures are raw unstratified median prices as well meaning they can be easily influenced by the sales mix etc, and so still carry a degree of "noise". 

PS: Here is the APM price data for Noosa which is collected in a more considered way - same current median price, but differing annual changes:

http://www.domain.com.au/Public/SuburbProfile.aspx?suburb=Noosa&postcode=4567&mode=buy



> Focus only on the Australian stats does not redeem your or Tyson's arguments here.  The fact, and point, is that high volatility exists in the property market from time to time, whether or not that volatility has been less than shares over a given time frame is irrelevant.  At least with shares you can protect yourself from downside risk.




In case you hand't noticed this is the "Australian" property thread - I have never been considering nor have been discussing any other market with any of my comments.

When compared to the share market, property can be easily shown mathematically to have lower price volatility over any time period. Full stop. None of your obfuscation changes this fact.

Cheers,

Beej


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## Tysonboss1 (27 February 2011)

awg said:


> Interesting question ( to me at least )
> 
> Can arise when neutrally geared...whats the pros and cons of pay interest-only and let the debt deflate ?




Personally I am not a fan of interest only. I work on a low debt model and prefer to always have my debts exponentially decaying.

Some people use the words "good debt (investment debt)" and "bad debt(personal debt)",  I understand the high debt model with all it bells and whitles, you know high growth, tax deductions etc.etc.

But for me personally I think of it as "Bad debt" and "worse debt", Debt can be nessasary and at times extremely rwarding when you can pick things up at for less than they are worth, But it's not somthing I want lingering, I want my cash flows from my Investments growing, clearing debt does this.


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## kincella (27 February 2011)

I think its funny comparing apples with ....oh I dont know....there is almost no comparison...
everyone needs shelter, and most prefer a house....
a huge % of those homeowners, have very little interest in the stockmarket.....if they do, it is because of compulsory superannuation.....

almost no-one needs stocks or other forms of investments.....
so people can live without an investment of any type.....

most cannot live without a roof over their heads.....it is the most basic of necessities
since the govnuts basically stopped building public housing in the 70's, the onus shifted to the private sector to provide housing for those who choose to rent.......
with tax incentives to property owners
last time I looked rentals were 30%, owners 70%....of the 30% rentals, there was 10% in public housing, 20% other investors....
majority of property investors are home owners, they treat it as a set and forget investment.....they know there will be dips and troughs, but overall the rise in value will be there after 10 or 20 years.....

for Robots, I note Ballarat rose 19% last year....see the REIV site, then to bottom of the page regional median
http://www.reiv.com.au/home/inside.asp?ID=1048&nav1=1226&nav2=165&nav3=1048

 I note even after 4 interest rate rises last year, in the middle of this prolonged GFC, the median price of the last auctions in Melb was 808,000.....are they crazy....
they are not fhb's, so who are they.....maybe the upgraders are on the move....buying and selling in the same market....
and,  what on earth were they doing in Ireland, between 2000-2008, with a population of only 6.5 million, they built an extra 300,000 new houses...thats 5% of the population...
now the Irish are fleeing Ireland, up to 10% of them are moving anywhere else...visas to come to OZ are up 60%...its very interesting.....

check out the abc site foreign/ correspondent...story on  ireland
http://www.abc.net.au/foreign/
and this book, plenty of information on that topic if one cares to research, or google it
http://www.nybooks.com/articles/archives/2010/nov/11/ireland-rise-crash/


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## FxTrader (27 February 2011)

Beej said:


> When compared to the share market, property can be easily shown mathematically to have lower price volatility over any time period. Full stop. None of your obfuscation changes this fact.



I am not comparing share price volatility with property price volatility, that is your obsession not mine, and a useless one I might add.

Since you have answered none of my original questions on volatility it is you engaging in obfuscation and misdirection. Your myopic focus on the Australian property market conveniently ignores the occurances of high price volatility in other world property markets as well.  Calculation of volatility includes a time period component, and large swings in property prices can and do occur over short periods of time in property markets, just as in shares. 

Interesting that you refer to the share market as a collective whole, not individual shares whose volatilities vary greatly, a glaring hole in your shallow comparative analysis.  By all means provide your volatility analysis between the asset classes since it's so easy to calculate, but in doing so include all the other sub indices, not just the All Ords.  Not that such an effort would provide any useful information for a potential property investor.

Out of curiousity, just what point do you hope to make here with your line of argument, that property is a safer or better investment than shares because it's less volatile or are you just engaging in petty point scoring by referring to comparisons that have no relevance to property investors?


----------



## tech/a (27 February 2011)

Tysonboss1 said:


> Personally I am not a fan of interest only. I work on a low debt model and prefer to always have my debts exponentially decaying.
> 
> Some people use the words "good debt (investment debt)" and "bad debt(personal debt)",  I understand the high debt model with all it bells and whitles, you know high growth, tax deductions etc.etc.
> 
> But for me personally I think of it as "Bad debt" and "worse debt", Debt can be nessasary and at times extremely rwarding when you can pick things up at for less than they are worth, But it's not somthing I want lingering, I want my cash flows from my Investments growing, clearing debt does this.





I ONLY work on interest only.
Its all tax deductible so I make the most of it.
I want as much free capital as possible for future opportunities and cash flow.


----------



## tech/a (27 February 2011)

> Interesting that you refer to the share market as a collective whole, not individual shares whose volatilities vary greatly, a glaring hole in your shallow comparative analysis




Selective arguement.
I can detail areas of Australian market which have seen 1000s% return in 10 yrs just like the Stock market individual stocks.

If your experienced in either you'll out perform the market.
If your  complete idiot and remain in the market you'll gain long term in both.
IF you have money in either.


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## medicowallet (27 February 2011)

Beej said:


> This statement simply shows that you do not understand what volatility actually is. Tysonboss is 100% correct and it can be proven easily mathematically - Australian residential property is an asset class with far lower historical price volatility than the share market.
> 
> Cheers,
> 
> Beej




So what is the daily volatility of residential property?

Because each individual house is individual, how did my house value track monday to sunday last week?

I can tell you how my BHP shares went.

In fact, I have a rental in rural NSW I have owned for 12 years, how much is it worth today? 

How much is it worth tomorrow?

Fact is, it may be worth 2-3% less than a week ago due to the new tax, or drop 2% after an interest rate hike, but who knows??


----------



## medicowallet (27 February 2011)

Beej said:


> Year	Median House Price	House Price % Change (YoY)	Median Unit Price 	Unit Price % Change (YoY)
> 2002	$375,000	38.9%	$430,000	8.2%
> 2003	$573,750	53.0%	$605,000	40.7%
> 2004	$595,000	3.7%	$680,000	12.4%
> ...




If you bought in 2003 you are better off, any later and you are worse off (units that is)

And also, a "median" house in 2010 does not equal a "median" house in 2003


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## Wysiwyg (27 February 2011)

medicowallet said:


> If you bought in 2003 you are better off, any later and you are worse off (units that is)
> 
> And also, a "median" house in 2010 does not equal a "median" house in 2003



'Median' is a good guide but where are the 1000% price increases holding it up?


----------



## FxTrader (27 February 2011)

tech/a said:


> I can detail areas of Australian market which have seen 1000s% return in 10 yrs just like the Stock market individual stocks.



Well this has nothing to do with the volatility argument but since you bring this up, please do give some examples of where established residential property (the category most IP investors invest in) returned 1000% plus in 10 years. 



> If your experienced in either you'll out perform the market.



True, depending on how you define experienced.



> If your complete idiot and remain in the market you'll gain long term in both.



Quite incorrect, there are so many examples.  Take TLS (a widely held, blue chip mom and pop stock), calculate it's 10 year return and report on those gains for me.

As for the question in your chosen graph, "Are Australian property prices cheap or in a bubble?"  while looking at a spike in a logarithmic plot, wow that's a tough question.  LOL


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## medicowallet (27 February 2011)

Wysiwyg said:


> 'Median' is a good guide but where are the 1000% price increases holding it up?




Median does not take into account the size of the house etc, eg would you prefer the size of a 1980s house or a 2010s house?

There was considerable increase in house size from 2000 to 2010


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## trainspotter (27 February 2011)

white_goodman said:


> you cant look at any one suburb for stats or signs of volatility when such little transactions take place and any one sale can skew the data... its not a good argument for price volatility.




Hear hear. Generally the most "over priced" areas suffer the most clawback due to the very nature of the cycle of velocity of money. Once the high flyers start trimming back the rest of the country suffers. I remember buying a property from a marriage break up. They would sign anything to get their hands on the money they hated each other that much. BARGAIN. Did this bring the overall price of commercial property down in the area? Maybe it contributed to the statistics BUT it sure as **** did not stop me from selling it for a healthy profit. Yes yes yes I hung onto it for a couple of years BUT that was the original plan. DOH !

This is a real "set and forget" time for RE. AND interest only is the only way to go on investment property. The idea is not to own it but (great if you can) by way of tax deductions of the interest component and outgoings. As long as you have purchased in an established area of REAL growth (not Noosa Heads or Mandurah) then you cannot go too far wrong. Wait for the capital appreciation to rollover and use this to your advantage. 

Has anyone considered the REAL reason as to why houses are getting more expensive as time goes on is that no one wants to live in a 3 bedroom 1 bathroom sh1tbox anymore? They all want their friggin McMansions with ducted aircon and a BMW parked out the front.

Hello ??? Anyone? Please feel free to enlighten me.

Oh bugger ...... I see Medicowallet is onto the size thing !!


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## ginar (27 February 2011)

Tysonboss1 said:


> When I said crash in a day I was refering the fact that sharemarkets routinely fall and rise in value by amounts of up and somrtimes more than 5%, this is a volitile asset class, Property does not do this, it's ups and downs take much longer to play out,
> 
> And as I have said many times when I say that property values will rise with inflation I am not saying property will not crash in the short or medium term, what I am saying is that this,
> 
> ...




Really is like comparing apples to oranges , hell the brokerage on selling your house is 5% so try and sell that house the next day and see where you get to . liquidity is so different its not funny . remember you are just as  likely to make that 5% the next day on shares as you are to lose it . this whole shares vs property thing is just 2 different universes . they are so different , a properly run blue chip portfolio will make mince meat of the returns on property , of that there is no doubt . most have no idea on both types of investments . shares you get divs and you can write out of the money options 12 times a year   , this alone will out perform property hand over fist over a long period with absolutely no capital gain included . this arguement really is irrelevant in a way as there is no way to compare . but i know where my money is going in the main . property is all about lifestyle for me and any capital gains are a bonus . the people who make money from property day in day out will do just as well if not better using a share portfolio . its all about whats between the ears and has nothing to do with the asset class ...............


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## Wysiwyg (27 February 2011)

trainspotter said:


> Has anyone considered the REAL reason as to why houses are getting more expensive as time goes on is that no one wants to live in a 3 bedroom 1 bathroom sh1tbox anymore?
> Hello ??? Anyone? Please feel free to enlighten me.



Depends what economic class thou chooses or is born into really. If you're on 500 bucks per week then the box made of ticky tacky appears to be a mansion as opposed to paying rent (to the leeches or investment savvy pending on fence side). If you're 20 something and pulling in gorillas per week like it seems plenty are doing these days then Gold Coast beachfront is not out of the question and a great chick puller to boot.

Oh I forgot about inflation.


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## Wysiwyg (27 February 2011)

medicowallet said:


> Median does not take into account the size of the house etc, eg would you prefer the size of a 1980s house or a 2010s house?
> 
> There was considerable increase in house size from 2000 to 2010



 Not to mention the population of Oz has more than doubled in the last 50 years. But incredulously the number of dwellings in my home town has increased 10 fold. Location location! While one area booms another dies. Supply and demand forever and ever.


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## tech/a (27 February 2011)

FxTrader said:


> Well this has nothing to do with the volatility argument but since you bring this up, please do give some examples of where established residential property (the category most IP investors invest in) returned 1000% plus in 10 years.




Most suburbs.
I was buying 4 bedrooms for $90K in 1996 fo 89K and 20K down.
Sold one in 2006 for 312K thats 223K on my 20K.
One on the esplanade I still hold paid $90K now 620K nothing down just used equity. 




> True, depending on how you define experienced.




Able to generate consistent profit in both bull and bear markets in each vehical.




> Quite incorrect, there are so many examples.  Take TLS (a widely held, blue chip mom and pop stock), calculate it's 10 year return and report on those gains for me.
> 
> As for the question in your chosen graph, "Are Australian property prices cheap or in a bubble?"  while looking at a spike in a logarithmic plot, wow that's a tough question.  LOL




Sorry I wasn't including morons.

For what its worth if you cant positively gear property you shouldn't be buying it unless you understand Negative gearing and need it to minimize tax exposure.
Ive never been negatively geared although in the late 90s I was 85% geared.


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## againsthegrain (27 February 2011)

> One on the esplanade I still hold paid $90K now 620K nothing down just used equity




This is a unbiased question, but in 5 years time where roughly do you see the currently valued 620k property to be at?

For a person like me who owns no property would buying it for 620k today I make money selling to in 5 years time or just break even on inflation and interest?


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## Beej (27 February 2011)

FxTrader said:


> I am not comparing share price volatility with property price volatility, that is your obsession not mine, and a useless one I might add.




Well then I don't know why you bothered to respond to my original post on this topic, which was in direct response to the following claim made by medicowallet :



> However, I disagree that property is not as volatile as shares. In my opinion it is just as volatile on a day to day basis, it is just that the owners cannot see it and/or are naive to the concept.




Pretty confusing now what you are going on about then? But the relative volatility of aussie residential property vs aussie shares was very much the topic at hand that you jumped on.


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## wayneL (27 February 2011)

tech/a said:


> Most suburbs.
> I was buying 4 bedrooms for $90K in 1996 fo 89K and 20K down.
> Sold one in 2006 for 312K thats 223K on my 20K.
> One on the esplanade I still hold paid $90K now 620K nothing down just used equity.




While that's a nice return in anyone's language:

1/ That is a leveraged return akin to option spruiker's 1000% in 3 days or whatever.

2/ It takes no accounts of transaction, maintenance and holding costs.

Returns on property are a bit more opaque than bought for x and sold for y.

The actual return (though may be better or may be worse) will not reflect those simple buy sell numbers.


----------



## FxTrader (27 February 2011)

tech/a said:


> Most suburbs.
> I was buying 4 bedrooms for $90K in 1996 fo 89K and 20K down.
> Sold one in 2006 for 312K thats 223K on my 20K.
> One on the esplanade I still hold paid $90K now 620K nothing down just used equity




Hmm, ok so you sold an IP that you held for 14 years for a gross profit of $223k. What were your buying costs, selling costs, interest cost over 14 years, income after tax on rental and other costs including captital gains tax.  Then we can get better take on the actual annual return on your investment.

But let's say your total take was $200k after 14 yrs with only 20K down.  That's an annual return of 16.5% on your funds.  That is a very good result but let's say you put 20k into BHP 10 years ago, what would it be worth now.

The annual share holder return for BHP for the last 10 years, using no leverage, was 20%.  That's 20% with no borrowing, no tenants, very low buying and selling costs, no maintenance, no accounting hassles etc.

Sorry tech but you should have sold that IP 10 years ago, invested it in BHP shares and geared the portfolio by a conservative 50%.  Had you done that you would have outperformed your property purchase by a country mile.


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## tech/a (27 February 2011)

againsthegrain said:


> This is a unbiased question, but in 5 years time where roughly do you see the currently valued 620k property to be at?
> 
> For a person like me who owns no property would buying it for 620k today I make money selling to in 5 years time or just break even on inflation and interest?




Ill be pushing it over and building 3 Apartments on it.
They will go for around $800K each.
Development costs around $350-$400 each



> 1/ That is a leveraged return akin to option spruiker's 1000% in 3 days or whatever.




difference is I wasn't expecting it.
I would have been happy with 10% a year.



> 2/ It takes no accounts of transaction, maintenance and holding costs.




true but in the scope of things in THIS instance they had little baring.



> Returns on property are a bit more opaque than bought for x and sold for y.
> 
> The actual return (though may be better or may be worse) will not reflect those simple buy sell numbers.




True but the period was definitely the fastest bull run in my lifetime in property and I wont see another like it!

Still Ive lost far more in my life from selling property than if I had held it.

If I had held every property Ive sold Id be in fortune 500.(Not really but you get the idea)



> Sorry tech but you should have sold that IP 10 years ago, invested it in BHP shares and geared the portfolio by a conservative 50%. Had you done that you would have outperformed your property purchase by a country mile.




Well I didn't--- nor did you or anyone I know---but I have and continue to be involved in property all part of a much larger picture.
I'm not un happy and really Dont give a rats about what COULD be achieved.
I know what I have and am achieving---and its not that tardy.
But hey you guys argue infinitum.


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## Tysonboss1 (27 February 2011)

tech/a said:


> I ONLY work on interest only.
> Its all tax deductible so I make the most of it.
> I want as much free capital as possible for future opportunities and cash flow.




I understand that, It's just not the game I play. I used to be full interest only but I have changed my stratergy somewhat.


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## Tysonboss1 (27 February 2011)

medicowallet said:


> So what is the daily volatility of residential property?
> 
> Because each individual house is individual, how did my house value track monday to sunday last week?
> 
> ...




In my view and the way I invest it doesn't really matter what I can sell it for each day, and that is the same with the shares I own. The daily price movements mean very little. The changes in underlying value concern me more.


----------



## FxTrader (27 February 2011)

tech/a said:


> Well I didn't--- nor did you or anyone I know---but I have and continue to be involved in property all part of a much larger picture.
> I'm not un happy and really Dont give a rats about what COULD be achieved.
> I know what I have and am achieving---and its not that tardy.




Well your the one spruiking your returns here and inviting comparsion with return on shares yet when one does this you could'nt give a rats and are dismissive.  By the way, you have no idea what I did or did'nt do for the last 10 years with shares.  For the record though, if I only make 5%/month return on my investments on average in a year then I consider it a bad year these days.

No one said you should be dissatisfied with your returns as they are very good, but compared with shares and other derivative instruments they are only ordinary, like it or not.


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## Tysonboss1 (27 February 2011)

ginar said:


> they are so different , a properly run blue chip portfolio will make mince meat of the returns on property , of that there is no doubt . most have no idea on both types of investments . shares you get divs and you can write out of the money options 12 times a year   , this alone will out perform property hand over fist over a long period with absolutely no capital gain included .




Yes I know know the strengths and weaknesses of both asset classes very well. I have not been trying to make posts that start the tired old "shares vs property" arguements again.

I have been investing in the stockmarket since I was 14 and the property market since I was 20, I have built an investment operation that uses Property, shares and my own business ( along with some options ), that produces steady all weather returns. and I do this with next to no trading.

Look, anyone that says Property is better than shares is just as wrong as any body that says shares are better than property, In my opinion an investment operation that excludes either one is lacking. But it's your life so do whatever.

I don't care if people dismiss my thoughts or opinions, People can say what they like, But I am not 30 yet But I am in a position where I can retire on multiple passive income streams that don't require super high trading profits or anything unsustainable like that, My investment operation will survive any market crash (property or shares) and thrive in the after math. So I don't really care if some geek disaggrees with me.


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## Tysonboss1 (27 February 2011)

wayneL said:


> Returns on property are a bit more opaque than bought for x and sold for y.




Only if your using negatively geared debt,

For example If I purchased (debt free) $100K in 2000 and sold it for $300K in 2010, I can say that I made $200K, just as I could if I bought shares in the same ratio.

Offcourse you will say , but what about rates, maintaince, etc.etc. Well the rent more than covers that stuff, Infact only about 15% of the rent would go for that stuff, So by saying I earned $200K I have really under estimated the returns.

What makes it opaque is the leverage, but this ture with margin loans also.


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## medicowallet (27 February 2011)

Tysonboss1 said:


> In my view and the way I invest it doesn't really matter what I can sell it for each day, and that is the same with the shares I own. The daily price movements mean very little. The changes in underlying value concern me more.




Oh I agree totally, and I am a investor, as I am not a good trader.

But people who say that housing has less volatility, do not realise that the price definitely has lots of volatility, they are just not aware of the volatility on a day to day basis.

Which is one of the reasons why housing is a good investment for people who can't handle volatility, as imo, their naivety leads them to believe that their house is "stable" and their house is "different"

Nothing wrong with that, but to deny the volatility is to be unaware that prices do fluctuate (especially as the market for a single dwelling has massive volatility on a day to day basis).


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## Tysonboss1 (27 February 2011)

FxTrader said:


> Hmm, ok so you sold an IP that you held for 14 years for a gross profit of $223k. What were your buying costs, selling costs, interest cost over 14 years, income after tax on rental and other costs including captital gains tax.  Then we can get better take on the actual annual return on your investment.
> 
> But let's say your total take was $200k after 14 yrs with only 20K down.  That's an annual return of 16.5% on your funds.  That is a very good result but let's say you put 20k into BHP 10 years ago, what would it be worth now.
> 
> ...




Just because you allocate some capital into property does not mean you can't also allocate funds into shares. I tell you having about 50% of my funds invested in property certainly made the GFC alot less scary, and being able to lend against the properties without the fear of margin call and buying into the stockmarket certainly made the GFC fun.

Alot of people here advocate Buying gold as an inflation hedge and a store of value, They know it's not going to outperform Sound and expanding businesses ( except for some goldbugs that are just like over the top property bulls). But the are buying to protect against inflation and be some what safer because they are controlling it, they can hold etc.

Well this is how I see property, A safe investment when purchased at sensible levels, that just like gold will offer inflation hedgeing, But unlike gold it produces weekly income. Offcourse the property price can stagnate or fall, But so can gold and when you have positive cash flow weekly from rent, who cares what property values do, As a matter of faact you should be hoping that the fall.

Thats why I always say I don't care if property of shares fall in quoted value, thats what I hope for,


----------



## medicowallet (27 February 2011)

Tysonboss1 said:


> Just because you allocate some capital into property does not mean you can't also allocate funds into shares. I tell you having about 50% of my funds invested in property certainly made the GFC alot less scary, and being able to lend against the properties without the fear of margin call and buying into the stockmarket certainly made the GFC fun.




I am with Tyson on this one.

I also find cherrypicking shares with the benefit of hindsight quite amusing (even though BHP should have been in most people's portfolios over the past 10 years)

It is what makes this thread so interesting,

You have people who are 100% housing
You have people 100% shares

and people who are in between (of which I am one)

I would prefer to lose twice as often, but for less than to have all my eggs in one basket, it surely DOES help me sleep better when one of the 2 fails.

Oh, and they BOTH fail from time to time


----------



## FxTrader (27 February 2011)

medicowallet said:


> I also find cherrypicking shares with the benefit of hindsight quite amusing (even though BHP should have been in most people's portfolios over the past 10 years)




BHP was a conservative example, and I did not pick it with hindsight in mind, I could have chosen far more profitable stocks as an example.  None of the property bulls here want to discuss when property investment goes bad and wipes out the life savings of investors.  No, they only roll out the success stories so I do the same.  The property vs shares (or derivatives) debate is frankly a boring one for me, property investment performance never compares favorably with good stock selection nor should it, property is a conservative investment that yields comparatively lower returns.


----------



## Tysonboss1 (28 February 2011)

FxTrader said:


> The property vs shares (or derivatives) debate is frankly a boring one for me, property investment performance never compares favorably with good stock selection nor should it, property is a conservative investment that yields comparatively lower returns.




Yes it is a boring debate, so why start it. And yes property does yield lower returns and so it should, hence my original comment where I said I thought of my property investments as inflation hedged bonds, where you receive a steady, safe although low cash-flow while you principle over time is largely protected for loss in value due to inflation. Remember this does not mean property prices will not fall or stagnate, after all even government bonds can fall in value compared to their face value.


----------



## againsthegrain (28 February 2011)

> Well this is how I see property, A safe investment when purchased at sensible levels




*                      
...   x2


----------



## Tysonboss1 (28 February 2011)

againsthegrain said:


> *
> ...   x2




Sorry, I don't get what that means.


----------



## againsthegrain (28 February 2011)

Tysonboss1 said:


> Sorry, I don't get what that means.





times two


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## FxTrader (28 February 2011)

Tysonboss1 said:


> Yes it is a boring debate, so why start it.



I did not start it, but did participate since the IP spruikers here are so intent on bragging about their capital gains made on property they purchased 10+ years ago or flipped for speculative gain as if such gains are special by comparison with other assets.



> And yes property does yield lower returns and so it should, hence my original comment where I said I thought of my property investments as inflation hedged bonds, where you receive a steady, safe although low cash-flow while you principle over time is largely protected for loss in value due to inflation. Remember this does not mean property prices will not fall or stagnate, after all even government bonds can fall in value compared to their face value.



More unsubstantiated generalization and nonsense from a blinkered property bull.  Go and tell your tall tale of how safe, secure and inflation hedged property is to the millions of Americans, Japanese, Brits, Irish etc. who are bankrupt or broke as a result of such faith in property investment.  Sure, if you don't over leverage you can hang onto your cash flow positive IP in a crash, but your net worth on your balance sheet reflects that you have taken a hit from which, other than selling prior, you could not protect yourself from.  The lower returns available in the property market now do not reflect the risk being taken by IP investors.

Bonds rise and fall in tradeable value with interest rate movements, the yield does not change to the investor and the capital value does not change to maturity, a rather silly comparison to property I think.


----------



## tech/a (28 February 2011)

Why so aggressive 
There are 2 sides


----------



## explod (28 February 2011)

tech/a said:


> Why so aggressive
> There are 2 sides




Can understand it.

From my point a lot of ordinary good honest wager earners are hurting bad because of the home mortgage and with inflation kicking in now a bloodbath here in Australia is now coming.

The smugness of the property bulls has been hard to take, however a lot of them are also going to feel pain soon.  Some of the bias, that it cannot happen here borders on stupidity IMHO

Of course I know some of you are wonderful and will never be effected.  But it is your influence over the innocent that I do not like.

Real financial education and mentorship is sadly lacking.  "Keep em dumb so that we can skin em"


----------



## AlexG1 (28 February 2011)

FxTrader said:


> More unsubstantiated generalization and nonsense from a blinkered property bull.  Go and tell your tall tale of how safe, secure and inflation hedged property is to the millions of Americans, Japanese, Brits, Irish etc. who are bankrupt or broke as a result of such faith in property investment.




I think you are being more than a bit unfair and inflammatory here.  I for one have valued Tysonboss's contribution (certainly hope the grammar police will agree with my choice of forms for the possessive plural here).  From my evaluation of his posts as a whole he's certainly not a property bull.  He's merely pointed out that carefully chosen property can be a good safe investment over a long time frame (and assuming you are not forced to sell in a trough - that's my reading between the lines rather than a quote).

Problem with email is that it's a block of thoughts in text and does not allow for the cut and thrust of spoken conversation.  Additionally you don't get the body language feedbacks.  It's pretty difficult to present a completely seamless argument on paper especially if you don't want to write 20 pages.  So you often make an assumption that a reader will understand where you are coming from and gloss over certain detail.  When the reader is coming from a completely different place or looking for a fight then it's pretty easy for something to be bent out of shape.   My point is it's easy to misinterpret what people mean.

Anyway - back on thread - my thoughts on property are as follows.  If you buy it at a good price then it is a very good bet that it will at least match inflation.  It's an essential item as has been pointed out by others - people need to live somewhere.  Further to this point - it's completely tangible.  There is no management team influencing the quality of the asset.  WOW is a company that also deals in essential items and would therefore also be considered a reasonably safe investement (but it can also be overpriced).  However, it would be quite possible to get a stupendously awful management team in place that would severely damage the underlying value.

There's loads of potential 'holes' in what I am posting there but I'm hoping that people can see the general point...

Finally, I believe that investing in property in the current market is over valued (based on the levels of debt, the potential slowdown in the resources boom, and the high median value compared to median salary) and a disaster if you leverage to the point where you may be forced to sell.  If property does crash - I'll be in there like a shot.  If it doesn't crash and stagnates for a few years I'll be in then (I already own a PPOR).  If it just goes up forever, then I made a bad investment decision.  I prefer to preserve capital and miss an opportunity I am uncomfortable with.  There will be other opportunities that I am comfortable with.

AlexG.


----------



## schnootle (28 February 2011)

explod said:


> Can understand it.
> 
> From my point a lot of ordinary good honest wager earners are hurting bad because of the home mortgage and with inflation kicking in now a bloodbath here in Australia is now coming.
> 
> ...




Well said. 

I think a key factor in this thread is that people that have made significant money out of property are the Bulls and the ones that haven't are the Bears - both are very biased positions.  I would like to here from the people that have made lots of money from property before and who think it is now doomed, and also people with no property that are bullish and keen to get in - I reckon these are the minority.

I think it all needs to get back reality personally. All this talk on the news about people panicking that electricity prices are going to go up $300 a year because of a carbon tax and how it is going to push families to the wall is stupid. how many orders of magnitude more that that do people pay on their mortgages? Mortgages are going to push families to the wall, not a carbon tax.


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## Dowdy (28 February 2011)

If you're talking about an inflation hedge, how come no one has mentioned gold/silver bullion.

It's been historically (throughout the world) the best inflation hedge. The only downside is that you don't earn dividends but you don't need them at the current growth levels. 

A kilo of silver bought in 2008 was around $550-600. Now in 2011, it's $1000-1400. Property is at an all time high and yet silver still hasn't reached it's high (even with inflation) from the 1980's


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## AlexG1 (28 February 2011)

Interesting analysis of the Canadian market with parallels to the Oz market here

http://macrobusiness.com.au/2011/02/will-canadas-housing-market-be-the-next-to-fall/


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## KurwaJegoMac (28 February 2011)

tech/a said:


> Why so aggressive
> There are 2 sides






explod said:


> Can understand it.




While you may agree with his point of view, it doesn't justify the need to be so aggressive. Take your post for example - you present a view similar to FXTrader but you don't arch up like a cat trapped in a corner the moment someone disagrees with your opinion. 

I think AlexG1's entire post sums it up nicely.



AlexG1 said:


> Problem with email is that it's a block of thoughts in text and does not allow for the cut and thrust of spoken conversation.  Additionally you don't get the body language feedbacks.  It's pretty difficult to present a completely seamless argument on paper especially if you don't want to write 20 pages.  So you often make an assumption that a reader will understand where you are coming from and gloss over certain detail.  When the reader is coming from a completely different place or looking for a fight then it's pretty easy for something to be bent out of shape.   My point is it's easy to misinterpret what people mean.




So well said and so very true. It's dead easy to selectively quote a single line and conveniently ignore the entire piece - then bend the quote out of shape, imply something else and then rip it to shreds.

Anyway this thread is starting to get spammed by "Asset class X is better than property for reasons y". These sorts of conversations have been done to death in the past - this thread is on AUSTRALIAN PROPERTY so how about we all get back on topic and please no talk of fx or shares being a better investment. Post that in a Property vs Shares thread - plenty of those around. 


-------


On a side note:



AlexG1 said:


> I for one have valued Tysonboss's contribution (certainly hope the grammar police will agree with my choice of forms for the possessive plural here).




That is the correct form for the possessive plural as the name ends with an s 



Smile everyone! Today is a beautiful day


----------



## Beej (28 February 2011)

Dowdy said:


> If you're talking about an inflation hedge, how come no one has mentioned gold/silver bullion.
> 
> It's been historically (throughout the world) the best inflation hedge. The only downside is that you don't earn dividends but you don't need them at the current growth levels.
> 
> A kilo of silver bought in 2008 was around $550-600. Now in 2011, it's $1000-1400. Property is at an all time high and yet silver still hasn't reached it's high (even with inflation) from the 1980's




Gold has been a terrible inflation hedge from 1980 for 20 whole years up until about 2000! It's only been a good investment for the last 5-10 years IF you were hedging $US. If you are/were trying to inflation hedge your AUSTRALIAN dollars, it hasn't even worked very well in the last few years - value of gold in $AU is a hundred dollars or more off it's peak a couple of years ago. Timing/luck of purchase would have been critical.

http://goldprice.org/gold-price-history.html#20_year_gold_price

http://goldprice.org/charts/history/gold_10_year_o_aud.png

EDIT: I don't mean to start a gold-flame war or anything here, and I am not saying Gold/Silver etc cannot be great investments, and certainly they can be traded a number of ways including through the futures markets etc which can have many advantages. POG may well rise a lot from here (or it may not!). I'm just arguing that especially in Australian dollars the "inflation hedge" argument does not stand up to much scrutiny. Maybe it's more of a speculative/directional commodoties play with the bonus of being a doomsday/Mad Max hedge??


----------



## financialdonk (28 February 2011)

tech/a said:


> I ONLY work on interest only.
> Its all tax deductible so I make the most of it.
> I want as much free capital as possible for future opportunities and cash flow.




Tech, what have you done in the intervening period from when you were last facing financial turmoil to safeguard yourself against it happening again?  And if safeguarding is not something you exercise in order to maximise your returns, roughly what % chance would you place on yourself facing personal economic ruin again?


----------



## tech/a (28 February 2011)

financialdonk said:


> Tech, what have you done in the intervening period from when you were last facing financial turmoil to safeguard yourself against it happening again?  And if safeguarding is not something you exercise in order to maximise your returns, roughly what % chance would you place on yourself facing personal economic ruin again?




Good question.
Since a few here forget (Didnt know) Ive faced the street 2wice in this interesting life.
So what Have I done to minimise the chance of riun this time that I hadnt considered or implemented (Some due to circumstance) on the other 2 occasions.

(1) My income is way way in excess to that which I had available in the 80s.
10-15x,but is also much more diverse. I only had one income stream than I now have 3
Freehold asset backing is infinately more now than then---when I look back I really was a cowboy!---but wow was it a rush!---learnt more from severley stuffing up than from getting it right. (Went from $4.5 mill net worth to $5K in the bank and no house---wife kids---skeleton of a business and a heap of misery!!)
(2) I have reduced debt and increased freehold asset.
(3) Everything I have is positively cashflowed and without increasing rents (which are way way overdue) and will remain so to 12%
(4) I understand risk and cashflow to a far greater degree and have actually implemented (In the above) safeguards.
(5) I have specialised in Growth areas at end of freeways and rail lines.
and Esplanade property---neither has seen lack of demand---yet.
(6) I still continue to grow the portfolio while decreasing debt. (IE Develop 3 and sell 2)
which brings back to (1) which allows this.

Ruin
Its a possibility as the whole world could be in ruin.
But in general terms I dont think so.
Nett wealth could be severely depleated but relative to all of us still livable.
It would also only be temporary---things recover just as they collapse.


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## financialdonk (28 February 2011)

AlexG1 said:


> I think you are being more than a bit unfair and inflammatory here.  I for one have valued Tysonboss's contribution (certainly hope the grammar police will agree with my choice of forms for the possessive plural here).  From my evaluation of his posts as a whole he's certainly not a property bull.  He's merely pointed out that carefully chosen property can be a good safe investment over a long time frame (and assuming you are not forced to sell in a trough - that's my reading between the lines rather than a quote).
> 
> Problem with email is that it's a block of thoughts in text and does not allow for the cut and thrust of spoken conversation.  Additionally you don't get the body language feedbacks.  It's pretty difficult to present a completely seamless argument on paper especially if you don't want to write 20 pages.  So you often make an assumption that a reader will understand where you are coming from and gloss over certain detail.  When the reader is coming from a completely different place or looking for a fight then it's pretty easy for something to be bent out of shape.   My point is it's easy to misinterpret what people mean.
> 
> ...




Post more please.  Thankyou for the reasoned and articulate points.


----------



## Dowdy (28 February 2011)

Beej said:


> Gold has been a terrible inflation hedge from 1980 for 20 whole years up until about 2000! It's only been a good investment for the last 5-10 years IF you were hedging $US. If you are/were trying to inflation hedge your AUSTRALIAN dollars, it hasn't even worked very well in the last few years - value of gold in $AU is a hundred dollars or more off it's peak a couple of years ago. Timing/luck of purchase would have been critical.
> 
> http://goldprice.org/gold-price-history.html#20_year_gold_price
> 
> ...




Like I said it's an inflation hedge, not a long term hold. When gold reached a high in the 1980 it was when inflation was out of control, during the s&l crisis - when interest rates were 17%, so yes it was a great inflation hedge back then aswell.

I don't plan to keep my silver until I retire.


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## Dowdy (28 February 2011)

tech/a said:


> It would also only be temporary---things recover just as they collapse.





Not if the world is doing what Japan did in the 1990, considering it's been in stagflation for 20 years and last time I checked, the world is doing exactly what Japan did


----------



## nunthewiser (28 February 2011)

yep sunshine and lollipops brothers..



> Perth house prices have continued their dive, dropping another 1.6 percent in January according to new figures out today.
> 
> The RP Data-Rismark measure of prices showed the median price in Perth slipped to $480,000 last month to be down 2.3 percent over the past quarter and 4.3 percent over the last year.
> 
> ...


----------



## financialdonk (28 February 2011)

tech/a said:


> (5) I have specialised in Growth areas at end of freeways and rail lines.
> and Esplanade property---neither has seen lack of demand---yet.
> which brings back to (1) which allows this.




I'm not sure where you are based (Adelaide?), but being from WA myself the growth surrounding the north/south freeways has been phenomenal since I moved to Perth to study in 2003.  Besides the obvious access it provides to the CBD, it is also positioned relatively close to the coast. For some reason unbeknown to me, people continue to pursue a policy of trading distance from CBD (effectively work) for their own house and garden.  Is this something that can continue into the foreseeable future?  Or was it a medium term event not too be repeated again until fundamental and vast changes to transport infrastructure occur (think high speed rail)?

Will Australians ever willingly accept highly dense big urban living akin to Western Europe/Japan/States in it's largest cities?  And if they do what effect will this have on outlying property prices?

(Not expecting you to take on the burden of answering all those questions Tech - more of a general question to the entire thread's participants)


----------



## tech/a (28 February 2011)

financialdonk said:


> I'm not sure where you are based (Adelaide?), but being from WA myself the growth surrounding the north/south freeways has been phenomenal since I moved to Perth to study in 2003.  Besides the obvious access it provides to the CBD, it is also positioned relatively close to the coast. For some reason unbeknown to me, people continue to pursue a policy of trading distance from CBD (effectively work) for their own house and garden.  Is this something that can continue into the foreseeable future?  Or was it a medium term event not too be repeated again until fundamental and vast changes to transport infrastructure occur (think high speed rail)?
> 
> Will Australians ever willingly accept highly dense big urban living akin to Western Europe/Japan/States in it's largest cities?  And if they do what effect will this have on outlying property prices?
> 
> (Not expecting you to take on the burden of answering all those questions Tech - more of a general question to the entire thread's participants)




opps sorry.


----------



## explod (28 February 2011)

Beej said:


> Gold has been a terrible inflation hedge from 1980 for 20 whole years up until about 2000! It's only been a good investment for the last 5-10 years IF you were hedging $US.




Depends on the time frame Beej.   My first home in 1971 cost $10,000.  The same place today would cost $350,000  ...up 35 times

An ounce of gold in 1971 was $35 and today it is $1,400.......up 40 times

But if you are a trend follower, i.e you move your money to the best growth then a good mix of them all at the right times will beat them all.

This thread gets bogged down by who knows most and what is best.  We are supposed to be looking at where the price of property is heading from here *today*.

History is a help if we look at all of it but that breaks down too because many do not consider that the great depression, for example, could ever happen again.

,


----------



## medicowallet (28 February 2011)

http://www.theage.com.au/business/home-prices-sag-as-demand-sapped-by-floods-20110228-1ban2.html

"National city home values slumped 1.6 per cent, seasonally adjusted, to $465,000 after rising 0.2 per cent in December, according to RP Data-Rismark figures. Outside cities, they declined 1.2 per cent in the month.

The 1.6 per cent decline was the largest since 2005 when the index began, RP Data's research director Tim Lawless said.

Advertisement: Story continues below Home prices in Brisbane slumped 2.3 per cent in the three months to January, while they fell 1.9 per cent in Melbourne over that period. Prices fell 3.8 per cent in Canberra, 1.4 per cent in Sydney, 1.3 per cent in Adelaide and 2.6 per cent in Perth. Hobart bucked the trend, rising 0.6 per cent over the three-month period"

So I guess that the highly leveraged property investor saw returns well in excess of 1.6%, what, probably 15%?

Well that doesn't sound like a good quarter to me, pity the average "punter" has no idea of this VOLATILITY, as their house is "different"


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## Tysonboss1 (28 February 2011)

explod said:


> Depends on the time frame Beej.   My first home in 1971 cost $10,000.  The same place today would cost $350,000  ...up 35 times
> 
> An ounce of gold in 1971 was $35 and today it is $1,400.......up 40 times
> 
> ...




Now plus the rental return on the house and minus storage costs of the gold and see where you are at.


----------



## Tysonboss1 (28 February 2011)

AlexG1 said:


> Finally, I believe that investing in property in the current market is over valued (based on the levels of debt, the potential slowdown in the resources boom, and the high median value compared to median salary) and a disaster if you leverage to the point where you may be forced to sell.  If property does crash - I'll be in there like a shot.  If it doesn't crash and stagnates for a few years I'll be in then (I already own a PPOR).  If it just goes up forever, then I made a bad investment decision.  I prefer to preserve capital and miss an opportunity I am uncomfortable with.  There will be other opportunities that I am comfortable with.
> 
> AlexG.




I agree with the basic outline of your thoughts, Property atleast the ones I own and areas I have looked at buying are more expensive now when compared to levels I was buying at prior to 2004 when compared to the rental return earned. If a crash brought the price down or stagnation kept the prices on hold while rental returns grew I would look at buying.

the basic formula I use ( and it's subject to different styles of property) is

Annual rental return x 0.85 (to allow for rates maintaince etc) X 22.5 = the highest price I can pay.

In 2001 in brisbane these type of properties were every where, now they are not.

The first house I bought was on a mulitple of just over 19, But brisbane had gone through a long period of stagnation through the 90's.

The first house I bought was for $218,000 in 2001. since rental increase ove the years if I were to buy it on a multiple of 22.5 i couldn't pay more than $422,662 but it could sell now for closer to $480,000 - $500,000. So I would say it is over valued, when I do my rental increases in march the estimated IV will go up a bit but it will still be somewhere between 10% - 20% over it's estimated IV.

So there is a bit of froth in the market, Atleast in my opinion based on the valuing mechinisms I use. But you can see anybody that believe that the capital gain experianced in the last 10years is a speculative bubble are a little bit out of touch, Yes the sale value of my first house has risen from $218,000 to over $480,000, but the IV value based on rental return has also increased a whole bunch, So even if there was a "crash", to expect falls larger than 10% is a little crazy, Offcourse it is not immpossible, But if it were to happen it should not be somthing to fear it should be thought of as a wonderful opportunity.

But as I said I am not holding my breath, Stagnation is the most likly outcome, with maybe 5%-10% declines in some areas.

But hey I am not prophit, I am just saying what is rational based on valuations of earning power, MR market can do anything


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## medicowallet (28 February 2011)

Tysonboss1 said:


> the basic formula I use ( and it's subject to different styles of property) is
> 
> Annual rental return x 0.85 (to allow for rates maintaince etc) X 22.5 = the highest price I can pay.
> 
> In 2001 in brisbane these type of properties were every where, now they are not.




I like the use of the formula, but don't despair, it will no doubt become much easier to purchase a house in brisbane over the next couple of years as their prices continue to fall.


----------



## Wysiwyg (28 February 2011)

explod said:


> Depends on the time frame Beej.   My first home in 1971 cost $10,000.  The same place today would cost $350,000  ...up 35 times
> 
> An ounce of gold in 1971 was $35 and today it is $1,400.......up 40 times




Hi Explod. Just pointing out to viewers the obvious 'inflation' factor isn't considered here. According to the RBA inflationary calculator, 10k in 1971 would now have the purchasing ability of 92k using an average annual rate of 5.9%. So an increase in inflation adjusted terms to 350k is around 3.8 times.


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## Tysonboss1 (28 February 2011)

Wysiwyg said:


> Hi Explod. Just pointing out to viewers the obvious 'inflation' factor isn't considered here. According to the RBA inflationary calculator, 10k in 1971 would now have the purchasing ability of 92k using an average annual rate of 5.9%. So an increase in inflation adjusted terms to 350k is around 3.8 times.




Yes, Indeed. What you have noticed is in the past 30years property values have grown faster than inflation, this is due to a number of factors.

- growth in housholds ( there is more households due to population growth, more single parent families and single person house holds) this puts upward pressure on land prices as we all keep trying to squeeze into the capital cities.

- Better more expensive homes, The average house has more mod cons these days

Property Prices would only match inflation perfectly if the number of house holds remained the same, growing population obviously puts upward pressure on land prices as you knock down houses and build apartments, those who want to live in a house on land are forced to pay higher prices as over time the population grows and number of houses close to the city declines.

They can move further out to outlining suburbs and it will be cheaper but again it would be putting upward pressure on prices out there.

I know there are people on this thread that do not believe land prices can ever outpace inflation or wages not matter how large the population or how dense the dwellings get, But I am not intersted in that arguement, I have been there and done that multiple times on asf.

All I will say is that the price of land will increase faster than inflation if the population density keeps increasing. for example the house block that sold as a median family home in parramatta in the 60's is worth much more than the inflation adjusted price when a developer wants to put a 10story apartment on it.

And as we keep knocking down these family homes more and more people are forced to out bid each other for the remaining un affected neighborhoods, So the price will grow faster than inflation, and the poor people live in apartments and these apartments must stay in certain limits as decided by wages, but the land they were built on will not.


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## sinner (28 February 2011)

Tysonboss1 said:


> Yes, Indeed. What you have noticed is in the past 30years property values have grown faster than inflation, this is due to a number of factors.
> 
> - growth in housholds ( there is more households due to population growth, more single parent families and single person house holds) this puts upward pressure on land prices as we all keep trying to squeeze into the capital cities.
> 
> ...




Demand without credit availability is no demand at all.

Hence, all your above points would be meaningless without an abundance of cheap cheap credit.


----------



## Tysonboss1 (28 February 2011)

sinner said:


> Demand without credit availability is no demand at all.
> 
> Hence, all your above points would be meaningless without an abundance of cheap cheap credit.




interest rates go up, interst rates go down. credit lossens, credit tightens. Over time it all balances out.


----------



## sinner (28 February 2011)

Tysonboss1 said:


> interest rates go up, interst rates go down. credit lossens, credit tightens. Over time it all balances out.




Except, when it doesn't.
Global credit has been on a 10 year downtrend in cost since Alan Greenspan opened the money spigot 12th Sept 2001. Credit was cheaper everywhere including and especially Australia (what is the correlation between interest rates for Aus and US since 2001? - I dare you to check). So um yeah...it probably will balance out, by going back to the way it was at some point, but I'm pretty sure that's not what your dismissive statement meant. The point is all your above premises are based on the recency bias of cheap available credit, nothing more.

You just can't bid up more than the next guy if the bank isn't offering to loan you more money than the next guy. It's simple maths. As a country we just aren't rich enough to be bidding assets up using cash. We use credit. Therefore, once the credit is no longer cheap and easy there will be less idiots bidding up more than the last guy "before they miss out".


----------



## Junior (28 February 2011)

Tysonboss1 said:


> Now plus the rental return on the house and minus storage costs of the gold and see where you are at.




_Plus _Rental Income

_Less _ Interest
Maintenance
Rates
Land Tax
Agent Fees
Legal Fees
Renovation/Building costs  (you've had this property for 40 years, so may have had to rebuild or renovate)


----------



## sinner (28 February 2011)

Tysonboss1 said:


> Now plus the rental return on the house and minus storage costs of the gold and see where you are at.




So you can clock the yield on a house but not yield on gold? 

Nope, wrong.

http://www.kitco.com/lease.chart.html


----------



## Dowdy (28 February 2011)

Now the RBA admits there is a bubble....




> RESERVE Bank board member Warwick McKibbin has warned that *Australia is being caught up in a global bubble that could hit us much harder than the global financial crisis* and expose the weaknesses of Labor's economic settings.
> Professor McKibbin told The Australian *the bubble in global commodity prices and property markets in Asia threatened to dwarf the US housing market bubble that led to the GFC in 2008.*
> He warned that the *inevitable* bursting of the bubble would reverse the surge in Australia's record high terms of trade, push down the dollar and leave the Reserve Bank struggling to fight off rising global inflation pressures.
> *"This is shaping to be much bigger than 2004 to 2007," he said in comparing the new excess of global liquidity with the global financial bubble that led to the worst global financial crisis since the 1930s.*
> ...


----------



## Tysonboss1 (28 February 2011)

sinner said:


> You just can't bid up more than the next guy if the bank isn't offering to loan you more money than the next guy. It's simple maths. As a country we just aren't rich enough to be bidding assets up using cash. We use credit. Therefore, once the credit is no longer cheap and easy there will be less idiots bidding up more than the last guy "before they miss out".




You can if you are out  bidding the "next guy", because your going to build 10 apartments and sell them to ten other "next guys", at rates that can be afforded when compared to average wages.

It is simple and mathamatically true that eventually, If density keeps growing in any given city the average guy can not afford to own a house and land package, and the average home must become higher density eg. town houses or apartments, and the big family home on a 1/4 acre will become the realm of the high income earner, and if the average guy trys through the usage of debt, he will get burned when the wind changes.

As I said, the price of accomadation or dwelling or the family home (insert whatever term you like) must stay in the realms of what can be afforded by the average wage, and this may be subject to flucuations, But what I was commenting on was that the price of land can outpace inflation if the density of the dwelling keeps increasing due to population growth.

But as I said, I am not getting into an arguement, feel free to make your point. I will aggree to disaggree.

After all time will tell and we don't all have to aggree, things either happen or they don't.


----------



## Tysonboss1 (28 February 2011)

Junior said:


> _Plus _Rental Income
> 
> _Less _ Interest
> Maintenance
> ...




OMG!!!! there we go again  

People always bring leverage into the discussion when talking about property, but fail to apply leverage to the other assett class.

as I said a million times, If you use leverage in the property example you have to use it in the gold example, Now I can tell you if you leveraged into gold 40 years ago since it produces no income you would be well and truely under water. But the property with all the costs mentioned would still be well in the black.

The rent more than covers the cost of maintaince and rates etc, as I said those costs are only about 15% of the rent collected.

If you did want to use leverage during that time, It would not have been a negative to the operation it would have increased the return of the property portfolio compared to gold.


----------



## Tysonboss1 (28 February 2011)

sinner said:


> So you can clock the yield on a house but not yield on gold?
> 
> Nope, wrong.
> 
> http://www.kitco.com/lease.chart.html




To be honest I had never heard of leasing gold, But after a bit of quick reading it seems it is in the territory of large central banks leasing 1000's of ounces to other central banks and charging amounts less than 1% p/a, one eample I saw was 0.1%.  I am open for correction though.


----------



## tothemax6 (28 February 2011)

Tysonboss1 said:


> as I said a million times, If you use leverage in the property example you have to use it in the gold example, Now I can tell you if you leveraged into gold 40 years ago since it produces no income you would be well and truely under water.



Yeah true, it only works during periods of negative real interest rates.


----------



## mazzatelli (28 February 2011)

mazzatelli said:


> In an inflation hedging context, is this assuming the property has been bought with cash or credit-based?






Tysonboss1 said:


> I was comparing holding $300K in property rather than say a term deposit.
> As mentioned above debt is a separate topic.




I am not referring to a cash vs. property debate for inflation hedging, as in general the majority of real assets will outperform cash.

I am asking:
1) Is property the best tool for hedging inflation and;
2) If so, which is better - property financed with cash or credit?


----------



## ginar (28 February 2011)

Tysonboss1 said:


> Yes I know know the strengths and weaknesses of both asset classes very well. I have not been trying to make posts that start the tired old "shares vs property" arguements again.
> 
> I have been investing in the stockmarket since I was 14 and the property market since I was 20, I have built an investment operation that uses Property, shares and my own business ( along with some options ), that produces steady all weather returns. and I do this with next to no trading.
> 
> ...




another figjam character , well mate im not exactly poor , im well north of 30 and im certainly no geek . once again i find this cyber world full of utter gentleman  . nothing youve said had adressed any of my opinions but then again i rarely expect that from anyone . another thread that has trully wasted my oxygen . carry on


----------



## Agentm (28 February 2011)

doesnt matter how you see it..

its a friggen bubble

8 - 9 time income is a bubble

invest in it at your peril imho.. but dont deny what a bubble is..


----------



## Bill M (28 February 2011)

Tysonboss1 said:


> The rent more than covers the cost of maintaince and rates etc, as I said those costs are only about 15% of the rent collected.




And in my case I spend about 35% on out goings but that is because it's a unit with high quarterly levys. 

Also the Residential Tenancies Act 2010 (NSW) is now in force as of 31 Jan 2011. A few more expenses have come into force. Premises now must be water efficient if tenants are to pay for water usage. Also now we have to have a certificate from a smoke alarm service company to show our place complies with the laws. I now pay $99 per year for unlimited service for my smoke alarms.

So yes we landlords still make money even after all the bills and the best part is that it's one of my easiest investments ever. The rent just drops into my account Month after Month after Month. Sure it isn't a stellar performance rent wise but it is a very safe and secure investment. By the way since NOV 2007 *the sharemarket is still over 30% BACKWARDS! * Most super funds are still no where near pre GFC amounts but Aussie property just keeps plodding along.


----------



## Tysonboss1 (28 February 2011)

Bill M said:


> And in my case I spend about 35% on out goings but that is because it's a unit with high quarterly levys.
> 
> Also the Residential Tenancies Act 2010 (NSW) is now in force as of 31 Jan 2011. A few more expenses have come into force. Premises now must be water efficient if tenants are to pay for water usage. Also now we have to have a certificate from a smoke alarm service company to show our place complies with the laws. I now pay $99 per year for unlimited service for my smoke alarms.
> 
> So yes we landlords still make money even after all the bills and the best part is that it's one of my easiest investments ever. The rent just drops into my account Month after Month after Month. Sure it isn't a stellar performance rent wise but it is a very safe and secure investment. By the way since NOV 2007 *the sharemarket is still over 30% BACKWARDS! * Most super funds are still no where near pre GFC amounts but Aussie property just keeps plodding along.




35% is really really high mate, Are you charging market level rent. Don't be afraid of raising the rent, those extra costs need to be pasted on to the customer. I raise the rent on my properties every year with out fail.


----------



## Bill M (28 February 2011)

Agentm said:


> doesnt matter how you see it..
> 
> its a friggen bubble
> 
> ...




What? Average salary in OZ is around 64K per year. LINK HERE 

and you can still buy a cheap old small house just 1 hour north of sydney for 210K. 
For a starter that's darn cheap!

Link to Cheap House


----------



## Bill M (28 February 2011)

Tysonboss1 said:


> 35% is really really high mate, Are you charging market level rent. Don't be afraid of raising the rent, those extra costs need to be pasted on to the customer. I raise the rent on my properties every year with out fail.




Yes I am, joints worth around 400K and I am charging $420 per week so I'm right up there. Won't put it up this year, bloody agents want a weeks rent up front if I change tenants, so better keep the ones I have. I haven't had any repairs in 18 Months so will look after them.


----------



## Tysonboss1 (28 February 2011)

ginar said:


> another figjam character , well mate im not exactly poor , im well north of 30 and im certainly no geek . once again i find this cyber world full of utter gentleman  . nothing youve said had adressed any of my opinions but then again i rarely expect that from anyone . another thread that has trully wasted my oxygen . carry on




Just letting people know where my opinions are coming from, It seems as soon as you make a comment on this thread that says anything other than property is a stupid investment and is about to crash 40% you get labeled  as a Dim witted, overleveraged,  property speculater, that knows nothing about any other asset class, and is fighting a weekly battle against the huge negative cashflows,


----------



## Tysonboss1 (28 February 2011)

Bill M said:


> Yes I am, joints worth around 400K and I am charging $420 per week so I'm right up there. Won't put it up this year, bloody agents want a weeks rent up front if I change tenants, so better keep the ones I have. I haven't had any repairs in 18 Months so will look after them.




Thats an ok yield, Your body corps must be really high. Thats part of the reason I have always avoided units.


----------



## Bill M (28 February 2011)

What area do you invest in Tyson? Do I recall Brisbane or am I wrong, I'm getting old?


----------



## medicowallet (28 February 2011)

Tysonboss1 said:


> The rent more than covers the cost of maintaince and rates etc, as I said those costs are only about 15% of the rent collected.




$450k house with 2 bathrooms rent $400 per week
approx 20k per year


Replace bathrooms and kitchen every 10-15 years

200000-300000 rent

= $30k replacement for kitchen and bathrooms.

So I think 15% is very conservative.  Have you owned property for more than 10 years?


----------



## Wysiwyg (28 February 2011)

Bill M said:


> and you can still buy a cheap old small house just 1 hour north of sydney for 210K.
> For a starter that's darn cheap!
> 
> Link to Cheap House



Hey Bill Gorokan is in a great location being a short 7 klm from the ocean (Tasman Sea), right on Lake Tuggerah/Budgewoi and about 20 klm from State Forest. Note the aerial behind the house indicates a fair distance to transmitters or a low lying area.


----------



## Tysonboss1 (28 February 2011)

Bill M said:


> What area do you invest in Tyson? Do I recall Brisbane or am I wrong, I'm getting old?




Yeah, All my properties are in Brisbane, Thats where I grew up. Moved to sydney but I still thought I knew the brisbane market better, so thats where I invested.


----------



## nunthewiser (28 February 2011)

medicowallet said:


> So I think 15% is very conservative.  Have you owned property for more than 10 years?




The question should be.

Do they even own property?

Not just PPOR i mean I.P and industrial as many have claimed...... i personally have a different set of numbers that havent been gleened from some guru real estate book.

not meaning to offend anyone just bored with a whole crock of crap that gets fed here daily......

i should sell buckets i reckon.


----------



## Tysonboss1 (28 February 2011)

medicowallet said:


> $450k house with 2 bathrooms rent $400 per week
> approx 20k per year
> 
> 
> ...




The banks recommend 20%, hence why they use 80% of the rental yield in their calculations, but it my experiance 15% has more than covered my costs

I bought my first property in 2001 so just on 10 years since I bought it, But it was built in 1993 and still have the original kitchen and bathroom, budjeting to replace the kitchen and bathroom every 15years is over the top.

You just have to keep things tidy as you go along, you would be amazed at what a coat of paint and replacing a few key fixtures can achieve.


----------



## Tysonboss1 (28 February 2011)

nunthewiser said:


> not meaning to offend anyone just bored with a whole crock of crap that gets fed here daily......




You can always just block me if my comments upset you.


----------



## nunthewiser (28 February 2011)

Tysonboss1 said:


> You can always just block me if my comments upset you.




Nah not upset .....just bored....

Mind you i suppose i shouldnt complain...its always enlightening to see how the "experts" show how its done in theory.

cheers


----------



## RandR (28 February 2011)

Tysonboss1 said:


> The banks recommend 20%, hence why they use 80% of the rental yield in their calculations, but it my experiance 15% has more than covered my costs
> 
> I bought my first property in 2001 so just on 10 years since I bought it, But it was built in 1993 and still have the original kitchen and bathroom, budjeting to replace the kitchen and bathroom every 15years is over the top.
> 
> You just have to keep things tidy as you go along, you would be amazed at what a coat of paint and replacing a few key fixtures can achieve.




I agree with Tysonboss here, what sort of crazy nutter replaces bathrooms or kitchens every 10 years ? I dont even own a property (yet being a tradesman know a thing or two about reno) and thats just crazy talk.

I think people throughout this thread have been misinterpreting his comments.

In the past two weeks i have been to 13 open houses, within the area of the southern extremities of brisbane and around logan, we have seen practically nobody but ourselves and the agents at most of them, the market seems to be very, very slow atm. But more then understandable considering the events that have taken place in Brisbane and Queensland so far this year. Only time will tell this year what happens to the property market. Both my partner and i think this will be an interesting year for property in aus.

We are looking for a PPOR. We are an average income couple (combined income approximately 100,000, as we are both 22-23) Yet the property's we are looking at are perfectly affordable. Looking to purchase around the 300 - 350 mark, with a mortgage of around 250k. 

I have budgeted and calculated that we are able to have this mortgage repaid in less then 7 years if we choose to. (if we dont have kids and dont take extravagant holidays). 

Honestly if anyone my age tells me property is not affordable for them i feel like slapping them in the head, its entirely affordable to buy a decent first house on a decent block of land. 

However its just not affordable to have a mcmansion in an inner city suburb with a jet ski and a brand new car and an iphone 4. Which is what everyone my age seems determined to try to leverage themselves into, and then will assuredly cry foul "omgz property is tooo expensive the guvarmant should help uz"!!!


----------



## white_goodman (28 February 2011)

RandR said:


> We are looking for a PPOR. We are an average income couple (combined income approximately 100,000, as we are both 22-23) Yet the property's we are looking at are perfectly affordable. Looking to purchase around the 300 - 350 mark, with a mortgage of around 250k.




try getting same house in Sydney, Melb in similar areas.. I earn a great salary yet still live at home, your looking at 400k minimum for a ****ty apartment down here in Sydney


----------



## Tysonboss1 (28 February 2011)

white_goodman said:


> try getting same house in Sydney, Melb in similar areas.. I earn a great salary yet still live at home, your looking at 400k minimum for a ****ty apartment down here in Sydney




http://www.realestate.com.au/property-unit-nsw-liverpool-106653137

Come on ****ty apartments sell for less than $400K. look at the link above


----------



## Bill M (28 February 2011)

Tysonboss1 said:


> Yeah, All my properties are in Brisbane, Thats where I grew up. Moved to sydney but I still thought I knew the brisbane market better, so thats where I invested.



Yeah, you are right about the levys, they're a bit rich. Reason I asked was that I couldn't buy a house in Sydney for 400k hence the unit and those levys. Brisbane sounds good. 


RandR said:


> I agree with Tysonboss here, what sort of crazy nutter replaces bathrooms or kitchens every 10 years ? I dont even own a property (yet being a tradesman know a thing or two about reno) and thats just crazy talk..



My Mum bought her house in 1985 on The Gold Coast. She is now a very old lady and Dad's passed on so nothing has been done on the house. 2 bathrooms and the kitchen are still original. Yeah bit old but it still all works.



> However its just not affordable to have a mcmansion in an inner city suburb with a jet ski and a brand new car and an iphone 4. Which is what everyone my age seems determined to try to leverage themselves into, and then will assuredly cry foul "omgz property is tooo expensive the guvarmant should help uz"!!!



That's exactly right. We don't have much choice in Sydney so in our case we have to buy a 1 br unit for big $$$ and just build on that. Why people want to start big on small funds is beyond me.



white_goodman said:


> try getting same house in Sydney, Melb in similar areas.. I earn a great salary yet still live at home, your looking at 400k minimum for a ****ty apartment down here in Sydney



No argument here, however as a Northern beaches guy I can tell you that a studio apartment 25 years ago for 50k will today sell for around 390k in MANLY. Do you know Central Plaza opposite Rockys barbers in Manly? I do, biggest sh!thole in Manly but still renting for 350 to $420 per week. It use to be the Sydney City Council building offices 30 years ago. They moved out and the offices were turned into studios. Buy price now for a 47 sqm studio is 399K. Rental for the same is $420 per week. Man, crappy place but good returns and that's before we talk about capital gains over the years. 
Link here to the studio for 399k.


----------



## Bill M (28 February 2011)

Tysonboss1 said:


> http://www.realestate.com.au/property-unit-nsw-liverpool-106653137
> 
> Come on ****ty apartments sell for less than $400K. look at the link above




He's a wax head from the Northern Beaches, rumour is we don't like going past the spit bridge, Liverpool won't do the trick for him.


----------



## So_Cynical (28 February 2011)

Bill M said:


> What? Average salary in OZ is around 64K per year. LINK HERE
> 
> and you can still buy a cheap old small house just 1 hour north of sydney for 210K.
> For a starter that's darn cheap!
> ...




Is that a old housing commission area? a 3 hour commute to the city and back every day...12 hours a week commuting, its like working 6 days in 5, a couple of years of that and i would be ready to throw myself in front of the train!


----------



## So_Cynical (28 February 2011)

Tysonboss1 said:


> http://www.realestate.com.au/property-unit-nsw-liverpool-106653137
> 
> Come on ****ty apartments sell for less than $400K. look at the link above




Liverpool lolol Tyson...what Sydney do you live in? Liverpool is an awful place...i remember refusing to met a woman i met on POF  after i found out she lived in Liverpool.

My first memory of visiting Liverpool (on foot) involved walking behind a young man totally off his head on what i can only assume was heroin...it was as if he was walking in slow motion, taking 3 steps forward only to lose balance and take 3 steps back...this in one of the main street in the middle of a sunny Saturday afternoon.


----------



## medicowallet (1 March 2011)

Tysonboss1 said:


> I bought my first property in 2001 so just on 10 years since I bought it, But it was built in 1993 and still have the original kitchen and bathroom, budjeting to replace the kitchen and bathroom every 15years is over the top.
> 
> .




I also service my car every 80000k.

You are either not maintaining your property properly, or are not getting the rent/tenants you can get.

I have been investing in property for a considerably longer time, and 15% just does not, ever cover expenses.

With $20k rent, rates and insurance chews up a substantial percentage of $20k, and leaves little for maintenance.


But  then again, there are a lot of "investors" who have no idea what their outgoings are.

I wonder how good the quarterly reports you get from your accountant are?


----------



## Tysonboss1 (2 March 2011)

medicowallet said:


> I also service my car every 80000k.
> 
> You are either not maintaining your property properly, or are not getting the rent/tenants you can get.
> 
> ...




I have gone years sometimes (2-3years) without having any maintaince requests, 

In 10 years the property that I have owned the longest has only even has the following work done.

1 x new hotwater system
1 x full Repaint
1 x partial repaint ( two rooms )
1 x Installed electric garage door ( tenant asked for it and I raised rent by $10/week as a result)
Some basic plumbing (washes etc)
1 x repair to electric stove
2x termite inspections
1 x termidoor treatment.
smoke alarms installed
battery replaced on smoke alarms.

I also manage it myself, so no management fees.

The rest is original, I have only ever 1 tenant change so both tenants have been longterm tenants and are happy with the house so why would I rush in and put new bathrooms etc in.

the maintaince costs very small over the years, offcourse there will be some big ticket items coming up, but if you divide the cost of them by the number of years it takes for them to wear out the cost per year is low, and you can get them done cheaper if you be smart about it, for example I will be recarpeting my properties soon and I have already made some calls and I will be getting a cheaper price by getting three properties done at once.

But If you are silly, responding to every tenants whim, getting ripped off by contractors, over capitalising on things that don't need to get done etc.etc I aggree with you the maintaince costs are limitless. You have to treat an IP like a business, not like a PPOR or a holiday home.

I will put in new kitchens and bathrooms, when spending the money to do so makes sense when compared to the extra rent it will provide and not before. But to be honest the kitchen and bathrooms are still in good nick, they have been looked after by the tenants, and the tenants are happy with it, so why spend the money.


----------



## TabJockey (2 March 2011)

There is no doubt you can get away with very little in maintainance and capex spending in resi property in tight rent markets and maintain tenants and rental rates.

In some cases it makes sense to run improvements into the ground but in some cases it does not.


----------



## Tysonboss1 (2 March 2011)

So_Cynical said:


> Liverpool lolol Tyson...what Sydney do you live in? Liverpool is an awful place...i remember refusing to met a woman i met on POF  after i found out she lived in Liverpool.
> 
> My first memory of visiting Liverpool (on foot) involved walking behind a young man totally off his head on what i can only assume was heroin...it was as if he was walking in slow motion, taking 3 steps forward only to lose balance and take 3 steps back...this in one of the main street in the middle of a sunny Saturday afternoon.




I live on the north shore, But I did live in wattle grove when I was in the army which is right next to liverpool.

I aggree liverpool is a dodgyarea, But he said that even I shetty apartment was $400,000, I was just showing that you can get a shetty apartment for half that price, although an apartment in liverpools ghetto is probally not all that apealing, But you can walk to the train station ( just don't do it at night)


----------



## Bill M (2 March 2011)

So_Cynical said:


> Is that a old housing commission area? a 3 hour commute to the city and back every day...12 hours a week commuting, its like working 6 days in 5, a couple of years of that and i would be ready to throw myself in front of the train!



No, Gorokan on the Central Coast is an older suburb that most oldies retired to back in the 60's and 70's, hence there is lot of fibro, timber or clad cottages. It is also an old tourist town just up from Toukley. There is some housing commission in the area but it's not overloaded. To be honest if one was hard up for cash and had to retire with limited funds you could buy a place for around 210K to 250K not far from the lake and club and just take it easy. Of course the commute to Sydney if you had to work could be a drag but what I was trying to point out was that there are cheap houses around, cheers.


----------



## medicowallet (2 March 2011)

Tysonboss1 said:


> I have gone years sometimes (2-3years) without having any maintaince requests,
> 
> In 10 years the property that I have owned the longest has only even has the following work done.
> 
> ...




You are very lucky on multiple levels

1. Excellent tennants (I have a few like this, but they are the exception). I am also not as confident to not have a real estate deal with troublesome ones, as I have been stung before.
2. Luck with electicals and build quality. I guess it also depends upon what your house has, but things like airconditioning, fans and plumbing, not really causing any problem at all in a 10 year period is definitely and outlier.

and most importantly

3. The economic conditions - you have never experienced pain from property, and I understand that this has made you overconfident. When I started building my portfolio, the government was not so gutless, bailing out housing "investors" to buy votes.

Also, vacancy rates will rise, as Australians (especially younger) start to share house with others, like in the UK, and us older farts downsize, or as I will hopefully do in the next 5 years, leave the country to one which is not such a socialist one (like America)

We have all made a lot of money over the past decade, and the good times can not and will not last forever. This applies to rents we can charge and the price we can demand.


----------



## explod (2 March 2011)

This thread is gradually becoming a waste of space as it is rarely on topic.  It reflects only how good some people have been in the past and only in the area of investment properties.

This thread is about the direction of, ie. "The future of Australian property prices" and that is it.

If you do want to analyse the facits of owning investment properties I suggest you start a thread on the subject.

*Back on topic:-*

The popular press itself overall would suggest the bubble has popped and Australian property prices are at best sideways at the moment.  Would be good to hear some comment on this assertion?

And the weekend clearance rate for last weekend there ole botty?

You must be all smiles with the silver price now ole Champ


----------



## Tysonboss1 (2 March 2011)

explod said:


> This thread is about the direction of, ie. "The future of Australian property prices" and that is it.




If that were the only topic to be discussed, then this thread would be a waste of time. The future direction of property prices is simply not knowable. 

Nobody knows the future direction, people can have an opinion and by default some will be right and others will be wrong. What did you want this thread to be, did you just want people from time to time post single word posts of "UP" "DOWN" or "FLAT".


----------



## Tysonboss1 (2 March 2011)

explod said:


> *Back on topic:-*
> 
> The popular press itself overall would suggest the bubble has popped and Australian property prices are at best sideways at the moment.  Would be good to hear some comment on this assertion?




They get it wrong just as often as they get it right, So who knows, I don't think a bunch of journalists can tell us whats happening. They didn't see the GFC till after the fact and they didn't see the recovery until after the fact.

If you follow the popular press you will undoubtly buy after the boom and sell after the crash, and thats true with shares and property.


----------



## Tysonboss1 (2 March 2011)

FLAT


----------



## trainspotter (3 March 2011)

Tysonboss1 said:


> FLAT




Aaaaah yesssssss ........ but wait for the dead cat bounce.


----------



## financialdonk (3 March 2011)

http://www.watoday.com.au/business/building-approvals-dive-most-in-8-years-20110303-1bfj9.html

If nobody is buying existing houses at auction or seeking to build new ones then time may be the only variable between flattening prices and a decline.


----------



## satanoperca (3 March 2011)

financialdonk said:


> http://www.watoday.com.au/business/building-approvals-dive-most-in-8-years-20110303-1bfj9.html
> 
> If nobody is buying existing houses at auction or seeking to build new ones then time may be the only variable between flattening prices and a decline.






> In the year to January, nationwide building approvals were down 24.8 per cent, the Australian Bureau of Statistics said today.




So do we have a shortage and this ad to the shortage? Or have we always had an oversupply?

Off to get a latte and smell them roses.


----------



## againsthegrain (3 March 2011)

Lately the arguments for a continual bull run are getting more desperate, now all I hear is investors coming to bail out baby boomers and a continual increase of "new austraians" and shortage

most of the "new" australians I see look like they can afford alot less then the "old" australians who are not even looking at property anymore.

So even if there was a shortage of supply it will not be physically possible for people to take up huge loans. The bank says no


----------



## white_goodman (3 March 2011)

http://www.netcastdaily.com/broadcast/fsn2011-0301-1.mp3


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## greebly24 (3 March 2011)

Just looking very basically at that example above of the house at Gorokan:

Price $210k
10% deposit = $21k
Mortgage = $189k
Weekly Repayments @ 6.5% = $295
Annual Repayments = $15,340

Weekly Rent = $240
Annual Rent = $12480
Minus 15% costs = $10,600

So it is negatively geared to the tune of about $5k per year.

Assuming a 5% capital growth in the first year = $10,500.

So you're going to make about $5k in the first year. On your $21k initial investment, that's a return of 25%. Pretty good. Guess that's before tax though, and without all the other costs.

My main concern is the very realistic possiblity that the mortgage goes up to 8%, while the capital growth drops to 3%.

Mortgage repayments = $336/wk or annually $17,472
Annual rent after costs = $10,600
Capital Growth = $6,300

And then you're losing money, basically. Not very much, but with additional costs you're not even breaking even.

And what happens in a really bad scenario if your mortgage goes to 10% and the property value drops 5%?

Mortgage repayments = $20,600
Annual rent after costs = $10,600
Capital Loss = $10,500

Then the house cost you $20k+ that year. Or a 95% loss of your original $21k. And forget about selling. It wouldn't cover what you owe the bank.

Take the nightmare mortgage rate of 12% and a five year property drop of 20%, then the picture would be disastrous for those first home buyers who were suckered in, or those middle-aged people who decided to unlock their equity, or those approaching retirement who have not other investments besides their own home. This nightmare has occurred in many other Western countries.

This is the potential problem new property investors face. Just because an asset class has boomed for a decade or two, doesn't mean it will keep booming. There are factors such as rising interest rates & retiring baby boomers and a possible Chinese slow-down which would negatively affect the Australian economy, not to mention the drying up of the home equity loan market.

But it doesn't mean the property market will bust either. Issues such as lack of land releases and foreign investment may keep prices high. But with full-recourse mortgages, people just getting in to the game need to be very careful that they aren't left with a unsustainable level of debt that is greater than the asset value. Real estate slogans won't help you then.


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## mazzatelli (3 March 2011)

mazzatelli]
[FONT=Verdana][SIZE=2]In an inflation hedging context said:


> I am not referring to a cash vs. property debate for inflation hedging, as in general the majority of real assets will outperform cash.
> 
> I am asking:
> 1) Is property the best tool for hedging inflation and;
> 2) If so, which is better - property financed with cash or credit?




Still awaiting you expert opinion on this Tyson...


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## Bill M (3 March 2011)

greebly24 said:


> Take the nightmare mortgage rate of 12% and a five year property drop of 20%, then the picture would be disastrous for those first home buyers who were suckered in, or those middle-aged people who decided to unlock their equity, or those approaching retirement who have not other investments besides their own home. This nightmare has occurred in many other Western countries.



Hello greebly24, I wanted to quote your whole post but people don't like you doing that. Anyhow thanks for a well balance post and opinion. Just thought I would add that when I borrowed for my first mortgage in 1979 my interest rate was 11% then. Rates hit 17.5% at one stage many years later. I still made money on my properties regardless of that. It has never been easy to invest in and make money in property but one thing for sure prices just keep climbing. Yes you have some flat or slightly negative years but nothing like the share market crashes of 87 and 2009 where people lost half their money. Your post is good reading for anyone wishing to buy, everything you wrote should be considered, cheers and thanks.


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## Bill M (3 March 2011)

white_goodman said:


> http://www.netcastdaily.com/broadcast/fsn2011-0301-1.mp3




Tooooo Tooooo friggin long man and an American commentary at that. You are doing the right thing white_goodman, living in your parents house and saving your money. There is nothing wrong with living like that and saving your $$$$$. That's the best way to build up your funds. If a plunge happens like you suggest then you can act, if it doesn't then you keep saving the $$$$ and buy at full price anyway. Either way you win.


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## medicowallet (3 March 2011)

Bill M said:


> Hello greebly24, I wanted to quote your whole post but people don't like you doing that. Anyhow thanks for a well balance post and opinion. Just thought I would add that when I borrowed for my first mortgage in 1979 my interest rate was 11% then. Rates hit 17.5% at one stage many years later. I still made money on my properties regardless of that. It has never been easy to invest in and make money in property but one thing for sure prices just keep climbing. Yes you have some flat or slightly negative years but nothing like the share market crashes of 87 and 2009 where people lost half their money. Your post is good reading for anyone wishing to buy, everything you wrote should be considered, cheers and thanks.




And this is the clincher.

Back in the day we COULD purchase a house and live in it with single income, through tough times.

Nowadays, it will take much less shock to kill the system.

Not only that. Here is the clincher::

Do you think the world will continue to prop up our property market if China has a hiccup?

Uh oh, then we will see some interesting times.


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## So_Cynical (3 March 2011)

Bill M said:


> No, Gorokan on the Central Coast is an older suburb that most oldies retired to back in the 60's and 70's, hence there is lot of fibro, timber or clad cottages. It is also an old tourist town just up from Toukley. There is some housing commission in the area but it's not overloaded. To be honest if one was hard up for cash and had to retire with limited funds you could buy a place for around 210K to 250K not far from the lake and club and just take it easy. Of course the commute to Sydney if you had to work could be a drag but what I was trying to point out was that there are cheap houses around, cheers.




I mite pop up on the weekend and have a look, while the weather is still good  Gorokan sounds a bit like Umina? old smallish fibro places, i agree that one could do alot worse than a 250K place on the Central coast.


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## tothemax6 (3 March 2011)

So is the property market crashing yet? I am waiting for this crash that means I can buy a house .


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## Tysonboss1 (4 March 2011)

mazzatelli said:


> _I am asking:
> 1) Is property the best tool for hedging inflation and;
> 2) If so, which is better - property financed with cash or credit?_
> 
> Still awaiting you expert opinion on this Tyson...




1, Well whether it is the "Best" depends on opinion, I would say it is one of the best. Offcourse there are assets that will grow faster, Like a good business with 30% ROE reinvesting all earnings, But then there are higher risks with this type of thing and less incomes. As I said earlier I have property inside my portfolio because I like the steady cash flow that will increase with inflation and the thought that I won't lose value on the capital (outside normal fluctuations) to inflation.

2, When it comes to Investing I believe a low debt model is best ( but thats my opinion). that way it keeps the cashflow positive, you have less risk of having to be forced seller if rates skyrocket, and you are not putting as much hope on quick capital gains. Also I view property as an inflation hedged income stream, but as soon as you load up to much debt you start to lose your income to interest payments.


I have seen my grandmother lose her entire net worth to inflation, this is why I recommend if people are going to rely on income from their assets they have to hold their wealth in somthing that produces income (that will feed them), while this income also increase with inflation, Property is a worry free investment that achieves this.

In the early 70's My Grandfather died, and My grandmother sold his IP and banked the cash a bit over $3500 Because she could earn more interest on the cash than the rent provided. That $3500 produced enough interest to maintain her home and supplement her small pension, and she could live quite well.

Fast forward 30 years and the $3500 which she still has, earns about $200 a year, which is nothing, if you kept the house it would be paying over  $14,000 per year and she would have a lump some of $350,000 in capital value.


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## FxTrader (4 March 2011)

Tysonboss1 said:


> In the early 70's My Grandfather died, and My grandmother sold his IP and banked the cash a bit over $3500 Because she could earn more interest on the cash than the rent provided. That $3500 produced enough interest to maintain her home and supplement her small pension, and she could live quite well.
> 
> Fast forward 30 years and the $3500 which she still has, earns about $200 a year, which is nothing, if you kept the house it would be paying over  $14,000 per year and she would have a lump some of $350,000 in capital value.




A sad story, however in this case your grandmother had an income producing property with no/low borrowings and my guess would be that the median income to median house price ratio was very low.

How would you achieve this now and what is low debt?  The REIV now reports that the median house price in Melbourne for the Dec quarter was $600,000!  Therefore, 80% leverage requires a $120,000 deposit at the median price.  How long would it take the average wage earner to save $120k?  Is 80% low debt/leverage? The property bubble is a debt bubble where many are living paycheck to paycheck to stay in their PPOR let alone buy an IP - a precariously balanced situation.

Back to your grandmother's story, at least she has a pension to fall back on.  My sister bought a home right on the water in Hawaii (sure thing) and paid much less than the median at the time.  Now it's worth 50% of what they paid (debt bubble + GFC) and they are essentially bankrupt in their fifties.  Buying a property while we have an explosion in household debt levels will probably not end well for many.


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## AlexG1 (4 March 2011)

An intertesting article from Steve Keen (hot off the press) http://www.talkfinance.net/f47/australian-debt-update-8974/

Convincing arguments as to why we'll see a continued decline in prices.  Essentially - in a nutshell strong evidence that rising house prices are strongly correlated to household debt.  Debt levels in Oz are now falling (as would be expected from the current high levels) hence expect housing prices to fall.

Been a common theme on this thread - but well presented with evidence in the linked post.  I know many here are dismissive of his arguments - but they certainly look solid to me.

Patiently waiting.

Alex.


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## Greg (4 March 2011)

tothemax6 said:


> So is the property market crashing yet? I am waiting for this crash that means I can buy a house .




Hi tothemax
I'm not sure that the Australian property market will ever really "crash" in the way that we have seen overseas (U.K. and U.S. specifically) as their attitudes and financing systems are so very different to ours. 

I guess it all depends on what you define as a "crash". If you mean putting a house on the market for less than someone paid for it, that already happening in a number of places, including Queensland, and has been for about 2 years (and it's only getting worse I'm afraid). But if you mean picking something up for a fraction of what it cost, I'm not sure that's going to happen.

I'm assuming that you are also talking about "normal" and "first time buyer" housing sector (in the $350k - $500k range) because if your talking about the multi-million dollar homes, then they are already crashing in relative terms.

My opinion is that prices are going to be quite stable for a little while with maybe a slight trend down for the next couple of years and then a gradual climb will begin once things (like our government and interest rates) settle down a bit. I hope that helps and I wish you luck in getting into the housing market; it's a great thing to do in the longer term.

All the best
Greg


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## schnootle (4 March 2011)

Tysonboss1 said:


> I have seen my grandmother lose her entire net worth to inflation, this is why I recommend if people are going to rely on income from their assets they have to hold their wealth in somthing that produces income (that will feed them), while this income also increase with inflation, Property is a worry free investment that achieves this.
> 
> In the early 70's My Grandfather died, and My grandmother sold his IP and banked the cash a bit over $3500 Because she could earn more interest on the cash than the rent provided. That $3500 produced enough interest to maintain her home and supplement her small pension, and she could live quite well.
> 
> Fast forward 30 years and the $3500 which she still has, earns about $200 a year, which is nothing, if you kept the house it would be paying over  $14,000 per year and she would have a lump some of $350,000 in capital value.




I enjoy your contributions Tysons and your arguments make a lot of sense (Doesn't mean I completely agree though). It is not like you can't maintain your capital and take an income from a savings account. I am earning 6.5% in a Ubank account,  I can put enough back and still take a small income. 

The next 40 years are going to be different to the last 40. You can guarantee cheap oil will be gone, you can guarantee cheap fossil fuels will be gone, will we be spending the same percentage of income on the same house when energy costs will command a greater share?


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## CamKawa (4 March 2011)

*Australian homes most overvalued - survey *

*AUSTRALIANS love to watch their home values rise but a leading magazine says they are way overvalued. *

The latest quarterly index of global house prices published in _The Economist _shows Australian homes are the most overvalued in the world, ahead of Hong Kong and France.
While the magazine said the local economy was strong, its index may renew fears of a house price bubble in Australia.

"There may be good reasons for Australian prices to have risen so far but people made similar, and ultimately incorrect, arguments for the run-up in prices in the West," it said.
The ratio of house prices to rents in Australia is 56 per cent above its long-run average between 1975 and 2010, it found.

The ratio in Hong Kong, the second most overvalued market, is 54 per cent followed by France at 48 per cent.

In the US, which experienced a hefty decline in property prices during the global financial crisis, house prices to rents were only overvalued by three per cent.

Source: http://www.heraldsun.com.au/news/br...vervalued-survey/story-e6frf7ko-1226015960562


_The Economist _Interactive chart


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## tech/a (4 March 2011)

Tyson
I make your grand mother around 125!!!
I agree property is a great hedge on inflation and
Held under credit as an IP is preferable
In times of inflation in my view


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## Tysonboss1 (4 March 2011)

schnootle said:


> I enjoy your contributions Tysons and your arguments make a lot of sense (Doesn't mean I completely agree though). It is not like you can't maintain your capital and take an income from a savings account. I am earning 6.5% in a Ubank account,  I can put enough back and still take a small income.




Yes I aggree that after Taxes and an allowance for inflation you are left with some cash to spend, However the problem is that it is only about 1% of the amount invested, So to earn $50,000 spending money you would need $5,000,000 Invested, and a couple of years of high inflation would wipeout 10 years of spending money.


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## Tysonboss1 (4 March 2011)

tech/a said:


> Tyson
> I make your grand mother around 125!!!




She may look it, But no she is in her mid 80's, 

I think she may be turning 88, but I would have to confirm that with Dad, I don't really see her because she lives in NZ. But yeah 85 - 88 is probably correct because my dad is turn 59 and he is the yougest of 5 children.


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## Tysonboss1 (4 March 2011)

schnootle said:


> . You can guarantee cheap oil will be gone, you can guarantee cheap fossil fuels will be gone, will we be spending the same percentage of income on the same house when energy costs will command a greater share?




I am not about to start speculating on the big macro stuff 20years into the future, Because the future is unknowable.

However if what you are saying about energy plays out, It would probably mean people would no longer be willing to make big commutes each day, and would pay a premium for living spaces close to the city, density would be on the increase and land prices in these areas would sky rocket.

But as i said who knows, we could just as easily avoid any such energy crisis and letting the worry of it affect your investments my well turn out badly for you.


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## Agentm (4 March 2011)

just came across this

updated article from steve keen at debtwatch



"So get used to it: mortgage debt drives house prices, and growth in mortgage debt is now ending. The recent falls in house prices are just the beginning."


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## wayneL (4 March 2011)

Agentm said:


> just came across this
> 
> updated article from steve keen at debtwatch
> 
> ...




It's been said hundreds of times - Credit is the ONLY fundamental.


----------



## white_goodman (4 March 2011)

wayneL said:


> It's been said hundreds of times - Credit is the ONLY fundamental.




this is true, watch the money supply, its a great indicator


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## AlexG1 (4 March 2011)

Tysonboss1 said:


> I am not about to start speculating on the big macro stuff 20years into the future, Because the future is unknowable.
> 
> However if what you are saying about energy plays out, It would probably mean people would no longer be willing to make big commutes each day, and would pay a premium for living spaces close to the city, density would be on the increase and land prices in these areas would sky rocket.
> 
> But as i said who knows, we could just as easily avoid any such energy crisis and letting the worry of it affect your investments my well turn out badly for you.




Yes - for example another possible future scenario is that businesses decentralise (entirely possible right now in many cases - and happening in other cases).  In this scenario people may choose to avoid the rat race and property prices in 'lifestyle' locations would skyrocket.

Alex


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## trainspotter (4 March 2011)

Agentm said:


> just came across this
> 
> updated article from steve keen at debtwatch
> 
> "So get used to it: mortgage debt drives house prices, and growth in mortgage debt is now ending. The recent falls in house prices are just the beginning."




Same guy walked to Mt. Kosciusko right? Geeeeeee ... fuggen legend.

I reckon it is going to rain soon. What are my chances of getting this right as well?

Steve Keen has called 5 of the last 3 downturns. Ripping stuff.

On one hand you have this ........... Banks made billions in profit.

The Commonwealth Bank of Australia's (The Group's) Net Profit After Tax ("NPAT") ("statutory basis") for the half year ended 31 December 2010 was $3,052 million, which represents an increase of 5 percent on the prior year.  NPAT ("cash basis") for the half year was up 13 percent on the prior year to $3,335 million

ANZ - Underlying profit after tax climbed to $1.4 billion for the three months to December 31, 2010, a 27 per cent jump on the previous corresponding quarter as impaired assets continue falling.

The NAB reported $1.3 billion in unaudited cash profits for the three months to December 31 2010, which was just above market forecasts of $1.25 billion.

That's $200 million more than the $1.1 billion of 12 months ago and slightly higher than the $1.29 billion for the last quarter of its previous year.

Average Home Loan
*The average loan* size for all owner occupied housing commitments rose $600 to *$287,300 *between October and November 2010. 

Average loans in each state/territory were (excluding refinancing): 

NSW - $322,200
VIC - $318,000
QLD - $292,500
SA - $245,500
WA - $298,900
TAS - $203,500
NT - $306,800
ACT - $291,700

*Non Performing Loans*
Australian banks have one of the lowest non-performing loans ratios of all 97 surveyed economies. Only 1.2 per cent of Australian bank loans are ‘non-performing’, meaning that only a very small proportion of loan repayments have either ceased or are excessively late. This ratio was fairly steady at 0.2% three years rising to its current figure in 2009.

On the other hand you have this ...... 

Williams and Nason argue that the banking investment cycle is moving from the housing boom era of 1995 to 2010 to what they have named the "utility phase", which will kick in from 2012.

Thanks to nearly two decades of unbroken economic growth, *the big banks grew fat on a home loan-led bonanza.* During that period, the percentage of mortgages as a proportion of the majors' loan books rose from 25 per cent to 55 per cent. (Cause of concern to some)

http://www.smh.com.au/business/banks-reach-end-of-boomtime-stats-20100926-15sfk.html

But they end it with this _"Either way, it's not all bad news on the investment front. Just don't expect to see overly generous shareholder returns in these credit-constrained times."_

and this ...............

First, Australia is heavily leveraged to China, so any slow down in the Chinese economy would likely translate into lower prices for Australia's two largest exports - iron ore and coal - along with other commodites. Should commodity prices fall significantly, it follows that less money will flow into the Australian economy, resulting in lower spending, a contraction in aggregate demand, and higher unemployment. A slowdown of China's economy is highly probable since its two major export destinations - the US and Europe - are facing an extended period of sub-par economic growth from deleveraging as well as ageing populations. To date, China has undertaken massive government stimulus to subsidise production and consumption in order to maintain high growth rates. But as highlighted recently by Jim Chanos, such an approach inevitably produces vast amounts of waste and is unsustainable. Futher, there is evidence that China's housing market is a bubble waiting to burst, and has the potential to dramatically slow China's economy.

The second major risk for house prices is that world credit markets freeze, thereby dramatically increasing Australian banks' cost of wholesale funding and/or reducing their ability to raise funds offshore. Recent analyses by investment banks Credit Suisse and Goldman Sachs estimate that the Australian banks will need to raise between $100 billion and $170 billion of term wholesale debt in the 12 months to March 2011, of which about $78 billion would be the refinancing of existing borrowings that mature.

http://www.unconventionaleconomist.com/2010/09/australian-housing-bubble-in-search-of.html

Who is right and who is wrong? 

This has all been done to death over several hundred pages so far.

Yes yes yes it is still possible to make money out of property. Yes yes yes people are gonna get burned. Yes yes yes I have seen it all before. Third cycle so far. Do your homework.

If you don't wanna own property, stay renting/living at home/boarding/house sitting/whatever and enjoy looking at the cash you have squirreled away in the bank. OR wait for the "crash" and pick up a bargain. Ooooooops ... too late.


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## Tysonboss1 (5 March 2011)

FxTrader said:


> 1, How would you achieve this now and what is low debt?
> 
> 2, The REIV now reports that the median house price in Melbourne for the Dec quarter was $600,000!  Therefore, 80% leverage requires a $120,000 deposit at the median price.  How long would it take the average wage earner to save $120k?
> 
> ...




1, Over your life just spend less than you earn, Invest the savings and as you build wealth and you are starting to accumulate a large amount of wealth think about putting some into property at low or no debt when the rental returns a favourable compared to the purchase price. this will put you in good shape when you look at stop working because you will have a solid weekly income stream, offcourse you would still keep 50% of you funds in other investments.

2, well how long is a piese of string? It completely depends on their spending habits, But if the average wage is $64,000 and there is two people working they will probably be bring in $100K after tax, if they could could save $40,000 / year then it would take 3 years to save $120,000, less if you include investment earnings.

3, 80%lvr is high debt ratio

4, If they are living paycheck to pay check they are either living above their means or have a history of failing to save.

5. I can't comment on your sisters situation with out knowing the facts, For example did she purchase it with cash or on margin, was it for a ppor or an IP, If it was an IP how was she planning to make a profit from rental return over time or short term capital gain(gambling), Was the property considered high end or luxury these always suffer the biggest falls in the down turn and have the worst rental yield, so I steer well clear.


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## medicowallet (5 March 2011)

"his weekend looks like a carbon copy of last with a total of 534 homes from the 806 auctions selling resulting in a clearance rate of 66 per cent compared to last weekends 65 per cent.

Of the 272 homes passed in 154 of those were passed in on a vendors bid. Despite a third of homes not selling at auction many real estate agents reported strong sales returning sale prices well above reserve.

This weekend last year saw 252 auctions and a clearance rate of 88 per cent, the low volume a result of Labour Day, conditions that will be repeated next weekend."

66% this year, 88% last year

Please, I don't know what all this means, but why has the clearance rate dropped so much over the past couple of months?

Medicowallet

On a lighter note, caught some nice bream this week, had an absolutely fantastic time in my mate's 9 foot dinghy, complete with a few beers (not the captain), some roast chicken and a loud, plucky, slow 4hp 2 stroke. Quite ominous really, full throttle up the creek popopopopopopopopopop, at least we had oars as a fall back plan. I wonder if most boats popopoping along at the moment have a set of oars?


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## GumbyLearner (5 March 2011)

*Join the queue for Melbourne's million-dollar suburbs*
Christopher Gillett
Herald Sun
March 05, 2011 12:00AM

*MELBOURNE will have 100 million-dollar suburbs by the end of 2014.*

There are currently 44 suburbs with a seven-figure median price tag, Real Estate Institute of Victoria figures show.

By 2030, that number is expected to rise to almost 400.

http://www.heraldsun.com.au/news/vi...n-dollar-suburbs/story-e6frf7kx-1226016141661

Not New York, Hong Kong, Tokyo, Paris, London but...Melbourne!


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## Bill M (6 March 2011)

Tysonboss1 said:


> In the early 70's My Grandfather died, and My grandmother sold his IP and banked the cash a bit over $3500 Because she could earn more interest on the cash than the rent provided. That $3500 produced enough interest to maintain her home and supplement her small pension, and she could live quite well.
> 
> Fast forward 30 years and the $3500 which she still has, earns about $200 a year, which is nothing, if you kept the house it would be paying over  $14,000 per year and she would have a lump some of $350,000 in capital value.



Hi Tyson, here is another example of why realestate is a very good investment hedge against inflation. How to turn $2,000 into $1.06 million, seems like there was no shortage of bidders too. I wonder how much that $2,000 would be worth in a bank account today?

From The Daily Telegraph:

----
The Pardey St house, which sold in the now up-and-coming suburb of Kingsford, was bought by Ms Howarth's mother Isabel May for just £990 in 1943.

*But thanks to the power of increasing property values the former secretary and bread deliverer reaped 1000 times that amount after a heated auction.*

Fully Story Here
----


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## Garpal Gumnut (6 March 2011)

Bill M said:


> Hi Tyson, here is another example of why realestate is a very good investment hedge against inflation. How to turn $2,000 into $1.06 million, seems like there was no shortage of bidders too. I wonder how much that $2,000 would be worth in a bank account today?
> 
> From The Daily Telegraph:
> 
> ...




There was a guy called Lucius Brucillus had a mansion in Corinth in AD 23 , how much is it worth now?

Perspective mate.

gg


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## Bill M (6 March 2011)

Garpal Gumnut said:


> There was a guy called Lucius Brucillus had a mansion in Corinth in AD 23 , how much is it worth now?
> 
> Perspective mate.
> 
> gg




You didn't answer the question, how much would that $2,000 in the bank be worth now compared to the massive increases of the house? Which wins? this is the argument.


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## Garpal Gumnut (6 March 2011)

Bill M said:


> You didn't answer the question, how much would that $2,000 in the bank be worth now compared to the massive increases of the house? Which wins, this is the argument.




Tell that to someone in Christchurch, or some poor bastard in NSW, Sydney , who will pay $750,000 for a house in the western suburbs which he can buy in Townsville for $450,000 and which will be worth the latter in 12 months time.

gg


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## Tysonboss1 (6 March 2011)

Bill M said:


> Hi Tyson, here is another example of why realestate is a very good investment hedge against inflation. How to turn $2,000 into $1.06 million, seems like there was no shortage of bidders too. I wonder how much that $2,000 would be worth in a bank account today?
> 
> From The Daily Telegraph:
> 
> ...




Yeah , So  I think that more than prooves the point that over time Property is a good inflation hedge. 

Now debate here would certainly rage that property is still in a bubble, But that argument only debates whether the property is worth the $1.06M or maybe only $800K, either way a $2000 invested in the 40'S in that suburb would have more than kept it's value in the face of inflation and provided a stable growing rental income over that time.


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## Tysonboss1 (6 March 2011)

Garpal Gumnut said:


> Tell that to someone in Christchurch,




I would go as far as saying even a pile of rubble on a free hold block of land in a earth quake zone is still worth more than the $2000 cash investment.


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## Bill M (6 March 2011)

Garpal Gumnut said:


> Tell that to someone in Christchurch, or some poor bastard in NSW, Sydney , who will pay $750,000 for a house in the western suburbs which he can buy in Townsville for $450,000 and which will be worth the latter in 12 months time.
> 
> gg




So you reckon a house in Sydney for 750K now will be worth 450K (a 40% drop) in 12 Months time........... I will revisit that statement in 12 Months, good luck with YOUR investments. 40% drop eh?


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## So_Cynical (6 March 2011)

GG is drunk...lol


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## GumbyLearner (6 March 2011)

Tysonboss1 said:


> Yeah , So  I think that more than *prooves* the point that over time Property is a good inflation hedge.
> 
> Now debate here would certainly rage that property is still in a bubble, But that argument only debates whether the property is worth the $1.06M or maybe only $800K, either way a $2000 invested in the 40'S in that suburb would have more than kept it's value in the face of inflation and provided a stable growing rental income over that time.




You spelled *proves* wrong. You have no nous, off the forum you go.


----------



## CamKawa (6 March 2011)

and who would have thought????

Auction rates fudged by failed campaigns 

*EMBARRASSED agents are covering up a growing failure to sell homes at auction by not telling reporting bodies about their failed campaigns. *

Figures compiled by research agencies Australian Property Monitors and Residex over the past three weeks show that between 10 per cent and almost 50 per cent of auction results across Sydney went unrecorded.

The reason was embarrassed real estate agents wanting to avoid reporting of failed auction campaigns, said leading property analyst Louis Christopher, managing director of SQM Research.

"We are having a very high percentage of auction campaigns going unreported to the reporting bodies, and we strongly believe those unreported auctions are actually failed campaigns," Mr Christopher said

Read more: http://www.news.com.au/money/auctio...ns/story-e6frfmci-1226016477643#ixzz1Fl2x5gj4


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## mazzatelli (6 March 2011)

Tysonboss1 said:


> Yeah , So  I think that more than proves the point that over time Property is a good inflation hedge. ..._ [context: in response to an article about a property purchased in 1943]_





Tysonboss1]
[B]I have seen my grandmother lose her entire net worth to inflation[/B] said:


> As I said earlier I have property inside my  portfolio because *I  like the steady cash flow that will increase with  inflation and the  thought that I won't lose value on the capital  (outside normal  fluctuations) to inflation*.





wayneL said:


> It's been said hundreds of times - Credit is the ONLY fundamental.





white_goodman said:


> this is true, watch the money supply, its a great indicator




In the context of residential property, there are 2 components being  proposed that hedge against inflation - 1) capital value and 2) rental  income.

Allow me propose a general theoretical scenario :  that since the mid 90's, Australian residential capital value is predominantly  correlated to credit and money supply, whilst before that, inflation  accounted for the correlation [regime-switch]. 

If this is the case, would this make your Grandma's scenario and the  article posted by Bill M, not as effective for people  starting to hedge inflation from today [or post mid 90's]?

Residential rental income - yes a hedge for inflation.



> When it comes to Investing I believe a low debt model is best (  but  thats my opinion). that way it keeps the cashflow positive, you  have  less risk of having to be forced seller if rates skyrocket, and  you are  not putting as much hope on quick capital gains. Also I view  property as  an *inflation hedged income stream*, but as soon as  you load up to much  debt you start to lose your income to interest  payments.



Excellent, that's better than hearing generalized  statements - e.g. 90% LVR IP's as a hedge because it's property.


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## dhukka (6 March 2011)

Interesting, interactive graphic from the economist. link here

Update: Apologies, I just saw CamKawa has already supplied a link.


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## medicowallet (6 March 2011)

Tysonboss1 said:


> Yeah , So  I think that more than prooves the point that over time Property is a good inflation hedge.
> 
> Now debate here would certainly rage that property is still in a bubble, But that argument only debates whether the property is worth the $1.06M or maybe only $800K, either way a $2000 invested in the 40'S in that suburb would have more than kept it's value in the face of inflation and provided a stable growing rental income over that time.




NO

the real question should be

is $1000000 invested in residential property now, a better proposition than $1000000 in cash, over the next few years.

And WHY?

I'm firmly in the camp who believes residential property has only one way to go over the next few years, and that is DOWN (I consider sideways as down)

Why?

Because Like GG, I have been around for long enough to experience the last property downturn (which was not long ago) as opposed to some of the currently active spruikers in this thread, who probably do not even know the name of the prime minister before John Howard.

Property is ridiculously overpriced, and there is a limit to how much the next fool is prepared to pay, either they wake up or the bank can't fund it, and I think we have reached both.


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## Tysonboss1 (6 March 2011)

mazzatelli said:


> Allow me propose a general theoretical scenario :  that since the mid 90's, Australian residential capital value is predominantly  correlated to credit and money supply, whilst before that, inflation  accounted for the correlation [regime-switch].




To measure the extent of any bubble, I suppose you would have to take the price of the target market in the mid ninties, add to that the compounded effect of inflation, as well as the growth in households over that time (because yes the population in oir capital cities has grown and at the same time the number of people in each house hold has shrank ( more single person and single parent households)).

The market I know the best is Brisbane, The area I invest in has gone up in value by about 150% in 10 years, some people here are saying this is a bubble, but if you look at a few facts you will see that if there is any froth or bubble it is much small than people would suggest, to suggest that the entire 150% growth in prices is related to a speculative bubble is crazy, that would mean that over that 10 year period there was zero growth in households and zero inflation, but both these things are untrue.

- Between 1993 and 2001 most of the brisbane maket was in stagnation, so a decent part of the boom that happened after 2001 was a correction relating to the pent up effect of inflation on prices,

- during 1998 through to 2010 brisbane had very large migration figures and it's population was growing, this effected the growth in demand for dwellings and would have put upward pressure on land prices.

So if look back at the bigger picture (atleast in the brisbane markets I have studied) you can see it is actually a 150% growth figure over the space of 18years, Inflation of 3% alone should make a property double every 20 years, So when you include that along with the population growth that has occurred it doesn't really leave much room for this bubble to live in.


----------



## Tysonboss1 (6 March 2011)

medicowallet said:


> NO
> 
> the real question should be
> 
> is $1000000 invested in residential property now, a better proposition than $1000000 in cash, over the next few years.




Well it really depends of the time frame, By all means try and time the market. If you have read my posts back a few pages I said that property may have so froth in it. But the longer the time frame ( when compared to cash ) the less important that froth is, Unless it is a massive amount of froth.

For example say that in 1943 you over paid by by 50% and bought that property for $3000 instead of $2000, Time has surely covered up your mistake.

But as I have said I have no idea where the market will go, I never do, I don't really care which way the market goes, I prefer both the property and stock markets going down.

And I am not banking on quick capital gains when I have spare cash to deploy into property I will just look for investments that make sense when compared to their rental earning power, and if I find one I will make the investment and if over the years my rental return grows with inflation and I see my capital base grows along with inflation + any extra 1%pa for population growth I am happy.

Property investing is a cinch, so I would never bank on it earning 40%pa, why should it. Property should earn just enough to keep investors interested in putting funds into it and supplying housing infrastructure, a basic rental return of about 4% that grows with inflation and capital protected from inflation does this for me.


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## Tysonboss1 (6 March 2011)

mazzatelli said:


> Allow me propose a general theoretical scenario :  that since the mid 90's, Australian residential capital value is predominantly  correlated to credit and money supply, whilst before that, inflation  accounted for the correlation [regime-switch].
> 
> .




One could say that inflation itself is predominantly correlated to credit and money supply.


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## mazzatelli (6 March 2011)

Tysonboss1 said:


> One could say that inflation itself is predominantly correlated to credit and money supply.




So both are one and the same, and have the same impact on residential house values? 
IOW instead of directly hedging inflation with property, I can hedge  inflation via mortgage/credit instruments, since they are all  correlated?

With your other post mentioning a bubble - I am not analyzing/inferring  anything regarding that - this is from a hedging perspective. If your  asset is say driven by two variables, one which has a larger effect on  your asset [e.g. credit & money supply, whether you agree or not]  and it also drives the other variable e.g. inflation [multicollinearity, I'll leave the debate about causation aside],  then is it worth using that asset to hedge the smaller effect?

Rental income, is separate, and I have already stated my view on that - so please don't bring that in.


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## explod (6 March 2011)

Tysonboss1 said:


> One could say that inflation itself is predominantly correlated to credit and money supply.




It is about the devaluation of paper money.  Houses going up is merely a match to the falling value of money.

A problem now, (not so much here *yet*), is that paper money is devaluing faster than property is going up.

However good land will hold its tangible value in the long term.


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## Tysonboss1 (6 March 2011)

mazzatelli said:


> 1,So both are one and the same, and have the same impact on residential house values?
> 
> 2,IOW instead of directly hedging inflation with property, I can hedge  inflation via mortgage/credit instruments, since they are all  correlated?
> 
> ...




1, Introducing more credit increases the total money supply in the economy, the money supply is not fixed it expands and can contract, as the money supply expands (inflates) faster than the total goods and services produced in the economy you will see inflation of prices accross the board, So expanding credit should generally see increasing inflation, thats why the RBA increases rates to try and slow inflation.

If the money supply contracted compared to the total amounts of goods and service moving deflation would occur, Inflation is regarded as the lesser evil hense the rba has a policy of allowing a small % of inflation to occur over time, rather than fact deflation and depression.

2, not sure how you would go about doing that

3, you lost from here in


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## Tysonboss1 (6 March 2011)

explod said:


> It is about the devaluation of paper money.  Houses going up is merely a match to the falling value of money.
> 
> A problem now, (not so much here *yet*), is that paper money is devaluing faster than property is going up.
> 
> However good land will hold its tangible value in the long term.




Yes, But I am not saying that property values are joined at the hip with inflation rates, the two can move indepentantly, But over time the effect of inflation will be factored into property prices, It may come all at once just as it did in 2001 for property and 2011 for coke at my local chinese shop.

For 5 years I have been buying cans of coke for $1.50 at my local chinese shop, Now all of a sudden the price has surged to $2.00, This boom in the price of coke may be seen as a bubble but the 33% increase would be partly due to inflation, now some would say that it may have over shot the market because 33% in 5 years is higher than inflation, So we may see the price of coke stagnate for a couple of years before we see another boom. This is how property works, except property has an other upward price pressure, the coke company can always just increase supply of coke to meet demand, the supply of land is some what fixed, So you have an extra >1% growth compounding from population growth and growth in households.


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## Tysonboss1 (6 March 2011)

Tysonboss1 said:


> One could say that inflation itself is predominantly correlated to credit and money supply.




This video from the 3 minute mark touches on this subject.

.


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## tothemax6 (6 March 2011)

Tysonboss1 said:


> This video from the 3 minute mark touches on this subject.
> 
> .




I've always wanted to make a set of rebuttal videos to the 'money as debt' series, but alas I cannot commit the time . There is so much wrong in that series it boggles the mind. But they got one thing right, mismatched debt maturities which rely on roll-overs (i.e. bank lending out 30 year loans and receiving instantly-callable loans) gives the illusion of there being more money in existence than there is. But in reality, since these loans to the bank (demand deposits) are usually not called in any large part, they effectively average a high debt maturity in aggregate.
The biggest thing about the videos that irks me is that it fails to point out that people can hold shares in these banking operations, and instead uses the concept of 'banker bogey-men'. 

I guess the root of the issue is that people consider their account at the bank to be "money *in* the bank", rather than what it really is - "money the bank owes me".


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## Tysonboss1 (6 March 2011)

tothemax6 said:


> I've always wanted to make a set of rebuttal videos to the 'money as debt' series, but alas I cannot commit the time . There is so much wrong in that series it boggles the mind. But they got one thing right, mismatched debt maturities which rely on roll-overs (i.e. bank lending out 30 year loans and receiving instantly-callable loans) gives the illusion of there being more money in existence than there is. But in reality, since these loans to the bank (demand deposits) are usually not called in any large part, they effectively average a high debt maturity in aggregate.
> The biggest thing about the videos that irks me is that it fails to point out that people can hold shares in these banking operations, and instead uses the concept of 'banker bogey-men'.
> 
> I guess the root of the issue is that people consider their account at the bank to be "money *in* the bank", rather than what it really is - "money the bank owes me".





yeah, They also fail to point out that the banks pay out all the interest in the form of interest to depositors, wages + other overheads and dividends so the whole "Bankers going to own the world through forclosure" just isn't true,

But the reason I posted this video was to try and make the point that there is a direct relation between inflation and the credit.


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## medicowallet (7 March 2011)

This question is for Tysonboss

7/3/11 saw a drop in share value, with some "volatility" (asx200 down 66 points)

What volatility was experienced by house prices today?


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## Tysonboss1 (7 March 2011)

medicowallet said:


> This question is for Tysonboss
> 
> 7/3/11 saw a drop in share value, with some "volatility" (asx200 down 66 points)
> 
> What volatility was experienced by house prices today?




I have no idea, ( and I think that is a positive )

But you can bet it was alot less, People just don't Buy or dump property every time the wind changes as they do shares.

I personally try and ignore the daily fluctuations of the share market unless it is working in my favour ( eg. dropping the prices of the businesses I wish to buy ), I don't follow the typical attitude that the daily fluctuations are making me richer or poorer, If I did I would be letting emotions into my investing and that is a fatal flaw.


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## Tysonboss1 (7 March 2011)

medicowallet said:


> This question is for Tysonboss
> 
> 7/3/11 saw a drop in share *value*, with some "volatility" (asx200 down 66 points)
> 
> What volatility was experienced by house prices today?




One the thing I will just point out is that it was the share prices that dropped, Not the share values, their is a difference. Price is what you pay, value is what you get. Prices change by the minute, values rise or fall slowly over time with the earning power of the asset.


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## medicowallet (8 March 2011)

Tysonboss1 said:


> One the thing I will just point out is that it was the share prices that dropped, Not the share values, their is a difference. Price is what you pay, value is what you get. Prices change by the minute, values rise or fall slowly over time with the earning power of the asset.




is THERE?

It truly sounds like you have been listening to real estate agents too long.

http://www.google.com.au/search?hl=...e&sa=X&ei=QJl1TfDUJJGOvQO7l6DXBQ&ved=0CCAQkAE

Perhaps the top 5 will show that the word value can be used to infer price.

You failed to answer my question, and since you are a staunch believer  that realestate is not as volatile as shares (btw I agree, but just not by the magnitude you infer), can you please quantify how much volatility was in the property on that particular day, because as you use the daily fluctuations in share values to support your argument, obviously you have a comparison rate for residential properties to support your claims.

So, are they justifiable claims, or merely beliefs?


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## Tysonboss1 (8 March 2011)

medicowallet said:


> is THERE?
> 
> 1, It truly sounds like you have been listening to real estate agents too long.
> 
> ...




1, No, just some of the greatest investment minds of the past 100 years.

2, No, I can not quantify it on a daily basis, But if you look at the total percentage of property traded each compared to the market as a whole and then compared it to the total % of issued shares traded each day you would see that by far the share market has alot more buying and selling going on, this liquidity creates volitility.

But any way volitility is not a real concern to me, I don't really understand why you are obsessing over volitility. I think the only comment I have made on the subject is that "property is not as" volitile as shares, I never said property had no volitility, and I think most people would aggree with that.


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## Tysonboss1 (8 March 2011)

medicowallet said:


> Perhaps the top 5 will show that the word value can be used to infer price.



These are the top five you suggested,


•a numerical quantity measured or assigned or computed; "the value assigned was 16 milliseconds" 
I don't think that relates to price

•fix or determine the value of; assign a value to; "value the jewelry and art work in the estate" You can value the jewelery and artwork in the estate, But it can then sell higher or lower than that figure on any given day, so again this is not infering price


•the quality (positive or negative) that renders something desirable or valuable; "the Shakespearean Shylock is of dubious value in the modern world" Again here value is not refering to the price somthing will trade at


•prize: hold dear; "I prize these old photographs" not price


•the amount (of money or goods or services) that is considered to be a fair equivalent for something else; "he tried to estimate the value of the produce at normal prices" again this is not refering to price, this is like saying, " The car is valued at $10,000 but he bought it for $8,000 at auction


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## sinner (8 March 2011)

Just for the record, I have been keeping track of the numbers supplied by realestate.com.au, specifically the ratio "Advertised property" which represents supply vs "People looking" which represents demand.

While most of the charts aren't declining as severely as they were during the later portion of last year, we are still way way down on supply/demand levels. Early last year we were seeing over 100 people per house in almost all the suburbs and now it's half of that. For example in Richmond, VIC demand is down 51% YoY. In Marrickville NSW 53% down YoY. In Windsor QLD 52% down YoY.

This is in combination with decreased home sales volume below preGFC levels which leads to an inherent increase in supply, an increase in the total number of new dwellings available in 2009 which remains unmatched by incremental demand (see previous posts by me for charts), continued stress in overseas credit markets (take a look at Eurodollar -not EURUSD- futures to see what I mean) which is the biggest threat to ongoing mortgage origination by our banks, continued lack of deposit growth to match loans growth, strong Aussie dollar introducing serious structural imbalances and reducing global competitiveness to the non resource portion of the economy, etc.

Meanwhile, I would ask, does anyones wage growth over the past 25 years match this curve?



Yet somehow, we are expected to believe that this time, it's different. To me, credit risk exposes this whole thing as a farce. If we wake up tomorrow and Aussie banks/corporates can't find overseas credit to rollover their ****ty short term debt (you know, the accepted practice of paying off debt with more debt), it will be all over a lot sooner than most think.


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## Tysonboss1 (8 March 2011)

Here is a video if you want a brief explanation of the difference between "price" and "value".

If you don't agree thats fine, we can agree to disagree. But I think you will get a benefit from watching this.

.


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## medicowallet (8 March 2011)

Tysonboss1 said:


> •fix or determine the value of; assign a value to; "value the jewelry and art work in the estate" You can value the jewelery and artwork in the estate, But it can then sell higher or lower than that figure on any given day, so again this is not infering price




I was not referring to the value of property in 6 weeks, I was referring to the value of shares and properties on that particular DAY. 

If you have just sold something, are you not establishing its price 
If I have the exact same item, it is not my ideals which determine the value at the time, it is what people are willing to pay.





Tysonboss1 said:


> One the thing I will just point out is that it was the share prices that dropped, Not the share values, their is a difference. Price is what you pay, value is what you get. Prices change by the minute, values rise or fall slowly over time with the earning power of the asset.




Ok I'm sold on your idea,

I am going off to the bank now to take out a new loan.

I have determined that my 4 BR investment property in Cairns is valued at 2.4 million, so I am going to take a loan out against it and buy 5 more properties in the street, with that loan.


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## medicowallet (8 March 2011)

Tysonboss1 said:


> What I was saying here was that if,
> 
> Woolworths sold bought 10 cans of baked beans per year for $1 per can and sold at $2 a can and in 2010 made $10 profit, the crowd may value the business at $100, because they want a 10% return.
> 
> ...




Have you read this Tysonboss?

Oh dear, you just did?

Oh dear, you feel silly?

That is OK. I won't tell anyone.


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## R35 (8 March 2011)

sinner said:


> Just for the record, I have been keeping track of the numbers supplied by realestate.com.au, specifically the ratio "Advertised property" which represents supply vs "People looking" which represents demand.
> 
> While most of the charts aren't declining as severely as they were during the later portion of last year, we are still way way down on supply/demand levels. Early last year we were seeing over 100 people per house in almost all the suburbs and now it's half of that. For example in Richmond, VIC demand is down 51% YoY. In Marrickville NSW 53% down YoY. In Windsor QLD 52% down YoY.
> 
> ...




****
"Meanwhile, I would ask, does anyones wage growth over the past 25 years match this curve?"

Just taking the last 15years for example..

I think the answer is yes....assuming 1995 = 200 and 15 years later = 600. So triple salary overall....

When I left Oz in 95 the average accounting Graduate salary was around $30k...most of my mates are pulling down $100k+ now that stayed in that space....thats over triple increase in base. 

I know others that moved into Investment Banking and are pulling down 10times+ the starting Acctg salary now.

Property is to some extent linked to affordability otherwise the masses could not afford to own it.


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## againsthegrain (8 March 2011)

R35 said:


> ****
> "Meanwhile, I would ask, does anyones wage growth over the past 25 years match this curve?"
> 
> Just taking the last 15years for example..
> ...




hmmmm those figures don't march, graduate accounting salary on 100k? more like $25 ph thesedays with everything being outsourced and nobody wanting to take on overheads.

Check out seek, any job 65 - 100k you are looking at 5 - 10 years experience with a shopping list 2 pages long of skills and education

Not talking about accounting specifically but average graduate programs range between 32 - 55k thesedays, take my word for it I still have plenty of friends who are at uni or just finished.


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## So_Cynical (8 March 2011)

R35 said:


> ****
> "Meanwhile, I would ask, does anyones wage growth over the past 25 years match this curve?"
> 
> Just taking the last 15years for example..
> ...




I know the answer is no...i am not making 3 times what i was 15 years ago, that's nuts..im making about 30% more than i was 15 years ago...200%


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## white_goodman (8 March 2011)

R35 said:


> When I left Oz in 95 the average accounting Graduate salary was around $30k...most of my mates are pulling down $100k+ now that stayed in that space....thats over triple increase in base..




really lol...

so your mates in 95, some 15 years ago are still at the graduate accounting level? So your comparing graduate accounting level in 95 (30k) and their current jobs in 2011 after 15 years in the field (100k) and are deducing that wages have gone up 300%?

wow just wow


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## mazzatelli (8 March 2011)

Tysonboss1 said:


> 1, Introducing more credit increases the total money supply in the economy, the money supply is not fixed it expands and can contract, as the money supply expands (inflates) faster than the total goods and services produced in the economy you will see inflation of prices accross the board, So expanding credit should generally see increasing inflation, thats why the RBA increases rates to try and slow inflation.
> 
> If the money supply contracted compared to the total amounts of goods and service moving deflation would occur, Inflation is regarded as the lesser evil hence the rba has a policy of allowing a small % of inflation to occur over time, rather than fact deflation and depression.
> 
> ...




lol, thanks for the 101 on monetary policy 
correlation doesn't imply ratio =1. Yes housing should only increase with inflation, but that relationship has broken down in recent times. 
My point is hedging for inflation atm with residential capital value is not optimal.

No I'm not lost, I make my living from hedging - if your option knowledge is up to scratch, the example I gave is analogous to hedging something with a delta of 0.9 with another of 0.2 and differing convexity. Even though they may be related, the replication is not perfect.

But I'll leave it at that, we can agree to disagree.


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## Tysonboss1 (9 March 2011)

mazzatelli said:


> No I'm not lost, I make my living from hedging - if your option knowledge is up to scratch, the example I gave is analogous to hedging something with a delta of 0.9 with another of 0.2 and differing convexity. Even though they may be related, the replication is not perfect.
> 
> But I'll leave it at that, we can agree to disagree.




Sorry, I meant to say I was lost, not you were lost.

You may well be right that you can use a option stratergy to hedge against inflation, But I try and keep it simple, I would much prefer to own property and just collect rent.

But yes as I have said many times you can not but any property at any price and expect to do well, the price you pay for the property must make sense when compared to the earning power of the property.


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## Tysonboss1 (9 March 2011)

medicowallet said:


> Have you read this Tysonboss?
> 
> Oh dear, you just did?
> 
> ...




What was your point here.


----------



## AlexG1 (9 March 2011)

medicowallet said:


> I was not referring to the value of property in 6 weeks, I was referring to the value of shares and properties on that particular DAY.
> 
> If you have just sold something, are you not establishing its price
> If I have the exact same item, it is not my ideals which determine the value at the time, it is what people are willing to pay.




I think the way I'd define value is what something SHOULD be worth based on all the measurable parameters.  It should be entirely objective, but in reality it is subjective due to differing interpretations of various inputs.  For example if I was attempting to estimate the future value of an oil company I must make some estimation about the future oil prices.

The price is, as you say, what people are willing to pay for it.  It's a point in time measurement of a transaction.

If somebody estimates that the value of their asset is worth more than what somebody is willing to pay for it then they are unlikely to sell it (Unless they are forced to).

To me this is pretty much the crux of this whole debate.  We have a bunch of people who estimate that the median value of Australian property is 7.5 times the median wage and that it will continue to grow into the future.  There's others that estimate it should be waaaay lower than that (including me btw).

I can go out and offer one of these 7.5x guys half that today - and they aren't going to sell it to me.  If no one offers the seller his estimated value he's not going to sell it - so there is NO price.

If however the guy on 7.5 times is leveraged at 90% and interest rates go up, fuel prices go up and god forbid he's out of a job - he's going to have to sell.......  Now if nobody out there values his house at 7.5x he's going to have to sell at the highest somebody offers him - which may well be below what EITHER of them value the property at.

This is the aim of a value investor - to pay a lower price for an item than their estimated value for it.  Adding a margin of safety to allow for errors in their calculations/assumptions.

I kinda think that's where Tyson was coming from as well and hopefully I've explained myself well enough.

Alex.


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## sinner (9 March 2011)

Tysonboss, I wish you would stop spouting this spiel about property being an inflation hedge, and using all your example points within a very narrow scope of recency bias to make your case!

The fact of the matter is that property is only an inflation hedge in a normally functioning economy with the inflationary pressures being result of higher productivity in the economy. However this is the same period that I refer to as the "dartboard" as in, you could throw a dart at any investment on the board and make money. Realistically during this period the best thing to hold instead of property is bank shares, as this is the company making actual money off "retail" property investors by acting as their secured creditor.

Yet, the truth is plain to see for anyone willing to check: Australia lags behind all contemporaries in productivity and yet we consistently record higher inflation rates. This is a massive structural imbalance that plays out over many many years, reducing our global competitiveness.

Property has never been shown to act as an inflation hedge against "unexpected" inflation, the sort we see more often than not in times like these. So please, unless you have proof that exceeds the narrow scope of 10-20 years Australian data (even then I am sure I can find counter examples), stop with this spiel.


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## Tysonboss1 (9 March 2011)

medicowallet said:


> I have determined that my 4 BR investment property in Cairns is valued at 2.4 million, so I am going to take a loan out against it and buy 5 more properties in the street, with that loan.




Well I have told you how I figure out the value of an asset, I conduct an analysis of it's earning power over time and then use this infomation to justify the price I am willing to pay for the asset and in this way I can have a certain assurance that over time I will have a decent return on my invested funds and by not over paying I have a certain assurance that I will not have a large loss in capital.

How do you work out the price to pay for an asset, Since you seem to believe that any asset is only worth what it can be sold for that day, How do you work out a fair price to pay for somthing, You seem to believe that the only value an asset has is it's current market price, How ever then you also state that you believe property is over priced and due for a correction, the fact that you believe it is due for a correction means that you do believe that assets have some sort of intrinsic value that can be measured and can become over priced in relation to this intrinsic value.

So which one is it, do you believe that the market is always 100% correct and market price is always equal to fair value, Or do you believe that there is a fair intrisic value to assets and they can trade at prices above and below this intrinsic value.

As I have stated i believe every asset has a value which is somewhat fixed and it is up to each person to decide they price they are willing to pay for that value, Sometimes it will be underpriced other times over priced. Each person may value an asset differently though, for example a developer may value a block of land higher because he has the skills to develop the property into apartments, so he can pay a higher price than some one who's plan was to simple rent out the house.

But each to there own. I would love to hear how you go about working out how to deploy your capital.


----------



## Tysonboss1 (9 March 2011)

AlexG1 said:


> .
> 
> I kinda think that's where Tyson was coming from as well and hopefully I've explained myself well enough.
> 
> Alex.




Yes exactly, but I don't use a multiple of wages to determine the value of a property, I use the rental return.


----------



## FxTrader (9 March 2011)

Tysonboss1 said:


> Well I have told you how I figure out the value of an asset, I conduct an analysis of it's earning power over time and then use this infomation to justify the price I am willing to pay for the asset and in this way I can have a certain assurance that over time I will have a decent return on my invested funds and by not over paying I have a certain assurance that I will not have a large loss in capital



Valuation methodologies vary between asset classes and are far from an exact science.  Take equities for example, you can easily get 10 different valuations for the same company from 10 analysts and frequently do with wide variation where each analyst has their own formula.  Roger Montgomery's valuation methodology did not assist him when he lost millions on Credit Corp for instance.  It may have been a bargain when he bought it but circumstances change, this can and does happen with property as well.

Valuers for property, including local councils and banks, use recent sale price history as a major factor in their valuation calculations so price and valuation are closely linked within the property asset class.  Not so with profit making businesses (stocks) where the saying "price is what you pay and value what you get" really applies.  Using rental yield as a guide to valuing a property is hardly more valid or accurate than recent sale price history since yield uses purchase/asking price as an input.

All you are doing is deciding what you are willing to pay for an IP based on return on equity today, but just as with stocks this is a point in time valuation subject to change when the propects for property prices change.  American and Irish property investors found this out the hard way.  What you are willing to pay today may prove to be to much a year from now.


----------



## R35 (9 March 2011)

white_goodman said:


> really lol...
> 
> so your mates in 95, some 15 years ago are still at the graduate accounting level? So your comparing graduate accounting level in 95 (30k) and their current jobs in 2011 after 15 years in the field (100k) and are deducing that wages have gone up 300%?
> 
> wow just wow




Maybe I should be a bit clearer.
Back in 1995 the average starting graduate accounting wage was $30k approximately in the big 4 - Brisbane - Sydney was higher etc..

15 years later, the guys who stayed in the accounting field are making at least $100k/year now. Thats 3times+ there starting salaries back in 1995. 

I'm not saying or implying all fields are the same but if my accountant has 15years of experience and is not pulling down over $100k and works in a major Aussie accounting firm then he is likely to be a poor accountant.

good luck..


----------



## prawn_86 (9 March 2011)

R35 said:


> I'm not saying or implying all fields are the same but if my accountant has 15years of experience and is not pulling down over $100k and works in a major Aussie accounting firm then he is likely to be a poor accountant.




thats the whole point.

A graduate now doesnt get 100k. To compare apples with apples, you have to look at the grad wages then, vs the grad wages now.

Accounting:
Grad wages then - 30k
Grad wages now - 50k upper end

Its been proven numerous times int his thread that house price increase have outpaced wage increases.


----------



## Tysonboss1 (9 March 2011)

FxTrader said:


> 1,Valuation methodologies vary between asset classes and are far from an exact science.  Take equities for example, you can easily get 10 different valuations for the same company from 10 analysts and frequently do with wide variation where each analyst has their own formula.
> 
> 2, Roger Montgomery's valuation methodology did not assist him when he lost millions on Credit Corp for instance.  It may have been a bargain when he bought it but circumstances change, this can and does happen with property as well.
> 
> ...




1, Offcourse you can, and variations occur for several reasons a) the projected earnings growth differs between analysts, weekly rents don't move like the oil price (I don't use any sort of future projections when it comes to property other than the rent will stay between a certain range adjusted for inflation over time) B) the rate of return the analyst wants to achieve, for example if the business is earning $100 an investor who wants to earn 10% can pay more than one who wants to earn 20% leading to different valuations c) analysts can discount valuations due to different risk factors,  the wide range of risk factors for businesses don't exist in property and the ones that do exist are very cheaply insured against or easily prevented.

2, offcourse there is always business risk with businesses on the stock market hence why graham says that using sound analysis techniques and the margin of safty principle ensures that the investor has a better chance for profit than for loss not that loss is impossible and as the number of investments increases you are more certain that the profits will out number the losses. it is a less important factor with property investments, because the Business risk is much lower.

3, Thats your opinion, I don't agree.

4, I don't use asking price / purchase price as an imput. I take the rental return less an allowance for outgoings and multiply it by 22.5, 

5, Rental yields are far less elastic than business earnings, In fact rental yields are probably more stable than property prices. So using the rental return to justify the amount I can pay for a property investment to me is quite logical, After all thats what my return is, The rental return is the whole reason I buy property in the first place.


----------



## medicowallet (9 March 2011)

Tysonboss1 said:


> *1* Well I have told you how I figure out the value of an asset, I conduct an analysis of it's earning power over time and then use this infomation to justify the price I am willing to pay for the asset and in this way I can have a certain assurance that over time I will have a decent return on my invested funds and by not over paying I have a certain assurance that I will not have a large loss in capital.
> 
> *2* How do you work out the price to pay for an asset, Since you seem to believe that any asset is only worth what it can be sold for that day, How do you work out a fair price to pay for somthing, You seem to believe that the only value an asset has is it's current market price, How ever then you also state that you believe property is over priced and due for a correction, the fact that you believe it is due for a correction means that you do believe that assets have some sort of intrinsic value that can be measured and can become over priced in relation to this intrinsic value.
> 
> ...




1. So you make assumptions about its earning power over time. This is what most people do, and most take into account historical precedence and future potential. A lot of spruikers have never seen property underperform in this country, I have, and hence I do not believe all the real estate agent generated hype at the moment. I am playing my real estate investments extremely conservatively at the moment, as I can afford to underperform the market at the benefit of protecting my assets. I know you gear at a low level, but you are in a market where the price pressures are not going to come from investors like us, but from the overcommitted.

2. It does not matter how I value an asset, if the market does not agree with me when I go to make the purchase.

That is why at a specific point in time Value = price. Future projections in value are just that, projections.

Therefore if I value my property in Cairns at 2.4 million, and the market values it at $400k, then it really does not matter what I think, its price AND its true value on that day is $400k

I believe, based on historical data that housing is overpriced and due for approx 20% correction (as I said claimed by a combination of falls/stagnation), but obviously at this exact point of time my valuation of property is clearly wrong, as the price I have to pay to acquire more is too high. I am, in fact merely making projections that house prices will either fall or stagnate, which I have been saying for many months on this forum. Therefore my projected valuation may be correct, but that does not help me in the moment.

4. It depends upon the asset class obviously, and an answer is not too easy eg do I want to purchase this specific business for capital growth or for cash flow? Do I want to purchase this particular property for my kids to stay in whilst at uni, or do I want it purely for tennants, do I want this share short term or long term. So I cannot ever give a blanket answer.

The only blanket rule which I like to apply, is that if something has outperformed for a long time, it is time to have a good, hard think about why this is, and the risks this presents.


----------



## Tysonboss1 (9 March 2011)

medicowallet said:


> but obviously at this exact point of time my valuation of property is clearly wrong,.




No, Mr Market may be wrong.

.


----------



## Tysonboss1 (9 March 2011)

The very end of this video has an insight into what I have been trying to explain.

Watch this from the 7.20 minute mark,

.


----------



## Tysonboss1 (9 March 2011)

medicowallet said:


> Therefore if I value my property in Cairns at 2.4 million, and the market values it at $400k, then it really does not matter what I think, its price AND its true value on that day is $400k
> 
> .




When I value a business or a property I am not trying to come up with a price it will sell at that day, I conduct my analysis with the aim of coming up with a figure called "estimated intrisic value", the Intrisic value is what this asset should trade at between two rational parties outside periods of any extreme pessimism or over the top optomism.

By indentifying the IV I can with a high amount of assurance be sure that I am not over paying for the asset. Offcourse market flucuations will take the price at times above the IV and at other times Below the IV, But the IV doesn't change with the price.

In regards to your cairns property, you can stand on a hill and spruik that your property is worth $2.4M, you could even convince people to bid at this level but unless this price is supported by measurable facts then it will not change the IV. You do not decide what the IV is, the facts do.

Any way I am not interested in discussing this topic any more, I have explained my point of veiw it does not matter to me if you do not aggree. But just remember this is not a theory that I have come up with my self it is a theory that is used by some of the richest and most successful investors history, Many with longstanding histories of outperforming markets for decades.

 Walter J. Schloss  1956–1984      21.3%pa 

Tom Knapp 1968–1983                20.0%pa 

 Warren Buffett  1957–1969         29.5%pa

William J. Ruane 1970–1984        18.2%pa

 Charles Munger 1962–1975        19.8%pa  

 Rick Guerin  1965–1983             32.9%pa

Stan Perlmeter  1965–1983         23.0%pa 




http://www.grahamanddoddsville.net/wordpress/Files/Gurus/Warren%20Buffett/Superinvestors%20of%20Graham%20and%20Doddsville%20-%20Hermes.pdf


----------



## R35 (9 March 2011)

prawn_86 said:


> thats the whole point.
> 
> A graduate now doesnt get 100k. To compare apples with apples, you have to look at the grad wages then, vs the grad wages now.
> 
> ...




 *****************************
Yep - I get your point - yes average wages have not kept up with the average housing price in the last 15yrs or so as a fraction Wages/Avg Home price.

This point reminds that i did make the right decision 15years ago in search of the higher wage versus staying in Oz...the point above vindicates that decision as I'm making a lot more now oversea's that staying back home...may be that is a good take-away for others..there are low-tax, high paying countries in Asia only a day flight away that you can make some coin and return home one day and live a comfortable life back in Oz...that choice is yours to make. 

good luck.


----------



## FxTrader (9 March 2011)

Tysonboss1 said:


> ... the wide range of risk factors for businesses don't exist in property and the ones that do exist are very cheaply insured against or easily prevented.



Oh really, and just how do you insure against a dramatic decline in property prices as occurred in the U.S., Ireland etc. and overdue in Australia?



> ...it is a less important factor with property investments, because the Business risk is much lower.



Recency and normalcy bias will not serve you well in investing.  IP is now a high risk investment in Australia and that's not just my opinion.



> I don't use asking price / purchase price as an imput. I take the rental return less an allowance for outgoings and multiply it by 22.5,



Are you serious?  And how do you arrive at rental return then?  
Point in time valuation only reflects current market conditions and is not much of a buffer in a downturn.


----------



## Tysonboss1 (9 March 2011)

Here is the proper figures, For some reason it put the dates as phone number in the other post 

Walter J. Schloss  1956 to 1984    -        21.3%pa 

Tom Knapp 1968 to 1983                -      20.0%pa 

 Warren Buffett  1957 to 1969        -       29.5%pa

William J. Ruane 1970 to 1984       -        18.2%pa

 Charles Munger 1962 to 1975       -         19.8%pa  

 Rick Guerin  1965 to 1983             -        32.9%pa

Stan Perlmeter  1965 to 1983        -         23.0%pa


----------



## againsthegrain (9 March 2011)

> high paying countries in Asia only a day flight away that you can make some coin and return home one day and live a comfortable life back in Oz...that choice is yours to make.




You can also go work in the mines here in Australia, opportunities everywhere but the point is average wage has nowhere near kept up with house prices, kind of the opposite of what you tried to reinforce in the original failed argument.


----------



## Tysonboss1 (9 March 2011)

FxTrader said:


> 1,Oh really, and just how do you insure against a dramatic decline in property prices as occurred in the U.S., Ireland etc. and overdue in Australia?
> 
> 
> Recency and normalcy bias will not serve you well in investing.  IP is now a high risk investment in Australia.
> ...




1, By not over paying in the first place

2, Please try and over come your learning disability and after I have spelled it out nice and slowly you will see that at no point do I use the purchase price or asking price in the input.

Step one- Look at the property, make an assesment of it's likely weekly rent based on  what it is currently renting for compared to other recent leases in the area and other other properties of similar type, quality an location etc.

Step two- you now have a figure of the likly weekly rent, lets say $425 / week. So times that by 52, because there are 52 weeks per year. this gives you a gross rental yield of $22,100

step three- You now have to deduct an amount from this figure that will cover rates/insurance/maintaince and other incidentals. you can make this figure as conservative as you like, most banks use 20% of gross rent as a rule of thumb so I will use that in this calculation (normally I would use 15%). So we multiply the $22,100 gross rent by 0.8 to give us an estimated net rent of $17,680.

step four- we then mulltiply the net rent by 22.5 to give you a figure of $397,800, this is then the IV of this property.

You will notice at no time did I use the purchase price or asking price in my calculation


----------



## Tysonboss1 (9 March 2011)

Any way, Thanks to all ASF members for the lively conversation over the years, It's been entertaining. I am off to focus on other things for a while.

Cheers, I wish everyone the best of luck.


----------



## Buckfont (9 March 2011)

and the best of luck to you Tysonboss1 in all your future endeavours. 

I have enjoyed all your posts. Bf


----------



## robots (9 March 2011)

hello,

see ya bro, thanks for sharing and helping out everyone here at ASF

and not once have any of us prophets asked for money 

thankyou
professor robots


----------



## robots (9 March 2011)

hello,

yeah, top effort man

people please go to the members area and research this guys posts, superb

thankyou
professor robots


----------



## FxTrader (9 March 2011)

Tysonboss1 said:


> 1, By not over paying in the first place



That's not a form of insurance, and if you can't understand this that then it's you with the learning disability.  Once again you try and avoid the substance of the issue, you can't insure property against capital loss.



> ... now have a figure of the likly weekly rent, lets say $425 / week. So times that by 52, because there are 52 weeks per year. this gives you a gross rental yield of $22,100



More financial illiteracy, your 22k is your gross rental return not yield.

Rental yield = (weekly rent * 52) / *purchase price* x 100, expressed as a percentage.  Rental yield clearly has a price component, understand, get your terminology in order.



> we then mulltiply the net rent by 22.5 to give you a figure of $397,800, this is then the IV of this property.  You will notice at no time did I use the purchase price or asking price in my calculation




Your figure of $397,800 is what you're willing to pay based on what you consider to be an acceptable rental yield, that is *not* a VALUATION or IV calculation.  You are clearly confused about the meaning of certain financial terms and their application here. Yours is not a valuation calculation, rather it's an acceptable yield calculation used to derive a purchase price.


----------



## robots (9 March 2011)

hello,

have we had the crash yet FX Trader? what great minds are now predicting it?

oh well, Keen wrong & gone, Schiffer wrong and gone, havent heard from that Minnick bloke, Grantham and Maldoff took over for a while, gone

louis christopher and jenman still carrying on with usual spam, oh well

thankyou
professor robots


----------



## trainspotter (10 March 2011)

Tysonboss1 said:


> Any way, Thanks to all ASF members for the lively conversation over the years, It's been entertaining. I am off to focus on other things for a while.
> 
> Cheers, I wish everyone the best of luck.




Cheers Tysonboss1. Your posts have been succint, factual, thought provoking and very enlightening. I am sure you will succeed in whatever you decide to focus on in the future. 

I find it hilarious that the people in here who have a difference of opinion to yours on property do not own property nor have they had much in the way of life experience or ever held a green title in their hands. Yet they have so much to say on the subject matter at hand. 

Apparently a balanced portfolio cannot include property that delivers capital growth and or a rental return nor even a tax deduction. What about PPOR and nil capital gain upon selling? Roof over your head that is actually yours and not Mummy and Daddys or the Landlords? NOPE. 

Don't buy property cause it is gonna crash and shares will outperform whatever property is capable of. I am still waiting for the crash so I can go and buy more property.

Keep on rolling they way you roll Tysonboss1. RESPECT !


----------



## Joe Blow (10 March 2011)

Tysonboss1 said:


> Any way, Thanks to all ASF members for the lively conversation over the years, It's been entertaining. I am off to focus on other things for a while.
> 
> Cheers, I wish everyone the best of luck.




Always sad to see a long time ASF member leave the site.

Thanks for all your contributions and best of luck for the future. 

You're always welcome back if you ever decide to return.


----------



## sinner (10 March 2011)

Just remember, we have been discussing the following topic at ASF for at least 2 weeks now:

Property sales reach 10-year low
http://www.abc.net.au/news/stories/2011/03/09/3159177.htm


> New research shows property sales across the country have slumped to their lowest level in 10 years.
> 
> The fresh figures from RP Data show sales of houses and units dipped 20 per cent in 2010 on the back of a number of interest rate rises.
> ....
> ...




Click the link to read on the usual HIA spiel about housing shortage.

To check, you can see it here

http://www.myrp.com.au/melbourne_house_prices.do (just replace melbourne in the URL with the capital city of your choice)


----------



## matty77 (10 March 2011)

Does anyone actually believe a thing RP Data put out nowdays? Seems like all fluff and clouds to me lately.


----------



## againsthegrain (10 March 2011)

Soaring house prices may spark mortgage crisis - economist Brian Haratsis

Read more: http://www.news.com.au/money/property/soaring-house-prices-may-spark-mortgage-crisis-economist-brian-haratsis/story-e6frfmd0-1226018966994#ixzz1GA6AkZVK

So what does it mean when now the media is no longer painting a colorful picture? I know news.com.au is a joke and not to be treated seriously however a large portion of the population believe anything that is printed.

I think this is the next step down on that graph....

Developers offering larger incentives
Media no longer printing positive outlooks .....


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## trainspotter (10 March 2011)

_Homes in capital cities rose in value at the end of last year, up 0.7 per cent for the quarter, defying economists' expectations of a fall. 

Australian Bureau of Statistics (ABS) figures show prices for established houses rose by 5.8 per cent for the year._

http://www.abc.net.au/news/stories/2011/02/01/3127128.htm

AHA ! NOW SOME TRUTH COMES OUT AT LAST !!!!!!!!!

_The ABS outcome is different to a private property survey out yesterday that showed a rise of *just 0.4 per cent for the quarter in home values, but that survey included regional areas. *_

Capital cities are still dragging regional areas along of which *some* HAVE suffered significant declines in value. Mandurah, parts of the Gold Coast, Ipswich and North Beach spring to mind.


----------



## So_Cynical (10 March 2011)

trainspotter said:


> AHA ! NOW SOME TRUTH COMES OUT AT LAST !!!!!!!!!




Yet more truth according to a piece i read in the AFR the other day

"Gold Coast property faces 7-year glut"

"KordaMentha partner Mark Korda told the conference more than 2,000 apartments worth around $2 billion were up for sale, with few buyers meaning just 300 apartments were selling on average each year."

http://www.businessspectator.com.au...ces-7-year-glut-pd20110309-ERQFT?OpenDocument

I wonder what the supply and demand brigade will make of that? sunshine and lollipops anyone?


----------



## trainspotter (11 March 2011)

So_Cynical said:


> Yet more truth according to a piece i read in the AFR the other day
> 
> "Gold Coast property faces 7-year glut"
> 
> ...




Which is probably why I wrote this in the previous post  ........ _"Capital cities are still dragging regional areas along of which some HAVE suffered *significant declines* in value. Mandurah, *parts of the Gold Coast,* Ipswich and North Beach spring to mind. _

Wake me up when you have finished darling. My head hurts.


----------



## satanoperca (11 March 2011)

trainspotter said:


> _Homes in capital cities rose in value at the end of last year, up 0.7 per cent for the quarter, defying economists' expectations of a fall.
> 
> Australian Bureau of Statistics (ABS) figures show prices for established houses rose by 5.8 per cent for the year._
> 
> ...




Looks like a decline in growth based on the above figures.

0.7% for last quarter leaves us with 2.8%p.a or inline with inflation. Growth trend is down.

Cheers


----------



## So_Cynical (11 March 2011)

trainspotter said:


> Which is probably why I wrote this in the previous post  ........ _"Capital cities are still dragging regional areas along of which some HAVE suffered *significant declines* in value. Mandurah, *parts of the Gold Coast,* Ipswich and North Beach spring to mind. _




Which parts of the gold coast you talkin about Tranny? the parts that have units for sale?


----------



## trainspotter (11 March 2011)

So_Cynical said:


> Which parts of the gold coast you talkin about Tranny? the parts that have units for sale?




LOL So_Cyclical. The Gold Coast is a very large strip of coastal land. My recollection is from Coomera to Banora Point would encompass the total land mass. Me personally I like the area around Tallebudgera Creek. One of my favourite family holiday destinations. And it is always good to catch up with family.

I also recall Sir Bruce Small as a business associate of my father who was a valuer at the time.

Yes yes yes the greedy naughty property developers have inundated the area with "apartments". Yes yes yes they all thought it is sunshine and lollipops. Mandurah is the same. North Beach has dropped 20% ??? Ipswich was a massive mortgage belt hit with evictions. Derrrrrrrrrrrrrrr

What is your point here??? I have repeatedly siad over the last 6 months or more that *CERTAIN *areas will be tanking for 40% a la' Steve Keen etc. I have also stated that the "national" house prices according to the ABS that only include the 8 capital cities is "skewed" and does not include the "outlier" of regional property.

Oh well ......... back to sleep for me.


----------



## So_Cynical (11 March 2011)

trainspotter said:


> LOL So_Cyclical. The Gold Coast is a very large strip of coastal land. My recollection is from Coomera to Banora Point would encompass the total land mass. Me personally I like the area around Tallebudgera Creek. One of my favourite family holiday destinations. And it is always good to catch up with family.
> 
> I also recall Sir Bruce Small as a business associate of my father who was a valuer at the time.
> 
> ...




My point was pretty obvious i thought...i would think that where ever your unit is on the GC its going to be hard to move with only 300 units selling last year...that's an amazingly negative figure.

-----------------

I lived on the GC for 5 years in the late 80's Tweed heads and on 5 acres in Piggabeen (out the back of Tugan) had a great time, Slightly off topic but my Grand mother actually had the opportunity to buy the land that ended up being Burleigh heads, the town centre right on the beach, back in the late 20's when there was nothing there.

In her usual style she decided that even though they have travelled regularly to the area from Melbourne, driving over many days to reach there...that nothing would ever come of the place and who would ever want to live there anyway.


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## Agentm (12 March 2011)

as usual the real figures for last weekends melbourne auction results were vastly overstated

the complete farce of 66% was overstated by 10% and not including withdrawn auctions and auction not even taken into the real count, the best they could muster with all their fudging was 60.6%

the age today reports 851 auctions last week (868 actual) and a clearance rate of 67% !!

all the happy  buyers will be basking in the sun today and enjoying the lollipops..

the bubble in melbourne remains and i bet the auctions manage to beat the medians again like they have been week in week out

plenty of window sill painting going on out there...


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## trainspotter (12 March 2011)

So_Cynical said:


> My point was pretty obvious i thought...i would think that where ever your unit is on the GC its going to be hard to move with only 300 units selling last year...that's an amazingly negative figure.




Well I would be suggesting that if the unit/apartment is part of a multi storey complex I would expect that they would be hard to sell especially as the sale prices vary from 2 million down to $245,000 depending on size and location ?? As most of these developments on the GC are of this nature it is not surprising that things are not selling as quickly as they were in 2007/2008.

According to the REIQ September quarter report, the median *house price* on the Gold Coast decreased 3 per cent to $480,000 in the quarter, however the change in the year to date has been more positive than negative, up 8.5 per cent since this time in 2009.

http://www.theaustralian.com.au/new...-apartment-sales/story-e6frg9zo-1225856479340

Matusik looked at 350 resales across 17 ocean-front apartment buildings in Surfers Paradise. He excluded sales between family members because of hardship such as divorce.

The analysis found an average capital gain of 9.9 per cent per year and an average actual gain of just under $225,000 between sales, equating to an annual gain of more than $40,000.

As there are approximately 800 apartements for sale ATM I am not concerned at the take up rate. All that glitters is not gold sometimes.


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## medicowallet (12 March 2011)

"As is normally the case on a long weekend there has been a lower number of auctions.

There were a total of 214 auctions held of which a total 146 sold resulting in a clearance rate of 68 per cent.

There were 68 homes passed in of which 44 were on a vendors bid.

Next weekend volumes return to a high number with around 950 auctions expected followed by 940 the weekend after."

I am posting some figures I somehow found on the internet.

They confuse me, so I cannot reliably give any analysis of them, but I thought I would put them up for the wise people to peruse.

medicowallet

Fairies, rainbows, marshmallows, wizz fizz and a lolly pop.


----------



## trainspotter (14 March 2011)

Wasn't that long ago a "few" were talking about the "volatility" of certain markets.


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## nukz (14 March 2011)

I watched a segment of your money your call on sky business yesterday, they had there ushual panel of REIV reps..

A guy called in who purchased a property in Tarneit in Melbourne who had been trying to rent it out for 2-3 months now with not a single inspection... The REIV reps suggested he get another agent which he told them he already had with no inspections...

It was funny watching the REIV reps then change the subject to how strong the housing market in Melbourne was and how there is a under-supply blah blah lol


----------



## medicowallet (14 March 2011)

trainspotter said:


> Wasn't that long ago a "few" were talking about the "volatility" of certain markets.




That is true, yet some were making assumptions which could not be backed up.

At the moment, the "volatility" may be increased in property due to pressure on funding, coming from the horrible disaster in Japan.

Let's just see what happens here, with Japan in trouble, and China battling inflation.

I don't think it will be all sunshine and happy days forever, yet some naive people do.


----------



## Dowdy (14 March 2011)

nukz said:


> I watched a segment of your money your call on sky business yesterday, they had there ushual panel of REIV reps..
> 
> A guy called in who purchased a property in Tarneit in Melbourne who had been trying to rent it out for 2-3 months now with not a single inspection... The REIV reps suggested he get another agent which he told them he already had with no inspections...
> 
> It was funny watching the REIV reps then change the subject to how strong the housing market in Melbourne was and how there is a under-supply blah blah lol




I live about ten minutes from Tarneit and driving past that area from Deer Park to Hoppers Crossing is just full of new estates - aimed at first home buyers. 

Driving past that area and you'll see why I say that there never was an under supply of houses just an oversupply of speculators. That area was the basis for my comment

There is a house near me that has been on the market since the start of the year. In the papers they say it takes about 50-60 days for an average home to be on the market before it sells. When it sell i'll let you know....maybe IF it sells...


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## ZSlaveski (14 March 2011)

Dowdy said:


> Driving past that area and you'll see why I say that there never was an under supply of houses just an oversupply of speculators. That area was the basis for my comment




Indeed there was never a real shortage anywhere it was all speculative. Demand was artificially generated or brought forward by easy credit and mad speculation. While the bubble expanded, more and more homes were allocated to speculation instead of shelter giving the illusion of a shortage. See here for details:

Blog about housing shortage myth

Demand exceeded that necessary for shelter because of speculative hoarding and almost 10% of dwellings were held empty. This enormous supply of empty homes will flood the market when delusional owners wake up and realise the party's over!


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## Garpal Gumnut (14 March 2011)

I live in a fairly upmarket area, possibly the 90th centile in NQ, and the sellers are hanging in, prices have dropped, but there are very few sales.

I am no expert on property.

gg


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## enigmatic (14 March 2011)

Maybe if they hold on too long the prices will fall even further and they will have to drop there price even lower to make ends meet.
Its expensive holding onto a house that isn't being rented out, I'm sure alot of those people selling haven't got tenants in there house so aren't making much cash from there investment properties.

Interesting times..


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## Garpal Gumnut (14 March 2011)

enigmatic said:


> Maybe if they hold on too long the prices will fall even further and they will have to drop there price even lower to make ends meet.
> Its expensive holding onto a house that isn't being rented out, I'm sure alot of those people selling haven't got tenants in there house so aren't making much cash from there investment properties.
> 
> Interesting times..




Yes but if you can pay the utilities and eat, and have a few kopeks coming in, why sell ?

gg


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## nukz (15 March 2011)

I used to live in the CBD and sold up because the place is getting developed into high rises all over the joint. Theres a place on corner of Lonsdale/Spencer st that will have the same amount of dwellings as East Melbourne.. in a single block.

I'm currently in South Yarra and its no better corner chapel/toorak there is 2 huge developments going on 42 level and 27 level... and developments as far as the eye can see. 

The interesting thing is if you have a drive around to outer suburbs its the same developemtns story... huge places being built but will they be filled?


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## trainspotter (16 March 2011)

*MORE properties sold for record prices in Sydney's west than in any other region over the past year. *

Sales across the city fell by just over 11 per cent last year, but this failed to halt the march of prices in the western suburbs - where most people can afford to buy.

According to figures compiled by Residex, 40 suburbs across the west and inner west have recorded a top sale price for a house, unit or block of land since January 1 last year, as have almost a dozen southwestern suburbs stretching towards Campbelltown.

"Affordability means we're moving further out, but we're pushing up costs and creating record prices as we move out," Residex managing director John Edwards said

http://www.dailytelegraph.com.au/property/property-hits-new-records/story-e6freztr-1226020406230

When OH when will this Ponzi scheme come crashing down?


----------



## Agentm (16 March 2011)

now the future fund is talking up the volatility

huge warnings from david murray

http://www.theage.com.au/business/high-house-prices-make-economy-vulnerable-20110316-1bx43.html

Australian house prices are high by world standards and have made the  economy vulnerable to overseas events that may cause a sudden decline  in their value, the head of the Future Fund says.
              Future Fund chairman David Murray said younger  Australians in particular had been prepared to devote a large portion of  their incomes to loan repayments, even at a cost to their living  circumstances, and that had helped propel house prices higher.
              ‘‘The relationship between house prices and incomes is  uncomfortably high,’’ Mr Murray said in a televised panel discussion,  hosted by The Australian newspaper and Sky News.

             The comments by Mr Murray, a former chief executive of  Commonwealth Bank, came as a major ratings agency said that more  Australians were falling behind with their mortgage repayments and the  situation could worsen with interest rate rises.


bt also backs up in the article, they talk about mortgages in arrears, and all sorts of outcomes possibly in the horizon..

lets hope it all gets forgotten by friday night and the upcoming 2700 auctions all get well above median prices and massive bogus clearance rates

imho articles like these are very much going to support the bubble story and be a thorn in the side of the real estate industry, so i expect some upbeat PR to be released.. perhaps some gloating 4 page spreads in the papers on how good your median price is in your postcode,, it may settle the nerves.. cheer up the masses.. we need more sunshine and lollipops!!!

long live the bubble.. and lets work harder in here to dispel the likes of keen and all the others whom are calling the bubble for what it is,,,

come on robots, we need guidance and inspiration now.. more than ever..


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## BigAl (17 March 2011)

The backbone of OZ (aka keeping the rest of the nation out of recession) WA is down the $hitter in Real Estate.

In the midst of the GFC, 1 in every 2 homes was being bought by / on a FHOG.  It's now down to 1 in 4.  Places here aren't selling and haven't been selling for a good 9 months+.

It was noted in the news last night that the Real Estate shonks are urging First Home owners to get in before their $21K reduces down to $7K.  Or did I mishear this?

I have no doubt the No Idea Govt will just end increasing the grant again, trying to lead even more desperate working families to the guillotine, like lambs to the slaughter.

When are the revised weekend auction results being released again?  You know the one, the one that doesn't get released to media but ends up being 5 - 10% less.


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## AlexG1 (17 March 2011)

I wonder how many Japanese investors there are in the Oz property market...  And whether they may be wanting to recover their capital given circumstances at home...

Just a thought.

Alex.


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## medicowallet (19 March 2011)

"From a city wide perspective the Melbourne residential auction market is very consistent right now with each weekend looking like the last.

This weekend the clearance rate is 67 per cent and over the last 4 weekends it has been between 63 and 67 per cent.

There was a total of 816 auctions reported of which 546 sold, 270 were passed in, 170 of those on a vendors bid.

On this weekend last year there were 889 auctions and a clearance rate of 87 per cent"

67% vs 87% last year.

All lollipops, sunshine, rainbows, fluffy toys and bubbles.


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## TabJockey (19 March 2011)

Pretty clear situation with sellers unwilling to sell without the capital gains they where expecting. Rental yields are so low that you need to make 10% a year at least to make it worth the investment.

But many buyers are not seeing much value in the market and are unwilling to go that extra 10% that sellers want. However there are still some crazies out there that will bid up a 3br 600sqm hovel in mitcham to 900k probably because they have been told that real estate "always goes up". Some prices on pretty non prestige homes in non prestige areas really boggles my mind.

To use a share market analogy, we are in a "trading range" at the moment with both sides looking for a  "break out"


----------



## Garpal Gumnut (19 March 2011)

Agree with all above.

There are many "Auction" sales in Townsville, I've been to a few and they mostly never reach the reserve and an interested party disappears in to a huddle with a RE Agent who was flipping burgers the week before.

It's sad really.

gg


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## tothemax6 (19 March 2011)

AlexG1 said:


> I wonder how many Japanese investors there are in the Oz property market...  And whether they may be wanting to recover their capital given circumstances at home...



Or perhaps they will want to 'take delivery' of that capital, i.e. 'want to live here now my japanese house is broken'.


medicowallet said:


> All lollipops, sunshine, rainbows, fluffy toys and bubbles.



LOL. Where is this place, I want to live there .

Anyway, is this going to end in a crash, or just a stagnating slow bear market in property?


----------



## medicowallet (19 March 2011)

tothemax6 said:


> Or perhaps they will want to 'take delivery' of that capital, i.e. 'want to live here now my japanese house is broken'.
> 
> LOL. Where is this place, I want to live there .
> 
> Anyway, is this going to end in a crash, or just a stagnating slow bear market in property?




I have made my predictions quite clear.

Most likely stagnation, possibly 20% correction is my guess.


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## c-unit (20 March 2011)

http://www.abc.net.au/news/stories/2011/03/16/3165231.htm

"Unexpected" jump in mortgage arrears. Unexpected to the mainstream economists I guess, who keep parroting how strong the economy is. The more enlightened of us can see that households are on the brink and the economy is terribly fragile.

I also note that the banks have lowered their credit standards even more in an attempt to gain a greater share of a declining home buyer pool. They are bumping up max LVR's to th 95-97% range again.


----------



## Agentm (20 March 2011)

medicowallet said:


> "From a city wide perspective the Melbourne residential auction market is very consistent right now with each weekend looking like the last.
> 
> This weekend the clearance rate is 67 per cent and over the last 4 weekends it has been between 63 and 67 per cent.
> 
> ...




hocus-pocus 

of course we were told to expect 950 auctions this weekend and 940 next weekend.

the 816 reported auctions dont include the 128 that they did not report.. ie no bid

so magic.. there are now 816 reported, 

hocus-pocus ala jazzamm

67% clearance rate 

lol  

way better than the actual 57% clearance rate..


quite a few auctions had pretty heated bidders.. with one advertised at 1.3 - 1.4 mill and going on market at 1.75 mill.. full 25% above the advertised price

so the result of this type of garbage smoke and mirror tactics.. property prices in melbourne are in full steam ahead bubble mode with prices still rising in february 2011

fantastic news for all

lets celebrate.. waaahhooooo!!!!!!!!!


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## BigAl (20 March 2011)

c-unit said:


> http://www.abc.net.au/news/stories/2011/03/16/3165231.htm
> 
> "Unexpected" jump in mortgage arrears. Unexpected to the mainstream economists I guess, who keep parroting how strong the economy is. The more enlightened of us can see that households are on the brink and the economy is terribly fragile.
> 
> I also note that the banks have lowered their credit standards even more in an attempt to gain a greater share of a declining home buyer pool. They are bumping up max LVR's to th 95-97% range again.



Idle money has to go somewhere, at the moment it's servicing all this monsterous debt and stretching families to the brink.

And this is all at the expense of Retailers who are down the Shizen, they have been in Recession for a year plus.


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## nukz (20 March 2011)

In Melbourne CBD its pretty easy to gauge what the market is doing because there are such high volumes. 

There market was at absolute peak around Feb/March 2010 and since then its been a real slide in the CBD...

Right now there are buildings that have massive amounts of listing (555/565 flinders st go there on Sat and have a look at how many opens they have in those 2 buildings.. mind you these property's were purchased off the plan 2 years ago for 400k and listing now under that) but generally allot of the property's right now advertised for sale in the CBD have been for sale for quite sometime... going to a few opens 2 weeks ago i was the *ONLY* one who inspected.... this is a big change from 2008-2009 when i remember property's in the CBD would have 10-15 people at each inspection and there was a feeling or panic that we need to get the places as fast as possible. 

The rental market is totally changed as well... i remember going to opens of a total **** hole on Russel st with about 30 people in 2008 asking 300/week rent and people were offering upto 350/week at the open... last open i went to on Collins st i was the only one to look.

I find you can read about whats happening... but just go out and do some ground work to see for yourself.


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## AlexG1 (21 March 2011)

Hmm - this little campaign is quite likely to cause a bit of a media stir..... Wonder if it will have any impact.  Will be watching for the Melbourne property clearances this week with interest....

http://www.prosper.org.au/2011/03/17/buyers-strike-day-3/

Alex.


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## sinner (21 March 2011)

nukz said:


> In Melbourne CBD its pretty easy to gauge what the market is doing because there are such high volumes.
> 
> There market was at absolute peak around Feb/March 2010 and since then its been a real slide in the CBD...
> 
> ...




I have been saying much the same thing on this thread for months.

Volumes are down people, way way down. 

Volumes are below their pre-GFC averages.


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## sinner (21 March 2011)

TabJockey said:


> Pretty clear situation with sellers unwilling to sell without the capital gains they where expecting. Rental yields are so low that you need to make 10% a year at least to make it worth the investment.
> 
> But many buyers are not seeing much value in the market and are unwilling to go that extra 10% that sellers want. However there are still some crazies out there that will bid up a 3br 600sqm hovel in mitcham to 900k probably because they have been told that real estate "always goes up". Some prices on pretty non prestige homes in non prestige areas really boggles my mind.
> 
> To use a share market analogy, we are in a "trading range" at the moment with both sides looking for a  "break out"




Thought I would dig up the old cascade model 

Housing Collapse Cascade Pattern

    * Volume drops precipitously *TICK*
    * Prices soften a bit *TICK*
    * Inventory levels rise slowly *TICK*
    * High-end home prices remain relatively steady for a brief while longer *TICK*
    * The real estate industry tries to convince everyone it's "business as usual" and homes are affordable because rates are low *TICK*
    * Bubble denial kicks in with media articles everywhere touting the "fundamentals" *TICK*
    * Stubborn sellers hold out for last year's prices as volume continues to shrink *TICK*
    * Inventory levels reach new highs *TICK* (at least, by my research)
    * Builders start offering huge incentives to clear inventory *TICK*
    * Some sellers finally realize (too late) what is happening 
    * Price declines hit the high-end *TICK*
    * Increasingly desperate sellers get creative with incentives, offering new cars, below market interest rates, trips, etc *TICK*
    * Gimmicks do not work *TICK*
    * Price declines escalate sharply at all price levels
    * The Central Bank issues statements that housing is fundamentally sound *TICK*
    * Prices collapse, inventory skyrockets, and builders holding inventory go bankrupt


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## adobee (21 March 2011)

Thought this article may be of interest to some.. The article itself isnt that good but the topic and feedback is interesting ..


http://www.smh.com.au/opinion/socie...ams-20110320-1c23o.html?comments=181#comments


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## konkon (21 March 2011)

There will be a serious correction in the housing market if the banks, to a significant extent, block supply of funds or prevent liquidity from hitting the housing market. With housing being at least twice as expensive here compared to the US on average, there is a potentially serious risk of huge losses of consumer wealth that will eventually drag-down the rest of the economy. 

If the banks don't curb supply though, then there will eventually be an even bigger long-term correction of the housing market. So it may be inevitable. 

Ask yourself ultimately what is the real difference between us and the United States, with respect to a housing bubble. They have mining just like we do and a whole lot of other world class industries. Paying off a, let's say, $200,000 loan got them in all sorts of trouble. What's the average here? Most markets work on a margin, so don't just factor in those that have a head start; look at the ones that bought all types of property at inflated prices and that's your margin!


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## trainspotter (21 March 2011)

konkon said:


> There will be a serious correction in the housing market if the banks, to a significant extent, block supply of funds or prevent liquidity from hitting the housing market. With housing being at least twice as expensive here compared to the US on average, there is a potentially serious risk of huge losses of consumer wealth that will eventually drag-down the rest of the economy.
> 
> If the banks don't curb supply though, then there will eventually be an even bigger long-term correction of the housing market. So it may be inevitable.
> 
> Ask yourself ultimately what is the real difference between us and the United States, with respect to a housing bubble. They have mining just like we do and a whole lot of other world class industries. Paying off a, let's say, $200,000 loan got them in all sorts of trouble. What's the average here? Most markets work on a margin, so don't just factor in those that have a head start; look at the ones that bought all types of property at inflated prices and that's your margin!




Banks have already tightened lending criteria on residential property 

People have been talking it down for years. Steve Keen was a victim of his own bearish dialogue and walked to Mt Kosciusko as a result. Yawn. 

Some parts have already fallen by 40% BUT ON AVERAGE IS HOLDING STEADY. (capital cities that is)

WE ARE NOT THE USA !!!!!!!!!!! How many times must this be written.

Our banks did not lend 100% borrowings on jingle mail loans to people with poor credit history !! Our banks did not then sell this toxic debt to another bank/fund/hole in the ground only to find out there was no LMI in place. DOH !!

We do not have NON RECOURSE loans. 

We do not have RATCHET LOANS which start off cheap and creep upwards on a sliding scale with no limits.

Our regulatory body (The Australian Prudential Regulation Authority) is independent unlike the USA model where nearly half the lending was government sponsored.  $900 billion to special loans and rescues related to the US housing bubble, with over half going to the quasi-government agencies of Fannie Mae, Freddie Mac, and the Federal Housing Administration.

We have high employment rates and our interest rates are low. 

And our default rates on residential loans is the LOWEST in the developed world.


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## trainspotter (21 March 2011)

The size of the average Australian home loan is $268,900. 

The average house in Australia is worth $474,775.

So therefore the "average" house will have to correct it's value by 43.37% before we are in negative territory.

The chances of this are ??? anybody ........ Bueller .... Bueller .... Bueller


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## wayneL (21 March 2011)

trainspotter said:


> The size of the average Australian home loan is $268,900.
> 
> The average house in Australia is worth $474,775.
> 
> ...




Prices are set at the margins. You might only need 10% or less to be in NE to make a big difference.


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## TabJockey (21 March 2011)

Allot of people have bought into the market at high prices and low rental yields for one reason and one reason only: Historically capital gains have been pretty huge over the past 2 decades. If capital growth remains flat for a while, and the outlook becomes a bit flatter, the incentive for allot of market participants to stay in the market disappears and they move their money into a different market. This can start a chain reaction with everyone going for the door at the same time. Those that have a loan 8x their household income or 20x their income after living expenses will feel quite queasy and some will sell.

The resulting market correction probably wont last too long though...


----------



## Agentm (21 March 2011)

a decade ago there were still some signs of responsible lending practices.. before all hell broke out in the crusade to drive the bubble up

in australia in 1990 mortgage debt to gdp was 20%

*mortgage debt to gdp now 90%*

america in 1990 had 30% mortgage debt to gdp 

when it all went belly up in 1980 when they had it up to 80% through irresponsible practices.. then it diminished

first home buyers here are now being totally priced out of the market.. 

but we all know this one is different... lol


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## TabJockey (21 March 2011)

There are allot of stats being thrown around but you can really pick and choose depending on weather you want to show a bullish or bearish outlook. Perhaps if you are going to quote stats maybe give a few reasons on why they are so relevant.


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## white_goodman (21 March 2011)

trainspotter said:


> The size of the average Australian home loan is $268,900.
> 
> The average house in Australia is worth $474,775.
> 
> ...





average - it means nothing (for whatever argument) as its always skewed to upside...

median wage = $56k approx

average wage = in the $80k


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## trainspotter (21 March 2011)

_"The most obvious losers from a price downturn will be the buyers enticed into the market by the FHVB, many of whom began with 5% equity and who can therefore be easily thrown into negative equity territory by even a small price fall.

*This won’t lead to “jingle mail” defaults in Australia because our housing loans are full recourse*. But since a trigger for the downturn will be a decline in aggregate demand as the Credit Impulse turns negative, unemployment will rise””certainly in NSW and Victoria that don’t directly benefit from exports to China””and this will cause forced sales, *though a lesser rise in bankruptcy sales than in the USA*."_

The author none other then Steven Keen. The same guy who said prices would fall by 40% and sold his own home. Lost a bet to Rory Robertson and walked to Kosciusko. Known in certain circles as the "Merchant of Gloom". Has predicted five of the last two downturns. Legend.

*The current ratio of house prices to income for those looking to purchase a property is not an issue that needs to be addressed, the head of the Reserve Bank of Australia (RBA) has claimed.*

Speaking at an event in London, Glenn Stevens said the figure is not very high when compared to that seen in other nations.

*He explained the broadest countrywide property prices and income figures give a ratio of about 4.5, a number that "has not moved much either way for ten years".*

Despite admitting this is "higher than it used to be", other countries have greater ratios, Mr Stevens remarked.

The RBA chief also called on Australia to do a better job of managing growth than it has done in previous years, noting the country has a poor record in this area.

Last month, the bank opted to keep the country's cash rate unchanged on 4.75 per cent, with Mr Stevens saying in a statement that trade levels in Australia are at the highest level since the 1950s.

_"Housing affordability and the sustainability (or otherwise) of current house price levels are extremely complex issues and drawing conclusions from simplistic aggregate metrics such as house price to income ratios is very unwise"_ - ANZ's economists, led by Paul Braddick, have burst many of the myths surrounding Australia's purportedly high house price-to-income ratio.

http://www.anz.com/resources/5/5/55...bd8721/Australian-Housing-Update-20102705.pdf


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## white_goodman (22 March 2011)

trainspotter said:


> _"The most obvious losers from a price downturn will be the buyers enticed into the market by the FHVB, many of whom began with 5% equity and who can therefore be easily thrown into negative equity territory by even a small price fall.
> 
> *This won’t lead to “jingle mail” defaults in Australia because our housing loans are full recourse*. But since a trigger for the downturn will be a decline in aggregate demand as the Credit Impulse turns negative, unemployment will rise””certainly in NSW and Victoria that don’t directly benefit from exports to China””and this will cause forced sales, *though a lesser rise in bankruptcy sales than in the USA*."_
> 
> ...




time to rehash my year 12 modern history teacher...

"source... reliability and purpose"


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## konkon (22 March 2011)

trainspotter said:


> Banks have already tightened lending criteria on residential property
> 
> People have been talking it down for years. Steve Keen was a victim of his own bearish dialogue and walked to Mt Kosciusko as a result. Yawn.
> 
> ...




A regulatory body that's independent! Love it. We are not the US, but if you look at how much trouble they're in and with much lower loans than us; even if we have deposits to begin with, the loans are much greater overall. Our interest rates are not low and full-time employment just won't cut it these days with out of control daily expenses for families, that are to a large extent put on credit. We pay more for goods and services than the US does and this is having a real burden on household income. How much (hidden) refinancing has gone on in Australia? How much has this been factored-in?

For fear of there being a run on the banks, they must be getting some clever accountants to 'make' their P&Ls and Balance Sheets look good. Just look at how many small business operators are no longer in business and here is the start of the problem. 

Refinancing to refinance refinance. You honestly think this isn't going on. No losses reported on this type of practice. Not yet.

They were shown all kinds of stats in the US too prior to the GFC, and then most thought what just happened, although this was happening years prior. Even with all the great stats.


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## medicowallet (22 March 2011)

The NEW cascade model 

Housing Collapse Cascade Pattern

    * Volume drops precipitously *TICK*
    * Prices soften a bit *TICK*
    * Inventory levels rise slowly *TICK*
    * High-end home prices remain relatively steady for a brief while longer *TICK*
    * The real estate industry tries to convince everyone it's "business as usual" and homes are affordable because rates are low *TICK*
    * Bubble denial kicks in with media articles everywhere touting the "fundamentals" *TICK*
    * Stubborn sellers hold out for last year's prices as volume continues to shrink *TICK*
    * Inventory levels reach new highs *TICK* (at least, by my research)
    * Builders start offering huge incentives to clear inventory *TICK*
    * Some sellers finally realize (too late) what is happening 
    * Price declines hit the high-end *TICK*
    * Increasingly desperate sellers get creative with incentives, offering new cars, below market interest rates, trips, etc *TICK*
    * Gimmicks do not work *TICK*
    * Price declines escalate sharply at all price levels
    * The Central Bank issues statements that housing is fundamentally sound *TICK*
    * Prices collapse, inventory skyrockets, and builders holding inventory go bankrupt
    * Robots goes quiet *TICK*
    * Trainspotter says he sold out months ago


Another massive builder "glenwood homes" went belly up in NQ.


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## Aussiejeff (22 March 2011)

medicowallet said:


> The NEW cascade model
> 
> Housing Collapse Cascade Pattern
> 
> ...




Funnily enough, within the current set of gummint rules only builders, developers & individual property owners/investors will ever go bust in a downturn or correction.

The favoured big banks are now and forever will be laughing under this scenario of official protectionism no matter what direction Oz property prices take. Up? Down? Who cares?? They don't!

Foreclosures / surrender of assets to bank = Bank WIN
Rapid rise in home loan values = Bank WIN.


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## trainspotter (22 March 2011)

white_goodman said:


> time to rehash my year 12 modern history teacher...
> 
> "source... reliability and purpose"





Steven Keen ... http://www.debtdeflation.com/blogs/2011/02/10/a-motley-crew-interview-on-australian-house-prices/

900 billion in rescue money to government controlled financiers .... http://www.ahorre.com/dinero/realestate/housing_bubble/united_states_housing_bubble/

APRA is the prudential regulator of banks, insurance companies and superannuation funds, credit unions, building societies and friendly societies.
 ...... http://www.apra.gov.au/

Source and reliability taken care of now for purpose. 

Purpose is to evidence that no matter how much people want to compare us to the USA it is not logical nor relevant.

In America when you sell you PPOR you pay capital gains.

In America you can claim the interest portion as well as capital expenditure.

American banks/financiers were driven by a regulatory body that had little checks or balances in practice and was supposedly backed by the government.

In America toxic debt was parcelled off onto unsuspecting funds thinking they were getting a great RoR.

In America you could buy your house for 100% LVR then borrow some more to fill it full of furniture and put a car and a boat in the garage all on the same mortgage. EASY CREDIT.

Blah blah blah yadda yadda yadda. Not the same. Do the research.

P.S. Trainspotter is still in the market . *NOT TICKED*


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## medicowallet (22 March 2011)

trainspotter said:


> P.S. Trainspotter is still in the market . *NOT TICKED*




Same, but I am going to take the fall..


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## shyguy (22 March 2011)

Okay, so as someone who is looking to buy a first home sometime this year here in SA... are there any words of advice?

been looking in the 400k mark as don't want to over extend to begin with...

do you think it is worth waiting as late as possible in the year?


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## KurwaJegoMac (22 March 2011)

The best time to buy a house was yesterday.

The best time to buy a house before that was the day before yesterday.

Etc. etc.

If this is your first property i'd look into ensuring you can purchase it with an adequate margin of safety. We have historically low interest rates - average for Australia is about 10% over the last 20 years. Do the sums on your purchase and work out whether you can service the debt at or above normal interest rate levels.

Ensure that the rental return and all deductions will make the property viable - best if you can achieve positive cash flow to serve as a buffer when times are lean or interest rates rise. (note if you don't fully understand the difference between positive vs negative gearing coupled with negative vs positive cash flow then I suggest you learn this before jumping into any expensive investment)

There will be times over the course of owning the property that you may be out of tenants, or prices may stagnate, or interest rates may sky-rocket - you can't be immune to these effects but you can minimise the damage significantly with a bit of pre-planning before the purchase.

You say you are looking at the 400k mark but don't want to over extend - whether the price of the property is 400k, 500k, 800k, etc is not important as you could be buying a 800k property with a 500k deposit (unlikely i know but that's just to illustrate a point). What's important when determining if you're overextending yourself is your capacity to service the loan coupled with an appropriate buffer to mitigate the risks in purchasing an investment property. It might mean you have to start with a smaller place and that's ok - getting your foot in the door is the hardest step.

I think it was Trainspotter who wrote a list of ways to mitigate risk when purchasing property. The list start started with Location Location Location and was back a few pages. Have a search, well worth a read.


----------



## medicowallet (22 March 2011)

KurwaJegoMac said:


> The best time to buy a house was yesterday.
> 
> The best time to buy a house before that was the day before yesterday.
> 
> Etc. etc.




and a crash will come sometime in the future.

All you have to do is wiegh up the fundamentals and decide how much RISK you want to take, and what contingency plans you have in place.


----------



## white_goodman (23 March 2011)

trainspotter said:


> Steven Keen ... http://www.debtdeflation.com/blogs/2011/02/10/a-motley-crew-interview-on-australian-house-prices/
> 
> 900 billion in rescue money to government controlled financiers .... http://www.ahorre.com/dinero/realestate/housing_bubble/united_states_housing_bubble/
> 
> ...




i think you missed my point, ive never stated the US and Australia are the same..

the source being ANZ was what I was pointing at... its basically asking a property developer where he thinks the market is going "up of course"

interesting I read how they debunked price to income ratios by arguing interest rates, does that mean we are all fcuked if they go back up??


----------



## konkon (23 March 2011)

As for Australia not being the US. Well I'll put it to you this way; the conditions here are far worse than in the US, on a per capita basis. The US has better and more reliable statistics on their economy overall. They come-out more frequently too. Their data is as close to independent as you can get. 

At least they (the US) were honest about what was occurring and the stats were out there for all to see. What we have here is 'sales reps' masquerading as 'independent' advisors/authorities, and they succeeded for well over a decade to continually inflate the property market overall. It was a sound practice for a while, as all investments need to inflate to some extent, but it has been overdone. 

The mining boom and the push for higher wages, directly and indirectly, in this industry has contributed to the distortions to market valuations and expectations. But they don't represent the pressures felt by the masses. 

Speculative practices and 'independent' valuations can easily be confused; I think that some people's definition of 'independent' differs from mine. I don't see anyone with an indirect or direct interest in inflating the property market as independent, even if this is to ensure inflated property prices in their own area.


----------



## AlexG1 (23 March 2011)

white_goodman said:


> interesting I read how they debunked price to income ratios by arguing interest rates, does that mean we are all fcuked if they go back up??




My thoughts exactly.  Basing purchase price affordability on something that can bite your leg off years down the track is dodgy at best.

For those interested - here's a presentation Steve Keen gave to the Mortgage finance association of Australia.  .  It Explains his take on the situation very well.  It's hard to go past the logic of his arguments.  'He's been wrong before' is not really a valid objection - there's clear evidence in the data as to exactly why we was 'wrong'.  I think that he just got the timing wrong ...... due to unforseen circumstances.

The basic premise is that purchasing power = income + borrowings.  As the personal borrowings of australians are through the roof, they can't borrow more.  After that it's pretty much simple supply and demand.  No growable purchasing power = no growable housing prices -> fall.

Alex.


----------



## jbocker (23 March 2011)

konkon said:


> As for Australia not being the US. Well I'll put it to you this way; the conditions here are far worse than in the US, on a per capita basis. The US has better and more reliable statistics on their economy overall. They come-out more frequently too. Their data is as close to independent as you can get.
> 
> At least they (the US) were honest about what was occurring and the stats were out there for all to see. What we have here is 'sales reps' masquerading as 'independent' advisors/authorities, and they succeeded for well over a decade to continually inflate the property market overall. It was a sound practice for a while, as all investments need to inflate to some extent, but it has been overdone.
> 
> ...




Heard of Market forces? Supply and Demand. Why are miners wages high - there is a shortage, why are house prices high - there is (was?)a shortage. Both will go down or stagnate when there is a glut. People will pay the price if they want it, if you dont see value, wait, hope and buy later.
 " _at least the US were honest about what was occurring..._" Your kidding right? I have spent a little time reading about sub prime mortgages, cant see much honesty there, _"...and the stats were out there for all to see."_, but they really didnt see it, did they.

Always answer this to high price of housing in Australia, ..where else would you want to live?


----------



## trainspotter (23 March 2011)

white_goodman said:


> i think you missed my point, ive never stated the US and Australia are the same..
> 
> the source being ANZ was what I was pointing at... its basically asking a property developer where he thinks the market is going "up of course"
> 
> interesting I read how they debunked price to income ratios by arguing interest rates, does that mean we are all fcuked* if *they go back up??




IF IF IF IF IF IF ......... that's all I read on here. Financiers factor in a +3% margin when assessing an application. Only a small part of a loan contract to look at when seeking funding. 

Has anyone here tried lately to get a home loan? Actually walked into a bank/financier/hole in the ground and actually put black marks on white paper? Do you even know the criteria required to get approved??

I am involved with the property market and have over 20 years experience in developments. I have 40% deposit and a proven track record of success. The banks are not exactly falling over themselves to give me money. I bank at Westpac, ANZ and NAB by the way. They also ask for up to 50% PRESALES ......... DERRRRRRRRRR ! If I had 50% presales I would not need them to fund it now would I ?????

If they were worried about interest rates going up then they would not be putting out a 10 year rate at 8.17% now would they? ANZ rates listed below. So if you are so worried about interest rates going up go and get a 10 year fixed rate !!!!!!!!!! FFS ....... do the research. 

  1 year 6.99% p.a. 7.77% p.a. 
  2 years 7.19% p.a. 7.75% p.a. 
  3 years 7.34% p.a. 7.74% p.a. 
  4 years 7.69% p.a. 7.84% p.a. 
  5 years 7.74% p.a. 7.86% p.a. 
  7 years 8.19% p.a. 8.14% p.a. 
*10 years 8.14% p.a. 8.17% p.a. *

Everyone keeps rabbiting on about Steven Keen "Merchant of Gloom" ....... *WRONG* His timing was wrong, it hasn't happened yet, the data says so, the stars and the moons are all lining up blah blah blah. on a per capita basis compared to the USA, hand waving bullsh!t, walk to Mt Kosciusko, yadda yadda yadda. Gee I am glad I listened to him and sold all my property when he said to !!!!!!! Great ....... I would be worth a lot less now and not have any property. You know the stuff banks like to lend against ?? Haha hah ha hha hah ahah aaaaaaaa.

In response to konkon - the real estate agents "list" a house on a price they think the market can achieve. The people pay the price. If the people require finance they go to a bank. The bank employs a VALUER who is registered with the Australian Valuers Generals Office. The VALUER reports as to whether or not the property is worth what the purchaser is paying for it. If the VALUER does not find comparable sales evidence in the area then he advises the bank via a valuation report. If there is any discrepancy towards the negative then the loan is DECLINED. Period.

Let's say for comedy purposes only the whole system fails and the people buy their overpriced piece of real estate and interest rates go through the roof and China stops buying our coal/exports and everyone loses their jobs.

What happens when there is a default ??? Oh glad you asked this one ...... see below.

An interesting disclosure made by the Australian Prudential Regulation Authority
(2005) (APRA) in Survey Results – Residential valuation practices by ADI’s and
LMI’s of May 2005, shows that of the eight lending mortgage insurers (LMI’s) six
are owned by authorised deposit taking institutions (ADI’s). In effect, lending
institutions, who are badged as authorised deposit taking institutions in this survey are
also in the mortgage insurance business. *The fact is that the valuer’s insurance acts as filters in the reinsurance process of spreading the risks through their insurance.* 

So the banks wont get hurt but the insurance companies at the bottom of the pile would cop it big time through the VALUERS insurance company. Oh oh ???

Please oh please people go and do some research before the arm waving arguments and "opinions" creep through into the thread. Better yet ....... go and buy some real estate and leave Steven Keen out of it.


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## AlexG1 (23 March 2011)

jbocker said:


> why are house prices high - there is (was?)a shortage.




Actually if you check the Steve Keen presentation in my previous post - he explains that the numbers used to calculate the 'shortage' include homeless people and marginal residents of caravan parks......

As he points out - This is an indicator of NEED for additional housing NOT DEMAND for additional housing.  Which helps explain all those empty apartments...

Alex.


----------



## trainspotter (23 March 2011)

And then there's the case of the bumblebee. According to the greatest minds of science, it cannot fly. Its wings aren't big enough. Aerodynamics says it is impossible. The biggest computers in the world all come to the same conclusion, it can't fly. But what does the bumblebee do? It ignores the great minds, the skeptics, the computers... and it just goes ahead and flies. 

Sound familiar?


----------



## AlexG1 (23 March 2011)

trainspotter said:


> If they were worried about interest rates going up then they would not be putting out a 10 year rate at 8.17% now would they?




That's a fair point.



trainspotter said:


> In response to konkon - the real estate agents "list" a house on a price they think the market can achieve. The people pay the price. If the people require finance they go to a bank.




And the general argument is that the level of personal debt is reaching saturation point so therefore this growing level of finance is not sustainable.  



trainspotter said:


> The bank employs a VALUER who is registered with the Australian Valuers Generals Office. The VALUER reports as to whether or not the property is worth what the purchaser is paying for it.




I had some experience with a valuer recently.  He asked my real estate agent what he thought the property was worth (I'm renting it out and needed to get it valued for possible future CGT).  The valuer told me he would value it as 'high as he could without being silly' as this maximises your future tax benefit.  So those valuations are skewed and subjective (in my limited experience). 



trainspotter said:


> go and buy some real estate and leave Steven Keen out of it.




Hmm I think I'll wait 6 months.  I can see signs off cooling off all around me (in two separate parts of the country) and yet to find one that gives me a decent rental return especially when the startup costs are covered off.

Still - I'm open to suggestions of good places to buy if you reckon you can supply some and the numbers stack up   But do you honestly believe the  growth rate of the last ten years will continue for the next 10 years?

Alex.


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## AlexG1 (23 March 2011)

trainspotter said:


> And then there's the case of the bumblebee. According to the greatest minds of science, it cannot fly. Its wings aren't big enough. Aerodynamics says it is impossible. The biggest computers in the world all come to the same conclusion, it can't fly. But what does the bumblebee do? It ignores the great minds, the skeptics, the computers... and it just goes ahead and flies.
> 
> Sound familiar?




And then there's the self-interested establishment who insisted that the earth was the centre of the solar system and branded Gallileo a heretic.

Sound familiar?


----------



## AlexG1 (23 March 2011)

trainspotter said:


> And then there's the case of the bumblebee. According to the greatest minds of science, it cannot fly. Its wings aren't big enough. Aerodynamics says it is impossible. The biggest computers in the world all come to the same conclusion, it can't fly. But what does the bumblebee do? It ignores the great minds, the skeptics, the computers... and it just goes ahead and flies.
> 
> Sound familiar?





And just for good measure - go check out the big bold heading MYTHS

on this page


----------



## trainspotter (23 March 2011)

AlexG1 said:


> I had some experience with a valuer recently.  He asked my real estate agent what he thought the property was worth (I'm renting it out and needed to get it valued for possible future CGT).  The valuer told me he would value it as 'high as he could without being silly' as this maximises your future tax benefit.  So those valuations are skewed and subjective (in my limited experience).
> 
> But do you honestly believe the  growth rate of the last ten years will continue for the next 10 years?
> 
> Alex.




"As high as he could without being silly" means that there is sales evidence in the area to support the figures he would be supplying. He does not want to risk losing his insurance either. No insurance means no livelihood. Most valuers I know will always value at the LOWEST they can get away with to protect their income streams. I have had valuations fall over on many a deal in a rising market. Think about it.

The growth rate will not continue the same over the next 10 years. I have never written that it would. I have repeatedly written that property is currently trancing sideways and that in several areas that drops of 40% have already occured. 

The problem is looking at 8 capital cities as an average/median home price in Australia is FLAWED. Yes yes yes they have jumped 20% in certain areas and in some cases more. In some areas they have also dropped this amount as well. The sales of the property in the sought after areas is propping up the areas in decline where sales evidence is slim on the ground. DOH !!

This takes into no relationship of how well the people are doing in paying their mortgage. Ipswich had massive mortgage stress prior to the floods and a bargain was to be had whereby the vendor would rent back the same house they jsut sold to you? Go figure HUH? Can't afford a mortgage but can afford to pay the rent for the same amount?? WTF ?? 

Yes yes yes GDP percentile of take home pay to Gross National Debt to Credit Card repayments and homeless people for housing shortages are important for data. And so is a roof over their heads.


----------



## trainspotter (23 March 2011)

AlexG1 said:


> And just for good measure - go check out the big bold heading MYTHS
> 
> on this page
> 
> ...




Aaahhhhh grasshopper you have so much to learn. 

The analogy placed before you was to evidence what the power of thought can do for you. Everyone thought that the bumblebee could not fly due to aerodynamics and wing size. Thus was the belief for a very long time. No one understood oscillating vortexs nor the power of lift they create. So looking at a bumblebee everyone said it could not fly yet it continued to do so. It wasn't until they understood the dynamics of the lift created before they could prove that it could.

The property market is the same. Everyone else is saying it is going to crash. Yet it continues to fly on like the bumblebee. 

Are you picking up what I am putting down now there AlexG1 ???


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## AlexG1 (23 March 2011)

trainspotter said:


> "As high as he could without being silly" means that there is sales evidence in the area to support the figures he would be supplying. He does not want to risk losing his insurance either. No insurance means no livelihood. Most valuers I know will always value at the LOWEST they can get away with to protect their income streams. I have had valuations fall over on many a deal in a rising market. Think about it.
> 
> The growth rate will not continue the same over the next 10 years. I have never written that it would. I have repeatedly written that property is currently trancing sideways and that in several areas that drops of 40% have already occured.
> 
> ...




Yeah - that's all fair enough.  I would note that valuations are done based on current sales, not sales directions - so they are going to be quite misleading in a falling market.  Can't really see any other way though.

Yes - I agree that a roof over their head is important too - but to use it as a measure of demand for housing and as an argument to justify why prices are rising and will continue to do so is a bit tricky.

I've been reading lots of your posts and I can see you've been talking about falls as well as gains.  But I'm still not personally convinced that there's not worse to come is all.  

I appreciate your points of view though   Discussion is one of the best ways to test your thoughts


----------



## AlexG1 (23 March 2011)

trainspotter said:


> Aaahhhhh grasshopper you have so much to learn.
> 
> The analogy placed before you was to evidence what the power of thought can do for you. Everyone thought that the bumblebee could not fly due to aerodynamics and wing size. Thus was the belief for a very long time. No one understood oscillating vortexs nor the power of lift they create. So looking at a bumblebee everyone said it could not fly yet it continued to do so. It wasn't until they understood the dynamics of the lift created before they could prove that it could.
> 
> ...




OK I'll let you get away with that one 

I read it thusly though

Everyone says a bumbleebee cannot fly - even scientists.  But it still does it anyway.  This is analagous to Steven Keen (an economist) saying the property market can't fly - but it does anyway.

Everyone can come up with an analogy to suit their viewpoint


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## kitehigh (23 March 2011)

I sold my property in Brisbane in September last year and have no intention of buying in my area (gold Coast) any time soon.  Just don't see the value in it yet, there will be a time that the numbers stack up but just not yet.  In the mean time I have made over 30% returns in the shares that I have targeted after investing the money from the sale of my house.  I am targeting Oil/Gas, and Gold/ Silver miners.  For me it's all about following the trends.  Oil is on the rampage, so is Silver.  Property in my area is in decline and not looking like any growth for some time to come due to reasons already mentioned which I'm not going to even bother to go into as they have been discussed to death. 
My advise, do your research, don't be one of the sheep and trust your instinct. Also don't fall in love with any one particular asset class, they all have their time in the sun and than they stall.  Also watch your debt levels, many a high flyer has been undone by excessive debt.


----------



## konkon (23 March 2011)

jbocker said:


> Heard of Market forces? Supply and Demand. Why are miners wages high - there is a shortage, why are house prices high - there is (was?)a shortage. Both will go down or stagnate when there is a glut. People will pay the price if they want it, if you dont see value, wait, hope and buy later.
> " _at least the US were honest about what was occurring..._" Your kidding right? I have spent a little time reading about sub prime mortgages, cant see much honesty there, _"...and the stats were out there for all to see."_, but they really didnt see it, did they.
> 
> Always answer this to high price of housing in Australia, ..where else would you want to live?




Ask a large proportion of talented next generation of Australian's where they are going to live, if housing continues on this inflated path, in let's say ten years from now. You will end up having a considerably large exodus of Australians living and working in more affordable places around the globe, just like Britain experienced. Ones that probably will stay here if the cost of living isn't going to be so high. 

The US is a lot more transparent about its economy. I don't know of another country that places so much attention on statistics than the US. How many Australian's are aware of what's going on in cities like Adelaide, for example, in which abnormal volumes of businesses have gone under. You're still seeing speculators trying to sell you the story that the property market here is stable. The statistics and information on housing here is too vague. 

The sub prime mess was pretty obvious even four years ago. If the stats and information wasn't available back then, then the US consumer would have gotten itself further in debt. The banks would have kept on lending. We don't have any real official warning signs here. So consumers will get themselves further in debt, just like they would have in the US if the statistics didn't come-out when it did.


----------



## ENP (23 March 2011)

Funny how all the New Zealander's are moving over to Australia for the better money and now you are saying Australians are going to move overseas for better money and cheaper housing. 

When will it end?


----------



## prawn_86 (23 March 2011)

Personally living overseas in a developing country is definitely a very attractive option for us.

We are either looking to get an expat job over there (South America or Asia) or alternatively save enough where we can live off the interest. At this stage, depending on the tax and residency situations, i think a couple could live a comfortable Western lifestyle if they had 200k in the bank and use the interest to live on.

I always had a loose goal of retiring (or not having to work) by the time i was 35 and this is easily acheviable if we lived overseas, much harder to acheive living in a major city in Australia at the moment.


----------



## white_goodman (23 March 2011)

this is what the thread has become


----------



## white_goodman (23 March 2011)

trainspotter said:


> Aaahhhhh grasshopper you have so much to learn.
> 
> The analogy placed before you was to evidence what the power of thought can do for you. Everyone thought that the bumblebee could not fly due to aerodynamics and wing size. Thus was the belief for a very long time. No one understood oscillating vortexs nor the power of lift they create. So looking at a bumblebee everyone said it could not fly yet it continued to do so. It wasn't until they understood the dynamics of the lift created before they could prove that it could.
> 
> ...




and how long do you think the raising of new debt and increases in money supply not tied to GDP will happen?

new loans arent exactly taking off, and as my good mate who works as the loan guy at a big four in the city, they are willing to give anyone a loan atm, he said i could get 98% for a 500-600k property.

i respectfully declined


----------



## trainspotter (23 March 2011)

white_goodman said:


> this is what the thread has become





And yet you continue to post? Weird HUH?


----------



## trainspotter (23 March 2011)

white_goodman said:


> and how long do you think the raising of new debt and increases in money supply not tied to GDP will happen?
> 
> new loans arent exactly taking off, and as my good mate who works as the loan guy at a big four in the city, they are willing to give anyone a loan atm, he said i could get 98% for a 500-600k property.
> 
> i respectfully declined




LOLOL ...... he said she said. I say you can get a 110% loan for 1 million. Put it in writing and see how it works out for you. I have just come back from NAB after a review of my portfolio. Over 40% equity across the board. They are asking me for 2 years financials (Family Trust and the development company as well as the private company) , statement of position with the ATO, copies of insurances on all my properties, copies of leases, last 3 years personal tax returns AND bank statements.

Yep they sure are willing to give anyone a loan atm. 
'
PM me with the details of your good mate from the city big four and I will call him for my next loan at 98% please.


----------



## mazzatelli (23 March 2011)

trainspotter said:


> LOLOL ...... he said she said. I say you can get a 110% loan for 1 million. Put it in writing and see how it works out for you. I have just come back from NAB after a review of my portfolio. Over 40% equity across the board. They are asking me for 2 years financials (Family Trust and the development company as well as the private company) , statement of position with the ATO, copies of insurances on all my properties, copies of leases, last 3 years personal tax returns AND bank statements.
> 
> Yep they sure are willing to give anyone a loan atm.
> 
> PM me with the details of your good mate from the city big four and I will call him for my next loan at 98% please.




You're comparing apples to oranges. Requirements for a trust structure differ from that of an individual.
I am in the same boat whenever we invest via the trust [fin stats, leases, insurance etc]. 

It is always harder for loans under this structure despite the fact the trust may hold several properties and have strong income flows. Banks prefer people rather than legal entities - as you well know.


----------



## trainspotter (23 March 2011)

mazzatelli said:


> Compare apples to oranges. Requirements for a trust structure differ from that of an individual.
> I am in the same boat whenever we invest via the trust [fin stats, leases, insurance etc].
> 
> It is always harder for loans under this structure despite the fact the trust may hold several properties and have strong income flows. Banks prefer people rather than legal entities - as you well know.




True ....... which is why you sign a guarantee as an individual to cover the debts of the Trust, company, whatever. Sometimes a fixed and floating charge over the company as well. Structure is the same. It is still a registered mortgage over a green title. Under the UCCC it makes no difference to the bank. Just more paperwork


----------



## white_goodman (23 March 2011)

so by arguing that loans are difficult to come by where is potential growth going to come from?


----------



## trainspotter (23 March 2011)

white_goodman said:


> and how long do you think the raising of new debt and increases in money supply not tied to GDP will happen?
> 
> new loans arent exactly taking off, and as my good mate who works as the loan guy at a big four in the city, they are willing to give anyone a loan atm, he said i could get 98% for a 500-600k property.
> 
> i respectfully declined




*Who can borrow 95%?*
Australian lenders consider all loans over 80% of the purchase price to be a high risk. Because of this they insure these loans with Lenders Mortgage Insurers (LMI). The LMI providers have their own lending guidelines that are stricter than those used by the banks, and so because of this borrowing 95% relatively difficult compared to other home loans. 

*What types of borrowers are the banks looking for?*

*Clear credit history:* This means that your credit file has no blemishes whatsoever and that you have paid all of your bills such as rent, credit cards, personal loans and other debts on time every time for the last 6 months. 

*Stable employment:* In most cases you must have been in your current job for 6 to 12 months. Sometimes an exception can be made to this policy. 

*A good income:* Lenders are more conservative when assessing your ability to repay a 95% loan. For this reason your “serviceability ratio” must be outstanding. 
Reasonable asset position: Lenders want to see that you have a good asset position relative to your age & income. 

*Genuine savings:* This is the one that catches most people out. Almost all lenders require you to prove that you have saved 5% of the purchase price. If you don’t have genuine savings then consider a 95% no savings loan (very difficult to qualify for) or a 110% guarantor home loan. 

*Minimal debts: *People with many credit cards & personal loans are generally not accepted. As a rough guide people who have more than 7% of the purchase price in unsecured debts such as personal loans and credit cards are often not approved. 

*Location / property type: *Many lenders may be hesitant to approve loans for properties in smaller towns, high rise units in the CBD or other unusual properties. 

*Not all lenders offer 95% loans*
Lenders only have so much funds to lend out, they want to maximise their profit while keep risks under control. And because a 95% home loan is very high risk, most of their available funds are allocated to less risky loans.

In short, lenders don’t have much money to lend at 95%, hence they only accept low risk borrowers!

http://www.homeloanexperts.com.au/no-deposit-home-loans/95-percent-home-loan/

WOWEEEEEEEEEEEEEE ........ who would have thunk it?

You would have to be on over 100k a year to borrow 500k by the way with ZERO peripheral debt, same vocation for 5 years, 6 months savings history ......... need I go on? :


----------



## trainspotter (23 March 2011)

white_goodman said:


> so by arguing that loans are difficult to come by where is potential growth going to come from?




Why does there need to be growth white_goodman? Why cannot lending and property prices slow for awhile? Cool their heels if you will. Have a softening in the market rather than a rampant train smash? It has happened before whereby house prices have stagnated for several years and loans were hard to come by? What is the rush to keep it moving? HUH ??? 

Anyone considered why people are paying up to 26% on their credit card ??? HUH??? Total credit and charge card balances outstanding stood at $45.153 billion in October 2009. This is a crisis before a housing downturn IMO. Why is it a crisis? Because it is unsecured debt. That is why !!!!!


----------



## white_goodman (23 March 2011)

trainspotter said:


> *Who can borrow 95%?*
> Australian lenders consider all loans over 80% of the purchase price to be a high risk. Because of this they insure these loans with Lenders Mortgage Insurers (LMI). The LMI providers have their own lending guidelines that are stricter than those used by the banks, and so because of this borrowing 95% relatively difficult compared to other home loans.
> 
> *What types of borrowers are the banks looking for?*
> ...




i fit all criteria minus the 5 years and make up for it in savings history.. yes I am eligible, no Ill pass thanks, as you say if there no cap growth what advantage in owning a PPOR when renting enables me to save more?


----------



## trainspotter (23 March 2011)

white_goodman said:


> i fit all criteria minus the 5 years and make up for it in savings history.. yes I am eligible, no Ill pass thanks, as you say if there no cap growth what advantage in owning a PPOR when renting enables me to save more?




I did not say there would be nil capital growth white_goodman. I said what is wrong with it slowing for awhile? I also mistakenly took your previous reply meaning that the "banks" were pushing for more "growth" in the market _*ie*_ more loans to force out on easy credit (which is not happening by the way) as evidenced. 

The banks have increased the lending criteria for home loans. No longer easy to get credit does not necessarily equate to falling house prices either.

My advice to you is to keep saving and paying off the landlors debt ! Someone has to do it. I would be miffed if no one rented my properties and helped me pay the interest on them. 

Don't answer this if you dont want to BUT ...... how much are you "saving" and as well as paying "rent" ?? Be interesting to see what you could "safely" borrow between rent and savings eg $400 per week rental money PLUS $400 per week savings = $800 per week right? $800 per week Principal & Interest loan at say 6.75% over 25 years means you can "afford" to borrow $500,000 comfortably. Plus deposit etc and criteria.

I am not advocating for one second that EVERYONE should rush out and buy a piece of the Australian Dream. No Sir. We need people renting to prop up all the investors out there as well.

My advice has been all through this thead to do the research prior to purchasing. Same as shares. It is not for everyone.


----------



## mazzatelli (23 March 2011)

trainspotter said:


> True ....... which is why you sign a guarantee as an individual to cover the debts of the Trust, company, whatever. Sometimes a fixed and floating charge over the company as well. Structure is the same. It is still a registered mortgage over a green title. Under the UCCC it makes no difference to the bank. Just more paperwork




In a legal liability context, it is different for the banks. In most cases one guarantor + several beneficiaries is not comparable to all the aforementioned parties taking out mortgages in their own names [&/or joint]. The latter get loans approved much easier, and it is still happening. Not going to play the he says she says game, but have friends in banking arms who reiterate what white_goodman is saying.

Loans don't comes as easily for us folk, why do you think their legal team spends their time peering through the trust deeds every time a loan application is made.


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## trainspotter (23 March 2011)

mazzatelli said:


> In a legal liability context, it is different for the banks. In most cases one guarantor + several beneficiaries is not comparable to all the aforementioned parties taking out mortgages in their own names [&/or joint]. The latter get loans approved much easier, and it is still happening. Not going to play the he says she says game, but have friends in banking arms who reiterate what white_goodman is saying.
> 
> Loans don't comes as easily for us folk, why do you think their legal team spends their time peering through the trust deeds every time a loan application is made.




True again. Banks don't care what entity the money is borrowed in which is why they have legal eagles to peer through the paperwork and charge you exorbitant fees for the privelige. Hence the guarantors acknowledgement you sign as an individual guaranteeing the debt in the Trust/company/whatever structure as a director or Trustee thereof.

Banks like 2 income no kids with savings history etc because it is straightforward on the paperwork front for them. Gimme 6 months savings history and a letter of employment is all that is required. 

It is quicker and easier for them to process. The lending criteria is the same. SERVICABILITY, EQUITY and STABILITY and as long as the bank has a clean shot at the title and you, then they will loan you the money.

Have borrowed money in all shapes and forms. (Personally and company) No difference in entity structures other than the fees and the paperwork required. Just my experience is all. 

Agreeing with you here mazatelli.


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## white_goodman (23 March 2011)

rent is $100 a week, saving is a tad over $1k a week...

I can afford, but I dont see it as a good investment.

And as for the lenders not getting a bit hows ya father with standards...

http://macrobusiness.com.au/2011/03/banks-continue-to-lower-lending-standards/


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## trainspotter (23 March 2011)

white_goodman said:


> rent is $100 a week, saving is a tad over $1k a week...
> 
> I can afford, but I dont see it as a good investment.
> 
> ...




Posted by a dude named Leith from unconventionaleconomist@hotmail. LMFAORF

Ummmmmm ...... you do realise that NONE of these practices went forward don't you? ING never implemented their "never ending loan". ANZ lifted their LVR to existing customers "only" for refinancing purposes for retention. Oh yeah ...... you still have the "other" criteria involved. Like LMI and valuations and proven savings history and DSR's. But you know all of this don't you white_goodman.

But but but don't let a good story get in the way of truth now white_goodman. $100 a week you say in rent eh? Can I move in with you? Does this include outgoings? Did you pay a bond? How much of the home can you utilise? Is it a share arrangement?

Saving $1000 per week eh? $52,000 per annum. WOW ....... Do you have a life? Or are you on like $200,000 per year gross? Do you have a car? What about expenses? Do you travel overseas? Have you been overseas? Just interested is all as to how all this is possible. I think it is fantastic you can save this much money. And do what with it at the end of the day? I suppose you can do anything you like.


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## jbocker (24 March 2011)

konkon said:


> Ask a large proportion of talented next generation of Australian's where they are going to live, if housing continues on this inflated path, in let's say ten years from now. You will end up having a considerably large exodus of Australians living and working in more affordable places around the globe, just like Britain experienced. Ones that probably will stay here if the cost of living isn't going to be so high.




Did the Brits leave because of the cost of housing??? I am surrounded by young recent arrival Irish kids busted their  whatits to stay here, did they leave because of the cost of housing? No.
IF housing continues at its inflated path - who in there right mind really extrapolates a constant rate for 10 years. Plenty on this thread will argue that it is going to plummet. Have asked plenty of smart kids where they are going to live, those want to live overseas are going to for work, not because houses are too expensive here.



konkon said:


> How many Australian's are aware of what's going on in cities like Adelaide, for example, in which abnormal volumes of businesses have gone under. You're still seeing speculators trying to sell you the story that the property market here is stable. The statistics and information on housing here is too vague.




Cannot argue with that konkon, we dont get ready access to good 'stats' thats why you need to research to make sound decisions / take the risk. Always going to have spruikers asking for our dollars - remember stats can be made up any way you like.



konkon said:


> The sub prime mess was pretty obvious even four years ago. If the stats and information wasn't available back then, then the US consumer would have gotten itself further in debt. The banks would have kept on lending. We don't have any real official warning signs here. So consumers will get themselves further in debt, just like they would have in the US if the statistics didn't come-out when it did.




The problem was prior to 4 years ago, the US consumer DID get into massive debt Banks DID keep on lending till the US consumer couldnt go further, they crashed, then people asked why, and 'subprime' was then explained, their apparently transparent Statistics did 'jack' to save them from getting into a real mess, that they are still wallowing in.
konkon, I wont trust any statistics for my dollars, and will only use them as very broad indicators. 
You can still make a great investment despite how crappy the market is, as much as you can make a crappy investment in a boiling market. Its Buyer Beware.


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## white_goodman (24 March 2011)

trainspotter said:


> Posted by a dude named Leith from unconventionaleconomist@hotmail. LMFAORF
> 
> Ummmmmm ...... you do realise that NONE of these practices went forward don't you? ING never implemented their "never ending loan". ANZ lifted their LVR to existing customers "only" for refinancing purposes for retention. Oh yeah ...... you still have the "other" criteria involved. Like LMI and valuations and proven savings history and DSR's. But you know all of this don't you white_goodman.
> 
> ...




like most on the board im investing it wisely, yes I have a car and have to commute to work everyday, im going to thai,laos,cambodia for 4 weeks in july. I go overseas once a year and plan on doing so most years (5 weeks annual leave).

I would love to buy a house, but I cant see the logic atm, im not permabear, my degree is property economics so I am interested, its just a bad investment for me atm.


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## medicowallet (24 March 2011)

trainspotter said:


> LOLOL ...... he said she said. I say you can get a 110% loan for 1 million. Put it in writing and see how it works out for you. I have just come back from NAB after a review of my portfolio. Over 40% equity across the board. They are asking me for 2 years financials (Family Trust and the development company as well as the private company) , statement of position with the ATO, copies of insurances on all my properties, copies of leases, last 3 years personal tax returns AND bank statements.
> 
> Yep they sure are willing to give anyone a loan atm.
> '
> PM me with the details of your good mate from the city big four and I will call him for my next loan at 98% please.




Well

1. Shows that the banks are seeing it as a riskier proposition going forward.

2. 40% equity gets chewed up pretty fast during a correction.

3. Have you sold out yet?


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## trainspotter (24 March 2011)

medicowallet said:


> Well
> 
> 1. Shows that the banks are seeing it as a riskier proposition going forward.
> 
> ...




Mazzatelli has already provided the correct response. Over and out.


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## white_goodman (25 March 2011)

http://macrobusiness.com.au/2011/03/is-the-first-home-buyer-pool-running-dry/

interesting read, take it how you wish


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## trainspotter (25 March 2011)

white_goodman said:


> http://macrobusiness.com.au/2011/03/is-the-first-home-buyer-pool-running-dry/
> 
> interesting read, take it how you wish




Best response by far:-

_"This is true. I regular read very aggressive posts from young bears and shortage-deniers proclaiming a house price crash is starting. They often use some vacancy rate number, or some unsold development, or some census figures as their “proof”. They claim that no better data exists. Some of them are quite abusive when I urge a little caution and when I suggest they delay their celebration until prices and rents have actually fallen.
Year after year their predictions are shown to be wrong, but they usually just disappear, and never apologise. These type of people harm their own cause."_

10 out of 10 

OF COURSE THE FHB MARKET IS DRYING UP !!!!!!!!!!!! That is the whole point of the banks making it harder to get credit. DERRRR. Also stops inflationary pressures on prices. DERRRRRR Interest ratres increasing also slows down the market as well. DERRRRR

Hello?


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## white_goodman (25 March 2011)

trainspotter said:


> View attachment 42064
> 
> 
> Best response by far:-
> ...




so your argument against a market slow down is that the market is slowing down?

im not in the crash group of thinkers, id say more the realist camp.

Also the banks arent loosening LVR requirements cos they want to make it harder to get credit...

also its easier for the oldies to be more bullish, the ones that are risking the most are FHB's levering up at a market top, I dare say many knowledgeable traders wouldnt advise to lever up at a market top which one has no prior position.


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## trainspotter (25 March 2011)

white_goodman said:


> so your argument against a market slow down is that the market is slowing down?
> 
> im not in the crash group of thinkers, id say more the realist camp.
> 
> ...




1) When have I not said the market is slowing down? I have repeatedly said it is trancing sideways? I have also said certain areas will fall and some areas will rise but overall the conditions are for a cooling period ??? 

2) Realist or not you have been pretty vocal AGAINST home ownership citing obscure blogs written by some dude named Leith calling himself an "unconventional economist".

3) Banks are not loosening criteria at all. I have posted the criteria a couple posts ago for all to see. 

4) Oldies are far from being bullish in the current market white_goodman. They are being cautious and have consistently advised people to perform DUE DILLIGENCE prior to purchasing. They also have the benefit of actually owning property. It is called experience. 

5) I was a FHB and leveraged in on a 2% deposit when interest rates were at 17% and falling. Spuds of steel. A lot and I mean a LOT of oldies told me not to buy. All my mates said I was madder than a cut snake to put this MASSIVE DEBT over my head *insert rambling vitriol here* of WHY YOU SHOULD NOT BUY.


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## white_goodman (25 March 2011)

trainspotter said:


> 2) Realist or not you have been pretty vocal AGAINST home ownership citing obscure blogs written by some dude named Leith calling himself an "unconventional economist".




as a PPOR and FHB yes, as you say its trending sideways or down, why would I or someone like me lever up pay more interest (dead money) and save/build less equity with a PPOR than renting, is that a totally unwise decision?

 investment property is a different kettle of fish


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## Bill M (25 March 2011)

white_goodman said:


> also its easier for the oldies to be more bullish, the ones that are risking the most are FHB's levering up at a market top, I dare say many knowledgeable traders wouldnt advise to lever up at a market top which one has no prior position.




The oldies have seen it all before, the 70's, 80's, 90's and the noughties.....They were calling doom and gloom then and now they are calling doom and gloom again. But nothing changes, the price just keeps going up. Look at it this way, a 2 bedroom unit in say COLLAROY will cost you 500k today. Do you really think that this unit will be cheaper in 5 years time? NEVER! As my long standing signature says..... we never learn from history.

There were people calling an imminent crash of Sydney Real Estate in 2007 when sub prime first surfaced in the USA, 4 years later and we are still waiting........ and waiting....and waiting....... ld:


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## white_goodman (25 March 2011)

Bill M said:


> The oldies have seen it all before, the 70's, 80's, 90's and the noughties.....They were calling doom and gloom then and now they are calling doom and gloom again. But nothing changes, the price just keeps going up. Look at it this way, a 2 bedroom unit in say COLLAROY will cost you 500k today. Do you really think that this unit will be cheaper in 5 years time? NEVER! As my long standing signature says..... we never learn from history.
> 
> There were people calling an imminent crash of Sydney Real Estate in 2007 when sub prime first surfaced in the USA, 4 years later and we are still waiting........ and waiting....and waiting....... ld:




strong analysis is strong...

im making a point not to listen to posters who recite previous decades as evidence of ftuure growth with no understanding of the drivers of the market, and adhere to the buy now, buy at any price without analysis it must go up.

I will continue to listen to trainspotter as we agree on some and disagree on other points, but mainly because he generally backs it up with some sort of evidence or valid argument.


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## trainspotter (25 March 2011)

white_goodman said:


> as a PPOR and FHB yes, as you say its trending sideways or down, why would I or someone like me lever up pay more interest (dead money) and save/build less equity with a PPOR than renting, is that a totally unwise decision?
> 
> investment property is a different kettle of fish




Once again for comedy purposes only. In "certain" areas there is a rising trend. "Overall" their will be a softening in the amount that houses will rise. Instead of a ridiculous 20% in one year rises it would be more than likely to be around 5 to 7 percent. (Capital cities data taken only) SOME Regional areas will suffer further losses.

If you are saving $1000 per week that could be paying a mortgage you could do this:-

Purchase property for 600k minus 100k deposit = loan amount of 500k. 83% LVR or thereabouts. (specific numbers here mind you)

Repay at $4333 per month = loan term of 17 years assuming todays values. Saving 8 years and $220,000 in interest.

As the average housing loan lasts for 7 years in OZ then it is more than likely you have either paid off the house or sold to another victim ....... ahem ......... astute purchaser.

(above is representative of a misguided attempt to justify my position and should not be taken as advice nor deemed to constitute any way shape or form of making sense)

Anyways ......... it is not for everyone to own a home then it would stuff people like me with IP's. No one to rent is not a good thing. 

P.S. interest is "dead money" ? Is this the same as renting? 

P.P.S. I have used monthly calculations. If you pay fornightly you will save a further 9 years 3 months and $250,000 in interest


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## white_goodman (25 March 2011)

trainspotter said:


> P.S. interest is "dead money" ? Is this the same as renting?




yes my point was that they are both dead money, and for a considerable amount of time you would be better off renting as less dead money will be being paid, these are my thoughts especially in this market.

also what would be a more preferable route...

a) buying a PPOR, paying off interest and principal over long time and having minimal savings for other investment.
b) renting, having significantly more savings, using that to invest in passive cash flow investments, using investments to pay of future PPOR?

i guess it depends on view of the market direction and how much it will cost in dollars to get enough passive CF for PPOR...


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## medicowallet (25 March 2011)

trainspotter said:


> Instead of a ridiculous 20% in one year rises it would be more than likely to be around 5 to 7 percent. (Capital cities data taken only) SOME Regional areas will suffer further losses.




So how would long would a 6% rise per year take to come back to the long term trend and fundamentals?

I think that zero growth for an extended period is more likely


----------



## medicowallet (25 March 2011)

Bill M said:


> The oldies have seen it all before, the 70's, 80's, 90's and the noughties.....They were calling doom and gloom then and now they are calling doom and gloom again.




Are you serious?

Us "oldies" remember realestate falls and stagnation.

I think you need to check your history.

Whilst you are at it check the fundamentals, any shock we experience in Australia = end of property bubble.


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## Bill M (25 March 2011)

medicowallet said:


> Are you serious?
> 
> Us "oldies" remember realestate falls and stagnation.
> 
> ...




No, I'm not kidding. Looks like I have to re post an old article. Yes we had falls but in 5 years we were all well ahead again. Here we go...


----------



## medicowallet (25 March 2011)

Bill M said:


> No, I'm not kidding. Looks like I have to re post an old article. Yes we had falls but in 5 years we were all well ahead again. Here we go...




As long as you acknowledge that realestate does have ups and downs.

Like other investments, like the sharemarket etc.

Your statement infers that the 70's onwards was risk free, and believe me I know a few "property investors" who went belly up.

Can sort of see the writing on the wall again, but not many believe it, bit like back then.


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## trainspotter (26 March 2011)

_The bank bosses were questioned by international fund managers at the conference about the risk of a housing bubble in Australia and the future direction of property prices.

Mr Norris said there was pronounced weakness in some commercial property sectors, especially in the development of large-scale residential apartment projects.

"There are some areas of property development that are having problems," he said.

"Some are developers that are finding it very hard in the current environment. Look at the Gold Coast: there is a large oversupply of apartments, which has led to a rerating in valuations."_

http://www.theaustralian.com.au/bus...ti-speed-economy/story-e6frg8zx-1226028349160

Talk about stating the bleeding obvious.

_The strength of Australia’s housing market has amazed observers, who had predicted that Australia would suffer one of the worst housing market crashes, because of a perceived house price overvaluation. _

http://www.globalpropertyguide.com/Pacific/Australia/Price-History

Woooooooooooopssssssssssss 

*Average* increase over last 50 years has been 8.6% so my prediction of 5 - 6 percentile for the next 10 years should be about average then. 




One difficulty with long-run property price data is that fact that observations are typically based on median house prices, which does not take into account changes in the quality of houses. *The median house in 2009 may be “better” than the median house in 1955 and changes in price may reflect this change in quality as well as price appreciation. *Stapledon has attempted to take this into account by constructing an index for Australian house prices (six capital cities) that is adjusted for both inflation and standardised to “constant quality”. The trend in real prices, adjusted for quality over the period 1955-2009 has been an increase of 2.1% per annum over inflation.


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## Reasons (26 March 2011)

An interesting thread to read, bringing out all the emotions that can come with property ownership and investment.

 I do not pretend to know whether housing will go up or down, but have applied the return on capital and some risk/reward assumptions going forward to make my own investment decision.

I have done some minor subdivision work over recent times and have now sold all the blocks. My decision was whether to reinvest into residential property or something else.

To invest into residential property (not subdivision) I needed to get an acceptable rate of return compared to equity or money market options. Getting 0 to 2% net on rent once you also take into account the lost opportunity cost of the sunk capital in most residential instances, was risky business from my perspective.

To make money I was relying on capital gains, and if I was, then so are most others who are property investing using loans. In my analysis, this put the risk/reward ratio of property at much higher risk based on the following simple assumptions:

1.	Property is now seen as the no-risk bet by the majority of the population.
2.	The property market has generally been going up since the 40’s as credit increased manifold.
3.	No-one knows they are in a bubble until it pops. If other assets can have serious corrections every few years, that risk is a much higher probability than not after ~70.
4.	If the market tanked my capital is trapped in the same illiquid exit as too many others.
5.	The return on equity is extremely low and probably negative if I am forced to hold.
6.	I would have reduced equity to put into buying cheap assets should they exist as the LVR will be reduced and banks likely property-shy.
7.	I am left with an asset of unknown lower value for ‘x’ time.

The returns through share trading, hybrids and the money market and high liquidity, based on my above assumptions, made them the lower risk / likely higher return place to invest.

So I don’t know the future of Australian property prices, or if they fall when that will be, but my investing assumptions say they pose a higher risk than alternatives and therefore not warranted for my purposes at this point in time.


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## TabJockey (26 March 2011)

Reasons said:


> An interesting thread to read, bringing out all the emotions that can come with property ownership and investment.
> 
> I do not pretend to know whether housing will go up or down, but have applied the return on capital and some risk/reward assumptions going forward to make my own investment decision.
> 
> ...




Well thought out decisions. I followed a similar path, the only upside I can see is the cheap leverage, which is a double edged sword as we all know.

Average property investors out there consider 9:1 lvr the norm.


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## white_goodman (26 March 2011)

TabJockey said:


> Well thought out decisions. I followed a similar path, the only upside I can see is the cheap leverage, which is a double edged sword as we all know.
> 
> Average property investors out there consider 9:1 lvr the norm.




if leverage is cheap you are probably not getting a good price


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## TabJockey (26 March 2011)

white_goodman said:


> if leverage is cheap you are probably not getting a good price




I mean the ability to easily get a 90% loan @7%. 90% on equity is unheard of and 50% for retail investors comes with an interest figure similar to your credit card.


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## medicowallet (26 March 2011)

"Saturday 26th March 2011

With around 2700 auctions expected over the next three weekends conditions shifted slightly in favor of buyers again today with a clearance rate of 61 per cent reached, down from last weekends 63 per cent.

There was a total of 777 auctions reported this weekend of which a total 474 sold and 303 were passed in, 197 of those on a vendors bid.

Further results will be reported tomorrow.

The result contrasts to this weekend last year when there was 1073 auctions and a clearance rate of 85 per cent"

81% last year and 61% this year.

Don't know what this means.

Robots are you ok?  Are you needing to work overtime? can't afford the train?

Trainspotter you sold yet?


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## trainspotter (26 March 2011)

medicowallet said:


> Robbots are you ok?  Are you needing to work overtime? can't afford the train?
> 
> Trainspotter you sold yet?




Don't shoot until you see the whites of their eyes - Colonel Prescott 

Buy when the blood runs in the streets - Baron Rothschild


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## medicowallet (26 March 2011)

trainspotter said:


> Don't shoot until you see the whites of their eyes - Colonel Prescott
> 
> Buy when the blood runs in the streets - Baron Rothschild




"When things are going good, your bank manager is your best friend"

"When you have limited equity, price falls destroy it faster than if you paid down your debt"

"Never truly believe the person who sells the product and makes commission"

"When you see the tears in their eyes as you purchase their house for 30% less than they purchased it for, make an offer for their car at the same time"

all by medicowallet


----------



## Julia (26 March 2011)

Reasons said:


> 1.	Property is now seen as the no-risk bet by the majority of the population.
> 2.	The property market has generally been going up since the 40’s as credit increased manifold.
> 3.	No-one knows they are in a bubble until it pops. If other assets can have serious corrections every few years, that risk is a much higher probability than not after ~70.
> 4.	If the market tanked my capital is trapped in the same illiquid exit as too many others.
> ...



Good summary and the reason I've stayed out of property with the exception of own home in recent years.

However, for some reason, perhaps just because they can identify more easily with property, inexperienced investors will buy an IP before they will buy shares.
I suspect most don't even do the calculations and reasoning above.


----------



## trainspotter (26 March 2011)

medicowallet said:


> "When things are going good, your bank manager is your best friend"
> 
> "When you have limited equity, price falls destroy it faster than if you paid down your debt"
> 
> ...




LOLOL ........ go you good thing. I prefer Kenny Rogers myself .......

You got to know when to hold 'em, know when to fold 'em
Know when to walk away, know when to run
You never count your money, when you're sittin' at the table
There'll be time enough for countin', when the dealin's done.

Marriage break ups and deceased estates are my specialty


----------



## medicowallet (26 March 2011)

trainspotter said:


> Marriage break ups and deceased estates are my specialty




lmao


----------



## Agentm (27 March 2011)

omg!!

omg  omg  omg....

did you see the melbourne auction results!!

777 properties!!! 113 no results.. 400 sold.. thats 61% brother!!!


thats an absolutely magic, totally magnificent and fully sick 61 % clearance rate brother... 

WOW

man they must have been jumping all over those excel spread sheets for hours trying to get the magic 61% figure

so how do to get a 61% clearance rate??

lets walk through it

first you have to lower the overall auction figure. 

we all know 940 properties went on auction.. well thats what the reiv have declared for the weekend, the figure is higher, not all actions are declared.. figures over 1000 can make the market look like its overheated on the sell side and in a panic selling mode here..

so the first problem for the reiv is the first figure that hits them at the bottom of the page.. 940 properties and 400 sold..   hmmmmm... *42.5%* clearance rate..  thats not going to look good.  that is not good at all... no sir.. have to change that around  big time..

ok.. lets do the first thing that we always do..

lower the total auctions, and on this occasion  by about 17%..  that takes care of 163 unsold properties.. so new total.. 777 properties

thats 57.9% clearance rate..  phew!! much better..  but thats not going to get you the magic figure you want.. has to be over 60% .. thats critical

what now?

ok, lets make another 14% disappear off the new auction total  by declaring them as unreported.. so take out 113 from the calculations.. so we now will report 113 as unreported auctions.. thats going to work nicely.. so we have changed the status of  113 unsold properties as properties being unreported.. 

so what is left??

of the 940 properties we have deleted 163 properties totally.. we just evaporated them..

and now we have 777 properties with a further 113 taken off, now we have a nice base of 664 properties to work with.. so 940 properties auctioned, 664 is what we will use in the calculations

so 664 divided by the actual properties sold, which is 400 =  hocus-pocus *60.24%*


but thats not sounding too good...lol...

lets round it up to *61%*


thats how the reiv make a 42% clearance rate into 61%  

magic lesson ends...


----------



## MACCA350 (27 March 2011)

I think you've got it nailed there Agentm, be careful though, REIV will be sending you job offers with such a display of you're knowledge in creative accounting 

Cheers


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## Agentm (27 March 2011)

the weekly garbage the real estate columnists churn out week in week out fails to even notice the fraud going on.. as if!!!

they love the 2 or sometimes 5 page spreads of how your local post code is going up YoY.

they misguided are under the impression there is an under supply of properties and they fail to tell their dear readers that there is so little demand for new properties and house and land packages in melbourne that the major developers have offices in asia (china) selling half of the new house and land packages to the upper echelon of china and to the criminal asian ponzi real estate schemes..

*"MAJOR builders and developers on Melbourne's urban fringe are selling up  to half of some new housing estates to overseas investors"*

reported in the age last month on feb 7th..

lol ,,,  just one voice in the slimy pond of real estate hocus-pocus

sunshine and lollipops for the happy melbourne readers..

most now think a lick of paint and cleaning the windows is a major reno maaaattte !!

totally sick mate,  we did a goood job brother.. painted the windows sills and she come up a treat mate.. mi girlfrend did the garden.. you know, some mulch from safeway mate..  should get back 250k easy mate.. bigtime.. maaaate... you know, property is real hot now mate, makin a killin now mate.. the real estate agent said he can sell it easy for 650, and i got it for 400..  mate this is easy mate!!

lol

just think what will happen in melbourne if half of the new house and and packages cant be sold to the chinese??  should that evaporate.. what then?? how do you keep the bubble going up? what will they think of next?  go the way of usa pre the 2008 crash? crazy loans? 

smoke and mirrors.. more hocus-pocus to come i think


----------



## trainspotter (27 March 2011)

Bwahaahahha haha a a aa hha........ you guys should be on a stage *pause* coach. Tish boom.

Report to me when clearance rates get below 20%. Then we can *really* do some creative maths to get it up above the 60% mark, 

Remember you are talking about Melbourne only where the result contrasts to this weekend *last year* when there was *1073* auctions and a clearance rate of *85 *per cent.

Let's apply your hocus pocus to these fugures as well shall we? Using your maths REIV has sold 110% of the property in Melbourne in one weekend. Legendary stuff. And I even rounded the number down 

Agentm wrote -_ "selling half of the new house and land packages to the upper echelon of china and to the *criminal asian ponzi* real estate schemes."_

Expect a knock at the door from the Yakuza for the disrespect to their dragon.


----------



## kincella (27 March 2011)

*Everything just changed*....

the slowing down of the housing market was brought to a dramatic halt last night....

I doubt too many on here would recognise the reason for the change...

so here is my prediction....
the dissatisfaction and despair associated with the high taxing, pigs might fly attitude, of both state and federal labor was the main cause of our recent post gfc depression...with ever increasing high energy, food and all other basic costs....

now that has all changed....with the recent changes in Vic govnut, now the NSw changes....

people felt safe under the liberals and Howard.....they have never felt safe since labor came to office....state labor has been out of control....

watch the shift, change in attitude....it will be dramatic....

if in any doubt....take notice of this....what was formerly the labor heartland...is now liberal

when Sydney's west became conservative last night, and ditched the labor nanny tag....there is something rather significant happening out there....the gentrification of a former lowly suburb....in this case hundreds of suburbs...
and it was just not the west....massive changes all over nsw....
people will feel confident again...now the rot has been removed....


----------



## Agentm (27 March 2011)

Cranbourne local George Zhang, originally from China's Guangdong  province, purchased three new houses, a pizza shop and a convenience  store in Melbourne in his quest for permanent residency.
              ''A lot of Chinese people are trying to immigrate to  Australia,'' he said. ''Buying property is the first stage of coming to  live here."

what chance does a first home buyer have when they are competing against ponzi schemes out of china and chinese millionaire immigrants buying everything up in a quest to get some better health services and better standard of living for them and their entire extended family that comes here?

sure immigration boosts productivity, and it is keeping the melbourne building sector employed since 2008.. but the bubble is still there.

what would happen if the chinese equation was removed from the real estate market in melbourne?


----------



## mazzatelli (27 March 2011)

Agentm said:


> what would happen if the Chinese equation was removed from the real estate market in Melbourne?




Not just Melbourne, but pockets here in Sydney as well. Hurstville, Campsie, Eastwood, Chatswood etc. come to mind. No racism here, just there is some truth in affluent families from Asia are purchasing a lot of property here. As to how they have the money....:


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## tech/a (27 March 2011)

So instead of taking advantage of the situation everyone comments on it like its a freak of nature and should be removed.

Derrrr.


We are currently involved with 5 major sub divisions in Adelaide--4 more are in the tender pipeline.
The duplication of the Southern Expressway and the new rail link to Seaford are absolute Motzza's for major increases in Demand and Infrastructure---hence Price.

But 99% just complain about development and sit and watch it happen---and IT HAPPENS!

Opportunity is staring you in the face.
but hey its a bubble always has been always will be!!


----------



## Agentm (27 March 2011)

2800 auctions to come over the next 3 weeks in melbourne..

volumes are up this year.. 5500 auctions thus far this year ..  5300 in 2010

looking good.. looking good..


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## Reasons (27 March 2011)

Julia said:


> However, for some reason, perhaps just because they can identify more easily with property, inexperienced investors will buy an IP before they will buy shares.
> I suspect most don't even do the calculations and reasoning above.




Hi Julia

Most people if they have not bought shares or ever got caught in a liquidity trap don't understand the risks. You don't know what you don't know, unless it is by experience or you take the time to do the risk analysis. In reality first hand experience with capital loss leads to understanding what risk analysis means to your ongoing wealth creation.

I have got good returns out of property as well as equities over time. What I eventually learnt like many others was never to become even slightly emotively tied to any asset; before, during and after ownership.

It just comes down to fear and greed. Like shares, if property corrects, by the time the majority realises it, it will be too late to exit without taking a significant bath on what they could have got a short time ago. That is when you learn about illiquidity and fear-based supply and demand.

When someone asks me about property prices, my only response is along the lines of - if property prices go down say ~30% do you care? Will you still get the cashflow or ROI you require or are you counting on the capital gains to sell down the property and to put into equities or whatever to get better returns? (if they even realise such options exists ).

There was an article in The Australian a few weeks ago that said that of those over 60 about ~73% of their wealth was in their own home. This indicates to me that most Australians are high risk speculators, not investors, as they are highly weighted to one asset. But it makes perfect sense because that is where the Govt. tax incentives have been made for many years. It also makes sense why the majority consider housing to be a no-risk bet, and they could well be right.

As many senior Australians will need a continually appreciating value asset in their own home to draw down on in retirement, the Govt. as a key promoter of the tax scheme will have little choice but to try to continue to prop up the values they have helped the banks establish. Past practice means that will likely mean high FHBS incentives to encouage and put the risk on those first home buyers who have time to eventually recover should something go wrong, in order to/try to stablise the market.

For my purposes, there are good returns on less risky assets elsewhere.

Cheers


----------



## tech/a (27 March 2011)

> There was an article in The Australian a few weeks ago that said that of those over 60 about ~73% of their wealth was in their own home. This indicates to me that most Australians are high risk speculators, not investors, as they are highly weighted to one asset. But it makes perfect sense because that is where the Govt. tax incentives have been made for many years. It also makes sense why the majority consider housing to be a no-risk bet, and they could well be right.




How on earth does it indicate that!
It clearly shows that capital appreciation has added to the cost of the home.
Its NOT increased their wealth one CENT.
They still have to pay for a home of equal value if they moved or rent one at an appropriate rate if they liquidate their "Asset".

There are basically NO tax incentives for PPOR.

There people are "highly geared to one asset' by DEFAULT---not design.

Those who have multiple IP's are indeed investors.
Those who flip IP's are speculators
These two get all the tax benefits---and so we should!



> As many senior Australians will need a continually appreciating value asset in their own home to draw down on in retirement,




An option but unless your 85--not a smart one!
FHBG is about employment and lack of resource.---housing


----------



## wayneL (27 March 2011)

tech/a said:


> So instead of taking advantage of the situation everyone comments on it like its a freak of nature and should be removed.
> 
> Derrrr.
> 
> ...




I've said this before but I think it is dangerous to equate a business venture in development with residential property investment.

It's two different things.

These opportunities staring everyone in the face demand knowledge, expertise, connections etc. Not everyone has the wherewithal to participate in such opportunities.

Plenty of smart people work in fields completely alien to property and I suggest to you that such people might make calamitous mistakes if attempting development without some sort of mentor, right contacts etc.

What seems obvious and relatively simple to a civil engineer might be foreign and dangerous to a nuclear physicist.


----------



## tech/a (27 March 2011)

wayneL said:


> I've said this before but I think it is dangerous to equate a business venture in development with residential property investment.
> 
> It's two different things.
> 
> ...





Wayne.

We are subcontractors for the Civil Works* NOT* the developers.

I'm not suggesting developing.

Im suggesting and very loudly that buying a house in Seaford /Mc Claren Vale/Pt Noarlunga/Willunga/Pt Willunga/Aldinga/Maslins/Moana anywhere at the end of the freeway/Rail line will double in price in the next 5 or so years.

I have housing and have just purchased Industrial---there are no more Industrial properties in the Seaford district left.

Rents are currently around 5%
Demand even now is far out stripping supply.
Rents will increase as fast as housing prices.

*Anyone can do it *the average 3 bed house is $270-$330K in most areas
Pt Noarlunga is a little boutique but still have $300K bargains.
Many Vic and NSW investors are here buying as well as O/S buyers.
If people cant see opportunity then they are blind and crippled by fear!

Lets have a look back here in 5 yrs time.






and if anyone wants to do their own research go here.

http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp

I visit this thread each month and its the same old same old.
Those that are crippled carrying on about why Property is doomed and then the 3 % who are doing.
Will never change---but if your sick of being one of the 97% *DO SOMETHING!!*


----------



## wayneL (27 March 2011)

tech/a said:


> Im suggesting and very loudly that buying a house in Seaford /Mc Claren Vale/Pt Noarlunga/Willunga/Pt Willunga/Aldinga/Maslins/Moana anywhere at the end of the freeway/Rail line will double in price in the next 5 or so years.




So 600-800K for a pile all the way down there in 5 years?

Nothing is impossible I guess, but I'll sit that one out... I just can't comprehend why anyone would want to pay that much to live anywhere in SA, now or in 2016. ::




> I visit this thread each month and its the same old same old.
> Those that are crippled carrying on about why Property is doomed and then the 3 % who are doing.
> Will never change---but if your sick of being one of the 97% *DO SOMETHING!!*




Not all of this "3%" want to invest in resi property. There is a place for it, wayneL is actively in the market right now as a matter of fact and continue to own prop in the UK.

But *DOING SOMETHING!!* might not include resi prop for any number of reasons. There are other avenues for building wealth. It is noted that you have never had the balls to put a substantial section of your wealth into the stock market. Others do... would that be counted as *DOING SOMETHING*?


----------



## robots (27 March 2011)

medicowallet said:


> "Saturday 26th March 2011
> 
> With around 2700 auctions expected over the next three weekends conditions shifted slightly in favor of buyers again today with a clearance rate of 61 per cent reached, down from last weekends 63 per cent.
> 
> ...




hello,

gidday brothers, yes i am fine thanks, no overtime just planting the money trees at my new project up in Ballarat

its just fantastic in Melbourne's no.1 regional town, total spin out after 15yrs in st Kilda i tell you, amazing

thankyou
professor robots


----------



## Reasons (27 March 2011)

tech/a said:


> How on earth does it indicate that! It clearly shows that capital appreciation has added to the cost of the home. Its NOT increased their wealth one CENT.




Both the article and I simply stated that ~73% of the total wealth of those over 60 is in the PPOR. We have no interest in this instance about how it got to that level, but in context it adds to equity risk. Therefore, when those over 60 have only 27% of other assets outside the PPOR (and to add insult to injury, might have property trust holdings in their Super funds in that 27%), the average person’s total wealth is very clearly heavily weighted to one investment; property.



tech/a said:


> They still have to pay for a home of equal value if they moved or rent one at an appropriate rate if they liquidate their "Asset".




However, people will more often use that PPOR equity to scale down to a cheaper property and use the extra equity to live in retirement than move to equal value, or rent as another option. Or stay and use an equity drawdown facility to do the same, regardless of what we might think prudent. If you have not saved the capital or got the assets, your choices are limited.



tech/a said:


> There are basically NO tax incentives for PPOR. There people are "highly geared to one asset' by DEFAULT---not design.




On its sale, the PPOR provides one of the biggest tax incentives of all at 100% tax free and is likely why for example, most 60+ year olds have ~73% of their total wealth tied up here (but logic says it is just sheer luck to date, mainly because of capital appreciation). The PPOR is not an asset when you know the simple difference, but as most people don’t, the capital gains free environment obviously appears attractive. As the article did not indicate any detail, it is possible they will have to use some of that 27% to pay off the PPOR, therefore at some point worsening the ratio.



tech/a said:


> Those who have multiple IP's are indeed investors.
> Those who flip IP's are speculators




I look at it this way, if you are heavily geared and have most/all of your assets in residential property, single or multiple IPs, you are a high risk speculator as your assets or wealth accumulation capacity are at high risk should the market tank or go sideways for years. If you have little or no gearing and are happy with ROI regardless of the capital value (why is beyond me), you are likely an investor as you should have weighed up the capital loss risks. 

Similarly, if the average punter is using their PPOR to fund their retirement, and we know many do, they likewise are high risk speculators should the continued or existing capital appreciation level of their main ‘asset’ decrease or go sideways, if that is contrary to their successful retirement financing plan.


----------



## trainspotter (27 March 2011)

wayneL said:


> But *DOING SOMETHING!!* might not include resi prop for any number of reasons. There are other avenues for building wealth. It is noted that you have *never had the balls *to put a substantial section of your wealth into the stock market. Others do... would that be counted as *DOING SOMETHING*?




Hmmmmmmmm ...... macho talk happening. TIme to put on the game face. Or is it reverse psychology? Or just a simple double dog dare?  

Renind me again why he has to put a substantial section of his wealth into the stockmarket again? I thought the best balanced portfolio was to have money in property/shares/cash and could be in disproportionate percentiles but liquid enough that you could move from one performing pool of money into another as required?

I'm confused.


----------



## wayneL (27 March 2011)

trainspotter said:


> Hmmmmmmmm ...... macho talk happening. TIme to put on the game face. Or is it reverse psychology? Or just a simple double dog dare?
> 
> Renind me again why he has to put a substantial section of his wealth into the stockmarket again? I thought the best balanced portfolio was to have money in property/shares/cash and could be in disproportionate percentiles but liquid enough that you could move from one performing pool of money into another as required?
> 
> I'm confused.




Clearly.

Nobody said he did, but was merely pointing out there are other avenues for wealth building. The individual chooses his or her way, but some sort of balance as you've outlined is probably a good idea.


----------



## trainspotter (27 March 2011)

wayneL said:


> Clearly.
> 
> Nobody said he did, but was merely pointing out there are other avenues for wealth building. The individual chooses his or her way, but some sort of balance as you've outlined is probably a good idea.




Gotcha. Over and out. And I'm taking my balls too.


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## tech/a (27 March 2011)

Reasons said:


> Both the article and I simply stated that ~73% of the total wealth of those over 60 is in the PPOR. We have no interest in this instance about how it got to that level, but in context it adds to equity risk. Therefore, when those over 60 have only 27% of other assets outside the PPOR (and to add insult to injury, might have property trust holdings in their Super funds in that 27%), the average person’s total wealth is very clearly heavily weighted to one investment; property.
> 
> 
> 
> ...





Nicely put.

Thats why I keep harping on to the 97% to become the 3%

Thanks Wayne

Kahuna's are fine.

Put them on the line many times and still have them.
Not at risk currently.
I no longer have to place them on the line.
As you point out even a small proportion of wealth in the stock market gives me a little play money.




> I just can't comprehend why anyone would want to pay that much to live anywhere in SA, now or in 2016.




For a while there I thought you were one of us but clearly a 97% er.

Who said anything about LIVING HERE????


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## wayneL (27 March 2011)

tech/a said:


> Who said anything about LIVING HERE????




Well sussing investment opportunities would surely involve visiting the place... I already spent a week there one afternoon. ::


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## tech/a (27 March 2011)

wayneL said:


> Well sussing investment opportunities would surely involve visiting the place... I already spent a week there one afternoon. ::




Yeh we all ( the 3 of us) knew you were here.


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## schnootle (28 March 2011)

tech/a said:


> Thats why I keep harping on to the 97% to become the 3%




What is with this idea that if you are not "crippled by fear" you buy property and if you are you don't. From my perspective over the last 10 years boat loads of people have bought property because they are too afraid to do anything else, because so much public perception and media beatup had it as a no risk investment. 

I am confident it will be many many more than 5 years before Moana and Seaford are worth that much therefore I choose not to buy - does that make me crippled by fear? Where is all this money going to come from anyway? During this price explosion are we going to see a complete replacement of the current residents with richer ones? Where are the old ones going to go?. Next you are going to tell me Hackham will have a median price of $800,000 in 5 years to.

This thread is converging to a debate between the have's and the have not's. I am willing to admit my views are probably biased because I am younger and don't own property, but I think some others are even more biased the other way.  Has anyone read the "Property" liftout of the weekend Australian?, that is a great example of the bias I am talking about. According to them, "property is moving sideways and building a platform for future growth" weazel words much?.


----------



## tech/a (28 March 2011)

schnootle said:


> What is with this idea that if you are not "crippled by fear" you buy property and if you are you don't. From my perspective over the last 10 years boat loads of people have bought property because they are too afraid to do anything else, because so much public perception and media beatup had it as a no risk investment.




They have to be able to afford to buy and they have a choice,Im certain people dont buy property because they are too afraid to do anything else---they would do nothing.



> I am confident it will be many many more than 5 years before Moana and Seaford are worth that much therefore I choose not to buy - does that make me crippled by fear?




If you can afford to by and choose not to I would say YES. If you cant afford to then your not in the arguement.



> Where is all this money going to come from anyway? During this price explosion are we going to see a complete replacement of the current residents with richer ones?



Yes that does happen demolitions happening all the time---but houses can and will increase in price from demand.


> Where are the old ones going to go?.



Some will be demolished and others will simply increase in value.


> Next you are going to tell me Hackham will have a median price of $800,000 in 5 years to.



Stupid statement.



> This thread is converging to a debate between the have's and the have not's. I am willing to admit my views are probably biased because I am younger and don't own property, but I think some others are even more biased the other way.




Pity you see it that way---some of us here know how easy it is to be crippled by fear and those who are in the position to take advantage of property are being encouraged to do so in a sea of negativity in this thread.




> Has anyone read the "Property" liftout of the weekend Australian?, that is a greate example of the bias I am talking about. According to them, *"property is moving sideways and building a platform for future growth" *weazel words much?.




Astute buyers would see this as great opportunity.
Ive pointed out greater opportunity looking at you and everyone out there---right NOW.


----------



## schnootle (28 March 2011)

tech/a said:


> If you can afford to by and choose not to I would say YES. If you cant afford to then your not in the arguement.




I can afford it and choose not to, and I don't agree with you - that makes me crippled by fear, amazing. My investment decisions differ from yours so I am wrong, thats excellent.


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## tech/a (28 March 2011)

schnootle said:


> I can afford it and choose not to, and I don't agree with you - that makes me crippled by fear, amazing.




Depends on what it is you "Choose" to do.

If its a choice to do nothing---its fear.
If its a choice to invest in other areas then its a choice and all power to you.



> My investment decisions differ from yours so I am wrong, thats excellent




Excellent that they are wrong--or that they differ?


----------



## againsthegrain (28 March 2011)

I think it comes down to this, if you can make your money work for you short term better then property long term then should not be investing in property especially at the moment.

I am definately getting better returns from my money and not in interest, interest on savings is just a bonus. 

But if I was sitting there just accumulating forever I would probably buy property just as a offset to inflation. Since I would be doing nothing with my money then who cares where it is sitting for the next 10 years.

My personal strategy right now is to save, invest and accumulate then buy property when it finally stabilizes at good prices, I do not see it at nowhere near good/fair prices at the moment.

But each to their own, everybody see opportunity lurking in different corners.


----------



## tech/a (28 March 2011)

> I do not see it at nowhere near good/fair prices at the moment.




And your not alone.
I dont agree with you and nor does the market in the areas I have posted up.

Lets just take *SEAFORD.*

*Lets do this exercise.*

You can afford a purchase so in 2007 you pay 20% down
Median price is $265k at the time (see chart)
Thats 52K
Now your median price is $335k
So your equity has risen from $52K to $122k
So youve made 134% on your money.
All in just over 3 years

Less of course out goings. Which would be mitigated by rent and copious tax deductions.
Hell I maybe wong--but that looks awful good to me!
Rail line---Dual freeway---3 new sub divisions to cope with demand.
See you back here in a few years!!




Could you point me to where I could do better than 45% a year on investment.
Its just alluding me at the moment.


----------



## prawn_86 (28 March 2011)

tech/a said:


> You can afford a purchase so in 2007 you pay 20% down
> Median price is $265k at the time (see chart)
> Thats 52K
> Now your median price is $335k
> ...




Aren't you quoting Return On Margin here? Same way all the FX/options advertisers say "make 1000% in a day".

My calcs show:
20% deposit on 265k = 52K
20% of new price = 67k

Which gives a return of 29%. 

Still not bad, but i dont see how you can quote return on margin. I can take out a 100:1 leveraged CFD or FX trade and 1 tick = 100% if thats the way you are looking at it.


----------



## tech/a (28 March 2011)

Yeh you could.
Just showing its not to be sneezed at.
I have bought houses on Zero down just using equity so the return has been massive relative to $ down.


----------



## againsthegrain (28 March 2011)

> You can afford a purchase so in 2007




2007 is 2007 now its 2011. I can look up a share that you could of bought back in 2007 and get a return on 1000%, could of would of didn't

And you are picking a suburb too, so using same example I will pick a specific share, I bought bkp shares (high spec, just as some say property is) just under a year ago at around .06c and sold them off recently at 2.1c that beats 45% and in under a year. 

Apples to Oranges but both examples based on foresight


----------



## schnootle (28 March 2011)

tech/a said:


> Could you point me to where I could do better than 45% a year on investment.
> Its just alluding me at the moment.




Just take the same example but take a 95% loan - 920% in three years.


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## tech/a (28 March 2011)

Ok Ok
I know this area I know the potential Im just sharing it.
I also own a great deal of property here and in adjacent suburbs.
All Im doing is attempting to help those who maybe interested.

Doesnt seem to be anyone so I'll bugger off.
Accept defeat.
Property is not for you so dont invest in it.


----------



## sinner (28 March 2011)

prawn_86 said:


> I can take out a 100:1 leveraged CFD or FX trade and 1 tick = 100%




Sounds good, how do I submit you my credit card details?

I think the behavior in this thread would simply not fly if this were a stock thread.

Where is the analysis, charts, thoughts, etc?


----------



## againsthegrain (28 March 2011)

Im not all against propety, just speculating on property going down and sideways for the next few years and dreaming to think can make the same returns as were expected in the last 10 years. 

Bigger better money to be made else where at the moment, then return to property when it is looking more healthy with more capital to invest. 

I have set myself a plan to buy out my first property in cash only in the next 5 years and I believe it. My plan.

Right now this bear is hibernating for the next few seasons.


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## trainspotter (28 March 2011)

_ROVE McManus sold his Melbourne mansion for *$3.4 million yesterday* in a private auction that included a handful of pre-approved bidders. 

LA-based McManus was not on hand for the auction of the five-bedroom, three-bathroom property he bought in late *2003 for $1.9 million*._

http://www.heraldsun.com.au/money/r...n-for-34-million/story-e6frfh5f-1226028707677

Works out to compound gross 7.83% RoR over a 90 month period paid annually. 

Or is it that Australian properties double in price every 10 years?


----------



## wayneL (28 March 2011)

trainspotter said:


> _ROVE McManus sold his Melbourne mansion for *$3.4 million yesterday* in a private auction that included a handful of pre-approved bidders.
> 
> LA-based McManus was not on hand for the auction of the five-bedroom, three-bathroom property he bought in late *2003 for $1.9 million*._
> 
> ...




Less transaction costs, both in and out... and of course we don't know about capital expenditure; renos etc.

All in a period of rapidly expanding credit.

A profit is a profit, but not a lot to boast about really.


----------



## trainspotter (28 March 2011)

Interest and inflation would also be required to be factored in plus a plethora of other factors. Prolly why I wrote it was 7.83% *gross*

If Rove McManus is selling up his property in Oz then it is definitley time to get out of Dodge.


----------



## trainspotter (28 March 2011)

Then there is this:- *Terri Irwin sells properties as Australia Zoo struggles *

Ms Irwin has also sold a $1.3 million luxury property, at a *$380,000 loss*, next to the family's $3.22 million home at Minyama, the Sunshine Coast's millionaire's row.

Read more: http://www.news.com.au/business/ter...es/story-e6frfm1i-1226029144883#ixzz0jSPZq0W2

When Terri Irwin starts to secretly sell property it is *DEFINITELY* time to get out of Dodge. Or the Australian Zoo is making an horrendous loss.


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## Craglet (28 March 2011)

I don't know if anybody here already knows about this but I thought this might be or interest. Apparently a tax reform organisation has called for FHB strike and the idea has been put up on Getup.org.au

http://suggest.getup.org.au/forums/60819-campaign-ideas/suggestions/1595687-first-home-buyers-property-buyers-strike

There's also another one on the site for the removal of negative gearing.


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## ZSlaveski (28 March 2011)

pcj821 said:


> I don't know if anybody here already knows about this but I thought this might be or interest. Apparently a tax reform organisation has called for FHB strike and the idea has been put up on Getup.org.au
> 
> http://suggest.getup.org.au/forums/60819-campaign-ideas/suggestions/1595687-first-home-buyers-property-buyers-strike
> 
> There's also another one on the site for the removal of negative gearing.




More information about them is gleaned here too... FHB Strike and End Negative Gearing Campaigns

Going by the comments, lot of angry people will be kicking down doors at Canberra if this govt does not do something, fast!


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## sinner (29 March 2011)

trainspotter said:


> When Terri Irwin starts to secretly sell property it is *DEFINITELY* time to get out of Dodge. Or the Australian Zoo is making an horrendous loss.




Maybe you missed it but they are...it was in the news a couple of weeks ago. Poor management, etc.


----------



## satanoperca (29 March 2011)

Question:-

Which is the most likely outcome :

1) Unemployment rises and then house prices fall or
2) House prices fall and then unemployment rises.

On another note :


> Shock rise in mortgage default cases




http://www.news.com.au/money/property/shock-rise-in-mortgage-default-cases/story-e6frfmd0-1226029350473#ixzz1HrcTtOFC

We may have low default rates but is this the start.

Cheers


----------



## sinner (29 March 2011)

satanoperca said:


> Question:-
> 
> Which is the most likely outcome :
> 
> ...






It's all so shocking and unexpected! Who could have ever thought it! Gobsmacked! 

I love how in this article, Resi Home Loans chief executive Lisa Montgomery, suggests that people under mortgage stress switch their loans to "interest only repayments to prevent financial hardship" hahahahaha.

After seeing that line, I just *had* to go see who runs Resi, turns out it is Challenger.

Definitely adding that one to the potential shorts watch list come the next market downcycle.


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## KurwaJegoMac (29 March 2011)

satanoperca said:


> Question:-
> 
> Which is the most likely outcome :
> 
> ...




Generally number 1 - you need a trigger to cause house prices to fall significantly. 2 will be an effect of 1 occuring. A period of stagnant growth or small declines in prices wont change unemployement significantly - perhaps some construction workers might not work every day of the year but they'll hardly become unemployed, most are booked out solidly right now.

If you have a trigger like large unemployment rises or massive oversupply then you'll see a house price fall. Looks like we may be stagnating now, or at least not growing at the rates we've been used to in recent days but this does not equal to a market crash. The property market goes through this sort of period all the time. If prices are stagnant and we get a large trigger then it'll be 'look out below'.




satanoperca said:


> On another note :
> 
> 
> http://www.news.com.au/money/property/shock-rise-in-mortgage-default-cases/story-e6frfmd0-1226029350473#ixzz1HrcTtOFC
> ...




Typical sensationalistic journalism. There are lies, damn lies and statistics. They grab 12.5% as a useless statistic (on its own) to scare the masses yet again. Here's why it's useless on it's own:

Lets say there are 1000 mortgages in Australia.

Situation A: Mortgage defaults are at 10 mortgages. 2 more mortgages default in this quarter so we now have 10 mortgage defaults. That's an increase of 20%. Oh my lord! It's the end of the world right?

12 mortgage defaults out of 1000 mortgages equates to 1.2% of mortgages defaulting (from the original 1%). Hardly a scary figure at all.

Situation B: Mortgage defaults are at 300 mortgages. An increase of 20% results in 60 more mortgages defaulting. We now have 36% of mortgages defaulting (from the original 30%). A much more worrying figure yet still the same 20% increase as situation A.

These articles (like most) are just a load of sensationalist drivel a la today tonight/current affair. All too often we see a ton of these sorts of articles quoted on on ASF to support doom & gloom/rosy sunshine and lollipops theories (The REIV figures are a serial offender) - suggest people look at the underlying numbers because these sort of articles mean absolutely squat.


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## medicowallet (29 March 2011)

satanoperca said:


> Question:-
> 
> Which is the most likely outcome :
> 
> ...




Easy

1. Something happens (eg China slows, combination of poor labor policies etc)

2. 1-2-1-2-1-2-1-2-1-2-1-2 in a cyclical fashion, till, as a guestimation 20% fall.

3. then stagnation for a few years.

4. things start creeping up slowly

5. Then BB sell out their investments to fund their lifestyle. - prices stagnate for a few years (wonder if stuff bb want would be a good place to invest for the future, considering we will control the vote  )


The people in the know sold out faster than the people who had rose coloured glasses. 

Where did they invest? I hope in the same place as I am

I know where I am investing now.. I just hope it is in the right place lol.


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## KurwaJegoMac (29 March 2011)

medicowallet said:


> Easy
> 
> 1. Something happens (eg China slows, combination of poor labor policies etc)
> 
> ...




Pretty good summary of the cycle


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## satanoperca (29 March 2011)

Thanks for the responses.

I asked the question to gain clarity of the USA situation.

It is my understanding that they had low, lower than ours, unemployment. House prices started to collapse and then unemployment rose accordingly.

It seems logical, if house prices decline, consumer sentiment drops and so people hire less.

Cheers


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## trainspotter (29 March 2011)

satanoperca said:


> Thanks for the responses.
> 
> I asked the question to gain clarity of the USA situation.
> 
> ...




Yes they did have lower unemployment than Oz. 4.8% April 2008. 9.1% April 2009. 

House prices began to fall sharply in Jan 2007.

Might have to look at the consumer sentiment index next. *gulp* trending down. 

Australalia unemployment rate at 5% February 2011. What will it be in 12 months time?

Yes yes yes it is the perfect storm ...... we are the USA. Sell sell sell and quickly.


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## trainspotter (29 March 2011)

Whats this then? A chance of more easy credit if rates go down? Oh oh !

*THE Reserve Bank may start cutting interest rates by mid-year if Australia's economy outside the mining sector does not improve, says Morgan Stanley Smith Barney investment strategy head Malcolm Wood. *

Read more: http://www.news.com.au/money/intere...ne/story-e6frfmn0-1226029863080#ixzz0jXxS9dSP

A mining executive on the RBA Board??? Noooooooooooooooooooooooooo way !

*A SENIOR mining industry executive, Catherine Tanna, will be appointed to one of two Reserve bank board vacancies today. *

_It is understood the Gillard Government wants the central bank to have stronger ties with the resource sector, now driving Australia's export prosperity, and with regional Australia._

http://www.adelaidenow.com.au/busin...-australia-board/story-e6frede3-1226030021564


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## c-unit (29 March 2011)

Swan showed how spineless he is by getting rid of McKibbon.


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## satanoperca (29 March 2011)

trainspotter said:


> Yes yes yes it is the perfect storm ...... we are the USA. Sell sell sell and quickly.




So dramatic TH, but thanks for the response anyhow.

I was just curious between the relationship of house prices and unemployment. I was always of the belief that unemployment went up and house prices went down, but it would seem that in the US, it was the opposite. 

I'm not saying that we are the US or will follow in the same foot steps.

On another note, I think TH you will find the banks have once again increased their LVR's up to 95% and are desperately trying to give money away at the moment.

On the IR subject, it would seem quite logical the RBA might decrease IR's to take a little wind out of the $AU. We will just have to wait and see.

Cheers


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## Peak Debt (30 March 2011)

KurwaJegoMac said:


> Generally number 1 - you need a trigger to cause house prices to fall significantly. 2 will be an effect of 1 occuring. A period of stagnant growth or small declines in prices wont change unemployement significantly - perhaps some construction workers might not work every day of the year but they'll hardly become unemployed, most are booked out solidly right now.




I'm not sure you need a trigger, prices can collapse under their own weight as explained here ... Australian House Price Crash ... and if they do collapse there will be a lot of pain for Australians



> If you have a trigger like large unemployment rises or massive oversupply then you'll see a house price fall. Looks like we may be stagnating now, or at least not growing at the rates we've been used to in recent days but this does not equal to a market crash. The property market goes through this sort of period all the time. If prices are stagnant and we get a large trigger then it'll be 'look out below'.




Triggers like that can certainly amplify the crash and bring it forward but a crash is certain whatever happens due to the scale of the bubble


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## explod (30 March 2011)

And of course the growing unnaffordability of property could itself be a contributor perhaps.

In an estate raised over the last five years near to where I live 5% are occupied by tradies and their families.  The slowdown has meant they are getting a lot less work so with little margin, tip overs can perhaps come from many angles.

A friend who has a low budget removal business paints a bad anecdotal picture.  We shall see.  The ending quarterly figures could be interesting one suspects.

Just


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## trainspotter (30 March 2011)

Too late. Certain areas that I have posted several pages ago have dropped by 40% on their price structure. Other areas are still continuing to increase steadily. 

Even if prices do drop 40% what then? Here is an interesting article:-

*A 40 per cent tumble in house prices and a home loan default rate of 8 per cent would be “manageable” for the nation’s banks and mortgage insurers, Fitch Ratings says.*

_Commonwealth Bank, which did its own stress test, said last month that under a “high-stress scenario,” with interest rates at 14 per cent, unemployment at 10 per cent and property values down 30 per cent, it would see losses of $740 million, *or 0.2 per cent of its total book,* not including additional insured losses._

http://www.smh.com.au/business/banks-pass-house-price-stress-test-20101013-16jlf.html

We will have to wait and see for this wholesale destruction of property values in OZ to become crystalline. China downturn? Massive unemployment? Global meltdown? Many triggers and all are possible but unlikely IMO


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## sinner (30 March 2011)

LOL!

Fitch! And CommBank doing their own stress "test"...reminds me of the European bank stress tests "yep, it's all good...we are self regulating...don't peak under the hood...all good".

This is the same Fitch that was rating toxic CDOs as AAA in August of 2008, right?

Same Fitch that somehow still has Portugal bonds rated as investment grade, right now.


----------



## trainspotter (30 March 2011)

Yeppers ........ the same one that reckons Singapore banks are "stable"

http://www.reuters.com/article/2011/03/30/markets-ratings-singaporebanks-idUSWNA488920110330

Talk about leaving the fox in charge of the hen house. 

You missed the post previously from me when I evidenced the ADI's also own the LMI's. Therefore they have insured against themselves ..... LOLOL. That is a house of cards as well.

Now that is funny. 

_The Australian Government Guarantee Scheme for Large Deposits and Wholesale Funding (the Guarantee Scheme) was announced by the Government on 12 October 2008 and formally commenced on 28 November 2008.

The arrangements were designed to promote financial system stability in Australia, by supporting confidence and assisting eligible authorised deposit-taking institutions (ADIs) to continue to access funding at a time of considerable turbulence._

http://www.guaranteescheme.gov.au/


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## kincella (30 March 2011)

another 2 cents worth.... re Terri Irwin.....her husband was the face of the australian zoo....it was all about him and his fearless crocodile wrestling.....
add in the GFC, less tourists, and lack of business sense.....she was reported to have done some questionable business etc....
she has spent 26 million on realestate......the qld govnut gave her 6 million etc...
backers have gone, family disputes etc, people unhappy with how she runs the zoo...and all that promotion of her daughter....
so she gets into strife and sells one property.....and some here get excited that is proof of the property downward spiral
more like mismanagement to me....
wonder how the poor animals are faring ??
http://www.sunshinecoastdaily.com.au/story/2008/03/01/terri-irwins-private-property-fortune/


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## sinner (30 March 2011)

kincella said:


> another 2 cents worth.... re Terri Irwin.....her husband was the face of the australian zoo....it was all about him and his fearless crocodile wrestling.....
> add in the GFC, less tourists, and lack of business sense.....she was reported to have done some questionable business etc....




Yep, classic hubris.

But you forgot to add: strong AUD, when Steve was around punters from the UK/US/JPY/etc could hop on a plane and check out the whole east coast of Aus for less than the cost of a night out in London


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## wayneL (31 March 2011)

FWIW

Australian property prices 'a disgrace'



> AUSTRALIAN house prices are a "national disgrace"' according to futurist, economist and population analyst Brian Haratsis.
> Mr Haratsis told a national development conference in Adelaide yesterday there was an immediate need to increase house and land supply to soften the impact of rising prices.
> 
> 
> Read more: http://www.news.com.au/money/proper...ce/story-e6frfmd0-1226030504466#ixzz1I6rTsyah


----------



## nunthewiser (31 March 2011)

> Perth median house prices fell another 0.2 per cent in February, as further signs emerge that the housing construction sector is stalling.
> 
> RP Data-Rismark's monthly measure of the housing market, released today, showed the median house price in Perth was now $480,000, down four per cent over the past 12 months.
> 
> ...




http://au.news.yahoo.com/thewest/a/-/wa/9108428/perth-house-prices-fall-again/

All good bro.......i read on the internet that if you buy now you can double ya cash in 5 years.

and them bonepicking vultures grin and make a cup of tea.


----------



## Reasons (31 March 2011)

More on the proposed buyers' strike...the trigger?

http://www.theage.com.au/business/beware-a-buyers-strike-in-property-20110331-1cgwh.html


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## KurwaJegoMac (31 March 2011)

Reasons said:


> More on the proposed buyers' strike...the trigger?
> 
> http://www.theage.com.au/business/beware-a-buyers-strike-in-property-20110331-1cgwh.html




Highly doubt it. Look at the posts on both ASF or any property article on the news sites - for every one bullish post there are about 50 bearish posts. The news articles are spammed with heathing masses of bearish people. Having a website promoting a strike will just attract those same bears there - theyre the ones not buying anyway so it will make little difference. 

What you need for a crash is a situation where lots of people are _forced_ to sell their property. People withholding a purchase does not force a lot of people to sell - perhaps only those investors who just purchased and are heavily negatively geared or are property flippers. Someone who is positively geared or has positive cashflow wont care. Same with PPOR holders as they need somewhere to live - if they sell, they must rent. If too many PPORs are sold we get an increase in renters and hence rent. This in turn boosts the returns on property until positive cash flow investors step in and prop up the market. 

Thankfully we dont have the same laws like in the us where you can walk away from ur loan or there would be carnage here given the general consensus. 

Either way: be greedy where others are fearful and be a contrarian. You dont get ahead of everybody else by doing what the majority does.


----------



## medicowallet (31 March 2011)

KurwaJegoMac said:


> Either way: be greedy where others are fearful and be a contrarian. You dont get ahead of everybody else by doing what the majority does.




Rubbish,

the housing bubble is EXACTLY what you wanted to do, follow the herd, just turn before they do.


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## Reasons (31 March 2011)

KurwaJegoMac said:


> Highly doubt it.




You could well be right; I will let you know in a few years. It is just a non-emotive strategic money management decision on my part.



KurwaJegoMac said:


> Either way: be greedy where others are fearful and be a contrarian. You dont get ahead of everybody else by doing what the majority does.




This saying usually applies to when an asset is of low value compared to the real value as the market is undervaluing it through fear. It is possible you are seeing something that some others cannot, and that is definitely when you can make money. 

It is also possible that we have not actually seen anything even closely resembling fear yet.

My own simple risk/reward analysis says that the probability of property doubling or providing an acceptable return compared to other assets in the next 7-10 years as opposed to going sideways or down is more improbable than probable. I accept I could be wrong, but can risk-mitigate in other assets and not be disadvantaged.

There has been good money to be made out of property to date, and that opportunity will exist in the future. I have made the decision I don't want to get caught in a possible illiquidity trap when there are other highly liquid assets that I can be in that provide excellent returns. 

If I possess highly liquid assets outside of property, that gives me easy and rapid access to capital should opportunities arise in property or elsewhere.

I do not have the same opportunity if my assets are in property and become illiquid or significantly reduced in their value to be used as collateral for leverage, should buying opportunities arise in the event of a negative property occurrence.

Only time will tell, in the meantime I have made a strategic decision that the odds are in my favor, compared to the alternative, by allocating my assets this way.


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## trainspotter (31 March 2011)

And yet for all the rhetoric the bumblebee continues to fly.

As you were ...... zzzzzzzzzzzzzzzzzzzzzzz.


----------



## Reasons (1 April 2011)

View attachment 42196


trainspotter said:


> And yet for all the rhetoric the bumblebee continues to fly.





Unless converted into a usetabee


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## wayneL (1 April 2011)

trainspotter said:


> And yet for all the rhetoric the bumblebee continues to fly.
> 
> As you were ...... zzzzzzzzzzzzzzzzzzzzzzz.




Of course bumblebees are simply using the laws of aerodynamics to fly, even if a few pointy heads couldn't initially figure out how. They could always fly.

Now the laws of economics are a wholly different matter.


----------



## trainspotter (1 April 2011)

wayneL said:


> Of course bumblebees are simply using the laws of aerodynamics to fly, even if a few pointy heads couldn't initially figure out how. They could always fly.
> 
> Now the laws of economics are a wholly different matter.




Depends on whose economic law you are using I guess.

1. The law of demand. When the price of a good falls, the quantity demanded does not fall. Usually, the quantity demanded rises with a fall in price. Strictly, the law of demand applies to the substitution of cheaper goods for more expensive goods due to a relative change in price. The law of demand also applies to the whole economy: when the whole price level falls, with the amount of money remaining constant, a greater amount of goods will be purchased. 

2. The law of supply. When the price of a good rises, the quantity produced does not fall. Usually, a higher price for a produced good results in a greater quantity produced. 

3. The law of diminishing returns (law of decreasing marginal productivity). Given a fixed amount of some input, when ever more amounts of the variable input are added, eventually, the marginal product (the last unit's contribution to output) declines. 

4. The law of one price. In an efficient market, a financial asset will tend to have one equilibrium price, because of arbitrage. 

5. Gresham's law. Bad money drives out good money when the bad money is legal tender. 

6. The law of reflux. In competitive free-market banking, there cannot be a permanent over issue of banknotes, since any issued in excess of the quantity demanded will be redeemed. 

7. Law of supply and demand. In a free market, the equilibrium price of a good is that at which the quantity supplied equals the quantity demanded. 

8. The law of diminishing marginal utility. As one obtains more and more of a particular good, eventually the marginal utility (value from one more unit) declines. 

9. The law of unintended consequences. Human actions, and especially governmental acts, have consequences which were not intended and not anticipated by the actors. 

10. The law of iterated expectations. One cannot use the limited information at some previous time in order to predict the forecast error one would make if one had better information later. 

11. Engel's law. The proportion of income spent on food in an economy is inversely proportional to the general welfare of the society in that economy. 

12. Wagner's law. As an economy grows, government spending has increased by a greater proportion. 

13. Foldvary's law of inequality. Inequality equals the concentration of a distribution times the number of units (I=CN). 

14. Say's law of markets. The supply of goods will pay the factors of production such that the payments are equal to the value of the product, and therefore aggregate quantity supplied equals aggregate quantity demanded. 

15. Law of time preference. People tend to prefer to obtain goods sooner rather than later, and will pay a premium (i.e. interest) to shift buying from the future to the present. 

16. Law of the market. Statements made by market participants are assumed to be truthful, and products are presumed to be safe and effective unless stated otherwise. 

17. *Pareto's law of distribution. There is a general tendency for 80 percent of the consequences to result from 20 percent of the causes, which often applies to property, 80 percent of the wealth owned by 20 percent of the population. *

18. Law of cost. All costs are opportunity costs, the true cost being what is given up to get something. 

19. Law of comparative advantage. Trade takes place because parties specialize in the products which have a lower opportunity cost, rather than merely a lower physical cost. 

20. The law of wages. The wage level of an economy, where labor is mobile and competitive, is determined by the marginal productivity of labor at the margin of production, i.e. the least productive land in use. 

21. The law of rent. The economic rent of a plot of land equals the difference between its output and the output at the margin of production, i.e. the least productive land in use, using the same quality of labor and capital goods. 

22. The law of capital goods. Investment in capital goods and human capital expand until the expected return on investment, adjusted for risk, equals that of the long-term real interest rate. 

23. Walras' law. If there is an excess quantity supplied in one market, there must be a matching excess quantity demanded in another market. 

24. The law of economizing. People tend to economize, maximizing gains for a given cost, and minimizing costs for a given gain. 

25. The law of economic rationality. Human action is economically rational if one's preferences are consistent and if one economizes. 

26. The Gaffney effect. The public collection of rent equalizes the discount rate for land usage, since otherwise people would have different credit costs for purchasing land.

And now for the bee - It is believed that the calculations which purported to show that bumblebees cannot fly are based upon a simplified linear treatment of oscillating aerofoils. The method assumes small amplitude oscillations without flow separation. This ignores the effect of *dynamic stall*, an airflow separation inducing a large vortex above the wing, which briefly produces several times the lift of the aerofoil in regular flight. More sophisticated aerodynamic analysis shows that the bumblebee can fly because its wings encounter dynamic stall in every oscillation cycle.

*Dynamic stall* - which is the exact position the Australian Property prices are at right now. Stalling but still somehow creating lift  .......... hence the bumblebee analogy.


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## Mr Z (1 April 2011)

Google is your friend! 

Jeeeeeezzzz!

http://patricksperry.wordpress.com/2008/12/02/

http://www.manifestingamillion.com/bees.html


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## Mr Z (1 April 2011)

wayneL said:


> Now the laws of economics are a wholly different matter.




They work just like the rules of whoring, you get the result you pay for sweety. Mind you, look out for those Austrians, they have a real discipline kink, good for you in the long run but you may suffer buyers remorse.


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## ZSlaveski (1 April 2011)

*Australian FHBs go on Strike!*

This week we have some very big news in Australia that I thought you all might be interested in discussing.

More and more Australians are giving up on overpriced housing in their home country and buying overseas. It's no surprise Aussies are buying real estate overseas. In America, UK, Ireland, and Spain - house prices have fallen back to more sensible levels.

The level of public dissatisfaction with Australia's housing market became abundantly clear today, to myself and thousands of other Australians.

Recent campaigns by renowned advocate group "Get Up!" are championing a First Home Buyer's Strike and also calling for an end to the negative gearing tax break used by many property investors. The campaigns are gaining a huge amount of publicity in the media:

Online campaign targets high cost of housing

Real estate in Australia has exceeded all sensible valuation criteria and we now have some of the most unaffordable homes on the planet according to Demographia, The Economist, and many other respected organisations.

Also gaining much public attention recently is the Get Up campaign support thread and discussion on the Australian Property Forum with literally thousands of hits in a few days:

Get Up! Campaign Thread on AustralianPropertyForum.com

If these campaigns works as the organisers plan, property values may reduce to more sensible levels whereby decent hardworking Australian families can once again afford a reasonable home.

Here are the links to the original campaigns where thousands of people are casting their votes at an ever accelerating pace:

Get Up! Campaign to End Negative Gearing

Get Up! Campaign calling for First Home Buyer strike

If the bottom rung (FHBs) are taken out then the whole property ladder pyramid scheme may collapse. However, the GetUp Administrator has unfortunately suggested that it is very unlikely they will even accept these campaigns, as explained here:

Get Up Administrator suggests campaign may be shelved

Now, whether or not the public believe these campaigns are a good idea or a bad idea, there is no denying the huge level of public interest. The discussion has gone viral across the country on Twitter and other social media sites.

It is important that all property investors and owners consider the impact such a campaign could have on Australian property values.

The public have spoken, and if nothing else, these campaigns will surely be influencing future political decisions about the housing market in Australia.

This has been an important event in the history of the Australian housing bubble.

Thanks,

Zoran.


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## satanoperca (1 April 2011)

Could this Getup campaign lead to a significant increase in the FBHG as this seems to be the usual solution by the govnuts to overcome the housing affordability issue.

I hope it doesn't but it seems the last time, Steven Keen, there was mainstream publicity on the subject, the FHBG was given a boost and up went prices.

Cheers


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## kincella (1 April 2011)

who would have thought.....so they are not all focused on the expensive inner city....as if, like this forums mantra in the past 6 years.....as if the only place to live is in the ugly little expensive dog boxes...smack in the centre...
I have been suggesting the whole time, that there are plenty of affordable houses in the outer suburbs.....
its obvious that there are a huge number who think the same...

some huge numbers have fled to the outer suburbs..
its an interesting read...over 600,000 in the past 10 years, and figures of 79000 pa now, or 1500 pw...

an extract only.....read the full article, no other city has grown at the same rate, Melb overtaking Syd and Perth etc
..........................
MELBOURNE'S outer suburbs are growing faster than any other area in Australia, part of a record-breaking trend that has seen Melbourne's population closing the gap on Sydney.

The city's outer suburbs are leaving coastal Queensland and Western Australia's mining towns in their dust, as more than 1000 people a week pour into Melbourne's fringe.

New figures from the Bureau of Statistics show that while the boom in overseas immigration cooled off all over Australia in 2009-10, Melbourne was again the centre of Australia's population growth.

Advertisement: Story continues below 
Illustration: Tandberg 
?? In the year to June 2010, Melbourne is estimated to have grown by 79,000 people, or more than 1500 a week. For the ninth consecutive year, Melbourne had the biggest growth of any city in Australia.

?? Since 2001, Melbourne has gained 605,000 new residents, up 17 per cent, rapidly pushing out the urban boundary in every growth corridor. That is far ahead of growth of 447,000 in Sydney, 380,000 in Brisbane, and 303,000 in Perth.

?? For the first time in almost 30 years, Melbourne's population is within 500,000 of Sydney's, and gaining. If the growth rates of 2001-10 continued, Melbourne would overtake Sydney in 2028, when each city would have roughly 5.6 million people
http://www.theage.com.au/victoria/citys-population-explosion-20110331-1cng1.html


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## kincella (1 April 2011)

*the sea changers*, with no noise at all, all along the coast, regionals included...nice inexpensive life by the sea....
( I wonder how many tree changes are out there , doing similar, vacating the city, for the quiet life)
2 million people in 12 years, or 160,000 pa....thats a whopping figure....
I believe they are departing the capital cities, on retirement....as they have always done....just in bigger numbers now...
leaving the cities for the working class to live there....

it was not so long ago...it seems to me....that the cities accommodation on offer were the slums...
they then converted the boxes into offices....
all those little dog boxes....that the now generation dream of living in...except they dont want to pay the unbelievable prices...nor should they
the now generation are demanding to live there, but at half the cost...
I believe they will get their wish, when and if the mood shifts, and they decide to live in units, rather than the tiny houses with tiny backyards...
Bracks was going to accommodate them, with high rise boxes along the main transport routes....


http://www.abc.net.au/news/stories/2011/03/29/3176361.htm


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## trainspotter (1 April 2011)

Mr Z said:


> Google is your friend!
> 
> Jeeeeeezzzz!
> 
> ...




LOLOL ...... wrong on both accounts. You don't think I would type all that myself do you???

http://www.progress.org/2004/fold379.htm

http://en.wikipedia.org/wiki/Bumblebee


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## kincella (1 April 2011)

fhb's represent 10% of the population....not all of them are interested in the inner cities...so lets be generous and say 5%....wanting to buy a big house in the city....but dont want to pay those high prices.....
whilst the rest of them are obviously out there in the outer suburbs...

will 5% of the population dictate to the other 95%.....not in my world, and not while they are at the bottom of the supply chain

and in case some dont know....'Get UP' is a labor based political support group...
oh, and the labor govnuts stopped the national affordablity scheme recently..

do you really think they care.....when they all get soo much money in taxes from property, in order to waste it on all the other hair brained schemes they promote...


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## moXJO (1 April 2011)

Building costs are only going to go up more once this carbon tax comes in. And good luck finding any skilled tradies left in the game. Have to wonder about the future impact on costs.


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## medicowallet (1 April 2011)

moXJO said:


> Building costs are only going to go up more once this carbon tax comes in. And good luck finding any skilled tradies left in the game. Have to wonder about the future impact on costs.




True, how it would hurt them dearly to start charging pre-2000 hourly rates.

When your plumber is earning more per hour than many doctors, it sort of indicates to me that housing is in a bubble, government "assistance" does not work and people have a priority wrong.


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## InstoMan (1 April 2011)

medicowallet said:


> True, how it would hurt them dearly to start charging pre-2000 hourly rates.
> 
> When your plumber is earning more per hour than many doctors, it sort of indicates to me that housing is in a bubble, government "assistance" does not work and people have a priority wrong.





The Carbon Tax is really a secondary issue.  There is no specific need for it to be raised when discussing housing prices while so many other factors are in play.

Price movements will be chiefly dictated by the following:
1. Labour shortage - workers pulled into mining increasing costs of labour for construction;
2. Strong AUD - increasing cost of materials, specifically cement; and
3. General Govnmt risk - People seem to pass over this one, but the recent political climate is making S&Ps and Moodies second-guess the credit worthiness of the big 4 banks.  Any downgrade in rating (which will come from Sovereign risk, and nothing more) will see a spike in the cost of funds for the banks, which in turn will be passed along to consumers.  

Not certain exactly how this will affect housing prices - increased costs could see a slump in demand, allowing for a pricing correction.  Conversely, growing population could reinforce demand and further increase prices on the back of heightened costs of production.

Either way, GTFO with the carbon tax influencing housing prices.


----------



## medicowallet (2 April 2011)

InstoMan said:


> The Carbon Tax is really a secondary issue.  There is no specific need for it to be raised when discussing housing prices while so many other factors are in play.
> 
> Price movements will be chiefly dictated by the following:
> 1. Labour shortage - workers pulled into mining increasing costs of labour for construction;
> ...




Sorry champ,

Where did I mention the carbon tax? 

I was inferring that builders/tradies might have to start returning to market fundamentals to maintain workload, something some of them must dread.

1. Agree
2. Makes imports cheaper, not dearer.
3. Agree, but what caused the risk? Government intervention, it has to be withdrawn carefully yes, but it needs to be withdrawn.

So, before getting all angry and building a strawman argument, please get your facts straight (or are you trolling)


----------



## Mr Z (2 April 2011)

trainspotter said:


> LOLOL ...... wrong on both accounts. You don't think I would type all that myself do you???
> 
> http://www.progress.org/2004/fold379.htm
> 
> http://en.wikipedia.org/wiki/Bumblebee




LOL... What does that prove? Other than there is an echo in here!

TS, we need your original pearls of wisdom! I feel cheated!!!!!!


----------



## Dowdy (2 April 2011)

Does this sound familiar?



> “The BLANK Association (CBIA) continues to express alarm over what it calls an ongoing housing crisis in BLANK. Alan Nevin, the association’s chief economist, projected in a 2006 CBIA Housing Forecast that only 185,000 to 205,000 building permits will be granted this year, far short of the 240,000 new homes needed each year.”
> 
> Sound familiar? The article continues:
> 
> “BLANK has been experiencing a massive population boom in recent years and it’s believed that 6 million new residents will be living in the region by 2020. The population increase, coupled with the housing shortage, has the CBIA worried that it will be increasingly difficult for first-time homebuyers to find a moderately priced unit.”





Now lets fill in the blanks - *Californian Building Industry Association (CBIA)* & *Southern California*

http://thedepression.org.au/?p=2557


Australia is different, right?


----------



## medicowallet (2 April 2011)

"This weekends clearance rate is 61 per cent, confirming that demand and sentiment has not changed since Melbourne Cup day in 2010 when the Reserve Bank last increased interest rates. At that time the clearance rate dropped from the high 60's to the mid to low 60's and that is where is has stayed. Whilst the number of auctions is still high a healthy number of homes are selling.

This weekend there has been 690 auctions reported of which a total of 422 sold and 268 were passed in, 176 of those on a vendors bid.

This weekend last year saw only 50 auctions so it is not a useful comparison, this weekend in 2009 saw a much lower 532 auctions with a clearance rate of 78 per cent.

On each weekend between now and Easter the REIV expects around 1000 auctions"


Still have no idea what this means, 61%.

Just keeping it real for the true believers


----------



## singlefished (3 April 2011)

http://www.reiv.com.au/news/details.asp?NewsID=1058

"The REIV expects around *845* auctions this weekend and then 1000 next weekend."

422 sold out of 845.... 49 point something percent clearance!

It's a pity that REIV aren't keeping it as real as yourself medico..... but hey, 61% sounds a lot healthier doesn't it


----------



## Aussiejeff (3 April 2011)

medicowallet said:


> "*This weekend there has been 690 auctions reported* of which a total of 422 sold and 268 were passed in, 176 of those on a vendors bid."




The key word is "reported".

I expect most of the REIV's "expected" auctions that are NOT reported in their figures would be failed auctions that RE agents simply don't want to admit to. I presume there is no penalty for agents failing to report failed auctions?

So, the 61% is a totally contrived furphy under those conditions.....

Party on.


----------



## satanoperca (3 April 2011)

March RPdata figures

Sydney $500,000  0.6%   
 Melbourne $474,000  0.1%   
Brisbane $434,000 -1.2%   
 Adelaide $390,000 -0.4%   
 Perth $465,000 -0.4%   
 Darwin $434,500 -6.7% 
 Canberra $507,500  1.9%   
 National $459,000  0.0%   
 Hobart* $330,000 -7.4%   

It appears there has been a significant change in trend in the last few months. Wasn't it reported around Xmas how Melbourne property prices had risen around 15% yoy. Three months later and barely registering +ive growth. Be interesting to see were we sit, come end of June.

Cheers


----------



## bellenuit (3 April 2011)

Aussiejeff said:


> The key word is "reported".
> 
> I expect most of the REIV's "expected" auctions that are NOT reported in their figures would be failed auctions that RE agents simply don't want to admit to. I presume there is no penalty for agents failing to report failed auctions?
> 
> ...




I'm not saying you are right or wrong, but many have suggested on this thread that many auctions are deliberately unreported to keep the figures looking good. Those unreported are assumed to be failed auctions.

Do we have any figures from the "good times" that indicate an unreported rate much lower than at present. If the unreported rate is consistent between good and bad times then there may be no sinister meaning behind the figures.


----------



## Agentm (3 April 2011)

auctions with no result = 116
total auctions = 690
TOTAL total auctions = total auctions + auctions with no result
TOTAL total auctions = 806

sold at auction = 341
sold before auction (private sale) = 78
sold after auction = 3
TOTAL sold because of auctions = 344

TOTAL sold because of auctions / TOTAL total auctions = true clearance rate

344/806 = true clearance rate

42.68% = true clearance rate



http://www.governmentmedia.com.au/index.php/blogs/25-economy-ponzi-scheme

Is the Australian economy the world?s largest Ponzi scheme?
Written by Oliver Yates	   
Wednesday, 04 August 2010 02:20
Is the Australian economy the worlds largest Ponzi scheme?

Oliver Yates asks why nobody seems to care that Australia is now one of the most indebted nations on earth.

Australia  needs more than one billion dollars every day. thats one thousand  million dollars each and every day - to avoid default on its foreign  debt, yet we seem to be basking in the illusion that we are not a future  Greece.

Australia is now in a worse foreign debt position than  Hungary and ranks as the 11th most indebted nation on earth. With gross  external debts (equity and debt) of over 2 trillion and a debt to GNP  ratio exceeding 100%, Australia sits well within the field of European  countries facing a bleak future. 

Australians should be able to  hear clearly the "tick..tick..tick" of our own debt bomb. But government  and business refuse to talk about it. Why?


article continues.....


----------



## moXJO (4 April 2011)

InstoMan said:


> Not certain exactly how this will affect housing prices - increased costs could see a slump in demand, allowing for a pricing correction.  Conversely, growing population could reinforce demand and further increase prices on the back of heightened costs of production.
> 
> Either way, GTFO with the carbon tax influencing housing prices.




Ultimately the replacement cost of property puts a floor under property prices.


----------



## wayneL (4 April 2011)

moXJO said:


> Ultimately the replacement cost of property puts a floor under property prices.




There have been periods in the past when established properties have been selling for less than replacement cost. There must be certain conditions in place for this to happen, but there is no reason this cannot happen again at some point in the future.


----------



## explod (4 April 2011)

moXJO said:


> Ultimately the replacement cost of property puts a floor under property prices.




At a Master Builders Association seminar awhile back we were advised that more than 30% of homes were built by home builders and without home builders we could not cope with demand as there at not enough registered builders to go round.  At times over the years this figure has been much higher.

People that really want thier own place will again resort to such methods as required.  The killer now of course is building materials which will drive people back to recycled materials and for example home made mud bricks.

History has shown that in tough times when people are down and out they will revert back towards basics in order to fulfill Maslow's second rule, and that is "Shelter".


----------



## kingcarmleo (4 April 2011)

In Perth you would struggle to get a 3x2 for under 500k


----------



## white_goodman (4 April 2011)

moXJO said:


> Ultimately the replacement cost of property puts a floor under property prices.




vast majority of florida, vegas etc etc are all under replacement cost atm...


----------



## moXJO (4 April 2011)

wayneL said:


> There have been periods in the past when established properties have been selling for less than replacement cost. There must be certain conditions in place for this to happen, but there is no reason this cannot happen again at some point in the future.



Yeah don't take that as gospel was a bit of a throw away statement.

_Ultimately the replacement cost of property *helps* put a floor under property prices._Probably only relevant to places that people want to live. But that is where these arguments seem to be centered.
I'm sure there are dirt cheap prices in plenty of rural towns; just not many people want to live there. The US situation maybe similar in that regard that houses were built in locations with no employment, services, etc. Added with being mass produced in factories on site. Couple this with rampant speculation and loans you can walk away from and no wonder they saw the drop. WA and mining areas no doubt see a bit of speculation and experiance more price movement.
Australia only has so many places close to major cities or employment and everyone seems to want to live the life. So unless Interest rates are pumped to pain, government tinkering, or there is some kind of employment shock event then I don't see too much of a drastic nationwide drop just yet.
I want cheaper house prices and have been waiting since 2004 must be about due.


----------



## sinner (4 April 2011)

Agentm said:


> Is the Australian economy the world?s largest Ponzi scheme?
> Written by Oliver Yates




Anyone check out this article posted by Agentm? The chart of debt with 1 year or less maturity is scary! 50% of total!



> ...a significant proportion of demand fuelling “growth” is debt driven; debt-financed demand has constituted around 20% of total demand in the Australian economy.


----------



## medicowallet (4 April 2011)

moXJO said:


> Ultimately the replacement cost of property puts a floor under property prices.




Materials + Labour

Materials = strong Aussie dollar = plenty of room to move.

Labour = grossly overinflated for 10 years = plenty of room to move.

Land = artificially inflated by council and developers = plenty of room to move potentially.


----------



## FxTrader (5 April 2011)

Margaret Lomas, in a just released newsletter, has her say on talk of price bubbles and a massive correction in the housing market...

_*"I'm over talk of a bubble in the same way that I easily get over eating the same cereal every morning - after a while it tastes like cardboard and I've just got to have something different or I won't eat breakfast at all!

Concerns about a house price bubble have been responsible for all manner of people getting in on the bandwagon with their comments and predictions, none more prolifically than economists who, in my opinion, should be sticking to what they do know and leaving property well alone. I'm a big subscriber to the notion of the obvious impact of micro economics on area values, but if you're trying to overlay a global or national economy onto a single suburb or regional town, then you're doing little more than proving how ignorant you are.

Adding to the countless number of ill-informed comments about our impending property meltdown is a media which causes alarm by reporting on a single property market and then comparing this to the international situation. These reports ignore the fact that our thousands of individual property markets behave in their own manner, and it's not uncommon to find pockets all over the place which are behaving counter-cyclically - that is, in an opposing fashion to the greater economy.

In a survey in The Economist magazine, the summary was that Australian houses are ''overvalued'' by 56 per cent - the highest in the world - on a historical ratio of rents to house prices. This survey ignored our advantageous tax treatment for property investors which significantly changes the bottom line numbers as it adds to after tax cash flow through a range of valuable deductions.

Some economists claim that debt levels are too high and this will be the single factor which results in that catastrophic, now legendary claim of a 40% price crash. The thing is, we are already proving we can sustain the debt and as long as interest rates don't run away (and there is simply no economic data which exists to indicate they will) we'll all probably sit and cop it without selling down in a panic.

For property prices to collapse, we'd need a lot more than high debt levels, and this would include rampant unemployment, a slowdown in our mining boom, a stagnant population growth, cut in migration rates and a sudden distaste of property ownership by the population, en-masse. This is like waiting for that eclipse where all the planets align at once - a one in a few thousand year occurrence which is not likely to occur, at least in our investing lifetime.

We'd also need the members of the Reserve Bank board to experience temporary insanity and forget how to quickly and decisively implement monetary policy - recently credited with saving our butts during the GFC.

Even Glen Stevens, Reserve Bank Governor, wants us to know that, from the Reserve Bank's perspective, a housing bubble is a myth perpetuated off the back of ill- informed alarmists. He is quoted as saying that a lot of things keep him up at night, and falling house prices is not one of them!

Anyone who knows what they are talking about agrees that economic growth is strong and in many pockets, very strong, and house price growth is certainly going to lag behind this growth for a couple of years yet. This bodes well for not only a return to affordability, but for investors who want to grab some good buys right now, during one of the best buyer’s markets I have seen for some time, and sit and wait for a year or so until price growth tries to catch up with our bullish economy."*_

An interesting perspective from an investor/advisor/author of her stature.  I tend to agree that the conditions for a 30-40% price decline across the board do not currently exist.  However, I don't share her confidence in perpetual and sustained ecomonic growth and the manageability of household debt levels that are far to high.  She seems to signal at least a slow down in price growth and "return to affordablity".  What affordability means to her isn't cited but it surely can't be related to growth in average household disposable income since this has not kept pace with house price growth for years.


----------



## Quincy (5 April 2011)

FxTrader said:


> Margaret Lomas, in a just released newsletter, has her say on talk of price bubbles and a massive correction in the housing market...






> Adding to the countless number of ill-informed comments about our impending property meltdown is a media which causes alarm by reporting on a single property market and then comparing this to the international situation. These reports ignore the fact that our thousands of individual property markets behave in their own manner, and it's not uncommon to find pockets all over the place which are behaving counter-cyclically - that is, in an opposing fashion to the greater economy.




I agree with this point of view. You can't just generalise by placing all Australian property into a single market. There are thousands of individual markets represented by suburbs, towns, cities and regions.

eg. Gold Coast / Sunshine Coast is tanking but Sydney North West (my area) hasn't missed a beat.


----------



## trainspotter (5 April 2011)

FxTrader said:


> Margaret Lomas, in a just released newsletter, has her say on talk of price bubbles and a massive correction in the housing market...
> 
> _*For property prices to collapse, we'd need a lot more than high debt levels, and this would include rampant unemployment, a slowdown in our mining boom, a stagnant population growth, cut in migration rates and a sudden distaste of property ownership by the population, en-masse. This is like waiting for that eclipse where all the planets align at once - a one in a few thousand year occurrence which is not likely to occur, at least in our investing lifetime.
> 
> ...




Which is what I have been writing for 22 months, 3100 posts and over 251 pages.


----------



## medicowallet (5 April 2011)

trainspotter said:


> Which is what I have been writing for 22 months, 3100 posts and over 251 pages.




Is this the same strong economic growth that was around when the sharemarket tanked?

I am sorry, but the fundamentals of property are even more out of whack than the sharemarket was at the time.

A correction, over the short to medium term is imminent. Whether this will be painful or benign I do not know, just that I am prepared, I know it will not be for me.

People should prepare for a fall and expect stagnation imo. Anything less than that is purely gambling in my books.


----------



## KurwaJegoMac (5 April 2011)

trainspotter said:


> Which is what I have been writing for 22 months, 3100 posts and over 251 pages.




And I suspect you'll be doing the same for the next 22 months, 3100 posts and over 251 pages :



> For property prices to collapse, we'd need a lot more than high debt levels, and this would include rampant unemployment, a slowdown in our mining boom, a stagnant population growth, cut in migration rates and a sudden distaste of property ownership by the population, en-masse.




Trigger, trigger, trigger... As i've said before - you need a trigger for a crash, not just people perceiving an asset to be overvalued. You need forced selling!

We have:
Low unemployment
Low interest rates
Mining boom
Tax Advantages for property investment
Relatively tight rental market

You need one or more of the above to fail in a spectacular fashion in order for a large crash to occur. Otherwise people will just sit on the asset and wait. People will not sell property unless they have to...

...trigger trigger trigger


----------



## sinner (5 April 2011)

KurwaJegoMac said:


> And I suspect you'll be doing the same for the next 22 months, 3100 posts and over 251 pages :
> 
> 
> 
> ...




A wise man once said:

Can events in complex systems ever be predicted?
No...and yes. No, because the precise timing and details can never be predicted. Yes, because we can be certain that anything that is unsustainable will someday cease to continue and things that are horribly imbalanced will someday topple. We can also be certain that the change, when it comes, will be rather sudden and abrupt, rather than gentle and linear. That is, we can easily predict that a complex system will shift, and that it will probably do so rapidly, but not exactly when or by how much.

--

and that is how I view the situation. The triggers are infinite. I can think of at least 3 which you didn't list just off the top of my head. None of them actually matter. 

What matters is that the system has changed from simple to complex, from sustainable to unsustainable, from transparent to opaque.

I am certain that when the change comes, it will be "sudden and abrupt" and the resulting change in standard of living will catch most, even those who call themselves "bears" completely unaware.

We are far beyond the point of "stagnation" being a possibility, that is a slow linear change. Good luck with that thesis.


----------



## kingcarmleo (5 April 2011)

Would it be unrealistic to a buy a decent house in vegas for under 400k?


----------



## white_goodman (5 April 2011)

kingcarmleo said:


> Would it be unrealistic to a buy a decent house in vegas for under 400k?




you cereal? for what u get in sydney you could get 10 in vegas


----------



## Reasons (5 April 2011)

FxTrader said:


> An interesting perspective from an investor/advisor/author of her stature.  I tend to agree that the conditions for a 30-40% price decline across the board do not currently exist.  ...I don't share her confidence in perpetual and sustained economic growth and the manageability of household debt levels that are far to high….What affordability means to her isn't cited but it surely can't be related to growth in average household disposable income since this has not kept pace with house price growth for years.




I agree with your perspective on her article. It is more emotive than factual or professional.



FxTrader said:


> Margaret Lomas, in a just released newsletter, has her say on talk of price bubbles and a massive correction in the housing market... (Margaret Lomas) "I'm over talk of a bubble in the same way that I easily get over eating the same cereal every morning …!




I subscribe to a number of property spruikers to keep tabs on where their thinking is being directed and I am observing far more frenetic email activity, soothing words about having to be selective in the areas you buy, how now has never been a better time to buy, acknowledgement that there even may be issues,  more difficulties filling seminars, etc, in recent months. There is a higher level of perceived angst amongst some, not all.



FxTrader said:


> ( Margaret Lomas) Concerns about a house price bubble have been responsible for all manner of people getting in on the bandwagon with their comments and predictions, none more prolifically than economists …. I'm a big subscriber to the notion of the obvious impact of micro economics on area values, but if you're trying to overlay a global or national economy onto a single suburb or regional town, then you're doing little more than proving how ignorant you are.




Yep, that is what many of the others in her profession will say too and who is to say she is not right? The yanks thought that some of their better areas were immune also, and it did take longer to affect some like Seattle, but eventually it did, and very ‘nicely’ to boot.



FxTrader said:


> ( Margaret Lomas) Adding to the countless number of ill-informed comments about our impending property meltdown is a media which causes alarm by reporting on a single property market and then comparing this to the international situation. These reports ignore the fact that our thousands of individual property markets behave in their own manner, and it's not uncommon to find pockets all over the place which are behaving counter-cyclically - that is, in an opposing fashion to the greater economy.




This is just emotive speak and opinion based on unsubstantiated ‘fact’. She assumes (rule number one is assume nothing) several things here in a very incoherent way. Internationally I can only guess she means bubbles and in her opinion that is not the case here; that there are markets within markets that don’t get affected ever. Once again she could be right, but she is attempting to denigrate anyone with an alternative view with emotive words, not a professionally balanced view. As they say, the good thing about opinions is, regardless of who you are, you can have one.



FxTrader said:


> ( Margaret Lomas) In a survey in The Economist magazine, the summary was that Australian houses are ''overvalued'' by 56 per cent ... on a historical ratio of rents to house prices. This survey ignored our advantageous tax treatment for property investors which significantly changes the bottom line numbers as it adds to after tax cash flow through a range of valuable deductions.




This of course is a very naive statement for someone in her position and profession as the tax concessions she refers to only relates to IPs and not the PPOR. The majority of concerns are PPOR based, not IP owners. As PPORs  get no input tax concessions until they sell, it is irrelevant and still leaves the question of overvalue wide open.



FxTrader said:


> ( Margaret Lomas) Some economists claim that debt levels are too high and this will be the single factor which results in that catastrophic, now legendary claim of a 40% price crash. The thing is, we are already proving we can sustain the debt and as long as interest rates don't run away (and there is simply no economic data which exists to indicate they will) we'll all probably sit and cop it without selling down in a panic.




As she points out, ‘proof’ is as long as interest rates don’t run away. Australian banks raise huge amounts of capital from OS investors to sustain the Aussies property market. The assumption on her part is that funding will remain cheap and indeed always be there, because that is what always happens (doesn't it?). But what if the central bankers have made a tactical error in all their acquired debt to get over the GFC or one of a hundred other international expectations we assume will keep happening because they always do, but doesn’t? But she has a point about economists, who would not know which way is up.



FxTrader said:


> ( Margaret Lomas) For property prices to collapse, we'd need a lot more than high debt levels, and this would include rampant unemployment, a slowdown in our mining boom, a stagnant population growth, cut in migration rates and a sudden distaste of property ownership by the population, en-masse. This is like waiting for that eclipse where all the planets align at once - a one in a few thousand year occurrence which is not likely to occur, at least in our investing lifetime.




She assumes here again that what has happened in the past will perpetuate into the future. Black swans did not exist until someone sailed into Perth. In other words the probability of a known being proved wrong is increased the longer that known has existed. The Aussie property market has defied gravity for possibly 70 years based on increased credit availability, without any significant correction. It might go for another 70. It might not. We all have to make investment decisions based on what we think that probability to be. Wild emotive statements about ‘a few thousand year occurrence’ will not save you if you make a tactical timing error with gearing or debt into the wrong investment.



FxTrader said:


> ( Margaret Lomas) Even Glen Stevens, Reserve Bank Governor, wants us to know that, from the Reserve Bank's perspective, a housing bubble is a myth perpetuated off the back of ill- informed alarmists. He is quoted as saying that a lot of things keep him up at night, and falling house prices is not one of them!




With all due respect to central bankers, I think the US Fed’s similar position back in 2007/8 puts paid to any mention of these experts being an authority on the subject and frantically grasping at straws to substantiate her argument. Our own RBA was putting interest up as the global economy tanked during the GFC.



FxTrader said:


> ( Margaret Lomas) Anyone who knows what they are talking about agrees that economic growth is strong and in many pockets, very strong, and house price growth is certainly going to lag behind this growth for a couple of years yet. This bodes well for not only a return to affordability, but for investors who want to grab some good buys right now, during one of the best buyer’s markets I have seen for some time, and sit and wait for a year or so until price growth tries to catch up with our bullish economy.




Once again just an emotive and condescending argument , ‘Anyone who knows what they are talking about agrees’; in other words anyone who has the same way of thinking and capital or business risk as her. Based on her being right, this is a great time to buy. She could be right, but if someone is buying and heavily geared or in debt, you have to look at the probability of property being higher or lower in 10 years’ time or gone sideways, as opposed to down. 
It just comes down to risk/reward. Can you afford not to be in it, or can you afford to be in it at all if highly indebted or geared, should the naysayers be right?



trainspotter said:


> Which is what I have been writing for 22 months, 3100 posts and over 251 pages.




It took 70 years to get to where we are and could take 70 more, or it might not. A few years here and there are irrelevant to find out. It is the asset risk you might have if your stand is emotive like Margaret’s that matters. When there are multiple options to make similar gains, you have to weigh up the risks and rewards of purchasing an asset that could become highly illiquid.



medicowallet said:


> Is this the same strong economic growth that was around when the sharemarket tanked? I am sorry, but the fundamentals of property are even more out of whack than the sharemarket was at the time. A correction, over the short to medium term is imminent. Whether this will be painful or benign I do not know, just that I am prepared, I know it will not be for me. People should prepare for a fall and expect stagnation imo. Anything less than that is purely gambling in my books.




I could not agree more; you can get great returns elsewhere with very high liquidity. Gambling is different from investing or buying your PPOR and anyone considering gearing or borrowing heavily against property at this point in time needs to consider all the pros and cons, and the risk/reward of doing so. Emotiveness has no place in investing or trading.



KurwaJegoMac said:


> And I suspect you'll be doing the same for the next 22 months, 3100 posts and over 251 pages :
> Trigger, trigger, trigger... As i've said before - you need a trigger for a crash, not just people perceiving an asset to be overvalued. You need forced selling!




Waiting to see the trigger is fine; will you be quick enough to dodge the bullet if your assets are at risk?


----------



## Mr Z (5 April 2011)

kingcarmleo said:


> Would it be unrealistic to a buy a decent house in vegas for under 400k?




Less... much less in some cases.

From 15K...


----------



## Reasons (5 April 2011)

sinner said:


> Can events in complex systems ever be predicted? No...and yes. No, because the precise timing and details can never be predicted. Yes, because we can be certain that anything that is unsustainable will someday cease to continue and things that are horribly imbalanced will someday topple. We can also be certain that the change, when it comes, will be rather sudden and abrupt, rather than gentle and linear. That is, we can easily predict that a complex system will shift, and that it will probably do so rapidly, but not exactly when or by how much.




Absolutely. Look at the Middle East. I don’t think Mubaruk in Egypt and his counter parts in other countries envisaged the cronyism systems they installed over decades being demolished and within days. Yet they were and it’s spreading. That would have toppled the wealth and power of many overnight (except the top ones leaving with all the State’s bullion); I wonder how many saw the trigger, and if so, did it do them much good? 

And that is a whole country, not just an asset class.



sinner said:


> and that is how I view the situation. The triggers are infinite. I can think of at least 3 which you didn't list just off the top of my head. None of them actually matter.




So very true. We all try to be clever and predict the future using simple elements that we know, even though we are all aware how well economists do at that. It is the complexity and interconnectedness of many systems that we don't/can't ever understand that will usually get us. How quick we forget recent history and the GFC.



sinner said:


> I am certain that when the change comes, it will be "sudden and abrupt" and the resulting change in standard of living will catch most, even those who call themselves "bears" completely unaware.




Yup; that is the known unknown and the perplexing high-risk bit.


----------



## KurwaJegoMac (5 April 2011)

sinner said:


> A wise man once said:
> 
> Can events in complex systems ever be predicted?
> No...and yes. No, because the precise timing and details can never be predicted. Yes, because we can be certain that anything that is unsustainable will someday cease to continue and things that are horribly imbalanced will someday topple. We can also be certain that the change, when it comes, will be rather sudden and abrupt, rather than gentle and linear. That is, we can easily predict that a complex system will shift, and that it will probably do so rapidly, but not exactly when or by how much.
> ...




I agree, the system is incredibly complex and I have no hope in being able to pinpoint a precise list of triggers - no one can. If a crash does occur it will be 'sudden and adrupt' and will catch most unaware. The GFC hit harder and faster than most would anticipate and there's no reason why it can't happen that way with property.

As Reasons mentioned: 



Reasons said:


> Waiting to see the trigger is fine; will you be quick enough to dodge the bullet if your assets are at risk?




I doubt most would be quick enough to 'dodge the bullet'. After all, it is a relatively illiquid asset. Personally, I wont even be trying to time the market - i'll just be minimsing my risk as much as possible. I do see more risk in the property market now then say 10 years ago but not at a level that will turn me off from IP... just yet


----------



## trainspotter (5 April 2011)

Reasons said:


> Yup; that is the known unknown and the perplexing high-risk bit.




This kind of known unknown or the Arab kind?


----------



## Reasons (5 April 2011)

trainspotter said:


> This kind of known unknown or the Arab kind?




Having read through this thread I am obliged to go for the former because Rummy's logic is at least correct.


----------



## Agentm (5 April 2011)

past performance is not an indication of future returns..

the bulls are enraged and desperate to fight the tide of change.. but its a fact.. 

markets are today

fantasy and dreams of yesteryear  doesnt mean a rosy future will follow..

the bubble is here.. and its not going to be a happy journey south.. no matter what speed it drops..


----------



## KurwaJegoMac (6 April 2011)

Agentm said:


> past performance is not an indication of future returns..
> 
> the bulls are enraged and desperate to fight the tide of change.. but its a fact..
> 
> ...




Coming from another perspective:

You say past performance is not an indicator of future returns - so by that logic one could argue that you cant call this a bubble yet as the main argument for the bubble is high median house price relative to median income _relative to what it's been in the past_. Rental yields are still the same as decades passed, as is capital growth. Still getting the same returns albeit at a greater capital outlay.

This bubble talk is ridiculous - heres a tip: house prices rise exponentially. Throughout your entire life you will see higher and higher prices. Our inflation is exponential too and ideally should be in line with the pace of housing. Have a peek at a graph trainspotter (i think) posted a few pages back showing the annual growth rate of property. *Shock, horror* it's been roughly the same for the last*50* years. Exponential growth makes the situation appear more ominous then it really is. 

Now i want to make this clear - i am not suggesting prices will always rise - they wont. We will hit some point of stagnation for a few years sometime in the future as wages catch up to property prices (they are expensive now no doubt about that). Property has been going through the same cycle for decades and will continue to do so (its the same cycle as most assets). 

Too many people are pinning their hopes on a crash so that they can jump into the market. We have media, most ASF posters, most economists and most average joes spouting the 'bubble' line for the past 10 years - the market is still going against what the majority thinks. Get out on the ground and see what it's really like - it'll open your eyes. 

Personally i see us at or near the top of the standard property cyclical phases. Expecting at some point soon a mild pullback in prices 5-10% from peak before a period of stagnation. But still buying another IP anyway - positive cashflow and dont give a fluff about the end price, already factored in to risk analysis.


----------



## KurwaJegoMac (6 April 2011)

Before anyone jumps down my throat about buying property now - i have a minimum 20 year view for holding it. Im not naive enough to think that i can predict the market with any degree of accuracy, nor be able to time a purchase with 20 year minimum holding time. So im not even bothering to forecast when making purchases so capital gains and losses are not a big factor in my decision (although they do impact m cash flow analysis so capital losses are accounted for in my risk assessment)


----------



## Greedy_Kev (6 April 2011)

Agentm said:


> past performance is not an indication of future returns..
> 
> the bulls are enraged and desperate to fight the tide of change.. but its a fact..
> 
> ...




It's funny how for property u say past performance is not an indicator of the future, yet for shares it seems like that theory is being push out alot.


----------



## Agentm (6 April 2011)

KurwaJegoMac said:


> Coming from another perspective:
> 
> You say past performance is not an indicator of future returns - so by that logic one could argue that you cant call this a bubble yet as the main argument for the bubble is high median house price relative to median income _relative to what it's been in the past_. Rental yields are still the same as decades passed, as is capital growth. Still getting the same returns albeit at a greater capital outlay.
> 
> ...






i recognise a bubble and wont buy into it..  if the RE values were growing to a correct 3 -4 X income then it wouldnt be a bubble..  to be at 7 - 9 X income is.  simple..


_"This bubble talk is ridiculous - heres a tip: house prices rise  exponentially. Throughout your entire life you will see higher and  higher prices."_

lol .. every day every type of analyst, journo, government and reserve bank departments have spoken openly of the bubble.. 


but to be deluded into thinking RE prices "rise exponentially"... pure fantasy.. just a quick glance globally to many of the burst RE bubbles tells me this is not the case.. 

we all need bulls to tell us that this one is different, this one is not a bubble.. i posted a link to a 100 or 200 page californian realestate appraisal paper a while back, issued about 2 months before the market went *kaboom*!!  i suggest you look back at that document and you will see it says everything the bulls here are saying..

whether it will be a decades long pull back or a 2 years collapse is unknown.. but there is strong evidence the banks and the government are perplexed now in knowing how to drive the bubble up further, it seems to have reached a peak but i think there is a hope that through some clever policy shake ups, they could fire up the bubble some more..

imho more sunshine and lollipops to come still for the bulls in melbourne..

the chinese can easily absorb more of the current house and land packages then the current 50% they are soaking up now.. we need more chinese retirees and their extended families in melbourne i guess..

all good.. 

but remember..  *past performance is not an indication of future returns..*  ever!!


----------



## Agentm (6 April 2011)

Greedy_Kev said:


> It's funny how for property u say past performance is not an indicator of the future, yet for shares it seems like that theory is being push out alot.




that would be a mad thing to do

ignoring the fact that the performance is overheated, ie: 7 - 9 X income is very unwise imho

performance directly attributed to income at 3 - 5 would be far more practical.

since 2000 the RE values have driven into a massive bubble through the credit practices and grants and the desire to sell so much of the new house and land packages into overseas markets to drive the scarcity in land further and further.. 

its been a great ride,  and i think it will be fired up some more.. i will buy into it when its all back to where it should be..

my share investments outperform many many times anything that i could achieve in R/E

even the share bubbles will not perform exponentially..


----------



## moXJO (6 April 2011)

Agentm said:


> its been a great ride,  and i think it will be fired up some more.. i will buy into it when its all back to where it should be..
> 
> ..




You and every other guy in the room. 
I agree that it is expensive but people are still out there making money despite what people think. My family has just sold two houses (Jan, March) both at record levels for the street and surrounding area. 
My area just won't go down and just when I thought the bum areas were heading south, we get a second wave of buying, damnit. 

The US situation was a bit different. I mean why not speculate like mad when you can just walk away from the loan if you get caught holding the bag. I think people overlook that. You go bankrupt here. Most investors I know have already sold down to manageable levels anyway, where as the US just went pop without as much warning.

I am hoping that prices have hit the ceiling.  Interest rates will probably be the trigger, but didn't labor just install a labor member in the Fed Res. Maybe the boomers selling off assets will do it, who knows. But damn if I see them coming down just yet. These things tend to go on a lot longer then you would expect.

 And yes what a ride I had a chance to buy houses at $20k, $50k, $120k that are now $280k, $300k, and $550k. That’s in 10 years. They actually flew up in 2003-2005. Woulda shoulda but was broke at the time.


----------



## KurwaJegoMac (6 April 2011)

Agentm said:


> all good..
> 
> but remember..  *past performance is not an indication of future returns..*  ever!!




You keep bringing this point up yet your main argument is:



Agentm said:


> i recognise a bubble and wont buy into it..  if the RE values were growing to a correct 3 -4 X income then it wouldnt be a bubble..  to be at 7 - 9 X income is.  simple..




Why is 3-4 X income 'correct'? You're only basing this on _past_ performance yet you say never to rely on past performance? Who's to say that we have seen a shift to 7-9 x income being 'correct'? Yes in the past 3-4 X income was the norm but as you say... past performance is not an indication of future returns 



Agentm said:


> _"This bubble talk is ridiculous - heres a tip: house prices rise  exponentially. Throughout your entire life you will see higher and  higher prices."_
> 
> lol .. every day every type of analyst, journo, government and reserve bank departments have spoken openly of the bubble..




Agree with you there - everyone speaks openly of this bubble but what's been happening? Prices are still going ever higher... Just because a lot of people talk about it doesn't make it right. I wouldn't rely on the opinion of a journo or government personally. In fact, I wouldn't rely on 99% of the opinion out there. This machine is too complex for any one person to accurately forecast.



Agentm said:


> but to be deluded into thinking RE prices "rise exponentially"... pure fantasy.. just a quick glance globally to many of the burst RE bubbles tells me this is not the case..




I think you may have misinterpreted what I meant to say - I'm not saying that the % gain rises exponentially. The $ value of property rises exponentially. Look at a chart of house prices for most countries for the last 100 years. Exponential prices increases. It's the nature of capitalist societies - you have exponential increases in prices when yoy growth is a positive %. Same applies to commodities, consumption, population, etc. Anything with yoy will have its' size/cost/amount grow exponentially.



Agentm said:


> we all need bulls to tell us that this one is different, this one is not a bubble.. i posted a link to a 100 or 200 page californian realestate appraisal paper a while back, issued about 2 months before the market went *kaboom*!!  i suggest you look back at that document and you will see it says everything the bulls here are saying..




And we also need the bears to single out one particular market or country to say the same applies to every single other country in the world. Also I am not bullish and I am not bearish. I even stated that I don't think we can sustain these prices increases forever. What I'm arguing for is a possible period of stagnation/low growth/decline. I just don't see a credible reason for a crash. High prices do not automatically constitute a crash. I think a lot of people have looked at America and gone 'jee whiz I wish the same thing happened here so I can get into property'. Personally, I wouldn't mind a bit of a crash - i'm pretty cashed up and would love to add an IP or two to the portfolio.


----------



## white_goodman (6 April 2011)

KurwaJegoMac said:


> I think you may have misinterpreted what I meant to say - I'm not saying that the % gain rises exponentially. The $ value of property rises exponentially. Look at a chart of house prices for most countries for the last 100 years. Exponential prices increases. It's the nature of capitalist societies - you have exponential increases in prices when yoy growth is a positive %. Same applies to commodities, consumption, population, etc. Anything with yoy will have its' size/cost/amount grow exponentially




well say if 7-8 times ratio is the new normal and past normals wont reflect future ratios etc etc.. its is still a bubble when you look at GDP% growth and how far money supply has exceeded that growth, unless there is a way for money supply to continue on its exponential path without correction I cannot see how we dont have some meaningful correction, crash whatever.

we are unbelievably susceptible to a trigger event, and the old fallacy that our inelastic supply will hold it up is laughable..


----------



## KurwaJegoMac (6 April 2011)

white_goodman said:


> well say if 7-8 times ratio is the new normal and past normals wont reflect future ratios etc etc.. its is still a bubble when you look at GDP% growth and how far money supply has exceeded that growth, unless there is a way for money supply to continue on its exponential path without correction I cannot see how we dont have some meaningful correction, crash whatever.
> 
> we are unbelievably susceptible to a trigger event, and the old fallacy that our inelastic supply will hold it up is laughable..




Completely fair - and that's why the only thing i'll be looking at are events that could serve as a trigger (rising unemployment, rising interest rates, slowdown in China, etc)

It's time to be cautious no doubt about that - if we get a large trigger event occuring the magnitude of any aftershock could be massive. But no point twiddling my thumbs and waiting for something to happen that might never happen - i've increased my required cash flow buffer but for now i'm still comfortable with the risk.

And if it does all crash well then i'll go on a spending spree :


----------



## white_goodman (6 April 2011)

KurwaJegoMac said:


> Completely fair - and that's why the only thing i'll be looking at are events that could serve as a trigger (rising unemployment, rising interest rates, slowdown in China, etc)
> 
> It's time to be cautious no doubt about that - if we get a large trigger event occuring the magnitude of any aftershock could be massive. But no point twiddling my thumbs and waiting for something to happen that might never happen - i've increased my required cash flow buffer but for now i'm still comfortable with the risk.
> 
> And if it does all crash well then i'll go on a spending spree :




yeah im also making sure im cash heavy, dont wanna have the downturn and no $ on hand to capitalise, cos lending will be up to **** aswell no doubt


----------



## trainspotter (6 April 2011)

Silly me ....... I finally found the global map of Australia that everyone is talking about as to why our house prices will drop. We are smack bang in the middle of Europe.


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## sinner (6 April 2011)

trainspotter said:


> Silly me ....... I finally found the global map of Australia that everyone is talking about as to why our house prices will drop. We are smack bang in the middle of Europe.






Yeah dude, everything is juuuust fine. 

Where is robots to let us know just how much sunshine and lollipops it all is.

Real housing data continues to *stink*. MoM home loans, released earlier today:




Remember these levels? I included the historical chart going back 6 years so you can get a rough idea how screwed we are talking.

Don't bother calling for a buyers strike, the buyers strike is involuntarily in FULL EFFECT.

I am starting to expect we will see the "unexpected" failure of some overleveraged garbage firm which will trigger the big ugly before June.


----------



## moXJO (6 April 2011)

white_goodman said:


> yeah im also making sure im cash heavy, dont wanna have the downturn and no $ on hand to capitalise, cos lending will be up to **** aswell no doubt




Everyone seems cashed up and waiting for the bargins. Hope the banks don't get in trouble and take everyones money


----------



## KurwaJegoMac (6 April 2011)

trainspotter said:


> Silly me ....... I finally found the global map of Australia that everyone is talking about as to why our house prices will drop. We are smack bang in the middle of Europe.
> 
> View attachment 42273




Huh?? Are you sure? I think there's something wrong with that map...

I always thought we were wedged between California and Los Angeles??


----------



## trainspotter (6 April 2011)

sinner said:


> Yeah dude, everything is juuuust fine.
> 
> Where is robots to let us know just how much sunshine and lollipops it all is.
> 
> ...




Me thinks robots is smarter than what you thinks.  

As for the overleveraged garbage firm going the big ugly before June ...... is this 2011 you are talking about? 

You are too late sinner ....... it started months ago.


----------



## Agentm (6 April 2011)

*http://www.theage.com.au/business/home-loans-sink-to-decade-low-20110406-1d3n2.html
*

*
*

*                     Home loans sink to decade low                 *

*                 Chris Zappone             *

     April 6, 2011 - 2:10PM      

                                    Home loans dropped for a second consecutive month in  February with New South Wales posting its biggest monthly decline in 14  years. The share of first-home buyers shrank further.


              The number of home loans fell 5.6 per cent to 45,393 in  February, following a revised 6.3 per cent fall in January, according to  the Australian Bureau of Statistics. Economists polled by Bloomberg  tipped a 2 per cent fall.


*The total was lowest number of home loans approved in a month since February 2001.*

             Home loans in New South Wales plummeted 10.1 per cent in  seasonally adjusted terms, the most since February 1997, the ABS  reported. Victoria did better than the national average but still saw a  drop.


              "What’s a little worrying is that there are such big  drops in the early part of this year," said RBC Capital markets senior  economist Su-Lin Ong. The drop ''has more than wiped the out gains in  the second half of last year when we saw a string of modest increases  and what looked to be a little bit of resilience in households and  housing in general", she said.

............


*Broad declines*

              Among the other states, *Victoria registered a 4.6 per  cent drop in new home loans*, while in Queensland, they edged down 0.5  per cent.


              In Western Australia the number of home loans slid 2.1 per cent, while in South Australia, home loans sank 5 per cent.


              Tasmania experienced a 13.7 per cent drop while in the  Northern Territory they sank 11.4 per cent. In the ACT, loans fell 4.5  per cent, the ABS said.



i am sure the bulls will find the news exactly according to plan

they will of course think that that this "exponential"  decline is like the old saying..

you know the one...

*past performance is not an indication of future returns

so this decline will of course not continue!! 

*lol


----------



## sinner (6 April 2011)

trainspotter said:


> Me thinks robots is smarter than what you thinks.
> 
> As for the overleveraged garbage firm going the big ugly before June ...... is this 2011 you are talking about?
> 
> You are too late sinner ....... it started months ago.




Dude I have seen a dying fish that flipflops less than you.

Firstly, I made no comment on how smart robots is, or even how smart I think he is.

Secondly, what is the point of being cryptic? Just spit it out. Too late? I have been talking about this **** for years now, with people like you accusing me of being a doomer or afraid, or just waiting for a crash so I can get in myself or *any of the other crap you guys spit* for even considering the possibility that all is not well in fairyland.

3 consectuvie MoM declines in home loans, with levels seen only in recent memory during the GFC and after FHOG was disbanded.

Good luck on your "stagnation" theory.

Waiting for you to once again run amok because you were "right" and everyone but especially me was "wrong".


----------



## moXJO (6 April 2011)

Any charts on rent prices?


----------



## sinner (6 April 2011)

> Any charts on rent prices?




Nice collation of contemporary data here,

http://macrobusiness.com.au/2011/01/rental-yields-and-vacancy-rates/




Gross yields on units and houses (from RPdata), pays less than gross yield on a Commonwealth Bank account.


----------



## white_goodman (6 April 2011)

sinner said:


> Nice collation of contemporary data here,
> 
> http://macrobusiness.com.au/2011/01/rental-yields-and-vacancy-rates/
> 
> ...




doesnt really show rent prices though..


----------



## SBH (6 April 2011)

KurwaJegoMac said:


> And I suspect you'll be doing the same for the next 22 months, 3100 posts and over 251 pages :
> 
> 
> 
> ...




Sentiment is the trigger. Even the bulls are expecting a flat market

Property in oz is goooone (bar the inner city i will admit), because noone needs to buy immediately, but enough people need to sell.  90% of people will hang on and not sell but I dont care I only need to buy 1 house! Without overwhelming belief in rising prices, I, you, everyone else will buy from those willing to drop their price. It wont be a high volume crash, but so what? If property was priced on rental returns then prices would stay stable through this period.. but there is no way thats the case in this country ; )


----------



## sinner (6 April 2011)

white_goodman said:


> doesnt really show rent prices though..




No it doesn't because prices viewed without some basis are extremely misleading way to view rent.

IMHO if you want to view rent as a price, you need to look at it on the cost of living basis.


----------



## sinner (6 April 2011)

> If property was priced on rental returns then prices would stay stable through this period.. but there is no way thats the case in this country ; )




Actually it's the other way around!

Just like the US stock market, which is yielding <2% right now, yields will go up only if companies start increasing dividends en masse OR prices come down dramatically.

Yields are low, they will go up. I doubt they will go up in any scenario except prices coming down.


----------



## trainspotter (6 April 2011)

sinner said:


> Dude I have seen a dying fish that flipflops less than you.
> 
> Firstly, I made no comment on how smart robots is, or even how smart I think he is.
> 
> ...




Dude I have seen tiger sharks bite harder than you.

Firstly YOU were the one that dragged robots into it by the "sunshine and lollipops" remark. He has decided to leave the forum to it's own devices and YET you still don't get it do you? 

Secondly there was nothing cryptic about my remark. YOU made the comment that some *overleveraged garbage firm* was going to go the big ugly in JUNE. Not me .... YOU. I made the comment that you are too late as it has started to happen months ago. (Adelaide Bank springs to mind with a capital buffer of 54 million and top heavy on lo-doc loans, St George holds the majority of their home loans in NSW) Is that specific enough for you? If you look back around a couple of hundred of posts ago you will find where I fluffed on about RAMS being a victim of it's own short term commercial paper and it is more than likely that others of the same ilk will follow. 

You really are not that bright afterall because YOU have misinterpreted my posts to somehow thinking that it is all about YOU. WE the guys *that spit out crap* have consistently said that some areas will tank (and I even gave several areas as references that already have dropped 40%) and others have also given areas that they believe it is still possible to earn good solid returns. 

But then again you are so forthright in your posts that it takes people (especially me) a hard time to take you seriously as your incessant vitriolic attacks on posters who YOU disagree with is getting tiresome. 

Take a chill pill "dude"


----------



## prawn_86 (6 April 2011)

Ok lets all cut back on the personal attacks please guys. I know its a hot toopic but all sides need to tone it down.

Please present your views without degrading others opinions.

Thanks


----------



## trainspotter (6 April 2011)

prawn_86 said:


> Ok lets all cut back on the personal attacks please guys. I know its a hot toopic but all sides need to tone it down.
> 
> Please present your views without degrading others opinions.
> 
> Thanks




Okey Dokey from this angle.  I apologise to sinner for my off the cuff remarks that are unnecessary for this thread to move forward.


----------



## SBH (6 April 2011)

sinner said:


> Actually it's the other way around!
> 
> Just like the US stock market, which is yielding <2% right now, yields will go up only if companies start increasing dividends en masse OR prices come down dramatically.
> 
> Yields are low, they will go up. I doubt they will go up in any scenario except prices coming down.




So there are still companies behind those stocks?! I didnt think it mattered

My argument is that yields cant be argued as a backstop to the vast majority of places in Australia. If SHTF you want to know that your 500k+ property cant fall by 30% or more, and really noone can guarantee that at the moment.


----------



## nunthewiser (6 April 2011)

To Whom it may concern,

Nunthewiser was the original user of the phrase "sunshine and lollipops" in the property threads.

Everyone else kind of adopted it and its variances as thier own.

I should of copyrighted the saying but i myself stole it in the first place.

Please mail a cheque to po box 1234 Geraldton for the sum of $59.95 for each time it has been used here by yourselves

your honesty would be appreciated  

thank you


----------



## nunthewiser (6 April 2011)

Hey guys theres still bargains out there!!!

currently in Meekatharra, been prospecting and propping up the bar at the commercial hotel and noticed ya can still buy a house here for under 60k!

quit your job .......go on the dole  and still own a castle.....

SUNSHINE AND LOLLIPOPS all round in this great country.


----------



## trainspotter (6 April 2011)

Cheques in the mail for both the catchphrase and the townhouse in Meekatharra


----------



## sptrawler (6 April 2011)

I suppose you have bought a couple of houses there nunthewiser: Some of us have been there and know the intrinsic value. Hail Julia Hail the fly in fly out. lets build a better Australia HaHaHa


----------



## nunthewiser (6 April 2011)

sptrawler said:


> I suppose you have bought a couple of houses there nunthewiser: Some of us have been there and know the intrinsic value. Hail Julia Hail the fly in fly out. lets build a better Australia HaHaHa




duh

no offense intended


----------



## trainspotter (8 April 2011)

*RP DATA INFO* - _First home buyers remain well and truly on the sidelines as well. During the month, first home buyers accounted for just 14.9% of all owner occupier purchasers, the lowest reading since June 2004 (14.2%). With first home buyers largely inactive in the market, those that are participating are being increasingly prudent with their borrowing. Over the past year, the average loan size for first home buyers has actually fallen by -1.6% to $277,000._

*The Guvmint tries to keep the ball rolling* - _THE commonwealth will invest an extra $4 billion in mortgage securities to boost smaller players in the lending market. 

"Today I announce that I have directed the Australian Office of Financial Management (AOFM) to invest a further $4 billion in high-quality, AAA-rated Australian residential mortgage-backed securities (RMBS) to help smaller lenders continue to offer competitive loans to families and small businesses," Treasurer Wayne Swan said._

Read more: http://www.news.com.au/business/bre...es/story-e6frfkur-1226036067664#ixzz0kU9N9srK

*Stagnation is the key* - _A survey of property market participants has found expectations of only a 0.6 per cent growth in home prices over the next 12 months.

The March survey of real estate agents, property developers, investors and owners by National Australia Bank shows most expect the strongest growth in Western Australia (up 1.1 per cent) and New South Wales and the ACT (up 0.9 per cent)._

http://www.abc.net.au/news/stories/2011/04/05/3182777.htm?section=business

Now we wait for rents to rise as the "investors" require a better RoR.


----------



## white_goodman (8 April 2011)

trainspotter said:


> Now we wait for rents to rise as the "investors" require a better RoR.




or fall and get worse..


----------



## sptrawler (8 April 2011)

If small business doesn't pick up and retail spending doesn't increase the problem will be to get the rent, let alone increase it. How many people do B.H.P employ, not many in the scheme of things. The big problem is going to be in the small to medium business employment numbers. 
Over here in the west things are pretty quite and overheads are going up, something has to give. There is nothing more moral destroying than watching your mortage going nowhere. Confidence is the next thing to go down the gurgler.


----------



## tothemax6 (9 April 2011)

Its interesting that the Aus property prices thread has the most negative outlook on the economy as a whole...


----------



## robots (9 April 2011)

hello,

oh gidday brothers, great day as usual

i just read the forum, busy with new project here in Ballarat, and yeah word out to Nunthewiser he is the sunshine and lollipop king

just as boards/management get into a company and add value i am doing the same on my new project, spend a dollar get 3 back i reckon

thankyou
professor robots


----------



## kincella (9 April 2011)

Evening Robots,
Good to see you here again...
its been rather quiet around here lately....
me, am looking forward to  those interest rate drops....the rba should be panicked by now....although with some of  them earning a million for a salary...they may have no idea...

guessing the may budget wont help anyone much.....
if it keeps up like this , things will be really bad come the June figures...so maybe a repeat of the 2008 year, when they finally panicked and dropped rates by 3%...
the RBA went too hard last year, repeating 2007/08....
doubt if confidence will change anytime soon, but I think some will come about from recent changes in state elections....the feds are holding it all back....
anyway property is going along nicely...regardless that every man and his two dogs is talking about it...
noticed last month, some big figures came out, about all those people moving to the outer suburbs in vic...it was over 600,000 in 10 years...or 60,000 pa....
I just knew the smarties would not stay around in the expensive inner suburbs, when they can get a house at a reasonable price further out...

sent you a message last week...
Cheers


----------



## medicowallet (9 April 2011)

"Half way into the busiest pre-easter fortnight on record demand for homes at this weekends residential auctions is proving to be very consistent. There appears to be enough buyers  in the market to meet the higher stock levels in the lead up to Easter.

The clearance rate this weekend is 62 per cent compared to 60 per cent last weekend. This weekend last year - post easter - had 502 auctions and a clearance rate of 84 per cent.

There was a total of 801 auctions reported today of which a 495 sold and 306 passed in, 212 of those on a vendors bid.

Next weekend the REIV expects 1000 auctions. Over Easter 55 auctions are expected and 535 the weekend after"


Keeping it real for the true believers.

Rainbows and bubbles.


----------



## nunthewiser (9 April 2011)

medicowallet said:


> "  Rainbows and bubbles.




LOL 

cheap bugger trying to avoid royalties 

Gday Robots nice to see ya


----------



## medicowallet (9 April 2011)

nunthewiser said:


> LOL
> 
> cheap bugger trying to avoid royalties
> 
> Gday Robots nice to see ya




It is good to see Robots.

However I have noticed something not posted on REIV site:

Robots post rate seems to correlate quite well with the trend in auction clearance rates.

I don't know what this means, just posting it out there for the true believers.


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## kingcarmleo (10 April 2011)

Looked at a report at work the other day, dwelling levels in perth are well down.


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## AlexG1 (10 April 2011)

Interesting graph showing the number of retail property investors over time.

There's quite a few more available here http://macrobusiness.com.au/2011/04/negative-gearing-losses-decline-in-2008-09/.

The following article at the same site is also of interest to this forum.  That article quotes heavily from an SQM newlsetter and includes such stuff as this 

"demand for housing is now weaker than back in the second half of 2008; a point where house prices fell by five per cent as an average for the eight capital cities around the country."

http://macrobusiness.com.au/2011/04/sqm-research-on-the-housing-finance-data/

Make of it what you will.


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## matty77 (10 April 2011)

Its an interesting video to watch anyway.



http://www.youtube.com/watch?v=bAye9sCpVCs


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## So_Cynical (10 April 2011)

matty77 said:


> Its an interesting video to watch anyway.
> 
> 
> 
> http://www.youtube.com/watch?v=bAye9sCpVCs




Interesting? .. its incredible!!! American capitalism and greed at its absolute worst.

Oh and i want a Chiquita Banana. :bananasmi


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## Bill M (12 April 2011)

matty77 said:


> Its an interesting video to watch anyway.
> 
> 
> 
> http://www.youtube.com/watch?v=bAye9sCpVCs




Disgusting but a well worth watching video, how can a country allow this to happen to their citizens.

The ol USA the leaders of the free economy, the supposedly richest country on earth now has tens of thousands of people sleeping in the streets. All because of little regulation and corruption, how disgusting. We should be thankful that our banks are regulated as much as they are.

Anyhow nothing in the video has anything to do with the future of Australian Property Prices. My accountant advised me to get "Quantity Surveyors" into my rental unit and do an audit, one off cost $715. Both the Accountant and Surveyors assure me that I will get back more in depreciation this year than the fee I paid them in services. Prices steady for units on the Northern Beaches in Sydney and the rent is coming in Month after Month without any problems at all.


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## Agentm (12 April 2011)

*This Time Had Better Be Different: House Prices and the Banks Part 2*

 by Steve Keen on April 11th, 2011 at 8:57 am Posted In: Debtwatch

Click here for this post in PDF​ *Figure 1*
*


*
 In last week’s post I showed that there is a debt-financed, government-sponsored bubble in Australian house prices (click here and here  for earlier installments on the same topic). This week I’ll consider  what the bursting of this bubble could mean for the banks that have  financed it.
*Betting the House*

 For two decades after the 1987 Stock Market Crash, banks have lived  by the adage “as safe as houses”. Mortgage lending surpassed business  blending in 1993, and ever since then it’s been on the up and up.  Business lending actually fell during the 1990s recession, and took off  again only in 2006, when the China boom and the leveraged-buyout frenzy  began.
*Figure 2
*



 Regular readers will know that I place the responsibility for this  increase in debt on the financial sector itself, not the borrowers. The  banking sector makes money by creating debt  and thus has an inherent desire to pump out as much as possible. The  easiest way to do this is to entice the public into Ponzi Schemes,  because then borrowing can be de-coupled from income.
 There’s a minor verification of my perspective in this data, since the one segment of debt that *hasn’t*  risen compared to GDP is personal debt””where the income of the borrower  is a serious constraint on how much debt the borrower will take on. As  much as banks have flogged credit cards, personal debt hasn’t increased  as a percentage of GDP.
 On the other hand, mortgage debt has risen sevenfold (compared to GDP) in the last two decades.
*Figure 3
*



 The post-GFC period in Australia has seen a further increase in the  banking sector’s reliance on home loans””due to both the business  sector’s heavy deleveraging in the wake of the crisis, and the  government’s re-igniting of the house price bubble via the First Home Vendors Boost in late 2008. Mortgages now account for over 57 percent of the banks’ loan books, an all-time high.
*Figure 4
*





 They also account for over 37% of total bank assets””again an all-time  high, and up substantially from the GFC-induced low of 28.5% before the  First Home Vendors Boost reversed the fall in mortgage debt.
*Figure 5
*




 So how exposed are the banks to a fall in house prices, and the  increase in non-performing loans that could arise from this? There is no  way of knowing for sure beforehand, but cross-country comparisons and  history can give a guide.
*Bigger than Texas*

 A persistent refrain from the “no bubble” camp has been that  Australia won’t suffer anything like a US downturn from a house price  crash, because Australian lending has been much more responsible than  American lending was. I took a swipe at that in last week’s post,  with a chart showing that Australia’s mortgage debt to GDP ratio  exceeds the USA’s, and grew three times more rapidly than did American  mortgage debt since 1990 (see Figure 13 of that post).
 Similar data, this time seen from the point of view of bank assets,  is shown in the next two charts. Real estate loans are a higher  proportion of Australian bank loans than for US banks, and their rise in  significance in Australia was far faster and sharper than for the USA.
*Figure 6
*




 More significantly, real estate loans are a higher proportion of bank  assets in Australia than in the USA, and this applied throughout the  Subprime Era in the USA. The crucial role of the First Home Vendors  Boost in reversing the fall in the banks’ dependence on real estate  loans is also strikingly apparent.
*

*


----------



## Agentm (12 April 2011)

*Figure 7
*




*Never mind the weight, feel the distribution*

 The “no bubble” case dismisses this Australia-US comparison on two grounds:


most of Australia’s housing loans are to wealthier households,  who  are therefore more likely to be able to service the debts so long  as  they remain employed; and
housing loans here are full-recourse, so that home owners put paying the mortgage ahead of all other considerations..
 Bloxham made the former claim in his recent piece:However,  there are other reasons why levels of household  debt should not be a  large concern. The key one is that 75 per cent of  all household debt in  Australia is held by the top two-fifths of income  earners. (Paul  Bloxham , The Australian housing bubble furphy, Business Spectator March 18 2011)​Alan Kohler recounted an interesting conversation with “one  of  Australia’s top retail bankers” a couple of years ago on the latter   point:There is some ‘mortgage stress’ in the northern  suburbs  of Melbourne, the western suburbs of Sydney and some parts of  Brisbane,  but while all the banks are bracing themselves for it and  increasing  general provisions, there is no sign yet of the defaults  that are  bringing the US banking system to its knees.​We often see graphs showing that Australia’s  ratios of  household debt to GDP and debt to household income had gone  up more than  in the United States. So, while the US is deep into a  mortgage-based  financial crisis, _it is surely a cause for celebration that Australia has not seen even the slightest uptick in arrears_.​“Please explain,” I said to my dinner  companion.  Obviously, low unemployment and robust national income,  including strong  retail sales until recently, have been the most  important part of it.  But on the other hand, the US economy was doing  okay until the mortgage  bust happened; it was the sub-prime crisis that  busted the US economy,  not the other way around.​Apart from that it is down to two things, he  says: within  the banks, “sales” did not gain ascendancy over “credit”  in Australia  to the extent that it did in the US; and _US mortgages  are  non-recourse whereas banks in Australia can have full recourse to  the  borrowers’ other assets, which means borrowers are less inclined to  just  walk away_. (Alan Kohler, “Healthy by default“, Business Spectator August 21, 2008; emphases added)​Kris Sayce gave a good comeback to Bloxham’s “most of the  debt is  held by those who can afford it” line when he noted that  “two-fifths of  income earners is quite a large pool of people”:In  fact, it’s nearly half the income earners. Is that  number any  different to any other economy? You’d naturally think the  higher income  earners would have most of the debt because they’re the  ones more  likely to want it, need it or be offered it.​So with about 11.4 million Australians  employed, that  makes for about 4.6 million Australians holding over  $1.125 trillion of  household debt – remember total household debt is  about $1.5 trillion.  That comes to about $244,565 per person.​Perhaps we’re not very bright.  But we’re  struggling to  see how that makes the popping of the housing bubble a  “virtual  impossibility.” (Kris Sayce, “Are Falling House Prices “Virtually Impossible”?“, Money Morning 18 March 2011)​The best comebacks to Alan Kohler’s dinner companion may  well be time  itself. Impaired assets (See Note [1]) did hit an all-time  low of 4.1%  of Bank Tier 1 Assets and 0.2% of total assets in January  2008, but by  the time Kohler and his banker sat down to dinner,  impairment  was on  the rise again. Impaired assets have since reached a  plateau of 25% of  Tier 1 capital and 1.25% of total assets””and this  has occurred while  house prices were still rising. Despite the pressure  that full-recourse  lending puts on borrowers, this is comparable to  the level of impaired  assets in US banks *before* house prices collapsed when the SubPrime Boom turned into the SubPrime Crisis (see Table 2 on page 10 of this paper).
*Figure 8
*




 Since real estate loans are worth roughly 7 times bank Tier 1   capital””up from only 2 times in 1990””it wouldn’t take much of an   increase in non-performing housing loans to push Australian banks to the   level of impairment experienced by American banks in 2007 and 2008.

*Figure 9
*




 The level and importance of non-recourse lending in the US is also   exaggerated. While some major States have it, many do not””and one of the   worst performing states in and since the Subprime Crisis was Florida,   which has full recourse lending.
 Finally, the “never mind the weight, feel the distribution” defence  of  the absolute mortgage debt level  has a negative implication for the   Australian economy: if debt is more broadly distributed in Australia   than in the USA, then the negative effects of debt service on   consumption levels are likely to be greater here than in America. This   is especially so since mortgage rates today are 50% higher here than in   the USA. Interest payments on mortgage debt in Australia now represent   6.7% of GDP, twice as much as in the USA. It’s little wonder that   Australia’s retailers are crying poor.
 Of course, the RBA could always reduce the debt repayment pressure by   reducing the cash rate. But with the margin between the cash rate and   mortgages now being about 3%, it would need to reduce the cash rate to   1.5% to reduce the debt repayment burden in Australia to the same level   as America’s.

*Figure 10
*




  So if America’s consumers are debt-constrained in their spending,   Australian consumers are even more so””with negative implications for   employment in the retail sector.
  Compared to the USA therefore, there is no reason to expect that   Australian banks will fare better from a sustained fall in house prices.   What about the comparison with past financial crises in Australia?
*This time really is different*

  There are at least three ways in which whatever might happen in the near future will differ from the past:


On the attenuating side, deposit insurance, which was only implicit or limited in the past, is much more established now; and
If  the banks face insolvency, the Government and Reserve Bank will  bail  them out as the US Government and Federal Reserve did””though let’s  hope  without also bailing out the management, shareholders and  bondholders,  as in the USA (OK, so call me an optimist! And if you  haven’t seen Inside Job yet, see it);
  On the negative side, however, we have the Big Trifecta:


The bubbles in debt, housing and bank stocks are far bigger  this  time than any previous event””including the Melbourne Land Boom and  Bust  that triggered the 1890s Depression.
  I’ll make some  statistical comparisons over the very long term, but  the main focus  here is on several periods when house prices fell  substantially in real  terms after a preceding boom, and what happened to  bank shares when  house prices fell:


The 1880s-1890s, when the Melbourne Land Boom busted and caused the 1890s Depression;
The 1920s till early 1930s, when the Roaring Twenties gave way to the Great Depression;
The  early to mid-1970s, when a speculative bubble in Sydney real  estate  caused a rapid acceleration in private debt, and a temporary fall  in  private debt compared to GDP due to rampant inflation;
The late  1980s to early 1990s, when the Stock Market Crash was  followed by a  speculative bubble in real estate””stoked by the second  incarnation of  the First Home Vendors Boost; and
From 1997 till now.
  I  chose the first four periods for two reasons: they were times when   house prices fell in real (and on the first two occasions, also nominal)   terms, and bank share prices suffered a substantial fall; and they  also  stand out as periods when an acceleration in debt caused a boom  that  gave way to a deleverage-driven slump, when private debt reached  either a  long term or short term peak (compared to GDP) and fell  afterwards.  They are obvious in the graph of Australia’s long term  private debt to  GDP ratio.


----------



## Agentm (12 April 2011)

*Figure 11
*




  They also turn up as significant spikes in the Credit Impulse (Biggs,    Mayer et al. 2010)””the acceleration of debt (divided by GDP) which    determines the contribution that debt makes to changes in aggregate    demand (See Note [2]).
  The Credit Impulse data also lets us distinguish the pre-WWII more    laissez-faire period from the “regulated” one that followed it: credit    was much more volatile in the pre-WWII period, but the trend value of    the Credit Impulse was only slightly above zero at 0.1%.
*Figure 12
*




  The Post-WWII period had much less volatility in the debt-financed    component of changes in aggregate demand, but the overall trend was far    higher at 0.6%. This could be part of the explanation as to why    Post-WWII economic performance has been less volatile than pre-WWII, but    it also indicates that rising debt has played more of a role in   driving  demand in the post-War period than before.
  Ominously too, even though the post-WWII period in general has been    less volatile, the negative impact of the Credit Impulse in this    downturn was far greater than in either the 1890s or the 1930s.
*Figure 13
*




  One final factor that also separates the pre-WWII data from post-WWII    is the rate of inflation. The 1890s and 1930s debt bubbles burst at a    time of low inflation, and rapidly gave way to deflation. This  actually   drove the debt ratio higher in the first instance, as the  fall in  prices  exceeded the fall in debt. But ultimately those debts  were  reduced in a  time of low inflation.
  The 1970s episode, on the other hand, was characterized by rampant    inflation””and the debt ratio fell because rising prices reduced the    effective debt burden. Whereas the falls in real house prices in the    1890s and the 1930s therefore meant that nominal prices were falling    even faster, the 1970s fall in real house prices mainly reflected    consumer price inflation outstripping house price growth. The 1990    bubble also burst when inflation was still substantial, though far lower    than it was in the mid-1970s.
  Today’s inflation story has more in common with the pre-WWII world    than the 1970s. Our current bubble is bursting in a low-inflation    environment.

*Figure 14
*




  Now let’s see what history tells us about the impact of falling house prices on bank shares.
*The 1880s-1890s*

  This was the bank bust to end all bank busts””just like WWI was the   War  to end all wars. Bank shares increased by over 75% in real terms as    speculative lending financed a land bubble in Melbourne that  increased   real house prices by 33% (Stapledon’s index combines Sydney  and   Melbourne, so this figure understates the degree of rise and fall  in   Melbourne prices). The role of debt in driving this bubble and the    subsequent Depression is unmistakable: private debt rose from under  30%   of GDP in 1872 to over 100% in 1892, and then unwound over the  next 3   decades to a low of 40% in 1925.
  The turnaround in debt and the collapse in house prices precipitated a    50% fall in bank shares in less than six months as house prices  started   to fall back to below the pre-boom level.
*Figure 15
*




  The excellent RBA Research paper “Two Depressions, One Banking Collapse” by Chay Fisher & Christopher Kent (RDP1999-06)    argues fairly convincingly that the 1890s Depression was a more  severe   Depression for Australia than the Great one””mainly because  there were   more bank failures in the 1890s than in the 1930s. The  severity of the   1890s fall in bank shares may relate to the higher  level of debt in  1890  than in the 1930s””a peak of 104 percent of GDP  in 1892 versus only  76  percent in 1932 (the peak this time round was  157 percent in March   2008).
  The correlation of the two series in absolute terms is obvious (the    correlation coefficient is 0.8), and the changes in the two series are    also strongly correlated (0.42).

*Figure 16
*




*The 1920s-1940s*

    The 1920s began with the end of the great deleveraging that had   commenced in 1892. Real house prices rose by about 25 percent in the   first two years””though mainly because of deflation in consumer   prices””and then fluctuated down for the next four years before a minor   boom. But the main debt-financed bubble in the 1920s was in the Stock   Market.
*Figure 17
*




    There was however still a crash in bank shares after house prices   turned south in early 1929. It was not as severe as in 1893, and of   course coincided with a collapse in the general stock market (I can’t   give comparable figures because of the different methods used to compile   the two indices””see the Appendix). But still there was a fall of 24%  in  bank shares over 7 months at its steepest, and a 39% fall from peak  to  trough””preceded by a 25% fall in house prices.
*Figure 18
*




    Bank shares also tracked house prices over the 20 years from the   Roaring Twenties boom to the beginning of WWII: the correlation was 0.44   for the indices, and 0.47 for the change in the indices.
*Figure 19
*


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## Agentm (12 April 2011)

*The 1970s*

     The 1970s bubble was the last gasp of the long period of robust yet   tranquil growth that had characterized the early post-WWII period. The   peculiar macroeconomics of the time””the start of “Stagflation”””clouds   the house price bubble picture somewhat (I discuss this in the   Appendix), but there still was a big house price bubble then, and a big   hit to bank shares when it ended.
     This was Australia’s first really big debt-financed speculative   bubble, which most commentators and economists seem to have forgotten   entirely. Its flavor is well captured in the introduction to _Sydney Boom, Sydney Bust_: Sydney  had never experienced a property boom on the scale  of that between  1968 and 1974. It involved a frenzy of buying, selling  and building  which reshaped the central business district, greatly  increased the  supply of industrial and retailing space, and accelerated  the expansion  of the city’s fringe. Its visible legacy of empty offices  and stunted  subdivisions was matched by a host of financial casualties  which  incorporated an unknown, but very large, contingent of small  investors,  together with the spectacular demise of a number of  development and  construction companies and financial institutions. The  boom was the  most significant financial happening of the 1970s and the  shock waves  from the inevitable crash were felt right up to 1980. It was  an  extraordinary event for Sydney, and for Australia.(Daly 1982, p. 1)​    House prices rose 40 percent in real terms from 1967 till  1974, and  then fell 16 percent from 1974 till 1980. Bank shares went  through a  roller-coaster ride, following Poseidon up and down from 1967  till 1970,  and then rising sharply as the debt-bubble took off in  1972, with a 31  percent rise between late 1972 and early 1973. But from  there it was all  downhill, with bank shares falling 35 percent across  1973 while house  prices were still rising.
     But when house prices started to fall, bank shares really tanked, falling 54 percent in just seven month during 1974.
*Figure 20
*




     However, the extreme volatility of both asset and commodity prices,   and the impact of two share bubbles and busts””the Poseidon Bubble of the   late 1960s and the early 1970s boom and bust””eliminated the  correlation  of bank share prices to house prices that applied in the  1890s and  1930s: the correlation of the indices was -0.46 and of  changes in the  indices was -0.01.
*Figure 21
*




*The 1980s*

     “The recession we had to have” remains unforgettable. That plunge   began with Australia’s second big  post-WWII speculative bubble, as   Bond, Skase, Connell and a seemingly limitless cast of white-shoe   brigaders established the local Ivan Boesky “Greed is Good” church””with banks eagerly throwing money and debt into its tithing box.
     It would have all ended with the Stock Market Crash of 1987, were it   not for the government rescues (both here and in the USA) that enabled   the speculators and the banks to regroup and throw their paper weight   into real estate.
*Figure 22
*




     Having plunged 30 percent *in one month*  (October, of  course), bank shares rocketed up again, climbing a  staggering 54  percent in 11 months to reach a new peak in October 1988,  as  speculators and the second incarnation of the First Home Vendors  Grant  drove house prices up 37 percent over just one and a half years.  Bank  shares bounced around for a while, but  once the decline in house   prices set in, bank shares again tanked””falling 40 percent over 11   months in 1990.
*Figure 23
*




     The positive correlations between the indices and their rates of   change which had been swamped by the high inflation of the early 1970s   returned: the correlation of the indices was 0.45 and the correlation of   their rates of change was 0.42.
*Figure 24
*




     Which brings us to today.
*From 1997 till today*

     I have argued elsewhere   that the current bubble began in 1997, but the debt-finance that   finally set it off began far earlier””in 1990. The fact that unemployment   was exploding from under 6 percent in early 1990 to almost 11 percent   in early 1994 was not, it seems, a reason to be restrained in lending  to  the household sector. It was far more important to expand the  marketing  of debt, and since the business sector could no longer be  persuaded to  take more on, the virgin field of the household sector had  to be  explored. Mortgage debt, which had flatlined at about 16 percent  of GDP  since records were first kept, took off, increasing by 50  percent during  the 1990s recession (from 1990 till the start of 1994),  and ultimately  rising by 360 percent over the two decades””from 19  percent of GDP to 88  percent””with the final fling of the First Home  Vendors Boost giving it  that final push into the stratosphere.
*Figure 25
*




     By 1997 the sheer pressure of rising mortgage finance brought to an   end a period of flatlining house prices, and the bubbles in both house   prices and bank shares took off in earnest.
     The rise in bank shares far outweighed the increase in the overall   share index (the two indices are now comparable, whereas for the longer   series they were compiled in different ways). Bank shares rose 230   percent from 1997 till their peak in 2007, versus a rise of only 110   percent in the overall market index.
     The increase in house prices also dwarfed any previous bubble: an increase of over 120 percent over fifteen years.
     Bank shares and house prices both tanked when the GFC hit: house   prices fell 9 percent and bank shares fell 61 percent. But thankfully   the cavalry rode to the rescue””in the shape of the First Home Vendors   Boost””and both house prices and bank shares took off again. House prices   rose 17 percent while bank shares rose 60 percent (versus a 45 percent   rise in the market) before falling 12 percent after the expiry of the   FHVB.
*Figure 26
*




     The correlation between bank shares and house prices is again   positive:  0.51 for the indices and a low 0.1 for the change in indices   over the whole period, but 0.46 since 2005.
*Figure 27
*




     So now we are on the edge of the bursting another house price bubble. What could the future bring?


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## Agentm (12 April 2011)

*When the bubble pops…*

      There are several consistent patterns that can be seen in the past data.
      Firstly, house prices and bank shares are correlated. There was one   aberration””the 1970s””but that was marked by peculiar dynamics arising   from the historically high inflation at the time. Generally, bank shares   go up when house prices rise, and fall when the fall. Partly, this is   the general correlation of asset prices with each other, but partly  also  it’s the causal relationship between bank lending, house prices,  and  bank profits: banks make money by creating debt, rising mortgage  debt  causes house prices to rise, and rising house prices set off the  Ponzi  Scheme that encourages more mortgage borrowing. The bubble bursts  when  the entry price to the Ponzi Scheme becomes prohibitive, or when  early  entrants try to take their profits and run.
      Secondly, the fall in the bank share price is normally very steep,  and  it occurs shortly after house prices have passed their peaks.  Holding  bank shares when house prices are falling is a good way to lose   money””and conversely, _if you get the timing right_, betting   against them can be profitable. That’s why Jeremy Grantham””and many   other hedge fund managers from around the world””are paying close   attention to Australian house prices.
      Thirdly, house prices and bank shares are driven by rising debt, and   when debt starts to fall, not only do house prices and bank shares fall,   the economy also normally falls into a very deep recession or   Depression. This is the crucial role of deleveraging in causing economic   downturns, including the serious ones where debt falls not just during  a  short cycle prior to another upward trend, but in an extended  secular  decline.
      There is also one cautionary note about the current bubble: though   history would imply that there is a very large downside to bank shares   now, it’s also obvious that bank shares fell a great deal in 2007-09, so   that much of the downside may already have been factored in.
      However, on every metric: on the ratio of debt to GDP, on how much   that ratio rose from the start of the bubble to its end, on how big the   house price bubble was, and on how much bank shares rose, this bubble   dwarfs them all.
*Debt to GDP*

      The 1997 debt to GDP ratio started higher than all but the 1890s   bubble ended, and the bubble went on long after all the others had   popped.
*Figure 28
*




      Though the actual debt to GDP ratio today dwarfs all its  predecessors,  in terms of the growth of debt from the beginning of the  bubble, it  has one rival: the 1920s.
*Figure 29
*




      However this is partly because of deflation during the early Great   Depression: deflation ruled from 1930 till 1934, and the debt to GDP   ratio rose not because of rising debt, but falling prices. Though the   increase in debt in the final throes of the Roaring Twenties was faster   than we experienced, over the whole boom debt grew as quickly now as   then, and it has kept growing for four years longer than in the 1920s.   Even though the ratio is falling now, it’s because debt is now rising   more slowly than nominal GDP: we still haven’t experienced deleveraging   yet (unlike the USA).
*House Prices*

      The rise in prices during this bubble again has no equal in the historical record.
*Figure 30
*




*Bank Shares*

      Bank shares are also in a class of their own in this bubble, even   after the sharp fall from 2007 till 2009. In terms of how high bank   share prices climbed, this bubble towers over all that have gone before,   and even what is left of this bubble is still only matched by the   biggest of the preceding bubbles, the 1890s and the 1970s.
*Figure 31
*




*It’s a long way from the top if you’ve sold your soul*

      Bank lending drove house prices sky high, and the profits banks made   from this Ponzi Scheme dragged their share prices up with the bubble   (and handsomely lined the pockets of their managers).
      It’s great fun while it lasts, but all Ponzi Schemes end for the   simple reason that they must: they aren’t “making money”, but simply   shuffling it””and growing debt. When new entrants can’t be enticed to   join the game, the shuffling stops and the Scheme collapses under the   weight of accumulated debt. There are very good odds that, when this   Ponzi Scheme collapses and house prices fall, bank shares will go down   with them.
*Appendices*

*Stagflation*

      Between 1954 and 1974, unemployment averaged 1.9 percent, and it only   once exceeded 3 percent (in 1961, when a government-initiated credit   squeeze caused a recession that almost resulted in the defeat of   Australia’s then Liberal government, which ruled from 1949 till 1972).   Inflation from 1954 till 1973 averaged 3 percent, and then rose   dramatically between 1973 and 1974 as unemployment fell.
      This fitted the belief of conventional “Keynesian” economists of the   time that there was a trade-off between inflation and unemployment: one   cost of a lower unemployment rate, they argued, was a higher rate of   inflation.
      But then the so-called “stagflationary” breakdown occurred:   unemployment and inflation both rose in 1974. Neoclassical economists   blamed this on “Keynesian” economic policy, which they argued caused   people’s expectations of inflation to rise””thus resulting in demands for   higher wages””and OPEC’s oil price hike.
*Figure 32
*




      The latter argument is easily refuted by checking the data: inflation took off well *before* OPEC’s price hike.
*Figure 33
*




      The former has some credence as an explanation for the take-off in  the  inflation rate””workers were factoring in both the bargaining power  of  low unemployment and a lagged response to rising inflation into their   wage demands.
*Figure 34
*




      The Neoclassical explanation for why this rise in inflation also   coincided with rising unemployment was “Keynesian” policy had kept   unemployment below its “Natural” rate, and it was merely returning to   this level.  This was plausible enough to swing the policy pendulum   towards Neoclassical thinking back then, but it looks a lot less   plausible with the benefit of hindsight.


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## Agentm (12 April 2011)

*Figure 35
*




      Though inflation fell fairly rapidly, and unemployment ultimately   fell  after several cycles of rising unemployment, over the entire    “Neoclassical” period both inflation and unemployment were *higher*    than they were under the “Keynesian” period. So rather than inflation    going down and unemployment going up, as neoclassical economists    expected, both rose””with unemployment rising substantially. On empirical    grounds alone, the neoclassical period was a failure, even before the    GFC hit.
*Table 1
*
               Policy dominance Keynesian Neoclassical   Years 1955-1976   1976-Now   Average Inflation 4.5 5.4   Average Unemployment 2.1 7    
      There was a far better explanation of the 1970s experience lurking  in   data ignored by neoclassical economics: the level and rate of  growth of   private debt. As you can see from Figure 32, private debt,  which had   been constant (relative to GDP) since the end of WWII, began  to take off   in 1964, and went through a rapid acceleration from 1972  till 1974,   before falling rapidly.
      The debt-financed demand for construction during that bubble added  to   the already tight labor market, and helped drive wages higher in  both a   classic wage-price spiral and a historic increase in labor’s  share of   national income””which has been unwound forever since.
*Figure 36
*




      Inflation, higher unemployment that weakened labor’s bargaining   power,  anti-union public policy and an approach to wage-setting policy   that  emphasized cost of living adjustments but ignored sharing   productivity  gains, all contributed to that unwinding.
*The share market indices*

      The bank share index used in this post was compiled by combining 3 data sources. Working backwards in time, these were:


The S&P’s ASX 200 Financials Index (AXFJ) from May 2001 till now;
A   composite formed from the prices for the 4 major bank share prices    that matches the value of the Financials Index from 2000 till May 2001;    and
 Data from the Global Financial Database from 1875 till 2000, which in turn consists of three series:
“Security  Prices and Yields, 1875-1955,” Sydney Stock Exchange   Official  Gazette, July 14, 1958, pp 257-258 (1875-1936), together with   D. McL.  Lamberton, Share Price Indices in Australia, Sydney: Law Book   Co.,  1958; and
The Australian Stock Exchange Indices, Sydney: AASE, 1980; and
Australian Stock Exchange Limited, ASX Indices & Yields, Sydney: ASX, 1995 (updated till 2000)
 
        From a perusal of the GFD documentation and a comparison of the    Banking and Finance index to the broader market index, it appears that    the bank index is a straight price index pre-1980, whereas the GFD’s    data for the overall market is an accumulation index till 1980 and a    price index after that. These inconsistencies make it impossible to    compare the two over the very long term, but the movements in each at    different time periods can be compared (and the comparison is also fine    from 1980 on).
*Figure 37
*




*Notes*

      [1] The notes to Table B05 state that “‘Impaired assets’ refers to   the  aggregate of a reporting bank’s non-accrual and restructured    exposures, both on- and off-balance sheet, plus any assets acquired    through the enforcement of security conditions. Off-balance sheet    exposures include, inter alia, commitments to provide funds that cannot    be cancelled or revoked and the credit equivalent amounts of interest    rate, foreign exchange and other market-related instruments.”
      [2] One of the many issues that distinguishes my approach to   economics  from neoclassical economists is my focus on the role that   changes in  debt play in aggregate demand. Neoclassical economists   wrongly ignore  the role of aggregate level of debt because they see  debt  as simply a  transfer of spending power from one agent to  another””so  that there is  no change in aggregate spending power if debt  rises.  This  is the  reason that Bernanke gave for ignoring Fisher’s  “debt deflation”  theory  of the Great Depression (Fisher 1933):
_Fisher’s idea was less influential in academic circles, though,    because of the counterargument that debt-deflation represented no  more   than a redistribution from one group (debtors) to another  (creditors).   Absent implausibly large differences in marginal spending  propensities   among the groups, it was suggested, pure redistributions  should have no   significant macro-economic effects… __(__Bernanke 2000, p. 24__)_
      And it’s the explicit assumption that Krugman uses in his recent paper on the Great Recession:
_Ignoring the foreign component, or looking at the world as a   whole,  the overall level of debt makes no difference to aggregate net   worth ””  one person’s liability is another person’s asset. __(__Krugman and Eggertsson 2010, p. 3__)_
      This shows their ignorance of the capacity for the banking sector  to   create spending power “out of nothing”, and thus create spending  power   in the process. I cover this topic in detail in these posts (http://www.debtdeflation.com/blogs/2010/09/20/deleveraging-with-a-twist/ and http://www.debtdeflation.com/blogs/2010/10/19/deleveraging-deceleration-and-the-double-dip/)
*References*

      Bernanke, B. S. (2000). Essays on the Great Depression. Princeton, Princeton University Press.
      Biggs, M., T. Mayer, et al. (2010). “Credit and Economic Recovery: Demystifying Phoenix Miracles.” SSRN eLibrary.
      Daly, M. T. (1982). Sydney Boom, Sydney Bust. Sydney, George Allen and Unwin.
      Fisher, I. (1933). “The Debt-Deflation Theory of Great Depressions.” Econometrica
*1*(4): 337-357.
      Krugman, P. and G. B. Eggertsson (2010).  Debt, Deleveraging, and  the  Liquidity Trap: A Fisher-Minsky-Koo approach  [2nd draft  2/14/2011]. New  York, Federal Reserve Bank of New York &  Princeton  University.


----------



## satanoperca (12 April 2011)

The bears come out to play.



> Property investors get sinking feeling: returns may fail to live up to expectations




http://www.theaustralian.com.au/business/pursuit-of-property-is-it-a-losers-game-returns-may-fail-to-live-up-to-investors-overly-optimistic-expectations/story-e6frg8zx-1226036173358

and the heavens open up over Melbourne


----------



## prawn_86 (12 April 2011)

satanoperca said:


> The bears come out to play.
> 
> 
> 
> ...




Pretty much along my line of thinking over the last few years.

When im loking for a value investment in the stockmarket i want an asset that is generating a profit and not relying on capital gains. And take into account you have to leverage into housing then your return needs to be even better (same as RR for a  margin loan essentially)


----------



## trainspotter (12 April 2011)

*GOSH* Agentm ...... couldn't you have summarised all of that Steven Keen espousal into a simpler form so my tiny brain could incorporate it. Or just placed a link directly to it?

What does it all mean? We are doomed ...... sell sell sell now before it is too late?

I had to laugh when he refers to the *1890's *depression ....... what the hell has that got anything to do with property prices right now?? OHHHHHHHHHHH that's right it was the land boom in Melbourne that caused it ?? So ipso facto IT MUST BE THE SAME AS NOW !!!!!

That's it ....... HEY Medicowallet ....... I am selling every green/strata/leasehold property I own. Time to get out of Dodge. The writing is on Steven Keens wall. It must be true.


----------



## satanoperca (12 April 2011)

Bit unaffair there TH. I do wonder if you will eat humble pie and apologise to Steven Keen if he is ever proven right.


----------



## Agentm (12 April 2011)

lol trainspotter, your sounding very upset at keen..

imho the bubble is going fine, and in melbourne they are fighting hard and looking for all sorts of ways of getting it to go bigger..  

i dont think its over by a long shot, too much capital in it for anyone to let it all collapse.. i wont buy into it, but i think many will regardless..

imho sunshine and lollipops is still very much the future..


----------



## Dowdy (12 April 2011)

This is an interesting article but nothing really surprising to the onse who predicted what is happening now :



> THE efforts by the government and the Reserve Bank to prop up the housing market during the global financial crisis are largely to blame for its sick state now.






> Prices have gone nowhere for the past year, but market dynamics suggest the scattered falls will become more widespread.
> 
> The best measure of *demand* is housing loan approvals.
> 
> ...






> reasury chief at the time Ken Henry said Treasury had always hated the first-home buyers grant, believing it simply resulted in prices being bid higher.





Well DUHH Fred!


http://www.theaustralian.com.au/business/opinion/rba-and-government-incentives-hurt-housing-market/story-e6frg9qo-1226036868376


----------



## trainspotter (12 April 2011)

satanoperca said:


> Bit unaffair there TH. I do wonder if you will eat humble pie and apologise to Steven Keen if he is ever proven right.




Sure thing ....... when he apologises to the whole of Australia when he told everyone to sell and property prices went UP 20%!?!?!??!!!

"In any case, the lesson to be learned from this episode is that betting the house on an economist's forecast typically is not a smart move. *Keen himself is learning that the hard way.* Unfortunately, Keen recklessly encouraged everyday Australians to sell their homes at what turned out to be the peak of the global financial crisis, and the trough in local house prices." Rory Robertson 

http://www.businessspectator.com.au...t-march-pd20100420-4P4MD?OpenDocument&src=blb



Agentm said:


> lol trainspotter, your sounding very upset at keen..
> 
> imho the bubble is going fine, and in melbourne they are fighting hard and looking for all sorts of ways of getting it to go bigger..
> 
> ...




Ummmmmmmm nope ...... I am of the belief that the corpulent Contessa is gargling out the back right now as I type. Too late my fine adversary ....... too late.

I like to look at trends. Television is our greatest thermometer in the universe for what the people are up to. Look as to what is on TV at the moment and you will see what the pea brain Aussie is thinking.

Not that long ago we have a veritable plethora of TV shows ramming down our throats about "Hot Property" and "Hot Auctions" and "Better Homes and Gardens" and "Home Improvement" and "Burkes Backyard" and on and bloody on it went.

What have we got now? Food shows ....... "My Kitchen Rules", "Master Chef", "Nigella Bites", "Olivers Kitchen" and on and bloody on it goes.

Travel and destination shows are coming in a close second.

So what does this tell us? The focus has shifted from housing to comfort food and travelling holidays. This equates to a massive softening in the real estate market as the frontal lobes of the Aussie battler is not being seduced by TV to buy/renovate/makeover but to eat/drink/ and leave the bloody country.

IMO that is.


----------



## medicowallet (12 April 2011)

trainspotter said:


> That's it ....... HEY Medicowallet ....... I am selling every green/strata/leasehold property I own. Time to get out of Dodge. The writing is on Steven Keens wall. It must be true.




It might be interesting to see how the Japan saga plays out, with euro countries still not performing well, and America's stimulus lowering.

and you only having 40% equity, it goes fast when you are geared high, ask storm financial investors.

You may be laughing now, but I hope it is tongue in cheek.


----------



## sptrawler (13 April 2011)

trainspotter said:


> Sure thing ....... when he apologises to the whole of Australia when he told everyone to sell and property prices went UP 20%!?!?!??!!!
> 
> "In any case, the lesson to be learned from this episode is that betting the house on an economist's forecast typically is not a smart move. *Keen himself is learning that the hard way.* Unfortunately, Keen recklessly encouraged everyday Australians to sell their homes at what turned out to be the peak of the global financial crisis, and the trough in local house prices." Rory Robertson
> 
> ...




I think you are spot on trainspotter because t.v reacts to viwer sentiment but there is a 6 month time lag. That is why WES seem seem to be nervous and they are really on top of the game.


----------



## nunthewiser (13 April 2011)

FWIW

i have just had an offer accepted for a very fair price in a very good suburb in a primo handy position.

i am happy to buy this around 100k below the median price for the suburb.

i will be waiting for the next pickings as they present themselves.

selection is the key and looking forward to a lot more selection to come out of the woodwork 

sunshine and lollipops all round......


----------



## -Bevo- (13 April 2011)

trainspotter said:


> Sure thing ....... when he apologises to the whole of Australia when he told everyone to sell and property prices went UP 20%!?!?!??!!!




Family member brought place in Noosa 2007 paid 1.1 million currently listed for 900k with zero interest in property that almost 20% loss right there, maybe they should have listened to Keen.


----------



## trainspotter (13 April 2011)

-Bevo- said:


> Family member brought place in Noosa* 2007 *paid 1.1 million currently listed for 900k with zero interest in property that almost 20% loss right there, maybe they should have listened to Keen.




Seeing how the bet was made on *27th November 2008 *it would be HIGHLY unlikely that your family member who purchased in 2007 would take any notice at all to Steven Keen prophecies. The bet was from "peak to trough" as well. Maybe they should have sold at the peak rather than buying in it ???


----------



## CamKawa (13 April 2011)

-Bevo- said:


> Family member brought place in Noosa 2007 paid 1.1 million currently listed for 900k with zero interest in property that almost 20% loss right there, maybe they should have listened to Keen.



and it's only listed at 900k, could sell for a lot less.


----------



## white_goodman (13 April 2011)

trainspotter said:


> Seeing how the bet was made on *27th November 2008 *it would be HIGHLY unlikely that your family member who purchased in 2007 would take any notice at all to Steven Keen prophecies. The bet was from "peak to trough" as well. Maybe they should have sold at the peak rather than buying in it ???




im sure they wouldnt have bought at the peak if they knew it was the peak or are you privy to a crystal ball?

make sure you lend that crystal ball to all current homebuyers, it will be worth its weight in gold


----------



## trainspotter (13 April 2011)

white_goodman said:


> im sure they wouldnt have bought at the peak if they knew it was the peak or are you privy to a crystal ball?
> 
> make sure you lend that crystal ball to all current homebuyers, it will be worth its weight in gold




LOL ..... nunthewiser picked the top about 50 pages ago white_goodman. Those in the know agreed with his wild and brash statement. Crystal balls and all.


----------



## white_goodman (13 April 2011)

trainspotter said:


> LOL ..... nunthewiser picked the top about 50 pages ago white_goodman. Those in the know agreed with his wild and brash statement. Crystal balls and all.




well in light of that im off to sth america and vegas for coke and hookers...


----------



## prawn_86 (13 April 2011)

white_goodman said:


> well in light of that im off to sth america and vegas for coke and hookers...




Can i join you? Or we'll be there next year, perhaps you can be the scouting party


----------



## againsthegrain (13 April 2011)

a very respectable choice, much better then Thailand


----------



## white_goodman (13 April 2011)

againsthegrain said:


> a very respectable choice, much better then Thailand




lol going to Thailand in July, sth America for xmas


----------



## kitehigh (13 April 2011)

South America is gold, had the best times there.  Brazil is no longer a cheap destination though due to their currency being very strong now.  Great food and woman that's for sure..


----------



## nunthewiser (14 April 2011)

> THE effect of proposed prostitution laws on properties in Perth's inner northern suburbs is raising some concern among residents.
> Reforms to prostitution laws have been proposed by WA Attorney-General Christian Porter.
> 
> Under proposed laws, prostitutes will be prohibited from working within set distances from homes and schools.
> ...




http://www.perthnow.com.au/real-est...s-raise-concerns/story-e6frg3o3-1226037992965


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## prawn_86 (14 April 2011)

Had a conversation with a couple property bulls here at work. Two of the gold quotes they came out with, and they were deadly serious were:

"You cannot lose on property"

"Property in Aus will not go down"

Worth pondering...


----------



## white_goodman (14 April 2011)

prawn_86 said:


> Had a conversation with a couple property bulls here at work. Two of the gold quotes they came out with, and they were deadly serious were:
> 
> "You cannot lose on property"
> 
> ...




 its funny how many people in financial jobs are 'world illiterate'


----------



## againsthegrain (14 April 2011)

I hear it all the time at work, back slapping each other with "dont worry you never lose on these things"

Worst is when they try to give you advice, your young so listen to us, go buy property before its too late, secure a foothold! "before its too late"


----------



## medicowallet (14 April 2011)

prawn_86 said:


> "You cannot lose on property"
> 
> "Property in Aus will not go down"
> 
> Worth pondering...




Obviously weren't around in the 80s and 90s

Like quite a few permabulls on this thread.


Long term averages do change, but most of the times bubbles return to trends, and for property, this would mean a correction or considerable stagnation.


----------



## trainspotter (14 April 2011)

prawn_86 said:


> Had a conversation with a couple property bulls here at work. Two of the gold quotes they came out with, and they were deadly serious were:
> 
> "You cannot lose on property"
> 
> ...




Not really, they have absolutely NO EYE DEAR what they are talking about.


----------



## satanoperca (14 April 2011)

Watch out the SKeen disease is spreading and coming to town near you.



> “We have a very overvalued housing market and even a small adverse shock can be magnified by a large adverse impact on property values,” said Gerard Minack, global developed markets strategist at Morgan Stanley, who asserts Australian home prices are as much as *40 per cent overvalued*. “We’re seeing that now in parts of Queensland.”




http://www.theage.com.au/business/more-cracks-in-the-housing-market-20110413-1ddtj.html

Speak to your local realestate agent for a cure of the SKeen disease.

Cheers


----------



## medicowallet (14 April 2011)

trainspotter said:


> Not really, they have absolutely NO EYE DEAR what they are talking about.
> 
> View attachment 42407




You know what.

I don't know what is more scary, the face, the eyes or the guns on her....

She needs to get off the roids.


----------



## jayinasia (14 April 2011)

prawn_86 said:


> Had a conversation with a couple property bulls here at work. Two of the gold quotes they came out with, and they were deadly serious were:
> 
> "You cannot lose on property"
> 
> ...




I heard the same thing from my friends in the States during 2005. I knew it would end ugly when 700 sq ft was going for a million dollars in Southern California. Of course I was a few years early. I think there's still some room to run because I haven't heard "It's different this time" yet from my Aussie friends.


----------



## wayneL (14 April 2011)

jayinasia said:


> "It's different this time"




It is, yet it isn't.


----------



## Bill M (14 April 2011)

Well well well, The Buyers Strike Hey? Just as I thought, it failed, it's canned, it's over. The fly by night posters are no where to be seen, never mind, facts are facts.
---
_*While the issue of housing affordability is clearly an issue that resonates with plenty of people, GetUp members don’t support a boycott campaign. Over the course of the last couple of weeks, we surveyed a random segment of our membership to gauge support - only 10% strongly support the campaign, and more than half the surveyed members opposed this campaign altogether. For these reasons, we won’t be running a campaign in support of the property buyers’ boycott.* _

Link Here.
---


----------



## explod (14 April 2011)

wayneL said:


> It is, yet it isn't.




hmmm ??

I'm a bit slow as you know waynel.

Clues for the clueless ?


----------



## trainspotter (14 April 2011)

wayneL said:


> It is, yet it isn't.




Is that some kind of Japanese philosophy that I don't understand? Or is it just a simple positive negative like "Yeah .... nahhhh"?

Meanwhile back at the ranch in America - Stockton to be precise - _None of the six is seeing price gains, just lessening declines that are expected to continue. Their foreclosure rates have peaked, so the worst could be behind them. Homes in these markets also are becoming more affordable, relative to local incomes, than they were before the real estate boom and bust of the past decade. *Investors in many of the markets say the housing deals won't get much better.*_

http://weststockton.news10.net/news/news/study-stockton-vallejo-housing-markets-bottoming-out/64282

What's this then ?? A shaky bank in Australialalala land that has too many eggs in one basket?

_Bad debts included a $45 million charge associated with the weather events and another $35 million from large commercial exposures, *mostly in the property and construction sectors.[/*I]

Read more: http://www.news.com.au/business/bre...ar/story-e6frfkur-1226039123335#ixzz1JUoaCk17

*GOSH* and here I was thinking that it was likely to be Adelaide bank with it's top heavy Lo Doc loans. Nope ........ securitised lending in too tight a demographic with a natural disaster thrown on top. _


----------



## wayneL (14 April 2011)

trainspotter said:


> Is that some kind of Japanese philosophy that I don't understand? Or is it just a simple positive negative like "Yeah .... nahhhh"?




The Taoists would say both, but if you claim to understand, you don't understand. 

Do you understand now? :


----------



## trainspotter (16 April 2011)

wayneL said:


> The Taoists would say both, but if you claim to understand, you don't understand.
> 
> Do you understand now? :




A bit like this thread really.

*Hot off the press from RP DATA *- _Lending finance data released this week by the ABS continue to show ongoing weakness. The total value of lending finance fell by -5.7% for the month and is -4.2% lower year on year. The soft lending conditions are certainly reflective of the overall consumer conservatism that has become apparent, resulting in a lower propensity to borrow. *Interestingly, personal credit finance commitments have recorded the greatest fall year on year, down -11.7%*_

No wonder the various Governments are so keen to keep it all going in one direction.

_Property related taxes are, by far, the largest source of tax revenue for the state and local governments. With buoyant housing market conditions over the 2009/10 financial year, property related tax income for the state and local government sector rose to new highs, however Governments should be budgeting from much lower property related taxes over the current financial year. 

*During the 2009-10 financial year, state and local governments raked in almost $32 million in taxes from property – the highest amount on record.* Over the financial year, total property related tax revenue increased by 14.3% following a -10.5% fall in property tax revenue during the softer housing market conditions of 2008-09. Last year’s increase was the largest of any financial year since 2000-01._

http://www.myrp.com.au/


----------



## CamKawa (16 April 2011)

Oh


----------



## nukz (16 April 2011)

Beijing News reported Tuesday, citing data from the city's Housing and Urban-Rural Development Commission." And while many dismissed these news as merely a property specific ASP rotation, what followed was a downgrade of the Chinese property sector by Moody's citing an expectation of "credit conditions to worsen in next 12-18 months for developers" at which point we decided to dig in deeper. It appears not all is as good as the apologists would like to claim. Because while the average selling price in Beijing plunged by 34%, and that in Hangzhou by 26%, the drop was very substantial and rather pervasive pretty much everywhere else as well. From Citi's Oscar Choi: "ASP- down 7% MoM in March, biggest monthly drop in the past five years. In January and February, ASP in most key cities still maintained an upward trend. But entering March, ASP achieved in 18 key cities dropped by 7% MoM, and Beijing’s and Hangzhou’s ASP achieved were down 34% MoM, Hangzhou down 26% MoM.


Any property slowdown in China will have a huge effect on Australia


----------



## UBIQUITOUS (16 April 2011)

CamKawa said:


> Oh




Double 'Oh' for Robots


----------



## lusk (16 April 2011)

UBIQUITOUS said:


> Double 'Oh' for Robots




Now thats one train that left the station without me on board.


----------



## CamKawa (16 April 2011)

UBIQUITOUS said:


> Double 'Oh' for Robots



lol


----------



## trainspotter (16 April 2011)

UBIQUITOUS said:


> Double 'Oh' for Robots




I don't get it UBI ??? Clicked on the link and I get a Justin Beiber scalpers news website? 

What has this got to do with Australian property prices and their future?


----------



## satanoperca (16 April 2011)

The Skeen disease has been contracted by the herald sun, great day in Melbourne, so thought I would do a spot of fishing with junior, a mate and his son down in the docklands. Sent the kids to get a paper, didn't look at it until I just got home, catching to many bream.
There it was front page, "Bubble Bursts", those lollipops must have gone sour. Next in the equation is to see over coming months if unemployment starts to rise. let's hope that the go nuts are not stupid enough to waste taxpayers doars keeping the bubble inflated or I will be advocating a strike on paying taxes if they are going to be continually wasted.

Great day indeed.


----------



## KurwaJegoMac (16 April 2011)

trainspotter said:


> I don't get it UBI ??? Clicked on the link and I get a Justin Beiber scalpers news website?
> 
> What has this got to do with Australian property prices and their future?




Isn't it obvious? First home buyers will be using their home deposits to pay for over inflated bieber tickets instead of their first home. This in turn will soften demand and be the catalyst for the 40% property crash. 

I'm just glad that i managed to secure a number of these tickets near the original selling price - it's serving well as a short term inflation hedge!


----------



## medicowallet (16 April 2011)

"Saturday 16th April 2011

Demand for homes at this weekends residential auctions mirrored last weekend with a clearance rate of 61 per cent compared to 59 per cent last weekend.

There were a total of 840 auctions reported this weekend, of which a total of 513 sold and 327 were passed in. Of the homes passed in at auction 204 were passed in on a vendors bid.

"

Doing it for the masses.


"This weekend last year saw 928 auctions and a clearance rate of 83 per cent"

83% to 61%

Why would this happen?


----------



## CamKawa (17 April 2011)

medicowallet said:


> "Saturday 16th April 2011
> 
> Demand for homes at this weekends residential auctions mirrored last weekend with a clearance rate of 61 per cent compared to 59 per cent last weekend.



What I find interesting is that Enzo reported the clearance last weekend at 62%. Notice how he revised that figure down now to 59% to give the impression that the property is picking up. REIV would have to produce the dodgiest stats out there.


----------



## kincella (17 April 2011)

the difference in clearance rates for auctions from last year is easy....there have been 4 interest rate rises since then, plus a bank only sanctioned rise on top of it...

the focus by most on these forums is about the inner city prices...which are ridiculously high...
but they have taken their eyes off the rest of the market...no noise, the other people are just quietly going about their business of buying a house, or the 2nd house in upgrading...
a whopping 60,000 people pa are heading for the outer suburbs....where housing is still affordable...
I believe there are no problems with houses under 300k's, and 400 range...

and rents are rising....
http://www.theaustralian.com.au/new...e-too-few-houses/story-fn6njxlr-1226038292917

wonder how many chinese will head over here now....where it is still much cheaper ...and there are no restrictions, as there are in china...


----------



## medicowallet (17 April 2011)

kincella said:


> the difference in clearance rates for auctions from last year is easy....there have been 4 interest rate rises since then, plus a bank only sanctioned rise on top of it...
> 
> and rents are rising....
> http://www.theaustralian.com.au/new...e-too-few-houses/story-fn6njxlr-1226038292917




Rental asking price will be tempered by decreasing growth, increasing electricity prices and carbon tax etc.

It has to hit a ceiling somewhere and with property prices stagnating, then I agree, it will mean people will purchase instead of renting.

So which is the supporter of which?  Do high rental prices drive property price growth or merely support it? or do high rental expectations drive action in property sales and hence prices?

If one is stagnant, it is unlikely the other one is going to go gangbusters in this environment.


----------



## Dowdy (17 April 2011)

kincella said:


> I believe there are no problems with houses under 300k's, and 400 range...





That's where most of the problems are. All the first home buyers are all but out of the market so demand will decrease and so will prices.


----------



## cutz (17 April 2011)

Dowdy said:


> That's where most of the problems are. All the first home buyers are all but out of the market so demand will decrease and so will prices.




Agree, that's where the no saved deposit market resides (AKA first home buyers grant).

Strange how industry voices on the mainstream news suggest that now is the time to buy, I thought these things take years to play out.


----------



## BigAl (17 April 2011)

kincella said:


> the focus by most on these forums is about the inner city prices...which are ridiculously high...
> but they have taken their eyes off the rest of the market...no noise, the other people are just quietly going about their business of buying a house, or the 2nd house in upgrading...
> a whopping 60,000 people pa are heading for the outer suburbs....where housing is still affordable...
> I believe there are no problems with houses under 300k's, and 400 range...



With all due respect,

Affordable in whose eyes?  You are out of step with reality if you believe this.

Meanwhile in WA, a lot of press here on the weekend that the Retail sector is officially in Recession and things haven't been this bad for many, many years.


----------



## sptrawler (17 April 2011)

Well you property bulls, on the weekend I watched my first auction. The property was purchased 18months ago for $750k, the house was demolished and block cleared then subdivided. About 12months ago the 3 blocks were put on the market for 395k each.
At the peak that was somewhere near the price being achieved (apples for apples) they didn't sell. Well onto the auction last weekend, 30 or so people turned up, no starting bid at $250k.


----------



## sptrawler (17 April 2011)

BigAl said:


> With all due respect,
> 
> Affordable in whose eyes?  You are out of step with reality if you believe this.
> 
> Meanwhile in WA, a lot of press here on the weekend that the Retail sector is officially in Recession and things haven't been this bad for many, many years.




Your spot on BigAl, retail over here is sliding into a hole and property is following it. I don't mean to be alarmist but W.A being such an isolated place is a weather bell for the economy. I can tell you confidence is down and people are battening down the hatches.
Mineral boom or no mineral boom the shopaholics are on the wagon and one bit of bad news is going press the elevator "down" button. Bargain basement here we come, is my guess.
If property is 20 - 30% overvalued, then wages have to go up a lot or prices have to come down a lot. Heads or Tails?


----------



## TabJockey (18 April 2011)

sptrawler said:


> Well you property bulls, on the weekend I watched my first auction. The property was purchased 18months ago for $750k, the house was demolished and block cleared then subdivided. About 12months ago the 3 blocks were put on the market for 395k each.
> At the peak that was somewhere near the price being achieved (apples for apples) they didn't sell. Well onto the auction last weekend, 30 or so people turned up, no starting bid at $250k.




Interesting how much land in what suburb?


----------



## UBIQUITOUS (18 April 2011)

CamKawa said:


> What I find interesting is that Enzo reported the clearance last weekend at 62%. Notice how he revised that figure down now to 59% to give the impression that the property is picking up. REIV would have to produce the dodgiest stats out there.




Agreed. I don't recall the REIV ever revising clearance percentages DOWN after having received the 'missing' data.


----------



## sptrawler (18 April 2011)

TabJockey said:


> Interesting how much land in what suburb?




Approx 400sq/m .Riverton


----------



## kingcarmleo (18 April 2011)

Anyone have an updated list of average prices per state.


----------



## medicowallet (18 April 2011)

http://www.theage.com.au/business/p...am-still-rises-to-the-top-20110417-1djow.html

median price in melbourne drops 6% in march quarter.

Don't know what it means, just putting it up for people.

I wonder what people with low equity or recent purchases think of the property outlook at the moment.


----------



## CamKawa (18 April 2011)

Here we go.... land sales are down 40% but prices are up 4.1%. How does that work? Someone is playing funny buggers with the figures I think.

*Land sales fall to 10-year low*

A report on land sales shows the number of lots sold fell sharply in the December quarter to the lowest level in a decade.

The Housing Industry Association and RP Data Residential Land Report shows sales were down 40 per cent compared to the same time a year ago.

However land values accelerated in the quarter and the weighted average land value rose 4.1 per cent to $194,000.

For the 12 months to December land values rose 5.9 per cent.

The report says the figures indicate the housing construction sector will continue to struggle.


----------



## MR. (18 April 2011)

Hello, Just callin' in to read what's happening...... 




Geez.....Some very disappointing figures above. Hope the index isn't a leading indicator!







There's no real need for interest rates to come down.

Now how's that chant go again?

bye


----------



## tothemax6 (18 April 2011)

Glad this thread is going so strong - good for a read.
t6 awaits the housing downturn, but fears he will be waiting a long time.


----------



## moXJO (19 April 2011)

tothemax6 said:


> Glad this thread is going so strong - good for a read.
> t6 awaits the housing downturn, but fears he will be waiting a long time.




Another street record price in my area.
Yup wake me up when they start moving down.


----------



## medicowallet (19 April 2011)

moXJO said:


> Another street record price in my area.
> Yup wake me up when they start moving down.




Yes, of course, your street is "different"

The thing that protects property is that people are naive as to the value of their house.

ie you could assume that most houses in melbourne dropped in the last quarter, but most people would assume that their house went up or stayed flat.

The interesting thing is that 6 extra weeks have passed since that quarter, and I wonder what has happened to prices in that 6 weeks?

What about the next 6 weeks as investors ponder another potential 6% fall?

Have the people in the know started bailing out already?

What effect has the dollar, inflation in China, and lending standards there had on the market?

Why has Robots disappeared? had to take on extra shifts?

Has trainspotter sold out yet? Is he going to ride it out and destroy equity like I am?

Why have the inventories of sunshine and lollipops started to increase? can people not afford optional extras?

Why have I started to get e-mails from real estate agents I have not heard from in years?


----------



## cutz (19 April 2011)

moXJO said:


> Another street record price in my area.
> Yup wake me up when they start moving down.




This thing *may* take years to play out, there will always be exceptions because the market is so illiquid, i.e two irrational bidders can push up the price way beyond the mean.


----------



## trainspotter (19 April 2011)

TS is confident the property he has amassed will not take a big hit. Commercial tenants are locked down in long leases. Residentials are paying weeks in advance with a big bond. But I did weaken the other day and accepted a large offer on a resi block of land. Finance pre approved and settlement in 28 days etc etc. 

What does this mean? It means that there has been reams of prose on countless blogs and websites warning of impending doom.

You see, house prices only fall when people are forced to sell their homes. Otherwise, households choose to simply remain in their home and wait things out. Property investors are loath to realise their capital loss.

A true collapse in house prices would indeed require some large external shock - a doubling of unemployment or interest rates - to trigger the wave of forced home sales that it would take to provoke house price falls.

Read more: http://www.smh.com.au/opinion/polit...ice-phobias-20110322-1c559.html#ixzz1JvHdekdJ


----------



## medicowallet (19 April 2011)

trainspotter said:


> A true collapse in house prices would indeed require some large external shock - a doubling of unemployment or interest rates - to trigger the wave of forced home sales that it would take to provoke house price falls.
> 
> Read more: http://www.smh.com.au/opinion/polit...ice-phobias-20110322-1c559.html#ixzz1JvHdekdJ




To cause catastrophic falls, well maybe.

The market has been propped up by foreign $$$ and our dollar and events around the world may be causing this to dry up.

I still think stagnation or up to a 20% drop is possible, however over how long of a timeframe I do not know.

I just find it very interesting that 6% in 3 months can happen when some people say property can never fall... interesting indeed.


----------



## Aussiejeff (19 April 2011)

medicowallet said:


> To cause catastrophic falls, well maybe.
> 
> The market has been propped up by foreign $$$ and our dollar and events around the world may be causing this to dry up.
> 
> ...




Then again, wouldn't a paltry but grinding 20% drop over 20 years ultimately be "catastrophic" for home investors?

Even stagnation or 0% increase over 20 years would be horrendous for RE capital wealth accumulation after inflation applied? If China pulls back export growth and foreign investment over the long term to concentrate on their own internal consumer economy as suggested by many world boffins, this scenario *might* be possible?

Hmmm..


----------



## satanoperca (19 April 2011)

medicowallet said:


> To cause catastrophic falls, well maybe.
> 
> The market has been propped up by foreign $$$ and our dollar and events around the world may be causing this to dry up.
> 
> ...




You dont need IR's or unemployment to go up to see a drop in property just consumer sentiment to fall off a cliff will do it, which will then be followed by rising unemployment.

A 6% drop in a qtr will prick the ears up of many, if followed by a second quarter drop then confidence will start to take a beating. The belief the property only goes up will be busted. Maybe we need myth busters on the case.

Once average joe realises there lose making investment is not going to see any capital growth for several years then they will sell, along with everyone else.

Cheers


----------



## Glen48 (19 April 2011)

Why I’m Never Going to Own a Home Again
Mar. 21 2011 - 4:20 am | 87,268 views | 2 recommendations | 62 comments 
By JAMES ALTUCHER
Many people have said to me in the past month, “I’m going to buy a home.” Or, “What do you think of the idea of me buying a home?” I like the second batch of people. They are my friends and it seems like they are sincerely asking for my advice. And I’m going to give it to them. Whether they meant it or not.

I have some stories about owning a home. One of them is here: “What It Feels Like to be Rich” where I describe my complete path into utter depravity and insanity. The other one is still too personal. Its filled with about as much pain as I can fit onto a page. Oh, I have a third one also from when I was growing up. But I don’t want to upset anyone in my family so I’ll leave it out. Oh, I have a fourth story that I just forgot about until this very second. But enough about me. Lets get right to it.

There are many reasons to not buy a home: [By the way, I also put this in the category ofAdvice I want to tell my daughters, including my other article: 10 reasons not to send your kids to college.]

Financial:

A)     Cash Gone. You have to write a big fat check for a downpayment. “But its an investment,” you might say to me. Historically this isn’t true. Housing returned 0.4% per year from from 1890 to 2004. And that’s just housing prices. It forgets all the other stuff I’m going to mention below. Suffice to say, when you write that check, you’re never going to see that money again. Because even when you sell the house later you’re just going to take that money and put it into another downpayment. So if you buy a $400,000 home, just say goodbye to $100,000 that you worked hard for. You can put a little sign on the front lawn: “$100,000 R.I.P.”

B)      Closing costs. I forget what they were the last two times I bought a house. But it was abo

StarRemovePickunPick Recommend Buzz Up!RedditStumbleUponFacebookTwitterEmail this Previous Post: 
Why I’m not worried about $200 oil and you shouldn’t be either


----------



## cutz (19 April 2011)

Aussiejeff said:


> Then again, wouldn't a paltry but grinding 20% drop over 20 years ultimately be "catastrophic" for home investors?
> 
> Even stagnation or 0% increase over 20 years would be horrendous for RE capital wealth accumulation after inflation applied?




Agree, a point that's often missed,

Especially by the NG'd property seminar set.


----------



## nukz (19 April 2011)

Hey were is robots, you told me i wouldn't be here in a few months time. 

Still sipping latte's with a slightly increased number of for-sale signs in the area?


----------



## Dowdy (19 April 2011)

nukz said:


> Hey were is robots, you told me i wouldn't be here in a few months time.
> 
> Still sipping latte's with a slightly increased number of for-sale signs in the area?




He's downgraded to tea


----------



## Vicki (19 April 2011)

Did anybody see the front page of the Herald-sun last Saturday?
The reiv has finally admitted to falling clearance rates & home values.
to the the tune of $400 per week or some such?

Rgs.
     Vicki


----------



## robots (19 April 2011)

hello,

gidday brothers, no extra shifts for me MW

so after the greatest financial shock the world has seen since 1929 and house prices have dropped a HUGE 6% WOW

and thats after a run of around 20% in 2010! hehehehehehehehehehehehehehe

what suburb you own your property medicowallet?

oh well

thankyou
professor robots


----------



## robots (19 April 2011)

hello,

and the government will bring in some new grants or drop interest rates as the RE sector is a contributor to the economy, 

after all, farmers, car manufacturers, textile manufacturers, importers and exporters all get handouts so RE will collect (as they should)

share the handouts around, thats alright brothers?

thankyou
professor robots


----------



## Vicki (19 April 2011)

Hi Robots,
Good to read from you again,you're good value..[I've been away to long]

I think the greatest financial shock, is yet to come...& pos. very soon!

rgs.
    Vicki


----------



## nukz (19 April 2011)

robots said:


> hello,
> 
> and the government will bring in some new grants or drop interest rates as the RE sector is a contributor to the economy,
> 
> ...




Problem is we cant even afford to repair QLD after floods without a levy we sorta used all our money when giving out 1000 to everybody lol


----------



## nukz (19 April 2011)

robots said:


> hello,
> 
> gidday brothers, no extra shifts for me MW
> 
> ...




Does this mean one of the forums biggest property bulls has acknowledged declines in property 

My, things have changed 

Sipping my latte's


----------



## robots (19 April 2011)

hello,

they went down the other year as well brother, you forgot that one

and stop assuming anybody who doesnt agree with Keen and his followers is a property bull, NG specuvestor, slumlord, seminar set

say it again, i would hate to be 55+ and not own the roof above your head, look at poor old Explod who has been staying in sons garage over in werribee

oh well

thankyou
professor robots


----------



## Glen48 (19 April 2011)

Here is the future for years to come Robots:

Don't Let This Be You: "Trash Out" Housing Foreclosures (video)



http://www.naturalnews.com/News_000408_foreclosures_housing_bubble_real_estate.html#ixzz1Jxx42vNK


----------



## robots (19 April 2011)

hello,

i hope the mods hit the delete button appropriately

thankyou
professor robots


----------



## explod (19 April 2011)

robots said:


> hello,
> 
> say it again, i would hate to be 55+ and not own the roof above your head, look at poor old Explod who has been staying in sons garage over in werribee
> 
> ...




Wonderful for an ole fella to be remembered at this most interesting time in history.

Always welcome down here at Mount Martha and have a very good back shed for you too *C*onfessor.

Bet your glad I got you onto those 1966 silver rounds, up 35% since then.

cheers explod


----------



## Vicki (19 April 2011)

I used to own 105 somerset drv.


----------



## robots (19 April 2011)

hello,

yes good pick Explod,

i am just glad i got people into property back in 2005+ , those in are up many many many $$$$$$$

is that okay? like you can make money on silver which produces nothing for the economy, absolutely nothing

but property, no no no no no no, socialist party says NO

thankyou
professor robots


----------



## explod (19 April 2011)

Vicki said:


> I used to own 105 somerset drv.




Up at least 30% hear the last few years.  Mount Martha they say is bullet proof.


----------



## robots (19 April 2011)

hello,

can you feel the euphoria running through the body brothers, robots in the house

the terminals getting flicked on across the stratosphere is huge

thankyou
professor robots


----------



## nukz (19 April 2011)

robots said:


> hello,
> 
> yes good pick Explod,
> 
> ...




Yea your right, mining makes up none of our economy.. 

Have a look at silvers industrial uses there are quite allot.


----------



## satanoperca (19 April 2011)

robots said:


> so after the greatest financial shock the world has seen since 1929 and house prices have dropped a HUGE 6% WOW




Yes WOW a 6% fall in just three months, with inventories rising rapidly. 

Don't count your chickens just yet, GFC 2 coming to a town near you soon.

But do agree with you 100%, need a roof over your head for retirement, but timing is everything.

Cheers


----------



## enigmatic (19 April 2011)

Although i think the market will maintain a stable or declining nature over the next 2years while wages start catching up again and rent starts becoming increasingly more expensive.

the most important thing is don't over extend yourself in the current market.

I personally think its a great time to be looking. I have a feeling if things don't get better the RBA will have to drop interest rates as they over did it. once that happens the average home owner who is on the edge will have far more confidence they can last it out, wages are definitely on the rise especially the mining industry, people are in save mode right now until they are confident well funded, so they can make there next investment so yes the demand is soft.

Less buildings getting built and lower rental vacancy also mean one things rents are going to rise and if they rise yields increase, and increased yields mean it will not be a great option to sell. Once this happens and people have more cash well you can put two and two together.. 

Projects are just starting up I guess I'm from Perth so this is going to impact property prices and especially rents soon.

Any way go out and find a bargin and make the seller work for his money. 
Even though property hasn't dropped much I think if you try you can get 10-15% of the price of those that are over committed


----------



## nukz (19 April 2011)

enigmatic said:


> Although i think the market will maintain a stable or declining nature over the next 2years while wages start catching up again and rent starts becoming increasingly more expensive.
> 
> the most important thing is don't over extend yourself in the current market.
> 
> ...




You actually have put up a better argument than even Enzo could from REIV, that's quite a achievement


----------



## enigmatic (19 April 2011)

I'm not sure if I'm suppose to take offence or take it as a compliment but i assume the first


----------



## BigAl (19 April 2011)

robots said:


> hello,
> 
> and the government will bring in some new grants or drop interest rates as the RE sector is a contributor to the economy,
> 
> ...



Good to see you are still alive, I thought maybe your Internet Connection had been cut-off while you are struggling with the Cost of Living and higher Mortgage repayments.

I hear what you are saying on the handouts, but this isn't going to make an iota of a difference to the First Homeowners who gut sucked into this Ponzi Scheme over the last 2 years, Joe Average that can't make ends meet, and that's with Interest Rates so low.  Trying telling Joe Average that his area has gone up by 20% a year up until 2008, when he bought in 08 or 09.  Some fool that just bought a property for $500K and that has dropped 6%+ in the last few months, has just lost around $50K+ easily.  That's a lot of money for Average Joe.

Good to hear you are thinking positively about the Govt giving more handouts to the Real Estate Shonk Market.  Just a shame the Govt is broke, some sectors of Business are broke, dwinding house sales and dropping house prices = less take for the Govt.

I guess JuLIAR thought the great Carbon Tax Ripoff would help take money away and give back to some sectors of the community, maybe prop up the Real Estate Ponzi Market?  But that's pretty much dead in the water.

So, where is all this Govnut (our money) coming from to help those struggling families  out of their Real Estate Nightmare?  Or put more NINJA's into a depressed market?


----------



## Glen48 (20 April 2011)

TRY this one:

http://www.youtube.com/watch?v=6q1PyJNp0FI&feature=related
Just the job for Robots.


----------



## Aussiejeff (20 April 2011)

BigAl said:


> So, where is all this Govnut (our money) coming from to help those struggling families  out of their Real Estate Nightmare?  Or put more NINJA's into a depressed market?




No wuckers! We will just follow Brave Big Ben Berwankee'$ scheme and simply PRINT MORE MOOLAH.

Mountains of luverly ca$h for Mr Market, Confe$$or & all. No need to pay the piper. The piper has been banished to La-La land.

Enjoy...

aj


----------



## medicowallet (20 April 2011)

robots said:


> what suburb you own your property medicowallet?
> 
> oh well
> 
> ...




Hi bots, great to see you around again.

I don't own property in Victoria, only Queensland and NSW.

So I don't have anything in Melbourne, if that is what you were asking.


----------



## moXJO (20 April 2011)

medicowallet said:


> Hi bots, great to see you around again.
> 
> I don't own property in Victoria, only Queensland and NSW.
> 
> So I don't have anything in Melbourne, if that is what you were asking.




Are you selling that before the crash?


----------



## medicowallet (20 April 2011)

moXJO said:


> Are you selling that before the crash?




No, I will ride it out, I own the properties (also own some from way back)

I have a philosophy of never selling anything (well rarely anyway).

Sure I make mistakes (MFS), but I also have made gains when I thought I would make losses.

Unfortunately, there are a lot of highly geared people where a 6% decline translates to 10-20% +

If it also happens again next quarter, then who knows what position they will be in.


----------



## Dowdy (20 April 2011)

> Originally Posted by robots
> hello,
> 
> gidday brothers, no extra shifts for me MW
> ...





Not too good on maths are we?

6% per quarter is 24%pa


----------



## medicowallet (20 April 2011)

Dowdy said:


> Not too good on maths are we?
> 
> 6% per quarter is 24%pa




more like 22% 

but yes, the sentiment is still really ordinary.


----------



## schnootle (20 April 2011)

medicowallet said:


> more like 22%
> 
> but yes, the sentiment is still really ordinary.




Reminds me of this cartoon
http://xkcd.com/605/


----------



## trainspotter (20 April 2011)

Dowdy said:


> Not too good on maths are we?
> 
> 6% per quarter is 24%pa




Ummmmmm are you prophesying that this will extrapolate over this period of time?



> Louis Christopher of SQM Research, who is predicting most capital cities will see prices fall by at least 5% during 2011, says the REIV figures – which are based on raw price data, unadjusted for factors such as more sales at the high or low end of the market – can be skewed by big price movements in particular suburbs.




http://www.smartcompany.com.au/prop...urne-house-prices-but-say-pain-is-coming.html


----------



## Quincy (21 April 2011)

> CHINESE buyers have deserted billionaire Harry Triguboff's Meriton Apartments, with sales to Chinese owners and investors dropping from 30 a week to 10 a week over the past month.






> *"Our (real estate) market is the Chinese market, just like coal and iron ore,"* Mr Triguboff said.






> Mr Triguboff, whose Meriton Apartments builds more than 1000 units a year, said Chinese owners and investors had accounted for about 75 per cent of Meriton sales for the last two to three years.
> 
> But in the past month, numbers had fallen steeply.
> 
> "Real estate is already dying. You can have all the planning reforms you want, but this won't help if there are no buyers," Mr Triguboff told The Australian.






> *"The Chinese, they are the only buyers I have. They are the only buyers anybody has,"* he said.




http://www.theaustralian.com.au/bus...riton-apartments/story-e6frg9gx-1226042443912


I think Harry Triguboff's comments go a fair way to explaining what is currently happening to Australian property (as a generalisation read as Sydney / Melbourne).

IMO, it's all about the Chinese who are coming to Sydney / Melbourne in huge numbers. The vast majority of property for sale in my area (north western Sydney) is being purchased by the ever increasing  numbers of Chinese moving into this area.


----------



## FxTrader (21 April 2011)

Quincy said:


> IMO, it's all about the Chinese who are coming to Sydney / Melbourne in huge numbers. The vast majority of property for sale in my area (north western Sydney) is being purchased by the ever increasing  numbers of Chinese moving into this area.




Yes, the article below indicates that Chinese buyers represented over 50% of buyers in some of the new developments here in Melbourne.  I wonder how much of an impact there will be when the Chinese buyer flood recedes, significant I suspect.

http://zincip.biz/2011/02/07/overseas-buyers-snapping-up-melbourne-property/

http://zincip.biz/2011/02/11/asian-buyers-snap-up-local-sites/


----------



## maffu (21 April 2011)

Quincy said:


> http://www.theaustralian.com.au/bus...riton-apartments/story-e6frg9gx-1226042443912
> 
> 
> I think Harry Triguboff's comments go a fair way to explaining what is currently happening to Australian property (as a generalisation read as Sydney / Melbourne).
> ...




I came into this thread to post the same article.
I found it very interesting personally, I had heard people mention that it was the international buyers who were bumping up our real estate prices, but I was a bit skeptical. Never realized that 75% of our buyers were Chinese.


----------



## Bill M (22 April 2011)

maffu said:


> Never realized that 75% of our buyers were Chinese.




It's not every suburb of Sydney and not everywhere. Where I am on The Central Coast it's 99% Aussie buyers and property is still holding firm up here.


----------



## nukz (22 April 2011)

maffu said:


> I came into this thread to post the same article.
> I found it very interesting personally, I had heard people mention that it was the international buyers who were bumping up our real estate prices, but I was a bit skeptical. Never realized that 75% of our buyers were Chinese.




In Melbourne the eastern suburbs all the way to Nunawadding are completely dominated by Chinese now. 

In 08/09 most auctions in Balwyn were being held in Mandarin... go figure.

But the last 12 months has been a totally different story you won't see many people at open for inspections these days and if you see Chinese they are not in this huge rush for property's like they were years ago. 

There was a story in the news about 2 years ago about a Chinese guy who had purchased 200 property's in Melbourne's eastern suburbs.


----------



## trainspotter (23 April 2011)

nukz said:


> There was a story in the news about 2 years ago about a Chinese guy who had purchased 200 property's in Melbourne's eastern suburbs.




*BOY* is he gonna cop one for the team when this massive Ponzi scheme comes crumbling down !

Hey wait a minute ???? Why would he buy 200 properties in the first place? Dirty money to launder or did he believe he is gonna make money ?

200 properties multiply by average price of let's say $400,000 = EIGHTY MILLION DOLLARS !?!?!?!?!?!!! Must have balls of steel to roll that much in one asset class in such a tight demographic. Or did he have some inside knowledge?

Any follow up to see how he is going I wonder?


----------



## FxTrader (23 April 2011)

trainspotter said:


> Hey wait a minute ???? Why would he buy 200 properties in the first place? Dirty money to launder or did he believe he is gonna make money?




Probably make money, but then that's what most property investors believe isn't it?  The past is the future and property is a sure thing, but only in Australia (except now for most of Queensland, West Australia, and the NT with Melbourne and Sydney hoping to go against the tide).



> 200 properties multiply by average price of let's say $400,000 = EIGHTY MILLION DOLLARS !?!?!?!?!?!!! Must have balls of steel to roll that much in one asset class in such a tight demographic. Or did he have some inside knowledge?




If true, what type of properties did he buy, in what suburbs and at what price?  Did he use a buyers agent and/or just focus on a few expensive suburbs? We just don't know but if he was smart and clairvoyant he sold them all 6 months ago when the market in Melbourne peaked.

This story highlights the problem, foreign buyers (primarily Chinese) proping up the bubble and contributing to the afforability crisis courtesy of relaxed foreign ownership laws.  Who does this benefit, the banks perhaps?  Certainly not the average Australian home buyer.


----------



## TabJockey (23 April 2011)

trainspotter said:


> *BOY* is he gonna cop one for the team when this massive Ponzi scheme comes crumbling down !
> 
> Hey wait a minute ???? Why would he buy 200 properties in the first place? Dirty money to launder or did he believe he is gonna make money ?
> 
> ...




He had 200 kids, and they all needed a place to live as they studied in Australia


----------



## Quincy (26 April 2011)

trainspotter said:


> *BOY* is he gonna cop one for the team when this massive Ponzi scheme comes crumbling down !
> 
> Hey wait a minute ???? Why would he buy 200 properties in the first place? Dirty money to launder or did he believe he is gonna make money ?
> 
> ...







TabJockey said:


> He had 200 kids, and they all needed a place to live as they studied in Australia





If this purchase happened around 2 years ago (as stated by "nukz") , then there is a fair chance that this bulk purchase would most likely have been by a "front man" - a dual citizen (Chinese man who has obtained P.R. / Australian citizenship) : -   




> *Backflip on foreign property ownership*
> 
> The Rudd Government has today (24 April, 2010) announced a crackdown on foreign property investors reversing many of the changes it made hastily in 2008 under the umbrella of “Administrative Changes” and imposing tougher penalties on anyone breaking these laws.
> 
> ...



My guess would also be that none of the money used to make this bulk purchase would have been sourced here in Australia. The purchase would most likely have been made on behalf of a consortium of 200 x Chinese purchasers, each stumping up the money individually and allowing the "Australian citizen" to purchase in his name on their behalf. I know that this activity goes on in north western Sydney (albeit on a much lesser scale - one or two properties only). This way of purchasing Australian property still flies under the FIRB radar.

The "Chinese factor" has definitely had a big influence on property prices in certain parts of Sydney (those that I know about) and no doubt certain parts of Melbourne as well. As the Chinese are retreating somewhat now from the "highs" of the last few years (see above article for what I believe to be one of the reasons), property prices in Sydney / Melbourne (again certain parts) are IMO reflecting same.




Bill M said:


> It's not every suburb of Sydney and not everywhere. Where I am on The Central Coast it's 99% Aussie buyers and property is still holding firm up here.




As a matter of interest, would you be able to guess how many of the Aussie buyers on The Central Coast are coming from Sydney ?  eg. some retirees (looking to relocate to a quieter life - maybe near the beach) and some other sellers (looking for an investment property) who have been able to get the high prices in recent times by selling their Sydney home to the cashed up Chinese.


----------



## Quincy (26 April 2011)

.
I haven't seen details about this posted before - see below.

Maybe food for thought, given that the Federal Government is insisting that its May 10, 2011 budget will be its toughest yet.




> *Negative Gearing Rort added to Endangered Species List*
> 
> Thursday, April 21st, 2011
> 
> ...


----------



## Bill M (26 April 2011)

Quincy said:


> As a matter of interest, would you be able to guess how many of the Aussie buyers on The Central Coast are coming from Sydney ?  eg. some retirees (looking to relocate to a quieter life - maybe near the beach) and some other sellers (looking for an investment property) who have been able to get the high prices in recent times by selling their Sydney home to the cashed up Chinese.



I walk around a bit and talk to many neighbours, I reckon at a rough guess about 50 to 60% have come from Sydney, not many claim to have been bought out by the Chinese. I'm from the Northern Beaches, most of the people buying in that area are local Aussies who have lived there a long time.


----------



## DB008 (26 April 2011)

If the Government axes Negative Gearing, where are the investors going to come from to keep up with demand to build properties. I think that Australia needs 150,000 new homes built each year. We are building around ~130,000 each year (short 20,000) and l would say that a fair chunk of them are investors. Axe Negative Gearing, that number would drop and prices would rise even further. 
I can't see the government axing negative gearing myself. 



> *Housing shortage to drive up rent in 2011*
> 
> A lack of supply in the housing market is not only pushing property prices up, but rents too, and new research from RP Data says the situation will worsen over the next 12 months.
> 
> ...


----------



## cutz (26 April 2011)

DB008 said:


> If the Government axes Negative Gearing, where are the investors going to come from to keep up with demand to build properties.




It's really not that clear cut when making predictions if NG were to be axed.

An alternate scenario would be an axing could cause a rush for the exits as many run into cash flow problems, renters may turn into buyers.

The possibilities are endless.


----------



## white_goodman (26 April 2011)

DB008 said:


> If the Government axes Negative Gearing, where are the investors going to come from to keep up with demand to build properties. I think that Australia needs 150,000 new homes built each year. We are building around ~130,000 each year (short 20,000) and l would say that a fair chunk of them are investors. Axe Negative Gearing, that number would drop and prices would rise even further.
> I can't see the government axing negative gearing myself.




is there really a housing shortage though?

underlying demand is a fickle thing, especially considering house sizes (bedrooms, sqm etc) have only gotten larger and people per household has reduced. California were reporting a grossly under supplied market in 2006, its amazing how a downturn in economic activity can make people rethink their living situation and turn a market into under supplied to over supply (everyone moved back home and increased people per household)...

so dont bet the house(lol) on perceived pent up demand


----------



## explod (26 April 2011)

white_goodman said:


> is there really a housing shortage though?
> 
> underlying demand is a fickle thing, especially considering house sizes (bedrooms, sqm etc) have only gotten larger and people per household has reduced. California were reporting a grossly under supplied market in 2006, its amazing how a downturn in economic activity can make people rethink their living situation and turn a market into under supplied to over supply (everyone moved back home and increased people per household)...
> 
> so dont bet the house(lol) on perceived pent up demand




Yep, and pleased to say that my ole pal Robots is onto that too.  He's suggesting I move into a shed in my Son's backyard to make ends meet.

Interesting times we live in.


----------



## medicowallet (26 April 2011)

DB008 said:


> If the Government axes Negative Gearing, where are the investors going to come from to keep up with demand to build properties. I think that Australia needs 150,000 new homes built each year. We are building around ~130,000 each year (short 20,000) and l would say that a fair chunk of them are investors. Axe Negative Gearing, that number would drop and prices would rise even further.
> I can't see the government axing negative gearing myself.




Prices drop and demand recovers.

An alternate to your question is:

"where are the investors going to come from with housing in a bubble?"



I think it is a good thing to see builder, developer, sub-contractor, real estate and bank margins fall.

Because that is all the FHVB and housing bubble have been supporting, as clearly, 20000 shortage means that it hasn't been keeping supply up with demand.


----------



## moXJO (26 April 2011)

white_goodman said:


> is there really a housing shortage though?
> 
> underlying demand is a fickle thing, especially considering house sizes (bedrooms, sqm etc) have only gotten larger and people per household has reduced. California were reporting a grossly under supplied market in 2006, its amazing how a downturn in economic activity can make people rethink their living situation and turn a market into under supplied to over supply (everyone moved back home and increased people per household)...
> 
> so dont bet the house(lol) on perceived pent up demand




Well something’s going on in NSW.
I've put a few bids on properties over the last few months and have been well outbid on 6. In fact a lot more then I would have been wiling to pay.
In construction there are guys coming in 5-9k over the top of my quotes instead of the expected undercutting. I've been flat out (commercial work has dried up though). 
People are still buying here and they are buying absolute $hiteholes for top price. No sign of slow down.

If they are talking about axing negative gearing, then no doubt they are seeing house prices staying high well into the future without some kind of intervention.
While I think labor will run us into the ground with workplace laws and general mismanagement soon enough, I'm sure they can truely stuff the housing market by putting their grubby finger in that pie prematurely as well.


----------



## MACCA350 (26 April 2011)

moXJO said:


> I'm sure they can truely stuff the housing market by putting their grubby finger in that pie prematurely as well.



Don't forget the grubby little fingers of investors in the pie of the tax payer.

Cheers


----------



## moXJO (26 April 2011)

MACCA350 said:


> Don't forget the grubby little fingers of investors in the pie of the tax payer.
> 
> Cheers




You mean like all the pork barrelling and middleclass welfare as well. Personally I could care less about NG, there is greater taxation reform measures I'm sure need attention. And I doubt government wants to go back to the public housing debacle it brought on itself last time.


----------



## Bill M (26 April 2011)

MACCA350 said:


> Don't forget the grubby little fingers of investors in the pie of the tax payer.
> 
> Cheers




Oh, you mean like all those people who borrow for shares? Ban it on investment housing then ban in on everything else (margin loans included), the economy will go backwards.


----------



## MACCA350 (26 April 2011)

Bill M said:


> Oh, you mean like all those people who borrow for shares? Ban it on investment housing then ban in on everything else (margin loans included), the economy will go backwards.



You can't live in a share

Cheers


----------



## medicowallet (26 April 2011)

MACCA350 said:


> You can't live in a share
> 
> Cheers




Your house doesn't employ you or anyone, or generate revenue.


----------



## Bill M (26 April 2011)

MACCA350 said:


> You can't live in a share
> 
> Cheers




As I said* INVESTMENT *housing and *INVESTMENT* shares both right off the interest from the loans against the income they derive. If you want to cut one you have to cut the other. All investments are just that, investments, and should be treated the same tax wise.


----------



## moXJO (26 April 2011)

medicowallet said:


> Your house doesn't employ you or anyone, or generate revenue.




council rates, renovations, realestate agents, pest/building inspectors, bank fees, and a host of taxes, its keeping someone employed and churning money to local and state coffers.


----------



## explod (26 April 2011)

Bill M said:


> Oh, you mean like all those people who borrow for shares? Ban it on investment housing then ban in on everything else (margin loans included), the economy will go backwards.




The economy once it became used to it would not go backwards at all.  The banks and their shareholders may not like it but sure there would be ways to cope with that.

Without large mortgages most pople would find themselves better off in the longer term.

Younger ones would put off marriages and children till they could afford it so we may even see some proper stabalisation of population to the betterment of the planet.  (less baby bonus against taxpayers too)

However I just floated back from the last post to answer this one, which took my eye [/B]*but none of them relate to the direction of property prices*.[/B] , which is what I was orginally trying to find.

If you want to argue the merits of housing as an investment vehicle then start a thread on it.


----------



## robots (26 April 2011)

Hello,

yeah you tell them Explod, just like the old days in the uniform brother

MoXjo, yeah classic from MW and others who believe property generates nothing! just amazing, but i reckon he/her a chameleon as his/her mantra is straight of GPHC, Keen.com.NFI.au 

NG is just another excuse put out from the likes of GetUp, Keen, Minnick, GPHC etc because the reality is they just truly cant afford RE because most are socialist bludgers

thankyou
professor robots


----------



## explod (26 April 2011)

robots said:


> Hello,
> 
> yeah you tell them Explod, just like the old days in the uniform brother
> 
> ...




Great to get your response there Confessor and love to hear your story too. *BUT*

getting back to topic *what about the direction of property prices*


----------



## robots (26 April 2011)

hello,

wouldnt have a clue man, but make sure you own something cause wouldnt want to be in a neighbours garage

oh yeah, let us know how silver going brother, hehehehehehehe

thankyou
professor robots


----------



## cutz (26 April 2011)

Bill M said:


> Ban it on investment housing then ban in on everything else




Agree,

Ban the whole stinking lot, the sooner we all pay our fair share (of tax) the better.

Actually a good middle ground may be to allow deductions only on the income generated by the investment in question.


----------



## explod (26 April 2011)

All discussions this evening have nothing to do with the direction of property prices.

If it is not going to stay on topic then the Mods need to get on it and if that fails the thread should be closed down.  

I would like to know where property prices are headed because the Confessor is worried that I will not have a garage to live in.

Silver up over 200% for the year botty, so all *very* good man


----------



## robots (26 April 2011)

hello,

the same Tax laws/rules apply to everybody, if you dont like NG on investments then dont borrow to invest, do something else with your life

once again its the minority groups trying to get their own way, plenty of affordable homes around everywhere,

i cant understand, why didnt I grow up in Toorak or South Yarra, like 40yrs ago anybody could of bought a joint in that place right?

thankyou
professor robots


----------



## robots (26 April 2011)

explod said:


> All discussions this evening have nothing to do with the direction of property prices.
> 
> If it is not going to stay on topic then the Mods need to get on it and if that fails the thread should be closed down.
> 
> ...




Hello,

yeah i agree Explod, plenty need to be deleted i reckon brother

me and a couple of others probably the only ones on track day after day after day

oh well

thankyou
professor robots


----------



## explod (26 April 2011)

robots said:


> hello,
> 
> the same Tax laws/rules apply to everybody, if you dont like NG on investments then dont borrow to invest, do something else with your life
> 
> ...




Yes hindsighty is a great thing.  Have a mate who brought a place at Armadale in Melbourne, just next to Toorak too, lovely old Victorian/federation, blue stone footings, you know the look, for $145,000 in 1976, today 3 million.  But its just his home and its great.

So price does not matter.   Do we perhaps need to take the investment bit right out of property.  The direction of prices may alter a bit then.  Nahh, too leftie for Botty.  

Matter of fact a nice brick barn out the back where I could stay at a pinch Botty.  Oops..., after a few reds I would trip into the swimming pool.

Smack me Mod, off topic nbow as well.  Blame ole Conf's..


----------



## medicowallet (26 April 2011)

moXJO said:


> council rates, renovations, realestate agents, pest/building inspectors, bank fees, and a host of taxes, its keeping someone employed and churning money to local and state coffers.




Churning of internal money, none coming in from overseas.  

Waste of our mining boom if there ever was one.


See what the argument is, is whether you are better off having a house "valued" at $600000 which does all what you say

Or one "valued" at $300000 which STILL does what you say

and $300000 invested in companies/infrastructure which makes more money for AUSTRALIA, and then, all of us.

Scrap negative gearing on everything.


----------



## medicowallet (26 April 2011)

robots said:


> Hello,
> 
> yeah i agree Explod, plenty need to be deleted i reckon brother
> 
> ...




On that note Robots.


What was the median increase in prices in Melbourne in the last quarter?

Thanks
Medicowallet

Sunshine, rainbows, periwinkles and bubbles.


----------



## robots (26 April 2011)

medicowallet said:


> Churning of internal money, none coming in from overseas.
> 
> Waste of our mining boom if there ever was one.
> 
> ...




hello,

rubbish, the mining boom and these companies/infrastructure are infact costing people in the states of SA, VIC, NSW and Tasmania

the only benefit most get is via there super and with diversification the benefit is very very low

get on board the truth brother, yeah i own property in Qld and NSW

thankyou
professor robots


----------



## Mr Z (26 April 2011)

robots said:


> rubbish, the mining boom and these companies/infrastructure are infact costing people in the states of SA, VIC, NSW and Tasmania




Just spectacular.....!


----------



## medicowallet (26 April 2011)

robots said:


> hello,
> 
> rubbish, the mining boom and these companies/infrastructure are infact costing people in the states of SA, VIC, NSW and Tasmania
> 
> ...




All the more reason for investments to be made in those states, as opposed to locking it up in houses.

So you are saying that you prefer the money to be locked up in housing than to be invested in industries in SA, NSW, VIC and TAS?

Sounds like someone doesn't understand that property prices here are in a bubble.

My property is not negatively geared, so it doesn't bother me.


----------



## MACCA350 (26 April 2011)

Bill M said:


> As I said* INVESTMENT *housing and *INVESTMENT* shares both right off the interest from the loans against the income they derive. If you want to cut one you have to cut the other. All investments are just that, investments, and should be treated the same tax wise.



And there's where we differ, you see it as it has become; a speculative investment, I see it as it has always been; a basic human need.

As far as I'm concerned losses in housing should be reduced from housing income either in that year or in the years to follow not from other income streams(ie salary). I am taxed as an "investor" not a "trader". Why, I gave up the ability to deduct losses against other income streams for the benefits of the 12 month 50% CGT reduction. Afaik housing has the benefit of both worlds.

So you're suggestion of "both right off the interest from the loans against the income *they* derive" is not quite accurate, if it were I wouldn't have an issue.

Cheers


----------



## nunthewiser (26 April 2011)

> Tens of thousands of Perth homeowners who bought property at the top of the boom before the global financial crisis are facing big losses as the market goes through its worst period in almost two decades.
> 
> Special analysis of median house and land prices across the city reveals that people who bought at the peak of the market in late 2007 and early 2008 hoping to see their investment grow now hold "negative equity".
> 
> ...




http://au.news.yahoo.com/thewest/a/-/latest/9252224/owners-feel-the-pinch-as-prices-stall/

sunshine and lollipops homies


----------



## moXJO (27 April 2011)

Government intervention seems inevitable. Seems to have come a bit faster then I anticipated, opinion has changed and I believe we will now get the national house price drop everyone has been waiting for. Buyers (investors) will be holding off until there is confirmation of what the government intends to do. No doubt home buyers will wait to see if they can buy in at lower prices. And those with overleveraged portfolios would be looking to lighten their holdings. I do worry about those people that bought $500k+ homes two new cars, boat, holidays every year etc and have absolutely no savings at this point.  
My main question is: what will government do, how long till we actually get details (the longer it takes to release the worse for the property market), and what will be the flow on effects in a skitterish economy.

Also people supporting wiping negative gearing off everything, does that include business that claim expenses from cost of doing business?

It's like the rise of the socialist investor mindset lately.


----------



## c-unit (27 April 2011)

moXJO said:


> Government intervention seems inevitable. Seems to have come a bit faster then I anticipated, opinion has changed and I believe we will now get the national house price drop everyone has been waiting for. Buyers (investors) will be holding off until there is confirmation of what the government intends to do. No doubt home buyers will wait to see if they can buy in at lower prices. And those with overleveraged portfolios would be looking to lighten their holdings. I do worry about those people that bought $500k+ homes two new cars, boat, holidays every year etc and have absolutely no savings at this point.
> My main question is: what will government do, how long till we actually get details (the longer it takes to release the worse for the property market), and what will be the flow on effects in a skitterish economy.
> 
> Also people supporting wiping negative gearing off everything, does that include business that claim expenses from cost of doing business?
> ...




Why does the government need to intervene? 

You act like property price falls are a bad thing. It is a great thing. Those that bought $500k houses, two cars, and have no savings, made their bed and now need to lie in it. 

You mention the rise of the socialist investor mindset. Government intervention is itself a socialisation mechanism. You seem to be advocating the socialisation of losses from excessive consumption and debt build up?


----------



## Glen48 (27 April 2011)

The feds will do the same as USA prop up house prices and the banks because they are more important than any other institution and use you super money as well, claiming the feds are looking after your retirement, sucker's will see this as a positive and vote for them in the next election until we have a tanking of house prices the fed's can't stop.. This will take years to play out house prices in USA are falling faster  than ever before.
What happens in USA happens here about 5 yrs later.


----------



## moXJO (27 April 2011)

c-unit said:


> Why does the government need to intervene?
> 
> You act like property price falls are a bad thing. It is a great thing. Those that bought $500k houses, two cars, and have no savings, made their bed and now need to lie in it.
> 
> You mention the rise of the socialist investor mindset. Government intervention is itself a socialisation mechanism. You seem to be advocating the socialisation of losses from excessive consumption and debt build up?




The government doesn't need to intervene that's my point, but looks like it will anyway. 
I'm all for price drops but let the market do its thing. Everyone on here seemed to be harping on house prices were dropping anyway. 
I'm also a little worried about the rest of the economy if everyone suddenly has to take a loss or are underwater on loans. I would have thought we were already having an increase in savings and a lowering of debt at the moment. I wouldn't mind more detail from government announcements not extended uncertainty like the NBN or Carbon Tax.
I wouldn't trust this government to organize flies on $hit, so the less government tinkering the better. But I should wait on the details before getting ahead of myself.


----------



## DB008 (27 April 2011)

I think that a fair number of people are also forgetting that in the good old US-of-A, your PPOR can be NG. Not here, only investment properties which make a loss can be NG. I think this makes our real estate markets slightly different.

DB80


----------



## satanoperca (27 April 2011)

Of cause our market is different in ways to the US but the same fundamental applies that causes price rises :

Availability and cost of credit.

And without doubt the govnuts will intervene if property drops, they have to as property is correlated to the health of the economy and unemployment. If property drops so does the economy and up goes unemployment. 

Cheers


----------



## drsmith (27 April 2011)

The monster is shaking its cage.

http://www.theaustralian.com.au/bus...re-than-expected/story-e6frg916-1226045534262


----------



## tech/a (27 April 2011)

DB008 said:


> I think that a fair number of people are also forgetting that in the good old US-of-A, your PPOR can be NG. Not here, only investment properties which make a loss can be NG. I think this makes our real estate markets slightly different.
> 
> DB80




????
Just about every new home owner begins negatively geared.
Over time most IP's become positively geared.
In the US you pay capital gains on your PPOR and you can claim tax deductions on interest.
You can also give the keys back and walk away.

This constant comparison is as futile as the Property thread itself.
Fear is the driver of most comments here.
Few are actively involved and those that are arent frozen by fear or blinkered by optimism.
They handle the situation/s as they develop


----------



## c-unit (27 April 2011)

moXJO said:


> The government doesn't need to intervene that's my point, but looks like it will anyway.
> I'm all for price drops but let the market do its thing. Everyone on here seemed to be harping on house prices were dropping anyway.
> I'm also a little worried about the rest of the economy if everyone suddenly has to take a loss or are underwater on loans. I would have thought we were already having an increase in savings and a lowering of debt at the moment. I wouldn't mind more detail from government announcements not extended uncertainty like the NBN or Carbon Tax.
> I wouldn't trust this government to organize flies on $hit, so the less government tinkering the better. But I should wait on the details before getting ahead of myself.




Ah I see, apologies I misread your post. Agreed about the rest of the economy. We are struggling badly. Already in recession (in my opinion). 

Not sure they government will be able to intervene in housing even if they wanted to. They have backed themselves into a corner with their talk of surpluses and budget cuts. Not sure they will be able to fund another increase in the FHOG. 

The GFC recession is still looming on Australia. Government stimulus essentially delayed the inevitable or kicked the can down the road for another 2 years. But we still have the same recession-inducing factors at play two years later. Unsustainable debt levels, dwindling productivity, affordability concerns, artificially high asset prices etc etc.


----------



## tothemax6 (27 April 2011)

c-unit said:


> Why does the government need to intervene?
> You act like property price falls are a bad thing. It is a great thing. Those that bought $500k houses, two cars, and have no savings, made their bed and now need to lie in it.



Damn straight.

There are crowds of people lining up, waiting for house prices to be affordable so they can finally commit to buying a home. The government should be releasing as much land for housing development as they possibly can, to at least balance out the crowding malais they are creating with their insane immigration policy. 

I hope house prices plummet, I shall be the first at the auctions.


----------



## IFocus (27 April 2011)

nunthewiser said:


> http://au.news.yahoo.com/thewest/a/-/latest/9252224/owners-feel-the-pinch-as-prices-stall/
> 
> sunshine and lollipops homies




Seems everyone is eastern states focused Nun so I'll comment WA is taking a real hit yet we are in a boom state with 1000's pouring in every week surely this isn't possible? demand and supply.............BS


----------



## IFocus (27 April 2011)

robots said:


> hello,
> 
> rubbish, the mining boom and these companies/infrastructure are infact costing people in the states of SA, VIC, NSW and Tasmania
> 
> ...




Bot so glad you are still around have seriously enjoyed your presence here for a long while long may it continue 

Cheers IF


----------



## banco (27 April 2011)

If I was the Government I'd very nervous as to how the Reserve Bank would react to an attempt to reinflate the bubble.


----------



## satanoperca (27 April 2011)

tothemax6 said:


> I hope house prices plummet, I shall be the first at the auctions.




I fail to understand this comment. At what price reduction would you start buying and do you wish to buy an IP or PPOR?

I believe we are in a credit induced bubble that is counter productive for our economy in the long run as it diverts funds aways from other productive ventures and other non productive activities, just having fun (eating out, going to the movies, taking holidays etc) but do not want to live with the consequences of a house price crash. Unemployment goes up, overall standard of living plummets, no one really benefits. I would just like to see every Australian be able to afford a roof over their head without having to be indebted for the rest of their lives and be able to experience the sunshine and taste the lolipops.

Cheers


----------



## Glen48 (27 April 2011)

House prices only rise due to inflation the reason house prices have risen is the same as the Tulip Bulb scheme many year ago. Even if you did buy at the bottom in 10 yrs time you will never live long enough to get a good return.
Collect bill boards from house sale so you can show your grand kids how easy credit can wreck your life.

If you are renting a house off the banks sell and buy Gold or Silver and rent some thing cheap.
the is no such thing as an Investment property unless you dud the figures


----------



## nukz (27 April 2011)

Unless China/US collapses and there is some significant financial shock then i don't see a collapse rather a long slow slide in house values. 

But is it out of the question to suggest a possible collapse in the US again? i suspect the answer looking at economic data is that its not out of the question right now.

Talk about the RBA re-inflating the bubble is imo out of the question as if the RBA lowered rates with inflation soaring people may be paying less for their mortgage but we would all be paying allot more for food/petrol ect and our dollar would weaken. 

Not to mention the massive budget gap in Victoria and huge budget deficit for the country, new housing grants? yea right.


----------



## Mr Z (27 April 2011)

That is just it... generally property investment is a leveraged bet that inflation will continue. That is over and above any local factors driving demand. It is one of the few assets that anyone can really lever up on in relative safety. Most of the time that is a good bet... when credit gets very extended it becomes a risky bet but, for the most part it is a 'no brainer'. Just not now... IMO. 



Lollipops!


----------



## banco (27 April 2011)

nukz said:


> Unless China/US collapses and there is some significant financial shock then i don't see a collapse rather a long slow slide in house values.
> 
> But is it out of the question to suggest a possible collapse in the US again? i suspect the answer looking at economic data is that its not out of the question right now.
> 
> ...




Don't asset bubbles tend to fall relatively quickly when they pop?  If it's going to happen I don't think it will be in the form of a long slow, slide.

I think the RBA wouldn't be entirely unhappy with housing prices falling "the fall we had to have".  You won't have to worry about the RBA trying to reinflate the bubble. The Government will be the one to watch but I suspect the RBA may be willing to counter attempts to reinflate the bubble with rate rises.


----------



## nukz (27 April 2011)

The whole Asian region is a bubble thats slowly starting to deflate in parts now. The most affluent parts of China (Shanghai, Hangzhou & Beijing) are now experiencing significant price declines. 

I was in Shanghai and Hangzhou a few months back and things were already starting to look bad with oversupply and these are the most affluent citys in the country not those new citys built primarily for GDP growth by the government. 

There are also signs that things may be cooling off in Hong Kong with China raising rates so many times. 

I had a look at Philippines around the same time which has a mass of cranes and huge projects going up. It's quite incredible for a place like Philippines and these places are dirt cheap (i saw as low as 25,000USD for a new apartment).

There was a recent article in The Age which explained that in Melbourne CBD something like 40% of all new projects had been put on hold due to financial problems. If anybody has a link to the article that would be good its a interesting one 

I'm not really a doom & gloomer but there are better asset classes right now.


----------



## nukz (27 April 2011)

banco said:


> I think the RBA wouldn't be entirely unhappy with housing prices falling "the fall we had to have".  You won't have to worry about the RBA trying to reinflate the bubble. The Government will be the one to watch but I suspect the RBA may be willing to counter attempts to reinflate the bubble with rate rises.




Great point. Time for some Glenn Stevens Quotes:

“These (house) prices are getting quite high,” Mr Stevens said. “I’ve got kids that within not too many years are going to want somewhere of their own to live and you wonder how is that going to be afforded.”


"It's a mistake to assume a riskless, easy, and guaranteed way to prosperity is just to leverage to property,"


----------



## Glen48 (27 April 2011)

You are right about the Philippines the feds are trying to get suckers in to buy Condo's with cheap money.

You can't buy land here but you can get a condo as long as it is over 50K USD
China just keeps pumping money in to shopping centers as no mayor wants to tell the higher up he is not doing his part and their fond love of shoot the messager is still rule No 1.


----------



## trainspotter (28 April 2011)

nukz said:


> Great point. Time for some Glenn Stevens Quotes:
> 
> “These (house) prices are getting quite high,” Mr Stevens said. “I’ve got kids that within not too many years are going to want somewhere of their own to live and you wonder how is that going to be afforded.”




Bwahahahahahah a ahaaaaaaaaaaa ........ Glenn Stevens is on over 1 million per annum. WTF would he know or care?



> *THE community would be legitimately concerned that Reserve Bank governor Glenn Stevens is paid more than $1 million, Treasurer Wayne Swan says.*
> 
> Mr Swan said he would like to see such salary arrangements more in line with community expectations and the Government was considering the matter.




http://www.heraldsun.com.au/busines...lion-salary-swan/story-e6frfh4f-1226035879077


----------



## Buckfont (28 April 2011)

For a deeply religious man he`s obviously being well looked after, my son


----------



## wayneL (28 April 2011)

trainspotter said:


> Bwahahahahahah a ahaaaaaaaaaaa ........ Glenn Stevens is on over 1 million per annum.




His children aren't though are they.


----------



## Mr Z (28 April 2011)

> THE community would be legitimately concerned that Reserve Bank governor Glenn Stevens is paid more than $1 million, Treasurer Wayne Swan says.




Yeah... lets get Brian, he is a mate of Wayno and he will do it for 80K a year and guarantee to cut rates at every available opportunity.

Lord forbid that we pay for competent people.... eh? W. Swan is a not qualified for his job so why should anyone else be? Hey we get our pollies cheap and look at them... I mean they could all do a better job.... right?


----------



## trainspotter (28 April 2011)

wayneL said:


> His children aren't though are they.




Nope ....... but if you were a bank manager would you be knocking back their loan?

It's not what you know but WHO you know in this world.

I dare say Glenn Stevens would also be fairly well connected ensuring his kids get a magic carpet ride.

And I am pretty sure if he is showing signs of concern for his kids there is nothing stopping him from going the "Guarantor" element on their loan either.


----------



## tothemax6 (28 April 2011)

satanoperca said:


> I fail to understand this comment. At what price reduction would you start buying and do you wish to buy an IP or PPOR?
> 
> I believe we are in a credit induced bubble that is counter productive for our economy in the long run as it diverts funds aways from other productive ventures and other non productive activities



At a substantial price reduction, perhaps of the magnitude of the US housing price fall. Basically, it has to look attractive versus renting.
Regarding the credit induced bubble, maybe but unlikely. Australia is one of the few places in the world with tight monetary policy. Places like the US, Britain, China, Europe, India, all have negative real interest rates. Australia has positive real interest rates.


----------



## wayneL (28 April 2011)

trainspotter said:


> Nope ....... but if you were a bank manager would you be knocking back their loan?
> 
> It's not what you know but WHO you know in this world.
> 
> ...




Probably true, but doesn't negate the truth of his comments.


----------



## trainspotter (28 April 2011)

wayneL said:


> Probably true, but doesn't negate the truth of his comments.




Aaaaaaaaaah yes ...... you have me there. For the Reserve Bank Governor to express his concern that *his* children may have an affordability issue on house prices then you truly do have an eyebrow raising conundrum.

It leads one to think that is he concerned purely on prices alone or is he saying that his children are not going to be able to have a vocation as to whether or not they have the servicability for a mortgage?_* ie*_ they have no job prospects?

It was not that long ago he said ''I worry about a lot of things at night,'' the governor confided before admitting that *falling house prices *were not among them.

Read more: http://www.theage.com.au/opinion/po...ice-phobias-20110322-1c559.html#ixzz1KoVhth8P

_"The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails." - William Arthur Ward _


----------



## wayneL (28 April 2011)

Concern over here as well

Watchdog's first job: Find out why houses are so unaffordable



> SNIP
> 
> Mr English said housing affordability was selected as an initial area of focus because New Zealand was "paying the price now for a housing boom that got out of control".
> 
> ...


----------



## NewOrder (29 April 2011)

wayneL said:


> Concern over here as well
> 
> Watchdog's first job: Find out why houses are so unaffordable




NZ views property markets the same as many here in Aust do, as one big picture when it is actually lots of little pictures. There is a massive difference between affordability in Akl compared to most of the Sth Isl, Akl is not NZ is a part of NZ. Housing is very affordable in other parts.

I hold property in both countries, the bigest bubble that worries me is what has happened to the property in Chch following the 2 earthquakes, it is forcast to bounce back though. The next biggest concern when holding IPs in NZ is the poorly managed rental industry. Holding IPs in Aust is a much better option with good capital gains and a tightly managed rental regulations.

The properties in Melbourne don't concern me at all, even if this so called bubble burst, property would have to drop by over 50% before I would lose money. I doubt that is going to happen.


----------



## moXJO (29 April 2011)

trainspotter said:


> Aaaaaaaaaah yes ...... you have me there. For the Reserve Bank Governor to express his concern that *his* children may have an affordability issue on house prices then you truly do have an eyebrow raising conundrum.






wayneL said:


> Concern over here as well
> 
> Watchdog's first job: Find out why houses are so unaffordable




All this (plus negative gearing talk) looks to indicate that property will possibly be in for a rough ride one way or another. Glenn Stevens probably just wants to raise rates and needs a good excuse with our two speed economy, 'high house prices' yeah that will do.


----------



## moXJO (29 April 2011)

moXJO said:


> I would have thought we were already having an increase in savings and a lowering of debt at the moment. .






> AUSTRALIA'S banks are flushed with more cash than they can lend as consumers pay debts and save.
> 
> The growth in savings is far outstripping loans growth with the Commonwealth Bank reporting household deposits growth of more than 12 per cent for the first six months of this financial year, compared with lending growth of just 4.3 per cent.
> 
> ...




http://www.news.com.au/money/money-matters/cautious-customers-lift-banks/story-e6frfmd9-1226046606894


----------



## wayneL (29 April 2011)

NewOrder said:


> Housing is very affordable in other parts.




"Very" affordable?

Not quite. Housing in other parts is certainly much cheaper, but wages are proportionally more stingy. 

Price/earnings ratios are still many multiples above long term averages in these areas.


----------



## NewOrder (29 April 2011)

wayneL said:


> "Very" affordable?
> 
> Not quite. Housing in other parts is certainly much cheaper, but wages are proportionally more stingy.
> 
> Price/earnings ratios are still many multiples above long term averages in these areas.




Yes, very affordable. Pre earthquake you could buy a very decent house in Chch for under $300k. On comparable wages to what we got in Aust we purchased a great 3 bedroom house between Sumner (exy beach suburb) and the city for under $200k. 

Sometimes people confuse what they want and what they can reasonably afford, sure I would love a $2mil house but I cannot afford it. That does not mean housing isn't affordable, it means I need to be realistic.


----------



## wayneL (29 April 2011)

NewOrder said:


> Yes, very affordable. Pre earthquake you could buy a very decent house in Chch for under $300k. On comparable wages to what we get in Aust...




Eh?

Wages are substantially lower in NZ than Oz, much to current consternation.

Hence large immigration flows to Oz.


----------



## Uncle Festivus (29 April 2011)

In so far as, along the chain of liquidity, there goes the US, there goes China, as we go?

What's in store for all of us when the pumping stops?

I don't believe this chart reflects the true state of US RE loans and is in fact much worse?


----------



## nukz (29 April 2011)

Front page of Theage.com.au today : 

*Home prices in biggest drop in 12 years*

I liked this snippet:

"Basically there are more people putting their properties on the market than there are people buying them,” RP Data research director Tim Lawless told BusinessDay. “Until we start to see that effective supply being absorbed, I really don’t think we’ll see any upward price pressures.”

Interesting, since we have such a huge under-supply issue... as the REIV... RP-Data... Robots ect have told us 

Read more: http://www.theage.com.au/business/h...in-12-years-20110429-1dzkb.html#ixzz1Ksj51Oys


----------



## NewOrder (29 April 2011)

wayneL said:


> Eh?
> 
> Wages are substantially lower in NZ than Oz, much to current consternation.
> 
> Hence large immigration flows to Oz.




No, my X has worked for the same company in Aust/NZ/Aust for 10 years and the wage package is pretty much the same in both countries. Main differences are that in NZ it is common to get PHI but very low Super. In Aust there is no PHI but much better Super.
There is also very little in the way of Govt family assistance in NZ and the cost of living (not inc. housing) is higher so combine those factors with the better lifestyle in Aust and that is why Kiwis flock over the Tasman.

Take our personal experience out of the picture if I use other known experiences then you can buy a decent house in Chch for 6 years wages $300k house, $50k wages. A comparable house in Aust (Melb) would cost $750k so 10 years of wages at $75k.
Of course there is no stamp duty in NZ so that is a bonus.


----------



## wayneL (29 April 2011)

NewOrder said:


> No, my X has worked for the same company in Aust/NZ/Aust for 10 years and the wage package is pretty much the same in both countries. Main differences are that in NZ it is common to get PHI but very low Super. In Aust there is no PHI but much better Super.
> There is also very little in the way of Govt family assistance in NZ and the cost of living (not inc. housing) is higher so combine those factors with the better lifestyle in Aust and that is why Kiwis flock over the Tasman.
> 
> Take our personal experience out of the picture if I use other known experiences then you can buy a decent house in Chch for 6 years wages $300k house, $50k wages. A comparable house in Aust (Melb) would cost $750k so 10 years of wages at $75k.
> Of course there is no stamp duty in NZ so that is a bonus.




LOL Apple and oranges

I don't think a $300k house in Chch compares with a $750k in Melb. LOL

I think I'll choose someone objective to debate with


----------



## KurwaJegoMac (29 April 2011)

Uncle Festivus said:


> In so far as, along the chain of liquidity, there goes the US, there goes China, as we go?
> 
> What's in store for all of us when the pumping stops?
> 
> ...




What exactly is wrong with that chart and how do you determine that it's being pumped?

I see steady average growth of 12-13% for the last 40 years and a tapering off highs from the peak at 2010 - which is what you'd expect given the high unemployement and property crash in the US following the GFC. 

I fail to see the concern?



nukz said:


> Front page of Theage.com.au today :
> 
> *Home prices in biggest drop in 12 years*
> 
> ...




I won't even begin to go on about what's wrong with this article...


----------



## KurwaJegoMac (29 April 2011)

wayneL said:


> LOL Apple and oranges
> 
> I don't think a $300k house in Chch compares with a $750k in Melb. LOL
> 
> I think I'll choose someone objective to debate with




He mentions a _*comparitive*_ house in Melbourne costing $750k. So you'd assume he's talking about similar quality (size, location, etc). So they are in fact comparable. Just because something costs $300k in one place and $750k in another place doesn't mean that they are not of the same quality.


----------



## wayneL (29 April 2011)

KurwaJegoMac said:


> He mentions a _*comparitive*_ house in Melbourne costing $750k. So you'd assume he's talking about similar quality (size, location, etc). So they are in fact comparable. Just because something costs $300k in one place and $750k in another place doesn't mean that they are not of the same quality.




I would like to see that comparison.

$300k in Chch is below average, $750k in Melb is above average


----------



## KurwaJegoMac (29 April 2011)

wayneL said:


> I would like to see that comparison.
> 
> $300k in Chch is below average, $750k in Melb is above average




Could be the case. I've never been to Chch so can't comment 

NewOrder I trust you will show us an example?


----------



## NewOrder (29 April 2011)

wayneL said:


> LOL Apple and oranges
> 
> I don't think a $300k house in Chch compares with a $750k in Melb. LOL
> 
> I think I'll choose someone objective to debate with




That suits me fine, I have houses of comparable quality and size, similar distance to CBD in both cities. In fact if the figures were looked at closer the Chch property would be even more affordable than the $300k eg given. 

Seems very immature to discard someones IRL experience because it does not match your own views, but hey it does not impact my investments at all.


----------



## NewOrder (29 April 2011)

wayneL said:


> I would like to see that comparison.
> 
> *$300k in Chch is below average*, $750k in Melb is above average




Are you sure you know as much as you think you do? I know both markets pretty well and have always made good money on RE.

Check out Trade Me which shows property by price range:
For Chch city the $200k - $400k range is by far the biggest.

$200k to $400k  1780 properties listed
$400k to $600k  752 listed
$600k to $800k  230 listed
$800k to $1mil   101 listed
$1m +              96 listed. 

These ratios are no different to pre quake as I have been monitoring for some time.


----------



## wayneL (29 April 2011)

NO,

Listings on TM are meaningless. What matters are sales.

The median house price in ChCh in Oct 2009 was $352k, ergo the bare facts are that a $300k house in Chch is below average, $750k in Melb is above average.

If you'd like to compare like with like with real numbers instead casting aspersions based on flimsy tenets, I'd be happy to debate you.


----------



## wayneL (29 April 2011)

NewOrder said:


> I have houses of comparable quality and size, similar distance to CBD in both cities.




You don't consider that one city has a population of 3-4,000,000 and the other 350,000 worthy of some sort of adjusting factor?

10 km in Melb is almost still inner city whereas it's the wop wops in Chch.

The following two maps are on the same scale LOL


----------



## robots (29 April 2011)

nukz said:


> Front page of Theage.com.au today :
> 
> *Home prices in biggest drop in 12 years*
> 
> ...




hello,

no i never mentioned supply and demand issues, its the likes of yourself and others who make all that up

i merely reported whats going on with property and quite amazingly i used to get disciplined for it, oh well

we got hounded for being pro-property yet those who listened way back in 2005 are livin' large 

i know i know i know we gonna get a post in a minute from explod wanting to know about the future and that he is up 2000% on his silver (which provides no economic input, but thats okay you not allowed to make $ on property remember)

but yeah find a post

thankyou
professor robots


----------



## NewOrder (29 April 2011)

Yes sorry for my manner pp, it was unecessarily short. I do however stand by my comments and am slightly bemused to be pushed to justify my own situation.
I hold property in both cities and was merely commenting that housing is affordable in Chch yet like Aust, in NZ people seem to focus on Akl throw the rest of the country in the same basket which is not apples/apples to use your terminology.

Yes the geography is not comparable but the general locations are. As are the size, age, quality etc of the properties. The properties in Melb are within zone one and 12kms from the CBD, the property in Chch I am unsure in kms but it is 4 min drive to the CBD. 

You said that people leave NZ to come to Aust as housing is unaffordable in NZ, this is not the case IME. Housing is much more affordable in NZ but the lifestyle and opportunities are better in Aust which is why many people do the TT jump.

Even at $350k median price for Chch (which to put it in perspective for others is the largest city in the Sth Isl, there are many much cheaper areas to live) it is extremely affordable. Keeping in mind that there is no stamp duty. Also our current interest rate in NZ is less than what we pay in Aust. 

Personally I would not usually invest in NZ property but we lived there at a good time for property gains and made 70% profit in the first year there buying a fix and flick, that would be hard to repeat and was pure good luck. We are still talking about properties under $300k though, of which there are plenty.

I am not interested in arguing about my personal experience but merely pointing out that there is affordable housing in NZ which was my first comment in the thread, simple. I respect your right to your opinion on the general state of things.


----------



## wayneL (29 April 2011)

NewOrder said:


> You said that people leave NZ to come to Aust as housing is unaffordable in NZ, this is not the case IME.




Whoa there Sapphire! I said no such thing.

I said people go to Oz because the wages are higher, not that Oz housing is more affordable.

My point (which is quite at a tangent to the topic of this thread) is that NZ housing, on a price/earnings/opportunity basis, is no more affordable than Oz.

There are a lot of folks here on very poor wages compared to Oz.

BTW I like the lifestyle here better.


----------



## tech/a (29 April 2011)

Had the second valuation in 18 mths the other day on holdings.
actually surprised that they have risen 13.5% average in that time.
2 had risen 19.8%
The worst 8% (That was the commercial/industrial properties)
All rose.
With a good dose of inflation and rising rents (I'll be rising them) things look less gloomy.


----------



## Dowdy (29 April 2011)

KurwaJegoMac said:


> I won't even begin to go on about what's wrong with this article...




Please enlighten me


----------



## Bill M (29 April 2011)

robots said:


> i know i know i know we gonna get a post in a minute from explod wanting to know about the future




No point knowing, he said in another thread that  "The Armageddon" is coming, the ol explod's turned into a right doomster.


----------



## explod (29 April 2011)

robots said:


> hello,
> 
> no i never mentioned supply and demand issues, its the likes of yourself and others who make all that up
> 
> ...




 

Well said Botty


----------



## Aussiejeff (30 April 2011)

nukz said:


> In Melbourne the eastern suburbs all the way to Nunawadding are completely dominated by Chinese now.
> 
> In 08/09 most auctions in Balwyn were being held in Mandarin... go figure.
> 
> ...




Surely the 11% slump in Yuan purchasing power v AUD since March has had & will continue to have a significant dampening effect on Chinese investment in Oz - across the board, not just RE? 

Since June last year it has plummeted almost 18%! That exchange situation is only going to get far worse for Oz in the short to medium term IMO.


----------



## medicowallet (30 April 2011)

robots said:


> hello,
> 
> no i never mentioned supply and demand issues, its the likes of yourself and others who make all that up
> 
> ...




Did he buy physical silver?

Or shares in a company that produces silver?

It is ok to invest in inflation protecting assets like silver, gold when appropriate.

But to dump all our resource money into houses, which like for like are grossly overvalued (and starting to come down), is just wrecking our future for when commodities cannot support us.


So Robots, your rose coloured glasses approach is not representative of the real world issues that overcaptalisation in clay and wood plays.

Then again, I expect none less.


How did Melbourne prices perform in the month of march?

What are your predictions for the june quarter?

Why will you never answer any questions?

How much money did you lose in the last quarter?

Are you needing to do extra shifts to make ends meet?

Why have your postings dried up?

Are you upset that I have taken over reporting of clearance?


----------



## robots (30 April 2011)

hello,

go back and read my posts, actually working less at the moment than in previous years MW

our site opens back up on monday from the easter break, we had a great bbq on thursday before easter and been relaxing since

is that okay with YOU?

thankyou
professor robots


----------



## medicowallet (30 April 2011)

robots said:


> hello,
> 
> go back and read my posts, actually working less at the moment than in previous years MW
> 
> ...




Sounds like a good holiday.

Go to any Auctions lately? Feeling lonely at them?

*"The clearance rate from this weekends residential auctions is 58 per cent which is 4 per cent less than the year to date clearance rate of 62 per cent.

The number homes on the market has reduced since Easter and it is apparent from this weekends result that the number of active buyers has as well.

There was a total of 455 auctions reported this weekend of which 232 sold and 193 were passed in, 107 of those on a vendors bid.

This weekend last year saw a very high 872 auctions and a clearance rate of 80 per cent.

The REIV expects just over 600 auctions next weekend."*

What do you make of a 58% clearance Professor?

It seems to be keeping low, and is now lower than 60%.


----------



## robots (30 April 2011)

hello,

i wouldnt have a clue what it means,

dont know either about the future of property prices and some how over the years that got extrapolated into me being a slumlord, specuvestor, negative gearer, perma bull property investor etc etc 

even got death threats just for posting up the weekly auction clearance rates, parents were attacked on the forum

and i was head butted and put in the choker hold by a socialist dude at the "support gay marriages" rally back in Oct 2010  

although i managed to break free and Suplex him over a seat in bourke st!

oh well life goes on

thankyou
professor robots


----------



## medicowallet (30 April 2011)

robots said:


> dont know either about the future of property prices and some how over the years that got extrapolated into me being a slumlord, specuvestor, negative gearer, perma bull property investor etc etc
> 
> even got death threats just for posting up the weekly auction clearance rates, parents were attacked on the forum
> 
> and i was head butted and put in the choker hold by a socialist dude at the "support gay marriages" rally back in Oct 2010




That is horrible mate.

I hope I don't get death threats for posting up auction results etc.

Stick around, and keep contributing.

MW


----------



## drsmith (30 April 2011)

robots said:


> and i was head butted and put in the choker hold by a socialist dude at the "support gay marriages" rally back in Oct 2010



Don't the Greens support gay marrriage ?


----------



## So_Cynical (30 April 2011)

www.smh.com.au said:
			
		

> AUSTRALIA'S much-debated property ''bubble'' may not have burst but recent data shows house prices are deflating, posting their worst quarterly slump in a decade.
> 
> Capital city prices were down 2.1 per cent nationally,
> 
> Read more: http://www.smh.com.au/business/hous...20110429-1e0vz.html?from=smh_sb#ixzz1L0fht1Z8




I hope i don't get death threats for just posting up the results...


----------



## Aussiejeff (1 May 2011)

medicowallet said:


> Sounds like a good holiday.
> 
> Go to any Auctions lately? Feeling lonely at them?
> 
> ...




The comparative YoY numbers are quite telling.

Last year same weekend there were *698* buyers vs a mere *232* for this year - a *massive slump of 67%*! If that doesn't speak volumes for signifying a significant RE downturn this year, I don't know what does. Similar negative comparisons have been seen week in week out for months now. 

IMO the REIV figures are likely to get far worse in the next couple of months, as many first home buyers in VIC will surely hold off signing contracts until July to get the new Stamp Duty rebate (which apparently will save them around $3,000 on a $400,000 home purchase up to around $6,000 on a median price home).

I won't be surprised to see 50% or less auction clearance rates between now and then....


aj


----------



## BigAl (1 May 2011)

robots said:


> hello,
> 
> i wouldnt have a clue what it means,
> 
> ...



You know exactly what the reduction in Clearance Rates mean.  Many years ago, you were the one posting the Rates and jumping up and down, shouting from the rooftops how much they reflected the boom times.  The only reason you may have received death threats (as you claim) is because of the rubbish you post on this forums that contributes nothing to this forum.  You have paid the mods well over the years to stay here.


----------



## robots (2 May 2011)

BigAl said:


> You know exactly what the reduction in Clearance Rates mean.  Many years ago, you were the one posting the Rates and jumping up and down, shouting from the rooftops how much they reflected the boom times.  *The only reason you may have received death threats (as you claim) is because of the rubbish you post on this forums that contributes nothing to this forum.  You have paid the mods well over the years to stay here.*




Hello,

sure have BigAl, paid with traffic, hits and excitement for the forum and its members

no doubt about it, should of been the other way around, like $5/post? what you reckon?

and thats why they never got rid of me (would of been a bit tough just for posting up auction results), the people came and still do man  

just amazing,

thankyou
professor robots


----------



## nunthewiser (2 May 2011)

currently in sunny exmouth wa.

half the town is for sale........especially the newer developments.

certainly changed over the years....

back to the bourbon and fishing.


----------



## nukz (2 May 2011)

robots said:


> Hello,
> 
> sure have BigAl, paid with traffic, hits and excitement for the forum and its members
> 
> ...




I don't really understand all your recent sympathy posts, i don't even understand why somebody would send you death threats over your posts. Most your posts don't contribute to any discussion.

You claim you have no idea what clearance rates mean but when clearance rates were high in 2008 you were posting daily about how they were so high and using that as a way to show the market was doing great, now your back-flipping again no surprise. 

Fingers crossed tomorrow on that interest rate decision robots, you might have to go without those latte's if the RBA makes a move


----------



## Uncle Festivus (2 May 2011)

Perhaps if we say la la la with our fingers in our ears it will eventually go away.......



> ESTABLISHED HOUSE PRICES  Quarterly Changes      Preliminary estimates show the price index for established houses  for the weighted average of the eight capital cities decreased 1.7% in  the March quarter 2011.     The capital city indexes decreased in Melbourne (-2.5%), Sydney  (-1.8%), Brisbane (-2.5%), Adelaide (-1.0%), Canberra (-0.4%) and Darwin  (-1.0%), and increased in Perth (+0.5%) and Hobart (+0.4%).




ABS




Please explain?


----------



## prawn_86 (3 May 2011)

Just a friendly reminder that this thread is about analysis, not discussing the weather, sunshine etc.

Please provide details and analysis with your posts (be they personal observations, or statistical data)


----------



## trainspotter (3 May 2011)

*Capital city home prices fell again in March, but rents have surged over the past six months.*

_The latest RP Data-Rismark Hedonic Home Value Index shows capital city purchase prices for houses and apartments declined an average 0.2 per cent seasonally adjusted during March.

Over the March quarter, capital city home prices slid 2.1 per cent, and are now down *0.6 per cent* over the year to March.

House values outside the capitals did not fare much better, rising just 0.2 per cent last month, falling 1.8 per cent over the March quarter, and slipping 0.5 per cent over the past 12 months.

The weakest performing capital city housing market was flood-ravaged Brisbane, with prices down 4.6 per cent over the 3 months to March._

http://www.abc.net.au/news/stories/2011/04/29/3203346.htm

Well DERRRRRRRRRRRRRRRRRRRR ......... after half of Brisbane was wiped out by a devastating flood what the hell do you think would happen ??? HUH????

And a measly .6% down nationally ??? WTF ??? So an average house in Australalialala Land is say $400,000 or thereabouts so the gross loss is $2400. Not even a decent weekend on the piss.


----------



## MACCA350 (3 May 2011)

March quarter, at least in Melb, is usually down so really there's nothing overly unusual about those figures, though it looks similar to the start of the 08 decline......
Link






Cheers


----------



## robots (3 May 2011)

Hello,

oh gidday, look this all a bit new to me so go easy please

the RBA left interest rates on hold today at 4.75% (howzat hey brothers) which was widely anticipated to occur.

Now my observations/research data is coming up with mixed signals, one offsets the other by the looks of it, and to be honest not sure what it all means for the future of property prices

oh well, another beautiful day

special shout out to againsthegrain

thankyou
professor robots


----------



## nukz (3 May 2011)

robots said:


> Hello,
> 
> oh gidday, look this all a bit new to me so go easy please
> 
> ...




Post up your data Robots for us all to see, im curious. 

Grats on the interest rate hold, you can have your latte tonight.


----------



## robots (3 May 2011)

Hello,

Sorry Nukz, its the property of Melbourne University all my data so i guess the dean of the department would have to give permission to ASF

I self fund it for the university, goodwill, like how i help  out ASF

yeah man still super size, and in coming months will be able to get 2 lattes with a drop heading our way

you reckon that Glenn Stevens any good?

thankyou
professor robots


----------



## nukz (3 May 2011)

robots said:


> Hello,
> 
> Sorry Nukz, its the property of Melbourne University all my data so i guess the dean of the department would have to give permission to ASF
> 
> ...




Good to hear, as far as Glenn Stevens goes we will have to see. He only left rates low long enough for there to be rampant property speculation by first home buyers but we will see if anything eventuates from that in the future.


----------



## KurwaJegoMac (3 May 2011)

nukz said:


> Good to hear, as far as Glenn Stevens goes we will have to see. He only left rates low long enough for there to be rampant property speculation by first home buyers but we will see if anything eventuates from that in the future.




Or it could be due to the surge in the AUD leading to decreased business profits for our exporters and othrr businesses who trade internationally...

With the proposed 20% reduction in stamp duty on the cards (for FHB) and potential increase in FHB grant theres no need to hold rates if you're solely talking about sparking 'rampant property speculation'.

Rates are not purely there to drive or temper speculative growth


----------



## trainspotter (4 May 2011)

Wasn't it Paul Keating who claimed this? He boasted that he controlled the Reserve Bank and that his hands firmly gripped the levers of the national economy.

Who is controlloing the Reserve Bank now? Afterall it is a public sector. When rates were too low it caused filthy, greedy, "snouts in the trough" property investors to plunder the market and the poor, defenceless little FHB with no friends to jump over the cliff and into the property pool. Rates are too high now causing mortgage stress, business to struggle and generalised foreclosures. Nobody is spending money in any quarter.

Whatever Glenn Stevens has got his hands on it sure aint the economy levers.


----------



## Knobby22 (4 May 2011)

Victorian government cuts stamp duty for first home buyers, should add a few more bucks to the prices.


----------



## maffu (4 May 2011)

> Alarms ring on rising mortgage arrears
> 
> Michael Bennet
> From: The Australian
> ...




I found this interesting. If household owners are struggling to repay the mortgage, we may see some more sales hit the market.
People being unable to pay back unaffordable loans was one of the early indicators for he US house price crash as it was a precursor to massive supply, and no one buying it up.


----------



## white_goodman (4 May 2011)

maffu said:


> I found this interesting. If household owners are struggling to repay the mortgage, we may see some more sales hit the market.
> People being unable to pay back unaffordable loans was one of the early indicators for he US house price crash as it was a precursor to massive supply, and no one buying it up.




in before the "we dont have jingle mail" crowd saying its impossible to compare the two. If people cant afford a mortgage they cant afford it whether its recourse or non recourse...


----------



## KurwaJegoMac (5 May 2011)

white_goodman said:


> in before the "we dont have jingle mail" crowd saying its impossible to compare the two. If people cant afford a mortgage they cant afford it whether its recourse or non recourse...




It can be compared in some ways but is still a different situation than the US - and not due to the recourse vs non-recourse debate.

Yes we may see more selling by those FHB in Australia but it's not the precurser to the same crash in the US. In the US you could walk away from your debt - that is the key difference and why they can't be directly compared. 

What you had there was the first batch of sellers being the FHBs/overextended/job losers/non-recourse/etc who start selling. This drives down property prices. Then those that bought in the last few months suddenly have -10% equity from their purchase price. So why should they pay a debt that's higher than their asset purchase price when they can walk away? So they leave the keys on the table and walk out. Bank is forced to sell that property but with so many on the market the price keeps dropping - thus trigging more people to enter into negative equity. Cycle repeats. 

Here in Australia if you're in negative equity, tough luck buddy! Still gotta pay back your debts you can't just walk out of the deal.

Of course that's an overly simplistic view of the situation, but at a high level more or less why arrears in Aus aren't the same as those in the US. However there's no denying that increasing arrears will increase supply - just wont lead to the crash so many are hoping for. Need other triggers for that


----------



## MACCA350 (5 May 2011)

You can file for bankruptcy and walk away, sure not as simple as the US and far more repercussions to those filing so less likely to occur but still able to walk away.

Cheers


----------



## satanoperca (5 May 2011)

KurwaJegoMac said:


> Here in Australia if you're in negative equity, tough luck buddy! Still gotta pay back your debts you can't just walk out of the deal.
> 
> Of course that's an overly simplistic view of the situation




You dont walk away, you just declare yourself bankrupt. If someone finds themselves in negative equity and cannot make mortgage repayments, the banks sells the property but is still out of property $50K or more, how many people will decide to repay that debt or just declare bankruptcy. I know of more than a few FHBers that have taken this approach when buying in the last few years, they just saw it as all part of the risk reward.

Cheers


----------



## CamKawa (5 May 2011)

It's been discussed before, you wont get out of most mortgages in Australia by declaring yourself bankrupt.


----------



## nukz (5 May 2011)

*Hong Kong Home Sales Fall to 2-Year Low on Curbs, Rates*

_Hong Kong home sales fell to the lowest volume in more than two years in April as government curbs and rising mortgage rates sapped demand after a price surge since 2009.

The number of units that changed hands last month declined 37.6 percent from a year earlier to 7,635, according to a statement on the Land Registry website yesterday. That’s the lowest since March 2009, according to data compiled by Bloomberg. The value of transactions slid 26.8 percent from a year earlier to HK$39 billion ($5 billion), the biggest yearly drop since June 2010, according to the release.

Housing prices in the city, ranked the world’s most expensive place to buy a home by Savills Plc (SVS), have gained more than 55 percent in the past two years on record-low mortgage rates and an influx of buyers from China. The government in November increased property transaction taxes and pledged to boost land supply amid public protests that housing prices are becoming unaffordable and as the central bank warned about the risk of a “credit-fueled property bubble.” _

Source - http://www.bloomberg.com/news/2011-...o-two-year-low-on-interest-rate-concerns.html

We are now seeing another domino in the asian region start to fall, mainland Chinese realestate has already started to fall as well as Thaiwan.


----------



## MACCA350 (5 May 2011)

CamKawa said:


> It's been discussed before, you wont get out of most mortgages in Australia by declaring yourself bankrupt.



How? Bankruptcy's supposed to clear all debts, don't see how banks can wiggle out of that one.

Cheers


----------



## wayneL (5 May 2011)

MACCA350 said:


> How? Bankruptcy's supposed to clear all debts, don't see how banks can wiggle out of that one.
> 
> Cheers




Yep, even tax liabilities are cleared by bankruptcy.


----------



## CamKawa (5 May 2011)

MACCA350 said:


> don't see how banks can wiggle out of that one.
> 
> Cheers



Keep looking.


----------



## robots (5 May 2011)

nukz said:


> *Hong Kong Home Sales Fall to 2-Year Low on Curbs, Rates*
> 
> _Hong Kong home sales fell to the lowest volume in more than two years in April as government curbs and rising mortgage rates sapped demand after a price surge since 2009.
> 
> ...




hello,

everyone okay with this post, setting a standard, isn't the thread on aussie property prices?

thankyou
professor robots


----------



## nukz (5 May 2011)

robots said:


> hello,
> 
> everyone okay with this post, setting a standard, isn't the thread on aussie property prices?
> 
> ...




I've actually commented on the wider bubble being the asian region as a whole in quite a few previous posts. With our economy so intertwined with the Chinese economy i believe any slowdown in the Asian region can have a effect on housing here.


----------



## trainspotter (5 May 2011)

Might need to refresh your collective memories me thinks.

http://www.itsa.gov.au/dir228/itsaweb.nsf/docindex/bankruptcy-%3

_The Australian Taxation Office (ATO) may keep your tax refund and offset it against any debt you owe the Commonwealth (eg *ATO*, Child Support Agency)._


----------



## Glen48 (5 May 2011)

Nothing wrong with Bankruptcy people did it in the 80 and moved in to a caravan at some ones place, once House prices start to tumble there will be no point in owning a home and if you are b/rupt just sit out both by the time the bottom is reached in housing tmarket the bank will have long forgotten about your problem.
 We have gone from a 2 speed economy to multi speed so the rules are out the window until some direction is found.


----------



## tech/a (5 May 2011)

Glen48 said:


> Nothing wrong with Bankruptcy people did it in the 80 and moved in to a caravan at some ones place, once House prices start to tumble there will be no point in owning a home and if you are b/rupt just sit out both by the time the bottom is reached in housing tmarket the bank will have long forgotten about your problem.
> We have gone from a 2 speed economy to multi speed so the rules are out the window until some direction is found.





Ive read some rubbish in my time but this is top of the pile.


----------



## explod (5 May 2011)

tech/a said:


> Ive read some rubbish in my time but this is top of the pile.




It did happen and I know of many cases back then too.  And for the now, a mate who is a removalist speaks of some heartbreaking walk outs in the Mornington area.  

Rubbish is however an interesting if not revealing description of it.

On top of the pile in this thread's a big call too


----------



## trainspotter (6 May 2011)

I'm still laughing at the defeatist attitude of decalaring yourself bankrupt. It aint as easy as it was in the 80's. Rules have changed. 

Surely if your home is on the line you guys/gals/whatever would *TRADE *your way out of it.

Another thing ... most of the homes would be held in JOINT NAMES _*ie*_ husband and wife, boy and girl , partner and partner, whatever,  meaning BOTH are responsible for the home mortgage as BOTH Names are on the title which means BOTH people are responsible for the debt.

Bankruptcy is not the answer. Having an exit strategy is the golden rule. How about paying your mortgage in advance so that when times are tough you have the ability to redraw on the facility? Or what about going to the bank and explaining the situation and seeing if debt consolidation or term extensions can be agreed to?? Could you not possibly sell some assets (cars, boats, shares) to assist? What about selling the house ??? OMFG ......... Multitudes of possibles.

If you honestly were placed in this situation would you not have seen the train smash coming a LOT earlier?? As in the mortgage needs to be paid  ........ DERRRRRRRRRRRR! Why would you let it go so far to have to go to bankruptcy? If you were on a stock and you put a large chunk of money on it to win and it starts sliding backwards faster than a speeding bullet do you hold onto this burning asset?

NOPE ......... declare yaself bankrupt. That's the way 

P.S. How is silver going now?? Let me tell you - Silver has now lost 30 per cent this week. Spot silver fell yesterday as much as 11 per cent to a six-week low of $34.58 an ounce. The metal is also heading for its biggest weekly loss since at least 1983.


----------



## moXJO (6 May 2011)

explod said:


> It did happen and I know of many cases back then too.  And for the now, a mate who is a removalist speaks of some heartbreaking walk outs in the Mornington area.
> 
> Rubbish is however an interesting if not revealing description of it.
> 
> On top of the pile in this thread's a big call too




I have family and friends that have gone bankrupt. Worst idea ever in this country imo (I'm self employed). 
It would never happen on the scale it did in the US in Australia. Simply because you become so toxic after pulling the pin here. 
Might be ok for low wage earners that managed to get a loan.


----------



## Mr Z (6 May 2011)

trainspotter said:


> P.S. How is silver going now?? Let me tell you - Silver has now lost 30 per cent this week. Spot silver fell yesterday as much as 11 per cent to a six-week low of $34.58 an ounce. The metal is also heading for its biggest weekly loss since at least 1983.




And yet it is still 100% YOY  

If you play with silver you get used to this sort of thing. This ain't over  but please do hang on for the ride, you will need too.  :


----------



## greebly24 (6 May 2011)

_"Yes we may see more selling by those FHB in Australia but it's not the precurser to the same crash in the US. In the US you could walk away from your debt - that is the key difference and why they can't be directly compared."_

Politely disagree. Not sure if the recourse v non-recourse debate mentioned this but most states in America are full-recourse. About 20 aren't. The list of non-recourse states is:

Alaska 
Arizona 
Arkansas 
California 
Colorado 
District of Columbia (Washington DC) 
Georgia 
Hawaii 
Idaho 
Mississippi 
Missouri 
Montana (as long as non-judicial foreclosure is used)
Nevada - note that the lender CAN get a deficiency judgment
New Hampshire 
Oregon 
Tennessee 
Texas (but even in a non-judicial foreclosure, the lender can pursue a deficiency judgment)
Virginia 
Washington 
West Virginia

Notice how Florida, one of the epicentres of the US house price crash, is a full recourse state. I think Florida is an excellent comparison of what could happen in a state like Queensland.

I saw one property for sale on the Gold Coast that had dropped from $1.8m to $1.4m (a 24% drop) and even then the rental yield (before interest payments on mortgage) was a ridiculously low 2.4%. I doubt even the cashed-up Chinese investors are looking for negatively-geared, negative capital growth investments!?!

Queensland is in a recession (although the figures won't be out on that for a few months yet). I spent six weeks recently. Brisbane was quiet, although it had been flooded a few weeks earlier. Mooloolaba on the Sunshine Coast was like a ghost town. There was just no-one around. Cairns was dead too. The hotel I stayed at was excited that they were 30% full, after getting down to as little as 8%. And that's before the Japanese, who represent 20% of Queensland international tourists, had their disasters.

Should point out that I had a great time in Queensland, helped considerably by the massive discounting going on amongst the tourism operators. Good time to visit Queensland (and help their economy too).

I have since read that the median price drop in Queensland in the March quarter was 4.6%. That's an annual rate of 18.4%!!!!! They sure better hope it turns round soon. The thing about even a small drop, as was the case outside WA and QLD, is that people aren't having this magical equity appearing in their home, and therefore they aren't withdrawing that equity to buy second cars, boats, holiday homes (etc etc), and therefore the economy outside mining, especially retail, is struggling. 

I think the entire Western world has been living this fantasy of getting rich by selling homes back and forth to each other, then withdrawing the equity from the rapidly appreciating properties, in order to maintain millionaire lifestyles. Now that this equity isn't booming, and in some cases is even shrinking, Australia's economy is about to be exposed as a big mine for China with little else.

It's kind of like Britain, under the Blair/Brown so-called boom years. Every single industry there shrunk (ie manufacturing, mining, farming, fishing), except for Finance, Insurance and Real Estate. It became a "FIRE" economy. But the massive boom of those three sectors surpassed the losses in all other sectors and so everyone felt rich. Then the GFC hit and those three sectors got hit hard. Now we've seen massive deficit reductions in the UK which were the only way of ensuring interest rates didn't explode and their bonds weren't reduced to junk status. A very similar thing happened in Ireland. The same thing could happen here if mining goes under.

I should mention at this point that I had invested some of my portfolio in silver ETF and was dismayed by the recent price crash. I was sitting on an 18-month 110% profit but now it is only an 80% profit. Bugger. The real reason I am mentioning this is because did anyone else notice that all the other commodities, including Australia's biggest exports, dropped too? Coal, oil, iron ore, copper all dropped. Its all to do with the liquidity leaving the system, and the end of money printing in the US and China (in order to reign in inflation), but that's for another thread on this forum.

Couple of anecdotes. Mate in Whyalla, a supposedly booming mining town, couldn't move interstate because he can't sell his three properties there. If he'd drop the price they'd sell, but he's resisting, claiming thats what they're worth. I am still not sure how something can be worth a certain amount, if no-one is willing to buy it at that price? Bizarre.

And a friend in Perth claims he can't sell either. He got in early on a big development a few years ago. Now other parts of the development are opening up, there are identical properties being built just down the road with brand new homes and more incentives for buyers, like cash bonuses and mod-cons like r/c air con and italian kitchen/bathroom fittings. These new places are selling for less than my mate bought his for and much less than he wants for his slightly-older, less flashy home. Ain't going to happen.

As for me, I live in Adelaide and am saving a deposit for my first home. I don't want an investment, I just want my own place (although currently only pay 12% of my income on rent). I had been told that I should leverage up and buy immediately, because house prices would increase faster than I could save. To me that just seemed insane, and the recent median price drops seem to validate that insanity.

When I looked at the real estate pages I used to be shocked at the ridiculous prices being asked. Now, when I look, a lot more properties seem a lot more reasonable in their asking prices. And there is hell of a lot more properties out there to choose from now. Gonna give it a couple more years though.

And if you want to see a housing crash in Australia outside of QLD, just check out the New Port development at Port Adelaide. Shocking price drops. They're million dollar apartments in a rough depressed neighbourhoood.

Any thoughts on QLD/Florida?


----------



## indeck (7 May 2011)

All I can really comment on is what I have seen first hand by looking at houses in a particular suburb in Brisbane and for the price range I have been searching with there has been a dramatic increase in the number of houses available.  Approx 8 months ago there might have been 3-4 maybe, now it's more like 15.

I'm still below the 20% deposit i'm aiming for but i'm hoping that prices will pull back a bit further by the end of the year i'm ready to buy.


----------



## medicowallet (7 May 2011)

"The clearance rate this weekend is 60 per cent from the 546 results reported. Of those a total of 328 sold and 218 were passed in, 128 of those on a vendors bid.

This weekend last year saw a total of 887 auctions and a clearance rate of 76 per cent.

The REIV expects around 600 auctions next weekend and then 800 on the following weekend
"

Don't know what this means.

Prices down a few percent last quarter and clearance rates not moving up.

Anyone have any ideas?

Keeping it real for the true believers.

Sunshine and cocopops

MW


----------



## schnootle (11 May 2011)

http://www.dailytelegraph.com.au/ne...cks-middle-class/story-e6frevp9-1226053615460

Typical media beat up, but the number of news stories talking about the over-extended getting into trouble is increasing. I don't know what that means. It is certainly a change from the boom time articles of the renovate and flip crowd, "I painted the kitchen and now I am a millionaire".


----------



## Junior (11 May 2011)

trainspotter said:


> I'm still laughing at the defeatist attitude of decalaring yourself bankrupt. It aint as easy as it was in the 80's. Rules have changed.
> 
> Surely if your home is on the line you guys/gals/whatever would *TRADE *your way out of it.
> 
> ...




Do you not know anyone who has gone through any sort of insolvency?  It happens for various reasons.  Poor investment decisions, redundancy, gambling problem, spending problems, small business failure, natural disaster, marriage breakdown, mental health problems.   Any combination of these issues to lead to having a solvency issue.  And often, bankruptcy is the least painful or only answer.

If house prices experience a decent fall in Australia it should be expected that a large number of individuals will be forced into bankruptcy or personal debt agreements.  What about all those 'investors' that leverage off existing property over and over using equity that comes about from seemingly neverending capital growth of 10-15% pa?  All it would take is to lose your job, interest rate rises, can't find tenants etc. and all of a sudden the debt can't be serviced.

In Las Vegas 85% of homeowners with a mortgage are in negative equity.  In that situation, if you are well under water and can't service the debt even at a low rate..you would be better off as a bankrupt.  It's not necessarily a cop out, the bank shouldn't have extended that much credit in the first place, and, when they did, they would have known there's a chance it won't be repaid in full.

I'm not sure of the point of my post...maybe trying to point out that bankruptcy is a reality of our financial system, and with so much easy credit at the moment, someone who ends up insolvent shouldn't be necessarily looked down upon.  There are a range of circumstances that can place an individual into a difficult financial situation.


----------



## explod (11 May 2011)

Junior said:


> Do you not know anyone who has gone through any sort of insolvency?  It happens for various reasons.  Poor investment decisions, redundancy, gambling problem, spending problems, small business failure, natural disaster, marriage breakdown, mental health problems.   Any combination of these issues to lead to having a solvency issue.  And often, bankruptcy is the least painful or only answer.
> 
> If house prices experience a decent fall in Australia it should be expected that a large number of individuals will be forced into bankruptcy or personal debt agreements.  What about all those 'investors' that leverage off existing property over and over using equity that comes about from seemingly neverending capital growth of 10-15% pa?  All it would take is to lose your job, interest rate rises, can't find tenants etc. and all of a sudden the debt can't be serviced.
> 
> ...




Good post.   

We are no longer in Fairy Land in my view and the Aussie dollars continued strength, among other things, is going to put a very big squeeze on jobs across the board in this Country.

And if the Guvmint think that the China story can continue at the recent level; and, that Japan can even afford to rebuild a lot of what has been lost, then I take it back, perhaps we *are* still in Fairy Land?


----------



## greebly24 (11 May 2011)

Read this today:

_“Figures released last week by SQM Research revealed that residential listings for April 2011 rose by 14,035 to 370,638 nationally – a 3.9% increase from March 2011 and a 68.7% increase when compared to the same month (April) in 2010.  This is an increase of 151,000 year-on-year.”_

14,000 more homes for sale than one month ago!

151,000 more homes for sale than one year ago!

That means almost 5% more homes for sale per month, for the last 12 months!

Not sure what this means for the "housing shortage" in Australia?

Any thoughts on how this will/won't affect prices? While I remain bearish on house prices here, mainly because I'm saving a deposit for my first, I enjoy the often well-presented arguments of the bull brigade. Not just looking for confirmation bias.


----------



## investorpaul (11 May 2011)

He Greebly24

Thanks for the figures, it is very interesting.

I follow the property market quiet closely in my area (Sydney's Northern Beaches) and know that there is a huge portion of stock (most of it in the 1.4m+ bracket) that has been on the market for an extended period of time.

For whatever reason alot of vendors in these higher priced homes are unwilling to drop their asking price to meet the market. As a result some have been for sale for 12 - 24 months. I know one house that is going through its fourth auction campaign within 18 months and is now at a lower asking price that what it was purchased for 7 yrs ago.

So in regard to the increases you posted I think that a large portion is attributed to stock that simply has not been sold. New properties continue to be bought onto the market with some that are overpriced and they just add to the backlog.

Unfortunately when these vendors finally start adjusting their price to meet the market everyone else will be doing the same and they will still have trouble selling their house IMO.


----------



## trainspotter (11 May 2011)

Junior said:


> I'm not sure of the point of my post...maybe trying to point out that bankruptcy is a reality of our financial system, and with so much easy credit at the moment, someone who ends up insolvent shouldn't be necessarily looked down upon.  There are a range of circumstances that can place an individual into a difficult financial situation.




Misinterpreted what I wrote. Not looking down on anyone. Previous posts from "other" ASFers were saying how easy it is to declare yourslef bankrupt instead of facing the music. *The rules have changed. * You are still liable for the debt. The bank/financier/loan shark will sell everything to recoup their debt. You are left with nothing. Banks take fixed and floating charges over your company as well as your assets. You cannot transfer funds/assets into the partner/wife/superior other/family prior to declaring bankruptcy either. ANY money you earn after the debt has been repaid (if there is a shortfall) will also be taken from you on a percentile ratio to repay funds outstanding.

The point of my post was that it is not that easy anymore to chuck your hands in the air and say "It is all to hard ..... I'm gonna walk". Nothing was mentioned from my quarter about _"Poor investment decisions, redundancy, gambling problem, spending problems, small business failure, natural disaster, marriage breakdown, mental health problems."_

P.S. Yes I do know several companies and individuals who have gone into receivership/bankruptcy. Not pleasant at all.


----------



## Glen48 (11 May 2011)

Once the depresion ends then look at buying a house as it is just starting you will have a long time to wait. What happens in USA happens here 5 years later, house prices started to tank 2007/08 + 5 depression hasn't started yet


----------



## trainspotter (11 May 2011)

Gonna be some good bargains coming up soon. "The time to buy is when blood is running in the streets," said Nathan Rothschild.


----------



## medicowallet (11 May 2011)

trainspotter said:


> Gonna be some good bargains coming up soon. "The time to buy is when blood is running in the streets," said Nathan Rothschild.




Yes, I wonder how much prices will drop over the next 1-2 years.


----------



## nunthewiser (11 May 2011)

trainspotter said:


> Gonna be some good bargains coming up soon. "The time to buy is when blood is running in the streets," said Nathan Rothschild.




already is mate

deceased estate in a overloaded market landed on my porch...  28% OFF the current fallen median which is another 20%-30% below peak.

prime position.

the sellers needed to sell and bugger the pussyfooting around in a falling market.

blessem i say.

more to come up these parts....but hey.. i wouldnt get to carried away.........some sound like they waiting for the 50% overnight drops....

its all about being ready in the right situation...... some watch..... some dont.

for some it will never be the right moment.


----------



## trainspotter (11 May 2011)

Also time for some ridiculous sale prices. Just moved a commercial property for above market value. Vacant tenancy as well. Location was the kicker.  

Time to get out of Dodge if TS is selling down and hunting for bargains.

Require about 2000m2 light/heavy industrial with a strong head lease. Any takers?


----------



## wayneL (11 May 2011)

trainspotter said:


> Time to get out of Dodge if TS is selling down and hunting for bargains.




...or the best buy signal ever!


----------



## explod (11 May 2011)

wayneL said:


> ...or the best buy signal ever!




Be interested in your points to this possibility.


----------



## Junior (12 May 2011)

trainspotter said:


> Misinterpreted what I wrote. Not looking down on anyone. Previous posts from "other" ASFers were saying how easy it is to declare yourslef bankrupt instead of facing the music. *The rules have changed. * You are still liable for the debt. The bank/financier/loan shark will sell everything to recoup their debt. You are left with nothing. Banks take fixed and floating charges over your company as well as your assets. You cannot transfer funds/assets into the partner/wife/superior other/family prior to declaring bankruptcy either. ANY money you earn after the debt has been repaid (if there is a shortfall) will also be taken from you on a percentile ratio to repay funds outstanding.
> 
> The point of my post was that it is not that easy anymore to chuck your hands in the air and say "It is all to hard ..... I'm gonna walk". Nothing was mentioned from my quarter about _"Poor investment decisions, redundancy, gambling problem, spending problems, small business failure, natural disaster, marriage breakdown, mental health problems."_
> 
> P.S. Yes I do know several companies and individuals who have gone into receivership/bankruptcy. Not pleasant at all.




Point taken.  It's not an easy option, and not a decision to be taken lightly!


----------



## greebly24 (12 May 2011)

Found some more figures on the year-on-year increase in real estate stock on the market (according to SQM Research):

_Adelaide + 72.6%
Brisbane + 72.9%
Canberra + 82.3%
Darwin + 73.4%
Hobart + 65.1%
Melbourne + 104.5%
Perth + 74.8%
Sydney + 54%_

So there's twice as many homes for sale in Melbourne now as there was a year ago!

It still doesn't seem like many though, for such a large city.

_Melbourne homes for sale: 32,572
Melbourne units for sale: 10,979_

But it sure makes for a few busy weekends if you're in the market to buy 

It's when you apply the median price that things get scary:

*March 2010*
14,662 homes for sale x median price $520,000 = $7,624,000,000
6,639 units for sale x median price $450,000 = $2,987,000
*21,000 homes/units for sale in Melbourne for about $10.6 billion dollars.*

*March 2011*
32,572 homes for sale x median price $565,000 = $18,400,000,000
10,979 units for sale x median price $460,000 = $5,050,000,000
*43,000 homes/units for sale in Melbourne for about $23.5 billion dollars*.

So there's now about $13 billion more dollars worth of real estate on the market in Melbourne than there was one year ago!!! That's about 121% more!!!

Not sure what it means. Just like playing with numbers. Any thoughts?


----------



## Knobby22 (13 May 2011)

There are houses in Essendon a few Ks from where I live that have been on the market for many months now, owners are finding it hard to sell poorly maintained property around the 1 mill mark as buyers have become more discerning. 

I have been looking but just don't feel any urgency. I think I am typical.


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## greebly24 (13 May 2011)

Knobby22 said:


> I have been looking but just don't feel any urgency. I think I am typical.




In a similar situation. Saved a deposit. I'd like to buy but can easily wait a couple more years.

Read this article today:

_*WA suffers record low property transactions*
THE State Government has confirmed that WA's declining property market has hit rock bottom, with property activity last month falling to 16-year lows._
http://www.perthnow.com.au/business...frg2ru-1226054805452?source=patrick.net#story

Yeah, I don't think it's hit rock bottom. Not as far as prices are concerned. Just the prelude. Give it a couple more years I think. 

74.8% more properties for sale in Perth than a year ago, and the lowest property activity in 16 years. Hmm.


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## Dowdy (13 May 2011)

Knobby22 said:


> There are houses in Essendon a few Ks from where I live that have been on the market for many months now, owners are finding it hard to sell poorly maintained property around the 1 mill mark as buyers have become more discerning.
> 
> I have been looking but just don't feel any urgency. I think I am typical.





I'm doing the same. There is a place near me that has been on the market since the start of the year - I want to see how long it takes for it to sell... on it's second real estate agent now....

I don't see the rush. If you rush to buy now, you'll be pay many years more on interest payment. Save more so there will be less interest to pay later on


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## andy0 (13 May 2011)

greebly24 said:


> snip.




Rock bottom


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## cutz (13 May 2011)

andy0 said:


> Rock bottom




What's the point of your post ando0,

Are you suggesting Perth is not rock bottom yet ?


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## JTLP (13 May 2011)

Hi all,

Anyone know where I can find the sale prices for stuff on realestate.com.au???

In the 'sold' section most come up with Contact Agent - any way of sourcing?


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## cudderbean (14 May 2011)

I just got notification of a Webinar "Where to for Australian house prices in the next 12 months?" on Alan Kohler's site Business Spectator. It may be of interest to forum members. 


"When: Thursday, May 19, 2011 at 12pm AEST
(which is 10am for WA, 11:30am for NT, 12pm for QLD and 11:30am for SA)

Duration: 45 mins 

REGISTER NOW

Australian house prices are 'the highest in the world' says the IMF, but is it true? We have recently seen some softening of residential house prices, especially in Victoria, but there are also signs of weakness in other regions, particularly those which are not directly linked to the mining boom.

Is it the reckoning the bears have been waiting for, or simply a soft patch in a wider acceleration that will continue thanks to a rising population, a shortage of housing stock and the powerful long term effects of negative gearing.

Business Spectator has gained a reputation as one of the prime debating arenas over house prices in the Australian media. Join Managing Editor James Kirby, economist Steve Keen and HIA's Harley Dale to hear what lies in store for the next 12 months.
REGISTER NOW! 
Don't forget, this avenue is a great way to have your questions answered in real time - you can submit them during the webinar via a panel on the screen.
Be quick to register as there are a limited number of places available."


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## nukz (14 May 2011)

cutz said:


> What's the point of your post ando0,
> 
> Are you suggesting Perth is not rock bottom yet ?




Without going back on the post i believe Perth still has some more to fall for sure, imagine if there is a slowdown in mining... it will be in free-fall. 

I like it how you see these realestate agents saying property in Melbourne should rise again now because its corrected... down what 2% since it rose in some parts over 100% in 1 year lol. I hate that they try to sucker in the FHB's with this kinda crap talk.


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## Glen48 (14 May 2011)

Here it comes:
from H S
More mortgage defaults than at GFC peak  
Queensland suffered biggest acceleration  
Points to new wave of repayment stress  
MORTGAGE customers are defaulting on their loans at a faster pace than at the height of the global financial crisis as soaring living costs stretch household budgets to breaking point. 
Westpac, the nation's second-biggest home lender, revealed yesterday that mortgage delinquency rates had climbed above the peaks they reached late in 2008 as the crisis swept around the globe.

And chief Gail Kelly, unveiling the bank's record first-half profit yesterday, said they were likely to climb further - albeit off a low base - as households struggled with rising utility bills and other costs.

Customers accounting for about 1.5 per cent of Westpac's $275 billion home loan book were more than 30 days behind on their repayment schedule at the end of March, according to the data released yesterday.

And the proportion of home loan clients more than 90 days late has jumped to 0.6 per cent - almost double the rate of a year ago and significantly above the high watermark hit during the financial crisis.

Start of sidebar. Skip to end of sidebar.
.End of sidebar. Return to start of sidebar.
Although Queensland has suffered the biggest acceleration in delinquencies - compounded by the natural disasters that beset the state over summer - defaults are gaining pace in every state.

Analysts said the surge in defaults, which comes despite the robust state of the nation's employment market, pointed to a new wave of repayment stress in Australia's mortgage belt.

UBS analyst Jonathan Mott questioned whether the rise was driven by first home buyers who used grants to enter the market.

The abrupt surge in the proportion of customers who were at least 30 days behind on payments was likely to "flow through over time" to the proportion at least three months late, Mr Mott said.

Mrs Kelly said the lift in delinquencies was "entirely within our expectations".

"It is picking up and we think it will pick up actually a little more, because we're in that stage of the cycle," she said.

While more customers were likely to require support to manage their loan repayments, "we don't actually see it translating into loss".

The revelation came as Westpac posted a cash profit for the six months to March of $3.17 billion, up 7 per cent on the same period a year ago in a result aided by a sharp fall in the charge for bad and doubtful debts.

Net profit soared to $3.96 billion - a 38 per cent increase largely fuelled by a favorable taxation ruling, previously announced by the group, relating to its 2008 acquisition of St George.

Nomura analyst Victor German said there were "no obvious problems" with Westpac's result, despite the 2.5 per cent fall yesterday in the value of the group's share price on a downbeat day across the market.

Some investors were concerned that the increase in profit, which beat analysts' forecasts, was largely fuelled by the sharp drop in the charge for bad and doubtful debts, Mr German said.


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## Knobby22 (14 May 2011)

Also, the new Federal budget is really pulling a lot of money out of the economy.

I know you wouldn't think that if you read Murdoch Press, but the truth is that there will be a lot less cash around, a lot less government discretianary spending as nearly every department has to cut.

The high Aussie dollar will  cause many businesses severe overseas competition. Also retail will continue to suffer as goods re bought overseas for far less.

We may have a quarter of negative growth soon.


----------



## Dowdy (14 May 2011)

Knobby22 said:


> We may have a quarter of negative growth soon.





I read somewhere that we DID have a quarter of neg growth. If we have another quarter then it's an official recession


----------



## andy0 (14 May 2011)

cutz said:


> What's the point of your post ando0,
> 
> Are you suggesting Perth is not rock bottom yet ?




To much is happening to make that call IMHO. China slow down, accelerating defaults, boomers retiring (deleveraging/liquidating), population deleveraging/saving, tightening of credit, unemployment growth etc


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## medicowallet (14 May 2011)

"Inclement weather around Melbourne today had no impact on the clearance rate for residential auctions with 59 per cent of the 467 auctions reported selling.

This is broadly in line with the year to date clearance rate of 61 per cent and less that the comparable weekend last year when there was 776 auctions reported with a clearance rate of 75 per cent.

Of the 467 auctions reported this weekend a total of 275 sold and 192 were passed in, 119 of those on a vendors bid.

Conditions will continue to favor buyers over the rest of May with an average of 694 auctions each weekend, well above the 20 year average of 551."

Don't know what it means.

Perhaps something for some posters to comment on between their extra shifts.


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## Agentm (15 May 2011)

medicowallet said:


> "Inclement weather around Melbourne today had no impact on the clearance rate for residential auctions with 59 per cent of the 467 auctions reported selling.
> 
> This is broadly in line with the year to date clearance rate of 61 per cent and less that the comparable weekend last year when there was 776 auctions reported with a clearance rate of 75 per cent.
> 
> ...




it means, regardless of the weather, the governments policy of trying to keep the housing price bubble inflated, is possibly working fine.. but there are signs its got cracks imho..

changing things around a little will make for a healthier RE market


Limit the First Home Vendors Grant to new housing only;
Limit new Negative Gearing to new housing only; and
Bring the capital gains tax rate back into alignment with the income tax rate.
90% of first home buyers are not buying new properties..600 million wasted on inflating the bubble and doing nothing to keep a healthy building industry alive

so 100,000 first home buyers per year are funding the price bubble in property prices simply by competing for existing properties and bidding the bejesus out of each others lenders credit accounts.., so clearance rates will continue to remain healthy looking and the demand continues for potential to inflate the housing bubble, but there is a good argument that the massive credit required to sustain this price bubble is stressing the heck out of the first home buyers big time..  but who cares ??? right!!

as for negative gearing, its simply an instrument to keep the housing bubble sustainable. 

less than 2% of negative geared investor finance is going to the new housing market.

so when you hear that the new house and land packages are so unattractive to investors and first home buyers, the only way to keep the new home market alive is to export it.. i mean you have absolutely no interest from australian first home buyers and investors in keeping the housing industry alive, so the only way to sell new house and land packages currently, is to put sales reps into asia, and try to sell that shortfall of demand for new house and land in australia  into the cash rich countries like singapore, malaysia and of course china.. i recall housing companies saying they are selling more than 40% of the house and land packages into asia as no one here in australia wants to keep the housing industry alive and there is no demand for it..

its possibly the asian money thats supporting the housing industry to the place it is now. 

just imagine what a healthy business model it would be if you actually promoted a building industry, allowed first home owners grants to apply to new properties.. and funnelled the negative gearing investor finance into new homes only.. then genuine jobs and growth would result in the RE market... rather than an auction bonanza price driven housing bubbling insane model currently being nurtured by the good people, bankers and government of australia..

bwtfwik


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## trainspotter (15 May 2011)

Agentm said:


> just imagine what a healthy business model it would be if you actually promoted a building industry, allowed first home owners grants to apply to new properties.. and funnelled the negative gearing investor finance into new homes only.. then genuine jobs and growth would result in the RE market... rather than an auction bonanza price driven housing bubbling insane model currently being nurtured by the good people, bankers and government of australia..
> 
> bwtfwik







I concur ........ a healthy building industry is what is required for the common good of Australia. Many trades will be affected as well as suppliers.


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## RandR (15 May 2011)

trainspotter said:


> View attachment 42918
> 
> 
> I concur ........ a healthy building industry is what is required for the common good of Australia. Many trades will be affected as well as suppliers.




The building industry is already healthy. There really is no need to throw more federal money away into it.

Imo i think its absolutely ridiculous that we have to entice people with grants etc to purchase a home to live in. What an epic waste.


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## medicowallet (15 May 2011)

trainspotter said:


> View attachment 42918
> 
> 
> I concur ........ a healthy building industry is what is required for the common good of Australia. Many trades will be affected as well as suppliers.




Sure, but let's only subsidise it when it becomes a problem.

ie the margins are still good, so why do we subsidise it?


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## trainspotter (15 May 2011)

The building industry is healthy? LOL. Nope ...... apprenticeships are at an all time low for tradespeople. Builders are reporting massive drops in turnover and some larger firms are shedding staff as well as closing their doors Australia wide. Building stats are through the floor (no pun intended) with approx 15% declinal. (PRIVATE HOME CONSTRUCTION)

The only subsidies I know of is the FHBG which is more if you build rather than purchase established. Encourages FHB to take the plunge but also no stamp duty applicable either. Down side is the months of waiting during construction. The building company does not get the subsidy ????? The purchaser does to assist with finance/deposit requirements.

Building company I contracted to had 54 houses under construction 3 years ago. They have 8 now. Things are just whistling along.

Now if you read what Agentm posted and what I agreed to was this:- Change the FHB to be the same for established as well as construction AND funnelled the negative gearing investor finance into new homes only. This would help IMO.


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## medicowallet (15 May 2011)

trainspotter said:


> The building industry is healthy? LOL. Nope ...... apprenticeships are at an all time low for tradespeople. Builders are reporting massive drops in turnover and some larger firms are shedding staff as well as closing their doors Australia wide. Building stats are through the floor (no pun intended) with approx 15% declinal. (PRIVATE HOME CONSTRUCTION)
> 
> The only subsidies I know of is the FHBG which is more if you build rather than purchase established. Encourages FHB to take the plunge but also no stamp duty applicable either. Down side is the months of waiting during construction. The building company does not get the subsidy ????? The purchaser does to assist with finance/deposit requirements.
> 
> ...




no, the building industry does not get the 7K FHVB, they get a leveraged $35k +

Have they dropped prices considerably?  Have land developers started to decrease prices?

The stalemate is there, either the workers will move to the mines, or the building companies will find ways of attracting clients.

Just as they did before (you are an old timer  , you should remember this)


Then again, I am for scrapping negative gearing on all investments, and I think a FHVB for new homes only is a much better idea than across the board (mainly because a lack of the FHVB on existing properties would keep a lid on bubbles)


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## RandR (15 May 2011)

trainspotter said:


> The building industry is healthy? LOL. Nope ...... apprenticeships are at an all time low for tradespeople. Builders are reporting massive drops in turnover and some larger firms are shedding staff as well as closing their doors Australia wide. Building stats are through the floor (no pun intended) with approx 15% declinal. (PRIVATE HOME CONSTRUCTION)
> 
> The only subsidies I know of is the FHBG which is more if you build rather than purchase established. Encourages FHB to take the plunge but also no stamp duty applicable either. Down side is the months of waiting during construction. The building company does not get the subsidy ????? The purchaser does to assist with finance/deposit requirements.
> 
> ...




Yes, it's perfectly healthy. I also work in the building industry, and its fine. Yes, things arnt as busy as they have been in the past, but the building industry is cyclical and we have been coming down from the 'peak' imo in this country, and atm its just moving with the slightly diminished demand. Theres no need to hit panic stations because "omgz there arnt as many homes being built as last year".

My question is, why provide incentives to boost demand for new buildings ? Wont this simply serve to bring forward demand and create further problems down the road ... or inflate the level of housing stock beyond what demand neccecitates ? Or simply be a stupendous waste of capital and labour that could be better directed elsewhere ?



> Change the FHB to be the same for established as well as construction




As far as im aware, the FHB grant is the same atm whether your building a new home or buying an existing ... i dont see what your point here is.

In fact during the GFC the 21000 FHB grant was ONLY applicable to new dwellings .... how did that work out ?



> Building company I contracted to had 54 houses under construction 3 years ago. They have 8 now. Things are just whistling along.




Maybe it's because there **** and just a terrible company ?


Our company has PLENTY of work, but were in the commercial/industrial space.


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## Wysiwyg (15 May 2011)

The consumer is saying (via mortgage defaults and lack of buying) they simply can't furnish a loan what with increasing interest rates, ever increasing market prices and the common denominator ...



> Wage Facts
> 
> Full-time earnings in Australia averaged A$66,594 a year in the final quarter of 2010. (Seasonally adjusted wages – Bureau of Statistics.)




As I posted on another thread, you have to be pulling in well over 1k per week to be able to pay off a mortgage and have some semblance of an existence outside of work. At the average gross you will pay tax of $14,827.11 (ATO calc. including Medicare Levy). So basic without allowable deductions to reduce taxable income the take home is around $51766.89 per year or less than 1k per week.

A mortgage over 25 years at the mean mortgage interest rates of *8.8% for an old   standard house and land for 350k would cost $666.27 per week leaving $333 to live off. $330 is a long stretch paying for fuel, food, electricity, telephone and ever increasing council rates.

Reason confirmed.



*







> (The average bank variable interest home loan interest rate rate over the past 59 years in Australia is 8.87 percent. (source Reserve Bank of Australia standard variable interest rate home loans, Jan 1959 to Feb 2008)


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## Wysiwyg (15 May 2011)

Also y'all may notice that if employed in half the sectors below, their egos (first home flash 500k types) will be watching t.v. for a long while because they got stuff all left after the mortgage payments and basic living expenses to do anything. 

Price you pay I suppose for biting off more than you can chew.  Oh but don't we "look" wealthy.


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## banco (15 May 2011)

trainspotter said:


> Now if you read what Agentm posted and what I agreed to was this:- Change the FHB to be the same for established as well as construction AND funnelled the negative gearing investor finance into new homes only. This would help IMO.




Might help the building industry but won't help FHBs.  If you are an FHB the worse the buidling industry gets the better I would think (assuming you're not employed directly or indirectly in that industry).


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## trainspotter (15 May 2011)

Not sure where the information is coming from but I am of the understanding it is this with the FHOG:-

_The announcement from the Australian Government specified the following:

For contracts made between 14 October 2008 and 30 September 2009 the boost provides for an:

Extra $7,000 for buying an established home 
Extra $14,000 for buying or building a new home _

http://www.dtf.wa.gov.au/cms/content.aspx?id=344

Yes it did go to 21k for construction and 14k for established but has been reversed now. Stamp Duty concessions are also to be factored in for FHB.

This is for Western Austrlalia. I also wrote in capital letters that my post related to PRIVATE RESIDENTIAL HOMES and not the commercial industry.

http://hia.com.au/hia/news/article/...ition a Concern for Residential Building.aspx

_“Put simply, government and industry efforts to increase the number of dwellings being built needs to be more effective at increasing skilled tradespeople numbers if there is to be sufficient resources to build the homes that are required in the future”, said Nick Proud. _

This is the third cycle I have personally been involved with. 

Alot of misinformation out there. I get the building stats from the council who approves them. Used to be 5 pages long. Now it is not even 3/4 of a page and this includes owner builders etc. 

Here is the link from the ABS as well :- http://www.abs.gov.au/ausstats/abs@.nsf/mf/8731.0

Builders and developers are starting to offer "incentives" like landscape packages and furniture and airconditioning and fencing etc ad infinitum. Prices are stalling and will soon be trending down also as builders drop margins to keep turnover going.

Only my opinion of course. The stats do seem to be backing it up though.


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## ferretbiter (15 May 2011)

Quick question for all you property moguls, would you buy an investment property outright and use the returns in rent for income, or would you get a loan and use the returns on income to just pay the interest of on the loan, whilst aiming to profit from an increased property worth for the property in the future?


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## trainspotter (15 May 2011)

ferretbiter said:


> Quick question for all you property moguls, would you buy an investment property outright and use the returns in rent for income, or would you get a loan and use the returns on income to just pay the interest of on the loan, whilst aiming to profit from an increased property worth for the property in the future?




If you had cash to pay outright for an investment property I can think of better things to do with the money in the short term. 

Hypothetically I would get an Interest Only loan but this would depend on the LOCATION of the property, the COST of the property, the LEASE agreement including it's terms as well as the INDIVIDUAL CIRCUMSTANCES of the purchaser. PLUS a stack of other information required prior to making ANY decisions of investing into property.

*Please note this does not constitute advice in any way shape or form and DYOR*


----------



## ferretbiter (15 May 2011)

trainspotter said:


> If you had cash to pay outright for an investment property I can think of better things to do with the money in the short term.
> 
> Hypothetically I would get an Interest Only loan but this would depend on the LOCATION of the property, the COST of the property, the LEASE agreement including it's terms as well as the INDIVIDUAL CIRCUMSTANCES of the purchaser. PLUS a stack of other information required prior to making ANY decisions of investing into property.
> 
> *Please note this does not constitute advice in any way shape or form and DYOR*




Lets say hypothetically the location of the property was on the outskirts of Perth/Brisbane, the cost of the property was between 240k-320k, the lease was for 1-5 years at $350-500 per week and the purchaser had between 400k-700k.
What other things would you do if you had the money to buy a property outright?

*Note that I am not using this advice nor is it intended for anyone else to use as advice.*

*These are purely hypothetical situations.*


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## trainspotter (15 May 2011)

ferretbiter said:


> Lets say hypothetically the location of the property was on the outskirts of Perth/Brisbane, the cost of the property was between 240k-320k, the lease was for 1-5 years at $350-500 per week and the purchaser had between 400k-700k.
> What other things would you do if you had the money to buy a property outright?
> 
> *Note that I am not using this advice nor is it intended for anyone else to use as advice.*
> ...




Hypothetically I would place 20% deposit on a property worth 320k ($64,000) and get me an IO loan for 10 years. $256,000 x 8.17% = $21,000 per annum. Obtaining $500 per week rent is up there but seeing how this is hypothetical I will play along for comedy purposes only. $500 per week x 52 weeks = $26,000 per annum. Positively geared for 5k a year? Sounds too good to be true. Spend approx another 15k on stamp duty and settlement fees and insurances etc and put a fork in you ... you are done.

Wait 10 years and it could be your home is now worth the same as what you paid for it or it could be more (LIke I said it depends on the LOCATION) and not just the suburb.

This should leave you with approx $400k in your hand to play with. 200k into fixed interest at 6.17% = $12k in the kitty every year and stick the rest into bluechip shares if you want to play it safe (marginally). Depends on your appetite for risk I would suggest.

Any one else got some good ideas?


----------



## ferretbiter (15 May 2011)

trainspotter said:


> Hypothetically I would place 20% deposit on a property worth 320k ($64,000) and get me an IO loan for 10 years. $256,000 x 8.17% = $21,000 per annum. Obtaining $500 per week rent is up there but seeing how this is hypothetical I will play along for comedy purposes only. $500 per week x 52 weeks = $26,000 per annum. Positively geared for 5k a year? Sounds too good to be true. Spend approx another 15k on stamp duty and settlement fees and insurances etc and put a fork in you ... you are done.
> 
> Wait 10 years and it could be your home is now worth the same as what you paid for it or it could be more (LIke I said it depends on the LOCATION) and not just the suburb.
> 
> ...




Would you say that a fixed interest rate of 7% per annum is too volatile in this current market?How about 8%?9%?10%? just would like your opinion, will not be taking this for advice, will simply prompt me to do more research.

P.S. What do you believe are good indications that a property is in a quality location?Neighborhood crime rates?Close to shops?A park nearby?


----------



## trainspotter (15 May 2011)

ferretbiter said:


> Would you say that a fixed interest rate of 7% per annum is too volatile in this current market?How about 8%?9%?10%? just would like your opinion, will not be taking this for advice, will simply prompt me to do more research.
> 
> P.S. What do you believe are good indications that a property is in a quality location?Neighborhood crime rates?Close to shops?A park nearby?




*Read what I wrote. You can get 8.17% IO for 10 years fixed with ANZ*

How is that volatile for a 10 year strategy???????????????? Can drop to 7.79% per annum if you pay yearly in advance.

Do the research on the propety market yourself. Fresh out of ideas here.


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## ferretbiter (15 May 2011)

trainspotter said:


> *Read what I wrote. You can get 8.17% IO for 10 years fixed with ANZ*
> 
> How is that volatile for a 10 year strategy???????????????? Can drop to 7.79% per annum if you pay yearly in advance.
> 
> Do the research on the propety market yourself. Fresh out of ideas here.




Dear god please stop yelling, I didnt mean on the IO I meant on the fixed interest return on the 200k.

Sorry if I'm pissing you off, just a kid out of highschool with absolutely no idea about the property market.


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## trainspotter (15 May 2011)

Ok kid out of high school. .. I will stop yelling when you stop asking leading queations. DEAL?


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## ferretbiter (15 May 2011)

trainspotter said:


> Ok kid out of high school. .. I will stop yelling when you stop asking leading queations. DEAL?




Hmmm tough decision, but im going to have to lock in no deal there.

http://www.abs.gov.au/AUSSTATS/abs@.nsf/ProductsbyReleaseDate/A50B6B8CF85F0474CA25722900179E3F?OpenDocumenthttp://

Does anyone else think that the housing prices in and around Perth are set to soar?
In part due to cashed out miners looking for a place to settle down and young families brought in by the mining boom?


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## andy0 (16 May 2011)

ferretbiter said:


> *Does anyone else think that the housing prices in and around Perth are set to soar?*
> In part due to cashed out miners looking for a place to settle down and young families brought in by the mining boom?




If you believe the likes of Troy Buswell 

Median house price to hit $850,000


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## Taltan (16 May 2011)

ferretbiter said:


> Lets say hypothetically the location of the property was on the outskirts of Perth/Brisbane, the cost of the property was between 240k-320k, the lease was for 1-5 years at $350-500 per week and the purchaser had between 400k-700k.
> What other things would you do if you had the money to buy a property outright?
> 
> *Note that I am not using this advice nor is it intended for anyone else to use as advice.*
> ...




You find a property for 240-320k with a rental return of $350-$500. In St Kilda on the weekend my mate sold an apartment for $505k that was returning $370 a week gross and about $298 net. Different state I know but maybe the VIC bubble is bigger than elsewhere, hypothetically speaking of course


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## stacks (16 May 2011)

ferretbiter said:


> Would you say that a fixed interest rate of 7% per annum is too volatile in this current market?How about 8%?9%?10%? just would like your opinion, will not be taking this for advice, will simply prompt me to do more research.
> 
> P.S. What do you believe are good indications that a property is in a quality location?Neighborhood crime rates?Close to shops?A park nearby?




Im not sure you understand what fixed interest is. The highest fixed interest rate for cash deposits is just over 6%

7, 8, 9, or 10% ?? Not available for fixed interest rate on cash deposits. Some managed/index funds may have achieved this in the past but that is no guarantee for the future.


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## stacks (16 May 2011)

andy0 said:


> If you believe the likes of Troy Buswell
> 
> Median house price to hit $850,000




After three quarters of negative growth in median prices - Housing minister mentions the median house price may rise to $850,000 ? Wow...


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## explod (16 May 2011)

If you take out the "sold before auction" and sold after auction" the REIV clearance rate this weekend is 42%

Now we all know that clearance rates are meaningless in isolation, but it is a far cry from this time last year when 80% was the norm.  In spite of a reported shortage of property the demand does seem to be plumeting.

The June quarter figures could put the wind up things I fear.


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## Glen48 (16 May 2011)

In Las Vegas the building boom is on again  yep true sad part is no one whats to own a house in a  ghost town or some thing that has been vacant for yrs so they are going for new...how stupid can people be.

And soon it will be here in a burb near you. 
Sell now IF you can find a buyer


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## nunthewiser (16 May 2011)

might be the wrong question for this thread.

how far do you think it will fall in YOUR area and why? 

from the peak in YOUR area to how much you think it deserves/due to fall in a % basis

in my area with select observation and "money talks" syndrome i have seen actual sold prices at times 40% in same streets to what they were selling for previously.

is this not enough of a fall in your view and you want 80% disccount?

are you spotting same drastic discounts in select listings in areas near you?

do you spend more time bitching and preening on the internet to notice whats happening locally?

how much further do you want/think it will fall?

I personally think there are true diamonds hidden amongst the overpriced crap  that have reasons for quick sale but you have to be patient and observant to get them.

 i dont want media/guvvy stats/abs etc etc ...... just what you see in YOUR areas


----------



## robots (16 May 2011)

hello,

gidday Nun, all posts welcome in this thread brother, dont worry about that one

i think the market wrap in the The Age today summed up melbourne, good property still going for good prices

if it has any speck of an issue, ie. parking, kitchen, bathroom, crap neighbours, socialist party/or support gay marriages sticker on the letterbox next door, then you gone

still coming to Melbourne, i still see a mix of places selling in my area (st kilda hill), one agent in particular is having a great run of sold at auction for solid prices, so hard to tell what it has really dropped

thanks

professor robots


----------



## MACCA350 (16 May 2011)

Based on realestate.com.au, My suburb(13km from CBD) has seen a drop of about 23% in 12 months and a drop of 41% since it's peak 6 months ago. Demand in the suburb has gradually dropped by almost 60% from a peak 12 months ago.

I've noticed prices dropping and properties increasing in my area. Although not the norm, a property on our street has been on the market for about 2 years and they've dropped their asking price by around 25% in the last year. Looking at listings I'd say the average drop in the area has been around 20-30% in the last year.

I'd say some areas have already hit the breaks and some who need to get out have missed their chance to preserve capital.

Cheers


----------



## ferretbiter (16 May 2011)

Taltan said:


> You find a property for 240-320k with a rental return of $350-$500. In St Kilda on the weekend my mate sold an apartment for $505k that was returning $370 a week gross and about $298 net. Different state I know but maybe the VIC bubble is bigger than elsewhere, hypothetically speaking of course




Hoping a house will return more in this current market because young families are willing to pay big bucks for a place because of the lack of rental opportunities.



stacks said:


> Im not sure you understand what fixed interest is. The highest fixed interest rate for cash deposits is just over 6%
> 
> 7, 8, 9, or 10% ?? Not available for fixed interest rate on cash deposits. Some managed/index funds may have achieved this in the past but that is no guarantee for the future.




Yep definitely got mixed up, was thinking of a mutual fund.Currently getting 7.2% returns from a mutual fund at the moment.


----------



## ferretbiter (16 May 2011)

MACCA350 said:


> Based on realestate.com.au, My suburb(13km from CBD) has seen a drop of about 23% in 12 months and a drop of 41% since it's peak 6 months ago. Demand in the suburb has gradually dropped by almost 60% from a peak 12 months ago.
> 
> I've noticed prices dropping and properties increasing in my area. Although not the norm, a property on our street has been on the market for about 2 years and they've dropped their asking price by around 25% in the last year. Looking at listings I'd say the average drop in the area has been around 20-30% in the last year.
> 
> ...




So it would be a great time to buy right now in your opinion?


----------



## cutz (16 May 2011)

nunthewiser said:


> i dont want media/guvvy stats/abs etc etc ...... just what you see in YOUR areas




Bit difficult to gauge lately,

My neck of the woods (inner melbourne) I'm seeing properties getting passed in at auction then relisted as private sale, then taken off the market. Some properties that were passed in at auction then sold via negotiation to the highest bidder, normally when I check the results on these the price is undisclosed.

Observations only, attending auctions in around my street for a pure sticky beak, hopefully things turn out OK when the dust settles.


----------



## nukz (16 May 2011)

robots said:


> one agent in particular is having a great run of sold at auction for solid prices, so hard to tell what it has really dropped




A real-estate agent? lol

Anyway as far as the above question, i sold some places in CBD early last year i personally see a repeat of 2000 when docklands/CBD experienced falls due to over-building of apartments. Right now in Melbourne CBD there are so many developments... 

but only time will tell.


----------



## banco (16 May 2011)

I thought this was kind of interesting given his role in pushing property over the years.  From Mark Bouris's latest article on the business spectator site:

"Consider a typical couple from this cohort earning a total of $150,000 per annum, with the husband bringing in $125,000 of full-time pay and the wife making $25,000 part-time. They have a joint mortgage of, say, $750,000 and their lifestyle expenses rise by around 5 per cent per annum. Before the GFC, this family would have about $264 a week in surplus after paying their mortgage and average household expenditure. After the GFC, and allowing for a spate of official interest rate rises and bank top-ups, that figure drops to just $116 per week."

If you are earning $150,000 seems like a really bad idea to take out a 750000 loan.


----------



## Caveman (16 May 2011)

Glen48 said:


> In Las Vegas the building boom is on again  yep true sad part is no one whats to own a house in a  ghost town or some thing that has been vacant for yrs so they are going for new...how stupid can people be.
> 
> And soon it will be here in a burb near you.
> Sell now IF you can find a buyer



Are you a tent seller or something?
If I sell my home where am I going to live


----------



## andy0 (16 May 2011)

banco said:


> *I thought this was kind of interesting given his role in pushing property over the years. * From Mark Bouris's latest article on the business spectator site:
> 
> "Consider a typical couple from this cohort earning a total of $150,000 per annum, with the husband bringing in $125,000 of full-time pay and the wife making $25,000 part-time. They have a joint mortgage of, say, $750,000 and their lifestyle expenses rise by around 5 per cent per annum. Before the GFC, this family would have about $264 a week in surplus after paying their mortgage and average household expenditure. After the GFC, and allowing for a spate of official interest rate rises and bank top-ups, that figure drops to just $116 per week."
> 
> If you are earning $150,000 seems like a really bad idea to take out a 750000 loan.




bouris pushes the panic button


----------



## Agentm (17 May 2011)

HOUSING approvals have collapsed to a 10-year low, falling 12 per cent  between December and March and  sliding 9 per cent in Victoria.
Read more: http://www.theage.com.au/business/housing-starts-up-in-smoke-20110516-1epva.html#ixzz1MYYi3tqc


i think the bubble is still valid, and as robots tells, the inner suburbs are maintaining a strong argument to sustain the bubble some more.. we have to thank the governments desire to keep it happening and god bless them hey!!

there are real estate agents now running auctions in english again in some inner city regions. but the demand for new housing has crunched to a halt, that part is being marketed as an export market into asia

so its all about outbidding and fighting hard to keep values high as no one wants their property values to shrink (and by property we are talking land value not dwelling costs)

the liberal government in victoria is looking at opening up vast tracts of land to export into asia as house and land packages, that will keep the failing housing sector from total collapse.. 

fingers crossed, we have to hope the Chinese and asian neighbours have an infinite thirst for outer melbourne house and land packages..

but imho the balances in place are just managing to keep the bubble sustained, and in the inner suburbs its peaked and flatlining at the peak.. but with a little bit of hocus pocus the RE industry will conjure up some nice numbers to make it all enticing

how long the fantasy will last is the question.. 

*Two upcoming property debates*

 by Steve Keen on May 13th, 2011 at 6:52 pm Posted In: Debtwatch

 				 				 				 					Surprise surprise–now that house prices are falling, whether  they are going to continue falling has become the topic du jour. I have  been asked to take part in two debates on this–one an online Webinar  organized by Business Spectator, the other a live lunchtime talk in Sydney organised by The Money Institute.
 I’d enjoy having some Debtwatch readers involved in them both, so if  you can make the webinar, or attend the debate, please do. Details are  below (excerpted from the promotional materials).
*Webinar: Where to for Australian house prices in the next 12 months?*

*When: Thursday, May 19, 2011 at 12pm AEST
*(which is 10am for WA, 11:30am for NT, 12pm for QLD and 11:30am for SA)
*Duration*: 45 mins
REGISTER NOW
 Australian house prices are ‘the highest in the world’ says the IMF,  but is it true? We have recently seen some softening of residential  house prices, especially in Victoria, but there are also signs of  weakness in other regions, particularly those which are not directly  linked to the mining boom.
 Is it the reckoning the bears have been waiting for, or simply a soft  patch in a wider acceleration that will continue thanks to a rising  population, a shortage of housing stock and the powerful long term  effects of negative gearing.
 Business Spectator has gained a reputation as one of the prime  debating arenas over house prices in the Australian media. Join Managing  Editor James Kirby, economist Steve Keen and HIA’s Harley Dale to hear  what lies in store for the next 12 months.
REGISTER NOW!
 Don’t forget, this avenue is a great way to have your questions  answered in real time – you can submit them during the webinar via a  panel on the screen.
 Be quick to *register* as there are a limited number of places available.
 We hope you attend and we look forward to answering your questions!
 Best Wishes
 The Business Spectator Team
*Will the Australian Property Market Crash?*

 Brought to you by The Money Institute & Live Debt Free Australia
*Proudly brought to you by: www.livedebtfree.com.au and www.moneyinstitute.com.au  The Great Property Debate – Panel Comments
*

_Rising mortgage debt caused the house  price bubble; now that debt has peaked, the same force that drove house  prices up will drag them down_
 Professor Steve Keen, University of Western Sydney & Debt Watch

_Many of the tell tale signs of a bubble are not present and just because house prices are overvalued doesn’t guarantee a bust_
 Shane Oliver, Chief Economist, AMP Capital Markets

_Australian housing is a giant Ponzi  scheme inflated by an unsustainable credit-fuelled boom. The bust has  already begun and is unstoppable_
 Kris Sayce, Editor & Chief- Money Morning Publication

_‘House price crash talk isn’t new and  it continues to be more successful than any other topic in generating  sensational headlines that scare the living daylights out of people.  There are many challenges facing the Australian residential sector,  including the need to aid entry level buyers and rental households. The  focus should be on what needs to be done to alleviate upward pressure on  dwelling prices_
 Harley Dale- Chief Economist, Housing Industry Association


Big differences of opinion by the leading experts. So come and hear  both sides on the debate onan issue that affects every Australian with  an interest in property & make up your own mind.
 When: 7th June, 2011 from: 11.30 Registration for 12pm start to 2.00pm
 Where: Wesley Centre, 220 Pitt St, Sydney. Info Hotline: 02 8004 2444
 Register online: (limited seats available) click on link below to go registration page:
http://live-debt-free.com.au/money-...1/06/07/41/-/propertybubble-crash-debate.html
*The Debate Panel*



Harley Dale- Chief Economist- Housing Industry Association (HIA),
Shane Oliver- Chief Economist-AMP Capital Markets,
Amanda Lynch, CEO of the Real Estate Institute
Professor Steve Keen- Associate Professor-University of Western Sydney N.S.W
Kris Sayce-Editor & Chief-Money Morning Publication
David Collyer- Manager Director-Prosper Organisation







​


----------



## greebly24 (17 May 2011)

banco said:


> I thought this was kind of interesting given his role in pushing property over the years.  From Mark Bouris's latest article on the business spectator site:
> 
> "Consider a typical couple from this cohort earning a total of $150,000 per annum, with the husband bringing in $125,000 of full-time pay and the wife making $25,000 part-time. They have a joint mortgage of, say, $750,000 and their lifestyle expenses rise by around 5 per cent per annum. Before the GFC, this family would have about $264 a week in surplus after paying their mortgage and average household expenditure. After the GFC, and allowing for a spate of official interest rate rises and bank top-ups, that figure drops to just $116 per week."
> 
> If you are earning $150,000 seems like a really bad idea to take out a 750000 loan.




Cheers banco. I found this hilarious. A combined income of $150k and they're left with $13,728 per year (or only $6,000 after the GFC). Ridiculous! How much of that do you reckon they'll be able to save for a rainy day? And what if the wife loses her job or a kid gets sick and needs looking after or even if one of their cars breaks down? Probably see a "vendor must sell" real estate ad shortly thereafter. No wonder Westpac is seeing an increase in late loan repayments. Who lent to this much to this couple anyway?

Using an over-extended couple like this to validate the author's argument is ludicrous.


----------



## Plumber1 (17 May 2011)

cutz said:


> Bit difficult to gauge lately,
> 
> My neck of the woods (inner melbourne) I'm seeing properties getting passed in at auction then relisted as private sale, then taken off the market. Some properties that were passed in at auction then sold via negotiation to the highest bidder,* normally when I check the results on these the price is undisclosed.*
> 
> .




Join up FREE with www.onthehouse.com.au  and all prices are disclosed. The information all comes from the Titles Office. It shows history of sales for every house in Australia.    
It is excellent.


----------



## nunthewiser (17 May 2011)

nice site plumber

cheers

gday robots, hope all is well in sunny paradise

thanks to those that left comments in regards to my querie


----------



## Knobby22 (17 May 2011)

Plumber1 said:


> Join up FREE with www.onthehouse.com.au  and all prices are disclosed. The information all comes from the Titles Office. It shows history of sales for every house in Australia.
> It is excellent.




Yes, thanks Plumber, I need this site. So many are undisclosed at the moment.


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## Taltan (17 May 2011)

Plumber1 said:


> Join up FREE with www.onthehouse.com.au  and all prices are disclosed. The information all comes from the Titles Office. It shows history of sales for every house in Australia.
> It is excellent.




Unfortunately per the website the info comes from the titles offices in QLD, NSW, SA, WA and ACT. Looks like the SRO (VIC) ain't playing ball, maybe that's why our bubble is bubbling along better than some of the others.


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## NewOrder (17 May 2011)

Plumber1 said:


> Join up FREE with www.onthehouse.com.au  and all prices are disclosed. The information all comes from the Titles Office.* It shows history of sales for every house in Australia.    *It is excellent.




Except Vic which is the only State I am intertested in. Anyone know of similar sites that include Vic?


----------



## tothemax6 (17 May 2011)

stacks said:


> Im not sure you understand what fixed interest is. The highest fixed interest rate for cash deposits is just over 6%
> 
> 7, 8, 9, or 10% ?? Not available for fixed interest rate on cash deposits. Some managed/index funds may have achieved this in the past but that is no guarantee for the future.



Corporate bonds.
Healthscope issued notes at 11.25% coupon rate, for instance. No capital guarantee like a treasury bill though of course.


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## medicowallet (18 May 2011)

The writing may be on the wall for property investors, the media is all over it.

Has the smart money exited before the herd?

If there is a rout, who will then say they sold their holdings x months prior to it?

Who will have to take on extra shifts at work?

Sunshine is free, but are lollipops discretionary spending?

Interesting times ahead.

MW

Sunshine and.... well that may just have to do.


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## Glen48 (18 May 2011)

That site is good but a few yrs out of date which will not show how fast things are tanking.


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## nunthewiser (18 May 2011)

LOL at the media.

Just an observation.

Pre market meltdown. .the media preached NOW was the best time to invest in the stock market......

Pre housing meltdown .....media preached NOW is the best time to invest in property...

stock market hit bottom..media screamed SELL SELL SELL

do you see a pattern here?

no?

i suppose following the herd is what all the cool kids do these days ....

Pick ya targets and leave the rest to the cool kids i reckon


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## nukz (18 May 2011)

There was a news article in late 2007 explaining that in Melbourne hundreds of property's in Toorak and other wealthy suburbs were put on the market but often not listed publiclly. The reason was because the houses were up for sales due to margin calls. 

I think allot of the smart investors would have got out when they saw what was happening in the U.S in 2007/2008 and if they did stay in possibly got out when they saw property rise parabolicly 30% nationally in a year.


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## medicowallet (18 May 2011)

nunthewiser said:


> LOL at the media.
> 
> 
> do you see a pattern here?
> ...




No, but the smart investors run with the herd.  They just turn before the herd does.

This time is different.  America increasing its debt (and congress not wanting to move to where Obama wants to go) their stimulis is coming out of the market, China in its own troubles, reckless inefficient government here, interest rates going up this time, not down.

If america decreases its consumption and China try to decrease inflation, we are in for BAD times.

Time will tell.
Just preparing myself to lose some more money, oh well.


----------



## KurwaJegoMac (18 May 2011)

medicowallet said:


> This time is different.




Is it now? Funny how with each bubble and bust it's always "this time is different".


----------



## Plumber1 (18 May 2011)

Plumber1 said:


> Join up FREE with www.onthehouse.com.au  and all prices are disclosed. The information all comes from the Titles Office. It shows history of sales for every house in Australia.
> It is excellent.




Sorry. I did not know that Victoria is not included. 
Here on the beautiful, sunny Gold Coast (where all property prices have halved in the last 3 years),  we cannot understand why anyone would live in a godforsaken, cold place like Victoria,    so I have never attempted to look up any Victorian houses.


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## Plumber1 (18 May 2011)

Glen48 said:


> That site is good but a few yrs out of date which will not show how fast things are tanking.




Rubbish. 
It is current to one month after settlement of the property.
 And it is all FREE.


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## nunthewiser (18 May 2011)

medicowallet said:


> No, but the smart investors run with the herd.  They just turn before the herd does.
> 
> This time is different.  America increasing its debt (and congress not wanting to move to where Obama wants to go) their stimulis is coming out of the market, China in its own troubles, reckless inefficient government here, interest rates going up this time, not down.
> 
> ...




Thats all good mate...

seen 40% + falls on select properties in my area already......that not enough? 80% discounts ya reckon?

where is the bottom? from where i am standing i cant see 80% discounts in a hurry regardless of overseas conditions.

dont get me wrong YES there is some major falls expected BUT on prices that are still expecting peak prices...... do the ones that are listing currently at major discounts to peak expect another 40% off ?

or is no one gunna be happy regardless of the discounts available currently?

I bought my first house for 50k , second one in same street for 42k...now that street got a median of 400k from a top median at peak of 480k..should i wait till its 50k again?

please tell me when thats going to happen


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## medicowallet (18 May 2011)

nunthewiser said:


> Thats all good mate...
> 
> seen 40% + falls on select properties in my area already......that not enough? 80% discounts ya reckon?
> 
> ...




I like long term trends, don't you?

Because things tend to return to trend, slowly or quickly, who knows.

What I can tell you is that credit growth can't go on forever.

Of course there has been some steam off the "peak", but according to national figures, this is still minor, and a lot of pain could still be coming.

Well done with your purchases, of course they will not go back to pre-inflation dollars, but to a trend line, definitely at some time. I just hope for us, that the trend line comes later rather than sooner.

Hope that clears things.

MW

Plenty of sun (can't afford polish to make it shine)


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## medicowallet (18 May 2011)

KurwaJegoMac said:


> Is it now? Funny how with each bubble and bust it's always "this time is different".




Sure, can you please provide me with a time with the same circumstances?

Go on.


----------



## andy0 (18 May 2011)

nunthewiser said:


> LOL at the media.
> 
> Just an observation.
> 
> ...




Some of us could see the future of houseing some time ago. The media are only picking this up because Australia's tv economist Davis Kochie has jumped on the wagon.


----------



## nunthewiser (18 May 2011)

andy0 said:


> Some of us could see the future of houseing some time ago. The media are only picking this up because Australia's tv economist Davis Kochie has jumped on the wagon.




Just as he did at the peak of the stock marketand explaining to the minions on WHY we should invest.

exactly the same at the peak of the housing boom explaining what a great investment property investment is.

hence my comments ..media screaming doom and gloom ....leading indicator to ignore the wanka,s and look for oneself

but hey....... what would i know ....i dont follow the "experts" , i tend to make my own path....

patience and avenues to act when the opportunities arise tend to not fit in most peoples investment criterias.

anyhoo....... i spose its easier not to look around when others are telling you theres nothing out there

Pick your targets wisely is all i got to say......buyers got the ball


----------



## nunthewiser (18 May 2011)

ok before we go any further and i get called a property bull etc etc .....

this is NOT the case 

Yes i believe that there are bargains out there i.e select propertys in my area for varying reasons are 40%+off there peak.....these probably make up 5% of the total listings i look at.
That leaves 95% thats listed that are dreaming and got a long way to fall for them to start being attractive to me.....

that 95% will be noticed when they fall ....not the 5% now that have already been hit 40odd%.....

will be a lot more to come off big% in my view but at the end of the day those that are sitting here expecting 80% discounts are the ones that wouldnt buy anything at anytime anyways.....

anyhoo.......good luck with it all, im going for a latte with Robots so i can check out some of these port melbourne swanky highrise pads that need to come of another 40% before i get excited


----------



## white_goodman (18 May 2011)

interesting developments

http://www.smh.com.au/business/moodys-downgrades-ratings-for-big-four-banks-20110518-1eso8.html


----------



## Tysonboss1 (18 May 2011)

> House prices to stagnate for 'years'
> By Nicki Bourlioufas
> 
> 19sep05
> ...




Well this is from the 2005 thread "property to stagnate for years"

I guess if you keep repeating the same thing for 6 years eventually it will happen or it might not.


----------



## andy0 (18 May 2011)

white_goodman said:


> interesting developments
> 
> http://www.smh.com.au/business/moodys-downgrades-ratings-for-big-four-banks-20110518-1eso8.html




Also add, 
Mortgage insurers a greater threat to banks


----------



## sinner (18 May 2011)

white_goodman said:


> interesting developments
> 
> http://www.smh.com.au/business/moodys-downgrades-ratings-for-big-four-banks-20110518-1eso8.html




Rumour was floating around on forexlive earlier today

http://www.forexlive.com/blog/2011/05/18/rumour-time-again/


----------



## nunthewiser (18 May 2011)

Tysonboss1 said:


> I guess if you keep repeating the same thing for 6 years eventually it will happen or it might not.




oh its definately happening

go with it or get ran over....different circumstances different strategies tho.

and gday


----------



## NewOrder (18 May 2011)

Plumber1 said:


> Sorry. I did not know that Victoria is not included.
> Here on the beautiful, sunny Gold Coast (where all property prices have halved in the last 3 years),  we cannot understand why anyone would live in a godforsaken, cold place like Victoria,    so I have never attempted to look up any Victorian houses.




boo

at least here in wonderful Melbourne my property values have gone up in the last 3 years. Not only that it is a fantastic place to live, give me a great lifestyle over supposedly good weather anyday :

Oh and you don't know what "godforsaken and cold" are until you have lived in Christchurch like I did for 6 long years


----------



## trainspotter (19 May 2011)

LOL ....... just went back to October 2010 and around post 3000, page 150ish of this thread. 

Talk about dÃ©jÃ  vu. Same same but different.

Man,  we have flogged this dead horse      :horse:


----------



## satanoperca (19 May 2011)

TH, this horse has just started to trot, the bolt has yet to become and then the complete and utter flogging.

But we are different here, just a little slower.

Cheers


----------



## kincella (21 May 2011)

just looked at ..on the house site...interesting the figures flashing up on the rhs....some places up 11% and 20% and some down 1%, god forbid one down 6%
so do you mob actually research the articles, information on these sites.....
as some of you have been frothing at the idea of 50-60% drops, and now 80%

you may get some sellers who had a margin loan gone bad, or some other catastrophe that requires a fire sale....
but I cant see it, from all the noise from lame stream media, the actual figures are nothing like it, in fact recent stuff from abs or whatever, instead of upgrading  they are renovating to the tune of 31 billion in the last quarter...so most are staying put, and saving their money, for the surety of rainy days to come...

the other point missed is the higher priced homes are not selling or not in the market, so the middle and lower houses are changing hands,  which brings the median value down...it does not mean houses are selling for less

news, ran a program this week, showing how many businesses had closed down and jobs lost, in each suburb....its worth having a read, + check out your suburb
it may surprise some of you, and those pretend economists, who I call econo- misteries , cause it seems they are off with the fairies,
I predicted gloom and doom a long time ago, for small business...and gfc mark 2
so whilst this is going down....there will not be interest rate rises for a long time

on the labor channel, abc24, they had a program about Vic 500,000 population increase, and how it will affect the regional cities....Bendigo, Ballarat, Shepparton etc
they mentioned Castlemaine, it has risen over 24% in past year, the locals are not that happy with the newbies arrivals...

those who go on about the lower auction numbers, also missed the high numbers last year, and last couple of years, when every man and his two dogs were buying...forcing the auction numbers way above the norm
I say you will not see anything like the doom and gloom the bears are frothing over in their cyrstal balls.....
you will see some forced sales, like after the business closed and no income, for the owners, some had business loans against their homes...
the banks are not lending to small business
the govt is pretending everything is hunky dory, to bolster their own egos...hence glen stevens pretending to back swan with his threatening to raise rates...its all crap...
all pretence...in fact you may see some rate drops, after worse figures come out in june..
a repeat of 2008 is on the cards, after they raised rates non stop, crowing about swans fiscal prowess, only to suddenly drop rates by 3%, with the reality
i swear some of you have been here for years, saying the same old gloom,  yet year after year, nothing like it has eventuated...in fact its gone the other way, with rises generally..
up here in country nsw, its all rather ordinary, if not slight rises, as I see  of at least 10% in the areas on my watch...
the lousy public housing, or low cost old housing, or unfavourable locations are selling as usual, but the nicer homes, in the better areas, middle class seem to be rising...some cases over 20%...but as they do with the median, they lump it all together, and you can get a lower median for the suburb...
oh well, once we get that change of govnuts, both state and federally, then you will see confidence rise, and the economy back on track...with house prices on their usual trajectory trend...upwards


----------



## medicowallet (21 May 2011)

kincella said:


> just looked at ..on the house site...interesting the figures flashing up on the rhs....some places up 11% and 20% and some down 1%, god forbid one down 6%
> so do you mob actually research the articles, information on these sites.....
> as some of you have been frothing at the idea of 50-60% drops, and now 80%
> 
> ...




Who has been saying 50-80% drops?

Or did you just make that up?


Also, we will see what happens over the next 12 months.


What are you predicting for returns over that timeframe, considering your prediction prowess.


----------



## damien275x (21 May 2011)

As a young person who wants a house to live in, I'm not buying right now. For 3 years I've been told to buy, but I refuse to accept the price tags right now. I would rather get more of a deposit behind me and a buffer account built up for tougher times that lie ahead. Most of my other friends and family my age feel the same way. 

Even the most bullish of all property bulls are now changing their tune - saying things like "property is going to stagnate at worst" .. Yes, OK fair point. If it's going to stagnate for 3-5 years though, you have effectively lost 30%+ because you could have been getting 6%+ per annum by holding cash. I don't think a lot of these property investors are strong enough to hold onto their bricks and mortar when they are tumbling in value and bleeding money. After all, it's *never* happened before and they are only used to seeing prices rise in good times. A lot more sellers and a lot less buyers  equates to lower prices.. or even a flash crash as the panic spreads. Markets are irrational and often overshoot one way or the other.

I think overall this is a good thing to have happen though, after all - a house isn't a bank. I don't know why people have got into the habit of parking all their cash and debt into one basket. It's a little bit dumb. I can live with my decision no matter which way the market goes, but I strongly expect it to fall for a while first. I see no hurry to rush out and buy, and if I ever do buy, it won't be to make money.


----------



## greebly24 (21 May 2011)

kincella said:


> the other point missed is the higher priced homes are not selling or not in the market, so the middle and lower houses are changing hands,  which brings the median value down...it does not mean houses are selling for less




By that logic, when higher priced homes were selling, or in the market, why did it mean houses were selling for more? Why is the median house price only accurate when it is going up? What other market indicators are only accurate when rising?

_The Australian Financial Review May 21-22 2011
THE GREAT WINTER HOME SALE
"The numbers tell the story. Property values are moving decisively in favour of buyers. There are bargains all around the country as sellers drop their prices – some by as much as 70 per cent."_

_"In 2008 the unit was brand new and it sold for $5 million. Yet at the twilight auction on May 13 a vendor bid of $2.5 million for the luxury Maroochydore penthouse unit was met with silence from the 50 onlookers."_

_"In the affluent Sydney beachside suburb of Palm Beach, public listings indicate that about one in 10 properties are up for sale."_

So, kincella, I don't see how you can argue that higher-priced homes aren't on the market? 10% of the homes in Palm Beach are publically listed as for sale. To me that seems a massive amount!?!


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## Aussiejeff (21 May 2011)

That devilish Enzo Raimondo reports *666* auctions held today (59% sold). http://www.reiv.com.au/home/inside.asp?ID=142

OMG, *666* is the number of the beast!

It must be true then.... the world MUST be gonna end tonite.....



Hasta la vista, babies....


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## So_Cynical (21 May 2011)

Anecdotally...im on the move again and looking for rental property's on the lower north shore (Sydney) i inspected 6 property's today all at the lower end of my price bracket and can report the following.


 2 bed unit in Wollstonecraft $590 p/w...approximately 15 inspectors (vacant)
 2 Bed Town house in Artarmon $490 p/w...approximately 12 inspectors (vacant)   
 3 Bed House in Artarmon $610 p/w..approximately 10 inspectors (vacant)
 3 bed unit in Cammeray $580 p/w...approximately 14 inspectors (almost vacant)
 4 bed house in Lane Cove $650 p/w...approximately 10 inspectors (vacant)  
 2 bed unit in Artarmon $460 p/w...approximately 70 inspectors (occupied) 

According to the media and the real estate industry there is a rental crisis, so how come there are so many empty property's? and why such disinterest, small numbers of inspectors. :dunno:

Also if we look at the 4 bed house in Lane Cove and assume a value of around 800K (its a very old crappy house) then consider the rent of $650 p/w that gives us a gross yield of around 4.3% ~ take out expenses and we are looking at less than 4% yield..maybe as low as 3.5%  its woeful and thus as an investment, it only makes sense if there is at-least 4% annual capital growth.

Its a real ponzi isn't it....someone has to pay more than you did or it all falls apart.


----------



## againsthegrain (21 May 2011)

There is a few 3 bedroom houses near my place, when I go for my relaxing nightly walks while sipping a late I note how long they have been on the market for lease. One 3 months the other 4 months. This must be owned by those owners who say dont worry rent will cover interest and ill just raise rent if rates go up.

Oops thats already 4 months income lost maybye ubank at 6.51% was not such a bad option


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## NewOrder (21 May 2011)

So_Cynical said:


> Anecdotally...im on the move again and looking for rental property's on the lower north shore (Sydney) i inspected 6 property's today all at the lower end of my price bracket and can report the following.
> 
> 
> 2 bed unit in Wollstonecraft $590 p/w...approximately 15 inspectors (vacant)
> ...




Coming into winter is not usually peak rental time as compared to Jan for eg. 

I also think your yields are a bit out unless the property in the eg has only just been purchased. If the property has beed owned for say 5 or more years then the purchase price would have been far less than $800k which would change the yield figure.


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## prawn_86 (21 May 2011)

NewOrder said:


> I also think your yields are a bit out unless the property in the eg has only just been purchased. If the property has beed owned for say 5 or more years then the purchase price would have been far less than $800k which would change the yield figure.




But if one was to buy it now and rent it out that would be the current yield.


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## NewOrder (21 May 2011)

prawn_86 said:


> But if one was to buy it now and rent it out that would be the current yield.




yes which is what I said. But if it was purchased years ago the yield figure given would be incorrect.


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## So_Cynical (21 May 2011)

NewOrder said:


> yes which is what I said. But if it was purchased years ago the yield figure given would be incorrect.




If the property is now worth 800K then the yield at today's value is woeful....and totally dependant on capital growth to make the yield competitive in the longer term.

In the stock market when yields blow out the SP will adjust accordingly or the yield will pull back, there is loose correlation between the two....now if property is just an asset with a yield, one would think that the value is going to reflect the yield (prices fall) or the yield is going to met the value (rents increase).


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## wayneL (22 May 2011)

NewOrder said:


> yes which is what I said. But if it was purchased years ago the yield figure given would be incorrect.




Yield is quoted on current value, not purchase price. This is important so that the investor can determine whether it is better to liquidate and find better yields elsewhere (capital gain potential considered).

It's a quirk of property investor psychology that up to the minute values are used to calculate capital gain, yet value from the pre-cambrian era is used for yield.

Can't have it both ways.


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## medicowallet (22 May 2011)

http://theage.domain.com.au/agents-cutting-rates-as-market-cools-20110521-1ey2y.html

Agents cutting commissions for property likely to sell.

Seems to me that the market is slowing considerably.  I guess the agent might have to get a new Audi every 5 years rather than every 3.

This coupled with the pressures to list at a reasonable price...

Doesn't bode too well for capital growth in the short to medium term.

Good luck to the people who require capital growth to make interest repayments or to maintain their lifestyle.


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## Glen48 (22 May 2011)

Here is where it will end up next year:

http://www.youtube.com/watch?v=6GkaRkSx20o&feature=related


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## nukz (23 May 2011)

*China woes loom over local property market*
Alison Bell
May 23, 2011 - 7:59AM

_But bigger price falls may be on the horizon given ructions in China's property market, according to famed short-seller and China bear, Jim Chanos.

House sales are slowing in China and prices declining, Mr Chanos, founder of New York-based short selling firm Kynikos Associates, told the CNBC television network on Wednesday.

"The cracks are spreading on the facade," he said, of China's economic growth story.

"You're seeing real estate firms shutter, sales offices closed down.

"Some of the engine behind the boom is at least beginning to sputter."

Chinese developers are now turning to Hong Kong to raise capital through junk bonds as China's banks wind back lending, he said.

Sixty per cent of China's economy is driven by the 12-year-old real estate construction and development market - twice the proportion of the Asian tigers before the Asia crisis hit in 1997, he told CNN earlier this year.

By contrast, 10 to 15 per cent of Western economies are driven by construction._

http://news.theage.com.au/breaking-...ver-local-property-market-20110523-1ezdz.html

Quite a interesting article _*"It's interesting that the only other countries that are experiencing a property boom besides China are Brazil, Australia and Canada."*_

I am still confident that China plays a huge part in the future of property prices in Australia even though Robots suggests otherwise. Only time will tell but the..


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## satanoperca (23 May 2011)

> *
> The Real Estate Institute of Victoria reckons median house prices in Melbourne collapsed 6 per cent in the three months to March. Nationally, prices fell almost 2 per cent according to the Australian Bureau of Statistics.
> 
> Read more: http://www.theage.com.au/business/p...-investment-20110522-1eyty.html#ixzz1N8Zrx6fF*




6% in three months and to think it is just the start.

http://www.theage.com.au/business/property/dwelling-upon-investment-20110522-1eyty.html


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## trainspotter (23 May 2011)

Dec Qtr 10 to Mar Qtr 11  Mar Qtr 10 to Mar Qtr 11  
Established house prices  % change  % change  

--------------------------------------------------------------------------------

Weighted average of eight capital cities  -1.7  *-0.2 * 
Sydney  -1.8  0.8  
Melbourne  -2.5  *1.1* 
Brisbane  -2.5  -3.6  
Adelaide  -1.0  0.9  
Perth  0.5  -3.2  
Hobart  0.4  0.6  
Darwin  -1.0  0.5  
Canberra  -0.4  1.1  

--------------------------------------------------------------------------------

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0

Not sure which ABS "The Age" is using as Capital City prices has dropped only 0.2% in 12 months and Melbourne 2.5% in the last 3 months?? But actually gained 1.1% over the last 12 months


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## greebly24 (23 May 2011)

Did anyone see the story on Channel 7 news last week about "Altona", a mansion for sale at Point Piper in Sydney? They're asking $60m.

The story bragged how Bono from U2 once stayed there, paying $30,000 per week.

Sounded pretty good until I checked the yield. If Bono stayed there for a whole year, it would cost him $1.56m. On a $60m purchase price, that's still only a yield of 2.6%. Or to put it another way, the purchase price is about 40 years rent.

It sold in 2002 for $28m. It was listed in June 2010 for $45m. So that's abit over 6% annual price growth (assuming it sold then).

But now it seems someone is trying to flip it? $45m in June 2010 to $60m in May 2011. A 33% profit of $15m in less than a year.

Good luck to them. Must have balls of steel


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## banco (23 May 2011)

trainspotter said:


> Dec Qtr 10 to Mar Qtr 11  Mar Qtr 10 to Mar Qtr 11
> Established house prices  % change  % change
> 
> --------------------------------------------------------------------------------
> ...




I think the Age's figures are from the seasonally adjusted numbers?


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## trainspotter (25 May 2011)

SYDNEY, May 25 (Reuters) - GE Capital is selling its A$5 billion ($5.3 billion) Australia and New Zealand mortgages books to Pepper Homeloans as concerns rise over a softening of the Australian housing market and rising cost of funds. 

http://www.reuters.com/article/2011/05/25/gecapital-australia-idUSL3E7GP0V320110525

Oh oh ....... is that smoke on the horizon?


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## Uncle Festivus (25 May 2011)

trainspotter said:


> SYDNEY, May 25 (Reuters) - GE Capital is selling its A$5 billion ($5.3 billion) Australia and New Zealand mortgages books to Pepper Homeloans as concerns rise over a softening of the Australian housing market and rising cost of funds.
> 
> http://www.reuters.com/article/2011/05/25/gecapital-australia-idUSL3E7GP0V320110525
> 
> Oh oh ....... is that smoke on the horizon?




A recession in fact but not in name, at least not yet officially?

Maybe they need to re-define what constitutes 'reccession', or maybe ask some retailers?

It's going to get nasty?


----------



## Dowdy (25 May 2011)

Uncle Festivus said:


> A recession in fact but not in name, at least not yet officially?
> 
> Maybe they need to re-define what constitutes 'reccession', or maybe ask some retailers?
> 
> It's going to get nasty?




The media/ politicians/ RBA want to avoid the word *reccession* for as long as they can. They'll manipulate/ fudge figures/ intoduce stimulus etc.

Half of the Gen Y have never heard of that word or understand its meaning but once it becomes mainstream, watch the prices fall & watch the stores close up


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## sptrawler (25 May 2011)

At the end of the day(to coin a phrase) the two major spends in joe averages life is a car and a house. 20 years ago when the average price for the family car became half the price of a house people bought houses.
Now the price of the family car is less than 1/10th of the house and to rent has dropped to 3% of the value of the house.
Only fools who are relying on a capital gain and tax breaks would be buying, and they deserve any gains they get, it takes guts.

The government has been trying for years to get out of renting, they know there is not a lot of upside to supplying housing to the needy, unfortunately


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## Mr Z (26 May 2011)

trainspotter said:


> Oh oh ....... is that smoke on the horizon?




The lousy retail number have been enough smoke for me, there is plenty of $ pressure out there on the east coast IMO.


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## Mr Z (26 May 2011)

Uncle Festivus said:


> It's going to get nasty?




Yes, too much personal debt out there on the east coast. Plenty of fuel to feed a general recession. In the end property is all about our ability to borrow!


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## ginar (26 May 2011)

Hot of the presses , explains why banks been worked over last week or so 


http://www.bloomberg.com/news/2011-...ncies-jump-to-record-on-rates-fitch-says.html


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## trainspotter (26 May 2011)

Here is the real concern IMO



> AUSTRALIANS owe almost $50 billion on credit cards as spiralling living costs force them to put everyday expenses and even mortgage repayments on plastic.
> 
> Reserve Bank of Australia statistics reveal the national credit card debt has climbed 42 per cent in the past five years to $49.3 billion, with $36 billion accruing interest.




http://www.news.com.au/money/money-...o-50-billion-rba/story-e6frfmd9-1226056643781

And what is the "average" interest rate on the plastic you may ask ??? *19.3% *is the answer !!!!!

All unsecured as well ........ I might have to start my own line of credit at this rate !

Zero interest on transfer of balances for the first 6 months and then up to 23% rollover ....... any takers??? No wait ...... Citibank has already done this ...  @#$%!@#$%^&*


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## ginar (26 May 2011)

latest RBA speech , very much housing related 


http://www.rba.gov.au/speeches/2011/pdf/sp-dg-260511.pdf


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## againsthegrain (26 May 2011)

have had a family member just upgrade to a bigger car, we went to the car dealers and did the usual haggling not expecting more then a few K off the price. 

Very very suprised at the desperation of the dealers, each caryard we visited was prepared to undercut the previous, on a 38k 4wd we ended up knocking off 9k! 

Not sure if its just crazy markups but the desperation was sure showing through the dealer's poker faces. 

Have been hearing heaps of similar stories now, especially with non basic essentials. very hard for retailers to pull in the sales thesedays, looks like the credit cards may have been maxed out 1 too many times.

Oh well Im patiently waiting for those interest rate raises, would be nice to get something in the 6.75 - 7% return on my savings which the negatively geared speculator will pay for. 

Don't think rents will compensate for that either, you will just start to see more and more rents being unpaid for 6 months at a time like its common in europe now.


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## awg (26 May 2011)

reported and discussed on ABC radio Newcastle, 0% clearance on auctions last weekend,

although they quoted only 14, and even the real estate spokesman admitted the figures might not include every auction that happened.

I have noticed a softening of prices at the low end now, which up until a few months ago, was holding up ok


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## Tysonboss1 (26 May 2011)

againsthegrain said:


> have had a family member just upgrade to a bigger car, we went to the car dealers and did the usual haggling not expecting more then a few K off the price.
> 
> Very very suprised at the desperation of the dealers, each caryard we visited was prepared to undercut the previous, on a 38k 4wd we ended up knocking off 9k!
> 
> ...




Two things,

1, Some of the larger vehicle financing companies have really increased commissions and trail incomes to dealers recently, So a dealer may be willing to offer a bigger discount if the finance is through them.

2, The Australian dollar has been really strong in recent months and while they may not be reducing their marked price they may be willing to give larger discounts should the meet with stronger hagglers.


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## Glen48 (26 May 2011)

On Sunrise Ch 7 Kockie interviewed some one who tells the housing market is falling  which is why Gold and silver is going up.
 the housig market only has another 60% + to  go down


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## cynic (26 May 2011)

Dowdy said:


> The media/ politicians/ RBA want to avoid the word *reccession* for as long as they can. They'll manipulate/ fudge figures/ intoduce stimulus etc.
> 
> Half of the Gen Y have never heard of that word or understand its meaning but once it becomes mainstream, watch the prices fall & watch the stores close up




No problem avoiding the word "recession", they'll just use artificial stimulus like the US did until it becomes a full blown "depression" instead. Most of us weren't even alive the last time we had one of those!


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## Dowdy (26 May 2011)

Glen48 said:


> On Sunrise Ch 7 Kockie interviewed some one who tells the housing market is falling  which is why Gold and silver is going up.
> the housig market only has another 60% + to  go down




I don't think he said that because if he did Kochie would be laughing in his face. Gold and silver isn't related to the Australian housing market. It's related to, amongst many things, the weakness in the US dollar


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## TabJockey (26 May 2011)

Glen48 said:


> On Sunrise Ch 7 Kockie interviewed some one who tells the housing market is falling  which is why Gold and silver is going up.
> the housig market only has another 60% + to  go down




What are you trying to say? Investors in australia are pumping money into Gold and Silver and not real estate?

Gold in Australian dollars is going nowhere fast and silver is completely speculative.







As far as I know, nobody who knows even remotely what they are talking about would link gold and silver to Aussie resi markets. 

60%? I would be in heaven but unfortunately I see very strong support about 20-30% below current price levels.

60% would put houses in my area at about 400k, or 3x the average household income around here. I dont see how it is physically possible for the market to reach that sort of level without some signifcant disruptions to affordability (like unemployment ,high inflation or very high interest rates).


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## Glen48 (26 May 2011)

What I meant was the housing market world wide is tanking because  a house is a consumerable like a car. TV etc and some people can see a depression arriving one day and looking for security and a hedge against inflation..


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## TabJockey (26 May 2011)

I would not agree that a house is a consumable. Certainly the population does not feel that way.

Land can also be considered a hedge against inflation because there is a limited amount of it.


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## sptrawler (26 May 2011)

TabJockey said:


> I would not agree that a house is a consumable. Certainly the population does not feel that way.
> 
> Land can also be considered a hedge against inflation because there is a limited amount of it.




The value is in the land, hence the saying"buy the worst house in the best street".
Once a house is built it starts depreciating, initially it is someones dream but eventually it becomes dated and needs money spent on it.
If it wasn't a consumable they wouldn't end up being knocked over. Once the land value exceeds the value of retaining the house it becomes a liability as it becomes an added cost.
I remember purchasing a house and the real estate agent said "it's worth more than that, it has a house on it". I told him I would pay an extra $10,000 if they demolished the house.
Like Glen48 said houses are consumables.


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## TabJockey (26 May 2011)

Sorry when I said "house" what I really meant to say was "Real Estate". Yes improvements upon land are depreciating items. The value attributed to improvements upon land are not what we are talking about in this thread. If you want a brand new house you will pay the cost of construction plus reasonable profit to the builder, and once you purchase the improvement it will slowly depreciate.

We are really talking about land values here, or in the case of apartments "space" value. It is not a consumable, and it is a hedge against inflation.

In a way improvements are also a hedge against inflation, if there is inflation in the future the replacement cost of your improvements will increase giving you more current bang for your future buck.


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## Glen48 (26 May 2011)

Any thing is only worth what some one is prepared to pay for it. Would you buy a $10 M mansion in the middle of  no where, would you buy a house if the prices are dropping 1% a month like they are in USA  or Ireland where there are 130, 000 vacant houses and some thing similar in Spain.
There is plenty of land it is the development cost  which is driven up by council fee's , rule's and stupid  regulations  to justify their council jobs.

Some countries have toll collectors not to help improve the road's but to pay the toll collectors wages.
 Most look at a house how much they paid and how much they sold them for with out adding in bank fees, application fees, rates, insurance, time spent on repairs, cost of repairs, agents costs, being stuck in some place you can't leave if you wanted to, agree house's were a good punt but the bubble has popped move on to the next bubble PM's and wait until you see sign's in the corner store saying we buy PM's and then get out and look for the next bubble in about 10+ years. 
 I have owned  9 houses over 30 yrs and only made money on 1 when the easy money came around one went no where for 10 yrs and cost me $1500 a yr in rates etc, it was on the beach.
I also made money on a $2,500car which went to 200K  in the easy credit bubble.
Never believe the RE agent's who say houses double every x yrs and all the other rubbish and ask them to prove it they can't.

The figures are all wrong, look up _Money Morning _and see what they have to say in today edition.
 As the cops said in the movie " When a stranger Calls " get out of the house  ir become one of Australia's biggest loosers.


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## sptrawler (26 May 2011)

TabJockey said:


> Sorry when I said "house" what I really meant to say was "Real Estate". Yes improvements upon land are depreciating items. The value attributed to improvements upon land are not what we are talking about in this thread. If you want a brand new house you will pay the cost of construction plus reasonable profit to the builder, and once you purchase the improvement it will slowly depreciate.
> 
> We are really talking about land values here, or in the case of apartments "space" value. It is not a consumable, and it is a hedge against inflation.
> 
> In a way improvements are also a hedge against inflation, if there is inflation in the future the replacement cost of your improvements will increase giving you more current bang for your future buck.




The problem is your "improvements "are only improvements in your eyes, to someone else they may be just something else to knock over.
Also where you say apartment '" space" value, it is no different to a house. Eventually the apartment becomes dated and will be knocked over. It only has value while it is seen as a desirable "box"to live in or rent. Once it becomes dated it is just another apartment block that provides cheap housing.
Like was stated, it is land where the value is, unless you are on a riverina flood plain in Queensland.
Actually in your first paragraph you say improvements slowly depreciate.
Then in your last paragraph you say improvements are an edge against inflation. 
I guess it will teach me to read more carefully before I wear my finger out with 1 finger typing, replying to contradictions.LOL


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## Glen48 (26 May 2011)

How to make money out of real estate: 

www.nytimes.com/2009/03/19/garden/19trash.html 

hubpages.com ”º ... ”º Home ”º Cleaning ”º Bathroom Cleaning

www.usatoday.com/.../2008-12-29-foreclosetrash_N.htm

www.walletpop.com/.../banks-pay-to-trash-out-foreclosed-homes/ 

Be here soon as well get in early and clean up.


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## TabJockey (26 May 2011)

sptrawler said:


> The problem is your "improvements "are only improvements in your eyes, to someone else they may be just something else to knock over.
> Also where you say apartment '" space" value, it is no different to a house. Eventually the apartment becomes dated and will be knocked over. It only has value while it is seen as a desirable "box"to live in or rent. Once it becomes dated it is just another apartment block that provides cheap housing.
> Like was stated, it is land where the value is, unless you are on a riverina flood plain in Queensland.
> Actually in your first paragraph you say improvements slowly depreciate.
> ...





Improvements are the legal term for constructed buildings such as house, garage, shed, ect.

Improvements are a hedge against inflation in the same way that the purchase of any physical valuable item can be, if the depreciation of the item is less than forecast inflation.

For example if I was expecting high inflation over the next 5 years, perceivably the house I want could cost $250k today, but $300k in two years. However the depreciation to the value of the improvements is going to be negligible. In this case you would have hedged yourself against inflation, saving yourself 50k.

Also clearly apartment "space" value is a valid concept, the consumable proportion of your initial outlay is possibly larger than a house and land package but there is still a value there that is tied to the land value of the apartment block, a value that is tied very closely to the location of the apartment. Even if it becomes economical to knock down an old apartment building (after what, 40 years?) then as a strata title holder you are entitled to a percentage of the land the apartment building is built on.

Don't assume that the only thing you have to learn from others is when to save your finger from the fatigue of dosing out that high quality internet opinion of yours! :


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## Julia (26 May 2011)

Glen48 said:


> I also made money on a $2,500car which went to 200K  in the easy credit bubble.



Really?  What were the details of the car and over what period of time did you make this profit?


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## TabJockey (26 May 2011)

Julia said:


> Really?  What were the details of the car and over what period of time did you make this profit?




+1 That is a most impressive profit! How do I get in on this car flipping million making scene?


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## sptrawler (26 May 2011)

TabJockey said:


> Improvements are the legal term for constructed buildings such as house, garage, shed, ect.
> 
> Improvements are a hedge against inflation in the same way that the purchase of any physical valuable item can be, if the depreciation of the item is less than forecast inflation.
> 
> ...




Hey tabjockey, don't get out of shape. 
What I am alluding to is, if you had a beach front block of land and you are "joe average", you would be wasting your money putting a house on it. 
You would make more money by selling the vacant block to someone with a lot of money, that has a dream.
As far as the example of a house costing $250k today and costing $300k in 5 years. That is completely dependent on the market in 2008 brickies were getting $1.50 a brick at the moment they are struggling to get work.
Building companies as with all market linked companies charge what the market will pay.
If you and I won't pay $250,000 for that house the price will drop untill people will buy it. Then that drop in price will be past on as a hair cut to the brickie, grano, plasterer, glazier, brick supplier, cement supplier, tiler, roof carpenter etc.
With appartments, from my take, they have no capital gain value at all. They have a very small footprint i.e no land value. The only thing the landlord owns is the "air space" 
and in a complex be it 10 units or 100 units it only takes 1 dissident to stuff up everyone elses  good intentions. They are only a rental money stream and a shakey one at that.
My thoughts only from personal experience.LOL


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## TabJockey (26 May 2011)

Well I am talking from a more theoretical viewpoint, whereas you seem to be talking from a practical point of view. 

You will find that apartments do have a significant capital gains profile.


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## Glen48 (26 May 2011)

Julia
 The 70's Muscle cars were all the rage as the lad's who were 20  or so at the time could relive their youth with a cheap extension on their home loan as well as buying things they don't need to impress some one they didn't like with money they could not afford.
I car I had was a  Ford 1970 XY GT Falcon new 2,500 XY GT Phase 111 new about 5,800  about 35 yrs later 200 to 250K  and 1 Million $ for 111, Holden cars went up the same now worth about 50 K if you can find a buyer so it shows house prices didn't go up cheap money and first homers bribe drove up the prices nothing else most house's increase about 2 % PA on average.
The only way people make money on RE it is  forced saving paying off the home loan but if you did the math's and added up the true cost you will find they are a dud. 
 Now all we have to do is pay for it all for the next 10- 15 yrs until the bad debt is written off.

Remember when USA bankesters were making million in bonus's it was because money was free and every one wanted to cash in on the ponzi scheme now they find the school kids who were signing the mortgage papers at $10 an hour and doing thousands a week and the banks putting the doc's in bundles and selling them to pension funds have lost track of who owns what property the  bubble poped just like it is starting to do here now.


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## Peak Debt (27 May 2011)

So_Cynical said:


> According to the media and the real estate industry there is a rental crisis, so how come there are so many empty property's? and why such disinterest, small numbers of inspectors. :dunno:
> 
> Also if we look at the 4 bed house in Lane Cove and assume a value of around 800K (its a very old crappy house) then consider the rent of $650 p/w that gives us a gross yield of around 4.3% ~ take out expenses and we are looking at less than 4% yield..maybe as low as 3.5%  its woeful and thus as an investment, it only makes sense if there is at-least 4% annual capital growth.
> 
> Its a real ponzi isn't it....someone has to pay more than you did or it all falls apart.




Totally agree with you, the housing market in Australia is a ponzi scheme that has gone on for far too long. Sometimes it’s hard to believe this ponzi kept going for as long as it did. It should have popped last time but a round of unprecedented stimulus forced a last gasp of air into the bubble.

All they did was kick the can down the road and now the collapse will be even worse. Posters on www.AustralianPropertyForum.com have been predicting this outcome for some time, and now the scale of this coming collapse will surprise the majority of commentators, in the same way the GFC surprised most economists.

Of course, there will be revisionists who will claim they predicted it all along but the truth is the majority of economists are blind optimists who couldn't see a coming train before it plows into them!

Awareness of the bubble is really seeping into the brains of the masses. IMO the biggest driver of house prices is sentiment, when consumers are confident they’ll bid up prices to crazy levels irrespective of fundamentals, but now the tides turning, panic is setting in and they’ll all run for the exits at the same time, especially the overleveraged speculators holding multiple “investment” properties.

I can smell the fear. It’s palpable on all the property forums where the desperate bulls and spruikers are frantically posting threads trying to disparage the bearish sentiment and message. For example...

APF threads - look how bearish the sentiment is right now

Well, I'm sorry bulls and spruikers but the party is over and you know it. No more endless capital gains, no more rents through the roof, no more easy credit, no more lo w interest rates, no more mass immigration. No more stimulus. Nothing left to keep in air in the bubble. The govt is out of ammo. The RBA wants the bubble to deflate. Bulls… you’re on your own.

If you sell now, you just might get out of this with your shirt!


----------



## Ves (27 May 2011)

So what's your solution for those who are trying to create wealth? Obviously not property. What are the alternatives and how do they stack up?


----------



## Glen48 (27 May 2011)

At any given time there is a bubble forming bit like mercury pull it apart and push it back together again and it continues to move around the Globe , the next bubble is Gold and Silver and the Asian markets maybe Green energy follow that until it looks like popping by then a new one will be forming some where. Look back at Enron, Dot com bubble . Just get out of RE at any cost before every one wakes up.


----------



## So_Cynical (27 May 2011)

Ves said:


> So what's your solution for those who are trying to create wealth? Obviously not property. What are the alternatives and how do they stack up?




Have a look at my posts in this thread https://www.aussiestockforums.com/forums/showthread.php?t=7600

That's how easy it is to make 4.6% in less than a month...and lol its a property stock.

Lots of lower risk money making opportunity's in the stock market, in fact its only the individuals lack of understanding etc that limits the potential, of course returns are also limited by the individuals ability to throw money at those opportunity's.


----------



## BigAl (27 May 2011)

I see that the Flogs on here have gone underground, whilst Aust. Property and Retail Market is crumbling around it.  God help those First Home Owners in this crisis, they'll need a bailout just to get through this mess.  The Government has blood on it's hands.


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## Ves (27 May 2011)

So_Cynical said:


> Lots of lower risk money making opportunity's in the stock market, in fact its only the individuals lack of understanding etc that limits the potential, of course returns are also limited by the individuals ability to throw money at those opportunity's.



Well aware of this (although, arguably the "individuals ability to throw money at those opportunities" should be higher since the entry costs are far lower than direct property).

I was merely testing the waters to see if the guy above had any positive ideas (ie solutions) to go with his negative spiel. You know, something constructive that we don't already know? 

BTW: I fit in the basket of not having enough money to throw at these short-term opportunities. I plan to build some passive income, by drip-feeding into longer term positions in the mean time.


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## medicowallet (27 May 2011)

BigAl said:


> I see that the Flogs on here have gone underground, whilst Aust. Property and Retail Market is crumbling around it.  God help those First Home Owners in this crisis, they'll need a bailout just to get through this mess.  The Government has blood on it's hands.




Yes, I can recall a distinguished professor highlighting the scalps he had taken in this forum.


Can't remember his name, as not many posts from him nowadays.

Perhaps taking more shifts at work to make ends meet, or can only afford internet for the first 10 days of the month.

MW

Sunshine and lollipop (can only afford one lollipop with property performing so poorly)


----------



## TabJockey (28 May 2011)

There is allot of bearish sentiment around at the moment, but don't get too excited, property markets are still at very high price levels and not exactly "crashing" down in a traditional way.

The heat is leaving the markets but sadly if you look at the markets technically it looks more like a consolidation than a correction!

Real Estate is certainly set to have a flat nominal and negative real period and I will be watching for bargains on the way down, however most likely there are allot of people ahead in the queue willing to buy at higher prices than me!


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## choofer (28 May 2011)

TabJockey said:


> There is allot of bearish sentiment around at the moment, but don't get too excited, property markets are still at very high price levels and not exactly "crashing" down in a traditional way.
> 
> The heat is leaving the markets but sadly if you look at the markets technically it looks more like a consolidation than a correction!
> 
> Real Estate is certainly set to have a flat nominal and negative real period and I will be watching for bargains on the way down, however most likely there are allot of people ahead in the queue willing to buy at higher prices than me!




LOL Wata a ripper


----------



## trainspotter (28 May 2011)

Peak Debt said:


> Totally agree with you, the housing market in Australia is a ponzi scheme that has gone on for far too long. Sometimes it’s hard to believe this ponzi kept going for as long as it did. It should have popped last time but a round of unprecedented stimulus forced a last gasp of air into the bubble.
> 
> All they did was kick the can down the road and now the collapse will be even worse. Posters on www.AustralianPropertyForum.com have been predicting this outcome for some time, and now the scale of this coming collapse will surprise the majority of commentators, in the same way the GFC surprised most economists.
> 
> ...




*PONZI PONZI SCARE DOOM CRASH PONZI LOSE YOUR SHIRT PARTY IS OVER PONZI SELLL PONZI *

Man are you for real? Go and commit suicide now and avoid the rush for Chrissake. You sound just like all those people who lose money in shares. Henny Penny the sky is falling. What utter rubbish I have never read before in my life. 

Yes yes yes the property train has slowed and in *CERTAIN* areas it has gone backwards. BIG DEAL !!! It has happened before and it will happen again. Too bad that Brisbane got wiped out with floods effecting property prices there. LOL. 

March 2010 to March 2011 Capital Cities house prices have changed by ................ wait for it .......................... wait for it ................................ wait for it .....................

*0.2%*

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0

Whooopppeeeeeeeeeeeeeeeeeeeeee !


----------



## trainspotter (28 May 2011)

Glen48 said:


> I have owned  9 houses over 30 yrs and only made money on 1 when the easy money came around one went no where for 10 yrs and cost me $1500 a yr in rates etc, it was on the beach.




Hahaha hhah aha ha ahhaaaaaaaaa A house every 3.33333 years???? Who the hell does that unless you are flipping them? Or did you buy a house for every ex wife?

In case anyone is interested there is more to property then RESIDENTIAL houses and mortgage stress. Anyone here own COMMERCIAL property? Like the big warehouse type with a secure term lease agreement to some multi national company ??? Hmmmmmmm .... I can smell the money pouring in .......


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## medicowallet (28 May 2011)

TabJockey said:


> Real Estate is certainly set to have a flat nominal and negative real period and I will be watching for bargains on the way down, however most likely there are allot of people ahead in the queue willing to buy at higher prices than me!




With what money dear liza?

There's a crash on the horizon, dear Jockey, dear Jockey, 
There's a crash on the horizon, dear Jockey, a crash
Then fix it, Ken Henry, Ken Henry, Ken Henry, 
Then fix it, Ken Henry, Ken Henry, fix it.
With what shall I fix it, dear Jockey, dear Jockey? 
With what shall I fix it, dear Jockey, with what? 
With a Stim-u-lus package, Ken Henry, Ken Henry, 
With a Stim-u-lus package, Ken Henry, FIX IT!,
But we've done that already, dear Jockey, dear Jockey,
But we've done that already, dear Jockey, been there,

Then cut Interest rates, Glenn Stevens, Glenn Stevens,
Then cut Interest rates, Glenn Stevens, cut them. 
But Inflation's a bitch, dear Jockey, dear Jockey
But inflation's a bitch, dear Jockey, a bitch
Why is that?, Glenn Stevens, Glenn Stevens, Glenn Stevens
Why is that?, Glenn Steven, Why is that the case? 
Stop spending you morons, you morons, you morons,
Stop spending you morons, and then I just might.

Then increase our employment, Ms Gillard, Ms Gillard
Then increase our employment, Ms Gillard, help us.
But how can I do that dear Jockey, dear Jockey
But how can I do that dear Jockey, help me
With super fast downloads Ms Gillard, Ms Gillard
With super fast downloads Ms Gillard, that's how!
But that's just for pr0n dear Jockey, dear Jockey,
And for extra consumption and more G-S-T,

Then improve all our incomes Mr Swann, Mr Swann,
Then improve all our incomes Mr Swann, help us.
I've got some ideas, Mr Jockey, Mr Jockey,
I've got some ideas Mr Jockey, here goes!
A tax on C-O-2, C-O-2, C-O-2
A tax on C-O-2, improves revenue,
But that will cost jobs, Mr Swann, Mr Swann
But that will cost jobs Mr Swann, maybe yours too,
Then let's tax the miners Mr Jockey Mr Jockey,
Then let's tax the miners Mr Jockey, how's that!
That's a lot of new taxes Mr Swann, Mr Swann
That's a lot of new taxes Mr Swann, a lot
Then we'll call it a levy a levy a levy,
Then we'll call it a levy, wink, wink, wink nod nod!

But that still doesn't help me Mr Swann, Mr Swann,
But that still doesn't help me Mr Swan does it!
Then draw off home equity, home equity, home equity,
Then draw off home equity, home equity, try it!
But there's a crash on the horizon, Mr Swann, Mr Swann,
There's a crash on the horizon, Mr Swann, a crash,

Well I've got no ideas Mr Jockey, Mr Jockey,
I have no ideas Mr Jockey, how's that,
Well who is in charge there, Mr Swann, Mr Swann,
Well who is in charge there, Mr Swann, who is?
Why it's Bob Brown, Rob Oakshott and of course Tony Windsor,
It's Bob Brown, Rob Oakhott and Tony Wind-sor too,
Then Shoot me Mr Swann, Mr Swann, Mr Swann,
Then shoot me Mr Swann, oh what can I do!
But we have no more guns John Howard took them toooooo!


----------



## mazzatelli (28 May 2011)

trainspotter said:


> In case anyone is interested there is more to property then RESIDENTIAL houses and mortgage stress. Anyone here own COMMERCIAL property? Like the big warehouse type with a secure term lease agreement to some multi national company ??? Hmmmmmmm .... I can smell the money pouring in .......




Yeah, best when the type of business in it doesn't have much scope to relocate


----------



## trainspotter (28 May 2011)

mazzatelli said:


> Yeah, best when the type of business in it doesn't have much scope to move




Exclamation mark ! Keep them entrenched and they pay forever. Or construct the facility to be specific to their industry. I love it when they advertise their location which brands people to your property. Makes it harder for them to move as well.


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## Glen48 (28 May 2011)

_ I will be watching for bargains on the way down, however most likely there are allot of people ahead in the queue willing to buy at higher prices than me! _

Good move as long as you know where the bottom is it is still coming in USA after 4 years and only just starting here now.


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## TabJockey (28 May 2011)

This thread attracts all types. PermaBulls and PermaBears abound plus a few travelling minstrels to mix it up.

The US situation is not something that you can point at and say "that's where we are headed".

Australian residential property is overvalued on almost any metric, but you have to remember why it is so. Property is not some electronic financial contract out there in the ether with a certain investment profile, property is something that 95% of the population wants to own because they need a place to live. 

I am going to come out strong here, for the record:

*TabJockey predicts that Australian residential property will not have a decline of greater than 15% from peak to trough in the next two years*

That's my prediction and we will see if it gives you wallies something to laugh over in 6 months, but its good to take a solid viewpoint, not a wishy washy one or an apocalyptic one.


----------



## mazzatelli (28 May 2011)

trainspotter said:


> Exclamation mark ! Keep them entrenched and they pay forever. Or construct the facility to be specific to their industry. I love it when they advertise their location which brands people to your property. Makes it harder for them to move as well.




Agreed. Heavy Machinery, close to their suppliers of materials (raw or processed), close to their vendors - ease of distribution etc. Because most of my family have businesses that operate from factories/warehouses, I have a bit of insight. However I am still always surprised by the number of factories, that while from the outside, look dead - in fact are generating a turnover, most can only dream of.

Like you and tech/a say, the opportunities are there.


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## medicowallet (28 May 2011)

TabJockey said:


> This thread attracts all types. PermaBulls and PermaBears abound plus a few travelling minstrels to mix it up.
> 
> The US situation is not something that you can point at and say "that's where we are headed".
> 
> ...




good one!!

*I PREDICT 20% falls within the next 5 years.*

This is likely to be in real terms, but may be loss to inflation. ie I expect 20% loss in real terms.
(but hope they keep rising  )


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## trainspotter (28 May 2011)

Here is a scenario for commercial sheds that can turn $185,000 into a nice little earner.

Purchase 2000m2 industrial land for 300k. Add settle costs of 15k. Build 2 x 325m2 sheds for 150k. Add concrete and bitumen for 55k. Add plumbing and electrical for 30k. Add fencing and internal improvements for another 20k. Total spend $570,000.

Rent sheds for $100m2 + all outgoings = $65,000 income

$570,000 - $185,000 capital introduction = Loan amount of $385,000 at 7.75% IR = $29,837.50 per annum. LVR = 67.54%

Upon completion valuation once leases are in place is approx 650k. 80k more equity 

Positively geared to the tune of $35,000 per year and 18.9% RoR.  

Nope ......... no money in property. 

(The figures are based on a recent development I have completed in my area but DYOR)


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## Glen48 (28 May 2011)

Come back in 5 yrs with an up date after the depression is getting under way and the tenants have closed  shop.


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## medicowallet (28 May 2011)

trainspotter said:


> Here is a scenario for commercial sheds that can turn $185,000 into a nice little earner.
> 
> Purchase 2000m2 industrial land for 300k. Add settle costs of 15k. Build 2 x 325m2 sheds for 150k. Add concrete and bitumen for 55k. Add plumbing and electrical for 30k. Add fencing and internal improvements for another 20k. Total spend $570,000.
> 
> ...




Assumptions

1. The bank will lend the money
2. There are people leasing your sheds
3. There is capital growth.

Yep, there may be no money in property.


Just like you would recall from the early 90s hey Trainspotter????


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## mazzatelli (28 May 2011)

medicowallet said:


> Assumptions
> 
> 1. The bank will lend the money
> 2. There are people leasing your sheds
> ...




Going by your general criteria, might as well not open a business either. No money in it.


----------



## trainspotter (28 May 2011)

medicowallet said:


> Assumptions
> 
> 1. The bank will lend the money
> 2. There are people leasing your sheds
> ...




1) Any of the Big 4 would gobble this one up as it is a walk up start. Ticks all the boxes.
2) You would not build it UNLESS you had the tenants in place FIRST.
3) Why does it need capital growth when you are taking 35k in the hand / annum?

I recall in February 1991 I bought a block of land for 20k and built a house for 50k on it and interest rates were at 14.25%. I was earning 25k a year as well. Man was that was a good deal. I just wish I had bought more


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## medicowallet (28 May 2011)

trainspotter said:


> 1) Any of the Big 4 would gobble this one up as it is a walk up start. Ticks all the boxes.
> 2) You would not build it UNLESS you had the tenants in place FIRST.
> 3) Why does it need capital growth when you are taking 35k in the hand / annum?
> 
> I recall in February 1991 I bought a block of land for 20k and built a house for 50k on it and interest rates were at 14.25%. I was earning 25k a year as well. Man was that was a good deal. I just wish I had bought more




1. At the moment yes, in the next few years, who knows. It depends upon how geared your portfolio is (ie how much you have lost over that time)

2. So you make 2 assumptions, first that you can get tennants, well in times of negative growth in industry, that is really really hard. Secondly you assume that the business remains viable.

3. You said that you got capital growth from having leases in place, not me.

"Past returns are no guarantee of future performance, and investment returns of less than one year should not be relied upon as any guide to future performance."

PS Probably should have purchased 2 of them for the same price in 1992 hey?


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## medicowallet (28 May 2011)

mazzatelli said:


> Going by your general criteria, might as well not open a business either. No money in it.




I would be reluctant to open up a business at the moment.

Some cowboys might, but I have seen many come and go.

Of course there are options/niches, but commercial property is not a good option for many because, as you may not have heard, the non-mining economy is in a spot of bother.


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## mazzatelli (28 May 2011)

medicowallet said:


> Of course there are options/niches, but commercial property is not a good option for many because, as you may not have heard, the non-mining economy is in a spot of bother.




No, its not a good option for many, because most don't know what they are talking about.


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## trainspotter (28 May 2011)

medicowallet said:


> 1. At the moment yes, in the next few years, who knows. It depends upon how geared your portfolio is (ie how much you have lost over that time)
> 
> 2. So you make 2 assumptions, first that you can get tennants, well in times of negative growth in industry, that is really really hard. Secondly you assume that the business remains viable.
> 
> ...




1) Crystal ball gazing is not my thing. I prefer the glass is half full approach myself. Banks could also go the other way and increase lending to prop up their profit making core business of lending money and paying divvys to shareholders. DOH !

2) You would not rent them out to some fledgling business in the first place. Read my earlier post about multi national companies ......... manufacturing companies are full steam ahead or what about mining companies and the peripheral business's that tool up to service this industry? Investment at 173 billion eh? http://www.theaustralian.com.au/bus...nt-hitting-173bn/story-e6frg8zx-1226063716021

3) Capital growth due to solid leases in place for 5 x 5 terms which makes it attractive for investors looking for income. But they don't exist in your world so that's OK with me.

"You cannot cross a chasm in two jumps" and why the hell are you quoting Gross Perfomance statements?? If you have no historical data how do you forecast future profit? What do you base your assumptions on then? A goats entrails?

PS. Funnily enough the subdivision doubled in price and the house price stayed the same in a 12 month period thereafter. It wasnt until 1994 that building costs started to escalate as it turned around again.

PPS. Retail is floundering ... manufacturing and engineering is still doing well.


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## trainspotter (28 May 2011)

_The Australian Bureau of Statistics (ABS) released data on the value of construction work completed across Australia over the March 2011 quarter. The total value of construction work increased by 0.7% and year on year the value of construction increased by 4.9%. Engineering work has been the standout performer, up 4.6% for the quarter and 15.5% year on year. Building construction (which is broken down into residential and non-residential) has lagged considerably, down -3.4% for the quarter and -4.8% year on year. Non residential building was particularly weak, down -10.2% over the quarter and -16.6% year on year. Residential building increased by 1.9% over the quarter and year on year it rose by 5.4%. Overall the data shows that engineering construction is driving activity with non-residential building activity in particular, extremely weak._

Thanks to RP Data for the info.


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## medicowallet (28 May 2011)

trainspotter said:


> 1) Crystal ball gazing is not my thing. I prefer the glass is half full approach myself. Banks could also go the other way and increase lending to prop up their profit making core business of lending money and paying divvys to shareholders. DOH !
> 
> 2) You would not rent them out to some fledgling business in the first place. Read my earlier post about multi national companies ......... manufacturing companies are full steam ahead or what about mining companies and the peripheral business's that tool up to service this industry? Investment at 173 billion eh? http://www.theaustralian.com.au/bus...nt-hitting-173bn/story-e6frg8zx-1226063716021
> 
> ...




I am quoting it because there is no GUARANTEE.

Over long periods, of course averages work out (hence why property is destined to underperform), but along with this, we have an economy which is not all peaches and cream, and cities are starting to hurt.

Let us revisit this in 6 months.  

I wonder if you would have sold out by that time  . Most people miraculously do just before the fall don't they.

You also assume that investors can get funding.  I guess in the insulated world that is Australia, it is inconceivable that this could happen.  Let us look to europe and the US and think about whether our banks will have access to unlimited funding in the medium term. Methinks not.


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## trainspotter (28 May 2011)

medicowallet said:


> I am quoting it because there is no GUARANTEE.
> 
> Over long periods, of course averages work out (hence why property is destined to underperform), but along with this, we have an economy which is not all peaches and cream, and cities are starting to hurt.
> 
> ...




The only thing that is GUARANTEED is death and taxes. If we all took the view of real estate underperforming over a period of time then why would anyone bother to invest? Real estate is not a get rich quick scheme you know ! Unles you are flipping on a rising market that is. 

I have previously posted that I have divested myself of a commercial property in a champagne location and have pulled back on construction of spec homes. Sign of the times really. Steady as she goes approach for me ATM.

_"ANZ Bank, Commonwealth Bank, Westpac and National Australia Bank were cut one level to New York-based Moody's third-highest grade amid concern about their “relatively high levels of wholesale funding.”

Mr Smith said the cut in his bank's rating had been “well anticipated” and still left it with one of the highest ratings in the world.

“They've adjusted all the Australian banks so it's the system that they're looking at,” Smith said in the interview. *“The irony is, I guess, that we've never had stronger balance sheets in our history.”*_

Read more: http://www.smh.com.au/business/anz-...nding-costs-20110523-1ezji.html#ixzz1NcsHUyrS

PS. Banks make money by lending money so therefore I am pretty confident that in the medium to long term us "Investors" will still be able to get our grubby little mitts on the moolah albeit at a higher price possibly. ANZ is still offering a 10 year rate at 8.17% .... maybe they know something we don't eh? Otherwise why would they offer such a CHEAP rate for such a looooooooooooong period of time?


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## medicowallet (28 May 2011)

trainspotter said:


> I have previously posted that I have divested myself of a commercial property in a champagne location and have pulled back on construction of spec homes. Sign of the times really. Steady as she goes approach for me ATM.
> 
> PS. Banks make money by lending money so therefore I am pretty confident that in the medium to long term us "Investors" will still be able to get our grubby little mitts on the moolah albeit at a higher price possibly. ANZ is still offering a 10 year rate at 8.17% .... maybe they know something we don't eh? Otherwise why would they offer such a CHEAP rate for such a looooooooooooong period of time?




Well why then the post about how easy it is to purchase a block of land and plonk 2 sheds on it and make $30ish thou a year and insta $80k capital gain.

I said it isn't easy to do, and that there is no guarantee that it will continue to be so.


By the way, I think you have done well to limit exposure (and this is why I think smaller developers tend to ride out poor times quite well as opposed to larger ones).

How much pain do you think we will be in for over the next 5 years?
Some of us have been courageous enough to make a prediction..


----------



## trainspotter (28 May 2011)

medicowallet said:


> Well why then the post about how easy it is to purchase a block of land and plonk 2 sheds on it and make $30ish thou a year and insta $80k capital gain.
> 
> I said it isn't easy to do, and that there is no guarantee that it will continue to be so.
> 
> ...




It is actually quite easy to perform this equation. The trick is to get the leases in place first or know of firms that are expanding and require larger premises to lease. The post was in regards to that there is *more* to Australian property then residential homes and mortgage stress which we have covered over 5000 posts on and it is becoming repetitve. The post also eludes to the fact that there are still opportunities out there to make money out of RE in Australia ..... it is not all a warm bath with a packet of razorblades and a bottle of Gin you know !!!!!!!! Warehouse and commercial is also a good investment as maintenance issues (not a lot can go wrong with a tin shed by the way) are the responsibility of the lessee as well as all outgoings are covered by the lessee. 

I asked why you were quoting Gross Perfomance statements? You said that there is no GUARANTEE ...... wtf do you want ?? A gold covered, gilt edged, money 5 years in advance investment? It is a calculated RISK. You have to look at historical data to analyse performance. The shed equation is creating income streams or POSITIVE GEARING if you will. Granted I am not expecting scintillating capital gains over a short period but then I never claimed this equation to perform this. I also finished my post with a DYOR (Hey it might work for me in my area ATM but could be down the creek in a barbed wire canoe in your area) I also think 18.9% RoR on 185k is not a bad investment myself. BWTFWIK ?

How much pain do I think we will be in over the next 5 years? For some they will be in a world of pain and cry the system is at fault and they did not know what they were getting into and bleat like the sheep that they are. Booo Hooo ..... Harden the F@CK up ..... No different to when interest rates went to 17% and we had to have the recession we had to have to make us stronger (according to Keating)

I can easily see *CERTAIN* areas dropping 20% in RESIDENTAIL housing ...... no wait .... parts of NOOSA and the GOLD COAST has already done that. Also parts of my area have done the same and Mandurah has dropped 40% on apartments. Hmmmm ...... I can see mortgage defaults increasing to  0.9% and retail figures dropping quicker than a wh0res drawers ........ no wait ........ this has already happened.

Interest rates increasing and unemployment following suit will certainly drive the nail in the coffin of RE in Australiallalaa land. FHB will be the first to go and mortgagee repos will be the new black for the remaining investors picking up a bargain. No wait ..... this is already happening in CERTAIN areas.

I can easily see 10% OVERALL reduction of the WEIGHTED AVERAGE OF CAPITAL CITIES in a 5 year timespan.


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## drsmith (28 May 2011)

For house prices to fall substantially in nominal terms, income would have to be hit, or put another way, a substantial jump in unemployment.

Real terms is more difficult to judge, but a longer term decline is likely if inflation gradually rises.


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## medicowallet (28 May 2011)

"For the fifth weekend in a row demand remained subdued at auctions in Melbourne with a clearance rate in the 50's being recorded.

The clearance rate is 59 per cent from the 775 auctions reported this weekend. This weekend last year saw 990 auctions held and a clearance rate of 72 per cent achieved.

There was a total of 455 homes sold at auction with 320 passed in, 220 of those on a vendors bid.

Next weekend the REIV expects around 785 auctions."

For the purists....


Any professors out there who can analyse this stuff for me?

I think Steve Keen doesn't have time taking extra shifts as debtwatch gets more hits.

Any other professors needing to do extra shifts to make ends meet?

PS the only thing I can say is it pleases me that
59% of 775 = 457
72% of 990 = 712

means that commissions for ripoff R/E agents have decreased well beyond 35% as this doesn't take into account faling values and decreased % commissions..... LOVING IT!!!


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## trainspotter (28 May 2011)

I am surprised anything is selling at all really, seeing how the banks wont lend money and the whole thing is a massive Ponzi scheme (according to some) waiting to take a bigger hit than a bug on a windscreen. :

Wonder how many sold after the auction in a private treaty? 

_Given that clearance rates have weakened so substantially, it does seem counter intuitive that auction volumes have remained quite strong. This must be weighed against the fact that it currently takes an average of 59 days to sell a home and vendors on average have to drop their asking price by -6.5%. Although 35.6% of all dwellings in Melbourne were taken to auction during 2009/10, *ultimately only 26.1% of all dwellings sold at, before or during the week after the auction*. The result indicates that even in our most prevalent capital city market for auctions (Melbourne) only one in every four properties actually sells at auction._

Thanks to RP DATA for the heads up on the auction conversion rate. Meaningless really.


----------



## medicowallet (28 May 2011)

trainspotter said:


> I am surprised anything is selling at all really, seeing how the banks wont lend money and the whole thing is a massive Ponzi scheme (according to some) waiting to take a bigger hit than a bug on a windscreen. :




Ok, I take your point that you are unaware that banks have tightened lending standards.

I also like how you misrepresent the fact that there are real risks to future lending.

Then again, these do not support your position.

I also note how you have said that you are taking a smaller footprint and have offloaded some debt. To me this seems conflicting, and either you are intentionally trying to drum up an argument or there is something else which is weirder going on up there.


----------



## choofer (28 May 2011)

trainspotter said:


> I am surprised anything is selling at all really, seeing how the banks wont lend money and the whole thing is a massive Ponzi scheme (according to some) waiting to take a bigger hit than a bug on a windscreen. :
> 
> Wonder how many sold after the auction in a private treaty?
> 
> ...




Great post champ. How do you do it?


----------



## trainspotter (29 May 2011)

medicowallet said:


> Ok, I take your point that you are unaware that banks have tightened lending standards.
> 
> I also like how you misrepresent the fact that there are real risks to future lending.
> 
> ...




Obviously your failure to read or comprehend my previous posts (which you actually responded to) about my concern that the banks have tightened their lending practices have escaped you in this instance.

Once again you have misrepresented my position as I have explained to you and all of ASF my intent in regards to the commercial equation. But I will just once more for comedy purposes only, THERE IS MORE TO REAL ESTATE THAN RESIDENTIAL HOUSING AND STOOOOPID MELBOURNE AUCTIONS ....... there I have said it again.

Yes, I have wound back my exposure and also committed to a prediction of a 10% downfall over the average weighted price of the 8 capital cities over a 5 year period. I hardly see how this is a conflicting position? If the market or a particular stock was showing signs of retreating backwards or suddenly stop paying dividends would you pour more money into it?

I have repeatedly written that the market is trancing sideways and that CERTAIN areas will drop considerably. I even named them before they happened about a year ago and some 2000 posts as well. My prediction is that the RE market is not going to do a Steven Keene (legend in his own lunchbox) style plummet of 40% and panicked everyone to sell their property. Didn't he walk to Kosciusko?? ROFL. What a goose.

As for something weirder going on up there ........ well ............ you are the Doctor. 

PS. Only a couple of posts (#5483) you were praising me for limiting my footprint and now you are denigrating it? And you think I have something weird going on up there? *GOSH*


----------



## medicowallet (29 May 2011)

trainspotter said:


> Obviously your failure to read or comprehend my previous posts (which you actually responded to) about my concern that the banks have tightened their lending practices have escaped you in this instance.
> 
> Once again you have misrepresented my position as I have explained to you and all of ASF my intent in regards to the commercial equation. But I will just once more for comedy purposes only, THERE IS MORE TO REAL ESTATE THAN RESIDENTIAL HOUSING AND STOOOOPID MELBOURNE AUCTIONS ....... there I have said it again.
> 
> ...




1. I did comprehend, hence why I made the point that it was an assumption to get funding.  So are we actually agreeing that it is an assumption that a bank will lend money?   

2. Your prior post inferred that making money in commercial property was a given, then you say that it is not so, which is it? Even getting tennants is very difficult as you say. What I said is it is an assumption to get and keep a tennant, what is wrong with this (and I do own commercial properties too)

3. I LOVE the fact that the professor walked up the mountain. It shows enormous character.

4. Where is our resident professor?  I wonder if he is walking around melbourne now as he cannot afford train tickets.   We used to get daily and weekly updates, now he has gone silent, why do you think?

5. Sorry, don't deal with mental health issues in my line of work


----------



## billv (29 May 2011)

trainspotter said:


> I am surprised anything is selling at all really, seeing how the banks wont lend money




The banks are lending, in fact they are falling over themselves to lend to people.
They just don't like risk so they've increased lending criteria and will easily knock back
low income and high risk clients



trainspotter said:


> the whole thing is a massive Ponzi scheme (according to some) waiting to take a bigger hit than a bug on a windscreen. :



It is so much like the stock market isn't it?
With the difference being that people actually need a roof over their head.
So it is a useful and needed ponzi scheme


----------



## trainspotter (29 May 2011)

choofer said:


> Great post champ. How do you do it?




The Art of War - So it is said that if you know your enemies and know yourself, you can win a hundred battles without a single loss.
If you only know yourself, but not your opponent, you may win or may lose.
If you know neither yourself nor your enemy, you will always endanger yourself. 

In other words ....... "understand the product you are dealing with"


----------



## trainspotter (29 May 2011)

medicowallet said:


> 1. I did comprehend, hence why I made the point that it was an assumption to get funding.  So are we actually agreeing that it is an assumption that a bank will lend money?
> 
> 2. Your prior post inferred that making money in commercial property was a given, then you say that it is not so, which is it? Even getting tennants is very difficult as you say. What I said is it is an assumption to get and keep a tennant, what is wrong with this (and I do own commercial properties too)
> 
> ...




1) You can assume anything you like cause all it does is make an ass out of you and me. If you went into a bank, no job, no assets, no savings then you can ASSUME that you would not get a loan. On the other hand if you went in with 3 years financials, loads of equity, NIL CRAAA, existing history with the bank out the WAZOOOOO etc etc, then I would be pretty confident you would get the loan. No assumptions made on this matter.

2) You missed the whole thing again. The equation was to evidence there is more to RE than resi housing. I also wrote it worked for me buy DYOR. You assume too much methinks.

3) Enormous character my @rse. Predicted 5 of the last 3 downturns. LOL

4) I think the hammering he gets in here due to his positive attitude towards RE has made him gun shy. He is also planting trees on a rural property (doing his bit for the planet)

5) Then why raise it Doc?


----------



## Glen48 (29 May 2011)

USA debt is the equivalent of a stack of $1,000 bill which stacked on top of each other would reach from Brisbane to Townsville it they were $1 bill they would go to the Moon and back ...twice... all this debt has to be cleared but USA is still printing.

What happens in USA happens in OZ it is our crystal ball in full HD.
The OZ banks are given your money  to keep the banks afloat and to stop them going under like some almost did in 2008. 

The first owners bribe was to get suckers in to keep the ponzi scheme running but like all ponzi scheme's they need more victims coming in to support it and they don't have them...yet  the Feds will do any thing to support the banks.

The banks have to get money from the world market and as IR goes up so will OZ banks rates which will put more pressure on the under preforming OZ economy and home victims.

 Steve Keen said house prices would tank with in 2 years but didn't realise the feds would give out your money as graft and this money will never be repaid but he was man enough to walk the walk but is correct just his timing was out.

The RE agents should be charged for mis leading the public under the trade practice act claiming, house price double every 7 years and there is not better investment than a  house it is proven a house can't keep up with inflation once the true figures are worked out.

However if you want to on a dud keep buying and ignore the facts.

To find out when to buy back in look at USA and wait 5 years but realise renting is a better option.


----------



## robots (29 May 2011)

hello,

oh gidday everybody,

another 3 day weekend medicowallet, check out the cfmeu website for a run down on my schedule as you so interested in it

my apologies to everyone as i dont have a computer at my st kilda residence

which suburbs do you own property in medicowallet?

top posts trainspotter, yeah plenty of trees to plant and birds to watch

thankyou
professor robots


----------



## stacks (29 May 2011)

trainspotter said:


> PPS. Retail is floundering ... manufacturing and engineering is still doing well.




Um, maufacturing is not exactly doing well, id suggest.

http://www.aigroup.com.au/portal/bi...omic%20Indicators/PMI/2011/pmi_april_2011.pdf

But engineering is, granted. And dont forget mining! Oz quarries all the way to future prosperity for the entire country! or at least until such time as its not.


----------



## Wysiwyg (29 May 2011)

stacks said:


> Um, maufacturing is not exactly doing well, id suggest.



 Yeah. Off topic but agree manufacturing has been going or is sourced overseas.


----------



## Junior (30 May 2011)

billv said:


> The banks are lending, in fact they are falling over themselves to lend to people.
> They just don't like risk so they've increased lending criteria and will easily knock back
> low income and high risk clients
> 
> ...




The stock market allows companies and business to raise capital.  A pretty important tool in the economy.

People need a roof over their head, but should still be able to achieve this without borrowing half a million $$ from the bank.  Property can be overvalued in the same way that shares can be overvalued.


----------



## Tysonboss1 (30 May 2011)

Junior said:


> .
> 
> People need a roof over their head, but should still be able to achieve this without borrowing half a million $$ from the bank.




They can, It's called renting.


----------



## IB12 (30 May 2011)

Residential property prices aren't going anywhere in the next 1-3 years. 
I can only see flat or negative growth.
Interest rates are heading to 7-10% in the next 1-5 years. 
First home owners who bought into Rudd's stimulus should be mad and rightly so, as they have been duped into buying at artificially inflated prices. 

According to recent numbers, bank lending growth has been the slowest in 30 years.


----------



## Mrs P (30 May 2011)

IB12 said:


> Residential property prices aren't going anywhere in the next 1-3 years.
> I can only see flat or negative growth.
> Interest rates are heading to 7-10% in the next 1-5 years.
> First home owners who bought into Rudd's stimulus should be mad and rightly so, as they have been duped into buying at artificially inflated prices.
> ...




I could not agree more....
I have just gained PR status and moved here with family 4 years ago on a business Visa ( now looking for a new challenge as i have NO interest in continuing the business that gained us the Visa but thats another topic...)
We have rented since arriving, "Just In Case" we didn't get the visa.. also cos it took 3.5 years for my other half to get a job and now find ourselves with a bit of cash in the bank by way of a deposit.
However.... with a 3 bed "cupboard" here on the Northern Beaches costing around 1.4m and interest rates only heading (IMO) one way, we find ourselves caught between wanting to put down "roots" but NOT wanting to be pulled in by the RE agents blurb of "The beaches prices only ever go up..... you better get in now" 



Gut instinct says sit tight for 12 mths or so and wait...

welcome others views on this


----------



## explod (30 May 2011)

Mrs P said:


> I could not agree more....
> I have just gained PR status and moved here with family 4 years ago on a business Visa ( now looking for a new challenge as i have NO interest in continuing the business that gained us the Visa but thats another topic...)
> We have rented since arriving, "Just In Case" we didn't get the visa.. also cos it took 3.5 years for my other half to get a job and now find ourselves with a bit of cash in the bank by way of a deposit.
> However.... with a 3 bed "cupboard" here on the Northern Beaches costing around 1.4m and interest rates only heading (IMO) one way, we find ourselves caught between wanting to put down "roots" but NOT wanting to be pulled in by the RE agents blurb of "The beaches prices only ever go up..... you better get in now"
> ...




Agree, and with our aussie dollar appreciating my view is that tourism will contine to deteriorate and exports under continued pressure will translate to increased unemployment, and as you say, add an interest rate rise,,, and yes.

Sit tight and watch.


----------



## investorpaul (30 May 2011)

Mrs P said:


> However.... with a 3 bed "cupboard" here on the Northern Beaches costing around 1.4m and interest rates only heading (IMO) one way, we find ourselves caught between wanting to put down "roots" but NOT wanting to be pulled in by the RE agents blurb of "The beaches prices only ever go up..... you better get in now"
> 
> welcome others views on this




I live on the Northern Beaches too and have worked in real estate (sales and property development) for the past 4 years. Don't worry Im out of the industry now 

Anyway what you say about Northern Beaches agents is true, they will be the last one to see the crash coming and it will prob happen when their BMW is towed because they missed their repayments. 

Over the last 6 months I have seen alot of property that has come onto the market at or below its previous sale price (I have access to RP data). One particular property is in Newport and it sold 7 years ago for $1.2m. It was bought on the market about 18 months ago with an asking price of $1.6m, it went to auction and didnt sell. It then relisted at 1.45m, it went to auction and didnt sell. It then relisted again at 1.3m and stayed on the market for ages. Eventually they relisted with another agent and attempted a third auction campain at 1.2m. It didnt sell and is currently listed for under $1.2m

There was another property along Hudson parade that was on the market for 3 years at 1.2m, it sold about 3 months ago for approx $900k. The family had originally bought it for about $1m and spent a few hundred K on renos.

Just goes to show property does go down and you dont always win


----------



## cutz (30 May 2011)

investorpaul said:


> Just goes to show property does go down and you dont always win




Hopefully this property monster does not drag down the banks with it, wishful thinking perhaps considering the big 4 have been taking a beating lately.


----------



## investorpaul (30 May 2011)

cutz said:


> Hopefully this property monster does not drag down the banks with it, wishful thinking perhaps considering the big 4 have been taking a beating lately.




Unfortunately they are just as leveraged to Aust property prices as most home owners.

If anything they have been pushing more debt onto their customers with credit cards, personal loans, car loans, etc. All packages together so you "save on bank fees".

They dont just have to worry about losing out on the home loan but also need to consider all the credit cards and personal loans they have given these homeowners over the years.

It could get very messy.


----------



## medicowallet (30 May 2011)

robots said:


> hello,
> 
> oh gidday everybody,
> 
> ...




Hi Professor,

I hope that your 3 day weekend was voluntary and not "downsizing"

As I have said before, I do not own property in Melbourne. I love to visit the place, but could not live there. 


Sad to hear that you don't come on much anymore. I used to love reading your Auction clearance rate reports, and also how you liked to say how property prices in Melbourne had been increasing..

How is that going for you Professor?  Taking on any extra shifts to cover your negatively geared and declining property investments?


----------



## Glen48 (30 May 2011)

The little 4 banks don't have any worries at all, the Office of mis-management has tipped a  lot of your loot in to them and the feds will continue to do so until the wells dry so they know they can do anything and you will bail the out just like USA is doing and will continue to do.
 You won't even get a thank you just loose your house. 
 Robot is on th right track  working a new job.


----------



## Junior (30 May 2011)

medicowallet said:


> Hi Professor,
> 
> I hope that your 3 day weekend was voluntary and not "downsizing"
> 
> ...




Sunshine and lollipops!!


----------



## robots (30 May 2011)

medicowallet said:


> Hi Professor,
> 
> I hope that your 3 day weekend was voluntary and not "downsizing"
> 
> ...




Hello,

oh well, the bed pan rounds at the hospital must be over, now the computers getting a go

its called an RDO, rostered day off (the nursing union hasnt organised them for you?), its compulsory and paid for

and soon we going to a four day week to keep inline with other trades and services, sunshine and lollipops brother

sorry, what suburbs do you own your property in?

thankyou
professor robots


----------



## robots (30 May 2011)

Hello,

oops, medicowallet not online again, must of head out for the rounds again, tidy up before dinner

thankyou
professor robots


----------



## medicowallet (30 May 2011)

robots said:


> Hello,
> 
> oh well, the bed pan rounds at the hospital must be over, now the computers getting a go
> 
> ...





A nurse's job is never done.  Great workers the lot of em!! I would never do their job 

You sound tired Robots, is it because of those extra nights wondering how the bills will be paid?

Don't worry, send me a message, I'll buy your properties off you for "fair value"

It is easy brother, roll up the sleeves, take on an extra job. Perhaps shining shoes, chimney sweep, pick pocketer. All to live the Australian dream.

Living the dream, for some is now living the nightmare, and I am sorry, but it looks like it might be a while before the sunshine rises again.

MW

P.S. I would never use the computer at work for anything but work, call me old school, but I go to work to work.

P.P.S. Oh don't worry brother, soon some tradies will be having 0 day weeks.


----------



## white_goodman (30 May 2011)

investorpaul said:


> I live on the Northern Beaches too and have worked in real estate (sales and property development) for the past 4 years. Don't worry Im out of the industry now
> 
> Anyway what you say about Northern Beaches agents is true, they will be the last one to see the crash coming and it will prob happen when their BMW is towed because they missed their repayments.
> 
> ...





i agree, our area will be last to be hit, its also amazing how uber bullish the area is as a whole...


----------



## ZSlaveski (30 May 2011)

IB12 said:


> Residential property prices aren't going anywhere in the next 1-3 years.
> I can only see flat or negative growth.
> Interest rates are heading to 7-10% in the next 1-5 years.
> First home owners who bought into Rudd's stimulus should be mad and rightly so, as they have been duped into buying at artificially inflated prices.
> ...




I think you're on the money my friend. House prices are going nowhere in Oz, but down that is!

Interestingly, Mr David "Kochie" Koch's announced on Sunrise this very morning prices in many parts of Sydney town would be dropping down 20% or more by end of year - he got this info from Mr Louis Christopher from the SQM Research.

However then Louis (he posts on the AustralianPropertyForum.com as the Black_Dragon) reveals that the Kochie had the crash figures all mucked up and wrong. There is more about this here.......

Kochie is the new bear hero...... but he gets his figure wrong on live television!

Allegedly Louis says he is going to publish a correction tomorrow, but this is all a little "embarrassing" for those concerned, I should say.

Zoran.


----------



## sptrawler (30 May 2011)

If descrectionary spending is drying up and if small business is doing it tough. One would think there will be a lot of panick selling in the upper middle class areas.
These people aren't stupid, if the economy keeps contracting they will have to bail out before there is a foreclosure, and hide the money.
This is the problem with Gillard, she thinks high speed broadband and more debt will be transforming, what a bunch of fools.


----------



## tothemax6 (30 May 2011)

sptrawler said:


> If descrectionary spending is drying up and if small business is doing it tough. One would think there will be a lot of panick selling in the upper middle class areas.
> These people aren't stupid, if the economy keeps contracting they will have to bail out before there is a foreclosure, and hide the money.



Selling a house and moving out is a real pain though


----------



## nukz (31 May 2011)

cutz said:


> Hopefully this property monster does not drag down the banks with it, wishful thinking perhaps considering the big 4 have been taking a beating lately.




Interesting point, i believe the big 4 banks exposure to the residential mortgage market is approximatly 1 trillion and when you add non-bank lenders into the mix we could be looking at a figure closer to 1.25 - 1.3 trillion which is more than the country's GDP.

When you add in Credit card & personal loans into the mix it could be somewhat cause for concern.


----------



## cutz (31 May 2011)

nukz said:


> Interesting point, i believe the big 4 banks exposure to the residential mortgage market is approximatly 1 trillion and when you add non-bank lenders into the mix we could be looking at a figure closer to 1.25 - 1.3 trillion which is more than the country's GDP.
> 
> When you add in Credit card & personal loans into the mix it could be somewhat cause for concern.




Wow, I didn't realize the numbers were that big, 

The risk may be offloaded somewhat via mortgage insurance but one other concern I have is whether negative gearers are able to take out this kind of insurance to protect the banks ?

Can an NG guru enlighten me, do insurers insure high risk investment loans or do they only take on high LVR residential loans ?


----------



## trainspotter (31 May 2011)

cutz said:


> Wow, I didn't realize the numbers were that big,
> 
> The risk may be offloaded somewhat via mortgage insurance but one other concern I have is whether negative gearers are able to take out this kind of insurance to protect the banks ?
> 
> Can an NG guru enlighten me, do insurers insure high risk investment loans or do they only take on high LVR residential loans ?




LMI is applicable to ALL housing loans with an LVR of greater than 80% irrespective of UCCC. Banks will go to 95% LVR on residential with LMI and up to 90% on investment with LMI.


----------



## greebly24 (31 May 2011)

Regarding the future of Australian property prices, I think everyone should be aware of the secret GREAT GAME currently going on in the international economy, and how it will affect us.

American manufacturers can't compete with cheap Chinese goods. They want the Chinese to revalue their yuan against the greenback. This will make Chinese goods more expensive, and therefore stimulate US manufacturing.

China refuses to revalue it's yuan. A low yuan keeps China's exports cheap, keeps hundreds of millions of Chinese peasants employed in factories making cheap goods, and therefore keeps them happy and unlikely to protest against their communist leaders.

So in response, America, the world's largest economy, is printing money!!!

China then has to print an equal amount of yuan, and use it to buy greenbacks, in order to maintain the currency peg. But this means lots more greenbacks and yuans out there, chasing the same amount of goods. Result is inflation.

America is deliberately creating inflation in order to hurt China. But how will it work?

Well, Americans have a secret weapon! It is the amount spent on food as a percentage of income. Average Americans spend less than 10% of their income on food. If global inflation hits 100% and food prices double, Americans' food cost will hit 20% of their income, and they won't be able to supersize their Big Mac meals. They will whine and whinge and vote for the other political party.

But if food prices in developing economies also double, then people won't be able to afford basics like rice. They will starve, and violently protest, and force government policy change, or even bring down governments altogether.

A brief Google and I was able to find a few stats. The average Indonesian spends 45% of their income on food. The average Indian spends 53%. If global food prices double, then people will starve and you will have anarchy on the streets.

Some examples of this already happening are the Arab uprisings. The Arabs accepted dictatorships for decades. But now that food prices are skyrocketing, we see mass protests and decades-old dictatorships suddenly collapsing overnight.

The same thing could happen in China. The communist leaders know it, and they are scared. They are desperately trying to cool inflation by restricting bank lending and instituting price controls (which are a desperate last stand on any dictatorship).

I found one stat on China, saying it's lowest income earners spend up to 48% of their income on food. That represents many hundreds of millions of peasants. What happens when the price of a basic like rice doubles in price? I saw a story on CNN a while ago where the price of cabbage went from 3 to 4 yuan a kilo, or something like that. It was a ridiculously small move (considering what is to come) but it resulted in massive protests and violent government clampdowns and price controls (cabbage may only be sold for 3 yuan a kilo, the govt ordered, despite what the free market decided).

I understand that there may be doubters as to my theory but ask yourself, what would you do? If you were the world's largest economy, with the world's largest military and intelligence apparatus, and you heard you were going to be overtaken by China in 20 years time, would you sit back and say bugger and do nothing about it?

China's greatest strength is that it has 1.2 billion cheap labourers. But China's biggest weakness is it has 1.2 billion mouths to feed. The idea that China will dominate the planet in 20 years time is wrong. The Western world will starve it into submission long before that, and China may tear itself apart as fertile (but poor and suffering) Western farming provinces break away from it's rich Eastern factory provinces. 

Inflation in China is already extremely damaging. Workers are demanding, and receiving wage increases. This is pushing up production costs and reducing profit margins. Marginal producers are shutting up factories, sacking workers and causing more social unrest. In response China lent out money to build empty shopping malls, and empty cities, just to keep workers employed and non-protesting. But how long can you build stuff you don't need?

Despite wage increase demands, China may eventually have to revalue it's yuan upwards. So in effect, China will be forced (by the US money printing) to do what the US wanted it to do in the first place. So America gets to print money to keep living above their means, while ****ing over the commies. But an increased yuan value will make Chinese goods more expensive and reduce their exports (Sri Lanka, Bangladesh, Vietnam etc etc etc will be cheaper for factories) and therefore slow their amazing economic growth. And unemployment there will rise and social unrest increase, and eventually China will be forced to trade internationally on a level-playing field.

This is the GREAT GAME in the world's economy, and will probably define all our lives for the next couple of decades. I just want people to be aware of this global trend, so that they will be armed with the truth in order to make the best investment decisions.

So, if I'm correct, *what does it mean for the future of Australian property prices?*

Farmland will go up (as food prices go up), so rural towns might do well.

Mining towns will boom, or bust (depending on the price of resources).

Inner-city homes, and especially those along public transport corridors will hold up well (as petrol price goes up).

Holiday homes will drop, particularly the upper end of the market (ie Noosa, Gold Coast, Palm Beach).

Overall, I think Australian property prices will drop over the next few years. I am not sure by how much, but the property around my beachside suburb in Adelaide seems overpriced by about 25%, so a drop of that much is entirely possible within five years.

I think it is obvious, given the media coverage of the effects of inflation on everyday Australians. Seems like you can't turn on the telly without some battlers whingeing about the rising cost of food and electricity and water bills and petrol and private education and health insurance etc etc etc. Hardly a recipe for rising house prices, or people wanting to move up the property ladder. Instead Australians are resorting to credit cards just to stay afloat. And not many people are unleashing equity in their homes for holidays any more. Many Australians are swimming hard against the current, just to stay afloat.

Globally, interest rates are going to have to rise as governments try to contain inflation. The GREAT GAME has only just begun. There will be opportunity, and there will be ruin. Be warned!


----------



## Mofra (31 May 2011)

Interesting post greebly, but dollar/yuan printing is not the only factor when it comes to food prices. Many maize crops worldwide (most noticeably in the US & Brazil) a switching from food producing to energy producing; using the corn to produce ethonol instead of food. Plam oil plantations in SE Asia are doing the exact same thing - less food production, more alternate energy production. 
This is already having an impact on food prices as lower global yields combines with greater demand with an increasingly industrialised middle class in many developing nations. 

I don't disagree with the premise or analysis - things may very well pan out this way. We don't think the US became all green and globally responsible overnight whilst their political slide to the right continues, do we?


----------



## Glen48 (31 May 2011)

G 24
You are correct and this is why China is looking to take over any country with the good' they need .. by any method the chose including force so one day you could be working for the PROC feds.
Imagine if every person in china ate 1 more grain of rice doesn't sound much but like a dripping tap is soon adds up.

Sell every thing and buy PM's while you still can.
 Make sure you are out of RE asap


----------



## ginar (31 May 2011)

greebly24 said:


> China refuses to revalue it's yuan. A low yuan keeps China's exports cheap, keeps hundreds of millions of Chinese peasants employed in factories making cheap goods, and therefore keeps them happy and unlikely to protest against their communist leaders.




http://online.wsj.com/article/BT-CO-20110531-703455.html

http://www.marketwatch.com/story/so...fourth-quarter-2011-05-31?link=MW_latest_news

http://online.wsj.com/article/BT-CO-20110525-703152.html

*""The yuan is up 5.1% against the U.S. currency since June, when China loosened its currency's two-year-long peg to the dollar. Analysts widely expect the yuan to rise 5%-7% against the dollar this year. ""*


FACTS ARE KING . some people just arent in the loop


----------



## damien275x (1 June 2011)

I don't know why mainstream media keep going on about how falling house prices are a bad thing. Why? Makes them more affordable


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## trainspotter (1 June 2011)

RP DATA strikes again ...



> “The luxury end of the housing market is also showing its volatility. During the growth phase of the cycle the most expensive homes realised the highest capital gains. Yet as the market cools premium home values seem to be losing steam the fastest,” he said.
> 
> Rismark Joint Managing Director, Christopher Joye, added, “The uber-luxury segment is risky and highly illiquid and has had the *rug whipped from under it* via a combination of the soaring Aussie dollar and the volatile share market. A final *fly in the ointment* is the much lower growth - and pay packets - expected in the financial services industry *going forward*. Luxury homes in areas like Sydney’s Eastern Suburbs will continue to face *valuation headwinds *as banks deal with the *new normal of subdued credit growth*.”
> 
> The national median dwelling price in capital cities is $468,000 based on sales over the three months to April. In the ‘Rest of State’ (i.e., non-capital city) markets, the national median dwelling price is a far lower $325,000. Across all Australian regions, the median dwelling price is currently $418,000.




Wow ..... wish I had all of these wank words in my arsenal.


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## skcots (1 June 2011)

damien275x said:


> I don't know why mainstream media keep going on about how falling house prices are a bad thing. Why? Makes them more affordable



They just go with whatever sells better which most of the time is negative.
e.g."Home ownership more affordable" vs "House prices set to craaaaash"​or the other way around,"Young Aussie battlers locked out of the Aussie dream" vs "Robots just got richer" (assuming he actually owns property)​


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## wayneL (1 June 2011)

damien275x said:


> I don't know why mainstream media keep going on about how falling house prices are a bad thing. Why? Makes them more affordable




Because so much manufacturing (AKA means of building wealth) has been off-shored to Asia, rising house prices are an important component in growth.

Lower house prices = less growth = less capacity to borrow etc etc.

It's a ponzi as it stands right now.

IMNTBCHO of course.


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## Knobby22 (1 June 2011)

If you watch that UK property program, they often get kit homes from Germany.

Surely it is only a matter of time before we can do this from overseas also.


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## Glen48 (1 June 2011)

How much is a property say you paid 1M for and now worth 300K  but there are no buyers?

 I predict house prices will tumble once the rest of OZ wakes up to the ponzi scheme and realize its just like USA


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## KurwaJegoMac (1 June 2011)

Glen48 said:


> How much is a property say you paid 1M for and now worth 300K  but there are no buyers?
> 
> I predict house prices will tumble once the rest of OZ wakes up to the ponzi scheme and realize its just like USA




Prices should tumble because they did in the USA? Why should they? Just because house prices fall overseas doesn't mean ours should. Seems that everyone is harping on about the great big fall in the US - whoopdee doo. Didn't see Australia hit a decade long recession because Japan did, didn't see our economic growth hit double digits because China did, didn't see our inflation hit triple digits because Zimbabwe did, didn't see our government near bankruptcy because Greece did, etc.

The US economy influences ours - of that there is no doubt - but it does not dictate our asset prices. Our respective micro and macro economic environments do. 

Spare a thought doomsayers to the statistic that 70% of Australian households own or are purchasing their home. For house prices to 'plunge/plummet/crash/whatever colourful adjective you want to use' you need supply to exceed demand (basically). Almost 3/4 of Australian households own or are purchasing their home - why would they sell? Even if they see house prices dropping why on Earth would they sell? 

Put yourself in their shoes - you own a home and it's value has dropped by 10%. Are you going to sell it? If you're an astute investor you might - but most of the population isn't. Guess what they're going to do - sit on it and ride it out. They're in it for a home, not for flipping their property. 

If they're not selling where's the supply going to come from? Investors selling up? Yes quite a few of the 'capital gain' flippers will be caught out for sure, but how many wise investors will just pile in onec these bargains show up?

If I see house prices drop 10% guess what i'll be doing - definitely not selling (unless you count selling a kidney to cover a deposit on another investment property).

Who here actually OWNS investment property and has been around long enough to see asset cycles play out? 

Meh. It's hump day and i've had enough of rambling and either way most of you won't care what i've written or will dismiss it straight away with your usual prejudice. I couldn't care less. I can see why there's only 1 or 2 people that hang around to stand up to the perma-bears... anyway hooray for another year in people getting it wrong...

again...

and again...

Anyway that should stir up a hornets nest of angry bears. Have at me you growling pessimists... RAWR

Sources: http://www.aph.gov.au/library/pubs/rp/2008-09/09rp21.pdf


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## KurwaJegoMac (1 June 2011)

P.S. I love you all.

Including you, scary smoking baby :bekloppt:


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## greebly24 (1 June 2011)

[*""The yuan is up 5.1% against the U.S. currency since June, when China loosened its currency's two-year-long peg to the dollar. Analysts widely expect the yuan to rise 5%-7% against the dollar this year. ""*

FACTS ARE KING . some people just arent in the loop[/QUOTE]

Cheers ginar. Read the brief articles. Interesting. I should have mentioned that it's just a theory of mine. Perhaps if I'd said China is only allowing it's yuan to rise in tiny increments (far less than inflation) then I would be right. Also check out today's AFR:

Australian Financial Review Wed 1st June 2011
_"China cools but inflation's on the boil

...One step China could take against inflation is to stop issuing hundreds of billions of extra yuan each month to pay for intervention in the currency markets. The intervention has slowed the yuan's rise against the US dollar to an annual pace of about 5 per cent. But few economists expect China to stop intervening.
   While doing so would benefit Chinese consumers by making imported commodities less expensive, it would also make Chinese exports less competitive and could prompt factories to lay off workers."_

So I'm not really sure how I'm out of the loop. Everything I read only seems to support my theory. Hundreds of billions of extra yuan per month? Without this intervention, the yuan would have massively appreciated (as any currency does for any other strong economy ie like ours) and the Chinese over-capitalised low-margin export-based so-called-miracle economy would have already collapsed.

Your articles state that analysts expect another 5% rise in the yuan this year. That's despite China printing hundreds of billions of extra yuan per month? The AFR article also talks about how Chinese authorities aren't letting electricity utilities to charge more to residential users (despite a 36% increase in coal prices this year). The reason? Why to help try to limit inflation of course.

Sorry to go on about it, but I think it would be unwise to gamble on rising *Australian property prices* using the justification of our mining industry riding on the back of a 30-year boom in China (by the way, why's it only 30 years, not 100 years? what happens in 30 years time?). The idea that China will continue growing at 10% a year for the next 30 years is just crap. Their economy is already dropping below that, while inflation is rising. It this the beginning of stagflation there?

The only two other countries in the last century who had such massive industrial capacity, and heavy reliance on export markets, were the US in the 1920s and Japan in the 1980s. And we all know what happened to them then. China is trapped between rising inflation and an yuan increasing in value which would limit growth and by extension, threaten the commies' grip on power. And the US just keeps stoking the fire by printing their own money.

And if the Chinese boom cracks up, then I'd humbly suggest our property markets would be in serious trouble. A fact not lost upon even the most ardent property bulls out there.


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## Glen48 (1 June 2011)

Sound like if you were playing roulette you would keep doubling up on the Black regardless how much you lost.

All you are doing here is shooting the messenger true RE was OK as a forced saving over the years but now the rules have changed USA didn't owe $75 T 40 odd years ago.
 China could have a much bigger RE bubble than USA  OZ has all its eggs in China's basket and China is heading to become basket case.

Keep buying at least a few people will get some money from the sales.


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## greebly24 (1 June 2011)

Cheers KurwaJegoMac. Enjoy reading comments from both the permabears and the permabulls and really hope both stick around. Without either one it would just be a property circle jerk (we had enough of those kind-of circle-jerk home-reno home-flipping TV shows during the property boom to know how sickening that would be).

Regarding your post on the effect of other nations on Australia, the US GDP is around $14 trillion. 70% of that is consumer spending, or almost $10 trillion dollars per year. But it is now shrinking due to over-indebted citizens. They were China's biggest customers (as well as debt-struggling Europe), so China's exporters are struggling. The Chinese govt pumped up a property and infrastructure bubble to try to alleviate it. But if that fails, then resource prices will plummet, and then Australia's mining boom will evaporate. So what happens in America affects us all, unfortunately.

Your points about homeowners not selling, despite possible price drops, is valid. But they are no longer unleashing increased equity in their homes for new cars/boats/shacks/holidays, and hence it impacts on our economy negatively too. People selling all that stuff are earning less, and aren't going to bid up property.

Property investors are different. Low yield and continued negative capital growth would scare them off. Selling could then become a flood.

And finally, I've got a mate who bought $60k of BHP shares when they were $10 each a decade ago. Now they're around $45 and are yielding 2.3% franked. So in ten years he's had 350% capital growth, and yielding over 10% after tax (on his original $10). 

Obviously this is entirely irrelevant. It tells us nothing about *the future of Australian share prices*, just as some story about how much so and so made on a property he bought 15 years ago. This thread is about *the future of Australian property prices*, not the past. Everyone knows we've just been through a 15 year property boom. The real question is, what happens next?

Love youse all


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## sinner (1 June 2011)

KurwaJegoMac said:


> Spare a thought doomsayers to the statistic that 70% of Australian households own or are purchasing their home. For house prices to 'plunge/plummet/crash/whatever colourful adjective you want to use' you need supply to exceed demand (basically). Almost 3/4 of Australian households own or are purchasing their home - why would they sell? Even if they see house prices dropping why on Earth would they sell?




Once the system is leveraged then the movement happens almost entirely at the margins, with price discovery occurring generally when new money enters the market. 

Thus your simplistic statement doesn't take into account macro factors that are hugely important and even misconstrues the idea of supply and demand:

1. Mortgage origination. For prices to continue up, the buyers must have hard cash equivalent to more than the current going price (highly unlikely) or the bank must be willing to lend it to them (much more likely). Considering the huge amounts of funding which the big 4 Aussie banks require from overseas to roll over debt, and originate new debt then the relationship between seemingly incongruous (they always seem incongruous in complex systems) factors becomes pretty clear. You used Greece as an example, it's a great one. How could a little tourist island in the Med have any impact on Australian house prices? Let me lay a hypothetical on you:

Greek bond crisis -> European bond market liquidity issues -> All marginal borrowers (our big 4 banks are a good example) shunted to the side and locked out of the market. Overnight and short term borrowing dries up or costs much much more and Australian mortgage origination rates decline massively in the same timeframe. Buying at the margins ceases, so there is a sudden huge mismatch between the number of buyers and the number of sellers.

2. Supply/demand: You state prices can only go down if everyone sells. This is a misrepresentation. In fact, if everyone who was going to buy has bought then there are no more buyers to continue pushing the price up. Even a normal level of supply will be able to drive prices down when there is no demand to fight it off. 

So please, now that the FHBs are fully suckered in, explain to us all where the marginal demand is going to come from.

3. Nominal vs real (prices and income): if the price for productivity (i.e. wages) does not increase in line with the price of assets then the value of productivity is necessarily diminished. In the specific example of Australian home prices, this is definitely the case (it gets worse when you add health insurance, taxes, food and fuel, etc to the mix). The value of productivity has been diminished in regards to the purchase of a home and therefore demand is mathematically capped. Not to mention Australians have a history of being statistically less productive than almost all of their G20 counterparts with statistically higher inflation rates to boot.

Only those who are still being renumerated on an equivalent sliding scale to house prices can afford to keep on the right side of the line, anyone else falls to the wayside. The line used to move very slowly in an oscillating or cyclical pattern, now it moves very quickly in an inexorable forward direction. i.e. less and less people are on the right side of the line no matter how budgety and frugal they are and at the same time it requires more and more effort just to maintain the same position.

I can think of plenty more, but those are the 3 main ones that pop in my head. Demographics and our Governments incessant meddling in housing/building markets causing structural imbalance are others.


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## VSntchr (1 June 2011)

Glen48 said:


> Sound like if you were playing roulette you would keep doubling up on the Black regardless how much you lost.
> 
> All you are doing here is shooting the messenger true RE was OK as a forced saving over the years but now the rules have changed USA didn't owe $75 T 40 odd years ago.
> China could have a much bigger RE bubble than USA  OZ has all its eggs in China's basket and China is heading to become basket case.
> ...




USA didnt owe that much 40 years ago, nor did they own all they assets they acquired through the GFC either - there is some backing to the debt you must realise...


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## sinner (1 June 2011)

VSntchr said:


> USA didnt owe that much 40 years ago, nor did they own all they assets they acquired through the GFC either - there is some backing to the debt you must realise...




And how much of this "backing" will be recovered by the people who have a claim to it at anywhere near current marked to bull**** prices?

Only those closest to the printing press benefit. Everyone (you and me) else pays the difference!


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## Knobby22 (1 June 2011)

Beautifully argued sinner.

There is an argument expounded in today's Age that we are merely seeing problems as the first home owner bribe has dropped and the low interest rates have ended. So some small correction should be expected.  I am not convinced we will have a big fall but then again I am not convinced it won't happen either.


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## KurwaJegoMac (1 June 2011)

greebly24 said:


> Cheers KurwaJegoMac. Enjoy reading comments from both the permabears and the permabulls and really hope both stick around. Without either one it would just be a property circle jerk (we had enough of those kind-of circle-jerk home-reno home-flipping TV shows during the property boom to know how sickening that would be).




I admit I can be too much of an optimist sometimes, but I certainly don't bet it all on black  I just don't see the crash happening that lots of people are hoping for - everyone wants us to crash like the US did so they can buy these assets on the cheap. People blindly assume that because we're expensive and the US crashed then we must too. 

That being said I also don't see the rapid growth we've had over the past 10-15 years continuing for much longer. At worst I see stagnant prices yo-yoing around the median, at best subdeued YoY growth. 



greebly24 said:


> Regarding your post on the effect of other nations on Australia, the US GDP is around $14 trillion. 70% of that is consumer spending, or almost $10 trillion dollars per year. But it is now shrinking due to over-indebted citizens. They were China's biggest customers (as well as debt-struggling Europe), so China's exporters are struggling. The Chinese govt pumped up a property and infrastructure bubble to try to alleviate it. But if that fails, then resource prices will plummet, and then Australia's mining boom will evaporate. So what happens in America affects us all, unfortunately.




Agree that what happens in America will have a profound effect on our economy (They sneeze we catch a cold and all that), but while it will effects our economy it does not dictate it and I don't believe it has a direct impact on our property prices. It will have an indirect effect if shocks over there cause our interest rates to climb, or unemployment to rise, etc - but until these factors get bad enough in our economy i dont see it triggering a major crash (although we will most definitely have pressure on asset prices)

No economy is safe from a US & China collapse. Although I'm particularly worried about China - you can't grow that rapidly and not have problems (and they do have problems!!) 



greebly24 said:


> Your points about homeowners not selling, despite possible price drops, is valid. But they are no longer unleashing increased equity in their homes for new cars/boats/shacks/holidays, and hence it impacts on our economy negatively too. People selling all that stuff are earning less, and aren't going to bid up property.
> 
> Property investors are different. Low yield and continued negative capital growth would scare them off. Selling could then become a flood.




Agreed - the reduciton in use of equity is apparent and will hurt our economy. But in my view will only bring it down to more organic levels of growth and help to curb inflation (we're already above the RBA's target band and they're still reluctant to raise interest rates - this raises a red flag for me)

Regarding property investors - these will be the ones leading the selling (especially like one of my close mates, who'se purchased 3 negatively geared, negative cash flow properties in the last 3 years and a PPOR and has maybe $200 a week to live off), but one must bear in mind that not all investors are negative cash flow investors seeking capital gains. Many are positive cashflow and/or held property for a while and will probably hold on despite the downturn (these sort of investors don't have capital gains as their primary focus, but not sure how many of these exist in the last decade )



greebly24 said:


> And finally, I've got a mate who bought $60k of BHP shares when they were $10 each a decade ago. Now they're around $45 and are yielding 2.3% franked. So in ten years he's had 350% capital growth, and yielding over 10% after tax (on his original $10).
> 
> Obviously this is entirely irrelevant. It tells us nothing about *the future of Australian share prices*, just as some story about how much so and so made on a property he bought 15 years ago. This thread is about *the future of Australian property prices*, not the past. Everyone knows we've just been through a 15 year property boom. The real question is, what happens next?
> 
> Love youse all




Well we all know that Shares are better : That's why we're on the ASF and not APF ey? 

Your last comment about the 15 year property boom is definitely one worth heading for the bulls and bears alike.


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## KurwaJegoMac (1 June 2011)

sinner said:


> Once the system is leveraged then the movement happens almost entirely at the margins, with price discovery occurring generally when new money enters the market.
> 
> Thus your simplistic statement doesn't take into account macro factors that are hugely important and even misconstrues the idea of supply and demand:
> 
> ...




So the financial system freezes and banks cannot lend money - as you say most people would use leverage when buying property so what happens here?

Buyers dry up as they cannot access funding, so supply is heavily increased (people are still selling but no one is buying). Still boils down to supply and demand.

We survived the financial meltdown of the GFC, including the credit freeze so im not worried about this point for now. Of course we could always cop a black swan but then again one should always have an adequate risk margin.



sinner said:


> 2. Supply/demand: You state prices can only go down if everyone sells. This is a misrepresentation. In fact, if everyone who was going to buy has bought then there are no more buyers to continue pushing the price up. Even a normal level of supply will be able to drive prices down when there is no demand to fight it off.




This is what i wrote:

"For house prices to 'plunge/plummet/crash/whatever colourful adjective you want to use' you need supply to exceed demand (basically)."

This is a far cry from 'price only go down if everyone sells'.

It all comes down to supply and demand at the end of the day.



sinner said:


> So please, now that the FHBs are fully suckered in, explain to us all where the marginal demand is going to come from.




Well we've got another round of them coming (20% reduction in stamp duty in July!) I don't like it as much as you do - the market should not be manipulated by the Government. It hardly ever ends well.

Even so, i don't see even FHBs lasting us much longer and you're right - where is the demand going to come from when they go? The next government-handout-FHBs? I surely hope not.




sinner said:


> 3. Nominal vs real (prices and income): if the price for productivity (i.e. wages) does not increase in line with the price of assets then the value of productivity is necessarily diminished. In the specific example of Australian home prices, this is definitely the case (it gets worse when you add health insurance, taxes, food and fuel, etc to the mix). The value of productivity has been diminished in regards to the purchase of a home and therefore demand is mathematically capped. Not to mention Australians have a history of being statistically less productive than almost all of their G20 counterparts with statistically higher inflation rates to boot.
> 
> Only those who are still being renumerated on an equivalent sliding scale to house prices can afford to keep on the right side of the line, anyone else falls to the wayside. The line used to move very slowly in an oscillating or cyclical pattern, now it moves very quickly in an inexorable forward direction. i.e. less and less people are on the right side of the line no matter how budgety and frugal they are and at the same time it requires more and more effort just to maintain the same position.




Completely agree with you here Sinner. It's a big problem and you're 100% right - more and more people are needing to put in more and more effort just to maintain the same position. 

If we keep heading this way we'll destroy our middle class, I certainly don't like the situation and I don't think Government throwing cash at young, naive people will fix the issue.


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## trainspotter (1 June 2011)

Commonwealth Bank has posted another record. For the six months to the end of December 2010, cash earnings came in at $3.3 billion. 
Westpac has posted a record half-year statutory profit of $3.96 billion, with underlying cash earnings up a more modest 7 per cent to $3.17 billion.
NAB half year profit increases 21.7% from previous year to 2.7 billion dollars
ANZ kicked off the big banks' interim reporting season by posting a net profit of $2.66 billion, 38 per cent better than a year earlier.



> They are concerned that bank profits are coming under pressure from the rising cost of sourcing wholesale funds offshore, particularly from Europe.
> 
> James Rosenberg, a private client stockbroker with Macquarie Bank, says the whole banking sector was affected by the bailout.
> 
> The Australian banking sector may not be under threat yet, but the risks remain for homeowners.




http://www.abc.net.au/news/stories/2011/05/23/3224808.htm

NAB 10 year rate 8.18% FIXED residential home loan
ANZ 10 year rate 8.17% FIXED residential home loan
CBA 10 year rate 7.89% FIXED residential home loan
WESTPAC 10 year rate 8.31% FIXED residential home loan

Now this is not making any sense to me whatsoever. First of all they are declaring record breaking half year profits during the GFC etc then they are claiming they are going to have to increase margins due to wholesale funding cost increases and YET they have 10 year residential home loans at a mean average of 8.1375%.

Surely if the costs of wholesale funding was encroaching on profit margins for the banks in the forseeable future then WHY would the banks have such a LOW interest rate for such a long term? 

Would you not as a smart investor/homeowner/whatever go and fix your rate at 8.13% for the next 10 years if the media/banks/shills are screaming that wholesale funds are going up so therefore the banks will be passing the increases onto you !!!!!!!!!!!!!


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## sinner (1 June 2011)

trainspotter said:


> Now this is not making any sense to me whatsoever. First of all they are declaring record breaking half year profits during the GFC etc then they are claiming they are going to have to increase margins due to wholesale funding cost increases and YET they have 10 year residential home loans at a mean average of 8.1375%.
> 
> Surely if the costs of wholesale funding was encroaching on profit margins for the banks in the forseeable future then WHY would the banks have such a LOW interest rate for such a long term?




I can think of a few possibilities, the most likely of which is a combination of:

a. Banks are desperate for more suckers because they know profit margins turn from growth to contraction very quickly without a perpetual influx of buyers to keep the game going.
b. They know *real* rates aren't going up on a long term basis, this implies they know another downturn in the domestic or global economy is coming or in progress.
c. They know any major losses they take will be socialised, and therefore happy to take on riskier investments than they would if it was their own neck on the line.



> Would you not as a smart investor/homeowner/whatever go and fix your rate at 8.13% for the next 10 years if the media/banks/shills are screaming that wholesale funds are going up so therefore the banks will be passing the increases onto you !!!!!!!!!!!!!




d. You can lead a horse to water but you can't make it drink. The pool of potential borrowers is likely tapped out and many more are now aware of the incompetence/malice of both medias/banks role in predicting/creating financial calamity. ergo, money will remain cheap until it is bid up.


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## sinner (1 June 2011)

KurwaJegoMac said:


> Completely agree with you here Sinner. It's a big problem and you're 100% right - more and more people are needing to put in more and more effort just to maintain the same position.
> 
> *If we keep heading this way we'll destroy our middle class*, I certainly don't like the situation and I don't think Government throwing cash at young, naive people will fix the issue.




Just for the record, this has been my argument all along!

My participation in this discussion was never about personal investment or whatever in property I am not a permabear yet somehow seeing the imminent potential for catastrophic system failure makes me one! 

If you agree so much with my statements, then you must concede these things can never continue on forever and the longer they go on the worse the resulting effect will be (and it has already gone on for quite some time). Systems always return to equilibrium one way or another, in the case of complex systems it is usually the case that they snap back in a rapid fashion which causes the system to fail.

I was always in the hopes of raising awareness that what the current financial system perpetrates leads to ruin, leads to a reduced standard of living for all of us. The accusations that followed include me being a permabear, me being too afraid to purchase property ever, me wanting property to crash so I could purchase it myself, me being an idiot, etc.

I do not and would not take heart in being correct on a property crash! The only asset I want to crash is gold, so I can buy more.


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## trainspotter (1 June 2011)

sinner said:


> I can think of a few possibilities, the most likely of which is a combination of:
> 
> a. Banks are desperate for more suckers because they know profit margins turn from growth to contraction very quickly without a perpetual influx of buyers to keep the game going.
> b. They know *real* rates aren't going up on a long term basis, this implies they know another downturn in the domestic or global economy is coming or in progress.
> ...




Thanks for the response sinner. Makes a lot of sense. Especially (b)


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## doctorj (1 June 2011)

Morgan Stanley produced the handy diagram below (as part of a paper on UK house prices which I can send if anyone is interested) that explains their view of how supply, demand and the availability of funding will play out in the UK. There are some differences between the UK and Australia - the UK's main wealth generating sector (finance) has already been hit for six, where as Australia's is yet to (commodities). Central Bank interest rates in the UK are virtually 0, whereas in Australia there's a lot more flexibility to cut them. Having said that though, there are some similarities - constrained supply and poor affordability.


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## KurwaJegoMac (1 June 2011)

sinner said:


> Just for the record, this has been my argument all along!
> 
> My participation in this discussion was never about personal investment or whatever in property I am not a permabear yet somehow seeing the imminent potential for catastrophic system failure makes me one!
> 
> ...




I do agree with you and do concede that this cannot go on forever. I can see why it'd be difficult to raise awareness of this issue in the property thread - got some balls on you to do that here


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## ginar (1 June 2011)

trainspotter said:


> \NAB 10 year rate 8.18% FIXED residential home loan
> ANZ 10 year rate 8.17% FIXED residential home loan
> CBA 10 year rate 7.89% FIXED residential home loan
> WESTPAC 10 year rate 8.31% FIXED residential home loan
> ...




historically in last 20 years a rate of 8.13% is above median variable rates , in the main banks usually get it right on fixed rates but im sure there are periods where they have it wrong , there are ways of hedging rates whilst still taking advantage of cheaper variable rates but these are beyond the abilities of the average loan takers . i wouldnt be locking in 8.13% thats for sure .


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## trainspotter (1 June 2011)

ginar said:


> historically in last 20 years a rate of 8.13% is above median variable rates , in the main banks usually get it right on fixed rates but im sure there are periods where they have it wrong , there are ways of hedging rates whilst still taking advantage of cheaper variable rates but these are beyond the abilities of the average loan takers . i wouldnt be locking in 8.13% thats for sure .




Thanks ginar but the point I was making is that the banks are claiming WHOLESALE funds are costing them more so they will have to pass on the costs of them borrowing more to the mortgage owner. If this is the case and the banks are saying it is costing them more and more to borrow money due to European debt sovereignty etc blah blah blah then why the hell are they letting money go for 10 years at 8.13%

Another matter ..... from October 1973 (IR at 8.38%) to January 1997 (IR at 8.25%) rates did not go under this magic figure (8.13%). And up to 17% 1989-1990. Usually when the country goes into recession RATES go up. Early 90's with Keating "The recession we had to have" and early 2000 when Howard and Costello only just squeaked past a recession because the ABS rounded up the figure to ZERO %. (IR 8.05%) I also recall rates went to 9.45% in August 2008 for some strange reason ??? 

http://www.loansense.com.au/historical-rates.html


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## sinner (1 June 2011)

trainspotter said:


> Another matter ..... from October 1973 (IR at 8.38%) to January 1997 (IR at 8.25%) rates did not go under this magic figure (8.13%). And up to 17% 1989-1990. Usually when the country goes into recession RATES go up. Early 90's with Keating "The recession we had to have" and early 2000 when Howard and Costello only just squeaked past a recession because the ABS rounded up the figure to ZERO %. (IR 8.05%) I also recall rates went to 9.45% in August 2008 for some strange reason ???
> 
> http://www.loansense.com.au/historical-rates.html




Difficult to use a historical perspective in this case, because 'this time it's different'.

Take a look at global bond yields from Sept 11 2001 onwards. Or instead of global bond yields, look at the correlation between global stock *yields* and global bond yields pre and post Sept 11 2001. 

To me the changes in the normal operating structure of the global market after that event indicate Greenspan turned on the money tap, and it never got turned off. Not really. 

Can note at least one obvious example of this 'new way' manifesting itself: one of the reasons the RBA isn't hiking rates 'like they used to' is because the market is doing most (not all) of their legwork and bidding up the AUD (to levels good enough to not just kill off good stuff like ecotourism and education which brings in money without high environmental cost but now is even starting to reduce our competetiveness in resource markets). How has a strong AUD come about? IMHO largely thanks to a weak USD more than anything else and the reasons for that if you ask me is the money tap.


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## ginar (1 June 2011)

trainspotter said:


> Thanks ginar but the point I was making is that the banks are claiming WHOLESALE funds are costing them more so they will have to pass on the costs of them borrowing more to the mortgage owner. If this is the case and the banks are saying it is costing them more and more to borrow money due to European debt sovereignty etc blah blah blah then why the hell are they letting money go for 10 years at 8.13%
> 
> Another matter ..... from October 1973 (IR at 8.38%) to January 1997 (IR at 8.25%) rates did not go under this magic figure (8.13%). And up to 17% 1989-1990. Usually when the country goes into recession RATES go up. Early 90's with Keating "The recession we had to have" and early 2000 when Howard and Costello only just squeaked past a recession because the ABS rounded up the figure to ZERO %. (IR 8.05%) I also recall rates went to 9.45% in August 2008 for some strange reason ???
> 
> http://www.loansense.com.au/historical-rates.html




true enough there certainly has been some volatility in rates last couple years . maybe that 8.13% isnt that bad in the long term , cant find any aussie interest futures any more than 2 years out atm so hedging seems difficult past 2013 at this stage . i may be wrong on this , the 30day cash rate futures are only indicating one more rate rise by end of 2012 so the banks are comfortable offering this 8.13 at this stage , you are correct on your data , the high rates in 08 were likely due to credit spreads blowing right out , was pretty well what inspired the final capitulation in GFC . we do live in interesting time , my powder is dry and i already have my eyes on a couple areas where id be comfortable buying although im remaining patient , certainly no need to rush and waiting for another rate rise is my first caveat ...............


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## tothemax6 (1 June 2011)

trainspotter said:


> Thanks ginar but the point I was making is that the banks are claiming WHOLESALE funds are costing them more so they will have to pass on the costs of them borrowing more to the mortgage owner.



I would love for somebody to tell me why this is. What do the banks mean by 'wholesale funds'? If they mean that people are not depositing enough, and they are running up against their minimum target reserve ratios, fair enough. But retail deposits do not sound 'wholesale' to me. 'Wholesale' sounds like a big loan, and since it couldn't be from other aussie banks (since they are in the same situation), it must be from abroad. 

And last time I looked, the interest rates abroad were around nothing.


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## sinner (1 June 2011)

doctorj said:


> Morgan Stanley produced the handy diagram below (as part of a paper on UK house prices which I can send if anyone is interested) that explains their view of how supply, demand and the availability of funding will play out in the UK. There are some differences between the UK and Australia - the UK's main wealth generating sector (finance) has already been hit for six, where as Australia's is yet to (commodities). Central Bank interest rates in the UK are virtually 0, whereas in Australia there's a lot more flexibility to cut them. Having said that though, there are some similarities - constrained supply and poor affordability.




Interesting that MS reckons so doctorj, afterall I am sure you have seen this composition chart of the S&P ASX 200.




I always thought our main wealth generating sector is/was the eminent ability to double the value of our homes using nothing but faux granite kitchen tops


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## trainspotter (1 June 2011)

sinner said:


> Difficult to use a historical perspective in this case, because 'this time it's different'.
> 
> How has a strong AUD come about? IMHO largely thanks to a weak USD more than anything else and the reasons for that if you ask me is the money tap.




I concur sinner with this theory and I also think that the fact that Australia had very little Government Securities on Issue (compared to the USA that is) when the credit squeeze hit helped the situation.


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## sinner (1 June 2011)

tothemax6 said:


> I would love for somebody to tell me why this is.




I thought I gave a pretty good answer.



> What do the banks mean by 'wholesale funds'? If they mean that people are not depositing enough, and they are running up against their minimum target reserve ratios, fair enough. But retail deposits do not sound 'wholesale' to me. 'Wholesale' sounds like a big loan, and since it couldn't be from other aussie banks (since they are in the same situation), it must be from abroad.
> 
> And last time I looked, the interest rates abroad were around nothing.




The loans are from abroad. 30-60% of the total funding requirement depending on who you ask. There aren't enough retail deposits to keep mortgage origination growing because everyone is using their money to leverage up into homes or flatscreen tvs. The loans in this case come from banks in countries where the CB is running a loose money policy (borrow from your CB at 0.25% lend at 4.75% what could go wrong), or countries locking in AUD for later commodity purchases I imagine China does a lot of these.

The rates abroad are quite cheap you are right, but only if you borrow in the foreign currency. AUD daily LIBOR is 4.75% and most of the loans are done around that basis. i.e. short term, not long term.


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## ginar (1 June 2011)

tothemax6 said:


> I would love for somebody to tell me why this is. What do the banks mean by 'wholesale funds'? If they mean that people are not depositing enough, and they are running up against their minimum target reserve ratios, fair enough. But retail deposits do not sound 'wholesale' to me. 'Wholesale' sounds like a big loan, and since it couldn't be from other aussie banks (since they are in the same situation), it must be from abroad.
> 
> And last time I looked, the interest rates abroad were around nothing.




not going to get into a longwinded debate here but world reserve bank cash rates have little to do with real rates involved in borrowing money . credit spreads , risk and exchange rates all have to be negotiated when borrowing from overseas . banks being risk adverse ( australian ) will try and hedge all of these points , that all costs and is passed on in the form of higher spread to cash rates . the RBA cash rate is 4.75% and a few years ago the variable rate was approx 2% higher than that , the risks have now blown that differential out to >3% . these risks are not diminishing so id expect little relief from banks in forseeable future , im sure my explantion is pretty basic with a lot of holes but its how i see the situation , im sure there are some here on higher pay scales than i who can explain it in finer detail with more clarity


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## fatmango (1 June 2011)

My crystal ball tells me Obama will move hell and high water to improve the US domestic economy as the election approaches. The US will rise, leading to a corresponding fall in the AUD. This will boost many sectors of the Australian economy, however, interest rates will not fall to where they should. We will continue to have an opposition leader who opposes everything - therefore, no great big new taxes to take the pressure off interest rates. Structural change will be stifled. Australians want change but only if they don't have to pay for it. Property prices will plateau for a few years as our national psyche of owning property will keep house prices bubbling around current levels. The quality of our housing will suffer in order to keep the quantity up.


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## doctorj (2 June 2011)

sinner said:


> Interesting that MS reckons so doctorj, afterall I am sure you have seen this composition chart of the S&P ASX 200.



The editorialising was my own... I wonder if we were to look at it against GDP if it would look any different?  I'm guessing unlisted miners (Vale? Rusal? etc) contribute more to GDP than unlisted FIs.



sinner said:


> IThe loans are from abroad. 30-60% of the total funding requirement depending on who you ask. There aren't enough retail deposits to keep mortgage origination growing because everyone is using their money to leverage up into homes or flatscreen tvs. The loans in this case come from banks in countries where the CB is running a loose money policy (borrow from your CB at 0.25% lend at 4.75% what could go wrong), or countries locking in AUD for later commodity purchases I imagine China does a lot of these.
> 
> The rates abroad are quite cheap you are right, but only if you borrow in the foreign currency. AUD daily LIBOR is 4.75% and most of the loans are done around that basis. i.e. short term, not long term.



The other thing to point out is that banks ideally don't fund 30 year mortgages with retail deposits and overnight loans from the reserve bank (does the RBA lend anything longer????)  otherwise they face an open liquidity gap and are running a big refinancing risk.  So banks fund themselves with wholesale funding in AUD (or in Fx, with swaps to cover the open currency exposure).  Ignoring the fx side at the moment, if a bank issues 10 year debt, it will pay more than it does for overnight money (google 'Yield Curve' - basically a longer loan is more risky). 

Banks can of course fund themselves with USD and save themselves 300bps or so, but they run the risk of the fx rate movements or if they try to hedge, they may suddenly find the swap market disappear as was the case recently with Polish banks.  It was common for Polish Banks to borrow in CHF and swap it in to PLN - very quickly they found they couldn't swap any more and they didn't have any PLN sources of long term funding.


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## sinner (2 June 2011)

doctorj said:


> The editorialising was my own... I wonder if we were to look at it against GDP if it would look any different?  I'm guessing unlisted miners (Vale? Rusal? etc) contribute more to GDP than unlisted FIs.




True, but what portion of our GDP is in the form of increasing house values? Projected tax receipts on increasing house values? etc?



> The other thing to point out is that banks ideally don't fund 30 year mortgages with retail deposits and overnight loans from the reserve bank (does the RBA lend anything longer????)




I think the GFC, Treasury bank guarantee and recent disclosure (in a format obfusicated for data querying no less) by the Fed of the banks (our banks!) who took part in their shenanigans show that there is a pretty large disparity with what is 'ideally' going on and what is 'really' going on. 

If one of our banks can't stay alive without an overnight loan the size of which would be enough to feed the homeless population of an entire city for a year, what is going on behind that supposedly APRA regulated curtain?! Of course we couldn't use that money to feed the homeless, fund infrastructure or directly bail out distressed mortgagees...they say that would be inflationary  this money here is a different sort of money, the kind that's only good for bailing out banks.

Interesting to watch comments dismissed as conjecture and conspiracy for years turn out to be pretty close to the bone in the end.


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## Macros (2 June 2011)

[video=vimeo;11211712]http://vimeo.com/11211712[/video]


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## KurwaJegoMac (2 June 2011)

sinner said:


> Interesting to watch comments dismissed as conjecture and conspiracy for years turn out to be pretty close to the bone in the end.




Isn't that always the case throughout history though? It's only until the situation gets to the point where average joes can see the effects that the 'truth' is admitted to - obviously at this stage the smart money has already left and average joe picks up the bill. When average joe starts selling then in comes the smart money to lap it all up. Rinse and repeat.

Our economies are a lot more cyclical than people realise - obviously it's hard for one to accurately time these cycles but we're always going to boom and bust, boom and bust. The best we can hope to do is to educate ourselves so that we can position ourselves to weather the bust and participate in the start of the boom. 

In terms of property I see us at or near the peak of its' cycle, as has been pointed out by many here we're at a stage where prices are putting pressure on capacity to repay. The number of arrears and defaults are still low and we have interest rates that can drop to boost things up again (can't understimate the naivety of people rushing in to make a purchase on seemingly 'bargain' interest rates) so when we hit a downturn (which we will) I struggle to see the crash that many are hoping for.

That's one other thing I want to point out - people tend to be looking past the facts and focusing on the US crash and hoping that it would be replicated here. Why? They look at the US and go 'house prices fell 40%, i'd be clever and buy up if that happened here.' so people are hanging onto that desire. If we start hitting high unemployment with record low interest rates like the US then i'd be worried. But for now I just really don't see it happening.

Just to be clear: I do believe we will be in for lacklustre performance in the short term - whether that be from very low growth, stagnation or 'softening of prices' (haha gotta love the media).But I have yet to be convinced we're headed for a crash (or a boom for that matter).

Would obviously welcome anybody with a different opinion - I may be suffering from confirmation bias


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## Macros (2 June 2011)

KurwaJegoMac,

I personally use the example of US property market only as an example to contrast against the mantra that property prices only go up and that they cannot possibly crash. Whether the Australian property prices crash or not is not dependant on the US property market.

Firstly, it seems to me absolutely clear that property prices internationally have been rising due to a long period of cheap credit, declining interest rates (due to central bank interventions) and an unsustainable path of credit expansion which has occurred significantly over and above the rate of economic growth.

The US is not the only example although it is used the most frequently. What about Ireland, what about Spain, Greece, Portugal, Italy, Iceland, England and Canada? All these markets have experienced similar property market issues. The most obvious similarity to our market is Canada and in particular Vancouver. Both England and Canada have not experienced the same level of price destruction but it is well recognised that there exists substantial structural stress.

On this matter, Australia is not an island and our property market has experienced similar increases to other countries during the same period of overall credit expansion. It has nothing to do with any fundamentals (except on the fringe) with regards to supply/demand, economic or population growth. It has primarily been driven by an unsustainable expansion in credit and the inevitable contraction of the same credit. Globally, we still face the same issues as a result of this unsustainable growth of debt. We are still in a credit crisis and now sovereign debt crisis.

Therefore Australia is not different. The only area where we are different is the timing and the type of Government bailout - ie FHOG - which brought forward demand and delayed our credit destruction.

Property prices will generally follow the rate of inflation or the rate of real economic growth over the long term. Inevitably assets are mean reverting. This is why we had the credit crises because there were too many imbalances.

Australian property prices will crash because our demand for debt will collapse. It has nothing to do with unemployment levels as the act of credit destruction actually leads to higher levels of unemployment.

The only saviour in this process will be extremely high levels of inflation. However this is a long term concept. In the shorter term it means that there will still be credit destruction and significantly higher interest rates here and overseas. The overall cost of capital is rising as it is becoming increasingly recognised that capital is to be respected and requires a commensurate rate of return for the risk involved. Therefore, Australia banks will face higher funding costs due to a) higher cost of capital due to a re-rating of the cost of capital and b) rising inflation expectations as central banks throughout the world deal with their debt burdens via inflation.

So, regardless of how strong our economy is locally - although it seems reasonably weak outside the commodity sector - we are facing a period of rising cost of capital and higher interest rates. This is coming from a period of historically low interest rates, easy credit, high debt participation rate and the highest private debt levels that we have ever had. I'm not sure how we could tolerate 15% interest rates with our debt levels.

I think that in the short to medium term we have a lot of pain and price collapse resulting from inability to service debt and the increased perception from property investors that their investments will not grow sufficiently to offset the cost of holding (especially with rising interest rates). I think that this will be combined with inaction  such as the concept of frogs boiling in hot water, as people do not believe that interest rates can rise when the economy is weak. 

Also, don't look at historical interest rates from the 1950s. You need to look back even longer to the 1900s to provide a reasonable long term appreciation. Even if you look at the rates since the 1950s, imagine a 1970s scenario where we have sustained high interest rates for a decade.


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## KurwaJegoMac (2 June 2011)

Thanks for offering your perspective Macros.

You mention that one factor in the price imbalance is the access to cheap credit - what then would you define as an 'acceptable' level/price of credit? Can one really set an 'ideal' level?

I firmly agree that cheap credit has had a major influence in house prices (anyone can see this when comparing between when interest rates were >12% and when interest rates were at present levels). Cheap credit has a major influence on almost all assets as you well know, but who's to say that the cheap credit won't continue for some time? Yes we are at historically low interest rates, but we're not at the bottom. 

Looking at US and UK and some of the other examples you provided, they're at or around 1% - given our current rates we still have some buffer available to us in the event that debt appetite decreases. Debt appetite itself is not _the_ trigger for a crash but it most certainly will increase the supply-demand imbalance.

My concern is that inflation is already creeping up above the RBA's target band and we have a situation where the general population is starting to reduce the amount of property they're buying (i.e. demand is decreasing/supply is decreasing). So what happens if prices fall a bit? Well it'll discourage less people to buy, meaning more money in the pocket of the average joe and a very real increase in the risk of inflation rising. 

What will the RBA do? Increase rates to curb inflation thus setting house prices on a further downward spiral creating a cyclical effect? Or will they let inflation run rampant and then face a repeat of the 'recession we had to have'? I don't like the current situation one bit and wouldn't want to be in their shoes.

I'm maintaining my optimism that we won't have a crash (perhaps this is blind optimism and wishful thinking) - if we do have a crash it will hurt a LOT of people and I certainly would not wish it on anybody.


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## Glen48 (2 June 2011)

Once the average  American Idol watcher wakes up prices are dropping they will panic because they can see what happened in the rest of the World and don't want to be caught and will bail out driving down prices at a fast rate and faster than USA which is still going down.  
 OZ prices have fallen and it is on the way down for a lot more years.
Watch the DOW it is falling and soon there will be another crash


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## sinner (2 June 2011)

I have been known to post this image on this thread before, but in the current context of questions asked by others it seems once again appropriate to the discussion (most specifically, why does the US example have anything to do with Aus):



(hat tip Mike Shedlock - globaleconomicanalysis.blogspot.com)

How much of the above can you see around you right now?


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## Quincy (3 June 2011)

> *Going, going, 10,000 estate agents gone*





Ten thousand Real Estate Agents, about 1 in 6, have abandoned the profession in the past year in Australia as low sales volumes and falling commissions wipe out their profits.

http://www.afr.com/p/business/property/going_going_estate_agents_gone_Vryl5IgL9cOsm89QsC7FYP


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## greebly24 (3 June 2011)

Cheers KurwaJegoMac. Thanks for commenting on my post. Despite being a property bear (at the moment), I can't fault with your last few posts.


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## stacks (3 June 2011)

KurwaJegoMac said:


> we have a situation where the general population is starting to reduce the amount of property they're buying (i.e. demand is decreasing/supply is decreasing)




Could you please explain how is supply decreasing??


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## kincella (4 June 2011)

*have a listen to these real Sydney people talking about buying or selling  houses*..
its on now from 10-11, but you can listen later...
listen to it on your PC...
http://www.2gb.com/
look to the right, click on listen live...Mark Moraza etc

reality checks for the non believers


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## Macros (4 June 2011)

KurwaJegoMac said:


> Thanks for offering your perspective Macros.
> 
> You mention that one factor in the price imbalance is the access to cheap credit - what then would you define as an 'acceptable' level/price of credit? Can one really set an 'ideal' level?




An acceptable level of credit is impossible to know in the short run, but in the long run it will be linked to economic growth. Given it has significantly exceeded economic growth in the past few decades, it is time to rebalance. There are vested interests who don't want this to happen which is why we have seen so much intervention internationally.

You can't set an ideal level in a capitalistic environment as it is supposed to be set by market forces and therefore go too far on the upside and correct too far on the downside. We have ongoing issues because Governments don't want the capitalistic forces to play out to the downside and only to the upside.


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## Agentm (4 June 2011)

we all know that what you see a lot of when investments go underwater?

bubbles...

lot of bubbles


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## KurwaJegoMac (4 June 2011)

stacks said:


> Could you please explain how is supply decreasing??




Apologies wrote the wrong thing - that was meant to be: demand is decreasing/supply is *increasing*


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## Glen48 (4 June 2011)

Think of the money that could be made following the bubbles get in to R E about 2000 out 2009 buy PM's until it pops and look for the next one


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## medicowallet (4 June 2011)

"This weekend 59 per cent of homes auctioned have resulted in a sale.  
There is no doubt that most buyers and sellers will be hoping that the Reserve Bank keeps interest rates stable when they meet on Tuesday.

A total of 650 auctions were reported this weekend. Of those 383 sold and 267 were passed in, 171 of those on a vendors bid.

The last time the Melbourne market recorded 6 weeks with a clearance rate in the 50's was late 2008 in the peak of the spring selling season. It is interesting to note that whilst its now winter the volume of auctions is the same as it was in late 2008."

Interestingly there were expected to be 785 auctions this weekend.

I wonder what happened to 135 auctions..

For the true believers, hope those extra shifts are going well

MW


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## Aussiejeff (5 June 2011)

medicowallet said:


> "This weekend 59 per cent of homes auctioned have resulted in a sale.
> There is no doubt that most buyers and sellers will be hoping that the Reserve Bank keeps interest rates stable when they meet on Tuesday.
> 
> A total of 650 auctions were reported this weekend. Of those 383 sold and 267 were passed in, 171 of those on a vendors bid.
> ...




Well, most of us know the simple answer to that. Increasingly, failed auctions are "not reported". They are an "embarrassment" to the RE industry. There has been some previous media reporting of this, of which this snip is only one example...  



> *Auction rates fudged by failed campaigns *
> By Bronwen Gora and Helen Pow From:The Sunday Telegraph March 06, 2011 12:00AM
> 
> Story
> ...




The percentage of "unreported" auction results is likely to keep climbing in coming months as RE agents become more and more desperate to hide the truth.

Sadly *coff* for many of them, they will join the ranks of the unemployable, as the truth will out.

Party on....


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## Agentm (5 June 2011)




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## JTLP (6 June 2011)

2 anecdotes:

- A friend recently spoke to numerous estate agents in Melbourne (city area) and enquired about selling. He was advised by all that now was not a good time/he wouldn't get top dollar. I asked him "what if it never is a good time again" but he begs to differ...

- This may tie in to point 1 but I have noted that Richmond and surrounds have really had supply dry up over the last few months - people holding out?


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## Starcraftmazter (6 June 2011)

It's interesting. On one hand, if real-estate agents tell people to hold, it will tighten supply and put pressure on prices to at least stay the same.

However the fewer sales, the less commission the real-estate agents make.

Perhaps they know that things are really, really bad, and are willing to make less money in order to delay any sort of crash for as long as possible, because it's still more money than they would make once the event occurs?

Or perhaps hopeful they can ride out the sluggish price growth and things will return to "normal".


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## medicowallet (6 June 2011)

Starcraftmazter said:


> It's interesting. On one hand, if real-estate agents tell people to hold, it will tighten supply and put pressure on prices to at least stay the same.
> 
> However the fewer sales, the less commission the real-estate agents make.
> 
> ...




sounds fishy. 

Prices crash and there are forced sales too.

R/E win each way.


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## medicowallet (6 June 2011)

Beautiful weather tonight.

Almost zero, large frost coming in the morning, no doubt blue skies and sunshine.

I'll sit out on the front verandah with a nice hot cuppa.

Has been nicer lately, less cars going up and down the street, especially on weekends.

Don't know why.

MW

PS. Interest rates look like going up twice more.  No problems, take another job, do some overtime, downsize...  glorious, I love this country.


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## nukz (7 June 2011)

Starcraftmazter said:


> It's interesting. On one hand, if real-estate agents tell people to hold, it will tighten supply and put pressure on prices to at least stay the same.
> 
> However the fewer sales, the less commission the real-estate agents make.
> 
> ...




I think you need to consider as well, who trusts realestate agents? there worse than used car salesmen. I mean i think people are smart enough to make there own decision and not just take what the realestate agent says as gospel lol


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## sinner (7 June 2011)

Starcraftmazter said:


> It's interesting. On one hand, if real-estate agents tell people to hold, it will tighten supply and put pressure on prices to at least stay the same.




That is simply not how it works.

Those "holding out" for todays prices will end up selling for much less when they finally capitulate IMHO.


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## Glen48 (7 June 2011)

Your kids will never see house prices this high again , you need to go and get some ad's from agents to show your kids what easy credit can do to wreck an economy.
 The house price you see to day will be the last at that price the next one will be down.
Once the general public become aware House prices are going the same way as USA they will be  panic and this will force prices down quicker as every one wants to bail it.


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## satanoperca (7 June 2011)

No irresponsible lending in Oz.



> The share of home loans with a maximum LVR of 95 per cent or more made up 62 per cent of all home loans in June, up from 54 per cent in January, according to RateCity's database of 2500 home loans on offer in Australia




And then this pearl of wisdom




> “High LVR home loans need to be considered very carefully and while it's better value to save for a bigger deposit, if you do choose a high LVR home loan, make sure you accelerate your repayments and look at refinancing in a year or two when your *equity has grown*,” said Mr Smith.




http://www.theage.com.au/business/banks-offer-bigger-loans-to-homebuyers-20110603-1fjvn.html

Have a great day


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## KurwaJegoMac (7 June 2011)

satanoperca said:


> No irresponsible lending in Oz.
> 
> The share of home loans with a maximum LVR of 95 per cent or more made up 62 per cent of all home loans in June, up from 54 per cent in January, according to RateCity's database of 2500 home loans on offer in Australia




This does not necessarily construe irresponsible lending. This cleverly written 'shock' line has an interesting bit at the end: 

"...according to RateCity's database of 2500 home loans _*on offer *_in Australia"

On offer =/= loans taken.

Just because the offer is there for a high LVR loan, does not mean it's being taken up, nor accounts for a large proportion of existing loans/loans taken out.

It'd be good if one could see the number of high LVR loans taken out in a given month relative to regular LVR loans to get a much better feel of how the market is acting. Offering is one thing, taking up is another.


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## wayneL (7 June 2011)

Just a tidbit from across the ditch: 



> Quarter of estate agents walk out
> By Michael Dickison
> 5:30 AM Tuesday Jun 7, 2011
> 
> ...


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## Mr Z (7 June 2011)

KurwaJegoMac said:


> This does not necessarily construe irresponsible lending.




Yeah 95% LVR does IMO....


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## Greg (7 June 2011)

nukz said:


> I think you need to consider as well, who trusts realestate agents? there worse than used car salesmen. I mean i think people are smart enough to make there own decision and not just take what the realestate agent says as gospel lol




I am currently selling my home (in Melbourne's eastern suburbs) and was convinced to go to auction at the end of May. My property was passed in with no bidders - that was a bit humiliating. Since then, I am now up for sale and I am taking all of this as a sign of a softening market I suppose. In fact local results would suggest that "first homes" are still moving OK, but "ready to move into" homes like mine have solwed a little and the "luxury" end of the market seems to be where good savings can be made (% savings are relative I guess).
I had an open mind about real estate agents at the start of this process, but since he has now argued around 2 of his primary "differentiators" that were offered before I signed him up, I have to understand why people think they are a bunch of "shonks". They don't do themselves any favours with their behaviours and their "fast-talking" which is probably meant to confuse the punter, soon falls apart when you point out a counter argument they offered just 2 weeks prior. (Tip: If you're going to tell lies, at least be consistent).
I remain phylosophical about selling my home (it will sell eventually, for a fair price, I am sure) and I am lucky to be able to wait for that to happen, but in fairness to everyone, unless someone sees your property, falls in love with one or more of its features and is ready to buy, it's all very open to raw emotions, the building of false hopes and media speculation/fear-mongering.
Apart from doing all the obvious things like fixing up the house, taking it to market properly and being patient, ther's really not much else a vendor can do.
Thanks


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## KurwaJegoMac (7 June 2011)

Mr Z said:


> Yeah 95% LVR does IMO....




The % of LVR has no bearing on whether lending is irresponsible or not - it comes down to the borrow's capacity to repay. 

If a family earns $200K per year and they take out a $400K loan at 95% LVR does that make the lender irresponsible? Certainly not. If a family earns $60k per year and take out a 95% LVR does that make the lender irresponsible? Fairly probable.  

One has to look at the facts - *who* is borrowing at 95% LVR and *how much* do they earn per year. Simply saying that 95% LVR is irresponsible is not justified.


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## KurwaJegoMac (7 June 2011)

Greg said:


> but in fairness to everyone, unless someone sees your property, falls in love with one or more of its features and is ready to buy, it's all very open to raw emotions, the building of false hopes and media speculation/fear-mongering.
> Apart from doing all the obvious things like fixing up the house, taking it to market properly and being patient, ther's really not much else a vendor can do.
> Thanks




Quite true - especially in a climate like the one we have now where prices have 'softened' and even RE agents are feeling a bit down.


----------



## Mr Z (7 June 2011)

KurwaJegoMac said:


> The % of LVR has no bearing on whether lending is irresponsible or not - it comes down to the borrow's capacity to repay.




No, no it doesn't IMO 95% LVR is just not prudent in any way shape or form. There is no fat there at all, that is pricing for perfection which as far as a policy for a bank goes is madness.


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## sinner (7 June 2011)

KurwaJegoMac said:


> One has to look at the facts - *who* is borrowing at 95% LVR and *how much* do they earn per year. Simply saying that 95% LVR is irresponsible is not justified.




Capacity to repay is not static, it is a dynamic variable in a broader equation and the value of that variable can change massively over time. Relying on such measures is a bit of what got us into this mess in the first place, and is why people like the RBA DepGov can continue to say "everything is fine, nothing to see here".

The loans which are most likely to become impaired are those which have a high % LVR and a sudden "unexpected" change in capacity to repay.

A perfect contemporary example would be all those people who were earning $200k at the peak of the tech bubble, you claim that lending $400k to those people was most probably responsible just because they had a couple of bank statements showing dollar signs?

Thus, lending at high % LVR just because the borrower has capacity to repay *today*, does not make the lending responsible!


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## KurwaJegoMac (7 June 2011)

Mr Z said:


> No, no it doesn't IMO 95% LVR is just not prudent in any way shape or form. There is no fat there at all, that is pricing for perfection which as far as a policy for a bank goes is madness.




It comes down to being a calculated risk. If the borrower has the earnings capacity and/or assets backing them up then there is no reason why the lender can't offer such a product. If the asset falls in the short term to less than the loan amount and the bank forecloses - bad luck to the borrower. They'll still have to pay back the difference to the lender so the bank gets its' money all the same. 

By that token, should we start calling all car manufacturers irresponsible? After all - they allow cars to hit top speeds well in excess of our highest speed limits.


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## sinner (7 June 2011)

KurwaJegoMac said:


> It comes down to being a calculated risk




I think I finally get you Kurwa. You are a logical reductionist! Everything always comes down to something for you.

The truth of the matter is, everything is far more complicated than that, you are claiming against idealistic rules that were abandoned by all players of this game long ago so you simply can't reduce the discussion to those simplicities and expect it to hold up against the real world!


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## trainspotter (7 June 2011)

What if their earning capacity goes the other way? As in it actually increases? Not everyone is going to die and stop paying their mortgages?? Usual home loan would be man and woman as joint tenants. Admittedly 50% of income is possible to be lost due to unexpected pregnancy perhaps. Other possibles is losing capacity to pay due to retrenchment as well as partnership breakdown (she squeezes the toothpaste from the top of the tube and he leaves his jocks on the bathroom floor). 

There are plenty of reasons as to WHY they might not be able to pay. There is also many valid reasons as to WHY they might be able to pay more as well. Pay increases are on the Unions agenda atm. Possible that pay rises due to extra shifts or even promotions/expansion as well.

So why is everyone so quick to take the negative? Unemployment is low, rates are steady, prices are stagnant, Real Estate Agents are leaving the industry in droves across the Ditch, Banks are making record profits AND offering money at under 8% for a 10 year fixed period. 

95% loans have been around for nearly 20 years BTW. I somehow think that they are no longer 95% LVR's any more !


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## KurwaJegoMac (7 June 2011)

sinner said:


> I think I finally get you Kurwa. You are a logical reductionist! Everything always comes down to something for you.
> 
> The truth of the matter is, everything is far more complicated than that, you are claiming against idealistic rules that were abandoned by all players of this game long ago so you simply can't reduce the discussion to those simplicities and expect it to hold up against the real world!




Hahaha can't say I disagree with you on that point. I am a logical reductionist. But i do acknowledge that everything is far, far, far more complicated in the 'real world'. 

But can one even hope to ever completely understand the complexities and nature of this market and every other market in the real world? I think not or we'd all be millionaires. The truth is that it's infinitely more complex then you or I can hope to comprehend and analyse. 

My approach serves me well, I break down a system into logical chunks and reduce it to a manageable chunk i.e. such things as for house prices to drop significantly we need to see supply outsrip demand heavily. What factors affect supply: factor a, b, c, etc. 

The benefit of this approach is that it allows me to make an investment based on the facts currently available to me, in an emotionless way. Nobody here or anywhere in the planet can divine the future of property prices or stocks or whatever. The best we can do is take a calculated risk on our beliefs in how the asset will perform in the future and to adjust our position and risk as the future unfolds.

I'm happy to 'over simplify' things that 'don't hold up in the real world' to help me make decisions because at the end of the day _it helps me make a decision_ and act on it rather than sit in a forum and argue semantics and attempt to prophesise.

To me, I don't see any of my points having been 'abandoned by all players of this game long ago'. The more demand exceeds supply the higher prices go - this hasn't changed. Demand can be temporary (FHBs with 20% reduced stamp duty) or long term (PPORs, investors) but while demand exists prices will not fall. Currently auction results are worsening, people are being scared by news headlines - demand is falling and so are prices. No surprises there.

I love my simple little world.


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## awg (7 June 2011)

Mr Z said:


> No, no it doesn't IMO 95% LVR is just not prudent in any way shape or form. There is no fat there at all, that is pricing for perfection which as far as a policy for a bank goes is madness.




Agreed

Out of interest, what do you think of 90%?

Perhaps it is a naive oversimplification, but arent banks effectivly geared to that ratio?


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## KurwaJegoMac (7 June 2011)

awg said:


> Agreed
> 
> Out of interest, what do you think of 90%?
> 
> Perhaps it is a naive oversimplification, but arent banks effectivly geared to that ratio?




Depending on how you define the gearing, then yes. Banks require about 10% capital to cover risks.


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## ginar (7 June 2011)

Mr Z said:


> No, no it doesn't IMO 95% LVR is just not prudent in any way shape or form. There is no fat there at all, that is pricing for perfection which as far as a policy for a bank goes is madness.





anyone with less than 20% down is forced to pay insurance to provide the banks with cover against the risks of having " no fat " to take up market price fluctuations


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## banco (7 June 2011)

Greg said:


> I am currently selling my home (in Melbourne's eastern suburbs) and was convinced to go to auction at the end of May. My property was passed in with no bidders - that was a bit humiliating. Since then, I am now up for sale and I am taking all of this as a sign of a softening market I suppose. In fact local results would suggest that "first homes" are still moving OK, but "ready to move into" homes like mine have solwed a little and the "luxury" end of the market seems to be where good savings can be made (% savings are relative I guess).
> I had an open mind about real estate agents at the start of this process, but since he has now argued around 2 of his primary "differentiators" that were offered before I signed him up, I have to understand why people think they are a bunch of "shonks". They don't do themselves any favours with their behaviours and their "fast-talking" which is probably meant to confuse the punter, soon falls apart when you point out a counter argument they offered just 2 weeks prior. (Tip: If you're going to tell lies, at least be consistent).
> I remain phylosophical about selling my home (it will sell eventually, for a fair price, I am sure) and I am lucky to be able to wait for that to happen, but in fairness to everyone, unless someone sees your property, falls in love with one or more of its features and is ready to buy, it's all very open to raw emotions, the building of false hopes and media speculation/fear-mongering.
> Apart from doing all the obvious things like fixing up the house, taking it to market properly and being patient, ther's really not much else a vendor can do.
> Thanks




While there are good arguments for going to auction in a bull market for property (most of the record high prices for houses in a given suburb  seem to come from auction sales) I don't think there's much point in going to auction from the seller's point of view when the market is weak.  Can be win/win for the agent though.  In a soft market either they sell it on the day or a failed auction is a strong signal to the seller to drop their expectations.


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## Mr Z (7 June 2011)

awg said:


> Agreed
> 
> Out of interest, what do you think of 90%?
> 
> Perhaps it is a naive oversimplification, but arent banks effectivly geared to that ratio?




I believe that we have no enforceable reserve ratio, as incredible as that sounds. The banks can go nuts  I must admit I kinda like the idea of controlling liquidity via a reserve ratio, it is a slightly subtler tool than the old interest rate hike IMO. The Chinese seem to put it to good use.

I guess we are over simplifying this but as a rule I'd like to see 80% LVR at the worst. If someone qualifies on an income basis but cannot manage to save 20% then I'd be wary of them period. If they are offering other assets as security... well then that is not a 95% LVR is it!

At 80% LVR a 50K deposit will get you into a 250K house, at 95% LVR the same 50K will get you into a 1M dollar house.... down here that 50K will not even cover stamp duty. I am with Steve Keen on this, LVR's like this are the reason we have over priced housing. These market price levels are purely a function of the available credit and the more leverage the worse the story ends. When I first went for a loan I'm sure the required LVR was around the 70% level and I don't think that is such a bad thing.

As for comparing car finance to housing finance... hmmmm... well aside from all the obvious differences in the way the loan books are run and considering that I believe we have been generally irresponsible with finance in this country you will get no argument from me if you call various other lenders irresponsible. I guess insane bank lending does not occur in isolation does it?


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## Mr Z (7 June 2011)

ginar said:


> anyone with less than 20% down is forced to pay insurance to provide the banks with cover against the risks of having " no fat " to take up market price fluctuations




Yes I know... it is the general effect on the market that I think is irresponsible as much as anything. See the 50K example above, Keen has it right IMO.


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## trainspotter (7 June 2011)

I repeat ...... 95% LVR has been around for 20 plus years. Look at the carnage this has caused. Just LOL on this chestnut. But but but this is different this time. No different to all the other times IMO.


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## Starcraftmazter (7 June 2011)

sinner said:


> That is simply not how it works.
> 
> Those "holding out" for todays prices will end up selling for much less when they finally capitulate IMHO.




Yes - I meant from the perspective of greedy real estate agents though 

Ie. Wouldn't it be in their interest to persuade people to hold in order to try and stop the prices from going down as rapidly and inspiring a panic.

But it's just my theory, I'm no expert


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## medicowallet (7 June 2011)

Starcraftmazter said:


> Yes - I meant from the perspective of greedy real estate agents though
> 
> Ie. Wouldn't it be in their interest to persuade people to hold in order to try and stop the prices from going down as rapidly and inspiring a panic.
> 
> But it's just my theory, I'm no expert




No,

their job is to make sales.

They con the seller into a lower than reasonable price, then try to con the purchaser into paying it.

Whenever I sell a property I list it at a price I want and NEVER EVER EVER tell the R/E agent what I'd accept for it, otherwise that is what you get offered.

Sneaky snakes the lot of em.


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## tothemax6 (7 June 2011)

Mr Z said:


> I believe that we have no enforceable reserve ratio, as incredible as that sounds. The banks can go nuts  I must admit I kinda like the idea of controlling liquidity via a reserve ratio, it is a slightly subtler tool than the old interest rate hike IMO. The Chinese seem to put it to good use.



Well they put it to use, whether or not its 'good' is another thing .
Yes, Australian banks do not have a central bank enforced reserve requirement ratio. I understand that they have various 'capital' requirements though, as per 'Basel III'. 
Of course a lack of an enforced reserve ratio has never allowed banks to 'go nuts', since they need to ensure that settlement demands from customers and other banks can be met (otherwise runs and bankruptcy ensue).
Amazingly under free-banking in Scotland it turned out that this ratio was about 2% , and that the financial system was very stable. Most of the stability can be attributed to the fact that the banks would all hover around this level of credit expansion, and the monetary base (gold) changed very little. So in aggregate, the level of credit remained very stable, as opposed to ballooning into various bubbles and then collapsing as bank runs occurred. A non-expanding monetary base makes all the difference .


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## trainspotter (7 June 2011)

ginar said:


> anyone with less than 20% down is forced to pay insurance to provide the banks with cover against the risks of having " no fat " to take up market price fluctuations




Is this the same as saying that you believe there will be a 20% price fluctuation? If they still have their job and are meeting repayments why would they sell? For fear of a greater drop on your "investment" ? So therefore there will be a greater than 20% drop and people will be quitting their homes in record numbers? Investors are not buying so who would take up the slack? What happens to all these homes on the market? Does the bank just simply write this off as bad debt? Does the bank go to a mortgagee sale who then in turn gets the shortfall from LMI who then in turn sues the Valuers indemnity insurance for their shortfall?

So much conjecture. What is different to this time as to when interest rates went to 17% and unemployment went to 10% under Keating??? Did the sky fall in on Australian house prices then? Did banks get the speed wobbles and sell everyone up? Why are banks offering under 8% for a 10 year FIXED period if they are squawking that "wholesale funds" are costing more to them. Why are so many people still borrowing to buy a house? 

So many questions. Too much conjecture.


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## cynic (8 June 2011)

trainspotter said:


> What is different to this time as to when interest rates went to 17% and unemployment went to 10% under Keating??? Did the sky fall in on Australian house prices then?




No not quite.

We did have that "recession that we had to have", house prices did gradually decline over a period of approximately ten years.

It may be worth noting that many borrowers were still enjoying the protection of the13.5% interest rate ceiling that had only just been abolished a few years prior.


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## Mr Z (8 June 2011)

trainspotter said:


> I repeat ...... 95% LVR has been around for 20 plus years. Look at the carnage this has caused. Just LOL on this chestnut. But but but this is different this time. No different to all the other times IMO.




Twenty years of a one way market, I think you are premature in your derision oh wise one.


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## trainspotter (8 June 2011)

cynic said:


> No not quite.
> 
> We did have that "recession that we had to have", *house prices did gradually decline over a period of approximately ten years*.
> 
> It may be worth noting that many borrowers were still enjoying the protection of the13.5% interest rate ceiling that had only just been abolished a few years prior.




Did they really? Ummmmmmm ........ guess again. 

June 1989 17% 1R average house price $138,600 .... June 1999 6.5% IR average house price $204,600.


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## trainspotter (8 June 2011)

Mr Z said:


> Twenty years of a one way market, I think you are premature in your derision oh wise one.




Nope ..... market has cycled three times in the last 20 years with periods of stagflation. 1991, 2001 and present day.


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## awg (8 June 2011)

Mr Z said:


> At 80% LVR a 50K deposit will get you into a 250K house, at 95% LVR the same 50K will get you into a 1M dollar house.... down here that 50K will not even cover stamp duty. I am with Steve Keen on this, LVR's like this are the reason we have over priced housing. These market price levels are purely a function of the available credit and the more leverage the worse the story ends. When I first went for a loan I'm sure the required LVR was around the 70% level and I don't think that is such a bad thing.





Agreed again, I dont gear more than 80% not only cause of the mortgage insurance issue, but because I feel 20% price swings are entirely possible at any time.

Furthemore to those reasons, I do not like over-gearing in general, due to the potentially awful impact of "counter-party risk".

Slightly of track I know, and I got kicked in the head when suggesting 99% gearing on various derivatives is a bad idea.

In business I have more than once seen how one counter-party not paying up can lead to a chain of liquidity issues


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## Glen48 (8 June 2011)

House prices didn't go up more than usual maybe a few % over the years, we had a greed driven gambling spree, the game has closed down some lost, some had a win. 
Now we have to wait until the gambling tables open again in about 10 yrs time to find out the results.


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## ZSlaveski (8 June 2011)

trainspotter said:


> So much conjecture. What is different to this time as to when interest rates went to 17% and unemployment went to 10% under Keating??? Did the sky fall in on Australian house prices then? Did banks get the speed wobbles and sell everyone up? Why are banks offering under 8% for a 10 year FIXED period if they are squawking that "wholesale funds" are costing more to them. Why are so many people still borrowing to buy a house?




I'll tell you why. Because the real estate industry is corrupt. The spruikers running this ponzi scheme lie through their teeth, tell you anything, in order to keep the bubble inflated for just a little bit longer. I take any media report about property with a pinch of salt, lending figures, capital growth, rents through the roof etc etc. All nonsense.

Take auction clearance rates for example. They're published every week in the MSM and every week they "appear" to be rising even though they're not really. How do they do this? Well first of all as explained here: Auction Clearance Rates Fudged, they falsify the initially reported figures by not including most of the failed auctions when calculating the initial clearance rate, so they might report an initial clearance rate of 61%. Then later in the week they quietly revise this down to maybe 54% when the failed auctions are reported.

Then next week they do the same and report the clearance rate has risen from 54% to 60% or whatever their initial falsified figure is, rinse and repeat. Clearance rates always going up! It's a total sham, like the rest of the real estate market!

Zoran.


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## trainspotter (8 June 2011)

So according to Zoran Theorom it is the Real Estate Agents fudging figures that is keeping the bubble afloat? 

I have to agree that Real Estate Agents are not worth a pinch of bovine exreta and will bend the truth to get you to sign because if they do not sell then they do not eat. Part of the sale process is to get the listing/auction/paperwork signed etc but surely this is not the only factor keeping this massive Ponzi scheme airborne?


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## cynic (9 June 2011)

trainspotter said:


> Did they really? Ummmmmmm ........ guess again.
> 
> June 1989 17% 1R average house price $138,600 .... June 1999 6.5% IR average house price $204,600.




It appears that another creative redefinition of a commonly used English word has emerged. It would seem that the word "guess" has now been equated to the expression of conclusion/s drawn from participation in, and observation of actual verifiable events in the real world/universe.

Yes those four residential houses that I purchased between the years of 1988 and *1998* were just "guesses".

I didn't get to buy any houses after my last "guess" in *early 1998* because by then, prices were starting to inflate beyond my preferred target range.

Did that table enable those vendors that I personally witnessed ("guessed"!) to recoup their losses when they purchased and subsequently resold at lower prices during that approximate decade?

Did I only "guess" that the realtor whom, based upon an erroneous entry in a State Government report, verbally challenged my ownership of one of my houses?  

Were any of your precious "tables/graphs", perchance, founded on data derived from such a "reliable" government source (i.e. one that is evidently capable of reporting "phantom" sales), or did the data originate from our friendly realtors whom seem to have earned such a longstanding reputation for "honesty" and "integrity" in their various business dealings? 

To date my "guesses" have proved to be profitable as is evidenced by my real estate portfolio and my various trading and bank account balances. These results could not have been achieved on bank interest and meagre wages alone - the residential property decline that I reported in my post was critical to my successes as it placed me in "positive gearers heaven" and provided much needed start up capital for my trading activities.

I commend any investor whom courageously chooses to confide in the various statistical and economical reports whilst failing to pay due regard to observable real phenomena. Such behaviour will undoubtedly increase the probability of me "guessing" my way onto the winning side of naive investors' losing transactions.

P.S. I'm "guessing" that somebody is going to want me to produce the evidence to support my dissertations, so my response in advance is that I already know what I saw and I don't owe anyone proof (any sentient being is capable of manufacturing evidence!) of my own personal discoveries! So just keep on believing those pretty charts, statistics, theories tabloid articles etcetera whilst I keep "guessing" my way to greater profitability.


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## trainspotter (9 June 2011)

ERMmmmmmmm ....... just a coupla questions cynic. 

1) How can you become positively geared in a declining property market? 

Rental income greater then repayments would come about if the *interest component* was lesser due to declining rates but not if the value of the property was in reverse? Surely rents would go down if property prices are falling? The much needed capital that you stated to begin your trading activities ........ did this come from the leftover rental money? 

2) If property declined during this period why did you not sell up this poor investment? 

3) How much did it decline and where was your stop loss point? 

If property prices declined over a 10 year period when interest rates were at 17% from 1989 - 6.5% 1999 then why is it that every single chart or statistic says differently?

Evidence on the other hand correlates to the uptick. Land titles office reports straight to the ABS btw so pretty hard to dodgy the numbers when the land transfer has gone through.

You seem like a person of your word there cynic so no need for proof or otherwise. 

P.S. Congratulations on your property portfolio, various trading and bank account balances.



> *The ABS *produces a quarterly index of established house prices in each capital city. Sales prices are determined using *Valuers’ General data *combined with data from home mortgage lenders.
> 
> The first was the two–year period from 1987 to 1989, when house prices *(based on ABS data)* rose by 56 per cent. The second was the seven–year period from 1997 to 2004, when prices rose by 108 per cent.




http://www.aph.gov.au/library/pubs/rn/2006-07/07rn07.htm


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## Glen48 (9 June 2011)

Cynic
You have done well which is possible on some property and I guess you have sold all at a profit and now looking at the next bubble PM's I guess?


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## Quincy (9 June 2011)

> *Asian developers hit the Gold Coast *
> 
> The Ridong group's principal, Li Riyu, is now based in Sydney, but has connections in China with the tourism industry there. China is overtaking Japan as the main source of tourists to the Gold Coast, *and analysts note there are opportunities in inbound tourism from China to the Gold Coast, which would flow to the property market*.




http://www.theaustralian.com.au/bus...t-the-gold-coast/story-e6frg9gx-1226071929048

*(If you build it they will come)*

This may well be a turning point for the future of property prices on the Gold Coast. Both Sydney and Melbourne (certain parts) have seen a huge influx of Chinese purchasers over the past few years. Maybe the next "hot spot" for the Chinese will be the Gold Coast ?


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## Quincy (9 June 2011)

> *The great property bubble of China may be popping *
> 
> AFTER years of housing prices gone wild, China's property bubble is starting to deflate.
> 
> ...




http://www.theaustralian.com.au/bus...a-may-be-popping/story-e6frg90x-1226072284347


The above statements (in bold) are the key points that could create the flow on effects to our economy and in turn affect Australian property prices.


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## medicowallet (9 June 2011)

Quincy said:


> http://www.theaustralian.com.au/bus...a-may-be-popping/story-e6frg90x-1226072284347
> 
> 
> The above statements (in bold) are the key points that could create the flow on effects to our economy and in turn affect Australian property prices.




Quincy, Quincy, Quincy,

It is *DIFFERENT* here

MW


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## satanoperca (9 June 2011)

medicowallet said:


> It is *DIFFERENT* here
> 
> MW




Yes it is, no affordability problem in Oz compared to China.



> Calculations based on Soufun data show that in the opening months of 2006 an average-price new apartment in China's capital would cost around $US100,000 ”” the equivalent of 32 years' disposable income for the average resident.
> 
> By 2011, the average price had more than doubled to $US250,000, but relatively modest increases in income mean it would now take 57 years of saving for the average resident to cover the cost.




http://www.theaustralian.com.au/business/news/the-great-property-bubble-of-china-may-be-popping/story-e6frg90x-1226072284347


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## trainspotter (9 June 2011)

China has 1.3 billion people of which 55% live in rural areas and moreover share less than 11.3% of the societal wealth. SO therefore 45% of the population live in a metropolitan area controlling 88.7% of the societal wealth. Not a bad ratio really. In other words there are some very, very poor people dragging the median average residents housing affordablility down. Amazing what you can do with statistics isn't it ?

Is this the same as Australia? Sort of ...... but on a much smaller scale.


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## greebly24 (9 June 2011)

You can't believe what you read in the media (in which I work) as real estate advertising is such a large component of media revenue. Pick up the weekend paper and see how large the real estate section is and you'll know what I mean. Think what it costs for a tiny classified ad, then multiply that hundreds of times over dozens of pages --- big big money.

Whenever we do stories on real estate on television, it is usually positively-skewed (perhaps because that's what the majority of people want to hear). Usually its about cheaper suburbs destined to boom for some unspecified reason. Then we'll ask a real estate agent or representative from a real estate association for their opinion, which is always bullish. But they're just talking up their own game so you can't blame them.

It's an easy story to do, especially on a quiet weekend. Actually, that's not entirely true. We've done some beat-up colour stories lately about supposed booming suburbs, but when we send the camera crews out to film some random auctions, they never manage to get any bids. Then its back to using file vision from the property boom, when people actually bid against each other. That's why you see the same shots used ad nauseum. Stories in winter showing auctions in summer where everyone's wearing late-90s fashion. We only do it because we have to. We try to get new vision.

Also interesting, Channel 9 has been struggling in the ratings, so soon they are going to play a reality-TV home-renovation show called The Block at 7PM, five nights a week starting some time in June. This is a huge gamble! They are hoping this will rate well, and set up the rest of the evenings viewers. 

I personally doubt it will work. Five nights of home reno shows per week? In this market? Given the corruption in real estate though, I wouldn't be surprised if the competing renovaters receive massive bids over the phone at their eventual auctions. They'll probably claim it was from Chinese interests, but its more likely to be from the network execs themselves, trying to cover their butts on their ratings failure.

I remember a couple of years ago, when the home-reno shows were dying out, there was one hosted by that guy with the mustache from the movie The Castle. Anyway, one couple spent ****loads renovating their house and then got no bids at auction. They cut to a couple of other couples, both of whom also got no bids. It was the most depressing television I'd seen since 911.

So, for all our conjecture, the success or failure of The Block 2011 will probably also be a good indication of the *future of Australian property prices* in the near term. Enough property bulls out there with ratings boxes in their homes just might make it work.

PS - The SA govt today announced that they're fazing out the $8,000 First Home Buyers Bonus over the next two years (but adding a raft of extra charges and fees instead). And this in a market where FHBs are the lowest segment of new mortgages in years. Hmm.


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## medicowallet (9 June 2011)

I doubt the houses on the block will make anything over cost this year.


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## medicowallet (10 June 2011)

The weekend is shaping up to be a fantastic time.

Morning toast and tea on the front patio. I might sleep in a little bit.

Enjoying the tranquility of the past six months. Less cars driving by on the weekend.. I can now hear the birds and wildlife.  I may chat to my neighbour, the community spirit is fantastic. I live in a rural area, everyone here has a gun, no violence, and we love our big diesel 4x4s.

This is truly the lucky country. 

Need to make ends meet?  Take on an extra shift, another job, cancel un-necessary luxuries like the internet. Read a book instead of going to the movies, buy online, do some gardening.

Paradise

MW


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## cynic (10 June 2011)

Glen48 said:


> Cynic
> You have done well which is possible on some property and I guess you have sold all at a profit and now looking at the next bubble PM's I guess?




Glen48, Trainspotter ,Thanks for taking the time to read my recent egomaniacal tirade and thankyou for the compliments. I consider myself honoured to be receiving such acknowledgement from persons who've clearly demonstrated significant insight and discernment in financial/economical matters throughout the various posts that I've read to date.
I must confess that, whilst I'm very proud of my overall percentage returns on investments/trades, I am still a member of the "wannabe" trader/investor club due to the small amounts of capital deployed.( I used to boast that I was a "hundredaire", fortunately, I've managed to add a small number of noughts since then.)

I've retained two of my residential properties in which I now have 100% equity (courtesy of that wonderful first "vendor's" grant that enabled me to fetch inflated prices for my other two properties). I'm keeping both of these, I live in one and the other is being kept "on ice" in preparation for my "escape" from the "big smoke" when the financial (un)reality actually sinks in. I could realize a healthy gain on either one in anticipation of the bargains that I believe are drawing ever nearer, but am too lazy these days to be particularly concerned. I want to retain two, and am happy with the one's that I've got (irrespective of the possibility of  future declines in prices - zero valuation can no longer harm me). 

I generally don't have to travel far to identify potentially profitable investment/trading opportunities. 
I've encountered so many people whom have failed to notice the "ponzi" structure of many of our preferred investment vehicles, that opportunities just seem to keep popping up. 

As for PM's, much as I love to keep a very small amount of gold and silver in my possession (I have a minute gold nugget that I found during my prospecting excursions in the 1980's) I've chosen not to speculate on them after taking small net losses throughout the past three decades. So whilst PM's are lovely to actually hold in my hands, their market behaviours seem to be poorly suited to my preferred trading style.

Totalisation pools may take a hit at some stage (although financial desperation may produce a short term surge in gambling first), so I won't be brushing the dust off of my Winning Greyhound Racing Formulae any time soon. As for lotteries, I used to make money up until a short time after the upgrade of the machine that selects the balls. So that investment vehicle is no longer suitable.

I'm not sure who those kind investors are who've been topping up my trading account ledgers with EUROs and Pounds lately, but they have my utmost gratitude for their generous contribution towards my "Greed is Good" crusade. Much as I hope these recent market behaviours continue, I'm anticipating that my strategy may require further adaptation (but I'm still awaiting my warning from GOD before I react).

I believe we've both foreseen what's coming Glen48, as I think I can recall you mentioning "beans and bullets" in one of your other posts.

I strongly suspect that a time is coming when a scarcity, that directly threatens physical survival, will awaken mankind to the illusory pricing nature of our currently preferred investment vehicles. Hypothetically, what use will PM's, paper/plastic currency etcetera be in a world that's temporarily run out of food following the liquidation of farms/orchards etcetera? Will anyone actually be willing to trade what little food they may have in exchange for inedible asset classes at the risk of going hungry?

Fortunately, my bees don't seem to be at all concerned about the state of our financial markets, they just keep crosspollinating flora and producing honey, regardless of the antics of the mighty "DOWN JOKERS" index. Rainfall in my area also appears to be impervious to financial catastrophes.So I think I'll survive the food shortage. Hopefully no-one will steal my bees, they're generally quite hostile to trespassers. Maybe there'll come a day when I'll be able to trade some of my surplus honey for PM's. (Don't laugh! Just remember, you heard it from me first!)

P.S. Trainspotter, you asked some excellent questions in your post, and I will furnish a reply within the next day or two. I would do it now, but I must catch some sleep before the DAX and FTSE open, just in case God has an important message for me (I need some dreamtime to open the communication channel! If only I could work out how those tea leaves and crystal balls work! Still, I'm always grateful for small mercies and hopefully not too small profits!)


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## againsthegrain (10 June 2011)

> I doubt the houses on the block will make anything over cost this year.




Im sure the producers have a backup plan in the form of alternate endings. I wonder if bots is sitting there giggling everytime he sees the block commercial on


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## Glen48 (10 June 2011)

Cynic
 Thanks for taking the time to explain your case which is exactly what a forum is about.
 Some people have made money out of real estate and good on them but what most are saying the bubble has popped because we are in another unknown world were prices were driven by easy cheap credit not the normal forces which drive up prices.
 Read any ponzi scheme from Tulips to Timber plots and insert Australia Houses it will be the same in the long run.
  I bet the men who made buggy whips  agreed Henry Ford new machine would not last.
 Gold you are correct you can't eat it but you can sell it and buy food and a farm with its own water and producing food will be a good asset  although the starving hoards will be a problem just like USA is now were mobs walk in to a shop help themselves and walk out and as things get worse they will be less police etc. 
 If you want to hold on the RE thats your choice and I won't come back in 12 mts time and say I told you so, one of us is wrong about it all time will tell.
 You keep you money on thr Black and ride it out.


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## medicowallet (10 June 2011)

againsthegrain said:


> Im sure the producers have a backup plan in the form of alternate endings. I wonder if bots is sitting there giggling everytime he sees the block commercial on




Probably too busy doing overtime to cover the losses this year.


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## Glen48 (10 June 2011)

TV shows and Newsprint have their share of scamming buyers into the ponzi scheme as well, making victims think you can buy a dump and make a motza with out showing the true costs they are right up there with First homes bribe, cash for clunkers amd convincing people to vote in any election.,


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## NewOrder (10 June 2011)

Glen48 said:


> Cynic
> Thanks for taking the time to explain your case which is exactly what a forum is about.
> *Some people have made money out of real estate and good on them *but what most are saying the bubble has popped because we are in another unknown world were prices were driven by easy cheap credit not the normal forces which drive up prices.
> Read any ponzi scheme from Tulips to Timber plots and insert Australia Houses it will be the same in the long run.
> ......




I love RE and have never lost on it but have some pretty basic criteria eg no mortgage insurance, buy in areas with good PT and facilities.
I find out the reasons for sale and how long it has been for sale, REA are twits who give away too much info which only serves the buyer not their client which is the seller.

Loving this thread especially your work Cynic  

TBH I have bigger life issues than the property market, if it implodes worst case for me is that I would go and live in one of my houses and give up my rental which is where I prefer to live. I have big equity in all properties so am not spooked by the current flat market. 
Wouldn't want to be a PPoR buyer from the last 12 months who purchased using their heart not their head. Property is a great investment for people who are actually investing without big borrowings, not those buying their dream home but selling their soul to aquire it.

FTR I don't think we will see a massive downslide, some would be great in the next few years as I would like to buy again.


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## Glen48 (10 June 2011)

New World Order
 The banks need to keep debt increasing to keep the ponzi scheme going and they will get you in to debt even if you don't want to.
There are 300,000 vacant houses in Ireland you could look as the victims move out of Ireland and move over seas because there is no future for them in Ireland. 
How about a house in USA for 55K .
If you want to live in a house you paid X for and will be worth nothing because there are no buyers that is your choice.
 Check back on a few months when house prices have dropped and Gold is nudging $1,800


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## NewOrder (10 June 2011)

Glen48 said:


> *New World Order* The banks need to keep debt increasing to keep the ponzi scheme going and they will get you in to debt even if you don't want to.
> There are 300,000 vacant houses in Ireland you could look as the victims move out of Ireland and move over seas because there is no future for them in Ireland.
> How about a house in USA for 55K .
> If you want to live in a house you paid X for and will be worth nothing because there are no buyers that is your choice.
> Check back on a few months when house prices have dropped and Gold is nudging $1,800




PMSL New Order is in reference to the band not NWO as in "we're gonna take over the world, us peoples of the elite"

Your enthusiasm is worthy of a standing ovation, truly I am impressed, thing is I don't have the same viewpoint. How can a house be worth nothing if it can be lived in? It is a roof, walls, floor etc I can live in it for nothing but a few bucks a week should the supposed bubble burst, my tenants die or the rental I am in gets blown up. 20 years in the Melb property market and I am still smiling. But really I do hope it does go down in the next little while so I can buy again.

We are not in Ireland, we have reasonable employment, I don't think housing is going to crash. Sure it may go down more but I am not going to worry unless it goes down by over 50%. If it does PM your addy and I will send you a case of this great Organic, Merlot I get at the local. 

Even after 2 earthquakes, a GST hike and a super crappy economy I could still sell my NZ property (although it might take a few years ) and still not lose money. 

There is a house opposite me for sale now, a 4bd weatherboard, very nicely reno'd but for the million they want for it, I would not go near it. That isn't a good RE buy but it doesn't mean that all RE is a bad investment opportunity. There is still a lot of movement and good prices around here though, will be interesting to see what they do get for it.


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## medicowallet (10 June 2011)

NewOrder said:


> How can a house be worth nothing if it can be lived in?
> 
> We are not in Ireland, we have reasonable employment, I don't think housing is going to crash. .




YES

It is DIFFERENT HERE!!



A house can be worth nothing in many different ways.

1. It is worth nothing to a person if it is in negative equity.

2. It is worth nothing to the bank if the person walks away from a bad debt.


But just in case people didn't realise

IT IS DIFFERENT here!!


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## trainspotter (10 June 2011)

Thanks for the equitable reply cynic. Greatly appreciated. I await with baited breath for the answers to my questions. I am not having a go about the situation. I am very keen to learn so that when the situation arises (possibly in the future) I can look back into the dark recesses of my mind and understand what is happening. I am one of those people that need to ask straightforward questions to get answers so I can compute in my tiny brain.

Thanks again for the forthright response.


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## trainspotter (10 June 2011)

medicowallet said:


> The weekend is shaping up to be a fantastic time.
> 
> Morning toast and tea on the front patio. I might sleep in a little bit.
> 
> ...




Bwahahahahahhahahah *gasp* hahahhaahhahahhggagagaggaggagaaG  ..... now that is truly funny. Top post MW ...... classic stuff. :


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## NewOrder (10 June 2011)

medicowallet said:


> YES
> 
> It is DIFFERENT HERE!!
> 
> ...




But you did not read my post, it is not worth nothing if I can live in it for a few bucks a week. You are comparing a person who has invested up to the hilt with my situation where I have factored in a complete crash of the market. My plan B is that I could live in one of my investments for bugger all per week if I had to.

Sits well with me


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## Glen48 (10 June 2011)

Let me see if I have the straight NWO you have spent $XK  on a property that is now worth nothing but needs to be mainatined,  rates etc.
At least you won't have to insure it if you want another house you can buy one get one free from any bank.
You can also live in a tent or cave and it would be cheaper.


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## NewOrder (10 June 2011)

Glen48 said:


> Let me see if I have the straight NWO you have spent $XK  on a property that is now worth nothing but needs to be mainatined,  rates etc.
> At least you won't have to insure it if you want another house you can buy one get one free from any bank.
> You can also live in a tent or cave and it would be cheaper.




I will reply when you use my proper login name. I am all for the banter but without due respect there is no point.


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## trainspotter (10 June 2011)

Glen48 said:


> Let me see if I have the straight NWO you have spent $XK  on a property that is now worth nothing but needs to be mainatined,  rates etc.
> At least you won't have to insure it if you want another house you can buy one get one free from any bank.
> You can also live in a tent or cave and it would be cheaper.




LOL Glen48. Where do you live BTW ??? The GoGo Bar in Pattaya? How is the Chang beer in Cheap Charlies? Tell Molly the katoey I said hello !

You can live in a foreign country anytime when you can't hack it here.


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## TabJockey (10 June 2011)

I dont like this "all property is a bad investment" attitude.

There are always opportunities, I have seen a few good things recently, good yields, good location and good price.


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## Glen48 (10 June 2011)

You are correct New Order was trying to save on typing.
I got out of OZ because I firmly believe it is heading for a crash just like USA  and bailed just like thousands of others from all different countries are doing.
However you are entitled to your opinion the same as other have rights to theirs.
 I do agree RE can be a good investment if you chose right.

May the best man win


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## NewOrder (11 June 2011)

Glen48 said:


> You are correct New Order was trying to save on typing.
> I got out of OZ because I firmly believe it is heading for a crash just like USA  and bailed just like thousands of others from all different countries are doing.
> However you are entitled to your opinion the same as other have rights to theirs.
> I do agree RE can be a good investment if you chose right.
> ...




Or the best woman, whichever the case may be 

Thinking about this thread last night, it seems that perhaps my POV is from the inside looking out and yours is in the reverse. TBH I am not overly concerned with charts and other indicators when it comes to property as I have always bought well, with low LVR's and properties with some feature such as location or land size.

Sure the market is not fantastic but I still believe that people have to live somewhere so with the right property and low borrowings it is not dire.  

I was already hammered earlier on in this thread because I firmly believe that both the Aust and Kiwi markets spend too much time and energy thinking the big cities *are* the property markets, therefore when the top end of the bigger cities start to faulter people freak out thinking every part of the market is a disaster. This POV has not changed, they are multi faceted markets and while some areas may be down, IME not all are.
Not all LL's and property owners are maxed out on credit and yes some areas are holding or even going up slightly.

As for your earlier question, if I did move back to one of my IP's it would halve my weekly outgoings so it is a reasonable plan B for me. Most of us have to have some cost of housing so why not move back to my own place? Even if the market completely crashed it would not bother me to keep paying down the mortgage for when the market upcycled. Thing is money is nowhere near the most important thing in life so I rent in an area I could not / would not currently buy in so I can  be close to family.


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## Glen48 (11 June 2011)

New Order
 If I was in your shoes I would sell... rent and wait until the market has bottomed maybe 8 10 yrs time and buy in and get a ex multi $$$$ mansion , Assuming the economy is still going and you have a Job. 


http://blogs.forbes.com/jamesaltucher/2011/03/21/why-im-never-going-to-own-a-home-again-3/


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## medicowallet (11 June 2011)

"This weekend there have been 138 auctions reported with a clearance rate of 58 per cent.

The long weekend has resulted in a low volume of auctions.

A total of 80 homes were sold and 58 were passed in, of those 38 were passed in on a vendors bid.

This weekend last year saw 348 auctions and a clearance rate of 72 per cent.

Around 700 auctions are expected on each of the next two weekends.

Don't miss Melbourne Property TV Monday night on Ch31 at 8.30pm.

Enzo Raimondo
CEO REIV


--------------------------------------------------------------------------------
"

Well done Enzo, I could tell that there were around 25% less cars on the road this weekend compared to last year.


Great for the serenity.
Great for the planet.

MW


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## trainspotter (11 June 2011)

Mannnnnnnnnnnnnnn ....... we are in real trouble !! I just witnessed afternoon TV and the amount of home improvement infomercials and shows was incredible. The BLOCK has 8 couples on this year "THE FIRST TIME EVER" it screamed at me. There was that crappy home improvement program as well which almost made me upchuck and I am not talking about "Tim the Toolman" one either. I went to the websites of the major TV stations and all the advertising is house related or home improvement.

GAAAAAAAAAAAAAAAAAAAAWD have mercy on our souls. 

I am sure I wrote this about 300 posts ago as to the state of play in the RE Industry.


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## moXJO (11 June 2011)

Damn it I must be living in a property hotspot. Five of the eight houses I looked at today had already sold. The others were absolute overpriced crap. Investors are still snapping up the resonable properties fast. Honestly bring on the crash.


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## trainspotter (11 June 2011)

moXJO said:


> Damn it I must be living in a property hotspot. Five of the eight houses I looked at today had already sold. The others were absolute overpriced crap. Investors are still snapping up the resonable properties fast. Honestly bring on the crash.




A gold coin to that man. You have hit the nail on the head my friend. There are places that are doing well. There are palces that are holding their own. There are places in retreat. Nothing changes overall. Samma samma Dong. It is called Real Estate. Kinda like the share market really.  Ya just gotta know WHEN AND WHERE to buy.


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## Knobby22 (12 June 2011)

trainspotter said:


> A gold coin to that man. You have hit the nail on the head my friend. There are places that are doing well. There are palces that are holding their own. There are places in retreat. Nothing changes overall. Samma samma Dong. It is called Real Estate. Kinda like the share market really.  Ya just gotta know WHEN AND WHERE to buy.




True, even in the USA, if you had top residential property in Manhattan, you wouldn't have lost coz "the rich are getting richer and the poor are getting the picture."


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## banco (12 June 2011)

trainspotter said:


> Mannnnnnnnnnnnnnn ....... we are in real trouble !! I just witnessed afternoon TV and the amount of home improvement infomercials and shows was incredible. The BLOCK has 8 couples on this year "THE FIRST TIME EVER" it screamed at me. There was that crappy home improvement program as well which almost made me upchuck and I am not talking about "Tim the Toolman" one either. I went to the websites of the major TV stations and all the advertising is house related or home improvement.
> 
> GAAAAAAAAAAAAAAAAAAAAWD have mercy on our souls.
> 
> I am sure I wrote this about 300 posts ago as to the state of play in the RE Industry.




Speaking of The Block, there was a story on the weekend that the producers will be lucky to not lose money when the apartments are sold off given they bought them when them market was a lot better.


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## CamKawa (12 June 2011)

banco said:


> Speaking of The Block, there was a story on the weekend that the producers will be lucky to not lose money when the apartments are sold off given they bought them when them market was a lot better.




The Block's Watercress Productions paid $3.6 million for terraces

 lol, lol, lol


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## trainspotter (12 June 2011)

banco said:


> Speaking of The Block, there was a story on the weekend that the producers will be lucky to not lose money when the apartments are sold off given they bought them when them market was a lot better.




Big picture stuff dude, irrespective of what they paid the endorsements and the advertising dollars will cover the overheads comfortably. 

Even during the boom times there was a ground floor apartment on THE BLOCK that sold for $25,000 less than what it cost to buy/renovate. NO BIGGY.

Not forgetting you have a captive audience to watch the program as well as the advertising extravaganza _*ie*_ THE SHOW itself to self promote. Remember it is the contestants that get to keep the $$$ at the end of the day IF there is a profit.


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## medicowallet (12 June 2011)

medicowallet said:


> "This weekend there have been 138 auctions reported with a clearance rate of 58 per cent.
> 
> The long weekend has resulted in a low volume of auctions.
> 
> ...




"This weekend there have been 146 auctions reported with a clearance rate of 57 per cent.

The long weekend has resulted in a low volume of auctions.

A total of 83 homes were sold and 63 were passed in, of those 38 were passed in on a vendors bid.

This weekend last year saw 348 auctions and a clearance rate of 72 per cent.

Around 700 auctions are expected on each of the next two weekends.

Don't miss Melbourne Property TV Monday night on Ch31 at 8.30pm."


There were 8 auctions in Melbourne today.

Real estate agents must all be going to to the ski resorts with the hefty commissions.

MW


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## cynic (13 June 2011)

trainspotter said:


> ERMmmmmmmm ....... just a coupla questions cynic.
> 
> 1) How can you become positively geared in a declining property market?



Yes I do admit that I conveniently neglected to mention the significance of declining interest rates in my recent tirade.

My share trading activities did not commence until the "noughties", so apologies if I gave the impression that I was trading shares during that time as my focus was primarily on real estate. 

Much of the surplus income that arose due to positive cash flow and accommodation savings went into paying down the mortgage on my principal residence over those years. This provided much needed start up capital as the additional equity was then available for redraw. Again, I would concur that the decline in interest rates was a larger factor than the decline in prices. I would also concur that the increase in prices between 1999 and 2009 have made significant contributions to my bank balance due to capital gains on the two that I sold. Incidentally the capital gains from this time would appear to be significantly higher (95% gain in 2002 , 290% gain in 2009) than those which might be expected according to the reported statistics.

The decline in prices reduced properties sufficiently to enable the acquisition of positively gearable investments in the lower end of the real estate spectrum. The first property I purchased in April 1988 was never able to be positively geared against the outstanding debt even when rates dropped below 7%. All subsequent purchases in 1994,1996 and 1998 were positively geared at interest rates at and below 13%. Having said this I will readily admit that two of these positively geared properties would have turned negative had rates ascended beyond 13% during the period of ownership. Fortunately that did not occur. 

The other thing about this process that was helpful was the fact that, unlike margin loans, the bank never asked me to top up the loan account with additional equity when prices were in decline. So in effect, each positively geared property I purchased, increased my borrowing capacity because it increased my disposable income from which I was able to do more borrowing! I did of course still have to save like crazy for each deposit, but had more money coming in with which to do so!. To the best of my recollection LVRs ranged between 80-85% at time of purchase, so I did on two occasions pay for mortgage insurance.

Significant declines in rents (if any) do not appear on any of my rental P & L statements during this time. Perhaps my former tenants are entitled to claim some refunds due to my excessive rents?

Interestingly enough, if the interest rates drop from say 13 to 6.5 percent, then surely rents would have to drop by approximately 50% to render a neutrally or positively geared property negative. House prices didn't drop nearly so dramatically, hence the rents remained comfortably above interest and other outgoings throughout this time.


trainspotter said:


> 2) If property declined during this period why did you not sell up this poor investment?



The decline was somewhat gradual. It could be argued that the perceived capital decline, in such a leveraged investment, exceeded the net positive cashflow hence yielding a somewhat meagre rate of return on my deposit monies overall. However, my expectation at the time was that availability of tenants would continue and that both rents and prices could at that time be reasonably expected to lift in response to increased wages etc. In terms of net cash flow, three out of the four properties yielded net positive cash flow and/or accommodation savings that far exceeded available returns on the personal capital deployed (deposit, stamp duty conveyancing etc.). 

Were these really poor investments?

The reason for retention of the property that consistently failed in the positive gearing stakes was more circumstantial than it was financial and ideally should be the subject of another thread under the heading of  "Does GOD really know what SHE's talking about?". So if you want to start another thread I'll happily attempt to explain what I mean by this.


trainspotter said:


> 3) How much did it decline and where was your stop loss point?



I'd have to go over my personal financial records dating back 20 years to give an accurate guesstimation. Furthermore I didn't retain suffiicient records of advertised prices (and I mean actual maximum price advertised, not price ranges or $XX+) throughout the years in question.

I can cite a couple of the examples that may give you a rough idea of what I'm talking about.

By 1993 the property that I'd bought in 1988, during the 1987 to 1989 boom (yes I do concur with the ABS statistics on this) was reevaluated at a mere 7.1% above my original purchase price. This would strongly suggest a decline from the 1989/90 peak as I know that there was nothing even close to the price I paid available then. I also know that I didn't pay too much for the property because I'd been searching the market for >6 months before swooping on it, and I did succeed in negotiating the vendors down to my first offer.

I made an offer of  approximately 90% on a property that was advertised at $XK in 1994. It was sold later that week to another emptor at a price closer to the $XK originally advertised. In 1998 that same property was passed in at auction. The reserve price that it was passed in at was approximately 80% of the $XK price advertised in 1994.
Interestingly enough, I don't have a lot of time for the "stop profits" philosophy. I do believe in risk management which is why I often talk to God. She usually warns me when things are happening that are likely to threaten my survival. So the only "stop profit" in effect was the possibility of foreclosure, compulsory acquisition, meteorological phenomena, alien invasion etc.

BTW It might be just a little off topic but, did you know that in the Spring of 2006 GOD showed me that there was a future time coming when the SPI would drop from the 6000 range down to the 4000 range and that I would lose a six figure sum as a result? None of my friends or family believed me when I told them. They insisted that it would take an event of nuclear proportions to cause such a market movement. Regretfully, GOD refused to tell me the date, so when I saw it coming in December 2007 I decided to outsmart HER and shorted the SPI. I later discovered that SHE had also conveniently neglected to forewarn me of Ben's Bernantics and I almost Bernankrupted myself throughout that year thereby fulfilling HER prophecy.
SHE also neglected to tell me about Wally Buffoon's plans to buy a chunk of Golden Sux. Still, I'm sure SHE has HER reasons for withholding certain information. I suspect that SHE doesn't want me to have too much of an unfair advantage.


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## cynic (13 June 2011)

trainspotter said:


> If property prices declined over a 10 year period when interest rates were at 17% from 1989 - 6.5% 1999 then why is it that every single chart or statistic says differently?
> 
> Evidence on the other hand correlates to the uptick. Land titles office reports straight to the ABS btw so pretty hard to dodgy the numbers when the land transfer has gone through.



The cheapest prices I observed in plentiful supply appeared in the Spring of 1997. By Summertime there were few of them to be found. By the Winter of 1998 there was nothing available in my target range, hence I concluded that the Positive Gearers Property Purchase Party was over and that prices were then on the rise. Based on my experience I concluded that the bottom of the market occurred sometime between Spring 1997 and Autumn 1998. If the statistics claimed that prices commenced their ascent during the summer of 1997 I would not contest the point. 

I may have been a little liberal in my use of the term "approximate decade". Can you find a period of  8 or 9 consecutive years in this data range that would support my assertion that there was a gradual decline in prices? 

In respect to the actual land titles, based upon my direct experience they are not 100% accurate 100% of the time (and I do have evidence of this), but generally I've found them to be pretty reliable. To the best of my recollection it was a Surveyor General Report that included a "phantom sale" of one of my properties. My understanding is, that this entry had arisen subsequent to a failed attempt at identity theft. 

As for statistics, my limited understanding is that there are a variety of statistical methodologies/practices that can result in dramatically different representations of the same data population. So are we talking about modes,medians, means, quartiles or other statistical concepts here?

Having said this, I must confess that my assertions were extrapolated from the lower end of the property spectrum in a few select locations. My infrequent visits to other states from time to time did not highlight any significant variances to my cursory observations.

The fact that you've taken care to consider the integrity of the data sources of published statistics and their susceptibility to influence prior to acceptance is highly commendable.

BTW I have in my various occupations worked for numerous industries including an ITS branch of one State Government Department that encompassed a Land Titles Office. I shall decline to overtly express an opinion of events that I've been witness to for reasons of propriety.

Suffice to say that I have decades of experiences that have justified my cynicism when it comes to trusting the infallibility of "transparent" reporting processes.  
Media reporting of statistics combined with respected economic and scientific theories/discoveries are amongst the most powerful forms of the "white man's magic" that I've seen practiced to date. Never before have I witnessed such large populations of intelligent beings mesmerised to the point of being unable to recognise the tangible reality of their immediate surroundings.


trainspotter said:


> You seem like a person of your word there cynic so no need for proof or otherwise.
> 
> P.S. Congratulations on your property portfolio, various trading and bank account balances.



Thanks for that, I freely admit that I am capable of error, from time to time, and I thank you for recognising that I speak the truth as I understand it. I also thank you for challenging my assertions and highlighting the inconsistencies in my post.


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## damien275x (13 June 2011)

*If you think prices are going to rise:* Buy a house
*If you think prices are going to fall:* Don't buy a house.

I don't talk about property with people, they get really pissy. Some guy recommended I get a property as an investment at work and when I said I'd rather wait and see if prices fall he got all defensive and went off on a long rant about how great they are. good, go ****ing buy one then!


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## medicowallet (13 June 2011)

damien275x said:


> *If you think prices are going to rise:* Buy a house
> *If you think prices are going to fall:* Don't buy a house.
> 
> I don't talk about property with people, they get really pissy. Some guy recommended I get a property as an investment at work and when I said I'd rather wait and see if prices fall he got all defensive and went off on a long rant about how great they are. good, go ****ing buy one then!




It is getting easier to hit a nerve, as, at the moment, people are confronting the real possibility of their investment going backwards.

Nice buying opportunities for others though.


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## explod (13 June 2011)

medicowallet said:


> It is getting easier to hit a nerve, as, at the moment, people are confronting the real possibility of their investment going backwards.
> 
> Nice buying opportunities for others though.




No the buying opportuities will not occur till we hit a bottom and that may well be three of four years away in my view.

As the old addage goes in share trading, "never try to catch a falling knife" unless of course you can short it.

There are of course exceptions, where one is perhaps buying a home in which to live for the long term.


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## Glen48 (14 June 2011)

I think once house prices are seen to be declining there will be a rush to get off the sinking ship after all they will see whats happening in USA and want out while there is still some equity left ..if they get out early.


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## medicowallet (14 June 2011)

Glen48 said:


> I think once house prices are seen to be declining there will be a rush to get off the sinking ship after all they will see whats happening in USA and want out while there is still some equity left ..if they get out early.




Yes, America and Europe are still looking very weak.  China is looking a little suspect at the moment too.


Problem is, it is a revolving door system, and that could see prices go down relatively quickly before they stabilise.


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## moXJO (14 June 2011)

My fear is the direction this government is taking us in regards to the economy. They are either driving us towards a recession on purpose, or are that stupid that they have managed to hit all the checklists by accident to create one. Houses won't be the only things that are down in the future. Are we brewing a perfect storm?


----------



## explod (14 June 2011)

moXJO said:


> My fear is the direction this government is taking us in regards to the economy. They are either driving us towards a recession on purpose, or are that stupid that they have managed to hit all the checklists by accident to create one. Houses won't be the only things that are down in the future. Are we brewing a perfect storm?




We cannot blame the guvmint for the falling US dollar which in turn is taking our dollar higher.  This translates into our industries losing competitiveness against cheeper overseas production etc.  It also decreases tourism, less coming to Aus., and aussies finding overseas travel cheaper and more attractive.   And make no mistake it is making money dearer, may not be apparent in interest rates to any great degree yet but it will continue to lean that way as our dollar cointinues to become stronger against the US dollar (which is after all the world reserve currency)

So Governments of any ilk will make not one iota of difference.

But do agree that Swannie is far out of his depth and Jules pandering to the seppos is not doing us any good at all as their advice is one of the things leading the world at this time down the financial gurgler.

*In my humble opinion*only, of course.


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## greebly24 (14 June 2011)

Been reading about some very clever real estate investors in the US.

The banks were offering LVR of 125%. So this one guy got a loan and bought a home and immediately rented it out. Then he did it again. And again. In a very short period of time he had bought six homes, and rented them all out. The thing is, he never made a single repayment. So he got 150% of a home value in cash (6 x 25%) and two years of rent payments before the banks threatened to foreclose. So he just sent them the keys back. Genius.

Another guy bought a $100k unit. His mate bought the identical one next door. Then they sold them to each other for $200k (no money changed hands, they just swapped them). Instantly they are both owners of $200k units with $100k in equity. They then used this equity to get more loans and repeat. Genius.

Another guy owned a house and followed the house price in gold ounces ratio. At the peak of the bubble it hit 800 ounces so he sold up and got his 800 ounces. Now homes in the US are around 100 ounces. So he can now buy 8 homes. Genius.

There's also the guy who bought his home for $500k. Eventually it appreciated, and he sold for $1m. Then the bubble popped and he bought the same house back for $500k. Genius.

So there is money to be made in real estate!!!


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## investorpaul (14 June 2011)

QLD treasurer on TV now annoucning a new home owner grant.

keep the ponzi scheme rolling for a little longer!


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## Glen48 (14 June 2011)

There's your problem buying the house back at K should have waited until the bottom in a few yrs time.
 But good to see some one thinking, we can do that here soon


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## explod (14 June 2011)

greebly24 said:


> So there is money to be made in real estate!!!




Only for the financialy literate.

How many who have jumped into the property ponzie over the last 15 years would know about gold for example.

I can assure you there are many out there who have been hoarding other assets and will be ready to pounce on rentals just when the other assets, such as gold, go counter and through the roof.

A few have been trying to get it through on this thread for years but were howled down by those who had bestowed greater knowledge/letters upon themselves.


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## village idiot (14 June 2011)

As few as 8 years ago, from the viewpoint of a lot of countries in the world australian property was comparatively cheap. There were a lot of people having a look from eg the UK thinking "I could sell my UK house and buy a bigger one in Australia for half the price, wouldnt that be nice", and a lot of them did just that. I know cos I was one of them. Thousands of Poms cashed in or at least improved their housing lot by moving here in the early noughties. (I am australian but went on the world tour in 1985 and ended up living in the UK for years). I am assuming that the inflow of cash buyers didnt do any harm to the boom here even if it wasnt a main driver. 

Nowadays due to the double whammy of rising Australian house prices and A$, I could go back and buy that same UK house for half what the house I bought here in 2003  is now worth, and bank the rest. That is a fourfold turnaround, and for the record it is nothing to do with the UK house price, which is about the same now in GBP. And I am thinking of doing just that, since the opportunity to do a Kerry Packer only comes round so many times in your life (not the exact same house obv, but one like it).

The Aust:UK house price ratio
2003; 1 Aust house = 0.5 UK house
2011; 1 Aust house = 2 UK house

At current levels of A$ and house prices, i can guarantee there is no-one out there  any more looking at australia thinking what a bargain our houses are, let alone could afford one, and actually I know of a few poms who have or are now thinking of making the move back, and they cant be the only ones. result = net outflow

i realise a few poms going back isnt going to break the australian property market, but it leads me to think that at the very least external demand wont be present for a while as things stand. 

Something has to give.  Assuming the A$ stays where it is, we cant go on having the most expensive stuff in the world.


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## KurwaJegoMac (14 June 2011)

A very interesting post Village Idiot. Thanks for sharing! Interesting point about the house prices being about the same across those two time periods save for the fluctuating $

I have a colleague originally from the UK, he's been renting here whilst renting out his UK residence. He too has been considering going back but seems to like the weather here too much (Melbourne... really?!) Must be really bad over there :

Still, even with an outflow of UK nationals we'll probably have an influx of other nationalities (from poorer economies). For those that can afford to make the trip it's fantastic coming to work in a country such as ours and send back $$s. You would know yourself from the 'invasion' of Poles in the UK in the decade leading up to the GFC - strong GBP vs PLN made it a very attractive proposition for migration. I haven't been following in-depth post GFC so the migration trend may have changed. But I suspect 'wealthier' people may migrate to western countries with a low currency value (get more 'bang for your buck' with 'poorer' people migrating to western countries with high currency value (significantly increased earnings capacity compared to back home).

Will be interesting to see what the next few years bring if the AUD stays where it is - more migrants will mean more renters and therefore better yields. Will it be enough to prop up prices? Guess we'll find out


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## KurwaJegoMac (14 June 2011)

Exciting news!!!

I'm sure you'll all be very pleased to know that I purchased a property today in Melbourne. Settlement towards the end of next month - will be on the hunt for tenants now. Holding costs at current rates are less than $100 per week and the property will be cashflow positive in 2 years if I use just 30% of my disposable income. Considering I have no other debts, this should be a breeze.

All this less than 1.5km from the nearest railway station (40 min by train to the CBD), bus stop across the road, less than 2 km to a shopping centre and less than 5 km to the Monash Freeway, Princess Highway and Eastlink. Got it at just under 10% of the normal price for that suburb (Thank you distressed seller!). Took me 6 months worth of inspections and a bit of patience but given the location and price i'm very happy - 

For those that are looking, don't lose heart - as TabJockey says:



TabJockey said:


> I dont like this "all property is a bad investment" attitude.
> 
> There are always opportunities, I have seen a few good things recently, good yields, good location and good price.




You can find opportunities in boom and bust, just gotta do the legwork to find them.


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## trainspotter (14 June 2011)

Congratulations KurwaJegoMac !! Every journey starts out with a first step. You have been sensible in your approach and have shown great patience grasshopper. I am sure you will succeed as you have studied your opponent well and understand it's weakness's and stengths. Well done you !


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## wayneL (14 June 2011)

KurwaJegoMac said:


> Got it at just under 10% *of* the normal price for that suburb (Thank you distressed seller!). Took me 6 months worth of inspections and a bit of patience but given the location and price i'm very happy -




Wow! 90% off! 

And still cash flow negative?

::

(Sorry couldn't resist, good luck with it )


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## KurwaJegoMac (14 June 2011)

wayneL said:


> Wow! 90% off!
> 
> And still cash flow negative?




Well I did say they were a distressed seller!!  but I think I need to work on my investment approach if I can't get positive cash flow after 90% off :



trainspotter said:


> Congratulations KurwaJegoMac !! Every journey starts out with a first step. You have been sensible in your approach and have shown great patience grasshopper. I am sure you will succeed as you have studied your opponent well and understand it's weakness's and stengths. Well done you !




Thanks Trainspotter! I won't begin to try and forecast when/if a market bottom will occur - one could go back through the thousands of posts here to see people have been doing it unsuccessfully for years. I figured I stand to lose more by waiting than by trying to time the market.

With my deposit and the fact that I got the property below market value, I have about 25% of the current property value as 'equity'. So my property would need to experience a fall of at least 25% before I start hitting 'negative equity'. I also have a First Home Saver account set up ($935 Government Contribution for every $5500 across 4 years, with interest earned taxed at only 15%) so with that money I can always buy a PPOR should the market fall anywhere near 10-25% (not to mention I can use the equity in my IP provided the fall is less than 25%).

So I either risk not getting in now and having a harder time in subsequent years, or I risk hitting flat/negative growth if property falls 25% (but still having opportunity to buy using my First Home Saver Account). As i'm holding with no intention of ever selling, even if I hit negative equity i'm not too fussed - worse case I'll just be unable to borrow for a while until I'm neutral again. Either way, with a 25% fall in the Australian property market negative equity would be the least of anybody's worries.

For those looking at getting their first PPOR - speak to a financial planner about a First Home Saver Account. Been around for a while but banks don't like to advertise it for some reason? No account fees maybe that's why


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## Dowdy (14 June 2011)

greebly24 said:


> Been reading about some very clever real estate investors in the US.
> 
> The banks were offering LVR of 125%. So this one guy got a loan and bought a home and immediately rented it out. Then he did it again. And again. In a very short period of time he had bought six homes, and rented them all out. The thing is, he never made a single repayment. So he got 150% of a home value in cash (6 x 25%) and two years of rent payments before the banks threatened to foreclose. So he just sent them the keys back. Genius.
> 
> ...




I wouldn't call it a good investment where you have to scam your way to a profit (apart from the last example where he just got the timing right)


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## medicowallet (14 June 2011)

KurwaJegoMac said:


> Got it at just under 10% of the normal price for that suburb (Thank you distressed seller!). Took me 6 months worth of inspections and a bit of patience but given the location and price i'm very happy -




Nice to hear!!

It is great to hear, that for such a large investment, you did a decent amount of research, this will no doubt serve you well.

Unfortunately I would probably expect your 10% not to be "profit", just a true reflection of price in the area.  However well done, you have insulated yourself for a 10% fall.

Good luck

MW


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## Starcraftmazter (15 June 2011)

greebly24 said:


> The banks were offering LVR of 125%. So this one guy got a loan and bought a home and immediately rented it out. Then he did it again. And again. In a very short period of time he had bought six homes, and rented them all out. The thing is, he never made a single repayment. So he got 150% of a home value in cash (6 x 25%) and two years of rent payments before the banks threatened to foreclose. So he just sent them the keys back. Genius.




Wouldn't he have severely ruined his credit rating?


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## Uncle Festivus (15 June 2011)

KurwaJegoMac said:


> I also have a First Home Saver account set up ($935 Government Contribution for every $5500 across 4 years, with interest earned taxed at only 15%) so with that money I can always buy a PPOR should the market fall anywhere near 10-25% (not to mention I can use the equity in my IP provided the fall is less than 25%).



 Excuse my ignorance, but isn't that now your 'First Home' or can we all do that ie buy IP's all the while getting a taxpayer subsidy to buy your PPOR?


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## KurwaJegoMac (15 June 2011)

Uncle Festivus said:


> Excuse my ignorance, but isn't that now your 'First Home' or can we all do that ie buy IP's all the while getting a taxpayer subsidy to buy your PPOR?




The First Home Owners Grant (FHOG) and First Home Saver Account apply provided you have not lived in a property you own - so if none of your IPs were a residency at any point then you can claim the government subsidies. Although for the FHOG you cant have purchased Residential Property prior to 1990. You can purchase after 1990 but must not have lived in it. 

Also note that this is for Victoria and eligibility may vary in other states.


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## nukz (15 June 2011)

Starcraftmazter said:


> Wouldn't he have severely ruined his credit rating?




I would have thought so, you really need more specific information. I have a few colleagues working in the U.S in New York and Chicago and they tell me its almost impossible to get a housing loan in the U.S right now regardless of how good your credit rating or income is.


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## KurwaJegoMac (15 June 2011)

medicowallet said:


> Nice to hear!!
> 
> It is great to hear, that for such a large investment, you did a decent amount of research, this will no doubt serve you well.
> 
> ...




Thanks MedicoWallet. I'd like to also mention that I've spent the last 2 years consulting with accountants who specialise in investments and estate planning, as well as devoured every book i could find on property investment (and of course this thread : ). 

Time well spent - i have several friends who've purchased IPs without doing all the required research. Here are some 'facepalm' moments from them:

- one hasnt bothered to have a solicitor/conveyancer review the contract of sale and section 32 (not to mention he just 'googled' his plot of land to make sure it was the right one)
- one has a couple of IPs and has not been to an accountant once (uses eTax) and hasnt had a quantity surveyor evaluate his eligible tax deductions (he only claims interest paid)
- one has 4 properties and claims that "property investing is all about maximising the loss to get the biggest tax refund" he didnt like my investing approach for positive cashflow and eventually positive gearing. Then again this same person has 3 IPs and one PPOR on a combined post tax income of 80k - with $1.6m in debt i shudder to think what no tenants or normal interest rates would do. You should have seen the fear in his eyes when i told him we're at below historic interest rates and 10% is closer to the norm. 

Biggest purchase of your life and people spend more time researching their dream car than the property!


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## greebly24 (15 June 2011)

Starcraftmazter said:


> Wouldn't he have severely ruined his credit rating?




This guy doesn't need to worry about his credit rating ever again! This guy got 150% of a home price anyway in cash (6 x 125% LVRs), plus two years rent on six properties. Say 7% yield (due to no repayments made), times two years is around 15%, times 6 properties is 90% of a home price. So through this scam he got 150% plus 90%, for a total of 240% of a home price, and then walked away with zero debt.

Then the US house price crash occurred, and prices dropped by 33% on average. So they now cost 67% of what they did. This guy could now buy 3 homes with cash, and put 50% into a fourth. Think a bank might consider him a worse credit risk than a FHB with 97% LVR?

Gotta love the balls on these scam-artists!

Anyway, interesting story KurwaJegoMac. Look forward to seeing how it works out for you over the next couple of years! But positive-gearing is definitely the way to go if capital growth is uncertain. Sounds like you did your research & can sleep easy.

Been looking at the FHSA. Not sure if readers aware of legal "scam". Put in $5500 one day before end of financial year to get $935 govt bonus for that year. Next day, new financial year, stick in another $5500. So in one years time:

$5500 + $5500 + $935 = $11,935
5.5% interest for one year = $656.42
Minus 15% tax = $557.96
Second govt bonus (2012/13) = $935
TOTAL PROFIT = $2427.96

Basically a 22% profit on $11,000 in one year and one day, zero risk. Drops to something like 12% in second year and 9% in third. Great for me cos saving for three more years for home anyway, but check details for yourselves. Combined with a stagnant or dropping RE market, could work out very nice. Hence the confirmation bias


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## KurwaJegoMac (15 June 2011)

greebly24 said:


> Been looking at the FHSA. Not sure if readers aware of legal "scam". Put in $5500 one day before end of financial year to get $935 govt bonus for that year. Next day, new financial year, stick in another $5500. So in one years time:
> 
> $5500 + $5500 + $935 = $11,935
> 5.5% interest for one year = $656.42
> ...




That's exactly what I'm doing Greebly24  Just signed up for the account - looking to have it up and running before end of June so I can pop in the $5500 and get $935 straight away.

Just FYI the account has to be set up outside of the bank branch system as the ATO has to confirm eligibility before it can be set up. So if you're hoping to get in before end of this month don't delay or it may not get set up in time!


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## Androopy (16 June 2011)

Just a quick find. 

http://www.smartcompany.com.au/property/20110615-why-we-need-another-way-to-invest-in-housing.html

What do you guys think?


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## Uncle Festivus (16 June 2011)

KurwaJegoMac said:


> The First Home Owners Grant (FHOG) and First Home Saver Account apply provided you have not lived in a property you own - so if none of your IPs were a residency at any point then you can claim the government subsidies. Although for the FHOG you cant have purchased Residential Property prior to 1990. You can purchase after 1990 but must not have lived in it.
> 
> Also note that this is for Victoria and eligibility may vary in other states.






greebly24 said:


> Been looking at the FHSA. Not sure if readers aware of legal "scam". Put in $5500 one day before end of financial year to get $935 govt bonus for that year. Next day, new financial year, stick in another $5500. So in one years time:
> 
> $5500 + $5500 + $935 = $11,935
> 5.5% interest for one year = $656.42
> ...




Why am I not surprised that property spruikers need the continued 'support' of the taxpayer for the ponzi to perpetuate. Isn't there anyone with ethics and morals any more who can resist the temptation to once again scam the system? Just glad I'm not a Victorian taxpayer, although we probably have a similar taxpayer funded subsidy here in NSW that non genuine first home buyers can rort also?


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## cynic (16 June 2011)

Uncle Festivus said:


> Why am I not surprised that property spruikers need the continued 'support' of the taxpayer for the ponzi to perpetuate. Isn't there anyone with ethics and morals any more who can resist the temptation to once again scam the system? Just glad I'm not a Victorian taxpayer, although we probably have a similar taxpayer funded subsidy here in NSW that non genuine first home buyers can rort also?




Is it unethical for a person to take full advantage of a facility that is made legally available at all taxpayers expense?

Surely as a current or future taxpayer himself, he's entitled to avail himself of legally granted opportunities to recapture some of his lost wealth without being accused of wrongdoing.

Please also bear in mind the inordinately high stamp duty rates being charged in Victoria. 

The taxpayers really can hardly be considered to be scammers for seeking an opportunity to get something back in return for their tax dollars/duties.


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## KurwaJegoMac (16 June 2011)

Uncle Festivus said:


> Why am I not surprised that property spruikers need the continued 'support' of the taxpayer for the ponzi to perpetuate. Isn't there anyone with ethics and morals any more who can resist the temptation to once again scam the system? Just glad I'm not a Victorian taxpayer, although we probably have a similar taxpayer funded subsidy here in NSW that non genuine first home buyers can rort also?




In addition to Cynics excellent response, why should I be penalised because I have chosen to derive an income from property? Should we start banning developers, flippers, renovaters, etc from receiving these benefits too? After all, they need to purchase property to derive their income. 


Like you, i need somewhere to live and when I can afford it, i will purchase a PPOR. The scheme is available to all members of the public and comes out of the taxes i pay as well. Would you ban students from receiving government handouts? They too are investing (in themselves) in the hope that future returns will outweigh short term losses.


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## trainspotter (16 June 2011)

KurwaJegoMac said:


> In addition to Cynics excellent response, why should I be penalised because I have chosen to derive an income from property? Should we start banning developers, flippers, renovaters, etc from receiving these benefits too? After all, they need to purchase property to derive their income.
> 
> 
> Like you, i need somewhere to live and when I can afford it, i will purchase a PPOR. The scheme is available to all members of the public and comes out of the taxes i pay as well. Would you ban students from receiving government handouts? They too are investing (in themselves) in the hope that future returns will outweigh short term losses.




I should have been paying more attention to some of your previous posts. Did you say that you have received the FHOG to buy an IP? OR did you say that even though you have bought an IP that you will be eligible for the FHOG in the future if and when you buy your PPOR ?


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## KurwaJegoMac (16 June 2011)

trainspotter said:


> I should have been paying more attention to some of your previous posts. Did you say that you have received the FHOG to buy an IP? OR did you say that even though you have bought an IP that you will be eligible for the FHOG in the future if and when you buy your PPOR ?




The latter: Even though I have bought an IP I am still eligible for the FHOG in the future if and when I buy a PPOR.


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## maffu (16 June 2011)

UncleFestivus, the First Home Owner Savings Account is a Federal Government initiative, not state based.
http://www.commbank.com.au/personal/accounts/firsthomesaver/default.aspx

I signed up for one a few weeks ago, my girlfriend and I will both put in $5,500 this financial year (2 weeks left!) and receive $1,870 from the government as a bonus.

Personally I think middle class welfare is disgusting policy, but its available to me, and I will make sure I use it.


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## againsthegrain (16 June 2011)

Was walking through my local shopping centre today and nearly every store had some kind of big upto 50% off sale, I guess it is end of financial year sales as usual.

What is not announced that quiet a few of these shops are having sales because they are closing, alot of owners are saying rents are too high and there is hardly any profits due to less and less consumer spending.

Angus and Robertson and most of borders stores are liquidating this month 4000 jobs Aus wide have been wiped out.

Not a doom prophecyst but general public and consumer confidence is taking a beating, I hear alot more people saying "hard times are coming"

There is so many 50% off sales you can have but when people just can't afford the luxuries the stock won't sellitself

Wonder what kind of effect this is having on RE, not a bear nor a bull just a curious observer.

Would rather not a big crash like some are hoping for, wish for a big crash and you might get just a little too much that you bargained for.


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## trainspotter (16 June 2011)

KurwaJegoMac said:


> The latter: Even though I have bought an IP I am still eligible for the FHOG in the future if and when I buy a PPOR.




OH really? Which state do you live in ? In WA the moment your name hits the title of the property the FHOG goes with this purchase. As in you cannot buy an IP then buy a PPOR and claim FHOG. I might have to buy some property in your state??? In QLD it is the same. (only commercial stuff there)



> You and your spouse have:
> 
> never been paid the first home owner grant
> *before 1 July 2000, not owned residential property in Australia *
> from 1 July 2000, not lived in residential property (in Australia) you have owned.




http://www.osr.qld.gov.au/first-home-owner-grant/eligibility-fhog/index.shtml

I was of the understanding that once your name is on ANY title you have ruled yourself ineligible?


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## KurwaJegoMac (17 June 2011)

trainspotter said:


> OH really? Which state do you live in ? In WA the moment your name hits the title of the property the FHOG goes with this purchase. As in you cannot buy an IP then buy a PPOR and claim FHOG. I might have to buy some property in your state??? In QLD it is the same. (only commercial stuff there)
> 
> 
> 
> ...




For the most part you are correct, you are ineligible if your name is on a title - however this applies only if the purchase was prior to 1 July 2000. 



> You and your spouse have:
> 
> 1) never been paid the first home owner grant
> 2) before 1 July 2000, not owned residential property in Australia
> 3) from 1 July 2000, not lived in residential property (in Australia) you have owned.




So in my case, regarding the conditions above:

1) I've never claimed a grant
2) I have never owned property prior to 1 July 2000
3) Provided I don't live in the property, I will satisfy this requirement as the IP was pruchased after 1 July 2000

Hope that clarifies things. I imagine you purchased your IPs prior to 1 July 2000? Unfortunately you won't be eligible. However you can still go for the FHSA:

Requirements for the RHSA don't contain the clause about owning a property before 1 July 2000  



> Eligibility to open an account
> 
> not have previously owned a home in Australia or Norfolk Island that has been your main residence
> 
> If you have already owned a home but you have never lived in it, for example you owned an investment property, you are still eligible to open an account.




Source: http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00250962.htm&page=4&H4


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## Glen48 (17 June 2011)

Wait a few years and the First Home Owners bribe will pay for your house in total.


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## cynic (18 June 2011)

Glen48 said:


> Wait a few years and the First Home Owners bribe will pay for your house in total.




I wonder what would happen if the Australian bank's got creative (like certain banks in US) and created a security based on bundled mortgages that could then be shorted?


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## jbocker (18 June 2011)

cynic said:


> I wonder what would happen if the Australian bank's got creative (like certain banks in US) and created a security based on bundled mortgages that could then be shorted?




Well I would have thought that was well documented already with what happened in the US.  I also recall NAB did cop a sting through some overseas involvement in the same.


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## explod (18 June 2011)

jbocker said:


> Well I would have thought that was well documented already with what happened in the US.  I also recall NAB did cop a sting through some overseas involvement in the same.




And recently LG got out of home finance here recently and I think from memory onsold theirs to Westpac.   It was in the beginning from Wizard who did see the writing on the wall early.


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## trainspotter (18 June 2011)

explod said:


> And recently LG got out of home finance here recently and I think from memory onsold theirs to Westpac.   It was in the beginning from Wizard who did see the writing on the wall early.




Not quite there explod. It was GE Capital that sold their residential mortgage book in Austalia and New Zealand for 5 billion to Pepper Homeloans. Two years ago the majority was offloaded to CBA. GE Capital owned Wizard prior to CBA moving in.

GE is better at high interest rate personal loans, short term credit and credit cards. Home loans was never their core business.

Hope this clear it up.


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## greebly24 (18 June 2011)

KurwaJegoMac said:


> That's exactly what I'm doing Greebly24  Just signed up for the account - looking to have it up and running before end of June so I can pop in the $5500 and get $935 straight away.
> 
> Just FYI the account has to be set up outside of the bank branch system as the ATO has to confirm eligibility before it can be set up. So if you're hoping to get in before end of this month don't delay or it may not get set up in time!




Thanks very much for the info. Didn't realise that. First thing Monday.



			
				Uncle Festivus said:
			
		

> Isn't there anyone with ethics and morals any more who can resist the temptation to once again scam the system? Just glad I'm not a Victorian taxpayer, although we probably have a similar taxpayer funded subsidy here in NSW that non genuine first home buyers can rort also?




But UncleFestivus, I am a FHB!?! And I still have to help pay for the tax revenue lost due to negative-gearing on IPs, not to mention the lack of CGT on PPOR, and I don't even own property yet!!! WTF!


----------



## Aussiejeff (18 June 2011)

> Saturday 18th June 2011
> 
> The clearance from this weekends 598 auctions is *54 per cent*. This shows that in all except a few circumstances buyers continue to be cautious when bidding and sellers are unlikely to have their price expectations exceeded, even when the home is sold.
> 
> ...




Only 321 sold so far out of 700 "expected" auctions this weekend (102 auctions "not reported" - we know what that means). So, I make that a dismal 45% success rate. 

Question is, how low will the clearance rate go - especially after the next couple of rate increases?


----------



## KurwaJegoMac (18 June 2011)

Aussiejeff said:


> Only 321 sold so far out of 700 "expected" auctions this weekend (102 auctions "not reported" - we know what that means). So, I make that a dismal 45% success rate.
> 
> Question is, how low will the clearance rate go - especially after the next couple of rate increases?




Judging by bond yield curves and the state of the economy in general i dont think we will be seeing rate rises anytime soon. In fact the likelihood of them going down is greater.


----------



## Glen48 (18 June 2011)

Saw one house listed at 700 and didn't get bid at 400, Rates will have to go up The OZ economy has nothing to do with rates they are all governed by over seas.


----------



## Aussiejeff (19 June 2011)

KurwaJegoMac said:


> Judging by bond yield curves and the state of the economy in general i dont think we will be seeing rate rises anytime soon. In fact the likelihood of them going down is greater.




Obviously you don't believe a word that Glenn Stevens has recently been spruiking... 



> Mr Stevens says there is not enough spare capacity in the labour market to cover the expected increase in demand for workers in the mining sector, and related services.
> 
> "The degree of slack in the economy overall does not seem large in comparison with the apparent size of the expansion in resources sector income and investment now under way," he added.
> 
> ...



http://www.abc.net.au/news/stories/2011/06/15/3244487.htm

As always, time will tell.


----------



## KurwaJegoMac (19 June 2011)

Aussiejeff said:


> Obviously you don't believe a word that Glenn Stevens has recently been spruiking...
> 
> http://www.abc.net.au/news/stories/2011/06/15/3244487.htm
> 
> As always, time will tell.




No I do not believe what Glenn has been spruiking. If he is so concerned about the resource sector causing inflation, then why haven't rates been increasing given that inflation is above the RBA's preferred 2-3% band? So house prices are expensive and inflation is above the target band - yet not interest rate rise? Couple that with the current Australian Government Bond yield curves and it looks like the market believes we're in for flat or declining rates. 

That being said however, the rapid appreciation of the AUD may be what is holding off the RBA from making a move - had we not appreciated then we'd be stuck at current rates. Given that most mining projects are priced in USD, with an appreciating AUD that means 'cheaper' labour and project capital cost which could spur an unprecedented number of projects being kicked off. I think this is what Glenn fears. On the flipside our resource exports are now much more expensive so the RBA would be hesitant to subdue the resource sector - might see international competition start to take large chunks out of our resource sector. 

Still, thats just my view, i hope so other people can weigh in. What is your thinking AussieJeff? As you say time will tell. 

P.S. Banks have 10 year fixed loans at about 8.5% - i would assume their mortgage analysts wouldn't set such a rate unless they were either confident of rates staying flat/down or they just desperately need loans. What are other's thoughts?


----------



## Glen48 (19 June 2011)

Whats wrong with having different IR for different products say Owner Occupied House x % cars x% up to a certain value then higher. 
Income generation equipment such as farm machinery a lower rate.
 I realise it would be all over the place but should be able to cabinet most in to groups such as luxury etc.


----------



## Knobby22 (19 June 2011)

KurwaJegoMac said:


> No I do not believe what Glenn has been spruiking. If he is so concerned about the resource sector causing inflation, then why haven't rates been increasing given that inflation is above the RBA's preferred 2-3% band? So house prices are expensive and inflation is above the target band - yet not interest rate rise? Couple that with the current Australian Government Bond yield curves and it looks like the market believes we're in for flat or declining rates.
> 
> That being said however, the rapid appreciation of the AUD may be what is holding off the RBA from making a move - had we not appreciated then we'd be stuck at current rates. Given that most mining projects are priced in USD, with an appreciating AUD that means 'cheaper' labour and project capital cost which could spur an unprecedented number of projects being kicked off. I think this is what Glenn fears. On the flipside our resource exports are now much more expensive so the RBA would be hesitant to subdue the resource sector - might see international competition start to take large chunks out of our resource sector.




And that's an important point. A mining tax would subdue the mining industry slow the need to raise interest rates, balance the economy better and therefore keep interest rates low. It is this failure of government policy (and oppositions) that may end up causing the trigger of higher unemployment combined with high interest rates that will lead to a propert sector crunch. The mining industry doesn't need too much help and I disagree with dampening the economy so the mining sector can get more employees. They (including Gina) can look after themselves.  Let market forces determine what happens.


----------



## FxTrader (19 June 2011)

KurwaJegoMac said:


> No I do not believe what Glenn has been spruiking. If he is so concerned about the resource sector causing inflation, then why haven't rates been increasing given that inflation is above the RBA's preferred 2-3% band? So house prices are expensive and inflation is above the target band - yet not interest rate rise? Couple that with the current Australian Government Bond yield curves and it looks like the market believes we're in for flat or declining rates.




My reading of RBA minutes and Stevens public pronouncements is that there is a strong bias toward a rate rise and you can bank on it (excuse the pun).  This will likely occur within the next few months and be another cruel slug on mortgage holders and the retail sector.  Of course this will put further downward pressure on already falling property prices.

Stevens and the other ivory tower bankers at the RBA manage monetary policy for the aggregate economy as a whole, individual sectors are of less concern.  Their pre-emptive mentality always sees them overshoot with their rate rises (just as they did prior to the GFC) so as to project the image that they are conservative and ahead of the curve.  In fact they are always behind the game and will only drop rates when the economy as a whole lurches into a deep recession.  By then it may already be to late since, as we know, 0% interest rates in the U.S. has not revived its moribund economy.


----------



## Knobby22 (19 June 2011)

FxTrader said:


> Stevens and the other ivory tower bankers at the RBA manage monetary policy for the aggregate economy as a whole, individual sectors are of less concern.  Their pre-emptive mentality always sees them overshoot with their rate rises (just as they did prior to the GFC) so as to project the image that they are conservative and ahead of the curve.  In fact they are always behind the game and will only drop rates when the economy as a whole lurches into a deep recession.  But then it may already be to late since, as we know, 0% interest rates in the U.S. has not revived its moribund economy.




I reckon Stevens has done OK, especially when you compare him to Greenspan. He gets dealt the cards and has to act on them as you say with a very blunt weapon.


----------



## Halifax (19 June 2011)

FxTrader said:


> Their pre-emptive mentality always sees them overshoot with their rate rises (just as they did prior to the GFC).




You're right, they should have kept rates stupidly low like other developed economies except NZ. Surely that wouldn't lead to reckless borrowing, a real estate price (and supply) bubble and a financial crisis. Ahh wait! How are those other economies doing? 

As for not dropping rates until the economy is in recession, that is just common sense to me  If you drop rates before an economic downturn, you get into the position that the US is in. You cant break the zero lower bound of rates, you therefore can do very little from that perspective once your economy is suffering. If rates are high to start, you have a lot of free space to implement monetary policy before falling into a liquidity trap.

Higher rates aren't such a price to pay when they avert hazardous lending/borrowing practices, they are just harder to appreciate as you can't see how things might have been. I know that higher rates were not the only thing holding the Australian economy above water through the GFC, but they were a part of it. I think Stevens does a great job.

My  , population growth + lack of supply to match growing demand = prices can only really go up.

Australian property doesn't have the supply bubble that other areas have/had, there is a supply shortage.


----------



## Glen48 (19 June 2011)

_Australian property doesn't have the supply bubble that other areas have/had, there is a supply shortage_

There is only a supply shortage if you count in the homeless now there is over supply but no buyers.


----------



## stacks (19 June 2011)

Glen48 said:


> Whats wrong with having different IR for different products say Owner Occupied House x % cars x% up to a certain value then higher.
> Income generation equipment such as farm machinery a lower rate.
> I realise it would be all over the place but should be able to cabinet most in to groups such as luxury etc.




Ummm..... Nothing wrong there Glen, thats how things are. Interest rate for car loan is very different to interest rate for home loan...


----------



## FxTrader (19 June 2011)

Halifax said:


> You're right, they should have kept rates stupidly low like other developed economies except NZ. Surely that wouldn't lead to reckless borrowing, a real estate price (and supply) bubble and a financial crisis. Ahh wait! How are those other economies doing?
> 
> As for not dropping rates until the economy is in recession, that is just common sense to me  If you drop rates before an economic downturn, you get into the position that the US is in. You cant break the zero lower bound of rates, you therefore can do very little from that perspective once your economy is suffering. If rates are high to start, you have a lot of free space to implement monetary policy before falling into a liquidity trap.
> 
> ...




Spoken like a true disciple of RBA propaganda.  Reserve banks are useless creations by bankers for bankers, your interests are not their interest.  To believe anything else is naive in the extreme.  Investigate the history of reserve banks, why they were created, by whom and their track record before you sing the praises of the RBA and their policies to me or anyone else.

Reckless borrowing in the U.S. was not just due to low interest rates.  Key elements in the mix were corruption, greed and lack of regulation with respect to predatory lending practices in the U.S. housing market.

High interest rates are not some panacea that cures price inflation with little negative impact that includes inflating currency exchange rates.  Inflation can be and is imported via reckless external monetary policy and money printing by foreign central banks.  This causes higher prices for business inputs and hence higher production costs and cost of goods.  The RBAs big club has no control over this.  Rather the interest rate club comes out (smashed over the heads of businesses and consumers) to dampen consumption and reduce demand while also hurting profitability and business competitiveness.  Our little mining boom won't last forever and when the tide goes out we will clearly see that the rest of the economy is naked and badly exposed.

Keep telling yourself that the Australian housing market is not a giant bubble, Australia is different, affordability is not an issue and prices will always go up (just as property spruikers and true believers did in the U.S., UK, Ireland etc.) When that bubble pops it will also deflate the ego, bank balances and net worth of millions of Australians just as property price collapses have elsewhere where property was thought to be an invincible asset class that will always rise in value.  Perhaps you have not heard yet, the stats are in and property prices are falling and have been for months now.

BTW, your two cents is more than the net worth of many Americans, Irish and Brits who thought the same way about their property markets as you do about the Australian market.  Ignore the lessons of history at your financial peril.


----------



## ginar (19 June 2011)

KurwaJegoMac said:


> No I do not believe what Glenn has been spruiking. If he is so concerned about the resource sector causing inflation, then why haven't rates been increasing given that inflation is above the RBA's preferred 2-3% band? So house prices are expensive and inflation is above the target band - yet not interest rate rise? Couple that with the current Australian Government Bond yield curves and it looks like the market believes we're in for flat or declining rates.
> 
> That being said however, the rapid appreciation of the AUD may be what is holding off the RBA from making a move - had we not appreciated then we'd be stuck at current rates. Given that most mining projects are priced in USD, with an appreciating AUD that means 'cheaper' labour and project capital cost which could spur an unprecedented number of projects being kicked off. I think this is what Glenn fears. On the flipside our resource exports are now much more expensive so the RBA would be hesitant to subdue the resource sector - might see international competition start to take large chunks out of our resource sector.
> 
> ...




rate change probabilities have been pretty dynamic lately with the odds pre last RBA decision favouring rate rise before years end , my how has the worm turned now . I have the probability of a rate rise in 2012 as under 50% and infact for the first time in a long time rate bulls are being squeezed by rate bears , i havent seen forward 30 day cash rate futures ahead of front month for a long time but its what im seeing now . potentially indicating a top in the interest rate cycle . if this is the case i wont be surprised to see aud under parity sometime this year , after last GDP its what economy needs imo . one more negative GDP and the R word pops up ................ 

ps . i dont think the R word would be good for property


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## TabJockey (19 June 2011)

Can somebody tell me how to read the room description in the property section of the herald sun? properties are reported as "9rm" or "4rm". These are not bedrooms, nor are these total rooms, does anyone know how this metric works? Is it bedrooms plus living rooms and kitchen?


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## explod (19 June 2011)

FxTrader said:


> Spoken like a true disciple of RBA propaganda.  Reserve banks are useless creations by bankers for bankers, your interests are not their interest.  To believe anything else is naive in the extreme.  Investigate the history of reserve banks, why they were created, by whom and their track record before you sing the praises of the RBA and their policies to me or anyone else.
> 
> Reckless borrowing in the U.S. was not just due to low interest rates.  Key elements in the mix were corruption, greed and lack of regulation with respect to predatory lending practices in the U.S. housing market.
> 
> ...




A great post and anyone in doubt about property and where our economy may be headed should read over it a couple of times and think about it.


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## Glen48 (19 June 2011)

There is no worries about inflation we can buy some well used printing press from 
Mr. Mugabe.
Stacks:
What I was alluding to was lower IR say for farmers buying new equipment or a manufacture buying new machinery about 1-2%.. I. P well above the home loan rate. 

Maybe this is seen a trade barriers but would hinder  people buying junk consumables and stop this on again off again recessions.
The economy will grow like the 50's but in a gradual incline


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## ginar (19 June 2011)

wow , hedging property with derivatives , what a can of worms . become a property investor with out buying property .................... 

http://www.smartcompany.com.au/property/20110615-why-we-need-another-way-to-invest-in-housing.html


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## TabJockey (19 June 2011)

ginar said:


> wow , hedging property with derivatives , what a can of worms . become a property investor with out buying property ....................
> 
> http://www.smartcompany.com.au/property/20110615-why-we-need-another-way-to-invest-in-housing.html




Sounds good. Wish property ETF's were around 6 months ago when i was bearish on property. After (stupidly) reading the wayward ramblings of too many silly people in this thread I have become significantly less bearish, but there will be big opportunities if the ETF takes off. New ETF's almost always correspond with price appreciation due to the increase of demand into the market from the new instrument,and the more the prices rise the more speculators pile into the ETF. Perhaps less in this case because of the gargantuan size of the market.


----------



## greebly24 (20 June 2011)

Knobby22 said:


> And that's an important point. A mining tax would subdue the mining industry slow the need to raise interest rates, balance the economy better and therefore keep interest rates low. It is this failure of government policy (and oppositions) that may end up causing the trigger of higher unemployment combined with high interest rates that will lead to a propert sector crunch. The mining industry doesn't need too much help and I disagree with dampening the economy so the mining sector can get more employees. They (including Gina) can look after themselves.  Let market forces determine what happens.




Hahahahaha. That's freaking hilarious. Calling for market forces to determine what happens whilst first advocating govt intervention in the form of a mining tax. Hilarious!

Think what you meant was "Let govt interference determine what happens." Sorry to say, but you're the opposite of a free marketeer, Knobby22.

Other news. Sunday Mail in Adelaide had a negative RE story, _"Bring the house down. No sales so owners dropping prices"._ Basically more supply, bigger discounts (surprising cos 1/3 of newspaper is RE advertising).

Example couple bought home $885k in Jan 2009. Had baby, dropped an income, gotta sell.
Initial listing April 2011   $870-$930k. Two months later   $820-$900k.

So they couldn't get $870k initially ($15k less than purchase by the way), but the new price range goes up to $900k? Tell em they're dreaming!

But don't worry. RE doesn't ever go down. Its just that discounting (9-17% in SA) is getting bigger. In RE speak, thats different.

Regarding FHBG, SA state govt decision to abolish $8k FHB Boost is contributing to discounting, according to RE Institue of SA. Think they just admitted FHBG is a vendor's boost. Whoops!

As for interest rates, be glad they're going up. Gives em more room to cut when the real GFC starts (Greek default & China slowdown). America's already at zero and got nowhere to go.

But here's a radical idea. Drop it to negative 5%. Borrow $500k, pay back $475k. It'd cost US govt a fair bit, but boy would it be a massive (temporary) boost to the fake economy there.

A quarter percent interest rise on $100k is only an extra $250 per year. That's five bucks a week. Or an extra $25/week on $500k. If you can't deal with that, you overextended yourself and its your fault. Stop demanding govt fix your mistake.

Money printing = high inflation. High interest rates = less credit = lower inflation. Its not rocket surgery or brain science (blonde's mixed metaphors)!


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## trainspotter (20 June 2011)

WOW !!!!!!!!!!!! That didn't take very long now did it? Bung on a few home improvement programs on the telly and WHAMMO !!! The fish are biting hard. 



> *REFINANCING to renovate is back in vogue as the sluggish property market means people are opting to do up their home rather than turn it over. *
> 
> New Australian Bureau of Statistics figures show refinancing existing home loans for established dwellings rose to $3.17 billion in April across all the banks, up 22 per cent on the $2.6 billion of refinancing a year earlier.
> 
> ...




Read more: http://www.news.com.au/money/proper...es/story-e6frfmd0-1226078403143#ixzz0rNJPnu3T


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## Glen48 (20 June 2011)

If you can't sell it at one price sink some more money in to it and try to sell it at a higher price and extend your mortgage. Sounds like OZ version of QE 2.


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## sinner (22 June 2011)

Which are the Australian banks most dependent on foreign funding to keep their heads above water?


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## greebly24 (22 June 2011)

trainspotter said:


> WOW !!!!!!!!!!!! That didn't take very long now did it? Bung on a few home improvement programs on the telly and WHAMMO !!! The fish are biting hard.




Early days but ratings ain't good.

THE BLOCK 2011 got 84,000 viewers in Adelaide on Tuesday. Home & Away, in same timeslot, got 148,000. Must have been a good soap episode.

Nationally, THE BLOCK 2011 dropped 18% Mon to Tues. D'oh.


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## investorpaul (22 June 2011)

I didnt even know it had started again.


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## explod (23 June 2011)

In our local Leader Newspaper yesterday they are saying the prices of new units are down 21% at Mornington.

This area has been regarded as bullet proof for years but not looking too good at the moment.   The contagion now seems to be moving south.


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## Glen48 (23 June 2011)

This is good news it means the fed Will soon only need to pay 2 shillings  and Sixpence for the First home owners bribe


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## trainspotter (24 June 2011)

Lets try some more accurate statistics shall we?


----------



## KurwaJegoMac (24 June 2011)

trainspotter said:


> Lets try some more accurate statistics shall we?
> 
> View attachment 43373




Forgive my ignorance, what does LGA stand for? 

Seems that apart from Gold Coast, most entries in that list are outside of the 'normal' metropolitan area. Even so, considering the number of suburbs in Australia there are very few which have fallen >6%, barely any in fact if you look at metropolitan suburbs. Thanks for sharing - any similar tables restricted to metropolitan areas?


----------



## moXJO (24 June 2011)

houses up 11.3% where I am damn it. Why won't it pop


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## trainspotter (24 June 2011)

KurwaJegoMac said:


> Forgive my ignorance, what does LGA stand for?
> 
> Seems that apart from Gold Coast, most entries in that list are outside of the 'normal' metropolitan area. Even so, considering the number of suburbs in Australia there are very few which have fallen >6%, barely any in fact if you look at metropolitan suburbs. Thanks for sharing - any similar tables restricted to metropolitan areas?




LGA = Local Government Areas

I posted this to evidence that *certain* "regional" areas are doing it tough. *cough*

The average median price for "regional" LGA has collectively dropped 6% in a 12 month period in these *certain *areas.

There are *certain* regional areas that are holding their own as well.




I will post "metropolitan" suburbs as the info comes to hand.


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## KurwaJegoMac (24 June 2011)

trainspotter said:


> LGA = Local Government Areas
> 
> I posted this to evidence that *certain* "regional" areas are doing it tough. *cough*
> 
> ...




Thanks for the explanation. Same thing as stocks really - certain stocks may perform worse than the general market. But that was interesting data, cheers.

Personally im surprised they're doing that well! I was expecting worse figures for those sorts of areas.


----------



## stacks (26 June 2011)

trainspotter said:


> LGA = Local Government Areas
> 
> I posted this to evidence that *certain* "regional" areas are doing it tough. *cough*
> 
> ...




Really Interesting figures trainspotter. May I ask how you obtain these? interested in other areas


----------



## Aussiejeff (27 June 2011)

Ok. I'll bite..... here's this last weekend's "official" REIV clearance rate fudge.



> Total Auctions
> 
> This week: 611
> Last week: 684
> ...




56% for houses - without factoring in "unreported" failures.

Regardless of the dodginess of REIV's data, their own graph showing the clearance rate TREND since Jul 2006 clearly suggests the same level and rate of fall off as was occuring during the GFC until the FHOG "boost" put a huge rocket under the clearance rates from Oct 2008! 

Insignificant coincidence in the declining rate? I don't think so. Given that "official unemployment" has supposedly fallen so much since the "end" of the GFC and that so much $$$ has been thrown at the housing industry by the gummint in the same time, wouldn't you have expected the graph to show RISING clearance rates? The current trend (since Apr 09) of rising auction volumes with falling clearance rates does not bode well IMHO.

Perhaps falling immigration, falling birth rate, rising interest rates, reduced FHOGS, rising property listings, real rising costs of living (NOT reflected in artificially contrived "official CPI" data IMO), are biting into RE harder than some would admit?

aj


----------



## trainspotter (27 June 2011)

Great post Aussiejeff. No doubt REIV has a few issues on credibillity on it's statistical range. Has been proven previously. 

My thoughts are along the lines that people are NOT buying at auction (well, not as much) and are waiting for a private treaty once auction is over to try and obtain a better price (and also to avoid paying RE fees) Would be interesting to see if there are any figures on SETTLEMENTS of properties rather than AUCTION clearance rates.

The other thing Aussiejeff is that the interest rate hikes and the other factors you mentioned have taken the sting out of the market. Better to gently deflate the balloon rather than have a loud "POP" IMO.

It also means that RE Agents are doing their job very well. You have to list the property first to get it to auction. So I reckon RE Agents are "buying" listings and talking the price down at a later date. This has happened previously and no doubt will happen again.

Notice on the TV there are no "Hot Auctions" or such like shows anymore? FOOD is the new black. Yes yes yes there are some shows like The BLOCK back on TV but these are aimed at RENOVATIONS of said home rather than achieving an instant sale. Guess what has happened to the finance figures from the banks for renovating your home? *GOSH* we are sheep !


----------



## trainspotter (27 June 2011)

stacks said:


> Really Interesting figures trainspotter. May I ask how you obtain these? interested in other areas




Google is my friend. I also pay to get the info emailed to me from several sources.

RP Data and REIA have terrific information (for a fee). ABS has many statistics embedded in their website but takes ages to work your way through the palava.


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## medicowallet (27 June 2011)

Aussiejeff said:


> Ok. I'll bite..... here's this last weekend's "official" REIV clearance rate fudge.
> 
> 
> 
> ...




The major flaw with your logical explanation is that

we are DIFFERENT here.

If PIGS go down, we will be ok 
As America's stimulis goes away, we are ok 
As China starts to come back to reality, we are ok 
As our inept government squanders our taxes, we are ok 
As inflation starts to bite, we will be ok 

You do realise we are DIFFERENT here, don't you ??


Still going for a short-medium term 20% drop and quite a few years of stagnant prices after that.


I have some solutions for the many who purchased within the last few years

1. Take on an extra job
2. Don't eat out
3. Cut off your internet
4. Stop using the train and walk more 
5. Work overtime
6. Grow your hair long
7. Grow a veggie patch 
8. Use the REIV reports as fertiliser for your veggie patch.

PM for any other helpful tips.

Life..... a pleasure. Living from paycheck to paycheck, or handout to handout...

MW


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## KurwaJegoMac (27 June 2011)

medicowallet said:


> The major flaw with your logical explanation is that
> 
> we are DIFFERENT here.
> 
> ...




The major flaw with your solutions is that

every investor is DIFFERENT here.

If they don't overleverage, they will be ok 
As some don't rely on a stimulus package for incentive, they will be ok 
As some purchase based on sound principals and not over-inflated prices, they will be ok 
As some use government tax incentives effectively, they will be ok 
As housing serves as a good long term inflation hedge, they will be ok 

You do realise all investors are DIFFERENT, don't you ??

Still going for property to be up in the long term, history does repeat itself. Better than 'out of thin air' forecasting.

I have some solutions for the many who purchased within the last few years

1. Ensure you have contingencies in place for higher interest rates
2. Don't pig out on debt 
3. Cut out the friends that hold you back
4. Stop using the train and walk more 
5. Work less overtime as you have an income producing asset
6. Grow your hair to whatever length you desire
7. Grow your financial knowledge 
8. Use the REIV reports as toilet paper.

PM for any other helpful tips.

Life..... a pleasure. Having the taxman and renters pay off your appreciating assets.

KJM


----------



## medicowallet (27 June 2011)

KurwaJegoMac said:


> The major flaw with your solutions is that
> 
> every investor is DIFFERENT here.
> 
> ...




Some property investors in Brisbane have gone bust over the past 12 months.

on average, ALL investors lost money.

So even though all investors are DIFFERENT, they ALL lost money.

Perhaps this was lost to you in translation.  

I hope you haven't recently overgeared KJM,  it might be painful going forward.... OUCH!!

Just remember, a few % fall is very destructive if you are highly geared... you are aware of this aren't you?


PS. Oh, and take comfort that even if you lose heaps of money in a property crash, so will I, and probably more than you


----------



## KurwaJegoMac (27 June 2011)

medicowallet said:


> Some property investors in Brisbane have gone bust over the past 12 months.
> 
> on average, ALL investors lost money.
> 
> ...




Some property investors in other states have not gone bust and on average all have made money. Does it matter? No.

You and I both know it's useless looking at one market in isolation and attempting to extrapolate its' results to all others. I can show you a ton of results for suburbs and states that have done well just as you can show the same amount for those that have not done so well. Different suburbs with different profiles will perform differently - in boom, bust and sideways markets. Can make a $$ no matter the time, just it's not as easy during the lulls.



medicowallet said:


> I hope you haven't recently overgeared KJM,  it might be painful going forward.... OUCH!!




Appreciate the concern and I agree with you - would not want to be overleveraged going forward. Things are not as pretty as they once were.

That being said, my leverage is high - at 80% LVR, but I'm not over leveraged. If I had no tenants and interest rates were at 10% i would have to spend 39% of my disposable income to maintain the property (inclusive of all repayments and costs to maintain the property). Yes I may need to cut back on some luxuries but that's hardly going to kill me. Unlikely that i'd have no tenants for a long time but one must plan for these things, no matter how rare. 

Add an even worse scenario of no negative gearing on top of no tenants and 10% interest rates and I have to use 64% of my disposable income. Not pleasant, but still very much achievable.


----------



## KurwaJegoMac (27 June 2011)

medicowallet said:


> Just remember, a few % fall is very destructive if you are highly geared... you are aware of this aren't you?




Of course - gearing is a double edged sword after all. 




medicowallet said:


> PS. Oh, and take comfort that even if you lose heaps of money in a property crash, so will I, and probably more than you




I wouldn't wish a loss on anybody and certainly wouldn't take comfort in you losing money - quite the opposite. You and I have differing opinions about the future and the purpose of this forum is to share such thoughts so that we may both benefit each other to perhaps consider 'all sides of the story' and make informed decisions.


----------



## medicowallet (27 June 2011)

KurwaJegoMac said:


> Some property investors in other states have not gone bust and on average all have made money. Does it matter? No.
> 
> You and I both know it's useless looking at one market in isolation and attempting to extrapolate its' results to all others. I can show you a ton of results for suburbs and states that have done well just as you can show the same amount for those that have not done so well. Different suburbs with different profiles will perform differently - in boom, bust and sideways markets. Can make a $$ no matter the time, just it's not as easy during the lulls.
> 
> ...




What happens if the banks start to require lower LVRs and property prices drop?

This could be very interesting indeed, and something that a lot of property "investors" would not have considered.

"margin calls" on property loans would expose many, and put further downward pressure on prices.  Just as it was looking bad for property before the FHVB, it seems to be looking bad now.


----------



## KurwaJegoMac (27 June 2011)

medicowallet said:


> What happens if the banks start to require lower LVRs and property prices drop?
> 
> This could be very interesting indeed, and something that a lot of property "investors" would not have considered.
> 
> "margin calls" on property loans would expose many, and put further downward pressure on prices.  Just as it was looking bad for property before the FHVB, it seems to be looking bad now.




Agree with you there - i need look no further than on of my friends. Same age as me, with 3 investment properties, 2 of which were acquired using equity from the first, all accumulated in 2 years. He just drew out his equity for a new pool and some landscaping. He has no cash and no buffer in the event of a drop in prices - needless to say even the slightest fall could wipe him out and im sure there are many like him. Would really compound any declines in the market for sure.  

I hold 15% of the asset value as cash in an offset account, so coupled with my initial 20% deposit there'd need to be a 35% fall for me to be margin called, so i have a reasonable buffer. But i'd rather not have to use it of course 

Do you hold similar buffers for your IPs? Although from the sounds of it you've been in the game longer than i have so theyre probably mostly positively by now i imagine? Considering you feel strongly about a 20% fall, have you sold your propertys? If not, may i ask why?


----------



## medicowallet (27 June 2011)

KurwaJegoMac said:


> Agree with you there - i need look no further than on of my friends. Same age as me, with 3 investment properties, 2 of which were acquired using equity from the first, all accumulated in 2 years. He just drew out his equity for a new pool and some landscaping. He has no cash and no buffer in the event of a drop in prices - needless to say even the slightest fall could wipe him out and im sure there are many like him. Would really compound any declines in the market for sure.
> 
> I hold 15% of the asset value as cash in an offset account, so coupled with my initial 20% deposit there'd need to be a 35% fall for me to be margin called, so i have a reasonable buffer. But i'd rather not have to use it of course
> 
> Do you hold similar buffers for your IPs? Although from the sounds of it you've been in the game longer than i have so theyre probably mostly positively by now i imagine? Considering you feel strongly about a 20% fall, have you sold your propertys? If not, may i ask why?




I have not sold anything, I prefer not to. I have no gearing on any property.

I am not selling, because I do not have to sell. If, over a few years properties drop 20% AND banks decide that all loans need to be at 90% LVR as a minimum, then it will not affect me.  I have also not purchased any property recently.

It amazes me how people say things along the lines that historically, prices of property do not crash, but, by going by their same logic, properties, historically, are horrendously expensive.

But, if prices fall, it will affect even those people with high equity levels, and this WILL stifle the economy and the person's ability to invest in the future.


----------



## Glen48 (27 June 2011)

Its not the drop you need to worry about it how long it Will stay on the bottom for an IF it does rise how much at least we have USA to use as a guide how it all works.


----------



## cynic (28 June 2011)

KurwaJegoMac said:


> I wouldn't wish a loss on anybody and certainly wouldn't take comfort in you losing money - quite the opposite. You and I have differing opinions about the future and the purpose of this forum is to share such thoughts so that we may both benefit each other to perhaps consider 'all sides of the story' and make informed decisions.




Although I currently have a pessimistic view of the near term direction of property prices, I wholeheartedly agree with the sentiments you've expressed here in relation to the value of forums and the need for people to make their own informed decisions in the management of their affairs.

Although making a profit (or preventing a loss) from somebody else's advice can be pleasant, there's nothing more annoying than making a loss after abandoning an otherwise profitable strategy solely upon someone else's insistence. 

Whilst I've never enjoyed losing money from my own decisions, I've always considered this to be the price one happily pays for experience. Said experience, though unsavoury at the time, will often lead to the enhancement of skills, understanding and future profitability.

I can see from your various posts, you've done plenty of research, formed an opinion, and enacted a plan with various contingency measures in place. Should unforeseen circumstances arise, I've no doubt that you'll be quick to apply your skills to making the necessary changes to your plan and ensuring your financial survival. 
I would of course caution anyone against relying too heavily upon their current employment circumstances in the present financial environment. Even the various insurance policies available might not be dependable if our economy collapses in a similar way to our economic siblings around the globe. 
Of course, one cannot be expected to cover every contingency.If we did try to, we'd probably never invest any money at all!

Political (Governmental Policy) risk is also a factor to consider with real estate. It's difficult to conceal it and/or transport it if (and when) major political changes occur.

P.S. Don't take my advice unless it happens to really resonate with you. After all, it's your bank balance so you're the one whom will be financially accountable for the decisions you make, I'm just another anonymous poster.


----------



## KurwaJegoMac (28 June 2011)

medicowallet said:


> I have not sold anything, I prefer not to. I have no gearing on any property.
> 
> I am not selling, because I do not have to sell. If, over a few years properties drop 20% AND banks decide that all loans need to be at 90% LVR as a minimum, then it will not affect me.  I have also not purchased any property recently.




Understand not having to sell if you have no gearing on any property, but if a 20% fall is imminent why wouldn't you sell now, wait until prices drop 20% and then buy back in? Of course there'd be transaction costs and a possible CGT liability, but surely this would be offset by buying the same asset at a 20% discount sometime in the future?



medicowallet said:


> It amazes me how people say things along the lines that historically, prices of property do not crash, but, by going by their same logic, properties, historically, are horrendously expensive.
> 
> But, if prices fall, it will affect even those people with high equity levels, and this WILL stifle the economy and the person's ability to invest in the future.




True. If prices fall everyone will be impacted in some way. Investors will be limited in their ability to invest in the future, construction would fall, unemployment would rise and manufacturing of materials would suffer. This would in turn affect every person in some shape or form. As a nation we would become poorer - let's hope this doesn't eventuate, but one day the price will be paid. Can't have a boom forever.


----------



## KurwaJegoMac (28 June 2011)

cynic said:


> Although I currently have a pessimistic view of the near term direction of property prices, I wholeheartedly agree with the sentiments you've expressed here in relation to the value of forums and the need for people to make their own informed decisions in the management of their affairs.
> 
> Although making a profit (or preventing a loss) from somebody else's advice can be pleasant, there's nothing more annoying than making a loss after abandoning an otherwise profitable strategy solely upon someone else's insistence.




Quite right Cynic! I made this mistake with my trading once, abandoning my profitable trading strategy as I was told it was 'not the way investors do it'. Needless to say, it cost me some $$ and has reinforced in me the desire to stick to my strategy as it's what works for me given my circumstances, education, personality and beliefs.




cynic said:


> Whilst I've never enjoyed losing money from my own decisions, I've always considered this to be the price one happily pays for experience. Said experience, though unsavoury at the time, will often lead to the enhancement of skills, understanding and future profitability.




Well said. It's a costly education at times but if one starts small and makes the mistakes early it will help when dealing with bigger $$s. Can you imagine if people jumped into trading for the first time with several hundred thousand $$? Considering how much I lost (as a % of capital) in my first year I think i'd have jumped off a building if I had a big pool of capital at the time 



cynic said:


> I can see from your various posts, you've done plenty of research, formed an opinion, and enacted a plan with various contingency measures in place. Should unforeseen circumstances arise, I've no doubt that you'll be quick to apply your skills to making the necessary changes to your plan and ensuring your financial survival.
> I would of course caution anyone against relying too heavily upon their current employment circumstances in the present financial environment. Even the various insurance policies available might not be dependable if our economy collapses in a similar way to our economic siblings around the globe.
> Of course, one cannot be expected to cover every contingency.If we did try to, we'd probably never invest any money at all!
> 
> Political (Governmental Policy) risk is also a factor to consider with real estate. It's difficult to conceal it and/or transport it if (and when) major political changes occur.






Thanks for your input Cynic. I definitely can't rely solely on my income because as you say it could always dissappear. Unfortunately that's a risk I need to bear, as i'm sure everyone did when they first started investing. I'll do my best to have contingencies in place but as you pointed out, you can't have a contingency for everything. I too hope we don't suffer like our economic siblings, no-one wants to go through a prolonged downturn.

Politic risk is something I had not considered (save for removal of FHB grants, negative gearing, etc). I am not educated enough in our political parties to be able to make informed decisions on that front, but have been reading books and articles in recent months to try and understand it better.



cynic said:


> P.S. Don't take my advice unless it happens to really resonate with you. After all, it's your bank balance so you're the one whom will be financially accountable for the decisions you make, I'm just another anonymous poster.




Appreciate you giving your thoughts. As I mentioned before, I welcome feedback and views from both sides of the fence - it helps in making more informed decisions. As you say, in the end i'll be accountable for the decisions I make. Given my circumstances and beliefs I believe I made the right one. No matter what the outcome i'll be a winner in the end - i'll either increase my wealth or learn some important lessons (albeit at a high cost )


----------



## medicowallet (28 June 2011)

KurwaJegoMac said:


> Understand not having to sell if you have no gearing on any property, but if a 20% fall is imminent why wouldn't you sell now, wait until prices drop 20% and then buy back in? Of course there'd be transaction costs and a possible CGT liability, but surely this would be offset by buying the same asset at a 20% discount sometime in the future?




1. I dislike RE agents (the con artists) so much, I will not line their pockets.
2. Would you sell a property that you like (sturdy construction, no asbestos, excellent tennants)
3. I hate paying CGT.
4. I don't have to sell.
5. I have other investments to "play with"


----------



## medicowallet (28 June 2011)

cynic said:


> Whilst I've never enjoyed losing money from my own decisions, I've always considered this to be the price one happily pays for experience. Said experience, though unsavoury at the time, will often lead to the enhancement of skills, understanding and future profitability.
> 
> I've no doubt that you'll be quick to apply your skills to making the necessary changes to your plan and ensuring your financial survival.




1. Never lost money?? Are you serious? You are either generation Y (and have never known hard times) or have very little investment exposure.

BTW most people I know become much better investors only once they lose considerable amounts of money.

2. "financial survival" can occur with massive capital deterioration.


----------



## moXJO (28 June 2011)

medicowallet said:


> 1. I dislike RE agents (the con artists) so much, I will not line their pockets.
> 2. Would you sell a property that you like (sturdy construction, no asbestos, excellent tennants)
> 3. I hate paying CGT.
> 4. I don't have to sell.
> 5. I have other investments to "play with"




man that is some emotional investing, or you just don't want to do a Steve Keen.
The latest I heard was property to head up even more


----------



## KurwaJegoMac (28 June 2011)

medicowallet said:


> 1. Never lost money?? Are you serious? You are either generation Y (and have never known hard times) or have very little investment exposure.
> 
> BTW most people I know become much better investors only once they lose considerable amounts of money.
> 
> 2. "financial survival" can occur with massive capital deterioration.




Medicowallet, Cynic is not saying he has never lost money - he says that he doesn't enjoy losing it. But even if he does lose it, he's fine with it because it's the price he pays for experience.



			
				Cynic said:
			
		

> Whilst I've never *enjoyed *losing money from my own decisions, I've always considered this to be the price one happily pays for experience.




I do agree with your second point and about most 'better' investors having lost considerable amounts of money. Same goes for business owners too I find. I've heard some say that the best thing that ever happened to them was going broke.


----------



## medicowallet (28 June 2011)

KurwaJegoMac said:


> Medicowallet, Cynic is not saying he has never lost money - he says that he doesn't enjoy losing it. But even if he does lose it, he's fine with it because it's the price he pays for experience.
> 
> 
> 
> I do agree with your second point and about most 'better' investors having lost considerable amounts of money. Same goes for business owners too I find. I've heard some say that the best thing that ever happened to them was going broke.




Ah, my bad 

I think losing considerable amounts of money due to poor decisions gives you some perspective on the importance of researching and making a plan b.  I see that is what you have done, and good work..... but it still does not prevent you losing money in a downturn.


----------



## explod (29 June 2011)

moXJO said:


> The latest I heard was property to head up even more




Who or where did you hear that from?


----------



## cynic (30 June 2011)

medicowallet said:


> BTW most people I know become much better investors only once they lose considerable amounts of money.
> 
> 2. "financial survival" can occur with massive capital deterioration.




Yep, sure do, and surely can. 

I've experienced the truth of both your statements. Although massive and considerable to me might not be quite the same as massive and considerable to others. A significant loss during the GFC gave me quite an education. I think I would've preferred a cheaper lesson, but the loss amount turned out to be critically important for other reasons that I shan't elaborate on here.


----------



## trainspotter (30 June 2011)

explod said:


> Who or where did you hear that from?




Here -------------> http://au.news.yahoo.com/thewest/a/-/breaking/9711405/perth-housing-prices-tipped-to-leap-20pc/


----------



## KurwaJegoMac (30 June 2011)

trainspotter said:


> Here -------------> http://au.news.yahoo.com/thewest/a/-/breaking/9711405/perth-housing-prices-tipped-to-leap-20pc/




I see your article and raise you a "House price slide eclipses GFC drop".

HA! Take that!

http://www.theage.com.au/business/house-price-slide-eclipses-gfc-drop-20110630-1gruy.html


----------



## explod (30 June 2011)

trainspotter said:


> Here -------------> http://au.news.yahoo.com/thewest/a/-/breaking/9711405/perth-housing-prices-tipped-to-leap-20pc/




When was your name moXJO?

Notice you talk little of markets and stocks, just sitonthefenceandpicksh itoneveryone and sundry who do not agree you with you, Your Worship.   Not to mention very undemocratic.  At least labor and the greens are endevouring to settle issues on a consensis basis.   The Abbott just says nah to everything and refuses to be drawn on costings of anything either.  Amounts to nought.

Texas is having a 50 year drought I notice.


----------



## KurwaJegoMac (30 June 2011)

explod said:


> When was your name moXJO?
> 
> Notice you talk little of markets and stocks, just sitonthefenceandpicksh itoneveryone and sundry who do not agree you with you, Your Worship.   Not to mention very undemocratic.  At least labor and the greens are endevouring to settle issues on a consensis basis.   The Abbott just says nah to everything and refuses to be drawn on costings of anything either.  Amounts to nought.
> 
> Texas is having a 50 year drought I notice.




Interesting how if you're a property 'spruiker' and you pick on the bears you get flamed hard. But if said bears pick on the 'spruikers' no one comments about it or cares?  The 'spruikers' come in, offer their opinion and then get hammered by 50 bears - most of it by one-line, baseless and factless armchair economists. 

Granted there are some bears out there posting legitimate views, concerns and information - but the vast majority just hurl jibes. It's no wonder there's 50 bears vs 1 'spruiker' at any given time. Notice how there's usually 1 to 2 max at any time? See how long they last before they tire of the jibes and give up. Meanwhile the majority of drivel that's posted here keeps jibing the next person to come along with an alternate view and the process repeats itself.

The poo is flying from both sides of the fence, let's not stoop to personal attacks.


----------



## CamKawa (30 June 2011)

KurwaJegoMac said:


> Interesting how if you're a property 'spruiker' and you pick on the bears you get flamed hard. But if said bears pick on the 'spruikers' no one comments about it or cares?  The 'spruikers' come in, offer their opinion and then get hammered by 50 bears - most of it by one-line, baseless and factless armchair economists.
> 
> Granted there are some bears out there posting legitimate views, concerns and information - but the vast majority just hurl jibes. It's no wonder there's 50 bears vs 1 'spruiker' at any given time. Notice how there's usually 1 to 2 max at any time? See how long they last before they tire of the jibes and give up. Meanwhile the majority of drivel that's posted here keeps jibing the next person to come along with an alternate view and the process repeats itself.
> 
> The poo is flying from both sides of the fence, let's not stoop to personal attacks.



I think you'll find the Bull vs Bears ratio fluctuates with the property market. I agree though that more analysis is needed in this thread. One of the problems with property analysis is the majority of the stats are created and published by spruikers themselves... which is all fair game to hurl rocks at (Greek style) I reckon.


----------



## KurwaJegoMac (30 June 2011)

CamKawa said:


> I think you'll find the Bull vs Bears ratio fluctuates with the property market. I agree though that more analysis is needed in this thread. One of the problems with property analysis is the majority of the stats are created and published by spruikers themselves... which is all fair game to hurl rocks at (Greek style) I reckon.




Agreed - it'd be nice to see some independant stats. But with almost all stats they can be manipulated - and often are. Hard to get an independant view when almost all suffer from confirmation bias. 

Best to just ignore the spruiker's articles, look at how many comments those articles generate - more advertising revenue. Best way to harm those sort of 'authors' is to just not read their rubbish and drop advertising revenue for those sorts of articles.


----------



## trainspotter (30 June 2011)

KurwaJegoMac said:


> I see your article and raise you a "House price slide eclipses GFC drop".
> 
> HA! Take that!
> 
> http://www.theage.com.au/business/house-price-slide-eclipses-gfc-drop-20110630-1gruy.html




I raise your article and flip the river on the table with this "Sydney house prices to soar 20 percent by 2013"

Ha ha ..... Touche'.

http://www.dynamicbusiness.com.au/news/sydney-house-prices-bis-shrapnel-1680.html


----------



## trainspotter (30 June 2011)

explod said:


> When was your name moXJO?
> 
> Notice you talk little of markets and stocks, just sitonthefenceandpicksh itoneveryone and sundry who do not agree you with you, Your Worship.   Not to mention very undemocratic.  At least labor and the greens are endevouring to settle issues on a consensis basis.   The Abbott just says nah to everything and refuses to be drawn on costings of anything either.  Amounts to nought.
> 
> Texas is having a 50 year drought I notice.




WOW ! Where did that come from explod? 

I generally do not talk much about markets and stocks as there are people far more smarter and astute than me to bang on about it. I used to post heavily in the stock threads I held interest/shares in but have told all and sundry I am now in cash and property with NIL shareholdings in speculative ATM.

Why are you dragging politics into this thread? What has a Texas drought got to do with Australian property prices? 

Mate, if you want to have a go by all means PM me and we can sort whatever is blocking your sphincter muscle.


----------



## KurwaJegoMac (30 June 2011)

trainspotter said:


> I raise your article and flip the river on the table with this "Sydney house prices to soar 20 percent by 2013"
> 
> Ha ha ..... Touche'.
> 
> http://www.dynamicbusiness.com.au/news/sydney-house-prices-bis-shrapnel-1680.html




Haha Touche' indeed 

On a serious note, how is the average punter meant to make an informed decision? For every negative article there is a positive one. For every crash story there is a boom story - no wonder so many are often frozen with indecisiveness.


----------



## trainspotter (30 June 2011)

KurwaJegoMac said:


> Haha Touche' indeed
> 
> On a serious note, how is the average punter meant to make an informed decision? For every negative article there is a positive one. For every crash story there is a boom story - no wonder so many are often frozen with indecisiveness.




It is what it is KurwaJegoMac. Property has always been the same for me. There are *certain* areas that are reasonably well priced and will provide a % yield over a period of time. This has not changed. If you think you are going to make a quick buck you are wasting your time. The rules have changed somewhat and there is a lot of uncertainty in the market. 

It all depends on what you are trying to achieve I suppose. Buying a house to raise a family in would mean different dynamics compared to buying a house/unit for rental/investment purposes. I don't advocate the 95% LVR and the NIL home loans for the FHB to get impaled upon these days. Job security, interest rate fears, cost of living, adjusting global monetary crisis, many external factors are now in play.

Do the research and have an exit strategy for worst case scenario.


----------



## medicowallet (2 July 2011)

"The clearance rate from this weekends auctions is 55 per cent.

There was a total of 403 homes auctioned, with 223 selling and 180 being passed in. Of the homes passed in 117 were passed in on a vendors bid.

Melbourne's auction market has moved into winter a normal winter cycle with an average of 463 auctions for next 4 weekends compared to 634 in the first half of the year.
This weekend last year saw 591 auctions and a clearance rate of 65 per cent. "

That is funny, I thought they expected 470 auctions...


Where is robots?  Is he off having coffee with Mr Burns?

Sunshine and lollipops

MW


----------



## choofer (3 July 2011)

trainspotter said:


> It is what it is KurwaJegoMac. Property has always been the same for me. There are *certain* areas that are reasonably well priced and will provide a % yield over a period of time. This has not changed. If you think you are going to make a quick buck you are wasting your time. The rules have changed somewhat and there is a lot of uncertainty in the market.
> 
> It all depends on what you are trying to achieve I suppose. Buying a house to raise a family in would mean different dynamics compared to buying a house/unit for rental/investment purposes. I don't advocate the 95% LVR and the NIL home loans for the FHB to get impaled upon these days. Job security, interest rate fears, cost of living, adjusting global monetary crisis, many external factors are now in play.
> 
> Do the research and have an exit strategy for worst case scenario.




Well i left aus 3  years ago and never look back. Money I had there is now worth twice wot it was, i have bought inumerable mansions boats cars etc overseas while all you home stayers chew the cud. good luck with your inflated dollar and useless governement hahahahahahah


----------



## greebly24 (3 July 2011)

*The Australian Financial Review July2-3, 2011 "Paradise losing money"*

Palm Beach median house price
May 2010 - $2.80m
May 2011 - $2.36m
*-16%*

Noel Nicholson, McGrath's Palm Beach - "There are 210 properties on the market in Palm Beach at present. Thirteen properties have been sold this year. Last year there were 25 sold and in 2009 there were 54 properties sold." *Averaging 35 sales a year that's 6 years' supply ha ha ha*

Noosa Heads median apartment price
Dec 2006 - $790k
Sep 2010 - $675k
*-15% ha ha ha*

Noosa Heads median house price
Mar 2008 - $1.05m
Sep 2010 - $646k
*-38% hardy har har*

High-profile Noosa agent Tom Offerman, of Tom Offerman Real Estate, admits he is selling new beachside houses from $510,000 as part of receivership sale when once they were priced at up to $1.4 million. *-64% OMFG!!!*

*AFR July 2-3, 2011 "Worst possible timing for owners"*

The values in some apartments in the Mirvac development (Tennyson Reach on the Brisbane River) have dropped from $2.45 million to $1.5 million, *-40% bugger!*

Mrs Buchanan's apartment is ideal, and they don't mind the quiet that pervades from the 43 unsold apartments that surround them. *Who's gonna pay the fees?*

Some apartment owners, including Brisbane property developer David Dunworth are set to take legal action to try to get out of completing the purchase of the apartments they bought off the plan. *Even a property developer wants out ha ha ha*

Seems like lots of people losing lots of money on property. Who woulda thunk it possible?


----------



## choofer (3 July 2011)

greebly24 said:


> *The Australian Financial Review July2-3, 2011 "Paradise losing money"*
> 
> Palm Beach median house price
> May 2010 - $2.80m
> ...




Yep, life sux hahahahahah


----------



## explod (3 July 2011)

choofer said:


> Yep, life sux hahahahahah




I dont' think so, it is a tradgedy and a disgrace, from Government to property developers, spruikers but in particular the banking system which has us all sucked in.

 to those who ha ha ha.


----------



## IFocus (3 July 2011)

greebly24 said:


> *The Australian Financial Review July2-3, 2011 "Paradise losing money"*
> 
> Palm Beach median house price
> May 2010 - $2.80m
> ...





Those numbers reflect the Mandurah market.


----------



## nth brisbanite (3 July 2011)

greebly24 said:


> *The Australian Financial Review July2-3, 2011 "Paradise losing money"*
> 
> Palm Beach median house price
> May 2010 - $2.80m
> ...




The above are very selective figures and not a reflection on what is going on in the property market as a whole.  I've got a unit in Kedron where prices are not going down much at all.  My son sold his unit in the same complex for $355000 which is a little more than another unit which sold 8 months ago.  Wavell Heights houses went up by 10% in the last year.  Nundah's figure is very similar.  I live in Aspley where houses are still selling fairly quickly - prices appear to be very similar.


----------



## singlefished (4 July 2011)

nth brisbanite said:


> The above are very selective figures and not a reflection on what is going on in the property market as a whole.  I've got a unit in Kedron where prices are not going down much at all.  My son sold his unit in the same complex for $355000 which is a little more than another unit which sold 8 months ago.  Wavell Heights houses went up by 10% in the last year.  Nundah's figure is very similar.  I live in Aspley where houses are still selling fairly quickly - prices appear to be very similar.




I live in Clayfield and obviously study the area closely... I could suggest that you are also being selective with your analysis.

Lets take Kedron from your example and compare it with the neighbouring suburbs of Stafford, Wooloowin, Clayfield & Albion.

Prices shown are 2010 Median house compared to the current May median price from rpdata:

Stafford: $485K down to $415K
Albion: $628K down to $425K
Wooloowin: $665K down to $612K
Clayfield: $930K down to $842​
_(these numbers are fluff though for sure... it's the downward trend and stagnant market that are the main items we should be considering here)_

Now, you'll admit that Kedron, Stafford and Nundah are not quite "prestige" markets but they do have aspirations I'll admit. Here's some commentary from Havig & Jackson on the prestige suburbs that they do neighbour and her analysis.

http://www.brisbanetimes.com.au/queensland/top-end-of-town-loses-its-way-to-market-20110618-1g9cc.html?from=age_ft

I also have a few good mates who have been trying to sell in both Clayfield & Kedron over the last few months..... the mate in Clayfield selling his unit has had no interest at all in the 3 months it's been with Havig & Jackson, similar with my mate in Kedron who's had his place on the market 4 months with only a few offers coming in (all well below advertised price).

The market in these northern suburbs is flooded with properties at the moment and nothing much is selling. A lot of the rental properties occupied by flood victims are also coming back onto the market pushing up rental vacancies from thier recent lows... I wouldn't expect much in the way of capital or rental growth over the next few years if I was you.......


----------



## Glen48 (4 July 2011)

i think if any one makes an offer some where near reasonable take it ,because next year you will have wished you had.


----------



## Bigukraine (4 July 2011)

Glen48 said:


> i think if any one makes an offer some where near reasonable take it ,because next year you will have wished you had.




shhhhhhhh! quiet...... i'm just waiting for the cooling off on my joint ,cash unconditional too


----------



## tech/a (4 July 2011)

So must be time to buy then.
All those who have been waiting for opportunity--- HERE IT IS!


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## Glen48 (4 July 2011)

tech/ A
 Buy a house or a Joint? or buy a house and a joint to ease the pain when you see the prices tanking.


----------



## tech/a (4 July 2011)

Most will watch frozen by fear.
Look for land value and replacement of dwelling prices to exceed prices offered on the property your buying.
Wether that be a high or lower priced investment.
Return on capital is also a must consideration if an investment.

I expect a stagnation at the higher end of the market.
They will still sell but based upon appeal and of course bargain pricing.
Most other housing will be driven by demand.
My area Moana in SA rose  28 % last year!

The examples shown above as pointed out are selective and expected.
But as usual a lot of typing by many and bugger all action---- which will be reflected in people's investments--- or more to the point --- lack of.


----------



## EXAQTD (4 July 2011)

explod said:


> I dont' think so, it is a tradgedy and a disgrace, from Government to property developers, spruikers but in particular the banking system which has us all sucked in.
> 
> to those who ha ha ha.




x2


----------



## Bigukraine (4 July 2011)

tech/a said:


> Most will watch frozen by fear.
> Look for land value and replacement of dwelling prices to exceed prices offered on the property your buying.
> Wether that be a high or lower priced investment.
> Return on capital is also a must consideration if an investment.
> ...




yes the making of the southern express way into a two way road and a rail link to go on further past norlunga are factors that would help you see the 28% growth last year.... nice spot had a rental unit on nashwalk for a while....it still is about location and potential for growth... just have to reconise the opportunities in this flat market and exit when you realise the potential for capital growth has stopped or stalled... depending on your circumstances.


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## tech/a (4 July 2011)

Yes agree
And as the plans for both are in our tender department ( for retaining walls--- our specialty) this who recognize the potential will ve buying with open arms.

It's out there just have to recognize the opportunity then DO SOMETHING!


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## Bigukraine (4 July 2011)

tech/a said:


> Yes agree
> And as the plans for both are in our tender department ( for retaining walls--- our specialty) this who recognize the potential will ve buying with open arms.
> 
> It's out there just have to recognize the opportunity then DO SOMETHING!




That almost qualifies as insider trading ! LOL


----------



## nth brisbanite (7 July 2011)

singlefished said:


> I could suggest that you are also being selective with your analysis.



I'm not trying to be selective but would like the discussion to be more balanced.  Well located and well priced properties appear to be doing well.  I own a Kedron unit which is close to the soon to be completed northern busway. There appears to be a big demand for the units in the complex.  About 4 units have come onto the market recently and have all sold at great prices within a few weeks of listing.


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## KurwaJegoMac (8 July 2011)

nth brisbanite said:


> I'm not trying to be selective but would like the discussion to be more balanced.  Well located and well priced properties appear to be doing well.  I own a Kedron unit which is close to the soon to be completed northern busway. There appears to be a big demand for the units in the complex.  About 4 units have come onto the market recently and have all sold at great prices within a few weeks of listing.




Brisbanite, many of us would like the discussion to be balanced but it never will be - there's much too much confirmation bias occuring. Most like looking at the results for overall median figures or an individual suburb or a friend's sister's cousin's brother's neighbour and then extrapolate that to the entire market. It provides comfort and an excuse for those too afraid to make a move. As you have pointed out some suburbs are doing very well, and will continue to do so. Some suburbs will/have crashed and will continue to do so. 

What if we change the asset class - if the stockmarket is sideways or falling does that mean all stocks are/will be? Of course not. If an industry 'suburb' is falling, does that mean all stock within it are too? Of course not. But property is different right? It doesn't behave the same as other asset classes right? You can't have anomolies in the property market, it's all one big, homogenous market. 

 There are a lot less opportunities and you need to work harder, but good opportunities do exist.


----------



## nth brisbanite (8 July 2011)

KurwaJegoMac said:


> There are a lot less opportunities and you need to work harder, but good opportunities do exist.




I totally agree with you.  There are always opportunities even in a falling market.  When shares were dirt cheap in the middle of the GFC I bought as many shares as I could afford.  My son was given the chance to buy an inner city Brisbane house next to the one he currently owns.  Together the 2 properties will be worth a lot of money as they zoned in an area which is zoned for 10 storey units.

To get back to the thread, I believe that prices will continue to fluctuate, as they always have, with no large falls in the immediate future unless the Australian economy completely "tanks".  Within this homogenous market there will be plenty of opportunities as long as you research well and don't listen to all the doomsayers out there.


----------



## KurwaJegoMac (8 July 2011)

Some areas are getting hit hard - predominately 'non-traditional' housing (seasonal, coastal, regional, etc) but in 'mortgage belt' areas there's a lot of mixed results. Generally speaking those that have skyrocketed due to being in vogue are coming off their highs but the more steady areas are still chugging along nicely. 

I think we will have this continue for a while yet (mixed results, lots of sideways movement but an underlying positive trend, weaker than what we've had in the last 2 decades). The economy is not growing at a blistering pace but neither is it performing badly (unless you compare it relative to the boom years). 

I'm still supporting a rate cut in upcoming months, which will boost prices. I was derided a few pages back on this thread for going against what Glenn Stevens was touting to the media - surprise surprise he's cut growth forecasts and is not as supportive of a rate rise. The global economy is still weak (I believe mostly owing to overly irrational fear) but watch US manufacturing take off in the next few years - the currency is so devalued that companies will switch from imports to producing. Up goes inflation, debt whittles away.

I think the whole thing is dodgy personally but ey, might as well go along for the ride.

/end off-topic ramble


----------



## Knobby22 (8 July 2011)

KurwaJegoMac said:


> Some areas are getting hit hard - predominately 'non-traditional' housing (seasonal, coastal, regional, etc) but in 'mortgage belt' areas there's a lot of mixed results. Generally speaking those that have skyrocketed due to being in vogue are coming off their highs but the more steady areas are still chugging along nicely.
> 
> I think we will have this continue for a while yet (mixed results, lots of sideways movement but an underlying positive trend, weaker than what we've had in the last 2 decades). The economy is not growing at a blistering pace but neither is it performing badly (unless you compare it relative to the boom years).
> 
> I'm still supporting a rate cut in upcoming months, which will boost prices. I was derided a few pages back on this thread for going against what Glenn Stevens was touting to the media - surprise surprise he's cut growth forecasts and is not as supportive of a rate rise.




Good call. I agree with you but reckon the local economy is mainly slowing due to lack of confidence in my opinion and so could easily take off again if this improves. The world is on the way out so I can't see the big recession here yet. Maybe in a few years.
Do you agree?


----------



## KurwaJegoMac (8 July 2011)

Knobby22 said:


> Good call. I agree with you but reckon the local economy is mainly slowing due to lack of confidence in my opinion and so could easily take off again if this improves. The world is on the way out so I can't see the big recession here yet. Maybe in a few years.
> Do you agree?




I see two main areas of slowdown: Investment in various asset classes and discretionary spending.

Regarding investment: People are more risk averse after the GFC and many have concerns about the Eurozone, Aus reliance on Asia and the US debt - property sales have slown, business lending is down and our stockmarket has not rebounded as much as say the NYSE, although this may be due to the high AUD making AU equities expensive for foreign investors and low USD making US equities cheap. I'm not too convinced by that argument as the US economy has been very sluggish yet they have experienced a greater return than our ASX since the lows of the GFC.

Regarding spending: It's a mixed bag but a lot of retail has gone down - the key culprits appear to be those companies which sell easy to import goods. Think books, clothes, dvds, gadgets, etc - most retailers who are experiencing sluggish sales are selling these sort of goods (makes sense that they'd be down considering they dont adjust their price to the same extent as the appreciating AUD and so consumers just buy them over the internet). On the flip side spending on meals, cinema, coffee and those sort of things are still experiencing great sales - stuff that people don't import with the high AUD. Also rate of savings have increased slightly but not drastically. So what does that tell us? If the economy was as bad as the papers like to make out, then people would be cutting back on everything from coffee to books, to alcohol. Yet they're not - they're buying easy to import goods over the net and still continuing with normal spending habits.

A slowdown in retail is never a good thing, people's jobs will suffer but the situation is no where near as bad as the papers try to make it out. After all, a shocking headline attracts more people. I don't see coles, woolworths, village cinemas, etc having a whinge - only the retailers. 

I agree with you in that it could easily rebound - and it will - the question is when? I see it building up as a coiled spring and expect flat/slightly positive times ahead. My only real concern is that fear overwhelms the markets and we get a credit squeeze and quick deleveraging. Then we'll see asset prices hammered just like they were in the US during the GFC. But with markets pushing our currency up past the $1 market, our banks having strong balance sheets (albeit tied to RE) and interest rates with room to move in the event of a slump we're a lot better placed than many believe.


----------



## Knobby22 (8 July 2011)

At the risk of sounding like a mutual appreciation society, I reckon you are right on the ball.


----------



## trainspotter (9 July 2011)

I wrote this on the 23rd August 2010



trainspotter said:


> Personally in my opinion I reckon the property price for Australia for the long term is down nationally overall. Not the raving lunatic harbringers of doom and gloom style but more of a deflation than a massive POP. *3 - 5 % would be realistic terms.  *
> 
> *This being said there will be places that will suffer Chernobyl style meltdowns*. Ipswich in Brisbane for one is going through "mortgage stress" right now. DYOR.
> 
> ...




BWTFWIK - So nothing has changed in the 12 months then? Business as usual


----------



## kincella (9 July 2011)

I believe the biggest most profound problem with our economy is the current govnut.
You will not see an improvement, or confidence until they are kicked out.
All that wasteful spending by rudd, then the people struck with fear of his Ets, that ETS stalled any confidence that was already in a shambles. Then to cripple what was left with any confidence in the mining industry, he effectively wiped it out with his mining tax.
In the middle of all this, swan kept raising interest rates, when every other developed country had dropped their's to zero....I say swan, because the rba has not been independent, and stevens kept up the ridiculous idea that the country was hot,,,,it was a farce, to support swans 'chest thumping antics' that swan alone had saved us from the GFC...
Stevens and swan raised rates non stop right thru the GFC, then by mid 2008 when the disastrous figures came out, they dropped them 3%...
History is repeating, they raised the rates 8 times in the past year, effectively crippling
the economy.
The banks stopped lending to small business in late 2007...(when stevens again, in his support of labor, raised rates to counteract the claim that rates stayed low under a liberal govnut...if you recall he raised them leading up the the 2007 election, 6 months into the GFC)
Then to wipe out any semblance of common sense , she came in....and its simply been, one major disaster after another, almost a new case of hit the voters where it hurts, on a weekly basis.
I have thought the rising of our dollar against the US, is simply that we now enjoy junk bond status in line with the US...we are on the same footing, with huge borrowings, and nothing to show for it, no infrastructure, improvement in health etc...just wasted money that has to be repaid...let alone the mounting interest repayments on those debts..
No wonder housing is flat, the people have no confidence in what this govnut will do next. I note they have been spending 36 billion on reno's alone....they are not upgrading to buy the next house, they are staying put, and upgrading their existing homes....but they will be in a prime position, when the economy recovers.
We are not seeing the  US style of huge drops in prices....and there are good reasons for that...
As others here have stated, some places are flat, some are growing up to 30%...and there is still buyer activity out there....interest rates around 7% are attractive....
Everytime the stock market takes a beating, you will see investors move away from stocks, and back into bricks and mortar.
The govnut has not kept stock of the foreign buyers, so who knows how active they have been, and what rorting has gone on there.
I am expecting bad figures out again by the end of July, and a drop in interest rates as in 2008.
Confidence will return when we get rid of this govnut, and get a sane, sensible, conservative govt back in office.
In the meantime, pray for your jobs if you are employed by a small business. SME's have been doing it exceptionally hard, with the finance needed to cling on, wiped out by the banks.
The carbon tax has had an effect where small business are closing down now, before it has come in,  rising energy costs have put paid to any hope of hanging in there.
The backlash expected from this gabfest tomorrow, should seal labor's fate, and most of us pray they will be gone within a few months. 
The alternate of a CT will be total disaster for Australia.


----------



## UBIQUITOUS (10 July 2011)

Well well well. Here it is...in black and white...in the msm - shonky reporting practices outlined. REIV attempts to defend what it is left of their integrity.



> http://www.theage.com.au/victoria/agents-withhold-house-price-data-20110709-1h859.html?from=smh_ft
> 
> Agents withhold house price data
> 
> ...


----------



## trainspotter (10 July 2011)

Non reporting has been going on for years UBI. Get used to it. Enzo enjoyed it. The ABS goes by bank standards as well as Land Titles Office measurements. Can't fudge the numbers when the Land Transfer Office has been paid and settlement has occurred into another name by the bank who owns the mortgage. State Revenue Department has a say in it as well. If you have purchased another property you have to pay stamp duty on it. These are the figures that count. Not the Enzo variety.

These are the figures to take notice of.


----------



## Aussiejeff (11 July 2011)

trainspotter said:


> Non reporting has been going on for years UBI. Get used to it. Enzo enjoyed it. The ABS goes by bank standards as well as Land Titles Office measurements. Can't fudge the numbers when the Land Transfer Office has been paid and settlement has occurred into another name by the bank who owns the mortgage. State Revenue Department has a say in it as well. If you have purchased another property you have to pay stamp duty on it. These are the figures that count. Not the Enzo variety.
> 
> These are the figures to take notice of.




Yes, but Ubi still has a point.

REIV is a party to _actively promoting the dissemination of mis-leading information to consumers._

Apparently, Minister for consumer Affairs O'Brien cares not a toss about this - apparently, he feels safe enough ensconced in his Ivory Tower to withstand the slings & arrows heading his way from a growing band of disgruntled consumers & RE agents alike - _for now_.

Fair suck, if businesses promote products and or services through false advertising, they can expect to be hauled over the coals by the ACCC. So, why is this Minister (as have previous Ministers) showing such dis-interest in what amounts to _false advertising practices in the RE sector with respect to auction clearance rates_? I think we can all guess the answer to that - Enzo has many "friends" in high places?

Well, the VIC gumint places a HUGE emphasis on the ongoing health & "buoyancy" of the RE housing sector - look at all the handouts they are throwing at the moment (very generous FHBG's & stamp duty rebates etc..) from the Public purse (a fair bit of everyone's taxes to support a _privileged few_). That's right. I said privileged. If you are fortunate enough to own outright or are in the process of purchasing a home I consider that a fine "privilege", and well done you.

IMO it's a hoary myth that pollies keep banging on about how it is every Australian's "right" to own a home. Those "rights" vanished quite some time ago, and were last seen fast disappearing towards the never-never.  

Consumers consume more than physical goods & services. In this day & age, INFORMATION consumption is big business and becoming increasingly so. Pollies _should_ be concerned at the veracity of that information - especially for a sector that has such a profound impact on the local and wider economies. Consumers deserve better than this shoddy fob-off by O'Brien and Co. If that is the best he can offer, electors should boot him out of his seat come next election.

IMO, of course


----------



## freebird54 (11 July 2011)

*RE. Mortgage stress*

 in posts above - many areas like Ipswich have homes sold by seminar and as we know those prices could be loaded up by huge amounts.
*
Re. Published research by "experts"*

"He who pays the piper calls the tune" - lots of it is rubbish and not only in real estate.

If one of SE Queenslands most experienced agents "allegedly" pays way too much for a beachfront property sold to him by another top agent what hope is there for the rest of us?

http://www.goldcoast.com.au/article/2010/10/13/262641_crime-and-court-news.html

but of course the truth may never come out - Just google the people involved

http://www.ozripoff.com/report-view/1429-rod-lambertthe-real-truth

or

http://www.theaustralian.com.au/new...of-mermaid-beach/story-fn6tcs23-1225872727258


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## Glen48 (11 July 2011)

Rod Lambert is my cousin. His Father David opened up a nursery called Evergreen on the G. coast in the 70's when they were trendy.
Dave did the right thing by all and died, the 3 kids ended up collect the dividends from the sale of the nursery some years ago and are now all bankrupt. 

The joys of real estate.


----------



## trainspotter (11 July 2011)

Aussiejeff said:


> Yes, but Ubi still has a point.
> 
> REIV is a party to _actively promoting the dissemination of mis-leading information to consumers._
> 
> Apparently, Minister for consumer Affairs O'Brien cares not a toss about this - apparently, he feels safe enough ensconced in his Ivory Tower to withstand the slings & arrows heading his way from a growing band of disgruntled consumers & RE agents alike - _for now_.




Then this matter should feel the full force of the law. 

The Real Estate and Business Agents Act 1978 clearly states that misleading and deceptive representations is illegal. Get Today Tonight to put a fright up them.


----------



## trainspotter (11 July 2011)

Glen48 said:


> Rod Lambert is my cousin. His Father David opened up a nursery called Evergreen on the G. coast in the 70's when they were trendy.
> Dave did the right thing by all and died, the 3 kids ended up collect the dividends from the sale of the nursery some years ago and are now all bankrupt.
> 
> The joys of real estate.




So the kids went bankrupt and not the land?


----------



## financialdonk (11 July 2011)

House next door to my parents in small coastal mid-west WA town has been decreasing price dramatically over the past 6 months.

2 storey, right on the ocean started at 840k...then 799...then 720...then 650...now 599!

29% reduction and not sold yet 

1 storey houses at the bottom of the hill with no ocean views were selling for more 3 years ago.

Town has next to no employment growth opportunities in the immediate area.  Can't see it returning to its peak for a loooong time.


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## KurwaJegoMac (11 July 2011)

trainspotter said:


> So the kids went bankrupt and not the land?




Didn't you know that bankruptcy occuring several years post-sale of real estate is the fault of real estate speculation? 

The joys of real estate indeed!


----------



## KurwaJegoMac (11 July 2011)

New figures for May - Dwelling sales fallen by 0.1% since April, slight decrease in investor purchases but slight increase in owner-occupier purchases. Aside from the 2009 GFC spike things look pretty ordinary.

Business as Usual it seems.

http://www.abs.gov.au/ausstats/abs@...mmary&prodno=5609.0&issue=May 2011&num=&view=

*EDIT: Gotta love the 'seasonally adjusted' figures. 2.9%? Possible owing to the winter months but seems a bit high to me personally.


----------



## trainspotter (11 July 2011)

KurwaJegoMac said:


> Didn't you know that bankruptcy occuring several years post-sale of real estate is the fault of real estate speculation?
> 
> The joys of real estate indeed!




AHA ! Right you are indeed.


----------



## Glen48 (11 July 2011)

Buying Land is like a casino token it has no value like Gold .
You pay for land or a token and speculate you will make more than the seller some times you do,
 Like any gambling or have to know the profit is maxed out and bail out.


----------



## Tysonboss1 (11 July 2011)

Glen48 said:


> Buying Land is like a casino token it has no value like Gold .
> You pay for land or a token and speculate you will make more than the seller some times you do,
> Like any gambling or have to know the profit is maxed out and bail out.




Hahaha,... you can't be serious.

i aggree about Gold but it is far more speculative than real estate, Gold has absolutely no value apart from the hope that some one will give you real assets or goods for it in the future.

Offcourse you can gamble on the future price of any asset Gold, real estate, shares, even oil and wheat.

But Gold is not an investment grade asset, income producing realestate is.


----------



## KurwaJegoMac (11 July 2011)

Glen48 said:


> Buying Land is like a casino token it has no value like Gold .
> You pay for land or a token and speculate you will make more than the seller some times you do,
> Like any gambling or have to know the profit is maxed out and bail out.




Disagree with you there. It has value else it would be worth nothing. Same as your casino token, it has value - whatever it says on the face of the token next to the $ sign. Now whether said token, gold or land is worth the amount paid for it is another question entirely. 

Also one cannot generalise that everyone buying property is 'gambling'. What an absurd thing to say - what about the fact that 70% of people in Australia are owner occupiers? I'm sure they all bought their houses for speculative gain, it's not like anyone needs a roof over their head or anything 

What's dangerous is when you have people who approach investing like they do a casino, I certainly hope you're not that sort of person since you appear to correlate the two.


----------



## KurwaJegoMac (11 July 2011)

Tysonboss1 said:


> Hahaha,... you can't be serious.
> 
> i aggree about Gold but it is far more speculative than real estate, Gold has absolutely no value apart from the hope that some one will give you real assets or goods for it in the future.
> 
> ...




+1 well said, better than my shoddy attempt :


----------



## satanoperca (11 July 2011)

Thought this was interesting coming from ANZ.



> The good news for homeowners is that AMP Capital chief economist Shane Oliver and Grattan Institute program director Saul Eslake - the ANZ's chief number cruncher for close to 14 years - say Victoria will avoid a US-style property crash which saw prices plunge by 30 per cent.
> 
> Instead, house prices will continue their single-digit slide into 2012 before stagnating for five to 10 years as wages catch up with a median house price which has climbed 133 per cent since 2000.
> 
> ...





So holding a NG property with 0% capital growth for 5 years seems very unappealing.

Cheers


----------



## Tysonboss1 (11 July 2011)

satanoperca said:


> Thought this was interesting coming from ANZ.
> 
> 
> 
> ...




NG property is never really over appealling for me


----------



## trainspotter (11 July 2011)

satanoperca said:


> Thought this was interesting coming from ANZ.
> 
> So holding a NG property with 0% capital growth for 5 years seems very unappealing.
> 
> Cheers




An NG property is done for tax purposes and not for capital gain. It is to offset your taxable income and CG is a bonus. Funny how the ANZ guru agrees with me !


----------



## wayneL (11 July 2011)

trainspotter said:


> An NG property is done for tax purposes and not for capital gain. It is to offset your taxable income and CG is a bonus. Funny how the ANZ guru agrees with me !




So we lose $100 to save ~$50 tax, never mind cap gain?


----------



## Glen48 (11 July 2011)

In 10 years time walk in to a shop with your title deeds and see what you can buy, the shop keeper will be serving the man with gold or silver.

Different periods of time dedicate what is rising or falling, land has had its day and will be a long time before you see prices like this again. 

42 empty shops on the strip on the Sunshine coast has to be telling you some thing is not right.


----------



## satanoperca (11 July 2011)

trainspotter said:


> An NG property is done for tax purposes and not for capital gain. It is to offset your taxable income and CG is a bonus. Funny how the ANZ guru agrees with me !




Sorry TS, you have lost me. If the investment looses money and there is no ppreciation in the asset value over a period of time, it is still a bad investment, regardless if you get a little back on you tax.

Cheers


----------



## KurwaJegoMac (11 July 2011)

satanoperca said:


> Sorry TS, you have lost me. If the investment looses money and there is no ppreciation in the asset value over a period of time, it is still a bad investment, regardless if you get a little back on you tax.
> 
> Cheers




Remember it's not always about the asset value appreciating - don't discount the cash flow (i.e. rent returns). If you have a positively geared/positive cashflow property then any CG is a bonus. You can be negatively geared with positive cashflow so that 'little back on your tax' makes all the difference.

That being said, reading that article they anticipate flat prices _in line with inflation_ so no 'real growth'. Effectively if you purchase a property with positive cashflow you have an investment with an inflation hedge + automatic increase in your earnings from day 1 with a chance of CG (holding over 30 years I like my odds of that eventuating). What's not to like? 

Being pedantic:

Saul Eslake was the _former_ chief economist at ANZ, so his view does not express that of the bank. The bank is unlikely to come out with such an article due to self-interest.

and;

The investment *loses* money, not *looses*. lose = give up, loose = not tight.

Some constructive criticism - I welcome any who would provide such feedback too.


----------



## KurwaJegoMac (11 July 2011)

Glen48 said:


> In 10 years time walk in to a shop with your title deeds and see what you can buy, the shop keeper will be serving the man with gold or silver.
> 
> Different periods of time dedicate what is rising or falling, land has had its day and will be a long time before you see prices like this again.
> 
> 42 empty shops on the strip on the Sunshine coast has to be telling you some thing is not right.




The shopkeeper can't eat gold, use it as shelter, let alone use it for anything but sitting under his mattress.

With land one can provide shelter - when push comes to shove you think a person would choose a gold bar over shelter?


----------



## trainspotter (11 July 2011)

wayneL said:


> So we lose $100 to save ~$50 tax, never mind cap gain?




For taxation purposes only you understand. The asset remains the same value (less depreciation) on your P & L. Only realise a loss when you sell of course.

It depends on *WHY* you are investing in RE.


----------



## Tysonboss1 (11 July 2011)

Glen48 said:


> In 10 years time walk in to a shop with your title deeds and see what you can buy, the shop keeper will be serving the man with gold or silver.
> 
> .




Nope, He'll be serving the guy with cash or a debit card. What ever the median of exchange is I will be walking into the shop holding the weekly rent payment, not slicing off a piece of capital like a gold horder would have to do.


----------



## medicowallet (11 July 2011)

KurwaJegoMac said:


> The shopkeeper can't eat gold, use it as shelter, let alone use it for anything but sitting under his mattress.
> 
> With land one can provide shelter - when push comes to shove you think a person would choose a gold bar over shelter?




BUT gold here is the same as gold everywhere. I assume you are disregarding its worth in an investment portfolio, and its value to central banks.

Of course you can go to the argument about shelter!! Can housing be used in electrical components?  Come on....




KurwaJegoMac said:


> Remember it's not always about the asset value appreciating - don't discount the cash flow (i.e. rent returns). If you have a positively geared/positive cashflow property then any CG is a bonus. You can be negatively geared with positive cashflow so that 'little back on your tax' makes all the difference.
> 
> That being said, reading that article they anticipate flat prices _in line with inflation_ so no 'real growth'. Effectively if you purchase a property with positive cashflow you have an investment with an inflation hedge + automatic increase in your earnings from day 1 with a chance of CG (holding over 30 years I like my odds of that eventuating). What's not to like?
> 
> ...




I like this quote of yours, filled with an ideal world of ideals 

I can assure you, that house prices CAN fall. Look at America (insert "we are different" quote)

I can assure you that rent prices are stagnant in Australia (and hence falling) (insert "not in my suburb" quote)

I can assure you that any sane investor does not agree with your point that CG is a bonus, CG is essential to prevent inflation killing your investment, and BTW for an investment property, CG has to be above inflation to break even on that component (insert expectation of explanation quote)


I will, however ask one explanation from you. 

Explain how to have positive cashflow AND negative gearing, and please include all outgoings..... awaiting reply on this maestro. Please show me this being maintained, and better than investing in a bank!.


----------



## Dowdy (11 July 2011)

KurwaJegoMac said:


> The shopkeeper can't eat gold, use it as shelter, let alone use it for anything but sitting under his mattress.
> 
> With land one can provide shelter - when push comes to shove you think a person would choose a gold bar over shelter?





Gold is looked at as a currency. It's liquid, easily tradeable, transportable, accepted everywhere and traded for anything. It's an inflation hedge PLUS we have a commodities boom, hence it makes a good investment (silver is better though)

A home is purely an asset (in the eyes of the investor) but it's illiquid and in the start of a slump.


----------



## Tysonboss1 (11 July 2011)

medicowallet said:


> BUT gold here is the same as gold everywhere. I assume you are disregarding its worth in an investment portfolio, and its value to central banks.
> .




Gold is the "snugggie" of the investment world, It's sold on late night TV and if you buy it you'll look like a fool.

I don't think gold has a place in an investment portfolio, Its not an investment grade asset.

At best it is a speculative play banking on it's price going up.

Offcourse their is the arguement that it is a hedge against inflation which it may be unless you buying it at a 100 year high,...  and receiving no income.

Heres the thing, All real assets provide a hedge against inflation while also producing income, Gold is usless an investment.


----------



## Glen48 (11 July 2011)

Water is the most important commodity,a glass of water in a wasteland is worth more than Gold . Food is next, medicine, clothing. fire, fire arm's then  shelter. A piece of gold will get you all of these a Gold Coast 19 acre beach front block wil not in a depression.
 This is what a block of land will be worth in 10yrs.

.http://www.kcet.org/socal/2008/09/foreclosure-alley.html


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## Tysonboss1 (11 July 2011)

Glen48 said:


> Water is the most important commodity,a glass of water in a wasteland is worth more than Gold . Food is next, medicine, clothing. fire, fire arm's then  shelter. A piece of gold will get you all of these a Gold Coast 19 acre beach front block wil not in a depression.
> This is what a block of land will be worth in 10yrs.
> 
> .http://www.kcet.org/socal/2008/09/foreclosure-alley.html




In a completely failed economy, which is what you are describing even a bar of gold loses it's value. A piece of gold that is worth 1000 dollars may buy you a sack of potatoes, but if you believe that is going to happen then you have lost all hope and should probably put you tin hat on and start digging a bunker


----------



## trainspotter (11 July 2011)

medicowallet said:


> BUT gold here is the same as gold everywhere. I assume you are disregarding its worth in an investment portfolio, and its value to central banks.
> 
> Of course you can go to the argument about shelter!! Can housing be used in electrical components?  Come on....
> 
> ...




Ahhhhhhhhhhhhhh I have been waiting for Doctor Wallet to return in full tilt.

Yes  yes yes gold is used as an economic leveller amongst central banking fraternities. *YAWN*  It is called the gold standard. Has nothing to do with mortgages or real estate values *STRETCH* There needs to be an required equilibrium and GUESS WHAT ?? Gold is the standard. *ROLLS OVER* Ho hum ........... *FEIGNS SLEEPINESS*

Look,,,  Look Dr Seuss ,,,,,,, It happened in America ....... must be the same in Australia. Get a grip on reality here for once. Read what has been written for thousands of posts ....... AINT GONNA HAPPEN.  Read the posts as to why not. 

Negative geared property was sold as a TAX DEDUCTION. Nuffin to do with CG.

If you are unhappy with my summation I am more than happy to come and check out your portfolio (at my expense of course)  and advise you of the errors of your ways.


----------



## Uncle Festivus (12 July 2011)

Tysonboss1 said:


> Gold is the "snugggie" of the investment world, It's sold on late night TV and if you buy it you'll look like a fool.
> 
> I don't think gold has a place in an investment portfolio, Its not an investment grade asset.
> 
> ...




All of that is just plain incorrect. Gold is a currency. Right now, in gold terms, the fiat currencies of the world are collapsing - the Euro, Yen and almighty US dollar are sinking under the weight of insurmountable debt. 

I have made more from gold, in percentage terms, than any other investment (and still growing).

Gold will continue to be the 'store of value' of last resort. Right now the equity markets are about to collapse from the global debt contagion - all down over 1% as of tonights trading.

Recent data from China suggests that they too have understated their (bad) debt levels and actual inflation rate ie a slowdown is coming, only the severity is unknown, and all that implies for Australia. 

And with that, Australian real estate will finally get the _real_ crash all the realists have been predicting on here for a while now. The only reason why we haven't taken a hit is that the various economic stimulis programs, funded by ever growing debt, have enabled the ponzi to be kicked down the road just that little bit longer.

How liquid will your real estate be when everyone starts heading for the exits? I know my gold will be tradable for everything I need, even your heavily discounted property........

As we all know, the Australian property market peaked well over a year ago when Robots bought his last IP


----------



## Uncle Festivus (12 July 2011)

trainspotter said:


> Look,,,  Look Dr Seuss ,,,,,,, It happened in America ....... must be the same in Australia. Get a grip on reality here for once. Read what has been written for thousands of posts ....... AINT GONNA HAPPEN.  Read the posts as to why not.




Then analyse the data to see why it will happen. It's called globalisation - if China gets a cold Australia will get the flu etc If the US gets another recession the whole world gets a recession, including us.......Mr Market is about to be shown up as being seriously wrong.....


----------



## Junior (12 July 2011)

Tysonboss1 said:


> Gold is the "snugggie" of the investment world, It's sold on late night TV and if you buy it you'll look like a fool.
> 
> I don't think gold has a place in an investment portfolio, Its not an investment grade asset.
> 
> ...




A lot of fools have made a lot of money over the past 10 years investing in gold.


----------



## KurwaJegoMac (12 July 2011)

medicowallet said:


> BUT gold here is the same as gold everywhere. I assume you are disregarding its worth in an investment portfolio, and its value to central banks.
> 
> Of course you can go to the argument about shelter!! Can housing be used in electrical components?  Come on....




I certainly am not disregarding its worth in an investment portfolio. Gold and other precious metals are needed in many high-tech devices we use today, they will always be an asset. What my point is, is that if we hit a major depression I'd rather have a cash generating asset that provides a fundamental need (shelter) than metal. I can always make use of the shelter and rent it to others in exchange for goods, services and whatever medium of exchange is being used at the time.

Before anyone jumps down my throat again, i'm not saying gold is useless as a medium of exchange and that it will be useless in a depression, all i'm saying is i'd rather a house than gold.




medicowallet said:


> I like this quote of yours, filled with an ideal world of ideals




An 'ideal world' for you is a property growing in value exactly in line with inflation? I hardly call that ideal but each to their own. I provided a situation based on the premise of the article (that house prices will not experience 'real' growth and that growth will be in line with inflation). Ideally we'd be getting CG above inflation, increasing rents and decreasing expenses. Now that is ideal 



medicowallet said:


> I can assure you, that house prices CAN fall. Look at America (insert "we are different" quote)




Thank you for your assurance.

However nowhere in my post did I say that house prices cannot fall. In fact I don't think i've ever said it in the entire existance of this thread. I will state it again plainly: I do NOT believe that house prices never fall. ALL assets rise and fall in value, to think otherwise is naive. As with any investment you need to exercise appropriate risk management and have exit strategies in place. Property is no different.




medicowallet said:


> I can assure you that rent prices are stagnant in Australia (and hence falling) (insert "not in my suburb" quote)




Now this is something I wouldn't have expected of you Medicowallet. As a 'savvy' investor with 'multiple' properties you would know that some areas are going up, some are going down and some are stagnant. I like the "(insert "not in my suburb" quote)", very cute. I would hazard to guess that you're the one actually doing that - picking on a few choice areas and extrapolating for the whole of Australia. 

You and I both know we can pick out choice suburbs to illustrate whatever point we like. I rent and keep a close eye on the market as a result (always looking to pocket a few $$). Plenty of suburbs still going up (coincidentally in desirable suburbs... who'd have thought ey?)



medicowallet said:


> I can assure you that any sane investor does not agree with your point that CG is a bonus, CG is essential to prevent inflation killing your investment, and BTW for an investment property, CG has to be above inflation to break even on that component (insert expectation of explanation quote)




Tell your point to those investors who seek positvely geared property, or properties with a low capital cost but high rents (think specialty towns like mining towns, holiday spots, etc). While you're at it you should go and tell all the Bond, Dividend and Cash investors that they're investing wrong - it's all about the CG and without it you can't make any money. Different people have different investment strategies and desired outcomes - just because you invest in CG does not mean that everyone else has to as well.

Also, CG does not have to be above inflation for an investment property in order to break even. If the cashflow (rent return less expenses) is positive and CG matches inflation you're making money (perhaps not a lot for the size of investment : but still above 'break even')




medicowallet said:


> I will, however ask one explanation from you.
> 
> Explain how to have positive cashflow AND negative gearing, and please include all outgoings..... awaiting reply on this maestro. Please show me this being maintained, and better than investing in a bank!.




No need to stoop to name calling, are you always this rude to people? Does my differing opinion offend you that much?

I'll provide an explanation, always happy to help out the newbies.

Scenario: Townhouse in Melbourne's South Eastern suburbs, built within the last year. I prefer to use a real example - this particular property is one of the places I put an offer down for a few months ago.

Personal Income: $90,000

Property Price: $360,000
Loan Value: $270,000 (75% LVR)
Interest rate: 7% ($18,900 p/y)
Rental Income: $350 p/w ($18,200 p/y)
Expenses: $3750 p/y
Depreciation: $7500 p/y (including building depreciation)

*Tax Calcs:*

Rental Income: $18,200

Expenses: $3,750
Depreciation: $7,500
Interest: $18,900
Total Expenses: $30,150

Annual before tax loss: $(-11,950)

Tax Savings: $4,464 (@ 37% tax bracket and $90k income)

*Cashflow*

Rental Income: $18,200
Tax Savings: $4,464
Total Inflows: $22,664

Expenses: $3,750
Interest: $18,900
Total Outflows: $22,650

Annual Cashflow Cost/Surplus: $14

----------------------------------------------

There you have it, a positive cash flow property with negative gearing. It can be done, just takes some research and careful selection.

Of course not everyone can do it - need to be in a good tax bracket 37% or more, with 25%deposit and you need to find something with low expenses and good depreciation so you'd be looking at new properties, perhaps units/townhouses (low maintenance, low council rates).


----------



## Tysonboss1 (12 July 2011)

Uncle Festivus said:


> All of that is just plain incorrect. Gold is a currency. Right now, in gold terms, the fiat currencies of the world are collapsing - the Euro, Yen and almighty US dollar are sinking under the weight of insurmountable debt.
> 
> I have made more from gold, in percentage terms, than any other investment (and still growing).
> 
> ...




Give me a real asset that produces income in present current terms over gold any day.

It's funny the same people that make fun of the property speculaters that say things like, " property always goes up, property never falls" etc etc Believe the same crap about gold.

Gold and property are both probably over valued at present (gold probably more so), Hence why I haven't bought a property in years, But atleast the property I do own will generate income regardless.

Real assets have all the same hedging as gold, if the currency fails the real assets will just carry on trading in current terms.




Junior said:


> A lot of fools have made a lot of money over the past 10 years investing in gold.




Buying gold at $250 back in 2002 is very different to buying it now at $1400. Is it really sound to buy your investments at 100year speculative highs. Or does gold never fall, does gold only ever go up. 

If property is in a bubble when it goes from $200 to $450, what is gold in when it goes from $250 to $1400.  

If your buying gold at current levels and recieving zero income, All your hopes are on contiuned increase in the gold price. that seems risky to me. But hey I could be wrong.


----------



## trainspotter (12 July 2011)

That graph only evidences to me more that Gold is overheated. Same as the property market was 12 months ago. 

P.S. To turn $250 into $1550 over a 10 year period has a compound interest rate of 19.97%.. If I am dealing in property development it has to have MINIMUM 20% return before I am interested.


----------



## medicowallet (12 July 2011)

KurwaJegoMac said:


> No need to stoop to name calling, are you always this rude to people? Does my differing opinion offend you that much?
> 
> I'll provide an explanation, always happy to help out the newbies.
> 
> ...




NAMECALLING!! lol, harden up champ. That is the lamest response to something, if you regard "maestro" as name calling, then there is something clearly wrong with your interpretation of society.

But as for your figures.

1. I note that you, like many property spruikers do not include all expenses. I wonder how far that $14 will go towards maintenance etc. Where is the money to replace the balance of the $7500 depreciation? Lacking? Please include these figures in a revised reposting.

Your figures therefore REQUIRE CG to maintain position. 

Your property is only positively geared, because you fail to maintain it.

You also fail to address any factor which I pointed to with maintaining said scenario (changes in depreciation, expenses, rent received) because with your continuously deteriorating asset, you are going to find it increasingly difficult to maintain rent.

In response to the other points 

1. To say that all you need is cashflow, BASED on the assumption that CG will remain in line with inflation, is doing just that, making the assumption that house prices NEVER fall. 

2. Some clear evidence is coming out that rental returns are flat, and as you are well aware, prices cannot go up faster than inflation forever.  To disregard this is very.... interesting.

3. I also note how you berate me for my comment on CG needing to be higher than inflation to break even, and note how you intentionally disregard the part where I say "COMPONENT" ie in general, to break even on your capital investment, you need to have higher than inflation growth in CG to break even on an investment property... poor reading or poor form?


----------



## medicowallet (12 July 2011)

trainspotter said:


> Ahhhhhhhhhhhhhh I have been waiting for Doctor Wallet to return in full tilt.
> 
> Yes  yes yes gold is used as an economic leveller amongst central banking fraternities. *YAWN*  It is called the gold standard. Has nothing to do with mortgages or real estate values *STRETCH* There needs to be an required equilibrium and GUESS WHAT ?? Gold is the standard. *ROLLS OVER* Ho hum ........... *FEIGNS SLEEPINESS*
> 
> ...




Happy to return 

Oh, btw, I notice today that Italy might be in a bit of trouble, that America might take longer to come out of trouble, and as we clearly know, China is having inflation problems. We have a carbon tax on the way, and manufacturing and retail is struggling, with a government with no knowledge of how to spend (or not to spend money)

America is printing money.

Gold may very well maintain its position.

Interesting times.

Most pertinent point..... where is ROBOTS???


I am also happy to decline your offer on checking out my portolio with respect to negative gearing. I own my properties. Sorry, but Mr conservative me does not see how overexposing myself to property at the moment is a good thing..

Have you sold any more properties recently??? Let me know when you do   I will be interested how far you ride the rollercoaster down, and who jumps off first. Was it 70% gearing iirc?  Doesn't take much of a fall to make that 90% or 100% gearing.... when is it when a bank starts to panic and presses the sell button?  Not sure myself.

"AINT GONNA HAPPEN" - can you please explain what you mean by this, exactly, so that I can use it in the future. I give you 3 options..

do you mean that house prices here won't fall?

do you mean that they won't fall by more than 5%?

or do you mean they won't fall by more than 10% ?


----------



## mazzatelli (12 July 2011)

medicowallet said:


> Where is the money to replace the balance of the $7500 *depreciation*? ...
> 
> You also fail to address any factor which I pointed to with maintaining said scenario (*changes in depreciation*, expenses, rent received) because with your continuously deteriorating asset, you are going to find it increasingly difficult to maintain rent.




I'm very interested to hear from you why:
1) a non cash item (depreciation) requires money to cover it
2) overall depreciation would change (other than modifications to existing property)

Thank you


----------



## KurwaJegoMac (12 July 2011)

medicowallet said:


> NAMECALLING!! lol, harden up champ. That is the lamest response to something, if you regard "maestro" as name calling, then there is something clearly wrong with your interpretation of society.
> 
> But as for your figures.
> 
> ...




It's not about the severity of the name calling, it's about respect. Do you see me flapping my mouth off at you? But of course those who's opinions are effectively countered always get defensive, but that's fine, i'm sure we can all learn a thing or too from your 'savvy' investment experience which you have yet to share.

I also love your last comment about 'poor reading or poor form', funny coming from the one who interprets my post to say $14 is for maintenance. Look at the figures again - that's the CASHFLOW. CASHFLOW is income less expenses. Poor reading and poor form indeed. 

So how are your mutltitude of properties going? You seem to be quite 'savvy' with the strong belief of declining house prices and decreasing rent. Sold any yet? As per your previous post, no - with no intention to. Funny that, refusing to action your convictions. Here you are forecasting doom and gloom and you're not cashing in. Hell, you didn't even know that one could have positive cash flow with negative gearing!! Here's an article from a magazine to explain it in detail so you don't start accusing me of more hocus pocus ($14 for maintenance hahaha): 

http://www.apimagazine.com.au/api-o...nding-negative-gearing-and-positive-cash-flow

Either way, as most can see you're a full of s*** armchair economist, never substantiating claims let alone following your own convictions.

--------------------

I'll take my leave and join all the 'property spruikers' who have departed this thread. The same baseless, herp derp comments are made page after page and are rebuffed time and time again with reasoned analysis to be followed by more herp derp comments.

Good luck to the bears for the impending crash, I'm sure you've all sold your homes and IPs and have shorts on the banks and property trusts. Be sure to shoot me an email in the next few years gloating how you made millions.


---------------

If anyone wants more details on some of the strategies I mentioned feel free to PM me. I'll be working 2 extra jobs and living off canned tuna to pay off my IP so if it takes me a while to reply bear with me.

All the best, peace out


----------



## Intrinsic Value (12 July 2011)

Properties in Australia are generally overpriced and it wouldn't take much of an economic downturn for housing prices to significantly fall.

1.The ratio between average house prices and average earnings is now way too high so far that many people just can't afford current prices.

2.What happens when you add the number of cash strapped baby boomers onto the market and they want or need to downsize but there aren't many buyers to buy their properties? Yep more pain for house prices.


3.The rising cost of living , food, power, petrol etc adds more pressure on peoples ability to afford a huge mortgage.


4.The banks ability to lend freely may be curtailed by more expensive access to credit facilities which would be passed on to consumers thereby making it even more difficult for lenders to service mortgages.


5.If we have a GFC2 then house prices will fall drammatically. This is on the cards and if it happens then I wouldn't worry to much about house prices i would be more worried about just surviving because the whole financial system could meltdown in such a scenario.


----------



## Glen48 (12 July 2011)

One needs to decide if the market will improve or tank, once you decide sit back and enjoy and hope you made the right choice.

 Of course one should read the market reports and if you think what is going on out there is normal stick with property.


----------



## medicowallet (12 July 2011)

KurwaJegoMac said:


> It's not about the severity of the name calling, it's about respect. Do you see me flapping my mouth off at you? But of course those who's opinions are effectively countered always get defensive, but that's fine, i'm sure we can all learn a thing or too from your 'savvy' investment experience which you have yet to share.
> 
> I also love your last comment about 'poor reading or poor form', funny coming from the one who interprets my post to say $14 is for maintenance. Look at the figures again - that's the CASHFLOW. CASHFLOW is income less expenses. Poor reading and poor form indeed.
> 
> ...




And the true swearing, insullting Kurwa comes out, nice work. I am but a newbie, and an FOS armchair economist and "savvy" person full of herp derp comments.... 

I will not sell my properties and will ride out lower prices etc for however long they occur, just as I do with most shares and other forms of investment, because, you see, I don't have a preference for either. I like to have some in everything, and it has proven successful for the past 30+ years.

Lol, I still see that you do not offset your expenses in your analysis.  Anyway, you are not replying here anymore, so best of luck with your recently purchased property.  I hope that everything keeps defying trends for you in the future, but don't bet on it.


----------



## medicowallet (12 July 2011)

mazzatelli said:


> I'm very interested to hear from you why:
> 1) a non cash item (depreciation) requires money to cover it
> 2) overall depreciation would change (other than modifications to existing property)
> 
> Thank you




1. Because you are killing your asset to achieve this pseudo positive cashflow. If a true indication of maintenance was included in the assessment, there would not be positive cashflow in this example.

2. Because it eventually runs out, depending upon how old the property is, and as you say, modifications to the property (which in the example are very low indeed)

Perhaps you would like to offer an analysis on the figures yourself.

but the small amount to cover ALL outgoings and to maintain the property is not what I experience.


----------



## Tysonboss1 (12 July 2011)

medicowallet said:


> Happy to return
> 
> Oh, btw, I notice today that Italy might be in a bit of trouble, that America might take longer to come out of trouble, and as we clearly know, China is having inflation problems. We have a carbon tax on the way, and manufacturing and retail is struggling, with a government with no knowledge of how to spend (or not to spend money)
> 
> ?




This too shall pass.


----------



## medicowallet (12 July 2011)

Tysonboss1 said:


> This too shall pass.




Possibly,

however there is definitely a chance of GFC 2 with now an Australian govt in debt, a carbon tax on the way, and greens in the senate, and a weaker europe.

Could get interesting, and in this case, it is important to not have rose coloured glasses on (which I know you don't)


----------



## Tysonboss1 (12 July 2011)

Tysonboss1 said:


> This too shall pass.




It is said an Eastern monarch once charged his wise men to invent him a sentence, to be ever in view, and which should be true and appropriate in all times and situations.

They presented him the words: "And this, too, shall pass away."

How much it expresses! 

How chastening in the hour of pride!
How consoling in the depths of affliction!

When the king received his ring and read the inscription, his sorrows turned to joy and his joy to sorrows, and then both gave way to equanimity.


----------



## medicowallet (12 July 2011)

Tysonboss1 said:


> It is said an Eastern monarch once charged his wise men to invent him a sentence, to be ever in view, and which should be true and appropriate in all times and situations.
> 
> They presented him the words: "And this, too, shall pass away."
> 
> ...




And then bought the inert metal, physical gold, and added it into his investment portfolio.


----------



## Tysonboss1 (12 July 2011)

medicowallet said:


> And then bought the inert metal, physical gold, and added it into his investment portfolio.




I'll forgive him for that, Benjiman Grahams Body of intellectual work on investment was not available for another 1000years or so.

Is buying and holding gold Investing?

In Security Analysis, Benjiman Graham proposed a clear definition of investment that was distinguished from what he deemed speculation. It read,

 "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."

No doubt that Gold purchased outside of bubble conditions meets the first condition being safty of principle, But it fails the second test of generating an adequate return, you could say it actually creates a negative return due to storage costs.

So buying gold is not investing, it is speculating. Now there can be intelligent speculation just as there is intelligent investing, Whether buying gold at 100year highs is intelligent only time will tell. But it is not investing in the true sense of the word.


----------



## trainspotter (12 July 2011)

medicowallet said:


> Happy to return
> 
> Oh, btw, I notice today that Italy might be in a bit of trouble, that America might take longer to come out of trouble, and as we clearly know, China is having inflation problems. We have a carbon tax on the way, and manufacturing and retail is struggling, with a government with no knowledge of how to spend (or not to spend money)
> 
> ...




Good to have you back ..... how's the self medication going?

Italy in trouble, Portugal in trouble, Greece in trouble, Ireland in trouble, The whole Euro in trouble. Been going on for awhile this lot eh? Global macroeconomics have been in the toilet bowl for a loooong time now. 

America has not stopped printing money.

Gold may well stay steady and offer a light retreat due to the current economic climate.

I believe robots got tired of preaching to the converted. Can't say I blame him.



> I am also happy to decline your offer on checking out my portolio with respect to negative gearing. I own my properties. Sorry, but Mr conservative me does not see how overexposing myself to property at the moment is a good thing..




So sell the stuff before it is too late. Sell sell sell and buy back in when the property market tanks. This is what you are preaching to others or do you not have the conviction to backup the rhetoric?



> Have you sold any more properties recently??? Let me know when you do   I will be interested how far you ride the rollercoaster down, and who jumps off first. Was it 70% gearing iirc?  Doesn't take much of a fall to make that 90% or 100% gearing.... when is it when a bank starts to panic and presses the sell button?  Not sure myself.




Nope ....... Am looking for more industrial land ATM. Housing is soft around the edges.

Please explain how it could become 100% gearing? Are you suggesting that the market is going to fall 30%? So one of my houses is worth 500k at the moment, when do you believe it will be worth 350k then? Next week? Next month? Next year? Next decade?

You of all people as an esteemed property guru should know that the bank does not hit the panic button until the mortgage goes past 120 days in arrears. If the rents are paying the mortgage then why should I sell? Just LOL at this chestnut.



> "AINT GONNA HAPPEN" - can you please explain what you mean by this, exactly, so that I can use it in the future. I give you 3 options..
> 
> do you mean that house prices here won't fall?
> 
> ...




"AINT GONNA HAPPEN" was in reference to your statement that we are just like America. I asked you to go and read the property thread from front to back as to WHY we are not the Americas. This topic has been done to death and explained fully in very simple language for all to understand.

:horse:


----------



## medicowallet (12 July 2011)

trainspotter said:


> So sell the stuff before it is too late. Sell sell sell and buy back in when the property market tanks. This is what you are preaching to others or do you not have the conviction to backup the rhetoric?
> 
> 
> 
> ...




1. I do not want to pay CGT   , AND as I said before in this thread, to you most likely, I LIKE my properties and do not want to replace them with different ones.

2. You make assumptions that it is business as usual, and that your tennants are making money forever. I have seen many vacant businesses, over the years.

3. Are you suggesting it is impossible for individual properties to drop 30%?   Emmanuel Cassimatis thought it was impossible for the sharemarket to drop 40% too, look where that got him, and a lot of experienced investors.


Yes I am suggesting that price could drop substantially, but you know my position on this, as I have clearly stated this before, and, we have had almost this exact discussion before.

We are in an interesting position. You make more money (in percent terms) if prices rise, I lose less money (in percent terms) if prices fall or stagnate.

I am much happier to be in this position over the short to medium term thankyou very much, and even economists such as Saul agree with me at the moment (which worries me  )

FYI I never said that we are just like America, I was inferring that they thought it could never happen there too. Of course we are not EXACTLY the same as America, we are in fact only EXACTLY the same as Australia, ever.


----------



## trainspotter (12 July 2011)

medicowallet said:


> 1. I do not want to pay CGT   , AND as I said before in this thread, to you most likely, I LIKE my properties and do not want to replace them with different ones.
> 
> 2. You make assumptions that it is business as usual, and that your tennants are making money forever. I have seen many vacant businesses, over the years.
> 
> ...




1. CGT is only applicable if you purchased property AFTER Spetmeber 20th 1985. Surely you would have purchased them in some $2 company that is a loss making enterprise so therefore there is no CGT applicable? Classic mistake of property. Never fall in love with the real estate. It is a commodity. Sell it now. Buy another. It is business and not a love triangle.

2. My tenants are doing fine thanks. I veto them before they sign the lease.  I especially like the ones who pay 12 months in advance.

3. Property has already dropped 40% in some *CERTAIN *areas. I must have posted this possibilty over 100 times in this thread already. Do you buy shares that have high risk? Do you do any research prior to purchase? Do you understand that the purchase/risk reward ratio is similar? Property is the same.

Bygones. We have locked horns on our position in the market previously. I am happy and you are happy where we both are at.


----------



## medicowallet (12 July 2011)

trainspotter said:


> 1. CGT is only applicable if you purchased property AFTER Spetmeber 20th 1985. Surely you would have purchased them in some $2 company that is a loss making enterprise so therefore there is no CGT applicable? Classic mistake of property. Never fall in love with the real estate. It is a commodity. Sell it now. Buy another. It is business and not a love triangle.




Oh silly me, and here I was thinking that capital gains could only be offset by capital losses.

I guess I'll have to revisit that one.


And even the blue chips dropped significantly during what will probably be known some day as GFC 1.


----------



## trainspotter (12 July 2011)

medicowallet said:


> Oh silly me, and here I was thinking that capital gains could only be offset by capital losses.
> 
> I guess I'll have to revisit that one.
> 
> ...




So you are saying you have never made a loss? Not even set up a company that takes a hit for the team come tax time? Man you need to talk to your accountants. 

GFC #2 is on the cusp my learned adversary. Late October early November according to the entrails of a recently slain goat. The tide is coming in very quickly for those that have buried their heads in the sand as well as the unfortuante few who have leveraged their way into property.

But if you keep waiting and property falls as you say it will then when it comes time to sell there will be no capital gain old bean !


----------



## medicowallet (12 July 2011)

trainspotter said:


> So you are saying you have never made a loss? Not even set up a company that takes a hit for the team come tax time? Man you need to talk to your accountants.
> 
> GFC #2 is on the cusp my learned adversary. Late October early November according to the entrails of a recently slain goat. The tide is coming in very quickly for those that have buried their heads in the sand as well as the unfortuante few who have leveraged their way into property.
> 
> But if you keep waiting and property falls as you say it will then when it comes time to sell there will be no capital gain old bean !




I am limited in the way I can structure my affairs, for various reasons. I even have to my regret partnerships in place, which, I can assure you are the least favourable of entities I have ever been involved in.

Also, my accountant is like some of my properties, aged, but one I'd like to keep. I think he does a good job 

See, I don't mind if GFC comes and drops property (I may even buy more, but probably not). I can live with it, unfortunately as you say, many cannot.

I have made plenty of losses, but have no current CGT loss to offset (recently took care of that)


----------



## trainspotter (12 July 2011)

medicowallet said:


> I am limited in the way I can structure my affairs, for various reasons. I even have to my regret partnerships in place, which, I can assure you are the least favourable of entities I have ever been involved in.
> 
> Also, my accountant is like some of my properties, aged, but one I'd like to keep. I think he does a good job
> 
> ...




AHA ! See in your position you are atop a peak. Many are not. They still have a long way to go pardner.

I can relate on the partnership imbibement. I am currenlty involved in several property trusts as well as a strata company. Each individual has a different style or goal. It does not make them right but it sure makes them loud. It is a way of offsetting aproachable losses (if any) as well as spreading debt burden. Risk is minimal but it is not worth the aggravation. On this matter I concur absolutely.

Property will fall in OZ. Has done so already. But I believe it is not the harbringer of doom style but more of a comfortable fart on the couch compared to a complete loss of bowel movement on the front doorstep. 3 - 5 per cent was my call "ON AVERAGE" 12 months ago. Not enough to rattle the penny tin but enough to realise that the commodity has chinks in the armour. 

No doubt it will be in the front line in the coming months with some sabre rattling yet to come from banks and their protestations in regard to funding costs irrespetive of what the RBA requires. 

All of the indicators you have mentioned will also bring factors into play. The game has got harder but it is still worth playing.


----------



## james0909 (13 July 2011)

satanoperca said:


> Good Evening All,
> 
> Was also out on the bike with my little man on the back riding around the docklands, beautiful evening. New buildings everywhere.
> 
> ...




Thats very interesting!


----------



## medicowallet (15 July 2011)

Prices in Melbourne tipped to fall in yesterday's age.

Gold going up last couple of days.


Lollipops and sunshine with a golden lining.

Paradise

MW


----------



## kincella (15 July 2011)

Interest rates will go down sooner rather than later...
only mid July and awful retail figures coming out
the rest of the June qtr figures will come by the end of the month...
RBA and banks will start pressing the  panic buttons  between now and then
2008 revisited again....not sure a drop of 3% is on the cards, but a drop of 1-2% is for sure
the economy was already stalled, but the stupid goose kept chanting, thumpng his chest, how he single handedly had trounced the GFC...stevens followed with a rate rise, and the banks took it a step further, raising above...
so its not only stalled big time...it is crushed, has been since 2008

all those chanting house prices to fall, at the same time rate increases to go thru the roof...unbelievable scenario...pigs will fly ...cannot have both those situations'

as for theage....a very left labor biased rag....they have gone on for a year about house prices crashing...obviously a faulty crystal ball there...'and still they have no evidence...nor proof....
I know exactly what happens...what the trend is, in situations like this....
people knuckle down, tighten the belt, twiddle their thumbs and sit it out.....

a change of govnut, will produce a total change in confidence....then watch a liberal govt bring back the Howard style confidence this country knew...

I think most of the 'housecrash group' are the day traders, how to be an instant millionaire group think tank...there is no longer term thoughts, mind set...for them..
cheers


----------



## medicowallet (15 July 2011)

kincella said:


> Interest rates will go down sooner rather than later...
> only mid July and awful retail figures coming out
> the rest of the June qtr figures will come by the end of the month...
> RBA and banks will start pressing the  panic buttons  between now and then
> ...




Welcome back..

Yes your post is very similar to what was in the news today.

Interest rates are decreasing, I wonder if there is any petrol left in the property tank.


----------



## wayneL (15 July 2011)

kincella said:


> I know exactly what happens...what the trend is, in situations like this....
> people knuckle down, tighten the belt, twiddle their thumbs and sit it out.....




'Cept for those that can't.


----------



## trainspotter (15 July 2011)

Job losses are next. Slight downturn in micro economics. Retailers are scared. Term Deposits start to rise. Cash is King. Interest rates are falling. Mortgagee possessions are rising. Ahhhhhhhhh ...... I smell money, the circle of life has turned again.Welcome to the world of property ladeeeeeeeeeez and generalmen. 

I just love this thread.


----------



## trainspotter (15 July 2011)

medicowallet said:


> Welcome back..
> 
> Yes your post is very similar to what was in the news today.
> 
> *Interest rates are decreasing, I wonder if there is any petrol left in the property tank.*




Whaaaaaaaaaaaaaaaaaa ????????? Is this why banks have been offering 10 year loans at 8.14% ....... but but but everybody was sure interest rates were going to kill the market ALA Steven Keen style. So this is not an interest rate bubble now? Is it a debt bubble? Hang on ...... if rates go down then it is more affordable.

Be very wary over the next few months as to what job advertisements are doing. If this starts to decline then the fly is in the ointment. This is the kicker. JOBS.


----------



## medicowallet (15 July 2011)

trainspotter said:


> Whaaaaaaaaaaaaaaaaaa ????????? Is this why banks have been offering 10 year loans at 8.14% ....... but but but everybody was sure interest rates were going to kill the market ALA Steven Keen style. So this is not an interest rate bubble now? Is it a debt bubble? Hang on ...... if rates go down then it is more affordable.
> 
> Be very wary over the next few months as to what job advertisements are doing. If this starts to decline then the fly is in the ointment. This is the kicker. JOBS.




Are you making the assumption that going forward, our banks are going to have access to cheap funding?

As I said in the prior posts, there may be a perfect storm brewing. On top of this is Obama having troubles getting extra debt.

Times are interesting, Robots is even having Coffee with Mr Burns.

I agree, our levels of happiness on the employment front are under pressure. 

No need to worry, some naive posters believe that rents rise in a compound fashion every year, and have done so forever.... well in their time since weaning a couple of years ago it might have.

I wonder how much new investors will enjoy their negatively geared property if they lose their job and they have to sell.

Have you sold yet?


----------



## trainspotter (16 July 2011)

medicowallet said:


> Are you making the assumption that going forward, our banks are going to have access to cheap funding?
> 
> As I said in the prior posts, there may be a perfect storm brewing. On top of this is Obama having troubles getting extra debt.
> 
> ...




Negative, Ghost Rider, the pattern is full. This is not what I intimated at all. I suggested that the people who were squawking about interest rates hitting 17% ALA Keating era were soundly misguided. I merely pointed out that banks were availing themselves at slightly above 8% for a ten year fixed period. Hardly the same at all.

Not sure on the perfect storm front though. Obama has debt, Euro has debt, China has debt ....... it will be only a matter of time.  The politics of Obama to get his will imposed has a significant bearing on our outcome. He is playing a very small card with a pack that has no Aces left IMO. The people he is agin seemingly do not care for his fiscal response and neither does the populace of the USA anymore.

Ahhhhhhhh I do miss those lazy afternoons on the front verandah with Mr Burns and robots basking in the afterglow of a property settlement. The times we had. I feel like it was only yesterday ......... wait a minute ....... it was. Property is a long term environment for those who understand the ruse of the market. 

The future is for the young MW. A donkey only learns after the first kick.

Me sold??? Nahhhhhhhhhhh still looking for a decent doctor to get me a frontal lobotomy so I can keep up with this property thread.  Got any commercial warehouse stuff?


----------



## Tysonboss1 (16 July 2011)

Junior said:


> A lot of fools have made a lot of money over the past 10 years investing in gold.




lets take the chart back a few years and see what comparisons can be gleaned.




So yes gold is a boom and bust commodity, and all those years without income. feel sorry for anyone that bought as a hedge against inflation in the late 70's.


----------



## explod (16 July 2011)

Tysonboss1 said:


> lets take the chart back a few years and see what comparisons can be gleaned.
> 
> 
> 
> ...




But many investors in at 200 to 400 would have had plenty of opportunities post the high to unload at 600 in 1980, and bet many did.

Just like some of the smart money over the last eighten months selling out of some of the best properties here in Toorak, Victoria.

Very good investors are also good traders.


----------



## Aussiejeff (16 July 2011)

Tysonboss1 said:


> lets take the chart back a few years and see what comparisons can be gleaned.
> 
> 
> 
> ...




Between '79 & '99 new, much more efficient mining technologies & methods as well as discoveries of massive additional gold reserves helped keep prices flat. 

Maybe the rate of new reserves discovery & gold production is declining somewhat of late at the same time the voracious appetites of China & India for the glittering prize keep growing?

Looks like a different scenario to me than gold demand 15-20 years back....


----------



## robots (16 July 2011)

hello,

oh gidday brothers, just back from doing 500 hrs of work this week and on the bus home there was this flyer on everyone's seat:

http://www.reiv.com.au/~/link.aspx?_id=4FF20028A7DB491F9728F6DB37B82EFD&_z=z

amazing, well another great week, called into festival hall on wednesday for the mass meeting, some great speeches from members of the community

oh well, take it easy brothers and enjoy the rest of the weekend

thankyou
professor robots


----------



## wayneL (16 July 2011)

robots said:


> hello,
> 
> oh gidday brothers, just back from doing 500 hrs of work this week and on the bus home there was this flyer on everyone's seat:
> 
> ...




Jayzuz we thought you had been murdered by a Socialist activist. 

Welcome back to the twilight zone.


----------



## Judd (17 July 2011)

It does seem all lovey dovey doesn't it.  Then again others have a different viewpoint.

www.refindhouseprices.com


----------



## explod (17 July 2011)

wayneL said:


> Jayzuz we thought you had been murdered by a Socialist activist.
> 
> Welcome back to the twilight zone.




And LAZARUZ, 

been trying to evade the dobicide squad for months.


----------



## Uncle Festivus (18 July 2011)

Just goes to show, that without the lollypops handed out by the government there is very little intrinsic sunshine to be had.........?



> Loan Market recently claimed a 10% spike in enquiries from first home buyers in June. However, a study by comparison site RateCity has indicated 60,000 fewer first home buyers entered the property market in the 12 months to May 2011 than in the 12 months to May 2010. RateCity CEO Damian Smith said ABS figures showed around 7,500 first time buyers per month active in the market in the 12 months to May. This compares with around 12,500 per month in the previous corresponding period. Smith claimed that, with property prices largely flat over the past year, interest rate rises and the winding up of the FHOG Boost were behind the drop-off.
> "Despite the Reserve Bank boards’ decision to keep rates steady for the past seven meetings, it’s clear that prospective buyers are still wary about jumping into debt because their monthly repayments are going to be much, much higher than they were in late 2009," Smith said.




http://www.brokernews.com.au/news/breaking-news/market-sees-60000-fewer-fhbs/116515

BER comes to an end, what next?



> Further evidence of the tough trading conditions for the real-estate sector has been revealed in the 75% jump in the number of construction businesses whose risk assessment was downgraded during the March quarter 2011.
> One in seven (14%) construction firms was downgraded in the March 2011 quarter, compared with 8% a year ago, according to the latest _Dun & Bradstreet Corporate Health Watch report_.




And the snake oilers go back to selling cars I presume?



> The figures come on the back of Real Estate Institute of Australia president David Airey claiming in May that up to 10,000 real-estate agents have quit the industry in the past year, reducing total numbers from 60,000 to 50,000.


----------



## Tysonboss1 (18 July 2011)

explod said:


> But many investors in at 200 to 400 would have had plenty of opportunities post the high to unload at 600 in 1980, and bet many did.
> 
> Just like some of the smart money over the last eighten months selling out of some of the best properties here in Toorak, Victoria.
> 
> Very good investors are also good traders.




So your saying the smart money should be exiting gold.


----------



## medicowallet (18 July 2011)

Tysonboss1 said:


> So your saying the smart money should be exiting gold.




Have you?


----------



## Tysonboss1 (18 July 2011)

medicowallet said:


> Have you?




The only gold I have every bought hangs around my partners neck or on her fingers. :

and I guess we are holding that, So I mustn't be the "Smart Money" everyone speaks of.


----------



## wayneL (18 July 2011)

Tysonboss1 said:


> The only gold I have every bought hangs around my partners neck or on her fingers. :
> 
> and I guess we are holding that, So I mustn't be the "Smart Money" everyone speaks of.




What you need is some Krugerrands. The smart money is buying right now and I have some for sale. 

They are fantastic pose value for which I will only ask a 20% premium.


----------



## explod (18 July 2011)

Tysonboss1 said:


> So your saying the smart money should be exiting gold.




Absolutely, silver is the real grunt for your money now.


----------



## MissMoneyPenny (22 July 2011)

Well it is now official that houses are over priced and about to crash for it was reported on Today Tonight. Now even the general population has no excuse not to take notice. Too bad it is too late to do anything about it now.....


----------



## cynic (22 July 2011)

MissMoneyPenny said:


> Well it is now official that houses are over priced and about to crash for it was reported on Today Tonight. Now even the general population has no excuse not to take notice. Too bad it is too late to do anything about it now.....




"Today Tonight" you say! 

Well coming from such a premium quality media source with a long standing reputation for complete, accurate and impartial reporting of facts - it must be true then!


----------



## cutz (22 July 2011)

cynic said:


> "Today Tonight" you say!
> 
> Well coming from such a premium quality media source with a long standing reputation for complete, accurate and impartial reporting of facts - it must be true then!




Yep,

Now awaiting Today Tonight to ring the bell at the bottom so I can take the plunge into NG'd IP.


----------



## Glen48 (22 July 2011)

ANZ? I think have put on 100 new staff members to handle bad loans I assume working in some sort of call center herein Manila, according to Blomberg.

So if ANZ need this we assume the other big three too big to fail as long as the taxpayer supports them banks must being the same position???


----------



## CamKawa (24 July 2011)

Oh

Surge in home repossessions


400 repossession writs issued in two months
Home owners face eviction if they can't pay
Record decline in property prices


----------



## Starcraftmazter (24 July 2011)

I lost the figures which showed which banks have the most offshore borrowings, does anyone know where to get it or does anyone have it?

Thanks.


----------



## cutz (24 July 2011)

CamKawa said:


> Oh
> 
> 
> 400 repossession writs issued in two months
> ...





Property bulls disappearing from the ASF thread in record numbers.


----------



## jet328 (24 July 2011)

CamKawa said:


> 400 repossession writs issued in two months
> Home owners face eviction if they can't pay
> Record decline in property prices




I'm no property bull, but say there was 2,000,000 properties in Victoria, thats 0.01% per month, thats less than peanuts, I'm actually suprised its not higher just purely related to illness. In fact, even in 'good times' it seems incredibly low.


----------



## Glen48 (24 July 2011)

Banks in USA now have  problem maintain foreclosed house's as the council are now issuing fines for property in a bad state of repair and the bank are refusing to pay fines which will be another burden on the taxpayer.
IF The market ever returns all these homes will be beyond repair and worthless.


----------



## satanoperca (25 July 2011)

> MELBOURNE'S tight rental market is showing signs of easing, with vacancy rates for all metropolitan areas rising above 2 per cent for the first time in six years. An apartment boom in the city - 65 per cent of all projects launched since 2008 are under construction - has helped boost the CBD vacancy rate to 2.5 per cent.




No shortage in Melbourne at the moment. How quickly things change.

http://theage.domain.com.au/real-estate-news/vacancy-rise-eases-market-20110720-1hoxy.html


----------



## CamKawa (25 July 2011)

satanoperca said:


> No shortage in Melbourne at the moment. How quickly things change.
> 
> http://theage.domain.com.au/real-estate-news/vacancy-rise-eases-market-20110720-1hoxy.html



Yes I know. It's interesting that this current sell off sees an increase in both the total number of houses for sale and an increase in vacant rental properties. During 2008 when the total number of sales increased, rentals tightened slightly.


----------



## trainspotter (25 July 2011)

cutz said:


> Property bulls disappearing from the ASF thread in record numbers.




[*] Property bears continue on growling the same old sh1te

Ummmmmmm let's look at this with an observant eye rather than a headline act shall we?



> MORE than 400 repossession writs have been served on home buyers in the past two months.
> 
> They are the highest figures for almost two years, more than double the number of repossession writs filed in the Supreme Court of Victoria six months ago.
> 
> ...




So in July 2009 231 writs were issued in 1 month? Extrapolate that out times two and we have 462 as a result. SO what has changed between 2009 and 2011?

It would appear when you actually read the article further it states thusly:-



> Between July 2007 and June 2009 the number of monthly repossession writs filed in the Supreme Court *dipped below 200 only twice*.




So once again if we use our brain and comprehend what has been written it is an AVERAGE of 200 per month anyhow since 2007 through to 2009. The article says so.

So therefore with the powers of deduction one could assume a mean average of around 200 per month at the worst end of the scale (which is about normal) or one could assume that nothing has actually changed at all in 4 years.

WOWEEEEEEEEEEEEE that is some good journalism there. Nothing to see here. Move on peoples.


----------



## trainspotter (25 July 2011)

What is this? Clearance rates at auction on the rise? It can't be !!!! But but but the property bears were gloating that property is ........ Oh what's the use.



> SYDNEY realtors defied the gloomy winter weather, with auction clearance rates hitting a 10-month high on the weekend.
> 
> Home-buyers braved Saturday's rain, spending $117.7 million on 148 properties across the city, pushing up the clearance rate to 63.5 per cent from 52.6 per cent the week before. It was the highest rate since September, The Australian reports.
> 
> ...




Read more: http://www.news.com.au/money/proper...ll/story-e6frfmd0-1226101104435#ixzz1T6yb2q9m


----------



## medicowallet (25 July 2011)

trainspotter said:


> What is this? Clearance rates at auction on the rise? It can't be !!!! But but but the property bears were gloating that property is ........ Oh what's the use.
> 
> 
> 
> Read more: http://www.news.com.au/money/proper...ll/story-e6frfmd0-1226101104435#ixzz1T6yb2q9m




Your trend is tremendous!

If it falls next week by a couple of percent, will you be a bear then?


----------



## trainspotter (25 July 2011)

medicowallet said:


> Your trend is tremendous!
> 
> If it falls next week by a couple of percent, will you be a bear then?




*GROWL* yeppers. It was in response to the stooopid report as to how there have been 400 writs in 2 months for delinquent mortgages. (This has been the average in VIC for over 4 years now) Both items of so called news are frivolous and meaningless at best. 

But but but interest rates are going to 18% and we are a massive Ponzi scheme they screamed. Banks are lending up to 15 years at 8.33% fixed. Like that is gonna happen eh?

http://www.commbank.com.au/personal/home-loans/fixed-rate/rates-fees/

But but but housing is gonna fall just like America and probably worse they belted out in tune. Guess again. March 2010 to March 2011 was a massive 0.2% drop.

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0 

But but but Auction Clearance Rates have dropped and Enzo is reporting/non reporting I dunno ... he is fudging the figures they squealed.

http://macrobusiness.com.au/2011/06/rpdata-index/



> The monthly RP Data – Rismark House Price Index was released this morning for May with the raw data showing a fall of 0.5% after last month’s fall of 0.1% was revised to -0.3%. In seasonal adjusted terms the fall in May was 0.3% after last months 0.3% was revised to a fall of 0.4%.




But but but banks are offering us all easy credit and I can get a gazillion dollar home loan on 100% borrowing and they will compound the LMI and I only earn $500 a week selling **** on ebay.



> The RBA has just released its Financial Aggregates for May. It is more of the same with credit growth remaining subdued, *with housing credit growing at the slowest rate in 35 years of current data* and at a three month annualised pace of just 5.2%.




http://macrobusiness.com.au/2011/06/credit-growth-remains-subdued/

Need I go on? :


----------



## medicowallet (25 July 2011)

trainspotter said:


> *GROWL* yeppers. It was in response to the stooopid report as to how there have been 400 writs in 2 months for delinquent mortgages. (This has been the average in VIC for over 4 years now) Both items of so called news are frivolous and meaningless at best.
> 
> But but but interest rates are going to 18% and we are a massive Ponzi scheme they screamed. Banks are lending up to 15 years at 8.33% fixed. Like that is gonna happen eh?
> 
> ...




Sounds like the desperate excuses that stock brokers were peddling before the stock market did it's second and third run of tanking during GFC1.

Retail in this country is under enormous pressure, and, as borrowing for consumption and pumping into over-inflated housing bites, we could be in for some nasty surprises.

Do you not get a feeling of impending trouble over the next 6 months, with retail stores closing, and loss of confidence in government?


----------



## trainspotter (25 July 2011)

medicowallet said:


> Sounds like the desperate excuses that stock brokers were peddling before the stock market did it's second and third run of tanking during GFC1.
> 
> Retail in this country is under enormous pressure, and, as borrowing for consumption and pumping into over-inflated housing bites, we could be in for some nasty surprises.
> 
> Do you not get a feeling of impending trouble over the next 6 months, with retail stores closing, and loss of confidence in government?




Not at all. It has been much worse than this previously and we somehow managed to get through. Jobs is the key. Have a look at what our employment rate is. Once this starts skyrocketing towards double digits then it will be time to get out of Dodge.


----------



## FxTrader (25 July 2011)

trainspotter said:


> The RBA has just released its Financial Aggregates for May. It is more of the same with credit growth remaining subdued, with housing credit growing at the slowest rate in 35 years of current data and at a three month annualised pace of just 5.2%.




But but but is it any wonder since debt laden Australian households are maxed out...

















> housing is gonna fall just like America and probably worse they belted out in tune. Guess again. March 2010 to March 2011 was a massive 0.2% drop.




You must be right, we have nothing in common with the US situation.  But but but then again this graph must be wrong then...







> But but but banks are offering us all easy credit and I can get a gazillion dollar home loan on 100% borrowing




But but but some institutions are offering 95-100% loans and easy to find them as well...

Here's just a few of many links for you...
http://www.rpi.com.au/
http://www.homeloanexperts.com.au/investment-loans/

_"Investment guarantor loan: If your parents can guarantee your loan using their property as security. Then you can borrow 105% of the purchase price and pay no LMI. You can read more about this on our family guarantee page."_


----------



## trainspotter (26 July 2011)

LOL FX Trader. So according to the graphs you have supplied that means that because Americans drive cars and we drive cars we are the same? WRONG ... they drive on the OTHER side of the road. The banks and the financial systems are totally different between OZ and USA. But you know this right? You have been there first hand and found out for yourself right? You do know that PPOR's in the states that the repayments are tax deductible and capital gains is applicable and 110% ratchet loans are the norm right? We don't have that here. (you knew this as well I am sure)

Bank dollar value loans have gone up but I notice you did not provide the intrinsic value of the real estate portfolio it represents? Can't have one without the other old bean.

But but but in 2008 your graph says we were spending 72% of our wages on a mortgage. Hardly likely as banks will not lend past 30% as a DSR and also takes into account uncommited income as well as a raft of other economic factors. But you knew this as well didn't you?

LOL 95% LVR loans have been around for over 20 years now. Look at the carnage they have caused in the market place. Oh BTW .... guarantor loans have been around for longer. You will find that they are extremely hard to get now as you have to toddle off to the solicitor who will recommend you NOT sign your life away in a guarantor element. But but but you know all of this because you deal with property all the time.

Which is probably why home lending is at it's lowest point in 35 years due to the tightening of credit by the banks. Many people still want to borrow to buy a house but not many banks are lending the money to do so.


----------



## kincella (26 July 2011)

I hear there are some very very cheap houses on offer near Brissy, not the ones that were flooded, no they are supposed to be dirt cheap, its the ones not affected by the floods...apparently the insurance companies are now charging homeowners $5000 pa for house insurance, compared to $1000 before the floods...

Or you can go a bit further out, where new hope mining has stacks of coal, the size of the opera house, littered along the side of the roads, so everytime there is a breeze the locals get covered in coal dust....those same people would love to sell and move on, but no one wants to live there anymore...

and if you are in favour of the carbon tax, expect your energy bill to go thru the roof, whilst they fiddle around with wind farms, or some other obscure expensive method to make energy...
am hearing rubbish about turning off the shower, the tv and the lights, and reading a book, whilst cuddling your pet to keep warm, standing outside in the sun....and other ridiculous options,,,,an advertising program run by labor I believe....

has the world gone mad, or is it just the current political morons in charge in Australia..

will everyone opt to live in a cave instead, in this brave new world....

so interest rates are going down, not up, house prices have slowed, no overall drop of 50%+ in the main capital cities, people still enjoying living in their comfortable houses, twiddling their thumbs.....or spending on renovating the house, instead of moving around...
its only 4 years since the GFC hit......and none of the armegeddon type predictions have come to pass....
might be the faulty crystal balls, some have been peering into, to predict the future
the biggest problem for most people now, is the damage done by the greens labor team, and what they have in store for you.....
I expect to come back and visit in another 2-3 years, and still read the same theme...from the global house price crash group.....
I wonder if same people who sold out in 2000, expecting to buy back later for half the price, are still renting....and waiting
cheers


----------



## indeck (26 July 2011)

i'll just leave this here 


Go Gecko real estate group calls in administrators
http://www.heraldsun.com.au/news/br...n-administrators/story-e6frf7ko-1226098767854


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## Aussiejeff (26 July 2011)

FxTrader said:


> <snip>
> _"Investment guarantor loan: If your parents can guarantee your loan using their property as security. Then you can borrow 105% of the purchase price and pay no LMI. You can read more about this on our family guarantee page."_




LOL. ".... read more about this on our _family guarantee_ page".

They might have put it another way... 

"Your parents are GUARANTEED to lose their property if you default on any payments."

Come in suckers-s-s-s....


----------



## cynic (26 July 2011)

trainspotter said:


> But but but in 2008 your graph says we were spending 72% of our wages on a mortgage. Hardly likely as banks will not lend past 30% as a DSR and also takes into account uncommited income as well as a raft of other economic factors. But you knew this as well didn't you?




But but but in 2007 this little alien-human hybrid did negotiate refinancing of an IP with repayments above 100% of gross income and no guarantor required. All of this was achieved via wonderful products called "no doc" loans (offered to me by no less than two Australian Banks - including one of the major 4). 
Bearing in mind that mortgages are generally written up as "debts for life" (ie. 20+ years duration) I could readily accept the plausibility of the graph in question (even if the banks did resume more conservative lending policies as early as 2008). 
In my case the resultant mortgage was not discharged until settlement on the sale of the property in December 2009. So I presume that I was a part of the statistics that contributed to that illuminating graph.



trainspotter said:


> Not at all. It has been much worse than this previously and we somehow managed to get through. Jobs is the key. Have a look at what our employment rate is. Once this starts skyrocketing towards double digits then it will be time to get out of Dodge.




Do you know what the definition of "unemployment" is for the purpose of the calculations behind this widely publicised 5% statistic?

I read somewhere recently that :

"Australia adopts the standard international definition of unemployment: people are unemployed if they did not work for at least one (paid) hour in the previous week, were actively seeking work and were able to accept a job in the next week if it were available."

I also suspect that engagement in many of the obligatory training and mutual obligation programmes place the welfare recipient outside of this "unemployment" definition for the duration of their participation in said programmes. 

Do your statistics have anything to say about the underemployed? (I have heard that these poor souls are now in the double digits, I'm probably a little of topic here, but perhaps you could confirm.)


----------



## trainspotter (26 July 2011)

cynic said:


> But but but in 2007 this little alien-human hybrid did negotiate refinancing of an IP with repayments above 100% of gross income and no guarantor required. All of this was achieved via wonderful products called "no doc" loans (offered to me by no less than two Australian Banks - including one of the major 4).
> Bearing in mind that mortgages are generally written up as "debts for life" (ie. 20+ years duration) I could readily accept the plausibility of the graph in question (even if the banks did resume more conservative lending policies as early as 2008).
> In my case the resultant mortgage was not discharged until settlement on the sale of the property in December 2009. So I presume that I was a part of the statistics that contributed to that illuminating graph.




Well my little alien - human hybrid believer that God is a woman kind of person ...... 
*YOU LIED ON YOUR APPLICATION FORM. *
With a "No Doc" loan you have to advise that you have the earning capacity to repay the debt either by a personal guarantee by yourself or by a letter from your accountant evidencing same. So therefore you have committed an act of fraud against a banking institution. But maybe that is allowed on your planet? With a "No Doc" loan you must have 60% minimum equity in the property as well. The bank would also be performing a credit check on you to see the extent of your borrowings as well as taking an SP from you to obtain an opinion of your credit worthiness.  You know when you signed the application form, then you signed the Letter Of Offer, then you signed the Mortgage Documents you fraudulently obtained money. Tsk Tsk. I wonder what Woman God will have to say about this act of deception?

Unless you had rental income that you have not advised of in your post that was assisting in covering debt. Banks will allow 60% of rental income for serviceability equations. Plausible.



> Do you know what the definition of "unemployment" is for the purpose of the calculations behind this widely publicised 5% statistic?
> 
> I read somewhere recently that :
> 
> ...




DYOR. :topic


----------



## trainspotter (26 July 2011)

indeck said:


> i'll just leave this here
> 
> 
> Go Gecko real estate group calls in administrators
> http://www.heraldsun.com.au/news/br...n-administrators/story-e6frf7ko-1226098767854




So mismanagement is not taking the blame but the property slump is? Good one.


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## satanoperca (26 July 2011)

TH, I think that you will find that many Low Doc loans were granted based on fraudulent information provided by the applicant. I know of several people who were encouraged by mortgage brokers to lie to get the loan.
Even myself was encourage by a mortgage broker to stretch the truth in order to obtain a lot larger amount of debt than I felt comfortable with, so I did not proceed with that mortgage broker.
The question is how many loans have been provided on incorrect information?

Cheers


----------



## trainspotter (26 July 2011)

satanoperca said:


> TH, I think that you will find that many Low Doc loans were granted based on fraudulent information provided by the applicant. I know of several people who were encouraged by mortgage brokers to lie to get the loan.
> Even myself was encourage by a mortgage broker to stretch the truth in order to obtain a lot larger amount of debt than I felt comfortable with, so I did not proceed with that mortgage broker.
> The question is how many loans have been provided on incorrect information?
> 
> Cheers




Hey satanoperca. Then the applicant is in need of the full force of the penalties provided by the banking system IMO. This is why they have terms and conditions as well as the UCCC. If the customer has lied on the application (income and statement of position as well as debts) as well as signed the Letter of Offer from the banks as well as authirised a mortgage document and knowingly lied to obtain credit fraudulently then I have no mercy for them.

Lo Doc Loans make up a very small portion of bank lending so exposure would be minimal due to the large equity required to be eligible to receive one in the first place.

How many loans have been provided on incorrect information? Well with what I have seen from the banks lending criteria they even want to know what colour your jocks are before, during and after the interview. They actually do check their paperwork now as the ATO has turned ALL the banks into spies for them. They must report all amounts of borrowings to the Guvmint. Great eh !

A mortgage broker asked you to stretch the truth to obtain a larger amount of debt? Surprise surprise. They get paid on the amount that you borrow. The more they sell the more they eat/obtain commission. Why would you bother using one? If your affairs are in order then go directly to the bank.


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## FxTrader (26 July 2011)

trainspotter said:


> ... The banks and the financial systems are totally different between OZ and USA. But you know this right? You have been there first hand and found out for yourself right? You do know that PPOR's in the states that the repayments are tax deductible and capital gains is applicable and 110% ratchet loans are the norm right? We don't have that here. (you knew this as well I am sure)




Yep, and since I lived in the U.S. for 35 years, have relatives there and still follow events closely there I bet I know far more about the U.S. housing and lending/banking situation than you do.  But there are worrisome parallels that you and other property bulls casually dismiss on the basis that Australia is different, special, unique, immune etc. to any sharp corrections in the residential property market, afforadablity and debt levels mean nothing in Australia, just don't apply here (unlike everywhere else in the world, LOL).

While the lending practices here are not as predatory or corrupt as was the case in the U.S., the debt situation and bank funded upward spike in house prices have similarities...












> Bank dollar value loans have gone up but I notice you did not provide the intrinsic value of the real estate portfolio it represents? Can't have one without the other old bean.




Intrinsic value??? Property pricing is mostly a confidence game (but you knew that), only IP investors try and divine value (to them anyway) on the basis of rental return.  Property valuers (best guess estimaters) use recent sale prices as a major factor in their valuation calculations.  But as that Buffetoholic Tyson will tell you price can't be used to calculate value.



> But but but in 2008 your graph says we were spending 72% of our wages on a mortgage. Hardly likely as banks will not lend past 30% as a DSR and also takes into account uncommited income as well as a raft of other economic factors. But you knew this as well didn't you?




Not paying close attention here are you TS.  Keen's graph depicts mortgage payments as a percentage of *average wages*, not the individual lending critera used by banks for loan qualification.



> Which is probably why home lending is at it's lowest point in 35 years due to the tightening of credit by the banks. Many people still want to borrow to buy a house but not many banks are lending the money to do so.




Retail banks make money by lending it out and through fees.  They answer to their shareholders and tight credit and reduced lending hurts bottom line profit.  They have been instrumental in creating and fueling the property price ponzi bubble and they certainly don't want to prick it.  A more likely explanation for slower lending is overstretched borrowers.  The Savings rate in Australia is increasing as households continue to try and reduce debt, focus on essentials and curtail spending.


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## trainspotter (26 July 2011)

AHA ! Another disciple of Keen and his wondrous graphs. This is the same guy who reckoned that property prices were to drop by 40% and sold his home? The same guy who walked to Kosciusko? Dead set legend this guy. 

Property pricing is a confidence game? Since when? So the system that we have in place with the Valuers Generals Department, Land Titles Office, Lenders Mortgage Insurance, Bank practices, Australian Institite of Property Valuers is for nought?

Yes yes yes the graphs are similar. That is where the trends stop. We do not have the predatory practices of Fannie Mae and Freddie Mac scalping heads with ratchet loans, graduated loan repaymemts and floating rate mortgages. We do not have anywhere near the amount of finance lending to developers that created whole suburbs without one buyer. We do it different here in Australia. The exposure is minimal. Yes yes yes there are some dodgy and isolated people in the industry selling house and land packages. Always has been.

Average income in Australia is $66,500. Average housing loan is $284,500. This equates to 4.27819 times income ratio. Average LVR is around 64% DYOR 

I would love to know where Keen gets his hysterical info from, afterall he has predicted five of the last two gloabl financial crises


----------



## medicowallet (26 July 2011)

trainspotter said:


> Average income in Australia is $66,500. Average housing loan is $284,500. This equates to 4.27819 times income ratio. Average LVR is around 64% DYOR




you cannot do that so easily.

It fails to appreciate that average income of an Australian does not equal the average income of a person with a loan, nor does the average loan figure provided represent the average loan that is held by someone of the average income for the loan.

Therefore mortgage stress is going to be real. Try explaining your figures to people in retail jobs who have lost them, had hours cut drastically or are in fear of losing their job.


----------



## trainspotter (26 July 2011)

medicowallet said:


> you cannot do that so easily.
> 
> It fails to appreciate that average income of an Australian does not equal the average income of a person with a loan, nor does the average loan figure provided represent the average loan that is held by someone of the average income for the loan.
> 
> Therefore mortgage stress is going to be real. Try explaining your figures to people in retail jobs who have lost them, had hours cut drastically or are in fear of losing their job.




But but but FX Trader started it with his "average incomes" graph from Steven Keen !

Sure there are going to be people on higher incomes as well MW  

Maybe their debt ratio is higher because they can afford it 

If you are on the "average" wage of $66,500 and you have no other commitments then you can boorow approximately $403,00 over a 30 year period at P&I. PLUS deposit.

We all cannot live in friggin McMansions on the canals MW. So therfore the "average" mortgage is about right then.

Ummmmmm what people have been sacked in retail MW? Last time I looked they were sacked for planking on the job. Sure thing retail is doing it tough but I do not see the headlines screaming that Myer and David Jones are sacking 300 workers? 

You are too late MW ..... mortgage stress is real and is happening now. I must have said this about 20 times already. IN CERTAIN AREAS. Whether it be the demographic of the 95% LVR kiddies who have lost the second job cause she is pregnant or he has gone out and bought the flash new car to go with the McMansion and over extended themselves ....... or whether it be the ones who got sucked into a house and land package on the thinnest of margins in a crap area (think Ipswich now) and who cares. History repeating itself yet again. 

Job security ..... surely you can remember when interst rates were at 17% and unemployment at 10% not that long ago and you are worried about the retailers doing it tough? C'mon ...... getting old has turned you into a cuddly bear stuck in a comfort zone.


----------



## medicowallet (26 July 2011)

trainspotter said:


> But but but FX Trader started it with his "average incomes" graph from Steven Keen !
> 
> Sure there are going to be people on higher incomes as well MW
> 
> ...




Maybe you didn't read about the latest retail chain (run by DJ old boss) to close stores across australia, or book store closures, or know anyone who is now part time instead of full time. It has already happened.

DJ's is struggling, and job losses are no doubt following. etc etc etc

I could only hope that interest rates go to 17% and unemployment to 10%, but it would take far lower numbers than those to kill the property market, as we observed the weakness before the first home vendors boost.

You can use these medians as trends to compare periods. They just would lose their effectiveness in predicting debt servicability in the way you chose, for of course the average earner can pay off the average loan. But as I point out, this is not the true case (and I am not aware what that is anyway(nor do I particularly care for the muppets who have recently purchased and are now staring at great potential loss))


----------



## cynic (27 July 2011)

trainspotter said:


> Well my little alien - human hybrid believer that God is a woman kind of person ......
> *YOU LIED ON YOUR APPLICATION FORM. *
> With a "No Doc" loan you have to advise that you have the earning capacity to repay the debt either by a personal guarantee by yourself or by a letter from your accountant evidencing same.






> You know when you signed the application form, then you signed the Letter Of Offer, then you signed the Mortgage Documents you fraudulently obtained money. Tsk Tsk. I wonder what Woman God will have to say about this act of deception?.





The mortgage manager was apprised of all my assets, liabilities and income particulars from the very first interview. I did not make any written or verbal  misrepresentations regarding my income, assets and liabilities throughout the loan application and settlement process and have strong objection to anyone implying, stating or inferring otherwise. 

On the subject of God, whom do you think it was that first told me that "No Doc" loans were on offer by one of the major Australian Banks. SHE even told me how much they were going to lend me before I made my first enquiries! Before this revelation, I would simply never have believed that any Australian Bank would offer me finance when I was out of work and would not have even considered approaching them! (This could have been one of those self-fulfilling prophecies where acting on the advice of the prohecy actually manifests same! It was of course just a wee bit uncanny how the valuations tied in comfortably with the loan amount, but I am now growing accustomed to bizarre happenstances such as these.)


My recollection of the guarantee document in question is that it only required that the applicant declare that he/she was able to meet the repayment obligations pursuant to the mortgage loan. Although I did not specifically recall the term "earning capacity" appearing in said document, I am sure that this statement could reasonably be seen to apply to the anticipated future earnings of any able bodied human (or alien hybrid) whilst between jobs (as I was), especially given my frugal nature and the low repayment rate when compared to the unskilled award wage.
If an accountant can reasonably be expected to report on historical and projected future earnings, were they expecting something different from a personal guarantee in lieu of the accountant's letter? 

Even with the financial erosion that arose from the increase in my financial liabilities, government legislation still rendered me ineligible for any allowances (based on the means testing of my assets). On this count alone I would argue that it wasn't just me declaring myself able to meet all financial obligations pursuant to the management of my affairs - Australian Government legislation had already decided this for me! (What right did I have to argue with the LAW ?)

My credit rating, has been, was, and still is, untarnished. Additionally, I've worked on a number of occasions for Corporations, both public and private, where security clearance from ASIO, State and Federal Police was a mandatory requirement. I have no criminal history whatsoever! (Not even a speeding ticket! I have occasionally encountered a police presence on the astral plane,but it always turned out ok because God simply arrived on the scene and asked the authorities to have me released - isn't SHE cool?). However, ASIO did sometimes have trouble granting me clearance! It seemed they were having difficulties when tracing my ancestry - hardly surprising given the circumstances!


Please remember that I honoured all financial obligations for the entire life (2.25 years) of this loan despite my severe lack of income (approx. $195 per week gross rent and some trivial dividend payments from the few remaining stock holdings in my share portfolio.) Please also remember that I had additional real estate assets at my disposal at the time of signing this document and could have rearranged my affairs to further accommodate my financial obligations if the need arose (i.e.reduce debt and/or increase liquid asset holdings).

I honoured my guarantee and met all repayments by the required date right up until the date that I sold said property (on my terms) for a sizable capital gain. This was nothing short of a transparent and productive business relationship for both the mortgagor and the mortgagee.

The mortgage manager had been duly informed of my financial circumstances and the mortgagee didn't lose any money, so why would they want to prosecute?

I know I can be abrasive and controversial when I target opinions/facts that are at variance to my personal experience of the universe. Please be assured that when I do so, it's usually my bizarre (alien?!)  way of engaging someone that has shown qualities worthy of my admiration. I've really enjoyed reading your posts on this and many other threads. I like to think that I have some experience based insights to offer to the ASF community, but if ASFer's are getting annoyed by me, then perhaps it's time they all reported me to the moderators so that I can find out where I truly stand.

P.S. If anyone believes an individual to be guilty of a criminal act, then surely it would be more prudent for that person to report the matter to the relevant authorities rather than simply making abrasive accusations/allegations on a public forum. 
(I invite the moderators to PM me for my personal particulars before reporting me to the authorities should they deem it appropriate to do so.) Until such time as this occurs, I will politely request that we refrain/desist from levelling criminal accusations at posters.


----------



## explod (27 July 2011)

> Ok… enough of that… here’s something that I think holders of Aussie dollars (A$’s) will love to hear… the markets are beginning to trade and hold A$’s like a “reserve currency”… a currency that people will flock to in times of flights to safety! I had a Aussie reader send me a note saying that the A$ is becoming the “mining currency”… and, that’s not all…… as I shuffle across the stage with cane in one hand and my hat in the other! Seriously though… why not? I’ve always called the A$ the proxy for global growth… well… now it can be a flight to safety currency, a reserve currency, and the mining currency!
> 
> Chris again. Yes, the Aussie dollar continues to have a lot going for it. The RBA is expected to be raising rates sometime this year as inflation continues to tick higher. Australian producer prices increased .8% in the second quarter, matching expectations. Next week we will get the more important report on consumer prices in Australia. This inflation report is expected to show prices are rising, and should reverse recent sentiment that the RBA will be looking to cut rates instead of increase them. Reserve Bank of Australia Governor Glenn Stevens said in a speech last night that his nation’s mining-led growth is turning around consumer sentiment. His positive outlook was another sign the RBA will have the confidence to raise interest rates in the coming months.
> 
> Not to be left out of the fun, the New Zealand dollar traded up to a record high vs. the US$ last night. The kiwi rose as high as 87.28 US cents which is the strongest this currency has traded since it was freely floated. There certainly doesn’t seem to be anything holding these commodity currencies back right now. With investors worrying about the debt situations in both Europe and the US, countries with strong commodity based economies are certainly attractive. After all, would you rather own ‘stock’ in a country which has huge stockpiles of raw materials, or countries with huge stockpiles of debt? Currency investments are just like owning shares of that country, and investors certainly look like they are choosing the stock of countries with physical assets.




From Chuck Butler, Everbank overnight.  Interest rates rises will be on the cards here in the months ahead.  Aussie dollar at $1.094 as we speak.

http://www.dailypfennig.com/


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## moXJO (27 July 2011)

explod said:


> From Chuck Butler, Everbank overnight.  Interest rates rises will be on the cards here in the months ahead.  Aussie dollar at $1.094 as we speak.
> 
> http://www.dailypfennig.com/




Sounds like more foreign investment to me. The only way is up for housing
Not to mention I have been out every wk/end looking at houses to buy. All the good ones are being bought at asking price and on day/first wk/end of listing. People are still clinging to super high prices for the crap shacks and I have seen a few drop $90k since listing (I still think they are overvalued). IMO some of them are $100-150k over priced. But the market is still snapping them up.


----------



## explod (27 July 2011)

moXJO said:


> Sounds like more foreign investment to me. The only way is up for housing
> Not to mention I have been out every wk/end looking at houses to buy. All the good ones are being bought at asking price and on day/first wk/end of listing. People are still clinging to super high prices for the crap shacks and I have seen a few drop $90k since listing (I still think they are overvalued). IMO some of them are $100-150k over priced. But the market is still snapping them up.




Yep, hold off whilst current conditions persist.   The old addage  "sell in boom, buy in gloom".  A few years off yet, but have my powder dry too.


----------



## FxTrader (27 July 2011)

moXJO said:


> Not to mention I have been out every wk/end looking at houses to buy. All the good ones are being bought at asking price and on day/first wk/end of listing. People are still clinging to super high prices for the crap shacks and I have seen a few drop $90k since listing (I still think they are overvalued). IMO some of them are $100-150k over priced. But the market is still snapping them up.




Same in my area.  Quality properties are selling, not quite as quickly as 6 months ago but still achieve good prices - for now.  The "crap shacks" (LOL) are getting little interest and going stale in the listings.  Just to many dreamers in my area think that their tired and dated 1970s rectangular BV is still worth half a million or more.  Good luck to them but buyers are being quite selective now in my area and I have seen more than a few price reductions in the local listings lately.


----------



## medicowallet (28 July 2011)

robots said:


> hello,
> 
> oh gidday brothers, just back from doing 500 hrs of work this week and on the bus home there was this flyer on everyone's seat:
> 
> ...




Has this flyer been on the bus today?

http://www.theage.com.au/business/m...till-out-of-reach-reports-20110728-1i11b.html

Just so that you know,

"
Home prices in Melbourne have fallen over the past year but unless house prices stay flat for a decade home ownership will stay out of reach for people on average wages, says a new report.

While Melbourne's median house price fell 2.1 per cent in the year to June, prices for the last three months of that period held firm, according to new data from Fairfax-owned Australian Property Monitors (APM)"

Oh well, prices stagnating, government with no funds left to prop up market, Robots cutting off home internet, walking and working more and hardly posting.

Sunshine and lollipops for all..


----------



## trainspotter (28 July 2011)

*turns on bath, reaches for bottle of gin, *glug glug*, grabs razorblades and does himself in*

SELL SELL SELL AND SELL LIKE THERE IS NO TOMORROW !!!! 

*yawn, STREEEEEEEEEETCH* ...... bored now MW. Come up with something new. This thread has been going for a couple of years now and nothing has happened.

I know .... let's rehash Steven Keen. He is always good for a graph and a pie chart !!


----------



## medicowallet (29 July 2011)

trainspotter said:


> SELL SELL SELL AND SELL LIKE THERE IS NO TOMORROW !!!!
> 
> *yawn, STREEEEEEEEEETCH* ...... bored now MW. Come up with something new. This thread has been going for a couple of years now and nothing has happened.
> 
> I know .... let's rehash Steven Keen. He is always good for a graph and a pie chart !!




Past performance is no indication of future performance.

TEN years with no capital growth is what they are saying to return housing to appropriate affordability.

Perhaps some investors might think that there are better places than housing for a while?

Patience, for times are very interesting at the moment. Within the week, we shall see the concessions Obama needs to make, and we will see the world react to that.

A couple of trillion extra into America keeps things going along, half that? well won't that put China in a dizzy?  What effect will that have on Australians?


----------



## trainspotter (29 July 2011)

PATIENCE ???????!!!!!????? I have been exercising patience for a couple of years now and STILL nuffin has happened. 

Intersting times ahead indeed. What effect will it have on Australian home prices? Coitus All. Sharemarket will tank. Rates will go up. Market flattens out again. Housing affordability (depending on which graph you use) will go up or down depending which camp you are in.

Jobs jobs jobs jobs is the key. Once this starts to slide and the people cannot afford to PAY for their mortgage you will see a definite trend down overall in house prices due to the fact we will be in a technical recession. Pretty damn close now.


But but but the people have to live somewhere so rentals will be a premium. 

*goes back to bath and bottle of gin with razorblades in it*


----------



## satanoperca (29 July 2011)

The old chicken and the egg.

Which comes first :
1) House prices fall or stagnate and then unemployment rises
or 
2) Unemployments rises and house prices fall.

I believe the first scenerio will apply.

Just have to wait and see.

Cheers


----------



## medicowallet (29 July 2011)

trainspotter said:


> PATIENCE ???????!!!!!????? I have been exercising patience for a couple of years now and STILL nuffin has happened.
> 
> Intersting times ahead indeed. What effect will it have on Australian home prices? Coitus All. Sharemarket will tank. Rates will go up. Market flattens out again. Housing affordability (depending on which graph you use) will go up or down depending which camp you are in.
> 
> ...




If you think 2 years is a long wait, I think you will be upset at the future prospects of your holdings


----------



## Tysonboss1 (29 July 2011)

satanoperca said:


> The old chicken and the egg.
> 
> Which comes first :
> 1) House prices fall or stagnate and then unemployment rises
> ...




in scenerio 1, are you suggesting that house price falls will cause unemployment or that they are both symptoms of somthing bigger and house price falls will just happen first.


----------



## satanoperca (29 July 2011)

I am suggesting that if house prices fall, unemployment will rise.

To much in this country is linked to the continued rise of house prices, if they fall, so will confidence, so will our economy and the creation on new jobs with cease.

From my understanding, house prices in the US declined after unemployment started to rise.

Cheers


----------



## trainspotter (29 July 2011)

satanoperca said:


> I am suggesting that if house prices fall, unemployment will rise.
> 
> To much in this country is linked to the continued rise of house prices, if they fall, so will confidence, so will our economy and the creation on new jobs with cease.
> 
> ...




Stands to reason doesn't it?? Unemployment rises so therefore they cannot pay the mortgage so they have a fire sale to rescind debt or alternatively the bank gets involved and sells them up for the debt only. ERGO house prices WILL fall if unemployment starts to rise. No chicken and egg about it. This will happen.


----------



## FxTrader (29 July 2011)

satanoperca said:


> I am suggesting that if house prices fall, unemployment will rise.
> 
> To much in this country is linked to the continued rise of house prices, if they fall, so will confidence, so will our economy and the creation on new jobs with cease.
> 
> ...




In the U.S. case, house price declines preceded the decline in employment and there was a clear connection between them.  The GFC event, brought about by the tide of defaulting NINJA and subprime loans that were securitized and sold to the rest of the world as triple A rated CDO products and the subsequent collapse of Lehman, saw a rapid decline in house prices.

Prior to the GFC, rapidly rising house prices tempted many American's to raid the home equity piggy bank via second mortgages and spend, spend, spend creating a false prosperity - their home equity was safe after all in a buoyant market (or so they thought).  Consumer spending being 2/3 of GDP, the massive wealth destruction caused by tanking home prices and tight lending saw consumer spending fall and with it consumer/business confidence and jobs.

Consumer confidence here in Aus is already low, consumer spending is drying up and house prices falling (even with all those jobs,jobs,jobs), and I suspect these trends will continue for some time.  Mortgage stress is a growing problem with households diverting an ever higher percentage of income to just paying the mortgage.  70% of Australian jobs are in the services sector; let's hope these jobs in the services sector hold up to keep the house price bubble inflated or we will see some serious wealth destruction here as well.

http://www.crikey.com.au/2011/04/27/our-fiscal-props-financial-services-and-mining/


----------



## medicowallet (29 July 2011)

trainspotter said:


> Stands to reason doesn't it?? Unemployment rises so therefore they cannot pay the mortgage so they have a fire sale to rescind debt or alternatively the bank gets involved and sells them up for the debt only. ERGO house prices WILL fall if unemployment starts to rise. No chicken and egg about it. This will happen.




People are using their fake equity to consume. Once prices stagnate they cannot spend. Retail tanks and unemployment rises. Where is the evidence of this?  

Why only the past 6 months grasshopper


----------



## Knobby22 (29 July 2011)

Could be a good weekend to get a bargain at auction - what with the US intent on defaulting.


----------



## trainspotter (29 July 2011)

medicowallet said:


> People are using their fake equity to consume. Once prices stagnate they cannot spend. Retail tanks and unemployment rises. Where is the evidence of this?
> 
> Why only the past 6 months grasshopper




1) Equity is already used up so no more consumerism.

2) Prices have stagnated already. I wrote about it two years ago.

3) Retail is hanging on by a thread. (I should know I have a retail shop)

4) Unemplyoment HAS NOT declined ..... yet to happen in mass droves.

3 outta 4 aint bad there Sensei! What's with the 6 months?


----------



## medicowallet (29 July 2011)

trainspotter said:


> 1) Equity is already used up so no more consumerism.
> 
> 2) Prices have stagnated already. I wrote about it two years ago.
> 
> ...




6 months of no house price growth to fund the consumption.

Prices stagnated 6 months ago.

Unemployment in retail surely has been affected, and as the media likes to point out, non-mining related business is under extreme pressure.

Yet some on here are calling happy days, and that the past 2 years are some sort of indication for the next 2...


----------



## trainspotter (29 July 2011)

medicowallet said:


> 6 months of no house price growth to fund the consumption.
> 
> Prices stagnated 6 months ago.
> 
> ...




Whaaaaaaaaa ??? Prices stagnated about 2 years ago dude. Go look back through the thread where this was advised by none other than my good self. The price rises in CERTAIN areas was about the same as price drops in CERTAIN areas.

Like I said ....... wait until the jobs start to DECLINE across the board. A few job losses in retail might smarten them up. **** service they provide anyhow in most shops I go in to so they deserve what they get.

Name them.


----------



## FxTrader (29 July 2011)

trainspotter said:


> Like I said ....... wait until the jobs start to DECLINE across the board. A few job losses in retail might smarten them up. **** service they provide anyhow in most shops I go in to so they deserve what they get.




You have it backwards TS, I agree with a piece written by Kris Sayce back in March where he says...

_"But even more than that, the mainstream have fallen into the trap of thinking the large external shock must come first.  Wrong.  What comes first is the slowing and then contraction of credit.

It is the slowing and the contraction of credit that causes the shock, not vice versa.

Simply because – as we’ve written before – any economy built on Ponzi finance will ultimately become a victim of Ponzi finance.

That is, as less credit is created and less credit is demanded due to borrowers being maxed out, there is less air being pumped into asset bubbles.

Ponzi schemes must always have an ever greater net inflow of new money.  As soon as that inflow slows, credit slows, price growth slows, and the consumer begins to see reality.

House prices can’t grow when credit is slowing and then contracting.  If you want to call that a large external shock, then you can.  The evidence is already around you that this is already happening.

If you’ve been looking at unemployment numbers as a sign of a future shock, I’m afraid – as experience in the US shows – you’ve been looking in the wrong direction.

Unemployment will rise, but only after house prices have already fallen."_

http://www.moneymorning.com.au/20110325/why-australia-is-set-to-follow-us-path-of-house-price-doom.html


----------



## trainspotter (29 July 2011)

Hahahahahahaaaa *gasp* hhehehehehehhe *choke* lololollllllloll  te he

Contraction of credit happened 2 years ago with the GFC ......... Nuffin.

Ponzi finance will become  a victim of Ponzi finance?? WTF .... what kind of statement is this? People in Australalia (not a typo sound it out in your head) will sell their grandmothers prior to defaulting on a housing loan  DYOR

 I WROTE TWO YEARS AGO THAT PRICES HAD STAGNATED :rolleyes

Large External Shock??? WTF do you think the GFC was?? A small fart in the lower intestines??

As experience SHOWS and evidences we are not the USA !!!!!!!!!!!  FFS.

Let me explain it real simple for all of you neophytes out there.

If you have a job and a mortgage you pay the mortgage because you have income to pay the instrument.

If you dont have a job you cannot pay the mortgage so therefore the piper will call the tune.

HELLO ?????????????? There is not an emoticon I cannot attach to this statement to clarlify.

Please please please STOP quoting ridiculous information and form an opinion yourself. I am heavily involved in the housing market. I have been for 20 years. I am still making money. Get a friggin grip peoples.


----------



## medicowallet (29 July 2011)

trainspotter said:


> Whaaaaaaaaa ??? Prices stagnated about 2 years ago dude. Go look back through the thread where this was advised by none other than my good self. The price rises in CERTAIN areas was about the same as price drops in CERTAIN areas.
> 
> Like I said ....... wait until the jobs start to DECLINE across the board. A few job losses in retail might smarten them up. **** service they provide anyhow in most shops I go in to so they deserve what they get.
> 
> Name them.




1. I agree with the service part 

2. Prices decreased, the govt introduced the FHVG and then they went up, now they have stagnated for 6 months (as per reports in today's paper) and I wonder what will happen with no further FHVB.

3. I know you are heavily involved in housing market. Does that make much of a difference? Emmanuel Cassimatis was heavily involved in the sharemarket too, Eddie Groves was heavily involved in the child care industry, Udo Jattke was involved in housing development etc etc.


----------



## trainspotter (29 July 2011)

medicowallet said:


> 1. I agree with the service part
> 
> 2. Prices decreased, the govt introduced the FHVG and then they went up, now they have stagnated for 6 months (as per reports in today's paper) and I wonder what will happen with no further FHVB.
> 
> 3. I know you are heavily involved in housing market. Does that make much of a difference? Emmanuel Cassimatis was heavily involved in the sharemarket too, Eddie Groves was heavily involved in the child care industry, Udo Jattke was involved in housing development etc etc.




1) I am glad we finally agree on something (albeit a small morsel) 

2) Nup ...... stagnation in the property market has been going on for a WEEE bit more timeframe than this. The paper told you this??? HUH????? You rely on newsprint to stay up to date?? WTF??? 6 months ??? LOL. :


3) Blinded by the science. You are a Doctor of Medicine. Does the heirachy know what is going on?? HAAHHAAHA A aaaaaaaa nope. The big shots that you have described were they walking the walk with THEIR money or someone elses?? I am using MY MONEY and no one elses. Eddie Groves !!!!!!!!! AHah aha ah ah*spit* gagagaagagga *vomit* you have to be kidding me surely?


----------



## FxTrader (29 July 2011)

trainspotter said:


> Contraction of credit happened 2 years ago with the GFC ......... Nuffin.




Perhaps you were not following events that closely 2 years ago but the credit contraction was calmed by a large stimulus package and bank deposit guarantee but caused a few casualties among smaller institutions.



> People in Australalia (not a typo sound it out in your head) will sell their grandmothers prior to defaulting on a housing loan




Good to know that all Australians have a self-nominated spokesperson on property ownership preferences in a crisis.  Following on from your goofy assertion, I know several people who have hung onto property in the U.S. post GFC and they are either in extreme negative equity or have simply stopped paying their mortgage but kept the grandmother.  Perhaps that was their mistake!



> As experience SHOWS and evidences we are not the USA !!!!!!!!!!!  FFS.




Neither are we Ireland, the U.K. or Spain.  We are different, a special case and immune to the problems confronting the world financial system.  A house price bust just can't happen the same way here.   LOL



> If you have a job and a mortgage you pay the mortgage because you have income to pay the instrument.
> 
> If you dont have a job you cannot pay the mortgage so therefore the piper will call the tune.




You still don't get it do you TS.  Job destruction occured after the housing market began to collapse overseas not the other way around.  Ignore the evidence if you wish but try not to be patronizing and demeaning from a position of ignorance. 




> Please please please STOP quoting ridiculous information and form an opinion yourself. I am heavily involved in the housing market. I have been for 20 years. I am still making money. Get a friggin grip peoples.




Are information, statistics and quotes from others ridiculous because a blinkered property bull says so?  What has your 20 years of property investment experience taught you about risk management, anything at all? 

So if you're still making money in property does that mean others should jump into the market now, of course not.  This thread is about the future of property prices not past glory.


----------



## trainspotter (30 July 2011)

FxTrader said:


> Perhaps you were not following events that closely 2 years ago but the credit contraction was calmed by a large stimulus package and bank deposit guarantee but caused a few casualties among smaller institutions.
> 
> Good to know that all Australians have a self-nominated spokesperson on property ownership preferences in a crisis.  Following on from your goofy assertion, I know several people who have hung onto property in the U.S. post GFC and they are either in extreme negative equity or have simply stopped paying their mortgage but kept the grandmother.  Perhaps that was their mistake!
> 
> ...




Bwahahahaha ah ahhaahhahahaaaaaaaaa

People held onto propetry in the USA ????? More fool them.

Let me know when the Steven Keen prophesy corrupts absolutley!!

I await with baited breath 

I have repeated myself yet again. If you do not like property then go and invest in the shonk market. There is more money to be made there @

Ignore "evidence" ......... LOL ...... mitigating circumstances made it so. The countries you are talking about where in a world of pain PRIOR to a housing melt down.

No such circumstances here. 

BTW ..... the bank guarantee and everthing else happened AFTER what I had written ..... but you knew that cause you were keeping up with the thread. You clever person you !!

I for one have NEVER advocated to ANYONE that what I do in property is the right thing for them to perform. If you look back 18 months ago I explained my strategy, It involves a large amount of CASH/EQUITY. My risk management is just fine thank you very much.

Past glory???? ROFL ........ Look at how many posts I have written about how BAD property is in CERTAIN areas. F@CK ME ......... you need to get up to speed before you start sharpening the knives. *NO*  it does not mean that people should jump in now expecting "past" ROR ..... what a goose logic.

Go and buy some shares and leave the real people that make real money in RE alone.


----------



## FxTrader (30 July 2011)

trainspotter said:


> I have repeated myself yet again. If you do not like property then go and invest in the shonk market. There is more money to be made there




In sarcasm you unwittingly speak the truth, there has always been much more money to be made in the stock market if you go both short and long equity positions.



> BTW ..... the bank guarantee and everthing else happened AFTER what I had written ..... but you knew that cause you were keeping up with the thread. You clever person you !!




Frankly, I could care less what you wrote 2 years ago unless you predicted the GFC.  But you did not did you ye old property oracle.  Your crystal ball let you down.



> I for one have NEVER advocated to ANYONE that what I do in property is the right thing for them to perform. If you look back 18 months ago I explained my strategy, It involves a large amount of CASH/EQUITY. My risk management is just fine thank you very much.




So what you do in property investment you don't advocate anyone else do even though you're successful?  Please..... what a joke.  You're the most prolific prophet for the bull case for property investment on this thread.  Even the demented bots does not compare.



> Go and buy some shares and leave the real people that make real money in RE alone.




I've made lots of money in RE pal but I won't stop warning people here about the perils of investing in RE now because you don't like my responses.


----------



## trainspotter (30 July 2011)

FxTrader said:


> In sarcasm you unwittingly speak the truth, there has always been much more money to be made in the stock market if you go both short and long equity positions.




Then go and do it you stockmarket guru. There is also a lot of money to be LOST on the stockmarket if you do not know what you are doing. Property is the same IF YOU DO NOT KNOW WHAT YOU ARE DOING !! 



> Frankly, I could care less what you wrote 2 years ago unless you predicted the GFC.  But you did not did you ye old property oracle.  Your crystal ball let you down.




Ummmm was not a member of this site then but I do remember setting and forgetting quite a few real estate transactions prior to the GFC. Tell me what has the GFC done to real estate in Australia again?? I mean after it went up over 20% in CERTAIN areas. Yes yes yes it has also gone down more than this in CERTAIN areas. How many times do I need to write this information for you to digest 






> So what you do in property investment you don't advocate anyone else do even though you're successful?  Please..... what a joke.  You're the most prolific prophet for the bull case for property investment on this thread.  Even the demented bots does not compare.




Yes that is right as you are not allowed to give advice on this medium. No matter how much you roll a turd in glitter it is still a turd. Prolific prophet?? Bwaahahhahahaa aaa ... go and LOOK at what I have written. I have repeatedly written for over 2 years that property is stagnating and trancing sideways and going DOWN up to 40% in CERTAIN areas. LOL and I am a property BULL??? You need to go and have a good look at what has been written. But no doubt this will not happen as you will be too busy looking at Steven Keens charts and pie graphs. LEGEND ! WAAAAAAAAAAHHHHHH like a siren he goes off SEL SELL SELL 40% drop just like the USA he klaxoned. Get a grip.



> I've made lots of money in RE pal but I won't stop warning people here about the perils of investing in RE now because you don't like my responses.




So I am dog food now PAL ?? The perils of RE investing is people like you that haven't a clue what they are talking about and are terrified of making a decision. 




Look at this chart ... it evidences what I have been wrting that the bank credit squeeze is slowing transactions.  Down nearly 16% for a 5 year average so far. HOW MANY TIMES DO I WRITE THIS !!

MARCH 10 to MARCH 11 House prices on 8 capital cities average *DOWN is 1.7% * mainly due to Brisbane being wiped out by floods.

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0


----------



## Tysonboss1 (30 July 2011)

trainspotter said:


> Tell me what has the GFC done to real estate in Australia again??[/url]




Lowered interest rates.:


----------



## choofer (30 July 2011)

tech/a said:


> So must be time to buy then.
> All those who have been waiting for opportunity--- HERE IT IS!




Opportunity for what? More debt? lol


----------



## Dowdy (30 July 2011)

I have a question to ask about something I was thinking about..


_Is it possible to get an '*Offshore* Mortgage'? _

Since US 30 fixed is at around 4%. It wouldn't be any different then an offshore account, i don't think.


If it is possible, the only con I can see is the exchange rate but don't some banks let you have an account with them in a different currency?


----------



## cutz (30 July 2011)

Dowdy said:


> I have a question to ask about something I was thinking about..
> 
> 
> _Is it possible to get an '*Offshore* Mortgage'? _
> ...




To buy Australian or US assets ?


----------



## prawn_86 (30 July 2011)

Dowdy said:


> If it is possible, the only con I can see is the exchange rate but don't some banks let you have an account with them in a different currency?




You can hold currency accounts with most banks, but there is usually a monthly charge. And i dont see the point, because even if you did have a currency account and got a mortage here in Aus then that would be in AUD so you would still be exposed to the exchange rates. Same thing as what happened with the Swiss carry trade loans back in the 90's.


----------



## cutz (30 July 2011)

prawn_86 said:


> You can hold currency accounts with most banks, but there is usually a monthly charge. And i dont see the point, because even if you did have a currency account and got a mortage here in Aus then that would be in AUD so you would still be exposed to the exchange rates. Same thing as what happened with the Swiss carry trade loans back in the 90's.





Yeah,

I was thinking along the lines that buying a deflating asset like aussie property using USD cheap debt could be a little dangerous in the event of a correction in the AUD. Something like a double wammy.


----------



## greebly24 (30 July 2011)

trainspotter said:


> I have repeatedly written for over 2 years that property is stagnating and trancing sideways and going DOWN up to 40% in CERTAIN areas.




Oceanique apartments in Dawesville, south of Perth, discounted their remaining 26 luxury apartments by 40% in mid-2010. One is advertised for sale for $1.1 million with 3.99% reduced interest for four years. That's a 40% drop plus another interest deduction of up to $150k.

And Today Tonight in Brisbane had a property price plunge story on recently. One devastated lady paid $1.5m for a Gold Coast apartment now worth $800k. That's a 46% loss.

So some properties are dropping MORE than 40% in CERTAIN areas.

The saddest part of the TT story was the bus driver approaching retirement who put down $156k 10% deposit on a $1.56m apartment. Guess he believed the hype and thought he'd pay interest-only on this IP, wait a few years of 7%+ capital growth and retire a millionaire. Sadly now he's trying to get out of the contract losing only his deposit and working until he's over 70. Bugger.

Despite that, there is still money to be made in real estate if you are very careful, but you have to ask yourself it is a better return than other asset classes? Sold my silver recently for a 100% two-year profit. Nice. But could have made much more if I'd sold it a couple of months ago. Fell in love with it, clouded my judgement, held on too long and then made less than I could have. Live and learn. Same goes with property.

Missed out on a $250k two-bed inner-city maisonette IP in Adelaide this week (was a bargain). What surprised me was how desperate the bank was to give me finance, and how desperate the RE agent was to sell me any other place.

Looking at other IPs, noticed studio-apartment student accomodation in Adelaide is dropping. The funniest ad read "Great investment - pay less than the vendor did." Hilarious!!!

So I have no doubt that property has been a great investment over the last decade. The question is, is it the best investment right now?

By the way, Aussie CPI hit 3.6% so another interest rate hike could be coming. Bigger returns for those cashed up and more whingeing and anti-govt hatred coming to a talkback radio near you soon.


----------



## trainspotter (30 July 2011)

Summed up brilliantly greebly24. The massive losses you are talking about is in the "luxury" end of town which has been overheated for too long. Coming back to the normal prices is a good thing overall for the state of play. 

Probably why I wrote this 



> There is also a lot of money to be LOST on the stockmarket if you do not know what you are doing. *Property is the same IF YOU DO NOT KNOW WHAT YOU ARE DOING !!*




CPI spike is a one off due to the devastation on the Eastern seaboard. Bananas is the culprit


----------



## medicowallet (30 July 2011)

trainspotter said:


> Bwahahahaha ah ahhaahhahahaaaaaaaaa
> 
> People held onto propetry in the USA ????? More fool them.
> 
> ...




Your posts are starting to get a bit more antsy.

Anything stressing you at the moment?


----------



## Tysonboss1 (31 July 2011)

greebly24 said:


> . One devastated lady paid $1.5m for a Gold Coast apartment now worth $800k. That's a 46% loss.




If she wasn't happy with paying $1.5M why did she do it in the first place.


----------



## cynic (31 July 2011)

Tysonboss1 said:


> If she wasn't happy with paying $1.5M why did she do it in the first place.




Quite right Tysonboss1!

If she wanted to own that property and was happy to part with the money then future price would be immaterial right!? After all she still has ownership of the property, so all that was lost was the opportunity to acquire same for a lower price. 

Unless she was speculating with the expectation of selling for a profit within a short time frame, a bit like many of those property "flippers" whom buy off the plan expecting to sell for a healthy gain prior to settlement. I'm sure we've all heard success and failure stories pertaining to this type of practice.


----------



## tech/a (31 July 2011)

choofer said:


> Opportunity for what? More debt? lol




Plenty of equity--you have 50% or more.
Search for bargains---there are plenty around.
Tight rental market---they line up to inspect.

*OPPORTUNITY.*

In the eye of* ADVERSITY.*

But if you want to think discuss and do as the 97% of people do---it will (Those in the position to take advantage of the opportunity---ie cashed up) *PASS YOU BY.*

*OR*

If your a developer like me times like these are as rare as rocking horse do do.
I'm looking for suitable land.
There is more and more coming on the market at less and less.

(One on the Esplanade around 15 doors down from where I live is a 2 block 1800 square meter opportunity currently at $1.4 mill was $1.75mill.
I can fit 4 and if I go community title 5-so its getting close to viable--for me.)

Project builders are falling over one another to get my business.
Property agents are calling me daily wanting my business.
Councils are passing developments quicker than ever.
Building time is quicker than ever.I'm seeing duplexes completed from ground up in 8 mths landscaped and sold!


----------



## trainspotter (31 July 2011)

medicowallet said:


> Your posts are starting to get a bit more antsy.
> 
> Anything stressing you at the moment?




Is this a consultation Doc? Nope ..... just tired of people bumping their gums without knowing what the hell they are talking about. "Just you wait and see" they preach "It will all end in negative tears" the bleat "Steven Keen says so" is my favourite. YEAH RIGHT ! I suppose just like children they are wanting to be heard in a grown ups world.

Is that a typo? antsy = nasty ?


----------



## FxTrader (31 July 2011)

trainspotter said:


> Is this a consultation Doc? Nope ..... just tired of people bumping their gums without knowing what the hell they are talking about. "Just you wait and see" they preach "It will all end in negative tears" the bleat "Steven Keen says so" is my favourite. YEAH RIGHT ! I suppose just like children they are wanting to be heard in a grown ups world.




Well what a surprise (not), more childish carping, sniping put downs of people whose views don't align with the bombastic, supremely arrogant and self-anoited expert on all things to do with property in this thread.  Instead of reasoned argument and discussion we get pejorative excrement and personal insults from someone who routinely vomits up unobjective, largely unsupported opinion himself and whose every utterance wreaks of confirmation bias. 

Keen (author and professor of economics and finance) is an idiot, ignore him proclaims the self-anoited expert.  Why, well because he made a prediction that has not come to pass - yet. Never mind the enormous body of statistical research he has done and the weight of evidence he uses to support his arguments.  Therefore, in the mind of one intellectually bankrupt poster on an ego trip in this forum, Keen's analysis as a whole should be discounted and ignored.

Not just Keen, though a frequent target, but anyone who dares venture a contrarian view, no matter who they are or how distinguished they may be, is lampooned, derided and brushed aside with dismissive rhetoric and scant retort.  I leave it to others here to decide whose views should carry more weight, someone like Keen or the ramblings of one poster infatuated with his own opinions.


----------



## drsmith (31 July 2011)

All eyes will be on the RBA on Tuesday.

http://www.theaustralian.com.au/bus...truth-approaches/story-e6frg9k6-1226104574518

It's looking very unstable on that tightrope.


----------



## medicowallet (31 July 2011)

trainspotter said:


> Is this a consultation Doc? Nope ..... just tired of people bumping their gums without knowing what the hell they are talking about. "Just you wait and see" they preach "It will all end in negative tears" the bleat "Steven Keen says so" is my favourite. YEAH RIGHT ! I suppose just like children they are wanting to be heard in a grown ups world.
> 
> Is that a typo? antsy = nasty ?




No typo, in fact all (well 99%+) of your posts have not been nasty. I mean antsy as in irritable.


----------



## cutz (31 July 2011)

medicowallet said:


> No typo, in fact all (well 99%+) of your posts have not been nasty. I mean antsy as in irritable.




According to my analysis, property bull aggression is directly proportional to the rate of bubble deflation.


----------



## medicowallet (31 July 2011)

cutz said:


> According to my analysis, property bull aggression is directly proportional to the rate of bubble deflation.




I think the door swings both ways.

In TS defence, we have had such banter for a long time, and I feel no offense. We joke quite a bit.

I also cannot say anything, as I am no angel. 

I think it is ok to be passionate and witty, as long as personal attacks do not take over, in which case, I think TS keeps it quite civil.


----------



## trainspotter (31 July 2011)

FxTrader said:


> Well what a surprise (not), more childish carping, sniping put downs of people whose views don't align with the bombastic, supremely arrogant and self-anoited expert on all things to do with property in this thread.  Instead of reasoned argument and discussion we get pejorative excrement and personal insults from someone who routinely vomits up unobjective, largely unsupported opinion himself and whose every utterance wreaks of confirmation bias.
> 
> Keen (author and professor of economics and finance) is an idiot, ignore him proclaims the self-anoited expert.  Why, well because he made a prediction that has not come to pass - yet. Never mind the enormous body of statistical research he has done and the weight of evidence he uses to support his arguments.  Therefore, in the mind of one intellectually bankrupt poster on an ego trip in this forum, Keen's analysis as a whole should be discounted and ignored.
> 
> Not just Keen, though a frequent target, but anyone who dares venture a contrarian view, no matter who they are or how distinguished they may be, is lampooned, derided and brushed aside with dismissive rhetoric and scant retort.  I leave it to others here to decide whose views should carry more weight, someone like Keen or the ramblings of one poster infatuated with his own opinions.




RAAAAAAAAAAAAAAAARRRRRRR ! You do bit hard when backed into a corner don't you !!

I have given reasoned arguments with stats and pie charts and 5 year spreadsheets all to no avail over a 2 year period. I have repeatedly explained this is not the FIRST TIME that this has happened in Australia. 3rd time I have experienced by the way.  I have PROVEN with ABS stats that it is not that bad as to what you are making out. I have proven that PROPERTY HAS FALLEN 1.7% in 12 months on average in the major capital cities.

Keen shot himself in the dick before he begain BTW. 40% drop he predicted. DID NOT HAPPEN !!!!!!!!  It went UP 20% !!!!!!!!!!!!!  IT STILL NOT HAS HAPPENED !!!!! (the drop that is) and is unlikely to happen for reasons I have posted in here for VERY VERY LONG TIME !!!! One swallow don't make a summer. You keep crapping on about YET. When is YET/ 1 year? 3 years? 10 years????  FFS ....... I have not once asked anyone to do what I do in RE. 

You called me a BULL ..... I showed you that I predicted 40% drops in CERTAIN areas. I pointed out CREDIT SQUEEZE from banks and you ignored me. I GAVE THREE areas that I reckoned could make 20% over the next 3 years. (averaged 17% so not too bad) I gave areas that will suffer mortgage stress due to being conned into RE. I showed you how to make a negative into a positive in this situation and you still want to ignore the real world. 

IF YOU DON'T KNOW WHAT YOU ARE DOING IN RE DONT FRIGGIN DO IT. 

You can have your contrarian view all you like. I do not have to accept it as a matter of course. I know what I know BECAUSE I AM DOING IT !!!!!!! Are you? Leaving it to others to decide who is right and who is wrong !!!!!! PMSL ....... are you serious???

Now that I have evidenced my position you have taken to the personal attack about my ego and that I am dismissive of other posters on this thread. Big mistake and far from it. I believe all posts on this thread are valid and should be read in the manner that they are written, Medicowallet owns property and has a very good grasp on what is going on. There have been other property people on here that have left due to the monkey poo flinging posts like the one I am responding to.

Tech/a sees this as an opportune time to invest. KWJmac is similar. Kincella is another. Just because you want to win an argument on the internet by squealing like a stuck pig does not make it right.

Go and read something other than Keens diatribe and get a real aspect as to what is going on. I wish you the sincere best in your endeavours.


Medicowallet and myself have a HEALTHY understanding of each other. :


----------



## trainspotter (31 July 2011)

medicowallet said:


> No typo, in fact all (well 99%+) of your posts have not been nasty. I mean antsy as in irritable.




OHHHHHHHHHHHHHH ....... sorry Doc. I have been under a bit of stress lately. Has nothing to do with property BTW. Small children being quite ill have taken a big slice of my time and demeanour. I am


----------



## trainspotter (31 July 2011)

FX TRADER WROTE THIS 







> , largely unsupported opinion himself and whose every utterance wreaks of confirmation bias.




So when I posted all the graphs and links and pie charts and signals and statistics and linear presentations and opinions of economists I was representing myself??


----------



## trainspotter (1 August 2011)

FxTrader said:


> Keen (author and professor of economics and finance) is an idiot, ignore him proclaims the self-anoited expert.  Why, well because he made a prediction that has not come to pass - yet. Never mind the enormous body of statistical research he has done and the weight of evidence he uses to support his arguments.  Therefore, in the mind of one intellectually bankrupt poster on an ego trip in this forum, Keen's analysis as a whole should be discounted and ignored.




As one of the conditions of the wager made in September 2008 with Macquarie interest rate strategist Rory Robertson, Keen will be wearing a T-shirt silkscreened with the words,

* ''I was hopelessly wrong on house prices – ask me how”.*

So is he an idiot FX Trader? How is your ego going now? LOLOL


----------



## Tysonboss1 (1 August 2011)

cynic said:


> Unless she was speculating with the expectation of selling for a profit within a short time frame, a bit like many of those property "flippers" whom buy off the plan expecting to sell for a healthy gain prior to settlement. I'm sure we've all heard success and failure stories pertaining to this type of practice.




Yeah, If thats the case she broke the golden rule of speculation "Never gamble more than your willing to lose".

But unforntunetly in todays easy language, Many people fail to see the difference between investing and speculation and end up gambling while they think they are investing.


----------



## trainspotter (1 August 2011)

drsmith said:


> All eyes will be on the RBA on Tuesday.
> 
> http://www.theaustralian.com.au/bus...truth-approaches/story-e6frg9k6-1226104574518
> 
> It's looking very unstable on that tightrope.




Very much so Drsmith. Housing market is still trancing into negative territory June 10 to June 11 is a full 2% down overall average 8 capital cities. Credit squeeze is not helping either.



> The amount borrowed by Australian property buyers climbed just 6 per cent in the year to June, providing more mixed messages on the true state of the Australian economy ahead of the Reserve Bank's monthly interest rates meeting next week.
> 
> *Coupled with a fall in business borrowing, total private sector credit contracted 0.1 per cent last month - the first fall in lending in almost two years. *




Read more: http://www.news.com.au/money/proper...ow/story-e6frfmd0-1226105704865#ixzz0vKjp68Y5


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## maffu (2 August 2011)

Someone posted a link in this thread an indeterminate time ago, and it was a realestate listing site that showed how much the property asking price or rental asking price had been dropped sine initially listing. It also showed how many days the property had been on the market.

I am trying to find this website, I have tried google and looking through the last few pages of this thread but can't seem to find it.

Can anyone remember and repost the site please?


----------



## tech/a (2 August 2011)

maffu said:


> Someone posted a link in this thread an indeterminate time ago, and it was a realestate listing site that showed how much the property asking price or rental asking price had been dropped sine initially listing. It also showed how many days the property had been on the market.
> 
> I am trying to find this website, I have tried google and looking through the last few pages of this thread but can't seem to find it.
> 
> Can anyone remember and repost the site please?




http://www.realestate.com.au/buy

Could be it have a look around the site.


----------



## maffu (2 August 2011)

tech/a said:


> http://www.realestate.com.au/buy
> 
> Could be it have a look around the site.




Thanks, I just found it on page 293.
http://www.refindhouseprices.com was the site I was after, it is good for finding rentals that have had to drop their initial asking price.


----------



## Dowdy (2 August 2011)

maffu said:


> Thanks, I just found it on page 293.
> http://www.refindhouseprices.com was the site I was after, it is good for finding rentals that have had to drop their initial asking price.





That's site is awesome. Alot of new estates around hoppers and werribee have dropped thier prices alot. Gives a good indication on the FHB market now. All these new estates being built now and no one wants to buy them.  And I said nearly a year ago that there was never a shortage of houses and I used that area as my basis, and what-do-you-know, I was right


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## Uncle Festivus (4 August 2011)

trainspotter said:


> IT STILL NOT HAS HAPPENED !!!!! (the drop that is) and is unlikely to happen for reasons I have posted in here for VERY VERY LONG TIME !!!! One swallow don't make a summer. You keep crapping on about YET. When is YET/ 1 year? 3 years? 10 years????




Within 13 months of the next RBA interest rate change, up or down, the median capital city price will be down at least 5%? How's that for 'yet'?


----------



## trainspotter (4 August 2011)

Uncle Festivus said:


> Within 13 months of the next RBA interest rate change, up or down, the median capital city price will be down at least 5%? How's that for 'yet'?




Irrespective it went up 20% in certain areas. Please provide link evidencing the 5% average 8 capital city fall as well as the entrails of a goat to predict this brash statement. Or are you crystal balling?


----------



## kincella (4 August 2011)

I know  there are some manufactured stats out there that show property versus shares, show comparable returns of income and capital over similar periods

however, those same stats match the very best hedge fund managers in stocks, versus the financially illiterate mum and dad property investors
amazing results,,, the best of the best fund managers...can only show their expertise....is matched by the most illiterate investors out there ...ie the mum and dads who prefer property....

so how on earth, can the taxi drivers, labourers, and paper shufflers...who mainly invest in the penny dreadful stocks.....attain the status of a hedge fund  manager....and  beat the lazy (perceived illiterate mum and dad property investor)

its  a long term investment cycle...
as Warren buffett states...buy when others are selling,,,,and vice versa
in the current climate....the hedge funds are selling stocks
but the smaller market for mums and dads....its a buy for property  
are you a fund manager - I doubt it on this forum
food for thought
I say its a buy... for us the alternative property investors
but unless you are a hedge fund manager....you would have no idea


----------



## Uncle Festivus (4 August 2011)

trainspotter said:


> Irrespective it went up 20% in certain areas. Please provide link evidencing the 5% average 8 capital city fall as well as the entrails of a goat to predict this brash statement. Or are you crystal balling?




I'm basing it loosely on the current rate of retracement and extrapolating that with a worsening factor build in to take account of the deteriorating global economic conditions, so it's fairly conservative if anything. The effects of an interest rate rise is self explanetary, but if rates are lowered it will mean a worsening global outlook, a bit like the learned wise economists at Westpac have foretold ie an IR cut is more likely because things are getting a lot worse.....poor CBA with all those new mortgagees....


----------



## trainspotter (5 August 2011)

Surely a rate cut is a boon for mortgage holders? Rates to go down will only come about from the mismanagement of the existing government who is currently causing inflation. There are too many mixed signals in the market to predict with any entirety IMO. Inflation going up usually means interest rates go up to curb spending etc. Inflation going up usually means house prices follow. NEITHER of these things have happened. The Phillips curve is about right with employment so what is driving house prices down when inflation is rampant? Inflation also constricts the velocity of the economy.


----------



## banco (5 August 2011)

Was't the talking point for the bulls "absent another global shock/GFC prices won't fall much"?  Well I think we might have our catalyst.


----------



## medicowallet (5 August 2011)

trainspotter said:


> Surely a rate cut is a boon for mortgage holders? Rates to go down will only come about from the mismanagement of the existing government who is currently causing inflation. There are too many mixed signals in the market to predict with any entirety IMO. Inflation going up usually means interest rates go up to curb spending etc. Inflation going up usually means house prices follow. NEITHER of these things have happened. The Phillips curve is about right with employment so what is driving house prices down when inflation is rampant? Inflation also constricts the velocity of the economy.
> 
> View attachment 43844




It is very complicated indeed.

How about cost of funding increasing as credit markets get squeezed, and australian banks being over exposed to residential property, and manufacturing in australia in big trouble.... etc etc


On a lighter note, where is robots for comment, I mean he HAS predicted 175 of the last 10 property upturns, I wonder how he is feeling at the moment, with a broke government not giving megabucks to rich tradesmen (do they really need it, or a pay cut?)

Some of us true believers have seen this coming for a while,

Sunshine and lollipops.


----------



## trainspotter (6 August 2011)

banco said:


> Was't the talking point for the bulls "absent another global shock/GFC prices won't fall much"?  Well I think we might have our catalyst.




Hahahahaa ..... nope. It was mentioned that if people are fleeing the sharemarket they head for property as there is not enough to be gained out of interest bearing accounts. Interest rates need to rise and unemployment to escalate to cause severe hardship. As there is no chance of turning good coin out of property at the moment it is going to be interesting to see what they do? It could be that they perceive property to be a safer bet than the sharemarket. Herd mentality.


----------



## trainspotter (6 August 2011)

medicowallet said:


> It is very complicated indeed.
> 
> How about cost of funding increasing as credit markets get squeezed, and australian banks being over exposed to residential property, and manufacturing in australia in big trouble.... etc etc
> 
> ...




Credit being squeezed by the government we had to have. 

Go and take a happy pill Doc. Your recent posts are bringing me down. 

Robots is living the dream man. After taking his licks in here he as decided to move onto greener pastures.


----------



## moXJO (6 August 2011)

Going out again today to look at housing, plenty to look at as well. Seen another house I looked at 2 weeks ago drop by $70k. They wanted $445k to begin with and has since dropped to $375k. Something has to be up with that so I will investigate further. Really I have all the time in the world so no hurry just yet.

 Some people are finally catching on that they missed the big money and their block of bricks and bad design isn't worth the half a mill they thought it was. Things started to turn here fairly quickly (predictions from treasury of losing 7000 jobs to carbon tax helped). For the first time in ages have noticed 'for lease' signs sitting for more then a week.

 North areas are the stronghold of the upper middle class and will be harder to crack. But $800k - $1mill was the norm and now struggling to hit $750k in some areas. Business has been folding so I am also picking up bits and pieces of equipment. Good times if you are cashed up. I'm excited  

Given that people won't spend in shops because of price, houses are copping a hit for being too expensive and talk of IR reform, is this the beginning of deflation (which in my opinion is much needed here).


----------



## Tysonboss1 (6 August 2011)

Although the general mood of most of the followers on this thread is very bearish on property, twice we have had spells where the bears hit an all time high.

Both times has ended in share market crashs, and property remaining relatively firm,


----------



## basilio (6 August 2011)

Tysonboss1 said:


> Although the general mood of most of the followers on this thread is very bearish on property, twice we have had spells where the bears hit an all time high.
> 
> Both times has ended in share market crashs, and property remaining relatively firm,




Perhaps this time there is just far more debt  around peoples necks and the property market is just too high in relation to peoples capacity to pay.

I'll be interested to see how many wealthier people  can hold onto their properties in the event of collapses in  shares and businesses particularly if the businesses are supposed to be paying them big bucks.  And in that  situation there will be far more people on the sell side than the buy side.

We will see what  happens with auctions and house sales this weekend. I think it will be ugly.


----------



## IFocus (6 August 2011)

Tysonboss1 said:


> Although the general mood of most of the followers on this thread is very bearish on property, twice we have had spells where the bears hit an all time high.
> 
> Both times has ended in share market crashs, and property remaining relatively firm,




I always thought we were in a bubble given how we got here via such a rapid credit expansion.

I just couldn't see how it could pop given low unemployment numbers.

There is a  possible confluence that might come together to change that.

Soft / negative numbers coming out of retail leading to shedding of labor.

GFC mark II if it comes and a government gun shy on stimulus (no Ken Henry)we drop confidence further and then we spiral.

We are still a long way from the above points IMHO.


----------



## banco (6 August 2011)

Tysonboss1 said:


> Although the general mood of most of the followers on this thread is very bearish on property, twice we have had spells where the bears hit an all time high.
> 
> Both times has ended in share market crashs, and property remaining relatively firm,




In 2008 took massive amounts of Government stimulus to keep the train on the track.


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## sptrawler (7 August 2011)

R.B.A putting up interest rates due to high inflation. The Government increasing taxes to try and claw back excessive spending. Workers pushing for higher wages to keep their head above water. State Governments increasing utility prices and Governments charges. Local Government increasing rates and charges.
There isn't much sunshine out there for retail. 
The Government should be reducing taxes to stimulate spending and inspiring confidence.
Oh I forgot, they have spent all that was in the kitty, on plasma t.v's, pink batts and school canteens.
I think it will be nothing short of a miracle if housing recovers in the next 10years, there is a lot of debt to flow under the bridge before it happens.


----------



## Wysiwyg (7 August 2011)

sptrawler said:


> Oh I forgot, they have spent all that was in the kitty, on plasma t.v's, pink batts and school canteens.



What are you saying, the government didn't buy the electorate?


----------



## Dowdy (7 August 2011)

sptrawler said:


> The Government should be reducing taxes to stimulate spending and inspiring confidence.
> Oh I forgot, they have spent all that was in the kitty, on plasma t.v's, pink batts and school canteens.





You do realise you're contradicting yourself there....


----------



## medicowallet (7 August 2011)

Tysonboss1 said:


> Although the general mood of most of the followers on this thread is very bearish on property, twice we have had spells where the bears hit an all time high.
> 
> Both times has ended in share market crashs, and property remaining relatively firm,




Could it be a case of third time lucky?


Or are we truly "different" here?

If there is severe fallout over the next couple of months, our frail building and property sectors, struggling under the pressure of poor government, cautious investors and weakness of parts of our economy could react much differently to the last GFC.

Are you prepared to make a call on what you think will happen?


----------



## sptrawler (7 August 2011)

Dowdy said:


> You do realise you're contradicting yourself there....




I don't think so.


----------



## robots (8 August 2011)

hello,

oh gidday, 

just an avid reader now as most people here make me the issue and not the future of property prices

but gee a bit of action on the shonk exchange at the moment, hows that hey brothers? still cant understand how storm investors done there dough when investing in companies is the road to take, oh well

oh well, lucky still a great asset class to plod along with,

thankyou

professor robots


----------



## cutz (8 August 2011)

Hi Robots,

Welcome back, glad to hear all is well.


----------



## kincella (8 August 2011)

Hi Robots....good to see you pop in from time to time...
All is good out here in the country...well so far so good....I do miss Melb...
Looking at 2-3% rate cuts again...sigh...2008 repeating itself again....just worse this time with the US downgraded, and Italy Spain Greece needing bailouts...
I will never go back into stocks,,,,not ever....
my property investments have proven to be very solid, with great capital returns, as the bonus after good annual income....
stressful time for all those in the stockmarket, horrid for the retirees with super stuck with too much focus on stocks...
and god help the gamblers with margin loans....
I think this  GFC mark 2 will be around for much longer than gfc mark 1
cheers
love to hear an update on what you are doing these days


----------



## trainspotter (8 August 2011)

Gidday robots. Shame the flamethrowers have made you stop posting.

Rates to drop by 0.5% ??? No wonder the banks were offering 15 year rates at 8.38% 



> Until a little over a week ago, most commentators had been tipping the next rates move by the central bank to be an increase following sharply higher inflation figures in the June quarter. That sentiment took a 180-degree turn during last week's global sharemarket rout, a slide that looks like continuing into this week.
> 
> While a rate cut might cheer borrowers, it would only come if the RBA took a very dim view of Australia's immediate growth prospects. *A global tilt back into recession would likely mean rising unemployment and tumbling commodity prices* - reversing two of the main reasons Australia managed to dodge a recession in the 2008-09 period.




http://www.businessday.com.au/business/double-rate-cut-tipped-for-september-20110808-1ii9g.html

RIGHT THEN ........ now we are getting somewhere. This could be the catalyst that I have been talking about. JOBS JOBS JOBS. If this happens then I can easily see a quickening slide on the 8 capital city average home price due to foreclosures. 

Also means that investors will buy from the scrap heap and rent them out.


----------



## medicowallet (8 August 2011)

trainspotter said:


> Gidday robots. Shame the flamethrowers have made you stop posting.
> 
> Rates to drop by 0.5% ??? No wonder the banks were offering 15 year rates at 8.38%
> 
> ...




I am with you here..

Just depends on how much vote buying the Gillard government has left, wrt another FHVB.

I can understand why they would support high wages for tradesmen too (for that is all a government subsidy achieves) as they form a strong voter base.

When I can go to a builder, and they can build NOW, or I can actually get a spec home, then I will believe builders, and hence tradesmen, are doing it tough.


----------



## trainspotter (8 August 2011)

Wont be too far away Doc. ECB better buy them bonds tonight to prop up the Italians and Spaniards or we are in a world of pain. Crisis what crisis? 

Australia wont be able to buy it's way out of this one. If the Gillard Guvmint tries it will be throwing itself over the financial cliff once commodity prices begin to slip as China gets the speed wobbles.

SOOOOOOO we are looking at a very interesting week. Make or break time. For the markets that is.

Where does that leave us on the property prices? Business as usual. Slowly does it.


----------



## Dowdy (8 August 2011)

trainspotter said:


> Wont be too far away Doc. ECB better buy them bonds tonight to prop up the Italians and Spaniards or we are in a world of pain. Crisis what crisis?
> 
> Australia wont be able to buy it's way out of this one. If the Gillard Guvmint tries it will be throwing itself over the financial cliff once commodity prices begin to slip as China gets the speed wobbles.
> 
> ...




You answered your own question in that post. _ Australia wont be able to buy it's way out of this one. If the Gillard Guvmint tries it will be throwing itself over the financial cliff once commodity prices begin to slip as China gets the speed wobbles. _

No more propping up of the housing industry. No more hand outs. No more easy credit from the banks.

Fun times if you're cashed up and own a boat load of silver - bring it on


----------



## trainspotter (8 August 2011)

Dowdy said:


> You answered your own question in that post. _ Australia wont be able to buy it's way out of this one. If the Gillard Guvmint tries it will be throwing itself over the financial cliff once commodity prices begin to slip as China gets the speed wobbles. _
> 
> No more propping up of the housing industry. No more hand outs. No more easy credit from the banks.
> 
> Fun times if you're cashed up and own a boat load of silver - bring it on




Ermmmmmmmm you are a bit late Dowdy. There will be no more handouts to FHB or to the housing industry. Credit Squeeze happened 2 years ago and banks have already tightened their lending criteria. That's what we have been discussing for quite some time now 

I was talking about a STIMULUS PACKAGE similar to the $900 x 3 handouts and the Pink Batts and the BER buying their way out of trouble palava that was totally unnessecary. They will not be able to afford it this time around if China does not by our minerals or commodity prices fall as the mining companies will lay off staff causing unemployment to go up. THEN this may begin to causative effect a rapid increase in loan defaults.

Interest rates are set to fall dude. Only last week everyone was screaming they were gonna rise !! LOLOLOL. SO hence why I stated it will be business as usual in the HOUSING market. I also pointed out WHY OH WHY were the banks prepared to lend funds for 15 year FIXED period at 8.38% if the interest rates were going to rise???? HUH???

Fun times if your tenants have their rent paid 12 months in advance and your repayments are going down ! How big is your boat?


----------



## Uncle Festivus (8 August 2011)

trainspotter said:


> Where does that leave us on the property prices? Business as usual. Slowly does it.




Property won't be the lone island of stability in the not too distant recession - that's why rates are going to fall - doesn't mean that house prices will stabilise or go up because rates are lower. All that's happening now is the approaching property train wreck (you would have spotted that already though?) is waiting patiently for it's turn as the asset class last to be sold off. And when it does, there won't be any liquidity like cash or shares, it will be just one horrible scramble for the exits.

Rents?? That's if you will still have tenants with jobs??

I still don't understand how a few of you permabulls can put forward the view of all that is wrong with the economy & how bad it's gonna get, but then in the next breath say that property will do fine?? There's not going to be a disconnection between  a global recession and Australian property, and in fact it's going to several magnitudes worse here because of the loan practices of the likes of the big 4 etc who need to constantly tout for more resi loan business for short term gain.

All the bazookas have been fired - it's going to get ugly.


----------



## trainspotter (8 August 2011)

LOL Uncle Festivus. All you permabulls. SHUCKS I am honoured you think this way. Where did I say that property will be doing fine? Where were you when I wrote this?



> RIGHT THEN ........ now we are getting somewhere. This could be the catalyst that I have been talking about. JOBS JOBS JOBS. *If this happens then I can easily see a quickening slide on the 8 capital city average home price due to foreclosures.*




Hey Uncle .... people have to live somewhere you know? They all just can't wander the streets aimlessly or sleep under bridges. This is why people rent houses. 

As for interest rates going down means that the majority of people will still be able to pay the mortgage. Yes yes yes there will be the usual victims that overleveraged and will have to sell due to foreclosures. Ho hum. Happened before it will happen again.

Last week everyone was squawking the reason property was going to fall was that interest rates were going to go UP and people would not be able to afford the repayments along with all the costs of living going UP etc. Looks like it will be going down now. SHUCKS, now aint that a biatch.

Any liquidity like cash or shares. Hahahhaahaaa sell your shares?? Who is gonna buy them in this market Uncle? 40 billion wiped out in 2 days of ASX trading. Liquidate your cash into what exactly? Interest bearing accounts? LOL .... now that's a good one. To qualify as liquid, you must be able to sell the asset quickly without a loss of value.

I have repeatedly explained that property has fallen in CERTAIN areas as well as the risk involvement in trading in property. 

But alas, alack it falls on deaf ears and mute eyes and stagnant brains. 

I might join robots in the dark room and observe as the bears come down to feast on the carcass of what was once an enjoyable thread.


----------



## medicowallet (9 August 2011)

trainspotter said:


> LOL Uncle Festivus. All you permabulls. SHUCKS I am honoured you think this way. Where did I say that property will be doing fine? Where were you when I wrote this?
> 
> 
> 
> ...




1. How can people charge high rents when people cannot afford them?

2. Liquidity does not depend upon maintenance of value.

3. Say hello to Mr Burns for me.

4. We have been "different" for so long, I wonder if this can continue. Any hiccup in China, will definitely crush the low confidence that the world is experiencing, bring it on and we will see how strong our housing market is... waiting in anticipation of the next 6 months.. might buy a property or 6. I have been patient so far, and, in reality it has only taken a couple of years of limited growth in property to get here, so I am looking forward to seeing any potential correction


----------



## Aussiejeff (9 August 2011)

medicowallet said:


> <snip>I am looking forward to seeing any potential correction




Another day or two of Obama & Timmy blaming S&P for all their economic woes should do the trick nicely and steamroll the ASX in the process. 

With millions of small-medium investors getting their immediate & future wealth crushed with no end in sight of the trainwreck unfolding, I wonder how many might start panic selling the only source of "real" wealth they have left - the family home - to keep afloat?

Could be a hectic few weeks ahead for listing agents!


----------



## Uncle Festivus (9 August 2011)

trainspotter said:


> LOL Uncle Festivus. All you permabulls. SHUCKS I am honoured you think this way. Where did I say that property will be doing fine? Where were you when I wrote this?




I believe you said - "RIGHT THEN ........ now we are getting somewhere. This could be the  catalyst that I have been talking about. JOBS JOBS JOBS. If this happens  then I can easily see a quickening slide on the 8 capital city average  home price due to foreclosures."

But then - "Where does that leave us on the property prices? Business as usual. Slowly does it."

What is your position exactly? Buying or selling?



trainspotter said:


> Hey Uncle .... people have to live somewhere you know? They all just can't wander the streets aimlessly or sleep under bridges. This is why people rent houses.




So if one of your tenants loses their job and can't pay the rent, what are you going to do?? Let them stay there rent free?



trainspotter said:


> Any liquidity like cash or shares. Hahahhaahaaa sell your shares?? Who is gonna buy them in this market Uncle? 40 billion wiped out in 2 days of ASX trading. Liquidate your cash into what exactly? Interest bearing accounts? LOL .... now that's a good one. To qualify as liquid, you must be able to sell the asset quickly without a loss of value.




As far as I know, none of the ASX200 shares have gone 'no bid' yet, which means anyone who wants to sell their shares, can. Can't say that for property.....


trainspotter said:


> "Liquidate your cash into what exactly? Interest bearing accounts?



Well yes - I've been getting 6% at call, 'risk free' for over a year now.....



trainspotter said:


> I have repeatedly explained that property has fallen in CERTAIN areas as well as the risk involvement in trading in property.
> 
> But alas, alack it falls on deaf ears and mute eyes and stagnant brains.
> 
> I might join robots in the dark room and observe as the bears come down to feast on the carcass of what was once an enjoyable thread.




No, Robots is having a Latte and riding the trams. He's been a bit quiet since buying his last IP at the peak back in March last year 

There will be a lot of carcasses for the bears to feast on - unfortunately they were right after all.....


----------



## Uncle Festivus (9 August 2011)

Aussiejeff said:


> Another day or two of Obama & Timmy blaming S&P for all their economic woes should do the trick nicely and steamroll the ASX in the process.
> 
> With millions of small-medium investors getting their immediate & future wealth crushed with no end in sight of the trainwreck unfolding, I wonder how many might start panic selling the only source of "real" wealth they have left - the family home - to keep afloat?
> 
> Could be a hectic few weeks ahead for listing agents!




No, we are different. Expect an announcement from Swanny of new "property price support mechanisms" though......can't have the market dictate prices after all?

PS you have been prolific lately AJ - winter hibernation over already??


----------



## Aussiejeff (9 August 2011)

Uncle Festivus said:


> No, we are different. Expect an announcement from Swanny of new "property price support mechanisms" though......can't have the market dictate prices after all?
> 
> *PS you have been prolific lately AJ - winter hibernation over already??*




Gr-r-r-o-w-w-wl! Me achy bones ARE a bit creaky of late! LOL


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## Bigukraine (9 August 2011)

Hey TS and other's,

Bit of noise around that S&P are going to review the rating system of our Aussie bank's

"DOWN" and that funding costs could rise by 0.3%......... and the banks wouldn't pass this on now would they........

That IR rise may still be on the table me thinks


----------



## Dowdy (9 August 2011)

Interest rate rise or not, who's going to buy a house in a falling market? 

Investors ride on confidence and when there's none, there's no market.

AS for the stock exchange, it's been a bear market rally for 08-10, now it's just going back to the bear market trend. Nothing new if you saw it coming


----------



## kincella (9 August 2011)

cba just dropped rates on fixed home loans by 0.6%

on radio 2gb news just now...on 1-5 year fixed loans....
no rba drop last week, so cba taking control on rates.....
hohoho...the future of rates is down....not waiting for the rba to dither around, and  over riding glen stevens bumbling nonsense


----------



## trainspotter (9 August 2011)

Last post peoples and then I am outta here.



Uncle Festivus said:


> I believe you said - "RIGHT THEN ........ now we are getting somewhere. This could be the  catalyst that I have been talking about. JOBS JOBS JOBS. If this happens  then I can easily see a quickening slide on the 8 capital city average  home price due to foreclosures."
> 
> But then - "Where does that leave us on the property prices? Business as usual. Slowly does it."
> 
> What is your position exactly? Buying or selling?




Buying and selling ... is it not obvious? Have jobs gone DOWN yet? NOPE ..... so therefore it is business as usual. Until unemployment rises then the status quo will remain. Can you not comprehend what is being written? Another reason why I will be going bye byes and leaving the ignoramus's to feast upon.



> So if one of your tenants loses their job and can't pay the rent, what are you going to do?? Let them stay there rent free?




What a stupid thing to write. Let blockheads read what blockheads wrote has never rung truer. I can't be bothered answering this inane question. You obviously have not been paying attention. This has been covered previously many times over.



> As far as I know, none of the ASX200 shares have gone 'no bid' yet, which means anyone who wants to sell their shares, can. Can't say that for property.....




SELL THEM TO WHO ???? I don't see people breaking down the doors to get into the stock market. Quite the opposite in fact !



> Well yes - I've been getting 6% at call, 'risk free' for over a year now.....




Once again you are not comprehendiong what has been written. Rates are set to fall so therefore your cash will be worthless as an investment tool as inflation is at 3.6% so you are making 2.4% on your money, take out the fees, charges etc and you may as well stick your cash up your mattress. Less than 1.5% on your money. SMART INVESTING !!



> No, Robots is having a Latte and riding the trams. He's been a bit quiet since buying his last IP at the peak back in March last year




So you know this for a fact do you?? No wonder he does not post anymore.



> There will be a lot of carcasses for the bears to feast on - unfortunately they were right after all.....




In your opinion. It has not happened. 

100 BILLION or 7% WIPED OUT IN 72 HOURS WITH MORE TO COME compared to 2% OVER 12 MONTHS.

Hey Bigukraine ...... Such a downgrade could affect fiscal 2012 estimated cash earnings for the banks by potentially up to 6 or 7%. That would be spread over three to five years and could already be partly factored into bank funding costs as they raised rates above Reserve settings and blamed "cost of funding"   LOL. 

They are still offerring over a 10 year fixed term ...... wait for it ........ wait for it ..... 8.17%   

http://www.anz.com/aus/RateFee/InterestRates/Rates.asp#Section100

Hey Dowdy ...... INVESTORS BUY IN A FALLING MARKET BECAUSE PEOPLE RENT THEM !! http://www.news.com.au/money/proper...-rents-skyrocket/story-e6frfmd0-1226107378085

People have to LIVE somewhere and they will pay RENT ......... In this situation you may see business's shut their doors so commercial property is on the cards to fall in price as well. Can't wait so I can buy some more.

Seeya peoples ... Have fun.


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## againsthegrain (9 August 2011)

Used light bulb business finally started to pay off?


----------



## Dowdy (9 August 2011)

trainspotter said:


> Another reason why I will be going bye byes and leaving the ignoramus's to feast upon.




Oh yes, anyone who doesn't agree with you is an ignoramus. 




> SELL THEM TO WHO ???? I don't see people breaking down the doors to get into the stock market. Quite the opposite in fact !




Do you how the stock-market works? When someone puts a sell order, it has to be bought by someone to make it a trade and there is no shortage of that, is there? Unlike the RE market where you have houses on the market for a year....





> So you know this for a fact do you?? No wonder he does not post anymore.




Don't you know, he's the great oracle of ASF. He just went into his 90 day meditation to reach enlightenment 





> 100 BILLION or 7% WIPED OUT IN 72 HOURS WITH MORE TO COME compared to 2% OVER 12 MONTHS.




Let me ask you something, how many people have gone broke due to the stock market dropping 7%? What do you think would happen is the RE market dropped 7%. It's so over leveraged that some people are having trouble with a 2% drop




> People have to LIVE somewhere and they will pay RENT ......... In this situation you may see business's shut their doors so commercial property is on the cards to fall in price as well. Can't wait so I can buy some more.
> 
> Seeya peoples ... Have fun.




Great, I'm waiting for commercial property to fall too!

Have fun. Not sure how life on this planet will continue once you're gone!


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## prawn_86 (9 August 2011)

A little bit of calm and tolerance required from both sides of the fence please ladies and germs


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## medicowallet (9 August 2011)

kincella said:


> cba just dropped rates on fixed home loans by 0.6%
> 
> on radio 2gb news just now...on 1-5 year fixed loans....
> no rba drop last week, so cba taking control on rates.....
> hohoho...the future of rates is down....not waiting for the rba to dither around, and  over riding glen stevens bumbling nonsense




Have to make a market somehow. Must be a sign of people not buying houses or not borrowing to buy (obviously there is a difference), the latter suggests stagnant or falling prices.


Nice to see the stock market rise 6% in a few hours!!!! if you extrapolate that over a year... hang on...

Money printing in the US is bad news for us all. I would prefer to see some short term pain.


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## cynic (9 August 2011)

trainspotter said:


> Last post peoples and then I am outta here.






trainspotter said:


> Seeya peoples ... Have fun.




Nooooo! 

Don't leave us now! Whatever would this thread be without you!

The financial heavens are falling!

We need your guidance more than ever right now!

How will we ever learn to navigate this newly discovered economic terrain without you?

T.S. , T.S. ! Why hast thou abandoned us!


----------



## jbocker (9 August 2011)

Hang in there TS, I hope you are only taking a short leave. I for 1 have greatly enjoyed your posts and hope that you remain.

Perhaps we all refresh our look at the first post on this thread; it is a passionate topic our property, and I am an avid supporter of investing in it - because mainly I am a crap stock investor - but still dabble.

Tis is a great debate - and I have learned much reading both views - even the most polarised.


----------



## Starcraftmazter (9 August 2011)

Just out of curiosity, is there an overall consensus here on whether we will have a crash (or whatever you want to call it) or not in the next few years?


----------



## notting (9 August 2011)

Starcraftmazter said:


> Just out of curiosity, is there an overall consensus here on whether we will have a crash (or whatever you want to call it) or not in the next few years?



I've been expecting it for about 7 years.
I was also thinking the stock market was way over priced when CBA went past $44 for the first time.  10 years later I was finally able to say "Told you so," and buy it back again at $28.00. Unfortunatly I missed something in between.
The financial world really is mental.


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## kincella (10 August 2011)

am afraid the only consensus you will get from your question is the bear mantra....
that the property market will crash,,,and by at least 50%
the majority oin this forum are the bears
the bulls are in the minority.....and seems like we just lost another bull...doubt he would like that description...but since he is not bearish.....
and only the two descriptions apply....one must call him a bull


unless you want to add some more descriptions for those in between...
as in  a steer (ie  a bull who had his nuts removed, as he is not required for breeding purposes, or not good enough)
bears being wild animals -are not subjected to the removal of their nuts....
so there is no similar, well known term to describe them...as far as I am aware
so should we just say....its a bear with no nuts

all the bears will come out and say ...dont buy...you must be nuts....
but the bulls will show that property has kept rising since 1986, the little slowdown in 2011 with a 1% median drop.....is a pittance

I say interest rates will drop, and we know what that does to housing......
watch the whole thing change from despair to confidence, just as soon as we get rid of the most incompetent govt in our history...
 I am betting there will be a huge number of stock investors  who will get out of stocks and into housing....after the deliberate fiasco this week.....
unfortunately the olds will have little choice than to move their super into cash,,,,

if you are looking to buy, stay aware from the inner city,with the overpriced dog boxes in there, and go further out into the suburbs,...where there are bigger houses for your money, at half the price....with good capital growth


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## notting (10 August 2011)

No. I believe in property. 
When? 
Doesn't matter. 
I bought and sold two houses in the last 7 years and did very nicely.
Even though I thought the market was overpriced. 
Inflation just means more expensive houses, even though interest rates go up and cause temporary stress. 
Despite what you hear about the US the good property in good suburbs isn't nearly as bad as what the numbers and press paint. 
Good location property wins.
And you can live in it when it's losing!


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## Dowdy (10 August 2011)

Starcraftmazter said:


> Just out of curiosity, is there an overall consensus here on whether we will have a crash (or whatever you want to call it) or not in the next few years?




I said at the start of this year that the market will remain flat for this year and you'll start to see declines next. (check my post history, it's there somewhere)


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## Starcraftmazter (10 August 2011)

kincella said:


> am afraid the only consensus you will get from your question is the bear mantra....
> that the property market will crash,,,and by at least 50%
> the majority oin this forum are the bears
> the bulls are in the minority.




Sounds good, I'm firmly predicting a crash myself - just curious as to what the populace of this forum thinks.


----------



## medicowallet (11 August 2011)

Starcraftmazter said:


> Sounds good, I'm firmly predicting a crash myself - just curious as to what the populace of this forum thinks.




I think that some of us are concerned what is happening in US and europe (read france now too!!)

Some of us seem concerned about hype and what we perceive is happening next door.

I just cannot see where all the money to keep gearing up is going to come from...


----------



## cutz (11 August 2011)

Starcraftmazter said:


> Sounds good, I'm firmly predicting a crash myself - just curious as to what the populace of this forum thinks.





IMO, no crash, just years if not decades of no growth/maybe negative growth, prices  will eventually return to the long term average.

This is my own personal view based on gut feel and word on the street, remember most owners are not investors, those that are may still be in a position to take yearly interest losses in the hope of an eventual cap gain.


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## satanoperca (11 August 2011)

Well if some believe that a rise in unemployment is need to see property prices decrease, here it is, a start;


> THE unemployment rate rose to a higher-than-expected 5.1 per cent in July, from 4.9 per cent in June, official data showed.




I would believe this is a lagging factor from a decrease in valuation of RE property across Australia over the last six months.

Cheers


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## Bill M (12 August 2011)

Here we are 4 years after sub prime hit the USA and all the gloomsters came out and said housing was going to crash in Australia, it hasn't happened in Sydney at least. I just raised my rent to $430 p/w for my small 80 sq unit on the Northern Beaches. There are plenty of people trying to rent at these prices so no shortages of tenants. Nothing has changed in the 4 years, there are still mobs of people turn up "open for rental inspection" on Saturday mornings then the agents have to pick and choose who gets the rental. Does this sound like a crash? Prices for units on the Northern Beaches are holding firm and on the Central Coast in my suburb they have dropped about 2 or 3% in the last year. Lots of Sydney Siders are selling the family home and are downsizing moving up this way and pocking the difference in prices, but no boom up here in housing. Things going on as normal.

So as far as house prices are concerned, in the Northern Beaches they are holding firm and I believe with increase rentals and low vacancy rates prices may move up. On the Central Coast prices are slightly declining or at best stagnating, cheers.


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## medicowallet (12 August 2011)

Bill M said:


> Here we are 4 years after sub prime hit the USA and all the gloomsters came out and said housing was going to crash in Australia, it hasn't happened in Sydney at least. I just raised my rent to $430 p/w for my small 80 sq unit on the Northern Beaches. There are plenty of people trying to rent at these prices so no shortages of tenants. Nothing has changed in the 4 years, there are still mobs of people turn up "open for rental inspection" on Saturday mornings then the agents have to pick and choose who gets the rental. Does this sound like a crash? Prices for units on the Northern Beaches are holding firm and on the Central Coast in my suburb they have dropped about 2 or 3% in the last year. Lots of Sydney Siders are selling the family home and are downsizing moving up this way and pocking the difference in prices, but no boom up here in housing. Things going on as normal.
> 
> So as far as house prices are concerned, in the Northern Beaches they are holding firm and I believe with increase rentals and low vacancy rates prices may move up. On the Central Coast prices are slightly declining or at best stagnating, cheers.




How long do you think investors will hold onto properties if the outlook is zero growth (ie negative return).. 

Stagnation for 5-10 years is a massive pullback in real terms, just like the shares I purchased at $20 6 years ago, which are $20 now have made a capital loss in real terms.

Sure, most housing investors do not understand this (nor do they factor in replacement costs/maintenance/RE fees/stamp duty/accountant fees etc), but the smart ones do, and it is to them we should look, and I know a few who, having purchased relatively recently, are limiting their exposure.


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## Bill M (13 August 2011)

medicowallet said:


> Sure, most housing investors do not understand this (nor do they factor in replacement costs/maintenance/RE fees/stamp duty/accountant fees etc), but the smart ones do, and it is to them we should look, and I know a few who, having purchased relatively recently, are limiting their exposure.




I am not most investors then. I have been doing this since the late 70's. Things have changed for the better now though and I have changed with the times. My accountant told me that I should get a Quantity Surveyor in to assess my unit. They provided a comprehensive depreciation schedule which will be used for my ATO tax return. As the unit is new I will get an $8,000 depreciation deduction for the last financial year. I also raised the rent in the mean time. Any refunds from the ATO will be put aside for refurbishment. At this present moment in time my investment property is the safest and easiest investment I have, I won't be selling it anytime soon, cheers.


----------



## medicowallet (13 August 2011)

Bill M said:


> I am not most investors then. I have been doing this since the late 70's. Things have changed for the better now though and I have changed with the times. My accountant told me that I should get a Quantity Surveyor in to assess my unit. They provided a comprehensive depreciation schedule which will be used for my ATO tax return. As the unit is new I will get an $8,000 depreciation deduction for the last financial year. I also raised the rent in the mean time. Any refunds from the ATO will be put aside for refurbishment. At this present moment in time my investment property is the safest and easiest investment I have, I won't be selling it anytime soon, cheers.




Sure, as long as there is capital growth to make up the shortfall between the tax benefit you get from the depreciation and the actual depreciation of the asset.  This is what is questioned, not the fact that you can claim it on your tax.


On a lighter note,

The birds are singing, and the streets are quiet.

A soft rustle of for sale signs moving in the wind permeates my cold house. I have gotten to know each sound personally, as the signs have been there for some time.

Unfortunately for me, my peace and quiet was interrupted by door knockers, I am not sure who it was, but I think Enzo was door knocking earlier, he looked desperate, and was dressed in a black suit and drove into the street in a lexus.

I just smiled, took a sip of my tea, and pondered doing some gardening. I am not much of a gardener, but I like to get my hands dirty. I looked over at my neighbours, who, in their 2010's Mcmansion were having a cafe late. They were on their patio, french doors open, heat pump warming the neighbourhood. Their gardener started early, and their cavoodle was being washed by the hydrodog man. I sure hope that they were watching what is happening in the world at the moment on their 42 inch plasma on their patio...

I look down at my garden, and remember the scrawny carrots it produced last time, I don't know why I bother.  I prefer my neighbours garden, their gardener does a great job, I give up... Perhaps I would be better off just offering them 25% less than they paid for their house, they will probably take it, I mean a painter and a checkout operator in a $750000+ house in the suburbs, will be in for a bit of a shock if the govt does not pump up the building industry again...

I am patient... nah I think I will stay in my place. There are better investments than a Mcmansion at some pathetic return on investment, ah return on investment, I remember when it used to matter.


Sunshine and lollipops

I am looking forward to the tainted clearance rates today,

MW


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## singlefished (13 August 2011)

medicowallet said:


> How long do you think investors will hold onto properties if the outlook is zero growth (ie negative return)..
> 
> Stagnation for 5-10 years is a massive pullback in real terms, just like the shares I purchased at $20 6 years ago, which are $20 now have made a capital loss in real terms.
> 
> Sure, most housing investors do not understand this (nor do they factor in replacement costs/maintenance/RE fees/stamp duty/accountant fees etc), but the smart ones do, and it is to them we should look, and I know a few who, having purchased relatively recently, are limiting their exposure.






http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp&s=nsw&u=manly

Looks like they're already used to the _10 years of capital stagnation_ scenario in Manly at least...

Check out the capital growth for units over the last 10 years:

2002 median - $570K
June 2011 median $520K

Sounds like rents are increasing so a median $600pw for a 2 bed unit may now cover about 2/3 of the monthly $3614 repayments on an assumed $500K mortgage taken out 10 years ago (guessing with an average interest of 7.25% over the last 10 years...)

median rent - http://www.housing.nsw.gov.au/About+Us/Reports+Plans+and+Papers/Rent+and+Sales+Reports/Latest+Issue/


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## Aussiejeff (13 August 2011)

Wonder how this will pan out?



> A NEW green scheme threatens to wipe tens of thousands of dollars from the market price of energy-guzzling old homes and McMansions.
> 
> The Federal Government aims to introduce mandatory energy star ratings for homes being sold or rented out as soon as next year.



http://www.heraldsun.com.au/news/mo...s-and-mcmansions/story-fn7x8me2-1226114121243

Yes, yes, yes, it is all a bit of a media beat-up as usual, but _in reality_, will the energy ratings competition really force some home values to drop significantly under the scheme? 

What next? A landlord rating scheme where tenants get to rate their landlords on a scale 0-10, where 0=Total Bastard and 10=Living God??


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## banco (13 August 2011)

Aussiejeff said:


> Wonder how this will pan out?
> 
> http://www.heraldsun.com.au/news/mo...s-and-mcmansions/story-fn7x8me2-1226114121243
> 
> ...




I think they've had them in the ACT for some time.  It's pretty obvious what a house's rating is anyway.  You don't need a rating to know that a large, older house is going to cost more to heat than a smaller house.


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## medicowallet (13 August 2011)

This weekend the clearance rate is 56 per cent compared to 54 per cent last weekend and 67 per cent this time last year. 

Those looking to sell their home over spring will be hoping that speculation of an interest rate cut last week becomes a reality as it would boost buyer confidence just at the right time. 

There was a total of 408 auctions reported this weekend, of which 229 sold and 179 were passed in, 117 of those on a vendors bid. 

Next weekend the REIV expects around 490 auctions. 

Enzo Raimondo
CEO REIV



--------------------------------------------------------------------------------

I note the 400 auctions reported is a wee bit short of the 500 predicted.  I can only wonder why last year had 681 auctions reported and apparently there are 40% more houses listed for sale this year.

Obviously real estate agents are taking it easy this year, doing around 60% of the work of last year with 40% more listings.

I can assume that over the next few months, reported auctions will have to drop to 300 to maintain around 60% clearance... unless juliar decides to give tradies a welcome boost to their bulging bottom lines.


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## moXJO (13 August 2011)

Lots of people at the open houses today in my local area. I was very surprised (all must have decided the stock market isn’t worth the risk after this week). Shops were all full during the day, as well as restaurants across 5 suburbs I drove through tonight. Actually found a house I am interested in today but I bet some sneaky bugger beats me to the punch while I do the figures.
Bounce coming? I hope not


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## greebly24 (15 August 2011)

I don't think there will be an interest rate cut. Inflation is simply too high. Aust CPI was around 3.5%, which is half a percent above the RBA's target band of 2-3%.

But real inflation, in things you actually need like food and gas and electricity, is actually way higher. Not to mention govt charges/fees/levies etc.

The way the CPI is calculated is based on a basket, can be misleading as it includes both things you need & things you'd like.
_
"The total basket is divided into a number of major commodity groups, subgroups and expenditure classes. It covers items such as food, alcohol and tobacco, clothing and footwear, housing, household contents and services, health, transportation, communication, recreation, education and financial and insurance services."_

Food, electricity, gas, water, transportation and healthcare are going up. But things like clothing, footwear and even TVs (household contents) are dropping as struggling retailers drop prices or people shop online instead. So food prices could double and TV prices halve, and there would be no CPI change.

But really, global money printing & currency devaluation is pushing up global inflation. 

So I don't think the RBA will lower rates. Combine that with the extra pressure families are feeling from their grocery and energy bills, and as a result now have less money to spend on servicing their mortgages and that won't be positive for house prices which will continue stagnating for a few years yet IMHO.


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## greebly24 (15 August 2011)

There seems to be a lot of arguments on shares v property on this thread. Arguments about the relevant superiority of asset classes are fairly pointless. Both have booms & busts & varying yields, just like all investments. I think the main things to keep in mind are your risk tolerance, your level of financial education and your trading frequency.

If you're a "set-and-forget" type, then you're probably better off in property. They call mortgages "forced savings for dumb people". You're forced to put money into something every month and it'll make money over the long term. But so would a savings account.

If you're an educated active trader, and can handle a bit of risk, then you're probably better off in shares. Buy on dips and sell on peaks. Or learn how to short-sell. You can make money when shares go up, or down, if you educate yourself a bit. Then a share crash becomes just another money-making opportunity.

Or in a booming housing market you can mix the two, and trade properties. "Flippers" made great money on property during the boom. Mate bought Gold Coast property on-line and sold six months later for $50k net profit. Besides a photo, he never even saw it.

But you don't really hear about "flippers" anymore. Not sure why?

While the property bubble here hasn't burst, sounds like its deflating now. Got mates offering cash bids with 3-month windows on properties at 20% discounts to advertised price. Amazing how keen RE agents are (esp. on properties on market for 6 months+), despite stubborn/romantic vendors still holding out.

Guess that pretty much sums up Aust property market at the mo.


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## Wysiwyg (15 August 2011)

greebly24 said:


> But really, global money printing & currency devaluation is pushing up global inflation.
> 
> So I don't think the RBA will lower rates. Combine that with the extra pressure families are feeling from their grocery and energy bills, and as a result now have less money to spend on servicing their mortgages and that won't be positive for house prices which will continue stagnating for a few years yet IMHO.




Do Australian banks borrow funds from overseas at presently very low % rates and sell loans to Australians at a higher % rate average set by the Reserve Bank while pocketing the margin?


----------



## Dowdy (15 August 2011)

greebly24 said:


> There seems to be a lot of arguments on shares v property on this thread. Arguments about the relevant superiority of asset classes are fairly pointless. Both have booms & busts & varying yields, just like all investments. I think the main things to keep in mind are your risk tolerance, your level of financial education and your trading frequency.
> 
> If you're a "set-and-forget" type, then you're probably better off in property. They call mortgages "forced savings for dumb people". You're forced to put money into something every month and it'll make money over the long term. But so would a savings account.
> 
> ...





Statically speaking, the share market has been historically the best long term investment.

If a house isn't paid off within 5-10years then it's a bad long term investment as over the 25year period of making payments off, you've paid a couple 100k in interest alone


----------



## Tysonboss1 (15 August 2011)

Dowdy said:


> If a house isn't paid off within 5-10years then it's a bad long term investment as over the 25year period of making payments off, you've paid a couple 100k in interest alone




if your paying $400 a week rent for 25years ( with zero inflation)
you will pay $520,000 in rent, I will take the interest thanks,


----------



## medicowallet (15 August 2011)

Tysonboss1 said:


> if your paying $400 a week rent for 25years ( with zero inflation)
> you will pay $520,000 in rent, I will take the interest thanks,




say a $450000 house rents for $400 per week (as is one I am involved in)

450k *7% interest over 25 years 

= $787500.

So at the moment, I'd take renting.

MUCH different to, for example, a house purchased in 1999 for $150000 which rented for 200 per week.

Once things start to come closer to realistic valuations and long term trends, then I would be happier to believe that owning in better than renting, but at the moment, the argument is difficult to make.


----------



## medicowallet (15 August 2011)

greebly24 said:


> despite stubborn/romantic vendors still holding out.
> 
> Guess that pretty much sums up Aust property market at the mo.




A lot of them HAVE to believe it.

There are quite a few places around Australia now, where prices are down to, or below prices 5 years ago, but the great thing is that their owners do not know yet.

If they had to sell, they would be very disappointed.


----------



## tech/a (15 August 2011)

*Is it time to buy yet???*


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## Tysonboss1 (15 August 2011)

medicowallet said:


> say a $450000 house rents for $400 per week (as is one I am involved in)
> 
> 450k *7% interest over 25 years
> 
> ...




Hey Bud,

Not looking for a long winded exchange, But.

It wouldn't be $787,000 interest because the loan decreases as you pay off the loan. 

and also as I eluded to earlier, $400 a week rent would increase significantly over 25 years with inflation.

But yes in a world where inflation didn't exist and people didn't pay off the principle of the loan ever you would be better renting.


----------



## Tysonboss1 (15 August 2011)

tech/a said:


> *Is it time to buy yet???*




I don't know, whats the chart tell ya. :


----------



## tech/a (15 August 2011)

Tysonboss1 said:


> I don't know, whats the chart tell ya. :




Ask a fundamentalist


----------



## medicowallet (15 August 2011)

Tysonboss1 said:


> Hey Bud,
> 
> Not looking for a long winded exchange, But.
> 
> ...




If you paid off the principal, then it would be significantly more than $400 per week. Now we could go on about how a properly geared difference in investment will perform etc, but that has been done by professionals across certain asset classes..IMO, gearing crazily into a bubble asset hoping for it to grow is flawed.

It is really horses for courses. If you are a good investor, with access to some investments (eg business) which can easily outperform property, then go ahead and consider renting.  If you think the herd will continue to ramp up gearing, then property over the medium term would be a good option.

I am not saying that property is a poor investment (or I would not be in it), but, AT THE MOMENT, the fundamentals are out of whack, and anyone wanting to challenge this need only check historic returns to confirm it.

Australian property investors will get a reality check, as have other investors world wide..


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## Tysonboss1 (15 August 2011)

medicowallet said:


> If you paid off the principal, then it would be significantly more than $400 per week.




Now thats sort of muddying up the waters.

consider the following and fill in the blank.

40 years of inflation adjusted rental payments = (blank)

Cost of home + 25years interest + 25 years rates maintaince - sale price of home inflation adjusted = (blank)


----------



## Wysiwyg (15 August 2011)

The obviousness is the sell price appreciates on the house but you have a house that is 25 years older and it will cost more to sell and upgrade to a modern house because everyone elses house has appreciated as well.. You don't really gain anything financially unless you sell and live in a caravan. It is a material gain through ownership while forking out hundreds of thousands in interest. Catch 22 with renting and saving. Interest on loan is dead money and so is rent.


----------



## Tysonboss1 (15 August 2011)

Wysiwyg said:


> You don't really gain anything financially unless you sell and live in a caravan. It is a material gain through ownership while forking out hundreds of thousands in interest. Catch 22 with renting and saving. Interest on loan is dead money and so is rent.




Well in retirement you get to live in it rent free, just paying rates and a bit of maintaince which is a fraction of the rent, and eventually you can sell it for a lump sum tax free and enjoy a higher standard of living in your later years.

It's not really a catch 22, Rent is dead money but.

Renting a house = ever increasing amounts of dead money due to inflation adjusted rent

renting money over 25 years = ever decreasing interest payments, that are made easier to pau due to inflation.


----------



## Tysonboss1 (15 August 2011)

Wysiwyg said:


> The obviousness is the sell price appreciates on the house but you have a house that is 25 years older and it will cost more to sell and upgrade to a modern house because everyone elses house has appreciated as well..




What, and it doesn't cost more to rent a better home?

Remember any maintaince costs, rates, insurance etc.etc is covered by rent.


----------



## jbocker (16 August 2011)

Do you remember when the big banks raised the interest rates higher than the RBA rate last year? Well it has come to bite the CBA chief on his backside. 
Due to customer disatisfaction he had dropped his bonus by nearly half! The bank has dropped from 2nd to 4th in customer satisfaction and the CBA chief (Norris) bonus has gone from 16.1Million to 8.6Million.
SUCK  EGGS  Norris!!!.. HA HA HA..

...ha

.....ha

**sigh** guess it wouldnt really hurt that much...


----------



## FxTrader (16 August 2011)

Tysonboss1 said:


> consider the following and fill in the blank.
> 
> 40 years of inflation adjusted rental payments = (blank)
> 
> Cost of home + 25years interest + 25 years rates maintaince - sale price of home inflation adjusted = (blank)




Such a calculation must be based on the past performance of property prices, interest rates etc.  Relying on past performance as a gauge for future performance is of course a fallacy.  However, let's reflect on a recent example of a relative in the U.S. since the Australian property market will never go down in the long term say the property bulls here, just look at the past. 

First, let's frame the calculation correctly...

(Current Valuation) - (Cost of home + 8 years interest + maint) 

   ($300,000) - ($700,000 + $192,000 + 8000) = - $600,000 in 8 years approximately 

Renting the same home for 8 years = $190,000 approximately.

So they would have been ~$410,000 better off after 8 years of renting.  However they stopped paying their mortgage a year ago now so that would distort the calculations a bit and they hope to stay another 12 months before being evicted.

Is this an extreme example? Unfortunately not in the U.S. but then they thought the same about property "secure as houses" as the saying goes.  In this case, and many millions of others, renting was definitely not dead money, rather it was smart money.


----------



## medicowallet (16 August 2011)

Tysonboss1 said:


> Now thats sort of muddying up the waters.
> 
> consider the following and fill in the blank.
> 
> ...




Muddying up the water????? YOU put that variable in, NOT me.

You also made an error:

40 years of inflation adjusted rental payments +return on alternative investment = (blank)


As I said, this has been done to death by people smarter in the area than us, but I only replied due to you claiming that I muddied the analysis, something you did to make your point seem more convincing.

The variable which really puts pressure on the whole thing is potential for capital gain, and to return to the long term trends, it needs to keep outperforming the world for many years to make a new trend, or to stagnate or fall to a more reasonable trend... I know what my money is on.


----------



## medicowallet (16 August 2011)

Tysonboss1 said:


> What, and it doesn't cost more to rent a better home?
> 
> Remember any maintaince costs, rates, insurance etc.etc is covered by rent.




Um.... wrong.

See, the thing that property spruikers tend to forget is the capital component, as you seem to be doing.

If we go to the above example, $450k loan, $400/wk rent.

How can the rent cover the interest costs AND the maintenance etc.

Of course, as you know, it does not.  That is why there is such a thing as negative gearing, please stop playing us as fools.

Of course, if you make the assumption that the property is fully owned, then, please factor this capital into the calculations of a properly constructed alternative investment plan for the renter in question..

Otherwise your analysis is like comparing a millionare to a social security recipient



Tysonboss1 said:


> Renting a house = ever increasing amounts of dead money due to inflation adjusted rent
> 
> renting money over 25 years = ever decreasing interest payments, that are made easier to pau due to inflation.




Here's the hole in your argument dear TB, dear TB,
Here's the hole in your argument dear TB, the hole,

Seriously, where did you magically get the extra money to pay the P&I payments, when the person renting can only pay the minimum rent of $400 per week on a $450k house....

IF you pay $400 per week on the $450k loan, I can tell you that the power of compounding on the ever increasing debt will KILL the inflationary adjusted rent payments for the same house.....


----------



## againsthegrain (16 August 2011)

haha Think I said this a while ago but I have friends that bought a good 5 - 8 yrs ago and only manged to pay off something like 20k from the loan and the rest is all interest payments. Needless to say they have no savings because everything goes off to pay the bank....

They got suckered in by exactly the same pitch that Tyson is spinning up


----------



## nomore4s (16 August 2011)

againsthegrain said:


> haha Think I said this a while ago but I have friends that bought a good 5 - 8 yrs ago and only manged to pay off something like 20k from the loan and the rest is all interest payments. Needless to say they have no savings because everything goes off to pay the bank....
> 
> They got suckered in by exactly the same pitch that Tyson is spinning up




That's pretty standard. The pay off for them will be in 10 years time when they start making real inroads into the loan, and then in 20 years time when the debt is paid off they will have a lot more disposable income.

Also need to consider everything extra they put into the loan now pretty much earns them 7% on that money.


----------



## againsthegrain (16 August 2011)

In 10 years time they will probably pay off another 30 - 50k max so maybye by the time they are 60 more disposable income will come for the pokies


----------



## medicowallet (16 August 2011)

nomore4s said:


> Also need to consider everything extra they put into the loan now pretty much earns them 7% on that money.




And loses them 6.5% in interest from the bank....


----------



## Tysonboss1 (16 August 2011)

againsthegrain said:


> haha Think I said this a while ago but I have friends that bought a good 5 - 8 yrs ago and only manged to pay off something like 20k from the loan and the rest is all interest payments. Needless to say they have no savings because everything goes off to pay the bank....
> 
> They got suckered in by exactly the same pitch that Tyson is spinning up




After 8 years you would already be seeing the compounded increase in the alternative rent they would have to pay for a similar property, and you would be seeing the exponetial decay of the loan, for example each payment they make this year has much less interest than it did in year 1.

Look, I am not trying to spruik property or sucker any body in, I am an investor in realestate so I benefit from lower prices and I benefit from having a larger body of potential tenants, I am just pointing out my beliefs.

After 8 years on a P/I 25year loan property investment is usually positive geared, atleast in my experiance, So that would be the mark where the owner occupier starts to break even in weekly housing cost compared to his renting friend, and from their compounding of rents and exponential decay work in the owners favour for as long as they live.


----------



## Tysonboss1 (16 August 2011)

medicowallet said:


> And loses them 6.5% in interest from the bank....




which is taxable and offers no hedge against inflation.

So yes, I aggree in a world with,

Zero inflation,
Zero population growth,
where you can only pay interest only on loans,

It makes sense to rent,

However I live in the real world where their is inflation, capital cities do have incremental population growth, owner occupier loans are p+I,


----------



## Tysonboss1 (16 August 2011)

againsthegrain said:


> In 10 years time they will probably pay off another 30 - 50k max so maybye by the time they are 60 more disposable income will come for the pokies




No, it would be more than that,

But consider this,

In ten years what would be the median rent compared to the weekly interest bill.


----------



## medicowallet (16 August 2011)

Tysonboss1 said:


> After 8 years you would already be seeing the compounded increase in the alternative rent they would have to pay for a similar property, and you would be seeing the exponetial decay of the loan, for example each payment they make this year has much less interest than it did in year 1.
> 
> Look, I am not trying to spruik property or sucker any body in,




Ok, so you are not a spruiker, nor trying to sucker anyone in,

but you are not comparing apples with apples.

How can an interest cost of $675 (anz standard variable), and P&I over 25y of $785 per week

be compared to $400 per week for a rental.

You keep ignoring or misrepresenting this fact.

Also don't forget inflation also affects your replacement costs and outgoings as well, so it is all relative.

So I have one question for you, if you dare:

AT WHAT POINT DOES RENTING BECOME MORE ATTRACTIVE THAN PURCHASING?


----------



## medicowallet (16 August 2011)

Tysonboss1 said:


> which is taxable and offers no hedge against inflation.
> 
> So yes, I aggree in a world with,
> 
> ...




And zero risk and zero bubbles... and where the person can AFFORD to pay more than interest only OR has not the capacity to invest in other areas... do you think everyone is clueless?

Who in their right mind would invest in cash?  It was an example of his erroneous statement.

How about $450k invested into a McDonalds franchise? or a pharmacy, or any other business that weathers storms quite easily..


----------



## medicowallet (16 August 2011)

Tysonboss1 said:


> No, it would be more than that,
> 
> But consider this,
> 
> In ten years what would be the median rent compared to the weekly interest bill.




Well it would depend,

How much will houses be worth in 10 years time?

Rent may be very similar in ten years time to what it is now, could be more, who knows??

And in saying that, purchasing a house in 10 years time may be a highly attractive proposition, as it was in the late 90s, but now it is not supported by fundamentals, if looking at returns.


----------



## Tysonboss1 (16 August 2011)

medicowallet said:


> .
> 
> 1, How can an interest cost of $675 (anz standard variable), and P&I over 25y of $785 per week
> 
> ...




1, because as I said I am looking at the cost over your life, I know I will need somewhere to live until the day I die and that will cost money, I am interested in sourcing this accomadation as cheaply as possible, and by purchasing a home the cost of accomadation is closer to wholesale rates than retail.

Yes , I would rather start paying $785 perweek that decreases over time to a nominal amount that is roughly 20% of the weekly rent, than start paying $400 a week that will increase forever with inflation and population growth.

2, In my experiance it is around the 8year mark that the interest payments and other costs end up below the weekly rent.


----------



## FxTrader (16 August 2011)

medicowallet said:


> AT WHAT POINT DOES RENTING BECOME MORE ATTRACTIVE THAN PURCHASING?




There are calculators for Rent vs Buy but default assumptions are usually overly optimistic about capital appreciation.  As a rule of thumb though, you need to stay in your property for at least 5 years before owning becomes a better option than renting.


----------



## medicowallet (16 August 2011)

Tysonboss1 said:


> 1, because as I said I am looking at the cost over your life, I know I will need somewhere to live until the day I die and that will cost money, I am interested in sourcing this accomadation as cheaply as possible, and by purchasing a home the cost of accomadation is closer to wholesale rates than retail.
> 
> Yes , I would rather start paying $785 perweek that decreases over time to a nominal amount that is roughly 20% of the weekly rent, than start paying $400 a week that will increase forever with inflation and population growth.
> 
> 2, In my experiance it is around the 8year mark that the interest payments and other costs end up below the weekly rent.




1. Of course you, yet again, fail to appreciate that the extra money, invested elsewhere, also provides a return.

2. I would prefer to pay rent of $400 per week out of a dividend from a business I purchase.

You failed to answer my question, so I will rephrase it so you gain clarity:

AT WHAT POINT DOES IT BECOME MORE ATTRACTIVE TO RENT THAN TO *PURCHASE A HOUSE*

Or do you think this is impossible?

Edit :  How did you come to the nominal 20% figure?  Are you saying that paying $400 per week on a homeloan will be better than paying $400 on rent?


----------



## Tysonboss1 (16 August 2011)

medicowallet said:


> 1, where the person can AFFORD to pay more than interest only OR has not the capacity to invest in other areas... do you think everyone is clueless?
> 
> 
> 2,How about $450k invested into a McDonalds franchise? or a pharmacy, or any other business that weathers storms quite easily..




1, Have I ever suggested that broke people should leverage into property, No. 

2, Or Abc learning, babcock brown etc.etc.  Not everyone has the skill of will to invest in some of the riskier asset classes. But most people can own their own home and it can add to their long term financel plans.


----------



## Tysonboss1 (16 August 2011)

medicowallet said:


> 1, AT WHAT POINT DOES IT BECOME MORE ATTRACTIVE TO RENT THAN TO *PURCHASE A HOUSE*
> 
> Or do you think this is impossible?
> 
> 2, How did you come to the nominal 20% figure?  Are you saying that paying $400 per week on a homeloan will be better than paying $400 on rent?




1, when the answer to A is less than the answer to B

A : 40 years of inflation adjusted rental payments = (blank)

B :Cost of home + 25years interest + 25 years rates maintaince - sale price of home inflation adjusted = (blank)

2, the 20% figure comes from the cost of home ownership with out debt, is generally in most areas about 20% of the rent that a land lord would charge for that property.

So after you have paid off your home, your cost of accomadation is 80% less than a renter renting the same property.


----------



## medicowallet (16 August 2011)

Tysonboss1 said:


> 1, Have I ever suggested that broke people should leverage into property, No.
> 
> 2, Or Abc learning, babcock brown etc.etc.  Not everyone has the skill of will to invest in some of the riskier asset classes. But most people can own their own home and it can add to their long term financel plans.




1. But you then forward a scenario whereby the person renting has not got $450k of assets.... interesting.

2. Sorry, I forgot, nobody has ever gone broke owning property.

I also agree that some higher return businesses are risky, hence why I said 2 businesses which are extremely stable, and have good ROI. 

I would also like to point out that housing is a riskier proposition now, than it was in the late 90s..


----------



## medicowallet (16 August 2011)

Tysonboss1 said:


> 1, when the answer to A is less than the answer to B
> 
> A : 40 years of inflation adjusted rental payments = (blank)
> 
> ...




ONCE AGAIN, I will fix your biased equation

1, when the answer to A is less than the answer to B

A : 40 years of inflation adjusted rental payments = (blank) - return generated by investing savings in alternate investments.

B :Cost of home (including legals and stamp duty) + 25years interest + 25 years rates maintaince - sale price of home +fees  = (blank)

And my argument is that, at the moment, A is less than B, as housing is in a bubble, with poor ROI on the capital investment.. The capital growth is FAR from guaranteed, and, as evidenced across the country, is under extreme pressure at the moment

Sure, I guess from your posts that you assume that housing will, for 25 years more, continue to defy trends, and the world... I guess you truly believe we are different, the "Cassimatis" of the realestate asset class...


----------



## Tysonboss1 (16 August 2011)

medicowallet said:


> Sure, I guess from your posts that you assume that housing will, for 25 years more, continue to defy trends, and the world......




Nope, just that inflation and incremental population growth exist.

Notice none of my posts have made reference to large cap gains, or all the normal property bull(shet) sayings like housing doubles every 10 years etc.etc.

My calcs just rely on inflation of say 3% and to an extent nominal population growth.

I am a value investor, and I aggree property is not as cheap as it was in the late 90's. but it's not bubble time, there is some froth, and that with settle, but your not looking at longterm 40% falls.


----------



## wayneL (16 August 2011)

Tysonboss1 said:


> Nope, just that inflation and incremental population growth exist.
> 
> Notice none of my posts have made reference to large cap gains, or all the normal property bull(shet) sayings like housing doubles every 10 years etc.etc.
> 
> ...




Define bubble


----------



## Tysonboss1 (16 August 2011)

medicowallet said:


> ONCE AGAIN, I will fix your biased equation
> 
> 1, when the answer to A is less than the answer to B
> 
> A : 40 years of inflation adjusted rental payments = (blank) - *return generated by investing savings in alternate investments.*B :Cost of home (including legals and stamp duty) + 25years interest + 25 years rates maintaince - sale price of home +fees  = (blank)




Yep, thats the catch though isn't it.

You only have about 8 years of actual savings by renting, and the biggest savings are in the first few years.

Now, I am not silly enough to believe that the average joe lower middle class is such a "cold blooded weigher of the odds" and has the disapline to allocate the savings from those first 8 years into a successful investment operation over the next 40 years where by he ends up better off.

In the great majority of cases if I recommended people took that approach it would end with them not saving the "savings", and therefore end up acustomed to a higher lifestyle than they can afford, little savings and never owning their own home.

However if I recommend that they start a plan to own a modest family home, the forced saving of it all will likly end up better for them.

Now, offcourse this is not true for everybody, there are countless individuals who will save the savings and put them to good use, and if the person is such a good cold blooded weigher of the odds, then eventually they will be so successful that buying a house may work out to be a great lifestyle decision for them.


----------



## Tysonboss1 (16 August 2011)

wayneL said:


> Define bubble




An economic development in which the price of a class of physical or financial assets (such as houses or securities) rises to a level that appears to be unsustainable and well above the assets' value as determined by economic fundamentals.


----------



## notting (16 August 2011)

wayneL said:


> Define bubble




Empty house


----------



## wayneL (16 August 2011)

Tysonboss1 said:


> An economic development in which the price of a class of physical or financial assets (such as houses or securities) rises to a level that appears to be unsustainable and well above the assets' value as determined by economic fundamentals.




Right... interesting.

So is debt (as an asset class) in a bubble?

Also, define unsustainable in this context.


----------



## Tysonboss1 (16 August 2011)

wayneL said:


> Right... interesting.
> 
> 1,So is debt (as an asset class) in a bubble?
> 
> 2, Also, define unsustainable in this context.




1. Not in the context that I believe it relates to longterm property ownership. 

2. wayne, I am sure you can find wikipedia site and link.


----------



## wayneL (16 August 2011)

Tysonboss1 said:


> 1. Not in the context that I believe it relates to longterm property ownership.
> 
> 2. wayne, I am sure you can find wikipedia site and link.




OK, thanks for your:

1/ view

2/ (non) answer

Your answer is actually far more comprehensive than it appears on face value.


----------



## medicowallet (16 August 2011)

Tysonboss1 said:


> Yep, thats the catch though isn't it.
> 
> You only have about 8 years of actual savings by renting, and the biggest savings are in the first few years.
> 
> ...




Um... no,

The $780ish P&I repayments start to make a larger dent into principal at around 8 years according to your assumptions....

However, even making the assumption that rent will keep pace with inflation over the next 25 years, 

the difference between a P&I repayment of $780ish and a rent starting at $400 will still be maintained for much longer 

That is, unless, you truly believe that a house worth $450000 will rent out at $780ish per week in 8 years time.

If this is the case, can you please convince my accountant of this..


( I do however, agree, that it takes discipline and a good investor to be able to pull off the alternative, but I would hope most of the people here are disciplined enough to do that, otherwise, yes, housing is a good "forced saving" scheme. )

I do like how you put "modest" house, the problem I see, through observation, is that the Mcmansion is becoming the norm.


----------



## Wysiwyg (16 August 2011)

Tysonboss1 said:


> Well in retirement you get to live in it rent free, just paying rates and a bit of maintaince which is a fraction of the rent, and *eventually you can sell it for a lump sum tax free and enjoy a higher standard of living in your later **years.*



Boss Tyson, what I have highlighted is exactly what I am pointing to. We are talking about the average family and eventually owning their family home. The cost of living and everyone elses house price has gone up so how can a higher standard of living be realised by selling? The only gain as you note is the building maintenance costs (including rates) will be the continuous outlay.


----------



## Tysonboss1 (16 August 2011)

medicowallet said:


> Um... no,
> 
> The $780ish P&I repayments start to make a larger dent into principal at around 8 years according to your assumptions....
> 
> ...




Let me clarify,

At 8years, the Interest on the loan, combined with other costs excluding principle payments, would be about what the inflation adjusted rent will be. 

The "P" part of P+I repayments is the forced saving, not a "cost", the P component is not dead money like rent and interest.


----------



## Tysonboss1 (16 August 2011)

Wysiwyg said:


> Boss Tyson, what I have highlighted is exactly what I am pointing to. We are talking about the average family and eventually owning their family home. The cost of living and everyone elses house price has gone up so how can a higher standard of living be realised by selling? The only gain as you note is the building maintenance costs (including rates) will be the continuous outlay.





1, no one lives forever, you goal should not be to die and leave the house to the kids.

 So when I said you can sell it and enjoy a higher standard of living in your later years, i meant that eventually you sell the family home, down size or draw equity out of it to fund nicer holidays, more free time, a better retirement villiage or nursing home than a person could afford that didn't have a home to sell because they lived it up when they were younger and were stuck paying high rent their whole lives.


----------



## medicowallet (16 August 2011)

Tysonboss1 said:


> Let me clarify,
> 
> At 8years, the Interest on the loan, combined with other costs excluding principle payments, would be about what the inflation adjusted rent will be.
> 
> The "P" part of P+I repayments is the forced saving, not a "cost", the P component is not dead money like rent and interest.




lmao, I am butting my head against a brick wall, of someone who wants their cake and to eat it too.   You have no idea about cash flow and expenses if this is your take. I am trying to help point out the facts ,but you cannot see them, at all, as you are blinded into thinking that the capital is magically made up for someone to buy a house, or it mystically evaporates for someone who rents.

ONCE AGAIN, you want to compare apples with oranges.

You want to count the "P" part for the home owner, and disregard it for the renter.  Poor, biased approach, designed to artificially make your position stronger.

You are either a Cassimatis, or Enzo.

PS

This is getting too frustrating for me to continue with, your persistant ignorance of reality has won the battle for you today. Well done??


----------



## Tysonboss1 (16 August 2011)

medicowallet said:


> You want to count the "P" part for the home owner, and disregard it for the renter.  Poor, biased approach, designed to artificially make your position stronger.
> 
> ?




Not at all, 

I am simply saying that the P part is not an expense in a way the I part is, You want to include the P part along with the I when calculating the weekly cost of buying a home this is not correct, the P part is equity, not an expense.

And no I am not disregarding the savings of the renter, as I said before I just question whether average joe uses these "saving" effectively to save for a stable future of just shouts an extra round or two at the pub and buys a better than average car.


----------



## medicowallet (16 August 2011)

Tysonboss1 said:


> Not at all,
> 
> I am simply saying that the P part is not an expense in a way the I part is, You want to include the P part along with the I when calculating the weekly cost of buying a home this is not correct, the P part is equity, not an expense.
> 
> And no I am not disregarding the savings of the renter, as I said before I just question whether average joe uses these "saving" effectively to save for a stable future of just shouts an extra round or two at the pub and buys a better than average car.




Seriously my last post regarding this, I promise.

PLEASE, check out the formula YOU wrote and I fixed, it clearly shows that your above statement is incorrect.  You MUST include both, if, as in YOUR example, you can use the sale price of the property to calculate the benefits/negatives of home ownership vs renting and investing as at the current time.

I grow tired of continuously correcting your flawed logic and analysis.  Please, if you do control any assets of worth, consult an accountant for advice..


----------



## satanoperca (16 August 2011)

Hi,

Interesting read you two debating buying over renting.

Okay, is renting now and for the next five years more beneficial financially over buying residential property?

I believe that buying your PPOR over renting if property price growth is >= inflation.

Yes, been over the fomulas a million times, way to many variables.

But I ask you this, do you see property prices keeping up with inflation over the next five years?

Cheers


----------



## medicowallet (16 August 2011)

satanoperca said:


> Hi,
> 
> Interesting read you two debating buying over renting.
> 
> ...




No, I do not see property prices keeping up with inflation over the next 5 years.  It has to return to trend somehow..

This was a tough question to answer as it involves a prediction on inflation, NOT easy to make predictions about, as the reserve has a different view than our wasteful, incompetent government.


----------



## Tysonboss1 (17 August 2011)

Well some people believe currency destroying inflation is at hand, but who knows for sure right. 

A better question would be do you think rents will not keep pace with inflation. Because that's what your comparing it with.


----------



## medicowallet (17 August 2011)

Tysonboss1 said:


> Well some people believe currency destroying inflation is at hand, but who knows for sure right.
> 
> A better question would be do you think rents will not keep pace with inflation. Because that's what your comparing it with.




Which is another complication.

It is really hard to make predictions as, in your example, a lot has to do with employment, relying on Americans and Europeans increasing debt to purchase stuff from China, so that the Chinese need to purchase our raw materials..

I, however can tell you that there are thousands in retail, soon to be followed by 1000 from Qantas, 400 from Bluescope and hundreds, if not thousands from banks, who will find it hard to pay the mortgage or to pay ever increasing rents over the next couple of years..

The system is so saturated by debt, that the shock to make it crack may not be that great.


----------



## prawn_86 (17 August 2011)

Tysonboss1 said:


> A better question would be do you think rents will not keep pace with inflation. Because that's what your comparing it with.




The rent i pay has def not increased with inflation. It has only gone up 6.5% over 5 yrs across 2 different properties in 2 different cities/states.


----------



## Tysonboss1 (17 August 2011)

prawn_86 said:


> The rent i pay has def not increased with inflation. It has only gone up 6.5% over 5 yrs across 2 different properties in 2 different cities/states.




I can tell you that the rent on every property I own has increased more than cpi every year for the last 10 years.

Offcourse some inexperianced land lords hesitate increasing rents each year (such as my mate) which can lead to them coolecting rents below market value which can give the impression to the tenant that rents don't go up.


----------



## sptrawler (17 August 2011)

Tysonboss1 said:


> 1, no one lives forever, you goal should not be to die and leave the house to the kids.
> 
> So when I said you can sell it and enjoy a higher standard of living in your later years, i meant that eventually you sell the family home, down size or draw equity out of it to fund nicer holidays, more free time, a better retirement villiage or nursing home than a person could afford that didn't have a home to sell because they lived it up when they were younger and were stuck paying high rent their whole lives.




It would be nice if the world worked that way. In Australia it doesn't ,usually what happens here is if you have nothing you get the service for nothing. If you have money or asset you pay for the same service.


----------



## againsthegrain (17 August 2011)

Or you lose the tennant and risk having your property on the lease market for weeks or months putting you back in the red on the "under market" rent you could have been collecting, yes there is plenty around where I live that have been on lease for months. 

Housing shortage is a myth


----------



## Tysonboss1 (17 August 2011)

sptrawler said:


> It would be nice if the world worked that way. In Australia it doesn't ,usually what happens here is if you have nothing you get the service for nothing. If you have money or asset you pay for the same service.




What, the government pays for interstate holidays to visit grankids, will they buy you a new caravan and fourwheel drive? I don't think so.

The pension is peanuts, trust me, from spending time with some retirees it is better to have a bit of wealth.

And when it comes to nurcing homes it is good to pay a bit extra.


----------



## satanoperca (17 August 2011)

If property prices do not keep up with inflation who would risk money in this highly overleveraged asset class.

It would seem that most people after nearly 20 years think that its growth will continue, but just like shares, after 20 straight wins one must be aware that the odds are stacked against you to keep winning.

Just like CFD's and other highly leveraged investment tools, the going is great when everything is going your way, but it leaves you will a very bitter taste when it goes against you.

Cheers


----------



## Tysonboss1 (17 August 2011)

againsthegrain said:


> Or you lose the tennant and risk having your property on the lease market for weeks or months putting you back in the red on the "under market" rent you could have been collecting, yes there is plenty around where I live that have been on lease for months.
> 
> Housing shortage is a myth




Well thats not my experiance, and I have been land lording for a while. Generally I have a new tenant lined up to move in within 1 or 2 days.

My biggest vacancy has been 2 weeks, and that was because we did some minor renovations in between tenants.

Offcourse it all comes down to the area and the property type.


----------



## Glen48 (17 August 2011)

Once there are thousands of properties on the market the tenant will tell you the rent guess most will be happy to have some money coming in and to have some one in the place as security.


----------



## banco (17 August 2011)

Interesting passage from Paul Krugman's The Return of Depression Economics:

By the late spring of 2006, however, the weakness of the market
was starting to sink in. Prices began dropping, slowly at first,
then with growing speed. By the second quarter of 2007, according
to the widely used Case-Shiller home price index, prices were
only down about 3 percent from their peak a year earlier. Over the
course of the next year they fell more than 15 percent. The price
declines were, of course, much larger in the regions that had experienced
the biggest bubbles, like coastal Florida.


----------



## medicowallet (17 August 2011)

Tysonboss1 said:


> What, the government pays for interstate holidays to visit grankids, will they buy you a new caravan and fourwheel drive? I don't think so.
> 
> The pension is peanuts, trust me, from spending time with some retirees it is better to have a bit of wealth.
> 
> And when it comes to nurcing homes it is good to pay a bit extra.




What grandchildren?

Too busy working to pay off the McMansion to do the act to make em.

They wouldn't be affordable with the monthly repayments...


----------



## satanoperca (18 August 2011)

If there is a housing shortage, why so much supply coming onto the market?



> Figures released last week by SQM Research revealed that residential property listings for the month of July 2011 rose by 13,476 to 377,315 nationally. This is a 4% increase from June 2011, as well as a 22% increase when compared to the corresponding period last year (July 2010).




and Melbourne going for Gold. 



> Melbourne was also the capital city to record the largest year-on-year increase, rising by 45% since July 2010.




So just to keep up to date :
1) Property prices have fallen for the last six months nationally
2) Unemployment on the rise
3) Housing inventory for sale building up rapidly
4) Our debt burden has increased since 2008

and somehow property will continue to rise

hmmmm, starting to look like the only thing that is different in Oz is we are four years behind the rest of the world.

Stay tuned.

Cheers


----------



## greebly24 (18 August 2011)

Best way to make money in real estate is to rent/buy the cheapest place you can, whilst also buying the most expensive place you can and renting it out. Let the renters pay off your big debt, whilst you pay off the small one.

If you've got a big house as your PPOR, and are renting out a little flat as an IP, you're doing it wrong.


----------



## prawn_86 (18 August 2011)

greebly24 said:


> Best way to make money in real estate is to rent/buy the cheapest place you can, whilst also buying the most expensive place you can and renting it out. Let the renters pay off your big debt, whilst you pay off the small one.
> 
> If you've got a big house as your PPOR, and are renting out a little flat as an IP, you're doing it wrong.




Wouldnt it make sense to get a place that will be cash-flow positive asap?

My analysis has shown that the more expensive the place is, the lower the rental return (in general), meaning more you need to contribute to pay off the loan...


----------



## greebly24 (18 August 2011)

prawn_86 said:


> Wouldnt it make sense to get a place that will be cash-flow positive asap?
> 
> My analysis has shown that the more expensive the place is, the lower the rental return (in general), meaning more you need to contribute to pay off the loan...




Very good point. But you can negatively-gear all the losses on your (more expensive) IP.


----------



## greebly24 (18 August 2011)

A little while ago I corrected someone who said that some property in some places had dropped by up to 40%, by pointing out a couple of places in WA & QLD that had dropped 50%. Then I read this:

_"Creditor chases valuers over lost funds" AFR, Property section, 18/8/11_

Long story short: Angas Securities lent people money based on RE valuations, then lenders defaulted, property sold at auction for less than loan, so Angas suing valuers instead.

_"This Noosa Heads riverfront home was valued at $8.1 million in October 2009 and sold for $4.1 million in March 2011."_ *50% loss*

_"One property in Palerang was valued at $1.9 million, with development approval for 16 housing lots, which was near completion. It sold for $140,000 last month."_ *93% loss*

"...two vacant housing lots near Gosford on the NSW Central Coast were valued at $385,000 and $425,000 in October 2006..... sold at auction in December 2010 for just over $25,000 and $40,000, respectively." *more +90% losses*

Its hard to argue that property in Australia wasn't a bubble, when valuations were up to 900% higher than reality. I'd feel sorry for people who paid those high prices, if they weren't part of the problem. But the CEO of the RE valuation company has a great quote in his defense, which could apply to the entire property market in Australia:

_"Anyone in that market, knowing how sick the market is and knowing they have a distressed sale on top of it, is going to be looking for an extremely good buy."_

Yes, there is great money to be made in property in Australia. Just offer people a lot less than they're asking, and someone will eventually take it. Property isn't booming anymore, but desperation seems to be.


----------



## satanoperca (18 August 2011)

Where have all the bulls gone?

And why have the disappeared? hmmmmm I wonder

Anyhow, the housing shortage myth busted by who else by Residex.

No shortage, more like an oversupply. Isn't this the same pattern that the US went down.

housing shortage
falling house prices
rising unemployment
oversupply of homes
falling house prices etc etc etc 

http://blog.residex.com.au/2011/07/26/june-qtr-residex-reports/

Melbourne currently has an oversupply of 26000 homes/apartments. 

So we have a huge build up in inventory in Melbourne at the moment as well as an oversupply, only logical conclusion is house prices to the moon.

Feel for all those FHB that got suckered into the market in the last few years, no I don't. They should have done so valid research before committing themselves to debt slavery. 

Cheers


----------



## nulla nulla (18 August 2011)

satanoperca said:


> Where have all the bulls gone?
> 
> And why have the disappeared? hmmmmm I wonder
> 
> ...




You're a cheerful sod satan.  Even if Melbourne has an oversupply, it isn't about to have a melt down like the u.s.a. (Who would want to live in a cold, wet and windy place like Melbourne anway  )

Maybe all the Melbournites are moving to Qld again to take advantage of the drop in housing/apartments on the goldcoast and the sunshine coast.


----------



## satanoperca (18 August 2011)

I'm a happy sod there Nulla Nulla, just reporting the facts, I dont create them, just find them. 

Please do explain why we cannot see a significant drop in Melbourne property prices.

To add just a little more :

Currently it takes 68% of the median after tax household income to purchase a median priced house in Melbourne. Yes 68%, I can see how we can get that up to maybe 85%, not. We are over indebted, have rising unemployment and a large build up of inventory, coupled with a defunct government and very uneasy international conditions.

By the way, where did all those Chinese investors go, maybe the same place as the shortage spruikers.

Cheers


----------



## trainspotter (18 August 2011)

I am breaking all my own rules by posting here. But it needs to be done. 

The quotes about 68% DSR and 93% losses (due to foreclosure/bad management and not by choice) are isolated cases FFS !!!!!!!!! Mummy and Daddy are still happy little slaves to the bank and paying off their debt.

ABS stats over 8 capital cities is less than 3% across the board over a 12 month period. Never mind it went UP more than this prior.. 

Get a grip peoples.  We are not seeing wholesale jingle mortgages and banks slumping due to non payment. FAR OUT !!!!!!!!!!!!!

No wonder I left this thread to it's own devices ......... go and slash your wrists NOW and avoid the rush.

Does anyone here that posts are ACTIVELY involved in property? Or are you all internet gurus? (Tech/a excluded of course) 

moooooooooooooooooooooooooooooooooooooooooooooo 

Medicowallet: This is considered a free hit. No correspondence will be entered into.


----------



## medicowallet (19 August 2011)

trainspotter said:


> Medicowallet: This is considered a free hit. No correspondence will be entered into.




Sooooooooooooo tempting, but, pointless actually, goign to see some houses this weekend, just for the peace and quiet.

You could take solace in the wise words from Robots, if he would post between shifts


----------



## medicowallet (19 August 2011)

trainspotter said:


> The quotes about 68% DSR and 93% losses (due to foreclosure/bad management and not by choice) are isolated cases FFS !!!!!!!!! Mummy and Daddy are still happy little slaves to the bank and paying off their debt.




b&b, mfs and abc were not really mum and dad shares, but consistently quoted, so I think fair is fair


----------



## nulla nulla (19 August 2011)

trainspotter said:


> I am breaking all my own rules by posting here. But it needs to be done.
> 
> The quotes about 68% DSR and 93% losses (due to foreclosure/bad management and not by choice) are isolated cases FFS !!!!!!!!! Mummy and Daddy are still happy little slaves to the bank and paying off their debt.
> 
> ...




Thank you Train Spotter. Melbourne is not about to have a ninja loan melt down with property values falling by up to 75%, now or in the future. 
Unemployment rates are not going to 30% and the federal government (and opposition) incompetence is having negligible influence on property prices. 
Banks are working with people that are experiencing problems with housing loan repayments and foreclosures are minimal as divulged in the bank reports and their provisioning. 
Life goes on and "bricks and mortor" remain a very important, and viable long term investment.


----------



## satanoperca (19 August 2011)

nulla nulla said:


> Thank you Train Spotter. Melbourne is not about to have a ninja loan melt down with property values falling by up to 75%, now or in the future.
> Unemployment rates are not going to 30% and the federal government (and opposition) incompetence is having negligible influence on property prices.
> Banks are working with people that are experiencing problems with housing loan repayments and foreclosures are minimal as divulged in the bank reports and their provisioning.
> Life goes on and "bricks and mortor" remain a very important, and viable long term investment.




I don't know what is worse, rampant bulls or bears in this thread.

Please point out where someone has stated falls of 75% and 30% unemployment. Talk about get a little excited, both you Nulla Nulla and T/H. 

I provide links to a report, that report states and oversupply of housing in Melbourne and that the median household in the median house is paying 68% of their after tax income on paying off the mortgage.

Nothing to see hear folks, keep you head up ya arses and it will all go away or provide some contructive arguement instead of rants of crazy men.

Cheers


----------



## Uncle Festivus (19 August 2011)

It's still good to see that Australia is still different and immune from the rest of the world, even though, going by the latest data, the rest of the world is possibly back in recession?

As always, the proof of commitment to property is if the permabulls are actually still buying now? Are you??


----------



## KurwaJegoMac (19 August 2011)

Uncle Festivus said:


> As always, the proof of commitment to property is if the permabulls are actually still buying now? Are you??




Yep. My latest IP saw a tenant sign a lease at just above market rate after only 2 days on the market. This is after 8 applications on day 1. 

Just gotta pick your suburbs well.


----------



## Uncle Festivus (19 August 2011)

KurwaJegoMac said:


> Yep. My latest IP saw a tenant sign a lease at just above market rate after only 2 days on the market. This is after 8 applications on day 1.
> 
> Just gotta pick your suburbs well.




Yes, but what is your yield? It's all well & good buying at the top but if it's not paying it's way then....?


----------



## greebly24 (19 August 2011)

In local Adelaide news, mate just offered $245k on $280k house (12.5% discount). RE Agent came round few hours later to make it official. You could almost smell the desperation.


----------



## KurwaJegoMac (19 August 2011)

Uncle Festivus said:


> Yes, but what is your yield? It's all well & good buying at the top but if it's not paying it's way then....?




Current yield, excluding any change in capital value is -0.77%. This includes, rent, maintenance and all operating fees and council rates. 

Based on my current rate of savings, yield will be positive within 11 months. 

Yields are based on total purchase price with stamp duty and not original capital invested.


----------



## medicowallet (20 August 2011)

"The clearance rate this weekend is 59 per cent, compared to 56 per cent last weekend and 73 per cent this weekend last year. 

This weekends result is consistent with the past three months in which the monthly clearance rate has been 55 per cent. 

There were a total of 409 auction results reported this weekend of which 242 sold and 167 were passed in, 107 of those on a vendors bid. 

There will be a small lift in stock next weekend with 615 auctions expected"

Soooo, 500 predicted for this weekend, 409 reported.. under reporting or the RE agents losing faith??

Why has the clearance rate remained so low so long?
When will it pick up?
What impact on price has this had?

Why so few auctions compared to last year when inventories are so much higher?
How many RE are there working this year?
Are they still full time or part time?

Where is Robots?


For all these answers and more, tune in to Bulls vs Bears, this month (and next etc), exclusive to ASF.

Sunshine, lollipops and slightly smaller bubbles

MW


----------



## Uncle Festivus (21 August 2011)

KurwaJegoMac said:


> Current yield, excluding any change in capital value is -0.77%. This includes, rent, maintenance and all operating fees and council rates.
> 
> Based on my current rate of savings, yield will be positive within 11 months.
> 
> Yields are based on total purchase price with stamp duty and not original capital invested.




So would you be willing to name the suburb or postcode so we can keep tabs on the price increase over the next 12 months??


----------



## Uncle Festivus (21 August 2011)

medicowallet said:


> Where is Robots?
> 
> For all these answers and more, tune in to Bulls vs Bears, this month (and next etc), exclusive to ASF.
> 
> ...




Apparently Professor Robots is on consignment from the University and is doing the lecture circuit in the US on how to solve their real estate bust.


----------



## KurwaJegoMac (21 August 2011)

Uncle Festivus said:


> So would you be willing to name the suburb or postcode so we can keep tabs on the price increase over the next 12 months??




Knock yourself out: Noble Park (3174)


----------



## FxTrader (21 August 2011)

KurwaJegoMac said:


> Knock yourself out: Noble Park (3174)




Prosper Australia has made a prediction on the Melbourne market (postcodes 3000-3207) based on rising stale stock levels in "Prosper affirms ‘Don’t Buy Now!’ warning"...

_"Melbourne will be the epicentre for foreclosures and price falls because we have overbuilt by so much," Prosper Australia spokesman David Collyer warned.

"We expect harsh price corrections in the newly built outer suburbs. I know it's unhappy news for a lot of people, but it's better they hear the truth."

Housing Industry Association chief economist Harley Dale said Melbourne was the country's most at-risk property market._

http://www.prosper.org.au/2011/08/18/prosper-affirms-%E2%80%98don%E2%80%99t-buy-now%E2%80%99-warning/

Some interesting excerpts...

‘Stale Stock’ on the market in Melbourne is growing exponentially
The sheer volume of unsold property is now indigestible
Recent price falls must accelerate

_“We confirm our earlier warning to prospective homebuyers – those entering the market or trading up to more valuable properties – to stand aside as prices fall,” Prosper Australia Campaign Manager David Collyer said today. “Your buying will not arrest this powerful economic trend.

“Anyone purchasing at current price levels will suffer very substantial capital losses over about the next six years. Those who rely on a large mortgage will likely plunge into negative equity, where the property is worth less than the loan it supposedly supports."

“In the last four months ‘Stale Stock’ in Melbourne postcodes 3000-3207 has doubled, ballooning from 19,800 to 38,522. In the wider Melbourne and environs, 60,253 houses have been on the market for more than 6o days and remain unsold."

“Buying has simply dried up. A couple with two good incomes and a solid deposit cannot afford these prices.

“New construction has slowed to a crawl because of the unsold stock. This means widespread layoffs in the building trades as projects are completed and new starts deferred,” Collyer said.

“We are entering the spring selling season when property is brought to market in volume. With this ‘Stale Stock’ already overhanging, prices must change.

“Across Australia, homeowners have eagerly bought the story property is wealth and prices can only rise, inflating the market price of Australian land to a ridiculous $3.5 trillion. Unfortunately, these values have been built on debt and we face difficult times as this frenzy is unwound.”_

As a counter Residex says...

_"Residex chief executive John Edwards said Melbourne was oversupplied, but would avoid a crash. Mr Edwards, who has monitored the country's property market for more than 20 years, estimates Victoria had an oversupply of about 24,000 dwellings.

"The majority of that is in medium and high-density developments, and a significant proportion of that is in Melbourne," he said."_

If the Prosper prediction comes to pass then a young couple who just bought a house in our neighborhood (3156) for $25k over the reserve at auction (and I thought the reserve itself was $25k to high!) will be very dissappointed indeed.

I think Edwards is more likely to be correct for the moment.  I have been looking at houses in Melbourne's east now for over a month and monitoring sales.  Poor quality homes are going stale but well presented homes in good neighborhoods are still selling at or above the top of their price range.  The traditional spring glut of houses going to market should be a gauge of where the market is headed price wise.


----------



## Aussiejeff (22 August 2011)

Looks like The Block auction failures - even with grossly "underquoted" values failing to attract bids - are a reflection of the true RE market sentiment at the higher end?



> UNDERDOGS Polly Porter and Waz Jones have won The Block because _they were the only contestants to sell their house at auction._
> 
> *The much-hyped grand finale hosted by Scott Cam proved an utter fizzer with three of the four Richmond houses falling well-short of what had been considered very conservative reserve prices.*
> 
> ...




Read more: http://www.news.com.au/entertainmen...on/story-e6frfmyi-1226119267456#ixzz1VhUd38l2

Oh well. As long as the ratings were ok.  Where to for median to high end RE from here??

aj


----------



## KurwaJegoMac (22 August 2011)

FxTrader said:


> If the Prosper prediction comes to pass then a young couple who just bought a house in our neighborhood (3156) for $25k over the reserve at auction (and I thought the reserve itself was $25k to high!) will be very dissappointed indeed.
> 
> I think Edwards is more likely to be correct for the moment.  I have been looking at houses in Melbourne's east now for over a month and monitoring sales.  Poor quality homes are going stale but well presented homes in good neighborhoods are still selling at or above the top of their price range.  The traditional spring glut of houses going to market should be a gauge of where the market is headed price wise.




Good articles, both present valid points. The South-East has a lot of stale properties on the market, many of which are unfavourably largely due to the sheer amount of development occuring in the area. For example, i wouldnt want to touch townhouses and units in Noble Park, the rate of development of these types of dwellings in the last 2 years has been phenomenal. Driving through i can see even more land being cleared and prepared for townhouses. Even so, they're getting snapped up quickly for now but they've hit a price point almost on par to a 30yr old 3 br house on 550 land. Dont know if thats similar in the East?

Good quality houses are gettin snapped up but there is a growing glut of poor properties - this will pit pressure on prices for sure. You can see the sentiment shift of the buyers, people aren't rushing out to buy anything that lists no matter the quality. While this is the way it should be, it could be a herald of darker days so one must be cautious. 

What are your thoughts on the East based on your research?


----------



## FxTrader (22 August 2011)

KurwaJegoMac said:


> What are your thoughts on the East based on your research?



We've been attending opens across a few suburbs out here in eastern Melb and monitored sales for the last month or so in search of another PPOR.  The pulse of the market out here seems to be that well presented homes in desirable neighbourhoods are getting a lot of attention and attracting top prices in their price range, anything else stays on the market for awhile and gets price adjustments.  Buyers are picky but not that price sensitive if the property is a good one.  For example, one well presented property had 60 groups through on the weekend while another in the same area in the same price range had about 10.

Of the suburbs we monitor, Pakenham, Cranbourne and Dandenong sales look under pressure with a lot of unsold stock going stale.  Still a lot of development activity going in these suburbs and surrounds keeping prices down.

Suburbs like Rowville, Ferntree Gully, Upwey and Lysterfield are still attracting buyers for well presented properties.  But spring will likely see a glut of properties hit the market in these suburbs a put some downward pressure on price expectations.


----------



## medicowallet (22 August 2011)

Uncle Festivus said:


> Apparently Professor Robots is on consignment from the University and is doing the lecture circuit in the US on how to solve their real estate bust.




I can just imagine his rally

"there is no bust, there is no bust, if you say it enough, there is no bust!"


----------



## maffu (22 August 2011)

Aussiejeff said:


> Looks like The Block auction failures - even with grossly "underquoted" values failing to attract bids - are a reflection of the true RE market sentiment at the higher end?
> 
> 
> 
> ...




I didn't watch the TV show, but I think they paid 900k each for the houses, and spent 100k on renovations, so 1mil for each property.

The winner sold for 855k, and I heard that one of the properties sold after auction for 860k.
What were the other 2 properties advertised at?

Seems like a very big loss considering how much publicity they got for the apartments...


----------



## banco (22 August 2011)

I've read in a few places that the US property bubble produced quite a lot of real estate reality TV.  Of course that's all gone now.... 

Good to see the spivs could only find a sucker for one of the four apartments.


----------



## KurwaJegoMac (22 August 2011)

FxTrader said:


> Of the suburbs we monitor, Pakenham, Cranbourne and Dandenong sales look under pressure with a lot of unsold stock going stale.  Still a lot of development activity going in these suburbs and surrounds keeping prices down.





I've seen the same, although can only comment for Dandenong. It is definitely slowing down, but its been a crazy couple of years since the Government revitilisation project, $200m+ in upgrades. Prices I think have reached their saturation point - a lot of the new precint has already been sold and there's a lot more coming just south of Dandenong towards Keysborough. I see townhouses in that area currently at a premium and I'm expecting them to go down - sales have most definitely slowed. In general though I think surrounding suburbs are behind the curve and have a bit more to go (perhaps 1-2 years) as Dandy is at a premium atm. 



FxTrader said:


> Suburbs like Rowville, Ferntree Gully, Upwey and Lysterfield are still attracting buyers for well presented properties.  But spring will likely see a glut of properties hit the market in these suburbs a put some downward pressure on price expectations.




Agree on this - I've been looking at Rowville in particular as this is my #1 personal pick for a PPOR at the moment. I have a close mate who works as an agent in the area and he says quality stock is flying out the door, but the less presentable ones are going very stale. He says a big issue is that there is a glut of vendors with highly unrealistic expectations - he gave one example of two similar sized homes in the same street on the market within 6months of one another. The first (which sold) at $480k was newly renovated and immaculate inside. The other one (stale for the last 3 months) still has original furnishings and is in bad need for some TLC - vendor refusing to take anything less than $500k.


----------



## medicowallet (22 August 2011)

maffu said:


> I didn't watch the TV show, but I think they paid 900k each for the houses, and spent 100k on renovations, so 1mil for each property.
> 
> The winner sold for 855k, and I heard that one of the properties sold after auction for 860k.
> What were the other 2 properties advertised at?
> ...




idk what they are advertised at,

But if I knew the "reserve" I sure as heck wouldn't be going in and offering $100k more than that now.

I feel sorry for the contestants who walk away with nothing for putting 10 or so weeks of full time work..

A sign of things to come,

I also notice that either june or July (can't remember) went down 1.6% for the month... where is Robots again?  Quite a few of Rudd's suckers will have lost 3-5%+ in that month alone on a 1.6% fall..

Will they start rushing for the exit?


----------



## skc (22 August 2011)

Aussiejeff said:


> Looks like The Block auction failures - even with grossly "underquoted" values failing to attract bids - are a reflection of the true RE market sentiment at the higher end?




I've only watched a few episodes of the show but it seemed like they are doing it the wrong way. They ask people to renovate, then come up with a reserve price based on the renovations done, and the winner is the couple who makes the most money above the reserve...

So in essence, you are penalised for your good renovating work by the higher reserve. The better you renovate, the more you are disadvantaged and the harder it is for you to win the show. 

They should have just come up with a "price point" that is based on the location and a plain vanilla home of that size, before all the renovations are done. The winner will then be whoever beats that price point by the largest amount.

The auction reserve price is another matter altogether and should not be used to determine the winner imo.

It is just a TV show I supposed. And frankly it is silly trying to buy a property on a TV show, as if the usual auction process isn't tough enough.


----------



## notting (22 August 2011)

Reserves should have been what nine paid for them plus renovation costs. Who ever did best out of that wins even if it was a loss. Nine probably paid too much to begin with to get the format right for the show. Hardly a reflection of the property market.


----------



## tech/a (22 August 2011)

Whole things a joke.
What people call entertainment never ceases to amaze me.

Its ONLY purpose is the fill 9s pockets with cash.
It does that-----
If you like watching paint dry and you love
pregnant pause suspense---your nights will be
choka block --pun--full.


----------



## notting (22 August 2011)

tech/a said:


> choka block --pun--full.




LOL


----------



## Glen48 (22 August 2011)

These type of shows have a lot to answer for in helping the Housing boom/bust convinced sucker R. E never fails now they need to do a show called Australia's biggest looser's and show how the economy works in real life


----------



## medicowallet (22 August 2011)

Glen48 said:


> These type of shows have a lot to answer for in helping the Housing boom/bust convinced sucker R. E never fails now they need to do a show called Australia's biggest looser's and show how the economy works in real life




The melbourne market has fallen over the last 6 months.
The auction clearance rates are shaky at best.

Such a high profile show, could be a tipping point (unlikely, but such a fragile setup, with such devastating results)

If I were a mega rich RE group, I would be teaming up with other groups and offering at least $100k over reserve for the final 2 houses and make a big hooplah over it all.


----------



## Aussiejeff (23 August 2011)

medicowallet said:


> The melbourne market has fallen over the last 6 months.
> The auction clearance rates are shaky at best.
> 
> Such a high profile show, could be a tipping point (unlikely, but such a fragile setup, with such devastating results)
> ...




Polly & Waz's house was purchased by "buyer's advocate" Frank Velentic "on behalf of an investor".

Hmmm. That mystery "investor" wouldn't have been an insider acting on behalf of CH9 now, would it? (imagine the fallout if NO houses had sold!)... tch. How could I even imagine a "rigged" result would be even remotely possible in this age of honesty and full disclosure by the media? I must be mad.... 

Footnote: 







> Nine has emerged a massive winner anyway with The Block averaging 1.336 million viewers a night for the past nine weeks.
> 
> The finale is likely to have come close to doubling that figure – not a bad result in a market like this one.




Read more: http://www.smh.com.au/entertainment...s-the-block-20110821-1j4tb.html#ixzz1VnPOMJCC


----------



## DocK (23 August 2011)

I'm not sure using the purchase price of the homes as a true value is realistic - I'm sure I read somewhere that 9 paid way over market value in order to get 4 side-by-side houses and could well afford to take a loss on the final sale as they make their money from the advertising, sponsorships etc.  As long as the show rated well 9 was on a winner.  My understanding was that the reserves were arrived at by a valuer or team of valuers who supposedly worked out a realistic value for the starting dump, land area etc and just added the 100k spent on renovations to that figure to arrive at a reserve - meaning that the team that had put their 100k to the best use would supposedly win.  Having watched most of the shows I'd be surprised if the lack of bids wasn't influenced a fair bit by the shoddy finish of a lot of the reno work - they were put under such ridiculous time pressure in order to produce "entertaining reality tv" that there's no way imo that a proper job could have been done - especially on the exteriors.

Turning the auction itself into a media circus wouldn't help either I'd expect - would any serious prospective bidder really want to play their hand on national telly?


----------



## againsthegrain (23 August 2011)

> would any serious prospective bidder really want to play their hand on national telly?




The angry Indian lady tried but was upset when her bid of 700 didn't win


----------



## greebly24 (23 August 2011)

The Block 2011 - gotta love train wreck television. 

Channel 9 paid $3.6 million for the four properties, plus $200k stamp duty, plus $400k on renoes (not including the free labour) for a grand total of $4.2M or $1,050,000 each.

Two have now sold, for $860k and $855k. So they only made a 18% loss on each so far.

Loved one of the chick's comments afterwards: _"Well that was a waste of time."_

But looking at the bright side, they got a clearance rate of 50%. One sold at auction and two go unreported.

There is still great money to be made in RE though. Just ask the bloke who sold these properties to Channel 9 how he did it? In fact he could now buy back the four renovated properties (inc stamp duty) for what he sold them for. The guy is a genius.


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## Tysonboss1 (23 August 2011)

greebly24 said:


> So they only made a 18% loss on each so far.




Is that Including the hundreds of thousands of dollars in advertising revenue and product placements.

As previously pointed out, channel nine is in the businesses of television, not real estate.

Offcourse the over paid for the properties so as to secure the 4 similar properties all in a row, so as to keep with the theme.


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## KurwaJegoMac (24 August 2011)

For all those that have been keen on posting the auction results of The Block - all 4 houses are now sold:

Property 1: $72,000 above reserve
Property 2: $50,000 above reserve
Property 3: $15,000 above reserve
Property 4: At reserve

http://www.theage.com.au/entertainm...-out-20110824-1j9g1.html?comments=49#comments

Shame that the contestants for property 1 didn't sell on the day! They would have walked away with an extra $100k in prize money. Still, a good result for all.


----------



## greebly24 (24 August 2011)

KurwaJegoMac said:


> Still, a good result for all.



 WTF? 

Oh, I get it now. Buy & reno a place for $1.05M, set a reserve at $850k, get $50k over that and call it a good result for all (ignore the $100k+ loss).

Using the same logic you could also say the auction clearance rate was 100% (1 sold, 3 unreported). Think I'm starting to get the hang of RE spin.

The production company made money, Channel 9 made money (despite the RE loss), one of the couples won some money, the other couples wasted their time, the advertisers got to prove their home-improvement products don't increase a home's re-sale value and the everyone who watched the train wreck of an auction got to see how depressed the OZ RE market really is.



KurwaJegoMac said:


> Still, a good result for all.


----------



## KurwaJegoMac (24 August 2011)

greebly24 said:


> WTF?
> 
> Oh, I get it now. Buy & reno a place for $1.05M, set a reserve at $850k, get $50k over that and call it a good result for all (ignore the $100k+ loss).
> 
> ...




Once again you choose to skim over the fact that the producers paid a premium to get 4 similar homes right next to each other. All couples won money (they kept proceeds from the price above reserve) and each contestant received $700 per person per week. So nobody 'wasted their time'.

The fact that four, shoddy hack job renovated places could get that much money in such a poor street in a poor area of that suburb was a resounding success. Never mind the millions that ch9 made. Those renos were rushed, and poor quality. If anything, given the renos and street profile the bidders overpaid. 

Also you choose to ignore that they were sold within a few days of the auction. So your references to clearance rate are not indicative of anything and just clutching at straws. Bear in mind these prices were set by independant property valuers and the properties sold ABOVE those prices.


----------



## medicowallet (24 August 2011)

KurwaJegoMac said:


> For all those that have been keen on posting the auction results of The Block - all 4 houses are now sold:
> 
> Property 1: $72,000 above reserve
> Property 2: $50,000 above reserve
> ...




I went into woolies today, there were some bananas that were there from yesterday, they had a bit of brown on them, I would have paid $7 per kg yesterday, but they wanted $10 per kg

Today I went in there and they were still for sale for $10 per kg, so I offered them $12 per kg.

Gee I am smart......

I smell something I posted I would be doing if I was a player in the industry. Either the show or RE interests intentionally did this to either protect next years show or the market.

But then again in KJM, I would not expect you to believe that this could happen, I know your love of the market, and how it blinds you to the real world.


Edit: also add stamp duty, advertising fees, real estate fees and legals, and it is an extreme loss of $$$$..


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## maffu (24 August 2011)

I saw the article today about selling 72k over reserve and it confused me straight away.

If the buyers knew the advertised reserve, and they didn't sell at auction, why would you offer 72k more than that? Why not just offer the reserve?

Seems very strange, but I don't really understand the real estate market too well.


----------



## KurwaJegoMac (24 August 2011)

Likewise medicowallet i know how your fear, pessimism and confirmation bias leads you to be blind. But thats ok you're only human. 

But of course all the bears are allowed to post up an article about the failed auction on the block and they're cheered for being so smart and in the know. Then a 'spruiker' comes along and provides an article showing the sales were quite successful and theyre met with cries of 'conspiracy' and 'blindness'. 

Tinhat much?


----------



## KurwaJegoMac (24 August 2011)

maffu said:


> I saw the article today about selling 72k over reserve and it confused me straight away.
> 
> If the buyers knew the advertised reserve, and they didn't sell at auction, why would you offer 72k more than that? Why not just offer the reserve?
> 
> Seems very strange, but I don't really understand the real estate market too well.




They had an auction on tuesday night with several bidders. The beauty of an auction is that you can easily work out the seller's minimum price (i.e. The reserve) and you can then try and get it through private sale. Thats why auctions are a bit of a gamble, dont always get the maximum a bidder would pay


----------



## medicowallet (24 August 2011)

KurwaJegoMac said:


> Likewise medicowallet i know how your fear, pessimism and confirmation bias leads you to be blind. But thats ok you're only human.
> 
> But of course all the bears are allowed to post up an article about the failed auction on the block and they're cheered for being so smart and in the know. Then a 'spruiker' comes along and provides an article showing the sales were quite successful and theyre met with cries of 'conspiracy' and 'blindness'.
> 
> Tinhat much?




sure 

Oh, btw, how are you managing your losses atm?


----------



## KurwaJegoMac (25 August 2011)

medicowallet said:


> sure
> 
> Oh, btw, how are you managing your losses atm?




It's really hard at the moment. The accountant calculated my yearly loss (excl. CG) at just under $2703. Life's really becoming a struggle you know? Gonna have to move to homebrand food and pick up a second job. 

Compounding my misery is that my property has appreciated in value by only $4850 in the past 2 months. 

How will i ever survive? Thank you for your interest in my affairs. It's comforting to know that others care. 

Can anyone spare me some change to call the salvos?


----------



## medicowallet (25 August 2011)

KurwaJegoMac said:


> It's really hard at the moment. The accountant calculated my yearly loss (excl. CG) at just under $2703. Life's really becoming a struggle you know? Gonna have to move to homebrand food and pick up a second job.
> 
> Compounding my misery is that my property has appreciated in value by only $4850 in the past 2 months.
> 
> ...




How do you know that it has risen in value?  Oh I see, you are in denial

MW.

PS being a realist and a man of integrity, I admit that my real estate portfolio is being hit hard, but, then again, I am not in denial of the real world.


----------



## KurwaJegoMac (25 August 2011)

medicowallet said:


> How do you know that it has risen in value?  Oh I see, you are in denial
> 
> MW.
> 
> PS being a realist and a man of integrity, I admit that my real estate portfolio is being hit hard, but, then again, I am not in denial of the real world.




I think it is you who is in denial - bitter perhaps that your investments aren't performing well? In denial about the fact that maybe not every single house in Australia is going to perform the same as the ones you own? That maybe, just maybe, there are properties and suburbs out there that are still performing well?

Being a 'realist' and a 'man of integrity' you should be able to admit that you can't take one set of results (such as your portfolio) and extrapolate them across the whole of the RE market.

Unless you've put up your properties for sale (which you say you refuse to do despite feeling so strongly about a downturn), then I assume you're pricing your portfolio in the same way as I am mine - by looking at properties with similar characteristics within the same suburb and looking at the prices for which they sold. I acknowledge however that the true value cannot possibly be known until the point of sale, but in the absence of actually putting it up for sale that is the closest valuation possible.


----------



## medicowallet (25 August 2011)

KurwaJegoMac said:


> I think it is you who is in denial - bitter perhaps that your investments aren't performing well? In denial about the fact that maybe not every single house in Australia is going to perform the same as the ones you own? That maybe, just maybe, there are properties and suburbs out there that are still performing well?
> 
> Being a 'realist' and a 'man of integrity' you should be able to admit that you can't take one set of results (such as your portfolio) and extrapolate them across the whole of the RE market.
> 
> Unless you've put up your properties for sale (which you say you refuse to do despite feeling so strongly about a downturn), then I assume you're pricing your portfolio in the same way as I am mine - by looking at properties with similar characteristics within the same suburb and looking at the prices for which they sold. I acknowledge however that the true value cannot possibly be known until the point of sale, but in the absence of actually putting it up for sale that is the closest valuation possible.




IMO, the strongest point of RE investment is the denial that mum and dad investors exhibit.

You, have a very strong investment strategy to look forward to.

Good luck

MW


----------



## KurwaJegoMac (25 August 2011)

For example, you can see some top performing suburbs here:

http://www.investsmart.com.au/property/search.asp?Suburb=&VIC=1&Houses=1&OrderBy=1

Of course these results won't continue on forever, but they do demonstrate that not all property in Victoria is getting hammered and extrapolating a sole individual's experience is baseless. 

In the same vein, I wouldn't say that because my property is holding up well that the state of the market is healthy. It certainly isn't. Credit growth has slowed dramatically, people are saving more and more, RE supply is building up and vendors are discounting stock. The sentiment has changed drastically and the housing gains we enjoyed in the past will not be around in the near term. I acknowledge all this, but i'm not so arrogant as to say that my performance is indicative of the market as a whole. In fact im surprised it's holding up as well as it is, was expecting it to be less. Location, location, location perhaps?


----------



## KurwaJegoMac (25 August 2011)

medicowallet said:


> IMO, the strongest point of RE investment is the denial that mum and dad investors exhibit.
> 
> You, have a very strong investment strategy to look forward to.
> 
> ...




As per usual, no meaningful rebuttal or presentation of facts. Just the usual presumptuous one-liners, all meaningless and baseless. In fact, quite a surprise to see a few more words than the usual "sure" and "whatever".


----------



## medicowallet (25 August 2011)

KurwaJegoMac said:


> As per usual, no meaningful rebuttal or presentation of facts. Just the usual presumptuous one-liners, all meaningless and baseless. In fact, quite a surprise to see a few more words than the usual "sure" and "whatever".




Well forgive me for discounting your statments of returns as meaningless and baseless.

No doubt you are not including stamp duty etc into your calculation, as it is a recent purchase etc.

Or perhaps you believe everything you read on a forum..

If you are so transparent, do you expect me to request you to pm me all your transaction details regarding this property?????   Of course not... so much for presumptions, one lines anre baseless statement, looks like you invented it all.

I was not born yesterday, and I am not naive.


----------



## KurwaJegoMac (25 August 2011)

medicowallet said:


> Well forgive me for discounting your statments of returns as meaningless and baseless.
> 
> No doubt you are not including stamp duty etc into your calculation, as it is a recent purchase etc.
> 
> ...




I provide facts and numbers, you provide senseless generalisations that don't even address what's being discussed. Then when you get caught out and trapped in a corner, you come out with statements like "sure", "you're in denial" or an off reference to "mum and dad investing" (seriously? That's the best you can respond with??) Then you attempt to deflect the argument without providing anything substantial as a reply - "so how are the losses going for you" and similar drivel. It's not just me that you do it to of course, but to anybody who disagrees with what you say.

Seems that all that is required from a bearish armchair economist is a few simple lines of baseless statments ('you're wrong', 'in denial', 'property will crash, don't ask me to explain how, just trust me it will', etc) and you're a regular bonified investor. 

You're really a troll aren't you? I bet you're some young 20-something, still at Uni, having a cry that you can't afford to buy any property because all the greedy investors are pricing you out. Due to your fear, you're too terrified to work hard and make some sacrifices early on for long term gain. So you come onto a forum, surround yourself with similar 'yes men' who's best contribution is 'herp derp property will crash 40% loLOLol' and simply respond with a 'you're in denial' or 'you're just so naive' whenever you're reasonably challenged. 

Still, you're only human. Scared and bitter that others are making headway where you are not. You can keep your baseless comments coming - I definitely want to hear more from a property bear with a portfolio of RE who's been forecasting for 12 months that a downturn is happening yet refuses to sell a single property.

Keep talkin, still full of s*** as always. But at least it makes for a good laugh.


----------



## KurwaJegoMac (25 August 2011)

medicowallet said:


> No doubt you are not including stamp duty etc into your calculation, as it is a recent purchase etc.




See you don't even know what you're talking about. 

I posted my annual loss, per year, from all revenue and expenses in running the property ($2703).

Then i said that my property value had increased by $4850.

Where did I say that I made money on top of my purchase price? Stamp duty has no bearing on the change in property value, nor does it change your annual loss/profit. It will however change your total investment return (which at the moment is at a loss of course, as the income less expenses less current value of the home is not more than the purchase price).

Troll is troll. Pretty bad at it too. At least learn basic investing principles before spouting more drivel.


----------



## medicowallet (25 August 2011)

KurwaJegoMac said:


> See you don't even know what you're talking about.
> 
> I posted my annual loss, per year, from all revenue and expenses in running the property ($2703).
> 
> ...




1. Actually it is you who is the young 20 year old.

2. Come on, you inferred your return was +$2000ish, and in which case, you were misleading. You are still behind on the purchase price, and hence, at this point in time, even if I can believe your "armchair" valuation, are still in negative territory.  Because, if you are to use incomes such as rent etc, then you sure as heck need to include taxes/levies/duties within the calculation too, champion, or, is your accountant incompetent too?  revenues/expenses and profit/losses / asset/liabilities are just accounting terms. in the REAL WORLD, you are down, and get used to it, because a bank does not GAS about your idea, if you go for a loan, you are down the stamp duty component on your current net worth.


3. I am sorry that the statistics agree with me that housing is going down at the moment. Please get real, it will help you in the future as you grow up.

4. Can you please include inflation within your calculation,...... ooooh, backwards even further... so much for keeping up with/exceeding inflation every year hey champ.

5. I am sure you can take some of these losses as an engineer, I mean, they do earn ok money I suppose (compared to an average income earner  )


----------



## KurwaJegoMac (25 August 2011)

medicowallet said:


> 1. Actually it is you who is the young 20 year old.




Didn't say I wasn't 



medicowallet said:


> 2. Come on, you inferred your return was +$2000ish, and in which case, you were misleading. You are still behind on the purchase price, and hence, at this point in time, even if I can believe your "armchair" valuation, are still in negative territory.  Because, if you are to use incomes such as rent etc, then you sure as heck need to include taxes/levies/duties within the calculation too, champion, or, is your accountant incompetent too?  revenues/expenses and profit/losses / asset/liabilities are just accounting terms. in the REAL WORLD, you are down, and get used to it, because a bank does not GAS about your idea, if you go for a loan, you are down the stamp duty component on your current net worth.




Nope, I never inferred that my return was $2000ish. I clearly stated that my annual loss (excl. CG) was just under $3000. I'll say it again - *my annual loss (excl. CG) is $2703*. Just so it's clear - I am *losing* $2703 *per year*without taking CG into consideration. Also, that includes all taxes, rates, maintenance, etc. My property is costing me $2703 per year to maintain at current levels. This is different to my investment return, which as i pointed out before, is currently *at a loss* when looking at the value of my property (inclusive of all holding costs and purchasing costs) compared to the current value of the property.

However, if we take CG into consideration ($4850) I am making an annual gain *but* I have still currently sitting on a loss (due to stamp duty and other purchasing costs as you mentioned).

Hopefully that's clear now. I have no idea how I can possible make it any clearer despite writing it in 3 posts. 



medicowallet said:


> 3. I am sorry that the statistics agree with me that housing is going down at the moment. Please get real, it will help you in the future as you grow up.




Lies, damn lies and statistics. As a prominent investor with a 'portfolio' you would know very well that statistics do not refelect the state of every asset within a market. On average, it may reflect them - but there are extremes at both ends. Just like the ASX is a 'statistic' showing the 'average' of the stock market: are you telling me that when the ASX goes down then every single stock in the market goes down? That if the ASX goes down 20% that means no stock could have made a gain? 



medicowallet said:


> 4. Can you please include inflation within your calculation,...... ooooh, backwards even further... so much for keeping up with/exceeding inflation every year hey champ.




I'm happy to include inflation with my calculation if I was calculating my total investment return. But I have not provided any such calculation pertaining to my total investment return on this thread. Clutching at straws again I see.



medicowallet said:


> 5. I am sure you can take some of these losses as an engineer, I mean, they do earn ok money I suppose (compared to an average income earner  )




You know so much about me, but do you know what I know about you? Nothing. That's the beauty of it - nobody cares about you or what you do, enough to go and research it. Think about that for a moment 

Well Mr. Smarty pants, quick to make assumptions - while I am an Engineer _by degree_ I am not an Engineer by trade. I am living quite comfortably well above median wage. I am in fact looking at buying a PPOR as i'm renting atm. Current repayments on my IP are 5% of my _after tax_ income. So I can more than comfortably sit on any losses that come my way. 

I worked hard to get where I am today and will continue to work hard while I am able. You can be bitter all you want about the fact that someone is more successful than you - it won't stop me. At least I come on here in the spirit of sharing knowledge, hopefully inspiring others to think about their own situations and make something of themeselves - rather than others who just berate and belittle everyone. 

"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."


----------



## medicowallet (25 August 2011)

KurwaJegoMac said:


> Didn't say I wasn't
> 
> 
> 
> ...




1. Thankyou for clearing up that you made a loss. You did not do this, contrary to your belief. When you mature, please reread the posts, and you will realise that I had to tease this out of you. I bet you are the kind of person who would never ever admit that they were wrong.

2. Don't flatter yourself, I remember things, such as occupations etc. because it is a skill valuable to me.

3. NICE income!!! 20% deposit so say 80% on 400k x 7% interest x 20 

a $450k income per year is very nice indeed.

or was that 20x 2700 = $54k after tax....

hmm, 2 properties on $450k is no problems, 2 properties on $54k is a bit risky, but then again, I think, when the property market burns you the first time, you will become a better, less arrogant investor.


----------



## KurwaJegoMac (25 August 2011)

medicowallet said:


> 1. Thankyou for clearing up that you made a loss. You did not do this, contrary to your belief. When you mature, please reread the posts, and you will realise that I had to tease this out of you. I bet you are the kind of person who would never ever admit that they were wrong.




It is you who needs to reread the posts when you mature. In EACH of the three seperate posts i mentioned I was making a yearly loss. It is not my fault you lack basic reading comprehension skills and required bolded writing in italics, repeated three times, before you comprehend. Read each post again and what did i say in each? A loss of $2703. Go on back and read them. Wrong yet again!



medicowallet said:


> 2. Don't flatter yourself, I remember things, such as occupations etc. because it is a skill valuable to me.



 strange that you claim to 'remember things' since by the time you've posted you've forgotten what i had written - refer to point 1. While you're at it, you should develop your attention to detail skills as they are clearly lacking. 



medicowallet said:


> 3. NICE income!!! 20% deposit so say 80% on 400k x 7% interest x 20
> 
> a $450k income per year is very nice indeed.
> 
> ...




Wrong once again. This really is becoming a consistent theme with you isn't it? In your infinite investing wisdom you failed to include tax benefits. Once again, shows the lack of attention to detail and basic financial calculations and investment basics. Keep developong those memory skills! Seems like they need some more work.


----------



## medicowallet (25 August 2011)

KurwaJegoMac said:


> It is you who needs to reread the posts when you mature. In EACH of the three seperate posts i mentioned I was making a yearly loss. It is not my fault you lack basic reading comprehension skills and required bolded writing in italics, repeated three times, before you comprehend. Read each post again and what did i say in each? A loss of $2703. Go on back and read them. Wrong yet again!
> 
> strange that you claim to 'remember things' since by the time you've posted you've forgotten what i had written - refer to point 1. While you're at it, you should develop your attention to detail skills as they are clearly lacking.
> 
> ...




1. You said you made a loss exc capital gains of $2700, then quoted a capital gain, so, were inferring (look this word up), that you made $2k... I corrected you, you went, immaturely, into damage mode.

2. I note that we both used after tax eg "54k after tax"   KJM, in your circles, this kind of argument might hold weight, but, unfortunately, I see through your pettiness and incompetence.  You may be good with numbers, but I guess, only in a newton kind of way.


Look KJM, you are in a investment strategy which is risky at the moment. Get used to it. I am afraid that your arrogance will NOT stop price declines. Welcome to the real world champ. 

I would also like to point out, that I was probably a bit arrogant about investments, like you, when I was in my 20s and untouchable.. Losing money in "sound" investments makes you consider investments from a different viewpoint. You were just a bub last time property / the economy underwent a bad patch, if you could take some time to get off your high pony, it might help you understand the signs... some of us have seen them before, some of us see them now.


----------



## finnsk (25 August 2011)

medicowallet said:


> You were just a bub last time property / the economy underwent a bad patch, if you could take some time to get off your high pony, it might help you understand the signs... some of us have seen them before, some of us see them now.



I was also only a bub last time, so which signs are you seeing know?


----------



## medicowallet (25 August 2011)

finnsk said:


> I was also only a bub last time, so which signs are you seeing know?




emotional : Desperation, denial, the last throes of euphoria

RE agents calling when before they didn't GAS

heavy discounting, lagging stock, clearance rates

retail and manufacturing tanking, empty retail shops.

banks forecasting lower credit growth

builders squealing and going broke

negative symbols in capital city property growth.

inflation for staples out of whack.

unemployment increasing (and more importantly, participation rates falling)

Disappearance of Robots

These are but a few examples, and are really not reflecting the potential stagnation/deleveraging from around the globe.

At the very least, there we are in for stagnation in real property prices, but I hope for a 20% fall so I can use some of my cash reserves I have been accumulating.

What does anyone think are positives?


----------



## tech/a (25 August 2011)

This thread is still as boring as it was 3 yrs ago.


----------



## stacks (25 August 2011)

Medicowallet, I reckon if you charged by the hour for writing in this thread, the price of property wouldnt matter and you could just about retire already


----------



## Agentm (25 August 2011)

i am hanging out for the falls

i think the industry is very resilient, and with the victorian premier very much tied into the sector.  i think they will do everything possible to rekindle the bubble, and inflate property/land prices as much as they can muster. 

i have friends in houston TX, which is considered a template for urban development, and his home, 2 story monster with 5 bedrooms,  2 separate living zones, 3 car garage - with basketball hoop above garage door.... in a magnificent estate with oak tree lined streets, nature paths 3 times wider than anything i have seen here.. underground power and warm apple pies cooling at the kitchen window.. $240K. i think the estate was built about 10 years ago, all lookalikes.. and its a place that everyone want to live, a beautiful community.. 

when i tell him that a pathetic run down 2 bedroom  terrace in melbourne fetches easily 3 times that, they really cant understand it. there is abundance of land in australia.. 

the bubble is here, the push to keep it alive is there, but imho the possibility of a high aussie dollar perhaps squeezing a few sectors like retail and tourism.. may mean more stock to flood the market..

i would like to see way more than 20% come off the bubble, and i wonder what it will implode to.. 

have not read this thread for a long time? did you say no robot??  he had this massive list of people he defeated, his kill list.. why leave the debate when the story was so crystal clear.. maybe he went to a pro climate change forum.. he may believe that fairy tale too?


----------



## satanoperca (25 August 2011)

tech/a said:


> This thread is still as boring as it was 3 yrs ago.




What would get you excited? Property on a 1 min time frame with massive liquidity.

Cheers


----------



## notting (25 August 2011)

tech/a said:


> This thread is still as boring as it was 3 yrs ago.




Oh that's a bit unfair. 
What about Josh and Jenna'ss engagement!
That was exiting.
I'm all over it.
Got my Women's Day. 
Whatching the replays on ninemsn.
Have driven by the houses trying to catch a glimps of the stars.
Pam and Waz.
Who would have thought eh?
Makes you think doesn't it.
Yeah.
Three letters in each of their names.
That's interesting.


----------



## tech/a (25 August 2011)

satanoperca said:


> What would get you excited? Property on a 1 min time frame with massive liquidity.
> 
> Cheers




Please


----------



## medicowallet (25 August 2011)

stacks said:


> Medicowallet, I reckon if you charged by the hour for writing in this thread, the price of property wouldnt matter and you could just about retire already




If I had more than a 4 finger typing style, it would be much better. Alas I am too old to learn this technology stuff (and things like quoting multiple stuff etc)

I am just keeping this thread alive with a few others... good past time, and most of us are sane, reasonable people, just with a different viewpoint. We get a bit narky at times, but get over it


----------



## medicowallet (25 August 2011)

tech/a said:


> Please




Careful tech/a

Only takes a few more posts to get hooked....


----------



## FxTrader (26 August 2011)

Agentm said:


> i have friends in houston TX, which is considered a template for urban development, and his home, 2 story monster with 5 bedrooms,  2 separate living zones, 3 car garage - with basketball hoop above garage door.... in a magnificent estate with oak tree lined streets, nature paths 3 times wider than anything i have seen here.. underground power and warm apple pies cooling at the kitchen window.. $240K. i think the estate was built about 10 years ago, all lookalikes.. and its a place that everyone want to live, a beautiful community..
> 
> when i tell him that a pathetic run down 2 bedroom  terrace in melbourne fetches easily 3 times that, they really cant understand it. there is abundance of land in australia..




Such examples are endless but location is important, I would NEVER chose to live in Texas for example.  My brother's wife is a real estate agent in Florida and you would not believe what say $400k will buy you - huge quality built home in a beautiful neighborhood, fully landscaped gardens with a fully enclosed swimming pool and entertaining area (took her over 6 months to sell it as I recall).  Here in Melbourne $400k will buy you an old, small, run down rectangular BV, a unit or a newer small home on a tiny block in far outer suburbia.  The ridculous prices we pay to for housing here can be put down to many factors (e.g. bank funded explosion of housing debt) not the least of which include local, state and federal government interventions in the market of various kinds including...

*  Billions of dollars of subsidies to property investors annually
*  Subsidies to first home buyers
*  Highly restrictive urban land release and use policies creating artificial scarcity (the green belt mentality - once my house is built stop all further development in my area in the name of reducing urban sprawl)

But we must not forget that wise old sage robots who reminded us that Australia is a paradise and everywhere else in the world is a dump by comparison.  Pay up or leave was the refrain as I recall.  I say afforadability is an issue and making it harder for Australians to afford the roof over their heads is economic mismanagement and lunacy.


----------



## James58209 (26 August 2011)

Mish's take on U.S. housing bottom "in some areas" :

Reader Seeks Help/Advice on US Housing/Economy; How Far to THE Bottom?

Where is Australia on this graph? Are we nearly at the first "Never A Better Time To Buy"?  The equivalent of the U.S.A. in Autumn 2007?


----------



## medicowallet (26 August 2011)

James58209 said:


> Mish's take on U.S. housing bottom "in some areas" :
> 
> Reader Seeks Help/Advice on US Housing/Economy; How Far to THE Bottom?
> 
> Where is Australia on this graph? Are we nearly at the first "Never A Better Time To Buy"?  The equivalent of the U.S.A. in Autumn 2007?




I VERY much dislike how that graph tries to superimpose America onto it, inferring a decrase to 50% of peak prices.

This type of graph is NOT what I am suggesting for australia, but more of a slow, plateau slightly declining (20% of real loss (of which we have seen 5% over the past 6 months)) then a tack up slowly, along a more reasonable course.

Anyone who thinks properties will halve here, is very brave, but a pullback is inevitable, as prices cannot and will not continue to grow faster than inflation.


----------



## Knobby22 (26 August 2011)

medicowallet said:


> emotional : Desperation, denial, the last throes of euphoria
> 
> 
> Disappearance of Robots




LOL


----------



## davede (27 August 2011)

In more relevant news 

The Mortgage Backed Security (MBS) market is growing again in oz.

ABS released figures this week showing the first positive growth in assets held by securities in over 15 quarters!

Meaning the mortgage market is getting more liquid again.

Depending on how you look at it;

property bears: setting up for a bigger fall
property bulls: more competition in the mortgage industry = lower fees + lower rates = more borrowing = increasing property prices


----------



## kincella (27 August 2011)

no wonder the bears on here are having such a party....
this site, forum, thread is so devoid of fact... it is unbelievable
and like the original ...globalhouseprice crash forum died....so too will this forum

bears do not do not read  the facts...they miss alll the relevant  signs.....they cannot grasp the most basic information,,,,hence it is the blind leading the blind

just for the  record....
that 3.6 million that ch9 or whatever paid for the whole site..included a corner vacant block of over 436 square metres....possibly worth at least 2 million....that is not on the
market....
that makes the other 4 blocks sold, at an intial cost of around $500k's each, plus  the cheap, reno's, of probably  $50,ooo each.....a huge profit on sale.... what was the sale prices again....??? up to or closer to a 1million each....

and that show is still sitting on profits, or capital gains of in excess of  the profit on the vacant block...

lets ignore the   marketing, advertising profits from the tv show and just concentrate on the capital gains of each house......
 one sold for a million bucks..the others were not far behind... 
are you able or capable  to compute the difference ?
 or are you so stuck with your faulty crystal balls, and the mantra of a house price crash..that you cannot see the difference

no wonder all the successful property investors shun this site....


----------



## davede (27 August 2011)

kincella said:


> no wonder the bears on here are having such a party....
> this site, forum, thread is so devoid of fact... it is unbelievable
> and like the original ...globalhouseprice crash forum died....so too will this forum
> 
> no wonder all the successful property investors shun this site....




I'm a bit curious as to why, if you are a successful property investor, you have 1,500+ posts on this forum instead of 'shunning' the site?

Joe runs another forum targeted more at property investing: http://www.aussiepropertyforums.com.au


----------



## medicowallet (27 August 2011)

kincella said:


> no wonder the bears on here are having such a party....
> this site, forum, thread is so devoid of fact... it is unbelievable
> and like the original ...globalhouseprice crash forum died....so too will this forum
> 
> ...




Time to change your sig? 20 years perhaps?  Or is it time to drop your expectations..

Going backwards at the moment is fun innit.


Clearance rate at 55% this weekend..

Why is it remaining so low oh experienced and wise property investor?


----------



## wayneL (28 August 2011)

kincella said:


> no wonder the bears on here are having such a party....
> this site, forum, thread is so devoid of fact... it is unbelievable
> and like the original ...globalhouseprice crash forum died....*so too will this forum*



Big call there Sapphire. ROTFL

BTW, for the record the original House Price Crash site is still alive and well. http://www.housepricecrash.co.uk

GHPC was started by disgruntled members who were banned from HPC and was essentially a duplication. That it no longer exists is meaningless.



> no wonder all the successful property investors shun this site....




Something you might have missed... this is a stock site, not a property site. LOLOL


----------



## kincella (28 August 2011)

just putting forward an alternative view....
god help any innocent that may stumble across this site....
as the majority of views  here  are negative on property...
however meanwhile...in the real world...property is alive and well...
and doing very well thank you
that is why you  have so few people commentating on the property sector

unlike the gambling den that most of you are stuck in.....
everyone needs a roof over their heads....
but none of them need a  hyperventilating, second by second,
gambling den ...that is the share market.....
now to be more than generous with you all...mods included....
your specialilty is in the stock market....I assume you are all gurus, make zillions every day...but you do not live in caves....
and you either own or rent a roof over your heads

my speciallity on the other hand,  is in providing the roofs over your heads...or  providing the real estate for the shops that you may frequent, to spend some of those  zillions that you earn....

where is all the angst you express.. coming from...
we are all in this together...are we not ?
meanwhile...out there in the real property world ......
oh, why bother...you cannot see the woods for the trees anyway...
so why bother......
you would be hard pressed to find any of the stock gurus, ceo's that you diligently follow....
are renters
or against property investments
or do not hold an impressive property portfolio


----------



## explod (28 August 2011)

kincella said:


> just putting forward an alternative view....
> god help any innocent that may stumble across this site....
> as the majority of views  here  are negative on property...
> however meanwhile...in the real world...property is alive and well...
> ...




Spoken like a true Pro who must be up to your neck in it.  

And gold is up an average of 30% per year since 2002.  Arh well, you know best.


----------



## tech/a (28 August 2011)

And gold is up an average of 30% per year since 2002. Arh well, you know best.

And I'll bet like the rest of us you sat by and watched.
Same with Oil
Same with AUD

Some of us actually took advantage of the housing boom
One boom can be enough!


----------



## medicowallet (28 August 2011)

kincella said:


> just putting forward an alternative view....
> god help any innocent that may stumble across this site....
> as the majority of views  here  are negative on property...
> however meanwhile...in the real world...property is alive and well...
> ...




I just keep people like you alive, so you can do my bidding...

How much has property increased this year?   (PS it is a trick question)

How much will it decrease over the next year?

Where is Robots?

How is China doing?

Regards, 

MW


----------



## explod (28 August 2011)

tech/a said:


> And gold is up an average of 30% per year since 2002. Arh well, you know best.
> 
> And I'll bet like the rest of us you sat by and watched.
> Same with Oil
> ...




You obviously have not followed the gold threads.  I began to buy physical bullion in 04 and have continued to accumulate since.  

Go back and have a read of my earlier posts in that thread from 07/08.

I sold five properties in 05 and yes got it wrong as there was much more in it, however a dip then hit my stop loss so to speak but I will be back into it again after the market has tanked and there are signs indicating it may well start soon.

As an avid trend follower since then I do have a better idea of what to be on.  The chart/market now tells me what to do and when.

And if gold and silver continue on thier merry way as they are now doing I will probably not have to bother with anything at all after that.   We shall see.


----------



## tech/a (28 August 2011)

Well if you've invested in gold the value of 5 homes or well over a million then I'll donate another $500 to Joe.

Frankly I don't have the kahunas.
Sure most will invest a small amount of net wealth but few life changing sums


----------



## choofer (28 August 2011)

medicowallet said:


> I just keep people like you alive, so you can do my bidding...
> 
> How much has property increased this year?   (PS it is a trick question)
> 
> ...




Property is like the SCUD in the arsenal lol


----------



## wayneL (29 August 2011)

kincella said:


> just putting forward an alternative view....
> god help any innocent that may stumble across this site....
> as the majority of views  here  are negative on property...
> however meanwhile...in the real world...property is alive and well...
> ...




We thank you for your services to humanity, providing dens for punters to gamble from.  </sarc>

Kinc, there is no need to be quite so emotionally disturbed because there are a few property bears on this site, nor is there any need to disparage traders the way you have. This is a stock site, with some short term traders and nervous novices so discussion on stocks and their short term gyrations would be expected don't you think?

There will always be a bull case and a bear case for any asset and there is no obligation that people must agree with your views, whether they be right or wrong.

So please, state your case on property, this is a property thread after all and can the emotional lashing out.


----------



## explod (29 August 2011)

tech/a said:


> Well if you've invested in gold the value of 5 homes or well over a million then I'll donate another $500 to Joe.
> 
> Frankly I don't have the kahunas.
> Sure most will invest a small amount of net wealth but few life changing sums




If only.   On the advice of neatly suited gurus thought I had it made only to find the cost of debt and fees to equity value nearly took me to the wall.

But it was a good lesson, nearly killed my wife and I but I hit the books for myself and learnt new ways.  We are getting back on track but it has been a very hard slog.  So if I have (and I have) sounded bitter over the years there have been a good reasons.

And these spruikers that give themselves fake university letters epitomise my detestation. 

But anyway


----------



## Aussiejeff (29 August 2011)

medicowallet said:


> Clearance rate at 55% this weekend..




Actually, there were *615* houses listed for auction this past weekend - see REIV preview 24 Aug 2011  http://www.reiv.com.au/News_Publications/News%20Archive.aspx?newsID={22F6DADC-D363-489D-8D4A-48D23BA3A9B7}&title=Auction preview 27 and 28 August

However, _only 525 auctions_ were reported to REIV this last weekend. So, _a whopping 90 auctions (or 14.7% of total auctions)mysteriously vanished into the "agents unwilling to report failed auctions" bin between Wed 24th Aug & Sun 28th_.

So surely the "true" clearance rate is much lower than the REIV's touted 55% - potentially as low as 47% (ie: 289/615 ACTUAL clearances?).

Let the Big Fudge continue.....


----------



## satanoperca (29 August 2011)

The start of the week and the slow moving property market is building momentum, abiet slowly but the signs are there.

Increased inventory everywhere, Melbourne winning the race
Property prices down from peak
Discounting increasing
Auction clearance rates down
Reporting on oversupply of housing increasing
Unemployment rising
Retailing being smashed
Banks trying to lend but no takers on offer
No clear direction on interest rates

Well the logical conclusion must be property prices must rise, because we are different.

Will keep to my conclusion, property prices falling 10% from peak is a much needed correction, falls greater than that we are heading towards a crash. Will just have to wait and see.

Cheers


----------



## Quincy (29 August 2011)

satanoperca said:


> The start of the week and the slow moving property market is building momentum, abiet slowly but the signs are there.
> 
> *Increased inventory everywhere, Melbourne winning the race*
> Property prices down from peak
> ...




Seems that Sydney may be bucking the trend : - 




> *Futile hunt for home in Sydney as city suffers a property crisis*
> 
> http://www.dailytelegraph.com.au/ne...-property-crisis/story-e6freuy9-1226123955011
> 
> ...


----------



## satanoperca (29 August 2011)

Quincy said:


> Seems that Sydney may be bucking the trend : -




Home and apartment prices in Melbourne are down 3.9 per cent this year to $485,000. In the Western Australian capital of Perth, prices are down 2.4 per cent to $461,000, according to RP Data-Rismark. Sydney has side-stepped some of the weakness, up 0.5 per cent over the past 12 months, but still off 1.3 per cent since the start of this year to $515,000.


----------



## Aussiejeff (29 August 2011)

Quincy said:


> Seems that Sydney may be bucking the trend : -




Maybe that Telegraph article should read (my bolded text inserted)...



> Futile hunt for home in Sydney as city suffers a property crisis
> 
> http://www.dailytelegraph.com.au/new...-1226123955011
> 
> SYDNEY is in the grip of a property *affordability* crisis, with a huge shortage of *less expensive* homes as vendors hold on to their *highly priced* houses in a depressed market.


----------



## Agentm (29 August 2011)

http://www.debtdeflation.com/blogs/2011/08/27/the-chopping-block/


keen is explaining it all too clearly yet again

nice article 

this update also helps

http://www.debtdeflation.com/blogs/2011/08/28/updated-credit-accelerators/


----------



## Dowdy (29 August 2011)

kincella said:


> my speciallity on the other hand,  is in providing the roofs over your heads...or  providing the real estate for the shops that you may frequent, to spend some of those  zillions that you earn....
> 
> where is all the angst you express.. coming from...
> we are all in this together...are we not ?
> ...






Well then i'd like to thanks you for contributing to the oversupply now that we have which is now driving prices down. 

Please keep building  - takes the worrying out of my game.



I just smile in pity now every time I drive pass a multi development or a high rise getting built, it just shows how blind and desperate developers are and are just increasing the chances of a price crash. 
What house shortage?! There never was one to begin with


----------



## Aussiejeff (30 August 2011)

Dowdy said:


> Well then i'd like to thanks you for contributing to the oversupply now that we have which is now driving prices down.
> 
> Please keep building  - takes the worrying out of my game.
> 
> ...




Exactly.

It's timely to reflect on this "expert" quoted commentary from Nov 2010 - 



> Property Monitors chief economist Dr Andrew Wilson said *housing demand and prices would pick up in mid-2011* on the back of wages and population growth and the resurgent mining sector.
> 
> "What we are seeing in Melbourne is a pause in the market, *mostly caused by a fall off in the bottom end of the market, but it's not a bubble,*" Dr Wilson said.
> 
> "The market was unsustainable because it couldn't be sustained by incomes, but now we are starting to see wages growth that will again fire up demand."



http://www.theaustralian.com.au/bus...-homes-stockpile/story-e6frg9gx-1225957998574

I wonder what the good Dr would be saying NOW, with no mid-year 2011 pick up in housing demand and prices, _middle to high range property auctions & sales slumping_ (let alone the "bottom end") and inventories of unsold, overpriced properties still soaring? Perhaps he could do a refresher course with the good Professor ProBots to bring him up to date on the Real state of Real Estate?


----------



## Bigukraine (30 August 2011)

Aussiejeff said:


> Exactly.
> 
> It's timely to reflect on this "expert" quoted commentary from Nov 2010 -
> 
> ...




Maybe the doc should go for a stroll up mt Kosi ......  LOLMROF


----------



## Agentm (30 August 2011)

aussiejeff

 what i found remarkable about the thread, is that the pro property "sunshine and lollipops" posters largely spoke of their triumphant successes, which is what the bubble was creating.. returns per year greater than income.. and despite pointing out that what they were experiencing was the fruits of a bubble, they blindly could not acknowledge the bubble was in play

whilst singing their own praises, the attempts to let them know that the "this bubble is different" argument, or indeed the "this one is not a bubble at all"  argument were both very unrealistic appraisals of what the indicators that people like keen were pointing out year after year with monotony.

the alarm of the rise of property for  a decade is now there for all to experience, with most australians now infected with high debt and limited spending capacity,, retail is now in a death spiral, generating some pressure on unemployment numbers..

imho tourism must be stressed with a high aus $

i cant see the government looking to drive up the property prices again with another program, but i wouldnt put it past them.. these guys are capable of anything..
'
the bubble is as big as they could pump it imho, but its not outside the realms of insanity for a state or federal program to be initiated to perhaps crank the pumps up again..

lets hope it can ease back 40% and we see property affordability again and spending power available again to the households.. generating a healthy nation of consumer spending..   might take a few decades, and a catastrophic global financial event may induce an accelerated path for it.. but imho a rational and well timed few decades of easing of this hyper housing property price bubble is well and truly overdue and needs to be allowed to occur without interference..


all imho and dyor


----------



## Tysonboss1 (30 August 2011)

Agentm said:


> aussiejeff
> 
> what i found remarkable about the thread, is that the pro property "sunshine and lollipops" posters largely spoke of their triumphant successes, which is what the bubble was creating.. returns per year greater than income.. and despite pointing out that what they were experiencing was the fruits of a bubble, they blindly could not acknowledge the bubble was in play




Gee, what about all those people saying I was an idiot back in 2007, because I had bought a few houses a few years earlier at a fair price and just planned on holding it and collecting rent with the belief that over time both my income and property value would hold pace with inflation.

I was considered dumb because the stock market was the place to be, thats where all the growth was etc.etc. They were the ones who failed to see a bubble.

Meanwhile my properties have more than exceeded expectations, and could fall and still more than outperform the target I had.

I bought property in the early 2000's with the idea that it would earn around 4% income after costs, and My income and capital would rise along with inflation, It has far exceeded this in both income and capital value.


----------



## FxTrader (30 August 2011)

Tysonboss1 said:


> Gee, what about all those people saying I was an idiot back in 2007, because I had bought a few houses a few years earlier at a fair price and just planned on holding it and collecting rent with the belief that over time both my income and property value would hold pace with inflation.
> 
> I was considered dumb because the stock market was the place to be, thats where all the growth was etc.etc. They were the ones who failed to see a bubble.
> 
> ...




Looking in the rear view mirror once again Tyson?  The recent past will be the future for property prices?  Need you and the other property advocates here be reminded about the title of this topic yet again?  "The *future* of Australian property prices".  Do you have any evidence at all supporting your "belief" (faith) that property prices will "hold pace with inflation"?

A rising tide of household debt has lifted all house prices and that was certainly the case post 2007 for property.  Problem is that tide is now receding, unsustainable household debt levels are being wound back, unsold housing inventories are rising and unemployment outside the resources sector is increasing with momentum.  So the *future* direction of property prices in general looks down, down, down.  Unless the RBA or government comes to the rescue, this downward trend in property prices will continue apace.


----------



## Tysonboss1 (30 August 2011)

FxTrader said:


> Do you have any evidence at all supporting your "belief" (faith) that property prices will "hold pace with inflation"?
> .




Based on the prices i paid for the property I own, I can't see them falling to below an inflation adjusted amount equal to my purchase costs, and I can't see the rental yield falling below an inflation adjusted rental return it was recieving when I bought it.

If you want to trash a "Bubble" make your way to the many threads disscussing Gold.

Do you have any facts that show that property prices will return to the levels of 2001 or that the rental yields will drop to those levels, It seems very unlikly to me considering the inflation during that time and the fact that prior to 2001 there was already a period of stagnation which in itself added to the boom,

Part of the boom we had is speculative froth,

 But a larger part

- was a correction from years of stagnation prior
- was a result of steady inflation since
- was the result of growth in number of house holds (population growth etc).

So offcourse a there is a good chance some of the spec froth will disappear, but any fall or stagnation outside of that would be an over reaction and again intime create an opportunity.


----------



## satanoperca (30 August 2011)

Tysonboss1 said:


> But a larger part
> 
> - was a correction from years of stagnation prior
> - was a result of steady inflation since
> - was the result of growth in number of house holds (population growth etc).




Come on.

How about a massive expansion of debt to leaves us more indebted per household than the US.
A belief that it can continue on forever, well that belief is soon to become a nightmare for many who will be left scared for decades.

But you go ahead Sunshine and keep believing, there needs to be someone leading the lost cause.

Cheers


----------



## The Falcon (30 August 2011)

medicowallet said:


> I VERY much dislike how that graph tries to superimpose America onto it, inferring a decrase to 50% of peak prices.
> 
> This type of graph is NOT what I am suggesting for australia, but more of a slow, plateau slightly declining (20% of real loss (of which we have seen 5% over the past 6 months)) then a tack up slowly, along a more reasonable course.
> 
> Anyone who thinks properties will halve here, is very brave, but a pullback is inevitable, as prices cannot and will not continue to grow faster than inflation.




I agree with this position.....there are a lot of people that dream of 50% drop but its never going to happen. On the other hand, if you expect to see much growth in the next decade you are going to be very dissapointed. As always the property market is really many markets and some will fair better than others, regional coastal markets will take a bit of a hammering i think.


----------



## Tysonboss1 (30 August 2011)

satanoperca said:


> But you go ahead Sunshine and keep believing, there needs to be someone leading the lost cause.
> 
> Cheers




I will, I have have little debt and low expectations,

As I said, All I want is my capital preserved against inflation (based on my entry costs) and a rental return that will grow over time with inflation.

I believe my property investments will meet my expectation because I only buy when it makes sense based on a value model ( hence why I haven't bought for years).

But as I said I wouldn't mind buying another one, So I eagerly await the correction that the doomsayers predict, However as I said I question the severity given a number of factors.


----------



## satanoperca (30 August 2011)

Tysonboss1 said:


> So I eagerly await the correction that the doomsayers predict, However as I said I question the severity given a number of factors.




Why are they doomsayers if they are only predicting a correction and not a crash.

Bulls are just as extreme it seems as bears, both over exaggerate.

High property prices do not benefit society as a whole. Massive debt erodes our standard of living.

Cheers


----------



## Glen48 (30 August 2011)

The Falcon you are correct _there are a lot of people that dream of 50% drop but its never going to happen_
you need to pray it stops at 50 because it will be going down for years just like USA is still doing after 4 yrs. 
 In 2035 you can look at the depression ending and thing turning.
 Gold is predicted to go to $1330 so cash in when it does.


----------



## The Falcon (30 August 2011)

Glen48 said:


> The Falcon you are correct _there are a lot of people that dream of 50% drop but its never going to happen_
> you need to pray it stops at 50 because it will be going down for years just like USA is still doing after 4 yrs.
> In 2035 you can look at the depression ending and thing turning.
> Gold is predicted to go to $1330 so cash in when it does.




thanks for the tip Glen. : I wont be doing any praying though.......preying possibly


----------



## medicowallet (30 August 2011)

OH NO!!!!!

I have to purchase a house in 3 months time... probably gonna crash in 4 months lol..

Darn kids and needing places to live and all


----------



## Tysonboss1 (30 August 2011)

satanoperca said:


> Why are they doomsayers if they are only predicting a correction and not a crash.
> 
> Bulls are just as extreme it seems as bears, both over exaggerate.
> 
> ...




Because I was refer to the correction " they" predict (50% drop) in contrast to the one I predict (10%max drop with some stagnation).


----------



## medicowallet (31 August 2011)

I was taking the train into work today and noticed a newspaper on the seat.

So I was a little bored, I normally get all my news from ASF,

this was, no joke!!, the first article I read

http://www.theage.com.au/business/house-prices-extend-falls-in-july-20110831-1jkvh.html

So 1.4% for the month in Melbourne drop, for July, before a lot of negative sentiment came through,

so for a person with 10% deposit, they lost 14% for the month, OUCH, someone with 50% equity, and annualised 30%ish loss, oucho!!

Can't wait for August, september and November figures to come through to give us an idea what is really happening 

I don't know what this means, just keeping it real for the true believers.

MW

Sunshine, lollipops, and even less bubble.

P.S.    Has anyone seen Robots?

MW's almost certainly certain Kill List on ASF

1. Robots


----------



## Tysonboss1 (31 August 2011)

medicowallet said:


> I normally get all my news from ASF,




This explains alot. :


----------



## Tysonboss1 (31 August 2011)

medicowallet said:


> So 1.4% for the month in Melbourne drop, for July, before a lot of negative sentiment came through,




So hows that compare to some one that invested in the all ordinaries with 10% deposit over the same time frame.

if they had held to the 8th of Aug it would be down nearly 10%, 

yikes!!!!! they just lost 100%, and probally wouldn't have the option of just riding it out they would be a forced seller through a margin call.


----------



## satanoperca (31 August 2011)

Tysonboss1 said:


> So hows that compare to some one that invested in the all ordinaries with 10% deposit over the same time frame.




The vast majority don't leverage up that high with shares.

How many people do you know that have a 90% LVR on their share portfolio. 

Not many, if any.

Cheers


----------



## wayneL (31 August 2011)

satanoperca said:


> The vast majority don't leverage up that high with shares.
> 
> How many people do you know that have a 90% LVR on their share portfolio.
> 
> ...




There is also the opportunity to hedge, profit and accumulate around a base shareholding with options... without throwing extra cash at it.


----------



## Tysonboss1 (31 August 2011)

satanoperca said:


> The vast majority don't leverage up that high with shares.
> 
> How many people do you know that have a 90% LVR on their share portfolio.
> 
> ...




Take a look at the storm financel thread there are some examples, every now and then you here of people taking out equity loans of personal loans and using the funds to finance a margin loan.

But, seriously I don't know many people with 90% LVR on their homes either (not that they tell me anyway), I know alot of people start off with 90%LVR but the majority would be a decent way through they loan.


----------



## Tysonboss1 (31 August 2011)

Cba Annual report says that their home loan book has an average LVR of 50%, and alot of those properties would not have been valued since the loan were given perhaps 20years ago. so the number is probably less than 50% in real terms.


----------



## medicowallet (31 August 2011)

Tysonboss1 said:


> But, seriously I don't know many people with 90% LVR on their homes either (not that they tell me anyway), I know alot of people start off with 90%LVR but the majority would be a decent way through they loan.




I don't know many either, but it is definitely in the realm for first home buyers.  

I am certain that many of the people who were conned by the FHVB at at 50%, so they lost quite a bit over the past 12 months (7.something%) and there is likely more pain to come for them..

safe as houses .... yeah right.


----------



## Dowdy (31 August 2011)

Tysonboss1 said:


> Because I was refer to the correction " they" predict (50% drop) in contrast to the one I predict (10%max drop with some stagnation).





You do know, in real terms, the market has already lost 8%.

It's reported a 4% decline in housing prices PLUS inflation, at around 4%. So inflation has eaten their money away combined with the national housing decline......

I predicted a flat market this year with losses next but I was wrong. Oh well...

Think about it, an 8% loss and there's not even a panic, yet. Imaging how far prices will fall when there's a panic and 40% drop doesn't seem unrealistic anymore.

Unemployment rising, china slow down, mining slow down, recession, carbon tax, natural disaster, USA stock crash - it only need to take one of these things to happen to see a panic and one of them is guaranteed (carbon tax)


----------



## Agentm (1 September 2011)

at last.. someone can see through it all!!


good post dowdy


----------



## satanoperca (2 September 2011)

Just keeping it real, RPdata figures for June.

Nothing really to see, just property doing wheat many predicted it would do, drop.   


                        Median Price   YOY

Sydney	              $500,000	      0.5% 
Melbourne	$475,000	     -4.3% 
Brisbane	              $420,000	     -6.6% 
Adelaide	              $380,000	     -4.5% 
Perth	              $455,000     -6.3% 
Darwin	              $425,000	     -3.3% 
Canberra	              $490,000	       1.9% 
National	              $455,000      -2.9% 
Hobart*	              $320,000	      -4.4% 


Cheers


----------



## nulla nulla (2 September 2011)

Dowdy said:


> You do know, in real terms, the market has already lost 8%.
> 
> It's reported a 4% decline in housing prices PLUS inflation, at around 4%. So inflation has eaten their money away combined with the national housing decline......
> 
> ...




You forgot to add "And the pubs run out of beer".


----------



## nulla nulla (2 September 2011)

satanoperca said:


> Just keeping it real, RPdata figures for June.
> 
> Nothing really to see, just property doing wheat many predicted it would do, drop.
> 
> ...




Show me where you can buy a decent house on a good block in a good suburb in Sydney for $500k and I'll run a ruler over it (And not out in the sticks).


----------



## medicowallet (2 September 2011)

nulla nulla said:


> Show me where you can buy a decent house on a good block in a good suburb in Sydney for $500k and I'll run a ruler over it (And not out in the sticks).




Can't find any?

Be patient, they will come


----------



## Tysonboss1 (2 September 2011)

nulla nulla said:


> Show me where you can buy a decent house on a good block in a good suburb in Sydney for $500k and I'll run a ruler over it (And not out in the sticks).




What your describing is not a median house,

To me you are describing a better than average house, but asking for it to be advertised at a less than average price.


----------



## nulla nulla (2 September 2011)

Tysonboss1 said:


> What your describing is not a median house,
> 
> To me you are describing a better than average house, but asking for it to be advertised at a less than average price.




Is his "median price" like the so called average wage?


----------



## explod (2 September 2011)

nulla nulla said:


> Is his "median price" like the so called average wage?




I think it means the average for that area and is calculated on the local demographics or mean standard for that area, so to speak.


----------



## Tysonboss1 (2 September 2011)

nulla nulla said:


> Is his "median price" like the so called average wage?




Median and average are different.

And when someone says good, to me that means better than average.

For example the average person in Sydney, does not live in a house on a big block in a good suburb.


----------



## Tysonboss1 (2 September 2011)

explod said:


> I think it means the average for that area and is calculated on the local demographics or mean standard for that area, so to speak.




Median is middle number.

Eg. 1, 1, 2, 2, 3, 4, 5.

Median is 2 

Average is 2.57


----------



## mazzatelli (2 September 2011)

Tysonboss1 said:


> Median is middle number.
> 
> Eg. 1, 1, 2, 2, 3, 4, 5.
> 
> ...




Median = Mean under a normal probability density
Both a measure of centre, one better than the other depending on the distribution

Semantic bs really


----------



## medicowallet (2 September 2011)

mazzatelli said:


> Median = Mean under a normal probability density
> Both a measure of centre, one better than the other depending on the distribution
> 
> Semantic bs really




I agree it is all semantics

This however is not:

Will house prices fall 4% in August and 4% in september, or will they have fallen 8% by the end of september...

Quite different really.

Now, more importantly..

Where is ROBOTS????   Having a cup of water with Mr Burns???

Sunshine and lollipops,

Awaiting a clearance rate of 55% on 485 auctions tomorrow (even though inventories are up 40%)

Signing off

MW


----------



## medicowallet (3 September 2011)

Requires
Overtime
Because
Of
Thoughtless
Speculation

Sunny today, not many cars driving around. Perhaps they don't get to the end of my strees nowadays, so many houses to choose from before they get this far. Going cheap too.  Might wait awhile.

Lollipops, Sunshine, even SMALLER bubbles,

MW


----------



## medicowallet (3 September 2011)

medicowallet said:


> Awaiting a clearance rate of 55% on 485 auctions tomorrow (even though inventories are up 40%)
> 
> MW




"The clearance rate this weekend is 57 per cent"

"There was a total of 462 auctions reported of which 264 sold and 198 were passed in, 136 of those on a vendors bid"

462 is considerably less than 663 last year with around 35-40% more stock this year.

Where are the other auctions????

630 predicted next week.. I predict

515 reported 56% clearance.... any takers?

Bubbles coming out of somewhere at REIV

MW

P.S.   Anyone know where ROBOTS is???  Haven't seen him around in a while.


----------



## choofer (3 September 2011)

medicowallet said:


> "The clearance rate this weekend is 57 per cent"
> 
> "There was a total of 462 auctions reported of which 264 sold and 198 were passed in, 136 of those on a vendors bid"
> 
> ...




Yes. Trying to rustle up enough money to use the internet kiosk at the local caravan park lol


----------



## Taltan (5 September 2011)

Just thought I would chuck in some food fro thought

1. Two tax events in 1999 & 2000 helped lead to the great property boom. One was discounted on CGT such that everyone earning a decent wage and paying an accountant had the incentive to turn their profits into Capital. Labor partially reduced this practice in 2010 which has contributed to the recent downturn.

Secondly the GST imposed an extra 10% on all new dwellings whilst living existing dwellings untouched. As a result a supply shortage was created as every existing property favours a new one by 10%

These events are only now fully factored into the system and along with FHOG are why even if all else was equal the next 10 years will not be as good as the last

2. Property always seems to be measure by Median price but where is the consideration of improvements (which cost time and money)? What should really be measured and is not is the price of untouched dwellings. RP Data includes properties bought and redone (developers or DIY) and compares them to shares or term deposits. 

However some people work considerable hours improving their property and thus increasing median prices. Its like comparing the returns on an savings account whilst adding the additional savings contributed.

In other words if RP Data says the median has fallen 4%, in actual fact I bet the median for untouched properties has fallen 5-6% whilst those where DIY improvements have been undertaken have risen in price.


----------



## medicowallet (5 September 2011)

Oh I agree entirely, but, more importantly:

Where is ROBOTS??

I think that I have seen him off, and he is having a suck on a damp cloth with Mr Burns.


----------



## Tysonboss1 (5 September 2011)

Taltan said:


> 2. Property always seems to be measure by Median price but where is the consideration of improvements (which cost time and money)? What should really be measured and is not is the price of untouched dwellings. RP Data includes properties bought and redone (developers or DIY) and compares them to shares or term deposits.
> 
> However some people work considerable hours improving their property and thus increasing median prices. Its like comparing the returns on an savings account whilst adding the additional savings contributed.
> 
> In other words if RP Data says the median has fallen 4%, in actual fact I bet the median for untouched properties has fallen 5-6% whilst those where DIY improvements have been undertaken have risen in price.




I don't aggree, for two main reasons.

1, The median figure is taken over a large portion of homes, and for every home that is renovated multiple others would have been depreatiating.

2, Renovations and maintance, over time would be funded through the rental return, which is not at all factored in by people simly looking at RP Data.

If you wanted a true picture of how a property performs as an investment, you would need to calculate the rental return it generates over time, minus any maintance of improvement work done, this would give you a real terms cashflow which you would add to the sale price.


----------



## Tysonboss1 (5 September 2011)

medicowallet said:


> Where is ROBOTS??




He said months ago he was not posting here any more.


----------



## Taltan (5 September 2011)

Tysonboss1 said:


> I don't aggree, for two main reasons.
> 
> 1, The median figure is taken over a large portion of homes, and for every home that is renovated multiple others would have been depreatiating.
> 
> 2, Renovations and maintance, over time would be funded through the rental return, which is not at all factored in by people simly looking at RP Data.




1. Of course buildings depreciate just like land appreciates but this is taken into consideration by the purchaser and vendor at any given point which is why both are in the median price and is irrelevant when comparing on-going prices.

2. Rental returns are like dividends - the yield on capital tied up in holding the asset. The ASX index excludes dividends and so rightly RP Data excludes rent. 

How renovations are funded is irrelevant, rather over time money and labour is put into existing properties which increases the median price from one month to the next. 

To put it differently lets say every 2nd Saturday all a bank's shareholders went in to work for the bank and in return increased the value of their specific shares. Such input would not be measured by the ASX Index.

There is an extra cost in property (renovations) v shares that is not considered when comparing a rolling index of prices.


----------



## Tysonboss1 (5 September 2011)

Taltan said:


> 1. Of course buildings depreciate just like land appreciates but this is taken into consideration by the purchaser and vendor at any given point which is why both are in the median price and is irrelevant when comparing on-going prices.
> 
> 2. Rental returns are like dividends - the yield on capital tied up in holding the asset. The ASX index excludes dividends and so rightly RP Data excludes rent.
> 
> ...




Thats my point though,

No doubt updating a 20 year old kitchen increases the property value, But what I am saying is that it wouldn't increase the median or average property value because over that year there would be 20 other properties whose kitchens all aged 1 year and hence lowered the average.

In regards to comparing to shares, All the companies on the ASX own assets which like a House are constantly wearing out and needing replacing, this is funded through the revenue of the business and deducted from earnings, so it reduces the free cashflow available to pay as dividends, Property is no different, the maintaince etc is deducted from the rental revenue,


----------



## Taltan (5 September 2011)

Tysonboss1 said:


> Thats my point though,
> 
> No doubt updating a 20 year old kitchen increases the property value, But what I am saying is that it wouldn't increase the median or average property value because over that year there would be 20 other properties whose kitchens all aged 1 year and hence lowered the average.
> 
> In regards to comparing to shares, All the companies on the ASX own assets which like a House are constantly wearing out and needing replacing, this is funded through the revenue of the business and deducted from earnings, so it reduces the free cashflow available to pay as dividends, Property is no different, the maintaince etc is deducted from the rental revenue,




Let me put it this way, If you are a passive property investor than over time your property (all else being equal) will do worse than the median prices RP Data collects because you are doing nothing compared to those putting in new kitchens. I assume you agree.

However if you are a passive share investor (all else being equal) you should do as well as the market because everyone is a passive investor.

In other words part of the value added to property comes not from asset appreciation but from the injection of labour (e.g. weekend DIY) and capital (buy new sink for kitchen).

It has nothing to do with funding we are talking about value, not cash flows or funding.


----------



## Tysonboss1 (5 September 2011)

Taltan said:


> Let me put it this way, If you are a passive property investor than over time your property (all else being equal) will do worse than the median prices RP Data collects because you are doing nothing compared to those putting in new kitchens. I assume you agree.
> 
> .




Yes, If you rented out a house and spent nothing on maintaince over time the value of you property would be worth less than those who did conducted maintaince.

But that is the same as any other business, you could compare that to,

Woolworths - not reinvesting money back into refreshing their stores with new signage, paint and floor coverings.

or,

Toll - Not reinvesting funds back into maintaining their trucks and warehouses

or,

APA - not spending money to maintain their gas pipelines and power stations.

All businesses reinvest part of their cash flows back into "staying in business" capital expenditure, 

When the asx says a certain index has increased X% in the last 10years, they have only increased in value because over those years money has been spent by the companies making up that index so they can stay in business and remain profitable.

If the companies did not have  stay in business capex spending, the index would not have increased in value, same goes for property.


----------



## Taltan (5 September 2011)

All right one last try, you buy a property in 2011 for $500,000 - old house nearly all land value. You demolish, build a new house and sell the entire block for $1,000,000 in 2012. If you had the only transactions in 2011 and 2012 RP Data would report a 100% increase in house prices - do you see a distortion that does not occur with shares?


----------



## Tysonboss1 (5 September 2011)

Taltan said:


> All right one last try, you buy a property in 2011 for $500,000 - old house nearly all land value. You demolish, build a new house and sell the entire block for $1,000,000 in 2012. If you had the only transactions in 2011 and 2012 RP Data would report a 100% increase in house prices - do you see a distortion that does not occur with shares?




Ok, one last try, 

Yes, if that were the only transaction to occur.

How ever, over the space of that year it would not be the only house sold, another 50 un renovated houses would sell also and the depreation that those 50 houses suffered that would offset the one full reconstruction.

Property Investments would hold value much better than just about any asx company if you stopped spending the stay in business capital expenditure.

If I said I was going to conduct zero maintance over the next 12 months I would still beagle to charge rent, and the house would probably still keep pace with the index.

If qantas said the same thing within 14 days they would planes falling out the sky and their share price falling with it.


----------



## Junior (6 September 2011)

Let me try.

Say, for example, in a given year the median property price is reported to have increased by 10%, and the ASX200 index is reported to have grown by 10% as well.

In that particular year shares would have effectively outperformed property, as shares have zero ongoing holding costs, whereas property has associated holding costs borne by the owner which include capital and labour contributed towards maintenance, repairs, renovations etc.  

These ongoing contributions of capital and labour have the effect of boosting the median house price, as this median figure does not factor in these costs.

So where the owner of a property has to contribute capital and labour towards his investment, the owner of shares has no such contribution to maintain his/her investment.

Therefore in this example, where the reported median house price shows an increase of 10%, and the ASX200 shows an increase of 10%, as an asset class equities have outperformed.


----------



## Tysonboss1 (6 September 2011)

Junior said:


> Let me try.
> 
> Say, for example, in a given year the median property price is reported to have increased by 10%, and the ASX200 index is reported to have grown by 10% as well.
> 
> ...




Ok, try and understand.

If I by a house that is in good condition debt free, I never, ever have to add more capital in, it is exactly the same as owning a share.

All maintaince and holding costs would be covered by the rental return, in the same way as woolworths covers their maintiance from their cashflow.

When you say a your share has increased without the need for capital expenditure this is untrue, your managers have used your "share holder funds" to conduct stay in business maintaince for you in the same way a property manager will use some of your rental return to conduct the maintaince.


----------



## investorpaul (6 September 2011)

Tysonboss1 said:


> Ok, try and understand.
> 
> If I by a house that is in good condition debt free, I never, ever have to add more capital in, it is exactly the same as owning a share.
> 
> ...




I get what you mean when you say that the company in which you invest uses some of their cash to pay for maintenance of their business/assets/etc. But:

With a share you get a dividend (lets say its 5%) you don't have to pay any of that towards "repairs and maintenace".

With a house you get rent (lets assume its 5% again) you do have to pay for repairs and maintenace.


----------



## Junior (6 September 2011)

Tysonboss1 said:


> Ok, try and understand.
> 
> If I by a house that is in good condition debt free, I never, ever have to add more capital in, it is exactly the same as owning a share.
> 
> ...




This is going around in circles.

Just to clarify:  We are talking about comparing stock indices and median house prices.  This often occurs as investors compare asset classes and asset class performance.

- The median house price includes a proportion of properties whereby the owners have outlayed large amounts of capital to completely rebuild the properties or conduct major renovations in order to increase the value of their investment.

- A share price index tracks the price of shares, whereby none of those shareholders/investors have outlayed any major sums of capital to increase the value of their investment.

Hence the two are not comparable, and a house price index is an overstatement of returns achieved by that asset class.


----------



## Tysonboss1 (6 September 2011)

investorpaul said:


> With a share you get a dividend (lets say its 5%) you don't have to pay any of that towards "repairs and maintenace".
> 
> With a house you get rent (lets assume its 5% again) you do have to pay for repairs and maintenace.




Company - takes in revenue pays costs and maintaince and then pays a dividend from the free cash flow left over.

House - takes in revenue pays costs and maintaince and then land lord can spend free cash flow left over.

It's the same.


----------



## Tysonboss1 (6 September 2011)

Junior said:


> 1,  The median house price includes a proportion of properties whereby the owners have outlayed large amounts of capital to completely rebuild the properties or conduct major renovations in order to increase the value of their investment.
> 
> 2, - A share price index tracks the price of shares, whereby none of those shareholders/investors have outlayed any major sums of capital to increase the value of their investment.




1, what and BHP hasn't used shareholder funds to expand into new mines, undate equipment etc etc.

2, The share holder owns all of the companies profit and cash at bank, when BHP's managers decides to replace 50 trucks with new ones because the old ones are worn out, they take that money from BHP's bank account, there fore reducing the amount that can be paid as a dividend that year. it is the same as a property manager deciding I need a freah coat of paint and they pay a painter $1000 that they deduct from my rental check that month.


----------



## Tysonboss1 (6 September 2011)

As I said before,

A land lord if he holds they property debt free, Never has to inject any capital or lift a hammer ever again unless he wants to.

For example if I own a house earning $400 a week rent, I can just let that rent ( sales revenue) build up in a bank account and at the end of the year I would have $20,800, from that some rates and insurance charges be paid $3000, put $4000 aside for future maintaince and pay a $14,800 dividend.

  $20,800 sales revenue
- $ 3,000 rates and insurance
- $ 4,000 Future capex allowance
- $14,800 dividend to owner

Notice the owner allowed for future capex and still paid a dividend to himself, the property has not required him to inject any further funds or labour.

This is exactly the same as a company listed on the asx.


----------



## craft (6 September 2011)

Tysonboss1 said:


> As I said before,
> 
> A land lord if he holds they property debt free, Never has to inject any capital or lift a hammer ever again unless he wants to.
> 
> ...




A dividend return is net of capital expenditure for growth.

As well as the median house price picking up maintenance expenditure it also picks up capital expenditure for quality improvements.  We used to be content with modest now we build McMansions.

If you are to include the return from capital expenditure arising from quality improvements captured by median house price then there should be a deduction from your gross yield of not only maintenance costs but a notional expense for capital improvement as well.


----------



## Tysonboss1 (6 September 2011)

craft said:


> If you are to include the return from capital expenditure arising from quality improvements captured by median house price then there should be a deduction from your gross yield of not only maintenance costs but a notional expense for capital improvement as well.




In the little 2 min example I put together, I allowed for $4000 to be set aside a year for future capex including any quality improvements the land lord wanted in future years.


----------



## craft (6 September 2011)

Tysonboss1 said:


> In the little 2 min example I put together, I allowed for $4000 to be set aside a year for future capex including any quality improvements the land lord wanted in future years.






Tysonboss1 said:


> put $4000 aside for future maintaince .




Read to me that you had only allowed for future maintenance. Allowing for the notional cost of the capital improvement included in the median house price measure is very important if you are not to overestimate your return and is the essence of the current discussion.

Do you think $4000 (on $20,800 gross yield) is a fair estimation for both maintenance expense and to improve the quality of the property in line with the rate of quality improvement in the median house?


----------



## Tysonboss1 (6 September 2011)

craft said:


> Do you think $4000 (on $20,800 gross yield) is a fair estimation for both maintenance expense and to improve the quality of the property in line with the rate of quality improvement in the median house?




 the figures were a demonstaion of how rental yield acts the same as sales revenue and costs and allowances are deducted, I was simply demonstrating that 

 If you did have plans for future improvement you could allow extra by spending less of you rental check, in the same way a company pays less dividends if big expansion plans are coming in future years.


----------



## satanoperca (6 September 2011)

Just getting this thread back on track :

The future of Australian Property Prices : DOWN

The current trend : DOWN

What is going to change the trend?

FHBG again or IR's to be decreased.

Just keeping it real.

Oh, the reason why Robots no longer posts as he has no arguement left, prices are down. 

Cheers


----------



## satanoperca (6 September 2011)

And further more, just have a look at the build up of inventory in area code 3030, over 400% increase in two years. That shortage should be kicking in soon, lol.

Just keeping it real.

Cheers


----------



## greebly24 (6 September 2011)

satanoperca said:


> Median Price   YOY
> 
> Sydney	              $500,000	      0.5%
> Melbourne	$475,000	     -4.3%
> ...




Melbourne median dropped by 4.3% to $475k.
Guess that means the median used to be $495k?
So buyers who waited 12 months saved themselves $20k?
Or saved themselves about $400 every week for a year?
Or saved $30k-$40k (including mortgage interest), simply by waiting one year?

*Is is any wonder that buyers have become more cautious?*


----------



## Tysonboss1 (6 September 2011)

greebly24 said:


> 1, Melbourne median dropped by 4.3% to $475k.
> 
> 2, So buyers who waited 12 months saved themselves $20k?
> Or saved themselves about $400 every week for a year?
> ...




So with a 4.3% drop, Melbourne property still out performed the ASX200 by a bit over 6%, I guess they will be happy with that.

And yes, buyers have become very cautious, take a look at the asx panic thread,... lol

Just stirring, I don't really care which way property prices go, it would offcourse be nice to see some decent falls though, I still don't think  it will happen, But I have been wrong before.


----------



## medicowallet (6 September 2011)

Tysonboss1 said:


> So with a 4.3% drop, Melbourne property still out performed the ASX200 by a bit over 6%, I guess they will be happy with that.
> 
> And yes, buyers have become very cautious, take a look at the asx panic thread,... lol
> 
> Just stirring, I don't really care which way property prices go, it would offcourse be nice to see some decent falls though, I still don't think  it will happen, But I have been wrong before.




Forgetting the effects of gearing again I see.


----------



## Tysonboss1 (7 September 2011)

medicowallet said:


> Forgetting the effects of gearing again I see.




Your right, I guess it's worth a mention.

If you had used 50% leverage you results would have been as follows,

Asx200- down 22% of your starting capital

Melbourne real-estate- down 8.6% of you starting capital.


----------



## medicowallet (7 September 2011)

Tysonboss1 said:


> Your right, I guess it's worth a mention.
> 
> If you had used 50% leverage you results would have been as follows,
> 
> ...




3 things.

1. We all know houses are geared more often and higher than shares.

2. What about including the figures for august and until 7/9/11 in your realestate calculations... don't worry, the figures are coming, I see red.

3. Where is Robots?


Glorious time brothers, 

housing market is very consistent at the moment, a trend is forming.

Finding times hard? 
: Cut off the internet
: Take on another job
: Stop going to the movies 
: Sell the car that used to take you to work
: Eat that toast that fell butter side down
: Make offers to tradies with low workloads
: Find a bulk billing GP
: Trade in that iphone for 2 tins of baked beans and some string
: Use your plasma tv as shelter for an extended family
: Sell your house and rent

Living the dream, 

Sunshine and lollipops.

MW

Obiwan Kenobi:10000  MW:1


----------



## satanoperca (7 September 2011)

Tysonboss1 said:


> Your right, I guess it's worth a mention.
> 
> If you had used 50% leverage you results would have been as follows,
> 
> ...




Think you may have embellished the figure a little to much.

Just keeping it real


----------



## Tysonboss1 (7 September 2011)

satanoperca said:


> Think you may have embellished the figure a little to much.
> 
> Just keeping it real




How so?

My rough calculations have the asx200 down 11% over the same time frame that melbourne property was reported as losing 4.6%.

If you were using 50%LVR on your asx200 investment, you would have turned your 11% loss into a 22% loss, Plus you were probably paying 3% higher interst than the Property investor.


----------



## satanoperca (7 September 2011)

Tysonboss1 said:


> So with a 4.3% drop, Melbourne property still out performed the ASX200 by a bit over 6%, I guess they will be happy with that.
> 
> And yes, buyers have become very cautious, take a look at the asx panic thread,... lol




You supplied the figures mate.

Cheers


----------



## Tysonboss1 (7 September 2011)

satanoperca said:


> You supplied the figures mate.
> 
> Cheers




I'm still struggling to see your point.

Melbourne was down 4.3%.
ASX 200 was down almost 11%.

The wording I used was "Melbourne property outperformed the asx200 by a bit over 6%"

I didn't say asx200 was down 6%, it was down by 11%


----------



## maffu (7 September 2011)

> BUYING a home in Australia's most populous state has become "simply unachievable" for some, real estate experts have warned.
> 
> In a major blow to those looking to get on the property ladder, the NSW Government has scrapped stamp duty concessions for 80 per cent of first-home buyers.
> 
> ...





Not a bad move, I agree with the new home buyer concession going to newly constructed homes.

There is an upcoming government tax summit, and I have seen some discussion about only allowing negative gearing of investment property to be allowed for new homes. That would be a massive change to the market, so I highly doubt it would happen. If it did, they would have grandfather provisions so that it doesn't impact on current investment properties I am sure.


----------



## medicowallet (7 September 2011)

Dear Robots,

I really miss your input.

Can you please let me know your professional opinion of what will happen the the realestate market in NSW with stamp duty changes.

Can you also please give me some advice on what is happening with clearance rates in the Melbourne auction market, as you are clearly and expert, during the last year alone you predicted 365 of the last 50 clearance rates over 65%. I think the only way is up for you on this front, next year I am predicting it will be 366.

I hope that your work schedule permits a prompt response,

Sunshine and ever diminishing bubbles

MW


----------



## The Falcon (7 September 2011)

medicowallet said:


> Dear Robots,
> 
> I really miss your input.
> 
> ...




Good to see you are the  "better man" MW, and never stoop to Robots level :


----------



## medicowallet (7 September 2011)

The Falcon said:


> Good to see you are the  "better man" MW, and never stoop to Robots level :




Considering you cannot possibly know who robots is, then why does it matter? Or are you a new account of an old friend 

PS How is gold going atm, I notice that there is some talk of it going to 2000.

MW

PS Where is Robots?


----------



## explod (7 September 2011)

Robots I gathered was one of the shining giants of the REIV.

Invited him down to Mount Martha once  (as his Mum lives nearby) for a coffee but duty always called and he could never make it.  We did speak on the phone for a short time but the line got a bit hot.

As an Associate Professor of something or other I would bet he would be doing some further research into something or other.

Do miss the input, it sort of gave me something to aim for/at, and he was tough.

Anyway, lollipops sunshine and bubbles;  and keep that powder dry as property is going to be a good thing again one day.


----------



## Uncle Festivus (8 September 2011)

maffu said:


> Not a bad move, I agree with the new home buyer concession going to newly constructed homes.
> 
> There is an upcoming government tax summit, and I have seen some discussion about only allowing negative gearing of investment property to be allowed for new homes. That would be a massive change to the market, so I highly doubt it would happen. If it did, they would have grandfather provisions so that it doesn't impact on current investment properties I am sure.




I hope they don't have grandfather provisions - property investors who buy not new dwellings contribute nothing to society, in fact they make society poorer. Not only do they contribute to higher prices, via their bottomless bank suger daddies, they then turn around and ask the taxpayer to subsidise them for the privilege!

It should be all about encouraging new dwellings to be built so that's where all the benifits should be. And in the process drop prices considerably - housing as a retirement nest egg has worked for the baby boomers but what sort of society have they left us?

The NSW government has just lit the fuse for a boom and bust scenario - get in now before 1st Jan so prices should be supported but come next year prices will take a dive and, hopefully, there will be an incentive to build new dwellings. That's where real economic prosperity comes from.


----------



## The Falcon (8 September 2011)

medicowallet said:


> Considering you cannot possibly know who robots is, then why does it matter?
> 
> Robots?




as you always have all the answers MW, please tell me why I could not possibly know.... I've been following this banter for a long time


----------



## Tysonboss1 (8 September 2011)

Just because an investor is not purchasing a new rental property doesn't mean he is not contributing to society, 

That's like saying saying only investors that by shares at ipo's as contributing, 

Who would buy a new property if they were not confident there was a strong resale market, the fact is if I buy a property whether new or old and make it available for rent, I am providing a service.

The fhbg on the other hand is where you need to direct your frustration, the billions wasted there have created almost no new homes, but put massive upward pressure on prices, these funds should have gone to encouraging developers to build low to middle income dwellings.


----------



## Bigukraine (8 September 2011)

Tysonboss1 said:


> Just because an investor is not purchasing a new rental property doesn't mean he is not contributing to society,
> 
> That's like saying saying only investors that by shares at ipo's as contributing,
> 
> ...




The only reason you can supply this "service" is due to govt moving away from providing trust homes (housing for lower income groups) and the affordability factor for the average joe to do this by neg. gear.

All you are doing is being the govt's lap dog(fits your avatar) and you and the other IP mob will be left holding the baby when the unemployment fig. starts to rise and tennants through frustration will miss rent payments and may even damage your "investment"

Tennants are a protected mob and having been a land lord in the past overall you can keep it......

it worked well for me for quite a number of years but could see the writing on the wall re private debt being too high and as of Aug this year only have ppor.....

good luck with your invest strategy ,none is right or wrong if you get the result you aim for but not for me (IP's) at this point in time,happy to be on the side lines

also hello to Robots from me the skies are now cloudy and the sweet store has gone into liquidation is now empty with a "for lease" sign in the window.


----------



## medicowallet (8 September 2011)

Tysonboss1 said:


> Just because an investor is not purchasing a new rental property doesn't mean he is not contributing to society,
> 
> That's like saying saying only investors that by shares at ipo's as contributing,
> 
> ...




2 scenarios

1. House build 1998 for $170000, valuation today $560000 (I had this house built for me)

I have no borrowings on this house.

If I sell it to Joe, he borrows $300000 and is plonked into an asset that had zero debt prior.

The thing is that most people who own their home have X apparent equity within this asset that just 12 years ago was "worth" only half, so instead of being only worth say, a realistic amount, they have hundreds of thousands extra in their name (due to a bubble of debt)

What do they do with it?  Consume = plasmas, new cars, holidays overseas etc.

2.

BHP Billiton

Purchase $560000 with a $300000 loan = share price increases.

BHP can use its valuation to expand its business operations, bringing money into the country and increasing incomes, and keeping employment levels high.



Which one is better for the economy? 

1. Which equals imports and increasing debt
2. Which equals exports and decreasing debt

It surprises me that the govt is so incompetent that they cannot do this simple reasoning to come to the fact that, for the country, propping up the housing market is a bad move, and that encouraging people to invest in Australian companies is a good move.

And for morons such as Bob Brown, THIS is what would ensure that BHP remained mainly Australian owned, and that the $22 billion in profits went to Australians who invested in it.

Because sure as heck, a house worth $560000 on the ground is not generating any more exports than a house worth $3000000 on the ground.


----------



## Tysonboss1 (8 September 2011)

Bigukraine said:


> The only reason you can supply this "service" is due to govt moving away from providing trust homes (housing for lower income groups) and the affordability factor for the average joe to do this by neg. gear.
> 
> All you are doing is being the govt's lap dog(fits your avatar) and you and the other IP mob will be left holding the baby when the unemployment fig. starts to rise and tennants through frustration will miss rent payments and may even damage your "investment"
> 
> ...




Couple off points,

1, I am not neg geared

2, It is cheaper for the government to subsidise a landlord for the first 5 years than a housing commision tenant for life.

3, Tennant issues, well $150 of landlords insurance covers that.


----------



## medicowallet (8 September 2011)

The Falcon said:


> as you always have all the answers MW, please tell me why I could not possibly know.... I've been following this banter for a long time




Are you Robots?   Where is Robots?  What is the clearance rate going to be? What does this mean?

Keeping it real for the true believers

MW


PS   I think that the only way to get rid of negative gearing is over a period of time.  

ie until 2016 = no change
2016-2021 = 80% deductable
2021-2026 = 60% deductable

etc for all properties, including newly purchased, but there has to be an exit at some stage as the tax concessions are so huge that we will not be able to fund the BB in the future. 

I am not sure if I want to see any benefits for newly built homes. I think supply and demand should prevail. I am against lining the pockets of builders and developers. They will just have to work for margins set by non-artificial supply and demand for a change.


A gradual decline, where people know what is going to happen will soften the landing over the life of all existing loans, and stop the stampede to get an investment property on grandfathered basis, and the inevitable massive crash that would immediately follow this.


----------



## Tysonboss1 (8 September 2011)

medicowallet said:


> 2 scenarios
> 
> 1. House build 1998 for $170000, valuation today $560000 (I had this house built for me)
> 
> ...




And BHP can do that while their workers families sleep in tents? 

It takes all parts to make up the economy.

I think the FHBG combined with high barriers to development has caused more of a bubble than anything else.

Just my opinion,


----------



## medicowallet (8 September 2011)

Tysonboss1 said:


> And BHP can do that while their workers families sleep in tents?
> 
> It takes all parts to make up the economy.
> 
> ...




No, they sleep in a house, worth $300k, not $560k

I agree with you.

I think the FHBG should be scrapped

and that massive land releases are made on a use it or lose it basis.

So that land prices fall back to reasonable levels. For example, in the property described, back when I purchased the land it was $50k, now the same area for land is $200k. That is crazy, (and it is not as if it is in a particularly desirable city, with a shortage of land).

Developers and builders have been ripping off the mainstream person, armed with their geared up govt handouts, for 10 years, and the only thing to stop them is to stop the govt handouts.

By the way, I acknowledge that the tax cuts over the past 10 years have also contributed, and that if bracket creep was not so disgusting during the 90s, that house prices graph would look a bit more steady too.  But this does not explain the bubble by itself.


----------



## Tysonboss1 (8 September 2011)

medicowallet said:


> .  But this does not explain the bubble by itself.




Don't underestimate the effect of the fhbg,

Picture a 5 people on a life raft, with 4 banana's,

4 people have  $1 each and 1 guy only has 80c.

Offcourse if the bananas are auctioned off, the guy with 80c will miss out, because there is only 4.

Giving the guy with 80c and 3 other of the other people who have never had banana before an extra 30c just means some one else misses out. and the median price of banana goes up 25% to $1.25.

The only real soloution is, to figure out a way of increasing supply, so that their is 8 banana's that get auctioned.

Negative geraing is a bit of a scape goat, the land lord are in business and deserve the same rules as any other business.


----------



## medicowallet (8 September 2011)

Tysonboss1 said:


> Don't underestimate the effect of the fhbg,
> 
> Picture a 5 people on a life raft, with 4 banana's,
> 
> ...




You are assuming that in Australia there are not enough bananas (in real terms yes, but in housing no)

There ARE in reality FOUR bananas, 4 slightly different sizes though.

Your person who gets the 30c then goes to the bank who says, heck, if you buy that banana, you are going to have to pay us back over 30 years, so here is 300c more so that you can make sure that you can get that banana..

so the banana sells for $4, and all the people who want the banana get their banana for $4, 3.95, 3.90 and $3.50.

However, my Banana tree farmer goes to the bank and wants to borrow some money to plant banana trees, he is from Tully, a nice guy, he likes the rain.

Sorry Mr farmer, says the bank, we are short of money, our lenders are running short, and we loaned our money to 4 people just yesterday, bananas are in huge demand you know!!

But, Mr Banker, I sell bananas, and I also sell them to people across the seas, if you cannot lend me my money, my workers, who just yesterday purchased bananas, well I won't be able to keep them on.

By the way, who lends you the money Mr Banker.

Why, the banks overseas, they make their money from selling the apples that your banana workers roll to work in every day.

Oh I see, so who is running this racket... sounds like a duck to me!!

No, Mr Farmer, he's a Swan, and quite smart too.


----------



## medicowallet (8 September 2011)

Tysonboss1 said:


> The only real soloution is, to figure out a way of increasing supply, so that their is 8 banana's that get auctioned.
> 
> Negative geraing is a bit of a scape goat, the land lord are in business and deserve the same rules as any other business.




I have no problem with people claiming tax deductions, but claiming losses vs personal income is ridiculous. It doesn't matter, if the rule is consistent for all, the returns will reflect incomes, which is what we want for society.  Good consistent returns reflecting wages, and AFFORDABLE housing for all.    Housing is a necessity, and policy can make it great for investors and all australians at the same time.

Also note, that one of the drivers for increasing prices, was probably the fact that the average person per household was decreasing.

Even with an ageing population, I note that this has just recently reversed and the average people per household is increasing again.

Kids staying at home longer, shared accommodation etc, are reflections of a bubble in pricing compared to yesteryear.

Prices will be down 20% from their peaks, and will stagnate for years.

I have also convinced my partner to let the kids rent. Thank goodness

MW

PS Where is Robots?


----------



## Tysonboss1 (8 September 2011)

medicowallet said:


> I have no problem with people claiming tax deductions, but claiming losses vs personal income is ridiculous.




Any future profit will be added to their personal income, so why not be able to deduct the early on losses.

The losses need to be claimed, Maybe they should be accumulated and only offset against future profits directly related to that investment, I guess that could work, But you would have to apply the same to any business venture a person starts and that could have unwanted impacts.

At the end of the day, One mans deductable loss is anothers (the banks) taxable profit, so the net affect on taxation is zero.

Plus the government have less housing commission to subsidise, which would create a bigger tax burden and restrict the ability to lower tax rates etc (thats the creep in the 90's you spoke of)


----------



## medicowallet (8 September 2011)

Tysonboss1 said:


> Any future profit will be added to their personal income, so why not be able to deduct the early on losses.
> 
> The losses need to be claimed, Maybe they should be accumulated and only offset against future profits directly related to that investment, I guess that could work, But you would have to apply the same to any business venture a person starts and that could have unwanted impacts.
> 
> ...




Both bracket creep and housing commission is a positive for affordable housing.

Net effect on taxation is more complex than that, as a personal taxation is at personal rates, whereas a bank's is at company rates, and both have different avenues for minimisation.

The problem with housing having negative gearing, is that with a business entity, the aim is to obtain a profit, whereas with neg gearing the aim is to make a loss. 

If negative gearing was to be removed in housing, it would still be an attractive investment, and would allow housing to be more affordable as it would be more closely linked to wages and inflation as opposed to gearing.   This kind of social security network for one of the essentials of life is something that is easy to do, was once the thing that was done, is done in many countries around the world, BUT would lose an election.

MW
PS Where is Robots?


----------



## satanoperca (8 September 2011)

We are different in Australia.



> Deduction of negative gearing losses on property against income from other sources for the purpose of reducing income tax is illegal in the vast majority of countries, the exceptions being Canada, Australia, and New Zealand.




So the rest of the world has got it wrong in providing public housing by not having negative gearing.

Negative gearing on existing dwellings does not provide any social good, it does not add to the supply, it only lines the pockets of the banks while removing money from the taxpayer.

Cheers


----------



## FxTrader (8 September 2011)

medicowallet said:


> Both bracket creep and housing commission is a positive for affordable housing.
> 
> Net effect on taxation is more complex than that, as a personal taxation is at personal rates, whereas a bank's is at company rates, and both have different avenues for minimisation.
> 
> ...




Negative gearing for IP is a form of wealth redistribution from the aggregate tax base to property investment speculators - yet another government market distortion.  The continued flipping of established property at ever higher prices to investors who create price competition for owner occupiers contributes NOTHING to the economy but does help to create an unsustainable debt and price bubble in property.

As long as the debt bubble keeps expanding the ponzi scheme stays affloat.  To many Australians and institutions now have a vested interest in maintaining the negative gearing heroin so equitable change is almost impossible now.


----------



## Knobby22 (8 September 2011)

FxTrader said:


> As long as the debt bubble keeps expanding the ponzi scheme stays affloat.  To many Australians and institutions now have a vested interest in maintaining the negative gearing heroin so equitable change is almost impossible now.




Its good that most educated people agree however.
I think it could be done by just changing the rules for future property buys so that losses could not be offset against income. It won't be this government as the Libs will oppose it but it may be a future Liberal government.


----------



## satanoperca (8 September 2011)

> THE Australian unemployment rate jumped to a higher than expected 5.3 per cent last month, as employers shed full-time jobs.




Another part of the property prices will fall puzzle coming into play.

Lets see how many people in the future will go into huge amounts of debt to obtain the Australian dream if unemployment gets to 6%. 

At todays rate, it is still low but the pyscological impact will be great as the public keep getting informed that it is rising, not everything is sunshine and lollipops out there in Aussie land.

Cheers


----------



## greebly24 (8 September 2011)

Anyone thinking of buying RE should check out www.refindhouseprices.com in order to get a clearer picture.

Very interesting site that lists property advertising history, including both discounts and time advertised.

Although it only seems to go up to 500 days 

Some properties around my area have been on the market for well over 200 days, despite 10-20% discounts. One ad says "Be quick". Obviously the market didn't listen as its been on the market 500+ days. Hilarious.

If the ad says "Vendor must sell" and its already been discounted 20% and its been on the market for over a year, you know you can definitely pay less. Hopefully this site can save people money and help cut through the RE spin.


----------



## medicowallet (10 September 2011)

Good evening brothers,

Another glorious weekend, sunshine, birds singing and bubbles galore.

Clearance rate of 55% this weekend. For the real estate investors, that means over HALF of the houses up for auction sold. That is great news for those sellers.

I wonder how much their reserves were compared to last month. I don't know that much, but in melbourne, the yearly losses, before gearing, must be around 10% by now. 

Better than the shonk market, because most of us are in denial hey 

Better go and have a cup of tea now (only one sugar now, to cut costs)

Sunshine, lollipops, but only 90% of last years bubbles

MW

PS Where is Robots?


----------



## robots (11 September 2011)

Hello,

another great day coming up alright,

anybody got any stats on Ballarat over the past year? hehehehehehehehehe

after all the expert opinions in this forum i didnt think i had a chance for the title again this year but its looking good,

well done Kincella, you been on it all the way man with the regional area call

thankyou

professor robots


----------



## Agentm (11 September 2011)

hmm


59,000 unsold properties on the market right now, and spring sales have just commenced

thats up 54% on last years figures!!!

those little hiccups are having a huge effect on the robotic effect of sustaining the bubble, but things are in the pipeline to make the bubble increase.. mark my words..

fudged clearance rates are now pegged at 55% with 80 of the 539 auctions unreported

the cry from the industry to a scrap stamp duty for first home buyers totally, and to double the first home buyers grant!!

lets guess what will happen next??


ummmm...  they will get those measures passed and we will see the bubble fly once again!

stay tuned, i think robots is going to have a wonderful time here if they can achieve greatness and generate new life into the bubble...

keep on dreaming out there, the real estate industry needs you!!  

lol


----------



## medicowallet (11 September 2011)

robots said:


> Hello,
> 
> another great day coming up alright,
> 
> ...




When the ASX dropped 40%, it wasn't much help when a single share went up 50%

Median price in ballarat is low.  Median price in melbourne is high

It takes more that a 13% increase in ballarat to cover a 10% loss in melbourne.


How are those losses holding up Robots?   More to come for august and september.  

No worries, take another job, perhaps hit up the family for another loan, declare bankruptcy.

Sunshine, lollipops and ever decreasing bubbles, 

All for you Robots,

Sincerely

MW

PS How is Mr Burns?


----------



## robots (11 September 2011)

hello,

thats right i was buying at the top in 2010 all the experts at ASF told me last year, hehehehehehehe

ASF Investor of the Year 2011 (07,08,09,10)

thankyou

professor robots


----------



## medicowallet (11 September 2011)

robots said:


> hello,
> 
> thats right i was buying at the top in 2010 all the experts at ASF told me last year, hehehehehehehe
> 
> ...




Sure, you purchased at the top, that is why you are carrying such losses, and have been hiding for the past month.

Sorry, you made a mistake, admit it, be done with it, and start to minimise the losses you are carrying, and which are coming.

Melbourne is down 10% as of july, probably down 15% by the end of the year.

Ballarat will probably be up 10-13% by the end of the year, with very low median prices.

Cash has been king for the past 12 months, yet you gambled on the hosing market, you are hoping that the bubble will maintain,

How can it, when your resolve can not even do so. I see it Robots, you are cracking, this is your last attempt to try to con us that you are not being smashed by the market you are so geared into.

You have no doubt lost at least 10%, perhaps 25-40% with gearing.  How much more do you expect to lose over the next 12 months?

Interesting times ahead

Sunshine, lollipops and smaller bubbles than Robots imagines

MW

PS How is Mr Burns?


----------



## Glen48 (11 September 2011)

I heard Mr. Burns  is now called Mr. Burnt and could be appearing on the new TV show called Australia Biggest looser's all about RE..
 In 2035 when the depression Re  will start to return as an investment.


----------



## Agentm (11 September 2011)

robots said:


> hello,
> 
> thats right i was buying at the top in 2010 all the experts at ASF told me last year, hehehehehehehe
> 
> ...




wow

robots thinks he is the only Real Estate investor in australia.. lol

robots, i would hazard a guess that a majority of ASF members are owning property, and have seen rises in land value during this decade long property bubble..


but its not possible you could match or beat my investment returns robots


my 5k i started with is now in a place where it can buy any property i want for cash in melbourne

current holdings in the likes of sbr tig and txn have a minimal upside of 100% return in the next 6 months to 12 months..

my current sizable holding in NGE has risen from .09 to .14 in the past week alone.. with a good chance of a major discovery being announced early next week which should see that share rise perhaps another 100% from where it is now.. who knows?

i held 100% in a company that rose from .04 to .42 in about 9 months, and trebled my holdings at .04

 we are not talking a few % YOY returns like you think is amazing in the RE market during the government driven bubble..

asf investor of the year in your own imagination robots..

your as full of hot air as the bubble you cherish

i thought this forum frowned on ramping and certainly no one believes your bogus claims of being asf investor of the year.  your making claims that are unable to be substantiated.. 

you always come across as a RE industry plant.. do you get paid per post?

lol


----------



## robots (11 September 2011)

hello,

gee, just posting up how Ballarat is doing really well through this period in time ( i thought thats the title) oh well

strange comment from medicowallet about the asx tanking but one particular stock may go up 40%, like isnt that the idea to use your skills and identify opportunities to make money

oops, sorry real estate isnt included in that one, sorry sorry fella's

i dont know, is it jealously about the life some of us walk?

oh well, enjoy the week brothers

thankyou

professor robots


----------



## medicowallet (11 September 2011)

robots said:


> strange comment from medicowallet about the asx tanking but one particular stock may go up 40%, like isnt that the idea to use your skills and identify opportunities to make money




Yes, but I am man enough to acknowledge that that one win does not make up for my losses.

Kind of like if I owned a property in Melbourne and one in Ballarat, and pretended I was doing well.

Keeping it real for the true believers

MW

PS, how is that credit going at the internet cafe Robots?   Just keep believing that the hosing market will come good, it just might if you pray for enough years.


----------



## satanoperca (11 September 2011)

Dear Prof Robots AKA ASF investor of all time,

Can you please give me your opinion on the future of Australian property prices?

Thanks in advance.

Cheers


----------



## Glen48 (11 September 2011)

House prices will go down just like USA until about 2035.


----------



## satanoperca (11 September 2011)

Glen48 said:


> House prices will go down just like USA until about 2035.




My mother always told me to be cautious around smoking babies.

Why 2035? Is it just a hunch or do you have some credible analysis?

Are you the evil twin Prof Robots?


----------



## bellenuit (12 September 2011)

'Tsunami' to hit Aust real estate

http://www.skynews.com.au/national/article.aspx?id=660390&vId=


----------



## Aussiejeff (12 September 2011)

bellenuit said:


> 'Tsunami' to hit Aust real estate
> 
> http://www.skynews.com.au/national/article.aspx?id=660390&vId=




Are you trying to dent the inimitable Prof. Robot's optimism?


----------



## satanoperca (12 September 2011)

bellenuit said:


> 'Tsunami' to hit Aust real estate
> 
> http://www.skynews.com.au/national/article.aspx?id=660390&vId=




Harry Dent is here to promote his latest book, he is no different to property spruikers, just trying to grab headlines.

Cheers


----------



## freebird54 (12 September 2011)

I am very impressed with the contributions from both sides of the argument and I am sure there are people here that can give me some advice

I am renting [have been for many years after selling our homes]and investing what I save by doing that.

Absentee owner likes me to do minor repairs and does not want to spend much money - I do not have a problem with that as annual increases are negotiated depending on how much work I have done.

Anyway owner visited - first time in 5 years and I asked him what his plans were. He was non committal but said he is not selling.

I did offer to pay a years rent in advance.

He seemed friendly - said he had forgotten what the home looked like.

He said he the agent had not told him about some repair items that were necessary that agent had been told about.

The current 2 year lease expires in a few weeks and for the last 2 months I have been asking the agent what the intentions were.

With 3 kids at home a stressful time!

It seems the agent [who always seems overworked] has not passed this request on.

What would you advise now - contact owner direct [never done] and probably upset agent or keep hassling the agent?

Thanks


----------



## Glen48 (12 September 2011)

i would be paying the rent 2 days after is due no more as things change and he will have to sell one day when he sees the way the market is tanking... keep and eye out for a cheaper house when rents come down.


----------



## tech/a (12 September 2011)

Keep paying your rent as usual
Keep requesting your rental agreement renewal.
Even if he wants you out he needs to give 6 weeks notice.
My bet is he is looking to up the rent.---Hence non commital.
Once an offer is on the table up to you.
Oh Id have him get pros to fix things if something doesnt work out---youll be the one holding the baby!


----------



## freebird54 (12 September 2011)

tech/a said:


> Keep paying your rent as usual
> Keep requesting your rental agreement renewal.
> Even if he wants you out he needs to give 6 weeks notice.
> My bet is he is looking to up the rent.---Hence non commital.
> ...




We are in  Qld. lease agreement says 1 months notice of rent increase prior to expiry if lease - that 1 calendar month is this week.


----------



## matty77 (12 September 2011)

Welcome back Robots, hope you sold out while you had the chance.



What should I do? Sell my PPOR and rent or just stay and pay my loan? Maybe upgrade to a new place?

Oh did i mention sunshine and lollipops on the weekend, if prices continue down could be a nice time for me to scoop a deal from one of these "investors" and upgrade the house for the family. Ahhh i can taste the lollipops now.....


----------



## Tysonboss1 (12 September 2011)

freebird54 said:


> We are in  Qld. lease agreement says 1 months notice of rent increase prior to expiry if lease - that 1 calendar month is this week.




maybe he is happy just to have a month by month,

My tenants are all on month by months,

They are all longterm tenants, I just can't see the need for constant renewal of the lease, as long as they pay their rent I won't be kicking them out.


----------



## Tysonboss1 (12 September 2011)

Glen48 said:


> keep and eye out for a cheaper house when rents come down.




So what is going to be the driver behind these cheaper rents.


----------



## Glen48 (12 September 2011)

Tysonboss
What ever happens in USA   happens here, Home owner's who think the market will recover will want to rent out their home and move in with their parents or some one and rent out their property to assist with payments, then they will see house prices are still going down and they are underwater and decide to sell but there will be no buyers so the tenant will be there as long as they can afford to pay  or move on to some thing cheaper.
 This is a train wreck coming to a burb near you soon


----------



## medicowallet (12 September 2011)

Add to this the stocklands of the world developing land and trying to move it, as opposed to gouging the consumer.  They will offer less when they purchase land parcels, and work on lower margins.

Then the GJ Gardners of the world will continue to offer incentives for people to purchase, then drop prices (and wages) to try entice people to keep building.

More affordable housing = cheaper rents.


Add to this, unemployment rising. Single income families cannot afford to pay $550+ per week, especially as our dollar continues to tank and petrol prices rise.

But we will all be happy, as we sit at home pirating movies over our NBN, powered by 25% green energy power, whilst contemplating a new tax to cool our climate 0.004 C over the next whatever years.


Paradise, and sunshine

MW

PS Where is Robots?


----------



## Tysonboss1 (12 September 2011)

Glen48 said:


> Home owner's who think the market will recover will want to rent out their home and move in with their parents




 I don't really get how your joining those dots, Why would a drop in property prices suddenly make people want to move in with their parents? 

That could only be likly if massive unemployment was at hand.

But a far more likely out come would be a small % people sell their home and then rent a similar property, inwhich case the net effect on rents would be zero.


----------



## medicowallet (12 September 2011)

Tysonboss1 said:


> I don't really get how your joining those dots, Why would a drop in property prices suddenly make people want to move in with their parents?
> 
> That could only be likly if massive unemployment was at hand.
> 
> But a far more likely out come would be a small % people sell their home and then rent a similar property, inwhich case the net effect on rents would be zero.




It is a momentum/snowball effect too.

k,, say prices drop 10%, but the disneyland living dreamers think that their property is "different"

So what happens is clearance rates plummet, and sales rates drop, and purchasers start to look for REAL bargains.

Therefore prices drop further, even with low volumes.  

Kind of what is happening now. Purchasers have woken up to the con job that the real estate industry fed them, and the banks went along with.

Painful times ahead for some of us, especially housing brainwashed who purchased anything since 2010.

sunshine and smaller bubbles

MW

PS Where is Robots?


----------



## Dowdy (12 September 2011)

Tysonboss1 said:


> So what is going to be the driver behind these cheaper rents.




More competition on the market. Simple





medicowallet said:


> Add to this, unemployment rising. Single income families cannot afford to pay $550+ per week, especially as our dollar continues to tank and petrol prices rise.




One thing i got to correct you on - our dollar isn't tanking. Sure i'd like to see it back at 1.10 but i'm sure i'll be up there again sometime soon


----------



## robots (12 September 2011)

Hello,

thanks Matty77, I just read the site most days

although not much in the last 50 odd pages since I havent been posting, the usual talk on everything not related to australian property prices

cant understand why the mods havent deleted it, oh well life goes on

i have been getting enormous requests for more detailed price info on the Ballarat region, once i can get the suburb data i will post it up for everyone

but my own thoughts from being out on the bicycle doing the on the ground research is that sebastopol, wendouree, redan are good to go

thankyou

professor robots


----------



## satanoperca (12 September 2011)

robots said:


> although not much in the last 50 odd pages since I havent been posting, the usual talk on everything not related to australian property prices




Hi Prof Robots, 

Well the above is not true at all. 

Firstly, Property in Victoria has seen a decent decline, Ok >5%. Something that I lost a bet to some time ago.

Secondly, I asked you a question, that you are yet to answer.

Nice to see you posting again.

Cheers


----------



## trainspotter (12 September 2011)

LOL ...... you guys crack me up !!


----------



## Dowdy (12 September 2011)

trainspotter said:


> LOL ...... you guys crack me up !!





What are you doing back. You thought we were all a bunch of ignoramus.

Why don't you stick by your convictions...


----------



## freebird54 (13 September 2011)

Tysonboss1 said:


> maybe he is happy just to have a month by month,
> 
> My tenants are all on month by months,
> 
> They are all longterm tenants, I just can't see the need for constant renewal of the lease, as long as they pay their rent I won't be kicking them out.




From your perspective I agree but wife does not like the instability with 3 kids at home 1 in local school which he can ride to, rest of us working close.

Overseas 3-5 year leases are not unusual. 

When I had 2 investment properties [one our own home whilst we were renting] 6m - 12m was the norm.

It still made no difference when I had bad tenants - at least the clean up/repair etc.was only once or twice a year [I did have good tenants occasionally ;-)

And no the agents never managed to recover some monies and landlord protection fund failed too!


----------



## Tysonboss1 (13 September 2011)

Dowdy said:


> More competition on the market. Simple




Wheres the extra competition coming from in the rental market,

example- Family sells home to investor so one extra house is available in the rental market, however the family then goes and rents another home taking one home off the rental market, net effect is zero.

The number of owners vs renters can change, and along with that the capital value of the property, But the rental yield won't change unless more houses are built,


----------



## robots (13 September 2011)

hello,

good evening everyone, another great day arent we lucky to be alive

oh yeah cleaned up big on that bet satanoperca, nice chicken parmagiana down in sunny st kilda, awesome man

i dont have a clue where australian property prices are headed brother, never have and never spruiked that things only go up and up

just a strong believer in owning a roof over your head, 

others disagree and decide to rent, or live in their son's garage, or the bushes at Elwood foreshore, tram stops along st kilda road, a humpy in warburton state forest what ever, thats life

yeah no worries

thankyou

professor robots


----------



## explod (13 September 2011)

Tysonboss1 said:


> Wheres the extra competition coming from in the rental market,
> 
> example- Family sells home to investor so one extra house is available in the rental market, however the family then goes and rents another home taking one home off the rental market, net effect is zero.
> 
> The number of owners vs renters can change, and along with that the capital value of the property, But the rental yield won't change unless more houses are built,




Delivered two new single beds to an address today.  Two young men lost their jobs in the city and moved back to live with Mum.  They were renting independantly, three down to one.

Ah well, more vacancies.

Lolliepops and sunshine brothers


----------



## Dowdy (13 September 2011)

Tysonboss1 said:


> Wheres the extra competition coming from in the rental market,
> 
> example- Family sells home to investor so one extra house is available in the rental market, however the family then goes and rents another home taking one home off the rental market, net effect is zero.
> 
> The number of owners vs renters can change, and along with that the capital value of the property, But the rental yield won't change unless more houses are built,





What Explod said. 

To add to that.

Real world example: remember a few years ago there were HUGE demand for rental lots. People were queuing for hours to look at a property and people were offering $50-100 above the asking rental rate. Now there's no lines, no bidding up. Pretty much, if you apply to be a tenant for a rental, you're going to get a call back from the owner within a few days.

The competition has reversed. before it was tenants bidding against each other, now its owners bidding against other owners to try and get the tenant.


----------



## satanoperca (13 September 2011)

Agree with the above.

Chatting to a building super the other day and asked have you had many move outs of the apartment block. He replied, in the next two weeks approx 7 out of the 32 apartments are moving out. Reason, block is controlled by one realestate agent and they had tried to put up everyones rents. The vast majority decided to move onto better pastures. Mind you at $400 for a one bedroom and $560+ for a two bedder not exactly cheap and are located in inner Melbourne. 

The block of units bar a few where sold to Malaysian investors. I happen to know the rental agent concerned, saw him have a coffee at the local cafe, on investigation, he stated that he is having trouble leasing out apartment at the current prices that his clients demand, with some properties sitting vacant for several months.

Further investigation of my local area and I was surprized just how many apartments where up for lease. It was only a year or two ago I used to see queues of people waiting to view apartments, they have all disappeared.

Going to be a lot of disappointed landlords over the coming months and with rental yields so low can see a slow rush to the exits for many.

Cheers


----------



## Miss Hale (13 September 2011)

Has anyone else noticed that the two major internet real estate sites (realestate.com and domain.com) are now advertising on the TV? Never seen that before.

My 

We have relocated from the country to the city and are currently renting.  In anticipation of buying a PPOR in about nine months when our lease is up I have been spending a lot of time researching properties for sale in our area (Melbourne eastern suburbs), including going to OFIs and auctions. I haven't yet been to an auction where the property has sold at auction, people just aren't bidding they are waiting for it to be passed in and then negotiating from there.  Most properties are selling but not at way above the advertised price like they would have a year ago, they are taking a bit longer and often being discounted. I am seeing properties going off the market after a month or so, then coming back on the market with a new agent but at a lower price. I reckon prices in this area are down an average of about 5%. Properties above the $800K mark and below $400K in particular, the ones in the middle are holding up better I think.  Because you have to give a name and number when you go to OFIs I am almost being 'harassed' by estate agents at the moment even when I have told them I'm not interested in a particular property or that I am just doing research at the moment (I'm quite up front with them that we are not ready to buy just yet). 

Regarding renting, the property we have rented was empty for a month when we rented it in June and we were the only people interested in it.  I was stunned as I had been told getting a rental was almost impossible (only wish we'd negotated a lower rent now  ) 

Yes, times are a changing (IMO).  We are seriously thinking of continuing to rent for a few years if real estate prices stay flat or continue to drop - why buy an asset that is not going to appreciate? The last thing we want to do is borrow money to pay off something that is going to drop in value  

Thanks for all the comments everyone, very interesting to read all the different opinions


----------



## FxTrader (14 September 2011)

Miss Hale said:


> We have relocated from the country to the city and are currently renting.  In anticipation of buying a PPOR in about nine months when our lease is up I have been spending a lot of time researching properties for sale in our area (Melbourne eastern suburbs), including going to OFIs and auctions. I haven't yet been to an auction where the property has sold at auction, people just aren't bidding they are waiting for it to be passed in and then negotiating from there.  Most properties are selling but not at way above the advertised price like they would have a year ago, they are taking a bit longer and often being discounted.



Welcome to the strange world that is the Melbourne eastern suburbs property market.  In search for another PPOR, we tried the tactic of waiting for a particular property to be passed in at auction.  Instead, the property sold to a young couple who, in a moment of sheer emotional delirium, paid $40k over pre-sale projection and some $90k above the previous recent sales on the street.  This may be the exception now but it still happens.

A pattern has emerged in our search, well presented homes in good neighborhoods are selling near or over the high end of their price range (if under 700k).  Poorly presented properties in good neighborhoods are sitting on the market a little longer but eventually move.  The sweet spot seems to be in the $550k-$600k range where well presented homes in this price bracket are moving.



> I am seeing properties going off the market after a month or so, then coming back on the market with a new agent but at a lower price. I reckon prices in this area are down an average of about 5%. Properties above the $800K mark and below $400K in particular, the ones in the middle are holding up better I think




The issue is all the new or near new stock for sale in outer eastern suburbs like Berwick, Pakenham, Cranbourne and now Officer.  The commute is horrible but the price of nice homes are more affordable.  Even towns as far out as Drouin are growing, amazing.



> Because you have to give a name and number when you go to OFIs I am almost being 'harassed' by estate agents at the moment even when I have told them I'm not interested in a particular property or that I am just doing research at the moment (I'm quite up front with them that we are not ready to buy just yet).




Get use to it, there's a lot of stale property on the market with the usual glut of spring listings on the horizon.  Hardly a day goes by that I don't get call from an agent.



> Regarding renting, the property we have rented was empty for a month when we rented it in June and we were the only people interested in it.  I was stunned as I had been told getting a rental was almost impossible (only wish we'd negotated a lower rent now  )



Careful about generalizing here.  Nice rental homes in my area are snapped up quickly with many applicants.



> Yes, times are a changing (IMO).  We are seriously thinking of continuing to rent for a few years if real estate prices stay flat or continue to drop - why buy an asset that is not going to appreciate? The last thing we want to do is borrow money to pay off something that is going to drop in value




Yes, you can hang out for further market drops but population growth in Melbourne is likely to sustain prices into the future here.  Here's a quote from the Vic governments 2008 report...

"*Projections for Melbourne*

_Melbourne is experiencing record population growth. It grew by 273,000 between the 2001 and 2006 censuses.

Overseas migration is the main contributor to Melbourne’s growth, with almost a quarter of migrants coming to Australia settling in Melbourne.  

Melbourne’s share of Victoria’s population has been increasing reflecting a worldwide trend to urbanisation.

Melbourne is projected to grow from 3.744 million in 2006 to 5.525 million in 2036, an increase of 1.781 million.

The number of Melbourne households is projected to increase by 51 per cent between 2006 and 2036, compared with a 41 per cent increase in population. _

*The Next Twenty Years*

_*To accommodate this increase, 600,000 extra households will be required in Melbourne over the next 20 years.
*
Between 2001 and 2006, the City of Melbourne was Australia’s third fastest growing local government area, reversing a trend of losing population during most of the twentieth century. It is projected that the inner city revival of Melbourne will continue, with a projected increase of 120,000 in the City of Melbourne.
*
In recent years, the population of most established suburbs has increased and this is projected to continue.* _

_Fast population growth is projected to continue in Melbourne’s growth areas – Wyndham, Melton, Hume, Whittlesea and Casey-Cardinia."_

This and other reports tell a similar story, Melbourne is growing well into the future and this I must admit does not support the case for a large drop in prices here going forward.  Any price drop is likely to be of short duration given future population trends and shortfall of new home construction.


----------



## satanoperca (14 September 2011)

FxTrader said:


> Any price drop is likely to be of short duration given future population trends and shortfall of new home construction.




No short fall in Melbourne but an oversupply of over 30K> homes
Short duration in falls, ha try over indebtness 

What could cause stagnation and falls :

1) Rising unemployment
2) world going into a prolonged recession
3) China crapping itself

But sunshine and lollipops all round


----------



## FxTrader (14 September 2011)

satanoperca said:


> No short fall in Melbourne but an oversupply of over 30K> homes. Short duration in falls, ha try over indebtness




I am well aware of the various stats on oversupply in Melbourne, Prosper Australia recently put it at 70k.  But much of this oversupply seems to be in medium and high density developments not low density detached dwellings - the homes most of us like to live in with some willing to move all the way to Drouin and Officer in VIC to get them.  If population growth projections are anywhere close to being accurate, the "oversupply" will be temporary.  This is simple math that even a die hard property bear must accept.

As to household debt, I have stated my concerns about this over the last ~50 pages in debates with the likes of trainspotter in case you have't noticed.  However, I must concede that, at least for now, the debt bubble has only put marginal downward pressure on house prices in Melbourne.  If one believes that prices across the board will fall significantly then by all means wait but current demographics and population growth forcasts simply do not support such a belief in the longer term.  People are still paying top dollar for well presented homes in my area of Melbourne's eastern suburbs, simply a fact.


----------



## howmanyru (14 September 2011)

satanoperca said:


> No short fall in Melbourne but an oversupply of over 30K> homes
> Short duration in falls, ha try over indebtness
> 
> What could cause stagnation and falls :
> ...




4) Wage stagnation
5) Inflation - many homeowners borrowed up to their eyeballs & now massive hikes in food, utilities, insurance etc are equivalent to getting a huge pay decrease - no money to pay the mortgage - house up for sale.
6) Recent property investors bailing out, why hold an asset decreasing in value? On top of that they have to pay Insurance, council rates, water rates, maintenance, agent fees, etc - lots more house up for sale.
7) Retirees dumping investment properties to free up capital because their share portfolios & super have been hammered.
8) The end of cheap easy cash from banks.
9) The end of stupid government first home buyer incentives that just pushed up house prices even further for those buyers.
10) Armageddon


----------



## todster (14 September 2011)

explod said:


> Delivered two new single beds to an address today.  Two young men lost their jobs in the city and moved back to live with Mum.  They were renting independantly, three down to one.
> 
> Ah well, more vacancies.
> 
> Lolliepops and sunshine brothers




Young blokes single beds what century are you from.


----------



## Aussiejeff (14 September 2011)

satanoperca said:


> No short fall in Melbourne but an oversupply of over 30K> homes
> Short duration in falls, ha try over indebtness
> 
> What could cause stagnation and falls :
> ...




Apparently, no 3) manifested itself today when Premier Wen declared China will not bailout ANY developed countries (not just Eurozone)  http://www.bloomberg.com/news/2011-...must-cut-debt-and-deficits-increase-jobs.html 

Reading between the lines, seems like China is crapping itself at the looming losses from all that luvverly US debt they hold? They are ready to go all "isolationist" on the rest of the world when it comes to financial assistance. 

So, will that lead to 2) then 1) in quick succession for Ozecon?

Good luck folks. We're all gonna need it since no saviour nation, apparently.


----------



## satanoperca (14 September 2011)

But AussieJeff, you keep forgetting, it cannot happen here because we are different


----------



## kincella (14 September 2011)

freeken hell, you guys said cash was king....
westpac dropped their cash management account interest to zero...
and the online accounts were about 6%...now 3.95%
geez, superfunds getting smashed, cause they put most of their investments into the stocks, or cash....
me, I am busy building a wildbird refuge in my backyard.....learning all about the native plants required to entice all those gorgeous birds .....I have a huge variety visiting on a regular basis already....
and believe  I may have had some tiny pygmy possums as visitors recently.....they have gone now...so I did not get photos....was unaware they existed...they could be mistaken for rats....weigh 45 grams, 5" length with a similar sized tail...
the dog does a lot of bird watching now.....
the eastern rosella's put on quite a show...

saw an interesting article today....just how much money all the  countries had lent to Greece....it was horriying....
on another pc so cannot find the link....

god help us if China decided to pull the plug.....
seems like the whole world is reliant on china.....

looks like the mud is hitting the fans big time.....
and a humungeous amount of extra money has to be printed......
so more devaluation of the dollar.....do you really know what that means

cheers to Robots....are you enjoying the regional life, clean air....smelling the roses

I note some interesting commercial opportunities.....are on the rise.....bargains to be had, if you know what you are doing....
all those little shops that suddenly cropped up, out of the blue, in the most obscure places, have all closed down......
I would never have touched them with a barge pole....
but boy, I can see some stunning commercial opportunities arising in the next few years...
I would be looking at Aldi opportunites...in the future....or similar...have a peek at their website...for what they require.... or similar cut price stores....

good luck to all...whatever asset class you invest in....you will need it....
except for residential....it will be fine....
unless some of you are contemplating living in caves, or living with the 'olds' forever


----------



## kincella (14 September 2011)

here is the link to the Greek exposure....horrifying reading
http://www.businessinsider.com/greece-default-contagion-2011-09?op=1

and to top that off....we have the most incompetent government running  australia in our history....
loved the satire tonight...
At home with julia...on abc at 9.30....
if you understand satire....it is brilliant...

a great example of who is in charge of the country....and how competent they are....and how it affects your investments....
 no wonder there is turmoil,,,,and no confidence whatsoever.....
as said previously...
good luck...cause you will need it....
with ferals like this in charge...


----------



## againsthegrain (15 September 2011)

Strange anz upped their online saver to 6.35% intro rate from 6.25% so are they preparing for the rates to go up or just very desperate to get some real cash in their vaults?

Not much pointing towards rates going up short term so what do they know?


----------



## singlefished (15 September 2011)

kincella said:


> freeken hell, you guys said cash was king....
> westpac dropped their cash management account interest to zero...
> and the online accounts were about 6%...now 3.95%




?????

Westpac reward saver paying 6% with $50/pcm deposit and no withdrawals.....

PLEASE..... stop posting utter rubbish!!!!!!


----------



## Uncle Festivus (15 September 2011)

kincella, you still confuse me?



> except for residential....it will be fine....



Your posts = 

Part 1 = why the financial world is going to explode

Part 2 = why Australian property will be totally immune - ie go out and buy more bargains

???????


----------



## basilio (15 September 2011)

As the Greek debt crisis unfolds might be worth reviewing what happened in 1931 when the  Australian Bank  Credit  Anstalt  collapsed

http://www.businessweek.com/magazine/content/11_18/b4226012481756.htm


----------



## medicowallet (15 September 2011)

againsthegrain said:


> Strange anz upped their online saver to 6.35% intro rate from 6.25% so are they preparing for the rates to go up or just very desperate to get some real cash in their vaults?
> 
> Not much pointing towards rates going up short term so what do they know?




Oh, our rates are on the way down for sure.

However, bank borrowing rates are on the way up.

That is the difference 



Beautiful day today, sunshine beaming down, birds singing.

Weekend, much the same in the forecast.

I don't agree, I feel a storm coming, and I am glad I have good shelter from it.


Sunshine, lollipops, bubbles and dark clouds.

The true believer, and the destroyer of Robots.
MW

PS. I wonder how everyone geared with only 40% equity is feeling at the moment, because that equity is probably only 30% now, could be 20% by the end of the year.


----------



## Tysonboss1 (15 September 2011)

medicowallet said:


> PS. I wonder how everyone geared with only 40% equity is feeling at the moment, because that equity is probably only 30% now, could be 20% by the end of the year.




I don't rekon at this point they know or care.

Probably still just walking the dog or enjoying taco night with the kids who are looking forward to a BBQ on the week end with Nanny and Poppy.

They'll just continue working, enjoying life and will never feel any of the girations of the market along the way.

It's summer soon, I can't wait to soak up the humidity on the back verandah, while I sip on a bundy and coke, and I won't be thinking about the daily flucuations in the possible sale price of a home I am not planning on selling for 40 years.


----------



## satanoperca (15 September 2011)

Tysonboss1 said:


> They'll just continue working, enjoying life and will never feel any of the girations of the market along the way.




I don't know of to many home owners that don't care how much their house is worth.  Our nation is obsessed with it, easy way to riches most believe.

The thing most have selective hearing and only want to know when it has doubled in 7 years.

Cheers


----------



## prawn_86 (15 September 2011)

satanoperca said:


> I don't know of to many home owners that don't care how much their house is worth.  Our nation is obsessed with it, easy way to riches most believe.






Tysonboss1 said:


> I don't rekon at this point they know or care.
> 
> I am not planning on selling for 40 years.




I think this highlights a key point for any asset. Price only matters when you are either interested in buying, or interested ins elling. If you are happy to (and can afford to) hold the asset within your budget then the day:day, month:month, year:year 'noise' doesnt really matter.

We have CNBC and other business channels on everyday at work, and it just makes me think "who actually cares if ANZ or Telstra move by 5c one day then back down the next". It's all just noise unless you are in the market to buy or sell


----------



## medicowallet (15 September 2011)

Tysonboss1 said:


> I don't rekon at this point they know or care.
> 
> Probably still just walking the dog or enjoying taco night with the kids who are looking forward to a BBQ on the week end with Nanny and Poppy.
> 
> ...




Unless the banks make them sell.

I can't wait for the august figures to come out, I wonder if a trend is forming, kind of like with auction clearances, not that they mean anything 

Banks tend to not like it when people can't pay back loans. they also tend not to lend money to people who make their living by having 40% equity, I mean 30%, know anyone like thise?

Lollipops and sunshine
MW

PS Where is Robots?


----------



## Tysonboss1 (15 September 2011)

medicowallet said:


> 1,Banks tend to not like it when people can't pay back loans.
> 
> 2, they also tend not to lend money to people who make their living by having 40% equity, I mean 30%, know anyone like thise?
> 
> ...




1, No doubt, But 34% of people own their home out right and the average LVR for the remainder is 50% based on cba's figures, and that LVR is based on the original value when the loan was done, which may have been up to 20years ago.

2, Don't know what you mean here.


----------



## Tysonboss1 (15 September 2011)

satanoperca said:


> I don't know of to many home owners that don't care how much their house is worth.  Our nation is obsessed with it, easy way to riches most believe.
> 
> Cheers




We must hang in different circles, I wouldn't have an accurate idea of what my properties would sell at today.


----------



## satanoperca (15 September 2011)

Tysonboss1 said:


> 1, No doubt, But 34% of people own their home out right and the average LVR for the remainder is 50% based on cba's figures, and that LVR is based on the original value when the loan was done, which may have been up to 20years ago.




This may be well true but you only need a small percentage of owners to start selling with no buying pressure and it brings down the whole market. Your statement is just to general to sum up the activity of a whole market.

Given the last two years has seen a large percentage of FHB purchase with extremely high LVR's, it would take much at all to see them fold. Just as the FHBG caused a massive increase in prices, no FHB activity can do the opposite.

Regardless of all the internal matters in Oz that can affect RE prices, it is the externals ones that I believe will bring down the house.

Cheers


----------



## Tysonboss1 (15 September 2011)

satanoperca said:


> 1, This may be well true but you only need a small percentage of owners to start selling with no buying pressure and it brings down the whole market.
> 
> 2,Your statement is just to general to sum up the activity of a whole market.
> 
> ...




1, No doubt this is true, we see this alot in the share market, frequently of late, But the rate of forced and panic selling and speculative trading is far less in the real estate market than the share market

2, Well it is far less general than alot of the other comments people post

3, What would make them fold, a decrease in prices alone can not make them fold, It would take massive job losses to have an impact, those large groups of high LVR first home buyers you speak of make up less than 5% of all home owners


----------



## ROE (15 September 2011)

http://au.tv.yahoo.com/sunrise/soapbox/article/-/10208867/miss-it-watch-the-live-finance-forum-here/

Part 3 -- skipped to the 15 minutes mark ....how this guy buy properties 
very sound principles...


----------



## freebird54 (17 September 2011)

Just found out - agent has gone bankrupt - that happens often here - how can a rental only agent lose money? ;-)



freebird54 said:


> I am very impressed with the contributions from both sides of the argument and I am sure there are people here that can give me some advice
> 
> I am renting [have been for many years after selling our homes]and investing what I save by doing that.
> 
> ...


----------



## medicowallet (17 September 2011)

Fantastic day brothers,

Quiet in the streets, less cars driving by looking at the houses on display.  Birds are chirping, spring is in the air.

I have an idea. Since there are so many for sale signs, we should make it compulsory for them to have 1 side as a solar panel. This could probably provide baseload power in lots of places.

Looking forward to the REIV figures, probably based off 400 reported auctions this week, probably off record listings.

Interesting to see a RE agent go belly up, perhaps not enough sales to support the audis that they drive around in.

Sunshine, paradise and bubbles,

MW

PS Where is Robots?  at work today?


----------



## Tysonboss1 (17 September 2011)

medicowallet said:


> Fantastic day brothers,
> 
> Quiet in the streets, less cars driving by looking at the houses on display.




Don't you live in a cul de sac, maybe it's the advent of the GPS navigation your picking up on, less people taking a wrong turn into your dead end street.


----------



## Tysonboss1 (17 September 2011)

freebird54 said:


> Just found out - agent has gone bankrupt - that happens often here - how can a rental only agent lose money? ;-)




Same as any other business, ie, Income is less than out goings = business failure.


----------



## medicowallet (17 September 2011)

Tysonboss1 said:


> Don't you live in a cul de sac, maybe it's the advent of the GPS navigation your picking up on, less people taking a wrong turn into your dead end street.




Maybe they just have a lot more choice of houses, and don't need to come down my street anymore.

Maybe they are sidelined and awaiting bargains.

All I know is that the for sale signs are showing signs of the weather, and real estate agents are even calling me now. I wasn't even aware of being on any databases anymore.

The latest one was about 2 weeks ago. A RE agent in NSW (yes NSW!!) calls up saying  I had better get in soon because the govt there is going to cut stamp duty concessions by jan, and that house prices are going to boom because of this!  What a load of rubbish.  I gave him my  and told him that I would contact him when house prices had gone down by minimum of 20%, looking for desperate sellers.


MW

PS Is Robots at work today again?


----------



## medicowallet (17 September 2011)

Great news brothers! Clearance rate holding up at 57%!

A bit concerning is that the REIV predicted this morning that 670 auctions were going to happen today, so I guess 130 houses sold before auction this week.


Keeping the nightmare alive

MW 

PS Where is Robots?

"There was a minor improvement in the clearance rate this weekend with 57 per cent of homes offered at auction selling compared to 54 per cent last weekend and 69 per cent this weekend last year. 

So far this year just over 11,500 homes have sold at auction. This is less than 2010, 2008 and 2007 but more than in either 2009 or 2006. 

A total of 540 auctions were reported of which 306 sold and 234 were passed in, 159 of those on a vendors bid"


----------



## satanoperca (17 September 2011)

It wouldn't surprise me if clearance rates went up as sellers adjust to new market prices.

Cheers


----------



## kincella (17 September 2011)

you guys just dont get it!....
the housing market is not like the stock market....where stocks move around every day...actually its more like a gambling den...and boy has the stockmarket put on a great display recently.....
the big guys taking money from the babies....

housing is predominately a basic need for most....
unless you prefer to live in a cave....
the majority of people, buy a home, they may upgrade at some stage to accommodate the teenagers....but not all...
most people live in the same house for anywhere between 20-50+ years...
they dont care about the prices, or the mood...
the enjoy their lives....then hand it over to the kids on death...they love their community
they could not care less what the value is....they have no intention of moving....
some of you appear to be ...well fringe dwellers.....
on the outside looking in....
you may not see the woods for the trees....
you dont recognise a bargain or opportunity when its staring you in the face...
you have a mindset...like penny dreadful stocks...
trying to pick the tops and the bottoms
I can almost bet I will still see the same ones here in 5 years time....still whinging, betting, gambling....
life will eventually pass you by....
no wonder the property investors are happy to keep on investing in that market....
.....all those disgruntled renters....who are still waiting for the market to crash
all the bailouts for all those bankrupted countries....can only mean one thing....more money being printed...dollar devalued.....means more dollars for less value
or hyperinflation....
my case has 100's of years of proof.....historical figures.....
dont give me crap about Japan, or the US where Obama 's rule that it was racial discrimination not to lend to a no income borrower.....
but I am pretty sure you will...


----------



## medicowallet (17 September 2011)

same house for 20-50 years lol.


I think you do not get it.  House prices rise and fall depending upon the recent sales (however little % of the turnover is)

So be happy sitting in your house in 5 years time, which has declined in value in real terms. 

The above sentence highlights the fact that the average home owner does not have a clue that their property showing negative or zero return is a bad thing, that it stifles their ability to fund their future.

Of course some people (like me) don't really care whether or not we lose money in the market, as it is all swings and roundabouts, but some do care, and the ones forced to sell will determine the valuation, not me.

There were a lot of people enticed into high priced homes by the labor party. Retail and manufacturing is in recession. House prices are falling.

Sunshine, lollipops and smaller bubbles

MW (The biggest baddest Robot killer)

PS Where is Robots?


----------



## robots (18 September 2011)

hello,

still here MW, long weekend again for us in the building industry

how you going to kill me Medicowallet, like you keep you keep posting your the Robot killer! amazing

bad dose of pethidine the last few day

thankyou

professor robots


----------



## satanoperca (18 September 2011)

What a strange article in the Weekend Age 



> The strange cases of the good houses that just won't sell
> 
> Read more: http://www.theage.com.au/victoria/t...t-wont-sell-20110917-1kfci.html#ixzz1YFwiJC00




http://www.theage.com.au/victoria/the-strange-cases-of-the-good-houses-that-just-wont-sell-20110917-1kfci.html#ixzz1YFczCDcE

Is it a case of unrealistic sellers or that the market has fallen?


----------



## medicowallet (18 September 2011)

robots said:


> hello,
> 
> still here MW, long weekend again for us in the building industry
> 
> ...




With kindness of course 

How are your properties going at the moment?  Good % falls no doubt, with more coming. 

No problems mate,
Take another job
Don't frequent the internet cafe as much
Beer only on special occasions
Electrical tape as band-aids
Hitch hike instead of trains
Take out another mortgage if possible


Endless potential in paradise,  

Sunshine, lollipops, smaller bubbles and a dead canary.

MW
PS what do you make of the clearance rate Robots (not that it means anything)


----------



## Dowdy (18 September 2011)

kincella said:


> housing is predominately a basic need for most....
> unless you prefer to live in a cave....




Stupid argument. I don't own a house but yet my cave has internet...amazing, isn't it!




> most people live in the same house for anywhere between 20-50+ years...




Not today's' generation......





> no wonder the property investors are happy to keep on investing in that market....
> .....all those disgruntled renters....who are still waiting for the market to crash




Who said they're disgruntled? Most are happy renting and can see the market for what it is.




> all the bailouts for all those bankrupted countries....can only mean one thing....more money being printed...dollar devalued.....means more dollars for less value
> or hyperinflation....




yes the dollar will be devalued but it the US dollar that will devalue. The Australia will rise against the US giving us more purchasing power or if hyperinflation happens does happen does that mean I can buy a house with 1oz of gold? 




> my case has 100's of years of proof.....historical figures.....
> dont give me crap about Japan




You mean the crap where Japan kept propping (stimulating) their economy, which lead to 20 years of stagflation?? Hmmm, sorta sound familiar...


----------



## freebird54 (18 September 2011)

kincella said:


> you guys just dont get it!....
> the housing market is not like the stock market....where stocks move around every day...actually its more like a gambling den...and boy has the stockmarket put on a great display recently.....
> the big guys taking money from the babies....
> 
> ...




1. Am a happy renter - do repairs myself to save owner money - do important things with what I save

2. I have owned homes both to live in and rent out

3. I have been a real estate agent for 25 years

4. I invest in the stockmarket using options to lessen the risk

5. I live in SE Qld. and hate what I see happening with RE

6. In the USA you can buy good homes in good areas [Memphis – Nike, FedEx, US biggest truckers all HQ’d there and climate with seasons [Florida too hot as many now discovering] for $40,000 and many more are renting, Met an ordinary RE agent the other day who owns 300 homes! Rents and living costs there are half here

7.Also we have denied ourselves grandchildren as their kids cannot afford kids – this is serious.

8. I am near retirement age and still working 50 hrs./week

9. And  still have 3 kids at home – eldest 26 and teaching – unheard of years ago

10. For many years it was 2x income to buy a home now it is 7-9x – something has to break.

11. Developers not developing due to council fees/nightmares


----------



## Smurf1976 (18 September 2011)

kincella said:


> most people live in the same house for anywhere between 20-50+ years...
> they dont care about the prices, or the mood...
> the enjoy their lives....then hand it over to the kids on death...they love their community



I am one of those who hates moving but I am well aware that living at the same address for 30 years is about as common as having the same job for 30 years these days. Some do it, but most don't.

Some are "stayers" but the rest aren't. Looking at the area where I grew up, my parents still live there and so does the neighbour on one side. The house on the other side has changed hands a couple of times now. And the houses 2 doors on either side have had numerous owners over the years. I'd say that's a fairly typical situation - some stay at the one address but a lot don't.

Personally though, I couldn't really care what my house is worth as long as it's not dropping in value relative to other similar properties. So what if it drops by $100K - there's no practical effect as long as every other similar house has dropped by the same amount.

The ones who gain from house price falls are first home buyers or those upgrading. The ones who lose are last home sellers or those moving to a smaller (cheaper) property. For everyone else, it's pretty much irrelevant unless you want to mortgage the house and spend the money on something else (some will, most don't).


----------



## satanoperca (18 September 2011)

Smurf1976 said:


> The ones who gain from house price falls are first home buyers or those upgrading. The ones who lose are last home sellers or those moving to a smaller (cheaper) property. For everyone else, it's pretty much irrelevant unless you want to mortgage the house and spend the money on something else (some will, most don't).




A lot of small business owners use the equity in their homes to provide funding for their business. Any descent drop would have them concerned.

Cheers


----------



## medicowallet (18 September 2011)

Smurf1976 said:


> Personally though, I couldn't really care what my house is worth as long as it's not dropping in value relative to other similar properties. So what if it drops by $100K - there's no practical effect as long as every other similar house has dropped by the same amount.




May be true for you and I.

What about the people who draw off their house to buy new cars/holiday. Retirees requiring their property to maintain / grow to funt their retirement / reverse mortgage.

What about people who borrow against their properties to gear into investment properties ( eg someone with only 40% equity is probably down to 30% now with more decreases to come,  or even someone who for example geared off a property (eg melbourne) to buy regional property))


These are the people who may struggle. These are the people who will offer the best deals to the conservative investors who have seen this coming for a while.


----------



## Tysonboss1 (18 September 2011)

Dowdy,

Why would hyper inflation mean you could purchase a house for an ounce of gold.

It's funny to me that the gold bugs seem to think that hyper inflation only increases the value of gold, 

Hyper inflation would force up the price of all assets including property.


----------



## Knobby22 (18 September 2011)

Tysonboss1 said:


> Dowdy,
> 
> Why would hyper inflation mean you could purchase a house for an ounce of gold.
> 
> ...




True, actually if anything property would be more valuable as it would be one of the few things you could own that will retain value. Especially farm land.

Shares would be damaged and metals etc. would be worth less as the economy stalled.
Gold would be worth a lot but would rely on people accepting it in exchange for food etc.


----------



## medicowallet (18 September 2011)

Knobby22 said:


> True, actually if anything property would be more valuable as it would be one of the few things you could own that will retain value. Especially farm land.
> 
> Shares would be damaged and metals etc. would be worth less as the economy stalled.
> Gold would be worth a lot but would rely on people accepting it in exchange for food etc.




Why would shares be worth less?  Do you not understand the underlying fundamentals of the Dow atm?  Money printing.


Houses are not going to fall due to inflation, they are going to fall because gearing cannot continue to grow in such an accelerating fashion. Therefore they will LAG inflation.

There are going to be less $$ for our banks to lend out, because overseas banks are under pressure.

We are also seeing manufacturing and retail in recession = house price declines in the capital cities.

They will also fall as developer and builder margins drop as wages come back and balance sheets are rebalanced.


----------



## tech/a (18 September 2011)

Property always remains a great hedge to inflation.
Cash depreciates in buying power so you buy less for the same amount.
Property becomes less affordable,rents rise,prices of housing increases as material and labor costs rise.
If a tank of 
Gas was $60 and is now $100 the $s locked in an IP are more valuable.
Cash becomes less valuable.that cash in the bank buys less.

Shares drop as companies tighten up and profits shrink.


----------



## medicowallet (18 September 2011)

tech/a said:


> Property always remains a great hedge to inflation.
> Cash depreciates in buying power so you buy less for the same amount.
> Property becomes less affordable,rents rise,prices of housing increases as material and labor costs rise.
> If a tank of
> ...




Which comes first the chicken or the egg?

Who do these companies who "tighten up" employ?   Where do they get their funding?

House prices CAN fall, they HAVE fallen previously and currently ARE falling, and you still preach that they are infallible.

Cash at 6.5%, inflation 3%

beats

Property -10%, inflation 3%, gearing 50%

Labour costs rising is something taken for granted. Fundamentals and trends do not lie, and at some time, house prices/margins will return to a trend.  Whether lack of capital, unemployment leading to decreased wages or some unforseen shock causes it, it WILL happen, and it would not take much to cause further falls atm.


----------



## tech/a (18 September 2011)

> House prices CAN fall, they HAVE fallen previously and currently ARE falling, and you still preach that they are infallible.




Painting all property investment with the same brush is a common ploy.
There are still great property opportunities out there.
My last purchase was an Industrial block in Seaford. That settled in May.
Today the same block ( one the same size 2 blocks down) sold for $50k more than I paid.
He called me and offered the same deal to me.

We have a new train line and widened freeway coming to the southern suburbs of Seaford and you can still buy property at $300k.
In 2 years they will be high $300 ks
I have property in Moana which rose 18% last year.
I stared buying property here in 1996 I have a few some at a buy price of $90,000
some $200k bought  years later all gained that 18 % on LAST YEARS PRICES.

Sure you get prices falling in low demand over supplied high density areas.
But just like investment in any asset----not ALL suffer the same fate in difficult times.
If you think profiting in property is no longer possible--- then for YOU
It won't be.
For people like me who look outside the square with all investments
It will be possible.


----------



## medicowallet (18 September 2011)

Avoid question much?

In that case I will assume that I am correct.

I would be very cautious in the houping market at the moment.

Gonna lose a LOT of geared dollars aren't you Robots?
It might hurt, but just take another job or two.

Keep hoping for the houping market to spare you. It is likely to come and take things away from you.


MW
(The original Robot destroyer)


----------



## medicowallet (18 September 2011)

http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp&s=vic&u=ballarat 

Looks like some august figures came through Robots.  September's will come soon.


----------



## robots (18 September 2011)

Hello,

amazing, just for posting up the auction results and saying hello to everyone

just goes to show the people we have in society now, i dont know

should be able to get some help here at ASF though, with like the ASX down at 4200, must be plenty who have gone through 30-40% falls

oh well

thankyou

professor robots


----------



## robots (18 September 2011)

hello,

have to get a security specialist around tomorrow, change the daily routine, check the windows,

get one of those devices to check under the car for bombs

they reckon homegrown terrorism is always the biggest concern

thankyou

professor robots


----------



## tech/a (18 September 2011)

Hmm I must be on ignore


----------



## medicowallet (18 September 2011)

robots said:


> should be able to get some help here at ASF though, with like the ASX down at 4200, must be plenty who have gone through 30-40% falls




or greater.

Don't worry, you might be in good company soon, with limited liquidity, and limited ability to average.

MW
(Robot mutilator)

PS I think Robts is down over 15%


----------



## satanoperca (18 September 2011)

medicowallet said:


> http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp&s=vic&u=ballarat
> 
> Looks like some august figures came through Robots.  September's will come soon.




Go just to show that there are some affordable homes in Victoria. Makes you think why live in the City.

Cheers


----------



## medicowallet (18 September 2011)

tech/a said:


> Hmm I must be on ignore




Of course not, I love everyone.

Your post just had no obvious flaws for me to attack.

You are obviously a keen investor ( Just as I am with businesses, but not being lucy with property atm)

You are an absolute exception, most people in property are losing considerable money, and will continue to do so, and some are getting hammered.

MW

PS If any more real estate agents call me, I am going to vomit into my phone.


----------



## medicowallet (18 September 2011)

satanoperca said:


> Go just to show that there are some affordable homes in Victoria. Makes you think why live in the City.
> 
> Cheers




I have lived in the country quite a bit.


I prefer to pay the premium and live in the city.

MW


----------



## Glen48 (18 September 2011)

Foreclosure's rose 7% in USA a nine month high so much for growth and a recovering economy see waht they come up with on 21 sept.


----------



## freebird54 (19 September 2011)

Sunrise TV am today had some expert on saying renting better than buying now - yes I know its a rag but people do listen to Kochie ;-)


----------



## Glen48 (19 September 2011)

Always has been a better deal to rent  if you invest wisely


----------



## matty77 (19 September 2011)

robots said:


> hello,
> 
> have to get a security specialist around tomorrow, change the daily routine, check the windows,
> 
> ...




so you criticise what other people contribute to the thread then come out with manure like this?

you know worry can cause cancer, so maybe sell some properties now before its too late? Dont worry no need to tell us.

Sunshine and lollipops / looking forward to your dribble reply, tally ho dear chap.


----------



## Julia (19 September 2011)

I'm pretty out of touch with real estate so would appreciate any input re the following situation.

My cousin, aged mid 40's, two teenagers still at school, working as a teacher two days a week, receiving some Centrelink benefits, plus maintenance from ex husband, paying no tax, has only small mortgage remaining on her home in a good part of Sydney (Epping), which agents have said will sell for about $1.3M.  It's too big for her and she's 
thinking about selling and then buying something smaller to live in plus an IP.

She's bright but inexperienced in investment, i.e. has never owned shares, and revealed in a conversation yesterday that she'd never heard of the sub prime issue and had no idea about the current chaotic state of world financial markets.

She is thinking she could sell now, rent for a year or so, and then find the market considerably lower, at which stage she could buy again.

She says a basic IP unit in Sydney would be around $500K.  If that's right, what sort of rental income would it produce?  

I've done some very rough calculations on around $500 p.w. which is only about 5% gross, and assumed (on the basis she does not now pay any tax) the tax free threshold of $6000, then 15% on the remaining $20,000 = $3000.

Then there would be council rates and body corporate, plus maintenance and insurance which optimistically all up would be around another $4000.  Is this about right?

This would be a net yield of less than 4%.

How realistic is the above?

Wouldn't it also affect her Centrelink benefit?

What have I failed to think of?  

I'm concerned that she has a blind faith that property - because it's all she has experience of and even then just that in which she has lived - is necessarily going to be a 'fantastic investment'.

I'd be appreciative of any comments members could offer.


----------



## Tysonboss1 (19 September 2011)

Julia said:


> I'm pretty out of touch with real estate so would appreciate any input re the following situation.
> 
> My cousin, aged mid 40's, two teenagers still at school, working as a teacher two days a week, receiving some Centrelink benefits, plus maintenance from ex husband, paying no tax, has only small mortgage remaining on her home in a good part of Sydney (Epping), which agents have said will sell for about $1.3M.  It's too big for her and she's
> thinking about selling and then buying something smaller to live in plus an IP.
> ...




I have no idea about the implications to her centrelink benefits, But If the house is too big and she wants to downsize I would be looking at selling and buying a smaller home outright and then investing the remaining funds.

I guess where those funds are going to be best invested comes down to your cousins temperament. If she is likely to be upset by market fluctuations then maybe a property investment would be best, that way she can focus on the weekly rent without paying heed to the ups and downs in it's capital value.

If she can take market flucutations with a degree of equanimity, maybe averaging into asx index fund may be better suited.

If you don't mind me asking, why is she on centre link benefits, you said she is bright and her kids are teenages, surely she could be working more than 2days a week. That way she could earn more money and also invest without worrying about losing benefits, probably met more people too.


----------



## qldfrog (19 September 2011)

Julia said:


> I'm pretty out of touch with real estate so would appreciate any input re the following situation.
> 
> .....
> Then there would be council rates and body corporate, plus maintenance and insurance which optimistically all up would be around another $4000.  Is this about right?
> ...



 Hi Julia, 
would not consider myself a property guru but I have an IP bought earlier this year in Brisbane for around $270k;
the rates, water and body corporate (low for this unit) amount already to $4k per year add 300 insurance and a few hundred for maintenance, I believe you are probably more near $6k or $7k a year for a $500k IP in Sydney;
Any Sydney person to confirm??

So your return would end up even lower;
If paying no tax (and so no negative gearing), and with my current pessimistic of RE, what is wrong with a term deposit/corporate bond???
Hope it helps


----------



## medicowallet (19 September 2011)

Julia said:


> My cousin, aged mid 40's, two teenagers still at school, working as a teacher two days a week, receiving some Centrelink benefits, plus maintenance from ex husband, paying no tax, has only small mortgage remaining on her home in a good part of Sydney (Epping), which agents have said will sell for about $1.3M.  .




Gotta love this country..

$1 million asset, and get centrelink benefits.


----------



## Tysonboss1 (19 September 2011)

medicowallet said:


> Gotta love this country..
> 
> $1 million asset, and get centrelink benefits.




Crazy isn't it.


----------



## MACCA350 (19 September 2011)

I'd advise you're friend to investigate what(if any) implications there are with regard to Centerlink benefits in these scenarios.

Cheers


----------



## schnootle (19 September 2011)

medicowallet said:


> Gotta love this country..
> 
> $1 million asset, and get centrelink benefits.




Completely crazy. Yet if you have $10000 to your name but its in cash and lose your job you will be told you have too many liquid assets and need to spend that and come back when its gone.


----------



## Julia (19 September 2011)

Many thanks for responses which are appreciated.


Tysonboss1 said:


> I guess where those funds are going to be best invested comes down to your cousins temperament. If she is likely to be upset by market fluctuations then maybe a property investment would be best, that way she can focus on the weekly rent without paying heed to the ups and downs in it's capital value.
> 
> If she can take market flucutations with a degree of equanimity, maybe averaging into asx index fund may be better suited.



Sensible suggestions.  I've tried often to interest her in the sharemarket (long before this present volatility)  but she seems resistant for no reason that she can explain.




> If you don't mind me asking, why is she on centre link benefits, you said she is bright and her kids are teenages, surely she could be working more than 2days a week. That way she could earn more money and also invest without worrying about losing benefits, probably met more people too.



Ah, an excellent question.  Let's just say she is getting a very nice income under the present circumstances, is very comfortable, and would rather swan about than work too hard.




medicowallet said:


> Gotta love this country..
> 
> $1 million asset, and get centrelink benefits.






Tysonboss1 said:


> Crazy isn't it.



No argument from me on this.



MACCA350 said:


> I'd advise you're friend to investigate what(if any) implications there are with regard to Centerlink benefits in these scenarios.
> 
> Cheers



Thanks, Macca.  I've already asked what effect her plan would have on her benefits.
Her response was very vaguely that she expected the income from an IP would make up for any loss of these.  I don't know if this is the case.

I'm still interested in anything Sydney people might know about the accuracy or otherwise of my calculations above if possible.


----------



## Bill M (19 September 2011)

Julia said:


> She says a basic IP unit in Sydney would be around $500K.  If that's right, what sort of rental income would it produce?
> 
> I've done some very rough calculations on around $500 p.w. which is only about 5% gross, and assumed (on the basis she does not now pay any tax) the tax free threshold of $6000, then 15% on the remaining $20,000 = $3000.
> 
> ...




Hello Julia, it is best for me to say what my out goings are and then you can work it out from there. My unit is worth around 420K and I get $430 p/w rent as it is very well located, walk to shops, bus, beach and entertainment. Building has one lift, no pool, no yards and no gardens.

Don't under estimate the levys. Mine are nearly $800 p/q, total $3,200 p/y
Water $600 p/y
Warringah Council $1,000 p/y
Landlords insurance $350 p/y
Agents Commission 6.6% = Around $1,500 p/y
Smoke Detector Checks $100 p/y 
+ Special Levys if needed, figure unknown as they pop up about once every 8 years or so.
+ Internal repairs if needed, carpets, kitchen, bathroom etc. I haven't spent any but eventually I will have to.

I think you are pretty close to your calculations and for me after all expenses including tax it's probably around 3 to 4% income. It doesn't sound like a lot but it does pay the bills and it is the most worry free investment I have. Every Month after Agents fees I have a $1,600 drop into my account. That is excluding any capital gains that could arise.

Now back to your friends case. Epping, there is no doubt she would get the money for her house $1.3 M as it is a high demand area and the Chinese in particular love that area. The problem is, where is she going to buy a house for 800K? She will either have to move into a big unit or a worse suburb. Now I am not trying to be funny but I have lived on the Northern Beaches and now I live on the Central Coast and it's very different up here to there. Which suburb is she going to move to and how are 2 teenagers going to live in a unit if they must move into one?

The other point is that I personally would not wait a year or more to buy the principle place of residence. It is unpredictable which way her new suburb may move in prices, it could just as easily go up rather than down. I would absolutely not take the risk myself of being out of the market. She can hold off on the investment unit until later but I wouldn't on the PPR, that's taking a balanced approach to the decision making.

I can understand her negativity towards sharemarket investing, it is very hard for a novice to see $36 Billion and $50 Billion wiped of the markets in daily moves. It is also a very scary that shares are still down some 40% from it's peak 4 years ago, she has reasons for her doubtfulness. Personally for me, there is nothing sweeter than that $1600 coming in a Month with very little to worry about and virtually nothing to do to get it. Cheers and I wish her luck.


----------



## So_Cynical (19 September 2011)

Julia said:


> She says a basic IP unit in *Sydney* would be around $500K.  If that's right, what sort of rental income would it produce?




A 500K unit would rent for between $430 > $460 




Julia said:


> Then there would be council rates and body corporate, plus maintenance and insurance which optimistically all up would be around another $4000.  Is this about right?




Body Corp in a new (good) block would be around 3.5K PA, a very good block 4K and up, an older block maybe as low as 2K PA...council rates PA around 1.5K


----------



## Bill M (19 September 2011)

medicowallet said:


> Gotta love this country..
> 
> $1 million asset, and get centrelink benefits.




That's why you have many old ladies living in $2 Million run down old houses drawing a Centrelink Pension. They refuse to sell and downsize because "I will lose the pension", heard it hundreds of times, truly unbelievable.


----------



## MACCA350 (20 September 2011)

Julia said:


> Thanks, Macca.  I've already asked what effect her plan would have on her benefits.
> Her response was very vaguely that she expected the income from an IP would make up for any loss of these.  I don't know if this is the case



I think there may be some implications when that PPOR is sold and as it changes from an asset to cash. She may find Centerlink will cut her off completely at that point and/or there may be limitations on the value of the to be purchased PPOR and/or IP let alone the income derived.

I think she needs to have a chat to someone in the know and become a lot less vague before making any commitments.

Cheers


----------



## lindsayf (20 September 2011)

Yes
Why not suggest she speak directly to a Centrelink financial advisor and get it from the horses mouth

Lindsay


----------



## medicowallet (20 September 2011)

Dollar dropping = inflation rising = pressure for interest rates increases.

Hmmm, lucky we are different here 

MW
(the original Robot destroyer)

PS Where is Robots?


----------



## Tysonboss1 (20 September 2011)

Bill M said:


> That's why you have many old ladies living in $2 Million run down old houses drawing a Centrelink Pension. They refuse to sell and downsize because "I will lose the pension", heard it hundreds of times, truly unbelievable.




I think that if you claim the aged pension, when you die the government should beable to make a claim against your estate to recover the funds paid out to you as part of the aged pension, the government could probably pay out a better pension rate that way.

Maybe those that pleadge a property to the government to claim against could get a 50% higher pension plan, Sort of like an interest free government reverse mortgage.


----------



## Knobby22 (20 September 2011)

Tysonboss1 said:


> I think that if you claim the aged pension, when you die the government should beable to make a claim against your estate to recover the funds paid out to you as part of the aged pension, the government could probably pay out a better pension rate that way.




Good idea but no votes in that.


----------



## Tysonboss1 (20 September 2011)

Knobby22 said:


> Good idea but no votes in that.




If they were going to get a 50% higher pension they may vote for it, it could be voluntary.


----------



## McLovin (20 September 2011)

Tysonboss1 said:


> I think that if you claim the aged pension, when you die the government should beable to make a claim against your estate to recover the funds paid out to you as part of the aged pension, the government could probably pay out a better pension rate that way.




Yeah, an estate tax on pensioners, imagine trying to sell that!


----------



## medicowallet (20 September 2011)

Tysonboss1 said:


> I think that if you claim the aged pension, when you die the government should beable to make a claim against your estate to recover the funds paid out to you as part of the aged pension, the government could probably pay out a better pension rate that way.
> 
> Maybe those that pleadge a property to the government to claim against could get a 50% higher pension plan, Sort of like an interest free government reverse mortgage.




Great idea in theory (and already addressed by reverse mortgages)

But, in reality, the person would just offload/change names to avoid it.


I think it would just be easier to make housing more realistic in the eyes of centrelink.

ie say I have $500000 in shares

vs $50000 cash and $1000000 property.

vs $1000000 shares

First gets part pension
second gets full pension
third gets no pension

Some way of valuing property needs to be taken on board so as to make it more realistic, and to avoid the system overload approaching.

And

in reality

This is a potential target in the future, as the BB start to overwhelm the ability of the system to maintain their lifestyle.

This (and other factors relating to generation shift) has the potential to really pull some supports out from property.

MW

PS Where is Robots?


----------



## Tysonboss1 (20 September 2011)

McLovin said:


> Yeah, an estate tax on pensioners, imagine trying to sell that!




As I said it could be sold as a voluntary program.


----------



## medicowallet (20 September 2011)

McLovin said:


> Yeah, an estate tax on pensioners, imagine trying to sell that!




It would be easier than trying to sell a tax on an odorless, colourless gas, which aids crop production and helps maintain our lifestyle.

BUT

the point of sale was probably 20 years ago. If we would have had the opportunity to vote back then, we probably could have got something done, but now us oldies control the vote to a greater extent, and it aint gonna happen...... a bit lke how nobody could promote a tax, with an abysmal vote, on an odorless, colourless.... hang on!


MW

PS Where is Robots?


----------



## McLovin (20 September 2011)

Tysonboss1 said:


> As I said it could be sold as a voluntary program.




Yes, but what you're attempting to do is say that people who have contributed tax their whole life on the basis that they will have a pension as part of the deal will now have the rules changed. Medicowallet is right, the time has passed. It won't be seen as a voluntary program, it will be seen as creating a system of have and have not pensioners.

Of course if you're in your late 20s/early 30s (like myself) then you're staring down the barrel of not only having to fund baby boomers retirements through the pension, healthcare and real estate system but also save enough to provide for their own retirement because the government won't have the cash.


----------



## Tysonboss1 (20 September 2011)

McLovin said:


> Yes, but what you're attempting to do is say that people who have contributed tax their whole life on the basis that they will have a pension .




If I have a $2M dollar house I can claim the pension, If I have $2M in cash I can't.

That is unfair,

Offcourse it has developed because the government does not want to be seen making old people sell the family home to fund retirement, But they are quite willing to make them sell shares and empty bank accounts.

All I am saying is that having a system where they can claim a pension to fund life style, but have their assets cover the bill upon death would be fairer.

The way I see it, atleast in the future the pension is a safty net to stop you staving to death if you fail to save for retirement, And you should use all your personal resources before you qualify, and if you can't bear to leave the family home it should be able to be claimed against to fund you past pension payments when you die.


----------



## Julia (20 September 2011)

Bill M said:


> Hello Julia, it is best for me to say what my out goings are and then you can work it out from there. My unit is worth around 420K and I get $430 p/w rent as it is very well located, walk to shops, bus, beach and entertainment. Building has one lift, no pool, no yards and no gardens.
> 
> Don't under estimate the levys. Mine are nearly $800 p/q, total $3,200 p/y
> Water $600 p/y
> ...



Many thanks for detailed response, Bill, especially the actual figures.  that's what I was looking for and which I don't believe she has clearly thought about.




> Now back to your friends case. Epping, there is no doubt she would get the money for her house $1.3 M as it is a high demand area and the Chinese in particular love that area. The problem is, where is she going to buy a house for 800K? She will either have to move into a big unit or a worse suburb. Now I am not trying to be funny but I have lived on the Northern Beaches and now I live on the Central Coast and it's very different up here to there. Which suburb is she going to move to and how are 2 teenagers going to live in a unit if they must move into one?



When I ask these questions, she is very vague.  I also think she's underestimating how much she likes what she sees as the prestige of her street in Epping and the undoubted elegance and charm of the house.




> The other point is that I personally would not wait a year or more to buy the principle place of residence. It is unpredictable which way her new suburb may move in prices, it could just as easily go up rather than down. I would absolutely not take the risk myself of being out of the market. She can hold off on the investment unit until later but I wouldn't on the PPR, that's taking a balanced approach to the decision making.



That seems like good advice.  I wouldn't either.




> I can understand her negativity towards sharemarket investing, it is very hard for a novice to see $36 Billion and $50 Billion wiped of the markets in daily moves. It is also a very scary that shares are still down some 40% from it's peak 4 years ago, she has reasons for her doubtfulness.



Sure, but she displayed the same reluctance when we were in a bull market.  What concerns me is that she seems to have a focus which regards only property as a good investment.




So_Cynical said:


> A 500K unit would rent for between $430 > $460
> 
> Body Corp in a new (good) block would be around 3.5K PA, a very good block 4K and up, an older block maybe as low as 2K PA...council rates PA around 1.5K



Thanks, SC.  Very helpful.



MACCA350 said:


> I think there may be some implications when that PPOR is sold and as it changes from an asset to cash. She may find Centerlink will cut her off completely at that point and/or there may be limitations on the value of the to be purchased PPOR and/or IP let alone the income derived.
> 
> I think she needs to have a chat to someone in the know and become a lot less vague before making any commitments.
> 
> Cheers






lindsayf said:


> Yes
> Why not suggest she speak directly to a Centrelink financial advisor and get it from the horses mouth
> 
> Lindsay



Yes, I've suggested she talk to a Centrelink FI before making any decision.
With the funds left over from buying a new PPOR, she could have a SF own the asset, whether it's property, shares or bank deposit.

I do appreciate the input, fellas, thanks very much.

Agree that it's obscene to have old people living in extremely expensive homes while hauling in a taxpayer funded pension.  There do seem to be tentative moves by the Productivity Commission and hopefully soon government to insist aged care, whether institutionalised or delivered in home, is funded by the individual rather than the state.
The obvious objection to this will be that those who have invested wisely and saved so as to be secure in old age will be penalised for not having been spendthrift throughout their lives.


----------



## McLovin (20 September 2011)

Tysonboss1 said:


> If I have a $2M dollar house I can claim the pension, If I have $2M in cash I can't.
> 
> That is unfair,
> 
> ...




Don't worry I agree with you. But no politician, unless they have a Sisyphus complex, would ever contemplate it. Look at the rort that is negative gearing.


----------



## medicowallet (21 September 2011)

Things are getting interesting.

More pressure in the news, growth tanking, and therefore wages/jobs will come under pressure.

Mainstream media is now against property.

Realestate agents calling me again.

Robots still has nothing, and is going backwards fast.

Pressure on interest rates up AND down!

Inflation to get a boost from the weaker dollar, banks higher funding costs, but in a weaker economy.

World's best treasurer supporting a houping bubble, while business finds it hard to get finance.

Clouds r coming


MW
(the original Robot destroyer)

PS Where is Robots?


----------



## Bigukraine (21 September 2011)

medicowallet said:


> Things are getting interesting.
> 
> More pressure in the news, growth tanking, and therefore wages/jobs will come under pressure.
> 
> ...




I bought my umbrella ages ago..... i'm set and i do pitty the rest that can't see the storm in front of them and keep looking straight up and say the sun is still shining


----------



## Tysonboss1 (21 September 2011)

Bigukraine said:


> I bought my umbrella ages ago..... i'm set and i do pitty the rest that can't see the storm in front of them and keep looking straight up and say the sun is still shining




As long as your investment operation is not made of sugar, a bit of rain from time to time will benefit you greatly.


----------



## robots (21 September 2011)

Hello,

here i am, still going strong

perhaps even the mods should go and re-read the first post of the thread, DH, hit the delete on everything

thankyou

professor robots


----------



## medicowallet (21 September 2011)

robots said:


> Hello,
> 
> here i am, still going strong
> 
> ...




So, how is property going Robots?

Is it doing as well as you predicted?  

Are your properties performing as poorly as the general market in the areas you purchased in?

Lots of love
MW
(The ex Robot destroyer)

PS How is Mr Burns?


----------



## satanoperca (22 September 2011)

Joe Blow said:


> Looking forward to some polite and constructive debate.




Hi MW,

Think you have done the Robot killing to death. Robots is not the only one in the world that owns property and is a property bull. If you kill off all the bulls who will there to be discuss the future of property prices with.

I for one have believed that we will see a descent falls in Oz property prices for some time, but I will get no joy if I'm proved right as it will cause pain to all of us.

Cheers


----------



## Temjin (22 September 2011)

*peek his head into this thread to see how it is going after being away for almost a year*

*hmm...not bearish enough, will check back later again*

*is amazed that Robot's egotism is still going as strong as ever and wonders how much longer will it last*


----------



## medicowallet (23 September 2011)

I am thinking of opening a business, just selling umbrellas


There is a storm coming....

Actually, buy an umbrella for $135.95, get two boxes of tissues for free. ( I will even offer a first umbrella buyer incentive of $5.95 off)

There is a storm coming....


MW
PS Where is Robots


----------



## Tysonboss1 (23 September 2011)

medicowallet said:


> I am thinking of opening a business, just selling umbrellas




What, Is the snake oil business not doing it for you any more.


----------



## satanoperca (23 September 2011)

RP data August figures

Nationally %-2.9 Yoy
Melbourne %-4.3 yoy

the falls are slowly building.

Cheers


----------



## medicowallet (24 September 2011)

Beautiful morning brothers, spring has finally sprung, and the morning sun warms my back patio. 

Birds are playing on the lawn, still eyeing off the neighbour's garden, and enjoying the new found peace and quiet in my street on the weekends.

Less people driving must be a great thing for "carbon pollution" as is the imminent massive price increase in petrol. Save the planet I say, and the GG (edit - this is not Garpul) and the pm while we are at it.

Looking forward to the 560 reported auctions from the 750 expected this weekend, that should keep it over 50%

Keeping it real for the true believers of the houping market,

Sunshine, lollipops and a snap crackle and pop
MW
(the original reformed robot dismantler)


PS Where is Robots?


----------



## robots (24 September 2011)

hello,

sure is another great day, fantastic job at keeping the thread going medicowallet top effort brother

everyone on the pushie now, anyway hope to stick around as long as i dont get anymore infractions like the other night when i got 3 x 5 pointers, amazing, just for using large letters

and people want to kill me off! oh well, gee the shonk exchange got hit AGAIN

thankyou

professor robots


----------



## trainspotter (24 September 2011)

You are a very, very sad man MW or should I say Mr Burns?


----------



## medicowallet (24 September 2011)

medicowallet said:


> Beautiful morning brothers, spring has finally sprung, and the morning sun warms my back patio.
> 
> Birds are playing on the lawn, still eyeing off the neighbour's garden, and enjoying the new found peace and quiet in my street on the weekends.
> 
> ...




Hi brothers, the clearance rate was 53%, wow, fantastic, excellent!

total reported was 599, so obviously 151 went missing, I wonder why?

Anyway, fantastic day today, sunshine blazing, less cars than I expected, many less.

Keeping it real for the houping market

MW
PS Where is Robots?


----------



## robots (24 September 2011)

hello,

yeah top day alright

thankyou

professor robots


----------



## tothemax6 (24 September 2011)

So this is the robots vs medicowallet bitch-fight thread?


----------



## drsmith (24 September 2011)

Something to sink your teeth into,

http://www.rba.gov.au/publications/fsr/2011/sep/pdf/house-bus-bal-sheet.pdf
http://www.rba.gov.au/publications/fsr/boxes/2011/sep/c.pdf


----------



## medicowallet (25 September 2011)

tothemax6 said:


> So this is the robots vs medicowallet bitch-fight thread?




Nah, Robots and I love each other.

We just provide information for the readers of this fine thread, such as auction clearance rates (whatever they mean)

Keeping it real for the true believers, especially in Robots' absence.

MW
(The original robot dismantler)


----------



## FxTrader (25 September 2011)

drsmith said:


> Something to sink your teeth into,
> 
> http://www.rba.gov.au/publications/fsr/2011/sep/pdf/house-bus-bal-sheet.pdf
> http://www.rba.gov.au/publications/fsr/boxes/2011/sep/c.pdf




Interesting reading indeed drsmith.  One notable quote...



> _During the periods of strong housing price growth in Queensland and Western Australia, investor activity increased significantly more than owner-occupier activity (Graph C4). Between 2000 and 2007, the value of investor loan approvals grew around fivefold in these two states, whereas owner-occupier approvals increased around threefold. Recent softness in housing prices has been associated with sharper falls in investor approvals relative to owner-occupier approvals. This procyclicality in lending may have amplified cyclical movements in prices, raising arrears rates in aggregate._




The insanity and price distorting effect of an unlimited negative gearing subsidy exposed in an RBA publication.  Investors crowd out owner-occupiers and push up prices.  Less property investor activity = lower prices for *everyone*, note that Aus governments (federal, state and local) aren't listening and actually support this market distortion - for different reasons.  Housing affordability relative to income will always be an issue where tax policy/subsidy favours property speculation.

This and population trends are the reason why I have become a bit less bearish on housing prices in Aus.  Tax advantaged IP will continue to appeal (and support/distort housing prices) in the wake of what is likely to be prolonged negative or poor returns in equity markets and stable or lower interest rates.  So what if your leveraged IP only returns 3%, when equities are at -20% you're feeling good as a property investor.


----------



## Agentm (25 September 2011)

medicowallet said:


> Nah, Robots and I love each other.
> 
> We just provide information for the readers of this fine thread, such as auction clearance rates (whatever they mean)
> 
> ...




robots is a classic

what is written by robots makes me absolutely hold my breath for the next line

enigmatic

not that i agrre with any of robots sentiment..

but, the bubble is deflating, imho the wealthy wont like it..

a revolt on hte horizon,,  they need more working class capital thrown at the bubble..

imho the proletariat will be given ample incentives to recreate the 2008 bonanza,,,

failing that,,, the bubbles over,, kahhputt

all imho


----------



## ROE (25 September 2011)

Agentm said:


> robots is a classic
> 
> what is written by robots makes me absolutely hold my breath for the next line
> 
> ...




Why wealthy people  doesn't like cheap asset? I like lot of cheap asset
Someone who is wealthy has more income than their expenses...

Cheaper asset give wealthy people more purchasing power which in turn
generate far better yield in the long run.

Mr A has an income of 50K and his expense is 30K a year 
is far wealthier than Mr B with 100K income and expense of 90K

Speculators and those who borrow lot doesn't like asset deflating because
their cost of borrowing exceed asset appreciation

Don't get confuse with wealth and high income and people load with debt that their expense exceed their income...


----------



## medicowallet (26 September 2011)

ROE said:


> Mr A has an income of 50K and his expense is 30K a year
> is far wealthier than Mr B with 100K income and expense of 90K




Yes, if they are just blowing money on consumables.

But if the person with 100k income spends 30k on living expenses and 60k on interest on investments, then it is he who controls the assets.

Just like many of us have done with property.. just as many of us have done with shares.

and as long as they go up in value we are ok, but if we are leveraged too high and they go DOWN, then we are in trouble.

So I agree with you to a point, but the other poster makes a great point too.

MW
PS Where is Robots? what are his predicitons?


PPS (edit) ie if I clear $100k and have a 60k interest bill on my $6million property portfolio which I own 2 million equity, surely I am wealthier, but if it drops 20% to 4.8 million, oops, I am in trouble..  (please do not take these figures literally, they are just an over the top illustration)


----------



## freebird54 (26 September 2011)

schnootle said:


> Completely crazy. Yet if you have $10000 to your name but its in cash and lose your job you will be told you have too many liquid assets and need to spend that and come back when its gone.




A mate in the UK has 6 properties and gets full pension - you can have unlimited assets!!!


----------



## drsmith (26 September 2011)

FxTrader said:


> Interesting reading indeed drsmith.  One notable quote...
> 
> 
> 
> ...



I suspect that while unemployment remains low, nominal housing prices will be broadly maintained. An investor (leveraged or otherwise) with a 3% return won't go backwards under this scenerio, but higher geared investors with net negative income may and this will eat away at their wealth over time.

The problem will be if unemployment rises. With a backdrop of interest payments/household disposable income still near historical highs, residential real estate is highly vulnerable to any shock in employment, in my view. In a poor economic envoronment, I suspect governments will stimuluate as much as the can to prevent this from happening, including painting all those school halls white if necessary to maintain employment.

Whether that works or not is another matter.


----------



## Julia (26 September 2011)

freebird54 said:


> A mate in the UK has 6 properties and gets full pension - you can have unlimited assets!!!




It's the same in New Zealand.  Pension is not means tested.
It is, however, taxable, so some of it will be clawed back.


----------



## FxTrader (26 September 2011)

drsmith said:


> The problem will be if unemployment rises. With a backdrop of interest payments/household disposable income still near historical highs, residential real estate is highly vulnerable to any shock in employment, in my view. In a poor economic envoronment, I suspect governments will stimuluate as much as the can to prevent this from happening, including painting all those school halls white if necessary to maintain employment.  Whether that works or not is another matter.




There's little doubt that unemployment at some higher level will impact on housing prices due to persistently high household debt for recent entrants.  How much of impact, in what price brackets and in what locations is another matter.

Another factor for Melbourne is demographics. If population growth trends continue and projections are correct then supply will be an issue over the next two decades.  Population growth and age distribution in the population are very important to sustained or rising house prices.

For those interested, Harry Dent gives an excellent presentation on this subject...
https://docs.google.com/leaf?id=0B7vkEsQc02zdYzA2NmMwODctOWMxNC00YTZmLTlmNTEtOWRiZmI2NjlhYTkw&hl=en_GB

Dent explains quite well what property investment boosters like trainspotter and robots just don't understand, population demographics vs asset prices.


----------



## trainspotter (26 September 2011)

Go and read post #5484 before you use my name in vain. It's a DOOOOZY !


----------



## TabJockey (26 September 2011)

trainspotter said:


> Go and read post #5484 before you use my name in vain. It's a DOOOOZY !




Is there an easy way to goto post numbers? because im not clicking through 500 pages of mostly garbage (medico im looking at you ).


----------



## Miss Hale (26 September 2011)

TabJockey said:


> Is there an easy way to goto post numbers? because im not clicking through 500 pages of mostly garbage (medico im looking at you ).




Not that I know of but it's about 1/4 of the way down page 275.

Clearance rate was low again this week in Melbourne, 53%.  Mind you with the footy finals on September might not be an acurate reflection of the spring property market ( no clearance rate with be issued next weekend due to the Grand Final and there being only 50 auctions scheduled!).  Will be interesting to see what October brings.


----------



## trainspotter (26 September 2011)

TabJockey said:


> Is there an easy way to goto post numbers? because im not clicking through 500 pages of mostly garbage (medico im looking at you ).




Here ...... I will paraphrase it for you.



> *I can easily see CERTAIN areas dropping 20% in RESIDENTAIL housing* ...... no wait .... parts of NOOSA and the GOLD COAST has already done that. Also parts of my area have done the same and *Mandurah has dropped 40% on apartments.* Hmmmm ...... *I can see mortgage defaults increasing to 0.9% and retail figures dropping quicker than a wh0res drawers *........ no wait ........ this has already happened.
> 
> *Interest rates increasing and unemployment following suit *will certainly drive the nail in the coffin of RE in Australiallalaa land. FHB will be the first to go and mortgagee repos will be the new black for the remaining investors picking up a bargain. No wait ..... this is already happening in CERTAIN areas.
> 
> *I can easily see 10% OVERALL reduction of the WEIGHTED AVERAGE OF CAPITAL CITIES in a 5 year timespan.*




And somehow this makes me a property bull ...... I showed all of you the warning signals in regards to retail and unemployment figures and the effects it will have on residential property prices 1000 + posts ago ....... GEEEEEZUUUUUUUUUUZ


----------



## trainspotter (26 September 2011)

Here is another to chow down on from post #5133



> You see, house prices only fall when people are forced to sell their homes. Otherwise, households choose to simply remain in their home and wait things out. Property investors are loath to realise their capital loss.
> 
> A *true collapse* in house prices would indeed require some large external shock - *a doubling of unemployment or interest rates* - to trigger the wave of forced home sales that it would take to provoke house price falls.
> 
> Read more: http://www.smh.com.au/opinion/politi...#ixzz1JvHdekdJ




BULL written all over this post as well


----------



## TabJockey (26 September 2011)

trainspotter said:


> Here ...... I will paraphrase it for you.
> 
> 
> 
> And somehow this makes me a property bull ...... I showed all of you the warning signals in regards to retail and unemployment figures and the effects it will have on residential property prices 1000 + posts ago ....... GEEEEEZUUUUUUUUUUZ




Not exactly oracle level stuff yet mate. Its all bears in here you know. You can find similar posts by myself and about 5 other property bears in here.

Appreciate the views though.


----------



## medicowallet (26 September 2011)

trainspotter said:


> BULL written all over this post as well




A lot of your posts are bull... but, a bull you are not.


----------



## medicowallet (26 September 2011)

TabJockey said:


> Is there an easy way to goto post numbers? because im not clicking through 500 pages of mostly garbage (medico im looking at you ).




Just keeping it real for the true believers brother.

Sunshine and lollipops

MW
(the original robot dismantler)


----------



## FxTrader (26 September 2011)

trainspotter said:


> And somehow this makes me a property bull ...... I showed all of you the warning signals in regards to retail and unemployment figures and the effects it will have on residential property prices 1000 + posts ago




How amuzing, TS the chameleon has shown he can colour his arguments to show he's right given any market condition.  Let's see, he's a property investor but doesn't necessarily advocate buying IP.  He thinks property bears like Steve Keen are idiots but then he can also be bearish.  He routinely lambasted and derided anyone here who dared to make the bear case for buying property (or disagreed with him) but he warned us 1000 posts ago about POSSIBLE weakness in property.  LOL, all things to all people, a man for all seasons.  One can only wonder which TS will show up in his next post, the defender of the IP faith and bear slayer or TS the property bear.  Flip-flop, double twist with pike.  Make up your mind which camp your in.


----------



## satanoperca (26 September 2011)

FxTrader said:


> How amuzing, TS the chameleon has shown he can colour his arguments to show he's right given any market condition.  Let's see, he's a property investor but doesn't necessarily advocate buying IP.  He thinks property bears like Steve Keen are idiots but then he can also be bearish.  He routinely lambasted and derided anyone here who dared to make the bear case for buying property (or disagreed with him) but he warned us 1000 posts ago about POSSIBLE weakness in property.  LOL, all things to all people, a man for all seasons.  One can only wonder which TS will show up in his next post, the defender of the IP faith and bear slayer or TS the property bear.  Flip-flop, double twist with pike.  Make up your mind which camp your in.




I am a bear and have been since this thread started, however I think you are being a little unfair on TS. His has presented his opinion often with evidence to support his views. I do not see anywhere at the start of the thread that a person is not allowed to changed the opinion as facts come to light.


Seems that we have a room full of bears that all believe they are right now the market has turned. 

If everyone is a bear on this thread, going to get might boring.

Cheers


----------



## IFocus (26 September 2011)

drsmith said:


> I suspect that while unemployment remains low, nominal housing prices will be broadly maintained. An investor (leveraged or otherwise) with a 3% return won't go backwards under this scenerio, but higher geared investors with net negative income may and this will eat away at their wealth over time.
> 
> The problem will be if unemployment rises. With a backdrop of interest payments/household disposable income still near historical highs, residential real estate is highly vulnerable to any shock in employment, in my view. In a poor economic envoronment, I suspect governments will stimuluate as much as the can to prevent this from happening, including painting all those school halls white if necessary to maintain employment.
> 
> Whether that works or not is another matter.





One more is the availability of credit, rapid easy credit availability raises house pricing on the other hand tightening credit constricts the numbers able to buy.

This is whats happening in the US where they are shocked at having to put 20% down LOL.


----------



## trainspotter (26 September 2011)

FxTrader said:


> How amuzing, TS the chameleon has shown he can colour his arguments to show he's right given any market condition.  Let's see, he's a property investor but doesn't necessarily advocate buying IP.  He thinks property bears like Steve Keen are idiots but then he can also be bearish.  He routinely lambasted and derided anyone here who dared to make the bear case for buying property (or disagreed with him) but he warned us 1000 posts ago about POSSIBLE weakness in property.  LOL, all things to all people, a man for all seasons.  One can only wonder which TS will show up in his next post, the defender of the IP faith and bear slayer or TS the property bear.  Flip-flop, double twist with pike.  Make up your mind which camp your in.




Nope ... not a chameleon at all. I have maintained the stance that CERTAIN areas will fail and have validated my point of view over a 3 year period and have explained my position to the nth degree OVER AND F@RKEN OVER. I have shown subject matter at hand where commercial properties are viable and will still return over 18% WITHOUT CAPITAL GROWTH on a positively geared property.

STEVEN KEEN IS AN IDIOT !!!!!!! Sell your property NOW as it will go down 40% .... what happened ?????????? Property in Australia went up 20% ......... IDIOT !!!!!!!

I am wondering YET AGAIN why I even bother to explain it to the so called erudites in this thread. 
I TRADE PROPERTY FOR A LIVING. 

Do you?

Go and read the posts and you MAY and I stress you MAY get an understanding of what it takes to have the balls to do what I do. Nope ..... instead you lick every post with a grain of salt. I am trying to explain to you what it takes to trade property and what do I get in return ........... Hmmmmmmmmmmmmm ???????

Good one boys and girls. 

P.S. .... learn how to spell amusing ...... kindegarten stuff again.

P.P.S. ...... go and buy an IP in CERTAIN areas depending on how your gearing and income is strategised. IDIOT


----------



## medicowallet (26 September 2011)

trainspotter said:


> STEVEN KEEN IS AN IDIOT !!!!!!! Sell your property NOW as it will go down 40% .... what happened ?????????? Property in Australia went up 20% ......... IDIOT !!!!!!!




In defence of Keen, he did not know the government was going to bail out house vendors and property developers and builders.

Also, be careful what you say atm, property is under all sorts of pressure, and the government has less ammo.

MW 
(the original robot dismantler)


----------



## trainspotter (26 September 2011)

medicowallet said:


> In defence of Keen, he did not know the government was going to bail out house vendors and property developers and builders.
> 
> Also, be careful what you say atm, property is under all sorts of pressure, and the government has less ammo.
> 
> ...




I stand corrected MW ....... Keen is still an IDIOT !!!!!!!!!!!!! 

Property has always been under pressure from every angle FFS. Interest rates too low, over supply, under supply, interest rates too high, no rentals, too much Guvmint interference, banks lending criteria too high/low Keystart. FHOG, greedy developers, Asian influence, no capital growth etc etc etc  BLAH BLAH BLAH ....... seen it all before.

Yes yes yes it is different now ....... same as before. 

If this was a share thread ...... what is different? Do you buy shares without doing due diligence or do you buy them on a whim? Do you get a gut feeling or do you make an informed decision? Do you buy because your "broker" told you to or was it the TV?


----------



## satanoperca (26 September 2011)

trainspotter said:


> STEVEN KEEN IS AN IDIOT !!!!!!! Sell your property NOW as it will go down 40% .... what happened ?????????? Property in Australia went up 20% ......... IDIOT !!!!!!!




I disagree with you there TH and it would seem that George Soros also disagrees with you after granted Steven Keen $125,000 to further his research.

Cheers


----------



## medicowallet (26 September 2011)

trainspotter said:


> I stand corrected MW ....... Keen is still an IDIOT !!!!!!!!!!!!!
> 
> Property has always been under pressure from every angle FFS. Interest rates too low, over supply, under supply, interest rates too high, no rentals, too much Guvmint interference, banks lending criteria too high/low Keystart. FHOG, greedy developers, Asian influence, no capital growth etc etc etc  BLAH BLAH BLAH ....... seen it all before.
> 
> ...




Seen it all before?   Seen it in the past 10 years, yes, also at higher levels than before.

There is a limit to ANY asset class growing at compounding rates well in excess of inflation, and housing HAS to come back at some stage. Increasing gearing levels at such accelerating rates is just impossible.  Totally impossible mathematically, so at some point the pressure MUST cause a correction.

Or do you think that the houping market is immune to corrections?


MW
(the original robot dismantler)
Keeping it real for the houping market.


----------



## trainspotter (26 September 2011)

satanoperca said:


> I disagree with you there TH and it would seem that George Soros also disagrees with you after granted Steven Keen $125,000 to further his research.
> 
> Cheers




This would be George Soros that has been convicted of insider trading in 2002 for Societe Generale? IDIOT worth billions. Proven doomsayer so he can talk the market down whilst he buys up big while the blood runs in the street? Same guy? LOL.

Keen is a briliant economist that has predicted 5 of the last 3 downturns. 

Anyways ........ I am posting again which is going against my predilection to do so. Enjoy.


----------



## trainspotter (26 September 2011)

medicowallet said:


> Seen it all before?   Seen it in the past 10 years, yes, also at higher levels than before.
> 
> There is a limit to ANY asset class growing at compounding rates well in excess of inflation, and housing HAS to come back at some stage. Increasing gearing levels at such accelerating rates is just impossible.  Totally impossible mathematically, so at some point the pressure MUST cause a correction.
> 
> ...




Just once more because it is you MW ...... I have repeatedly said that it is quite easy to see that the market will fall over 20 % in CERTAIN ares. I have also said that the general market will see falls of 10% on a mean average over the 8 capital cities over a 5 year period. 

Surely you of all observant people have logged this away in your hippocampus for future reference. FFS.

I have also repeatedly maintained that IF you pick the RIGHT property to purchase in CERTAIN ares that you will still make money. Just like the share market. But property is different right?


----------



## medicowallet (26 September 2011)

trainspotter said:


> Just once more because it is you MW ...... I have repeatedly said that it is quite easy to see that the market will fall over 20 % in CERTAIN ares. I have also said that the general market will see falls of 10% on a mean average over the 8 capital cities over a 5 year period.
> 
> Surely you of all observant people have logged this away in your hippocampus for future reference. FFS.
> 
> I have also repeatedly maintained that IF you pick the RIGHT property to purchase in CERTAIN ares that you will still make money. Just like the share market. But property is different right?




Is that 10% from current prices?

MW

PS I think your neuro knowledge of the hippocampus is not very well developed. Not really a memory storage area as you propose


----------



## trainspotter (26 September 2011)

medicowallet said:


> Is that 10% from current prices?
> 
> MW
> 
> PS I think your neuro knowledge of the hippocampus is not very well developed. Not really a memory storage area as you propose




And here I was thinking you were a doctor?  Try anterograde amnesia and see what happens. I have an Aunt with this situation.


----------



## medicowallet (26 September 2011)

trainspotter said:


> And here I was thinking you were a doctor?  Try anterograde amnesia and see what happens. I have an Aunt with this situation.




There is a difference between forming new memories, as opposed to having stored memories, so please, keep to topics you know a lot about, such as property....

so keeping on topic.

Is the 10% drop from current levels?


----------



## FxTrader (26 September 2011)

trainspotter said:


> I TRADE PROPERTY FOR A LIVING. Do you?




Well, well, struck a nerve with our resident egomaniac once again.  I trade for a living as well, but I would not waste time with "trading" property, that's the slow road to nowhere now in most of Australia.  Would probably work well in the U.S. at the moment though.



> Go and read the posts and you MAY and I stress you MAY get an understanding of what it takes to have the balls to do what I do. Nope ..... instead you lick every post with a grain of salt. I am trying to explain to you what it takes to trade property and what do I get in return ........... Hmmmmmmmmmmmmm ???????




You've explained nothing, rather you revel in petty, childish insults and useless banter about your glorious past.  The pathetic level of risk you take "trading" property is of little interest to real "traders" in derivatives and forex.  You have no idea what real risk is until you put on a trade that can cost you thousands in seconds. Your balls are peanuts by comparison.


----------



## trainspotter (26 September 2011)

LOL ...... go find someone else to play with Doc. I am bored beyond belief, Goodnight old chum.


----------



## trainspotter (26 September 2011)

FxTrader said:


> Well, well, struck a nerve with our resident egomaniac once again.  I trade for a living as well, but I would not waste time with "trading" property, that's the slow road to nowhere now in most of Australia.  Would probably work well in the U.S. at the moment though.
> 
> 
> 
> You've explained nothing, rather you revel in petty, childish insults and useless banter about your glorious past.  The pathetic level of risk you take "trading" property is of little interest to real "traders" in derivatives and forex.  You have no idea what real risk is until you put on a trade that can cost you thousands in seconds. Your balls are peanuts by comparison.




LMAO ..... last time I looked I am not trading in the US of A. 

Grow some hair on them FX Trader ... for a few thousand I could probably toss you for it.


----------



## medicowallet (26 September 2011)

trainspotter said:


> LOL ...... go find someone else to play with Doc. I am bored beyond belief, Goodnight old chum.




Is the 10% drop from current levels?

MW


----------



## sptrawler (27 September 2011)

I haven't been following this thread, looks like I missed out on a bit of excitement.
I expected a major correction in property, but it hasn't eventuated. 
I am seeing a drop of 15-20% in my suburb, but that is from the absolute peak of what houses were getting.
They are still higher than the low they reached in 2009, when owners were panick selling.
The fact still remains, there will not be a radical drop in prices unless we go into recession and unemployment goes up.
This will only happen if commodity prices fall over, as to that nickel is usually the bellwether and it is sliding badly.
Next year will be make or break. IMO


----------



## moXJO (28 September 2011)

My area went through a slight dip for a few weeks then all the houses I had shortlisted sold. Lot of building activity as well going on (reno, expansion) making the house prices rise. The other talk is people getting out of the sharemarket and going to housing. Even crap areas seem to have a small boost. Still well off the highs, but well overpriced.
10 years waiting for a drop and counting.


----------



## medicowallet (28 September 2011)

I read this on the train today. The paper was sitting on the chair next to a used packed of kleenex. 

http://www.theage.com.au/business/house-prices-extend-slide-nab-20110928-1kwck.html

House prices falling. Who would have guessed.

At least rental yields are increasing.


MW

PS Where is Robots?


----------



## Aussiejeff (29 September 2011)

Another take on the latest housing data..



> In other negative reports, a NAB survey of industry players found that house prices have fallen 2.4 per cent across Australia this quarter.
> 
> *Victoria, which has suffered the steepest fall in prices in the current quarter, is expected to be the nation's worst-performing property market for the next two years, according to the study.*
> 
> ...



http://www.news.com.au/money/proper...ty/story-e6frfmd0-1226150977789#ixzz1ZIAllcom

I'm noticing a lot more For Sale signs popping up around Wodonga. Very few "SOLD" stickers, though. The Long Wait might just be starting for sellers....


----------



## moXJO (29 September 2011)

Aussiejeff said:


> I'm noticing a lot more For Sale signs popping up around Wodonga. Very few "SOLD" stickers, though. The Long Wait might just be starting for sellers....




It was like that where I am and prices started to drop. Then buyers seemed to hit the market again. Still 100k overpriced imo but it's not what I price them at that makes the sale


----------



## greebly24 (29 September 2011)

The Australian, Thursday, September 29, 2011
*"House prices on the slide"*

_"...research shows more than 300,000 homes nationally are today worth less than their owners paid for them."_

Considering there are millions of homes in Australia, it doesn't sound that bad.

_"...includes almost 100,000 homes bought since the onset of the global financial crisis in early 2008..."_

Does that mean over 200,000 homes bought before the GFC are worth less than they were paid for? Now that sounds bad. Particularly over 4+ years since.

_"Queensland has been hardest hit by declining home values, with about one in seven homeowners sitting on paper losses..."_

I wonder how many people would have rushed in to buy RE in QLD, if they knew there was a 15% chance it was going to depreciate? Guess the RE agents forgot to mention it.

_"One in ten homes in Western Australia are now worth less than their owners paid for them..."_

Only a 10% chance of losing money on RE in WA. Not bad odds really, considering other investments.

But what happened to the mining boom? How can RE drop in the biggest mining states? Floods and tourism might help explain QLD, but what about WA?

_"For September, house prices nationally slid 2.4 per cent after a decline of 2 per cent in June, with a further 1 per cent slide expected in the next 12 months."_

So we've already had some declines, but only another 1% decline over the next 12 months? With an inevitable Greek default looming, Spain & Italy to follow, then European & US banks collapsing, and China slowing, and commodity prices crashing? Not to mention Australia: retail crumbling, unemployment rising, manufacturing dying, real incomes decreasing. Only 1% decline in RE over 12 months? Really? Do people really have that much faith in governments and central banks to print money out of thin air to paper over all the trillions in bad debts? Really? We're all doomed.


----------



## Aussiejeff (29 September 2011)

greebly24 said:


> But what happened to the mining boom? How can RE drop in the biggest mining states? Floods and tourism might help explain QLD, but what about WA?




Indeed. With many pundits now tipping China growth to slow significantly in the next few years, maybe the "rewards" currently being reaped from the much-vaunted "mining boom" in Oz might be just about as good as it will ever get. 

If it's all going to start sliding down hill in the next year or two, what hope for Ozecon and RE by 2020 (a trifling 9 years from now)? Our economic prospects appear to be dimming by the day....so, let us pray that SuperSwan re-introduces a massive FHB boost for the foreseeable future + more ca$h cheques for all! LOL.


----------



## moXJO (29 September 2011)

Or another way you could look at it is Asia going through a boom, our dollar dropping and our investments snapped up.


----------



## robots (1 October 2011)

hello,

hit us up with the info Medicowallet

another great day brothers

thankyou

professor robots


----------



## medicowallet (1 October 2011)

robots said:


> hello,
> 
> hit us up with the info Medicowallet
> 
> ...




Hello brother,

REIV reports no results on grandfinal weekend.

I'll keep it real next weekend

MW


----------



## NewOrder (2 October 2011)

Prices are still going fine in my area. Eastern subs Melbourne. One place I was watching went for $116k over the listed price at auction last weekend. I am not seeing any bargains here.


----------



## Dowdy (2 October 2011)

NewOrder said:


> Prices are still going fine in my area. Eastern subs Melbourne. One place I was watching went for $116k over the listed price at auction last weekend. I am not seeing any bargains here.




I live in the west but work in the east (Richmond). I thing i noticed in the east (espically the inner east) is that people have more money then sense


----------



## FxTrader (2 October 2011)

Dowdy said:


> I live in the west but work in the east (Richmond). I thing i noticed in the east (espically the inner east) is that people have more money then sense




Probably true given the high prices still being demanded by vendors in the east for unrenovated shacks.  The dynamic in the eastern suburbs continues to be that well presented, quality properties in good neighborhoods sell at or above their asking prices with almost everything else going stale and sitting on the market for months.  Buyers are picky but will open their wallets wide for a nice property.  The days of just dumping a shack on the market and expecting it to sell quickly for a top price ended months ago.


----------



## greebly24 (5 October 2011)

moXJO said:


> Or another way you could look at it is Asia going through a boom, our dollar dropping and our investments snapped up.




From Reuters Sept 23 2011
*Insight: Hard lessons for Vietnam as property slumps*
_Like many hoping for easy cash in Vietnam's property market, Nguyen Thu Huong borrowed 500 million dong ($24,000) from a bank in April to buy a new flat she didn't need and planned to flip. The only question, she thought, was how big the profit would be. Five months later, she is lucky if she can sell it at all.
Vietnam's real-estate market has stalled, beset by soaring inflation, sky-high interest rates and sharp lending curbs. Developers are halting projects or delaying new ones. Prices have fallen from dizzying heights in 2006 and 2007 and brokers are bracing for more losses ahead._

So yet another country's property bubble bursts. But how can this be? Particularly as it is _...in one of the world's fastest-growing economies..._. And even they can't stop their property bubble imploding? Bugger.

_"We could have sold the flat immediately for a 200 million dong ($9,600) profit but we hoped to get 500 million dong ($24,000) by waiting a few months," said Huong, who works in Hanoi at a government agency involved in the real-estate sector.
Meanwhile, she keeps doling out 7.5 million dong ($360) a month in interest, a large sum in a country where the average annual income is about $1,100. A second installment of 500 million dong is due soon.
"I can't afford to make the payments anymore," she said
_

Why couldn't she see this was a classic property bubble? Why does this property hysteria affect everyone in every country on the planet, until it doesn't? What is it about debt and greed that blinds people like her? $24,000 for a flat in a country where the average income is $1,100? That's like 22 times income. Freaking ridiculous!!! She says she could have flipped it immediately for $9,600 profit? So she could have made almost 9 years of the average annual wage, but she tried holding out for 22 years average income? Freaking unbelievable!!!

And what is the reason for the Vietnam property bubble imploding? In one of the fastest growing economies in the world? Yep, you guessed it, credit growth is slowing. All the talk about increasing population, increasing wages, economic growth, its different here, etc etc etc don't mean ****. It's about credit growth, stupid. Its about eternally-increasing debt. The central bank in Vietnam raised interest rates to fight inflation, and pop goes their property bubble.

Before the crash:
_In the past four years, credit growth averaged 35 percent a year..._

Yep, that pretty much explains it:
A boom in credit growth equals a boom in house prices.
A slowing of credit growth equals a stagnation of property prices.
A reversal of credit growth (credit shrinking) equals a collapse of property prices.

Think of what happened in the US. The world's largest economy. Property booming. Then Lehmann Bros collapses. Interbank lending seizes up. Credit stops growing and starts shrinking. Property bubble pops. The exact same thing happened in Ireland, Spain, Greece, Latvia, Japan (in the 80s) etc etc etc. It ain't brain science or rocket surgery!!!!

Vietnam's probably a good pre-cursor for China. Booming Asian economy with high inflation. So interest rates have to go up. So credit growth shrinks. So property deflates. Unfortunately the central Chinese govt is trying to raise rates, whilst local Chinese governments are borrowing more through shadow banks to keep the bubble going. Its not going to be pretty.

So the future of Australian property prices? Check credit growth in Australia. It grew heaps for more than a decade. So did Aussie property prices! What a co-incidence, hey? Then the GFC hit. Interbank lending slowed. Credit growth slowed. So our government borrowed billions to stimulate. Stimulate what? You guessed it again, credit growth! Now the stimulus has run its course and this year credit growth in Oz has been slowing. And guess what's happening to Oz RE? Its stagnating. Man, these coincidences just keep coming, don't they!


----------



## explod (5 October 2011)

greebly24 that is a sick post man.  We are different in Auz, no worries

lolliepops, sunshine and nice trams down St Kilda Road, new 500 unit developments to go up soon, vacancy rates rising in the Docklands.  Confidence man because

botty said so, all good as he is the

*$onfessor* Bhd, REIV (Hons) and a Ba *B* in ppp

And that last is not "property property property" either, its in the pocket


----------



## Agentm (6 October 2011)

*Dwelling turnover rate at 16-year low*

        By *Gavin R. Putland*
  The RBA's quarterly Statement on Monetary Policy is usually good for at least one killer graph. Here's the latest winner:
​  The bottom curve shows that in Q3 of 2010, the *dwelling turnover rate* ”” that is, the turnover of dwellings expressed as a percentage of stock per year ”” fell below the “GFC” minimum. In Q4 of 2010 it fell again, to its lowest point since the sequence began in 1995. That record was broken in Q1 of 2011. The turnover rate was then down by more than a third from the peak in Q3 of 2009.
  Considering that neither the mining boom nor the First Home Owners' Boost could restore the turnover rate to the heady heights of Q2'01 to Q3'03, one is left with the distinct impression of a market running out of greater fools.


http://blog.lvrg.org.au/2011/08/dwelling-turnover-rate-at-16-year-low.html


----------



## young-gun (6 October 2011)

Here's a not so recent report i only just read, both interesting and ammusing:

http://www.moneymorning.com.au/reports/mm-aussiehouseprices-2010.pdf

Brace yourselves.


----------



## robots (8 October 2011)

explod said:


> greebly24 that is a sick post man.  We are different in Auz, no worries
> 
> lolliepops, sunshine and nice trams down St Kilda Road, new 500 unit developments to go up soon, vacancy rates rising in the Docklands.  Confidence man because
> 
> ...




Hello,

any data up from todays effort, Explod, MW anything?

oh well, great post-up there Explod keep em coming brother, amazing and to think i get a 3 pointer for using capitals

thankyou

professor robots


----------



## medicowallet (8 October 2011)

"Saturday 8th October 2011

Buyers, owners and sellers may have welcomed the decision by the Reserve Bank to keep interest rates stable this week but it was not reflected in an improvement in buyers confidence or the clearance rate this weekend. 

The clearance rate is 54 per cent compared to 65 per cent this weekend last year. 

There have been a total of 484 auctions reported of which 260 sold and 224 were passed in, 162 of those on a vendors bid. 

Next weekend the REIV expects 720 auctions to be held. 

Enzo Raimondo
CEO REIV"

I see another massive *484* auctions reported for a 54% clearance rate.

funny thing is, I thought they were expecting many many more than 484 auctions this week, what, being after a week off.

Interesting times,

Sunshine and lollipops and ever decreasing bubbles,

MW

PS how is that gearing treating you Robots?  Sold yet? any taps on the shoulder yet?


----------



## GumbyLearner (8 October 2011)

Hi all

I'm here to ask for advice. Not investment advice just hypothetical advice in the Geoffery Robertson tradition.

I have some capital to deploy into Australian real estate.

I plan to pay *cash* with no leverage. 

My choices are as follows:

a) Buy land now, construct and minimize costs like stamp duty (off-the-plan) as well as other concessions etc...?

b) Buy an established property in a good location(dodgy foundations, lemons, RE spruikers etc..)

c) Wait it out and earn 6% plus interest and save more by the inevitable tanking of the real estate bubble... there's more tanking to go.... Or is there? 

d) Buy land in Australia and build a holiday house when you want to retire. 

e) Invest in North Asian property (China/Japan/Korea). They all have a dynamic economy and little leverage compared to Australia. 

f) None of the above because you're an ex-pat and you don't know what will happen domestically within Australia. China Slowdowns/European bank failures etc...

Thoughts?


----------



## medicowallet (9 October 2011)

GumbyLearner said:


> Hi all
> 
> I'm here to ask for advice. Not investment advice just hypothetical advice in the Geoffery Robertson tradition.
> 
> ...




I think the reason why this thread goes around in circles is because none of us knows what is going to happen.

That is why no advice is (or should) be given to people, and others (may I speak for them) and my POV are just that, and not offered as advice.

I can, however tell exactly what will happen with the RE market, over the next 10 year period, but will only be able to do that in 2022.

MW

PS Perhaps Robots will one day offer a "prediction", he is, afterall, a self professed professor.


----------



## GumbyLearner (9 October 2011)

medicowallet said:


> I think the reason why this thread goes around in circles is because none of us knows what is going to happen.
> 
> That is why no advice is (or should) be given to people, and others (may I speak for them) and my POV are just that, and not offered as advice.
> 
> ...




I suppose if you watch your p's and q's you can say whatever you like on ASF. 

As long as your adjectives don't offend anyone, you can rampathon whatever you like? 

And of course with qualifications? What qualifications?  For example -> RoboREIVCop also known as Robots on ASF.


----------



## young-gun (9 October 2011)

GumbyLearner said:


> Hi all
> 
> I'm here to ask for advice. Not investment advice just hypothetical advice in the Geoffery Robertson tradition.
> 
> ...





Theres houses going pretty cheap in the US at the moment im curious if you were buying to hold for a number of years the eventual appreciation(obviously not going to happen over night with the way things are) combined with either a strengthening US dollar over the coming years(or a weakening aussie dollar), would possibly not only see capital growth on the house but you'd profit on the exchange rate if you sold at the right time(when our dollar is at 80 cents to theirs or so)? i dunno.

This is just a thought, i have no idea if it would be that simple or if it would work


----------



## Aussiejeff (9 October 2011)

NewOrder said:


> Prices are still going fine in my area. Eastern subs Melbourne. One place I was watching went for $116k over the listed price at auction last weekend. I am not seeing any bargains here.




Still going fine? Not according to Mr Edwards of Residex....



> VICTORIAN homeowners have lost more than $290 million over the past three years selling properties for less than what they paid for them.
> 
> *Alarming figures that point to a hidden crisis in the property market reveal 5427 vendors lost an average of $54,000 on investments gone wrong in the three years to July.*
> 
> ...




and....



> Mr Edwards, who has monitored the nation's property market for 25 years, said the pain for Melbourne home owners was far from over.
> 
> *By the time the market bottoms at the end of next year, Residex expects the city's median house price to have shed 15 per cent. Families living in a $500,000 home can expect to see $75,000 wiped from its value.
> 
> "The adjustment process in Melbourne is just beginning,"* Mr Edwards said.




http://www.heraldsun.com.au/news/more-news/home-owners-300-blow/story-fn7x8me2-1226162101573

Hmmmm.....


----------



## sptrawler (9 October 2011)

Another pressure that is going to be applied to the property market, is going to be the downsizing of the baby boomers.
They will probably want to realise some of the value in their houses to help fund their retirement.
Also as they are going to be buying a cheaper house it won't be as imperative that they get top dollar.
The push for top dollar is also more driven by purchasers trying to achieve loan limitations when upsizing. 
Therefore with the banks having tightened their lending criteria and vendors not being under pressure to obtain absolute top dollar. I would think that prices will continue to slide. IMO


----------



## young-gun (9 October 2011)

sptrawler said:


> Another pressure that is going to be applied to the property market, is going to be the downsizing of the baby boomers.
> They will probably want to realise some of the value in their houses to help fund their retirement.
> Also as they are going to be buying a cheaper house it won't be as imperative that they get top dollar.
> The push for top dollar is also more driven by purchasers trying to achieve loan limitations when upsizing.
> Therefore with the banks having tightened their lending criteria and vendors not being under pressure to obtain absolute top dollar. I would think that prices will continue to slide. IMO




do you think this shift would be enough to sustain apartment prices or perhaps units and town houses? imo i would still expect to see losses, probably not as great though..


----------



## sptrawler (9 October 2011)

In W.A, especially the Perth, Mandurah area there appears to be an oversupply of appartments, they have taken a big hit already. 
Also people are being warned to check with a bank before signing for an off the plan appartment, as banks are really tightening their criteria for these types of developments.
My feeling is there has to be a drop in prices to sustainable levels or an extended period of no price movement. 
This would allow inflation to sort out the problem, however I think we will all know the answer by christmas 2012. To my way of thinking 2012 looks like a big year one way or another.


----------



## trainspotter (10 October 2011)

*Re: Post #6470 - Gumby Learner*

You did not say if it was for investment or PPOR purposes nor the amount of capital you wish to deploy hypothetcially. And why does it have to be RESIDENTIAL if it is to be for investment purposes hypothetically. Anybody heard of COMMERCIAL property ???

Out of all of the imaginary scenarios that you have proposed, in this current climate I would be opting for a) ...... mainly due to the lack of parameters that have been set for this task. Deploy 1/3 of your capital, purchase vacant land and leave the rest in the bank. This leaves you several options:

a) Do nothing at all and wait for the market to turn either up or down DEPENDING where you have purchased. Keep gunpowder dry and all that stuff.

b) Use the block as security to purchase property and have a small mortgage on "new" purchase (whatever that may be)

c) Construct new home at a later date on parcel of land for investment purposes and claim the GST on the building contract, depreciation schedule blah blah blah (depending on how you are structured) and rent property out for period of time then move in and claim it as your PPOR.

d) Sell property/land in future depending on circumstances.

e) Go to casino and put the lot on black 13.

 BWTFWIK ....... propety is gonna fall 40% and we are all doomed don't you know. Just ask Steven Keene ...... he knows everything.


----------



## moXJO (12 October 2011)

Sydney house prices to go up more 20% apparently. Good God, who the hell would want to live there at those prices.


----------



## Aussiejeff (12 October 2011)

moXJO said:


> Sydney house prices to go up more 20% apparently. Good God, *who the hell would want to live there at those prices.*




Wealthy Chinese?

LOL.


----------



## satanoperca (12 October 2011)

moXJO said:


> Sydney house prices to go up more 20% apparently. Good God, who the hell would want to live there at those prices.




Got to laugh, the renovators is on now. Rumour has it only one sold for a small profit, 0.2%. So somehow in the next few years Sydney is going to go off. Good luck.

Debt rules for now but not for to long.

Cheers


----------



## young-gun (13 October 2011)

moXJO said:


> Sydney house prices to go up more 20% apparently. Good God, who the hell would want to live there at those prices.




Bringing the MEDIAN house price to approx 800 large apparently ...the big 4 will have to start rolling out inter-generational home loans


----------



## Glen48 (13 October 2011)

Ad on Fox TV buy a house in USA for 200K get four free , coming soon to a suburb near you


----------



## kavla1970 (13 October 2011)

This might be a silly question but is there anywhere where we can get the median house prices (melb etc)for each Month/QTR etc and run a moving average over it to give us an idea how the prices are really travelling?

I am trying to work it out for myself rather than rely on the real estate industry.


----------



## Aussiejeff (14 October 2011)

kavla1970 said:


> This might be a silly question but is there anywhere where we can get the median house prices (melb etc)for each Month/QTR etc and run a moving average over it to give us an idea how the prices are really travelling?
> 
> I am trying to work it out for myself *rather than rely on the real estate industry.*




IMO that's the way the RE industry & their close friends in politics would prefer it to stay - forever. 

The less the dumb hoipoloi know about the REAL state of real estate, the better for those "in the know" to profit from it - *nudge, nudge, wink, wink, buy, buy*.


----------



## investorpaul (14 October 2011)

> Sydney house prices to go up more 20% apparently. Good God, who the hell would want to live there at those prices.




This is blatant misquoting by the Media.

The artilce was written in refernce for a BIS Shrapnel report, which I actually have a copy of.

The report does say that property prices will go up until 2013, but it then says that in 2013-2014 there will be a *downturn* as higher interest rates bite and the general economy slows.

Both the SMH article and news.com.au article that I have read say that property prices will rise before *slowing* in 2013.

There is a massive difference between property price growth slowing (implies prices still go up) and property prices entering a downturn (i.e. go down).

Also the articles dont mention that real growth is considerably less than this 20% figure and even when property prices are predicted to peak in 2013 they will still not take out the previous highs set in 2004 when adjusted for inflation.

It is also worth noting that the report is 130 odd pages and cannot be accurately discussed in one article


----------



## Quincy (14 October 2011)

> Originally Posted by moXJO
> 
> Sydney house prices to go up more 20% apparently. Good God, who the hell would want to live there at those prices.







Aussiejeff said:


> Wealthy Chinese?
> 
> LOL.





Yes, wealthy Chinese are buying up big in certain areas of Sydney    . . . .   the below extract relates mainly to the Melbourne Unit market, however Sydney is experiencing a huge influx of wealthy Chinese buyers of both new and exsiting Units and Houses in many suburbs.




> http://www.theaustralian.com.au/bus...ng-turns-off-tap/story-fn9656lz-1226165293150
> 
> But despite the government-induced sales slump, demand in China for property and investment opportunities -- *as well as residency and immigration options for its growing middle class -- spells good news for Australian property developers*.
> 
> ...


----------



## Aussiejeff (14 October 2011)

Quincy said:


> Yes, wealthy Chinese are buying up big in certain areas of Sydney    . . . .   the below extract relates mainly to the Melbourne Unit market, however Sydney is experiencing a huge influx of wealthy Chinese buyers of both new and exsiting Units and Houses in many suburbs.




IMO all non-Chinese speaking Oz school children should be forced to learn Mandarin from the age of 6, so that they can be more fully conversant with the world's soon-to-be-biggest economy.

Those of us Westerners older than 60 who would be befuddled by the teachings of the mysterious Eastern lingo should be mercifully shot to save space and boost bequeathment of rich monies to younguns for investment in Chinese owned RE. 

Problem solvered.

LOL.


----------



## FxTrader (14 October 2011)

Quincy said:


> Yes, wealthy Chinese are buying up big in certain areas of Sydney    . . . .   the below extract relates mainly to the Melbourne Unit market, however Sydney is experiencing a huge influx of wealthy Chinese buyers of both new and exsiting Units and Houses in many suburbs.




You raised this issue 6 months ago in post #5170.  Yes, Chinese buyers are proping up sales in new developments (their favored property class) in Melb and Syd.  Just another factor (along with unlimited IP subsidies and other market distorting policies and actions of Aus governments) underpinning the ridiculously high prices (relative to median income) of urban residential property in Aus.


----------



## robots (15 October 2011)

hello,

good evening brothers, any auction results yet?

i want to collect all the data to decide on whether to invest in property

another great day

thanks

professor robots


----------



## medicowallet (15 October 2011)

robots said:


> hello,
> 
> good evening brothers, any auction results yet?
> 
> ...




Sure mate

54% this week, better than the 51%  WOW property is on the way BACK

How is that third job going for you?

MW


----------



## robots (15 October 2011)

hello,

thanks for the data, 

great stuff, gotta do the research

thankyou

professor robots


----------



## choofer (15 October 2011)

robots said:


> hello,
> 
> thanks for the data,
> 
> ...




Hi Robots,

How's the new caravan goin at Eucla? Hope things get better for you dude. Property should rebound in the next week or two. In the mean time kick back and keep puffin. Cheers.


----------



## robots (15 October 2011)

hello,

thanks choofer, great opinion brother

everything going fine, i got a new push bike just recently (an Apollo hybrid 7spd)

rolls nicely

oh yeah, weed, goof balls, uppers, H, crank, arctic, mogadons, the caravan rockin

thankyou

professor robots


----------



## Glen48 (15 October 2011)

Wow Robots has the net on in his caravan .. why don't  you set up a web site for fellow Aussie who like you thought property will never crash like it is doing now and will continue to do for years to come. 

Call it _Australians Biggest Losers_ warn your ISP here could be a overrun on your site and branch out into hiring 1 bedroom apartments AKA caravan's as there will be a shortage of them soon.
 You can all sit around playing Monopoly and talk about when RE  was king.


----------



## robots (15 October 2011)

Glen48 said:


> Wow Robots has the net on in his caravan ..* why don't  you set up a web site for fellow Aussie who like you thought property will never crash like it is doing now and will continue to do for years to come.*
> 
> Call it _Australians Biggest Losers_ warn your ISP here could be a overrun on your site and branch out into hiring 1 bedroom apartments AKA caravan's as there will be a shortage of them soon.
> You can all sit around playing Monopoly and talk about when RE  was king.




hello,

get a few guests from ASF who have lost a bit also to help out, a few Storm turkeys (which i still cant understand if shares are the way to go, oh well)

must be a couple of the 95 out of 100 who fail trading shares (buying/selling businesses as many put it)

thankyou

professor robots


----------



## choofer (15 October 2011)

robots said:


> hello,
> 
> thanks choofer, great opinion brother
> 
> ...




Good to see the sense of humour. Some people don't see the funny side, but that's life bro. Property is always king, lol.
Adeus.


----------



## FxTrader (16 October 2011)

robots said:


> hello,
> 
> get a few guests from ASF who have lost a bit also to help out, a few Storm turkeys (which i still cant understand if shares are the way to go, oh well)
> 
> must be a couple of the 95 out of 100 who fail trading shares (buying/selling businesses as many put it)




Those poor naive souls who lost everything, including their homes, to the crooks at Storm don't deserve a cold slap in the face from a crackpot on this forum.  They gave their money to speculators (pretending to be advisors) who then made huge margined bets on stocks with margin loans that were granted on the basis of falsified information.  This was corrupt behavior and gambling with other peoples money, not share investing.  Hope this helps with your lack of understanding.

As for your ill-informed quip about share traders, why not learn the difference between a share trader and investor and quote the sources for your stats before you post such whimsical trash.

If you honestly think property investing is such a golden goose, ask yourself why property prices have crashed in so many other developed countries destroying the wealth of millions of people.  Perhaps they should have bought an apartment in Sydney or Shanghai, no bubbles have formed in these places eh.


----------



## robots (16 October 2011)

hello,

i just reported the auction results and the likes of you and others extrapolated that to mean i am a property perma bull, got banned for it too. better watch out MW your account may be in trouble

even with the GFC people got smashed, that was all by rogue's (advisors) as well? hehehehehehehe

so after the biggest financial event since 1929, property went higher than pre GFC numbers and now its down what 5%-10% in Melbourne? hehehehehehehee

asx 6000 down to 4000, 

thankyou

professor robots


----------



## young-gun (16 October 2011)

robots said:


> hello,
> 
> i just reported the auction results and the likes of you and others extrapolated that to mean i am a property perma bull, got banned for it too. better watch out MW your account may be in trouble
> 
> ...




Property is about to take the biggest hit in australia you could ever possibly imagine. but the market is about to cop it again aswell. lose lose. glad im in a position to hold neither.


----------



## FxTrader (16 October 2011)

robots said:


> i just reported the auction results and the likes of you and others extrapolated that to mean i am a property perma bull, got banned for it too. better watch out MW your account may be in trouble




Nothing useful can ever be "extrapolated" from the ramblings of a crackpot poster.  You revel in the misfortunes of others, calling them turkeys and laughing at their losses.  Just more despicable trash from someone who adds nothing to the debate here and deserves to be banned.



> even with the GFC people got smashed, that was all by rogue's (advisors) as well?




Never implied anything of the kind oh moronic one.  BTW, Australia is one of the very few property markets that has not been "smashed" post GFC.  Consider yourself lucky and thank the Chinese for your good fortune.  Investor of the year.  LOL 

Keep on smoking that wacky tobacci, get back on your new bike and watch out for the freight train heading your way.


----------



## choofer (16 October 2011)

FxTrader said:


> Nothing useful can ever be "extrapolated" from the ramblings of a crackpot poster.  You revel in the misfortunes of others, calling them turkeys and laughing at their losses.  Just more despicable trash from someone who adds nothing to the debate here and deserves to be banned.
> 
> 
> 
> ...




lol I thought my brain was fried with the choof, but this robots dude takes the cake. I bet he even drinks the bong water lol What a legend in his own lunch time.


----------



## choofer (16 October 2011)

robots said:


> hello,
> 
> i just reported the auction results and the likes of you and others extrapolated that to mean i am a property perma bull, got banned for it too. better watch out MW your account may be in trouble
> 
> ...




So what you are saying is that basically the ASX has returned to its average norm from the overinflated values that it was? Big deal everything goes up and down, but never property right? Property can never take a bit hit like that Sir Professor. BTW why are you living in Ballarat now? What happened to the high life in St Kilda? How's the caravan park goin dude lol


----------



## robots (16 October 2011)

hello,

hehehehehehe, great afternoon

man i wouldnt have a clue about property or shares and have expressed that opinion on this blog, 

looks like i'm a legend right here at ASF bro as people want to keep writing about me, i keep the advertisers coming, the peace in all other threads, the creators are very thankful for my service

i like buckets though choofer, just goes whhhoooooooosh

thankyou

professor robots


----------



## Glen48 (16 October 2011)

Robots stand by there will be money to be made of of RE, spraying painting dead grass green, emptying swimming pools, trash outs, forced evictions, boarding up windows for banks and as the depression get worse more jobs will be created.


----------



## medicowallet (16 October 2011)

median price decline for houses at auction in melbourne in the September quarter

= 5.1%

that is not so small, I wonder if some of the more fragile investors might start to worry at this.

Awaiting the december quarter results.. however, auction clearance rates have fallen further than from the september quarter over the last couple of weekends, not that it means anything

MW


----------



## choofer (17 October 2011)

medicowallet said:


> median price decline for houses at auction in melbourne in the September quarter
> 
> = 5.1%
> 
> ...



 Mass exodus of Cairns property market. Very worrying. Can now buy an apartment in Port Douglas for under 100 gorillas. Bring it on


----------



## prawn_86 (17 October 2011)

choofer said:


> Mass exodus of Cairns property market. Very worrying. Can now buy an apartment in Port Douglas for under 100 gorillas. Bring it on




Yeh i am watching Cairns with interest. Would love a little holiday unit there.


----------



## medicowallet (17 October 2011)

prawn_86 said:


> Yeh i am watching Cairns with interest. Would love a little holiday unit there.




Too hot for my liking.

I just can't see anything that can prop Cairns up, with tourism so devastated by lack of Japanese tourists and the high Aussie dollar.

Perhaps it will just become a retirement/social security city.

MW


----------



## choofer (17 October 2011)

prawn_86 said:


> Yeh i am watching Cairns with interest. Would love a little holiday unit there.




http://www.realestate.com.au/buy/between-0-100000-in-manoora/list-1?preferredState=qld

I like the way they say, "owner says sell my unit", or "must be sold yesterday" lol

Wait another year and should be half the price ;-)


----------



## Glen48 (17 October 2011)

and then 1/2 of that price the following year


----------



## Bill M (17 October 2011)

choofer said:


> http://www.realestate.com.au/buy/between-0-100000-in-manoora/list-1?preferredState=qld
> 
> I like the way they say, "owner says sell my unit", or "must be sold yesterday" lol
> 
> Wait another year and should be half the price ;-)




Mate I like Cairns too but there is always a price to pay. I noted one nice unit at $79,000 but it had a $10,000 body corp fee p/a. I wouldn't touch that with a barge pole. That's 2/3rds of your rent on body corp.

This one:http://www.realestate.com.au/property-unit-qld-cairns-108251796

The reason why it won't sell is the ridiculous body corp fees, I don't pay anywhere near that in Sydney.


----------



## choofer (18 October 2011)

Bill M said:


> Mate I like Cairns too but there is always a price to pay. I noted one nice unit at $79,000 but it had a $10,000 body corp fee p/a. I wouldn't touch that with a barge pole. That's 2/3rds of your rent on body corp.
> 
> This one:http://www.realestate.com.au/property-unit-qld-cairns-108251796
> 
> The reason why it won't sell is the ridiculous body corp fees, I don't pay anywhere near that in Sydney.




I think that is management fee, electricty rates etc. But yes too expensive lots of better places round justr wait  a year


----------



## -Bevo- (18 October 2011)

choofer said:


> Mass exodus of Cairns property market. Very worrying. Can now buy an apartment in Port Douglas for under 100 gorillas. Bring it on




Mass exodus of workers too? I'm in Townsville plumber came around the other day to do some work on place I rent he was from Cairns moved here few months earlier said work was hard to find so packed up and left.

Will do some trips up there early next year and take a look always liked Cairns.


----------



## FxTrader (18 October 2011)

When agents start to email me article links like this, clearly they are concerned about the state of the market and buyer perceptions...

http://www.theage.com.au/business/a-crash-in-property-prices-dont-bet-on-it-20111005-1l9nz.html#ixzz1ZzDXW17A


----------



## young-gun (18 October 2011)

FxTrader said:


> When agents start to email me article links like this, clearly they are concerned about the state of the market and buyer perceptions...
> 
> http://www.theage.com.au/business/a-crash-in-property-prices-dont-bet-on-it-20111005-1l9nz.html#ixzz1ZzDXW17A




my girlfriend is in recruitment, record numbers of jobless real estate agents going through at the moment. I guess it's true that anyone can sell in a boom?


----------



## medicowallet (19 October 2011)

I was travelling around on public transport today, 

There was this paper sitting there, it seemed all alone, so I decided to give it purpose and read it, this article caught my attention:

http://www.theage.com.au/business/australias-most-overpriced-property-market-20111019-1m73h.html

Why does the property price graph stop in 2009 and all the others go to 2011?


Sunshine and lollipops

MW


----------



## FxTrader (19 October 2011)

medicowallet said:


> I was travelling around on public transport today,
> 
> There was this paper sitting there, it seemed all alone, so I decided to give it purpose and read it, this article caught my attention:
> 
> ...




Hmm, a little Melbourne property price bashing with selective statistical analysis and biased interpretation by van Onselen.

Let's look at a different take on the stats shall we...

From http://theage.domain.com.au/real-estate-news/citys-population-explosion-20110331-1cng1.html

_New figures from the Bureau of Statistics show that while the boom in overseas immigration cooled off all over Australia in 2009-10, Melbourne was again the centre of Australia's population growth.  Melbourne's growth in the past 9 years equals roughly six Ballarats, three Hobarts and one Gold Coast.

Melbourne's growth in the past 9 years equals roughly six Ballarats, three Hobarts and one Gold Coast.

■ In the year to June 2010, Melbourne is estimated to have grown by 79,000 people, or more than 1500 a week. For the ninth consecutive year, Melbourne had the biggest growth of any city in Australia.

■ Since 2001, Melbourne has gained 605,000 new residents, up 17 per cent, rapidly pushing out the urban boundary in every growth corridor. That is far ahead of growth of 447,000 in Sydney, 380,000 in Brisbane, and 303,000 in Perth.

■ For the first time in almost 30 years, Melbourne's population is within 500,000 of Sydney's, and gaining. If the growth rates of 2001-10 continued, Melbourne would overtake Sydney in 2028, when each city would have roughly 5.6 million people. At June 30 last year Sydney had 4.575 million people to Melbourne's 4.077 million.

■No other city in Australia has ever recorded growth of this size. It has strained the city's infrastructure and services, adding to congestion on the roads, delays, overcrowding on public transport and waiting times in hospital emergency wards. Some believe it was a key factor in Labor's unexpected loss at the 2010 state election.

■The four fastest-growing municipalities in Australia in 2009-10 were all on Melbourne's fringe._

and this...

_*Projections for Melbourne*
Melbourne is experiencing record population growth. It grew by 273,000 between the 2001 and 2006 censuses.

Overseas migration is the main contributor to Melbourne’s growth, with almost a quarter of migrants coming to Australia settling in Melbourne.  

Melbourne’s share of Victoria’s population has been increasing reflecting a worldwide trend to urbanisation.

Melbourne is projected to grow from 3.744 million in 2006 to 5.525 million in 2036, an increase of 1.781 million.

The number of Melbourne households is projected to increase by 51 per cent between 2006 and 2036, compared with a 41 per cent increase in population.

*The Next Twenty Years*
To accommodate this increase, 600,000 extra households will be required in Melbourne over the next 20 years._

So even with the projected "slowing" of population growth (still robust) in Melbourne, we will still be bursting at the seams unless a lot more housing is constructed.

And finally there is this...

http://theage.domain.com.au/real-estate-news/home-construction-on-urban-fringe-excessive-20110501-1e364.html

_MELBOURNE is building thousands more houses on its sprawling fringe than there is demand for - while at the same time the supply of houses in established suburbs is dramatically inadequate, a leaked confidential report reveals.

The VicUrban report also reveals Melbourne's building industry is failing to meet the need for housing for overseas migrants to Melbourne.

According to The Melbourne Residential Market: Demand & Supply Overview, new housing developments on the city's fringe are the only areas in Melbourne where building approvals outstrip demand, with a surplus of 4775 houses.

*The October 2010 report says that despite a surplus of housing in the new greenfield developments, Melbourne overall has a housing shortfall of more than 6000 homes a year because of a shortage of housing in established suburbs.*

The report highlights an overwhelming demand for ''family housing'' and recommends that government policy encourage the building of more family-friendly townhouses in existing suburbs.

Overseas migration to Melbourne was the main factor driving housing under-supply, the report showed.

It says that migration ''levels that exceed 56,000 persons per annum currently exceed the industry capacity to deliver new housing''.

Melbourne's migrant intake rose sharply from 40,000 a year in 2006 to 83,000 a year in 2009, and is now at 63,000, according to the report._

In summary then, the Melbourne property market is not as monolithic and easy to categorize as a whole as van Onselen leads one to believe.  It's quite stratified with fringe development oversupplied and established areas under supplied and little prospect for improvement given strong community oppostion to higher density development in established areas.


----------



## medicowallet (19 October 2011)

I don't care anything for the article, except the graph ends so long ago, and I wonder why it happens.

As you point out, another point is stupid.

No wonder people cannot make informed decisions, with so much biased reporting out there


MW


----------



## robots (22 October 2011)

hello,

any data yet on todays auctions? MW might of been banned for posting up the results just like I was, oh well life goes on

just make sure you do your research

great day for storm chasers in Ballarat, awesome what nature delivers us

thankyou

associate professor robots


----------



## Tink (23 October 2011)

If you were looking for a good yield, there were cheap houses and good rents in certain areas in Ballarat - they sold pretty quickly 

Alot of period homes too, I suppose it depends what you were looking for.

They have actually gone up the last few years.


----------



## Aussiejeff (23 October 2011)

*56%* auction clearance rate yesterday, according to the renowned & trustworthy REIV boffins. 

http://www.reiv.com.au/~/link.aspx?_id=F86BFA7729DF4E22B9FB036CD6EFD36F&_z=z


Then there is this pretty grim RPData auction clearance rate report to mull on showing no state auction clearances achieved above 50.1% for the previous week.... Sydney 50.1%, Melbourne 48.8% & Brisbane an appalling 18.3%. 

http://www.myrp.com.au/showNews.do?id=503

You be the judge.


----------



## wayneL (23 October 2011)

robots said:


> hello,
> 
> any data yet on todays auctions? MW might of been banned for posting up the results just like I was, oh well life goes on




In the interests of accurate historical records, you weren't banned for posting auction results and you know it.

Please note also that you can report personal abuse to the mods via the "report post" button present on each post.


----------



## Wysiwyg (23 October 2011)

This chart of Melbourne house affordability represented as percentage of income says it all really. Obviously pushed to excess at 85% of average wage. Renting is dead expensive and dead money while house prices are beyond the working class heroes. 

Outer suburb block of dirt prices near me in Qld. 

$305,000  -864m
$299,000  -783m  
$290,000  -757m
$285,000  -697m
$299,000  -775m 
$305,000  -891m 
$299,000  -790m

Chart below of Melbourne house affordability 1965 to 2010.


----------



## explod (23 October 2011)

Clearance rate 47% down from 48% last week.

Calculated on past early figures against later in the week adjusted figures.

Plodalong from statistics Div.


----------



## kincella (23 October 2011)

hello property people, and all the other mushrooms...
I see ASF property thread is on its last  legs....
I can see how boring it is, just patting each other bear on the back....whilst twiddling thumbs, and waiting for the '''great big  property crash', that some have been on here predicting since ...well forever.....

just scroll down this page....to find the world wide house indexes.....
I must warn the bears....there are no...I reiterate  NO evidence of price drops in the vicinty that all have been predicting....
some cities have risen in price....
god forbid...(that must be a huge lie, conspiracy )

how does about 1.9% or some similar insignificant figure sound as a drop in the Australian prices sound to you....
probably after rising over 20% in the prior 2 years...

currently the banks are having a price war on fixed rates...over 3 years..below 6.5%...
and non bank lending below 6%....they are ignoring the stupid RBA figures...
and the RBA pretence that everything is honky dory....

looking like a good buying op to me....lovely low rates....contrarian indicators in control...stock market crashing....superfunds providing zero returns for those  nearing retirement...
all indicators that conservative investors are going back to bricks n mortar for the sanity...versus the bot trading activites...that take your money for zero return...

http://www.propertyobserver.com.au/...-house-price-index-knight-frank/2011090151383


----------



## Dowdy (23 October 2011)

kincella said:


> hello property people, and all the other mushrooms...
> I see ASF property thread is on its last  legs....
> I can see how boring it is, just patting each other bear on the back....whilst twiddling thumbs, and waiting for the '''great big  property crash', that some have been on here predicting since ...well forever.....
> 
> ...




Firstly, do you really have to make me remind you of all the comments between the property bulls ie.Great post etc etc


Lets put it into perspective....

_REIV data released Friday shows Melbourne house prices have fallen 8.3 per cent from their peak in the December 2010 quarter.

The S&P/Case-Shiller US National Index peaked at 190.94 in first quarter 2006 and only retreated 1.01 per cent in the first year. By second quarter 2011 US prices had fallen to 129.19 – down 47.8 per cent over 21 quarters._ 

So is Australia still different???

http://www.prosper.org.au/2011/10/18/house-price-falls-steeper-that-the-us/


----------



## FxTrader (23 October 2011)

kincella said:


> hello property people, and all the other mushrooms...
> I see ASF property thread is on its last  legs....
> I can see how boring it is, just patting each other bear on the back....whilst twiddling thumbs, and waiting for the '''great big  property crash', that some have been on here predicting since ...well forever.....




Why not take a trip down memory lane and read back 6 months ago or more and you will find plenty of back slapping, self congratulation and in your face boasting from the IP crowd here.  If this thread is getting boring it's due to the almost wholesale retreat of the RE investment spruikers here, many of whom probably realize by now  that the property golden goose stopped laying eggs months ago and looks to be barren for some time to come.



> how does about 1.9% or some similar insignificant figure sound as a drop in the Australian prices sound to you....




Ahh, aggregate numbers again - how useless.  Cold comfort in Perth for instance...

_"Property values in central Perth, including the wealthy suburbs of Peppermint Grove, Cottesloe, Subiaco and the CBD, plummeted 12.3 per cent in the year to June, according to RP Data research."_

My hope is that the various factors keeping the Aussie property price (debt) bubble inflated persist as I don't want to see the price of my house drop 12.3%.


----------



## Julia (23 October 2011)

I'm very out of touch with the property market so would appreciate comments from others on the question:

should I expect if having a house built in this soft market that it will be cheaper than in the better times, or does the cost of labour and materials remain fairly inflexible?


----------



## trainspotter (24 October 2011)

Julia said:


> I'm very out of touch with the property market so would appreciate comments from others on the question:
> 
> should I expect if having a house built in this soft market that it will be cheaper than in the better times, or does the cost of labour and materials remain fairly inflexible?




NO NO NO NO NO Julia ....... this will not do !!!! A sensible quetion in this thread instead of the tirade of monkey poo flinging and hand waving gestures ?????

NON ! 

Materials and labour remain roughly the same (some labour costs may come down as the subbies try to undercut to obtain work) it is the PROFIT MARGIN of the builders that is flexible as to whether or not they want to keep cash flow or they induce you with things like FREE whitegoods/carpets/airconditioning/landscaping/fencing blah blah blah or they just build you a bare bone house at a sensible price. Gouging I think they call it.


----------



## Whiskers (24 October 2011)

I'm thinking about building a new house again while the $10,000 gift is still available, till end of Jan... but since Qld is almost at the bottom of the heap... three speed economy... it may get an extension.

But, for me I think the way to go is as an owner builder again, since I've had experience doing it before.

There is plenty of cheap building materials, especially timber, around if you are patient and know where to look to find the stock clearance and liquidation sales. 

The only snag may be getting tradies when you want them, since a lot are being drawn away into the mines. But for me, I could do all except the electrical myself, but for the regulations being a bit stiffer now than last time I did it. 

In any case if you can do a bit of site preperation, give the tradies a hand as a (free) labourer, and do things like lay your own plaster board, build or assemble your own kitchen, lay tiles, painting etc... I'm thinking you probably couldn't go too far wrong building new in the near future.


----------



## Tysonboss1 (25 October 2011)

Anyone remember the conversation we had a couple of months back in relation to pensioners sitting on home equity.

Well it appears someone from the government aggrees that the home equity should be tapped to fund the cost of looking after their aged care.

http://news.smh.com.au/breaking-news-national/old-aussies-to-lose-their-homes-20111025-1mh3r.html


----------



## FxTrader (25 October 2011)

Tysonboss1 said:


> Anyone remember the conversation we had a couple of months back in relation to pensioners sitting on home equity.




I believe the issue was pensioners living in million dollar plus homes while collecting pension checks since...
_
"Assets which are not assessed under the assets test - exempt assets - include:

     your principal family home and any permanent fixtures such as wall-to-wall carpet and wall heaters, and either:
      up to 2 hectares of privately used surrounding land on the same title document as the home, or
      all land greater than 2 hectares on the same title document as the home if you are eligible for the new rules for farmers and rural homeowners."_

So you can live in a 10 million dollar home (or whatever) on up to 2 hectares (~ 5 acres) and still collect a pension check.  Is this equitible or reasonable?  Probably not.

As for aged care, compelling property millionaires to fully or partially fund their aged care seems reasonable to me.


----------



## prawn_86 (25 October 2011)

So if the gov ends up owning the house then what will they do with it?

Will they sell it at maret price? Or look to hold it? Or offload it as quick as possible?

Any of those 3 scenarios could have an effect on the market


----------



## Tysonboss1 (25 October 2011)

prawn_86 said:


> So if the gov ends up owning the house then what will they do with it?
> 
> Will they sell it at maret price? Or look to hold it? Or offload it as quick as possible?
> 
> Any of those 3 scenarios could have an effect on the market




3 options that the government suggests,

1, Sell the home on the free market and use funds to pay for aged care.

2, Use a reverse mortgage from a private insto eg. a bank or other lender.

3, Fund your aged care from a government loan, Which will give the government first claim against the home upon your death or sale of the property.


----------



## Tysonboss1 (25 October 2011)

FxTrader said:


> As for aged care, compelling property millionaires to fully or partially fund their aged care seems reasonable to me.




I agree, 

At the end of the day you can't take the assets with you when you die, and it's a bit much to ask the tax payers to fund your needs just so you can pass on a larger amount to your kids.

And if you take the government loan option, you can carry on as normal until the day you die with out making a payment.


----------



## Junior (26 October 2011)

FxTrader said:


> I believe the issue was pensioners living in million dollar plus homes while collecting pension checks since...
> _
> "Assets which are not assessed under the assets test - exempt assets - include:
> 
> ...




This is correct.  

However, the reality is that someone who resides in a large home worth millions, would have significant ongoing costs relating to their property and would not be able rely on the Age Pension to fund their retirement.  So I don't think too many retirees would be in this situation.


----------



## prawn_86 (26 October 2011)

Tysonboss1 said:


> 3 options that the government suggests,
> 
> 1, Sell the home on the free market and use funds to pay for aged care.
> 
> ...




But what effect (if any) will this have on the property market? Governments are notorious for poor use of capital, so if they are selling the houses it could effect the market


----------



## Tysonboss1 (26 October 2011)

Junior said:


> This is correct.
> 
> However, the reality is that someone who resides in a large home worth millions, would have significant ongoing costs relating to their property and would not be able rely on the Age Pension to fund their retirement.  So I don't think too many retirees would be in this situation.




Not true,

There are plenty of people living in what would have been an average family home 50years ago within 20km's of sydney that is now worth over $2M mostly land value.

The are heaps in my area, as the oldies die off the houses are sold enriching the kids and multi level apartments are constructed.

When thinking of "Multimillion dollar home" don't think of luxary homes on the gold coast. These pensioners are living in their family home in the suburbs, But they are sitting on massive land value that could be tapped to help fund their living expenses in their later years,


----------



## Tysonboss1 (26 October 2011)

prawn_86 said:


> But what effect (if any) will this have on the property market? Governments are notorious for poor use of capital, so if they are selling the houses it could effect the market




The house will be sold when they die anyway, 

The way I see it should happen, is that the cost of the aged care is loaned each year to the elderly person ( rather than simply be provided free ), each year the annual cost is just added to the account and maybe 3% interest, then when they die the house gets sold, funds are used to clear the loan, excess funds go to the estate for distribution in the will.


----------



## Junior (26 October 2011)

Tysonboss1 said:


> Not true,
> 
> There are plenty of people living in what would have been an average family home 40years ago within 20km's of sydney that is now worth over $2M mostly land value.
> 
> ...




"Not True".  There's degress of truth.  

My point is, with regards to retirees living in multi-million dollar homes (i.e. not just $2mill homes in inner sydney where land values are high), you would assume a large proportion of these retirees *are * self funded.


----------



## satanoperca (26 October 2011)

Agrees with Tyson. 

I personally know of a few oldies living in $1.5m + homes that they purchased many decades ago that do not have a penny to their name. Many don't wish to sell because they wish to leave the property to the kids.

Freeing up these homes that are often large and only house a single occupant would seem like a good idea.

Cheers


----------



## Tysonboss1 (26 October 2011)

Junior said:


> you would assume a large proportion of these retirees *are * self funded.




well they are not the ones we are discussing are they.

The gist of what I was saying, and what the government is also starting to look at, Is that if you take government payments and other forms of assistance, while also sitting on a large amount of equity, the costs incurred by the government in making the payments and providing the support should be recovered from the equity in the home.

This can be done without having to affect the persons living arrrangements or forcing them to sell until they die or are forced to move into a high level care facility.


----------



## tech/a (26 October 2011)

satanoperca said:


> Agrees with Tyson.
> 
> I personally know of a few oldies living in $1.5m + homes that they purchased many decades ago that do not have a penny to their name. Many don't wish to sell because they wish to leave the property to the kids.
> 
> ...




Hmm Rates kill many of these retirees.

Their house of residence for 50 yrs becomes impossible to live in as their pension cannot pay the rates.
An absolute tradgedy---silently suffered by many.

*And who cares????*


----------



## Tysonboss1 (26 October 2011)

tech/a said:


> Hmm Rates kill many of these retirees.
> 
> Their house of residence for 50 yrs becomes impossible to live in as their pension cannot pay the rates.
> An absolute tradgedy---silently suffered by many.
> ...




I don't know about in your area, But here pensioners get rates at a very much discounted rate. Local coucils would have varying rules though I guess.


----------



## tech/a (26 October 2011)

Many Esplanade properties have this problem.
some neighbours along our stretch have been forced to leave even with subsidy.


----------



## Knobby22 (26 October 2011)

tech/a said:


> Hmm Rates kill many of these retirees.
> 
> Their house of residence for 50 yrs becomes impossible to live in as their pension cannot pay the rates.
> An absolute tradgedy---silently suffered by many.
> ...




I'm not sure if that comment was toungue in cheek, they could sell their house to a family who will use it, live in a smaller house with all the mod cons and live a great lifestyle for their final years.

If they act stupidly and hold onto a house, too big for them that they can't afford to spend upkeep and heat it. I don't care. I don't want to subsidise their stupidity.


----------



## Mrmagoo (26 October 2011)

It gonna cause a recession.

How do you profit from that ? I want to learn how. 

Seriously, which genious thought people sepending 40% of their income on rent would HELP the economy ? Don't back the retail industry I tell you that much. YOu gotta understand entire economies might be build on the fate of one or two super stores.

They cut hours it can reak havok among suburbs and towns. 

Recession here we come and not a moment too soon.

Then watch what happens to property prices. Just you watch ....

This is just like 06. If I could be bothered digging up some old threads from other various forums about stock prices LMAO.


----------



## Judd (26 October 2011)

Julia said:


> I'm very out of touch with the property market so would appreciate comments from others on the question:
> 
> should I expect if having a house built in this soft market that it will be cheaper than in the better times, or does the cost of labour and materials remain fairly inflexible?




Julia,

Apparently, as trainspotter has indicated, it all depends.  I had some work done on my home and I was lucky to get, what I believe, an honest person.  Came up with a fixed cost after going through my requirements very thoroughly.  Was there at various stages of the work and pulled up contractors to correct work which he considered unsatisfactory ("The plastering where that light has been moved needs fixing. Smooth it off, give it a proper finish and re-paint by tomorrow" sort of thing.) And the job was done within the time-frame.

I was surprised about a month after the job was completed when he came back just to ask whether I was happy with the outcome.  I was even more surprised when I mentioned a very minor issue which I was going to fix.  The response was "I'll fix that right now."  Which he did; no charge.

However, over a beer or three at the end of the working day he did tell me horror stories.  Asked to "fix" others work only to find the whole structure was unapproved with deck bouncing like a trampoline so $30,000+ already down the drain and now up for even more $$s.  Being undercut on a quote by a hundred dollars or so simply to be asked at a later date to finish the job as the other builder "hasn't come back" despite being paid in full.   That sort of thing.

So luck of the draw I suppose.  Cheap may mean "less expensive" or it may mean "cheap."  It all depends on the outcome.


----------



## greebly24 (26 October 2011)

I mentioned earlier that the best indicator of the future of property prices in Australia (or anywhere else) is HOUSING CREDIT GROWTH.

Some may dispute this but it explains every property bubble on the planet. Why did US house prices boom? Was the economy booming too? Or was it simply because credit was becoming easier to get? Think of sub-prime & NINJA loans if you're looking for an answer.

Look at Spain or Ireland too. Booming credit = booming house prices. When the GFC hit, nothing really changed overnight. Except for credit growth. It suddenly froze up. And house prices there? They crashed. Ireland still has many multinational companies there due to it's low corporate tax. It still has high employment and high wages in those areas. But take away the cheap & easy credit and housing came crashing down, almost overnight. Google "Irish ghost estates". Tragic mass delusion.

If you wonder why it didn't happen here, you just have to look at the gov response to the GFC, a $70Bn stimulus package, most of it going to banks, to stimulate credit growth. Plus govt is now buying billions of mortgage-backed securities. It's all about ensuring housing credit growth. Cos if they don't, the party ends.

And now this:

Australian Financial Review, Tues 25th Oct 2010
_"MORTGAGE SLUMP CHALLENGES BIG FOUR"_
_"...in the 12 months to the end of August housing credit growth was just 5.8 per cent, well below the average 15 per cent growth across the last decade."_

So over the past decade banks were lending out 15% more money for mortgages each year than the previous year. How much did the median Aust house price rise each year over that period? Difficult to tell, but I found some figures on median values 99-09:

Sydney $295k - $615k, or about 7.5% (per annum compounded)
Melbourne $230k - $513k, or about 8.5%
Brisbane $145k - $459, or about 12%
Perth $149 - $491, or about 12%
Adelaide $134 - $397, or about 11%

So this very rough guide would seem to indicate that housing in Australia rose by 10% per year over the last decade. That's a fantastic return! But it occurred during a boom in credit, when housing credit growth was increasing at 15% per year.

Now that housing credit growth is slowing in Australia, where does that leave us?

I am not yet sure of the correlation between the two, but there is one. Maybe house prices go up at two-thirds credit growth? Or maybe house prices go up at 5% less than credit growth?

I think the latter is more likely. Credit growth of 5% would allow for increasing population buying increasing built homes at the same price. Credit growth above that, say an additional 10%, would seem to indicate house prices go up 10% too. Simple.

Perhaps too simple. Perhaps there are other factors ie population growth, lack of home builds, booming economy. But perhaps not. I'm going to see if I can get some figures for the US/UK/Spain/Ireland etc to see how strong the correlation is.

More from the article:
_"The most recent three months of Reserve Bank of Australia data show housing credit is growing at just 5.2 per cent a year, the lowest since the RBA began reporting official housing credit statistics in 1977."_

So our population is increasing, more homes are being built, but housing credit growth is slowing? More people buying more homes, but now only a 5% growth in credit, compared to 15% pa for the past decade? Its pretty obvious why OZ RE ain't really going anywhere fast at the moment.

Keep an eye on housing credit growth! If you think its going to go back to 15%, then property capital growth will probably go back to 10%. But if it doesn't, property won't.

If housing credit growth slows (due to a Greek default/Euro bank collapse/China slowdown) so much that it actually goes negative, then housing in Australia will crash too (more people + more homes + less mortgages = cheaper homes). But until credit growth changes, house prices won't change much. Reckon I can safely wait to see what happens


----------



## Julia (26 October 2011)

tech/a said:


> Hmm Rates kill many of these retirees.
> 
> Their house of residence for 50 yrs becomes impossible to live in as their pension cannot pay the rates.
> An absolute tradgedy---silently suffered by many.
> ...



Most councils in my experience have a minimum rate p.a., based on land values.
Everyone I know in this regional centre of 55,000 pays the same basic rate, with discounts for pensioners.  Increased rates are applied to properties right on the Esplanade overlooking the sea.




Knobby22 said:


> If they act stupidly and hold onto a house, too big for them that they can't afford to spend upkeep and heat it. I don't care. I don't want to subsidise their stupidity.



I agree.   I suspect a lot of elderly folk are being pushed about by their families who only have an eye to the potential value of the property they anticipate inheriting, with little care for the living standards of the elderly person.

I don't know any details, but I'm pretty sure if there's some likelihood the old person will have to go into care there's a significant difference in the fees payable when the assets are held in 'the family home' versus cash in the bank.

i.e. probably the issue is more complex than it appears on the surface.



Judd said:


> Julia,
> 
> Apparently, as trainspotter has indicated, it all depends.  I had some work done on my home and I was lucky to get, what I believe, an honest person.  Came up with a fixed cost after going through my requirements very thoroughly.  Was there at various stages of the work and pulled up contractors to correct work which he considered unsatisfactory ("The plastering where that light has been moved needs fixing. Smooth it off, give it a proper finish and re-paint by tomorrow" sort of thing.) And the job was done within the time-frame.
> 
> ...



Thanks, Judd.  I've been talking with four builders.  One I dismissed immediately as a 'corner cutting' type.  The others are all impressive so far.



greebly24 said:


> If you wonder why it didn't happen here, you just have to look at the gov response to the GFC, a $70Bn stimulus package, most of it going to banks, to stimulate credit growth



Could you supply some detail of this?  I don't recall $70 bn mostly going to banks.


----------



## Mrmagoo (26 October 2011)

YOu wanna know how to tell the state of the economy.

1) Walk down the street.

2) Put yourself in the positions of a hot chick or some guy with big shoulders and no education. Browse the jobs sites and compare it to average expenses and the cost of stuff and you'll have a pretty clear picture of whats going on.

3) During times of economic awesomeness people LOVE TO BUY PIZZA. I worked in one when I was 13-20 and when things were cheap and awesome and PEOPLE LOVED PIZZA. This probably applies to all fast food.

If you can walk into a pizza shop of a fridey night and see it is empty, speak to the owners ask how business is going.

I speak to successful small business owners, there is merit in this kidna stuff. MERIT.

Who is buying houses now ? Why, WHY NOT ? There will lie the answer of where property prices are heading.


----------



## Starcraftmazter (27 October 2011)

Mrmagoo said:


> YOu wanna know how to tell the state of the economy.
> 
> 1) Walk down the street.
> 
> 2) Put yourself in the positions of a hot chick or some guy with big shoulders and no education. Browse the jobs sites and compare it to average expenses and the cost of stuff and you'll have a pretty clear picture of whats going on.




I don't know why, but there are a ton of hot chicks working for Sydney councils (various roadwork/pedestrian pavement stuff). Sometimes I see more of them than guys on site.


----------



## bellenuit (27 October 2011)

Julia said:


> I'm very out of touch with the property market so would appreciate comments from others on the question:
> 
> should I expect if having a house built in this soft market that it will be cheaper than in the better times, or does the cost of labour and materials remain fairly inflexible?




Julia,

I'm not sure if this answers your question, but I went through the process of having two townhouses designed, council approved and quoted on by several builders recently. I used a building broker to do these tasks and the town houses were to be built at the rear of my existing property, which is close to a trendy Perth suburb (Subiaco). 

I was utterly shocked at the prices quoted and they seemed completely out of whack with the depressed state of the housing market. I could have bought two established townhouses of similar quality for nearly the same amount in this same area. In other words, by building I was giving away my land value for almost nothing and assuming huge risk in comparison to just buying. I decided to not go ahead with my approved plans.

My experience is consistent with what many are saying. Building costs are far in excess of replacement values, so why bother. This may just be a Perth thing, with the mining boom and consequent labour shortages, but I certainly wouldn't build in the current environment. Particularly with building costs continuing to rise and the cost of established properties falling. 

Obviously if it is a place to live in, the issues are different. But for investment purposes I think one should hold tight and wait for prices to fall further.


----------



## wayneL (27 October 2011)

bellenuit said:


> Julia,
> 
> I'm not sure if this answers your question, but I went through the process of having two townhouses designed, council approved and quoted on by several builders recently. I used a building broker to do these tasks and the town houses were to be built at the rear of my existing property, which is close to a trendy Perth suburb (Subiaco).
> 
> ...




That's pretty much how it is over here in NZ too.


----------



## bellenuit (27 October 2011)

bellenuit said:


> Building costs are far in excess of replacement values, so why bother.




Sorry, meant to say: "Building costs are far in excess of the cost of established properties, so why bother."


----------



## Knobby22 (27 October 2011)

We knew what you meant.

You can build pretty cheaply in Melbourne, but not quality.
Land is the big expense.

I suspect Perth is probably worse due to lack of competition.


----------



## Julia (27 October 2011)

bellenuit said:


> Julia,
> 
> I'm not sure if this answers your question, but I went through the process of having two townhouses designed, council approved and quoted on by several builders recently. I used a building broker to do these tasks and the town houses were to be built at the rear of my existing property, which is close to a trendy Perth suburb (Subiaco).
> 
> I was utterly shocked at the prices quoted and they seemed completely out of whack with the depressed state of the housing market. I could have bought two established townhouses of similar quality for nearly the same amount in this same area. In other words, by building I was giving away my land value for almost nothing and assuming huge risk in comparison to just buying. I decided to not go ahead with my approved plans.



Thanks, bellenuit.  I've been looking at established (built 1 - 2 years ago) houses in the same area that I'm considering building, and what you say absolutely holds true here.  I looked through a house for sale which is about double the sq m I would want and the price (which the agent made clear is extremely negotiable!) is less than what building costs advised so far for my much smaller place on smaller block of land.




> My experience is consistent with what many are saying. Building costs are far in excess of replacement values, so why bother. This may just be a Perth thing, with the mining boom and consequent labour shortages, but I certainly wouldn't build in the current environment. Particularly with building costs continuing to rise and the cost of established properties falling.
> 
> Obviously if it is a place to live in, the issues are different. But for investment purposes I think one should hold tight and wait for prices to fall further.



Agree that as an investment the whole idea is nonsense.  But it would be a place to live in, away from current problems of  neighbouring trees etc.
However, that doesn't mean I'll throw away all reasonable financial sense for a change and a more desirable overall situation.

I'm also concerned, to paraphrase Donald Rumsfeld, about what I don't know that I don't know.  Pretty much every day I think of another factor which would add to the cost.


----------



## Mrmagoo (29 October 2011)

tech/a said:


> *And who cares????*




Honestly this is not a socialist country. I don't think anyone should care too much about old people.

I'd much rather see young men and women getting a head start to start a family through job opportunities and cheap housing than seeing old people linger on in $2m mansions.

Self funded OR you depend on family or frankly, tough for you.

Bring on the land tax ! I want young couples with babies and newly built houses and infrastructure to fuel the economy. NOT inefficient immigration  or an old person centric retirment home economy.


----------



## Tysonboss1 (29 October 2011)

Mrmagoo said:


> Honestly this is not a socialist country. I don't think anyone should care too much about old people.




Are you forgetting who is in power.

_The Labor Party is commonly described as a social democratic party, but its constitution stipulates that it is a democratic socialist party_


----------



## Mrmagoo (29 October 2011)

Tysonboss1 said:


> Are you forgetting who is in power.
> 
> _The Labor Party is commonly described as a social democratic party, but its constitution stipulates that it is a democratic socialist party_




The political system (for both major parties) is neither capitalist nor socialist it is a vote buying system. 

They're described as ... but what they really are is a way for a bunch of people with lots of connections to live a pretty good life...

Neither party has any direction on how to address the housing affordability problem which is most likely goign to negatively impact the economy if it hasn't already.


----------



## Tysonboss1 (29 October 2011)

Mrmagoo said:


> Neither party has any direction on how to address the housing affordability problem which is most likely goign to negatively impact the economy if it hasn't already.




Because there is not really a housing affordability problem, certain indiviuals just have a personal savings and entitlement attitude problem.


----------



## Mrmagoo (29 October 2011)

Housing is more expensive relative to income than it has been in the past. If you want to call that a "problem" or not is a matter of subjective definition. 



Tysonboss1 said:


> Because there is not really a housing affordability problem, certain indiviuals just have a personal savings and entitlement attitude problem.




Person savings are currently at all time highs.

There is no such thing as entitlement attitude. People simply buy what they can for the money they have available. 

Neither of these have anything to do with the affordability of housing, which is determined entirely by the price which is demanded for a property.


----------



## satanoperca (29 October 2011)

Tysonboss1 said:


> Because there is not really a housing affordability problem, certain indiviuals just have a personal savings and entitlement attitude problem.




Spoken like a true pollie. "Not really", there either is or isn't an affordability problem.

And you better go a tell all those primary school kids that are shipped off to before school care and after school care that their parents cannot save and have an attitude problem when all they are trying to do is put a roof over their kids heads.

Find statements like the above a little bit narrow minded and do not look at the total costs of high priced housing on society. 

Wouldn't money be better used in society to fund business that employee people instead of keeping bankers on huge salaries?

Cheers


----------



## Tysonboss1 (29 October 2011)

satanoperca said:


> 1,Spoken like a true pollie. "Not really", there either is or isn't an affordability problem.
> 
> 2, And you better go a tell all those primary school kids that are shipped off to before school care and after school care that their parents cannot save and have an attitude problem when all they are trying to do is put a roof over their kids heads.
> 
> ...




1, The reason I say not really is because I myself and my friends and relatives that work hard and save have never had a problem affording realestate, Those but on the other hand a also have some friends who tend to work little or spend tomuch and have never developed any savings who also dream of the mcmansion type house and they tend to complain and say it is an immposible dream, Thats why I say not really, Because it really comes down to a persons earning / spending habits and their personal tatse's.

2, I went to before and after school care, It was great. If both parents are working why can't they save. Obviously they are not budjeting correctly.

3, Housing is at the top end of it's price cycle, times change, It's not where I would call it unaffordable, Perhaps peoples expectations are unaffordable.

4, I never said people shouldn't fund business, I own businesses and invest in the stock market, I also own property. Money should be going to build more dwellings if their is a need for cheaper accomadation and it should be spent on expanding businesses also.

If you want to see a waste of capital, go to all the funds that are going into buying and stockpiling gold and funding gold mines.


----------



## Tysonboss1 (29 October 2011)

Mrmagoo said:


> affordability of housing, which is determined entirely by the price which is demanded for a property.




It's not the price demanded, it is the price people are willing to pay.

Isn't High price a precurser for more supply to be developed which inturn feeds the demand and causes prices to moderate.

Any attempt to suppress house prices that does not involve increasing supply will ulimately fail.


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## Mrmagoo (29 October 2011)

Tysonboss1 said:


> It's not the price demanded, it is the price people are willing to pay.
> 
> Isn't High price a precurser for more supply to be developed which inturn feeds the demand and causes prices to moderate.




It is commonly reported that houses are spending increasingly longer amounts of time on the market. This suggests the price is too high for the current level of demand.


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## Tysonboss1 (29 October 2011)

Mrmagoo said:


> It is commonly reported that houses are spending increasingly longer amounts of time on the market. This suggests the price is too high for the current level of demand.




If that the case then the prices will have to be lowered, that how the free market works.


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## young-gun (29 October 2011)

Tysonboss1 said:


> If that the case then the prices will have to be lowered, that how the free market works.




and prices shall be lowered as this bubble pops. prices ARE unaffordable. I'm sure you have never had a problem buying real estate given you most likely bought pre-2000's. and have ridiculous amounts of equity left right and centre.

a house within 45 minutes of brisbanes cbd (in a reasonable area) is so out of reach for so many people in their early twenties and even older. do you suggest we live at home for years on end until we can finally afford a deposit ranging between 20-40k? this is the only option for many, as rent prices are so high, and cost of living is ever rising, it makes it almost impossible to save at the same time.

I am in a fortunate situation where i didn't go to uni and am making decent money. But even given my situation i fail to see the point in taking out a 300-400k home loan and forking out 500$ a week plus on interest. it's just dead money, and house prices have only been inflated so wildly out of control by baby boomers, so why should we have to compete in a market with people who have had 20+ years to save and push prices so out of reach? i especially feel for those that are at uni and once finished will still find themselves on a 50k starting salary with a hex debt.

One consolation is that as the baby boomers retire and downsize, prices will crash, mark my words and woohoo, us youngsters will finally have the same opportunities as boomers did


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## trainspotter (29 October 2011)

:horse: and here we go again for another trip around the block with how the baby boomers are at fault and $500 a week is dead money on interest and how you can't save and live at the same time blah blah blah.

Heres a tip ........ START WITH WHAT YOU CAN AFFORD AND NOT THE FREAKING McMANSION 15 mins out of the CBD !


----------



## Whiskers (29 October 2011)

young-gun said:


> and prices shall be lowered as this bubble pops. prices ARE unaffordable. I'm sure you have never had a problem buying real estate given you most likely bought pre-2000's. and have ridiculous amounts of equity left right and centre.
> 
> a house within 45 minutes of brisbanes cbd (in a reasonable area) is so out of reach for so many people in their early twenties and even older. do you suggest we live at home for years on end until we can finally afford a deposit ranging between 20-40k? this is the only option for many, as rent prices are so high, and cost of living is ever rising, it makes it almost impossible to save at the same time.
> 
> I am in a fortunate situation where i didn't go to uni and am making decent money. But even given my situation i fail to see the point in taking out a 300-400k home loan and forking out 500$ a week plus on interest. it's just dead money, and *house prices have only been inflated so wildly out of control by baby boomers*,




How do you reason this out? 

How do you know it wasn't high flying, 'I want it, I need it all now', gen Y's who inflated the market.



> so why should we have to compete in a market with people who have had
> 20+ years to save and push prices so out of reach?




 So you don't think the Baby Boomers weren't in the same position you are now?


----------



## cynic (29 October 2011)

trainspotter said:


> :horse: and here we go again for another trip around the block with how the baby boomers are at fault and $500 a week is dead money on interest and how you can't save and live at the same time blah blah blah.
> 
> Heres a tip ........ START WITH WHAT YOU CAN AFFORD AND NOT THE FREAKING McMANSION 15 mins out of the CBD !




  +1 .


----------



## Julia (29 October 2011)

trainspotter said:


> :horse: and here we go again for another trip around the block with how the baby boomers are at fault and $500 a week is dead money on interest and how you can't save and live at the same time blah blah blah.
> 
> Heres a tip ........ START WITH WHAT YOU CAN AFFORD AND NOT THE FREAKING McMANSION 15 mins out of the CBD !



Exactly.

Young gun, your attitude is so defeatist it's unbelievable.  The only person you're hurting by this negativity and failure to have a bit of 'get up and go' is yourself.
As long as you believe yourself to be a victim, so shall you be.  And don't expect anyone to come and take you by the hand and say, 'ah, come on then, I'll fix it all for you".

Stop blaming baby boomers.   Many of us still have children living at home, essentially sponging off us, whilst we support our elderly parents.  We're not whining about this, just getting on with managing what we need to.

As TS has said, buy something that you CAN afford.  When prices improve, you'll be able to trade up to something more in line with what you actually want.

My first home was on the outskirts of the city, in a mediocre but not awful area, on leasehold land so that I didn't have to find the money for the block, and was a very ordinary 40 year old two bedroom bungalow.  A bit of work and creating a magical garden saw 100% profit in a couple of years.

So maybe stop focusing on what's hard and instead think about what is achievable.
And please, please stop whining about baby boomers.!


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## Tysonboss1 (30 October 2011)

Young gun, 

I am 29, I bought my first property just before I turned 20 in 2001, it was a big commitment at the time and not easy, but it is possible. I had been saving and investing money from part time jobs since I was 12, so don't make out it was all cheese and biscuits for me but you have it hard. 

Obviously you can spend every cent you earn, take on loans for holidays and cars extra and then expect to beable to by a first home that is your dream home.

Our generation has to learn that you can't start where our parents finished, take a look back at some old photos of your parents first home, bet it's not a mc mansion.

Plenty of places round Brisbane you could work towards making a start,


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## choofer (30 October 2011)

trainspotter said:


> :horse: and here we go again for another trip around the block with how the baby boomers are at fault and $500 a week is dead money on interest and how you can't save and live at the same time blah blah blah.
> 
> Heres a tip ........ START WITH WHAT YOU CAN AFFORD AND NOT THE FREAKING McMANSION 15 mins out of the CBD !




lol
Disagree entirely. The cheapest best value places will be closer to the CBd than all those places where the battlers will be trying to hold on to their over priced mc mansion.

Most people are too brain dead to think outside the square


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## wayneL (30 October 2011)

It's nothing to do with Boomers, Gen X, Y, Z.

The only fundamental is credit.

Loose credit => house prices boom

Tight credit => house prices plateau/fall

Everything else is a side issue


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## Mrmagoo (30 October 2011)

trainspotter said:


> :horse: and here we go again for another trip around the block with how the baby boomers are at fault and $500 a week is dead money on interest and how you can't save and live at the same time blah blah blah.
> 
> Heres a tip ........ START WITH WHAT YOU CAN AFFORD AND NOT THE FREAKING McMANSION 15 mins out of the CBD !





You think $500 a week in interest buys you a mansion 15 mins from the CBD ?

Wow... I'll take two in that case.


----------



## trainspotter (30 October 2011)

Mrmagoo said:


> You think $500 a week in interest buys you a mansion 15 mins from the CBD ?
> 
> Wow... I'll take two in that case.




Your failure to comprehend the simplest annotation shall preclude you from owning property in the first instance.


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## Mrmagoo (30 October 2011)

Getting really tired of advice from people who rode the credit expansion by investing in real estate. Well done to you all, seriously, well done. But what happened has not much to do with now. 

unless -

Can you tell me that growth in property prices is going to continue the same growth trend as the last ten years ? If not then your anecdotes of " I borrowed every cent possible and bought a house, 2 years later it doubled in value " aren't useful.


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## Mrmagoo (30 October 2011)

trainspotter said:


> Your failure to comprehend the simplest annotation shall preclude you from owning property in the first instance.




That makes no sense. You told the guy who didn't want to spend $500 on interest to not look at a mc-mansion 15mins from the city.

$500 in interest MAY get you sometyhing 45ks or 50 kms out which is very small and a starter home.


----------



## trainspotter (30 October 2011)

choofer said:


> lol
> Disagree entirely. The cheapest best value places will be closer to the CBd than all those places where the battlers will be trying to hold on to their over priced mc mansion.
> 
> Most people are too brain dead to think outside the square




You are not quite with it are you then? Post some research and facts up to evidence this asinine statement. Opinions are a dime a dozen from people who smoke the broad leaf entertainment plant and most of them have delusions of grandeur.


----------



## trainspotter (30 October 2011)

wayneL said:


> It's nothing to do with Boomers, Gen X, Y, Z.
> 
> The only fundamental is credit.
> 
> ...




Spoken like the true guru he is. I think we discussed this about 213 pages ago to the nth degree when the credit squeeze started.


----------



## Mrmagoo (30 October 2011)

I think most of the baby boomer hate comes from lack of understanding of the above quoted statement. Increase in house prices is not due to their investment genius but due to a credit boom, and prices were cheaper back when they were FHBs. I think these are all clear facts.

Some of my friends who have bought recently have taken on INSANE amounts of leverage for places which were half the price a few years ago.

If credit is not expanding I can't see that the next buyer will be saving 400k deposit on their 1000 pw income of which they pay 300 of in rent ...


----------



## trainspotter (30 October 2011)

Mrmagoo said:


> I think most of the baby boomer hate comes from lack of understanding of the above quoted statement. Increase in house prices is not due to their investment genius but due to a credit boom, and prices were cheaper back when they were FHBs. I think these are all clear facts.
> 
> Some of my friends who have bought recently have taken on INSANE amounts of leverage for places which were half the price a few years ago.
> 
> If credit is not expanding I can't see that the next buyer will be saving 400k deposit on their 1000 pw income of which they pay 300 of in rent ...




Clearly your myopic view of RE is misguided by your own sense of comprehension of the matter at hand. Prices WERE NOT CHEAPER back then. You really need to do some research before posting.

In 1991 the average median house price was $121,125 http://www.econ.mq.edu.au/research/2004/Abelson_9_04.pdf

In 1991 the average income was $17,614 http://www.abs.gov.au/AUSSTATS/abs@.nsf/0/66B7AF146D7F99E3CA2575010014EAF3?opendocument

So therefore this would be 7 times the average income in 1991. So what has changed?

EASY CREDIT ...... you could get a house and land package deal with $500 deposit and a job. Financiers would loan you 95% LVR and compound the interest and the LMI into the loan taking borrowings past 100%. 

But you know all of this because you have studied and trade in RE .......


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## Mrmagoo (30 October 2011)

trainspotter said:


> So therefore this would be 7 times the average income in 1991. So what has changed?




The year is not 1991. A single average figure, from a single year, from a single paper is not going to convince me. (also their data collection methods are not clearly reliable or necessarily of high quality)

If you can show me reliable and accurate statistics and not a single data point I am more than open to changing my point of view on property. But I still won't invest in it.

Show me how income relative to prices is the same now as it has been consistently for the last 20 years.

Not just two data points.

Anything could have happened in 1991 to cause that ratio to occur. 

I also find it interesting that this was the start of a fall in property prices (according to the index provided) and stagnation over the next few years... indicating, wow, I don't know A RECESSION.


----------



## trainspotter (30 October 2011)

Mrmagoo said:


> The year is not 1991. A single average figure, from a single year, from a single paper is not going to convince me. (also their data collection methods are not clearly reliable or necessarily of high quality)
> 
> If you can show me reliable and accurate statistics and not a single data point I am more than open to changing my point of view on property. But I still won't invest in it.
> 
> ...




The links I provided evidence property and wages from 1970 to 2010 and not just one data point. An ability to read and understand facts is essential.

ALSO one of the links is to the Australian Bureau of Statistics. WHAT more do you want .... are you saying the data is flawed from the ABS??

The other link uses the ABS as a reference point as well. Once again the ability to comprehend what is being posted is an advantage.

In 1991 rates were coming down from 17% and property had stagnated. Unemployment was at 10% ... Yes yes yes ..... "The RECESSION WE HAD TO HAVE" by Paul Keating.

After that if you read the data, prices consistently increased on a mean average and wages kept pace. Same situation we are having now. I have seen this cycle 3 times already and am aware of the nuances that are involved. 

If you do the research you will get it eventually. So DON'T invest in property.


----------



## Mrmagoo (30 October 2011)

trainspotter said:


> The links I provided evidence property and wages from 1970 to 2010 and not just one data point. An ability to read and understand facts is essential.
> 
> ALSO one of the links is to the Australian Bureau of Statistics. WHAT more do you want .... are you saying the data is flawed from the ABS??
> 
> ...




1) 1997-2003 for property
2) Yes ABS data is flawed, everyone knows that
3) Income in recession vs income in skills shortage... hmmm
4) As I said you haven't show any ratios in the intermittent years, making the comparison pointless, especially if you say there is a 7 year seasonal patternm based on a 20 years ago number.
5) Averages on their own are not useful because if I don't have the ability to be 20 million people at once. A statistical distribution is much more useful.
6) Property scares me, used care salesman types, constant spruiking about gains, people keen to get you to buy (why if it has such great returns) and smug people talking about gains they made based on 10 years ago prices.


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## trainspotter (30 October 2011)

You see I don't have to do the research for you. I have covered this topic for over 2 years and 300 pages already. Please whatever you do Mrmagoo DON'T invest in property. Good luck in your endeavours. Over and out.


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## Mrmagoo (30 October 2011)

Oh wait - I just did, 4 seconds on a google search, here is another "report" which talks about house price to income ratios.

I'm sure I could find 5 more which give a different indicator.

Rather than your cherry picked 2 data points based on data which probably had innacurate collection methods and an irrelevant comparison.
_*
Clearly, there has been a significant increase in the ratio of house prices to income over the last 15 years. Unfortunately, this trend has meant that first home buyers have found it increasingly more difficult to transition from the rental market into home ownership.*_

http://economics.hia.com.au/media/House price to income ratio - FINAL.pdf

And that came from a property spruiking group ....


----------



## young-gun (30 October 2011)

Julia said:


> Exactly.
> 
> Young gun, your attitude is so defeatist it's unbelievable.  The only person you're hurting by this negativity and failure to have a bit of 'get up and go' is yourself.
> As long as you believe yourself to be a victim, so shall you be.  And don't expect anyone to come and take you by the hand and say, 'ah, come on then, I'll fix it all for you".
> ...




If you knew me you would know i have a far from a defeatest attitude, i have a great work ethic, im pulling 60 hour weeks week after week. i am saving like crazy, and i then come home and work on starting up our own business(my fiance and i). the circumstances when most of you bought houses (when average prices where 3 times that of income) is not comparable today by any means.  i don't require any one to take me by the hand, nor would i ever expect them to. I will get to where i want or need to be through hard work and determination. this, however, does not change the climate in which i am trying to achieve my goals. my attitude or opinion on something is completely different to how i act. i will by no means lay down and say this is to hard.

I'd like to see you buy this so called "mcmansion" for 300k in brisbanes outter suburbs that most are striving for, do some research. as i said i am in a position that i have already been out, built a house in the outter suburbs, payed a small fortune for it, only to sell it 14 months later as i failed to see the point in blowing so much money on sky high interest repayments. 

for those of you that think this is typical gen y wanting everything brand new, ill have u know it was an investment strategy as i received the 21k from the government in doing so, 21 grand is alot fo money, but barely makes a dent in interest repayments.

why can't you boomers just accept what you have created? through greed and unnecessary luxuries? i can admit im a victim of it, why is it so hard for you to? 

as for your bungalow, congrats on your 100% profit in a couple of years, think we will see a return like that even in the next 10 or so years? i doubt it.

and to tyson if you had of bought just a year or two later your story would have been a whole lot different. 2001 had not seen the price hikes of 5-8 years furhter down the track.

anyway like i said, i see myself as being in a good position, and ready to buy again at the drop of the hat. but once again there are very few gen y's in this position. i will not be buying anytime soon, but will continue renting while it collapses in on itself.


----------



## young-gun (30 October 2011)

Whiskers said:


> How do you reason this out?
> 
> How do you know it wasn't high flying, 'I want it, I need it all now', gen Y's who inflated the market.
> 
> ...




HAHA because gen y cant afford to get into the market let alone inflate it! with all the government stimulus gen y were BARELY able to sustain the ridiculous prices let alone push them higher. 

and NO baby boomers absolutely were not in the same position we are now. please do some research into house prices before the boom. my parents picked up a 4 bed double bath house for 170k(thats right 170k!) in 1999 just 20 minutes from the cbd on a 600m2 block!! at the time that would have been possibly just over 3-4 times my fathers salary. that same house today is worth half a mill! maybe a little less due to the poor market.

it is truly laughable that any boomer can compare their first home purchase with that of gen y's today. unless the boomer bought 2004 onwards which would be unusual.


----------



## young-gun (30 October 2011)

Mrmagoo said:


> Getting really tired of advice from people who rode the credit expansion by investing in real estate. Well done to you all, seriously, well done. But what happened has not much to do with now.
> 
> unless -
> 
> Can you tell me that growth in property prices is going to continue the same growth trend as the last ten years ? If not then your anecdotes of " I borrowed every cent possible and bought a house, 2 years later it doubled in value " aren't useful.




+1..it's a relief to have someone else understand what our generation is facing. my house that i built in 09 increased by a measely 20k over 14 months. and some could argue that that was simply the gain you get from building your own house. 14 months in the boom period probably would have seen a return of 100k plus.


----------



## Whiskers (30 October 2011)

young-gun said:


> HAHA because gen y cant afford to get into the market let alone inflate it! with all the government stimulus gen y were BARELY able to sustain the ridiculous prices let alone push them higher.
> 
> and NO baby boomers absolutely were not in the same position we are now. please do some research into house prices before the boom. *my parents picked up a 4 bed double bath house for 170k(thats right 170k!) in 1999 just 20 minutes from the cbd on a 600m2 block!! at the time that would have been possibly just over 3-4 times my fathers salary. that same house today is worth half a mill! *maybe a little less due to the poor market.
> 
> it is truly laughable that any boomer can compare their first home purchase with that of gen y's today. unless the boomer bought 2004 onwards which would be unusual.




There are a number of things you have to consider and allow for when making simple comparisons, like x times salary as a guide for house prices... not the least of which is the stage in the cycle of development/growth or recession of a particular area, better transport and services etc which allow for you to have the same convenience as your parents close to the city, but from a further distance where the house prices are lower.

Also the culture of the city has significantly changed such that whereas the center of the city used to be the center of business and social activity, the development of undercover shopping centers and malls with a large range of businesses under one roof has introduced the notion of satellite cities where you can get the convenience and service of most things much further from the traditional city center.

I don't know how old you are, but I'm assuming about mid 20's. 

Obviously your parents were quite a bit older than you in 1999 when they bought that house. I'd say they worked and saved and waited for the right time in all the cycles of things to buy the house. There's a clue!

You demonstrate my point about want it, need it now mentality of some, particularly associated from surveys with gen Y.

You will not be able to do what your parents did and get the same results, for numerous reasons. All the things that make the world go around have changed and will keep changing.

I'd get the chip off my shoulder and start doing some simple maths, and logistic planning to see how you can best meet your life goals given the prevailing conditions and limitations.


----------



## choofer (30 October 2011)

trainspotter said:


> You are not quite with it are you then? Post some research and facts up to evidence this asinine statement. Opinions are a dime a dozen from people who smoke the broad leaf entertainment plant and most of them have delusions of grandeur.




A personal insult?


----------



## robots (30 October 2011)

trainspotter said:


> You are not quite with it are you then? Post some research and facts up to evidence this asinine statement. Opinions are a dime a dozen from people who smoke the broad leaf entertainment plant and most of them have delusions of grandeur.




Hello,

no, all clear

what another great day brothers

thankyou

professor robots


----------



## wayneL (30 October 2011)

trainspotter said:


> Spoken like the true guru he is. I think we discussed this about 213 pages ago to the nth degree when the credit squeeze started.




Yes. 

No guru savant-ness required. Like the climate change thread, we go around in circles here. 

Some of the characters change, some egos bigger than others, some more rude than others, some both, but the same ol' same ol'.


----------



## trainspotter (30 October 2011)

wayneL said:


> Yes.
> 
> No guru savant-ness required. Like the climate change thread, we go around in circles here.
> 
> Some of the characters change, some egos bigger than others, some more rude than others, some both, but the same ol' same ol'.




You forgot to mention that some actually will learn from the more experienced posters in this thread who use property as an income/investment deriving tool and others will remain internet experts beacuse they can google in 4 seconds the information they think is required to make them proficient in trading RE. :


----------



## satanoperca (30 October 2011)

trainspotter said:


> You forgot to mention that some actually will learn from the more experienced posters in this thread who use property as an income/investment deriving tool and others will remain internet experts beacuse they can google in 4 seconds the information they think is required to make them proficient in trading RE. :




Well said.


----------



## choofer (30 October 2011)

nunthewiser said:


> Negative growth of median house prices over the next 3-5 years?
> 
> Nah could never happen




Looks like you've taken one too many in the ring pirate pete.


----------



## Julia (30 October 2011)

young-gun said:


> I'd like to see you buy this so called "mcmansion" for 300k in brisbanes outter suburbs that most are striving for, do some research.



My point was that why do you need the McMansion???? As a starter buy a two brm unit somewhere, something you can actually afford.
Why can't you get what so many of us are trying to say here? i.e. that your expectations of initially having the bloody McMansion are totally unrealistic, not to mention unnecessary!


----------



## young-gun (31 October 2011)

Julia said:


> My point was that why do you need the McMansion???? As a starter buy a two brm unit somewhere, something you can actually afford.
> Why can't you get what so many of us are trying to say here? i.e. that your expectations of initially having the bloody McMansion are totally unrealistic, not to mention unnecessary!




*sigh* why cant YOU get what WE are saying here? i never said i want the mcmansion. This whole thing has been about unaffordability throughout! these so called mcmansions are MILES out of reach for any of us, this isn;t what we are aiming for! what is also out of reach is EVERYTHING else. if we do what you are saying we end up with somethng that is falling over. if we play it sensible and get something that is livable but cheap, we are still taking out HUGE loans. perhaps you all need to get the chip off of your shoulder towards gen y, and stop being so ignorant and admit that real estate was EASY for you, and thats that. "oh wow isnt this fantastic, i can buy virtually anywhere anytime and see astronomical growth!" your 2 bedroom unit idea that your so keen on isn't that cheap either. a 2 bedda at kallangur(a great suburb if you like paint tags on your front wall, and by no means close to the city) is still 350+, now this is a rough estimate before some clown jumps on here quoting a price of 340 as they seem to love doing. u may get some clapped out run down joke of a town house for less, which means you would constantly be repairing things which cost money$$ which makes it worth spending a touch extra initially to avoid these disasters.

you need to realise we are not all idiots, we have done research, we arent all trying for the 5 bedroom 3 bath with inground pool at paddington, and that some are on the right track, my original post seems to have just sparked everyones underlying issues with gen y, perhaps i need to refine it and sent out the wrong message which was not my intent


----------



## young-gun (31 October 2011)

Whiskers said:


> There are a number of things you have to consider and allow for when making simple comparisons, like x times salary as a guide for house prices... not the least of which is the stage in the cycle of development/growth or recession of a particular area, better transport and services etc which allow for you to have the same convenience as your parents close to the city, but from a further distance where the house prices are lower.
> 
> Also the culture of the city has significantly changed such that whereas the center of the city used to be the center of business and social activity, the development of undercover shopping centers and malls with a large range of businesses under one roof has introduced the notion of satellite cities where you can get the convenience and service of most things much further from the traditional city center.
> 
> ...





ahh but you see the problem is you are all over complicating. the average family does not wait for the ideal cycle. the average family(not aware of economics, cycles or anything of this nature) buys for only a few reasons. they want something nicer, OR they HAVE TO. this is where demographics comes into play, easy credit may be a factor in booming prices, but if no one takes out loans then nothing goes up. my parents bought this place not because they had saved, not because it was the right cycle, but because they needed a bigger house for our growing family. this is the MAIN reason alot of people buy a new house in a boom period, that together with people who are switched on and are buying real estate as an investment. 

people all behave the same(give or take a few years) get married, have kids, buy a house, have more kids, buy a bigger house, have these kids eat you out of house n home, get rid of the kids, downsize. agree?(with the few exceptions of no kids)

this is a simple example that works. and it is relative to almost every suburb on the northside. they have all seen similar price jumps(some more some less) things like public transport and all that you speak of are factors, but in a boom they have marginal impact. im not going to go too much into it as the post will go on forever and the final difference in price results won't be worth the effort. i do acknowledge that things like transport shops and schools do cause houses to inflate more.

i never demonstrated any such point of wanting everything right now. you misinterpreted.


----------



## Tink (31 October 2011)

> as i said i am in a position that i have already been out, built a house in the outter suburbs, payed a small fortune for it, only to sell it 14 months later as i failed to see the point in blowing so much money on sky high interest repayments.
> 
> for those of you that think this is typical gen y wanting everything brand new, ill have u know it was an investment strategy as i received the 21k from the government in doing so, 21 grand is alot fo money, but barely makes a dent in interest repayments.




Just out of curiousity, young gun, why did you sell that house? Why didnt you rent it out?
Wouldnt that have been a better option?
Just my opinion

I can understand what you are saying, but you have to remember the rates were up to 17% at one time, and though the houses might have been abit cheaper, was still alot to pay in mortgage repayments at that time too.

I think we all had to make sacrifices in one way or another.


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## young-gun (31 October 2011)

trainspotter said:


> You forgot to mention that some actually will learn from the more experienced posters in this thread who use property as an income/investment deriving tool and others will remain internet experts beacuse they can google in 4 seconds the information they think is required to make them proficient in trading RE. :




haha another guy who 'made it with real estate'. congratulations. how many properties have you bought in the past 12-36 months? if any, how many of these have seen growth? as someone else just said, times are a changing, and they always will. investment strategies that worked for you guys WILL NOT work for us. its great that you hitched a ride on the tsunami that was the boom, but previous real estate strategies will not work for the next decade.

i have a plan in place. or a strategy if you will. so if you wish to give advice please post perhaps some of your own ideas for the future, and how you plan to attack RE. do you think there is a good buy time? a good sell time? will the market stagnate for the next 5 years? or perhaps see some growth? instead of throwing figures at another user to prove him wrong(which seems to be quite popular in this forum)to satisfy your urge to put gen y in their place, give us some of this advice your talking about. i dont know about anyone else by i signed up to this forum in the hope of getting information and advice and being able to voice my opinion on things.

at the end of the day anyone can spend hours on the internet pulling figures to support any form of argument. your probably going to suggest that i go back and read all your previous posts on this matter, and that i shall.


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## young-gun (31 October 2011)

Tink said:


> Just out of curiousity, young gun, why did you sell that house? Why didnt you rent it out?
> Wouldnt that have been a better option?
> Just my opinion
> 
> ...





absolutely, it is very hard to aim a post at every scenario as you can imagine. my main aim is those that had it easy eg bought cheap without really knowing it and then buying investment properties and capitalising on growth with ease, and then tell us to stop whining and pull our heads in.

the reason i didnt rent it out was because i would have had to find a place to rent. i would have been renting the house out for maybe 450(which was not a bad rental return) and then renting a unit for maybe 300 for something small but liveable, and not 55 minutes from the cbd. i went to an accountant, obtained a full list of things i could and could not claim including getting a surveyor through to get a depreciation schedule. and after crunching all the numbers i decided it was still not worth holding the property.

now in a boom the property would undoubtedly have been worth holding. but given i had only seen 20k worth of growth(if it could even be classed as genuine growth) in 14 months, the future for the house wasnt looking to crash hot.

thank goodness i did, as i would have at the very least lost that 20k gain since i sold only not long ago, as the market continues to deteriorate.

i understand others made sacrifices and it was hard in some instances depending on the situation. but please elaborate on the circumstances. was it hard because your husband was the only one working while you stayed at home? if this were the case(which is was largely only a decade or two ago) then 'hard' by comparison to today was not so hard. my dad worked, while mum stayed at home, and they were comfortable. as cost of living rose, and belts were tightened, my mother started working again at around 2000-2001. this wasnt to 'get-by', but to enable lifes little luxuries. this isnt the case today. alot of mums n dads both have to work just to get by, with little luxuries going by the wayside. children are thrown into day care, dads are working overtime and saturdays. unfortunately im moving onto a different topic and will stop it there as it wont match the thread topic.

NOTE - interest rates havent been over 8% since jan 92. high rates indicate high inflation which inturn indicates there is alot of money getting around, its all relative. i understand it had alot to do with the dollar floating but how this affected interest rates i havent researched, most likely in a roundabout way to how i just stated.


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## trainspotter (31 October 2011)

young-gun said:


> haha another guy who 'made it with real estate'. congratulations. how many properties have you bought in the past 12-36 months? if any, how many of these have seen growth? as someone else just said, times are a changing, and they always will. investment strategies that worked for you guys WILL NOT work for us. its great that you hitched a ride on the tsunami that was the boom, but previous real estate strategies will not work for the next decade.
> 
> i have a plan in place. or a strategy if you will. so if you wish to give advice please post perhaps some of your own ideas for the future, and how you plan to attack RE. do you think there is a good buy time? a good sell time? will the market stagnate for the next 5 years? or perhaps see some growth? instead of throwing figures at another user to prove him wrong(which seems to be quite popular in this forum)to satisfy your urge to put gen y in their place, give us some of this advice your talking about. i dont know about anyone else by i signed up to this forum in the hope of getting information and advice and being able to voice my opinion on things.
> 
> at the end of the day anyone can spend hours on the internet pulling figures to support any form of argument. your probably going to suggest that i go back and read all your previous posts on this matter, and that i shall.




HAHA another young guy who held property for 14 months and thinks he knows it all.

I have and do trade in real estate for a living. Over the past 3 years I have purchased 4 blocks of land, 1 x 3 bedroom unit (neutrally geared) and built a comercial warehouse (returning 18%) for lease and 3 "spec" homes that all sold for above 20% return. In this time I have sold ONE commercial property as the price was REDONKOLOUS that they offered me. YES ...... I have scaled back from where I normally trade up to 5 deals a year.

I started small with a 3 x 1 (IN THE RIGHT AREA) as my PPOR ....... I lived in it for SEVEN years to attain enough equity (as well as paying OFF the mortgage as fast as I could with every spare cent) This was my investment strategy ..... PROPERTY IS LONG TERM IN A DEPRESSED MARKET !!!!!!!!!!!!!!!! Don't like it??? Then get out of the kitchen.

Tsunami boom???? Ummmmmmmm this is the usual cycle of RE IMO

Take your own advice and go and read 330 pages and 2 and a half years of explanations from the people who are actually out there doing it for a living.


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## Mr Z (31 October 2011)

trainspotter said:


> PROPERTY IS LONG TERM IN A DEPRESSED MARKET !!!!!!!!!!!!!!!!




How the heck do you rationalize that?


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## trainspotter (31 October 2011)

Mr Z said:


> How the heck do you rationalize that?




HEYYYYYYYYY Mr Z ..... long time no see. 

Rationalisation: If you own property in a DEPRESSED market then the likelihood of selling to realise profit is minimal so therefore you would be better off long term and taking either the tax deductibility (if you can afford it) or deriving an income stream from it (if it is positively geared)


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## Mr Z (31 October 2011)

I took it that you where suggesting that the last decade or two has actually been a depressed market... I would be very interested in hearing the whys of that idea.

I'm looking around at commercial and seeing some good yields, no where near 18%. I'm assuming that the only way to attain that is to build. What I am not liking is the quality of the tenants at the higher yields... anywhooo! I'm also noticing that properties with high quality tenants and long leases are having to 'meet the market' and effectively up the yield in order to get a bid. That leads me to assume that commercial finance is generally tight at the moment, I guess that may be different if you are a proven performer.

Young-gun has a point, boomer demographics have distorted this housing market and the age bubble in the population is introducing stresses and risks that we have not seem before. In defense of the boomers it was not as easy as YG assumes simply because lending standards where much tighter back when. Getting into property still involved (at least in Sydney) saving a hefty deposit, borrowing from family, lending all you could from the bank and eating beans for five years. The only real difference now is the LVR's are way up and you can get way more money that you once could on relatively modest means.

Resi still looks at risk to me on the average numbers, sure you can pick winners and do deals etc but broadly speaking I'm still in the cautious camp.


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## young-gun (31 October 2011)

trainspotter said:


> HAHA another young guy who held property for 14 months and thinks he knows it all.
> 
> I have and do trade in real estate for a living. Over the past 3 years I have purchased 4 blocks of land, 1 x 3 bedroom unit (neutrally geared) and built a comercial warehouse (returning 18%) for lease and 3 "spec" homes that all sold for above 20% return. In this time I have sold ONE commercial property as the price was REDONKOLOUS that they offered me. YES ...... I have scaled back from where I normally trade up to 5 deals a year.
> 
> ...




usual cycle my ****. this boom is unprecedented and is bigger in magnitude than anythng seen before. fueled by demographics and very easy credit. i never claimed to know it all. your strategy is typical to just about anybody who invested in RE in the past 20 years. once again it is not applicable to todays circumstances. as you said yourself you have scaled back. in my situation by and hold would have worked, if i held it for 15 years, i may have seen it start to bounce back. property is almost always long term unless your renovating and flipping.

im curious about your 'neutrally geared' apartment. you obviously dont have an 80% loan on this or i highly doubt you would be getting enough income to cover cost. which leads me to believe you funded this from previous investments in the property market. 

i dont know anything about commercial real estate. and am not questioning the fact that you are obviously accomplished in the RE game, but your current view on where real estate is and where it might be heading seems to be somewhat blurred by your previous success.


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## young-gun (31 October 2011)

Mr Z said:


> In defense of the boomers it was not as easy as YG assumes simply because lending standards where much tighter back when. Getting into property still involved (at least in Sydney) saving a hefty deposit, borrowing from family, lending all you could from the bank and eating beans for five years. The only real difference now is the LVR's are way up and you can get way more money that you once could on relatively modest means.
> 
> Resi still looks at risk to me on the average numbers, sure you can pick winners and do deals etc but broadly speaking I'm still in the cautious camp.




please understand i am not of the belief that it was easy for all. but for a large portion between certain years it is evident that you simply couldnt go wrong no matter what you did, or purchased, share market included. as you stated, much caution is now required when considering RE, unfortunately there are alot of people my age still being told that real estate cant fail, and they will be burnt something fierce.


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## trainspotter (31 October 2011)

young-gun said:


> usual cycle my ****. this boom is unprecedented and is bigger in magnitude than anythng seen before. fueled by demographics and very easy credit. i never claimed to know it all. your strategy is typical to just about anybody who invested in RE in the past 20 years. once again it is not applicable to todays circumstances. as you said yourself you have scaled back. in my situation by and hold would have worked, if i held it for 15 years, i may have seen it start to bounce back. property is almost always long term unless your renovating and flipping.
> 
> im curious about your 'neutrally geared' apartment. you obviously dont have an 80% loan on this or i highly doubt you would be getting enough income to cover cost. which leads me to believe you funded this from previous investments in the property market.
> 
> i dont know anything about commercial real estate. and am not questioning the fact that you are obviously accomplished in the RE game, but your current view on where real estate is and where it might be heading seems to be somewhat blurred by your previous success.




Good luck in your endeavours young-gun.


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## young-gun (31 October 2011)

trainspotter said:


> Good luck in your endeavours young-gun.




haha aww come on, you cant just stop there?! i may appear stubborn and argumentative, but if i just accept everything that is written without questioning people where would that leave me? believe it or not i do take a little of everything that someone says on board(and not just what suits me)

lets go down this track - 

your 23, engaged, no kids, have a small house deposit, no other debts. steady job making lets say 70k a year with overtime. what would you do in the current climate overrrrr...lets say the next 5 years? granted a 5 year plan may be a bit ambitious given the current uncertainty, and a strategy has to be able to adopt new economic conditions, but disregard that for now.


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## Mr Z (31 October 2011)

young-gun said:


> please understand i am not of the belief that it was easy for all. but for a large portion between certain years it is evident that you simply couldnt go wrong no matter what you did, or purchased, share market included. as you stated, much caution is now required when considering RE, unfortunately there are alot of people my age still being told that real estate cant fail, and they will be burnt something fierce.




Yes you could go wrong and I know people that did, in RE and stocks, you are using 20/20 hind sight. Things are always clear and safe once you are looking in the rear vision mirror.

People will look back on this period and say that the moves to make where obvious.... the trouble is that it is not that easy in real time. I think I have things right at the moment but call me in twenty years and I will most assuredly tell you how you couldn't go wrong in this decade 

Anyway... I agree resi looks out on a limb, but then it has looked that way for a while. I don't like the grants that have enticed young people into property that they probably should not have purchased BUT ---> IIWII! For now it looks like we are in a situation where all resi needs is a catalyst send us properly south. I'm not certain where I think that is coming from although I can think of a few triggers. Sans catalyst it will probably still labor under its own weight for the foreseeable future --> but that is JMO.


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## young-gun (31 October 2011)

Mr Z said:


> Yes you could go wrong and I know people that did, in RE and stocks, you are using 20/20 hind sight. Things are always clear and safe once you are looking in the rear vision mirror.
> 
> People will look back on this period and say that the moves to make where obvious.... the trouble is that it is not that easy in real time. I think I have things right at the moment but call me in twenty years and I will most assuredly tell you how you couldn't go wrong in this decade
> 
> Anyway... I agree resi looks out on a limb, but then it has looked that way for a while. I don't like the grants that have enticed young people into property that they probably should not have purchased BUT ---> IIWII! For now it looks like we are in a situation where all resi needs is a catalyst send us properly south. I'm not certain where I think that is coming from although I can think of a few triggers. Sans catalyst it will probably still labor under its own weight for the foreseeable future --> but that is JMO.




good point, unfortunately the failings of those are not quite as evident, nor their stories as readily available as those that did well.

and yes these grants have helped people into the market that shouldn't be there yet. This has helped to sustain prices somewhat, but they have begun slipping again, as higher interest rates have brought these people to the realisation of " we cant sustain these repayments"

can you please talk about what 'triggers' you might expect would cause such a move?


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## FxTrader (31 October 2011)

young-gun said:


> your 23, engaged, no kids, have a small house deposit, no other debts. steady job making lets say 70k a year with overtime. what would you do in the current climate overrrrr...lets say the next 5 years? granted a 5 year plan may be a bit ambitious given the current uncertainty, and a strategy has to be able to adopt new economic conditions, but disregard that for now.




Given that scenario I would rent and keep saving unless rental prices increase to the point where owning becomes an attractive option again. Even then, an investment property (not PPOR) may be a better option.

Lest we forget the title of this thread yet again, the FUTURE of property prices over the next 5 years does not look promising in general with significant price falls already occurring in some markets (e.g. WA and QLD).  There is no point investing in property now unless you believe the next 5 years will at least see capital growth exceed inflation and ownership costs in a given area.  There is no insurance like a put option to protect you from downside risk in the property market and downside risk is greater now than at any time over the last decade IMO.


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## McLovin (31 October 2011)

trainspotter said:


> Clearly your myopic view of RE is misguided by your own sense of comprehension of the matter at hand. Prices WERE NOT CHEAPER back then. You really need to do some research before posting.
> 
> In 1991 the average median house price was $121,125 http://www.econ.mq.edu.au/research/2004/Abelson_9_04.pdf
> 
> ...




The ABS pdf you linked to says average weekly total earnings in 1991 was $596/week. How does that equate to $17k/year?


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## Mr Z (31 October 2011)

young-gun said:


> can you please talk about what 'triggers' you might expect would cause such a move?




Number one at the moment would have to be a proper China slow down. All the elements seem to be there for them to take a pause and shake some of the imbalances in their economy out. That would impact sentiment down here greatly IMO. ATM I'm looking toward 2013 as the danger year and I expect a few compounding issues with both Europe and the US across this time... specifically a resurgence of the sovereign debt issue as the flaws in this fix become apparent and problems of a similar nature in the US muni bond markets. For now it looks like we might get some plain sailing but by mid to late next year things very much look like they will be on the slide again.

I really don't know for sure but the idea of a China lead Australian recession is becoming a very realistic possibility to me. Having said that understanding China is a challenge in an of itself, getting that call right in terms of timing is hard enough without forecasting its impact on Aussie houses!

In terms of this global credit bubble ---> We have jumped off the sky scraper roof, the optimists among us are saying, so far, so good. The pessimist are screaming we are all going to die! I suspect that the fire brigade are at the bottom with a catchers net... but that the result of that will not be pretty, fair or something you'd want to try twice. No we are not going to die but some of you will need new undies.

Life... ain't it grand?


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## young-gun (31 October 2011)

Mr Z said:


> Number one at the moment would have to be a proper China slow down. All the elements seem to be there for them to take a pause and shake some of the imbalances in their economy out. That would impact sentiment down here greatly IMO. ATM I'm looking toward 2013 as the danger year and I expect a few compounding issues with both Europe and the US across this time... specifically a resurgence of the sovereign debt issue as the flaws in this fix become apparent and problems of a similar nature in the US muni bond markets. For now it looks like we might get some plain sailing but by mid to late next year things very much look like they will be on the slide again.
> 
> I really don't know for sure but the idea of a China lead Australian recession is becoming a very realistic possibility to me. Having said that understanding China is a challenge in an of itself, getting that call right in terms of timing is hard enough without forecasting its impact on Aussie houses!
> 
> ...




i share very similar views to those you have discussed above, but surely our housing market isnt entirely dependent on the performance of the world economy? there must be some underlying factors here at home holding prices at current, other than just sentiment? or is it wholly based on whether the world forces us into recession that we will see it plummet? i have no doubt that global issues will have a huge affect on our market, especially in regards to foreign investors, but to what extent i am unsure of at this point.

mr triguboff(Meriton) is the first to admit in some instances upwards of 50% of his apartment sales are to foreign investors, however is beginning to decline rapidly. this to has contributed to the perfect storm, and the government should have been far more strict regarding this issue imo.


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## satanoperca (31 October 2011)

The main contributor to a decent fall in Oz RE will be unemployment.

As stated by myself on more than one occassion is that a 10% fall from peak median national prices is only a healthy correction, above that and we might just see a crash.

But while unemployment is low and people are still confident that there is plenty of work around to keep paying their mortgage and I cannot see a rush to the gates and a significant drop in prices.

Could we see a real slow down in the Oz economy due to global events, hell yes, will it happen, more than likely yes, when will it happen. I could be in the grave before it does.

Cheers


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## Mr Z (31 October 2011)

young-gun said:


> i share very similar views to those you have discussed above, but surely our housing market isnt entirely dependent on the performance of the world economy? there must be some underlying factors here at home holding prices at current, other than just sentiment? or is it wholly based on whether the world forces us into recession that we will see it plummet? i have no doubt that global issues will have a huge affect on our market, especially in regards to foreign investors, but to what extent i am unsure of at this point.
> 
> mr triguboff(Meriton) is the first to admit in some instances upwards of 50% of his apartment sales are to foreign investors, however is beginning to decline rapidly. this to has contributed to the perfect storm, and the government should have been far more strict regarding this issue imo.




I see the issue as the % of foreign funding in our resi market. Any persistent "risk off" trade will see the AUD go south concomitantly our cost of OS funding rise leaving the banks in the situation that they will need to increase rates and or reduce lending despite what the RBA may do. When I say sentiment it is more the worlds risk appetite and their view of our markets primarily and our reaction to those conditions secondarily.

In a similar vein I am keeping an eye on the Feds operation twist, it could well result in a sell off in the ten year note that they cannot contain. The ten year dictates the US cost of mortgage funds which in turn feeds into our markets. If US bonds do enter into a bear market that could well change the game as well.

There are other things that are concerning, odd things like the Greek bond haircut being 'voluntary' and not being considered a default. That is an end run around the credit default swap market and one that I suggest will be challenged. Should it hold the CDS market will price in (is pricing in?) the event and will drive up the cost of insuring certain debt which will in turn limit debt issuance which will increase competition for all available funds and tighten all debt markets. Admittedly that is drawing a long bow at this point but its odd things like this that get legs and catch people off guard. The unintended consequences of, and market reactions to government actions are ripe with opportunity to spear us off in an unsought direction.

Really who knows but the situation looks loaded with potential.


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## Mr Z (31 October 2011)

satanoperca said:


> The main contributor to a decent fall in Oz RE will be unemployment.
> 
> As stated by myself on more than one occassion is that a 10% fall from peak median national prices is only a healthy correction, above that and we might just see a crash.
> 
> ...




What about 10%+ rates regardless of the employment situation? Remember that rates are not wholly in the RBAs control. IMO that would do it.


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## Whiskers (31 October 2011)

While general home and business rates do not necessiarly follow the RBA, I feel we are at a critical point in Aus in so far as growth seems to be flattening off. 

If for example the RBA did lower rates and the banks didn't match it, it might just be enough to cause a bit more slowing of demand.

The other thing to consider is the $10,000 building grant runs out in a couple of months.

The grant running out and no interest rate cut is a recipe for cheaper prices in the short term I suspect... unless those grants are extended.


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## robots (31 October 2011)

hello,

gidday brothers, great posts, superb

and well done to those who road the credit based real estate boom, top effort, 

yeah well done to everybody who is making money whether from real estate, shares, FX, cfd's, flipping burgers

great achievements

i reckon this category of people should get down to Fed Square and set up a few tents to voice our concerns about the freeride many people in the community are getting, the injustice of the handout, taking and not contributing, freeloaders

thankyou

professor robots


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## Bill M (31 October 2011)

Just a quick note for those that think that renters are drying up and that landlords may need to take a haircut. The tenants in my Northern Beaches (Sydney) unit decided to vacate after renting from me for 15 Months. The agent called me and said we should do a Wednesday afternoon open for rental inspection. On that inspection I had 7 groups of people through looking, 5 took applications and the next day one was lodged and accepted by the agent at full asking rental of $430 p/w. They paid a bond of 4 weeks rent and 2 weeks rent in advance. There are no shortages of tenants in my area and prices are holding firm and I am very happy with my investment.


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## Whiskers (31 October 2011)

Bill M said:


> Just a quick note for those that think that renters are drying up and that landlords may need to take a haircut. The tenants in my Northern Beaches (Sydney) unit decided to vacate after renting from me for 15 Months. The agent called me and said we should do a Wednesday afternoon open for rental inspection. On that inspection I had 7 groups of people through looking, 5 took applications and the next day one was lodged and accepted by the agent at full asking rental of $430 p/w. They paid a bond of 4 weeks rent and 2 weeks rent in advance. There are no shortages of tenants in my area and prices are holding firm and I am very happy with my investment.




Good on ya Bill.

I actually agree with you that while property prices may fall a bit, rental rates will stay firm.

I owned rental property in the 80's making 25% in the bank for a bit over three years investment. I can relate to you tennancy demand. Back then I hardly missed a days rent. I would put an advert in the paper the day the tennent moved out, drive down to bris to clean up if necessary and sign in a new tennant from a list of prospects immediatly.

I'm getting interested in property again cos I'm thinking good rental occupancy rates and returns will be here for some time as property prises rise again in the longer term.


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## choofer (1 November 2011)

Whiskers said:


> Good on ya Bill.
> 
> I actually agree with you that while property prices may fall a bit, rental rates will stay firm.
> 
> ...




I agree there bro. Just ride this dip in property prices out. Rent it. Good stuff. Lots of young families will need housing soon. Great concept. Rba TO LEAVE RATES ON HOLD. bUT WHO CARES. BANKS WILL DO WHAT THEY LIKE ;-)


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## Tink (1 November 2011)

Well you either pay the banks to get your house title or you pay the landlord to get his.
I know what I would prefer.

Young gun, I dont know of anyone that didnt both work when they bought their first home.


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## young-gun (1 November 2011)

Whiskers said:


> Good on ya Bill.
> 
> I actually agree with you that while property prices may fall a bit, rental rates will stay firm.
> 
> ...




rental rates will only hold provided prices dont fall too much. tennancy demand should hold in a downturn provided landlords drop their rent price with interest rates, as these will undoubtedly come down as prices fall. this will only work if the downturn lasts short-term. long-term and large falls and it all goes out the window.


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## young-gun (1 November 2011)

choofer said:


> I agree there bro. Just ride this dip in property prices out. Rent it. Good stuff. Lots of young families will need housing soon. Great concept. Rba TO LEAVE RATES ON HOLD. bUT WHO CARES. BANKS WILL DO WHAT THEY LIKE ;-)





not enough families coming through to support prices.


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## FxTrader (1 November 2011)

young-gun said:


> rental rates will only hold provided prices dont fall too much. tennancy demand should hold in a downturn provided landlords drop their rent price with interest rates, as these will undoubtedly come down as prices fall. this will only work if the downturn lasts short-term. long-term and large falls and it all goes out the window.




I think you will find that rental prices are much more sensitive to vacancy rates than interest rates or property price movements.  For example, vacancy rates in many areas of Melbourne are still near historic lows and rents are firm or rising.  Don't expect big falls in rental prices just because house prices or interest rates fall, these factors are not as correlated as you assume here.


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## young-gun (1 November 2011)

FxTrader said:


> I think you will find that rental prices are much more sensitive to vacancy rates than interest rates or property price movements.  For example, vacancy rates in many areas of Melbourne are still near historic lows and rents are firm or rising.  Don't expect big falls in rental prices just because house prices or interest rates fall, these factors are not as correlated as you assume here.





the more interest rates fall, and the more house prices fall, the more attractive and more affordable home ownership becomes. how can this not be a factor largely affecting rental income? as i said, short term probably wont make a difference, but if prices continue to slide you will most definitely see less demand for rentals. and as investors pick up bargains and low interest rates remain, new landlords will be entering the market with cheaper rentals as there costs are less than yours.

on the other hand it could be argued that if house prices are falling unemployment will be rising, and given the economy will be in bad shape meaning less people will be able to afford a new or even existing homes regardless of prices, in turn keeping your rental rate at reasonable levels.

ive actually got no idea


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## Whiskers (1 November 2011)

young-gun said:


> rental rates will only hold provided prices dont fall too much. tennancy demand should hold in a downturn provided landlords drop their rent price with interest rates, as these will undoubtedly come down as prices fall. this will only work if the downturn lasts short-term. long-term and large falls and it all goes out the window.




There is one dynamic that I think you are forgetting or unaware of atm.

Since the GFC Aus savings rates have increased quite a bit, ie people are putting away more savings into various forms and reducing debt. They do not wish to carry the same level of debt they did previously.

The implications of this is slower demand for both new house construction (despite gov incentives) as well as slower established house sales.

The higher rate of savings also has implications for slower land development for new houses. 

Collectively, this higher savings dynamic causes this cycle to be a bit different to recent cycles, in particular strong rental demand despite the movement in property prices.


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## wayneL (1 November 2011)

IME rent growth is 'somewhat' inversely correlated with price growth and did see a graph somewhere to that effect.


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## McLovin (1 November 2011)

McLovin said:


> trainspotter said:
> 
> 
> 
> ...




I would really be interested in knowing the answer to this...


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## young-gun (1 November 2011)

Whiskers said:


> There is one dynamic that I think you are forgetting or unaware of atm.
> 
> Since the GFC Aus savings rates have increased quite a bit, ie people are putting away more savings into various forms and reducing debt. They do not wish to carry the same level of debt they did previously.
> 
> ...




i wasnt aware of this. i was aware that credit growth is slowing, whether the 2 are related im unsure, but would expect they are in some way. it cant be argued that rental prices and demand are not strong at the moment. im simply curious as to whether this will be the case if this downward trend were to continue.


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## Tysonboss1 (1 November 2011)

young-gun said:


> it cant be argued that rental prices and demand are not strong at the moment. im simply curious as to whether this will be the case if this downward trend were to continue.




property prices and rents do not move to the beat of the same drum.

Property prices decreasing does not mean rents will decrease, and property prices rising does not mean rents will increase.


----------



## young-gun (1 November 2011)

Tysonboss1 said:


> property prices and rents do not move to the beat of the same drum.
> 
> Property prices decreasing does not mean rents will decrease, and property prices rising does not mean rents will increase.




is it not naive to think that a *strong* move in either direction would not ultimately have some affect on rental income? whether it be positive or negative. it surely cannot be completely dismissed. if everyone is of this opinion then perhaps i am barking up the wrong tree in a big way.


----------



## Tysonboss1 (1 November 2011)

young-gun said:


> is it not naive to think that a *strong* move in either direction would not ultimately have some affect on rental income? whether it be positive or negative. it surely cannot be completely dismissed. if everyone is of this opinion then perhaps i am barking up the wrong tree in a big way.




Rents are determined by the market supply and demand, 

Supply of dwellings available to be rented vs Amount of people wanting to rent them determines the rental price.

Prices of houses may fluctuate, But how do you see this affecting the supply and demand of houses on the rental market,

Say 100,000 people all sell their houses today at any cost, It would crash the house prices, those 100,000 houses might end up in the renting market and increase the supply, However those 100,000 home owners we also endup renting in the market and will soak up the extra supply.

So the net effect is zero,

House prices won't affect rent, only 1. extra supply of properties available for rent without any increase in renters  2. renters leaving a certain market. will reduce prices.


----------



## Glen48 (1 November 2011)

No, people will sell or be foreclosed on and live in their cars, move in with family or rent a caravan in some ones back yard like they did in the 80's and this will put more property's on the rental market  at a lower price and if the land lord buys he will most like reduce rents to cover costs only.


----------



## Junior (1 November 2011)

Tysonboss1 said:


> Rents are determined by the market supply and demand,
> 
> Supply of dwellings available to be rented vs Amount of people wanting to rent them determines the rental price.




Wouldn't the above be the determinant of vacancy rates, rather than rental price?  

Surely the major determinant of rental prices is 'ability to pay a certain price' rather than simply the demand for rental properties.  i.e. higher unemployment and slow wage growth may not have a major impact on demand for rentals, but would have a significant impact on prices.


----------



## young-gun (1 November 2011)

Tysonboss1 said:


> 2. renters leaving a certain market. will reduce prices.




therefore if renters are leaving the market to buy their own house due to rapidly dropping or bottomed out prices would in fact reduce rent prices...?


----------



## Tysonboss1 (1 November 2011)

Glen48 said:


> No, people will sell or be foreclosed on and live in their cars, move in with family or rent a caravan in some ones back yard like they did in the 80's and this will put more property's on the rental market  at a lower price and if the land lord buys he will most like reduce rents to cover costs only.




That always has and will contiune to happen, But will be offset by others moving out of parents homes and caravans.


----------



## Tysonboss1 (1 November 2011)

Junior said:


> Wouldn't the above be the determinant of vacancy rates, rather than rental price?
> 
> Surely the major determinant of rental prices is 'ability to pay a certain price' rather than simply the demand for rental properties.  i.e. higher unemployment and slow wage growth may not have a major impact on demand for rentals, but would have a significant impact on prices.




Land lords will lower the rental price to get a tenant if their property is sitting vacant,

If their are no vacancies and the land lord puts the rent up $10 a week you will just cough up the extra $10, so in a tight rental market the rents will creep higher.

If their is plenty of other similar properties coming onto the rental market and sitting empty for a month at a time, the landlord will probably not ask for an extra $10, especially if other land lords with vacant houses have been dropping rents by $20 to get tenants.

If tenants are hard to find rents stagnate or even creep down a bit, if properties are having multiple rental applications submitted the rents will creep up.


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## Tysonboss1 (1 November 2011)

young-gun said:


> therefore if renters are leaving the market to buy their own house due to rapidly dropping or bottomed out prices would in fact reduce rent prices...?




But if they are buying houses in the same market the net affect is the same.

eg, A sydney renter stops renting and buys a property from a sydney land lord, He has vacated a rental property but taken another off the market,

Only if people are moving out of the market to another city does it have any affect, if the city is maintaining the same number of house holds and it is only the ownership being shuffled there will be little affect on rents being charged.


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## explod (1 November 2011)

There is still a bit of dreamland stuff on here I notice.

Young ones in their droves are losing jobs and moving back with old Mum and Dad.  A number I have delivered beds two down here held city jobs and have moved out as they lost it and cannot afford their rental pads anymore.

Speaking to my Newsagent mate again the other day and things in Frankston are getting  worse.  If the retail sector there had to catch up on their rents owed, *half* would have to shut up and leave.  My Brother in business in Brunswick told me this morning it is the same there.

And debt, so many around here were encouraged by the banks to mortgage their homes and buy an investment property in the last two years are now up to their necks in it.  When the next quarter figures come out there is going to be a rush at the gate on property as has not been seen before in my view.

Forget about listening to the industry, go out and talk to people on the ground in the real world.  We are going into tough times and there does not seem to be any green shoots to me.

Of course time will tell.


----------



## Glen48 (1 November 2011)

This post  will be good reading and should be compulsory for home  buyers of the future and will be a accurate record of how house prices rose and  feel due to greed and cheap money, government bribes and taxpayers propping up the banks as they fail nothing else.

House prices are still falling in USA and will do so for many more years.
If you got the choice of eating a poison pen letter or buying a house eat the letter first.

 Tysonboss1
The ones who move out of their parents home/caravans where do they go?


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## young-gun (1 November 2011)

Tysonboss1 said:


> But if they are buying houses in the same market the net affect is the same.
> 
> eg, A sydney renter stops renting and buys a property from a sydney land lord, He has vacated a rental property but taken another off the market,
> 
> Only if people are moving out of the market to another city does it have any affect, if the city is maintaining the same number of house holds and it is only the ownership being shuffled there will be little affect on rents being charged.




you would like to think the sydney landlord(obviously a property investor) wont be selling at the bottom 

i think you are over-simplifying(and dont get me wrong i love to simplify) for example foreign investors who have numerous houses sitting totally vacant in sydney, might be forced to sell up, as previously discussed boomers who are downsizing to units or small townhouses, or even retirement homes(which would possibly come under your 'those who move cities' category. the assumption that people who move out of a rented property will then only buy from a landlord/property investor is absurd. there is no guarantee landlords will be able to offload their property, not to mention potential lag time of months or even years between the renter leaving and being able to sell the property if tenants cannot be found.

granted its all swings and round abouts, its impossible to comprehend every possible scenario, and i am somewhat coming around to what you're saying, but still remain skeptical.

if you are right and rental price is dictated by supply and demand then you would expect investors to see the same prices well into the future as they are now if not increasing steadily, as in a declining property market people arent rushing out to buy houses that are plummeting, but are far more likely to rent until they think it's bottomed. im struggling to see prices going up if things go south


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## Mrmagoo (1 November 2011)

So....

Crashing economy.

Job losses.

Mortgage defaults.

Low rental vacanies.

High rents.

High homelessness.

If events come to pass. Will be an interesting ride.

How does homeless people squatting in repo'd IPs no one wants to buy sound ?

exaggeration I know, but still it is lol.


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## Mr Z (1 November 2011)

The pool of property is a little more elastic than the bulls tend to argue. We had three generations under one roof in the last depression now we have one generation under two roofs and an empty holiday house. Recession and depression tend to change the rules and the resource becomes  used more frugally.


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## Tysonboss1 (1 November 2011)

young-gun said:


> 1, foreign investors who have numerous houses sitting totally vacant in sydney, might be forced to sell up
> 
> 2, as previously discussed boomers who are downsizing to units or small townhouses, or even retirement homes(which would possibly come under your 'those who move cities' category.
> 
> ...




1, I don't think is a number of any material value

2, yep, But then you have younger people moving out of home and international migrants coming in every day to replace them, the population is growing.

3, No they will also be buying from home owners, But then the home owner has to live some where, they will either rent or buy another house either way it's a zero sum.

4, it takes very little time to find a tenant, I couldn't see a situation where it would take longer than a few weeks if it is priced correctly, As I said big vacancy increases can only happen if extra supply comes on board, lots of it.

5, All commodities are priced based on supply and demand in a free market.  landlords will raise prices when they can when the market is tight and drop them when competion forces them to


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## young-gun (1 November 2011)

Tysonboss1 said:


> 3, No they will also be buying from home owners, But then the home owner has to live some where, they will either rent or buy another house either way it's a zero sum.




in a falling market something has to give. if everything went as per your rosey examples prices would never rise nor fall in house prices or rentals. can you please give some examples as to what would cause a fall in rental demand and in-turn rental prices, if not house prices themselves?


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## Junior (1 November 2011)

What about this information?  Irrelevant?



> *HOUSING UTILISATION*
> 
> While Australian households are becoming smaller on average, dwelling size (as indicated by the number of bedrooms) is increasing. The average number of persons per household has declined from 3.1 in 1976 to 2.6 in 2007-08. In the same period, the proportion of dwellings with four or more bedrooms has risen from 17% to 29% and the average number of bedrooms per dwelling has increased from 2.8 to 3.1.
> 
> In 2007-08, most households enjoyed relatively spacious accommodation. For example, 86% of lone-person households were living in dwellings with two or more bedrooms; 75% of two-person households had three or more bedrooms; and 35% of three-person households had four or more bedrooms. Over a fifth (21%) of three-bedroom dwellings, and 8% of four-bedroom dwellings, had only one person living in them (table 10.3).




Source:  ABS


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## robots (1 November 2011)

Mrmagoo said:


> So....
> 
> Crashing economy.
> 
> ...




hello,

sounds well out of order, freeloaders to get it even easier

bulldoze them and plant trees for the other organisms we share the globe with

thankyou

professor robots


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## MACCA350 (1 November 2011)

Tysonboss1 said:


> 3, No they will also be buying from home owners, But then the home owner has to live some where, they will either rent or buy another house either way it's a zero sum.



Not necessarily zero sum, they may have just inherited a property, they may be moving back in with the parents, they may be moving into a retirement home, they may be moving in with the kids.....there's a whole bunch of scenarios.

Cheers


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## Wysiwyg (1 November 2011)

Tysonboss1 said:


> 4, it takes very little time to find a tenant,



That is because some employment sectors (mining, construction/engineering) have had considerable wage increases while most sectors have not. Plenty that can't afford a home on their wages.


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## Tysonboss1 (1 November 2011)

MACCA350 said:


> Not necessarily zero sum, they may have just inherited a property, they may be moving back in with the parents, they may be moving into a retirement home, they may be moving in with the kids.....there's a whole bunch of scenarios.
> 
> Cheers




More house holds are created each year than are disbanded, eg. people living longer, population growth, immigration,  smaller numbers in each house hold etc etc. more than  offsets those factors


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## Tysonboss1 (1 November 2011)

young-gun said:


> in a falling market something has to give.
> 
> 1, if everything went as per your rosey examples prices would never rise nor fall in house prices or rentals.
> 
> 2,can you please give some examples as to what would cause a fall in rental demand and in-turn rental prices, if not house prices themselves?




1,  you have to understand that asset prices ( house prices) are based on expectations of the future wheres as earnings of the asset are based on current market fundamentals. A business's revenue (rent) will be based on the current supply and demand for it's products, But the price the asset sells at will be based on the future expectations.

if people start in mass start thinking property prices will go through the roof and start buying the price of houses will rise, But this does not mean rents will rise, In the same fashion if people become bearish and refuse to buy the prices may fall, But this will not mean rents fall.

2, As I said, rental Prices will fall if supply increases. If you owned a 2 bed apartment and in a tight market were charging $300 per week, then a brand new project was completed next door and 100 new 2 bed apartments came on the market and soaked up all the demand, when it came time to renew the lease your tenant may decide to move next door into a newer apartment where landlords are trying to under cut you to gain a tenant.

This is happening in the suburb of brisbane I own a duplex in. I own both units in a duplex that have always rented well with steady rent increases, this year is the first year I have not raised rents and the reason is an influx of town houses on the rental market that are keeping a lid on rents at the moment.


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## Tysonboss1 (1 November 2011)

Also remember within any area there are many markets,..

For example if houses are being bulldozed to built units, the extra units being produced can dilute the market and force rents of units down, While as the houses get bulldozed the diminshing number of houses left may mean rents of house start increasing, 

Also if a recession occurs, rental yields of high end properties may fall and vacancy increases as people move into cheaper housing, this may cause a floor under lower end property.


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## Tysonboss1 (2 November 2011)

Junior said:


> What about this information?  Irrelevant?
> 
> 
> 
> Source:  ABS




Yes it is irrelevant , most people do want more bedrooms than people in the house, most people I know have, guest rooms, studies, storage etc etc in what would be called a bedroom on the plans. 

Having lived in a one bedroom apartment, I know how much easier it makes life to have a few extra rooms


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## trainspotter (2 November 2011)

Junior said:


> What about this information?  Irrelevant?




Oviously !! Don't you know ..... the ABS statistics are flawed. Everyone says so on this thread.


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## Junior (2 November 2011)

Tysonboss1 said:


> Yes it is irrelevant , most people do want more bedrooms than people in the house, most people I know have, guest rooms, studies, storage etc etc in what would be called a bedroom on the plans.
> 
> Having lived in a one bedroom apartment, I know how much easier it makes life to have a few extra rooms




Oh ok, so most people _you _know want more bedrooms than people in their house, THEREFORE you conclude that going forward, indefinately, Australians will never increase the average number of occupants per home?

I really should stop responding to your posts.


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## Mr Z (2 November 2011)

Classic static linear projection, kills them every time.


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## Tysonboss1 (2 November 2011)

Junior said:


> Oh ok, so most people _you _know want more bedrooms than people in their house, THEREFORE you conclude that going forward, indefinately, Australians will never increase the average number of occupants per home?
> 
> I really should stop responding to your posts.




Well there is no evidence to say it is reversing.

to say that the majority of people  are going to start living in houses where all bedrooms are occupied seems crazy to me, it's just not practical.

Are all the bedrooms occupied in your house, I can't see people giving up their studies, home offices, guest rooms, grankids bedrooms etc etc

Remember just because some statistic says that there are 3 bedrooms but only 1 being used as a bedroom does not mean the rooms are not being utilized. there are hundreds of reasons people choose to have extra space.


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## Mr Z (2 November 2011)

Money changes everything.


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## Aussiejeff (2 November 2011)

Mrmagoo said:


> So....
> 
> How does homeless people squatting in repo'd IPs no one wants to buy sound ?




Sounds like the UK atm to me...

LOL....


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## Glen48 (2 November 2011)

Ireland has 300,000 vacant houses, Spain has something similar where are the tenant's there.
 There is talk of demolishing the never lived  in proprieties due to the strain on council budgets. 

 Once the recession kicks in peoples spending will contract on every thing including renting.
Cake shop, Take away's, Pizza's etc will feel the pinch and so the contraction will continue.


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## Tysonboss1 (2 November 2011)

Glen48 said:


> Ireland has 300,000 vacant houses, Spain has something similar where are the tenant's there.
> There is talk of demolishing the never lived  in proprieties due to the strain on council budgets.
> 
> Once the recession kicks in peoples spending will contract on every thing including renting.
> Cake shop, Take away's, Pizza's etc will feel the pinch and so the contraction will continue.




Offcourse places that have massively over built will have an over supply issue, and the pain will be felt in that market, eg. the over supply of units on the gold coast will put a cap on rental yield in that market for a while, But it will have no effect on the rental market for 3 bedroom houses in brisbane, It is very localized.

People will be cutting back on all sorts of things before they cut back on rent, and as I said earlier if things get bad it is the high end that suffers, rental yields in lower income property generally strengthen and vacancy rates vanish.

When is this recession meant to be starting, So far so good.


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## Junior (2 November 2011)

Tysonboss1 said:


> Well there is no evidence to say it is reversing.
> 
> to say that the majority of people  are going to start living in houses where all bedrooms are occupied seems crazy to me, it's just not practical.
> 
> Are all the bedrooms occupied in your house, I can't see people giving up their studies, home offices, guest rooms, grankids bedrooms etc etc




In my house we have 3 occupants, and 3 bedrooms, no study.  Most of my friends use all their bedrooms as they are late 20s, unmarried, living inner suburbs of Melbourne.  As rents/cost of living is high most can't afford, or don't need/want the luxury of spare bedrooms.  Certainly if I moved further from the city I could have spare bedrooms, but I choose to pay more to live near work and friends.

The above is just the case amongst my social group, but it proves that you can't just take your personal situation and extrapolate that onto the whole population.

For example what about some immigrants, working as taxi drivers in Melbourne. Many reside in the outer suburbs, 5 to a bedroom, in order to minimise costs and maximise how much $$$ they can send home to their families.  No spare bedrooms there.


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## Mrmagoo (2 November 2011)

Tysonboss1 said:


> Well there is no evidence to say it is reversing.
> 
> to say that the majority of people  are going to start living in houses where all bedrooms are occupied seems crazy to me, it's just not practical.
> 
> ...




They won't but what will happen is that those who don't have those things now, won't ever get them.

At current house prices if I were to buy I would ALWAYS be renting out a spare room. Most likely 2 rooms. 

A decade ago this would only have been the case for the first few years.

How can you not understand that $700 per week is a LOT of money ?

I know, I know, you saved up 200k by age 12 and had a 200k a year salary as a doctor by age 13 .....


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## Tysonboss1 (2 November 2011)

Mrmagoo said:


> 1, They won't but what will happen is that those who don't have those things now, won't ever get them.
> 
> 2, At current house prices if I were to buy I would ALWAYS be renting out a spare room. Most likely 2 rooms.
> 
> ...




1, I don't think so, 

2, You may do that while your in your 20's with no kids, But i doubt you would contiune to do it once married and having kids, and I doubt you would do it once the kids have moved out, 

3, yes it is, But have you looked at how much it costs to rent for 50years, it's alot more than the cost of buying especially when you factor in inflation adjusted rents, and you don't have a home to sell later.

4, no real need for sarcasm, at 12 I was only earning about $50 dollars a week delivering papers and picking fruit, all of which I saved and invested.


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## young-gun (2 November 2011)

Tysonboss1 said:


> 4, no real need for sarcasm, at 12 I was only earning about $50 dollars a week delivering papers and picking fruit, all of which I saved and invested.




wish i had of invested at 12, i wouldve rode the dot com boom and the roaring mid 2000's  and dont get me started on property....


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## Tysonboss1 (2 November 2011)

young-gun said:


> 1, wish i had of invested at 12, i wouldve rode the dot com boom and the roaring mid 2000's  and dont get me started on property....




Remember hindsight is a wonderful thing,

Most people that rode the tech bubble were wiped out, the companies were worthless, then the share market went in a bear phase for a few years after, Are you sure you would have the nouse to go against the public opinion and pull out in time just when every one is going nuts saying we are on the cusp of the next big thing, I dont think so if the hype got to you enough that you put money behind these rubbish companies you would have held and been wipede out too.

Then the stagnation and bear market after that probably wouldn't have inspired you to put more money in the market so you would have missed the boom.

And on property, would you have really ignored all the talk about property being a dog that had gone no where for 10 years and invested your funds ( if you had any after the tech wreak) into property investment. I don't think so.




to be honest during the dot com boom I avoided all technology companies, Not because I had any idea it would end as badly as it did, it was just my personality lead me to invest in industrial companies And I sat and watched as the companies that I bought, which were "Old economy" stocks went down and stagnated and luckily after the tech wreak they turned out to be bargains and eventually went up and I made a killing.

then against every ones advice I apparantly "Over paid" by buying a 4 bedroom house in castle hill (brisbane) for $218,000. 

It just goes to show you have to be doing the opposite of the consenses opinion. If people are aggreeing with you, your heading in the wrong direction.


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## VSntchr (2 November 2011)

Tysonboss1 said:


> Remember hindsight is a wonderful thing,
> It just goes to show you have to be doing the opposite of the consenses opinion. If people are aggreeing with you, your heading in the wrong direction.




FWIW, alot of people (with little to no property knowledge) keep telling me that now is the time to buy/invest in property.

It seems that because all they have seen (these people are between 20 - 25ish) is a boom property market...they see a year or two of stagnant growth and think "BARGAIN!".

I don't know which way property is headed...but I thought that was an interesting correlation to what you said..


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## Tysonboss1 (3 November 2011)

VSntchr said:


> FWIW, alot of people (with little to no property knowledge) keep telling me that now is the time to buy/invest in property.
> 
> It seems that because all they have seen (these people are between 20 - 25ish) is a boom property market...they see a year or two of stagnant growth and think "BARGAIN!".
> 
> I don't know which way property is headed...but I thought that was an interesting correlation to what you said..




Well the property market of 2011, is not the market of 2001. That's for sure.

I am not rushing to buy property at the moment, there is to many people dumping quality shares, so that's where the bargain is,

I would only buy property if it was fir personal use, or if it was the only way to stop myself wastingmy weekly paycheck.


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## Mrmagoo (3 November 2011)

If I bought an asset for 200k and it was worth 400k after 4 years I would feel good about it.

HOWEVER, the other side of the coin is that someone who wants to buy that asset now will need to pay 200k more than they would have 4 years ago. 

An increase of 4% would have risen the price by nearly 17% over that same period, so would you be happy to pay 400k for someone which you think is only worth 234k ?

That is the property market right now.


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## Tysonboss1 (3 November 2011)

Mrmagoo said:


> If I bought an asset for 200k and it was worth 400k after 4 years I would feel good about it.
> 
> HOWEVER, the other side of the coin is that someone who wants to buy that asset now will need to pay 200k more than they would have 4 years ago.
> 
> ...





The true underlying value of an asset like property will grow steadily over time as the population grows, and inflation devalues the currency, 

But as you correctly pointed out, the market price does not simply grow by a small percentage each year,

Instead property and most other asset classes tend to have their market price stagnate for years before experiencing a surge (boom) which gets over done and leads to more stagnation,

The value of that property bought for $218,000 in 2001 had stagnated for 7 years prior to 2001, this stagnation fueled the boom from 2001 to 2005, since 2005 till now there has been much more modest growth and a small fall, we could easily have a few years of further stagnation from here.


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## Mr Z (4 November 2011)

Any property that stagnated through the second half of the 90's must have been a dog, I have never had making money so easy! Even the delays on my developments made me money!


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## Tysonboss1 (4 November 2011)

Mr Z said:


> Any property that stagnated through the second half of the 90's must have been a dog, I have never had making money so easy! Even the delays on my developments made me money!




not in the brisbane market they didn't, 

My Dad bought our family home in 1992 for $200,000 in 2000 it was valued at $195,000.

The northern brisbane market went no where for years, offcourse during that time there was inflation, and population growth, so when the boom happened dads property went from $195,000 to $425,000 within 3 years. 

Now any one looking at that growth rate might think it is part of a bubble, and no doubt there is some froth there, but when you factor in all the stagnation of prior years there is much less froth than appears at first glance.


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## Mr Z (4 November 2011)

Not great but not backwards.


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## Tysonboss1 (4 November 2011)

Mr Z said:


> Not great but not backwards.




That certainly was not what we experianced in the outer north of brisbane. As I said My dad's house went no where for years, and the house that I bought for $218,000 in 2001 had cost almost that much to build 7 years earlier.


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## young-gun (4 November 2011)

Mr Z said:


> Not great but not backwards.




ahh and so we see the great bubble of 99 onwards......i wonder where we will be left after the pop? if history has shown us anything(and it has) your castle hill home will be worth slightly more than what you paid for it in 01 tyson...MO

on a side note, very nice buy. some nice houses in there(i can only assume yours is one of them being in castle hill) not the greatest run to work on the highway in the morning though

oh and my comment on investing when i was 12, was just clowning around, as you said hindsight makes it all too easy


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## young-gun (4 November 2011)

Tysonboss1 said:


> That certainly was not what we experianced in the outer north of brisbane. As I said My dad's house went no where for years, and the house that I bought for $218,000 in 2001 had cost almost that much to build 7 years earlier.




haha outer north? if i were to try and by a home in the same km ring as castle hill(obviously not in castle hill itself) i would be accused of trying to buy a 'mcmansion'. outer north now means caboolture


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## greebly24 (5 November 2011)

Some interesting points here. My thoughts on Baby Boomers:

My parents bought a house in a beachside suburb in Adelaide in 1975 when I was just a kid. It cost about 4 times my parents' income. Life wasn't easy and we had few mod cons. What we did have though was amazing surroundings (for a kid to play in). Vast areas of swampland, greenhouses, and wild bush surrounding the nearby river.

My point is that is was considered "in the sticks". No-one really wanted to live there.

Jump forward to today and my parents house is worth ten times my current income. But that's with all their renovations and improvements over the decades. It is annoying that I can't afford to buy a house in the suburb I grew up in. But the swamp was drained and became West Lakes, with lake-front and canal-front homes. The greenhouses were removed and houses developed. The river was cleaned, turned into Linear Park. Now the area is very popular as it is near the beach, near the river, near lakes and not far from the CBD either.

Basically my parents bought in an area that was, at the time, considered the outer suburbs, because that's all they could afford, back in 1975. I remember we had a kerosene-powered fridge for years, because they couldn't afford a new electric one. And a manual washing machine. I remember going to friend's houses to watch their TV. My parents scrimped on everything to own their house.

Looking at the outer suburbs of Adelaide now, I could buy a place for 4 times my income. Its just that I don't want to live out "in the sticks", like my parents did. And I don't want to scrimp. I want the iPad and the flatscreen TV and a nice car, nice clothes, regular nights out etc etc etc.

And I think that's due to our entitlement culture. Blaming the Boomers seems pointless. They just had a bit of luck on their side. And that luck was a 15-year global credit expansion. That is now ending with a massive global debt hangover. So interesting times ahead.

For the record I rent a great place right by the beach in Adelaide for 15% of my income. I have made another 10% profit on my investment portfolio this financial year already on share/forex/bullion trades. So my savings keep going up while house prices seem to be slowly coming back down. Hoping the cross-over point comes in about 3-4 years time, when I'll be able to buy a house near the beach with cash and no mortgage.

For a real picture of current market conditions in your desired suburb, check out www.refindhouseprices.com Lots of property in my area sitting on the market for hundreds of days despite big discounts. RE spruikers won't tell you that.


----------



## greebly24 (5 November 2011)

And speaking of Brisbane, has everyone seen the articles about how the median house price in Brisbane is now below the median house price in Adelaide? Bizarre.

I live in Adelaide but have worked in Brisbane twice this year. So to me this is surprising. Think about it --- the median house price in a city of 1 million is higher than the median house price in a city of 2 million!!! Prices in the capital of a state of 1.5 million people are more expensive than houses in the capital of a state with a population of over 3 million!!! Bizarre.


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## explod (5 November 2011)

> For the record I rent a great place right by the beach in Adelaide for 15% of my income. I have made another 10% profit on my investment portfolio this financial year already on share/forex/bullion trades. So my savings keep going up while house prices seem to be slowly coming back down. Hoping the cross-over point comes in about 3-4 years time, when I'll be able to buy a house near the beach with cash and no mortgage.




grebly24, I like your plan and patience will in my view be rewarded.


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## Mrmagoo (6 November 2011)

Tysonboss1 said:


> not in the brisbane market they didn't,
> 
> My Dad bought our family home in 1992 for $200,000 in 2000 it was valued at $195,000.
> 
> ...




Ever increasing house prices is a ridiculous modern day construct which I can't understand how people think it is a good thing or a logical thing to be happening.

Yeah, my folks struggled too, but you know what ? That means nothing. If they were in the same situation today, they probably wouldn't even get a loan and the suburb I'm talking about is STILL the sticks.

You can't compare the situation of people on crap incomes 20 years ago to the situation of SAVERS of GOOD incomes today.


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## FxTrader (7 November 2011)

greebly24 said:


> For a real picture of current market conditions in your desired suburb, check out www.refindhouseprices.com Lots of property in my area sitting on the market for hundreds of days despite big discounts. RE spruikers won't tell you that.




REfind may be useful but they clearly have data accuracy problems.  Two properties listed as advertised for 256 and 254 days in my area (very close to me) have in fact been on the market for 2 and 3 months respectively.  So you need to validate the information posted on REfind for any property listed there as reliability is clearly an issue.


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## Tysonboss1 (7 November 2011)

Mrmagoo said:


> Ever increasing house prices is a ridiculous modern day construct which I can't understand how people think it is a good thing or a logical thing to be happening.




Do you understand the concept of inflation, The currency we use to buy houses goes down in value by atleast 3% per year, So to think property would not go up over time in $$$ terms is a bit crazy.

Add to that population growth, there is population growth in Australias capital cities, this increasing density will also have some effect of pushing up values.


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## Tysonboss1 (7 November 2011)

young-gun said:


> haha outer north? if i were to try and by a home in the same km ring as castle hill(obviously not in castle hill itself) i would be accused of trying to buy a 'mcmansion'. outer north now means caboolture




There is plenty of modest homes in that ring that would be affordable, 

http://www.realestate.com.au/property-unit-qld-petrie-107991546

Obviously not a mc mansion, But it would be a good starter home for a young couple.


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## medicowallet (7 November 2011)

Tysonboss1 said:


> Do you understand the concept of inflation, The currency we use to buy houses goes down in value by atleast 3% per year, So to think property would not go up over time in $$$ terms is a bit crazy.
> 
> Add to that population growth, there is population growth in Australias capital cities, this increasing density will also have some effect of pushing up values.




It is the growth in excess of 3% that is the concern.

Also, they are actually building new houses in Australia.

Also, there is not a shortage of houses.

MW

PS - nice to be back after some well earned holidays, to see that some things never truly change... except the clearance results, which though characteristically fudged, are trending around low 50%. Does this mean anything?


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## Tysonboss1 (7 November 2011)

medicowallet said:


> It is the growth in excess of 3% that is the concern.
> 
> Also, they are actually building new houses in Australia.
> 
> ...




The comment I was making is that for over 7 years there was zero growth in my suburb, But then it all came at once along with a surge in migrants which pushed up the prices over a realtively short time, So you can't say all the growth over that time was a bubble.

Yes new dwellings are being built, But when they are knocking down houses to rebuild town houses and apartment buildings, those decreasing number of houses will go up in value and people that want to live in house and land options will start moving to outer suburbs and push up prices there.


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## Tysonboss1 (7 November 2011)

young-gun said:


> ahh and so we see the great bubble of 99 onwards......




Just remember any chart that shows compounded growth will have a hockey stick shape and give the impression of a bubble. eg a chart that starts at $25,000 and ends at $1000,000 will have the growth from $25,000 to $50,000 look far less dramatic than the growth in later years from $500,000 to $1,000,000. even though they are the same growth rate.

If you think that property chart was a bubble, what are your thoughts on this one, and keep in mind it is actually $300 higher since this chart was published.


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## Tysonboss1 (7 November 2011)

Heres an interesting fact,

The average Australian mortgage holder is 9 months ahead in their payments, No doubt the most recent interest rate cut is going to extend that figure,


----------



## VSntchr (7 November 2011)

Tysonboss1 said:


> Heres an interesting fact,
> 
> The average Australian mortgage holder is 9 months ahead in their payments, No doubt the most recent interest rate cut is going to extend that figure,




Interesting. Is this figure at all distorted by those who have taken out 30 year loans with the intention of paying it off far quicker...?

A historical graph of this figure would be very interesting...one of the first positive facts ive heard for property in a while...


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## Tysonboss1 (7 November 2011)

VSntchr said:


> Interesting. Is this figure at all distorted by those who have taken out 30 year loans with the intention of paying it off far quicker...?




No doubt it caused by all sorts of reasons,

1, People maintaining the same monthly repayment even though interest rates have gone down, clearing their home loan quicker.

2, People storing cash in offset accounts are reducing their loan quicker

3, lumps sums from bonuses etc.

4, even just paying an extra $20 a week seriously increases the speed your loan is cleared.

There has been an increase in savings over the last few years in Australia, and no doubt home owners divert their portion of the savings to clear their loan at 7% or sit it in an offset account than in a high interest bank account at 6%.


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## Junior (7 November 2011)

Tysonboss1 said:


> Just remember any chart that shows compounded growth will have a hockey stick shape and give the impression of a bubble. eg a chart that starts at $25,000 and ends at $1000,000 will have the growth from $25,000 to $50,000 look far less dramatic than the growth in later years from $500,000 to $1,000,000. even though they are the same growth rate.
> 
> If you think that property chart was a bubble, what are your thoughts on this one, and keep in mind it is actually $300 higher since this chart was published.




That spike started when the US govnt decided to start running huge deficits and printing vast amounts of USD, thereby devaluing their currency in relation to hard assets, such as gold.  Chart the USD against other commodities and base metals and the picture is similar.


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## Tysonboss1 (7 November 2011)

Junior said:


> That spike started when the US govnt decided to start running huge deficits and printing vast amounts of USD, thereby devaluing their currency in relation to hard assets, such as gold.  Chart the USD against other commodities and base metals and the picture is similar.




I am not really looking for an arguement about gold, Been there done that, 

One thing I will say though, if it is simply the currency devaluing, then why has the price of every thing else not followed the same path. eg, other commodities, land etc.etc


----------



## McLovin (7 November 2011)

Tysonboss1 said:


> Heres an interesting fact,
> 
> The average Australian mortgage holder is 9 months ahead in their payments, No doubt the most recent interest rate cut is going to extend that figure,




Interesting. What would be more interesting is to see who is actually 9 months ahead. I'm guessing, given the number of people who bought homes since 2008 in mortgage stress, it is probably those people who bought 5+ years ago. Do you have a cite?



			
				Tysonboss1 said:
			
		

> There has been an increase in savings over the last few years in Australia, and no doubt home owners divert their portion of the savings to clear their loan at 7% or sit it in an offset account than in a high interest bank account at 6%.




I think this is probably the case. The rainy day account is now just the mortgage; if you lose your job you end up redrawing on the mortgage.


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## Tysonboss1 (7 November 2011)

McLovin said:


> Interesting. What would be more interesting is to see who is actually 9 months ahead. I'm guessing, given the number of people who bought homes since 2008 in mortgage stress, it is probably those people who bought 5+ years ago. Do you have a cite?
> 
> 
> 
> .




Yeah, obviously the longer to have owned the more time you have had to get infront, 

The figure was quoted by a westpac finance guy on bloomberg radio today, he was qouting from various sources that have come out recently.


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## Mrmagoo (7 November 2011)

Tysonboss1 said:


> Do you understand the concept of inflation, The currency we use to buy houses goes down in value by atleast 3% per year, So to think property would not go up over time in $$$ terms is a bit crazy.
> 
> Add to that population growth, there is population growth in Australias capital cities, this increasing density will also have some effect of pushing up values.




No, never heard of inflation.

You ever heard of nominal inflation ? 

House prices should at beast increase by inflation, not four or five times inflation, which leads to a real price increase. Ever increasing house prices are ridiculous and we're seeing the result of decades of ridiculousness right now.

If I earn $100 an a can of coke costs $1 then in 5 years time if I multiply both numbers by 5 it is still the same percentage of my income.

If a can of coke all of a sudden cost 15% of my income, rather than 1% would you call that "progress" or a backwards step, because the average worker can no longer afford a basic item like a can of coke.

Or ... all those coke investors... making society better my making coke cost $500 a can.


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## Mrmagoo (7 November 2011)

Tysonboss1 said:


> Just remember any chart that shows compounded growth will have a hockey stick shape and give the impression of a bubble. eg a chart that starts at $25,000 and ends at $1000,000 will have the growth from $25,000 to $50,000 look far less dramatic than the growth in later years from $500,000 to $1,000,000. even though they are the same growth rate.
> 
> If you think that property chart was a bubble, what are your thoughts on this one, and keep in mind it is actually $300 higher since this chart was published.




Gold may or may not be in a bubble but it is clear from that graph thhat SOMETING happened.

Growth rates like that, are they sustainable ?

Probably not.

Are they usually followed by sharpy falls.

Probably.

Is that one a heck of a lot steeper and gargantuan than normal.

Yes.

Should you be worried ?

Yes.


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## young-gun (7 November 2011)

Tysonboss1 said:


> There is plenty of modest homes in that ring that would be affordable,
> 
> http://www.realestate.com.au/property-unit-qld-petrie-107991546
> 
> Obviously not a mc mansion, But it would be a good starter home for a young couple.




haha i know i was slightly over-exaggerating. this type of property is unsuitable for us unfortunately, we run a business from home also so we need a reasonable amount of room(not ridiculous amounts).

on the gold topic without elaborating too much, it's a bubble, but not inflated quite as badly as house prices IMO. obviously the 2 graphs arent comparable anyway(apples n oranges) as im sure you're aware.

and id like to point out that once upon a time you could bury a jar filled with 1000$ and a hundred years later you could dig it up and buy the same things for the same amount


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## Tysonboss1 (8 November 2011)

young-gun said:


> 1, on the gold topic without elaborating too much, it's a bubble, but not inflated quite as badly as house prices IMO.
> 
> 2, and id like to point out that once upon a time you could bury a jar filled with 1000$ and a hundred years later you could dig it up and buy the same things for the same amount




1, well, different people would argue the point, but gold went from $250 to over $1850 in the time property went from $218,000 to $450,000. A comparible bubble in property would have property go from $218,000 to over $1,700,000.

2, Yeah I know, different currency (gold and silver backed) the economy didn't run to hot back then either, there are pros and cons, the current system is much better ( although it does have weaknesses ), I don't think it is healthy to have a currency that is fixed, But thats a whole other disscussion.


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## Mrmagoo (9 November 2011)

And if I could walk down the street and see blocks of gold on every street I'd be concerned about the gold price too.

Especially if everyone lived in gold.


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## Tysonboss1 (9 November 2011)

Mrmagoo said:


> 1, House prices should at best increase by inflation, not four or five times inflation, which leads to a real price increase. Ever increasing house prices are ridiculous and we're seeing the result of decades of ridiculousness right now.
> 
> 2, If I earn $100 an a can of coke costs $1 then in 5 years time if I multiply both numbers by 5 it is still the same percentage of my income.
> 
> ...




1, that would only be true if there was not also population growth, ofcourse if there was a stagnant population with zero growth in the number of households then yes, houses prices would only increase over time with inflation, However if population and the number of house holds increases in an area houses on land will increase at a rate above inflation.

2, Yes, provided that the supply of coke = the demand. if the number of people buying coke every day increased but the number of cokes stayed the same the price would rise.

It is true that the price of accomadation should remain within a certain percentage of a persons income over time, However for this to be achieved in an area with a growing population, the type of property must change

eg. in the 1940's it would have been possible for every family in sydney to live in a house on a 1/4 acre block, however once the population has tripled, that is no longer possible, People have to accept that the person of lower means must choose to live in an apartment of town house.

Offcourse if a person decides they want to live in a house on a 1/4 acre block, they will find that the price has risen faster than inflation and they must use a great % of their earnings, simply because over time the number of 1/4 blocks has diminished as they are subdivided into town houses and apartment blocks and the number of people who hold the dream of owning a house with a back yard has increased.

It's simple supply and demand, Offcourse provided there is not to much red tape the price of accomadation should stay within their budget if they are willing to change the type of property they live in, or move out of the city.


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## Tysonboss1 (9 November 2011)

Mrmagoo said:


> Especially if everyone lived in gold.




Thats the thing isn't it, No one lives in gold, or eats it. It is not a nessesity of life, unlike dry land,

Humans need space, We need space to live, do business, manufacture and produce food, and the population is still growing, which inturn will put more pressure on the price of that space, 

As I said in an earlier post, the free market system (provided there is not tomuch red tape) will ensure you can always afford the space you need to live, But it can not ensure that space consists of a 1/4 arce block within a close circle of a capital city, it will most likly be an option with less land content, eg. an apartment or town house.

Offcourse, if land is a must have, we do live in a large country and you can move out of the city to a place where there is less competition for land.


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## Mr Z (9 November 2011)

Humans need money to live the way they do in organized economies. Gold is money that is no one else's debt, that is its function. Admittedly money is a little more abstract than a roof over ones head but none the less an important concept. When FIAT money is under siege from bad management gold fills the void and allows ordinary folk to buy protection in the form of a recognized monetary commodity that has survived the ages with value intact. 

In a true free market we'd choose our money as well... think about what you would trust?

You persist in degrading gold as useless and you refuse to acknowledge its role in the system. Central banks keep gold for a reason... a little more complex a reason that hiding under it or eating it but then again humans are a little more complex than that are they not?

P.S. We have not got a free market, free market arguments are a nonsense in this country. We have a regulated and manipulated market that is full of unintended consequences born of government interference.


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## Mr Z (9 November 2011)

Tysonboss1 said:


> and the population is still growing, which inturn will put more pressure on the price of that space




You know that is not 100% correct, the cost and availability of finance determines the level that real estate prices can rise to. It has never been simply supply and demand of housing that determine the price of a house. It is the supply and demand of housing combined with the supply and demand of housing credit that determines house prices. This is true for all things, most analyses fixes the supply and demand for money and only addresses the other supply demand balance in the equation. This works over the short term but when you consider assets held across a longer term you have to consider the state of the credit market that underpins price. We have just witnessed what happens in commodities when the credit part of the equation falls away despite nothing like that level of softening in physical commodity movements (iron ore set records across the slump!). People accept that as not only possible but a probable event from time to time YET when you talk real estate the same dynamic becomes an unthinkable and unmentionable option. Funny really, when you think about it!

Beware talking your book, it can and will lead you down a mental box canyon. 

This is all about credit.


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## satanoperca (9 November 2011)

Mr Z said:


> This is all about credit.




& govnuts needs to collect revenues through stamp duties and rates. The higher the price of a home, the more people selling and buying, the more revenue they collect.

The govnuts have a vested interest in keeping property prices growing yoy.

What % of state revenues comes from transaction costs of property?

Cheers


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## Mr Z (9 November 2011)

You presuppose that government will be able to achieve that aim sustainably. 

I'd challenge that notion  .


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## satanoperca (9 November 2011)

Mr Z said:


> You presuppose that government will be able to achieve that aim sustainably.
> 
> I'd challenge that notion  .




Of cause not, it is not sustainable, however, they will try everything they can to keep it going. Just need to look at the effect the FHBG had, while I'm against this form of so called stimulation, the last one had the desired effect from the govnuts view.

 On the money the govnuts spent on the FHBG, I wonder what return on their expenditure they got through increase stamp duties and increase prices over the last few years.

Cheer


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## Mr Z (9 November 2011)

satanoperca said:


> On the money the govnuts spent on the FHBG, I wonder what return on their expenditure they got through increase stamp duties and increase prices over the last few years.




An excellent return I would imagine... much like the return a heroin dealer gets on 'free' samples, it is all great until the customer ends up in rehab.


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## young-gun (9 November 2011)

Mr Z said:


> An excellent return I would imagine... much like the return a heroin dealer gets on 'free' samples, it is all great until the customer ends up in rehab.




Best to invest in rehab facilities then?;-)


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## Mr Z (9 November 2011)

young-gun said:


> Best to invest in rehab facilities then?;-)




Debt restructuring businesses are doing well as are "My Business Angels"


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## Mofra (9 November 2011)

satanoperca said:


> & govnuts needs to collect revenues through stamp duties and rates. The higher the price of a home, the more people selling and buying, the more revenue they collect.



Otherside of the coin too; they need happy voters, and by and large growing asset prices = happy voters. 

Worth remembering of course, the assets only need to grow until the next election (and if you get turfed out, there is suddenly an "affordability crisis")


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## Mr Z (9 November 2011)

Damn you lot are cynical! :


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## young-gun (9 November 2011)

Mr Z said:


> Damn you lot are cynical! :




Given the magnitude and severity of the crisis the world is about to face how can you not be?


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## Mr Z (9 November 2011)

I think it is about time Robots turned up and chided us for wandering off topic and desecrating the haloed subject of  The *future* of Australian property prices. I mean seriously you lot! Get a grip, get a loan and get a McMansion, do your patriotic duty damn it!  :


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## explod (9 November 2011)

On the ball Z.   Sumada bulls are so wowwied they are explainin all sortsa things alloverdaplace.


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## wayneL (9 November 2011)

Mr Z said:


> This is all about credit.




Though I run the risk of yet another ad hominem attack from trainspotter, I will gladly run the risk of agreeing with you.


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## maffu (9 November 2011)

I find it interesting that one of the themes for the older posters is to say, you should start out small and work your way up. Very logical advice, and easy in theory.

The problem in my situation is that starting out small is still ridiculously expensive in some cases.

Here are my figures, and why I believe home ownership is not a realistic option for me in the near future.

I earn about a median wage ~60k at the moment at age 25.
I work in a professional job, reasonably long hours at times, and I often work til 9 or 10pm in the CBD, hence I want to live close to the CBD, or somewhere that has safe and reliable public transport options. 

I have been looking within about 10km of the CBD, and most 1 bedroom units are still about 500k. So the smallest starting price is about 500k.

So if I am bringing home ~$1000-$1100 cash a week, and require a 450k loan to buy a 1 bedroom unit, then that is a loan repayment of about ~800 a week. 80% of my median wage to go on a below median property, a small 1 bedroom is pretty rough. 

If you rely on dual incomes, its very tough when pregnancy and children come into play, and a 1 bedroom apartment with kids would also be a bit cramped.

So for me, starting out small is still very hard. I don't really mind, as I prefer to invest my cash into the share market, and am not in a rush to buy property, rent is dead money, but at the moment its a much cheaper option if the surplus cash is invested wisely.

Another big difference between my parents generation and my situation is transport and job centres. They moved out west and worked out west not a problem, they could drive to work cheaply and quickly as there was little traffic. Moving far out of town was an easy option. If I want to drive to work parking costs $100 a week, and my job is only available in the city, as are most professionals. So if I want to move a long way out of town somewhere affordable I am looking at 20 hours a week commuting, and I did that for 5 years, its not fun or healthy.


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## young-gun (9 November 2011)

maffu said:


> I find it interesting that one of the themes for the older posters is to say, you should start out small and work your way up. Very logical advice, and easy in theory.
> 
> The problem in my situation is that starting out small is still ridiculously expensive in some cases.
> 
> ...




be prepared to be bombarded with criticism my dear friend. i know exactly how you feel, and know what you're saying, but allow me to attack you before everyone over 40 on here does. 

1. there is perfectly good public transport 50 minutes out of the cbd(woohoo - as you said everyone loves travelling for almost 2 hours everyday)
2. all you young guys need to stop focusing on the 'mcmansion' in the cbd and settle for a beaten down old shack in the sticks with more issues than you can count.
3.we(the over 40's-45's) had it just as hard as you do know so suck it up and stop having such a defeatist attitude.

thats just a few, there no doubt will be others.

now back to the point. IMO you're right to wait.do not buy or consider buying any form of property in the coming months, possibly year. for the love of god. you will be rewarded by waiting.

i too was investing in the market but given my lack of 'day trading knowledge' the current market wasnt doing anything for me :S


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## kincella (9 November 2011)

well, well well, being in the over 40's group....
no advice given here...
all I can say is....it just looks like a straight forward stalemate to me....

so in this case...I am really, really looking forward to the 'under 40's replies'
to address this dilemma......


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## KIWIKARLOS (9 November 2011)

$60K as a professional? you must be very junior or in a crappy job. Most professionals i know get paid nothing for a few years while working 60 hour weeks then move onto descent salaries. Most tradies make more than you and dont have a hecs debt.

What industry are you in so I can tell my kid to avoid it.

i work in the cbd and travel from parra every day, people in my office come from campletown, central coast etc. The big difference is we work reasonable hours.
Its beyond me why anyone would work free overtime, your gettng paid like $20 an hour.

People hate the labour party? they may have made some poor decisions but at least they value peoples lives. If workchoices was in and all public assets sold we would all work like rats for peanuts.

IMO housing prices very closly linked to wages and employment, hence why top end doing it tougher currently than median level. Unemplyment not so bad sharemarket and investments taking the pounding.

talking to my bank manager the other day they believe most risk in property >800K and in QLD / WA


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## Dowdy (9 November 2011)

maffu said:


> I find it interesting that one of the themes for the older posters is to say, you should start out small and work your way up. Very logical advice, and easy in theory.
> 
> The problem in my situation is that starting out small is still ridiculously expensive in some cases.
> 
> ...





Time for an attack by someone your age...

You got to look harder for both a job and a 1bed unit.

A 1 bed unit around docklands is 400k. Still majorly expensive by my chart but not 450k loan like you claim and if you want 10k from the CBD, a house in Newport in currently for lease for under $300 a week - 3bed

I don't know about you, but office jobs suck balls! I worked in one once, didn't get paid any overtime, got paid a weekly salary and when I asked if I could get paid by the hour instead - the boss said No and told me he pays 'fairly' and if you work hard he'll give you a bonus. I found out the secretary was sometimes working 15hr days and only getting $200 bonus a week (if she was lucky). I kept telling her how wrong that was. I left after 1 month, she was working there for over 2 years....

I work in the city, not professional, in Richmond. You want to save up for a house, live with your parents.  It takes me 1hr to drive to the city. 1hr45min to ride my bike which is fun and healthy.

Find a job with good work/life balance and give your boss the finger - unless you are the boss, which is a whole different matter


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## Tysonboss1 (9 November 2011)

Hey Maffu,

I am 29, so not too much older than you.

There is no need to rush into property, If you have a good investment operation going just keep at that.

When you decide that the time is right to buy a property, I would recomend buying one with a high land content, eg. Not a single bedroom in a tower in the sky, Bedrooms in the sky are easily replicated, land is not.

Maybe buying a house that you eventually want to live in and have a tenant help you pay it off till you and your mrs are ready to move in and breed is an option.( thats what I did any way ).


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## Tysonboss1 (9 November 2011)

Dowdy said:


> give your boss the finger - unless you are the boss, which is a whole different matter




True that, When you work for yourself you work for the biggest asshole, He'll work you to the bone with no over time and no holidays


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## pilots (10 November 2011)

Tysonboss1 said:


> True that, When you work for yourself you work for the biggest asshole, He'll work you to the bone with no over time and no holidays




You do get to screw his wife, just don't get caught doing  it in work hours.


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## nulla nulla (10 November 2011)

Tysonboss1 said:


> True that, When you work for yourself you work for the biggest asshole, He'll work you to the bone with no over time and no holidays




And no sick days either.


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## KIWIKARLOS (10 November 2011)

I'm 29 bought my place 5 years ago it's still up 25% which is good considering the size of the investment , leverage and risk. What investment is going to do well now ? I put all my savings into cash ATM. Today will prob be the start of a new crises I wouldn't want to be in shares at all


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## Mr Z (10 November 2011)

*This kinda sums it up for me...*

Here you have a suburb where it takes a household income of around 120K (with minimal other commitments, car loan etc and assuming a 20% deposit) to buy the median house. Yet look at the income distribution, over 95% of the suburb could not buy the median house if they where starting out with a minimum deposit of around 20% (say 150K).

To me this just looks extreme in terms of affordability.


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## young-gun (10 November 2011)

kincella said:


> well, well well, being in the over 40's group....
> no advice given here...
> all I can say is....it just looks like a straight forward stalemate to me....
> 
> ...




i was only referring to those that would produce nothing constructive but rather complaints about our generation - we would all appreciate guidance or advice, or even constructive criticism(some would argue it has been given).

my advice as previously stated - dont buy now, or in the near future, anywhere.

60k is above average for current office jobs is it not? making it not so bad? i personally couldnt make it work but as stated by others you will advance and be promoted shortly if you're good at what you do.


----------



## Wysiwyg (10 November 2011)

young-gun said:


> 60k is above average for current office jobs is it not?



60k gross is about $800 in the hand per week and $2300 per month for a mortgage repayment does not add up. The gap has widened due to some sectors having wage increases while others stagnate. The two speed economy thing.


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## kincella (10 November 2011)

OK...lets start with the suburb you grew up in...that you are familiar with....or  if you have moved...where do your parents live....we need something familiar....that you can get to know back to front...visit on a regular basis....most young ones like to be near family...
just because you now work in the CBD....will not always be the case in the future...as you grow, your career grows, more opportunities open up....and you can move with them......you should also factor in an increase in salary...year in year out....

I am suggesting you buy what you can afford in the outer suburbs....and rent it out....at least that way you get your foot in the door....and at a price range of only 250k to 
300k limit...there will not only be growth on average at 10% per annum for you... but you will have a proven track record of a saver...for future credit.... cum finance requirements.....
you need to establish a career goal plan for youself to grow, and choose an outer affordable suburb......there are steps you need to take, with time limits on it.....
lets say...we aim for a purchase in one years time.....in the meantime, you need to set up a saving plan towards your deposit.... with a goal of  xxxxx dollars to be achieved

when the older generation say start small, they mean a small purchase.....what you can afford....great trees grow from a humble mustard seed....you have you whole career and life to get into the big time....that will come later...as your career progresses...

but you must have life plan....with set goals, and use by dates to achieve those goals....

in summary, you can start in a humble place in the outer suburbs....it will grow in time...
I use a base rate of 10% per annum....now it may not grow at 10% each and every year from day one....it may even remain stagnate for 3 years...then do a small spurt and suddenly grow 20% in one year....but after 10 years ...and in hindsight on your part
it should eventually produce the results...of either a doubling or tripling in market value


I believe the lack of confidence with the current labor govnut.....will have a dramatic turnaround , once they are kicked out of office...
get ready for that ...event...
interest rates will remain low for the next year or more....they will not increase under a labor govnut.....they may increase slightly under a coalition govnut...but only after confidence has been restored to the community....after the elimination of carbon tax, mining taxes etc

then in around 5 years time....your income should have increased dramatically, the little property should have doubled in price.....and you will have made a tidy sum...in capital profits...more than sufficient to sell it, and buy a family home, of your choice

you  really need to do the sums, of what you really can afford....I am assuming you are not a financial person....??? 
**** there are professional careers way out in the burbs, the regional centers...where houses come at a fraction of the price....
professionals do not only work in the CBD of the biggest capital cities...they are everywhere.....
think about it....
it all depends on just how hungry you are...whether you are a go getter....gung ho about your career and lifes goals....or a pacifist...content with what you have...with no goals or plans to improve your lot ?

I have just found out a relative of mine...she is just 22...earns $400 k pa....and blows it all on overseas hols etc....she is an accountant with a no 1 miner in OZ......
you have choices.....
its up to you how you apply, pursue same...


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## young-gun (10 November 2011)

kincella said:


> there will not only be growth on average at 10% per annum for you...
> I use a base rate of 10% per annum....now it may not grow at 10% each and every year from day one....it may even remain stagnate for 3 years...then do a small spurt and suddenly grow 20% in one year....but after 10 years.




are you bullish on property?


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## MACCA350 (10 November 2011)

kincella said:


> in summary, you can start in a humble place in the outer suburbs....it will grow in time...
> I use a base rate of 10% per annum....now it may not grow at 10% each and every year from day one....it may even remain stagnate for 3 years...then do a small spurt and suddenly grow 20% in one year....but after 10 years ...and in hindsight on your part
> it should eventually produce the results...of either a doubling or tripling in market value



Yes, but so will everything else, it's relative position in the market will still be the same, unless you picked a property that had exceptional growth in comparison to the rest of the market. 

And you're making an assumption that the next 10 years will produce similar growth as the last 10 years, it's possible that may not occur.

Cheers


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## Tysonboss1 (10 November 2011)

$60,000
May be ok for an office worker, but he said he was a professial, to me a professial is a working in a profession, eg lawyer, dentist, civil engineer etc. I would be pretty upset if I went to uni to to become a professional and earned less than $100k,


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## Tysonboss1 (10 November 2011)

Kincella, I think 10% capital gain per year is to much to expect.

I think if you buy you property well, a 10% total return per year is a more realistic figure, made up of the following,

3% general inflation + 4.5% Cashflow ( after cost rent ) + 2.5% actual value growth


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## KIWIKARLOS (11 November 2011)

10% get real using those figures will just get you burnt. Historic house price rises are bs , how far back you go and the period you choose dramatically effects the results . Even glen Stevens gave a warning about relying on gains. I assume 3% per annum growth on property investments anyone telling you property doubles every tens years either got lucky in the last boom or has vested interest in selling property investments. Sure there may be certain areas that experience large short term growth but that's usuallybecause of external factors such as an opening a mine or a developer rebuilding a large part of the suburb. You need to have good sources, knowledge or luck to pick those areas


----------



## lusk (11 November 2011)

Tysonboss1 said:


> $60,000
> May be ok for an office worker, but he said he was a professial, to me a professial is a working in a profession, eg lawyer, dentist, civil engineer etc. I would be pretty upset if I went to uni to to become a professional and earned less than $100k,




What do you just get a degree and pull 100k straight up, he is only 25 so still green with only few years out of uni(possibly), 60K seems right. The calculations he has done are with his wage static but it will increase in years to come which he has not considered.


----------



## stacks (11 November 2011)

kincella said:


> I use a base rate of 10% per annum....now it may not grow at 10% each and every year from day one....it may even remain stagnate for 3 years...then do a small spurt and suddenly grow 20% in one year....but after 10 years ...and in hindsight on your part it should eventually produce the results...of either a doubling or tripling in market value
> 
> then in around 5 years time....your income should have increased dramatically, the little property should have doubled in price.....
> 
> I have just found out a relative of mine...she is just 22...earns $400 k pa....





These..... three....statements.....I'm.....really....not....so.......sure.....about


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## againsthegrain (11 November 2011)

Wow she must of been on a starting wage 100k at local macdonalds back in yr12


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## Tysonboss1 (11 November 2011)

lusk said:


> What do you just get a degree and pull 100k straight up, he is only 25 so still green with only few years out of uni(possibly), 60K seems right. The calculations he has done are with his wage static but it will increase in years to come which he has not considered.




Gee, I am glad I didn't go to uni then,


----------



## prawn_86 (11 November 2011)

kincella said:


> I have just found out a relative of mine...she is just 22...earns $400 k pa....and blows it all on overseas hols etc....she is an accountant with a no 1 miner in OZ......
> you have choices.....
> ...




I very much doubt this. If she is an accountant that means she would have had to do a adegree so lets work backwards from a best case scenario.

If she finished high school at 17, she could have completed a 3 year degree at 20. She then needs to get into a grad role (probable depending on grades) which pays about 60k pa. Then she needs to do CA or CFA, which takes another 2 years. 

So you are saying that she got a 700% pay rise once she completed her CFA at the age of 22? I know partners at big 4 firms who are not on that much money.

I got a great job when i graduated from finance and now earn pretty decent coin (im 24). I'm earning more than anyone i know of my class and i can assure you its not 400k


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## Tysonboss1 (11 November 2011)

kincella said:


> I have just found out a relative of mine...she is just 22...earns $400 k pa....and blows it all on overseas hols etc...




Thats really good money for a young female,

Perhaps the money is not all she is blowing.


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## Mr Z (11 November 2011)

I see that the Cloud Cuckoo Airline is thriving, tis the only legal way you get this high.


----------



## young-gun (11 November 2011)

Tysonboss1 said:


> Thats really good money for a young female,
> 
> Perhaps the money is not all she is blowing.




haha


----------



## medicowallet (11 November 2011)

Tysonboss1 said:


> Kincella, I think 10% capital gain per year is to much to expect.
> 
> I think if you buy you property well, a 10% total return per year is a more realistic figure, made up of the following,
> 
> 3% general inflation + 4.5% Cashflow ( after cost rent ) + 2.5% actual value growth




so 5.5% capital growth (this is probably reasonable for a growing market, but I wouldn't count on this at the moment)

4.5% cashflow (aftercost rent) = I assume this means after outgoings.

$350000 house, $370 per week rent = 5.5%. So you expect total outgoings to be $3500 per year.... 

NOT going to happen..... rates, insurance, RE agent fees, maintenance, depreciation.

I have put this up before, but people NEVER include the fact that there is significant upkeep... but in this example, you are ALREADY counting your capital growth in a different part of your calculation.

so please explain your claims...


----------



## medicowallet (11 November 2011)

Tysonboss1 said:


> $60,000
> May be ok for an office worker, but he said he was a professial, to me a professial is a working in a profession, eg lawyer, dentist, civil engineer etc. I would be pretty upset if I went to uni to to become a professional and earned less than $100k,




Yes, the tide has turned.  Mining boom, first home vendors boost etc.

But, in time, mining will return to normal, and, so will our outlooks.. booms never last forever, especially in a country suc as ours where we offer nothing else (partially because our government is incompetent)

So, eventually it will all tank, when?  who knows... China will crumble in a heap at some stage, all superpowers do.


----------



## Tysonboss1 (11 November 2011)

medicowallet said:


> 1, so 5.5% capital growth (this is probably reasonable for a growing market, but I wouldn't count on this at the moment)
> 
> 2, 4.5% cashflow (aftercost rent) = I assume this means after outgoings. $350000 house, $370 per week rent = 5.5%. So you expect total outgoings to be $3500 per year.... NOT going to happen..... rates, insurance, RE agent fees, maintenance, depreciation.
> 
> ...




1, Note, I said if bought well, Not " If bought any time at any price"

2, Note, I said if bought well, Not " if bought any time at any price on any yield"

3, Yeah, and remember that the figures I used were a very rough outline, It's not going to be exactly that accross the board. I was just offering an outline of the way I think.


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## Tysonboss1 (11 November 2011)

medicowallet said:


> Yes, the tide has turned.  Mining boom, first home vendors boost etc.
> 
> But, in time, mining will return to normal, and, so will our outlooks.. booms never last forever, especially in a country suc as ours where we offer nothing else (partially because our government is incompetent)
> 
> So, eventually it will all tank, when?  who knows... China will crumble in a heap at some stage, all superpowers do.




How does that relate to my quote.


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## Glen48 (11 November 2011)

Maybe she does her pay slip up each week???
 Made off eat ur heart  out her come another one.


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## medicowallet (12 November 2011)

Tysonboss1 said:


> How does that relate to my quote.




Because one of the reasons $60k seems low is that other jobs have crept over the top.

The reason why we have low unemployment (if you disregard the tripe the media vomits up about how the mining industry cut X% of jobs over the GFC)  is because of the flow on $$$ from the mining boom.


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## medicowallet (12 November 2011)

Tysonboss1 said:


> 1, Note, I said if bought well, Not " If bought any time at any price"
> 
> 2, Note, I said if bought well, Not " if bought any time at any price on any yield"
> 
> 3, Yeah, and remember that the figures I used were a very rough outline, It's not going to be exactly that accross the board. I was just offering an outline of the way I think.




Fair enough..

So I guess to correct my calculation, prices have to fall..


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## sptrawler (12 November 2011)

medicowallet said:


> Yes, the tide has turned.  Mining boom, first home vendors boost etc.
> 
> But, in time, mining will return to normal, and, so will our outlooks.. booms never last forever, especially in a country suc as ours where we offer nothing else (partially because our government is incompetent)
> 
> So, eventually it will all tank, when?  who knows... China will crumble in a heap at some stage, all superpowers do.




That quote is the key to the whole property debate. Not wanting to be a prophet of doom, but it is simple market dynamics.
We are riding a mining boom, so the mining companies gear up production untill there is an oversupply with a resultant drop in prices. Then the high recovery cost miners become unviable, leading to an increase in unemployment.
People 50 and over have seen it before, their children haven't. China doesn't have to crumble, just a slowdown will expose our high dependancy on mining.
Just enjoy it while you can, as the saying goes make hay while the sun shines, but nothing is forever.


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## Tysonboss1 (12 November 2011)

medicowallet said:


> Fair enough..
> 
> So I guess to correct my calculation, prices have to fall..




Either a Fall or a decent period of stagnation to allow inflation to make up the differrence to bring them back to 'Fair Value', 

But to "Buy Well" you would be buying underfair value on higher yield, or buying into a situation where you can increase the yield in a relativily short time frame.


----------



## medicowallet (12 November 2011)

Tysonboss1 said:


> Either a Fall or a decent period of stagnation to allow inflation to make up the differrence to bring them back to 'Fair Value',
> 
> But to "Buy Well" you would be buying underfair value on higher yield, or buying into a situation where you can increase the yield in a relativily short time frame.




And I still think that a lot of people who think that they are doing this atm are in disneyland.

Cash is king atm, even with the recent interest rate cut.


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## Beej (12 November 2011)

maffu said:


> I have been looking within about 10km of the CBD, and most 1 bedroom units are still about 500k. So the smallest starting price is about 500k.




Just to add one thing to what others have already said - it's not clear which city you are in but it sounds like it might be Sydney? Anyway if it is Sydney, you can buy a 1 bed flat within 10kms of the city for significantly less than $500k easily. Many places are available for half that in fact. Here's a nice looking place in Annandale for around $340k: http://www.domain.com.au/Property/For-Sale/Apartment-Unit-Flat/NSW/Annandale/?adid=2009336041 as just one example.

So I think the whole premise of your argument might be wrong! 

In addition to that, you are not factoring in any future income growth in your scenario, or the ability to use dual incomes *initially* to pay down a mortgage so that you can then afford to live on one income comfortably a few years down the track. That's what most people do.


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## Tysonboss1 (12 November 2011)

medicowallet said:


> Cash is king atm, even with the recent interest rate cut.




Time will tell, 

I think quality businesses, at low multiples are always King,


----------



## Tysonboss1 (12 November 2011)

Beej said:


> the ability to use dual incomes *initially* to pay down a mortgage so that you can then afford to live on one income comfortably a few years down the track. That's what most people do.




Thats a really good point, It definatly makes it easy to live on one income if you own your own home with a decent chunk paid off,


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## Tysonboss1 (12 November 2011)

medicowallet said:


> Because one of the reasons $60k seems low is that other jobs have crept over the top.
> 
> The reason why we have low unemployment (if you disregard the tripe the media vomits up about how the mining industry cut X% of jobs over the GFC)  is because of the flow on $$$ from the mining boom.




Maybe,

But $60,000 at 25years old is pretty low for some one that has had to go to uni for years to get that rate.

I joined the army staight out of high school and was earning $75K per year and that was in 2001 dollars, Now I own my own business and make several times that, As I said I am glad I didn't go to UNI.

( In reference to soldiers pay - Some of you my Google it and say "I checked the army website and it says soldiers only earn $40,000. But when you add all the other stuff it adds up.

eg, Base pay for soldier $40,000 + service allowance + Rental assistance + Bush Pay + Higher pay groups for completeing further training + separation allowance + a whole heap of other allowances. And all medical and dental etc if free, man I miss that bit)


----------



## jank (12 November 2011)

OK.

I am going to weigh in here with a few points. I am an outsider looking in. I am looking at this from an Irish perspective because that is where I am from.


Firstly, Australia is expensive. It has one of the highest cost of living in the world. It also has one of the highest wages in the world. Min wage is what $16 per hour?? Seriously? Does anyone think that is sustainable in an ever increasinly global competive economy?
Secondly, Wages are high to fuel high property prices. The same thing happened in Ireland. The higher the wage the more someone can afford to get a loan from abank for a house. However again this is not sustainable.
Thirdly. Not one economic think tank or study says that Australian House prices are under valued, many think they are over valued by anything from 10%-50% (the economist with the latter figure)
Fourth. Never in history has a property boom/bubble NOT ended in some sort of crash/correction.

Now spare me the, Australia is different crap because it holds no water and is a strawman argument. The only reason Australia is doing well now is because of record commodity prices that we ship to China, Japan, India, etc.. Are these prices sustainable once china et al slow down growth. Will China be growing at 8%+ for the next 20 years. No way in Hell it will. We shall see a change in that by the end of the decade as well as internal poltical pressures but that is a discussion for another day.

So the future of Australian property prices? Well they will in best case scenario stagnate for the next 5 years. Worst case will be a crash. Too many idiots out there thinking they can make money but just buying and holding property. The house of cards will fall soon.

Me, well happy out renting and saving the rest into a savings account and buying shares. Rent is NOT dead money at the moment. In fact I would challenge anyone to prove otherwise in today's market. Yields are very low.


----------



## explod (12 November 2011)

> So the future of Australian property prices? Well they will in best case scenario stagnate for the next 5 years. Worst case will be a crash. Too many idiots out there thinking they can make money but just buying and holding property. The house of cards will fall soon.
> 
> Me, well happy out renting and saving the rest into a savings account and buying shares. Rent is NOT dead money at the moment. In fact I would challenge anyone to prove otherwise in today's market. Yields are very low.




Well summed up Jank and welcome to the forums, great to see more reality arrive in this space.

I sold my investment properties and home a few years back now.  Called it a bit early but who can always call the top.

Very happy with a few shares and my silver, up 300% since then.  And will go up more soon    

http://www.safehaven.com/article/23240/price-irregularities-in-the-silver-market

when the manipuation stops, but heck this should be on another thread.

And then it may be time to get back into property.


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## jank (12 November 2011)

Cheers mate. I was expecting barrage of insults telling me go home or something....
Silver though? The devils metal is risky, money to be made. When are you going to sell?


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## Julia (12 November 2011)

Tysonboss1 said:


> ( In reference to soldiers pay - Some of you my Google it and say "I checked the army website and it says soldiers only earn $40,000. But when you add all the other stuff it adds up.
> 
> eg, Base pay for soldier $40,000 + service allowance + Rental assistance + Bush Pay + Higher pay groups for completeing further training + separation allowance + a whole heap of other allowances. And all medical and dental etc if free, man I miss that bit)



Whacko!  Just don't worry about the little detail that you can be killed.


----------



## young-gun (12 November 2011)

jank said:


> OK.
> 
> I am going to weigh in here with a few points. I am an outsider looking in. I am looking at this from an Irish perspective because that is where I am from.
> 
> ...




i hope there are some arguments as to why australia is different...would like to see some new ones.

stagnate for 5 years i think is ambitious, but possible i guess. you're on the money but MO shorter time frames need to be applied. by the end of the decade i would hope that the world will be well into it's detox(debt deleveraging) if not coming off the back of it ready for a new day. thats not to say house prices wont stay low for a long time.

people are of the opinion new buyers will hold the market as it starts to fall as they will see the cheap prices and dive in. and this will happen in some instances, but for the majority why would you buy a house when the market is clearly falling and hasnt shown any signs of bottoming? most will wait it out. just as alot have stopped trading equities long(largely due to volatility but also as the asx is down...alot).

its a shame you cant go short on property.


----------



## explod (12 November 2011)

young-gun said:


> i hope there are some arguments as to why australia is different...would like to see some new ones.
> 
> 
> its a shame you cant go short on property.




Australia is not different, there are people with two heads all over the world.

Home building is slowing down, see it where I live as this was a growth spot, its down to a trickle in the last few months and the builders I know tell me so too.  In the last few months a new home outfitting company went to the wall, they had had the business for sale for 12 months and no takers.

Jobs are being lost in the car industry, car sales are down, then the spin off of the related industries and further staff.

Our rising dollar has seen a slaughter in the tourist industry, resorts are closing and the associated industries here are many.

Cheaper food is coming from off shore, except we find it is not really much cheaper, our canning industry closed in the last 12 months, more jobs, and related.  Supermarkets are buying direct to package (milk to names one) from the source, middle processors gone, more jobs, but still prices seem not to drop.

And then there is retail, of course internet buying is claimed as the main culprit, but rising prices and less disposable income will be playing its part here too.

Fuel continues to rise, just recently we went over the $1.50 a litre in our area on the high cycle of the week.  

We sure have the ion ore, coal and gas fields but due to the spike in prices a few years back, cheaper mines to operate are opening up in Africa and South America.  BHP made a recent statement of concern on this development. 

In my view these effects and any common knowledge of them has not yet filtered through to the mainstream yet.  For that we can point to a ramping Government, (just watch Swanny go about how good we are, he would not have a clue) the Real Estate Industry and the daily press who feed off it.

By next March (when the fun of xmas passes) the full pain will hit and the realisation that property is not all it is cracked up to be and those then with high debt levels and lots of investment properties will be blocking each other at the gate to get out.

We have seen it in the US, the UK and Ireland and from my reading we have all the elements for the same.

We are just the same as everyone else, IMVHO.


----------



## satanoperca (12 November 2011)

jank said:


> OK.
> 
> I am going to weigh in here with a few points. I am an outsider looking in. I am looking at this from an Irish perspective because that is where I am from.
> 
> ...




But we are different here - our property market hasn't crashed yet.

As we speak it is in a healthy correction, but will it crash?

Cheers

Cheers


----------



## young-gun (12 November 2011)

satanoperca said:


> 1.But we are different here - our property market hasn't crashed yet.
> 
> 2.As we speak it is in a healthy correction, but will it crash?




1. 'yet'
2. yes


----------



## medicowallet (12 November 2011)

Julia said:


> Whacko!  Just don't worry about the little detail that you can be killed.




Apart from afghanistan, there is little risk.


----------



## medicowallet (12 November 2011)

Tysonboss1 said:


> Maybe,
> 
> But $60,000 at 25years old is pretty low for some one that has had to go to uni for years to get that rate.
> 
> ...




Really, I couldn't tell you were from the army, lol.

It still does not matter. Recent wage increases are very dependent upon the influence of mining.

The extra demand for blue collar workers is dependent on mining.

To think otherwise is ignoring the fundamentals of our poorly managed economy.


----------



## noirua (12 November 2011)

Vote for favourite forum at: http://www.thebull.com.au/the_stockies/forums.html

Hope you can spare just a minute this weekend.


----------



## jank (12 November 2011)

satanoperca said:


> But we are different here - our property market hasn't crashed yet.
> 
> As we speak it is in a healthy correction, but will it crash?
> 
> ...




Yet is the key word here. Because something hasn't happened yet doesn't mean it will.


----------



## Julia (12 November 2011)

explod said:


> And then there is retail, of course internet buying is claimed as the main culprit, but rising prices and less disposable income will be playing its part here too.



Let's not forget the woeful lack of service in retail stores.  They don't deserve to get the business in many cases.



> In my view these effects and any common knowledge of them has not yet filtered through to the mainstream yet.  For that we can point to a ramping Government, (just watch Swanny go about how good we are, he would not have a clue)



Are you quite mad, explod?  He's the world's greatest treasurer!   As someone remarked at the time of this announcement, god help the competition.


----------



## Julia (12 November 2011)

medicowallet said:


> Apart from afghanistan, there is little risk.



It was Afghanistan I was thinking of.  Where you can have the comfort of knowing even your own side will take you out.  Such a comfort.


----------



## Tysonboss1 (12 November 2011)

Julia said:


> Whacko!  Just don't worry about the little detail that you can be killed.




2 people died on Bhp mine sites last year, another year 16 died on Bhp mine sites,


----------



## noirua (12 November 2011)

If you buy property as an investment you must remember it is a gamble. Many invested in US condo's and the value of these fell apart. If you put your money in a throw them up quick investment for a speedy return on the Aussie property spike wear fire-proof-gloves.





Voting takes place for your favourite stock forum at: http://www.thebull.com.au/the_stockies/forums.html


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## Tysonboss1 (12 November 2011)

Medico,

Wouldn't the mining boom have an equal effect on professonal wages,


----------



## wayneL (12 November 2011)

Tysonboss1 said:


> 2 people died on Bhp mine sites last year, another year 16 died on Bhp mine sites,




How many service personal died in industrial accidents (as a proportion).

How many miners were shot by belligerents?


----------



## Tysonboss1 (12 November 2011)

Believe me, I am not making light of the danger, a friend of mine has been killed and several scarred and one disabled, it can be dangerous work.

I was just pointing out their is danger every where, we are talking about pay rates though, and if you want to add the risk in afganistan, you can add an extra $60,000 to the annual amount mentioned earlier.


----------



## jank (13 November 2011)

Someone mentioned that there is no way to short property but why not short the banks? The key of course is timing.


----------



## Tysonboss1 (13 November 2011)

That could proove to be a very patience trying exercise,


----------



## medicowallet (13 November 2011)

Tysonboss1 said:


> Medico,
> 
> Wouldn't the mining boom have an equal effect on professonal wages,




no.. you do know this already, don't you?


----------



## explod (13 November 2011)

Tysonboss1 said:


> That could proove to be a very patience trying exercise,




I know traders who could have, and some will be, going long and short on NAB over the last 12 months where it has moved up and down from 28 to 20 dollars.

Went to a trading school some 8 years ago where we did just that with BHP.

Theres money to be made for the discerning in these markets.  And good traders know when the tops and bottoms are in, just ask Tech/a.


----------



## Tysonboss1 (13 November 2011)

medicowallet said:


> no.. you do know this already, don't you?




If the mining boom is increasing the wages throughout the economy, I can't see how professionals would not also be benefiting.


----------



## Mrmagoo (14 November 2011)

Tysonboss1 said:


> If the mining boom is increasing the wages throughout the economy, I can't see how professionals would not also be benefiting.




Because their company does not service the mining industry nor service any industry which does. 

" Oh but flow on effects - and it will trickle down ! "

LMAO. Psuedo science much ?


----------



## Tysonboss1 (14 November 2011)

Mrmagoo said:


> Because their company does not service the mining industry nor service any industry which does.
> 
> " Oh but flow on effects - and it will trickle down ! "
> 
> LMAO. Psuedo science much ?




So you don't believe the cash generated by mining flows through the economy,

Where do the share holders live that spend the dividends, 
Where does the state governments spend their royalties,
where does the federal goverment spend the company tax and income tax,
where do the fly in fly out mine workers spend their pay check,

There are far to many trickle down areas to mention, For example cash from a mine in western NSW, is probably funding school teachers, police officers and road workers in sydney, and that flows on and on,


----------



## cutz (14 November 2011)

Tysonboss1 said:


> Where do the share holders live that spend the dividends,
> Where does the state governments spend their royalties,
> where does the federal goverment spend the company tax and income tax,
> where do the fly in fly out mine workers spend their pay check




It's a mirage TB, like many I can't see how the cash flows down.


----------



## Mr Z (14 November 2011)

cutz said:


> It's a mirage TB, like many I can't see how the cash flows down.




Oh come now... just take a look at most all the non commodity economies and tell me how you think they are going! You just don't know how good it actually is down here! People I talk to in the US cite 30% local unemployment... we are soooooo lucky down here it is not funny.


----------



## Tysonboss1 (14 November 2011)

cutz said:


> It's a mirage TB, like many I can't see how the cash flows down.




It is definately flowing down, I bet you would miss it if it were taken away, Look at al the government departments financed by the royalties and taxes, and flow on employment from the teachers, police, nurses and doctors, soldiers, and the emplyment generated by governent projects like roads, bridges and tunnels etc, 

If it weren't for the mining income the government would be in alot more debt, we would be sitting next to greece in the bread line.


----------



## disarray (14 November 2011)

mining and energy contribute 8.4% of GDP and employ 1.5% of the workforce. smaller than arts and recreation and the banking sector.

while it provides more than half of our exports eek, and there is some limited spillover into related service industries, the RBA ran numbers that said with all the value add "trickle down" effect mining and energy provides, the sector comes to about 13% of the economy.

in return it has driven the aussie dollar higher strangling the tourism, education and (lol) manufacturing industries.

lets not jump up and down and wave the mining flag as if its some great all encompassing saviour  of the country.

Peter Harcher on Hack talking about the mining industry


----------



## MACCA350 (14 November 2011)

REIV amended clearance rates for the previous two weekends have been 50%. 

This weekends pre-amended clearance rate is 54%, most likely will be amended to around 50% later in the week.

We've seen the clearance rates in the 50s and 60s for over a year now. I've never seen clearance rates stay so low for so long, though I've only been watching for a few years.

It seems sellers are still holding out for better prices rather than taking the offers that are available.

What's everyone's thoughts on this extended period of low clearance rates and how is it impacting the future of prices? Is it an indication that sellers are reluctant to accept that the market has softened? And when they finally to accept current conditions will their sales put negative pressure on future prices?

Just posing some interesting questions for discussion

Cheers


----------



## satanoperca (14 November 2011)

MACCA350 said:


> REIV amended clearance rates for the previous two weekends have been 50%.
> 
> This weekends pre-amended clearance rate is 54%, most likely will be amended to around 50% later in the week.
> 
> ...




For me it is quite simple after attending many auctions in the last few months with the aim of buying.

Sellers are wanting last years prices - high
Buyers are wanting next years prices - lower

So it is a stand off at the moment.

Cheers


----------



## MACCA350 (14 November 2011)

satanoperca said:


> For me it is quite simple after attending many auctions in the last few months with the aim of buying.
> 
> Sellers are wanting last years prices - high
> Buyers are wanting next years prices - lower
> ...



Who do you think is going to blink first?

It feels a bit like the calm before the storm. We're just waiting in anticipation of who's going to retreat, then we'll see a run either up or down. Or can things just keep going the way they have for the last year?

Cheers


----------



## Tysonboss1 (14 November 2011)

disarray said:


> 1, mining and energy contribute 8.4% of GDP and employ 1.5% of the workforce.
> 
> 2, banking sector.
> 
> ...




1, So thats a big number, especially when you factor in that a Much larger portion of the revenues ends up in government hands than most other industries, 43% Actually, then you have the wages of all the related workers and industries attched to that

2, The banking sector would be smaller if you took away mining think about the loans to mining companies, loans and financel services of mine workers, related industry financing, the strong aussie dollar etc. etc

3, thats huge

4, does that include government spending funded by royalities and taxes.

5, the high dollar is neither a positve or negative


----------



## satanoperca (14 November 2011)

MACCA350 said:


> Who do you think is going to blink first?
> 
> It feels a bit like the calm before the storm. We're just waiting in anticipation of who's going to retreat, then we'll see a run either up or down. Or can things just keep going the way they have for the last year?
> 
> Cheers




I would expect that sellers will start reducing their expectations on price as more and more wish to sell. 
I forsee this situation happening due to the very large build up of stock for sale in the market at the moment, especially in Melbourne.

Note : the last seven auctions I have attending in inner melbourne have all seen no sales. approx 3 have gone unreported.

I also find it interesting that the last two revisions down on auction clearance rates have been to that magical level of 50%. If it was 49%, doesn't sit as well as 50% as you could say less than half of all auction homes are not selling. 50% is sitting on the fence.

Cheers


----------



## explod (14 November 2011)

Tysonboss1 said:


> 5, the high dollar is neither a positve or negative




You have to be joking, go back to my post on here Saturday.

Interesting, if you cant jump it you ignore it.

And back to the big miners.  very large share holdings are held by overseas investors, many still in the old homeland, the UK.


----------



## cutz (14 November 2011)

Mr Z said:


> Oh come now... just take a look at most all the non commodity economies and tell me how you think they are going! You just don't know how good it actually is down here! People I talk to in the US cite 30% local unemployment... we are soooooo lucky down here it is not funny.




Don't get me wrong Mr Z, I do feel we have it good here but it's not because of the mining boom, I think it may have to do with a speculative bubble that hasn't popped yet.


----------



## Tysonboss1 (14 November 2011)

explod said:


> You have to be joking, go back to my post on here Saturday.
> 
> Interesting, if you cant jump it you ignore it.
> 
> And back to the big miners.  very large share holdings are held by overseas investors, many still in the old homeland, the UK.




The high dollar helps some people and hinders others, over all it balances out. 

Yes, there are over seas interests in our mining indusrty, this in no way stops royalties flowing to the government, and it doesn't stop australians earning wages and paying income tax, and it doesn't stop the various other industries.

And the international investors in australia are offset by aussies investing over seas,


----------



## explod (14 November 2011)

The higher dollar is hurting our employment situation.

Reduced employment opportunities and lower wages is hitting the wider middle classes; 

and that is the big one that will impact more and more on property prices.


----------



## medicowallet (14 November 2011)

Tysonboss1 said:


> If the mining boom is increasing the wages throughout the economy, I can't see how professionals would not also be benefiting.




They are, but the effect is diluted. It is also recycled via the trades quite well via inept government strategies such as the FHVB.

Miner on $50k buys house from builder making $75k profit, paying worker $50k per year.

Miner on $150k buys house from builder making $150k profit, paying worker $85k per year.

Concentrating money in the subsector not deemed "professionals". Hence there is an increase in BCW incomes relative to "professional" incomes.

Please tell me your posts were tongue in cheek..


MW


----------



## Tysonboss1 (14 November 2011)

medicowallet said:


> Concentrating money in the subsector not deemed "professionals". Hence there is an increase in BCW incomes relative to "professional" incomes.
> 
> 
> 
> MW




No doubt all that building and various other economic activity is stimulating fees to lawyers, accountants, architects etc. Even the doctors and dentists should be having a better go at it.


----------



## Tysonboss1 (14 November 2011)

explod said:


> The higher dollar is hurting our employment situation.
> 
> Reduced employment opportunities and lower wages is hitting the wider middle classes;
> 
> and that is the big one that will impact more and more on property prices.




Here is from the RBA.



> In the long term, the main implication of an appreciating exchange rate is structural change within the Australian economy. Since a strong Australian dollar means that Australian exports become more expensive, export industries will effectively become less competitive in the world market. Export industries other than mining, including farming, manufacturing and tourism, are likely to be impacted by this. Those that cannot compete under the high exchange rate will contract. This results in the release of labour and capital previously utilised by inefficient businesses, which will be reallocated to the expanding mining industry. The reallocation of resources to an area of production in which they are being used more efficiently results in higher productivity growth and increased economic growth. This in turn leads to higher real incomes for Australians, and higher living standards.




You just have to roll with the punches.


----------



## Wysiwyg (14 November 2011)

Mrmagoo said:


> Because their company does not service the mining industry nor service any industry which does.



Exactly and the reason why wages of keyboard tappers in the city high rises remain relatively stagnant. Big company stumps up billions and the construction firms (including engineering pros.) are hired. Flow on is directly to the local community and indirectly to the government via taxes for distribution. House construction and existing house prices rise proportionately to incomes in the local area. Unskilled people may find it tough due to increased rents and living costs.

We are in the middle of a mining and energy construction boom but if you are not directly in touch with it then the personal returns for effort obviously won't be as great.


----------



## Mrmagoo (14 November 2011)

Tysonboss1 said:


> So you don't believe the cash generated by mining flows through the economy,
> 
> Where do the share holders live that spend the dividends,
> Where does the state governments spend their royalties,
> ...




Trickle down economics and flow ons from a quantiative perspective are largely pseudo scientific mythology. 

If you can show me actual emperical evidence that wealth concentration leads to flow ons which result in economic growth then I might listen. However, I'd need time to critically examine the articles so I doubt we'd be settling this over the internet. 

Anecdotaly, Europe and the US and what I've seen with my own two eyes in Australia indicate that the mining boom doesn't "flow on" and the rest of the country was largely better off before the silly boom.


----------



## Mrmagoo (14 November 2011)

Wysiwyg said:


> Exactly and the reason why wages of keyboard tappers in the city high rises remain relatively stagnant. Big company stumps up billions and the construction firms (including engineering pros.) are hired. Flow on is directly to the local community and indirectly to the government via taxes for distribution. House construction and existing house prices rise proportionately to incomes in the local area. Unskilled people may find it tough due to increased rents and living costs.




Who exactly is the local community ?

Tradies ? Sure, they earn a bit more than they used to and some of them got rich (likely through hard work) but I'm pretty sure I don't want to be one any time soon.

That basically leaves office workers and the un-skilled.

Engineers ? Because we all had 4-6 year of mummy and daddy looking after us while we studied an intensive course and graduated on a whopping 55k a year. Plus if we all went and got engineering degree's we'd all be unemployed or earning a crap wage.

Why not just say that doctors make good money, so the economy must be doing fine. (also see above regarding mummy and daddy).

It is not that I am jealous (which I am but that is not the reason) it is just that it really irks me when people think that going off and getting some fancy degree is the solution to all problems.

Yeah, the unskilled suffer, which funnily enough is like, I dunno, like the majority of the population who buys stuff and pays taxes. So what you're really saying is the majority of people suffer, so the economy tanks, so nothing flows on, but people in my social circle are all well off and they do okay, so it must all flow on nicely.


----------



## Mrmagoo (14 November 2011)

Tysonboss1 said:


> Here is from the RBA.
> 
> 
> 
> You just have to roll with the punches.




 I wouldn't trust teh RBA to walk my dog. I'm sure they have some intelligent quantitative people, but economic theory like that is silly and helps no one.


----------



## Wysiwyg (14 November 2011)

Mrmagoo said:


> Who exactly is the local community ?
> 
> Tradies ? Sure, they earn a bit more than they used to and some of them got rich (likely through hard work) but I'm pretty sure I don't want to be one any time soon.



We are in the middle of a mining and energy construction boom but if you are not directly in touch with it then the personal returns for effort obviously won't be as great.


----------



## Mrmagoo (14 November 2011)

If retail and manu. continue as they are all I can say is brace for complete economic destruction and 9% unemployment because we're slowly becoming the basket case US economy and we all know what happened to prices there.

Look, if you earn 30k a year and your rent is 300pw that leaves you with about $200 to live off, $100 for food and probably another $100 for bills leaves about 50 bucks to afford the train to work and back.

As the cost of stuff rose, that person probably took out a credit card so now isn't even consuming $100 worth of food items.

Have enough people like that and retail businesses statrt going under. Why ?

They were built in a time when :

30k gave u $450 a week instead of $550

BUT

rent was $80 a week, bills were $25 and for $50 a week you ate really well.

Then the whole thing just spirals.


----------



## Tysonboss1 (14 November 2011)

Mrmagoo said:


> Trickle down economics and flow ons from a quantiative perspective are largely pseudo scientific mythology.
> 
> If you can show me actual emperical evidence that wealth concentration leads to flow ons which result in economic growth then I might listen. However, I'd need time to critically examine the articles so I doubt we'd be settling this over the internet.
> 
> Anecdotaly, Europe and the US and what I've seen with my own two eyes in Australia indicate that the mining boom doesn't "flow on" and the rest of the country was largely better off before the silly boom.




All you need to see is that 43% of mining revenues enter government coffers, They are then spent ( Or wasted however you like to put it ) on things in ever corner of the country, how is this not trickle down,


----------



## Mrmagoo (14 November 2011)

Tysonboss1 said:


> All you need to see is that 43% of mining revenues enter government coffers, They are then spent ( Or wasted however you like to put it ) on things in ever corner of the country, how is this not trickle down,




I told you above. I'm not here to prove that I am right to you. I know I am right and will one day profit from it.


----------



## explod (14 November 2011)

Tysonboss1 said:


> Here is from the RBA.
> 
> 
> 
> You just have to roll with the punches.




The good ole RBA.  Like swanny, they would not have a clue.  

And all premised on the mining industry.  As has been pointed out, our high dollar and the high prices for commodities over the last few years are opening up mines in other areas away from Australia.  

And they have the ore bodies dont worry about, *with* much cheaper labour too.

Commorn there Pal, you need to come up with more substance than that to hold the property market up.


----------



## young-gun (14 November 2011)

Mrmagoo said:


> Who exactly is the local community ?
> 
> Tradies ? Sure, they earn a bit more than they used to and some of them got rich (likely through hard work) but I'm pretty sure I don't want to be one any time soon.
> 
> ...




im a sparky - and make alot more money than most people would think, and work no more hours than a key basher. there is plenty of work going in brissy. not to mention commonwealth games, thats work for years for us construction workers both in brisbane and goldy. there is huge flow on affects. thanks blighe, or maybe gillard - not sure who funds the infrastructure. either way we're winning

to stay on topic - house prices to fall


----------



## kincella (14 November 2011)

couple of points for the mushrooms.....
homeowners have been splurging 35 billion on home renovations..rather than selling, then upgrading and paying state govnut fees and taxes...a huge saving there

more people are selling by private treaty...rather than auction
cause auctions only work in a heated market....
and we do not have a heated market right now....

for everyday the stockmarket girates....it loses another conservative investor.....
with his tail between his legs,,,,he takes what is left.....and puts it into the property market....
there are a stack of people out there, on salary or wages, who watch in awe....just how much they are losing on their superfunds.....and there is absolutely nothing they can do about it...
because the majority of superfunds invest their clients money into the gambling den of the stockmarket....
it is only the DIY...small business operators, who have their own superfunds, that can control their super investments.

Harry Tribgunorf or whatever his name is...said today,,,he is only geting 12 chinese investors in his 'off the plan apartments', compared to 25 investors per week last year...

Australian expats to the UK are coming home in droves....
France will be the net one to fall.....
Germany is waiting in the wings.....to take over the Euro assets, at a fraction of the price
China is primed.....it has you, the consumer  figured out

you  will be able to buy, australian farms, and land at a fraction of the price in the future.....contaminated places....after the coal seam gas cowboys. have ripped it up. and destroyed it....,,, it will leave what was once thriving food bowls.....now barren wastelands.....
but sitting there in your city offices....you will have absolutely no idea..what went wrong......higher food and energy costs.....will have an impact......
but in most cases it will fall on deaf ears....


----------



## Mrmagoo (14 November 2011)

young-gun said:


> im a sparky - and make alot more money than most people would think, and work no more hours than a key basher. there is plenty of work going in brissy. not to mention commonwealth games, thats work for years for us construction workers both in brisbane and goldy. there is huge flow on affects. thanks blighe, or maybe gillard - not sure who funds the infrastructure. either way we're winning
> 
> to stay on topic - house prices to fall





As I said " me and my circle of privilleged friends are doing well out of mining so the rest of the country must also be "

Never mind that most of the country are NOT electricians working in commercial construction getting 110k a year base, plus every second friday off, family picnic day, an allowance if it is under 20 degrees and allowance if it is 10am an allowance for going to work....

Most people earn an average crappy wage which is further reduced by inflation and increased housing prices. That'll start to cause some of those key b ashers to lose jobs soon and then there is no one to buy houses or pay taxes to fund constrsuction.


----------



## Tysonboss1 (14 November 2011)

explod said:


> Commorn there Pal, you need to come up with more substance than that to hold the property market up.




Have I ever said I wish to hold the property market up, Or any market for that matter.

Why would I want to encourage higher prices, I am going to be a buyer of real estate over the next 30 years I want the prices to go down.


----------



## Tysonboss1 (14 November 2011)

Mrmagoo said:


> It is not that I am jealous (which I am but that is not the reason) it is just that it really irks me when people think that going off and getting some fancy degree is the solution to all problems.
> 
> Yeah, the unskilled suffer, which funnily enough is like, I dunno, like the majority of the population who buys stuff and pays taxes. So what you're really saying is the majority of people suffer, so the economy tanks, so nothing flows on, but people in my social circle are all well off and they do okay, so it must all flow on nicely.




Why Be jealous? Envy is the only deadly sin you will never have any fun at. Never feel sorry for yourself or feel envy. Once you adopt of victim attitude, you done for.

I don't think the unskilled suffer, I think the unmotivated suffer. Any one who is prepared to get out there and get after it will succeed in this country. 



Mrmagoo said:


> I told you above. I'm not here to prove that I am right to you. I know I am right and will one day profit from it.




One day, Mmmm. why not today, why not for the last 10 years. I am not here to proove anything either. I am not right or wrong because people agree of disagree, I am right or wrong because my data and reasoning is right or wrong, and my investments and income either meet expectations or fail to meet expectations.



Mrmagoo said:


> Never mind that most of the country are NOT electricians working in commercial construction getting 110k a year base, plus every second friday off, family picnic day, an allowance if it is under 20 degrees and allowance if it is 10am an allowance for going to work....
> 
> Most people earn an average crappy wage which is further reduced by inflation and increased housing prices. That'll start to cause some of those key b ashers to lose jobs soon and then there is no one to buy houses or pay taxes to fund constrsuction.




You remind me of this guy,




 No one is going to offer you a fantastic pay check when you act like him. You have to be motivated, Find an industry you love and be the best at it, Be the guy customers love to come and see, be the go to guy that you employer can't live without, be above average, turn up early do extra, spend time thinking about how you can serve better, and money will flow in.

The best way to get what you want in life is to deserve what you want.


----------



## So_Cynical (14 November 2011)

A Malaysian bank is offering loans for the purchase of Prime Aussie property.



			
				biz.thestar.com.my said:
			
		

> OCBC Bank offers loans to buy properties in Australia:
> 
> Head of Consumer Financial Services, Charles Sik said the introduction of the facility, OCBC Overseas Property Financing-Australia, follows the success of a similar scheme for London properties launched six month ago.
> 
> "Like the earlier scheme, customers will be able to take advantage of the fact that this is also a *ringgit-based loan*, hence mitigating the effects of fluctuating foreign exchange risks,"




LOL no currency risk there... everything old is new again, its all one big merry go round.

http://biz.thestar.com.my/news/story.asp?file=/2011/11/14/business/20111114114623&sec=business


----------



## Tysonboss1 (15 November 2011)

Mrmagoo said:


> As I said " me and my circle of privilleged friends are doing well out of mining so the rest of the country must also be "
> 
> Never mind that most of the country are NOT electricians working in commercial construction getting 110k a year base, plus every second friday off, family picnic day, an allowance if it is under 20 degrees and allowance if it is 10am an allowance for going to work....
> 
> Most people earn an average crappy wage which is further reduced by inflation and increased housing prices. That'll start to cause some of those key b ashers to lose jobs soon and then there is no one to buy houses or pay taxes to fund constrsuction.




I think if you take the time to listen to Dave you will gain a better outlook as to your place in the economy.


----------



## young-gun (15 November 2011)

Tysonboss1 said:


> Why Be jealous? Envy is the only deadly sin you will never have any fun at. Never feel sorry for yourself or feel envy. Once you adopt of victim attitude, you done for.
> 
> I don't think the unskilled suffer, I think the unmotivated suffer. Any one who is prepared to get out there and get after it will succeed in this country.
> 
> ...




couldnt agree more tyson. magoo u think guys and girls with a trade have just had those conditions handed to them? as a first year apprentice i was working a 40hr week for 160$ a week in the hand. it doesnt get much better as you progress. once you finish your time then its upto you to go out and find the highest paying employers. its upto you to find where the most overtime is. its upto you to find what area of your profession you enjoy the most.

as you can imagine everyone wants these positions - so exactly as tyson said you have to set yourself apart from the rest, or u very quickly find yourself down the road.

it doesnt matter where your working or what your doing, whether your skilled or unskilled. if your keen motivated and ready to go, the possibilities are endless.

i agree with you that construction will definitely slow as it's largely supported by companies requiring office space and expanding. but there is always something going on.

if you're so jealous of people making good money, become one - find out who the main construction players are in your area. throw your resume into them as a trade assistant. sure youll be doing some pretty intense work, but with a foot in the door you can work your way into different positions, get a large variety of skills on site in alot of different areas. not to mention making good $$$ TA's can make upwards of 80-90k even more if they put in 60 hours or more a week.

 - house prices to fall


----------



## Mrmagoo (15 November 2011)

young-gun said:


> couldnt agree more tyson. magoo u think guys and girls with a trade have just had those conditions handed to them? as a first year apprentice i was working a 40hr week for 160$ a week in the hand. it doesnt get much better as you progress. once you finish your time then its upto you to go out and find the highest paying employers. its upto you to find where the most overtime is. its upto you to find what area of your profession you enjoy the most.
> 
> as you can imagine everyone wants these positions - so exactly as tyson said you have to set yourself apart from the rest, or u very quickly find yourself down the road.
> 
> ...




Oh my GOD........ Not even going to bother addressing that post.

But why would I want to start from the bottom as a trade assistant and "get a wide variety or skills" when I already make that much for working in an office ?


----------



## young-gun (15 November 2011)

Mrmagoo said:


> Oh my GOD........ Not even going to bother addressing that post.
> 
> But why would I want to start from the bottom as a trade assistant and "get a wide variety or skills" when I already make that much for working in an office ?




Then what's ur problem with construction boom if ur making the same as them anyway?


----------



## Mrmagoo (15 November 2011)

young-gun said:


> Then what's ur problem with construction boom if ur making the same as them anyway?




Construction workers make a whole lot more than 80-90k. 

This place is just a little weird sometimes. Like being at a dodgy investment conference or reading one of those self help investment books. 

I'd say the point of my post has been missed and the replies are kind of what I was trying to mock in the first place.

LOOK

According to tyson all we have to do is work hard and then eceryone in the world will be millionares.


----------



## Tysonboss1 (15 November 2011)

Work hard, earn good money, spend less than you earn, invest wisely and yes you will grow steadily richer,


----------



## young-gun (16 November 2011)

Mrmagoo said:


> Construction workers make a whole lot more than 80-90k.
> 
> This place is just a little weird sometimes. Like being at a dodgy investment conference or reading one of those self help investment books.
> 
> ...




you are have been seriously mislead about the construction industry. yes we make good money. but only after working big weeks. base rates are no better than what you are currently on. only difference is we are able to work more for more money(on wages) as opposed to ur salary, no need to hate.

this has fizzled now anyway so im not bothering to go and read both yours and tysons original post

house prices to fall


----------



## medicowallet (16 November 2011)

young-gun said:


> couldnt agree more tyson. magoo u think guys and girls with a trade have just had those conditions handed to them? as a first year apprentice i was working a 40hr week for 160$ a week in the hand. it doesnt get much better as you progress. once you finish your time then its upto you to go out and find the highest paying employers. its upto you to find where the most overtime is. its upto you to find what area of your profession you enjoy the most.




How about a 6 year medical degree, getting paid $0 per hour for a 40-60 hour week and actually paying to do the course.

Then starting out on $60k, then 2 or 3 years as a resident then 5 years as a registrar, and only then, after 14 years of very intense training and studying, earning more than a lot of other jobs... just food for thought.


----------



## Wysiwyg (16 November 2011)

medicowallet said:


> How about a 6 year medical degree, getting paid $0 per hour for a 40-60 hour week and actually paying to do the course.
> 
> Then starting out on $60k, then 2 or 3 years as a resident then 5 years as a registrar, and only then, after 14 years of very intense training and studying, earning more than a lot of other jobs... just food for thought.



More food for thought is the choice one makes by going that path. Tradesmen spend an average of 4 years doing an apprenticeship on 25%, 50% and 75% of tradesmen wages due to an actual contribution to the company as skills develop. Well paid jobs need experience with employers wanting from 5 to 10 years of post trade experience. Fair days work for a fair days pay I reckon and your condition is fair effort for eventual reward. 

Not to mention actually having a passion for the career.


----------



## Tysonboss1 (16 November 2011)

medicowallet said:


> How about a 6 year medical degree, getting paid $0 per hour for a 40-60 hour week and actually paying to do the course.
> 
> Then starting out on $60k, then 2 or 3 years as a resident then 5 years as a registrar, and only then, after 14 years of very intense training and studying, earning more than a lot of other jobs... just food for thought.




Doctors do OK, I don't think many are in the poor house, 

I know dentists do ok, I had to pay one the other day, Now that's money for jam, (but hey, I sure am glad their are all sorts of people good at their jobs to help me out, and if they serve well they will do well)

I don't want to go down the line of tradies vs professials, Both contribute greatly to the economy, Both can earn substantial amounts if they are good at their jobs, and both can enjoy their work,


----------



## medicowallet (16 November 2011)

Wysiwyg said:


> More food for thought is the choice one makes by going that path. Tradesmen spend an average of 4 years doing an apprenticeship on 25%, 50% and 75% of tradesmen wages due to an actual contribution to the company as skills develop. Well paid jobs need experience with employers wanting from 5 to 10 years of post trade experience. Fair days work for a fair days pay I reckon and your condition is fair effort for eventual reward.
> 
> Not to mention actually having a passion for the career.




Of course this is off topic, but the final 8 years are making a contribution too.  To compare 4 years to 14 is interesting..

It is much easier to get a "fair day's pay" for a "passionate" tradie at a mine (I assume that you meant that tradies do it for the passion and not the pay  ), but I can tell you, the hospital system, does not really make any distinction between a person working in metro vs rural..

THIS is where I am coming from, saying the mining boom causes problems in relative incomes.  How much extra does a school teacher earn in Moranbah?


----------



## Wysiwyg (17 November 2011)

medicowallet said:


> Of course this is off topic, but the final 8 years are making a contribution too.  To compare 4 years to 14 is interesting..



4 years plus 5 - 10 for experience to get a pay commensurate with such. Anyway this is off topic and if one doesn't like the pay or conditions well do something else.


----------



## satanoperca (17 November 2011)

Back on topic.

House prices down down down.

Across the capitals, property values have fallen by -3.4%  over the past year.

•Hobart (-9.1%) and Brisbane (-6.1%) have been the weakest markets over the past year.

•Sydney and Canberra have been relatively stronger performers with values down -1.2% and -1.6%respectively.

Must have been the floods in Hobart that did it.

Cheers


----------



## young-gun (17 November 2011)

medicowallet said:


> How about a 6 year medical degree, getting paid $0 per hour for a 40-60 hour week and actually paying to do the course.
> 
> Then starting out on $60k, then 2 or 3 years as a resident then 5 years as a registrar, and only then, after 14 years of very intense training and studying, earning more than a lot of other jobs... just food for thought.




of course this is a much harder path. and never claimed that an apprenticeship was the most difficult way to go. i personally loved the idea of earning while learning, hence why i took that path(not to mention i have neither the intellect nor the motivation for a medical degree) did consider architecture but was even put off at the thought of 6 years for that.

and also medico, there is a higher risk working in the mining industry, even the construction industry in general. 2 deaths in the past month in fact in brisbane alone. and no these guys were not moreons, they were just very unfortunate. although all safety precautions are taken, people do still die - im sure not many teachers have died on the job, regardless of where they are located

thanks for the update satan,

house prices to continue to fall.


----------



## medicowallet (17 November 2011)

Wysiwyg said:


> 4 years plus 5 - 10 for experience to get a pay commensurate with such. Anyway this is off topic and if one doesn't like the pay or conditions well do something else.




In the city, yes, but there are jobs readily available that pay well very quickly.  Also there is better choice of where to live etc.

BTW just pointing out that WCW actually have to do training and such as well.  But of course, according to some, a trade is the hardest thing to get into and the hardest to complete, and the hardest to maintain... word for you, 60+ hours of study per week is exhausting.

MW

PS where is Robots?


----------



## Mrmagoo (18 November 2011)

You'll seldom find a doctor who is not a millionare before 30. Their earning capacity is truly amazing. 

However, this is NOT off topic because many people seem to be unable to grasp the concept that it is not possible for everyone to be a doctor. So you can't base predictions of house prices on " just work harder and earn more money, see, 700k for a 3 bedroom house in frankston is affordable ".


----------



## satanoperca (18 November 2011)

Mrmagoo said:


> You'll seldom find a doctor who is not a millionare before 30. Their earning capacity is truly amazing.
> 
> However, this is NOT off topic because many people seem to be unable to grasp the concept that it is not possible for everyone to be a doctor. So you can't base predictions of house prices on " just work harder and earn more money, see, 700k for a 3 bedroom house in frankston is affordable ".




But they are becoming more affordable.

Across the capitals, property values have fallen by -3.4% over the past year.

That is in one year, lets see what happens next year, another 4% fall maybe.

Cheers


----------



## explod (18 November 2011)

Nephew just got retrenched, new mob took over and he got his job back at $40 a week less.

They have a mortgage and just cancelled the overseas trip.

Seems to be lots of anecdotal of batterning down.


----------



## Tysonboss1 (18 November 2011)

explod said:


> Nephew just got retrenched, new mob took over and he got his job back at $40 a week less.
> 
> They have a mortgage and just cancelled the overseas trip.
> 
> Seems to be lots of anecdotal of batterning down.




One of my Mates got head hunted by another firm and he's getting an extra $45K a year in a new position,

Whats that got to do with the property market,

Nothing,

Lots of anecdotal prosperity at my end,

If $40 a week is going to spoil your nephew's plans, I would suggest he learns a bit of budjeting, $40 a week is nothing.

Notice he cancelled the holiday though, and not the mortgage,


----------



## Tysonboss1 (18 November 2011)

Mrmagoo said:


> 1, You'll seldom find a doctor who is not a millionare before 30. Their earning capacity is truly amazing.
> 
> 2, However, this is NOT off topic because many people seem to be unable to grasp the concept that it is not possible for everyone to be a doctor.
> 
> 3, So you can't base predictions of house prices on " just work harder and earn more money, see, 700k for a 3 bedroom house in frankston is affordable ".




1, Remember people that look like millionaires seldom are, High income does not always correlate with high net worth.

2, No, But being a doctor is not the only way to earn good money. the economy is a very dynamic thing, Full of holes and niches that need to be filled, and their is plenty of opportunity for smart and productive people to earn alot of money.

3, I haven't seen any body say that, But it is true you have to save and make sacrifices to own a property, that has always been the case, If property is truely over valued, don't worry, it will correct, it's impossible for it not to, 

Obviously though if you wait till you turn 30 before you decide to start saving you are going to have a harder time at than someone who started saving at 18, and you will have to work harder and make much larger sacrifices, and those sacrifices will seem so much larger because for 10years you have spend every dime on consumption so it will be hard to cut back.

If you blow the opportunity to save in your 20's, your life will be harder and it is no ones fault but yours,


----------



## moXJO (18 November 2011)

Mrmagoo said:


> Construction workers make a whole lot more than 80-90k.
> 
> .




Gross wage for the majority of Construction workers is a little over $800 a week (plumbers a little over a $1000). Unless you run your own business. And yes I do know, as I employ a lot. There is a lot that get paid under $800 per week.

As for property the floor seems to be in for now after some drops in the local area


----------



## Mrmagoo (18 November 2011)

Tysonboss1 said:


> 1, Remember people that look like millionaires seldom are, High income does not always correlate with high net worth.
> 
> 2, No, But being a doctor is not the only way to earn good money. the economy is a very dynamic thing, Full of holes and niches that need to be filled, and their is plenty of opportunity for smart and productive people to earn alot of money.
> 
> ...





lol yeah right dude. That whopping 2% real increase is gonna masacre the 10% pa you get on housing :S

That compound interest gig is an old wives tale.


----------



## young-gun (18 November 2011)

Mrmagoo said:


> lol yeah right dude. That whopping 2% real increase is gonna masacre the 10% pa you get on housing :S
> 
> That compound interest gig is an old wives tale.




im sure ur not trying to say property returns 10% pa?

and tyson this idea wont work when interest rates hit between 0 and 1% in the next 18 months(optimistic timeline)

 - property to faaaalllllllll


----------



## kincella (18 November 2011)

just some considerations.......or food for thought

what if these guys are correct......
ie china is bankrupt....
http://www.financialsense.com/contr.../11/16/chinese-banking-system-nearly-bankrupt


extracts from an interesting report today.....

If you want an illustration of how difficult the environment has become for share investors, consider the fact that US stocks have now underperformed bonds not just in the short term but in the past 30 years, which is something they haven't done in any other 30-year period since the start of the American Civil War. That's right - since 1861.

http://www.theage.com.au/money/inve...r-investors-20111115-1nfxs.html#ixzz1dzhrpdtU.................

and finally this article


http://www.zerohedge.com/news/entir...-collapse-presenting-first-mf-global-casualty

France and the UK are in strife.....so too is the US.....and so too is Australia
so I am wondering.....
its the world bankers that actually control the money....
so what if they decided tomorrow...to reduce their debt obligations.....in unison....
apart from printing money ....they announced that ....
they had done a re-capitilsation......and from the 1st of December.....your Dollar would now be worth .50 cents....

so on the basis that the banks currently only hold 10% in cash...if they are honest with the regulations.....and their debt is currently 90%, with corresponding assets....ie loans to home owners and business is also 90%
after the devaluation, or recapitalisation...they would now hold the same % in cash, net equity ie assets less liabilities......but their debt or liabilities are now only half the dollar value.....
which would free them up from their current total debt obligations.....
and send them on their way to keep running their CDO schemes

if they simply keep printing money as in the US.....the dollar is devalued, it buys you less goods....or everything costs more than yesterday....
I think the Euro cannot by law print money...but am sure there are ways around this....with The ECB and The IMF

anyone get the felling they are being screwed big time

I am now paying a 300% increase on my electricty bill....but am using less electricty each year.....and the state and federal govnuts....think that this is OK...


----------



## Tysonboss1 (18 November 2011)

Mrmagoo said:


> lol yeah right dude. That whopping 2% real increase is gonna masacre the 10% pa you get on housing :S
> 
> That compound interest gig is an old wives tale.






young-gun said:


> im sure ur not trying to say property returns 10% pa?
> 
> and tyson this idea wont work when interest rates hit between 0 and 1% in the next 18 months(optimistic timeline)
> 
> - property to faaaalllllllll




I am sorry, Both of you missed the point.

I am not trying to say property earns 10%, or earning bank interest is the way to success,

The point is, Starting early, and deploying capital in a way that it earns good returns that compound is the way to success,

There are many ways to skin a cat,

but if you are saving a decent chunk of your earnings, and deploying the saving in a way that earns decent returns, and you allow them to compound, you will grow richer and richer.

Mcgoo, Compounding returns is the only way to wealth, I am sorry if you disaggree. I know you are nearly 30, but it's not to late. Better to start now than when your 35 or 40.

I started when I was 14, and am now 29, I could easily retire on an income alot of people struggle to make working 40 hrs, So I have been there and done most of what you seem to think is impossible, 

But hey each to his own, Honestly I am not here to argue, I just give my opinions based on what i have done and what I believe, It has worked out for me so far.


----------



## jank (19 November 2011)

Tysonboss1 said:


> I am sorry, Both of you missed the point.
> 
> I am not trying to say property earns 10%, or earning bank interest is the way to success,
> 
> ...




Would inflation eat into the principle though if you retired now?


----------



## young-gun (19 November 2011)

jank said:


> Would inflation eat into the principle though if you retired now?




U need a ****e-load of money to allow for such things.. 4-5 mill plus if u were to retire at 30?

Kincella I'm sure ur aware that the destruction of a dollar increases it in value.. Unless that 50 cents you're talking of is against the green back as opposed to the new value of our own dollar once debt is written down?

I wasn't aware ebb couldn't print money, and indeed thought they hsd been so there ya go.

Tyson I got what u were saying but was referencing magoo.. Unless he was quoting u


----------



## Mrmagoo (19 November 2011)

young-gun said:


> im sure ur not trying to say property returns 10% pa?
> 
> and tyson this idea wont work when interest rates hit between 0 and 1% in the next 18 months(optimistic timeline)
> 
> - property to faaaalllllllll




The only way to make money is to have money. Or to make a high return on a leveraged investment.

Compounding interest MAY have worked back when you could burry $100 in the ground and 100 years later it would have increased slightly in value.


----------



## Tysonboss1 (19 November 2011)

jank said:


> Would inflation eat into the principle though if you retired now?




Inflation reduces the purchasing power of cash, I don't hold 100% of my principle in cash, so no it wouldn't.

I hold assets that produce Cashflow, that I could live off. The principle value of these assets as well as the Cashflow generated will increase with inflation.


----------



## Mrmagoo (19 November 2011)

Tysonboss1 said:


> I am sorry, Both of you missed the point.
> 
> I am not trying to say property earns 10%, or earning bank interest is the way to success,
> 
> ...




You invested in property in the early 2000s, seriously, big deal, anyone who did that will be doing really well now.

In 2001 I was in year 11 so buying a house wasn't really possible. Or was I going to buy one on my $8 an hour dish washing job I had at uni ? (b.c the $4.95 an hour one in highschool wasn't going to cut it)


----------



## Tysonboss1 (19 November 2011)

Property makes up maybe 30% of my net worth, 

Why not start saving on the $8 uni job, I first entry into shares was funded by delivery of paper, earning less gha $5 an hour.


----------



## Mrmagoo (19 November 2011)

Tysonboss1 said:


> Property makes up maybe 30% of my net worth,
> 
> Why not start saving on the $8 uni job, I first entry into shares was funded by delivery of paper, earning less gha $5 an hour.




uuumm... bills ?

How long did you say you were in the army for ?


----------



## Tysonboss1 (19 November 2011)

Mrmagoo said:


> 1, uuumm... bills ?
> 
> 2, How long did you say you were in the army for ?




1, Earn more or spend less

2, just over 5 years


----------



## jank (19 November 2011)

So you have cash, property and stocks I presume. Most people have these as investments. I have 2 out of the 3. Id find it hard to believe you can retire on it now though! How much debt do you have?


----------



## Tysonboss1 (19 November 2011)

jank said:


> 1,So you have cash, property and stocks I presume. Most people have these as investments. I have 2 out of the 3.
> 
> 2, Id find it hard to believe you can retire on it now though!
> 
> 3, How much debt do you have?




1, And an operating business,

2, Why, would you find it hard to believe you can live off rental income and dividends.

3, Not much debt at all,

My home is pretty much paid for, 

My other property investments are less than 40% LVR and generate positive cashflow which is clearing the remaining debt pretty quickly.

I have a largish share portfolio personally that generates considerable annual dividends.

I hold an emergency fund of about 12months wages personally in cash (offset against property)

and,

My company is debt free and has an operating business which could be sold when i choose to scale back, a pile of cash and also a trust holding further share investments.


----------



## cutz (19 November 2011)

This thread is turning into one big yawn.

Now back to property,

Has anyone got any observations at street level with what’s happening. In my area sales boards are on the increase, no bidders at auctions (apart from the vendor bid) and deserted open for inspections.

Is this a bottoming process or the start of a seismic shift ?


----------



## jank (19 November 2011)

Tysonboss1 said:


> 1, And an operating business,
> 
> 2, Why, would you find it hard to believe you can live off rental income and dividends.
> 
> ...




Maybe you should sell those investment properties! Dont you hear a crash is coming?


----------



## craft (19 November 2011)

Tysonboss1 said:


> I started when I was 14, and am now 29, I could easily retire on an income alot of people struggle to make working 40 hrs, So I have been there and done most of what you seem to think is impossible,





Sorry to continue this off topic stuff but I was just wondering Tyson, what % of disposable income did you have to put aside and what % return did you have earn to achieve this?


----------



## medicowallet (19 November 2011)

Mrmagoo said:


> You'll seldom find a doctor who is not a millionare before 30. Their earning capacity is truly amazing.




This is incorrect

18 
+ 3 years for undergraduate degree
+ 4 years for medical degree
25
+1 Intern
+2 Resident
+2 of 5 registrar
30

1 year intern pay + 2 year registrar pay + 2 year resident pay is not even going to get anyone anywhere near net worth of $1million.

Just cannot happen.


now AFTER the 15 years of training (of which 12 of those are at least 60 hours per week ) the earning is good, but you would be surprised how low some of the jobs pay for such intense and prolonged training.


----------



## Glen48 (19 November 2011)

A  mate on the sunshine coast  has put his unit on the market , the one above they paid 1M and sold for 600K ...


----------



## Tysonboss1 (19 November 2011)

cutz said:


> Now back to property,
> 
> ?




Sorry, Last off topic reply I promise.



craft said:


> Sorry to continue this off topic stuff but I was just wondering
> 
> 1, Tyson, what % of disposable income did you have to put aside and
> 
> 2,  what % return did you have earn to achieve this?




Hey Craft,

1, The % I saved varied depending on my income, during highschool it was 100% of my income, after school it was probably around 30%, Since I have been running my business I save around 80% of the companies earnings

2, I have never calculated the return, But I have certainly had some lucky days and had some big wins, Some looking back in the early days some we pure dumb luck, eg. getting into property right before the 2001 boom, and some of my early investments. Some were big gambles that fortunately paid off eg. Beppa convertable securities and others have been great buys during the GFC.

I have a much more conservative investment operation going at the moment though, So my future returns although they will be lower, should be based on sound investment principles and less on outright speculation and luck.

Any one interested can have a look back to this post from 2009 in another thread if they want to see that my responces have not just been made up to answer mcgoos questions.

https://www.aussiestockforums.com/forums/showthread.php?t=4426&page=11&highlight=people+poor


----------



## Tysonboss1 (19 November 2011)

jank said:


> Maybe you should sell those investment properties! Dont you hear a crash is coming?




Yeah I hear I crash is coming, I hear lots of things, Not every thing you hear is true though.

I agree there may be a correction, But I don't believe it will be as large as some people here beileve, and it would not be worth the hassle of sellign up, paying the transaction fees and capital gains just to sit in cash.

I would rather just keep the properties and keep have the weekly rental income flowing in, 

My property portfolio offers a good counter weight to all the market girations in the stock market.

The same people that say the property market is going to crash say big inflation is coming, I see hold a chunk of my wealth in property as being a long term inflation hedge that produces cashflow.


----------



## Mrmagoo (19 November 2011)

Tyson property will crash. Either in 1 year or 10 years or 20, by price correction or lack of growth or growing wages the price will come down. It is a mathematical certainty. Why ? Well I've tried to explain that to you, but your argument has been "well then just earn more money" so it seems that you think the inflation argument will be what brings house prices down.


----------



## Mrmagoo (19 November 2011)

Tysonboss1 said:


> Sorry, Last off topic reply I promise.
> 
> 
> 
> ...




So the truth comes out. Investing at the right time and investing in high risk high return investments combined with earning a relatively high income will make you rich.

That, I agree with.

Unfortunately property is a joke at the moment as it is just too expensive to even consider


----------



## Smurf1976 (19 November 2011)

cutz said:


> This thread is turning into one big yawn.
> 
> Now back to property,
> 
> ...



House next door to where I lived for many years has been for sale for probably half a year now and the owners have moved to Queensland. According to neighbours on the other side who I know quite well, there have been open inspections (nobody turns up) and the price has been reduced but still no luck. There's nothing wrong with the house but it's not selling.

Or I could look around my own area. Plenty of houses for sale with an asking price that is lower than the independent valuation done on this house when I bought it 4 years ago. And that's asking prices - actual selling prices would no doubt be lower again.

In cash terms I'd say that prices are much the same as they were 5 years ago. Relative to practically anything else of value (gold, oil, wages, food etc) they have certainly come down and are continuing to fall.


----------



## craft (19 November 2011)

Mrmagoo said:


> So the truth comes out. Investing at the right time and investing in high risk high return investments combined with earning a relatively high income will make you rich.




Not to mention a high level of retention.

Yep, I think Tyson just made pretty powerful argument *against* real estate if your ambition is wealth creation as you need to seek high return potential and that is just not present in Australian real-estate at the moment.

It’s all just opinion but I doubt residential real-estate is even going to be much of a store for wealth over the next decade, but there is more reason then just financial for owning your home. As for property investment – Happy to leave that to others at current prices, buying a low yielding asset for diversification sake doesn’t make much sense to me nor does leveraging it up to try and get a decent return.


----------



## Ves (19 November 2011)

craft said:


> Sorry to continue this off topic stuff but I was just wondering Tyson, what % of disposable income did you have to put aside and what % return did you have earn to achieve this?



 I apologize if I am intruding, but would appreciate if you could give a rough indication of the answer to this question for yourself too. 

Welcome to PM me if you feel more comfortable.

Thanks in advance!


----------



## Wysiwyg (19 November 2011)

Smurf1976 said:


> House next door to where I lived for many years has been for sale for probably half a year now and the owners have moved to Queensland.



Qld., N.T. and W.A. is where the money is and apparently the whole of Tassie is going to be World Heritage listed. Well that would keep the chuffed grin on Bob's face anyway.


----------



## Julia (19 November 2011)

Tysonboss1 said:


> Inflation reduces the purchasing power of cash, I don't hold 100% of my principle in cash, so no it wouldn't.
> 
> I hold assets that produce Cashflow, that I could live off. The principle value of these assets as well as the Cashflow generated will increase with inflation.



This may be an intrusive question, but if you can live off your current cashflow, why don't you do that?  Too young to retire?  Absolutely love working???



Tysonboss1 said:


> 1, And an operating business,
> 
> 2, Why, would you find it hard to believe you can live off rental income and dividends.



Probably because in most cases the ROE for property is miserably low, and with regard to dividends, you're currently going to be accepting this yield whilst watching your capital investment diminishing.  You might be the exception, Tyson, but imo this is not a time to regard dividend yield as all that matters. 


medicowallet said:


> now AFTER the 15 years of training (of which 12 of those are at least 60 hours per week ) the earning is good, but you would be surprised how low some of the jobs pay for such intense and prolonged training.



Not to mention the immense responsibility involved.  



craft said:


> Not to mention a high level of retention.
> 
> Yep, I think Tyson just made pretty powerful argument *against* real estate if your ambition is wealth creation as you need to seek high return potential and that is just not present in Australian real-estate at the moment.



Totally agree.


----------



## Smurf1976 (19 November 2011)

Wysiwyg said:


> Qld., N.T. and W.A. is where the money is and apparently the whole of Tassie is going to be World Heritage listed. Well that would keep the chuffed grin on Bob's face anyway.



Literally about half the entire state already is locked up... (off topic but it really annoys me everytime I see someting in Vic / NSW media implying that there's about 10 trees left in Tas and they'll be cut down by the end of next week. Fact is about half the state is protected - far more than any other state). 

Back on topic, there are more reasons to own real estate than simply investment that's for sure and that's something I think of everytime I hear of yet another person with landlord hassles. My landlord (me) gives me no silly hassles... 

Only the other week a colleague had a truly ridiculous saga. They wanted to keep his bond because apparently the flat needed cleaning. It came down to the fact that he hadn't thoroughly cleaned (1) the underside of the kitchen sink and (2) the exterior of the hot water service. WTF! Who regularly cleans the underside of a kitchen sink? And when's the last time you gave your hot water cylinder a good scrub? No doubt there's some good landlords out there, but there's an awful lot of outright scammers. Owning your own home has its advantages...


----------



## kincella (19 November 2011)

on another forum today....a labourer who had taken up the incentive to go seek the big money in the mines...was whinging about paying  roughly  $70,0000 in tax on an income of $180,0000.....
same whinger is a property bear.....he is like most of you on this forum....
they cannot see the woods for the trees....

I know people in the eastern states, earning similar incomes.... who have taken the smarter tax routes....and invested in the negative gearing incentives, from the property market....
and they are not whingeing......
they reduce their tax bills, by huge amounts...which more than compensates for the low return on income from property....but at the same time....they are looking at good increases in capital growth.........
in Melb for instance... there has been growth of over 30% in the past 3 years....but a decrease in the past year of  is it 1.3%.....?

if you are on a  medium income for a family of around $120.000 pa.....with a joint income....paying only 21% tax is fine....
but on a single income in excess of that....
there are better ways to reduce your tax bill....
and increase your wealth.......


----------



## sptrawler (20 November 2011)

Well for what it's worth, I THINK.
The government has to decide whether to let inflation slide up and make the average wage $120,000 p.a. a loaf of bread goes to $5. The price of fuel goes to $2/L, the
Aussie dollar goes back to $0.75 U.S and the average house price stays at $450,000.
The upside is you can get rid of all the change in your pocket, no need for 5, 10. 20, 50cent coins. Not long and we could be 1 for 1 with the rupiah. LOL
I guess what I am saying unless you have crashes like U.S/ U.K/ Europe. The money system just keeps compounding up.
We just haven't had our crash YET!!!!!


----------



## noirua (20 November 2011)

Commodity prices are falling and that should help reduce inflation and Import prices will eventually follow. Government will need to increase taxation as the future mining tax may not now bring in as much as expected -- together property prices will fall as guaranteed profits become the way of the past; probably very soon.


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## craft (20 November 2011)

kincella said:


> on another forum today....a labourer who had taken up the incentive to go seek the big money in the mines...was whinging about paying  roughly  $70,0000 in tax on an income of $180,0000.....
> same whinger is a property bear.....he is like most of you on this forum....
> they cannot see the woods for the trees....
> 
> ...




If you are negatively gearing then by definition the asset is not capable of self liquidating the debt against it.

You are dependent on a few things that are not a given.  The economy growing to facilitate capital growth, the economy providing employment so you can fund the shortfall. The government continuing to support your investment. Negative gearing has been a path to wealth creation in the past but it may just be a path to wealth destruction if any of the above changes. 

Even if all the supporting factors  remain in place your return may not be that great if you have paid too much in the first place and there is unwinding in the multiples paid for housing by the time you want to sell, a real possibility given the current multiples on a historical basis.


----------



## trainspotter (20 November 2011)

Head tenant just signed 3 year lease for $90 psqm in a 325m commercial shed plus outgoings and a 5% ratchet per annum. 

Just signed contracts to build 2 x "spec" homes. 18% return on input when they sell.

Have just finished 8 x unit development for tidy sum. 

Whatever you do don't invest in property !!! It is going to crash ................


----------



## MACCA350 (20 November 2011)

MACCA350 said:


> REIV amended clearance rates for the previous two weekends have been 50%.
> 
> This weekends pre-amended clearance rate is 54%, most likely will be amended to around 50% later in the week.



Last weekends amended clearance rate is 51%

This weekends pre-amended clearance rate is 52%

Cheers


----------



## young-gun (20 November 2011)

sptrawler said:


> Well for what it's worth, I THINK.
> The government has to decide whether to let inflation slide up and make the average wage $120,000 p.a. a loaf of bread goes to $5. The price of fuel goes to $2/L, the
> Aussie dollar goes back to $0.75 U.S and the average house price stays at $450,000.
> The upside is you can get rid of all the change in your pocket, no need for 5, 10. 20, 50cent coins. Not long and we could be 1 for 1 with the rupiah. LOL
> ...




problem is as we start devaluing our currency with stimulus spending(as ive said so many times before this doesnt do anything except prolong the bubble bursting)other nations such as the states will by that time be writing down their debt and destroying their dollars(increasing their value) which will cause ours to be even more worthless

once the resource boom slows - so too will the amount of high income earners coming back to capital cities to push up house prices, and buying numerous investment properties. 

MO the perfect storm is brewing. 

japan, the US, Europe, everywhere in the world investors and home owners have had reasons excuses and facts as to why housing there was different, and that it CANT crash here............

the system is imperfect, we dont do anything much differently to anywhere else, its only logical that we will follow suit.


----------



## young-gun (20 November 2011)

trainspotter said:


> Head tenant just signed 3 year lease for $90 psqm in a 325m commercial shed plus outgoings and a 5% ratchet per annum.
> 
> Just signed contracts to build 2 x "spec" homes. 18% return on input when they sell.
> 
> ...




welcome back train spotter 

are you a builder or a developer? and have u been paid for those contracts? 3 houses built at the end of my st(not spec homes) were put on the market for 520-530. they sold for around 480-490, and took months to move.

ive been watching for houses in the area i wish to live - same houses have been on there for the past 5 months - each dropping prices by 10-20k since august and still not budging - 2 houses ive been watching sit there have now be repossessed by banks, and are listed under new agents. ive watched the amount of houses in the same price range go from 18 to about 28 in the area.

commercial real estate is a joke, we require about 150m2 storage to allow us to grow our businesss in the near future, most were priced at over 20k p/a for basic tilt slab lock up. 400$ a week?! no thanks. we can rent a 3 bedroom house with a shed and have almost the same amount of space for equal to or less than that price. storage space and a place to live - win win.

its obviously in high demand as the cost of buying the commercial buildings doesnt justify whats able to be charged. not many 300k houses out there u could rent for 400$ a week.

i think u have luck on ur side atm. and am guessing margins are lower?


----------



## trainspotter (21 November 2011)

young-gun said:


> welcome back train spotter
> 
> are you a builder or a developer? and have u been paid for those contracts? 3 houses built at the end of my st(not spec homes) were put on the market for 520-530. they sold for around 480-490, and took months to move.
> 
> ...




You are welcome young-gun. 

I am a developer. I have signed the contracts to build the homes to speculate on. The advantage I have is that I sell my own product so it is not hard for me to offload. I have gone into the formula on this thread many times and can't be bothered posting it again.

Commercial property is the best. Not much to destroy inside a big tin shed !! Anything above 300sqm attracts between $90 - $110 psqm depending on location and fitout. Good to be the owner ..... tenant pays for the lot. Once again I have explained how to create 30k per annum income out of 2 x industrial sheds in previous posts. All this for a 150k input 

Margins I operate on have not changed for me. I am doing it less than previous years as the market has gone off the boil somewhat. LOLOLOL


----------



## McLovin (21 November 2011)

trainspotter said:


> You are welcome young-gun.
> 
> I am a developer. I have signed the contracts to build the homes to speculate on. The advantage I have is that I sell my own product so it is not hard for me to offload. I have gone into the formula on this thread many times and can't be bothered posting it again.
> 
> ...




Are they in this thread? I'd like to read them. I'm amazed at the cost of warehousing in Sydney. Last week I was looking at 400sqm warehouse with a very small office area and the agent wanted $240/sqm. I laughed at him and told him I'm paying $190/sqm just down the road for showroom/warehouse. It did get me thinking though, how hard can it be to put up four walls and tin roof.


----------



## satanoperca (21 November 2011)

kincella said:


> in Melb for instance... there has been growth of over 30% in the past 3 years....but a decrease in the past year of  is it 1.3%.....?



30% hey, so back 3 years to 2008 the median price was approx $360K, currently $455K?
-1.3% - actually -4.4% from rpdata, just a little out. 

Is that decline in prices  the start of a new trend or just a correction?

Time will tell.

Cheers


----------



## matty77 (21 November 2011)

Sunday Mail in Adelaide says Brighton in SA has gone up 30% in the past 12 months...

I just don't see how that is possible.


----------



## young-gun (21 November 2011)

matty77 said:


> Sunday Mail in Adelaide says Brighton in SA has gone up 30% in the past 12 months...
> 
> I just don't see how that is possible.




The odds of Pulling actual facts from the Sunday or courier mail would be equivalent to watching an unbiased report on today tonight - it just can't happen


----------



## matty77 (22 November 2011)

young-gun said:


> The odds of Pulling actual facts from the Sunday or courier mail would be equivalent to watching an unbiased report on today tonight - it just can't happen




I would 100% agree with you.

Today Tonight had the JFK conspiracy solved apparently, except I missed it.


----------



## cutz (22 November 2011)

matty77 said:


> I would 100% agree with you.
> 
> Today Tonight had the JFK conspiracy solved apparently, except I missed it.




matty77,

You need to look at hard stats from the RBS and ABS, the fin review has got good property reporting and things don't sound too good.

On the topic of auctions one thing that erks me are knockout vendor bids, these days with no genuine bidders at auctions vendors come in with knockout bids that reflect boom times, how does this assist with price discovery ? Potential buyers just walk away. How do you deal with a knockout vendor bid ? Properties just sit there with for sale signs, not a good look for the street.


----------



## sptrawler (22 November 2011)

Sounds like the banks are trying to deflate prices in a controlled manner. Forclose on one sector at a time to minimise write downs.

http://www.smh.com.au/business/1-billion-in-distressed-property-on-the-block-20111122-1nscp.html


----------



## young-gun (22 November 2011)

sptrawler said:


> Sounds like the banks are trying to deflate prices in a *controlled*manner.




is this the same controlled as chinas soft landing?


----------



## trainspotter (22 November 2011)

sptrawler said:


> Sounds like the banks are trying to deflate prices in a controlled manner. Forclose on one sector at a time to minimise write downs.
> 
> http://www.smh.com.au/business/1-billion-in-distressed-property-on-the-block-20111122-1nscp.html




Whilst they still make record profits !! 

http://www.abc.net.au/worldtoday/content/2011/s3349141.htm


----------



## sptrawler (23 November 2011)

trainspotter said:


> Whilst they still make record profits !!
> 
> http://www.abc.net.au/worldtoday/content/2011/s3349141.htm




Well trainspotter, they either deflate the property prices or FWA will be chock a block with pay claims.
If house prices don't come down, wage claims will kick in to compensate for lack money to buy a house.
If that happens everything resets to the new norm and we can get rid of all the coins under $1.


----------



## trainspotter (23 November 2011)

sptrawler said:


> Well trainspotter, they either deflate the property prices or FWA will be chock a block with pay claims.
> If house prices don't come down, wage claims will kick in to compensate for lack money to buy a house.
> If that happens everything resets to the new norm and we can get rid of all the coins under $1.




There is more to wage claims than mere house prices. Many factors force the Unions hands to bring pay disputes to council chambers. Have a closer look at who is flexing their muscles and it sure as **** aint the banks. Banks don't want prices to fall as their loan books would have slightly higher default ratings which in turn will effect the shareholders confidence thusly watching their propfits going down the gurgler.

Banks require happy little vegemites in boxes diligently toiling away to pay the mortgage. Good governance requires this also so that people are employed to pay the taxes which feed the great party machines.

Pay claims are coming in vogue RIGHT NOW !! Look at QANTAS. Nothing to do with house prices as they already have come down over 3% (according to the ABS figures) in the past 12 months. Look at CPI and the price of living/petrol/bananas/state taxes on electricty/gas/water yadda yadda yadda.

What does this guvmint do to afford all of this? Why .... introduce more taxes of course ! Wait until we have full blown wealth distribution when the Feds take the mineral states to the cleaners. Then you will see house prices plummet as everyone has been prediciting as unemployment goes through the roof.

Anyhooooooo ...... back to topic please.


----------



## explod (23 November 2011)

My Brother-in-law purchased a new property at Ocean Grove (Vic) last year.  I mentioned my concern to him and suggested renting for awhile.   However you cannot step in the way of a property bull I have found.  Paid $450,000 in full, no debt.  A nearly identical new property on the market up the street has a price tage reduced to $365,000.  Arr well.

The following from Morgan Stanley is in line with what a lot of us bears have been pointing out for some time. Arr well.

http://www.morganstanley.com/views/gef/archive/2010/20100817-Tue.html


----------



## trainspotter (23 November 2011)

explod said:


> My Brother-in-law purchased a new property at Ocean Grove (Vic) last year.  I mentioned my concern to him and suggested renting for awhile.   However you cannot step in the way of a property bull I have found.  Paid $450,000 in full, no debt.  A nearly identical new property on the market up the street has a price tage reduced to $365,000.  Arr well.
> 
> The following from Morgan Stanley is in line with what a lot of us bears have been pointing out for some time. Arr well.
> 
> http://www.morganstanley.com/views/gef/archive/2010/20100817-Tue.html




Amazing what a difference 12 months can make isn't it??

It also shows how you can make money out of RE. Let's say you purchased aforementioned "new house" for $365,000 and it sells to someone like explods brother in law for $450,000 !!!!!!!!!! Arrr well ....... another one born every minute I reckon.


----------



## explod (23 November 2011)

trainspotter said:


> Amazing what a difference 12 months can make isn't it??
> 
> It also shows how you can make money out of RE. Let's say you purchased aforementioned "new house" for $365,000 and it sells to someone like explods brother in law for $450,000 !!!!!!!!!! Arrr well ....... another one born every minute I reckon.




Was a bit out, on questioning my Wife her Brother brought the place in March of this year.

And I am sure the building company who did the job up the road on the March price levels would be a pit peeved.  More than a 20% drop in eight months.

So maybe the one in every minute could change a bit soon.


----------



## sptrawler (23 November 2011)

trainspotter said:


> There is more to wage claims than mere house prices. Many factors force the Unions hands to bring pay disputes to council chambers. Have a closer look at who is flexing their muscles and it sure as **** aint the banks. Banks don't want prices to fall as their loan books would have slightly higher default ratings which in turn will effect the shareholders confidence thusly watching their propfits going down the gurgler.
> 
> Banks require happy little vegemites in boxes diligently toiling away to pay the mortgage. Good governance requires this also so that people are employed to pay the taxes which feed the great party machines.
> 
> ...




Wage claims are usually brought about because wages are not covering peoples living costs. The single biggest cost to people is usualy the house payment, dropping interest rates relieves pressure. 
But owing $400,000 when on $60,000 p/a brings on its own kind of pressure. The only way to get that under control is to either give pay rises or drop the amount people have to borrow.
I know which the government and RBA would prefer, one is inflationary the other hurts those that are over extended by choice.


----------



## trainspotter (24 November 2011)

explod said:


> Was a bit out, on questioning my Wife her Brother brought the place in March of this year.
> 
> And I am sure the building company who did the job up the road on the March price levels would be a pit peeved.  More than a 20% drop in eight months.
> 
> So maybe the one in every minute could change a bit soon.




I reiterate ....... let's look at the maths of this transaction.

Let's say we borrow 80% of value of $365,000 principal at 7.5% = $292,000 and $21,900 per annum or $1,825 per month and $73,000 in deposit. $1,825 x 8 months = $14,600 interest component. $87,600 total outlay (insurance, rates stamp duty, etc) to be added in later.

Sell house for $450,000 = $85,000 gross profit in 8 months or $127,500 per annum. Minus sales commission and rates and taxes and stamp duties, solicitors fees etc. Let's say $20,000 = $65,000 nett profit.

Let's not get into capital gains tax as you should be better structured to be able to offset this kind of profit with carried forward losses.

So I just turned $87,600 into a nice little earner !! 

Please feel free to post percentile basis return figures


----------



## sptrawler (24 November 2011)

trainspotter said:


> I reiterate ....... let's look at the maths of this transaction.
> 
> Let's say we borrow 80% of value of $365,000 principal at 7.5% = $292,000 and $21,900 per annum or $1,825 per month and $73,000 in deposit. $1,825 x 8 months = $14,600 interest component. $87,600 total outlay (insurance, rates stamp duty, etc) to be added in later.
> 
> ...




Thats a great idea, then I buy it from you for $450,000, put down 20% approx $90,000.
Keep it for 8months and then sell it for $550,000 (don't want to too greedy).
Another tidy profit, what an absolute stroke of genius, transpotter, where do I sign up.LOL


----------



## prawn_86 (24 November 2011)

trainspotter said:


> So I just turned $87,600 into a nice little earner !!
> 
> Please feel free to post percentile basis return figures




Quoting Return On Margin isn't entirely accurate though is it TS. Its how all the dodgy CFD/option operators etc say "how to make 5000% in a year". Simply leverage up $1000 at 500:1 with an FX provider and a positive one cent movement returns $5k. Where do i sign up...


----------



## explod (24 November 2011)

trainspotter said:


> I reiterate ....... let's look at the maths of this transaction.
> 
> Let's say we borrow 80% of value of $365,000 principal at 7.5% = $292,000 and $21,900 per annum or $1,825 per month and $73,000 in deposit. $1,825 x 8 months = $14,600 interest component. $87,600 total outlay (insurance, rates stamp duty, etc) to be added in later.
> 
> ...




Absolutely no argument with me there transpotter.

Just pointing out that my Brother-in-law purchased his new house in August this year and its value is down 20%.

We do enjoy the finer points from yourself et al., however the basis of this thread is the future of Australian property prices and for the rank and file things are looking down at the moment.


----------



## young-gun (24 November 2011)

sptrawler said:


> Thats a great idea, then I buy it from you for $450,000, put down 20% approx $90,000.
> Keep it for 8months and then sell it for $550,000 (don't want to too greedy).
> Another tidy profit, what an absolute stroke of genius, transpotter, where do I sign up.LOL




do u mind if i buy it from u? i have a feeling if i sell it 2 years later i could pocket upto 250k. 

 - prices to fall


----------



## Mr Z (24 November 2011)

This way the entire country becomes investment geniuses and gets to feel MUCH better about themselves.

Just a suggestion guys, but shouldn't this story start with "once upon a time"?


----------



## trainspotter (24 November 2011)

This thread is also to learn how to make money out of RE if you know what you are doing. 

Anyhoooooo ..... yes prices are trancing sideways and will continue on a slow deflation level controlled by the banks until unemployment hits hard.

The future of Australian propery prices is definitely on a downward trend. BUT .... there is still good opportunities out there .... like the one I have given an example of. Finding the right buyer is the key. IF ONLY the world was filled with explods brother in laws !!


----------



## trainspotter (24 November 2011)

prawn_86 said:


> Quoting Return On Margin isn't entirely accurate though is it TS. Its how all the dodgy CFD/option operators etc say "how to make 5000% in a year". Simply leverage up $1000 at 500:1 with an FX provider and a positive one cent movement returns $5k. Where do i sign up...




Only need one deal a year to cover expenses prawn86


----------



## Mr Z (24 November 2011)

trainspotter said:


> IF ONLY the world was filled with explods brother in laws !!




or hot blonds that say yes after you have had 16 beers, are legendary in your own mind and can barely speak.

Not my reality but never say never.


----------



## trainspotter (24 November 2011)

Mr Z said:


> or hot blonds that say yes after you have had 16 beers, are legendary in your own mind and can barely speak.
> 
> Not my reality but never say never.




What ??? That has never happened to you Mr Z?


----------



## sptrawler (24 November 2011)

Mr Z said:


> or hot blonds that say yes after you have had 16 beers, are legendary in your own mind and can barely speak.
> 
> Not my reality but never say never.




Exactly, after 16 beers they are all hot blondes. The only question is your performance.:


----------



## Mr Z (24 November 2011)

trainspotter said:


> What ??? That has never happened to you Mr Z?




The thing is... I don't remember.


----------



## Mr Z (24 November 2011)

sptrawler said:


> Exactly, after 16 beers they are all hot blondes.




Nope... your perception is that they are all hot blondes... reality however is waking up in a house that you paid too much for. 



sptrawler said:


> The only question is your performance.:




Hey I only wanted it for a year or so... after that some greater fool was gunna buy it! Whadda ya mean the music stopped? I gotta keep this up for how many years? Seeeeesh!?


----------



## explod (24 November 2011)

Mr Z said:


> Nope... your perception is that they are all hot blondes... reality however is waking up in a house that you paid too much for.




And you cant' afford 16 beers.   

Does it come down to the blonde or the house ?

err, you'd get kicked out of the house I spose anyway.


----------



## Mr Z (24 November 2011)

explod said:


> Does it come down to the blonde or the house ?




What planet do you live on? The blonde got the house and I got the payments, where was the OR choice  ... or was it she got the mine and I got the shaft... I always get  

Now where is that beer that I can't afford?


----------



## trainspotter (24 November 2011)

Mr Z said:


> What planet do you live on? The blonde got the house and I got the payments, where was the OR choice  ... or was it she got the mine and I got the shaft... I always get
> 
> Now where is that beer that I can't afford?




LOL ... welcome to my world brother !


----------



## Temjin (26 November 2011)

Latest quarterly RP Data.




full report here

http://www.scribd.com/doc/73715835/Quarterly-Review-NOV11-1

They trying to make it sounds it's not that bad, but the conclusion is still negative, at least not as negative as they want to portray to avoid killing more confidences.


----------



## Aussiejeff (26 November 2011)

Temjin said:


> Latest quarterly RP Data.
> 
> 
> 
> ...




Thanks for that link Temjin. Good one.

Yeah, I agree they have managed to squeeze some positive juice out of pretty much EVERY negative. LOL. Most of it comes down to "should be better" "might pick up" "may improve" etc, etc. An awful lot of wishful thinking to assuage concerns in property sector, metinks.

Plenty of fat to chew over.


----------



## explod (26 November 2011)

Don't you just love the adds currently on TV and radio on advertising home loans.

"...its never been a better time to take out a home loan *as its a buyers market*"

As traders we are lucky that we understand the fundamental of "never try to catch a falling knife".


----------



## So_Cynical (26 November 2011)

Temjin said:


> Latest quarterly RP Data.
> 
> 
> 
> ...




Some pretty telling stats there....long term volume in clear decline and long term values in clear decline...it looks like a market bubble burst except in illiquid slow motion.
~


----------



## cutz (26 November 2011)

explod said:


> Don't you just love the adds currently on TV and radio on advertising home loans.
> 
> "...its never been a better time to take out a home loan as its a buyers market"




Not according to "The Economist",

Caught this report http://www.theage.com.au/business/p...-overvalued-the-economist-20111125-1nyvv.html in today's "Age", it sent shivers up my spine. 

Here in inner melbourne the auction scene is still looking pretty bleak, but it may just be due bad weather.


----------



## young-gun (26 November 2011)

cutz said:


> Not according to "The Economist",
> 
> Caught this report http://www.theage.com.au/business/p...-overvalued-the-economist-20111125-1nyvv.html in today's "Age", it sent shivers up my spine.
> 
> Here in inner melbourne the auction scene is still looking pretty bleak, but it may just be due bad weather.




its ok, Dave doesnt think theres anything to worry about

‘‘We *think* there’s more to the stability of the housing sector ... than is suggested in the Economist’s analysis,’’ he said.

Read more: http://www.theage.com.au/business/p...e-economist-20111125-1nyvv.html#ixzz1enL9WUAZ

and yes explod, couldnt agree more. i have been trying to explain to those much older than myself NOT to be buying investment properties. of course no one takes me seriously, both of them have just bought rentals worth 400k+(within the last week). 
their argument is "as long as we buy and hold for 20 years it'll be ok anyway" which might be the case, but draws into question job security, and not to mention the fact that if you wait 12 months u may pick up the same house for 100k+cheaper, multiplying returns over 20 years by a hell of alot. 

they brushed it off. but then again maybe im wrong and the spruikers are right


----------



## MACCA350 (27 November 2011)

MACCA350 said:


> Last weekends amended clearance rate is 51%
> 
> This weekends pre-amended clearance rate is 52%



Last weekends amended clearance rate is 50%

This weekends pre-amended clearance rate is 53%

Cheers


----------



## sptrawler (27 November 2011)

MACCA350 said:


> Last weekends amended clearance rate is 50%
> 
> This weekends pre-amended clearance rate is 53%
> 
> Cheers




Apparently it is not mandatory for real estate agents to report their clearance rates.
Therefore it stands to reason the only ones giving their stats are the ones that are actually selling some properties.
The ones that don't sell any, just don't ring in their stats.
So it goes without saying clearance rates are far worse than what is reported.


----------



## Mr Z (28 November 2011)

sptrawler said:


> So it goes without saying clearance rates are far worse than what is reported.




Yes, that is my understanding. Clearance rates are unreliable numbers now things are turning south.


----------



## satanoperca (28 November 2011)

Mr Z said:


> Yes, that is my understanding. Clearance rates are unreliable numbers now things are turning south.




But they clear show things are heading down down, prices are down and/or lack of demand.

If the clearance rate is 50% then I will assume it is actually less than 40%.

If the clearance rate is 70% then I will assume it is actually 65%

If the clearance rate is 85% then I will assume it is actually 85%.

Given the it is voluntary to provide the auction results would you if you where a realestate company and are not selling anything at auction. I wouldn't.

The easiest way to determine what is happening is to attend the auctions themselves and make up your own mind.

Cheers


----------



## Mr Z (28 November 2011)

Sure.... but any way you turn it, it is all "wet finger in the air" stuff and not really a stat that is worthy of note. Suffice to say it is looking worse than it did this time last year.


----------



## againsthegrain (29 November 2011)

but the bank commercials on tv are saying its a buyers market and best time to buy now!


----------



## Glen48 (29 November 2011)

You can buy any thing you like at any time the smart one's think about what they are buying, do they  need it, is it value for money, can I sell for a profit  later, is there a catch, am I better of looking at some thing else.

 The next thing will be homes bribe comes back in again.


----------



## satanoperca (29 November 2011)

> Stock levels in Melbourne remain at record highs, with 49,613 properties for sale at the end of last month, up by about 42 per cent on the same time last year, according to figures from property research firm SQM Research.
> 
> Listings have risen every month in Melbourne since April last year.
> 
> “The tide hasn’t turned,” SQM Research director Louis Christopher said. “The worst is still in front of us. There is a huge overhang of stock for the market to work through and it is going to get worse before it gets better.”




GO MELBOURNE, supply accelerating, demand de-accelerating. Well as we are different in Oz, this must mean prices to the moon.

Cheers


----------



## Aussiejeff (29 November 2011)

satanoperca said:


> “The tide hasn’t turned,” SQM Research director Louis Christopher said. “The worst is still in front of us. There is a huge overhang of stock for the market to work through and it is going to get worse before it gets better.”




Who is this idiot?

_"Worst is still in front of us"_?

_"Going to get worse before it gets better"_?

Doesn't he know we have the *World's Greatest And Most Magnificent Treasurer Ever* on the case?

Doh!


----------



## young-gun (29 November 2011)

Aussiejeff said:


> Who is this idiot?
> 
> _"Worst is still in front of us"_?
> 
> ...




i hope ur not being sarcastic jeff! im sure swanny has plenty of cards up his sleave... like stimulus....home-owner grants as mentioned above....some nice tight austerity measures.

these will surely save us, all the cool countries are doing it...and they're in great shape....:bananasmi


----------



## Starcraftmazter (30 November 2011)

Contrary to stimulus, Swan's trick is to force the RBA's hand on interest rates by fiscal tightening.

That dirty rotten bastard.


----------



## banco (30 November 2011)

Starcraftmazter said:


> Contrary to stimulus, Swan's trick is to force the RBA's hand on interest rates by fiscal tightening.
> 
> That dirty rotten bastard.




Won't be much of a trick if the banks refuse to pass on any cuts.


----------



## medicowallet (30 November 2011)

banco said:


> Won't be much of a trick if the banks refuse to pass on any cuts.




If defaults overseas rise, and credit markets freeze, cutting rates here will have much less impact, and, we could see effectively rise.


----------



## Julia (30 November 2011)

medicowallet said:


> If defaults overseas rise, and credit markets freeze, cutting rates here will have much less impact, and, we could see effectively rise.



Exactly.  Have to admit I'm hoping for this.


----------



## Agentm (30 November 2011)

Australia's house prices are falling at an accelerating rate according  to figures out today, with Melbourne and Brisbane reporting the steepest  drops over the past year and Sydney among the most resilient.
Read more: http://www.theage.com.au/business/home-price-falls-accelerate-20111130-1o5wx.html#ixzz1fAVUrYQa


robots....  we need you to convince us its all ok..

i want more sunshine and lollipops 
​


----------



## young-gun (30 November 2011)

Starcraftmazter said:


> Contrary to stimulus, Swan's trick is to force the RBA's hand on interest rates by fiscal tightening.
> 
> That dirty rotten bastard.




we wouldnt need fiscal tightening if rudd didnt stimulate swanny is prob just saving up so he can stimulate


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## Starcraftmazter (30 November 2011)

young-gun said:


> we wouldnt need fiscal tightening if rudd didnt stimulate swanny is prob just saving up so he can stimulate




I do not support Rudd's stimulus. I do not support any sort of stimulus. Except building more highways, tunnels and possibly teleportation devices for Sydney. Also NBN.


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## trainspotter (30 November 2011)

Agentm said:


> Australia's house prices are falling at an accelerating rate according  to figures out today, with Melbourne and Brisbane reporting the steepest  drops over the past year and Sydney among the most resilient.
> Read more: http://www.theage.com.au/business/home-price-falls-accelerate-20111130-1o5wx.html#ixzz1fAVUrYQa
> 
> 
> ...




Compared to the uptick previously? Fine to report drops but at what previous gain?? HUH ???

robots is cool ...... leave him out of the convo 

*sidenote* Brisbane has just experienced what again? A FLOOD ?? HUH ???


----------



## medicowallet (1 December 2011)

trainspotter said:


> Compared to the uptick previously? Fine to report drops but at what previous gain?? HUH ???
> 
> robots is cool ...... leave him out of the convo
> 
> *sidenote* Brisbane has just experienced what again? A FLOOD ?? HUH ???




The "upswing" argument can be said about any bubble. Pity that it doesn't really help people who bought too late, or are utilising capital to do other things.

Robots is cool, but he goes missing when the heat is on.

Brisbane had a flood. It affected a small proportion of houses directly, and has stimulated trade with insurance payouts etc, and has therefore improved employment in certain areas.   How long is this argument going to be used?  How many floods were in Melbourne? How many in Perth? How many in Adelaide? etc. 

Housing is coming into massive problems, and the gov can ill afford to increase the first home vendors bribe. 

MW

PS Where is Robots?


----------



## satanoperca (1 December 2011)

trainspotter said:


> *sidenote* Brisbane has just experienced what again? A FLOOD ?? HUH ???




and please don't forget Melbournes floods as well, the flood of properties for sale at the moment. Well, well, well up from last year. 

Cheers


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## trainspotter (1 December 2011)

medicowallet said:


> Housing is coming into massive problems, and the gov can ill afford to increase the first home vendors bribe.




How long wil this bleating continue? *YAAAAAAAAAWN* ... heard it all before


----------



## greebly24 (1 December 2011)

*"Queensland auction prices hammered"* AFR 1st Dec 2011

_"...as vendors accept... offers that are below their expectations to conclude deals before Christmas."

"Vendors are getting more and more flexible as they want to move on with their life..."_

And thus it begins. Vendors were holding out, hoping for the housing bubble fantasy to continue, but are slowly having to capitulate to reality.

_"Gold Coast businessman... accepted $3.5m for his six-bedroom waterfront mansion... which he bought in 2007 for more than $7.36m."_

Bugger! A 53% loss in four years (that Steve Keen 40% drop prediction was way off). This Gold Coast businessman lost $18,557 per week for four years, plus it cost another $11k a week on the mortgage. Should've rented dude.

But I wonder why he didn't hold on for a better price? At $3.5m the house would've only had to appreciate 110% from there to break even. Assuming 7% compounded growth per year, it would've only taken 11 years. But...

_"...growth rate of 3% is forecast for the state over the next four years."_

Bugger. So $3.5m + 3% compounded for four years = $3.94m. Then with a return to the boom of 7% growth, it would only take another 9 years to break even. Adding the four years since he purchased it (2007), in 15 years time it'll almost be worth what he originally payed for it (not including mortgage interest). Sounds like that line from _The Castle_!!!

_"A Brisbane home passed in at $755,000 in March on a $955,000 reserve price was offered again last weekend as a mortgagee-in-possession property. It passed in again with a $630,000 offer, below the $670,000 vendor reserve."_

Bugger! So the owner obviously owed more than $755k on the property. Or else he would've sold it. Bet he believed the hype and was trying to make a profit too, despite not being able to afford the mortgage. Now all he's got is a big mortgage on a house he doesn't even own anymore. The bank owns it now and is trying to recoup some of its losses. 

The latest offer was 36% percent down on the original reserve price, and 16% down on the last offer in March. Even the new reserve price is 30% below the reserve price in March (9 months ago). Thats a 37.5% (annual) reserve price drop on a sub-one million dollar property in Brisbane. Who would've thunk it?

_"...Brisbane's median house price is down 9.3% in 12 months."_

The Brisbane median is now $402k. So it must've been $439k 12 months ago. So people who bought 12 months ago lost 37K. Start being honest with first home buyers and tell them that they could lose $700 a week for the next 12 months on bricks n mortar and see how keen they are to buy now. But that's the reality at the mo.

But enough doom & gloom and confirmation bias. I've been looking at positively-geared rentals in some mining regions. They're getting cheaper and more positively-geared by the day. But I guess everyone else is too mortgaged to the hilt to take advantage. Interesting times indeed.

Gonna wait a bit longer for those vendors to get more flexible though. Seems like they've been doing stretches and limbering up for the past year anyway.


----------



## robots (1 December 2011)

hello,

robots still around, in Melbourne for a couple of days so no internet

hope thats okay with everybody, i know i should of cleared it

and you know right, you can always check my status as to when i last visited,

thankyou
professor robots


----------



## medicowallet (1 December 2011)

trainspotter said:


> How long wil this bleating continue? *YAAAAAAAAAWN* ... heard it all before




Yes, you heard it here first.

Is it getting a bit boring now that you are hearing it on ABC, 7, 9 and 10?


The government want a surplus.. FHVG is unlikely to bail out the greedy this time

MW


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## Glen48 (1 December 2011)

The one who sell out now are the smart investors, the suckers are the one who stay waiting for the prices to go up again


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## kincella (2 December 2011)

thinking outside the square....
I say a change of federal govnut will turn everything around....it was looking promising, for a while, that we may have got rid of her....but we will have to wait till after xmas....
to see if thomson is charged....and watching slippery pete, fall off his new throne....or get tossed out

wonder what stopped the slide...in WA, VIC, NSW......yes, labor govnuts were turfed out and the liberals arrived...that explains the low drops of less than 2%.....when the bears were claiming it would be 50% plus

only QLD is lagging and on the nose....but it could have been worse...except for the lingering committment, that the bligh govnut will be gone by March 2012.....

then we just have to oust gillard.....and all will return to normal...with good governance....and happy people

we will get a rate cut in december....whether glenn stevens can handle it or not....
the banks will cut rates, regardless of what the rba says...

enjoy


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## young-gun (2 December 2011)

kincella said:


> thinking outside the square....
> I say a change of federal govnut will turn everything around....it was looking promising, for a while, that we may have got rid of her....but we will have to wait till after xmas....
> to see if thomson is charged....and watching slippery pete, fall off his new throne....or get tossed out
> 
> ...



i find your posts very hard to decipher, and am not sure if you are serious in the above post, however

prices are in no way affected by who is in power the only way they affect the market is by introducing stupid ideas like first home owners grants and new home grants. this isnt to help out  first home owners by the way. this was to help keep the bubble inflated and prevent prices from falling.

the reserve bank obviously also has a very small contribution to prices through altering interest rates.

this is where alot of people fall into the trap. federal banks and governments DO NOT control economies. they absolutely believe that they can and that they do. ultimately it is US the people that drive economies and prices. demographic trends are what cause cycles. resulting affects of interference by reserve banks and governments ultimately will be rendered useless.


----------



## satanoperca (2 December 2011)

kincella said:


> out and the liberals arrived...that explains the low drops of less than 2%.....when the bears were claiming it would be 50% plus




Please get your figures a little more correct instead of the ramblings.

Nationally -4.0%
Oh dear Melbourne -5.4%

And bears claiming %50+ falls, who on this forum that is still around is claiming or has claimed 50%. You are just as extreme as your so called bears.

Cheers


----------



## young-gun (2 December 2011)

satanoperca said:


> Please get your figures a little more correct instead of the ramblings.
> 
> Nationally -4.0%
> Oh dear Melbourne -5.4%
> ...




quite happy to admit i a 30% minimum bear(down), but from where im sitting that would be a very positive thing for me.


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## greebly24 (2 December 2011)

Kincella, don't think any bears were predicting 50%+ price drops. Steve Keen only predicted a 40% drop and he's the most radical I've heard of.

Guess those FHBs in QLD who lost 9% this year are laughing at those imaginary 50%+ price drop predictions too, hey.


----------



## young-gun (2 December 2011)

greebly24 said:


> Kincella, don't think any bears were predicting 50%+ price drops. Steve Keen only predicted a 40% drop and he's the most radical I've heard of.
> 
> Guess those FHBs in QLD who lost 9% this year are laughing at those imaginary 50%+ price drop predictions too, hey.




if i still had my place i wouldnt be finding a 9% loss very funny. and who said its stopped falling?


----------



## demiser (2 December 2011)

If and when prices do fall, how does everyone think it will affect the economy in general ?

Even with the stagnation / drop so far, a few chippy mates tell me a lot of the people that were looking at buying up, are now just renovating instead, but if prices keep dropping, would you throw money at something that's lost that much value ?

I'm also interested in the labour market, as even if houses drop by 30%, I'm not sure how any one could build a house cheaper than they could buy an existing, and if people aren't building, what happens to all the people the industry employs ?


----------



## young-gun (2 December 2011)

demiser said:


> If and when prices do fall, how does everyone think it will affect the economy in general ?
> 
> Even with the stagnation / drop so far, a few chippy mates tell me a lot of the people that were looking at buying up, are now just renovating instead, but if prices keep dropping, would you throw money at something that's lost that much value ?
> 
> I'm also interested in the labour market, as even if houses drop by 30%, I'm not sure how any one could build a house cheaper than they could buy an existing, and if people aren't building, what happens to all the people the industry employs ?




it depends on individual situations.

they will have to weigh up the cost of renovating against the new house prices, given this is common sense everyone already does that. if you can buy a 4 bedroom house for less than its gonna cost you to upgrade your 3 bedroom house then theres really no question what people will do. in saying that selling and buying in the same market is the same whether its high or low - so renovating would probably still be a viable option for someone looking to upsize.

people often argue that house prices wont ever fall below the cost to build a new one im not sure why

the residential workforce will naturally become unemployed, or find work elsewhere(commercial, or something different all together). causing higher unemployment, which in turn will drive house prices lower again.

builders will have to lower prices, and also hope that land depreciates in line if not more so than houses.


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## ROE (2 December 2011)

young-gun said:


> the same market is the same whether its high or low - so renovating would probably still be a viable option for someone looking to upsize.




Buying in the down market WINS every time ... example...

your house bought 300K rising to 400K
bigger house bought 500K rising  670K

sold your for $400K paying extra 270K for an upgrade

Same scenario
300K now worth 200K 
500K now worth 330K
sold your for 200K buying 330K, you pay an extra 130K for the upgrade

how is it the same?


----------



## sptrawler (2 December 2011)

demiser said:


> If and when prices do fall, how does everyone think it will affect the economy in general ?
> 
> Even with the stagnation / drop so far, a few chippy mates tell me a lot of the people that were looking at buying up, are now just renovating instead, but if prices keep dropping, would you throw money at something that's lost that much value ?
> 
> I'm also interested in the labour market, as even if houses drop by 30%, I'm not sure how any one could build a house cheaper than they could buy an existing, and if people aren't building, what happens to all the people the industry employs ?




In my opinion the main player in all this is the BANKS. If they tighten up lending due to market forces, be that Euro problems or increase in unemployment from China`slowdown.
The end result is they lower the amount they will lend e.g 80% of valuation and also lower their valuation. They have to do this to meet their capital adequacy requirements.
This in turn reduces what someone can pay for your house and reduces what you can borrow for your next house.
It then puts downward pressure on established homes and makes older better located suburbs more attractive than newer houses further out.
Which inturn puts downward pressure on what developers will pay for outlying land and what builders can charge for a house. There is a huge knock on effect.
Again these are only my thoughts.


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## young-gun (2 December 2011)

ROE said:


> Buying in the down market WINS every time ... example...
> 
> your house bought 300K rising to 400K
> bigger house bought 500K rising  670K
> ...




good point. 

i missed the whole point of the upgrade bit, and instead referenced buying a similar house of a similar value in any given point of the market. 

you could get a decent reno for 130k. more importantly you could build a new house for 270


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## ROE (2 December 2011)

Unless you have plenty of properties bought cheap, or use your home as an ATM higher price is good for you 

but if you just got a PPOR without the ATM component  you want the housing market to be cool or outright in a recession as buying, upgrading, moving cost you a lot less 

I got a place and I dont mind if the whole market crash down 20-50%  
cost me a lot less to upgrade to a bigger place.


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## young-gun (2 December 2011)

ROE said:


> Unless you have plenty of properties bought cheap, or use your home as an ATM higher price is good for you
> 
> but if you just got a PPOR without the ATM component  you want the housing market to be cool or outright in a recession as buying, upgrading, moving cost you a lot less
> 
> ...




provided you own, or almost own your PPOR. for those that have 450k against a (once 500k) now 300k value house, no such luxury upgrading then costs 150k realised loss plus for examples sake 130k for the upgrade


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## sptrawler (2 December 2011)

young-gun said:


> provided you own, or almost own your PPOR. for those that have 450k against a (once 500k) now 300k value house, no such luxury upgrading then costs 150k realised loss plus for examples sake 130k for the upgrade




When the banks have finished with the appartment developers. My guess is they will be sending letters to the people with $450k loans against $300k properties, asking for more equity. Otherwise they will have to include the $150k loss in their annual results.IMO


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## Julia (2 December 2011)

young-gun said:


> people often argue that house prices wont ever fall below the cost to build a new one im not sure why



They already have where I live.
I recently went through considering building a new house, the plan for which essentially replicated the one in which I now live.
Taking what I'd get for my existing property in this soft market compared to what I'd have been paying for the land and new building, including pool, additional fencing, landscaping to a standard equating the present, I'd have had to find around 
$250K to do it.

The locations re proximity to the beach are the same, i.e. 500metres, so position doesn't determine the higher cost.  New house would have been twice as close to the CBD but in a town of 55,000 that's hardly a consideration.


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## medicowallet (2 December 2011)

sptrawler said:


> When the banks have finished with the appartment developers. My guess is they will be sending letters to the people with $450k loans against $300k properties, asking for more equity. Otherwise they will have to include the $150k loss in their annual results.IMO




and may try to increase margins to recoup losses.

Interest rates may not go down... cause... we are different here.

MW
PS where is Robots?


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## sptrawler (2 December 2011)

Actualy it isn't much different to what happened in the late 80's with "Armstrong Jones".
They were getting their property portfolio revalued, in a rising market, then revaluing their units accordingly.
When it went pear shaped, the banks sent out letters to all unit holders to stump up more money.
The only difference this time is people have done it on a macro scale. 
They have purchased investment properties and then gear up and purchased more on increased valuations, in a rising market.
Same **** different day. It's a bit like musical chairs, it's great fun untill the music stops and it always does.


----------



## indeck (3 December 2011)

kincella said:


> thinking outside the square....




oh i'm sorry, i thought this was a housing debate not a labour bashing one.  Shall I drop a few points about how the libs royally screwed up?


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## ROE (3 December 2011)

Your home is not an investment, it is something
you need, you either own your own home or rent

Over leverage and buy a PPOR is just plain crazy

Owning your own place give you the benefit of
paying it off some 20 years down the track provided
you buy them at a sensible price

Over commit to buy a place, most WILL never pay it off
and could be in a negative equity position during pro-long down turn.
very bad financial choice if that is the case.

Rent if it is too expensive ...the law of compounding will guarantee 
that there will be a period of negative growth and zero growth.....

you cant time it because you don't know when but 100% guarantee that
the law of compounding will see to it that it is always the case....

Most people don't understanding how compounding works 

The Most IMPORTANT Video You'll Ever See (part 1 of 8)
http://www.youtube.com/watch?v=F-QA2rkpBSY


----------



## explod (3 December 2011)

indeck said:


> oh i'm sorry, i thought this was a housing debate not a labour bashing one.  Shall I drop a few points about how the libs royally screwed up?




I also thought it was about "the future of australian properties"

All this off topic twos and froes are those trying to convince themselves that it is a good investment and will allways go up.

Good to see me ole mate Con$$esor back the udder day.  Botty, start putting back sheds and old caravans in your Ballarat yards.  We are all going to need the cheap rent and you will need every diminishing cent you can lay your hands on.

Did you start buying those silver 1966 rounds last year as I suggested.?

Not too late at the current price, *if you can get them*.


----------



## rryall (3 December 2011)

ROE said:


> The Most IMPORTANT Video You'll Ever See (part 1 of 8)
> http://www.youtube.com/watch?v=F-QA2rkpBSY




Thanks for the link ROE - Great watch!


----------



## sptrawler (3 December 2011)

rryall said:


> Thanks for the link ROE - Great watch!




+1 explains beautifully why prices can't keep compounding, like they have in the last 10 years.
Great link Roe.


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## village idiot (3 December 2011)

that old bloke was Julius Sumner Miller right?  "why is it so?"


----------



## robots (3 December 2011)

explod said:


> I also thought it was about "the future of australian properties"
> 
> All this off topic twos and froes are those trying to convince themselves that it is a good investment and will allways go up.
> 
> ...




hello,

no time for any of that stuff explod, i have been busy trying to put bent coppers away

never ending, oh well might look into the shed and caravan next week

thankyou

professor robots


----------



## explod (3 December 2011)

robots said:


> hello,
> 
> no time for any of that stuff explod, i have been busy trying to put bent coppers away
> 
> ...




Yep, they put me out of a job, but you and I will overcome that.


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## village idiot (3 December 2011)

I have just been trying to model the proposition of

1) selling the house you live in, putting x% of the proceeds into shares (in super), rest in cash, and renting somehwere to live

versus 

2)the status quo of keeping house 

this particular model ignores the cash flow situation (which is roughly neutral as I dont count any income from the super, its just left to compound up) and seeks to establish which stategy would leave me better off after ten years in terms of  net worth, under various growth scenarios (including negative growth) for both asset classes. Why 10 years? - happens to suit my circumstances 

the selling the house strategy pretty much dominates over most reasonable scenarios, but i have to admit in most of my 'reasonable scenarios' I cant see shares doing worse, or much worse than house values.  That is, if we are going to live in a world where (aust) shares decline some more over the next few years (a possibilty to be sure) then for sure house prices arent going up, and are probably going down.  On other hand if house prices do stabilise here or even go up mildly, that would imply the end of the world/europe hdoesnt come to pass, then the most likely scenario for shares would be a sustained rally back to more normal P/E ratios. 
If house prices crash 40% i have to assume shares suffer badly as well but since we are deleveraged by only having x% exposed it would be pretty much impossible to lose more than 40% of the value of a house. If by some miracle House prices immediately return to long term trend growth at say 7% then happy days are obviously here again and surely shares have to do at least as well if not far better right?

The trouble with all this is I am pretty much assuming a positve correlation between the two assets, or at least that HP cant outperform shares, so obviously the model is going to confirm that bias. 

Turns out strategy 1) can only be a bad mistake v strategy 2) if house prices return to growth in the short term AND shares dont at least keep pace with that growth. So how likely is that?



So the question for the panel is;


Can anyone outline a scenario where house prices could significantly outperfom shares, lets say over  a more than a short term 1 year view?


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## Glen48 (3 December 2011)

check your nick and buy gold silver


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## village idiot (3 December 2011)

Glen48 said:


> check your nick and buy gold silver




yeah forgot strategy 3) ; sell house and invest proceeds in an asset that returns nothing, has no fundamental value, whose price fluctuates driven by only speculation and sentiment and has seen an exponential growth curve to put property to shame. 

that should work


----------



## explod (3 December 2011)

village idiot said:


> yeah forgot strategy 3) ; sell house and invest proceeds in an asset that returns nothing, has no fundamental value, whose price fluctuates driven by only speculation and sentiment and has seen an exponential growth curve to put property to shame.
> 
> that should work




Speculation you say.

Money printing and its dilution is going to the moon and to the core of the earth.

Gold an silver will continue its trajectory whilst the QE continues.  Now the Federal Reserve is holding most of the world strings the money dilution will bring about the Wiemer Rupublic result onto the world stage.  Your title deeds and cash will be wallpaper.

Those of us who looked economics in the eye and got onto p/m's have done well over the last eight or nine years, in fact very well.  However there is still time to learn and get on board as in my view we aint seen nothin yet.

And I will be ready to buy property when we hit nothin.


----------



## Glen48 (3 December 2011)

Looks like a Robots understudy has come on board, wanta buy a hose go to Ireland  they have 300 K new vacant they cant sell, don't like Ireland try Spain before the council knocks down the new never lived in houses because the council can't afford the upkeep, don't like those two go to USA  were every second home owner is under water  start up a business hiring out Ex  US postal service vans once they fold to all the un-employed home less to live in for years to come.


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## sptrawler (3 December 2011)

Well something interesting happened today, was talking to someone about the amount of empty new apartments in the area (trendy, holiday, seaside) .
She said, well funny you should mention that a couple of tradies she knows, have bolted. 
Signed up for $800k off the plan, at auction they are going for $400k, well they have done a runner.
Best of luck with that idea, eventually they catch up, usually that's when mum and dad have to step in.LOL been there done that, thankfully on a much smaller scale, thank god they learnt.

This is obviously starting to get messy.


----------



## choofer (4 December 2011)

Look people. Property rules. It will never go down. Onward and upwards. You can not live in a bar of gold. Paper is great for cleaning excrement.  Pass me the spif dudes.


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## kincella (4 December 2011)

*rich getting richer, poor struggling *

this news is a bit old....but I thought it is a timely reminder....for some to ponder, over the coming weeks....
whilst the world waits and watches as the Euro keeps destroying themselves....and the banks shiver, or are they panicking now.....and the stockmarket gyrates on a daily basis
..................................................
Their wealth has increased just 4 per cent since 2005-6, compared to the richest 20 per cent of households, where the average net worth has risen 15 per cent.

The top 20 per cent have an average of $2.2 million per household and account for about two-thirds of the nation's total household wealth, the ABS figures show.

The average wealth of an Australian household in 2009-10 was $720,000, up 14 per cent in the last five years.

The family home was the biggest contributor to household wealth. About 2.7 million households owned their home outright, with an average value of $541,000. For those with a mortgage, the average house value was $521,000 with an average mortgage of $188,000.

...........................................................
http://www.theaustralian.com.au/new...r-are-struggling/story-e6frg6nf-1226166633412

*******please note the averages....
For those with a mortgage, the average house value was $521,000 with an average mortgage of $188,000.

not hocked to the hilt at all.....they are actually sitting pretty...
these figures are based on facts.....
not what your neighbour, friend, mate told you...
enjoy 

--------------------------------------------------------------------------------

*the billionaires have taken a huge hit in fortunes *

this list will make you feel better....for eg; James Packer has lost almost half his fortune

but that can happen when the kids inherit it all from wealthy parents....the parents save...the kids spend....

http://www.crikey.com.au/2011/11/28/the-billion-dollar-blues-how-the-gfc-hit-our-richest


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## trainspotter (4 December 2011)

choofer said:


> Look people. Property rules. It will never go down. Onward and upwards. You can not live in a bar of gold. Paper is great for cleaning excrement.  Pass me the spif dudes.




As I live and breathe ! Living in my 400m2 home overlooking the ocean is a terrible crime. Moet on the balcony as the sunset goes down. Sarantos soft pressed Chardonnay with my seafood for dinner followed by Chivas Regal in the den for desert. I can actually watch the crayfish crawl into my pots from here.

Knowing full well my rental properties are paid in advance  ..... Awful thing to happen.

Whatever you do ..... don't invest in real estate .... there is no money in it.






Bwahahaahhahahaaaaaaaaaaa


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## sptrawler (4 December 2011)

Jeez, trainspotter, I'll stay at your place when I come through Geraldton, next winter.LOL
I'll help you get through some of that bubbly, take the pressure off your your liver for you.


----------



## trainspotter (4 December 2011)

sptrawler said:


> Jeez, trainspotter, I'll stay at your place when I come through Geraldton, next winter.LOL
> I'll help you get through some of that bubbly, take the pressure off your your liver for you.




You are most welcome !


----------



## Julia (4 December 2011)

sptrawler said:


> Jeez, trainspotter, I'll stay at your place when I come through Geraldton, next winter.LOL
> I'll help you get through some of that bubbly, take the pressure off your your liver for you.



Wow, trainspotter, what a friend is sptrawler, huh!   Such immense self sacrifice.


----------



## finnsk (4 December 2011)

Hi All
I have a dilemma. 
Very close to buy PPOR on Sydney's northern beaches, seller has come down in price but the last $30000.00 I want him to come down is going to be difficult.
1) Should I accept he's price
2) Wait for next year hoping he will not sell to another party "dont think he has somebody else interested"


----------



## explod (4 December 2011)

finnsk said:


> Hi All
> I have a dilemma.
> Very close to buy PPOR on Sydney's northern beaches, seller has come down in price but the last $30000.00 I want him to come down is going to be difficult.
> 1) Should I accept he's price
> 2) Wait for next year hoping he will not sell to another party "dont think he has somebody else interested"




If you really want the property,  have your interest noted and wait.   With the talk even in the press of property values falling he will come around to it.   If he is reducing the price as is indicated then he needs to get out.

If you do not need this property I would wait a couple of years to see how far the knife is going to fall.

But you are the only judge, the above is just what I would do.


----------



## Dowdy (4 December 2011)

finnsk said:


> Hi All
> I have a dilemma.
> Very close to buy PPOR on Sydney's northern beaches, seller has come down in price but the last $30000.00 I want him to come down is going to be difficult.
> 1) Should I accept he's price
> 2) Wait for next year hoping he will not sell to another party "dont think he has somebody else interested"





Just remember, you dream property comes about once a week.....With rising supply and falling prices there's no rush IMO


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## trainspotter (4 December 2011)

finnsk said:


> Hi All
> I have a dilemma.
> Very close to buy PPOR on Sydney's northern beaches, seller has come down in price but the last $30000.00 I want him to come down is going to be difficult.
> 1) Should I accept he's price
> 2) Wait for next year hoping he will not sell to another party "dont think he has somebody else interested"




I fail to see the dilemma other than the procrastination levels you are displaying.


----------



## sptrawler (4 December 2011)

I agree with trainspotter $30,000 shouldn't make or break a deal, if it's worth the extra money pay it. Otherwise if you think $30,000 makes the property overpriced, it must be a low cost property.
If the property is $1,030,000 and you want to pay $1,000,000 get over it you are being stupid.
If the property is $130,000 and you want to pay $100,000 that is a real percentage diference.


----------



## MACCA350 (4 December 2011)

MACCA350 said:


> Last weekends amended clearance rate is 50%
> 
> This weekends pre-amended clearance rate is 53%



Last weekends amended clearance rate is 51%

This weekends pre-amended clearance rate is 55%


Looks like 300 odd auctions went unreported this week

Cheers


----------



## medicowallet (4 December 2011)

sptrawler said:


> I agree with trainspotter $30,000 shouldn't make or break a deal, if it's worth the extra money pay it. Otherwise if you think $30,000 makes the property overpriced, it must be a low cost property.
> If the property is $1,030,000 and you want to pay $1,000,000 get over it you are being stupid.
> If the property is $130,000 and you want to pay $100,000 that is a real percentage diference.




I disagree.. why not $60k more then?  $90k?  This is exactly what makes fundamentals lose the plot as what did happen.

I would agree with you if Mr Buffet did, but alas he does not.. Don't get too caught up in your own passion


----------



## sptrawler (5 December 2011)

medicowallet said:


> I disagree.. why not $60k more then?  $90k?  This is exactly what makes fundamentals lose the plot as what did happen.
> 
> I would agree with you if Mr Buffet did, but alas he does not.. Don't get too caught up in your own passion




Well I am assuming that finnsk has done his homework on the property. If he hasn't he shouldn't be buying it at all.
It reminds me of a friend who put an offer in on a block of land at $120,000. It fell through, then the next release came out at $150,000. He said there is no way I'm paying that. Well the next release came out at $200,000, he jumped in and bought one.
Well at the height of the boom, he sold it at $1.3m.
Now the block would struggle to get $750,000.
It is all about timing if it is a real bargain $30,000 shouldn't break it, if it does it isn't a life changing deal anyway.LOL


----------



## medicowallet (5 December 2011)

sptrawler said:


> Well I am assuming that finnsk has done his homework on the property. If he hasn't he shouldn't be buying it at all.
> It reminds me of a friend who put an offer in on a block of land at $120,000. It fell through, then the next release came out at $150,000. He said there is no way I'm paying that. Well the next release came out at $200,000, he jumped in and bought one.
> Well at the height of the boom, he sold it at $1.3m.
> Now the block would struggle to get $750,000.
> It is all about timing if it is a real bargain $30,000 shouldn't break it, if it does it isn't a life changing deal anyway.LOL




You just said what I did, within your last sentence. Yes it should matter. At some point in time, there has to be a maximum price, otherwise the homework was incorrect in the first place.

If I go to auction and the max I am prepared to pay is $350k, I will not spend one cent more than this, as my research says that the $350k is better off spent elsewhere.


----------



## sptrawler (5 December 2011)

medicowallet said:


> You just said what I did, within your last sentence. Yes it should matter. At some point in time, there has to be a maximum price, otherwise the homework was incorrect in the first place.
> 
> If I go to auction and the max I am prepared to pay is $350k, I will not spend one cent more than this, as my research says that the $350k is better off spent elsewhere.




+1 as you say it all boils down to homework.


----------



## nomore4s (5 December 2011)

For anyone interested.

http://www.htw.com.au/Month_in_Review/Month-In-Review-December-2011.pdf


----------



## ROE (5 December 2011)

sptrawler said:


> I agree with trainspotter $30,000 shouldn't make or break a deal, if it's worth the extra money pay it. Otherwise if you think $30,000 makes the property overpriced, it must be a low cost property.
> If the property is $1,030,000 and you want to pay $1,000,000 get over it you are being stupid.
> If the property is $130,000 and you want to pay $100,000 that is a real percentage diference.





This is where human irrational comes in, 30K is 30K .... you still end up paying 30K more...here is a good one to compare to this scenario...

you buy a DVD player cost you $200 at local shop, then there is a 50% off on the other side of
the bridge, you would drive to that place and get a DVD player..

you buy a car, it cost 22,100K the other side of the bridge it has them for 22,000 people
dont bother to make the trip?

WTF ? it's $100 either way, you still save $100.

Just because you have 1 Mil does that make 30K more value or less value than when you have 100K? NO, same exact value...

This plays on the stock market and housing all the time.
if you understand this concept you can make lot of money


----------



## nomore4s (5 December 2011)

ROE said:


> This is where human irrational comes in, 30K is 30K .... you still end up paying 30K more...here is a good one to compare to this scenario...
> 
> you buy a DVD player cost you $200 at local shop, then there is a 50% off on the other side of
> the bridge, you would drive to that place and get a DVD player..
> ...




One of the best posts in this thread imo, $30k is $30k.

I find the whole concept of a "dream home" a bit flawed tbh. There are normally plenty of houses around that will meet the criteria for your "perfect house", no need to over pay, especially in the current market.


----------



## prawn_86 (5 December 2011)

ROE said:


> This is where human irrational comes in, 30K is 30K .... you still end up paying 30K more...here is a good one to compare to this scenario...
> 
> you buy a DVD player cost you $200 at local shop, then there is a 50% off on the other side of
> the bridge, you would drive to that place and get a DVD player..
> ...




There are usually other factors to take into account aside from just price. Service, ease of purchase, time etc. If i can save $100 but its going to take a few hours, i probably wouldn't bother as i value my time as being worth more than $30 an hour.

Also, the more you have, the less it matters in percentage terms. Sure 30k is 30k, but if you have $10m in the bank its 0.3% of your net worth. If you only have 50k in the bank its 60% of your net worth. I know i wouldnt bother over 0.3% of my net worth if it was for a major purchase like a property


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## trainspotter (5 December 2011)

Location, location, location is the key. I would happily spend the extra 30k for my "dream home".

By the way .......... remember he is holding out for the price to drop by this much !! Why does it automatically mean it is overpriced to begin with?? HUH ?? I don't get it.

I went shopping with my wife once for shoes. We went to one shop and she tried on some shoes. They were perfect colour/fit/price every damn thing ticked the boxes. Did we buy them ??? NUP ??? We went to about 14 other shoe stores and tried on shoes for about 4 hours. She did not like any of them. We went back to the shoe store where the first pair were perfect. Guess what ........ they had sold. Oh well. It's only 30k.


----------



## wayneL (5 December 2011)

trainspotter said:


> Location, location, location is the key. I would happily spend the extra 30k for my "dream home".
> 
> By the way .......... remember he is holding out for the price to drop by this much !! Why does it automatically mean it is overpriced to begin with?? HUH ?? I don't get it.
> 
> I went shopping with my wife once for shoes. We went to one shop and she tried on some shoes. They were perfect colour/fit/price every damn thing ticked the boxes. Did we buy them ??? NUP ??? We went to about 14 other shoe stores and tried on shoes for about 4 hours. She did not like any of them. We went back to the shoe store where the first pair were perfect. Guess what ........ they had sold. Oh well. It's only 30k.




My wife could teach your wife a thing or two, Grasshopper. 

My wife can have half of the stock in Lambton Quay locked up before she makes up her mind LOL.

PS Why the hell does it take them four hours to bey a pair of shoes FFS?


----------



## againsthegrain (5 December 2011)

I think the bigger question is WTF do you let your wife boss you around for 4 hours, I know who the boss is in my relationship :


----------



## Julia (5 December 2011)

prawn_86 said:


> There are usually other factors to take into account aside from just price. Service, ease of purchase, time etc. If i can save $100 but its going to take a few hours, i probably wouldn't bother as i value my time as being worth more than $30 an hour.
> 
> Also, the more you have, the less it matters in percentage terms. Sure 30k is 30k, but if you have $10m in the bank its 0.3% of your net worth. If you only have 50k in the bank its 60% of your net worth. I know i wouldnt bother over 0.3% of my net worth if it was for a major purchase like a property



Agree.  Convenience and simplicity is worth paying for imo.
Different story if you're on a tight budget.



againsthegrain said:


> I think the bigger question is WTF do you let your wife boss you around for 4 hours, I know who the boss is in my relationship :



Ah, but clearly TS and Wayne are devoted, loving husbands for whom no amount of trailing after their wives is ever too much.


----------



## finnsk (5 December 2011)

Thanks to everybody for the replies.
My problem is not really with the $30000 but properly more the fact that we have not had any financial issues yet, and I know that I would hate to buy know, and the market will drop with say 20% that does not mean that that particular property would drop but at least the market would have moved, if I am wrong and market goes up then it is my bad luck.
Properties in Europe is dropping even in Sweden which is supposed to be a strong economy.


----------



## trainspotter (5 December 2011)

againsthegrain said:


> I think the bigger question is WTF do you let your wife boss you around for 4 hours, I know who the boss is in my relationship :




Man you have a lot to learn about relationships dude


----------



## young-gun (5 December 2011)

finnsk said:


> Thanks to everybody for the replies.
> My problem is not really with the $30000 but properly more the fact that we have not had any financial issues yet, and I know that I would hate to buy know, and the market will drop with say 20% that does not mean that that particular property would drop but at least the market would have moved, if I am wrong and market goes up then it is my bad luck.
> Properties in Europe is dropping even in Sweden which is supposed to be a strong economy.




put aside the fact that if you dont buy now someone else may.

if you dont buy now, and prices fall 20%, youll get a similar house elsewhere for much cheaper. however if the market starts to turn, you will be able to get in before it 'takes off'. if you buy after the market turns around, house prices wont have increased drastically and you would most likely get back in before prices got away from you too much. some people dont seem to care much for 30k so lets say between the time things start to turn and the point you buy the house its gone up 30k. 30k is alot of money, but when it comes to a home loan 30k is not alot when it comes to calculating repayments.

if there is something that everyone should be able to agree on its that house prices wont be reaching new heights any time soon. MO if i was in your shoes id sit tight for a while.


----------



## Knobby22 (5 December 2011)

againsthegrain said:


> I think the bigger question is WTF do you let your wife boss you around for 4 hours, I know who the boss is in my relationship :




I know what you mean, I wear the pants in my house after my wife picks the ones I am to wear!


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## nth brisbanite (6 December 2011)

Back to the thread.  What do forumites think will happen to property prices with today's decrease in interest rates?  At this stage only the Bank of Queensland have lowered their rates by the full .25%.  It'll be interesting to see whether the other banks will follow suit.


----------



## explod (6 December 2011)

nth brisbanite said:


> Back to the thread.  What do forumites think will happen to property prices with today's decrease in interest rates?  At this stage only the Bank of Queensland have lowered their rates by the full .25%.  It'll be interesting to see whether the other banks will follow suit.




Too late in my view, general community productivity is on the slide and though it may be a bit of a relief to some the pain will continue.

We will see.


----------



## Aussiejeff (6 December 2011)

nth brisbanite said:


> Back to the thread.  What do forumites think will happen to property prices with today's decrease in interest rates?  At this stage only the Bank of Queensland have lowered their rates by the full .25%.  It'll be interesting to see whether the other banks will follow suit.




IMO prices will continue to slide along with rates. Like the UK & US et all.

There is NO housing shortage. That is a myth perpetrated by gummint & housing industry gallahs. Thousands of EXTRA houses are listed for sale each week. The pile of unsold properties is steadily growing. Time to sell is growing. Check here and get a feel for how long properties are waiting to sell and how much they are beginning to discount the asking price  http://www.refindhouseprices.com/

However, there IS a chronic and growing shortage of AFFORDABLE housing. While that remains the case, downward pressure should continue ad-infinitum for those resellers trying to achieve big profits out of their property "investments". 

IMHO.

Good luck....


----------



## young-gun (6 December 2011)

explod said:


> Too late in my view, general community productivity is on the slide and though it may be a bit of a relief to some the pain will continue.
> 
> We will see.




+1, if we have learnt anything from the US its that cutting interest rates to virtually nothing wont even stop prices from falling. we're in a huge demographic shift that cannot be stopped. on a side note explod even if rates were cut 6 months ago i still think we would be in a very similar position to where we are now.

agree with you also jeff, the media, banks and government are doing their best to pull the wool over the poor families and couples that dont know any better. i truly feel for people who have recently gone out on a limb to buy their first family home.


----------



## Miss Hale (7 December 2011)

Well after all the expectation it appears the major banks are not going to pass this on afterall.  This might be worse for the property market (in terms of confidence) than not having a rate cut at all.


----------



## Aussiejeff (7 December 2011)

Miss Hale said:


> Well after all the expectation it appears the major banks are not going to pass this on afterall.  This might be worse for the property market (in terms of confidence) than not having a rate cut at all.




US Fed loan rate to banks = 0% - 0.25%
US 30 year mortgage = 3.75% (ave)

So, the margin for banks borrowing Fed money to on-lend to home buyers = 3.5% - 3.75% (approx.)


AUS RBA loan rate to banks = 4.25%
AUS Standard Variable Rate = 7.8% (ave)

So, the margin for banks borrowing RBA money to on-lend to home buyers = 3.55% (approx.)

In other words, even with the latest drop in RBA loan cost to them,*our banks are still running tighter margins than most US mortgage lenders!* If they drop in tandem with the RBA, (to 3.3% margin), that doesn't improve their margin and maintains them well under the going margin rate in the US. 

Also, if they agree to lower their rates now, it might encourage the RBA to move again quickly. What about in the New Year the RBA drops another .5%?   

Fun 'n games a'comin', metinks.


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## McLovin (7 December 2011)

Aussiejeff said:


> US Fed loan rate to banks = 0% - 0.25%
> US 30 year mortgage = 3.75% (ave)
> 
> So, the margin for banks borrowing Fed money to on-lend to home buyers = 3.5% - 3.75% (approx.)
> ...




Most mortgages in the US are fixed for the entire term, unlike Australia. Most banks in the US are not borrowing in the cash market, or the Fed window, to lend fixed at 30 years (duration matching, liquidity and interest rate risk could become a serious issue). The whole point of Operation Twist was to try and flatten the yield curve so that banks could access cheaper 10/20/30 year finance. In the US currently, AAA rated 10 year corporate bonds are yielding ~2.5%, 20 year bonds are yielding ~4.4%.


----------



## kincella (7 December 2011)

* amazing response from gen y,x debate  * 

apparently the bears views on this forum is not in line with the rest of the community....

I know, its a very small community here....like a union org...or a closed shop
so the same old, same old..is trotted out.... bears do the chest thumping....
houses are too expensive...so just wait until the prices crash...as in Japan in the
 1980's, or the US, Iceland, Ireland etc etc etc...

and steve keen is the guru.....he predicted the 40% price crash...and to prove it , he sold his house/unit....(which has possibly increased in value by 25% since that date)

how long are you prepared to wait....10 years or more ?

I bet those bears who are in a serious relationship, are at risk, if the little woman is planning on nesting....because she will not nest, unless there is definate plan to buy the nest egg...
and she will only wait so long...it is not an open ended contract

 some of the angst we all see, stems from the 'gung ho' types, who believed the steve keens of this world, and sold the family home, and placed their families in rentals....

some families have been split by this action....and the prospect of buying back cheaper in the same neighbourhood....has evaporated.....hence the angst
..............but look at this....

spotted an article , on the news site, 
(which I believe is aimed at the young viewers, with all the crap about celebs, fashion and requires only a 2 minute concentration span)

hosted by a very young woman, discussing the pro's and con's of renting versus buying...
so I read it....it was actually a good balanced article... regardless of my attitude...it really is a good article...covers all the basics....and the responses are really informative...for those seeking information, outside of the industry gurus
(amazing, considering the source)

but then when I looked at the 100 responses, I expected to see the same comments we get from the bears on this site....
you know...yadda yadda yadda....renting is best, houses too expensive, the young need to travel and invest their money in stocks....

but the responses are amazing...all these young people, who have purchased a house, and are happy.....
?????? who would have thought.....

it is certainly a change from responses I have seen on the same web site in the past....
wow....there is definately a shift in sentiment from the younger generation....where on earth did it come from...
was it the reality of the GFC that hit home...?

http://blogs.news.com.au/moneystuff/index.php/news/comments/property_do_you_prefer_to_rent_or_buy/

ps...look outside the square you live in...
or picture yourself, in other's shoes....situations....

most of you would aspire to become a Warren Buffet.....but he owns real estate.....
he recognised the asset of providing a stable home for his family....and most, if not all the wealthiest people in the world, actually own their own homes....there is an intrisic value there....and it is not the monetary value...that the bears ascribe to...
it is a far greater value....it has no price


----------



## explod (7 December 2011)

kincella said:


> * amazing response from gen y,x debate  *
> 
> apparently the bears views on this forum is not in line with the rest of the community....




Yep, lambs to the slaughter in my view.


----------



## young-gun (7 December 2011)

kincella said:


> * amazing response from gen y,x debate  *
> 
> but then when I looked at the 100 responses, I expected to see the same comments we get from the bears on this site....
> you know...yadda yadda yadda....renting is best, houses too expensive, the young need to travel and invest their money in stocks....
> ...




i dont even need to read the article as i guarantee there will be no arguments for or against that i havent already read or developed myself.

you have managed to find 100 people that wont be happy shortly. everyone(apart from the 'few bears') in every nation on earth has been bullish on property to the day that it crashes. i am still amazed that people honestly believe australia is different. 

history is your friend kincella, but hey dont let me stop you from buying.


----------



## Garpal Gumnut (7 December 2011)

re Inevitable increases in property prices.

Tell that to Emmanuel Cassimatis.

His pad in Townsville has dropped from $3.8 to $1.1754 in two years.

And that is on sold data, not dodgy projections.

gg


----------



## Dowdy (7 December 2011)

kincella said:


> * amazing response from gen y,x debate  *
> 
> apparently the bears views on this forum is not in line with the rest of the community....




Really, are you sure? or you like to wrap yourself into your own little bubble, oblivious to your surroundings 




> and steve keen is the guru.....he predicted the 40% price crash...and to prove it , he sold his house/unit....(which has possibly increased in value by 25% since that date)




I think you use Keen in your comments more then anyone else in here...







> ....sold the family home, and placed their families in rentals....
> 
> some families have been split by this action....and the prospect of buying back cheaper in the same neighbourhood....has evaporated.....hence the angst
> ..............but look at this....





Where is the evidence for this crap you're peddling 







> most of you would aspire to become a Warren Buffet.....but he owns real estate.....
> he recognised the asset of providing a stable home for his family....and most, if not all the wealthiest people in the world, actually own their own homes....there is an intrisic value there....and it is not the monetary value...that the bears ascribe to...
> it is a far greater value....it has no price




Very touching, put a tear to my eye


----------



## medicowallet (7 December 2011)

explod said:


> Yep, lambs to the slaughter in my view.




Until you actually experience a financial disaster, you cannot properly risk manage or assess yourself.

ie the young ones who lost in the sharemarket imo will be much better investors from now on.. property investors, many of whom have no experience of the last time property was doing it tough, will be better after the inevitable correction.


The over confidence is akin to army recruits, and the bravado before ever having a bullet fired at them (not that I have), but through discussions with my father and grandfather, and commanding officers who have seen active combat, the value they place on "experience" is amazing.


----------



## medicowallet (8 December 2011)

Swann is looking weaker by the day... kind of like the housing market prospects.


----------



## Mr Z (8 December 2011)

Garpal Gumnut said:


> re Inevitable increases in property prices.
> 
> Tell that to Emmanuel Cassimatis.
> 
> ...




I bet you go to church just to cuss 

*BLASPHEME!!!!!!*

Get thee behind me Lucifer.


----------



## satanoperca (8 December 2011)

kincella said:


> how long are you prepared to wait....10 years or more ?




Not that long.

Nationally RE down -4.0%
Melbourne down -5.4%
and look at that build up of upsold properties on the market. 

Cheers


----------



## TMC93 (8 December 2011)

I live in Mackay and i am thinking about buying my first home. I saw an add in the paper offering House & Land packages for $158,000 in a good area. Only catch is that i have to rent the house back at cheaper rates (~$300) than what is the normal(~$450-500). I don't plan on living in it as i am going to uni in Brisbane but for me personally i see more potential growth in Mackay than in Brisbane. I still need to do a lot more research but it would be a great deal especially with the Governments new housing grant. Has anyone done the same thing for an investment home? 

PS: those rental prices above i just plucked from thin air so don't quote me


----------



## Mr Z (8 December 2011)

Keep in mind that it only takes a -50% correction to wipe out a +100% gain.


----------



## Agentm (8 December 2011)

banks are of the view that cash aint gunna be any cheaper, so they wont lower rates, one may try b4 christmas as a PR stunt imho..



with banks seeing things bleakly, talking up hugely on all interviews that the fact the rates they have to chase are higher than it was last time, they are giving up on australia and giving up on the housing sector big time, forget record profits, they see the bubble bursting and have signalled they are not in it any more for the fun ride, its time to turn their collective backs on the housing sector, offer no relief and disregard the RBA.. 

kincella

keen was a minority of 1, but he at least has the balls to say it as it is. the bubble was spirited along by many planned economic measures and events, as you well know, and only now that it has peaked it cannot increase anymore, so what speed it falls at is entirely up local and global factors.


----------



## Mr Z (8 December 2011)

Agentm said:


> with banks seeing things bleakly, talking up hugely on all interviews that the fact the rates they have to chase are higher than it was last time, they are giving up on australia and* giving up on the housing sector big time*, forget record profits, they see the bubble bursting and have signalled they are not in it any more for the fun ride, its time to turn their collective backs on the housing sector, offer no relief and disregard the RBA..




Can they actually do that an survive? I doubt it, I think they need a controlled descent and soft landing at the worst so in essence surely they will have to support a fight against any rapid move in property prices.


----------



## robz7777 (8 December 2011)

young-gun said:


> i truly feel for people who have recently gone out on a limb to buy their first family home.




For the most part I would imagine that most first home buyers will have purchased in the low-mid price bracket for their area and have the added 'buffer' of the FHOG before eating into their profit/loss should they be forced to sell.. 

Question: When prices fall is it the top end and low end that fall the hardest??

I would be more concerned for investors leveraged to the eyeballs into residential or commercial properties they were sold by spruikers with vested interests.. While the market is moving sideways (or down) those negatively geared are burning money.. 
I know of a couple who purchased a commercial property with a 2 year rent guarantee, after 3 years they have never had a tennant and are down nearly 50%..


----------



## Mr Z (8 December 2011)

robz7777 said:


> Question: When prices fall is it the top end and low end that fall the hardest??




Ancient real estate wisdom is ---> "Move up in a down market"

Yes the top end always cops a bigger % crop in a true correction, the real estate market builds from the ground up much like a house


----------



## greebly24 (8 December 2011)

kincella said:


> *rich getting richer, poor struggling *
> The average wealth of an Australian household in 2009-10 was $720,000, up 14 per cent in the last five years.




Read the article. It's all averages, not medians so its pretty pointless. Warm & fuzzy feeling though, which is about all its good for.


----------



## young-gun (8 December 2011)

Mr Z said:


> Can they actually do that an survive? I doubt it, I think they need a controlled descent and soft landing at the worst so in essence surely they will have to support a fight against any rapid move in property prices.




Mr Z, when has an engineered soft landing ever actually been soft of recent?


----------



## young-gun (8 December 2011)

robz7777 said:


> For the most part I would imagine that most first home buyers will have purchased in the low-mid price bracket for their area and have the added 'buffer' of the FHOG before eating into their profit/loss should they be forced to sell..
> 
> Question: When prices fall is it the top end and low end that fall the hardest??
> 
> ...




real estate will move by enough in all property brackets that it wont matter whether they bought in low- mid or mid to high. fact is if people lose their jobs it doesnt take long for that 'buffer' to disappear. 

glad u raised the point about investors, as these guys are going to have a huge part in the crash. every third person these days has an investment property(i dont know the exact %), most owning more than one. as you said they're leveraged to the hilt, negative gearing everything and have taken on crazy amounts of debt. when these guys lose their jobs and their assests start going under water there is going to be a flood of houses on the market in a very short period of time. 

kincella, steve keen is right, and there is no way if he sold in 07-08 that his house wouldve increased 25% between then and now


----------



## kincella (8 December 2011)

house and unit prices in surrey Hills, nsw


steve keen had a unit...he had to sell it due to a divorce settlement...
in 2008......( wow loser status)
prices of units in 2008 were 418,000
prices of units in 2011 were 522,500
an increase of 24%... or thereabouts...

young gun....I suggest you really need to do some serious research,  get the facts, rather than simply using emotion, in your arguments

http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp&s=nsw&u=surry+hills

and for the bears who like to use the dwindling auction results as their 'gotcha moments'
have a look here.....auctions represent such a small % of total sales.... (similar to the popularity stakes for the current incumbent political party)

* but be warned...do not look at the increase in median values over the same period...nor the capital growth figures (close your eyes to those figures)

http://www.reiv.com.au/Property-Research/Housing-Indicators/Auctions-and-private-sales.aspx


----------



## medicowallet (8 December 2011)

kincella said:


> house and unit prices in surrey Hills, nsw
> 
> 
> steve keen had a unit...he had to sell it due to a divorce settlement...
> ...




So what you are saying is if I purchased a house for $418000 in 2008, cash would have performed the same   (oh do, do some calculations, but, please, factor in maintenance and depreciation).... well done.

MW


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## McLovin (8 December 2011)

kincella said:


> house and unit prices in surrey Hills, nsw
> 
> 
> steve keen had a unit...he had to sell it due to a divorce settlement...
> ...




That site says the most recent median house price in Surry Hills was $1.9m. That sounds a fair way off. My suburb, Paddington, is showing as a median price of $1.375m which seems on the low side and is more expensive than Surry Hills. Just questioining how reliable those stats are really.


----------



## So_Cynical (8 December 2011)

kincella said:


> house and unit prices in surrey Hills, nsw
> 
> 
> steve keen had a unit...he had to sell it due to a divorce settlement...
> ...




I though Steve Keen sold his unit out near Penrith somewhere... that's a lifetime away from Surrey hills.


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## McLovin (8 December 2011)

So_Cynical said:


> I though Steve Keen sold his unit out near Penrith somewhere... that's a lifetime away from Surrey hills.




It was in Surry Hills, but he sold it for $526k so above the then median.


----------



## young-gun (8 December 2011)

kincella said:


> young gun....I suggest you really need to do some serious research,  get the facts, rather than simply using emotion, in your arguments




rich coming from someone who in just about every post has spat out constant ramblings of noticeably flawed statistics.


----------



## So_Cynical (8 December 2011)

McLovin said:


> It was in Surry Hills, but he sold it for $526k so above the then median.





Link please...or it didn't happen.


----------



## McLovin (8 December 2011)

So_Cynical said:


> Link please...or it didn't happen.




http://www.smh.com.au/news/national/big-sale-despite-keens-gloom/2008/10/24/1224351544016.html


----------



## young-gun (8 December 2011)

McLovin said:


> http://www.smh.com.au/news/national/big-sale-despite-keens-gloom/2008/10/24/1224351544016.html





as suspected, 25% increase wasnt even close. thanks mclovin.


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## So_Cynical (8 December 2011)

McLovin said:


> http://www.smh.com.au/news/national/big-sale-despite-keens-gloom/2008/10/24/1224351544016.html




Cool thanks...i really thought it was out west.


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## satanoperca (9 December 2011)

kincella said:


> steve keen had a unit...he had to sell it due to a divorce settlement...
> in 2008......( wow loser status)




WOW, anyone who gets divorced is a loser, I think I know who the real loser might be.

Cheers


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## kincella (9 December 2011)

oh dear, you dont get it....the prices for Surrey Hills units......are *median prices*....
do you know how they calculate the *median price*....
and you think that, the median price overall has not increased since keen sold....
give me a break.....
in your haste to disregard any increases in house prices....cause it is against your views...you still dont get it...or cannot see the woods for the trees..

have a good day , anyway


----------



## young-gun (9 December 2011)

kincella said:


> oh dear, you dont get it....the prices for Surrey Hills units......are *median prices*....
> do you know how they calculate the *median price*....
> and you think that, the median price overall has not increased since keen sold....
> give me a break.....
> ...




best u rush out and buy a unit in surry hills, its clearly a win win.

either use keen as an example, or use median unit prices as an example. if you wanna mix and match

keen sold in 08 for 526
median price today 522(2010 stat)

oh no keen lost 4 grand.

i never said prices havent increased at all since 08. theres every chance though that keens proeprty didnt increase over that time. in an area as small as surry hills there is flaws in using median prices. if ten people sold because people like yourself paid wayyy to much,(pushing the median way higher)for it because they believe RE is ok, and ten people sold below the median. can it really be said that surry hills has gone up?

im not saying that this is the case, just point out that it can be flawed focusing on such a small area, im sure stanopera will be back shortly with fresh price updates nationwide to give us a better indication.


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## kincella (9 December 2011)

the saying goes, you cannot teach an old dog new tricks.....

but here is an old dog, who knows all the tricks

I have over 40 years experience in property, purchased my first home at age 21 years...
I have been there all the time....interest rates at 18%,  or 6%....I bought property and made great gains everytime

when people like you were saying ...wait for it to come down.....I was out there buying

I am a contrarian investor....when the mob says buy...I sell at a huge profit....
when the mob says sell....I buy , for my huge future profits...

I am not hocked to the hilt....

due to my property investments, I was able to retire early
and now I just sit back, and watch it all grow, the money rolls in....its all good fun
and probably unlike you, who may have a problem , gaining finance....for your first home
it is easy peasy for me....
I have a huge amount of equity and assets...which the banks just love...
together with a regular income from property...which usually seals the deal with the banks
I use OPM (other peoples money) to fund my acquistions.... 
I have a huge bank of knowledge and research at my disposal...
I would never ever sell in a down market.....how stupid is that  policy
If I decide to sell, for whatever reason....it is only ever in a HOT market...
I can wait for the best deals....not necessarily waiting for the market to bottom.....
but looking at one particluar property or location to purchase....

plus , there are plenty of cashed up investors like myself out there in the market....competing against people like you....who  in the current market, are simply tyre kickers....
but we nab the properties....you do not...
lately, I find the best deals are in commercial properties...I doubt that you are in that market
but pulease..
have a great day anyway


----------



## Mr Z (9 December 2011)

40 whole years experience! WOW.

Read Nikolai Kondratiev, you have only experienced part of one cycle. This is bigger than your experience and might just possibly require a change of tactic.


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## sptrawler (9 December 2011)

My thoughts are, the ANZ announcement today is more about the banks wanting to keep the thumbscrews on house prices.
Keep them slowly going down to absorb the losses in the balance sheets.
Nothing would hurt the bank balance sheets more than prices flying up or screaming down.


----------



## Gerkin (9 December 2011)

young gun what do you live in?

in this market im able to find properties that i can purchase that the mortgage repayments are only slightly higher than the rent i would pay....i think it may be a good time to buy for you especially if you can lock in 5.99% for 3 years.


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## medicowallet (9 December 2011)

kincella said:


> the saying goes, you cannot teach an old dog new tricks.....
> 
> but here is an old dog, who knows all the tricks
> 
> ...




I know many people who had much more money than you have now, and are now bankrupt.  

I have also found in business that surrounding yourself with people who you empower and support gives you support networks when you come down a notch... I hope that you do the same, for when you come down a notch or two.


----------



## young-gun (10 December 2011)

kincella said:


> the saying goes, you cannot teach an old dog new tricks.....
> 
> but here is an old dog, who knows all the tricks
> 
> ...




it appears your head is stuck in the same bubble as your property portfolio.

there is one word for you, lucky. lucky that you were born at a the right time.

its too bad you cant learn new tricks, your gonna need them, as mr z has pointed out. the only reason you may get through this crash is because of your 40 years of investing without really experiencing an actual crash(none of which will come close to the magnitude of what you're about to experience anyway) which has enabled you to create enough wealth that could potentially see you to the other side.

in the mean time given that we're all calling down you better get into the market(i believe this is your signal?), what with all your equity etc etc, i hear now is the time to buy!(prices never go down)

all the best

oh and ps gerkin, im currently renting north brisbane, im aware of the areas that you are referring to, but i dont see the point in buying and paying slightly more than i could rent for, on a currently depreciating asset, not to mention that if the 2 are as close as you say, owning your home will shortly become cheaper than renting will it not(if the market continues its 'moderate downtrend')?

people keep saying, oh but if you buy and hold it doesnt matter if it goes down, long term you will prosper. correct, but if it crashes, and then i buy and hold, i will be far better off. the odds of the market crashing far outweigh those of it taking off in the next 12 months, sitting tight is a win win for me as i see it. i can assure you patience will be rewarded. oh and i would never lock in, im fairly sure the banks have a siren that goes off when people lock in, and they have a quick giggle, before returning to work....most of the time


----------



## indeck (10 December 2011)

kincella said:


> the saying goes, you cannot teach an old dog new tricks.....




i cant read past the not so thinly veiled, look at me im awesome at everything and you're not undertone which makes me take what you're saying with a grain of salt. thanks for the info awesome mc cool.


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## Beej (10 December 2011)

young-gun said:


> real estate will move by enough in all property brackets that it wont matter whether they bought in low- mid or mid to high. fact is if people lose their jobs it doesnt take long for that 'buffer' to disappear.




For someone who has so many facts completely wrong, you seem very certain of the future?



> glad u raised the point about investors, as these guys are going to have a huge part in the crash. every third person these days has an investment property(i dont know the exact %), most owning more than one. as you said they're leveraged to the hilt, negative gearing everything and have taken on crazy amounts of debt. when these guys lose their jobs and their assests start going under water there is going to be a flood of houses on the market in a very short period of time.




Wrong on all counts - % of taxpayers that declare investment property rental income is 10%. % of PIs with multiple properties is a very small proportion of those (something like a few%), certainly not the majority as you seem to think.

As for flooding the market etc, you have to consider that the vast majority of those PIs bought many years ago and both prices and rents have increased significantly in that time. Very few will become forced sellers even in the doomsday scenario you outline.



> kincella, steve keen is right, and there is no way if he sold in 07-08 that his house wouldve increased 25% between then and now




Steve Keen was wrong, and proven so - he even had to walk from Canberra to a certain tallest mountain in oz as a result of his being proven wrong. He also sold his Surry Hills unit at almost the exact bottom of the market in late 2008, and started renting. As others have shown, prices today are still +20% higher or more in Surry Hills today than they were then. Sydney rents have also increased by about nearly 20% in the same period as well.

As an aside, does everyone here realise that Sydney UNIT prices, according to RP-Data and Residex stats, are higher now than they have ever been? They have not fallen at all in the past 12-18 months.


----------



## Aussiejeff (11 December 2011)

Hmm. Something doesn't quite add up here...



> Wednesday, 7 December 2011 - Auction preview 10 and 11 December
> *The REIV expects around 900 auctions this weekend.*




Sat 10 Dec reported auctions - 



> *The clearance rate this weekend is 55 per cent compared to 53 per cent last weekend and 57 per cent this weekend last year.*
> 
> There is only one more normal weekend of auctions this year and it appears that the overall clearance rate in 2011 will be 56 per cent.
> 
> ...




Huh? So, ONLY 741 auctions were "reported" out of the REIV's own prediction of _900???_ (yes, yes, I know there is a handful to go on Sun yet - but around 95% go on Sat don't they...?) FYI there were around 1200 reported auctions this weekend last year... a drop of around 48% in "reported" auctions since then!

So, IN REALITY, only 408 properties were sold yesterday at auction out of the predicted 900 auctions? After an interest rate cut?

Well, I make that a *45%* clearance rate, Enzo. NOT 55%! Saturday's figure is not likely to improve more than a couple of percent with today's handful of auctions - maybe it will get to 48% or so this weekend total. I guess Enzo will tweak it to 55% or so with his Magic Calculator. 

Not only do Enzo's maths for this weekend smell extremely fishy, just check out his own clearance rate graphs...  http://www.reiv.com.au/Property-Research/Housing-Indicators.aspx?period1=2 Remember, the graphs only show REIV reported auction stats. The "real" graphs would look undoubtedly worse. 

It's not hard to see the overall trend from the 3 year graph - ie: INCREASING reported auctions vs DECREASING clearance rates. The unspoken result is a *significant increase in the pool of unaffordable, unsold houses that must drop substantially in price if they have any hope to sell within a reasonable time frame*. Even more clear is when the FHB "artificially" boosted RE prices through rapid increase in demand (see 5 year graph - huge kick up from Nov  2008 to March 2010 in the clearance rate). However, after that initial flood of buyers had been sated, not even ongoing state funded FHB schemes have been able to maintain the growth curve today. 

Yet Enzo's spruiking remains all positive. Very funny!

Good luck.


----------



## kincella (11 December 2011)

the age newspaper, ordered this inquiry into melb housing affordability....what they found was that, apart from being grossly unaffordable for most fhb, the cheaper suburbs house prices, held firm or had increased in 115 of 139 suburbs

I doubt Qld, WA or NSW is much different 
and qld has mining, coming to a town near you, soon...

extract...........

''Looking at the median price for the whole city sometimes doesn't give you the full story of what is happening,'' APM economist Andrew Wilson said. ''There's certainly been a softening in the upper part of the market, but the situation can be much different at the lower end.'' House values in 115 of the 139 suburbs still priced below the city's median are either holding firm or increasing.

http://theage.domain.com.au/home-buyers-priced-out-20111210-1ooxm.html

on another forum, the bears are advising a youngun to sell and take a profit of $60,000 odd, the difference between the buying price in 2008, and sold prices in the neighbourhood now....
they are advising him to sell up,then sit it out, wait for the prices to drop and go back in, in a years time.....wow look at the capital costs he would lose, and have to pay all over again, this time without the stamp duty benefits and fhb grants, rebates
one, a former RE agent said he did the same, but after 4 years, he is still waiting to get back into the market
 this is  great advice on how to lose money
and its based on the assumption prices will fall.....regardless there is no evidence...except the 2% drops at the top of the median market....
which is not the maket the young  one is involved in....he is in the market, that is holding form or growing...

its a 'stock day trader mentality,' being applied to the housing market


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## kincella (11 December 2011)

*the new age in property=everyone wants to rent*
so based on the research one can gain from this forum, absolutley everyone wants to be a renter..
and not only for one year, but for the next 3-4 years

this is absolutley stunning news for property investors...

no wonder, the astute, and smarts, are buying property
that the 'investors' are shunning'
cheers
and thank you, for supporting the property investors
ps, no wonder property is so reliant,,,with such dedicated and resiliant cuistomers


----------



## Starcraftmazter (11 December 2011)

Some people in here (like the above two posters) are absolute nutters. No offence.


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## So_Cynical (11 December 2011)

kincella said:


> *the new age in property=everyone wants to rent*
> so based on the research one can gain from this forum, absolutley everyone wants to be a renter..
> and not only for one year, but for the next 3-4 years
> 
> ...




I would personally like to go on the record and thank the investment property owners of Sydney...thanks guys  

Thanks for buying places so that i have somewhere to live...thanks for putting up with the crappy 2 and 3% yields , thanks for putting your money on the line for such low returns, providing me with some where to live and make 12% > 15%+ returns on my money in the stock market.

Sincerely thank you....oh and while im at it thanks to the person who sold me IIN shares 3 months ago for $2.25 thanks.


----------



## Beej (12 December 2011)

So_Cynical said:


> I would personally like to go on the record and thank the investment property owners of Sydney...thanks guys
> 
> Thanks for buying places so that i have somewhere to live...thanks for putting up with the crappy 2 and 3% yields , thanks for putting your money on the line for such low returns, providing me with some where to live and make 12% > 15%+ returns on my money in the stock market.
> 
> Sincerely thank you....oh and while im at it thanks to the person who sold me IIN shares 3 months ago for $2.25 thanks.




Where in Sydney do you live where you think you are paying rent equivelant to a 2-3% yield? You must live in a different Sydney to me?? The average yield on Sydney unts is 5.2% and on houses is 4.5%? (See http://www.rpdata.com/images/storie...pdata_rismark_home_value_index_nov30_2011.pdf). A simple search of available rental properties in just about any area I have ever looked confirms those yields as well?


----------



## stacks (12 December 2011)

Beej said:


> Where in Sydney do you live where you think you are paying rent equivelant to a 2-3% yield? You must live in a different Sydney to me?? The average yield on Sydney unts is 5.2% and on houses is 4.5%? (See http://www.rpdata.com/images/storie...pdata_rismark_home_value_index_nov30_2011.pdf). A simple search of available rental properties in just about any area I have ever looked confirms those yields as well?




Does anyone know what is included in the rental yield numbers? Is it strictly median rent/median price for a city? 

Also as it is a gross yield I'm assuming no allowances for additional costs rates, insurance, RE agent fees etc? Is that correct?


----------



## young-gun (12 December 2011)

Beej said:


> Wrong on all counts - % of taxpayers that declare investment property rental income is 10%. % of PIs with multiple properties is a very small proportion of those (something like a few%), certainly not the majority as you seem to think.
> 
> As for flooding the market etc, you have to consider that the vast majority of those PIs bought many years ago and both prices and rents have increased significantly in that time. Very few will become forced sellers even in the doomsday scenario you outline.
> 
> ...




ok so instead of the 1 in 3(which last time i checked 33% isn't a majority) its 1 in 10. and as you said some of these own more than one. im sure i dont need to point out that for u to believe that most investment properties were bought before the boom is a bit far fetched. i know three guys mid 40's that purchased one each in the past 3 weeks. 

as i said people that have been lulled into thinking property is such a brilliant idea in the past few years, and are leveraged to the hilt, after all it what does it matter if you're a mill in debt when RE will only ever go up(majority of the time)?

allow me to rephrase on keen -  he will be right.(yeah yeah i know he keeps pushing the date further and further back, but its coming to a suburb near you shortly)

the one thing that happened is the one thing no one can predict, and that one thing is when governments will step in to try and prevent natural economic occurrences.

unit prices?? hmmm i wonder who would be buying units in sydney, probably not first home owners that could no way in hell afford a house. if you take a look at most graphs of median unti prices in those areas around sydney

eg paddington and redfern you will notice sharp percentage increases in 09-10.

i wonder if that had anything to do with the governments fhog and new home grants??? probably not, just a coincidence.

carry on, everything is fine in RE.


----------



## young-gun (12 December 2011)

kincella said:


> *the new age in property=everyone wants to rent*
> so based on the research one can gain from this forum, absolutley everyone wants to be a renter..
> and not only for one year, but for the next 3-4 years
> 
> ...




oh dear god......................


----------



## wayneL (12 December 2011)

young-gun said:


> oh dear god......................




Religious irony noted

Disclosure - Not bearish on property and in the market making ludicrous offers.


----------



## young-gun (12 December 2011)

wayneL said:


> Religious irony noted
> 
> Disclosure - Not bearish on property and in the market making ludicrous offers.



perhaps some examples of your "ludicrous offers"? if you dont mind.


----------



## wayneL (12 December 2011)

young-gun said:


> perhaps some examples of your "ludicrous offers"? if you dont mind.




It's something I'd rather keep to myself, but here is the town I'm focused on (and nearby Palmerston North) http://www.realestate.co.nz/residential/search/suburbs/2604

Shannon has been depressed for some time and at last has a dynamic core of individuals (plus moi hopefully) who will propel the town to better things. Wellingtonians have thus recently "discovered" Shannon as a cool fashion/daytrip destination.

Looking at an acreage space for PPOR and business opportunities as well.

But I want a bargain.


----------



## young-gun (12 December 2011)

wayneL said:


> It's something I'd rather keep to myself, but here is the town I'm focused on (and nearby Palmerston North) http://www.realestate.co.nz/residential/search/suburbs/2604
> 
> Shannon has been depressed for some time and at last has a dynamic core of individuals (plus moi hopefully) who will propel the town to better things. Wellingtonians have thus recently "discovered" Shannon as a cool fashion/daytrip destination.
> 
> ...




i can honestly say i know absolutely nothing about NZ RE.

I can however note that there isnt much sunshine to be had in Shannon, judging by the large majority of photos on that page


----------



## Beej (12 December 2011)

stacks said:


> Does anyone know what is included in the rental yield numbers? Is it strictly median rent/median price for a city?
> 
> Also as it is a gross yield I'm assuming no allowances for additional costs rates, insurance, RE agent fees etc? Is that correct?




Certainly correct on the 2nd point. 

The first I am not certain about - I think though it's a little more sophisticated than just "median rent / median dwelling price", as that would actually give artificially low estimated yields due to the fact rental properties in a given area usually over-represent the lower end and under represent the higher end (where PPOR owners tend to dominate). I suspect they look at recently sold and then rented properties in particular areas (lot's of hard data there) and determine the average rental yield that way?


----------



## So_Cynical (12 December 2011)

Beej said:


> Where in Sydney do you live where you think you are paying rent equivelant to a 2-3% yield? You must live in a different Sydney to me?? The average yield on Sydney unts is 5.2% and on houses is 4.5%? (See http://www.rpdata.com/images/storie...pdata_rismark_home_value_index_nov30_2011.pdf). A simple search of available rental properties in just about any area I have ever looked confirms those yields as well?




The figure works out the same for all of Sydney as you well know...i pay approximately 4.8% PA rent on the Approximate value of the property i live in.

4.5 to 5% gross yield less agents fees, insurance, water, rates, upkeep, repairs, and vacant periods etc.  = 2.5 > 3% gross.... that's standard from Penrith to Potts point.


----------



## Peak Debt (12 December 2011)

young-gun said:


> as i said people that have been lulled into thinking property is such a brilliant idea in the past few years, and are leveraged to the hilt, after all it what does it matter if you're a mill in debt when RE will only ever go up(majority of the time)?




Spot on! The Aussie media and the blogosphere are dominated by real estate industry spruikers and shills who are paid to post positive spin on forums and blogs (yes even forums like this one) to talk up the market etc. They feed lies and propaganda to the masses. Read the blog below and watch the included video for evidence:

On the Internet, nobody knows you're a dog, or a paid property spruiker

http://www.differenthere.com/2011/08/on-internet-nobody-knows-youre-dog-or.html

The public needs to open their eyes. To stop believing what they read about real estate in the mainstream press. Almost every media article about property is from a vested interest trying to pump up the market!


----------



## Julia (12 December 2011)

wayneL said:


> It's something I'd rather keep to myself, but here is the town I'm focused on (and nearby Palmerston North) http://www.realestate.co.nz/residential/search/suburbs/2604
> 
> Shannon has been depressed for some time and at last has a dynamic core of individuals (plus moi hopefully) who will propel the town to better things. Wellingtonians have thus recently "discovered" Shannon as a cool fashion/daytrip destination.
> 
> ...



Shannon???  I lived most of my life in NZ and have never heard of it.
The properties featured on your link are hardly a bargain in a decent sized city, let alone in a small town.

What is it that you see in this place, Wayne?
Some hidden future prosperity?


----------



## Beej (13 December 2011)

So_Cynical said:


> The figure works out the same for all of Sydney as you well know...i pay approximately 4.8% PA rent on the Approximate value of the property i live in.
> 
> 4.5 to 5% gross yield less agents fees, insurance, water, rates, upkeep, repairs, and vacant periods etc.  = 2.5 > 3% gross.... that's standard from Penrith to Potts point.




I see your problem, possibly due to lack of experience, you are grossly over-estimating the costs of property ownership. Try somewhere between 0.5% and 1% and you would be much closer to the true mark.


----------



## Knobby22 (13 December 2011)

Beej said:


> I see your problem, possibly due to lack of experience, you are grossly over-estimating the costs of property ownership. Try somewhere between 0.5% and 1% and you would be much closer to the true mark.




Beej, that seems low to me.
My parents have a property (a flat) and when you include rates, real estate agents, repairs, time when the flat is empty, the money you pay to manage the block, insurances etc.  It is a lot more than 1%.


----------



## awg (13 December 2011)

Beej said:


> I see your problem, possibly due to lack of experience, you are grossly over-estimating the costs of property ownership. Try somewhere between 0.5% and 1% and you would be much closer to the true mark.




hmmm..if you do/ dont include long-term depreciation/maintenance that makes a big difference.

You cant claim as much on older houses.


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## young-gun (14 December 2011)

Peak Debt said:


> Spot on! The Aussie media and the blogosphere are dominated by real estate industry spruikers and shills who are paid to post positive spin on forums and blogs (yes even forums like this one) to talk up the market etc. They feed lies and propaganda to the masses. Read the blog below and watch the included video for evidence:
> 
> On the Internet, nobody knows you're a dog, or a paid property spruiker
> 
> ...




is there something you would like to admit...kincella?

all jokes aside, peak, the amount of people that come to me with the argument of:

You dont know what you're talking about! there is a massive under supply of housing, 200,000 in fact, dont you read?! for over 12 months now....


"What happened to the housing shortage? You know the one I’m talking about. The ‘chronic’ housing 
shortage. The one where Australia is short by 135,000... sorry, 200,000 homes.
The housing shortage which will reach – what is it – 400,000 homes by 2020?
According to a report by Stuart Fagg on ninemsn... ‘Australia must build an additional 500,000 houses by 
2020 or face a crippling rise in house prices that will make home ownership out of reach for many.’
But suddenly no one is talking about it. I’ll tell you why. It’s gone up in a puff of smoke.
We’ve final proof that it never existed. And as far as we can tell, barring a man-made or natural catastrophe, there won’t ever be a housing shortage.
I don’t think I’ve laughed so much in a long time as when I read this headline in The Age recently: ‘Flood of property listings to hit Melbourne market.’

‘Flood’. That implies a lot. It’s the opposite of a ‘drought’. According to the Microsoft Word dictionary, flood is a synonym to deluge, torrent and overflow. On the other hand, a ‘drought’ is nothing. Hope you’ve got 12 that.
According to the story, ‘The Real Estate Institute of Victoria is predicting 1210 auction listings over the next 
two weeks...’
But here’s the bit that had us rolling on the floor in laughter, ‘A 50 per cent increase of new home listings 
expected over the next three weekends comes as auction clearance rates begin to falter on pricier home loans and weaker buyer confidence.’

In other words, despite the so-called housing shortage of 200,000 homes, the property spruikers and mainstream press have had the crap frightened out of them by an extra 400 houses hitting the market over the next two weeks.
Or to put it even more simply, if we average those numbers out, an extra 200 houses hitting the market in one weekend is considered a ‘flood’. And it’s causing panic because it’s seen as a ‘flood’ of supply.
Are these people insane?
One week they’re saying with a straight pen that there’s a 200,000 housing shortage and the next week 
they’re worried the whole market could topple over due to an extra 400 homes being offered for sale.
Does that make sense to you?
By our calculations, 400 homes equals around 0.2% of the number of homes needed to address the socalled housing shortage.
We’d have thought the spruikers would be cheering that the supply has increased. After all, with a shortage of 200,000 homes, surely an increase of just 400 properties isn’t going to burst the bubble.
This is the capacity increase they’ve been waiting for. Isn’t it?"

Courtesy of:
http://www.moneymorning.com.au/reports/mm-aussiehouseprices-2010.pdf

its backdated a bit, but as true today as it was then.


----------



## wayneL (14 December 2011)

Julia said:


> Shannon???  I lived most of my life in NZ and have never heard of it.
> The properties featured on your link are hardly a bargain in a decent sized city, let alone in a small town.
> 
> What is it that you see in this place, Wayne?
> Some hidden future prosperity?




Julia, Shannon is between Palmerston North and Levin... about 90 minutes out from Wellington.

Mostly what I see is somewhere I'd like to live... if I stay here , but here is a little of what's starting to happen http://www.stuff.co.nz/manawatu-standard/news/4434840/Shannon-alive-with-sound-of-cash-registers

BTW NZ is no longer cheap... you wouldn't see prices like that in Welly.


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## Julia (14 December 2011)

wayneL said:


> Julia, Shannon is between Palmerston North and Levin... about 90 minutes out from Wellington.
> 
> Mostly what I see is somewhere I'd like to live... if I stay here :



OK, each to his own.   But if you're going to opt for some small town, why not one where you have a chance of remotely OK weather???



> BTW NZ is no longer cheap... you wouldn't see prices like that in Welly.



Welly??  Oh, my goodness.


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## wayneL (15 December 2011)

Julia said:


> OK, each to his own.   But if you're going to opt for some small town, why not one where you have a chance of remotely OK weather???







What is good weather?

To me good weather is plenty of rainfall and not at all hot in summer. Where I live now supposedly has good weather and everyone is whingeing about the heat (including moi).

Qld might as well be Hell for me. Like you say, each to their own.



> Welly??  Oh, my goodness.




It was nearly Wellywood. 

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10767569


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## satanoperca (17 December 2011)

Are we that different here?

Over this thread and the previous property thread there was discussion that in Oz we are different. The US property market crashed due to the notion of "jingle mail" or non recourse loans and that Oz only has full recourse loans.

Some facts :

The US has 11 states that have non recourse loans and even those loans can be recourse, it just depends on what the judge determines if the lender takes the mortgagee to court.

Secondly, the states that had the greatest falls in property prices had full recourse loans , Nivada and Florida. Funny that anything that got smashed ended in a "a" just like Australi"a". 

So that sort of squashes the myth on the American environment.

So Oz has full recourse loans so our property prices cannot crash, hmmmm, the funny thing is Ireland had full recourse loans and what happened to their property prices, they were in a bubble and crashed.

So we move on, Australia has a shortage of properties. This one has been much debated on this thread and many others, all sorts of stats have been thrown around. For me there will always be a shortage of affordable houses, but that does not mean there is a shortage of houses. I for one have been watching with baited breath the build up of unsold properties across Australia. Why arn't they selling, especially if they are a rare commodity. Interest rates are at historical lows and unemployment is still low.

And we move, Australian banks have been prudent in lending, bull---h. Many have offered 95% LVRs or greater and Australians mortgage debt to GDP is over 90%, this seems very dangeous to me with Australias ratio greater than the US. But we are different here we have Kangaroos and Echinas.

It would be great if some of the property bulls on this forum, they to are in shortage can counter argue the above with exception that I already know are fauna and flora is unique to Australia.

Cheers


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## Wysiwyg (17 December 2011)

satanoperca said:


> But we are different here we have Kangaroos and Echinas.



And coal, iron ore, gas, uranium etc. otherwise we would be in similar and probably worse state than the other nations experiencing lower quality of life.


----------



## greebly24 (17 December 2011)

_Chinese prop up property market_ AFR Dec 17-18 2011

Very interesting article. The RE apartment market struggled after the GFC but Chinese buyers kept it going. A lot of developments wouldn't have happened if it wasn't for these pre-sales. So in a roundabout way, Chinese buyers help create more properties here for rent or purchase by Australians too.

But it seems the vast majority of Chinese buyers are students who studied here (paying top dollar to do so), and are moving here to live, not overseas Chinese investors. Although it does sound like some new Chinese-Australians don't mind paying "well above market levels" either, which could cause problems for Australians looking to buy. Couple of more years of price drops should curtail that too though.

In the article a Chinese-Australian developer states he doesn't like dealing with overseas Chinese investors either because settlement on the properties isn't certain. I guess if they buy off-the-plan and prices drop (which they seem to be doing at present) and they pull out of the deal then its pretty hard to sue them for settlement in a Chinese court. The high Aussie dollar, and recent changes by the Foreign Investment Review Board, have also made it harder for overseas Chinese to invest here (as opposed to those emigrating here).

The local Chinese-Australians seem to be investing in property correctly though. They buy the most expensive apartment they can afford, then rent it out. Meanwhile they live in the cheapest rental they can, often share-housing. Financially, that's the smart way to invest in property if you can put up with less-than-ideal temporary living conditions. But from my experience, Chinese enjoy being surrounded by others, and dislike the solitude and wide open spaces of Australia. Bizarre to a country Aussie boy like me.

It sounds like apartment investments, particulary inner-city and near the Chinatowns will be good cash-flow (not capital-growth) investments going forward, until China's growth slows, as it inevitably will. Remember Japan's dominance of QLD RE in the 80s? Same thing. Nothing grows forever. Might be India's turn next though. Money should keep pouring, or at least trickling, into OZ.

However, locally in Adelaide, I've noticed prices on uni student pads dropping over the last few months. Offered off the plan five years ago at $170k, they rose to almost $200k. Now some are on the market for $135k with "all offers considered". So they're definitely "softening" (in bizarro-world RE speak). Yields and vacancy rates might mean they aren't good investments now either.

Personally I think RE in OZ is going to continue declining in price for the next few years while the massive global debt-overhang is sorted. Can't see any other way out. China's biggest customers (US &  EU) got too much debt, so China export growth slowing & manufacturing shrinking (PMI under 50), so commodity prices dropping. Global trade dropping too (check out the plummet in shipping rates causing bankruptcies). BRIC stockmarkets all down 30% this year too. And locally recent NSW, VIC and SA budgets showing big drops in revenue (partly due to overreliance on now-shrinking property taxes just like happened in the US) mean government cutbacks looming. Plus the best indicator of the future of property prices, credit growth, is slowing and is way below the boom-years average.

That can only mean lower RE prices, as we've seen over the past year in all capital cities. But rents might increase, so yields on investment properties might increase too. Cash flow, not capital growth, gonna be the name of the game for both RE and shares over the next few years me thinks.

(And yeah, satanoperca, Ireland has full recourse loans too, and even debtor's prisons. Didn't stop that property bubble bursting.)


----------



## young-gun (17 December 2011)

satanoperca said:


> Are we that different here?
> 
> Over this thread and the previous property thread there was discussion that in Oz we are different. The US property market crashed due to the notion of "jingle mail" or non recourse loans and that Oz only has full recourse loans.
> 
> ...




love your work satanoperca,

miami, fallen over 50% i believe. but everyone wanted to live there! apparently not

i work with an irish guy, just before the crash he had an offer on one of his properties over there for 500k euros. he inquired into putting it on the market, was told hed be lucky to get 290k euros. cant remember why he didnt take the offer initially, perhaps thought the market had one last burst in it

indeed prices are set to crash. luckily our banks are stess testing for homes to fall to 30%, that should ensure their survival 

now i wonder why banks would be carrying out such tests?


----------



## Wysiwyg (17 December 2011)

> Personally I think RE in OZ is going to continue declining in price for the next few years while the massive global debt-overhang is sorted.



 RE is not declining everywhere in Australia! The internet is such a valuable research tool and you can find what you're looking for most of the time.


----------



## young-gun (17 December 2011)

Wysiwyg said:


> RE is not declining everywhere in Australia! The internet is such a valuable research tool and you can find what you're looking for most of the time.




yet.


----------



## Wysiwyg (17 December 2011)

young-gun said:


> yet.



When this resource rush starts to decline I agree property in the present growth areas will moderate.


----------



## quadfin (17 December 2011)

Australian Property is so far out of wack to wages it must crumble eventually , if the government was serious they would remove negative gearing, problem solved, housing now affordable, supply increases due to the exit of the rich no longer having a tax dodge & gen x onwards could afford to buy rather than pay astronomical rents.

Plus it would remove the  banks from supplying money to a loss making enterprise funded by the taxpayer, than people could buy a home, less demand lower interest rates

in review get rid of tax breaks, stop funding loss making enterprises at the expense of the tax payer, property prices drop everyone can afford a home, my property can halve in value i don't care its my home .

i invest i things that are real & have a value, property does not


----------



## Julia (17 December 2011)

young-gun said:


> l
> 
> indeed prices are set to crash. luckily our banks are stess testing for homes to fall to 30%, that should ensure their survival
> 
> now i wonder why banks would be carrying out such tests?



Banks carry out such tests all the time.  It's completely routine for them and one of the reasons we have such strong banks.
APRA has just issued a directive to them to do this.
This will not cause the banks to do anything more than usual.  It is APRA wanting to be seen to be doing something  so no one can accuse them of being asleep at the wheel when the crash comes.


----------



## young-gun (18 December 2011)

Julia said:


> Banks carry out such tests all the time.  It's completely routine for them and one of the reasons we have such strong banks.
> APRA has just issued a directive to them to do this.
> This will not cause the banks to do anything more than usual.  It is APRA wanting to be seen to be doing something  so no one can accuse them of being asleep at the wheel when the crash comes.




Thanks for the info Julia. Wasn't aware that this was standard procedure for banks.


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## RandR (18 December 2011)

Wysiwyg said:


> When this resource rush starts to decline I agree property in the present growth areas will moderate.




meh, there will always be areas worth buying. The place where I grew up used to be a small rural town 45minutes out of brisbane, and 40 minutes to the gold coast. The QLD government is putting a new 'planned super city' of 50,000 people and 20,000 homes 5 minutes down the road. What do you think is going to happen to the value of the acreage properties we have and in that area ?

(disclaimer - I should add though that the local real estate agency let slip to me a week ago, they'd only sold 1 property in the last 3 months )


----------



## DB008 (18 December 2011)

quadfin said:


> Australian Property is so far out of wack to wages it must crumble eventually , if the government was serious they would remove negative gearing, problem solved, housing now affordable, supply increases due to the exit of the rich no longer having a tax dodge & gen x onwards could afford to buy rather than pay astronomical rents.
> 
> Plus it would remove the  banks from supplying money to a loss making enterprise funded by the taxpayer, than people could buy a home, less demand lower interest rates
> 
> ...




Sorry, l disagree with the above statement. Removing negative gearing will have investors (developers) drop out of the market and future property developments will slow down, thus pushing property prices higher while the population increases.


----------



## Mrmagoo (18 December 2011)

A property price crash would be TERRIFIC !

Hopefully they crash soon


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## medicowallet (18 December 2011)

DB008 said:


> Sorry, l disagree with the above statement. Removing negative gearing will have investors (developers) drop out of the market and future property developments will slow down, thus pushing property prices higher while the population increases.




Phase the change over 10 years with staggering amounts.

This would allow transition, and prevent crashes, give tradies time to adjust to more appropriate wages (compared to the rest of society) and builders and developers to return to historical margins, and councils to allow inflation to return land valuations to normal.

More affordable and transparent real estate for all... oh, plus legislate that RE must report de-identified statistics to improve it as well, then we won't have pathetic, tainted REIV results.. could you imagine if BHP could report only its highest 50% trades per week, and hide the true shareprice.

MW


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## Mrmagoo (18 December 2011)

medicowallet said:


> Phase the change over 10 years with staggering amounts.
> 
> This would allow transition, and prevent crashes, give tradies time to adjust to more appropriate wages (compared to the rest of society) and builders and developers to return to historical margins, and councils to allow inflation to return land valuations to normal.
> 
> ...




Just remove negative gearing and CGT exemptions. Why should rich investors get tax exemptions ?

I mean this is just socialism for the rich. What next ? CEO tax exemption ? Earn more than 1 million dollars a year and pay only 5% marginal tax ?

The 6 billion pumped into negative gearing should be put into public housing for WORKING people. i.e you don't get a place for being a drug addict. You get offered a place because you're next on the waiting list, earn less than a certain amount and you agree to pay 85% of market rent. 

Would do wonders for the economy in general 

Also sell them as PPOR ONLY !


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## medicowallet (18 December 2011)

Mrmagoo said:


> Just remove negative gearing and CGT exemptions. Why should rich investors get tax exemptions ?
> 
> I mean this is just socialism for the rich. What next ? CEO tax exemption ? Earn more than 1 million dollars a year and pay only 5% marginal tax ?
> 
> ...




I can't argue with this (nor removal of negative gearing for all investments).

But no government would ever survive an election with either of our proposals, hence the problem with the way our govt system operates, and how China can move appropriately and we cannot.


----------



## Mrmagoo (18 December 2011)

medicowallet said:


> I can't argue with this (nor removal of negative gearing for all investments).
> 
> But no government would ever survive an election with either of our proposals, hence the problem with the way our govt system operates, and how China can move appropriately and we cannot.




If the ALP did this it would be about the only chance they would have of winning the next election in a landslide victory.

Think about it, lovers of negative gearing and tax breaks for the rich, well they vote liberal anyway...

If nothing else they'd win back thousands of disillusioned youth and younger people and alienate only the far right voter.


----------



## medicowallet (18 December 2011)

Mrmagoo said:


> If the ALP did this it would be about the only chance they would have of winning the next election in a landslide victory.
> 
> Think about it, lovers of negative gearing and tax breaks for the rich, well they vote liberal anyway...
> 
> If nothing else they'd win back thousands of disillusioned youth and younger people and alienate only the far right voter.




Even I would vote Labor if they did this.... except then the $6 billion saved would go to subsidise earwax potato farming to solve the global food crisis, or some other stupid idea.


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## Mrmagoo (18 December 2011)

medicowallet said:


> Even I would vote Labor if they did this.... except then the $6 billion saved would go to subsidise earwax potato farming to solve the global food crisis, or some other stupid idea.




Yeah because scientists just made global warming up to get extra funding right ?


----------



## medicowallet (18 December 2011)

Mrmagoo said:


> Yeah because scientists just made global warming up to get extra funding right ?




nope, because they think they know the exact cause, and that it is with our powers to change it...


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## sptrawler (18 December 2011)

Mrmagoo said:


> If the ALP did this it would be about the only chance they would have of winning the next election in a landslide victory.
> 
> Think about it, lovers of negative gearing and tax breaks for the rich, well they vote liberal anyway...
> 
> If nothing else they'd win back thousands of disillusioned youth and younger people and alienate only the far right voter.




You have a better chance of the crack in you backside healing up.
How many Union reps,organisers,secretaries, labour party members with houses in Canberra do you think are negative gearing. They just got a 50k pay rise, Jeez wake up.

Do you really think these dudes are in this for your betterment, oh to be young again.


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## Smurf1976 (18 December 2011)

Mrmagoo said:


> Yeah because scientists just made global warming up to get extra funding right ?



I've long suspected that it has more to do with fossil fuel depletion than any sort of funding conspiracy or new world order type stuff.

Tell the average person that oil is running out and they immediately go into denial despite overwhelming evidence that there is indeed a problem. Nearly half a century of declining discovery rates tells the story as does the fact that we've gone from simple wells onshore to offshore to now drilling in ridiculously deep water and still the stuff costs $100 a barrel whilst the wheels fall off the economy. But even with all of that plus a few wars as well, few are willing to move beyond denial on this one.

Likewise coal, until very recently generally accepted as being plentiful, is rapidly going the same way now that China is burning as much as the rest of the world combined an India wants to follow suit. That India apparently wants to buy poor quality coal from Australia that even 5 years ago would have been considered non-exportable says all you need to know really. They wouldn't want the rubbish if there was plenty of good stuff easily available.

But as I said, few are willing to face up to the situation we have with energy supply so telling them that getting off coal and oil is helping the environment, putting a positive spin on a disastrous situation, would seem the most practical way to gain the public's acceptance of what's about to happen.


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## drsmith (19 December 2011)

When I think of removing negative gearing cold turkey and without other complimentary tax reforms, I think of Paul Keating.


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## wayneL (19 December 2011)

Smurf1976 said:


> I've long suspected that it has more to do with fossil fuel depletion than any sort of funding conspiracy or new world order type stuff.




I've always suspected this too, without discounting the other two on an "and/or" basis.


----------



## greebly24 (20 December 2011)

*"China's housing bubble is losing air"* Los Angeles Times 13 December 2011
*Home prices nationwide declined in November for the third straight month.*
Surely prices didn't decline by very much?
*Average prices in the Shanghai area are down about 40% from their peak in mid-2009.*
Bugger. That's Steve Keen bad!
*Sales have plummeted. In Beijing, nearly two years' worth of inventory is clogging the market, and more than 1,000 real estate agencies have closed this year.*
But aren't hundreds of millions of country peasants moving to the cities? Two years inventory? How many did they build in the first place? An extra hundred million?
*Developers who once pre-sold housing projects within hours are growing desperate. A real estate company in the eastern city of Wenzhou is offering to throw in a new BMW with a home purchase.*
A free BMW? Why not just sell the homes for $80 grand less? Weird.
*The swift turnaround has stunned buyers.. who thought prices had nowhere to go but up.*
Because thats what the RE agents told them. Morons.
*Li, a software engineer, closed on a $250,000, three-bedroom apartment in August, only to watch weeks later as the developer slashed prices 25% on identical units to attract buyers in a slowing market. Outraged, Li and hundreds of others who paid full price trashed the sales office, scuffled with employees and protested for three days before police broke up the demonstration. Walking away now would mean losing the $75,000 down payment that he borrowed from his working-class parents.
"I still haven't told them," Li, 29, said of his home's plummeting value. "It will just make them worry, and it's already too late.
"The sales agent told me prices wouldn't go down, that I was getting the best deal," he said. Li plans on marrying his girlfriend this time next year, when the apartment is scheduled to be finished. He'll have to devote half of his $1,500 monthly salary to pay the mortgage.
Li said he hasn't worked up the nerve to tell his parents how much his apartment has fallen in value ”” not after they lent him their life savings for the down payment. His father, an electrician, and his mother, a middle school teacher, live in Jiangxi, a poor province southwest of Shanghai. Frugal savers, they insist on walking wherever they can to save on bus fare when they visit their son in the city.
"I really thought I could save enough for a house," Li said. "But over the years, property prices grew so much faster than my salary. I couldn't play this catch-up game. I had to ask my parents for help or I'd never settle down."*
So you've lost your "working-class" parents life savings by "investing" in real estate. Property prices growing faster than salaries should have been the give-away, dude. Its called "unsustainable" in English. You invested in a bubble. 50% of your income for 30 years? Wonder what "mortgage stress" is in Chinese?
*That's news to millions of Chinese for whom real estate ownership has become an obsession. The mania has cemented itself into the national zeitgeist, inspiring a wildly popular soap opera, songs and even new slang. Debt-strapped home buyers have been dubbed fang nu, or house slaves.*
Right. So the Li is now "fang nu", a house slave. And even a soap opera about RE? Genius.
*It's all eerily similar to the early stages of the U.S. housing crash. The big difference is that the Chinese government intentionally slammed on the brakes.
Over the last year it has tightened lending... Chinese authorities say they're trying to tame inflation and defuse public anger over housing costs, the fallout from the government's efforts to stimulate the economy with easy credit during the global financial crisis.*
So despite an economy growing at over 8% and hundreds of millions of immigrants (from the countryside) house prices are dropping? Simply because of less easy credit?
*The protesters have garnered little sympathy on China's microblogs, a Twitter-like national nerve center with 300 million users. Many bloggers have denounced the home buyers as speculators hoping to make a quick buck by flipping units.
"You deserve this!" read one comment on the most heavily used service, Sina Weibo.
Such criticism isn't fair, wrote homeowner Wang Zeyi, who bought a unit in the same complex as Li in Shanghai.
"Most of us home buyers really just bought for ourselves to live in," Wang posted on her Sina microblog. "And overnight, the assets just evaporated."*
Wow. Didn't know China had forums like this one. But why does Wang care if the value dropped, if they only "bought for ourselves to live in"? You can still live in it, Wang, so what's your problem? Unless you thought you were going to get rich buying a PPOR? Unless you thought you were going to be better off than everyone who didn't buy now?

So it sounds like the China property bubble has popped. Property in China is 20% of their economy, and the largest user of our resources.
That just leaves Australia and Canada property bubbles left. Wonder if our resources will save us?


----------



## Tysonboss1 (20 December 2011)

> Li, a software engineer, closed on a $250,000, three-bedroom apartment in August, only to watch weeks later as the developer slashed prices 25% on identical units to attract buyers in a slowing market. Outraged, Li and hundreds of others who paid full price trashed the sales office, scuffled with employees and protested for three days before police broke up the demonstration. Walking away now would mean losing the $75,000 down payment that he borrowed from his working-class parents.
> "I still haven't told them," Li, 29, said of his home's plummeting value. "It will just make them worry, and it's already too late.
> "The sales agent told me prices wouldn't go down, that I was getting the best deal," he said. Li plans on marrying his girlfriend this time next year, when the apartment is scheduled to be finished. He'll have to devote half of his $1,500 monthly salary to pay the mortgage.
> Li said he hasn't worked up the nerve to tell his parents how much his apartment has fallen in value ”” not after they lent him their life savings for the down payment.




Here's the part I don't get with these situations.

One day he felt good about the purchase and his future getting married to his girlfriend and moving into the house, life's good.

Then when he gets told the value of the home has dropped by 25%, he freaks out and acts like the world is ending, 

He should just contiune on with his plans, buy the house work and pay back his parents and enjoy life.


----------



## Whiskers (20 December 2011)

Tysonboss1 said:


> Here's the part I don't get with these situations.
> 
> One day he felt good about the purchase and his future getting married to his girlfriend and moving into the house, life's good.
> 
> ...




It's one thing for the open/auction market to fall, but quite another for the developer to give assurances that the sale price would not go lower... and weeks later lower it by 25%.

I don't know what the law is, or more importantly what laws are actually enforced in China, but there are clear laws in the west (Aus at least) that would give him a case for suing the developer to recover the  subsequent 25% discount. 

That's a very substantial discount and utterences like that, if not kept, are a clear breech of contract in Aus.


----------



## explod (20 December 2011)

Whiskers said:


> It's one thing for the open/auction market to fall, but quite another for the developer to give assurances that the sale price would not go lower... and weeks later lower it by 25%.
> 
> I don't know what the law is, or more importantly what laws are actually enforced in China, but there are clear laws in the west (Aus at least) that would give him a case for suing the developer to recover the  subsequent 25% discount.
> 
> That's a very substantial discount and utterences like that, if not kept, are a clear breech of contract in Aus.




As well he would lack the licence/credentials to make any indication at all.  You can bet that litigation will occur in this case when it sinks in.

But just the normal disgrace of the property industry.

"Its a buyers market" remember.


----------



## young-gun (20 December 2011)

for all of you spruikers read below:

http://www.moneymorning.com.au/2011...tralia-the-last-of-the-bubbles.html#more-6962

we are not special, china is not special. and the simple fact that we have had such a good run over the past few decades will most probably only lead to us falling harder and faster. our prices are going to crash.


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## Tysonboss1 (20 December 2011)

Whiskers said:


> It's one thing for the open/auction market to fall, but quite another for the developer to give assurances that the sale price would not go lower... and weeks later lower it by 25%.
> 
> I don't know what the law is, or more importantly what laws are actually enforced in China, but there are clear laws in the west (Aus at least) that would give him a case for suing the developer to recover the  subsequent 25% discount.
> 
> That's a very substantial discount and utterences like that, if not kept, are a clear breech of contract in Aus.




True, the developer should not have made such assurances, I don't care what the product is no one can guarantee the price will stay at any level.

The chinese will slowly work things out as their system continues to evolve.


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## young-gun (21 December 2011)

Tysonboss1 said:


> Here's the part I don't get with these situations.
> 
> One day he felt good about the purchase and his future getting married to his girlfriend and moving into the house, life's good.
> 
> ...




are you saying you would be happy with an 'investment' of 250k that lost 25% in a few weeks? if hes coming from a working class background money is most likely scarce, and the extra repayments he would have saved would most likely have gone a long way.


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## Tysonboss1 (21 December 2011)

young-gun said:


> are you saying you would be happy with an 'investment' of 250k that lost 25% in a few weeks? if hes coming from a working class background money is most likely scarce, and the extra repayments he would have saved would most likely have gone a long way.




the way I read it was he was buying it for himself and his future wife to live in, All the features he was happy paying for are still there, he can still build a life with his partner, Nothing has changed.

If I bought an investment and a week later i realised I had over paid, I would be be upset with myself and be searching for lessons I can draw from the experiance,


----------



## maffu (21 December 2011)

A few interesting articles on SMH today that are very negative in regards to property, which is unusual.



> Rising property values have been an article of faith in the housing market for a generation of Australians who borrowed big as real estate prices marched ever upward.
> 
> Now, though, some buyers are finding that their homes are worth less than the size of mortgages taken out to acquire the proverbial roof over their heads.
> 
> ...




2% of homes have negative equity, hard to tell if that is a meaningful statistic without knowing any historic trends, but it doesn't sound good.




> SYDNEY'S housing market ran out of steam at the weekend with buying activity in full retreat over the past month, and *the clearance rate hitting a record low for the year.*
> 
> Tellingly, *the median price of houses sold at the weekend collapsed to the lowest recorded for the year.* This result reflects the surge in first home buyers and the continued stagnant nature of the prestige property market.
> 
> ...



209/466 so a 44% clearance rate for the auctions, and the Real Estate agents were talking up a big boom to end the year in NSW due to the stamp duty concessions changing. It seems as though that didn't happen as predicted.



> FOREIGN developers have grabbed a 30 per cent share of Australia's apartment market, a trend not repeated since the Japanese office and hotel development boom in the late 1980s.
> 
> Overseas investors are behind 13,000 apartments in 37 projects in Australia. Based on the average number of apartments completed in 2011, that represents a market share of as much as 32 per cent, research by the property group CBRE finds.
> 
> ...




I think this is the first time I have ever heard anyone talk about possible oversupply in the Australian market. We are constantly bombarded with the under supply argument, that to see a journalist discuss oversupply after many massive apartment blocks are underway is very different.


It took me by surprise seeing 3 negative articles on the same day.


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## young-gun (21 December 2011)

Tysonboss1 said:


> the way I read it was he was buying it for himself and his future wife to live in, All the features he was happy paying for are still there, he can still build a life with his partner, Nothing has changed.
> 
> If I bought an investment and a week later i realised I had over paid, I would be be upset with myself and be searching for lessons I can draw from the experiance,




you're missing a very important point...people dont think like this. alot are negative and fail to see the bigger picture. and what lessons can be drawn from this tyson? dont listen to spruikers developers and RE agents?

you may be of the opinion i am negative what with my bearish outlook, but for things to crash is a positive for me. so long as i have work.


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## young-gun (21 December 2011)

maffu said:


> A few interesting articles on SMH today that are very negative in regards to property, which is unusual.
> 
> 
> 
> ...




everything is fine maffu. theres no bubble, and there definitely will be no crash here.

thanks for the articles. good to see its finally filtering through!


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## Whiskers (21 December 2011)

maffu said:


> ...and the Real Estate agents were talking up a big boom to end the year in NSW due to the stamp duty concessions changing. It seems as though that didn't happen as predicted.




Another stastitic I read a couple of weeks ago was (I think) an aggregate capitol city annual price drop to Oct of abt 4%. 

I've been watching a few properties here in Qld for some months that have not sold for the asking price. It's a bit unreliable to put too much weight on big spending items during the holiday season, but I'm wondering if the market is still sliding quite significantly while those substantial new home and first home buyer grants from the gov are available, whether there will be dumping of property toward the end of January when the new home grant finishes and continuing into 2012. 

The other issue is, can and will the gov extend the schemes to try to pump the economy via the housing industry when most people seem set on reducing debt and increasing savings. 

I have a bit of an intuitional thing, based on mob psychology, that people may be inclined to put a bit more money into more liquid investments like the share market in the short term while they wait out the property cycle.

A good part of the rationale for that is that a lot of people will see the relatively rare decision of the RBA to cut rates too months in a row and the anticipated likely further reductions in 2012 as the economy slows further as the right time to hold off first home and investment decisions and build up their savings for a few months to Feb at least.


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## Tysonboss1 (21 December 2011)

young-gun said:


> 1, and what lessons can be drawn from this tyson? dont listen to spruikers developers and RE agents?
> 
> 2, you may be of the opinion i am negative what with my bearish outlook, but for things to crash is a positive for me. so long as i have work.




1, Offcourse, that is always a big lesson, just as you should never ask a barber if you need a hair cut, 

2, Offcourse lower prices are good for anybody who is a net buyer, myself included. I like lower asset prices not matter whether it be property or shares, But the market the market doesn't care what you or I think or hope, it is what it is, So I have set my self up to be in a postion to benefit not matter what happens.

Putting property aside, My personal belief is that you are far to bearish and don't have enough exposure to the upside, But each to his own, I am either right or wrong.


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## young-gun (21 December 2011)

Tysonboss1 said:


> 1, Offcourse, that is always a big lesson, just as you should never ask a barber if you need a hair cut,
> 
> 2, Offcourse lower prices are good for anybody who is a net buyer, myself included. I like lower asset prices not matter whether it be property or shares, But the market the market doesn't care what you or I think or hope, it is what it is, So I have set my self up to be in a postion to benefit not matter what happens.
> 
> Putting property aside, My personal belief is that you are far to bearish and don't have enough exposure to the upside, But each to his own, I am either right or wrong.





since the time i established such bearish views, i would have done nothing but lose money if i had of invested anywhere in anything. yes, there are a few guys out there(maybe even yourself) that have enough knowledge, and a bit of luck, to make money in crazy markets rife with insane volatility, or even flip a property for a measly profit in the past 6 months. my attitude and views merely reflect what i read and see occurring in day to day life(and throughout the world).

once things turn, thats when ill get in, i can handle paying a bit more for something when things are on the up and up, what i will not handle is paying for something that is overpriced and i could potentially lose 30% or more of its value in a short period of time.

im happy to admit i may be wrong also, but the outcome of being correct, but still buying a house, is far worse than being wrong, and having to buy a house a little off the bottom of the trough.


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## sptrawler (21 December 2011)

In my opinion, for what it is worth, don't set your property price barometer on prices in 2005.
Since the gfc in 2008 everyone has been in a frozen state. IMO 
However wage rises have been happening and everything will return to equilibrium. Therefore a state of the 'average' house being worth 3 times the 'average' wage will return.
The trick is knowing when the two align.


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## maffu (22 December 2011)

Todays top two property articles on the Sydney Morning Herald
#1 Property oversupply
#2 Property under supply


One author is claiming 120,000 empty properties in Sydney, and the other is claiming a housing shortage of 80,000 in Sydney...
Interesting strategy of 'land banking', I have seen plenty of long term empty buildings around the place, and always wondered why the owners don't lower rents to try and get some cash flow. It seems they are not too worried by it all.



> 'Land bankers': Sydney's empty property magnates
> 
> The Wakils, of Bellevue Hill, are directors of Citilease Property Group and own many empty properties, including the Griffith's Tea building in Surry Hills and two multi-storey buildings in the CBD.
> 
> ...




Then it is followed by the undersupply issue.



> Housing shortfall blows out
> *A CURRENT shortfall of 215,000 homes Australia-wide has prompted calls to reform land and sales taxes to cater to the growing demand for rental accommodation.
> *
> Despite the slowdown in building demand and house prices, the 2011 State of Supply report from the National Housing Supply Council found that the gap between housing supply and population demand increased by 28,000 over the past financial year.
> ...


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## young-gun (22 December 2011)

maffu said:


> Todays top two property articles on the Sydney Morning Herald
> #1 Property oversupply
> #2 Property under supply
> 
> ...




Ahh good old nhsc.. Please see the link below to reassure yourself. Nhsc are a joke.

www.moneymorning.com.au/

The articles are on the left of the main page, and talk about the report your article references.


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## young-gun (22 December 2011)

maffu said:


> Todays top two property articles on the Sydney Morning Herald
> #1 Property oversupply
> #2 Property under supply
> 
> ...





My apologies..nhsc do in fact have it right. I didn't read about the squatters. Surely once they're kicked out they will be looking for a place to buy in the burbs and start a family, this will most certainly create even more of a housing shortage


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## Temjin (23 December 2011)

young-gun said:


> My apologies..nhsc do in fact have it right. I didn't read about the squatters. Surely once they're kicked out they will be looking for a place to buy in the burbs and start a family, this will most certainly create even more of a housing shortage




You meant nhsc got it wrong?

Where do these squatters find the money to buy new houses to move in anyway? And why they don't do so now even if they can already afford it? Is it because there are absolutely no houses on sell? (shortage) Or there is a shortage of houses at an affordable price?


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## young-gun (24 December 2011)

Temjin said:


> You meant nhsc got it wrong?
> 
> Where do these squatters find the money to buy new houses to move in anyway? And why they don't do so now even if they can already afford it? Is it because there are absolutely no houses on sell? (shortage) Or there is a shortage of houses at an affordable price?





sorry temjin,

i was being very sarcastic with that post. of course squatters getting kicked out wont have an impact on anything(except maybe the crime rate), and naturally if they are squatting they would never be able to afford a house, and im sure the last thing on their mind is starting a family.

there is no shortage of housing, a shortage of affordable housing yes, but this simply means  that prices need to come down a hell of alot before alot of people are able to consider buying in, if they currently cant afford to get in, then there is no demand from this group until prices are low enough for them to create demand.


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## medicowallet (26 December 2011)

WOW 

The clearance results for the 24/12-25/12 weekend FINALLY seem accurate!!

Well done Enzo and the rest of the misleading industry!


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## Aussiejeff (27 December 2011)

From RPData latest annual report....



> "Melbourne house and unit prices fell by 5.7 per cent, making it the second worst performing city in Australia.
> 
> *Mr Kusher says prices have been sliding for four years and there is an oversupply of new housing on the Melbourne market.
> 
> ...



http://www.abc.net.au/news/2011-12-27/property-prices/3748490

From REIV EOY report... 







> The total value of auction sales was $11.6 billion compared to $16.8b in 2010,..



http://www.reiv.com.au/~/link.aspx?_id=F86BFA7729DF4E22B9FB036CD6EFD36F&_z=z

Wow. So, according to REIV there's been a *whopping 21% fall in total value of reported auction sales for 2011*, yet the average property value fall according to the RPData was "only" 5.7% across the board. Perhaps this indicates there has been a very big drop in the high end property market values causing the huge drop in overall annual _reported_ auction values? Admittedly, there were 11% fewer auctions in 2011 compared to 2010, but that still doesn't account for the huge drop. 

Oh well, Happy New Year, Melburnians?


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## trainspotter (27 December 2011)

Off to London tomorrow (28th Dec 2011) to see first hand the devastation of the falling house prices throughout Europe and the impact it has had on the proletariat. Bon Voyage  ........... Oh yeah .... almost forgot ...... to stand underneath Big Ben when it chimes 12 times to ring in the New Year known as 2012.


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## McLovin (27 December 2011)

trainspotter said:


> Off to London tomorrow (28th Dec 2011) to see first hand the devastation of the falling house prices throughout Europe and the impact it has had on the proletariat. Bon Voyage  ........... Oh yeah .... almost forgot ...... to stand underneath Big Ben when it chimes 12 times to ring in the New Year known as 2012.




I don't think you'll find much "devastation" there.


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## McLovin (27 December 2011)

McLovin said:


> I don't think you'll find much "devastation" there.




To expand a bit on that. I was in London last week (I'm in Italy now and the mood is much more depressing here). In London I noticed that the high end retailers were very busy (Selfridges/Harvey Nick's/Fortnum and Mason) The shops on the Kings Road were fairly busy. Oxford/Regent Street was much quieter though (for those unfamiliar with London that is where a lot of the middle of the road retailers are). 

Central London property is still expensive and has held up well. I guess that is the nature of the market there though, very different to anything in Australia. I actually had a meeting with a bank manager about buying a couple of apartments over there. Rental yields are ~6% and 5 year fixed mortgages can be done for under 4%. 

The economy is still pretty bad -- not quite devastation though -- and that was certainly the sentiment I got from the ex-colleagues I met up with.


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## kincella (28 December 2011)

am positive I heard the bloke from rpdata, on abc24  yesterday....saying Melb prices had risen 50% since 2007.....
so is it more correct now to say...melb prices have risen 45% since 2007.....

extract.......
The rural Victorian town Lismore recorded the highest increase in median property prices, up 50 per cent to $159,000.

The weakest performer was Bowen in Queensland's far north with the media price sliding 48 per cent to $161,250.

http://www.news.com.au/money/austra...ta/story-e6frfmci-1226196669965#ixzz1hiZ8Sn7k

but wait...theres more...

melb prices rose 25-30%, in 2009/10
“In contrast, Brisbane home values have been hit hard and are now off -7.5 per cent while Melbourne dwellings have corrected -5.8 per cent after very strong 25-30 per cent capital growth over 2009-10,” Mr Lawless said.

http://www.heraldsun.com.au/news/mo...rne-house-prices/story-fn7x8me2-1226210215796

but the media are thumping their chests, sprouting any tiniest % falls....as proof they have been vindicated for all the armedgeddon reports they have been making...

'theage' housing journos are the worst...
goodness me....here are two very different props...one is up 50%, one down 48%.....
because not every property fits the median....
they are all very different....from mcmansions, to fibro dog boxes....

now***regarding Bowen qld, price drop....I am wondering, since it is a mining town...what caused the drop....was it after massive rises in the prior years, is there a hiccup with the mines, or are the mining companies buying up big, and demanding a discount...
there is more to this drop, than meets the eye

you can be sure of that
see the price graph here to 2010....
http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp&s=qld&u=bowen

happy new year


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## greebly24 (28 December 2011)

*"1770 prices step back in time as beach towns await boom" The Australian, Wednesday, Dec 28, 2011*
The Queensland coastal property bubble has popped...

*"...the price of a penthouse beach unit to crash from $1.5 million to $350,000."*
WTF??? That's a 77% drop. That's almost double Steve Keen's prediction. Man, he wasn't even close, hey.

*"...the once $1.5m-$1.8m asking prices for beachfront penthouses at Loka Santi have slumped to a more realistic $350,000-$600,000."*
In dollar terms that's a loss of $1.15m-$1.2m per penthouse (67%-77%). Wonder if any investors leveraged up and bought more than one?

*"28 North Break Drive. Valued at $1.2m in 2008. Sold this year for $350,000."*
A 70% loss in three years! Unbelievable!!!

*"618 Captain Cook Drive. Sold April last year for $1m. Sold in October this year for $315,000."*A 68.5% loss in 18 months. That's 45% annual loss. On property!!! In Australia!!!

Who would've thunk it? Obviously not the local RE agent, Agnes Water property manager Kim Skinner...

*"Two years ago she paid $900,000 for a garden unit in the same block..."*

Firstly, what was she thinking? Is she educated? How clever do you have to be to work in real estate? Do you even need to finish high school? It's a country town. It doesn't even have a school. And she paid almost a million dollars for a ground floor unit? Mass hysteria during a property bubble must be a powerful thing.

So she paid $900k for a ground floor unit when the penthouse sold for $1.5m. Now the penthouse sold for $350k. Being generous, that means her purchase is now worth $250k, maybe. How much does her property now have to appreciate for it to get back to break even? A total of 360%. Assuming a generous 10% annual growth rate, she's going to break even in about three decades. Until then her repayments are going to be a retirement killer.

But why wouldn't people hang on until the market comes back, like thousands of other Australians are doing? Why would they lock in such a large loss?

*"The reality is the banks are dumping their foreclosures."*

Okay. So the people didn't become millionaires like they thought they would. They couldn't keep up the interest payments either. So banks are locking in the losses. Guess they are going the full-recourse routes and will pursue the previous owners until death. Wonder how many are already bankrupt?

And here's a question for the property bulls: why wouldn't the banks simply hang on until the market recovers. They claim they have increased deposits from savers, and no problems accessing overseas credit markets for funds. Why would they take such massive losses?

What do the banks know, with their tens of thousands of financial sector employees, about the future of property prices in Australia, that the local dim RE agents don't???


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## medicowallet (28 December 2011)

greebly24 said:


> So she paid $900k for a ground floor unit when the penthouse sold for $1.5m. Now the penthouse sold for $350k. Being generous, that means her purchase is now worth $250k, maybe. How much does her property now have to appreciate for it to get back to break even? A total of 360%. Assuming a generous 10% annual growth rate, she's going to break even in about three decades. Until then her repayments are going to be a retirement killer.




If the journalist who wrote this understood compound interest they would realise that 10% growth per year gets her back to $900k in about 13-14 years, not 30.

IF they meant to include inflation, depreciation, outgoings etc. then they should have mentioned that.


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## young-gun (30 December 2011)

greebly24 said:


> *
> And here's a question for the property bulls: why wouldn't the banks simply hang on until the market recovers. They claim they have increased deposits from savers, and no problems accessing overseas credit markets for funds. Why would they take such massive losses?
> 
> What do the banks know, with their tens of thousands of financial sector employees, about the future of property prices in Australia, that the local dim RE agents don't???*



*

the banks are well aware of whats about to happen, as is the government. you think they would just give out 21k to first home owners cause the genuinely wanted the youth of today to own homes? of course not...it was to save the proeprty market, as is the most recent 10k+ grants being handed out. if anything has come out of being the last bubble to pop, would hopefully be that the banks and gov have had time to prepare as best they can for the pop. 

RE agents are either thick, or completely ignorant. i recently read an RE sunshine coast paper. the median house/unit price in '01 was 180k. the median house/unit price in 07 was 500k. bubble? of course not. RE gurus in the paper were claiming - "its been a tough year, but the market is ready to go up, time to buy!". I've done a little bit of driving around while up here. ther eis for sale signs EVERYWHERE on top end holiday homes/units(in alexandra hills) i can only assume it spreads throughout.*


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## jank (31 December 2011)

What are peoples predictions of the market?

More falls on the way. Id say Sydney will have a fall of 7%, nationally it will be 9% for the year.


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## medicowallet (31 December 2011)

jank said:


> What are peoples predictions of the market?
> 
> More falls on the way. Id say Sydney will have a fall of 7%, nationally it will be 9% for the year.




Too hard to make a firm prediction as it really depends upon Europe, and if the info from China is real or manufactured. I have heard many smart commentators saying that internally China might not be as good as they are reporting. So my pure guestimations are:


I am going 3-5% falls nationally ( I think that the heat will come out of the market over an extended period of small negative growth or flatline ) I think melbourne will perform the worst out of all the capitals, and, shock horror, I think Brisbane will be the best performer out of the capitals.


Either way, property to be down by 20% minimum from its peak.


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## greebly24 (31 December 2011)

medicowallet said:


> If the journalist who wrote this understood compound interest they would realise that 10% growth per year gets her back to $900k in about 13-14 years, not 30.
> 
> IF they meant to include inflation, depreciation, outgoings etc. then they should have mentioned that.




Sorry mate. The journo wrote the bits in bold. The other bits in between were my musings. But yeah, you are right the compounding effect. Sorry bout that. 

I think the main thing to take from the article, and others like it, is that the market for second homes (ie holiday homes) is struggling, particularly in QLD. This probably has something to do with less share market & company profits and less bonuses for financial sector workers, and already existing high debt levels. Captial depreciation is also a vicious circle.

But as an unintended consequence, going without the second homes on non-urban coasts may be supportive of home prices in urban areas. What I've noticed in my beachside suburb in Adelaide is that places being built there are all 'luxury' homes now. Three-storey beachfront mansions, often with pools, have become the norm. This upward expansion is also being seen in the leafier hills suburbs. And if you've got one of those, why do you need a holiday home?

Also overseas travel has become so much cheaper, that might be negatively affecting holiday home prices too. I think it is a generational shift too. Young people seem less keen to buy and upkeep holiday homes that they only use occasionally, preferring instead cheap luxury overseas holidays (to Bali/Thailand etc) with their shrinking leisure time.

I also think some of the median price drops in the cities can be partly attributed to the high-end luxury market. It seems every single new development is called 'luxury', even in poor outer-suburbs areas. I guess developers can maximise profits that way. But with the luxury market struggling, perhaps developers should consider sub-luxury places in the near future. Smaller cheaper places on each block, basically. I think this trend is already visible in inner-city apartments. Less massive penthouses, or whole-floor apartments. More tiny apartments. They also seem increasingly popular with changing demographics too (more asians/indians/young people).

I still don't understand why new developments in the outer suburbs are so up-market. Who, aside from Kim from 'Kath & Kim' wants to live in the best house in the worst street (so she can lord it over her neighbours), a mansion in a poor run-down area? They are given deceptively-attractive names with words like "Farm" or "Glen" or "Fern" or "Grove" in their titles. It doesn't disguise the fact that they are miles out of the cities, built next door to impoverished crime-ridden areas. Would have thought cheap tiny 'starter' homes would be a better bet in those areas.

Good article in the Adelaide Advertiser today about investing in RE in some of those areas. Lots of low-paying jobs, not enough to support a mortgage, but enough to pay rent and so yields are starting to look attractive. Depends on getting good tenants though, and not those 'from hell'.

The trouble with these new pretty-sounding housing estates is that they are mostly purchased by young families by going deeply into debt. You see it in the ads; young families with happy young kids enjoying the lovely amenities. Jump forward five or ten years and you'll see what these new estates turn out like. Lots of divorces (often due to financial troubles related to taking on too much debt) and then lots of children from broken homes roaming the streets at night. Then the amenities need maintenance but the developers fled years earlier. Same old story. Soon the estates start looking very similar to the poor surrounding suburbs they tried to differentiate themselves from.

What is also interesting in the earlier article is that some of the non-urban coastal properties were now being bought by FIFO (Fly In Fly Out) mining workers. Work a week on a remote desert mine, then spend a week off at your cheaply-bought luxury beach house. Not too bad a life (except mining camp life sux).

This has been my personal experience with my parents beach shack on Eyre Peninsula. Some other shacks there have been purchased by FIFO miners as PPORs. You can tell by the massive 4WDs and massive boats out the back. Miners earn great money, but most of them aren't great money managers. Bigger incomes = bigger debts, it seems. One back injury away from losing it all, most of them.

However this FIFO demand hasn't been enough to support prices of shacks there. Few years ago the shacks were selling for $300k. Now my parents said they'd sell theirs for $250k if they could. But they can't. No takers. I think this is due to the fact that despite earning big incomes, miners are unlikely to own holiday homes. They don't seem to have enough time off, and are already away from their PPOR for weeks at a time. Not many of them seem to pack up the kids for a beachside holiday. Most of them seem to live in beachside towns instead, near where they grew up.

My brother and I seriously considered buying the shack off our parents but decided against it. As it is old, it is constant need of maintenance mostly due to exposure to salt water at the beach. My retired father is permanently fixing things on it. He loves doing it, keep him busy, and he has the technical skills to do so. My brother and I don't, and have no desire to eradicate white ants or re-paint walls or re-concrete floors or replace old rain water tanks etc etc etc etc etc with our limited time-off. Would rather just relax at an Asian resort.

Sadly, when my parents do pass away, we'll probably just sell the shack as quick as we can (before it needs more maintenance) which will put downward pressure on surrounding shacks' values too I guess. But that seems to be the way things are headed. Heard some stories about investors buying deceased estates at below market value, then patiently waiting a year or two to sell at market value. Sort-of slow motion flipping.

I'm currently renting. Going forward, I am leaning towards buying a tiny studio inner-city apartment as a crash-pad for work during the week, and also buying a block on the coast not too far from the city to build a house to set my future family up in (strangely, my partner seems to love the idea ). A place where I can spend my weekends and eventual retirement. Then we could sell the city apartment, or rent it out for cash flow, or use it as our city crash-pad when we need to go there. Best of both worlds strategy. And with prices of both inner-city apartments AND coastal blocks "softening", it all seems to be falling into place. High savings, healthy investments, zero debt, property "softening" --- let the good times roll.

Oh yeah, as for the future of Australian property prices, I think it all depends on if US & Euro debt problems cause a China slowdown causing a commodity price crash. The world has never been more inter-dependant. We are in a global situation where there is too much debt that can't be repaid, except by money printing. So we're currently experiencing a deflationary depression where everything, including housing, will get cheaper. Whether they print vast amounts of money to re-pay all the debt and we enter an inflationary stagflation is completely unknown by anyone.

The biggest driver of house price increases anywhere (including China) is credit growth. It's growing slower in Aust now (+5% compared to much higher during the boom), and so house prices are now "softening" slightly (-4%). If international credit markets seize up again, like in '07, and credit growth stops and even shrinks, then property will collapse (just like it did in overseas markets where credit growth went into reverse). Lots less money being borrowed = lower prices for everything. Anything else impossible. But who really knows?

I read that South Australia's population increased by only 0.8% last year. Think that means about 12,000 more people needing about 5,000 more homes in a state of 1.6 million people living in around 600,000 homes already, with over 10,000 homes on the market already too. Not exactly a recipe for a boom either. And with the prices of student apartments here dropping significantly, I guess overseas student numbers might be decreasing too???

Looking at prices round Adelaide, if they were 25% cheaper they'd seem to be reasonably priced. So that's my prediction for the downside in total from their peak last year(2010), 25% less in 2014 on an inflation-adjusted basis. So around 15-20% less in actual dollar terms. So down 5% already, three more years of 5% drops and some inflation, me thinks. Based on anecdotes from many friends waiting for market to recover in order to sell, which will eventually lead to individual then mass capitulation. Bit of wishful thinking in there too


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## explod (31 December 2011)

greebly24 that last post of yours was one of the most thoughtful and well put that I have seen in awhile.

Look forward to reading your outlook as the 2012 market progresses.


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## young-gun (31 December 2011)

greebly24 said:


> The trouble with these new pretty-sounding housing estates is that they are mostly purchased by young families by going deeply into debt. You see it in the ads; young families with happy young kids enjoying the lovely amenities. Jump forward five or ten years and you'll see what these new estates turn out like. Lots of divorces (often due to financial troubles related to taking on too much debt) and then lots of children from broken homes roaming the streets at night. Then the amenities need maintenance but the developers fled years earlier. Same old story. Soon the estates start looking very similar to the poor surrounding suburbs they tried to differentiate themselves from.




indeed this is happening everywhere. perfect example is north 'lakes'(brisbane north) and also to a lesser extent warner lakes. another issue aside to those that you pointed out greebly, is the fact that there is always more and more land released. first they release stage one, and all the first home owners and young families leap at the chance to live in this new 'luxurious' haven. then once the developer flogs them off at sky high prices, they then release stage 2(instantly devaluing all the poor families land that bought just a few months ago) but still release just enough to flog them off at sky high prices aswell. some blocks of which dont even exceed 400m2(and thats a generous sized block) some blocks under 350 even which covenants state MUST have a double story house built. stage 3 is then released and so on and so fourth. great for the developers, bad for the guys that bought and built stage 1. occasionally the riff raff from neighbouring kallangur will venture across the border to spray paint a few walls and deface the fresh new 'upper-class' suburb.

by the time a couple of years have passed why would you buy a 2-3 year old house for 500k when you can build a brand new one in stage 4 for 450k or even less? this brings prices of the initial houses down, as a friend of mine recently realised when they picked up a stage 1 home for an absolute steal(in comparison to peak prices).

without diving too deep into it here i agree with your views on credit growth also(which has accelerated greatly since around 99-00) it's essentially a ponzi scheme.


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## Garpal Gumnut (31 December 2011)

Townsville property is getting cheaper by the month.

Where will it all end?

I just own me house and a block of land about it, so I'm happy, but if I were a seller I'd be worried.

In fact if I were a buyer I'd be worried as it's on the way down.

The Government need to stimulate the economy and stop spending money in to lost politically correct schemes like pink batts and getting Kevvie in to the UN Sec Gen job with the Global Warming Hoax, taxes and pandering to the Greens. 

Young couples with children looking at buying a house for life need certainty, not all this upheaval.

gg


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## sptrawler (31 December 2011)

greebly24, well thought out post. What i would add to it is, if your dad has outgoings of $20.000 p/a and his pension doesn't cover it, the shack will be sold.
This is the problem that is going to sink in very soon. 
In the 80's everyone wanted $600,000 to retire rich and not a worry in the world.
In 2000 it was moving upto $800,000, now if you ask someone who you work with, how much they would like to retire with $1,000,000 is thrown around.
Most of the baby boomers don't have anywhere near that, so the investment property/ holiday home comes into the retirement equation.
This will really come to the fore in the next couple of years when baby boomers HAVE TO RETIRE, the pension is crap. They won't have any option, but to sell. IMO
Sad reality, age catches up eventually.


----------



## Julia (31 December 2011)

explod said:


> greebly24 that last post of yours was one of the most thoughtful and well put that I have seen in awhile.




+1.  Well thought out and constructed, greebly.  Most interesting reading with its combination of objective market comments and personal relevance.  Thank you.


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## ZSlaveski (8 January 2012)

Very interesting exposÃ© on Bullion Baron blog about Australian property manipulations and shady characters getting in control of real estate market!

http://www.bullionbaron.com/2012/01/strindberg-identified-as-apfghpc.html

Can not trust any one!


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## kid hustlr (9 January 2012)

Just a couple of quick ones.

When data refers to 'median house prices' does this include houses AND units or just houses?

Secondly, if I wanted to find data on housing growth over the last xyz years. Where is the best place to find this information?

Thanks in advance.


----------



## Starcraftmazter (9 January 2012)

kid hustlr said:


> Just a couple of quick ones.
> 
> When data refers to 'median house prices' does this include houses AND units or just houses?
> 
> ...




Both

http://www.whocrashedtheeconomy.com/realhouseprices1880to2011.gif
Probably ABS


----------



## Peak Debt (10 January 2012)

kid hustlr said:


> Secondly, if I wanted to find data on housing growth over the last xyz years. Where is the best place to find this information?
> 
> Thanks in advance.




There are four main organisations, Residex, RPData, APM and ABS.

You can find link to all their house price indices below.

Australian Property Research Data

That link also has auction results, sold property details, industry property reports etc.


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## matches (12 January 2012)

My view on the current level of house prices? even with a price spike in the early 2000's, arrears only got up just above 1% in '07(?)..

My view on the future of house prices? I think ppl will start spending on houses again when they start spending on everything else.


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## young-gun (12 January 2012)

matches said:


> M
> 
> My view on the future of house prices? I think ppl will start spending on houses again when they start spending on everything else.




which will be in about 2018/2020, when gen y comes in to pick up the slack, and starts having kids and buying houses etc etc etc.


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## greebly24 (19 January 2012)

Sean Quinn, formerly Ireland's richest man worth $4.7 billion Euros, has been declared bankrupt. Lost the lot on Irish property development and bank shares. Bugger. Now his wife's trying to argue in court she didn't know what she was signing when she went guarantor. D'oh!

But even weirder is the former yellow Wiggle, Greg Page, having to rejoin the band. After 15 years of Wiggles' earnings and a $50m severance, he lost the lot developing RE in Sydney. Probably going to have to sell the mansion ($7M) and the Elvis memorabilia collection ($4M) too. Retired a multi-millionaire at 35 due to ongoing illlness, now broke and back to work at 40. Bugger.

Anyone know how you can lose $50m+ on RE in Sydney???


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## Tysonboss1 (19 January 2012)

Offourse you can lose when it comes to leveraged developments, 

I doubt either example would be bankrupt if it was straight simple nonleveraged real estate, rental collection businesses.


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## Bill M (19 January 2012)

greebly24 said:


> Sean Quinn, formerly Ireland's richest man worth $4.7 billion Euros, has been declared bankrupt. *Lost the lot on Irish property development* and bank shares.
> 
> After 15 years of Wiggles' earnings and a $50m severance, *he lost the lot developing RE in Sydney*.




What has development got to do with buying an investment property and renting it out? Nothing! 2 totally different things. My IP is going real well, income coming in every Month, good tenant and hassle free.


----------



## satanoperca (20 January 2012)

> It seems that Melbourne’s booming dwelling construction is having the desired effect, with the state’s rental vacancy rate hitting a seven year high of 4.4% according to SQM research




http://www.sqmresearch.com.au/graph_vacancy.php?region=vic%3A%3AMelbourne&type=c&t=1

Rental market not to rosey down here in sunny Melbourne, Bill M.

The amount of new apartments being built or just finished around the CBD is just astonishing. Also over the last few months seeing many development sites for sale with building permits. Rumour has it the banks arn't playing ball anymore with developers.

Oh well, we will see how things work out over the year.

Cheers


----------



## prawn_86 (20 January 2012)

satanoperca said:


> Rental market not to rosey down here in sunny Melbourne, Bill M.




Yeh i am am considering a move down to Melbs later this year and am absolutely loving the value you can get as a renter down there. Like for like (ie same style and building age) you would have to live 5 - 10km from the Sydney CBD for the same price, compared to in Melbs you can live walking (or 5 min tram) to work.

Sydney has a definite undersupply of apartments and the rents here are ridiculous. My basic research shows Bris and Melbs both have an over-supply so renters are getting amazing deals


----------



## nth brisbanite (20 January 2012)

greebly24 said:


> Sean Quinn, formerly Ireland's richest man worth $4.7 billion Euros, has been declared bankrupt. Lost the lot on Irish property development and bank shares. Bugger. Now his wife's trying to argue in court she didn't know what she was signing when she went guarantor. D'oh!
> 
> But even weirder is the former yellow Wiggle, Greg Page, having to rejoin the band. After 15 years of Wiggles' earnings and a $50m severance, he lost the lot developing RE in Sydney. Probably going to have to sell the mansion ($7M) and the Elvis memorabilia collection ($4M) too. Retired a multi-millionaire at 35 due to ongoing illlness, now broke and back to work at 40.




What are you trying to prove? You are using 2 extreme cases to show that investing in real estate can cause untold damage.  There are thousands of property investors (like myself) who are not having any problems with their investments.  Mine may have gone down 5% over the last year or two but over a long time period, I have done really well.


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## Bill M (20 January 2012)

prawn_86 said:


> Sydney has a definite undersupply of apartments and the rents here are ridiculous. My basic research shows Bris and Melbs both have an over-supply so renters are getting amazing deals




And that is exactly right (for the Sydney situation). When my agent puts my unit up for rent he gets several applicants, the market is tight, the rents are high. This is why I can't see dramatic price decreases. More in the following article:
---
THE median price of renting in Sydney has hit $500 a week for the first time, an industry report has revealed. 

While the national asking price rose by a modest 1.1 per cent for houses and 1.4 per cent for units in the December quarter, *houses in Sydney jumped 4.2 per cent and apartment rents skyrocketed by 4.5 per cent in the same quarter*, the Australian Property Monitors Rental Report shows.

Link here to article in The Telegraph
---


----------



## trainspotter (23 January 2012)

greebly24 said:


> Sean Quinn, formerly Ireland's richest man worth $4.7 billion Euros, has been declared bankrupt. Lost the lot on Irish property development and bank shares. Bugger. Now his wife's trying to argue in court she didn't know what she was signing when she went guarantor. D'oh!
> 
> But even weirder is the former yellow Wiggle, Greg Page, having to rejoin the band. After 15 years of Wiggles' earnings and a $50m severance, he lost the lot developing RE in Sydney. Probably going to have to sell the mansion ($7M) and the Elvis memorabilia collection ($4M) too. Retired a multi-millionaire at 35 due to ongoing illlness, now broke and back to work at 40. Bugger.
> 
> Anyone know how you can lose $50m+ on RE in Sydney???




RE: The Wiggle thing.

Just goes to show how easy it is when you do not know what you are doing !


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## YELNATS (23 January 2012)

prawn_86 said:


> Sydney has a definite undersupply of apartments and the rents here are ridiculous. My basic research shows Bris and Melbs both have an over-supply so renters are getting amazing deals




Re Sydney, it is patchy and there are some notable exceptions, like in the Rhodes mid-western suburbs area, where I have a 5 year-old 2-bedder investment unit and where, like many landlords, I can't find a tenant. 

Harry Trugaboff's Meriton has flooded the market with new lower cost units in the last couple of years, many of which are still unsold/empty.


----------



## prawn_86 (23 January 2012)

YELNATS said:


> Re Sydney, it is patchy and there are some notable exceptions, like in the Rhodes mid-western suburbs area, where I have a 5 year-old 2-bedder investment unit and where, like many landlords, I can't find a tenant.
> 
> Harry Trugaboff's Meriton has flooded the market with new lower cost units in the last couple of years, many of which are still unsold/empty.




I like Rhodes but transport infrastructure there is a nightmare. No way i would ever drive to work in Sydney, and there is no direct train from Rhodes to the CBD, so instantly it rules it out for me as a renter


----------



## sptrawler (23 January 2012)

YELNATS said:


> Re Sydney, it is patchy and there are some notable exceptions, like in the Rhodes mid-western suburbs area, where I have a 5 year-old 2-bedder investment unit and where, like many landlords, I can't find a tenant.
> 
> Harry Trugaboff's Meriton has flooded the market with new lower cost units in the last couple of years, many of which are still unsold/empty.




I just googled Meriton apartments, I see what you mean there are lot on the website. Reading the papers they are always going on about a rental shortage in Sydney?


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## satanoperca (23 January 2012)

YELNATS said:


> Re Sydney, it is patchy and there are some notable exceptions, like in the Rhodes mid-western suburbs area, where I have a 5 year-old 2-bedder investment unit and where, like many landlords, I can't find a tenant.
> 
> Harry Trugaboff's Meriton has flooded the market with new lower cost units in the last couple of years, many of which are still unsold/empty.




And stock on the market has doubled since the start of last year.

http://sqmresearch.com.au/graph_stock_on_market.php?postcode=Rhodes&t=1

Seems there is no shortage or a shortage because no one is willing to pay the price anymore.


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## YELNATS (23 January 2012)

prawn_86 said:


> I like Rhodes but transport infrastructure there is a nightmare. No way i would ever drive to work in Sydney, and there is no direct train from Rhodes to the CBD, so instantly it rules it out for me as a renter




Rhodes has infrastructure aplenty, that's not the problem.

The Rhodes railway station is about a 5 minute walk away which goes straight to the city, as is the new modern Rhodes shopping centre, including Ikea, cinemas, restaurants, etc. The Parramatta rivercat is nearby, plus schools, sports and recreation facilities.

It's actually a great place to live, but at the moment there's a glut of available accommodation.


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## Bill M (23 January 2012)

YELNATS said:


> Re Sydney, it is patchy and there are some notable exceptions, like in the Rhodes mid-western suburbs area, where I have a 5 year-old 2-bedder investment unit and where, like many landlords, I can't find a tenant.
> 
> Harry Trugaboff's Meriton has flooded the market with new lower cost units in the last couple of years, many of which are still unsold/empty.




Ahh, that's the difference. Mine is on the Northern Beaches, has water views, 5 minute walk to beach, 2 minutes walk to Coles, Woolworths, several speciality shops and main bus stop where you can get a express bus to the city every 5 Minutes and renters want that. Not much new stuff being built up here for now and what there is is just too expensive anyway.


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## prawn_86 (23 January 2012)

YELNATS said:


> Rhodes has infrastructure aplenty, that's not the problem.
> 
> The Rhodes railway station is about a 5 minute walk away which goes straight to the city, as is the new modern Rhodes shopping centre, including Ikea, cinemas, restaurants, etc. The Parramatta rivercat is nearby, plus schools, sports and recreation facilities.
> 
> It's actually a great place to live, but at the moment there's a glut of available accommodation.




Hmm, when i looked at it i didnt think they had a direct train. I do like the area though, it is nice and modern, unlike most tired Sydney suburbs


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## kid hustlr (24 January 2012)

Rhodes has a nice appearance, that modern feel will appeal to a lot of people I would have thought.

Any thoughts on the the lower north shore? st leaonards/wollstonecraft etc?

From a buying perspective it looks like you can get a new apartment in one of those higher density places around the station at st leonards for a similar price as one of those older medium density stle apartments in wollstonecraft. Yet rent prices seem to be much higher at st.leonards?

Does this suprise anyone?


----------



## Bill M (24 January 2012)

kid hustlr said:


> From a buying perspective it looks like you can get a new apartment in one of those higher density places around the station at st leonards for a similar price as one of those older medium density stle apartments in wollstonecraft. Yet rent prices seem to be much higher at st.leonards?
> 
> Does this suprise anyone?




No it doesn't, reason being is the *levys.* Those high rises apartment blocks charge whopping levys, the owners will have to recoup that from higher rents. If I had to make the choice I would choose St. Leonards over Wollstonecraft simply for the location. Buses up and down the main drag to Manly, City and Chatswood, plus the trains, handy for me as I use the airport a bit. Also you have all the shopping like Coles and Wollies about, many restaurants and cafes too, hospital next door too. In Wollstonecraft you will have to walk up that hill to Crows Nest to do the shopping, some people don't like that, although Wollstonecraft would be quieter.


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## Bill M (26 January 2012)

I have a gut feeling house prices will be rising again this year. Interest rates are coming down, still chronic shortages in Sydney (can't speak of other areas) and Japanese Banks may soon be entering the market offering lower interest rate loans. Here's a couple of articles worth reading.

---
*Aussie house prices could be on the rise again*. Christopher Joye

Wiser readers will realise that this is history repeating itself: the same individuals expressed the same opinions during the global financial crisis only to see Aussie house prices surge over 2009 and 2010. 

And now we have mounting evidence that the housing market is staging a slow recovery, as I’ve projected in these pages for some time. 

Link to full story here: http://www.propertyobserver.com.au/...the-rise-again-christopher-joye/2012012453137
---

and

---
*Japan's mortgage shake-up*

Boyd says the Japanese banks have a competitive advantage which could see them smash our local rates.

Based on a speculated rate of 4.5 per cent from the Japanese banks, Mickenbecker crunched the numbers on what it could mean for home owners.

Link to full story here: http://au.news.yahoo.com/today-tonight/article/-/12696121/japan-s-mortgage-shake-up/
---

Will be an interesting year, cheers.


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## finnsk (27 January 2012)

If home loans at 4.5 per cent from the Japanese banks, what about the official interest rate from the RBA, will that not mean that they will have to lower there official rate to below 3%.


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## sptrawler (27 January 2012)

finnsk said:


> If home loans at 4.5 per cent from the Japanese banks, what about the official interest rate from the RBA, will that not mean that they will have to lower there official rate to below 3%.




It will be very interesting, Japan savings deposit rates are really low in the order of 1%, I think. 
Therefore it will be really dificult for our banks to compete, unless they drop the rate they give savers for deposits.
It will be interesting to see if the government has to put in some form of regulation.


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## prawn_86 (27 January 2012)

The whole rumours of the Japanese banks offering low rate loans is BS.

If it was as easy as borrowing in one currency and lending in another then everyone would do it. What all the media pumping this up conveniently forget is that the interest rate differential between the 2 countries is taken into account by the difference in currencies, or when you book forward to hedge. IE if you borrow in JPY and lend out in AUD then any gain from low cost borrowing is offset by the high purchasing cost of the AUD.

Unless you remain unhedged, which blew up a lot of people/banks back int he early 90's as far as i recall


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## ROE (27 January 2012)

Bill M said:


> Ahh, that's the difference. Mine is on the Northern Beaches, has water views, 5 minute walk to beach, 2 minutes walk to Coles, Woolworths, several speciality shops and main bus stop where you can get a express bus to the city every 5 Minutes and renters want that. Not much new stuff being built up here for now and what there is is just too expensive anyway.




Bill what do you think area near the Darling Harbour, Ultimo and the opposite  side like 
Kent St and Shelly St on King St Wharf etc..?

What do you think price action wise there for the next couple of years? you reckon it could drop 10-15% from today price?


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## Bill M (28 January 2012)

ROE said:


> Bill what do you think area near the Darling Harbour, Ultimo and the opposite  side like
> Kent St and Shelly St on King St Wharf etc..?
> 
> What do you think price action wise there for the next couple of years? you reckon it could drop 10-15% from today price?




My wife and I are always thinking about living somewhere new. We looked at high rise apartments in that area but the levies being so high quickly put that idea to rest. Around Ultimo and Darling Harbour you have some 3 story newer type blocks, I haven't looked into them. They could be good but depends again on the levies. I like the area, handy to everything, city, Central rail, Uni's, Casino etc.. Great for city workers and students and I don't it would be that hard to rent. I don't know about the prices going up or down for that area as I don't follow it.


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## Bill M (28 January 2012)

prawn_86 said:


> The whole rumours of the Japanese banks offering low rate loans is BS.
> 
> If it was as easy as borrowing in one currency and lending in another then everyone would do it. What all the media pumping this up conveniently forget is that the interest rate differential between the 2 countries is taken into account by the difference in currencies, or when you book forward to hedge. IE if you borrow in JPY and lend out in AUD then any gain from low cost borrowing is offset by the high purchasing cost of the AUD.
> 
> Unless you remain unhedged, which blew up a lot of people/banks back int he early 90's as far as i recall




John Symonds and Mr Bouris said a similar thing, will be interesting to see how it pans out.

---
But Mr Bouris and Aussie Home Loans founder John Symonds doubt that Japanese banks could sell mortgages much cheaper than major Australian banks. Mr Symond said after factoring in foreign exchange costs a Japanese bank would be making a loss on Australian mortgages. 

Link here to story:http://afr.com/p/national/juicy_margins_enough_to_attract_N1pavYHuKcXHSkzSbZc41J
---


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## Miss Hale (28 January 2012)

A few people have referred to levies in relation to apartments, what are these exactly?  Are they the same as body corporate fees?


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## ROE (28 January 2012)

Miss Hale said:


> A few people have referred to levies in relation to apartments, what are these exactly?  Are they the same as body corporate fees?




Yeah around sydney near darling harbour it will cost you around 11k -15k to hold a year depending which building your apartment is in and in what area...

I looked at some of the apartment there every so often and I will pound when the time comes - when cash is king and debt is the dirty 4 letter words...

There are 2 beddies apartment there you can get 850 a week rent for around 650k


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## Bill M (28 January 2012)

ROE said:


> Yeah around sydney near darling harbour it will cost you around 11k -15k to hold a year depending which building your apartment is in and in what area...




And to put that into perspective I have a 12 year old house. In the 2 years and 3 Months that I have lived there my outgoings have been only around $400 in repairs and maintenance. I have full control of that. Paying higher levies does not equate to a better building or service and could well mean the Body Corporate Manager is wasting money in some areas. Nearly every unit block I have owned a unit in the Managers have blown up cash one way or the other, that is why I am very sceptical on the fees that must be paid.


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## Koeln (29 January 2012)

ROE said:


> Yeah around sydney near darling harbour it will cost you around 11k -15k to hold a year depending which building your apartment is in and in what area...




Seems you are indicating that the body corporates are calculating their fees based on location. Is that the case in Sydney?

I can see that buildings maintenance depends on features (like pool, gym, elevator,...), but would consider it a rip off when these body corporates charge on location. This would be trying to tap into the investment while taking none of the risk that an investor/owner has.


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## Wysiwyg (29 January 2012)

Koeln said:


> Seems you are indicating that the body corporates are calculating their fees based on location. Is that the case in Sydney?
> 
> I can see that buildings maintenance depends on features (like pool, gym, elevator,...), but would consider it a rip off when these body corporates charge on location. This would be trying to tap into the investment while taking none of the risk that an investor/owner has.



I would be interesting to see body corporate reports to examine where the unit holder's privilege of ownership (fees ) go for the year.


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## Bill M (29 January 2012)

Koeln said:


> Seems you are indicating that the body corporates are calculating their fees based on location. Is that the case in Sydney?




No it's not, it happens everywhere. Just look at any high rise apartment block anywhere and ask them how much their body corporate fees are for a 2 bedroom unit for a year. Anywhere in OZ it would be high, except in brand new buildings. I had one of those (new buildings) and then it sky-rocketed a few years later. In the beginning the developers said they weren't sure what they should be, later the fees crept up and UP.



> I can see that buildings maintenance depends on features (like pool, gym, elevator,...), but would consider it a rip off when these body corporates charge on location. This would be trying to tap into the investment while taking none of the risk that an investor/owner has.




Nah, doesn't work like that. They can not tap into your capital investment. In all honesty they just don't manage well, that's all. 

Examples, fail to upgrade fire certification as required by council, $6,000 fine. Call electrician to fix a light, he told me it only need a fluro but changed the lot and at 3 times the price. I know, I made out I was a renter and he told me.



Wysiwyg said:


> I would be interesting to see body corporate reports to examine where the unit holder's privilege of ownership (fees ) go for the year.




I like that question. This is how the yearly reports come back. (note, no detail)

Plumber: Repair damage level 3 $1,296

Electrician: Repairs 9 lights $1,642

Security gates: $3,219 

etc..... 

It is not detailed. Once I was in a meeting and we brought up why certain jobs were costing so much. Believe or not the d!ckhead said he can't find the paperwork. That is how slack they are. If it was a courtroom we could sue them for a motza but geeezz we are only plebs and pay body corp fees. No ones going to pay to sue the body corporate manager.

Not all are incompetent, I'm just saying be very, very wary of body corp fees and their managers, that's all.


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## medicowallet (1 February 2012)

http://www.theage.com.au/business/property/record-slump-in-house-prices-in-2011-20120201-1qsid.html

Record slump in house prices has a correlation of 1 with the record slump in posts by Robots.

It is inversely proportional to the amount of extra shifts he has had to take on as well.

Could be more of the same for 2012, interest rate reductions or not.

Happy days of sunshine and lollipops
Keep up the good work brothers and true believers,

MW
ASF investor 2011


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## Tysonboss1 (1 February 2012)

Koeln said:


> Seems you are indicating that the body corporates are calculating their fees based on location. Is that the case in Sydney?
> 
> I can see that buildings maintenance depends on features (like pool, gym, elevator,...), but would consider it a rip off when these body corporates charge on location. This would be trying to tap into the investment while taking none of the risk that an investor/owner has.




The body corp is a fund of that owners pay into, It's not a for profit thing that some one gets to keep all the funds that don't get spent at the expense of the owners.

It's basically an account that owner pay into shared costs come from.

The Body corp is responsible for charging enough that they accrue enough funds to cover big future costs without having to hit owners for large lump sums,


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## Glen48 (1 February 2012)

The real record will be know in about another 6-8 years time  once the market has bottomed and the next record will be how long the market stays flat for.
I did hear Robots was flipping  burgers in some soup kitchen it was do it your self type place.


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## Tysonboss1 (1 February 2012)

Glen48 said:


> The real record will be know in about another 6-8 years time  once the market has bottomed and the next record will be how long the market stays flat for.
> I did hear Robots was flipping  burgers in some soup kitchen it was do it your self type place.




Gold market maybe


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## Glen48 (1 February 2012)

Yep another record going in the opposite direction to housing.


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## Glen48 (2 February 2012)

Look into the future of OZ housing:



The latest Case-Shiller numbers released yesterday showed that the US residential housing market is still very weak. After three straight months of declines, home prices are now at 2003 levels. Duh.

To some, it was a shocking revelation. The pundits I saw discussing it yesterday practically had a seizure they were in such disbelief. CNBC even ran an article on their website in response, extolling the strong fundamentals of US housing.

Let's look at those fundamentals:

1) Most people cannot afford to write a check for $200,000 or more (roughly the median home price), which means they'll require bank financing. Consequently, speculators and investors aside, home prices must be a function of income-- do buyers make enough money to be able to afford the monthly mortgage payment?

2) Mortgage affordability is tied directly to income levels, and where there's no job, there's no income. When you aggregate that notion across an entire economy with high unemployment, it restrains housing affordability. 

3) Millions of people have been taken out of the housing market as potential end-user owners. These are the 'former' homeowners who have lost their jobs and/or been foreclosed on. They can no longer qualify for a mortgage, particularly at the ultra-low rates we're seeing now. 

4) There's a lot of talk about how low interest rates are making homes affordable. Maybe so, at least to the people who qualify for a mortgage. And while it's possible that interest rates could go lower, there's a lot of potential for rates to rise. And when rates rise, homes become more UNaffordable.

Example: if you can afford $1,500 per month to spend on a home, you would be able to afford a $300,000 home at today's low rates. If rates go up to 6%, $1,500 per month only buys you a $250,000 home. If that's what the average guy can afford, that's where home prices will converge.

5) Many local governments are completely bankrupt; we've read about looming municipal defaults and laying off cops and fire fighters. Property taxes will likely rise as a result, adding an additional cost in buyers' monthly payments. 

Again, if a buyer can only afford $1,500/month, and his property tax rises by $600/year, that takes about $10,000 off the price of the home s/he would be able to afford.

6) Ditto for homeowners' insurance rates, which are rising rapidly. 

7) There are currently 15 million vacant homes in the US according to the latest census figures, and every day, more people are being foreclosed and getting kicked out of their homes. Housing prices can't have any meaningful rise as long as there's such excess supply in the market.

8) In bad economies, people double up in homes. Roomates. Live-in relatives. The number of households is contracting, and this is a demographic issue-- too many homes, not enough families to fill them.

9) Even if every unemployed American were simply given a home to live in, it would still leave millions of vacant homes on the market. 

10) Given how US Homeland Security treats everyone like a criminal terrorist, foreigners aren't exactly lining up to tighten the slack. 

Ultimately, while there are bright spots in any market, the fundamentals for US housing remain poor. 

It can be tempting to jump into the market as an investor with prices so low. But gobbling up a low-grade track house simply because it's cheap is not a sound investment strategy. There are a lot of things in this world that are cheap. That doesn't mean the price will go up. It just means that they're cheap.

A great investment is one that is both cheap, -and- has a catalyst for growth. Median housing in the US has few, if any, catalysts to growth. If you want to invest, stick to the highest quality assets you can find-- premium homes in the best locations. They'll be the first to recover.


Until tomorrow, 

Simon Black 
Senior Editor, SovereignMan.com


----------



## Starcraftmazter (3 February 2012)

FYI back to ~2000 level in real (ie. the only thing that matters) terms.


----------



## Bintang (3 February 2012)

And headingback to 1980 when measured in terms of gold (~ 100 oz):


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## Bintang (3 February 2012)

And here are some projections in fiat money derived indices based on my previous chart:


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## prawn_86 (3 February 2012)

Bintang,

Do you know the correlation % between gold and house prices? It seems to me that if you are basing analysis off this you have 2 asset prices/risks to factor in, as opposed to just looking at the Real Home Price Index or a Price:Income Ratio


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## Tysonboss1 (3 February 2012)

Glen48 said:


> Example: if you can afford $1,500 per month to spend on a home, you would be able to afford a $300,000 home at today's low rates. If rates go up to 6%, $1,500 per month only buys you a $250,000 home. If that's what the average guy can afford, that's where home prices will converge.




As usual your examples are far to overly simplistic,

That guy with $1500 permonth to spend still has to live some where and if he is not buying he must rent, and if he is willing to spend $1500 per month on rent then an investor can spend $360,000 on the house and make an investment out of it, So it is unlikely to drop to $250,000.

Offcourse it is total possible to drop to that level in the midst of a choatic financel mess, But as the dust settles it will not stay there.


----------



## Bintang (3 February 2012)

prawn_86 said:


> Bintang,
> 
> Do you know the correlation % between gold and house prices? It seems to me that if you are basing analysis off this you have 2 asset prices/risks to factor in, as opposed to just looking at the Real Home Price Index or a Price:Income Ratio




Varies greatly depending on which country and which time period, eg for the last 10 years USA 0.04, UK 0.34, AUS 0.02, NZ 0.57


----------



## prawn_86 (3 February 2012)

Bintang said:


> Varies greatly depending on which country and which time period, eg for the last 10 years USA 0.04, UK 0.34, AUS 0.02, NZ 0.57




So what are you trying to display from these charts? With a correlation that low i wouldn't have thought comparing the 2 would prove of any use.

Is there any historical evidence that house prices will reduce (or gold increase) as per your charts?

I'm bearish on houses also, but am just curious as to what your graphs are actually trying to prove if they are using a metric that has no (or a very weak) relationship


----------



## Bintang (3 February 2012)

prawn_86 said:


> So what are you trying to display from these charts? With a correlation that low i wouldn't have thought comparing the 2 would prove of any use.
> 
> Is there any historical evidence that house prices will reduce (or gold increase) as per your charts?
> 
> I'm bearish on houses also, but am just curious as to what your graphs are actually trying to prove if they are using a metric that has no (or a very weak) relationship




I have provided more explanation in another forum. Am happy to answer more questions after you have taken a look. I'm just saving myself the trouble of reproducing the entire story here. Here is the link:

http://bubblepedia.net.au/tiki-view_forum_thread.php?comments_parentId=25049&topics_sort_mode=lastPost_desc&forumId=7


----------



## prawn_86 (3 February 2012)

Bintang said:


> I have provided more explanation in another forum. Am happy to answer more questions after you have taken a look. I'm just saving myself the trouble of reproducing the entire story here. Here is the link:
> 
> http://bubblepedia.net.au/tiki-view_forum_thread.php?comments_parentId=25049&topics_sort_mode=lastPost_desc&forumId=7




I've read that post but i still dont quite understand.

You are assuming gold will go up 25% pa in a straight line. Ignoring this huge assumption, what % of house price 'falls' in this graph is simply attributed to gold increasing? IE couldnt gold just go higher and house prices stay the same.

I still dont see what meaningful relationship there is between the 2 assets...


----------



## tech/a (3 February 2012)

Someone has too much time on their hands.
Basically the projection is a 25% increase in gold /year V number of ounces required to hold X value in housing.
If gold rises the graph plummets.
Gold falls----well the opposite.


----------



## prawn_86 (3 February 2012)

tech/a said:


> Someone has too much time on their hands.
> Basically the projection is a 25% increase in gold /year V number of ounces required to hold X value in housing.
> If gold rises the graph plummets.
> Gold falls----well the opposite.




Yeh that's my thoughts also. Unless there is a strong correlation between the 2, or a historical link then i dont see how this data is useful.

I must admit its nice having something else to think/talk about on this thread though and its good to see members posting up actual thought out analysis, instead of just "property will go up/crash".


----------



## Bintang (3 February 2012)

tech/a said:


> Someone has too much time on their hands.
> Basically the projection is a 25% increase in gold /year V number of ounces required to hold X value in housing.
> If gold rises the graph plummets.
> Gold falls----well the opposite.




Quite the opposite actually. For those wishing to see house prices stay aloft they should hope for the highest gold price possible. If US$ gold price slows its ascent below the 25% pa I have assumed the Australian house price index will fall more steeply.


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## Glen48 (3 February 2012)

It all depends in the times you are living in, if there is a war you are going to think about moving some where safe, know the cost  of power is to rise you look at alternatives, worried about fiat money failing you look at other forms of security, house prices are seen as a risk so you sit back and wait until *you* decide what to do next.
If enough think the same way prices rise or fall. 
Circumstances change  so you have to as  well whether you like it or not. Growth is optional,   change is inevitable.
The smart ones can see and adapt.
  If Henry Ford was born in 1400's he would not have been famous  because the opportunities were not there just like now electronic and new plastic  will be the future but not there in the 30's.
 House prices are  going the same way as buggy whips PM's are  going the same way as Mr. Fords new mode of transport


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## tech/a (3 February 2012)

Glen48 said:


> It all depends in the times you are living in, if there is a war you are going to think about moving some where safe, know the cost  of power is to rise you look at alternatives, worried about fiat money failing you look at other forms of security, house prices are seen as a risk so you sit back and wait until *you* decide what to do next.
> If enough think the same way prices rise or fall.
> Circumstances change  so you have to as  well whether you like it or not. Growth is optional,   change is inevitable.
> The smart ones can see and adapt.
> ...




I once lived in a very nice buggy whip!!!


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## Glen48 (3 February 2012)

Tech
 Did you get  the latex suit and chains and live in a house  of  ill repute.


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## Bintang (3 February 2012)

prawn_86 said:


> I've read that post but i still dont quite understand.
> You are assuming gold will go up 25% pa in a straight line. Ignoring this huge assumption, what % of house price 'falls' in this graph is simply attributed to gold increasing? IE couldnt gold just go higher and house prices stay the same.
> I still dont see what meaningful relationship there is between the 2 assets...




My main premise (based purely on observation and of course is subject to challenge) is that the ratio of house prices to gold price (in the same currency as the house prices) could follow a fixed downward trajectory and bottom-out at a value of around 100 oz. Thus at a future time (say within the next 4 to 5 years) the value of that ratio will have a fixed value (though different for the different markets, USA, UK, AUS & NZ). There are 5 ways in which the lower fixed values of that ratio can be reached.
1)	House prices don’t change but gold price keeps going up – but steeply.
2)	House prices go up and gold price goes up – but even more steeply.
3)	Gold price doesn’t change and house prices go down – but steeply.
4)	Gold price goes down and house prices go down – but even more steeply.
5)	Something in between the above extremes.

All this raises an interesting conundrum from the perspective of a prospective property investor. If I badly want to see a house price 'soft landing' or even a price revival and I believe in my premise then I will want to see a very high future gold price.  But if I seriously believe that will happen then I should be buying gold not houses.


----------



## Eager (4 February 2012)

Just a general comment - after 360 pages of guesses, estimates, opinions and good ol' speculation in this thread, has anyone actually got it right yet?


----------



## Tysonboss1 (4 February 2012)

Bintang said:


> My main premise (based purely on observation and of course is subject to challenge) is that the ratio of house prices to gold price (in the same currency as the house prices) could follow a fixed downward trajectory and bottom-out at a value of around 100 oz. .




I can't see how the two are connected,

Both are tradable commodities who's price will flucuate over time , there will be times where gold is massively over valued, and times when it is massively under, same with property.

There is absoulutly no value in such an obscure method of valuing realestate.

Why not just value each piece of real estate on it's merits, eg. cashflow produced and development potencial.


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## Glen48 (4 February 2012)

You are eager,Eager 
yes they will go down like white ants eating away one bite at a time and one day it will all be over but not until USA  stop tanking.
  PM"s will go up the same way.
But Gold etc is driven by worry and security nothing else.
See what happens soon in Iran it explodes PM's will go up.


----------



## trainspotter (4 February 2012)

Eager said:


> Just a general comment - after 360 pages of guesses, estimates, opinions and good ol' speculation in this thread, has anyone actually got it right yet?




Just Robots !


----------



## Bintang (4 February 2012)

Tysonboss1 said:


> I can't see how the two are connected.....




They are connected by the ratio of House Price to Gold Price as per this chart:


But I happily acknowldege that my forecast is an extrapolation, which could be completely and utterly wrong. So let's lets assume it is wrong and reverse the analysis. Let's assume that the Australian median house price will stop declining in 2012 and revive to 7% per annum growth for the next 5 years. Let's further assume that the US$ gold price growth will slow to 5% pa over the same period. and that the US$:AUS$ exchange rate will average 1.05 (in deference to Julia Gillard who told us this week that she expects the Australian dollar to remain 'relatively strong'  for years to come). After that we calculate future House/Price to Gold Price ratios and superimpose them on my previous chart to get ......:


----------



## Glen48 (4 February 2012)

Australia has the highest priced RE in the World it can only go down as Prof Robots has confirmed by his silence.
In fact  I think we should pass the hat around to assist him to buy Gold and help pay for the professional help he is seeking trying to work out where he went wrong.


----------



## medicowallet (4 February 2012)

"Saturday 4th February 2012






Today there has been 101 auctions with 59 selling and 42 being passed in. Of the auctions that were passed in 26 were on a vendors bid. 

The clearance rate was 58 per cent.

As volumes remain low this results is unlikely to be indicative of the state of the market. 

On this weekend last year there were 189 auctions and a clearance rate of 56 per cent.

Next weekend around 305 auctions are expected followed by 620 on the weekend of 18 and 19 February.

Enzo Raimondo
CEO REIV"

WOW!!!
Clearance rates ABOVE last year!!!! 
Sunshine and lollipops for all.  
Wonder why, with increased inventory, there were only 101 auctions this year compared to 189 last year?

Perhaps R/E agents are making so much money, they only need to do around half the work to make the same amount of money,

Anyways,
Nice stats, should see prices start to come up as these clearance rates keep improving, not that I am sure clearance rates have any correlation,

MW

P.S. Where is Robots?


----------



## sptrawler (4 February 2012)

The thing to keep in perspective is, interest rates are going down, if you can get 5% return on a property.
If that property is in an area where you think there maybe future capital growth and also has secure rental prospects, it is worth thinking about.
Wages may stay stagnant for a period, they may drop(but not by much)but if you pay $300k for a well located property that pulls $300/wk. It isn't a bad place to park some money.IMO
But you have to be selective with the property and cut a good deal. My thoughts only.


----------



## Julia (4 February 2012)

Glen48 said:


> Australia has the highest priced RE in the World it can only go down as Prof Robots has confirmed by his silence.



We keep hearing this.
I had an email from a friend in Vancouver recently telling me that they have the highest priced RE in the world.


----------



## Glen48 (4 February 2012)

I think Canada kept their rates high and a deposit was needed to buy a house and no first owners bribe but even if Oz is 2Nd or 3rd it is still bad news when  Ireland has 300K vacant, Spain authorities are talking about bulldozing because they can't afford the upkeep, UK, Belgium,USA etc are all in trouble with over priced houses OZ must be due for a correction .


----------



## trainspotter (5 February 2012)

Been hearing this bleating for 3 years now !! Yes yes yes CERTAIN areas have dropped 20% as per my prediction and overall the market is around 3% down overall based on the 8 capital city average ..... DYOR and go by ABS figures !!

There is also areas that have increased by 20% ..... I even named the suburbs and towns over 2 years ago ....... Good luck punters.


----------



## kincella (5 February 2012)

Eager said:


> Just a general comment - after 360 pages of guesses, estimates, opinions and good ol' speculation in this thread, has anyone actually got it right yet?




yes, several of us got it right....no crash, slowdown (it is the GFC in action) rises in some places, 'and most of all the median figure that is touted' as the evidence of a drop in prices, can be a misnomer...
less high priced places selling, plus more median and lower prices, cause the median figure to drop... voila there is your price drops of what 3, 6% big deal
and I have witnessed huge increases in the bottom end of the price range....so go figure

dont expect things to change much, while there is so much political misery....

 once it is sorted out, and we get some good conservative politicians back into office, watch for the change in attitude....as in when Howard was in office...


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## Glen48 (5 February 2012)

More chance of Howard running again and getting re-elected than house prices going up.


----------



## wayneL (5 February 2012)

kincella said:


> yes, several of us got it right....no crash, slowdown (it is the GFC in action) rises in some places, 'and most of all the median figure that is touted' as the evidence of a drop in prices, can be a misnomer...
> less high priced places selling, plus more median and lower prices, cause the median figure to drop... voila there is your price drops of what 3, 6% big deal
> and I have witnessed huge increases in the bottom end of the price range....so go figure
> 
> ...




So conservative governments = rising house prices?

How do we account for the concurrent rise in house prices in the UK where the Fabians were in power? 

I've dropped probably £200,000 in equity since the conservatives have been in.

Polly-ticks ain't got nuttin' to do with it Kinc.


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## sptrawler (6 February 2012)

Eager said:


> Just a general comment - after 360 pages of guesses, estimates, opinions and good ol' speculation in this thread, has anyone actually got it right yet?




Well I've bought an investment property in the last month.
How about you?
Also I don't see a property rebound in the foreseeable future, however a bagain is a bagain. If you call it right.
The bad news can't get much worse, can it?
Time will tell if I've blown my money. C'est la vie


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## Glen48 (6 February 2012)

sptrawler
 Just delete the word "  investment " and enjoy the ride down all will be ok


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## Wysiwyg (6 February 2012)

Glen48 said:


> sptrawler
> Just delete the word "  investment " and enjoy the ride down all will be ok



 Taxi business is doing a roaring trade lately I see.


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## KurwaJegoMac (6 February 2012)

sptrawler said:


> Well I've bought an investment property in the last month.
> How about you?
> Also I don't see a property rebound in the foreseeable future, however a bagain is a bagain. If you call it right.
> The bad news can't get much worse, can it?
> Time will tell if I've blown my money. C'est la vie




Congratulations!! All the best with your investment. 

Hope you have a thick shell, you'll be bombarded pretty soon


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## Bill M (6 February 2012)

sptrawler said:


> Well I've bought an investment property in the last month.
> How about you?
> Also I don't see a property rebound in the foreseeable future, however a bagain is a bagain. If you call it right.
> The bad news can't get much worse, can it?
> Time will tell if I've blown my money. C'est la vie




Hello sptrawler, I think from memory you are at or near retirement age. I think you did the right thing as long as you really did get a bargain. I reckon as long as you can rent it at least 95% of the time you will do ok. It isn't a 10 bagger investment that's for sure but as long as that rent keeps coming in you will be ok. Hopefully you didn't borrow too much. 

I would like to give you one great tip my Accountant got me onto. In my first year he asked me if I had my property "Quantity Surveyed". I didn't and he advised me to get done ASAP as I would have been missing out on substantial claims. I had to justify the $750 cost to do this but he assured me that my first claim would be way higher than the fee that I would have to pay.

With his advice I got BMT Tax Depreciation to do a full schedule for me. In my first year I got an 8k tax deduction that I thought I would never get. I now have a schedule for the next 20 years (I think). I strongly suggest that at the very least you give them a call. Here is their link http://www.bmtqs.com.au/Default.aspx There is no point is missing out on claims that are rightfully yours.

Good luck with your new investment.


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## todster (6 February 2012)

sptrawler said:


> Well I've bought an investment property in the last month.
> How about you?
> Also I don't see a property rebound in the foreseeable future, however a bagain is a bagain. If you call it right.
> The bad news can't get much worse, can it?
> Time will tell if I've blown my money. C'est la vie




I imagine it's in WA,still plenty of big construction jobs
All the big mobs FIFO from east now i wonder if that will change things.
Looking at getting in myself but very cautious at the moment.
Has anyone had much to do with the National housing affordability scheme or NRAS.
100K tax deduction over ten years.


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## KurwaJegoMac (6 February 2012)

Bill M said:


> I would like to give you one great tip my Accountant got me onto. In my first year he asked me if I had my property "Quantity Surveyed". I didn't and he advised me to get done ASAP as I would have been missing out on substantial claims. I had to justify the $750 cost to do this but he assured me that my first claim would be way higher than the fee that I would have to pay.
> 
> With his advice I got BMT Tax Depreciation to do a full schedule for me. In my first year I got an 8k tax deduction that I thought I would never get. I now have a schedule for the next 20 years (I think). I strongly suggest that at the very least you give them a call. Here is their link http://www.bmtqs.com.au/Default.aspx There is no point is missing out on claims that are rightfully yours.
> 
> Good luck with your new investment.




I second this - it's worthwhile doing, you can get some great savings.

If you get a quote and are still on the fence about it, jump onto the ATO website and look up Depreciation rules and schedules for investment properties. They have some nifty information there that you can use to make your own estimates - then you can get a rough idea of the potential depreciation you're entitled too which should help you justify the cost of a professional quanitity surveyor.

Note: you can use your own calculations as long as they stick to the ATO guidelines. But usually best to use a professional


----------



## Bronte (6 February 2012)

Eager said:


> Just a general comment - after 360 pages of guesses, estimates, opinions and good ol' speculation in this thread, has anyone actually got it right yet?



 lol
In the original 'Stagnation....' Australian property prices thread, we did make a comment that Australian property was cheap just before it went up 40% or more.  Does this count ?
There is also an Australian property thread somewhere started by spitrader when we turned bearish.
Just before Australian property started this downward cycle.


----------



## sptrawler (7 February 2012)

Bill M said:


> Hello sptrawler, I think from memory you are at or near retirement age. I think you did the right thing as long as you really did get a bargain. I reckon as long as you can rent it at least 95% of the time you will do ok. It isn't a 10 bagger investment that's for sure but as long as that rent keeps coming in you will be ok. Hopefully you didn't borrow too much.
> 
> I would like to give you one great tip my Accountant got me onto. In my first year he asked me if I had my property "Quantity Surveyed". I didn't and he advised me to get done ASAP as I would have been missing out on substantial claims. I had to justify the $750 cost to do this but he assured me that my first claim would be way higher than the fee that I would have to pay.
> 
> ...




Thanks for the tip Bill. I will look into it.


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## sptrawler (7 February 2012)

todster said:


> I imagine it's in WA,still plenty of big construction jobs
> All the big mobs FIFO from east now i wonder if that will change things.
> Looking at getting in myself but very cautious at the moment.
> Has anyone had much to do with the National housing affordability scheme or NRAS.
> 100K tax deduction over ten years.




Hi todster, it is in W.A, 5% return, also lifestyle option if I want to move into it at a later date.
The NRAS sounds like it is just a negative gearing scheme, tax man gives you nothing for nothing.


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## medicowallet (11 February 2012)

"Saturday 11th February 2012

Today’s auction clearance rate was 66 per cent, compared to 54 per cent last weekend, and 63 per cent on this weekend last year.

This is a modest improvement on last year’s results, however the outcome of auctions over the coming two weekends will provide a
clearer indication of the state of the market.

A total of 270 auctions were reported today. Homes sold comprise 178 of the total. The remaining 92 were passed in, 57 of those on a
vendor’s bid.

There are 1500 auctions scheduled between now and the end of February.

Enzo Raimondo
CEO REIV"

WOW, sunshine and lollipops this weekend!!, Don't really know what happened to the more than 10% of auctions that weren't reported this weekend, but perhap Enzo submitted his BAS early this week.

*1500* auctions over the next 2 weekends expected, should give more of an indication, so of the 1250 reported, it should give some indication about what is happening.

Keep working hard, and if struggling, then try pawning off some trinkets, or try hitting up the olds for a loan, take on a few extra jobs, or buy a bike,

Until next week, be excellent to each other,

MW
P.S. Where is Robots?


----------



## prawn_86 (12 February 2012)

New survey shows that >30% of NSW residents are paying more than 40% of their income on mortgage repayments.

http://www.abc.net.au/news/2012-02-12/nsw-residents-dreaming-of-queensland/3825136


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## greebly24 (13 February 2012)

nth brisbanite said:


> What are you trying to prove? You are using 2 extreme cases to show that investing in real estate can cause untold damage.  There are thousands of property investors (like myself) who are not having any problems with their investments.  Mine may have gone down 5% over the last year or two but over a long time period, I have done really well.




Yeah, sorry dude. The Wiggles guy and the Irish Quinns are extreme cases. I was just using them of examples of how investors shouldn't put all their eggs in the one basket. But many RE spruikers used the opposing argument, the outrageous claim that all other investments (like buying shares in a productive exporting company) are bad, and that leveraging up and borrowing as much as you could to buy as many properties as you could, was the only smart strategy to wealth creation. And for 15 years at least, it worked really well. It was a very smart investment strategy during that period.

But now, as the world deleverages, this once-sacred strategy is slowly being proven as possibly ill-advised. It has proved spectacularly wrong in places like US, Ireland & Spain. There are endless tales of property developers & RE agents who put all of their money into property, and nothing else. When those property bubbles popped, they are the people who lost everything, and they are the angry ones you see on the news, angry at their own gullibility for believing that property was the only asset to be invested in.

Thats why I mentioned the Wiggles guy. He was worth well over $50m. So what did he do? He put it all into leveraged property. When upmarket RE in Sydney didn't continue booming like the RE spruikers said it would forever, and underwent a minor correction, he lost everything and was forced to liquidate assets including his family home and Elvis memorabilia collection and go back to work despite his ongoing illness.

But what if he diversified among asset classes? Imagine if he only put $10m into property, and also put $10m into shares, $10m into bonds, $10m into bullion, and $10m in cash? Would he be coming out of retirement? I doubt it. He'd probably have made money. There's something called the Permanent Portfolio that describes how to do this. Its the reason old-money families like the Rothschilds have kept their wealth for centuries. They never put everything they had into just one thing, like property.

Its great to hear you've made good money on your IPs, despite the recent drop. But in the present and going forward, would you really now advise your children to leverage up as much as they could now and take on as much as debt as they could now, and buy as much RE now as they could, to the detriment of every other investment? What if they didn't have the most secure jobs? Still tell them to take on as much debt as they could? Right now?

I guess that's what we all want to know? Does the positive past behaviour of RE being a good investment, still hold true in the near future?

In other news, more banks raising rates independently, whilst laying off more staff. Residex house prices figures just out too, showing 1.7% median drop in January (20.4% annual rate).


----------



## young-gun (13 February 2012)

greebly24 said:


> But now, as the world deleverages, this once-sacred strategy is slowly being proven as possibly ill-advised. It has proved spectacularly wrong in places like US, Ireland & Spain. There are endless tales of property developers & RE agents who put all of their money into property, and nothing else. When those property bubbles popped,
> 
> 
> In other news, more banks raising rates independently, whilst laying off more staff.




deleveraging? bubbles? you are misinformed - australia is immune. must rush out to buy a house now, i hear its just about to boom again. great time to invest aswell, government has never handed out so much money to keep things afloat!

oh no, sounds like OUR banks are finally finding themselves in a spot of bother now, luckily we have the strongest banking system in the world, and they too are immune. surely australia isnt going to follow the path of every other developed country in the world? i read somewhere that we are different!!

*end sarcasm.


----------



## Wysiwyg (13 February 2012)

young-gun said:


> surely australia isnt going to follow the path of every other developed country in the world? i read somewhere that we are different!!



Surely interest rates would lower, house prices would lower and present opportunity for those with secure employment to finally buy a house at an affordable price.


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## trainspotter (13 February 2012)

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0

Preliminary estimates show the price index for established houses for the weighted average of the eight capital cities decreased 1.0% in the December quarter 2011. 


Which would equate to 4% annually 

December 10 to December 11 overall downward spiral is wait for it ........ wait for it ................ wait for it ......................... 4.8%


----------



## So_Cynical (13 February 2012)

trainspotter said:


> http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0
> 
> Preliminary estimates show the price index for established houses for the weighted average of the eight capital cities decreased 1.0% in the December quarter 2011.
> 
> ...




Average for Melb, Bris and Adelaide about -6.4% = 32 thousand dollars on a half million dollar property...even if next years fall is half that, it will be close to a 10% loss in just 2 years...and that's one of the better case scenarios.
~


----------



## trainspotter (13 February 2012)

So_Cynical said:


> Average for Melb, Bris and Adelaide about -6.4% = 32 thousand dollars on a half million dollar property...even if next years fall is half that, it will be close to a 10% loss in just 2 years...and that's one of the better case scenarios.
> ~




Melbourne overpriced to begin with.
Adelaide has just had close to 23% increase in 4 years.
Brisbane has just been flooded.

Just like shares ..... ya gotta know when to buy. Would I buy a house in these (metro) areas now? Ummmmmmmm ..... nope. Would I buy a house in "CERTAIN" areas ..... you betcha. But I am repeating myself yet again ....... Zzzzzzzzzzzzzzzz


----------



## sptrawler (13 February 2012)

trainspotter said:


> Melbourne overpriced to begin with.
> Adelaide has just had close to 23% increase in 4 years.
> Brisbane has just been flooded.
> 
> Just like shares ..... ya gotta know when to buy. Would I buy a house in these (metro) areas now? Ummmmmmmm ..... nope. Would I buy a house in "CERTAIN" areas ..... you betcha. But I am repeating myself yet again ....... Zzzzzzzzzzzzzzzz




I have to agree with you trainspotter, average wages are not going to go down(unless you have a Greek situation) So therefore there are some great opportunities poping up.
There are some great locations being sold at low prices.


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## Klogg (13 February 2012)

trainspotter said:


> Melbourne overpriced to begin with.
> Adelaide has just had close to 23% increase in 4 years.
> Brisbane has just been flooded.
> 
> Just like shares ..... ya gotta know when to buy. Would I buy a house in these (metro) areas now? Ummmmmmmm ..... nope. Would I buy a house in "CERTAIN" areas ..... you betcha. But I am repeating myself yet again ....... Zzzzzzzzzzzzzzzz




Agreed trainspotter! Even in times like this, there are suburbs that are performing very well (I can only speak for Melbourne).

IMO, there's value to be found in any market...


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## Klogg (13 February 2012)

sptrawler said:


> I have to agree with you trainspotter, average wages are not going to go down(unless you have a Greek situation) So therefore there are some great opportunities poping up.
> There are some great locations being sold at low prices.




Actually I've been looking at buying a house in Williamstown (Melbourne, well-known beach area in the inner west) and I'm noticing some nice prices there in comparison to the rest of the market.

If I'm able to get things in order and ensure I'm not exposing myself, I may just have to move down there!


----------



## sptrawler (13 February 2012)

Klogg said:


> Actually I've been looking at buying a house in Williamstown (Melbourne, well-known beach area in the inner west) and I'm noticing some nice prices there in comparison to the rest of the market.
> 
> If I'm able to get things in order and ensure I'm not exposing myself, I may just have to move down there!




Well Klogg, that is what it is all about, if you can pick up a bargain RELATIVE TO AVERAGE WAGES, in a good location you can't go wrong in the long term. If worse comes to worse you can move in.
Just go back to the old rule of three times average wages, add a bit for a great location


----------



## moXJO (13 February 2012)

I just picked up a ip that started at $550k and bought it for $390k. Worst house in a decent street. Houses around it have been selling for the low $600k. Rent covers the loan payments and then some. Will probably develop the block down the track. I've been looking for years and have noticed some good bargains around at the moment. About 5km   
north of this house prices have just been going stupidly high. I think a lot of people brought at the top of the market in some areas and I have friends in this situation that pay a fortune in loan repayments. I'm tighter then a fishes ******** though, so I prefer loan and ip ongoing costs to not put any dent in my weekly budget. I hate having debt even if it is the so called good kind.


----------



## trainspotter (14 February 2012)

He he ! Now the people come out to play. There is still good coin to be made. Ya just gotta look at the situation. Unlike shares where you buy in the morning and sell in the arvo there is more to property than meets the eye.


----------



## medicowallet (14 February 2012)

trainspotter said:


> Brisbane has just been flooded.




So the city was flooded, and there has been employment generated by the rebuilding and the insurance dollar, and consumption increase due to purchasing replacement items etc.

Why has housing in the areas not affected by the flooding (ie the houses that sustained no damage) decreased too?  

Wouldn't a supply and demand scenario support higher prices in these areas?

Any other excuses for Brisbane's pathetic property market that are credible?

MW


----------



## trainspotter (14 February 2012)

medicowallet said:


> So the city was flooded, and there has been employment generated by the rebuilding and the insurance dollar, and consumption increase due to purchasing replacement items etc.
> 
> Why has housing in the areas not affected by the flooding (ie the houses that sustained no damage) decreased too?
> 
> ...




LOL ........ I see you have not had your Optirectumotomy operation yet ?


----------



## medicowallet (14 February 2012)

trainspotter said:


> LOL ........ I see you have not had your Optirectumotomy operation yet ?




I like your eyes exactly where they are 


But, still, I see no reason as to why the floods should have caused prices in unaffected areas to follow suit, when so few houses were truly affected.


----------



## McLovin (14 February 2012)

Slightly tangential to the property market but I had a good chuckle about this...



> THE strong Aussie has pushed Adelaide into the top 20 list of the world's most expensive cities, says the Economist Intelligence Unit's Worldwide Cost of Living survey.
> 
> ...
> 
> the high dollar had made all five Australian cities costlier than major international cities such as London, Rome, New York, Los Angeles, Berlin, Hong Kong, Beijing and Shanghai.




http://www.adelaidenow.com.au/busin...ity-in-the-world/story-e6fredj3-1226270757603

No doubt the high dollar is influencing this but really, you have to wonder how sustainable it is to have Adelaide as more expensive than the other cities mentioned above. Something's gotta give.


----------



## medicowallet (14 February 2012)

McLovin said:


> Slightly tangential to the property market but I had a good chuckle about this...
> 
> 
> 
> ...




1. But it is different here
2. But it recently flooded in all those cities and their prices have fallen.
3. But Australian banks are offering too low interest rates.
4. But unemployment here is falling.
5. But we have the most efficient government.
6. But our lack of land drives house prices up and up.
7. But our centralised location ensures a strategical position for trade.
8. But our drastic undersupply of housing is causing pricing pressures.
9. But we have the greatest treasurer in the world.
10. But Robots says up up and up brothers.

Just keeping it real for the true believers,

Sunshine and lollipops for my kind and glorious brothers,

MW

PS where is Robots?


----------



## trainspotter (14 February 2012)

medicowallet said:


> I like your eyes exactly where they are
> 
> 
> But, still, I see no reason as to why the floods should have caused prices in unaffected areas to follow suit, when so few houses were truly affected.




Ummmmmmm ..... so places like Zipswich which were sold as house and land packages to 95% LVR's which came under mortgage stress when rates went up flew under your radar then?

SO FEW HOUSES ???????? We are talking about Fig Tree Pocket and GraceVille that went underwater ...... ya know the old money areas???? What about the infrastructure and the boats that ended up in the bay??? The Cultural Centre and the pr0n pool at Southbank? Brett's Jetty ..... HUH ??? Are you paying attention !!!!!!!

P.S. Your eyes need some Clear Eyes drops in them.


----------



## IFocus (14 February 2012)

McLovin said:


> Slightly tangential to the property market but I had a good chuckle about this...
> 
> 
> 
> ...





So going by that you would cash out here and buy your IPs overseas..........


----------



## McLovin (14 February 2012)

IFocus said:


> So going by that you would cash out here and buy your IPs overseas..........




I'll leave you to answer that question.

FWIW, the Economist doesn't include accomodation costs in its survey as these are usually paid by the employer.

I'll take a punt and speculate that full employment has led to wage growth without productivity increases and this is showing in high prices for goods and services. It creates a sort of Pyrrhic victory, especially in a service based economy.


----------



## So_Cynical (14 February 2012)

IFocus said:


> So going by that you would cash out here and *buy your IPs overseas*..........




While on the subject of OS property.

I've just returned from 2 weeks in the Philippines and couldn't help but notice that new 1 bedroom  apartment/condominiums (off plan) in Manila are selling for less than 60K AUD and in a prime location, the Darling harbour equivalent of Manila.

Selling for less than 12% of the cost of similar apartments in inner Sydney...apples and oranges comparison perhaps but apples and oranges prices too.


----------



## medicowallet (14 February 2012)

trainspotter said:


> Ummmmmmm ..... so places like Zipswich which were sold as house and land packages to 95% LVR's which came under mortgage stress when rates went up flew under your radar then?
> 
> SO FEW HOUSES ???????? We are talking about Fig Tree Pocket and GraceVille that went underwater ...... ya know the old money areas???? What about the infrastructure and the boats that ended up in the bay??? The Cultural Centre and the pr0n pool at Southbank? Brett's Jetty ..... HUH ??? Are you paying attention !!!!!!!
> 
> P.S. Your eyes need some Clear Eyes drops in them.




Let us take for example Graceville.. How many houses went "under" were old Queenslanders which were on stilts, and were built in underneath?

These are then paid out by insurance money, and replaced = keeps tradies employed, and retailers who sell the product etc.

Insurance money coming in, generates work for people who otherwise would have less, and puts upwards pressure on housing prices as tradies continue to charge ridiculous rates as their supply and demand is more favourable than otherwise.

In all, only a small % are not liveable, and if it was larger then there would be higher prices as rental vacancies dropped and pressure to find housing increased.

Boats into the bay?  Replacement of those boats with insurance money stimulates the economy (and if they weren't insured, they weren't really generating a huge amount anyway)

So... come again?  and, when will the floods cease to be an excuse? 5 yrs? 10 yrs? or whenever the govt increases the FHVG again?

MW


----------



## trainspotter (14 February 2012)

medicowallet said:


> Let us take for example Graceville.. How many houses went "under" were old Queenslanders which were on stilts, and were built in underneath?
> 
> These are then paid out by insurance money, and replaced = keeps tradies employed, and retailers who sell the product etc.
> 
> ...




You really do not have a clue now do you MW ???? 

Let's keep it real simple for you ...... what happened to Nagasaki RE value after the bomb went off??

What happened to Christchurch values after the earthquake??

Do you get it now or should I become more basic ???


----------



## satanoperca (14 February 2012)

Reality  : 
Australian property prices are trending down
Unemployment on the rise
Interest rates increasing.

Conclusion ;
Property must increase, my taxi driver told me so.


----------



## Klogg (14 February 2012)

I'd imagine that the floods will no longer be an excuse once the memory of them has worn off... How long that takes, I have no idea.
IMO, the floods can only be used to explain capital losses in those areas that are in excess of the capital losses of comparable areas.

Slight off topic:
I haven't checked this out in too much detail as I don't have the cash to do this... but I think it'd be worth checking the rental yield on some of those flooded areas and see if you can get a decent return for your dollar. Although the value of the properties may have fallen, it might just return a similar amount of rent as before... (just a thought, haven't actually verified this).
And then of-course this might be offset by higher insurance premiums.... just a possibility though.


----------



## trainspotter (14 February 2012)

Klogg said:


> I'd imagine that the floods will no longer be an excuse once the memory of them has worn off... How long that takes, I have no idea.
> IMO, the floods can only be used to explain capital losses in those areas that are in excess of the capital losses of comparable areas.
> 
> Slight off topic:
> ...




Majority of flooded areas were high nett worth areas close to the Brisbane River. You do the math backwards from there.  Re goes up closer to water tributaries or oceans. Lord knows what happens when you have your own private jetty that gets washed away in a major flood along with the 60 foot launch. What about all the Government infrastructure??? HUH ????? Ferry terminals GONE !!! Southbank GONE !! Kangaroo Point Walkway GONE !! 

Shhheeeeeeeeeeeeeessssssssssssshhhhhhhhhh !


----------



## sptrawler (15 February 2012)

trainspotter said:


> Majority of flooded areas were high nett worth areas close to the Brisbane River. You do the math backwards from there.  Re goes up closer to water tributaries or oceans. Lord knows what happens when you have your own private jetty that gets washed away in a major flood along with the 60 foot launch. What about all the Government infrastructure??? HUH ????? Ferry terminals GONE !!! Southbank GONE !! Kangaroo Point Walkway GONE !!
> 
> Shhheeeeeeeeeeeeeessssssssssssshhhhhhhhhh !




It does my head in why anyone would want to buy on the east coast, clean the mud out every year, I don't think so.


----------



## Klogg (15 February 2012)

trainspotter said:


> Majority of flooded areas were high nett worth areas close to the Brisbane River. You do the math backwards from there.  Re goes up closer to water tributaries or oceans. Lord knows what happens when you have your own private jetty that gets washed away in a major flood along with the 60 foot launch. What about all the Government infrastructure??? HUH ????? Ferry terminals GONE !!! Southbank GONE !! Kangaroo Point Walkway GONE !!
> 
> Shhheeeeeeeeeeeeeessssssssssssshhhhhhhhhh !




Ah, fair enough.

I'm not too familiar with the Brisbane market, so I'm pleading ignorance on this one


----------



## Starcraftmazter (15 February 2012)

Aussie banks dangerously undercapitalised.

http://www.youtube.com/watch?v=baBokhvOvUA

From
http://www.macrobusiness.com.au/2012/02/too-big-to-fail-act-2/


----------



## medicowallet (15 February 2012)

trainspotter said:


> You really do not have a clue now do you MW ????
> 
> Let's keep it real simple for you ...... what happened to Nagasaki RE value after the bomb went off??
> 
> ...




Both are examples of places with lasting deficit.   ie radiation or threat of earthquake.

What happened to Japan's and Germany's economies after the war?  Massive improvements due to new infrastructure and work for people to do.


Can it get any more basic than that?

How come Gold coast, sunshine coast, northern suburbs etc not impacted in any way at all by flooding have declined so much?  Especially answer why there is any reason why suburbs not affected by flooding have tanked so much..... oh the flood argument falls to pieces again?

Do not just follow the R/E agent mantra and do some thinking for yourself?

MW


----------



## Vixs (15 February 2012)

medicowallet said:


> *How come Gold coast, sunshine coast, northern suburbs etc not impacted in any way at all by flooding have declined so much?*  Especially answer why there is any reason why suburbs not affected by flooding have tanked so much..... oh the flood argument falls to pieces again?
> 
> Do not just follow the R/E agent mantra and do some thinking for yourself?
> 
> MW




Emphasis added by me - I can't speak for the Sunshine Coast or the Brisbane Northern suburbs as I don't feel I know enough to argue it, but if you have taken a drive through the Gold Coast lately, there's For Sale signs and commercial space for lease left right and center. It has been rocked hard by lack of tourism thanks to the dollar (and generally being a f$&%ing tip these days) and there are various infrastructure projects that were propping up the tradies a few years ago (desal plant/water pipeline/hilton) that have since been completed, with many of the tradies having no next job to go to and leaving the coast to find work.

The Gold Coast economy is in a bad way, with the Commonwealth Games and the light-rail development being the next flicker of light for many. Natural disasters certainly have had an impact in my opinion but they are not the only factor at play.

As a young Brisbane resident saving a home deposit with my fiancee (not in ANY rush to deploy it) all I can say is that the pervasive feeling amongst people in my circle has become that the only way to move forward is debt free and frugally, with the very real possibility of our employers laying off staff suddenly or shutting down completely.


----------



## trainspotter (15 February 2012)

medicowallet said:


> Both are examples of places with lasting deficit.   ie radiation or threat of earthquake.
> 
> What happened to Japan's and Germany's economies after the war?  Massive improvements due to new infrastructure and work for people to do.
> 
> ...




LOL ..... go DYOR Doc    Vixs has some good cannon fodder there for you to chow down on.

P.S. As for the Japs and the Krauts I believe you would find it was the US money laundering machine that reignited their economies ...... but you already knew that didn't you !!!


----------



## medicowallet (15 February 2012)

trainspotter said:


> LOL ..... go DYOR Doc    Vixs has some good cannon fodder there for you to chow down on.
> 
> P.S. As for the Japs and the Krauts I believe you would find it was the US money laundering machine that reignited their economies ...... but you already knew that didn't you !!!




Yes, and insurance money will rejuvinate the Brisbane area (how long ago were the floods anyway?)

I guess that is what has helped places in NQ after cyclones and other similar natural disasters... kind of like Townsville where the R/E market came tumbling down when the cyclone came through, or the floods of 15 years ago there... hang on, that's right, they didn't affect R/E there at all.

Keep clutching at straws, you are quite good at it.

MW

PS - Just when will the floods stop being an excuse, oh that is right, you make statements and never, ever support them by backing them up.


----------



## trainspotter (15 February 2012)

medicowallet said:


> Yes, and insurance money will rejuvinate the Brisbane area (how long ago were the floods anyway?)
> 
> I guess that is what has helped places in NQ after cyclones and other similar natural disasters... kind of like Townsville where the R/E market came tumbling down when the cyclone came through, or the floods of 15 years ago there... hang on, that's right, they didn't affect R/E there at all.
> 
> ...





So go and buy up big spender seeing how you have promulgated that Brisbane is a boom town due to insurance monies !! 

Townsville 15 years ago was not effected by RE reductions from floods as it is a common occurence up there .... LOLOL ..... last one in Brizvegas this big was 50 years ago !! 

As for straw felching I am having an award made up in your honour 

P.S. Geeeezzzzzzzzzz Doc ...... exactly when are you having "that" operation to improve your sh!tty outlook on life?


----------



## medicowallet (16 February 2012)

trainspotter said:


> So go and buy up big spender seeing how you have promulgated that Brisbane is a boom town due to insurance monies !!
> 
> Townsville 15 years ago was not effected by RE reductions from floods as it is a common occurence up there .... LOLOL ..... last one in Brizvegas this big was 50 years ago !!
> 
> ...




1. Townsville had not experienced any significant flooding (of that magnitude) since before the dam was built.   Brisbane 1974 was not 50 years ago either, the math is not that hard.

2. I am not into property because I believe that forces other than "flooding" are keeping Brisbane's prices down, you know, such as the price being unaffordable historically, so, please do not think that your delusional assertions are in any way factoring into my investment decisions.

Again, failing to answer any questions, are you Robot's alt?

MW


----------



## trainspotter (16 February 2012)

medicowallet said:


> 1. Townsville had not experienced any significant flooding (of that magnitude) since before the dam was built.   Brisbane 1974 was not 50 years ago either, the math is not that hard.
> 
> 2. I am not into property because I believe that forces other than "flooding" are keeping Brisbane's prices down, you know, such as the price being unaffordable historically, so, please do not think that your delusional assertions are in any way factoring into my investment decisions.
> 
> ...





LOl ....... Give it a rest MW. Once again I reiterate ..... go DYOR as I do not need to answer your inane line of questioning. You were the one banging on how insurance money will turn Brisbane into a boom town as you have repeatedly pointed out.

SO GO AND BUY SOME PROPERTY THEN AND STOP HITTING THE BOARDS !


----------



## medicowallet (18 February 2012)

"Saturday 18th February 2012




Today's auction clearance rate was 58 per cent, compared to 64 per cent last weekend, and 63 per cent on this weekend last year.

The small reduction in the clearance rate follows a doubling of the number of auctions compared to last weekend.

A total of 546 auctions were reported to the REIV today. Homes sold comprise 317 of the total. The remaining 229 were passed in, 149 of those on a vendor's bid. 

Next weekend the REIV expects 880 auctions followed by 870 in a fortnight. 

Enzo Raimondo
CEO REIV"

ouch, only 58% clearance.

There are meant to be 1500 Auctions over this weekend and next.  That figure is now supposedly 1420, so next week will be 1250.

I don't know what these clearance rates mean, but I do know they are subdued and under-reported

Keeping the facts real for the true believers

MW
The original Robots destroyer.


----------



## Glen48 (18 February 2012)

Like to see if the amount of properties up for auction are increasing?
I did hear robots has full time job making for sale/auction signs, putting them and removing hence he can't reply and  is looking for more workers to stem the tide.


----------



## Starcraftmazter (19 February 2012)

Afaik last weekend the volume was quite high in Sydney.


----------



## village idiot (20 February 2012)

you bears better be effin well right on this cos I have just sold our house to sit out of the property market for a while and put the equity to better use than the 4% rental return it was 'making'


----------



## Starcraftmazter (20 February 2012)

village idiot said:


> you bears better be effin well right on this cos I have just sold our house to sit out of the property market for a while and put the equity to better use than the 4% rental return it was 'making'




Well done buddy.


----------



## Tysonboss1 (20 February 2012)

medicowallet said:


> Yes, and insurance money will rejuvinate the Brisbane area (how long ago were the floods anyway?)
> 
> .




I think the scale is far to small to have an impact, and it would mostly be done by now any way.


----------



## Tysonboss1 (20 February 2012)

village idiot said:


> you bears better be effin well right on this cos I have just sold our house to sit out of the property market for a while and put the equity to better use than the 4% rental return it was 'making'




Those same bears will be telling you the cash will be toilet paper in a few years due to hyper inflation,

My personal view is that property is some what over valued, but it is not panic time like they would have you believe, I hold some property but am not looking to sell, I am not buying either though,

If there is a reduction in prices back to the rental returns of 2000 I will probably buy another property though,


----------



## Glen48 (20 February 2012)

Good on V I did you make a profit?
Now you need  some PM's and sit back.


----------



## medicowallet (20 February 2012)

Tysonboss1 said:


> I think the scale is far to small to have an impact, and it would mostly be done by now any way.




and the flood waters receded ages ago..

So do you think that the flood is the cause of the current housing problem in Brisbane?


----------



## young-gun (20 February 2012)

village idiot said:


> you bears better be effin well right on this cos I have just sold our house to sit out of the property market for a while and put the equity to better use than the 4% rental return it was 'making'






Starcraftmazter said:


> Well done buddy.




+1. but i would also never make an investment decision based on the ramblings of a forum of any nature. here's hoping you have carried out alot of research before making such a decision

ps you made the right one imo, the prices are going down and staying down, welcome to australia, one of the last few remaining bubbles in the world. one thing i am tired of is my tax dollars supporting government handouts to artificially support these stupid prices. just pull out the pin already.


----------



## Tysonboss1 (20 February 2012)

medicowallet said:


> and the flood waters receded ages ago..
> 
> So do you think that the flood is the cause of the current housing problem in Brisbane?




I can't see a problem with housing in brisbane.

what exactly do you think is the problem with housing,


----------



## medicowallet (20 February 2012)

Tysonboss1 said:


> I can't see a problem with housing in brisbane.
> 
> what exactly do you think is the problem with housing,




Apart from the price decrease last year, not much actually..


----------



## young-gun (20 February 2012)

medicowallet said:


> Apart from the price decrease last year, not much actually..




i may be crazy, but wouldnt substantially LESS AVAILABLE HOUSES due to flooding at the time cause prices to go up? unless of course the floods deterred more people from buying than those that were forced to vacate, whether it be permanently or temporarily. after all it comes down to good ol' supply and demand. i cant imagine a flood that only affected certain areas wold discourage people from purchasing in areas that not only weren't affected, but would never even come close to experiencing flood waters anyway?

in theory if people decided they werent going to buy in flood areas this should increase values of property outside of these areas, once again supply and demand.

prices are falling due to demographics and a deflating debt bubble. oversupply, lack of demand.


----------



## Tysonboss1 (20 February 2012)

young-gun said:


> i may be crazy, but wouldnt substantially LESS AVAILABLE HOUSES due to flooding at the time cause prices to go up? unless of course the floods deterred more people from buying than those that were forced to vacate, whether it be permanently or temporarily. after all it comes down to good ol' supply and demand. i cant imagine a flood that only affected certain areas wold discourage people from purchasing in areas that not only weren't affected, but would never even come close to experiencing flood waters anyway?
> 
> in theory if people decided they werent going to buy in flood areas this should increase values of property outside of these areas, once again supply and demand.
> 
> prices are falling due to demographics and a deflating debt bubble. oversupply, lack of demand.




It's all swings and roundabouts, 

Remember as much as the media loved pushing the story, the damage was relatively contained to a very small area.

The price of property has come back a bit nation wide, it is not a brisbane thing.


----------



## medicowallet (21 February 2012)

young-gun said:


> i may be crazy, but wouldnt substantially LESS AVAILABLE HOUSES due to flooding at the time cause prices to go up? unless of course the floods deterred more people from buying than those that were forced to vacate, whether it be permanently or temporarily. after all it comes down to good ol' supply and demand. i cant imagine a flood that only affected certain areas wold discourage people from purchasing in areas that not only weren't affected, but would never even come close to experiencing flood waters anyway?
> 
> in theory if people decided they werent going to buy in flood areas this should increase values of property outside of these areas, once again supply and demand.
> 
> prices are falling due to demographics and a deflating debt bubble. oversupply, lack of demand.




These are my thoughts too, but some posters here think the opposite 

I guess they are trying to find explanations for the retreat that give them solace.. 

MW


----------



## Tysonboss1 (21 February 2012)

medicowallet said:


> Apart from the price decrease last year, not much actually..




Aren't cheaper prices a good thing,

Doesn't seem like a problem to me


----------



## Glen48 (21 February 2012)

When things go pear shape people move in with rellies , parents or put C.van in the back yard, just like did in the 80's


----------



## Knobby22 (21 February 2012)

Glen48 said:


> When things go pear shape people move in with rellies , parents or put C.van in the back yard, just like did in the 80's




True, and those empty McMansions could be rented out to three single mother families who would have plenty of room for them and their kids plus have the social advantages of helping each other out in lieu of extended family.

I'm sure we would have lots of empty houses if times got bad, rents dropped and people moved in with each other. Needs high unemployment though and I can't see that occurring at this time but who knows?


----------



## Tysonboss1 (21 February 2012)

Knobby22 said:


> True, and those empty McMansions could be rented out to three single mother families who would have plenty of room for them and their kids plus have the social advantages of helping each other out in lieu of extended family.
> 
> I'm sure we would have lots of empty houses if times got bad, rents dropped and people moved in with each other. Needs high unemployment though and I can't see that occurring at this time but who knows?




If rents dropped why would people move in with each other,


----------



## McLovin (21 February 2012)

Knobby22 said:


> Needs high unemployment though and I can't see that occurring at this time but who knows?




Something like this?


----------



## Klogg (21 February 2012)

McLovin said:


> Something like this?




Even though we should see the Roy morgan stats flow through to the ABS set, I still don't think that level of unemployment would cause any real issues in the price of housing in Australia... 
That's not to say that they'll go up, just that I dont think it will have a major impact.


----------



## Glen48 (21 February 2012)

The RBA should start dropping IR soon as next month and continue doing that until it hits 0% like the rest of the World and given Gillard/Rudd/Abbot?Turnbull/ any one wants to stay in office who knows what will happen but a FHOB MRK 3 should be on the cards.
 House prices could go any where.

As for lower rate if you don't have job or part time job you move in with others or like the elderly in Japan turn to pick pocketing , shoplifting to survive.
 So if your tenant turns up with a few  cartons of M&M to pay the rent you will understand.


----------



## Starcraftmazter (21 February 2012)

Unemployment is a lagging indicator, house prices are a more leading indicator.

Unemployment will go up because house prices go down - not the other way around. Then it will develop into a self-feeding loop.


----------



## Knobby22 (21 February 2012)

Klogg said:


> Even though we should see the Roy morgan stats flow through to the ABS set, I still don't think that level of unemployment would cause any real issues in the price of housing in Australia...
> That's not to say that they'll go up, just that I dont think it will have a major impact.




I agree. Need unemployment officially around the 9% level which would take the underemployment level up a lot also. Still plenty of money around, things aren't that tough.


----------



## medicowallet (25 February 2012)

As per my predictions, 1274 of the expected 1500 auctions were reported over the last 2 weekends.

(317+454)/1274 = 60%
(317+454)/1500 = 51%

This weekend had 728 auctions compared to 958 last year, when now there are more houses listed.  R/E agents must be all on holidays if they are that less productive than previously, or sellers have lost confidence.

I hope people don't take these figures seriously as they may not be able to be used at face value.

MW

P.S. Where is Robots?   Is the power off there Robots?  I have an old kero fridge you can borrow.


----------



## McLovin (25 February 2012)

John Edwards, from Residex, was on Sky Business this week he said the clearance rates in Sydney and Melbourne are in the mid to low 40's.

He was also fairly disparaging about APM's methodology for measuring house supply; there's a lot of duplication when the market stagnates.


----------



## young-gun (25 February 2012)

Tysonboss1 said:


> Aren't cheaper prices a good thing,
> 
> Doesn't seem like a problem to me




nor i


----------



## Gerkin (25 February 2012)

McLovin said:


> John Edwards, from Residex, was on Sky Business this week he said the clearance rates in Sydney and Melbourne are in the mid to low 40's.
> 
> He was also fairly disparaging about APM's methodology for measuring house supply; there's a lot of duplication when the market stagnates.




61% clearance rate today in melbourne


----------



## satanoperca (25 February 2012)

young-gun said:


> nor i




But wil be a problem for all those FHB of the last few years thanks to this disfunctional govnuts approach to property/debt and the FHBG who will be faced with negative equity and being a slave to the banks for many many many years to come.

And then the negative sentiment that will run through society due to falling property prices and yes they are in decline and stocks levels are rising month on month.

I for one don't want to see peoples hopes and dreams dashed, but on the other hand I cannot support such high prices and the cost they impose on greater society. Now how was retail going.

Prices on the way down down prices are down.

Cheers


----------



## McLovin (25 February 2012)

Gerkin said:


> 61% clearance rate today in melbourne




According to who?


----------



## Tysonboss1 (25 February 2012)

satanoperca said:


> But wil be a problem for all those FHB of the last few years thanks to this disfunctional govnuts approach to property/debt and the FHBG who will be faced with negative equity and being a slave to the banks for many many many years to come.
> 
> And then the negative sentiment that will run through society due to falling property prices and yes they are in decline and stocks levels are rising month on month.
> 
> ...




But a falling price will not increase the monthly cost for existing owners, they just keep making the same payments as the always have, it could also be a net plus, if it facilitates lower interest rates,


----------



## satanoperca (25 February 2012)

Tysonboss1 said:


> But a falling price will not increase the monthly cost for existing owners, they just keep making the same payments as the always have, it could also be a net plus, if it facilitates lower interest rates,




Are you serious or live a life as a hermit, don't mean to be rude but this nation is obsessed with property and it going up up and away.

Do you really believe that people who bought in the last few years with high LVR's are not expecting that their investment will not appreciate in value?

And when they realise that their investment is decreasing in value will cut back on spending, become worried about how they will move forward, pay for the next holiday for the kids etc 

I for one are seeing the effects in many areas in our society, retail being one and another being the number of kids that are in before school and after school care because both parents are working, the equity genie has left and they are left with the old fashion way of creating wealth, working for it.

I'm still lost as to why credit should become cheaper if the economy starts sliding, the risk increases in loaning money. But then again, most people wish us to go down the same path of ridiculous low interest rates like most other countries and look how that is panning out.

We are in a sticky situation and the best we can hope for is a slow decline, the next 6 months will determine how fast a descent we are on but two years ago now in Melbourne would have believed that we could fall over 6% in a year, but it happened and will continue until an equalibrium is reached.

Cheers


----------



## Glen48 (25 February 2012)

I know of one home victim who CBA  foreclosed on who is no longer with us and he will be one of many as IR  increase and house prices decrease and PM's increase each year.


----------



## Tysonboss1 (26 February 2012)

My point stands, property price decreasing does not effect the monthly mortgage payment. 

People will just keep plugging away, 

Yes there will be foreclusures, but not because property prices went down. 

We have had property crashes before, it is not a new thing, we have also had long periods of stagnation before,

People may be bummed if they find there property price has gone down, but if they enjoy living in there home what does it matter.


----------



## Tysonboss1 (26 February 2012)

Glen48 said:


> I know of one home victim who CBA  foreclosed on who is no longer with us and he will be one of many as IR  increase and house prices decrease and PM's increase each year.




How is he a "home" victim. 

Surely there was other factors, ie, job loss, poor budgeting, consumer debt.


----------



## McLovin (26 February 2012)

Tysonboss1 said:


> We have had property crashes before, it is not a new thing, we have also had long periods of stagnation before,
> 
> People may be bummed if they find there property price has gone down, but if they enjoy living in there home what does it matter.




Until the bank starts asking for extra security when the mortgage is worth more than the house...

With a fat deposit not so much a problem but if you're up to your eyeballs in the Australian dream, then a 5-10% fall in the value of your property could mean the bank asking for $50k.

The etymology of the word "mortgage" is rather ironic.


----------



## Glen48 (26 February 2012)

Think the word will _Morgue iges _for a lot  who got conned by the FHOB and the myth house prices never fail next one to go will be " as safe as a bank"  
The world has a depression ever 70 -80 years this one is delayed while big Ben and crew prop up the economy's.

 At present the total amount owing on CDS's is 11.4 times the total world economy which is about $550 B.
 Once that starts to bite it should speed the depression along.


----------



## explod (26 February 2012)

satanoperca said:


> I'm still lost as to why credit should become cheaper if the economy starts sliding, the risk increases in loaning money. But then again, most people wish us to go down the same path of ridiculous low interest rates like most other countries and look how that is panning out.
> 
> Cheers




It is a perception painted and reinforced by money created by the US Federal Reserve at zero to .5 basis points and lent out to Banks having difficulties.

For a year or so now smaller businesses and builders I know have been finding it increasingly difficult or unable to obtain funding for spec homes.

A mantra by the bulls on this forum over the years has been "its different here in Australia" but when some of us have indicated by our research that the economic situation may well be different this time, we have been howled down.

We live in interesting times perhaps, but there is nothing for anyone to gloat about either.

And do not fret for our ole Pal Robots, his presence on the forum over the years puts him in the catigory of a thinker who will have provided options for himself.  It is the families with children to raise and put through school who in a year or two will be hit by the preverbial.


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## Dowdy (26 February 2012)

Tysonboss1 said:


> My point stands, property price decreasing does not effect the monthly mortgage payment.
> 
> People will just keep plugging away,
> 
> ...




You forgot one thing that people have in their minds/ego - *CONFIDENCE! *

When people see what they owe is more then the house is worth they will lose confidence in spending, which leads to a vicious cycle ie.recession


...PS
Not that recessions are bad thing.  It exposes the 'McMillionaire' phonies from the fiscally responsible....
 If left to the free market, things will return to equilibrium fairly quickly but we all know that won't happen. It's not popular with the pollies....


----------



## medicowallet (26 February 2012)

explod said:


> For a year or so now smaller businesses and builders I know have been finding it increasingly difficult or unable to obtain funding for spec homes.
> 
> .




Highlighted by the incompetent Wayne Swann who "pressures" the banks into lowering interest rates for home owners, and therefore stifles the bank's ability to provide cheaper cost of lending to business... 

Would Australians prefer banks to provide loans to their employers to keep their business ( and exports ) growing or to home owners (and risk unemployment / lower economic growth) to keep bidding up house prices / building mcmansions (and increasing imports)

Couple this with stupid wasteful spending and increased taxes, and the picture painted is that of incompetence.. but, it gets em elected.

MW 

PS Where is Robots?


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## Mrmagoo (26 February 2012)

Tysonboss1 said:


> But a falling price will not increase the monthly cost for existing owners, they just keep making the same payments as the always have, it could also be a net plus, if it facilitates lower interest rates,




If prices become lower then the asset of buying a house becomes less attractive to new investors.

Who cares if they don't sell ? Lol @ them for having an "asset" which loses money..


----------



## Mrmagoo (26 February 2012)

medicowallet said:


> Highlighted by the incompetent Wayne Swann who "pressures" the banks into lowering interest rates for home owners, and therefore stifles the bank's ability to provide cheaper cost of lending to business...




Wayne Swann is a good treasurer.


----------



## Mrmagoo (26 February 2012)

Housing is very expensive. I don't think it is sustainable or fair at the current prices.

Some people pay less on mortgage than others do on rent simply because they bought a few years earlier. That is not a just way to run a country because housing is a necessity.


----------



## Mrmagoo (26 February 2012)

explod said:


> It is the families with children to raise and put through school who in a year or two will be hit by the preverbial.




Personally I hope they lose the lot and the kids go hungry. I don't think the government should help these people, infact I think they should actively take action that would result in rate raises.

Why ? These people stopped being families the minute the paid 350k for a 3 bedder on the urban fringe because of "capital gains" and became investors, who should suffer for their poor investments if the market dictates this is the case.

What these selfish evil people do not realise is that each dollar in capital gains means that some other family will be $1 worse off. 

So tough to them - I hope they lose the lot.


----------



## young-gun (26 February 2012)

satanoperca said:


> But wil be a problem for all those FHB of the last few years thanks to this disfunctional govnuts approach to property/debt and the FHBG who will be faced with negative equity and being a slave to the banks for many many many years to come.
> 
> And then the negative sentiment that will run through society due to falling property prices and yes they are in decline and stocks levels are rising month on month.
> 
> ...




i would have been one of them had i not sold 10 months ago. and i do feel for them, it's not the fhob's fault, they(myself included) weren't to know, i just got lucky that i was made aware of exactly what is happening.

it is purely the governments fault, had they of not had the fhog many wouldnt have gotten into the market that shouldnt have been there, and those affected would have been more contained to greedy investors.


----------



## satanoperca (26 February 2012)

Mrmagoo said:


> Personally I hope they lose the lot and the kids go hungry. I don't think the government should help these people, infact I think they should actively take action that would result in rate raises.
> 
> Why ? These people stopped being families the minute the paid 350k for a 3 bedder on the urban fringe because of "capital gains" and became investors, who should suffer for their poor investments if the market dictates this is the case.
> 
> ...




Easy to say from behind a screen and just a little to harsh. Hope kids starve is well behind me.

I do believe that people should research a lot more before placing themselves in debt but they also expect that the govnuts will provide the right advice and actions which they have not. 

Lets just see if Mr Krudd gets a second chance tomorrow.

Cheers


----------



## young-gun (26 February 2012)

Tysonboss1 said:


> My point stands, property price decreasing does not effect the monthly mortgage payment.
> 
> People will just keep plugging away,
> 
> ...




tyson, mortgage repayments may not change, but are you forgetting one of the driving forces(although not the trigger) behind prices continuing to fall is high unemployment? which also leads to employers being able to pay less and become more picky, which leaves people short.

you have used this argument before, on the chinese guy that bought a unit and 1 week later they were 30% off or something. the fact is people have not only bought a house as a home, they buy as an investment - or t least they believed it was. an investment that will later allow them to enhance their living standards, and path the way for their children to succeed, through use of equity.

i cant help but notice your bullish tone is starting to turn ever so slightly towards property tyson



Mrmagoo said:


> Personally I hope they lose the lot and the kids go hungry. I don't think the government should help these people, infact I think they should actively take action that would result in rate raises.
> 
> Why ? These people stopped being families the minute the paid 350k for a 3 bedder on the urban fringe because of "capital gains" and became investors, who should suffer for their poor investments if the market dictates this is the case.
> 
> ...




always a pleasure to read your posts magoo.... if a family needs a single house to live in they dont have much choice but to pay the price at the time. people need to realise that very few people research and understand economics. they catch a few glimpses of things on the news, which obviously doesn't deliver an economic forecast for them. the broader population simply has no idea. if anything comes out of this crash ahead we can only hope its that people pick up on the cycle of demographics, and people and businesses can prepare themselves for the expected downturns instead of pretending everything is going to be ok.


----------



## So_Cynical (26 February 2012)

Attention property gurus...i have a question

I'm wondering...can i negative gear an overseas property? with an overseas loan? and get like the Aussie tax breaks?

Thanks in advance.


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## Tysonboss1 (26 February 2012)

> tyson, mortgage repayments may not change, but are you forgetting one of the driving forces(although not the trigger) behind prices continuing to fall is high unemployment? which also leads to employers being able to pay less and become more picky, which leaves people short.




Yes that may be true for owners who are near 100% LVR's but the average home loan has 50% equity at the the moment.

Also, Australia has close to 95% employment, So I can't see unemployment being a factor.



> you have used this argument before, on the chinese guy that bought a unit and 1 week later they were 30% off or something. the fact is people have not only bought a house as a home, they buy as an investment - or t least they believed it was. an investment that will later allow them to enhance their living standards, and path the way for their children to succeed, through use of equity.




Even if property did suffer a 30% fall, it wouls still function as an investment, Property is a longterm asset class.

Offcourse if buy "investment", you mean "speculative gamble" then yes it could end badly for you, as does most gambling.

i







> cant help but notice your bullish tone is starting to turn ever so slightly towards property tyson




I have thought a correction in property was due for a long time, As I have said many times I thought it would come through a small decline followed by a period of stagnation.

I am bullish on it as an asset class, However I haven't bought any for a long time because everyone else has been excited about it so it's been impossible to get it at a price that would excite me.

My comments on lower prices being a good thing always hold true, Property along with great companies are fantastic assets to own, Offcourse I want to get them as cheap as possible, So I welcome Share market crashes, Property crashes etc.


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## Tysonboss1 (26 February 2012)

> Some people pay less on mortgage than others do on rent simply because they bought a few years earlier



.

Thats just the way things are, It is always going to be cheaper to own than to rent over time, the owners cost of ownership decreases every year as the loan gets smaller and the renters rent goes up with inflation.




> That is not a just way to run a country because housing is a necessity




It seems fair to me, If you buy your own home over time it should be cheaper for you than some one who rents a home from someone else, just like it is cheaper to make your own sandwiches.

Offcourse making your own sandwiches seems more expensive becuase you have to spend $500 to buy a whole loaf of bread, a whole tub of butter, a whole block of cheese, a pack of ham a lettuce, perhaps even a cutting board a knife and a fridge etc.etc wheres as the guy who buys the sandwich just pays $4.5 for a sandwich.

But after 5 years the guying buying his sandwich each day would have outlayed $1000's.


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## Julia (26 February 2012)

Mrmagoo said:


> Wayne Swann is a good treasurer.



Could you outline your reasons for this assertion?


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## Tysonboss1 (26 February 2012)

Mrmagoo said:


> Personally I hope they lose the lot and the kids go hungry. I don't think the government should help these people, infact I think they should actively take action that would result in rate raises.
> 
> Why ? These people stopped being families the minute the paid 350k for a 3 bedder on the urban fringe because of "capital gains" and became investors, who should suffer for their poor investments if the market dictates this is the case.
> 
> ...




You really are a bitter little man aren't you 

Oh well I wish you the best, You are going to have trouble getting anything good in life with that lousy attitude,

All I will say is that the economy is not a cake where if one person gets rich it means they have a bigger slice and some one else will miss out.

The economy is more akin to candles, where we all work to light each other candles.

If I use my candle to light your candle I am not dimished anyhting and you have light, 

But if your sitting there complaining and moaning no one is going to want to light your candle.


----------



## McLovin (26 February 2012)

Tysonboss1 said:


> Yes that may be true for owners who are near 100% LVR's but the average home loan has 50% equity at the the moment.




It doesn't matter. The people who have 50% LVR's can continue making payments. The ones on 100% LVR's are the ones who will have to sell and the ones who will drive down prices.




Tysonboss1 said:


> Even if property did suffer a 30% fall, it wouls still function as an investment, Property is a longterm asset class.




Unless the bank demands extra security. Then what do you do?

People are less tied down these days; they're not getting married at 21 and having their first kids at 22-23. The idea of taking out a huge mortgage being tied down and foregoing other significant opportunities (working overseas, traveling, spending your 20s on an endless summer or winter) is no longer appealing. Household formation is happening later in life and with less frequency. Apart from that, rents are so ridiculously cheap, relative to property value, that I'm quite happy to let some property "investor" subsidise my housing.


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## Glen48 (27 February 2012)

Rents are good when you can rent a house with 3 toilets and 4 bedrooms 2 car garage large open area many can stay there and slit the 6 ways and party hard with the change. 
 They live in a house the owner can't afford.


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## Vixs (27 February 2012)

With regards to the idea that interest rate reductions change nothing as people continue to make the same repayments - while people with the capacity to do so may make above minimum payments and try to further reduce their LVR, people in any sort of financial dire straits will be speaking to the bank and trying to minimise what they are paying. There are plenty out there in this position.


----------



## Tysonboss1 (27 February 2012)

Vixs said:


> With regards to the idea that interest rate reductions change nothing as people continue to make the same repayments - while people with the capacity to do so may make above minimum payments and try to further reduce their LVR, people in any sort of financial dire straits will be speaking to the bank and trying to minimise what they are paying. There are plenty out there in this position.




I don't think any body did say that,

What I said wast that somebody who was comfortable making their payments on their home loan would not automaticly be in dire straits because the market value of the house dropped 10%.

They probably wouldn't even notice anything had changed,


----------



## Tysonboss1 (27 February 2012)

Vixs said:


> There are plenty out there in this position.




what percentage of the population do you think are in this position, 

26% of people rent,
30% of people own their home with no debt,

that leaves 44% with debt against a house, and the average LVR is 50%, So maybe only 5% of people have high levels of debt against their home,

And out of those 5%,... 95% of them are employed, So probably less than 1% of the population are in danger, 

But that 1% do happen to be the ones paraded on today tonight as representing "Normal" so I guess I forgive you for thinking that every one is hurting.


----------



## bellenuit (27 February 2012)

AUSSIE PROPERTY SLOWDOWN HAS JUST BEGUN

http://www.thebull.com.au/articles/a/26400-aussie-property-slowdown-has-just-begun.html


----------



## Klogg (27 February 2012)

bellenuit said:


> AUSSIE PROPERTY SLOWDOWN HAS JUST BEGUN
> 
> http://www.thebull.com.au/articles/a/26400-aussie-property-slowdown-has-just-begun.html




I would argue that the gains just won't keep up with wages in years to come (which does mean a slowdown)...
Given the low unemployment and strong Australian economy, I don't see our property crashing anytime soon - And if the RBA were to cut and the AUD fell, our economy would go into over-drive.

If there is any sort of 'crash' though, I'd say it'd be limited to the one/two bedroom dogboxes they keep putting up in the cities (there seems to be an over-supply of these, especially in Melbourne).


----------



## McLovin (27 February 2012)

Klogg said:


> I would argue that the gains just won't keep up with wages in years to come (which does mean a slowdown)...




That seems to be the consensus. I also think that much like stocks when growth slows PE will compress. Rents will continue trending up (in line with inflation/wage increases) as prices move sideways. It's pretty amazing when you think about it that yields on property are so low and are unfranked. Without capital growth who would accept less than bank account returns?


----------



## Miss Hale (27 February 2012)

McLovin said:


> It's pretty amazing when you think about it that yields on property are so low and are unfranked. Without capital growth who would accept less than bank account returns?




I wonder that too. I suppose the benefit of negative gearing compensates a bit.


----------



## Tysonboss1 (27 February 2012)

McLovin said:


> Without capital growth who would accept less than bank account returns?




While I give it to you that at the moment yields are not enough to get me in.

yields of say 5.25% on good ressie property win against bank interst hands down,

the benefits are that the property yield is inflation hedged, eg over time it will rise with inflation bank interest does not.

the principle value of the property should also be some what hedged against inflation.

The tax benefits are also there, ( not neg gearing, I don't believe in that) You get to use the depreatiation against the income and you get any capital growth tax free for your ppor or 50% discounted for investment.

Also the relative safty and control of cashflows from the property can give you peace of mind compared to other asset classes.

Offcourse as you know I invest in businesses as well, But I do hold a bit of capital in property and I think it brings balance to my portfolio as a whole.


----------



## Tysonboss1 (27 February 2012)

Miss Hale said:


> I wonder that too. I suppose the benefit of negative gearing compensates a bit.




Negative gearing is rubbish,

It might be the only way a guy with $30,000 can get in on a capital city property, But even then he should be working to bring it into positive cashflow asap.


----------



## Miss Hale (27 February 2012)

Tysonboss1 said:


> Negative gearing is rubbish,
> 
> It might be the only way a guy with $30,000 can get in on a capital city property, But even then he should be working to bring it into positive cashflow asap.




Well that is my opinion too, I am only interested in investments that make money not lose money, but I constantly run into people singing the praises of negative gearing.


----------



## Tysonboss1 (27 February 2012)

Miss Hale said:


> Well that is my opinion too, I am only interested in investments that make money not lose money, but I constantly run into people singing the praises of negative gearing.




Yeah, they have bought into that rubbish of "good debt" vs "Bad debt"

I don't beileve the possible extra gain through high leverage is enough to offset the extra risk that high leverage brings,

Don't get me wrong I was spouting the same rubbish once, when I was 20 I busily went about buying as much property as I could, and it worked out well, but it's not 2001 any more and I am wise enough now to know I was taking part in pure speculation, not wise investment, luckily it worked out well it could have easily ended badly.

I would still invest in property, just not will high leverage the risk of big capital loss is bad enough but also having negative cashflow is crazy.


----------



## McLovin (27 February 2012)

Tysonboss1 said:


> While I give it to you that at the moment yields are not enough to get me in.
> 
> yields of say 5.25% on good ressie property win against bank interst hands down,
> 
> ...




That's true, although you have to wonder how many people actually view property that way and how many view it as loss on income, growth on capital, use equity to buy next IP, repeat.

I recall reading somewhere last year (I don't remember the source sorry) about the expectation of most property investors. The consensus was that a decent majority would be out of the market after 3 years of price deflation.


----------



## Tysonboss1 (27 February 2012)

> That's true, although you have to wonder how many people actually view property that way and how many view it as loss on income, growth on capital, use equity to buy next IP, repeat.




Yes, several years of growth has brought in some sloppy speculaters who think they are sophisticated investors, The market has a why of routing out the gamblers.

The investment club has beening spinning that idea for a while, I can see those guys, getting into some trouble in the years ahead, Unfortunatly a friend of mine believes their rubbish.



> I recall reading somewhere last year (I don't remember the source sorry) about the expectation of most property investors. The consensus was that a decent majority would be out of the market after 3 years of price deflation




Again I wouldn't call those people investors to start with, and the same can be said for alot of people in share investments,

Unfortunatly ( or fortunatly ) human emotion has not changed since Graham wrote security analysis, People are still all to quick to join overpriced bandwagons while avoiding sound assets at attractive prices after market declines.

In grahams words " every bull market ends badly", and those who take a rational patient approach will do well.


----------



## lurker123 (27 February 2012)

Tysonboss1 said:


> You really are a bitter little man aren't you
> 
> Oh well I wish you the best, You are going to have trouble getting anything good in life with that lousy attitude,
> 
> ...




I disagree with your rosy picture of the world. Money is created with debt, for someone to have money someone else must be in debt. That is probably the reason there is so much government debt. All the money in the economy has to be held as debt somewhere and it is currently held by governments. It is also held in the form of personal debt, I would say a huge chunk of personal debt exists in mortgages which  as a side effect inflates house prices. 

So sad that people think capitalism improves lives. Technology improves lives. There is no scientific evidence that technology would NOT advance at the same rate without capitalism.


----------



## Tysonboss1 (27 February 2012)

> I disagree with your rosy picture of the world. Money is created with debt, for someone to have money someone else must be in debt. That is probably the reason there is so much government debt. All the money in the economy has to be held as debt somewhere and it is currently held by governments. It is also held in the form of personal debt, I would say a huge chunk of personal debt exists in mortgages which  as a side effect inflates house prices.




Yes, but people benefit from debt when they are sensible about it eg, I person buying a modest home with a 30% deposit making payments based on a 15 year loan, rather than a 110% lvr on a 30 year loan using 50% of their income,

Certain Businesses also benefit from debt, eg a company earning 25%+ on invested capital is fine using modest debt to equity ratio, likewise capital intensive monoploy style regulated infrastructure projects,

Or many other low lvr type investments.



> So sad that people think capitalism improves lives. Technology improves lives. There is no scientific evidence that technology would NOT advance at the same rate without capitalism



 Technology must not only be created but deployed to produce increases in standard of living,

My business provides goods and services to many customers each day, i work hard building and maintaining my network of suppliers, staff and customers to deliver these goods and service to customers when and where they need them, 

But I only do this for personal gain, I would not be nearly as effective if I didn't have the capitalist drive, I would probally be at the beach.

Not a single day in my life have I starved, Yes this is in part because of technology, But mainly because there are thousands of people out there working to produce, process and deliver food to me all in the name of personal gain.


----------



## Glen48 (27 February 2012)

As  long as those thousands have money or a need for your good's it will be ok but if banks start to foreclose and you are trying to sell on a tanking market it will all implode.


----------



## ROE (27 February 2012)

Glen48 said:


> As  long as those thousands have money or a need for your good's it will be ok but if banks start to foreclose and you are trying to sell on a tanking market it will all implode.




capitalism isn't bad
debt isn't bad

these are just ideas, system and instruments.

it is the individual that use them that is the problem...

human greed, excess is the problem not the instruments

and there are countless example of this written into history books
and there will many more in the future.


----------



## lurker123 (27 February 2012)

Watch this RSA animate clip on drive:
http://www.youtube.com/watch?v=u6XAPnuFjJc&feature=player_embedded#!
What studies show is that in simple repetitive tasks, higher pay does = better performance, however once a task becomes more complex this is not the case.

From wikipedia about one of the greatest minds, Nikola Tesla: "He ripped up a Westinghouse contract that would have made him the world's first billionaire, in part because of the implications it would have on his future vision of free power, and in part because it would run Westinghouse out of business, and Tesla had no desire to deal with the creditors."

True a lot of people will do nothing everyday, in fact a lot of people on the dole already do nothing everyday. However there are also a lot of people who do things for no reward e.g. the huge number of free open source computer programs.

Capitalism is remarkably similar to evolution. A simplistic view of evolution is that individuals most suited to their environment will survive to pass on their genes to future generations. In capitalism those most suited to it will be well off whereas others will fail. Those who are wealthy can pass on their wealth to their offspring. We also have compounding interest e.t.c. Due to this reason, maybe capitalism is the best and only system for mankind before we annihilate ourselves.


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## Mrmagoo (27 February 2012)

Tysonboss1 said:


> You really are a bitter little man aren't you
> 
> Oh well I wish you the best, You are going to have trouble getting anything good in life with that lousy attitude,
> 
> ...




Sorry I didn't work hard to be born to a well off family and work hard enough to be born old enough to buy property when it was dirt cheap.


----------



## Mrmagoo (27 February 2012)

Tysonboss1 said:


> what percentage of the population do you think are in this position,
> 
> 26% of people rent,
> 30% of people own their home with no debt,
> ...




Ok so what, that means nothing, then the other 70 lose money or don't buy houses when prices crash. Hhmm if I was paying off 400k on something only worth 300k then yeah I'd call that trouble and if it were 550k vs 300k I'd probably declare myself bankrupt.


----------



## young-gun (28 February 2012)

Mrmagoo said:


> Sorry I didn't work hard to be born to a well off family and work hard enough to be born old enough to buy property when it was dirt cheap.




i wasn't born into a well off family, nor was i born at a time to buy property dirt cheap, these dont excuse your absolutely pathetic attitude and comments like "i hope kids go hungry and families lose everything". 

either bring something constructive and argumentative in an appropriate way or dont bother.


----------



## explod (28 February 2012)

For those still thinking that a collapse in property cannot happen to us then the following gives some disturbing trends in our economy that are going to have impacts on r/e in my view.

http://seekingalpha.com/article/394831-an-epic-australian-bust


----------



## ROE (28 February 2012)

explod said:


> For those still thinking that a collapse in property cannot happen to us then the following gives some disturbing trends in our economy that are going to have impacts on r/e in my view.
> 
> http://seekingalpha.com/article/394831-an-epic-australian-bust




predict the future is a mug's game because the market can stay irrational longer than you can stay solvent.

This is just one more added to the tally until such time if and when the bubble burst ..it could be 1 years, it could be 10 years, it could be 100 years 

It been 4-5 years since Steve Keen predict the doom day scenario, when will he get it right? another 5? another 2? another 10? or when he's in his 90's and crashing or not doesn't really matter


----------



## Glen48 (29 February 2012)

Its not going to happen over night but it will happen...The USA bubble has been leaking for 5 yrs and still expelling sub prime hot air .. the OZ one has just found key hole leak and getting under way.. 
Thanks to the FEDS all over the World the bubble gum is working to a degree and slowing things down and dragging it out.

Call back next years and see how far down the bubble has gone.


----------



## Starcraftmazter (29 February 2012)

ROE said:


> It been 4-5 years since Steve Keen predict the doom day scenario, when will he get it right? another 5? another 2? another 10? or when he's in his 90's and crashing or not doesn't really matter




Have you heard about the FHOB? Seriously, some people here...


----------



## Tysonboss1 (29 February 2012)

Starcraftmazter said:


> Have you heard about the FHOB? Seriously, some people here...




Yeah I heard about it back in 2002, Long before steve predicted the crash.


----------



## Starcraftmazter (29 February 2012)

Tysonboss1 said:


> Yeah I heard about it back in 2002, Long before steve predicted the crash.




Given that you are talking about the FHOG when I mentioned the FHOB, I presume you have not


----------



## Klogg (29 February 2012)

As far as I'm concerned, Steve Keen keeps predicting the same thing over and over until it actually happens...

I can see the logic in it (and agree to an extent), but repeatedly predicting the same thing and shifting your timelines doesn't make you an expert by any means.


----------



## McLovin (29 February 2012)

Tysonboss1 said:


> Yes, several years of growth has brought in some sloppy speculaters who think they are sophisticated investors, The market has a why of routing out the gamblers.




I don't know about that, I mean net rental income in Australia is something like negative $6b/annum which says to me most people are expecting capital growth and foregoing current income.



			
				Tysonboss said:
			
		

> Again I wouldn't call those people investors to start with, and the same can be said for alot of people in share investments,




No arguments from me there, the difference of course being that sharemarket is dominated by sophisticated investors (instos, FM's and the like). Residential property, AFAIK, is not.


----------



## ROE (29 February 2012)

Starcraftmazter said:


> Given that you are talking about the FHOG when I mentioned the FHOB, I presume you have not




I dont need to know a lot of stuff to know..

that Seriously NO ONE can predict the future, timing is everything
with prediction.

I can now claim the market will go through another crash with 100% certainty
but WHEN? that is the key ....

I remembered  it when price start to decline in 2008/2009 and they
predicting doom day in 2010 - 2011, 2010 and 2011 gone and they came
out claiming interference by government to prop up price as
an excuse ...

well that is the nature of the game isn't it? you cant predict the
future whether it's help from the government, printing money etc... if
it doesn't goes your way blame it on some other forces, if it does you are the
clever one ...

now it's on to 2012  and 2013 until it comes true and someone will
jump out and said I told you so.

Bust will come EVENTUALLY and some will claim to fame and other will
just disappear into the abyss.

I'm a net buyer of asset, cheaper price is always good... I got so
much free cash flow each month

I dont know what to do with...I prefer to buy cheap asset than
expensive one but I'm not about to go

on predicting doom day or  Irrational exuberance because I know the
outcome of that already.

People need to spend less than they bring in and they never run out of
money EVER and after a while you have so much free cash flow you dont
know what to do with...

dead simple concept but being human we have to go and invent something
more complex and more costly to try and beat a simple concept 

boom and bust will eventually come does it really matter...

and here is something written decades ago in 1994 by some famous investor
price at the time of his writing $10,083, today price $119,265.00.

Can some predictor of doom put out the same record 

We will continue to ignore political and economic forecasts, 
which are an expensive distraction for many investors and 
businessmen.  Thirty years ago, no one could have foreseen the 
huge expansion of the Vietnam War, wage and price controls, two 
oil shocks, the resignation of a president, the dissolution of 
the Soviet Union, a one-day drop in the Dow of 508 points, or 
treasury bill yields fluctuating between 2.8% and 17.4%.

     But, surprise - none of these blockbuster events made the 
slightest dent in Ben Graham's investment principles.  Nor did 
they render unsound the negotiated purchases of fine businesses 
at sensible prices.  Imagine the cost to us, then, if we had let 
a fear of unknowns cause us to defer or alter the deployment of 
capital.  Indeed, we have usually made our best purchases when 
apprehensions about some macro event were at a peak.  Fear is the 
foe of the faddist, but the friend of the fundamentalist.

     A different set of major shocks is sure to occur in the next 
30 years.  We will neither try to predict these nor to profit 
from them.  If we can identify businesses similar to those we 
have purchased in the past, external surprises will have little 
effect on our long-term results.


----------



## Starcraftmazter (1 March 2012)

ROE said:


> well that is the nature of the game isn't it? you cant predict the
> future whether it's help from the government, printing money etc... if
> it doesn't goes your way blame it on some other forces, if it does you are the
> clever one ...




No it's actually quite easy;

1. Aussie property is the biggest property bubble in the world.
2. This bubble has now lived it's course with the global credit bubble bursting.
3. The government will try this and that to prop it up - but in the end it will fail, and whatever pauses the government will manage to engineer will be nothing but a blip on a longer term (say 10 year) outlook.

No government is powerful enough to overcome market forces - this is not possible.

Therefore, house prices will continue fall. And they will accelerate in falls as negatively geared speculators and the newly retired pull out.

Demographics drive long-term boom and bust cycle - they have since the dawn of time. This is no magic and it is definitely, 100% predictable.


----------



## Klogg (1 March 2012)

Starcraftmazter said:


> No it's actually quite easy;
> 
> 1. Aussie property is the biggest property bubble in the world.
> 2. This bubble *has now lived it's course with the global credit bubble bursting*.
> ...




Referring to the bolded part - how can you be certain? What if we just have an endless circle of one institution propping up others (e.g. ECB lending to european banks, or even China coming in and lending to Europe)?
How long can that go on for before we finally see a 'collapse'?

And remember, we've seen many countries default before... That alone won't cause the doomsday that some are predicting. 
Take a look at Argentina - they default just over 10years ago and are quite strong now...

Don't get me wrong, I can understand the reasoning behind your arguments and agree to some of the points, but history and a little level thinking tell me it's not as bad as people make it out to be.


----------



## Glen48 (1 March 2012)

What happens in USA we follow about 5 yrs later their property started to  tank 2007 -08 add 5 yrs and we are in line.
 Every 75-80 there has been a depression  just long enough for the old to some times   remember and the young to know nothing about. 
Add 75-80 yrs  1930 and we are now due but Big Ben is holding on fighting so prolonging  the pain.
 Once house prices are seen dying by the Home and Away fans all will panic and the house of cards will blow away.
 Take the first offer or any offer and get out now.


----------



## Klogg (1 March 2012)

Glen48 said:


> What happens in USA we follow about 5 yrs later their property started to  tank 2007 -08 add 5 yrs and we are in line.
> Every 75-80 there has been a depression  just long enough for the old to some times   remember and the young to know nothing about.
> Add 75-80 yrs  1930 and we are now due but Big Ben is holding on fighting so prolonging  the pain.
> Once house prices are seen dying by the Home and Away fans all will panic and the house of cards will blow away.
> Take the first offer or any offer and get out now.




I can see your point, but think of it like this...

If house prices were to fall by 40-50%, then you're looking at a rental return of b/w 9-11% on some properties in areas around me (inner-west Melbourne). 
I understand that rents would fall slightly, but with rental vacancies around the 3% mark and immigration in Australia still fairly strong, I don't see how:

- Rents would drop significantly; and following this,
- how property prices would plunge to allow for anything close to a 10% return

I can still see another possible 5-10% drop, but the potential figures that are being thrown out of 30-50% seem somewhat over the top.


----------



## medicowallet (1 March 2012)

Klogg said:


> I can see your point, but think of it like this...
> 
> If house prices were to fall by 40-50%, then you're looking at a rental return of b/w 9-11% on some properties in areas around me (inner-west Melbourne).
> I understand that rents would fall slightly, but with rental vacancies around the 3% mark and immigration in Australia still fairly strong, I don't see how:
> ...




1. If unemployment rises, immigration will slow.
2. If unemployment rises, rents will fall in line with decreased income, which could be significant.
3. If unemployment rises, young people move back home / families move in with each other / share houses become more prevalent.


Still think housing only will go to 20% fall from peak.. how long? who knows, but it must not be picking up (last 2 months reported today = flat) as Robots is still silent (read: working)

MW
PS Where is Robots.


----------



## RandR (1 March 2012)

Have signed a contract at the start of this week to purchase a PPOR (our first home).

Were not worried. LVR is 75%.

The current principal and interest repayment is going to be about 400ish a week (pretty much the same price as rent).

If one of us is out of work, we will still be able to make repayments.

Were almost smack bang between brisbane and the gold coast, only about 25km to brisbane cbd and similar to gold coast cbd. Short walk to trains and new shops and backs onto a large park ! house is a simple but neat and tidy 3b brick and tile home thats only 12yr old, on a decent 700sq block.

I think people are overhyping the 'omg itz a mega housing bubble' thing a bit much ...

We are just to avg wage people - im 24 my partner is 22 and have a combined income of just 100k, and we can quite capably afford this property ...

so ... err .. take that doomsayers.

The only thing im dissapointed about is ive sold all my stock ! Now just going to concentrate solely on smashing this non tax deductible mortgage.


----------



## young-gun (1 March 2012)

Starcraftmazter said:


> No it's actually quite easy;
> 
> 1. Aussie property is the biggest property bubble in the world.
> 2. This bubble has now lived it's course with the global credit bubble bursting.
> ...




+1

when are people going to wake up and see demographic for what they are(which is everything). the debt bubble is jsut the beginning. builders, developers see a boom period and think for some reason that it's just going to keep on accelerating. the boomers have had their time. there isnt another generation the size of the boomers(or bigger) to come through and sustain their spending habbits. 

so an entire generation stops upsizing renovating etc, but a whole industry keeps building in the belief that the demand will be there, simply because it has been the past 10-15 years. it isn't, and won't be there again until gen y comes through and they begin their typical spending habits.


----------



## Glen48 (1 March 2012)

klogg
 You want to hope your are right 30-50% drop would be nice but it will go lower than that.. once USA prices stop tanking we will have an idea where oZ prices will end..
We  didn't have a housing boom, house prices most like only rose about in line with inflation.
 We did and still have a credit boom just  like some kid who finds a wallet full of $100's and goes on a spree and shouts his mates then the cops get him and he has to pay it  back out of his paper run money only people don't buy papers as they are trying to  save money for food.


----------



## medicowallet (1 March 2012)

RandR said:


> Have signed a contract at the start of this week to purchase a PPOR (our first home).
> 
> Were not worried. LVR is 75%.
> 
> ...




1. where you have purchased has already tanked a lot, and it is not representative of Australian housing at the moment

2. Where you have purchased is bogan-ville.

3. You have probably made an ok purchase that may not drop, only because of 1 and 2.

Good luck keeping your household items safe, also I hope you can still get the same colour fence paint to cover the graffiti


----------



## Mrmagoo (1 March 2012)

medicowallet said:


> 1. where you have purchased has already tanked a lot, and it is not representative of Australian housing at the moment
> 
> 2. Where you have purchased is bogan-ville.
> 
> ...




Seriously ? I thought all houses were a good investment ! Bogan ville is just buying what you can afford ? Isn't it ! OMG HAVE I BEEN LIED TO !


----------



## McLovin (1 March 2012)

young-gun said:


> builders, developers see a boom period and think for some reason that it's just going to keep on accelerating.




On builders and developers, they all seem to be falling off their perch at the moment. Kell & Rigby, now Reed and I was told by someone this afternoon that another large builder is on teetering on the edge.

The question then becomes is this the inevitable shakeout and reset occuring or just the beginning.


----------



## Klogg (1 March 2012)

medicowallet said:


> 1. If unemployment rises, immigration will slow.
> 2. If unemployment rises, rents will fall in line with decreased income, which could be significant.
> 3. If unemployment rises, young people move back home / families move in with each other / share houses become more prevalent.
> 
> ...




20% seems viable. In real terms, they've already dropped about 10%, so it's just another year the same as the last...


----------



## ROE (1 March 2012)

RandR said:


> Have signed a contract at the start of this week to purchase a PPOR (our first home).
> 
> Were not worried. LVR is 75%.
> 
> ...




good stuff, you doing something rather than scare into doing nothing..
in 7 years your rent would have exceed your repayment on mortgage and in 14-15 year hopefully you live rent free for the rest of your life....the doom day predictor still be around and they predict some more doom stuff 

Bogan-ville or what ever people label them are just relative, I used to live around government flats with majority of people probably unemployed but I was once never feel unsafe or got broke in....

you live well, you do no harm to anyone and no harm shall come to you


----------



## ROE (1 March 2012)

soon you guys can bet where the market going  make sure you got your timing right
a 4 years wrong bet probably cost you a bit of money 

http://www.rpdata.com/research/daily_indices.html


----------



## young-gun (1 March 2012)

McLovin said:


> On builders and developers, they all seem to be falling off their perch at the moment. Kell & Rigby, now Reed and I was told by someone this afternoon that another large builder is on teetering on the edge.
> 
> The question then becomes is this the inevitable shakeout and reset occuring or just the beginning.




indeed...and just the beginning imo. industries that take off with booms will inevitably crash. or have a sharp 'correction'. mining included. it took 40 years for prices to get here, most gains made in the last 10-15(easy credit, debt bubble etc). it will take alot longer than 12-18 months of small price drops to fix it. especially with government meddling.


----------



## RandR (1 March 2012)

medicowallet said:


> 1. where you have purchased has already tanked a lot, and it is not representative of Australian housing at the moment
> 
> 2. Where you have purchased is bogan-ville.
> 
> ...




LOL ... assume much ?

How did you know everyone in our street to be is either a petty thief or a graffiti vandal ?


----------



## medicowallet (1 March 2012)

RandR said:


> LOL ... assume much ?
> 
> How did you know everyone in our street to be is either a petty thief or a graffiti vandal ?




Because you live half way between brisbane and the gold coast, where an awful lot reside..

That is, unless you are a petty thief and graffiti vandal, but if that is the case, you would be better off going somewhere nicer, slim pickings where you are now.


----------



## Julia (1 March 2012)

Klogg said:


> I understand that rents would fall slightly, but with rental vacancies around the 3% mark and immigration in Australia still fairly strong, I don't see how:






> - Rents would drop significantly;



Which is it Klogg?  First you say 'rents would fall slightly' and then you say 'rents would drop significantly'.



RandR said:


> Have signed a contract at the start of this week to purchase a PPOR (our first home).



Good for you RandR.  It's a great start and you have the sense to get into your own home where you've worked out you can still afford it if one of you loses your job.
Makes so much more sense than taking on ridiculous levels of debt because you want the ultimate in the first home.  You'll have plenty of opportunity to move up on your own terms.



McLovin said:


> On builders and developers, they all seem to be falling off their perch at the moment. Kell & Rigby, now Reed and I was told by someone this afternoon that another large builder is on teetering on the edge.



Similar situation here.  I've been looking at building in a development in a great position where sales have stalled in the last year.  One of the builders associated with it is this area's top builder.  When I went to see him he was engaged in the less than challenging task of completing reports for a resort (which he had nothing to do with building) with respect to various faults on which they wanted a independent opinion.
If I'd wanted him to start a house for me tomorrow, he could do that.  Has nothing else happening right now.


----------



## Gerkin (1 March 2012)

RandR said:


> LOL ... assume much ?
> 
> How did you know everyone in our street to be is either a petty thief or a graffiti vandal ?




youve doe well mate, 100k combined income and i presume you didnt overextend, yep at your age youve done well

dont listen to most of these people on here, most of them rent within a few kms of cbd paying over the top rent and putting there $$ into an asset that doesnt offer peace and mind


----------



## Gerkin (1 March 2012)

Julia said:


> Which is it Klogg?  First you say 'rents would fall slightly' and then you say 'rents would drop significantly'.
> 
> 
> Good for you RandR.  It's a great start and you have the sense to get into your own home where you've worked out you can still afford it if one of you loses your job.
> ...




agreed, im in the process of town planning now, and the quotes for the 2 townhouses  im getting are 10% cheaper than a few years ago when i was costing it up


----------



## ROE (1 March 2012)

Gerkin said:


> youve doe well mate, 100k combined income and i presume you didnt overextend, yep at your age youve done well
> 
> dont listen to most of these people on here, most of them rent within a few kms of cbd paying over the top rent and putting there $$ into an asset that doesnt offer peace and mind




There is a simple maths to this and most people cant really understand...
Your mortgage repayment would probably go down over time but your rent

will just keep going up and up until you reach an interception where
your mortgage repayment is bugger all compared to rent.

When I start out I can rent for $180 a week or pay $250 in the mortgage
fast forward now 12 years later  rent $400- $450 a week .. I pay no rent 
magical number.

and there is something money cant buy that is a place you call home
and you live there as long as you like, do what the hell ever you want without
asking for permission and a roof over your head no one can take it away once you paid it off of course


----------



## Bill M (2 March 2012)

RandR said:


> Have signed a contract at the start of this week to purchase a PPOR (our first home).
> 
> Were not worried. LVR is 75%.
> 
> The current principal and interest repayment is going to be about 400ish a week (pretty much the same price as rent).




You have done well, congratulations! You seem to have thought it out pretty well.



medicowallet said:


> 2. Where you have purchased is bogan-ville.




I can tell you that in suburbs like Seaforth and Balgowlah Heights where homes are worth $2 Million + you still have heaps of graffiti, smashed bus shelters and plenty of theft. It is a common problem pretty much anywhere in Australia these days.



ROE said:


> good stuff, you doing something rather than scare into doing nothing..
> in 7 years your rent would have exceed your repayment on mortgage and in 14-15 year hopefully you live rent free for the rest of your life....the doom day predictor still be around and they predict some more doom stuff




Yes you are correct, they said the same thing in the 70's and the early 90's. Prices were too high, they will collapse, the young ones can't buy a home, interest rates are too high, not a good investment, the recession........ heard it all before. Roll on 20 years and everything including housing has gone up. Same doomsday predictions now, nothings changed, life goes on and prices will go up as they always have over time.




ROE said:


> When I start out I can rent for $180 a week or pay $250 in the mortgage
> fast forward now 12 years later  rent $400- $450 a week .. I pay no rent
> magical number.
> 
> ...




When I first rented in Manly in 1980 I paid $100 p/w rent. Now that same unit would command $600 to $700 p/w. Now fast forward 30 years, if I had bought that unit back then I would have been paid off by now. The renter would still be paying $700 p/w. 

I paid off my mortgage a long time ago, now I live rent and mortgage free. Buying a property was one of the best decisions I ever made. I would hate to be paying $700 p/w to anyone...


----------



## craft (2 March 2012)

RandR said:


> Have signed a contract at the start of this week to purchase a PPOR (our first home).
> 
> Were not worried. LVR is 75%.
> 
> The current principal and interest repayment is going to be about 400ish a week (pretty much the same price as rent).




Hi R&R Congratulations from me also.

It’s hard to believe just how negative some are.

Have you considered borrowing all that you can (whilst avoiding the cost of mortgage insurance) and putting the left over in a 100% offset account? Also making minimum repayments (even consider interest only) with everything else going into the offset.

Reason – the offset account can be called on by you to buy time in the future if you ever get into a real jam, i.e. lose both jobs. 

Other reason is that if you ever want to buy a new house for yourself down the track and retain the existing house as a rental then you put all the money from the offset towards the new house(non-deductable if you borrow)  and you instantly have a deductable debt against your now rental property. 

Just some thoughts to retain flexibility for the future.

Cheers


----------



## moXJO (2 March 2012)

McLovin said:


> On builders and developers, they all seem to be falling off their perch at the moment. Kell & Rigby, now Reed and I was told by someone this afternoon that another large builder is on teetering on the edge.
> 
> The question then becomes is this the inevitable shakeout and reset occuring or just the beginning.




Here’s what usually happens. We had the BER pump in funds that grew a lot of these building companies. Large contract work slows up and they get caught out on cashflow after paying out on ongoing expenses. Same thing happened roughly ten years back to a few builders (more a construction boom/bust that time). The majority don't know when, or simply can't adapt because they are too big and geared to a specific market.
 A lot of those big guys are also badly managed on job sites to the point of sending the company broke in good times. OHS laws and the usual bureaucratic bs applied to construction doesn’t help.
For us smaller guys (NSW), well I'm flat out with work.

I am also seeing a massive exodus of experienced tradies leaving for the mines mainly because it's stable work and no more paperwork, customers, OHS, quoting, or long days and then bringing home the paperwork. If anything getting a decent tradie will be next to impossible in years to come.



> ABS Building Approvals show that the number of dwellings approved rose 0.9% in January 2012, in seasonally adjusted terms, following a fall of 0.8% in December.
> 
> Dwelling approvals increased for the month of January in *New South Wales (37.6%) *and South Australia (6.9%) but fell in Queensland (-22.1%), Tasmania (-3.0%), Victoria (-2.7%) and Western Australia (-0.4%) in seasonally adjusted terms.




Will be interesting to see if NSW follows on with those increases. I'm seeing some really good bargains out there at the moment and would buy more housing if I wasn't such a tightass regarding leverage.


----------



## McLovin (2 March 2012)

Julia said:


> Similar situation here.  I've been looking at building in a development in a great position where sales have stalled in the last year.  One of the builders associated with it is this area's top builder.  When I went to see him he was engaged in the less than challenging task of completing reports for a resort (which he had nothing to do with building) with respect to various faults on which they wanted a independent opinion.
> If I'd wanted him to start a house for me tomorrow, he could do that.  Has nothing else happening right now.




Builders are the canary in the coalmine, always the first to go.

My old office was next to a building engineering firm and they went bust a couple of months ago.


----------



## Starcraftmazter (2 March 2012)

Klogg said:


> Referring to the bolded part - how can you be certain? What if we just have an endless circle of one institution propping up others (e.g. ECB lending to european banks, or even China coming in and lending to Europe)?
> How long can that go on for before we finally see a 'collapse'?




I'll respond with a famous phrase; liquidity doesn't solve insolvency, and much of the world is insolvent.

Australians have close to 100% mortgage debt to GDP. It doesn't take a rocket scientist to understand that this has a limit and can't go up forever.


----------



## Klogg (2 March 2012)

Starcraftmazter said:


> I'll respond with a famous phrase; liquidity doesn't solve insolvency, and much of the world is insolvent.
> 
> Australians have close to 100% mortgage debt to GDP. It doesn't take a rocket scientist to understand that this has a limit and can't go up forever.




Yep, I agree that the debt to GDP can't go up forever - that's why debt to equity ratios have been changing recently (as can be seen in many of the disleveraging posts on MB) and will positively effect the debt to GDP.

However, I have a slightly different view of the insolvent part. Insolvency is "the inability to pay one's debts as they fall due". While there are European countries that fall under this category, the majority (I don't know exact stats) of Australian home-owners do not.


----------



## young-gun (2 March 2012)

ROE said:


> There is a simple maths to this and most people cant really understand...
> Your mortgage repayment would probably go down over time but your rent
> 
> will just keep going up and up until you reach an interception where
> ...




apples and oranges ROE. given your figures im assuming you bought a long long time ago. let me give u the scenario for the present.

mortgage 350k for 3 bedroom = 2766p/m
rent i pay on a 3 bed room worth 350k approx(maybe more) = 1360p/m 20 mins from bris cbd.

the above figure is on a 20 year loan. in 12 years your still paying it off. you cant afford to pay it off earlier as repayments are simply to high in this day n age. the tenant in the current economic climate sits it out as property is slowly sliding. if the property bubble does burst youll be paying off a house worth 40%(or more) LESS than you paid today in 4 years time. the tennant will have a stack of cash saved(1400$ a month?) and then can enter the market at an affordable level with a comfortable deposit.

lets say property doesnt continue its downward spiral, you wait for for the right signals and get in a little off the trough. its a no brainer.


----------



## Uncle Festivus (2 March 2012)

moXJO said:


> Here’s what usually happens. We had the BER pump in funds that grew a lot of these building companies. Large contract work slows up and they get caught out on cashflow after paying out on ongoing expenses. Same thing happened roughly ten years back to a few builders (more a construction boom/bust that time). The majority don't know when, or simply can't adapt because they are too big and geared to a specific market.
> A lot of those big guys are also badly managed on job sites to the point of sending the company broke in good times. OHS laws and the usual bureaucratic bs applied to construction doesn’t help.
> For us smaller guys (NSW), well I'm flat out with work.
> 
> ...






Uncle Festivus said:


> Closer to home, all of the BER projects have completed or will be  completed within the rest of the year. Now combine this with the latest  poor, abysmal actually, building starts, both resi & commercial, and  you have the foundation for substantial job losses, and possibly  interest rate cut's, although the market is pricing in more rises. There  is a shadow recession going on around the world but when has the real  economy mattered when it comes to the illusion of 'green shoots' & a  'global recovery' that manifests itself in a rising stockmarket?




I posted that back in April 2011 so it didn't take much to work out what would happen  when all the stimulis money was exhausted?

As for the bit about OH&S being a bit of a pain, it's a pity that we need laws to prevent employers from risking the health of their employees - we don't live in 19th century England, although a few employers would gladly like a return to those times.

OHS&E laws are what differentiates us from somewhere like China or India.

The big mining companies are probably more OHS&E compliant and aware than almost any other industry.

With regards to house prices, now that the property bubble has burst in China, expect to see an accelerating negative price trend here in AU.......


----------



## Miss Hale (3 March 2012)

Article here claiming real estate is looking up in Melbourne:

http://www.heraldsun.com.au/news/mo...t-on-hot-pockets/story-fn7x8me2-1226287796606

Meanwhile we have been advised that are landlord is selling and we may have to move when our lease is up in three months (only been here for 9 months so far).  Good news is that, looking around at what's available, we should be able to rent something equivalent for less than what we are paying now.  Really no incentive for us to buy just yet. What we pay in rent would only cover half of what we'd have to pay in mortgage payments for the same property. (I'm talking eastern suburbs of Melbourne).


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## Glen48 (3 March 2012)

Cheaper rent are the way of the future as house prices die you will be able to live in a better class of home for less as the land lord get desperate to keep money coming in.


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## medicowallet (3 March 2012)

"Saturday 3rd March 2012

The auction clearance rate recorded today was 62 per cent, compared with 61 per cent last weekend, and 64 per cent this weekend last year.

Today's result indicates that the improved demand recorded last weekend has been sustained and that will help improve confidence  over autumn and into winter.

There were 748 auctions were reported to the REIV today with 464 selling and 284 being passed in. Of those 176 were passed in on a vendor bid

The number of auctions drops next weekend to around 200 due to the long weekend.

Enzo Raimondo
CEO REIV"


Just thought I'd post this for the true believers.

Sunshine and lollipops

MW
The original Robot destroyer.


----------



## ROE (3 March 2012)

young-gun said:


> apples and oranges ROE. given your figures im assuming you bought a long long time ago. let me give u the scenario for the present.
> 
> mortgage 350k for 3 bedroom = 2766p/m
> rent i pay on a 3 bed room worth 350k approx(maybe more) = 1360p/m 20 mins from bris cbd.
> ...




That is the life style choice, you pay a price for that, who said you have to buy close to the city? I don't live any where near the city...

Maybe place I live people called Gheto or Boganville 

you guys wants everything cheap, easy, convenience without sacrificed 
I can tell you THERE IS NO Such thing in life

you can wait for the market to crash, you can pray rent will plummet or you actively doing something that required sacrificed but that will bear fruit in future years or it may not ...but unless you doing it you cant really tell

I catch buses when I have a mortgage, I have a car that in winter I have to start it 20 minutes early before I can drive to work....My best holidays are the one at local beaches....I watch free to air TV as my entertainment....

I know people with kids yes very young kids with mortgage don't even own a car
and that was 20 years ago....they caught public transport for 5 years, shopping with grocery on public transport weekly anyone? Are they doing tough? are they doing it tough now? no they retire at 50.....oh wait god damn baby boomers they have everything cheap 

Each generation faces different challenges and possibilities...it is up to you to take on that challenge no one will help you....

I know housing is expensive but praying for crash or watching people over leverage burned isn't the right idea and no I don't have multiple investment properties so I don't care if it crash or it keep going up... if it crash I may buy some but until then I'm doing something by investing in the stock market 

If you want another example in life, when I study IT, jobs aren't plentiful, in fact there are more IT graduates than job so I face prospect of not having a job when finish, people advices I shouldn't do it... I like IT that the only thing I'm good at so I continue the journey....now I get pay  3-4 times above average pay

how things turn out for better when you doing something and work at it...


----------



## lurker123 (3 March 2012)

Making the big assumption that the interest rate remains stable and the price of a property only goes up with inflation. 

The maths says the best time to buy rather than rent is when your [yearly rent > or = (yearly interest amount you pay on theoretical mortgage) + (yearly interest amount you make from your deposit as cash in bank after subtracting inflation) - (yearly tax you pay for earning interest) - (yearly tax deductions you can get for buying property as a investment) - (yearly rent collected from tenant)]   

Assuming you buy the property as a place to live or your income tax bracket is low then (yearly tax deductions you can get for buying property as a investment) = 0.  Assuming you live there and don't have or won't rent out extra rooms then (yearly rent collected from tenant) = 0. 

Which leaves:
[yearly rent > or = (yearly interest amount you pay on theoretical mortgage) + (yearly interest amount you make from your deposit as cash in bank after subtracting inflation) - (yearly tax you pay for earning interest)]

After inputting some numbers into this equation it is apparent that for the majority of people rent is less than the other side of the equation, which means it is more logical to rent.

This equation however assumes that interest rates remain stable. If interest rates decrease then it benefits the buying side of the equation. Because the interest rate falling is a big possibility it is safer to use a conservative small interest rate for the calculation rather than the current relatively high interest rate. Even when using a conservatively small interest rate i believe it will still remain true that rent is less than the other side of the equation for the majority of people.

The above equation assumes that you would at least save the same amount in a year as your theoretical mortgage repayment minus rent. Which means this doesn't apply if you can't save money and need to be forced through payment of a mortgage.

The only scenario where this equation is completely not applicable is when the price of property rises well above inflation in which case you are speculating that house prices will only go up. The reverse is also true, this equation also doesn't apply if the price of property falls.

It is my belief that the equation will yield renting as the more logical thing to do for the majority, even after using a conservative low interest rate. This is in complete opposition to your view ROE that people should sacrifice. 
One can only speculate that: 
a) you want people to sacrifice more than they have to e.g. you work at a bank and want their money 
b) you are a speculator and think house prices will continue to rise above inflation forever
c) your message is only for those fools who can't save.


----------



## young-gun (4 March 2012)

ROE said:


> That is the life style choice, you pay a price for that, who said you have to buy close to the city? I don't live any where near the city...
> 
> Maybe place I live people called Gheto or Boganville
> 
> ...




you make alot of incorrect assumptions. and the fact is even moving further out from the city eg caboolture, the houses arent much cheaper anyway. maybe 50k? as i said above, i am not 'waiting' for a crash. i am expecting one. once the signals are there as i said above, and the market stops going down, then i will buy. your simple philosophy of just working at something isn't the greatest, you can work as hard as you want but if you don't analyse, research and actually think about your choices then hard work is pointless. work smarter not harder.

i work hard at my job, i save plenty, and i catch the train to work. once again, this is a different day and age, and what you and your friends and relatives did, will not work nor is it applicable to the current economic climate.


----------



## moXJO (4 March 2012)

Uncle Festivus said:


> With regards to house prices, now that the property bubble has burst in China,




Is that regarding price or the fact of all those empty new houses they have?

Chinese investors actually wont move anyone into the house to keep the 'new' tag. Once someone lives in it the price drops. Which is why you get suburbs of empty houses.


----------



## Gerkin (4 March 2012)

lurker123 said:


> c) your message is only for those fools who can't save.




this is the problem, id suggest 75% of Australians cant save, and 95% of renters cant save and dont put excess cash into other investments.


----------



## Gerkin (4 March 2012)

id also suggest the clearence rate is overinflated, i went to two auctions yesterday, both did not sell at auction or after and were not disclosed to REIV????


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## Glen48 (4 March 2012)

http://www.chrismartenson.com
 This report has all the news about USA housing .


----------



## robots (4 March 2012)

Glen48 said:


> http://www.chrismartenson.com
> This report has all the news about USA housing .




hello 

yeah start a new thread, this one about AUS housing

how much is housing in Australia down since the GFC? anyone got a graph

thankyou
professor robots

still ASF Investor of the Year 2005-2011


----------



## young-gun (4 March 2012)

robots said:


> hello
> 
> yeah start a new thread, this one about AUS housing
> 
> ...




since? gfc aint over yet robots....


----------



## robots (4 March 2012)

hello,

hasnt even done anything to the housing market

i know i know i know, its coming

thankyou
professor robots


----------



## Beej (4 March 2012)

Glen48 said:


> Take the first offer or any offer and get out now.




Glen you have been giving this exact same advice on this forum for at least the past 4-5 years! I ignored your advice 4-5 years ago (thank goodness!), and will continue to ignore it now!


----------



## Miss Hale (4 March 2012)

Just an observation, but there seems to be more houses in my area these days that are advertised as 'Price on Application'.  Now I used to interpret this as 'You can't afford it so don't bother with this one', but I am seeing this on properties that I know would be in the lower end of the market (e.g. 2 bed villa units) so I am wondering if agents are doing this so as not to advertise that the market has dropped a bit? Just a thought...


----------



## Beej (4 March 2012)

lurker123 said:


> Which leaves:
> [yearly rent > or = (yearly interest amount you pay on theoretical mortgage) + (yearly interest amount you make from your deposit as cash in bank after subtracting inflation) - (yearly tax you pay for earning interest)]




No - this equation is short sighted, and will lead to incorrect financial decision making. 

1) You need to add "+ nominal capital appreciation of house" to the second term in your equation.

2) You are only considering year 1 in a 30 or even a 50+ year scenario. You need to factor in the reality that you will always be paying rent at current market prices in the future. So the cheapest rent you will ever pay for that house will be today. When you buy the MOST you will ever pay in interest will be today (assuming your stable interest rate scenario).

In the long run, when it comes to PPOR, in pure financial terms owning will always come out better vs renting the equivalent property - certainly in most places in Australia at current rental yields right now. If you won't buy until cost of renting is more expensive than the cost of purchasing in the first year, then you will be waiting for a VERY long time, as I'm pretty sure that situation has not arisen broadly in the market at any point in my lifetime so far (I'm Gen-X).

PS: My comments apply to PPOR purchase only - the equation for property investing is different.


----------



## lurker123 (4 March 2012)

Beej said:


> No - this equation is short sighted, and will lead to incorrect financial decision making.
> 
> 1) You need to add "+ nominal capital appreciation of house" to the second term in your equation.
> 
> ...




It is pretty evident that:
1) you didn't read my post correctly, from my post:
"The only scenario where this equation is completely not applicable is when the price of property rises well above inflation in which case you are speculating that house prices will only go up. The reverse is also true, this equation also doesn't apply if the price of property falls."
2) you are a speculator and think house prices will continue to rise above inflation forever
3) you do not understand properly what this equation represents, this equation assumes that you are NOT a fool who can't save and would at least save the same amount in a year as your theoretical mortgage repayment minus rent. What this means is as you are renting your savings (deposit on a house gets bigger and bigger). 
Because your deposit on the house gets bigger and bigger as you rent, this:
(yearly interest amount you pay on theoretical mortgage) gets smaller and smaller.


----------



## McLovin (4 March 2012)

Miss Hale said:


> Just an observation, but there seems to be more houses in my area these days that are advertised as 'Price on Application'.  Now I used to interpret this as 'You can't afford it so don't bother with this one', but I am seeing this on properties that I know would be in the lower end of the market (e.g. 2 bed villa units) so I am wondering if agents are doing this so as not to advertise that the market has dropped a bit? Just a thought...




I've noticed that too. I'm in the Eastern Suburbs of Sydney and POA/EOI used to be only for $10m+ properties but I'm noticing it for a lot of properties in the $2-3m mark. I've also noticed a massive increase in the number of for sale v auction.


----------



## lurker123 (4 March 2012)

After thinking about it some more I've come to realize that your 1st point is half correct Beej. My equation cannot account for the property rising with inflation. Since a property is so expensive in $$$ terms, the inflation amount will also be big in $$$ terms and that just because i had inflation in:
(yearly interest amount you make from your deposit as cash in bank after subtracting inflation)
doesn't mean i can equate that to house prices going up with inflation and make house prices going up with inflation disappear. 

Therefore the equation cannot account for house prices going up with inflation and only works if the house price remains the same (it doesn't rise or fall).

In order to account for inflation the equation would need to be revised:
[yearly rent + yearly amount calculated after applying the years inflation percent to  property > or = (yearly interest amount you pay on theoretical mortgage) + (yearly interest amount you make from your deposit as cash in bank) - (yearly tax you pay for earning interest)]

Assuming house prices go up with inflation,
even a low 3.5% inflation such as evident in the past couple of years can favour buying a house, whereas a high 15% such as in the distant past will definately favour buying. Consequently if you think the government is happy to inflate all our debts away such as occurred in the distant past, then the case is definitely FOR buying. Need to get in now so the government can inflate all the debt away, the government did this in the past so they may do it again.


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## Glen48 (4 March 2012)

Beej
You are correct I didn't expect the Feds to prop up the housing market by buying to  OFM and putting taxpayers on the hook and now expect once the down turn is more evident another FHOB111 will be available in a higher figure  maybe the 20's


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## Starcraftmazter (5 March 2012)

robots said:


> hello
> 
> yeah start a new thread, this one about AUS housing
> 
> how much is housing in Australia down since the GFC? anyone got a graph







The spike around 2010 was Rudd's FHOB bailout. Didn't last very long, and as has been pointed out GFC is far from over.


----------



## Beej (5 March 2012)

Starcraftmazter said:


> [misleading linear scaled 130 years chart snipped]
> 
> The spike around 2010 was Rudd's FHOB bailout. Didn't last very long, and as has been pointed out GFC is far from over.




You do know that using a linear scale on a chart like that over a 130 year period is just a "bearish" confidence trick to make you think there is something particularly abnormal about price change magnitudes in recent times?

For example, the chart suggests that CPI adjusted prices have doubled in 12 years since 2000, however, did you notice that from about 1948 - about 1950 CPI adjusted prices increased by an even greater amount? In 1/3 of the time? They then "corrected" slightly, and continued onwards and upwards for decades more - but on this chart that little episode of history looks far less dramatic than the last 12 years doesn't it?

The other problem with this often trotted out chart is that it really is pointless looking at CPI adjusted house prices anyway - what we pay are nominal prices! You cannot ignore the inflation when you have to stump up the cash, or better still when you sell and pocket the actual cash! Wages, income etc have grown far more than CPI over the past 130 years, and houses have changed a lot in that time as well - we have electricity, inside dunnies, A/C, and houses are generally far larger and accommodate less people on average now etc etc just to think of a few differences! Did you know that if you "deflated" current house prices to the CPI adjusted equivalent of 1920 prices that the average house price would be about $50k? Is that what an average house should cost nowadays? Is that a realistic expectation? Could you even build 1/3 of a modest modern house for $50k? Plus land cost of course!


----------



## Starcraftmazter (6 March 2012)

Beej said:


> You do know that using a linear scale on a chart like that over a 130 year period is just a "bearish" confidence trick to make you think there is something particularly abnormal about price change magnitudes in recent times?




There is not a thing misleading about that chart - you only think so as you disagree with the proven thesis of a housing bubble.



Beej said:


> For example, the chart suggests that CPI adjusted prices have doubled in 12 years since 2000, however, did you notice that from about 1948 - about 1950 CPI adjusted prices increased by an even greater amount? In 1/3 of the time? They then "corrected" slightly, and continued onwards and upwards for decades more - but on this chart that little episode of history looks far less dramatic than the last 12 years doesn't it?




No, I think it's very dramatic. Australia underwent many changes after WW2. Public opinion changed. It was decided that in order to protect such a vast continent, we would require mass immigration.



Beej said:


> The other problem with this often trotted out chart is that it really is pointless looking at CPI adjusted house prices anyway - what we pay are nominal prices!




I just cannot comprehend how stupid that is. Someone with less patience would stop reading right here and never respond to you again.

If there is inflation of 100% in a year and house prices go up by 20%, I suppose you'd be jumping on the street claiming to be rich.



Beej said:


> You cannot ignore the inflation when you have to stump up the cash, or better still when you sell and pocket the actual cash! Wages, income etc have grown far more than CPI over the past 130 years, and houses have changed a lot in that time as well - we have electricity, inside dunnies, A/C, and houses are generally far larger and accommodate less people on average now etc etc just to think of a few differences! Did you know that if you "deflated" current house prices to the CPI adjusted equivalent of 1920 prices that the average house price would be about $50k? Is that what an average house should cost nowadays? Is that a realistic expectation? Could you even build 1/3 of a modest modern house for $50k? Plus land cost of course!




First of all, wages have zero to do with house prices. Second of all, the cost of construction has barely moved compared to the cost of land in real terms - and only so because of the commodity bubble in the recent decade and wage inflation caused by the housing bubble itself. The size and nature of the houses reflects the time we live in, and it has no impact on price whatsoever.


----------



## ROE (6 March 2012)

Starcraftmazter said:


> If there is inflation of 100% in a year and house prices go up by 20%, I suppose you'd be jumping on the street claiming to be rich.




That never going to happen, with inflation paper money lose value not hard asset
so 100% inflation, your money in the bank disappear fast where as hard asset will just
sell for 100% more ...

so high inflation is renter worse nightmare ... but not as angry as these American with comments

http://www.bloomberg.com/news/2012-...ulators-to-get-foreclosure-aid-mortgages.html


----------



## Starcraftmazter (6 March 2012)

ROE said:


> That never going to happen




It doesn't actually matter whether it will happen - I was merely demonstrating the stupidity of your logic.



ROE said:


> with inflation paper money lose value not hard asset
> so 100% inflation, your money in the bank disappear fast where as hard asset will just
> sell for 100% more ...




If that hard asset is gold then I would agree. Not property though.



ROE said:


> so high inflation is renter worse nightmare ...




It's a nightmare for pretty much everyone....


----------



## explod (6 March 2012)

ROE said:


> so high inflation is renter worse nightmare ... but not as angry as these American with comments




The renters will then be in the street as they are in America now.


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## Starcraftmazter (6 March 2012)

explod said:


> The renters will then be in the street as they are in America now.




Actually the people in the street in USA are the ones who borrowed up to their necks to buy overpriced property.

Nobody would be out on the street because they _rent_. That makes no sense at all.

Maybe try and find out the facts before talking about them


----------



## Beej (6 March 2012)

Starcraftmazter said:


> There is not a thing misleading about that chart - you only think so as you disagree with the proven thesis of a housing bubble.




PROVEN thesis?? I don't think so - a bubble is proven if it spectacularly busts, and as much as you might wish it so, that has not happened in Australia. Regardless, the chart is deliberately misleading - it should be plotted with a log scale.



> No, I think it's very dramatic. Australia underwent many changes after WW2. Public opinion changed. It was decided that in order to protect such a vast continent, we would require mass immigration.




We still have one of the highest immigration rates of any country in the world - right now. So is your argument then that high immigration can cause a sustainable more than doubling of "real" house prices?



> I just cannot comprehend how stupid that is. Someone with less patience would stop reading right here and never respond to you again.
> 
> If there is inflation of 100% in a year and house prices go up by 20%, I suppose you'd be jumping on the street claiming to be rich.




The only one looking foolish right now is you. Try thinking a little harder, and you might actually get it. It's like this - even in your 100% inflation / 20% house price appreciation scenario, are you better off to have bought sooner or later? If a house today costs $500k and next year it costs $600k, should you have bought when it cost $500k or would you rather pay that + $100k a year later? It really doesn't matter if the price of banana's doubles - or even if your income doubled over that period! You would still have to find (or borrow) and pay an extra $100k a year later. Plus you will probably pay rent in the meantime that  went up by 100% over that time period as well.

I'm old enough to have actually lived (and worked / supported myself etc) in relatively high inflation times from the mid 80s through mid 90s when your "real house price chart" shows a falling line. I can tell you that for most of this period it was a no brainer decision to use your cash or to borrow money to buy a house if you could. The sooner you did it the better off you ended up. Inflation erodes the value of your cash savings (ie you lose), while it also deflates away the value of any debt you are carrying (ie you win). The higher the inflation the bigger the lose / win margin in each scenario.



> First of all, wages have zero to do with house prices.




Really??? you really think that?



> Second of all, the cost of construction has barely moved compared to the cost of land in real terms - and only so because of the commodity bubble in the recent decade and wage inflation caused by the housing bubble itself. The size and nature of the houses reflects the time we live in, and it has no impact on price whatsoever.




Yea right - you go ahead and convince yourself that is true.


----------



## ROE (6 March 2012)

I better stop and not follow this stuff, a bit of waste of time.

but looking at credential and track record I would back Beej any day just like picking good fundamental stocks...

it like looking through a business like Westfield (Beej) vs Starcraftmazter (Centro)

Beej : own his own home, has shares and a few more properties on the side

vs

Starcraftmazter: who rent, doesn't own a home and keep warning people house price will crash, discard other people point of view and call it stupid, discard properties as hard asset.

this will go one for another decades, Beej own a few more properties and house price may crash by then and Starcraftmazter may own a home at last ... 

Have fun and I do hope house price decline one day so you can own one cheap


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## McLovin (6 March 2012)

Starcraft, what's your end game in this? I mean, are you hanging out for lower house prices so that you can buy or is this just a discussion based in theory?


----------



## Ves (6 March 2012)

Starcraftmazter said:


> There is not a thing misleading about that chart - you only think so as you disagree with the proven thesis of a housing bubble.



Just post the chart in logrithmic scale, it's not that hard. Not like the data changes.


----------



## Glen48 (6 March 2012)

It doesn't matter what a house is worth now or in 10 yrs time if you don't have job you are not going to buy even if it is a a bargain.

 Would buying a Lamborghini for $1,000K when fuel is $20 a liter.
 This time it is different we are on the ropes.


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## Julia (6 March 2012)

Beej said:


> The only one looking foolish right now is you. Try thinking a little harder, and you might actually get it. It's like this - even in your 100% inflation / 20% house price appreciation scenario, are you better off to have bought sooner or later? If a house today costs $500k and next year it costs $600k, should you have bought when it cost $500k or would you rather pay that + $100k a year later? It really doesn't matter if the price of banana's doubles - or even if your income doubled over that period! You would still have to find (or borrow) and pay an extra $100k a year later.



Exactly.  This is a point too often overlooked when considering inflation.


----------



## lurker123 (7 March 2012)

Julia said:


> Exactly.  This is a point too often overlooked when considering inflation.




This assumes house prices go up with inflation, the fact of the matter is that they don't. Over the last 50 years house prices have appreciated on average 2.7% over and above inflation. There is no reason to believe house prices will continue to go up, whether with inflation or above it, just as there is no reason to believe house prices will go down.

Considering the current economic and political climate, deflation is the more likely scenario when the Abbott government gets into power and decides to follow the lead of the UK and practice austerity instead of printing money like the US is doing. Inflation occurs when there is too much money around, which also means it occurs when there is too much debt around. When the government stops borrowing money, businesses stop borrowing money, and the everyday Australian stops borrowing money because they look at the current economic climate and are afraid of the future, inflation is not the issue, deflation becomes the issue.

Then again considering Abbott supports a paid parental leave scheme, its hard to predict what he will do once he gets into power. Will he continue spending money or will he practice austerity. 

No matter how much you bulls try to deny it, property is like shares, some people will buy a share thinking it will go up in price while others will sell it believing it will go down. Property is the same, only time will tell who is right and who is wrong. 

Given your stance of getting out of the share market due to the current economic situation, your stance on property is contrary and you seem to advocate going into property and getting into debt despite current economic conditions. 

No one knows the future, if you did you could become wealthy guaranteed. We can only try to predict the future and those who predict well can make money, while those who predict badly will lose money. Telling someone to buy a house rather than rent or to sell a house and rent is like giving advice on whether to buy or sell a share.

Then you may say, no your wrong, property is a hard asset, shares aren't. Oil is a hard asset yet its price fluctuates dramatically. A commodity trader in some respects is similar to a share trader.


----------



## Uncle Festivus (7 March 2012)

Good stuff lurker123. Blinkered property bulls just don't get it - yet. Until it's too late, but at least we tried to warn them 



moXJO said:


> Is that regarding price or the fact of all those empty new houses they have?
> 
> Chinese investors actually wont move anyone into the house to keep the 'new' tag. Once someone lives in it the price drops. Which is why you get suburbs of empty houses.




Both. The Chinese economic crash has started - even the top man(ipulater) has forewarned the world that China will slow, so assuming that all Chinese data is manipulated to be far more positive than it actually is then we can expect an even lower Chinese GDP from now on. 

It obviously affects AU in many ways and property will be hit hard, both indirectly (the so called mining boom Mk2 ending) and directly from Chinese investors having to sell. 

The GFC is a continuing process - it's just entered phase 2 today. 

Australia is not a financial island - we are all connected now......AU property prices will fall faster & harder from now.....both property and interest rates will be lower this time next year......


----------



## Knobby22 (7 March 2012)

Uncle Festivus said:


> .....both property and interest rates will be lower this time next year......




There is such a divergence on this - in both directions especially on interest rates.
The problem is we don't really know where China is going.


----------



## maffu (7 March 2012)

McLovin said:


> I've noticed that too. I'm in the Eastern Suburbs of Sydney and POA/EOI used to be only for $10m+ properties but I'm noticing it for a lot of properties in the $2-3m mark. I've also noticed a massive increase in the number of for sale v auction.




Same here. I'm in Clovelly in Sydney's East. I just did a search on real estate.com out of the 23 properties listed, only 3 or 4 had a price. The rest are auction or ask for the price.

In other news they just had an interview with a bulldozer driver in Ohio on ABC. They are bulldozing whole blocks of houses as they are all foreclosed, and the maintenance is to high.
I can't quite get my head around the fact that perfectly good houses are being bulldozed as the best priced option. Absolutely crazy...
Apparently happening in Ireland and Spain. Imagine buying an investment property and having to bulldoze it because you can't sell it at all.


----------



## sptrawler (7 March 2012)

Knobby22 said:


> There is such a divergence on this - in both directions especially on interest rates.
> The problem is we don't really know where China is going.




As lurker123 says it is all a gamble, no one knows which is the best assett class to be in. 
However as SCM says property, in a lot of places, is overvalued and is probably going through a correction as we speak. The reserve bank and the banks seem to be handling it very well, despite Wayne Swan, I am sure the banks will have their house in order before Swan does.
So really if you can get a couple of houses payed for, have a few shares say $500,000 in steady divided paying companies and have a couple of million in term deposit staggered so they mature as a steady income. I think as long as your at preservation age you will be o.k. 
So lets get into it, where is a good area to buy a house in your opinion, that has already taken a hit and is starting to look like reasonable value.
I know there is going to be a crash, but just incase there isn't lets put some ideas together on places posters know in their area. I will chuck in my thoughts around the areas of Perth I've been watching. Parkwood, Ferndale, Lynwood, St James. They are all within approx 10k's of the city and at present you can get in between $300k and $400k. As a rank outsider Mandurah, has electric train access to city and great amenity presently starting around $200k for free standing units.


----------



## KurwaJegoMac (7 March 2012)

Uncle Festivus said:


> The Chinese economic crash has started - even the top man(ipulater) has forewarned the world that China will slow, so assuming that all Chinese data is manipulated to be far more positive than it actually is then we can expect an even lower Chinese GDP from now on.




The Chinese Premier announced a _target _of 7.5%. A target =/= a forecast. 

They have had a target of 8% for over 5 years, but have not been able to achieve it (posting double digit GDP growth up until 2010 (10.3%). 2011 saw them hit 9.2% so despite the GFC and ongoing troubles they still haven't hit anywhere near their 8% target.

Now they've cut their target to 7.5% - will they hit it? Highly doubt it. Better to aim extremely high and get part way, then aim really low and achieve it. 

There is no denying that the rate of growth is slowing (you can see that from the two figures I provided above), its' the magnitude of that growth that's overlooked. E.g. If something increases 10% off a base of 100, it's a lot less than 5% off a base of 500. 

So assuming their GDP is $6trillion US (sources vary between 6 and 10), if they were to hit their target of 7.5% (realistically it'll be higher), they will add $450 _billion_ to their economy. To put it in context, that is just as much as Poland produces _each year_ (~$460b) and is just under the market valuation of Apple ($500b). It's like adding a country like Poland or a company like Apple to the world economy _every year_.

That is _*huge*_. To think that it will not have any effect on asset prices and mining is, to use your own words, a bit of a 'blinkered' view.


----------



## Starcraftmazter (7 March 2012)

Beej said:


> Regardless, the chart is deliberately misleading - it should be plotted with a log scale.




No it is not. House prices are meant to never change in real terms, it is unnecessary to plot them on a log scale. Regardless, the scale used makes no different the the data represented.



Beej said:


> We still have one of the highest immigration rates of any country in the world - right now. So is your argument then that high immigration can cause a sustainable more than doubling of "real" house prices?




My argument has little or nothing to do with immigration. Once our economy turns to depression there will be significant *e*migration from Australia.



Beej said:


> The only one looking foolish right now is you. Try thinking a little harder, and you might actually get it. It's like this - even in your 100% inflation / 20% house price appreciation scenario, are you better off to have bought sooner or later? If a house today costs $500k and next year it costs $600k, should you have bought when it cost $500k or would you rather pay that + $100k a year later? It really doesn't matter if the price of banana's doubles - or even if your income doubled over that period! You would still have to find (or borrow) and pay an extra $100k a year later. Plus you will probably pay rent in the meantime that  went up by 100% over that time period as well.




You completely miss the little - but very important fact of where I would be keeping my wealth. I would be holding gold - which no doubt would go up at least in line with inflation, and thereby my ability to buy a house would increase five-fold.



Beej said:


> I'm old enough to have actually lived (and worked / supported myself etc) in relatively high inflation times from the mid 80s through mid 90s when your "real house price chart" shows a falling line. I can tell you that for most of this period it was a no brainer decision to use your cash or to borrow money to buy a house if you could. The sooner you did it the better off you ended up. Inflation erodes the value of your cash savings (ie you lose), while it also deflates away the value of any debt you are carrying (ie you win). The higher the inflation the bigger the lose / win margin in each scenario.




So you actually advocate buying at the peak of the bubble? What total nonsense. Yes, let me just borrow up to my neck in debt so I can buy something which is rapidly going down in value.



Beej said:


> Really??? you really think that?




Actually yes sorry I was mistaken in my haste. Wages influence construction costs - however it is only a very small influence. Absolutely nothing compared to the cost of land for instance.



Beej said:


> Yea right - you go ahead and convince yourself that is true.




I don't need to convince myself, it is proven by readily available data.




The slight increase in the last decade is merely the commodity bubble (not busting) and wage inflation - which happened itself as a result of the housing bubble. Pretty soon it will come back down to 100.



Ves said:


> Just post the chart in logrithmic scale, it's not that hard. Not like the data changes.




I didn't make the chart, so I can't. Either way, it's irrelevant - the chart has no influence on the amount by which house prices have risen.


----------



## Knobby22 (7 March 2012)

Starcraftmazter said:


> The slight increase in the last decade is merely the commodity bubble (not busting) and wage inflation - which happened itself as a result of the housing bubble. Pretty soon it will come back down to 100.




I would have thought that since real household income have risen so much the best you could hope for would be 140, not 100.


----------



## Starcraftmazter (7 March 2012)

Knobby22 said:


> I would have thought that since real household income have risen so much the best you could hope for would be 140, not 100.




?? Income has nothing to do with construction costs - again except wages, but deflated by inflation it has the most insignificant affect of anything else.


----------



## KurwaJegoMac (7 March 2012)

Starcraftmazter said:


> Actually yes sorry I was mistaken in my haste. Wages influence construction costs - however it is only a very small influence. Absolutely nothing compared to the cost of land for instance.






Starcraftmazter said:


> ?? Income has nothing to do with construction costs - again except wages, but deflated by inflation it has the most insignificant affect of anything else.




Wages have a small influence on costs?? So if I earn 50k and my wage increases to 100k you're saying it has no impact on costs? What about the fact, that I now have more income to spend and therefore more inclined to make a more expensive purchase (such as property). I've now increased the demand for housing by 1. Unless supply rises to meet the new demand, prices will go up. Have you been paying attention in your economics classes lately? Or did you fail your uni subjects last year?

Of course should wages and assets stay the same in real term, the net change is 0 (despite an increase in price). However as Knobby22 pointed out, according to your chart wages rose in real terms - there is therefore more money _in real terms _to spend on assets, which is quite significant. To suggest that this would not have an impact on prices is absurd.


----------



## Julia (7 March 2012)

lurker123 said:


> This assumes house prices go up with inflation, the fact of the matter is that they don't. Over the last 50 years house prices have appreciated on average 2.7% over and above inflation.



"On average", I wouldn't dispute that at all.   But markets are cyclical.   I am simply speaking from my own experience in the late 70's and early 80's in NZ when inflation was high, and house prices - and rents - as well as interest rates were also high.
It was absolutely possible - if you bought sensibly - to make around 100% capital gain in about a year.

Reporting that experience from that time does not logically translate into my being 'a property bull'.  I would absolutely not be buying property as an investment at present because capital gains are far from assured and the yield is pathetic, at least in the area where I live.



> There is no reason to believe house prices will continue to go up, whether with inflation or above it, just as there is no reason to believe house prices will go down.



  Did I say house prices would go either up or down? No.   I have no idea what they will do at this stage.



> Given your stance of getting out of the share market due to the current economic situation, your stance on property is contrary and you seem to advocate going into property and getting into debt despite current economic conditions.



What?  Where have I advocated going into property and/or getting into debt?
I have done nothing of the sort.  Perhaps you could explain the source of your conclusion about what I am advocating?



> Telling someone to buy a house rather than rent or to sell a house and rent is like giving advice on whether to buy or sell a share.



I completely agree and have never told anyone to buy or sell either a house or a share.


----------



## robots (7 March 2012)

hello,

that was the case with me as well ^above, I just reported the auction results which therefore meant i was a real estate agent, developer. perma bull, slumlord, specuvestor, DH and all the others

even had death threats, just for putting up the clearance results, oh well life goes on

i notice in an above post that someone wrote property has only returned 2.6% above inflation? amazing, is that a bubble

thankyou
professor robots


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## young-gun (7 March 2012)

robots said:


> hello,
> 
> that was the case with me as well ^above, I just reported the auction results which therefore meant i was a real estate agent, developer. perma bull, slumlord, specuvestor, DH and all the others
> 
> ...




it is simply ignorant to believe australian housing is not in a bubble. perhaps it wont burst this year, or next, or the next, but the fact remains, it is in a bubble.


----------



## young-gun (7 March 2012)

Can i get some users gameplan on the following scenario.

You DON'T own any property. There is an entire nation(less a few %) saying property is gonna be ok and it wont go down much more. Would you be rushing out to buy now? What would you do if you were in this situation? please do your best to put aside the fact you own one, two, three or however many houses, and reply unbiased.


----------



## Gerkin (7 March 2012)

young-gun said:


> Can i get some users gameplan on the following scenario.
> 
> You DON'T own any property. There is an entire nation(less a few %) saying property is gonna be ok and it wont go down much more. Would you be rushing out to buy now? What would you do if you were in this situation? please do your best to put aside the fact you own one, two, three or however many houses, and reply unbiased.




I dont listen to a whole nation.

I will do my sums and buy something that
a) I can live in
b) can be subdivided, greater than 700sqm

I'm looking at the moment for the above. If prices fall say 20%, my subdivision plan still works, simple.



Im actually going through this at the moment. The area im looking at prices have fallen 10-20% on simiarlar properties


----------



## sptrawler (7 March 2012)

young-gun said:


> it is simply ignorant to believe australian housing is not in a bubble. perhaps it wont burst this year, or next, or the next, but the fact remains, it is in a bubble.




There is no doubt housing is in a bubble. However the RBA and banks are trying to deflate it in an orderly manner.IMO
What has to be appreciated is we are not in the same situation as the U.S, U.K, Europe etc. 
We are a relatively young economy that is fortunately endowed with raw material assets that are easily mined as they are close to the surface and logistcally close to the market.
Combine this with a small population results in low unemployment.
As long as the unemployment stays low so will mortgage delinquencies, meanwhile prices are sliding and wages are rising.


----------



## sptrawler (7 March 2012)

young-gun said:


> Can i get some users gameplan on the following scenario.
> 
> You DON'T own any property. There is an entire nation(less a few %) saying property is gonna be ok and it wont go down much more. Would you be rushing out to buy now? What would you do if you were in this situation? please do your best to put aside the fact you own one, two, three or however many houses, and reply unbiased.




Work out what you think you can afford to borrow without stressing yourself, it's different for everyone.
IMO there are two ways to approach house investment, capital gain and capital gain.
1. If you are going to rent the place you want minimum maintenance, close to public transport, close as possible to the city with future rezoning potential( in fill housing will be the way of the future). If there is no capital gain potential you are just supplying housing for the poor and paying c.g.t on any profit, sad but true.
2. If you are going live in it, the old saying of buying the worst house in the best suburb you can afford is still true. Fix the house up and tax free gain, then move up the ladder.

I have done both and for me the second option worked better, because if worse comes to worse, you end up being stuck with a house you want. 

It's is a lot better than having tenant problems, in a house you don't want to live in and then when you do sell the tax man puts out his hand for a take of the profit.
Anyway that's just a brief take on how I see it a lot will disagree. Everyones different.


----------



## Bill M (7 March 2012)

young-gun said:


> Can i get some users gameplan on the following scenario.
> 
> You DON'T own any property. There is an entire nation(less a few %) saying property is gonna be ok and it wont go down much more. *Would you be rushing out to buy now?* What would you do if you were in this situation? please do your best to put aside the fact you own one, two, three or however many houses, and reply unbiased.




Thanks young-gun, it's a fair question. OK, my experience is now quarantined.

I wouldn't rush out to buy anything right now. What I would be doing is looking very closely at the suburb you are interested in living in. I would hit every open house (or unit) in the area. I would go to every auction I could and just observe the outcomes. I would do this for 3 Months or so. I would even talk to some of the other young-ones there and see what they are thinking. Then just for fun turn up to a open for "rental inspection" to see how many renters turn up. That is the best sign you will see if you can rent that property. Walk the walk, talk the talk but depart with none your cash. After 3 Months you will know the price, the real price. Then it is a matter of time before the right property comes along, it will then be the time to buy. That is how I would do it, good luck.


----------



## Uncle Festivus (7 March 2012)

sptrawler said:


> There is no doubt housing is in a bubble. However the RBA and banks are trying to deflate it in an orderly manner.IMO
> What has to be appreciated is we are not in the same situation as the U.S, U.K, Europe etc.
> We are a relatively young economy that is fortunately endowed with raw material assets that are easily mined as they are close to the surface and logistcally close to the market.
> Combine this with a small population results in low unemployment.
> As long as the unemployment stays low so will mortgage delinquencies, meanwhile prices are sliding and wages are rising.




We are in exactly the same 'situation' as them ie too much debt.

As for unemployment......

*2.21 MILLION AUSTRALIANS UNEMPLOYED OR UNDEREMPLOYED –  HIGHEST EVER RECORDED. UNEMPLOYMENT AT 10.3% – A RECORD 1.28 MILLION  AUSTRALIANS LOOKING FOR WORK*

*In January 2012 according to Roy Morgan:*


*Unemployment was 10.3% (up 1.7% since December 2011) ”” an  estimated 1,278,000 Australians were unemployed and looking for work.  This is Australia’s highest ever number of unemployed as reported by Roy  Morgan and is also Australia’s highest unemployment rate for a decade ””  since January 2002 (10.9% ”” 1,075,000).

*
*A further 7.5% of the workforce* were working part-time looking for more work (underemployed) ”” 934,000 Australians.

*
*In total a record 17.8% of the workforce, or 2.21 million Australians, were unemployed or underemployed.

*
*The Australian workforce* in January was at a record  high 12,429,000, up 383,000 since January 2011 ”” comprising 7,681,000  full-time workers (up 106,000); 3,470,000 part-time workers (down  53,000) and 1,278,000 looking for work (up 330,000).

*
*The latest Roy Morgan unemployment estimate of 10.3% is now almost double the 5.2% currently quoted by the ABS for December 2011.*
*Roy Morgan*


----------



## Julia (7 March 2012)

young-gun said:


> You DON'T own any property. There is an entire nation(less a few %) saying property is gonna be ok and it wont go down much more. Would you be rushing out to buy now? What would you do if you were in this situation? please do your best to put aside the fact you own one, two, three or however many houses, and reply unbiased.



 Young-gun, for me it would depend entirely on whether I wanted to buy a home to live in or an investment property.  If I needed to buy my own home and it was important to me to feel settled (which it always is) and if I intended to continue living in that property for 10+ years, I wouldn't be put off so doing because of a fear values will fall further.  It depends entirely on one's personal circumstances which are going to vary immensely.

For an IP, no I wouldn't be even considering it.  
For Lurker:  the above sentence is purely a personal view and does not in any way constitute advice to anyone about anything.



Uncle Festivus said:


> We are in exactly the same 'situation' as them ie too much debt.
> 
> As for unemployment......
> 
> ...



That's a pretty remarkable difference between Morgan's figure and the ABS.
I know whom I'd be more likely to believe!


----------



## McLovin (7 March 2012)

Julia said:


> That's a pretty remarkable difference between Morgan's figure and the ABS.
> I know whom I'd be more likely to believe!




The thing with government statistics is the change in the number is often the more important data point than the number itself.

Having said that, the current unemployment rate would seem quite inaccurate. Perhaps, because of the decade long labour shortage, a lot of companies are worried if they sack workers they will struggle to replace them when the economy picks up again. As a consequence, they are cutting back on hours (the latest ABS figures highlighted the plunge in hours worked) rather than cutting back on headcount.


----------



## medicowallet (7 March 2012)

Bill M said:


> Thanks young-gun, it's a fair question. OK, my experience is now quarantined.
> 
> I wouldn't rush out to buy anything right now. What I would be doing is looking very closely at the suburb you are interested in living in. I would hit every open house (or unit) in the area. I would go to every auction I could and just observe the outcomes. I would do this for 3 Months or so. I would even talk to some of the other young-ones there and see what they are thinking. Then just for fun turn up to a open for "rental inspection" to see how many renters turn up. That is the best sign you will see if you can rent that property. Walk the walk, talk the talk but depart with none your cash. After 3 Months you will know the price, the real price. Then it is a matter of time before the right property comes along, it will then be the time to buy. That is how I would do it, good luck.




For too long sensible investing principles such as the one above have been ignored due to panic buying and passioniate delirium.

Once more people start doing their homework (and the above example is excellent), they will realise that the bubble is real, or they will find the gem amongst the rubble, and will end up with a decent investment.


----------



## Bill M (7 March 2012)

Uncle Festivus said:


> As for unemployment......
> 
> *2.21 MILLION AUSTRALIANS UNEMPLOYED OR UNDEREMPLOYED –  HIGHEST EVER RECORDED. UNEMPLOYMENT AT 10.3% – A RECORD 1.28 MILLION  AUSTRALIANS LOOKING FOR WORK*




Seeing you and I are only an hours drive from Sydney I thought I'd do a quick search for government jobs in the Sydney area. I found heaps of jobs going begging, no shortages there. I didn't know a lollipop man can get $24 p/h. That's good money for doing a bit of community work.

Here's the link, I got my eyes on the Mosman job:http://mycareer.com.au/jobs/sydney/defence-essential-services/state-government/


----------



## sptrawler (7 March 2012)

Uncle Festivus said:


> We are in exactly the same 'situation' as them ie too much debt.
> 
> As for unemployment......
> 
> ...




The difference between us and them is we have a chance to pay ours off.

We are one of the only western countries with a growing population and a growing G.D.P.
Take the U.K. 59 million people, no manufacturing left to speak of, no raw materials to sell, minimal fuel reserves. They are dependent on the financial services sector and overseas investments. This has to support a massive social welfare system that is falling apart at the seams.
The U.K though is in great shape compared to Greece who have nothing to sell.

But in my opinion, to think that we are going to go the same way as the above mentioned countries, just doesn't add up. Like I said IMO


----------



## lurker123 (7 March 2012)

Julia said:


> Reporting that experience from that time does not logically translate into my being 'a property bull'.  I would absolutely not be buying property as an investment at present because capital gains are far from assured and the yield is pathetic, at least in the area where I live.
> 
> What?  Where have I advocated going into property and/or getting into debt?
> I have done nothing of the sort.  Perhaps you could explain the source of your conclusion about what I am advocating?




My apologies, I got ahead of myself and assumed you were a bull due to your support of Beej's comment on how as long as the price of property keeps rising your better off buying sooner rather than later.




To reiterate my stance, I wouldn't  recommend anyone buy a property now, sell a property now or stay out of the market, in the end you need to make your own decisions. 

I can only say that in my view house prices don't look sustainable, so I myself wouldn't be buying. On the otherhand beej has brought to light for me the problem of inflation and there exists a high possibility of the government inflating all our debts away. So if you don't get in now you won't benefit from your debt decreasing significantly in real terms due to inflation. In the end everyone needs to make their own decisions.


----------



## sptrawler (7 March 2012)

lurker123 said:


> I can only say that in my view house prices don't look sustainable, so I myself wouldn't be buying. On the otherhand beej has brought to light for me the problem of inflation and there exists a high possibility of the government inflating all our debts away. So if you don't get in now you won't benefit from your debt decreasing significantly in real terms due to inflation. In the end everyone needs to make their own decisions.




Sums it up perfectly, the time frame and how far the prices pull back are the only issues. Get it right and you will do o.k.

Now is the time for research and saving up some cash.


----------



## Julia (8 March 2012)

lurker123 said:


> My apologies, I got ahead of myself and assumed you were a bull due to your support of Beej's comment on how as long as the price of property keeps rising your better off buying sooner rather than later.



Thanks, lurker.  No problem.  I probably sounded a bit terse because I'm anything but a property bull at the moment.  
I'm actually close to settling on a block of land and having a house built and am less than thrilled about the difference in what I'll get for my present place and the cost of the new one.

Glad to see you can see Beej's point about inflation.


----------



## Uncle Festivus (8 March 2012)

sptrawler said:


> The difference between us and them is we have a chance to pay ours off.
> 
> We are one of the only western countries with a growing population and a growing G.D.P.






sptrawler said:


> Take the U.K. 59 million people, no manufacturing left to speak of, no raw materials to sell, minimal fuel reserves. They are dependent on the financial services sector and overseas investments. This has to support a massive social welfare system that is falling apart at the seams.
> The U.K though is in great shape compared to Greece who have nothing to sell.
> 
> But in my opinion, to think that we are going to go the same way as the above mentioned countries, just doesn't add up. Like I said IMO





We are totally reliant on resources now, exporting dumb dirt, which means reliant on China.

As for GDP............

Australia's economy slowed more than expected in the December  quarter, increasing the likelihood that the Reserve Bank will cut  interest rates again to bolster demand.


*Annual GDP grows slowest since 2008*
*Quarterly growth half of expectations*
*RBA rate cuts to hinge on jobs strength*
*Construction shrinks for 21 months in a row*
 The economy expanded 0.4 per cent in the quarter,  compared with the revised 0.8 per cent pace reported for the September  quarter, according to the Australian Bureau of Statistics. Economists  had tipped economic growth of 0.8 per cent for the December quarter.
"It's a disappointing result relative to expectation and * the 1 per cent figure the Reserve Bank had in its forecast*,’’ said  Michael Blythe, chief economist for the Commonwealth Bank.


That's a massive miss by the (supposedly) top economists in the country, who have consistently gotten it wrong so far.


----------



## sptrawler (8 March 2012)

Uncle Festivus said:


> We are totally reliant on resources now, exporting dumb dirt, which means reliant on China.
> 
> As for GDP............
> 
> ...




I understand where you are coming from and I agree our growth has slowed, the same as everyone elses. But as your post above state we are still in growth and yes it is mainly due to selling minerals and some food.
However unlike U.K and most of Europes problem economies at least we have something to sell.
It is o.k to be doom and gloom, but do you think it may cause you to miss a buying opportunity. I am not saying now or next month or next year is the best time to capitalise on buying opportunity.
But what I am saying is growth will return and by the time the plebs know it is happening the opportunity has gone.
As Julia above states she is building a house, I personaly have just bought a free standing double storey property, next to a marina in city cetre, 500m to everything, for under $300k. Yes it may go down further and I may do my dough, but it is half of what it was in 2010, I can easily afford it and it gives me lifestyle choices in retirement.
So do I sit back and wait for the crash or say well at that price in that location I think it is fair value. 
Only time will tell meanwhile I will sit on the balcony watching the sun go down over the ocean with a glass of shiraz in my hand and worry about it later.


----------



## Uncle Festivus (8 March 2012)

It would be interesting to know how many on here have actually experienced a recession - that's when you buy.....just need to have patience. Apparently the magic formula for avoiding the dreaded R word is to stimulate & subsidise and hope the debt can be paid off on the other side in better times. The only problem is that there looks like it will be a double dip and the gamble will only have made the situation worse.

The fact is we have just had 25 years of expansionary money supply to feed bubbles, biggest of which is housing, specifically investment property. That bubble started to deflate about the time Robots bought his last IP (or have you bought more since?)


----------



## sptrawler (8 March 2012)

Uncle Festivus said:


> It would be interesting to know how many on here have actually experienced a recession - that's when you buy.....just need to have patience. Apparently the magic formula for avoiding the dreaded R word is to stimulate & subsidise and hope the debt can be paid off on the other side in better times. The only problem is that there looks like it will be a double dip and the gamble will only have made the situation worse.
> 
> The fact is we have just had 25 years of expansionary money supply to feed bubbles, biggest of which is housing, specifically investment property. That bubble started to deflate about the time Robots bought his last IP (or have you bought more since?)




The other thing to put into the equation is wages, the chances of wages going down are fairly remote. Rent is also linked to wages, in relation to the property i have bought it is returning 5% and the tenant loves it. 
The down side with cash is inflation as you know, if like a friend of mine, you wait for the bubble to burst it is possible to miss out.
When houses jumped to $150k he sold and waited for the bubble to burst. Well 10 years later he is getting closer to retirement and has just built about 30klm's out on cottage block for $350k.
Do you think that his original house 10klm's out of the city centre is going to go back to $150 or even $200k? If that happens I will pick up 10 and become a slum lord. Because  houses like that rent out for between $300 - $400 p/w. So that would be a gross return in the vicinity of 10%.
It is fun to speculate on what happens if the bubble bursts, but what is plan B if it doesn't?
In retirement you still have to make money to live and try to cover for inflation.

As for your question 'who has lived through a recession' I've been through a couple, did my apprenticeship in the early 70's. Who is to say we are not going through a recession right now, I for one think we are.LOL
Like I said earlier, by the time the plebs hear about it it is over.LOL,LOL,LOL


----------



## Julia (8 March 2012)

sptrawler said:


> As Julia above states she is building a house,



But *this despite the economic conditions,* a personal decision about where I want to live, not at all because it makes good financial sense.  If I thought the housing market would improve fairly soon, I'd hold off.


----------



## sptrawler (8 March 2012)

Julia said:


> But *this despite the economic conditions,* a personal decision about where I want to live, not at all because it makes good financial sense.  If I thought the housing market would improve fairly soon, I'd hold off.




If you couldn't afford to do it or it didn't make sense for your situation, you wouldn't do it. The one thing we all run out of is time, as happened with the friend off mine in the earlier post.
It may take 10 years for house prices to rise again, who knows? That doesn't mean it doesn't make sense to buy one.

By the way, can't you just rent out your existing house, untill things pick up?

It is a bit like everyone saying the banks are going to go broke,LOL. I'll put money on with anybody that their pay is still going into a bank in 10 years also they will still be borrowing from the bank to buy a house.
If you don't have banks that the government can regulate, who holds the money, the corner shop?LOL

In answer to your bold print Julia, like I said I think we are in a recession now. It may not be a technical recession, but if you take out mining , it's a recession.


----------



## Julia (8 March 2012)

sptrawler said:


> If you couldn't afford to do it or it didn't make sense for your situation, you wouldn't do it. The one thing we all run out of is time, as happened with the friend off mine in the earlier post.
> It may take 10 years for house prices to rise again, who knows? That doesn't mean it doesn't make sense to buy one.
> 
> By the way can't you just rent out your existing house, untill things pick up?



 Yes, I suppose I could.  But I won't.  I don't see too many tenants keeping it to the standard I do, thus best presentation for sale.  Plus I can't be bothered with all the hassle of making two moves.  Plus I have a large dog = difficulty in finding good rental accommodation.

Would rather drop the price on existing house than stuff around with rental.


----------



## Knobby22 (8 March 2012)

Bill M said:


> Seeing you and I are only an hours drive from Sydney I thought I'd do a quick search for government jobs in the Sydney area. I found heaps of jobs going begging, no shortages there. I didn't know a lollipop man can get $24 p/h. That's good money for doing a bit of community work.
> 
> Here's the link, I got my eyes on the Mosman job:http://mycareer.com.au/jobs/sydney/defence-essential-services/state-government/




Yes, there does seem to be a lot of jobs out there for 'Australians". Could it be mainly the Indian and Chinese immigrants having trouble getting a good job?


----------



## Starcraftmazter (8 March 2012)

KurwaJegoMac said:


> Wages have a small influence on costs??




On real construction costs - yes, they are the smallest source of increase in construction costs. If it were not for the housing bubble inflating wages, they would be even smaller (ie. they should be smaller still).



KurwaJegoMac said:


> What about the fact, that I now have more income to spend and therefore more inclined to make a more expensive purchase (such as property). I've now increased the demand for housing by 1. Unless supply rises to meet the new demand, prices will go up. Have you been paying attention in your economics classes lately? Or did you fail your uni subjects last year?




Housing demand should *never* increase house prices costs - and it doesn't in well functioning land markets like Germany, Texas, etc. If it does - then that is a sure sign of a bubble.



KurwaJegoMac said:


> Of course should wages and assets stay the same in real term, the net change is 0 (despite an increase in price). However as Knobby22 pointed out, according to your chart wages rose in real terms - there is therefore more money _in real terms _to spend on assets, which is quite significant. To suggest that this would not have an impact on prices is absurd.




No, it is not absurd. The price of a house and land package is the cost of land (which should never go up in real national average terms in a well functioning market) and the cost of building a house. Beyond the wages that have to be payed to construction workers, wages have zero impact on the cost of a house and land package.


----------



## Klogg (8 March 2012)

Starcraftmazter said:


> Housing demand should never increase house prices costs - and it doesn't in well functioning land markets like Germany, Texas, etc. If it does - then that is a sure sign of a bubble.




Isn't that just a sign of an open/unregulated market? (i.e. demand > supply, price goes up?) 
Regardless of whether it's in land or any other asset...


----------



## Starcraftmazter (8 March 2012)

Klogg said:


> Isn't that just a sign of an open/unregulated market? (i.e. demand > supply, price goes up?)
> Regardless of whether it's in land or any other asset...




No, and there are countless counter-examples - electronics for instance.

In the contrary, when you have a housing market in which house prices rise as a result of demand shocks, it is a sign of perverted government interference - due to idiotic regulations, supply is not able to meet demand fast enough and the price of land goes up. This is done in Australia through urban growth boundaries and fascist state and local governments which refuse to release land to developers.

That's just the beginning though. In phase 2, the government encourages speculation through tax incentives like negative gearing and the first home owners grant. It also ensures that foreigners are allowed to speculate on land.

At this stage, the mechanics of supply and demand have absolutely no relation to house (or land) prices - a bubble is born, as the housing market turns into the ultimate ponzi scheme which relies speculators to buy houses form other speculators for ever increasing amounts of money. The entire country leverages up to the neck in bad debt which is not even half supported by real equity.

Extremely overinflated house prices send incorrect signals to the market, and the market responds with overcapacity - building massive amounts of houses and apartments. We can see this is most prominent in Melbourne. This goes on and on until there are no longer enough speculators to absorb the overcapacity.

Eventually prices stall and begin modest falls. Negatively geared people (of which there are *many*) ask themselves why they are losing money on their "investment" and decide to sell out. Foreign speculators realise they've been duped and sell out. There over 70,000 empty houses owned by foreign speculators sitting in Sydney alone. They didn't even bother to rent them out - such was their arrogance.

In Australia it is even worse. The housing bubble has been supported by demographics - the baby boomers. They own over 50% of all properties and are already retiring. They hold over 2/3 of all _investment_ properties, and amazingly many are negatively geared as they move into retirement.

Overall a massive exodus out of our housing market is upon us, as demographics change and oversupply kicks in.


No bubble has ever stood the test of time, and demographics drive long-term boom and bust cycles. These are clear and simple facts property bulls or bubble naysayers fail to understand.


----------



## Glen48 (8 March 2012)

This is what has happened before and will and  happen again.. its called GREED  take out Tulips and insert Australia housing thiis is the history of Aussie properties for the  next 10 yrs , it has nothing to do with houses, construction etc  just houses turned into an icon like the plastic Hot rod on a Monopoly game  :

The peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsman. It is generally considered the first recorded speculative bubble (or economic bubble),[3] although some researchers have noted that the in 1619–22, a Europe-wide chain of debasement of the metal content of coins to fund warfare, featured mania-like similarities to a bubble.[4] The term "tulip mania" is now often used metaphorically to refer to any large economic bubble (when asset prices deviate from intrinsic values).[5]
The event was popularized in 1841 by the book Extraordinary *Popular Delusions* and the *Madness of Crowds,* written by British journalist Charles Mackay. According to Mackay, at one point 12 acres (5 ha) of land were offered for a Semper Augustus bulb.[6] Mackay claims that many such investors were ruined by the fall in prices, and Dutch commerce suffered a severe shock. Although Mackay's book is a classic that is widely reprinted today, his account is contested. Many modern scholars believe that the mania was not as extraordinary as Mackay described, with some arguing that the price changes may not have constituted a bubble.[7][8]
Research on the tulip mania is difficult because of the limited data from the 1630s””much of which comes from biased and anti-speculative sources.[9][10] Although these explanations are not generally accepted, some modern economists have proposed rational explanations, rather than a speculative mania, for the rise and fall in prices. For example, other flowers, such as the hyacinth, also had high prices on the flower's introduction, which then fell dramatically. The high prices may also have been driven by expectations of a parliamentary decree that contracts could be voided for a small cost””thus lowering the risk to buyers.
 Wikipedia


----------



## Agentm (8 March 2012)

*Regarding the argument on which data is accurate on unemployment*



*Which way Australian unemployment?*

 by Steve Keen on February 16th, 2012 at 10:32 pm Posted In: Debtwatch




The most recent ABS data  implies that unemployment is falling, and that those who saw the  economy as either stable or booming were right. Both the seasonally  adjusted and the trend estimates fell, and the seasonally adjusted  unemployment is now 0.2% below the peak it reached in August 2011 of  5.3%. This looks good””though not as good as conventional Neoclassical  forecasters were expecting a year ago: in the 2011-12 budget, the Treasury,  using its TRYM model, predicted a smooth fall in unemployment from 5%  in June 2010 to 4.75% in June 2011 and 4.5% in June 2012.
*Figure 1: ABS Unemployment Data and Treasury Forecasts
*





 Clearly the Treasury didn’t expect the rise in unemployment that  occurred in mid-2011. But the last five months of seasonally adjusted  ABS data appear to imply that this deterioration was an aberration, and  the expected recovery is on its way once more.
*Figure 2: Treasury forecasts (& projections of a return to equilibrium) in the 2011-12 MYEFO
*




 Or is it? As I noted in my most recent post, the definitions of employment and unemployment are now seriously compromised. The formal definition of *unemployment* used by the ABS is:Persons aged 15 years and over who were not employed during the reference week, *and*:

 *had actively looked for full time or part time work* at any time in the four weeks up to the end of the reference week and were available for work in the reference week; or
 were waiting to start a new job within  four weeks from the end of the reference week and could have started in  the reference week if the job had been available then.
The definition of “*actively looked*“:Includes writing, telephoning or  applying to an employer for work; answering an advertisement for a job;  checking noticeboards; being registered with Centrelink as a jobseeker;  checking or registering with any other employment agency; advertising or  tendering for work; and contacting friends or relatives.​The definition of *employed* is:All persons aged 15 years and over who, during the reference week:

 worked for one hour or more for pay,  profit, commission or payment in kind in a job or business, or on a farm  (comprising employees, employers and own account workers); or
 worked for one hour or more without pay in a family business or on a farm (i.e. contributing family workers);
On these definitions, people who are discouraged by the job-seeking  process””so that they haven’t applied for a job in the previous 4  weeks””are not unemployed. If they have worked for one hour or more in  the previous fortnight, they will be classified as employed; if not,  they will be “Not in the Labour Force”.
 As noted in the previous post, these definitions disguise the real  level of unemployment, and they inspired Roy Morgan to conduct its own  survey with a rather more straightforward definition:The Roy Morgan survey, in contrast,  defines any respondent who is not employed full or part-time and who is  looking for paid employment as being unemployed. ” (Roy Morgan, September 2001)​When Roy Morgan reports a trend in unemployment, this can be taken  seriously””with caveats about the smaller size of the Roy Morgan sample  (4,500 versus 30,000 for the ABS), and the fact that the data is not  seasonally adjusted. When the ABS reports a trend, it could be a trend,  or it could be an artefact of its definitions.
 Curiously, the ABS itself implied in today’s statement that its  unemployment data should be taken with a grain of salt. They recommended  instead using the ratio of employment to populationA different method of analysis that  removes the effect of population growth is to compare average employment  to population ratios for each year… This analysis provides an  alternative comparison of employment between years, as the influence of  change in the underlying population in each year is removed.​The ABS’s definition of employment is not above reproach””including as  employed people who worked a ludicrous 1 hour in a fortnight (and  unpaid at that, if in a family business or on a farm)””but it lacks the  additional distortion of its unemployment definition, which classifies  the discouraged unemployed as “not in the workforce”. Curiously, the  trend to falling unemployment in the last 5 months of ABS data isn’t  mirrored in the employment to population ratio: though it blipped up in  the most recent month, it has been steadily falling since the beginning  of 2011.


----------



## Agentm (8 March 2012)

Figure 3 illustrates this by graphing the employment to population   ratio and unemployment together, and inverting the unemployment data   (putting low unemployment at the top and high at the bottom).
*Figure 3
*




 A smoothed plot makes the trends in both series more obvious: the   employment to population ratio is still trending down””implying rising   unemployment””while the recorded unemployment rate is falling.
*Figure 4: The data in Figure 3 smoothed
*




 Roy Morgan’s measure of the unemployment rate, however, is clearly increasing.
*Figure 5
*




Roy Morgan’s estimate   that 10.3% of the workforce is unemployed is now more than twice the   ABS’s estimate of 5.1%, and the gap between the two is the largest it   has ever been.
*Figure 6
*




 Part of this huge gap in the January 2012 figures is undoubtedly due   to the fact that the Roy Morgan data is not seasonally adjusted, and   January necessarily involves a huge boost to actual unemployment as   school leavers enter the workforce. But the trend in the gap can’t be   explained away, and that gap is now the biggest it has ever been.
*Figure 7
*




 So it’s too early to declare that unemployment is falling””especially when that call is based upon data with a dodgy definition.
 Oh, and that Treasury forecast shown in Figure 2, of *rising* unemployment from mid-2012””with it returning to 5% from the forecast low of 4.5%? That’s not a forecast: that’s an *assumption*.   Built in to the TRYM model””and every other neoclassical macroeconomic   model on the planet””is the assumption that the economy will return to a   long run equilibrium rate of growth after any short term “shock”. The   Treasury happened to assume that this long run equilibrium includes an   unemployment rate of 5%.
 This assumption is a classic example of the adage that “to assume   makes an ASS out of yoU and ME”. Neoclassical economists have been   getting away with this sort of behaviour for decades, because the public   didn’t challenge them before the Global Financial Crisis when the   economy seemed to be doing well. I hope now that, after the crisis, the   public will be as critical of such assumptions as Roy Morgan has been  of  the ABS’s dicky definition of unemployment.


----------



## young-gun (8 March 2012)

Julia said:


> For an IP, no I wouldn't be even considering it.
> For Lurker:  the above sentence is purely a personal view and does not in any way constitute advice to anyone about anything.




Just to clarify i wasnt seeking any advice, and although the situation resembles mine, i was merely trying to get users to separate themselves from the one thing that can swing the argument in favour of a bullish property market. i have a game plan and im sticking to it. and good advice bill, im not in the market to buy, but plan on carrying out similar research to that stated by yourself before buying.


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## Agentm (9 March 2012)

*                         China drop to hit house prices hard                     *

*Peter Cai*

     March 9, 2012         


 


	

		
			
		

		
	
                 House prices in Melbourne fell 1.4 per cent in the three months to December last year. 

                                 THE  predicted slowdown in China's economic boom could  cause Australian house prices to plunge by more than 5 per cent this  year, according to one of the world's most influential credit rating  agencies.
              Standard & Poor's warned that efforts by the Chinese  government to deliberately slow its economy over the next 12 months   will have a major impact on Australia's exports throughout Asia.



Read more: http://www.theage.com.au/business/c...prices-hard-20120308-1un4w.html#ixzz1oYqh5d9h


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## KurwaJegoMac (9 March 2012)

Starcraftmazter said:


> On real construction costs - yes, they are the smallest source of increase in construction costs. If it were not for the housing bubble inflating wages, they would be even smaller (ie. they should be smaller still).




What brings you to that conclusion? From what I've seen, some of the biggest costs in building are the labour costs - which is driven by the labour's wages. Whether it be Residential or Commercial, sparky or chippy, labour costs are high.

Perhaps some of the more regular property developers can weigh in, maybe I'm wrong about this. Julia - you mention you're looking at building a house, what is your take on wages? Do you see labour wages being a major part of your construction costs? 




Starcraftmazter said:


> No, it is not absurd. The price of a house and land package is the cost of land (which should never go up in real national average terms in a well functioning market) and the cost of building a house. Beyond the wages that have to be payed to construction workers, wages have zero impact on the cost of a house and land package.




You're skipping around the question when talking about what should happen. I'm not asking you how things *should* be (which is the region of academics) because as per the paragraph you quoted I agree that with infinite supply, theoretically wages and assets should stay the same in real terms. 



KurwaJegoMac said:


> Of course should wages and assets stay the same in real term, the net change is 0 (despite an increase in price).




What I'm asking you to explain is how you believe an increase in wages _*in real terms*_, which results in _*increased capacity to spend*_ does not have an impact on asset prices.



KurwaJegoMac said:


> However as Knobby22 pointed out, according to your chart wages rose in real terms - there is therefore more money _in real terms _to spend on assets, which is quite significant.




As you say in your signature: "Economics is the science of satisfying unlimited demand with limited resources." ~ Peter Schiff

If resources are limited and I have increased purchasing power in real terms, how does this have no impact on prices?


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## KurwaJegoMac (9 March 2012)

Agentm said:


> THE  predicted slowdown in China's economic boom could  cause Australian house prices to plunge by more than 5 per cent this  year, according to one of the world's most influential credit rating  agencies.
> *Standard & Poor's *warned that efforts by the Chinese  government to deliberately slow its economy over the next 12 months   will have a major impact on Australia's exports throughout Asia.




Thank heavens we have the S&P here to guide us with their fabulous powers of economic observation and reasoning. After all, they did such a great job helping us avoid the GFC with their accurate measures!

...oh wait...


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## Julia (9 March 2012)

KurwaJegoMac said:


> Julia - you mention you're looking at building a house, what is your take on wages? Do you see labour wages being a major part of your construction costs?



Absolutely.   



KurwaJegoMac said:


> Thank heavens we have the S&P here to guide us with their fabulous powers of economic observation and reasoning. After all, they did such a great job helping us avoid the GFC with their accurate measures!
> 
> ...oh wait...



Yep, S&P:  depend on them every time for accuracy.


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## Starcraftmazter (9 March 2012)

KurwaJegoMac said:


> What brings you to that conclusion? From what I've seen, some of the biggest costs in building are the labour costs - which is driven by the labour's wages. Whether it be Residential or Commercial, sparky or chippy, labour costs are high.




Yes, but it's not the costs themselves - rather how much the costs of labour have risen relative to other costs, in construction the other one would be materials.

However even if you add up *all* of the construction costs - they have gone up just a _fraction_ of how much land prices have risen - and there is the main culprit of the property bubble.

While I never suggested that labour costs are insignificant - they are just a part of construction costs (which as I said has risen as a small fraction of land price increases).

So all in all, it is not a big factor.


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## KurwaJegoMac (9 March 2012)

Starcraftmazter said:


> Yes, but it's not the costs themselves - rather how much the costs of labour have risen relative to other costs, in construction the other one would be materials.
> 
> However even if you add up *all* of the construction costs - they have gone up just a _fraction_ of how much land prices have risen - and there is the main culprit of the property bubble.
> 
> ...




Right, now I understand where you're coming from. Thanks for clarifying.


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## young-gun (10 March 2012)

Agentm said:


> *                         China drop to hit house prices hard                     *
> 
> *Peter Cai*
> 
> ...





its funny that anyone actually believes china has control of whats coming there way. China isnt slowing things down, things are slowing down, and china are making out like its intended.

That aside, china is only one of many reasons our property prices are falling, and will simply accelerate them if things head south quickly over there.


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## sptrawler (11 March 2012)

young-gun said:


> its funny that anyone actually believes china has control of whats coming there way. China isnt slowing things down, things are slowing down, and china are making out like its intended.
> 
> That aside, china is only one of many reasons our property prices are falling, and will simply accelerate them if things head south quickly over there.




I had better get the pre approval in place and wait for the bell and flashing neon, telling me to buy.


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## So_Cynical (11 March 2012)

Hey the ASX site has a page up showing "all dwellings" index's for the 5 biggest states and rental yields..

http://www.asx.com.au/asx/markets/propertyIndices.do


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## McLovin (12 March 2012)

How do you measure property on a day to day basis with any sort of accuracy?


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## Glen48 (12 March 2012)

A mate on the Sunshine Coast has been loosing 2G a week on his unit so far he is down 300K will he sell and get out now ....NO.


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## damien275x (12 March 2012)

Nobody in my age bracket (22-25) wants to buy a home. Too expensive, don't want the debt/commitment, so good luck selling them when you retire. As for the shortage, there is no shortage, if you wanted a house all you have to do is find one, inspect it, and buy it. There is no waiting, there is no excessive competition, and there is plenty of space to build up and out. It's hard to go against what everybody says, most older people I know seem to be economic illiterate and think prices will continually rise forever. I somehow doubt that. It comes up as a debate and talking point over and over and over and I am sick of trying to convince people that renting makes sense given the current economic climate. I just tell them I bought the house and they shut up. I will do what I think is best, and they can go do what they think is best.

I wish people would stop trying to convince others they are right, what do you care so deeply about whether or not a stranger loses his/her money? I doubt it. You just want to convince yourself that you are right. Why don't you put your money where your mouth is and just shut up?


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## Bill M (12 March 2012)

damien275x said:


> most older people I know seem to be economic illiterate




You must be hanging around the wrong crowd.


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## village idiot (12 March 2012)

> I am sick of trying to convince people that renting makes sense given the current economic climate






> I wish people would stop trying to convince others they are right




no conflict here?


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## young-gun (12 March 2012)

damien275x said:


> Nobody in my age bracket (22-25) wants to buy a home. Too expensive, don't want the debt/commitment, so good luck selling them when you retire. As for the shortage, there is no shortage, if you wanted a house all you have to do is find one, inspect it, and buy it. There is no waiting, there is no excessive competition, and there is plenty of space to build up and out. It's hard to go against what everybody says, most older people I know seem to be economic illiterate and think prices will continually rise forever. I somehow doubt that. It comes up as a debate and talking point over and over and over and I am sick of trying to convince people that renting makes sense given the current economic climate. I just tell them I bought the house and they shut up. I will do what I think is best, and they can go do what they think is best.
> 
> I wish people would stop trying to convince others they are right, what do you care so deeply about whether or not a stranger loses his/her money? I doubt it. You just want to convince yourself that you are right. Why don't you put your money where your mouth is and just shut up?




so ignore everyone else? get your gameplan and stick to it. thats what im doing, and if it all turns to **** then we only have ourselves to blame. no need to stress, prices are coming down.


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## So_Cynical (12 March 2012)

damien275x said:


> As for the shortage, there is no shortage, if you wanted a house all you have to do is find one, inspect it, and buy it. There is no waiting, there is no excessive competition, and there is plenty of space to build up and out.




When you put it like that...your 100% right, there is no housing shortage.

------------------------------

Anyone see 4corners tonight? they were reporting on the Euro debt woes in Ireland and Greece in particular...anyway to highlight just how bad things are in Ireland they attended a real estate auction...ill quote an online paper below.



> A four star 55 bedroom hotel that once counted the former British Prime Minister Tony Blair as a regular guest has sold at bargain basement prices in Donegal.
> 
> The 55-bedroom Sandhouse Hotel fetched *$900,000* when it sold at a distressed property auction in Dublin.
> 
> The four star establishment, overlooking Donegal Bay, was once on the market for a whopping $10million.




http://www.irishcentral.com/news/Fo...r-one-tenth-of-boom-time-price-141164123.html

Click the link and have a look at the place...amazing what real estate is worth when no ones got any money.
~


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## Bill M (12 March 2012)

So_Cynical said:


> When you put it like that...your 100% right, there is no housing shortage.
> 
> ------------------------------
> 
> ...



 Un f****ng believable, truly is. You can't get  fibro shack in Freshwater for that.

Here's hoping for that crash here...:bier:

Somehow I don't think it's gonna happen.


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## So_Cynical (12 March 2012)

Bill M said:


> Un f****ng believable, truly is. You can't get  fibro shack in Freshwater for that.
> 
> Here's hoping for that crash here...:bier:
> 
> Somehow I don't think it's gonna happen.




Yeah but that's the point isn't it...the unbelievable does happen, happened 2 weeks ago in Ireland and the buyers were the only bidders at the Auction and got it at the reserve.

Unbelievable that a 4 star 55 room Ocean front Hotel sold for well under a million Aussie dollars.


----------



## Bill M (12 March 2012)

So_Cynical said:


> Yeah but that's the point isn't it...the unbelievable does happen, happened 2 weeks ago in Ireland and the buyers were the only bidders at the Auction and got it at the reserve.
> 
> Unbelievable that a 4 star 55 room Ocean front Hotel sold for well under a million Aussie dollars.



This will be a talking point for many years to come, I'll have another Guinness thanks.:bier:


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## Miss Hale (13 March 2012)

Bill M said:


> Un f****ng believable, truly is. You can't get  fibro shack in Freshwater for that.
> 
> Here's hoping for that crash here...:bier:
> 
> Somehow I don't think it's gonna happen.




I saw this too...amazing 

Slightly off topic, but I am a bit of an addict for an English reality show called "Homes Under the Hammer".  Basically people buy - usually rundown - houses at auction then fix them up and ether re-sell or let.  I am amazed at (a) how cheap the houses are and (b) how good the rental return is (usually around 10% sometimes more).  Makes me realise how out of whack our real estate is here at the moment  .


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## Vixs (13 March 2012)

Miss Hale said:


> I saw this too...amazing
> 
> Slightly off topic, but I am a bit of an addict for an English reality show called "Homes Under the Hammer".  Basically people buy - usually rundown - houses at auction then fix them up and ether re-sell or let.  I am amazed at (a) how cheap the houses are and (b) how good the rental return is (usually around 10% sometimes more).  Makes me realise how out of whack our real estate is here at the moment  .




Well if you do the sums, that's what rental yields need to be when you don't have negative gearing in place. It has to pay any mortgage on the place plus maintenance costs plus some profit, or there is simply no point in anyone buying it to rent out.

In reality, if we do have the massive crash down to UK income/house price ratios, there will never ever be a better time for the government to scale down and remove negative gearing. Whether they do or not, I don't care. If it stays I'll take advantage of it when I can, if it goes I'll adapt my financial plans accordingly.


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## village idiot (13 March 2012)

> Slightly off topic, but I am a bit of an addict for an English reality show called "Homes Under the Hammer". Basically people buy - usually rundown - houses at auction then fix them up and ether re-sell or let. I am amazed at (a) how cheap the houses are and (b) how good the rental return is (usually around 10% sometimes more). Makes me realise how out of whack our real estate is here at the moment  .




havent seen that particular show, but I used to do that in blighty in the good old days when property was cheap and returns justified the investment, whether you were selling or renting out. 

as mentioned earlier in this thread, i have just sold house here (perth), and was looking around to rent, astonished at how quickly rents were shooting up (can you have a bubble in rent prices?)

then on the net i came across a 6 bedroom house in a village near the wifes home town in england, for rent at one quarter of the price it would cost me to rent a 4 bed here. so we're off back to blighty for a while to check out whats happening. pehaps i will find a 55 room hotel to buy?

as an aside, the electrician who did my house is a pom, and he is doing the same - selling the house in australia to return to the uk relatively cashed up. i dont think he is the only one


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## Miss Hale (13 March 2012)

village idiot said:


> havent seen that particular show, but I used to do that in blighty in the good old days when property was cheap and returns justified the investment, whether you were selling or renting out.
> 
> as mentioned earlier in this thread, i have just sold house here (perth), and was looking around to rent, astonished at how quickly rents were shooting up (can you have a bubble in rent prices?)




I don't think so to the same extent because people don't borrow to pay their rent so ther is a limit to what they will pay.  Rents are dropping  fraction over here I think (Melbourne) but they are still a bit high IMO.



> then on the net i came across a 6 bedroom house in a village near the wifes home town in england, for rent at one quarter of the price it would cost me to rent a 4 bed here. so we're off back to blighty for a while to check out whats happening. pehaps i will find a 55 room hotel to buy?
> 
> as an aside, the electrician who did my house is a pom, and he is doing the same - selling the house in australia to return to the uk relatively cashed up. i dont think he is the only one




I was actually wondering what the regulations are about foreigners buying property in the UK because at the moment it looks a lot more attractive than here.


----------



## Miss Hale (13 March 2012)

Vixs said:


> Well if you do the sums, that's what rental yields need to be when you don't have negative gearing in place. It has to pay any mortgage on the place plus maintenance costs plus some profit, or there is simply no point in anyone buying it to rent out.
> 
> In reality, if we do have the massive crash down to UK income/house price ratios, there will never ever be a better time for the government to scale down and remove negative gearing. Whether they do or not, I don't care. If it stays I'll take advantage of it when I can, if it goes I'll adapt my financial plans accordingly.




But do you think the negative gearing laws that are in place will stop us having a crash?  I'm inclined to think prices won't come down substantially *unless* they get rid of negative gearing.


----------



## Vixs (13 March 2012)

Miss Hale said:


> But do you think the negative gearing laws that are in place will stop us having a crash?  I'm inclined to think prices won't come down substantially *unless* they get rid of negative gearing.




You need cashflow to live and hold negatively geared property. If unemployment continues to rise in white collar industries (and others) then negative gearing or not, someone is going to feel the pinch.

Same deal with rentals, if people can't afford the rents, rents will come down eventually. That puts more pressure on the negatively geared investors and they may need to get out. 

I'm not making any predictions, I just know that I'm saving for a house deposit and by the time I have the deposit I want, I think it will be a little more affordable.

EDIT: I didn't really respond to what you said. Negative gearing itself can't sustain the property market. Whether we get stagflation or deflation in property prices is what I'm waiting to see.


----------



## Miss Hale (13 March 2012)

Yes, I suppose negative gearing is good when everything is hunky dory but won't be of any use if things go pear shaped


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## Vixs (13 March 2012)

Miss Hale said:


> Yes, I suppose negative gearing is good when everything is hunky dory but won't be of any use if things go pear shaped




It's the perfect strategy for the property market that only ever goes up :

Shame about that whole global economy situation, right?


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## Beej (13 March 2012)

damien275x said:


> Nobody in my age bracket (22-25) wants to buy a home. Too expensive, don't want the debt/commitment




Ha ha - when I was your age back in the early 90s 95% of my friends / colleagues who were the same age said exactly the same thing and cited exactly the same reasons! There is nothing new under the sun......



So_Cynical said:


> http://www.irishcentral.com/news/Fo...r-one-tenth-of-boom-time-price-141164123.html
> 
> Click the link and have a look at the place...amazing what real estate is worth when no ones got any money.
> ~




The thing is, this is a business, not a house. I am actually aware of several similar hotel sales in Australia in the ski resorts - 20-50+ rooms, licensed bars, restaurant etc all included, that sold for about the same amount of money a few years ago - I know because I attended the auctions and considered purchasing them, but didn't go ahead with those plans at the time. 

What commercial places like this fetch really depends largely on the economics and potential of the business that you run with them, rather than the general state of the residential property market.

I would have thought people who hang around forums like this would be a bit more commercially minded and not fall so easily for these sorts of contrived non-examples of "how bad" the property market in country X is (or is not)!


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## Klogg (13 March 2012)

> Nobody in my age bracket (22-25) wants to buy a home. Too expensive, don't want the debt/commitment




I was 22 when I bought my first house, with a loan of 450k to my name. I'm now 25 and am glad I did it.

My point being - don't make these assumptions.


----------



## Miss Hale (13 March 2012)

Beej said:


> Ha ha - when I was your age back in the early 90s 95% of my friends / colleagues who were the same age said exactly the same thing and cited exactly the same reasons! There is nothing new under the sun......




Really?  When I was in that age bracket (also early 90s), all my friends were frantically buying real estate.  I was the exception opting to use my savings for a big overseas trip :.  ( Carpe Diem!! You only live once!   )

Article here about how some areas have experienced a 40% drop in value already:

http://www.news.com.au/money/proper...eavy-discounting/story-e6frfmd0-1226297242759


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## So_Cynical (13 March 2012)

Miss Hale said:


> I was actually wondering what the regulations are about foreigners buying property in the UK because at the moment it looks a lot more attractive than here.




I actually had a bit of a look at real estate in Ireland and Spain last night...seems there are no restrictions at all on foreign ownership....its the residency visa that's a little hard to get.

-------------------------------



Beej said:


> The thing is, this is a business, not a house. I am actually aware of several similar hotel sales in Australia in the ski resorts - 20-50+ rooms, licensed bars, restaurant etc all included, that sold for about the same amount of money a few years ago - I know because I attended the auctions and considered purchasing them, but didn't go ahead with those plans at the time.




Ok Beej its official...you are now well and truly out off the closet as a perma bull.

This is a business, not a house...lol because of course you cant live in a hotel right?

Had a look at some houses and apartments for sale in Dublin and Madrid last night and came to the inescapable conclusion that *ALL real estate was cheap*, commercial, retail, residential, industrial, everything..if it was land it was cheap...less than half the price of like for like Aussie real estate.


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## McLovin (13 March 2012)

Miss Hale said:


> I was actually wondering what the regulations are about foreigners buying property in the UK because at the moment it looks a lot more attractive than here.




There's no restrictions. I was looking at this a couple of month ago when I was in London. The trick is to be able to get a good rate though. That's a lot harder to do when you're not working in the UK.

It's pretty amazing when you look at what you can get in terms of yield and location. Compared to anywhere in Australia.


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## Julia (13 March 2012)

Miss Hale said:


> Article here about how some areas have experienced a 40% drop in value already:



I can endorse that.  With the idea of building a new house, I've had some agents out to give me a likely selling price on my present property and have been taken aback to find it's down around 30% or even more on prices a couple of years ago.


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## Glen48 (13 March 2012)

Ireland, USA, Spain, Iceland, Portugal, Italy, Greece, Belgium, UK, Egypt, China and a few others all have declining real estate markets This time its different been 80 years since the last tanking and as there is one every 75 -80 yrs it is all falling in to place as it has done for  hundreds of years and will continue to do so unless we go back to the gold standard..


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## Dowdy (13 March 2012)

Glen48 said:


> Ireland, USA, Spain, Iceland, Portugal, Italy, Greece, Belgium, UK, Egypt, China and a few others all have declining real estate markets This time its different been 80 years since the last tanking and as there is one every 75 -80 yrs it is all falling in to place as it has done for  hundreds of years and will continue to do so unless we go back to the gold standard..




AS much as I like gold and a gold standard you can achieve the same result by removing or drastically increasing the fractional reserve requirement of banks.


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## desolator (14 March 2012)

Klogg said:


> I was 22 when I bought my first house, with a loan of 450k to my name. I'm now 25 and am glad I did it.
> 
> My point being - don't make these assumptions.




yeah and if you did that on your own Klogg, im sure you wouldnt be saying that if mummy and daddy didnt help.


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## Starcraftmazter (14 March 2012)

Klogg said:


> I was 22 when I bought my first house, with a loan of 450k to my name. I'm now 25 and am glad I did it.
> 
> My point being - don't make these assumptions.




I think he meant nobody smart. And before you protest, your post indicates that you bought at the very height of the bubble in 2009 when the government propped it up with the FHOB. Observe:




See you bought it at that peak. Now, nobody _smart_ would ever buy housing (or anything) at the peak of the bubble.


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## Glen48 (14 March 2012)

He is not alone and many are still buying, once the word get out around election time there will be another bribe offered to suckers to help the feds get back into power, as long as it doesn't tank before then so far some are only down 40%.
 A mate sold his house 3 yrs ago for 360K it is back *on the market* not sold as yet for $390


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## Starcraftmazter (14 March 2012)

Well fortunately home sales are at a 15 year low, so there is some hope for our country yet.


----------



## baby_swallow (14 March 2012)

Starcraftmazter said:


> I think he meant nobody smart. And before you protest, your post indicates that you bought at the very height of the bubble in 2009 when the government propped it up with the FHOB. Observe:
> 
> 
> 
> ...




Looking at the graph, the last three major property price booms since 1950, were proceeded by retracements which lasted for several years. The retracements averages 38% (note: 38% Fib). If we apply this historical price action to the latest boom, the index will drop from the 2010 peak of around 350 pts to 284 pts.

Example of that is: a $500K property bought in 2010 peak will retrace back to $405K.
That's $95K loss or 19% off the purchased price.


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## Starcraftmazter (14 March 2012)

baby_swallow said:


> Looking at the graph, the last three major property price booms since 1950, were proceeded by retracements which lasted for several years. The retracements averages 38% (note: 38% Fib). If we apply this historical price action to the latest boom, the index will drop from the 2010 peak of around 350 pts to 284 pts.




First of all, that's a very narrow minded statement. You are selectively ignoring the mini-bubbles which retraced fully.

Second of all, the current bubble is literally orders of magnitude anything that has happened recently, and is not a good comparison. The best historical comparison is the 1890s housing bubble in Australia which overshot. This bubble will also overshoot.

There are just too many things you aren't taking into account (demographics, commodities & China bubbles, over-indebtedness to name a few), and you have fallen into the fallacy of predicting the future based on the most recent experiences.


----------



## baby_swallow (14 March 2012)

Starcraftmazter said:


> First of all, that's a very narrow minded statement. You are selectively ignoring the mini-bubbles which retraced fully.
> 
> ...




Mate, you don't have to say such derogatory remarks. You don't know me. 
I'm not portraying to be a genius about this subject. 
You have your opinion and I got mine. In fact we are on the same side of this property debate. 
BTW, looking at the posts, this is just my "quick" interpretation of the graph basing purely on price action of  recent times. I see that you sounded that you've done an extensive research about this subject. Good on you.


----------



## Knobby22 (14 March 2012)

Starcraftmazter said:


> Second of all, the current bubble is literally orders of magnitude anything that has happened recently, and is not a good comparison. The best historical comparison is the 1890s housing bubble in Australia which overshot. This bubble will also overshoot.
> 
> There are just too many things you aren't taking into account (demographics, commodities & China bubbles, over-indebtedness to name a few), and you have fallen into the fallacy of predicting the future based on the most recent experiences.




You mention the 1890s experience but the world is different from then too so basing the fall on that is also a fallacy!

Firstly, we need a trigger, where is it?

I personally think baby-swallow is correct, this won't be the full fall, more of a retracement by maybe 20%. There is too much cash floating about from foreigners, miners, public servants you name it and negative gearing still exists as does easy credit that didn't exist previously before we floated the dollar.  

The government will also act to keep the bubble going using 1st home owner grants and increasing immigration.


----------



## Glen48 (14 March 2012)

and when that fails whats next?


----------



## wayneL (14 March 2012)

Knobby22 said:


> You mention the 1890s experience but the world is different from then too so basing the fall on that is also a fallacy!
> 
> Firstly, we need a trigger, where is it?
> 
> ...




In addition, western economies have become highly dependent on rising house prices, as have the investment portfolios of key politicians. 

Propping the bubble is paramount.


----------



## Klogg (14 March 2012)

desolator said:


> yeah and if you did that on your own Klogg, im sure you wouldnt be saying that if mummy and daddy didnt help.




Not only did I do that on my own, I know have a share portfolio of about 35k too.

And my aim here is not to brag, but I take offense to the ageist remarks being made.


----------



## young-gun (14 March 2012)

Klogg said:


> Not only did I do that on my own, I know have a share portfolio of about 35k too.
> 
> And my aim here is not to brag, but I take offense to the ageist remarks being made.




firstly - what is your 450k house(assuming you are around 90-95 LVR if not 100%) worth today?

secondly - i wouldnt go speaking of a 450k house in this forum at the age of 22, the boomers will shoot you down in flames for not living more sustainable and being too greedy for your age even though a few years back 450k didnt get much.


----------



## Klogg (14 March 2012)

young-gun said:


> firstly - what is your 450k house(assuming you are around 90-95 LVR if not 100%) worth today?
> 
> secondly - i wouldnt go speaking of a 450k house in this forum at the age of 22, the boomers will shoot you down in flames for not living more sustainable and being too greedy for your age even though a few years back 450k didnt get much.




I'm @ 80% LVR now, was @ 90% when I first bought (after the boom, refinanced it to less than 80% and got 60% of my LMI back)
As for value, the last bank valuation was 2years ago and that came in at just under 750k. Given the price drop of about 5-10% in the area (going by median), it's now around 680-700k.

And I'm not greedy in the slightest. My income easily supports the loan, and I did it with no help. I'm just making the point that the assumptions that anyone in their early 20s can't afford a home are not always true.


----------



## Dowdy (14 March 2012)

Klogg said:


> I'm @ 80% LVR now, was @ 90% when I first bought (after the boom, refinanced it to less than 80% and got 60% of my LMI back)
> As for value, the last bank valuation was 2years ago and that came in at just under 750k. Given the price drop of about 5-10% in the area (going by median), it's now around 680-700k.
> 
> And I'm not greedy in the slightest. My income easily supports the loan, and I did it with no help. I'm just making the point that the assumptions that anyone in their early 20s can't afford a home are not always true.




So you're telling me that the price went up 50%+ in two years.......and you're not selling! 

Are you mad, you should cash in on the bubble while there's still suckers out there. I'm guessing it's the eastern suburbs, right, then there's no shortage of suckers there.....


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## Bill M (14 March 2012)

Klogg said:


> I'm @ 80% LVR now, was @ 90% when I first bought (after the boom, refinanced it to less than 80% and got 60% of my LMI back)
> As for value, the last bank valuation was 2years ago and that came in at just under 750k. Given the price drop of about 5-10% in the area (going by median), it's now around 680-700k.
> 
> And I'm not greedy in the slightest. My income easily supports the loan, and I did it with no help. I'm just making the point that the assumptions that anyone in their early 20s can't afford a home are not always true.




Can we start from the beginning please?

1. When exactly did you buy your house?

2. Where did you buy your house, what suburb/city?

3. If you borrowed 90% that makes it a $405,000 loan, is that right? On the standard variable rate mortgage that is $700 per week in repayments. Is that right? Did you afford that ok with your salary?

Just wondering as I can't find the original posts.


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## Miss Hale (17 March 2012)

*National survey reveals buyer caution in 2012*

Here is an article about a survey on people's attitude to buying real estate.  I'm not sure how reliable/accurate it is (I don't know who realestateVIEW.com are exactly) but some interesting points including the following:

- Buyers are more cautious about entering the market at present

- Factors affecting this are include interest rates, housing affordability and increasing household expenses 

- buyer confidence was not improved by the November and December interest rate cuts

- More than a fifth of participants claimed they had plans to buy this year until last month’s shock decision by the big four to raise interest rates

See the full article here:

http://www.bigpondmoney.com.au/nati...er-caution-in-2012?cid=ZBP_MON_headline_1503A


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## Glen48 (17 March 2012)

From Steve Keen and Money Morning:


----------



## Starcraftmazter (17 March 2012)

Glen48 said:


> From Steve Keen and Money Morning:
> 
> View attachment 46457




Excellent chart - our crash is looking exactly like Japan. Given we have the same demographic problems going ahead, it's quite likely that we will also get falls over the next 20 years with no letting up.


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## Glen48 (17 March 2012)

From what I have been reading the news needs to catch up to the falls I think the smart victims are deciding to try and get out while there is still money around and suckers buying.
Soon we will see another vendors grant to help the market along.
 Housing market is like the woman and the drunk were the woman tells the man your drunk to which he replies and your ugly but  at least I will be sober in the  morning, the housing market is hoping to wake up pretty in the morning.


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## rryall (17 March 2012)

Glen48 said:


> From what I have been reading the news needs to catch up to the falls I think the smart victims are deciding to try and get out while there is still money around and suckers buying.
> Soon we will see another vendors grant to help the market along.
> Housing market is like the woman and the drunk were the woman tells the man your drunk to which he replies and your ugly but  at least I will be sober in the  morning, the housing market is hoping to wake up pretty in the morning.




There is a reason the news hasn't caught up to the falls. There are obvious incentives (advertising revenue) for newspapers to maintain a biased perspective regarding house prices. This is a massive conflict of interest. However, they will make sure the publish a small percentage of articles from a bearish perspective to show they were not misleading the public. Unfortunately (or fortunately) people take everything they hear in the news as gospel.


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## Beej (18 March 2012)

Glen48 said:


> From Steve Keen and Money Morning:
> 
> View attachment 46457






Starcraftmazter said:


> Excellent chart - our crash is looking exactly like Japan. Given we have the same demographic problems going ahead, it's quite likely that we will also get falls over the next 20 years with no letting up.




You guys just take in all this bearish outlook stuff without any real thought or analysis don't you? Two problems:

1) The data on that chart looks suspect to me, and I notice it doesn't cite a source? From the ABS here: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6416.0Dec 2011?OpenDocument you can see that the national house price index has fallen from it's last peak of 149.8 in the June 1/4 2010 to 141.6 in the Dec 1/4 of 2011 - so 18 months, the period implied on Keen's chart. By my reckoning, that's a fall of 5.5% -whereas Keen's chart implies Oz is 9% down after 18 months, which is factually wrong based on ABS data.

2) All this chart is really saying is that every time property prices have fallen 5% in 12 months, that "this is what the start of a crash" looks like. Australian property prices on average have fallen more than 5% on several other occasions in the past 20 years, and yet there was no subsequent large or ongoing crash, so this line of reasoning proves nothing about what the future holds from this point on really. But I am sure that chart has helped generate traffic for Money Morning and Keen's websites! ;-)


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## Glen48 (18 March 2012)

Robots  err sorry Beej doesn't matter if house  prices are going down  5% or 7.940685% the fact is they are going down.

I would suspect the ABS figures are about 3 months behind the times.

A hand grenade with the pin out is the same as owning a house both will explode and I guess a few home owners sadly will use the hand grenade option once it is clear the market has died. 
 Money Morning is fee you should join up and get with the programme.


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## moXJO (18 March 2012)

Starcraftmazter said:


> Excellent chart - our crash is looking exactly like Japan. Given we have the same demographic problems going ahead, it's quite likely that we will also get falls over the next 20 years with no letting up.




We have nothing like Japans demographic problems


----------



## moXJO (18 March 2012)

Glen48 said:


> From Steve Keen and Money Morning:
> 
> View attachment 46457




Ahhh Steve keen the man who bet his house and lost then bet a walk up the hill and lost. All his predictions come to nought if the government stimulates again or <insert a thousand other factors here>


----------



## young-gun (18 March 2012)

Starcraftmazter said:


> Excellent chart - our crash is looking exactly like Japan. Given we have the same demographic problems going ahead, it's quite likely that we will also get falls over the next 20 years with no letting up.




im unsure how closely comparable our demographics are to japans', but keep in mind they have very strict immigration also. ours is simply, well let anyone and everyone in and buy a house(whether you live here or not).



Beej said:


> You guys just take in all this bearish outlook stuff without any real thought or analysis don't you? Two problems:
> 
> 1) The data on that chart looks suspect to me, and I notice it doesn't cite a source? From the ABS here: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6416.0Dec 2011?OpenDocument you can see that the national house price index has fallen from it's last peak of 149.8 in the June 1/4 2010 to 141.6 in the Dec 1/4 of 2011 - so 18 months, the period implied on Keen's chart. By my reckoning, that's a fall of 5.5% -whereas Keen's chart implies Oz is 9% down after 18 months, which is factually wrong based on ABS data.
> 
> 2) All this chart is really saying is that every time property prices have fallen 5% in 12 months, that "this is what the start of a crash" looks like. Australian property prices on average have fallen more than 5% on several other occasions in the past 20 years, and yet there was no subsequent large or ongoing crash, so this line of reasoning proves nothing about what the future holds from this point on really. But I am sure that chart has helped generate traffic for Money Morning and Keen's websites! ;-)




you must own alot of property at present to have the current view of property that you have.



moXJO said:


> Ahhh Steve keen the man who bet his house and lost then bet a walk up the hill and lost. All his predictions come to nought if the government stimulates again or <insert a thousand other factors here>




Along with every other economist/forecaster? do you honestly believe the stimulus didn't affect prices?

if you took out the variable that is the government and their meddling, economics would almost be a science.


----------



## Beej (18 March 2012)

young-gun said:


> you must own alot of property at present to have the current view of property that you have.




Sorry but I don't see what your comment has to do with what I wrote in the post you responded to? Or is this is a case of not letting facts get in the way of a doom and gloom prediction? Do you think that my point re the actual data on Keen's chart is a valid criticism? Do you have an answer as why every other time property prices have fallen by a few percent over a year or two that they haven't subsequently crashed? Or is it "different this time"?

FYI I only own a PPOR outright, in Sydney, where the ABS index is down 2.9% from the 2010 peak. I've owned property in Sydney continuously since 1992. My spare cash-flow currently channels into other asset classes. My views on the likely direction of the property market are based on my experience, analysis and observations of the market and the data, and thus are not driven by fear of being financially ruined if prices fall (which is what you are implying) - I'll be OK whatever happens. So I am actually probably more objective than the many people who don't own property but want to, and who thus lap up all the doom and gloom stuff that is out there on this topic.



Glen48 said:


> Robots  err sorry Beej doesn't matter if house  prices are going down  5% or 7.940685% the fact is they are going down.
> 
> I would suspect the ABS figures are about 3 months behind the times.




Yes ABS data lags. In fact the leading house price indexes produced by Residex and RP-Data are showing rising house prices since February (Australia average) - so they are not actually falling anymore over-all it seems, or at least we are at an inflection point, rather than an acceleration of any crash as Keen's chart implies / predicts. Here's the Residex data for Feb:




PS; Check out the rental increases in the last year.......


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## Bill M (18 March 2012)

Beej said:


> My views on the likely direction of the property market are based on my experience, analysis and observations of the market and the data, and thus are not driven by fear of being financially ruined if prices fall (which is what you are implying) - *I'll be OK whatever happens*. So I am actually probably more objective than the many people who don't own property but want to, and who thus lap up all the doom and gloom stuff that is out there on this topic.




Same here, I know where my money is coming from. Really doesn't matter to me if prices go up or down.




> PS; Check out the rental increases in the last year.......




In 34 years of residential property investing the rent has only gone one way for me..UP.


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## Bill M (18 March 2012)

Glen48 said:


> Money Morning is fee you should join up and get with the programme.




You got to be kidding, how's those $1.60 Gin and Tonics going.


----------



## McLovin (19 March 2012)

Beej said:


> Do you have an answer as why every other time property prices have fallen by a few percent over a year or two that they haven't subsequently crashed? Or is it "different this time"?




Serious question, until the GFC had US property prices ever crashed? I don't know the answer to this, although from what I've seen the answer is no.

The way I see it, we've had a lot of events that won't be repeated starting from the mid-70s. 

- The baby boomers needing homes
- Women entering the workforce (all of a sudden households went to double income)
- Debt being made more easily available.
- Various incentives to encourage property investment
- Massive productivity increase which killed off inflation but maintained wage growth

Maybe I am being over simplistic, but these events to some extent would have driven property prices. Where is the next catalyst to keep property on an upward trajectory? On top of that, Australia has become increasingly unaffordable. Excluding property, our major capitals are ~50% more expensive than the big cities in North America and Europe.

As I have said previously, I'm not in the "property will collapse" camp, I think it will moderate for an extended period though.


----------



## Starcraftmazter (19 March 2012)

Beej said:


> You guys just take in all this bearish outlook stuff without any real thought or analysis don't you? Two problems:




Believe me buddy - I've put a hell of a lot more thought and analysis into this than you have.



Beej said:


> 1) The data on that chart looks suspect to me, and I notice it doesn't cite a source? From the ABS here: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6416.0Dec 2011?OpenDocument you can see that the national house price index has fallen from it's last peak of 149.8 in the June 1/4 2010 to 141.6 in the Dec 1/4 of 2011 - so 18 months, the period implied on Keen's chart. By my reckoning, that's a fall of 5.5% -whereas Keen's chart implies Oz is 9% down after 18 months, which is factually wrong based on ABS data.




Maybe you should learn how to read a chart. If you look at the Y axis label on the chart, it will say "*Real* Price Index" - or is it that you are unfamiliar with the definition of "real"?



Beej said:


> 2) All this chart is really saying is that every time property prices have fallen 5% in 12 months, that "this is what the start of a crash" looks like.




It is merely comparing the crashes the US and Japan have had with our own current experience. If you have trouble comprehending that, it is no reason to smear the names of good economists like Steve Keen.



moXJO said:


> We have nothing like Japans demographic problems




A very large proportion of the population calling "baby boomers" who own over 50% of all property have started moving into retirement. Pretty sure we do.


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## Glen48 (19 March 2012)

Bill M  You are saying if you propertie/s drop by say 70%  and stay flat for  along time you are happy with that.

House prices have risen about only about 3% a year for the last 40 yrs.



_There's one thing we have learnt from history, it's that we don't learn from history.
Nothing I say is a recommendation or advise, do your own research._

 Research read up on depression you will find we have one about every 75 yrs and find out what caused them.
1930 tanking was cause by feds tampering and housing and in a day when you had to put down 20+ % deposit not -10%.


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## YELNATS (19 March 2012)

Glen48 said:


> Research read up on depression you will find we have one about every 75 yrs and find out what caused them.




Isn't that a bit like saying we have a bad earthquake every 75 years, it's 75 years since we had one, so we're due to have one now. :


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## Knobby22 (19 March 2012)

Starcraftmazter said:


> A very large proportion of the population calling "baby boomers" who own over 50% of all property have started moving into retirement. Pretty sure we do.




I know some Baby Boomers and older who have moved into retirement and they tend to keep holding onto the properties. I think it may take death to prise them from their hands. I don't think they will come onto the market as much as we all would hope. They may also sell to their children as investments so they stay off the market for another generation.

I am talking perfectly located inner city property by the way.


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## Knobby22 (19 March 2012)

Glen48 said:


> Research read up on depression you will find we have one about every 75 yrs and find out what caused them.
> 1930 tanking was cause by feds tampering and housing and in a day when you had to put down 20+ % deposit not -10%.




The Depression was caused by a complex array of factors.
Bubble behaviour and excessive debt in assets and restriction of trade combined with lax regulation were the main causes in my view.


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## Starcraftmazter (19 March 2012)

Knobby22 said:


> I know some Baby Boomers and older who have moved into retirement and they tend to keep holding onto the properties. I think it may take death to prise them from their hands. I don't think they will come onto the market as much as we all would hope. They may also sell to their children as investments so they stay off the market for another generation.




Few things;

First of all, baby boomers hold a disproportionately large amount of investment properties. Even if they choose not to sell their main property (where they live), they will have to sell these to fund their retirement - there is simply no choice.

Additionally, for those whom do not hold IPs or otherwise, it is quite sensible to downsize their property and perhaps move to a quieter location.

In terms of their children - they may not have enough children to flog off their properties to, their children may not want them in the first place (rightly understanding now is not the time to buy), or they could simply disagree on price too much, or their children may already have a property, or they may not want to buy a property of the quality or location which their parents have.


----------



## Glen48 (19 March 2012)

Yelnats,
 Read  up on the Tulips scam, South Sea Island just keep deduction 75 from each event and see the pattern it won't work for earth quakes.


----------



## Knobby22 (19 March 2012)

Starcraftmazter said:


> Few things;
> 
> First of all, baby boomers hold a disproportionately large amount of investment properties. Even if they choose not to sell their main property (where they live), they will have to sell these to fund their retirement - there is simply no choice.
> 
> Additionally, for those whom do not hold IPs or otherwise, it is quite sensible to downsize their property and perhaps move to a quieter location.




They do have a choice, collect the rents. maybe they will sell one but many own a few.

The baby boomers that tend to downsize are the poorer ones, not the investors. There are many elderly widows living in big mansions with many empty rooms.

Finally, I didn't say all would sell to their children, but some will, especially the wealthy ones with kids who went to private school and also have good jobs.

I'm not saying your wrong, just that it will probably not be as ideal as you hope.


----------



## Starcraftmazter (19 March 2012)

Knobby22 said:


> They do have a choice, collect the rents. maybe they will sell one but many own a few.




Why collect the rents on a property through a property crash when you can sell now and lock in better term deposit rates? These are important matters, if you're a person too old to work, but will probably live for a few more decades, then would you really be able to take such a big risk, would you really be able to sleep through the stress? Seems much better to me just to sell.



Knobby22 said:


> The baby boomers that tend to downsize are the poorer ones, not the investors. There are many elderly widows living in big mansions with many empty rooms.
> 
> Finally, I didn't say all would sell to their children, but some will, especially the wealthy ones with kids who went to private school and also have good jobs.
> 
> I'm not saying your wrong, just that it will probably not be as ideal as you hope.




I get the impression you are referring to a specific demographic within the boomers whom are exceedingly wealthy. I question whether it is large enough to hold up the property market single-handedly.

My view of baby boomers is that largely they do not have much wealth and very little super. The only thing they have is "perceived wealth" through properties - which they will have to sell in order to fund their retirement.


----------



## Knobby22 (19 March 2012)

Starcraftmazter said:


> Why collect the rents on a property through a property crash when you can sell now and lock in better term deposit rates? These are important matters, if you're a person too old to work, but will probably live for a few more decades, then would you really be able to take such a big risk, would you really be able to sleep through the stress? Seems much better to me just to sell.




Their experience with property has been good, they will sleep well.
Also it is a hedge against inflation, something term deposits are not.


----------



## Starcraftmazter (19 March 2012)

Knobby22 said:


> Their experience with property has been good, they will sleep well.




Alright let's say this, you are a baby boomer and you are retired living with your wife in an average house. You have one IP.

You turn on the news, and month after month you are told that house prices have gone down. With time these falls begin to accelerate. Suddenly the man on the news says that house prices have dropped for the longest time in decades.

Can you really go to bed knowing that your investment is safe? Can you really feel financially secure?

Now this is a point which is different for many people. Some get stressed out easily, others will refuse to accept that property does anything accept go up in price in the longer term.

But overall, I would suggest that one by one people get nervous and start selling out. You get a Minsky moment, then before you know it _everyone_ is selling.




Knobby22 said:


> Also it is a hedge against inflation, something term deposits are not.




In a country like say Germany where real house prices have been per perfectly stable for over 40 years, I do agree it is a good hedge against inflation and a smart way to build your wealth without having to resort to risky endeavours in more volatile markets.

But that's only because Germany has the most perfect housing market in the world where real prices basically never go up or down.

But in a country like Australia with one of the world's worst housing markets, which is highly susceptible to boom and bust cycles, how in the world can property be considered a hedge against inflation during a bust like the one we are having now, whereby a property owner's best hope would be that the value of his property doesn't exceed in it's price fall by more than inflation?


----------



## McLovin (19 March 2012)

Starcraftmazter said:


> Why collect the rents on a property through a property crash when you can sell now and lock in better term deposit rates?




Because if you own a debt free property, why do you care, unless you think rents will crash, what the property is worth? Why try and second guess the market and lock yourself into a term deposit which might get eaten away at inflation when you have a inflation protected income stream that will fund your retirement.


----------



## Starcraftmazter (19 March 2012)

McLovin said:


> Because if you own a debt free property, why do you care, unless you think rents will crash, what the property is worth?




So what you are saying is, holding an asset, why do you care if that asset will drop in price...

Like...I don't know, maybe I guess because people don't like losing money? Like you know, it's seen as not such a good thing to happen because more money is always better - right?



McLovin said:


> Why try and second guess the market and lock yourself into a term deposit which might get eaten away at inflation when you have a inflation protected income stream that will fund your retirement.




I don't know, maybe because getting eaten away with inflation is a lot better than getting eaten away at a rate far exceeding inflation?

Rent is not an inflation protected income stream either, in housing downturns rent goes down just as well as prices. Rent has little to do with inflation.


----------



## McLovin (19 March 2012)

Starcraftmazter said:


> So what you are saying is, holding an asset, why do you care if that asset will drop in price...
> 
> Like...I don't know, maybe I guess because people don't like losing money? Like you know, it's seen as not such a good thing to happen because more money is always better - right?




Most people are happy with the income stream. Especially once they hit retirement. There's a reason retirees buy bonds. It's not because they hope that the price of the bond will appreciate it's because they want a steady earnings stream.





Starcraftmazter said:


> Rent is not an inflation protected income stream either, in housing downturns rent goes down just as well as prices.




No it doesn't, unless rents have spiked which they haven't (iirc they have risen ~30% in real terms since the 70s). Infact, one of the main bear arguments against the property market is the fact that real rents have remained relatively flat while property prices have surged. Even in the US, despite the massive surge in home prices and subsequent collapse, rents have remained flat in real terms. Quite simply, in a bubble, people trade off income for capital growth. As a someone who spent most of my investing life in the stock market, I see it as a scenario of property being an ex-growth stock on a high PE. Over time the PE will compress the E will keep rising but the P will stay flat.


----------



## Mr Z (19 March 2012)

YELNATS said:


> Isn't that a bit like saying we have a bad earthquake every 75 years, it's 75 years since we had one, so we're due to have one now. :




No, it is closer to a cycle... more reliable, predictable and better understood.

Think debt super cycle & Nikolai Kondratiev long wave cycles. They where typically in the neighborhood of 60 years but we are better at "pretend and extend" these days so we are pushing that out quite a bit.


----------



## sinner (19 March 2012)

For the record,

I currently live in a house which is rented. The landlord is one of three sons of an old Greek lady and her (late) Italian husband.

When the husband died and the lady was unable to take care of herself, the sons did not sell the property, they looked for someone who could pay the rent. In that way they ensured a good income stream to pay their mothers retirement village fees. 

They could have sold the property, or even put it in reverse mortgage, but they chose to rent it out. 

Just my  on the topic above.


----------



## Mr Z (19 March 2012)

Knobby22 said:


> I know some Baby Boomers and older who have moved into retirement and they tend to keep holding onto the properties. I think it may take death to prise them from their hands. I don't think they will come onto the market as much as we all would hope. They may also sell to their children as investments so they stay off the market for another generation.
> 
> I am talking perfectly located inner city property by the way.




While that may be the case the stats say that less than 1% of them will be self funded in retirement. On the whole they will need to deleverage and sell assets to maintain income.


----------



## Mr Z (19 March 2012)

Knobby22 said:


> The Depression was caused by a complex array of factors.




It is not that complex, in the end it is all about excessive debt.


----------



## Knobby22 (19 March 2012)

Mr Z said:


> While that may be the case the stats say that less than 1% of them will be self funded in retirement. On the whole they will need to deleverage and sell assets to maintain income.




Show me the stats.


----------



## Starcraftmazter (19 March 2012)

McLovin said:


> Most people are happy with the income stream. Especially once they hit retirement. There's a reason retirees buy bonds. It's not because they hope that the price of the bond will appreciate it's because they want a steady earnings stream.




Yes - but there's a very very big difference between bonds and houses, so please do not try to compare them. You do not get a guaranteed 100% ROI with a house. You don't get it with Greek bonds either, but I think that's a lesson well learned by now.

I would highly encourage pensioners to sell property and buy bonds (say our federal government bonds for instance) - I think that's a fine investment.



McLovin said:


> No it doesn't, unless rents have spiked which they haven't (iirc they have risen ~30% in real terms since the 70s). Infact, one of the main bear arguments against the property market is the fact that real rents have remained relatively flat while property prices have surged. Even in the US, despite the massive surge in home prices and subsequent collapse, rents have remained flat in real terms. Quite simply, in a bubble, people trade off income for capital growth. As a someone who spent most of my investing life in the stock market, I see it as a scenario of property being an ex-growth stock on a high PE. Over time the PE will compress because the P will fall.




According to my research both in general fall. Housing downturns bring on recessions, which destroys demand for housing in general - be it buying or renting, as people co-habit more.


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## skcots (19 March 2012)

A relative of mine is moving into a retirement village as he is no longer capable of living by himself. The retirement village is quite expensive costing something like $250,000 upfront. He can afford this but is still selling his house as if it is rented he will lose a lot of his pension.

I am not sure if retiring baby boomers will be seeking any kind of centrelink benefits but might be worth considering.


----------



## McLovin (19 March 2012)

Starcraftmazter said:


> According to my research both in general fall. Housing downturns bring on recessions, which destroys demand for housing in general - be it buying or renting, as people co-habit more.




Cite.


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## Mr Z (19 March 2012)

Knobby22 said:


> Show me the stats.




I dunno where that number came from, I have had it quoted by quite a few in the investment business... what they are saying is that less than 1% make it through retirement without government assistance at some point. It takes more to retiree than most think! In that process they typically divest themselves of major assets.

There are around 125,000 currently self funded retirees out of a retirement population of around 2 million --> ~ 6-7%. It is optimistic to think that they will all make it through to the end fully self funded so logically they divest at some point BUT even if they don't there will be many more sellers than buyers and as price is set at the margin, you only really need a small imbalance to drive price one way or the other.


----------



## Julia (19 March 2012)

Starcraftmazter said:


> First of all, baby boomers hold a disproportionately large amount of investment properties. Even if they choose not to sell their main property (where they live), they will have to sell these to fund their retirement - there is simply no choice.



Just ease off on the categorical, dogmatic statements.  There are plenty of choices.  The world does not run according to your rules, thank god.



Starcraftmazter said:


> Why collect the rents on a property through a property crash when you can sell now and lock in better term deposit rates? These are important matters, if you're a person too old to work, but will probably live for a few more decades, then would you really be able to take such a big risk, would you really be able to sleep through the stress? Seems much better to me just to sell.



Others have already addressed this point.  It's very arrogant of you, especially at your minimal age, to imagine that what you think is best will in fact be even remotely in line with what baby boomers and retirees generally want and/or intend to do.



> My view of baby boomers is that largely they do not have much wealth and very little super. The only thing they have is "perceived wealth" through properties - which they will have to sell in order to fund their retirement.



Well, just consider for a millisecond that *your view* just may not be 100% right.  I know it doesn't come naturally to you to even consider any such thing, but just try.



Starcraftmazter said:


> I would highly encourage pensioners to sell property and buy bonds (say our federal government bonds for instance) - I think that's a fine investment.



Do you indeed?  Trouble is, there's no earthly reason why any pensioner should take the slightest notice of what you think they should do, so maybe just stop being so tediously dictatorial.


----------



## Starcraftmazter (19 March 2012)

McLovin said:


> Cite.




It's hard to find a lot of things quickly, but let's just see here....

http://www.time.com/time/magazine/article/0,9171,1874846,00.html



Julia said:


> Well, just consider for a millisecond that *your view* just may not be 100% right.  I know it doesn't come naturally to you to even consider any such thing, but just try.




It's not really my view so much as it is economic fact.


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## Knobby22 (19 March 2012)

Mr Z said:


> I dunno where that number came from, I have had it quoted by quite a few in the investment business... what they are saying is that less than 1% make it through retirement without government assistance at some point. It takes more to retiree than most think! In that process they typically divest themselves of major assets.
> 
> There are around 125,000 currently self funded retirees out of a retirement population of around 2 million --> ~ 6-7%. It is optimistic to think that they will all make it through to the end fully self funded so logically they divest at some point BUT even if they don't there will be many more sellers than buyers and as price is set at the margin, you only really need a small imbalance to drive price one way or the other.




Yes, I knew that 1% figure is a dodgy figure used to sell investment products, that's why I asked. 

Thanks for the real info.  it doesn't include those that structure their affairs to claim the pension even though they own assets through a trust and people getting the part pension. 

It is a good point you make that many will eventually sell and skcots gives a good example. sinner gives a good alternative example also of a home being kept. If you have a family trust you may not need to sell.

I just think it will be a slow effect and may not cause the drop some are expecting.


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## McLovin (19 March 2012)

http://www.lincolninst.edu/subcenters/land-values/rent-price-ratio.asp



			
				Rents said:
			
		

> 2007.3	$9,925.86
> 2007.4	$10,030.68
> 2008.1	$10,118.79
> 2008.2	$10,198.55
> ...




Average annual rent across the US...

Considering that period covers the worst recession since 1930 coupled with the worst crash in house prices ever, I think it's fair to say rents don't crash....

Going back further, you can see that rents are not subject to the same appreciation that prices are...


> 2000.3	$7,785.46
> 2000.4	$7,868.33
> 2001.1	$7,952.61
> 2001.2	$8,049.52
> ...


----------



## Starcraftmazter (19 March 2012)

McLovin said:


> http://www.lincolninst.edu/subcenters/land-values/rent-price-ratio.asp
> 
> 
> 
> Average annual rent across the US...




No it's the rent to house price ratio - please don't change the subject.


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## McLovin (19 March 2012)

Starcraftmazter said:


> No it's the rent to house price ratio - please don't change the subject.




No, it's not. There are three sheets in that workbook. "rent-price data" is the one you want.


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## Knobby22 (19 March 2012)

That is incredibly flat McLovin.

I suspect that Australian data will be much steeper asthe middle class has had a rise in pay unlike the USA middle class over the same time frame.


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## McLovin (19 March 2012)

Knobby22 said:


> That is incredibly flat McLovin.
> 
> I suspect that Australian data will be much steeper asthe middle class has had a rise in pay unlike the USA middle class over the same time frame.




According to the ABS...



> Between 1994–95 and 2009–10, private renters experienced a $95 (or 45%) increase in
> average weekly housing costs, after adjustment for inflation.




http://www.ausstats.abs.gov.au/Ausstats/subscriber.nsf/0/7BA06D0612AAABF7CA257949000B9FBE/$File/41300_2009-10.pdf


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## Starcraftmazter (19 March 2012)

McLovin said:


> No, it's not. There are three sheets in that workbook. "*rent-price data*" is the one you want.




Pretty sure I just said that's the one I *don't* want?

What I'd be looking for are the rents (preferably real rents).

That site has 3 things none of which is that;

 - Rent to Price ratio
 - Imputed for owner-occupiers
 - Underlying data sheets

Of the data sheets, there is only a BLS measurement of rent. However if you look at what actually goes into that index:
http://www.bls.gov/cpi/cpifact6.htm

You will see that it to is largely about imputed rent from owner-occupiers, because the US officials are obsessed with the obfuscation of any proper economic data.

You will also note that they state it is only recalculated twice a year because they _assume_ that there is no volatility within rents.


In conclusion, I can understand the gesture, but the figures you linked to are a load of crap.


----------



## McLovin (19 March 2012)

Starcraftmazter said:


> Pretty sure I just said that's the one I *don't* want?




You didn't want the ratio, so I gave you the data. Until you have something a bit stronger than a Time magazine article I guess it will have to do.

You seem to spend more time disputing anything or anyone who doesn't believe in your version of the world than you do in actually trying to understand the world. Good luck, I'm out.


----------



## Starcraftmazter (19 March 2012)

McLovin said:


> You didn't want the ratio, so I gave you the data. Until you have something a bit stronger than a Time magazine article I guess it will have to do.




There is no data there which reflects how much rent people pay. Explanation above.


----------



## Bill M (19 March 2012)

Glen48 said:


> Bill M  You are saying if you propertie/s drop by say 70%  and stay flat for  along time you are happy with that.




No one in their right mind would be happy with a 70% price drop but for me I have an IP mostly for it's rental income. I own it 100% debt free and treat it's income like a small pension. I also do not believe in fanciful 70% drop predictions.



> House prices have risen about only about 3% a year for the last 40 yrs.



How about throwing up some credible evidence of this.



> Research read up on depression you will find we have one about every 75 yrs and find out what caused them.
> 1930 tanking was cause by feds tampering and housing and in a day when you had to put down 20+ % deposit not -10%.




We don't know when or if ever this will occur. It's all just guess work. Put it this way, if there was a depression I would rather be a property owner and property investor receiving some rent than have nothing. Imagine having no job, no income and no where to live. No thanks I will keep my home and grow some vegies in the back yard.


----------



## young-gun (19 March 2012)

YELNATS said:


> Isn't that a bit like saying we have a bad earthquake every 75 years, it's 75 years since we had one, so we're due to have one now. :




If you were a geologist, there would be many signs that indicate that an earth quake is about to occur. If you look at the signals we have at current, we are heading into the next great depression. I have been doing some reading on the great depression, and the similarities to events that occurred in the lead up to then, compared to those occurring today, are very close. If central banks didn't intervene when they did, we would already be witnessing it in full force. everyone can beat up on the doom n gloomers all they want, but the fact is with the current global economic situation, its not off the cards by any means. The only thing we are waiting on is the US' next 'black tuesday'.

@beej, my point was towards your opinion in general, not just in relation to that post, sorry. there isnt a single argument that can be made, that differs to those made in every other country in the world(with the exception of canada i think?) prior to their property bubble imploding. you can be as positive as you want. but being too positive in such a negative environment can lead to poor investment choices. if property was a winner right now, id buy.

@mclovin - property in the states had started to slide from '06. as far as im aware it was the beginning fallout in the property market that started hurting the banks? and eventually led to the collapse of lehmans? im sure there were other factors.


----------



## Ves (19 March 2012)

Some of you guys (and girls?) really need to crack out some psychology books and research the term _confirmation bias._


----------



## young-gun (19 March 2012)

Glen48 said:


> Bill M  You are saying if you propertie/s drop by say 70%  and stay flat for  along time you are happy with that.
> 
> House prices have risen about only about 3% a year for the last 40 yrs.
> 
> ...




property crashing was not a cause that led to the great depression.


----------



## Ves (19 March 2012)

Starcraftmazter said:


> It is merely comparing the crashes the US and Japan have had with our own current experience. If you have trouble comprehending that, it is no reason to smear the names of good economists like Steve Keen.



This guy is a sensationalist, clearly making a living off dramatic claims that he can see a crisis coming. Ironically, most of his predications have been way off the mark. I guess, like any "good" economist, the more predictions you make, the more chance you have of finally getting that "big call" right that will immortalise you in economic folklore forever (much like the so-called miracle workers who predicted the GFC).

I am sure you will provide a concocted list of empirical evidence where he has been on the mark, true to your previous form.

edit: the gold graph of the last few weeks eerily resembles the housing graph. Panic stations?


----------



## Mr Z (19 March 2012)

Knobby22 said:


> Yes, I knew that 1% figure is a dodgy figure used to sell investment products, that's why I asked.




I don't think it is actually that dodgy a number and it is certainly near true for the sample that I know. Regardless even if it is 1000% wrong the outcome will be the same.


----------



## Mr Z (19 March 2012)

Bill M said:


> How about throwing up some credible evidence of this.






3% doubles your value in around 25 years. In real terms this is about what we have seen, in nominal terms it is greater... naturally. This is why real estate is a good investment MOST (not all) of the time, it is basically a very leveraged bet that inflation will continue. In a western economy this is about as certain as you get, aside from in debt super cycle deleverageing periods... which we are now in globally. The global real estate experience will visit our shores, we are not different and Keen is correct... it is all about the debt.


----------



## Bill M (19 March 2012)

Mr Z said:


> Keen is correct...




Keen will only be correct if it happens. We have seen nothing like 40% real estate falls in Sydney. Until then it's nothing but pure speculation and fantasy.

---
*Steve Keen wrong on house prices (again)*

Like most of Keen’s predictions, such as the ‘best case scenario’ during the GFC being 11 per cent unemployment and a recession “more severe than 1990 and lasting 1.5 times as long” (unemployment peaked at 5.8 per cent while there was no recession), his 2008 projection proved way wide of the mark.

For the record, Australian dwelling prices are today 13.3 per cent higher than when Keen put his reputation on the chopping block, and 89 per cent higher than the level at which Keen expected them to be.

Link:http://www.switzer.com.au/the-experts/christopher-joye/steve-keen-wrong-on-house-prices-again/

---


----------



## Mr Z (19 March 2012)

Bill M said:


> Keen will only be correct if it happens.




DON"T PART QUOTE ME!

Keen is correct, it is all about the debt.


----------



## Bill M (19 March 2012)

Mr Z said:


> DON"T PART QUOTE ME!
> 
> Keen is correct, it is all about the debt.




Don't part quote me either, I will believe it when I see it, until then it is business as usual.


----------



## Starcraftmazter (19 March 2012)

Ves said:


> This guy is a sensationalist




How?



Ves said:


> , clearly making a living off dramatic claims that he can see a crisis coming.




Well actually no, he makes a living off being a professor at the university of western Sydney and his research.

Speaking of his research, he recently got a large sum of cash to develop his world-leading debt deflation models which are the epicentre of his research. A true pioneer economist - easily the best in Australia.



Ves said:


> Ironically, most of his predications have been way off the mark.




You mean like the GFC? That wasn't off the mark at all.

You are clearly a biased person.


----------



## Beej (19 March 2012)

Starcraftmazter said:


> How?




Are you old enough to remember 2008? He was all over the media - ACA, 7:30 report, 60 minutes, Lateline etc spruiking his doom and gloom, predicting his 40% crash in house prices etc. He even made a bet with then Macquarie Bank economist Rory Robertson about house prices that resulted in Keen having to walk from Canberra to Mt Kosciusko because he was so "hopelessly wrong on house prices"! LOL.



> Well actually no, he makes a living off being a professor at the university of western Sydney and his research.




He sells books too, and raises money via his website - oh and he is only an "associate" professor by the way, at UWS - hardly the most prestigious position or the most prestigious institution for economic research around.....



> Speaking of his research, he recently got a large sum of cash to develop his world-leading debt deflation models which are the epicentre of his research. A true pioneer economist - easily the best in Australia.




Well he does some interesting work and his theories are worth having a think about, but he also get's a lot of stuff wrong and is not seen as being all that great by most of his profession - mainly just by internet fan-boy's like yourself.



> You mean like the GFC? That wasn't off the mark at all.




Well he kind of predicted some general aspects related to the GFC, but none of the specifics, but he was totally wrong about it with respect the Australian economy generally, and literally "hopelessly' wrong with respect to the GFC and Australian house prices.......he still has the T-shirt I think?

PS: For someone who claims to have researched a topic so well you make some pretty certain and outlandish statements! You remind me of many posters on this forum  from back in 2008 who were just as certain as you about what was going to happen, giving out the same advice for the same reasons etc etc. They even posted the same charts you do!

PPS I would really "research" your claims about Japan demographics vs Australia's if I were you as well.


----------



## Starcraftmazter (19 March 2012)

Beej said:


> Are you old enough to remember 2008? He was all over the media - ACA, 7:30 report, 60 minutes, Lateline etc spruiking his doom and gloom, predicting his 40% crash in house prices etc. He even made a bet with then Macquarie Bank economist Rory Robertson about house prices that resulted in Keen having to walk from Canberra to Mt Kosciusko because he was so "hopelessly wrong on house prices"! LOL.




First of all; he was entirely correct about his predictions about a 40% drop in house prices. You seem to forget his time horizon.

Second of all, the bet he "lost" had nothing to do with his predictions - it was all media propaganda. Here is all of the evidence:
http://www.debtdeflation.com/blogs/2010/05/12/a-monkey-off-my-back/



Beej said:


> He sells books too, and raises money via his website - oh and he is only an "associate" professor by the way, at UWS - hardly the most prestigious position or the most prestigious institution for economic research around.....




You're quite welcome not to buy his books nor donate money to him. However were you an actual economist, you would find his work extremely interesting.



Beej said:


> Well he does some interesting work and his theories are worth having a think about, but he also get's a lot of stuff wrong




Please, name some of these things that you seem to know so much about.



Beej said:


> and is not seen as being all that great by most of his profession - mainly just by internet fan-boy's like yourself.




Most of his profession are government lackies that wouldn't know a bubble if they were in one.



Beej said:


> Well he kind of predicted some general aspects related to the GFC, but none of the specifics




There is no kind of about it. He understood the causes of the GFC and knew it would occur. He alerted others to it. End of point.



Beej said:


> but he was totally wrong about it with respect the Australian economy generally, and literally "hopelessly' wrong with respect to the GFC and Australian house prices.......he still has the T-shirt I think?




In what way was he wrong?



Beej said:


> PS: For someone who claims to have researched a topic so well you make some pretty certain and outlandish statements!




Disprove any of them - go ahead.


----------



## McLovin (19 March 2012)

Ves said:


> Some of you guys (and girls?) really need to crack out some psychology books and research the term _confirmation bias._




Thank God someone mentioned it.


----------



## Mr Z (20 March 2012)

Bill M said:


> Don't part quote me either, I will believe it when I see it, until then it is business as usual.




I addressed one of your questions...then I used your lead... you quoted me completely out of context.... *BIG DIFFERENCE*!

I made no comment on Keen's predictions, the comment I made was that Keens central tenet i.e. that the largest determinate of real estate price is credit/debt factors.... is indeed correct! This is all about the debt, Keen is correct in that.

You may also notice that I didn't comment on his 2010 Melbourne Cup pick!!!!! If you *READ* closely enough.

What is it? Don't you like that your precious real estate has only grown 3% PA in real terms?

Try addressing Keen's assertion that it is all about the debt, then you might get somewhere.


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## sptrawler (20 March 2012)

What I have trouble reconciling is the belief that housing will fall a further 40%. It doesn't make sense, unless there is a catastrophe in our economy and that seems highly unlikely.
Everyone is comparing us to Europe and the U.S and saying it has happened there so the same will happen here. I agree it usually does and to a certain degree it has and is happening right now. 
But to think there will be a major crash, is relying on China, India and to a lesser degree SE Asia halting growth. The size and availability of our resource base and the relatively small population that it has to support is a very unique situation.
The restructuring of the manufacturing and retail sectors may cause house prices to slide further. However to expect starter house and land packges to drop to $150-160k I think is wishfull thinking. 
That would mean the price of developed land with services would have to drop to around $75k and the house to around $75k. That would require the price of materials/labor to halve. 
Also if wages, interest rates and rents remain similar everyone would be positively geared at 10% return.
For my kids sake I hope it does happen, but I wouldn't be relying on a massive house crash as my retirement plan. 
I would definately have a plan B incase it didn't happen.
Inflation is a great leveler.


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## explod (20 March 2012)

sptrawler said:


> I would definately have a plan B incase it didn't happen.
> Inflation is a great leveler.




In monetary terms as we have traditionally recognised them I think you are on the right track in theory.

It is the diminishing value of paper money that is eating away at equity value and the rising costs (inflation) of food, fuel, clothing etc., as well as a growing value of our Aussie dollar.  And our rich resources may well see this rise much more against other currencies.

In the long term, good land and your home will never be effected;  but on the investment side, particularly that built on debt could be in a lot of trouble for some time going forward.


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## Starcraftmazter (20 March 2012)

All bubbles pop buddy - there are no exceptions.

Mining doesn't directly benefit anyone, so I fail to see how or why it would save the bubble from popping.


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## sptrawler (20 March 2012)

Starcraftmazter said:


> All bubbles pop buddy - there are no exceptions.
> 
> Mining doesn't directly benefit anyone, so I fail to see how or why it would save the bubble from popping.




Your reasoning is sound SCM, however I can only go from experience and limited financial knowledge.
There is definately a housing bubble and the slide will continue, it is where the slide and the inflationary rise of disposable income intersect that I think about.
I know my wages in the same position tripled over the last 15 years, I heard on the radio the other day the average wage of teachers will be nearly $100k. Most tradesmen I know in the non mining sector, that are on wages are earning $100k. Council workers are on $70k with O/T.
It won't take long, if inflation cpi and interest rates stay low, for the slack to be taken up.
In Perth outer suburbs an established 3 bed 1 bath on 700m2 is selling for $250-300k. If by your reasoning, they will go down another 50% that will make them awefully cheap.
The suburbs about 10-15k's out entry prices are around $350-400k, but realistically these are 2nd home buyer areas. 
Again I can't see them going down another 50%, not unless interest rates start and climb appreciably. I remember when I purchased my second house the interest rate was 19%, now that would certainly put everything in a tail spin. But I can't see that happening.
I know the average loan is high but is that due to peoples expectations exceeding their income. Maybe people will have to go back to buying a starter home first rather than buying what in reality should have been their 2nd or even 3rd home. Maybe a lot of people will have to take one step back, which would probably put them where they in reality should be.
That's one problem with the have to have it now and won't take second best mentality.


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## Starcraftmazter (20 March 2012)

By my reckoning, the bubble in house prices has dragged up wages reluctantly. If house prices are not rising (as they can't) - so there is no reason for wages to rise further. This is cemented by the fact that these wage rises have made us internationally uncompetitive which is causing us to lose jobs.

House prices fall and wages will fall in line with them.


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## sptrawler (20 March 2012)

Starcraftmazter said:


> By my reckoning, the bubble in house prices has dragged up wages reluctantly. If house prices are not rising (as they can't) - so there is no reason for wages to rise further. This is cemented by the fact that these wage rises have made us internationally uncompetitive which is causing us to lose jobs.
> 
> House prices fall and wages will fall in line with them.




We agree, it is just we are looking from different ends of the tube.
We are uncompetitive in the sectors that are being hammered. We will always be competitive with raw materials, because most of ours are sitting on the surface therefore costs are minimal.

By the way, do you think houses are expensive, or do you think houses that you would like to own are expensive?

To buy an older home in an outer suburb for $250k will cost $425/wk @7.5% interest. That is still probably too high, take that house down to $200k and the payments are $340/wk that is the same as rent.


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## Starcraftmazter (20 March 2012)

sptrawler said:


> By the way, do you think houses are expensive, or do you think houses that you would like to own are expensive?




Personally, and I do not lie, I would not like to own a home. Or at least at this stage - maybe in 10 years or so, if prices come down enough.

So to answer your question, I haven't really been looking. I just use the median prices for property and the median wages as a gauge to how overpriced property is - so I take the most general case.


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## Logique (20 March 2012)

ACT prices could do with some easing.

Student ordered to quit his 'home' on lake 
By Stephanie Anderson, Canberra Times
March 20, 2012
http://www.canberratimes.com.au/dom...-to-quit-his-home-on-lake-20120319-1vg0h.html
_"..A student who has been living on the waters of Lake Ginninderra has been given orders to move on by the ACT government.
William Woodbridge, a University of Canberra student, has been living on the homemade raft for six weeks, since tiring of Canberra's rental market and the increasing costs of living in university accommodation.."_


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## sptrawler (20 March 2012)

Starcraftmazter said:


> Personally, and I do not lie, I would not like to own a home. Or at least at this stage - maybe in 10 years or so, if prices come down enough.
> 
> So to answer your question, I haven't really been looking. I just use the median prices for property and the median wages as a gauge to how overpriced property is - so I take the most general case.




Thats what I have been getting at SCM, some areas have already been hammered and if you buy well it will only cost the same as rent. Secondly buying investment property at the moment is like a smorgasbord, there are a lot of business people being hammered, furniture shops etc. These people have investment properties that they have to move, not nice but hey. Some are in great locations and are positively geared.
The problem with median prices is, it is a reflection of houses that are selling, not a reflection of houses on the market.

Don't keep yourself out of an appreciating asset if you don't have to. I remember when I was young(here we go) houses were around $25-30k, I don't think they will go back to that and I'm 56. Trust me in 10 years they WILL be dearer than they are now.
An old bloke once told me, God's not making any more land or coastline or river front.


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## Mr Z (20 March 2012)

I am interested in real gains! The nominal price of housing can go anywhere, just ask Robert Mugabe, it all depends what government does with our money. I suspect they will battle to keep a reasonable price level just because it is politically desirable and because will not "challenge" the financial system with a big hurdle to negotiate. BUT that will mean unreasonable inflation and an environment where an unused refrigerator's capital gains will outstrip a house! Don't laugh, in the past some people in Brazil resorted to buying and keeping new white goods over trusting the money or banks 

We are challenged on the demographic front, so is China. Resources are currently the smaller part of our economy, while it is logical to expect it to grow it will not be smooth and the shift from our current mix will not be seamless.

In the end it is all about credit and how we can grow it OR how we can't. When the blue line hits zero housing is in deep trouble, we are already feeling the impact as we approach zero. Note the impact of the personal credit contraction on retail so far, note how it tends to lead business.




Read this if you are interested, it is Ray Dalio's take on how it all works and while it is not classic Austrian School it is a practical real world view that has guided him to making billions with Bridgewater Associates.

View attachment A Template For Understanding.pdf


Yeah I know it says copyright etc at the end but they post it in the public domain here...

http://www.bwater.com/Uploads/FileM...-for-understanding--ray-dalio-bridgewater.pdf

It is all about debt in the end! It is as natural as breathing in and breathing out, expansion must eventually lead to retrenchment.


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## Mr Z (20 March 2012)

sptrawler said:


> Thats what I have been getting at SCM, some areas have already been hammered and if you buy well it will only cost the same as rent. Secondly buying investment property at the moment is like a smorgasbord, there are a lot of business people being hammered, furniture shops etc. These people have investment properties that they have to move, not nice but hey. Some are in great locations and are positively geared.
> The problem with median prices is, it is a reflection of houses that are selling, not a reflection of houses on the market.




Catching a falling knife?


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## Bill M (20 March 2012)

sptrawler said:


> Don't keep yourself out of an appreciating asset if you don't have to. I remember when I was young(here we go) houses were around $25-30k, I don't think they will go back to that and I'm 56. Trust me in 10 years they WILL be dearer than they are now.
> An old bloke once told me, God's not making any more land or coastline or river front.




That is exactly my real estate investing experience also.



Mr Z said:


> Catching a falling knife?




OK Mr Z no problem. You can stick to your methods and I will stick to mine, no need for me to go on about Keen any more, I certainly don't consult him when I make property decisions. We long term property investors have heard it all several times before, I hope you do well in the future.


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## sptrawler (20 March 2012)

Mr Z said:


> Catching a falling knife?




Well I suppose that is true statement. 
However those who caught the C.B.A falling knife at $26 in 2009 I suppose did better than the ones who let it go expecting it to fall further. 
I know they will fall again and recover and fall again but does that mean you do nothing?


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## Starcraftmazter (20 March 2012)

sptrawler said:


> Thats what I have been getting at SCM, some areas have already been hammered and if you buy well it will only cost the same as rent. Secondly buying investment property at the moment is like a smorgasbord, there are a lot of business people being hammered, furniture shops etc. These people have investment properties that they have to move, not nice but hey. Some are in great locations and are positively geared.
> The problem with median prices is, it is a reflection of houses that are selling, not a reflection of houses on the market.




Aren't the the houses selling the ones currently on the market? Or did you mean the ones that are not selling? Their price I imagine would be determined by those which _are_ selling.

I don't disagree there are areas - especially in Qld which have had some pretty big falls, but I do think they will fall even further.

It is not unreasonable to say that not the entire country will plummet all at once, some areas will definitely be leading, and Melbourne looks to be the first capital where property prices will plummet due to the oversupply issue there.



sptrawler said:


> Don't keep yourself out of an appreciating asset if you don't have to. I remember when I was young(here we go) houses were around $25-30k, I don't think they will go back to that and I'm 56. Trust me in 10 years they WILL be dearer than they are now.
> An old bloke once told me, God's not making any more land or coastline or river front.




I really doubt there is any property that you can just buy at the moment and consider it a safe investment that will only go up. Doesn't matter the location, it just goes against all the evidence.

Some areas may be cheap relative to the most recent past, but they can get cheaper...and cheaper...and cheaper.

Land is a finite resource, but Australia is a very sparsely populated country and most of it is very low in residential density. Hong Kong is 82 times smaller than Tasmania yet has 1/3 of Australia's entire population. With that density, you could fit Australia's entire population into an area 1/3rd the size of Sydney. Food for thought.


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## Mr Z (20 March 2012)

Bill M said:


> We long term property investors have heard it all several times before, I hope you do well in the future.




Debt super cycles can be larger than your life experience and certaintly exceed most peoples investment careers. You have not experienced this before unless you lived the 1930's. This is a once in a life time market condition for most people.

I'm an ex-property investor and developer so I guess I have heard all you have! 

Yes I do intend to do well in the future BUT this will be hard to negotiate correctly even if you take the time to understand what is happening. This will not be an easy course to navigate for quite some time.


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## wayneL (20 March 2012)

Possibly reductio ad absurdum or something like that, but the price of housing is what people are willing to pay... and along with availability (and cost) of credit are tied up a whole bunch of psychological factors... fear of loss, via a vis fear of missing out, cultural lexicon as it applies to housing etc.

Things will have to seriously turn to shyte before there is a real housing bust in Oz.

My money is on an extended plateau with a few bumps along the way... with real bargains here and there if you're Johnny on the spot.


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## Mr Z (20 March 2012)

sptrawler said:


> I know they will fall again and recover and fall again but does that mean you do nothing?




I guess that is determined by your time frame and ability to hold the investment and the alternates that you feel comfortable holding. I guess that equation works differently for everyone depending on capital, ability, temperament etc. Personally I'm saying more liquid and trading assets at a MUCH higher frequency. When the time is right I am looking to get back into commercial real estate but that will be a while IMO. For now I just don't know but there are some major events I want to see ticked off before I move, things like Japans up coming debt crisis, the US muni bond market train wreck, the eventual Euro breakup (lets call it a rearrangement!), China's new leadership and how they look to be dealing with the demographic wall that country is hitting... it is going to be an action packed 5 years or so and that is without nature turning the volume back up to 10 on the odd occasion.

Stay nimble?! I think... for now.


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## kincella (20 March 2012)

I noticed an exodus of people from the city, to sea, tree change places from 2000 to about 2005/05...they were early retirees, and self employed, small business operators..

they sold up their expensive city houses, cashed in their chips, purchased comparable houses in the country for half the price, and stashed the rest in the bank....

these people had little or no super, which was only compulsory from 1986...
so even if they were employees, there was not much there...
then they watched what super there was, get trashed with the tech wreck....
the property market was supposed to have been in the doldrums, because everyone  was focused on the stock market...
so off the went in droves, buying up property

these people had paid between $10,000 to $100,000 for those city houses....they were paid off, there was no debt....and they sold them from $600 to $1 million
kids are gone, living costs now minimal....and they are enjoying life in the country

kids now brag of a country retreat...or holidaying with the olds....

some of these early retirees  are finding life a little boring, twiddling their thumbs, so they are starting up new business, part time work....to keep them active....not so much for the money...

there is no confidence out there under labor,...but there is a pent up demand, people want their lives back, to how it was under the liberals...
just watch Qld start to bounce, after the election this week....
but Qld's have other problems with the floods, in regard to housing...

confidence will only be restored in the economy, when federal labor is ousted.....

will you be ready for the change in sentiment...

if you need some clues why house prices have not dropped, in Vic and NSW , it is because they changed political parties, and confidence was returned...

disregard political interference in the economics of a country, or state, at your peril....


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## Glen48 (20 March 2012)

The only thing governments can do is give bribes to sucker to help vendors sell their houses, this distorts the true market, over seas forces call the shots soon IR will start to rise regardless of the RBA.
Once the US housing market stop tanking wait 5 yrs and then buy at present USA is still going down


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## Starcraftmazter (20 March 2012)

kincella said:


> if you need some clues why house prices have not dropped, in Vic and NSW , it is because they changed political parties, and confidence was returned...




Actually they have dropped in line with the other capitals.




Sydney had the smallest fall because of the stamp duty exemption for FHBs until this year. You can see the finance spiked around Q4 of 2011 and has dropped back down this year - although I do not have that graph handy.

People do not buy or not buy houses because a certain party is in their state parliament, it has a lot more to do with affordability and the perception of future capital gains or losses...


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## wayneL (20 March 2012)

Starcraftmazter said:


> People do not buy or not buy houses because a certain party is in their state parliament, it has a lot more to do with affordability and the perception of future capital gains or losses...




Yes Kinc, One must not forget that the UK had its bubble under Labour and now struggling under the Tories.

Sorry, it's nothing to do with Liberal or Labor.

The only fundamental is credit.


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## sptrawler (20 March 2012)

wayneL said:


> Sorry, it's nothing to do with Liberal or Labor.
> 
> The only fundamental is credit.




Correct and the fact people are paying it down as quickly as possible. 
Baby boomers downsizing and deleveraging from shares, investment properties to term deposits. 
Business people offloading investment properties to get liquidity into their businesses and to make them a sellable proposition.
IMO everyone will still be talking about the property bubble popping when it is all over.LOL


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## Starcraftmazter (20 March 2012)

sptrawler said:


> IMO everyone will still be talking about the property bubble popping when it is all over.LOL




That's it isn't it - once _*everyone*_ is dooming and glooming, that's when I will buy


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## drew70 (20 March 2012)

Starcraftmazter said:


> That's it isn't it - once _*everyone*_ is dooming and glooming, that's when I will buy




the cab drivers and the hairdressers are already dooming and glooming


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## sptrawler (20 March 2012)

drew70 said:


> the cab drivers and the hairdressers are already dooming and glooming




That really sums it up, 5 years ago they were at bbq's telling everyone how many investment properties they had.


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## sptrawler (20 March 2012)

Starcraftmazter said:


> Actually they have dropped in line with the other capitals.
> 
> 
> 
> ...




That post shows what I was saying about averages.
It says the average fall in Perth is 4.6%, well in this weekends paper there was an official government sales figures.
Shelley a riverside suburb within 7k's of the city centre down 24.4%
Mt Pleasant riverfront suburb within 5k's of the city down 19.9%
Mt Lawley  inner city up market character home area down 15.4%

What skews the figures is the lower end of the market is holding up in affordable suburbs.


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## Starcraftmazter (20 March 2012)

sptrawler said:


> What skews the figures is the lower end of the market is holding up i.e suburbs where prices are below $500k.




I don't think the figures are skewed - the average is the average, RP Data also compares like for like houses, so it is quite accurate.

Furthermore, you must understand that the price drops in a waterfall sort of way. Top tiers drop first, then middle tier, then bottom tier. Every tier must drop because the one above it now costs the same as it, and thus there would then be no reason to buy it - so it must drop.

So of course, with any housing crash (or downturn), it is the top tier - the most expensive properties which are the first to record significant drops. And then the drops trickle down to the lower tiers.


----------



## sptrawler (20 March 2012)

Starcraftmazter said:


> I don't think the figures are skewed - the average is the average, RP Data also compares like for like houses, so it is quite accurate.
> 
> Furthermore, you must understand that the price drops in a waterfall sort of way. Top tiers drop first, then middle tier, then bottom tier. Every tier must drop because the one above it now costs the same as it, and thus there would then be no reason to buy it - so it must drop.
> 
> So of course, with any housing crash (or downturn), it is the top tier - the most expensive properties which are the first to record significant drops. And then the drops trickle down to the lower tiers.




On that basis then there should be some real bargains when the bottom rung drops 60% as you are predicting. That should make my retirement a wonderfull experience.


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## drew70 (20 March 2012)

It does sound good.. In Cairns they will be giving you a 1 bedroom unit free, with every case of beer purchased..


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## Glen48 (20 March 2012)

Bet that would be NQ Lager so not a good deal..
Don't forget the 50Billion now owed on Cards as of December.


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## McLovin (20 March 2012)

This doesn't sound to good...



> About one in seven Australian homes bought in the past five years are worth less than their purchase price, according to RP Data.
> 
> This potentially has pushed owners into negative equity, that is, they now owe more to the bank than they can recoup through selling their home.
> 
> ...




http://www.afr.com/p/business/property/home_price_slide_hits_mortgagees_BmaryeS68IH3IJ2VjYJq8I# (subscription required)


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## MrBurns (20 March 2012)

Port Douglas market has collapsed, so cheap even I might move there and have money over for a Ferrari.

Melbourne prices are on the way down very evident now watch out for the property BS artists coming out with "what a great time to buy it is" reports.

Realestate.com.au has one such report done by "experts" out right now, scumbags they are even their own agent clients dont trust them.

This is so close to the truth it's not funny, but the sketch is -


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## sptrawler (20 March 2012)

McLovin said:


> This doesn't sound to good...
> 
> 
> 
> http://www.afr.com/p/business/property/home_price_slide_hits_mortgagees_BmaryeS68IH3IJ2VjYJq8I# (subscription required)




I agree that property prices are likely to fall further. But from your post 1 in 7 houses bought in the last 5 years are worth less.
That means that 6 out of 7 are worth the same or more than they were purchased for, I wouldn't have thought that.


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## moXJO (20 March 2012)

Beej said:


> PPS I would really "research" your claims about Japan demographics vs Australia's if I were you as well.




A Lol I agree

 As for Keen he is right on debt but is blinkered to outside forces that might influence. As an example he was caught off guard when the GFC hit and he hadn't factored in that the government would simply stimulate the economy and keep everything going, oops.
 Instead of only reading all these narrow view blogs by perma bears why not look at government policy/direction as well. 
Our government is intent on imposing on us a carbon tax and mining tax to fill the coffers (more ability to stimulate the economy), we have room to double the population ('Big Australia' anyone), Asia had its financial crisis back in 97 and we are making more inroads with India, Korea and all those other nations that are emerging and going strong. Hey and all the Greeks are moving back here and they love buying property


The economy/Business has to turn to ****e before it gets worse (possibly on its way). Otherwise it's just slow steps down for housing imo. I'm in NSW though and everyone in my area seems to have started building Mcmansions again. I'm not bullish but even Harry Dent (for all you blog lovers) had us pegged for another Bull market in 2020 I believe. Star you should make Dent your new must read as he is all about the demographics.
Housing market = flat - slow decline


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## RandR (20 March 2012)

Starcraftmazter said:


> Personally, and I do not lie, I would not like to own a home. Or at least at this stage - maybe in 10 years or so, if prices come down enough.
> 
> So to answer your question,* I haven't really been looking*. I just use the median prices for property and the median wages as a gauge to how overpriced property is - so I take the most general case.




Starcraft. Your making some pretty consistent and strong claims in relation to an epic end of days style property bust. Personally I think it would do wonders for you to actually go and have a look at some open homes. Even an auction or two. Might give you a better understanding of whats happening in your local area.

I know, your an unemployed student, so you might consider doing so a waste of your time. Consider having a look at areas that are affordable (based upon an approximate future wage for your chosen proffesion) Consider what would be affordable for you on your possible wage and go have a look. 

IMO there is plenty of affordable housing out there for people to buy. Weve just bought a house and the P+I repayments are pretty much the same as rent. We need a place to live and its not unnaffordable.

Dont get me wrong, im no perma bull. In fact im not even bullish on property for the near and medium future. But I think your sentiment is a touch on the unrealistically bearish side. Inflation will continue, the monetary base will expand as it has continually done. This will flow through in time to assets.

I was flicking through a late 60's courier mail the other day that my father had. In brisbane the new suburb at the time was Mount Gravatt. Brand new house and land was selling for 6000 pounds.


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## Glen48 (20 March 2012)

_I was flicking through a late 60's courier mail the other day that my father had. In brisbane the new suburb at the time was Mount Gravatt. Brand new house and land was selling for *6000 pounds*_*. Before Decimalization? 14 Feb 1966
*

Some one want to work out the inflation plus say 35- 40 K in rates and Insurance and a throw in a bit more for repairs.


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## young-gun (20 March 2012)

RandR said:


> Starcraft. Your making some pretty consistent and strong claims in relation to an epic end of days style property bust. Personally I think it would do wonders for you to actually go and have a look at some open homes. Even an auction or two. Might give you a better understanding of whats happening in your local area.
> 
> I know, your an unemployed student, so you might consider doing so a waste of your time. Consider having a look at areas that are affordable (based upon an approximate future wage for your chosen proffesion) Consider what would be affordable for you on your possible wage and go have a look.
> 
> ...




not jumping to stars defense, but i share similar views. and i guarantee you anyone in the US that had views of a doom and gloom property crash before it happened would have received similar posts to that of yours above. most are unable to come to terms with the idea of such a crash until its staring them in the face.


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## young-gun (20 March 2012)

kincella said:


> I noticed an exodus of people from the city, to sea, tree change places from 2000 to about 2005/05...they were early retirees, and self employed, small business operators..
> 
> they sold up their expensive city houses, cashed in their chips, purchased comparable houses in the country for half the price, and stashed the rest in the bank....
> 
> ...




best call the US! if they realise all they need is a change of government and a bit of confidence im sure theyll jump on board, and property will boom again!.......


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## Glen48 (21 March 2012)

US have small prob here to sort out first: 		  

How To Cripple the Real Estate Market in Five Easy Steps   (March 19, 2012) 


Central Planning has crippled the real estate market to "save" their core constituency, the banks.
If you were head of Central Planning (howdy, Ben!) and were tasked with crippling the real estate market, here's what you would recommend.

1. Choke the market and banking sector with zombie banks. Central Planning creates zombie banks in one easy step: it allows insolvent banks to mark their impaired "real estate owned" to fantasy rather than to market. This enables the banks to survive in a deathless state, propped up by free money from the Federal Reserve and lax regulations that enable fantasy accounting and all sorts of off-balance sheet trickery.

Zombie banks have no incentive to auction off their holdings of real estate with defaulted, underwater or otherwise impaired mortgages, for having the market discover the price of these properties would immediately reveal the insolvency of the bank as properties it held on its books at (say) $400,000 were actually only worth $200,000. Since the mortgage is (say) $350,000, then the bank would be forced to recognize a $150,000 loss (actually more with transaction fees, repair of the derelict property, etc.).

If the bank's entire portfolio of phantom-value properties was auctioned off or its price discovered by the market, the bank would be declared insolvent and closed.

So instead the zombie banks' impaired properties clog the market, unlisted, unsold, indefinitely held off the market until unicorns arrive and valuations return to bubblicious 2006 levels where the bank can unload them with no loss.

Since those valuations haven't arrived, millions of properties are being held off the market. This "shadow inventory" is well-known (tens of thousands of people are living rent and mortgage-free in homes that the banks have yet to even put in the foreclosure pipeline), so no one has any confidence that "the bottom is in." Confidence cannot be restored until the market clears the inventory and a real bottom is established.

This destruction of confidence undermines the entire market. Zombie banks create zombie valuations. Who can say valuations won't decline once the shadow inventory finally hits the market?

Keeping zombie banks alive via bogus valuations and shadow inventory of derelict and defaulted homes has another consequence: banks themselves cannot be confident that prices won't decline further, so it makes no sense for them to put capital at risk by issuing mortgages on real estate.

2. Have the central bank (the Federal Reserve) buy up $1 trillion in toxic, impaired mortgages. If these mortgages were such a great deal, then why didn't private buyers snap them up? Exactly: they were fetid garbage no private buyer would touch except at steep discounts that would have sent the banks into insolvency. (That isn't allowed in crony-capitalist State-run economies.)

The market was thus denied the opportunity to discover the price of all this mortgage debt, and this effectively destroyed the private market for mortgages. Literally 99% of all mortgages in the U.S. are guaranteed by the Central State. Suppressing market price discovery works just as well in the mortgage market as it does in the housing market.

3. Lower the rate that banks can borrow from the Fed to zero, and then pay the banks interest on all funds deposited at the Fed. I wish we had this option, don't you? We could borrow $1 billion from the Fed at zero interest, then deposit the $1 billion with the Fed and skim risk-free interest.

But the real-estate effect of ZIRP (zero-interest rate policy) is to lower the mortgage rate to such a low level that it makes no sense to take on the risks and unknowns of real estate valuations for such a paltry return. After all, what if the bank loans $300,000 on a $400,000 home, the value subsequently drops to $300,000 and the buyer defaults? The bank will lose capital it can't afford to lose dumping the property at auction.

Better to avoid the mortgage market altogether by refusing most applicants as risks--and given the high debt levels of most households, they may indeed be poor risks.

4. Try to prop up the housing market by giving poor credit risk buyers loans with only 3% down. This generates a new pool of ready buyers, but since the government is guaranteeing the loan, qualifying is easy and the buyers only have a few thousand dollars of skin in the game. This means defaulting is not very painful, especially if it takes the lender a few years to foreclose on the property.

The net effect of subsidizing poor credit risks to buy houses is that another pool of uncertainty is created, as these buyers are defaulting in droves, dumping inventory that had just been cleared back on the market. (The default rates of FHA loans is skyrocketing, and now the taxpayers will have to bail out the FHA.)

This is what happens when you try to prop up the market with unqualified buyers and 3% down mortgages--those buyers bail out in huge numbers and the homes return to the inventory. The clearing of inventory was as phantom as the real estate valuations on the banks' balance sheet.

5. Load young people up with the equivalent of a mortgage in student loans. That insures that the majority of potential new homebuyers won't be qualified to buy a house--they're already indentured to the banks for student loans. Those fortunate few who get good-paying jobs will qualify for a mortgage when they're getting grey hair; most will never qualify, having been buried by impossible-to-default student loans.

OK,let's see how our Organs of Central Planning are doing: check, check, check, check, check: a perfect score! they're doing everything possible to cripple the real estate market.

Do they care? Of course not; the only goal is to keep the zombie banks alive, regardless of the cost to the nation. Great work, Ben, Barack, Timmy and the rest of the gang at Central Planning: thanks to your policies, the real estate market will never clear and therefore it can never be restored to health.


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## robman (21 March 2012)

Glen48 said:


> _I was flicking through a late 60's courier mail the other day that my father had. In brisbane the new suburb at the time was Mount Gravatt. Brand new house and land was selling for *6000 pounds*_*. Before Decimalization? 14 Feb 1966
> *
> 
> Some one want to work out the inflation plus say 35- 40 K in rates and Insurance and a throw in a bit more for repairs.




Compliments of the RBA Calculator: http://www.rba.gov.au/calculator/annualPreDecimal.html

In 1960 (Pre-Decimalisation) of 6,000 pounds would be the equivelant of *$155,455.54* in 2011.

Total change in cost: 1195.5% at an average inflation of: 5.2%

This calculation excludes any other rates - i.e. taxes, fees


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## sptrawler (21 March 2012)

Glen48 said:


> _I was flicking through a late 60's courier mail the other day that my father had. In brisbane the new suburb at the time was Mount Gravatt. Brand new house and land was selling for *6000 pounds*_*. Before Decimalization? 14 Feb 1966
> *
> 
> Some one want to work out the inflation plus say 35- 40 K in rates and Insurance and a throw in a bit more for repairs.




Now somebody should work out how much rent someone would have paid over the same time period, for an equivalent house in a similar suburb


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## Timmy (21 March 2012)

sptrawler said:


> Now somebody should work out how much rent someone would have paid over the same time period, for an equivalent house in a similar suburb




Ok, so I checked the other thread. 
Its Wednesday. 
Bewilderment averted.


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## financialdonk (23 March 2012)

Thought this was quite an apt quote for the thread.

"Bread, meat, and vegetables were sold at prices greater than had ever before been known; while the wages of labour rose in exactly the same proportion. The artisan who formerly gained fifteen sous per diem now gained sixty. New houses were built in every direction; an illusory prosperity shone over the land, and so dazzled the eyes of the whole nation, that none could see the dark cloud on the horizon announcing the storm that was too rapidly approaching." 

From Charles Mackay's Extraordinary Popular Delusions and The Madness of Crowds.

Does anyone else see parallels between today's China and John Law's Mississippi Scheme?


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## trainspotter (24 March 2012)

"The more things change, the more they stay the same." - Alphonse Karr

P.S. Anyone seen the movie "Margin Call" yet? Enlightening for the myopic proletariat.


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## trainspotter (24 March 2012)

Glen48 said:


> Bet that would be NQ Lager so not a good deal..
> Don't forget the 50Billion now owed on Cards as of December.




AAAAAAAAhhhhhhhhhhh now the debt owed on paper is the issue finally.


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## damien275x (28 March 2012)

The only argument for high house prices is "there's a shortage" .. If there was a shortage, why is it that anyone can log on, find a property, inspect it, then buy it? There's no competition, there are no long lines, people aren't on the streets. The problem is with affordability not availability. There is plenty more room to build out, and plenty more room to build up. Where do you think prices are going to go from here

High house prices are bad for our economy, despite our economic illiterate government believing that this is true wealth. With large amounts of money being tied up in repayments, there is less money to be saved, allocated, and put to work to create goods and services that actually grow our standard of living. Cornering a market and driving up prices of an asset class everybody needs doesn't grow our standard of living.  If people were borrowing to buy all the fuel available and hoarding it from everybody who drives, pushing the price up, do you think we'd be better off as a society? Hell no.

Property investors need to take their losses and get over it, now that prices are high enough that they can only sell to each other, nobody new can come into the market and buy, there is no greater fool left, and when the bearish market sentiment spreads, the house of cards will fall and all of the imaginary wealth will vapourize. At least with Shares you are never in denial about what they are worth.


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## Miss Hale (28 March 2012)

I spotted a new term in a real estate ad yesterday, 'price revised'.  Surely they mean 'price reduced', I hardly think the price has gone up  (Apologies is estate agents have been using this for years but it was the first time I'd seen it). 

I agree, there is no shortage, it's a furphy.


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## MrBurns (28 March 2012)

Miss Hale said:


> I spotted a new term in a real estate ad yesterday, 'price revised'.  Surely they mean 'price reduced', I hardly think the price has gone up  (Apologies is estate agents have been using this for years but it was the first tie I'd seen it).
> I agree, there is no shortage, it's a furphy.




They havent had to reduce prices for so long they've forgotten the use the term "reduced"


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## Starcraftmazter (28 March 2012)

If there was a shortage, then stock on market wouldn't be at all time highs.


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## young-gun (28 March 2012)

Miss Hale said:


> I spotted a new term in a real estate ad yesterday, 'price revised'.  Surely they mean 'price reduced', I hardly think the price has gone up  (Apologies is estate agents have been using this for years but it was the first time I'd seen it).
> 
> I agree, there is no shortage, it's a furphy.




i have recently noticed that real estate agents almost never put the price of the house on ads or photos anymore. i swear they use to do it on almost every ad of a house? also, when walking past the windows of RE gents, 60% of the window is taken up with houses they have apparently sold. are they trying to convince people they are moving houses out the door at a rapid rate? im a bit confused by their tactics.


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## Starcraftmazter (28 March 2012)

young-gun said:


> i have recently noticed that real estate agents almost never put the price of the house on ads or photos anymore. i swear they use to do it on almost every ad of a house? also, when walking past the windows of RE gents, 60% of the window is taken up with houses they have apparently sold. are they trying to convince people they are moving houses out the door at a rapid rate? im a bit confused by their tactics.




I would presume that's precisely what they are trying to do. I talk about housing to some people I know personally, and they still believe that people are buying houses just as always - and then I explain to them that no, sales volumes are actually at the lowest in over 20 years.


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## Taltan (28 March 2012)

young-gun said:


> i have recently noticed that real estate agents almost never put the price of the house on ads or photos anymore. i swear they use to do it on almost every ad of a house?




I've noticed this as well. I'm not an RE agent but I suspect the following
1. They are a lot more fussy buyers feeling no rush to buy so by not having a price they are limiting enquiries only to those who are genuinly interested.
2. There are bigger differences between what they can sell it at (which they know) and Vendors asking prices (which they convinced the Vendor) - if you advertise too low you might lose the Vendor.


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## Julia (28 March 2012)

I've had discussions with a few RE agents over the last few weeks to get some idea of what my present place would sell for if I go ahead with the building a new house idea.

1.  They are much fewer on the ground than two to three years ago because there's simply not enough business.

2.  Quite a few principals have just closed down their business because there's not enough profit after overheads have been met.

3.  Buyers used to make an offer as the first step in the negotiation process.  Now they are just saying "this is my first and final offer" and walking away if it's not accepted.
That sounds possibly a bit exaggerated as a generalisation but obviously it is happening.

4.  Buyers are just not around in anything like the numbers they were.  This is a regional centre with a population of 55,000.  The population is continually growing.
Only 600 properties were sold in 2011.

5.  I could expect to get 20 - 25% less than three years ago.

None of the agents I've spoken with have conveyed any sense that sentiment is improving for sellers.


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## MrBurns (28 March 2012)

Julia said:


> I've had discussions with a few RE agents over the last few weeks to get some idea of what my present place would sell for if I go ahead with the building a new house idea.
> 
> 1.  They are much fewer on the ground than two to three years ago because there's simply not enough business.
> 
> ...




What state ?


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## Julia (28 March 2012)

MrBurns said:


> What state ?




Queensland, SE.


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## MrBurns (28 March 2012)

Julia said:


> Queensland, SE.




It's happening all over, regional Vic is hopeless and even Melb is difficult, we will read about the crash after it's over but it's real and it's here.

Want something for nothing ? Have a look at Port Douglas - 

http://www.realestate.com.au/buy/be...douglas,+qld+4877/list-1?activeSort=price-asc


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## Starcraftmazter (28 March 2012)

Julia said:


> 3.  Buyers used to make an offer as the first step in the negotiation process.  Now they are just saying "this is my first and final offer" and walking away if it's not accepted.
> That sounds possibly a bit exaggerated as a generalisation but obviously it is happening.




That is good to hear, everyone should be doing only that. Ask them what they want, discount by at least 40% and demand that price.


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## young-gun (28 March 2012)

Starcraftmazter said:


> That is good to hear, everyone should be doing only that. Ask them what they want, discount by at least 40% and demand that price.




haha so skip the bull**** and jump straight to the inevitable bottom? i like it, recovery will be faster then....


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## DB008 (28 March 2012)

Starcraftmazter said:


> That is good to hear, everyone should be doing only that. Ask them what they want, discount by at *least 40%* and demand that price.




LOL!!!
Almost fell out of chair reading that...

If l were selling a property and someone made an offer like that, l'd be like 'Yeah right'. I wouldn't take it seriously, that's for sure. House on the market for 200k, buyer offers 100k-120k (LOLOLOLOLOLOLOL)....

Hold on, with *your theory* SCM, if you keep using that method you'll eventually get that. By what? 2020 did you say?


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## Glen48 (28 March 2012)

Can't   believe  any one would ever think about buying now just  shows how many don't read/follow the news.


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## DB008 (28 March 2012)

*Europeans See Crisis Near End, Bernanke Warns on Recovery*



Glen48 said:


> Can't   believe  any one would ever think about buying now just  shows how many don't read/follow the news.




But there does seem to be light at the end of the tunnel....

*Europeans See Crisis Near End, Bernanke Warns on Recovery*



> European leaders signaled rising confidence that their region’s crisis is near an end, while Federal Reserve Chairman Ben S. Bernanke warned that a U.S. recovery isn’t assured.
> 
> The euro area’s woes are “almost over” after a slow initial response by policy makers, Italian Prime Minister Mario Monti said in Tokyo today. German Chancellor Angela Merkel said yesterday that the crisis is ebbing and her country’s borrowing costs will probably rise as its status as a haven wanes




Not saying we are out of the woods by a long shot, but if the USA starts to recover, there will be a positive knock on effect globally.


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## Glen48 (28 March 2012)

You maybe right slight prob here:


With oil prices soaring ever higher, Saudi Arabia stepped in last week and vowed to increase its production by 25% if necessary. 

But while that assurance managed to siphon a few dollars off of oil futures, the reality is there's nothing Saudi Arabia - or anyone else, for that matter - can do about rising oil prices. 

In fact, crude is still on track to reach $150 a barrel by mid-summer.

As Saudi Oil Minister Ali Naimi pointed out last week, current oil supplies already exceed global demand by 1 million-2 million barrels per day. 

For its part, Saudi Arabia is already breaking its own OPEC-imposed production quota limit, churning out about 10 million barrels of oil per day - close to its 12.5 million barrel capacity.

Yet the effect of that production has been negligible.

Oil is still trading at $106 a barrel on the NYMEX - something that has clearly flummoxed the world's largest oil producer. 
 And the US house prices are still going down after 5 yrs which means we have 2021 before it looks like being over so cash up boys it will be good for cheap houses buy one take one and don't forget your fries in the deal.


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## Starcraftmazter (28 March 2012)

young-gun said:


> haha so skip the bull**** and jump straight to the inevitable bottom? i like it, recovery will be faster then....




Well if you know property is going to devalue by at least 40% to 2020, why bother bidding up? May as well buy it for what it will be worth in the future.



DB008 said:


> Hold on, with *your theory* SCM, if you keep using that method you'll eventually get that. By what? 2020 did you say?




Yep, and I'm more than happy to wait. Meanwhile I would have saved up a fortune by not leveraging myself in massive debt and spending my entire salary on interest repayments while my property price goes down year after year.



DB008 said:


> But there does seem to be light at the end of the tunnel....
> 
> *Europeans See Crisis Near End, Bernanke Warns on Recovery*
> 
> ...




You actually believe that? Please, the Eurozone crisis has only just began - Italy and Spain haven't even defaulted yet!

And the US recovery is a joke.

Not to mention we live in Australia - the country of the biggest housing bubble in all of the world combined with the most uncompetitive economy.


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## DB008 (28 March 2012)

l'm going to start saving paper newspapers, egg cartons and used milk bottles. 

Sounds like it's going to be worse than the 1930's Great Depression...Y2K x 10000000


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## Starcraftmazter (28 March 2012)

DB008 said:


> l'm going to start saving paper newspapers, egg cartons and used milk bottles.
> 
> Sounds like it's going to be worse than the 1930's Great Depression...Y2K x 10000000




Much worse. The world had room to grow out of the great depression, it doesn't have room to grow out of this mess.


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## Beej (28 March 2012)

Starcraftmazter said:


> If there was a shortage, then stock on market wouldn't be at all time highs.




Sorry, but that is simply another false statement - especially for the two biggest cities:

Sydney:
http://www.sqmresearch.com.au/graph_stock_on_market.php?region=nsw::Sydney&type=c&t=1

Melbourne:
http://www.sqmresearch.com.au/graph_stock_on_market.php?region=qld::Brisbane&type=c&t=1

Also - your other comment claiming sales volumes are at 20 year lows is a little sensationalist and misleading - here's the data:




Also note that Sydney, and even Perth are in much better shape with respect to recent sales volumes - the stats are skewed by Melbourne and Brisbane in particular - one the result of over-building a huge recent house price surge / boom that is now deflating, and the later having bee dramatically impacted by floods:




So yes volumes in 2011 were low, but 2009 and 2010 were also very high - things are just evening out a bit I reckon. Also, volumes have been around / close to the levels of 2011 several times in the past 15 years, and there was no huge house price crash on any of those occasions, in fact the low volume periods immediately preceded booms? But maybe "it's different this time"???



damien275x said:


> The only argument for high house prices is "there's a shortage" .. If there was a shortage, why is it that anyone can log on, find a property, inspect it, then buy it? There's no competition, there are no long lines, people aren't on the streets. The problem is with affordability not availability. There is plenty more room to build out, and plenty more room to build up. Where do you think prices are going to go from here




It's not that simple - there are many artificial and real constraints on the ability for housing supply to be increased in places where people actually WANT to live. The only reason it is "easy" to buy a place if you have the cash is because the market is priced based on (or slightly above) the demand level presently. As for Qs etc - try going to rent a 2 bed flat in Sydney < 10kms to the CBD - believe me you WILL be waiting in a Q and competing for any decent place.



> High house prices are bad for our economy, despite our economic illiterate government believing that this is true wealth. With large amounts of money being tied up in repayments, there is less money to be saved, allocated, and put to work to create goods and services that actually grow our standard of living.




This is an economically bogus argument. One mans debt is another man's asset. One man's repayment is another man's income. The money does not just disappear you know! People paying off debt spend less but those they pay can then spend / invest more. It's just circulation and distribution of the same money.


----------



## Starcraftmazter (29 March 2012)

Beej said:


> Sorry, but that is simply another false statement - especially for the two biggest cities:




Why did you link to Brisbane for Melbourne? Here is the graph for Melbourne, and it is at al all-time high:
http://www.sqmresearch.com.au/graph_stock_on_market.php?region=vic::Melbourne&type=c&t=1

Furthermore, I fail to see why you cherry pick two cities. I look exclusively at the national picture always.



Beej said:


> Also - your other comment claiming sales volumes are at 20 year lows is a little sensationalist and misleading - here's the data:




Yep, 20 year lows. I think you ought to look at your own graph.




Beej said:


> Also note that Sydney




I am only concerned with the national average, thanks. And I thank you for continuing to provide evidence of my claims. 



Beej said:


> So yes volumes in 2011 were low, but 2009 and 2010 were also very high - things are just evening out a bit I reckon.




This is not about the two years 2009 or 2010 - they are at *20 year lows* - that's 20, a two followed by a zero indicating two *tens*.



Beej said:


> Also, volumes have been around / close to the levels of 2011 several times in the past 15 years,




Not really, in the last 15 years the only thing that comes close is the GFC, and the government needed to borrow massive amounts of money and throw it at the housing bubble to prop it up back then. Since then, prices have now fallen further than during all of the GFC, and the government is in no position to throw money at the bubble again.



Beej said:


> It's not that simple




Yes it is.



Beej said:


> As for Qs etc - try going to rent a 2 bed flat in Sydney < 10kms to the CBD - believe me you WILL be waiting in a Q and competing for any decent place.




There are lots of good places, massive developments around Zetland/Waterloo - and plenty more coming, you'll have absolutely no problem.



Beej said:


> This is an economically bogus argument. One mans debt is another man's asset. One man's repayment is another man's income. The money does not just disappear you know! People paying off debt spend less but those they pay can then spend / invest more. It's just circulation and distribution of the same money.




You do realise Australians pay their interest to foreign creditors who lend us the money, right?

Why do you think we've had a massive current account deficit since the housing bubble started?


----------



## McLovin (29 March 2012)

Beej said:


> This is an economically bogus argument. One mans debt is another man's asset. One man's repayment is another man's income. The money does not just disappear you know! People paying off debt spend less but those they pay can then spend / invest more. It's just circulation and distribution of the same money.




I think you're correct up to a point (don't ask me where that point is because I have no idea). The asset (owner-occupied property) can't be used in any productive way, aside from the basic utility of providing a roof over someone's head, nor can it earn a passive income through rent. For property investment, relatively large, and until recently increasing, amounts of capital are used to purchase assets that then run at a loss for many years. You could reasonably argue that over-investment in residential property (and the perceived safety of the asset class by borrowers and lenders) "crowds out" other, more productive, uses of that capital. That last point would appear to be very real given the growth in banks' residential property books to the detriment of small businesses.

Just a bit of thinking out loud.


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## damien275x (29 March 2012)

Beej said:


> It's not that simple - there are many artificial and real constraints on the ability for housing supply to be increased in places where people actually WANT to live. The only reason it is "easy" to buy a place if you have the cash is because the market is priced based on (or slightly above) the demand level presently. As for Qs etc - try going to rent a 2 bed flat in Sydney < 10kms to the CBD - believe me you WILL be waiting in a Q and competing for any decent place.





Well yes it really is that simple, there are more houses than people who want to buy them, and if artificial constaints are part of a decision to buy you should rethink that, there is plenty of room to build up, and out. What are governments just going to hold onto Land and not ever release it? Never build new homes? 

I've spoken to several Real Estate agents in Melbourne, one who is my great uncle, he told me they're basically up **** creek without a paddle and he will be shutting up in the next 2 years, doesn't really matter to him because he made a TONNE of money stealing the % in between sales during the boom, but this is a bearish sign you would have to say. Less sales, lower sales, lower profit = weak market and falling prices.

He said the wildcard would be the ability to keep confidence high, they have contacts and close relationship with property writers for mainsteam media, but I don't think this will have the effect it may have done in say, 1980 when there was no interenet and no independent analysts writing blogs and articles with more facts and figures and less spin.


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## Glen48 (29 March 2012)

Here is some one who needs to be in a home, he must be pushing to keep the market afloat so he can get re elected:
 IF IR goes down next month it will be a  good indicator of where the market is going. start buying means confidence no buyers mean its game on.
From NSM.
More needs to be done to tackle the problem of housing affordability and housing shortage in Australia, the federal government says.

Housing Minister Brendan O'Connor was addressing a conference run by the Australian Council of Social Service (ACOSS).

"All Australians deserve an affordable, safe and sustainable home," Mr O'Connor told the gathering in Sydney on Thursday.

"(But) we know we're in a midst of a housing shortage.

"We know that housing affordability remains a real concern ...and we know that there are too many without a home."

Mr O'Connor said the government had made housing a high priority through programs like the Housing Affordability Fund and building 20,000 new social housing homes.

"We are addressing the roadblocks to supply of housing to make sure we have enough homes to meet the needs of our growing population," he said.

"We're doing this by through programs such as the $450 million Housing Affordability Fund."

However Mr O'Connor acknowledged that much more work was needed to address the national housing problem.

"All levels of government need to do more and work with community and business sectors to improve housing affordability and to ensure that we have the right types of housing for our population," he said.

"We know that there is much more work to be done by all levels of government to make the housing market more efficient and responsive."


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## Starcraftmazter (29 March 2012)

You know times are bad even when professional property spruikers aren't covering it up anymore:



> Symond said the basic principles of supply and demand suggested the housing market was unlikely to recover anytime soon, pointing out that *there were currently more than 300,000 houses listed for sale on the market, the highest in Australia’s history.*




http://www.propertyobserver.com.au/...t-rates-or-borrowers-will-burst-like-tomatoes

Some "shortage" we have there isn't it?


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## young-gun (29 March 2012)

Beej said:


> This is an economically bogus argument. One mans debt is another man's asset. One man's repayment is another man's income. The money does not just disappear you know! People paying off debt spend less but those they pay can then spend / invest more. It's just circulation and distribution of the same money.




are you sure about this? or did you mean to say one mans debt, pays another mans debt, who pays another mans debt, who pays the bank who owns the 'asset', which is depreciating, who then pays their debts, to another country who has to pay their debts(or in greeces' case not pay their debts). do tell me where greeces debt went if money does not just dissapear. please. Our dollar was completely shot against the greenback in the gfc. now i dont know for certain, but im fairly sure the only way the US$ could have surged like that was if its dollars were being destroyed, but i may be wrong.

and although the above may appear off topic it is quite relevant. what happens when unemployment goes up and people cant service their loans on propertys that are under water? the banks need bailouts, from who?


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## young-gun (29 March 2012)

DB008 said:


> LOL!!!
> Almost fell out of chair reading that...
> 
> If l were selling a property and someone made an offer like that, l'd be like 'Yeah right'. I wouldn't take it seriously, that's for sure. House on the market for 200k, buyer offers 100k-120k (LOLOLOLOLOLOLOL)....
> ...




and what if you were offered 120k today, but only received 100k in 2020? still laughing? in fact with inflation, 120k in 2020 wouldnt be too crash hot either.


----------



## Beej (29 March 2012)

Starcraftmazter said:


> Why did you link to Brisbane for Melbourne? Here is the graph for Melbourne, and it is at al all-time high:
> http://www.sqmresearch.com.au/graph_stock_on_market.php?region=vic::Melbourne&type=c&t=1
> 
> Furthermore, I fail to see why you cherry pick two cities. I look exclusively at the national picture always.




The Brisbane / Melbourne thing was a typo on my part - apologies. What I was trying to demonstrate is that there really is no such thing as a "national" market. The fact that Melbourne currently has a surge of property for sale due to over-building and a 30% run-up in prices over 2009/2010, doesn't really impact Sydney (20% of the national market anyway), where rents are growing, there really is a housing shortage and massive constraints on supply etc etc, and where listings are nowhere near all-time highs. Likewise Brisbane has been affected by it's own issues such as the floods etc.

In terms of talking sensationally about "all time highs" etc, please also remember that there has never been more properties in existence in Australia than right now, and there has never been more people living in Australia than right now, so as the property market goes through it's various "normal" cycles, we are going to see new heights periodically in terms of listings etc etc. But that itself does not prove any impending doom as you make it out to.



> Yep, 20 year lows. I think you ought to look at your own graph.




I think you should look at it again. mid 90s saw lower sale volumes, so that was 15 years ago, not 20. Regardless, the number of property sales nationally moves in a cycle anyway - that is clear from that graph! It rises for a few years then falls. Last years numbers whilst low and representative of a weak market, are not especially unusual in the historical context - the fact that prices only fell a few % points proves this as well. For serious price falls, or to demonstrate that there really is something different going on now as compared to at other times in the past 20 years, you would need to show something far more unprecedented than what we are seeing at the moment. 

Additionally, I predict 2012 will see more property changing hands than 2011 anyway - that trend is already evident in stats for the first quarter of the year so far.

Also, as I mentioned in my previous post, previous periods of low sales volumes were followed by boom times for prices and volumes, not wholesale market crashes.



> I am only concerned with the national average, thanks. And I thank you for continuing to provide evidence of my claims.




I don't know why you look at it this way - all markets are local; if you live in Sydney it's no use celebrating a 7% fall in Brisbane house prices is it if they have not moved where you live, or worse still actually gone up, as units have on average across Sydney throughout 2011?



> Not really, in the last 15 years the only thing that comes close is the GFC, and the government needed to borrow massive amounts of money and throw it at the housing bubble to prop it up back then. Since then, prices have now fallen further than during all of the GFC, and the government is in no position to throw money at the bubble again.




That's rubbish! The government spent very little money on housing stimulus relative to the broad stimulus program. In fact the net tax take from housing due to stamp duties is still far more than anything that is or was given back in the form of stimulus! So to ever be truly stimulatory the government would need to pump more in than it takes out. 

In terms of current capacity, if they wanted they would happily stimulate again - don't kid yourself about this! Australia has a sovereign currency - the government can borrow / create as much of it as they like. The only constraints on fiscal stimulus are political, not economic.



> There are lots of good places, massive developments around Zetland/Waterloo - and plenty more coming, you'll have absolutely no problem.




LOL! You think a couple of thousands flats in Zetland due for completion over several years is enough to deal outright with the population pressures facing Sydney? 1000 net new people settle here every week! There is nowhere near enough new dwelling construction going on in Sydney to satisfy underlying demand.



> You do realise Australians pay their interest to foreign creditors who lend us the money, right?




The bulk of funding is sourced locally. Where do you think your bank account interest comes from? Even foreign creditors get paid in $AU - so either have to deposit that in an AU bank, spend it in Australia, or sell it to someone in exchange for foreign currency, who then invests it somewhere in Australia anyway. $AU are only good for buying stuff here. It amazes me how few people see the big picture when it comes to monetary issues!



> Why do you think we've had a massive current account deficit since the housing bubble started?




Australia has run a current account deficit for 100 years! There are complex, but sound economic reasons why this is the case - but it essentially boils down to us always, historically being dependent on foreign investment to grow our economy. It has nothing whatsoever to do with the housing market.



damien275x said:


> Well yes it really is that simple, there are more houses than people who want to buy them, and if artificial constaints are part of a decision to buy you should rethink that, there is plenty of room to build up, and out. What are governments just going to hold onto Land and not ever release it? Never build new homes?




I think you guys all mis-understand the concept of a shortage of housing relative to UNDERLYING demand. It's not about the micro-market and whether everything on the market for sale is being instantly snapped up or not. If people don't buy, or can't afford to buy, then they have to rent, or share, or live with family. The point is there are loads of people out there who are in these circumstances who might like to buy, or move out of their relatives home, or live in a bigger house than they currently due to a growing family or whatever - this is the underlying demand. We know it is there because of the pressure it is placing on both prices, which are high and being sustained - especially in the most afflicted areas like Sydney, and on rents, which have been rising above CPI for the last several years, nationally, but especially in the afore-mentioned most afflicted regions. See this Alan Kholer graph from the news the other night:







Got any other explanation for that???

PS: If you are in Melbourne, then your situation re housing supply is much better than many other parts. IN fact Melbourne is probably over-supplied right now. That's why it's rents and house prices are under-performing.


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## Bill M (29 March 2012)

Beej said:


> LOL! You think a couple of thousands flats in Zetland due for completion over several years is enough to deal outright with the population pressures facing Sydney?




More importantly who would want to live there? Not my kind of place, for where I like (on the Northern Beaches) you still have to pay serious $$$$ for anything and not much new stuff going up.


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## Dowdy (29 March 2012)

Beej, can't believe you're still trying to play the housing shortage myth.

I've been saying for years there was never a shortage of houses, just an oversupply of speculators...

AS early as January (this year) they were still saying that Melbourne had a housing shortage so now you're telling me that in three months we suddenly build tens of thousands of homes to deal with the allegedly shortage of homes?

The market has already gone down and that was mainly due to regular people (couples, familys etc) choosing to stay out of the market. 
What do you think would happen when the speculators want to get out of the market, mainly the chinese


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## So_Cynical (29 March 2012)

Beej said:


> Sydney (20% of the national market anyway), where rents are growing, *there really is a housing shortage and massive constraints on supply* etc etc, and where listings are nowhere near all-time highs.




Shortage? if so how come prices have stagnated? and how come Stockland, Mirvac and Australand, 3 of Sydney biggest listed builders are reporting that demand for new residential apartments is falling? if there is a shortage how come houses can and do sit on the market for months and months? and why are prices falling and not going up???

When a stock is in demand sellers are exhausted and the price goes up not down.


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## Beej (29 March 2012)

Dowdy said:


> Beej, can't believe you're still trying to play the housing shortage myth.
> 
> I've been saying for years there was never a shortage of houses, just an oversupply of speculators...
> 
> As early as January (this year) they were still saying that Melbourne had a housing shortage so now you're telling me that in three months we suddenly build tens of thousands of homes to deal with the allegedly shortage of homes?




Two points in response to this:

1) I don't know what you read, but I have been reading of potential over-building / over-supply of housing in Melbourne for a couple of years now? So no news in that for me, and certainly no "sudden" change in 3 months? It was a classic response to the 30% increase in prices over 18 months that occurred just after the last time everyone here was predicting the inevitable big crash!

2) Re the general housing shortage - there is absolutely no doubt that there are areas with acute under-building and lack of new supply relative to population growth and under-lying demand - Sydney is the prime example. Fundamentally, if you don't buy this - how do you explain the estimate under-supply vs rent/CPI chart I posted? Got anything to say about that?



> The market has already gone down and that was mainly due to regular people (couples, familys etc) choosing to stay out of the market.  What do you think would happen when the speculators want to get out of the market, mainly the chinese




What makes you think the Chinese would want to exit our market?? 

Current property price corrections last year are just a part of the normal property cycle, with the largest falls happening in those areas that have had the most recent run-up of prices. I expect there to be more frequent periods of falling prices vs rising prices in the future compared to the past 15 years, as the big structural market changes in response to low inflation / low interest rates are done and dusted now. Average price growth over time when you smooth out the volatility will roughly track income growth.



So_Cynical said:


> Shortage? if so how come prices have stagnated? and how come Stockland, Mirvac and Australand, 3 of Sydney biggest listed builders are reporting that demand for new residential apartments is falling? if there is a shortage how come houses can and do sit on the market for months and months? and why are prices falling and not going up???
> 
> When a stock is in demand sellers are exhausted and the price goes up not down.




Dude - are RENTS in Sydney falling? Or rising?? You don't think this is giving you a hint as to what is going on? I tried to explain earlier, you have to look at the whole picture. As for prices - the fact they are holding on to the ("stimulus driven"??)  20% gains of 2009/2010 despite all the economic doom and gloom, poor consumer confidence etc is a testament to how deep the underlying demand actually is, even at Sydney prices!

PS: Hint; here's a chart from Residex up to Feb '12 that shows what's been going on with rents over the past 12 months:


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## Starcraftmazter (30 March 2012)

Beej said:


> The Brisbane / Melbourne thing was a typo on my part - apologies. What I was trying to demonstrate is that there really is no such thing as a "national" market.




There is. We are one country, if prices differ significantly in one city to another, then people will relocate there, thus lowering the prices from where they came, and equilibrium will be reached.



Beej said:


> The fact that Melbourne currently has a surge of property for sale due to over-building and a 30% run-up in prices over 2009/2010, doesn't really impact Sydney (20% of the national market anyway), where rents are growing, there really is a housing shortage and massive constraints on supply etc etc, and where listings are nowhere near all-time highs. Likewise Brisbane has been affected by it's own issues such as the floods etc.




Housing bubble mechanics 101 pal:

There is an initial shortage of land, this causes house prices to bubble, the overpriced valuations send incorrect signals to the market which produces oversupply - but at this stage, everyone is speculating on property for capital gains and fundamentals no longer matter - all while overbuilding continues due to ridiculous price valuations.

This happens everyone in Australia - in all cities, not just Melbourne. It has happened more in Melbourne than Sydney sure, but it absolutely happens in Sydney.

Rents in Sydney are not going up - nor are they anywhere else.









Beej said:


> In terms of talking sensationally about "all time highs" etc, please also remember that there has never been more properties in existence in Australia than right now, and there has never been more people living in Australia than right now, so as the property market goes through it's various "normal" cycles, we are going to see new heights periodically in terms of listings etc etc. But that itself does not prove any impending doom as you make it out to.




Not by itself no - but as part of a 1000 pieces of evidence puzzle, it certainly does.



Beej said:


> I think you should look at it again. mid 90s saw lower sale volumes, so that was 15 years ago, not 20. Regardless, the number of property sales nationally moves in a cycle anyway - that is clear from that graph! It rises for a few years then falls. Last years numbers whilst low and representative of a weak market, are not especially unusual in the historical context - the fact that prices only fell a few % points proves this as well. For serious price falls, or to demonstrate that there really is something different going on now as compared to at other times in the past 20 years, you would need to show something far more unprecedented than what we are seeing at the moment.




Only ONCE have sales volumes moved so low on that graph - in 1994, only ONCE - apart from the GFC. And as you already pointed out, we have had quite a lot of population growth since then!



Beej said:


> Also, as I mentioned in my previous post, previous periods of low sales volumes were followed by boom times for prices and volumes, not wholesale market crashes.




Past performance is not an indication of future performance... You need to understand all factorors which led to those results - which you clearly do not, you just stick your head in the sand yelling "lalalala" and claim that because it happened once before it must happen now.



Beej said:


> I don't know why you look at it this way - all markets are local; if you live in Sydney it's no use celebrating a 7% fall in Brisbane house prices is it if they have not moved where you live, or worse still actually gone up, as units have on average across Sydney throughout 2011?




Because we are one country, the the housing markets in our states are more or less identical, they work in an identical way and are regulated the same. This is in sharp contrast to somewhere like USA where you can indeed look at states as separate markets since there are such vast differences between their markets and regulations.

And secondly for the point which you allouded to - because it is possible for me to move from one city to another which has cheaper property, thereby balancing the situation out.




Beej said:


> That's rubbish! The government spent very little money on housing stimulus relative to the broad stimulus program. In fact the net tax take from housing due to stamp duties is still far more than anything that is or was given back in the form of stimulus! So to ever be truly stimulatory the government would need to pump more in than it takes out.




Stamp duties are state revenue, FHOB was a federal program. Also it is an incorrect statement to make as you cannot know exactly how many more sales were generated as a result, so you cannot know what proportion of that money wound back up in state government coffers.

You are also missing the point entirely.


----------



## Starcraftmazter (30 March 2012)

Beej said:


> In terms of current capacity, if they wanted they would happily stimulate again - don't kid yourself about this! Australia has a sovereign currency - the government can borrow / create as much of it as they like. The only constraints on fiscal stimulus are political, not economic.




Can you cite me any example since the RBA was created, when it monetised debt? Are you aware that our federal government has spoken openly critisisng such behaviour?



Beej said:


> LOL! You think a couple of thousands flats in Zetland due for completion over several years is enough to deal outright with the population pressures facing Sydney? 1000 net new people settle here every week! There is nowhere near enough new dwelling construction going on in Sydney to satisfy underlying demand.




It is not a couple of thousand, the develops there are easily good for tens of thousnads of units a year. And not everyone wants to live close to the CBD - not to mention not everyone needs to.

Seriously, you ought to put down our housing shortage cool-aid.



Beej said:


> The bulk of funding is sourced locally. Where do you think your bank account interest comes from? Even foreign creditors get paid in $AU - so either have to deposit that in an AU bank, spend it in Australia, or sell it to someone in exchange for foreign currency, who then invests it somewhere in Australia anyway. $AU are only good for buying stuff here. It amazes me how few people see the big picture when it comes to monetary issues!




No it isn't, and no they don't. I suggest you learn about our banking system.



Beej said:


> Australia has run a current account deficit for 100 years! There are complex, but sound economic reasons why this is the case - but it essentially boils down to us always, historically being dependent on foreign investment to grow our economy. It has nothing whatsoever to do with the housing market.




First of all, not it has not. Second of all, the point is that it has gotten much much larger since the housing bubble began. And most of all, you fail to understand how bad of a thing that is.



Beej said:


> I think you guys all mis-understand the concept of a shortage of housing relative to UNDERLYING demand.




We have no shortages.



Beej said:


> Got any other explanation for that???




Yes - it's called a housing bubble.



Beej said:


> What makes you think the Chinese would want to exit our market??




Because they are leveraged, their houses are sitting empty (speculating on capital gains), and house prices have been falling for over a year. Not to mention our currency is dropping.




Beej said:


> PS: Hint; here's a chart from Residex up to Feb '12 that shows what's been going on with rents over the past 12 months:




Residex is well-known to be very unreliable and false. RP Data-Rismark is the only reputable housing data provider in Australia.

Debunking the shortage Myth

They said Los Angeles had a shortage. Nevada's population over the last 25 years grew in *orders of magnitude faster* than Australia's.




Their construction *per capita* was *lower than Australia's*





And guess what happened to the house prices? A bubble followed by a crash.





No such thing as a shortage. That's just a meme spewed out by property spruikers.

By all accounts, Australia has a massive *housing surplus* - a problem that will only get much worse as baby boomers retire.


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## Dowdy (31 March 2012)

Beej said:


> Two points in response to this:
> 
> 1) I don't know what you read, but I have been reading of potential over-building / over-supply of housing in Melbourne for a couple of years now?





Yeah, we (bears) were showing you those links and you choose to dismiss them! 

 I was talking about a property spruiker still claiming that Melbourne has a housing shortage.  So your saying you're now a property bear?





> What makes you think the Chinese would want to exit our market??




Things are slowing down in China so they're going to need capital and where have they stored alot of their capital.....in our RE market!


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## MrBurns (31 March 2012)

The Chinese are still around but a bit more careful about what they pay, prices are going down.
When the slump is well and truly in motion people will become fully aware of it.


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## moXJO (31 March 2012)

Been ten years since this crash was suppose to happen good luck waiting on the next ten. GFC was suppose to bring it  and still nothing to write home about, in fact they went up some more.

 For prices to crash their needs to be a trigger that hits wages imo.
Rents are still sky high as well.


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## MrBurns (31 March 2012)

moXJO said:


> Been ten years since this crash was suppose to happen good luck waiting on the next ten. GFC was suppose to bring it  and still nothing to write home about, in fact they went up some more.
> 
> For prices to crash their needs to be a trigger that hits wages imo.
> Rents are still sky high as well.




Was told by a large Melbourne rental firm that it's already in steep decline with thousands of places empty.

That crash you're waiting for is happening right now.


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## wayneL (31 March 2012)

moXJO said:


> *Been ten years since this crash was suppose to happen *good luck waiting on the next ten. GFC was suppose to bring it  and still nothing to write home about, in fact they went up some more.
> 
> For prices to crash their needs to be a trigger that hits wages imo.
> Rents are still sky high as well.




2002?

I don't think so.

Probably 2005 were the early property bears.


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## damien275x (31 March 2012)

Also I am contacting real estate agents by emails indicating I am looking to pay <20-30% of advertised price and they still phone me. Shows they're desperate!


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## Glen48 (31 March 2012)

House prices  don't crash over night just  like USA they start to go down over a period of many years USA  started about 2007 and still going down then they will over shoot the bottom stay flat and start to pick up again BUT you will never see the prices we did have again in your life time.


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## Ves (31 March 2012)

Glen48 said:


> House prices  don't crash over night just  like USA they start to go down over a period of many years USA  started about 2007 and still going down then they will over shoot the bottom stay flat and start to pick up again BUT you will never see the prices we did have again in your life time.



 I remember reading that house prices spend two thirds or more of the seven to ten year property cycle close to being flat and only one third is "boom" time. 

I have not looked for evidence of this over a long-term time frame but I would be curious if someone could validate or deny it. 

I think that this poses an interesting question particularly as the majority of people in our times are impatient by nature and think that something always has to be happening (whether boom or bust).


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## moXJO (31 March 2012)

wayneL said:


> 2002?
> 
> I don't think so.
> 
> Probably 2005 were the early property bears.




No the early bears were calling a crash in NSW and QLD (brissy) 2002 after a massive run up in property, I remember arguing with them. I was living in both states (alt months) at the time. I was bearish a few years back 2007-9 but have seen houses come off the boil with some cheaper blocks around (Been waiting ten fricken years).
Can't comment on VIC don't know the market

Some guys on here seem to think we will be living on the hills with a can of baked beans.

Unless wages drop I'm not that worried, and considering Unions were pushing for wage rises I might just jack up the rent.


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## Beej (31 March 2012)

wayneL said:


> 2002?
> 
> I don't think so.
> 
> Probably 2005 were the early property bears.




Here's some articles from 2003 calling for a crash, and one also refers also to a similar article from 2001:

http://www.jenman.com.au/news_item.php?id=60
http://www.jenman.com.au/news_item.php?id=126

I remember these were picked up by the MSM and their were various newspaper articles at the time along the same lines. Mind you when it came to Sydney it was right to be bearish in late 2003 - however there was no great crash, just small falls and some stagnation, much like we are seeing right now.


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## damien275x (31 March 2012)

Problem with stagnation is that anyone leveraged will bleed money. Every year that passes where the home does not go up in value while they are paying interest = a loss, and a big loss. Most people cant deal with ongoing loss and will want out, especially once they see no signs of improvement for 5-10 years.


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## young-gun (31 March 2012)

moXJO said:


> Been ten years since this crash was suppose to happen good luck waiting on the next ten. GFC was suppose to bring it  and still nothing to write home about, in fact they went up some more.
> 
> For prices to crash their needs to be a trigger that hits wages imo.
> Rents are still sky high as well.




There is but only one trigger. and that trigger is demographics. the fact that we are the last bubble to pop merely shows that our boomer generation were born a bit later than all other nations.

As it has been said sooo many times, it is as simple as supply and demand. what causes demand? NOT sentiment, NOT confidence. 80% of the home owners dont have an effing idea whats going on in the global economy, nor do they care. no, what causes demand is whether people(an entire generation of people) need/want to buy a house or not. and the fact is they simply dont need or want too anymore.

so the trigger that you're looking for, is your next door neighbour, your independent grocery store owner, your friends, possibly even yourself if youre a boomer, who simply ahve no need, want or desire to purchase a house anymore, and its happening right now.

rising unemployment and falling wages are a bi-product of a slowing economy, not a cause. simply because people are not spending at the dizzying heights that they were in the boom times.

some may say that the slowdown is caused by too much debt. this is incorrect. the slowdown is caused by demographics, the intensity of it is caused by how much everyone is leveraged.


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## Beej (31 March 2012)

Starcraftmazter said:


> There is. We are one country, if prices differ significantly in one city to another, then people will relocate there, thus lowering the prices from where they came, and equilibrium will be reached.




You are very naive! It simply doesn't work that way, at least not in the short / medium term. If what you say is true then house prices should be roughly the same across all Australia's capital cities! Are they?? Have they ever been?? There goes that whacky theory.......



> Housing bubble mechanics 101 pal:
> 
> [snip some naive youtube economics type drivel]
> 
> This happens everyone in Australia - in all cities, not just Melbourne. It has happened more in Melbourne than Sydney sure, but it absolutely happens in Sydney.




Again complete rubbish. The building rates in various cities at any point in time prove your theory to be bollocks.



> Rents in Sydney are not going up - nor are they anywhere else.




Ok now you are just trying to be funny???



> Only ONCE have sales volumes moved so low on that graph - in 1994, only ONCE - apart from the GFC. And as you already pointed out, we have had quite a lot of population growth since then!




Well there goes your 20 year comment....... and did prices crash after 1994? How about after 2008? Wake me if sales volumes fall say 30% or more lower than the 2011 level and you will sway me to the bearish side - as that would be virtually unprecedented, and would prove to me that things are "different this time".



> Past performance is not an indication of future performance... You need to understand all factorors which led to those results - which you clearly do not, you just stick your head in the sand yelling "lalalala" and claim that because it happened once before it must happen now.




Ok so you ARE basically arguing "it's different this time" - but isn't that what the bubble deniers are meant to argue??? (Confused?).



> Because we are one country, the the housing markets in our states are more or less identical, they work in an identical way and are regulated the same. This is in sharp contrast to somewhere like USA where you can indeed look at states as separate markets since there are such vast differences between their markets and regulations.
> 
> And secondly for the point which you allouded to - because it is possible for me to move from one city to another which has cheaper property, thereby balancing the situation out.




More evidence of your naivity with regards to how the residential property market in Australia and various cities actually DOES work. If you invest in other assets I sure hope you have a better understanding of market mechanics and history than shown with these comments about housing!



> Stamp duties are state revenue, FHOB was a federal program. Also it is an incorrect statement to make as you cannot know exactly how many more sales were generated as a result, so you cannot know what proportion of that money wound back up in state government coffers.




FHBGs are administered by the states as well - states are all partially federally funded anyway - you know about COAG? Commonwealth state grants? GST income distribution? So it doesn't matter that stamp duties are a state tax. The bottom line is that the government does not actually stimulate housing - they suck revenue out of it and thus suppress the market. All FHB grants etc do is offset this a little for FHBs.



Starcraftmazter said:


> Can you cite me any example since the RBA was created, when it monetised debt? Are you aware that our federal government has spoken openly critisisng such behaviour?




Do you understand the difference between fiscal and monetary actions? My comment was about potential FISCAL actions by the government - you are talking about MONETARY actions. Please ready my comment again. The only constraints on fiscal action by government are political.



> It is not a couple of thousand, the develops there are easily good for tens of thousnads of units a year. And not everyone wants to live close to the CBD - not to mention not everyone needs to.




Ummm - I don't think so. I'd check your facts if I were you. Regardless, just think for a second about how much new housing is needed with a population growing by 50,000-60,000 people every year?



> No it isn't, and no they don't. I suggest you learn about our banking system.




I understand the banking system and the monetary system extremely well thanks. If you think you are so smart on this one then tell me - what happens to funds paid to overseas investors in Australian assets exactly? Do you think the $AU just disappears out of the system and country? Do you actually know how foreign exchange works?



> First of all, not it has not. Second of all, the point is that it has gotten much much larger since the housing bubble began. And most of all, you fail to understand how bad of a thing that is.




Again you should check your facts. Australia has run a CAD for a long long long time. It has nothing to do with the so called housing bubble, unless we have had a housing bubble since the 60s? There is no correlation there at all. You could count on one hand the number of years out of the past 50 that Australia has registered a CA surplus. See figure 1 on page 7 of this RBA paper for a chart that goes back to 1960-ish: http://www.rba.gov.au/publications/rdp/2007/2007-02.html

Here's a chart plotting the CAD as % of GDP since 1980:




Do you see ANY correlation to house prices there? Any correlation to the rise in debt/GDP ratio that you claim proves a bubble?

Add to all this the fact that in recent times due to much improved terms of trade and trade surpluses etc the CAD has been trending lower in nominal terms and even moreso in % of GDP terms:







Doesn't exactly fit in with your theory does it? House prices rose 20% nationally over that period from 2007 - present!



> Residex is well-known to be very unreliable and false. RP Data-Rismark is the only reputable housing data provider in Australia.




Of you are funny! Residex data doesn't say what you believe so it must be false? By the way RP-Data shows rising rents pretty much across the board as well.


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## Beej (31 March 2012)

damien275x said:


> Problem with stagnation is that anyone leveraged will bleed money. Every year that passes where the home does not go up in value while they are paying interest = a loss, and a big loss. Most people cant deal with ongoing loss and will want out, especially once they see no signs of improvement for 5-10 years.




Nah - rising rents fixes that issue. We saw this scenario play out from 2003-2007 in Sydney already; there was no rush for the exits. We can see this happening right now as rents are rising strongly just about everywhere while property prices fall a bit or stagnate.


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## robz7777 (31 March 2012)

Beej said:


> Nah - rising rents fixes that issue. We saw this scenario play out from 2003-2007 in Sydney already; there was no rush for the exits. We can see this happening right now as rents are rising strongly just about everywhere while property prices fall a bit or stagnate.




That's fine for those still working. Once people start moving into retirement they need income from their property, no doubt in many cases the rents are only break even once the tax deductible loan interest has been taken into account.. 

IMO people who bought in the 90's and earlier will be fairly comfortable but those who got in late (once their friends started taking about their investment properties) will be the ones looking to exit the market as their cashflow gets squeezed.


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## Beej (31 March 2012)

robz7777 said:


> That's fine for those still working. Once people start moving into retirement they need income from their property, no doubt in many cases the rents are only break even once the tax deductible loan interest has been taken into account..




No that doesn't make sense? A property investment is either cash-flow positive or it is not. Once you reach the point where rent >= costs (interest, strata, rates etc etc), then it doesn't matter what income you earn / what your marginal tax rate is. In fact earning no / low income is better as you will pay less tax on the cash flow surplus from your investment property. This is what nearly all long term PIs actually aim for, especially those looking to fund their retirement from such. 

Having income and high marginal tax rates only helps during the period when the investment is actually negatively geared, as the higher your marginal rate the more of the shortfall is picked up by your tax reduction.


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## Bill M (31 March 2012)

robz7777 said:


> That's fine for those still working. Once people start moving into retirement they need income from their property, no doubt in many cases the rents are only break even once the tax deductible loan interest has been taken into account..




Hi robz, I am one of those guys who has moved into retirement and I live off my IP rental income. Usually most people retiring do so once that IP is pretty much paid off. I am in this position and currently earn about 3% clear after all expenses and after tax. It may not sound like a lot but it is enough to pay all of our living expenses.

What you must remember is the very low taxes low income individuals pay. Yes I know the first $6,400 is tax free but did you know about the low income tax offset? In effect it allows an individual to earn around 18k per year tax free. So with me being able to have 18k tax free and my wife having 18k tax free that gives us a 36k a year salary or $700 p/w tax free, not bad for doing nothing. So the point I'm trying to make is that net 3% per year is safe tidy little earner and any future capital gains on that property will be a bonus. I also wish to advise all posters, I have never ever lowered rents, they have only gone up and mine again went up $10 p/w last year. There is no shortage of tenants on the Northern Beaches in Sydney where my property is, cheers.

Link to low income tax offset calculator here.


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## MrBurns (31 March 2012)

Bill M said:


> Hi robz, I am one of those guys who has moved into retirement and I live off my IP rental income. ]




Thanks for sharing that Bill M, residential rentals in good locations will always be ok, commercial industrial however is another matter, volatile like shares in a way.


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## Bill M (31 March 2012)

MrBurns said:


> commercial industrial however is another matter, volatile like shares in a way.




Yes I know, I held a few listed REIT's before and during the GFC. I have consolidated the lot of them and ended up just buying into a ASX 200 Property ETF. They are still well down since their peak in 2007.


----------



## lenny (31 March 2012)

I have a few questions for the property bears on this thread.

1. In percentage terms what do you guys define a crash as?

2. Where have the property bears got their money invested now?

3. How long are you prepared to wait for this property crash to happen?

Look forward to hearing your responses.


----------



## MrBurns (31 March 2012)

lenny said:


> I have a few questions for the property bears on this thread.
> 
> 1. In percentage terms what do you guys define a crash as?
> 
> ...




1/ 30% or more.

2/ in TD's 

3/ It's happening now but about 12 months from now for it to bottom is my guess.


----------



## Dowdy (31 March 2012)

lenny said:


> I have a few questions for the property bears on this thread.
> 
> 1. In percentage terms what do you guys define a crash as?
> 
> ...




1. 25%

2. I run an online business

3. Saving up money to buy a house with at least 50% deposit. Gets easier every year with falling prices


----------



## Starcraftmazter (31 March 2012)

Beej said:


> You are very naive! It simply doesn't work that way, at least not in the short / medium term. If what you say is true then house prices should be roughly the same across all Australia's capital cities! Are they?? Have they ever been?? There goes that whacky theory.......




Yes it does, it's called labour mobility. And yes, they are roughly the same. The price to income ratios are extremely high in all major cities in Australia. Look at Germany and they are literally 3-4 times cheaper. Now that's a difference in prices which does not exist in Australia.




Beej said:


> Again complete rubbish. The building rates in various cities at any point in time prove your theory to be bollocks.




It is not bullocks, you can clearly see housing commencements rose and then moved to the highest point in Australia's history after the bubble started in around 1990. After the 2000 slowdown housing commencements moved to a very high level until the GFC, after which they again bounced up very strongly even as our population growth ground to the slowest level in around a decade.



Beej said:


> Ok now you are just trying to be funny???




Maybe you should stop making stupid comments and pay attention to the evidence. Like those rent graphs I produced.



Beej said:


> Well there goes your 20 year comment....... and did prices crash after 1994?




Completely different time, completely different circumstances.



Beej said:


> How about after 2008? Wake me if sales volumes fall say 30% or more lower than the 2011 level and you will sway me to the bearish side - as that would be virtually unprecedented, and would prove to me that things are "different this time".




Why 30% lower than the lowest point in the last 20 years? How arbitrary. We are already at panic levels. And yes they did began to crash after 2008 - and the government poured rivers of "stimulus" to prop up the market.

But I already went over this - it didn't work, and house prices have now fallen even further than during the GFC while the government is significantly indebted.



Beej said:


> Ok so you ARE basically arguing "it's different this time" - but isn't that what the bubble deniers are meant to argue??? (Confused?).




This time has never come before, so I don't know what you are talking about. Never in the history of humanity have we had a credit bubble burst the size of the current one. Never in Australia's history have we faced a demographic bomb. Never in Australia's history has housing been more unaffordable. Never in Australia's history have we had so much mortgage debt per capita.

This time is not different - because this time has never occurred in the past.



Beej said:


> More evidence of your naivity with regards to how the residential property market in Australia and various cities actually DOES work. If you invest in other assets I sure hope you have a better understanding of market mechanics and history than shown with these comments about housing!




More pathetic rhetoric from you, and *zero substance*.




Beej said:


> FHBGs are administered by the states as well




I said FHOB not FHOG.



Beej said:


> The bottom line is that the government does not actually stimulate housing - they suck revenue out of it and thus suppress the market. All FHB grants etc do is offset this a little for FHBs.




Yes they do, that is what they have always done.




Beej said:


> Do you understand the difference between fiscal and monetary actions? My comment was about potential FISCAL actions by the government - you are talking about MONETARY actions. Please ready my comment again. The only constraints on fiscal action by government are political.




You show that you do not understand what you are talking about. Our government does not have a reserve currency like the US or Japan. It cannot borrow whatever it wants - it would require the RBA to monetise it's debt - and that is indeed monetary policy. Our reserve ban is unlikely to ever do that.



Beej said:


> Ummm - I don't think so. I'd check your facts if I were you. Regardless, just think for a second about how much new housing is needed with a population growing by 50,000-60,000 people every year?




Wow, you really know nothing do you? "Ummm I dont think so check your facts, regardless" - just listen to yourself. Maybe you should go down there and talk to the developers to see just how much capacity they are building.

As for 50-60k people per year, that is absolute nonsense. The vast majority of the people immigrating to Australia go to WA and to a lesser extent QLD to work in the mines, NSW population growth has actually slowed by about 30% since the GFC. It's obvious that births do not amount to housing demand for a very long period of time - by which time baby boomers will be gone, and house prices would have fallen by 60%.

For all intents and purposes, Sydney's population growth is fairly flat.



Beej said:


> I understand the banking system and the monetary system extremely well thanks. If you think you are so smart on this one then tell me - what happens to funds paid to overseas investors in Australian assets exactly? Do you think the $AU just disappears out of the system and country? Do you actually know how foreign exchange works?




I do but you don't (which you have already demonstrated). Australians paying interest to the foreign banks goes to foreign banks - that money does not stay in Australia. Our bank borrow overseas in overseas currency.

Same principal for the stock market. Our miners - the biggest of which are listed around the world pay dividends to overseas investors in overseas currency.

All that money is just leaving Australia. That is the definition of a current account deficit.



Beej said:


> Here's a chart plotting the CAD as % of GDP since 1980:




And you can clearly see it has blown out as the bubble grew - once again, thanks for proving my point.



Beej said:


> Add to all this the fact that in recent times due to much improved terms of trade and trade surpluses etc the CAD has been trending lower in nominal terms and even moreso in % of GDP terms:




Nominal terms are irrelevant, all nominal measures are a joke.



Beej said:


> Of you are funny! Residex data doesn't say what you believe so it must be false? By the way RP-Data shows rising rents pretty much across the board as well.




No, there's nothing funny about it - it's a well known fact that Residex is very unreliable. Macrobusiness has covered this in detail.




lenny said:


> 1. In percentage terms what do you guys define a crash as?
> 
> 2. Where have the property bears got their money invested now?
> 
> 3. How long are you prepared to wait for this property crash to happen?




1. I would deem 30% as enough for a crash, but I think it will crash much further than that.

2. Stock market, various derivative trading instructs (short term only).

3. If by 2020 house prices don't fall by 40% real from peak then I'm out of this country.


----------



## lurker123 (31 March 2012)

lenny said:


> I have a few questions for the property bears on this thread.
> 
> 1. In percentage terms what do you guys define a crash as?
> 
> ...




1) 30% or more

2) Shares and options, in theory, if you know what you are doing you should be able to profit from all kinds of markets. Due to the current economic instability its risky since there is a chance that the market may drop even more, on the other hand there is a chance that the current situation is near low, so who knows, 5 years from now you might be able to sell at 100% capital gains. The other factor is you can short shares and options. A lot harder to get into shorting property unless you can get into the credit default swap action.

3) Up to the point where i am so filthy rich that it doesn't matter that I might make a loss on property. A lot of people have their savings in their place of residence/ family home. Currently i have no plans on where or which country I want to live in when I retire so I couldn't care less that I don't own my place of residence.  My savings rather than parked in the family home would be invested in quality businesses. Obviously if a crash does occur it is in my interest to have a investment property or 2 provided i have the necessary capital.


----------



## Beej (31 March 2012)

Starcraftmazter said:


> Yes it does, it's called labour mobility. And yes, they are roughly the same. The price to income ratios are extremely high in all major cities in Australia. Look at Germany and they are literally 3-4 times cheaper. Now that's a difference in prices which does not exist in Australia.




You are delusional! So you think that houses in Hobart are just as expensive as houses in Sydney do you??

I've made most of my points to you before so I;m not going to go over everything again, but I am just going to highlight some of the complete bollocks you just wrote:



> Maybe you should stop making stupid comments and pay attention to the evidence. Like those rent graphs I produced.




Here's the chart on rental growth again for you:






. 

That chart is from Alan Kohlers website and was produced by ANZ based on ABS data. 

There is so much data showing rising rents over the past few years it is not funny. You are in complete denial if you think rents have not been rising. They were up 16% in Perth in the last 12 months! 6% in Sydney! Up in nearly every capital city across the board.



> But I already went over this - it didn't work, and house prices have now fallen even further than during the GFC while the government is significantly indebted.




Fact - the Australian government has the LOWEST public debt relative to GDP of every country in the G20. You need to take your brown coloured glasses off!



> This time has never come before, so I don't know what you are talking about.
> 
> This time is not different - because this time has never occurred in the past.




Yep, so "it's different this time" - got it. I'll talk to you in 12-18 months if you are still around, and you will be proven wrong just like all the posters in 2008 who spouted the exact same stuff back then.



> You show that you do not understand what you are talking about. Our government does not have a reserve currency like the US or Japan. It cannot borrow whatever it wants - it would require the RBA to monetise it's debt - and that is indeed monetary policy. Our reserve ban is unlikely to ever do that.




Complete bollocks - and since when does Japan have a "reserve" currency? Only the $US is considered reserve because world commodities are priced in and traded in $US. What Australia DOES have (as does US, Japan, UK etc, but Greece and Ireland do not) is our own SOVEREIGN currency. Australia can borrow / create as much of its sovereign currency as it sees fit. The only constraints are political on the fiscal side, and the risk of inflation and foreign exchange value on the monetary side. If you don't understand this then you will never get how the economy actually works, and what Treasury and the RBA actually try to do behind the scenes to maintain economic growth.



> Wow, you really know nothing do you? "Ummm I dont think so check your facts, regardless" - just listen to yourself. Maybe you should go down there and talk to the developers to see just how much capacity they are building.




No - I KNOW you are wrong. I notice you can produce nothing to back your claim of "tens of thousands of new units in Zetland over the next few years"?



> As for 50-60k people per year, that is absolute nonsense.
> ......
> It's obvious that births do not amount to housing demand for a very long period of time
> ......
> For all intents and purposes, Sydney's population growth is fairly flat.




You are so demonstrably wrong on all counts here it is getting beyond a joke! This article (http://www.smh.com.au/national/sydney-drags-the-chain-on-growth-20120330-1w3lr.html) bemoaning the "slowdown" of Sydney population growth because it's population grew by "only" 60,000 last year, and 75,000 the year before is wrong is it? Really Sydney's population is flat is it?

_"Sydney's population rose by almost 60,000 in the year to June, more than 15,000 less than 2009-10."_

As for babies and housing demand, you are probably too young and wet behind the ears to realise, but when people have kids, they usually want to move to a bigger house! Natural population growth creates HUGE housing demand!

Anyway enough arguing with you - I know I will not change your mind and you will maintain your extreme views spread by reading to much Steve Keen and other rubbish like on Macrobusiness etc. It's just that someone has to point out the huge factual errors in half the stuff you post. Will see who is right in 12-18 months from here, assuming you are still on this site with that handle. If you really want some interesting reading go back through the archives here and read the housing threads from 2008/2009.


----------



## Starcraftmazter (31 March 2012)

Beej said:


> You are delusional! So you think that houses in Hobart are just as expensive as houses in Sydney do you??




No, that is not what I said. Furthermore, it is not a good argument to compare two capitals that are so drastically different in size. It is best to compare capitals like Sydney, Melbourne, Brisbane since they are the biggest. Then would come smaller capitals, etc.

Furthermore, the point I made was the price to income ratios are relatively even between those cities - compared to cities in other countries. This is true.



Beej said:


> Here's the chart on rental growth again for you:




Yes, it shows rents have risen faster than CPI - it supports the housing bubble thesis. I do not understand what your point is. 



Beej said:


> There is so much data showing rising rents over the past few years it is not funny. You are in complete denial if you think rents have not been rising.




Two posts ago, I showed you two graphs of official rents in real terms, and it is pretty clear that they have been flat for the last few years. There is no debate to be had here.



Beej said:


> Fact - the Australian government has the LOWEST public debt relative to GDP of every country in the G20. You need to take your brown coloured glasses off!




Every country and it's finances are different. Every country is at whims to a different monetary situation, and thus their capacity to borrow is different. You seriously do not understand economics if you think every country is the same in terms of being able to borrow money.




Beej said:


> Yep, so "it's different this time" - got it. I'll talk to you in 12-18 months if you are still around, and you will be proven wrong just like all the posters in 2008 who spouted the exact same stuff back then.




It's not different - please, continue to think your head in the sand and ignore the situation. Nobody who said housing was going to crash in 2008 was wrong one bit.



Beej said:


> Complete bollocks - and since when does Japan have a "reserve" currency?




Since investors are quite happy to bid up the yen even as Japan stands at over 200% debt to GDP.



Beej said:


> Only the $US is considered reserve




No, that's not really true.



Beej said:


> because world commodities are priced in and traded in $US.




And that's not entirely why either. As I suspected, you only pretend to have a clue.



Beej said:


> What Australia DOES have (as does US, Japan, UK etc, but Greece and Ireland do not) is our own SOVEREIGN currency. Australia can borrow / create as much of its sovereign currency as it sees fit.




Are you serious? Can you please describe to me the process by which countries create money, because I honestly do not think you understand it. I think you just read a lot of blogs and think you understand economics.

So tell me, if Australia wants to "create" more money to spend - where is it going to get it from?



Beej said:


> No - I KNOW you are wrong. I notice you can produce nothing to back your claim of "tens of thousands of new units in Zetland over the next few years"?




Go and look for yourself.



Beej said:


> You are so demonstrably wrong on all counts here it is getting beyond a joke! This article (http://www.smh.com.au/national/sydney-drags-the-chain-on-growth-20120330-1w3lr.html) bemoaning the "slowdown" of Sydney population growth because it's population grew by "only" 60,000 last year, and 75,000 the year before is wrong is it? Really Sydney's population is flat is it?




This is a typical nonsense article by our real-estate driven press to make people like you think there's a housing shortage, and rush out to bid up property prices. If it was true, it would mean that Sydney was responsible for 1/3 or more of the population growth of the whole country. They then go on to say that Melbourne grew even more. That means Sydney and Melbourne combined are 3/5th. This leaves very little for WA and QLD which is where the immigrants are going.



Beej said:


> As for babies and housing demand, you are probably too young and wet behind the ears to realise, but when people have kids, they usually want to move to a bigger house! Natural population growth creates HUGE housing demand!




People do not move residences with every new child they have - and it is certainly not necessary.



Beej said:


> Anyway enough arguing with you - I know I will not change your mind and you will maintain your extreme views spread by reading to much Steve Keen and other rubbish like on Macrobusiness etc. It's just that someone has to point out the huge factual errors in half the stuff you post. Will see who is right in 12-18 months from here, assuming you are still on this site with that handle. If you really want some interesting reading go back through the archives here and read the housing threads from 2008/2009.




You are hilarious, please continue.


----------



## young-gun (1 April 2012)

lenny said:


> I have a few questions for the property bears on this thread.
> 
> 1. In percentage terms what do you guys define a crash as?
> 
> ...




1. enough to make the 6pm news

2. cash

3. if prices dont fall by more than 5-10% in the next 12-18 months i will be reassessing my situation. if RE makes a bigger move than that either up or down sooner than 12 months then naturally my game plan will change. its really a month by month sorta game.


----------



## moXJO (1 April 2012)

young-gun said:


> There is but only one trigger. and that trigger is demographics. the fact that we are the last bubble to pop merely shows that our boomer generation were born a bit later than all other nations.
> 
> As it has been said sooo many times, it is as simple as supply and demand. what causes demand? NOT sentiment, NOT confidence. 80% of the home owners dont have an effing idea whats going on in the global economy, nor do they care. no, what causes demand is whether people(an entire generation of people) need/want to buy a house or not. and the fact is they simply dont need or want too anymore.
> 
> ...




Howard was pouring people into this country through immigration and not much has changed with labor. Remember the 'Big Australia' plan of doubling the population.



> Recent research by Comsec economist Craig James has found that Generation Y is now Australia's largest demographic. How are you keeping up with this changing world?
> 
> Based on population data from around Australia, Gen Y has emerged as Australia's largest demographic with 4.67 million people. Generation X  has also grown to 4.6 million. And, the Baby Boomer demographic is shrinking, falling by 6,000 to just 4.11 million people.
> To clarify who's who:
> ...


----------



## Starcraftmazter (1 April 2012)

moXJO said:


> Howard was pouring people into this country through immigration and not much has changed with labor. Remember the 'Big Australia' plan of doubling the population.




Well Gillard is against big Australia isn't she?

The net O/S arrivals have come down drastically since the LNP peaks around 2005, and are now about half of what they were. I don't think it's something to worry about considering the fast pace of construction activity in Australia and the massive oversupply in Melbourne, not to mention a lot of these are immigrants flown in by the mining companies.


----------



## Intrinsic Value (1 April 2012)

I have been predicting a big housing correction for years. 

I refused to get my self into big debt in the 80s and 90s paying what i though were over the odds prices for property in Sydney. Most of my friends have now retired on the back of havng three of four properties negatively geared over that period and  making huge capital gains through a series of strong upswings in the housing market.

So I am reluctant to  predict any crash in the market for a number of reasons.

Firstly the tax system makes it more attractive to get into debt to make money than is it to save money. Hence why many invest in property.

Secondly there is a relative shortage of premium locations with an ever increasing population.

Next there is something in the national psyche that reveres home ownership. It is a cultural phenomenon if you like.

Then there is the boost to the makets from cashed up overseas Asian investors. Is this likely to stop? I dont think so.

Then there is government policy which has always favoured home ownership and is very electoral sensitive to any falls in house prices.

Having said all of this I still think house prices in Australia are ridiculous and I certainly wouldnt pay the money that many would for crappy housing but it seems I am in the minority and always have been. And further to this I think it has been detrimental to the Australian economy as a whole with too much money been sunk into housing.

So a big crash is probably not going to happen.


----------



## DB008 (1 April 2012)

Starcraftmazter said:


> Yes it does, it's called labour mobility. And yes, they are roughly the same. The price to income ratios are extremely high in all major cities in Australia. Look at Germany and they are literally 3-4 times cheaper. Now that's a difference in prices which does not exist in Australia.




Look at the differences in wages between Germany and Australia
Look at the differences in property tax concessions between Germany and Australia (i.e., Negative gearing).


----------



## Beej (1 April 2012)

Starcraftmazter said:


> Well Gillard is against big Australia isn't she?
> 
> The net O/S arrivals have come down drastically since the LNP peaks around 2005, and are now about half of what they were. I don't think it's something to worry about considering the fast pace of construction activity in Australia and the massive oversupply in Melbourne, not to mention a lot of these are immigrants flown in by the mining companies.




Here's the actual migration and population growth numbers based on the department of immigration and ABS population figures:




So apart from an obvious ramp up during 2007 / 2008 (Rudd maybe?), current net overseas immigration and population growth in general are even now running above the average pace of most of the past decade. Also - I can see no 2005 peak in that chart as you claim to be the case?

And here's a quote from a recent ANZ report (picked up from http://christopherjoye.blogspot.com.au/2012/01/anz-population-growth-about-to-surge.html):

_"After slowing in 2009-10, leading indicators suggest a rebound in net overseas migration is imminent. In annualised terms, net international movements are currently running at 267,000 net arrivals, which is consistent with net overseas migration rebounding to 230,000 during 2011-12. This will lift population growth to 1.75% by June 2012, from 1.4% y/y in June 2011."_

Ignore anything politicians say publicly about population growth - they all know and believe that Australia can only prosper if our population grows - population growth = bigger economy = bigger domestic markets = more opportunity and global economic clout. That's why our immigration intake remains high no matter who is running the country.


----------



## Starcraftmazter (1 April 2012)

DB008 said:


> Look at the differences in wages between Germany and Australia
> Look at the differences in property tax concessions between Germany and Australia (i.e., Negative gearing).




Once again, I am not comparing absolute prices but median price to median wage ratios.

And yes, the tax system in Australia is retarded and that is a major culprit of the *bubble*.



Beej said:


> Here's the actual migration and population growth numbers based on the department of immigration and ABS population figures:




That looks like it doesn't account for emigration. Ie. flawed.




You can see that the LNP opened up the immigration floodgates in 2005 to prop up the housing bubble, but then the GFC came along and immigration crashed as emigration rose.








Beej said:


> Ignore anything politicians say publicly about population growth - they all know and believe that Australia can only prosper if our population grows - population growth = bigger economy = bigger domestic markets = more opportunity and global economic clout. That's why our immigration intake remains high no matter who is running the country.




That's all a load of crap. And indeed I prefer to pay attention to their actions, and ALP has recently tightened the immigration professions to reduce immigration.

This is apart from the fact there is more than enough construction activity to house everyone. Australia has one of the highest rates of new housing construction per capita as a result of bad price signals sent to the market by the housing bubble.

So the amount of housing overcapacity in this country is ridiculous.


----------



## DB008 (1 April 2012)

Starcraftmazter said:


> Once again, I am not comparing absolute prices but median price to median wage ratios.




When l visited Berlin a few years ago, l asked a friend what she earned a year. She was on 17k Euro p.a. She said it was a average wage.


----------



## Klogg (1 April 2012)

Starcraftmazter said:


> And yes, the tax system in Australia is retarded and that is a major culprit of the *bubble*.




Doesn't that imply that this is partly the reason for the higher property prices in Australia, and until they are removed, the portion of the price that is added as a result of these taxation laws will still remain?

Therefore, unless negative gearing laws (and other related laws) are changed, the bubble will remain forever inflated...
I don't see negative gearing going anywhere after the last time they tampered with it.


----------



## young-gun (1 April 2012)

moXJO said:


> Howard was pouring people into this country through immigration and not much has changed with labor. Remember the 'Big Australia' plan of doubling the population.




america had hoards of people immigrating also.


----------



## lenny (1 April 2012)

Thanks guys for responses!

My quandray is that i sold my house about 6 months ago and achieved my my exact asking price and plan to upgrade in the next ?????? How long???????.

I am renting at present and my capital gain i made on my house sale would be eroded in rent in about 6 years.

House prices are soft in my vic regional town but far from a crash, buyers market yes

When talking turkey i feel i could get a deal of around 5-10% discount to pre GFC price in prime location in my town, average locations have probably declined more but i'm not interested in average locations.

My problem is how long do you wait for the market to crash? 

I am getting the feeling sitting on the sidelines paying rent waiting for a possible housing crash to occur isn't the way to go.

I guess similar to the stock market nobody rings a bell at the bottom.


----------



## young-gun (1 April 2012)

Intrinsic Value said:


> I have been predicting a big housing correction for years.
> 
> I refused to get my self into big debt in the 80s and 90s paying what i though were over the odds prices for property in Sydney. Most of my friends have now retired on the back of havng three of four properties negatively geared over that period and  making huge capital gains through a series of strong upswings in the housing market.
> 
> ...




in 1980 the average wage was 12500 a year, the median house price was 37000, a ratio of roughly 3 times more. in 2011 average wage was 67k, median national house price was 431k, approx 6.5 times the average income.

i wonder if this means that, in 2040, houses are going to be 13 times our income? i think not, the 'correction' you have been waiting for is here.


----------



## DB008 (1 April 2012)

From a property investor point of view, demand is still high, i.e., renting the property. Once a property is purchased, the price paid isn't the most important factor (to me), it's the rent l receive, unless l'm looking to offload the property, which l'm not at the moment...


Not saying we should believe everything we read/hear, but demand is still strong in Sydney. 

http://www.news.com.au/money/property/growing-city-is-in-rental-crisis-as-population-boom-puts-pressure-on-housing/story-e6frfmd0-1226315015730



> Real Estate Institute of NSW data shows vacancies in the inner suburbs fell to 1.5 per cent, while the number of properties located up to 25km from the CBD dropped to 2.0 per cent.
> 
> The Australian Bureau of Statistics latest population figures released yesterday revealed NSW had 76,700 new residents to the year ending September 2011 - an increase of 1.1 per cent.




Supply and demand at work.


----------



## Starcraftmazter (1 April 2012)

DB008 said:


> When l visited Berlin a few years ago, l asked a friend what she earned a year. She was on 17k Euro p.a. She said it was a average wage.




Yes, Germany is a very good country indeed. Since they have good economic governance they have had no housing bubble, and as a result they have not experienced the same wage inflation Australia has due to it's need to service monstrous mortgages, and thus it has maintained it's manufacturing competitiveness - even though their currency is higher valued than the aussie.

However still your friend is incorrect, the average salary in Germany is â‚¬42,535:
http://www.thelocal.de/money/20110203-32865.html



Klogg said:


> Doesn't that imply that this is partly the reason for the higher property prices in Australia, and until they are removed, the portion of the price that is added as a result of these taxation laws will still remain?




Not at all, tax systems do not change housing valuations. They can help create bubbles, but once the bubble bursts prices will return to normal.



Klogg said:


> Therefore, unless negative gearing laws (and other related laws) are changed, the bubble will remain forever inflated...




That is not at all possible. The bubble is a ponzi scheme - it only remains inflated for as long as there are more idiots *able* and *willing* to buy into it. That is what drives all ponzi schemes.



lenny said:


> I am getting the feeling sitting on the sidelines paying rent waiting for a possible housing crash to occur isn't the way to go.




It is absolutely the way to go! Use that money to trade the market, or at least chuck in a long dated term deposits.

Wait at least 5 years. Buying anywhere near Melbourne is pure insanity at the moment, Melbourne house prices are in free-fall.


----------



## Starcraftmazter (1 April 2012)

The Irish are getting worried about immigrating to Australia:



> But as we in Ireland know, *the demand for houses is not a result of the growth in population but the growth in, and availability of, credit.* The key driver for house prices is debt. No debt means there's no house- price inflation -- plain and simple. If the banks are financing every Tom, Dick and Harry there will be an unsustainable boom. When prices start to fall, the credit dries up and the market collapses.




http://www.independent.ie/opinion/c...lias-crash-will-reach-our-shores-2984954.html


----------



## Klogg (1 April 2012)

Starcraftmazter said:


> That is not at all possible. The bubble is a ponzi scheme - it only remains inflated for as long as there are more idiots *able* and *willing* to buy into it. That is what drives all ponzi schemes.




You've said that Australian tax laws are one of the reasons why property prices have been inflated and maintained at such high levels - yet their contribution to the prices can't be expected to be maintained until they're removed?

Adam Smith tells me otherwise.


----------



## Klogg (1 April 2012)

Starcraftmazter said:


> The Irish are getting worried about immigrating to Australia:
> 
> 
> 
> http://www.independent.ie/opinion/c...lias-crash-will-reach-our-shores-2984954.html




Agree with your point 100%.

What they fail to say is each time house prices have crashed, the root cause has been high unemployment.

Fundamentals tell you that unless someone is willing (or in the Irish/American cases, forced) to sell their stock for a lower price, they just won't sell it.


----------



## moXJO (1 April 2012)

Starcraftmazter said:


> Well Gillard is against big Australia isn't she?
> 
> The net O/S arrivals have come down drastically since the LNP peaks around 2005, and are now about half of what they were. I don't think it's something to worry about considering the fast pace of construction activity in Australia and the massive oversupply in Melbourne, not to mention a lot of these are immigrants flown in by the mining companies.




I think it is roughly around the 170k a year mark intake with WA the highest growth -probably what you mentioned above. I think both sides of government will keep raising the population to keep up the tax revenue


----------



## Glen48 (1 April 2012)

Germans also had to put down a substantial deposit on houses's not like the others 110% loans which commonsense told them or they would have a bubble.

Owning a house in OZ is one way so showing off like a bloke driving a Merc you don't know if he owns it out right, on lease for more than what its worth, stole. fiber glass kit car or his father owns it the whole housing thing is a charade a lot would have been better of buying a Roller for 400k at least it will be worth more in yrs to come..


----------



## moXJO (1 April 2012)

moXJO said:


> I think it is roughly around the 170k a year mark intake with WA the highest growth -probably what you mentioned above. I think both sides of government will keep raising the population to keep up the tax revenue




Nvm everyone posted a chart


----------



## Starcraftmazter (1 April 2012)

Klogg said:


> You've said that Australian tax laws are one of the reasons why property prices have been inflated and maintained at such high levels - yet their contribution to the prices can't be expected to be maintained until they're removed?




Inflated yes, maintained no - has nothing to do with it.



Klogg said:


> Agree with your point 100%.
> 
> What they fail to say is each time house prices have crashed, the root cause has been high unemployment.




No - that is a myth. Housing crash comes first, unemployment comes *second*. It is a lagging indicator, and if you look at any bubble crash you will see that house prices began to crash long before unemployment started to go up.


----------



## moXJO (1 April 2012)

young-gun said:


> america had hoards of people immigrating also.




Yeah they don't have our minimum wage structure, IR or tax system.


----------



## McLovin (1 April 2012)

Intrinsic Value said:


> Firstly the tax system makes it more attractive to get into debt to make money than is it to save money. Hence why many invest in property.




Except that people are now saving more and shying away from debt. It's easy to look like a genius when you go and buy a place wait five years and sell it for double, having only put 5-10% down. Unfortunately, all other things being equal it requires whoever you sell it to to take on even more debt but absolute and relative to their income. From 1992 to 2007 household debt grew at ~15%/annum. We went from having a relatively debt free household sector to a heavily indebted one. The tax incentives, IMO, encouraged risk taking behaviour. That is unraveling now.



Intrinsic Value said:


> Secondly there is a relative shortage of premium locations with an ever increasing population.




This I agree with and I think is the reason why the bottom won't fall out. Australia needs more mid-size cities with white collar job opportunities. I'm talking about cities of between 750k-1.5m. In NSW, Newcastle and Wollongong should both be developed in to 1m population cities.



Intrinsic Value said:


> Next there is something in the national psyche that reveres home ownership. It is a cultural phenomenon if you like.




I don't see that as much in people of my generation as I do in older generations. People seem more interested in going overseas and traveling rather than spending their 20s trying to pay off an oversized mortgage. Fewer people are getting married and fewer are having children. Household formation has changed.

I agree with the general premise of your post; I don't think house prices are going to collapse but I still don't see how people can afford to keep bidding up house prices.

Here's an interesting article from this weekend about the reluctance to not take on debt and how it's effecting the economy.

http://www.smh.com.au/business/nati...oc-for-house-and-contents-20120330-1w3do.html

ETA: I also think that underemployment is happening below the surface and if things stay like they are it will start to show in a higher unemployment rate.


----------



## DB008 (1 April 2012)

Starcraftmazter said:


> Yes, Germany is a very good country indeed. Since they have good economic governance they have had no housing bubble, and as a result they have not experienced the same wage inflation Australia has due to it's need to service monstrous mortgages, and thus it has maintained it's manufacturing competitiveness - even though their currency is higher valued than the aussie.




Berlin - maybe l shouldn't have used it as an example, it's broke....

http://www.dw.de/dw/article/0,,1983556,00.html

http://www.guardian.co.uk/world/2007/jun/15/germany.kateconnolly


To me, the major difference between Australia and USA/Europe is the mining boom. 

Electricians/Refrigeration mechanics getting paid ~$150+ p.a.
Riggers/Scaffies/Haul pack drivers on ~$3k+ a week
Chefs on ~$130k+ a year
These are not BS figures, l spent around 3 years doing FIFO work in WA ex-PER/SYD. 

As long as China has an appetite for the resources in Australia, I can't see Australia's housing 'bubble' popping. 
China still has a long way to go before it really starts slowing down. The only way l can see China slowing down is if it gets nuked...


----------



## Starcraftmazter (1 April 2012)

DB008 said:


> China still has a long way to go before it really starts slowing down. The only way l can see China slowing down is if it gets nuked...




It doesn't have a long way to go, it's already finished. At the rate China has been constructing apartment buildings, it will be able to house the entire world's population in 3 years.

The slowdown has definitely began, even the government is now targeting 7.5% growth - say that even that is optimistic. Manufacturing PMIs have been contracting all of this year so far.

There are massive amount of bad loans and bankruptcies. Many businessmen have committed suicide lately, the shadow banking system is huge and is collapsing.

Honestly, I could go on and on - but the fact is, China is finished. At least so far as growth is concerned.

It's also not just me saying this, investment banks (IIRC Citi came out with a report last month on this) have already called the peak of China's resource usage, and we are past it.

The commodity bubble has already began to crash - and this is even before the new iron ore capacity comes online in the coming years. But alas this is how bubbles work - the unrealistic prices sent incorrect signals to the market, and world miners massively over-invested in iron production. Now iron ore prices will plummet for years.


----------



## moXJO (1 April 2012)

Starcraftmazter said:


> It doesn't have a long way to go, it's already finished. At the rate China has been constructing apartment buildings, it will be able to house the entire world's population in 3 years.
> 
> The slowdown has definitely began, even the government is now targeting 7.5% growth - say that even that is optimistic. Manufacturing PMIs have been contracting all of this year so far.
> 
> ...




And then there was India


----------



## DB008 (1 April 2012)

Starcraftmazter said:


> It doesn't have a long way to go, it's already finished. At the rate China has been constructing apartment buildings, it will be able to house the entire world's population in 3 years.




Link please...




Starcraftmazter said:


> The slowdown has definitely began, even the government is now targeting 7.5% growth - say that even that is optimistic. Manufacturing PMIs have been contracting all of this year so far.




Yes, the slow down has begun, Government initiated.




Starcraftmazter said:


> Many businessmen have committed suicide lately, the shadow banking system is huge and is collapsing. Honestly, I could go on and on - but the fact is, China is finished. At least so far as growth is concerned.




Please do go on, l am interested in this. Link please.



Starcraftmazter said:


> It's also not just me saying this, investment banks (IIRC Citi came out with a report last month on this) have already called the peak of China's resource usage, and we are past it.




Over 1 billion people, and we are over it? Citi link please...



Starcraftmazter said:


> The commodity bubble has already began to crash - and this is even before the new iron ore capacity comes online in the coming years. But alas this is how bubbles work - the unrealistic prices sent incorrect signals to the market, and world miners massively over-invested in iron production. Now iron ore prices will plummet for years.




Iron Ore prices to plummet?? Do the Iron Ore contracts get re-newed every 6 months or yearly? Lets keep an eye on this, and see if Iron Ore has plummeted, why are companies building mines in WA like crazy? Better tell RIO/BHP/FMG/Hancock Prospecting/Metallurgy to slow down...

http://www.theaustralian.com.au/business/companies/hancock-prospecting-and-partners-seek-roy-hill-funding/story-fn91v9q3-1226314925755

http://www.news.com.au/business/china-iron-ore-demand-flattening-bhp/story-e6frfm1i-1226305233629


> Mr Ashby said he expected China's steel production capacity would reach up to 1.1 billion tonnes by 2025, up from about 700 million tonnes currently.


----------



## young-gun (1 April 2012)

moXJO said:


> And then there was India




no doubt, but theyre not ready to pick up the slack yet, give them 10 years.


----------



## Starcraftmazter (1 April 2012)

DB008 said:


> Link please...




I don't have a link on it, I calculated it a last year when I was reading an article about construction rates in China.




DB008 said:


> Yes, the slow down has begun, Government initiated.




And it's a good thing they did, otherwise they would have complete economic collapse due to their housing bubble.



DB008 said:


> Please do go on, l am interested in this. Link please.




I don't keep links for everything, how have you not heard of this? What exactly do you want a link for? I suggest searching FT first.



DB008 said:


> Over 1 billion people, and we are over it? Citi link please...




Yes, most of them are old and aging. China's population is going to drop very quickly now that it's peaked.

As for the link, since this is a recent report I do indeed have it. I again question why you are making statements about China if you are not aware of these basic fundamental facts.

http://www.macrobusiness.com.au/2012/03/citi-weighs-in-on-commodity-super-cycle-debate/




DB008 said:


> Iron Ore prices to plummet?? Do the Iron Ore contracts get re-newed every 6 months or yearly?




In case you aren't aware, China just opened an exchange where it's companies will buy iron ore at spot prices. Both mining companies and China have been moving to price structures which reflect the most recent prices possible.



DB008 said:


> Lets keep an eye on this, and see if Iron Ore has plummeted, why are companies building mines in WA like crazy? Better tell RIO/BHP/FMG/Hancock Prospecting/Metallurgy to slow down...




Because they are incredibly stupid and it's the only thing they know how to do. But even they are now realising their mistakes:

http://www.marketwatch.com/story/bhp-may-tweak-plans-as-china-growth-slows-report-2012-03-19-1939510



> BHP Billiton Ltd. BHP +1.41%  Chairman Jacques Nasser has told investors the company is *reevaluating its massive spending plans as slowing Chinese growth prompts a more cautious outlook for commodity demand*, The Australian Financial Review reported Tuesday.
> 
> BHP is looking more closely at where *Chinese demand for iron ore is likely to peak before committing to a US$20 billion-plus investment in mine and port infrastructure in Western Australia state's Pilbara region*, the report said.


----------



## Glen48 (1 April 2012)

Suckers wanted:
The Victorian first home buyers grant should be restricted to newly constructed dwellings to give the building industry a much needed boost, the Urban Development Institute of Australia says.

The UDIA is also calling for a further interest rate cut when the Reserve Bank meets on Tuesday.

The peak industry group says the two measures are urgently needed to revive the flagging property market and protect thousands of jobs in the construction industry.

Victorian first home buyers receive up to $7000 for a home. They get an extra $13,000 if they purchase a newly constructed dwelling, increasing to $19,500 if they buy new in a regional area.

The UDIA says the payments should be limited to first-time buyers of new homes.

This is in conflict with the Real Estate Institute of Victoria (REIV), which believes the additional payment scheme for new home buyers should be scrapped in July because it has achieved its purpose of stimulating building projects.

"It is important to move quickly to restore broad confidence in the property sector," UDIA Victoria executive director Tony De Domenico said in a statement.

"Whilst we still have population demand as a positive driver of the market, it needs to be complemented with the first home buyer grant for new housing and the interest rate cut."

New home sales were down _18 per cent _in _February _compared with 2011, according to the Housing Industry Association. But this followed a period of rapid growth in construction and buying between 2008 and 2010.

Mr De Domenico said the Victorian property industry directly employed about 310,000 people, contributing about 12 per cent of the state's gross domestic product and $4.6 billion in taxes.

The Victorian government has committed to halve stamp duty for first home buyers by 2014.


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## Starcraftmazter (1 April 2012)

Glen48 said:


> Suckers wanted:
> The Victorian first home buyers grant should be restricted to newly constructed dwellings to give the building industry a much needed boost, the Urban Development Institute of Australia says.




Just as I predicted. This is why a housing downturn will not result in the reduction of over-capacity. Because they will stimulate and stimulate - but direct their stimulus to new construction to save jobs. This way the over-capacity continues. They will just keep on building and building and building until house prices plummet to all-time lows.


----------



## drsmith (1 April 2012)

Starcraftmazter said:


> I don't have a link on it, I calculated it a last year when I was reading an article about construction rates in China.



I'm curious about a link to that article.


----------



## Beej (1 April 2012)

drsmith said:


> I'm curious about a link to that article.




I wouldn't hold your breath..... It's a ridiculous claim!


----------



## Starcraftmazter (1 April 2012)

Wish I could find it, but the data was graphed in an MB article at least 5-6 months ago. They publish hundreds of articles every months so it's not really practical to go through them all....but if you want, you can.

To narrow it down a bit, it was probably put under one of these 2 categories:

http://www.macrobusiness.com.au/category/chinas-economy/
http://www.macrobusiness.com.au/category/global-housing/

EDIT: Amazingly I found it! How awesome am I? Pretty damn awesome. Anyway - article:
http://www.macrobusiness.com.au/2011/06/socgen-on-chinas-construction-bubble/

Analysis from SocGen:



> China has built the entire European housing floor space stock (limited to Czech Republic, Sweden, Portugal, Greece, Poland, Netherlands, Spain, UK, Italy, France and Germany) in less than 10 years. Within 10 years, China has built slightly more than 16 billion sqm of completed residential floor space, enough to provide accommodation for 600 million people assuming 30 sqm per capita. Over the same period, the urban population increased by just 185 million. With around 1.8 billion square metres of new residential floor completed in 2010, China has built the equivalent of Spain’s housing floor space stock. This construction has already provided accommodation for 60 million people while the urban population only increased by c. 20 million. If China were to keep its current construction rate within the next five years, the 9 billion sqm of new housing built would provide accommodation for 300 million more people. China would thus have the available floor space stock to accommodate an urbanisation rate of 65-70%… the IMF’s forecast for 2030!




This is unrealistically bullish though. You have to understand exponential growth and the power of compounding. You also have to understand that not everyone lives in luxury, and in China which is very densely populated, a lot more people live in the same amount of residential floorspace.




At the current rate of construction China will add a Europe's worth of housing every year in just half a decade!

It is ridiculous, especially for a population that will experience significant shrinking between now and 2050. Already China has way more residential apartments than it will ever need. Massive ghost cities sitting there unfilled for a rapidly decreasing rural population.

Not to mention as wages rise in China, there will be fewer businesses looking for labour there. Textiles is already moving to Vietnam. Where are the jobs to fuel further urbanisation going to come from?

Nowhere, all construction that is happening in China is pure malinvestment and will never be used!


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## FxTrader (1 April 2012)

Starcraftmazter said:


> Just as I predicted. This is why a housing downturn will not result in the reduction of over-capacity. Because they will stimulate and stimulate - but direct their stimulus to new construction to save jobs. This way the over-capacity continues. They will just keep on building and building and building until house prices plummet to all-time lows.




Ask yourself where all the "building and building and building" is occurring.  It's on the urban fringe of Melbourne where the greatest risk exists of a significant price decline in the future even though property there is the most affordable.  There is no "over-capacity" 20km within the CBD as evidenced by the ridiculous rents asked for and being achieved by landlords and low vacancy rates.  Melbourne is not a monolithic property market that can be described and generalized as a whole. 

"All time lows" compared to what period of time?  The only way such fanciful and unsupported speculation would ever come true would be in the wake of a catastrophic economic and financial collapse on the scale of Greece, Spain or Ireland here is Australia.  The probability of this would have to be extremely low here.


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## Starcraftmazter (1 April 2012)

FxTrader said:


> Ask yourself where all the "building and building and building" is occurring.




I live in Sydney and I see construction bloody everywhere.



FxTrader said:


> "All time lows" compared to what period of time?  The only way such fanciful and unsupported speculation would ever come true would be in the wake of a catastrophic economic and financial collapse on the scale of Greece, Spain or Ireland here is Australia.  The probability of this would have to be extremely low here.




Compared to the last 100 years. Our economy is one of the worst in the world, so it's pretty likely.


----------



## FxTrader (1 April 2012)

Starcraftmazter said:


> I live in Sydney and I see construction bloody everywhere. Compared to the last 100 years. Our economy is one of the worst in the world, so it's pretty likely.




You originally commented on an article about the VIC first home buyers grant.  It's quite clear you do know much about the Melbourne property market.  There is no construction boom in the areas were most Melbournians would like to live (within 20km of the city), there's virtually no land to build on!  Apartment building is a different matter but this has slowed considerably.

As for the throwaway line regarding our economy, clearly you are not keeping up with recent events.  The problem here is our dependence on China keeping the resource boom ticking along, not the current state of the economy.  The "worst in the world" prize would be a dead heat between Greece, Spain and Ireland followed closely by a large number of eastern European economies.  Australia's economy can't be compared with these basket cases on any measure.


----------



## Starcraftmazter (1 April 2012)

FxTrader said:


> It's quite clear you do know much about the Melbourne property market.




Thanks, I do my best 



FxTrader said:


> There is no construction boom in the areas were most Melbournians would like to live (within 20km of the city), there's virtually no land to build on!  Apartment building is a different matter but this has slowed considerably.




Why is Apartment building a different matter? When demand increases, so must density.



FxTrader said:


> As for the throwaway line regarding our economy, clearly you are not keeping up with recent events.  The problem here is our dependence on China keeping the resource boom ticking along, not the current state of the economy.  The "worst in the world" prize would be a dead heat between Greece, Spain and Ireland followed closely by a large number of eastern European economies.  Australia's economy can't be compared with these basket cases on any measure.​





I agree, except we are the basket case - they are much better than us. Maybe not Greece - I am willing to say they are around as bad as us. Spain and Ireland though? Much better. They are also textbook examples of what will happen to Australia - except we will fare worse for our property bubble is much bigger than theirs.​


----------



## So_Cynical (1 April 2012)

Starcraftmazter said:


> Thanks, I do my best
> 
> 
> 
> ...




Are you drunk?

For a start their property bubble has popped, unemployment in Ireland is like 14% and something like a third of all mortgages are worth more than the houses the mortgages cover.

http://www.google.com.au/publicdata...onality:sa&dl=en&hl=en&q=ireland+unemployment

http://www.ronanlyons.com/2011/08/30/top-ten-facts-in-relation-to-ireland’s-mortgage-debt-arrears/


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## Starcraftmazter (2 April 2012)

So_Cynical said:


> Are you drunk?
> 
> For a start their property bubble has popped, unemployment in Ireland is like 14% and something like a third of all mortgages are worth more than the houses the mortgages cover.
> 
> ...




Yes, they are at a different point in time of their housing bubble crash - that doesn't make us any better than them.

The point is, once our crash has progressed as far as theirs, we will be in a much worse economic situation than they are now.

It's all relative.


----------



## lenny (2 April 2012)

Starcraftmazter said:


> I agree, except we are the basket case - they are much better than us. Maybe not Greece - I am willing to say they are around as bad as us. Spain and Ireland though? Much better. They are also textbook examples of what will happen to Australia - except we will fare worse for our property bubble is much bigger than theirs.




Using the rule of thumb that our stock market leads our economy by about 6 months I'm pretty confident to say our stock market bottomed out on Aug 9th, If that is the case our economy should recover some time  2012 .

If our stock market can break to new ground this would confirm my thinking.


----------



## Starcraftmazter (2 April 2012)

lenny said:


> Using the rule of thumb that our stock market leads our economy by about 6 months I'm pretty confident to say our stock market bottomed out on Aug 9th, If that is the case our economy should recover some time  2012 .
> 
> If our stock market can break to new ground this would confirm my thinking.




I don't think the stock market indicates anything to be honest. Just a measure of investor sentiment going forward. Also heavily manipulated.


----------



## Starcraftmazter (2 April 2012)

Morgan Stanley outlook on Australia
http://www.morganstanley.com/views/gef/#anchor0a67815c-7a60-11e1-8bc0-6f37658be6eb

Take a note of the housing section;



> #5 The Housing Bubble Deflates
> 
> We think that the single most important reason for the escalation in house prices over the past two decades was the rising willingness and ability of households to increase leverage.
> 
> ...


----------



## tech/a (2 April 2012)

*Love it!*

And why do you think many people like me were prepared to buy house after house at 100% borrowings?

Because I could (for 7 yrs) buy houses at 100% borrowings and rent them out with a positive return every time.
Not only that but my rents increased and my equity sky rocketted.
So why wont we leave in droves.

Because my $500K houses I bought in 1996 at $85K and rented at $200/week are now rented for $400 a week. So they drop 20%
Do I care? really! 
I sold one in 2007 and freeholded 4 
Do I really care??

Opportunity
When it hits you in the face
Grab it with *BOTH HANDS*.

Ill be anything you like that the author of that artical *DOESNT HAVE* one IP.

*I pop in now and again and its still as boring as it was when it started!*


----------



## Glen48 (2 April 2012)

The reason house prices took of as well as furniture, plasma tv etc and boomers being allowed to re-live their youth by buying older model cars was cheap credit, lo doc loans  the bribe and banks pushing out cheap money, as most didn't understand the credit system, thought the bribe would give them money in their hand, being brained washed in to house price double every 7 yrs  they all went on a spending spree, now the bill has arrived and no one can pay.
 Just like the start of any other depression and just like the next one in 70- 80 yrs time when most will have forgotten about this one.

 House prices are gong down thread closed.


----------



## tech/a (2 April 2012)

Glen48 said:


> The reason house prices took of as well as furniture, plasma tv etc and boomers being allowed to re-live their youth by buying older model cars was cheap credit, lo doc loans  the bribe and banks pushing out cheap money, as most didn't understand the credit system, thought the bribe would give them money in their hand, being brained washed in to house price double every 7 yrs  they all went on a spending spree, now the bill has arrived and no one can pay.
> Just like the start of any other depression and just like the next one in 70- 80 yrs time when most will have forgotten about this one.
> 
> House prices are gong down thread closed.




Brain washed.
*Who are you kidding.*

They Doubled and Trebled and Quardupled.
Many frozen by fear missed out completely on a once in a life time outlier!!!!

Man there is no helping some people.
Look around outliers happen all the time.
FIND ONE!
MAD has risen 500% in 6 mths.
If you had $300K (price of a very very modest house) on that ---------------- *See the point!*


----------



## McLovin (2 April 2012)

tech/a said:


> *Love it!*
> 
> And why do you think many people like me were prepared to buy house after house at 100% borrowings?
> 
> ...




I don't really understand the point of your post. You bought well 16 years ago at a yield over 10%. Of course you wouldn't sell, you've got a nice income stream (I don't buy into the whole rents are going to collapse). I understand that some property investors wanted to build a stable income stream and well done to them. Your houses have had a more than fivefold increase in price, yet rental income has only doubled. If it were a stock and investors in 1996 were only willing to pay 8.5x earnings but today are willing to pay 25x earnings then I'd assume it was growing its earnings a fair bit faster than 4.5%.

I know plenty of people in your shoes who have bought well and couldn't care less about property prices, they have no intention of selling. They're not worried because they bought income not capital growth. The ones who thought they'd get rich buying property, well they're a different story.

FWIW, I'm not one of those property doomsdayers but I don't think it's going up for a while.


----------



## DB008 (2 April 2012)

Generally speaking, rent only goes up every 6 months or yearly (usually when a new contract is signed, or is in the contract & stipulates a rental increase on xx date). 
Usually it's in small increments too, like $10 a week or so.


----------



## DB008 (2 April 2012)

tech/a said:


> Because my $500K houses I bought in 1996 at $85K and rented at $200/week are now rented for $400 a week. So they drop 20%
> Do I care? really!




Very valid point. 
I don't care about what my IP is worth, but l do care what the rental income is.


----------



## rryall (2 April 2012)

DB008 said:


> Very valid point.
> I don't care about what my IP is worth, but l do care what the rental income is.




This is a very ignorant point of view. Yields are going to be highly correlated with capital preservation. If house prices continue their downward trend rents will decrease as many renters will become buyers.


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## DB008 (2 April 2012)

rryall said:


> This is a very ignorant point of view. Yields are going to be highly correlated with capital preservation. If house prices continue their downward trend rents will decrease as many renters will become buyers.




Sorry, maybe l should have been clearer.
I'm not bothered if 1 of my IP's dips in value, from say, 350k to 320k, while the rent remains unchanged. 
As an investor, you can look for 3 types of value in property;
1) Capital gain
2) Cash flow - through rent
3) Both points 1 and 2

At the moment, l'm sitting at point #2. A dip wouldn't effect me (at the moment, as l'm not looking to sell).

*Sorry for the ignorance.


----------



## tech/a (2 April 2012)

McLovin said:


> I don't really understand the point of your post. You bought well 16 years ago at a yield over 10%. Of course you wouldn't sell, you've got a nice income stream (I don't buy into the whole rents are going to collapse). I understand that some property investors wanted to build a stable income stream and well done to them. Your houses have had a more than fivefold increase in price, yet rental income has only doubled. If it were a stock and investors in 1996 were only willing to pay 8.5x earnings but today are willing to pay 25x earnings then I'd assume it was growing its earnings a fair bit faster than 4.5%.
> 
> I know plenty of people in your shoes who have bought well and couldn't care less about property prices, they have no intention of selling. They're not worried because they bought income not capital growth. The ones who thought they'd get rich buying property, well they're a different story.
> 
> FWIW, I'm not one of those property doomsdayers but I don't think it's going up for a while.




 Read this article ----- love it---- then everything else should read in context.




Starcraftmazter said:


> Morgan Stanley outlook on Australia
> http://www.morganstanley.com/views/gef/#anchor0a67815c-7a60-11e1-8bc0-6f37658be6eb
> 
> Take a note of the housing section;


----------



## Starcraftmazter (2 April 2012)

tech/a said:


> Because I could (for 7 yrs) buy houses at 100% borrowings and rent them out with a positive return every time.
> Not only that but my rents increased and my equity sky rocketted.
> So why wont we leave in droves.
> 
> ...




You bought around the start of the bubble. Your experience is irrelevant to the present situation, as it simply is not what is ever going to happen again.

Your argument is also akin to buying stocks for their dividends and not caring about the capital value.

So tech, are you comfortable with buying a stock, watching it plummet 60% in value, and hugging the dividends for 7 years?



tech/a said:


> Brain washed.




Indeed you are! Houses don't just rise and rise and rise. They form a bubble, and then the bubble pops. This has been happening for hundreds of years in every country. Including Australia.




DB008 said:


> Very valid point.
> I don't care about what my IP is worth, but l do care what the rental income is.




That's crazy talk, I'll never understand people like you. May as well just throw your money away if you don't care about it.


----------



## Ves (2 April 2012)

And you conveniently missed tech's main point. Again.


----------



## Starcraftmazter (2 April 2012)

Ves said:


> And you conveniently missed tech's main point. Again.




Which is what? None of his post makes any sense, it's as if he travelled from 1987 to now and is not aware of the bubble that has occurred between then and now.


----------



## Ves (2 April 2012)

He's bought his houses. He is already presumably rich from the much feared bubble.  The key word is, or more accurately was, opportunity.


----------



## tech/a (2 April 2012)

Starcraftmazter said:


> Which is what? None of his post makes any sense, it's as if he travelled from 1987 to now and is not aware of the bubble that has occurred between then and now.




Let me spell it out.
I'll type slowly so you can keep up!

The article read that banks making credit available caused the bubble.
I personally disagee.
I and the banks saw opportunity
We took advantage of it and so did a small % of the population.

Sure some got their timing wrong and got burnt.
Sure there will be a pull back.
but over time rents and housing will all make new highs.

Got it now or would you prefer the movie length version?
It's an opinion
You don't have to agree.
Most don agree with me
Hence opportunity everywhere!
.


----------



## Starcraftmazter (2 April 2012)

tech/a said:


> Let me spell it out.
> I'll type slowly so you can keep up!
> 
> The article read that banks making credit available caused the bubble.
> ...




Yes, there was a bubble and some people got rich off of it. What's your point? Everyone knows this already.

This thread is about *future* property prices. In the future they will go down. A lot.

The last bubble to rival the current happened in 1890. That's 100 years before the start of the current bubble. You know why it took so long for a bubble of this magnitude to form again? Because an entire generation of people lost all their money and were permanently scarred by the asset bubble. 

This is why asset bubbles have happened so far and few in between, because no generation has been stupid enough to allow two of them to happen under their watch.

Now I don't know about you, but I doubt I will live another 100 years to see another housing bubble. This is besides the fact that house prices will go down for the next 20 years at least.


----------



## Klogg (2 April 2012)

Starcraftmazter said:


> So tech, are you comfortable with buying a stock, watching it plummet 60% in value, and hugging the dividends for 7 years?




Even though this is directed at tech, I'm going to answer this with - if I'm getting a good yield (e.g. > 10% return) on the money I *originally* invested (which he probably is by now), I don't really care what the underlying asset value is. So long as:

- The yield does not change
- I'm not forced to realise the loss

And if you do find any assets that perform like that, be sure to let me know


----------



## Starcraftmazter (2 April 2012)

Klogg said:


> Even though this is directed at tech, I'm going to answer this with - if I'm getting a good yield (e.g. > 10% return) on the money I *originally* invested (which he probably is by now), I don't really care what the underlying asset value is. So long as:
> 
> - The yield does not change
> - I'm not forced to realise the loss
> ...




Sure thing buddy.

Gold has yielded much more than that every year for the last 12 years (around 28%?) - and it's a hell of a lot safer than housing. It also yields even more in AUD since it has gone up.

As for your investment philosophy - I don't agree with it. And there is nothing with guaranteed yields.


----------



## tech/a (2 April 2012)

Starcraftmazter said:


> Yes, there was a bubble and some people got rich off of it. What's your point? Everyone knows this already.




Was commenting on YOUR post which was commenting on the past.
I had and have an opinion which is at right angles to the articles view.



> This thread is about *future* property prices. In the future they will go down. A lot.




Excellent more buy opportunities.



> The last bubble to rival the current happened in 1890. That's 100 years before the start of the current bubble. You know why it took so long for a bubble of this magnitude to form again? Because an entire generation of people lost all their money and were permanently scarred by the asset bubble.




You appear to be hell bent on convincing yourself and others that there are only losers
There are losers and plenty of winners. Same in the tech boom and bust--- same in 87




> This is why asset bubbles have happened so far and few in between, because no generation has been stupid enough to allow two of them to happen under their watch.




Ha ha really. Nothing to do with economics then?



> Now I don't know about you, but I doubt I will live another 100 years to see another bubble. This is besides the fact that house prices will go down for the next 20 years at least.




Really.
I'm having a meaningless discussion with one of the 95%
Believe what you want.
Opportunity will just pass you buy.
You'll probably see it but be frozen by fear.
----there you go there's my 20 year prediction---
Time to bugger off again.


----------



## Starcraftmazter (2 April 2012)

tech/a said:


> Really.
> I'm having a meaningless discussion with one of the 95%
> Believe what you want.
> Opportunity will just pass you buy.
> ...




Economics indeed - there will never in your lifetime (nor mine) be opportunities in the Australian housing market.

Ignore the evidence at your peril.


----------



## tech/a (2 April 2012)

Starcraftmazter said:


> Economics indeed - *there will never in your lifetime (nor mine) be opportunities in the Australian housing market.*
> 
> Ignore the evidence at your peril.





And there you have it.
Absolute ignorance.
There are and will be opportunities everyday.
You have to know what to look for and how to take advantage of them

Your totally ridiculous comment would have every builder and every investor,every Real estate office,Every sub contractor,every suppliers of building needs.
shut shop.

I have 3 apartments under construction at the moment.
2 are sold.
The last one will be freehold.
Completion time 10 weeks from now.
I have an industrial block which I will warehouse up in a year or so
when the free way is completed and the rail link to it also completed.
That will return about $60K a year NETT.

I was wrong opportunity will elude you.

You yabba 
People like me do!

On the flip side Id put you at around 18-26.
I certainly hope so--- if your older then you've missed the boat.


----------



## Starcraftmazter (2 April 2012)

tech/a said:


> Your totally ridiculous comment would have every builder and every investor,every Real estate office,Every sub contractor,every suppliers of building needs.
> shut shop.




Well I hate to brag about the accuracy of my predictions, but building approvals *did* come in today at a miserable -7.8%.

There are many opportunities - but not in housing. Not when we are just past the peak of the bubble. Total waste of money.


----------



## young-gun (2 April 2012)

soo anyone read today that construction approvals are down 7.8%? 

tech, i disagree that there are any good opportunities in the current market, if you are sitting on houses you purchased long ago you are in a much different and more fortunate situation to the younger generations. not saying there wont be good opportunities, jsut saying that there isnt always such at ever turn.

if i owned positively geared properties that were paid off  5-10 even 15 years ago and i was pulling 300+ a week per property then i wouldnt care what happened to the value of it either. i pointed out just recently the wage to house price ratios from 1980 compared to 2011, things are alot different now.

getting in when you did has allowed you to create the capital needed to continue your RE ventures even in tough times. whether or not you will continue to make money off these ventures in the not so distant future is yet to be seen.


----------



## young-gun (2 April 2012)

Starcraftmazter said:


> Well I hate to brag about the accuracy of my predictions, but building approvals *did* come in today at a miserable -7.8%.
> 
> There are many opportunities - but not in housing. Not when we are just past the peak of the bubble. Total waste of money.




jsut beat me too it.


----------



## tech/a (2 April 2012)

Starcraftmazter said:


> Well I hate to brag about the accuracy of my predictions, but building approvals *did* come in today at a miserable -7.8%.
> 
> There are many opportunities - but not in housing. Not when we are just past the peak of the bubble. Total waste of money.




Behind my smile is everything you will never understand.


----------



## DB008 (2 April 2012)

tech/a, you have to wait until 2020 for SCM to leave, his words, not mine...


----------



## Ves (2 April 2012)

young-gun said:


> soo anyone read today that construction approvals are down 7.8%?
> 
> tech, i disagree that there are any good opportunities in the current market, if you are sitting on houses you purchased long ago you are in a much different and more fortunate situation to the younger generations. not saying there wont be good opportunities, jsut saying that there isnt always such at ever turn.
> 
> if i owned positively geared properties that were paid off  5-10 even 15 years ago and i was pulling 300+ a week per property then i wouldnt care what happened to the value of it either. i pointed out just recently the wage to house price ratios from 1980 compared to 2011, things are alot different now.



Seriously, you guys have mastered the art of selective reading.  Just skipped over his latest developments (highly profitable) willy nilly.   

Median prices are about as much use as the ASX index.  It's an average or middle point. Not a sum of the opportunites.

I honestly am boggled by your inability to understand this, despite obvious depth and time spent in reading fancy economic reports.


----------



## Starcraftmazter (2 April 2012)

DB008 said:


> tech/a, you have to wait until 2020 for SCM to leave, his words, not mine...




Only if prices don't drop at least 40% real from peak.



Ves said:


> Median prices are about as much use as the ASX index.  It's an average or middle point. Not a sum of the opportunites.
> 
> I honestly am boggled by your inability to understand this, despite obvious depth and time spent in reading fancy economic reports.




Property in this country is still overpriced by 250%, pretty sure no opportunities exist anywhere. Maybe if it was only 10% you would have been right. But not 250%.


----------



## DB008 (2 April 2012)

Starcraftmazter said:


> Only if prices don't drop at least 40% real from peak.
> 
> 
> Property in this country is still overpriced by 250%, pretty sure no opportunities exist anywhere. Maybe if it was only 10% you would have been right. But not 250%.




Which you are predicting already!


----------



## Ves (2 April 2012)

Starcraftmazter said:


> Only if prices don't drop at least 40% real from peak.
> 
> 
> 
> Property in this country is still overpriced by 250%, pretty sure no opportunities exist anywhere. Maybe if it was only 10% you would have been right. But not 250%.




Are you suggesting that tech/a is lying about his recent deals?


----------



## tech/a (2 April 2012)

DB008 said:


> Which you are predicting already!




Danny

“You can educate a fool, but you cannot make him think”

Anyway I'm off must put in a call to the liquidator!


----------



## DB008 (2 April 2012)

tech/a said:


> Danny
> 
> “You can educate a fool, but you cannot make him think”
> 
> Anyway I'm off must put in a call to the liquidator!




Hear Hear....


----------



## Uncle Festivus (2 April 2012)

tech/a said:


> Danny
> 
> “You can educate a fool, but you cannot make him think”
> 
> Anyway I'm off must put in a call to the liquidator!




From memory you are in Adelaide? Does it not concern you that Adelaide is to a large extent reliant on car manufacturing, with mining contributing a bit? The very same car industry reliant on various Fed & State subsidies etc, and mining reliant on Japan & China?
A big egg in a small basket?


----------



## Uncle Festivus (2 April 2012)

Land of opportunity for the go-getters......

_S_TUART GRIMSHAW, CEO, BANK OF QLD: We've seen signs of rapid property  value *decretion* in the Sunshine and Gold coasts in particular, and I  don't think that's a surprise to anyone, but the extent of the rapidity  of the move has probably surprised me a little which has caused us to  mark to market our book in that troublesome and impaired area just for  prudence and conservatism, and I think that's the right place to be and  that's part of the reasons for that capital raising.

Do these people trawl thesaurus so they don't have to say "We've seen signs of rapid property  value *loss*...."

De*cre"tion\, n. [From L. decrescere, decretum. See Decrease.] A decrease.


----------



## Glen48 (2 April 2012)

Write yourself a memo Tech/a to  open that post again this time next year;
 There is no guaranteeing your tenant won't have tanked with the depression so it doesn't matter what rent you are getting now what will if be next year is the important question.


----------



## Julia (2 April 2012)

Starcraftmazter said:


> Now I don't know about you, but I doubt I will live another 100 years to see another housing bubble. This is besides the fact that house prices will go down for the next 20 years at least.






Starcraftmazter said:


> Property in this country is still overpriced by 250%, pretty sure no opportunities exist anywhere. Maybe if it was only 10% you would have been right. But not 250%.



 Wow, it must be great to know everything and be so totally certain about being right all the time.  

I'd rather heed the wisdom of someone who has actually succeeded, rather than someone of zero practical experience sitting on the sidelines pontificating.


----------



## Bill M (2 April 2012)

In the 70's, 80's, 90's and 2,000's, we have only heard one thing from those with negative views and that is that house prices will crash. The last one was when sub prime hit the USA 5 years ago. All the Aussie doom and gloomers said we are finished, it's all over, rents are going down, real estate prices will crash, it didn't happen at any of those times. 

The rents I charge have gone up, my property is holding firm, Australia is doing ok. So just for a trip down memory lane here is a clip from the early 90's, they were saying the same things then as the naysayers are saying now.

The last time I posted this one was on the old property thread so it's about time I reposted it on this one. I cut it out by hand in 1994.

---
_"The table on this page demonstrates how far off the mark the doom and gloom merchants were, when, as they did in 1983 and more recently in 1992, they predicted that price increases were a thing of the past. Whilst caution is wise, undue caution could see some buyers miss out on excellent opportunities."_
---
( I typed all that by hand, no cut and pasting as the article was scanned years ago)

So 20 years ago that guy was right, yes indeed, ignore history at your peril, goodnight.


----------



## McLovin (2 April 2012)

tech/a said:


> Read this article ----- love it---- then everything else should read in context.




The premise of the argument is that for a variety of reasons house prices can't keep rising at the pace they have for the last 15-20 years. Maybe I'm missing something but that doesn't seem like a far fetched idea.

There are some posters on here who have an axe to grind about house prices. I'm not one of them. For a variety of reasons, largely luck, I am not that concerned about house prices, so much so that I would say I don't have a dog in the fight. 

It's a shame that both sides of the debate can't do anything but take extreme views. In any event, this thread has become a waste of time, you're either an idiot because you don't believe the sky is going to fall in or you're an idiot because you don't believe property is screaming buy.


----------



## moXJO (2 April 2012)

McLovin said:


> The premise of the argument is that for a variety of reasons house prices can't keep rising at the pace they have for the last 15-20 years. Maybe I'm missing something but that doesn't seem like a far fetched idea.
> .





 No that argument is to sensible and dull.

House prices hit the wall a few years back and will probably stay flat for a bit, will see if there is a mini boom in 2015 with an even bigger boom in 2020


----------



## qldfrog (2 April 2012)

tech/a,
I am a bit puzzled when reading the recent statement in this thread that " as long as I get 10% (or whatever) of my INITIAL investment, I am happy"

Does it not make sense that if you buy a house for $100, get 10% return ($10) but the house value increases to let's say $400 yet still return $10, you should:
1) congratulate yourself to have been lucky/wise/etc on the capital gain, 
2) sell the house, get the $400 and put that money on a 5% term deposit doubling your income???

We see the same thing on the stock market when people buy banks/telstra for the dividends and pretend to be in-interested by share value variations (mostly when it goes down.. )
I will not change your mind but selling now(if you can at a proper price) might be worthwhile considering IMHO
More generally

The point which is also missing from that thread is the fact that [but for a small reference to Asian investors], Aussie RE is pure internal  Aussie business and so does not leverage the currently very high AUD ..
I am a bear on the australian market (yet bought recently one IP for diversification but do not expect miracle from it) but would be more positive on getting RE in the US or Europe if I could have more local knowledge, just as a way to edge the AUD...
Much easier to edge the AUD on the stock market/commodities and more liquidity: fast to act when required
Hope it helps


----------



## Starcraftmazter (2 April 2012)

Ves said:


> Are you suggesting that tech/a is lying about his recent deals?




I know nothing of the details of his deals.




Julia said:


> Wow, it must be great to know everything and be so totally certain about being right all the time.
> 
> I'd rather heed the wisdom of someone who has actually succeeded, rather than someone of zero practical experience sitting on the sidelines pontificating.




You don't need any experience when the bubble is this obvious:




'nuff said.



Bill M said:


> The last one was when sub prime hit the USA 5 years ago. All the Aussie doom and gloomers said we are finished, it's all over, rents are going down, real estate prices will crash, it didn't happen at any of those times.




Buddy, do we really need to go over this again? Really? The government propped up the bubble with the FHOB - that's it, all over, nothing else to be said. It was nothing but a slight delay, and now prices have dropped *even further* and they are *still dropping*.

You and some others seem to think bubbles burst overnight and a $500,000 property will cost $200,000 next week. That's not how the real world works - crashes take many years to happen, decades even. Here, have a look at Japan:





You see that? That is what a crash looks like. It doesn't happen overnight. Some are quicker than others, but it takes many years. And Australian property prices will drop. Year, after year, after year, after year - for decades to come. It's simple logic.


----------



## Glen48 (2 April 2012)

Then it over shoot and takes a long time to climb back get a window RE  card as proof you can show your grand kids how much house's were worth and what they are down to now.
 After the dust settles there will be a lot not wanting to enter the property market for a long time and back living with their parents , just like the victims of college loans in USA are doing now.
The next few months should show clear signs of direction if the RBA drop the rates and Banks put them up you will know its game on..


----------



## young-gun (3 April 2012)

Ves said:


> Seriously, you guys have mastered the art of selective reading.  Just skipped over his latest developments (highly profitable) willy nilly.
> 
> Median prices are about as much use as the ASX index.  It's an average or middle point. Not a sum of the opportunites.
> 
> I honestly am boggled by your inability to understand this, despite obvious depth and time spent in reading fancy economic reports.




i am boggled by your inability to practise what you preach. if you read the last paragraph i acknowledged techs successful dealings of late, but also pointed out that having the ability to carry out these ventures are a result of being successful over the past 30 years of booming RE. building warehouses that are going to return 60k pa isnt exactly something you can achieve straight off the abt in your early twenties. well maybe it is if youre game to leverage yourself to the hilt in the current market.

for all you know tech has paid cash for the lot, and indeed if i owned something that returned 60k a year, and again i wouldnt give a rats **** if it decreased in value(once again, within reason).

i apologise, as when discussing in this thread i largely am referring to houses, as i dont know much about the state of commercial or industrial property, but on the other side, you need to realise that buying a HOUSE at this point in time would not be a smart move financially. i have been looking around, and there isnt any opportunities that jump out at current.


----------



## tech/a (3 April 2012)

young-gun said:


> i am boggled by your inability to practise what you preach. if you read the last paragraph i acknowledged techs successful dealings of late, but also pointed out that having the ability to carry out these ventures are a result of being successful over the past 30 years of booming RE. building warehouses that are going to return 60k pa isnt exactly something you can achieve straight off the abt in your early twenties. well maybe it is if youre game to leverage yourself to the hilt in the current market.
> 
> for all you know tech has paid cash for the lot, and indeed if i owned something that returned 60k a year, and again i wouldnt give a rats **** if it decreased in value(once again, within reason).
> 
> i apologise, as when discussing in this thread i largely am referring to houses, as i dont know much about the state of commercial or industrial property, but on the other side, you need to realise that buying a HOUSE at this point in time would not be a smart move financially. i have been looking around, and there isnt any opportunities that jump out at current.




Your right YG 
Many are not in the position to take advantage of those opportunities which are currently available and will be available as Time goes on.

If I was a young person in my 20s I'd be getting myself in a position to take advantage of great deals. I'd be looking for distressed sales and offering 20% less than asking price. I'd be looking for something that I could add value to as my PPR
and looking to move it on in 18 mths or so.
Rinse and repeat. NO CAPITAL GAIN.
Once I had three under my belt I'd be looking at small developments.
Min 3 on a block with a view of sell 2 or 3 and keep 1
You can buy property ( land ) really cheaply as no one is buying.
You can screw builders to the floor as they want any business they can get!
With really quick completion times--- project builders are the cheapest by far.

Sell at least one off plan before you start the development.
Work the maths on 20% less than 12 mths ago.
Keep everything under the accepted sale figures for the area.

For example I have 3 down south.
Last year the same type of development was $ 420-450k 
I'm on the market at $365k there is 50k a place at that.
2 down. If I don't sell the other I may keep it with a 200 k cost and rental
At $350/ wk. But would prefer to sell.

Anyway there is a few hints for the younger entrepreneurs out there.
One of my employees started At 23 4 years ago and owns his home freehold after
4 developments.


----------



## Ves (3 April 2012)

young-gun said:


> i am boggled by your inability to practise what you preach. if you read the last paragraph i acknowledged techs successful dealings of late, but also pointed out that having the ability to carry out these ventures are a result of being successful over the past 30 years of booming RE. building warehouses that are going to return 60k pa isnt exactly something you can achieve straight off the abt in your early twenties. well maybe it is if youre game to leverage yourself to the hilt in the current market.



You acknowledged his post with a negative, "no one else can do that unless it is with special circumstances" type post.  

Go look up a bloke called NathanBirch.  Was a millionaire through property at 21.  Not because he did what everyone else did, but because he saw opportunity whilst others saw disaster (and too much hardwork).  Other examples out there, you can find them at your leisure.  I have a friend who is my age (26) and he has been retired from traditional work.  He started when credit was getting harder.  He is still doing developments and still profiting.

You don't have to believe them. It's fine by me.



> i apologise, as when discussing in this thread i largely am referring to houses, as i dont know much about the state of commercial or industrial property, but on the other side, you need to realise that buying a HOUSE at this point in time would not be a smart move financially. i have been looking around, and there isnt any opportunities that jump out at current.



 Close your eyes at your own leisure.  There is a myriad of different techniques out there that require "no money down."  No heavy borrowing.  If you are good at clutching deals and acting with positivity the world is your oyster.


----------



## McLovin (3 April 2012)

Ves said:


> You acknowledged his post with a negative, "no one else can do that unless it is with special circumstances" type post.
> 
> Go look up a bloke called NathanBirch.  Was a millionaire through property at 21.  Not because he did what everyone else did, but because he saw opportunity whilst others saw disaster (and too much hardwork).  Other examples out there, you can find them at your leisure.  I have a friend who is my age (26) and he has been retired from traditional work.  He started when credit was getting harder.  He is still doing developments and still profiting.




Some people want things handed to them. There are always pockets of value in any market. Of course the title of the thread is "The future of Australian property prices", although that seems to have gone out the window ages ago.


----------



## trainspotter (3 April 2012)

The window of opportunity is still there .... ya just gotta work a bit harder at it to get end result. 

Tech/a is right ..... we have both posted over several years about commercial property being the way forward for several years now. Has anyone listened?

The trick with property is you have to START somewhere to do what we do for a living (personal experience here). Some you win and some you don't make as much. DO THE HOMEWORK !!


----------



## trainspotter (3 April 2012)

Starcraftmazter said:


> Only if prices don't drop at least 40% real from peak.
> 
> 
> 
> Property in this country is still overpriced by 250%, pretty sure no opportunities exist anywhere. Maybe if it was only 10% you would have been right. But not 250%.




BWAHAHAHAAHAHAHHA *SCOFF* HAHAHAGAGGAAAJJAJAAAAA *GASP* AAGGAGAGAAAA

WTF ??? 250% overpriced ......... you really do not have a clue about percentages then do you !! :


----------



## trainspotter (3 April 2012)

tech/a said:


> Your right YG
> Many are not in the position to take advantage of those opportunities which are currently available and will be available as Time goes on.
> 
> If I was a young person in my 20s I'd be getting myself in a position to take advantage of great deals. I'd be looking for distressed sales and offering 20% less than asking price. I'd be looking for something that I could add value to as my PPR
> ...




CAREFUL Tech/a ........ you might edumacate the RE myopic masses and then where would we be??


----------



## Starcraftmazter (3 April 2012)

trainspotter said:


> BWAHAHAHAAHAHAHHA *SCOFF* HAHAHAGAGGAAAJJAJAAAAA *GASP* AAGGAGAGAAAA
> 
> WTF ??? 250% overpriced ......... you really do not have a clue about percentages then do you !! :




I'm an engineer buddy, and what are your maths skills like? Maybe you ought to think about what 250% means. Or perhaps you really don't understand just how overpriced property is.


----------



## trainspotter (3 April 2012)

Starcraftmazter said:


> I'm an engineer buddy, and what are your maths skills like? Maybe you ought to think about what 250% means. Or perhaps you really don't understand just how overpriced property is.




Whoop whoop for you SCM ...... an engineer ... you dont say !! How many developments have you done with your own money? How many subdivisions have you partaken in with your own money? How many commercial properties do you own? How many times have you flipped real estate? How many houses do you own??

I have met over qualified nupties like yourself and employed many more just like you who could not find their **** in three grabs.

I am a property developer and I EMPLOY nupties like you and YOU still get it WRONG.

If you want a pissing contest little boy you have come to the wrong place.


----------



## DB008 (3 April 2012)

trainspotter said:


> Whoop whoop for you SCM ...... an engineer ... you dont say !! How many developments have you done with your own money? How many subdivisions have you partaken in with your own money? How many commercial properties do you own? How many times have you flipped real estate? How many houses do you own??




Let me take a stab...None, RE is 'overpriced' according to SCM...


----------



## Starcraftmazter (3 April 2012)

trainspotter said:


> Whoop whoop for you SCM ...... an engineer ... you dont say !! How many developments have you done with your own money? How many subdivisions have you partaken in with your own money? How many commercial properties do you own? How many times have you flipped real estate? How many houses do you own??




And how much does this matter for national RE valuations, being able to predict the trends that will drive RE valuations and understanding boom/bust cycles? Zilch.



trainspotter said:


> I am a property developer




So you are inherently biased on this topic. No wonder.



trainspotter said:


> If you want a pissing contest little boy you have come to the wrong place.




Really? Tell me, was it you or your other personality that said this?




trainspotter said:


> WTF ??? 250% overpriced ......... you really do not have a clue about percentages then do you !! :




Sounds like you're trolling for a pissing contest to me.


----------



## trainspotter (3 April 2012)

Starcraftmazter said:


> And how much does this matter for national RE valuations, being able to predict the trends that will drive RE valuations and understanding boom/bust cycles? Zilch.
> 
> 
> So you are inherently biased on this topic. No wonder.
> ...




Oh deary deary me. Another engineer for the grist. Zilch experience but prepared to spend other peoples money to tell them how to do it WRONG ......... AGAIN !!

You fail to recognise I do this for a living ..... so did your tiny brain consider for one second that I understand boom/bust cycles? NUP !!!!!!!!

Inherently biased?? Just LOL on this one ..... did I become succesful on a game of chance?? Go to the casino Oh wise one ......... you would be better off understanding percentages at the crap table then dealing in RE.

Like all young engineers you are so prepared to tell everyone how clever you are but you ignore the people with the experience that does it for a living. Good luck in your vocation. You are gonna need it.

Tell me ...... do you even have another side to you or are you just this moronic all the time?


----------



## trainspotter (3 April 2012)

Starcraftmazter said:


> And how much does this matter for national RE valuations, being able to predict the trends that will drive RE valuations and understanding boom/bust cycles? Zilch.




So I have the experience of 23 years of property development and you have NONE !!


GEEEEEEEEEZZZZZZZZZZ  I wonder who I would listen to for the future of property prices. Good one Mr. Engineer !! LOLOLOL


----------



## Starcraftmazter (3 April 2012)

trainspotter said:


> You fail to recognise I do this for a living ..... so did your tiny brain consider for one second that I understand boom/bust cycles? NUP !!!!!!!!




If you did, you would never disagree that Australian RE is crashing.



trainspotter said:


> Inherently biased?? Just LOL on this one ..... did I become succesful on a game of chance??




No, just the luck of doing it during the biggest credit bubble in history. It takes no skill to buy an asset during it's bubble and watch it go up in price at other peoples' expense. A monkey can do this.



trainspotter said:


> Like all young engineers you are so prepared to tell everyone how clever you are




I never said anything about how cleaver I am, merely that you probably aren't in a position to question my mathematical knowledge...



trainspotter said:


> but you ignore the people with the experience that does it for a living.




Well here's the thing. What is happening now has not happened for a hundred years, so there is absolutely nothing in your experience which is relevant to the present situation regarding Australian housing. Do not feel special, this goes for everyone. Although people like me who understand this very simple fact are better placed to understand what is happening in the market, and to make the most accurate predictions about the future going forward.

So my predictions are simple, at least 40% by 2020 and at least 60% by 2030. Real terms.




trainspotter said:


> So I have the experience of 23 years of property development and you have NONE !!
> 
> 
> GEEEEEEEEEZZZZZZZZZZ  I wonder who I would listen to for the future of property prices. Good one Mr. Engineer !! LOLOLOL




I fail to see what construction has to do with economics.


----------



## trainspotter (3 April 2012)

Starcraftmazter said:


> If you did, you would never disagree that Australian RE is crashing.
> 
> 
> 
> ...




Listen TROLL ........ go and sell your sh1te elsewhere and let the real people who understand what is going on in the real world makes the money that pays your wages.

"mathematical knowledge" FFS ........ If you are so clever with maths you would be able to recognise an opportunity when you see one. Do you have any idea what I did for a living before I chose this vocation?? Why is it that as an engineer you must take a holier than thou approach. An engineer is out of a Weeties packet these days . 

You still dont get 250% ................ NOW DO YOU?


----------



## Starcraftmazter (3 April 2012)

trainspotter said:


> Listen TROLL ........ go and sell your sh1te elsewhere and let the real people who understand what is going on in the real world makes the money that pays your wages.




No need to feel threatened, I know your business sector is in a downturn, and I know it will get worse. If you feel that bad about it, you may as well get out while you're ahead. I hope you are ahead.

Please understand, in all of your time in your current profession, the only thing house prices did was go up. There was not one correction, downturn, crash or anything of the sort. You are completely unfamiliar with what is happening right now. You are in foreign territory. I understand that you feel agitated - but it is not my fault.



trainspotter said:


> "mathematical knowledge" FFS ........ If you are so clever with maths you would be able to recognise an opportunity when you see one.




I do. There will not be any opportunities in Australian property for decades to come. It's a waste of money anyway, there is no way you can make more money in property than in trading if you know what you're doing. Who wants to play with such illiquid assets, pay all sorts of commissions and duties, and be at the whim of bubbles?



trainspotter said:


> You still dont get 250% ................ NOW DO YOU?




I do - you are the one who questioned it - not me.


----------



## Ves (3 April 2012)

Starcraftmazter said:


> Only if prices don't drop at least 40% real from peak.
> 
> 
> 
> Property in this country is still overpriced by 250%, pretty sure no opportunities exist anywhere. Maybe if it was only 10% you would have been right. But not 250%.




You have maintained that property will fall 40% (actually it was 30% at first, I am sure) for most of your posts.

Now you are saying it is 250% over-valued.

Say  the "real value" is 100.

250% over-valued is 250.

A 40% fall would take this figure back to 150.

Why would you start buying after *at least* a 40% fall? You would still be buying an over-priced (in your terms) asset would you not?

It would require a 60% fall to get back to 100.  I think you are mixing your percentages up.  I think it needs to fall *more than 60%*.

I could be wrong here though.  Happy to be corrected.


----------



## trainspotter (3 April 2012)

Starcraftmazter said:


> No need to feel threatened, I know your business sector is in a downturn, and I know it will get worse. If you feel that bad about it, you may as well get out while you're ahead. I hope you are ahead.
> 
> Please understand, in all of your time in your current profession, the only thing house prices did was go up. There was not one correction, downturn, crash or anything of the sort. You are completely unfamiliar with what is happening right now. You are in foreign territory. I understand that you feel agitated - but it is not my fault.
> 
> ...




Clueless moron .......... Good bye. Good luck in whatever it is you do.


----------



## young-gun (3 April 2012)

Ves said:


> You acknowledged his post with a negative, "no one else can do that unless it is with special circumstances" type post.
> 
> Go look up a bloke called NathanBirch.  Was a millionaire through property at 21.  Not because he did what everyone else did, but because he saw opportunity whilst others saw disaster (and too much hardwork).




i fail to see how building up wealth over a period of 20-30 years, and then use that to make alot more money is a special circumstance. my negative outlook on housing is no reflection of my character or work ethic...don't confuse the two.

until the evidence points me in a different direction, i will continue to hold my views. it will be interesting to see just how many nathan birchs there will be emerging in 5 years time.


----------



## Ves (3 April 2012)

young-gun said:


> until the evidence points me in a different direction, i will continue to hold my views. it will be interesting to see just how many nathan birchs there will be emerging in 5 years time.



 Same as there always has been. Not many. He isn't the product of a bubble.


----------



## trainspotter (3 April 2012)

Ves said:


> Same as there always has been. Not many. He isn't the product of a bubble.




Zackery ....... opportunity knows no bounds. When the blood runs in the street kinda stuff. It always amazes me the people who think in the negative cannot be swayed and have ZILCH experience but those in the positive camp are willing to look at both sides of the coin and make assumptions from there !


----------



## Trembling Hand (3 April 2012)

Starcraftmazter said:


> I do. There will not be any opportunities in Australian property for decades to come. It's a waste of money anyway, there is no way you can make more money in property* than in trading if you know what you're doing.* Who wants to play with such illiquid assets, pay all sorts of commissions and duties, and be at the whim of bubbles?




Are you claiming that you do know what your doing when it comes to trading? Or are we just again talking hypothetically?


----------



## trainspotter (3 April 2012)

Trembling Hand said:


> Are you claiming that you do know what your doing when it comes to trading? Or are we just again talking hypothetically?




Apparently this soothsayer can predict the future of Australian Property Prices as well ! He is an engineer you know !! Good to see your posts again TH !!


----------



## Beej (3 April 2012)

Starcraftmazter said:


> I'm an engineer buddy,




 Have you actually graduated yet???


----------



## Beej (3 April 2012)

Ves said:


> You have maintained that property will fall 40% (actually it was 30% at first, I am sure) for most of your posts.
> 
> Now you are saying it is 250% over-valued.
> 
> ...




Just one correction - if the "true value" is 100, and the asset is "250% overvalued", then present price is actually 350 (rather than 250). Try the example for "100% over-valued" and this should make sense ;-)

So in fact, a fall of over 70% would be required from the present point to get back to "true" value if we are 250% over-valued as SCM claimed. To put that in context, that would mean detached 3 bedroom houses in the western suburbs of Sydney selling for < $100k.

I also note that a claim of 250% over-valuation is very different from his subsequent prediction of 40% falls in real terms by 2020 - if CPI averaged 3%pa then that actually only works out to be a 25% fall from today's prices in nominal terms. This is basically Steve Keens current call - heavily revised from some of his more gloomy calls in 2008.....

Meanwhile - here's the latest charts from SCMs most respected data source - RP-Data, updated with their March house price data:

















So it looks like last years falls over over for now, and have been since the end of last year. What will happen from here? I reckon modest growth in most cities - more in Sydney than elsewhere, spurred on by a few interest rate cuts through the year.

Also SCM - you said you live in Sydney? Check that second chart again maybe - there is NO crash in Sydney. Falls in 2008 were greater than last years in our town...... 

PS: If these charts don't convince you that there is no such thing as a "national" real estate market in Australia, and that all markets are regional, then nothing will.


----------



## trainspotter (3 April 2012)

Beej said:


> Just one correction - if the "true value" is 100, and the asset is "250% overvalued", then present price is actually 350 (rather than 250). Try the example for "100% over-valued" and this should make sense ;-)
> 
> So in fact, a fall of over 70% would be required from the present point to get back to "true" value if we are 250% over-valued as SCM claimed. To put that in context, that would mean detached 3 bedroom houses in the western suburbs of Sydney selling for < $100k.
> 
> ...




OMFG !! Some sense at last !! Hear hear to that man !


----------



## kincella (3 April 2012)

All I can say is.....if you thought education was expensive , try ignorance...Derick Bok

just like tech a, trainspotter, bill m, and all the other successful, smart property people on this forum...(apologies if I missed each and everyone of you)
when there was only doom and gloom after the tech wreck of 2000, I too went on a property buying spree.....remember property had supposedly been in the doldrums since the 1990's...as per the media and spruikers....
however the RBA and all other property recording institutions, tell a different story...
there is no actual evidence of  same ...

I bought a commercial property, in 2000,  at a yield of 10%, it has gained on average 20% capital growth per annum, every year...
the income it is now returning is equivalent to 5% of the current market value,
or ....wait for it,,,,20% income pa...
I also purchased several resi props, currently returning 10% of the cost price,
and sold several resi props at 300% capital gains...the cash was banked, and ready for other prop development investments.....
I used OPM...ie other peoples money, via bank loans....usually only 10% of my money upfront.....
and some of you doubt that I can continue on this road, this very successful journey......
wow ......money talks, and believe me....it is loud and clear...
no wonder only 5% of the population have the gutz to go with their beliefs, experience, goals
and the other 95%, just wish and hope, pray.....against all odds.....
I forget the actual figures, but my parents bought a house with 10 acres of land in the 1940's for about A$5000 pounds, today the land value is worth $5,000,000 bucks...

a rather nice inheritance for the kids, in anybodies language......
and some will  suggest that after 70 years, the whole thing will turn upside down..

education and ignorance.....a huge disparity between the two


----------



## Starcraftmazter (3 April 2012)

Ves said:


> You have maintained that property will fall 40% (actually it was 30% at first, I am sure) for most of your posts.
> 
> Now you are saying it is 250% over-valued.
> 
> ...




Sure.

First of all, I've never said 30% by 2020. Second of all, I do not imply that a fall of 40% will revert to fair value. I have never said nor implied this, that is merely my baseline prediction for 2020 - at least 40%. Likewise the 60% figure is my prediction for 2030.

I should also correct you that 250% over-valued is actually 350% of the original price (that being 100%).

Next, I never said that I will buy a property when prices drop by 40% or 60% or they are fair value - or any specific price point. I have said that I do not plan to buy a property anytime soon. If in the distant future house prices drop far enough that I feel they are affordable (measured by divergence from a price to income ratio of 3), and if I shall have a very significant need for a property, then that will present the most likely situation in which I will buy a property.

I do have thoughts about investing in Swiss or German property - but that's not here nor there.

I have not mixed anything up, as I am sure you can now see.



trainspotter said:


> Clueless moron .......... Good bye. Good luck in whatever it is you do.




When one has to resort to personal insults, it is clear they have nothing of substance to add to the discussion. Good day.



Trembling Hand said:


> Are you claiming that you do know what your doing when it comes to trading? Or are we just again talking hypothetically?




Is it relevant to my statement? Are you implying I would have more luck making money in property is I don't? I disagree on all counts.



Beej said:


> Meanwhile - here's the latest charts from SCMs most respected data source - RP-Data, updated with their March house price data:




First of all, those are nominal and not real prices. Second of all, RP Data have stopped seasonally adjusting nor revising when they released their daily index, so you need to keep seasonality in mind. For instance - in March, house prices typically register a significant rise, so if you take that into account, they actually fell in seasonally adjusted terms.

It is fine that this is disregarded, for it will be made up elsewhere in the year (can't wait till winter) - but it does dillute the meaning of monthly figures, as YoY prices become far more important.

And in regards to revisions, it is actually the very usual case that RP revised monthly prices down 0.1% - so that should also be taken into account.



Beej said:


> So it looks like last years falls over over for now, and have been since the end of last year.




That is false as I have explained above. You merely lack a proper understanding of the data you are failing at trying to analyse. Better luck in the future perhaps.


----------



## trainspotter (3 April 2012)

kincella said:


> All I can say is.....if you thought education was expensive , try ignorance...Derick Bok
> 
> just like tech a, trainspotter, bill m, and all the other successful, smart property people on this forum...(apologies if I missed each and everyone of you)
> when there was only doom and gloom after the tech wreck of 2000, I too went on a property buying spree.....remember property had supposedly been in the doldrums since the 1990's...as per the media and spruikers....
> ...




Methinks you have had one drink too many .......... you have disaproportioned yourself


----------



## trainspotter (3 April 2012)

Starcraftmazter said:


> I should also correct you that 250% over-valued is actually 350% of the original price (that being 100%).
> 
> That is false as I have explained above. You merely lack a proper understanding of the data you are failing at trying to analyse. Better luck in the future perhaps.




OHHHHHHHHHHHHH ........ try the MATHS my learned friend ......... you were ALL for it before !!

You cannot take more from a pie than 100% You cannot give 110% as it is more than the ratio allows. You cannot say that propety is 250% OVER VALUED as if it was to drift into the negative it is worth NOTHING !!

Get off your perch and start understanding what is actually going on.

YOUR LACK OF UNDERSTANDING IS AMAZING !


----------



## DB008 (3 April 2012)

All this negativity in this thread, l'm going to crawl back into my mansion....






I'm upgrading too, almost finished...


----------



## Starcraftmazter (3 April 2012)

trainspotter said:


> You cannot take more from a pie than 100% You cannot give 110% as it is more than the ratio allows. You cannot say that propety is 250% OVER VALUED as if it was to drift into the negative it is worth NOTHING !!




You make no sense. Zero. But of course this is nothing new


----------



## trainspotter (3 April 2012)

Starcraftmazter said:


> You make no sense. Zero. But of course this is nothing new




I say again ...... good luck with your endeavours !


----------



## Caveman (4 April 2012)

Starcraftmazter said:


> What is happening now has not happened for a hundred years



Not sure if I should get into this debate,but what is happening now that hasnt happened for a hundred years?


----------



## tech/a (4 April 2012)

Caveman said:


> Not sure if I should get into this debate,but what is happening now that hasnt happened for a hundred years?




Nothing
As in all things concerning money
There will be those who

Do
Don't
And
Discuss.

If you *don't* want to be *dis*---appointed *do* something!


----------



## Trembling Hand (4 April 2012)

Starcraftmazter said:


> Is it relevant to my statement? Are you implying I would have more luck making money in property is I don't? I disagree on all counts.



Well yes it is relevant. If your words are to be taken any more serious than just part of the hopeless 95%. Just like your statement that Gold was better than property over the last whatever period I don't think you have the ability or balls to make money out of any of the next moves. 

Anyone can state what has been good and why in hindsight. Lots throw out guesses as to what will happen next. Very few actually have a record of doing and succeeding on their talk.


----------



## Starcraftmazter (4 April 2012)

Caveman said:


> Not sure if I should get into this debate,but what is happening now that hasnt happened for a hundred years?




Yes, there was a relatively speaking very big property bubble in the 1890s - much smaller than current, but in those times it was very big. People lost everything, it was pretty devastating. Now we're headed for many many times worse.



Trembling Hand said:


> Just like your statement that Gold was better than property over the last whatever period I don't think you have the ability or balls to make money out of any of the next moves.




It's not just a statement - it is a very easily verifiable fact. I also don't understand what you mean about me not having the balls to make money out of any "next move". I trade and I take positions pretty much every day in all sorts of things.

The next big move in property is down, there's no real way to profit from that. It will also happen over a long period of time (as all bubbles and crashes do), and I do only short-term trading, so...

There are a great many ways to make money in this world - however leveraging up to your neck in debt, just to pay interest to foreign banks on rapidly devaluing assets is most certainly *not* one of them.



Trembling Hand said:


> Anyone can state what has been good and why in hindsight. Lots throw out guesses as to what will happen next. Very few actually have a record of doing and succeeding on their talk.




You don't need a record, just take a look at all the evidence, and the only logical conclusion is that we are past the peak of the biggest property bubble in our history and pretty much one of the biggest in the world (depending on whether you consider HK a bubble or not), and that property prices in Australia are going to crash over the next several decades.


On a related note, house prices in USA are set to go down another 10% this year, due to a large quantity of foreclosures are entering the market on the back of a court ruling allowing their sale.
http://www.bloomberg.com/news/2012-...ping-10-in-u-s-on-foreclosures-mortgages.html

So you see bubbles burst over long periods of time. That is how it will happen in Australia - years after the peak, they will still be going down a lot, and more, and more and even more. Just like in USA.


----------



## Trembling Hand (4 April 2012)

Starcraftmazter said:


> I also don't understand what you mean about me not having the balls to make money out of any "next move". I trade and I take positions pretty much every day in all sorts of things.



Yeah the TAB is full of losers who do the same. But you would be an idiot to take advice off them. Thats my point. While you stating with much certainty,
1. That there is *no *money to be made in property and 
2. That *you *can make much more trading

Until you actually do you are just another unproven punter. One of the 95% which is why I find your certainly in thought and inability to listen to those that have gone before you and walked the walk strange.


----------



## Starcraftmazter (4 April 2012)

Trembling Hand said:


> Yeah the TAB is full of losers who do the same. But you would be an idiot to take advice off them. Thats my point. While you stating with much certainty,
> 1. That there is *no *money to be made in property and
> 2. That *you *can make much more trading
> 
> Until you actually do you are just another unproven punter. One of the 95% which is why I find your certainly in thought and inability to listen to those that have gone before you and walked the walk strange.




Your post doesn't make sense. First of all, who or what is TAB? Second of all, what do you mean until I do? Do what exactly? How do you measure my success arbitrarily in such a way as to determine how much better or worse I would have done had I bought property? This makes no sense.

Furthermore, I do listen to people - but only those clearly smarter than me about the subject matter being discussed. It is clear that anyone who does not comprehend the scale of our bubble does not know much about property prices, what drives them, and where they are going. The feeling that I get about a lot of the older people here, is that they bought properties through the bubble and watched them rise in value. This takes no skill, no experience, no specific quality - anyone can do that, and a lot of people did that. That in no way makes them qualified to even discuss what is going to happen in the future. In many ways it gives them an incorrect bias - because the only world they know, is one where property prices only ever go up. They are unable to comprehend what will happen in the future because it is simply so far outside of what they know and "understand". So you see, I would argue that those with "experience" in property are the least well placed to make the correct judgements heading into the future.

But you need not listen to me - all the data is out there, do your own research and do your own analysis, it's pretty simple. At least to me.


----------



## odds-on (4 April 2012)

I do not get this borrow from the bank to buy an investment property game. Do not see the margin of safety. I get turning up to auctions with cash when rental yields are double digit. I can see the margin of safety.


----------



## Trembling Hand (4 April 2012)

I'm far from a property bull. In fact surprised at how well its done in the last 3 years. My point is although I would not go chasing property here it doesn't mean there is NO money to be made in it.

The other point is I'm not so sure you will make money in trading. : Get it?


----------



## Starcraftmazter (4 April 2012)

odds-on said:


> I do not get this borrow from the bank to buy an investment property game. Do not see the margin of safety. I get turning up to auctions with cash when rental yields are double digit. I can see the margin of safety.




I doubt Australia will ever see double digit rental yields - rents will just drop in line with house prices.

If you want to invest in property though that's fine and you can do that already in USA with only a small downside risk in prices. You can already get double digit rents rental yields there, and as the Aussie dollar falls the income will only rise.

So why bother with Australia? Go and buy in USA today. You can get beautiful beach-side property in Miami for under $100,000.



Trembling Hand said:


> I'm far from a property bull. In fact surprised at how well its done in the last 3 years. My point is although I would go chasing property here it doesn't mean there is NO money to be made in it.




Well put it this way. You would be an absolute idiot to buy Australian property when it's just past the peak of the bubble with the worst rental yields in the world - compared to say US property which is close to the end of a bubble bust, and with some of the highest rental yields in the world (if you know which cities to look in).



Trembling Hand said:


> The other point is I'm not so sure you will make money in trading. : Get it?




It's pretty much impossible to not make money in trading, I fail to see why everyone doesn't do it. It's not even hard. The real challenge is getting something like 1000% pa returns. Fortunately there is leverage


----------



## Trembling Hand (4 April 2012)

Starcraftmazter said:


> It's pretty much impossible to not make money in trading, I fail to see why everyone doesn't do it. It's not even hard. The real challenge is getting something like 1000% pa returns. Fortunately there is leverage




LOL.


----------



## odds-on (4 April 2012)

Trembling Hand said:


> I'm far from a property bull. In fact surprised at how well its done in the last 3 years. My point is although I would go chasing property here it doesn't mean there is NO money to be made in it.
> 
> The other point is I'm not so sure you will make money in trading. : Get it?




I appreciate there is SOME money to be made in it, but due to the lack of margin of safety it is far from a no brainer, just like sticking all your cash in one company in the middle of bull market. . 

I was reading a book about successful investors and one explained how he made his money over the years. Property was the first big win, he built up a portfolio of UK properties when the rental yield was greater than 20% - now that is a no brainer. He subsequently went on to sell the portfolio during a property bull market, moving money into shares as they were a cheap asset class at the time and so on. He looks for cheap asset classes - no brainers. You get the idea.


----------



## Julia (4 April 2012)

http://www.abc.net.au/worldtoday/content/2012/s3470637.htm

Report on present supply/demand situation in Australia.


----------



## McLovin (4 April 2012)

Trembling Hand said:


> I'm far from a property bull. In fact surprised at how well its done in the last 3 years. My point is although I would not go chasing property here it doesn't mean there is NO money to be made in it.




Ed Zacchery.


----------



## CanOz (4 April 2012)

Watching this thread with interest. We're thinking of buying a property in australia soon. My wifewants to go and have a look soon and i've been saying that things looked a bit frothy around Sydney. One of her friends is a builder in Brisbane and he was saying that Brisbane was one of the better 'buys' at the moment.

This would be a property that we would buy now to live in later. Perhaps we would rent it out for a while, a few years.

The US is the best place for bargains, but i couldn't stand living there amongst so many insular self centered rednecks, so whats the point?

CanOz


----------



## Starcraftmazter (4 April 2012)

Julia said:


> http://www.abc.net.au/worldtoday/content/2012/s3470637.htm
> 
> Report on present supply/demand situation in Australia.




While I largely agree with most of the things said there, and it's no secret everyone knows that FHOG, stamp duties, negative gearing all need to go - they make no real argument and provide no evidence in relation to their claim of a shortage.

The only thing close is this:



> TIM WILLIAMS: There is a structural problem. The - so that two things are happening really, we're only producing in Sydney 14-15,000 homes a year. We need 40,000 homes a year. The average - it takes nine times average salary to buy a house in Sydney. Right, that's a world beating record we don't want okay.




But if there was that much construction in Sydney, then there would literally be one house for every one new person living - including all the newborns. That is completely ridiculous for obvious reasons, and I don't understand how they reached the conclusion that unless there is one house built for every one inhabitant that there is a shortage.

Secondly, they completely miss the point of demographics. They don't understand that the 22% who own the 55% of property are all going to die in the next few decades and wind up in old folks homes as they will need medical care. So that's a startling 55% of properties that will come on the market within a very small period of time.

Boomers drove this bubble, and they will equally drive this bust. There is no supply problem. It's pretty simple really.



CanOz said:


> Watching this thread with interest. We're thinking of buying a property in australia soon. My wifewants to go and have a look soon and i've been saying that things looked a bit frothy around Sydney. One of her friends is a builder in Brisbane and he was saying that Brisbane was one of the better 'buys' at the moment.
> 
> This would be a property that we would buy now to live in later. Perhaps we would rent it out for a while, a few years.
> 
> ...




There's absolutely no reason to buy now if you won't live in it until later - you'd only be losing massive amounts of money. Wait as long as you can before buying, prices in Australia are only headed one way - down.

Rednecks also do not occupy all states in USA, though I agree it's generally speaking a terribly country to live in. Good for investing in RE though - if you must, though I wouldn't encourage it until the bubble crash overshoots the bottom.


----------



## wayneL (4 April 2012)

I doffs me cap to the gents making it in commercial.

But I would have thought this thread was more about resi by implication ....

...and the more SCM pontificates the more bullish I am getting on resi prop. :


----------



## Starcraftmazter (4 April 2012)

wayneL said:


> ...and the more SCM pontificates the more bullish I am getting on resi prop. :




*You* should totally go out and buy 10 houses Wayne. Property prices only ever go up - remember?


----------



## wayneL (4 April 2012)

CanOz said:


> Watching this thread with interest. We're thinking of buying a property in australia soon. My wifewants to go and have a look soon and i've been saying that things looked a bit frothy around Sydney. One of her friends is a builder in Brisbane and he was saying that Brisbane was one of the better 'buys' at the moment.
> 
> This would be a property that we would buy now to live in later. Perhaps we would rent it out for a while, a few years.
> 
> ...




Re USA... indeed CanOzzy. 

What about Canada though? The only rednecks in any great number are in the prairie provinces.

No bargains? Too Cold? Too many frogs? :

Being a citizen, I've been having the whimsical notion of perhaps hanging out there for a bit in the near future.


----------



## Starcraftmazter (4 April 2012)

wayneL said:


> What about Canada though? The only rednecks in any great number are in the prairie provinces.




Don't you know that Canada has a housing bubble too? 




And it went mainstream just a couple of months ago.









Australia, Canada and China (but probably not for much longer!) - the three greatest current property bubbles. Do not buy - avoid at all costs!


----------



## wayneL (4 April 2012)

Starcraftmazter said:


> *You* should totally go out and buy 10 houses Wayne. *Property prices only ever go up - remember?*




Got a couple of piles I've had for a while. As long as we have the system of money we have, over long time frames that is certainly true... with a few dips/plateaus along the way.

Western governments have come to rely on asset prices rising to prop up the system, so they will prop up markets and I don't see that changing in the near future.

Could be wrong, but that's the way I see it right now.


----------



## wayneL (4 April 2012)

Starcraftmazter said:


> Don't you know that Canada has a housing bubble too?




Of course.



wayneL said:


> What about Canada though?...
> 
> ...*No bargains?* Too Cold? Too many frogs? :


----------



## Starcraftmazter (4 April 2012)

wayneL said:


> Got a couple of piles I've had for a while. As long as we have the system of money we have, over long time frames that is certainly true... with a few dips/plateaus along the way.
> 
> Western governments have come to rely on asset prices rising to prop up the system, so they will prop up markets and I don't see that changing in the near future.
> 
> Could be wrong, but that's the way I see it right now.




Sure, I understand your argument completely. There is just one thing you forgot to explain.

Japan, US, UK, Ireland, Spain, Portugal, Greece, and New Zealand even.

Why haven't any of them propped up asset prices yet? When will they? Let me know so I can buy in before the next bubble starts


----------



## Knobby22 (4 April 2012)

Starcraftmazter said:


> Japan, US, UK, Ireland, Spain, Portugal, Greece, and New Zealand even.
> 
> Why haven't any of them propped up asset prices yet? When will they? Let me know so I can buy in before the next bubble starts




Coz them broke.


----------



## wayneL (4 April 2012)

Starcraftmazter said:


> Sure, I understand your argument completely. There is just one thing you forgot to explain.
> 
> Japan, US, UK, Ireland, Spain, Portugal, Greece, and New Zealand even.
> 
> Why haven't any of them propped up asset prices yet? When will they? Let me know so I can buy in before the next bubble starts




Well the PIIGS are in deep doo-doo from going too far with it and not having the wherewithal to prop up the prop.

RE NZ - you'd better take a closer look, not many bargains here.


----------



## CanOz (4 April 2012)

wayneL said:


> Of course.




The biggest housing bubble in the world in probably Vancouver where they are officially the most unaffordable place to live in the world....they just overtook Sydney.

We were there over New Year's, and its a great place to live. My mate has several properties near Victoria, which is more affordable than Vancouver.

Canada is just too cold....I really like Brissy!

CanOz


----------



## Starcraftmazter (4 April 2012)

wayneL said:


> Well the PIIGS are in deep doo-doo from going too far with it and not having the wherewithal to prop up the prop.




And the rest? US and Japan?

Do you notice a pattern here? Housing bubbles destroy economies, and the countries can't do anything thereafter because they are economically stuffed. Same thing will happen here and in Canada.

Ironically China is the only country smart enough to put a stop to the madness - so they have a fighting chance.



wayneL said:


> RE NZ - you'd better take a closer look, not many bargains here.




I didn't say there were, but their bubble popped and prices are still heading down.


----------



## CanOz (4 April 2012)

Starcraftmazter said:


> And the rest? US and Japan?
> 
> Do you notice a pattern here? Housing bubbles destroy economies, and the countries can't do anything thereafter because they are economically stuffed. Same thing will happen here and in Canada.
> 
> ...






China has a problem which Canada and Australia do not have......empty houses/factories/offices on a scale that boggles the mind.  

China housing is a true asset bubble. The only difference is most of the residential buildings that are empty have been paid for, in savings/cash attained by whatever means.

Prices will stay inflated here until someone decides its time to sell an they find there is no liquidity in the market. Prices will start to fall dramatically if the owners decide to they need the cash to pay other debts....like bad loans for poor performing businesses as a result of a global contraction...this is the 'hard' landing that everyone is worrying about....but they can always re-inflate. I think this is going to end in tears soon though...as in the next ten years or so.

The biggest thing that still separates countries like Canada, China and Australia from the 2008 global crisis is the level of securitization, correct me if i have the wrong spelling.

In Canada and China at least, the loans are not bundled up and sold off as a leveraged instruments laced with toxic but 'creative' mortgages with little or no credit worthiness behind them.

Bad debt is just bad debt...not bad debt x 1000

CanOz


----------



## lenny (4 April 2012)

Starcraftmazter said:


> It's pretty much impossible to not make money in trading, I fail to see why everyone doesn't do it. It's not even hard. The real challenge is getting something like 1000% pa returns. Fortunately there is leverage




Thats a cracker!


----------



## Starcraftmazter (4 April 2012)

CanOz said:


> China has a problem which Canada and Australia do not have......empty houses/factories/offices on a scale that boggles the mind.
> 
> China housing is a true asset bubble. The only difference is most of the residential buildings that are empty have been paid for, in savings/cash attained by whatever means.




Two things there which are not correct. Firstly Australia has many empty houses too. There are tens of thousands of them sitting in Sydney, bought by foreign speculators who haven't even bothered renting them out.

Second is that Chinese property need not be paid for at all. People do have to front a deposit - but the rest can be and is leveraged.

A lot of the money for the ghost cities was raised from the shadow banking system, and countless developers in China are now insolvent.



CanOz said:


> . I think this is going to end in tears soon though...as in the next ten years or so.




Agreed.



CanOz said:


> The biggest thing that still separates countries like Canada, China and Australia from the 2008 global crisis is the level of securitization, correct me if i have the wrong spelling.




Sure, but this is not really relevant. A bubble is a bubble. Australia has the unique problem of not having enough money to fund it's great big bubble - so our banks have had to borrow about half of it from foreign banks.

Imagine what happens if our government fails to please the rating agencies which have just warned it, with it's coming budget. 2012 is the biggest year for debt roll-over by the big 4 banks. Their margins on foreign debt are already non-existent. If the slightest thing goes wrong....poof.


----------



## Glen48 (4 April 2012)

USA  banks are reluctant to lend against the property as equity as the property is close to going under or is under , so you have some thing that is not worth a plug nickel.


----------



## trainspotter (4 April 2012)

wayneL said:


> I doffs me cap to the gents making it in commercial.
> 
> But I would have thought this thread was more about resi by implication ....
> 
> ...and the more SCM pontificates the more bullish I am getting on resi prop. :




Property is property WayneL, whether it be resi or commercial or strata unit development and come to think of it ........ vacant land.

The more SCM sermonizes to the bourgeoisie the more of a gluteus maximus he appears.


----------



## CanOz (4 April 2012)

Starcraftmazter said:


> Two things there which are not correct. Firstly Australia has many empty houses too. There are tens of thousands of them sitting in Sydney, bought by foreign speculators who haven't even bothered renting them out.
> 
> Second is that Chinese property need not be paid for at all. People do have to front a deposit - but the rest can be and is leveraged.
> 
> A lot of the money for the ghost cities was raised from the shadow banking system, and countless developers in China are now insolvent.




I think the big difference here (Canada/Australia/China) is scale. Sure there are loans for a high percentage of the residential properties but the deposit required here is much higher than western countries at the moment....but there are literally as you mention, ghost suburbs or cities with no inhabitants. I can see many structures from my window now, and i am west of Shanghai. Many developers are either insolvent or reluctant to pay their suppliers and subby's until they move the inventory. My wife's father owns a construction company and he has not been paid in full for the last project either....and if there is one there is a thousand......

CanOz


----------



## Klogg (4 April 2012)

Starcraftmazter said:


> Sure, but this is not really relevant. A bubble is a bubble. Australia has the unique problem of not having enough money to fund it's great big bubble - so our banks have had to borrow about half of it from foreign banks.




The level of securitization is very relevant. It's these securitization deals in the US that caused the US housing crash.

I'm not arguing whether it was a bubble, to each their own on that point, but given the cause of the 'pop' is not there, I can't see the Australian housing market crashing.

SCM - a question for you. If the Australian market is in a bubble, does it mean it has to crash now? What is stopping it from inflating some more? Would like to hear your thoughts.


----------



## CanOz (4 April 2012)

Klogg said:


> SCM - a question for you. If the Australian market is in a bubble, does it mean it has to crash now? What is stopping it from inflating some more? Would like to hear your thoughts.




My  on this, as long as the economy is awash in money there will be no crash...take away the punch bowl and look out...

CanOz


----------



## Starcraftmazter (4 April 2012)

Klogg said:


> The level of securitization is very relevant. It's these securitization deals in the US that caused the US housing crash.




It doesn't matter what causes the crash, the point is there is always a crash where there is a bubble.



Klogg said:


> I'm not arguing whether it was a bubble, to each their own on that point, but given the cause of the 'pop' is not there, I can't see the Australian housing market crashing.




Every country will have a different cause - there is no requirement whatsoever for them to be the same.



Klogg said:


> SCM - a question for you. If the Australian market is in a bubble, does it mean it has to crash now? What is stopping it from inflating some more? Would like to hear your thoughts.




Many reasons.

First of all, credit growth in Australia is completely flat. That means prices are not going to rise. And this is with extremely low interest rates.

Second of all, baby boomers are past their peak spending ages and are moving into retirement as of last year - so the big demographical cycle which caused the bubble in the first place is now going to cause it to pop.

Third of all, Australia's household debt is over $1Trn, over 100% of GDP - and much of that is mortgage debt. There is only so much mortgage debt people can service. It is impossible for it to go any higher.

Fourth of all, there is significant over-supply across the country which will force prices down. On that note, the quantity of properties on sale is at record heighs. This means prices must fall.

Fifth, tens of not hundreds of thousands of foreign speculators - highly leveraged have bought into our bubble and many of them did so at the peak. They are seeing their "investment" go down in value, and our currency is now dropping as well. They will run for the exists.

Due to bubble mechanics, once a bubble has finished going up, it must crash straight away. There are countless domestic negatively geared "investors" who are not going to put up with losses, and will also head for the exits. This is especially true of the aforementioned baby boomers who are moving into retirement. There is no tax benefit in housing if you have no income.

Next, the bubble has completely destroyed our economy. By hyper-inflating house prices, wages also suffered extreme inflation and now we are extremely uncompetitive with the rest of the world. This has brought about a depression which is only going to get worse, as hundreds of thousands will lose their jobs in the coming years.

The other way in which the bubble has destroyed our economy is through the wealth effect. As people used their houses like ATMs during the bubble phase, the retail sector expanded too rapidly and now there is a significant oversupply of retail outlets. This will only compound problems as businesses shut down and more jobs are lost, and more commercial property is put on the market.

Now days households - freaked out by the global financial problems are saving and paying down debt instead of taking equity out of their properties. It is a double wammy for the economy. Households are now deleveraging - and that will take over a decade due to the enormous size of the debt.

As properties drop in price faster and faster people will begin to panic. Hordes of speculators will head for the exists. No - there is no returning back to the "good old days" up double prices every 7 years. Do not forget that it took all of the following to prevent a complete meltdown during the GFC:

 -1.2 million or 5.7% increase in population
 - $270 billion increase in housing debt
 - $42 billion in government stimulus
 - 300 basis point (3%) reduction in cash rate (total 400 points peak to trough)

We do not have the fiscal nor the monetary room to do that again - not to mention all it did was bring forward lots of demand and speculation. This can not be done more than once. Ironically we have also been getting immigrants coming from the countries where house prices crashed. Once ours do, we will probably experience population decline as people go abroad for better opportunities.

Oh and I almost forgot the mining boom. In many ways it has allowed us to leverage what little money we get from it, borrow money from overseas banks, and swap houses with each other, while paying interest to foreign countries who spend it on infrastructure and R&D as we pathetically try to compete with them.

Note that none of this money was saved, none has been invested on Australian infrastructure or R&D. Our economy is houses and holes. And now that the commodity bubble is over, China is going down - we won't even have holes.

No, our economy will be in ruin. Millions underwater on their mortgages, and countless jobs will be lost. Complete and utter devastation. Personally, I'm planning to move to Switzerland.

And right now you are witnessing the start of it. The rating agencies demand that our budget be so tight, that it will bring about a recession due to severe fiscal contraction. If we disobey them, they will cut our government's rating and our banks will not be able to roll over a record amount of debt owned to foreign banks this year. This is it, our economy is headed for a complete crash.


Our crash is looking no different from the US nor Japan at the onset. It will accelerate in the coming years just like the US and Japan. Just wait and see


----------



## CanOz (4 April 2012)

I agree with most of your opinions SCM, but i feel the trigger will be from a demand shock from China. There is no question that Australia would be at one of several bull market boom/bust peaks now or soon. Allot depends on China though, same goes for the other big resource economies. If they can re-inflate then it may delay more rate cuts from the RBA. 

This is a very interesting topic, and although i am not an expert at anything, nor do i pretend to be, i do enjoy listening to opinions on this topic. Housing is normally at or close to the center of an economy, especially for employment. Unfortunately i now have a wife determined to buy a house in Australia....Got to find some value somewhere.

Thanks for the discussion.

CanOz


----------



## moXJO (4 April 2012)

Wow, don't forget everyone will get super aids and die SCM


----------



## CanOz (4 April 2012)

moXJO said:


> Wow, don't forget everyone will get super aids and die SCM




LOL @ moXJO.....yeah he is a little bearish today...


----------



## trainspotter (4 April 2012)

Starcraftmazter said:


> Due to bubble mechanics, once a bubble has finished going up, it must crash straight away.




This is just priceless !  All this from an engineer to boot ... LOLOL


----------



## young-gun (4 April 2012)

trainspotter said:


> Methinks you have had one drink too many .......... you have disaproportioned yourself





you have the self proclaimed property elite talking about how much money they have made in RE in the past 20 years and you expect kincella not to announce(for perhaps the 5th time) her amazing RE accomplishments? please.


----------



## young-gun (4 April 2012)

trainspotter said:


> Zackery ....... opportunity knows no bounds. When the blood runs in the street kinda stuff. It always amazes me the people who think in the negative cannot be swayed and have ZILCH experience but those in the positive camp are willing to look at both sides of the coin and make assumptions from there !




both sides of the coin? exactly where do you see RE heading? i hope not to new heights...


----------



## CanOz (4 April 2012)

trainspotter said:


> This is just priceless !  All this from an engineer to boot ... LOLOL




couldn't resist ....
The Four Engineers:

One day, a Mechanical Engineer, Electrical Engineer, Chemical Engineer and Computer Engineer were driving down the street in the same car.

The car broke down.

The Mechanical Engineer said, “I think a rod broke.”

The Chemical Engineer said, “The way it sputtered at the end, I don’t think it’s getting gas.”

The Electrical Engineer said, “I think there was a spark and something is wrong with the electrical system.”

All three turned to the computer engineer and said, “What do you think?”

The Computer Engineer said, “I think we should all get out and get back in.” 

Sorry.....:topic


----------



## Ves (4 April 2012)

Starcraftmazter said:


> I should also correct you that 250% over-valued is actually 350% of the original price (that being 100%).
> 
> Next, I never said that I will buy a property when prices drop by 40% or 60% or they are fair value - or any specific price point. I have said that I do not plan to buy a property anytime soon. If in the distant future house prices drop far enough that I feel they are affordable (measured by divergence from a price to income ratio of 3), and if I shall have a very significant need for a property, then that will present the most likely situation in which I will buy a property.



 Ok thanks - my error. Not that it helps me understand the first part of the post the bit about not buying unless it had fallen at least 40%.  Shouldn't this read as 71.4%? 

I really don't understand why you said that you would wait until 2020 (before you leave the country out of frustration) when you have predicted continued falls until 2030 in this latest post.  You clearly don't think there is any point buying a house here until the later date - so why even bother staying? 

I know your position, but your targets never seem consistent to me.

Just as aside; if the mining industry is going to slow down, and construction projects and housing and all that jazz are also in major trouble - where does an "engineer" find work?


----------



## young-gun (4 April 2012)

what i dont understand about this thread is that it is really quite clear that the cons outweigh the pros in the current housing market. it simply isnt the best time to be buying your PPOR. there is negative news coming out from every corner or the globe on a daily basis, and yet majority of people are trying to cram this "there is always an opportunity no matter what" crap down everyones throats. with so much uncertainty in global financial and housing markets it would be insane to take an unnecessary leap into the depths of property AT THIS CURRENT POINT IN TIME.

anyone who is concerned about the value of their 'asset' falling and does take the leap is making a un-educated unnecessary, and very poorly thought out move IMO

please note i am largely referring to those renting and considering buying, or perhaps those that think now is a good time to *become* a developer of any kind. or even those looking at buying investment properties.


----------



## DB008 (4 April 2012)

Ves said:


> Ok thanks - my error. Not that it helps me understand the first part of the post the bit about not buying unless it had fallen at least 40%.  Shouldn't this read as 71.4%?
> 
> I really don't understand why you said that you would wait until 2020 (before you leave the country out of frustration) when you have predicted continued falls until 2030 in this latest post.  You clearly don't think there is any point buying a house here until the later date - so why even bother staying?
> 
> ...




We'll all be living in cardboard boxes by 2020, wait until 2030 and we'll all be hobo's on the street...

(Good for SCM for his outlook, but l'm looking the other way. China still has an appetite for our resources, India hasn't even started...)


----------



## Starcraftmazter (4 April 2012)

moXJO said:


> Wow, don't forget everyone will get super aids and die SCM






trainspotter said:


> This is just priceless !  All this from an engineer to boot ... LOLOL




Nice counter-arguments....not! Complete lack of substance from you two indicating a lack of knowledge of the subject matter.

I expect nothing more.



Ves said:


> Ok thanks - my error. Not that it helps me understand the first part of the post the bit about not buying unless it had fallen at least 40%.  Shouldn't this read as 71.4%?




I believe you are equating "not buying until it falls at least 40%" to "buy once it falls to 40%". Those are not the same.



Ves said:


> I really don't understand why you said that you would wait until 2020 (before you leave the country out of frustration) when you have predicted continued falls until 2030 in this latest post.  You clearly don't think there is any point buying a house here until the later date - so why even bother staying?




I am not suggesting that I am eager to buy and cannot hold off longer than by 2020 - which is what you seem to understand I have written. The point is rather that if it doesn't fall by at least 40% by 2020, then I would deem the progress of the crash insufficient for my taste, and would leave the country as there would be something seriously wrong with it.



Ves said:


> I know your position, but your targets never seem consistent to me.




I think it's quite the opposite.



Ves said:


> Just as aside; if the mining industry is going to slow down, and construction projects and housing and all that jazz are also in major trouble - where does an "engineer" find work?




Lots of places buddy, I am not predicting 100% unemployment. Even during the depression it would not have been more than 30%. That means at least 70% of people still had work.

Now I don't know about you, but I am quite confident that I am better than at least 30% of other engineers in my field. Hell, I'd even say 99% 



young-gun said:


> what i dont understand about this thread is that it is really quite clear that the cons outweigh the pros in the current housing market. it simply isnt the best time to be buying your PPOR. there is negative news coming out from every corner or the globe on a daily basis, and yet majority of people are trying to cram this "there is always an opportunity no matter what" crap down everyones throats. with so much uncertainty in global financial and housing markets it would be insane to take a leap an unnecessary leap into property AT THIS CURRENT POINT IN TIME.




They are all either exposed to property already or are wishing for easy profits just like during this last credit bubble. Delusional.


----------



## Ves (4 April 2012)

Starcraftmazter said:


> I believe you are equating "not buying until it falls at least 40%" to "buy once it falls to 40%". Those are not the same.



I think you missed the word "to" in the sentence below. Hence my mis-interpretation.



> Only if prices don't drop at least 40% real from peak.


----------



## trainspotter (4 April 2012)

young-gun said:


> you have the self proclaimed property elite talking about how much money they have made in RE in the past 20 years and you expect kincella not to announce(for perhaps the 5th time) her amazing RE accomplishments? please.




You misrepresented my post. "Misaproportioned" meaning that kincella has sold themselves short on the investment by Mum and Dad. _*ie*_ the 5 million return on the property seemed a bit small for mine (if we are talking about the Gold Coast for instance) 

My old man owned half of Caboolture when it was a cow paddock for instance. I think he paid 6000 pounds for 1000 acres or something equally stoopid. Sold it as he could not afford the rates !! LOL


----------



## trainspotter (4 April 2012)

young-gun said:


> both sides of the coin? exactly where do you see RE heading? i hope not to new heights...




*GOSH* you are being pugnacious tonight young-gun !! I have enucleated my position VERY STRONGLY and in about 2000 posts in this thread alone as to where I think it is going. DYOR.


----------



## trainspotter (4 April 2012)

Starcraftmazter said:


> Nice counter-arguments....not! Complete lack of substance from you two indicating a lack of knowledge of the subject matter.
> 
> I expect nothing more..




LOL Mr engineer .... go and read all about the direction of property from my point of view. I have been banging on in here for 3 years and got tired of doomsayers like yourself who hasn't a clue as you do not have any real experience. It's all in your head.

There are those that talk and then there are those that take action.

I know which one you are. Your superior knowledge of this subject matter at hand has me quaking in my boots ........ NOT !!


----------



## Starcraftmazter (4 April 2012)

trainspotter said:


> I have been banging on in here for 3 years and got tired of doomsayers like yourself who hasn't a clue as you do not have any real experience. It's all in your head.




What experience do you have in situations where the biggest credit bubble in history worldwide suddenly goes bust? Please list them for me. Go right on ahead.


----------



## young-gun (4 April 2012)

trainspotter said:


> You misrepresented my post. "Misaproportioned" meaning that kincella has sold themselves short on the investment by Mum and Dad. _*ie*_ the 5 million return on the property seemed a bit small for mine (if we are talking about the Gold Coast for instance)
> 
> My old man owned half of Caboolture when it was a cow paddock for instance. I think he paid 6000 pounds for 1000 acres or something equally stoopid. Sold it as he could not afford the rates !! LOL




apologies, i did misread, not with it at all tonight, im out


----------



## Trembling Hand (4 April 2012)

Starcraftmazter said:


> What experience do you have in situations where the biggest credit bubble in history worldwide suddenly goes bust? Please list them for me. Go right on ahead.




Errr..... the last 4 years.


----------



## DB008 (4 April 2012)

Starcraftmazter said:


> What experience do you have in situations where the biggest credit bubble in history worldwide suddenly goes bust? Please list them for me. Go right on ahead.




And as l said earlier, it's going to be sooooooooo big, well, according to SCM, that we'll all be living in cardboard boxes. Just like the GFC doomsday, Y2K nutters were predicting......

So, SCM, what's going to happen after this "biggest credit bubble in history worldwide suddenly goes bust"??? 

*What exactly is going to happen?*
Are people going to stay indoors and eat SPAM for the rest of their lives?


----------



## explod (4 April 2012)

DB008 said:


> We'll all be living in cardboard boxes by 2020, wait until 2030 and we'll all be hobo's on the street...
> 
> (Good for SCM for his outlook, but l'm looking the other way. China still has an appetite for our resources, India hasn't even started...)




Well they are turning into cardboard boxes down here at Martha Cove.

Built from Bessa Bricks, rendered styrene foam and composition board for 2 million dollars each only about four years back now.

Today the beams are sagging, the water has got into some of the walls so they have bursting seams and the many empty blocks between them make it look like a moonscape.

Many unhappy owners cannot get a bid over half a million for them today.

I note the last four or five posts have come down to arguments with little to do with the topic.

*Not happy Jan*.

But did try to warn you bulls, with many posts commencing five years ago.


----------



## Starcraftmazter (4 April 2012)

Trembling Hand said:


> Errr..... the last 4 years.




The question was not for you.



DB008 said:


> And as l said earlier, it's going to be sooooooooo big, well, according to SCM, that we'll all be living in cardboard boxes.




First of all, I never said anything about carboard boxes. You are basically putting words in my mouth trying to be a smartarse. This only makes you look a fool. Either contribute to the thread or don't post in it. If you have any counter-arguments, I'd love to hear them, but so far you have nothing, so perhaps you ought to consider saying less until you have something of substance to say.



DB008 said:


> So, SCM, what's going to happen after this "biggest credit bubble in history worldwide suddenly goes bust"???




It already happened, you are seeing it now.


----------



## DB008 (4 April 2012)

...and then...???


----------



## Starcraftmazter (4 April 2012)

DB008 said:


> ...and then...???




House prices fall?


----------



## DB008 (4 April 2012)

Starcraftmazter said:


> House prices fall?




So, let me understand this.....

Your prediction is; by 2020, a 40% reduction in house prices from where they currently are? (Your words, not mine)

You believe that it has already started (Your words, not mine).

So, for the next ~7.7, house prices will decrease....
(Now, my maths ain't the best, so please feel free to correct)

At the moment, lets say an average house in Sydney is 500k 
500,000 * .40 = 200,000
500,000 - 200,000 = 300,000

200,000 / 7 = 28,571  <- Average amount RE prices have to decease, each year, from now, to get to that 300k figure you are predicting.


----------



## Beej (4 April 2012)

Starcraftmazter said:


> It's pretty much impossible to not make money in trading, I fail to see why everyone doesn't do it. It's not even hard. The real challenge is getting something like 1000% pa returns. Fortunately there is leverage




Wow! Ever heard of hubris? It's been the undoing of many-a-cocky undergrad engineering student such as yourself. I think you have some VERY expensive lessons in life ahead of you........


----------



## trainspotter (4 April 2012)

Starcraftmazter said:


> What experience do you have in situations where the biggest credit bubble in history worldwide suddenly goes bust? Please list them for me. Go right on ahead.




What TH said !! Just LOL you are a TROGLODYTE.

Commit suicide now and avoid the rush why dontcha. Walk to Kosciusko with Keen for Chrissake !!! OR BETTER YET ......... go and get some experience under your belt Mr "I am an engineer".

Last post for you as I am wasting my valuable time. :horse:

P.S. You never answered my question. WHAT EXPERIENCE DO YOU HAVE ???


----------



## trainspotter (4 April 2012)

Beej said:


> Wow! Ever heard of hubris? It's been the undoing of many-a-cocky undergrad engineering student such as yourself. I think you have some VERY expensive lessons in life ahead of you........




I want him to post up some of his never losing trades Beej !! "Its not even hard" LOLOL


----------



## lenny (4 April 2012)

DB008 said:


> So, let me understand this.....
> 
> Your prediction is; by 2020, a 40% reduction in house prices from where they currently are? (Your words, not mine)
> 
> You believe that it has already started (Your words, not mine).




SCM

What exactly are you trying to achieve by spending multiple hours a day postings on a thread about Australian property when you have no intent of buying Australian property until 2020 if at all.

It looks like its consuming your life!

Whats the point?


----------



## Starcraftmazter (4 April 2012)

DB008 said:


> Your prediction is; by 2020, a 40% reduction in house prices from where they currently are? (Your words, not mine)




40% from peak, real. As I have stated at least 20 times now.



DB008 said:


> So, for the next ~7.7, house prices will decrease....
> (Now, my maths ain't the best, so please feel free to correct)




It would be more correct to say that in 7.7 years time, they will be less than they are now, and less than at the 2010 peak by 40% real terms.



DB008 said:


> At the moment, lets say an average house in Sydney is 500k
> 500,000 * .40 = 200,000
> 500,000 - 200,000 = 300,000
> 
> 200,000 / 7 = 28,571  <- Average amount RE prices have to decease, each year, from now, to get to that 300k figure you are predicting.




Right. But that's $300,000 in 2010's dollars, if the average was $500k in 2010. What the nominal figure in 2020 will be depends on the inflation between now and then. Since 2010 we have had some pretty high inflation which has definitely helped increase the falls.



Beej said:


> Wow! Ever heard of hubris? It's been the undoing of many-a-cocky undergrad engineering student such as yourself. I think you have some VERY expensive lessons in life ahead of you........




Name three?



lenny said:


> SCM
> 
> What exactly are you trying to achieve by spending multiple hours a day postings on a thread about Australian property when you have no intent of buying Australian property until 2020 if at all.
> 
> ...




Well you know, it's a thread on house prices, so I thought I'd lay out a clear and coherent argument for why house prices are going to fall long into the future. In the event that anyone looks to such a thread in trying to decide whether now is the right time to buy property, I was hoping it would deter them from doing so, and thus save their lives from debt slavery on a rapidly depreciating asset.

I am just fascinated by the mind of the Australian property bull. I don't think I've studied such amazing creatures ever in my life. Against all evidence and analysis to the contrary, against all odds they seem to think our property will do fine.

My aim has been to try and understand their thought process. How they work. But so far, they have mostly responded with insults and trolling - so I'm not sure if they have any reason behind their mindset, or if they are in fact just a little bit not right in the head.

You are right though, far too much time is wasted here - and it's the same tossers posting crap. I would be nice if other people could contribute to the discussion, but I guess there aren't too many smart chaps around here.


----------



## DB008 (4 April 2012)

Don't re-quote me and nit-pick my post without providing numbers. 

Your an engineer, much smarter than me in the field of maths.

Give me numbers, per year, from 2012 to 2020.

Do a spreadsheet if you have to, and go into detail.


----------



## Trembling Hand (4 April 2012)

Starcraftmazter said:


> I am just fascinated by the mind of the Australian property bull. I don't think I've studied such amazing creatures ever in my life. Against all evidence and analysis to the contrary, against all odds they seem to think our property will do fine.




You know what that very same statement can be applied to your stupid comment about how easily you can make money trading. 



> Against all evidence and analysis to the contrary, against all odds SCM seem to think his trading will do fine.



From comments about trading I've seen you display i think you would be better off losing 40% in RE.

Seriously!!


Starcraftmazter said:


> It's pretty much impossible to not make money in trading, I fail to see why everyone doesn't do it. It's not even hard. The real challenge is getting something like 1000% pa returns. Fortunately there is leverage



 Spoken like a true novice.


----------



## Starcraftmazter (4 April 2012)

DB008 said:


> Don't re-quote me and nit-pick my post without providing numbers.
> 
> Your an engineer, much smarter than me in the field of maths.
> 
> ...




Buddy I am not nit picking anything. I gather what you are asking is the exact percentage change in house prices year to year between 2012 and 2020? I have never said anything about such figures and I have never given them. I have only ever given 2 figures:

40% to 2020
60% to 2030

Both figures are real terms and from peak. I've never given any other figure. I really don't know how to make that any more clear.


----------



## DB008 (4 April 2012)

Starcraftmazter said:


> 40% to 2020
> 60% to 2030
> 
> Both figures are real terms and from peak. I've never given any other figure. I really don't know how to make that any more clear.




What are the 'real terms' and 'peak' numbers?
1) You have already stated that the 'crash/pop' has begun (your words)
2) Give me a 'peak' number from Jan/Feb or March so l can work out the 2020 figure.


----------



## doctorj (4 April 2012)

Let's keep the discussion focused on arguments rather than the individual making them.

The fact is, residential property prices could conceivably fall in Australia, even 40% or more.  There are plenty of countries where this has happened over the last 2-3 years - so its not outside the realms of possibility.  For example, I've been spending a lot of time in Romania looking at property portfolios, where residential property is probably on average 40% off its peak and much worse than that outside the capital (60% or more). 

Now you can argue about the drivers for this and the merits of the USA, Romania or any other country vs Australia for ever more but being an investment forum, the 'why' doesn't really matter.  It should be about risk/reward - ie the probability of above inflation price increases vs potential downside...


----------



## Julia (4 April 2012)

> Report on present supply/demand situation in Australia.





> While I largely agree with most of the things said there,



So here you are agreeing that there is undersupply of housing in Australia.



Starcraftmazter said:


> Fourth of all, there is significant over-supply across the country which will force prices down.



So here you are directly contradicting your earlier comment.
Not the first time you have done this by any means.



> On that note, the quantity of properties on sale is at record heighs.



"Heighs"???  Hope your engineering skills are better than your spelling.




> No, our economy will be in ruin. Millions underwater on their mortgages, and countless jobs will be lost. Complete and utter devastation. Personally, I'm planning to move to Switzerland.



Hard to know why you're hanging about here.  
Would you like some help to pack?



Ves said:


> I really don't understand why you said that you would wait until 2020 (before you leave the country out of frustration) when you have predicted continued falls until 2030 in this latest post.  You clearly don't think there is any point buying a house here until the later date - so why even bother staying?
> 
> I know your position, but your targets never seem consistent to me.



+1.





Starcraftmazter said:


> Nice counter-arguments....not! Complete lack of substance from you two indicating a lack of knowledge of the subject matter.
> 
> I expect nothing more.
> 
> Now I don't know about you, but I am quite confident that I am better than at least 30% of other engineers in my field. Hell, I'd even say 99%



Self confidence is usually a good thing.
Brash, arrogant hubris from someone with no real experience is just a joke. 



Starcraftmazter said:


> The question was not for you.
> 
> First of all, I never said anything about carboard boxes. You are basically putting words in my mouth trying to be a smartarse. This only makes you look a fool. Either contribute to the thread or don't post in it. If you have any counter-arguments, I'd love to hear them, but so far you have nothing, so perhaps you ought to consider saying less until you have something of substance to say.




It's hard to say whether you're deliberately being rude and inflammatory, or whether, sadly, you just have no manners or capacity for civilised discussion.


----------



## Starcraftmazter (4 April 2012)

DB008 said:


> What are the 'real terms' and 'peak' numbers?
> 1) You have already stated that the 'crash/pop' has begun (your words)
> 2) Give me a 'peak' number from Jan/Feb or March so l can work out the 2020 figure.




Real terms are deflated by CPI - so you get the real price, instead of a product of general inflation.

The peak did not happen this year, prices have been dropping for over a year now. I am not sure what the peak exactly is. One would probably need to get the RP Hedonic Price Index for several years back and deflate it by CPI, it would have been around 2010.

I cannot seem to find this data easily on their website, but I could let you know the next time I come across it (undoubtedly I will).



doctorj said:


> For example, I've been spending a lot of time in Romania looking at property portfolios, where residential property is probably on average 40% off its peak and much worse than that outside the capital (60% or more).




Are you looking to invest for rental yields? From what I've seen, yields in Romania are very good - however the economy is in bad shape, and I am personally unaware of just how safe it is to conduct such investments there. Have you got any comments on this?

Was it Romania where people typically borrow from foreign banks (Hungarian banks?) to pay for their home loans, who are now facing trouble because the Romanian currency has significantly devalued and they can't keep up interest payments?



Julia said:


> So here you are agreeing that there is undersupply of housing in Australia.
> 
> 
> So here you are directly contradicting your earlier comment.
> Not the first time you have done this by any means.




I am not contradicting anything - perhaps you ought to re-read my post. I said *largely* - not *completely*. Then I even went on to say why I disagree with their undersupply argument. I cannot understand why you thought I would agree with it when I was clearly arguing against it in that very post?



Julia said:


> Hard to know why you're hanging about here.
> Would you like some help to pack?




Moving countries is quite a big task. Leaving behind friends, family. Your qualifications might not be accepted in other countries. You don't have any references there. You don't know anyone there. Personally, I don't know the languages spoken in any of the countries I'd like to move to either.

Surely you understand the complexity in all this?



Julia said:


> It's hard to say whether you're deliberately being rude and inflammatory, or whether, sadly, you just have no manners or capacity for civilised discussion.




Who me? Or the other posters in this thread? I'm confused - compared to certain other individuals, I am a beacon of civility.


----------



## trainspotter (4 April 2012)

BWaahahahhahaaahahh *gasp* gagagahahhagagahaha *cough* gegeggegeeggeggg

I almost threw up a lung.

DONT FEED THE TROLL !


----------



## doctorj (4 April 2012)

Starcraftmazter said:


> Are you looking to invest for rental yields? From what I've seen, yields in Romania are very good - however the economy is in bad shape, and I am personally unaware of just how safe it is to conduct such investments there. Have you got any comments on this?
> 
> Was it Romania where people typically borrow from foreign banks (Hungarian banks?) to pay for their home loans, who are now facing trouble because the Romanian currency has significantly devalued and they can't keep up interest payments?




Let's not take this too far off topic. My point was that it is possible for property prices to fall significantly and quickly.  If you want to discuss international property markets, start another thread and I will participate if I have anything remotely intelligent to say.

We're not looking for rental yields on this one.  I don't want to say anything more about the transaction as it's ongoing, suffice to say it's sufficiently large (measured in percentage points of GDP type large) that we have a pretty good idea of what can happen to property markets.

That said, there are some lessons that could be learned in terms of downside risk factors to keep an eye out for in Australia - eg availability of credit (bank access to funding, willingness to lend), concentrated exposure to a country's trading partners.  In terms of warning signs, I'd look at credit growth, bank NPLs, avg equity by householders in their house and transaction volumes, particularly in smaller cities which tend to be more vulnerable and may move first.

FX lending wasn't an issue in Romania to my knowledge, at least not to the extent as it was/is in Poland and Hungary.


----------



## Julia (4 April 2012)

Starcraftmazter said:


> I am not contradicting anything - perhaps you ought to re-read my post. I said *largely* - not *completely*.



Oh, don't be ridiculous.  If you say you largely agree with something, then you are making pretty clear that you do not disagree with it.
You then later completely contradicted this.  Finish.  End of story.



> Moving countries is quite a big task. Leaving behind friends, family. Your qualifications might not be accepted in other countries. You don't have any references there. You don't know anyone there. Personally, I don't know the languages spoken in any of the countries I'd like to move to either.
> 
> Surely you understand the complexity in all this?



Many of us here have managed to do it.  For someone of your astonishing level of brilliance and infallibility, it should be no problem at all.
Perhaps, though, it's a case of all talk and no hope of walking the walk.
Just a scared kid underneath all the hubristic nonsense.


----------



## Starcraftmazter (4 April 2012)

Julia said:


> Oh, don't be ridiculous.  If you say you largely agree with something, then you are making pretty clear that you do not disagree with it.
> You then later completely contradicted this.  Finish.  End of story.




Did you re-read my post again? Maybe you should. Me contradicting myself in the same post makes no sense, I'm not sure how you don't realise this.

It's quite simply, I agree largely with what is said there, with the exception of their supply problem claim. In that very post I went on to describe why. I cannot fathom how you could possibly misinterpret that. 



Julia said:


> Many of us here have managed to do it.  For someone of your astonishing level of brilliance and infallibility, it should be no problem at all.
> Perhaps, though, it's a case of all talk and no hope of walking the walk.
> Just a scared kid underneath all the hubristic nonsense.




Did you also do it straight out of uni as you begin your career? If so, I'd love to hear about your experience.


----------



## kincella (4 April 2012)

horses for courses....
my parents died when I was quite young, my mother before my 18th , and my father at 25....but they left me with a huge legacy, of ethics, morality, hard work, AND  a substantial education, and then they topped it off with empathy, for all living things,,,
plus a family history of being leaders, educators in their chosen fields of expertise...

the internet attracts everyone, the blind leading the blind,.... the loudmouths, the noisy ones, suddenly everyone has a voice .....
but at the end of the day,  if you really, truly want to become really wealthy or successful, you may need to revisit your grass roots beginnings,, and take control of your own destiny, 
in my case, I was superman, doing the popular media  based popular moves,'
until I found it was not working......
only when I reverted to my parents ethics, was I finally succesful
take control of your own destiny, do not leave financial desicions to others, do not allow others to control your financials....educate yourself....do the hard yards, then reap the rewards


----------



## trainspotter (4 April 2012)

Ok Ok Ok I will say it again for the great unwashed masses.

If you don't know what you are doing in the property field then DON'T put your big toe in the bathtub.

It takes YEARS of experience as well as balls of steel to play as well as a HUGE amount of capital to cover contingencies that crop up along the way.

Having said that there is still opportunities out there and money to be had. This is from a developers point of view.

From a FHB angle my advice is to make sure that you do your research and have job security. Remember that you will lose 50% of income once the female of the species becomes in bloom. Can you afford this? What is the worst case scenario? Is it a saleable item? What peripheral debts do you have that will sap mortgage repayments?

Other possibility is go and RENT !!!!!!!!!!! I love my tenants ....... hahahahaaaaaaaaa !

Once more for comedy purposes only. The RE in Australia is trancing sideways ATM. Yes yes yes Gold Coast has lost 20% + in CERTAIN areas as well as a lot of other places. There is also A LOT of other areas that have gone UP. DYOR and stop being so narrow minded. I have known properties that I would not give 350k for that have sold for over 400k because the buyer fell in LOVE with the property. One born every minute scenario.

Does this mean property prices will fall 40% by 2020 ....... I think not !!!

And I am not an engineer recently graduated.


----------



## doctorj (4 April 2012)

trainspotter said:


> Does this mean property prices will fall 40% by 2020 ....... I think not !!!




2020 is a long way away…. What do you think residential property prices will do in the next 3-5 years? Do you think rental yields or ratios of property prices to average income is relevant and if so, what do you see those metrics doing? Are you bullish on the macro situation?


----------



## trainspotter (4 April 2012)

doctorj said:


> 2020 is a long way away…. What do you think residential property prices will do in the next 3-5 years? Do you think rental yields or ratios of property prices to average income is relevant and if so, what do you see those metrics doing? Are you bullish on the macro situation?






doctorj said:


> 2020 is a long way away…. What do you think residential property prices will do in the next 3-5 years? Do you think rental yields or ratios of property prices to average income is relevant and if so, what do you see those metrics doing? Are you bullish on the macro situation?




2020 is upon us already. Banks here are lending 10 years at 7.69% 

http://www.anz.com/aus/RateFee/InterestRates/Rates.asp?section=PHL#PHL

I believe that a 5% reduction is necessary to facilitate this ratio (overall)  I also believe that there are places YET to be discovered. Harumph. Been done before.

Wages will increase and meet PP/AI .......... yields on rents WILL RISE !! It is happening now !! Labor in power and all that palava.

Metrics is mathmatical. You have to live somewhere right? Plenty of properties at a bargain price that return great yields. Problem is that capital growth is a stinker. What do you want? Investment or turnover?

As for the macro situation I am not bullish at all. I am experienced in Australia only. I am off to Portugal in 2 days for a month. I will report after this fact finding mission.


----------



## doctorj (5 April 2012)

trainspotter said:


> Wages will increase and meet PP/AI .......... yields on rents WILL RISE !! It is happening now !! Labor in power and all that palava.
> 
> As for the macro situation I am not bullish at all. I am experienced in Australia only. I am off to Portugal in 2 days for a month. I will report after this fact finding mission.



Interesting... how do you reconcile the two positions - rising wages and flat or poor GDP growth?


----------



## trainspotter (5 April 2012)

doctorj said:


> Interesting... how do you reconcile the two positions - rising wages and flat or poor GDP growth?




GDP to CPI is a behemoth. We are currently in a stagflation of wage growth. As fast as the Unions want the proletariat to be paid it is gobbled up by CPI and other indexes. We are treading water at best. Rich get richer and the poor get the picture. 


The more wages surge to combat CPI the better off we are IMO. Inflation means wage rises. Wage rises means increase in CPI. It is a dirty circle. Expenditure meets income sort of thing.

As long as OZ land is looked upon as a great big hole in the ground for it's mineral wealth and China (let alone India) is prepared to take our product I really don't see an issue. Dont get me started on our Uranium deposits.

The banks here are the most profitable IN THE WORLD !!!!!!!!!!! Their loan books are FAT and their trades to FX is minimal at best. They also have a Guvmint guarantee for a bailout as well as a disaproportinate LVR ratio to keep them honest. I understand it is around 38% so therefore exposure riddle needs over 60% wholesale across the board drops for effect.

Mummy & Daddy in Australalia is a slave to the debt merchants and the culture survives !!


----------



## doctorj (5 April 2012)

doctorj said:


> Interesting... how do you reconcile the two positions - rising wages and flat or poor GDP growth?






trainspotter said:


> GDP to CPI is a behemoth. We are currently in a stagflation of wage growth. As fast as the Unions want the proletariat to be paid it is gobbled up by CPI and other indexes. We are treading water at best. Rich get richer and the poor get the picture.
> 
> As long as OZ land is looked upon as a great big hole in the ground for it's mineral wealth and China (let alone India) is prepared to take our product I really don't see an issue. Dont get me started on our Uranium deposits.
> 
> The banks here are the most profitable IN THE WORLD !!!!!!!!!!! Their loan books are FAT




Trainspotter - in a relatively illiquid market (relative to other instruments) and with relatively few good data points to rely on, it seems to me its hard to be objective.  As you pointed out, in any market, there will always be winners and losers and if you only have a small number of properties your experience may vary widely from the average.  It seems to me to be very difficult to be scientific about property prices - emotion and bravado seem to reign supreme and people's opinions appear highly correlated to their vested interests...


----------



## trainspotter (5 April 2012)

doctorj said:


> Trainspotter - in a relatively illiquid market (relative to other instruments) and with relatively few good data points to rely on, it seems to me its hard to be objective.  As you pointed out, in any market, there will always be winners and losers and if you only have a small number of properties your experience may vary widely from the average.  It seems to me to be very difficult to be scientific about property prices - emotion and bravado seem to reign supreme and people's opinions appear highly correlated to their vested interests...




As it is always DoctorJ, My limitations extend to 23 years and over 300 houses as well as numerous subdivisions and strata companies. 

My experience is limited to Australalaia only which is why I am going to Portugal to be a grown up and see if it is relevant over there?

Nice talking to you my friend.  Keep smiling


----------



## Aussiejeff (5 April 2012)

doctorj said:


> ...emotion and bravado seem to reign supreme and people's opinions appear highly correlated to their vested interests...




Describes this and a few other threads to a tee, Doc... 

Here's some interesting links that should reinforce "caveat emptor" - the rug may get pulled from under any one of us at any time by bad government etc. - let alone bad personal decisions.

http://www.news.com.au/money/proper...orporate-charges/story-e6frfmd0-1226317257979

http://www.news.com.au/money/proper...rt-homes-for-all/story-e6frfmd0-1226319120810

Good luck to all in the remaining year.

Ciao.


----------



## tech/a (5 April 2012)

trainspotter said:


> As it is always DoctorJ, My limitations extend to 23 years and over 300 houses as well as numerous subdivisions and strata companies.
> 
> My experience is limited to Australalaia only which is why I am going to Portugal to be a grown up and see if it is relevant over there?
> 
> Nice talking to you my friend.  Keep smiling




Did 7 weeks in Spain France Italy Germany last year.

Spain was amazing
It's completely stuffed.
I saw on one of the coastal resort towns 200 esplanade apartments
All perfect and all completed for sale --- they had been that way for 3 years!
200 meters down the road another 200 these under construction materials Cranes and temporary fencing all in place.
But not a sole to be seen--- that had also been lik that for 3 years
Just walked away!

Friends have a villa in one of these.
Paid €300.000
they are trying to sell it at € 99,000
but around 30 in the block of 100 want €60,000

Now I have also spent 9 weeks in the US and have a few friends who are well healed in both commercial and domestic property there.
But those delivering their views here are just regurgitating media rubbish.Australia isn't remotely similar to either the US or EUROPE.

I can't be bothered discussing subjects where people just bludgeon their views on posters who quite frankly are streets in front of their theories.

Anyway carry on
Circular rubbish which satisfies your view of sitting and watching 
Is exactly what you should have


----------



## wayneL (5 April 2012)

tech/a said:


> Did 7 weeks in Spain France Italy Germany last year.
> 
> Spain was amazing
> It's completely stuffed.
> ...




I guess those developers in Spain were streets ahead too.


----------



## MrBurns (5 April 2012)

The future of property prices in Australia hinges almost exclusively on interest rates.

It's become a national sport ro bash the banks and intimidate the RBA to keep rates low and the worse the economy gets the lower they will go.

If economic circumstances mean rates have to rise that will be the end, hundreds of thousands of people will default on mortgages and the political fallout wil be immense.

So every effort will be put into steering away from that scenerio, but the fudging can't go on forever, things will change, rates will have to rise, but when... is anyones guess.

In the meantime the property market justs drifts down slowly not because of interest rates but because prices are too high and people are no longer prepared to buy on optimism alone.


----------



## trainspotter (5 April 2012)

wayneL said:


> I guess those developers in Spain were streets ahead too.




LOL WayneL ...... Big diffference from building 200 apartments in Spain compared to knocking up a strata title 10 unit development in a safe as suburb !! Or putting a speccie on the market in a well heeled division with proven sales evidence !! 











BWTFWIK?? Carry on ..... as you were


----------



## wayneL (5 April 2012)

Agreed,

Not a bad spot Wandina, if you like Gero.


----------



## lenny (5 April 2012)

Starcraftmazter said:


> Well you know, it's a thread on house prices, so I thought I'd lay out a clear and coherent argument for why house prices are going to fall long into the future. In the event that anyone looks to such a thread in trying to decide whether now is the right time to buy property, I was hoping it would deter them from doing so, and thus save their lives from debt slavery on a rapidly depreciating asset.




My very simplistic view is that as long there is jobs, there will be no crash.

Correction yes, buyers market yes, slow to no growth ST, all which is healthy imo.

I hope your pursuit in waiting to 2030 to buy a property pays off, you could just pay off a mortgage in 28 years instead of paying rent for 28 years.


----------



## trainspotter (5 April 2012)

tech/a said:


> I can't be bothered discussing subjects where people just bludgeon their views on posters who quite frankly are streets in front of their theories.
> 
> Anyway carry on
> Circular rubbish which satisfies your view of sitting and watching
> Is exactly what you should have




AAAAAahhhhhhhhhh but it keeps the mind active !! A bit of sabre rattling never hurt anyone. It is when they go for the jugular .... then it becomes interesting.

People frozen by fear or lack of experience amazes me that they are the first to bleat about NOT doing something whether it be bungee jumping or trading in the market to dipping their toe in the RE world.

Crapping on about CPI to GDP to DSR to IAH is also a load of wank. If you are playing with monopoly money it would mean something. If you are picking the eyes out of the market in a closed loop than it is irrelevant. 

Pick your target and manage your profitability and make sure that IF it does not sell that the RENTAL INCOME is the same amount as the INTEREST COMPONENT. Ooooppps have told too much now. Back in my box.

Unless you have done it before than .......... STFU !!!!!!!! No experience is exactly that.


----------



## trainspotter (5 April 2012)

wayneL said:


> Agreed,
> 
> Not a bad spot Wandina, if you like Gero.




Fishing is insane !! Market is patchy at best with sales both under and over the sweet line. Weather is sublime (when it is not blowing dogs off chains)


----------



## rryall (5 April 2012)

Starcraftmazter said:


> Did you also do it straight out of uni as you begin your career? If so, I'd love to hear about your experience.




I was offered a job in the Caribbean immediately after University which I accepted. Was one of the biggest decisions of my life which I have no regrets about. Amazing experience!


----------



## tech/a (5 April 2012)

> Big diffference from building 200 apartments in Spain compared to knocking up a strata title 10 unit development in a safe as suburb !! Or putting a speccie on the market in a well heeled division with proven sales evidence !!




Exactly.

However the <30 yr old armchair economists with < a deposit to buy a car who havent been to Europe or US let alone developed anything bigger than a cold---know better---err profess to know better.


----------



## prawn_86 (5 April 2012)

rryall said:


> I was offered a job in the Caribbean immediately after University which I accepted. Was one of the biggest decisions of my life which I have no regrets about. Amazing experience!




Hi rryall,

I have been looking at finance jobs in the Carribean also. If you mind me asking how did you go about getting one?

PM me if you can please


----------



## professor_frink (5 April 2012)

Starcraftmazter said:


> It's pretty much impossible to not make money in trading, I fail to see why everyone doesn't do it. It's not even hard. The real challenge is getting something like 1000% pa returns. Fortunately there is leverage




Big call there.

I remember we had a member on this forum a couple of years ago that used to make similar statements about how easy trading was, and how he was naturally good at it and the like.

Find out a few months later that the guy was swinging a rather small trading account, and then when he decided to start a journal to document his trades, all he did was waffle on about missed opportunities with the benefit of hindsight.

Obviously left the forum to troll elsewhere not long after that.

Seems to be that the only people who make comments about how easy trading is are the ones yet to actually take any real money out of it.

Why don't you start a thread and document some of your trading real time and demonstrate how easy it is?

Could be some great inspiration for mere mortals like myself


----------



## tech/a (5 April 2012)

> Why don't you start a thread and document some of your trading real time and demonstrate how easy it is?




What and show you ---- 
Why would he ----

I agree.

Infact With or without leverage Id *BET* (And Ill bet $500 to Joe if Im wrong---as its a far more worthy cause) he will blow up (fail spectacularly) over a 12 mth period.

Look forward to it.


----------



## McLovin (5 April 2012)

prawn_86 said:


> Hi rryall,
> 
> I have been looking at finance jobs in the Carribean also. If you mind me asking how did you go about getting one?
> 
> PM me if you can please




I had a work offer to the Cayman Islands a few years ago. I turned it down. It costs a fortune to live there ($7-$8 for a loaf of bread) and it's boring as bat ****; there's only so much sitting on a beach drinking rum you can do. The bloke who ended up going lasted 4 months and was back in London.

If you're looking for high cost of living by the beach, you don't need to live Australia.


----------



## odds-on (5 April 2012)

trainspotter said:


> AAAAAahhhhhhhhhh but it keeps the mind active !! A bit of sabre rattling never hurt anyone. It is when they go for the jugular .... then it becomes interesting.
> 
> People frozen by fear or lack of experience amazes me that they are the first to bleat about NOT doing something whether it be bungee jumping or trading in the market to dipping their toe in the RE world.
> 
> ...




I have always thought that there is an art to property investment and I doff my cap to it. However I have never got my head round finances of it all, everybody I have met to date who invests in property does "special accounting". Most seem to have leveraged to the max, put additional capital in over the years and worked many hours managing tenants/properties for what I guesstimate is a CAGR of less than 5%. Bonkers.


----------



## wayneL (5 April 2012)

tech/a said:


> What and show you ----
> Why would he ----
> 
> I agree.
> ...




I'll go ya halves.

*That* I would like to see.


----------



## Starcraftmazter (5 April 2012)

lenny said:


> I hope your pursuit in waiting to 2030 to buy a property pays off, you could just pay off a mortgage in 28 years instead of paying rent for 28 years.




There is no way in hell I am paying for a mortgage for 28 years. Do you have any idea how crazy that even sounds? Don't get me started...


I also don't see how Australia is going to get any real wage growth going into the future - our already ridiculously high wages make us uncompetitive. If wages are going to do anything over the next decade, it is to go down.



professor_frink said:


> Why don't you start a thread and document some of your trading real time and demonstrate how easy it is?




I actually have a similar but an even better idea. I am planning to write trading software over the course of the next year or so, and what I will do is make the signals from it public with a small delay so that I can get in/out before anyone who decides to pay attention to it. And some period of time after that, I will of course start charging for it's use


----------



## tech/a (5 April 2012)

Starcraftmazter said:


> There is no way in hell I am paying for a mortgage for 28 years. Do you have any idea how crazy that even sounds? Don't get me started...
> 
> 
> I also don't see how Australia is going to get any real wage growth going into the future - our already ridiculously high wages make us uncompetitive. If wages are going to do anything over the next decade, it is to go down.
> ...




Now without doubt I am certain this guy is a nutter.
Straight on to ignore. A complete watse of bandwidth.


----------



## DB008 (5 April 2012)

tech/a said:


> Now without doubt I am certain this guy is a nutter.
> Straight on to ignore. A complete watse of bandwidth.




+1
(Ignore engaged)


----------



## McLovin (5 April 2012)

Starcraftmazter said:


> I actually have a similar but an even better idea. I am planning to write trading software over the course of the next year or so, and what I will do is make the signals from it public with a small delay so that I can get in/out before anyone who decides to pay attention to it. And some period of time after that, I will of course start charging for it's use




Wow. I'm not sure whether you're very naive or very arrogant. Maybe both.


----------



## professor_frink (5 April 2012)

Starcraftmazter said:


> I actually have a similar but an even better idea. I am planning to write trading software over the course of the next year or so, and what I will do is make the signals from it public with a small delay so that I can get in/out before anyone who decides to pay attention to it. And some period of time after that, I will of course start charging for it's use




So that's a no then?

Thanks for the reply though, at least now I know how much attention I need to pay to the posts you make.


----------



## Glen48 (5 April 2012)

Totally agree with every thing you say SCM, the market crashed in 30's took until 1957 to get back to the same level 27 YRS about,  2012 + 27 a long time.
The prices of eggs will be next to tank as every one will be getting a large helping from ASF property site.


----------



## trainspotter (5 April 2012)

Just LOL @ whackjob SCM. .. Delusions of grandeur


----------



## young-gun (5 April 2012)

DB008 said:


> +1
> (Ignore engaged)




ohhh please dont ignore SCM! everyones reactions to his posts have become apart of my daily routine. it reminds me of watching my younger brothers when we were younger, even they were aware the other was doing it for the reaction.

trainspotter, does it bother you at all that you are selling overpriced depreciating assests to those obviously unknowing of the coming fall in prices?


----------



## DB008 (5 April 2012)

Glen48 said:


> Totally agree with every thing you say SCM, the market crashed in 30's took until 1957 to get back to the same level 27 YRS about,  2012 + 27 a long time.
> The prices of eggs will be next to tank as every one will be getting a large helping from ASF property site.




Don't forget the World War and nuke...

Hang-on, maybe if someone nukes China, we'll see a massive reduction in the price of properties. 

young-gun, l know where your coming from, l've got a younger brother. Just not interested in someone trolling for the sake of it. I asked SCM for a number, from 2012 (as stated by SCM) that the market is 'bursting already/popped'. Can't be that hard to pick a number from the *past*.


----------



## Klogg (5 April 2012)

young-gun said:


> trainspotter, does it bother you at all that you are selling overpriced depreciating assests to those obviously unknowing of the coming fall in prices?




You've assumed here that:
1) Just because the general trend is downward, the price of _every_ house is going with it. There are some areas still appreciating in value
2) The houses that he owns are overpriced


----------



## trainspotter (5 April 2012)

Big assumptions huh Klogg?


----------



## young-gun (5 April 2012)

Klogg said:


> You've assumed here that:
> 1) Just because the general trend is downward, the price of _every_ house is going with it. There are some areas still appreciating in value
> 2) The houses that he owns are overpriced




i agree with the first point somewhat, although there is much more evidence than a mere downward trend. the second however i do not. because every house in the country is over-priced. if he is selling any houses, then he is selling over-priced houses.....


----------



## young-gun (5 April 2012)

trainspotter said:


> Big assumptions huh Klogg?




no bigger than assuming it will continue to go up jsut ebcause it has in the past


----------



## Glen48 (5 April 2012)

The Florida Real Estate Craze
By Andrew Beattie

When: 1926 
Where: Florida

The amount the market declined from peak to bottom: Land that could be bought for $800,000 could, within a year, be resold for $4 million before crashing back down to pre-boom levels. The prices were so inflated that to buy a condo-style property in 1926, you would've had to pay the same as you would now have to pay for a luxury home in the guard-gated communities in Miami ($4,500,000) - without adjusting for inflation!

Synopsis: In the 1920s, the United States of America was chugging along like the British Empire of the 1700s, and it was only natural that people were beginning to believe such prosperity was infinite. But it wasn't the stock market that was the recipient of a bubble. It was the real estate market.

In 1920, Florida became the popular U.S. destination/residence for people who don't like the cold. The population was growing steadily and housing couldn't match the demand, causing prices to double and triple in some cases, which was not exactly unjustified at this point. But, news of anything doubling and tripling in price always attracts speculators. So, once people began pumping huge amounts of money into the real estate market it took off. Soon everyone in Florida was either a real estate investor or a real estate agent.


Read more: http://www.investopedia.com/features/crashes/crashes4.asp#ixzz1rBHvjwHh


----------



## Starcraftmazter (5 April 2012)

DB008 said:


> I asked SCM for a number, from 2012 (as stated by SCM) that the market is 'bursting already/popped'. Can't be that hard to pick a number from the *past*.




No idea what you're talking about here.




young-gun said:


> because every house in the country is over-priced. if he is selling any houses, then he is selling over-priced houses.....




That's correct, and it is a simple fact that some here fail to understand. There are no magic suburbs in Australia which are somehow fairly priced - all property is ludicrously overpriced in this country. All of it - and all of it will drop in price.

Imagine if you took away credit? Median prices will definitely drop to around $150,000 - maybe lower.


----------



## Bill M (5 April 2012)

I bet robots is looking in on this thread having a nice little chuckle.

hello, long weekend up coming up brothers, weather going to be sunshine all the way through,

are you there robots, thread is going down hill, how's it all going? pop in say hello.

see ya later.

ps; my rent went up not down .... oh well, glad i don't rent.....


----------



## young-gun (5 April 2012)

Bill M said:


> I bet robots is looking in on this thread having a nice little chuckle.
> 
> hello, long weekend up coming up brothers, weather going to be sunshine all the way through,
> 
> ...




my landlord just had to get my taps fixed and a new hot water system, oh well glad im not a landlord. have a good weekend all


----------



## tech/a (5 April 2012)

young-gun said:


> my landlord just had to get my taps fixed and a new hot water system, oh well glad im not a landlord. have a good weekend all




Simply a cost of doing business.
We just claim it.

Just as we pay for brokerage slippage and tax.
Cost of doing business.

Something you'll understand when you actually *DO* *SOME*!


----------



## Starcraftmazter (5 April 2012)

tech/a said:


> Simply a cost of doing business.
> We just claim it.
> 
> Just as we pay for brokerage slippage and tax.
> ...




Sounds like a waste of money. What's the point? Don't you trade? Rental yields in Australia are what, 3.5% net. Surely you can make more than that a year with trading?

What's the point?


----------



## Klogg (5 April 2012)

Starcraftmazter said:


> Sounds like a waste of money. What's the point? Don't you trade? Rental yields in Australia are what, 3.5% net. Surely you can make more than that a year with trading?
> 
> What's the point?




Depends what you're renting.

I bought the one title with two separate houses. It actually returns about 7.5% gross, which ends up a lot more than 3.% net.


----------



## Starcraftmazter (5 April 2012)

Klogg said:


> Depends what you're renting.
> 
> I bought the one title with two separate houses. It actually returns about 7.5% gross, which ends up a lot more than 3.% net.




Sure, but that's still below what I would expect any trader can make in a year, so I repeat - what's the point?

This seems the most illogical part to me about "investing" in property if you are a trader - you can always make better returns through trading. So why do people do it?


----------



## CanOz (5 April 2012)

Starcraftmazter said:


> Sure, but that's still below what I would expect any trader can make in a year, so I repeat - what's the point?
> 
> This seems the most illogical part to me about "investing" in property if you are a trader - you can always make better returns through trading. So why do people do it?




I can't speak for them SCM, but i suspect they have too much capital to trade personally and want to diversify their investments but still be in control....so they don't end up on another thread wondering where their hard earned dough went.

They stopped making land a long time ago, so price shocks aside....they've always got the land, regardless of depreciation on the bricks and mortar.

I would suspect that some, even many successful short term traders also have a portfolio of long term, blue chip stocks that pay good dividends.

CanOz


----------



## Klogg (5 April 2012)

Starcraftmazter said:


> Sure, but that's still below what I would expect any trader can make in a year, so I repeat - what's the point?
> 
> This seems the most illogical part to me about "investing" in property if you are a trader - you can always make better returns through trading. So why do people do it?




But a trader puts in effort day to day, whereas I collect rent and occasionally organize for something to be fixed in the house... 
And that 3% is what I get as an income - I didn't mention the 80% capital gain I've had over the years I've owned it. (Yes, I know this is unrealized, which is why I didn't mention it initially)

Finally, I'm not a trader - I work as an IT contractor. Investments are my way to make my money grow.


----------



## Bill M (5 April 2012)

Starcraftmazter said:


> Sure, but that's still below what I would expect any trader can make in a year, so I repeat - what's the point?
> 
> This seems the most illogical part to me about "investing" in property if you are a trader - you can always make better returns through trading. So why do people do it?




Ok, I speak for myself only. I can not trade, I don't know how to do it and I am too scared and too stupid to try. Having said that I do invest in stocks and other listed investments long term and for dividends. On average in a passive style of investing that returns me about 6% fully franked. Although that might sound slightly better than real estate both are better than getting a flat 6% in a cash account. So for me it is about spreading the risk. Real estate over the last 35 years of my investing life has been more stable than stocks but I concede, I am not a "trader" in anyway.


----------



## Starcraftmazter (5 April 2012)

That's fine, but obviously my question was aimed at the traders.


----------



## tech/a (5 April 2012)

Initial purchase price $ 90,000-- 1996
Rent return $17500 a year. $ 19.4%/yr
Not to mention the 400% capital gain.
Oh and that's one of them.

Best one returns 23% is owned by my superfund.

Banks love house equity for collateral.
This is where I stop.

Going any further is way beyond the capacity for 
The original poster to comprehend let alone
Understand.


----------



## CanOz (5 April 2012)

tech/a said:


> Initial purchase price $ 90,000-- 1996
> Rent return $17500 a year. $ 19.4%/yr
> Not to mention the 400% capital gain.
> Oh and that's one of them.
> ...




thanks Tech, appreciate your perseverance. 

I notice you still let the odd poster get under your skin....!

Seeing you still posting when i came back encouraged me to stick around...it just wouldn't be the same without you here.

Cheers,


CanOz


----------



## Starcraftmazter (5 April 2012)

tech/a said:


> Initial purchase price $ 90,000-- 1996
> Rent return $17500 a year. $ 19.4%/yr
> Not to mention the 400% capital gain.
> Oh and that's one of them.
> ...




Yield is not calculated on a historic price, but on the current market price. This is done for reasons which should be very obvious to you.


----------



## Ves (5 April 2012)

Starcraftmazter said:


> Yield is not calculated on a historic price, but on the current market price. This is done for reasons which should be very obvious to you.



Why would you do that?  Considering that in order to shift to another income stream (into another asset class) you would need to first pay capital gains tax, agent's fees, legals fees, and all those sorts of things.  I would say at the very least you would calculate the yield at the net realisable value after costs.


----------



## CanOz (5 April 2012)

Starcraftmazter said:


> Yield is not calculated on a historic price, but on the current market price. This is done for reasons which should be very obvious to you.




This is interesting....i see why the return _should_ be calculated at today's valuation, but really its more realistic to consider the return on the actual investment than the hypothetical....its like mark to market on steroids....

I'm getting deja vu from 2008 here...

CanOz


----------



## tech/a (5 April 2012)

My apologies a correction.
Initial capital invested in the property was $20,000
So return on investment 1800%. Now worth $360,000
So return on investment /year is around 85% from rent alone.

Back to it.


----------



## Glen48 (5 April 2012)

Pure crap because you haven't sold it yet which you should do and take your money off the table.


----------



## tech/a (5 April 2012)

Glen48 said:


> Pure crap because you haven't sold it yet which you should do and take your money off the table.




Sorry I'll rephrase that to appease you.

Currently---- blah blah.
The crap can you just point that out?
As it's just the current liquidated value.
Just like a stock holding with open profit.

Strangely banks calculate open equity--- a fair % of it as capital.
Why would I forfeit 85% return on capital a year?


----------



## Glen48 (5 April 2012)

I looked up greed in my dictionary and saw your photo, no one is worried if you made X % to the power of 10 profit, all we (SCM et al ) are saying there is crash coming be ready, only you can chose when to get out its called the withdrawal method.


----------



## Dowdy (5 April 2012)

trainspotter said:


> LOL WayneL ...... Big diffference from building 200 apartments in Spain compared to knocking up a strata title 10 unit development in a safe as suburb !! Or putting a speccie on the market in a well heeled division with proven sales evidence !!





You want a 200 apartment building? Go to Richmond. There are at least 4 multi-unit apartments going up there within a 2km radius







tech/a said:


> Exactly.
> 
> However the <30 yr old armchair economists with < a deposit to buy a car who havent been to Europe or US let alone developed anything bigger than a cold---know better---err profess to know better.




Which economists are you talking about?
The Economist magazine?
Marc Faber?
Even Glenn Stevens has warned about reckless investing in the RE market


But hey, I guess you would know better since you made your millions in property...


----------



## trainspotter (5 April 2012)

Here we go again. ...... ZzzzzzzzzzzzzzZZZZ. ... Dont feed the trolls tech/a


----------



## tech/a (5 April 2012)

Dowdy said:


> You want a 200 apartment building? Go to Richmond. There are at least 4 multi-unit apartments going up there within a 2km radius
> 
> 
> 
> ...




No
Closer to home
They are right here on this thread.


----------



## Julia (5 April 2012)

Glen48 said:


> Pure crap because you haven't sold it yet which you should do and take your money off the table.



 Can't you make your point without being so unnecessarily rude?

Dowdy, if you've been following the last several pages, it's pretty obvious to whom Tech's post was directed.


----------



## trainspotter (5 April 2012)

young-gun said:


> no bigger than assuming it will continue to go up jsut ebcause it has in the past




Show me where I have said this ridiculous statement please or are you trolling as well?


----------



## DB008 (5 April 2012)

(Loving this ignore feature!)


----------



## trainspotter (5 April 2012)

Starcraftmazter said:


> That's fine, but obviously my question was aimed at the traders.




Why dont you try answering a few questions yourself for a change.

Like how much experience you have in property and why dont you post up ypur trades Mr. "I never lose and it is easy"


----------



## Julia (5 April 2012)

trainspotter said:


> Why dont you try answering a few questions yourself for a change.
> 
> Like how much experience you have in property and why dont you post up ypur trades Mr. "I never lose and it is easy"



 You know the answer to the above, TS/


----------



## Beej (5 April 2012)

tech/a said:


> Banks love house equity for collateral.
> This is where I stop.
> 
> Going any further is way beyond the capacity for
> ...




Yes - this is a KEY point that "some" here do not understand, at all. ;-)


----------



## young-gun (6 April 2012)

tech/a said:


> Simply a cost of doing business.
> We just claim it.
> 
> Just as we pay for brokerage slippage and tax.
> ...




For the last time, a negative view on property is absolutely no reflection of character or work ethic. I guarantee you I work just as hard as you do(and for alot less money)so dont go making personal assumptions. 

Both you and train think you're the bees knees of Re investors. I hope like all good business men your business model has acknowledged a crash is possible and you have a strategy to cope with a real crash.

I'm poised and ready to jump in at any moment. And could jump into something in a month. Are you ready for a crash? You will both most likely 'sit on the sidelines' as your portfolio falls by 30%+ as your views are far too stubborn n biased. Unlike you both I can accept I may be wrong.


----------



## young-gun (6 April 2012)

trainspotter said:


> Show me where I have said this ridiculous statement please or are you trolling as well?




So you think prices are to stay stagnant for.. 20 years? I'm not going to read over your property posts as 50% of them are attacks on SCM and your noticeable issue with engineers, and I have some water skiing to do;-)

It's just a forum.


----------



## tech/a (6 April 2012)

young-gun said:


> For the last time, a negative view on property is absolutely no reflection of character or work ethic. I guarantee you I work just as hard as you do(and for alot less money)so dont go making personal assumptions.




Do some business as opposed to work.
I feel my assumption stands.



> Both you and train think you're the bees knees of Re investors. I hope like all good business men your business model has acknowledged a crash is possible and you have a strategy to cope with a real crash.




Thanks for your concern
Yes some holdings have been liquidated to freehold others.
In downturns cash is king a debt is the devil. The other long term lurker is possible inflation. With it interest rate rises. Something highly geared investors don't want to be caught with. So yes risk mitigation--- for me at least is a top priority--- with all investing.



> I'm poised and ready to jump in at any moment. And could jump into something in a month. Are you ready for a crash? You will both most likely 'sit on the sidelines' as your portfolio falls by 30%+ as your views are far too stubborn n biased. Unlike you both I can accept I may be wrong.




Strange comment--- on the one hand you " could jump " at any minute but onthe other your warning me of a 30% downturn in my holdings?

This has by the way happened on some holdings.
Not a game breaker due to time of entry.
However if you were late on the scene or hadn't calculated it in your development
It would be painful.
My latest is less than perfect.
The drop in R/E prices has left me with a lot less profit than I could have had in the past.
But like a trade--- you'll get some great trades and some not so great.
Business ---- pure and simple.


----------



## moXJO (6 April 2012)

Be interesting to see what happens and if indeed there will be a trigger event that leads the crash (possible under this current govt). And while I was a bit of a D&G in the past, I don't see it playing out to the 'crash and burn then run for the hills' that some here are preaching. If anything we should be looking at the countries that actually have something to do with us in this area, Asia pacific not at the US or Euro. Also those countries we are developing trade with.



> There has been much discussion over a number of years about whether Australia’s house prices are too high, and indeed whether there is a house price ‘bubble’. This notion is typified by the Economist magazine’s regular update suggesting that Australia’s house prices are up to 50 per cent overvalued against standard naive measures.
> 
> Our view is that these metrics are indeed too naive to be useful. Typically they take a measure of housing prices to income or to rents and compare the current level to a 15- or 20-year average. This ignores a large structural adjustment that occurred in the Australian housing market between 1997 and 2003. This transition involved lower interest rates, better-anchored inflation expectations, and increased availability of housing credit. Without some reversal of these structural changes – which is a virtual impossibility – we do not expect Australian housing prices to fall.





> Indeed, we expect them to track sideways in the short term and then rise in line with household disposable incomes – consistent with recent history. Since late 2003 the dwelling price to income ratio has been broadly stable at between 3.5 and 4.5 and has averaged 4 (see chart). As we are forecasting growth in household disposable income per household of around 5 per cent per annum over the next couple of years (as a result of strong employment and wages growth), we also have in mind that house prices will grow at this pace over the next couple of years.
> 
> 
> Supply features of the housing market support this assessment. Most forecasters, including official agencies, suggest that Australia has an undersupply of housing. This assessment is most simply made by comparing growth in the number of dwellings to population. As we pointed out above, since 2006, population growth has exceeded new supply of dwellings, which is the first time this has happened in the postwar era. This will put a floor under housing prices and is a key reason why we have little concern about a sharp (or large) house price decline.
> ...






> Third, public transport from outer suburbs in most cities is generally of fairly low quality, limiting the distance which people can productively live from the city centres and further enhancing demand for property in the centre of the cities.
> 
> Lastly, there is a lack of affordable land at the fringes of major cities. This is due to state governments seeking to front-load infrastructure costs into the land release price and also some issues with land investors holding large swathes of land in anticipation of future capital gains – and not being prepared to sell this land in adequate quantities in the short run to meet demand.
> 
> ...






> Slower housing credit growth in recent years, due partly to lower housing turnover, has also meant that the Australian mortgage book is ageing. This reduces the risk of repayment problems, as households with a longer history of repayment tend to be better risks. The credit foncier model of repayments suggests that these households are now repaying a greater amount of principal and less interest, so that households have built up equity in their homes and could run this down in a crisis.






> The structure of the mortgage market and tax system in Australia is also such that most households are ahead of schedule in their mortgage repayments. This would provide a buffer in the case of a negative income shock to households, such as increased unemployment.
> 
> In the event of a large negative shock to the Australian economy, there are also a number of contingencies built into the system that would somewhat protect the housing market. These were vividly displayed during the GFC. The RBA would cut interest rates, the fiscal authorities would boost spending, and the exchange rate would depreciate. As we discussed above, with most of the mortgages at variable rates, the monetary transmission mechanism is very powerful, and very low net government debt – it is forecast to peak at 6 per cent of GDP in 2012/13 – means the government also has significant capacity to spend.
> 
> Overall, with strong prospects for the Australian economy, on the back of high commodity prices driving a mining investment boom and rising incomes, we expect that housing prices will continue to grow at a modest pace over the next few years. We view the risk of a sharp fall in housing prices as very low.




http://www.businessspectator.com.au/bs.nsf/Article/Australian-property-prices-housing-bubble-pd20110317-F24WP?OpenDocument


----------



## Uncle Festivus (6 April 2012)

I'm sure we could all be lectured to by the '1 percenters' ad infinitum, but, reality prevails for the rest of us - 

*SEVENTY per cent of under 35s in Sydney will be excluded from the housing market, a UK housing expert says.                                  *                               The figure makes up part of a new report, Homes for All, which  found that Australia's housing market is in crisis, with only half of  the supply needed to meet demand.

Co-author Dr Tim Williams says  governments need to reconsider tax incentives and policies that  encourage investors to push house prices higher.

"Seventy per cent  of 35-year-olds and younger cannot afford to buy any kind of home at  this point in time, on average," Dr Williams told AAP.

"At the same time we find 22 per cent of Australians own 55 per cent of residential development."

*It recommends that negative gearing and untaxed capital gains be  reconsidered by the government in an effort to drive down house pricing  for first-time buyers.* 
--------
He said that about 30 years ago it took *three* times the median salary to buy a house in Sydney, whereas it now took *nine* times.

This is a higher ratio than London or New York, the report said.

Story

It's pretty obvious to all, to even our resident "white shoe brigade", that negative gearing results in higher prices. 

So what we need is a politician or party to be brave enough to realise that the tax perks, like negative gearing, have failed miserably to stimulate new building activity, and that the incentives should be there for those who build new dwellings, not buy old ones. Along with the problem of developers 'encouraging' the limited release of land from the government & the ineptitude of the various relevant government departments in planning for the limited land releases that do get to market?


----------



## DB008 (6 April 2012)

*RP Data rejects 'housing bubble' claims*



> Oct 2011
> 
> Claims that Australia is in the midst of a property price bubble have been dismissed by RP Data.
> 
> ...




http://www.theadviser.com.au/breaking-news/6112-rp-data-rejects-housing-bubble-claims


----------



## Uncle Festivus (6 April 2012)

moXJO said:


> If anything we should be looking at the countries that actually have something to do with us in this area, Asia pacific not at the US or Euro.




Yes, China is slowing - just have to see if it's a hard or soft landing? Which leads to this erroneous assumption from the authors of the 'report' - 

In the event of a large negative shock to the Australian economy, there  are also a number of contingencies built into the system that would  somewhat protect the housing market. These were vividly displayed during  the GFC. The RBA would cut interest rates, the fiscal authorities would  boost spending, and the exchange rate would depreciate. As we discussed  above, with most of the mortgages at variable rates, the monetary  transmission mechanism is very powerful, and very low net government  debt – it is forecast to peak at 6 per cent of GDP in 2012/13 – means  the government also has significant capacity to spend.

Overall, with strong prospects for the Australian economy, on the back  of high commodity prices driving a mining investment boom and rising  incomes, we expect that housing prices will continue to grow at a modest  pace over the next few years. We view the risk of a sharp fall in  housing prices as very low.                       

Cut rates - check
Boost spending - get into more debt?? I'f got my ceiling batts, solar panels, & all the schools have new halls etc - what next??
Exchange rate - falling - comparing to which other country in recession? Imports will be dearer.
high commodity prices - and falling with China slow down & Euro recession

Depending on who's figures you believe, China is already in contraction mode.....exhibit A,  Australias $500B trade deficit last month....less coal = less electricity generation shown by latest data....


----------



## trainspotter (6 April 2012)

young-gun said:


> So you think prices are to stay stagnant for.. 20 years? I'm not going to read over your property posts as 50% of them are attacks on SCM and your noticeable issue with engineers, and I have some water skiing to do;-)
> 
> It's just a forum.




Once again you are failing to understand the written missive. There are CERTAIN areas that are rising/falling. Pick the eyes out of the market. I have been bleating this for 3 years and 2000 posts thus far. Go and read some of these posts and you will see my position has not changed. 

Yes yes yes it is not free and easy and no FLIPPING allowed in a depressed market or you will get burnt.

Why are the doomsayers wanting so many stats and figures??? The way that I do it is if I see an opportunity I strike. Also perform due dilligence. You do know what this is right? I presold 6 of the 10 units in the last development I did and three sold in less than 2 weeks on completion leaving me with one Unit which I have rented out. The profit I made meant that I now own this unit outright. The total development end game was 3.6 million. Valuation of said Unit a mere 360k. You do the math. Now before everyone starts blabbing on about holding costs and interest component and contingincies ...... this has already been factored in. You will figure it out eventually

SCM gets what he deserves ....... nothing more and nothing less. SCM professed to be an engineer. I could be a propulsion theorist (one above a rocket scientist) for all he knows !! I have been doing this for 23 years and he has just graduated and crapped on he was smarter than 99% of all engineers whoever has graduated. He attacked first and I responded accordingly.

I have a plane to catch to Portugal.

Remember ..... it's only a forum


----------



## Dowdy (6 April 2012)

trainspotter said:


> Here we go again. ...... ZzzzzzzzzzzzzzZZZZ. ... Dont feed the trolls tech/a






DB008 said:


> (Loving this ignore feature!)




Oh yeah, that's just typical. The only property bull with credibility, tech, comes back and suddenly all the bulls start coming out of the woodwork, running to defend their master.

I speak about the Melbourne market....You can be blinded to the facts and choose to ignore them but they're still going to be there when you open your eyes. 
Victoria is on the brink of recession, the government is broke, shops are closing, people are saving, oversupply in housing plus the RE market dropped 5% last year while building approvals are at an all time low....
Press ignore, turn off the news, stop reading the paper, disconnect your internet, don't look outside your window and maybe things might be better.





Julia said:


> Dowdy, if you've been following the last several pages, it's pretty obvious to whom Tech's post was directed.




Yeah I know. But he said <30 armchair economist who can't afford a deposit on a car (somewhere along those lines). 
I had to take a swipe at that since i'm an exception





DB008 said:


> *RP Data rejects 'housing bubble' claims*




Keyword: RP Data


----------



## Uncle Festivus (6 April 2012)

Dowdy said:


> Victoria is on the brink of recession, the government is broke, shops are closing, people are saving, oversupply in housing plus the RE market dropped 5% last year while building approvals are at an all time low....




That surely can't be - isn't the Liberal Party in office?

Reserve Bank figures show average growth per head of population in  Victoria has been running at only 1.5 per cent - about half the rate of  inflation - over the past 10 years.

It the weakest growth rate barring only New South Wales, the state's half-year budget update shows.
Economists  and business leaders told BusinessDaily that the state's budget update,  released yesterday, signalled that Victoria's performance was likely to  deteriorate further.

The update shows Victoria's total financial  liabilities ballooned by $10 billion in the six months to December to a  record $51.4 billion.

Debt levels are tipped to grow despite the  government's pledge to deliver consistent surpluses, rein in debt and  fund much-needed infrastructure projects without more borrowing.

The Baillieu Government is forecasting debt levels will peak at $56 billion in 2015.


----------



## kincella (6 April 2012)

just to  reiterate a few points I have made over the years....
each year your dollar buys less, it is now worth only 5% of its value, it has lost 95%..in the last 80 odd years...
cash is not king...you need to be able to invest in assets that keep their value, and keep pace with inflation..
if you look at houses in the opposite context, ie instead of being overpriced, they have retained their value against the dollar, then a house is a good investment...
or you could view  it slightly differently, when you sit back waiting and watching house prices with their overall, average 10% rise in value each year.....you should not wonder why...

you should think to yourself, there is the proof my dollar has lost 10%, in the past year, or 2, or 3 years...and for some people here, they have been waiting 10 years or more...
the figures the govnuts use to calculate the CPI, is one of the biggest fudges ever...they tell you the CPI is in the range of 3%, in fact the figures are closer to 10%, but so many welfare payments, super, wage rises are attached to, and rely on the CPI for their annual  increases each year....the govnuts do not want to pay the higher real costs of the CPI....so they fudge, adjust, screw the figures to always only reflect the 3% figure.....
the other argument, why is Australia different, well we dont have 300  little cities like the US, we only have 3 decent sized cities, along the east coast which are the heaviest populated, then we have the emerging growth in the mining states...

 .... and we dont have the violence,  guns, and ethnic problems plaguing the US and UK, nor do we have the huge spending on war and terrorism...

we do have state and local govnuts dependent on stamp duty, and costs in developing new land releases, the money is taken up front in lump sums, to pay for the schools, roads and other minimum requirements....I have seen figures of $50,000 to $75,000 per block of land, going straight to local councils...those costs alone would double the price of some blocks of land, compared to the good old days...

have a look here, all the countries are included, see the rhs graph of growth in the past 10 years...start with canada, it is very similar with mining to Aus.
http://www.globalpropertyguide.com/real-estate-house-prices/C

ps I have read the same stories since I started reading blogs in the late 90's, especially so after the tech wreck, some bragged they sold their houses, and would wait for the crash, some are still out there waiting, now they are priced out of their market, their suburb...
I realise this post will fall on the deaf ears, I just like to remind some, every now and again, how wishing and reality are poles apart...


----------



## tech/a (6 April 2012)

Actually I dont see myself as a property Bull.

Yet many here see my posts as such.
The point I am attempting to make---obviously poorly---is that *opportunity* is there even in a depressed property environment.

*AND*.

Not all property holders are starting now.

*AND*

You can also travel a similar road to some of us here you only need to find *YOUR* opportunity and go for it.

I've made some suggestions which fall on many deaf ears.

But we must all travel our own road.
I certainly did and in the 80s lost pretty well everything.
I remember paying my 2 employees at the time off of job deposits and losing 1.2 million of property along with my own home---and marriage----with $5k in the bank and not all that happy with my lot!

So I really *DO* understand your trepidation and in some cases fear.


----------



## trainspotter (6 April 2012)

Dowdy said:


> Oh yeah, that's just typical. The only property bull with credibility, tech, comes back and suddenly all the bulls start coming out of the woodwork, running to defend their master.




I did not know he had been away? Had you noticed I had been away as well? Maybe I am a sock puppet from tech/a's twisted and warped mind? So I have no credibility? Nice one Dowdy 



Dowdy said:


> I speak about the Melbourne market....You can be blinded to the facts and choose to ignore them but they're still going to be there when you open your eyes. Victoria is on the brink of recession, the government is broke, shops are closing, people are saving, oversupply in housing plus the RE market dropped 5% last year while building approvals are at an all time low....
> Press ignore, turn off the news, stop reading the paper, disconnect your internet, don't look outside your window and maybe things might be better.




Whoop whoop for Melbourne. Get out of Dodge then if you don't like it. There is more to Australia then ego eccentric Melbournians. 



Dowdy said:


> Yeah I know. But he said <30 armchair economist who can't afford a deposit on a car (somewhere along those lines).
> I had to take a swipe at that since i'm an exception




Do you understand what tech/a was actually driving at? He was talking about their age and their lack of experience or firepower to back up their outlandish statements. 



Dowdy said:


> Keyword: RP Data




So who do we listen to ??? Steven Keen???? Bwaahahahhaahahhahhaaaa

Ummmmmmmmm BTW ....... prices have dropped over 20% in CERTAIN areas so therefore all the doomsayers and bell ringers are CORRECT ... well done guys and gals. YAY for the negative team.


----------



## MrBurns (6 April 2012)

Uncle Festivus said:


> That surely can't be - isn't the Liberal Party in office?
> 
> Reserve Bank figures show average growth per head of population in  Victoria has been running at only 1.5 per cent - about half the rate of  inflation - over the past 10 years.
> 
> ...




The Baileau Govt is trying to balance the books after Labor clubfooted it's way through the states finances for a few years.

We have a desalination plant we don't need , we cant get out of the contract and it's costing so much we cant afford to give pay rise to police or nurses.



> UPDATE 4.30pm: MELBURNIANS will face rocketing water bills over the next 30 years to pay for the state's desalination plant.
> Victoria's desalination plant could cost a maximum $23.9 billion. Source: Herald Sun
> Premier Ted Baillieu admitted today the contract signed by the former Labor Government couldn't be broken and the "white elephant'' desalination plant could cost a maximum $23.9 billion




Yes lovely bunch of dim wits we had at State level, Gillard will out do them of course and the Libs will have the task of cleaning up there too.


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## Uncle Festivus (6 April 2012)

kincella said:


> or you could view  it slightly differently, when you sit back waiting and watching house prices with their overall, *average 10% rise in value each year.*....you should not wonder why...
> 
> you should think to yourself, there is the proof my dollar has lost 10%, in the past year, or 2, or 3 years...and for some people here, they have been waiting 10 years or more...
> the figures the govnuts use to calculate the CPI, is one of the biggest fudges ever...they tell you the CPI is in the range of 3%, *in fact the figures are closer to 10%*




Hmmmm......


----------



## kincella (6 April 2012)

I dont see myself as a bull either, but there appears to be only 2 classes, on these blogs, you are either a bull or bear....
and Dowdy, we dont need to support tech, or any other posters who suggest a crash in prices is not on the cards....or has an alternative view, to the majority on this forum..

the forum has been really, really boring, with no posts on some days in the past couple of years....I keep expecting it to die....just as many other, house price crash forums have died in the past...

as for the liberal govt, until they find out all the hidden costs, and committments the labor govt had rung up...and sort that out, only then can you expect that liberal recovery... I suggest it has given confidence to the community in general, hence the stablizing affect.....as for businesses closing down etc....blame swan and glen stevens, for pretending OZ was exempt from the GFC, and for raising rates, instead of lowering them...then add the increased taxes from the feds, and no assistance from banks or fed labor to help small business...
small business are the biggest employers in this country....the unemployment numbers are fudged to make it look good....
only the mining states, with income from royalties are holding up , sustaining what is left...
we have no manufacturing left, and a mob of very incompetent people pulling our strings...


----------



## kincella (6 April 2012)

funny about choosing Melb and the Vic liberals...I feel sorry for the Qlders, 86 billion in debt, that they are aware of, who knows what else is hidden....massive floods last year, and people still waiting for assistance, all that donated money ,,,where did it go...houses built on proven flood plains, then they released Wivenhoe dam on top of it, in the middle of the flooding...how many business went broke there....
or NSW, another basket case, but the boats keep coming, the immigrants keep coming, and they all need housing...
thank goodness, on average 60,000 move out of the little dog boxes of inner Melb, out to the suburbs each year...
on abc 24 this morning, they showed about 6  places in WA, where the mining royalties have been fed back in to grow those mining communities...about 1 billion last year...guess what they built...not houses, or roads, but big community centres, or childcare, or white elephants...
in Pilbara an ugly old 2 bdr fibro cottage rents for over $1700 pw....no new houses built, with all that easy money...
sounds like special interest groups got hold of the money, rather than the community...

and all the bears predicted Sydney's south west housing would be the first to crumble, fall 40% plus, they may need to have a look at the facts, now and again, in hindsight...

the banks have been reluctant to finance property, and developers, so dont look surprised when there are almost no new houses, or units being built in the middle of the congested cities


----------



## Intrinsic Value (6 April 2012)

Uncle Festivus said:


> I'm sure we could all be lectured to by the '1 percenters' ad infinitum, but, reality prevails for the rest of us -
> 
> *SEVENTY per cent of under 35s in Sydney will be excluded from the housing market, a UK housing expert says.                                  *                               The figure makes up part of a new report, Homes for All, which  found that Australia's housing market is in crisis, with only half of  the supply needed to meet demand.
> 
> ...




One of the more sensible posts in this thread.

I think thou it is highlly unlikely that we will find any politicians prepared to risk taking on this one.

i would add further that the whole system is fundamentally flawed and has been extremely detrimental to the Australian economy as a whole.

Generations of Australians have build their nest eggs on property speculation but ulitimately  someone has to pay if the merry go round is to continue to go around.


----------



## Dowdy (6 April 2012)

trainspotter said:


> I did not know he had been away? Had you noticed I had been away as well? Maybe I am a sock puppet from tech/a's twisted and warped mind? So I have no credibility? Nice one Dowdy




Alright you got me. I didn't mean that at you or at the forum veterans but I do take offense at being called a troll





> Whoop whoop for Melbourne. Get out of Dodge then if you don't like it. There is more to Australia then ego eccentric Melbournians.




But I love Melbourne!
I just go with my experience and what I hear on the news - Sydney West - all I hear is about the shootings. QLD is in shambles. The other state don't interest me....




> Do you understand what tech/a was actually driving at? He was talking about their age and their lack of experience or firepower to back up their outlandish statements.




Yeah but I'm 27 so he was (unintentionally) referring to me too



> So who do we listen to ??? Steven Keen???? Bwaahahahhaahahhahhaaaa
> 
> Ummmmmmmmm BTW ....... prices have dropped over 20% in CERTAIN areas so therefore all the doomsayers and bell ringers are CORRECT ... well done guys and gals. YAY for the negative team.




I like prosper http://www.prosper.org.au/
But then some would claim they are biased to the bears

If you want unbiased then you have to go international commentators - which Marc Faber who I consider the best who believes that AU property is overpriced (his latest prediction - markets are overbought and should be a sell off which will rally later in the year)


----------



## kincella (6 April 2012)

for those going on about negative gearing...you may need a history lesson, firstly going back 40 years ago, then another lesson just recently..since 2007
prior to early 1970's, the federal and state govnuts allocated  a large amount of money for public housing....you might recognise them, little boxes on top of each other called units, and then whole suburbs of them...
so people on the public teat, or low income earners could rent those affordable places..they charged you 25% of your income...with limits on your income, to be eligible

then various housing people complained, had been for years, about placing so many disadvantaged people together, the public houses were becoming slums...and the cost of upkeep was enormous....some people like to trash their houses for no other reason, than boredom
so the govnuts stopped spending money on public housing, they turned it over to the private market...who had always suggested they could provide better housing for the taxpayers dollar..
to entice the private market into housing, building or renting cheaper houses for the poor, they had to give them something...so they gave them neg gearing and other tax benefits...
in the meantime, more and more immigrants came, and they received first preference to the dwindling public housing available...
now, in the past couple of years, the current govnut thought they would get into building again, building school halls...
then just like the old days, a school  hall that should cost $200,000 to build, suddenly costs the taxpayer a million bucks....so go figure it out...
kevin rudd brought in a deal, where only corporates, not individuals could build or buy a house, rent it at 20% discount to the market, and one could claim back $6000 per annum for 10 years...people like myself, as an individual may have been tempted to go for the deal, but it was not available to us...I think they changed it later, but then the whole thing died...
the waiting list in nsw is over 10 years to get into those old units, because most are filled with the most recent immigrants, plus the  original immigrants, who stayed on...

property investors need an incentive, with tax breaks, just like any other investor...
it is cheaper for the taxpayer, then the old method from the pre  70's era


----------



## rryall (6 April 2012)

I have thoroughly enjoyed reading this thread over the last 6 months or so and think it is about time that I actually contributed something. I'm personally bearish on the outlook of Australian property prices (and the economy as a whole). However, that being said I agree with many of the points made by Tech/A (and others) that there will *always* be opportunities in any asset class regardless of the direction of the market. They are just few and far between at the moment Australian property I believe.

I'm only recently out of University (18 months) after studying for almost 8 years and I'm 28 years old. Therefore, I have only being able to save properly in the last 18 months. I have about $45,000 in cash and $15,000 in shares (plus a $20,000 HECS debt). In the last 18 months I have lived in various countries/states which has made me realize how expensive it is to live in Australia in terms of housing and the more general cost of living. I have no intention to purchase a property any time soon because I think there is much greater chance of property decreasing in value (or staying stagnate for a number years) than increasing significantly and becoming unaffordable. The proverbial buy now or else you will miss the boat comes to mind. If that occurs I will be happy with the decision that I have made.

I am very fortunate in that I am able to live overseas (not currently) and earn my income in Australian dollars. With the Australian dollar being where it is currently and the fact that I love the travelling/living in other countries it is a very good fit. I also believe there are many others like me who can earn income in $AUD and live overseas so I see this as becoming an increasing trend amongst professionals.      

Just thought this might be of interest to some to hear real stories about real people.

Cheers,


----------



## Uncle Festivus (6 April 2012)

kincella said:


> the waiting list in nsw is over 10 years to get into those old units, because most are filled with the most recent immigrants, plus the  original immigrants, who stayed on...
> 
> property investors need an incentive, with tax breaks, just like any other investor...
> it is cheaper for the taxpayer, then the old method from the pre  70's era




kincella - find the Enter key & shift for capital letters - makes it easier to read 

Immigrants - the solution would be to only allow immigrants to buy or rent a new dwelling - think about it. Immigration should be matched to infrastructure - if there are no new dwellings to buy or rent then stand in the Q till there is....and ban foreigners (that are not going to live there) from buying property outright! Once the dwelling has been sold or rented for the first time it's status would then be 'used'.

To ensure the above, the negative gearing perk(s) should only apply to new dwelling constructions. 

The irony is that if property was affordable ie at least half of what it is now, we would all be able to afford more 'things' and the economy would be much more resilient, and we wouldn't need such a large retirement 'nest egg' of a property portfolio to live off till you kark it?


----------



## FxTrader (6 April 2012)

Uncle Festivus said:


> ...Immigrants - the solution would be to only allow immigrants to buy or rent a new dwelling - think about it. Immigration should be matched to infrastructure - if there are no new dwellings to buy or rent then stand in the Q till there is....and ban foreigners (that are not going to live there) from buying property outright! Once the dwelling has been sold or rented for the first time it's status would then be 'used'.
> 
> To ensure the above, the negative gearing perk(s) should only apply to new dwelling constructions.




  Building new housing should be the primary focus of tax incentives (perks).  Building houses actually generates economic activity. There should be little or no tax subsidy to buy and rent established houses given to property investors who artificially inflate prices and squeeze out owner occupiers to receive their small ROI thanks primarily to tax subsidy.



> The irony is that if property was affordable ie at least half of what it is now, we would all be able to afford more 'things' and the economy would be much more resilient, and we wouldn't need such a large retirement 'nest egg' of a property portfolio to live off till you kark it?




How true.  This argument seems so sensible to anyone looking at this matter rationally instead of through the prism of receiving tax breaks for unproductive housing investment activity that costs the tax base billions of dollars each year.


----------



## ROE (6 April 2012)

kincella said:


> property investors need an incentive, with tax breaks, just like any other investor...
> it is cheaper for the taxpayer, then the old method from the pre  70's era




land tax is a fairer system..hong kong has this model works beautifully
they lower almost all tax and abolish most tax ...

you can own as many properties as you like as long as you can afford land tax payment
so not many ppl do so they all start buiness and employ people as it is more effective use of the capital and hence hong kong is star in Asia, booming economy and business.

company and people income dont pay much tax...max tax rate there is 17%
but you have to earn big 6 figures to attract this 17%


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## CanOz (6 April 2012)

ROE said:


> hong kong is star in Asia, booming economy and business.




Hong Kong was recently voted as being the 'Best Business City in the World'...again. Its a wonderful city, and although I've been there for a couple of years, Singapore is not far behind.

Its extremely expensive to rent or buy in HK.. if you have not already owned property or are on an expat package then it would be tough.

But to eat there is really cheap for the quality of food you get. I was there on a visa run with my wife on Monday and Tuesday and we would eat in these little HK cafes and get a bowl won ton soup for like, 20 HK $. I was eating a full breakfast for 45 HK$....because if their SARS experience they are almost as crazy about hygiene as the Singaporeans.

I was the only foreigner in the place for the whole two days and they were so friendly to me.

Cheers,


CanOz


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## Macquack (7 April 2012)

trainspotter said:


> Voyager Homes just so happens to be the builder in question !! Thanks for the gratuitous plug of *my building company*.






trainspotter said:


> To give you some direction .... the building company is to be called *HOME BUILDING CORPORATION Pty Ltd T/as "Voyager Homes*"




Trainspotter, care to enlighten us on your involvement in the collapse of home builder HBC trading as "Voyager Homes"?

*Voyager hits wall*
http://au.news.yahoo.com/thewest/regional/gascoyne/a/-/news/9965336/voyager-hits-wall/


----------



## moXJO (7 April 2012)

What was the date of those posts?


----------



## tech/a (7 April 2012)

Macquack said:


> Trainspotter, care to enlighten us on your involvement in the collapse of home builder HBC trading as "Voyager Homes"?
> 
> *Voyager hits wall*
> http://au.news.yahoo.com/thewest/regional/gascoyne/a/-/news/9965336/voyager-hits-wall/




The guys in Portugal so if I was him wouldn't  be rushing to ASF.

Secondly he said they were his builder.
What makes you think that the use of a builder 
Is a prerequisite to having anything to do with the running
Of that building company

The builder that built my home 2 yrs ago is no longer trading.

Witch hunt I detect!


----------



## Macquack (7 April 2012)

tech/a said:


> The guys in Portugal so if I was him wouldn't  be rushing to ASF.



He posted yesterday?



tech/a said:


> Secondly he said they were his builder.
> What makes you think that the use of a builder
> Is a prerequisite to having anything to do with the running
> Of that building company




tech/a, have a look at trainspotters thread titled "*Advertising techniques*" and see what you think. The whole thread is about marketing of Voyager Homes.



tech/a said:


> Witch hunt I detect!




Hardly a witch hunt, just a fair and reasonable question.


----------



## McLovin (7 April 2012)

Macquack said:


> tech/a, have a look at trainspotters thread titled "*Advertising techniques*" and see what you think. The whole thread is about marketing of Voyager Homes.
> 
> 
> 
> Hardly a witch hunt, just a fair and reasonable question.




Here's the thread in question...

https://www.aussiestockforums.com/forums/showthread.php?t=17247&page=5

Seems a very reasonable question.


----------



## tech/a (7 April 2012)

Macquack said:


> He posted yesterday?
> 
> 
> 
> ...





Well he either over exaggerated his position with regard to Voyager.
Or he's one of those mentioned with a liquidation headache.

600k with 3 houses under construction doesn't sound totally devastating.
But hey it happens.
I'm down 50% in profits this year and it's damned tough.


----------



## Starcraftmazter (7 April 2012)

DB008 said:


> *RP Data rejects 'housing bubble' claims*
> 
> 
> 
> http://www.theadviser.com.au/breaking-news/6112-rp-data-rejects-housing-bubble-claims




So the only two pieces of "evidence" are that;

1. Most mortgage holders are upfront on their payments - which holds no relation whatsoever to whether there is a property bubble or not.

2. There is a population boom - which is entirely false, as the "population boom" - which was very small to begin with, ended when the GFC began. Regardless - that too is irrelevant to whether there is a property bubble or not.


----------



## Knobby22 (7 April 2012)

Starcraftmazter said:


> 2. There is a population boom - which is entirely false, as the "population boom" - which was very small to begin with, ended when the GFC began. Regardless - that too is irrelevant to whether there is a property bubble or not.




We have the highest immigration rate in our recent history. That is what is causing the population boom.
Come to Melbourne, Chinatown has expanded well beyond the one street in the CBD that used to exist and every shop is run by new Australians with accents.


----------



## Starcraftmazter (7 April 2012)

Knobby22 said:


> We have the highest immigration rate in our recent history. That is what is causing the population boom.
> Come to Melbourne, Chinatown has expanded well beyond the one street in the CBD that used to exist and every shop is run by new Australians with accents.




I live in Sydney and believe me it's much the same. Melbourne has the most spare capacity of any city in the country, and so it doesn't matter how many people are settling there.

However to refute the point - our population growth is in fact well below our recent highest growth rate.





Given that a lot of people have moved here from Europe in recent years seeking employment - and we are now facing a situation where jobs are actually disappearing - that trend too is in the process of reversing. So all in all, we will see even less population growth going into the future now.

Couple that with the fact that a slowdown in China is forcing our biggest miners to rethink future investments, that will be an end of foreign mine worker immigration - a double wammy for population growth.


----------



## MrBurns (8 April 2012)

http://finance.ninemsn.com.au/newsbusiness/8448289/negative-gearing-debate-needed-robertson



> NSW Opposition Leader John Robertson has called for a debate on whether negative gearing is harming housing affordability.


----------



## Miss Hale (8 April 2012)

MrBurns said:


> http://finance.ninemsn.com.au/newsbusiness/8448289/negative-gearing-debate-needed-robertson




Interesting, this topic was broached on Meet the Press this morning too.  The guest was Dr Cassandra Goldie head of the Australian Council of Social Service. The question posed to her by Hugh rimmington was, "negative gearing, its time has come, it has to go?"

Dr Goldie's response was "We had a report out just yesterday saying, negative gearing is at the heart of problem with inflating housing prices and it's not playing out leading to increased supply of housing. We’ve got a crisis here so let's have a bit of courage to deal with it."


Transcript here http://ten.com.au/media/MEET_THE_PRESS_Transcript_BRANDIS_GOLDIE.pdf (right at the bottom).


----------



## So_Cynical (8 April 2012)

Macquack said:


> Trainspotter, care to enlighten us on your involvement in the collapse of home builder HBC trading as "Voyager Homes"?
> 
> *Voyager hits wall*
> http://au.news.yahoo.com/thewest/regional/gascoyne/a/-/news/9965336/voyager-hits-wall/




Is it wrong that this news gives me a twinge of pleasure. :dunno: well if TS is worth even a quarter of what he talks then the loss of a couple of 100K is hardly gona hurt him.


----------



## young-gun (9 April 2012)

tech/a said:


> Do some business as opposed to work.
> I feel my assumption stands.
> 
> 
> ...




you're assumption remains incorrect.

and no its not a strange comment at all. you see, like i said, i am prepared for every outcome. if i should think there actually is an opportunity and housing should actually look like its on the up and up then i am ready for it, but if i think that RE isnt a great investment at this point in time, i can wait it out for 6 months. 

i know i know, there is an opportunity around every corner!! im more than happy to let you have those for now.....


----------



## young-gun (9 April 2012)

tech/a said:


> Well he either over exaggerated his position with regard to Voyager.
> Or he's one of those mentioned with a liquidation headache.
> 
> 600k with 3 houses under construction doesn't sound totally devastating.
> ...




tell me tech, have there been any other points in all of your experience that profits have been down 50%? not from your mistakes(presuming you made some) but from a slowing market?



So_Cynical said:


> Is it wrong that this news gives me a twinge of pleasure. :dunno: well if TS is worth even a quarter of what he talks then the loss of a couple of 100K is hardly gona hurt him.




hell wait it out until everyone has forgotten about it, or will come up with a brilliant cover story.


----------



## young-gun (9 April 2012)

trainspotter said:


> I did not know he had been away? Had you noticed I had been away as well? Maybe I am a sock puppet from tech/a's twisted and warped mind? So I have no credibility?




ohhh come on dowdy, credit where credits due! dont you know how successful TS is?

the problem with you and all your experience TS is that you have none for the upcoming market. should we be back in 2002 i would be more than happy to sit and listen to all your wisdom, but what you have experienced and learnt, will no longer be applicable should this crash actually play out.

what you have experience in is a perma-bull market, where every step you took made you money, and every step you took while leveraged made you alot more money. now im not saying that was easy, and you still had to be switched on and make smart moves to capitalise on purchases, but if you can please lay out either your exit strategy or how you plan to make money in a full blown crash i would very much like to hear it.

keep in mind selling all your RE before its too late might not be so easy, as there would be plenty on the market for me to choose from.


----------



## tech/a (9 April 2012)

young-gun said:


> tell me tech, have there been any other points in all of your experience that profits have been down 50%? not from your mistakes(presuming you made some) but from a slowing market?
> 
> 
> 
> hell wait it out until everyone has forgotten about it, or will come up with a brilliant cover story.




Yeh in 87 it was more.
I really think that was worse.
Interest was 18% and my penalty interest was another 6%.

It was just a hopeless situation,
Business was just terrible I had no hope of paying interest.
No hope of selling at Any price.

Banks just sold at stupid figures.
Talk about riches to rags! 

Imagine 18% interest today!
Now in this market.
Carnage.


----------



## wayneL (9 April 2012)

tech/a said:


> Imagine 18% interest today!
> Now in this market.
> Carnage.




What does that say about current values?

Can only be supported by low interest rates?


----------



## Dowdy (9 April 2012)

young-gun said:


> ohhh come on dowdy, credit where credits due! dont you know how successful TS is?




Don't worry. Tech is one of the few members I respect and admire - not in a creepy, poster on the wall, way though....





tech/a said:


> Imagine 18% interest today!
> Now in this market.
> Carnage.




If there was no manipulation with the money supply and bond market then Greece, Ireland, Spain, Portugal and maybe even USA would be seeing those rates too.


Question: What's everyone's thought on the Industrial market? I believe the RE and Commercial market are heading downwards but not too sure on Industrial property


----------



## Glen48 (9 April 2012)

Its all supply and demand, why rent a Industrial prop. if you don't have sales?
In a depression Water, Food, shelter, surviving rises to the top and will out price any property. 

 Pm's & cash will have more power than any asset you can't sell.
 Wait until Xmas and see where it is all going, once China et al refuse to fund USA which could happen any day things will change over night.

Gold and Silver are suppose to drop to Gold about $1,500 soon back the truck up and buy.


----------



## Miss Hale (9 April 2012)

Swan says no changes planned to negative gearing arragements  

http://www.theaustralian.com.au/nat...negative-gearing/story-fn59nsif-1226321644363

I wonder if the Libs would have the cohones to do something about it.


----------



## MrBurns (9 April 2012)

Miss Hale said:


> Swan says no changes planned to negative gearing arragements
> 
> http://www.theaustralian.com.au/nat...negative-gearing/story-fn59nsif-1226321644363
> 
> I wonder if the Libs would have the cohones to do something about it.




No one wants to touch that one, political reasons take precedence over what is right.


----------



## young-gun (9 April 2012)

Dowdy said:


> Question: What's everyone's thought on the Industrial market? I believe the RE and Commercial market are heading downwards but not too sure on Industrial property




i don't know a great deal about it. i recently looked at prices of renting a 150-200sqm shed with a tiny office attached and almost fell off my chair when i saw prices of renting and purchasing. perhaps this was due to my lack of knowledge in the area and it was very much standard.

i would assume that with businesses struggling and culling employees that would be a sign of downsizing. meaning less space required whether it be for staff, or stock, or office space, whatever it may be. which brings you back to supply and demand, so i would say they would be falling also.


----------



## young-gun (9 April 2012)

MrBurns said:


> No one wants to touch that one, political reasons take precedence over what is right.





theyre well aware of the potential of a crash, hence throwing so much money at FHO. they wouldnt dare do anything that might see investors start selling up.


----------



## McLovin (9 April 2012)

wayneL said:


> What does that say about current values?
> 
> Can only be supported by low interest rates?




I believe that was what Minsky was getting at. The whole stability leads to instability. No recession for a generation and interest rates that have been trending down for 20+ years would certainly lend itself to risk-taking behaviour.


----------



## tech/a (9 April 2012)

young-gun said:


> i don't know a great deal about it. i recently looked at prices of renting a 150-200sqm shed with a tiny office attached and almost fell off my chair when i saw prices of renting and purchasing. perhaps this was due to my lack of knowledge in the area and it was very much standard.
> 
> i would assume that with businesses struggling and culling employees that would be a sign of downsizing. meaning less space required whether it be for staff, or stock, or office space, whatever it may be. which brings you back to supply and demand, so i would say they would be falling also.




I havea couple for 1 acre lots with sheds.
1 houses my own business that I rent off of my Superfund.
The other has 3/350 square Meter sheds on it eith parking.
Also in my super and currently 2 rented 1 vacant.

I like industrial as they don't release a lot of land for industrial.
I can get the same rent on a 350 squ meter shed as I can on a house.
3 sheds and land cost about the same as house.
Tenants pay all out goings. Land and buildings currently flat.
Rents are ok to get particularly smaller sheds.

Great generators of passive income.


----------



## Vixs (10 April 2012)

tech/a said:


> I havea couple for 1 acre lots with sheds.
> *1 houses my own business that I rent off of my Superfund.*The other has 3/350 square Meter sheds on it eith parking.
> Also in my super and currently 2 rented 1 vacant.
> 
> ...




Tech/a do you have any compliance issues with renting from your own super fund? Is it simply a matter of paying rent at market rate?


----------



## Klogg (10 April 2012)

Vixs said:


> Tech/a do you have any compliance issues with renting from your own super fund? Is it simply a matter of paying rent at market rate?




I can't answer for tech/a and how he's structured his own financial matters, but my accountant has advised me that in I can't rent a property that my SMSF holds, as I shouldn't see a benefit from my superannuation until I start drawing from it.

I'm sure there are ways around it, but I can't really give any solid financial advice.


----------



## DocK (10 April 2012)

Klogg said:


> I can't answer for tech/a and how he's structured his own financial matters, but my accountant has advised me that in I can't rent a property that my SMSF holds, as I shouldn't see a benefit from my superannuation until I start drawing from it.
> 
> I'm sure there are ways around it, but I can't really give any solid financial advice.




Also don't wish to answer for Tech/A - but my business also rents a factory from our smsf.  This is quite common, and in our case was the primary reason for rolling our supers into a smsf.  You can't rent residential property from your smsf, but the rules are different for a business renting commercial property.  Must be market rent with a formal lease agreement in place, just as if renting from an unrelated landlord.


----------



## tech/a (10 April 2012)

DocK said:


> Also don't wish to answer for Tech/A - but my business also rents a factory from our smsf.  This is quite common, and in our case was the primary reason for rolling our supers into a smsf.  You can't rent residential property from your smsf, but the rules are different for a business renting commercial property.  Must be market rent with a formal lease agreement in place, just as if renting from an unrelated landlord.




Same for myself.
The key here is its a commercial property.


----------



## Vixs (10 April 2012)

tech/a said:


> Same for myself.
> The key here is its a commercial property.




Thanks, the seperation rules were pretty clear to me but if the property capital growth is strong enough I guess it would justfity paying market rent - I mean, if you have to have a business premises anyway, seems like a reasonable way to do it.


----------



## Dowdy (10 April 2012)

DocK said:


> Also don't wish to answer for Tech/A - but my business also rents a factory from our smsf.  This is quite common, and in our case was the primary reason for rolling our supers into a smsf.  You can't rent residential property from your smsf, but the rules are different for a business renting commercial property.  Must be market rent with a formal lease agreement in place, just as if renting from an unrelated landlord.






That sound interesting.

Is the reason for doing that to claim more expenses on the tax return and pay less tax at the end of the financial year?


----------



## Starcraftmazter (10 April 2012)

MrBurns said:


> http://finance.ninemsn.com.au/newsbusiness/8448289/negative-gearing-debate-needed-robertson




Since when do state governments concern themselves with federal tax law?

There have been countless respectable organisations, economists, public advocacy groups, etc calling for the removal of negative gearing - and the toxic FHOG, but the federal government never will because they are a bunch of corrupt dirt-bags.

It is the demise of our once great economy.



Dowdy said:


> Question: What's everyone's thought on the Industrial market? I believe the RE and Commercial market are heading downwards but not too sure on Industrial property




Honestly - what sorts of industries do you see prospering in Australia? We have a FIRE economy, let's face it. There's no reason why industrial land will go up in price, especially given the decline of manufacturing.



Miss Hale said:


> I wonder if the Libs would have the cohones to do something about it.




Considering they are the corrupt scumbags who put it there in the first place - I highly doubt it.

The best way to get rid of negative gearing IMO is to make it a big issue for the Greens, who will then have the power to force ALP to get rid of it - providing they are again necessary for forming government.


----------



## Glen48 (10 April 2012)

That's the trouble with our system some dangles a carrot and we vote for them, then the carrot becomes two and then a bunch each party trying to buy votes and once some thing is in place it can't be rescinded  or the party risk's be booted out or not be elected. 
 Like USA  now if you are not a christian, pro guns and anti Abortion forget about running. 
IF they did get rid of NG then they would replace it with some thing else and here is Gillard and Co doing any thing to hold on to power, then I read were some one from HSU is suspended on full pay, boy is this that hurting him he is probably stacking shelves at Coles at night now as well.


----------



## DocK (11 April 2012)

Dowdy said:


> That sound interesting.
> 
> Is the reason for doing that to claim more expenses on the tax return and pay less tax at the end of the financial year?




My husband and I operate a business that requires factory space.  If we didn't rent from our smsf, we'd need to rent from an unrelated landlord or purchase a factory with our own funds.  We both had super in industry funds from prior employment that was not performing brilliantly so followed our accountant's advice to roll it into a smsf and use it to purchase a factory.  The end result is that our business still pays rent on a factory but it is into our own smsf which then invests the rent into shares, fixed int etc.  Our company claims the rent as an expense to reduce tax at 30% and our smsf has to pay tax on the income at 15% tax.  After doing this for about 10 years I don't believe we'd have achieved anywhere near the growth we've had in our smsf total value (even with the recent decline in factory valn's in our area) if we'd simply left our super where it was.  SGC contributions on our salaries (paid by our company) also go into our smsf for investment.


----------



## Klogg (11 April 2012)

Starcraftmazter said:


> The best way to get rid of negative gearing IMO is to make it a big issue for the Greens, who will then have the power to force ALP to get rid of it - providing they are again necessary for forming government.




It all makes sense now...


----------



## Starcraftmazter (12 April 2012)

One for the "housing shortage" conspiracy theorist nutters out there.





Enjoy


----------



## cynic (13 April 2012)

tech/a said:


> What and show you ----
> Why would he ----
> 
> I agree.
> ...



 Are you sure that you want to do that Tech/A? 

He is an engineer you know!? 

And not just any engineer - he's actually so good at maths that he's deduced/extrapolated himself to be better than 99% of all engineers (even the one's he's never actually met!). 

P.S. If there's one thing that I've found out about the markets, it's their dependability in the provision of expensive reeducation for those participants with overinflated opinions regarding their own capability.


----------



## trainspotter (13 April 2012)

Greetings from Portugal. Easy to see why the property prices have dropped over here. Spent a few days in the Algarve. The tourist capital of Portugal. Currently in Estoril which is showing signs of a pulse. Not going to go into details but it is pretty obvious that Australia is NOTHING like the P.I.G.S in the RE world DYOR 

Went down to Tarifa in the South of Spain. Even worse down there. Unfinished projects everywhere and rundown houses right next door to magnificent holiday Villas (empty this time of the year)

Anyhoooooo ...... Try travelling out of your own backyard to see the real world and get an idea of why we are different !!!!!!


----------



## wayneL (13 April 2012)

What's the story with Voyager TS?


----------



## lurker123 (13 April 2012)

cynic said:


> Are you sure that you want to do that Tech/A?
> 
> He is an engineer you know!?
> 
> ...




If you haven't noticed, our world rewards those with overinflated ego's + successful psychopaths. As for the share market, it doesn't care how big your ego is. It can destroy you whether you have a big ego or not, on the other end it can reward you whether you have a big ego or not.

In my opinion engineers contribute way more towards society than the paper pushing professions that the majority in this forum have jobs in. There is a reason that there is a lack of engineering graduates in first world countries, because its harder than those other degrees which eventually lead you to a higher paying, paper pushing job. Engineering is the reason Germany is different from the other first world economies. Instead of overvaluing paper pushers, which aided in the creation of fake prosperity through debt based real estate, they made sure they cultivated their engineers as well.


----------



## Starcraftmazter (13 April 2012)

lurker123 said:


> In my opinion engineers contribute way more towards society than the paper pushing professions that the majority in this forum have jobs in. There is a reason that there is a lack of engineering graduates in first world countries, because its harder than those other degrees which eventually lead you to a higher paying, paper pushing job. Engineering is the reason Germany is different from the other first world economies. Instead of overvaluing paper pushers, which aided in the creation of fake prosperity through debt based real estate, they made sure they cultivated their engineers as well.




+1, We the engineers have created everything in this world


----------



## Julia (13 April 2012)

lurker123 said:


> In my opinion engineers contribute way more towards society than the paper pushing professions that the majority in this forum have jobs in.



Can you explain how you know what fields "the majority in this forum" are employed in?
I've been around this forum for many years and could only nominate the jobs of half a dozen members out of the many thousands.


----------



## StumpyPhantom (13 April 2012)

Julia said:


> Can you explain how you know what fields "the majority in this forum" are employed in?
> I've been around this forum for many years and could only nominate the jobs of half a dozen members out of the many thousands.




I don't think he can explain it, Julia.  Lurker123 was just big-noting himself plus working on the justifiable assumption that the majority, any majority, are NOT engineers.

You go for it L123, and I hope you earn good money.  You probably don't, that's why you're on here big-noting yourself.  Get your rocks off any way you can, man!

You won't be getting any response from those pen-pushers who ARE making good money, so do your worst.

Then try and get some sleep!


----------



## Beej (14 April 2012)

Starcraftmazter said:


> +1, We the engineers have created everything in this world




What exactly have *you*, yourself, created or contributed to the creation of so far??? You haven't even actually graduated yet right?


----------



## Starcraftmazter (14 April 2012)

Beej said:


> What exactly have *you*, yourself, created or contributed to the creation of so far??? You haven't even actually graduated yet right?




Are you stuck in time buddy?


----------



## Uncle Festivus (14 April 2012)

More bear fodder...............




and more......

ANZ Bank has announced it will raise its interest rates this  month, making it the first of the big four banks to move after the Reserve Bank left the official cash rate steady at 4.25 per cent last week.

From April 20, the bank will increase its standard variable mortgage rate by 6 basis points to 7.42 per cent per annum, while its small business rates also will increase by 6 basis points.

The bank said it took the decision as its funding costs were rising due to increased competition for deposits.


----------



## medicowallet (14 April 2012)

I had a friend in real estate whose business recently went down the gurgler.  Went on a last ditch trip overseas, all the bells and whistles, before claiming bankruptcy.



Clearance rates low, could see a bit more of this

MW


----------



## lurker123 (14 April 2012)

StumpyPhantom said:


> I don't think he can explain it, Julia.  Lurker123 was just big-noting himself plus working on the justifiable assumption that the majority, any majority, are NOT engineers.
> 
> You go for it L123, and I hope you earn good money.  You probably don't, that's why you're on here big-noting yourself.  Get your rocks off any way you can, man!
> 
> ...




Thanks mate.

By the way Julia I regard share trading as paper pushing.


----------



## Aussiejeff (14 April 2012)

Uncle Festivus said:


> More bear fodder...............
> 
> View attachment 46726
> 
> ...




I'm presuming those figures don't include the erosion of capital asset value from inflation? The official YOY inflation for 2011 was 3.01%, so you can deduct that from PPOR & IP asset values as well.

Then there's soaring rates, electricity, water costs etc. Add that to the sum total and the REAL decrease in the asset values would look a tad more glum for many owners/investors. As usual, location, location, location is the key.

Sure, rents are also going gangbusters for non-property owners so the outlook for renters is also to the downside if continuous generous wage rises can't compensate. All in all, RE for owners and renters alike has a distinctly nervous look about it right now.

Good luck.


----------



## MrBurns (14 April 2012)

Rental market in Melbourne is shot.


----------



## young-gun (14 April 2012)

wayneL said:


> What's the story with Voyager TS?




just wanna keep this alive, awaiting his reply once he returns from portugal....


----------



## Glen48 (14 April 2012)

http://www.alsosprachanalyst.com/re...ars-figure-and-more-empty-shopping-malls.html
 More on China.


----------



## wayneL (14 April 2012)

young-gun said:


> just wanna keep this alive, awaiting his reply once he returns from portugal....




I'm sure TS has a good explanation IF he wants to tell us about it... and maybe he doesn't.

But I hope nobody has the bad manners to gloat if things have gone pear shaped (and I'll bet TS is quite fine).


----------



## young-gun (14 April 2012)

wayneL said:


> I'm sure TS has a good explanation IF he wants to tell us about it... and maybe he doesn't.
> 
> But I hope nobody has the bad manners to gloat if things have gone pear shaped (and I'll bet TS is quite fine).




judging from the level of gloating i would put his assets at well above the losses incurred by a pear shaped event such as voyager falling apart. so perhaps he was un-phased by the event. or behind all the speculation it may have had no affect on him at all? if he had no ties with them other than they were simply his builder then he wouldve had insurance and been fine even with them going under, a new builder would have come in and wrapped things up anyway.

im betting he has had a sneak peak at ASF while hes away though


----------



## DB008 (14 April 2012)

young-gun said:


> judging from the level of gloating i would put his assets at well above the losses incurred by a pear shaped event such as voyager falling apart. so perhaps he was un-phased by the event. or behind all the speculation it may have had no affect on him at all? if he had no ties with them other than they were simply his builder then he wouldve had insurance and been fine even with them going under, a new builder would have come in and wrapped things up anyway.
> 
> im betting he has had a sneak peak at ASF while hes away though




Sure...do all shares goes up? 
You can do all the research/analysis/due diligence in the world, and a stock/share/company your investing in can still flop...
I look at property in a 10-20 year cycle. Not every year is going to go up, you'll have some bad years, just like shares.


----------



## young-gun (14 April 2012)

DB008 said:


> Sure...do all shares goes up?
> You can do all the research/analysis/due diligence in the world, and a stock/share/company your investing in can still flop...
> I look at property in a 10-20 year cycle. Not every year is going to go up, you'll have some bad years, just like shares.




apples and oranges, but if what you're trying to say is that every form of investing has risks, then yes naturally i agree.


----------



## DB008 (14 April 2012)

young-gun said:


> apples and oranges, but if what you're trying to say is that every form of investing has risks, then yes naturally i agree.




What else do you think l was trying to say?


----------



## Starcraftmazter (14 April 2012)

Great article calling out property spruikers for constantly misleading the public with data.

http://theage.domain.com.au/real-es...amned-lies-and-statistics-20120412-1wvfk.html









> So how was it presented?
> 
> ‘‘While arrears rates on mortgages are still above average, they have eased a little recently, and remain low by international standards,’’ the RBA said.
> 
> ...


----------



## young-gun (14 April 2012)

DB008 said:


> What else do you think l was trying to say?




sorry i was reading it over and over and was just completely blank at the time, hence my pointless post


----------



## cynic (14 April 2012)

lurker123 said:


> If you haven't noticed, our world rewards those with overinflated ego's + successful psychopaths. As for the share market, it doesn't care how big your ego is. It can destroy you whether you have a big ego or not, on the other end it can reward you whether you have a big ego or not.




No. I can't say that I have. However, I have noticed plenty of egotists puffing themselves up and pretending to be successful. I've also noticed that some people aren't sufficiently astute to distinguish between gold and iron pyrites.



lurker123 said:


> In my opinion engineers contribute way more towards society than the paper pushing professions that the majority in this forum have jobs in. There is a reason that there is a lack of engineering graduates in first world countries, because its harder than those other degrees which eventually lead you to a higher paying, paper pushing job. Engineering is the reason Germany is different from the other first world economies. Instead of overvaluing paper pushers, which aided in the creation of fake prosperity through debt based real estate, they made sure they cultivated their engineers as well.




So I take it that you consider that my dwellings, currently owned outright, along with my modest savings - mostly derived from real estate investment, are fake? 

I'm glad that the various industries I regularly patronise hold a different opinion - otherwise I'd have serious problems on my hands.

P.S. I've worked with many engineers in a variety of industries. All were highly educated and some were even intelligent. Others demonstrated a poor understanding of mathematics and Newtonian physics. (Our educational institutions have a lot to answer for!)


----------



## Macquack (15 April 2012)

young-gun said:


> judging from the level of gloating i would put his assets at well above the losses incurred by a pear shaped event such as voyager falling apart. so perhaps he was *un-phased by the event*. or behind all the speculation it may have had *no affect on him at all*? if he had no ties with them other than they were simply his builder then he wouldve had insurance and been fine even with them going under, a new builder would have come in and wrapped things up anyway.



Young-gun, I think you are on the money.

What ever happened with Voyager Homes, I would say it would have cost Trainspotter sweet FA. It is the suppliers and subcontractors who do not get paid through no fault of their own.

Limited liability is just a convenient excuse for bad management (get out of jail free pass).

Anyway enough speculation when we can get the true story from the horses mouth. Any comments, Trainspotter???


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## Beej (15 April 2012)

I saw this in an article in todays Sun-Herald, and thought it was worth posting:




Wasn't someone on the thread recently trying to argue rents in Sydney have not been rising? How about 50% over the past 6 years? That's 7% pa average growth - yikes! 

Meanwhile Sydney house prices increased at a modest 3% pa - basically tracking inflation on average.

PS: Would be good to see the same data for / including units as well; I reckon rents for those have likely increased more, as have prices.


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## Starcraftmazter (15 April 2012)

Beej said:


> PS: Would be good to see the same data for / including units as well; I reckon rents for those have likely increased more, as have prices.




You cannot look at a few select high-wealth beach-side suburbs and say they represent Sydney.

I have posted just a few pages ago real rents for both units and houses in Sydney, and they have all been flat for years.


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## Beej (15 April 2012)

Starcraftmazter said:


> You cannot look at a few select high-wealth beach-side suburbs and say they represent Sydney.




Who is doing that??? The data is for median rents and median prices across all of Sydney - you might want to look at the chart again! 

PS: The individual suburb results shown are the "top 5 and bottom 5" median asking rent changes over the past 12 months.

PPS: "Real" rents don't mean squat - as you will learn when you move out of home, you have to pay your rent in nominal dollars! And given that the chart shows 7% pa increases in median rents over the past 6 years, that is about a 4% pa "real" increase over and above CPI over the same period anyway.


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## lurker123 (15 April 2012)

cynic said:


> No. I can't say that I have. However, I have noticed plenty of egotists puffing themselves up and pretending to be successful.




Confidence is rewarded, if you had to choose between hiring a person outwardly confident in their abilities and someone who was not, assuming all other aspects were equal, the majority of people would pick the confident person.
Over confidence or having a large ego, is just confidence taken to the extreme.

Successful Psychopaths are rewarded in our society. Psychopathy doesn't just mean you are crazy and want to kill people. The majority of people don't understand psychopathy. You can identify psychopathy from brain scans. Watch this video if anyone is interested in understanding what psychopathy actually is: http://topdocumentaryfilms.com/are-you-good-or-evil/
There is a higher percentage of psychopaths in the prison population than in the rest of society. Likewise there is a higher percentage of psychopaths at the top of society, corporate leaders e.t.c. Basically psychopaths are running our society.



cynic said:


> So I take it that you consider that my dwellings, currently owned outright, along with my modest savings - mostly derived from real estate investment, are fake?
> 
> I'm glad that the various industries I regularly patronise hold a different opinion - otherwise I'd have serious problems on my hands.




I never said the houses or the labor used to build the houses was fake. I said that the prosperity created by overvalued housing is fake. Simply put there is not enough jobs for the population due to advancements in technology. In order to keep the unemployment rate low, fake prosperity needs to be created. 

How is this fake prosperity created:

1) Planned obsolescence, products are designed to fail just after the warranty expires so that companies will continue to have a steady income stream.

2) Marketing and advertising designed to keep consumers buying new products.

3) The marketing and advertising of debt. Such as: 
- get this credit card 
- you need a degree no problems, we will give you a student loan (America)
- we will give you a mortgage on this house, we don't care that you can't repay it since we are going to offload your crappy mortgage to someone else, by the way we can give you this mortgage because the bush government wants everyone to own a house. (America)

4) Government debt, especially World Wars. Government debt or should I say stimulus reduces unemployment. It is pretty obvious how the World Wars reduced unemployment.

5) The coming into existence of various paper pushing jobs, bureaucracy and creative financial products such as derivatives. Some of which probably wouldn't be needed if people had common sense and legislation was made to be simple and straight forward. However the current system promotes over legislation, creating bigger and bigger government. Meanwhile giving lawyers, bankers, accountants e.t.c their jobs reducing unemployment. 

6) Unlimited growth

If you look at Ireland they built tons of new houses allowing the construction industry to employ tons of workers, hence reducing unemployment and creating fake prosperity. What is happening to the houses that were built with the real labor, they are getting demolished because no one is buying them and its cheaper to demolish them than to keep them.

The current monetary system relies on unlimited growth for stability, without unlimited growth it is unstable, therefore it is inherently unstable. 
http://www.youtube.com/watch?v=f6uuAupT4AQ
illustrates the problems with the current monetary system. Gold spruikers have taken bits and pieces from the money as debt series to promote their agenda of returning to the gold standard. However it is NOT the intention of the money as debt series to promote the return of the gold standard.

I hope you realize there are two parts to prosperity.
1) Low unemployment
2) Technology which improves our lives, our society is more prosperous than any that have come before due to technology. However in the current system it is a double edged sword.

The over valuing of real estate creates debt. Debt is money, without debt there would be no money in existence. There would be no money to facilitate trade. Without money people can't put food on their table. Without someone being in debt people can't put food on their table. This is all explained in the money as debt series. Therefore the over valuing of real estate creates debt/money which in turn helps create fake prosperity and reduces unemployment.




cynic said:


> P.S. I've worked with many engineers in a variety of industries. All were highly educated and some were even intelligent. Others demonstrated a poor understanding of mathematics and Newtonian physics. (Our educational institutions have a lot to answer for!)




Probably because the universities let people pass if they get over 50% rather than 70-80%. Using a drivers license as a example, they wouldn't let you pass the DKT if you only got 50%. Another problem is that they teach you something once and then move on to the next topic. Proper learning happens through repetition. E.g. when you learn how to drive a car you are taught and then pass your P's. Through repetition, continually driving on the road you eventually get your full license. So the university degree is basically like passing your P's. The final stage happens in the workplace through repetition (years of experience).


I recently stumbled upon this video which if true, it may be made up propaganda. Highlights the flaws in the current system in bureaucracy and the undue power that those with money (in this case big pharma) have over society.
http://www.youtube.com/watch?v=2BH9XTxb290&feature=related


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## Starcraftmazter (15 April 2012)

Beej said:


> PPS: "Real" rents don't mean squat - as you will learn when you move out of home, you have to pay your rent in nominal dollars! And given that the chart shows 7% pa increases in median rents over the past 6 years, that is about a 4% pa "real" increase over and above CPI over the same period anyway.




Thank you Mr. ivory Tower economist. My nominal salary has risen twice in my fist year of work, both times well in nominal access of my annual nominal rental increase which is completely insignificant in nominal terms.

Given that official statistics show no real rental growth in Sydney, the newspaper is clearly mistaken.


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## Beej (15 April 2012)

Starcraftmazter said:


> Given that official statistics show no real rental growth in Sydney, the newspaper is clearly mistaken.




Which official statistics are you talking about? ALL statistics show rising rents in Sydney over the past 5 or so years? Your anecdotal evidence is meaningless in the broad context. No ivory tower required to see this - if you don't believe Sydney rents have been rising, a lot, you are delusional.


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## Starcraftmazter (15 April 2012)

Beej said:


> Which official statistics are you talking about? ALL statistics show rising rents in Sydney over the past 5 or so years? Your anecdotal evidence is meaningless in the broad context. No ivory tower required to see this - if you don't believe Sydney rents have been rising, a lot, you are delusional.




The past 5 years are not as important as what has happened since the peak of the bubble. Since that time, real rents have completely flatlined.




About $10 since 2008, and no growth since 2010.




About $5 more rent than in 2009, and no growth since 2010.


What does the future hold? Rents will flatline and go eventually deflate.


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## So_Cynical (15 April 2012)

Beej said:


> if you don't believe Sydney rents have been rising, a lot, you are delusional.




Ive rented in Sydney for the last 12 years...in the last 3 or 4 years i would think the following.

Rents rising "a lot" = No
Rents rising = Yes
Rent rises beating inflation = No

IMO


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## McLovin (15 April 2012)

So_Cynical said:


> Ive rented in Sydney for the last 12 years...in the last 3 or 4 years i would think the following.
> 
> Rents rising "a lot" = No
> Rents rising = Yes
> ...




I moved recently. Offered 15% below the asking rent and they accepted without even flinching. In Sydney also.


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## young-gun (15 April 2012)

im not to sure what you are all trying to achieve by arguing about rent yields. its doesnt really have anything to do with house prices at the moment.an increase in rental yields is not a reflection of house prices, it is simply an indication that there is more demand for rentals. if more people are looking to rent i would think that this would indicate that less people are interested in owning their own home, which could possibly lead to prices falling?

rental prices are dictated by the market, not the lessor. of course wents are high and probably going up, as it is far cheaper to rent than to own in this crazily over priced market so there is huge demand.

it cant be said that this means investors would be buying more houses to cater for the influx of people trying to rent, as if they were then rents wouldnt increase as they would be meeting the demand. not to mention that its not a good market to be purchasing IP's imo.

so i personally fail to see how the too are related at the moment. and I only believe the two will affect one another when the crash is in full swing. there will come a point where it will be cheaper to get a mortgage and own a house than to pay current rent rates, i would imagine this would then start to drive down the demand for rentals.

SCM i think you should be arguing for higher rent prices, and vice versa for beej if you were to support your underlying views


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## Beej (15 April 2012)

Starcraftmazter said:


> The past 5 years are not as important as what has happened since the peak of the bubble. Since that time, real rents have completely flatlined.
> 
> 
> 
> ...




Your own chart here shows house rents in SYDNEY (the subject of my post) going up by 20-25% AFTER adjusting for inflation, since March 2006, ie, about 3.5-4% pa REAL increase on average over that period. This data agrees with that shown in the article I posted.

As for what happened since 2010 - rents have grown at CPI since then, so they have gone up! As you can see rents tend to increase in bursts then grow with inflation for a bit, then burst again and so on. The point you need to get is that 7% pa AVERAGE rent growth over 6 years is significant.



> About $5 more rent than in 2009, and no growth since 2010.
> 
> 
> What does the future hold? Rents will flatline and go eventually deflate.




Looks like Sydney rents for units have gone up less than for houses, but they have still outpaced CPI since 2006 by a good 2% pa.

As for the future, population pressure will ensure ongoing demand and further rental increases for Sydney. Rental deflation for Sydney is nothing but a dream.


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## Starcraftmazter (15 April 2012)

young-gun said:


> SCM i think you should be arguing for higher rent prices, and vice versa for beej if you were to support your underlying views




How so? The relation between rental yields and house prices is that as housing prices fall, rental yields rise - but this applies only and only to new investments, because otherwise you have the drag of capital loss to cancel it out. And of course until the house prices bottom out, all new investments still have to face that.

We however are not really discussing yields so much as how fast rental prices are rising. From what we can see, myself and others who actually rent in Sydney can testify that they have not really been rising at all - and certainly not in real terms.

My outlook on rents is pretty simple, they will go down along with house prices. Not necessarily at the same speed, but historical precedent shows that housing downturns result in lower rents because of less aggregate demand on housing in general - both buying and renting.



Beej said:


> As for what happened since 2010 - rents have grown at CPI since then, so they have gone up! As you can see rents tend to increase in bursts then grow with inflation for a bit, then burst again and so on. The point you need to get is that 7% pa AVERAGE rent growth over 6 years is significant.




They haven't gone up in real terms. They have gone up with the housing bubble, and now they have levelled off, and next they will drop.



Beej said:


> As for the future, population pressure will ensure ongoing demand and further rental increases for Sydney. Rental deflation for Sydney is nothing but a dream.




Population growth does not implicitly put pressure on rents, so long as development keeps up. Given that population growth in Australia is dropping, while construction continues steaming ahead, I do not see how higher rents are possible into the future.


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## trainspotter (15 April 2012)

wayneL said:


> What's the story with Voyager TS?




Sorry it has taken so long to get back to you WayneL ... Portugal is getting better around Estoril Cascais for me. They went broke due to a sheeeetload of carried forward debt that they failed to disclose to me when I joined in union with them. It also turned out that the directors were having their own behind closed doors backstabbing session and I got caught in the middle. Lawyers got involved and insolvency was the result.


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## trainspotter (15 April 2012)

young-gun said:


> judging from the level of gloating i would put his assets at well above the losses incurred by a pear shaped event such as voyager falling apart. so perhaps he was un-phased by the event. or behind all the speculation it may have had no affect on him at all? if he had no ties with them other than they were simply his builder then he wouldve had insurance and been fine even with them going under, a new builder would have come in and wrapped things up anyway.
> 
> im betting he has had a sneak peak at ASF while hes away though




No losses incurred on this development ..... slight time delay so interest component and holding costs eroded PM at the end of the day. The stoooopid part behind this venture (the building company side of things) was that I actually knew the people I was jumping into business with were (deleted for slanderous and liable reasons) to say the least.

I thought I could get in and turn the business model around and take a bit of profit share but alas alack it was not to be. Just goes to show that I should have stuck to what I know and remained a one man wolf pack. 

If you are to ever get over to Portugal just come straight to Estoril Cascais by the way.


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## wayneL (15 April 2012)

trainspotter said:


> Just goes to show that I should have stuck to what I know and remained a one man wolf pack.




+1

Glad all will work out OK


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## moXJO (15 April 2012)

trainspotter said:


> No losses incurred on this development ..... slight time delay so interest component and holding costs eroded PM at the end of the day. The stoooopid part behind this venture (the building company side of things) was that I actually knew the people I was jumping into business with were (deleted for slanderous and liable reasons) to say the least.
> 
> I thought I could get in and turn the business model around and take a bit of profit share but alas alack it was not to be. Just goes to show that I should have stuck to what I know and remained a one man wolf pack.
> 
> If you are to ever get over to Portugal just come straight to Estoril Cascais by the way.




Some of the members on here won't be happy Tspot, they seemed to want to have you completely blown off the financial map
 Let the cutting of the poppies begin.


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## trainspotter (15 April 2012)

Macquack said:


> Young-gun, I think you are on the money.
> 
> What ever happened with Voyager Homes, I would say it would have cost Trainspotter sweet FA. It is the suppliers and subcontractors who do not get paid through no fault of their own.
> 
> ...




Wrong again Macquack. The subcontractors and suppliers were all paid up. It was the creditors that got a touch up for a lousy 175k. It was the directors loans to the company to keep it afloat that was the cause of insolvency as they tried to claw back their initial investment in the original business BEFORE the name change to Voyager Homes. I personally got stung for 50k and am on the list of creditors.

If you want EXACT details and not dragged across the boards I am more than happy to tell you ALL about it if you PM me.


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## trainspotter (15 April 2012)

moXJO said:


> Some of the members on here won't be happy Tspot, they seemed to want to have you completely blown off the financial map
> Let the cutting of the poppies begin.




ASF LAW #1 :- The tallest blade of grass gets cut down first. :

LOL ...... one investment that does not go EXACTLY according to plan would hardly rattle my tin.


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## Macquack (15 April 2012)

trainspotter said:


> Wrong again Macquack. The subcontractors and suppliers were all paid up. It was the creditors that got a touch up for a lousy 175k. It was the directors loans to the company to keep it afloat that was the cause of insolvency as they tried to claw back their initial investment in the original business BEFORE the name change to Voyager Homes. I personally got stung for 50k and am on the list of creditors.
> 
> If you want EXACT details and not dragged across the boards I am more than happy to tell you ALL about it if you PM me.




Thank you trainspotter for responding to the question of your involvement with Voyager Homes.


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## So_Cynical (15 April 2012)

I suppose 50K is better than nothing.


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## cynic (15 April 2012)

wayneL said:


> +1
> 
> Glad all will work out OK




+2

Glad to have you back TS!

Great timing too! This thread could really utilise even more of your experienced input given that it's been infiltrated by ASF's favourite inexpert poster in recent times.


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## Julia (15 April 2012)

trainspotter said:


> ASF LAW #1 :- The tallest blade of grass gets cut down first. :
> .



+1.  What a disappointment for the knockers.


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## medicowallet (15 April 2012)

trainspotter said:


> ASF LAW #1 :- The tallest blade of grass gets cut down first. :
> 
> LOL ...... one investment that does not go EXACTLY according to plan would hardly rattle my tin.




Good to see you address the questions posed, a good sign of character.

Great show of character TS (and good choice to use PM, although you should not have to answer too personal questions at all imo)

MW


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## moXJO (16 April 2012)

So_Cynical said:


> I suppose 50K is better than nothing.




You are a bitter piece of work sometimes. Funny how you harp on about the treatment of bob b on another thread then throw up troll posts.


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## Joe Blow (16 April 2012)

This thread has gone off the rails again and I'd like to see it back on track.

So, I will ask everyone to please dispense with the personal attacks, deliberate provocation and off-topic chatter and confine your remarks to the topic of the thread: The Australian property market and its future.

Thank you.


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## Miss Hale (16 April 2012)

McLovin said:


> I moved recently. Offered 15% below the asking rent and they accepted without even flinching. In Sydney also.




We are renting at the moment and we have to move soon because our landlord has sold the property and the new owners want to live in it.  Hence we have been looking around for somewhere new. As far as I can tell rents have not increased in the year since we rented our current home, in fact I think they have gone down a touch. What I am noticing is that many rental properties are sitting on the market for up to a month, usually because they are sub-standard or overpriced (or both!). I am actually struggling to find something because the standard of rental properties seems very poor to me.  We were lucky with the one we are in now as the landlord was originally the owner occupier and had done good quality renovations and there was only one tenant between us and the owner being in it so everything was in near new condition.  However, some of the places I have looked at are absolutely terrible, you would think it was 1912 not 2012 when you look at some of them!  I looked at one place in Camberwell (very upmarket suburb in Melbourne) on Saturday and it could only be described as a dump. It's been on the market for over 90 days and now I know why - you couldn't pay me to live there!  I think a reasonably up to date kitchen is vital and if you are going to renovate the kitchen put a dishwaher in, it's pretty standard equipment these days. I also had two calls from agents this morning to see if we are  going to put in an applications for properties I viewed on Saturday (we're not) so I don't think they are overun by applicants at the moment.  Some of the OFIs I've been to have been well attended and there are people there that seem enthusiatic about the properties but then, weeks later, they are still on the market sometimes with reduced rent.  The search continues....


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## Caveman (16 April 2012)

Joe Blow said:


> This thread has gone off the rails again and I'd like to see it back on track.
> 
> So, I will ask everyone to please dispense with the personal attacks, deliberate provocation and off-topic chatter and confine your remarks to the topic of the thread: The Australian property market and its future.
> 
> Thank you.



Perhaps you should be saying this to TS


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## skcots (16 April 2012)

When I moved into my rental property I asked for 5% off and it was accepted without fuss. I should have asked for 10% off. 

I have been considering moving somewhere nicer and noticed what Miss Hale described, the average rental price seems to have come down in the last year but there is a heap of overpriced dumps which will sit on the market for weeks.


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## StumpyPhantom (16 April 2012)

skcots said:


> When I moved into my rental property I asked for 5% off and it was accepted without fuss. I should have asked for 10% off.
> 
> I have been considering moving somewhere nicer and noticed what Miss Hale described, the average rental price seems to have come down in the last year but there is a heap of overpriced dumps which will sit on the market for weeks.




Not sure if rental rises/falls is directly relevant to this thread, but while we're here - what's the logic/reason for the falls? More people buying? I don't think so. The number of renters doesn't really go down unless all these 30-something's are moving home?


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## Tink (17 April 2012)

Thats a good question StumpyPhantom, why would rents fall? 
Either people are buying to live in or investments, more rentals on the market, or they are moving back home.


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## skcots (17 April 2012)

In my area there are a lot of rentals, which makes sense due to its proximity to transport and facilities.

The overall quality houses is rather poor. Units and townhouses on the other hand are mostly new so they might be seen as a better option. I suspect many people who have families would rather move to another suburb for a better quality house. If this is the case then rents in the outer suburbs are likely to be rising.

There are plenty of old houses around for sale and for lease. The real estate agents might be encouraging people to buy an old house, do it up and rent it. In fact I know they are encouraging it as my Mum recently looked at buying a townhouse in the same suburb. Easy money. The thing is renters won't pay for rubbish when there are alternatives and proper renovations or demolitions are expensive. From what I can see the people who have done these renovations have no chance of getting a reasonable rental return. Hence the stupidly high prices of some property.

I guess the smart property investors know this but I don't believe all property investors are smart.


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## Starcraftmazter (17 April 2012)

Tink said:


> Thats a good question StumpyPhantom, why would rents fall?
> Either people are buying to live in or investments, more rentals on the market, or they are moving back home.




Because aggregate demand for housing in general would fall (due to unemployment).

Also, why housing is not an investment, and what sorts of things have brought about this flawed way of looking at property.
http://pragcap.com/robert-shiller-housing-is-not-an-investment


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## wayneL (17 April 2012)

Starcraftmazter said:


> Because aggregate demand for housing in general would fall (due to unemployment).
> 
> Also, why housing is not an investment, and what sorts of things have brought about this flawed way of looking at property.
> http://pragcap.com/robert-shiller-housing-is-not-an-investment




Jeeeezuz!

I am generally a RE bear and even I reckon that article is bullshyte. Interesting discussions in the comments.


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## Starcraftmazter (17 April 2012)

wayneL said:


> Jeeeezuz!
> 
> I am generally a RE bear and even I reckon that article is bullshyte. Interesting discussions in the comments.




It's true when you think about it. Property never ever ever goes up in real values, central banks merely inflate the artificial nominal price. And to make matters worse, governments tax this artificial inflation.

Housing is no investment, just a way to speculate.


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## wayneL (17 April 2012)

Starcraftmazter said:


> It's true when you think about it. Property never ever ever goes up in real values, central banks merely inflate the artificial nominal price. And to make matters worse, governments tax this artificial inflation.
> 
> Housing is no investment, just a way to speculate.




If this is true then Buffet style value investing in stocks is also a non investment.

There was some analysis done that the real value of stocks only increases via the retention of earnings, so same thing.

In addition, this is one of the hopes of long term investment, as a hedge against inflation. Ergo, if it keeps keeps pace with inflation, especially with regards to yield, then the investment is worthwhile as it outperforms cash.

Returns in excess of inflation are cream.

Both stock and RE 'investment', if well selected will outpace inflation. Gearing enhances this.

The great advantage of RE is that even when leveraged is that it is not marked to market. As long as repayments are covered (by whatever means), one can hold for the long term and allow inflation to diminish real debt.

I agree that RE investment has been rather more speculative of late, but this does not detract from the intrinsic good sense of RE as an investment class as at least part of one's total portfolio.


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## Starcraftmazter (17 April 2012)

wayneL said:


> If this is true then Buffet style value investing in stocks is also a non investment.




How can that be true? Companies invest earnings in R&D, equipment, factories, stores, etc - whatever it may be. Company add value by growing, they can legitimately increase they produce.

A house cannot.



wayneL said:


> There was some analysis done that the real value of stocks only increases via the retention of earnings, so same thing.
> 
> In addition, this is one of the hopes of long term investment, as a hedge against inflation. Ergo, if it keeps keeps pace with inflation, especially with regards to yield, then the investment is worthwhile as it outperforms cash.
> 
> Returns in excess of inflation are cream.




If people want to hedge against inflation then just buy gold - it's really not hard. Why bother with property or stocks if that is all you want to do.



wayneL said:


> Both stock and RE 'investment', if well selected will outpace inflation. Gearing enhances this.
> 
> The great advantage of RE is that even when leveraged is that it is not marked to market. As long as repayments are covered (by whatever means), one can hold for the long term and allow inflation to diminish real debt.
> 
> I agree that RE investment has been rather more speculative of late, but this does not detract from the intrinsic good sense of RE as an investment class as at least part of one's total portfolio.




Leverage is speculation. I bet nobody would ever use leverage if property rose in step with broader CPI. Only in some markets, and only some people and only under very favourable demographic and credit conditions, will they be successful for some unknown amount of time in their speculation. And in the end, it destroys the economy of whichever nation allowed it.

Now there's something which hasn't changed in hundreds of years.

If one was not a scumbag speculator intent to destroy his nation's economy, clearly there are better ways than property to hedge against inflation (gold) and invest with the aim to increase wealth (companies).


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## skcots (17 April 2012)

Starcraftmazter said:


> Leverage is speculation. I bet nobody would ever use leverage if property rose in step with broader CPI.




I don't think that is true. Tax deductions on investment properties make them cheaper then they appear. There are property investors only after an income stream, once purchased, they could not care less about the dollar value of the house just as long as someone will send them some pocket money every week.


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## DB008 (17 April 2012)

Rent is still going up...

Rents rise in 2011 - Switzer



> While property prices remained fairly subdued in 2011, weekly rents continued on an upwards path in most capital cities. Last year, Sydney was among the standout performers with rents increasing by an impressive 4.2 per cent for houses and 4.5 per cent for apartments. Great news for investors but spare a thought for all the tenants out there competing for their next home!
> 
> The latest rental report from Australian Property Monitors (APM) says the median rent for a house in Sydney has reached a record of $500 per week, with apartments a little more affordable at $460 per week.
> 
> Rents for apartments are increasing at a more rapid rate because more people are competing for the cheaper option. There’s also the ongoing desire, especially among Gen Y, to live in trendy inner city locations close to cafes, beaches, transport and the CBD and there are more apartments than houses available in those areas.





Sydney rents on the upward march again



> After a flat patch in the middle of last year, Sydney rents have resumed their upward trajectory. The latest Australian Property Monitors Rental Report, released this week, reveals median weekly asking rentals for houses rose by 1 per cent in the December quarter.
> 
> There was an even stronger rise in apartment rents, which surged 2.2 per cent.
> 
> ...


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## Starcraftmazter (17 April 2012)

skcots said:


> I don't think that is true. Tax deductions on investment properties make them cheaper then they appear. There are property investors only after an income stream, once purchased, they could not care less about the dollar value of the house just as long as someone will send them some pocket money every week.




Just because previous governments were stupid to encourage said speculation doesn't make it a good thing.



DB008 said:


> Rent is still going up...




That's less than half of the 10% with which it was earlier claims by bulls rent is going up. It is basically just barely keeping in line with inflation now. 

Never been a better time to rent.


----------



## wayneL (17 April 2012)

Starcraftmazter said:


> How can that be true? Companies invest earnings in R&D, equipment, factories, stores, etc - whatever it may be. Company add value by growing, they can legitimately increase they produce.
> 
> A house cannot.




But earnings can be reinvested into the property to increase value, increase rent, or subdivide, or other ways to augment capital value and returns, same as a company.



> If people want to hedge against inflation then just buy gold - it's really not hard. Why bother with property or stocks if that is all you want to do.




Oh really? LOL 

Gold is speculative plain and simple, it hedges fear, not inflation. Gold has decreased in nominal and real terms during periods of inflation in the past, hence not a reliable hedge. 

RE capital values don't always move lock-step with inflation either, but rental returns tend to do so...

...and gold doesn't yield a thing.




> Leverage is speculation. I bet nobody would ever use leverage if property rose in step with broader CPI. Only in some markets, and only some people and only under very favourable demographic and credit conditions, will they be successful for some unknown amount of time in their speculation. And in the end, it destroys the economy of whichever nation allowed it.




Dear Lord! Please do some maths FFS. If property reliably tracked inflation and no more, leveraged, cash flow neutral RE investment is a no brainer.



> Now there's something which hasn't changed in hundreds of years.
> 
> If one was not a scumbag speculator intent to destroy his nation's economy, clearly there are better ways than property to hedge against inflation (gold) and invest with the aim to increase wealth (companies).




I agree rampant speculation on RE is a negative, but this bears no relation to sensible investment.


----------



## Starcraftmazter (17 April 2012)

wayneL said:


> But earnings can be reinvested into the property to increase value, increase rent, or subdivide, or other ways to augment capital value and returns, same as a company.




Surely you can't say it's the same.

With a company, you can build another factory and permanently increase your output. Doing renovations merely maintains the quality of the house or apartment.

Subdividing is like cutting a factory in half. Nothing is really created. 



wayneL said:


> Gold is speculative plain and simple, it hedges fear, not inflation. Gold has decreased in nominal and real terms during periods of inflation in the past, hence not a reliable hedge.




Like when? There should be no debate that gold has returned to it's historic status as money and a real store of value. In the last decade it easily beat inflation and any rental returns, putting an equal amount of capital in it and housing. Except unlike housing worldwide gold is not in a speculative bubble and has not crashed.





wayneL said:


> Dear Lord! Please do some maths FFS. If property reliably tracked inflation and no more, leveraged, cash flow neutral RE investment is a no brainer.




That's only true if interest rates are lower than inflation. Historically, that has never really happened - except now, specifically in countries where RE bubbles burst.



wayneL said:


> I agree rampant speculation on RE is a negative, but this bears no relation to sensible investment.




I would prefer to invest in things which were not speculated upon, would you not?


----------



## Glen48 (17 April 2012)

Picture this:
You are in dark Africa and  have an oz of Gold and a pocket full of  USD. RMB etc notes and need water which one would the seller take.
 Gold is a voucher just like money only money decreases in value, the good thing is PM's are due to go down due to the oncoming depression so back the truck up and take a trailers as well


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## wayneL (17 April 2012)

Starcraftmazter said:


> Surely you can't say it's the same.




The 'principle' is the same.



> With a company, you can build another factory and permanently increase your output. Doing renovations merely maintains the quality of the house or apartment.




Not quite. Facilities can be added... and extra bedroom, another bathroom, a garage where none existed, additional curb appeal etc etc.

All these things can increase yield.



> Subdividing is like cutting a factory in half. Nothing is really created.




Say what??? Two, three, fifteen, a hundred and fifty (OR WHATEVER) additional dwellings are created, each creating another yield. Sometimes each new dwelling has a greater yield than the one original.



> Like when?




For your education, pull up a cart of gold prices over the last 30 years and a chart of inflation over the same period. The correlation 'at times' is weak at best. At other times the correlation is reverse.



> There should be no debate that gold has *returned* to it's historic status as money and a real store of value. In the last decade it easily beat inflation and any rental returns, putting an equal amount of capital in it and housing. Except unlike housing worldwide gold is not in a speculative bubble and has not crashed.




I'd like you to contemplate on the qualifier you have included (bolded) and consider how you have torpedoed your own argument. If gold has 'returned' to some purported status as detailed, logically there was a time in the near past when such status did not apply.

As to whether gold is is in a bubble, it is very difficult to quantify as there is no yield or other economic markers to compare to. I am not denying gold as a store of value, but would point out that that value is fleeting and marked to market and not to some intrinsic value.



> That's only true if interest rates are lower than inflation. Historically, that has never really happened - except now, specifically in countries where RE bubbles burst.



There are other dynamics at play other than interest rates/inflation.

Each must be considered by the investor before investing. There are points where the numbers stack up and points when they don't. But this does not negate RE as an investment class as the same dynamics apply in the stock market





> I would prefer to invest in things which were not speculated upon, would you not?




If 'investing', the speculative component is irrelevant. All that matters is if the numbers stack up as an investment. The speculators will do what they will and if speculators have distorted the market to the point where investment is inappropriate, then 'investors' will look elsewhere.


----------



## young-gun (17 April 2012)

skcots said:


> I don't think that is true. Tax deductions on investment properties make them cheaper then they appear. There are property investors only after an income stream, once purchased, they could not care less about the dollar value of the house just as long as someone will send them some pocket money every week.




are you one of these property investors sk? i only ask as I think you would find very very few if any investors that would be happy watching the value of their proeprty either sit there or slide. the only ones who would be happy to are thoes that bought 30, 20 and even 10 years ago. why? because they have seen stupid percentage increases already and prob all have over 50% equity(if not more), so even if prices did crash by 50 they still break even if they sell, and keep making money off rent if they hold. 

if i bought an investment property tomorrow, and it went no where for 10-20 years, and all i did was reduce my taxable income while helping the bank make hefty profits, i would be pissed off.


----------



## Caveman (17 April 2012)

Starcraftmazter said:


> Like when? There should be no debate that gold has returned to it's historic status as money and a real store of value. In the last decade it easily beat inflation and any rental returns, putting an equal amount of capital in it and housing. Except unlike housing worldwide gold is not in a speculative bubble and has not crashed.



Well if you had bought either gold or real estate in 2000 you would have made a killing.
But what about previous to that?If you sold your house in 1984 to buy gold you`d be kicking yourself 
Who`s to say we aren`t at another 1980 PM peak?


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## DB008 (18 April 2012)

30 year Gold chart

http://goldprice.org/30-year-gold-price-history.html


----------



## Tink (18 April 2012)

wayneL said:


> If this is true then Buffet style value investing in stocks is also a non investment.
> 
> There was some analysis done that the real value of stocks only increases via the retention of earnings, so same thing.
> 
> ...




Great posts Wayne, agree.

I must say I am more FOR property than against, was raised in a family of -- never sell RE
Hope my children have taken that on board. 
Son is looking into buying his own investment in a few years


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## MrBurns (18 April 2012)

Tink said:


> -- never sell RE




I've seen that in action, multi millionaires made as sure as night follows day and it's safe and easy as long as you can afford to service any loans.

Crashes/recesssions mean nothing, just hold and forget aboiut it , it will always look after you in the end.


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## odds-on (18 April 2012)

MrBurns said:


> it's safe and easy as long as you can afford to service any loans.




Here is the problem. As the years move on personal circumstances and/or financial  circumstances could change which mean this becomes a significant risk. RE investment is still a bet just like the stockmarket or any other business. I would not bet with leverage.


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## skcots (18 April 2012)

young-gun said:


> are you one of these property investors sk? i only ask as I think you would find very very few if any investors that would be happy watching the value of their proeprty either sit there or slide. the only ones who would be happy to are thoes that bought 30, 20 and even 10 years ago. why? because they have seen stupid percentage increases already and prob all have over 50% equity(if not more), so even if prices did crash by 50 they still break even if they sell, and keep making money off rent if they hold.
> 
> if i bought an investment property tomorrow, and it went no where for 10-20 years, and all i did was reduce my taxable income while helping the bank make hefty profits, i would be pissed off.




In my post I am talking about property growing with CPI not dropping but in either case a lot of people don't care about the dropping price as long as they are getting a stable yield. Dropping price means time to buy a second or third property. Selling just means capital gains tax. 

Regarding my personal situation, yes I bought property (overseas) and would rather it not drop in value but don't really care if it does as long as I get a stable yield. My situation is a bit different thought as I paid cash.


----------



## qldfrog (18 April 2012)

skcots said:


> My situation is a bit different thought as I paid cash.



hum not really, you lower the risk of the bank calling for its mortgage, yet by paying cash, you loose the 6% on ubank that you could get
Always hard to judge, I have an IP, a fully own  owned home  and play the market:
market has been a no hope affair for the last few years, made a few k  trading but heavy involvement, risk..and definitively not an easy one yet I am in place  IF the market goes up;
Purchased IP at good time/location (well, until the next crash..) so did not loose too much value if any since purchased but return on investment is pathetic and without NG would be a no go...so where from now..
I can get 10% from hybrids with reasonable risks but they will never provide me with substantial capital gain...
I can have no risk and 6% as TD,
both above fully taxed or I can bet on RE with government help (NG and CGT discount)...
weird world...
Toying with commercial properties but businesses health is a disaster in my opinion in Brisbane so still holding on cash


----------



## Starcraftmazter (18 April 2012)

wayneL said:


> Not quite. Facilities can be added... and extra bedroom, another bathroom, a garage where none existed, additional curb appeal etc etc.




Firstly that can't be done with units. Secondly, you would do such major transformations with a house you are renting out? Sounds totally bizarre.



wayneL said:


> Say what??? Two, three, fifteen, a hundred and fifty (OR WHATEVER) additional dwellings are created, each creating another yield. Sometimes each new dwelling has a greater yield than the one original.




Subdivision is immoral in my view. Give young families and their children enough land to play sports on. Moreover constructing a house requires additional capital, and it seems better to construct additional dwelling on new plots of land rather than on old. It is a stupid way to build a city.




wayneL said:


> For your education, pull up a cart of gold prices over the last 30 years and a chart of inflation over the same period. The correlation 'at times' is weak at best. At other times the correlation is reverse.




I don't really see it. There was a lot of gold selling by central banks after the gold standard was dropped, and once it became apparent that this fiat currency system is doomed even that wasn't enough to keep down the price of gold.

Right now, gold has nowhere to go but up. $2000, $5000, tens of thousands. Sky's the limit.



wayneL said:


> I'd like you to contemplate on the qualifier you have included (bolded) and consider how you have torpedoed your own argument. If gold has 'returned' to some purported status as detailed, logically there was a time in the near past when such status did not apply.




Yes, after the gold standard was dropped from the US dollar and it was heavily sold down by central banks.



wayneL said:


> As to whether gold is is in a bubble, it is very difficult to quantify as there is no yield or other economic markers to compare to. I am not denying gold as a store of value, but would point out that that value is fleeting and marked to market and not to some intrinsic value.




It's intrinsic value is quite simply - whichever fiat currency you want it to be valued in's worth of all assets in the world.

Gold is not priced in USD or AUD. USD and AUD are priced in gold. Gold is the only real money, the only real store of wealth. The last beacon of stability and righteousness - the people's money, and so on and so forth.



wayneL said:


> If 'investing', the speculative component is irrelevant. All that matters is if the numbers stack up as an investment. The speculators will do what they will and if speculators have distorted the market to the point where investment is inappropriate, then 'investors' will look elsewhere.




Given there are plenty (even within this thread) who would consider themselves property "investors" in our highly speculated upon market, I would challenge your point of view.



Caveman said:


> Who`s to say we aren`t at another 1980 PM peak?




I am, completely different circumstances. BRIC countries purchasing massive amounts of gold ahead of their plan to launch a gold-backed currency to take over the USD in international trade.


Back to rents as well, here's the actual APM data:







And these aren't real, so rents in the last year have failed to keep up with inflation, and in the last quarter they have without a doubt began to drop - which indeed backs up the comments of us renters that we are just not seeing these rental increases that property "investors" always foam at the mouth about.


----------



## wayneL (18 April 2012)

Try answering objectively, your answers are subjective... and highlight a lack of real world experience.


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## Ves (18 April 2012)

Starcraftmazter said:


> Firstly that can't be done with units. Secondly, you would do such major transformations with a house you are renting out? Sounds totally bizarre.



 Actually, a simple kitchen or bathroom renovation, on an older style unit, even if it is only cosmetic can substantially increase the rent received per week.


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## Starcraftmazter (18 April 2012)

Ves said:


> Actually, a simple kitchen or bathroom renovation, on an older style unit, even if it is only cosmetic can substantially increase the rent received per week.




That's one way of looking at it. Another (and one I favour due to very low rental yields in Australia) is that it's rental value has depreciated overtime along with the building structure / interior itself - and quite so, this is what people refer to when they say real-estate is a depreciating asset. The point however is that through renovation you are merely investing to maintain the relative quality of the dwelling, allowing yourself to take advantage of the full rental value it once had before it depreciated too much.


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## Trembling Hand (18 April 2012)

Starcraftmazter said:


> That's one way of looking at it. Another (and one I favour due to very low rental yields in Australia) is that it's rental value has depreciated overtime along with the building structure / interior itself - and quite so, this is what people refer to when they say real-estate is a depreciating asset. The point however is that through renovation you are merely investing to maintain the relative quality of the dwelling, allowing yourself to take advantage of the full rental value it once had before it depreciated too much.




 I don't know why i bother but,

Do you know how Tax depreciation works in relation to fixtures and equipment?

Have you done a tax return let


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## Starcraftmazter (18 April 2012)

Trembling Hand said:


> I don't know why i bother but,
> 
> Do you know how Tax depreciation works in relation to fixtures and equipment?




I really fail to see why it's relevant, especially because it is implied that an older unit is bought and renovated for rental purposes.

You're again missing the point.


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## Trembling Hand (18 April 2012)

Starcraftmazter said:


> I really fail to see why it's relevant,




Yep Im sure you don't.



Ves said:


> Actually, a simple kitchen or bathroom renovation, on an older style unit, even if it is only cosmetic can substantially increase the rent received per week.




If you don't understand how tax depreciation works in relation to fixtures and equipment & building how can you comment about its cost to maintain rental return or improve rental return?


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## Starcraftmazter (18 April 2012)

Trembling Hand said:


> If you don't understand how tax depreciation works in relation to fixtures and equipment & building how can you comment about its cost to maintain rental return or improve rental return?




Because tax has nothing to do with this.

The point is that RE is a depreciating asset. Renovations do not increase yields so much as maintain the quality of the premises. This is about the mentality of investors.


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## Ves (18 April 2012)

Starcraftmazter said:


> Because tax has nothing to do with this.
> 
> The point is that RE is a depreciating asset. Renovations do not increase yields so much as maintain the quality of the premises. This is about the mentality of investors.



 yes it does. Nominal cost less your marginal tax rate will be the actual cost of the asset if you allow for depreciation. Of course it differs if it is classified as a capital works item, because it is written off over a longer period, but will still affect cash flow. If you generate more rent over its useful life, than your adjusted actual cost you are ahead.


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## doctorj (19 April 2012)

Today, Genworth Financial announced a delay to the planned IPO of its Australian mortgage insurance business:



> This new timeframe primarily reflects recent business performance in Australia.* For the 2012 first quarter, the company expects to report elevated loss experience in Australia as lenders accelerated the processing of later-stage delinquencies from prior years through to foreclosure and claim at a higher rate and severity than expected, particularly in coastal areas of Queensland that experienced natural catastrophes and regional economic slowdowns and among certain groups of small business owners and self-employed borrowers. First quarter experience is anticipated to result in a modest first quarter loss in the Australian MI business.




http://www.prnewswire.com/news-rele...an-mortgage-insurance-business-147815625.html


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## Trembling Hand (19 April 2012)

Starcraftmazter said:


> Because tax has nothing to do with this.
> 
> The point is that RE is a depreciating asset. Renovations do not increase yields so much as maintain the quality of the premises. This is about the mentality of investors.




So again you do not know how depreciation affects your rental yield? 


Carry on. Tell us some more..........


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## young-gun (19 April 2012)

MrBurns said:


> I've seen that in action, multi millionaires made as sure as night follows day and it's safe and easy as long as you can afford to service any loans.
> 
> Crashes/recesssions mean nothing, just hold and forget aboiut it , it will always look after you in the end.




has** looked after people to the end...in the past.


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## Tink (20 April 2012)

You cant see the future young gun, you are speculating what you think is going to happen in the next few years.

I agree that houses have stagnated, and with unemployment going up, prices will probably fall abit further, but I know quite a few that have bought in the last 12 months, be it to live in or invest. 

They seem happy with their choices.


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## DB008 (20 April 2012)

Tink said:


> You cant see the future young gun, you are speculating what you think is going to happen in the next few years.
> 
> I agree that houses have stagnated, and with unemployment going up, prices will probably fall abit further, but I know quite a few that have bought in the last 12 months, be it to live in or invest.
> 
> They seem happy with their choices.




+1
I know a few people who have purchased with a 18-24 month settlement date (to live in or IP).


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## moXJO (20 April 2012)

Vic is probably the worst place to invest at the moment so I am told.


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## Glen48 (20 April 2012)

Buying a property is not an investment it will be once prices have crashed but that will be many years away, when China's Yuan is the reserve currency and back by Gold then it should turn around. 
 China wants to buy 5,000 tons of Gold over the next 5 yrs. China is buying all the gold it can and not allowing any exporting from China they are also buying up gold mining companies here and over seas. 

Wikipedia:
Investment has different meanings in finance and economics. Finance investment is putting money into something with the *expectation of gain*, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within a*n expected period of time.*[1] In contrast putting money into something with an expectation of *gain without thorough analysis, without security of principal, and without security of return is speculation or gambling.*


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## young-gun (20 April 2012)

Tink said:


> You cant see the future young gun, you are speculating what you think is going to happen in the next few years.
> 
> I agree that houses have stagnated, and with unemployment going up, prices will probably fall abit further, but I know quite a few that have bought in the last 12 months, be it to live in or invest.
> 
> They seem happy with their choices.




Well aware that I can't see into the future, but are you forgetting the no one else is able to either? past performance is absolutely no indication of the future. Just because people have done well in the past does not mean the trend is going to continue. old habits need to be thrown out the window, as changes occur that no one in the past or present have ever experienced. the world economy recovering in any way shape or form to me at the moment is mathematically impossible. at least for the next decade.

i prefer not to ignore the blatantly obvious, that is, the world is in trouble, and i dont believe any form of investment is a good investment at the moment(for me that is, others can gamble if they choose, there is still opportunity). especially not those that are in a bubble.


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## Starcraftmazter (20 April 2012)

Tink said:


> You cant see the future young gun, you are speculating what you think is going to happen in the next few years.




It's no speculation; it's common sense.


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## Glen48 (20 April 2012)

Young gun think you have jumped the gun:
 JP Morgan has more on its balance in CDS than the whorl world economy and the other 3 banks are not far behind,  No one know what's going on in Japan but they may have to evacuate Toyota 35 m people think of the logistics there 1.5 time OZ population, USA is shoot pigs because they have the wrong hair colour  while people are living is flood water drains starving, USA iis pay 2.5 m interest a second, California is introducing a law to ban smoking in  in the back yard,   Greece has 60% un employed in places, Spain's debt is twice.


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## Starcraftmazter (23 April 2012)

*The Property Predicament - by Robert Shiller*
Why property price rises are a bad thing, and the flawed mentality behind it.
http://www.ft.com/intl/cms/s/2/1cc90a5c-87a8-11e1-8a47-00144feab49a.html#axzz1snp2BVdY


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## Miss Hale (26 April 2012)

Did anyone else see 7.30 on the ABC tonight in Victoria?  In an item about the upcoming Victorian budget they highlighted the fact that revenue from stamp duty is down $366 million.  If that doesn't inndicate that there's been a downturn in real estate sales in Victoria I don't know what does.


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## MrBurns (26 April 2012)

Miss Hale said:


> Did anyone else see 7.30 on the ABC tonight in Victoria?  In an item about the upcoming Victorian budget they highlighted the fact that revenue from stamp duty is down $366 million.  If that doesn't inndicate that there's been a downturn in real estate sales in Victoria I don't know what does.




Victoria will be in recession very soon if it isnt already, house prices are falling now, the ABC news headed off with more job loses one in a transport company closing down where management said no ones buying anything, hang on tight.


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## Miss Hale (26 April 2012)

MrBurns said:


> Victoria will be in recession very soon if it isnt already, house prices are falling now, the ABC news headed off with more job loses one in a transport company closing down where management said no ones buying anything, hang on tight.




I'm battening down the hatches


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## MrBurns (26 April 2012)

Miss Hale said:


> I'm battening down the hatches




It'll be a chilly winter


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## Glen48 (26 April 2012)

http://topdocumentaryfilms.com/real-estate-4-ransom/
 This will help Mr. B your blood will boil.


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## Starcraftmazter (26 April 2012)

Glen48 said:


> http://topdocumentaryfilms.com/real-estate-4-ransom/
> This will help Mr. B your blood will boil.




That looks incredibly interesting - is there a way to download it?


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## Glen48 (26 April 2012)

Click on the title it should open at the site???


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## Starcraftmazter (26 April 2012)

Glen48 said:


> Click on the title it should open at the site???




I meant download the video to my computer.


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## MrBurns (27 April 2012)

Glen48 said:


> Click on the title it should open at the site???




I think there's more manipulation of markets generally than most people could even imagine


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## ishakeel (29 April 2012)

very difficult to predict


----------



## ishakeel (29 April 2012)




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## freebird54 (30 April 2012)

Ch 10 breakfast this morning did the rent v buy argument with a financial planner and it seemed to come out in favour of renting for many

In USA they even narrow it down to which cities are best for each

http://money.cnn.com/galleries/2011/real_estate/1101/gallery.rent_or_buy/index.html


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## satanoperca (3 May 2012)

Since it seems our long time poster has left the building, so keeping it real for the Sunshine and Lollipops brigade some interesting data from RPdata.

Melbourne -7% YOY
5 capital city aggregate -4.68 % YOY

And with parts of the FHBG being scrapped in Victoria and a massive oversupply of apartments coming online in the next year, Vic is in for more than just a healthy correction but could be heading for a crash, dare I say. All those that bought using the FHBG to leverage up their capital base and to soon find out that it has cost them more than the govnuts gave me. Bad, bad govnuts for interferring in so called free markets.

Not to mention the worse land sales since 1994, the market has turned and even with dropping interest rates and increasing unemployment (retrenchments seem to be front page news) and I cannot see anyone wishing to take on more debt in this environment.

Back to the bear cave I crawl.


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## MrBurns (3 May 2012)

satanoperca said:


> , Vic is in for more than just a healthy correction but could be heading for a crash, dare I say. .




Went to an auction in Kew last week very popular location mid range property low 
$500's ........not one bid.

Havent seen that in a while but now very common.


----------



## Knobby22 (3 May 2012)

MrBurns said:


> Went to an auction in Kew last week very popular location mid range property low
> $500's ........not one bid.
> 
> Havent seen that in a while but now very common.




Yes, I am in the market but need to sell my old house and I am unsure whether I would get a buyer. It forces me to consider selling it first and renting.


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## MrBurns (3 May 2012)

Knobby22 said:


> Yes, I am in the market but need to sell my old house and I am unsure whether I would get a buyer. It forces me to consider selling it first and renting.




Sell first then you know exactly where you stand.

You may not have to rent there will be plenty on the market if things keep going this way and it seems they will I cant see any reason for things to pick up.


----------



## Knobby22 (3 May 2012)

Thanks Burnsy.


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## satanoperca (3 May 2012)

Just popped head out of cave, thought things might have improved after reading the pamphlet from REIV only to see stock on the Melbourne market still trending up at around 4 year highs.

So lets recap the Melbourne market, oh why bother it is looking ill.

Cheers

Returns to bear cave


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## Glen48 (3 May 2012)

At least you have a Cave by Xmas a lot will be sleeping in cars etc.


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## Glen48 (3 May 2012)

Now we know house prices are on the way down I am predicating:

Bankruptcies will increase over the years as FH victims relaise they are fighting a loosing battle and a lot will be un-employed so hand in the keys maybe and walk away go live with some friends parents.
 House prices will be down for 10 yrs or more we will follow USA in dropping IR to nil however  as the bottom gets close it will be a good time to buy as IR will be low houses cheap and inflation cancelling out any IR.
 Slater and Gordon could try a few banks in a class action because they FHV were not told they could go under and want their money back.


----------



## Ijustnewit (3 May 2012)

I'm personally coming across some interesting plays by Real Estate agents whilst searching for a house in Hobart. The market is in decline , one or more Real Estate agents has shut down and let staff go due to the downturn. Houses are sitting for months on Realestate.com and Tasmania is or very close to being in recession. 
However every time I make an enquiry about a property that has been sitting on the market for some time they reply with "Oh we just got a contract on that this morning , but your still welcome to inspect and make a better offer" .
This has happened 4 times and the funny thing is I don't like playing games and I decline. But here's the thing the property still sits on the market and in the paper for weeks after.
For years the Tasmanian Real Estate industry has been able sell a 1940's home that has not been touched since 1940 for half a million that needs another 100,000 spent on it to make it liveable to Interstate Investors. I think those buyers have dried up now, but it's taking the Agents and Sellers a bit longer to catch on. They are still asking the big dollar and thus the property still sits unsold. So something has to give eventually.


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## Julia (3 May 2012)

Ijustnewit said:


> However every time I make an enquiry about a property that has been sitting on the market for some time they reply with "Oh we just got a contract on that this morning , but your still welcome to inspect and make a better offer" .



Real estate agents, like the government, must imagine people are just silly.

I've just pulled out of a plan to build a new house.  Had the offer on the land accepted and sorted out a builder from seven I approached who had a good reputation and who seemed responsive to what I described I wanted.

He submitted a final plan that was good with an estimate of cost, final cost to be supplied after the designer had done all the detailed drawings and he had contacted suppliers for exact costs.  He advised that the cost was unlikely to vary much from the estimate.

So the designer suggested an extension to the patio area, I agreed subject to cost.
Designer phoned the builder to get cost per sqm of patio and advised the addition would be about $4000.  OK, fine.

Queensland has had a government building boost grant which offered $10,000 for new homes where contract was signed by 30 April.  The builder was made very aware of my desire to get it all signed up before this date.  

However, it wasn't until the day before that he emailed me the specifications, various other documents to be read, and the contract.  About 50 small print pages all up.

The original list of inclusions provided with the cost estimate stipulated security screens on all doors.  However, when I got to that part of the specifications, lo, this has just disappeared and there are just fly screens.

Further, the total price has increased by over $35,000!!  
My request for an itemised breakdown of how this was comprised was met with surprise but it did appear.  It included - in addition to the above mentioned patio extension - an increase in the interior of 7sqm.  No such increase had been authorised and I was unable to see where on the plan any such increase occurred.

Via email I raised the issue of the security doors not being included in the final cost and suggested that page of the specifications needed to be redone to stipulate this as per original inclusions list.

I also reminded him that he was yet to provide me with details of his insurance.

This is the night before 30 April deadline.

No response to my request above.
Fortunately I was still within the cooling off period with the land contract so have withdrawn, feeling disgusted and disappointed.

What is going on here?  Has there developed such a laissez-faire culture where clients don't routinely check e.g. specifications, are in love with a dream and just OK whatever the builder does?
Are builders so accustomed to this loose and casual approach that they are unwilling to accommodate a client who expects what has been promised?

Buying/building a house is one of the most significant capital events in any of our lives and surely most people would be careful to ensure they're actually getting what has been promised?  Perhaps not.

I'd be interested to know if others have had similar experiences.


----------



## MrBurns (3 May 2012)

Julia said:


> I'd be interested to know if others have had similar experiences.




Seems like a problem with a builder not a real estate agent.
Don't build buy an established house and you'll save yourself a brain hemorrhage.


----------



## Glen48 (3 May 2012)

Julia sounds like a stroke of good luck with RBA telling us on Tuesday there will be a housing crash maybe you can get out of building.


----------



## doctorj (3 May 2012)

Glen48 said:


> At least you have a Cave by Xmas a lot will be sleeping in cars etc.




This may be a bit extreme, but the tide of opinion outside Australia seems to be turning. No one's citing anything new (affordability etc), but it seems the 50bps rate cut has made the AUD less attractive and prompted people to dig a bit deeper. Loudest amongst the new bears is SocGen who in the past week have come out with some of the following on Australian property and the AUD



> All we have in Australia, at its simplest, is a credit bubble built upon a commodity boom dependent for its sustenance on an even greater credit bubble in China. Of all the bubbles I have seen over the last 30 years in this industry, this one is even more obvious than the rather prominent nose on my increasingly haggard face.






> Our own more Minskyan interpretation of events is that the lack of volatility in the Australian economic cycle and the absence of any recession since 1991 has led Australians to have an excessive appetite for debt in the belief the future will reflect the past.






> But for us, suppressed volatility is merely storing up an even bigger crash further down the road. The Australian "miracle" is dependent on the wheels not coming off China.






> When you scratch the surface of the Australian 'miracle' you don’t just find an unmiraculous commodity super-cycle: you also find an equally unmiraculous credit super-cycle as well. A credit bubble built on a commodity market built on an even bigger Chinese credit bubble, Australia looks like leveraged leverage, a CDO squared



In short, it seems they're recommending foreign folk short AUD and Aussies go long gold….


----------



## Julia (3 May 2012)

Glen48 said:


> Julia sounds like a stroke of good luck with RBA telling us on Tuesday there will be a housing crash maybe you can get out of building.




I am out, Glen.  As above I withdrew during the cooling off period for the land purchase and the building contract was not signed.


----------



## StumpyPhantom (3 May 2012)

An Australian, Steve Keen, is widely published on this subject.  See for example:

http://www.debtdeflation.com/blogs/poolroom/media-coverage/

http://www.crikey.com.au/2011/12/19/house-price-experts-off-key-on-the-new-reality/

As we draw further and further from GFC (1?), his predictions seem to have moderated.  The latest I think is a 6-10% drop this year, which was probably going to be close to the mark without interest rate reductions by the RBA.

With China's property bubble as an extreme example (60 million unoccupied units in 10-20 ghost cities), the critical thing seems to be whether it's a gradual decline or whether it's a calamitous drop, with the latter having strong ripple effects right through other parts of the economy.

If there is no tsunami approaching from outside Australia, the former scenario is more likely to play out.  But lose the mining boom, European debt contagion, Iran gets bombed and the black swan event will have arrived.  The Gold Coast is already there, then Perth, then Gladstone, then Brisbane, and so on.  But thaat's GFC2, so wait and watch.


----------



## doctorj (3 May 2012)

StumpyPhantom said:


> An Australian, Steve Keen, is widely published on this subject. See for example:



Keen's view's are largely focused on the extraordinary growth in household debt levels, shown below


----------



## MACCA350 (4 May 2012)

Certainly considering selling off our land, though I may have missed the peak of this bubble.

Cheers


----------



## Uncle Festivus (4 May 2012)

Wealth is just an illusion for the property bulls - we're not getting any richer?


----------



## trainspotter (4 May 2012)

*GOSH* ... has anyone been paying attention?? 

*JOBS JOBS JOBS *....... IS THE TRIGGER POINT !!!!!!

*1st Fleet closes it's doors and 600 jobs lost. *

http://www.news.com.au/business/st-.../story-e6frfm1i-1226345440090?from=public_rss 

What does 1st Fleet do? Why a trucking company of course !! So deliveries of product to various outlets is now in jeapordy thusly affecting supply of goods to the retailer causing an accordian effect to the consumer.


*3000 Public Sector Jobs to go in the next budget as Juliar Gizzards razor gang gets busy. *

http://afr.com/p/national/public_sector_could_lose_jobs_union_gBCnqpA4D4DBhn9m3rj1eM

 Dear oh Dear !! The Unions will not be liking this one. Vive' le Revolution !!

*700 jobs in Optus and 1000 jobs in Qantas in the balance here.*

http://www.news.com.au/optus-signal...ly-as-next-month/story-fn7x8me2-1226304551759

Sooooooooooooo once again for comedy purposes only. Residential prices in Australia will fall at a faster pace due to job losses. But I only have been banging on about this fact for a couple of years now. 

Good to see Steve Keen followers as well as the man himself have moderated their views on the percentile of possible deflation of property. 

Let the hatchet job begin.


----------



## trainspotter (4 May 2012)

Uncle Festivus said:


> Wealth is just an illusion for the property bulls - we're not getting any richer?
> 
> View attachment 46987




Aaaaaaaaah yes Uncle F ..... but but but the little red line is spending a lot more time above the datum point.


----------



## young-gun (4 May 2012)

trainspotter said:


> *GOSH* ... has anyone been paying attention??
> 
> *JOBS JOBS JOBS *....... IS THE TRIGGER POINT !!!!!!
> 
> ...




this is indeed the most 'open to the idea of a fall in prices' post I have seen from you train spotter, it's refreshing.


----------



## trainspotter (4 May 2012)

young-gun said:


> this is indeed the most 'open to the idea of a fall in prices' post I have seen from you train spotter, it's refreshing.




Aaaahhhh but Grasshopper ..... Go and read post #5984 on Page 300 that I wrote on the 8th of August 2011. Really take note of the "QUOTE" from myself in this post. 

There were many more before that but I cannot be bothered trolling through the years/pages/posts that I have been writing about only to fall on myopic eyes and views with the inability to comprehend what I have been diatribing about. 

To know your enemy is to keep them close.


----------



## young-gun (4 May 2012)

trainspotter said:


> Aaaahhhh but Grasshopper ..... Go and read post #5984 on Page 300 that I wrote on the 8th of August 2011.
> 
> There were many more before that but I cannot be bothered trolling through the years/pages/posts that I have been writing about only to fall on myopic eyes and views with the inability to comprehend what I have been diatribing about.
> 
> To know your enemy is to keep them close.




you will have to forgive me for also not wanting to go back through them all, your posts that I have read have been far from dominated by the idea of a fall. ill get back to you.


----------



## young-gun (4 May 2012)

trainspotter said:


> LOL Uncle Festivus. All you permabulls. SHUCKS I am honoured you think this way. Where did I say that property will be doing fine? Where were you when I wrote this?
> 
> 
> 
> ...




finally something we agree on. But i don't believe that unemployment is the sole trigger(although possibly the most noticeable) to falling prices, there is a huge array of factors the contribute to such an event.

I also think you are putting too much faith in the ability of lower interest rates to stop a fall. Sure it helps people to hold their houses a little longer if they are in strife, but I think there would be a point at which people go "oh ****, I need to get out now before I lose any more money!" regardless of their repayments. And as you have pointed out, interest rates are redundant if you cant make the repayments at all

In fact I think interest rates are redundant in every way in the current market, as evident throughout the world at present.


----------



## trainspotter (4 May 2012)

young-gun said:


> you will have to forgive me for also not wanting to go back through them all, your posts that I have read have been far from dominated by the idea of a fall. ill get back to you.




I have not changed my position. I have always maintained that prices are trancing sideways and or falling in CERTAIN areas. I have also maintained that there is still moeny to be made in CERTAIN areas. 

I have given clear and concise reasons as to WHY I think house prices will fall and given valid and factual explanations as to how to make money in RE both commercial and also residential. Even down to percentages of profit as well as amount of capital input required.

My main objection is that other "posters" have claimed 30% to 40% reductions overall ala Steven Keen style. I have called for a more orderly "leaking of the balloon" style due to the amount of banks/guvmint/business/corporations involved along with the FACT that we are not like America or Spain or Greece or Ireland blah blah blah as our fiscal policy as well as the amount of money involved is chicken **** compared to what they have over there tied up in RE. Our Guvmint is not broke but they are working on it !!!

We are only 22 million people for CHRISSAKE ..... Not even a decent city in China.

What did Commbank come out and say about passing on the interest rate reduction? "We have to think of our 3 million DEPOSITORS compared to our 800,000 mortgage holders first." Hmmmmmmmmm over securitised you think?


----------



## wayneL (4 May 2012)

trainspotter said:


> Viva La RevoluciÃ³n! (Or Vive depending on the specific source)




One mustn't cross tongues. :


----------



## trainspotter (4 May 2012)

young-gun said:


> finally something we agree on. But i don't believe that unemployment is the sole trigger(although possibly the most noticeable) to falling prices, there is a huge array of factors the contribute to such an event.
> 
> I also think you are putting too much faith in the ability of lower interest rates to stop a fall. Sure it helps people to hold their houses a little longer if they are in strife, but I think there would be a point at which people go "oh ****, I need to get out now before I lose any more money!" regardless of their repayments. And as you have pointed out, interest rates are redundant if you cant make the repayments at all
> 
> In fact I think interest rates are redundant in every way in the current market, as evident throughout the world at present.




MY GOD MAN !!! You actually agree with one of my posts??? 

Once again you misinterpreted what I wrote in the quote !! 

Read it again please "If this happens then I can easily see a *quickening * slide on the 8 capital city average home price due to foreclosures"

Note the word "quickening" ..... and that I recognised that the home prices were already sliding in the 8 capital cities?

This is what I am talking about ... the "selective" interpretations of my posts. 

My position has not changed.


----------



## trainspotter (4 May 2012)

wayneL said:


> One mustn't cross tongues. :




LOL ...... Good on ya WayneL .... my faux pas !!


----------



## young-gun (4 May 2012)

trainspotter said:


> I have not changed my position. I have always maintained that prices are trancing sideways and or falling in CERTAIN areas. I have also maintained that there is still moeny to be made in CERTAIN areas.
> 
> I have given clear and concise reasons as to WHY I think house prices will fall and given valid and factual explanations as to how to make money in RE both commercial and also residential. Even down to percentages of profit as well as amount of capital input required.
> 
> ...





This chart isnt the most recent, but me thinks that australia has just as much money tied up in RE as anywhere else?
http://www.macrobusiness.com.au/201...orsens-recessions/imf-mortgage-debt-to-gdp-8/

I know you hate keen(im not his biggest fan either), but he pulled these charts from the RBA, putting our mortgage debt to gdp at around 85%.
http://www.debtdeflation.com/blogs/2012/01/07/australian-house-prices-again/

and finally this recent article from the irish times
http://www.irishtimes.com/newspaper/finance/2012/0221/1224312114714.html


> There is no escaping personal debt in this country. It is a massive problem. Just how massive was revealed in a recent report by consultants McKinsey, which put Ireland’s household debt as a percentage of gross domestic product at the end of the second quarter of last year at 124 per cent. The average for a mature economy is 77 per cent. And while in some respects Ireland is performing much better than other financially troubled countries, when it comes to our personal debt mountain we are out on our own. Greece has a personal debt to GDP ratio of 66 per cent, in Portugal it stands at 99 per cent and in Spain it is 82 per cent, while Italy’s personal debt to GDP ratio is an admirable 45 per cent.




please note that the above figures are HOUSEHOLD debt, not just mortgage debt. it would seem our mortgage debt alone is above most countries entire household debt, unless im missing something.

and whats our population got to do with it? ireland only has 4.5 million and their RE has fallen?

im not trying to pick you apart, please feel free to correct me if i have missed something with my myopic view


----------



## trainspotter (4 May 2012)

young-gun said:


> This chart isnt the most recent, but me thinks that australia has just as much money tied up in RE as anywhere else?
> http://www.macrobusiness.com.au/201...orsens-recessions/imf-mortgage-debt-to-gdp-8/
> 
> I know you hate keen(im not his biggest fan either), but he pulled these charts from the RBA, putting our mortgage debt to gdp at around 85%.
> ...




Errmmmmmmm go and do some research and get back to me. I have enucleated my position more than enough in here. This topic has been covered a Brazillian times already.

Start with the Google search "Ireland is part of the European Union "


----------



## young-gun (4 May 2012)

trainspotter said:


> MY GOD MAN !!! You actually agree with one of my posts???
> 
> Once again you misinterpreted what I wrote in the quote !!
> 
> ...




haha you make out as though this view of yours is something you portray all the time, I'd like to point out that it isn't the most frequent idea that you post, in fact as I said its the first time I have seen you talk about it in recent times.

It's not so much that I disagree with your posts, as it was a dislike for your inability(how i perceived you at the time) to see both sides of an argument. but i feel much better now that I know you do in fact see a threat there and of course i can concede there are opportunities out there, I have never argued there isn't, but I'll leave those opportunities to you and tech, and keep my cards close to my chest for now.


----------



## wayneL (4 May 2012)

To be fair Young Gun, I do recall TS repeatedly being 'realistic' about the prospects of RE throughout this thread since that original quote.


----------



## McLovin (4 May 2012)

I was watching _Selling Houses Australia_ last night (yes I was that bored). Anyway, they had a property in South Coogee, with nice enough views, but the house was an absolute knock-down rebuild job. The vendor wanted $3m. Thinking this was a new episode I almost choked on my _Ron Zacapa_. Then I realised it was from early 2008. How times change. For $3m these days you could buy a decent place in Vaucluse.


----------



## Uncle Festivus (4 May 2012)

trainspotter said:


> Aaaaaaaaah yes Uncle F ..... but but but the little red line is spending a lot more time above the datum point.




That's a yearly trend change down for 20 years now, and a flattening of the GDP as well. It's all part of the big picture globally - too much liquidity creating property bubbles. Looks like one last hurrah from the late comers with the interest rate reduction, perhaps may arrest the decline momentarily, but for all intents we are probably just now at the start of _the_ property bust coinciding with the next leg down of the GFC?

Anyway, welcome to the dark side 

PS it's now 2 years since the Robots peak.....


----------



## numbercruncher (4 May 2012)

Thought I better stop lurking and say Hi 


Everything going well with the Property erm I mean credit boom ?


Oh and no Robee' Ottics anymore ?


Cheers


----------



## Glen48 (4 May 2012)

Bloomberg Markets has a list of the world’s strongest banks ”” they are dominated by Canada and Singapore firms.

Why Canada? Regulators there set strict criteria on the quality of banks’ assets and reserves. Canadian banks don’t use a lot of leverage, and are required to hold 75% of their capital in equity.

Here is the top 10 list:

1. Oversea-Chinese Banking Corp OCBC (Singapore)
2. BOC Hong Kong Holdings Ltd. (Hong Kong)
3. Canadian Imperial Bank of Commerce CIBC (Canada)
4. Toronto-Dominion Bank TD (Canada)
5. National Bank of Canada (Canada)
6. Royal Bank of Canada (Canada)
7. United Overseas Bank Ltd. (Singapore)
8. DBS Group Holdings Ltd. (Singapore)
9. Hang Seng Bank
10. Svenska Handelsbanken (Sweden)

Other Canadian banks made the list, such as Bank of Nova Scotia ranked 18th, and Bank of Montreal was 22nd.

Only three U.S. banks ”” JPMorgan Chase (JPM) (No. 13), PNC Financial Services Group Inc. (PNC) (No. 17) and BB&T Corp. (BBT) (No. 20)  made the top 20.


----------



## young-gun (4 May 2012)

wayneL said:


> To be fair Young Gun, I do recall TS repeatedly being 'realistic' about the prospects of RE throughout this thread since that original quote.




he has been quite resistive to the idea of a crash in most of what i have read, but I do agree that there is every chance RE will have a bit of a slow burn or a 'leaking balloon' affect, as opposed to a crash. just how low it will go remains to be seen. perhaps i have only been exposed to certain posts.


----------



## McLovin (4 May 2012)

This is a pretty bearish outlook. Good to finally see the RBA addressing the wage inflation issue and the lack of productivity growth. Unfortunately, this sort of thing should fall to the government, not the RBA, for policy initiatives. Anyone like to wager on the chances of that happening.



> Australia needs to slow the pace of labour cost growth and boost productivity to keep a lid on domestic inflation that has been offset by weaker prices for imported goods and services, the Reserve Bank said on Friday.
> 
> As the bank trimmed its forecasts for economic growth and inflation, it also warned that Australia faces weaker growth and faster price gains if it doesn’t generate a “sustained moderation in domestic cost pressures”.
> 
> ...




http://www.afr.com/p/national/rba_trims_growth_inflation_forecasts_zi8TLfCOYe49puzEVPZ11H

It really amazes me how expensive Australia is, not just housing but everything. You have to worry about how prepared the indebted housing sector is for the part I have highlighted.


----------



## numbercruncher (4 May 2012)

Perhaps a "slow leaking" effect is even worse for individual home owners/money renters, might benefit bankers perhaps as people hold on ....

ie - if you paid 500k a year ago in the boom state of Victoria your now in the hole big time - 7% down , 7ish% mortgage interest , stamp duties etc - alot of ground to make up in a rapidly worsening economy ......


----------



## satanoperca (4 May 2012)

Melbourne 7% down already
Massive amount of stock on the market
Massive amount of apartments to come onto the market over the next 24 months
Incredibly low rates of new land sales
Massively over indebted FHB who bought with the FHBG and high LVR's facing negative equity
The removal of the FHBG
Retrenchments on the rise, how does one pay the mortgage with no job
Retail being squashed

Prediction at least 7% down in the next 12-18months

If correct, the crash will happen as people run for the exits

TS, I think you will look back in a few years and see it was property first that started to decline which resulted in unemployment rising.


----------



## Trembling Hand (4 May 2012)

satanoperca said:


> TS, I think you will look back in a few years and see it was property first that started to decline which resulted in unemployment rising.




Yes thats been what happened in all the other pops OS. One does not need to cause the other to happen. When it is a confidence game they just fall together.


----------



## Macquack (4 May 2012)

numbercruncher said:


> Thought I better stop lurking and say Hi
> 
> 
> Everything going well with the Property erm I mean credit boom ?
> ...




Welcome back numbercruncher, one of the good guys on ASF.


----------



## Julia (4 May 2012)

Macquack said:


> Welcome back numbercruncher, one of the good guys on ASF.



A+1.  Nice to see you back, Numbercruncher.  Hope all has been going well for you.


----------



## numbercruncher (4 May 2012)

Thanks guys - been meaning to say hi for a while 

Hope your all well too !


----------



## MrBurns (4 May 2012)

numbercruncher said:


> Thanks guys - been meaning to say hi for a while
> 
> Hope your all well too !




Glad to meet you


----------



## Agentm (5 May 2012)

we miss the sunshine and lollipops in this forum

what i miss is the vitriolic attacks you get when you suggest they acknowledge the idea of massive RE bubble

there is absolute no doubt the RE market is is a decline and here in victoria, the state government cant support the bubble further, but we can only hope the fed government can intervene and perhaps come up with a way to keep the bubble growing..

failing that, the reiv has no power to sustain the bubble and week by week their appalling spin on the disaster thats unfolding will just discredit them more and more, and they maintain the active policy of falsely reporting auction sales results without any shame..

i think its time to rethink that a coat of paint and a property filled with new furniture and paintings, leased exclusively for the auction, will deliver you a fat profit.. thats about as much knowledge you need to make money in property.. watch the block and become an overnite bogan developas maate.. lol

reality of the bubble and it true financial impact is finally coming home to roost

should be a disaster for many caught in the hype, but those sunshine and lollipops believers i think will still disbelieve the reality and put their heads in the sand for a long while to come..

lets hope the decline curve stays slow and we dont have a crash and burn,,, but anythings possible and the employment cycle looks sad in the bubble zones imho..


----------



## Agentm (5 May 2012)

*Australian House Prices down 10% from Peak*

 by Steve Keen on May 1st, 2012 at 2:04 pm Posted In: Debtwatch





287


EmailShare
There  are several providers of statistics on Australian house prices, but  only one that doesn’t have a vested interest in the direction house  prices actually move in: the Australian Bureau of Statistics.  So despite the criticisms of this series””that it’s based on detached  dwellings only, based on median sales data, too infrequent, not adjusted  for “hedonic” differences between houses, etc., it’s the only one I  trust.
 Click here for data in Excel: Debtwatch; CfESI
Click here for more data in Excel: Debtwatch; CfESI
Click here for this post in PDF: Debtwatch; CfESI
 Chris Vedelago had a very nice piece about how confusing the various commercial house price statistics are:The Real Estate Institute of Victoria said the city’s  median house price rose 0.9 per cent in the March quarter. Except that,  according to RP Data-Rismark, it fell 1 per cent. Australian Property  Monitors, which is owned by Fairfax, believes prices rose 1.6 per cent  in the three-month period. Residex, on the other hand, estimates values  fell 1.9 per cent… (“Confused about the market? We all are“, The Age April 29)​I’m happy to ignore these numbers””and even more so the spin doctoring  that goes with them. The ABS numbers are in, and they show a 1.1%  national fall over the March quarter. Sydney house prices fell 1.8%  according to the ABS, whereas Australian Property Monitor alleged they  rose 1.4%””the latter being the basis for Andrew “Always Look On the  Bright Side” Wilson’s latest piece “Confidence rises as prices bounce back” (SMH April 28). Yeah, right.
 Australian House prices have now fallen 6.1% from their peak, and  have been falling for 21 months, which is the longest downturn in  nominal prices ever recorded by the ABS””the previous longest being the  12 months from the beginning of the GFC (which was terminated by my  favourite government policy of all time, the First Home Vendors Boost).
*Figure 1: Nominal house prices have fallen 6.1% since June 2010
*





 I’m sure the usual spruikers will come out with why this is now the  bottom, and it’s a good time to buy, and there wasn’t an Australian  house price bubble, and the shortage will drive up prices, and… So let’s  put the current data in the context of the bursting of acknowledged  overseas house price bubbles.
 Firstly the inflation adjusted data: in real terms, house prices have  now fallen 10% from their June 2010 peak, and are back to a level they  first reached in late 2007.
*Figure 2: Real house prices have fallen 10% since June 2010
*




 Now let’s compare the Australian experience to date with the Japanese and US experiences””where no-one, not even Alan Greenspan,  denies that there was a housing bubble. The Japanese bubble peaked in  June 1991; the US bubble peaked in in May 2006; and Australian house  prices peaked in June 2010. Figure 3 shows the three declines from the  peak, and while the Australian experience so far is clearly better than  the USA’s, it’s only a whisker better than the Japanese experience to  the same date after the peak.
*Figure 3: Comparing Japanese, US and Australian house prices from their peaks
*




 Anyone who takes comfort from that should also consider the longer term perspective””see Figure 4.
*Figure 4: The long term picture for Japan and the USA
*





http://www.debtdeflation.com/blogs/2012/05/01/australian-house-prices-down-10-from-peak/


----------



## Agentm (5 May 2012)

The motive force behind Australia’s bubble was the same as in the USA   and Japan: accelerating debt drove rising house prices during the boom.   Now in both those countries, decelerating debt is driving house prices   down. The same pattern applies in Australia””see Figure 5 .
*Figure 5: Mortgage acceleration drives change in house prices
*




 Don’t take heart from the uptick in acceleration at the end of the   series there: for that to be sustained into the future, ultimately   Australian mortgage debt would need to start rising (compared to GDP).   But mortgage debt grew more rapidly here and reached a higher peak than   in the USA (see Figure 6); the odds that it will rise again are slim.
*Figure 6: Australian mortgage debt exceeded the USA’s
*




 And even though the actual level of mortgage debt is still rising,   it’s doing so at the slowest rate ever recorded by the RBA (see Figure   7).
*Figure 7: Annual growth in mortgage debt (with series break in 1991)
*




 The odds are that the rate of decline will accelerate in the next year””since as Leith van Onselen pointed out yesterday,   many Baby Boomers are relying on rising house prices to secure their   retirements. Now that house prices are falling, and have been doing so   for almost 2 years, many of these Boomers””74% of whom earn less than   $80,000 a year, with the average investor losing over $9,000 a year on   these “investments”””could decide to get out rather than continue to   absorb losses. The unwinding of their leveraged positions could push   mortgage growth below zero, and of course accelerate the house price   fall.


http://www.debtdeflation.com/blogs/2012/05/01/australian-house-prices-down-10-from-peak/


----------



## Starcraftmazter (5 May 2012)

Agentm, excellent posts - great charts. Anyone who denies the bursting of our housing bubble must have the downs.


----------



## MrBurns (5 May 2012)

Starcraftmazter said:


> Agentm, excellent posts - great charts. Anyone who denies the bursting of our housing bubble must have the downs.




I agree.

They'll try and make it a soft landing with interest rate reduction but it won't stop the inevitable, the banks are well aware of whats happening.

It's a cycle what goes up sometimes comes down for a while, last time it was about 10 years before property recovered from memory. (the 90's)


----------



## Agentm (5 May 2012)

Starcraftmazter said:


> Agentm, excellent posts - great charts. Anyone who denies the bursting of our housing bubble must have the downs.




thanks starcraft

i follow this decline with interest


----------



## young-gun (5 May 2012)

Starcraftmazter said:


> Agentm, excellent posts - great charts. Anyone who denies the bursting of our housing bubble must have the downs.




what? there's a housing bubble?


----------



## Starcraftmazter (5 May 2012)

young-gun said:


> what? there's a housing bubble?




Who stole my false teeth?


----------



## lioness (5 May 2012)

Can someone post the link to today's results.

Thanks. Good to hear this bubble deflating in an orderly fashion.


----------



## moXJO (5 May 2012)

> Australian House Prices down 10% from Peak
> 
> by Steve Keen on May 1st, 2012 at 2:04 pm Posted In: Debtwatch




Thats f**king it?
 I thought it was suppose to be at least 50% by now.
 Maybe next year.


----------



## Glen48 (5 May 2012)

It may not happen over night but it will happen...be slow and over a long time so you will get your wish.


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## MrBurns (5 May 2012)

Glen48 said:


> It may not happen over night but it will happen...be slow and over a long time so you will get your wish.




Wish it or not it's on its way - 

Watch for - 

job losses
insolvencies
retail sales figures
auction pass in rates

it will happen in slow motion, everything slows down , almost stops, it's only after it's obvious to everyone will it be talked about as fact.

Banks are waiting to foreclose without attracting adverse publicity.


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## moXJO (5 May 2012)

Glen48 said:


> It may not happen over night but it will happen...be slow and over a long time so you will get your wish.




Flat to slow decline that’s what the majority of the labelled property bulls have been saying. I will say this if we don't get stable government in the next 6 months that begins to tackle productivity, IR and gets back to developing relationships with our Asian neighbours then I'm all in on that 'very hard landing' call.


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## young-gun (6 May 2012)

moXJO said:


> Flat to slow decline that’s what the majority of the labelled property bulls have been saying. I will say this if we don't get stable government in the next 6 months that begins to tackle productivity, IR and gets back to developing relationships with our Asian neighbours then I'm all in on that 'very hard landing' call.




and it took a while for them to come to terms with the potential of a 'flat to slow decline'. i can only imagine how hard its gonna be for the poor fellas when the wheels fall off. is there medication for denial?

it would appear we are entering into quite the downward spiral, as TS pointed out the other day unemployment and job cuts are hitting the head lines, in my short time I don't recall seeing so many thousands of jobs lost/being cut by large corporations all over the news, and almost on a daily basis. companies cutting back spending, battening down the hatches. the question is when will RE investors start to consider cutting their losses, and taking profits before it's too late?

i work with 2 guys who just bought an IP 2-3 months ago, they are both already worth less than they paid. can't imagine thats a good feeling.?


----------



## Mrmagoo (6 May 2012)

I gotta say I can't wait for the crash. All those evil property investors. I can't wait to see the tears.

I mean it is so immoral. You're buying an asset on the expectation it will cause financial hardship to a young family. You want that next person who needs a place to live to pay 100k more 2 years down the track... immoral. Wrong.

A house is a necessity of life...

Why not invest in publicly listed building companies ? Provide the funds to build more properties... nope... it is all one big evil scam.


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## Glen48 (6 May 2012)

The best con has been calling it Investment Property when not many have made money and those with property now are letting all their Black chips ride on the roulette wheel not knowing the  Red or Zero will  turn up.
They should have cashed in when they had the chance waited and got back in the market once it hit the floor and own a better piece of RE at a cheaper price.

To RE shill's it means  IP ...in your pocket ..


----------



## Beej (6 May 2012)

moXJO said:


> Thats f**king it?
> I thought it was suppose to be at least 50% by now.
> Maybe next year.




And to get even that mildly impressive sounding minus 10% figure, Keen had to use inflation / CPI adjustment to the numbers! 

In nominal terms, according to both ABS and RP-Data, the current Aussie property market cycle peaked around June 2010, and since then has *fallen 6% over 21 months* to end of Mar 2012, based on the weighted capital city indexes. Prior to June 2010, prices increased by 21% from the previous low point of March 2009. Results do vary quite a bit between individual cities though.

The big question is what will we see from here? Perplexingly, APM recorded a positive numbers on average for Q1 2012 (+0.9%), RP-Data was basically flat (-0.1%), and Residex + ABS published negative numbers of (-0.7% and -1.1%).

For Sydney, all providers bar ABS had a positive Q1 number - APM: +1.4%, Residex: +1.73%, APM: +1.2%, ABS -1.8%

For Perth, everyone including ABS had a positive number - APM: +0.1%, Residex: +3.95% APM: +0.7%, ABS: +1.1%

Housing finance numbers and FHB proportion reported in those figures steadily improved from mid last year until the present time, and this is often a leading indicator of improving conditions. Auction clearance rates in the key auction cities of Melbourne and Sydney were pretty ordinary up until Xmas, but have improved a bit this year up to recent weeks. Both Melbourne and Sydney have reported clearance rates of ~60%+ this weekend, and for the past few weekends (barring one poor result for Sydney after the Anzac day holiday week).

I note that last time the market turned from falling to rising prices back in early 2009, there was a similar period of confusing / conflicting house price data, with the ABS in particular lagging quite a bit before reporting the rising prices. Likewise, the finance data and auction clearance rates had been improving steadily for 6 months or so before the market started to turn.

Given all of this, and the recent interest rate cut, with the likely-hood of more to come, my feeling is that the bottom is in for this cycle for now, and that we may see some steadily rising prices from here. Perth and Sydney will probably provide the bulk of this I think, with Brisbane not far behind. I'm not thinking 20% in a year gains or anything, I just think flat to low growth for a while, spurred on by the tight rental market and rising rents in the key cities - especially Sydney and Perth.

EDIT: Here's a good RBA graph showing national average rental yields and vacancy rates (I prefer city by city data though):




And here's the ABS housing finance data:










Like always I still say though, every market is local. Anyone thinking of buying or selling at the moment needs to watch what's going on in their local area very closely. Real bargains only really come up when there are distressed / forced sales. I'm sure the serious property investors are actively looking out for these in many areas at the moment. There are a couple of auctions next weekend in my local area that will give me a good feel for what the demand is like around where I live at the moment, so looking forward to see how those go.


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## Mrmagoo (6 May 2012)

I feel like it is 05 all over again..

how far can it go down ?

how far down are we now ?

no one knows

the only certainty

its is falling


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## Glen48 (7 May 2012)

Given all of this, and the recent interest rate cut, with the likely-hood of more to come, my feeling is that the bottom is in for this cycle for now, and that we may see some steadily rising prices from here. Perth and Sydney will probably provide the bulk of this I think, with Brisbane not far behind. I'm not thinking 20% in a year gains or anything, I just think flat to low growth for a while, spurred on by the tight rental market and rising rents in the key cities - especially Sydney and Perth.

Hold that thought for a few months and see how wrong your are.


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## Starcraftmazter (7 May 2012)

Glen48 said:


> Given all of this, and the recent interest rate cut, with the likely-hood of more to come, my feeling is that the bottom is in for this cycle for now




NOPE. Even if interest rates will eventually be 0.125%, house prices in Australia will still fall.


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## Miss Hale (7 May 2012)

Has anyone else noticed this?

Here in Melbourne we get a glossy property magazine with our local paper. Each week they profile a suburb.  When I first moved back to Melbourne mid last year I noticed that the graph showing median house price only went as fas as 2010, fair enough I thought, we are only midway through 2011.  However, it's now well into 2012 and they are _still _only showing data up until 2011.  I think this is very misleading as the prices have dropped since 2010 and just glancing at this graph you would think they are on the way up.


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## Knobby22 (7 May 2012)

That is very dodgy, can I ask the paper?


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## Starcraftmazter (7 May 2012)

Well of course - property bulls/spruikers are amazing creatures - anything which doesn't fit in with their "house prices double every 7 years!" religion is blocked out by their brain. They are sort of like the cult of scientology - in that, they will keep the "truth" away from their minions at all costs.


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## Miss Hale (7 May 2012)

Knobby22 said:


> That is very dodgy, can I ask the paper?




It's a property glossy that comes with our free local paper which is the "Whitehorse Leader", the glossy mag is called "Manningham/Whitehorse Leader Property". I assume there is a similar version for all of the various localities in Melbourne.

Also, in my above post with the graph I meant to say that they are still only showing data up until 2010 (I inadvertantly typed 2011)


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## Knobby22 (7 May 2012)

Yep, as I thought, News Limited. 

33 titles over all of Melbourne.  

http://www.newsspace.com.au/communitynews/leader


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## Starcraftmazter (7 May 2012)

Knobby22 said:


> Yep, as I thought, News Limited.




That explains it.


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## maffu (7 May 2012)

Julia said:


> What is going on here?  Has there developed such a laissez-faire culture where clients don't routinely check e.g. specifications, are in love with a dream and just OK whatever the builder does?
> Are builders so accustomed to this loose and casual approach that they are unwilling to accommodate a client who expects what has been promised?
> 
> Buying/building a house is one of the most significant capital events in any of our lives and surely most people would be careful to ensure they're actually getting what has been promised?  Perhaps not.
> ...




Julia, when you decided to not go ahead with the building, and cancelled during the cooling off period, did the Builder try a bit harder to convince you to go ahead with it? Or did he just continue to ignore you?
If business was as bad for builders as many have mentioned, I thought he would have been busting his gut trying to suck up to you and get the contract.


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## young-gun (7 May 2012)

Starcraftmazter said:


> Well of course - property bulls/spruikers are amazing creatures - anything which doesn't fit in with their "house prices double every 7 years!" religion is blocked out by their brain. They are sort of like the cult of scientology - in that, they will keep the "truth" away from their minions at all costs.




ohh come on now star, give them a break! I'm sure they are trying their best to present the unknowing with some positive data, it's not their fault that there isn't any.


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## Starcraftmazter (7 May 2012)

young-gun said:


> ohh come on now star, give them a break! I'm sure they are trying their best to present the unknowing with some positive data, it's not their fault that there isn't any.




I bet they pray to their satanic prophet of easy credit every night for some sort of a miracle


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## Miss Hale (7 May 2012)

Knobby22 said:


> Yep, as I thought, News Limited.
> 
> 33 titles over all of Melbourne.
> 
> http://www.newsspace.com.au/communitynews/leader




I don't think it's related to it being a News Limited paper per se, I see plenty of property spruiking in the Fairfax Press too.


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## kid hustlr (7 May 2012)

I went to an auction on the weekend and the big green st george dragon rocked up and knocked 10k off the purchase price courtesy of the bank.

i thought that was pretty cool


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## Glen48 (7 May 2012)

10K it is called bait just like 1080 is to pigs.


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## Julia (7 May 2012)

maffu said:


> Julia, when you decided to not go ahead with the building, and cancelled during the cooling off period, did the Builder try a bit harder to convince you to go ahead with it? Or did he just continue to ignore you?
> If business was as bad for builders as many have mentioned, I thought he would have been busting his gut trying to suck up to you and get the contract.



 Yep, you'd have thought so.  And he could have explained away the non provision of security screens in the final specification as an oversight.
He clearly decided he preferred clients who wouldn't be too vigilant about costs.

Looking back there were other clues e.g. changes I made which reduced the cost (no dishwasher, less sophisticated oven etc) for which I asked for written note of difference between the original and the new version which never appeared.  Presumably he thought these credits would just get overlooked in the scheme of time.

And yes, most builders are looking for work.  He's in his late 50's and about ready to retire, apparently quite well off, so probably can choose his sucker clients.
Glad I didn't in the event become one of them.


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## Macquack (7 May 2012)

Julia, do you mind revealing the total cost of the project home you were purchasing?


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## Agentm (8 May 2012)

*                         Top end caught flat-footed as property slump worsens                     *

*Chris Vedelago*

     May 6, 2012         


 Be the first to comment
 



	

		
			
		

		
	
                 Illustration: Matt Golding 

                                 Melbourne's rich and famous are facing losses of up to 25  per cent in the luxury apartment market as the top-end property slump  worsens.
              Prestige areas, including Toorak, Brighton, East  Melbourne, Southbank and St Kilda Road, where hundreds of $1  million-plus apartments have been  for sale, have been hit hardest over  the past year, according to research by Australian Property Monitors.
              Owners of some of the most expensive penthouses and flats  in the city are having to slash their asking prices by millions  in  some cases to close deals. Others have had to sell for well below what  they paid, even after years in the exclusive buildings.


http://theage.domain.com.au/top-end-caught-flatfooted-as-property-slump-worsens-20120505-1y618.html


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## Julia (8 May 2012)

Macquack said:


> Julia, do you mind revealing the total cost of the project home you were purchasing?



It wasn't a project home.  Why is the cost relevant?


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## Glen48 (8 May 2012)

All those in flood affected QLD who can't get insurance with Suncorp unless they want to pay top $$ should be worried it means their property is worth nothing not even the land.
Which in turn will help push the price of RE down.
 The fault is with the councils wanted revenue at any cost and allowing building  in flood plains.
 There will be other areas in QLD in the same boat.
I assume this will be the trend as the years roll on and insurance companies nit pick where they want to do business.
I guess the banks will be looking at it after all if you can't insure your house then the banks will want their loot back.


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## im sparticus (8 May 2012)

Julia said:


> It wasn't a project home.  Why is the cost relevant?




So the bear****ters on this forum can understand just how much it costs to build a house and that the builder does not price his materials in multiples of the average wage.

Glen explain to me how decreasing supply (of insurable land) lowers prices?


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## Starcraftmazter (8 May 2012)

Glen48 said:


> I guess the banks will be looking at it after all if you can't insure your house then the banks will want their loot back.




What happens if most of the loan is still unpaid for? The banks will be heavily underwater.


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## MrBurns (8 May 2012)

Julia said:


> It wasn't a project home.  Why is the cost relevant?




It's not relevant and it's private/personal


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## MACCA350 (8 May 2012)

im sparticus said:


> So the bear****ters on this forum can understand just how much it costs to build a house and that the builder does not price his materials in multiples of the average wage.



No they just price their wages as multiple of the average wage

Do you really have to wonder why building a house cost so much when tradies are out earning doctors and engineers You don't see many tradies getting around in beat up old utes anymore.

Cheers


----------



## notting (8 May 2012)

MACCA350 said:


> tradies are out earning doctors and engineers




Government should be implementing programs to make it easier for apprentices etc.  Clearly there is a shortage of skilled tradies.


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## young-gun (8 May 2012)

MACCA350 said:


> No they just price their wages as multiple of the average wage
> 
> Do you really have to wonder why building a house cost so much when tradies are out earning doctors and engineers You don't see many tradies getting around in beat up old utes anymore.
> 
> Cheers




supply and demand my friend. if there wasnt so many people forbidding their children to be tradesmen back in the day, telling them to 'make something of themselves', we wouldnt be able to charge so much, as there wouldnt be so little skilled labour. i personally thank all those that look down on tradies $$$ (not saying you are one of these people). this combined with people originally thinking there was no money in it, and an unwillingness by some to 'get their hands dirty' and a number of other factors has led to good times for those that pursued it

not to mention the money made by builders/developers is huge compared to that of your plumbers and sparkys. sure they make good coin, but builders have been riding the boom wave for years now with huge profit margins. people could buy off the plan and have their purchase worth 30k more before it was even finished. that money stops with them(the builders/developers), and doesnt filter down through all subbies. this may not be as noticeable of late with margins coming under pressure, and profits being slashed. tech/a noted he hasnt seen it this bad since the late 80's.

we won't have it good for much longer anyway. the building and construction industry is in my opinion one of the most under threat of a severe downturn. the guys who are actually good at their jobs should be ok. the duds shall finally be culled.


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## moXJO (8 May 2012)

MACCA350 said:


> No they just price their wages as multiple of the average wage
> 
> Do you really have to wonder why building a house cost so much when tradies are out earning doctors and engineers You don't see many tradies getting around in beat up old utes anymore.
> 
> Cheers




Provide evidence, cause it isnt many on top dollar unless they run a team.


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## Julia (8 May 2012)

Glen48 said:


> All those in flood affected QLD who can't get insurance with Suncorp unless they want to pay top $$ should be worried it means their property is worth nothing not even the land.
> Which in turn will help push the price of RE down.
> The fault is with the councils wanted revenue at any cost and allowing building  in flood plains.
> There will be other areas in QLD in the same boat.
> ...



The alternative would be that those of us who have taken care not to live in flood prone areas would continue to massively subsidise the premiums of those who have chosen to ignore the risks and live on river banks etc.

I totally support Suncorp's action here.  They are not firing existing customers.  They are simply saying they will no longer issue new business in these areas.


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## young-gun (8 May 2012)

moXJO said:


> Provide evidence, cause it isnt many on top dollar unless they run a team.




He may be over-exaggerating on the doctor call, i would imagine they are on upwards of 200k plus(just a rough guess). if he is referring to trades in the mines, then possibly, but even then a sparky(in the mines) with experience for example would be getting about 120-130k, maybe more depending on how good/valuable he is. keeping in mind they only work around 5 months of the year on  bhp or rio roster.

There is plenty of money for plebs in construction. in fact, so long as you put in the hours(60 or so a week) you can easily make more than project managers(team leaders) or supervisors. not often supervisors as they tend to work the same hours as the crew in my experience.

the mining boom is undoubtedly keeping property prices in far north and central queensland artificially inflated, and i can only imagine places as far as brisbane aswell(for fly in fly out rosters). ill try find some examples of renting and buying in or around mining towns.


----------



## im sparticus (8 May 2012)

young-gun said:


> He may be over-exaggerating on the doctor call, i would imagine they are on upwards of 200k plus(just a rough guess). if he is referring to trades in the mines, then possibly, but even then a sparky(in the mines) with experience for example would be getting about 120-130k, maybe more depending on how good/valuable he is. keeping in mind they only work around 5 months of the year on  bhp or rio roster.
> 
> There is plenty of money for plebs in construction. in fact, so long as you put in the hours(60 or so a week) you can easily make more than project managers(team leaders) or supervisors. not often supervisors as they tend to work the same hours as the crew in my experience.
> 
> the mining boom is undoubtedly keeping property prices in far north and central queensland artificially inflated, and i can only imagine places as far as brisbane aswell(for fly in fly out rosters). ill try find some examples of renting and buying in or around mining towns.




you guys are well on your way to understanding why prime aussie realestate is the price it is why in real terms its never been cheaper just because you are earning a pitance and cant afford a place does not everyone else is.


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## young-gun (8 May 2012)

im sparticus said:


> you guys are well on your way to understanding why prime aussie realestate is the price it is why in real terms its never been cheaper just because you are earning a pitance and cant afford a place does not everyone else is.




it doesnt matter how much you earn, be it 60k or 260k, it is not cheap.


----------



## sinner (8 May 2012)

im sparticus said:


> why in real terms its never been cheaper




Nonsense. Claims like this demand substantiation, please provide your justification and a chart. Considering the ABS released it's latest housing data recently, this is an especially nonsensical claim to make that 10% off the highs is 'never been cheaper'. It was this cheap last time we were here!

When it comes to residential housing, there is no more real measure than affordability. If you feel that average prices which have increased several orders of magnitude against average incomes in the last 10-20-30 years, I have a few Gold Coast properties to sell you.



> just because you are earning a pitance and cant afford a place does not everyone else is.




Who cares about 'everyone'? House prices are set at the margin, almost entirely on the back of new bank credit creation.


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## Starcraftmazter (8 May 2012)

im sparticus said:


> in real terms its never been cheaper




Drugs are bad, mmmmk?


----------



## numbercruncher (8 May 2012)

Ha - thought that same thing when I read that spruiker comment ....

RE industry is just way under regulated , if a Licenced Stockbroker said the equivalent unfounded and misleading comment about a stock he would be dragged across the coals ....


----------



## trainspotter (8 May 2012)

Starcraftmazter said:


> I bet they pray to their satanic prophet of easy credit every night for some sort of a miracle




Just LOL at this gem of a moronic erudition. I am breaking my own rules and replying to you SCM.

I had lunch with the manager of the local Westpac branch today and I quote him verbatim ..... "We are no longer in the business of lending money, we are deposit takers only" ..... So where is the easy credit?

I wrote over 2 years ago that the banks are tightening their securitisation policy. I went into great detail as to why property is trancing sideways and trigger points that will cause this to quicken and explained as to the percentages required to deal in property. 

Anyhoooooooo ....... No ! no ! no  ..... property does not double in price every 7 years 

Currently looking at a 4700m2 CBD block that I can get 12 units on. $127,000 per block strata titled completed. Building contract of 3 million. Proven sales evidence of 450k per unit. You do the math. Rental of $430 per week. Get purchaser to settle on vacant strata block and cashflow construction all with bank guarantees. 

But, but, but I am being a greedy naughty property developer now aren't I by employing over 60 trades and putting money into the local council, utility services (think water, sewerage and power authorities) as well as the suppliers and local businessmans pocket (engineers, drafting services, floor coverings, landscaping, retaining walls, driveway contractors etc ad infinitum) and keeping the economy going by creating WORK !!!!!!!!!!!!

Aaaaaaaaahhhhh more to it than meets the eye now isn't there. OR I could put my money in the bank and earn 6% and watch the local business and trades slowly go under due to lack of work and as I watch the local council steadily increase their land rates to cover the services of the proletariat as no NEW houses or land is being developed.

Guess what ??? No work for the engineers either. You are the worlds greatest engineer and smarter than 99% of ALL engineers (as per your own statement) right? So if I do not spend my money employing YOU how do YOU survive???


----------



## Starcraftmazter (8 May 2012)

trainspotter said:


> But, but, but I am being a greedy naughty property developer now aren't I by employing over 60 trades and putting money into the local council, utility services (think water, sewerage and power authorities) as well as the suppliers and local businessmans pocket (engineers, drafting services, floor coverings, landscaping, retaining walls, driveway contractors etc ad infinitum) and keeping the economy going by creating WORK !!!!!!!!!!!!




I have no qualm with developers adding to the overcapacity of housing. Please continue to build on!



trainspotter said:


> Aaaaaaaaahhhhh more to it than meets the eye now isn't there. OR I could put my money in the bank and earn 6%




Only simpletons think in absolutes.



trainspotter said:


> Guess what ??? No work for the engineers either. You are the worlds greatest engineer and smarter than 99% of ALL engineers (as per your own statement) right? So if I do not spend my money employing YOU how do YOU survive???




Luckily construction is not the only industry in Australia. If it was, I would be quite worried indeed!


----------



## im sparticus (8 May 2012)

sinner said:


> Nonsense. Claims like this demand substantiation, please provide your justification and a chart. Considering the ABS released it's latest housing data recently, this is an especially nonsensical claim to make that 10% off the highs is 'never been cheaper'. It was this cheap last time we were here!
> 
> When it comes to residential housing, there is no more real measure than affordability. If you feel that average prices which have increased several orders of magnitude against average incomes in the last 10-20-30 years, I have a few Gold Coast properties to sell you.
> 
> ...




you simply cannot nor will you ever be able produce a house for the sorts of prices you guys think is fair value or the prices people are charging for established.


----------



## Starcraftmazter (8 May 2012)

im sparticus said:


> you simply cannot nor will you ever be able produce a house for the sorts of prices you guys think is fair value or the prices people are charging for established.




You realise that most of the cost of a land + property package is the land, right?
You realise this cost is a matter of credit - and has nothing to do with supply and demand anymore, right?
You realise that even the cost of constructing a property (which is already modest compared to the cost of land) will drop further once the commodity bubble bursts, and wages deflate, right?

Right?


----------



## trainspotter (8 May 2012)

Starcraftmazter said:


> I have no qualm with developers adding to the overcapacity of housing. Please continue to build on!




The development in question is undersupplied in the market place/proximity at the moment. Hence why I have gone to extreme measures to elucidate "CERTAIN AREAS" in many of my posts.



Starcraftmazter said:


> Only simpletons think in absolutes.



 ERGO you are a simpleton as I am merely spewing forth your own views as per your previous diatribe.



Starcraftmazter said:


> Luckily construction is not the only industry in Australia. If it was, I would be quite worried indeed!




So the engineers that have specialised in this area are to fold right? By your own admittance you are ahead of 99% of the competition. 

I wrote several posts on the "VELOCITY OF CASHFLOW THROUGH THE ECONOMY" but you are completely aware of all of these symposiums and the adverse effects on everyone literally sitting on their hands and doing nothing aren't you? 

Once again I have responded to the troll


----------



## Starcraftmazter (8 May 2012)

trainspotter said:


> The development in question is undersupplied in the market place/proximity at the moment. Hence why I have gone to extreme measures to elucidate "CERTAIN AREAS" in many of my posts.




That's your *impression*.



trainspotter said:


> ERGO you are a simpleton as I am merely spewing forth your own views as per your previous diatribe.




My views are not that the only two places to put ones' money is property speculation and a bank savings account.



trainspotter said:


> So the engineers that have specialised in this area are to fold right?




Fold what? Shirts?



trainspotter said:


> Once again I have responded to the troll




Responding to yourself you mean? Suggesting the your construction activity employs all software engineers in the country is either trolling or stupidity. You pick.


----------



## DB008 (8 May 2012)

Just had a mate fix up his house and put it on the rental market here in Sydney.

He thought to himself, market is a bit soft, l'll go fishing on 'Gumtree' (of all places) to test the water. Within 4 hours it was snapped up with a signed tenant @$550, and offers of $700 were rolling in just after he signed that tenant. This is out in Greater Western Sydney, not Inner City or Lower North Shore. Yield will be around 8%-10%.

SCM - I see that you have left my question 'unanswered' in the Singapore thread that *you* started. My My, how convenient. Eager to rant and rave on the property thread, but unable to answer 1 of 4 (or is it 5) questions in another threat. LOL.


----------



## numbercruncher (8 May 2012)

Which Western suburb Danny ?


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## DB008 (8 May 2012)

numbercruncher said:


> Which Western suburb Danny ?




Can't give you 100% name, but l think it's Revesby. I will confirm it this coming week.
Decent sized house, 4 x 2 l think, again, l'll find out for you.


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## numbercruncher (8 May 2012)

Intersting that your friend was getting offers of $700 a week through Gumtree for that type of property - 

Realestate.com.au has 110 places in that suburb for rent - dearest is 725 and very schmick - For around that 500 still huge houses available ie - for 550 There is a 5 bedder plus granny flat .....

Maybe everyone should seek out tenants through gumtree to gain that premium price hey ?


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## trainspotter (8 May 2012)

8 Capital City outcome will be closer to 5% DOWN per annum for the 2012/2013 irrespecive of Reserve Bank dropping of monetary policy and or global predictions.

Using ABS figures or whoever you like this WILL be the outcome due to job losses as well as restrictive lending practices of the banks to contain their losses and to subdue shareholders. 

BUT ....... and it is a big BUT ....... in saying this it means that money is cheap to lend if you are securitised with presales. Once again I reiterate in "CERTAIN AREAS" it is still possible to make a profit in RE. See previous posts for a complex dealing that may or may not come along down the gravy train.

Same as buying shares ...... DYOR


----------



## im sparticus (9 May 2012)

Starcraftmazter said:


> You realise that most of the cost of a land + property package is the land, right?
> You realise this cost is a matter of credit - and has nothing to do with supply and demand anymore, right?
> You realise that even the cost of constructing a property (which is already modest compared to the cost of land) will drop further once the commodity bubble bursts, and wages deflate, right?
> 
> Right?




you do realise we are 4 odd years to the otherside of the greatest financial crisis of our time, right?


----------



## im sparticus (9 May 2012)

reposted for somewhere else

"You’re never going to make BIG money betting against the market. That is a fact. There will be pockets of weakness, in between rip your face off rallies. To believe that “this time is different” is always a suckers bet. By betting against progress and prosperity, via clamoring for market disaster, that’s exactly what you are doing.

I will bet against that bubble every single time."


----------



## moXJO (9 May 2012)

Mate just sold his house $5k more than he expected and about $80k more than I expected. It backs onto a major motorway as well. The house next door sold as well for a price I thought was impossible not long after. I'm a bit surprised, imo someone paid too much


----------



## Starcraftmazter (9 May 2012)

im sparticus said:


> you do realise we are 4 odd years to the otherside of the greatest financial crisis of our time, right?




You realise that Swanny merely *postponed* the crisis in Australia - and the chickens are coming home to roost right?

You realise a crisis is not a singular point in the space time continuum right?

China growth plummeting, USA over 100% debt to GDP, Greece about to default on a further $200Bn+. Oh no, GFC was just the proverbial on-tray.

Maybe you should pay more attention to economic analysis, everybody is finally getting on-board in relation to the fact that Australia is about to crash and burn.

Australia headed for the 'Mother of all Hard Landings' - SocGen



> “(In Australia) We see a credit bubble built on a commodity bull market based on a much bigger Chinese credit bubble,” Edwards said in a report. “Of all the bubbles I have seen over the last 30 years in this industry, this one is even more obvious.”


----------



## Glen48 (9 May 2012)

Getting and keep every one in debt is enslaving the world's population once you are caught tn the debt trap it is impossible for you to react to  government decisions.

The IMF is attempting to take over the worlds assets such as power, water, rail and national treasures.
In Greece a large Aluminum company got a government agreement to sell power back to the feds  and buy power from the feds for 60% less.  
Any attempt to privatise any national complex has resulted  in failure and ended up costing the taxpayers more.


----------



## im sparticus (9 May 2012)

Lol, are you guys capitalists or conspiracy theorists?

You do realise the market priced in everything your privy to and some long before you realised it...right?


----------



## numbercruncher (9 May 2012)

im sparticus said:


> Lol, are you guys capitalists or conspiracy theorists?
> 
> You do realise the market priced in everything your privy to and some long before you realised it...right?





How could you possibly know what he or anyone is privy to or in realisation of .... you speak like some kind of crystal ball reading soothsayer .... perhaps you are !


----------



## Glen48 (9 May 2012)

One good thing about those who like to keep their head in the sane the rest of us have some where to park out push bikes.


----------



## DB008 (9 May 2012)

SociÃ©tÃ© GÃ©nÃ©rale - brings back memories that name...4.9 Billion actually

SociÃ©tÃ© GÃ©nÃ©rale


----------



## im sparticus (9 May 2012)

numbercruncher said:


> How could you possibly know what he or anyone is privy to or in realisation of .... you speak like some kind of crystal ball reading soothsayer .... perhaps you are !




bold statement i know but really, what do you believe he is privy to and in realisation of that all market participants as a whole are not?


----------



## young-gun (9 May 2012)

im sparticus said:


> bold statement i know but really, what do you believe he is privy to and in realisation of that all market participants as a whole are not?




quite simple really, investors are biased, as they have their retirements savings in shares and property, they are either ignorant, or mis-informed. it's not that the bears know any more than the next guy, they are simply choosing not to ignore the blatantly obvious. some don't care about the price of their shares which is fair enough, if you bought way back when and your dividends are sky high i prob wouldnt expose myself to the capital gains either.

i think you are giving the markets far too much credit, as they are built on greed.

anyway prices still seem to be falling, havent seen any factories shut down in the past day or two, perhaps we've seen the worst of it?


----------



## Julia (9 May 2012)

young-gun said:


> anyway prices still seem to be falling, havent seen any factories shut down in the past day or two, perhaps we've seen the worst of it?




Dream on.


----------



## Starcraftmazter (9 May 2012)

im sparticus said:


> You do realise the market priced in everything your privy to and some long before you realised it...right?




Just like it priced in the US housing bubble when we were well aware of it but before the **** hit the fan? OH WAIT.

Go back to uni with your failed "efficient market" nonsense.



im sparticus said:


> bold statement i know but really, what do you believe he is privy to and in realisation of that all market participants as a whole are not?




What makes you think most market participants are not mentally retarded?


----------



## im sparticus (9 May 2012)

Starcraftmazter said:


> Just like it priced in the US housing bubble when we were well aware of it but before the **** hit the fan? OH WAIT.
> 
> Go back to uni with your failed "efficient market" nonsense.
> 
> ...




Omg now ive heard it all, so just  how much money did you and the rest of your ilk make calling the gfc?


----------



## Starcraftmazter (9 May 2012)

im sparticus said:


> Omg now ive heard it all, so just  how much money did you and the rest of your ilk make calling the gfc?




Stop trying to change the topic and accept the fact that the market is not efficient nor rational nor right. Everyone is aware of everything and nobody knows how to analyse all the information properly to draw the correct conclusions.


----------



## im sparticus (10 May 2012)

Starcraftmazter said:


> Stop trying to change the topic and accept the fact that the market is not efficient nor rational nor right. Everyone is aware of everything and nobody knows how to analyse all the information properly to draw the right conclusions.




Nope sorry. i will always go with the market and fade the likes of you

anywhoo for me we are range bound with all risk of going lower thab gfc all but gone  the next move is up we arnt far off with history repeating some  indicators for me will be this may sound a little wakey but weakness in gold im talking 1974 and on style gold weakness and stock market recovery and just for ****s and giggles a greek default, apparently the last time greece defaulted was right at the start of a huge bull market look it up quiet interesting.


----------



## Starcraftmazter (10 May 2012)

im sparticus said:


> weakness in gold im talking 1974 and on style gold weakness




Back then the USD was still convertable to gold, and European countries called America's money-printing bull**** and demanded their treasuries be exchanged for gold causing the crisis and the collapse of USD as the gold backed currency.

Nothing that is happening now can be compared to that period of time.


Have fun losing money with the market.


----------



## im sparticus (10 May 2012)

im sparticus said:


> Nope sorry. i will always go with the market and fade the likes of you
> 
> anywhoo for me we are range bound with all risk of going lower thab gfc all but gone  the next move is up we arnt far off with history repeating some  indicators for me will be this may sound a little wakey but weakness in gold im talking 1974 and on style gold weakness and stock market recovery and just for ****s and giggles a greek default, apparently the last time greece defaulted was right at the start of a huge bull market look it up quiet interesting.




Another thing is that the dow has been range bound since the late 90s gfc magnitude selloffs have happened twice in that time long time to be rangebound the next major selloff ill be expecting as the last then we will see a real bull market something my generation hasnt seen in its adult life. thats my take on the next 20 years.


----------



## im sparticus (10 May 2012)

Starcraftmazter said:


> Back then the USD was still convertable to gold, and European countries called America's money-printing bull**** and demanded their treasuries be exchanged for gold causing the crisis and the collapse of USD as the gold backed currency.
> 
> Nothing that is happening now can be compared to that period of time.
> 
> ...




maybe you could be so kind as to show us how you make money in the markets (please dont say your still putting it all under your mattress cause you dont trust the greedy banks....on second thaughts just show us how to make that special uminium foil hat you use to protect yourself.


----------



## moXJO (10 May 2012)

> THE Australian economy added 15,500 jobs in April, compared to market expectations for 5000 fewer jobs during the month, data from the Australian Bureau of Statistics showed today.




Ok wasn't expecting that. Bad news for Doomers.


----------



## numbercruncher (10 May 2012)

moXJO said:


> Ok wasn't expecting that. Bad news for Doomers.





The truth is always in the detail's ...... got to love intentionally misleading news articles ....




> "The growth in jobs is all in part time work, with part time employment rising by 26,000 and full time jobs falling by 10,500,” said treasury spokesman Joe Hockey. “The ambition of full time work is becoming less of an opportunity for Australians.”




http://www.theaustralian.com.au/business/economics/australian-dollar-spikes-as-abs-unemployment-data-surprises-market/story-e6frg926-1226352030159

Im guessing Part-Time jobs arnt that good for "booming" house prices in this new era of responsible lending ?


----------



## young-gun (10 May 2012)

numbercruncher said:


> The truth is always in the detail's ...... got to love intentionally misleading news articles ....
> 
> 
> 
> ...




since when did we start paying attention to job figures anyway? they are almost as useless as the US figures. id say all those part timers are now working at dominos, i think they are doing pretty well.


----------



## young-gun (10 May 2012)

im sparticus said:


> Nope sorry. i will always go with the market and fade the likes of you
> 
> anywhoo for me we are range bound with all risk of going lower thab gfc all but gone  the next move is up we arnt far off with history repeating some  indicators for me will be this may sound a little wakey but weakness in gold im talking 1974 and on style gold weakness and stock market recovery and just for ****s and giggles a greek default, apparently the last time greece defaulted was right at the start of a huge bull market look it up quiet interesting.




im glad you're not in control of my money. if you can please point out anything at all that could not only start, but then sustain a half decent rally i would love to hear it.


----------



## DB008 (10 May 2012)

Here is something that just popped up on Bloomberg.
Could it happen here?



> Dutch With Food Aid Shows New Economic Reality Engulfing Europe
> 
> It’s just after lunchtime on a drizzly day in the Amsterdam suburb of Bos en Lommer and the line of people waiting to fill their bags with free rice, juice, potatoes and bread is lengthening.
> The market is one of 135 food banks in the Netherlands bailing out people trying to survive on less than 180 euros ($234) a month, the threshold to qualify for the aid. Organizers say demand for the service rose 20 percent in the first quarter.


----------



## numbercruncher (10 May 2012)

DB008 said:


> Here is something that just popped up on Bloomberg.
> Could it happen here?





Already does thanks to the free flow of people from New Zealand who have no entitlement to social security arriving here - 

Half of the clients of the food charities on the Gold Coast are young unemployed and therefore hungry Kiwis ....

But I dont think the income of Australian residents could ever fall as low as in that article ?


----------



## im sparticus (10 May 2012)

young-gun said:


> im glad you're not in control of my money. if you can please point out anything at all that could not only start, but then sustain a half decent rally i would love to hear it.





i know im being very general here

the further lowering of interest rates due to the tight budget. from memory most aussie property booms i know of began with record low interest rates. i think sentiment was worse last time around too most missed the turn and looks like they will again.

How much money has your superior market knowhow made you?


----------



## satanoperca (10 May 2012)

im sparticus said:


> How much money has your superior market knowhow made you?



Mine is bigger than yours. 
Title  : The future of Australian property prices
Down


----------



## Glen48 (10 May 2012)

Soup kitchen are to come here one day for sure, UK opens 3 new ones aweek


----------



## im sparticus (11 May 2012)

young-gun said:


> since when did we start paying attention to job figures anyway? they are almost as useless as the US figures. id say all those part timers are now working at dominos, i think they are doing pretty well.




Dominos is booming??


----------



## Glen48 (11 May 2012)

Think they are broke in USA but booming here all making money except the franchisee. .


----------



## hangseng (11 May 2012)

numbercruncher said:


> Im guessing Part-Time jobs arnt that good for "booming" house prices in this new era of responsible lending ?






True but fulltime jobs are.

One mining company in WA alone needs over 6000 new workers for new startup projects but simply can't find them. Maybe some of the people doing part time at Domino's may like to come to WA and take part in what is REALLY going on.

Rents rising significantly in the last 12 months and forecast to rise further with the increased demand.

Add Inpex in the NT and many other new projects and there is simply a massive amount of work available for anyone that has the required skills and willing to relocate or FIFO where avaliable.

But I gues the eastern states are sheltered from this and really don't grasp the enormity of what is happening. Easier for them to ignore the wild west lol 

Seriously though plenty happening if you are willing to work and sacrifice a little. One company I know of is looking for diesel mechanics but can't find anyone. At $1950 p/wk + super, all site accom, meals and FIFO travel...seems people are getting just a bit too picky...

And this is only looking at WA and the NT, what is happening in Qld and SA??? I dare say Qld has quite a bit happening, SA I am not sure. NSW, TAS, Canberra (lol) and Vic people will need to think about what to do...Remain and wait in hope of manufacturing to come back, or go to where the work and money is.

WA and NT housing will be just fine.


----------



## wayneL (11 May 2012)

hangseng said:


> One company I know of is looking for diesel mechanics but can't find anyone. At $1950 p/wk + super, all site accom, meals and FIFO travel...seems people are getting just a bit too picky...




Pfffft

Jeeeezus if a SE trady isn't making that in the cities (and taking half on the black) there is something wrong with him.

That wouldn't lure me out to the never never.


----------



## againsthegrain (11 May 2012)

LOL thought he was going to say PER DAY I don't make too far from that in a cosy office in melb. After tax that 1.9k wont be much better off. Sure paid accommodation but in middle of nowhere. So do you live or just exist for some measly pennies? 

p.s and thats just the mining bubble how long is that going to last


----------



## Glen48 (11 May 2012)

And if you are over 40/45 you can't get a job.


----------



## hangseng (11 May 2012)

againsthegrain said:


> ... and thats just the mining bubble how long is that going to last




Hilarious, more of the same old...West Aussies love here that from you lot, whilst we advance from one project to the next you carry on that it's a bubble. I have been doing this for over 20 years and have heard the same thing every year, with only 2008 showing any signs of slow down that was very short lived.

That keeps on coming up and yet the resource industry in WA in particular continues on expanding at a rapid rate. You should really get out a bit more, the reflection in the window is sheltering you lol...

Your statement displays clearly to me you have no idea what is REALLY going on beyond your comfy office, and merely another armchair expert out of touch with the REAL world.


----------



## numbercruncher (11 May 2012)

Iron ore continues to do extremely well im not sure that can be said about all the other area of the resources sector as you imply- and I dont see to much evidence of RE boom anywhere in Oz at the moment ? anyone have evidence ? anyone ?

And I agree 1950 a week to live in the desert covered in grease and sweat doesnt sound very appealing to most - maybe WA needs to boost wages a bit if it wants to fill these jobs ?


----------



## againsthegrain (11 May 2012)

hangseng said:


> Hilarious, more of the same old...West Aussies love here that from you lot, whilst we advance from one project to the next you carry on that it's a bubble. I have been doing this for over 20 years and have heard the same thing every year, with only 2008 showing any signs of slow down that was very short lived.
> 
> That keeps on coming up and yet the resource industry in WA in particular continues on expanding at a rapid rate. You should really get out a bit more, the reflection in the window is sheltering you lol...
> 
> Your statement displays clearly to me you have no idea what is REALLY going on beyond your comfy office, and merely another armchair expert out of touch with the REAL world.




My apology, obviously us backwards southerners have no idea how it is in the real world. Ah well back to living in a bubble


----------



## young-gun (11 May 2012)

im sparticus said:


> i know im being very general here
> 
> the further lowering of interest rates due to the tight budget. from memory most aussie property booms i know of began with record low interest rates. i think sentiment was worse last time around too most missed the turn and looks like they will again.
> 
> How much money has your superior market knowhow made you?




haha i never claimed to have any know how let alone superior, but with what little i do know, i know that you are going to lose money with your views. unless you are going short on the new property index??? is this your plan?

sorry satanoperca, yes property = down

ps sparticus, exactly how are people going to be able to fund this coming property boom you think is coming? the boomers are maxed out on all fronts, gen y is still getting out of uni, and we're also quite a lazy bunch(so im told). wages are at a breaking point, theres no mroe wiggle room in profits to take on more increases like we've been seeing. somethings gotta give.


----------



## young-gun (11 May 2012)

im sparticus said:


> Dominos is booming??




sorry, i didn't actually mean for that to sound sarcastic, yes they are booming, hence why i was saying thats probably where everyone is working. i use to work at eagle boys, hope they take me on when the going gets tough!


----------



## wayneL (11 May 2012)

Bloody Hell!

We've come from property prices to arguments of existentialism. 

Who'da thunk it? The real world is NW WA.


----------



## DB008 (11 May 2012)

againsthegrain said:


> My apology, obviously us backwards southerners have no idea how it is in the real world. Ah well back to living in a bubble




Yeah, l shouldn't complain. I was earning at least twice my wage (if not more) while doing FIFO work ex PER a few years ago. Yes, l did make some sacrifices along the way, but for me, it paid off and l feel l'm in a more comfortable position in life now. 

Each to their own l guess. 
Not everyone likes FIFO work. Take the good with the bad.

And before everyone jumps on hangseng, do not judge until you have worked in WA (or had a taste for remote work). There is that much work up for grabs (in WA and possibly NT/QLD/SA) it's not funny.


----------



## im sparticus (11 May 2012)

young-gun said:


> sorry, i didn't actually mean for that to sound sarcastic, yes they are booming, hence why i was saying thats probably where everyone is working. i use to work at eagle boys, hope they take me on when the going gets tough!




you know while the gfc was going down i never had so much spare cash in my life it wasnt funny the rent just kept going up holding costs got chrushed things got cheaper but my wage was static to increasing. my guess is this is where the money is comming from.

will you be buying a dominos?


----------



## im sparticus (11 May 2012)

young-gun said:


> haha i never claimed to have any know how let alone superior, but with what little i do know, i know that you are going to lose money with your views. unless you are going short on the new property index??? is this your plan?




i guess it was just the way you have discounted the advice of others who have actually achieved something over your own views that seem to have made you nothing had me believing thats where you were at.


for what its worth im as long as long can be. worst case i give back what i shouldnt already have and continue working for wages.


----------



## young-gun (11 May 2012)

im sparticus said:


> i guess it was just the way you have discounted the advice of others who have actually achieved something over your own views that seem to have made you nothing had me believing thats where you were at.




exactly what advice have you offered? i don't discount any advice i deem remotely credible. once i'm your age, ill let you know how i went. but for now to think that property will boom in the near term to me is simply outrageous, you will have to forgive me for not jumping on that bandwagon with you.


----------



## numbercruncher (11 May 2012)

im sparticus said:


> you know while the gfc was going down i never had so much spare cash in my life it wasnt funny the rent just kept going up holding costs got chrushed things got cheaper but my wage was static to increasing. my guess is this is where the money is comming from.
> 
> will you be buying a dominos?





How often was the rent going up during this GFC thing - was it like a monthly rise or ? and these holding costs you speak of, they got "crushed" - care to elaborate ? after all crushed is a fairly strong word....


----------



## Ves (11 May 2012)

numbercruncher said:


> How often was the rent going up during this GFC thing - was it like a monthly rise or ? and these holding costs you speak of, they got "crushed" - care to elaborate ? after all crushed is a fairly strong word....



 I think he is referring to the falling cash rate over the period.


----------



## im sparticus (11 May 2012)

young-gun said:


> exactly what advice have you offered? i don't discount any advice i deem remotely credible. once i'm your age, ill let you know how i went. but for now to think that property will boom in the near term to me is simply outrageous, you will have to forgive me for not jumping on that bandwagon with you.




i dont offer advice, there is a good chance im younger than you and even better chance I earn less (and im not being cheeky and talking net). been buying since sydney stagnated in 2005 if i remember right we were right on the cusp on another great australian property crash. would hate to have to repurchase my places today. your gonna say the same about the place you sold too everybody does.


----------



## numbercruncher (11 May 2012)

im sparticus said:


> i dont offer advice, there is a good chance im younger than you and even better chance I earn less (and im not being cheeky and talking net). been buying since sydney stagnated in 2005 if i remember right we were right on the cusp on another great australian property crash. would hate to have to repurchase my places today. your gonna say the same about the place you sold too everybody does.





So if we understand your net speak correctly you have purchased a bunch of Sydney properties post 05' on a modest wage -

Which boom suburbs did you buy in ? Is Sydney the only market you have property ?


----------



## im sparticus (11 May 2012)

numbercruncher said:


> So if we understand your net speak correctly you have purchased a bunch of Sydney properties post 05' on a modest wage -
> 
> Which boom suburbs did you buy in ? Is Sydney the only market you have property ?




No you dont get my net speak expenses generally lower my net or taxable income im saying gross im still less than him (job wise maybe not rent wise). didnt buy any boom suburbs from what ive seen things just seem to chug along at 5-7% on average same with rents ( i havnt sold so can only go by what the bank is prepared to lend to) , no sydney is not the only city and nsw is not the only state.


----------



## hangseng (11 May 2012)

wayneL said:


> Bloody Hell!
> 
> We've come from property prices to arguments of existentialism.
> 
> Who'da thunk it? The real world is NW WA.





Get real waneL.

I never stated any such thing. People here are talking like the world is ending as there is no work in the East and it's off to Domino's part time for crying out loud. As if the ONLY world revolves around Sydney and Melbourne drinking cappucino's and looking at their own reflection out of the tinted office window.

Well news flash, outside your "perceived" real world they is a load going on. So much so the govt want to tax the crap out of WA state revenues to prop up your failing economies. Yes yes....blah blah the East propped up WA for a long time so now it's payback time....yawn!

However I don't really give a rats gnats anymore I have made a life elsewhere. Now I make a far better living doing Aus and international projects from afar. 

The other poster is partially correct iron ore is the bulk of the mining activity and a damn lot of it, mind boggling actually. However there are many ASX juniors over here and in the Phillipines going ahead in a big way  in gold, copper and also tungsten in Korea, these revenues will find there way to Aus. The list is long for anyone that cared to look.

Also oil and gas, the latter in particular is massive.

But mr earnsalot from melb wouldn't see that from his comfy chair would he....Except what he reads in the press, and they don't lie do they??????
Like the SMH writer that is in deep crap for what he wrote about EWC operating here in Indonesia. I hope they take both him and the paper to the cleaners for the rubbish they published and then the shareholders affected take them both even better.

Media hype is all you get to see over there, that is your "real world".

So according to the east gurus's the world is ending and property is finished and the resources industry is in a bubble....oh dear what a pile of uninformed cods!

Look out your window into your own backyard...there lies the problem. It certainly isn't a problem in WA.


----------



## Junior (11 May 2012)

hangseng said:


> Well news flash, outside your "perceived" real world they is a load going on. So much so the govt want to tax the crap out of WA state revenues to prop up your failing economies. Yes yes....blah blah the East propped up WA for a long time so now it's payback time....yawn!
> 
> .....
> 
> Look out your window into your own backyard...there lies the problem. It certainly isn't a problem in WA.




"ner ner ner ner, we got more sh*t to dig out of the ground here in WA than you guys in the east."


----------



## wayneL (12 May 2012)

hangseng said:


> *Get real* waneL.
> 
> I never stated any such thing. People here are talking like the world is ending as there is no work in the East and it's off to Domino's part time for crying out loud. As if the ONLY world revolves around Sydney and Melbourne drinking cappucino's and looking at their own reflection out of the tinted office window.
> 
> ...




You seem to still be discussing existentialism. 

BTW I've lived in the Mid West, I know what's going on never said it wasn't.

My only comment is that as a tradey, the package you mentioned wouldn't draw me away from where I am. I net nearly 3k a week here in regional NZ, most of my clients are attractive ladies who give me coffee and cake as I work and I get to go home every night to my attractive lady.

I actually thought there was more on offer than that.


----------



## DB008 (12 May 2012)

wayneL said:


> I net nearly 3k a week here in regional NZ




Stop right there.
That ain't the 'norm' for starters in NZ...


----------



## wayneL (12 May 2012)

DB008 said:


> Stop right there.
> That ain't the 'norm' for starters in NZ...




In my trade and a few others it is.

BTW I was referring to me specifically, plenty of Kiwis are heading over to the mines for better wages, no question about that.

In fact the companies are over here poaching people atm.


----------



## Uncle Festivus (12 May 2012)

hangseng said:


> Get real waneL.
> 
> So according to the east gurus's the world is ending and property is finished and the resources industry is in a bubble....oh dear what a pile of uninformed cods!




No, not yet, but WA's 2 biggest markets are slowing dramatically ie Japan & China. So there is a large lag between the market turning down & the canceling of projects. The bubble is bursting, you just have to wait for it to flow through to 'the real world'

You do know there are gluts of several commodities already ie steel & aluminium?

WA will have the biggest property market 'correction' of them all......just have to be patient.

BHP, whose biggest customer is also China,* is re-evaluating spending plans amid slowing Chinese growth*, the Australian Financial Review reported today, citing Chairman Jacques Nasser’s comments to investors. China accounted for 28 percent of BHP’s sales in the last financial year and 31 percent of Rio’s.

Reuters reported that Norway based aluminium producer Norsk Hydro reined  in its expectations for market growth this year due to weak demand from  Europe as it posted a bigger than expected drop in quarterly profit *due  to a glut in supply* that is hitting prices.

Brazilian steelmakers are fighting *a global supply glut* at a time when growth in Latin America’s biggest economy slows down.


----------



## numbercruncher (12 May 2012)

DB008 said:


> Stop right there.
> That ain't the 'norm' for starters in NZ...




I spent most of last year contracting in Christchurch - and could vouch that many many people are/were earning that there ..... Quite a thriving economy evolving around the EQ recovery .....


----------



## numbercruncher (12 May 2012)

Uncle Festivus said:


> No, not yet, but WA's 2 biggest markets are slowing dramatically ie Japan & China. So there is a large lag between the market turning down & the canceling of projects. The bubble is bursting, you just have to wait for it to flow through to 'the real world'
> 
> You do know there are gluts of several commodities already ie steel & aluminium?
> 
> ...





RIO also going to bring out the cost cuting axe -



> MINING giant Rio Tinto has flagged cutting some of its multi-billion dollar Australian expansion projects as costs soar.
> 
> Rio chief Tom Albanese says he is challenging managers to justify why their projects should not be dumped.
> 
> ...




http://www.heraldsun.com.au/business/miner-rio-tinto-may-scrap-local-projects/story-fn7j19iv-1226352498702


So still a big Iron Ore demand going forward - but does this one segment of the economy translate to a booming or even growing realestate market , I dont think so ......

Plenty of eager vendors looking to dump RE in WA just as there is everywhere ....

But yes I can see how your Mcmansion five minutes drive from your mine of choice in the Pilbara could still be growing in Value


----------



## young-gun (12 May 2012)

im sparticus said:


> i dont offer advice, there is a good chance im younger than you and even better chance I earn less (and im not being cheeky and talking net). been buying since sydney stagnated in 2005 if i remember right we were right on the cusp on another great australian property crash. would hate to have to repurchase my places today. your gonna say the same about the place you sold too everybody does.




i have never been bearish on property until the past 9 months. i put everything i had into my first property, thank god i woke up to myself and got the hell outta there. i wont be saying that, and no one else will either.

and your not younger than me, as while you were buying all these fabulous properties on your mediocre wage in 2005, i was attending woodwork at highschool.

but anyway, prices are set to sky rocket, so best you get out and leverage yourself up some more! you don't wanna look back in 5 years wishing you had of bought today. all the best.


----------



## im sparticus (12 May 2012)

young-gun said:


> i have never been bearish on property until the past 9 months. i put everything i had into my first property, thank god i woke up to myself and got the hell outta there. i wont be saying that, and no one else will either.
> 
> and your not younger than me, as while you were buying all these fabulous properties on your mediocre wage in 2005, i was attending woodwork at highschool.
> 
> but anyway, prices are set to sky rocket, so best you get out and leverage yourself up some more! you don't wanna look back in 5 years wishing you had of bought today. all the best.





will you be buying a dominoes then?


----------



## young-gun (12 May 2012)

im sparticus said:


> will you be buying a dominoes then?




if one thing in life is certain, it's that you never wind up where you thought, so i guess there is every chance i just might.


----------



## im sparticus (12 May 2012)

young-gun said:


> if one thing in life is certain, it's that you never wind up where you thought, so i guess there is every chance i just might.




why do you call yourself young-gun?


----------



## young-gun (13 May 2012)

im sparticus said:


> why do you call yourself young-gun?




haha, are you insinuating that buying a dominos is not a decision of a smart man? plenty of guys out there that are rich off dominos champ. just go buy a house sparticus. please keep us all updated as to its progress, i will listen with thorough enjoyment.


----------



## numbercruncher (13 May 2012)

im sparticus said:


> why do you call yourself young-gun?




Funny Sparticus the Irony of your name isnt lost on me as you encourage people onto the Australian RE rollercoaster which would typically be via debt " slavery " ......


----------



## im sparticus (13 May 2012)

young-gun said:


> haha, are you insinuating that buying a dominos is not a decision of a smart man? plenty of guys out there that are rich off dominos champ. just go buy a house sparticus. please keep us all updated as to its progress, i will listen with thorough enjoyment.




ha buying a dominoes was my idea. you havnt baught a dominoes even though you know dominoes is booming, and i bet even though the impending crash is so obvious to you you havnt shorted the market or some realestate etf with any degree of success, the jury is still out on weather you pissed the greatest opportunity this country is ever gonna give you up the wall. just wondering where your getting young-gun from?


----------



## im sparticus (13 May 2012)

numbercruncher said:


> Funny Sparticus the Irony of your name isnt lost on me as you encourage people onto the Australian RE rollercoaster which would typically be via debt " slavery " ......




why do you consider debt slavery?


----------



## So_Cynical (13 May 2012)

wayneL said:


> My only comment is that as a tradey, the package you mentioned wouldn't draw me away from where I am. I net nearly 3k a week here in regional NZ, most of my clients are attractive ladies who give me coffee and cake as I work and I get to go home every night to my attractive lady.
> 
> I actually thought there was more on offer than that.







DB008 said:


> Stop right there.
> That ain't the 'norm' for starters in NZ...




Ah but we all know Wayne's not normal...he's special.


----------



## wayneL (13 May 2012)

So_Cynical said:


> Ah but we all know Wayne's not normal...he's special.




When do you get out of kindy SC?


----------



## Macquack (13 May 2012)

wayneL said:


> I net nearly 3k a week here in regional NZ, most of my clients are attractive ladies who give me coffee and cake as I work and I get to go home every night to my attractive lady.




What is it that you actually do Wayne?


----------



## VeryGreen (13 May 2012)

Hello everyone.

I don't really have an opinion re topic. I joined this site to learn but discussions like this always interest me. I've got two properties in Perth and its great to hear everyone’s opinion. Lots of variation.

I just wanted to chime in on the wages discussion for fifo workers to give you some idea of what an average wage looks like. Personally, I'm on an 8/6 7/7 roster. This means I work 15 x 12hour shifts a month and my pay packet after tax stands at $7606.50 for those 15 shifts

The package is $142,791 a year which includes super. 4 weeks holiday a year and 10 days 'personal leave". You get more bang for your buck with the holidays. If I take my 8 day shift off, I actually get 20 days off work (6+8+6). We also get a quarterly bonus, taken as cash or shares. If shares they will also match it so you get double. I believe "unskilled" workers, those with out a trade are on about $132,000 package and the same bonus. 

Being ex-BHP I can say that their last offer to me as I walked out the door was $138,000 package 8/6-7/7

About 6 years ago I remember my pay being around $5-6k in the bank a month for 2/1.
Main incentive for taking that job was exactly double my Perth wage, and 1/3rd the living costs as they kept me fed and watered for 2 out of 3 weeks. I don't drink and left my wallet at home. Saved a fortune!!

My father who is in a more specialized role (electrical trade based) is on $216,000 package working for a Chinese gov backed steel company who are setting up over here. (3weeks on/1week off)

So that's a little insight as to what the west has to offer currently. Will it stay like this? I don't know. All I know is I love working less than half the year and being able to eat steak, fish, what ever every night I'm at work (the missus reins me in at home). Deserts are usually awesome too. The Qantas frequent flyer's have served me well over the years as well. So many flights on 8/6 roster. Many of the companies have corporate deals too. Like any BHP employee can get 10% discount on their Telstra bill. Car rentals, salary sacrifice plans, lease/purchase plans, deals with banks etc.

I know the sun is not going to shine forever which is why I've joined this site. I am trying to decide where is the best place for my money, and learn a bit of financial management tips.

I am sure there are people out there earning a lot more than my father and I but for two busted ass tradesmen its happy days.


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## hangseng (13 May 2012)

numbercruncher said:


> RIO also going to bring out the cost cuting axe -
> 
> 
> 
> ...





A little wake up call for those that cannot or will not see beyond their own backyard.

From the latest "Eureka Report"

"WA, according to CommSec, is leading Australia in five out of eight criteria: overall economic growth, retail trade, equipment investment, construction and population growth. WA is also equal with the Northern Territory on employment creation.

WA lags on housing finance and dwelling starts, but when other factors are considered that could simply be a timing issue, because it is hard to image an economy growing rapidly without housing joining in at some stage.

CommSec’s view of the difference between WA and the rest of the country was supported by the latest Deloitte Access Economics assessment of Australia.
Deloitte partner Chris Richardson described the situation as “less welcome news”, but confirmed that “the two-speed split in Australia’s economy is widening”.
“WA growth remains dominated by a project investment pipeline of simple awe inspiring dimensions,” he said."

The very limited views displayed here on this thread by some displays how little they know of what is really going on. For others such as me that are in the midst of this, it offers opportunities of "awe inspiring dimensions."


----------



## StumpyPhantom (13 May 2012)

Good post VG - make hay while the sun shines!

And as with hay, make sure you put it somewhere or cover it so it doesn't get ruined should the weather turn sour.

It's probably much more important to preserve your hard-earned ATM than find a get rich quick scheme.

The wrenching Storm Financial Group thread keeps ringing in my ears.

And yes, I'm learning a huge amount from ASF too!


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## Julia (13 May 2012)

StumpyPhantom said:


> Good post VG - make hay while the sun shines!



+1.  Thanks, Very Green.  Interesting post.  Good luck for the future.


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## Dowdy (13 May 2012)

VeryGreen said:


> I am trying to decide where is the best place for my money,




My pocket, thanks!


----------



## VeryGreen (13 May 2012)

StumpyPhantom said:


> Good post VG - make hay while the sun shines!
> 
> And as with hay, make sure you put it somewhere or cover it so it doesn't get ruined should the weather turn sour.
> 
> ...




Thanks StumpyPhantom!

I actually ended up here because of a get rich quick scheme. Someone I consider to be quite smart was telling me about 6% per month returns when renting shares with options... I thought it sounded too good to be true and started reading the internet. Found heaps of positive discussions on it. Then found ASF... Turns out the positive discussions are all posts by the creators. They tried one post here and the admins pointed out that the person claiming to have no affiliation had a username that was the real name of someone on the said companies web site! Not only were they dishonest, but not very wise either...


----------



## VeryGreen (13 May 2012)

Dowdy your pockets have holes in them, I wont fall for that trick a 4th time...


----------



## StumpyPhantom (13 May 2012)

VeryGreen said:


> Thanks StumpyPhantom!
> 
> I actually ended up here because of a get rich quick scheme. Someone I consider to be quite smart was telling me about 6% per month returns when renting shares with options... I thought it sounded too good to be true and started reading the internet. Found heaps of positive discussions on it. Then found ASF... Turns out the positive discussions are all posts by the creators. They tried one post here and the admins pointed out that the person claiming to have no affiliation had a username that was the real name of someone on the said companies web site! Not only were they dishonest, but not very wise either...




No worries - the way I look at it at the moment, compare the savings you can make on your turbo-charged job with your normal savings.

If you can save $10k in a normal year, and $50k per year on this job, then you're gaining 5 years on your working life, year on year.  So there's no need to get rich quick on that because in your normal job you wouldn't even have earned it yet.

So just look after it - and you're ahead!


----------



## numbercruncher (13 May 2012)

hangseng said:


> A little wake up call for those that cannot or will not see beyond their own backyard.
> 
> From the latest "Eureka Report"
> 
> ...




I dont think me or anyone is denying the projects that are going on around the Place or in the Pilbara or any specific spot - but ongoing demand for iron ore or specific booming areas of the economy arnt translating into a booming property market -

The figures show property prices down virtually everywhere .....

So you can tell us about the fortunes of WA a million times , it just doesnt change whats going on across realestate world ....

Its wonderful that we still have some booming mining and other resources , because without them as a nation we would be rite royally rooted ....


----------



## Starcraftmazter (13 May 2012)

im sparticus said:


> maybe you could be so kind as to show us how you make money in the markets (please dont say your still putting it all under your mattress cause you dont trust the greedy banks....on second thaughts just show us how to make that special uminium foil hat you use to protect yourself.




What do you mean by show? What am I some sort of a market-money making teacher? As for putting things under the old mattress, gold is always a prime candidate for this.



moXJO said:


> Ok wasn't expecting that. Bad news for Doomers.




10,000 full-time jobs lost actually. Bad news for everyone, including the economy.



numbercruncher said:


> Iron ore continues to do extremely well




Ahem.









hangseng said:


> I never stated any such thing. People here are talking like the world is ending as there is no work in the East and it's off to Domino's part time for crying out loud. As if the ONLY world revolves around Sydney and Melbourne drinking cappucino's and looking at their own reflection out of the tinted office window.
> 
> Well news flash, outside your "perceived" real world they is a load going on. So much so the govt want to tax the crap out of WA state revenues to prop up your failing economies. Yes yes....blah blah the East propped up WA for a long time so now it's payback time....yawn!




Mining employes barely anyone - just 2% of the population, and even they are about to be replaced by 100% computer operated equipment. 

Sydney and Melbourne combined have over half of the urban population in the country - if people can't find jobs in those cities it is a little bit of a problem.



hangseng said:


> So according to the east gurus's the world is ending and property is finished and the resources industry is in a bubble....oh dear what a pile of uninformed cods!




You have no argument, no figures, no data, no substance - and yet you have the nerve to call others uninformed cods?

How about you go back to your drawing board and try to come up with a coherent argument - go on, I dare you.



hangseng said:


> Look out your window into your own backyard...there lies the problem. It certainly isn't a problem in WA.




You wouldn't know a problem if one kicked you in the balls.


----------



## hangseng (14 May 2012)

numbercruncher said:


> I dont think me or anyone is denying the projects that are going on around the Place or in the Pilbara or any specific spot - but ongoing demand for iron ore or specific booming areas of the economy arnt translating into a booming property market -
> 
> The figures show property prices down virtually everywhere .....
> 
> ...





No arguments on the last sentence, thats why the govt is now going to rape the resources industry to prop up the failing states, Vic and NSW. Those two clearly displaying having the largest population doesn't translate into economical success, they are both basket cases. So the great minds, at least they think they are, of the "business hubs" are also not demonstrating how clever they are. WA QLD NT and to a lesser extent SA are leading the way.

However the point that completely went to the keeper with you is that it hasn't yet happened. As I alluded to before it is about to happen. Iron ore prices have b'all to do with it. It will be the massive influx of workers coming into the state for project development that will put pressure on property. If not with prices, definitely with rental returns, that has already started to show in the last 10 months.


So keep those blinkers on lol...we will keep doing what we do best, make money...TRUCK and SHIP LOADS of it!


----------



## im sparticus (14 May 2012)

Lol gold is that the best you can do its down more in the last few week than property has been in 12 months and hasnt yeilded a cent since the begining of time once again your trading the past. But my guess is you dont have a substancial amount of anything.


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## hangseng (14 May 2012)

Starcraftmazter said:


> What do you mean by show? What am I some sort of a market-money making teacher? As for putting things under the old mattress, gold is always a prime candidate for this.
> 
> 
> 
> ...





Your a wonderful type aren't you...

I believe you may fit the description in the first paragraph of my last post.

Projects dear person, mining and construction projects coming online that will impact significantly on WA in particular. I directed the uninformed to the Eureka report, worth a read.


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## Starcraftmazter (14 May 2012)

hangseng said:


> Projects dear person, mining and construction projects coming online that will impact significantly on WA in particular. I directed the uninformed to the Eureka report, worth a read.




I'm unsure if you're familiar with Australian geography and demographics or not; but here's something which might be a revelation for you:

1. Western Australia is one of *six* states and *two* territories in the Commonwealth of Australia
2. Western Australia has less than 10% of the nation's total population


Oh - and just in case you aren't good with maths, that means that WA - even when taken as an individual state, provides a disproportionately small representation of the Australian economy.


----------



## hangseng (14 May 2012)

Starcraftmazter said:


> I'm unsure if you're familiar with Australian geography and demographics or not; but here's something which might be a revelation for you:
> 
> 1. Western Australia is one of *six* states and *two* territories in the Commonwealth of Australia
> 2. Western Australia has less than 10% of the nation's total population
> ...




Correct genius, now work out why that "less than 10% of the nation's total population" is propping up the the two largest populations of the nation that are basically stuffed. I refer you to the poster that expressed it wonderfully without mining the nation would be "right royally rooted".

To the other poster, rents have risen in my areas of interest in Perth by over 10% and continuing. Currently forecast to rise around 10-15% more over this year. Why would that be now I wonder?...


----------



## wayneL (14 May 2012)

Macquack said:


> What is it that you actually do Wayne?




Macquack I'm a farrier i.e. one who shoes horses.


----------



## wayneL (14 May 2012)

VeryGreen said:


> I just wanted to chime in on the wages discussion for fifo workers to give you some idea of what an average wage looks like....




Cheers VG that's more like what I thought was on offer.

I have a friend who captains one those tenders that service offshore oil rigs. Actual work is about 2 hours a day or less... $5k a week.


----------



## numbercruncher (14 May 2012)

hangseng said:


> Correct genius, now work out why that "less than 10% of the nation's total population" is propping up the the two largest populations of the nation that are basically stuffed. I refer you to the poster that expressed it wonderfully without mining the nation would be "right royally rooted".
> 
> To the other poster, rents have risen in my areas of interest in Perth by over 10% and continuing. Currently forecast to rise around 10-15% more over this year. Why would that be now I wonder?...




Demand because people would much rather lose a few measly dollars in rent than 10's of Thousands as property continues to slump ?



> The bad news for Perth's real estate market continues with house prices dropping 1.9 per cent in the three months leading to February, according to the latest RP Data figures.
> 
> Perth was the second-worst performing state in the country, with only flood-hit Brisbane at 3.3 per cent producing a steeper drop.




http://news.domain.com.au/domain/real-estate-news/perth-house-prices-down-in-difficult-market-20110331-1ckfs.html

The next quarters results will reflect much of the same Id imagine .....

Im not denying that you are could be getting a decent yield on _your_ property portfolio - you just havnt convinced me of any kind of boom in RE no matter how dismissive of other peoples opinion you are


----------



## Uncle Festivus (14 May 2012)

hangseng said:


> A little wake up call for those that cannot or will not see beyond their own backyard.
> 
> From the latest "Eureka Report"
> 
> ...




That's a relief - economists are never wrong? 



hangseng said:


> However the point that completely went to the keeper with you is that it hasn't yet happened. As I alluded to before it is about to happen. Iron ore prices have b'all to do with it. It will be the massive influx of workers coming into the state for project development that will put pressure on property. If not with prices, definitely with rental returns, that has already started to show in the last 10 months.
> 
> 
> So keep those blinkers on lol...we will keep doing what we do best, make money...TRUCK and SHIP LOADS of it!




Only takes a stroke of the pen from Kloppers or Albanese and they're gone.......

Prices have everything to do with it - supply & demand still rules. There is plenty of supply already, the demand is the problem.......


----------



## Starcraftmazter (14 May 2012)

hangseng said:


> Correct genius, now work out why that "less than 10% of the nation's total population" is propping up the the two largest populations of the nation that are basically stuffed.




They are stuffed in no small part by the mining boom centred around WA, and I don't really see it "propping up" anyone - just making everything worse. Hell, at this point making mining activities illegal would probably be good for the Australian economy.



hangseng said:


> I refer you to the poster that expressed it wonderfully without mining the nation would be "right royally rooted".




And better off for it.



hangseng said:


> To the other poster, rents have risen in my areas of interest in Perth by over 10% and continuing. Currently forecast to rise around 10-15% more over this year. Why would that be now I wonder?...




Because most economic forecasters are idiots. Just take BIS and their ridiculous forecasts on Australian property values last year (turned out to be utterly deluded and false).


----------



## trainspotter (14 May 2012)

Starcraftmazter said:


> They are stuffed in no small part by the mining boom centred around WA, and I don't really see it "propping up" anyone - just making everything worse. Hell, at this point making mining activities illegal would probably be good for the Australian economy.




Ummmmmmmm ...... please explain how the mining boom has stuffed the Eastern States economies? 

Making mining illegal is good for the Australian economy?? But, but, but what will the Red Queen do then? How will she fill the black hole in the Budget without the MRRT ??

Are you really some kind of an antiestablishmentarianism proactivist? 

Is mining good for property prices ???? OHHHHHHHHH The banality of it all !!


----------



## trainspotter (14 May 2012)

wayneL said:


> Macquack I'm a farrier i.e. one who shoes horses.




And a very good one at that if the ladies are bringing you cups of tea and cake.


----------



## Starcraftmazter (14 May 2012)

trainspotter said:


> Ummmmmmmm ...... please explain how the mining boom has stuffed the Eastern States economies?




By providing money to leverage and borrow from foreign banks to speculate on property.


Home sales surge, rentals fall (and rents are not rising!)
http://www.macrobusiness.com.au/2012/05/homes-for-sale-surge-rentals-fall/

This proves people are taking their "investment" properties off the rental market and beginning to panic sell. They will certainly be shocked to find out how much money they lost!


----------



## trainspotter (14 May 2012)

Starcraftmazter said:


> By providing money to leverage and borrow from foreign banks to speculate on property.
> 
> 
> Home sales surge, rentals fall (and rents are not rising!)
> ...




Sooooooooooo according to your theory the whole economy in the Eastern States is based on home sales?

What about tourism? No wait ....... the high Aussie peso killed that one off.

What about manufacturing? No wait ...... repetitive Guvmints has driven them offshore.

What about bananas? No wait ...... Cyclone Larry took care of that.

What do the Eastern States produce again? No wait ....... WA has taken care of that for them.

Foreign banks? What foreign banks? ANZ? NAB? WESTPAC or COMMONWEALTH?

What about this little gem then from Wikipedia ?

*In 2011, Western Australia provided 46% of Australia's exports*. In 2010-11, Western Australia’s gross state product was A$193 billion (14.6% of Australia's GDP), making it the nation's fourth most productive state with a GSP per capita of $82,653 (compared with the national average of $57,925).

*If Western Australia were a separate country, it would be among the Top 50 economies in the world by GDP.*

YEAHHHHHHHHHHH ......... Let's make mining illegal. Smart move. Genius level, wish I had thought of this epiphany.


----------



## young-gun (14 May 2012)

im sparticus said:


> ha buying a dominoes was my idea. you havnt baught a dominoes even though you know dominoes is booming, and i bet even though the impending crash is so obvious to you you havnt shorted the market or some realestate etf with any degree of success, the jury is still out on weather you pissed the greatest opportunity this country is ever gonna give you up the wall. just wondering where your getting young-gun from?




well buy a dominos then. why would i buy into an industry I have no desire to work in, nor do I have knowledge on how to manage a pizza shop. Although it may not be too difficult, it doesn't interest me in the slightest. are you the type to chase a dollar regardless of whether you enjoy what your doing or not? im thinking so. and no im not shorting anything, especially not dodgy RE etf's. im investing elsewhere, and dont care to go into with you. gold is a winner though as SCM pointed out.

im glad you re so fascinated with my nick-name. its actually in reference to my amazing abilities in the bedroom i never claimed to be a gun at investing.

now back on topic - new loans up in april by .3% over a 'downwardly revised' march. so by the time we 'downwardly revise' april well be back to square one. perhaps an incorrect assumption but we will see. a one off .3% increase isnt saving house prices anyway, but i guess it's positive data none-the-less!
http://www.businessspectator.com.au...n-March-pd20120514-UA2YV?OpenDocument&src=hp5

analysts were expecting different - analysts = wrong - big surprise.

anyway, back to pissing everything against the wall! as told by some guy whos bullsih on property.


----------



## Starcraftmazter (14 May 2012)

trainspotter said:


> Sooooooooooo according to your theory the whole economy in the Eastern States is based on home sales?




It's not my theory; it is a basic fact that NSW and Vic in particular have parasitic FIRE economies which feed off the housing bubble. Speculation leads to higher artificial valuations, leads to people using their property as ATMs and malinvestment in retail ensured as a result.



trainspotter said:


> What about tourism? No wait ....... the high Aussie peso killed that one off.




Yes, blame mining.



trainspotter said:


> What about manufacturing? No wait ...... repetitive Guvmints has driven them offshore.




A combination of the high AUD and uncompetitive hyperinflated wages driven by the requirement to service ever-increasing amounts of debt have made Australian manufacturers uncompetitive. Blame mining and the housing bubble.



trainspotter said:


> What do the Eastern States produce again? No wait ....... WA has taken care of that for them.




In my view, they would be far better off without WA. WA does not take care of anyone in any particular way. 



trainspotter said:


> Foreign banks? What foreign banks? ANZ? NAB? WESTPAC or COMMONWEALTH?




Our banks are capital constrained - there is a limit to how much money they can print out of thin air. After they reach this amount, they borrow money from foreign banks to re-lend it dollar for dollar. And borrow they did - heavily.

And so that's how it is in the Australian economy, people leverage and drown in debt all while paying untold billions of dollars in interest to foreign banks who invest in foreign infrastructure, foreign R&D, foreign entrepreneurs - and then Australians have the nerve to wonder why we can't compete.



trainspotter said:


> In 2011, Western Australia provided 46% of Australia's exports. In 2010-11, Western Australia’s gross state product was A$193 billion (14.6% of Australia's GDP), making it the nation's fourth most productive state with a GSP per capita of $82,653 (compared with the national average of $57,925).




Yes, that is because of the commodity bubble. And it is very bad for Australia as it pushes our dollar up making every other export industry uncompetitive.

Apart from that, it is barely of any benefit to Australians. Most of the money is payed to foreign shareholders, and very little tax is collected. That very small amount of tax is not even saved or invested, it's just pissed away.



trainspotter said:


> *If Western Australia were a separate country, it would be among the Top 50 economies in the world by GDP.*




And your point is? If WA was a separate country, it's currency would appreciate so much, it would probably drive even miners out of business. But I guess that's a little more economics than you can handle.



trainspotter said:


> YEAHHHHHHHHHHH ......... Let's make mining illegal. Smart move. Genius level, wish I had thought of this epiphany.




I didn't say we should make it illegal; I said if we did, it would probably benefit Australia. The point being - that is how bad mining is, it has destroyed the nation's economy.

Long after the commodity bubble is over, and the mining industry has replaced those 2% of the national workforce with machines and computers, when WA peasants are stuck without jobs and with a massive population of immigrants whom they stupidly imported, they will be begging the rest of the country for support - unknowing of the fact that they had played no small part in destroying it's economy.


And there is nothing special about WA by the way. It is only lucky in that it is the largest state by area, and happens to have a disproportionate amount of natural resources. Business and people in WA are not innovative, hard working or competitive in any particularly special way. That is in fact why they are all being replaced with machines - because the work they do is so damn simple even a computer can handle it.

The only true innovation which can lead Australia through the 21st century is found in the east.


----------



## im sparticus (14 May 2012)

Gold sure that horse bolted long ago its further off its highs than property and doesnt yeild a thing cant believe you can be duped into that con yet shaken out of your own home for a single didget decline great going young-gun, your headed straight to the top

so now your telling me you dont want a dominoes make up your mind and quit bagging property till you can take the otherside.


----------



## Starcraftmazter (14 May 2012)

im sparticus said:


> Gold sure that horse bolted long ago its further off its highs than property and doesnt yeild a thing cant believe you can be duped into that con yet shaken out of your own home for a single didget decline great going young-gun, your headed straight to the top




Gold is following a steady 13 year uptrend without fault. It is fundamentally an asset which appreciates against fiat currency due to monetary supply expansion.

Housing has been in a speculative bubble for over 20 years, and has started to crash. It has now fallen more and for longer than in any period of time since the bubble began. It is a fundamentally depreciating asset which eventually needs to be demolished and rebuilt.

Gold priced in AUD is an even better buy since AUD is going to go down while gold is going to go up.


----------



## im sparticus (14 May 2012)

Starcraftmazter said:


> Gold is following a steady 13 year uptrend without fault. It is fundamentally an asset which appreciates against fiat currency due to monetary supply expansion.
> 
> Housing has been in a speculative bubble for over 20 years, and has started to crash. It has fallen more and for longer since the bubble began. It is a fundamentally depreciating asset which eventually needs to be demolished and rebuilt.






Look All im saying scm is that there is no point in taking a historically defensive position when you dont have anything to defend.


----------



## Starcraftmazter (14 May 2012)

im sparticus said:


> Look All im saying scm is that there is no point in taking a historically defensive position when you dont have anything to defend.




Well you might want to consider saying that in a way which actually makes sense.


----------



## young-gun (14 May 2012)

im sparticus said:


> Gold sure that horse bolted long ago its further off its highs than property and doesnt yeild a thing cant believe you can be duped into that con yet shaken out of your own home for a single didget decline great going young-gun, your headed straight to the top
> 
> so now your telling me you dont want a dominoes make up your mind and quit bagging property till you can take the otherside.




haha, its because of clowns like yourself i sold up. spruiking an investment that has no where left to go. talking it up and lulling the unsuspecting into your over-inflated web of housing. like i said, thank god i woke upto myself. i was 90% LVR, and my home loan would now be under water had i of stayed. if i was to lose my job(which is unlikely but possible) where does that leave me genius? i broke even, got out, and now get to enjoy my youth, while making smart investments, which basically involves anything that doesnt involve RE at this current point in time.

i have just realised there is two things certain in this world. the second being that you have no idea what you're doing.

as SCM has just pointed out again, gold has good fundamentals. not to mention everytime the morons running the show fire up their presses(metaphorically speaking) and its going to take off again.


----------



## Starcraftmazter (14 May 2012)

young-gun said:


> haha, its because of clowns like yourself i sold up. spruiking an investment that has no where left to go. talking it up and lulling the unsuspecting into your over-inflated web of housing. like i said, thank god i woke upto myself. i was 90% LVR, and my home loan would now be under water had i of stayed. if i was to lose my job(which is unlikely but possible) where does that leave me genius? i broke even, got out, and now get to enjoy my youth, while making smart investments, which basically involves anything that doesnt involve RE at this current point in time.




+1, glad to hear it mate. Us youngsters need to steer clear of these old geezers wanting to offload their over-leveraged crap to us for hyper-inflated prices.


----------



## im sparticus (14 May 2012)

Whats the bet your precious gold is underwater too, whats your cost base so far? not that it matters its not like your swinging a line as big as you house or anything gold could probably triple and you and scm would still be neither here nor there.


----------



## Starcraftmazter (14 May 2012)

im sparticus said:


> Whats the bet your precious gold is underwater too




If you buy a bar of gold - then it's yours. There is no debt or leverage involved. The concept of underwater does not apply here.



im sparticus said:


> whats your cost base so far? not that it matters its not like your swinging a line as big as you house or anything gold could probably triple and you and scm would still be neither here nor there.




Selling gold that you are holding is a stupid endeavour; especially if it triples in value (ie. imminent financial collapse).


----------



## Glen48 (14 May 2012)

From memory Spartacus got mixed up is some sort of  lumber business in the end.
 Gold will continue to go down maybe 1500 or less once it hits this back the truck up it will be the best thing you ever did ,see who is smiling by Xmas 2012


----------



## im sparticus (14 May 2012)

Starcraftmazter said:


> If you buy a bar of gold - then it's yours. There is no debt or leverage involved. The concept of underwater does not apply here.
> 
> 
> 
> Selling gold that you are holding is a stupid endeavour; especially if it triples in value (ie. imminent financial collapse).




some of your best work right there scm! No further questions your honour.


----------



## im sparticus (14 May 2012)

Glen48 said:


> From memory Spartacus got mixed up is some sort of  lumber business in the end.
> Gold will continue to go down maybe 1500 or less once it hits this back the truck up it will be the best thing you ever did ,see who is smiling by Xmas 2012




my moneys all tied up (sorry still wiping away the tears from scms last post)


----------



## moXJO (14 May 2012)

Starcraftmazter said:


> If you buy a bar of gold - then it's yours. There is no debt or leverage involved. The concept of underwater does not apply here.
> 
> 
> 
> Selling gold that you are holding is a stupid endeavour; especially if it triples in value (ie. imminent financial collapse).




So what are you going to do with it when it all comes crashing down? 
I've got some magic beans if you're interested.


----------



## trainspotter (14 May 2012)

Starcraftmazter said:


> I'm unsure if you're familiar with Australian geography and demographics or not; but here's something which might be a revelation for you:
> 
> 1. Western Australia is one of *six* states and *two* territories in the Commonwealth of Australia
> 2. Western Australia has less than 10% of the nation's total population
> ...




Ummmmmm it would appear you have tripped over your own words yet again oh wise and ancient one.

*46% of exports and 14.6% of GDP attributed to WA* is a how did you write this? _"that means that WA - even when taken as an individual state, provides a disproportionately small representation of the Australian economy"_

Oh but wait .... it gets better Oh learned and exalted higher than thou annointed one of all things that are holier than thou.

FACT : *making WA the nation's fourth most productive state with a GSP per capita of $82,653* !!!! LOLOL 

Small and disproportianate INDEED !!

But but but you wrote this _"Hell, at this point making mining activities illegal would probably be good for the Australian economy"_ and then this _"I didn't say we should make it illegal; I said if we did, it would probably benefit Australia. The point being - that is how bad mining is, it has destroyed the nation's economy."_

Bwahahahhahaaaaa *gasp* ahahahhahhaggagaggaggaaaaaaaa 

Oh and just in case you cannot comprehend the written word ....... oh never mind you have proven yourself worthy by contradicting yourself repeatedly in here. Go and Google rummage "Optirectomy" 

But then again this might be a little more truth than you can handle 

P.S. Property prices to continue to slowly deflate over the next year across the 8 capital city average of 5%  JMHO


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## trainspotter (14 May 2012)

Starcraftmazter said:


> If you buy a bar of gold - then it's yours. There is no debt or leverage involved. The concept of underwater does not apply here.
> 
> 
> Selling gold that you are holding is a stupid endeavour; especially if it triples in value (ie. imminent financial collapse).




If you buy a house - then its yours. There is no debt or leverage involved. The concept of underwater does not apply here.

Selling houses that have tripled in value ...... now there is a concept !! 

SQUUUUAAAAAAARK ...... Polly want a cracker !!


----------



## numbercruncher (14 May 2012)

Why is it that the pro-Australian property crowd are disproportionately more agressive in their tone or debate style than those bearish on Australian property ?


----------



## Ves (14 May 2012)

Why post the gold chart with a log scale, but not the housing price?


----------



## trainspotter (14 May 2012)

numbercruncher said:


> Why is it that the pro-Australian property crowd are disproportionately more agressive in their tone or debate style than those bearish on Australian property ?




Try reading some of SCM's posts first and the waters will become clear for you. 

So I am pro by saying they are going to deflate 5% nationally over the 8 capital city average ? *GOSH* 

I especially liked the one where he reckoned that there was "_too much economics_" for me to handle or what about this little gem _" Business and people in WA are not innovative, hard working or competitive in any particularly special way." _

Which is why WA has the lowest unemployment rate in Australia at 3.8% 

http://www.abc.net.au/pm/content/2012/s3502563.htm

YEAH RIGHT !!!!!!


----------



## Starcraftmazter (14 May 2012)

moXJO said:


> So what are you going to do with it when it all comes crashing down?




Sell my gold for whatever new gold and silver backed currency will rise to take place of fiat currency. 



trainspotter said:


> Ummmmmm it would appear you have tripped over your own words yet again oh wise and ancient one.
> 
> *46% of exports and 14.6% of GDP attributed to WA* is a how did you write this? _"that means that WA - even when taken as an individual state, provides a disproportionately small representation of the Australian economy"_




Yes, because it has a disproportionately small amount of people.

If WA takes it's resources and sells them to foreign countries to be used in foreign economies, and pays the proceeds of the sales to foreign shareholders, while employing imported foreign labour - then it doesn't really benefit the country does it? Doesn't matter what it's contribution to the magical GDP or trade balance if Australians in general do not benefit - does it?

Most Australians do not live in the WA. Most Australians have to put up with the high AUD and most Australians are having a hard time keeping their jobs. That is the reality for the Australian economy.



trainspotter said:


> FACT : *making WA the nation's fourth most productive state with a GSP per capita of $82,653* !!!! LOLOL




Well not really. Once the commodity bubble bursts that will plummet. It's not really productive - it's just riding a bubble. Nothing of value is really produced in WA. Once the resources are gone, WA is screwed.



trainspotter said:


> P.S. Property prices to continue to slowly deflate over the next year across the 8 capital city average of 5%  JMHO




Keep dreaming. Maybe you'll dream up a coherent argument one day.



trainspotter said:


> If you buy a house - then its yours. There is no debt or leverage involved. The concept of underwater does not apply here.




Given that average property is priced at 7-9 times average income, buying outright is a luxury not affordable for the vast, overwhelming majority.



trainspotter said:


> Selling houses that have tripled in value ...... now there is a concept !!




Houses do not ever rise in value.



numbercruncher said:


> Why is it that the pro-Australian property crowd are disproportionately more agressive in their tone or debate style than those bearish on Australian property ?




Because they are very threatened that people are waking up to the housing scam.



Ves said:


> Why post the gold chart with a log scale, but not the housing price?




Mostly because I don't have a log chart of a real house price comparison between Australia and the US. I have never come across one either.

Also because the charts show the nominal value of gold and the real value of housing. The real value of housing is never ever meant to rise - and when it does, it will come down.

The real value of gold is however presently undetermined due to massive manipulation, both historical and current. One obvious fact however is that gold is significantly undervalued at present prices.


----------



## wayneL (14 May 2012)

Oh Brother!


----------



## trainspotter (14 May 2012)

UPDATE ! Majority of gold is mined in WA.

HEADLINES ! Miners employ 8% of jobs in OZ and not 2% as claimed by SCM

MYTH ! Being a software engineer with no experience in property or shares makes you smarter than anyone else with an opinion or better yet with EXPERIENCE.

Goodnight SCM .... don't let the gold bug bite.

I really liked this one from you tonight _"Houses do not ever rise in value."_ Some of your best work yet SCM. Keep it up you are doing just fine.


----------



## Glen48 (14 May 2012)

This should get things boiling:

The financial crisis in Greece is reaching an explosive tipping point, with the youth unemployment rate now exceeding a startling 50 percent and the government itself announcing it will be forced to stop paying salaries and pensions by June:

"We will be in wild bankruptcy, out-of-control bankruptcy," said Theodoros Pangalos, the deputy prime minister of Greece. "The state will not be able to pay salaries and pensions. We have got until June before we run out of money."

Learn more: http://www.naturalnews.com/035858_Greece_bankruptcy_California.html#ixzz1uqOx9vK9


----------



## numbercruncher (14 May 2012)

I wasnt singleing you out trainspotter - just an observation ...


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## Starcraftmazter (14 May 2012)

trainspotter said:


> UPDATE ! Majority of gold is mined in WA.




Relevance?



trainspotter said:


> HEADLINES ! Miners employ 8% of jobs in OZ and not 2% as claimed by SCM




Actually it's *less than 2%*. Feel free to cite your source....that is if you have one.

1.764690389% of the employed workforce as of 2011 according to government figures.



trainspotter said:


> MYTH ! Being a software engineer with no experience in property or shares makes you smarter than anyone else with an opinion or better yet with EXPERIENCE.




An understanding of economics is much much more important when trying to forecast property prices - rather than so called "experience" flogging them off during the biggest bubble in Australian history.


----------



## numbercruncher (14 May 2012)

trainspotter said:


> HEADLINES ! Miners employ 8% of jobs in OZ and not 2% as claimed by SCM







Can you source us your 8pc thang, think you plucked that from thin air ...?


----------



## numbercruncher (14 May 2012)

> Employing just 179,400 Australians, mining is outranked by all but one of the 19 industry groupings used by the Bureau of Statistics. Even ''arts and recreation'', employing 193,400 people, is a greater provider of jobs.
> Australia's top employer, health and aged care now provides jobs to 1.2 million Australians, retail remains in second place, employing 1.18 million and construction moves into third place employing a record 1 million workers.
> Manufacturing continues to shrink, employing a record-low 972,000 in May - just 8 per cent of the workforce.
> Mining employs 1.6 per cent nationwide.
> Only in Western Australia is mining a significant employer, providing 6 per cent of that state's jobs. In NSW it employs less than 1 per cent, in Victoria less than 0.5 per cent.




http://www.theage.com.au/national/mines-jobs-peak-but-still-just-16-20100617-yjsi.html


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## Uncle Festivus (15 May 2012)

im sparticus said:


> Whats the bet your precious gold is underwater too, whats your cost base so far? not that it matters its not like your swinging a line as big as you house or anything gold could probably triple and you and scm would still be neither here nor there.




Completely off topic but.....

*NEW YORK (Commodity Online):* The International Monetary  Fund (IMF) is planning to purchase more than $2 billion worth of gold  on account of *rising global risks*.


----------



## moXJO (15 May 2012)

Uncle Festivus said:


> Completely off topic but.....
> 
> *NEW YORK (Commodity Online):* The International Monetary  Fund (IMF) is planning to purchase more than $2 billion worth of gold  on account of *rising global risks*.




Plenty of those tungsten filled gold bars at the moment floating around they could buy.



> Actually it's less than 2%. Feel free to cite your source....that is if you have one.




Does that include the spin off industries that are directly linked servicing the mining industry that wouldn't be there otherwise?


----------



## trainspotter (15 May 2012)

numbercruncher said:


> Can you source us your 8pc thang, think you plucked that from thin air ...?




Why do I even bother posting links if you are not going to follow them?



> The Reserve Bank has continued its efforts to convince more Australians that the mining boom is benefiting the whole country. Speaking in Melbourne, the bank's deputy governor Philip Lowe said mining and related industries now made up around 16 or 17 per cent of the economy and 8 per cent of jobs.
> 
> Mining is also growing at a staggering 12 per cent a year, compared to around 1 per cent for the rest of the economy




Post #8304 http://www.abc.net.au/pm/content/2012/s3502563.htm Monday May 14th and NOT ABS figures from last year !!!!!!!! There has been a significant growth spurt in the mining sector of late. 

I just love the goading that SCM spews forth and everyone believes it as gospel. DYOR !!


----------



## numbercruncher (15 May 2012)

There was no link where I quoted you saying 8pc ....

Ok so comparing both these figures - its saying Mining emplys 8x as many (as a percentage) as it did a year ago ....

Something is a bit fishy - 

Rest of economy is Growing 1pc a year - how bad is that -

As we have established your house in the Pilbara goes up in price rest of Nation keeps collapsing - what a skewered economy huh ....

-----

Did some more reading from that same meeting of Rob Lowes - he said Mining related employment was at 8pc - not Miners employ 8pc as you are incorrectly spreading. A whole heap of that would be infrastructure construction - which one would think will vanish once they complete these big projects ?

Rob Lowe said 2.75pc of teh workforce is employed Directly -

Anyway this is a property thread not Australian mining facts thread ....


----------



## againsthegrain (15 May 2012)

This is amazing almost same tactics as those that report clearance rates

TS got a shock changing those used light globes from the socket? bzzz the nutty professor


----------



## trainspotter (15 May 2012)

numbercruncher said:


> There was no link where I quoted you saying 8pc ....
> 
> Anyway this is a property thread not Australian mining facts thread ....




Go and read post #8304 again and look at the link I posted there. That would be the same one that refers to 8% of people being employed in mining. 

SCM skewiffed this thread to state that mining has ruined the economy of the Eastern states by foreign banks loaning money to local banks to lend/leverage money into housing thusly effectively rootng their economy by having fire sales of property as they track their investments.

It's all about comprehension right?


----------



## trainspotter (15 May 2012)

againsthegrain said:


> This is amazing almost same tactics as those that report clearance rates
> 
> TS got a shock changing those used light globes from the socket? bzzz the nutty professor




Once again you fail to understand what I was driving at. It was about low capital ventures that have high turnover and extremely low overheads. The light globe business was an example. It was also about the velocity of money in the economy. I asked if anyone else knew of any other low cost capital ventures !! LOLOL

And you lock onto one small fragment and completely miss the point. LOLOL


----------



## Klogg (15 May 2012)

numbercruncher said:


> http://www.theage.com.au/national/mines-jobs-peak-but-still-just-16-20100617-yjsi.html




Does that include mining services?


----------



## Starcraftmazter (15 May 2012)

moXJO said:


> Does that include the spin off industries that are directly linked servicing the mining industry that wouldn't be there otherwise?




Not sure if that's a very valid point. The steel industry is suffering for instance because miners buy their steel from China.

Sure there is bound to be some domestic spending by the miners, but in my view it boils down to insignificance.



trainspotter said:


> Post #8304 http://www.abc.net.au/pm/content/2012/s3502563.htm Monday May 14th and NOT ABS figures from last year !!!!!!!!




Where's the evidence of this 8% claim though? I still haven't seen any.



trainspotter said:


> There has been a significant growth spurt in the mining sector of late.




Lol what, you think mining industry has grown from 2% to 8% employment in one year? Are you absolutely mad? Do you even realise that miners are shutting down mines and cancelling projects because the commodity bubble is bursting?


In other news, first home buyers desert the housing market:
http://www.macrobusiness.com.au/2012/05/first-home-buyers-desert-housing-market/


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## im sparticus (15 May 2012)

At the moment in brisbane second hand appartment 2 bedroom 1 bath in six pack double brick block thats 5-10 km from the city seem to be going for 3-400k one particular one i know of sold for 350k any who out of interest founyd out it was origibally sold for 38k back in 1967 anyway thinking housed are in a b nowubble and over inflate i wanted to see just how much by so i punch those numbers into the rba inflation calculator and it tells me according to inflation the appartment should be worth $389K mr x is felling a  hmm things arnt so bad after all. try it with the price of gold now and then you might get a rude shock


----------



## Starcraftmazter (15 May 2012)

im sparticus said:


> At the moment in brisbane second hand appartment 2 bedroom 1 bath in six pack double brick block thats 5-10 km from the city seem to be going for 3-400k one particular one i know of sold for 350k any who out of interest founyd out it was origibally sold for 38k back in 1967 anyway thinking housed are in a b nowubble and over inflate i wanted to see just how much by so i punch those numbers into the rba inflation calculator and it tells me according to inflation the appartment should be worth $389K mr x is felling a  hmm things arnt so bad after all. try it with the price of gold now and then you might get a rude shock




1967 is far too far away to measure, not to mention stagflation occurred in between then and now.

As for gold, the world came off the gold standard between then and now - and that is why gold has risen in price. To compare the cost of gold now versus 1967 considering inflation doesn't make any sense.


----------



## young-gun (15 May 2012)

im sparticus said:


> At the moment in brisbane second hand appartment 2 bedroom 1 bath in six pack double brick block thats 5-10 km from the city seem to be going for 3-400k one particular one i know of sold for 350k any who out of interest founyd out it was origibally sold for 38k back in 1967 anyway thinking housed are in a b nowubble and over inflate i wanted to see just how much by so i punch those numbers into the rba inflation calculator and it tells me according to inflation the appartment should be worth $389K mr x is felling a  hmm things arnt so bad after all. try it with the price of gold now and then you might get a rude shock




Lol. So first your saying that property is a great investment. Now you're telling us it doesn't even keep up with inflation? Top notch sparticus


----------



## im sparticus (15 May 2012)

This is Another reason why i think gold is in a huge speculative bubble and could trade much lower possibily even test its previous all time lows there are much better hedges for inflation and currency risk out there that actu
ally produce a positive return. 

Just about everyone is on the gold bandwagon now i mean youngsters would rather have a few useless bars under there pillow thanhave a go at putting a roof over there heads. it is the original ponzi scheme. everyone is in all the gold bugs can do now is sell and the only place for prices is down.
You know what they say when the nobodys (dont want to offend butchers) are talking about xyz... well its time to sell xyz.

All this money with no where to go flodding into the stock and realestate markets. 1979 all over again.
Only this time im not in nappies. (wasnt born till the 80's so missed the turn but wont this time)

Another fun exersize was plugging the seventies highs into the inflation calculator and having it spit out $1950 odd, how interesting.


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## im sparticus (15 May 2012)

young-gun said:


> Lol. So first your saying that property is a great investment. Now you're telling us it doesn't even keep up with inflation? Top notch sparticus




I know youve been toying with gold a little to long you may have forgotten other asset classes actually
  have alot more going on than capital appreciation so i wont be rude but its time for you to shush now young-gun the adults are talking.


----------



## young-gun (15 May 2012)

im sparticus said:


> I know youve been toying with gold a little to long you may have forgotten other asset classes actually
> have alot more going on than capital appreciation so i wont be rude but its time for you to shush now young-gun the adults are talking.




dont kid yourself into thinking anyone at all wants to listen to the **** your spinning, young or old. i dont believe for one second the only thing a proeprty investor is interested in is rental return.

if you could make up your mind what argument you are trying to make, it would be great for the rest of us.


----------



## young-gun (15 May 2012)

im sparticus said:


> This is Another reason why i think gold is in a huge speculative bubble and could trade much lower possibily even test its previous all time lows there are much better hedges for inflation and currency risk out there that actu
> ally produce a positive return.
> 
> Just about everyone is on the gold bandwagon now i mean youngsters would rather have a few useless bars under there pillow thanhave a go at putting a roof over there heads. it is the original ponzi scheme. everyone is in all the gold bugs can do now is sell and the only place for prices is down.
> ...




I think you need to do some serious research as to just how many people are actually in bullion. oh how misled you are.


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## Glen48 (15 May 2012)

JP Morgan's total derivatives exposure stands at $70.1 trillion, or roughly the same size as the entire world economy. Each of the *$1 trillion towers *in the image is double-stacked to a height of 930 feet (283 meters).


----------



## explod (15 May 2012)

im sparticus said:


> I know youve been toying with gold a little to long you may have forgotten other asset classes actually
> have alot more going on than capital appreciation so i wont be rude but its time for you to shush now young-gun the adults are talking.




A joke surely.  

I have been invested in gold since 2004.   Since 2002 it is up 599%

And if you do a bit of research on the real values of tangible goods unencumbered you will learn that gold and silver have only just begun.

In fact today there is less than .05% of money invested globally tied up in physical gold and silver.

Need to do a bit of research before you blow off the top on these forums ole pal.


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## numbercruncher (15 May 2012)

im sparticus said:


> At the moment in brisbane second hand appartment 2 bedroom 1 bath in six pack double brick block thats 5-10 km from the city seem to be going for 3-400k one particular one i know of sold for 350k any who out of interest founyd out it was origibally sold for 38k back in 1967 anyway thinking housed are in a b nowubble and over inflate i wanted to see just how much by so i punch those numbers into the rba inflation calculator and it tells me according to inflation the appartment should be worth $389K mr x is felling a  hmm things arnt so bad after all. try it with the price of gold now and then you might get a rude shock





Yet another terrible example  - 

In 1967 the average weekly wage for an employed male in QLD was $55 per week - 

38000/55 = 690 weeks pay - obviously a fairly well to do area in the day ....

New price is 350000/1389 (average weekly pay 2012) = 252 weeks pay

Pretty bad investment back in 1967 and I imagine it will keep nose diving ....

Had that person invested in gold - 38000 AUD  .....


Now in 1967 I believe gold was about $31 and ounce - so 38000/31 = 1225 ounces 

1225 ounces at todays price of 1550 = 1,898,750

Moral of the story ?

Gold is and has always been a better investment that two bedroom units 5 to 10ks from Brisbane city


----------



## im sparticus (15 May 2012)

numbercruncher said:


> Yet another terrible example  -
> 
> In 1967 the average weekly wage for an employed male in QLD was $55 per week -
> 
> ...






oh man that cant be your final conclusion i almost feel like im getting baited.i cant even be bothered just gonna type afew key words your the number cruncher.

initial outlay, yield, leverage, reinvestment, growth 

hint: while the guy who borrowed from the bank to buy 38k gold died of starvation well before the 2011 peak or was smart and had to liquidate to eat and ran out well before the 2011 peak, the guy who baught his initial property continued to accumulated retired early and now has a passive income the gold bug now mows his grass on weekend to help pay the ever increasing rent and still goes hungry most days.

moral of the story there is more going on with property than just capital appreciation. where you take it is up to you.

599% nice job, imagine what you could have done with a little gearing into property over the same period.


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## im sparticus (15 May 2012)

name anyone on the brw rich list that got there through buy and hold gold. it hasnt made anyone rich realestate on the other hand.


----------



## robz7777 (15 May 2012)

Hahaha, perfect example of using figures to support an argument!!

Think if we look at any investment over a specific period of time you could make an argument that it is the best asset to hold..


----------



## numbercruncher (15 May 2012)

I could of used plenty of other investment examples but you were rabitting on Bout gold - 

Still stands that unit was 690 weeks pay then and 252 weeks pay now and still falling ....

Awesome investment


----------



## im sparticus (15 May 2012)

numbercruncher said:


> that unit was 690 weeks pay then and 252 weeks pay now




damn straight!


----------



## Starcraftmazter (16 May 2012)

im sparticus said:


> This is Another reason why i think gold is in a huge speculative bubble and could trade much lower possibily even test its previous all time lows there are much better hedges for inflation and currency risk out there that actu
> ally produce a positive return.
> 
> Just about everyone is on the gold bandwagon now i mean youngsters would rather have a few useless bars under there pillow thanhave a go at putting a roof over there heads. it is the original ponzi scheme. everyone is in all the gold bugs can do now is sell and the only place for prices is down.
> ...




I don't even 

Seriously, are you for real? I don't even know where to begin tearing up your "arguments".



im sparticus said:


> name anyone on the brw rich list that got there through buy and hold gold. it hasnt made anyone rich realestate on the other hand.




What the hell does that have to do with anyone? Are you nuts?


----------



## numbercruncher (16 May 2012)

Seems Sparticus is obsessed with discrediting Gold alongside pushing his property agenda -

One would have to assume he is highly leveraged in property and owns not one grain of the shiny stuff -


----------



## im sparticus (16 May 2012)

Starcraftmazter said:


> What the hell does that have to do with anyone? Are you nuts?




some of the best advice i was given was to learn from the people that have achieved success and discount those who havent. considering the most successful of us  that are self made have not and probably would never consider building it through gold (while they may hold substancial amounts its not what got them there) stands to reason that there is a good chance its not possible. i know plenty of very well off bussiness owners, realestate investors, stock investors and to a lesser extent traders i dont know of any well of gold bugs. just my personal experiance.


----------



## McLovin (16 May 2012)

McLovin said:


> On builders and developers, they all seem to be falling off their perch at the moment. Kell & Rigby, now Reed and I was told by someone this afternoon that another large builder is on teetering on the edge.




And here is the builder in question...The chat is this was almost an open secret.



> The construction arm of Sydney property company St Hilliers has been placed in voluntary administration.
> 
> The move comes after weeks of speculation about the company’s health, in particular in relation to its troubled Ararat prison project in Victoria.
> 
> Trent Hancock and Michael Hird of Moore Stephens Sydney Corporate Recovery Group were appointed as voluntary administrators on Tuesday night.



http://www.afr.com/p/business/prope...luntary_administration_RVhBsSQQebaa0EzyYfIxyN


----------



## Miss Hale (16 May 2012)

McLovin said:


> And here is the builder in question...The chat is this was almost an open secret.
> 
> 
> http://www.afr.com/p/business/prope...luntary_administration_RVhBsSQQebaa0EzyYfIxyN




I heard about this on the radio this morning, the unions are blaming the Victorian state government for the failure of the project but I don't know the details as to why.

Another update form the land of rentals.  We have been able to find a new place to rent after our current landlord decided to sell and the house was bought by owner occupiers rather than investors. The rent on the new place is 8% less than what we were previously paying and the property is larger and has a few extra features (namely a garage and airco). The only negative is that it is in a slightly less salubrious location (although that would be a debatable I think). It was on the market for over a month and we were the only applicants.  Definitely a softening in the rental market IMO.


----------



## Knobby22 (16 May 2012)

St Hilliers were in a PPP and tried to save money by not getting the prison doors manufactured in Australia but instead in China.

The doors were not of the right quality and didn't fit. They blew a fortune, hence they have gone broke on the project.

As it is a PPP it is the PPP that will wear it.


----------



## numbercruncher (16 May 2012)

About 75b wiped off the ASX so far this Month !


A few posters in this thread insisting that we just dont get it with Australian realestate because of the mining boom - BHP now supposedly scaling back its expansion plans as well....

Best we petition the RBA to drop interest rates to 0pc so we can revive some of our dead industries ? there is only about 7 tourists here on the Gold Coast - room for more !


----------



## Glen48 (16 May 2012)

No reason to complain we are watching a depression forming and a part of history just like  1930 but our depression will be a lot worse.
Just like all the others and the ones to come in the next 80 odd years.


----------



## numbercruncher (16 May 2012)

Glen48 said:


> No reason to complain we are watching a depression forming and a part of history just like  1930 but our depression will be a lot worse.
> Just like all the others and the ones to come in the next 80 odd years.





Funny I think a depression would be wonderful for Australia - people can chill and have some family time for a while .... Trade in the Jetski for a fishing pole etc ....

It would be like ravage bush fire burning off the dead fuel load and undergrowth - imagine all the opportunity after the flames subside ....


----------



## Glen48 (16 May 2012)

So true as long as you sell every thing now and be cashed up when  the fire sale starts by then the Gold bubble should have popped so you can buy Q1 on the G/coast


----------



## numbercruncher (16 May 2012)

Seems our Chinese mates who according to a few posters in this thread are the bastion of Booming House prices via purchase of stuff out of the ground in the Pilbara are losing their appetite for Credit as well ....



> 1.40pm: Bit of news around about China, too, and it's hardly the bullish news many of us have taken for granted until lately.
> China’s four biggest banks reported almost zero net new lending in the two weeks ended May 13, Shanghai Securities News reported today, citing unidentified people - as distributed by Bloomberg.
> Two of the four lenders increased outstanding loans by less than 20 billion yuan ($3.2 billion), while the others posted drops as repayments exceeded new credit, the newspaper said.
> 
> ...


----------



## satanoperca (16 May 2012)

The future is down down, prices are down.

From RPdata.

Melbourne qtr -1.49% yr/yr -7.17% 

5 capital city aggregate qtr -1.03% yr/yr -5.00% 

Still in correction stage, another 7% drop nationally and it could look very worrying to those holding large leveraged positions.

Also add, that I can see Melbourne dropping 5% this year due to the FHBG being removed and the large increase of supply of apartments over the coming year, coupled with that the trend still up on stock available on the market.

Good luck to all.


----------



## young-gun (16 May 2012)

numbercruncher said:


> About 75b wiped off the ASX so far this Month !
> 
> 
> A few posters in this thread insisting that we just dont get it with Australian realestate because of the mining boom - BHP now supposedly scaling back its expansion plans as well....
> ...




ignorance is bliss


----------



## MrBurns (16 May 2012)

numbercruncher said:


> Funny I think a depression would be wonderful for Australia - people can chill and have some family time for a while .... Trade in the Jetski for a fishing pole etc ....
> 
> It would be like ravage bush fire burning off the dead fuel load and undergrowth - imagine all the opportunity after the flames subside ....




Would be great - Ch 9 would go broke along with that irritating P**** Eddie Maguire.
and Stefanovic AND Richard Wilkins...........would be great for Australian media.


----------



## Julia (16 May 2012)

numbercruncher said:


> Funny I think a depression would be wonderful for Australia - people can chill and have some family time for a while .... Trade in the Jetski for a fishing pole etc ....
> 
> It would be like ravage bush fire burning off the dead fuel load and undergrowth - imagine all the opportunity after the flames subside ....



 I hope you're just being facetious.  A depression would bring untold misery for hundreds of thousands of human beings.
Just think about how you'd go being on the unemployment benefit of around $230 p.w.
Do you really wish that on your fellow Australians, in addition to the many who are already thus living below the poverty line?


----------



## DB008 (16 May 2012)

l'll start collecting egg cartons, empty PET bottles, food stamps, cardboard boxes.

I might even open a Soup Kitchen? They did good during the 1930's Depression in the States, did they?


----------



## numbercruncher (16 May 2012)

Funny enough I cant envision how people below the poverty line now could be much worse off during a Depression especially if the welfare state system we currently operate continues ?

It not like prices will rise on many products/services. ...

Of course an income of 230 a week wouldnt be easy but its not like an able person would starve to death in our land of plenty -

Yes I think a depression would be charactor building for everyone , might even motivate a few couch potatoes out there ...

Probably be good for the environment too ?

Lets keep an eye on Greece that might give us a heads up how it would play out ...


----------



## MrBurns (16 May 2012)

numbercruncher said:


> Lets keep an eye on Greece that might give us a heads up how it would play out ...




It already has, but it would be much worse than that.
There would be a run on the banks, funds locked up wholesale destruction of society as we know it, and violence and a lot of it as people steal and take out frustration on people with a few dollars, sell the Merc it wont be safe.


----------



## Ves (16 May 2012)

Julia said:


> I hope you're just being facetious.  A depression would bring untold misery for hundreds of thousands of human beings.
> Just think about how you'd go being on the unemployment benefit of around $230 p.w.
> Do you really wish that on your fellow Australians, in addition to the many who are already thus living below the poverty line?



I agree, most of the comments in this thread lately are laughable to say the least.  Most people are all talk, you would do best to ignore them.


----------



## Glen48 (16 May 2012)

The run on banks in Greece has already started according to B/BERG.
 Well the ATM"S at leas they can refuse to refill the machines and slow it down a bit.


----------



## numbercruncher (16 May 2012)

So you all dont see the unsustainabilty of our current finacial system ? Forever the optimists ? Surely you have considered what if's ? 

We have alot more wriggle room in Oz compared to many nations hey ... Interest rates , AUD value etc ... So maybe we will pop up smelling like roses again ?


----------



## numbercruncher (16 May 2012)

Glen48 said:


> The run on banks in Greece has already started according to B/BERG.
> Well the ATM"S at leas they can refuse to refill the machines and slow it down a bit.




Cool - bet they wished the had read Aussie Stock forums about the benefits of holding some physical precious metals hey ! Would of beat the ATM line ups....

They all might have Drachma? In accounts replacing their Euros soon perhaps ?.....


----------



## DB008 (16 May 2012)

numbercruncher said:


> Cool - bet they wished the had read Aussie Stock forums about the benefits of holding some physical precious metals hey ! Would of beat the ATM line ups....
> 
> They all might have Drachma? In accounts replacing their Euros soon perhaps ?.....




And your solution? 
Property - bad, going to worse....
Gold - dropping more....
Just sit on cash for the moment?


----------



## numbercruncher (16 May 2012)

DB008 said:


> And your solution?
> Property - bad, going to worse....
> Gold - dropping more....
> Just sit on cash for the moment?





Not sure Danny - its nice to hear peoples strategy though hey .....

Me personally ? About half cash and no debt - im willing to change that as market forces or sentiment guide me though ....

Me thinks that inflating away the debt has to happen at some point - so prepared to leverage up when or if that eventuates ....

In the old days the financial Wizards would accuse me of having a lazy balance sheet , haha ....

But back to Aussie realestate it cant be worth it until we hit positive geared territory again ... And itll come some day ....


----------



## Glen48 (16 May 2012)

Gold should go down a bit more so be cashed up to buy to buy.
Soup kitchen: be to much Fed red tape to set one+ up better of getting in the ques.


----------



## young-gun (17 May 2012)

Julia said:


> I hope you're just being facetious.  A depression would bring untold misery for hundreds of thousands of human beings.
> Just think about how you'd go being on the unemployment benefit of around $230 p.w.
> Do you really wish that on your fellow Australians, in addition to the many who are already thus living below the poverty line?




+1 Julia. However IF the global economy was to head down this extreme path, and Australia was to be taken down in its wake, I think a full blown depression in te long run would be far better. It would most definitely rid the economy of certain negatives, as well as allow the growth phase to return faster and better than ever. I guess a sharp fierce depression or slowdown(that the gov actually allows to take place!) would be the equivalent of ripping off a band aid quickly. Not fun while it's happening but you know it will be over a lot quicker.

Not having ever experienced anything like this it's hard to speculate what the best way to the bottom would be, I personally don't think a couple decade long slow burn would be ideal. And for those laughing thinking that it's outrageous to think things will be grim for 20 years or more, it's now been a number of years since the GFC took hold, with no signs of letting go just yet.

Of all nations I think Australia is in the best position. 

Anyway just reading the Australian and CSR (building products manufacturer) is saying worst the industries been in 15 years. Lend Lease claiming conditions will continue to deteriorate, St Hilliers collapsed - apparently due to bad weather and interest rates.

Yeehaa


----------



## Glen48 (17 May 2012)

Not sure OZ has all their Bum berries in the one basket minerals, coal and buyers declining the only bright light is natural Gas as heating and cooking will always be a world wide demand but it seems natural gas is every where now.

We don't have much more going for us the tourist industry is dropping off.
 This depression will be like rust slow but working 24/7 but the feds will keep spraying WD40 until the can runs out then we can clean out the bad debt and start to recover.

Meanwhile sit back and enjoy the ride down gold is predicted to drop to 1430 so be cashed up.


----------



## satanoperca (17 May 2012)

Glen48 said:


> Not sure OZ has all their Bum berries in the one basket minerals, coal and buyers declining the only bright light is natural Gas as heating and cooking will always be a world wide demand but it seems natural gas is every where now.




So instead of all the doom and gloom and the world is ending, what do you suggest can get Australia out of the crap.

I for one are thankful that I get to live in this great country with lots of valuable resources under the ground. Would rather have them than not.

You need to start smelling the roses and look on the bright side of things, you are very depressing and projecting such constaint negativity is no way to develop a prosperous future.

Actually, do you work and pay taxes. Often find those that whinge the most don't actually contribute to society.

Cheers


----------



## Glen48 (17 May 2012)

Thank you Baldrick, you are correct no I don't pay any tax and if you read my last line I said be cashed up to buy so you can buy bargains this will be the best time ever to find some good deals.
PM's being top of the list.
Nothing wrong with be ready to jump.


----------



## numbercruncher (17 May 2012)

Haha funny that - Ive also found those that are the most irationally bullish are usually the most highly leveraged .....

Like you Satan Im glad I live in this great country - It is great we have all these wonderful resources , but I really do wonder if the development of these resources over the last decades credit boom has been done responsibly .....

And most of our Mining companies are now Majority foreign owned ..... tax em through the eye balls I say 

Be good to see our Dollar tank considerably and let other industries like Tourism, Manufacturing, Agriculture have a go again .....

Back to Houses - Hows that boom going ? Lower dollar might bring a couple of foreign investors back ?


----------



## Glen48 (17 May 2012)

Mr Seeney said the interest on the debt totals $30 million a year, while rental income only reached $3 million a year.

The value of the properties *continued to depreciate*, he said.

Mr Seeney last week visited the Mary Valley to discuss the issue with locals.

Sales of the remaining 469 properties were halted last month for a review.


In 7yrs time when all these double QLd' will be in clover..


----------



## im sparticus (17 May 2012)

Glen48 said:


> interest on the debt totals $30 million a year, while rental income only reached $3 million a year.
> 
> ..




Do you really understand what your trying to imply with that quote. as for picking you my margin liquidations and morgagee sales forget it wont happen until you cashed up renters stop paying bulk of the costs and you  government stops fitting the rest. if this thead is anything to go by doesnt look like either are gonna stop anytime soon.


----------



## Glen48 (17 May 2012)

Yo Asparagus:
Mr. Seeney is a state member of Parliament. Me, I just cut and paste so those who want to prop up a falling piano can think about it as does what gravity makes it do.
Unless you are talking about non Newtonian fluids.
http://www.youtube.com/watch?v=S5SGiwS5L6I&feature=related


----------



## numbercruncher (17 May 2012)

Asparagus -

hahaha - Im sooo going to use that term ....


----------



## Starcraftmazter (17 May 2012)

im sparticus said:


> some of the best advice i was given was to learn from the people that have achieved success and discount those who havent. considering the most successful of us  that are self made have not and probably would never consider building it through gold (while they may hold substancial amounts its not what got them there) stands to reason that there is a good chance its not possible. i know plenty of very well off bussiness owners, realestate investors, stock investors and to a lesser extent traders i dont know of any well of gold bugs. just my personal experiance.




So let me get this straight.

There has been a property bubble in Australia - the biggest in the world, and some people "got rich" by mindlessly speculating on property - and that somehow makes them successful, even though they did not really do anything special or unique, analyse anything, or indeed contribute to the economy in any real way - and thus property "must be a good investment".

On the other hand, because gold is not an asset people generally speculate on, and so people don't really get rich with gold - gold isn't meant for that sort of thing, it is meant to be a currency of safe harbour, it is a "bad investment and must be in a bubble".

That about sums it up, does it?



satanoperca said:


> So instead of all the doom and gloom and the world is ending, what do you suggest can get Australia out of the crap.




We have had a multi-decade malinvestment of trillions of dollars into property - all of our wealth has been stolen by foreigners, and we have only ourselves (or better said, stupid governments) to blame.

Nothing can get us out, prepare for a 20 year depression.


----------



## Glen48 (17 May 2012)

The only ones who have make money out of property are those who could see it was a bubble and got out before it popped.
The rest are on the elevator going to the basement.
Move on to the next bubble GOLD and Silver.


----------



## numbercruncher (18 May 2012)

A glimpse into our future maybe to peek at the advanced and innovative economy of the United States of America ......



> Wages in Indianapolis are reasonably high with the median family income at $66,900, nearly $2,000 above the national median. Meanwhile, the median price for homes sold there during the first three months of 2012 was a mere $102,000.




http://money.cnn.com/2012/05/17/real_estate/affordable-home/index.htm

Now imagine how well other areas of that economy must be doing without people having to waste so much on housing ....


----------



## medicowallet (18 May 2012)

I wonder how it will be viewed in 5 years time, those of us who have gone defensive with cash and no gearing...

Interesting times ahead..

Interest rates to go DOWN further..

Government with no money for further first home vendors boosts.


Mr Keen must be sitting back, feeling quite smug at the moment...


MW


----------



## im sparticus (18 May 2012)

just wondering if anyone has info on % declines of australian property, overall how much percentage wise has it fallen of its peaks historically before recovering and timeframes for said  declines and recoveries??


----------



## tech/a (18 May 2012)

im sparticus said:


> just wondering if anyone has info on % declines of australian property, overall how much percentage wise has it fallen of its peaks historically before recovering and timeframes for said  declines and recoveries??




This should help

http://www.australian-real-estate.n...ian-house-prices-over-the-years-1980-to-2010/


----------



## DB008 (18 May 2012)

Can anybody get data (sales from the Gold Coast area (mainly RP Data).

I ask this because l have seen that RSL Art Union and Boystown have lottery draws each month, and the properties are 'usually' over the $1 million price mark. I would like to see if you take these out of the equation, how the data might change?


----------



## young-gun (18 May 2012)

tech/a said:


> This should help
> 
> http://www.australian-real-estate.n...ian-house-prices-over-the-years-1980-to-2010/




nevermind


----------



## im sparticus (18 May 2012)

tech/a said:


> This should help
> 
> http://www.australian-real-estate.n...ian-house-prices-over-the-years-1980-to-2010/




any earlier data? found something on median houseprices from 70-04 but it didnt show a single decline yoy in the medians over that time. hard to believe we are a once in a greneration decline. kinda looking for a major past decline pre 2000 and how the medians behaved.


----------



## Glen48 (18 May 2012)

The QLD state gov. spent 30m buying properties at for Traverson ? Dam project  the properties were rented back to the original owners the ex owner's didn't know it but the feds did them a favour.


----------



## Julia (18 May 2012)

medicowallet said:


> I wonder how it will be viewed in 5 years time, those of us who have gone defensive with cash and no gearing...



No idea, but I've been very thankful I went to cash at the start of the GFC and am again 100% in cash at present.


----------



## MrBurns (18 May 2012)

Julia said:


> No idea, but I've been very thankful I went to cash at the start of the GFC and am again 100% in cash at present.




Me too and I'm staying that way I have a bad feeling about whats happening now.


----------



## medicowallet (18 May 2012)

Julia said:


> No idea, but I've been very thankful I went to cash at the start of the GFC and am again 100% in cash at present.




I wish I was 100% ATM but, I am mostly cash, but some assets, such as ones I purchased for much less back in the day, I am holding, as transaction costs just seem like a pain.

Still, I won't suffer much at all with a fall, as I have no borrowings atm, and will likely pick some things up when it looks like it might settle down, be that 10 years or more, nobody knows I suppose


----------



## Glen48 (19 May 2012)

medicowallet said:


> and will likely pick some things up when it looks like it might settle down, be that 10 years or more, nobody knows I suppose




What if things get so bad you can pick up say a Sydney hotel for say 100k would you buy it, if you paid 100k at auction then that is what it is worth, if sale are weak and you would still be forced to pay all outgoings and fees etc with limited income it shows no body knows what some thing is worth in a depression and just as hard to make a decision as in good times.
During the German post war economy you could buy a city block with a gold coin.
Trying to pick the bottom of the market is as hard as the top,no doubt buying some thing like that at that price sounds like a good buy but is it????
 Given a few more year it could be worth less.
 All we can do is look back at history and try to judge when to pounce.
 I go by 5 yrs after what ever happens in USA.


----------



## numbercruncher (19 May 2012)

Is this the anAtomy of a Chinese housing bust ? Shows that even controlling communist Governments cant sustain the unsustainable ....

Peek into Oz RE's near future ?



> Year-on-year sales in Q1, for all real estate, was down 14.6%.
> Residential property sales were down 17.5%
> Office sales were down -10.2%*
> Sales in January-February were a disaster, falling 20.9% overall, compared to the first two months of 2011, -24.7% for residential.
> ...


----------



## medicowallet (19 May 2012)

"
Latest Sales
Saturday 19th May 2012

A clearance rate of 61 per cent was recorded today compared to 60 per cent last weekend and 56 per cent this weekend last year. 

The falls recorded in the stock market during the week serve as a reminder that when considering investment strategies it is sensible to include property as part of a portfolio as it does not display the volatility of shares"


Well done Enzo, perhaps you should do a comparison of the average person's returns of their super fund for 2012 vs their property performance for Melbourne in the same timeframe.

Also, the argument that house prices have less volatility is quite flawed, and in fact, on a day to day basis, I would guestimate that a house would show wild volatility compared to shares, as there has to be an available purchaser on that particular day.

Just because a person is unaware that their house went down in value 5% on a particular day, does not mean it did not lol.

If shares showed as much volatility as the REIV's proposed vs reported # of auctions per week, then that would be something!!


----------



## satanoperca (19 May 2012)

Hold on sunshine, 508 auctions with 311 = 61% whoppy do da do.

How about those Auctions with no result: 57, more than 10% goes unreported.

Auction results need to be taken as just part of the picture.

I went to three today myself, apparently it is a buyers markets, all inner city Melbourne. Seems they forgot to tell the buyers, at two there would have been less than 10 people and most of them neighbours with both being passed in on vendor bids. The third had 5 people standing around, I was the second highest bid, just out bid by the vendor by several hundred thousand. Oh well may day will come.

Good luck to those selling and if buying, you will need more than good luck.


----------



## im sparticus (20 May 2012)

volatility?? Shares in australia as a whole are currently 40+% off their gfc highs. Cant see the medians ever achieving half of this. Anywhoo if your any good at maths and i personally dont think you are you can work out the past volatility of the index and compare it to the medians and report back on your findings.


----------



## young-gun (20 May 2012)

im sparticus said:


> volatility?? Shares in australia as a whole are currently 40+% off their gfc highs. Cant see the medians ever achieving half of this. Anywhoo if your any good at maths and i personally dont think you are you can work out the past volatility of the index and compare it to the medians and report back on your findings.




im backing hes better at maths than you are at spelling, spartacus.

you are absolutely kidding yourself if you think house prices can't fall 20% from peak. theyve already proven to have fallen 10%(adjusted for inflation though) from peak. are you ruling out another 10-15% fall?


----------



## Glen48 (20 May 2012)

Wonder if asparagus is Robots behind a cheap mask???
 Born again denier.


----------



## im sparticus (20 May 2012)

young-gun said:


> im backing hes better at maths than you are at spelling, spartacus.
> 
> you are absolutely kidding yourself if you think house prices can't fall 20% from peak. theyve already proven to have fallen 10%(adjusted for inflation though) from peak. are you ruling out another 10-15% fall?




Heresay vs whats actually happened calculate current vol of both and report back when proerty is higher until then what has been said is not true.

Some suggested reading for young-gun and co "the fox and the grapes"


----------



## young-gun (20 May 2012)

im sparticus said:


> Some suggested reading for young-gun and co "the fox and the grapes"




lol. do you actually understand the story, and the meaning behind it? perhaps you should read over it again, then look in the mirror.


----------



## young-gun (20 May 2012)

im sparticus said:


> Heresay vs whats actually happened calculate current vol of both and report back when proerty is higher until then what has been said is not true.




i'm also not arguing that there is more volatility in property than shares either.


----------



## Glen48 (20 May 2012)

If you have a good memory for faces you don't need a mirror.


----------



## Julia (20 May 2012)

young-gun said:


> you are absolutely kidding yourself if you think house prices can't fall 20% from peak. theyve already proven to have fallen 10%(adjusted for inflation though) from peak. are you ruling out another 10-15% fall?



It's not going to be uniform across the country.
Selling prices in my area (regional coastal SEQ) are down as much as 20 - 25% on two to three years ago.


----------



## Glen48 (20 May 2012)

Wrong you for got to add in the 7% you are paying in IR plus extra's.
This can't be good. 
One day the penny will drop and panic will set in.


----------



## Starcraftmazter (20 May 2012)

im sparticus said:


> Some suggested reading for young-gun and co "the fox and the grapes"




Do you understand how the banking system works yet?


----------



## im sparticus (21 May 2012)

Starcraftmazter said:


> Do you understand how the banking system works yet?





Do you understand why the grapes are sour?


----------



## Glen48 (21 May 2012)

This can't be good:
From Money morning.


he China Daily newspaper ran an article on Friday reporting that, 'China's big four banks made almost no new loans in the first half of May.'

China's big four are Industrial and Commercial Bank of China [HKG: 1398], China Construction Bank [HKG: 0939], Bank of China [HKG: 3988], and Agricultural Bank of China [HKG: 1288].

Chinese lenders were already slowing down their lending. In April it fell to 681 billion, from 1001 billion yuan in March.

But still - zero new lending from 'China's big four' in the first half of May comes as a shock

Last weekend's Chinese financial data fits the same picture. These showed China's imports grew at just 0.3% in April. 

China's real estate is also hitting the skids. Residential construction growth has fallen from 16% to 4% in a year.

And it's not selling either: sales are down 17.5%, and there is now 47.4% more residential floor space for sale than a year ago. Land sales are down 55% compared to last year.

This is hitting China's growth rate hard as real estate investment makes up 13% of the GDP figure. 

The evidence is mounting before your eyes that China is stalling.


----------



## im sparticus (22 May 2012)

young-gun said:


> im backing hes better at maths than you are at spelling, spartacus.
> 
> you are absolutely kidding yourself if you think house prices can't fall 20% from peak. theyve already proven to have fallen 10%(adjusted for inflation though) from peak. are you ruling out another 10-15% fall?




Spartacus was already taken so was tricky dicky


----------



## satanoperca (22 May 2012)

satanoperca said:


> The future is down down, prices are down.
> 
> From RPdata.
> 
> ...




And they are still going down down down

Melbourne Qtr -2.89% Yr -7.62%

5 capital city aggregate: Qtr -1.54% Yr -5.12%

Oh what a difference a couple of weeks makes.

Trending down, gaining momentum. 

What will another 50bps drop in IR's dow, just slow it down a little.

Cheers and keeping it real for all those Greeks soldiers out there.


----------



## MrBurns (22 May 2012)

Looks like RP Data can't fudge the figures any more.


----------



## satanoperca (22 May 2012)

MrBurns said:


> Looks like RP Data can't fudge the figures any more.




Exactly, it is for all to see, but don't worry Mr Burns it is not as bad as the share market apparently. Really depends on your choice of cancer.


----------



## MrBurns (22 May 2012)

satanoperca said:


> Exactly, it is for all to see, but don't worry Mr Burns it is not as bad as the share market apparently. Really depends on your choice of cancer.




It's about time the market (property) corrected, or crashed again it always does, then it will recover again one day.....a long way off this time I think.

Share market here looks like it's bouncing back but it's 3 steps down and one back up, I think it's on it's way right down, no matter how much Obama orders Europe to tcome good. it just wont happen unless his cheque book is massive and he's broke anyway.

So where are the positive signs going forward in any market ??? there are non.


----------



## DB008 (22 May 2012)

Sales Of Previously Owned U.S. Homes Probably Climbed In April



> Sales of existing U.S. homes probably rose in April for the first time in three months, indicating the industry is stabilizing, economists said before a report today.
> Purchases climbed 2.9 percent to a 4.61 million annual rate last month, according to the median forecast of 73 economists surveyed by Bloomberg News. The pace would be just shy of the 4.63 million reached in January that was the strongest in more than a year.


----------



## medicowallet (22 May 2012)

DB008 said:


> Sales Of Previously Owned U.S. Homes Probably Climbed In April




it would want to with such low interest rates and money printing.. with china slowing, how long will it last though


----------



## Logique (23 May 2012)

Well I've rarely been so confused on an investment decision. I am not hinting for advice.

To remain in a direct (i.e. unlisted - retail/commercial/industrial) property fund, or seek partial redemption on a (rare) opportunity. Thing is, their analysis of the commercial market points to a steady recovery, and the distributions are better than bank interest. 

They say that with financing tight, supply is constrained, so the balance is tipping to  demand over supply. I think I've talked myself into staying put.


----------



## numbercruncher (23 May 2012)

Funny thing was looking on Realestate.com.au last night and saw a house that recently sold on the same street as I sold my house in 2003 (on Gold Coast )- and it sold for less !!

Given my house was a better house but certainly not 9 years of inflation/interest/insurance/rates/stamp duties etc worth !! 

ANd prices are still appear to be Tumbling - thats some serious Wedge property speculators are losing if selling ....


----------



## Glen48 (23 May 2012)

Know how you feel only I had to sell due to divorce lost 1m. in 2003 the bubble was only 1/2 pumped up and still had 10 yrs to go before the crash.
Look for the next bubble to cash in on.


----------



## Glen48 (23 May 2012)

A slowdown in China should have a big impact on its '51st state' - Australia. While China's massive demand for resources has shielded Australia from the global financial crash to a great extent, this is now set to go into reverse.

This would be bad enough even if Australia was in a hugely sound economic state. But it's not. It has suffered a rampant housing bubble that has made it one of the most expensive places to live in the world. That bubble is already collapsing. According to the Australian Bureau of Statistics, average house prices have now fallen for five straight quarters.

Meanwhile, the latest economic surveys show that both the manufacturing and service sectors are in deep trouble, with activity in both shrinking rapidly. No wonder the Aussie dollar has toppled back through parity with the US dollar.

Matthew Partridge
Contributing Editor, Money Morning


----------



## numbercruncher (23 May 2012)

One of the Australian property permabulls in this thread was lipping on about how India's middle class is about to come online and send demand for resources through the roof along with His house price ...... aside from the BHP boss dissagreeing with the said thread contributor here is some more evidence to the contrary .... 




> India faces mass default and restructuring as devaluation looms | Reuters
> 
> By Jonathan Rogers
> 
> ...




http://www.reuters.com/article/2012/05/22/us-india-devaluation-idUSBRE84L0N920120522

I think some people just assume that Large populations equal large economy - but the opposite can be very much more the reality. Kind of like if your own Home had 10 dependant mouths to feed instead of four -


----------



## Aussiejeff (23 May 2012)

numbercruncher said:


> One of the Australian property permabulls in this thread was lipping on about how India's middle class is about to come online and send demand for resources through the roof along with His house price ...... aside from the BHP boss dissagreeing with the said thread contributor here is some more evidence to the contrary ....
> 
> 
> 
> ...




Well, India's economy is pretty damn big! In 2011 India's economy was ranked 11th with GDP of US$1.676143 Trillion, ahead of Spain (1.493513 Trillion) & Australia (13th with 1.488221 Trillion).

Lowly Greece was 35th with a GDP of a mere .303065 Trillion - around 1/5th of India's!

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

If we are in such doo-doos with piddling little Greece, I shudder to think what an Indian crash might lead to with regard to the world and our economy/housing sector et all ....

Oh well, who cares - as long as the Gwhizz8+20 are in total control, nothing bad can possibly happen. 

SPEND like there's no tomorrow!


----------



## Glen48 (23 May 2012)

Guess go short on curry powder sales as well???


----------



## numbercruncher (23 May 2012)

Aussiejeff said:


> Well, India's economy is pretty damn big! In 2011 India's economy was ranked 11th with GDP of US$1.676143 Trillion, ahead of Spain (1.493513 Trillion) & Australia (13th with 1.488221 Trillion).
> 
> Lowly Greece was 35th with a GDP of a mere .303065 Trillion - around 1/5th of India's!
> 
> ...




I should of said Healthy rather than large 

Too right she is a huge economy !


----------



## young-gun (23 May 2012)

numbercruncher said:


> I should of said Healthy rather than large
> 
> Too right she is a huge economy !




I personally would look to India for growth in the future. Certainly not right now though. They will eventually go through a boom phase equal to or greater than China's. I can't see it beginning in the next decade though. That will be the next huge bubble to ride.


----------



## Julia (23 May 2012)

Glen48 said:


> Meanwhile, the latest economic surveys show that both the manufacturing and service sectors are in deep trouble, with activity in both shrinking rapidly. No wonder the Aussie dollar has toppled back through parity with the US dollar.
> 
> Matthew Partridge
> Contributing Editor, Money Morning



I've never heard of Mr Partridge.  I did, however, have a free trial of "Money Morning" some years ago and found it contained some of the most awful rubbish I've ever read.

The OECD apparently disagree with Mr Partridge's conclusions, nominating Australia as one of the world's most healthy economies.  The following is one of many references to this:
http://www.abc.net.au/am/content/2012/s3508780.htm


----------



## numbercruncher (23 May 2012)

The OECD predicting that Oz will outperform the rest of the developed World , says more about the rest of the World than it does about Oz Im thinking.....

Lets see what they have to say when they see next years figures.....

No one seriously believes we will run a surplus do they?


----------



## Glen48 (23 May 2012)

Next step will be a tax on Oz taxpayers to bailout the mining companies.
Any one who thinks Swan is the Man and OZ business are not in trouble should visit before OZ before making any statements.


----------



## Julia (23 May 2012)

numbercruncher said:


> The OECD predicting that Oz will outperform the rest of the developed World , says more about the rest of the World than it does about Oz Im thinking.....



Yep, agree.


----------



## young-gun (24 May 2012)

numbercruncher said:


> The OECD predicting that Oz will outperform the rest of the developed World , says more about the rest of the World than it does about Oz Im thinking.....
> 
> Lets see what they have to say when they see next years figures.....
> 
> No one seriously believes we will run a surplus do they?




I hope your not second guessing swannys master plan NC.......


----------



## im sparticus (24 May 2012)

MrBurns said:


> So where are the positive signs going forward in any market ??? there are non.




smells like deflation??


----------



## moXJO (24 May 2012)

numbercruncher said:


> One of the Australian property permabulls in this thread was lipping on about how India's middle class is about to come online and send demand for resources through the roof along with His house price ...... aside from the BHP boss dissagreeing with the said thread contributor here is some more evidence to the contrary ....
> 
> 
> 
> ...




I'm sorry do you want to point out where I said just resources?

How about education, food etc we are a nation of what? 20 something million smack bang in the middle of opportunity. We don't need to do a whole lot to punch above our weight. All you do is look for the most pessimistic outlook possible and man it's draining. 
 And how the hell do you come to the conclusion I'm a permabull when I mostly point out the fact things are not as bad as what you whiners say and I doubt we will end up in depression. 

BHP yep I'm sure they are doing it tough


----------



## numbercruncher (24 May 2012)

De'nile is a river in Egypt  .....

I didnt say anything about BHP other than they dissagree with your India will save the day Idea ...

No Whining here infact I see your type as whiners - Im just pointing out the facts - I think its absolutely wonderful that your Mcmansion 5 mintutes drive from the Worlds best Iron ore deposit is gaining value - go you - you rock !

But for the rest of the nation it simply isnt that rosey - unless you have proof otherwise ?


----------



## DB008 (30 May 2012)

Jut saw this on Reddit.
Seems like Australia isn't the only expensive place on the planet....








> The above graphic exploded on Facebook this weekend. It shows how many minimum wage hours a worker needs to work in order to be able to afford a two-bedroom unit at “Fair Market Rent” in any given state. The FMR is a figure determined by the U.S. Department of Housing and Urban Development (HUD).
> 
> The numbers don’t show any discernible trend aside from perhaps 1) states with high cost of living/rent such as NY, NJ, DC, MD require the most man hours and 2) the minimum wage is too low. The latter, of course, is the point of this graphic.




http://tiny.cc/eo43ew


----------



## numbercruncher (30 May 2012)

I think thats rather misleading - perhaps its tipping jobs? They have lower minimum ...

But anyway - stacks of cities in US with houses under 100k and household incomes over 50 ....  US has alot more potential than we do I feel .....


Plenty of examples thanks to google...

http://money.cnn.com/galleries/2011/real_estate/1105/gallery.cheapest_housing_markets/index.html

Makes us look like the hard lessons most the world is being or been taught have not yet arrived


----------



## numbercruncher (30 May 2012)

Heres a pretty good writeup about US prices etc- 



> Is it better to rent or buy? Ken Johnson of Florida International University and Eli Beracha of East Carolina University recently crunched the numbers in 23 cities.
> 
> Nationwide, they found prices have dropped enough, and rents have risen enough, to make buying the better deal. But results vary.
> 
> ...




http://money.cnn.com/galleries/2011/real_estate/1105/gallery.rent_or_buy/index.html

Where would you rather invest folks ?


----------



## DB008 (31 May 2012)

Here is one for SCM who has said that Australia should have its property bubble burst like Iceland did during the GFC...


Iceland Property Bubble Grows With Currency Controls: Mortgages



> Iceland’s crisis-management policies are creating the island’s next property bubble less than four years after its banking meltdown threw the economy into its worst recession.
> Prices for new homes touched a record last quarter, having surged 40.1 percent since the final three months of 2010, according to estimates by the National Registry of Iceland in Reykjavik. Average house prices have risen 11.3 percent since the market bottomed at the end of 2009, according to central bank data at the end of the first quarter.




http://www.bloomberg.com/news/2012-05-29/iceland-property-bubble-grows-with-currency-controls-mortgages.html


----------



## Starcraftmazter (31 May 2012)

numbercruncher said:


> I think thats rather misleading - perhaps its tipping jobs? They have lower minimum ...
> 
> But anyway - stacks of cities in US with houses under 100k and household incomes over 50 ....  US has alot more potential than we do I feel .....




And even if they don't the rental yields in many places are *double* what they are in Australia. No true investor would ever touch Australia with a 10 foot pole, with our chronic oversupply of housing.

If you combine this with the fact that our currency is on the way down, clearly investing in US real-estate is by far the best way to go, if one must invest in real-estate at all.


----------



## numbercruncher (31 May 2012)

Clearly


----------



## numbercruncher (31 May 2012)

> Australian residential building approvals fell 8.74 per cent to 10,330 units in April.
> This compares to a downwardly revised 11,312 units in March, seasonally adjusted.
> In the year to April, building approvals were *down 24.1 per cent*, the Australian Bureau of Statistics (ABS) said on Thursday.
> Economists' forecasts had centred on a 0.5 per cent rise in approvals in April.




http://www.thebull.com.au/articles/a/28686-building-approvals-fell-8.74-in-april.html

Can only get worse in the near term surely .....


----------



## Klogg (31 May 2012)

Starcraftmazter said:


> And even if they don't the rental yields in many places are *double* what they are in Australia. No true investor would ever touch Australia with a 10 foot pole, with our chronic oversupply of housing.
> 
> If you combine this with the fact that our currency is on the way down, clearly investing in US real-estate is by far the best way to go, if one must invest in real-estate at all.




Not siding either way on Aus property, but your suggestion of investing in US property is probably not a great idea either...

You're taking on FX risk, which can be huge at times... that is, unless you buy some form of hedge/insurance against this, which would cost you a fair bit anyway.


----------



## Starcraftmazter (31 May 2012)

Klogg said:


> Not siding either way on Aus property, but your suggestion of investing in US property is probably not a great idea either...
> 
> You're taking on FX risk, which can be huge at times... that is, unless you buy some form of hedge/insurance against this, which would cost you a fair bit anyway.




I didn't suggest it - I clearly said *if one must invest in real estate* - then US is far better than Australia.


----------



## jank (31 May 2012)

numbercruncher said:


> http://www.thebull.com.au/articles/a/28686-building-approvals-fell-8.74-in-april.html
> 
> Can only get worse in the near term surely .....




Just one thing, if house builds are declining, would that not limit supply thus stabilising prices, if demand is constant?


----------



## numbercruncher (31 May 2012)

jank said:


> Just one thing, if house builds are declining, would that not limit supply thus stabilising prices, if demand is constant?





Would certainly help determine a floor in prices eventually I would summise -


----------



## MrBurns (31 May 2012)

jank said:


> Just one thing, if house builds are declining, would that not limit supply thus stabilising prices, if demand is constant?




Demand wil drop like a stone, just like it's doing now.


----------



## Glen48 (31 May 2012)

Except for bullets, beans,and band aids the necessary things in life. Mr.B


----------



## im sparticus (31 May 2012)

MrBurns said:


> Demand wil drop like a stone, just like it's doing now.




its very hard to really know what is happening right now most data is old and the action that created the data even older and the intent of the action ie, organising finance searching etc older still by the time you start to see positive signs the market could well have been running away for close to 12 months, people really need to start looking forward rather than back. all the data is good for is predicting the past.


----------



## MrBurns (31 May 2012)

im sparticus said:


> its very hard to really know what is happening right now most data is old and the action that created the data even older and the intent of the action ie, organising finance searching etc older still by the time you start to see positive signs the market could well have been running away for close to 12 months, people really need to start looking forward rather than back. all the data is good for is predicting the past.




I can see it as plain as the agents can, people arent buying and/or aren't prepared to pay like this time last year.


----------



## Ves (31 May 2012)

Starcraftmazter said:


> I didn't suggest it - I clearly said *if one must invest in real estate* - then US is far better than Australia.



Isn't the system a bit different in that certain taxes and rates, if not paid, attach to the house and not it's owner?  I remember hearing that this surprised people who were buying "cheap" houses and having to fork out a lot more money on top of this.


----------



## numbercruncher (31 May 2012)

Ves said:


> Isn't the system a bit different in that certain taxes and rates, if not paid, attach to the house and not it's owner?  I remember hearing that this surprised people who were buying "cheap" houses and having to fork out a lot more money on top of this.





Houses arnt Cheap in the US - they are fair market value - its just ours are still over the top expensive making theirs seem cheap.

I believe property tax in US varies considerably from state to state - im sure if what you suggest is true it would be easy to find out and one would take that into consideration with an offer - a couple extra k is chicken feed to in comparison to our market though hey ?


----------



## im sparticus (31 May 2012)

MrBurns said:


> I can see it as plain as the agents can, people arent buying and/or aren't prepared to pay like this time last year.




Hope the prices stay down in vic until im ready to purchase in a year or two this is not qld or nsw reality though.


----------



## im sparticus (31 May 2012)

numbercruncher said:


> Houses arnt Cheap in the US - they are fair market value - its just ours are still over the top expensive making theirs seem cheap.
> 
> I believe property tax in US varies considerably from state to state - im sure if what you suggest is true it would be easy to find out and one would take that into consideration with an offer - a couple extra k is chicken feed to in comparison to our market though hey ?




just because a big mac or whatever is cheaper in the usa does not mean its price is due to fall is Oz


----------



## village idiot (31 May 2012)

> And even if they don't the rental yields in many places are double what they are in Australia. No true investor would ever touch Australia with a 10 foot pole, with our chronic oversupply of housing.




The same cannot be said about commercial property. I have just been doing a quick  tour of property yields available in UK, USA and AUS. I was thinking there might be some good yields available os with recovery potential but not so...

the table below list the dividend yields available by investing via ETFs, an then via the top few underlying holdings; 

*USA* 
ETF	ICF	2.80%
ETF	VNQ	3.00%
ETF	IUSP	2.77%

HOLDING	SPG	2.70%
HOLDING	PSA	3.30%
HOLDING	EQR	2.20%

*UK* 
ETF	IUKP	3.27%

HOLDING	LAND	3.10%
HOLDING	BLND	5.20%

*AUSTRALIA* 
ETF	VAP	6.30%
ETF	SLF	6.40%

HOLDING	WDC	5.50%
HOLDING	WRT	7.04%
HOLDING	SGP	7.50%
HOLDING	GPT	5.76%


----------



## numbercruncher (31 May 2012)

im sparticus said:


> Hope the prices stay down in vic until im ready to purchase in a year or two this is not qld or nsw reality though.




You already own property all over the country so you were telling us - wouldnt you just use yah equity mate and snap up all these bargains ?


----------



## Ves (31 May 2012)

numbercruncher said:


> Houses arnt Cheap in the US - they are fair market value - its just ours are still over the top expensive making theirs seem cheap.



 Have a look at the quotation marks before you lecture me. Cheers.


----------



## medicowallet (31 May 2012)

jank said:


> Just one thing, if house builds are declining, would that not limit supply thus stabilising prices, if demand is constant?




The extra unemployment generated by a failing housing industry and the flow on effect of it would help negate this stabilisation.


----------



## numbercruncher (31 May 2012)

Ves said:


> Have a look at the quotation marks before you lecture me. Cheers.




Maybe you should just add a caveat to your posts that you dont want anyone to reply because you have the sensitive gene. Cheers.


----------



## Ves (31 May 2012)

numbercruncher said:


> Maybe you should just add a caveat to your posts that you dont want anyone to reply because you have the sensitive gene. Cheers.



Maybe you just shouldn't post because you have no reading comprehension? Just IMO of course. Any way, enjoy trolling property threads in your free time.


----------



## im sparticus (31 May 2012)

numbercruncher said:


> You already own property all over the country so you were telling us - wouldnt you just use yah equity mate and snap up all these bargains ?




probably thats how its been panning out so far...... the only places i have alluded to have been sydney and brisbane btw but your welcome to twist the truth to support your agenda, melbourne and perth are next. my plan is to hop around checking out the countryside renovating at least one place while im there taking advantage of the ppor cgt and stampduty exemptions before moving on and turning it into an ip once the next purchase is in place. undecided about adeilade and definatly not interested in darwin.


----------



## numbercruncher (31 May 2012)

im sparticus said:


> probably thats how its been panning out so far...... the only places i have alluded to have been sydney and brisbane btw but your welcome to twist the truth to support your agenda, melbourne and perth are next. my plan is to hop around checking out the countryside renovating at least one place while im there taking advantage of the ppor cgt and stampduty exemptions before moving on and turning it into an ip once the next purchase is in place. undecided about adeilade and definatly not interested in darwin.





Glad we cleared that up -

So your saying that on current prices you are bullish on Victoria ..... What Makes you think Vicis good buying ?


----------



## Starcraftmazter (31 May 2012)

Maybe he hasn't lost enough money.





Oh how I wish you could short property.


----------



## Ves (31 May 2012)

Starcraftmazter said:


> Oh how I wish you could short property.



 You'd have made more money shorting gold last month.  Just sayin'.


----------



## im sparticus (31 May 2012)

numbercruncher said:


> Glad we cleared that up -
> 
> So your saying that on current prices you are bullish on Victoria ..... What Makes you think Vicis good buying ?




ive always liked fading breakouts especially when its to the downside of prime aussie ressi


----------



## CanOz (31 May 2012)

Starcraftmazter said:


> Maybe he hasn't lost enough money.
> 
> 
> 
> ...




Pretty sure you can mate... IFAS - Asian Property ETF.

CanOz


----------



## im sparticus (31 May 2012)

Ves said:


> You'd have made more money shorting gold last month.  Just sayin'.




hes long gold currently getting hosed scm why dont you just open up a cfd account and start shorty property etf's? theres plenty of them.


----------



## DB008 (31 May 2012)

I saw Ves's quote and had to unquote SCM.



Starcraftmazter said:


> Oh how I wish you could short property.




Um, you can. Why not short some R.E. ETF's or something? There are plenty out there. How about some long dated put options/warrants if they are available?

(Edit; S&P/ASX 200 A-REIT Index Futures
S&P/ASX 200 A-REIT Index Futures (also known as Mini Property Futures or XPJ Index Futures) began trading in 2002 and are now widely traded by fund managers.)


----------



## Starcraftmazter (31 May 2012)

CanOz said:


> Pretty sure you can mate... IFAS - Asian Property ETF.
> 
> CanOz




I don't see Melbourne on there. In fact, I don't even see Australia!


----------



## Ves (31 May 2012)

Plenty of REITS and other listed real estate developers and mortgage brokers. And major banks.  The list of related shortable securities goes on, actually.


----------



## im sparticus (31 May 2012)

DB008 said:


> I saw Ves's quote and had to unquote SCM.
> 
> 
> 
> ...






yeah but the brokers wont accept his bullion as margin lol


----------



## Starcraftmazter (31 May 2012)

Ves said:


> Plenty of REITS and other listed real estate developers and mortgage brokers. And major banks.  The list of related shortable securities goes on, actually.




Call me once there's a security which tracks RP Data's House Price index for Melbourne.


----------



## CanOz (31 May 2012)

LOL. Call your broker when you've got some capital!!

CanOz


----------



## im sparticus (1 June 2012)

can anyone who follows realestate etfs and stocks tell us how they have been performing over the last 12-18 months?

also looking forward to seeing how that home price index has performed over the next 12 months. lets lock scm in hypothetically short at todays value for melbourne?


----------



## Starcraftmazter (1 June 2012)

im sparticus said:


> also looking forward to seeing how that home price index has performed over the next 12 months. lets lock scm in hypothetically short at todays value for melbourne?




There are no ETFs for Melbourne, that's why I don't have any positions. There's nothing "hypothetical" here


----------



## im sparticus (1 June 2012)

Starcraftmazter said:


> There are no ETFs for Melbourne, that's why I don't have any positions. There's nothing "hypothetical" here




Ive just created one for you short at todays value for melbourne get it will be interesting to see how this hypothetical plays out. your welcome to call the exit any time you like. whats todays value for melbourne?


----------



## Starcraftmazter (1 June 2012)

im sparticus said:


> Ive just created one for you short at todays value for melbourne get it will be interesting to see how this hypothetical plays out. your welcome to call the exit any time you like. whats todays value for melbourne?




I don't know, why not simply go for RP Data's monthly price movements to calculate %return?

I will also take as much leverage as you offer.


----------



## numbercruncher (1 June 2012)

im sparticus said:


> Ive just created one for you short at todays value for melbourne get it will be interesting to see how this hypothetical plays out. your welcome to call the exit any time you like. whats todays value for melbourne?





Seems your already out of the money mr property Permabull 



> MELBOURNE home prices plunged a further 2.7 per cent in May as buyers continue to drive hard bargains.
> 
> According to the latest RP Data home value index, Melbourne residential property prices have now fallen 4.6 per cent in the past three months and a staggering 8.4 per cent during the past year with the latest median price of just* $490,000.




http://www.heraldsun.com.au/business/buyers-market-as-melbourne-house-prices-fall-27-per-cent-in-may/story-fn7j19iv-1226379376932

Hooley Dooley - 2.7pc in one month ! what we in the real world were expecting though -


And unless im living in fairyland I have seen nothing to indicate they will reverse this downward trajectory - even the spectre of nose diving interest rates isnt doing it ....

Happy Investing


----------



## im sparticus (1 June 2012)

Starcraftmazter said:


> I don't know, why not simply go for RP Data's monthly price movements to calculate %return?
> 
> I will also take as much leverage as you offer.




thats what i mean rp data index for melbourne. ill offer you 80%lvr cash (no gold). So whats your total position size?


----------



## im sparticus (1 June 2012)

numbercruncher said:


> Seems your already out of the money mr property Permabull
> 
> 
> 
> ...




were trading the future not the past!


----------



## numbercruncher (1 June 2012)

If you purchased a median Melbourne property a year ago using borrowed money and sold today you would be atleast 100k in the hole .....


----------



## satanoperca (1 June 2012)

im sparticus said:


> thats what i mean rp data index for melbourne. ill offer you 80%lvr cash (no gold). So whats your total position size?




I will take your offer, get your lawyers to write up the contracts, put the money in escrow, you put equal money in as I to cover your lose. $60K leveraged up to $300,000. 

Lets go. No hypotheticals, lets make it real.


----------



## im sparticus (1 June 2012)

satanoperca said:


> I will take your offer, get your lawyers to write up the contracts, put the money in escrow, you put equal money in as I to cover your lose. $60K leveraged up to $300,000.
> 
> Lets go. No hypotheticals, lets make it real.




my lawyers whats wrong with yours?


----------



## numbercruncher (1 June 2012)

Good to see the team at Moody's are keeping it real -




> GLOBAL ratings agency Moody's says the Australian housing market is still *significantly* overvalued despite a 7 per cent slide in prices over the past two years.
> 
> And Moody's says the resilience of Australia's debt-bloated household balance sheets has never been truly tested since house prices accelerated.
> 
> The agency has warned it is considering cutting its credit rating on three of the leading Australian businesses that provide mortgage insurance.




http://www.couriermail.com.au/life/homesproperty/australian-houses-overvalued/story-e6frequ6-1226379360653


----------



## satanoperca (1 June 2012)

im sparticus said:


> my lawyers whats wrong with yours?




you are the one who was offering, but mail me your details and I will have the contract drawn up, do you have the $60K to leave for a period of 3 years, as I will holding the short for some time.

Also what is your max position size, have a few people interested in taking up your offer.

Cheers


----------



## Starcraftmazter (1 June 2012)

im sparticus said:


> thats what i mean rp data index for melbourne. ill offer you 80%lvr cash (no gold). So whats your total position size?




Given it's hypothetical, as big as you can handle.


----------



## satanoperca (1 June 2012)

Starcraftmazter said:


> Given it's hypothetical, as big as you can handle.




No hypothetical, lets make it real or it means jack. 

Time to stump up his money or shut up.

Cheers


----------



## Starcraftmazter (1 June 2012)

satanoperca said:


> No hypothetical, lets make it real or it means jack.
> 
> Time to stump up his money or shut up.
> 
> Cheers




That seems like a massive waste of opportunity cost 

You want me to commit capital to a market which moves in one month as much as a stockmarket index usually moves in 1-2 days. This is why I always say real estate is a suckers' investment.


----------



## medicowallet (1 June 2012)

I wonder if there are any professionals out there with opinions of current Melbourne market and future projections?

Robots?

Sunshine and lollipops

MW


----------



## satanoperca (1 June 2012)

medicowallet said:


> I wonder if there are any professionals out there with opinions of current Melbourne market and future projections?
> 
> Robots?
> 
> ...




Yes where is Robots, miss his comments.


----------



## im sparticus (1 June 2012)

Starcraftmazter said:


> a market which moves in one month as much as a stockmarket index usually moves in 1-2 days.




Guess the sky isnt falling after all cheers for clearing that up

satan send my offer to your lawyers and see what they can draw up i stand by every word i posted


----------



## McLovin (1 June 2012)

Starcraftmazter said:


> That seems like a massive waste of opportunity cost
> 
> You want me to commit capital to a market which moves in one month as much as a stockmarket index usually moves in 1-2 days. This is why I always say real estate is a suckers' investment.




Do it on tick. $1,000/1% move. No money down and seeing as you're so confident it's like cash in the bank for you.

ETA: I just thought of another benefit for you SCM, as it's considered gambling you won't have to pay tax!


----------



## satanoperca (1 June 2012)

im sparticus said:


> Guess the sky isnt falling after all cheers for clearing that up
> 
> satan send my offer to your lawyers and see what they can draw up i stand by every word i posted




What is your maximum position size, no time to play games.


----------



## jank (1 June 2012)

Jayus, its like a penis waving competition here.


----------



## prawn_86 (1 June 2012)

Yeh lets get back on topic please. If members want to sort out contracts, please do it via PM


----------



## im sparticus (1 June 2012)

Bit disappointed my post was deleted but the post it was in retaliation to was not. anywho for today 1-6-12 the values are as follows mel 571 sydney 626 brisbane 429 perth 551. Now whilst the perma bears have had the wind in there sales as of late im interested to see how we go from (no more hindsite trades please) here it is also worth noting this is not an accumulation index you will have to add yield to this (roughly 5%pa) its documented where the indices are posted to compare to gold i etc think its also important to note that these numbers though generated for today are really comming from events that happened quiet some time ago and not a reflection of whats happening right right now if you know what i mean. 

Scm wanted melbourne short at 571 and i guess will be charge the dividends on the short sale (5%pa) position size is for the point of the exersize irrelevant but you can compare it to a median later on if you like whatever.

To balance the argument i will go short gold a the current spot of 1569. Scm calls the exit i close when he closes (sound like a fun game?? Nice and friendly like! just one rule on the exit if you do its because your no longer a bear and have become a bull.


----------



## Agentm (1 June 2012)

real clearance rates for melb last weekend.. 

*Latest Sales*

*Saturday 26th & Sunday 27th May 2012*





*SALES RESULTS* 
S Sold at Auction: 309
SB Sold before Auction: 57
SA Sold after Auction: 0
Passed in: 280
Passed in on vendor's bid: 177
Clearance rate: 57%

*TOTAL AUCTIONS*

This week: 646
Postponed: 2
Withdrawn: 9
Auctions with no result: 10
PS Private Sales: 608
Total Volume (Auctions): $280.05mil
Total Volume (Private Sales): $285.4mil
Total Auctions Houses: 421
Clearance Rate: 58%
Median Price: $745,000
Total Value: $213,431,750
Total Auctions Flats/Apartments: 205
Clearance Rate: 55%
Median Price: $492,500
Total Value: $60,099,000
Total Auctions Vacant Land: 17
Clearance Rate: 41%
Median Price: $466,000
Total Value: $5,317,000


expect them to post the same 61% on sunday and wait for the friday late afternoon update as usual if you really want the accurate (if you believe it ) tally

melbourne prices are plunging

i saw that in elwood brighton and sandringham there was hardly a sale

the 7.7 mill in brighton went and one other as a sale b4

none in sandringham and one out 11 went in elwood

so no one likes the beach anymore!!

on an slide and escalating MoM


----------



## young-gun (1 June 2012)

satanoperca said:


> you are the one who was offering, but mail me your details and I will have the contract drawn up, do you have the $60K to leave for a period of 3 years, as I will holding the short for some time.
> 
> Also what is your max position size, have a few people interested in taking up your offer.
> 
> Cheers




given that hes waiting for 2 years to buy his next brilliant property investment, i don't think 60k is floating around.


----------



## young-gun (1 June 2012)

im sparticus said:


> Hope the prices stay down in vic until im ready to purchase in a year or two this is not qld or nsw reality though.




no need to worry spartacus! id say youll be looking at a 10-15% discount by that time. a super bargain.


----------



## im sparticus (1 June 2012)

young-gun said:


> no need to worry spartacus! id say youll be looking at a 10-15% discount by that time. a super bargain.




ive shared what im up to would you like to share your story, when did you start buying bullion and a more recent purchase?


----------



## young-gun (1 June 2012)

im sparticus said:


> ive shared what im up to would you like to share your story, when did you start buying bullion and a more recent purchase?




i own very little gold, and have already built and sold my first house 18 months ago. I am currently pumping all my money into a business. i will buy property once it stops going down, which isn't now. im early twenties, so im sure even you can understand my accomplishments are limited at this current point in time. don't go viewing my lack of experience as a downfall, as your good experiences are your very downfall in seeing the coming crash. i can afford to buy another house, and would do so if I thought the time were right, but again, it isn't.

despite yourself, TS and tech pointing out there are opportunities, I don't believe there are as many for those just entering the market. i am still skeptical that even the opportunities they discuss will make any money, short or long term. given my knowledge is limited in commercial RE this may be what they are talking about. or maybe they can flip a few quick properties on some really cheap land they picked up and still turn a profit, who knows.

once the business is supporting itself I will get a little kitty and begin trading again.

anyway back on topic.

I read somewhere yesterday that residential building approvals are down almost 9% for april. But according to the bulls I guess that just means that supply is decreasing meaning prices are ready to sky rocket.


----------



## Agentm (1 June 2012)

nice post young gun..   i dont read these threads back much myself, but it looks like the usual case of peoples ego's getting the better of themselves.  i saw a mod intervene a few posts back.. so its gettin ugly i guess.. 

dont feel intimidated into explaining yourself, but you have just done that.. so big ups from me for being pretty young and having a level head.. 

imho your point on the greater RE market not doing so well overshadows the few RE gurus success stories.. all markets turn, up and down,, been hearing for years from the same people here that this one is different, this bubble in australia is not like any other..

guess what???

its not the case.. 

bubbles are bubbles..

i have my capital in other sectors, i will invest in RE once the bubble is over.. may be fast or slow, but when its done, then i enter..


----------



## im sparticus (1 June 2012)

the funny thing with property corrections is when you go in to take advantage of them everything half decent gets pulled off the market and all that is left is the crap trading 10% lower than the quality stock you wanted to buy.


----------



## Sean K (1 June 2012)

im sparticus said:


> the funny thing with property corrections is when you go in to take advantage of them everything half decent gets pulled off the market and all that is left is the crap trading 10% lower than the quality stock you wanted to buy.



And only the people who have to sell would be selling. RE is a much slower moving beast than the SM. Real risk is unemployment to the undercapitalised. Hope all the recent sackees have some room to move or find something fast! Having said that, unemployment still seems relatively low on the surface. Does a few thousand engineers going here and there really make a difference?


----------



## Starcraftmazter (1 June 2012)

McLovin said:


> Do it on tick. $1,000/1% move. No money down and seeing as you're so confident it's like cash in the bank for you.
> 
> ETA: I just thought of another benefit for you SCM, as it's considered gambling you won't have to pay tax!




Sounds perfect, I'm all up for it. Anyone wanting to make that bet, just PM me the contract, I'll do 6 and 12 months.



im sparticus said:


> To balance the argument i will go short gold a the current spot of 1569. Scm calls the exit i close when he closes (sound like a fun game?? Nice and friendly like! just one rule on the exit if you do its because your no longer a bear and have become a bull.




I have no idea what you are talking about here. I also don't advocate taking trading positions in the highly manipulated market of gold, and will have nothing to do with any such position.



im sparticus said:


> the funny thing with property corrections is when you go in to take advantage of them everything half decent gets pulled off the market and all that is left is the crap trading 10% lower than the quality stock you wanted to buy.




That's not half as funny as clueless people calling the bottom just past the peak of the bubble.


----------



## Starcraftmazter (1 June 2012)

im sparticus said:


> You take re short, i take gold short,
> 
> You call the exit for re which will also be the end of your bearish view which will trigger my exit in gold, all hypothetical so we can look back on today and see how things have changed.
> 
> That was not my take on corrections but my real world experiance with them. i take it yours has been different?




In regards to gold, you can do whatever you want with your other trades/investment, but I want it nothing to do with me.

In regards to RE, you are confusing one's stance on a market with one's investments and/or trades in said market. Just because I am bearish on something doesn't mean I will take a position on it an keep it for the entirety of the time I hold that view. I cannot even begin to explain how stupid this notion of yours is.

I am bearish on Australian property for at least 20 years; however I have no intention in holding any position on anything for that long.


----------



## im sparticus (1 June 2012)

Starcraftmazter said:


> In regards to gold, you can do whatever you want with your other trades/investment, but I want it nothing to do with me.
> 
> In regards to RE, you are confusing one's stance on a market with one's investments and/or trades in said market. Just because I am bearish on something doesn't mean I will take a position on it an keep it for the entirety of the time I hold that view. I cannot even begin to explain how stupid this notion of yours is.
> 
> I am bearish on Australian property for at least 20 years; however I have no intention in holding any position on anything for that long.




 ok you can call the exit and still be bearish. long time to be bearish just how old are you anyway? Youtube says 22.      Ps. I have a youtube account too sparticus11 check it out.


----------



## Julia (1 June 2012)

Agentm said:


> nice post young gun..   i dont read these threads back much myself, but it looks like the usual case of peoples ego's getting the better of themselves.  i saw a mod intervene a few posts back.. so its gettin ugly i guess..
> 
> dont feel intimidated into explaining yourself, but you have just done that.. so big ups from me for being pretty young and having a level head..



Yes, agree.
Good to see someone express themselves so reasonably, no ranting, no insults, and making complete sense.


----------



## Ves (1 June 2012)

im sparticus said:


> To balance the argument i will go short gold a the current spot of 1569.



 Your short is getting squeezed as we speak.  If it was real money it'd be hard not to blink.  Especially if QE3 comes around.


----------



## numbercruncher (2 June 2012)

Sparticus your short has been smoked - hand over your Houses and Credit cards to team Bear/Realists.


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## im sparticus (2 June 2012)

Now i get why you think the sky is falling down. 4% = crash total wipe out,and you guys call yourself realists. More like hanging on to every bit of bad news that supports your theory and extending its truth as far as you can confirmation biasists! all the best scm calls the exit how many of you realists made money on last nights pop? oh your still holding since $1950 
. Even scm wont buy gold now....apparently its manipulated lol have fun with your money under your mattress.


----------



## im sparticus (2 June 2012)

Its funny when rpdata was reporting positive results it was rigged now its reporting negative results and they gooble it up hook line and sinker.


----------



## numbercruncher (2 June 2012)

im sparticus said:


> Now i get why you think the sky is falling down. 4% = crash total wipe out,and you guys call yourself realists. More like hanging on to every bit of bad news that supports your theory and extending its truth as far as you can confirmation biasists! all the best scm calls the exit how many of you realists made money on last nights pop? oh your still holding since $1950
> . Even scm wont buy gold now....apparently its manipulated lol have fun with your money under your mattress.





haha - Sky isnt falling down my excitable friend - all is good in lala land - peaches and cream as one of the permabulls used to say ....

Simply pointing out that your hypothetical levergaged Gold short bet got smoked - we didnt need all the other insecure drivel.

Have a smokn' Saturday -

PS. any RE news so we can get back on track ?


----------



## numbercruncher (2 June 2012)

im sparticus said:


> Its funny when rpdata was reporting positive results it was rigged now its reporting negative results and they gooble it up hook line and sinker.





Its still a rigged Template -

Its now impossible to hide that things are falling - its just the depth of the falls that are smudged now -

What are you worried about your supposedly a RE investor price falls should be good for you in the long term ? just imagine all those bargains youll get - youll eventually be Mr Big of RE land if you pounce at the right time ...


----------



## im sparticus (2 June 2012)

Enough heckling from thr peanut gallery number time for you to lay some cards on the table?


----------



## im sparticus (2 June 2012)

Alot gets said about the poor yeilds of re when comparing to other investments (ie cash etc) . Comparing yeilds of re to whatever is as naive as ranking companies by there pe ratio. With the lower prices increasing yeild and lower holding cost (we arnt far off rents being more than owning) through interest rates coupled with the fact that most of the vultures are on the sidelines waiting to pounce everyone is bearish as f ck. the bottom is near may already be here (maybe not melbourne but it isnt the only place in oz dispite the focus of the bears) while the magician is waving his hand over there were pull the rabbits out of hats over there. prepare to be astonised.....again!


----------



## Glen48 (2 June 2012)

im sparticus said:


> the rabbits out of hats over there. prepare to be astonised.....again!





After reading that I am already...


----------



## im sparticus (2 June 2012)

Property has gone to zero the peanut gallery is still feeling bearish.


----------



## Uncle Festivus (2 June 2012)

im sparticus said:


> the bottom is near may already be here (maybe not melbourne but it isnt the only place in oz dispite the focus of the bears) while the magician is waving his hand over there were pull the rabbits out of hats over there.




The bottom you say?? What are you buying? 



im sparticus said:


> prepare to be astonised.....again!




The only way I'd be astonished is if the Gov was to start up another home buying subsidy scheme to prop up property investors, again! But as we all know, the Gov is broke so that's not going to happen! This time you're on your own!

Sell now while you can - GFC part 2 is only months away, if not already started.....


----------



## im sparticus (2 June 2012)

Uncle Festivus said:


> The bottom you say?? What are you buying?
> 
> 
> 
> ...




Dow sp and asx are miles off there gfc lowes gold way off its highs rba with fully loaded gun, double dip recessions rearly if ever test them this is no different. News couldnt be worse the market doesnt give a f ck. everyone knows the possibilities all priced in macro is bs anyway. one last shake of the tree and where off.


----------



## Uncle Festivus (2 June 2012)

im sparticus said:


> Dow sp and asx are miles off there gfc lowes double dip recessions rearly if ever test them this is no different. News couldnt be worse the market doesnt give a f ck. everyone knows the possibilities all priced in macro is bs anyway. one last shake of the tree and where off.




Well no, nothing negative is 'priced in', if anything in the US at least, they are pricing for recovery, which is predicated on more money printing and debt.

'They' have prriced in a CHina soft laning also - looks like a hard one forming.

Australia will eventually have the recession it technically avoided very soon....


----------



## Starcraftmazter (2 June 2012)

im sparticus said:


> . Even scm wont buy gold now....apparently its manipulated lol have fun with your money under your mattress.




I said I won't take trading/investment positions on gold, didn't say I won't buy physical.

Also, your gold short is dead. If it was a real position, you would have lost a lot of money you silly person.



im sparticus said:


> Its funny when rpdata was reporting positive results it was rigged now its reporting negative results and they gooble it up hook line and sinker.




Nothing is rigged, RP Data has a statistical bias to the upside by 0.1% every month - this can be season by revisions done in the past. It further stopped using seasonal adjustments at a time it would look good for house prices - and now that we're entering winter the chickens will come home to roost. Your lack of knowledge and understanding of matters which you allegedly invest upon is astounding.


----------



## im sparticus (2 June 2012)

numbercruncher said:


> Its still a rigged Template -
> 
> Its now impossible to hide that things are falling - its just the depth of the falls that are smudged now -




Direct your post in the correct direction


----------



## maffu (2 June 2012)

I am very interested in how the media portray the property markets. I think the way the media sells the property investing market definitely has a real impact on prices. Confidence in the future price of a market can become a self fulfilling prophecy.

Last night on prime time Channel 10 news, I heard the headline 'Investors worry as Real Estate Prices drop rapidly' or something along those lines. Today the Most Viewed story on the Sydney Morning Herald website is 'Home prices extend national retreat'.


> Home values fell the most in at least six years in May defying Reserve Bank efforts to spark a recovery in the nation's lacklustre housing market with interest rate cuts. Melbourne led declines.
> 
> Read more: http://www.smh.com.au/business/home-prices-extend-national-retreat-20120601-1zlm6.html#ixzz1wbaSIjqz




If these kind of headlines keep coming through in the mainstream media, we may see a bit of a change in the average property investors attitude.

I have also noticed in the last few weeks I am getting small glossy brochures trying to sell me new apartments around Botany Bay and surrounding inner city suburbs. They are all mentioning that stamp duty exemptions for property under $600,000 are ending at the end of June and that you need to BUY NOW! (I think this is a NSW only thing?)
I rarely ever received those in the past year, but now am receiving a few a week. I take it as a sign that the developers are finding it harder to shift the new apartments and need to spend a lot more in advertising to try and get the property sold, rather than it just selling itself as it has in prior years.

So with NSW having the FHBG gone at the end of last December, and the stamp duty concessions for property under 600k about to be taken away, it will be interesting to see if the low end property market is impacted in a big way.


----------



## damien275x (2 June 2012)

My uncle works for one of the medium to large size real estate agents. So I hear from him what's going on. The fact/truth is the market isn't flat like they're reporting, it's actually down. They have enormous internal pressure from the top to sell, sell, sell and have a high stock (+50%  more since 3 years ago) People are quitting, burning out. All the perks have dried up, and a lot are leaving the industry. This is in Melbourne, though. Not sure about everywhere else. There are still booms in Perth/mining towns. He also said that the word they're all throwing around is "confidence" ..  if they can restore confidence, prices will stabilize. So maybe they can but they are very fearful that market sentiment has already gone from bullish to bearish. I'd say it's still borderline but it's going to get bearish eventually, given all the defaulting dominoes at play.

And if anyone is skeptical about the figures and graphs they post online and in the newspapers, you'd be right. The sales and marketing division have internal meetings on how to best dress up bad numbers and present them in a positive light. It's not illegal, however, I would say It is unethical!! E.g- skewing graphs, posting figures and then "revising them down" in small print the following month. I have also heard about claims where they have banks going to auctions and buying homes at auctions that may end up otherwise being passed in. I'm pretty sure that's illegal. But how can you regulate it, really. I am sure you will see someone get caught doing it soon though. One of them is about to be audited, so it will be interesting, keep watching the headlines

If you think for yourself you should be fine. The sky isn't falling, but house prices are.


----------



## MrBurns (2 June 2012)

damien275x said:


> My uncle works for one of the medium to large size real estate agents. So I hear from him what's going on. The fact/truth is the market isn't flat like they're reporting, it's actually down. They have enormous internal pressure from the top to sell, sell, sell and have a high stock (+50%  more since 3 years ago) People are quitting, burning out. All the perks have dried up, and a lot are leaving the industry. This is in Melbourne, though. Not sure about everywhere else. There are still booms in Perth/mining towns. He also said that the word they're all throwing around is "confidence" ..  if they can restore confidence, prices will stabilize. So maybe they can but they are very fearful that market sentiment has already gone from bullish to bearish. I'd say it's still borderline but it's going to get bearish eventually, given all the defaulting dominoes at play.
> 
> And if anyone is skeptical about the figures and graphs they post online and in the newspapers, you'd be right. The sales and marketing division have internal meetings on how to best dress up bad numbers and present them in a positive light. It's not illegal, however, I would say It is unethical!! E.g- skewing graphs, posting figures and then "revising them down" in small print the following month. I have also heard about claims where they have banks going to auctions and buying homes at auctions that may end up otherwise being passed in. I'm pretty sure that's illegal. But how can you regulate it, really. I am sure you will see someone get caught doing it soon though. One of them is about to be audited, so it will be interesting, keep watching the headlines
> 
> If you think for yourself you should be fine. The sky isn't falling, but house prices are.




Excellent post Damien a lot of truth in there, I think it will only get worse but let's face it Australia is boom and bust, we havent had a bust in a while so it's overdue.
It's all about debt, people dont want to borrow any more, they've had enough and they're scared.

See what happened to the DOW on Friday, I just wish this crash would get a move on do we can all stop talking about it and speculating. There's no chance that it wont happen so I wish it would hurry up so we can sort things for the future.


----------



## MrBurns (2 June 2012)

The save edit button is not responding.


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## Joe Blow (2 June 2012)

MrBurns said:


> The save edit button is not responding.




There was a major software upgrade last night and we are experiencing some issues. It should be sorted out soon, but in the meantime please proofread your posts.


----------



## damien275x (2 June 2012)

When people say getting worse I don't think it's getting worse. It's called a healthy correction. The market yields what it yields.. problem is the Government steps in and distorts it so there are huge winners and huge losers. Eventually people are only going to pay what they can afford though -  I am not sure why property is seen as so different from any other asset class. I'm pretty sure nobody would be talking about petrol going up as good news, or if clothes, food, bills rising sharply as "good economic news" .. if we're spending more on these, we're spedning less on real productivity! That's a disaster! 

If we see a decline, the smart property investors will buy more at low prices, and will have sufficient cash flow to do it. The dumb ones will be forced sellers, I'm talking about the bogans in the west who have "purchased" (borrowed staggering amounts) 1, 2, 3 houses! On single incomes. They can't keep repayments up, so it will be default, forced sale, low profit/no profit made on sale. Where is could get bad is if the banks have to eat some of the losses, which is not out of the question if the prices fall below what people borrowed to buy them!! Then **** will hit the fan, but it's not at that point... yet. We really want a slow deflation, so they decline say 30-50% in real (not nominal) terms over 15-20 years. Instead of all at once.


----------



## young-gun (2 June 2012)

im sparticus said:


> Alot gets said about the poor yeilds of re when comparing to other investments (ie cash etc) . Comparing yeilds of re to whatever is as naive as ranking companies by there pe ratio. With the lower prices increasing yeild and lower holding cost (we arnt far off rents being more than owning) through interest rates coupled with the fact that most of the vultures are on the sidelines waiting to pounce everyone is bearish as f ck. the bottom is near may already be here (maybe not melbourne but it isnt the only place in oz dispite the focus of the bears) while the magician is waving his hand over there were pull the rabbits out of hats over there. prepare to be astonised.....again!




your views literally give me an un-easy feeling in my stomach. exactly what is it you're smoking at the moment?


----------



## MrBurns (2 June 2012)

Joe Blow said:


> There was a major software upgrade last night and we are experiencing some issues. It should be sorted out soon, but in the meantime please proofread your posts.




Oh damn do I have to ?


----------



## trillionaire#1 (2 June 2012)

Well,we just sold our house here in adelaide for above advertised price in a couple of weeks flat.
Couldnt be more relieved.
There is just so much negativity out there,plus skyrocketing utility costs,job layoffs everywhere i look,
and i cant help but feel Australia is overdue for a more serious price correction in many property markets.
I may well be wrong but as our cooling off period has passed ,im sleeping like a kitten!
Now happily getting back to renting ,ok rental prices are high,but not worrying about your house value being 
smashed about,not replacing hws,and faulty ducted A/C,i feel ive made the right decision.


----------



## notting (2 June 2012)

trillionaire#1 said:


> Well,we just sold our house here in adelaide for above advertised price in a couple of weeks flat.
> Couldnt be more relieved.



Awesomely well done! I sold up about 2 years ago.
When you can buy 2 with it you probably should!


----------



## young-gun (2 June 2012)

trillionaire#1 said:


> Well,we just sold our house here in adelaide for above advertised price in a couple of weeks flat.
> Couldnt be more relieved.
> There is just so much negativity out there,plus skyrocketing utility costs,job layoffs everywhere i look,
> and i cant help but feel Australia is overdue for a more serious price correction in many property markets.
> ...




you have indeed(jmo), congratulations also!


----------



## im sparticus (2 June 2012)

trillionaire#1 said:


> Well,we just sold our house here in adelaide for above advertised price in a couple of weeks flat.
> Couldnt be more relieved.
> There is just so much negativity out there,plus skyrocketing utility costs,job layoffs everywhere i look,
> and i cant help but feel Australia is overdue for a more serious price correction in many property markets.
> ...







What was your reason for buying originally, did you have it for long?


----------



## trillionaire#1 (2 June 2012)

im sparticus said:


> What was your reason for buying originally, did you have it for long?






Sold a fair bit of land up north to a developer during the impending boom of 2007
Purchased a near new home in cul de sac ville with the proceeds.
Now looking to a bit of a change,somewhere you can watch the sunset and not be surrounded by 
noisy and inconsiderate neighbours.


----------



## im sparticus (2 June 2012)

For those that think property is overpriced what do you think would be a fair m
edian for say sydney?


----------



## medicowallet (2 June 2012)

"Saturday 2nd June 2012

A clearance rate of 60 per cent was recorded this weekend compared to 57 per cent last weekend and 56 per cent this weekend last year.

The market continues to be subdued with activity at low levels as many investors wait to see an improvement in consumer confidence and economic activity. This translates to lower levels of competition between buyers and more moderate price outcomes.

There were 551 auctions reported to the REIV today with 332 selling and 219 being passed in, 145 of those on a vendors bid.

Next weekend the REIV expects around 140 auctions before around 645 the weekend after.
"

What a joke, keeping up the 60% after reporting 551 and expecting 650 this week.

What is the point in publishing such tainted data anyway, except to mislead the uninformed?


Nice to see that clearance results DO NOT have any effects on prices

Clearances up and up, prices down and down... master ROBOTS was correct!!

Sunshine and lollipops

MW 
PS Where is Robots?


----------



## Starcraftmazter (2 June 2012)

im sparticus said:


> For those that think property is overpriced what do you think would be a fair m
> edian for say sydney?




210k.


----------



## Gerkin (2 June 2012)

medicowallet said:


> "Saturday 2nd June 2012
> 
> What a joke, keeping up the 60% after reporting 551 and expecting 650 this week.
> 
> ...




I went to an auction today, (only for research on this area im buying into)  passed in, no where near the advertised price....Did not make it onto the list on the REIV

The only people buying at the moment are cashed up bargain hunters.....


----------



## Gerkin (2 June 2012)

Starcraftmazter said:


> 210k.




Ill take 5 please at that price


----------



## Glen48 (2 June 2012)

Is that buy one take one? Will be in a few more years. USA house prices still hasn't stopped dropping


----------



## MrBurns (2 June 2012)

Gerkin said:


> The only people buying at the moment are cashed up bargain hunters.....




Believe me the cashed up bargain hunters won't go near the market yet they have time on their hands and plenty of it.


----------



## Gerkin (2 June 2012)

MrBurns said:


> Believe me the cashed up bargain hunters won't go near the market yet they have time on their hands and plenty of it.




Id disagree with that, I should rephase that to putting in offer 20% under asking....Thats after a 20% fall already.


----------



## MrBurns (2 June 2012)

If it's a slowdown as i the past it will take years to recover, you're not getting bargains you're just paying the new uninflated price.


----------



## Gerkin (2 June 2012)

MrBurns said:


> If it's a slowdown as i the past it will take years to recover, you're not getting bargains you're just paying the new uninflated price.




good to upgrade the home and keep the existing one at 6.5% yield


----------



## im sparticus (2 June 2012)

Glen48 said:


> Is that buy one take one? Will be in a few more years. USA house prices still hasn't stopped dropping




Actually us medians are well above their gfc lows (currently sitting half way between lows and highs) gfc lows have not been tested


----------



## young-gun (2 June 2012)

im sparticus said:


> Actually us medians are well above their gfc lows (currently sitting half way between lows and highs) gfc lows have not been tested




yet**


----------



## Starcraftmazter (2 June 2012)

im sparticus said:


> Actually us medians are well above their gfc lows (currently sitting half way between lows and highs) gfc lows have not been tested




*What* are you on about?





Even if one was to (idiotically) consider nominal prices, it is still not true.


----------



## numbercruncher (3 June 2012)

im sparticus said:


> Actually us medians are well above their gfc lows (currently sitting half way between lows and highs) gfc lows have not been tested




Where do you pluck this stuff from ? Do you just think " yeah that sounds good ill post that, state it like fact and see if I get quizzed or not .... "

Crikey ...


----------



## im sparticus (3 June 2012)

numbercruncher said:


> Where do you pluck this stuff from ? Do you just think " yeah that sounds good ill post that, state it like fact and see if I get quizzed or not .... "
> 
> Crikey ...





Younggun believed it maybe hed like to post the chart?


----------



## young-gun (3 June 2012)

im sparticus said:


> Younggun believed it maybe hed like to post the chart?




haha i did think it was a bit far fetched, however i honestly didn't believe prices had fallen as much as the charts show. i thought they had a mild recovery, but it would appear not. just further evidence that you have no idea what you are talking about. perhaps you could produce a chart that favours your arguments? or isn't there any?

im actually wondering if you own any property or not.


----------



## im sparticus (3 June 2012)

And of numbercruncher and his rigged rpdata quote say it with me now confirmation bias dont we all feel better


----------



## young-gun (3 June 2012)

lol. ahhhh trollacus. again, at least the bears can find charts to support arguments. I would love to see you pull some decent evidence to back up your ridiculous claims about the future of prices.

oh but please don't use any historical charts, as you've pointed out they are simply a waste of time, im sure no one has ever learnt or predicted anything from looking back over old data


im sparticus said:


> people really need to start looking forward rather than back. all the data is good for is predicting the past.


----------



## im sparticus (3 June 2012)

young-gun said:


> lol. ahhhh trollacus. again, at least the bears can find charts to support arguments. I would love to see you pull some decent evidence to back up your ridiculous claims about the future of prices.
> 
> oh but please don't use any historical charts, as you've pointed out they are simply a waste of time, im sure no one has ever learnt or predicted anything from looking back over old data




You will find as time goes on that no market prices things in multiples of the average wage or inflation adjusted price of however many years ago or what ever other wacky reason or ratio you think property prices are connected to. you would never do it for anything else. to be honest you might be a able to reproduce a 1960's median for scms quote 210k but you dont have a hope in hell of producing todays standard of a median house hence the price diff land afew km from the city didnt do much for you back then either but now can probably save you $50-100 dollars a week just in fuel not to mension time the utility of the land has also improved. 

When prices of all assets start falling its a good sign we are in for some good old fashion deflation and your bullion is as much at risk as my houses accept my houses are producing an income as most even the bears have pointed out re has faired quiet well considering (down only a fraction of other assets from its highs including gold and alot less volitile gold just did 4% overnight dont even think the indexes are doing that) ontop of that if you include yeild as in an accumulation index it is yet to give a total negative return or only slightly negative for melbourne and lets not forget all the gains it made before giving a tiny percentage back so far its winning.

Looking forward to me the only real risk is deflation (and this goes for every asset class accept cash ofcourse im starting to think cash atm is giving the best total returns high interest low to no inflation) which the rba has quiet alot of ammo for  and falling of rents there is so much going on with re that medians dont capture just trying to judge an entry on the median of  something that is not fungable is nonsence best to just be taking advantage of opportunities when they present themselfs or for the proactive when you find them is the best i think. but if you want a prediction on future medians all bar melbourne stable to increasing. melbourne maybe a little more falling to stable and well stable by the time im ready.

We all know record low interest rate began the last great australian property boom, i wonder if they can do it again?


----------



## im sparticus (3 June 2012)

im sparticus said:


> And of numbercruncher and his rigged rpdata quote say it with me now confirmation bias dont we all feel better




And of the quote when glen claimed property was more volatile than shares?


----------



## Starcraftmazter (3 June 2012)

im sparticus said:


> When prices of all assets start falling




That will never happen; gold will always rise in price, and property is in a 20 year long crash.

Anyway, your post is major gibberish, can you at least use spelling, grammar, *punctuation* and separate your "thoughts and ideas" into more separate paragraphs; as it stands your post is simply unreadable. It's just common curtsey.


----------



## Gerkin (3 June 2012)

Starcraftmazter said:


> That will never happen; gold will always rise in price, and property is in a 20 year long crash.
> 
> Anyway, your post is major gibberish, can you at least use spelling, grammar, *punctuation* and separate your "thoughts and ideas" into more separate paragraphs; as it stands your post is simply unreadable. It's just common curtsey.




pot calling the kettle black


----------



## im sparticus (3 June 2012)

i know he comes in here on his feet every day and goes out on his ass, I feel terrible for him. its pretty impressive though most would have given up and ran for the bleach long ago.


----------



## young-gun (3 June 2012)

Starcraftmazter said:


> That will never happen; gold will always rise in price, and property is in a 20 year long crash.
> 
> Anyway, your post is major gibberish, can you at least use spelling, grammar, *punctuation* and separate your "thoughts and ideas" into more separate paragraphs; as it stands your post is simply unreadable. It's just common curtsey.




+1 on the post barely being readable. as for the gold price always rising, given the current economic outlook yes, i believe it will continue to rise, but it can fall in certain circumstances. just look at the 08/09 period, gold took a bit of a beating as the gfc took hold. I think it may have continued to fall if central banks didn't step in in such a huge way.

sorry off topic again, the housing bubble is sure to collapse everyone has been living beyond their means for too long, and property investment was their weapon of choice to support such lavish lifestyles(among other investments of course). prices are now un-sustainable, alot of people not only can't afford to buy, but don't want to buy due to the crazy prices. this ridiculous debt fueled spending frenzy, or a term i have recently taken a liking to 'ponzi propserity' is over. look out below.


----------



## numbercruncher (3 June 2012)

Seriously Sparticus - at a minimum use paragraps if you want people to read your propaganda.

SCM constructs his replies in a easy to understand layout - maybe use his method as a template?

Gerkin - nice snipe buddy - one wee spelling error - hardly an absolute breech of the point he was making.


----------



## im sparticus (3 June 2012)

Starcraftmazter said:


> That will never happen; gold will always rise in price, and property is in a 20 year long crash.
> 
> .




oh man it just gets better.

like i said no selfmade buy and hold gold bugs plenty of selfmade property investors especially over the last 20  years. the proof of the pudding is alway in its???

really bears is this where you all stand?


----------



## Starcraftmazter (3 June 2012)

im sparticus said:


> i know he comes in here on his feet every day and goes out on his ass, I feel terrible for him. its pretty impressive though most would have given up and ran for the bleach long ago.




I'm beginning to suspect you're a troll 



Gerkin said:


> pot calling the kettle black




Compare my posts to his, now weep under some blankets.


It's not that much to ask for that one's posts be readable, this is a forum - not failbook or a text message.



im sparticus said:


> like i said no selfmade buy and hold gold bugs plenty of selfmade property investors especially over the last 20  years. the proof of the pudding is alway in its???




The only thing it proves is that you are unable to form thoughts and arguments. Your logic is beyond stupid.


----------



## young-gun (3 June 2012)

im sparticus said:


> We all know record low interest rate began the last great australian property boom, i wonder if they can do it again?




interest rates do nothing of the sort.


----------



## young-gun (3 June 2012)

im sparticus said:


> oh man it just gets better.
> 
> like i said no selfmade buy and hold gold bugs plenty of selfmade property investors especially over the last 20  years. the proof of the pudding is alway in its???
> 
> really bears is this where you all stand?




apples and oranges my friend. you need to tailor your portfolio to the economy at any given time. property was a winner once upon a time, it is no longer.



Starcraftmazter said:


> I'm beginning to suspect you're a troll




I hope you're being sarcastic SCM. of course he is.


----------



## im sparticus (3 June 2012)

young-gun said:


> interest rates do nothing of the sort.




key phrase "monetary policy".


----------



## young-gun (3 June 2012)

im sparticus said:


> key phrase "monetary policy".




monetary policy is useless in times like this. if you can please explain why the US is still falling while their interest rates are near zero im listening. they shiould be on the brink of BOOM TOWN according to you.

monetary policy is the very reason we are here. because these idiots think they can prevent recessions with their actions. they can help to an extent, but no where near as much as you seem to believe. now we have all their prevention balled into one big mess.


----------



## im sparticus (3 June 2012)

numbercruncher said:


> Seriously Sparticus - at a minimum use paragraps if you want people to read your propaganda.
> 
> SCM constructs his replies in a easy to understand layout - maybe use his method as a template?
> 
> Gerkin - nice snipe buddy - one wee spelling error - hardly an absolute breech of the point he was making.




its hard on my phone im not sitting in front of my computer all day waiting for replys on asf and do i really need a graph to disprove that the price of gold always increases.

stay strong guys and hold together now your all tainted with the scm bs brush.


----------



## Starcraftmazter (3 June 2012)

im sparticus said:


> key phrase "monetary policy".






What is this retardation, US has had ZIRP for years and prices have continued to fall. Are you completely oblivious to the concept of a bubble? I guess you pretend to understand monetary policy as good as you pretended to understand the banking system?

This is the future of Australian property prices:










im sparticus said:


> its hard on my phone im not sitting in front of my computer all day waiting for replys on asf and do i really need a graph to disprove that the price of gold always increases.




Who's forcing you post in here with your phone? Love it so much you can't wait to get home?


----------



## im sparticus (3 June 2012)

young-gun said:


> monetary policy is useless in times like this. if you can please explain why the US is still falling while their interest rates are near zero im listening. they shiould be on the brink of BOOM TOWN according to you.
> 
> monetary policy is the very reason we are here. because these idiots think they can prevent recessions with their actions. they can help to an extent, but no where near as much as you seem to believe. now we have all their prevention balled into one big mess.




omg you believe you could have done a better job?


----------



## im sparticus (3 June 2012)

Starcraftmazter said:


> What is this retardation, US has had ZIRP for years and prices have continued to fall. Are you completely oblivious to the concept of a bubble? I guess you pretend to understand monetary policy as good as you pretended to understand the banking system?
> 
> This is the future of Australian property prices:
> 
> ...




are you really 22? bearish before you could speak?

wanna tell us how you plan to produce todays median house for 210k

ps weve already seen that graph thread title is the future of AUSTRALIAN house prices.


----------



## young-gun (3 June 2012)

im sparticus said:


> omg you believe you could have done a better job?




yes. allow economies to deflate when they want. rid them of the negatives and the waste, and allow them to then prosper with real growth. what they are trying to achieve isn't natural, and cannot be achieved, as we will witness in the coming years. it is simply un-sustainable long term(over several decades). constant economic growth is not possible, plain and simple.


----------



## im sparticus (3 June 2012)

young-gun said:


> yes. allow economies to deflate when they want. rid them of the negatives and the waste, and allow them to then prosper with real growth. what they are trying to achieve isn't natural, and cannot be achieved, as we will witness in the coming years. it is simply un-sustainable long term(over several decades). constant economic growth is not possible, plain and simple.




great stuff sunshine, im sure youll be runnung the country in no time.


----------



## im sparticus (3 June 2012)

young-gun said:


> apples and oranges my friend. you need to tailor your portfolio to the economy at any given time. property was a winner once upon a time, it is no longer.
> 
> .




so does this mean you dissagree with scms "realestate has been in a 20 year crash"?

shame you couldnt voice it but then that would go against your agenda right.......lets say it again confirmation bias ah.

where do you stand on his gold always increases in price comment?


----------



## Starcraftmazter (3 June 2012)

im sparticus said:


> are you really 22? bearish before you could speak?
> 
> wanna tell us how you plan to produce todays median house for 210k
> 
> ps weve already seen that graph thread title is the future of AUSTRALIAN house prices.




1. Don't need to produce anything, the housing stock has already been produced.

2. In terms of construction costs, if you knew anything, you'd know they are insignificant compared to the price of land which will thoroughly deflate. On top of that, construction workers and especially tradies will suffer significant wage deflation. Coupled with the bust of the commodity bubble, construction costs will plummet.


----------



## young-gun (3 June 2012)

im sparticus said:


> so does this mean you dissagree with scms "realestate has been in a 20 year crash"?
> 
> shame you couldnt voice it but then that would go against your agenda right.......lets say it again confirmation bias ah.
> 
> where do you stand on his gold always increases in price comment?




ive already commented on his gold price post, read back over one or two pages, it's there. 

real estate obviously hasn't 'been' in a 20 year crash. you say it as if it's been happening for the last 18 years. we are *entering* a severe crash and or downturn yes, whether it will last 20 years is another thing, i don't personally don't attempt to put timelines on it as i believe it to be impossible to predict. given the magnitude of the debt fueled economies and bubbles world wide, it certainly isn't out of the question.

to argue that property has never been a good investment is most definitely not a good one. I have never seen SCM argue that point, but i could be wrong. there is plenty of money to be made in re at the right time, i feel that time has passed and will not return for a long time.

i notice you didn't argue against my view on monetary policy, is this because you woke up to yourself and realised it is in fact a flawed system?


----------



## young-gun (3 June 2012)

Starcraftmazter said:


> On top of that, construction workers and especially tradies will suffer significant wage deflation. Coupled with the bust of the commodity bubble, construction costs will plummet.




this is gonna suck when it happens, best i make hay while the sun-shines, i should get another 2 or so years out of these sky high wages.


----------



## im sparticus (3 June 2012)

Starcraftmazter said:


> 1. Don't need to produce anything, the housing stock has already been produced.
> 
> 2. In terms of construction costs, if you knew anything, you'd know they are insignificant compared to the price of land which will thoroughly deflate. On top of that, construction workers and especially tradies will suffer significant wage deflation. Coupled with the bust of the commodity bubble, construction costs will plummet.




just when i think it cant get any better he goes and completely trips himself up, in on his feet out on his ass just as it was written. whats good is having lower housing costs if you are going to have sugnificant wage deflation aswell??? have you thaught any of this threw?? yes i am aware through is spelt wrong.

well atleast we know why you dont have 2c to your name. even less now gold has tumbled.

.


----------



## im sparticus (3 June 2012)

young-gun said:


> ive already commented on his gold price post, read back over one or two pages, it's there.
> 
> real estate obviously hasn't 'been' in a 20 year crash. you say it as if it's been happening for the last 18 years. we are *entering* a severe crash and or downturn yes, whether it will last 20 years is another thing, i don't personally don't attempt to put timelines on it as i believe it to be impossible to predict. given the magnitude of the debt fueled economies and bubbles world wide, it certainly isn't out of the question.
> 
> ...




yes i agree scm is wrong. still disagree with you on monetary police if you think it has no effect just look at how the markets behave before during and after the announcment especially if its a suprise announcment. interest is a cost when you lower the cost bla bla bla.


----------



## im sparticus (3 June 2012)

And SCM's solution to all this rampant price delfation is..........drum roll..................................................................................................................................................................................................................................................................buy physical gold.


----------



## Starcraftmazter (3 June 2012)

im sparticus said:


> just when i think it cant get any better he goes and completely trips himself up, in on his feet out on his ass just as it was written. whats good is having lower housing costs if you are going to have sugnificant wage deflation aswell??? have you thaught any of this threw?? yes i am aware through is spelt wrong.




1. You stupidly imply they will deflate by the same amount.
2. Wage deflation is not only good, but necessary in order to restore competitiveness.
3. House prices will deflate far far far more than wages
4. I said wages will deflate in the construction industry - not anywhere else, *as a result of the housing bust*.



im sparticus said:


> well atleast we know why you dont have 2c to your name. even less now gold has tumbled.




Do you live in bizzaro world or something?









im sparticus said:


> And SCM's solution to all this rampant price delfation is..........drum roll..................................................................................................................................................................................................................................................................buy physical gold.




Deflation doesn't occur everywhere, in every sector and asset class simultaneously and equally, Mr. Troll.


----------



## im sparticus (3 June 2012)

Starcraftmazter said:


> 1. You stupidly imply they will deflate by the same amount.
> 2. Wage deflation is not only good, but necessary in order to restore competitiveness.
> 3. House prices will deflate far far far more than wages
> 4. I said wages will deflate in the construction industry - not anywhere else, *as a result of the housing bust*.
> ...




shesh one minute your telling us the market is manipulate the next your boasting about 4% pops. lets say it again....confirmation bias

Are you 22 years old were you bearish on property before you could speak?? you keep avoiding this one.

 price deflation is just that everything priced in dollars goes down as the dollar goes up overall, golds value is static overall even you admit to this its a very simple equasion. just who is from bizzaro world here . To think gold will be the only thing immune is crackpottery its one of the first to fall as deflation sets in. if anything the hardest and last to fall is wages. maybe its time for you to go back to the beginners lounge. here is a paragraph for you.

 Are you 22 years old,  have you been bearish in property since before you could speak??


----------



## Starcraftmazter (3 June 2012)

im sparticus said:


> shesh one minute your telling us the market is manipulate the next your boasting about 4% pops. lets say it again....confirmation bias




I'm not boasting about anything actually, I'm just pointing out that you claimed gold "has tumbled" at a time when it actually rose quite a lot - showing once more, that you have no idea what you are talking about.



im sparticus said:


> Are you 22 years old were you bearish on property before you could speak?? you keep avoiding this one.




Keep avoiding what one? You make no sense as usual.



im sparticus said:


> price deflation is just that everything priced in dollars goes down as the dollar goes up overall




... I don't really know how else to address this but again say that you have no clue, no understanding and no concept of what you are talking about.



im sparticus said:


> golds value is static overall even you admit to this its a very simple equasion. just who is from bizzaro world here . To think gold will be the only thing immune is crackpottery its one of the first to fall as deflation sets in.




No, silver too.



im sparticus said:


> if anything the hardest and last to fall is wages. maybe its time for you to go back to the beginners lounge. here is a paragraph for you.
> 
> Are you 22 years old,  have you been bearish in property since before you could speak??




Maybe you should learn some economics, and then explain how anyone could be bearish about anything before they could speak, and what relevance that has to this thread.


----------



## moXJO (3 June 2012)

Starcraftmazter said:


> No, silver too.
> 
> 
> 
> .




Isn't silver down about 50% from 2011 highs?


----------



## im sparticus (3 June 2012)

Starcraftmazter said:


> I'm not boasting about anything actually, I'm just pointing out that you claimed gold "has tumbled" at a time when it actually rose quite a lot - showing once more, that you have no idea what you are talking about.
> 
> 
> 
> ...




omg you really are 22 lol bearish since before you could speak. lol

me learn economics, sure thing doctor google.

gold has tumbled is further of its highs than even melbourne medians that you claim are crashing and thats before we add yeild. whats the bet your in the red even after your 4% pop that you used to imply that gold wasnt deflating, bizzaro?? get some real world experiance and keep it to the beginners lounge till you do. its time to hush the adults are talking.


----------



## im sparticus (3 June 2012)

moXJO said:


> Isn't silver down about 50% from 2011 highs?




Dont bother, this guy cant even count let alone put together valid arguments.


----------



## young-gun (3 June 2012)

im sparticus said:


> omg you really are 22 lol bearish since before you could speak. lol




are you a child?



> me learn economics, sure thing doctor google.
> 
> gold has tumbled is further of its highs than even melbourne medians that you claim are crashing and thats before we add yeild. whats the bet your in the red even after your 4% pop that you used to imply that gold wasnt deflating, bizzaro?? get some real world experiance and keep it to the beginners lounge till you do. its time to hush the adults are talking.




i am actually embarrassed for you. your approach to these forums is pathetic, and i don't intend on discussing anything with you from here on.


----------



## young-gun (3 June 2012)

moXJO said:


> Isn't silver down about 50% from 2011 highs?




not quite 50%, but yes it's down a fair way. silver has more room for growth than gold does imo, as it has so many uses, and i can only imagine will have more developments in the future which will also require silver.


----------



## Starcraftmazter (3 June 2012)

moXJO said:


> Isn't silver down about 50% from 2011 highs?




You'd know better than me, I don't track silver.




im sparticus said:


> omg you really are 22 lol bearish since before you could speak. lol
> 
> me learn economics, sure thing doctor google.
> 
> gold has tumbled is further of its highs than even melbourne medians that you claim are crashing and thats before we add yeild. whats the bet your in the red even after your 4% pop that you used to imply that gold wasnt deflating, bizzaro?? get some real world experiance and keep it to the beginners lounge till you do. its time to hush the adults are talking.




 Talk about gibberish. You're funny because you consider yourself an authority; even as every one of your posts is shown immediately to contain false information. You have shown that you don't know anything about property nor banking. Maybe I should make a compilation of crap that you've said.

Just today, you have shown to have no understanding of the composition of the price of a house, no knowledge about what has been happening with gold and zero understand of deflation. Yet you continue to persist with your nonsense.

I will remind you again that gold is in an 11 year up-trend, unbroken.




Can't say the same about bubble-housing.





If you bought a house in Melbourne at the peak of the bubble in 2010 and at the same time bought an equivalent value of gold, you would have lost 10% of your money on housing, and made 15% on gold - more if you priced gold in AUD.


----------



## im sparticus (3 June 2012)

young-gun said:


> not quite 50%, but yes it's down a fair way. silver has more room for growth than gold does imo, as it has so many uses, and i can only imagine will have more developments in the future which will also require silver.




replace the words silver with property and see how your statement gels. people who have held physicals since the top have been creamed less so for property investor.

give a balanced argument without contradicting yourself as scm does and show a little respect and im not such a monster actually i consider myself quiet the gentlman. why is it his rudeness is ok but mine isnt? play it again... confirmation bias.

young-gun i havnt been rude to you since youve started playing fair and stopped ending your rebuttle with an insult.

this may sound childing but as far as getting personal he did start it and fair is fair.


----------



## im sparticus (3 June 2012)

Starcraftmazter said:


> If you bought a house in Melbourne at the peak of the bubble in 2010 and at the same time bought an equivalent value of gold, you would have lost 10% of your money on housing, and made 15% on gold - more if you priced gold in AUD.




were comparing how far off peaks things are ie how much the have deflated. youve just stated a hindsight trade that gives us no insight to anything just supports your view once again comfirmation bias. 

in the interest of fairness im looking forward to your compilation ill even let you go back as far as you like even though mine is pretty recent, remember not your take on what ive said but what ive actually said no inuendo no twisting of words?


----------



## medicowallet (3 June 2012)

young-gun said:


> are you a child?




Like omg it's like totes like wth I thnkn totes n like samenall

MW


----------



## Starcraftmazter (3 June 2012)

im sparticus said:


> were comparing how far off peaks things are ie how much the have deflated.




Precious metals have not deflated because *they were never inflated*, they have not hit a peak yet. This is your problem - you are implying gold has hit a peak, it has not. It has had a normal correction - which has been a common occurrence in it's *solid 11 year uptrend*. The reason for this correction is later than expected QE3.

Housing has hit a peak and has *been in a bubble, this is the key difference - gold is not and was not in any bubble, it is simply being pushed up in price by money printing*.



im sparticus said:


> youve just stated a hindsight trade that gives us no insight to anything just supports your view once again comfirmation bias.




Yet you do this all the time?



im sparticus said:


> in the interest of fairness im looking forward to your compilation ill even let you go back as far as you like even though mine is pretty recent, remember not your take on what ive said but what ive actually said no inuendo no twisting of words?




What compilation?

And how about our bet? $1,000 for every 1% real value lost or gained in Melbourne according to RP Data starting say from the 1st of June, no capital down.


----------



## CanOz (3 June 2012)

:jerry

ata boy SCM! Go get em!!corn:

CanOz


----------



## lurker123 (3 June 2012)

young-gun said:


> monetary policy is useless in times like this. if you can please explain why the US is still falling while their interest rates are near zero im listening. they shiould be on the brink of BOOM TOWN according to you.
> 
> monetary policy is the very reason we are here. because these idiots think they can prevent recessions with their actions. they can help to an extent, but no where near as much as you seem to believe. now we have all their prevention balled into one big mess.




I would disagree, in my opinion there is a high chance that governments would inflate the debt away. In my loony opinion the only reason this hasn't happened is that the elites haven't finished buying up everything in the deflation they have orchestrated and haven't begun to move onto other countries. Once the elites have done acquiring all the wealth in their orchestrated deflation, they will start inflating the debt away and once again we will have another boom.


----------



## im sparticus (3 June 2012)

Hey scm why dont you try sticking the aussie medians on a log scale like you did the gold graph over the same time frame then youll see a real unbroken trend, maybe try pricing your gold in aud also. confirmation bias to the max! what a joke!

Can you ever put together a balanced argument.

Ps. i do like the smart money post above the way its been done for centuries, if i was to believe a conspiracy theory that would be it.


----------



## Starcraftmazter (3 June 2012)

im sparticus said:


> Hey scm why dont you try sticking the aussie medians on a log scale like you did the gold graph over the same time frame then youll see a real unbroken trend, maybe try pricing your gold in aud also. confirmation bias to the max! what a joke!




1. I didn't make the graph, if you have a log one, feel free to share it.
2. Gold priced in AUD would deliver an even bigger return as I suggested.
3. I don't see how there's any confirmation bias in my post....do you even know what it means?



im sparticus said:


> Can you ever put together a balanced argument.




Well you seem to have a flawed perception of balanced...


----------



## im sparticus (3 June 2012)

Starcraftmazter said:


> 1. I didn't make the graph, if you have a log one, feel free to share it.
> 2. Gold priced in AUD would deliver an even bigger return as I suggested.
> 3. I don't see how there's any confirmation bias in my post....do you even know what it means?
> 
> ...





Look at the 2 graphs you provided neither has anything to do with the other if you wanna put together a balanced argument start comparing  apples to apples same timeframes same scale no excuses what you have just done is a perfect example of confirmation bias look it up.


----------



## Starcraftmazter (3 June 2012)

im sparticus said:


> Look at the 2 graphs you provided neither has anything to do with the other




Considering that you continuously compare property to gold, I'd say they are quite related for the purposes of our debates.



im sparticus said:


> if you wanna put together a balanced argument start comparing  apples to apples no excuses what you have just done is a* perfect example of confirmation bias look it up.*




Maybe you should


----------



## im sparticus (3 June 2012)

Starcraftmazter said:


> Considering that you continuously compare property to gold, I'd say they are quite related for the purposes of our debates.
> 
> 
> 
> Maybe you should





And you think im a troll shesh. i would have got a more informed response from siri! Is that what your using to answer my questions


----------



## Gerkin (3 June 2012)

im sparticus said:


> And you think im a troll shesh. i would have got a more informed response from siri! Is that what your using to answer my questions




you gents still going hammer and toe at each other
the time youve been smashing the keyboard ive managed to walk to the local pub, had a few bevvies, had dinner, great conversation, made plans to ski in two weeks time.....what have you achieved


----------



## im sparticus (3 June 2012)

Gerkin said:


> you gents still going hammer and toe at each other
> the time youve been smashing the keyboard ive managed to walk to the local pub, had a few bevvies, had dinner, great conversation, made plans to ski in two weeks time.....what have you achieved




Plastering the latest posting between coats.


----------



## matty77 (3 June 2012)

Been awhile..

One question I have.. what ever happened to Robots?


----------



## Glen48 (3 June 2012)

Born again as _I'm Spartacus.
_


----------



## numbercruncher (4 June 2012)

> GLOBAL ratings agency Moody's says the Australian housing market is still significantly overvalued despite a 7 per cent slide in prices over the past two years.
> 
> And Moody's says the resilience of Australia's debt-bloated household balance sheets has never been truly tested since house prices accelerated.
> 
> The agency has warned it is considering cutting its credit rating on three of the leading Australian businesses that provide mortgage insurance.




http://www.couriermail.com.au/life/homesproperty/australian-houses-overvalued/story-e6frequ6-1226379360653


What was the argument to support rising House prices again ? Its kinda slipped my mind ......  - Oh was it nose diving Interest rates and mass migration or something ?


----------



## Starcraftmazter (4 June 2012)

numbercruncher said:


> http://www.couriermail.com.au/life/homesproperty/australian-houses-overvalued/story-e6frequ6-1226379360653
> 
> 
> What was the argument to support rising House prices again ? Its kinda slipped my mind ......  - Oh was it nose diving Interest rates and mass migration or something ?




About time the rating agencies did their jobs. It only took for the mortgage insurers to start losing their money before they were looked at 

Sheer incompetence if you ask me, everything to do with Australian housing should have been rated as "junk" years ago.


----------



## im sparticus (4 June 2012)

Starcraftmazter said:


> And how about our bet? $1,000 for every 1% real value lost or gained in Melbourne according to RP Data starting say from the 1st of June, no capital down.




One again this was someone elses post just how much missinformation are you going to spread your credibility is really taking a beating of late, still waiting for your compilation of my missinformation?


----------



## Starcraftmazter (4 June 2012)

im sparticus said:


> One again this was someone elses post just how much missinformation are you going to spread your credibility is really taking a beating of late, still waiting for your compilation of my missinformation?




Huh 

I'm offering you the deal - do you want to take it or not?

And here's your compilation:
https://www.aussiestockforums.com/forums/search.php?searchid=635981


----------



## im sparticus (4 June 2012)

Starcraftmazter said:


> Huh
> 
> I'm offering you the deal - do you want to take it or not?
> 
> ...




would i make a bet with someone who cant afford it......... NO! 

Would i overexpose myself while some nobody sits there without his balls on the line.....NO!

Like i said before my post got deleted get as short as i am long and we will talk seven figures real re stock no cfd unhedged. think you can handle it sport?

Unlike some of us i have real exposure to manage.


----------



## Starcraftmazter (4 June 2012)

im sparticus said:


> Would i overexpose myself while some nobody sits there without his balls on the line.....NO!




Ummm what? We would take identical positions (in different directions), neither of us would be more exposed than another.



im sparticus said:


> Like i said before my post got deleted get as short as i am long and we will talk seven figures real re stock no cfd unhedged. think you can handle it sport?




I have no idea what you are on about here.


----------



## im sparticus (4 June 2012)

Starcraftmazter said:


> Ummm what? We would take identical positions (in different directions), neither of us would be more exposed than another.
> 
> 
> 
> I have no idea what you are on about here.





There goes some more of you credibility keep it up your on a roll


----------



## im sparticus (4 June 2012)

Starcraftmazter said:


> Huh
> https://www.aussiestockforums.com/forums/search.php?searchid=635981




and the last nail in the coffin by by scm. mwhahahaha

and now that your done im gonna share with you your undoing......."primacy effect".

A trap for young players learning solo on the internets . but as always in life you get what you pay for!


----------



## numbercruncher (4 June 2012)

Hi Sparticus -


Your wee attacks on SCM are detracting from the Property Price debate -

Maybe this is intentional as you have no prices are rising substance to add anymore ?

Maybe you could belittle him via inbox rather than in open forum format ?

He does seem to have the advantage of being able to articulate himself better than your good self I notice though


----------



## prawn_86 (4 June 2012)

Back on topic please. A lot of posts here that are not discussing "The future of Australian Property Prices".

Final warning. Off topic posts will be removed and infractions issued


----------



## numbercruncher (4 June 2012)

Ooooh -


Some more property crash evidence of my own.

Was just speaking to my RE agent and the property Im currently living in just appraised up at 20pc below what the "owner" was asking 6 months ago -  - got to love property bubbles .... So in 6 months the owner has got like 10k in rent and over 100k in equity loss .....

Might have to offer them a rent deduction to keep my good self here - or perhaps its change of view time ..... plenty of property available these days ....


----------



## prawn_86 (4 June 2012)

numbercruncher said:


> plenty of property available these days ....




Melbourne has a huge over supply over apartments. We looked at heaps and didnt apply to one we thought was perfect, and we got that straight away


----------



## im sparticus (4 June 2012)

numbercruncher said:


> Ooooh -
> 
> 
> Some more property crash evidence of my own.
> ...




Not debating direction, just debating magnitude how someone can call crash to property when its off by less than most asset classes and is still returning same yeilds is a bit strange why the need to blow on asset class out of proportion whilst rooting for the other that is off by more and has no yeild is bazzar, all the best with your rental decrease let us know how you go and how much money time and effort you waste moving...into the hands of your next land LORD. whilst you ex gets new tennants in at a higher price (my experiance with tennants anyway).

Howmaytimes do you need to get caught out blowing things out of proportion better look up th definition of a crash (hit it doesnt go on a single transaction)


----------



## im sparticus (4 June 2012)

But i do get where your comming from if i was a tennant ide be rooting for a housing colapse too but as scm has illuded to most will be unemployed by then unable to take advantage of the low low prices anyway you loose again. must be frustrating.


----------



## numbercruncher (4 June 2012)

im sparticus said:


> ...into the hands of your next land LORD.





Haha your such a lover of perceived power ...... Im sure a psychologist could tell us interesting things about you from posts ? 

anyways .....

If I did decide to move the Money renting property specualtor is still paying 6pc interest whilst trying to attract a tenant that will pay less than 5pc in a falling market - awesome investment !!! 

Your right with falling prices I guess the yield rises on current market value and thats if they find another tenant who pays on time everytime


----------



## Starcraftmazter (4 June 2012)

im sparticus said:


> But i do get where your comming from if i was a tennant ide be rooting for a housing colapse too but as scm has illuded to most will be unemployed by then unable to take advantage of the low low prices anyway you loose again. must be frustrating.




I fail to see how I lose or what is so frustrating, nor of what importance other people are and their ability to "take advantage" of anything.

The issue is simple, we are experiencing a property crash, and prices will plummet much further - the bust has only just began. Who will buy what when is irrelevant. I don't plan to "take advantage" of it either - there is nothing to take advantage of, nor any big opportunity coming. Rather, housing is merely returning to it's traditional utility of providing shelter as speculators get squeezed out of the market, and prices will return to normal and stay there for the foreseeable future. 

It has been 100 years between the last great housing bubble of the 1890s and the current, so using that as historic precedent, we will not get another bubble for at least 100 years, though I highly doubt it will happen ever again for a variety of reasons.


There is nothing to look forward to, housing prices will simply return to normality. Those people wishing to buy a house or unit to live in, will then be able to do so with a fair amount of money - that being, three times their annual salary. They will then be able to live their life in peace, being able to pay off their property in a few years, without having to slave away for their debt their entire lives.

In other words, things will simply return to normal.


----------



## im sparticus (4 June 2012)

My experiance with tennants by im sparticus:

12 months have passes and the lease has expired(i could have served them notice 60days prior but im a gentleman). I serve them notice for what seems to be fair market rent....tennants refuse i offer to meet half way....tennants want to meet half of halfway....no deal notice served at halfway... tennants give lots of excuses but eventually move out and into a lesser place they can more easily afford.....new tennants agree to price either at or above my initial offer.....place is untennanted for less than 3days  i loose a weeks rent and tennant looses a weeks rent in moving costs which is sometimes all the rental increase was to begin with.... so be it

every single dealing with a tennant has gone this way since 2005.


----------



## moXJO (4 June 2012)

Are the majority of posters here from Melbourne?


----------



## im sparticus (4 June 2012)

numbercruncher said:


> Haha your such a lover of perceived power ...... Im sure a psychologist could tell us interesting things about you from posts ?
> 
> anyways .....
> 
> ...




And of the ones that by outright are they better off than the gold bug.

Never had a late payment btw but i try not to cater to the lower socioeconomic types.


----------



## numbercruncher (4 June 2012)

moXJO said:


> Are the majority of posters here from Melbourne?




Property Crash Ground Zero - Gold Coast


----------



## Starcraftmazter (4 June 2012)

moXJO said:


> Are the majority of posters here from Melbourne?




Sydney myself; the reason Melbourne is being discussed so much is probably because it is by far the worst looking of all cities as far as future drops are concerned.


----------



## moXJO (4 June 2012)

numbercruncher said:


> Property Crash Ground Zero - Gold Coast




lol no wonder you are so bearish. I think Vic will be the undoing of the nation if it comes to pass though.

My worry is deflation as  sparticus mentioned and the current IR laws / expenses creating a noose for business. Will it be setting up a domino effect in the not too distant future?

 For the meanwhile I'm enjoying a mini boom in my home town


----------



## moXJO (4 June 2012)

Starcraftmazter said:


> Sydney myself; the reason Melbourne is being discussed so much is probably because it is by far the worst looking of all cities as far as future drops are concerned.




Yeah I agree with the above (but from a standing on the outside looking in viewpoint). Other factors are at play in Vic as well though. I think business will be stuffed down there due to the current IR environment and union lobbying


----------



## numbercruncher (4 June 2012)

moXJO said:


> lol no wonder you are so bearish. I think Vic will be the undoing of the nation if it comes to pass though.
> 
> My worry is deflation as  sparticus mentioned and the current IR laws / expenses creating a noose for business. Will it be setting up a domino effect in the not too distant future?
> 
> For the meanwhile I'm enjoying a mini boom in my home town





Mini Boom ? Mining Town ?


----------



## im sparticus (4 June 2012)

Starcraftmazter said:


> Sydney myself; the reason Melbourne is being discussed so much is probably because it is by far the worst looking of all cities as far as future drops are concerned.




Ding ding ding we have a winner johnny.........confirmation bias is why you concerntrate on mel.


----------



## im sparticus (4 June 2012)

numbercruncher said:


> Haha your such a lover of perceived power ...... Im sure a psychologist could tell us interesting things about you from posts ?
> 
> anyways .....
> 
> ...




Pretty naive to assume your lords are running 100% lvr. kaboom number blows another out of proportion!


----------



## medicowallet (4 June 2012)

im sparticus said:


> My experiance with tennants by im sparticus:
> 
> 12 months have passes and the lease has expired(i could have served them notice 60days prior but im a gentleman). I serve them notice for what seems to be fair market rent....tennants refuse i offer to meet half way....tennants want to meet half of halfway....no deal notice served at halfway... tennants give lots of excuses but eventually move out and into a lesser place they can more easily afford.....new tennants agree to price either at or above my initial offer.....place is untennanted for less than 3days  i loose a weeks rent and tennant looses a weeks rent in moving costs which is sometimes all the rental increase was to begin with.... so be it
> 
> every single dealing with a tennant has gone this way since 2005.




IDC if you lose a week's rent, or a month's rent or a year's rent...

just, lose an O

MW


----------



## satanoperca (4 June 2012)

I'm Sparticus,

What do you consider a property correction, % drop from peak?
What do you consider a crash, % drop from peak?

Ie correction 10-15%
Crash 15% >

Might help some reader understand what you are trying to discuss.

Cheers

Still waiting for that beer.


----------



## greebly24 (4 June 2012)

Headline of The Australian newspaper Monday June 4 2012 *"Hope for mortgage 'victims'"*

_"Thousands of struggling homeowners could walk away from their mortgages as a series of court cases helps to expose widespread improper lending practices involving some of the nation's biggest financial institutions."_

OMG!!! But property bulls were telling us that we were different to America!

_"Finance industry giants are spending millions of dollars on legal fees fighting homeowners who have successfully exited their mortgages because they were stung by sub-prime-style lending practises during the last property boom."_

OMG!!! Sub-prime-style lending practises? In Australia? Surely not? People successfully exiting their mortgages? In Australia? How? No, no, no! They can't, we were told repeatedly by the bulls. Part of the reason the US market collapsed couldn't happen here, they said.

_"...inflating borrowers' income and ability to repay debts to secure so-called 'low-doc' loans."_

No, no, no! We don't have sub-prime mortgages in Australia! It's different here! Our lovely financial institutions weren't reckless like the Americans'.

_"...No docs - Client only needs to be self-employed for 1 day or more... No assets or liabilities required, no income needs to be stated!!!"_

They were called NINJA loans in the US (No Income, No Job, no Assets). Here the financial institutions advised clients to register an ABN, then get one day of work, one single day, before they are eligible for a mortgage! You couldn't get a NINJA loan here. Presumably you needed to work for 8 hours. But why would our banks be so reckless?

_"In the race to provide credit - and earn commissions..."_

Oh, right! Think greed is pretty much universal, I guess.

_"The Australian has also discovered cases of mortgage brokers, loan originators and others inflating borrowers' stated incomes on loan application forms without their knowledge."_

Keep saying it: Australia is different, Australia is different, Australia is different...

_""Lenders have been throwing everything they have at these cases because they know there are thousands, probably tens of thousands, of people who have been affected," say Geoff Robertson of Champion Legal..."_

But Australians love housing more than Americans do, or some other property bull argument (I forget what it was)!

The fact is that the same dodgy lending practises that caused the property bubble to crash in America (and Spain and Ireland and Greece etc) also existed in Australia. The question of how great the problem was will only become clear in the months and years ahead of legal action.

Hopefully anyone struggling to pay their mortgage, or facing foreclosure from the bank, should immediately contact the bank to get a copy of all the documents. Any discrepancies in any facts should be challenged in court. This could drag on for years, folks.

So the banks are going to take big losses, through mortgage reductions or write-offs, on this debacle. And do you think banks want to become landlords, holding thousands of properties in a falling market? No chance. They'll dump them on an already over-saturated market, pushing prices down further. Try competing to sell your home with a bank foreclosure selling cheaper next door!

The other interesting part of the article is about Residential Mortgage-Backed Securities (RMBS). After the GFC, the investment market for them collapsed. In order to protect small lenders against the big banks, in Oct 2008 Wayne Swan announced the government would invest $4Bn to "shore up the RMBS market".

Think they were good investments? Securities paying a good rate of interest, backed up by residential mortgages in Australia? Well apparently investors don't (maybe they're aware of our little "Low-Doc" problem). Investors would rather buy US Treasuries paying around 1% (less than inflation), than invest in Aussie mortgages.

So in April last year Swannie had increase the obligation to $20Bbn. $14Bn of that has already been invested in RMBS. The govt claims it is invested in "...superior-quality loans with relatively low default rates...". Really? Why didn't private investors want them then?

It is obvious that the govt is now creating our own version of Fannie Mae and Freddie Mac, bankrupt taxpayer-funded organisations to invest in crap  RMBS that no-one else wants. And remember, we didn't have the money to pay for it. We borrowed the money off China, amongst other places, to buy Aussie mortgages. Its part of the reason the Gillard govt has to raise our debt ceiling. It was $70Bn, then they raised it to $200Bn, then $250Bn, now who knows how high it will go? Part of the money is being used to continue to prop up the unsustainable Aussie property bubble. When the govt can no longer borrow money to keep our bubble afloat, look out below.


----------



## numbercruncher (4 June 2012)

Awesome news -

Hopefully some of these financial predators get sued for the bonuses and inflated salaries they received. Some even deserve prision sentences.

During the flipping days one of my loans was Lowdoc , amazed me how easy it was - ridiculous really, they may as well of thrown Money at me for showing little more than my ABN at the time.


----------



## Starcraftmazter (4 June 2012)

im sparticus said:


> Ding ding ding we have a winner johnny.........confirmation bias is why you concerntrate on mel.




I am not concentrating on anything, the discussion of the last few pages has been about Melbourne.



greebly24 said:


> It is obvious that the govt is now creating our own version of Fannie Mae and Freddie Mac, bankrupt taxpayer-funded organisations to invest in crap  RMBS that no-one else wants. And remember, we didn't have the money to pay for it. We borrowed the money off China, amongst other places, to buy Aussie mortgages. Its part of the reason the Gillard govt has to raise our debt ceiling. It was $70Bn, then they raised it to $200Bn, then $250Bn, now who knows how high it will go? Part of the money is being used to continue to prop up the unsustainable Aussie property bubble. When the govt can no longer borrow money to keep our bubble afloat, look out below.




A++ post, bookmarking for later. Of course there is no difference between USA and Australia - what has happened there, will happen here. Of course since our bubble is so much bigger, there is much further to fall.


----------



## CanOz (4 June 2012)

Starcraftmazter said:
			
		

> I am not concentrating on anything, the discussion of the last few pages has been about Melbourne.
> 
> A++ post, bookmarking for later. Of course there is no difference between USA and Australia - what has happened there, will happen here. Of course since our bubble is so much bigger, there is much further to fall.




SCM,  in what respect is the property bubble in Australia bigger than the US? 

Also, did Australian banks package up these toxic mortgages as CDOs or similar derivatives and flog them off to investors?

CanOz


----------



## Gerkin (4 June 2012)

prawn_86 said:


> Melbourne has a huge over supply over apartments. We looked at heaps and didnt apply to one we thought was perfect, and we got that straight away




you probably had a good history + double income no kid


----------



## numbercruncher (4 June 2012)

Gerkin said:


> you probably had a good history + double income no kid





People with Kids typically dont live in Apartments anyway do they ?

Such an oversupply these days I think what he is saying is the "owner" was glad to get someone apply to lease it ( ie/ no other applicants for the lease).....

"owners" should be privledged to have their apartments leased to good tenants these days, especially if ownership is underpinned by Monies they are renting from Bankers ....


----------



## Starcraftmazter (4 June 2012)

CanOz said:


> SCM,  in what respect is the property bubble in Australia bigger than the US?




Well see here;





You see how Australian prices have bubbled more than US? You could also see the same result if you compare price to income ratios.

Additionally, there has been more overbuilding and oversupply in Australia than in the top US bubble states;





So you see, the prices were twice over-inflated than in the US at the peak (which we are still reasonably close to), and we have had more over-construction. So it is in every way bigger.



CanOz said:


> Also, did Australian banks package up these toxic mortgages as CDOs or similar derivatives and flog them off to investors?




We won't know to what extent this has happened until it's too late; however I will suggest that it is completely irrelevant - especially considering the above.

Quite simply put, our bubble is far bigger because our prices are far more inflated, and we have had more construction. What our banks have and have not done with mortgage debt is not really relevant. Or you could say it is perhaps worse if they _didn't_ package them up and sell the mortgages, since the banks are liable (that is to say, they won't be able to cover their liabilities if house prices tank).

And while we're at that, Australia has the worst capitalised banks in the world, just around 1.5% capital against their mortgage books. That's pretty ridiculous, once the mortgage insurers fall (they are all already losing money, mortgage insurance is not in any way meant to protect against a bubble bust) our banks are history.


And let's not forget the most important thing of all. US banks can borrow infinite free money from the Fed. Our banks have to borrow from overseas, and they can only do so as long as they are implicitly covered by our federal government's AAA credit rating. If even the slightest thing goes wrong with our federal government's finances...


----------



## Glen48 (4 June 2012)

IF the RBA drop on Tuesday  .5% we will know they are worried.
So we all agree the crash is on except for a couple and trying to see the bottom will be like looking at inside of a black cow at midnight .


----------



## Starcraftmazter (4 June 2012)

If they drop by another 0.5%, I would say it's not panic than worry. That'd make 1% in 2 months - crazy.

They will have to drop by 25bps at least though just in case the GDP figure on Wednesday will be negative.


----------



## DB008 (4 June 2012)

Glen48 said:


> IF the RBA drop on Tuesday  .5% we will know they are worried.
> So we all agree the crash is on except for a couple and trying to see the bottom will be like looking at inside of a black cow at midnight .




WHAT?
You are aware that rates do go up and down? 
Maybe if the banks actually kept in step with the RBA, we might not need another rate cut? Do you see that side of the coin????

What is your prediction Glen48? 0.5% like Japan has had for the last 20+ years?


----------



## Julia (4 June 2012)

numbercruncher said:


> Awesome news -
> 
> Hopefully some of these financial predators get sued for the bonuses and inflated salaries they received. Some even deserve prision sentences.



Of course the entire blame falls on the lending institutions, doesn't it, NC!
No way any responsibility should be attributed to those engaging in loans they couldn't service.
Of course not.


----------



## numbercruncher (4 June 2012)

If a Doctor incorrectly doses someone 200mg instead of 100mg he is negligent - if a Money dealer lends 500k instead of a manageable 200k he is negligent and people should excercise their statutory right to take legal action.

These money dealers made big loans to make big personal profits and lending standards have never been as easy as they were ever in history as during the great credit experiment of early this century.

I do however support the forefeiture of the property speculator classes right to complete compensation under these rules, they should first surrendor all assets needed to cover debt then the bankers should cover the short fall.

They can then all go work in mine for Gina before the 457's take their job as their income tax will be needed to pay for the millions of pensioners in the welfare state.


----------



## Julia (4 June 2012)

numbercruncher said:


> These money dealers made big loans to make big personal profits and lending standards have never been as easy as they were ever in history as during the great credit experiment of early this century.



I'm not at all defending inappropriate lending.  It's despicable and stupid.
But I'm just sick of no blame being attributed to the person acquiring the loan.  Do you really believe the borrower had zero responsibility?


----------



## numbercruncher (4 June 2012)

Julia said:


> I'm not at all defending inappropriate lending.  It's despicable and stupid.
> But I'm just sick of no blame being attributed to the person acquiring the loan.  Do you really believe the borrower had zero responsibility?




Borrowers of course played a role but lenders have a professional and legal ( wish I could say ethical ) responsibility to make certain borrowers have the capacity to repay and they clearly breached that responsibility in many cases.

Perhaps in some cases blame and liability can be apportioned as a percentage and dollar figure to each party.

I actually think persnally many property spruiker enterprises have a case to answer from scaring people into unaffordable purchasing with rubbish propaganda like prices double each and every seven years , how if you dont buy now youll never afford it and other heavy handed fear tactics that tricked so many into buying at terribly inflated prices.


----------



## Ves (4 June 2012)

numbercruncher said:


> If a Doctor incorrectly doses someone 200mg instead of 100mg he is negligent - if a Money dealer lends 500k instead of a manageable 200k he is negligent and people should excercise their statutory right to take legal action.



That's a poor analogy  - one has years of education, the other has very little or no education at all.  Are you serious?

You don't sign a contract when you go to a doctor.


----------



## Julia (4 June 2012)

Ves said:


> That's a poor analogy  - one has years of education, the other has very little or no education at all.  Are you serious?
> 
> You don't sign a contract when you go to a doctor.



+1.


----------



## Ves (4 June 2012)

numbercruncher said:


> Borrowers of course played a role but lenders have a *professional and legal* ( wish I could say ethical ) responsibility to make certain borrowers have the capacity to repay and they clearly breached that responsibility in many cases.



Lenders are not qualified professionals in most cases, especially at the big four.

Can you please quote a source that suggests that they have some legal obligation to make sure that borrowers have the capacity to repay? I believe it exists, but what must be proven for a lender to be found guilty?  What if the borrower has provided false and misleading information?  Most major institutions have lending criteria that their employees must satisfy before making a loan.  What does this count for?  I think you need to provide more facts  IMO.

edit:  Have you ever read the legal contract that you have to sign before you accept a mortgage?


----------



## numbercruncher (4 June 2012)

Ves said:


> That's a poor analogy  - one has years of education, the other has very little or no education at all.  Are you serious?
> 
> You don't sign a contract when you go to a doctor.





Im not suggesting the mortgage brokers with a one week certificate 11 education face the legal wrath but moreso the bankers with MBAs etc and the banking cartels they represent who facilitated this need to be dragged across the coals.


But sure I could of made a better anaolgy.

Anyway who cares what I think it appears that reckoning for these dodgy bankers is happening !


----------



## numbercruncher (4 June 2012)

Ves said:


> edit:  Have you ever read the legal contract that you have to sign before you accept a mortgage?





Despite what these banking Gods write in dodgy contracts they dont override peoples statutory rights and im going to guess thats why thousands of mortgage holders could be off the hook.

But im not a lawyer and thats what you need in these slipery matters - great to see the dodgy money dealers getting beat at their own dodgy game though.


----------



## Ves (4 June 2012)

More empty rhetoic, with little if any meaningful content. I'll leave you to it. Have fun!


----------



## numbercruncher (4 June 2012)

Dude no need to bury your head in the sand screaming denial - its happening and the banks are spending millions to try stop the flow becoming a flood ...



> Finance industry giants are spending millions of dollars on legal fees fighting homeowners who have successfully exited their mortgages because they were stung by sub-prime-style lending practices during the last property boom.
> 
> An investigation by *The Australian* has revealed several mortgage providers and mortgage brokers engaged in improper lending practices in the years before the global financial crisis hit in 2008, including inflating borrowers' income and ability to repay debts to secure so-called "low-doc" loans.







> Ms Brailey, who has been tracking low-doc loans and loan application issues with The Australian for several years, said she had uncovered examples of loan application irregularities in loans approved by 14 banks and other lenders.
> 
> She obtained emails illustrating imprudent lending practices by 36 banks and non-bank lenders, including all of the major banks.
> 
> *"We're about to see a major train wreck,"* she said.




http://www.theaustralian.com.au/news/investigations/hope-for-mortgage-victims-as-homeowners-winning-battle-against-banks/story-fn6tcs23-1226382076020

Pretty reputable source ....


----------



## jank (4 June 2012)

I'm bearish on Australian property as I have said before on this thread but the person who borrowed huge sums of money that they cannot pay back at all is also responsible. To blame it all on the banks is just shifting responsibility on to someone else. I have heard it all before in Ireland. 

If you borrow too much and cant pay it back then who's fault is that? People need to learn personal responsibility.


----------



## young-gun (5 June 2012)

jank said:


> I'm bearish on Australian property as I have said before on this thread but the person who borrowed huge sums of money that they cannot pay back at all is also responsible. To blame it all on the banks is just shifting responsibility on to someone else. I have heard it all before in Ireland.
> 
> If you borrow too much and cant pay it back then who's fault is that? People need to learn personal responsibility.




Yes, but a key point that everyone seems to be forgetting here is that people are stupid. If you let them take out a million bucks on 50k a year some will. I'm not covering for people's stupidity, they are just as much at fault, but the banks have the ability to stop such decisions taking place to begin with. Not to mention you have a generation of bulls screaming at the top if their lungs that property never goes down, coupled with the media banging on about ut for years, and you can understand why some unsuspecting families want to try and get into the market sooner thn they can afford.


----------



## Glen48 (5 June 2012)

People worldwide think the same that's why this is now a global greed  problem not just buying property but consumerism to the hilt,new cars,white goods, electronics,house renovations now its time to pay the piper and every one is broke


----------



## Starcraftmazter (5 June 2012)

Julia said:


> I'm not at all defending inappropriate lending.  It's despicable and stupid.
> But I'm just sick of no blame being attributed to the person acquiring the loan.  Do you really believe the borrower had zero responsibility?




How about putting some responsibility on governments - ALP and LNP for shoving massive incentives down people's throats to speculate on property?


----------



## CanOz (5 June 2012)

SCM, in your data cache do you happen to have any data on which australian banks are most exposed to these subprime loans?

Thanks for the info...

CanOz


----------



## Starcraftmazter (5 June 2012)

CanOz said:


> SCM, in your data cache do you happen to have any data on which australian banks are most exposed to these subprime loans?
> 
> Thanks for the info...
> 
> CanOz




Unfortunately not. It is irrelevant too in my view - and the reason is that there is no possible way to know which loans are subprime until the recession kicks in full blast and people start losing their jobs en mass.

The worst loans are written during the best of times.


----------



## prawn_86 (5 June 2012)

Starcraftmazter said:


> Unfortunately not. It is irrelevant too in my view




But wouldnt it make sense to short the bank with the highest exposure? This is a stock forum after all and shorting stocks is a legitimate way to make money


----------



## CanOz (5 June 2012)

Starcraftmazter said:


> Unfortunately not. It is irrelevant too in my view - and the reason is that there is no possible way to know which loans are subprime until the recession kicks in full blast and people start losing their jobs en mass.
> 
> The worst loans are written during the best of times.




Curious because most of our money is now in Canada and China, might pay to wait a while and see how this pans out before we repat it...

CanOz


----------



## Starcraftmazter (5 June 2012)

prawn_86 said:


> But wouldnt it make sense to short the bank with the highest exposure? This is a stock forum after all and shorting stocks is a legitimate way to make money




Certainly, but as I said - there is no way to know based on any official figures, disclosures or other releases.

One idea is to get someone with a bad credit rating and have them apply for an equally valued mortgage with the 4 major banks and see which ones will give him the money. That I imagine would be a solid experiment.


----------



## Starcraftmazter (5 June 2012)

This is quote relevant to my points in the last two pages:



> So, what is the wash up of the last few days of this debate? *The Government’s senior bureaucrats have conceded that there will be no revisiting the 2008/9 stimulus package in the event of a global recession*. Only the automatic stabilisers will be allowed to run the Budget into deficit. The principle ratings agency, *S&P, has declared that that won’t be enough to prevent a downgrade of the sovereign.* So, in the event of a global recession, we have lost both the ability to provide active counter-cyclical fiscal support and the efficacy of monetary policy has been damaged.




http://www.macrobusiness.com.au/2012/06/is-australia-the-next-spain/


This means that not only will there not be a FHOB again which propped up the bubble during 09-10, but our AAA credit rating - and thus our banks' ability to borrow is hanging on by a thread.


----------



## jank (5 June 2012)

young-gun said:


> Yes, but a key point that everyone seems to be forgetting here is that people are stupid. If you let them take out a million bucks on 50k a year some will. I'm not covering for people's stupidity, they are just as much at fault, but the banks have the ability to stop such decisions taking place to begin with. Not to mention you have a generation of bulls screaming at the top if their lungs that property never goes down, coupled with the media banging on about ut for years, and you can understand why some unsuspecting families want to try and get into the market sooner thn they can afford.




Yes people are stupid, but so what. There is a reason why some people end up at the bottom of the pile, because of bad personal decisions. Should we legislate against stupidity? Make it illegal to be stupid, so no matter how stupid a financial decision you take you are not responsible at all? Also, if a bank gives a person $1 million who earns 50,000 a year then they are also stupid.


----------



## prawn_86 (5 June 2012)

jank said:


> Also, if a bank gives a person $1 million who earns 50,000 a year then they are also stupid.




Exactly, and yet they ended up getting bailed out with taxpayer funds. They get an out for stupidity, why shouldnt stupid individuals do everything they can to try and get bailed out for their stupidity?


----------



## Glen48 (5 June 2012)

The stupid ones are the feds world wide who guarantee the banks they can't fail and they know that, the ones who volunteered to bailout the banks have no say in it and banks are seen as some sort of God to be worshiped by the feds.


----------



## jank (5 June 2012)

prawn_86 said:


> Exactly, and yet they ended up getting bailed out with taxpayer funds. They get an out for stupidity, why shouldnt stupid individuals do everything they can to try and get bailed out for their stupidity?





Which bank in Australia got bailed out?


----------



## prawn_86 (5 June 2012)

jank said:


> Which bank in Australia got bailed out?




I was referring to the trend in Western societies in general. The banks in Aus did get the gov guarantee (backed by taxpayer funds) and also had access to overseas TARP funds i believe


----------



## Glen48 (5 June 2012)

Nab and CBA under TARP wait a few more months and see how it will pan out once ex-home owners walk.


----------



## CanOz (5 June 2012)

Governments bail out banks, then bail out consumers by providing mortgage assitance as well. This is a global hangover tat will take years to unwind. 

Canadian banks are highly regulated and yet even there they have issues with property bubbles.

There are no safe havens anymore...no place to hide.

CanOz


----------



## im sparticus (5 June 2012)

What percentage of oz morgages are affected by this and what percentage of the oz property market as a whole do said morgage holders make up?


----------



## Ves (5 June 2012)

numbercruncher said:


> Dude no need to bury your head in the sand screaming denial - its happening and the banks are spending millions to try stop the flow becoming a flood ...
> 
> 
> 
> ...



Would not be the first time a newspaper has covered a story like this and nothing material has eventuated? No reason to think it will be any different this time. Thanks though.  A shame australia has very little decent media coverage.


----------



## numbercruncher (5 June 2012)

Ves said:


> Would not be the first time a newspaper has covered a story like this and nothing material has eventuated? No reason to think it will be any different this time. Thanks though.  A shame australia has very little decent media coverage.




The point of the Article is that bankers are already spending millions defending their position against homeowners who shouldnt of been lent money.


----------



## Ves (5 June 2012)

numbercruncher said:


> The point of the Article is that bankers are already spending millions defending their position against homeowners who shouldnt of been lent money.



I'm sure they have always spent millions on legal expenses.  Not 100% sure, but check out some historical financials for the Big 4. Probably tell us more.


----------



## ROE (5 June 2012)

A few million bucks on legal fees are pocket change for banks
large corporation spending Multi millions and hundred of million every year on legal fees.

They probably has their own legal department so they just keeping these guys busy
this is a fixed cost for them.


----------



## young-gun (5 June 2012)

jank said:


> Yes people are stupid, but so what. There is a reason why some people end up at the bottom of the pile, because of bad personal decisions. Should we legislate against stupidity? Make it illegal to be stupid, so no matter how stupid a financial decision you take you are not responsible at all? Also, if a bank gives a person $1 million who earns 50,000 a year then they are also stupid.




Don't make it illegal to be stupid, make it illegal to take advantage of stupid people perhaps? its illegal for Nigerians to lull stupid people into scams, why is banking ok? as i said initially, there is no excuse for people making obviously stupid decisions, but if there is a way to stop it or limit it then shouldn't it be explored? I am right down the middle on this one, banks are equally responsible as the customers, but if you want to stop a drug problem do you lock up every user in hope so that there is no more demand, or do you try take out the top guy to limit the supply?



prawn_86 said:


> Exactly, and yet they ended up getting bailed out with taxpayer funds. They get an out for stupidity, why shouldnt stupid individuals do everything they can to try and get bailed out for their stupidity?



+1. except it's not stupidity of the banks, it's pure greed. well i guess stupidity is a bi-product of such an insane amount of greed.


----------



## numbercruncher (5 June 2012)

ROE said:


> A few million bucks on legal fees are pocket change for banks
> large corporation spending Multi millions and hundred of million every year on legal fees.
> 
> They probably has their own legal department so they just keeping these guys busy
> this is a fixed cost for them.




Very valid point actually.

Aussie banks have hardly been punished at all yet.

So i imagine they will at some point start doing it again. :swear:


----------



## Julia (5 June 2012)

prawn_86 said:


> I was referring to the trend in Western societies in general. The banks in Aus did get the gov guarantee (backed by taxpayer funds) and also had access to overseas TARP funds i believe



No Australian bank was bailed out by anyone.
The banks paid a significant amount to the government for the government guarantee.
Why do you make it sound as though the Australian taxpayer actually gave the banks something for nothing?
So misleading and inaccurate.



young-gun said:


> Don't make it illegal to be stupid, make it illegal to take advantage of stupid people perhaps? its illegal for Nigerians to lull stupid people into scams, why is banking ok?



Is it so?  Who prosecutes the Nigerians for offering scams to people who are stupid enough to get sucked into thinking they are suddenly due millions of dollars from someone they have never heard of?
How impossibly unrealistic!


----------



## qldfrog (5 June 2012)

Julia said:


> No Australian bank was bailed out by anyone.



If only....
I am soon getting a new enemy in Julia, but one of the big 4 got bailed out by the US government during the worst of the GFC at the time of 20 or so billions if I remember well
I post gain when I find a link


----------



## Glen48 (5 June 2012)

Think it was CBA and NAB needed a few bucks.


----------



## qldfrog (5 June 2012)

qldfrog said:


> If only....
> I am soon getting a new enemy in Julia, but one of the big 4 got bailed out by the US government during the worst of the GFC at the time of 20 or so billions if I remember well
> I post gain when I find a link



not 20 billions, was a big high but still $4billions:
http://www.moneymorning.com.au/20101203/nab-and-westpacs-secret-bailout-revealed.html
download the spreadsheet from the fed:
http://www.federalreserve.gov/newsevents/reform_taf.htm
in US$ (at the time)
3 billions for NAB
1 billion for westpac

idea being to grease the wheel as the monetary  system was frozen and these two were unable to access any credit otherwise and would have been in default
But was just a loan not a bailed out if we want to keep pretending...


----------



## qldfrog (5 June 2012)

Glen48 said:


> Think it was CBA and NAB needed a few bucks.



Thanks Glenn, unsure about our own aussie government, anyway at least the ones i quoted


----------



## Julia (5 June 2012)

qldfrog said:


> If only....
> I am soon getting a new enemy in Julia, but one of the big 4 got bailed out by the US government during the worst of the GFC at the time of 20 or so billions if I remember well
> I post gain when I find a link



We were discussing the Australian taxpayer funds bailing out Australian banks by the Australian government.
I made no comment about any overseas arrangements.


----------



## jank (5 June 2012)

young-gun said:


> Don't make it illegal to be stupid, make it illegal to take advantage of stupid people perhaps? its illegal for Nigerians to lull stupid people into scams, why is banking ok? as i said initially, there is no excuse for people making obviously stupid decisions, but if there is a way to stop it or limit it then shouldn't it be explored? I am right down the middle on this one, banks are equally responsible as the customers, but if you want to stop a drug problem do you lock up every user in hope so that there is no more demand, or do you try take out the top guy to limit the supply?
> 
> 
> +1. except it's not stupidity of the banks, it's pure greed. well i guess stupidity is a bi-product of such an insane amount of greed.




Well first of all those Nigerians are committing a crime which is called fraud. Anyway did you ever hear of the saying that a fool and his money are easily separated.

Taking out a mortgage isn't illegal no matter how stupid you are. There requirements by a bank are usually capital and a contract stating that they will take the house of your hands to recapture their capital if you don't keep up payments. It has worked like this for many hundreds of years. The only difference now is that stupid people expect big bank loans and banks are willing to oblige as it means money for them. Of course banks should take the losses on the chin. I do not in any way advocate bailing out banks.

Regarding drugs. Well drugs are illegal. How are you equating a financial contract or financial process that has the basis of capitalism to illegal activities. Makes no sense.

Poor arguments all round I think.


----------



## jank (5 June 2012)

Julia said:


> We were discussing the Australian taxpayer funds bailing out Australian banks by the Australian government.
> I made no comment about any overseas arrangements.





Agreed Julia, no Australian taxpayer bailed out any Australian bank! This is still true.


----------



## qldfrog (5 June 2012)

Julia said:


> We were discussing the Australian taxpayer funds bailing out Australian banks by the Australian government.
> I made no comment about any overseas arrangements.




Noted: all depends on whether we focus on : the use of Australian taxpayer's $ or the strength of our big four during hardship
As there was a reference on shorting banks who could be stressed during GFC2, I thought it was relevant


----------



## young-gun (6 June 2012)

jank said:


> Well first of all those Nigerians are committing a crime which is called fraud. Anyway did you ever hear of the saying that a fool and his money are easily separated.
> 
> Regarding drugs. Well drugs are illegal. How are you equating a financial contract or financial process that has the basis of capitalism to illegal activities. Makes no sense.
> 
> Poor arguments all round I think.




of course I have heard, what does that make the people who have also been separated from there money in the way of over-priced homes and lavish lifestyles at the expense of debt? whos the stupid one, the one giving away money they have to the nigerians, or the one giving away money they don't even have, and have a contract to say they should give it back.

your inability to understand a basic metaphor is not my problem.


----------



## young-gun (6 June 2012)

Julia said:


> Is it so?  Who prosecutes the Nigerians for offering scams to people who are stupid enough to get sucked into thinking they are suddenly due millions of dollars from someone they have never heard of?
> How impossibly unrealistic!




I'm sure to an extent the authorities over there are trying to track them down, fact is it's illegal. If you prefer you could simply use similar scams carried out here in Aus where people actually get locked up.


----------



## Julia (6 June 2012)

young-gun said:


> I'm sure to an extent the authorities over there are trying to track them down, fact is it's illegal. If you prefer you could simply use similar scams carried out here in Aus where people actually get locked up.



OK.   I was unaware just making an offer to someone was illegal.


----------



## prawn_86 (6 June 2012)

Julia said:


> OK.   I was unaware just making an offer to someone was illegal.




I dont think it is illegal to make the offer, but if you were to do it in Aus and the Charity/King/Lotto you said didnt exist, and you didnt pay out it would probably be false advertising at the least, or fraud at worst.


----------



## lurker123 (6 June 2012)

Julia said:


> OK.   I was unaware just making an offer to someone was illegal.




If you were to buy something from a shop and the salesmen was making up things to sell you the item. You buy the item and when you go home you find it does not do what the salesmen said it would do, then under Australian Law you are entitled to a full refund. To be specific if the salesmen gives a different story and says he didn't tell you anything and you just bought the item, then ultimately it needs to be judged in court before you get your refund, assuming of course the court decides you were in the right.

You can call people who don't do enough research on a item before buying it and only rely on the advice of the salesmen stupid. However the fact is this applies to the majority of the population, in fact I would bet that you yourself fit into this category and have bought things from stores without researching thoroughly. 

Lets look at a hypothetical example. You just applied for a Optus cable broadband plan, instead of getting the modem from optus you decide to get a modem elsewhere to save a bit of money. You walk into a store and being stupid you buy a ADSL modem rather than a cable modem (note in this scenario the salesmen didn't push you to buy anything, you just walked up to the counter and asked for a modem).
You go home and find out that you actually needed a cable modem and because you were stupid you bought the wrong thing. You go back to the store and demand they take it back. By rights the store doesn't have to do anything, it was your own stupidity that led you to buy the wrong thing. Obviously the majority of stores will just give you a refund. However I bet if the store didn't, you would have bad mouthed the store and said things like how Dicksmith/e.t.c has crappy customer service and sold you the wrong thing when in fact it was your own fault.   
Taking the hypothetical example even further, you decide to call fair trading and complain about the store. While on the phone with fair trading you pretend that it wasn't your fault at all and that you asked for a modem to connect to optus broadband. Fair trading then calls the store and tries to negotiate with the store. The store decides to give you a refund even though they are in the right because they don't want to waste time going to court over the matter. They also know that in court its just your word against theirs and there is a high chance that the court will side with you even though you were in the wrong.

Funny how if this hypothetical scenario happened to you, I bet you would be complaining about the store. Yet when banks knowingly give mortgages to people who can't service them, you place more blame on the people who take out the mortgage.


----------



## jank (6 June 2012)

young-gun said:


> of course I have heard, what does that make the people who have also been separated from there money in the way of over-priced homes and lavish lifestyles at the expense of debt? whos the stupid one, the one giving away money they have to the nigerians, or the one giving away money they don't even have, and have a contract to say they should give it back.
> 
> your inability to understand a basic metaphor is not my problem.




Are you seriously still equating someone getting scammed by a nigerian "prince" to someone who has bought property in a bubble? 
I have no idea what your arguement is anymore, seems you are arguing for the sake of it.


----------



## Starcraftmazter (6 June 2012)

jank said:


> Which bank in Australia got bailed out?




All of them; it was called the "First Home Owners Boost" bailout package. The money went directly to the housing - which means it ended up in the banks' coffers through interest, along with a lot more debt taken on by the sheeple as a result.



Glen48 said:


> Nab and CBA under TARP wait a few more months and see how it will pan out once ex-home owners walk.




IIRC they were bailed out by the (US) Fed - not through TARP. TARP was for US banks only (or US branches of foreign banks).



CanOz said:


> There are no safe havens anymore...no place to hide.




Gold? 



Julia said:


> No Australian bank was bailed out by anyone.
> The banks paid a significant amount to the government for the government guarantee.
> Why do you make it sound as though the Australian taxpayer actually gave the banks something for nothing?
> So misleading and inaccurate.




The only misleading and inaccurate thing here is the above. Banks got FHOB money - provided by the taxpayer.


----------



## Glen48 (6 June 2012)

The south African scammers only get you for  few K at the most, the FHOB gets you for 100's of K and could even cost you your marriage or life as well as every thing you own or likely to own.

The scammers would be be in worshiping from afar Howard and Rudd for implemented it  and spewing they can't run the same scam. 
The banks pushed it as well  introducing their own schemes.


----------



## Glen48 (6 June 2012)

Who will be the first to start printing money  Swan or  The Libs, as the Oz economy tanks and   China/India  fails to deliver what options do the feds have they will tell us they are cutting back  just like UK is claiming but not doing,  baby boomers are at the door with their hands out now and will be for awhile.


----------



## Starcraftmazter (6 June 2012)

The RBA doesn't print money.


----------



## Glen48 (6 June 2012)

Yet!!


----------



## Starcraftmazter (6 June 2012)

Well I'm not intimate with the inner workings of the RBA, but given they did not print during the panic times of the GFC, what makes you think they will/can print anytime in the future?

The Australian banking system does not allow banks to borrow money from the RBA afaik, there would need to be a lot of changes to allow something like that to happen. As for government debt, I can't see RBA monetising federal debt nor can I see the federal government going into any significant amount of debt (the economic repercussions would be too severe).


----------



## Glen48 (6 June 2012)

This time its different the feds will do any thing to stay afloat as you can see over seas, Spain has introduced a law saying how much of your money you can take out.
Once they want your super you know its timeto take steps

.up_Times are tough in Spain. Half her youth are unemployed - if they haven't emigrated. Her economy, banks and real estate industry are in tatters.

They built too many homes in Spain. Homes that nobody would ever want. Speculators snapped them up, betting that prices would go even higher. Then the party ended in 2007. By 2008, activity in the real estate market stopped completely.

Estimates put the total of Spain's excess supply and distressed inventory as high as two million units. Much of this inventory (50% is a reasonable guess) is along the tourist-friendly costas.

No genuine efforts have been made to sell this inventory. Until now.

Recently, a banking contact called me with an opportunity that grabbed my attention: Newly completed condos in a historic area minutes from Granada's old town. A bank has foreclosed on the developer. Prices start from under $100,000. Up to 95% financing is available. Five minutes later, I booked my flight.

Sitting there in bright warm sunshine looking at the snow-covered Sierra Nevada Mountains, things didn't feel so bad. Bright blooming flowers lined the streets. Cured meats hung from the ceilings of little tavernas.

Home to three UNESCO world heritage sites (the Alhambra, Generalife and Albayzin), Granada is steeped in history and attracts visitors from across the world.

Its international airport has flights from most major European cities, and it's within a two-hour flight range of Northern Europe's major population centers. I flew into Malaga, a town that's less than 90 minutes away on the coast. 

Culture, beaches, world-class golf and other outdoor activities are easily accessible. This area appeals to visitors on a weekend break, golfers, history buffs and even as a wedding destination.

Domestic visitors and North Americans come in large numbers. And it's a beautiful place to retire.

__




_​​​_
Granada escaped the major over-development seen on Spain's costas. Development has been tasteful, and there isn't the major oversupply problem that we see elsewhere. This part of Spain has intrinsic value. It will always hold appeal.

This also means that distressed completed condos in the right part of town are almost non-existent. That's why I booked my flight within minutes of hearing about this opportunity.

The area where these condos are located is peaceful, quiet and classy. It's surrounded by high-end villas with pools. The area is known as "Little Vatican" because of the churches and convents dotted around the neighborhood. Granada's historic center is seven minutes away.

Construction of the condos is complete (to a very high standard). When scouting for distressed opportunities, I'm only interested in construction that's complete. I'm looking for somewhere that doesn't have a supply overhang. This is a stunningly beautiful place that ticks all these boxes.

With prices for an 800-square-foot condo starting at less than $100,000, this is a killer deal. The bank which foreclosed on the developer is offering 95% financing. Put simply: they are trying to turn a non-performing loan to the developer...into multiple, smaller, performing loans to individual buyers.

__These condos are just one example of the Spanish real estate bargains that are starting to pop up_


----------



## young-gun (6 June 2012)

Julia said:


> OK.   I was unaware just making an offer to someone was illegal.




Sorry I think you have misinterpreted what I was saying. I am also unsure as to whether the offer itself is illegal. I can only assume once they have received so much as a cent it becomes fraud. Again I don't know for certain sorry.


----------



## kid hustlr (6 June 2012)

Starcraftmazter said:


> *The RBA doesn't print money.*






Starcraftmazter said:


> Well I'm not intimate with the inner workings of the RBA, but given they did not print during the panic times of the GFC, what makes you think they will/can print anytime in the future?
> 
> The Australian banking system does not allow banks to borrow money from the RBA afaik, there would need to be a lot of changes to allow something like that to happen. As for government debt, I can't see RBA monetising federal debt nor can I see the federal government going into any significant amount of debt (the economic repercussions would be too severe).




SCM are you sure about this? Where does the RBA get its funds from?


----------



## Glen48 (6 June 2012)

Frank posted this in Storm Thread:

Hope for mortgage 'victims' with homeowners winning battle against banks
by: Anthony Klan
From:The Australian
June 04, 201212:00AM


THOUSANDS of struggling homeowners could walk away from their mortgages as a series of court cases helps to expose widespread improper lending practices involving some of the nation's biggest financial institutions.
Finance industry giants are spending millions of dollars on legal fees fighting homeowners who have successfully exited their mortgages because they were stung by sub-prime-style lending practices during the last property boom. An investigation by The Australian has revealed several mortgage providers and mortgage brokers engaged in improper lending practices in the years before the global financial crisis hit in 2008, including inflating borrowers' income and ability to repay debts to secure so-called "low-doc" loans.
Courts in several states have sided with homeowners who have defaulted on their loans, extinguishing their mortgages. The rulings have encouraged other lenders to reach settlements with borrowers that are saving homeowners hundreds of thousands of dollars. And the issue could be tested in the High Court in coming months.
MAY has transformed the global economic outlook like no other month since September 2008 brought the collapse of Lehman Brothers.
Award-winning consumer advocate Denise Brailey, who runs the Banking and Finance Consumers Support Association, said she was dealing with more than 100 alleged victims of improper lending. "What this means is that if you are a struggling homeowner and the bank comes knocking you may well not have to hand over your keys," Ms Brailey said.
The declining health of loans could have ramifications for the federal government, which has put about $14 billion into securitised mortgage investments - packages of home loans known as "residential mortgage backed securities" - since the GFC.
In October 2008, Wayne Swan announced the government would invest $4bn to shore up the RMBS market, but that figure has ballooned and in April last year he increased the obligation to $20bn.
Australian Office of Financial Management chief executive Rob Nicholl said the government had invested in superior-quality loans with relatively low defaults rates and that it was "very cognisant of all the risks involved".
However, default rates among some mortgage securities, which include low-doc loans, have surged to as much as 7 per cent of loans.
According to Fitch Ratings, low-doc loans comprise about 8-10 per cent of every mortgage in the Australian securitised mortgage market.
Fitch analyst James Zanesi said that proportion of low-doc loans was similar in the wider, $1.2 trillion*( use to be Aussis GDP)* Australian mortgage market.
According to Fitch, low-doc loans were more than four times as likely to be in default than standard loans, with 5.5 per cent of all "prime" low-doc loans in default compared with 1.26 per cent of all standard loans.
The group said low-doc loans were experiencing "considerable deterioration" and there was "no relief in sight" for low-doc loan delinquencies.
The Australian has amassed evidence of widespread improper lending activity based around abuse of low-documentation lending products.
In the race to provide credit - and earn commissions - major lenders such as Macquarie, Suncorp and GE Money spruiked imprudent lending practices to mortgage brokers, highlighting loopholes in their own lending requirements.
Low-doc or "no-doc" loans were supposed to be only for self-employed business owners who could not provide standard loan information. Borrowers typically pay a higher interest rate to reflect their lack of a regular credit and income history.
But in scores of emails those lenders - and many others - told mortgage brokers that borrowers needed only to register an Australian Business Number "for one day" to secure low-doc or no-doc loans.
One email from a Macquarie Bank business development manager to brokers says: "Why not try Macquarie for the below reasons . . . No docs - Client only needs to be self-employed for 1 day or more . . . No assets and liabilities required, no income needs to be stated!!!"
Macquarie Bank and GE Money declined to comment. Suncorp spokesman Jamin Smith defended similar emails sent by Suncorp staff, saying business development managers did not have the power to authorise loans.
The Australian has also discovered cases of mortgage brokers, loan originators and others inflating borrowers' stated incomes on loan application forms without their knowledge.
Precedent-setting court cases have recently found that, where borrowers were given loans they could never afford, lenders must extinguish part or all of those mortgages. Nine judges before six courts have to date found in favour of homeowners affected by improper loan applications, and in almost all cases courts have ordered lenders to fully extinguish mortgages within 30 days.
The most clear-cut cases have occurred in NSW because of the 1980 Contracts Review Act in that state. However, courts in Victoria and Western Australia have found in favour of borrowers under existing legislation. Major mortgage securitiser First Mac - which has issued $9.5bn in Australian mortgages since 2003 - lost a NSW Supreme Court bid to repossess the family homes of three borrowers on the grounds those borrowers were victims of loan application schemes.
The judges found lenders had acted inappropriately by engaging in "asset lending" - that is, lending money based solely on the fact that the loan is secured by an asset, usually a person's home, and paying little or no regard as to whether the borrower could afford the loan.
First Mac appealed against the decision and in December the judges again sided with borrowers, ordering that mortgages against two family homes be rescinded completely, and reduced by three-quarters in a third case. First Mac was ordered to pay court costs.
In light of those judgments, lenders such as Westpac are scrambling to settle with borrowers who claim to have been wronged. In many cases, hundreds of thousands of dollars are being wiped from mortgages.
In every court case heard, lenders had failed to make simple checks, such as calling prospective borrowers to verify their stated incomes or employment status.
First Mac, based in Brisbane, has now sought to take its case to the High Court, and a hearing as to whether the case will be heard will take place later this month.
A High Court spokesman said between 8 per cent and 10 per cent of applications for such "special leave to appeal" applications were granted.
First Mac founder and managing director Kim Cannon did not respond to calls last week.
In most instances, the precedent-setting cases against the deep-pocketed financial institutions are being funded by consumer groups or lawyers working for little or no pay because the borrower victims are often close to bankruptcy. Lawyers said the vast majority of the thousands of homeowners affected by improper or unconscionable lending activities had no idea they could legally walk away from their mortgages.
"Lenders have been throwing everything they have at these cases because they know there are thousands, probably tens of thousands, of people who have been affected," said Geoff Roberson of Champion Legal, who has run the cases against First Mac. "The problem for many borrowers is they don't know they have been wronged and simply roll over when the banks come knocking."
Consumer advocates said borrowers who believed they had been affected should approach their lender for a copy of their loan application form, which they were entitled to by law, and check the income levels stated.
Ms Brailey said not being provided with a copy of the loan application form was a key indicator borrowers may have been subject to loan application irregularities.
"In every single case of the 100-plus I am dealing with, the person has not been provided with a copy of their loan application form by their mortgage broker or lender," she said.
She said borrowers were entitled to such information by law. However, banks and other lenders had "stonewalled" such requests.
"Every time the borrowers receive the forms they are blown away," Ms Brailey said. "Incomes have been grossly exaggerated, false employment job descriptions have been entered or they have been stated as being employed when they're not.
"In one case, a lowly-paid deckhand was described as a ship's captain and described as earning $150,000 a year."
Ms Brailey, who has been tracking low-doc loans and loan application issues with The Australian for several years, said she had uncovered examples of loan application irregularities in loans approved by 14 banks and other lenders.
She obtained emails illustrating imprudent lending practices by 36 banks and non-bank lenders, including all of the major banks.
"We're about to see a major train wreck," she said.


----------



## Julia (6 June 2012)

young-gun said:


> Sorry I think you have misinterpreted what I was saying. I am also unsure as to whether the offer itself is illegal. I can only assume once they have received so much as a cent it becomes fraud. Again I don't know for certain sorry.



Thank you for acknowledging grey area in this topic.  It's a pleasant contrast to the rudeness of some of the other responses.

If it were illegal to make an unsubstantiated offer, surely the courts would be clogged up with such accusations.
Just one very everyday example would be real estate agents telling prospective sellers they can absolutely get them $X for their property, knowing absolutely no such price is remotely achievable.

People make unrealistic and non-genuine 'offers' to others all the time.


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## moXJO (7 June 2012)

The banks didnt get bailed out they took out and used the money that was given at a really low rate. Pretty sure they posted a bumper profit that year.

The aussie lowdoc loans were something like .8% or .08% (will verify later) of loans


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## jank (7 June 2012)

Starcraftmazter said:


> All of them; it was called the "First Home Owners Boost" bailout package. The money went directly to the housing - which means it ended up in the banks' coffers through interest, along with a lot more debt taken on by the sheeple as a result..




That was a stimulus, not a bailout in the traditional sense. I can see why you are making that argument however, that is because you have declared your position on the matter at hand. Any government intervetion in the property market is by your reasoning a bailout of the banking system. Understandable but ultimately flawed logic.


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## im sparticus (7 June 2012)

moXJO said:


> The aussie lowdoc loans were something like .8% or .08% (will verify later) of loans




thankyou moxjo, thats the info i was looking for wonder why the doom merchants couldnt come out with it they always seem to have all the facts and figures these days.
One really has to wonder how those affected loans could be anymore than a blip on an otherwise solid balancesheet and to crash the housing maket.....please!


----------



## McLovin (7 June 2012)

Julia said:


> OK.   I was unaware just making an offer to someone was illegal.




It is illegal...



> CRIMES ACT 1900 - SECT 192G
> Intention to defraud by false or misleading statement
> 192G Intention to defraud by false or misleading statement
> 
> ...




Of course there is a huge grey area. Which would make it very difficult to prosecute. I think on the scale of things, Nigerian scams and real estate agents with optimistic price hopes are worlds apart.


----------



## Starcraftmazter (7 June 2012)

jank said:


> That was a stimulus, not a bailout in the traditional sense.




Traditional sense? The government spent taxpayer money which ended up in the banks' coffers. Whether it's traditional or not is irrelevant.


----------



## numbercruncher (7 June 2012)

Hate to break it to the Permabull crew but Low-Doc is a big part of the over inflated RE market in Oz - sure to be adding to the RE mega crash - less than 1pc someone posted ? Thats wishful thinking - predators were operating in the mortgage market for years , sucking in poor victims who truly didnt understand what the deal was.

Hopefully Lawyers will continue to obtain compensation for all these unfortunate victims of what is simply dishonest practice.




> According to researcher Datamonitor, low-doc loans in Australia more than doubled from $17.5bn to $37.9bn between 2002 and 2006 -- when they represented 16.1 per cent of total housing lending.
> 
> According to Fitch Ratings, *low-doc loans comprise about 8 per cent to 10 per cent of every mortgage* in the Australian securitised mortgage market. Fitch analyst James Zanesi says that proportion of low-doc loans is similar in the wider $1.2 trillion mortgage market.




http://www.theaustralian.com.au/news/features/the-motgage-sting/story-e6frg6z6-1226383950929


And here is an example of how these predators operate with calloused disregard .......



> IN 2002 John O'Donnell had been *unemployed* for about 18 months when an investment spruiker for a company called Streetwise approached him in his local shopping centre. He asked if O'Donnell wanted to "unlock" the equity in his $750,000 home to buy an investment property.
> 
> Although O'Donnell earned no income and his wife Jill made just $23,000 a year, the couple was provided, via Streetwise, with a *$500,000 loan* against the family home to invest in a mooted property development.
> 
> *Soon afterwards the O'Donnells faced financial ruin.* Streetwise had folded, the property the O'Donnells thought they were buying never materialised, and when they were unable to meet loan repayments, the lender who had ultimately provided the loan sought to repossess their home.




Criminal Behaviour should not go unpunished ......


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## lusk (7 June 2012)

Starcraftmazter said:


> All of them; it was called the "First Home Owners Boost" bailout package. The money went directly to the housing - which means it ended up in the banks' coffers through interest, along with a lot more debt taken on by the sheeple as a result.




What about Ruddy's $900 dollars for everyone, you either spend it or put it in the bank.


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## im sparticus (7 June 2012)

numbercruncher said:


> Hate to break it to the Permabull crew but Low-Doc is a big part of the over inflated RE market in Oz - sure to be adding to the RE mega crash - less than 1pc someone posted ? Thats wishful thinking - predators were operating in the mortgage market for years , sucking in poor victims who truly didnt understand what the deal was.
> 
> Hopefully Lawyers will continue to obtain compensation for all these unfortunate victims of what is simply dishonest practice.
> 
> ...




How many orders of magnitude greater than as crash is a "mega crash"??


----------



## Starcraftmazter (7 June 2012)

lusk said:


> What about Ruddy's $900 dollars for everyone, you either spend it or put it in the bank.




No doubt.

I just had another thought too. We have (allegedly) very strong GDP growth, very good employment, and record-low interest rates apart from the panic GFC days.

Now, if even under all of these circumstances property prices continue to fall (10% real in Melbourne 12 months to date) - then I would hate to think that will happen once things get worse...and then much worse still.


----------



## numbercruncher (7 June 2012)

round about the equivalent of the compensation our lending Victims are getting 



> The O'Donnells have had the $500,000 loan against their home cut by 75 per cent following unsuccessful Supreme Court action taken by their lender, Brisbane-based First Mac.





Good work O'Donnells, you lil ripper - stick it to them Ciminal Banker cartels !


----------



## moXJO (7 June 2012)

numbercruncher said:


> Hate to break it to the Permabull crew but Low-Doc is a big part of the over inflated RE market in Oz -
> 
> 
> 
> .....





5.5% of lo docs in default. And lo docs are 8-10% of all mortgages. So that's .55% of all mortgages. Plus full docs- 1.26% default, 90% of all mortgages. 1.134%. Total 1.6834% of all mortgages together. 
Me so scared


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## numbercruncher (7 June 2012)

> ALMOST one in 10 homes in WA are currently worth less than was paid for them, with two southern regions in the nation’s top five for negative equity, according to RP Data.
> 
> The market analyst’s quarterly Baseline Equity Report to the end of December, released today, *revealed that 6.4 per cent of Australian homes are currently valued at less than the price they were bought for*.*




http://www.perthnow.com.au/business/negative-equity-starting-to-bite-in-wa/story-e6frg2ru-1226305392616

And that doesnt include the enormous amounts of boofheads who unlocked their " equity mate " to live far beyond their capabilities .....

Not to mention all the retirees that didnt plan for retirement using the home as a ATM week n week out now and going forward ....

The fat lady has Begun to sing my wee permabull friends ....


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## moXJO (7 June 2012)

numbercruncher said:


> http://www.perthnow.com.au/business/negative-equity-starting-to-bite-in-wa/story-e6frg2ru-1226305392616
> 
> 
> 
> The fat lady has Begun to sing my wee permabull friends ....




Gina Rinehart singing, must be all that money she is rolling in. The future is bright my dropbear friend


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## numbercruncher (7 June 2012)

moXJO said:


> Gina Rinehart singing, must be all that money she is rolling in. The future is bright my dropbear friend




Indeed it is dispite our currently slightly different take on things  .....


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## explod (7 June 2012)

moXJO said:


> Gina Rinehart singing, must be all that money she is rolling in. The future is bright my dropbear friend




Not to sure how long she will last.

With the recent high price of commodities worldwide we have massive new coal and ion ore fields opening up in South Africa, Indonesia and South America.

China now hitting the wall due to overproduction against falling consumption.

Not a god mix.

Would not want to be a property investor for any money at the moment.


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## numbercruncher (7 June 2012)

explod said:


> Not to sure how long she will last.
> 
> With the recent high price of commodities worldwide we have massive new coal and ion ore fields opening up in South Africa, Indonesia and South America.
> 
> ...





Explod being the wise and experienced man he is , is offering you all some very sound advice


----------



## numbercruncher (7 June 2012)

And here is some advice for and readers who may have been suckered in by the money Dealers ....





> STRUGGLING homeowners stung by improper lending practices during the property boom are being let down by complaints resolution processes funded by lenders themselves, consumer advocates have claimed.
> 
> Banking and Finance Consumers Association president Denise Brailey said aggrieved borrowers had in many cases had hundreds of thousands wiped from their mortgages by the nation's two main lending arbitrators. However, the courts had regularly delivered yet more favourable outcomes for those victims who could afford to use them.
> 
> ...






> *The Australian has revealed thousands of struggling homeowners could walk away from some or all of their mortgages, as a series of court cases have found in favour of borrowers who have been hit by unscrupulous lending practices.*




http://www.theaustralian.com.au/news/nation/subprime-borrowers-let-down-by-system/story-e6frg6nf-1226383963085


----------



## young-gun (7 June 2012)

numbercruncher said:


> And here is some advice for and readers who may have been suckered in by the money Dealers ....
> 
> 
> 
> ...




Haha, it was only a few weeks ago a real life permabull was arguing her pint against a crash. Her main being that Australians are more likely to hang in there and pay their loans even if they are underwater. She thought this would soften the correction and wouldnt cause similar crashes to EVERYWHERE ELSEAnd here you are presenting numerous articles that Australians are doing all they can to get out. Another bull bites the dust. We are no different bulls.


----------



## Mr Z (7 June 2012)

moXJO said:


> 5.5% of lo docs in default. And lo docs are 8-10% of all mortgages. So that's .55% of all mortgages. Plus full docs- 1.26% default, 90% of all mortgages. 1.134%. Total 1.6834% of all mortgages together.
> Me so scared




and so you should be... 




Follow the blue line... as we approach 0 it becomes impossible to maintain price growth.





In the end it is THAT simple.


----------



## numbercruncher (7 June 2012)

Too right ....

I have been very bearish on my local market for a long time - all these pesky interstaters that pushed prices well beyond any fundamental then some ....



> Almost 12 per cent of all Queensland homes are in negative equity, 9.2 per cent of homes in Brisbane are valued below their purchase price, and the state’s northern and coastal regions also topped the list.*
> 
> “Far North Queensland, and the Gold and Sunshine Coasts have the highest instances of negative equity at 22.6%, *19.4%* and 15.3% respectively,” the report said.*




Thats got to hurt property specualtors ? Especially considering how many people were warning you ?

Just got to hope your money dealer practiced bad lending standards so you may sue The bejeezers out of them 

I just hate to think that these dodgy realestate agents armed with a two training course rendering them experts are getting away scott free ....


----------



## im sparticus (7 June 2012)

numbercruncher said:


> http://www.perthnow.com.au/business/negative-equity-starting-to-bite-in-wa/story-e6frg2ru-1226305392616
> 
> And that doesnt include the enormous amounts of boofheads who unlocked their " equity mate " to live far beyond their capabilities .....
> 
> ...





Not to mension this is an even smaller percentage of the overall property market... just what percentage of houses have a morgage attached and what percentage of this is above 80%lvr , you guys are really grabbing at straws but with such a huge emotional investment attachment to your position (actually thats all you have invested in your positione) who can blame you!

You bears really need to lower your emotional lvr, get a decent nights sleep, and stop it from it from clouding your judgement.


----------



## numbercruncher (7 June 2012)

im sparticus said:


> Not to mension this is an even smaller percentage of the overall property market... just what percentage of houses have a morgage attached and what percentage of this is above 80%lvr , you guys are really grabbing at straws but with such a huge emotional investment attachment to your position (actually thats all you have invested in your positione) who can blame you!
> 
> You bears really need to lower your emotional lvr, get a decent nights sleep, and stop it from it from clouding your judgement.





Got any hard evidence on the direction of Oz realestate yet or just this dismissive realestate agent type suff ?


----------



## im sparticus (7 June 2012)

numbercruncher said:


> Got any hard evidence on the direction of Oz realestate yet or just this dismissive realestate agent type suff ?




Youve already posted up all the eveidence contrary to your "mega crash". Thanks as everyone can see most asset classes are suffering varying degrees of price deflation with property so far fairing far better than most especially when lookinh at total returns.


----------



## numbercruncher (7 June 2012)

im sparticus said:


> Youve already posted up all the eveidence contrary to your "mega crash". Thanks as everyone can see most asset classes are suffering varying degrees of price deflation with property so far fairing far better than most especially when lookinh at total returns.





Haha delusional - when your selling houses to people do they believe those kinds of unqualified comments ?


----------



## numbercruncher (7 June 2012)

Mr Z said:


> and so you should be...
> 
> View attachment 47344
> 
> ...





I like that blue line - very funky !


----------



## Starcraftmazter (7 June 2012)

im sparticus said:


> Not to mension this is an even smaller percentage of the overall property market... just what percentage of houses have a morgage attached and what percentage of this is above 80%lvr , you guys are really grabbing at straws but with such a huge emotional investment attachment to your position (actually thats all you have invested in your positione) who can blame you!




Huh? I think you have things backwards - emotional investors are the ones who leveraged to buy houses, not people who analyse the property market.

As for the quantity, it only needs to be as big as a significant proportion to the stock on market. Most houses and units do not get sold in a given year and have no impact on market pricing - only the ones that are sold (*especially force sold*) matter.

These are basic characteristics of the housing market...



im sparticus said:


> You bears really need to lower your emotional lvr, get a decent nights sleep, and stop it from it from clouding your judgement.




Such hypocrisy.


----------



## Ves (7 June 2012)

Do you post on Somersoft or Property Investing.com forums at all SCM?


----------



## moXJO (7 June 2012)

Mr Z said:


> and so you should be...
> 
> View attachment 47344
> 
> ...




Nothing a few more million migrants and a lack of building won't fix.
*yawn* 
I'll tell you all when I start sweating.


----------



## numbercruncher (7 June 2012)

moXJO said:


> Nothing a few more million migrants and a lack of building won't fix.
> *yawn*
> I'll tell you all when I start sweating.




Haha what lack of building ? That was one on the biggest scams the industry ever pulled - 




> This week's RP Data national house price index is down 1.7 per cent, with Melbourne especially on the cusp of a crisis with an *oversupply of houses* and a slow economy.




http://www.abc.net.au/news/2012-05-17/house-prices-continue-to-fall/4018416?section=business

They built it and the migrants didnt come , and if they did come there was no jobs , unless of course they had a 457 and the desire to be paid alot less :bad:


----------



## Julia (7 June 2012)

McLovin said:


> It is illegal...
> 
> Of course there is a huge grey area. Which would make it very difficult to prosecute. I think on the scale of things, Nigerian scams and real estate agents with optimistic price hopes are worlds apart.



Of course they are.  However, it also goes to credibility.

If you want to sell your house and a RE agent comes in and oohs and ahs over your so gorgeous property, says stuff like "I wish I could get more of this quality and exceptional taste to sell" etc., then regales you with what may or may not be true stories about the prices he obtained on other inferior properties in your neighbourhood, and then assures you a price at least 20% over what you'd expected is obtainable, chances are many people will believe him.  Especially if they've failed to do their own research on sale prices, not asking prices.

If, on the other hand, you suddenly find in your email inbox an offer from someone in Nigeria or any other far off country whom you have never heard of, telling you that you have inherited ten million dollars from someone else you have never heard of, and all you have to do to have this windfall paid into your bank account is immediately send $5000 (or whatever amount), along with your bank account details and your date of birth, driver's licence, etc to validate your identity,  to the following address, to cover 'transfer fees' , is that really credible?  Surely not.  Yet apparently people still do it, despite all the publicity and all the warnings.

Yet, there seems to be a strong feeling in this discussion that the person responding to the Nigerian scam bears no responsibility for being fleeced.  Beats me.

Here's an example I had myself recently.  I'd bought the block of land and given go ahead for final plans on house for a new house.  The decision was made on a comparison of cost estimate and standard inclusions on similar plan given to seven builders.  The builder chosen included several items in his Standard Inclusions that the others didn't.   The specifications and contract were supposed to be made available at least a week before the 30 April, that being when the $10,000 Qld Building Boost ended.  They didn't arrive until late on the day before and included more than fifty pages.  Accompanying email said ' All as discussed.  Please initial each page of the specifications and sign final page'.  There was a temptation to assume all was OK and just sign.

I didn't, and ploughed through it all, to find that many of the items included in the original Standard Inclusions had been left out of the final specifications, with no downward adjustment of price.

So was this an illegal act by the builder?  Could he have been considered guilty of fraud?


----------



## moXJO (7 June 2012)

numbercruncher said:


> Haha what lack of building ? That was one on the biggest scams the industry ever pulled -




Is that why I'm renting dog boxes out for top dollar because there are no other places around.


----------



## Starcraftmazter (7 June 2012)

Ves said:


> Do you post on Somersoft or Property Investing.com forums at all SCM?




No, if I did I think they would try to exorcise me or something. What can one learn from a bunch of idiot speculators anyway.



moXJO said:


> Nothing a few more million migrants and a lack of building won't fix.




Australia has the most expensive property in the world after HK, immigrants - especially for the wages they pull have no chance. Who would want to lend them money anyway?

Immigration has significantly slowed since the GFC as well, and I bet it will slow further as our economy goes further into recession and jobs dry up completely.


----------



## numbercruncher (7 June 2012)

moXJO said:


> Is that why I'm renting dog boxes out for top dollar because there are no other places around.




You are the Uber slumlord though - Mr Big of the Dog Box industry -

The other specuculators arnt doing as well


----------



## moXJO (7 June 2012)

numbercruncher said:


> You are the Uber slumlord though - Mr Big of the Dog Box industry -




I try


----------



## numbercruncher (7 June 2012)

moXJO said:


> I try




What suburb are your dog boxes in ?


----------



## im sparticus (7 June 2012)

numbercruncher said:


> I like that blue line - very funky !




Looking alot better than the green or orange.


----------



## im sparticus (7 June 2012)

Starcraftmazter said:


> Huh? I think you have things backwards - emotional investors are the ones who leveraged to buy houses, not people who analyse the property market.
> 
> As for the quantity, it only needs to be as big as a significant proportion to the stock on market. Most houses and units do not get sold in a given year and have no impact on market pricing - only the ones that are sold (*especially force sold*) matter.
> 
> ...




Why are you so emotionally invested in property anyway?


----------



## Julia (7 June 2012)

im sparticus said:


> Why are you so emotionally invested in property anyway?



Maybe because he's never owned any?  Just a thought.


----------



## moXJO (7 June 2012)

numbercruncher said:


> What suburb are your dog boxes in ?




sydneyish


----------



## numbercruncher (7 June 2012)

Give him a break - hes clearly interested in economics period , just because he doesnt have the same vested interest you guys have because you are owners , some of you leveraged owners you feel the need to play the player instead of the ball.

Hes in this thread commenting on what is clearly nearly if not the most expensive property market on the planet.

And everytime you guys get cornered or short of an argument you start on the personal comments.

Gets a bit old really.


----------



## jank (7 June 2012)

Starcraftmazter said:


> Traditional sense? The government spent taxpayer money which ended up in the banks' coffers. Whether it's traditional or not is irrelevant.




Well if that is your definition of a bailout then the government has bailed out every taxpayer in Australia every year since the foundation of the state.
I suppose it also bailouts students who apply for a HECS, or pensioners or collect their old age pension, bails out the mining industry and so on...
Man, really work on your logic. I don't agree with government intervention in the property market but you cannot call it a bailout. 
Down the rabbit hole we go! Dont go all crazy SCM on me again, you will make a fool of yourself.


----------



## numbercruncher (7 June 2012)

moXJO said:


> sydneyish





As we established you must be the Dog Box master beating market performance ....




> The pressure came off the Sydney rental market over the March quarter, according to the latest figures from Australian Property Monitors.
> Median weekly asking rentals for houses recorded no growth in the city, with apartment rentals actually falling by 2.2 per cent.




http://m.smh.com.au/domain/real-estate-news/sydney-rental-fall-takes-the-heat-off-tenants-20120413-1wx6e.html



> Sydney, which has proven resilient to the market downturn, also posted a decline. In May, the city’s home values were down 1.2 per cent, resulting in a 3.6 per cent drop over the year
> 
> Read more: http://www.news.com.au/money/proper...ow/story-e6frfmd0-1226379751250#ixzz1x6xqZEtC


----------



## McLovin (7 June 2012)

Julia said:


> Here's an example I had myself recently.  I'd bought the block of land and given go ahead for final plans on house for a new house.  The decision was made on a comparison of cost estimate and standard inclusions on similar plan given to seven builders.  The builder chosen included several items in his Standard Inclusions that the others didn't.   The specifications and contract were supposed to be made available at least a week before the 30 April, that being when the $10,000 Qld Building Boost ended.  They didn't arrive until late on the day before and included more than fifty pages.  Accompanying email said ' All as discussed.  Please initial each page of the specifications and sign final page'.  There was a temptation to assume all was OK and just sign.
> 
> I didn't, and ploughed through it all, to find that many of the items included in the original Standard Inclusions had been left out of the final specifications, with no downward adjustment of price.
> 
> So was this an illegal act by the builder?  Could he have been considered guilty of fraud?




The scenario you described is an invitation to treat. The offer wasn't made until you were presented with the contract. There are of course plenty of consumer laws around misleading invitation to treat (bait and switch advertising and they may or may not apply to builders, I suspect they don't given the complexity of and individuality of the average building contract) but at the point of comparing prices no contract exists and he can withdraw his invitation or alter it at any time his formal offer was the contract he sent you. It's probably not good for business but it isn't illegal.


----------



## Starcraftmazter (7 June 2012)

im sparticus said:


> Why are you so emotionally invested in property anyway?




I'm not invested in property. Never have been, never will be.



jank said:


> Well if that is your definition of a bailout then the government has bailed out every taxpayer in Australia every year since the foundation of the state.




Yeh, and I'm against it.



jank said:


> I suppose it also bailouts students who apply for a HECS




I fail to see how, HECS debt has to be paid back with interest.



jank said:


> or pensioners or collect their old age pension, bails out the mining industry and so on...




Absolutely - should cut those leeches off.



jank said:


> Down the rabbit hole we go! Dont go all crazy SCM on me again, you will make a fool of yourself.




There's nothing crazy here - the FHOB was designed as a bailout of the Australian banking sector. I challenge you to explain it otherwise.


----------



## numbercruncher (7 June 2012)

Got to love this ....



> HOUSE prices have slid to a six-year low in capital cities despite RBA efforts to lift the housing market out of the doldrums with rate cuts.
> 
> Read more: http://www.news.com.au/money/proper...ow/story-e6frfmd0-1226379751250#ixzz1x71aacl1




Since when was the RBA mandate to drop interest rates in an effort to lift the Housing market ? 

Should be jacking interest rates through the roof to protect our savings from the soaring prices!

But warming to see that evening plummeting IRs havnt even touched falling prices -


----------



## Mr Z (7 June 2012)

im sparticus said:


> Not to mension this is an even smaller percentage of the overall property market... just what percentage of houses have a morgage attached and what percentage of this is above 80%lvr , you guys are really grabbing at straws but with such a huge emotional investment attachment to your position (actually thats all you have invested in your positione) who can blame you!
> 
> You bears really need to lower your emotional lvr, get a decent nights sleep, and stop it from it from clouding your judgement.




Thanks for the giggle!

LOOK AT THE CREDIT GROWTH SHRINKING!

Do the math... you don't have to be Eisenstein, or even have to be able to spell. :asdf:


----------



## Glen48 (7 June 2012)

Which one are you talking about:
Searches related to _Eisenstein_​*elizabeth* eisenstein
eisenstein *movie*
*charles* eisenstein
eisenstein *strike*

eisenstein *sacred economics*
eisenstein *october*
eisenstein *film*
eisenstein *caltech*


----------



## jank (7 June 2012)

Starcraftmazter said:


> I'm not invested in property. Never have been, never will be.
> 
> 
> 
> ...




I challenge you to have some logic and get a dictionary.


----------



## numbercruncher (7 June 2012)

They say Credit is the Ultimate Fundamental....



> Focusing on the housing market, annual credit growth hit a fresh all time (35-year) low of 5.30%




http://www.macrobusiness.com.au/2012/04/private-credit-growth-flat-in-march/

And apparently 35 years ago is when these records began ....


----------



## im sparticus (7 June 2012)

Mr Z said:


> Thanks for the giggle!
> 
> LOOK AT THE CREDIT GROWTH SHRINKING!
> 
> Do the math... you don't have to be Eisenstein, or even have to be able to spell. :asdf:




you know that graph is showing credit growth for realestate at 5% and a nice steady decline from its peaks  yet to go negative whilst all else is below zero. like i said realestate seems to be fairing far better than most. thanks for the graphs they are really helping cement my beliefs


----------



## Starcraftmazter (7 June 2012)

Let's say that there was a company on the ASX, who's sp was $500,000. About 70% of the country has at least one share, with many of those having more than one. 

Everyone who has bought shares in this company in the last couple of decades had to borrow a lot of money to buy it, but especially in recent years people have borrowed anywhere from 95% to over 100% of their initial deposit to buy it and use their entire income to service the debt. They bought it with the expectation that the share price will rise, and the government has encouraged such speculation with various incentives.

Now share price is dropping and people are getting emotional, lots of people are losing money on their "investment", whereby they pay more in interest than they get in dividends (rent), and everyone is experiencing capital losses.

Would you buy one of these $500,000 shares - taking on massive amounts of debt to do so? Do you think it's better than every single other stock on the ASX?


----------



## im sparticus (8 June 2012)

Starcraftmazter said:


> Let's say that there was a company on the ASX, who's sp was $500,000. About 70% of the country has at least one share, with many of those having more than one.
> 
> Everyone who has bought shares in this company in the last couple of decades had to borrow a lot of money to buy it, but especially in recent years people have borrowed anywhere from 95% to over 100% of their initial deposit to buy it and use their entire income to service the debt. They bought it with the expectation that the share price will rise, and the government has encouraged such speculation with various incentives.
> 
> ...






You forgot (and maybe its that your not aware or just take for granted) that if you dont buy the share you will have to pay the yeild of said share to those that do (well maybe not you scm but your parents that are supporting  you)


----------



## Starcraftmazter (8 June 2012)

im sparticus said:


> You forgot that if you dont buy the share you will have to pay the yeild of said share to those that do (well maybe not you scm but your parents that support you)




Interest + Capital Loss > Dividend

Not to mention you have a lot more money for *actual* investing, or trading.


----------



## im sparticus (8 June 2012)

Starcraftmazter said:


> Interest + Capital Loss > Dividend
> 
> Not to mention you have a lot more money for *actual* investing, or trading.




Hasnt been my experiance.


----------



## Mr Z (8 June 2012)

Glen48 said:


> Which one are you talking about:
> Searches related to _Eisenstein_​*elizabeth* eisenstein
> eisenstein *movie*
> *charles* eisenstein
> ...




Einstein in aggregate, or take an average if you please!


----------



## Mr Z (8 June 2012)

im sparticus said:


> you know that graph is showing credit growth for realestate at 5% and a nice steady decline from its peaks  yet to go negative whilst all else is below zero. like i said realestate seems to be fairing far better than most. thanks for the graphs they are really helping cement my beliefs




errrr, um. You really need to get a grip on how markets work. :asdf:


----------



## im sparticus (8 June 2012)

Mr Z said:


> errrr, um. You really need to get a grip on how markets work. :asdf:




Im not the one implying credit growth as the cause of price inflation. let me guess this is another phenomenon that only affects property? All else is imune right?

For those that dont understand here is another simple fact credit growth does not change the value of the underlying currency.


----------



## Starcraftmazter (8 June 2012)

im sparticus said:


> Im not the one implying credit growth as the cause of price inflation. let me guess this is another phenomenon that only affects property? All else is imune right?






All else? What else is there? Housing is by far the biggest market - much bigger than the stock market. Most people borrow to the hip to buy houses - what else do they do that with?



im sparticus said:


> For those that dont understand here is another simple fact credit growth does not change the value of the underlying currency.




Any other nonsensical and irrelevant comments?


----------



## Mr Z (8 June 2012)

im sparticus said:


> Im not the one implying credit growth as the cause of price inflation. let me guess this is another phenomenon that only affects property? All else is imune right?
> 
> *For those that dont understand here is another simple fact credit growth does not change the value of the underlying currency.*




What an odd reply! Why would it only effect housing? You have seen what the limitation of credit has done to other markets over the last few years, so the real question is why on earth would it not effect housing? The answer is of course that it does and it is! As credit growth approaches zero it becomes very hard to achieve capital gains. This is not the sole determinant but is is certainly a large key factor. Our housing is all about credit, period, end of story.

To think otherwise is delusional!


----------



## Mr Z (8 June 2012)

im sparticus said:


> You forgot (and maybe its that your not aware or just take for granted) that if you dont buy the share you will have to pay the yeild of said share to those that do (well maybe not you scm but your parents that are supporting  you)




However at the moment the yield is less than the holding cost so you still win.


----------



## im sparticus (8 June 2012)

Mr Z said:


> What an odd reply! Why would it only effect housing? You have seen what the limitation of credit has done to other markets over the last few years, so the real question is why on earth would it not effect housing? The answer is of course that it does and it is! As credit growth approaches zero it becomes very hard to achieve capital gains. This is not the sole determinant but is is certainly a large key factor. Our housing is all about credit, period, end of story.
> 
> To think otherwise is delusional!




Ill write it again everything is deflating the least of all housing your graph illistrates this well. To which your response was that i need to understand how markets work. 

Sounds like your reply was far odder than mine.
Care to ellaborate on what you were implying?


----------



## im sparticus (8 June 2012)

Mr Z said:


> However at the moment the yield is less than the holding cost so you still win.





Whos holding costs? Judging the return on a property by the current yeild is as naive as ranking companies by their pe ratios.


----------



## Starcraftmazter (8 June 2012)

im sparticus said:


> Ill write it again everything is deflating




Not according to CPI. Healthcare, education, transportation and food are all rising in price. So basically all the fundamental things you need to live.

But I guess you are too busy speculating on housing to pay attention to the actual economy.


----------



## herzy (8 June 2012)

McLovin said:


> The scenario you described is an invitation to treat. The offer wasn't made until you were presented with the contract. There are of course plenty of consumer laws around misleading invitation to treat (bait and switch advertising and they may or may not apply to builders, I suspect they don't given the complexity of and individuality of the average building contract) but at the point of comparing prices no contract exists and he can withdraw his invitation or alter it at any time his formal offer was the contract he sent you. It's probably not good for business but it isn't illegal.




This is an invitation to treat, and so the previous discussions are not strictly binding. As McLovin points out, only the final agreement will be binding/enforceable. However, I would add that, reading the documents/communications as a whole (including the email stating 'everything as discussed'), while not actually including many of the specifics which were both discussed and crucial/provisional to you signing the contract would be misleading and deceptive conduct (s18 of the Australian Consumer Law, previously s52 of the TPA). However, given that you didn't sign and presumably suffered no loss, there's not really anything to be done now. Just FYI...

While withdrawing and changing an offer is in no way illegal, representing that it is the same offer as previously discussed would be misleading. The courts have taken a fairly expansive interpretation of what can constitute misleading/deceptive conduct.


----------



## im sparticus (8 June 2012)

Starcraftmazter said:


> Not according to CPI. Healthcare, education, transportation and food are all rising in price. So basically all the fundamental things you need to live.
> 
> But I guess you are too busy speculating on housing to pay attention to the actual economy.




Looks that way. so youve had this insight and the best you could come up with is buy bullion. might be worth taking a look at the value of companies that trade in these underlyings.


----------



## Starcraftmazter (8 June 2012)

im sparticus said:


> Looks that way. so youve had this insight and the best you could come up with is buy bullion. might be worth taking a look at the value of companies that trade in these underlyings.




No; it's not the best I've come up with - nor is it relevant to the discussion. Stop trying to sidetrack the fact that you are consistently shown to be incorrect with every stupid claim you make.


----------



## McLovin (8 June 2012)

herzy said:


> This is an invitation to treat, and so the previous discussions are not strictly binding. As McLovin points out, only the final agreement will be binding/enforceable. However, I would add that, reading the documents/communications as a whole (including the email stating 'everything as discussed'), while not actually including many of the specifics which were both discussed and crucial/provisional to you signing the contract would be misleading and deceptive conduct (s18 of the Australian Consumer Law, previously s52 of the TPA). However, given that you didn't sign and presumably suffered no loss, there's not really anything to be done now. Just FYI...
> 
> While withdrawing and changing an offer is in no way illegal, representing that it is the same offer as previously discussed would be misleading. The courts have taken a fairly expansive interpretation of what can constitute misleading/deceptive conduct.




Interesting Herzy, thanks. Does there need to be financial loss in order to be prosectued under the ACL? Obviously, Julia couldn't sue for damages but a breach of the act has occurred.

My memory of contract law doesn't extend much beyond the Carbolic Smoke Ball Company.


----------



## im sparticus (8 June 2012)

Starcraftmazter said:


> No; it's not the best I've come up with - nor is it relevant to the discussion. Stop trying to sidetrack the fact that you are consistently shown to be incorrect with every stupid claim you make.






Increasing prices does not always = increasing profit margin.

Do you understand primacy effect yet ¿


----------



## Starcraftmazter (8 June 2012)

im sparticus said:


> Increasing prices does not always = increasing profit margin.




What the hell does that have to do with ANYTHING?

You claimed there was deflation in everything, that has to you been shown to be incorrect - and you have done nothing but post irrelevant nonsense. Is this some sort of a defence mechanism of denial that you have?


----------



## Julia (8 June 2012)

herzy said:


> This is an invitation to treat, and so the previous discussions are not strictly binding. As McLovin points out, only the final agreement will be binding/enforceable. However, I would add that, reading the documents/communications as a whole (including the email stating 'everything as discussed'), while not actually including many of the specifics which were both discussed and crucial/provisional to you signing the contract would be misleading and deceptive conduct (s18 of the Australian Consumer Law, previously s52 of the TPA). However, given that you didn't sign and presumably suffered no loss, there's not really anything to be done now. Just FYI...
> 
> While withdrawing and changing an offer is in no way illegal, representing that it is the same offer as previously discussed would be misleading. The courts have taken a fairly expansive interpretation of what can constitute misleading/deceptive conduct.






McLovin said:


> Interesting Herzy, thanks. Does there need to be financial loss in order to be prosectued under the ACL? Obviously, Julia couldn't sue for damages but a breach of the act has occurred.
> 
> My memory of contract law doesn't extend much beyond the Carbolic Smoke Ball Company.



Thanks for your comments, Herzy and Mc Lovin.
I'd never have thought his behaviour was illegal, just lacking in integrity and for me very disappointing.
Deceptive even.   I was fortunately within the cooling off period of the land contract so was able to withdraw and think about the whole project further without much cost.

I only raised it as a very minor example of the sort of everyday misleading behaviour one has to be on the lookout for, and to underline the need for us as individuals to take responsibility not to be so misled.


----------



## Mr Z (8 June 2012)

im sparticus said:


> Whos holding costs? Judging the return on a property by the current yeild is as naive as ranking companies by their pe ratios.




EVERYONES!


----------



## Mr Z (8 June 2012)

im sparticus said:


> Ill write it again everything is deflating the least of all housing your graph illistrates this well. To which your response was that i need to understand how markets work.
> 
> Sounds like your reply was far odder than mine.
> Care to ellaborate on what you were implying?




That is a justification for housing as an investment? YIKES!!!!

Deflation is a monetary phenomena, falling prices are a potential secondary impact... everything is not "deflating" per say. However if you do believe that to be the case and you can return 5.75% in a term deposit you have just argued cash is a favorable holding to real estate even if you are managing an equivalent yield, which I doubt. You appear to have shot at your own feet old chap!

Yes you need to get your head around market dynamics if you believe that a falling housing credit growth rate that has been trending lower for years is not a bad thing for house prices. If you can find a reason for this to expand again then you can argue potential gains but for now we are entering the zone where the lack of credit growth is clearly hitting prices. To be bullish on property under this market condition is a little nutty, maybe if interest rates where at 80's nose bleed levels and you could see why an end to that was coming... but while credit levels at historical highs and rates are pushing their lows globally... then... well then you have to worry.

We are Irish in the end, perhaps not Spanish but more fool hardy than the Americans and look at them!


----------



## im sparticus (8 June 2012)

Starcraftmazter said:


> What the hell does that have to do with ANYTHING?
> 
> You claimed there was deflation in everything, that has to you been shown to be incorrect - and you have done nothing but post irrelevant nonsense. Is this some sort of a defence mechanism of denial that you have?




Now your taking what i have said out of context with your pathetic grab at straws try and stay just a little on topic.

Last i checked milk was a dollar a litre try telling the dairy farmers your thaughts on food


----------



## im sparticus (8 June 2012)

im sparticus said:


> You will find as time goes on that no market prices things in multiples of the average wage or inflation adjusted price of however many years ago or what ever other wacky reason or ratio you think property prices are connected to. you would never do it for anything else. to be honest you might be a able to reproduce a 1960's median for scms quote 210k but you dont have a hope in hell of producing todays standard of a median house hence the price diff land afew km from the city didnt do much for you back then either but now can probably save you $50-100 dollars a week just in fuel not to mension time the utility of the land has also improved.
> 
> When prices of all assets start falling its a good sign we are in for some good old fashion deflation and your bullion is as much at risk as my houses accept my houses are producing an income as most even the bears have pointed out re has faired quiet well considering (down only a fraction of other assets from its highs including gold and alot less volitile gold just did 4% overnight dont even think the indexes are doing that) ontop of that if you include yeild as in an accumulation index it is yet to give a total negative return or only slightly negative for melbourne and lets not forget all the gains it made before giving a tiny percentage back so far its winning.
> 
> ...




I have already discussed the merits of cash short term mr z  i am a realist after all. however to compare yield of property to cash is as naive as ranking companies by their pe ratio


----------



## numbercruncher (8 June 2012)

Sparticus - I have to know , are you , or have you been , a licensed Realestate salesperson ?


----------



## Starcraftmazter (8 June 2012)

im sparticus said:


> Now your taking what i have said out of context with your pathetic grab at straws try and stay just a little on topic.




What context can there be in something completely irrelevant?

How do profit margins have ANYTHING, ANYTHING AT ALL to do with your stupid argument of "deflation everywhere"?



im sparticus said:


> Last i checked milk was a dollar a litre try telling the dairy farmers your thoughts on food




http://en.wikipedia.org/wiki/Anecdotal_evidence


----------



## im sparticus (8 June 2012)

This thread is about property and its comarison to other investment classes this is the context to which i am posting. most if not all investment asset classes are down from there highs this is what i mean when everything is deflating. gosh its hard to respond to you without being rude. you just dont get it do you?


----------



## im sparticus (8 June 2012)

numbercruncher said:


> Sparticus - I have to know , are you , or have you been , a licensed Realestate salesperson ?





No

number do you have a personal vendetta against property investors that stems from a deep seated jealousy of their past profits?


----------



## Starcraftmazter (8 June 2012)

im sparticus said:


> most if not all investment asset classes are down from there highs this is what i mean when everything is deflating




This is entirely relative, there is always going to be highs, lows and in-betweens. Not all asset classes are falling either.

Nor does this have anything to do with deflation.


----------



## numbercruncher (8 June 2012)

im sparticus said:


> No
> 
> number do you have a personal vendetta against property investors that stems from a deep seated jealousy of their past profits?




Haha no - My Issue is with typical Australian realestate and so far im spot on as it continues slide down the cliff, Im not concerned with individuals in the slighest. I do like how you use the term " past " because thats pretty much where its at.

Just the way you post is very irrationally bullish towards Australian realestate as noted by many other contributors to this thread.

I actually had the very last of my monies just returned to me today that was invested in realestate - and I was lucky to get all of my capital returned, no profit. Inflation adjusted I lost on the deal, and at the beginning of this project they projected a 3-400pc return. Maybe I can be even more bearish now that I have no conflict of interest huh 

I would actually agree that Realestate in some places isnt a bad investment - just not currently in this country. Infact its so out of control that it risks leading to our entire economy falling off that proverbial cliff just like many other nations imo.

But happy Specufesting anyway


----------



## im sparticus (8 June 2012)

numbercruncher said:


> Haha no - My Issue is with typical Australian realestate and so far im spot on as it continues slide down the cliff, Im not concerned with individuals in the slighest. I do like how you use the term " past " because thats pretty much where its at.
> 
> Just the way you post is very irrationally bullish towards Australian realestate as noted by many other contributors to this thread.
> 
> ...




ok now i get it, your sore because you lost money while most creamed it. the only way for you to be happy is to see them have the same or slightly worse outcome than yourself, right?


----------



## numbercruncher (8 June 2012)

haha - wrong -

I cashed out most my chips earlier as I recognised like many many others that this was merely a unsustainabile bubble with easy credit being the ultimate fundamental - Why does it need to be personal with you anyway young Sparticus ? starting to wonder about the quality of your upbringing my friend ....


----------



## im sparticus (8 June 2012)

Starcraftmazter said:


> This is entirely relative, there is always going to be highs, lows and in-betweens. Not all asset classes are falling either.
> 
> Nor does this have anything to do with deflation.



You argued your 4% pop was the reason gold was not deflating. and poof like magic it gone!

Actually i think my hypothetical short might now be profitable. might dig up some of the old quotes just for laughs....you remember them dont you number?


----------



## Starcraftmazter (8 June 2012)

im sparticus said:


> You argued your 4% pop was the reason gold was not deflating. and poof like magic it gone!




No I didn't, and no it isn't. Can you stop spouting crap now?



im sparticus said:


> Actually i think my hypothetical short might now be profitable. might dig up some of the old quotes just for laughs....you remember them dont you number?




Your short would have been closed for lack of capital to cover your losses by now.


----------



## im sparticus (8 June 2012)

Starcraftmazter said:


> Your short would have been closed for lack of capital to cover your losses by now.




Speak for yourself scm


----------



## im sparticus (8 June 2012)

Starcraftmazter said:


> 1. You stupidly imply they will deflate by the same amount.
> 2. Wage deflation is not only good, but necessary in order to restore competitiveness.
> 3. House prices will deflate far far far more than wages
> 4. I said wages will deflate in the construction industry - not anywhere else, *as a result of the housing bust*.
> ...






Starcraftmazter said:


> I'm not boasting about anything actually, I'm just pointing out that you claimed gold "has tumbled" at a time when it actually rose quite a lot - showing once more, that you have no idea what you are talking about.
> 
> 
> 
> ...




Mmmmmmmmmmm


----------



## Mr Z (8 June 2012)

im sparticus said:


> I have already discussed the merits of cash short term mr z  i am a realist after all. however to compare yield of property to cash is as naive as ranking companies by their pe ratio




Not in a deflationary environment as you asserted, it is just basic investment sense.... there is no naivety about it at all. Investing in property heading into a credit contraction (you have noticed the trend since 2007 haven't you?) is naive in the extreme. Why are you fixated with PE's? Why not compare eggs with eggs and talk grossed up yields? I can tell you there are many stocks that are looking like much better deals that RE... and it even looks like prices will get a little sillier over the US summer. A smart operator will be able to kill RE fro return over the next 12 months.

Keep it up.... I like upset RE agents, when I was developing property I did very much enjoy winding them up on the odd occasion! Some of them really deserved it! Especially the young cocky ones.


----------



## Mr Z (8 June 2012)

im sparticus said:


> You argued your 4% pop was the reason gold was not deflating. and poof like magic it gone!
> 
> Actually i think my hypothetical short might now be profitable. might dig up some of the old quotes just for laughs....you remember them dont you number?




LOL... you talk short term when it suits I see!


----------



## sptrawler (8 June 2012)

As was mentioned by SCM at least 6 months ago the reserve bank was doing a good job of deflating the housing bubble. Well if the banks don't hold the line they are going to be in deep manure, as can be seen by this arcticle.

http://www.theage.com.au/business/r...ding-house-prices-stevens-20120608-200ti.html

Up untill now the banks have been toeing the line and creaming a bit off the top, obviously the Reserve think it is time to pull their heads in.
However the fact still remains the overpriced are going to be squeezed.


----------



## Starcraftmazter (8 June 2012)

im sparticus said:


> Mmmmmmmmmmm




Do you have a point there? Any at all? Please, humour us.



sptrawler said:


> http://www.theage.com.au/business/r...ding-house-prices-stevens-20120608-200ti.html




That's really good to hear - Stevens is doing a good job telling people to hurry up and pay off their debt before our banks become insolvent.


----------



## numbercruncher (8 June 2012)

Yes good article - even the RBA boss finally saying it as it is - should of fessed up years ago though ..



> Reserve Bank Governor Glenn Stevens today said he had no intention of engineering a return to the spiralling property prices and household debt levels which characterised the pre-2007 housing boom.
> Mr Stevens said the surge in household wealth in the decade or so leading up to 2007 - which rose by about six or seven per cent a year - was driven primarily by unsustainable growth in property prices.
> 
> 
> Read more: http://www.theage.com.au/business/r...ces-stevens-20120608-200ti.html#ixzz1xBybkcVd


----------



## Starcraftmazter (8 June 2012)

They must be frothing at the mouth and having seizures at APF over that comment


----------



## Mr Z (8 June 2012)

Starcraftmazter said:


> They must be frothing at the mouth and having seizures at APF over that comment




Prolly buying the dip!

Famous last words and all that


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## Glen48 (8 June 2012)

We don't need a RBA to decide if it wasn't for the feds getting in on the act of dropping rates  worldwide  we most likely would not be in this mess.
 All over 9/11 Bin Liner is dead? yet we are still paying now that's a good investment spend a few hundred on planes?.and destroy the worlds econony


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## Starcraftmazter (8 June 2012)

Moody's has recently been snooping around our mortgage insurers, and now this:



> Sydney, June 07, 2012 ”” Moody’s Investors Service has announced the publication of a new quarterly report that will track the performance of the Australian RMBS market. The new report was published today with performance data up to first quarter 2012, and covers the prime and non-conforming sectors.
> 
> …*The current report shows that delinquencies rose in the first quarter of 2012 despite the easing of monetary policy which occurred in late 2011.*
> 
> ...




http://www.macrobusiness.com.au/2012/06/march-quarter-loan-arrears-rise/

Good to see at least one rating agency is waking up to the scam that is our housing bubble.


----------



## im sparticus (8 June 2012)

Mr Z said:


> Not in a deflationary environment as you asserted, it is just basic investment sense.... there is no naivety about it at all. Investing in property heading into a credit contraction (you have noticed the trend since 2007 haven't you?) is naive in the extreme. Why are you fixated with PE's? Why not compare eggs with eggs and talk grossed up yields? I can tell you there are many stocks that are looking like much better deals that RE... and it even looks like prices will get a little sillier over the US summer. A smart operator will be able to kill RE fro return over the next 12 months.
> 
> Keep it up.... I like upset RE agents, when I was developing property I did very much enjoy winding them up on the odd occasion! Some of them really deserved it! Especially the young cocky ones.




And of past and projected growth in yeild. had many rental increases of late?


----------



## Julia (8 June 2012)

numbercruncher said:


> I actually had the very last of my monies just returned to me today that was invested in realestate - and I was lucky to get all of my capital returned, no profit. Inflation adjusted I lost on the deal, and at the beginning of this project they projected a 3-400pc return.



Care to share with us something of what that investment was about?  A 300% - $400 return?
Really?




> Reserve Bank Governor Glenn Stevens today said he had no intention of engineering a return to the spiralling property prices and household debt levels which characterised the pre-2007 housing boom.
> Mr Stevens said the surge in household wealth in the decade or so leading up to 2007 - which rose by about six or seven per cent a year - was driven primarily by unsustainable growth in property prices.



Might have been good to have acted before the bubble became so unsustainable, Mr Stevens.


----------



## Ves (8 June 2012)

Julia said:


> Care to share with us something of what that investment was about?  A 300% - $400 return?
> Really?



Speculator come perma-bear?  Well that reveals a lot of my doubts about some of these posters.  So a guy who got it wrong in the first place is lecturing other posters? You would certainly hope you didn't get get it wrong twice.


----------



## Starcraftmazter (8 June 2012)

Julia said:


> Might have been good to have acted before the bubble became so unsustainable, Mr Stevens.




You want Bernie Fraser and Ian Macfarlane - Stevens only increased interest rates after he got appointed in September of '06, all the way up to the GFC.


----------



## numbercruncher (8 June 2012)

Julia said:


> Care to share with us something of what that investment was about?  A 300% - $400 return?
> Really?





Specufesting on a land development - I had my doubts (based on gut feeling) on projections from the outset but know the folks running the project, who had made those kinds of returns on similar projects earlier on in the credit boom ..... But as they told me today its currently dead in the water ....

Hell I made 100pc on my first property after holding for only 18 months - no genius input on my behalf - bought at the beginning of the Credit boom in a comparitively cheap/undiscovered suburb - any numnut could of done it ..... Used to laugh my butt off going to BBQs etc listening to everyone talking like they were some kind of property investing genius - 

The game is clearly up


----------



## numbercruncher (8 June 2012)

Ves said:


> Speculator come perma-bear?  Well that reveals a lot of my doubts about some of these posters.  So a guy who got it wrong in the first place is lecturing other posters? You would certainly hope you didn't get get it wrong twice.




Im bullish on plenty of things - obviously not the same things you are


----------



## cynic (9 June 2012)

Julia said:


> Of course the entire blame falls on the lending institutions, doesn't it, NC!
> No way any responsibility should be attributed to those engaging in loans they couldn't service.
> Of course not.




+1

There was a time when I availed myself of one of these loans. It came in very useful given my somewhat unusual circumstances. Whilst I believe that both the borrowers and the banks have been reckless and irresponsible in the manner in which these products were engaged, I have utter contempt for any fiscally irresponsible borrower whom automatically transfers the blame for their own financial failings onto their bank. 

Thanks to those irresponsible borrowers whom are now seeking to have their mortgages forgiven, this product is unlikely to be made available to those whom could have made productive and responsible use of just such a facility. Thanks to the irresponsible actions of consumers, another great blow has been struck against freedom of choice.

Of course, if  the banks are found to be guilty of misrepresenting the lending product in a way that is materially disadvantageous to the borrower, then that is an entirely different matter.


----------



## numbercruncher (9 June 2012)

More news coming online about the pushy scumbag money dealers ...




> Here's how it works.
> 
> In the late 1990s lenders began offering "low-doc" and "no-doc" home loans, to help self-employed people (who often didn't fit the lenders' normal wage-earner criteria) get a loan without needing to provide a lot of supporting documentation (as in, none).
> 
> ...







> For example, a 2007 email from a Macquarie Bank salesperson to mortgage brokers, forwarded to me this week, said: "Why not try Macquarie for the below reasons: no docs - client only needs to be self-employed for one day or more; no assets and liabilities required, no income needs to be stated!!!"
> 
> Turns out the bankers had "six degrees of separation" between them and the eventual borrowers.






> *In Australia we're beginning to enter our own housing slump. With the tide now going out, we're about to find out who (lenders and borrowers) has been swimming naked.*




http://www.heraldsun.com.au/ipad/we-panned-the-us-for-its-sub-prime-mortgage-crisis-but-were-not-immune/story-fn6bn4mv-1226389570687

This fraudulent money pushers just like drug dealers need to be harshly punished !


----------



## Julia (9 June 2012)

cynic said:


> Thanks to those irresponsible borrowers whom are now seeking to have their mortgages forgiven, this product is unlikely to be made available to those whom could have made productive and responsible use of just such a facility. Thanks to the irresponsible actions of consumers, another great blow has been struck against freedom of choice.



Correct.  Yet another example of the increasing way our society seems to be legislating for the most irresponsible, thus as you suggest reducing choice for the responsible.


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## medicowallet (9 June 2012)

As avenues to getting $$$ are removed from the system (eg low doc loans) and as banks find it harder to get finance,

these result in decreased growth of debt, and hence lower prices.

This can all come spiralling down as decreasing prices force banks to keep tightening credit... possibly could get ugly for the highly geared.

MW

PS where is Robots?


----------



## numbercruncher (9 June 2012)

Yes no problem if you own your houses but the highly leveraged and those that lend them money could be in for a huge shock as our economy hurtles back to Earth -




> According to the 8th Annual Demographia International Housing Affordability Survey, published in March:
> 
> "Australia exhibited the worst housing affordability of *any* national market outside Hong Kong. There were *no* affordable markets in Australia in 2011 and the overwhelming majority of markets were severely unaffordable"


----------



## medicowallet (9 June 2012)

What a beautiful crisp day brothers, the sun shining, a light frost cleared by the time the jug had boiled and I had managed to make some breakfast.


You might be interested to know the clearance rate:

"Saturday 9th June 2012




A clearance rate of 50 per cent was recorded this weekend compared to 58 per cent last weekend and 58 per cent this weekend last year.

Due to the very low number of auctions this result cannot be seen as indicative of the state of the market. 

The year to date clearance rate is 61 per cent. 

Last weeks interest rate cut will help improve buyer confidence in the later part of the year, especially if the positive growth in the national and state economy continues.

There were 129 auctions reported to the REIV today with 64 selling and 65 being passed in, 34 of those on a vendors bid.

Next weekend the REIV expects around 630 auctions."


50%, now I don't know what that means, but I am sure A/Prof Robots/im sparticus will be able to decipher the significance of those, as I am merely a speculator.


Sunshine and lollipops,

MW

The original Robot destroyer.


----------



## drsmith (9 June 2012)

Starcraftmazter said:


> You want Bernie Fraser and Ian Macfarlane - Stevens only increased interest rates after he got appointed in September of '06, all the way up to the GFC.



And the Howard Government.

they changed CGT to favour shorter term speculation and disadvantage longer term investment.


----------



## Gerkin (9 June 2012)

medicowallet said:


> Sunshine and lollipops,
> 
> MW
> 
> The original Robot destroyer.




what a silly weekend to auction a property, holiday weekend/....
plenty of sunshine today


----------



## Mr Z (9 June 2012)

im sparticus said:


> And of past and projected growth in yeild. had many rental increases of late?




No.

It is well known that real estate doesn't fare that well in an aggressively inflationary environment, it becomes impossible to keep rents in line, historically they have always lagged. That is where we are headed... like it or not.


----------



## Mr Z (9 June 2012)

drsmith said:


> And the Howard Government.
> 
> they changed CGT to favour shorter term speculation and disadvantage longer term investment.




 I think you have that backwards.


----------



## im sparticus (9 June 2012)

Mr Z said:


> No.
> 
> It is well known that real estate doesn't fare that well in an aggressively inflationary environment, it becomes impossible to keep rents in line, historically they have always lagged. That is where we are headed... like it or not.




Yes yes prices run alot harder than rents in such times i agree. but as of late it has been rents who have been outpacing prices, looking forward to where you think we are headed though a leveraged property investors dream. unless of course your thinking property wil be immune to the inflation? either way most data including what you have provided is illuding to the opposite like it or not.


----------



## MrBurns (9 June 2012)

The Age reports a clearance rate in Melbourne of 40%


----------



## Mr Z (9 June 2012)

im sparticus said:


> Yes yes prices run alot harder than rents in such times i agree. but as of late it has been rents who have been outpacing prices though looking forward to where you think we are headed though a leveraged property investors dream. unless of course your thinking property wil be immune to the inflation? either way most data including what you have provided is illuding to the opposite like it or not.




Yes, property will be to some degree immune. Property thrives in low and constant inflation where growth exceeds or meets the rate of inflation. When you hit stagflationary conditions and inflation is outpacing growth then property suffers and very much lags. This is simply because it is leveraged and the ability of the average person to pay interest is limited by the rising cost of staples against stagnating or evaporating wages. You also reach the point where the central bank moves to contain inflation and pushes rates to nose bleed levels.... that is the time to buy, just before rates top. 

Property works most of the time, in "normal" inflationary conditions... it is simply a leveraged bet that inflation will continue, normally a no lose proposition BUT once inflation starts growing too quickly and growth suffers then the dynamic fails, as it does under deflationary conditions (not likely aside from specific market deleveraging). IMO it is not as simple as inflation or deflation, the dynamic is a little more complex than that but for the sake of this discussion.... YES I beleive we will see inflation that we exceed properties ability to maintain its current price levels especially when you consider the historically high debt levels we are starting with. You can only borrow so much, even @ 0% you must be able to cover principle. As a group Australians have pushed this debt limit... this is changing... as per the RBA credit growth chart... it counts, even if you don't like the idea. Shrinking credit will equal shrinking prices.


----------



## im sparticus (9 June 2012)

Mr Z said:


> Yes, property will be to some degree immune. Property thrives in low and constant inflation where growth exceeds or meets the rate of inflation. When you hit stagflationary conditions and inflation is outpacing growth then property suffers and very much lags. This is simply because it is leveraged and the ability of the average person to pay interest is limited by the rising cost of staples against stagnating or evaporating wages. You also reach the point where the central bank moves to contain inflation and pushes rates to nose bleed levels.... that is the time to buy, just before rates top.
> 
> Property works most of the time, in "normal" inflationary conditions... it is simply a leveraged bet that inflation will continue, normally a no lose proposition BUT once inflation starts growing too quickly and growth suffers then the dynamic fails, as it does under deflationary conditions (not likely aside from specific market deleveraging). IMO it is not as simple as inflation or deflation, the dynamic is a little more complex than that but for the sake of this discussion.... YES I beleive we will see inflation that we exceed properties ability to maintain its current price levels especially when you consider the historically high debt levels we are starting with. You can only borrow so much, even @ 0% you must be able to cover principle. As a group Australians have pushed this debt limit... this is changing... as per the RBA credit growth chart... it counts, even if you don't like the idea. Shrinking credit will equal shrinking prices.





Ok can someone please explain to me why everyone on this forum seems to think every property on oz has a substancial morgage attached?

You should probably understand just how "leveraged" oz realestate is overall then see how well it sits with your little theories on how this market works.

Just how shrinking credit shrinking prices goes with agressive inflation is beyond me. your not scm's dad are you?


----------



## Starcraftmazter (9 June 2012)

im sparticus said:


> Ok can someone please explain to me why everyone on this forum seems to think every property on oz has a substancial morgage attached?




Doesn't need to be every, just enough to make a difference to the stock on market.


----------



## im sparticus (9 June 2012)

Starcraftmazter said:


> Doesn't need to be every, just enough to make a difference to the stock on market.




Hint: its not enough, and once again your out of context did you even read your dads post?


----------



## Starcraftmazter (9 June 2012)

im sparticus said:


> Hint: its not enough




Falling house prices say otherwise.


----------



## Glen48 (9 June 2012)

As the economy tanks people will keep moving down a notch in their life style and cut back on thing's they consider not be of any benefit and a money waster such as phones, less Air con, car usage when they can use public transport etc and as the collapsing grip tightens they will keep cutting back until they have to move out of their abode and into their car or what ever and spending less just to survive so the retail sector will feel the pinch and only stock the bare necessaries even down to smaller tubes or bottles of goods.
In USA you can buy meat in $1 slices. 
Farmers won't be able to grow due to the lack of profit margin, rents will come down high interest rate will be of no benefit's  to the banks as no one can afford to borrow so reduce rates to find where the market is.

 So all this will lead to Deflation not Inflation,one is just as bad as the other.


----------



## im sparticus (9 June 2012)

Starcraftmazter said:


> Falling house prices say otherwise.




If you think defaults are the sole reason for the current lower prices well there really is no hope for you. But thankyou for yet another exellent example of confirmation bias.


----------



## Starcraftmazter (9 June 2012)

im sparticus said:


> If you think defaults are the sole reason for the current lower prices well there really is no hope for you. But thankyou for yet another exellent example of confirmation bias.




I never said anything about defaults, stop putting words in other peoples' mouths.


----------



## im sparticus (9 June 2012)

Starcraftmazter said:


> I never said anything about defaults, stop putting words in other peoples' mouths.






What exactly were you saying/insinuating  then?..........
This should be good, keep in mine everyone can read your previous posts.


----------



## Starcraftmazter (9 June 2012)

im sparticus said:


> What exactly were you saying/insinuating  then?..........
> This should be good, keep in mine everyone can read your previous posts.




That there only needs to be enough people with substantial mortgages who have or feel they will soon have any difficulty in servicing it, to make an impact on the total housing stock, in order to drive prices down.


----------



## im sparticus (9 June 2012)

im sparticus said:


> its not enough,






Starcraftmazter said:


> Falling house prices say otherwise.




You forgot the most important bit what were you insinuating when you then posted the above? why are house prices falling?


----------



## Starcraftmazter (9 June 2012)

im sparticus said:


> You forgot the most important bit what were you insinuating when you then posted the above?




No, I'm pretty sure my previous post covers that pretty well.


----------



## im sparticus (9 June 2012)

Starcraftmazter said:


> No, I'm pretty sure my previous post covers that pretty well.





It does just wanted to be clear that that is your conclusion to what has driven the price of oz realestate down.

Why are they selling again? Loan servicing difficulty, right?

The difficulty to service the homeloan is the reason for lower realestate prices in australia. 

like i said there is no hope for you!


----------



## Starcraftmazter (9 June 2012)

im sparticus said:


> It does just wanted to be clear that that is your conclusion to what has driven the price of oz realestate down.




Well that's a big part of it, the other side of the coin is flat credit growth.


----------



## medicowallet (9 June 2012)

Actually SCM did not say what you thought you read sparticus.

Obviously it is only the houses that are turning over that determine the direction of the market.

And it is not the level of current mortgages,

BUT

The ability to generate NEW mortgages to continue to ponzi scheme which dictates which direction prices go.

Since banks are tightening up, I can not see prices rising for quite a while.  So, in effect, houses either stagnate for a long time or decrease or a combination...

IMO a good time to be sitting on the fence and observing.

Pity I didn't sell any houses, but then again, I don't need to 

MW

PS Where is Robots?


----------



## numbercruncher (9 June 2012)

MrBurns said:


> The Age reports a clearance rate in Melbourne of 40%





Isnt that a fairfax owned newspaper ?


----------



## numbercruncher (9 June 2012)

sparticus - do you know Robots personally?.


----------



## numbercruncher (9 June 2012)

im sparticus said:


> Ok can someone please explain to me why everyone on this forum seems to think every property on oz has a substancial morgage attached?




You only need a 50pc mortgage on recent prices for that to actually be a 100 plus percent mortgage on new revised "crashed" prices ....


----------



## im sparticus (9 June 2012)

numbercruncher said:


> You only need a 50pc mortgage on recent prices for that to actually be a 100 plus percent mortgage on new revised "crashed" prices ....





50% go fish your not even close. but ide like to see your math number are you quoting aussie medians on there peak @ 50%lvr or some appartment in the circle on cavil building?


----------



## numbercruncher (10 June 2012)

Actually I didnt even need to use the 50pc thing as an extreme example - just look at how many people have lost on paper their entire deposit and now sit in massive negative equity after making pathetic leveraged bets on Australian Realestate .....



> Far north Queensland had the highest proportion of mortgages in negative equity, at* 22%, followed by the Gold Coast, with 19%.*
> 
> The Sunshine Coast was in the third spot at 15%.
> 
> ...




http://www.propertyobserver.com.au/mortgages/number-of-homes-in-negative-equity-rising-particularly-for-recent-buyers-rp-data

I highlight the Gold Coast as I live there - the very place I live in has dropped 20pc of its " value " in just the past 6 months and its only going to get alot worse for property speculators.


----------



## tech/a (10 June 2012)

Prices are 20% down from peak here.

I'm in the process of selling all longterm holdings. Keeping all industrial stock.

Development is where the opportunity is currently.
Holding property even if it's positively geared is. In my opinion not the best use of opportunities (in property) at this time. ( in the domestic market ).

Development property stock is really cheap.
Project builders will fall over themselves with deals to get your business.
Building times are the fastest I've seen in years.
Do the numbers right and select the right property for development and you'll sell off plan BEFORE
you start your build.

Sound easy--- well it's not that hard!


----------



## Julia (10 June 2012)

numbercruncher said:


> I highlight the Gold Coast as I live there - the very place I live in has dropped 20pc of its " value " in just the past 6 months and its only going to get alot worse for property speculators.






tech/a said:


> Prices are 20% down from peak here.



20 - 25% down here, SE coastal regional Qld.

The oft quoted 6% or 7% down in media reports are very misleading imo.


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## Starcraftmazter (10 June 2012)

tech/a said:


> Prices are 20% down from peak here.
> 
> I'm in the process of selling all longterm holdings. Keeping all industrial stock.




Look how he changes his tune from just a month or two ago


----------



## numbercruncher (10 June 2012)

Starcraftmazter said:


> Look how he changes his tune from just a month or two ago





Good to see a realistic Businessman positioning himself according to market conditions actually - but yes it is a big change on the techs posts of the past


----------



## Starcraftmazter (10 June 2012)

numbercruncher said:


> Good to see a realistic Businessman positioning himself according to market conditions actually - but yes it is a big change on the techs posts of the past




I guess that makes me a much better businessman, considering I would have sold long ago at the peak - without losing any money.


----------



## tech/a (10 June 2012)

numbercruncher said:


> Good to see a realistic Businessman positioning himself according to market conditions actually - but yes it is a big change on the techs posts of the past




It's reality.

Been advocating development for a few years now.
Difference now is the opportunity is even more apparent.
Demand at the right price is still excellent.
Price a property at market pricing and you'll sell it.
Over price it and you'll sit in the queue.


----------



## im sparticus (10 June 2012)

Starcraftmazter said:


> I guess that makes me a much better businessman, considering I would have sold long ago at the peak - without losing any money.





Are you serious!

You have been bearish on property for 20 years (since before you could speak) you never would have baught and misses all previous gains. your only angle on increasing worth is through bullion. whats more is i bet you have never engaged in anything that even remotely resembles bussiness activity.


----------



## Starcraftmazter (10 June 2012)

im sparticus said:


> Are you serious!
> 
> You have been bearish on property for 20 years (since before you could speak)




There's something about those two things side by side which is wholesomely funny 

Don't even need to rebut you when you post crap like that.


----------



## im sparticus (10 June 2012)

Starcraftmazter said:


> There's something about those two things side by side which is wholesomely funny
> 
> Don't even need to rebut you when you post crap like that.




The only person that finds that funny (ie what your implying, not the fact your bear buddies are still laughing at you behind your back on that one) is you.


----------



## Starcraftmazter (10 June 2012)

im sparticus said:


> The only person that finds that funny (ie what your implying, not the fact your bear buddies are still laughing at you behind your back on that one) is you.




You keep thinking that.


----------



## numbercruncher (10 June 2012)

Starcraftmazter said:


> I guess that makes me a much better businessman, considering I would have sold long ago at the peak - without losing any money.




I know you would of SCM - shame there wasnt a raw vehicle to short Aussie realestate at the peak of this popping bubble.


----------



## Starcraftmazter (10 June 2012)

numbercruncher said:


> I know you would of SCM - shame there wasnt a raw vehicle to short Aussie realestate at the peak of this popping bubble.




It would have been good. Not sure how it would work, plenty of bulls though - maybe just let the bulls and bears bet against each other through CFDs or something to that extent, they could save the cost of useless stamp duties and RE fees, and we could simply take their money straight off their hands


----------



## damien275x (10 June 2012)

I know everyone says it's horrible to laugh or gloat when the prices collapse, but no offense, a whole group of people have driven up prices in an asset class that everybody needs. If somebody cornered the oil market, or the clothing, or food market, and sold it to everyone else at sky high prices, people would be pissed, yet when property goes up, it's considered "good economic news" .. Um, how exactly? 

I just find it so sad that in Australia the only (perceived) road to riches by middle class morons is: Step 1. Buy house. Step 2. Extort people with high rent Step 3. Sell house for even more, locking up large amounts of money by all parties 

How about: 
Step 1. Create, refine, deliver something that the market wants, you know? A product, or a service?
Step 2. Deliver it on a huge scale, rake in profits, grow the standard of living of the entire country and create jobs

It's a total fail, and as a younger potential home owner, I refuse to buy/commit to any debt at this point, I don't care what the RBA does. It's going to hit the fan when all the domino's knock over. There's too many things set to blow up this decade - especially USA and their fiscal crisis, that's the biggest elephant in the room and is going to be in the headlines in the next 3-5 years, it's effects are going to be worse than Europe when their rates rise and they have to meet their obligations (they have committed over 400% of GDP if you account for all their unfunded liabilities) - they're stuffed. 

So instead of having an economy where we've created, built products, become more efficient and affluent, all we'll be left with are: a) too many houses b) povo people defaulting c) high unemployment. 

Oh, and the share market will tank in sympathy with the USA share market at that point, we have better fundamentals but whatever happens in the USA happens here. I would be waiting on the sidelines and getting your superannuation out right now, these boomers cannot afford to wait another 20 years for it to come back, you'll be dead then! Oh well, I guess you can just sell all your homes back to the generation you've been screwing, at a reduced price because you'll be desperate at that point!


----------



## Glen48 (10 June 2012)

So true but don't worry the Feds are on to it:
The longer this bail out lurk goes on the worse it will get and longer to settle. 

Spain has become the fourth and largest country to ask Europe to rescue its failing banks, a bailout of up to 100 billion euros ($A127.76 billion) that leaders hope will stabilise a financial crisis that threatens to break apart the 17-country eurozone.

he rescue offer follows growing pressure from international investors and the Obama administration and comes a week before elections in Greece, whose voters could decide whether the country leaves the euro.
Europe's widening recession and financial crisis has hurt companies and investors around the world. Providing a financial lifeline to Spanish banks is likely to relieve anxiety on the Spanish economy - which is five times larger than Greece's - and on markets concerned about the country's ability to pay its way.
"What the markets are looking for is essentially the Spanish government's acceptance that its banks are broke," said Jacob Kirkegaard, a research fellow at the Peterson Institute for International Economics in Washington.
Economy Minister Luis de Guindos announced the deal after an emergency conference call with eurozone financial leaders.
He said the aid will go to the banking sector only and would not come with new austerity conditions attached for the economy in general - conditions that have been an integral part of previous bailouts to Portugal, Ireland and Greece.
The exact figure of the bailout has not yet been decided. De Guindos said the country is waiting until independent audits of the country's banking sector have been carried out before asking for a specific amount. The audits are expected June 21 at the latest.
De Guindos did say, however, that Spain would request enough money for recapitalisation, plus a safety margin that will be "significant".
With markets in turmoil, de Guindos said the government's efforts to shore up the financial sector "must be completed with the necessary resources to finance the needs of recapitalisation".
Finance ministers of the 17 countries that use the euro said the money would be fed directly into a fund Spain set up to recapitalise its banks, but underscored that the Spanish government is ultimately responsible for the loan.
Still, that plan allows Spain to avoid making the onerous commitments that Greece, Ireland and Portugal were forced to when they sought their rescues.
Instead, the eurogroup statement said that it expected Spain's banking sector to implement reforms and that Spain would be held to its previous commitments to reform its labour market and manage its deficit.
That meant the cost could reach 100 billion euros.
The Spanish acceptance of aid for its banks is a big embarrassment for Prime Minister Mariano Rajoy, who insisted just 10 days ago that the banking sector would not need a bailout. He was elected in November and walked right into a hurricane.
International pressure on Spain to solve its financial problems has grown more urgent in recent weeks.
On Thursday ratings agency Fitch hit Spain with a three-notch downgrade of its credit rating. That left it two levels above junk status. Then on Friday, Moody's Investor Services warned it could downgrade Spain and other countries in the eurozone.
The International Monetary Fund on Saturday released a report estimating that Spanish banks need a recapitalisation injection of at least 40 billion euros following a stress test it performed on the country's financial sector.
That report came out three days ahead of schedule, underscoring the urgency of the situation.
And US President Barack Obama, facing re-election, enduring a weak economy and in need of strong trading partners, expressed strong concern late Friday over the European economic crisis



​


----------



## Mr Z (10 June 2012)

im sparticus said:


> *Ok can someone please explain to me why everyone on this forum seems to think every property on oz has a substancial morgage attached?*
> 
> You should probably understand just how "leveraged" oz realestate is overall then see how well it sits with your little theories on how this market works.
> 
> Just how shrinking credit shrinking prices goes with agressive inflation is beyond me. your not scm's dad are you?





My "little" theory understands that price moves at the margin and that the margin is highly leveraged. What is 'owned' outright is of no concern, the cash buyers mostly come from cash sales that have bought and sold on the same market, they are not the drivers of price so much as the more sensitive margined buyers and owners. Until you almost completely eliminate them they will have a disproportionate impact on price. Consider how a stock moves on the pain of the minority of margined holders if you can't get your head around housing... it is not different in housing, in a down turn the weakest hands determine the top and direction... at the bottom the opposite is true, the strongest hands put the bottom in.

I understand just how leveraged Aus property is, again you need to understand how markets really work and get past how you think they work.

Price can fall in real or nominal terms, in an aggressive inflation they will fall until the excess debt is adsorbed then they will lag most other assets due to the financing pressures on families struggling to keep pace with the cost of living. During this period they move forward in nominal terms but not in real terms. It is RE history... not some theory, if you don't understand this dynamic you need to ask yourself are you qualified to invest your own money in property? Look at stagflations and see what happens.

Wouldn't you have been better arguing that we are not stagnating given 4.3% growth? 

Keep em coming this is fun... especially the condescension, I thrive on it!


----------



## Mr Z (10 June 2012)

damien275x said:


> I know everyone says it's horrible to laugh or gloat when the prices collapse, but no offense, a whole group of people have driven up prices in an asset class that everybody needs. If somebody cornered the oil market, or the clothing, or food market, and sold it to everyone else at sky high prices, people would be pissed, yet when property goes up, it's considered "good economic news" .. Um, how exactly?




LOL, yes... I love the way an entire nation of property owners became master investors of a few short years! Inflation gets into stocks and property and all of a sudden we are geniuses, monetary phenomena be damned! As soon as the same dynamic hits commodities like oil it is those damn speculators! Dats politics for you!


----------



## im sparticus (10 June 2012)

How do property investors drive rents up i always thaught they were the supply side of the equasion?

I seriously doubt property is being cornered btw


----------



## Mr Z (10 June 2012)

They don't, the market drives it all and the market gets distorted by government intervention, directly via grants and indirectly via monetary policy. What we have is the result of  government attempting to control what the shouldn't touch.


----------



## im sparticus (10 June 2012)

For what its worth houses these days bear a closer resemblence to peoples wants than there needs. Enough with the moral high ground. not directed at you mr z neither was my last post but thanks for explaining


----------



## Mr Z (10 June 2012)

im sparticus said:


> For what its worth houses these days bear a closer resemblence to peoples wants than there needs.




This is another factor in the downward pressure, when push comes to shove people can downsize. Years ago we had three generations under one roof, these days we have one generation under two roofs. When it gets tougher families tend to pool resources more and expectations are kept more realistic. One of my long standing predictions is that many Mc Mansions of 40 squares will be divided into four flats, there is an up coming opportunity for the smart property investor... that is when these things tank!


----------



## im sparticus (10 June 2012)

Mr Z said:


> This is another factor in the downward pressure, when push comes to shove people can downsize. Years ago we had three generations under one roof, these days we have one generation under two roofs. When it gets tougher families tend to pool resources more and expectations are kept more realistic. One of my long standing predictions is that many Mc Mansions of 40 squares will be divided into four flats, there is an up coming opportunity for the smart property investor... that is when these things tank!




years ago 3 generations under 1 roof = property 3x average wage.

today one generation under 2 roofs = property 7x average wage.

whatever it takes to get property back to the fair and equitable 3x average wage i guess.


----------



## Mr Z (10 June 2012)

It is likely property will move from over to under valued, markets rarely stop at fair for long. I expect outright cheap, better than early 90's pricing, there is good opportunity coming for the patience IMO.


----------



## wayneL (10 June 2012)

im sparticus said:


> years ago 3 generations under 1 roof = property 3x average wage.




How many years are we talking? 

>100?

I can't ever remember 3 generations being the norm and I'm starting to get long in the tooth myself.


----------



## Glen48 (10 June 2012)

http://www.chrismartenson.com/blog/...mail_newsletter&utm_content=node_title_76297&
latest from Steve Keen


----------



## Mr Z (10 June 2012)

wayneL said:


> How many years are we talking?
> 
> >100?
> 
> I can't ever remember 3 generations being the norm and I'm starting to get long in the tooth myself.




No not that long 

It was far more common in the 50's and 60's than it is now. Mind you granny flats are coming back in vogue with the stalling boomers! We have three under one roof as it happens. I'm just making the point that the maths on dwellings required is done in a static accounting fashion, the reality is that when there is financial pressure things change, gran lives with the kids and their kids, divorces that might otherwise happen don't happen simply because of tight resources. Lots of people find flexible solutions that the statistics guys don't consider, hard times breeds innovation. I live in a suburb where 15% of the houses are full time dwellings, the rest are holiday places... we are not that far from Melbourne! Plenty of flexibility in the housing stock around here!


----------



## Julia (10 June 2012)

Glen48 said:


> So true but don't worry the Feds are on to it:
> The longer this bail out lurk goes on the worse it will get and longer to settle.
> 
> Spain has become the fourth and largest country to ask Europe to rescue its failing banks, a bailout of up to 100 billion euros ($A127.76 billion) that leaders hope will stabilise a financial crisis that threatens to break apart the 17-country eurozone...................​




Glen, could you put passages that you are quoting within the QUOTE tags in order to differentiate properly between this and your own comments.


wayneL said:


> How many years are we talking?
> 
> >100?
> 
> I can't ever remember 3 generations being the norm and I'm starting to get long in the tooth myself.



Me neither.  I've never seen even two generations living in the one house, with the occasional brief exception of a single elderly parent for about a year before dying.​


----------



## numbercruncher (10 June 2012)

Mr Z said:


> It is likely property will move from over to under valued, markets rarely stop at fair for long. I expect outright cheap, better than early 90's pricing, there is good opportunity coming for the patience IMO.




I think youll be correct on that !

I put an offer in on a block of land mortgagee in possession early this year that ended up selling less than half price of the peak. So that wasnt the norm where I nearly bought but it will start hapening more.


----------



## Mr Z (10 June 2012)

Julia said:


> Me neither.  I've never seen even two generations living in the one house, with the occasional brief exception of a single elderly parent for about a year before dying.




What? You don't know anyone with kids? That is two for a start.

The last place I worked most of the people under 30 where still at home due to the cost of housing, add a granny flat and you have three... come on folks, it is not exactly unheard of & IMO you will see more and more of it.


----------



## numbercruncher (10 June 2012)

Theres Probaly 10s of thousands of three generation households in Oz and I bet itll get more common in the future .... Gran , mum dad and the kids - quite common - thats how we got Granny Flats !


----------



## MR. (11 June 2012)

> Posted by drsmith
> And the Howard Government.
> 
> they changed CGT to favour shorter term speculation and disadvantage longer term investment.






Mr Z said:


> I think you have that backwards.




Howard encouraged speculating by rewarding businesses to a 50% capital gains deduction. Before that businesses were taxed fully, less perhaps CPI index. Howards reforms (about yr 2000) encouraged speculation not real investment. 

Interest rates were too low for too long, yes, but there is always more a story.


----------



## MR. (11 June 2012)

tech/a said:


> Prices are 20% down from peak here.
> 
> I'm in the process of selling all longterm holdings. Keeping all industrial stock.
> 
> ...




If Tech unloads, we might see the market at that 50% price reduction!  

Adding more fuel to the fire with everyone else......


----------



## MR. (11 June 2012)

2010 "The Peak":


tech/a said:


> The best time to buy property is NOW.
> 
> It was in 2003,2004,2005,2006,2007,2008,2009, and NOW.




Maybe you should be more specific in ya riddles, someone might start to think that you're saying 2012 is the time to buy!.......


----------



## Mr Z (11 June 2012)

MR. said:


> Howard encouraged speculating by rewarding businesses to a 50% capital gains deduction. Before that businesses were taxed fully, less perhaps CPI index. Howards reforms (about yr 2000) encouraged speculation not real investment.
> 
> Interest rates were too low for too long, yes, but there is always more a story.




Huh? You get a 50% deduction for long term holdings not short term, you pay full freight short term (< 1yr). The only concession small businesses get make sense and are designed to encourage small business, the rules prior penalized the largest job creating sector of our economy, Howard simply recognized that and reduced the penalty. They don't speculate... in fact I can't see how they can really under the rules, anymore than you or I can under the long term holding rules. 

As far as I can see none of it engenders short term speculation! Be happy have the specifics pointed out if that is wrong as I could certainly use that loop hole, the cost of setting up a company would be easily covered by the benefits.


----------



## Mr Z (11 June 2012)

I guess you could argue that the ultra long term holders would be better off under an indexation scheme but as to this engendering short term speculation... unless you are talking  1 to 5 years say as short term, which I guess it is in property terms.

The thing that I think is wrong is that people are taxed at their top marginal rate in the year that the gain is realized. In reality if the gain took tens year to materialize then the gain should be broken down and apportioned across the ten years and an average top margin rate calculated. That way a low income earner that managed to buy say a block of land and held it for ten years but couldn't manage to put a house on it is not unduly taxed. The reality is that the capital gain occurred over time, therefore tax should be calculate over the same time.


----------



## Tyler Durden (11 June 2012)

Glen48 said:


> http://www.chrismartenson.com/blog/...mail_newsletter&utm_content=node_title_76297&
> latest from Steve Keen




Thanks Glen, I read that from a link from Zero Hedge.
Interesting read, though one wonders, when will the ugly end?


----------



## im sparticus (11 June 2012)

Tyler Durden said:


> Thanks Glen, I read that from a link from Zero Hedge.
> Interesting read, though one wonders, when will the ugly end?




Never people have realised property is not an investment but a neccessity property is reverting back to its fairly valued 100 year mean from there it will be impossible for property to ever print a positive return in real terms again, it is a depreciating asset after all. it is well documented in this thread property prices are depressed in both inflationary and deflationary times due to being leveraged you cant win best to buy gold it goes up in both win win! Everone knows the true way to increase your worth is through precious metals sure its miles of its highs and dont yeild a thing but precious metals have great fundamentals just wait till the world ends youll see!


----------



## tech/a (11 June 2012)

MR. said:


> 2010 "The Peak":
> 
> 
> Maybe you should be more specific in ya riddles, someone might start to think that you're saying 2012 is the time to buy!.......




*Ok.---No Riddles.
*
*I'm not saying now is NOT *a time to buy property in fact the exact opposite.
Now is an excellent time to buy. If your developing.

Why am I selling.
Well I'm selling 3 IP's Each are positively geared but not by a great deal.
So looking forward Im not seeing a rise back to the old highs for many years.
If I hold then my properties depreciate---the banks love me as I pay their interest and take all the risk.
Thats dumb investing in my view. If I have capital gain then fine---if I dont then I'm just serving as an investor for the banks.

By selling I realize profit that can be better used elsewhere.
if I cant find anything straight up then I have it set ready to go with pretty well all else freehold.

Industrial is all returning far more /1000 than domestic.
Costs way way less to develop and Tennant s pay ALL outgoings.
They are much better tennents and once established are there for years.
I can determine the property value on rent return.

The latest is small 120-150 square meter sheds for tradies.Each sell for $130K or rent for $15K a year.
Cheap but great return. I can fit 8 on the 2200 square meter block I hold currently.
Thats where part of the proceeds will find a home.

So not a contradiction as some would have "hoped".


----------



## Mr Z (11 June 2012)

im sparticus said:


> Never people have realised property is not an investment but a neccessity property is reverting back to its fairly valued 100 year mean from there it will be impossible for property to ever print a positive return in real terms again, it is a depreciating asset after all. it is well documented in this thread property prices are depressed in both inflationary and deflationary times due to being leveraged you cant win best to buy gold it goes up in both win win! Everone knows the true way to increase your worth is through precious metals sure its miles of its highs and dont yeild a thing but precious metals have great fundamentals just wait till the world ends youll see!




Now you are just getting silly!

You know that MOST of the time property is a no brainer, you simply have to recognize the conditions under which it will not preform. In most of the western world we are there now, in Australia we have all the precursors but we have not quite buckled yet. To think that we will be impervious to the same factors that have savaged the worlds property markets is getting a little naive, the question we need to solve is more by how much will we correct. I think we will fare much better than most but then again most have had a really hard time of it. 

It is amazing how gold polarizes people... if you find yourself hating it or loving it you are probably dangerous and should not handle your own money. It is an asset that has its time and place... since $250 it has been gold outperforming almost every year, that is no accident, it will come to and end and there is more to go ---> you can take that to the bank.


----------



## Julia (11 June 2012)

Mr Z said:


> What? You don't know anyone with kids? That is two for a start.



Well, if you're going to include dependent children your argument is irrational from there.
If you are discussing two or more generations living in the same household, you would surely assume said generations are both going to be adult.


----------



## Mr Z (11 June 2012)

Julia said:


> Well, if you're going to include dependent children your argument is irrational from there.
> If you are discussing two or more generations living in the same household, you would surely assume said generations are both going to be adult.




Irrational? How so, it was more an observation than an argument and as is typical we are focusing on the throw away lines and not the actual argument.

Let me frame my actual argument it a different way as we seem to be hung up on the minutia.

As pointed out by 'im sparticus' housing has become far more aspirational than utilitarian, house sizes have increased and in many instances the number of people in them has decreased. The bottom line is that we now appear to have (guesstimation here sans stats) what should be a high in the ratio between square meterage of domestic housing and residents. There is room, under financial pressure, for that ratio to head back down and for people in one way and another to consolidate making better use of the resources available to them. *This is a factor that is not taken into consideration when stats are done on supply v demand as the stats are done in a 'static accounting' fashion, that is my actual argument.* Do you find that irrational?

I simply believe that housing supply is a little more elastic than people think. It reacts more to monetary conditions, economic conditions and confidence factors than it does straight out theoretical supply and demand numbers.


----------



## im sparticus (11 June 2012)

Mr Z said:


> Now you are just getting silly!




Mr z if you think that is silly you really need to go back and read what some of the nutcases are posting posting scm is the star poster on this with numbercruncher not far off. Enjoy the laugh i know i have, almost as much as i have enjoyed watching them defend their bs.


----------



## medicowallet (11 June 2012)

tech/a said:


> *
> By selling I realize profit that can be better used elsewhere.
> if I cant find anything straight up then I have it set ready to go with pretty well all else freehold.
> 
> ...



*

Very wise.

Showing that not getting emotionally attached is very important.

However, I don't think the majority of property "investors" have a clue what could happen.


If you have 3+ properties, and haven't gone into damage control since the GFC first raised it's head, then you only have yourself to blame.

MW

PS Where is Robots?*


----------



## im sparticus (11 June 2012)

medicowallet said:


> Very wise.
> 
> Showing that not getting emotionally attached is very important.
> 
> ...




what do you suggest as damage control? Property prices would have to depress quite alot to make this worthwile and thats if you nail the top and bottom. have not seen this as a viable option for any of the markets where my properties are located even now with the advantage of hindsight, without it your dreaming


----------



## tech/a (11 June 2012)

im sparticus said:


> what do you suggest as damage control? Property prices would have to depress quite alot to make this worthwile and thats if you nail the top and bottom. have not seen this as a viable option for any of the markets where my properties are located even now with the advantage of hindsight, without it your dreaming




What sort of equity do you have in your properties?


----------



## im sparticus (11 June 2012)

tech/a said:


> What sort of equity do you have in your properties?




No alot 70-80% lvr


----------



## medicowallet (11 June 2012)

im sparticus said:


> No alot 70-80% lvr




No wonder you are in here trying to talk yourself into a position of confidence..

BTW Do you own any properties in Ballarat 

At that LVR, doesn't take much movement to lose 50% of your equity.

MW

PS where is Robots?


----------



## Mr Z (11 June 2012)

im sparticus said:


> No alot 70-80% lvr




You are a high risk then, like a margined stock player.


----------



## tech/a (11 June 2012)

im sparticus said:


> No alot 70-80% lvr




The problem you have is multiple.
Without increasing equity your Losing most of your interest.
Rent which off sets the interest is wasted ---- the bank loves it.
You take the risk and loss --- they take their risk free interest.

So if your interest is say $60k a year in 3 yrs you'll have lost 
Most of $180k Taking a loss from the highs now would be better than
Bleeding to death.

So as you can see your the banks patsy.


----------



## im sparticus (11 June 2012)

tech/a said:


> The problem you have is multiple.
> Without increasing equity your Losing most of your interest.
> Rent which off sets the interest is wasted ---- the bank loves it.
> You take the risk and loss --- they take their risk free interest.
> ...




Im only loosing what they generate so its not quite as bad as that (this isnt the full story anywho)  work through the sums on liquidating dont forget tax and cost of reentry. how much further does the market have to fall to make it worthwhile? I understand you have found outher opportunities but lets say you havnt your just joe average having held for however long youve held them for?


----------



## medicowallet (11 June 2012)

im sparticus said:


> Im only loosing what they generate so its not quite as bad as that (this isnt the full story anywho)  work through the sums on liquidating dont forget tax and cost of reentry. how much further does the market have to fall to make it worthwhile? I understand you have found outher opportunities but lets say you havnt your just joe average having held for however long youve held them for?




Kind of like how the sharemarket invertors held onto their bluechips as they didn't want to trigger capital gains, and exit and re-entry costs.

Yeah, I can see the benefit in that.


----------



## im sparticus (11 June 2012)

medicowallet said:


> Kind of like how the sharemarket invertors held onto their bluechips as they didn't want to trigger capital gains, and exit and re-entry costs.
> 
> Yeah, I can see the benefit in that.




All depends on your approach and how long you have been inprobably why after tax etc the accumulation index is so hard to beat.
Easy in hindsight very hard to do practically most that try end up behind. me i try not to have my trader goggles on when dealing with my properties or my super (100% indexed btw) you know my super is worth alot more now than it ever was at the highs almost double most my age cannot say the same


----------



## MR. (11 June 2012)

Hi Z,
The implementation of the 50% CGT (from near no deduction in the shorter term) would have encouraged more investment into property (fuelling higher prices).

Hello Tech,
“The best time to buy is NOW” that was the peak, that was 2010! You’d have to be very lucky not to have done some dough, developer or not even with research undertaken. 

It was not fear that kept people out of the market at that time as you preached; it was the fear of missing out that was luring them in. Now you are going to sell that very foundation of their investment as an example, for greener pastures. The bread and butter and they're even positively geared…. 

Wonder what the painful game plan would be if these properties were purchased more recently as the apparent preaching? How about Kincella?  Oh, I see, IM SPARTICUS should take a loss???  That would mean prices have further to fall, and the specifics of IM’s investment aren’t even known…..  The tune has definitely changed and it’s a contradiction alright! 

“Witness the unwinding of propety”


----------



## MR. (11 June 2012)

On a lighter note. Development land should be priced very attractively as demand for this asset would have been low. Project builders doing anything for your business is not a good sign for actual development though! Have you thought of selling the industrials?


----------



## Julia (11 June 2012)

Mr Z said:


> Irrational? How so, it was more an observation than an argument and as is typical we are focusing on the throw away lines and not the actual argument.
> 
> Let me frame my actual argument it a different way as we seem to be hung up on the minutia.
> 
> As pointed out by 'im sparticus' housing has become far more aspirational than utilitarian, house sizes have increased and in many instances the number of people in them has decreased. The bottom line is that we now appear to have (guesstimation here sans stats) what should be a high in the ratio between square meterage of domestic housing and residents. There is room, under financial pressure, for that ratio to head back down and for people in one way and another to consolidate making better use of the resources available to them. *This is a factor that is not taken into consideration when stats are done on supply v demand as the stats are done in a 'static accounting' fashion, that is my actual argument.* Do you find that irrational?



On the contrary, it's entirely rational and I thank you for 'reframing' with such clarity.
What I was objecting to was your uncharacteristically silly suggestion that including dependent children in a household as a 'second generation' made sense.  Yes, literally it's true, but it doesn't make sense in the context we are discussing.
So, good you have explained now so well.



> I simply believe that housing supply is a little more elastic than people think. It reacts more to monetary conditions, economic conditions and confidence factors than it does straight out theoretical supply and demand numbers.



Yes, I agree.  Perhaps especially confidence which seems at a pretty low ebb at present.


----------



## tech/a (11 June 2012)

MR. said:


> On a lighter note. Development land should be priced very attractively as demand for this asset would have been low. Project builders doing anything for your business is not a good sign for actual development though! Have you thought of selling the industrials?




Firstly from the peak to sale now sure I've lost potential profit.
But it's all part of the business of property for me. Profit in all business I'm involved in is well down on past figures but we still continue doing business.

No not selling the industrials as I own them and the return on investment is excellent.

By the way demand for good development property is always very high.
GOOD property is difficult to find.
Number of dwellings or sheds is king on a property.
You'll make a lot of your profit at the front end so important to get you numbers right.


----------



## im sparticus (11 June 2012)

As this elasticity in property plays out seems to me its gonna place more demand on smaller places whilst lowering median (as the median gets redefined) and bigger properties loose value seems like appartments and such could have an nice increase in real terms... actually this has already been playing out for the last few years appartment overall have been outperforming house (im talking capital cities).


----------



## medicowallet (11 June 2012)

im sparticus said:


> As this elasticity in property plays out seems to me its gonna place more demand on smaller places whilst lowering median (as the median gets redefined) and bigger properties loose value seems like appartments and such could have an nice increase in real terms... actually this has already been playing out for the last few years appartment overall have been outperforming house (im talking capital cities).




I don't mind reading your posts.


I just wish you would lose an o.

So frustrating when adults can not even spell lose.

I am sorry if that is narky, but I have mentioned it before, and it seriously is something that the young ones of today struggle with.. In fact, I would be surprised if you are over 25.

MW


----------



## MR. (11 June 2012)

tech/a said:


> No not selling the industrials as I own them and the return on investment is excellent.




Your industrials are owned outright while the residential is only marginally positively geared. So your residential understandably is being liquidated. 

Anyway, I brought up your industrials because in your neck of the woods, it sounded like industrial hadn’t taken much of a hit. If your tenants are tradies on residential developments they’d be asking their selves how much they really need that shed!

Industrials definitely have their advantages over residential with the outgoings and a tenant can’t do too much damage when there is 4 concrete walls and a roof. However, a tenant is going to pay their house rent or repayments before the rent of their business.   

Medi, but that's how is sounds Loooooooooooooooooooose. I'm giving it another year..... What do you think?


----------



## tech/a (12 June 2012)

MR. said:


> Your industrials are owned outright while the residential is only marginally positively geared. So your residential understandably is being liquidated.
> 
> Anyway, I brought up your industrials because in your neck of the woods, it sounded like industrial hadn’t taken much of a hit. If your tenants are tradies on residential developments they’d be asking their selves how much they really need that shed!
> 
> ...




Not that clear cut.

They are owned by my SMSF
My company rents one so I pay myself rent and various other SMSF benefits.
The other is rented by one of my suppliers which I have an interest in as well.

Both of us are in the building industry and both are experiencing strong down turns.
Both accept it's part of business. You learn more in business in these times than you 
Ever can in boom times.


----------



## young-gun (12 June 2012)

tech/a said:


> Not that clear cut.
> 
> They are owned by my SMSF
> My company rents one so I pay myself rent and various other SMSF benefits.
> ...




Tech, can I ask just how far you are expecting property to fall? As it has become quite clear it is on it's way down and you have acknowledged your industry is experiencing a 'downturn', have you got a certain percentage fall in mind that you believe will be the bottom? perhaps a point which you think would be safe to re-enter residential RE.


----------



## young-gun (12 June 2012)

MR. said:


> Your industrials are owned outright while the residential is only marginally positively geared. So your residential understandably is being liquidated.
> 
> Anyway, I brought up your industrials because in your neck of the woods, it sounded like industrial hadn’t taken much of a hit. If your tenants are tradies on residential developments they’d be asking their selves how much they really need that shed!
> 
> ...




at least 1 then reassess, and who knows, maybe even another few years on that. Once it bottoms it will take a looonng(apologies for the o's MW)time before prices start increasing. With majority of speculators burnt and out of cash a house will simply become a place to live.


----------



## numbercruncher (12 June 2012)

interesting to see the afforability that our American Brothers are enjoying now that their bubble has completely popped. So much healthier for their economy when Households have all that cash to spend elsewhere.




> Rates are almost half what they were at the peak of the housing bubble in mid-2006. At the time, the median price of a U.S. home was about $250,000, according to the National Association of Home Builders, and the average interest rate was about 6.75% for a 30-year loan.
> 
> A person who bought a home in 2006 with 20% down would have made payments of $1,300 a month. Today, a person who buys a *median* price home of about *$162,000*, would pay less than half that amount, about *$600 a month*. *




http://money.cnn.com/2012/05/24/real_estate/mortgage-rates/index.htm?iid=obnetwork


----------



## Mr Z (12 June 2012)

Some people I know of in the US have been buying HUD houses. They are defaults and so numerous that it has been described as a watermelon in a snake. HUD simply want to push them out and it seems at nearly any cost. I have heard of people buying job lots for 10K a piece. It would seem that if you look in the right places or know the right people there is reasonable real estate (I'm sure it is not top draw!) available for give away rates. Most banks are holding stuff off the market because supply is too high and I have heard of people living in places that they are trying to default on but the bank will not process them. When tax time comes the owner says to the state... it is not mine, I defaulted and the bank says it ain't ours yet we haven't foreclosed! Apparently there is a lot of this limbo stuff, not to mention some of the stuff caught up on shoddy CDO paper work where no one is sure who holds the mortgage and no one can prove anything. The whole mess is kinda amusing in a sad way.

That said, apparently some big money is starting to soak up housing stock... or so the rumor goes.

You probably know all this stuff, but every so often I just have to remind myself just how big a train wreck they had in their housing market.

"Only in America" ---> Hopefully!


----------



## young-gun (12 June 2012)

Mr Z said:


> Some people I know of in the US have been buying HUD houses. They are defaults and so numerous that it has been described as a watermelon in a snake. HUD simply want to push them out and it seems at nearly any cost. I have heard of people buying job lots for 10K a piece. It would seem that if you look in the right places or know the right people there is reasonable real estate (I'm sure it is not top draw!) available for give away rates. Most banks are holding stuff off the market because supply is too high and I have heard of people living in places that they are trying to default on but the bank will not process them. When tax time comes the owner says to the state... it is not mine, I defaulted and the bank says it ain't ours yet we haven't foreclosed! Apparently there is a lot of this limbo stuff, not to mention some of the stuff caught up on shoddy CDO paper work where no one is sure who holds the mortgage and no one can prove anything. The whole mess is kinda amusing in a sad way.
> 
> That said, apparently some big money is starting to soak up housing stock... or so the rumor goes.
> 
> ...




I've heard the banks still have countless amounts RE on their books, that as you say they don't want to go to market with as it will completely destroy them. I wonder just how long they can hold onto it all for, it could very well be the un-doing of the US banks.

Haha... I know you don't believe that.


----------



## young-gun (12 June 2012)

numbercruncher said:


> interesting to see the afforability that our American Brothers are enjoying now that their bubble has completely popped. So much healthier for their economy when Households have all that cash to spend elsewhere.
> 
> 
> 
> ...



 It will take a long time for that cash to filter through the economy, I imagine alot of families are still in huge amounts of debt they are trying to pay down, which as you say at least is made easier if they walked away from their home and bought now.


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## McLovin (12 June 2012)

young-gun said:


> I've heard the banks still have countless amounts RE on their books, that as you say they don't want to go to market with as it will completely destroy them. I wonder just how long they can hold onto it all for, it could very well be the un-doing of the US banks.
> 
> Haha... I know you don't believe that.




Everyone knows this, it's like an open secret. The banks have been letting mortgage holders live in their houses for 2-3 years without making a single payment because a) they have so many mortgages in default it takes time to get around to new ones b) they don't want to have to make the impairment charge on their books, so instead they just keep calling past due but collectible.

It's unlikely US banks will go broke from this, at least systemically important ones. There was a risk for a while that smaller banks could drag down larger banks (in the US smaller banks almost exclusively lend their deposits to larger banks) but that seems to have passed.

The biggest issue for the US banking system is that because it is still trying to digest the fallout from the boom it will become like the Japanese banking system, which has kept Japan unable to grow for decades. IMO.


----------



## Glen48 (12 June 2012)

At least some one living in house which they have stopped making payments on will keep maintaining the place and keep the smash and grab merchants away  the banks should be paying the householder a fee for guarding the place, I assume the owner or ex- owner would also be paying the land tax etc.


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## Mr Z (12 June 2012)

Glen48 said:


> At least some one living in house which they have stopped making payments on will keep maintaining the place and keep the smash and grab merchants away




Yes



Glen48 said:


> the banks should be paying the householder a fee for guarding the place,




LOL... it would be cheaper in many ways.



Glen48 said:


> I assume the owner or ex- owner would also be paying the land tax etc.




No, this is a problem for the state... they have no one to chase, no one who gives a damn. Eventually they can sell it for the back tax, I guess that the bank will make decision at that time.


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## JellySausage (12 June 2012)

Hey, some more incentives on the way.

http://www.news.com.au/money/proper...t-doubled-in-nsw/story-e6frfmd0-1226392861922

_Under his Building the State package, which Mr Baird said was at the heart of today's Budget, the grant would increase from $7000 to $15,000 on October 1, then drop to $10,000 from 2014.

The Budget will also introduce the New Home Grant of $5000 to all others buying a new property up to $650,000, while existing first home buyer stamp duty concessions will apply on new properties up to that amount - an increase of $50,000._


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## numbercruncher (12 June 2012)

JellySausage said:


> Hey, some more incentives on the way.
> 
> http://www.news.com.au/money/proper...t-doubled-in-nsw/story-e6frfmd0-1226392861922
> 
> ...




Not very encouraging numbers - Prices are falling by more that the amount of this grant, guess it encourages a new home build rather than one of the energy hogs littering the landscape


----------



## Aussiejeff (12 June 2012)

JellySausage said:


> Hey, some more incentives on the way.
> 
> http://www.news.com.au/money/proper...ubled-in-nsw[/B]/story-e6frfmd0-1226392861922
> 
> ...




Hoorah.

More fat for the flaming pyre.

Will. They. Never. Learn?


----------



## Mr Z (12 June 2012)

numbercruncher said:


> Not very encouraging numbers - Prices are falling by more that the amount of this grant, guess it encourages a new home build rather than one of the energy hogs littering the landscape




Might do if the energy rating system actually worked. Talk about a co-opted measuring system that is poorly implemented.

http://www.theaustralian.com.au/new...ings-in-disarray/story-fn6tcs23-1225899270215

There is a designer in Canberra designing virtually zero energy designs, they use one small fan to circulate air. He has trouble getting them to rate 6 star! They should rate 10! The model assume that you use heating and cooling regardless of requirement to do so!


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## Mr Z (12 June 2012)

Aussiejeff said:


> Hoorah.
> 
> More fat for the flaming pyre.
> 
> Will. They. Never. Learn?




Here, have some free money and shutup... it is all good... RIGHT?


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## young-gun (12 June 2012)

Aussiejeff said:


> Hoorah.
> 
> More fat for the flaming pyre.
> 
> Will. They. Never. Learn?




I would assume any more stimulus thrown at the Aussie housing market will have achieve less than desired effects with each batch. As is with most forms of stimulus, regardless of how they are delivered, when you're trying to make something  do what it doesn't wish to do, it will inevitably get to where it wants to be.


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## tech/a (12 June 2012)

young-gun said:


> Tech, can I ask just how far you are expecting property to fall? As it has become quite clear it is on it's way down and you have acknowledged your industry is experiencing a 'downturn', have you got a certain percentage fall in mind that you believe will be the bottom? perhaps a point which you think would be safe to re-enter residential RE.




I personally think it's close to where it will rest now.
It will rest at these levels for sometime many years.
Unless there is a massive dump in Europe and Asia.

Interest rates are really low.
They will turn so bear this in mind.


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## McLovin (12 June 2012)

Mr Z said:


> No, this is a problem for the state... they have no one to chase, no one who gives a damn. Eventually they can sell it for the back tax, I guess that the bank will make decision at that time.




The unpaid tax in many states attaches to the property, not the owner. So whoever buys the property will have to pay the unpaid tax.


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## apgb8 (12 June 2012)

I'd hate to sound like i haven't studied all the economics (which i have) and dispite this, i still highly doubt there will be that large a property burst as people think. Yes prices are technically highly overvalued, and purchasing a property is highly unattractive with such high overheads resulting in low amounts of disposable income. But in saying this you cannot deny (especially from someone living in Perth atm) housing is the best investment with such high growth occuring in Australia.

Higher population growth will mean less dwellings (for which there already is shortage for), and even with a property bubble scare, people will always need a place to live, if they're not purchasing, they're renting which means higher rental yields. There will be stagnent times, and now is probably a time, but long term (which is the reason you invest in property) you'll always come off on top, either through capital gains or rental yields.


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## MR. (12 June 2012)

apgb8 said:


> But in saying this you cannot deny (especially from someone living in Perth atm) housing is the best investment with such high growth occuring in Australia.



 Growth as in Population Growth. Best investment????


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## young-gun (12 June 2012)

apgb8 said:


> I'd hate to sound like i haven't studied all the economics (which i have) and dispite this, i still highly doubt there will be that large a property burst as people think. Yes prices are technically highly overvalued, and purchasing a property is highly unattractive with such high overheads resulting in low amounts of disposable income. But in saying this you cannot deny (especially from someone living in Perth atm) housing is the best investment with such high growth occuring in Australia.
> 
> Higher population growth will mean less dwellings (for which there already is shortage for), and even with a property bubble scare, people will always need a place to live, if they're not purchasing, they're renting which means higher rental yields. There will be stagnent times, and now is probably a time, but long term (which is the reason you invest in property) you'll always come off on top, either through capital gains or rental yields.




is that you? sparticus?


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## numbercruncher (12 June 2012)

apgb8 said:


> I'd hate to sound like i haven't studied all the economics (which i have) and dispite this, i still highly doubt there will be that large a property burst as people think. Yes prices are technically highly overvalued, and purchasing a property is highly unattractive with such high overheads resulting in low amounts of disposable income. But in saying this you cannot deny (especially from someone living in Perth atm) housing is the best investment with such high growth occuring in Australia.
> 
> Higher population growth will mean less dwellings (for which there already is shortage for), and even with a property bubble scare, people will always need a place to live, if they're not purchasing, they're renting which means higher rental yields. There will be stagnent times, and now is probably a time, but long term (which is the reason you invest in property) you'll always come off on top, either through capital gains or rental yields.




Welcome back Robots ! We like the peaches and cream approach better


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## apgb8 (12 June 2012)

young-gun said:


> is that you? sparticus?




no



numbercruncher said:


> Welcome back Robots ! We like the peaches and cream approach better




i'm not following...



MR. said:


> Growth as in Population Growth. Best investment????




well economic and population growth, especially in WA


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## herzy (12 June 2012)

MR. said:


> Growth as in Population Growth. Best investment????





huh?


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## Mr Z (13 June 2012)

McLovin said:


> The unpaid tax in many states attaches to the property, not the owner. So whoever buys the property will have to pay the unpaid tax.




That basically what I meant when I said that the property will be sold for its back tax. Until they they need a responsible party to chase for the money, which is what they are lacking! It is a revenue hole in the short term and because the property is taxed at the value you purchased it for the lower resale values are also hurting state coffers.


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## Mr Z (13 June 2012)

apgb8 said:


> I'd hate to sound like i haven't studied all the economics (which i have) and dispite this, i still highly doubt there will be that large a property burst as people think. Yes prices are technically highly overvalued, and purchasing a property is highly unattractive with such high overheads resulting in low amounts of disposable income. But in saying this you cannot deny (especially from someone living in Perth atm) housing is the best investment with such high growth occuring in Australia.
> 
> Higher population growth will mean less dwellings (for which there already is shortage for), and even with a property bubble scare, people will always need a place to live, if they're not purchasing, they're renting which means higher rental yields. There will be stagnent times, and now is probably a time, but long term (which is the reason you invest in property) you'll always come off on top, either through capital gains or rental yields.




In the end all property markets are local, there are places in the US that are doing OK despite the national wreckage. Mind you they tend to be the places that didn't bubble so much in the first place.


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## damien275x (13 June 2012)

apgb8 said:


> no
> 
> 
> 
> ...




Oh but you are. Ive studied psychology and people feel more of a need to play dumb when they're lying. If you were not following you would not have replied at all. Hello robots


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## Uncle Festivus (13 June 2012)

tech/a said:


> I personally think it's close to where it will rest now.
> It will rest at these levels for sometime many years.
> Unless there is a massive dump in Europe and Asia.
> 
> ...




A property paradigm shift for the baby boomers?

Massive dump underway = check
China gluts happening = check
End of commodities bubble for Aus = check

Or perhaps it's just the beginning of the r_eal _crash.....when the recession begins in earnest?

I give it 6-8 months to show up here in official figures.......it may already be too late to sell your IP (at the price you want)?

China's imports of copper are expected to drop for a third straight month in May as unfavorable prices and *high stockpiles *of the metal at the world's top consumer continues to *erode demand*

*defaults by Chinese buyers f*or some bulk commodities

 In the race for sales, India's carmakers may need to ease off the accelerator as they speed towards a head-on collision with a c*apacity glut.*

China’s biggest auto-dealer association said carmakers need to scale back their sales targets or sweeten incentives because the *worsening glut *of vehicles across the nation’s dealerships is unsustainable

etc etc etc


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## Aussiejeff (13 June 2012)

Uncle Festivus said:


> A property paradigm shift for the baby boomers?
> 
> Massive dump underway = check
> China gluts happening = check
> ...




Tsk, tsk Mr Festivus.  :frown:

You are so......_UN-Australian _for talking DOWN the economy!

[size=-2][Written & spoken by Herr Pain Schwann on behalf of the S.O.P. (Supreme Optimists Party)] [/size]

Heil!!!


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## Mr Z (13 June 2012)

Don't forget that China has just sent a lot of stimulus down the pipe and that lending is already up significantly. This will mean higher prices in a while. They seem stock pile on low prices and divest on high, they play the game when it comes to commodities IMO.

China has HUGE scope when it come to stimulus, they have a 40 year plus US play book to learn from after all. They are just starting out in that respect.


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## young-gun (13 June 2012)

Mr Z said:


> Don't forget that China has just sent a lot of stimulus down the pipe and that lending is already up significantly. This will mean higher prices in a while. They seem stock pile on low prices and divest on high, they play the game when it comes to commodities IMO.
> 
> China has HUGE scope when it come to stimulus, they have a 40 year plus US play book to learn from after all. They are just starting out in that respect.




you're not really taking those lending figures out of china seriously are you? one month it's flat as a tac, the next its almost record breaking? seems a bit strange...


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## Mr Z (13 June 2012)

young-gun said:


> you're not really taking those lending figures out of china seriously are you? one month it's flat as a tac, the next its almost record breaking? seems a bit strange...




Absolutely, that is the direct control that manipulating reserve ratios gives you. They are worried, Europe is their biggest customer... IMO you would be foolish to think that you somehow know better.


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## young-gun (13 June 2012)

Mr Z said:


> Absolutely, that is the direct control that manipulating reserve ratios gives you. They are worried, Europe is their biggest customer... IMO you would be foolish to think that you somehow know better.




just an opinion Z I only have this view from skimming articles where alot of people seem to think chinas figures aren't worth the paper they're printed on. I also wouldn't have thought that they would have seen such a fast reaction.


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## explod (13 June 2012)

young-gun said:


> just an opinion Z I only have this view from skimming articles where alot of people seem to think chinas figures aren't worth the paper they're printed on. I also wouldn't have thought that they would have seen such a fast reaction.




Agree, my sources seem to indicate similar. As with Japan, China is turning inward and the game with Auz and our resources is over in my view.


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## Mr Z (13 June 2012)

young-gun said:


> just an opinion Z I only have this view from skimming articles where alot of people seem to think chinas figures aren't worth the paper they're printed on. I also wouldn't have thought that they would have seen such a fast reaction.




It matters not if they are political numbers, which government has untainted numbers after all? It signals intent, reserve ratios cut, interest rates cut, borrowing up ---> that is a powerful signal to the market from a government that has the resources to stimulate like no other on this planet. It is to be taken seriously in the mid term and will have an impact.


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## explod (14 June 2012)

Mr Z said:


> It matters not if they are political numbers, which government has untainted numbers after all? It signals intent, reserve ratios cut, interest rates cut, borrowing up ---> that is a powerful signal to the market from a government that has the resources to stimulate like no other on this planet. It is to be taken seriously in the mid term and will have an impact.




Agree, but private leverage and employment will be issues for some time now.

And talking to my Estate Agent here at Mornington yesterday says its starting to get ugly.  Mount Martha okay but a very different demographic along the secluded beaches.

He he, that cold at the moment makes you wonder.


----------



## DB008 (14 June 2012)

Westpac Chief outlook



> Westpac managing director Gail Kelly says compound growth in house prices are over for good
> 
> AUSTRALIA is unlikely to ever see the housing boom that sparked a massive rise in personal wealth across the country in the past decade, Westpac managing director Gail Kelly told the economic forum in Brisbane yesterday.
> In a closed session, Ms Kelly told business leaders that the years of compound growth in house prices were over for good.
> She also said Australians were rejecting the high levels of debt that allowed them to borrow vast sums against the equity in their house.




http://www.news.com.au/money/money-matters/westpac-managing-director-gail-kelly-says-years-of-compound-growth-in-house-prices-are-over-for-good/story-e6frfmd9-1226395093277


----------



## sptrawler (14 June 2012)

DB008 said:


> Westpac Chief outlook
> 
> 
> 
> http://www.news.com.au/money/money-matters/westpac-managing-director-gail-kelly-says-years-of-compound-growth-in-house-prices-are-over-for-good/story-e6frfmd9-1226395093277




The reason it is over is because the banks are tightening their lending practices. So Gail would know, if anyone would.


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## Aussiejeff (14 June 2012)

DB008 said:


> Westpac Chief outlook
> 
> 
> 
> http://www.news.com.au/money/money-matters/westpac-managing-director-gail-kelly-says-years-of-compound-growth-in-house-prices-are-over-for-good/story-e6frfmd9-1226395093277




No! This can't be happening!! It's a Big Fat Talking-Down-The-Economy Lie by an un-Australian!!! 

For pity sake, one just has to look at our darling Gina. Clearly, she is booming mightily.... 

One should support one's gummint, surely? Let us all pray the World's Greatest Treasurer & His trusty sidekick Jools remain in their jobs _forever_ to banish the naysayers & reward our precious FHB's!!

Up Ozzie I say!!


----------



## DB008 (14 June 2012)

sptrawler said:


> The reason it is over is because the banks are tightening their lending practices. So Gail would know, if anyone would.




Have been getting tightened since the GFC....


----------



## Julia (14 June 2012)

sptrawler said:


> The reason it is over is because the banks are tightening their lending practices. So Gail would know, if anyone would.




Not before time, going by the story in "The Australian" over recent days.  
Contrary to popular belief (my own included) Australia apparently had a thriving subprime event leading up to the GFC.



> Denise Brailey of the Banking and Finance Consumers Support Assn, has, with The Australian, been closely following loan application irregularities for several years.
> 
> 'But these emails prove unconscionable and predatory lending practices were happening across the board,' Ms Brailey said.
> 
> ...


----------



## sptrawler (14 June 2012)

Julia said:


> Not before time, going by the story in "The Australian" over recent days.
> Contrary to popular belief (my own included) Australia apparently had a thriving subprime event leading up to the GFC.




I think we were saved by the bell, if the U.S, Europe and U.k hadn't imploded. We would have had our own crash, not a deflation like is currently happening.
The banks would have continued to support the ever increasing valuations, if they weren't reigned in.


----------



## explod (14 June 2012)

Some knew,  I hit the wall with a property using a subprime loan 8 years ago.  The loan officer I knew as we had both been in the same occupation some years earlier.  After being cleaned out I then hit the books on economics and discussions with my mate from dud loans and have therefore seen this coming.

It is why I have been so critical of property rampers on this thread since I joined you in 2007

Talking to my old Real Estate confidant yesterday and we all agree that for a few years here it is going to be very ugly indeed.   Anyone with any sort of a mortgage needs to get out now.  If you own your own home however hang onto it as most other things apart from a bit of gold and silver will soon have little value.   But your own roof over your head will be everything.

Just an uninformed, innocent and humble two cents.


----------



## prawn_86 (14 June 2012)

You still haven't really given any reasonings explod? Do you think it is a sub-prime cirsis coming? Or somehting else? Global or Aus specific? etc etc


----------



## MrBurns (14 June 2012)

explod said:


> Talking to my old Real Estate confidant yesterday and we all agree that for a few years here it is going to be very ugly indeed.   Anyone with any sort of a mortgage needs to get out now.  If you own your own home however hang onto it as most other things apart from a bit of gold and silver will soon have little value.   But your own roof over your head will be everything.
> 
> Just an uninformed, innocent and humble two cents.




Thats about how it is and if you look back you'll realise this has been creeping up on us for the past year, it's now starting to bite and will be seriously destructive before too long.


----------



## explod (14 June 2012)

prawn_86 said:


> You still haven't really given any reasonings explod? Do you think it is a sub-prime cirsis coming? Or somehting else? Global or Aus specific? etc etc




A global problem.  We have outgrown our planet and somehow the breaks need to come on.  Perhaps this is just nature taking its normal course.  

But who really knows, we are on new ground in my view and only time will tell the real story.

And the drop in property, I concede I called it far too early and could well have done better by hanging on for awhile.  However when one loses confidence decision are poor.


----------



## MR. (14 June 2012)

Dear Gail,

Good to listen to another one of your speeches yesterday. I know you got roped into answering a few questions on real-estate yesterday, can’t blame them for their questions, remember your audience has been hit the hardest in Australia, but..... May I ask?


Referring to your comment “The years of compound growth in house prices were over for good”. How long is that exactly? It just sounds like a very long time !

I bought an investment property just under two years ago after reading, as it appeared, expert posts from various property experts/gurus. To think I ended up listening to the smooth words of “seal” when I should have listened to the knockers who’d never end up owning a thing.... 

Should I sell my investment property?
Looking forward to your response.

yours sincerely,
MR.


----------



## MR. (14 June 2012)

Dear MR..........?

If I could only find the words to say......

http://www.youtube.com/watch?v=QW5Ha1cLApw&feature=related

Best Regards

G.


----------



## explod (14 June 2012)

> To think I ended up listening to the smooth words of “seal” when I should have listened to the knockers who’d never end up owning a thing....




"Some people ya just caant reach" in Cool Hand Luke

Got gold and silver.


----------



## Julia (14 June 2012)

explod said:


> Anyone with any sort of a mortgage needs to get out now.



That's a bit unnecessarily dramatic, isn't it?  Plenty of people have perfectly manageable mortgages and are very happy living in the houses they have chosen.

Not that it would ever happen, but perhaps consider the results if everyone with mortgages were to suddenly put their properties on the market.

Totally unrealistic.  Silly, really.


----------



## explod (14 June 2012)

Julia said:


> That's a bit unnecessarily dramatic, isn't it?  Plenty of people have perfectly manageable mortgages and are very happy living in the houses they have chosen.
> 
> Not that it would ever happen, but perhaps consider the results if everyone with mortgages were to suddenly put their properties on the market.
> 
> Totally unrealistic.  Silly, really.




Perhaps Julia but what is going to kill the system soon is the very low yields.  Money printing is one thing but heading towards almost zero interest rates in some countries and lower here means that something is going to have to give.   The speed of change is gaining pace, we have had Ireland, Iceland, Greece and now Spain.  Some are saying that a domino effect will occur at the collapse of Spain and indications are that this is close.  Their Bond Yields almost hit 7% today.   From my readings and in spite of the Government guarantees our banks here are very exposed to the world currency flows.

Not saying it will happen tomorrow but there is danger that very major haemorrhage is near.  You would well remember the 18% interest rates back around 1980, sure you can  say it was the Government but at the end of the day it was supply and demand.  How would a $100,000 mortgage go for someone out of work or even working part time.

Call me doom and gloom if you like but it is well worth painting pictures of all scenarios for consideration at this juncture.


----------



## drsmith (14 June 2012)

explod said:


> The speed of change is gaining pace, we have had Ireland, Iceland, Greece and now Spain.  Some are saying that a domino effect will occur at the collapse of Spain and indications are that this is close.  Their Bond Yields almost hit 7% today.



If bond holders lose confidence in one of the major economies, that could get interesting.


----------



## Aussiejeff (15 June 2012)

drsmith said:


> If bond holders lose confidence in one of the major economies, that could get interesting.




Thankfully, it would seem that most of the big Euro Debt bond holders (ie bailed out banks) are not short on supreme confidence that they will be bailed out further by the gummints they themselves are helping to bail out. With new wads of bailout cash they are queuing to buy Euro debt bonds like there is no tomorrow!

It's a beautiful self-fulfilling feedback loop, invented by the cunning rich and notorious to prop their dailly need for greed. Bit like inventing the "Perpetual Motion" theory - just substitute "CONfidence" for "Motion".

Why, overnight the markets have soared again on a whiff of "CONfidence"(tm).

You know it makes cents....


----------



## damien275x (15 June 2012)

Somebody today asked me why would evil gail come out and say that, when reduced borrowing is not in the banks best interest.

a) Gail does not give a **** about market conditions, she will reduce and sack staff as necessary to ensure her bank will always turn a profit. 

I saw another article today titled "Battling Aussies only have 4 weeks savings" .. So watch for job losses and mass defaults on loans when they can't pay. Especially uneducated factory workers who have no skillset relevant to 21st century Australia. These bogans are the ones who have borrowed on top of borrowed to obtain multiple homes.. This is a standard practice particulary in the west and low socio suburbs. These economic illiterate investors are set to lose it all because they listened to Tracy on ACA as well as the fat Aussie home loans dude.

Even if they debt it up to kgoing aging for a while that's only delaying the inevidible . More debt repayments also results in less consumption which in turn leads to  even further job losses etc and then credit won't be available anymore. 

At least with shares you are never in denial about what it's worth. When it sinks in that their ****box purchased for 700k will never go for that much again they will NOT be pleased!!!


----------



## Glen48 (15 June 2012)

http://www.realecontv.com/page/10990.html 

Here is a bit more what to expect. maybe Gillard can go back to Slater and Gordon suing Banks for mortgage fraud after she is tossed out.


----------



## young-gun (15 June 2012)

where did all the bulls go......? alot of them will be doing this  shortly i feel.


----------



## Glen48 (15 June 2012)

Kirk Douglas is still fighting on.


----------



## moXJO (16 June 2012)

young-gun said:


> where did all the bulls go......? alot of them will be doing this  shortly i feel.




There is only so much doom I want to read. I'm busy making money and there is plenty out there. 

My bank manager is building another three duplex developments after a profitable first development a few months backr. Go figure, he works for gail


----------



## medicowallet (16 June 2012)

moXJO said:


> There is only so much doom I want to read. I'm busy making money and there is plenty out there.
> 
> My bank manager is building another three duplex developments after a profitable first development a few months backr. Go figure, he works for gail




I'd be careful about using a bank manager as a yardstick for my future.


In my experience bank workers have next to zero idea about how to make money.

They have more experience with selling product, being your best mate when you have huge loans or deposits with them, 

and your worst enemy when you cannot make a payment for whatever reason.

I tend to keep my bank managers on edge.

MW


----------



## numbercruncher (16 June 2012)

Haha yes taking that sort of advice from the guy lending you the money is hardly unbiased - no different than buying a property because the RE agent says youll make cash.

Good luck with the Leveraged speculating though Bulls ! Only one thing I see positive in Australian RE is that yields are rising as rates and prices plummet.


----------



## moXJO (16 June 2012)

numbercruncher said:


> Haha yes taking that sort of advice from the guy lending you the money is hardly unbiased - no different than buying a property because the RE agent says youll make cash.
> .




Lol who is taking advice it's just an observation after he sent me the plans to quote on(i worked on the first one). The way you guys twist things is the reason you guys are the only ones posting on this pity party. Housing down... Yes
However there are some great deals out there and some fantastic ones if you do the numbers. And there is still a boat load of property I think is overpriced by $100k or more that sells quickly


----------



## damien275x (16 June 2012)

moXJO said:


> There is only so much doom I want to read. I'm busy making money and there is plenty out there.
> 
> My bank manager is building another three duplex developments after a profitable first development




Can't imagine it would be that profitable. We've already overbuilt like just about every other country. I was in Mainland China last year and I kid you not, there are entire cities EMPTY. Obviously we have not done it to that extent, but we've still overbuilt and overspent due to stimulus and cheap government money distorting the true demand. Now that the demand has been revealed , the prices are falling. It is basic economics.

If there was high demand like everyone (in real estate) says, prices would not be falling right now, and to the counter argument "well they just can't get loans" .. that's basically an admission that prices have been fueled by stimulus rather than true market demand, because without credit, the demand disappears. 

The downside isn't the idiots who bought homes they can't afford are going to lose. That's their fault. The worst damage will be when the Federal Government has huge holes in their budgets because of stamp duty/property taxes not being collected @ sky high rates and percentages. When that happens, I assume it will be screw the people/introduce a new tax/expand the public service more to 'fix' the very problem they caused, and their solutions will only make it worse. 

The future all depends on how they react when these market forces place pressure on them, and USA will also be knocking on our door for money in the next 5 years when they default too. They are absoultley stuffed and have contributed 800% of GDP in unfunded liabilities !!! LOL!!!


----------



## moXJO (16 June 2012)

damien275x said:


> Can't imagine it would be that profitable.




thats why this forum is full of blowhards, I'm out


----------



## young-gun (16 June 2012)

moXJO said:


> thats why this forum is full of blowhards, I'm out




looking forward to your return in 12-24 months, please bring stats(if you can bring yourself to look at them a second time) in relation to the profitability of ventures between now and then.

in saying that they might not be half bad if they throw enough money at potential buyers again.


----------



## ROE (16 June 2012)

damien275x said:


> Can't imagine it would be that profitable. We've already overbuilt like just about every other country. I was in Mainland China last year and I kid you not, there are entire cities EMPTY. Obviously we have not done it to that extent, but we've still overbuilt and overspent due to stimulus and cheap government money distorting the true demand. Now that the demand has been revealed , the prices are falling. It is basic economics.




Can you tell me what city that you visited?

is it those photos that taken early hours in the morning and all the shopping mall before anyone get out of bed and spread around saying China Building a ghost city 

Pitt st Sydney is a ghost city if photos taken at 6am in the morning I can tell you that


----------



## Mr Z (16 June 2012)

I'd be wary of applying our norms to the Chinese property market, things work a little differently in many respects in China and they certainly have not got an economy built around a housing boom like the USA had. They tend to pay cash a lot and they will often invest in a property and leave it empty, new and never used is far preferable to the Chinese than a used property. I know it doesn't make sense to us but they do it. Yes there is an enormous amount of property but there are enormous numbers of people to fill it. 

Added all up... 

1. the leverage is not that high, beyond a third property you are forced to pay cash 
2. the market potential is there, it is not really an over build if you look how a lot of the country is living 
3. they do tend to leave investment properties empty for cultural reasons
4. the property boom in not "the" central stay to the economy
5. banks run crazy high reserve ratios and can withstand much higher default levels than our banks

All in all I can see that they are in big bad bubble territory, I can't say that I think this has to burst really badly to resolve itself, there is scope to work through this in an economy with its growth rate. Things are not so bad in China, hell even McDonalds are looking to add 70K workers!

Call me skeptical, if only because it is the property bubble the whole world seems to be calling!

I dunno about China... I get the feeling that most commentators don't really understand the place as well as they think they do.


----------



## maffu (16 June 2012)

Changes to the NSW budget results in changes to the property grants and stamp duty exemptions.

I received plenty of glossy brochures in the mail recently trying to sell off new apartments before the June 30 stamp duty exemption expires.
September 30 losing the $7,000 First Home Buyers grant is a good thing in my mind.
Overall I am happy with the direction of these changes, as its removing some of the perks for First Home Buyers that, I believe simply drive up prices for no real gain.

So NSW/Sydney will probably see the statistics jump around a little bit in July and again in October as people rush to take advantage of the grants, and then slow down in the following months.



> Budget changes: Five important dates
> June 30, 2012 The last day off-the-plan buyers other than first-home buyers - investors, upgraders and downsizers - can claim the stamp-duty exemption (Home Builders Bonus), worth more than $22,490 on a $600,000 property.
> 
> July 1, 2012 Buyers of new property other than first-home buyers will pay full stamp duty but can claim a $5000 New Home Grant for houses or apartments priced up to $600,000.
> ...


----------



## damien275x (16 June 2012)

Grants help nobody except the builders and the sellers, as soon as a grant is offered prices rise by the very amount of the grant, worse - when it expires, they go down, and you lose.


----------



## medicowallet (16 June 2012)

damien275x said:


> Grants help nobody except the builders and the sellers, as soon as a grant is offered prices rise by the very amount of the grant, worse - when it expires, they go down, and you lose.




If only this was the case....


$7000 "equity" = $70000k+ borrowings

yay, I can now pay $197000 for the $190000 house..

What's that!!! 7 other FHB are buying as well

Well, I'll show them, I'll pay $260000 for it... it has the deck I always DREAMED of....


----------



## medicowallet (16 June 2012)

Good evening brothers,

Such a glorious day here, it was raining and the global warming has made it awfully cold for this time of year,

but another FANTASTIC auction clearance result

"Saturday 16th June 2012

A clearance rate of 56 per cent was recorded this weekend compared to 53 per cent last weekend and 53 per cent this weekend last year.

There were 229 auctions reported to the REIV today with 297 selling and 229 being passed in, 142 of those on a vendors bid.

The auction market continues to reflect the conservative position of buyers and sellers.

Next weekend the REIV expects around 610 auctions.

Enzo Raimondo
CEO REIV"


Enzo says 610 Auctions next week!!!!   I guess that they will sell 280 of 510 reported then 


Sunshine and lollipops,

MW
The original Robot destroyer

PS Where is Robots?


----------



## young-gun (17 June 2012)

medicowallet said:


> If only this was the case....
> 
> 
> $7000 "equity" = $70000k+ borrowings
> ...




but it has the deck we've always dreamed of also. i guess i'm gonna have to go 270. if you go higher ill just go higher again, property always goes up after all, I cant really lose on this one.


----------



## drsmith (17 June 2012)

All government grants to purchse property should be abolished as should all property taxes at the state government level. 

The only tier of government that should apply taxes to property is local government and then only in the form of rates as is the case now. That's the only level of government that directly provides services to property owners.


----------



## numbercruncher (22 June 2012)

Another area of the property spruiker exposed as false!




> AUSTRALIA lost almost 300,000 people on the way to last year's census. The census count suggests that Australia's population growth since 2006 was much smaller than previously estimated, especially in New South Wales, Victoria and Queensland.
> In its first release of census-based data, the Bureau of Statistics has slashed its estimate of the population in mid-2011 from 22.6 million people to 22.3 million. The cut of 294,400 is equivalent to wiping away roughly a year's population growth.
> 
> 
> Read more: http://www.smh.com.au/opinion/polit...sus-mystery-20120620-20oh5.html#ixzz1yVzsPsp7





Further more from ABS -



> There were 297,900 births registered in 2010, a slight increase (0.7%) from the number of births registered in 2009 (295,700)




So our entire net populaion growth appears to be babies who dont buy houses !


----------



## Mr Z (22 June 2012)

It always shrinks in the cold weather


----------



## numbercruncher (23 June 2012)

More and more business leaders getting the Bear goggles out !




> AUSTRALIA is unlikely to ever see the housing boom that sparked a massive rise in personal wealth across the country in the past decade, Westpac managing director Gail Kelly told the economic forum in Brisbane yesterday.
> In a closed session, Ms Kelly told business leaders that the years of compound growth in house prices were over for good.
> She also said Australians were *rejecting* the high levels of debt that allowed them to borrow vast sums against the equity in their house.
> 
> ...


----------



## medicowallet (23 June 2012)

medicowallet said:


> Good evening brothers,
> 
> Such a glorious day here, it was raining and the global warming has made it awfully cold for this time of year,
> 
> ...




"Saturday 23rd June 2012

A clearance rate of 55 per cent was recorded this weekend compared to 56 per cent last weekend and 55 per cent this weekend last year.

Next weekend marks the end of the first half of the year and the year to date clearance rate is 61 per cent compared to 63 per cent this time last year and 82 per cent in 2010.

There were 515 auctions reported to the REIV today with 284 selling and 231 being passed in, 152 of those on a vendors bid.

Next weekend the REIV expects around 500 auctions.

Enzo Raimondo
CEO REIV"


Pretty close to the 510 I predicted and the 280 sales.... The REIV is such a predictable beast.

A corrected 46% clearance rate is looking interesting

MW
The original robot destroyer

PS Where is Robots?


----------



## robz7777 (23 June 2012)

Pretty fair prediction there MW!! Any predictions on Interest Rates or the ASX by December? Put those economists to shame!


----------



## medicowallet (23 June 2012)

robz7777 said:


> Pretty fair prediction there MW!! Any predictions on Interest Rates or the ASX by December? Put those economists to shame!




If only,

I'd be happy enough just to predict the weather for fishing tomorrow!


----------



## numbercruncher (24 June 2012)

Further evidence of years of fudged figures ...



> Australia has almost 1 million fewer households than assumed in government forecasts of a housing shortage, raising doubts about a supply shortfall cited as the main reason the nation will avoid a U.S.-style crash.
> The Pacific nation had 7.8 million households, data released yesterday from the 2011 Census showed.
> 
> That compared with estimates of 8.7 million as of June 2010, according to the latest figures used by the National Housing Supply Council, a group created by the government in May 2008 to monitor housing demand, supply and affordability. Australia’s population also grew by 300,000 less than previously estimated, to 21.5 million.






> “Young adults have gone back home with mum and dad, or are sharing houses,” said Collyer, who argues that Australia has an oversupply of housing based on statistics showing water usage and new building data. “Household sizes have gone up even more than people think, and the oversupply of housing will be revealed to be even worse than we thought.”
> 
> As more Australians live with friends or parents to combat falling affordability, the number of vacant dwellings rose to 934,471 in the 2011 census from 830,376 in 2006.






> While home prices across Australia’s eight state capitals fell for a fifth consecutive quarter in the three months through March, the longest stretch of losses on record






http://www.bloomberg.com/news/2012-06-21/vanishing-households-undercut-claim-of-australian-home-shortage.html


----------



## im sparticus (24 June 2012)

Ok just an update of the scm hypothetical short mel at 571 1-6-12 syd 626 perth 551 bris 429. As of today he is unprofitable with mel at 574, for info syd 526 and perth 550 bris 460 ad 424 all states showing steady increases accept perth with the biggest jump being bris. looking at the index today was fun all green. looks like the peanut gallery just might have nailed the bottom but we will have to wait and see.


----------



## medicowallet (24 June 2012)

im sparticus said:


> Ok just an update of the scm hypothetical short mel at 571 1-6-12 syd 626 perth 551 bris 429. As of today he is unprofitable with mel at 574, for info syd 526 and perth 550 bris 460 ad 424 all states showing steady increases accept perth with the biggest jump being bris. looking at the index today was fun all green. looks like the peanut gallery just might have nailed the bottom but we will have to wait and see.




I never saw the original post,

What were your predictions?  Or were you not game enough to make one for fear of it differing..

House prices to fall in real terms for some time.

MW


----------



## young-gun (24 June 2012)

im sparticus said:


> Ok just an update of the scm hypothetical short mel at 571 1-6-12 syd 626 perth 551 bris 429. As of today he is unprofitable with mel at 574, for info syd 526 and perth 550 bris 460 ad 424 all states showing steady increases accept perth with the biggest jump being bris. looking at the index today was fun all green. looks like the peanut gallery just might have nailed the bottom but we will have to wait and see.




link?

or are you deciding to stay true to form and just making stats up?


----------



## young-gun (24 June 2012)

medicowallet said:


> House prices to fall in real terms for some time.




+1, a long long time.


----------



## numbercruncher (24 June 2012)

Endless reports of whats happening in the real world ....



> ONCE the booming engine room of growth, Australia's housing sector is now in a crumpled heap and is holding back the country's otherwise stellar economic performance.
> 
> New housing construction fell 12.6 per cent*in the first quarter of 2012 from the prior quarter and plunged 25 per cent*on year, the Australian Bureau of Statistics said today. It was the fourth consecutive quarterly fall and the biggest since September 2010.
> 
> ...




http://www.theaustralian.com.au/business/economics/housing-slump-drag-on-economy/story-e6frg926-1226403112643

With construction such a "disaster" you really have to wonder about these billionaire miners needing to import 457 contruction labour because of a "skills shortage" - so many absolute rorts in the country ...


----------



## young-gun (24 June 2012)

numbercruncher said:


> Endless reports of whats happening in the real world ....
> 
> 
> 
> ...





RPData June report on youtube.

http://www.youtube.com/watch?v=wgqwDhETjVI


----------



## Muschu (24 June 2012)

young-gun said:


> +1, a long long time.




If +1 is an acceptable abbreviation for agreeing then where do +3 or -4 fit?  

I gather the stats are, in given areas I assume, that first home buyers are re-entering the market.  

On what evidence, not circumspection, do you base your "long long time" view?  And how long is that?

Rick


----------



## im sparticus (24 June 2012)

He said long long which is obviously 2 orders of magnitude greater than long just remember some of these guys have been calling for a crash for 20 years or more ala scm (who is actually only 22years of age believe it or not).


----------



## young-gun (25 June 2012)

Muschu said:


> If +1 is an acceptable abbreviation for agreeing then where do +3 or -4 fit?




Is this really something you need explained to you?



> I gather the stats are, in given areas I assume, that first home buyers are re-entering the market.



If you are referring to sparticus' stats then who would know, he has never provided evidence of anything that he says, which as far as I'm aware has proven to be incorrect almost every time.



> On what evidence, not circumspection, do you base your "long long time" view?  And how long is that?




The evidence is in 99% of every other developed nations housing bubble burst. Japan is in something like a 20 decade property bear market. The US is 5 or so years into it's crash and still going down. It's been said a billion times before, we are no different here, and although we didn't engage in sub-prime lending to the extent of the US, it has become evident in the past 2 weeks that similar practices were carried out.

Population growth has nothing to do with it, as I am fairly sure there hasn't been mass amounts of people dying in the US and Japan or Spain to trigger their crashes. As seen in the RPData clip i posted above, prices are still falling despite heavy interest rate cuts.

If you can find me a hockey stick graph of housing, that then plateaus and then shoots off in another hockey stick formation I would love to see it. Bubbles ALWAYS end up back where they started. Failure to acknowledge a bubble is ignorant.

The only thing that will sustain or cause 'minimal' increases to current prices is as you said stimulus. However, even if the gov embarks on a similar amount to last time, it will have a less desired affects, and prices will continue to fall sooner than previous.

To answer your question, if house prices 'crash' a long long time for me would be a minimum of 10 years, pushing out to possibly 20. Not falling the entire time, but falling and remaining stagnant, perhaps with the occasional blip of increases. People seem to underestimate the magnitude of what is occurring on a global scale.

I think that when mums and dads that have no idea what they are actually doing can buy a house, and sit back and watch it increase exponentially without doing anything, it is a sign that something isn't quite right.

Debt is bad.


----------



## im sparticus (25 June 2012)

Do you really need to be shown where the rpdata daily house price index is found? Its almost as bad as someone quoting a price of a stock and then needing to show evidence, as always rebuke me if you can otherwise it is you who is breeding missinformation. hockey sticks do not signal the end of the world or anything unsustainable just how poorly linear scale is at plotting compound growt  some people are silly enouth think thwt because linear scale can no longer fit this growth it musnt fit in real life set your charts to a log scale remove the tinfoil hat and rejoin reality . exponential growth always looks unsustainable on linear just because it cant fit the chart does not mean we are  done in real life the present always looks like the peak on those charts weather  its now 200 years from now or 200 years ago anyone who understands graphs understands this where the graph runs out of resolution does not signal the end or anywhere near


----------



## young-gun (25 June 2012)

im sparticus said:


> Do you really need to be shown where the rpdata daily house price index is found? Its almost as bad as someone quoting a price of a stock and then needing to show evidence, as always rebuke me if you can otherwise it is you who is breeding missinformation. hockey sticks do not signal the end of the world or anything unsustainable just how poorly linear scale is at plotting compound growt  some people are silly enouth think thwt because linear scale can no longer fit this growth it musnt fit in real life set your charts to a log scale remove the tinfoil hat and rejoin reality . exponential growth always looks unsustainable on linear just because it cant fit the chart does not mean we are  done in real life the present always looks like the peak on those charts weather  its now 200 years from now or 200 years ago anyone who understands graphs understands this where the graph runs out of resolution does not signal the end or anywhere near




it really is a very simple process, im sure if you try really really hard, even you can achieve it! simply link-your-info when quoting figures. go and adjust all your graphs(if you actually view data?) to give yourself peace of mind. i now remember why i stopped dealing with you.


----------



## im sparticus (25 June 2012)

young-gun said:


> it really is a very simple process, im sure if you try really really hard, even you can achieve it! simply link-your-info when quoting figures. go and adjust all your graphs(if you actually view data?) to give yourself peace of mind. i now remember why i stopped dealing with you.






Lol you actually dont know where the indexs are quoted do you?? Oh well thats to bad for you. why dont you ask scm even he didnt need verification for that one. come to think of it knowone else has either good luck it really is a useful tool anyone who is anyone will have it as for the uninformed well they will just have to be content with whatever picture there 100 year old chart on linear is painting them.

Scm further in the red today by a whole 1% with mel at 576 for info syd also gained at 631.


----------



## young-gun (25 June 2012)

im sparticus said:


> Lol you actually dont know where the indexs are quoted do you?? Oh well thats to bad for you. why dont you ask scm even he didnt need verification for that one. come to think of it knowone else has either good luck it really is a useful tool anyone who is anyone will have it as for the uninformed well they will just have to be content with whatever picture there 100 year old chart on linear is painting them.
> 
> Scm further in the red today by a whole 1% with mel at 576 for info syd also gained at 631.




Haha, if i recall correctly your gold position was closed in a matter of hours, from the start point of your hypothetical.

And you're absolutely right, i have no idea how to google stats Its a matter of principal, one that you seem to find very hard to grasp. Given your views on the economy I guess I can only expect as much. But if clutching at a few daily positive figures is helping you sleep at night then that's good. If you can(as I don't know how to view this amazing index of yours) please quote the year on year change for any capital of your choosing? In fact, make it 3?


----------



## im sparticus (25 June 2012)

Thanks i forgot we were also monitoring gold im sparticus gold hypothetical is currently in the green think it was short @ 1577. Its a hypothetical why would it have been closed the whole point was to monitor gold vs housing and atm housing is winning. even melbourne housing lol.


----------



## young-gun (25 June 2012)

im sparticus said:


> Thanks i forgot we were also monitoring gold im sparticus gold hypothetical is currently in the green think it was short @ 1577. Its a hypothetical why would it have been closed the whole point was to monitor gold vs housing and atm housing is winning. even melbourne housing lol.




Ah ok so both are still in play? Good to hear. I look forward to you posting year on year figures from your index of 3 capital cities.


----------



## Ves (25 June 2012)

im sparticus said:


> Thanks i forgot we were also monitoring gold im sparticus gold hypothetical is currently in the green think it was short @ 1577. Its a hypothetical why would it have been closed the whole point was to monitor gold vs housing and atm housing is winning. even melbourne housing lol.



What about the interest charges for when you were down on the gold short?  You can't short gold without leverage as far I recall, so you'd be underwater as things stand.


----------



## im sparticus (25 June 2012)

Guys the trades arnt real its to compare different assets from a actual point in time ie without hindsight. Interest can be hedged so its irrelevant. Ie i just put whatever my exposure is into an interest earning account the only person to mension leverage was scm who wanted as much as he could get 1% of whatever the hell he had in mind is probably quiet a substancial loss ontop of his having to pay dividends while short (i wont have to pay any dividends lol but the point wasnt to get technical) but good point we will have to add an automatic 3.8%pa loss to scms short to account for rent.

Me im just looking at percentage diffs between the two. if i recall for all you caught up in the ego side of it rules were scm calls the exit maybe when he does you can get him to post up the sort of exposure he had in mind and work out profitability.


----------



## village idiot (25 June 2012)

can I play?

put me down for Long XJO , Short all the property indexes except Perth. $1m per side

hypothetically.


----------



## im sparticus (25 June 2012)

village idiot said:


> can I play?
> 
> put me down for Long XJO , Short all the property indexes except Perth. $1m per side
> 
> hypothetically.




Sure remember to keep us posted of your progress starting from today


----------



## young-gun (26 June 2012)

village idiot said:


> can I play?
> 
> put me down for Long XJO , Short all the property indexes except Perth. $1m per side
> 
> hypothetically.




XJO long that's dangerous even hypothetically


----------



## numbercruncher (27 June 2012)

Interesting read listing rental returns across different US cities - helps demonstrate the extent of our bubble ...




> 3. Daytona Beach, Fla.3 of 10
> 
> Median home price in 2012: $114,000
> Projected home price in 2015: $123,282
> ...




http://money.cnn.com/galleries/2012/real_estate/1206/gallery.best-rental-investing-markets.moneymag/3.html


----------



## apgb8 (27 June 2012)

http://www.wabusinessnews.com.au/ar...A&utm_medium=email&utm_campaign=article_click

opinions?


----------



## young-gun (27 June 2012)

apgb8 said:


> http://www.wabusinessnews.com.au/ar...A&utm_medium=email&utm_campaign=article_click
> 
> opinions?




It won't happen


----------



## againsthegrain (27 June 2012)

No chance


----------



## im sparticus (27 June 2012)

A buddy of mine had baught into a new development in in his home in manila waterfront he calls it a condominium (highrise 30 floors) he baught off the plan and is yet to settle with the dmeveloper 26m2 for $125000, Given that labour is cheap there im suprised to find per m2 ( usually in oz luxury highrise the bigger the unit and better positioning the greater the $$$ per m2) our average new 2bedroom  is usually 5 x 6 times the size and very compareable $$$ Per m2 and a completely renovated oldy alot cheaper with the only diff being some ammenities. some people just cant see the value though.


----------



## Glen48 (27 June 2012)

Kirk, Manila is another bubble being pumped up every shopping center is pushing leaflet's etc..


----------



## Glen48 (27 June 2012)

http://finance.ninemsn.com.au/pfpro...-aussie-trophy-homes-that-cant-sell.slideshow
 sell your face book  shares and move up


----------



## damien275x (28 June 2012)

I went to three auctions in Melbourne over the weekend. None of them sold, and there was a dismal turnout. I found out one of them ended up negotiating with a bidder for slightly more, but they still got about $35-40k less than they wanted. The sellers were wanting to leave Australia though so they had to sell. Some people will hold onto them and wait longer, but if prices keep sliding it doesn't look like they will recoup any losses they incur from this point forward. 


Also at the moment it looks as though even the most optimistic forecasts involve price stagnation. If prices stay the same, you're going backwards @ 3% p/a on average (inflation) so after 5 years, that's 15%. a $52,000 loss. Then you've got to factor in the transaction costs of selling the place, so you'd be bleeding upwards of 20%. 

I am looking at buying in 2017/18 at this point, I think after about 5-6 years of steady falls or stagnation I will be able to buy one comfortably, especially if I am able to invest money in another area and have it compound, although with all the doom and gloom I am not banking on very high returns in shares. Possibly a slight appreciation in the price of my Gold and Silver collection but thats about it.


----------



## Miss Hale (28 June 2012)

damien275x said:


> I went to three auctions in Melbourne over the weekend. None of them sold, and there was a dismal turnout. I found out one of them ended up negotiating with a bidder for slightly more, but they still got about $35-40k less than they wanted. The sellers were wanting to leave Australia though so they had to sell. Some people will hold onto them and wait longer, but if prices keep sliding it doesn't look like they will recoup any losses they incur from this point forward.




That's interesting. I had a look through the Auction results for last weekend and noticed quite a few places around my area passed in for well below the reserve.  Even saw a few where the later offers were lower than the vendor bid! 




damien275x said:


> Also at the moment it looks as though even the most optimistic forecasts involve price stagnation. If prices stay the same, you're going backwards @ 3% p/a on average (inflation) so after 5 years, that's 15%. a $52,000 loss. Then you've got to factor in the transaction costs of selling the place, so you'd be bleeding upwards of 20%.
> 
> I am looking at buying in 2017/18 at this point, I think after about 5-6 years of steady falls or stagnation I will be able to buy one comfortably, especially if I am able to invest money in another area and have it compound, although with all the doom and gloom I am not banking on very high returns in shares. Possibly a slight appreciation in the price of my Gold and Silver collection but thats about it.




We originally thought we would buy in one or two years (from a year ago) but are now thinking of a longer time frame too, maybe five years. 

Another thing I am noticing is rentals being offered for 6 month leases. As a renter this doesn't appeal to me as the last thing I want to be doing is moving every 6 months.  I am also seeing rentals being offered for sale after not being let, and houses for sale being listed for rent after not selling.


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## trillionaire#1 (28 June 2012)

Miss Hale said:


> That's interesting. I had a look through the Auction results for last weekend and noticed quite a few places around my area passed in for well below the reserve.  Even saw a few where the later offers were lower than the vendor bid!
> 
> 
> 
> ...




Im also seeing more of the 6 month lease offers here in SA,a growing number will even let you bring your pets!


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## im sparticus (28 June 2012)

Short leases usually spell high demand expect rental increases at expiry also. when thing soften 1+ year leases become common. everything is playing out nicely weve had the boom and the price contraction now increasing yeilds no just in relation to price but in real terms lower holding costs via record low interest rates, just a matter of time before it becomes a no brainer only problem will be once it starts showing in the figures most will have already missed exactly what they were holding out to catch.


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## young-gun (28 June 2012)

im sparticus said:


> Short leases usually spell high demand expect rental increases at expiry also. when thing soften 1+ year leases become common. everything is playing out nicely weve had the boom and the price contraction now increasing yeilds no just in relation to price but in real terms lower holding costs via record low interest rates, just a matter of time before it becomes a no brainer only problem will be once it starts showing in the figures most will have already missed exactly what they were holding out to catch.




Yet another easy to understand, well structured post. I hope I haven't missed the boat to lose my money! Can I still buy at record high prices? I can?! Phew.


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## satanoperca (28 June 2012)

im sparticus said:


> Short leases usually spell high demand expect rental increases at expiry also. when thing soften 1+ year leases become common. everything is playing out nicely weve had the boom and the price contraction now increasing yeilds no just in relation to price but in real terms lower holding costs via record low interest rates, just a matter of time before it becomes a no brainer only problem will be once it starts showing in the figures most will have already missed exactly what they were holding out to catch.




Rental demand high, high prices, long leases > benefits landlord
Short leases, low prices > low demand - landlords are trying to just get someone in. There is no benefit to the landlord having a high turnover in tenants and if demand was high tenants would be forced into the above.

Glad to see Sparticus that you are persistant but unfortunately overgeared to matter.


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## im sparticus (28 June 2012)

satanoperca said:


> Rental demand high, high prices, long leases > benefits landlord
> Short leases, low prices > low demand - landlords are trying to just get someone in. There is no benefit to the landlord having a high turnover in tenants and if demand was high tenants would be forced into the above.
> 
> Glad to see Sparticus that you are persistant but unfortunately overgeared to matter.




Short lease does not equal high turnover especially during times of high demand just greater opportunity to increase rents

you missed the point read back landlords are not even offering long leases even to tennants that want them reason high demand ll would rather have the opportunity to increase rents regularly they are not worried about loosing tennants as demand is high .in times of low demand ll want to lock you in for longer periods at higher current rents as demand and prices fall or are expected to fall this is just fact and makes perfect economic sense. you will also find that you have a greater ability to increase rent by small amounts regularly than large amounts less frequently less chance of upsetting your tennant and lower turnover. something that cannot be done with long leases.

Overall Long leases being offered = low demand. short leases offered = high demand. cant even get a long lease no matter how much you beg unless you offer more money = very high demand.

Dont kid yourself demand is high.
.


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## Miss Hale (28 June 2012)

Landlords are finding it hard to get tennants around my area, properties are typically spending some time empty before getting tennants (the place we are in now was advertised for over two months, was vacant before we moved in and we were the only applicant).  Many properties having to drop the rental price before getting tennants. 

I was wondering if some of these properties offering only 6 month leases were really houses that the owners want to sell but can't so they think they will let them for 6 months until - hopefully - the market picks up then they'll put them back on the market. Another theory I had was that landlords are being told by by agents to offer the property at a lower rent (because demand is low) to get someone in and then increase the rent when - hopefully - the rental market picks up in 6 months.


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## young-gun (29 June 2012)

Miss Hale said:


> Landlords are finding it hard to get tennants around my area, properties are typically spending some time empty before getting tennants (the place we are in now was advertised for over two months, was vacant before we moved in and we were the only applicant).  Many properties having to drop the rental price before getting tennants.
> 
> I was wondering if some of these properties offering only 6 month leases were really houses that the owners want to sell but can't so they think they will let them for 6 months until - hopefully - the market picks up then they'll put them back on the market. Another theory I had was that landlords are being told by by agents to offer the property at a lower rent (because demand is low) to get someone in and then increase the rent when - hopefully - the rental market picks up in 6 months.




We're paying 330 a week for a two story 3 bed 20 mins from the city. The landlord actually wanted us in for 24 months at that price. I guess the rental market is different throughout suburbs, I can't say that I think renting is expensive at the moment.


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## im sparticus (29 June 2012)

Getting $460 1brd 12km direct line from city turned over tennants mid dec2011 and still had somone in 3 days latter 6 month lease . As always in life you get what you pay for i guess.

So youngung are you in the long lease = high demand camp ala satan ¿ 24 month should spell some pretty high demand according to him


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## Miss Hale (29 June 2012)

im sparticus said:


> Getting $460 1brd 12km direct line from city turned over tennants mid dec2011 and still had somone in 3 days latter 6 month lease . As always in life you get what you pay for i guess.
> 
> So youngung are you in the long lease = high demand camp ala satan ¿ 24 month should spell some pretty high demand according to him




What city are you refering to im sparticus?  My experience in Melbourne is very different.


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## im sparticus (29 June 2012)

Miss Hale said:


> What city are you refering to im sparticus?  My experience in Melbourne is very different.





Anywhere but melbourne, that particular example is from sydney eastern suburbs whilst i am yet to rent my brisbane appartment  ( north east 4km from city direct line)(still renovating) talking with the landlord in the unit below mine paints a similar picture just delayed a couple of years expecting it to be neutral to positive from day one (actually going of the performance of the unit below it would have been neautral without the renovation but ive gotta live in her for 12 months anyhow so mayaswell learn to renovate in my spare time whilst your time is worth something your spare time is worth nothing always best to do something productive she was in very original condition when i moved it so it didnt feel like i was demolishing anything of value.

vacancy rates very low in both areas somewhere between 1-2%


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## young-gun (29 June 2012)

im sparticus said:


> Getting $460 1brd 12km direct line from city turned over tennants mid dec2011 and still had somone in 3 days latter 6 month lease . As always in life you get what you pay for i guess.
> 
> So youngung are you in the long lease = high demand camp ala satan ¿ 24 month should spell some pretty high demand according to him




without getting involved in your little back and forth there was 5 applicants on the first day this house went back on the rental market. so i guess that would equate to high demand? I'm unsure as to exactly what constitutes as high. I personally think it is quite cheap, so perhaps that's why so many were interested in it.

We were the first applicants to get our form in and not a blemish on either of our names so we got it.


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## im sparticus (29 June 2012)

young-gun said:


> without getting involved in your little back and forth there was 5 applicants on the first day this house went back on the rental market. so i guess that would equate to high demand? I'm unsure as to exactly what constitutes as high. I personally think it is quite cheap, so perhaps that's why so many were interested in it.
> 
> We were the first applicants to get our form in and not a blemish on either of our names so we got it.




you you are right satan is wrong demand for rentals overall is currently high and i agree


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## explod (29 June 2012)

im sparticus said:


> you you are right satan is wrong demand for rentals overall is currently high and i agree




Rubbish, rental signs appearing all over the place here and talking to my Agent he says rents are falling.  Used to only take a week or two here to re let, now its 6 weeks if you can get them.  Sometimes now no one is turning up for open for inspections either

And in my work with a charity service there is big demand for single beds in particular as the kids are moving back in with parents.  This of course is only in the last six months so may take a bit longer for it to hit the official figures.

You must be living in dreamland somewhere.

Anyhow you all  tend to be a bit off topic, its about property prices and apart from a few select spots its all down hill at the moment.


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## im sparticus (29 June 2012)

Let us know when you negotiate a rental decrease on your lease renewal. anyone..........bueller...
...... bueller


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## young-gun (29 June 2012)

im sparticus said:


> you you are right satan is wrong demand for rentals overall is currently high and i agree




Keeping in mind I am only one case. As I said the property I am in is relatively cheap for the area. If supply and demand is the game then by rights the land-lord should have jacked up the price given the amount of interest generated. Seeing as how there was high demand and the price remained low, what does that say?? That demand doesn't matter??

Anyway rent prices aren't really something that bother me. If i owned a house, now there's something to worry about


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## young-gun (29 June 2012)

explod said:


> Anyhow you all  tend to be a bit off topic, its about property prices and apart from a few select spots its all down hill at the moment.




Don't jump the gun explod. Sparticus will return armed with a few positive figures for today from the rpdata daily index to shoot you down in flames..... just don't look at the year to date figures


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## young-gun (29 June 2012)

im sparticus said:


> Let us know when you negotiate a rental decrease on your lease renewal. anyone..........bueller...
> ...... bueller




Ill give it a red hot go, and let you know in January.


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## explod (29 June 2012)

im sparticus said:


> Let us know when you negotiate a rental decrease on your lease renewal. anyone..........bueller...
> ...... bueller




A couple I know recently separated as they could not afford the rent any more on their pensions.

The wife now lives with her Daughter and the husband moved onto a small farm here on the Peninsular for a bungalow and drives a child to School a couple of days a week for a low rental.

You can have and twist all the figures you like, but the necessities of life are becoming dearer by the day, petrol, food, power, water etc.,  so the game *is changing*.

With the increasing job losses being reported daily this must kick in soon to the downside in my view.  And unless something very dramatic occurs with the economy it looks like the years ahead are going to be nasty indeed for the property investor.


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## Miss Hale (29 June 2012)

im sparticus said:


> Let us know when you negotiate a rental decrease on your lease renewal. anyone..........bueller...
> ...... bueller




It's obvious isn' it?  If you get to the end of your lease and your landlord is not interested in dropping the rent (or wants to put it up) you give notice and move to a cheaper place. Having observed that rents had dropped over the past year, this is what we were thinking of doing at our last place but when the lease was nearing its end we were advised the landlord was selling.  We found a new place that is better than the old one and about 8% cheaper.


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## im sparticus (29 June 2012)

young-gun said:


> Ill give it a red hot go, and let you know in January.





Bad time of the year to be negotiating decreases, just saying.

Syd and per yoy less than 2% down atm brisbane less than 5% and the white night of the bears mel now less than 7% definately looks like things are improving non have fallen enough to profitabily exit and reenter after cost. these losses look to be vanising as quick as they came. Anyone capitalise anyone bueller.......bueller!


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## Julia (29 June 2012)

explod said:


> You can have and twist all the figures you like, but the necessities of life are becoming dearer by the day, petrol, food, power, water etc.,  so the game *is changing*.
> 
> With the increasing job losses being reported daily this must kick in soon to the downside in my view.  And unless something very dramatic occurs with the economy it looks like the years ahead are going to be nasty indeed for the property investor.



Agree.  And this is before the carbon tax and additional electricity increases have kicked in.
Every week I look at the property for sale listings here (coastal SE Qld) and am really astonished at the rapidly falling asking prices.  Way more than 20% over prices two years ago.


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## young-gun (30 June 2012)

Julia said:


> Agree.  And this is before the carbon tax and additional electricity increases have kicked in.
> Every week I look at the property for sale listings here (coastal SE Qld) and am really astonished at the rapidly falling asking prices.  Way more than 20% over prices two years ago.





A guy I know had a higher end property (worth just over 850k at the peak) on north side of Brisbane. Unfortunately had to sell due to divorce, went on the market for 790k, no one touched it, plenty of inspections though. dropped to 750k, still nothing. It wasn't until he dropped it further, and then someone came in with a near offer, that he sold at about 710 I think. 140k peak to sell price?

I understand these type of properties are usually hit harder and faster by a crash, but it's a hell of a lot of money. Fortunately housing has increased so dramatically people in this situation are usually ahead by several hundred anyway.


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## moXJO (30 June 2012)

explod said:


> A couple I know recently separated as they could not afford the rent any more on their pensions.
> 
> The wife now lives with her Daughter and the husband moved onto a small farm here on the Peninsular for a bungalow and drives a child to School a couple of days a week for a low rental.
> 
> ...




from the census



> But perhaps the most astonishing figure to come out of the latest census results was a near 50 per cent jump in rents since the 2006 census.
> Advertisement: Story continues below
> Between 2006 and last year, the median weekly household rent jumped 49 per cent from $191 to $285. That's an annual rate of 8 per cent-plus a year across the entire country, far outstripping annual growth in median household incomes of about 3.5 per cent.




here is some more stats

*The median monthly mortgage repayment in Australia was $1,800. For 9.9% of households, their mortgage repayment was more than 30.0% of their income.

In Australia, the median weekly rent was $285. For 10.4% of households, their rent was more than 30.0% of their income.

Of occupied private dwellings in Australia, 32.1% were owned outright, 34.9% were owned with a mortgage and 29.6% were rented.*

http://www.censusdata.abs.gov.au/census_services/getproduct/census/2011/quickstat/0

More 'for lease' signs are generally about this time of year and around Christmas. 



> so the game *is changing*



yes it is and not just for housing, which is why you use the stats to hit your target market. There are a lot of cheap options to make renters want to live in your house.


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## Glen48 (30 June 2012)

We built a house in 98 the ex decide she wasn't good enough to live in the place due to a low self esteem problem, though having the Air con in the main bedroom was over the top so slept outside while the rest of the family slept  in the Air con on hot nights, so SHE  decided on a divorce place owed us 330 ended up selling for 290 after the bubble it went to $870.
SHE didn't wanted it sold out of spite because my solicitor was picking on her.
 We got about $ 190 back which she got as settlement.


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## im sparticus (30 June 2012)

Glen48 said:


> We built a house in 98 the ex decide she wasn't good enough to live in the place due to a low self esteem problem, though having the Air con in the main bedroom was over the top so slept outside while the rest of the family slept  in the Air con on hot nights, so SHE  decided on a divorce place owed us 330 ended up selling for 290 after the bubble it went to $870.
> SHE didn't wanted it sold out of spite because my solicitor was picking on her.
> We got about $ 190 back which she got as settlement.





Rough story. thats enough to make even myself hate housing.


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## im sparticus (30 June 2012)

moXJO said:


> from the census
> 
> 
> 
> ...




Those stats are very similar to the experiance i have posted since being a landlord since 2005. I wonder why every tennant in this thread has had a much different experiance...... guess theyve got an agenda to push??? But when not one of them have had a similar experiance to the census results you do have to wonder!


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## young-gun (30 June 2012)

im sparticus said:


> Those stats are very similar to the experiance i have posted since being a landlord since 2005. I wonder why every tennant in this thread has had a much different experiance...... guess theyve got an agenda to push??? But when not one of them have had a similar experiance to the census results you do have to wonder!




If i owned property, I would pretend it wasn't going to crash also.


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## Miss Hale (30 June 2012)

im sparticus said:


> Those stats are very similar to the experiance i have posted since being a landlord since 2005. I wonder why every tennant in this thread has had a much different experiance...... guess theyve got an agenda to push??? But when not one of them have had a similar experiance to the census results you do have to wonder!




Easily explained in my case.  We have been renting for only a little over a year.  The decreases I am seeing are happening now.  I don't have an agenda to push, just relating my experiences.  I have a preference to buy but not at current prices so we have our money in the bank and are happy renting for now because we feel it's a better option financially. 



> But perhaps the most astonishing figure to come out of the latest census results was a near 50 per cent jump in rents since the 2006 census.
> Advertisement: Story continues below
> Between 2006 and last year, the median weekly household rent jumped 49 per cent from $191 to $285. That's an annual rate of 8 per cent-plus a year across the entire country, far outstripping annual growth in median household incomes of about 3.5 per cent.




I don't dispute this at all. When we returned to Melbourne a year ago I was shocked at the price of rentals, they had dramatically incresed since last time I rented both in $ terms and as a percentage of income.  I was even more shocked at what it would cost us in mortgage repayments to buy however, which was easily double what it would cost to rent. So by that comparison it was/is cheaper to rent.  Rents are not cheap per se but cheaper than mortgage repayments and dropping.  So I would agree with young-gun, it's cheap to rent at the moment (considering the alternative).


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## im sparticus (30 June 2012)

Miss Hale said:


> Easily explained in my case.  We have been renting for only a little over a year.  The decreases I am seeing are happening now.
> 
> 
> 
> I don't dispute this at all. When we returned to Melbourne a year ago I was shocked at the price of rentals, they had dramatically incresed since last time I rented both in $ terms and as a percentage of income.  I was even more shocked at what it would cost us in mortgage repayments to buy however, which was easily double what it would cost to rent. So by that comparison it was/is cheaper to rent.  Rents are not cheap per se but cheaper than mortgage repayments and dropping.  So I would agree with young-gun, it's cheap to rent at the moment (considering the alternative).





It has always been cheaper to rent than buy initially. as is the pricing of anything that has projected growth. Would be interesting to have a tally on your death bed ie rent vs buy in your life time you wont have the answer just yet but everone who is now gone that has come before you does and its not in favour of renting (over all you will pay a premium for the flexability that renting affords. in a perfect world ofcourse to think things should be priced otherwise is well). if you think you are going to nail the bottom and reenter triumphant dont kid yourself and remember you are also carrying the losses of having not baught in the past. best of luck but the odds are against you. me i always take the high probability trade and while bad beats do happen thinking otherwise is a suckers path to getting fleeced


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## young-gun (30 June 2012)

im sparticus said:


> It has always been cheaper to rent than buy initially. as is the pricing of anything that has projected growth. Would be interesting to have a tally on your death bed ie rent vs buy in your life time you wont have the answer just yet but everone who is now gone that has come before you does and its not in favour of renting




You are seriously kidding yourself. You have seen a few good years of property and think that it's guaranteed to continue that way. You are either trolling, incredibly naive, or have only ever researched evidence that supports prices climbing. I hope it's not the last given how much you crap on about confirmation bias.

You need to dig a lot deeper and go further back in history, hopefully you will eventually realise property isn't all it's cracked up to be. I'm guessing you won't. 

There is 2 ways the market is going from here.

1. A crash of epic proportions as seen in a large majority of developed nations.
2. A slow burn, where prices remain stagnant for decades until wages catch up, and all debt has been deleveraged.

There simply isn't room for growth in house prices anymore, not only do people not want to pay these prices, they simply can't afford to. Those that can afford to have now been sucked into the market with grants, and squeezed of every cent to keep prices artificially inflated (and i really feel for them) and now there is now one left.

Sorry sparticus, but all the money has gone champ, no one coming through can pay your crazy asking prices without putting there nuts on a chopping block. Credit growth is weak, unemployment will no doubt be rising in the next figures. Game over.


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## drsmith (30 June 2012)

young-gun said:


> 2. A slow burn, where prices remain stagnant for decades until wages catch up, and all debt has been deleveraged.



The ideal here from the RBA's perspective is, in the long term, a narrow window between stagnant nominal prices and stagnant real prices.

A similar kind of slow burn is the objective for western world debt.


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## Julia (30 June 2012)

young-gun said:


> There is 2 ways the market is going from here.
> 
> 1. A crash of epic proportions as seen in a large majority of developed nations.
> 2. A slow burn, where prices remain stagnant for decades until wages catch up, and all debt has been deleveraged.
> ...



True enough.  Anecdotally only of course, I've seen growing instances of negative equity recently.
But this discussion is making one vital omission, i.e. that most people buy a home to live in for reasons little related to whether or not it is going to increase in value.
The drive for owning one's home shouldn't be underestimated imo.


----------



## Ann (1 July 2012)

Finally we get some clear information as to what property prices are really doing. The ABS are publishing  'House Price Indexes'.  It won't be distorted or massaged by self interested Real Estate Agents any more. Once the ABS get themselves fully set up with the statistics, there will be a chance to see decent charts of property prices so we will really know where we stand. 




(quoting the Australian Bureau of Statistics)

*MARCH KEY POINTS


ESTABLISHED HOUSE PRICES

Quarterly Changes

    Preliminary estimates show the price index for established houses for the weighted average of the eight capital cities fell 1.1% in the March quarter 2012.
    The capital city indexes fell in Melbourne (-2.2%), Sydney (-1.8%), Adelaide (-0.9%) and Hobart (-2.7%) and rose in Perth (+1.1%), Brisbane (+0.4%), Canberra (+1.2%) and Darwin (+4.4%).



Annual Changes (March Quarter 2011 to March Quarter 2012)

    Preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities fell 4.5% in the year to the March quarter 2012.
    Annually, house prices fell in Hobart (-6.7%), Melbourne (-6.6%), Sydney (-4.6%), Adelaide (-3.8%), Brisbane (-3.7%), Perth (-1.7%), and Canberra (-0.5%) and rose in Darwin (+3.5%).



NOTES

FORTHCOMING ISSUES

ISSUE (QUARTER) 	Release Date
June 2012 	1 August 2012
September 2012 	6 November 2012
December 2012 	5 February 2013
March 2013 	7 May 2013



CHANGES IN THE NEXT ISSUE

The established house price index currently covers detached houses in the eight capital cities. Since 2010, work has been underway to develop a price index for other dwellings in the capital cities. The June quarter 2012 issue of this publication will include a feature article which provides some information about the development of this new experimental price index. A data cube will be provided with a time series of the other dwellings price index and a total measure of detached houses and other dwellings: the All dwellings price index.


REVISIONS

Estimates for the two most recent quarters of the HPI series are preliminary and subject to revision (see paragraphs 15 to 19 of the Explanatory Notes).

The series for the median price of established house transfers (unstratified) and the number of established house transfers (published in Tables 7 and 8 respectively) are also subject to revision as the ABS receives more data from the Valuers-General. This quarter, the completion of a review of ABS processes has led to a change in the practice of revising Tables 7 and 8. In the past, these tables were revised as necessary throughout the whole time series. From the March quarter 2012 onwards (with the exception of revisions for Canberra), the usual practice will be to update only the most recent eight quarters of published figures. For the March quarter 2012, however, the review has also led to revisions to Canberra beyond the most recent eight quarters.*


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## Tink (1 July 2012)

Thats exactly right Julia. 
Renting has always been the easy option for many, and years just roll into the next.
Then when they retire, they have rent to juggle as well as everything else.
I am not saying this will happen to the posters on here, just how some people go about things.

Young gun, your friend that sold that house after a divorce, I am sure he would have still made money depending on how long he was living in it. 
How much did he buy it for? 

Well I must say I have never worried about the house I am living in whether the value goes up and down.


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## young-gun (1 July 2012)

drsmith said:


> The ideal here from the RBA's perspective is, in the long term, a narrow window between stagnant nominal prices and stagnant real prices.
> 
> A similar kind of slow burn is the objective for western world debt.




Unfortunately I think you're right. It's hard to see anything crashing real hard and fast with all the central banks on edge, and pumping so much money into markets etc. There needs to be something that takes everyone by surprise.

I still believe a full blown crash, although disastrous, would be better for the economy long term, and although alot of people would be affected negatively, it would be a better outcome and allow recovery to occur faster. jmo.  



Julia said:


> True enough.  Anecdotally only of course, I've seen growing instances of negative equity recently.
> But this discussion is making one vital omission, i.e. that most people buy a home to live in for reasons little related to whether or not it is going to increase in value.
> The drive for owning one's home shouldn't be underestimated imo.




True. However I look at my circumstance, and i would love nothing more than to own my own home. There is a sense of accomplishment and pride attached to owning your own home. However there a few people my age willing to commit, and as stated simply can't afford to. Everyone is travelling and living their lives. 

Home owners and speculators alike, I think that the money is gone, as alot would have been burnt from the gfc, and other boomers already leveraged to the hilt, unable to tap anymore equity as prices remain subdued.



Tink said:


> Young gun, your friend that sold that house after a divorce, I am sure he would have still made money depending on how long he was living in it.
> How much did he buy it for?
> 
> Well I must say I have never worried about the house I am living in whether the value goes up and down.




He bought along time ago tink and yes, he still made money. 

Would you be of the same opinion if you bought 2 years ago at 95%-100% LVR?(Whether you believe you personally would actually obtain a loan at 95% LVR is irrelevant, simply a hypothetical.)

It's ok for those that bought way back when to say they aren't bothered by what prices are doing, but it's a different story for a lot of others.


----------



## RandR (1 July 2012)

young-gun said:


> Unfortunately I think you're right. It's hard to see anything crashing real hard and fast with all the central banks on edge, and pumping so much money into markets etc. There needs to be something that takes everyone by surprise.
> 
> I still believe a full blown crash, although disastrous, would be better for the economy long term, and although alot of people would be affected negatively, it would be a better outcome and allow recovery to occur faster. jmo.
> 
> ...




cha ching. your onto something in the bit I bolded. Me and my partner made the decision to not spend big on travelling just yet. We bought our house in march, things are going great. The value of our purchase has not tanked, if I got a valuer out I actually think It would poll higher then our price we paid (ive been working away on it over most weekends. weve looked at similar properties in the same neighbourhood priced higher then ours) We purchased affordably .... and got a 3bdrm brick and tile 300m  from a decent school. backing onto a park, 200m from shops and 1km from a train station. Quiet street with nice neighbours. Its perfect for us.

but the cost of living is too much, omg how are we ever going to survive !!! ...  

Atm were on track with our repayments to be mortgage free in ... 6 years ... which will make us mortage free in our 20's. Seriously ... its really ... really ... *not *... hard.

You should have a look around young gun, you'd be surprised at what you can buy very affordably. Having said all that, we do have friends that are purchasing a house atm and I think they are overpaying and stretching themselves. They'll be able to stay on top of it while there both working, but once a baby comes along or anything else that puts one of them out of work they'll be in trouble. The size of the mortgage they are taking on is going to take them 20 + years to clear anyway. There doing that because they want to live in a particular suburb and refuse the notion of buying anywhere else. They want there dream house now they dont consider at all the cost it will have on them in the long run.

I cant help but think your going to far by blanketing real estate entirely and saying there is nothing worth purchasing. There are plenty of good deals around if you look for them imo.


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## Tink (1 July 2012)

Good on you RandR and good luck, exactly right, cha-ching.

As said, we have all had to make sacrifices.


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## young-gun (1 July 2012)

RandR said:


> cha ching. your onto something in the bit I bolded. Me and my partner made the decision to not spend big on travelling just yet. We bought our house in march, things are going great. The value of our purchase has not tanked, if I got a valuer out I actually think It would poll higher then our price we paid (ive been working away on it over most weekends. weve looked at similar properties in the same neighbourhood priced higher then ours) We purchased affordably .... and got a 3bdrm brick and tile 300m  from a decent school. backing onto a park, 200m from shops and 1km from a train station. Quiet street with nice neighbours. Its perfect for us.
> 
> but the cost of living is too much, omg how are we ever going to survive !!! ...
> 
> ...




Haha, well aren't the bulls just going to love you.

I have had a look around, and regardless of what is deemed 'affordable' I still don't wish to buy. I would much rather see the world while we're young. We're getting married in sept so alot of our money is going to that also.

We're are able to get into the market, but don't believe now is the best time, both financially and for lifestyle reasons.

I am also well aware that it "really...really...isn't...hard". But the fact is I think you have made a poor investment decision. However this comes back to Julia's point of home ownership. You may be happy to just own your own home regardless of what the price does, so that you have a place to call your own, which is perfectly understandable as I have the same desire. However I personally prefer to be a little less reckless with my money, and am happy to wait and see how things pan out.

Agree with you completely about people wanting the dream home right now, they aren't doing themselves any favours.

At the end of the day I have a long term plan, and that means scrutinizing every big financial move I make while I'm young. At this current point in time everything is telling me don't buy. jmo.


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## im sparticus (1 July 2012)

When you look at how much work materials etc go into producing a house then look at the output of most. do you really have to wonder why people have to work hard make sacrifices etc. most would be lucky to have the same output in a lifetime to think it should take less to pay back with interest is nuts. no one is gonna give you there hard earned output for nothing. you are buying an asset that has more in it than you can produce ofcourse its gonna be unaffordable and rightly so. go out there build a house and then see if your willing to part with it for the sorts of prices you guys think is fair value.


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## RandR (1 July 2012)

young-gun said:


> Haha, well aren't the bulls just going to love you.
> 
> I have had a look around, and regardless of what is deemed 'affordable' I still don't wish to buy. I would much rather see the world while we're young. We're getting married in sept so alot of our money is going to that also.
> 
> ...





So its not that housing is unnafordable, your just making the conscious decision not to purchase, to spend your money elsewhere for now. I envy any long term travelling you get to do as a result  Were just prioritizing money spent differently.

A PPOR is not an investment.... it really is a zero sum game for 95% of ppor property. People that delude themselves otherwise as a result of market rise and falls just arnt thinking. If I were looking upon a house to live in purely from an investment decision I would have purchased a property with the possibility of taking advantage of the no capital gains to its utmost effect. Something with the zoning to develop or simply a slice of acreage as close to a capital city as can be affordably found.

We havnt done that. Weve looked upon our housing as a neccesary cost in life. One that must be faced and paid. But something you must enjoy and be happy living on. Wether you decide the path of least resistence is to rent or buy a particular property is entirely up to you. Weve done the numbers and were very comfortable with the decision to purchase. In a few short years the 'cost' of our housing is going to be absolutely neglible and financially close to nothing. Thats the big winner for us. Which renders any fluctuations in the market value of property relatively meaningless to us. Why bother to worry about the dollar figure when the cost of holding will be so insignificant and the comparitive value of the property in comparison to others will remain regardless of price point, whether that moves up or indeed down.


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## young-gun (1 July 2012)

im sparticus said:


> go out there build a house and then see if your willing to part with it for the sorts of prices you guys think is fair value.




hahaha. So you think prices can't crash because you aren't willing to part with your properties for any less than you paid? Well done sparticus, well done. The cost of building a house is negligible, it's the land that is ridiculous.



RandR said:


> So its not that housing is unnafordable, your just making the conscious decision not to purchase, to spend your money elsewhere for now. I envy any long term travelling you get to do as a result  Were just prioritizing money spent differently.



It isn't unaffordable for us personally, but we are in a rather fortunate position, both with good jobs no kids and not so much as a dollar of debt to our names. If we want/need something we either pay cash or go without.



> A PPOR is not an investment.... it really is a zero sum game for 95% of ppor property. People that delude themselves otherwise as a result of market rise and falls just arnt thinking. If I were looking upon a house to live in purely from an investment decision I would have purchased a property with the possibility of taking advantage of the no capital gains to its utmost effect. Something with the zoning to develop or simply a slice of acreage as close to a capital city as can be affordably found.




Simply different perspectives. When dealing with large sums of money such as purchasing a property, I personally would rather position myself to not only profit from the satisfaction of owning my own place, but also know that my money is working for me at the same time. I can't see my money working for me in this current market. 

I personally will wait for it to play out, save more and mroe of a deposit, and when we do buy will be looking at a four bedroom house close to shops and preferred schools as you have done. People will scoff at the 4 bedroom house idea but it's a smart move, as in the future we will not have to spend money moving and upgrading as we already know we want x amount of children. I would rather pay the little extra and save the hassle in say 4-8 years time when our family is underway. Simply preparing long term.



> We havnt done that. Weve looked upon our housing as a neccesary cost in life. One that must be faced and paid. But something you must enjoy and be happy living on. Wether you decide the path of least resistence is to rent or buy a particular property is entirely up to you. Weve done the numbers and were very comfortable with the decision to purchase. In a few short years the 'cost' of our housing is going to be absolutely neglible and financially close to nothing. Thats the big winner for us.




Well so long as you're happy with your decision and aren't concerned about price movements then absolutely you'
re onto a winner. I just want to point out that in my experience there are very few people out there that have the unique frame of mind that you do at our age. Being that most aren't willing to commit to a home loan at such a young age, and majority of people I know believe housing to be an appreciating asset and investment.

If you haven't had been working on your house on weekends, im assuming you have been cleaning up gardens, perhaps painting, maybe a few bits n pieces here n there. Do you believe your property would be worth what you paid for it? Seems tough to be putting work into a house just to hold its original price. On the other hand it's always nice to step back and look at what you have achieved, not to mention come home to a nice looking house every night.


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## im sparticus (1 July 2012)

Anyone watching the block? There in melbourne right?


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## drsmith (1 July 2012)

young-gun said:


> Unfortunately I think you're right. It's hard to see anything crashing real hard and fast with all the central banks on edge, and pumping so much money into markets etc. There needs to be something that takes everyone by surprise.
> 
> I still believe a full blown crash, although disastrous, would be better for the economy long term, and although alot of people would be affected negatively, it would be a better outcome and allow recovery to occur faster. jmo.



Significantly higher unemployment could be a trigger if it was to occur.

Something that savages household income.


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## Julia (1 July 2012)

RandR said:


> cha ching. your onto something in the bit I bolded. Me and my partner made the decision to not spend big on travelling just yet. We bought our house in march, things are going great. The value of our purchase has not tanked, if I got a valuer out I actually think It would poll higher then our price we paid (ive been working away on it over most weekends. weve looked at similar properties in the same neighbourhood priced higher then ours) We purchased affordably .... and got a 3bdrm brick and tile 300m  from a decent school. backing onto a park, 200m from shops and 1km from a train station. Quiet street with nice neighbours. Its perfect for us.
> 
> but the cost of living is too much, omg how are we ever going to survive !!! ...
> 
> ...



Great post, RandR.  It sounds as though you've really thought through your decision and bought affordably.
I wish you many happy years of home ownership.  Imo there's simply nothing that can equal that sense of security and independence owning your own home brings.



Tink said:


> Good on you RandR and good luck, exactly right, cha-ching.
> 
> As said, we have all had to make sacrifices.



Indeed.  I just can't believe the unrealistic aspirations of so many young people who say they 'can't afford to buy a house".  I'm not surprised they can't afford it when their demands include four bedrooms plus study, three bathrooms plus the pretentiously named 'media room'.  And it has to be in an inner suburb close to everything.
And those silly people who take on an LVR of up to 100% are obviously just asking for trouble.

I suppose it's yet another symptom of the "I want it and I want it now" society, regardless of any sense of financial propriety.




young-gun said:


> Haha, well aren't the bulls just going to love you.



Is that sarcasm really necessary, young gun?  RandR has made his choice which seems to be thoughtfully arrived at and I can see no evidence that he and his partner are following this choice to fall in with 'the bulls' or for any reason other than their own conclusion that it's what they want now and for the future.



> I have had a look around, and regardless of what is deemed 'affordable' I still don't wish to buy. I would much rather see the world while we're young. We're getting married in sept so alot of our money is going to that also.



Fine.  That's your choice which expresses your priorities.  Many people would question "a lot of your money going to a wedding" rather than a house deposit, but whatever means most to you is all that matters.

Let's just all respect one another's choices.


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## im sparticus (1 July 2012)

Julia you just dont get it young-gun is gonna make the smartest of all his moves and wait for the crash then he will be able to purchase his dream house as a four bdr in popular suburb for the todays price of a cheapy this way he will also save on transaction cost of upgrading. dont you see how smart he is. with all the money he is saving he can afford to splash out on his other smart move (getting married)


Looks like the block achieved 100% auction clearance rate and all selling well above reserve, doesnt exactly follow the picture the melbournians are trying to paint. great results considering the poor results of the lat few shows the block might be a little leading indicator. loved how they turned the roofs into usable entertaining space and views every house thats positioned correctly should be doing that i know i will be from now on.

Lots of green shoots around my best guess is the daily index never prints lows lower than it already has if i was waiting for price defation before entering it woud be now to 12 months ago might be stagnant wont be falling further but my guess is slow growth on par with inflation. wait to see strong gains in the figures and youve already missed your chance. my guess and actually what ive noticed of late is things will creep away unnoticed.


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## Tink (2 July 2012)

Thats a great post Julia and well said.

I always thought you found it unaffordable, young gun, and that was the reason you couldnt purchase a home, but you are making the decision not to buy a home, travelling and waiting for a 4 bedroom house etc. 
No one I know started like that, and if it works out for you, good luck.

Having your own home is one of the best things, imo, but as said, everyone is entitled to their views.


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## Glen48 (2 July 2012)

Wonder if the TV station slipped a few bucks into the help the sale to get the price up in a depressed market, and therefore keep the ratings up, so they can claim the show is the best and charge more for advertising and get their money back.


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## young-gun (2 July 2012)

Julia said:


> I'm not surprised they can't afford it when their demands include four bedrooms plus study, three bathrooms plus the pretentiously named 'media room'.  And it has to be in an inner suburb close to everything.
> And those silly people who take on an LVR of up to 100% are obviously just asking for trouble.




I don't know if this is in reference to my 4 bedroom comment, but if it is I never said anything about studies bathrooms and media rooms. It would be quite easy to buy a 4 bedroom house if prices continue to deflate for a reasonable price. Without all the bells and whistles of course. Catering for a future family is most certainly not greedy.



> Is that sarcasm really necessary, young gun?  RandR has made his choice which seems to be thoughtfully arrived at and I can see no evidence that he and his partner are following this choice to fall in with 'the bulls' or for any reason other than their own conclusion that it's what they want now and for the future.




Nothing wrong with a bit of sarcasm. I understand he has made a choice, and personally I think I have been more than understanding. But the fact is, the thread topic isn't "does buying/owning your own home give you that warm fuzzing feeling inside". It's the future of prices. And as is quite evident I think they are going down, so I'm sticking to my guns, and regardless of what reasons are behind the purchase, I believe it was a poor investment decision.

Randr may not be bullish on property, but the steps he is taking are what all the bulls are claiming are the steps to success. It blows me away that people are still trying to apply the same tactics that may have worked back in the day, to today. Out with the old, in with the new.




> Fine.  That's your choice which expresses your priorities.  Many people would question "a lot of your money going to a wedding" rather than a house deposit, but whatever means most to you is all that matters.



Agree.

Oh and I also already deleted the bit about people questioning whether getting married before buying a house is a smart move, and the answer is yes it is at the moment. Get all the necessities out of the way and paid for in full while prices are falling, have the kitty ready to go when the time is right to pounce. Some don't view marriage as a necessity, each to their own, I'm not going into that here.



im sparticus said:


> Julia you just dont get it young-gun is gonna make the smartest of all his moves and wait for the crash then he will be able to purchase his dream house as a four bdr in popular suburb for the todays price of a cheapy this way he will also save on transaction cost of upgrading. dont you see how smart he is. with all the money he is saving he can afford to splash out on his other smart move (getting married)




I can't wait until the day that your arguments turn to " I'm doing really well, My property portfolio has only lost 300k on paper, good compared to most."




> Looks like the block achieved 100% auction clearance rate and all selling well above reserve, doesnt exactly follow the picture the melbournians are trying to paint. great results considering the poor results of the lat few shows the block might be a little leading indicator. loved how they turned the roofs into usable entertaining space and views every house thats positioned correctly should be doing that i know i will be from now on.




Ah great now your using '_reality_' Tv shows to support your theories. I suppose you'll next be quoting Lara bingle on her thoughts?



> Lots of green shoots around my best guess is the daily index never prints lows lower than it already has if i was waiting for price defation before entering it woud be now to 12 months ago might be stagnant wont be falling further but my guess is slow growth on par with inflation. wait to see strong gains in the figures and youve already missed your chance. my guess and actually what ive noticed of late is things will creep away unnoticed.




Turns out your beloved index is a sham. Not surprised really. Sorry to bring down your last remaining glimmer of hope:

http://www.macrobusiness.com.au/201...RSS_DAILY_MAILCHIMP_CAMPAIGN&utm_medium=email.

I will happily concede when ABS figures reflect RPData.



Tink said:


> I always thought you found it unaffordable, young gun, and that was the reason you couldnt purchase a home, but you are making the decision not to buy a home, travelling and waiting for a 4 bedroom house etc.
> No one I know started like that, and if it works out for you, good luck.




No need to sugar coat it Tink, if you think it's a stupid idea just say People hear 4 bedroom and think lavish, ensuites, walk i robes pools etc. I will be looking at getting a stock standard 4 bedroom house at a good price when the time comes. It may be a couple 10's of thousands more, but if it is going to save the cost of moving/upgrading later which would no doubt equate to over 20k with agents fees and stamp duty, isn't it a long term smart financial move? So long as I'm not breaking the bank of course. I don't see anything wrong with it.



> Having your own home is one of the best things, imo, but as said, everyone is entitled to their views.



I completely agree home ownership is a great feeling, and I can't wait for the day I get to start working on my own home again on weekends as Randr does.



Glen48 said:


> Wonder if the TV station slipped a few bucks into the help the sale to get the price up in a depressed market, and therefore keep the ratings up, so they can claim the show is the best and charge more for advertising and get their money back.




Wouldn't surprise me at all, I am very skeptical of the results. I havent officially seen them but have heard they are through the roof.


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## im sparticus (2 July 2012)

Glen48 said:


> Wonder if the TV station slipped a few bucks into the help the sale to get the price up in a depressed market, and therefore keep the ratings up, so they can claim the show is the best and charge more for advertising and get their money back.




Yes its all a big conspiracy theory its funny when prices were down younggun and friends were more than happy to quote the index  now they are up its a sham hear we go again. 

Ive seen young-gun quote uneployment figures to support his agrument then the minute unemployment is down its no longer relavant. you guys need to get some consistancy in your argument i hate to think what thread followers must be thinking of you guys.

Talk about a bad case of denial. prices depressed just as you wished and you still cant make a move doubt you will ever be able to pull the trigger your always gonna find a reason not to no matter how irrational.


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## im sparticus (2 July 2012)

Scm hypothetical sinks further in the red mel today 580. He is now 2% down who would have thaught he just might have nailed the bottom.


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## Glen48 (2 July 2012)

Kirk Douglas house prices are on the way down FULL STOP
 It may not happen over night but it will happen.


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## young-gun (3 July 2012)

im sparticus said:


> Yes its all a big conspiracy theory its funny when prices were down younggun and friends were more than happy to quote the index  now they are up its a sham hear we go again.




For starters I have never quoted that sham index, ever.

Secondly, the year on year figures are still down substantially, it would be in my best interest to push the credibility of it, I will do no such thing.



> Ive seen young-gun quote uneployment figures to support his agrument then the minute unemployment is down its no longer relavant.




I don't recall ever in any of my posts quoting abs unemployment figures to support any argument. Please feel free to quote me where I did, and again I will accept that I was wrong. Of course unemployment is relevant. 

However:

Sorry to burst another of your bubbles
http://www.macrobusiness.com.au/201...RSS_DAILY_MAILCHIMP_CAMPAIGN&utm_medium=email

So now even ABS themselves are saying they can't get it right, or haven't. Would love to hear your thoughts.



> you guys need to get some consistancy in your argument i hate to think what thread followers must be thinking of you guys.






> are you really 22? bearish before you could speak?
> 
> You have been bearish on property for 20 years (since before you could speak)




Yes.... I am the one who should be worried about what others think of me....



> Talk about a bad case of denial. prices depressed just as you wished and you still cant make a move doubt you will ever be able to pull the trigger your always gonna find a reason not to no matter how irrational.




Now that I have completely torn everything you said apart in glorious fashion, I think we can all simply disregard the above as sparticus nonsense.


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## satanoperca (3 July 2012)

Wonder what all those Melbournian vendors are thinking after the block, how come my place cannot sell.

Have a look at stock on the market in Melbourne, incredibly high and it is only going to get worse after a great month of building approvals for May, mainly apartments.

http://sqmresearch.com.au/graph_stock_on_market.php?region=vic%3A%3AMelbourne&type=c&t=1

So we have had interest rate cuts ontop of the ending of many FHBG throughout the country, low unemployment, great GDP growth figures, concerning low credit growth and what do have with property prices, nothing.

Must be a bottom forming, a really big bottom. lol


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## im sparticus (3 July 2012)

young-gun said:


> For starters I have never quoted that sham index, ever.
> 
> Secondly, the year on year figures are still down substantially, it would be in my best interest to push the credibility of it, I will do no such thing.
> 
> ...





Well put lol. I would never quote that index....but yoy its still down pfft. i dont believe unemployment is relevant but look the figures are wrong and it now supports my argument. man i didnt need to dig up any quotes you have managed to prove my point in one post your a real peace of work young-gun how do you do that magic that you do?


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## young-gun (4 July 2012)

im sparticus said:


> Well put lol. I would never quote that index....but yoy its still down pfft. i dont believe unemployment is relevant but look the figures are wrong and it now supports my argument. man i didnt need to dig up any quotes you have managed to prove my point in one post your a real peace of work young-gun how do you do that magic that you do?




1. I didn't quote the index directly. I simply stated it was down.
2. I think you will find I said "Of course unemployment *IS* relevant." Perhaps actually read posts before you continue to make a fool of yourself. Unemployment is not the only thing that affects the re market though. I'm sure you are aware of that.


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## im sparticus (4 July 2012)

young-gun said:


> since when did we start paying attention to job figures anyway? they are almost as useless as the US figures. id say all those part timers are now working at dominos, i think they are doing pretty well.




Keep it up this is fun.

When the numbers are swayed in your favour your happy to point it out and when they arnt the figures are rigged sham conspiracy against you there is no more perfect example of denial you did it again in your last post do you even understand what you rwight... i didnt quote it exactly just pointed out it was down wtf?? you used it to validate your argument regardless of weather you quoted its exact figures or not dont kid yourself, what a joke!


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## satanoperca (4 July 2012)

and the MSM finally are catching up with 

http://www.theage.com.au/business/property/record-number-of-houses-for-sale-in-melbourne-20120704-21guk.html



> Record number of houses for sale in Melbourne






> In June, Melbourne’s residential listings grew at a monthly rate of 6.1 per cent - almost four times the national average - and recorded a yearly jump of 27.7 per cent, more than 27 times Sydney’s annual growth of 1 per cent.




and the best part :-



> Permits granted to build or renovate homes soared 27.3 per cent in May from the prior month after the central bank cut interest rates, a report this week showed.




lets help that supply increase by decreasing IR's and to ring out the last FHB with the ending of the FHBG.

Give it a year or so and we really will know the true state of property in Melbourne.

It is alright I am, Melbourne cannot drag down you growth.

Cheers


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## young-gun (4 July 2012)

im sparticus said:


> Keep it up this is fun.
> 
> When the numbers are swayed in your favour your happy to point it out and when they arnt the figures are rigged sham conspiracy against you there is no more perfect example of denial you did it again in your last post do you even understand what you rwight... i didnt quote it exactly just pointed out it was down wtf?? you used it to validate your argument regardless of weather you quoted its exact figures or not dont kid yourself, what a joke!




*sigh*

So in that quote I never said unemployment is useless I said the figures are useless. Actual unemployment and the figures the abs release are two completely different things. Hence my quote that the figures are useless. The true rate of unemployment is a factor to house prices. However when it decreases, I believe this will simply hold prices steady. When it increases, I believe it will cause prices to fall. No doubt youll throw your hands in the air over that atatement as you will find that hard to comprehend, so once I get off my phone I'll explain it to you.

For the last time, I have never quoted your sham index. Yes I noted it was down, purely to point out that it would be in my best interest to push the credibility of it. Not once have I ever referenced it to argue which way prices are going. If you spent less time making a fool of yourself trying to discredit everyone else on the forum, and more time producing valid arguments and reasoning, you may be able to have a half decent back and forth.


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## young-gun (4 July 2012)

satanoperca said:


> and the MSM finally are catching up with
> 
> http://www.theage.com.au/business/property/record-number-of-houses-for-sale-in-melbourne-20120704-21guk.html
> 
> ...




I read this morning(in the Australian I think) that council approvals for dwellings were at record highs.


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## Judd (4 July 2012)

Fascinating that people are fascinated by the price of a house.  Then I don't care as I only have one (mine) and I don't give a rats what it is supposed to be worth.

My kids will find out once I am dead or shuffled off to a nursing home.  In the meantime, I'll continue to enjoy its utilitarian value.


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## explod (4 July 2012)

Judd said:


> Fascinating that people are fascinated by the price of a house.  Then I don't care as I only have one (mine) and I don't give a rats what it is supposed to be worth.
> 
> My kids will find out once I am dead or shuffled off to a nursing home.  In the meantime, I'll continue to enjoy its utilitarian value.




Good point.  

Most posters are either desperately concerned at their investment properties or gloating and waiting for the bottom.

A home is a man's/woman's Castle.


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## im sparticus (4 July 2012)

young-gun said:


> *sigh*
> 
> So in that quote I never said unemployment is useless I said the figures are useless. Actual unemployment and the figures the abs release are two completely different things. Hence my quote that the figures are useless. The true rate of unemployment is a factor to house prices. However when it decreases, I believe this will simply hold prices steady. When it increases, I believe it will cause prices to fall. No doubt youll throw your hands in the air over that atatement as you will find that hard to comprehend, so once I get off my phone I'll explain it to you.
> 
> ...




How can one possibabily produce valid argument when every instrament of measurement to you is inaccurate a sham or conspiracy against you especially when it does not conform to your  logic.


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## im sparticus (4 July 2012)

You know even scm believed the rpdata daily index was one of the best and most accurate weve had!


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## Tink (5 July 2012)

No I wouldnt say its a stupid idea young gun, that is up to you, only you know your financial situation, though, I would be going for a bigger block rather than a bigger house, thats my view.
I think while you are young, both working, no kids is a good time but this - I am young, you want to live it up saga - gets that look from me. 
Weren't we all young?
We all had choices.

What do you mean, out with the old, in with the new? 
People have to live somewhere, you either rent or pay mortgage, thats it.
Not everyone wants their own home and thats fine, but when I hear people whingeing they cant pay the rent, well, we didnt travel and throw money up on the wall, we made sacrifices.

Great post Judd.
I would extend that to investments too, if they are in a positive, who cares.


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## Judd (5 July 2012)

Yeah.  My approach has caused a little bit of disharmony in the past.  Was at a social evening and this bloke was banging on about how much he owns and the price of his property.  During one of his infrequent pauses for breath I remarked that it was all very interesting but irrelevant.  When asked why I responded that I already owned my own home and had no intention of buying his so why would I care what he had.  Totally destroyed the evening but it was worth it.  The boring little twerp.


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## im sparticus (5 July 2012)

Interesting but irrelevant in a social setting? Sounds like someone had a bad case of house price envy that night.
  i have never found anyone to be interesting and a boring little twerp all at once. usually the boring little twerp is the bitter guy at the end of the table not contributing to the conversation. or saying things like why is everyone discussing house prices on a house price thread cant they see how stupid it is. the truth is everyone is free to discuss whatever it is they feel like discussing whenever they feel like discussing it. if it is not your cup of tea simply remove yourself from the conversation. but to remove the conversation you have no right if you cant understand why people do what they do deal with it.


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## im sparticus (5 July 2012)

Another hypothetical. The pricing of assets.

Lets say you had an asset that could produce $500 per week. and lets say said asset would appreciate in value by the same value as inflation and lets say the $500pw would also appreciate by the current rate of inflation and lets say from now until the end of time inflation would run at 3%pa. lets say also current interest rates for lending over said asset were 5%pa

what value would you put on set asset. ie what price as both a buyer and seller would you be happy to buy and sell at?


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## prawn_86 (5 July 2012)

im sparticus said:


> Another hypothetical. The pricing of assets.
> 
> Lets say you had an asset that could produce $500 per week. and lets say said asset would appreciate in value by the same value as inflation and lets say the $500pw would also appreciate by the current rate of inflation and lets say from now until the end of time inflation would run at 3%pa. lets say also current interest rates for lending over said asset were 5%pa
> 
> what value would you put on set asset. ie what price as both a buyer and seller would you be happy to buy and sell at?




A lot of stocks are conservatively valued at 10x earnings, private businesses a lot less. So in a hypothetical situation like this, where growth isn't going to outpace inflation then $260k would be a very rough guide of fair value imo. IR shouldn't need to come into a basic, income based, valuation


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## im sparticus (5 July 2012)

prawn_86 said:


> A lot of stocks are conservatively valued at 10x earnings, private businesses a lot less. So in a hypothetical situation like this, where growth isn't going to outpace inflation then $260k would be a very rough guide of fair value imo. IR shouldn't need to come into a basic, income based, valuation




Bussiness is carring alot more risk both to earnings and capitial hence higher vals. me i wouldnt sell my growth asset to anyone that could borrow the money and be positively geared to the tune of x$$ and increasibg at a rate of 3% both in income and value. If you know what i mean i dont think you will have any trouble selling your hypothetical though. ok if one that ran par with inflation was worth 260K what would on that just maintained vaue be worth...and one that outpaced inflation by 3%. I do believe the cost of finance is important in vals btw.


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## prawn_86 (5 July 2012)

im sparticus said:


> Bussiness is carring alot more risk both to earnings and capitial hence higher vals. me i wouldnt sell my growth asset to anyone that could borrow the money and be positively geared to the tune of x$$ and increasibg at a rate of 3% both in income and value. If you know what i mean i dont think you will have any trouble selling your hypothetical though. ok if one that ran par with inflation was worth 260K what would on that just maintained vaue be worth...and one that outpaced inflation by 3%. I do believe the cost of finance is important in vals btw.




I don't understand much in that post. Very hard to read.

Why would anyone buy a business that is losing money unless they think there is a potential for a quick turnaround? Hence why things should be valued (basically) on a multiple of earnings.


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## white_goodman (5 July 2012)

im sparticus said:


> Julia you just dont get it young-gun is gonna make the smartest of all his moves and wait for the crash then he will be able to purchase his dream house as a four bdr in popular suburb for the todays price of a cheapy this way he will also save on transaction cost of upgrading. dont you see how smart he is. with all the money he is saving he can afford to splash out on his other smart move (getting married)
> 
> 
> Looks like the block achieved 100% auction clearance rate and all selling well above reserve, doesnt exactly follow the picture the melbournians are trying to paint. great results considering the poor results of the lat few shows the block might be a little leading indicator. loved how they turned the roofs into usable entertaining space and views every house thats positioned correctly should be doing that i know i will be from now on.
> ...





 no matter how bullish or how much trumpeting you do, if housing finance doesnt pick up the fuel for the fire is simply not there, 

I am in a similar situation to young gun, I can afford a home but why would I? I travel twice a year, bank interest pays 70% of my rent, and if i was to buy id have to use all that for a deposit and then pay more in interest for the first few years for a similar property... Older generation might have to come to a realisation that the demographics arent there, the financing isnt there, and this little thing called the internet doesnt allow the masses to be duped into dumb decisions (as much as past).. also the freedom of not worrying about job security nearly as much.

Good luck in all your housing dreams this year.


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## prawn_86 (5 July 2012)

white_goodman said:


> I am in a similar situation to young gun, I can afford a home but why would I? I travel twice a year, bank interest pays 70% of my rent, and if i was to buy id have to use all that for a deposit and then pay more in interest for the first few years for a similar property... Older generation might have to come to a realisation that the demographics arent there, the financing isnt there, and this little thing called the internet doesnt allow the masses to be duped into dumb decisions (as much as past).. also the freedom of not worrying about job security nearly as much.




I'm the same. It just doesnt stack up for me and my wife personally. Both early-mid 20's, earning well over 6 figures between us, have just got married and spent three months travelling, so a lot of major life goals and expenses out of the way, yet still dont see buying as suiting us just yet. Currently save more pa than many people earn, and live in a nice area, and dont have to worry about when we next want to move or change jobs.

If we were to buy were we live now, it would take about 15yrs (excluding costs/body corp etc) to pay off, putting all our savings and equivilant rent into it. Admittedly it is an inner city location.

Currently our interest only pays 25% of our rent though. Do you live by yourself WG?


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## im sparticus (5 July 2012)

prawn_86 said:


> I don't understand much in that post. Very hard to read.
> 
> Why would anyone buy a business that is losing money unless they think there is a potential for a quick turnaround? Hence why things should be valued (basically) on a multiple of earnings.




My point is you are not pricing growth why different assets have different value and pes the lowest pe does not represent best value

dont you ever wonder why different companies trade at greatly different pe's?

It is very rare indeed to find an asset with projected growth that is priced to pay a net credit after expenses initally with 100% finance. Moreso the greater the probability of said growth.

Anywho with that response from a relatively high profile member i really must bid the forum fairwell all the best.


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## prawn_86 (5 July 2012)

im sparticus said:


> My point is you are not pricing growth why different assets have different value and pes the lowest pe does not represent best value
> 
> dont you ever wonder why different companies trade at different pe's?




There is no growth in your example, only inflation, unless i mis-read it.

Of course different valuations are affected by past and future potential growth, but your example only cites inflation, so in my mind, if i was buying an asset that only grows with inflation i would pay no more than 10x earnings. Government bonds are currently priced at a PE of 33, which is news to me, as they seem way over-priced based on that basic measure also, unless the market is anticipating a LOT of deflation


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## white_goodman (5 July 2012)

prawn_86 said:


> I'm the same. It just doesnt stack up for me and my wife personally. Both early-mid 20's, earning well over 6 figures between us, have just got married and spent three months travelling, so a lot of major life goals and expenses out of the way, yet still dont see buying as suiting us just yet. Currently save more pa than many people earn, and live in a nice area, and dont have to worry about when we next want to move or change jobs.
> 
> If we were to buy were we live now, it would take about 15yrs (excluding costs/body corp etc) to pay off, putting all our savings and equivilant rent into it. Admittedly it is an inner city location.
> 
> Currently our interest only pays 25% of our rent though. Do you live by yourself WG?




yeh by myself but in a townhouse just over the bridge with 2 mates, id rather by a house then get married


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## white_goodman (5 July 2012)

prawn_86 said:


> There is no growth in your example, only inflation, unless i mis-read it.
> 
> Of course different valuations are affected by past and future potential growth, but your example only cites inflation, so in my mind, if i was buying an asset that only grows with inflation i would pay no more than 10x earnings. Government bonds are currently priced at a PE of 33, which is news to me, as they seem way over-priced based on that basic measure also, unless the market is anticipating a LOT of deflation




dont worry your answer was generally right, ive done property val (work and uni) before and its was a less than descriptive example


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## young-gun (5 July 2012)

im sparticus said:


> How can one possibabily produce valid argument when every instrament of measurement to you is inaccurate a sham or conspiracy against you especially when it does not conform to your  logic.




I didn't write the articles claiming that they weren't any good. I simply read, and asses. No need to get yourself all worked up because there is people out there debunking your index. I didn't say the index was flawed until I read about it. 

I did however say that the methods used to calculate unemployment are flawed before I read the article. Turns out that assumption was correct, as I previously posted an article in which the ABS was quoted in saying that they were miles off the mark.



im sparticus said:


> You know even scm believed the rpdata daily index was one of the best and most accurate weve had!




He quotes macro business alot, I'm sure he has read the same article, and I am also sure that when he returns(from wherever he is) He will be of the same opinion that I am.



Tink said:


> No I wouldnt say its a stupid idea young gun, that is up to you, only you know your financial situation, though, I would be going for a bigger block rather than a bigger house, thats my view.
> I think while you are young, both working, no kids is a good time but this - I am young, you want to live it up saga - gets that look from me.




I'm not sure that choosing to take a different route to that of yourself really deserves 'a look' from anyone.



> What do you mean, out with the old, in with the new?
> People have to live somewhere, you either rent or pay mortgage, thats it.
> Not everyone wants their own home and thats fine, but when I hear people whingeing they cant pay the rent, well, we didnt travel and throw money up on the wall, we made sacrifices.




I mean out with old investment strategies and approaches, and in with the new. We live in a different economic world now, and that requires a very different approach to that used in the past in my opinion. I would never whinge about my rent. It is but a small portion of my wage, and is so much better than owning a home right now.

In a sense am I not making sacrifices also? By travelling I am reducing the amount of money I will have as deposit for a home, which will mean I have to atke a bit longer to pay it off? Sounds like a sacrifice to me.



white_goodman said:


> no matter how bullish or how much trumpeting you do, if housing finance doesnt pick up the fuel for the fire is simply not there,
> 
> I am in a similar situation to young gun, I can afford a home but why would I? I travel twice a year, bank interest pays 70% of my rent, and if i was to buy id have to use all that for a deposit and then pay more in interest for the first few years for a similar property... Older generation might have to come to a realisation that the demographics arent there, the financing isnt there, and this little thing called the internet doesnt allow the masses to be duped into dumb decisions (as much as past).. also the freedom of not worrying about job security nearly as much.
> 
> Good luck in all your housing dreams this year.




Unfortunately the interest I am earning doesn't come close to covering my rent No one on here appears interested in demographics or credit growth either.

Bottom line is, even if prices do climb, they most certainly won't be climbing fast. If I'm wrong about a crash, I pay a little extra for a house. If an investor is wrong about a crash not being able to happen, and it crashes, well.......


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## damien275x (6 July 2012)

. Look at those figures, they're terrible. Well only terrible to gamblers who purchaced a bunch of houses on credit and hope they will magically be worth more in the future. Right now prices are sliding and I would say most property investors are still holding on. Once it sinks in that they're going to remain at the same levels for a prolonged period (5-10 years) .. those negative gearing will start nail biting and they will probably get out and cut their losses, pushing prices down more, and more, and more. There's also too much bearish news abroad that's going to knock on over to us, Europe is stuffed, and America are even worse off, but nobody's caught onto that yet, that will blow up soon too

Also I have been contacting RE agents ads to properties I see on Domain flat out asking for <20% of what they've posted and they seem absolutely desperate. One left me 3 voice mail messages. So if you need to buy this year for family reasons or other personal reasons I think you can be really pushy and they can't do jack. Put in one really low offer, if it's not accepted, walk away.. and watch them come running. This is Melbourne, and Sydney


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## white_goodman (6 July 2012)

young-gun said:


> Unfortunately the interest I am earning doesn't come close to covering my rent No one on here appears interested in demographics or credit growth either.
> 
> Bottom line is, even if prices do climb, they most certainly won't be climbing fast. If I'm wrong about a crash, I pay a little extra for a house. If an investor is wrong about a crash not being able to happen, and it crashes, well.......




I just did a model for my econom masters on house prices, the major explanatory variables I had were real credit growth (housing finance excl refi's) real IR's, and per capita real GDP growth... housing finance being the king, to take a view on housing is to take a view on whether housing finance growth will increase or subside.

So it would be nice if perma bulls argue on why they think lending will increase, not just increase but growth rates increase, rather than make ridiculous comments on the clearing rates of The Block or the amount of people at Bunnings on a Sunday or whatever desperate measures that can possibly be grasped..

Owning a house has terribly fat tails ATM, if house prices fall which leads to unemployment, how secure are first home buyers (middle management types) going to be in making those loan repayments, the upside is heavily outweighed by the downside at this moment in time.


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## Tink (7 July 2012)

Oh well, you had better hope those investers all dont pull out, otherwise where are you going to live?

Thats fine, while you keep banging how good renting is, investors can keep banging on how good their income generating asset is, giving you a roof over your heads.
If their investment is in a positive, they dont care. 

This is a housing thread and people are free to say whatever they like, be it bulls or bears.


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## young-gun (7 July 2012)

Tink said:


> Oh well, you had better hope those investers all dont pull out, otherwise where are you going to live?
> 
> Thats fine, while you keep banging how good renting is, investors can keep banging on how good their income generating asset is, giving you a roof over your heads.
> If their investment is in a positive, they dont care.
> ...




Oh well? If RE investors didn't inflate prices by purchasing multiple IP's I wouldn't be renting as housing wouldn't be so over-priced. I am aware this is not the only factor that has pushed housing to current levels. But Please don't make out like they are the good guys putting up a home for us. 

Yes there is a definite need for some rental properties, the only reason we need as many as we currently have is because there is families out there that genuinely can't afford to buy.

If things get bad enough you will see family moving in with one another. Not all, but some. Rental prices will also increase as investors sell up, as you pointed out, jmo though. 

It's currently happening in America with vacancies at 30 year lows and rents on the up and up. Funny thing is, all the young people over there would rather pay more for the freedom of rental, and do away with the risk of owning a home, than be tempted by a mortgage which would actually come out cheaper per week in a lot of cases, purely because they have seen what a mess RE is. Prices will keep going down.

The key words in your last sentence are 'in a positive'. They will most certainly care when it isn't.


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## Miss Hale (7 July 2012)

Tink said:


> Oh well, you had better hope those investers all dont pull out, otherwise where are you going to live?




Well if that were to happen, housing prices would fall and some of us who are renting will be happy/able to buy those former rental properties.  I'm in favour of renting not because I see renting as better than buying per se it's just that it's better _at this point in time_ (IMO). At other points in time I have been both a home owner and a landlord.  It's less about bull and bears and more about horses for courses.


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## Tink (7 July 2012)

Alot of confused messages on here 
- one minute its affordable but I dont want to buy, the next is its unaffordable and you have priced us out.


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## young-gun (7 July 2012)

Tink said:


> Alot of confused messages on here
> - one minute its affordable but I dont want to buy, the next is its unaffordable and you have priced us out.




I'm afraid you are confused. Allow me to clarify. At no point on that previous post did I state the words un-affordable. I stated that they were 'over-priced'. There is a big difference between the two. Also, what is affordable for one does not make it affordable for another. If a millionaire can afford a 3 story beachfront property because he can afford it, does that make it affordable? For very few perhaps. But that does not mean that the mansion is not over-priced.

 Just because I can afford a property, does not make it a good price. It's like a someone in jb hifi tryign to flog off a 50 inch plasma for 10 grand. Can i afford it, yes, does that make it a good buy? no.

I also never said anyone priced me out, I have chosen to sit out. Well I guess in a sense yes you are correct, I have been priced out. Being that I won't pay the current prices as 1. I think they are too high, and more importantly 2. I believe we are looking at the potential for a crash. I said that if prices weren't inflated by boomers, I wouldn't be renting, as houses to me would be alot closer to their true value, or a 'good buy'.

If you like I can pull the figures as to how many rental properties there are in Australia, I have them in another post. To flood the market with every investment property would lead to total destruction of the housing market as we know it. Prices would hit levels of which I can't even begin to imagine.

I am not looking to make any money, I am simply looking to not lose money. I don't think property will see the returns that it has in the past for a very very long time.

There are houses that I can afford, yes, but there are houses/units/places to live that almost anyone can afford. They are simply in places that are so impractical and far away(remote) that I would find it hard to make a living in what I do. I think someone posted units on here in somewhere like port douglas going for about 70k-100k? I may be wrong with the area, just a guess.


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## white_goodman (7 July 2012)

Tink said:


> Oh well, you had better hope those investers all dont pull out, otherwise where are you going to live?
> 
> Thats fine, while you keep banging how good renting is, investors can keep banging on how good their income generating asset is, giving you a roof over your heads.
> If their investment is in a positive, they dont care.
> ...




what do you think happens to price when all the investors pull out? Gotta think past stage 1...

95% of 'investment' is in second hand property, its not generating any new stock, how many 'investors' are in positive cash flow? I have no problem with speculation just dont call it investment when the only profit is in the capital appreciation


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## young-gun (7 July 2012)

white_goodman said:


> the upside is heavily outweighed by the downside at this moment in time.




Nail on the head. Australia is one of the last nations remaining on its feet(not just in housing but as an economy), and we too will soon be in a very similar place to everyone else. It's no co-incidence, it is the boom/bust cycle of an economy, we haven't done anything different or special, we've just had a few things in the ground to keep us ticking over for a bit, and our demographic shift has arrived a few years later than other nations.

Head down **** up and save, as I am currently taking home baby boomer wages, without the boomer expenses


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## So_Cynical (7 July 2012)

I stumbled onto a Florida (US) real estate site today  wow is our real estate over priced, i mean OMG have a look at what you can buy around Miami.

http://www.opendoormiami.idxco.com/idx/4211/details.php?idxID=001&listingID=A1533174

Map: http://maps.google.com/maps?q=25.693903960928104,+-80.44805471049371


Two story, 4 Bedrooms, 2 Bathrooms,1 Partial Baths - 2351 Square Ft, Year Built: 1992
Price: *$345,900 USD*
11 Kilometres to the beach, 30 clicks by road to the centre of Miami 

Or how about a 2 bedroom ocean view Apartment in Key Biscayne.

http://www.opendoormiami.idxco.com/idx/4211/details.php?idxID=001&listingID=A1621518

Map: http://maps.google.com/maps?q=25.6836070,+-80.1570300 


Ocean View, 2 Bedrooms, 2 Bathrooms - 1782 Square Ft
Price: *$899,000 USD*
Property adjoins ocean and nature reserve.


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## medicowallet (8 July 2012)

http://www.theage.com.au/victoria/housing-glut-hits-suburbs-20120707-21o6k.html

"record 55,290 unsold homes in Melbourne in June - the highest number of any capital city in Australia "

This can't be true, there is an UNDERSUPPLY of houses.


Very interesting REIV reporting today = so few auctions reported.. I can see in the next six months or so they might have to report a negative amount to keep their clearance rates for the year over 50%.

Sunshine and lollipops

MW 

PS Where is Robots?


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## trillionaire#1 (8 July 2012)

So-cynical, i'll take the key biscayne apartment ,but wait until next year when its 599000.
Just need to scrape together enough change for a ferrari testarossa and a white sports jacket.:car:


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## Tink (8 July 2012)

I wasnt talking specifically to you, young gun, quite a few had said the same thing.

Fair enough, good luck.


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## young-gun (8 July 2012)

So_Cynical said:


> I stumbled onto a Florida (US) real estate site today  wow is our real estate over priced, i mean OMG have a look at what you can buy around Miami.
> 
> http://www.opendoormiami.idxco.com/idx/4211/details.php?idxID=001&listingID=A1533174
> 
> ...




I showed this to my partner, and asked her how much we might pay for it, 850k almost fell of her chair when she knew it was 350.



> Or how about a 2 bedroom ocean view Apartment in Key Biscayne.
> 
> http://www.opendoormiami.idxco.com/idx/4211/details.php?idxID=001&listingID=A1621518
> 
> ...




You would easily pay more than twice that for a top end beach front unit at moloolaba, and they would be smaller by the looks of the photos.



Tink said:


> I wasnt talking specifically to you, young gun, quite a few had said the same thing.




Sorry, didn't realise.



> Fair enough, good luck.




You too.


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## Aussiejeff (8 July 2012)

medicowallet said:


> http://www.theage.com.au/victoria/housing-glut-hits-suburbs-20120707-21o6k.html
> 
> "record 55,290 unsold homes in Melbourne in June - the highest number of any capital city in Australia "
> 
> This can't be true, there is an UNDERSUPPLY of houses.




Ties in nicely with this data 
http://sqmresearch.com.au/graph_stock_on_market.php?region=vic::North+West+Melbourne&t=1

Click on all the other Melbourne outer suburban "ex-housing boom" localities - the trend is very similar. Sharply rising unsold listings during sharply falling interest rate period. Not a good outlook I'm afraid. Compare Melbourne to other capitals and it stands out as by far the worst.  



> Very interesting REIV reporting today = so few auctions reported.. I can see in the next six months or so they might have to report a negative amount to keep their clearance rates for the year over 50%.
> 
> Sunshine and lollipops
> 
> MW




Gee, how long has Enzo been fudging the mid-50's % now? He's like a crazy-cracked record..LOL



> PS Where is Robots?




Look no further than i sparticus = i robots. 

Happy bargain hunting..


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## damien275x (8 July 2012)

Attended two more auctions this weekend. Both passed in. This is Melbourne's West. I have no idea why properties were selling in the middle of nowhere like Point Cook for $400,000+ at one point. They don't even have infrastructure there, it's just a hole. Not to mention all the welfare leeches who don't work who are around your home while you are at work !

I feel sorry for a lot of the ones who were lied to. I know of at least three families who are massively over leveraged. They borrowed against borrowed against borrowed, banking on capital appreciation on all 3x homes. They are well and truly in the ****ter now in negativity equity and facing job loss. This is not uncommon either, it's a growing trend out that way. For a decade the only investment middle class people have been into is property. I hope they don't go down too much because it could be a horrible deflation spiral. :S Then when they crash the 1% will take them at basement prices and grow even wealthier, and we don't want that. 

Makes me wonder if there was such a shortage of homes they would be selling right now? I think we've all been lied to. I don't know how anyone could believe statistics RE agents roll out. It's the same thing as listening to a new car salesman tell you all about how great the car is, or the Foxtel guy at the door trying to convince you to buy 55  channels. They have a strong, vested interest as they directly benefit from making a sale!!

Very thankful we have the internet. If I did not have the Internet, I would have bought a 400,000 home in the middle of nowhere in 2008 during GFC when everyone was barking "Get in now.." .. even my parents were. Think for yourself! The Internet allows you to access all the information the "experts' do .. and make your own calls!


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## Glen48 (8 July 2012)

Why do we have laws and rules about  truth in advertising, yet any one can be a RE expert  and make any outlandish statement about growth, shortage of house's , migration etc they wish.

 When some one is duded over a few bucks for some scam Heaven and Earth are moved to stop it, yet here we have the biggest financial disaster about to hit  Australia causing all manner of heartache to thousands in the years to come and it is all acceptable and continuing all in the name of money, big banks and power for the feds.


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## medicowallet (8 July 2012)

damien275x said:


> For a decade the only investment middle class people have been into is property.




And as our moronic governments have been propping up the bubble, it has diverted investment from the sharemarket, decreasing growth, and allowing foreigners to pick up our good companies at bargain basement prices... so when the jobs need to go, they will go, and go fast.

Interesting times ahead

MW

PS Where is Robots?


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## Glen48 (8 July 2012)

First we lose Robots now Kirk Douglas has gorn??????


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## prawn_86 (9 July 2012)

I'm not generally one for posting sensationalist articles but this one seems reasonably balanced, albeit on the bearish side:
http://theage.domain.com.au/real-es...g-loan-repayment-disaster-20120708-21pkl.html



> New figures from Commonwealth Bank show the *annual average pace of housing appreciation in Australia has been 1.8 per cent since the financial crisis*, substantially below the 8 per cent average over the prior 20 years. It warned that a lower pace of appreciation was the ''new normal''.




My emphasis added, but this is less than inflation, on average. So add in debt on top of that and the 'average' buyer since 2008 is well out of pocket. It has been 4 years now also, so it's getting harder and harder to argue that it is just a blip on the radar


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## Miss Hale (9 July 2012)

prawn_86 said:


> I'm not generally one for posting sensationalist articles but this one seems reasonably balanced, albeit on the bearish side:
> http://theage.domain.com.au/real-es...g-loan-repayment-disaster-20120708-21pkl.html
> 
> 
> ...




Thanks for the link prawn_86.

Another salient point from this article:



> Property analyst Mark Armstrong predicted appreciation would be slowest for home owners in outer suburbs, who could see negative to zero growth in values for as many as 20 years.




I think that's where the problem may lie for us, although the drop is not huge, if the growth rate is even nil or very low *for the next twenty years *then that is not good


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## prawn_86 (9 July 2012)

Miss Hale said:


> I think that's where the problem may lie for us, although the drop is not huge, if the growth rate is even nil or very low *for the next twenty years *then that is not good




I have said this all along. We may not see a 'bust' as such, but a slow decline and little to no growth until income:house price ratios come back into 'normal' is a serious possibility, especially with credit dried up


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## damien275x (9 July 2012)

prawn_86 said:


> I have said this all along. We may not see a 'bust' as such, but a slow decline and little to no growth until income:house price ratios come back into 'normal' is a serious possibility, especially with credit dried up




I don't think so. People won't want large amounts of capital tied up in something that is bleeding money, especially when it becomes very obvious that it is going to continue bleeding money for most of their life. Once that really sinks in, panic selling will take hold.


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## Glen48 (9 July 2012)

Most will walk away , go bankrupt for 5 yrs as house prices will still be sinking and the banks AKA the taxpayers will bail out the banks.
Get a Window sign from a RE agent to show your grand kids who stupid we were and the prices we paid.


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## sinner (9 July 2012)

prawn_86 said:


> I have said this all along. We may not see a 'bust' as such, but a slow decline and little to no growth until income:house price ratios come back into 'normal' is a serious possibility, especially with credit dried up




Mortgage lending is 85% in the hands of the big 4.

$1.2 trillion is the total housing debt figure for Australia, so we are talking a cool $1 trillion between the four of them. As a country, we owe the banks our total gross annual production in mortgage debt alone!

My question is, what happens to the big 4 (share price, ability to borrow in overnight markets, ability to roll borrows, credit rating, etc) if house prices go down by 5% in real terms? What about 10%?

Maybe we could use BoQ and median house prices in New Farm over the last twelve months as a guide?



20+% declines there in the BoQ price.

Everything is connected together, I just don't see it playing out the way you've "said all along". Maybe if this was 30 years ago and we were only looking at housing in a bubble (no pun intended), ignoring all other factors.

So what happens to the economy when what happens to the banks, happens?

Welcome to the undecoupled macroeconomy.

Disclaimer: my super is long SLF since Feb.


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## howmanyru (9 July 2012)

damien275x said:


> I don't think so. People won't want large amounts of capital tied up in something that is bleeding money, especially when it becomes very obvious that it is going to continue bleeding money for most of their life. Once that really sinks in, panic selling will take hold.




My investment property has lost value, at least 10-15% from peak, so what ? I still paid 300% less than what it's worth now. There are heaps of people who were buying investment properties and land when I did and are sitting on heaps of capital growth - they are not in a hurry to sell. Besides, if i sell my house, there is nothing to invest in anyway, stocks - down, cash interest rates - down, so why sell? Sure there are demographics that will be in trouble, but one can't say a crash across the board is inevitable, IMO.


----------



## prawn_86 (9 July 2012)

sinner said:


> Everything is connected together, I just don't see it playing out the way you've "said all along". Maybe if this was 30 years ago and we were only looking at housing in a bubble (no pun intended), ignoring all other factors.




We shall see i guess. I could be wrong, but just cant see the panic selling setting in here in Aus. Either way i'm in a good spot with a nice cash reserve and no debt, it's just a matter of not guying too early


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## damien275x (10 July 2012)

howmanyru said:


> My investment property has lost value, at least 10-15% from peak, so what ? I still paid 300% less than what it's worth now. There are heaps of people who were buying investment properties and land when I did and are sitting on heaps of capital growth - they are not in a hurry to sell. Besides, if i sell my house, there is nothing to invest in anyway, stocks - down, cash interest rates - down, so why sell? Sure there are demographics that will be in trouble, but one can't say a crash across the board is inevitable, IMO.





Yes, there are cases like yours, but you were early to the party. Seeing 300% returns is what drove the majority into the market. These people are still very leveraged and make up more of the market than those who own outright. So I see extreme downward pressure on prices.

Yes yields across the board are low right now, but there are places you can park money where it won't lose value, or won't lose as much as a house that is returning negative -5-10% p/a. Over 5 years we are talking big losses, leverage is a double edged sword and people seem to forget that while it can magnify the gains, it can also magnify the losses.


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## numbercruncher (11 July 2012)

More of the expected .....



> THE house building sector is deteriorating at a pace not seen since Australia was in the throes of recession more than two decades ago.
> 
> 
> Read more: http://www.news.com.au/money/proper...or/story-e6frfmd0-1226422013676#ixzz20FZOtRSc






> The number of homes for sale in Melbourne has soared nearly 28 per cent to record levels in the past year.
> Research house SQM Research says the pressure of the extra supply is likely to push the city's house prices down $10,000 by the end of the year.
> 
> 
> Read more: http://www.news.com.au/money/proper...or/story-e6frfmd0-1226422013676#ixzz20FZlnyc6


----------



## Mr Z (11 July 2012)

Miss Hale said:


> I think that's where the problem may lie for us, although the drop is not huge, if the growth rate is even nil or very low *for the next twenty years *then that is not good




Yes, think of all that negative gearing.... a little pointless if no capital growth is available eh? Not to mention what would happen if some government decides to eliminate it again, remember Hawkes effort in that regard... I do.



> Political History
> 
> In July 1985 the Hawke/Keating government quarantined negative gearing interest expenses (on new transactions), so interest could only be claimed against rental income, not other income. (Any excess could be carried forward for use in later years.)
> 
> ...




... yet there are rumblings.

Changing a status quo can be very damaging in the near term, that is why we are less likely to see this rule go but we seem to be going into "eat the rich" mode so change may be back on the table.


----------



## Mr Z (11 July 2012)

prawn_86 said:


> We shall see i guess. I could be wrong, but just cant see the panic selling setting in here in Aus. Either way i'm in a good spot with a nice cash reserve and no debt, it's just a matter of not guying too early




I don't think that panic selling would be the concern, you only need a relatively small % of distress selling to move a market significantly.


----------



## tech/a (11 July 2012)

> I think that's where the problem may lie for us, although the drop is not huge, if the growth rate is even nil or very low for the next twenty years then that is not good




*As a property investor/developer *Im in the thick of it--its part of business.

Currently selling Housing which Ive held for many years as I too cannot see capital gain 
for the forseeable future.
As an investment if I simply hold it Im fighting against depreciation/maintenence and holding costs.
These chew substantially into my passive income even on those I freehold. I can better
use the money elsewhere. I am holding industrial property as the holding and depreciation costs are 
way way lower and the return much higher.

So to sell you have no choice but to meet the market and with most in my area thats 20% off the 
property highs of 18 mths ago. Ive sold 1 of 5 with a couple being sniffed at.As this is part of business Im not concerned about the 20% off the highs. 

Freeing up the capital has the bank happy with liquidity and cash available for some industrial
building on some land I hold.

As for buying Property the best time for those who buy their PPOR is around nowish.
Sure prices will drop more in some areas but stagnation is likely in the market. Good negotiation skills
will see savings at the front end. Remember though that low interest rates are likely to revert to their mean (8-9%) so factor that in withing 3-5 yrs. If you dont it will be at your own peril.

*Property as an investment.*

Not General housing or units for my money.
Some small developments pre sold would be fine.
Industrial is also in my area in demand.
Selective and informed property decisions will
have a far better chance of being profitable than
herd following. If you treat it and run it like the 
business it should be then youll prosper!

Best of business felloow Property holders!


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## moXJO (11 July 2012)

Mr Z said:


> Yes, think of all that negative gearing.... a little pointless if no capital growth is available eh? Not to mention what would happen if some government decides to eliminate it again, remember Hawkes effort in that regard... I do.
> 
> 
> 
> ...




Govt public housing costs grew and those wanting public housing blew out the waiting list. Rents went very high as well. Yeah I remember.


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## young-gun (11 July 2012)

howmanyru said:


> My investment property has lost value, at least 10-15% from peak, so what ? I still paid 300% less than what it's worth now. There are heaps of people who were buying investment properties and land when I did and are sitting on heaps of capital growth - they are not in a hurry to sell. Besides, if i sell my house, there is nothing to invest in anyway, stocks - down, cash interest rates - down, so why sell? Sure there are demographics that will be in trouble, but one can't say a crash across the board is inevitable, IMO.




Let's not forget how percentages work. Say your house is worth 400k today, which has fallen 10% or 40k. 40k (assuming you bought at 100k as you stated) is a 13.3% loss of capital gain. If this was to continue downward to say a 30% loss which is 120k approx, thats a 40% paper loss on your gains.

Disregarding the second figure, you have stated that your property has already fallen by around 40k. Does that not bother you at all? Is there a point at which you would say 'enough is enough'?

And surely having your money in a term deposit that is returning something and not depreciating at the same time would be a better option? Sure you're getting rental returns, but have they returned substantially more than 40k since the point in time of which your IP started to decline in price?

I don't mean to single you out, just curious.

On another note, ABS released figures on the number of owner-occupied housing finance commitments excluding refinancing to be down -0.8%. Before you jump down my throat sparticus I don't know how accurate this is, I would say they are able to achieve a more accurate result with these type of figures as opposed to unemployment, but who knows.


----------



## white_goodman (11 July 2012)

young-gun said:


> Let's not forget how percentages work. Say your house is worth 400k today, which has fallen 10% or 40k. 40k (assuming you bought at 100k as you stated) is a 13.3% loss of capital gain. If this was to continue downward to say a 30% loss which is 120k approx, thats a 40% paper loss on your gains.
> 
> Disregarding the second figure, you have stated that your property has already fallen by around 40k. Does that not bother you at all? Is there a point at which you would say 'enough is enough'?
> 
> ...




its pretty much accurate, they dont have to go to too many financials to get the figures, compared to using sampling for unemployment


----------



## Glen48 (11 July 2012)

I always though an investment was some thing you put money in to and it increased in value so even when you are bankrupt, un employed  and underwater and living in the bathroom of your ex mother-in-laws your property is still an investment.


----------



## Tink (12 July 2012)

Great post as usual Tech, value your posts in here.

I would also say if people were going to buy a PPOR as an investment first, is also a good idea, with the intention of moving in later.

howmanyru, I wouldnt sell either, when are you going to see properties at $100,000 again inner suburbs, unless you have another venture or need the money for something else. 

Alot I know are more than 300% in positive.


----------



## Mr Z (12 July 2012)

Re: PPOR --> Given what has happened around the world, and that our market has some of the worst credit stats, I would think it would be prudent to step back and take a long hard look before jumping at "cheap" realestate. Keeping in mind that in the end all RE markets are basically LOCAL and you may have sound reasons to be above or below trend. For now I'd be concerned about the SE corner of Oz.... save maybe SA to some degree.

The idea that Melbourne became one of the least affordable cities to live in globally was just a major red flag to me, I cannot see any justification for that!


----------



## Glen48 (12 July 2012)

Great post as usual Mr Zee, value your posts in here.
 300% positive you are correct.


----------



## Mr Z (12 July 2012)

Glen48 said:


> Great post as usual Mr Zee, value your posts in here.
> 300% positive you are correct.






Thanks

I've had to be more than a little patient with this market but we appear to be at a critical juncture.... at least one worthy of close scrutiny. Hopefully we get some blow softening from China's easing monetary conditions... we will see!

Cheers
Z


----------



## MrBurns (12 July 2012)

> Property glut to keep prices falling
> 
> Property experts are predicting a further 0.7 per cent decline in house prices across the country amid a glut of properties for sale.
> 
> ...




So much for the shortage 

http://www.abc.net.au/news/2012-07-12/property-market-doldrums/4126580


----------



## young-gun (12 July 2012)

Tink said:


> howmanyru, I wouldnt sell either, when are you going to see properties at $100,000 again inner suburbs,




I'm sure stranger things have happened.


----------



## young-gun (12 July 2012)

MrBurns said:


> So much for the shortage
> 
> http://www.abc.net.au/news/2012-07-12/property-market-doldrums/4126580




Nonsense mr b. I have no doubt there is droves of people about to dive into the market, they'll be coming from everywhere, I'm certain! We better start building more houses actually. 

In fact I've recently decided that I am going to ignore all the compelling evidence that supports a substantial correction/fall/crash in prices, and everything that has occurred overseas, and I'm gonna buy a house. I just feel that with all this uncertainty in the global economy, not to mention the cracks appearing right here at home, that now is without a doubt the perfect time to take the leap of faith. After all, who has ever gone wrong with a big slab of debt in recent times?


----------



## Vixs (12 July 2012)

young-gun said:


> Nonsense mr b. I have no doubt there is droves of people about to dive into the market, they'll be coming from everywhere, I'm certain! We better start building more houses actually.
> 
> In fact I've recently decided that I am going to ignore all the compelling evidence that supports a substantial correction/fall/crash in prices, and everything that has occurred overseas, and I'm gonna buy a house. I just feel that with all this uncertainty in the global economy, not to mention the cracks appearing right here at home, that now is without a doubt the perfect time to take the leap of faith. After all, who has ever gone wrong with a big slab of debt in recent times?



\

For those that don't know you better young-gun, it's very easy to miss the sarcasm of that post.

needs more smiley faces - maybe some 's, or some 's, or you could go all out with a  or  haha.

This thread has become much more reader-friendly over the last few weeks - you don't need to dodge the wild streams of piss coming from all the pointless and non-property related pissing contests now that they've subsided.


----------



## numbercruncher (12 July 2012)

Pretty tame falls last quarter - sure to accelerate for the speculators ....




> Australian house prices fell 2 per cent in the June quarter with more falls expected in the coming year, especially in the most populous states of New South Wales and Victoria, according to National Australia Bank.
> ‘‘Employment security is now the biggest concern for homebuyers as interest rate concerns recede,’’ the report says. The comment comes as the economy shed 27,300 jobs in June, the biggest monthly drop in 2012.
> NSW and Victoria have already posted the steepest declines in house prices for the April-June period, showing 2.3 per cent and 2.9 per cent drops, respectively, according to NAB's residential property survey, released today.
> 
> ...


----------



## numbercruncher (12 July 2012)

Vixs said:


> \
> 
> .
> 
> This thread has become much more reader-friendly over the last few weeks - you don't need to dodge the wild streams of piss coming from all the pointless and non-property related pissing contests now that they've subsided.




You should of been here a few years ago buddy when all the industry sponsored and brain washed permabulls bagged us realists 24/7 for warning about the enevitable ....


----------



## explod (12 July 2012)

numbercruncher said:


> You should of been here a few years ago buddy when all the industry sponsored and brain washed permabulls bagged us realists 24/7 for warning about the enevitable ....




Well said, 

and where's Professor Robots?


----------



## Tink (13 July 2012)

young-gun said:


> I'm sure stranger things have happened.




If you getting $4000 a month in rental, I would be happy to leave it there.


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## young-gun (13 July 2012)

Tink said:


> If you getting $4000 a month in rental, I would be happy to leave it there.




I would too. But I'm yet to find a rental valued at 400k that returns 4k a month. If that sort of return was able to be achieved prices would increase accordingly.


----------



## againsthegrain (13 July 2012)

young-gun said:


> I would too. But I'm yet to find a rental valued at 400k that returns 4k a month. If that sort of return was able to be achieved prices would increase accordingly.




Think he means sitting on the market for months asking 4k rent a month before reality sets in


----------



## Mr Z (13 July 2012)

young-gun said:


> I would too. But I'm yet to find a rental valued at 400k that returns 4k a month. If that sort of return was able to be achieved prices would increase accordingly.




Drug gangs are not always the most reliable tenants and they are hard to replace if they default.... + getting back rent out of dead people is a problem as is meth lab insurance.

Just sayin... high risk and all that.


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## Glen48 (13 July 2012)

Hope they leave the cooking gear behind  you can make your own ,not hard to do a woman was caught cook some in her hand bag in Wal Mart USA.
 No GST  some Carbon, Tax rest profit.


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## numbercruncher (13 July 2012)

Unit in Sydney or Castle in the US ? (or much of Europe for similar prices im led to believe)




> A couple in the US has bought a castle complete with a stone tower, peep holes and secret passageways for just $395,000
> Brandon and Kate Smith bought the 724sqm castle in Eureka, Missouri, last month but first heard of it in 2005 when it was on the market for nearly $2 million
> 
> .






http://finance.ninemsn.com.au/executivesuite/home/8498718/us-couple-buys-395k-castle


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## Mr Z (13 July 2012)

There had to be some meth involved in that build! Self medication at the least... doctors


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## Miss Hale (14 July 2012)

Does anyone else use REFind to check out house prices? 

http://www.refindhouseprices.com/

It's been down for a few days and I'm wondering is anyone knows what's going on  I've found it invaluable to check the length of time a property has been on the market and if the price has dropped both for houses for sale and rentals.


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## Julia (14 July 2012)

It's working fine for me, Miss Hale.  Thanks for the link - really useful.


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## young-gun (14 July 2012)

Julia said:


> Thanks for the link - really useful.




+1

If you were in the market for buying a house this would help you go in with a very aggressive but reasonable offer.


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## Miss Hale (14 July 2012)

Aha! Yes, it's working for me now too!  I must have done the opposite of jinxing it


----------



## damien275x (15 July 2012)

Australia's property expert discusses the future of the Market.

http://www.youtube.com/watch?v=bCwNClUZBeg&feature=youtu.be


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## young-gun (15 July 2012)

damien275x said:


> Australia's property expert discusses the future of the Market.
> 
> http://www.youtube.com/watch?v=bCwNClUZBeg&feature=youtu.be




It's like a broken record.:horse:


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## Miss Hale (16 July 2012)

Just an update on the REfind site.  Yes, it's up and running again but it looks like it has basically been 'reset'.  In other words all the properties are showing as being only on the market for a few days and no price reductions.  Poking around the internet I've found out that this has happened before. Conspiracy theorists believe that it is hacked periodically but those who would not want us to know how long properties have been on the market and how much the prices may have been reduced by.


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## young-gun (17 July 2012)

Miss Hale said:


> Just an update on the REfind site.  Yes, it's up and running again but it looks like it has basically been 'reset'.  In other words all the properties are showing as being only on the market for a few days and no price reductions.  Poking around the internet I've found out that this has happened before. Conspiracy theorists believe that it is hacked periodically but those who would not want us to know how long properties have been on the market and how much the prices may have been reduced by.




Wow it has too. All houses I was looking at the other day are either found today or 3 days old. Quite strange, I wonder if you can contact them or if they release statements. It doesn't seem like the most professionally set up site.

There is no 'about us' or contact us or anything, bit sus.


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## Miss Hale (17 July 2012)

young-gun said:


> Wow it has too. All houses I was looking at the other day are either found today or 3 days old. Quite strange, I wonder if you can contact them or if they release statements. It doesn't seem like the most professionally set up site.
> 
> There is no 'about us' or contact us or anything, bit sus.




Yes, it's a bit sus and is a bit hit and miss too but it does (or it did) give a fairly reliable guide to price movements and length of time on the market.  I used it when I was looking for a rental property recently and, cross checking it against my own records, it seemd fairly accurate. Sometimes it would take a few days to pick up a price drop and sometimes there was the odd property missing but by and large it was quite useful.  

I found some comments about it on this blog which provide a few theories on its origin and how it works (go to the last 6 comments at the bottom of the article).

http://www.macrobusiness.com.au/2012/07/reivs-goes-into-bat-for-melbourne/


----------



## young-gun (17 July 2012)

Miss Hale said:


> Yes, it's a bit sus and is a bit hit and miss too but it does (or it did) give a fairly reliable guide to price movements and length of time on the market.  I used it when I was looking for a rental property recently and, cross checking it against my own records, it seemd fairly accurate. Sometimes it would take a few days to pick up a price drop and sometimes there was the odd property missing but by and large it was quite useful.
> 
> I found some comments about it on this blog which provide a few theories on its origin and how it works (go to the last 6 comments at the bottom of the article).
> 
> http://www.macrobusiness.com.au/2012/07/reivs-goes-into-bat-for-melbourne/




Who is the last guy wanting to expose? The owners of the site or the 'hackers'? 

I don't think a site like this is illegal, unless it breaches laws in retrieving its data. They provide handy information, important info the very closely reflects the true market(from my comparisons anyway(.


----------



## Miss Hale (17 July 2012)

young-gun said:


> Who is the last guy wanting to expose? The owners of the site or the 'hackers'?
> 
> I don't think a site like this is illegal, unless it breaches laws in retrieving its data. They provide handy information, important info the very closely reflects the true market(from my comparisons anyway(.




I thought he meant the hackers.  I can't see that it's illegal in any way either.


----------



## Agentm (18 July 2012)

[h=2]Beware the rent-seeking organisation: don’t be dudded by housing data[/h] by David Lawson on July 16th, 2012 at 10:23 am 					
 				 				 				 					By Philip Soos
The Conservation
 One of the more interesting outcomes the 2011 Census produced  was the figures concerning the housing market. The reason for this  interest is how the results contrasted with the idea that Australia  currently suffers from an acute housing undersupply or shortage. Taking  the lead in promoting this idea is the National Housing Supply Council (NHSC),  an organisation formed by the federal government in May 2008 to provide  an in-depth analysis of the housing market. The NHSC is widely  considered to be the peak body in this field.
 Unsurprisingly, in its first report – State of Supply Report 2008 –  released in March 2009, the NHSC concluded that a deficit or gap of  85,000 dwellings existed. Here was the most comprehensive study of  Australia’s housing market, a dense 172 pages. The alarming shortfall of  dwellings made instant headlines in the media, not least because it  provided concrete proof that Australia’s rocketing housing prices were  strongly affected by this shortage. Both government and industry  broadcasted the NHSC’s results because it confirmed the suspicion that a  shortage did, in fact, exist – and that something could now be done  about it. The banking and real estate sectors were also very supportive,  as their own arguments about a housing shortage were now considered  irrefutable.
 There was only one small problem: the purported shortage of 85,000 dwellings was complete fiction.
 In order to arrive at the shortage, the NHSC had to employ a  methodology of the most dubious nature – a travesty of basic science.  The shortfall of 85,000 dwellings was composed of the following: 1)  9,000 to address homelessness of those sleeping rough, 2) 35,000 to  address homelessness of those staying with friends and relatives, 3)  13,000 to house marginal residents of caravan parks, 4) 26,000 to  increase the rental vacancy rate to three percent, and 5) an extra 2,000  to round up to the nearest 5,000!
 The problems with this analysis are legion, and were quickly unmasked  by Australian economists Kris Sayce and Steve Keen, and are covered  briefly here. While homelessness is indeed a serious problem with tens  of thousands suffering from this plight, these persons (typically on the  lower income scales) do not have the financial power to turn their  needs into demand on the property market. Instead, the NHSC produced  evidence of social need but not actual demand. The same goes for the  residents of caravan parks.
 The fourth category is an interesting one because it assumes that  data sourced from the Real Estate Institute of Australia (REIA) and its  state-level affiliates are also based upon sound methodology. As I have  covered elsewhere, the reported vacancy rates are  likely to be severely biased downwards given the appalling methodology,  data-gathering techniques, and lack of independent oversight  (auditing). The last point is self-explanatory: who on earth rounds up  to the nearest 5,000?
 These highly questionable statistics were produced by Australia’s  “peak” body. The NHSC is a body stacked with industry and former  government professionals. Its continued funding would most likely  quickly dry up were they to find that no shortage existed. If instead a  surplus was found, the NHSC’s brief existence would come to an end as  dwelling supply considerations are found not to be an issue in price  inflation.
 The outcome is obvious: if a shortage can be found, then government  is much more likely to enact policies favourable to industry. Asking the  NHSC if there is a shortage is similar to asking Dracula if the blood  bank needs to be expanded because of a deficit – the answer is already  predetermined and reflexive.
 Little more could be expected in the 2010 and 2011 reports.  The NHSC performed a backflip, admitting that it was uncomfortable with  its previous methodology given the obvious problems with it. It is  unlikely that the NHSC would have changed course if not for the barrage  of ridicule it experienced from those who read the report and were  honest enough not to give their silent approval. Each report provided an  increasingly dismal prognosis as the shortage had increased to 185,000  in 2011 and, if present circumstances remained the same, there is  expected to be a shortage of 640,000 dwellings by 2030.
 But nothing changed. The NHSC had to find another pretext for the  pre-supposed shortage, this time by creating a category called  “underlying demand”, driven primarily by immigration and other  demographic factors. This would appear to be a more sound methodology if  not for the fact that the numbers were simply made up again.
 The pseudo-science of the NHSC has not prevented vested interests  from promoting its conclusions as fact and crucially relies upon the  public not reading through hundreds of pages (630 in all) of economic  and statistical analysis to understand this. After all, the public is  supposed to trust the “experts”. It is worth reading through these three  reports in order to realise how the phrase “lies, damned lies, and  statistics” rings true.
 The non-existent housing shortage probably comprises the most popular  argument used by the bubble deniers to justify astronomical housing  prices. As Australia is apparently suffering from a chronic deficit of  dwellings, demand is greatly outstripping supply, leading to rising  prices.
 The problem with this argument is it can’t explain why prices started  to rise in 1996 and have skyrocketed onwards, especially during  2001-2004. Annual population growth between 1996 and 2005 registered at  approximately 1%, but dwelling growth (adjusted for demolitions and  discontinuations) was greater over this period. In fact, 2007 was the  first time since 1950 that population growth was higher than dwelling  growth. If the housing shortage argument was correct, housing prices  should’ve started to rise from 2007 onwards, not 1996.
 The shortage argument, however, is not new. Every country that has  suffered through a housing boom followed by a crash (a bubble) in recent  years have always had its so-called ‘experts’ claim that prices were  based upon fundamental valuations due to dwelling shortages.
 Take the US as a case study. Leading institutions such as the Federal  Reserve, National Association of Realtors, California Building Industry  Association and Harvard University’s Joint Center for Housing Studies  produced sophisticated studies to show that the $8 trillion housing boom  was caused, in part, by dwelling shortages. These studies were authored  by professors, PhDs, and businesspeople, all with extensive knowledge  and experience but with conflicts of interest that could fill a small  book. Yet, their expertise was as illusory as the shortage when the  housing market crashed. The same again occurred in Ireland and Spain to  the point where these three countries are now bulldozing entire  neighborhoods to reduce some of the massive oversupply.
 Going back to point first made in the introduction, the 2011 Census revealed Australia had 7.8 million households,  900,000 lower than the NHSC’s figure, with population also growing by  300,000 less than previously estimated. These figures have come as such a  shock that the NHSC chairman has reported that an undersupply could be  incorrect. In fact, Morgan Stanley researchers have found that the current 228,000 dwelling undersupply has now become an oversupply of 341,000, a huge turnaround.
 Given the flawed nature of the NHSC’s reports, the run-up in housing  prices is likely due to other factors, specifically the escalation in  mortgage debt used to finance real estate speculation. As of 2011,  mortgage debt reached $1.2 trillion or 85% of GDP. Combined with  personal debt, this climbs to $1.3 trillion or 95% of GDP, a staggering  sum. Also of concern is the $53 billion in subsidies and tax breaks that property owners receive.
 Perhaps the NHSC can stop wasting our taxpayer dollars and instead investigate these leads.


http://www.debtdeflation.com/blogs/...-organisation-dont-be-dudded-by-housing-data/


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## Aussiejeff (18 July 2012)

Thanks, Agentm.

For me, the standout part of that info is this section....



> ....Morgan Stanley researchers have found that* the current 228,000 dwelling undersupply has now become an oversupply of 341,000, a huge turnaround*.
> 
> Given the flawed nature of the NHSC’s reports, the run-up in housing prices is likely due to other factors, specifically the escalation in mortgage debt used to finance real estate speculation. *As of 2011, mortgage debt reached $1.2 trillion or 85% of GDP. Combined with personal debt, this climbs to $1.3 trillion or 95% of GDP, a staggering sum*.




Of course, this changes nothing. Gummint policy weighted heavily towards speculation in the RE sector will continue ad-nauseum until the Oz economy collapses under an even more staggering level of debt...prolly when the "mining boom" tapers orf.. whenever that may be. IMHO.

meh....


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## explod (22 July 2012)

On a weekend this time last year there were up to 40 post on a weekend on this thread, nothing since A/J posts four days ago.

No one interested in property any more.


----------



## drsmith (22 July 2012)

explod said:


> On a weekend this time last year there were up to 40 post on a weekend on this thread, nothing since A/J posts four days ago.
> 
> No one interested in property any more.



Nobots ?


----------



## medicowallet (23 July 2012)

explod said:


> On a weekend this time last year there were up to 40 post on a weekend on this thread, nothing since A/J posts four days ago.
> 
> No one interested in property any more.




Went to an open house on the weekend... bit like that really.

Was the only one there on a property for the kids which was reduced from $650000 to $540000.   

Perhaps the calm before a storm again?

Perhaps not much is happening, because not much is happening!


MW
The original Robot destroyer.


----------



## Glen48 (23 July 2012)

MW did you get MR Asparagus as well? aka Kirk Douglas.


----------



## againsthegrain (23 July 2012)

Surprised nobody has mentioned this but all day media have been slamming that mining boom will be over in two years, unemployment up, dollar down.... In do recall some indicators being mentiones


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## medicowallet (24 July 2012)

Glen48 said:


> MW did you get MR Asparagus as well? aka Kirk Douglas.




I only shot the sheriff.


----------



## Miss Hale (24 July 2012)

"House prices can't fall a 'dangerous idea':RBA"




> The Reserve Bank says housing prices may fall further and believes it is risky to assume they won't.
> 
> "It is a very dangerous idea to think that dwelling prices cannot fall," said RBA governor Glenn Stevens said in a speech today. "They can, and they have."
> 
> ...





http://www.watoday.com.au/business/house-prices-cant-fall-a-dangerous-idea-rba-20120724-22m9v.html


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## MR. (24 July 2012)

againsthegrain said:


> Surprised nobody has mentioned this but all day media have been slamming that mining boom will be over in two years, unemployment up, dollar down.... In do recall some indicators being mentiones




What? The mining boom will be over in two years? What’s that got to do with property? Ps: Don’t tell Fortescue…..  

How about the “Paradox of Thrift” ……..Google it…... Or how Spain (4th largest Euro Zone) and/or Italy (Third largest Euro zone) may need bailouts! Two year bonds at and below a massive 0% yield is now being lent to Germany. Hey and China’s largest trading partner is with Europe! 

“Don’t you worry there Rose we have build you a good ship.” we all saw the final of "The Block" a few weeks ago! 




medicowallet said:


> Went to an open house on the weekend... bit like that really.
> 
> Was the only one there on a property for the kids which was reduced from $650000 to $540000.
> 
> ...




No no, not even close, it's because nothing's happening.... I've even found time for a visit.... Might sweep the floors again now! .......  

Govnut's  Need more stimulas! You don't expect us to have to wait for all these loans to be paid back now, do ya?


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## Glen48 (24 July 2012)

From Money Morning:



According to SQM research, the record level of 'stock on market' in Melbourne is now sitting at around 41,000 unsold houses (and 14,000 apartments). This level of stock has been increasing steadily, and is now double what it was just two years ago.

 Should be ok  people are still loosing their jobs, Carbon Tax is in, prices rising, China stopped importing, Germany stop lending.  
 Wots me worry.


----------



## moXJO (24 July 2012)

Miss Hale said:


> "House prices can't fall a 'dangerous idea':RBA"
> 
> 
> 
> ...




From his speech


> It has to be said that the housing market bubble, if that's what it is, seems to be taking quite a long time to pop – if that's what it is going to do. The ingredients we would look for as signalling an imminent crash seem, if anything, less in evidence now than five years ago.
> Conclusion
> 
> Most Australians I encounter who return from overseas remark how good it is to be living and working here. We are indeed ‘lucky’ in so many ways, relative economic stability being only one of them.
> ...




edited speech is here
http://www.businessspectator.com.au/bs.nsf/Article/Australian-economy-economic-outlook-RBA-Glenn-Stev-pd20120724-WH7JG?OpenDocument&src=sph&src=rot


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## Agentm (28 July 2012)

classic moments from the master and lord bernanke.. the ultimate bubble denier and whom got it so so wrong on every count every step of the way..

like many here, and i fear, most property owners alike, whom all seem to be bubble deniers, check these classic statements from bernanke prior to the very obvious and well observed and predicted property bubble collapse..

i often hear many of bernankes sentiments replicated here in australia by observers, industry specialists and economists and the rba themselves

if anyone like me has fully read the californian property report posted by the governement in the few months before the collapse, you will see there the same echos of property bubble denial and the same sentiment and bubble denial speak that bernanke and most here echo..

good luck to those bubble denier here in australia,  its all about keeping up appearances, listening to the economists who's vetsed interest is in keeping this decades long dream bubble afloat for as long as they can.... as the walls crumble around them..

as we all know its true.. lol ...  this bubble is different!!!  really,, this aussie property bubble is different..   just listen to bernanke...  he knew it too..


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## Glen48 (28 July 2012)

I was read were most Pre-divorce men worth 1M  ended up worth about $270K post divorce, after the bubble has run out of air a lot of Aussies will be lucky to be worth 270K.


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## bullet21 (28 July 2012)

Agentm said:


> classic moments from the master and lord bernanke.. the ultimate bubble denier and whom got it so so wrong on every count every step of the way..
> ]




Forget Bernanke for the moment, we've got our own Prince of the RBA talking about rainbows and daffodils. http://smh.domain.com.au/real-estat...ces-of-homes-not-too-high-20120724-22nhe.html


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## Miss Hale (28 July 2012)

bullet21 said:


> Forget Bernanke for the moment, we've got our own Prince of the RBA talking about rainbows and daffodils. http://smh.domain.com.au/real-estat...ces-of-homes-not-too-high-20120724-22nhe.html




I reckon Glenn Stevens is having a bet each way.  One minute he's saying don't be surprised if house prices go down (see my post above), the next he is saying the bubble - if there is one - isn't going to pop!  Even in the speech I quoted from WA he more or less said both things in the one speech (see post further down from moXJO).  What could this mean I wonder?  I think it means he has no {insert appropriate adjective} idea


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## Mrmagoo (31 July 2012)

1) it pops and no one can get a loan
2) it continues as is and non-home owners end up as a weird class of new working poor despite high incomes.

Either way, not looking good.

3) Moderate falls over the long term to let wages catch up... to what ? I mean who really WANTS to be able to afford to pay half your lifes earnings on a dog box your folks could have paid off in 10 years on their low wages because they had low status jobs.

I say bring on the crash.... little pain.... for a better future for the entire country.


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## Mr Z (31 July 2012)

This is a democracy, we don't do pain if at all possible. At least not while we can vote other peoples money into our pockets for "the greater good".

Beware of what you wish for, a proper crash would be shared around by our "caring" government.


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## damien275x (31 July 2012)

I am 23 and have been looking around for a house to buy, and god am I sick of real estate agents telling me it's a 'Buyers market' .. I'll tell you when it's a buyers market, k mate? Piss off and let me looka t the home. Also if you see an advertised price, you might as well take off 30% because that's all I hear anyone discussing paying, and even they're holding onto their cash tighly.  

I find it hillarious that they're now doing things like giving people cars, and $40,000 cheques for homes. The reason? I think they know the prices are going to tank well north of whatever bribe they give the suckers. Not buying it. Also, I am not sure what happened to this "housing shortage" they were going on about. If housing was in such a shortage, why are prices tanking $50,000+ 

Also what kind of an idiot buys an investment when it is in short supply? Markets are driven by supply and demand and whenever supply is reduced, it makes it more lucrative to develop, and this drives people in to build and equal it back out. So what the're really saying is. Lose all your money. Right now. It infuriates me that these people are allowed to talk absoulte garbage and con people out of all their money. If someone in the Financial services industry did this with a stock, they'd be screaming bloody murder!!!


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## bullet21 (1 August 2012)

Mrmagoo said:


> I say bring on the crash.... little pain.... for a better future for the entire country.




Sadly you're in the reasonable minority. The majority wants their cake to eat.



damien275x said:


> I am 23 and have been looking around for a house to buy, and god am I sick of real estate agents telling me it's a 'Buyers market' .. I'll tell you when it's a buyers market, k mate? Piss off and let me looka t the home. Also if you see an advertised price, you might as well take off 30% because that's all I hear anyone discussing paying, and even they're holding onto their cash tighly.




I went to one of those group auctions at a hotel with a mate last week. All the properties were in the Dandenong area, which was supposed to be a boom suburb with one of the fastest growing property prices. Of the six houses five got passed in and most didn't make it past 300k.


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## Glen48 (3 August 2012)

Those who wanted to know when  the RE boom would return wait no longer it is here:

http://www.ratecity.com.au/home-loans/mortgage-news/investors-surge-back-into-the-property-market


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## Mr Z (3 August 2012)

You mean I miss the bottom? Already?


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## Glen48 (3 August 2012)

Afraid so but get in early to catch the next one soon..


----------



## white_goodman (3 August 2012)

real estate is primarily a function of rents, rents are gonna have to increase a lot more, prices are gonna have to come down a lot more or both for the investment case to make sense... then again people can make (and lose) sums of money playing the 'greater fool' game


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## sptrawler (6 August 2012)

At the end of the day it comes back to basics. Property prices rise and rents rise, eventualy property prices become too expensive and people rent. Then prices sit for an extended period untill buying a house becomes attractive.
Then off we go again.
The problem with the last cycle was, it was pumped by the real estate agents, the banks and the government and it overshot the market affordability by 50%.
Now we have to sit and wait for inflation to sort it out.


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## Glen48 (6 August 2012)

Capital gains tax was suppose to bring in revenue once a property was sold now all the properties are starting to tank  the feds will miss out on that expected income but have allowed tax deductions for years  waiting for the golden egg.


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## apgb8 (7 August 2012)

bullet21 said:


> Sadly you're in the reasonable minority. The majority wants their cake to eat.
> 
> 
> 
> I went to one of those group auctions at a hotel with a mate last week. All the properties were in the Dandenong area, which was supposed to be a boom suburb with one of the fastest growing property prices. Of the six houses five got passed in and most didn't make it past 300k.




you mean like at most auctions, it's always been like that with auctions, even in the boom times.

looks pretty **** over there in the east, the west is only stagnating, prices won't rise but rent is through the roof, yields are coming back to what they were in the early 00's.
property market over here is going to do a steady rise like it did from the late 80's-90's.


----------



## So_Cynical (7 August 2012)

apgb8 said:


> you mean like at most auctions, it's always been like that with auctions, even in the boom times.
> 
> looks pretty **** over there in the east, *the west is only stagnating*, prices won't rise but rent is through the roof, yields are coming back to what they were in the early 00's.
> property market over here is going to do a steady rise like it did from the late 80's-90's.




stagnating in the west hey?

Not if you paid top dollar in mid 2007 its not...its fallen and its flat.

My mums going back to Busso at Xmas to try and sell her house again..she will need luck to get anywhere near what she wants for it.


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## Glen48 (8 August 2012)

Is  this where prices will end for OZ houses almost buy one take one:
 645 @7.100 each.

Former yacht dealer Bill McMachen bought every home at the Macomb County auction in Michigan, paying a total of $4.55 million for the swag of properties, Detroit News reports.
*READ MORE: America's most expensive apartment*
There are around 400 family homes in the package which includes commercial and industrial real estate. But with many of the properties in a dilapidated state, Mr McMahen expects to make just $2 million profit off the entire transaction.


The homes he can't sell he will reportedly give away to charitable organisations.
Not everybody is happy about the deal after the 300 investors who registered for the auction were turned away.
One investor told Fox News he would have paid four times the amount Mr McMahen paid for one of the properties.
But Macomb county treasurer Ted Wahby defended the mass sell-off, saying by offloading the mixed bag of properties together the county would not be stuck with properties it could not sell.
"By packaging the good with the bag, it's in the centre for somebody to come in and buy it all," Mr Wahby told Fox News.
Mr McMahen said since buying the homes he had received a flood of emails from would-be buyers.


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## apgb8 (8 August 2012)

So_Cynical said:


> stagnating in the west hey?
> 
> Not if you paid top dollar in mid 2007 its not...its fallen and its flat.
> 
> My mums going back to Busso at Xmas to try and sell her house again..she will need luck to get anywhere near what she wants for it.




yes if you paid top dollar in '07...the only thing dragging the average down is the high decreases in properties over $2M...i don't know about busso, but i'm talking perth. house i'm in was worth $650k in 07, is now worth $700k easy considering the house down the street sold for $715k a month ago.


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## prawn_86 (8 August 2012)

apgb8 said:


> house i'm in was worth $650k in 07, is now worth $700k easy considering the house down the street sold for $715k a month ago.




It's a very isolated example, but in this case it means the owner has only had a 10% gain in 5 yrs. Depnding on the size of their loan they have probably paid a lot more than that in costs and interest


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## numbercruncher (9 August 2012)

prawn_86 said:


> It's a very isolated example, but in this case it means the owner has only had a 10% gain in 5 yrs. Depnding on the size of their loan they have probably paid a lot more than that in costs and interest




Less than 8% 


Factor in stamp duties, interest , loan fees , rates , insurance , maintenance and yet another speculator loses when he thinks he wins ...... Not to mention the opportunity cost that he could of invested in something productive and profitable .....


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## young-gun (9 August 2012)

apgb8 said:


> yes if you paid top dollar in '07...the only thing dragging the average down is the high decreases in properties over $2M...i don't know about busso, but i'm talking perth. house i'm in was worth $650k in 07, is now worth $700k easy considering the house down the street sold for $715k a month ago.




That's the best way to judge what a house is worth..


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## young-gun (9 August 2012)

numbercruncher said:


> Less than 8%
> 
> 
> Factor in stamp duties, interest , loan fees , rates , insurance , maintenance and yet another speculator loses when he thinks he wins ...... Not to mention the opportunity cost that he could of invested in something productive and profitable .....




but NC! what about the magic of negative gearing?!?!


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## numbercruncher (9 August 2012)

young-gun said:


> but NC! what about the magic of negative gearing?!?!





The tax payer loses along with the speculator -

sick system.


Bank wins big time though !


----------



## numbercruncher (9 August 2012)

As unemployment skyrockets house prices will continue to nose dive ....



> Earlier, Treasurer Tim Nicholls revealed job losses in Queensland's public service could amount to more than 20,000.


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## Glen48 (9 August 2012)

Not worth any thing until sold then you can work out the facts.


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## Mrmagoo (12 August 2012)

A fall in house prices can only be a good thing as it lowers the cost of living for every day Australians.


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## doctorj (22 August 2012)

UBS have compared the market cap of Australia’s banking system with those around the world.  Interestingly, the combined market caps of the big 4 plus Macquarie is equivalent to the combined market caps of US Bancorp, Goldman Sachs, Standard Chartered, Deutsche Bank and the entire UK domestic banking system…

All this while BHP announced Olympic Dam’s $30bn expansion , bank NPLs are rising and China continues to weaken…


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## Glen48 (22 August 2012)

http://finance.ninemsn.com.au/newsbusiness/aap/8520330/bhp-profit-down-by-more-than-1-3

Here are 30,000 workers who own a home or would consider buying now off the market and potential sellers.

The $US30 billion ($A28.73 billion) expansion of the massive Olympic Dam copper-uranium-gold project in South Australia has been shelved along with the $US19 billion ($A18.20 billion) Port Hedland harbour expansion in Western Australia.

Low commodity prices and soaring operating costs were blamed by BHP chief executive Marius Kloppers for the announcement on Wednesday.

He said the economics no longer stacked up for what would have been the world's biggest uranium mine at Olympic Dam.

"In a regime of falling prices, costs cannot continue to go up forever and it is very important to bend the trend," he told reporters.

"What you have is you've got a very high Australian dollar exchange rate and very high capital costs at this moment in time.

"If you build something while those conditions are in place, you effectively lock in the economics of the project in an unfavourable way because the capex (capital expenditure) is all spent during that unfavourable way."

Mr Kloppers said he would redouble efforts to develop new technology to improve the project's economics.

However, whether BHP keeps the Olympic Dam project is another matter.

An angry South Australian Premier Jay Weatherill said it was a dark day for the state and BHP would have to work hard to win over the state again.

South Australia's Chamber of Minerals and Energy chief executive Jason Kuchel said he was confident the project would still go ahead and be a major contributor to the economy, just not now.

No more major projects were likely to be approved by BHP in the current year, with $US22.8 billion ($A21.84 billion) already committed to 20 projects including a planned increase in iron ore output to 220 million tonnes from a current 180 million tonnes.

Mr Kloppers said its first priority for shipping the extra iron ore would be the cheaper option of focusing on using the inner harbour at Port Hedland rather than developing the outer one.

With prices for major commodities plunging in the past year, increased production to counter the falling prices was Mr Kloppers' message.

He blamed "one-off" operational issues affecting production of three assets: Queensland coal, copper mining in Chile and offshore natural gas in the US.

Production in all those areas would be double-digit this year, he said, while the company's Eagle Ford shale business in the US would become its largest producing petroleum field, with output of 200,000 barrels by 2015.

"Achieving these strong results before the upside these three facilities have as they come back is testament to the value of our diversified approach," he said.

The low commodity prices and about $US2.5 billion ($A2.39 billion) of write-downs on US shale, Australian nickel and Olympic Dam contributed to the weaker profit.

There was a 15 per cent decline in underlying earnings before interest and tax to $US27.2 billion.

BHP said it expected more volatility in commodity markets in the short term due to weakness in manufacturing and construction sectors in all key markets weighing on market sentiment.

"However, in the medium term we expect supportive economic policy and a broad growth bias, particularly in China, to lead to measured improvement in the external environment beginning in the first half of the 2013 financial year," the company said in a statement.

BHP increased its final dividend by two US cents a share to 57 US cents a share.

City Index analyst Peter Esho said BHP had ridden out the difficult economic conditions well.


----------



## basilio (23 August 2012)

Interesting story on how banks and other lending bodies have constructed loan applications that allowed pensioners etc to take out unaffordable home loans.

Makes one wonder how good the home loan books are.



> *There are predators in our own backyard, but where are our financial watchdogs?*
> 
> The level of sub-prime mortgages in Australia may be far in advance of what was previously assumed and provided for by banks. The story was broken on the ABC, and covered elsewhere. The revelations centred around two personalities: Kate Thompson and Denise Brailey.
> 
> ...




https://theconversation.edu.au/ther...rd-but-where-are-our-financial-watchdogs-8871


----------



## doctorj (23 August 2012)

Some may find this detailed report from Deloitte helpful - it's a few weeks old now but covers each state's economic outlook, with particular attention to property.


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## numbercruncher (24 August 2012)

basilio said:


> Interesting story on how banks and other lending bodies have constructed loan applications that allowed pensioners etc to take out unaffordable home loans.
> 
> Makes one wonder how good the home loan books are.
> 
> ...





Well hopefully a prison sentence coming for these criminals.!


----------



## greebly24 (30 August 2012)

Interesting anecdote. Female friend at work was excited as her husband texted to say he got a job outside the RE industry. Apparently he worked for a large mortgage broker in Adelaide which has just gone a month without writing a new mortgage (first time ever). Lots of people re-financing though. Pulling out equity for increased living costs. Hmm.

Heard there was about 100 property developments planned for Roxby Downs too, before BHP's announcement. Bugger.


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## Mrmagoo (1 September 2012)

I just want to see all of these greedy people who wanted to drive others in debt slavery suffer the same fate. Did people really think that a 100k increase on the cost of a necessity of life in a couple of years was good for society ? I hate to say this but : THINK OF THE CHILDREN.

My parents had crap jobs, but were able to afford a roof over our heads and you want to deny that to future generations of children : DISGUSTING.


----------



## howmanyru (1 September 2012)

It's the Fed banksters & Governments that drove up property prices with their stupid monetary policy, it was a global phenomenom. People are opportunists so RE agents, banks, developers, investors and so on just took advantage of it, and why not?


----------



## Mrmagoo (1 September 2012)

howmanyru said:


> It's the Fed banksters & Governments that drove up property prices with their stupid monetary policy, it was a global phenomenom. People are opportunists so RE agents, banks, developers, investors and so on just took advantage of it, and why not?




Banks not force you to buy a house, to pay an amount, to borrow too much. Banks are good guys. They lend money to the economy. We need banks.


----------



## young-gun (1 September 2012)

Mrmagoo said:


> Banks not force you to buy a house, to pay an amount, to borrow too much. Banks are good guys. They lend money to the economy. We need banks.




Now I've heard it all.


----------



## wayneL (1 September 2012)

young-gun said:


> Now I've heard it all.




Essentially, Magoo is correct. Although the banks abrogated their responsibility to ensure sensible borrowing by their customers, no bank forced individuals to bid up the price of housing to the currently absurd proportions.

We Plebeians did that all by ourselves.


----------



## Mrmagoo (1 September 2012)

young-gun said:


> Now I've heard it all.




Banks are good. They will loan businesses money. When the business is in difficulty the bank will work with you. When the home owner is in default, the bank will work with you.

Compared to a property investor, if your rent is but 14 days late, you get evicted. 

Banks care about their customers and their financial well being. That is why they have lending criteria and are happy to loan people money to achieve their dreams of putting other families out on the street and into poverty. A bank doesn't force up the price of a property, if I borrow 10 years ago or I borrow now, the cost of the loan is the same (market interest rate). Banks will loan you money for a business, so you can employ others. Unlike property investors who only do evil. Banks loan to business owners who are also really good guys, they employ people, follow labor laws, pay taxes. Property investors are the bad guys who try to take homes away from children, don't pay taxes and don't create any jobs they just harm society by making basics of life expensive. They drive society backwards. While hard working business men create jobs and increase the size of the economic pie so that everyone can live a better life, evil property investors (and speculative home owners) try to shrink the pie for their own personal greed.

The Banks are the good guys in all of this. The evil ones are the individual investors who do activities that HARM society. The Banks only ever benefit society.


----------



## young-gun (1 September 2012)

wayneL said:


> Essentially, Magoo is correct. Although the banks abrogated their responsibility to ensure sensible borrowing by their customers, no bank forced individuals to bid up the price of housing to the currently absurd proportions.
> 
> We Plebeians did that all by ourselves.




We need banks, we don't need their reckless fractional reserve system that creates debt that helps to inflate prices more than anyone who buys a house could on their own.


----------



## young-gun (1 September 2012)

Mrmagoo said:


> The Banks only ever benefit society.




lol


----------



## Mrmagoo (1 September 2012)

young-gun said:


> We need banks, we don't need their reckless fractional reserve system that creates debt that helps to inflate prices more than anyone who buys a house could on their own.




Fractional reserve is a good system. Greedy little Australians are not a good system.


----------



## young-gun (1 September 2012)

Mrmagoo said:


> Fractional reserve is a good system. Greedy little Australians are not a good system.




If the banks are so wonderful, why didn't they put a cap on how much people could borrow for a house? Oh thats right they were too busy thinking about profits, oh sorry  i mean the good of society.

Fiat money and FRB is not good, and you will see that as that as everything unfolds over the next couple of years.

Look Magoo I'm with you, I think that prices are way too high, it's bubbled blah blah blah. But you can't blame one entity. There is a multitude of reasons that prices are as high as they are. It doesn't stop with houses either. 

There's the banks, mortgage brokers, property investors, the current banking system, the recent sub-prime lending uncovered here in AUS(still the banks), and I'm sure many others that I can't think of right now, all tied up in this. You're barking up the wrong tree, and clearly have a chip on your shoulder over investors.

If it's any consolation our prices will fall substantially soon, and you will be able to put a roof over your head at a much more reasonable price.


----------



## numbercruncher (1 September 2012)

Start preparing for your date with destiny Oztraaalia ...



> 'Australia faces a run on its currency, a deeper collapse in housing prices and a bank funding crisis to rival Europe's as it tries to come to grips with life after the mining boom, according to a report from a boutique US advisory firm.
> 
> 'Entitled Australia: The Unlucky Country, the report from Variant Perception argues that Australia faces a classic case of Dutch Disease, the erosion of capability that flows from a resources boom and an overvalued exchange rate.'


----------



## Mrmagoo (1 September 2012)

young-gun said:


> If the banks are so wonderful, why didn't they put a cap on how much people could borrow for a house? Oh thats right they were too busy thinking about profits, oh sorry  i mean the good of society.
> 
> Fiat money and FRB is not good, and you will see that as that as everything unfolds over the next couple of years.
> 
> ...




What why should they put a cap on it ?

I blame the greedy property speculators, be they investors or home owners.

The reason prices are high is because little Australians in general are greedy, selfish and manipulative people who do not care about their fellow man.


----------



## young-gun (1 September 2012)

numbercruncher said:


> Start preparing for your date with destiny Oztraaalia ...




strap yourself in, it's gonna be a bumpy 12-24 months. To start anyway.


----------



## tech/a (1 September 2012)

Mrmagoo said:


> What why should they put a cap on it ?
> 
> I blame the greedy property speculators, be they investors or home owners.
> 
> The reason prices are high is because little Australians in general are greedy, selfish and manipulative people who do not care about their fellow man.




Looney Tunes


----------



## Macquack (1 September 2012)

Mrmagoo said:


> I blame the greedy property speculators, be they investors or home owners.
> 
> The reason prices are high is because little Australians in general are greedy, selfish and manipulative people who do not care about their fellow man.




That may be true, but those "greedy, selfish and manipulative little Australians" are NOT responsible for increasing the money supply which causes inflation in house prices. The private banks are soley responsible for increasing the money supply so you can stop "patting them on the back".


----------



## Mrmagoo (1 September 2012)

Macquack said:


> That may be true, but those "greedy, selfish and manipulative little Australians" are NOT responsible for increasing the money supply which causes inflation in house prices. The private banks are soley responsible for increasing the money supply so you can stop "patting them on the back".




An increase in money supply would allow many Australians to borrow money to buy reasonably priced high rise apartments close to where they work. Many of these dwellings could be constructed, because builders would find borrowing easy due to availability of credit.

Instead the behavior of Australians was to buy $1 million dollar 2 bedroom townhouses and to act as NIMBYs to disallow development all in the hope of making a quick buck at the expense of their fellow man.

The banks have no control over that so I can't see how we can blame them for the misuse of credit by every day
Aussies who's only dream was to make accommodation an item of desperation for others.


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## Macquack (1 September 2012)

Mr Magoo,
1. Do you work in high rise construction?
2. Are you are fan of the corrupt high density developer and capitalist pig Harry Triguboff?


----------



## wayneL (1 September 2012)

young-gun said:


> We need banks, we don't need their reckless fractional reserve system that creates debt that helps to inflate prices more than anyone who buys a house could on their own.




The fractional reserve system has existed through times of price stability in relation to income.

It can be successfully argued that FR is inherently inflationary, but the key figure is house prices in relation to incomes.

Therefore I don't believe FR itself is the problem, the problem is due the extraneous factors.


----------



## wayneL (1 September 2012)

Macquack said:


> That may be true, but those "greedy, selfish and manipulative little Australians" are NOT responsible for increasing the money supply which causes inflation in house prices. The private banks are soley responsible for increasing the money supply so you can stop "patting them on the back".




Hang on, there is some logic missing increase in money supply and rising prices. While increasing money supply makes price increases possible, it is not causative in and of itself. It is much more multifaceted that that.


----------



## Mrmagoo (1 September 2012)

Exactly. I firmly believe that the current house price paradigm represents a shift in the Australian way of thinking. You're going to have a generation of people, who will not understand the concept of why someone else's poverty is their problem. You're going to have a generation of people who are not going to understand the concept that once upon a time in this country if you got a job and worked hard you could buy a house and raise a family in relative comfort. That was the social contract and it is now gone. To buy a house these days you need a *high *income. That is the bottom line. This last decade saw the social contract torn up and where that will lead this country I don't know.  During the Howard years houses were still affordable so it was the ALP that screwed it up and did nothing to correct it so I don't think it has anything to do with evil capitalist it is just the Australian way of thinking.


----------



## cynic (1 September 2012)

Mrmagoo said:


> ...During the Howard years houses were still affordable so it was the ALP that screwed it up and did nothing to correct it so I don't think it has anything to do with evil capitalist it is just the Australian way of thinking.




Whilst I'm no fan of the ALP, I am somewhat puzzled as to how you arrived at this opinion. The value of all of my real estate holdings more than doubled during Howard's term as PM.


----------



## young-gun (1 September 2012)

Mrmagoo said:


> During the Howard years houses were still affordable so it was the ALP that screwed it up and did nothing to correct it so I don't think it has anything to do with evil capitalist it is just the Australian way of thinking.




I'm confused, is it ALP's fault, or the satanic property speculators??


----------



## young-gun (1 September 2012)

wayneL said:


> The fractional reserve system has existed through times of price stability in relation to income.
> 
> It can be successfully argued that FR is inherently inflationary, but the key figure is house prices in relation to incomes.
> 
> Therefore I don't believe FR itself is the problem, the problem is due the extraneous factors.




True, but as I stated previously, there is a large number of contributing factors. FRB is simply something that most certainly doesn't help prevent wildly inflated prices.


----------



## Mrmagoo (1 September 2012)

The obvious solution is to dump negative gearing, CGT exemption and use part of the extra money for tax breaks for the well off because in reality the poor end up paying for it anyway. Either through lost tax revenue, higher rents and higher property prices. So what you do is you figure out what rich people buy and put a freaking sales tax on it.

They should do similar things to get rid of family tax benefits and other such middle class welfares and put the money into schools and hospitals. Not give a single bloody red cent as a pay rise to dead **** teachers who don't know anything but for training which provides skills. 

The reason it is the ALP's fault is because they've been in government almost 6 years and have not changed the tax situation to be in line with the economic situation. Taxes should have been lowered and tax breaks for property removed and this would have led to increased investment in commercial ventures and lower house prices. This would have caused higher employment and consumption outside of the mining sector as people would have more disposable income.

When everything slowed back down that is when you would raise taxes again as most people won't be over the thresholds anyway and you can use that money to build infrastructure projects to create jobs. 

Instead now we've just got a lot of capital tied up in assets that are going to drop in value when income drops and no investment in non-mining commercial activities or building and no lower levels of consumption.


----------



## damien275x (2 September 2012)

Went to two more auctions on the weekend out in Melbourne's west. Both advertised for at least $600,000, passed in at like 325. What a joke News.com.au's articles are saying that 'Spring is the time to buy' and also their latest one saying that 'Young people are the most optimistic about buying property' .. I don't think so.

Also I have heard from my uncle who is in the sector that a good strategy right now is to make one offer substantially below the asking price and then walk away. A lot of  the over leveraged ones are desperate to sell so they might take what they can get. The problem right now for buyers is that the sellers aren't getting anywhere near what they want, but are holding out. So no sales made. The question is how long can either side wait. Will buyers up their bids, or will sellers lower their expectations. As a young buyer I have longer to wait so that's what I am going to do for now. A bigger deposit cant hurt


----------



## young-gun (3 September 2012)

damien275x said:


> Went to two more auctions on the weekend out in Melbourne's west. Both advertised for at least $600,000, passed in at like 325. What a joke News.com.au's articles are saying that 'Spring is the time to buy' and also their latest one saying that 'Young people are the most optimistic about buying property' .. I don't think so.
> 
> Also I have heard from my uncle who is in the sector that a good strategy right now is to make one offer substantially below the asking price and then walk away. A lot of  the over leveraged ones are desperate to sell so they might take what they can get. The problem right now for buyers is that the sellers aren't getting anywhere near what they want, but are holding out. So no sales made. The question is how long can either side wait. Will buyers up their bids, or will sellers lower their expectations. As a young buyer I have longer to wait so that's what I am going to do for now. A bigger deposit cant hurt




Never mind a deposit, wait a couple of years and pay cash


----------



## Mr Z (3 September 2012)

wayneL said:


> The fractional reserve system has existed through times of price stability in relation to income.
> 
> It can be successfully argued that FR is inherently inflationary, but the key figure is house prices in relation to incomes.
> 
> Therefore I don't believe FR itself is the problem, the problem is due the extraneous factors.




FR feeds the boom bust cycle if it is not managed very tightly, combined with the political desire to keep boom going at all costs you have a train wreck waiting to happen sooner or later, the later the bigger. FR needs absolute hard and fast limits that the political system is completely unable fiddle with. Canning the RBA might be a good start, the market needs to set real interest rates with no interfere from uneconomic players like central banks.



JMO


----------



## Mr Z (3 September 2012)

wayneL said:


> Hang on, there is some logic missing increase in money supply and rising prices. While increasing money supply makes price increases possible, it is not causative in and of itself. It is much more multifaceted that that.




It is a quite direct link considering the easiest and largest leverage most people can get is on their house. Its is a given that the state of the market at any given point is also critical but most of the time, when you are not out on a credit limb, it is a cert. We are out on a credit limb that is creaking more than a little so IMO "mo money" will do very little until we are back into some sort of market balance.


----------



## Mr Z (3 September 2012)

Mrmagoo said:


> Banks not force you to buy a house, to pay an amount, to borrow too much. Banks are good guys. They lend money to the economy. We need banks.




Granted but the words responsible and sustainable do come to mind when talking about lending, banks have gone too far in their competition to gain market share. The sober lending limits put in place in the past where there for a reason!

30K deposit 70% @ LVR = 100,000 
30K deposit 97% @ LVR = 1,000,000 ---> they went there! + remember the 106% loans? Jeeez louise!!!!! 

How can that not end badly? and how can the banks not be partially culpable for taking things to that extreme?


----------



## Miss Hale (3 September 2012)

young-gun said:


> Never mind a deposit, wait a couple of years and pay cash




I am actually hoping I might be able to do this.  I'm starting to see a home as like a car; a neccessity but not something you want to take out a loan for.


----------



## prawn_86 (3 September 2012)

Miss Hale said:


> I am actually hoping I might be able to do this.  I'm starting to see a home as like a car; a neccessity but not something you want to take out a loan for.




We are the same. Both 25 and yet to decide where we want to live permanently (or even for the next few yrs) so not much point buying a PPOR. I would only treat an investment proeprty as if it were a business (ie generating me a return/income) so as most rentals are still not positively geared we will just keep saving until an opportunity does present itself


----------



## McLovin (3 September 2012)

Check out what $900k gets you in a fairly average part of Sydney (near La Perouse)...

http://smh.domain.com.au/real-estate-news/propertys-pot-of-gold-20120902-257x5.html

Is it just me or is Fairfax's real estate news in perma-bull mode? I guess it's because they derive so much of their ever-declining revenue from real estate advertisements.


----------



## MrBurns (3 September 2012)

McLovin said:


> Check out what $900k gets you in a fairly average part of Sydney (near La Perouse)...
> 
> http://smh.domain.com.au/real-estate-news/propertys-pot-of-gold-20120902-257x5.html
> 
> Is it just me or is Fairfax's real estate news in perma-bull mode? I guess it's because they derive so much of their ever-declining revenue from real estate advertisements.




Correct Fairfax will say it's booming regardless.

If you want value go to Tassie, look what you get in Sandy Bay


http://www.realestate.com.au/property-house-tas-sandy+bay-110299053


----------



## young-gun (3 September 2012)

Miss Hale said:


> I am actually hoping I might be able to do this.  I'm starting to see a home as like a car; a neccessity but not something you want to take out a loan for.




I'm in the same boat. Keep saving and investing and hopefully take out a very small loan if at all when the time comes.



prawn_86 said:


> We are the same. Both 25 and yet to decide where we want to live permanently (or even for the next few yrs) so not much point buying a PPOR. I would only treat an investment proeprty as if it were a business (ie generating me a return/income) so as most rentals are still not positively geared we will just keep saving until an opportunity does present itself




+1. We're in no hurry for our PPOR either. Once prices fall and rental yields remain approx the same(or increase if the states is anythign to go by) it will be a far better time to invest. I'd say we will get an IP before we look for a PPOR also.


----------



## Mrmagoo (5 September 2012)

Hate the RBA so much, last time they cut rates prices went through the roof. That is the cause pf the mess. If they cut rates this time and prices go through the roof it means they cut rates when they did not need to be cut. If the economy if performing poorly and requires a rate cut people should not be able to afford an extra 100k for a house.


----------



## young-gun (5 September 2012)

Mrmagoo said:


> Hate the RBA so much, last time they cut rates prices went through the roof. That is the cause pf the mess. If they cut rates this time and prices go through the roof it means they cut rates when they did not need to be cut. If the economy if performing poorly and requires a rate cut people should not be able to afford an extra 100k for a house.




Well the didn't cut, and believe it or not magoo the rba is most likely oblivious to the housing bubble(stevens definitely is) and it probably has little impact on the decision of to cut or not. Jmo. Also rate cuts won't save falling prices, this is evident throughout the world. When it pops it pops. For now it's just sustaining it all.


----------



## damien275x (13 September 2012)

Interesting reading this thread from 2006/07 and watching the sentiment slowly change. First it was 'go go go, up up up' then it was 'we've hit a wall, it'll bounce back' .. then it was the 'buyers market' .. then it was 'just winter blues' .. and now that spring is here and the results are still terrible, they've gone totally silent.

The investigative work my university group does, attending auctions and collating data from people, there is a huge gap between what the mainsteam medias (The Age, News.Com, RPData) report and what is actually going on. I'm not talking a few %, but outright lies. A survey in which over 3,500 people in the bracket of 19-31 were quizzed on housing and 85% were holding onto cash waiting, yet the media tell a totally different story. They'reeither lying or very misinformed. If anyone wants our figures send me a PM. Survey was conducted in person  and via mail only to avoid people manipulating polls and  voting twice online.


----------



## prawn_86 (13 September 2012)

Would love to see the survey Damien. Can you post it in public yet? If not please PM me


----------



## McLovin (13 September 2012)

damien275x said:


> The investigative work my university group does, attending auctions and collating data from people, there is a huge gap between what the mainsteam medias (The Age, News.Com, RPData) report and what is actually going on. I'm not talking a few %, but outright lies. A survey in which over 3,500 people in the bracket of 19-31 were quizzed on housing and 85% were holding onto cash waiting, yet the media tell a totally different story. They'reeither lying or very misinformed. If anyone wants our figures send me a PM. Survey was conducted in person  and via mail only to avoid people manipulating polls and  voting twice online.




+1

My Mum just bought a place a few weeks ago. It is a more expensive suburb, which is where prices have been hurting. Through her solicitor they made an offer one week before the auction that was ~20% below the stated reserve. Two days before the auction the real estate agent called to say the auction was being canceled "although we do have a few other offers" and would she like to increase her offer. She didn't and 24 hours later they accepted the offer.

You almost get the feeling there is an undercurrent that will bubble to the surface in due course.


----------



## Mr Z (13 September 2012)

McLovin said:


> +1
> 
> My Mum just bought a place a few weeks ago. It is a more expensive suburb, which is where prices have been hurting. Through her solicitor they made an offer one week before the auction that was ~20% below the stated reserve. Two days before the auction the real estate agent called to say the auction was being canceled "although we do have a few other offers" and would she like to increase her offer. She didn't and 24 hours later they accepted the offer.
> 
> You almost get the feeling there is an undercurrent that will bubble to the surface in due course.




I would love to know how often that is happening.


----------



## McLovin (13 September 2012)

Mr Z said:


> I would love to know how often that is happening.




I'd say it's extremely common. There are properties changing hands at the moment in the Eastern Suburbs (Sydney) for the same price they were in the late 90s. This has been the case for a couple of years now.

As for the discounting at the top end, see here: http://smh.domain.com.au/spring/pre...deep-discounts-at-top-end-20120907-25jon.html


----------



## boofis (13 September 2012)

http://bigpondnews.com/articles/Fin...prices_tipped_to_fall_by_up_to_20_794342.html

Media's getting the news out and about haha.


----------



## Julia (13 September 2012)

prawn_86 said:


> Would love to see the survey Damien. Can you post it in public yet? If not please PM me



+2, Damien.



McLovin said:


> +1
> 
> My Mum just bought a place a few weeks ago. It is a more expensive suburb, which is where prices have been hurting. Through her solicitor they made an offer one week before the auction that was ~20% below the stated reserve. Two days before the auction the real estate agent called to say the auction was being canceled "although we do have a few other offers" and would she like to increase her offer. She didn't and 24 hours later they accepted the offer.
> 
> You almost get the feeling there is an undercurrent that will bubble to the surface in due course.



I heard the same story from a neighbour who was selling her late mother's house.  It was to go to auction, but they accepted the agent's advice that they should take an offer around 20% less than the same agent originally suggested could be achieved.
Seems like at least a certain amount of self-interested manipulation by agents here.


----------



## saiter (13 September 2012)

Julia said:


> +2, Damien.
> 
> 
> I heard the same story from a neighbour who was selling her late mother's house.  It was to go to auction, but they accepted the agent's advice that they should take an offer around 20% less than the same agent originally suggested could be achieved.
> *Seems like at least a certain amount of self-interested manipulation by agents here.*




Why are agents still so ubiquitous in the real estate market?!

The seller meets the agent who attracts the interest of buyers through internet ads that can be placed by the seller! Why not just cut out the agent and save on the commission? Are they legally required for a property transaction to occur? It doesn't make sense that you can sell many assets online without the need for an agent, yet agents are still employed in the sale of houses


----------



## MrBurns (13 September 2012)

saiter said:


> Why are agents still so ubiquitous in the real estate market?!
> 
> The seller meets the agent who attracts the interest of buyers through internet ads that can be placed by the seller! Why not just cut out the agent and save on the commission? Are they legally required for a property transaction to occur? It doesn't make sense that you can sell many assets online without the need for an agent, yet agents are still employed in the sale of houses




There's no legal requirement to use an agent, people do because they need correct valuation advice and the agents have all the buyers.
However if people knew how easy it was they'd do it themselves.
In a hot market agents can squeeze the price up using Auctions.


----------



## Miss Hale (13 September 2012)

saiter said:


> Why are agents still so ubiquitous in the real estate market?!
> 
> The seller meets the agent who attracts the interest of buyers through internet ads that can be placed by the seller! Why not just cut out the agent and save on the commission? Are they legally required for a property transaction to occur? It doesn't make sense that you can sell many assets online without the need for an agent, yet agents are still employed in the sale of houses




You don't need an agent.  We bought our last house off a private seller, that was a good few years ago now though. I think most people think it will be easier/less work to sell using an agent.  What I have noticed over the last year or so that I never knew existed is buyer advocates, they are sort of like an agent for the buyer rather than the seller. 

I've almost lost interest in the real estate market at the moment.  There doesn't seem to be a lot of decent properties on the market where I am looking and what is about is still overpriced.


----------



## Julia (13 September 2012)

Miss Hale said:


> You don't need an agent.  We bought our last house off a private seller, that was a good few years ago now though. I think most people think it will be easier/less work to sell using an agent.



The reasonable assumption is that an agent - with his shop front and usually large generic display advertising - will provide a far greater base of buyers.
Presumably a factor would be the position of the property for sale.  On major roads I'd expect a large For Sale sign with some decent photos would prompt prospective buyers to contact the seller, whether that's an agent or a private seller.

My logic might be wrong but if I were buying I'd be more than happy to approach a private seller, but not so keen if selling, where I'd at least expect the agents would qualify prospective buyers before trooping them through the house.
Anecdotal only, but there are a few properties near here up for private sale.  The signs have been up there for years.


----------



## Mr Z (13 September 2012)

saiter said:


> Why are agents still so ubiquitous in the real estate market?!




Agents sell time, the time it takes to sell a house which is in the end just a numbers game... x showings will on average equal y sales, if handled correctly. Most importantly they provide an emotional circuit breaker without which the majority of deals would not occur. I spent many years working as a broker providing a similar service and I can say unequivocally that most sales where lost when buyer met seller. The middle man removes the emotion and works hard on both sides to make deals happen, the identification of a potential buyer and the establishment of price is just the first step, there are so many ways deals can fail from there on in that it is just not funny. A good intermediary more than covers the commission, but having said that there are many/most RE agents that have no clue.

Put it this way... a direct sale will almost never beat a good agent/broker in terms of yield for the seller BUT finding a good agent in RE seems to be the challenge. There a way too many also rans in that business! However that does not mean that those that are competent don't earn their fee.


----------



## Miss Hale (18 September 2012)

Interesting article in the Telegraph, *House crisis looms *

http://www.dailytelegraph.com.au/realestate/buying/house-crisis-looms/story-fndbpo91-1226475536529


----------



## MrBurns (18 September 2012)

Miss Hale said:


> Interesting article in the Telegraph, *House crisis looms *
> 
> http://www.dailytelegraph.com.au/realestate/buying/house-crisis-looms/story-fndbpo91-1226475536529




Thats an accurate assessment, this situation has been coming for a while now and it wont be pretty.


----------



## Miss Hale (18 September 2012)

MrBurns said:


> Thats an accurate assessment, this situation has been coming for a while now and it wont be pretty.




I can think of nothing worse than having borrowed a bucket load of money and then seeing the value of your home dropping


----------



## MrBurns (18 September 2012)

Miss Hale said:


> I can think of nothing worse than having borrowed a bucket load of money and then seeing the value of your home dropping




It started with Rudd, when he relaxed the FIRB laws allowing Chinese (in particular) to buy anything the lliked in effect, that's when prices just went ballistic, I attended auctions for friends where Chinese students outbid them , they didnt care what they paid, just didnt care at all, the money was coming from their parents in China.

Low interest rates as well created the perfect storm and the riduculous doubling of the first home owners grant and encouraging everyone to "get into the market" to keep the housing sector going.

It will end in tears as the forced sales depreciate the worth of all the properties around them.

I blame Rudd and Labor for whats to come.


----------



## againsthegrain (18 September 2012)

What I would like to know where is robots, what is he doing and what strategy has he taken on? 
Very curious if the king of bulls is still bullish or over the bs


----------



## Miss Hale (18 September 2012)

MrBurns said:


> It started with Rudd, when he relaxed the FIRB laws allowing Chinese (in particular) to buy anything the lliked in effect, that's when prices just went ballistic, I attended auctions for friends where Chinese students outbid them , they didnt care what they paid, just didnt care at all, the money was coming from their parents in China.
> 
> Low interest rates as well created the perfect storm and the riduculous doubling of the first home owners grant and encouraging everyone to "get into the market" to keep the housing sector going.
> 
> ...




Good assessment but you forgot my personal bÃªte noire, negative gearing


----------



## McLovin (18 September 2012)

Miss Hale said:


> Good assessment but you forgot my personal bÃªte noire, negative gearing




Ahh but without negative gearing property investing will require some skill.


----------



## young-gun (18 September 2012)

MrBurns said:


> I blame Rudd and Labor for whats to come.




Oh no not you as well Mr B.

I fail to see how we can blame anyone in particular for decades of reckless debt accumulation and investment speculation. Rudd didn't help, but it's merely the icing on a 10 tier cake.

**** is poised to hit the fan, falling property values will be the least of everyones worry(although a big one)


----------



## white_goodman (19 September 2012)

young-gun said:


> Oh no not you as well Mr B.
> 
> I fail to see how we can blame anyone in particular for decades of reckless debt accumulation and investment speculation. Rudd didn't help, but it's merely the icing on a 10 tier cake.
> 
> **** is poised to hit the fan, falling property values will be the least of everyones worry(although a big one)




its a natural thing to scapegoat our greedy politicians, but imo a fair lump of the blame it to be put on the boomer generation and their greed, a cocktail of greed coming from all parties in society....


----------



## Judd (19 September 2012)

white_goodman said:


> its a natural thing to scapegoat our greedy politicians, but imo a fair lump of the blame it to be put on the boomer generation and their greed, a cocktail of greed coming from all parties in society....




Yes, I can see your point.  It is always an issue when one group has more than another.


----------



## Superb Parrot (19 September 2012)

Judd said:


> Yes, I can see your point.  It is always an issue when one group has more than another.




But Government policy sets the agenda. Negative gearing would have been a policy to encourage housing construction in an earlier phase of our history i.e. it is a developmental encouragement that in 2012 is merely a tax avoidance system.  No CGT on sale of the family home seems like a fair policy, but it is being exploited, as in NG, to being a tax dodge, used to the extreme by the very rich. What would you do with $6m ?, anything but the family home incurs tax.


----------



## Judd (19 September 2012)

Superb Parrot said:


> But Government policy sets the agenda. *Negative gearing would have been a policy to encourage housing construction in an earlier phase of our history* i.e. it is a developmental encouragement that in 2012 is merely a tax avoidance system.  No CGT on sale of the family home seems like a fair policy, but it is being exploited, as in NG, to being a tax dodge, used to the extreme by the very rich. What would you do with $6m ?, anything but the family home incurs tax.




Suggest you read some of the decisions by Sir Garfield Barwick, Chief Justice of Australia from 1964 to 81.  However, you are correct that it is within the power of Government to alter the relevant legislation.  Then are they concerned at a possible challenge to the High Court should they do so?

As I don't have $6m it is not an issue for me to worry about.  Still in the same 3 beddie my wife and I bought many years ago in the 70's just as the oil crisis hit and we were concerned about keeping our jobs.


----------



## drsmith (19 September 2012)

Drsmith's property tax reforms for private owners/investors.

1) All state based property taxes (stamp duties, land taxes etc) should be abolished.
2) Deduction of expenses against unrelated income (negative gearing) should be abolished.
3) The current 50% capital gains discount should be reduced to 1/3 (the current difference between the top marginal rate of income tax and the corporate rate) and the option of CPI cost base indexation restored.
4) Building depreciation should be abolished.


----------



## McLovin (19 September 2012)

Some commentary from the head of Residex about the competition. Hits the nail on the head, I think. I am puzzled that month in month out, what I hear anecdotally just doesn't add up to the statistics presented.

APM is the worst. Andrew Wilson seems to be stuck in 2007...




> I strongly believe that housing data being published by other market researchers in the press does not present an accurate picture of what is happening. In fact, it is probably the reason why reported figures are not in line with other indicators of what is happening in the market to the ordinary Australian. My point is very simple: the total dwelling statistics being reported suggest that the majority of property owners in Australia are seeing growth in their principal asset hence they should be feeling more comfortable, starting to spend a little and increasing their activity in housing markets. If this were the case, consumer sentiment surveys would also point to a more confident population…
> 
> I believe that, given the current interest rate setting is attractive, the market should be moving forward more strongly than what we are seeing.
> 
> ...




http://www.macrobusiness.com.au/201...s-data-providers-rosy-view-of-housing-market/


----------



## Superb Parrot (19 September 2012)

Judd said:


> Suggest you read some of the decisions by Sir Garfield Barwick, Chief Justice of Australia from 1964 to 81.




Do you have a link to the relevant decisions ?


----------



## Judd (19 September 2012)

Superb Parrot said:


> Do you have a link to the relevant decisions ?




Well, I could be nasty, SP, and simply refer you to www.austlii.edu.au but...

Here is a PDF which will give you a flavour of the decisions of the High court under Sir Garfield.  He was quite a character I understand.  Not born into a wealthy family and a bankrupt at one stage. Sorry about the ramble but I am fascinated by historical developments and people who formed them.


----------



## wayneL (19 September 2012)

drsmith said:


> Drsmith's property tax reforms for private owners/investors.
> 
> 1) All state based property taxes (stamp duties, land taxes etc) should be abolished.
> 2) Deduction of expenses against unrelated income (negative gearing) should be abolished.
> ...




1/ Agree

2/ Disagree, if there is a reasonable expectation of a trading profit within a period of time (e.g 5 years). Agree if there is no expectation of profit within a set time frame. This would bring it into line with Aus law in other industries.

3/ CGT should only be levied if an asset is converted to cash. If an asset is sold in order to finance the purchase of some other asset, there should be no CGT.

4/ Disagree, but it should be radically overhauled to reflect true depreciation, if any.

FWIW


----------



## baby_swallow (20 September 2012)

First-home buyers in severe mortgage stress

"ALMOST a fifth of first-home buyers are facing the prospect of losing their homes within months, according to an alarming new survey.
The Australian Mortgage Stress Analysis of 26,000 households found the number of young people in severe mortgage stress is set to escalate, with countless families at risk of being driven by lenders to sell their homes."

Read more: http://www.news.com.au/realestate/i...ss/story-fndbarft-1226477993222#ixzz26z8yyCPG


----------



## satanoperca (20 September 2012)

baby_swallow said:


> First-home buyers in severe mortgage stress
> 
> "ALMOST a fifth of first-home buyers are facing the prospect of losing their homes within months, according to an alarming new survey.
> The Australian Mortgage Stress Analysis of 26,000 households found the number of young people in severe mortgage stress is set to escalate, with countless families at risk of being driven by lenders to sell their homes."
> ...




Firstly, no mention that the increased FHBG may have contributed to this mess and allowed those that had little savings to get themselves a huge amount of debt on the back of the Aussie slogan of "don't worry, be happy, house prices always go up in the banana republic of Oz".



> The figures come as banks are under increasing pressure to find more home loan customers, with bureau of statistics figures showing 35 per cent of all housing loans written in the past 12 months were borrowers refinancing their existing mortgages with another lender.
> 
> Read more: http://www.news.com.au/realestate/i...ss/story-fndbarft-1226477993222#ixzz26zDNCJdG




Does anyone have a chart of the last 10 years showing new loans against refinancing. Bit had to know if the above stat is a concern or just normal business.

Cheers


----------



## drsmith (20 September 2012)

wayneL said:


> 1/ Agree
> 
> 2/ Disagree, if there is a reasonable expectation of a trading profit within a period of time (e.g 5 years). Agree if there is no expectation of profit within a set time frame. This would bring it into line with Aus law in other industries.
> 
> ...



With negative gearing I was thinking along the lines that it should only be available within a corporate structure, not as an individual. Perhaps in conjunction with that, Capital gains tax should be abolished altogether for individuals, such that,

_State based property taxes (stamp duties, land taxes etc), deduction of expenses against unrelated income (negative gearing), capital gains tax and building depreciation should all be abolished for individuals._

That, if nothing else would significantly simplify non corporate tax and shift individual investment decisions from tax and more towards underlying merit.


----------



## numbercruncher (21 September 2012)

baby_swallow said:


> First-home buyers in severe mortgage stress
> 
> "ALMOST a fifth of first-home buyers are facing the prospect of losing their homes within months, according to an alarming new survey.
> The Australian Mortgage Stress Analysis of 26,000 households found the number of young people in severe mortgage stress is set to escalate, with countless families at risk of being driven by lenders to sell their homes."
> ...




Fantastic news - these young tackers will find a whole new life of freedom once they default and begin the process and get a life free of the debt noose - let those pesky bankers cop a few on the chin 

Thousands more properties to market = rapidly tumbling prices !


----------



## moXJO (21 September 2012)

numbercruncher said:


> Thousands more properties to market = rapidly tumbling prices !




Yeah still waiting


----------



## white_goodman (21 September 2012)

satanoperca said:


> Firstly, no mention that the increased FHBG may have contributed to this mess and allowed those that had little savings to get themselves a huge amount of debt on the back of the Aussie slogan of "don't worry, be happy, house prices always go up in the banana republic of Oz".
> 
> 
> 
> ...





you can get all those figures from the ABS, from memory the figures for that go back to 91/92 or even earlier... its in an easy spreadsheet format..


----------



## young-gun (21 September 2012)

moXJO said:


> Yeah still waiting




are you still not familiar with the term asset bubble yet?


----------



## moXJO (21 September 2012)

young-gun said:


> are you still not familiar with the term asset bubble yet?




yeah a title given by those with an opposing view.


----------



## young-gun (21 September 2012)

moXJO said:


> yeah a title given by those with an opposing view.




Perhaps, or.....a fact.

asset bubble - When the prices of securities or *other assets* rise so sharply and at such a sustained rate that they exceed valuations justified by *fundamentals*, making a sudden collapse likely - at which point the bubble "bursts".

Sounds like just about everything in the australian economy over the past decade.

Move along, nothing to see here.


----------



## moXJO (21 September 2012)

young-gun said:


> Perhaps, or.....a fact.
> 
> asset bubble - When the prices of securities or *other assets* rise so sharply and at such a sustained rate that they exceed valuations justified by *fundamentals*, making a sudden collapse likely - at which point the bubble "bursts".
> 
> ...




Hope you didn't wait that last decade on the sidelines waiting for everything to crash. IMO it burst a while back. But there are booms within the property market and good areas for profit I'm seeing now.

I will update on that duplex I mentioned previously as it will be interesting to see if and how fast it sells. Still a couple of weeks off completion.


----------



## young-gun (21 September 2012)

moXJO said:


> Hope you didn't wait that last decade on the sidelines waiting for everything to crash. IMO it burst a while back. But there are booms within the property market and good areas for profit I'm seeing now.
> 
> I will update on that duplex I mentioned previously as it will be interesting to see if and how fast it sells. Still a couple of weeks off completion.




I'm not old enough to have been able to invest the whole previous decade

Not sitting on the sidelines, plenty of investment opportunities, jsut don't think there's great ones in RE atm, then again I'm not looking.


----------



## white_goodman (21 September 2012)

young-gun said:


> I'm not old enough to have been able to invest the whole previous decade
> 
> Not sitting on the sidelines, plenty of investment opportunities, jsut don't think there's great ones in RE atm, then again I'm not looking.




there are good opportunities in real estate if not aware of risk and/or probability


----------



## moXJO (21 September 2012)

white_goodman said:


> there are good opportunities in real estate if not aware of risk and/or probability




Thats the going advice of the thread, and then you think those that are in property don't stick around because they went broke.


----------



## white_goodman (21 September 2012)

moXJO said:


> Thats the going advice of the thread, and then you think those that are in property don't stick around because they went broke.




point to a post where i said that, theres plenty of money to be made in a bubble, i can buy property knowing full well there is a bubble as long as  I expect it to continue further. So it can become two different debates, is there a bubble? Should i speculate on real estate prices(ie whats my timeline)?... Me and young gun are of a generation where it might not be wise, where it might be different for older people with a portfolio... Regardless of that based on most measures we are in a credit driven bubble, property prices are essentially a  function of housing finance ex refi's... my view on housing finance into the near future is cloudy at best, but I firmly believe worldwide we are in a state of private deleveraging, balance sheet recession, and we are all mini Japans


----------



## Knobby22 (21 September 2012)

white_goodman said:


> point to a post where i said that, theres plenty of money to be made in a bubble, i can buy property knowing full well there is a bubble as long as  I expect it to continue further. So it can become two different debates, is there a bubble? Should i speculate on real estate prices(ie whats my timeline)?... Me and young gun are of a generation where it might not be wise, where it might be different for older people with a portfolio... Regardless of that based on most measures we are in a credit driven bubble, property prices are essentially a  function of housing finance ex refi's... my view on housing finance into the near future is cloudy at best, but I firmly believe worldwide we are in a state of private deleveraging, balance sheet recession, and we are all mini Japans




Good point. And we haven't had a real recession for 22 years and am possibly looking at one in the face now. 
I hope we aren't a mini Japan though. I agree many other countries look like Japan these days.


----------



## young-gun (21 September 2012)

white_goodman said:


> point to a post where i said that, theres plenty of money to be made in a bubble, i can buy property knowing full well there is a bubble as long as  I expect it to continue further. So it can become two different debates, is there a bubble? Should i speculate on real estate prices(ie whats my timeline)?... Me and young gun are of a generation where it might not be wise, where it might be different for older people with a portfolio... Regardless of that based on most measures we are in a credit driven bubble, property prices are essentially a  function of housing finance ex refi's... my view on housing finance into the near future is cloudy at best, but I firmly believe worldwide we are in a state of private deleveraging, balance sheet recession, and we are all mini Japans




Absolutely. Investing in property can be a fantastic investment, and has been for many. Fact is you have to pick your timing. Now is most certainly not the time. Sure you can get in, negative gear your way through, and eventually get your investment cashflow positive. In some cases do the research and you can even pick up something already cash flow positive Im sure. Why do this when the risk of your IP crashing in price is so high at the moment?

Identifying bubbles is key to making big money in RE(imo). I could buy now and set up a portfolio but there are far better opportunities, and yields will be far greater against capital outlay once it pops. The US rents are rising and prices have crashed(and will continue to).


----------



## Mr Z (21 September 2012)

Investments create income, personally I can't stick that word in the same sentence as the term "cash flow negative", that belongs with the word speculation. Investments should make sense on their current merit before any potential capital gain is considered. JMO


----------



## wayneL (21 September 2012)

Mr Z said:


> Investments create income, personally I can't stick that word in the same sentence as the term "cash flow negative", that belongs with the word speculation. Investments should make sense on their current merit before any potential capital gain is considered. JMO





Well, RE is only cash flow negative due to gearing. RE bought with cash yields _x_% gross.

Once nett is calculated, the return is truly gross IMO. Where is risk premium?

That said, totally agree on the comment re speculation.


----------



## explod (21 September 2012)

Mr Z said:


> Investments create income, personally I can't stick that word in the same sentence as the term "cash flow negative", that belongs with the word speculation. Investments should make sense on their current merit before any potential capital gain is considered. JMO




Wise words.

Making sense to *oneself* seems to be the problem.  

The human tendency is to follow as sheep which we can equally akin to belief.


----------



## Julia (21 September 2012)

young-gun said:


> Absolutely. Investing in property can be a fantastic investment, and has been for many. Fact is you have to pick your timing. Now is most certainly not the time. Sure you can get in, negative gear your way through, and eventually get your investment cashflow positive.



Even if it's cashflow positive, at least where I live the yield absolutely does not justify the capital risk.
There's also the risk of the IP not being fully tenanted.  Lots of empty rentals around here, regional coastal Qld,  and they're only rentals because they have failed to sell.  I've never seen such a soft market.
Might be different in capital cities.


----------



## moXJO (21 September 2012)

young-gun said:


> Absolutely. Investing in property can be a fantastic investment, and has been for many. Fact is you have to pick your timing. Now is most certainly not the time. Sure you can get in, negative gear your way through, and eventually get your investment cashflow positive. In some cases do the research and you can even pick up something already cash flow positive Im sure. Why do this when the risk of your IP crashing in price is so high at the moment?
> 
> Identifying bubbles is key to making big money in RE(imo). I could buy now and set up a portfolio but there are far better opportunities, and yields will be far greater against capital outlay once it pops. The US rents are rising and prices have crashed(and will continue to).



Really?  so you guys think the aussie housing market moves as one across the nation. And the strategy I am limited to making money is buy an ip.


----------



## moXJO (22 September 2012)

white_goodman said:


> pbut I firmly believe worldwide we are in a state of private deleveraging, balance sheet recession, and we are all mini Japans




I agree with this to a point. However australia has a decent lag time between the rest of the worlds woes and our current position. And for me the name of the game is to gouge as much cash in shortish term trades as I can. There are still booming housing markets in this country and milking them before we do deleverage/crash is what Im interested in. Once the big money goes off the table there may not be another chance for a long time.   I have a birds eye view at the moment of a few investors turning big roi%. So listening to some of the stuff peddled on here can be a bit of a laugh. Its not vanilla buy and hold stuff though.


----------



## young-gun (22 September 2012)

moXJO said:


> Really?  so you guys think the aussie housing market moves as one across the nation. And the strategy I am limited to making money is buy an ip.




If your aim is to draw stupid assumptions from others posts then so be it.


----------



## young-gun (22 September 2012)

Mr Z said:


> Investments create income, personally I can't stick that word in the same sentence as the term "cash flow negative", that belongs with the word speculation. Investments should make sense on their current merit before any potential capital gain is considered. JMO




Well said and a great point, probably words to live by.



Julia said:


> Even if it's cashflow positive, at least where I live the yield absolutely does not justify the capital risk.
> There's also the risk of the IP not being fully tenanted.  Lots of empty rentals around here, regional coastal Qld,  and they're only rentals because they have failed to sell.  I've never seen such a soft market.
> Might be different in capital cities.




I guess it depends on what sort of return you are making. Anything equal to or less than inflation is a waste of time obviously. As you say you need to be making money, and enough to create a buffer for vacancy periods. There has been a few houses around my area with for lease/rent signs out the front, one of them had one up for 4 months!! It was taken down a few weeks back.

Whether that's a sign of the landlord asking too much, or a soft market I'm not sure. Perhaps the returns on commercial RE are better? tech or TS would know.


----------



## Mr Z (22 September 2012)

Even though property has done what it has over the last five years, or so, there have been better ways to play the peaking of a credit super cycle IMO. Trying to catch profits into the top seems to be trading against probability to me. So while people may see success I would question the sanity of it, there have been safer plays IMO... but then maybe that is just me.  I don't like the idea of fighting, or even judging the timing of, the bursting of the personal credit bubble that exists in this country. We are out on a limb that most of the world is retreating from and I'm finding it hard to reason why we are a special case and exempt from the experiences they are having. At the end of the day too much credit is too much credit whatever the price.



Good luck if you are over leveraged into property, I fear you will need it!


----------



## DB008 (22 September 2012)

Mr Z, would supply and demand not play a critical role in the price of properties?

Spain, Ireland and the USA went on a  property building boom like a bunch of drunken sailors on a month long bender with unlimited booze = monster hangover (over supplied the market buy a huge (enormous) amount)

Sydney has very low vacancy rates, which l suspect are keeping rental prices high...


*Spanish Housing Boom*




> *Spain's Housing Market Faces A Huge Oversupply Of Properties*
> 
> It will take until at least 2015 for the Spanish property market to absorb the 1.5 million properties currently on the markets, according to consultants.
> 
> ...







> *Spain, a housing bubble and who knew what*
> 
> And it wasn't just the housing boom itself -- Garicano estimates there may be as many as 1.5 million empty housing unit
> 
> http://www.thedeal.com/thedealeconomy/spain-a-housing-bubble-and-who-knew-what.php#ixzz27ADbmzED


----------



## Mr Z (22 September 2012)

Not when credit is not readily available or simply less available than it has been, Real Estate is a credit driven market in the end. + it is also more flexible than people seem to consider, we are running at quite low density in terms of heads per house in this country. We are currently see the market reaction to a slight tightening in lending standards, not to mention the fact that we as a nation are close to maxed out on personal debt.


----------



## Mrmagoo (23 September 2012)

House down the end of my street been for sale for as long as I can remember. Had an auction the other day, auction sign went down. Come monday... Auction sign is back up....

Also.... I'll bet these published indices have a rolling period to"smooth" the trend.


----------



## Tyler Durden (23 September 2012)

I haven't read the last 464 pages, and I did a search and nothing I am going to post about came up, so I am assuming this has not been raised yet.

Corrupt Chinese officials in China have been stealing money and basically use it to bring and settle their families in Canada, US and Australia. I read about it in an article a friend sent me a while ago, which I can no longer find (it may have been from Zero Hedge, but I did a search there and nothing came up). My own search found a similar, yet not as detailed article:



> China‘s Central Bank has reported that thousands of corrupt Chinese officials stole more than US$123 billion and fled overseas between 1995 and 2008.
> 
> The report also cited Associated Press as saying that the United States was a top destination for the looted funds.
> 
> ...




http://www.chinauncensored.com/inde...nds-in-13-years&catid=25:real-china&Itemid=57

Two experiences which support this theory:

1. My friend told me he went to an auction, where there were two main bidders - an Asian gentleman, and a Middle Eastern gentleman. The latter owned the property next door and so really had his heart set out on winning the auction so he could join the two properties, but no matter what he bid, the Asian gentleman just out-bid him with ease and money did not appear to be a concern.

2. There is a family of some Chinese official who lives near me. Originally, they were going to buy a unit within an apartment (contains about 6-8 units) when it was built, but they ended up buying the whole apartment...for just one family (no, not a big family).

I also saw on the news recently that said 25% of first time property buyers in Australia are Asian. I'd bet a lot of these are ones who came here recently, rather than the ones who are 'Aussie-born' or grew up here as a child.

Please don't take this as a post against Asians (let's just say I was born overseas  ).


----------



## cynic (23 September 2012)

Interesting article, Tyler, but I don't see how anyone can make automatic assumptions about the origins of the money in any particular Real Eastate transaction. Would 123 billion USD actually cover the purchase costs of all celestial R.E. purchases in US, Canada and Australia during the period in consideration?


----------



## Tyler Durden (23 September 2012)

cynic said:


> Interesting article, Tyler, but I don't see how anyone can make automatic assumptions about the origins of the money in any particular Real Eastate transaction. Would 123 billion USD actually cover the purchase costs of all celestial R.E. purchases in US, Canada and Australia during the period in consideration?




An assumption is the highest I can take it, so I can't really answer your question I'm afraid. All I know is I look around, and no one I know from work or in my circle of friends can afford a property (in Sydney)


----------



## banco (23 September 2012)

Tyler Durden said:


> I haven't read the last 464 pages, and I did a search and nothing I am going to post about came up, so I am assuming this has not been raised yet.
> 
> Corrupt Chinese officials in China have been stealing money and basically use it to bring and settle their families in Canada, US and Australia. I read about it in an article a friend sent me a while ago, which I can no longer find (it may have been from Zero Hedge, but I did a search there and nothing came up). My own search found a similar, yet not as detailed article:
> 
> ...




John Bronte had a good post on why Chinese investors buy up western property:

http://brontecapital.blogspot.com.au/2012/06/macroeconomics-of-chinese-kleptocracy.html


----------



## McLovin (23 September 2012)

cynic said:


> Interesting article, Tyler, but I don't see how anyone can make automatic assumptions about the origins of the money in any particular Real Eastate transaction. Would 123 billion USD actually cover the purchase costs of all celestial R.E. purchases in US, Canada and Australia during the period in consideration?




This post from Bronte Capital might gives a slightly different reason although the premise is the same; Officials ripping off the state.



> The Chinese property market as a savings mechanism
> 
> Chinese people have very few savings mechanisms. The major ones (bank deposits and their life-insurance contract twins) have sharp and consistently negative real returns.
> 
> ...



http://brontecapital.blogspot.com.au/2012/06/macroeconomics-of-chinese-kleptocracy.html

You really must be desperate when you think Australian property is the best thing on offer.


----------



## Miss Hale (24 September 2012)

Interesting comments/articles re the Chinese investing in Australian property.  I've been to two auctions in the last two weeks, one was passed in after one very late half hearted bid, the other was sold for much higher than I expected after enthusiatic bidding by three Chinese bidders pushing the price up. 

Another observation. Because I attend so many OFIs I am on many agents' lists (as you have to give name and phone number). Over the last few weeks I've received a few text messages about properties for sale that are not being advertised, why would anyone do this?  If you want to sell surely getting you property listed in all the relevant places is paramount (although I suppose you would save on advertising).


----------



## tinhat (24 September 2012)

Miss Hale said:


> Over the last few weeks I've received a few text messages about properties for sale that are not being advertised, why would anyone do this?  If you want to sell surely getting you property listed in all the relevant places is paramount (although I suppose you would save on advertising).




If the vendor knows what price they are willing to accept then the real estate agent just needs to find a buyer who is interested in paying that price. The real estate agents know who the buyers are and they can contact them. Some people want their privacy. Why let dozens of people all through your house who are not genuine buyers but nosy neighbours and tire kickers only to have the house passed in at auction and end up negotiating with the two or three genuine interested buyers?


----------



## Miss Hale (24 September 2012)

tinhat said:


> If the vendor knows what price they are willing to accept then the real estate agent just needs to find a buyer who is interested in paying that price. The real estate agents know who the buyers are and they can contact them. Some people want their privacy. Why let dozens of people all through your house who are not genuine buyers but nosy neighbours and tire kickers only to have the house passed in at auction and end up negotiating with the two or three genuine interested buyers?




Yes, I can relate to the privacy aspect of it, I just think it's probably worth sacrificing that a bit to get your property out there so to speak.  I confess I am pretty much in the nosy neighbour/tyre kicker category but in my defence I do intend to buy at some point and it's my way of doing extensive market research as I am not the type of person to buy on a whim so I need to get a very good feel for the market before I contemplate a purchase.


----------



## Mr Z (26 September 2012)

*A Conversation with Ray Dalio - Bridgewater Capital*

Not directly about RE but germane to it...


----------



## Tyler Durden (1 October 2012)

Another article support my general proposition:

*One by one all the money-laundering loopholes in a broke world are coming to an end.

First it was Swiss bank accounts, which for centuries guaranteed the depositors absolute secrecy, and as a result saw money inflows from all the wealthiest savers in the world, who felt truly safe their wealth (obtained by legal means or otherwise) would not be redistributed forcefully. In the ecosystem of finance, Switzerland was the depositor bank. Then 2008 happened, and starting with the US, shortly to be followed by every other insolvent country, demands were issued for a full list of people who had used Zurich and Geneva bank vaults to avoid the risk of asset taxation, capital controls and confiscation on their own native soil. The result was the end of the Swiss banking sector as the ultimate target of all global money laundering. In the ensuing power vacuum, others have sprung up to take its place, most notably Singapore, but its days as a tax-haven are numbered by how long it takes China to fall face first into a hard landing at which point no saving on the Pacific seaboard will be safe.

Now, it is the turn of real estate.

While hardly a secret, for decades the ultra-luxury housing segment in any country was the target not so much of local wealthy individuals and business, but foreigners, for whom the grass was always greener, and sought to put their money into "hard assets" abroad to save it from local confiscation. After all, it is far easier to be sued and prosecuted by your own government than a foreign one. Two very vivid examples are the most expensive house in Miami ever sold, which two months ago fetched a price of $47 million, which was purchased by "a Russian who bought the home in the name of a U.S.-based limited-liability company" and in the until recently a record $88 million paid for a 15 CPW penthouse for the daughter of Russian billionaire, Dmitry Rybolovlev (bought from Citi's Sandy "End TBTF" Weill). The record was topped at $90 million paid for a One57 duplex apartment paid by an unknown individual, almost certainly a foreigner.

The common theme here of course is that foreigners come to the US (or London, or Geneva, or Hong Kong) or any other wealthy megapolis with their almost always ill-gotten, and untaxed gains, spend the money indiscriminately on local real estate even as the local authorities look the other way because by lifting any offer, these foreigners, while laundering illegal money, are also keeping the all important housing market afloat thus perpetuing the illusion that the domestic economic is rising. Instead all that is happening is it is attracting illegal foreign capital flows.*

More at:

http://www.zerohedge.com/news/2012-09-30/money-laundering-driven-real-estate-boom-ending


----------



## MR. (2 October 2012)

Houses up 1.4% in September!

http://www.thebull.com.au/articles/a/31872-house-prices-rise-1.4-in-september.html

and now interest rates down another 0.25%

http://www.theaustralian.com.au/bus...of-rate-decision/story-e6frg916-1226486479765

Watching with interest!


----------



## young-gun (2 October 2012)

MR. said:


> Houses up 1.4% in September!
> 
> http://www.thebull.com.au/articles/a/31872-house-prices-rise-1.4-in-september.html
> 
> ...




So we're now only half a percentage point above the lows of the GFC, but without the 'GFC'....things must be going well.


----------



## MR. (2 October 2012)

young-gun said:


> So we're now only half a percentage point above the lows of the GFC, but without the 'GFC'....things must be going well.




Good point, we are 25 basis points from the cash rate GFC lows of 3%. (ie: 0.25%)

However, average realestate loans were at 5.55% at the GFC lows and are currently at 7%. Basically the banks have crept 1% and counting. We shall wait with baited breath for the banks response. I'm not holding me breath!


----------



## Klogg (2 October 2012)

MR. said:


> Good point, we are 25 basis points from the cash rate GFC lows of 3%. (ie: 0.25%)
> 
> However, average realestate loans were at 5.55% at the GFC lows and are currently at 7%. Basically the banks have crept 1% and counting. We shall wait with baited breath for the banks response. I'm not holding me breath!




BoQ already said they're keeping 5bps... 
http://www.macrobusiness.com.au/2012/10/boq-takes-5/


----------



## Miss Hale (4 October 2012)

Surprised at teh RBA rate cut, wasn't expecting that 

With the Grand Final done and dusted, the real estate season is in full swing here now and I am receiving quite a few calls and text messsages from agents at the moment.  I have noticed one interesting thing though, some properties that were on the market last spring that I assumed had eventually sold are now being relisted. I think now that they didn't sell and were taken off the market for awhile.  Prices seem about the same at the moment with little movement in either direction as far as I can see.


----------



## prawn_86 (4 October 2012)

We are actually considering buying a positively geared property. Some of the properties we are looking at, by the time you take off our deposit, would be positively geared. 

Just a decision as to if we want to bite the bullet or wait and see for another 6 - 12 months


----------



## McLovin (4 October 2012)

Anyone see David Murray on 7:30 last night? Stock up on canned food!

http://www.abc.net.au/7.30/content/2012/s3603244.htm


----------



## Julia (4 October 2012)

McLovin said:


> Anyone see David Murray on 7:30 last night? Stock up on canned food!
> 
> http://www.abc.net.au/7.30/content/2012/s3603244.htm



Yes.  He's initially an uninspiring speaker but there was nothing ambiguous about his message.
Leigh Sales was a bit out of her depth here.


----------



## DB008 (4 October 2012)

Miss Hale said:


> Surprised at teh RBA rate cut, wasn't expecting that




Really? I was.


----------



## Miss Hale (4 October 2012)

DB008 said:


> Really? I was.




I was expecting it next month.

Thanks for the link to the David Murray interview McLovin, interesting.


----------



## moXJO (4 October 2012)

Mate just got back from doing a reno on a property owned by a mate of his. Bought it for roughly $40k spent another $20k on it and sold it for round about $168k. He was going to rent it out when he fixed it up but was offered good money for it. I was surprised as it was in a state where I thought property was moving slow.


----------



## againsthegrain (4 October 2012)

A mate who is mates with my other mates enemy did the same thing true story


----------



## Miss Hale (4 October 2012)

moXJO said:


> Mate just got back from doing a reno on a property owned by a mate of his. Bought it for roughly $40k spent another $20k on it and sold it for round about $168k. He was going to rent it out when he fixed it up but was offered good money for it. I was surprised as it was in a state where I thought property was moving slow.




This is a wind up right?  Where in Australia can you buy a property of any descripton for $40K?: confused:


----------



## moXJO (4 October 2012)

Miss Hale said:


> This is a wind up right?  Where in Australia can you buy a property of any descripton for $40K?: confused:



Not a wind up. Dyor as Im looking at doing the same thing.


againsthegrain said:


> A mate who is mates with my other mates enemy did the same thing true story



Good on him.
 Not to worried if its believed or not.


----------



## Miss Hale (5 October 2012)

moXJO said:


> Not a wind up. Dyor as Im looking at doing the same thing.




My research tells me _if_ you could buy for $40K (and that's a big if, don't know anywhere where you can even buy land for $40K) and spent $20k on renos, there is no way you would sell for $168K.  If this was the case the peoperty spruikers would by telling us all about it  Can you at least name the state?


----------



## drew70 (5 October 2012)

there are a few 1 bedroom units (motel rooms essentially) in cairns for under 40k


----------



## againsthegrain (5 October 2012)

Miss Hale its all relative and can always be subject to personal bias, sure you can buy lots of properties for 40k ... you simply go back to 90s make your purchase wait 20 years and make a clean profit, chuck in a reno for better story telling


----------



## Ijustnewit (5 October 2012)

Some nice little places in Queenstown Tassie for under 40k.

http://www.realestate.com.au/property-house-tas-queenstown-111662379


----------



## Miss Hale (5 October 2012)

Thanks drew70 and IJUSTKNEWIT for pointing out where there are $40K properties (although not properties or places I would be interested in).


----------



## Julia (5 October 2012)

Ijustnewit said:


> Some nice little places in Queenstown Tassie for under 40k.
> 
> http://www.realestate.com.au/property-house-tas-queenstown-111662379




Hopefully the 'nice little places' was tongue in cheek!


----------



## moXJO (5 October 2012)

againsthegrain said:


> Miss Hale its all relative and can always be subject to personal bias, sure you can buy lots of properties for 40k ... you simply go back to 90s make your purchase wait 20 years and make a clean profit, chuck in a reno for better story telling




Umm there is actually some on realestate.com. The property was bought this year.
 I'm not pro or con property (personally I prefer business) - just that there are people out there making very good returns and it isn't this doom and gloom $hit for everyone. Ill check on the progress on the duplex I mentioned before and some of the costs. Just noticed another duplex being built up the road from a property I wanted to build something similar on. So might go up and talk to the owner about what he is doing and see if he ends up in profit.


----------



## moXJO (5 October 2012)

Miss Hale said:


> My research tells me _if_ you could buy for $40K (and that's a big if, don't know anywhere where you can even buy land for $40K) and spent $20k on renos, there is no way you would sell for $168K.  If this was the case the peoperty spruikers would by telling us all about it  Can you at least name the state?




 -PM-


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## MR. (7 October 2012)

prawn_86 said:


> bite the bullet or wait and see for another 6 - 12 months




Interest rates vs House prices.

View attachment Investment loans Property Oct2012.pdf

View attachment Property Australia Oct2012.pdf

View attachment Property Brisbane Oct2012.pdf

View attachment Property Melbourne OCT2012.pdf

(would someone turn some of these into jpgs and re-post if you think they are of interest. So you don't need to log in to view)

http://www.abc.net.au/news/2012-10-02/home-prices-surge-in-september/4290780?section=business


> Last month's home price rise across Australia's eight capital cities was the largest in two-and-a-half years and comes on the back of 125 basis points of rate cuts over the past year.




This chart also reflects lower interest rates causing price increases. 




Now the interest rates have dropped a further 0.25%. 

With the amount of movement we have left in interest rates these property prices may remain high for some time.


----------



## MR. (7 October 2012)

Mini housing Boom

http://www.youtube.com/watch?v=XOyceGDHVbI

Could be right........


----------



## Tyler Durden (7 October 2012)

I have had difficulties reconciling the rise in property prices versus the "white collar recession" I am hearing about:



> AUSTRALIANS should brace for a "white-collar recession" by early next year with the unemployment rate tipped to rise to up to 6 per cent.
> 
> The rise in unemployment is fuelled by redundancies in the financial and IT sectors handed out over the past 18 months, which experts say have so far been hidden from official unemployment figures.
> 
> ...




http://www.news.com.au/business/wor...ion-experts-warn/story-e6frfm9r-1226486009556

The only explanation I can come up with is...voila, what I have said previously about the corrupt Chinese officials laundering their money by buying up property in Australia (and in other countries).

I mean, if so many people are losing jobs, and so many people are complaining about the unaffordability of properties, then who is buying them and increasing the prices?


----------



## Bill M (7 October 2012)

Just back from spending 4 Months overseas. During that time I received an email from my agent managing my property suggesting I raise the rent and offer a new lease to my tenant. I agreed and we raised the rent another $10 per week. My current tenant signed a new 12 Month lease, all good for us. In the 3 years of renting my property in Sydney it has been rented 99% of the time and the rent has been going up each year. There is no shortage of tenants.

I thought I'd get the Agents to do a formal appraisal of our apartment as well, the value has not dropped and in fact it is up slightly.

Interest rates have also dropped and so will home loan rates. I think the future of Australian property prices is that they will just keep going up. Strong rental demand (as my unit demonstrates), low interest rates, higher salaries can only mean prices are going to keep going up. (My opinion only and from my own experience)

At this stage of the game I am very happy with my investment, it is so simple, hands off and the rent just keeps coming in Month after Month. It may not give super stellar returns but I'm very happy with what I'm being paid for investing. Good luck all and happy investing.


----------



## Tyler Durden (7 October 2012)

Bill M said:


> Just back from spending 4 Months overseas. During that time I received an email from my agent managing my property suggesting I raise the rent and offer a new lease to my tenant. I agreed and we raised the rent another $10 per week. My current tenant signed a new 12 Month lease, all good for us. In the 3 years of renting my property in Sydney it has been rented 99% of the time and the rent has been going up each year. There is no shortage of tenants.
> 
> I thought I'd get the Agents to do a formal appraisal of our apartment as well, the value has not dropped and in fact it is up slightly.
> 
> ...




Just wondering about how it works - does your agent get a cut from getting the higher rent?


----------



## Bill M (7 October 2012)

Tyler Durden said:


> Just wondering about how it works - does your agent get a cut from getting the higher rent?




Yes, the agent gets 6.6% commission on all rents. In addition they also get $33 for signing up a new lease for me, cheers.


----------



## damien275x (7 October 2012)

Has anyone read the kind of articles coming out lately regarding property and a recovery? Some economist at The Age was going on about how a 66% clearance rate was high and a sign of a strong rebound. That isn't very high at all, but as soon as there is a tiniest uptick they cheer to try and inflate its importance.

News.com.au/The Age come out on an almost daily basis, and then in the 200+ comments section they skew the comments. There are always bulls and bears, but it's as though they only approve comments that are in agreement with their position. Or worse still, they approve one bear comment and then release another 10 attacking that one comment. It's skewing and distorting the true picture. Same with the online polls. They manipulate them.

I've noticed this repeatedly. They posted a link to an external video/economist on Youtube, I replied in disagreement- and my response received 200 replies. A day later they'd deleted it all and disabled comments.  There was no swearing, there was no foul language, it was just pure censorship. These people blow. I am so glad we have the Internet, online forums and communities. Without the Internet we would all be lapping their **** up.

As for my position, still in the wait and see basket, and I have zero confidence in borrowing right now.


----------



## rooster6 (7 October 2012)

Bill M said:


> Just back from spending 4 Months overseas. During that time I received an email from my agent managing my property suggesting I raise the rent and offer a new lease to my tenant. I agreed and we raised the rent another $10 per week. My current tenant signed a new 12 Month lease, all good for us. In the 3 years of renting my property in Sydney it has been rented 99% of the time and the rent has been going up each year. There is no shortage of tenants.
> 
> I thought I'd get the Agents to do a formal appraisal of our apartment as well, the value has not dropped and in fact it is up slightly.
> 
> ...




Wow.. The agents appraisal showed an increase.  Who would have thought?  No vested interests there of course.


----------



## Julia (7 October 2012)

Bill M said:


> Just back from spending 4 Months overseas. During that time I received an email from my agent managing my property suggesting I raise the rent and offer a new lease to my tenant. I agreed and we raised the rent another $10 per week. My current tenant signed a new 12 Month lease, all good for us. In the 3 years of renting my property in Sydney it has been rented 99% of the time and the rent has been going up each year. There is no shortage of tenants.
> 
> I thought I'd get the Agents to do a formal appraisal of our apartment as well, the value has not dropped and in fact it is up slightly.
> 
> ...



I'm happy for you Bill.  But it's probably not valid to take your one personal anecdote and deduce that all property, as a rental investment, is necessarily profitable.  You seem to have chosen a good position where rental demand exists.
Your suggestion that property prices will keep going up is somewhat contrary to observations in some places.
I live in regional Qld, an attractive 55,000 pop coastal centre, and I can tell you that if I were to try to sell at present I would get about 25% less than three years ago.

You say you are not receiving 'stellar returns'.  No obligation of course, but would you like to tell us the %pa  return on your capital?



rooster6 said:


> Wow.. The agents appraisal showed an increase.  Who would have thought?  No vested interests there of course.



Valid comment.


----------



## McLovin (7 October 2012)

Julia said:


> Your suggestion that property prices will keep going up is somewhat contrary to observations in some places.
> I live in regional Qld, an attractive 55,000 pop coastal centre, and I can tell you that if I were to try to sell at present I would get about 25% less than three years ago.




Therein lies the rub; as long as unemployment stays low and people can continue to make the payments they, and their lenders, are happy to sit on the paper loss rather than crystalise it.

Low interest rates, low unemployment and wages that have been rising for the past decade in the absence of productivity gains has created the indebtedness households are in. Assuming, and it's a big assumption, that trend does not reverse but merely flatlines then property will just move sideways for a long time, as I think it will. 

There's no money left in the tank, the government cannot afford to rescue the property market again either.


----------



## young-gun (7 October 2012)

Julia said:


> I'm happy for you Bill.  But it's probably not valid to take your one personal anecdote and deduce that all property, as a rental investment, is necessarily profitable.  You seem to have chosen a good position where rental demand exists.
> Your suggestion that property prices will keep going up is somewhat contrary to observations in some places.
> I live in regional Qld, an attractive 55,000 pop coastal centre, and I can tell you that if I were to try to sell at present I would get about 25% less than three years ago.
> 
> ...




+1. There is no point in even arguing it anymore IMO. It's a debt fueled bubble, and debt bubbles burst...eventually(not too much longer). Alot seem to believe there needs to be a catalyst, the end of the mining boom may be seen as one.


----------



## McLovin (7 October 2012)

MR. said:


> Interest rates vs House prices.
> 
> View attachment 49236
> 
> ...




Your chart goes to 2010. I wonder how much is really because of interest rates falling and how much was because the government started doling out more home owner welfare at the same time.


----------



## Bill M (7 October 2012)

Julia said:


> You say you are not receiving 'stellar returns'.  No obligation of course, but would you like to tell us the %pa  return on your capital?




My gross return on capital outlay is 6.1%, that is for rent alone and not including any of the capital gains. From that 6.1% gross return you must deduct the agents fees, levies, council rates, water rates, repairs and depreciation. My estimation is a net return of around 4%. Any capital gains over the years will increase that p/a return.


----------



## MR. (8 October 2012)

McLovin said:


> Your chart goes to 2010. .



My charts go to Sept 2012 and are in PDF..... You are looking at the chart "over a longer time span" I re-produced because it shows the apparent common occurance, when interest rates drop (as a result indirectly or not) property prices seem to rise.



young-gun said:


> +1. There is no point in even arguing it anymore IMO. It's a debt fueled bubble, and debt bubbles burst...eventually(not too much longer). Alot seem to believe there needs to be a catalyst, the end of the mining boom may be seen as one.




If property prices are debt fueled, as we all would agree, the interest rate associated is a major factor. It's not un-comprehendible that interest rates and debt or debt fueled are so closely linked, I for one are paying more attention to this........ it should not be dismissed. I paid a factory off when interest rates were 19% and we all realize, "what if interest rates rose back to the 90's". My point is your "not too much longer" maybe a little longer than we might have thought. 

Even at a 3.25% cash rate (6.8% mortgage) the RBA has a good way down if it ever needed to go to zero. Sure, any mining reduction with job losses will reduce interest rates further but the lower the interest rate the easier the re-payments will become on property. The US has mortgage rates of 3%. What would our property prices look like at 3% mortgage rates or what about in the 5's.

The last Youtube link MrZ put up (in the first few minutes) talks about "when interest rates can't drop any further" Stop….., we can drop interest rates and will drop rates further if required. It's a double edged sword for anyone wanting property in the near future and for a little less. I think even regional coastal Queensland towns will now experience some property rises again.

The following is interesting regarding the Bank of Qld losses.
http://www.theaustralian.com.au/bus...-loss-since-1992/story-fn91vch7-1226489239560


> The regional lender has been struggling with rising bad loans as property prices have plunged as much as 30 per cent in parts of Queensland and the state's economy has slowed.


----------



## white_goodman (8 October 2012)

i think its worth remembering when talking about drivers of asset prices its real rates/credit growth not jsut the nominal figure.. theres more riggle room then simply 325 bp's


----------



## Mr Z (8 October 2012)

MR. said:


> If property prices are debt fueled, as we all would agree, the interest rate associated is a major factor. It's not un-comprehendible that interest rates and debt or debt fueled are so closely linked, I for one are paying more attention to this........ it should not be dismissed. I paid a factory off when interest rates were 19% and we all realize, "what if interest rates rose back to the 90's". My point is your "not too much longer" maybe a little longer than we might have thought.
> 
> Even at a 3.25% cash rate (6.8% mortgage) the RBA has a good way down if it ever needed to go to zero. Sure, any mining reduction with job losses will reduce interest rates further but the lower the interest rate the easier the re-payments will become on property. The US has mortgage rates of 3%. What would our property prices look like at 3% mortgage rates or what about in the 5's.
> 
> The last Youtube link MrZ put up (in the first few minutes) talks about "when interest rates can't drop any further" Stop….., we can drop interest rates and will drop rates further if required. It's a double edged sword for anyone wanting property in the near future and for a little less. I think even regional coastal Queensland towns will now experience some property rises again.




With respect the RBA can do what it likes BUT the market is not compelled to support it. We have already seen that with the cost of funding rising against RBA cuts. Typically the RBA follows the 90 day bill rate and practically it cannot stray too far for too long from where the market wants to be.


----------



## banco (8 October 2012)

If the RBA keeps dropping rates the civil war between the baby boomers who rely predominantly on property for their retirement income versus baby boomers who rely on bank deposits and bonds will be amusing.


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## young-gun (8 October 2012)

MR. said:


> If property prices are debt fueled, as we all would agree, the interest rate associated is a major factor. It's not un-comprehendible that interest rates and debt or debt fueled are so closely linked, I for one are paying more attention to this........ it should not be dismissed. I paid a factory off when interest rates were 19% and we all realize, "what if interest rates rose back to the 90's". My point is your "not too much longer" maybe a little longer than we might have thought.




When such a massive shift or event takes place, traditional monetary policy has little effect on preventing the true course of events. This much is evident in the credit bust of the states. I honestly don't think they could pay people to take on loans for new houses at the moment. No matter how much cash they print, or how low rates go, or are promised to stay low for ears, they are still stagnant at best.

I do however agree that it may take a little longer than expected. This is due to the lowering of interest rates having a VERY short lived, and minor impact on the housing market, before it heads where it wants to. They have already squeezed the FHO out with grants and a few grand, I cant imagine there would be many more to be squeezed out with the temptation of low interest rates. I would expect the low interest rates to sustain prices, if not increase prices in the tiniest of amounts, and not in any real volume in the near term, and then fall. Coming back to what you said, it is very hard to put a time line on how long it will take to run it's course, and I am afraid you are probably right that it may get drawn out a while longer.



> Even at a 3.25% cash rate (6.8% mortgage) the RBA has a good way down if it ever needed to go to zero. Sure, any mining reduction with job losses will reduce interest rates further but the lower the interest rate the easier the re-payments will become on property. The US has mortgage rates of 3%. What would our property prices look like at 3% mortgage rates or what about in the 5's.




They have alot of wiggle room, but if the boomers dont want or need to spend, then the boomers dont want to spend.



> The following is interesting regarding the Bank of Qld losses.
> http://www.theaustralian.com.au/bus...-loss-since-1992/story-fn91vch7-1226489239560




I skimmed over this the other day, will give it a read. All in all, I won't be buying soon.


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## prawn_86 (8 October 2012)

young-gun said:


> All in all, I won't be buying soon.




I posted this in another thread:

Is it a bubble or is it stagnation? As far as i am concerned, if i can buy an asset with debt that pays itself off then that is a good deal providing:
1. The asset maintains or gains value
2. The income the asset produces is going to increase in time

So one then has to look at the asset and if conditions 1 and 2 are going to be met.

Positive gearing means that it now becomes like any other asset/business purchase as opposed to having to negative gear and hope for capital appreciation 

Many people with income are buying positive geared properties in the US also. I think a big problem over there is that the minimum wage is so low, hence when people lose jobs and have to take new ones, the pay can be massively lower. So obviously you need to know the market you are buying in, and the liklihood of rental being maintained


----------



## white_goodman (8 October 2012)

prawn_86 said:


> Many people with income are buying positive geared properties in the US also. I think a big problem over there is that the minimum wage is so low, hence when people lose jobs and have to take new ones, the pay can be massively lower. So obviously you need to know the market you are buying in, and the liklihood of rental being maintained




would they be better at maintaining the rental if minimum wage was higher?

US is a thousand markets within one, personally speaking i think its a waste just buying one (in terms of all the effort - accounting etc), but if you can set it up for 3+ properties it may be worth it, tho foreign financing is bullsh*t hard - assuming people are looking at the uber cheap $70k per home markets. If i could find financing for Vegas id be stepping in, yields are juicy


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## white_goodman (8 October 2012)

young-gun said:


> I honestly don't think they could pay people to take on loans for new houses at the moment




id disagree in part, theres such a large foreclosure inventory in these depressed markets that prices will be stagnant for a while, but its still a good time to buy imo, people would love to buy, unfortunately their credit scores are up the sh*t and the will to finance/lend for resi purchases isnt there. Rentals are more then mortgage repayments, the only logical reason not to buy is confidence, which is a big factor.


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## prawn_86 (8 October 2012)

white_goodman said:


> would they be better at maintaining the rental if minimum wage was higher?




haha i am well aware of your position on minimum wages.

What i was trying to get at is that there is a wide spread between rich>average>poor in the US. Whereas here in Aus if you have a FT job you are generally able to service a 2 - 300k mortgage, whereas in the US you might have a FT job but only be able to service a 50k mortgage with the same % of income. Am i making sense?

So basically, as many of us have said before, it would take a lot of unemployment to see a US style crash here in Aus.

I agree with the pain in the ar5e for buying o/s, hence why i am not doing it, although many of my clients do and have bought properties in the 50 - 200k range in the US.


----------



## sptrawler (8 October 2012)

prawn_86 said:


> haha i am well aware of your position on minimum wages.
> 
> What i was trying to get at is that there is a wide spread between rich>average>poor in the US. Whereas here in Aus if you have a FT job you are generally able to service a 2 - 300k mortgage, whereas in the US you might have a FT job but only be able to service a 50k mortgage with the same % of income. Am i making sense?
> 
> ...




I think you are spot on with that analysis, prawn_86. Also I think that is what labor are talking about with the big Australia policy.
They want to get rid of this ability for plebs to ascend through to a comfortable lifestyle. The ironic thing is, the plebs think the coalition is the enemy.


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## Julia (12 October 2012)

Not a bad little bedsitter in Cairns for just $62,500
http://www.realestate.com.au/property-unit-qld-cairns-108323271


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## Ves (12 October 2012)

Julia said:


> Not a bad little bedsitter in Cairns for just $62,500
> http://www.realestate.com.au/property-unit-qld-cairns-108323271



Looks fantastic when you read this...



> Some of these units are permanently let, this is one of them $160 per week returns. That is a gross return of over 12%




But not two lines later...



> Body Corp fees which includes electricity close to $6000 per year



That is about 70% of the rent!

Wow!  I have never seen them so high.   It is amazing how lots of these holiday / strata type apartments are run for the benefit of the body corporate managers, rather than the actual owners.  It never ceases to suspend belief that people buy them without fail, not realising the scam they are perpetuating.

How many pennies do you have left after you finish paying the council and water rates?


----------



## white_goodman (13 October 2012)

prawn_86 said:


> haha i am well aware of your position on minimum wages.
> 
> What i was trying to get at is that there is a wide spread between rich>average>poor in the US. Whereas here in Aus if you have a FT job you are generally able to service a 2 - 300k mortgage, whereas in the US you might have a FT job but only be able to service a 50k mortgage with the same % of income. Am i making sense?
> 
> So basically, as many of us have said before, it would take a lot of unemployment to see a US style crash here in Aus.




housing price declines before unemployment declines. Therefore the relationship and causality can be reversed even though it logically can work the way your saying


----------



## Mrmagoo (14 October 2012)

Julia said:


> Not a bad little bedsitter in Cairns for just $62,500
> http://www.realestate.com.au/property-unit-qld-cairns-108323271




I must find a way to live in QLD.


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## CanOz (14 October 2012)

Ves said:


> Looks fantastic when you read this...
> 
> 
> 
> ...





Yeah, this is weird. Why don't they raise the rent ?


----------



## Ves (14 October 2012)

CanOz said:


> Yeah, this is weird. Why don't they raise the rent ?




The coastal holiday / housing markets are really depressed up the east coast of Australia.   No demand!


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## moXJO (14 October 2012)

Be very careful buying units in cairns. A very high % are vacant for too much of the year with very high fees attached.


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## MrBurns (14 October 2012)

moXJO said:


> Be very careful buying units in cairns. A very high % are vacant for too much of the year with very high fees attached.





Yes you have to get all the ourgoings, one I enquired on in Port Douglas had out goings of $500 per week


----------



## Miss Hale (14 October 2012)

moXJO said:


> Be very careful buying units in cairns. A very high % are vacant for too much of the year with very high fees attached.




These look like holiday lets that are not being used by holiday makers due to the downturn in tourism and so are being let out for longer periods.  I've seen similar for sale/let in Mackay. Not sure whether they would be good investments.


----------



## Julia (14 October 2012)

moXJO said:


> Be very careful buying units in cairns. A very high % are vacant for too much of the year with very high fees attached.



I only put up the example out of interest.  Probably only achieve full occupancy during winter which would render the yield unacceptable.


----------



## moXJO (15 October 2012)

Julia said:


> I only put up the example out of interest.  Probably only achieve full occupancy during winter which would render the yield unacceptable.




I'm sure there are guys making money out of these things somehow, I'm not really up to speed in that market. As with other investments I suppose the ratio is 90% suckers to 10% people that turn decent coin.


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## CanOz (16 October 2012)

Anybody have any opinions about Sydney CBD apartment prices? Have they come down much? Will they come down much more? I'm not looking for a crystal ball, just some decent perspective to frame a start on some research....

Thanks,


CanOz


----------



## white_goodman (16 October 2012)

CanOz said:


> Anybody have any opinions about Sydney CBD apartment prices? Have they come down much? Will they come down much more? I'm not looking for a crystal ball, just some decent perspective to frame a start on some research....
> 
> Thanks,
> 
> ...




prices have held up the most nationally in this market in recent times... so your not getting Noosa type discounts, still pretty expensive relative to stuff just out of the CBD


----------



## CanOz (16 October 2012)

white_goodman said:


> prices have held up the most nationally in this market in recent times... so your not getting Noosa type discounts, still pretty expensive relative to stuff just out of the CBD




Yeah thanks, seems as though prices have turned up again, i guess that can be expected as rates turn down...

Just looking to buy our first place, an investment property that would be relatively easy to rent. We would like to hang onto it for long term too.

CanOz


----------



## pilots (16 October 2012)

Not the same here in Perth, rental houses here sell the same day they go on the market.


----------



## white_goodman (16 October 2012)

CanOz said:


> Yeah thanks, seems as though prices have turned up again, i guess that can be expected as rates turn down...
> 
> Just looking to buy our first place, an investment property that would be relatively easy to rent. We would like to hang onto it for long term too.
> 
> CanOz




from my personal opinion id wait for interest rates/cash rate to bottom and possibly have its first up tick, otherwise you could be catching a falling knife in terms of prices, the overhang of private debt burden and the balance of people willing to pay down debt compared to take up new debt means imo that potential cap growth will be restrained. Mortgage finance is predominantly refi market which doesnt put any upward pressure on prices, however with every central bank replicating helicopter Ben im assuming growth in asset prices.


----------



## drsmith (16 October 2012)

I've seen a number of TV ads recently promoting housing finance on little or no deposit.


----------



## young-gun (16 October 2012)

white_goodman said:


> from my personal opinion id wait for interest rates/cash rate to bottom and possibly have its first up tick, otherwise you could be catching a falling knife in terms of prices, the overhang of private debt burden and the balance of people willing to pay down debt compared to take up new debt means imo that potential cap growth will be restrained. Mortgage finance is predominantly refi market which doesnt put any upward pressure on prices, however with every central bank replicating helicopter Ben im assuming growth in asset prices.




You won't see growth here in aus as a result of the reserve bank action until there has been a solid correction though. They aren't going to deliberately inflate housing prices more than they currently are(in my opinion more than well into bubble status) for the hell of it. jmo of course. completely agree with you on the growth of capital

How benny boy thinks that fixing the biggest collapse of a debt and housing bubble ever seen, with a new housing bubble is a good idea I will never know.

So long as this dark cloud looms Ill sit on the side-lines. From what I've seen current yields aren't even going to allow you to break even once inflation, expenditures and potential vacancy etc is taken into account.


----------



## young-gun (16 October 2012)

drsmith said:


> I've seen a number of TV ads recently promoting housing finance on little or no deposit.




great....


----------



## white_goodman (16 October 2012)

young-gun said:


> You won't see growth here in aus as a result of the reserve bank action until there has been a solid correction though. They aren't going to deliberately inflate housing prices more than they currently are(in my opinion more than well into bubble status) for the hell of it. jmo of course. completely agree with you on the growth of capital
> 
> How benny boy thinks that fixing the biggest collapse of a debt and housing bubble ever seen, with a new housing bubble is a good idea I will never know.
> 
> So long as this dark cloud looms Ill sit on the side-lines. From what I've seen current yields aren't even going to allow you to break even once inflation, expenditures and potential vacancy etc is taken into account.




im the same boat, property is off my radar in Aus till I see something, when i refer to asset prices above, im more specifically talking about stocks where i think CB policy specifically heli Ben will be more present in our own market


----------



## young-gun (16 October 2012)

white_goodman said:


> im the same boat, property is off my radar in Aus till I see something, when i refer to asset prices above, im more specifically talking about stocks where i think CB policy specifically heli Ben will be more present in our own market




Sorry, thought you were referring to housing and was getting confused as to how berwank was going to affect it.

I actually saw a for sale sign on a house not far from my place atm. It was actually advertising a rental yield of 5.5%p/a in huge letters like it was some huge selling point.

I'm going to start researching commercial RE alot more. But from what I have seen so far prices are quite inflated also, perhaps there is more opportunities hiding there though. Only issue is more capital required to enter.


----------



## Julia (16 October 2012)

young-gun said:


> You won't see growth here in aus as a result of the reserve bank action until there has been a solid correction though. They aren't going to deliberately inflate housing prices more than they currently are(in my opinion more than well into bubble status) for the hell of it. jmo of course. completely agree with you on the growth of capital
> 
> How benny boy thinks that fixing the biggest collapse of a debt and housing bubble ever seen, with a new housing bubble is a good idea I will never know.
> 
> So long as this dark cloud looms Ill sit on the side-lines. From what I've seen current yields aren't even going to allow you to break even once inflation, expenditures and potential vacancy etc is taken into account.



+1.



young-gun said:


> But from what I have seen so far prices are quite inflated also,



Depends where you are looking.  As I've commented before, where I live prices have fallen by around 25%.
That's a significant contrast to the commonly quoted national forecast of well under 10%.


----------



## CanOz (16 October 2012)

young-gun said:


> So long as this dark cloud looms Ill sit on the side-lines. From what I've seen current yields aren't even going to allow you to break even once inflation, expenditures and potential vacancy etc is taken into account.




So what does one do? Sit on bank interest?

My wife is bored to death with bank interest...

CanOz


----------



## Klogg (16 October 2012)

CanOz said:


> So what does one do? Sit on bank interest?
> 
> My wife is bored to death with bank interest...
> 
> CanOz




From a pure investment standpoint, emotions shouldn't come into the equation.
If you ask me, hand-picked equities scream buy to me, but  my financial position is different to yours...


----------



## CanOz (16 October 2012)

Klogg said:


> From a pure investment standpoint, emotions shouldn't come into the equation.
> If you ask me, hand-picked equities scream buy to me, but  my financial position is different to yours...




This is part of our funds we set aside for property eventually, just wondering of the timing... 

CanOz


----------



## Klogg (16 October 2012)

CanOz said:


> This is part of our funds we set aside for property eventually, just wondering of the timing...
> 
> CanOz




If that's the case, then I'd suggest that if you can afford the place you want with those funds, go for it.

Investment decisions are one thing, but if you can afford a house you'll be happy with and it won't put you in a difficult financial position, why not do it? 

Screw timing!


----------



## CanOz (16 October 2012)

Klogg said:


> If that's the case, then I'd suggest that if you can afford the place you want with those funds, go for it.
> 
> Investment decisions are one thing, but if you can afford a house you'll be happy with and it won't put you in a difficult financial position, why not do it?
> 
> Screw timing!




Yeah, I'm the one i guess that is a little afraid of buying too high....

I don't really want to leverage this much though.

thanks mate...

CanOz


----------



## young-gun (17 October 2012)

CanOz said:


> Yeah, I'm the one i guess that is a little afraid of buying too high....
> 
> I don't really want to leverage this much though.
> 
> ...




The more you leverage the more you lose at the moment imo. If you did take the leap you would want to ensure you were paying as little interest as possible... We will most likely see small increases in property across the board as the rba cuts rates by at least another 25 points by year end, and probably even more early next year. Once interest rates bottom, and everyone comes back down to earth prices should start to fall. We are simply following the same steps that everyone other nation has previously, only with a bit of a lag.

After all, the only reason they cut interest rates is because they believe the economy is/will be struggling soon. Thats JMO though, it's no secret that I'm bearish


----------



## wayneL (17 October 2012)

News is reporting that 1/3 of mortgage written since 2008 are in negative equity.

http://www.news.com.au/realestate/n...an-loans-on-them/story-fncq3gat-1226497332060


----------



## Uncle Festivus (17 October 2012)

CanOz said:


> So what does one do? Sit on bank interest?
> 
> My wife is bored to death with bank interest...
> 
> CanOz




Yes, unless you know you are going to get the same return from a Sydney unit, which you would be buying at the top? 



> Sydney has been ranked the second most expensive place to live and do business in a survey that measured economic opportunity in 27 cities.
> 
> Sydney was ranked as the second most expensive city, behind Tokyo.
> 
> ...






young-gun said:


> After all, the only reason they cut interest rates is because they believe the economy is/will be struggling soon. Thats JMO though, it's no secret that I'm bearish




These central bankers see info the rest of us don't, so they are telling us they are concerned with what's _going_ to happen. We might finally get a recession after 22 years.....

First home buyers  credit worthiness and baby boomer demographics - 

http://www.abc.net.au/news/2012-10-16/house-view-gloomy/4317032


----------



## moXJO (17 October 2012)

CanOz said:


> Yeah, I'm the one i guess that is a little afraid of buying too high....
> 
> I don't really want to leverage this much though.
> 
> ...




If you are just looking at a long term buy and hold then I would wait till the election for a better direction. I don't see that much growth just yet for the vanilla holders unless you have really really done your homework.


----------



## CanOz (17 October 2012)

Hmm, not a lot in great support of the idea...

During the financial crisis, prices is the big US cities like New York, etc., didn't get hit as bad as the burbs...

Personally i like Phuket, but that's another thread i guess.

Cheers,


CanOz


----------



## satanoperca (17 October 2012)

wayneL said:


> News is reporting that 1/3 of mortgage written since 2008 are in negative equity.
> 
> http://www.news.com.au/realestate/n...an-loans-on-them/story-fncq3gat-1226497332060




Interesting article, combine that with the low-doc problem and things could get fun.

Cheers


----------



## Tysonboss1 (17 October 2012)

wayneL said:


> News is reporting that 1/3 of mortgage written since 2008 are in negative equity.
> 
> http://www.news.com.au/realestate/n...an-loans-on-them/story-fncq3gat-1226497332060




I am not sure about the accruracy of that report or the article.

the artical says the following



> The report defines negative equity as any house that has seen its value grow by less than 10 per cent - below inflation - in the past four years.




This is not the criteria I would use to workout if a property is in negative equity.


----------



## wayneL (17 October 2012)

Tysonboss1 said:


> I am not sure about the accruracy of that report or the article.
> 
> the artical says the following
> 
> ...




Indeed.

What's the feeling out in the mortgage belt I wonder?


----------



## prawn_86 (17 October 2012)

wayneL said:


> Indeed.
> 
> What's the feeling out in the mortgage belt I wonder?




If you like i can go for a drive in the DB9 and venture forth and spend time with the populous in Frankston and see what general sentiment the masses are opining about...


----------



## Tysonboss1 (17 October 2012)

wayneL said:


> Indeed.
> 
> What's the feeling out in the mortgage belt I wonder?




I am not sure, I haven't interviewed any.

But I would think that the 25% reduction in the interest rates over the past couple of years would be putting a smile on their face.

That has got to be giving the Exponential decay of there loan principle a real boost.

When a person took out a $300K loan back in 2008 they would have done it thinking it was going to take them 29years and 7 months to repay it at $2,212 per month

Now with the reduced interest rate they will pay it back in 18years and 3 months.

that is a big noticable difference, they will probably not notice their house price volitility as much.


----------



## Julia (17 October 2012)

Tysonboss1 said:


> When a person took out a $300K loan back in 2008 they would have done it thinking it was going to take them 29years and 7 months to repay it at $2,212 per month
> 
> Now with the reduced interest rate they will pay it back in 18years and 3 months.



That's minimal comfort to anyone who bought at the peak of the bubble, borrowing 100% of the purchase price and whose property is now worth about 25% less than they paid for it.

That's a real definition of negative equity.  There are several such properties near where I live.  They have been on the market for about three years with no hope of a sale anywhere close to what they paid and what they therefore owe the bank.


----------



## McLovin (17 October 2012)

Tysonboss1 said:


> I am not sure about the accruracy of that report or the article.




Actually, it's the accuracy of the article that should be questioned. The report states that 1/3 of homes purchased in 2008 or after have negative equity or very limited equity, pp15.

http://www.scribd.com/doc/110148635/Australian-Mortgage-Industry-Volume-16


----------



## Tysonboss1 (17 October 2012)

Julia said:


> That's minimal comfort to anyone who bought at the peak of the bubble, borrowing 100% of the purchase price and whose property is now worth about 25% less than they paid for it.
> 
> .




Well yes and no,

When they original signed up for the loan at 7.99% interest, the total they had to pay over the life of the loan was $786,852. 

With current interest rates the total amount they have to pay has dropped to $485,829, thats nearly 40% less.

So even if the 25% drop in house prices is permanent they are still much better off.


----------



## againsthegrain (17 October 2012)

Tysonboss1 said:


> Well yes and no,
> 
> When they original signed up for the loan at 7.99% interest, the total they had to pay over the life of the loan was $786,852.
> 
> ...





Except most of them like the respectable prof robots only had a short term plan of buy-hold-sell-quickprofit
Now they are locked in for life, repayments are less but profits are nowhere in sight.

If they sell now they are at loss, if they keep living with 100% loan its not much of a life


----------



## Tink (17 October 2012)

I suppose it depends on how you look at it too, you either have to pay rent or mortgage to live somewhere, I would rather be paying off my own home than paying someone elses.

You would hope you bought at a good price and you worked out your figures.

I am not one to sit and analyse how much my house is worth, though we all know roughly how much houses are in the area etc.


----------



## Tysonboss1 (17 October 2012)

> only had a short term plan of buy-hold-sell-quickprofit




Gamblers get Gamblers results, regardless of asset class.




> Now they are locked in for life, repayments are less but profits are nowhere in sight.If they sell now they are at loss, if they keep living with 100% loan its not much of a life




Home owners normally plan to hold for long periods and rarely if ever used 100%LVR interest only loans. They will be paying down principle.

Here is any interesting thought experiment, 

Work out how much it would cost you to rent a $300K home for 30years, Be sure to allow for rental increases with inflation, and then compare it to the $185,829 of interest + $150,000  rates etc you would pay over that time.


----------



## prawn_86 (17 October 2012)

Tysonboss1 said:


> Well yes and no,
> 
> When they original signed up for the loan at 7.99% interest, the total they had to pay over the life of the loan was $786,852.
> 
> ...




If it was an investment property then in the 18 yrs between now and when it is paid off the price still needs to rise 61% to cover the cost of interest. Admiteddly tennants are paying some of it off, so say half, it would mean they still need a 30% gain.

Or assuming $300pw rent, then it would take 6 years of cashflow on top of that 18 years of paying off just to break even


----------



## prawn_86 (17 October 2012)

Tysonboss1 said:


> Work out how much it would cost you to rent a $300K home for 30years, Be sure to allow for rental increases with inflation, and then compare it to the $185,829 of interest + $150,000  rates etc you would pay over that time.




Quick back of the envelope shows it to be very similar, with the home owner having an assett in the end, and the renter having nothing if they are not saving anything additional.

Interesting


----------



## Tysonboss1 (17 October 2012)

prawn_86 said:


> If it was an investment property then in the 18 yrs between now and when it is paid off the price still needs to rise 61% to cover the cost of interest. Admiteddly tennants are paying some of it off, so say half, it would mean they still need a 30% gain.
> 
> Or assuming $300pw rent, then it would take 6 years of cashflow on top of that 18 years of paying off just to break even




18 years at $300 / week generates $280,800 in rent, thats more than the total interest bill, And thats not factoring any rental increases.


----------



## againsthegrain (17 October 2012)

Currently where I am renting the rent is significatly cheaper then repayments would be on the property. Due to cheap quality of the building which was bought off the plan from one of those metricon type of builders there is some major repairs that need to be done which are looking to wipe out the the last 2 years rent. Hoping for the landlords sake that his insurance will cover it since warranty is out. However for the period of the repairs rent will have be deducted so either way there is some unexpected loses.

At the moment renting is a much better option then struggling on a 100% lvr loan much like those fho have been birbed at the peak with the grant. 

The money I am saving far outweights any slow repayments which would be mostly covering interest. Who knows few more years and I might be buying with 50% deposit.

Each to their own, need to have a plan and stick by it. Nobody wants to be 50 and renting, but nobody wants to be 50 and still seeing repayments going to the bank that might be passed down to their kids.


----------



## Tysonboss1 (17 October 2012)

> Currently where I am renting the rent is significatly cheaper then repayments would be on the property.




It normally is, I can't speak for where you live, But in general it takes about 7 years before the cost of owning becomes less than renting and from that point the cost of owning keeps dropping and the cost of renting keeps climbing



> At the moment renting is a much better option then struggling on a 100% lvr loan




I would never recommend anybody get a 100% loan.


----------



## McLovin (17 October 2012)

Tysonboss1 said:


> 18 years at $300 / week generates $280,800 in rent, thats more than the total interest bill, And thats not factoring any rental increases.




Nor is it factoring in any capital maintenance, tax, strata levies, agent's commission, insurance, land tax etc. Those are real costs.


----------



## prawn_86 (17 October 2012)

Tysonboss1 said:


> 18 years at $300 / week generates $280,800 in rent, thats more than the total interest bill, And thats not factoring any rental increases.




Yes it pays the interest and costs but then assuming the owners are contributing the difference to make up the 2k pm mentioned in your post, it's going to take them a lot longer than 18 yrs to completely pay off the property.

As i have said in this thread. You can currently get properties where income pays off all the bills and interest, ie nuetrally geared, its just a matter of if you feel the growth prospects are there to take advantage of the leverage.

PPOR is different obviously as you can usually contribute more to it if you are renting + saving


----------



## Tysonboss1 (17 October 2012)

McLovin said:


> Nor is it factoring in any capital maintenance, tax, strata levies, agent's commission, insurance, land tax etc. Those are real costs.




yes they are real costs, and you would have about $100,000 left over to deal with that,

But remember that is without ever raising the rent, after 18 years that rent would have doubled to $600 / week.

and at the 30 year makr the rent will be closer to $1000 / week, and this is just based on inflation, and no doubt through the ups and downs of the property market the house price would have also increased with inflation.

If you plan on living for the next 40 years or so, do some calcs as to the rent you will pay and factor in rent doubling every 15years or so, the numbers are astounding.


----------



## CanOz (17 October 2012)

With only some rough 'back of the envelope' math, It seems to me at this point that a one bedroom apartment with a car park in the CBD is the still the best value when you compare, serviced apartments and more than one bedroom.

Still early days, lots more research left to do yet.

We want something that is the easiest to rent, but will still appreciate in value over the next ten to twenty years. The rental yield needs to be over 6% net, to make this worth while in IMO.

Anyone here have any properties in the sydney CBD?

Cheers,


CanOz


----------



## Tysonboss1 (17 October 2012)

prawn_86 said:


> Yes it pays the interest and costs but then assuming the owners are contributing the difference to make up the 2k pm mentioned in your post, it's going to take them a lot longer than 18 yrs to completely pay off the property.




There would be neg cashflow for probably the first 7 years or so, at which point the rental increases would have bridged the gap.

No, land lord is going to rent a property for 18years without putting up the rent.


----------



## McLovin (17 October 2012)

Tysonboss1 said:


> yes they are real costs, and you would have about $100,000 left over to deal with that,
> 
> But remember that is without ever raising the rent, after 18 years that rent would have doubled to $600 / week.
> 
> ...




I'm not disputing what you're saying I just think the return on property is pathetic and in no way commensurate with the risk, mainly because it has been sold as a safe path to wealth. And let's face it, if you bought property in the last 25 years, you looked like a genius.

The reality is that the risks facing housing as an asset class are centered around those who are in years 0-5, not the guy who is in year 18+ and has seen his income to service the debt rise threefold over the period since he took out his mortgage. Those poor FHOB's bought at heavily inflated prices, essentially competing against eachother. I've seen stats that say 40% of them are in mortgage stress. It seems to me that it won't take much to tip them into default, they're probably only a couple of pay cheques away from it.

The risk is of a large shock to the prospective buyer/new buyer from either unemployment, interest rates or inflation (I guess you could lump the baby sonic boom on its way into the mix too) means they can longer support the "ladder".


----------



## young-gun (17 October 2012)

All this is assuming that the interest rate is going to remain at it's current level. Granted that in the next few years it will remain here or lower. That's not to say that in 7 years time interest rates don't hit 10%+. Then what?

Rental yields don't move in tandem with interest rates. Sure if rates are higher so to is inflation usually. But if inflation got to out of hand land lords wouldn't be able to increase rent accordingly. Just as they aren't lowering rents as rates are eased and inflation softens. So were they to rise in the future your example comes under some strain TB.


----------



## Tysonboss1 (17 October 2012)

> I'm not disputing what you're saying I just think the return on property is pathetic and in no way commensurate with the risk,




there are two ways to look at property, One is as a place to live. I believe it is by far cheaper to Buy than it is to rent when you look at the long term picture of owning for say 40years compared to renting over a similar time frame.

Then there is investment.

I think property like any asset class can perform badly as an investment if you over pay. However, it comes back to expectations, The fact that I get weekly revenue from my properties, I control the cashflow ( no one can cancel a dividend etc), and the cashflow is likly to grow with inflation while the capital is also likely to atleast keep pace with inflation means I am happy to pay 25 times earnings, So what some people class as overvalued when they are comparing it to stocks may not be over valued at all.

I see a good property like a good Bond paying 4% that is inflation hedged, and has some good tax advantages.





> The reality is that the risks facing housing as an asset class are centered around those who are in years 0-5, not the guy who is in year 18+ and has seen his income to service the debt rise threefold over the period since he took out his mortgage.




Yes, especially if he his funding the purchase with debt, But I don't think the effect of inflation is going away. And this kind of plays into the property investors hand.




> I've seen stats that say 40% of them are in mortgage stress. It seems to me that it won't take much to tip them into default, they're probably only a couple of pay cheques away from it.




The same was probably true for the genius (your word) who bought 25 years ago, no doubt as rates hit 18% there was some pretty big mortgage stress.



> The risk is of a large shock to the prospective buyer/new buyer from either unemployment, interest rates or inflation (I guess you could lump the baby sonic boom on its way into the mix too) means they can longer support the "ladder".




this is true, You will find though that I have never proposed people take on large amounts of debt to finance property, I always recommend low lvrs.

But also, commiting yourself to rent that $300K house for the next 40 years means you are subjecting yourself to payments of upto $2,340,000 over that 40 years, The cost of owning that home comes no where near that amount, Plus you end up owning a house.


----------



## Tysonboss1 (17 October 2012)

> All this is assuming that the interest rate is going to remain at it's current level



.

It's also assuming that house prices crash 25% and then sit there permanently



> Granted that in the next few years it will remain here or lower. That's not to say that in 7 years time interest rates don't hit 10%+. Then what?




In seven years time you would have raised the rent 6 times, and you would have reduced the loan through 6 years of principle payments. 

Not to mention that for interest rates to hit 10%, the RBA must be trying to calm rampant inflation, which would have put upward pressure on the capital value of the house and the rental income.



> Rental yields don't move in tandem with interest rates



. 

True, they tend to just go up. interest rate flucutate both up and down.



> Sure if rates are higher so to is inflation usually



.

Yes, correct. 



> But if inflation got to out of hand land lords wouldn't be able to increase rent accordingly.




Inflation would be causing upward pressure on rents along with every things else.


----------



## McLovin (17 October 2012)

Tysonboss1 said:


> there are two ways to look at property, One is as a place to live. I believe it is by far cheaper to Buy than it is to rent when you look at the long term picture of owning for say 40years compared to renting over a similar time frame.
> 
> Then there is investment.




Except potential buyers aren't faced with a binary decision of buy now or rent for the next 40 years...



Tysonboss1 said:


> The same was probably true for the genius (your word) who bought 25 years ago, no doubt as rates hit 18% there was some pretty big mortgage stress.




Funnily enough interest payments as a % of income were lower with rates at 18% than they are with rates at 6%. The massive run up in debt would explain that. http://www.macrobusiness.com.au/201...e-affordability/screenhunter_07-oct-15-09-01/




Tysonboss1 said:


> this is true, You will find though that I have never proposed people take on large amounts of debt to finance property, I always recommend low lvrs.




Easier said than done. Great once you're buying your third or fourth IP. But for the average family earning the median income with a couple of kids it's not really an option.



Tysonboss1 said:


> But also, commiting yourself to rent that $300K house for the next 40 years means you are subjecting yourself to payments of upto $2,340,000 over that 40 years, The cost of owning that home comes no where near that amount, Plus you end up owning a house.




Again, the decision is not rent for 40 years or buy.


----------



## Bill M (17 October 2012)

A lot of discussion out there about renting or buying so I thought I'd share a true story. 23 years ago a good mate of mine said "Bill it's so expensive here in Manly, I will never be able to afford a house here." I said, take it easy start cheap, right now you can buy a bedsitter for 130k, buy it, pay it off and then move on to something bigger. He ignored me as they usually do, guess what? 23 years later he is still renting and is now paying $700 per week for a crappy house in a bad location. Had he have bought back then he would own that property by now. Buying will always pay off eventually. Paying rent when you are an old man is a mugs game.


----------



## Macquack (17 October 2012)

Bill M said:


> A lot of discussion out there about renting or buying so I thought I'd share a true story. 23 years ago a good mate of mine said "Bill it's so expensive here in Manly, I will never be able to afford a house here." I said, take it easy start cheap, right now you can buy a bedsitter for 130k, buy it, pay it off and then move on to something bigger. He ignored me as they usually do, guess what? 23 years later he is still renting and is now paying $700 per week for a crappy house in a bad location. Had he have bought back then he would own that property by now. Buying will always pay off eventually. Paying rent when you are an old man is a mugs game.




You should advise your mate to move to the Central Coast.


----------



## Klogg (17 October 2012)

Bill M said:


> A lot of discussion out there about renting or buying so I thought I'd share a true story. 23 years ago a good mate of mine said "Bill it's so expensive here in Manly, I will never be able to afford a house here." I said, take it easy start cheap, right now you can buy a bedsitter for 130k, buy it, pay it off and then move on to something bigger. He ignored me as they usually do, guess what? 23 years later he is still renting and is now paying $700 per week for a crappy house in a bad location. Had he have bought back then he would own that property by now. Buying will always pay off eventually. Paying rent when you are an old man is a mugs game.




I agree with you here to a degree. It is good to own an asset that is bound to go up with inflation (and cash does not). However, what if I could find assets that could get me a better return than I would get by buying the property I'm living in?

As far as I can tell, equities are far better value (yes, this is subjective, but to me they are) than residential property. Even if rent is 4-5% of the property, with your start-up (stamp duty, solicitors, etc), on-going costs, interest variations, and amount of equity committed, I think there's better elsewhere....

Overall, I'd say that if the argument were either buy a house or hold cash, I think the former will almost always win long term... but to think they're your only options is very narrow-minded.


----------



## Bill M (17 October 2012)

Macquack said:


> You should advise your mate to move to the Central Coast.




He won't go as it's too far from his work. For me it doesn't matter, live rent free and don't work.


----------



## Tysonboss1 (17 October 2012)

> Except potential buyers aren't faced with a binary decision of buy now or rent for the next 40 years...




I think they will be renting for 40 years if they are waiting for property p/e's to match current stock p'e's. I am not saying now is the ideal time to buy, But some people that post on this thread act like they are waiting for property to be trading on a pe of 10 before they buy.




> Funnily enough interest payments as a % of income were lower with rates at 18% than they are with rates at 6%.




So there was no mortgage stress at that interest rate level, I was only young then, But I remember alot of people in my neighborhood having trouble finding work and quite a few people losing there houses. I honestly think it was worse then. 




> Easier said than done. Great once you're buying your third or fourth IP. But for the average family earning the median income with a couple of kids it's not really an option.




Obviously.  thats part of the problem though. My generation has no problem earning enough money. But they don't save what they earn. I honestly believe the problem is two fold.

First problem - Most people expect to much for their first house, They want to start where their parents finished.

Second problem - they want to move into this dream home the second they decide to marry and have kids even though they have spent their early adult life back packing across europe or in thailand and spent all disposible income on fully sick cars and alcohol fueled nights out.




> Again, the decision is not rent for 40 years or buy




Well, I think knowing that you will need a roof for the next 40 years, and it is likely to be your biggest living expense. Finding the best value option will have a deep impact on your life.

And understanding that what it cheapest in year 1, might night be best value over the 40years.

I mean if you focus on what is cheaper in year one, renting a car might seem the best option, But clearly if it were, there would not be companies renting out cars.


----------



## Tysonboss1 (17 October 2012)

Bill M said:


> A lot of discussion out there about renting or buying so I thought I'd share a true story. 23 years ago a good mate of mine said "Bill it's so expensive here in Manly, I will never be able to afford a house here." I said, take it easy start cheap, right now you can buy a bedsitter for 130k, buy it, pay it off and then move on to something bigger. He ignored me as they usually do, guess what? 23 years later he is still renting and is now paying $700 per week for a crappy house in a bad location. Had he have bought back then he would own that property by now. Buying will always pay off eventually. Paying rent when you are an old man is a mugs game.


----------



## Julia (17 October 2012)

Tysonboss1 said:


> Well yes and no,
> 
> When they original signed up for the loan at 7.99% interest, the total they had to pay over the life of the loan was $786,852.
> 
> ...



Your calculation assumes interest rates will remain at what is almost an 'emergency low'.  They will not.




McLovin said:


> I'm not disputing what you're saying I just think the return on property is pathetic and in no way commensurate with the risk, mainly because it has been sold as a safe path to wealth.



+1.  I'm happy to own my own property but wouldn't in my wildest dreams be buying as an investment right now.



young-gun said:


> All this is assuming that the interest rate is going to remain at it's current level. Granted that in the next few years it will remain here or lower. That's not to say that in 7 years time interest rates don't hit 10%+. Then what?



And, if property prices do not similarly move, what is mortgage stress now will become a total crisis.



McLovin said:


> Funnily enough interest payments as a % of income were lower with rates at 18% than they are with rates at 6%.



You have to consider the whole situation as McLovin suggests.
At one stage I was paying 22% on IPs but generating rents and capital gain that rendered such an interest rate immaterial.  



Tysonboss1 said:


> First problem - Most people expect to much for their first house, They want to start where their parents finished.



True enough.  Young people these days expect their first home to have five bedrooms, three bathrooms, three living areas, a media room and a pool.  
Solution:  change your ideas, kids.  Get real.



> Second problem - they want to move into this dream home the second they decide to marry and have kids even though they have spent their early adult life back packing across europe or in thailand and spent all disposible income on fully sick cars and alcohol fueled nights out.



Again true.  "Having it all" seems to be the dream.  Reality is a bit different.


----------



## Tysonboss1 (17 October 2012)

> I agree with you here to a degree. It is good to own an asset that is bound to go up with inflation (and cash does not). However, what if I could find assets that could get me a better return than I would get by buying the property I'm living in?




Thats great, go for the assets with the higher return. But be sure that the higher return is set in stone, and you are as good at capital allocation as you think you are. and that you have the self control to never spend those extra returns along the way, or stop saving the savings your getting by renting.



> As far as I can tell, equities are far better value than residential property.




Yes, alot of equites are, hence why I have exposure to a couple of million dollars worth of equities. But I still love my property investments, they are a great counter balance, and to know that no matter what happens to my business of other investments I can live in my house rent free and have a couple of other properties generating cashflow gives me great comfort.




> but to think they're your only options is very narrow-minded



.

They are not your only options, but owning some property, Atleast one that you live in or that offsets the one you live in is a good idea in my mind. Timing of purchase is another arguement though, but when judging the correct time to buy, be sure to measure apples against apples.


----------



## Tysonboss1 (17 October 2012)

Julia said:


> Your calculation assumes interest rates will remain at what is almost an 'emergency low'.  They will not.





Yes it does, but only in the same sense that your calculation assumes that the house price decline of 25% remains as a permanent feature and the is never a recovery or any inflation.

In one very real aspect, the interest rate decline is producing real bankable savings, that will make permanent reductions in the loan amount.

The decline of prices may quite well be shorterm in nature and produce no long term change in situation.



And a 5.7%interest rate is not really an emergency low, when compared to say the Usa home loan rates of 2%.


----------



## Julia (17 October 2012)

Tysonboss1 said:


> Yes it does, but only in the same sense that your calculation assumes that the house price decline of 25% remains as a permanent feature and the is never a recovery or any inflation.



Fair enough, but if you think prices will return to previous highs in, say, less than ten years, are you saying there was never any *unreasonable increase in house prices, i.e. a bubble, largely spurred by initially the subprime loans in the US and what we now know to have been a not too dissimilar process in low doc loans here, plus various government grants to push people into buying real estate?*
In other words, do you disagree that now we are seeing a return to more realistic housing prices and that these could fall further?



> And a 5.7%interest rate is not really an emergency low, when compared to say the Usa home loan rates of 2%.



It's not realistic to compare our interest rates here with those in the US whose whole situation is markedly different to that in Australia.  What is realistic is to look at lows and highs of interest rates in this country.


----------



## Ves (17 October 2012)

Julia, I love how you're an absolutely fundamentalist in terms of housing prices, but an avid trend-follower when talking about stocks "ie.  the market price is always right".  It's an interesting mix, and I mean no disrespect when I say that!


----------



## Julia (17 October 2012)

Ves said:


> Julia, I love how you're an absolutely fundamentalist in terms of housing prices, but an avid trend-follower when talking about stocks "ie.  the market price is always right".  It's an interesting mix, and I mean no disrespect when I say that!



I'd never thought of it in those terms, Ves.  Interesting observation.
I'm guessing, though, about the real estate situation, rather than necessarily being convinced about the bubble and the bursting of it.
Possibly even just a bit bored and alleviating this with provoking further discussion.


----------



## Tysonboss1 (17 October 2012)

> Fair enough, but if you think prices will return to previous highs in, say, less than ten years, are you saying there was never any unreasonable increase in house prices,




No, I think houses did hit prices that were to high. However the fair value of a house is not as low as some here would like to think. And yes, I believe houses have the same chance of hitting recent highs as interest rates do of hitting recent highs.

I actually think that lower interest rates are more probable than, cheaper hosuing prices.




> a bubble, largely spurred by initially the subprime loans in the US and what we now know to have been a not too dissimilar process in low doc loans here



, 

The loc doc situation here is nothing like the subprime loan situation. As a business owner myself, Low doc loans have been helpful to me in the past, and they are much different from the sub prime.



> plus various government grants to push people into buying real estate?




I have never been a fan of the government grants.

If you want banana's to be more affordable giving a certain element of the population more money to pay for the bananas will not make them more affordable. I believe helping developers build more stock and sub divide more land is the way to reduce prices ie. reduce red tape.



> In other words, do you disagree that now we are seeing a return to more realistic housing prices and that these could fall further?




Prices of any asset class can fall further, What is worth discussing is the multiple of earnings you should pay for a good property.

Due to the stablity of cashflow a property produces and the tax advantages I am happy to pay 20 - 25 times earnings, most property in the area I invest is not far above this, Offcourse I want it to drop though.




> It's not realistic to compare our interest rates here with those in the US whose whole situation is markedly different to that in Australia.  What is realistic is to look at lows and highs of interest rates in this country




Well, yes it is different.

But I think our economy is maturing to the stage where interest rates will be lower for longer, I think will will stay near 3% for longer than we stay near 12% in the next 10 years.

But that's just my prediction, I don't have a crystal ball.


----------



## Tysonboss1 (17 October 2012)

Ves said:


> Julia, I love how you're an absolutely fundamentalist in terms of housing prices, but an avid trend-follower when talking about stocks "ie.  the market price is always right".  It's an interesting mix, and I mean no disrespect when I say that!




That's funny you say that.

I consider my self a fundamentalist.

But I see julia in this situation as following a trend, ie " house prices have come down, so they must be on the way lower"


----------



## Tysonboss1 (17 October 2012)

Julia said:


> Possibly even just a bit bored and alleviating this with provoking further discussion.




Thats it, 

 no more long winded answers for you


----------



## Julia (17 October 2012)

Tysonboss1 said:


> Thats it,
> 
> no more long winded answers for you



Sorry, Tyson.  I'll stop it and just leave you with some pretty sensible comments from Robert Gottliebson.
http://www.businessspectator.com.au...ent=118496&utm_campaign=kgb&modapt=commentary


----------



## Tysonboss1 (17 October 2012)

Julia said:


> Sorry, Tyson.  I'll stop it and just leave you with some pretty sensible comments from Robert Gottliebson.
> http://www.businessspectator.com.au...ent=118496&utm_campaign=kgb&modapt=commentary




:


----------



## McLovin (18 October 2012)

Tysonboss1 said:


> I think they will be renting for 40 years if they are waiting for property p/e's to match current stock p'e's. I am not saying now is the ideal time to buy, But some people that post on this thread act like they are waiting for property to be trading on a pe of 10 before they buy.




I don't think your average home buyer _ever_ compares house prices to stock PE's. 




Tysonboss1 said:


> So there was no mortgage stress at that interest rate level, I was only young then, But I remember alot of people in my neighborhood having trouble finding work and quite a few people losing there houses. I honestly think it was worse then.




I don't know if there was mortgage stress only that as a % of disposable income people were spending less on interest then than now. That's a pretty worrying statistic, that we have ended up over 20 years spending more on home mortgage interest even though rates have fallen by 2/3rds. How can that possibly be sustainable? It's even worse when you think about the growth in real wages without productivity growth and the fact that we have come to the end of a 30 year credit boom.



Tysonboss1 said:


> Well, I think knowing that you will need a roof for the next 40 years, and it is likely to be your biggest living expense. Finding the best value option will have a deep impact on your life.




It seems fewer and fewer people think that way. The risks just don't outweigh the benefits at the moment.


----------



## Tink (18 October 2012)

Bill M said:


> A lot of discussion out there about renting or buying so I thought I'd share a true story. 23 years ago a good mate of mine said "Bill it's so expensive here in Manly, I will never be able to afford a house here." I said, take it easy start cheap, right now you can buy a bedsitter for 130k, buy it, pay it off and then move on to something bigger. He ignored me as they usually do, guess what? 23 years later he is still renting and is now paying $700 per week for a crappy house in a bad location. Had he have bought back then he would own that property by now. Buying will always pay off eventually. Paying rent when you are an old man is a mugs game.




Very true, Bill, how many of these stories have we heard and still hear.

Struggles with mortgages have happened through the years, regardless. 
I know a few that have bought the last few years and are doing fine, just like when we bought that many years ago.
Agree with your posts, Tysonboss.

If you look at this thread, its that long through the years, but seems to be the same thing. 
Waiting...

Just my opinion.


----------



## Mrmagoo (18 October 2012)

Tysonboss1 said:


> Yes it does, but only in the same sense that your calculation assumes that the house price decline of 25% remains as a permanent feature and the is never a recovery or any inflation.
> 
> In one very real aspect, the interest rate decline is producing real bankable savings, that will make permanent reductions in the loan amount.
> 
> ...




I earn ~80k a year with a hecs debt is take home of about $2200 a fortnight. I've done the sums over and over again and I can't afford to purchase what they call an affordable home.

House prices were high in 05, but instead of waiting for wages to catch up, they went even higher.

There is just no way I can service 6-700 a week for either a terrible 2 bedroom unit or a house which is 40-50kms away from the CBD. 

The government really is against us on both sides so there is no way of winning. 

If those prices continue to rise then that is a net loss to society.


----------



## Mrmagoo (18 October 2012)

Low income earners paying the majority of their income on a mortgage 7 years ago is different to today where people on reasonable incomes will do the same. 

Mark my words : this will all correct itself soon.


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## Mrmagoo (18 October 2012)

Bill M said:


> A lot of discussion out there about renting or buying so I thought I'd share a true story. 23 years ago a good mate of mine said "Bill it's so expensive here in Manly, I will never be able to afford a house here." I said, take it easy start cheap, right now you can buy a bedsitter for 130k, buy it, pay it off and then move on to something bigger. He ignored me as they usually do, guess what? 23 years later he is still renting and is now paying $700 per week for a crappy house in a bad location. Had he have bought back then he would own that property by now. Buying will always pay off eventually. Paying rent when you are an old man is a mugs game.




So I gather then that you are from the future ? (so they did invent time travel !)


----------



## Tysonboss1 (18 October 2012)

> I earn ~80k a year with a hecs debt is take home of about $2200 a fortnight



.

Don't you have savings, if not, Why not?




> I've done the sums over and over again and I can't afford to purchase what they call an affordable home.




It is always hard in the beginning, Saving the deposit and paying off the first couple of years always takes a bit of sacrifice, But it gets easier, Way way esaier.





> There is just no way I can service 6-700 a week for either a terrible 2 bedroom unit or a house which is 40-50kms away from the CBD



. 

So rent for life then, But trust me, that will be more expensive



> there is no way of winning



. 

not with that attitude


----------



## craft (18 October 2012)

This chart probably belongs here. Gives a good long term perspective.

Most people's opinion are based on the limited observed history.








For me, I can't see much justification (or mathmatical possibility) for house prices to continue as they are for ever. Aus house pricing trend for the last 60 years has been a friend to many but the bigger the trend the bigger the bend at the end.

How and when it unwinds are my question - As I don't have those answers my exposure to Aus Real estate is limited to meeting housing needs. Equities offer a far better risk/reward for investment purposes.


----------



## McLovin (18 October 2012)

Bill M said:


> A lot of discussion out there about renting or buying so I thought I'd share a true story. 23 years ago a good mate of mine said "Bill it's so expensive here in Manly, I will never be able to afford a house here." I said, take it easy start cheap, right now you can buy a bedsitter for 130k, buy it, pay it off and then move on to something bigger. He ignored me as they usually do, guess what? 23 years later he is still renting and is now paying $700 per week for a crappy house in a bad location. Had he have bought back then he would own that property by now. Buying will always pay off eventually. Paying rent when you are an old man is a mugs game.




23 years ago a bedsit in Manly cost $130k?


----------



## Tysonboss1 (18 October 2012)

craft said:


> For me, I can't see much justification (or mathmatical possibility) for house prices to continue as they are for ever. Aus house pricing trend for the last 60 years has been a friend to many but the bigger the trend the bigger the bend at the end.
> 
> How and when it unwinds are my question - As I don't have those answers my exposure to Aus Real estate is limited to meeting housing needs. Equities offer a far better risk/reward for investment purposes.




Just so I can understand that chart a bit better,

Is it saying that excluding inflation, over the 70years or so since 1942 property values have become 9 times higher.

If that is what it is saying I think most of that growth would be actual fair growth in value, I mean look at the difference in population of the cities between those times, Obviously population growth can be expected to cause a significant upward presure on land values.

Also look at the difference in what was considered a medium home in 1900, flushing toilets were a luxuary, running hot water wouldn't have been a feature. forget about 90% of the plumbing, electrical wiring, landscaping, bathrooms, appliances etc that are common place today,

And the size of homes on average was much smaller.

So if we allow for the change due to population growth and changes in what your getting for your money, How much exactly of the price is froth, Do you expect we will hit parity with 1900 prices again.


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## McLovin (18 October 2012)

Tysonboss1 said:


> Just so I can understand that chart a bit better,
> 
> Is it saying that excluding inflation, over the 70years or so since 1942 property values have become 9 times higher.
> 
> ...




The US has had a similar rise in population (and flushing toilets) and yet their prices are 10% higher than they were in real terms, while ours are 827% higher. Also we have finished up with house prices more than double the next nearest country.


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## orr (18 October 2012)

This Article made sense to me 12 months ago 

http://smh.domain.com.au/real-estat...adow-over-property-market-20111026-1mizf.html

The link to the full report at the bottom of the article is no longer viable... Though it doesn't take to long a look at the coastal holiday home market to see validation of some central themes raised
a link to the article  doesn't appear to have been posted earlier, not around when published.


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## craft (18 October 2012)

Tysonboss1 said:


> Just so I can understand that chart a bit better,
> 
> Is it saying that excluding inflation, over the 70years or so since 1942 property values have become 9 times higher.
> 
> ...




The thing I don’t like about the chart is that it uses CPI as the deflator to get to real prices. I think that measure is dubious.

If the deflator was wage growth or GDP per capta – than any move above 100 signifies potential risk. As a non-productive asset, there is no justification or mathematical possibility for housing to outperform real economic growth long term.

Despite the short coming of the graph – it still paints the same picture.  The last 60 years has led us to a risky elevation of prices on a historical basis and against peers.


----------



## finnsk (18 October 2012)

McLovin said:


> 23 years ago a bedsit in Manly cost $130k?



Today it is about $325.000 cheapest I could find
http://www.domain.com.au/Property/For-Sale/Apartment-Unit-Flat/NSW/Manly/?adid=2009958702


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## Julia (18 October 2012)

Mrmagoo said:


> I earn ~80k a year with a hecs debt is take home of about $2200 a fortnight. I've done the sums over and over again and I can't afford to purchase what they call an affordable home.
> 
> House prices were high in 05, but instead of waiting for wages to catch up, they went even higher.
> 
> ...



Do you have to live in a capital city?


----------



## Miss Hale (18 October 2012)

craft said:


> This chart probably belongs here. Gives a good long term perspective.
> 
> Most people's opinion are based on the limited observed history.
> 
> ...




The thing I find interesting about that chart is that except for a small period around 1950 our houses prices since then have always been high relative to other places and yet Australia has always been known for high home ownership rates where the average person could afford to own their own home.  Why would this be if our house prices have been higher than elsewhere?  Why were not people in other countires buying houses too?  I always thought it was because our houses were cheaper than in other places  (or am I misinterpreting the graph somehow  )


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## McLovin (18 October 2012)

Miss Hale said:


> The thing I find interesting about that chart is that except for a small period around 1950 our houses prices since then have always been high relative to other places and yet Australia has always been known for high home ownership rates where the average person could afford to own their own home.  Why would this be if our house prices have been higher than elsewhere?  Why were not people in other countires buying houses too?  I always thought it was because our houses were cheaper than in other places  (or am I misinterpreting the graph somehow  )




As craft said, the graph is CPI adjusted, not wage adjusted. You'd need to know what real wages did over the period to get the full picture...


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## Miss Hale (18 October 2012)

McLovin said:


> As craft said, the graph is CPI adjusted, not wage adjusted. You'd need to know what real wages did over the period to get the full picture...




OK, yes, that is important. Thanks   (note to self, read posts more carefully)


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## Bill M (18 October 2012)

Mrmagoo said:


> So I gather then that you are from the future ? (so they did invent time travel !)




What are you talking about? What happened 23 years ago is fact, real estate prices have been going up steadily. I am sure the next 23 years will be seeing real estate prices going up too, nothing to do with time travel.


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## MACCA350 (18 October 2012)

McLovin said:


> As craft said, the graph is CPI adjusted, not wage adjusted. You'd need to know what real wages did over the period to get the full picture...




Can't recall the name but there is a company that compares house prices to local population income and gives an affordability rating which can be compared to many other countries. 

It also showed most Australian capital cities being in the most unaffordable range when compared to other countries.

cheers


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## Bill M (18 October 2012)

McLovin said:


> 23 years ago a bedsit in Manly cost $130k?






finnsk said:


> Today it is about $325.000 cheapest I could find
> http://www.domain.com.au/Property/For-Sale/Apartment-Unit-Flat/NSW/Manly/?adid=2009958702




Thanks for bringing that up McLovin and finnsk. That was the block of bedsitters that were for sale all of them years ago. It use to be the Sydney County Council building. They flogged it off and sold them as bedsitters and 1 br units. The link that I post next doesn't go back to 23 years ago however it does go back to the previous 2 sales.

You will note that this bedsitter was sold on 27/10/2008 and fetched 245K. Then on 09/07/2010 it was sold again and fetched 295K. Now of course they are asking 325K for it. So throughout the whole GFC this little bedsitter has just been going up all the time. Now if only my mate had bought this when I told him too he would have 325K in his kick to put down on his house, but then again he chose to rent.

LINK HERE: http://www.onthehouse.com.au/buy/property/47402588?PageNr=1


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## CanOz (18 October 2012)

Regarding investment properties:

If you're not leveraging more than 50% and buying an investment property in the center of a major city, especially Sydney (the center of finance in Australia) i just cannot fathom what can go wrong. Your getting someone to pay off the loan and its just as good or better than money in the bank. I'm not advocating that property is the best answer, or the only answer, just an option. We are not using any of our existing property as collateral, so no risk there.

In addition to domestic buyers, there are plenty of Asian buyers looking for foreign investment opportunities. My boss is one of them, a ton of money sitting and waiting for a few bargains.

Most of the previous arguments are on home ownership...versus renting. 

Has anyone got any arguments against owning investment properties in the CBD?

Cheers,


CanOz


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## Bill M (18 October 2012)

CanOz said:


> Has anyone got any arguments against owning investment properties in the CBD?
> 
> Cheers,
> 
> ...




Hi CanOz, there are a few things that put me off of them. The first is that for some reason levies are much higher for CBD apartments. I hate forking out for excessive levies. The next is parking, a lot don't have it and if they do you will pay for it. Then there is the price, it just seems a bit too expensive compared to say a nice sea side Sydney suburb. Lump those 3 reasons together just makes me think that I would rather choose a sea side suburb that is cheaper. But that's just me, find out how much the levies are as they are something to watch out for and something that puts potential buyers off, cheers.


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## finnsk (18 October 2012)

Bill M said:


> Hi CanOz, there are a few things that put me off of them. The first is that for some reason levies are much higher for CBD apartments. I hate forking out for excessive levies. The next is parking, a lot don't have it and if they do you will pay for it. Then there is the price, it just seems a bit too expensive compared to say a nice sea side Sydney suburb. Lump those 3 reasons together just makes me think that I would rather choose a sea side suburb that is cheaper. But that's just me, find out how much the levies are as they are something to watch out for and something that puts potential buyers off, cheers.



I think one of the reasons the CBD prices is more expensive is a few years ago 10 overseas student shared a 2 bedroom unit and that way prices has been pushed up


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## CanOz (18 October 2012)

Thanks Bill, I agree i would rather live sea side too. My thinking is from the rental market though, or trying to think like the market...

I'm thinking that young people in the office space in Sydney need someplace close by, not wanting to commute.

CanOz


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## prawn_86 (18 October 2012)

CanOz said:


> I'm thinking that young people in the office space in Sydney need someplace close by, not wanting to commute.
> 
> CanOz




Having lived in Syd and worked in the CBD, it is very rare for people to live what i would call close by, by Adelaide or Melbourne standards. This is partly due to high prices, and partly due to lack of development on the CBD fringe. Most people are a 15 - 20 min bus or train ride away at a minimum, ie Easter Suburbs or Inner West


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## CanOz (18 October 2012)

prawn_86 said:


> Having lived in Syd and worked in the CBD, it is very rare for people to live what i would call close by, by Adelaide or Melbourne standards. This is partly due to high prices, and partly due to lack of development on the CBD fringe. Most people are a 15 - 20 min bus or train ride away at a minimum, ie Easter Suburbs or Inner West





I guess it's like this.... We want to find out what pays the best rent for the money invested that's the easiest to rent out that will generate the best capital gain over 10 to 15 years....

Not too much to ask?

CanOz


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## Mrmagoo (19 October 2012)

Tysonboss1 said:


> .
> 
> Don't you have savings, if not, Why not?
> 
> ...




What you can't get through your head :

A high percentage of your income on a mortgage earning 45k is fine, as your income is likely to see big up swings.

At 80k this is unlikely to happen.

Obviously owning is better than renting at the same price, the issue here is not to own or to rent, it is at what price to own. The current prices don't make sense.

If a mortgage were more like 450-550 it would definitely be worth it as long as the quality and location of the dwelling were reasonable.

300k for something 50kms out of the CBD is not CHEAP it is EXPENSIVE for something 50 kms for the CBD.


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## FxTrader (19 October 2012)

Bill M said:


> A lot of discussion out there about renting or buying so I thought I'd share a true story. 23 years ago a good mate of mine said "Bill it's so expensive here in Manly, I will never be able to afford a house here." I said, take it easy start cheap, right now you can buy a bedsitter for 130k, buy it, pay it off and then move on to something bigger. He ignored me as they usually do, guess what? 23 years later he is still renting and is now paying $700 per week for a crappy house in a bad location. Had he have bought back then he would own that property by now. Buying will always pay off eventually. Paying rent when you are an old man is a mugs game.




Classic example Bill.  I might also add paying off a mortgage when you're an old man is also a mugs game.  Given the governments age pension assets test exempts your primary residence, a popular method to collect the full pension is to ensure you own outright the most expensive home you need to in order to keep your assessable assets below the level required to collect the full pension.  I've seen so many examples now of retired couples living in million dollar plus homes collecting the age pension that it's clearly a strong growing trend that will only be arrested by a change of policy by a very brave government.  Such a policy change is unlikely to happen for the boomer generation so people in this category who envision collecting the age pension should pay off their homes or buy one and pay it off before retirement.


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## McLovin (19 October 2012)

FxTrader said:


> Classic example Bill.  I might also add paying off a mortgage when you're an old man is also a mugs game.  Given the governments age pension assets test exempts your primary residence, a popular method to collect the full pension is to ensure you own outright the most expensive home you need to in order to keep your assessable assets below the level required to collect the full pension.  I've seen so many examples now of retired couples living in million dollar plus homes collecting the age pension that it's clearly a strong growing trend that will only be arrested by a change of policy by a very brave government.  Such a policy change is unlikely to happen for the boomer generation so people in this category who envision collecting the age pension should pay off their homes or buy one and pay it off before retirement.




I will wager a good bit of money that that perk will be gone within 10 years. I reckon we aren't far off a land tax system similar to the US.


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## Julia (19 October 2012)

FxTrader said:


> Classic example Bill.  I might also add paying off a mortgage when you're an old man is also a mugs game.  Given the governments age pension assets test exempts your primary residence, a popular method to collect the full pension is to ensure you own outright the most expensive home you need to in order to keep your assessable assets below the level required to collect the full pension.  I've seen so many examples now of retired couples living in million dollar plus homes collecting the age pension that it's clearly a strong growing trend that will only be arrested by a change of policy by a very brave government.  Such a policy change is unlikely to happen for the boomer generation so people in this category who envision collecting the age pension should pay off their homes or buy one and pay it off before retirement.



That's a bit of a narrow focus, FxTrader, in that to get the full government pension you're going to be generating not much income outside of that government pension, whether assessed on the assets or income tests, and thus probably have a less than financially comfortable retirement.  The asset limit for full pension (single person) is less than $200,000.   At current at call rate of 5% that's only about $10,000 over the age pension.
I think the age pension is only around $18,000, so that's an annual income of less than $30,000.

To own and have to look after (physically and financially) a home that is much larger than you need, just to get the age pension, seems hard to justify to me.

I have seen people in this position actually take out a reverse mortgage to give themselves enough cash to live on!


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## FxTrader (19 October 2012)

Julia said:


> That's a bit of a narrow focus, FxTrader, in that to get the full government pension you're going to be generating not much income outside of that government pension, whether assessed on the assets or income tests, and thus probably have a less than financially comfortable retirement.  The asset limit for full pension (single person) is less than $200,000.   At current at call rate of 5% that's only about $10,000 over the age pension.
> I think the age pension is only around $18,000, so that's an annual income of less than $30,000.
> 
> To own and have to look after (physically and financially) a home that is much larger than you need, just to get the age pension, seems hard to justify to me.
> ...




This is a financial planning conversation and I am not a financial planner nor is that the subject of this thread.  However, your income assumptions only apply to collection of the full aged pension.  You can still make up to a maximum of $2,545 a fortnight (from a super income stream for instance) and still collect some aged pension income.  An annual tax free income of $30k for a retired couple with no mortgage is quite adequate for many.

I made no mention of the size of the home, my comment was about its VALUE.  If I own a two million dollar apartment overlooking the Yarra river in Melbourne, I can still collect the aged pension by structuring my finances accordingly.

I have simply noted that there is a growing trend in structuring finances to draw the age pension.  This strategy involves keeping a large proportion of one's total asset base invested in the family home, however large it may be.

The main point remains, outright home ownership makes financial sense for the elderly if they want to draw a pension.


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## young-gun (19 October 2012)

Is anyone in here familiar, or invested in commericial/industrial real estate at all? Would love to hear of anyone who is, or has a history of being involved in it, and what price movements have been like in that section of property.

I spoke to a real estate agent that said at the height of the RE boom, he was getting 40 calls a day re. commercial property, now he gets maybe 3-4 a day.


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## Ves (19 October 2012)

FxTrader said:


> I have simply noted that there is a growing trend in structuring finances to draw the age pension.  This strategy involves keeping a large proportion of one's total asset base invested in the family home, however large it may be.
> 
> The main point remains, outright home ownership makes financial sense for the elderly if they want to draw a pension.



I see this all the time as well in the industry.

I thought the goal of retirement was to avoid getting the age pension (I know it is for me!), but it seems that most people just want a free hand out.


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## Julia (19 October 2012)

Ves said:


> I see this all the time as well in the industry.
> 
> I thought the goal of retirement was to avoid getting the age pension (I know it is for me!), but it seems that most people just want a free hand out.



Exactly.   Hence the number of people who take their super as a lump sum, blow it all on travel, cars, etc., in the naive assumption that they can live comfortably on the government pension.
There is almost a national obsession with 'getting what we have paid our taxes for' or something.

I'd support a change in the rules to disallow the entire amount of saved super to be taken as a lump sum.
Legislation to mandate some being used as an annuity seems pretty reasonable to me.


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## Julia (19 October 2012)

FxTrader said:


> Given the governments age pension assets test exempts your primary residence, a popular method to collect the full pension is to ensure you own outright the most expensive home you need to in order to keep your assessable assets *below the level required to collect the full pension. *



*
*


FxTrader said:


> This is a financial planning conversation and I am not a financial planner nor is that the subject of this thread.  However, your income assumptions only apply to collection of the full aged pension.



Correct.  I was addressing your original point above.



> I made no mention of the size of the home, my comment was about its VALUE.  If I own a two million dollar apartment overlooking the Yarra river in Melbourne, I can still collect the aged pension by structuring my finances accordingly.



OK, not necessarily a large home.  But in retirement it seems a bit silly to sit on a highly valued asset just because it's exempt from Centrelink assessment, and as a consequence have insufficient income for an enjoyable life.

Just my view and I agree that many people are prepared to do pretty much anything to ensure they receive what they perceive as what they deserve in terms of receiving the full age pension, even if they are actually disadvantaged in the process.


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## DB008 (19 October 2012)

McLovin said:


> Nor is it factoring in any capital maintenance, tax, strata levies, agent's commission, insurance, land tax etc. Those are real costs.




And here is a real world example.

Fin year just gone.

Brisbane, 1 bedroom, fully furnished. Rented out @ $500 p.w.


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## Bill M (19 October 2012)

Julia said:


> But in retirement it seems a bit silly to sit on a highly valued asset just because it's exempt from Centrelink assessment, and as a consequence have insufficient to have an enjoyable life.




It is unfortunate but this is the current system. I have met many old ladies in my time who live in $2 million houses than are falling apart around them. They can't afford renovations and can not do any work themselves. Their husbands have passed on and they are alone collecting the Government pension. Suggest to them to sell and move into a nice new townhouse and they all say no. Why? "because I'll loose my pension" they say. The pension is God to them. Hoarding Multi Million Dollar Homes in order to collect the Government pension will one day be a thing of the past.


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## Vixs (19 October 2012)

Julia said:


> Exactly.   Hence the number of people who take their super as a lump sum, blow it all on travel, cars, etc., in the naive assumption that they can live comfortably on the government pension.
> There is almost a national obsession with 'getting what we have paid our taxes for' or something.
> 
> I'd support a change in the rules to disallow the entire amount of saved super to be taken as a lump sum.
> Legislation to mandate some being used as an annuity seems pretty reasonable to me.




I'm not happy to encourage, and won't be voting for anyone who champions, any policy that dictates how people can access their own money in superannuation once they've reached preservation age. You can encourage as much control over your own funds as you like, but as someone who can manage their own money I don't see why you would want that either.

Let them live on the pension if they're stupid enough to blow all their savings on 'stuff'. I don't even expect there'll be a pension by the time I retire.


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## Julia (19 October 2012)

Vixs said:


> I'm not happy to encourage, and won't be voting for anyone who champions, any policy that dictates how people can access their own money in superannuation once they've reached preservation age. You can encourage as much control over your own funds as you like, but as someone who can manage their own money I don't see why you would want that either.
> 
> Let them live on the pension if they're stupid enough to blow all their savings on 'stuff'. I don't even expect there'll be a pension by the time I retire.



You're rather missing the point.  We have an aging population and the demand on the remaining taxpayers in paying for the age pension will become unmanageable.
The whole idea of compulsory saving in Super is to provide an income to retirees *in order to avoid this sort of massive drain on the taxpayer.*

If you're going to continue to allow entire Super balances to be spent, why would you offer the current tax advantaged status of Super?  If people can just save X amount and then spend it all before accessing a full age pension, you might as well wipe compulsory super and let them pay tax on those savings at their ordinary marginal rate.


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## Tink (20 October 2012)

Bill M said:


> It is unfortunate but this is the current system. I have met many old ladies in my time who live in $2 million houses than are falling apart around them. They can't afford renovations and can not do any work themselves. Their husbands have passed on and they are alone collecting the Government pension. Suggest to them to sell and move into a nice new townhouse and they all say no. Why? "because I'll loose my pension" they say. The pension is God to them. Hoarding Multi Million Dollar Homes in order to collect the Government pension will one day be a thing of the past.




At least they have that option to downsize, especially if they have no savings.
If they rented they would have nothing, if they hadnt planned accordingly.

No savings, rent to be paid.
My opinion.


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## FxTrader (20 October 2012)

Bill M said:


> It is unfortunate but this is the current system. I have met many old ladies in my time who live in $2 million houses than are falling apart around them. They can't afford renovations and can not do any work themselves. Their husbands have passed on and they are alone collecting the Government pension. Suggest to them to sell and move into a nice new townhouse and they all say no. Why? "because I'll loose my pension" they say. The pension is God to them. Hoarding Multi Million Dollar Homes in order to collect the Government pension will one day be a thing of the past.




There is another dimension to this issue not often discussed.  Their kids/heirs don't want them to sell, they see that 2 million dollar house as their inheritance and don't trust that the old ladies would be able to wisely manage the cash should they sell (with some justification I might add).  Adding the family home to the assets test makes  sense to me but it would be a huge political risk for any government to propose it.


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## Vixs (20 October 2012)

Julia said:


> You're rather missing the point.  We have an aging population and the demand on the remaining taxpayers in paying for the age pension will become unmanageable.
> The whole idea of compulsory saving in Super is to provide an income to retirees *in order to avoid this sort of massive drain on the taxpayer.*
> 
> If you're going to continue to allow entire Super balances to be spent, why would you offer the current tax advantaged status of Super?  If people can just save X amount and then spend it all before accessing a full age pension, you might as well wipe compulsory super and let them pay tax on those savings at their ordinary marginal rate.




I understand that the purpose of superannuation is to take the pressure off the aged pension. What I'm saying is, if people retire, spend up like kings for a few years and are left with nothing but the 20k p.a. pension, their poverty should be the advertisement for what not to do.

Dependency on an income stream you have NO control over should frighten anyone. If the burden on the budget from the pension is too large, we'll see lower indexation, tougher qualification criteria, inclusion of PPRs in the assets test etc. All things that are to come anyway as retirees leave the workforce with a healthier super balance - just hastened in order to take the pressure off the budget.

To FxTrader's point about inheritance - people's children can feel what they like about inheritance. The attitude towards leaving an inheritance is already changing. Besides, a family in their late 40s/early 50s need inheritance money much less than families in their 20s and 30s could use a hand with a house deposit and education expenses.

The elderly should be downsizing and moving out of working suburbs into areas with better access to lifestyle facilities and healthcare. 

Buy a townhouse or a villa and get rid of the 4 bed 2 bath homes they raised their families in. Use the surplus funds to top up their super or fund healthcare and aged care expenses. Give another working family the chance to live there rather than commuting for 90 minutes each way. If the house/land is something they want to keep in the family for generations to come, sell it to their children. 

The means are there, the fact that people don't want to use them should be their problem.

Ultimately all of those thoughts are brought on by the fact that I am losing incentive to contribute money over and above SGCs with every budget, as governments of all brands can't stop poking the sore tooth that is the pile of cash in super funds.


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## Mrmagoo (20 October 2012)

As they're currently doing, flood the market with highrise units. Young people move into these units and out of houses, creating much less demand.

Bet your bottom dollar all the oldies will do whatever they can to stop this happening but it already is basically everywhere apart from Sydney..


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## Julia (20 October 2012)

FxTrader said:


> There is another dimension to this issue not often discussed.  Their kids/heirs don't want them to sell, they see that 2 million dollar house as their inheritance and don't trust that the old ladies would be able to wisely manage the cash should they sell (with some justification I might add).



I'm tempted to climb on to the currently fashionable band wagon of screaming 'sexist comment' here, but I'm sure you meant to add that very old blokes would equally have difficulty managing money.
We could just cover the whole gamut and accuse you of ageism.


> Adding the family home to the assets test makes  sense to me but it would be a huge political risk for any government to propose it.




Agree.  But perhaps the family home could only be exempt up to a certain level?

Despite my facetious comment above, you raise a good point about the family wanting to keep the exempt family home with as high a value as possible.  The other factor is that a move into most retirement villages involves a deduction of as much as 33% from the entry price when the old person eventually dies and the dwelling is sold.
So not only would the family receive no capital gain regardless of years of residence in the village, the village also keeps a substantial amount of the entry price.

Then in nursing homes I think they can charge whatever they decide in terms of a bond, as long as they leave the resident with something like $30K odd.

So no wonder families are keen to see mum or dad stay in that family home.



Vixs said:


> I understand that the purpose of superannuation is to take the pressure off the aged pension. What I'm saying is, if people retire, spend up like kings for a few years and are left with nothing but the 20k p.a. pension, their poverty should be the advertisement for what not to do.



You'd think so, wouldn't you.  But it doesn't seem to work that way at all.  Hence the compulsory saving for Super.
Many people just don't seem to plan ahead at all.  A couple I knew had no children, both had worked all their lives, and at retirement all they had was a very modest home (worth less than $300K) and about $30,000 in the bank.   So they qualified for the full age pension.   Said they'd always just assumed that - because they paid taxes all their lives - they would be properly looked after in retirement.

Just such surprising naivete.



> Dependency on an income stream you have NO control over should frighten anyone. If the burden on the budget from the pension is too large, we'll see lower indexation, tougher qualification criteria, inclusion of PPRs in the assets test etc. All things that are to come anyway as retirees leave the workforce with a healthier super balance - just hastened in order to take the pressure off the budget.



Agree in principle but it will be a brave political party that will do this.


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## Mrmagoo (21 October 2012)

Pensioners should be made to sell their homes and perform menial tasks for payment. There should be soup kitchens so they can get food but we should not be funding their lifestyle with a guaranteed pension.

I'd like to see more old people working at KMART and BIG W as house cleaners for a wage rate similar to youth wages.

The pension age really should be a disability pension for when you're physically too old to work !


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## FxTrader (21 October 2012)

Julia said:


> I'm tempted to climb on to the currently fashionable band wagon of screaming 'sexist comment' here, but I'm sure you meant to add that very old blokes would equally have difficulty managing money.
> We could just cover the whole gamut and accuse you of ageism.




Unfortunately you totally ignored the context of my comment on Bill's statement and the point about the heirs preferences and chose to attack a straw man instead and thus make a useless and stupid comment as a result.  The reality is that since women live longer than their partners on average, they represent a larger proportion of single retired persons living alone in the community.  Hence Bill's comment about "many old ladies" living in 2 million dollar homes instead of just saying many old people.

You can "accuse" me of nothing other than commenting on generally poor financial literacy of the majority of people in our community including the elderly.  Unfortunately the financial illiteracy of many elderly people is exploited by unscrupulous conman in various ways using various methods (well documented on this forum) most of which rely on trusting someone else to manage one's life savings.  Many of these people are then forced to draw an age pension as a safety net.  

On one hand you think it nonsensical to live in a large expensive home and draw a pension, on the other hand it's ageism or sexism to suggest that perhaps that's because they are not financially literate enough to know they have better options or their heirs don't trust them to manage their own financial affairs.  Why not pause and look at context before shooting from the hip and making asinine accusations.


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## Macquack (21 October 2012)

Mrmagoo said:


> Pensioners should be made to sell their homes and perform menial tasks for payment. There should be soup kitchens so they can get food but we should not be funding their lifestyle with a guaranteed pension.
> 
> *I'd like to see more old people working at KMART and BIG W as house cleaners for a wage rate similar to youth wages.*
> 
> The pension age really should be a disability pension for when you're physically too old to work !




Care to explain your personal situation so we can put your comments in context?

Expecting elderly people to work for youth wages, you must be kidding?


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## Junior (21 October 2012)

I don't think any government of this country will ever scale back Age Pension benefits in any meaningful way.  Political suicide.  Unfortunately it will only happen when this country is running giant deficits and we have no other option.

They will however, continue to find sneaky ways to chip away at large super balances.  Look at the recent proposed changes for SMSFs.

*Edit*:  I don't think Age Pension benefits should be slashed, but the system overall should cost a lot less and be scaled back over time as the number of retirees benefitting from years of Superannuation Guarantee grow.  Not including the primary residence is crazy.  You can live in a $1million home and claim full age pension.  Easy to downsize to say a $500,000 home and become partially self funded.


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## Mrmagoo (21 October 2012)

Macquack said:


> Care to explain your personal situation so we can put your comments in context?
> 
> Expecting elderly people to work for youth wages, you must be kidding?




As they're old and frail they'll be less productive. For example, a $8 an hour award wage for a 70 year old will allow employers to hire them it will also allows households to employ, for example and elderly house cleaner or baby sitter, so that tax payer do not need to increase the pension, businesses get cheap workers and the pensioner more money this is in much in the same way that youth are employed.

Once these people are forced to sell their homes over a certain value (or lose the pension) they'll have even more money available, no need for the pension and everyone in society will benefit.

I think the above is preferable to being unable to work and having to live off an unsuitably small pension.


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## moXJO (21 October 2012)

Mrmagoo said:


> As they're old and frail they'll be less productive. For example, a $8 an hour award wage for a 70 year old will allow employers to hire them it will also allows households to employ, for example and elderly house cleaner or baby sitter, so that tax payer do not need to increase the pension, businesses get cheap workers and the pensioner more money this is in much in the same way that youth are employed.
> 
> Once these people are forced to sell their homes over a certain value (or lose the pension) they'll have even more money available, no need for the pension and everyone in society will benefit.
> 
> I think the above is preferable to being unable to work and having to live off an unsuitably small pension.




Are you serious ??


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## Julia (21 October 2012)

FxTrader said:


> Unfortunately you totally ignored the context of my comment on Bill's statement and the point about the heirs preferences and chose to attack a straw man instead and thus make a useless and stupid comment as a result.  The reality is that since women live longer than their partners on average, they represent a larger proportion of single retired persons living alone in the community.  Hence Bill's comment about "many old ladies" living in 2 million dollar homes instead of just saying many old people.



Oh dear, FxTrader, didn't you read my following post which included the comment to you:


> Despite my facetious comment above, you raise a good point about the family wanting to keep the exempt family home with as high a value as possible.



?
I was just having a dig at the ridiculous accusations of sexism and misogyny that are flying in all directions at present.  I actually said you made a good point and went on to further agree on various points.




> You can "accuse" me of nothing other than commenting on generally poor financial literacy of the majority of people in our community including the elderly.



As I said, it was facetious. Couldn't agree more about the woeful lack of financial literacy, and not just amongst the elderly.



> Unfortunately the financial illiteracy of many elderly people is exploited by unscrupulous conman in various ways using various methods (well documented on this forum) most of which rely on trusting someone else to manage one's life savings.  Many of these people are then forced to draw an age pension as a safety net.



Yes.  And I have made many posts in various threads suggesting it's never too late to acquire some financial nous. 



> On one hand you think it nonsensical to live in a large expensive home and draw a pension, on the other hand it's ageism or sexism to suggest that perhaps that's because they are not financially literate enough to know they have better options or their heirs don't trust them to manage their own financial affairs.  Why not pause and look at context before shooting from the hip and making asinine accusations.



Likewise, dear FxTrader, recognise a facetious comment when it occurs.  I value your observations always and could wish that you contributed more often to more threads.



Macquack said:


> Care to explain your personal situation so we can put your comments in context?
> 
> Expecting elderly people to work for youth wages, you must be kidding?



I thought so too, but I suspect Magoo is actually serious.


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## FlyingFox (21 October 2012)

I have been reading the last few posts on this thread and some great points are raised. 

Firstly this is my first post. Secondly I may not have the wisdom of many of the members here (and I am not calling you old farts by that  ) .

The pension issue aside, and it is an issue because: 

1) Many people have treated their houses as an asset over the years but "hoarding" now that they need it in retirement.
2) This is not only becoming a burden on tax payers but also on the young as housing stock in these million dollar suburbs does not move and because of that inflates prices.

I would like to address some of the comments made in the posts before.

1) Something will not continue to happen just because it has in the past. Look what happened to housing in Japan. 23 years ago, the world was a very different place. Australia was a very different place and wages increased significantly with time (more on this later). Do you expect house prices to continue rising? Who will buy these? If 15% of households have incomes greater than 150K, how come a much larger proportion of the housing stock in major cities is priced so high relatively speaking?

Between my wife and I, we earn a decent income and we have no kids. We have saved quite a bit but looking around we can't buy a newish house close (within 30 mins train ride) of the city (Melbourne) without a > 500K mortgage. A colleague of mine just bought a house in Oakleigh for over 700,000 and he will be doing reno's before he moves in. That is not affordable! 


2) Wages cannot continue to rise well not at the pace to keep up with or get up to housing. With the current value of the AUS dollar we are perhaps the most uncompetitive country in the world. Do you think wages can increase in the current environment? Even if the dollar drops, relatively speaking which other country has minimum wages of US$20 /hr?

3) This is putting strains on socio-economic conditions. People are moving further out with big commutes. Delay having kids. Not having kids.

The rent vs buy debate also depends on where you want to live. Closer to the city then rent is cheaper (just comparing rent vs interest) than buying assuming you save as well (easy to do the math). As you go further out, then buying is cheaper. 

I am not saying property investment is bad. My dad and my father in-law have made a killing out of it but neither of them is looking to expand their portfolios because they realize that returns are **** and capital gains are very uncertain.

If people are treating their house as assets and pouring everything into it to pay off a mortgage (hopefully) before they retire, then it should be treated as an asset. Personally, I don't want to be paying off a (very modest) house at 60 that I bought 30 years earlier.


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## CanOz (21 October 2012)

Mrmagoo said:


> As they're old and frail they'll be less productive. For example, a $8 an hour award wage for a 70 year old will allow employers to hire them it will also allows households to employ, for example and elderly house cleaner or baby sitter, so that tax payer do not need to increase the pension, businesses get cheap workers and the pensioner more money this is in much in the same way that youth are employed.
> 
> Once these people are forced to sell their homes over a certain value (or lose the pension) they'll have even more money available, no need for the pension and everyone in society will benefit.
> 
> I think the above is preferable to being unable to work and having to live off an unsuitably small pension.





Its Starcraftmazter!!!!


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## Mrmagoo (21 October 2012)

moXJO said:


> Are you serious ??




I doubt such brilliance would ever occur. This society is 100% catering to old people and I can't see that changing


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## CanOz (21 October 2012)

It occurs in China and other Asian countries where there is no pension and the earlier generations have not had a chance to bring themselves out of poverty. Most housekeepers are older women, ours is over 60. Most of the hard labor gets done by older men on the building sites, the younger lads won't have it.

It is sad though. You'd think after 40 years of work you could take a break and enjoy life.

CanOz


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## Ves (21 October 2012)

CanOz said:


> Its Starcraftmazter!!!!



LOL - where did he even disappear to??


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## wayneL (21 October 2012)

Ves said:


> LOL - where did he even disappear to??




I believe he emigrated to North Korea.



Starcraftmazter said:


> ...I would rather live in North Korea... at least NK doesn't have genetically modified food.


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## young-gun (21 October 2012)

CanOz said:


> Its Starcraftmazter!!!!




I don't think SCM would take too kindly to that assumption/comparison Canoz Magoo just rattles off troll-like non-sense and outlandish/weird ideas that would never work or be implemented(not necessarily referring to the above). 

At least scm was an educated troll.


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## DocK (21 October 2012)

CanOz said:


> Its Starcraftmazter!!!!




That's exactly what I thought too!

On a more serious note - although I agree in principle with the PPR  being included (or at least over a certain value) in means testing for the age pension - there is also the human/emotional factor to consider.

My mother is 82, receives a small part pension and is mainly self-funded.  She is a widow living in the same 4 bedroom house that has been her home for over 30 years.  It is too large for her, is surplus to her needs and if sold for a more suitably sized (and easier for her to maintain) home would no doubt result in her becoming ineligible for any age pension.  Most of the prior arguments are in favour of just such a course, and in theory I agree that downsizing would make perfect sense.  However....  What makes sense intellectually is not always what can actually be considered emotionally.  My mother's home was a fairly modest home when built over 30 years ago, in what used to be an outer suburb of Brisbane.  Due to no fault of her own, it is now in a sought-after suburb and has increased in value substantially.  She is emotionally attached to it - it has been her home for many years, she has lived and loved in it, cared for it, spent way too many hours tending its gardens, and every nook and cranny holds precious memories for her.   She has developed excellent relationships with her neighbours (important when you are an elderly lady living on your own) and has been visiting the same medical centre, dentist etc for years.  It would be a very brave government that would tell her, and her family, that despite having paid taxes all her (and my father's) working lives and  having lived within their means in order to pay off a mortgage, raise future tax-payers, and save enough to be almost fully self-funded, that because she's drawing a part pension she must either sell her home or give up the part pension she receives.  There would be an outcry the likes of which I can only imagine.   It would be absolute political suicide.  And to be honest, although I agree it makes perfectly logical sense to means-test the family home, I don't think it's actually _fair_ in a lot of cases.

Another reason my mother has given for clinging to the family home is that she wants to make sure she has enough funds available to fund the retirement villa/nursing home of her choosing, should the need arise.  As Julia has pointed out the entire retirement village/nursing home system is tantamount to being a rip-off for the elderly and imo this area needs a drastic overhaul before any govt could consider a move against the ppr exemption for pension eligibility.


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## Julia (21 October 2012)

> It would be a very brave government that would tell her, and her family, that despite having paid taxes all her (and my father's) working lives and having lived within their means in order to pay off a mortgage, raise future tax-payers, and save enough to be almost fully self-funded, that because she's drawing a part pension she must either sell her home or give up the part pension she receives.



You've eloquently described the practical v the emotional/psychological considerations of this debate, Dock.

I think most self funded (or almost self funded) retirees are very conscious that it's their own effort over many years which has put them in a position of independence in retirement.  It really irks me when I hear someone who has wasted money all their life, say "oh, you're so lucky to have .........".  Um, luck had nothing to do with it.

My late father was immensely attached to his quite large house and larger garden where he had about fifty fruit trees.  The care of these trees was the main focus of his life, plus the sense of independence in being able to do what he liked when he liked.   A major medical event meant he had to go to a nursing home.  He absolutely hated it and committed suicide after only a few months there.


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## DocK (21 October 2012)

Julia said:


> You've eloquently described the practical v the emotional/psychological considerations of this debate, Dock.
> 
> I think most self funded (or almost self funded) retirees are very conscious that it's their own effort over many years which has put them in a position of independence in retirement.  It really irks me when I hear someone who has wasted money all their life, say "oh, you're so lucky to have .........".  Um, luck had nothing to do with it.
> 
> My late father was immensely attached to his quite large house and larger garden where he had about fifty fruit trees.  The care of these trees was the main focus of his life, plus the sense of independence in being able to do what he liked when he liked.   A major medical event meant he had to go to a nursing home.  He absolutely hated it and committed suicide after only a few months there.




I do think that sometimes the younger generations can lose touch with the fact that pensioners are actually real people, who have lived full lives and mostly contributed to our society in one form or another, and are not just a burden on society that we'd be well shot of if given the opportunity.

The security and comfort older people can draw from living in their own homes can be difficult to empathise with if you've never actually owned your own home, or lived in one place for a lengthy period of time.  It's probably equally difficult for youngsters to recognise the value older folk place on their independence, or that looking after one's home can provide a purpose in life, as in your late father's case.  Like most things in life, it's easy to suggest changes that affect older people if such changes are far-distant from oneself.


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## Mrmagoo (21 October 2012)

DocK said:


> I do think that sometimes the younger generations can lose touch with the fact that pensioners are actually real people, who have lived full lives and mostly contributed to our society in one form or another, and are not just a burden on society that we'd be well shot of if given the opportunity.
> 
> The security and comfort older people can draw from living in their own homes can be difficult to empathise with if you've never actually owned your own home, or lived in one place for a lengthy period of time.  It's probably equally difficult for youngsters to recognise the value older folk place on their independence, or that looking after one's home can provide a purpose in life, as in your late father's case.  Like most things in life, it's easy to suggest changes that affect older people if such changes are far-distant from oneself.




Nah.  According to the baby boomers they all worked so hard to get their houses I can't see how any will be depending on the pension as they're all self funded investment geniuses.

And they'll all been soooo wonderful to their kids, their kids will be falling over to help them out in retirement.


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## Tink (21 October 2012)

Excellent posts Julia and DocK, agree.


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## explod (21 October 2012)

Mrmagoo said:


> As they're currently doing, flood the market with highrise units. Young people move into these units and out of houses, creating much less demand.
> 
> Bet your bottom dollar all the oldies will do whatever they can to stop this happening but it already is basically everywhere apart from Sydney..




Your attitude disgusts me to the core ole Pal.

Your post put up some 25 hours ago is the last one that hinted at anything to do with the topic of Property Price Direction in my view.  Had just thought I would pop in and see how property has been going over the weekend but as has become typical on ASF of late there is little if any content any more.   There used to be some mods on the ball.

Apart from the Gobbledygook rubbish I post or stirring wayneL, I think Joe you have some problems.


----------



## Mrmagoo (21 October 2012)

explod said:


> Your attitude disgusts me to the core ole Pal.
> 
> Your post put up some 25 hours ago is the last one that hinted at anything to do with the topic of Property Price Direction in my view.  Had just thought I would pop in and see how property has been going over the weekend but as has become typical on ASF of late there is little if any content any more.   There used to be some mods on the ball.
> 
> Apart from the Gobbledygook rubbish I post or stirring wayneL, I think Joe you have some problems.




I fail to see how the current situation is anything but a generational stand off. 

The over whelming majority of oldies have and will benefit enormously from ever increasing house prices. While the young overwhelmingly face disproportionately high levels of debt for the  rest of their lives or additional to the unattractive prospect of ever increasing rents.

The alternative is to increase the supply of new high-rise dwellings as these can be located close to city centers. Who do you think might oppose such developments ?


----------



## explod (21 October 2012)

Mrmagoo said:


> I fail to see how the current situation is anything but a generational stand off.
> 
> The over whelming majority of oldies have and will benefit enormously from ever increasing house prices. While the young overwhelmingly face disproportionately high levels of debt for the  rest of their lives or additional to the unattractive prospect of ever increasing rents.
> 
> The alternative is to increase the supply of new high-rise dwellings as these can be located close to city centers. Who do you think might oppose such developments ?




You are still not dealing with the subject *of the thread*.  The solution would be to locate or start a thread on such demographic and or social issues.  Take your case elsewhere champ.

Where's Robots with the weekly sales and spring outlook on auctions etc..


----------



## Mrmagoo (21 October 2012)

explod said:


> You are still not dealing with the subject *of the thread*.  The solution would be to locate or start a thread on such demographic and or social issues.  Take your case elsewhere champ.
> 
> Where's Robots with the weekly sales and spring outlook on auctions etc..




So you think demographic trends have nothing to do with the future of Australian house prices ?


----------



## explod (21 October 2012)

Mrmagoo said:


> So you think demographic trends have nothing to do with the future of Australian house prices ?




I do not say that at all, I worked in the game for years.   What I am saying is that this thread is about immediate property prices so that one can decide whether its a good time buy etc.  What may or may not happen as a result of pensions etc. down the track, has little relevance for the general audience here.

Your arguments and views are to be welcomed (not that I agree with them) and the subject has enormous merit, but not on this particular thread in my view.


----------



## CanOz (22 October 2012)

Agree with explod here....if you want to discuss the old age pension and it's effects on property then take it to another thread.....

CanOz


----------



## craft (22 October 2012)

Joe Blow said:


> Please feel free to post your research, analysis, relevant information or opinions on Australian property in this new thread.







explod said:


> What I am saying is that this thread is *about immediate property prices *so that one can decide whether its a good time buy etc.  What may or may not happen as a result of pensions etc. down the track, has little relevance for the general audience here.






CanOz said:


> Agree with explod here....if you want to discuss the old age pension and *it's effects on property *then take it to another thread.....
> CanOz





???


----------



## Tink (22 October 2012)

I dont know why you are picking on the old folk, MrMagoo, plenty of young folk in the CBD and on the outskirts.

I do agree with explod.


----------



## explod (22 October 2012)

craft said:


> ???




Fair points, 

but was being carried a bit far the last day or so in my view.


----------



## Julia (22 October 2012)

explod said:


> What I am saying is that this thread is about immediate property prices so that one can decide whether its a good time buy etc.  What may or may not happen as a result of pensions etc. down the track, has little relevance for the general audience here.






CanOz said:


> Agree with explod here....if you want to discuss the old age pension and it's effects on property then take it to another thread.....
> 
> CanOz



I don't think you decide whether it's a good time to buy on the basis of what will happen with property in the next year, or I hope not.  So if changes are made to tax treatment of PPOR (which looks increasingly likely), it seems pretty reasonable to me to consider the implications of that.


----------



## Vixs (22 October 2012)

Mrmagoo said:


> ...The over whelming majority of oldies have and will benefit enormously from ever increasing house prices. While the young overwhelmingly face disproportionately high levels of debt for the  rest of their lives or additional to the unattractive prospect of ever increasing rents....




First off, there is absolutely heaps on offer suitable for young couples and families for 3-400k in Brisbane and outlying suburbs serviced by trains. That's a mortgage that's done and dusted by the time the kids are in high school and you're in your mid 30s. I used to feel that the levels of debt were scary, but it's only relative to job security. If you feel like you'll still have a job in 10 years then a mortgage isn't so scary.

EDIT: Just to be clear the only thing written directly in response to waht was quoted is that ^^^^ what is below is directed at the 'keep it on topic' people.

I apologise for the fact that a large part of my earlier post was to do with the pension, retirement and superannuation, but if you can't see how those are massive contributors to the future of Australian property prices in Australia that's on you, not me. I wouldn't call them pivotal, but I believe they're a major foundation.

If that's all a bit too far from the point still, here's something clearer. With plummeting interest rates, capital growth in equity markets still a scary thing to bet on and no certainty that high-yield darlings will maintain their dividends, a lot of self-funded retirees are likely to face rapidly draining super balances. Sitting on a valuable but not income generating asset that becomes a higher and higher percentage of a retirees net wealth will not make sense.

I believe that many will need to, or choose to, sell. If the global economic outlook doesn't get some of the monkeys off its back (Greece, Spain, Chinese growth if it's a slow news day in Europe, American recovery etc etc etc), job security will fall and the buyers will not be able to meet the sellers. I think there will be stagflation in run-of-the-mill suburbs with nothing to differentiate them.

It's my opinion however, that for those WITH job security and within serviceability levels will continue to pay a premium for places with the attributes they want. You can always add another bathroom and fix the kitchen, but you can't always get that house you want in the same suburb as the school you want to send your kids to and a short commute to work.

If that doesn't sound new and exciting Explod, that's because it's not. In a thread about prices you know as well as I do that there are 3 options - up, down or nowhere. 

If you don't want to think about the why, just flip a coin.


----------



## maffu (22 October 2012)

prawn_86 said:


> Quick back of the envelope shows it to be very similar, with the home owner having an assett in the end, and the renter having nothing if they are not saving anything additional.
> 
> Interesting




I have done a bunch of spreadsheets years ago comparing buying vs renting.
Generally in a strict buy vs rent and invest the spare cash flow In stocks scenario buying came out on top.
Rent and invest in stocks using margin loans was a better option again.

Overall there are lots of scenarios and variables to play around with.
I was using historical asset returns in the calculations. Despite stocks having a historically higher return compared to property, the high leverage of property generally result end in higher returns. That is why only when margin loans for the renting scenario were used did it turn out better.

Discipline for most would make the rent and invest option hard. Its easy to upgrade a rental, or spend the spare cash instead of investing.


----------



## maffu (22 October 2012)

DocK said:


> That's exactly what I thought too!
> 
> On a more serious note - although I agree in principle with the PPR  being included (or at least over a certain value) in means testing for the age pension - there is also the human/emotional factor to consider.
> 
> ...



I imagine that if a government was ever brave enough to include the family home in means testing for the pension, we would see an insurance firm or financial services firm start a sale and lease back product for pensioners.
Sell your house, have a guaranteed rental tenancy for life. You get the lump sum cash, but have to pay rent.


----------



## explod (23 October 2012)

Julia said:


> I don't think you decide whether it's a good time to buy on the basis of what will happen with property in the next year, or I hope not.  So if changes are made to tax treatment of PPOR (which looks increasingly likely), it seems pretty reasonable to me to consider the implications of that.




Agree Julia, but we do seem to have moved away from the news around Australia of auction and sale trends which I found of value.

And as much as I disagreed with ole Botty, (someone will call me ole splod one day ) it stimulated very lively debate on the day to day issues at the coal face of real estate.

As property prices were rising there was a lot of enthusiasm, does this mean perhaps property is collapsing and no one wants to push that horror.


----------



## white_goodman (23 October 2012)

explod said:


> Agree Julia, but we do seem to have moved away from the news around Australia of auction and sale trends which I found of value.
> 
> And as much as I disagreed with ole Botty, (someone will call me ole splod one day ) it stimulated very lively debate on the day to day issues at the coal face of real estate.
> 
> As property prices were rising there was a lot of enthusiasm, does this mean perhaps property is collapsing and no one wants to push that horror.




i find talking about longer term economic trends and drivers much more entertaining and valuable to the discussion as opposed to anecdotal sale evidence.., its a property thread its all applicable, maby follow the same advice and start your own 'Anecdotal sales/auction evidence thread'

property prices are relatively flat in net terms, down slightly in real terms in aggregate. Property could well and truly remain flat for many many years, so weekly auction results arent that pertinent to the discussion as we may not be in boom boom or doom and gloom markets


----------



## young-gun (23 October 2012)

explod said:


> As property prices were rising there was a lot of enthusiasm, does this mean perhaps property is collapsing and no one wants to push that horror.




Seems to be the case explod. I know 2 RE agents that run their own show. Was talking to one a couple of weeks ago and she said things are terrible. She largely works with repeat investors and foreign investors that don't want to make the trip to sell or purchase. She was saying that investors just simply won't come to grips with the fact they need to reduce prices by 10's of thousands to sell their places. Because of this nothing is moving, everything is just stagnating(in the areas she deals in anyway). She was saying it's getting slower and slower, and doesn't think it will get better any time soon(at least 2-3 years in her opinion).

Perhaps this mentality is a big reason why prices haven't really started to slide hard and fast yet. Investors simply refusing to sell in a depressed market, thinking, hoping, praying that things will head on up again soon.

I wonder what the tipping point would be for the majority. Surely once prices start to fall further investors will want to lock in gains while they can, and get out before things get too outta hand. First home owners heading into negative equity cutting their losses and getting out before they get really stuck. 

There seems to be a serious lack of direction with the housing market at the moment. Just sitting in limbo almost.


----------



## CanOz (23 October 2012)

Property investors don't cut and run easy. They're in for a long haul so a it would take more than a business cycle blip to scare them off. 

Where were your RE mates from YG?

CanOz


----------



## young-gun (23 October 2012)

CanOz said:


> Property investors don't cut and run easy. They're in for a long haul so a it would take more than a business cycle blip to scare them off.
> 
> Where were your RE mates from YG?
> 
> CanOz




Both Brisbane. And yeah alot of inv. are long haul, but they would only approach her if they were ready/thinking about selling. Needless to say she is starting to stress as she isn't making anywhere near the money she was use to. I guess the point she was making is that if they want to sell, they need to be prepared to discount heavily from their original expectations.

I was also talking to a commercial agent the other day(I don't know him personally) and was chatting about how that area was going. He said in the peak of boom time he was getting about 40 calls a day re industrial/commercial property, now he's lucky to get 4 a day. Prices have plateaued but don't seem to be dropping much. There is so much stock on the market in an area I am looking at for both lease and sale it's crazy. I would have thought that would have had a lot more downward pressure on prices. He said I could expect a brand new 250sq shed to sit for upto 6 months before leasing.


----------



## CanOz (23 October 2012)

young-gun said:


> Both Brisbane. And yeah alot of inv. are long haul, but they would only approach her if they were ready/thinking about selling. Needless to say she is starting to stress as she isn't making anywhere near the money she was use to. I guess the point she was making is that if they want to sell, they need to be prepared to discount heavily from their original expectations.
> 
> I was also talking to a commercial agent the other day(I don't know him personally) and was chatting about how that area was going. He said in the peak of boom time he was getting about 40 calls a day re industrial/commercial property, now he's lucky to get 4 a day. Prices have plateaued but don't seem to be dropping much. There is so much stock on the market in an area I am looking at for both lease and sale it's crazy. I would have thought that would have had a lot more downward pressure on prices. He said I could expect a brand new 250sq shed to sit for upto 6 months before leasing.




I was also talking to a mate in Brisbane that has several investment properties and a demolition business. He was saying that its a buyers market no doubt! He was saying some big developments were selling at almost half their COST.


----------



## Vixs (23 October 2012)

explod said:


> As property prices were rising there was a lot of enthusiasm, does this mean perhaps property is collapsing and no one wants to push that horror.




I'd bet that plays a part mate. There's no light in the immediate future as far as can be seen, so the good news is all in the future, yet to be written.

It definitely feels a lot better planning and pondering about a brighter future than a sh*tty tomorrow. I do know what you mean about the excitement and stimulation of the short term results and outcomes, however I think there has been some gloom descend and the conversation reflects that.


----------



## Julia (23 October 2012)

I've previously commented on properties in my area which have been for sale since the peak of the bubble, many bought with 100% borrowed money.
Just noticed today that one of these, for which the asking price was $550,000,  has now been reduced to $510,000.
That's a substantial drop but I think it will have to fall further to achieve a sale.
This just reinforces the trend, at least here, where the agents are doing it very tough indeed.

I also noticed a couple of properties which went up for sale a few months agowith a sign outside for www.owner.com.au, in an attempt to avoid paying agent commission, have now succumbed to employing an agent.


----------



## Tink (24 October 2012)

Yes explod, whatever happened to Robots, Trainspotter, and the others that used to pop in here...
Market Snapshot
http://apm.domain.com.au/Research/AuctionResults/

Well, Spring is here, the time of year when buyers are out and about...
As I have said, I know a few that have bought.
Footscray, North Melbourne, Kensington etc have all taken off the last few years.
Its not my side of town, but bargains were to be found

My opinion.


----------



## damien275x (24 October 2012)

Yes spring has arrived and the sales aren't so great. Week one they were saying the Melb clearance rate was 66%, then steady at 65, and a week later Ross Greenwood was on channel 9 saying they were a "strong 62%" What a clown.

Also correct me if I am wrong but when you borrow money you are generally at the mercy of the interest rate for the entire loan (25 to 30 years) so why are "Low interest rates" a good time to buy? I can't see any point in history were they remain low for over 10 years without prices going nowhere! 

From 2008 to 2012 prices are about the same, and my wage goes up 3%ish give or take per annum, so wages are catching up finally. But I still won't buy for a few years, they're blaming Europe at the moment but what about USA they are up **** creek too


----------



## white_goodman (24 October 2012)

can someone link me to that site which shows properties which have been discounted?

cheers


----------



## young-gun (24 October 2012)

white_goodman said:


> can someone link me to that site which shows properties which have been discounted?
> 
> cheers




Miss Hale knows about it, I don't have it bookmarked. It's quite un-reliable though, and seems a bit sketchy. The time period and discounts get 'reset' for some reason quite often.


----------



## againsthegrain (24 October 2012)

```
http://www.refindhouseprices.com/
```

might be the one


----------



## white_goodman (24 October 2012)

againsthegrain said:


> ```
> http://www.refindhouseprices.com/
> ```
> 
> might be the one




cheers


----------



## MrBurns (24 October 2012)

Just had a good conversation with one who knows, the commercial market, in Melbourne at least, is on it's knees.........


----------



## Klogg (24 October 2012)

MrBurns said:


> Just had a good conversation with one who knows, the commercial market, in Melbourne at least, is on it's knees.........




I would think that with retail not being able to afford the rent, the yield will drop, and prices soon after...


----------



## CanOz (24 October 2012)

Klogg said:


> I would think that with retail not being able to afford the rent, the yield will drop, and prices soon after...




Would it not be more of a *lack of* commercial space *demand* driving prices lower?

CanOz


----------



## MrBurns (24 October 2012)

CanOz said:


> Would it not be more of a *lack of* commercial space *demand* driving prices lower?
> 
> CanOz




There are tenants out there but it's a lack of finance and general disinterest.

Private financiers are playing hard ball with existing clients but banks are being tolerant ....for now.


----------



## Miss Hale (24 October 2012)

againsthegrain said:


> ```
> http://www.refindhouseprices.com/
> ```
> 
> might be the one




Yes, that's the one I use.  It is unreliable though in that it crashes from time to time and all the historical data is lost and it has to start from scratch again.  If I was a conspiracy theorist I would say it gets hacked.


----------



## againsthegrain (25 October 2012)

Miss Hale said:


> Yes, that's the one I use.  It is unreliable though in that it crashes from time to time and all the historical data is lost and it has to start from scratch again.  If I was a conspiracy theorist I would say it gets hacked.





or maybye its just on a cheap host that crashes alot and loses data which is not backed up on regular basis so they often have to start from a much older database version or scratch


----------



## Ijustnewit (1 November 2012)

Tas house prices "worst in years"

http://www.abc.net.au/news/2012-11-01/tas-house-prices-27worst-in-years27/4346482?section=tas


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## young-gun (1 November 2012)

properties are expensive, investment returns are poor, very poor. it would need to correct itself a long way before I consider anything


----------



## baby_swallow (6 November 2012)

Just before rate announcement, housing spruikers cry poor.
(trying to influence RBA decision???).

In SMH today......

*House prices continue to struggle*

_The enticement of  the lowest interest rates since the GFC has done little to help house prices, official data shows.
The Australian house price index rose by just 0.3 per cent in the third quarter, following a 0.5 per cent rise in the second quarter, according to the Australian Bureau of Statistics. Over the year to September, they grew 0.3 per cent following a 2.1 per cent drop.
Economists polled by Bloomberg expected a 1 per cent rise in the quarter, amid firmer auction clearance rates and lower interest rates. In the year to September, analysts forecast a 0.8 per cent rise._


Read more: http://www.smh.com.au/business/the-...to-struggle-20121106-28v70.html#ixzz2BP133aCn

PS:
I thought we are in a housing price bubble and it need to cool down to make it more affordable for  
homebuyers. But this article is saying otherwise. 
BTW, the recent change to the FHOG 1/10/2012 (ie: $15000 grant & free stamp duty for new homes in NSW), the builders and developers just increased the prices of new homes by more than $30K in the past few weeks.


----------



## young-gun (6 November 2012)

baby_swallow said:


> PS:
> I thought we are in a housing price bubble and it need to cool down to make it more affordable for
> homebuyers. But this article is saying otherwise.
> BTW, the recent change to the FHOG 1/10/2012 (ie: $15000 grant & free stamp duty for new homes in NSW), the builders and developers just increased the prices of new homes by more than $30K in the past few weeks.




If that's true they are only shooting themselves in the foot. 

My wife works for in the recruitment industry, never before has she seen so many unemployed people coming through the office doors. Not that it seems to be reflected in the unemployment numbers, then again that may just be due to ABS admittedly not calculating very accurately. The construction industry appears to be slowing rapidly from what I can see here in brisbane. Our whole company has a strict over-time ban in place.

Perhaps unemployment is just the flavour of the month for media outlets. At the end of the day a rate cut signals a struggling economy. The perfect storm is still brewing, mining boom slowdown, sluggish global economy, unemployment although not evident in the figures appears to be on the rise just by talking to a lot of people. The end of problems is endless.

However I am meeting with a guy soon who claims he has bought 3 positively geared properties in the past 12 months, so very interested in speaking to him. There may still be some opportunities if you can buy at substantially reduced prices.


----------



## white_goodman (6 November 2012)

young-gun said:


> However I am meeting with a guy soon who claims he has bought 3 positively geared properties in the past 12 months, so very interested in speaking to him. There may still be some opportunities if you can buy at substantially reduced prices.





problem is under that scenario what would the lending standards be.. need to be heavy in cash


----------



## young-gun (6 November 2012)

white_goodman said:


> problem is under that scenario what would the lending standards be.. need to be heavy in cash




Not necesarily. Well to buy 3 in 12 months yeah. Im unsure of the loan requirements, prob a 20% deposit on IP's. Once I meet with him and crunch the numbers and make sure he is achieving what he claims I'll go speak to my mortgage broker and see what the story is. I'm still bearish on property, but if you can pick something up at 20-30% off then if things do crash it won't fall as hard as everything else. I also wouldn't have over-payed.

If prices slide enough the rental market should start to heat up. That's what's happening in the states atm.


----------



## white_goodman (6 November 2012)

young-gun said:


> Not necesarily. Well to buy 3 in 12 months yeah. Im unsure of the loan requirements, prob a 20% deposit on IP's. Once I meet with him and crunch the numbers and make sure he is achieving what he claims I'll go speak to my mortgage broker and see what the story is. I'm still bearish on property, but if you can pick something up at 20-30% off then if things do crash it won't fall as hard as everything else. I also wouldn't have over-payed.
> 
> If prices slide enough the rental market should start to heat up. That's what's happening in the states atm.




what do you think that state of bank balance sheets under a scenario wear property falls 30%, what do you think happens to the bank ratios in that situation with new basel lll coming in? if your talking a one off property at discount where lending levels are essentially the same as present then yes id agree. (which i think is what ur saying)

The bear scenario of prices crashing and people being able to buy up at firesale with unlimited bank finance is foolish at best.

There were plenty of people that could have bought US property at the crash prices under the pre-crash lending criteria, the willingness and ability to lend by banks was not there.

imo we could be at a new elevated new normal when it comes to median income/median prices... cash flow will be the new meme in resi going forward.. however the bear case is still strong relative to other assets.


----------



## young-gun (6 November 2012)

white_goodman said:


> what do you think that state of bank balance sheets under a scenario wear property falls 30%, what do you think happens to the bank ratios in that situation with new basel lll coming in? if your talking a one off property at discount where lending levels are essentially the same as present then yes id agree. (which i think is what ur saying)




Yes, I am referring to buying a heavily discounted property in todays market. As you say, trying to buy in a crash with a bunch of banks who have toxic balance sheets would no doubt be much harder to gather finance.



> The bear scenario of prices crashing and people being able to buy up at firesale with unlimited bank finance is foolish at best.




For investors perhaps, but for first home owners I don't believe it to be foolish. Prices are over-cooked, there's no doubt about it. Saving a deposit and waiting for things to calm down(after a sharp slide), and waiting for normality to return in lending practises(ie when they get bailed out) would be a good time to get in. _*If*_ the scenario were to paly out like that.



> imo we could be at a new elevated new normal when it comes to median income/median prices... cash flow will be the new meme in resi going forward.. however the bear case is still strong relative to other assets.




That's just the problem. So many people have jumped on the RE bandwagon that they don't even realise they are losing out. The amount of investors in negative cash-flow, and that have bought property without truly understanding the figures imo is astronomical. Hence the bubble. When mum and dads can just buy a house somewhere and do well out of it without thinking too much, I guess that's a sign of trouble. Not that that is happening now.

What happened to number-cruncher, he was always a big fan of negative gearing


----------



## white_goodman (6 November 2012)

yeh i agree on all that you say there, fhb's/investors might inevitably get the bottom of the market as lending would only come in once it had sufficiently bottomed out, not catching a knife.. ie 1-5 years post crash


----------



## trainspotter (6 November 2012)

Tink said:


> Yes explod, whatever happened to Robots, Trainspotter, and the others that used to pop in here...
> Market Snapshot
> http://apm.domain.com.au/Research/AuctionResults/
> 
> ...




Got tired of all the naysayers squawking on about how the sky is falling. Residential home market *has* taken a hit. (In CERTAIN areas) TICK. Prediction was between 5 - 7 per cent NATIONALLY on 8 capital city average and NOT the 40% Keen followers were drivelling on about. TICK. I think I also mentioned the suburbs and cities with pie charts and demographics etc ad infinitum. TICK. Bank lending criteria tightening. TICK. Time to move into commercial property. TICK. Secure leases on BIG tin sheds with low overheads. TICK. Explained how banks would move the goal posts on developers. TICK. Went into great detail as to WHY the builders were raping the boom cycle. TICK. Enucleated to the masses when TV productions start bringing back shows like HOT PROPERTY and THE BLOCK the market is in need of a push. TICK. Gave ACTUAL examples of how much capital is required to play the real estate game and how BIG your nads need to be. TICK. It's a long term game at the moment and not a FLIPPING market. TICK. Blah yadda blah.

I have left a WHOLE bunch of stuff out that was wasted on the great unwashed masses.

Keep smiling everybody 

P.S. This post was not intended nor needs to be taken as an irruption on you Tink.


----------



## white_goodman (6 November 2012)

trainspotter said:


> Got tired of all the naysayers squawking on about how the sky is falling. Residential home market *has* taken a hit. (In CERTAIN areas) TICK. Prediction was between 5 - 7 per cent NATIONALLY on 8 capital city average and NOT the 40% Keen followers were drivelling on about. TICK. I think I also mentioned the suburbs and cities with pie charts and demographics etc ad infinitum. TICK. Bank lending criteria tightening. TICK. Time to move into commercial property. TICK. Secure leases on BIG tin sheds with low overheads. TICK. Explained how banks would move the goal posts on developers. TICK. Went into great detail as to WHY the builders were raping the boom cycle. TICK. Enucleated to the masses when TV productions start bringing back shows like HOT PROPERTY and THE BLOCK the market is in need of a push. TICK. Gave ACTUAL examples of how much capital is required to play the real estate game and how BIG your nads need to be. TICK. It's a long term game at the moment and not a FLIPPING market. TICK. Blah yadda blah.
> 
> I have left a WHOLE bunch of stuff out that was wasted on the great unwashed masses.
> 
> ...




in fairness to Keen he gave a timeline of a decade for that to pan out, and also his own arrogance doesnt allow him to see scenarios where he is incorrect... ie hes an economist.


----------



## trainspotter (6 November 2012)

young-gun said:


> I don't think SCM would take too kindly to that assumption/comparison Canoz Magoo just rattles off troll-like non-sense and outlandish/weird ideas that would never work or be implemented(not necessarily referring to the above).
> 
> At least scm was an educated troll.




An engineer in fact or so he told us, the best in the land bar none.


----------



## KurwaJegoMac (6 November 2012)

Welcome back Trainspotter  

Hopefully you've recharged the batteries for the next round. Looks like you've kicked off with a ripper.


----------



## trainspotter (6 November 2012)

white_goodman said:


> in fairness to Keen he gave a timeline of a decade for that to pan out, and also his own arrogance doesnt allow him to see scenarios where he is incorrect... ie hes an economist.




Ummm NOPE .... He bet Rory Robertson and no mention of a decade as the time line. Based his figures on the Japan slump I believe? 15 years of data and Japanese economics at the time is nothing like what we have now. He even sold his own house for fear of losing 40% etc. He wore a T shirt emblazoned with "I was hopelessly wrong on house prices! Ask me how." Agree on the economist barb. 2 part bet with the latter to be formed. How long has it been now? A mere 3 years? Could be possible but it would have to be something catastrophic to get there.


----------



## McLovin (6 November 2012)

trainspotter said:


> Ummm NOPE .... He bet Rory Robertson and no mention of a decade as the time line.




There was.



> Rory: I think some people here probably came today to hear about why house prices are going to fall 40 percent, so that’s what you’re most famous for at this stage. So what I was going to do, in the spirit of competition or whatever, Steve’s a betting man, he sold his house.. so what I would say is if, I think it was 40 percent on average across Australia, is that what it was?
> 
> Steve: Yeah, but over a ten to fifteen year period mate, so…
> 
> ...


----------



## trainspotter (6 November 2012)

McLovin said:


> There was.




OK OK OK ... It has only been 3 years and Keen based his prediction on Japans data over a 15 year period which is why I posted this 







> " 2 part bet. How long has it been now? A mere 3 years? Could be possible but it would have to be something catastrophic to get there. ."




If he was so keen (pardon the pun) WHY OH WHY did he sell his house?


----------



## Tink (7 November 2012)

Good to see you back, trainspotter


----------



## Uncle Festivus (7 November 2012)

trainspotter said:


> Got tired of all the naysayers squawking on about how the sky is falling. Residential home market *has* taken a hit. (In CERTAIN areas) TICK. Prediction was between 5 - 7 per cent NATIONALLY on 8 capital city average and NOT the 40% Keen followers were drivelling on about. TICK. I think I also mentioned the suburbs and cities with pie charts and demographics etc ad infinitum. TICK. Bank lending criteria tightening. TICK. Time to move into commercial property. TICK. Secure leases on BIG tin sheds with low overheads. TICK. Explained how banks would move the goal posts on developers. TICK. Went into great detail as to WHY the builders were raping the boom cycle. TICK. Enucleated to the masses when TV productions start bringing back shows like HOT PROPERTY and THE BLOCK the market is in need of a push. TICK. Gave ACTUAL examples of how much capital is required to play the real estate game and how BIG your nads need to be. TICK. It's a long term game at the moment and not a FLIPPING market. TICK. Blah yadda blah.
> 
> I have left a WHOLE bunch of stuff out that was wasted on the great unwashed masses.
> 
> ...




Seems like you have an uncontrollable TICK?

Don't you have trouble just walking?

"Gave ACTUAL examples of how much capital is required to play the real estate game and how BIG your nads need to be."


----------



## moXJO (7 November 2012)

young-gun said:


> If that's true they are only shooting themselves in the foot.
> 
> My wife works for in the recruitment industry, never before has she seen so many unemployed people coming through the office doors. Not that it seems to be reflected in the unemployment numbers, then again that may just be due to ABS admittedly not calculating very accurately. The construction industry appears to be slowing rapidly from what I can see here in brisbane. Our whole company has a strict over-time ban in place.
> 
> ...




Business is dying out there. Self-employed are doing it very tough and the whole:
 "Australians have never had it better" 
line I keep hearing being trotted out is a load of bull.
Unless the problem is addressed we will grind to a nasty halt no matter how much they fudge the figures imo. 

As for property round my way, I have seen a massive increase in stock hit the market. Good houses/commercial as well, not the usual dumps I normally see. No doubt we do get more on the market during spring till the end of the year.  But I will be doing some figures because some are in great positions to value add.
 Had a tenant move out of one property recently was $210, put the rent up $250 and had tenants a week later. It's a bit of a shthole too so I was surprised how quick it rented.
Very mixed signals out there.


----------



## trainspotter (8 November 2012)

Tink said:


> Good to see you back, trainspotter




Thanks Tink.  Has the sky fallen in yet? Certainly has been a slow leaking of air out of the balloon. Notice how our banks are still recording MEGA profits. Wonder why that is? Could it be that Mums and Dads are still paying their mortgages? Default rate is very low in Australalia. Have I mentioned this before?


----------



## KurwaJegoMac (8 November 2012)

trainspotter said:


> Thanks Tink.  Has the sky fallen in yet? Certainly has been a slow leaking of air out of the balloon. Notice how our banks are still recording MEGA profits. Wonder why that is? Could it be that Mums and Dads are still paying their mortgages? Default rate is very low in Australalia. Have I mentioned this before?




But but but the RE market crashed 40% in the US so it HAS to happen here! My friend's uncle's nephew's best friend was talking to some guy at the bus stop who said they saw a house go for 30% less than a year ago. Proves we're in a bubble and everything is crashing.

P.S. don't mention Canada nor make reference to auction results - especially the recent "Super Saturday" where 2400 properties went up for sale and clearance rates were 60%+. Never mind that it was the highest number of properties on auction in two years and still had a very healthy clearance rate. Guess it must be a whole bunch of naive people buying in an enviornment with low interest rates, low unemployment rates, low default rates and prices off peaks. You'd be mad to buy now!! 


Please note: Post may, or may not be filled with rampant sarcasm


----------



## Uncle Festivus (8 November 2012)

Unfortunatly, time is not on the property permabulls side. 

Do you really think that Oz property will even match just cash in the bank these days?

By any measure, the data is not conducive to even a lukewarm market, despite the usual banter of vested interests to talk it up.




Even the RBA is trying to keep the bubble alive with their own version of ZIRP. With interest rates this low, various government grants/loans/bribes and a highly accomodative tax structure trying to keep the bubble inflated, you wil have to, at some stage very soon, have to admit that the property game, as an investment, is over.

To make it interesting, any of you care to nominate any city/suburb to buy into and we'll see how it fairs over the next 12 months?


----------



## moXJO (8 November 2012)

This thread almost three years old


----------



## Aussiejeff (8 November 2012)

moXJO said:


> This thread almost three years old




"The future" is infinite.....


----------



## Modest (11 November 2012)

How's the next 12 - 24 months looking for the first home buyer? There is a lot of talk about property from an investors perspective I was wondering what you all think the future for someone like me who will be a first time home buyer within the next 24 months? 

From what I can see/read if things continue to go as they are prices should continue to drop...


----------



## matty77 (12 November 2012)

What ever happened to Robots?

I miss Robots!!


----------



## Izabarack (12 November 2012)

Modest said:


> How's the next 12 - 24 months looking for the first home buyer?
> From what I can see/read if things continue to go as they are prices should continue to drop...




I'm preparing a house for sale at the moment and have been doing some research and thinking in this area.   The recent activity has cleaned out the lowest priced houses in the market and the next level up is what is now being sold to the first home buyers.   First home buyers are paying what they believe to be a fair price for what they are getting, in the current market.   Essentially, I convinced the market has bottomed and has taken the first step up.   I do not believe there will be any huge recovery inside 3-4 years but the current move is a slight rise.   I want to use the value of the house for a couple of purposes and am not going to wait for a large up movement because I can do better in other areas.   I also notice stories about it being cheaper to buy than rent, at the moment.   I agree with the general sentiment although the comparison is somewhat over stated.   In Western Brissy, a typical house going for 250k is renting for just over 300 a week, suggesting rent return is better than capital gain in a property strategy.   In the end, it's a buyers market now and the time to pay off your own home couldn't be better, in my view.

Iza


----------



## sptrawler (12 November 2012)

My guess is negative gearing is going to be hit.
Reason for this, the government doesn't want to keep forking out on loss making investments.
The government has to prick the property bubble, or leave it to the reserve bank to keep dropping interest rates.
The problem with that is it increases the retirees dependence on pensions as their deposits fail, therefore costs the government more.
I don't think it will happen before the election, but I think it will happen. The one thing this government is showing is, unpopular and even disasterous decissions seem to go through o.k.


----------



## Julia (12 November 2012)

sptrawler said:


> My guess is negative gearing is going to be hit.



I don't think so, sptrawler.  They cannot risk losing that amount of political capital imo.



> The government has to prick the property bubble, or leave it to the reserve bank to keep dropping interest rates.



They love the RBA dropping rates.  Swannie claims (god knows on what basis) that interest rates are falling due to the government's magnificent fiscal management.
Some of the electorate may swallow the line that their mortgages are becoming cheaper due to government policy.

In reality, of course, the RBA drop rates in order to stimulate a flagging economy.



> The problem with that is it increases the retirees dependence on pensions as their deposits fail, therefore costs the government more.



When did you hear any politician show the slightest concern for how falling rates hit savers?
Almost never.  Any increase in claims on the age pension is far enough away for the present government to be quite unconcerned.



> I don't think it will happen before the election, but I think it will happen.



You might be quite right.  We'll see.


----------



## DB008 (13 November 2012)

Didn't negative gearing get dissolved (briefly) back in the 80's?
What happened then?

If there are less people investing in property (ie, developers, investors) = more (or same level of) demand, less supply, will prices increase even further?


----------



## white_goodman (13 November 2012)

DB008 said:


> Didn't negative gearing get dissolved (briefly) back in the 80's?
> What happened then?
> 
> If there are less people investing in property (ie, developers, investors) = more (or same level of) demand, less supply, will prices increase even further?




this would be true if investors were purchasing new homes in high number, 95%+ of investment properties are in second hand stock and do not add supply to the market


----------



## white_goodman (13 November 2012)

Julia said:


> I don't think so, sptrawler.  They cannot risk losing that amount of political capital imo.
> 
> 
> They love the RBA dropping rates.  Swannie claims (god knows on what basis) that interest rates are falling due to the government's magnificent fiscal management.
> Some of the electorate may swallow the line that their mortgages are becoming cheaper due to government policy.




there is an economic reason behind this, tighter govt budget policy and even expectations for tighter fiscal policy (surplus) gives the CB more wiggle room on the downside with the cash rate as inflation isnt as much of a concern.. [insert ISLM model]

if Swanny actually knew this id be highly surprised


----------



## Julia (13 November 2012)

white_goodman said:


> there is an economic reason behind this, tighter govt budget policy and even expectations for tighter fiscal policy (surplus) gives the CB more wiggle room on the downside with the cash rate as inflation isnt as much of a concern.. [insert ISLM model]
> 
> if Swanny actually knew this id be highly surprised



I think even Swanny probably gets that.  
Perhaps you'd like to comment about WHY inflation isn't as much of a concern?  i.e. why it's so low.


----------



## moXJO (14 November 2012)

DB008 said:


> Didn't negative gearing get dissolved (briefly) back in the 80's?
> What happened then?
> 
> If there are less people investing in property (ie, developers, investors) = more (or same level of) demand, less supply, will prices increase even further?




Rents went up and the public housing list blew out so bad they brought negative gearing back from memory. There was a huge uproar about it.


----------



## DB008 (14 November 2012)

moXJO said:


> Rents went up and the public housing list blew out so bad they brought negative gearing back from memory. There was a huge uproar about it.




Would similar out comes happen again, if they did it now?


----------



## moXJO (14 November 2012)

DB008 said:


> Would similar out comes happen again, if they did it now?




I'm not sure of the effect if any it would have now. The building industry is already in trouble so it could cause a massive shortfall of new homes being built and creating further price pressures later on similar to the hawk/keating era. 

I did skim an article about ditching negative gearing a while back that was fairly balanced (I will have a look for it). Most of the time it seems articles are written with extreme bias to one side or the other.

The one thing I remember clearly was the howling from landlords and renters alike. It was a pretty fast back flip as well.

I know a few people out there are saying rents didn't rise and supply was fine. Not to sure if these people were even around back then.



> It is well known to all Australians that in July 1985 the Hawke/Keating
> government changed negative gearing so that losses or expenses could not
> be claimed against rental or other income. The immediate result was a
> dampening of investment in rental accommodation and significant increases
> ...




http://www.treasury.gov.au/~/media/Treasury/Consultations%20and%20Reviews/2012/Business%20tax%20reform/Submissions/PDF/BMT_Submission.ashx


----------



## white_goodman (14 November 2012)

Julia said:


> I think even Swanny probably gets that.
> Perhaps you'd like to comment about WHY inflation isn't as much of a concern?  i.e. why it's so low.




thats going down the rabbit hole a bit, define inflation; CPI or some deflator... then theres new theory suggesting inflation is mainly caused by govt budgets and expectations of govt budgets (into perpetuity) more so then monetary excesses... PM me i can link you to a few papers if you're interested

a simple answer however is that IS curve dropped so much that we are nearing the Aussie version of ZIRP ie deleveraging and declines in growth isnt being offset/exceeded by the reduction in the cash rate


----------



## Uncle Festivus (15 November 2012)

DB008 said:


> Didn't negative gearing get dissolved (briefly) back in the 80's?
> What happened then?
> 
> If there are less people investing in property (ie, developers, investors) = more (or same level of) demand, less supply, will prices increase even further?




Abolition/reduction by itself would only exacerbate the current problems I would think?

They would need to make it vastly more attractive to build new dwellings, both private and developers, in conjunction with neg gearing/capital gains tax reform? I would even include the family home to be CGT applicable if sold within a time period eg 3 years etc, but nil after that?

Not much chance of any of that happening though.......it would put accountants out of business.....which wouldn't be a bad thing!


----------



## Mrmagoo (17 November 2012)

DB008 said:


> Would similar out comes happen again, if they did it now?




HILARIOUS ! Compared  to the current shortage of rental properties !

NEGATIVE GEARING - Keep it to increase the number of rental properties.

NEGATIVE GEARING - It isn't increasing them, but keep it anyway.

If what these property scammers were saying was true we'd have ample rental accomodation Australia wide due to the 5.5 BILLION invested in it each year.

How many FREAKING HOUSES COULD YOU BUILD FOR 5.5 BILLION EACH YEAR !!!!

Negative gearing is a scam, get rid of it.


----------



## Mrmagoo (17 November 2012)

Easy. Abolish negative gearing. Give a boost/incentive to build new for investment purposes.

1) Make it so debts due to property bankruptcy cannot be removed during a bankruptcy. i.e those scammers will have to pay it off for LIFE !!

2) Imprison all real estate agents and property agents for human rights abuses due to depriving an entire generation of adequate housing, i.e a human right.


----------



## Mrmagoo (17 November 2012)

moXJO said:


> Rents went up and the public housing list blew out so bad they brought negative gearing back from memory. There was a huge uproar about it.




Bullocks. Landlords charge every single cent they can regardless of their costs. What a larf.


----------



## Mr Z (17 November 2012)

Remove negative gearing and you will, at least in the short term, reduce the rental stock. When the price of property falls and the ROI equation makes sense again investors will return, until then there will be a shortage of rentals. Ultimately it should lead to lower property values and lower rent BUT it will take time. 

Ask Bob Hawk, he tried it and the predicable result happened, the backlash was so sharp and immediate that they reversed course QUICKLY. 

If it is to go, they need to phase it out, as in stop negative gearing on any new finance and allow the old stuff to be resolved over time. It is not exactly fair to chop investors off who have complied with a long standing law, they will be battling capital losses in the short term as it is should negative gearing for domestic investment property be removed.

Don't forget that negative gearing also applies to any entity making an investment in income producing assets, it is not a rule singularly applied to property investors. In fact you would need to specifically exempt them from the rule as apposed to removing the rule to avoid doing damage elsewhere.


----------



## Mr Z (17 November 2012)

Mrmagoo said:


> Easy. Abolish negative gearing. Give a boost/incentive to build new for investment purposes.
> 
> 1) Make it so debts due to property bankruptcy cannot be removed during a bankruptcy. i.e those scammers will have to pay it off for LIFE !!
> 
> 2) Imprison all real estate agents and property agents for human rights abuses due to depriving an entire generation of adequate housing, i.e a human right.




LOL... yeah that would get me right back into the domestic market! The returns are ****e as it is.... you really don't want more rentals available do you? Maybe mommy government should provide them all?


----------



## Miss Hale (17 November 2012)

Heard the property talkback segment we have on the radio here on a Saturday morning and the property expert (real esate agent) said that you should not expect good returns from property and you should only expect to make capital gain.  Is this what most property investors think?  To me, if I can make good returns _and _capital gain elsewhere (shares) why would I bother with property? (other than for diversification maybe).


----------



## DB008 (17 November 2012)

Mrmagoo said:


> 2) Imprison all real estate agents and property agents for human rights abuses due to depriving an entire generation of adequate housing, i.e a human right.




Riiiiight-e-o....trying to maximise a return on investment is a bad thing? 

Did you scammed in property and/or have a property investment turn sour?


----------



## DB008 (17 November 2012)

Miss Hale said:


> Heard the property talkback segment we have on the radio here on a Saturday morning and the property expert (real esate agent) said that you should not expect good returns from property and you should only expect to make capital gain.  Is this what most property investors think?  To me, if I can make good returns _and _capital gain elsewhere (shares) why would I bother with property? (other than for diversification maybe).




At the moment, I'd say that most property is returning under 5%.

Cash in bank is higher returns and safer (from a property bubble/losing value), for the moment (no a$$hole tenants, rates, body corp, etc...etc...to deal with). Shares are also, _generally speaking_, out performing property returns atm.


----------



## Mr Z (17 November 2012)

Miss Hale said:


> Heard the property talkback segment we have on the radio here on a Saturday morning and the property expert (real esate agent) said that you should not expect good returns from property and you should only expect to make capital gain.  Is this what most property investors think?  To me, if I can make good returns _and _capital gain elsewhere (shares) why would I bother with property? (other than for diversification maybe).




You invest for income and you speculate for gain! So he is basically saying resi property is speculation more than investment!

NOT THIS LITTLE BLACK DUCK is about all I can say  There are better speculative bets and better income on offer.


----------



## Mrmagoo (17 November 2012)

Mr Z said:


> LOL... yeah that would get me right back into the domestic market! The returns are ****e as it is.... you really don't want more rentals available do you? Maybe mommy government should provide them all?




Yeah right mate. How much more encouragement did you need to invest in property ? It was 10% return per year, plus super low interest rates, tax breaks ect AND THERE WAS A GOD DAMNED SHORTAGE OF RENTAL PROPERTIES !!!! Non of this actually encourage an INCREASE IN DWELLINGS. It actually ENCOURAGED A LIMITED INCREASE TO PROMOTE SCARCITY OF SPECULATIVE INVESTMENTS.

So I don't see how "encouraging investment" does anything to improve stock.

Only thing to improve stock WILL BE TO BUILD MORE NEW HOUSES NOT BUY AND SELL EXISTING ONES.

Plain and simple - NEGATIVE GEARING DOES NOT WORK - GET RID OF IT IT DOES NOT INCREASE RENTAL AVAILABILITY as we saw during the BOOM there was SHORTAGE or RENTALS.


----------



## Mr Z (17 November 2012)

Mrmagoo said:


> Yeah right mate. How much more encouragement did you need to invest in property ? It was 10% return per year, plus super low interest rates, tax breaks ect AND THERE WAS A GOD DAMNED SHORTAGE OF RENTAL PROPERTIES !!!! Non of this actually encourage an INCREASE IN DWELLINGS. It actually ENCOURAGED A LIMITED INCREASE TO PROMOTE SCARCITY OF SPECULATIVE INVESTMENTS.
> 
> So I don't see how "encouraging investment" does anything to improve stock.
> 
> ...




Where did you ever get the idea that ...

a. Negative gearing was specifically about the property market.

b. That it was supposed to deliver any particular outcome in the property market.

????

a. It is not specifically for property investment! It is a general taxation principle applied in many different businesses!

b. It is not supposed to deliver any particular real estate market outcome.

It works fine and does what it is intended to do and has a much wider application that just private property investment.

I think you are barking up the wrong tree... even for property investment it is a pretty short sighted and IMO dumb strategy to negative gear.

However, because it is so ingrained in the property market removing it will...

a. raise rent in the short term.

b. bring more property to market in the short term.

We know this because it has happened before. 

Eventually, AS I SAID BEFORE, it will likely lead to lower prices and rents given current market conditions BUT that will take time.

Again, AS I SAID BEFORE, if it is to be removed specifically for private property investors alone then it should be done softly by allowing existing NG finance to stand but disallowing NG on any new finance. That would cause the least disruption.

BTW most places where the rent is high there are constraints in new construction, either man made (gov rules etc) or simply physical. Your assertions are a tad simplistic, it is not always easy to bring new supply to market regardless of added incentive.

10% from resi looking fwd... GET REAL!


----------



## Mr Z (17 November 2012)

Mrmagoo said:


> AND THERE WAS A GOD DAMNED SHORTAGE OF RENTAL PROPERTIES !!!! Non of this actually encourage an INCREASE IN DWELLINGS. It actually ENCOURAGED A LIMITED INCREASE TO PROMOTE SCARCITY OF SPECULATIVE INVESTMENTS.
> 
> So I don't see how "encouraging investment" does anything to improve stock.




You shouldn't drink and post.... really. You just stop making any sense at all.


----------



## Mrmagoo (17 November 2012)

Negative gearing is a special exemption in taxation law so you can't just deduct a loss making business against a profitable one..

Otherwise I'd have a food eating business set up at my house and deduct my food and all expenses.

What you dont understand is that over the last 20 years we've had lots of investment in property, negative gearing and all that and the effect has been a REDUCED number of rental properties.

Tell me... if you do something to make a particular outcome occur and then the opposite thing happens, do you keep doing what you were doing or do you stop ?


----------



## Ves (17 November 2012)

Mrmagoo said:


> Negative gearing is a special exemption in taxation law so you can't just deduct a loss making business against a profitable one..



You can if you pass the business tests in the Non-Commercial Loss provisions...


----------



## Bill M (17 November 2012)

DB008 said:


> At the moment, I'd say that most property is returning under 5%.




Gross, my IP returns me around 6% on capital outlay. Net it's more like 4% so you are right.



> Cash in bank is higher returns and safer (from a property bubble/losing value), for the moment (no a$$hole tenants, rates, body corp, etc...etc...to deal with).




At the moment yes but property never stays still and in the long run it will always go up. Cash will never go up, a 100k in cash today returns 5% flat interest income. A 100k in an IP will return the same but in say 20 years time the property will have doubled or trebled but the cash will still be a 100K.



> Shares are also, _generally speaking_, out performing property returns atm.




I have been a long term shares and property investor. Over the last 5 years our sharemarket has gone backward and is nearly 40% off it's highs. On the other hand my IP is still holding it's price well and every year the rent has been increasing. I think, I still prefer that lovely rental deposit each Month in my account over gambling in the share market anyday, cheers.


----------



## young-gun (17 November 2012)

Bill M said:


> Gross, my IP returns me around 6% on capital outlay. Net it's more like 4% so you are right.




Don't mean to pick on you bill, but that is a VERY poor return, and unless you paid cash in full, or a large portion of the property, then it would be a poor investment choice.





> A 100k in an IP will return the same but in say 20 years time the property will have doubled or trebled but the cash will still be a 100K.




This will soon be realised to be huge myth. Property will not treble, and will unlikely double in 20 years from the current prices. Some areas and properties perhaps, but the market as a whole absolutely not. I would buy property under the assumption that I was going to receive no capital gain in the next 20 years, and base the math on that.




> I have been a long term shares and property investor. Over the last 5 years our sharemarket has gone backward and is nearly 40% off it's highs. On the other hand my IP is still holding it's price well and every year the rent has been increasing. I think, I still prefer that lovely rental deposit each Month in my account over gambling in the share market anyday, cheers.




After reading the above its obviously heavily cashflow positive, I think you could find one returning far better than 6% gross if you looked around though


----------



## Bill M (17 November 2012)

young-gun said:


> Don't mean to pick on you bill, but that is a VERY poor return, and unless you paid cash in full, or a large portion of the property, then it would be a poor investment choice.



It's blue chip, northern beaches in Sydney. I never have a problem renting it, blue chip = walk to beach, supermarkets, city buses etc. It is an investment that I never need worry about and I have no mortgage on it. Not only that, all the expenses are tax deductible and one day we might end up moving back in there so whilst renting all the bills are covered.







> This will soon be realised to be huge myth. Property will not treble, and will unlikely double in 20 years from the current prices. Some areas and properties perhaps, but the market as a whole absolutely not. I would buy property under the assumption that I was going to receive no capital gain in the next 20 years, and base the math on that.




I have been investing in property since 1978, I have no worries of where the price will be in 20 years, it will be up for sure without doubt. I only invest in areas where there is no land left, nothing left in Manly Warringah area. 



> After reading the above its obviously heavily cashflow positive, I think you could find one returning far better than 6% gross if you looked around though



Yes probably but I am not into gambling, 6% is ok for me. I do have stocks and hybrids too, I'm just saying I've seen several cycles and real estate rarely goes backwards to the same extent like stocks do.


----------



## young-gun (17 November 2012)

Bill M said:


> It's blue chip, northern beaches in Sydney. I never have a problem renting it, blue chip = walk to beach, supermarkets, city buses etc. It is an investment that I never need worry about and I have no mortgage on it. Not only that, all the expenses are tax deductible and one day we might end up moving back in there so whilst renting all the bills are covered.
> 
> I have been investing in property since 1978, I have no worries of where the price will be in 20 years, it will be up for sure without doubt. I only invest in areas where there is no land left, nothing left in Manly Warringah area.
> 
> ...




Fair enough, just keep in mind there was no land left to develop in Miami.


----------



## Mrmagoo (18 November 2012)

Property investing has become a disgusting evil which has pushed both owning and renting above the means of ordinary Australian people. 

The facts are pretty clear - when investment environment was strong there was a *SHORTAGE *of rental properties.

Now that it is weak, there is an INCREASE in availability of rental properties.

Telling us that investor confidence has little to do with increasing rental availability. 

They need to get rid of negative gearing and tax exemptions on investment properties immediately.

First home buyers instead should be able to deduct their interest from their income tax like in other sane countries.


----------



## young-gun (18 November 2012)

Mrmagoo said:


> Property investing has become a disgusting evil which has pushed both owning and renting above the means of ordinary Australian people.






The facts are pretty clear - when investment environment was strong there was a *SHORTAGE *of rental properties.



> Now that it is weak, there is an INCREASE in availability of rental properties.




If there is an increase in rentals why are rents not falling.



> Telling us that investor confidence has little to do with increasing rental availability.




No it doesn't. 



> They need to get rid of negative gearing and tax exemptions on investment properties immediately.




This would ruin many financially. Although I agree that the tax laws need to be reviewed, it would need to be along the liens of what mr Z was saying, where the new laws apply to people that start investing from a certain point in the future.

First home owners should absolutely not receive tax deductions on their first purchase. People should pull there finger out, and stop expecting hand-outs from the government. The government should only support those who are unable to support themselves, not unwilling to. If they stopped giving all these tax exemptions and deductions, I wouldn't need to pay so much tax.


----------



## Mrmagoo (18 November 2012)

After decades of handing out billions to greedy investors to push prices out of reach for FHBs I think it is due time that FHBs receive a similar benefits to that provided to investors. 

The current situation is socialism for the rich, capitalism for the poor young and struggling. *It is a disgrace*.


----------



## white_goodman (18 November 2012)

young-gun said:


> The facts are pretty clear - when investment environment was strong there was a *SHORTAGE *of rental properties..




its worth noting that while this is correct, perceived or actual shortages or surpluses  can be quite fickle.. while the supply side is quantifiable the demand side is a little more subjective with housing composition (household size) can change rapidly...

for eg. i have read articles coming out of California circa the top of the boom in 2005, where they estimated as much as 1million under-supply in homes and described as the driver behind the boom-boom pricing.. within 2 this picture had reversed and they had a massive oversupply as the household size which was at all time lows in 2005 (slightly above 2) had become around 3 ppl per household


----------



## DB008 (18 November 2012)

Mrmagoo said:


> After decades of handing out billions to *greedy investors* to push prices out of reach for FHBs I think it is due time that FHBs receive a similar benefits to that provided to investors.
> 
> The current situation is socialism for the rich, capitalism for the poor young and struggling. *It is a disgrace*.




LOL.

You do realise that this is a stock forum? Where people invest in various asset classes?

I guess I'm an evil capitalist as I worked my a$$ off during my apprenticeship and when I worked in NSW, QLD, VIC, London and WA, and purchased some investment properties, instead of wasting my hard earned money????


----------



## howmanyru (18 November 2012)

Mrmagoo said:


> After decades of handing out billions to greedy investors to push prices out of reach for FHBs I think it is due time that FHBs receive a similar benefits to that provided to investors.
> 
> The current situation is socialism for the rich, capitalism for the poor young and struggling. *It is a disgrace*.




What's the FHB grant then?


----------



## white_goodman (18 November 2012)

howmanyru said:


> What's the FHB grant then?




a boost to vendors..


----------



## Mrmagoo (18 November 2012)

DB008 said:


> LOL.
> 
> You do realise that this is a stock forum? Where people invest in various asset classes?
> 
> I guess I'm an evil capitalist as I worked my a$$ off during my apprenticeship and when I worked in NSW, QLD, VIC, London and WA, and purchased some investment properties, instead of wasting my hard earned money????




Capitalism is brilliant. You deserve a return on that hard work.

However,

The housing market in Australia is NOT capitalism, it is socialism pure and simple. There is no market mechanism it is all subsidies and interventions at every level of government. Infact it is as close to a command economy as this country gets.

A house is not an asset class it is a place to live. By profiting on housing you don't create anything of value. You hurt people. A housing investor is no better than a drug dealer, pimp or stand over man.


----------



## Mrmagoo (18 November 2012)

There is no return on property because it is not a profit generating investment.

It is just a home someone pays a meager amount of money for the right to reside in the property.

You want to be an investor ? Come up with an idea for a product, develop it, risk it all on your idea and you've done something wonderful.

Invest in said company and you're doing a good thing for the world.

Housing investment is just a parasitic, communist, ponzi scheme  resembling a Stalinist system.


----------



## young-gun (18 November 2012)

Mrmagoo said:


> There is no return on property because it is not a profit generating investment.
> 
> It is just a home someone pays a meager amount of money for the right to reside in the property.
> 
> ...




You are confusing an average joe investor with an entrepreneur.



> Housing investment is just a parasitic, communist, ponzi scheme  resembling a Stalinist system.




The whole debt based global economy is a ponzi scheme, get over it. It'll be corrected soon enough anyway. You need to spend less time complaining and more time preparing for coming opportunities.


----------



## young-gun (18 November 2012)

white_goodman said:


> its worth noting that while this is correct, perceived or actual shortages or surpluses  can be quite fickle.. while the supply side is quantifiable the demand side is a little more subjective with housing composition (household size) can change rapidly...
> 
> for eg. i have read articles coming out of California circa the top of the boom in 2005, where they estimated as much as 1million under-supply in homes and described as the driver behind the boom-boom pricing.. within 2 this picture had reversed and they had a massive oversupply as the household size which was at all time lows in 2005 (slightly above 2) had become around 3 ppl per household




Sorry WG they were Mr magoos words, I left out quote tags*


----------



## Bill M (18 November 2012)

Mrmagoo said:


> A housing investor is no better than a drug dealer, pimp or stand over man.




 You crack me up Mrmagoo, in fact I nominate you to the "ASF members going troppo" thread for this week. 

Well done, you win!!

Link here:https://www.aussiestockforums.com/forums/showthread.php?t=17823&page=5&p=737767&viewfull=1#post737767


----------



## RandR (18 November 2012)

Mrmagoo said:


> Capitalism is brilliant. You deserve a return on that hard work.
> 
> 
> A house is not an asset class it is a place to live. By profiting on housing you don't create anything of value. You hurt people. A housing investor is no better than a drug dealer, pimp or stand over man.




Property (and housing) has been as asset class before capitalism was even invented.

A housing investor is providing accomodation to others at a cost that will (generally) be cheaper then purchasing that accomodation. Thats a service of value 

A housing investor is providing accomodation to others who have been unable to fund the capital expenditure or obtain financing to purchase a place to live. Thats a service of value.

 You almost sound bitter and resentful the way you describe real estate investors Mrmagoo, is there a reason for that ?


----------



## Mrmagoo (18 November 2012)

RandR said:


> Property (and housing) has been as asset class before capitalism was even invented.
> 
> A housing investor is providing accomodation to others at a cost that will (generally) be cheaper then purchasing that accomodation. Thats a service of value
> 
> ...




No, investors in the construction industry do as you describe. The term property investor has come to mean those who purchase already built houses on the expectation they will become more expensive to purchase down the track.

Which is in no way providing a service to anyone or anything other than making the cost of living higher for others.

If they were investing in companies which built loads more houses for people I'd tend to agree but they clearly don't and they get tax breaks and special interventions from the government, making it a socialist adventure. Funny how *socialism *never seems to help those who need help.


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## moXJO (19 November 2012)

Mrmagoo said:


> Bullocks. Landlords charge every single cent they can regardless of their costs. What a larf.




And they will charge more if their cost of holding goes up. I actually agree with some of your points. But geeze magoo you sure do hate property.


----------



## Izabarack (20 November 2012)

Mrmagoo said:


> The term property investor has come to mean those who purchase already built houses on the expectation.....



that the equity will increase over time and be no more than an accumulation strategy in a diversified portfolio.   Capital gain is only of passing interest in calculating the return on the money, over and above rent revenue, I invested in the property.

Well, that is how it was for me.   I bought a house using the support of what I had already accumulated and then someone else used the property as a cheap (relative to buying their own) place to live and has also contributed to my increase in equity.

Iza


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## satanoperca (20 November 2012)

Been a while since last post, travelling throughout South East Asia for the last few months.

While abroad have been looking a property prices compared to local salaries.

Conclusion, if you wish to live in a safe, beautiful country with free health and social services then Oz property doesn't look overpriced. On all the metrics discussed in this thread it does.

After being a bear for a while, my mindset is changing and I cannot see Oz property going into crash mode in the future, stagnation yes. 

Given all the vested interests in property and the RBA determination to make sure it does not reset itself, they will keep on lowering rates, I am rapidly coming to the conclusion that in the next year or two will be an opportunity to buy again. Renting may be more financially beneficially but I would rather be a slave to banks than some two bit, dumb arsed landlord any-day.

As for the argument to get ride of negative gearing, I think I will be long gone before I can see any govnuts going down that path.

While I agree with most of the sentiment in this thread about property being overpriced, sometimes one must accept, it is what it is and being fair has little to do with it. 

For those that believe it is overpriced, keep renting. For those that see opportunity or just want a home, go forth and purchase.

Best wishes to you all.


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## Uncle Festivus (21 November 2012)

I agree with Mrmagoo, although I think the point of distinction is being lost on a few posters? The distinction is between a property investor of existing properties & a property investor who builds new dwellings. There is a big difference between the 2 as to the service that they provide to the community. The former competes with those who simply need a place to live and forces prices up while the latter provides a place to live and, all things being equal, provides price stability?

Now the fact remains that the system is highly accomodative for the investor ie negative gearing etc, and it has also been the paradigm that property is used to fund ones retirement, but this has been at the expense of those just starting out who also wish to do the same. One poster just blithely has assumed that property will 'always go up' - that is not a guarantee, as all the low hanging fruit has been picked by this baby boomer generation who have made the rules and exploited them.

For example, take Sydney, where I recall from memory that there are several suburbs where the median price is $1m plus. Do you really think you can even make 5% compound every year ad infinitum? And these aren't harbour-side premium properties, just your average suburban shack. You will probably counter that wages will be rising commensurably. Unfortunately we are well and truly part of the global economy so our wages will be tied to it, which means we have to compete with the likes of China, Thailand etc

As the government won't do the right thing and eliminate negative gearing, I think 'the market' will eventually undertake the task of bringing house prices back to affordable levels so everybody can afford to simply live without having to work 3 jobs to pay of the house who's price has been forced up by unproductive investors?


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## moXJO (21 November 2012)

I think there is a big misconception with 'property investors' and 'dumb investors'.
 In saying that I consider most people who refuse to invest in property on some bias as dumb investors. Also thinking that a property investors only avenues is buy and hold for cap or rental yield is just plain dumb.


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## rryall (21 November 2012)

Just wondering if anyone would seriously consider buying property overseas if they could obtain dual residency? 

http://www.heraldsun.com.au/realest...ffered-residency/story-fndcursx-1226520952618


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## Bill M (22 November 2012)

satanoperca said:


> Been a while since last post, travelling throughout South East Asia for the last few months.
> 
> While abroad have been looking a property prices compared to local salaries.
> 
> Conclusion, if you wish to live in a safe, beautiful country with free health and social services then Oz property doesn't look overpriced.




Thanks for a balanced and informed point of view. I too have spent many years travelling in SE Asia and as you say, what we have here in Australia just can not be compared with what they have there. 

Now check this out:

---
A BEACH box in Victoria without power or water has sold for a record *$275,000.*

The price tag does not include the land the shed sits on as this remains government-owned.

Link here: http://www.heraldsun.com.au/realestate/investing/rye-beach-box-sets-sales-record/story-fndcursx-1226521686941
---

Some people can whinge and moan all they like about the price of real estate in Australia but it all comes down to one thing, as long as someone is willing to pay for it that's all that counts, anything else is just wishful thinking.


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## Mrmagoo (22 November 2012)

Bill M said:


> Thanks for a balanced and informed point of view. I too have spent many years travelling in SE Asia and as you say, what we have here in Australia just can not be compared with what they have there.
> 
> Now check this out:
> 
> ...




bla bla mate. House prices already coming down.

Bloke and his wife at work just bought a 4 bedroom house, rumpus room, spa bath, pool ect... under 500k. First home buyers. I'm happy for them. They work hard, saved hard. Rather than paying 600k for some 3 bedroom shack they got a good deal.

Prices are coming down fast.


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## satanoperca (22 November 2012)

Mrmagoo, 

How far do you predict prices will fall?

What is your trigger point to buying?

Just curious, you seem a little angry that they are not affordable. I'm just wondering what you perceive as affordable or thus acceptable.

Cheers


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## Mrmagoo (22 November 2012)

satanoperca said:


> Mrmagoo,
> 
> How far do you predict prices will fall?
> 
> ...




Pretty straight forward to work that one  out really isn't it ? Do I really need to dignify that one ? LMAO.

Lets see... house is to live in... when I get married and my wife decides to have babies.

The trigger point is... what I can afford ?


----------



## RandR (23 November 2012)

Mrmagoo said:


> Pretty straight forward to work that one  out really isn't it ? Do I really need to dignify that one ? LMAO.
> 
> Lets see... house is to live in... when I get married and my wife decides to have babies.
> 
> The trigger point is... what I can afford ?




It is a pretty relevant question ...

... but from your answer it appears your summary seems to be, you just want it easy, and you dont want too have to work to hard for a house ... but the work only begins when you buy one 

... so good luck with that.

You can probably afford plenty right now ! Me and my partner are on ordinary wages at present, and yet weve purchased a house while still in early 20's. Theres plenty of stock around that available for first home buyers in affordable price ranges were we are from. We'll get the dream house after weve paid off the relatively small amount of debt on this one which is on track  to be done when we turn 30.


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## Mrmagoo (23 November 2012)

RandR said:


> It is a pretty relevant question ...
> 
> ... but from your answer it appears your summary seems to be, you just want it easy, and you dont want too have to work to hard for a house ... but the work only begins when you buy one
> 
> ...




Bla bla housing industry rubbish bla bla 

Yes you can buy with 2 incomes everyone knows that you're not good.


----------



## McLovin (23 November 2012)

satanoperca said:


> Conclusion, if you wish to live in a safe, beautiful country with free health and social services then Oz property doesn't look overpriced. On all the metrics discussed in this thread it does.




There are though plenty of other countries that offer what you describe above and don't have property prices near Oz prices. Pretty much anywhere in Europe, outside the major capitals. And of course the US does too, albeit with much more restricted free health care.

I've lived in a few places around the world, Sydney is extremely expensive, not just for property but for _everything_. Based on my own anecdotal evidence, I'd say that rents in New York would be slighty ahead of Sydney but NY is ridicuously cheap for everything else compared to Sydney (I'm talking 30-40% cheaper). Wages are roughly the same. Take housing in that context, afterall you still need to buy food, pay utilities, get to and from work, and Australia (or at least Sydney) looks very expensive.


----------



## againsthegrain (23 November 2012)

Not too sure about that, Australia is a great country to live in but I think its being blown a little out of proprotion. 

Healthcare is free, however public hospitals, doctors, nurses are in shortage and many do complain that Aussie healthcare system is alot worse then other poorer countries. Also you still paying for dentist, ambulance call our is 1k if you don't have private or membership. So really the system is great if you have private cover, in which case im sure its the same story in other countries.

Not to mention we pay the highest taxes in the world.

As for being safe, any country is dangerous if you are in the wrong place at the wrong time, http://www.news.com.au/national/mobs-racist-tirade-against-bus-passenger-caught-on-camera/story-fndo4cq1-1226522521354

Beatifull, yes no disagreements there.


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## McLovin (23 November 2012)

againsthegrain said:


> Not to mention we pay the highest taxes in the world.




No we don't. Not even close.


----------



## Klogg (23 November 2012)

Our income taxes, relative to the rest of the world, are quite high though.


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## Julia (23 November 2012)

McLovin said:


> No we don't. Not even close.



The table only quotes income tax.  We seem to have a lot of other levies as well, eg ambulance, medicare, GST, stamp duty, CGT etc.  A more comprehensive table showing all taxes would be helpful if such exists.


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## Klogg (23 November 2012)

Julia said:


> The table only quotes income tax.  We seem to have a lot of other levies as well, eg ambulance, medicare, GST, stamp duty, CGT etc.  A more comprehensive table showing all taxes would be helpful if such exists.




It does say Income tax "plus..." but I'm not sure what these are specifically.


----------



## againsthegrain (23 November 2012)

Julia said:


> The table only quotes income tax.  We seem to have a lot of other levies as well, eg ambulance, medicare, GST, stamp duty, CGT etc.  A more comprehensive table showing all taxes would be helpful if such exists.





Average tax in Australia is 35% going to 50% for those that are on higher incomes. According to that grahp which states australia at around 22% only Iceland Denmark and Belgium have higher taxes


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## McLovin (23 November 2012)

Klogg said:


> Our income taxes, relative to the rest of the world, are quite high though.




Because we don't pay social security, it's just included in our PAYG taxes. Most countries split it, so you pay income tax and you pay social security. In reality they are both taxes.

When I lived in NYC, I paid more tax than I would on a comparable salary in Australia. Federal income tax + NY state income tax + NYC income tax...it all adds up. Then you need to get pay for healthcare, which I was lucky enough to have included but 50 million Americans don't get.

In Europe, income tax rates are high and you have to pay a VAT that is double what you pay in Australia. Australia has one of the smallest government sectors in the world, when measured as % of GDP.


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## againsthegrain (23 November 2012)

vat = gst


----------



## McLovin (23 November 2012)

againsthegrain said:


> Average tax in Australia is 35% going to 50% for those that are on higher incomes. According to that grahp which states australia at around 22% only Iceland Denmark and Belgium have higher taxes




The average Australian does not pay 35% of their income in tax. Assuming no deductions, you'd need to be earning over $250k to be paying that much in tax.


----------



## McLovin (23 November 2012)

Julia said:


> The table only quotes income tax.  We seem to have a lot of other levies as well, eg ambulance, medicare, GST, stamp duty, CGT etc.  A more comprehensive table showing all taxes would be helpful if such exists.




Here's total government revenue to GDP. Again, we are way toward the bottom. And when you look at some of the luminaries ahead of us (Greece, Ireland) you get the feeling we probably have it about right.

The argument that we are the highest taxed nation on Earth is pretty ridiculous, IMO.


----------



## againsthegrain (23 November 2012)

McLovin said:


> Here's total government revenue to GDP. Again, we are way toward the bottom. And when you look at some of the luminaries ahead of us (Greece, Ireland) you get the feeling we probably have it about right.
> 
> The argument that we are the highest taxed nation on Earth is pretty ridiculous, IMO.
> 
> View attachment 49722




$18,201 - $37,000	
19c for each $1 over $18,200

$37,001 - $80,000	
$3,572 plus 32.5c for each $1 over $37,000

$80,001 - $180,000	
$17,547 plus 37c for each $1 over $80,000

$180,001 and over 	
$54,547 plus 45c for each $1 over $180,000

assuming average aussies are in second bracket 32% the closer you get to making 80k the less u actually get back on your return, lucky to see around $500 
bit of interest in the bank, some small investment and suddenly you are actually owing money to the ato.

Last few tax returns I consistantly have to pay back close to 1k and I am in the 32% bracket


----------



## McLovin (23 November 2012)

againsthegrain said:


> $18,201 - $37,000
> 19c for each $1 over $18,200
> 
> $37,001 - $80,000
> ...




Sorry, I'm not quite sure what point you are trying to make.


----------



## againsthegrain (23 November 2012)

McLovin said:


> Sorry, I'm not quite sure what point you are trying to make.




I said the average income tax in australia was around 35% and you said it was nowhere that high


----------



## McLovin (23 November 2012)

againsthegrain said:


> I said the average income tax in australia was around 35% and you said it was nowhere that high




It's not. Go and calculate how much tax you actually pay as a % of your income, not what marginal tax rate you are on. On $80k you pay about 23% income tax.


----------



## againsthegrain (23 November 2012)

All I said was average income tax .. you filled in the rest


----------



## village idiot (23 November 2012)

Difference between marginal rate and actual rate paid. at $80002 marginal rate is 37% but actual rate is around 22%. The tables would be on aggregate actual rate rather than marginal rate of the 'average income' earner


----------



## McLovin (23 November 2012)

againsthegrain said:


> All I said was average income tax .. you filled in the rest




Right, and what does average income tax mean? Most would assume it means how much income tax the average person pays, not whatever marginal rate they happen to be on. If you earn $18,201 would you tell people you pay 19% income tax, even though you will have only paid 19c in tax?


----------



## young-gun (23 November 2012)

RandR said:


> It is a pretty relevant question ...
> 
> ... but from your answer it appears your summary seems to be, you just want it easy, and you dont want too have to work to hard for a house ... but the work only begins when you buy one
> 
> ...




Sorry RandR I'm with magoo on this one. Didn't you see him say that housing is a necessity, and people shouldn't be allowed to invest and or speculate on it?

In fact, I think that it's such a necessity that the government should just start giving away houses paid in full to anyone who asks nicely. Especially those that are too lazy to make something of themselves and provide for their family. It could be the ultimate welfare scheme!

Magoo you get the ball rolling by calling gillard, and I'll get a petition going or something. Also I don't like the way people are making money in the share market, especially bank stocks, as it's making the banks charge me more to please share holders. So perhaps we can look at destroying stock investment also.


----------



## Bill M (23 November 2012)

Mrmagoo said:


> bla bla mate. House prices already coming down.
> 
> Bloke and his wife at work just bought a 4 bedroom house, rumpus room, spa bath, pool ect... under 500k. First home buyers. I'm happy for them. They work hard, saved hard.




No bla bla here magoo, just the facts. New land release in Edmondson Park (south west Sydney) will be on sale at 10 AM tomorrow. Land only, Priced from $245,000 - $315,000 further info here

And guess what? People are camping out overnight to secure their land. As I said, it doesn't matter what anybody thinks, all that matters is what Australians are will to pay for their real estate. Appears to be no shortage of buyers in Sydney anyway. 

Story here
---
Mr Smith and Ms Courtney said they didn't intend to queue so early but decided to trigger their plan when they drove past the development on Saturday.

"We are the only ones who are reasonably prepared, we're not roughing it that bad," Mr Smith said.

The couple organised time off work and take turns to go home for showers.

http://liverpool-leader.whereilive.com.au/news/story/richard-smith-and-merryn-courtney-camp-out-in-car-for-land-at-edmondson-park/
---


----------



## Mrmagoo (23 November 2012)

Bill M said:


> No bla bla here magoo, just the facts. New land release in Edmondson Park (south west Sydney) will be on sale at 10 AM tomorrow. Land only, Priced from $245,000 - $315,000 further info here
> 
> And guess what? People are camping out overnight to secure their land. As I said, it doesn't matter what anybody thinks, all that matters is what Australians are will to pay for their real estate. Appears to be no shortage of buyers in Sydney anyway.
> 
> ...




See Japan for further info.


----------



## Mrmagoo (23 November 2012)

young-gun said:


> Sorry RandR I'm with magoo on this one. Didn't you see him say that housing is a necessity, and people shouldn't be allowed to invest and or speculate on it?
> 
> In fact, I think that it's such a necessity that the government should just start giving away houses paid in full to anyone who asks nicely. Especially those that are too lazy to make something of themselves and provide for their family. It could be the ultimate welfare scheme!
> 
> Magoo you get the ball rolling by calling gillard, and I'll get a petition going or something. Also I don't like the way people are making money in the share market, especially bank stocks, as it's making the banks charge me more to please share holders. So perhaps we can look at destroying stock investment also.




We're in the same situation as the yanks from 04 to about 06. The economy is slowly eating itself away and getting ready for a big implosion that everyone says cannot happen.

Wages not growing. 
Consumptions going to fall off the cliff.
Jobs going to be lost.
Consumption will fall even further.

Tax revenues going to plummet.
Government will lay EVERYONE off.
Feedback cycle.

Huge recession.

Lack of disposable income due to inhibitive housing costs won't help either.


----------



## pilots (24 November 2012)

Mrmagoo said:


> We're in the same situation as the yanks from 04 to about 06. The economy is slowly eating itself away and getting ready for a big implosion that everyone says cannot happen.
> 
> Wages not growing.
> Consumptions going to fall off the cliff.
> ...




OMG, dont tell me the sun is going to stop shining as well, house next to us was on the market for 7hours, and sold. I take it from your posts that you are a renter????


----------



## jank (24 November 2012)

McLovin said:


> There are though plenty of other countries that offer what you describe above and don't have property prices near Oz prices. Pretty much anywhere in Europe, outside the major capitals. And of course the US does too, albeit with much more restricted free health care.
> 
> I've lived in a few places around the world, Sydney is extremely expensive, not just for property but for _everything_. Based on my own anecdotal evidence, I'd say that rents in New York would be slighty ahead of Sydney but NY is ridicuously cheap for everything else compared to Sydney (I'm talking 30-40% cheaper). Wages are roughly the same. Take housing in that context, afterall you still need to buy food, pay utilities, get to and from work, and Australia (or at least Sydney) looks very expensive.




Agreed, Sydney is expensive for everything. Then of course you get retailers complaining about loss of trade to the internet and so on. People cannot afford to be paying double for the same product locally as you can get it online for much cheaper. The only thing keeping property stable at the moment is low interest rates and high employment. Take one of them away and you get falling house prices. I dont think the most ardinant property bull can argue that property is going to double in value again like it has in the past within the next 8 years or so. Best they can hope for it 3-4% increase year on year and again that is with low unemployment and record low interest rates......
Something will give at some stage and property at the moment is over valued. Maybe we are in for a long period of price adjustments like Japan and Finland rather than a short sharp crash like Ireland


----------



## Tyler Durden (24 November 2012)

Interesting perspective:

*Here’s Why Mortgage Money is Dead Money

Just a month after Mr Koukoulas trumpeted the Australian housing recovery (he wasn’t the only one, even former housing bears are starting to get bullish), RP Data released its October data:


‘Dwelling values across all of Australia’s capital city housing markets, except Perth and Darwin, fell over October, interrupting a four month recovery.

‘The RP Data-Rismark Home Value Index result for October recorded the first month-on-month decline since May 2012, with the eight capital city aggregate index falling by -1.0 per cent over the month.’

So much for a recovery. In fact, according to RP Data, since the start of the year, Australian house prices in the five major Aussie capitals are down 0.2%, and down 1.2% since the same time last year.

That doesn’t sound like a big deal, but for homebuyers who expected 7-10% annual growth, and that Australian house prices would double every seven years, it is a big deal.

Because not only have Australian house prices not matched these gains…they’ve fallen. That has compounded the loss. And for each year prices don’t go up it means more interest payments down the drain.

The housing spruikers used to say that ‘rent money is dead money’. It turns out that in a falling housing market, ‘mortgage money is dead money’ too.

But look, we can’t really blame the housing spruikers. It’s the nature of markets. The market raises your hopes and then disappoints you.

You only have to look at a chart of the Aussie stock market over the past three years to see more false hopes than you can shake a stick at.

How Homebuyers Lost $65,000 Last Year

But the stock market is different to the housing market. The average Aussie has a much bigger exposure to Australian housing than they do to shares. And what’s most frightening is that whereas loans to buy shares have fallen off a cliff since 2008, the amount of mortgage debt has gone up.

But that’s not all. As Mr Koukoulas states in his article:


‘Let’s go back to early 2011. There was a $500,000 house that you wanted to buy and your annual household income of $100,000, but the house was just out of reach. Fast forward to the middle of this year and in that 18 month period, the house price has dropped to $465,000 while your income has risen to $106,000. Clearly, it is increasingly attractive for people to dive in and buy that house and that is happening now.’

We’ll make two comments on this lame attempt to talk up Aussie housing.

First, we don’t know a single person who would buy $465,000-worth of shares on credit in this market…especially not on a household income of $106,000 (we assume this is before tax income).

And yet that’s exactly what the housing spruikers want the average Aussie to do. Take out a half-a-million dollar loan to buy an asset that in all likelihood will be worth less in one year than it is today.

This brings us to the second point. Mr Koukoulos imagines the homebuyer who missed out on buying the $500,000 home. But what about the homebuyer who did buy the home?

One year later, the home is now only worth $465,000…plus they’ve paid interest on the mortgage (say a $450,000 mortgage) of about $30,000. So in the space of one year, the homebuyer has busted $65,000, wiping out the deposit money that may have taken them 10 years to save!

Call that an investment? Give us a break. We make no apologies for saying that is a rotten, rotten, rotten investment.*

http://www.moneymorning.com.au/20121122/dont-be-fooled-by-australian-housings-death-fart.html111


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## moXJO (24 November 2012)

Tyler Durden said:


> Interesting perspective:
> 
> *
> 
> ...




Hmmm must not be hard becoming a financial writer. Here is some advice that saves the paragraphs of waffle:
Do your research before parting with the cash


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## moXJO (24 November 2012)

Mrmagoo said:


> We're in the same situation as the yanks from 04 to about 06. The economy is slowly eating itself away and getting ready for a big implosion that everyone says cannot happen.
> 
> Wages not growing.
> Consumptions going to fall off the cliff.
> ...




I agree that this is a possibility in the future. But still a good amount of money to be made between now and when it happens imo. Also hinges on what happens in next years election.


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## Tyler Durden (25 November 2012)

moXJO said:


> Hmmm must not be hard becoming a financial writer. Here is some advice that saves the paragraphs of waffle:
> Do your research before parting with the cash




I do wonder though how much research the average first home buyer does before parting with their cash. It seems from the people I talk to, they buy a property once they have saved up enough money - with no regard to timing of the market, the state of the economy or the future value of the property.


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## young-gun (25 November 2012)

Tyler Durden said:


> I do wonder though how much research the average first home buyer does before parting with their cash. It seems from the people I talk to, they buy a property once they have saved up enough money - with no regard to timing of the market, the state of the economy or the future value of the property.




I would say about 90% of people do this. I would also think that there is also alot of investors that don't do the necessary research before purchasing a property either. A couple of guys at work have started negative gearing a property each in the past 12 months. did no research of area whatsoever, didn't explore opportunities outside of brisbanes south, one took the advice of his financial advisor out of pocket $60 a week. Good idea.

Terrible investment in this market imo. with prices depressed you should at least be cashflow positive even if it's by $20 a week. You may have to step out of your comfort zone(ie buy interstate or somewhere not around the corner) but it's more than possible.


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## Mrmagoo (25 November 2012)

Tyler Durden said:


> I do wonder though how much research the average first home buyer does before parting with their cash. It seems from the people I talk to, they buy a property once they have saved up enough money - with no regard to timing of the market, the state of the economy or the future value of the property.




As I said for the vast majority of people, housing is not really an investment, they buy to have somewhere to live. The price going up is just something to talk about and does them no real benefit other than to push others out of the market. The price change just doesn't matter. If you sell, you still need to buy somewhere else...


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## Struzball (25 November 2012)

Mrmagoo said:


> If you sell, you still need to buy somewhere else...




And generally when you do by somewhere else, you upgrade. So if the value of your 400k first home drops 10% or $40k, the value of your 800k house will have dropped by $80k. So in reality, assuming a fhb is buying a house for somewhere to live, they are arguably better off with falling house prices.

But having bought a house 3 years ago, falling house prices are the least of my "losses", once you take into account all the improvements and maintenance to keep up with your lifestyle, home ownership, if you could even call it an investment, is a terrible investment, however I wouldn't have it any other way.


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## Mrmagoo (25 November 2012)

Struzball said:


> And generally when you do by somewhere else, you upgrade. So if the value of your 400k first home drops 10% or $40k, the value of your 800k house will have dropped by $80k. So in reality, assuming a fhb is buying a house for somewhere to live, they are arguably better off with falling house prices.
> 
> But having bought a house 3 years ago, falling house prices are the least of my "losses", once you take into account all the improvements and maintenance to keep up with your lifestyle, home ownership, if you could even call it an investment, is a terrible investment, however I wouldn't have it any other way.






300*1.1 = 330 

330-300= 30 

500*1.1 = 550 

550 - 30 = 520

So a year later, you're still out of pocket 20k on the 500k home. 

All that was probably happening was they were getting some equity to borrow more off.


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## Struzball (25 November 2012)

Mrmagoo said:


> 300*1.1 = 330
> 
> 330-300= 30
> 
> ...




Ah, was a bit confused by your post, so you're saying first home buyers are worse off in a rising market when they go to upgrade.

Regarding equity, Yes but then if they manage to pay extra into their loan, offsetting interest and accumulating a  20% deposit of 100k, equity shouldn't really matter.

Personally I'd prefer house prices to stay put for another 10 years. Though I consider it unlikely and they will probably increase modestly (read: not double).


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## Julia (25 November 2012)

young-gun said:


> I would say about 90% of people do this. I would also think that there is also alot of investors that don't do the necessary research before purchasing a property either. A couple of guys at work have started negative gearing a property each in the past 12 months. did no research of area whatsoever, didn't explore opportunities outside of brisbanes south, one took the advice of his financial advisor out of pocket $60 a week. Good idea.



Agree.  Many people, thinking about investments, are familiar only with housing and don't even consider anything else.  They still assume 'property always goes up'.
This is the attitude that now sees many property owners in negative equity because they bought near the top of the cycle, and borrowed 100% of the cost.   

A new entry to the local market is a four bedroom house, two bathroom, double garage, pool, excellent area, priced at $645,000.  That's just a total joke.  There are several similar, actually better, houses in a preferable position in that estate which have been on the market for about three years, at around $500,000.  Market price now imo would be about $450,000 max.  So any estate agent agreeing to market that house at almost $650,000 must be nuts.


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## DB008 (25 November 2012)

Julia said:


> This is the attitude that now sees many property owners in negative equity because they bought near the top of the cycle, and borrowed 100% of the cost.




Since the GFC, bank ratios (LVR) have tightened up a fair bit since then. I remember 105% and 107% loans from Wizard Home Loans back in the day.

20% deposit (or 10% with mortgage insurance) down is the norm now.


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## moXJO (25 November 2012)

young-gun said:


> I would say about 90% of people do this. I would also think that there is also alot of investors that don't do the necessary research before purchasing a property either. A couple of guys at work have started negative gearing a property each in the past 12 months. did no research of area whatsoever, didn't explore opportunities outside of brisbanes south, one took the advice of his financial advisor out of pocket $60 a week. Good idea.
> 
> Terrible investment in this market imo. with prices depressed you should at least be cashflow positive even if it's by $20 a week. You may have to step out of your comfort zone(ie buy interstate or somewhere not around the corner) but it's more than possible.




Its a bit like the sharemarket (or any market). A lot of people buy because they like the name or heard from a friend etc. Any investment bought this way is a gamble rather then an investment.


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## Smurf1976 (25 November 2012)

Tyler Durden said:


> I do wonder though how much research the average first home buyer does before parting with their cash. It seems from the people I talk to, they buy a property once they have saved up enough money - with no regard to timing of the market, the state of the economy or the future value of the property.



It's a bit like saying most people buy a car somewhere around the time they get a driver's license, commonly around the age of 18 (that is, practically as soon as they can). Whether or not it's going to make them a profit or whether it's the best time to buy a car isn't a consideration - they want it so they buy it. 

From a purely financial perspective, a car is unlikely to be profitable unless it's the only way to get to work. And, of course, it'll also save a lot if you wait until age 25 before buying one. Practical reality however is that most people buy a car as soon as they have a license and can afford to.

Holidays are another one. It could be argued that anyone in Australia who went to the US (for example) a decade ago made a big mistake given the subsequent currency movements. But if you wanted a holiday in 2002 and could afford it at the time then you weren't likely to wait until 2012 to take it just to save some money.

Same goes for housing. Bought a house at age 31 because I wanted to and could afford it. Had the mortgage paid off at age 35 and from a purely personal perspective couldn't care less what happened to house prices after that. 

For broader social and economic reasons I'd rather a fall than a rise from this point. In the absence of either a wages boom or a substantial house price slump, there's going to be a lot of economic pain and social tension ahead I expect. But a wages boom would kill Australian business which leaves a house price slump as the least bad outcome. 

So far as the actual costs of ownership are concerned, I've never found it to be a major issue. Replaced the seriously worn out oven when I bought the place. Replaced the water heater when it blew up. Painted the back doors. Fixed a few minor things here and there. If you look after things then repairs shouldn't cost much at all really since most things last for many, many years if used sensibly. For those people who abuse things and wear them out rapidly then it's a different story of course, but landlords don't like tenants like that anyway.


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## medicowallet (29 November 2012)

Good morning brothers,

Fantastic day this morning before the hot weather comes through to put a dampener on the pathetic attempt of a tomato bush I have planted this year.

I have just arrived back in the virtual world after a holiday into the real world.

I must say that the property developments are interesting, with some cancellations for off the plan builds, retail under immense pressure, and even banks now admitting their growth is pressured.

apparently there is a doubling of house prices every 7 years, guaranteed, rubber stamped, that you can take to the bank.  I guess that the next 3 years will have to be a boom then.

Anyway, looking forward to the detailed analysis on this civilised and informative thread.

Sunshine, lollipops and fluffy bunnies,

MW
(Robot destroyer in retirement)

PS Where is Robots?    Has he taken up a 4th job recently?   Can he afford internet?


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## medicowallet (29 November 2012)

Smurf1976 said:


> From a purely financial perspective, a car is unlikely to be profitable unless it's the only way to get to work. And, of course, it'll also save a lot if you wait until age 25 before buying one. Practical reality however is that most people buy a car as soon as they have a license and can afford to.
> 
> Holidays are another one. It could be argued that anyone in Australia who went to the US (for example) a decade ago made a big mistake given the subsequent currency movements. But if you wanted a holiday in 2002 and could afford it at the time then you weren't likely to wait until 2012 to take it just to save some money.




Your holiday analogy is interesting, but ultimately flawed.   Housing has 2 options one is to purchase a property, the other is to rent.

Virtual holidays are not as good 





Smurf1976 said:


> Same goes for housing. Bought a house at age 31 because I wanted to and could afford it. Had the mortgage paid off at age 35 and from a purely personal perspective couldn't care less what happened to house prices after that.
> 
> For broader social and economic reasons I'd rather a fall than a rise from this point. In the absence of either a wages boom or a substantial house price slump, there's going to be a lot of economic pain and social tension ahead I expect. But a wages boom would kill Australian business which leaves a house price slump as the least bad outcome.




The thing is that price movements are determined by a smallish number of transactions, and hence can potentially move very fast (as they have in an upward direction)

The thing is that yes, you have equity in your house and that is great, and if it drops 25% then sure, you lost paper gains, or have made paper losses, and these don't matter to you.

But they DO matter to the banks.

When they start calling in their debts, the whole ponzi scheme could unravel, and bring down large sectors of the economy with it... the brain donor governments who allowed this to happen should be shot.

You may be indirectly affected by a house price decrease if we enter a recession and you lose your job, and if there is a recession, you will be penalised with higher taxes no doubt for the rest of your life as the government debt will skyrocket...


Has happened before in my lifetime, no doubt will happen again.

MW

PS Where is Robots?


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## freebird54 (3 December 2012)

Does anyone watch "homes under the hammer " on ch 72 sunday nights?

Interesting to see first time renovators having a go  -rental yields twice and often 3x ours so it may help but we will have to wait to see how they do as it was 2009 vintage

Property managers here now not allowing the tenant to do ANY minor repairs [even changing a light globe, tap washers] due to duty of care - wonder where this will take us [You will have to call in an expert to put chlorine in your pool?]


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## Miss Hale (10 December 2012)

freebird54 said:


> Does anyone watch "homes under the hammer " on ch 72 sunday nights?
> 
> Interesting to see first time renovators having a go  -rental yields twice and often 3x ours so it may help but we will have to wait to see how they do as it was 2009 vintage




Yes, I used to be positively addicted to it but after gorging myself on it I found I suddenly lost interest (probably because the stories are all basically the same).  I made the same comment some time ago about the rental yields (you'd have to go back very many pages to see it though), the yields here are pathetic by comparison. 



> Property managers here now not allowing the tenant to do ANY minor repairs [even changing a light globe, tap washers] due to duty of care - wonder where this will take us [You will have to call in an expert to put chlorine in your pool?]




It has some advantages.  Our gutters were badly blocked and cleaning out gutters is not on my list of fun things to do  but because it involves ladders it's now the responsbility of the landlord so a call to the agent and we now have clean gutters  .


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## kincella (15 December 2012)

I just popped in to have a peep, to see if anyone was still here posting. 
I see this forum is still alive, but only just.

I note the bears  are still posting, nothing has changed.

Property has performed exceptionally well, interest rates at their lowest ever, and it is all roses and lolly pops.

Unfortunately the stockmarket has deteriorated, and taken a load of players, and gamblers with it.

I have discovered a novel way to beat the low deposit rates, using an offset account against a couple of the mortgages. You effectively earn 6% on your deposit, or the same rates as the mortgage. So by cutting the interest bill on the mortgage  in half, it is easier to pay down the capital off the mortgage so much faster. It produces an almost magical result.
The offset accounts have become more popular, so that most banks offer them today. Of course it works both ways whether rates are high or low. But the ability to reduce the capital off the loan is magnified when the rates are low.
Super has also taken a huge hit, due to most funds being invested in the gambling den, or cash only. Unbelievable bad management  by fund managers, without exposure to the property market.

Wonder how many people are still pouring their money into super, and salary sacrificing under these adverse conditions. I am also surprised so many people still think only of the lower tax rates, as their reason for putting more of their hard earned into super. 
They have not kept up to date with the lower income tax rates. I think the average tax rate for income around $35,000 is now just under 10%, and around 20% for  $50,000. Yet they will pay up for a contribution, paying 15% tax up front before the contribution earns any income, and they are stuck in the super funds until retirement age.

The  same people, who have a choice, would be better off to not contribute to super, but save and invest it outside of super. A difference of 5% tax, and the ability to do whatever they choose, is in my view a far better option. But then again, there are many people who really cannot save, invest or manage their money very wisely at all.
That is one of the secrets that many first home buyers learn, if they follow their parents advice to buy their home rather than renting. This method provides a forced saving plan, with life benefits.
That path is not for everyone.
I came across just 2 clients in all my years as a tax accountant, who were not mentally fit for the exercise.
Both had become drawn into the buying  property, but only because they felt everyone was doing it. Both were middle aged and were rent for lifers. Interesting that both had parents who were also renters for life.

One woman had bought a great little property, it was renting with a great return, never vacant, but she could not handle the stress,of what if something went wrong in the future. Luckily for her the market was still going strong, so when she sold the excess or profits covered her stamp duty and capital costs of purchase and sale.

The other client had a spouse on a very high income, and it was her choice to put her funds into property. It was a majestic property in one of the best locations. But she let her husband manage it, to give him something to do.
He was so out of his depth, and was stuffing it up big time. And boy, as a former life renter he was stressed.
He wanted to sell up and cash out the $50,000 profit. Luckily I advised the wife, to hang onto it, and employ professionals to manage the property.  She was a financial professional, actually a guru, and the spouse was not, he was in IT. Last time I spoke to her, the property had exceeded one million in value over the purchase price, plus returning an enormous rental income.

ps 
A friend just sold a house last month, it sold the first day on the market, at the asking price. Kidding there is not pent up demand out there. There is a load of money going into property, at the lower and middle end of the market. It has been taken out of the stocks, and cash is woeful.
Have a merry xmas, and a prosperous new year.
cheers


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## medicowallet (15 December 2012)

kincella said:


> I just popped in to have a peep, to see if anyone was still here posting.
> I see this forum is still alive, but only just.
> 
> I note the bears  are still posting, nothing has changed.
> ...




I read up until here are realised that you were just trolling for a response so I will give you an example of the stockmarket over the last 12 months.

ASX 200 at Dec 2011  approx 4050

Currently   4583

I guess that property pretty much flat taking into account maintenance you were just posting for a response, or is it that you are truly not aware that the stockmarket drastically outperformed residential property in 2012.

MW

PS Where is Robots?


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## Smurf1976 (15 December 2012)

freebird54 said:


> Property managers here now not allowing the tenant to do ANY minor repairs [even changing a light globe, tap washers] due to duty of care - wonder where this will take us [You will have to call in an expert to put chlorine in your pool?]



That's the sort of thing that leads me to prefer owning over renting no matter what the cost.

If a light bulb blows on Christmas Eve then do you think the landlord is going to send an electrician around straight away? Or will they try and get away with leaving it until normal business hours so as to avoid paying whatever the sparky charges for being called out at that time? And if they do leave it, what happens if you trip over in the dark? Do they have appropriate liability insurance to cover that one?

The good point about renting is that depending on circumstances it may be cheaper. The bad side is that it's often a lot of hassle.


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## Miss Hale (15 December 2012)

Smurf1976 said:


> That's the sort of thing that leads me to prefer owning over renting no matter what the cost.
> 
> If a light bulb blows on Christmas Eve then do you think the landlord is going to send an electrician around straight away? Or will they try and get away with leaving it until normal business hours so as to avoid paying whatever the sparky charges for being called out at that time? And if they do leave it, what happens if you trip over in the dark? Do they have appropriate liability insurance to cover that one?
> 
> The good point about renting is that depending on circumstances it may be cheaper. The bad side is that it's often a lot of hassle.




It isn't always a hassle and we have found it to be the opposite, that is a lot less hassle than owning your own home, especially when it comes to repairs etc. 

I don't think not being able to change a light bulb is standard in most rental agreements.  We have rented two places recently and we are expected to change our own light bulbs and have done  many times.  Most landlords and agents are good, we had a badly dripping tap in the garden and it was fixed the same day.  All emergencies (like hot water service going bung) must be fixed within 24 hours.  All you have to do is call the agent, nothing easier


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## kincella (17 December 2012)

funny, so the asx dramatically outperformed property in 2012....
how convenient for you to forget how far down the asx is since 2007..when it was around 7000

Houses in the lower and middle income range have survived very well, maintained their status quo, and some have even gained or doubled in value.

The majority of investors in  stocks in 2007, are still way down or underwater....or have retreated
with what if anything was left, for the safety of doing nothing.

Not many stock investors have the ability to match the gains as per the asx benchmark,
they play  individual stocks, penny dreadful' s and the like and those stocks have not put on similar gains.

I thought it was a gambling den leading up to 2007, but it has made a turn for the worse since, and the antics would put the leading mafia gangs to shame.

I actually read individuals posts on stocks, and it is anything but champers out there, with a huge number  hurting, and some will never return to the stock market again. Many were wiped out.

Regardless that this is a stock forum, everyone visiting this site still needs a roof over their heads, whether as a renter or buyer, and will have a view on the housing market.

A successful investor knows to hold the 3 main asset classes in  a balanced portfolio, of cash , shares and property. The period since the onset of the GFC has provided a stunning example, of why that policy is successful. While one asset class goes down or falls over, the other two provide a sanctuary, a back up, while providing gains and income. Each asset class is affected by movements in the other classes. So when one goes down, the others move up.  One of the greatest mistakes the newcomers fall for, is the idea that when one falls, they all fall as in a domino affect.
Many investors, at the first sign of trouble, will move their funds around to other asset classes, as in a Plan B.

The bears display of such an aversion to property,  leads me to believe they will rarely be successful with their investments. 
The biggest hurdle, and problems  faced by the majority of investors, is allowing emotion to control their investment decisions.
Unless and until they make the stockmarket a level playing field, I doubt it will return to the glory of former days.
So where do investors park their money in the future. That is the big question.
cheers


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## Tink (17 December 2012)

61% this weekend

I have noticed the Mornington Peninsula is moving along -- must be alot of retirees moving down there.

Has anyone got a national data, rather than only Melbourne, just so it caters for everyone.


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## Julia (17 December 2012)

kincella said:


> Houses in the lower and middle income range have survived very well, maintained their status quo, and some have even gained or doubled in value.



What do you mean "lower and middle *income range*?
You follow that with "have gained or double in value".  
Well, I don't know what extra special place you live in to make that observation.  Here in a quite attractive coastal resort town in SE Qld property is down around 30% and showing no signs of picking up in anything other than the bottom price range.


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## kincella (17 December 2012)

So the SE Qld coast determines prices Australia wide...?
Now I wonder what particular problem has contributed to that particular area, which is well reported as having some  serious temporary problems. Lets look a little closer,  it has its own problems, including the increase in crime, the GW con job with councils so that the sea rising means all the houses will be washed away, so there are scaredy cats who will panic and sell. Or is it the old white shoe brigade that took over the place in the 80's are all dying off, and the kids are cashing in their inheritance. 
Most councils along the east coast have been putting in ridiculous restrictions , due to the fear  about rising sea levels. However I guarantee there are plenty of people ready to pounce and get themselves a bargain, for a beach front when they see the change in council sentiment is imminent.

I don't live in any special place, but if you followed the  market  like I do, actively looking to buy, you would notice  the big increases in the bottom of the market, and the good increases in good properties.

Of course if you just follow the media, without an active interest, you may have no idea of how the market is performing.
cheers


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## Julia (17 December 2012)

kincella said:


> So the SE Qld coast determines prices Australia wide...?



Don't be so silly.  I said no such thing.  I simply pointed out that your implication that prices were up everywhere was not correct.

I don't have sufficient interest to be bothered arguing about it, save to point out that the Council here has not succumbed to the fear mongering about coastal property.  Interestingly enough, much to the fury of some of the ardent greenies, they are actually removing scrappy trees and other weedy looking stuff along all the foreshore so that we all have better views and it looks more attractive.

Oh, and save your snide remarks about "if you only follow media".  I am commenting on the basis of observation.


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## kincella (17 December 2012)

you said, "I simply pointed out that your implication that prices were up everywhere was not correct."

I never stated prices were up everywhere....that is just silly.

It would be impossible.


oh, and this might be one reason, that prices are not hunky dory on the Gold Coast
there might be a substantial cost to rectify this problem.
I guess giant tides might create havoc, it is nature after all.

http://www.news.com.au/realestate/i...ses-on-the-brink/story-fndbarft-1226538296354


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## young-gun (17 December 2012)

Julia said:


> Oh, and save your snide remarks about "if you only follow media".  I am commenting on the basis of observation.




It's ok Julia, it's now safe to follow the media again, as kincella is using the most mainstream of mainstream media to link his post.


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## kincella (18 December 2012)

young gun, 
you appear not to have noticed the difference....the article was based on
a fact, about erosion to a beach front property-

versus the thousands of articles, which are purely opinion....
there are rarely any facts included in the opinion pieces


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## Uncle Festivus (18 December 2012)

kincella said:


> Unless and until they make the stockmarket a level playing field, I doubt it will return to the glory of former days.




Unless and until they make property a level playing field, I doubt it will return to the glory of former days.


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## Uncle Festivus (18 December 2012)

You've had a good run, just accept & prepare for the inevitable........


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## medicowallet (18 December 2012)

Sure Kincella, lol, now I know you are just trolling.

You specifically mentioned how people are NOW putting money into super etc.  Well, sorry champ, but I am just letting you know that over the past 12 months shares have dramatically outperformed property.

That is a fact.

I do agree that some very small investors try to gamble in the stockmarket, but any serious investor with a decent amount of capital invested, should be able to at least match an index fund, and outperform it regularly.

Why not take the performance of shares vs property from the month before the last housing market correction to today's date to make the comparison?   Oh I know, because it suits your purpose to live in the past where fundamentals of shares were not sound, not in the present where fundamentals of residential property are not sound.

That is why the current housing correction is underway.

Also when did you purchase your last property?


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## pavilion103 (18 December 2012)

Kincella, you don't have to hold shares through every bust (i.e 2008). So when using numbers of how the stock market has performed, take this into consideration. 

With ANY investment class you need to recognise when the potential is there and when it isn't. Property was an amazing investment vehicle especially over a 10 year period. Now that prices are way way over extended there is not money to be made (only lost) by buying and holding real estate. There may not be money to be made in this way for many many many years. 

You don't need to hold a balance of property, shares and cash. *Just know when to be out of the market (i.e. like now with property) and preserve capital so that when opportunities arise you can capitalise on them. *I bought in 2006 - 3 cheap properties. They luckily went up 50% in 24 months. I sold as I saw the writing on the wall. Since prices have fallen and won't rise for a long time. Had I held I'd be down from the peak. With no upside why hold?

Now that I've preserved capital I can pursue other opportunities rather than seeing it eroded in property.


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## kincella (18 December 2012)

Let s put what I said into context.... so it was not just the contribution, but a load of people focus on the tax rates for super at 15%
when it may be higher than their non super tax rates....plus why lock it into super until retirement.

I did not state the obvious, but there is also a risk with numerous changes in the legislation. There always seems to be someone with their eye on that bonanza, and wanting to get their hands on it. Like swan for instance, taking any balance under $2000 that may be dormant, and turfing it into general revenue.

How would you feel about the unions running the superfunds, in light of how they manage union funds for members?
Now they have changed the Auditor requirements, basically it will only be the larger Auditors to take their share of the mum and dad superfunds in the future. It is moving that way now. I would not be surprised if at some stage they cancelled the DIY superfunds, and made them turn it over to the bigger players.

my earlier post...........

"Wonder how many people are still pouring their money into super, and salary sacrificing under these adverse conditions. I am also surprised so many people still think only of the lower tax rates, as their reason for putting more of their hard earned into super. They have not kept up to date with the lower income tax rates. I think the average tax rate for income around $35,000 is now just under 10%, and around 20% for $50,000. Yet they will pay up for a contribution, paying 15% tax up front before the contribution earns any income, and they are stuck in the super funds until retirement age."


----------



## kincella (18 December 2012)

I know all about taking the funds back, out of the markets, and sitting on it.
The trouble with sitting on cash, is it devalues quickly, plus the woeful 3.5% at the moment, needs some serious
attention.
That is the reason I have been looking at the offset accounts. It is the equivalent of earning the same as the investor or home loan rates.


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## medicowallet (18 December 2012)

kincella said:


> I just popped in to have a peep, to see if anyone was still here posting.
> I see this forum is still alive, but only just.
> 
> I note the bears  are still posting, nothing has changed.
> ...




The above was conveniently forgotten hey Kincella?


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## Knobby22 (18 December 2012)

Uncle Festivus said:


> You've had a good run, just accept & prepare for the inevitable........
> 
> View attachment 50011




Is it inevitable in the short term?

If interest rates drop another percentage point there might just be one last gasp left.


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## Uncle Festivus (18 December 2012)

Knobby22 said:


> Is it inevitable in the short term?
> 
> If interest rates drop another percentage point there might just be one last gasp left.




I haven't seen any effect from rates where they are now, in fact prices still falling overall?

It's the perfect conditions for property ie the usual reasons like low rates, demand outstripping supply yarda yarda etc etc yet the RBA is getting very little bang for buck out of it?


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## Uncle Festivus (18 December 2012)

kincella said:


> I know all about taking the funds back, out of the markets, and sitting on it.
> The trouble with sitting on cash, is it devalues quickly, *plus the woeful 3.5%* at the moment, needs some serious
> attention.
> That is the reason I have been looking at the offset accounts. It is the equivalent of earning the same as the investor or home loan rates.




If you aren't getting 5% minimum you aren't trying - use that as your comparison to returns on property right now?

As for super, I agree it's a ponzi scheme, but up till now it's worked ok. It was yet another baby boomer retirement scheme like property. Those days are gone (or coming to an end), so what's going to replace them?


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## tech/a (18 December 2012)

Ive had considerable hdings in property fr over 
15 years

For the last 12 mths I've been in the process of liquidating debt.
Un winding my debt in property has been my main priority.
Nearly there!
Will still hold property for passive income but won't carry debt related to it.
For me this may alter if developement of some freehold properties becomes
Financially viable.

Until then my view is to be as debt free as possible going forward.
Cash-flow and liquidity is now and will continue to be king in these
More difficult economic times.


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## young-gun (18 December 2012)

tech/a said:


> Ive had considerable hdings in property fr over
> 15 years
> 
> For the last 12 mths I've been in the process of liquidating debt.
> ...




Tech, you have spoken of unwinding/ liquidating/de-leveraging your debt a couple of times over the past 6 months. Is this because you also see a disturbing path ahead for aussie RE? Or are you simply protecting yourself in the event of a bit of turbulence that you think will blow over in the near future(12-36 months)?


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## tech/a (18 December 2012)

young-gun said:


> Tech, you have spoken of unwinding/ liquidating/de-leveraging your debt a couple of times over the past 6 months. Is this because you also see a disturbing path ahead for aussie RE? Or are you simply protecting yourself in the event of a bit of turbulence that you think will blow over in the near future(12-36 months)?




*Y/G*
I can't see the point in holding debt if it's not earning you income.
If I'm just collecting interest for a bank then more the fool I am.
I hold the debt they hold the security and I hold all the risk for no or little income.

As for the future.
I see a long flat spot in all areas of investment.
Business is tough,so too property and commodities.

Inflation will return and when it does ----- will be with vengeance.
Perhaps 3-5 years.
When it does you won't want to be on the wrong side of interest rates!


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## pavilion103 (18 December 2012)

tech/a said:


> *Y/G*
> I can't see the point in holding debt if it's not earning you income.
> If I'm just collecting interest for a bank then more the fool I am.
> I hold the debt they hold the security and I hold all the risk for no or little income.
> ...




Quoted for truth. Agree 100%.


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## tech/a (18 December 2012)

pavilion103 said:


> Quoted for truth. Agree 100%.




I will add that on the other side of that will be opportunity once again.

Oh and PAV I know what you do for a living --- so am glad your in agreeance!


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## Vixs (18 December 2012)

kincella said:


> Let s put what I said into context.... so it was not just the contribution, but a load of people focus on the tax rates for super at 15%
> when it may be higher than their non super tax rates....plus why lock it into super until retirement.
> 
> I did not state the obvious, but there is also a risk with numerous changes in the legislation. There always seems to be someone with their eye on that bonanza, and wanting to get their hands on it. Like swan for instance, taking any balance under $2000 that may be dormant, and turfing it into general revenue.
> ...




Why do you focus on average tax rates? The impact isn't made at the average rate, it is made at the margin.

You don't get a benefit to the effect of your average tax rate when you reduce your taxable income by making a concessional super contribution. It comes off the top not the middle.

If you don't think having $850 in super earning income at 15% tax for ever after is a reasonable solution to having $660 in your personal investment portfolio earning income at 34% tax at least, that's fine. I'm no massive fan of super as a young person anyway - there are far too many changes to happen in the next 35 years for me to want to save every dollar I can from the tax man by locking it up for 3 or 4 decades. I certainly don't advocate making extra contributions at a point in life when you're better off keeping the money in your hand to pay a mortgage that puts a roof over your head.

This isn't a point made factoring in different asset class returns or industry super funds with union muppets dipping their toes in, I just think that your attitude about average tax rates is stupid, and no-one seems to have taken you to task on it yet.


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## WilkensOne (18 December 2012)

Tech, Pav or anyone else.. What would be your advice for people that are looking to purchase a house for PPOR when it isn't that much more of a jump in price from renting. I understand that prices may trend sideways or whatever else they want to do but do you think it is worth at least putting that dead money (rent) towards a house anyway?

Wilkens


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## pavilion103 (18 December 2012)

Difficult question to answer imo.

PPOR isn't completely a financial decision like investing is. The purpose of investing is purely to make money so property now makes no sense. Why take on enormous debt to be paying money out of your pocket each week with no prospect of growth (seen those ads - own your own investment property for ONLY $50 a week - haha)

PPOR obviously has other considerations i.e. how much do you like the property/location, how long do you want to live there (do you want stability)? Do you have a young family and want to settle down. There are many more considerations for PPOR. 

My opinion for people choosing to buy for a PPOR due to a number of factors is - don't buy above your means and overextend yourself. Don't be like those who took on huge loans at 105% and with repayments they could barely make at record low interest rates. What would happen if you lost your job?

For me, personally I would avoid it if I could. Only because I believe there is some chance of prices falling enough to make it worth staying out of the market. What if retail gets even worse? what if unemployment rises? What happens when interest rates rise again (they won't now - they are heading down)? 
I'm not really sure how bad things are under the surface but I do believe there is some chance of reasonable declines under some circumstances - although the people in charge will do everything possible to avoid this happening.

Right now I want as little debt as possible and I feel much more comfortable after selling my 3 properties.

I'll tell you what dead money is. Having bought a property 12 months ago for $500,000 and seeing it worth $465,000 now with potential for further declines. No one ever seems to include the costs into their calculations either.


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## tech/a (18 December 2012)

WilkensOne said:


> Tech, Pav or anyone else.. What would be your advice for people that are looking to purchase a house for PPOR when it isn't that much more of a jump in price from renting. I understand that prices may trend sideways or whatever else they want to do but do you think it is worth at least putting that dead money (rent) towards a house anyway?
> 
> Wilkens




PPOR a different kettle of fish.

My advice if it's your first home.
Look to either buy or build with the maximum Govt and or builder discounts 
Some are matching first home owners grants.

Selection of "potential" capital appreciation is critical 
Don't go for what you like more what you can potentially gain
Worst house in best street if your a DYI kinda guy/girl.

Look at areas of potential demand
Eg no more land releases for the forseeable future
New freeway or rail line.

Remember this will not be your last house.

Put as much as you can into the deposit.
Look at ways to get help with your mortgage
If your in a relationship that helps
Or take on room mates.
Pay down your mortgage as soon as you can.
If an un expected bill arrives you will be able to draw on a line of credit
Set this up if you have enough equity.

If you can make a quick dollar from say renovations or good buying
Then flip it and do it again ---- you'll not have capital gains on your PPOR.
I know a few couples who freeholder their home of $500k in 5-7 yrs doing this.

Remember you'll make the best deal at the point of purchase
A few weeks of negotiation could save $20-50k.
Always make an initial offer you think will be refused and insist that it
Is presented to the vendor in writing.

Write down everything you can think of and start ticking boxes.
Smart young people can lead the pack in 10 short years.
Each time you trade up you'll have more and more equity
Less re payments and more spare cas to put against the mortgage,

Good luck it's worth it!


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## medicowallet (18 December 2012)

WilkensOne said:


> Tech, Pav or anyone else.. What would be your advice for people that are looking to purchase a house for PPOR when it isn't that much more of a jump in price from renting. I understand that prices may trend sideways or whatever else they want to do but do you think it is worth at least putting that dead money (rent) towards a house anyway?
> 
> Wilkens




Is this before or after you include initial transaction costs, extra insurance, rates, wear and tear etc.


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## WilkensOne (18 December 2012)

Wow, lots of great info.

The house I am looking to buy is owned by my parents who are selling it to eliminate all their debts. The positive of this is that they are taking about 25K off the fair market value for all the fees and time that they would have incurred if sold through an agent. From my research it is a good short/medium term growth suburb, located 8km from Perth CBD, 500m to a university, school and large park. The suburb currently has not had much redevelopment but surrounding suburbs have just started. There is a proposed lightrail to be build close by, NBN and rezoning of development which would allow me to subdivide into 2 blocks.

Myself and my partner are both 22 and are serious about being financially smart, the goal is to live here for the next 4-5 years while we finish our university studies then either look to rebuild a better house, develop it or just sell it for a capital gain hopefully! The location of the house is also great for having other students living in the house which make the repayments more manageable, I am in for a few years of strict living but I think the potential for upside is absolutely worthwhile. 

While in the short term the economy is very volatile I think that property can be a great longterm investment and if nothing else, a place to live and call home.

If anyone has some feedback it would be greatly appreciated


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## WilkensOne (18 December 2012)

medicowallet said:


> Is this before or after you include initial transaction costs, extra insurance, rates, wear and tear etc.



I was referring to before the above costs, although I have already considered what they would look like. I know that what I am talking about is viewed purely as an investment would not be very successful but I think a PPOR is more than that, capital gains come more as a benefit of the transaction.


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## young-gun (18 December 2012)

tech/a said:


> *Y/G*
> I can't see the point in holding debt if it's not earning you income.
> If I'm just collecting interest for a bank then more the fool I am.
> I hold the debt they hold the security and I hold all the risk for no or little income.




Naturally, but are you saying that you were only holding investments in hope of capital growth? If not then they would have been generating you some income, no? My confusion simply comes from thinking that you wouldn't have ever tied your money up in something that wasn't returning a decent %p/a in the first place.



> As for the future.
> I see a long flat spot in all areas of investment.
> Business is tough,so too property and commodities.




Agree.



> Inflation will return and when it does ----- will be with vengeance.
> Perhaps 3-5 years.
> When it does you won't want to be on the wrong side of interest rates!




time will tell.


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## pavilion103 (18 December 2012)

I like what Tech said about saving money on the purchase price. This is big. If you don't become too emotionally attached to a property and are prepared to lose it, you could save a packet on purchase price!

For some reason what people pay for a property often becomes like Monopoly money. People pay an extra $10,000-$20,000 without a fight. You can cut much more than that off the purchase price in this market.


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## kincella (18 December 2012)

I have some theories....

The housing market has withstood the GFC partially due to the fact, that people regained some confidence at a state level, when the labor party in each state were ousted.....I believe that confidence was gained on the premise that a conservative state government would rein in spending, reduce public waste, and retain jobs, all the important things people look for.
There was a renewed confidence leading up to each election, that labor would  be tossed out.
Hence you did not see the projected depressed housing market.

There is a similar confidence the federal govnut will not be around after Nov 2013.
People felt confident under the Howard Costello reign, and are looking forward to those heady days returning.

They do not need to wait until the election is held, to change tactics. They are reasonably  confident  there will be a dramatic change with a new conservative government. They are allowing for a 'tough love' period while the budgets and cut backs are sorted out.
Hence the current confidence in the housing, and jobs market. The stock market has been showing similar confidence.
There is an enormous amount of money stashed away, just looking for a new home.
I believe the majority of people are moving in, are ready to take advantage of the new confidence that will flow, with almost immediate affects after the election.
There is no confidence whatsoever with the current federal government.

There has also been another interesting development, with a new government in Japan.
I do not believe it will all go gang busters next year, but I do believe there will be a quiet confidence that will prevail in the meantime, leading up to a return to a similarity to the Howard years by 2014 and 2015/
I do not see any dramatic deterioration in 2013. There will be job losses and businesses will continue to close down, or be taken over.
Finally the RBA has seen some light, with dropping interest rates, to give relief to the non mining states and businesses.
Fixed rates  below 6% for 3-5 years should give you some clues as to the future direction. If you cannot handle those low rates, then you should probably forget about using credit.


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## tech/a (19 December 2012)

> Naturally, but are you saying that you were only holding investments in hope of capital growth? If not then they would have been generating you some income, no? My confusion simply comes from thinking that you wouldn't have ever tied your money up in something that wasn't returning a decent %p/a in the first place.




Initially in 1996---2000 yes.
Infact I recognised the opportunity to leverage the hell out of property and get a fantastic return on the *BANKS* money.
I was putting zero down on a $100K property which I sold for $320K in 2003 (As an example).

Plan always was to freehold as much property as I could eventually.
Did that but through my Super Fund and have held Industrial Property one which houses my company and another ready for development when appropriate---read profitable.

The rest increases equity in those domestic properties I still hold which increases passive income.

So like any investment---when you can use other peoples money to leverage your return---use it.



> Fixed rates below 6% for 3-5 years should give you some clues as to the future direction. If you cannot make those low rates profitable for you, then you should probably forget about using credit.




Just altered the wording Kincella This is how I would have expressed it---not that its right just my view on your wording.


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## medicowallet (19 December 2012)

tech/a said:


> Just altered the wording Kincella This is how I would have expressed it---not that its right just my view on your wording.




One must not confuse a "dividend yield" for a net return.

Still very easy to lose money with residential property even with very low interest rates, say, like over the past 12 months.

MW


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## prawn_86 (19 December 2012)

kincella said:


> I have some theories....




I would counter that Joe Average really doesnt care about what state or federal government is in power, and certainly dont care who is governing in Japan.

The average house buyer/seller is probably just worried if they can cover the mortage or if they are going to lose their job, or maybe what the value on their property is, but not much beyond that


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## kincella (19 December 2012)

One can use an offset account, effectively not paying any interest on a home or investment loan, but at the same time in receipt of a much higher interest rate, than you would receive on deposits.

Most of the higher deposit rates on offer are only for 3-5 months, then they revert to the standard rates
I would only put deposits with those that have the  government guarantee .
I have been earning 5.85  - 6.10% with e savers, but once the honeymoon period ends, you cannot get similar rates by opening another account with the same bank.

I am looking at a double bonanza,,,,I get a new loan rate at 5.4 - 5.7% even on commercial loans, and I have offset accounts, effectively earning the same rate, but for the life of the loan, not just a honeymoon period.
I pay substantially less interest on that part of the loan that is not offset, which frees up capital to apply to pay down the loan balance, much faster and quicker than if the offset was not in place.

Why would you sell properties, when you know they will bounce back in 2 years or less, and will remain stable in the meantime. All the capital costs involved in selling, then buying back, means you are giving away your profit and gains.  

Applying short term actions against a long term investment is not smart investing.


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## againsthegrain (19 December 2012)

kincella said:


> One can use an offset account, effectively not paying any interest on a home or investment loan, but at the same time in receipt of a much higher interest rate, than you would receive on deposits.
> 
> Most of the higher deposit rates on offer are only for 3-5 months, then they revert to the standard rates
> I would only put deposits with those that have the  government guarantee .
> ...




With most banks you are free to open as many new online saver accounts as you please each time attracting the special rate for the first few months, only a few minutes online and instant transfer between accounts. Not much work for a extra 1 - 2 %


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## tech/a (19 December 2012)

> and I have offset accounts,




What am I missing here?

To offset interest on $500k loan I will need 500K in another account earning interest???


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## Mrmagoo (19 December 2012)

tech/a said:


> Initially in 1996---2000 yes.
> 
> I was putting zero down on a $100K property which I sold for $320K in 2003 (As an example).





Yup. That is all about dedication and saving <sarcasm.\>

Honestly, buying a property now would just be like handing my money over to someone like tech/a and selling yourself to slavery to the banks.

Great Australian Housing SCAM.


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## Mrmagoo (19 December 2012)

You buy a PPOR if and only if you spend no more than 30-40% on the mortgage and no more than 45% on total holding costs including maintenance. The 40%  figure is for if you can buy a really nice house in an area you desire. If you need to spend 40% of your income on just the mortgage and it is an hour from the CBD, no public transport 3 bedroom (or 2 bedroom) poorly built dog box then you cannot afford it.

If you're on a high income, you should aim to have at least $800 out of ONE INCOME spare after paying the mortgage then you can go over the 40% mark.

Just my opinion and it is the number I use to decide I cannot afford to buy a house.

My parents were able to afford a house with similar ratios of VERY LOW incomes back in the early 90s and that is where I believe things will trend back towards, probably more like the early 2000s though.


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## Mrmagoo (19 December 2012)

tech/a said:


> PPOR a different kettle of fish.
> 
> My advice if it's your first home.
> Look to either buy or build with the maximum Govt and or builder discounts
> ...




I personally would not listen to advice like this. Mathematically it does not make sense and is based on the nostalga of compounding 10% price gains seen in the past 10  years.

I do not know the perfect strategy myself but I can see the above leading to over paying for a "renovators dream" and after minor unskilled renovations having a house on the market priced 100k above high quality dwellings which won't sell and for which the vendor cannot sell for less or he/she will go bankrupt and then in negative equity for a decade. Unable to sell, unable to renovate properly, constant problems in the house and shoveling away your wage into minimum repayments on the "home" which ruined your life.

Meanwhile the elderly baby boomer investor will be on a beach in Asia somewhere, talking about how his dedication, savings and hard work allowed him to ride a property boom. The timing just ins't the same.


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## KurwaJegoMac (19 December 2012)

Mrmagoo said:


> I personally would not listen to advice like this. Mathematically it does not make sense and is based on the nostalga of compounding 10% price gains seen in the past 10  years.
> 
> I do not know the perfect strategy myself but I can see the above leading to over paying for a "renovators dream" and after minor unskilled renovations having a house on the market priced 100k above high quality dwellings which won't sell and for which the vendor cannot sell for less or he/she will go bankrupt and then in negative equity for a decade. Unable to sell, unable to renovate properly, constant problems in the house and shoveling away your wage into minimum repayments on the "home" which ruined your life.
> 
> Meanwhile the elderly baby boomer investor will be on a beach in Asia somewhere, talking about how his dedication, savings and hard work allowed him to ride a property boom. The timing just ins't the same.




Man you talk a lot of crap. Mathematically it makes sense and doesn't require 10% compounding price gains. Tech stated the price gains come from renovating and selling - using the extra cash generated to buy an upgrade and taking advantage of PPOR CGT exemptions. 

Of course you have to do your research and know what you're doing - no sense putting in 50k worth of renos for a 50k gain in capital. I'm employing the same strategy and it's working very well for me. The issue is most people are too negative/lazy/undisciplined to do some hard work and think outside the box.

It's really not that hard. It's been less than two years and I have doubled my equity whilst still being able to do my day job. 

Haters gonna hate, whingers gonna whinge.


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## againsthegrain (19 December 2012)

KurwaJegoMac said:


> Man you talk a lot of crap. Mathematically it makes sense and doesn't require 10% compounding price gains. Tech stated the price gains come from renovating and selling - using the extra cash generated to buy an upgrade and taking advantage of PPOR CGT exemptions.
> 
> Of course you have to do your research and know what you're doing - no sense putting in 50k worth of renos for a 50k gain in capital. I'm employing the same strategy and it's working very well for me. The issue is most people are too negative/lazy/undisciplined to do some hard work and think outside the box.
> 
> ...




On the Noble Park property? I thought not that long ago you said it has dropped in price slightly


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## WilkensOne (19 December 2012)

KurwaJegoMac said:


> Man you talk a lot of crap. Mathematically it makes sense and doesn't require 10% compounding price gains. Tech stated the price gains come from renovating and selling - using the extra cash generated to buy an upgrade and taking advantage of PPOR CGT exemptions.
> 
> Of course you have to do your research and know what you're doing - no sense putting in 50k worth of renos for a 50k gain in capital. I'm employing the same strategy and it's working very well for me. The issue is most people are too negative/lazy/undisciplined to do some hard work and think outside the box.
> 
> ...




I am glad to see that some people are still working hard in these conditions and coming out on top!

If you don't mind elaborating, could you explain your strategy a little more as I am very interested


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## kincella (19 December 2012)

tech a, obviously you are unaware of how offsets work
you do not earn interest on the offset account, and you do not pay interest on the equivalent amount of the loan

who has a mortgage of $500 k...not your average home buyer of FHB that frequent these threads

so if I have the average loan of $239k, and put up $100k in the offset account, I only get charged interest on the balance of $139k
makes a huge difference to the interest cost

to the other poster, Westpac do not allow another esaver account if you have held one in the past 3 months, and I assume the fine print for the other banks are the same
fine if one wants to keep changing and opening banks accounts to chase these amounts

I had a substantial amount in one account , believing it was earning 5.85 at the time, when no interest arrived and I checked, the bank had  changed the rate to zero...they do not send you a letter, or call to advise the changes

the other poster on the average rate of tax...if you are on an income of $50,000pa your average tax rate is around 20%....big deal if the actual rate on $1000 of that money is 30%, so you put it into super, it is taxed at 15% upfront before it has a chance to earn any money. so it is not $1000 earning any income, it is only $850 and then the income is taxed at 15%...then you need to wait years for retirement to get your hands on it.
Some people would be better off having the $800 extra to pay off their mortgage, than to put it into super.
($1000 taxed at 20% average rate) than $850 sitting around for years for fund managers to take their cut each year, plus tax  on the income
I look at the bigger picture


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## againsthegrain (19 December 2012)

kincella said:


> tech a, obviously you are unaware of how offsets work
> you do not earn interest on the offset account, and you do not pay interest on the equivalent amount of the loan
> 
> who has a mortgage of $500 k...not your average home buyer of FHB that frequent these threads
> ...




not sure about westpac, but NAB and ANZ sure do, I have about 20 open with both banks uptodate and have been receiving 5% with ANZ on each new one. The old ones just go back to 3% of whatever. Its not against bank policy, they even encouraged this to me. Maybye time to shop around and do some research as mentioned before


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## prawn_86 (19 December 2012)

kincella said:


> who has a mortgage of $500 k...not your average home buyer of FHB that frequent these threads
> 
> so if I have the average loan of $239k, and put up $100k in the offset account, I only get charged interest on the balance of $139k
> makes a huge difference to the interest cost




We are toying with the idea of buying our 1st ppor in a couple years time. Even with deposit the mortage will be up around the 400k, there is just no other choice if one does not want to spend more than an hour travel each way.

So you're saying you get paid interest on the money in the offset account, and not charged interest on that equivalent amount off your loan?


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## WilkensOne (19 December 2012)

prawn_86 said:


> We are toying with the idea of buying our 1st ppor in a couple years time. Even with deposit the mortage will be up around the 400k, there is just no other choice if one does not want to spend more than an hour travel each way.
> 
> So you're saying you get paid interest on the money in the offset account, and not charged interest on that equivalent amount off your loan?




Someone correct me if I am wrong but my understanding was; If you have a loan of 400k with an offset account, if you put 50k in the offset account (which doesn't earn interest like a normal HISA) the amount of principle you pay in each repayment is calculated as if your mortgage was 350k.

In short the amount in the offset account acts as if you made additional repayments to the loan which pays off the principle faster, but gives you the option to use or remove the money at will.


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## prawn_86 (19 December 2012)

WilkensOne said:


> Someone correct me if I am wrong but my understanding was; If you have a loan of 400k with an offset account, if you put 50k in the offset account (which doesn't earn interest like a normal HISA) the amount of principle you pay in each repayment is calculated as if your mortgage was 350k.
> 
> In short the amount in the offset account acts as if you made additional repayments to the loan which pays off the principle faster, but gives you the option to use or remove the money at will.




That is what i would of thought. So it is bascially a redraw account where you can redraw any additional payments you have made.

Would like to here from Kincella though


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## WilkensOne (19 December 2012)

prawn_86 said:


> That is what i would of thought. So it is bascially a redraw account where you can redraw any additional payments you have made.
> 
> Would like to here from Kincella though




Like I said that was my understanding so no guarantees 

A lot of the time you can attach a normal transaction account to it, allows you to have your salary paid into it and gain any small benefit from that. Alternatively you could use it to save for home improvements and benefit from parking the money in the offset.

I am in a similar situation to you prawn, will see that the others say!


----------



## Vixs (19 December 2012)

Vixs said:


> Why do you focus on average tax rates? The impact isn't made at the average rate, it is made at the margin.
> 
> You don't get a benefit to the effect of your average tax rate when you reduce your taxable income by making a concessional super contribution. It comes off the top not the middle.
> 
> ...






kincella said:


> the other poster on the average rate of tax...if you are on an income of $50,000pa your average tax rate is around 20%....big deal if the actual rate on $1000 of that money is 30%, so you put it into super, it is taxed at 15% upfront before it has a chance to earn any money. so it is not $1000 earning any income, it is only $850 and then the income is taxed at 15%...then you need to wait years for retirement to get your hands on it.
> Some people would be better off having the $800 extra to pay off their mortgage, than to put it into super.
> ($1000 taxed at 20% average rate) than $850 sitting around for years for fund managers to take their cut each year, plus tax  on the income
> I look at the bigger picture




Just try reading again, this time with your eyes open. I bolded it just so you can see it with your 'big picture' eyes.

They don't HAVE $800 to put off their super, there is no AVERAGE RATE in our income tax system. They are paying 34% with an income of 50k pa. They have $660 dollars. If they salary sacrifice it (which I didn't recommend as I would personally pay down my mortgage so that I can refinance for smaller monthly payments, a better interest rate or redraw for tax effective investment purposes first) they have $850.

You don't need to roll over and 'have fund managers take their cut each year', take control of your super and take advantage of the vast number of low fee investments available.

Anyway, this is a property thread so I will leave that train of thought there.

You are right about mortgage offset accounts, they are a great tool and a very simple way of generating the equivalent of a decent return with no tax consequences for parking money in the short term.

I personally just follow the belief that if I buy in an area that is likely to be in demand into the future (access to places where people work, educate their kids, public transport, health, not on floodplain etc etc) I can bank on at least growth with inflation over the long term.


----------



## tech/a (19 December 2012)

> so if I have the average loan of $239k, and put up $100k in the offset account, I only get charged interest on the balance of $139k
> makes a huge difference to the interest cost





Ah--yeh 

(1) So you need to have X available in spare cash to place in an offset account.
OR
(2) Make higher payments so you can offset an amount over time.

Fine provided you cant do better than bank interest on the amounts being tied up.
Again your being a very good client offering the bank even more security with your money.

Like going into the bank asking for an overdraft and they want cash security.
So why not use your own cash in the first place!!


----------



## jancha (19 December 2012)

tech/a said:


> Ah--yeh
> 
> (1) So you need to have X available in spare cash to place in an offset account.
> OR
> ...




Money in an offset account isn't tied up for starters Tech.


----------



## tech/a (19 December 2012)

jancha said:


> Money in an offset account isn't tied up for starters Tech.




Really?

If I take it out they still offset the interest against my mortgage?
Of course its tied up! I cant use it.


----------



## kincella (19 December 2012)

I only ever hold cash whilst twiddling my thumbs and waiting for the next opportunity to invest.
I do hold xxx amount for unforeseen circumstances.

there is not much that interests me as an investment in the current climate
It is this money I am using for the offset accounts.
It is earning the equivalent of 6% deposit rates
they do not pay you interest on the deposit amount
nor do they charge you interest on the loan account, to the amount offset
the end result is the same as if you are earning say 6% on deposit
and paying 6% loan rates

in the earlier example provided, $100k saving loan interest at 6%= saving of $6000 interest
so it gives one the ability to pay the extra $6000 off the capital, 
at the same time keeping the loan repayments at the old monthly rate
kidding that is not a saving, or a benefit in this day and age

they are not the old type of everyday account , where people put some salary in on a temp basis
they are very specific accounts
not everyone offers this account
some banks restrict them to variable loan accounts
they cannot be used to offset a fixed loan account

some do offer them against the fixed loans

if you are in investor, there is less income to pay tax on, for the deposit income, since there is none
and less claims for the interest expense, since it does not accumulate nor is it paid

if you have parents, who would trust you, with their extra cash, it can work
or vice versa for wealthy kids to look after their parents
it is considered as an asset for age pension purposes

they are specific offset accounts....I suggest you google the question

The average rate of tax....
for the current year 2012-2013
tax on $80,000 is $17547 / 80,000 = .219%
tax on $37,000 is $3572/37,000 = .0965%

cheers


----------



## jancha (19 December 2012)

tech/a said:


> Really?
> 
> If I take it out they still offset the interest against my mortgage?
> Of course its tied up! I cant use it.




So you think it's fixed like a term deposit?
What would happen if you needed money for an urgent operation (say your brain example) you wouldn't be penalized for it if it were sitting in an offset account. It isn't tied up.


----------



## prawn_86 (19 December 2012)

jancha said:


> So you think it's fixed like a term deposit?
> What would happen if you needed money for an urgent operation (say your brain example) you wouldn't be penalized for it if it were sitting in an offset account. It isn't tied up.




Yes but then your interest payable would increase due to removing funds from that account. Unless i too am missing somehting i don't see how it is different to a redraw facility


----------



## tech/a (19 December 2012)

jancha said:


> So you think it's fixed like a term deposit?
> What would happen if you needed money for an urgent operation (say your brain example) you wouldn't be penalized for it if it were sitting in an offset account. It isn't tied up.




*Rubbish*

I take it out ---- I no longer get an offset.
Of course Im penalized. I no longer get the benefit.
Its tied up!---Unless Im happy to negate the benefit.

Just walk me through how Im not worse off using the 
money in the offset account for my brain surgery.
Just type slowly so I can see how I can still recieve 
an offset on my mortgage AND get a new brain?

If I cant do both then its TIED UP.
If I can only do one then its tied up! Infact if I take it out its TIED UP in the
cost of Brain surgery---or isnt it tied up there either?

Hang on ll bet a loss isnt a loss until you take the loss--Right?
If its just on paper then its not a loss right?
If you have $10000 worth of paper losses unless you liquidate those losses 
you havent made a loss--RIGHT?


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## kincella (19 December 2012)

the money in the offset account is not tied up like a term deposit,
you are free to add and remove any amount you like
it is quite simple really, only the amount on the deposit offset account reduces the interest on the loan account
so while you may have funds sitting idly by
and if you have one or 10 mortgages
you can make that money work for you

geez
do some research and find out, instead of battling it out blindly here


----------



## tech/a (19 December 2012)

kincella said:


> the money in the offset account is not tied up like a term deposit,
> you are free to add and remove any amount you like
> it is quite simple really, *only the amount on the deposit offset account reduces the interest on the loan account
> so while you may have funds sitting idly by*and if you have one or 10 mortgages
> ...




Understand it totally.
Pedantic rubbish about funds being tied up. By the Brain surgeon.


----------



## KurwaJegoMac (19 December 2012)

againsthegrain said:


> On the Noble Park property? I thought not that long ago you said it has dropped in price slightly




Not the Noble Park one - if you recall that's an IP. What I'm referring to here is my PPOR.


----------



## pavilion103 (19 December 2012)

Hopefully the thread will welcome some comic relief:

http://www.news.com.au/realestate/renting/ask-the-property-professor/story-fndbatbk-1226534460846

I'm not sure if this was posted anywhere previously but it gave me more than a little chuckle at work!


Peter is the nicest of guys. I have spoken with him on many occassions. I actually did the property course at TAFE under him. I could have sworn I went back in time when I read this article! Amazing that the leading news service in Australia would publish this, even with the bullish bias the media has toward property!


----------



## KurwaJegoMac (19 December 2012)

Just to clarify some of the questions regarding the difference between offsets and redraws and how they work as there is a subtle difference between both.

Firstly - the offset account:

If you have a $400k loan and deposit $50k into the offset account, the lender will calculate your interest as if you had a $350k loan ($400k - $50k) however your principal is still $400k. The offset account does not pay down the principal.

Now the redraw facility:

If you have a $400k loan and pay $50k towards the prinicipal, you now have a $350k loan (principal). If you redraw that $50k, your principal goes back up to $400k.

--------------------------------------------------

In both of the examples above, you pay the same amount of interest as your effective loan amount is treated as $350k by the lender. From that perspective, they seem to be the same thing. Where they differ, is in the way that they are treated from a tax perspective:

Let's say, I have a redraw facility. Using the example above, I put $50k towards my $400k loan. The principal I owe to the bank is now $350k.

I now decide I want to purchase a holiday worth $15k. I utilise the redraw facility to take out $15k and purchase the holiday. *From a tax perspective, I am considered to have taken a new loan for non-investment purposes.* This means, that I cannot claim interest payments for that $15k. So even though I'm paying full interest on my new principal (loan amount) of $375k ($350k + $15k), I can only claim on my tax, the interest payments for the $350k portion.

Contrast this with an offset account, using the same figures above. If I withdraw $15k from my offset account, I can claim on my tax, the interest payments for the full $375k. Why? *Because the money in the offset account has not been paid towards the principal, and therefore I am not considered to have taken out a new loan.*

It's a subtle difference, which is relevant more so for investment properties. You can't claim interest repayments on PPORs so an offset account won't make any difference.

Hope that helps!


----------



## prawn_86 (19 December 2012)

KurwaJegoMac said:


> Hope that helps!




Perfect. Thanks KJM


----------



## cynic (19 December 2012)

KurwaJegoMac said:


> Just to clarify some of the questions regarding the difference between offsets and redraws and how they work as there is a subtle difference between both.
> 
> Firstly - the offset account:
> 
> ...




Great example KJM.

Another thing worth mentioning is that a proportion of the interest on a PPOR mortgage can become tax deductible if a redraw facility is utilised (in preference to an offset account) provided that the redrawn funds are used for investment purposes.


----------



## KurwaJegoMac (19 December 2012)

cynic said:


> Great example KJM.
> 
> Another thing worth mentioning is that a proportion of the interest on a PPOR mortgage can become tax deductible if a redraw facility is utilised (in preference to an offset account) provided that the redrawn funds are used for investment purposes.




Quite right - a good point Cynic!


----------



## jancha (19 December 2012)

tech/a said:


> *Rubbish*
> 
> I take it out ---- I no longer get an offset.
> Of course Im penalized. I no longer get the benefit.
> ...




Fark! All what i'm saying is you have access to it if need be and unlike it being in a fix term deposit your not penalized for withdrawing it. Got it Chief?


----------



## tech/a (19 December 2012)

jancha said:


> Fark! All what i'm saying is you have access to it if need be and unlike it being in a fix term deposit your not penalized for withdrawing it. Got it Chief?




*Yes you are*
Your benefit vanishes the second you take the money out.
Hence IMMEDIATE Penalty. Got it???


----------



## young-gun (19 December 2012)

kincella said:


> I have some theories....
> 
> The housing market has withstood the GFC partially due to the fact, that people regained some confidence at a state level, when the labor party in each state were ousted.....I believe that confidence was gained on the premise that a conservative state government would rein in spending, reduce public waste, and retain jobs, all the important things people look for.
> There was a renewed confidence leading up to each election, that labor would  be tossed out.
> ...




This is the biggest load of **** I have ever read.


----------



## jancha (19 December 2012)

tech/a said:


> *Yes you are*
> Your benefit vanishes the second you take the money out.
> Hence IMMEDIATE Penalty. Got it???




Seriously? I thought the advantage in having an offset account was to save the interest off your morgage. Money you cant claim back and if you needed a brain operation like in your case you only had to withdraw the money without any penalties. Sure you'd be paying more interest after that but at least it's accessible.
Are you suggesting people should find better ways in investing their spare money? If so what should the average Jo Blow with be doing with it or would you be giving away your secrets of success? lol


----------



## kincella (19 December 2012)

tech, 
technically you are not penalised...a penalty is like a fine, you are not being fined
you simply revert to paying the interest on the full amount of the mortgage 

you can take your offset deposit and put it into an account that pays interest, 
which is usually at a lower rate than the mortgage rate
 the average mortgage rate at the moment is between 5.49 to 6.10 with the big lenders
the deposit rate is 3.5  or less

some may elect to split their loans between fixed and variable....
then choose which the offset account will attach to

some lenders will not allow an offset against a fixed loan, some will

if this is the case with your lender, then apply the offset against the variable portion
or the one with the higher interest rate (usually the variable rate)
 some people have been stuck on a higher fixed rate....they locked in when rates were higher
this is another option available to reduce the interest on that higher rate loan


----------



## young-gun (19 December 2012)

jancha said:


> Are you suggesting people should find better ways in investing their spare money? If so what should the average Jo Blow with be doing with it or would you be giving away your secrets of success? lol




I wouldn't call an offset savings account an investment There is plenty of stocks yielding good dividends at the moment. If you have enough in your account you could also use it towards another cashflow positive property. Not that I would be doing that in the current environment.


----------



## Julia (19 December 2012)

young-gun said:


> This is the biggest load of **** I have ever read.



+1.   


> The housing market has withstood the GFC



Again, this vast generalisation from kincella in the face of massive falls in some areas.


----------



## jancha (19 December 2012)

young-gun said:


> I wouldn't call an offset savings account an investment There is plenty of stocks yielding good dividends at the moment. If you have enough in your account you could also use it towards another cashflow positive property. Not that I would be doing that in the current environment.




No maybe not an investment but a safe place to have it sitting without being penalized when you do decide to take it out and invest.


----------



## kincella (19 December 2012)

any comments on why CBA would take the rest of Aussie home Loans ? and what it means for the future of property

dividends are a great source of income.....but who guarantees the capital behind my investment will remain in tact and not decrease.....
for eg what was the price of BHP in 2007 ? was it 55.00 or thereabouts
and what is the price now ?


----------



## jancha (19 December 2012)

kincella said:


> any comments on why CBA would take the rest of Aussie home Loans ? and what it means for the future of property
> 
> dividends are a great source of income.....but who guarantees the capital behind my investment will remain in tact and not decrease.....
> for eg what was the price of BHP in 2007 ? was it 55.00 or thereabouts
> and what is the price now ?




Exactly unless you can read the signals on when to sell and buy... like some claim they can.
 Old adage sell when people are buying and buy when people are selling. GFC was a good example.


----------



## Ves (19 December 2012)

tech/a said:


> Understand it totally.
> Pedantic rubbish about funds being tied up. By the Brain surgeon.



I leave six months of salary in my offset account (it is effectively my 'emergency fund' should I need it for any purpose, job loss, medical, you name it).  I don't think there is a better place for it.  No where else can I get an interest rate equal to my mortgage.

An offset just gives me flexibility.

For investment loans using an offset is always better than paying down the loan.  If you need the money for non-income producing or investment purposes the interest on the loan remains tax deductible if you take it out of the offset account.

If you are using a loan, and draw down the funds for a personal reason you will not be eligible to claim a deduction on that portion of the interest.  Also good luck with the accounting fees for the accountant having to work out the portion of the loan that is 'quarantined' each year for tax purposes.

I don't see why you guys are arguing about 'offset' accounts.


----------



## Vixs (19 December 2012)

kincella said:


> The average rate of tax....
> for the current year 2012-2013
> tax on $80,000 is $17547 / 80,000 = .219%
> tax on $37,000 is $3572/37,000 = .0965%




I give up. Good luck to ya mate. I hope you do well, if you can do it I'm gonna be just fine.

I'm gonna go eat an average of 1 slice of bread. I'm not going to cut it off the end, I'll just chew right through the middle of the loaf.

Might have the middle layer of lasagne too.


----------



## young-gun (19 December 2012)

kincella said:


> any comments on why CBA would take the rest of Aussie home Loans ? and what it means for the future of property




Yes, they are trying to gain more market share and turn more profit as their greed consumes them further. The sort of action you would see before it all comes tumbling down. Shares up, profits up, confidence in the banking sector appears to be up, all is rosey.



> dividends are a great source of income.....but who guarantees the capital behind my investment will remain in tact and not decrease.....
> for eg what was the price of BHP in 2007 ? was it 55.00 or thereabouts
> and what is the price now ?




and who guarantees your property portfolio? there are no guarantees in investing, even though you may think you're safe.


----------



## kincella (20 December 2012)

jancha said:


> No maybe not an investment but a safe place to have it sitting without being penalized when you do decide to take it out and invest.




Vespura said "I don't see why you guys are arguing about 'offset' accounts. "


at least we have 2 other bright sparks here who understand the concept, and recognise an excellent new product, that can be used as a huge advantage
cheers


----------



## prawn_86 (20 December 2012)

kincella said:


> at least we have 2 other bright sparks here who understand the concept, and recognise an excellent new product, that can be used as a huge advantage
> cheers




I fail to see how the slight difference between this and a redraw account is a 'huge advantage'. Everyone i know with a mortgage overpays and then redraws it if needed as opposed to just having a seperate savings account


----------



## medicowallet (20 December 2012)

I guess if times get tough (if they ever really have been for 15 years) again, the government will not be able to afford another first home vendors boost...

another failed policy of kicking the can down the road by a failed government.


House prices to continue to fall in the short term.


----------



## explod (20 December 2012)

An interesting and most important aspect that many on here fail to see is true value and the value of money.

Now I am talking about property and we will get back to that shortly.

Money used to be backed by gold, called "The Gold Standard" It was done away with by President Nixon so that nations could print money without being encumbered.

Gold for 4000 years has always been a solid intrinsic measure and still is to this day.

The money printing system has worked well for awhile and in 2001 gold fell to a price of US$260 an ounce from $700 in 1980.

Since then however it has risen to $1600 due to the devaluation of money. Up more than 600%

So if you purchased a property in 2001 for say $300.000 and it is worth today 1.8 mill then good luck to you.  Of course with a rental property you would have made a bit more.

But the important aspect is that although the value of your property is going up against paper money, is it really in a tangible manner going up.

With Japan about to embark on the greatest printing spree ever we will soon be faced with increasing inflation.

Now I am not being a gloom and doom prophet, just stating some facts that should be considered in this current climate.

Anyone wanting to find real answers should start by reading up on the Austrian School of economics which will gradually open you to other leads of financial education.  To make good decisions on any investment the more you can learn on economics the better.


----------



## tech/a (20 December 2012)

Excellent points explod

Take this opportunity to mitigate risk
You'll be glad you did.


----------



## Trembling Hand (20 December 2012)

explod said:


> With Japan about to embark on the greatest printing spree ever we will soon be faced with increasing inflation.
> 
> To make good decisions on any investment the more you can learn on economics the better.




Could you give us a detailed explanation about how that will effect us in Oz and exactly what are they going to do with the " greatest printing spree ever"

Just so we are sure we all know your "economics ".


----------



## wayneL (20 December 2012)

explod said:


> Anyone wanting to find real answers should start by reading up on the Austrian School of economics which will gradually open you to other leads of financial education.  To make good decisions on any investment the more you can learn on economics the better.




Agreed there Mr Plod.

I am confused however... The Austrian School is total incongruous with Watermelonism and the economics it espouses. 

Cognitive dissonance?


----------



## explod (20 December 2012)

Trembling Hand said:


> Could you give us a detailed explanation about how that will effect us in Oz and exactly what are they going to do with the " greatest printing spree ever"
> 
> Just so we are sure we all know your "economics ".




No that would take a book.  You need to learn and know it for yourself, hence the reference.

DYOR    My intent is to have some give it thought.

But on Japan,the hyperinflation resulting will merely make clear that it is upon us everywhere.  A pack of beans is the same price as last year but the weight is now half.  Just need to open the eyes, it is not for me to hold hands.


----------



## explod (20 December 2012)

wayneL said:


> Agreed there Mr Plod.
> 
> I am confused however... The Austrian School is total incongruous with Watermelonism and the economics it espouses.
> 
> Cognitive dissonance?




Well perhaps I should have mentioned "Von Misers" on economics and value. http://mises.org/

Unfortunately its a bit like learning a new language with a different alphabet to get to a simple question like "
where is start"?

To invest a lot of money (hard earned) you need to know in my view.


----------



## Trembling Hand (20 December 2012)

explod said:


> No that would take a book.  You need to learn and know it for yourself, hence the reference.
> 
> DYOR    My intent is to have some give it thought.
> 
> But on Japan,the hyperinflation resulting will merely make clear that it is upon us everywhere.  A pack of beans is the same price as last year but the weight is now half.  Just need to open the eyes, it is not for me to hold hands.




Oh OK! Just thought you were going to call the tipping point for the end of the world or something ...... again!!

Just a bit un-sure and all as they have been doing the same thing for 30 years and they cannot even get their property prices to move let alone effect Australian property prices.

Was sure you would be able to add something to the mechanics how this time its different..... but hey maybe it is _this time._


----------



## Ves (20 December 2012)

prawn_86 said:


> I fail to see how the slight difference between this and a redraw account is a 'huge advantage'. Everyone i know with a mortgage overpays and then redraws it if needed as opposed to just having a seperate savings account



Prawn, see post #9700. I think it explains the difference and the potential consequences.


----------



## wayneL (20 December 2012)

explod said:


> Well perhaps I should have mentioned "Von Mise*r*s" on economics and value. http://mises.org/




Ludwig might have a been a miser, I don't know, but I'm sure your are referring to Von Mises. 

The thing is Plod, The Greens are light years away from Austrian Economics.


----------



## explod (20 December 2012)

wayneL said:


> Ludwig might have a been a miser, I don't know, but I'm sure your are referring to Von Mises.
> 
> The thing is Plod, The Greens are light years away from Austrian Economics.




And so are the other parties, and the US God forbid are light years away too.  It is not a reason to not study the angles and get the powder dry.

At least the Greens canvass all of their members with survey forms to complete, in a lot of detail, to formulate policy.  And that my friend takes time to get through, but practical change by consensus is on the way.  That approach is also light years away with the other parties here.  Ron Paul in the US was onto it but the Republicans repudiated him and his very good ideas.


----------



## wayneL (20 December 2012)

explod said:


> And so are the other parties, and the US God forbid are light years away too.  It is not a reason to not study the angles and get the powder dry.
> 
> At least the Greens canvass all of their members with survey forms to complete, in a lot of detail, to formulate policy.  And that my friend takes time to get through, but practical change by consensus is on the way.  That approach is also light years away with the other parties here.  Ron Paul in the US was onto it but the Republicans repudiated him and his very good ideas.




I grant you that, but I never claimed any other party was close the the Austrians. The natural business cycle is disastrous to incumbents when it cycles down, hence the attraction to pseudo Keynesian/Monetist frankenomics.


----------



## explod (21 December 2012)

wayneL said:


> I grant you that, but I never claimed any other party was close the the Austrians. The natural business cycle is disastrous to incumbents when it cycles down, hence the attraction to pseudo Keynesian/Monetist frankenomics.




Tick


----------



## overlap (22 December 2012)

> In the 1964 Bond movie Goldfinger, “M” asks the hero: “What do you know about gold?” Bond replies with a wry smile, “I know it when I see it”.



http://leithwheelerblog.sitecm.com/uncategorized/housing-bubble/


----------



## kincella (22 December 2012)

oh dear, so a fixed income analyst, a competitor in the  'grab for cash', your cash, industry writes an article with graphs to show how bad it is for the average bloke to buy a home, put a roof over his head.
He wants your cash, simple, no more no less, so of course he will put up a scathing argument against housing.

it is no different to all the other stock tipster's  articles, with the same agenda....they are all jealous of the amount of money ploughed into housing.
just imagine, if they could get you to go to the bank and borrow 90% to invest in any of their schemes...
truthfully their real fight should be with the banks...
it is easy to see why the banks will not lend against those assets.....the assets can disappear, as in the stocks.... 
the value or worth is gone, with just a few moves on a keyboard, nothing more required..

there is a bloke on another forum this week, bragging that he had made over 3 million in profits....
from trading stocks.....seems he started with $500...a simple labourer....he thinks he was just lucky...he had no trading rules, patterns or tips....just luck
and all the sheep followed his every word, praised him, bestowed much love on him, as if he  was a new god, to be worshipped..
it is everyone's dream...from a humble beginning,  a new guru arrives...
he said he had bought a house, paid cash, gave up his day job, and now just traded for a living....
wow
then finally, I posed a simple question.....had he paid half of his winnings to the tax man ? or had he in fact made 6 million in profits, and walked away with 3 million after tax...? 
It is stories like this, that feeds and nourishes the dreamers. The easy life, easy money attitude.
Whereas with property, it is the opposite, it is viewed as hard yakka, the hard work, the slow road.


----------



## Uncle Festivus (22 December 2012)

kincella said:


> It is stories like this, that feeds and nourishes the dreamers. The easy life, easy money attitude.
> Whereas with property, it is the opposite, it is viewed as hard yakka, the hard work, the slow road.




I can't wait for this weeks story on ACA or TT about the average suburban single mum, with 6 kids, who has a $6M property portfolio in just 2 years. How does she do it?? Then the back-up interview with the 'property guru' who then proceeds to list all the suburbs that are about to EXPLODE because the next boom is about to start! I've seen more sincere and trustworthy speils from side show hawkers and used car salespersons.

See, even the sheeple can 'do' property.....it doesn't really take any brains does it?


----------



## Bill M (22 December 2012)

Uncle Festivus said:


> Then the back-up interview with the 'property guru' who then proceeds to list all the suburbs that are about to EXPLODE because the next boom is about to start! I've seen more sincere and trustworthy speils from side show hawkers and used car salespersons.
> 
> See, even the sheeple can 'do' property.....it doesn't really take any brains does it?





It's kind of started already, read this today.

---
THE dark clouds over Australia's depressed housing market will lift next year - and Sydney will be leading the property boom. 

The rest of the story at this link:http://www.dailytelegraph.com.au/realestate/buying/sydneys-west-to-lead-housing-boom-next-year/story-fndbpo91-1226542264918

---


----------



## overlap (23 December 2012)

kincella said:


> oh dear, so a fixed income analyst, a competitor in the  'grab for cash', your cash, industry writes an article with graphs to show how bad it is for the average bloke to buy a home, put a roof over his head.
> He wants your cash, simple, no more no less, so of course he will put up a scathing argument against housing.
> ...
> ...




Fine.

So what are you thoughts on the analysis then?


----------



## sydboy007 (23 December 2012)

I just can't see how property prices can increase much faster than earnings growth now.

Australians have geared up to their necks - presently around 155% of income.

It seems each time it reaches around 160% that it would then fall back a bit.  It's the great joke of the Howard Government that they paid of their debt because a large proportion of the Aussie public went out and spent more than they earned for a few years and drove the value of housing to be near the most over valued in the world.

Considering most people are a lot more wary about debt after the GFC, and there's a bit of worry about how the economy will fare in 2013 I just can't see a general housing recovery for years to come.  Either prices have to fall, or they stagnate for quite a few years until incomes rise enough to improve the affordability.

It will be interesting to see how long it takes the boomer generation to decide the negative gearing of property ain't such a good idea when there's little to no capital growth.

I know this is a stocks forum but there's still some highly rated corporate bonds out there paying 6.5 to 7% yield and I'd take that over an investment property any day (I have in my SMSF).  There's also still a reasonable number of shares out there paying 5%+ fully franked dividend yields with hopefully above inflation growth of the capital and income over time.  To me a diversified share portfolio with quality corporate debt is less risky over a 5+ year time period than a single house that provides no diversification.

I ask anyone thinking to buy a property, why would you buy when someone is willing to lend it to you at maybe 4.5% of it's value, and you have nothing else to pay, while the landlord is going to see up to 1% of their gross yield disappear in holding costs, and is probably paying around 5.5% interest on the loan.  I know there's a lot of non financial reasons to own your own home, but to me the economics these days don't stack up too well.

full disclosure - I was lucky to buy before the boom, but there is no way I would put myself through a 700K loan now.


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## FlyingFox (25 December 2012)

Curious as to whether anyone thinks that this time there might be some fundamental changes to the way the economy works and property in particular? Is this the start of the Ponzi collapsing? Will there be growth in 3-5 yrs? 5-7 yrs?

Personally I think the two major reasons property has held up so well wince GFC was the flow on effect of wages from the mining investments and the unrelenting belief that was hammered home about how Oz is different and prices will not fall here.


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## satanoperca (27 December 2012)

Hi,

Just back from a few months travelling in Asia, investigated property prices in four major cities, Phnom Penh, Ho Chi Minh, Kuala Lumpur and Shanghai. It would seem that if you wanted the same sort of properties that are available in our major cities and taking into account average salaries, our property prices don't seem that expensive.

Two things while away came to my attention, that I hadn't given a great deal of thought to when evaluating Oz property prices :

1) Our population increased by approx 2% this year. Those extra people need somewhere to live.
2) Australia is the best place to live in the world. While my statement might be seen as bias, it seemed that every traveler that I met wanted to migrate to Oz and the locals all asked how they can get to this great country, the lucky country. This desire is hard to determine as a metric and use in analyzing whether we do have inflated property prices. It did however make me realize that if Oz property does start to decline due to the inability of Australians to take on ever increasing debt then the govnuts will simply open the flood gates to wealthy immigrants who will readily take up any slack. Believe me the world is a big place with millions of millionaires willing and wanting to come and live in Oz. This alone has changed my belief that we will not see any major crash and at best a small correction followed by years of stagnation. 

I did also see the effects of the GFC in all the countries that I visited. Many places have seen rapid growth and expansion over the last decade, largely due to the easy availability of credit and cashed up/debted up westerners wanting more material goods which they don't need and tourism. The tourism side had seen a substantial slow down and locals do not have the money to take up the slack.

The other area of our economy that I cannot see ever recovering is manufacturing, which I am involved in. Due to low wages, the availability of the same technologies we utilize, the ability of westerns to easily travel fast and efficiently to these countries and the increasing use of English as a language. So we better hope that China and other Asian countries continue to need our resources as we will for the foreseeable future have a two speed economy.

As for tourism in this country, all travelers that I meet all loved Australia and wanted to come here more often but all stated that it had become way to expensive and I have to agree. As for Australians wishing to holiday in this country, why would you. You can take the whole family away for a month and live like kings for the same cost as a week or two in this country. Plane travel has become cheap due to increased competition.

In conclusion, I'm still unwilling to purchase property in Oz until the full effects of GFC 1 and in progress GFC11 become apparent. I do see and feel that there are some good buys on property if one is willing to research and be astute. It is still cheaper to rent than purchase property even with extremely low IR's.

Cheers and happy new year to everyone


----------



## FlyingFox (28 December 2012)

satanoperca said:


> Hi,
> 
> .....
> 
> ...




Thanks for providing a world perspective. You did mention some possible scenarios but some of these can easily be quite different.

One of the reasons the property prices are higher in some of these cities is that their population is greater than or approaching that of Australia. Also the spread of the type of properties and wages is significantly higher than Australia. Our wages are very tight around the mean (this is from anecdotal evidence so please correct me) which is very different from most countries but definitely developing countries. Moreover a town-house in inner - west Sydney or south east Melbourne is in the 20-40 percentiles of property here. Something similar is more closer to the 2-4 percentiles in their respective cities. 

As for the million of millionaires, most of them will have the same or greater exposure to the global economy that investors here have. If they are not hit hard they surely won't want the risk. Moreover for a lot of immigrants in this situation, Australia is treated as a holiday house with cheap world class education and good healthcare. Are they actually contributing to the economy except for pushing up house prices?  I think the politicians will be weary of this.

Last but not least, and speaking from some people I got to know a while back due to my fathers business, one of the reasons people want to come to the "lucky" country is because we are perhaps one of the last of the welfare states. Also due to mining opportunities but these are fast disappearing. People that can actually afford to leave here (the millionaires that you referred to) don't actually want to. They have a much better lifestyle in their home countries and find Australia a very expensive place to live and do business.


----------



## white_goodman (28 December 2012)

satanoperca said:


> 1) Our population increased by approx 2% this year. Those extra people need somewhere to live.




as much as logically it makes sense, population has very little statistically significant impact on property prices. The nature of housing composition, demand/supply cycles, people per household etc trumps the basic population up = property up argument


----------



## Bill M (28 December 2012)

FlyingFox said:


> Last but not least, and speaking from some people I got to know a while back due to my fathers business, one of the reasons people want to come to the "lucky" country is because we are perhaps one of the last of the welfare states. Also due to mining opportunities but these are fast disappearing. People that can actually afford to leave here (the millionaires that you referred to) don't actually want to. They have a much better lifestyle in their home countries and find Australia a very expensive place to live and do business.




I spend 4 to 6 Months a year living overseas, mostly in Asia. The people I talk to there, (hundreds of them locals) want to come to Australia to *work.* They just want that chance to build up wealth like you and I and millions of other Aussies have just by having decent jobs with decent salaries. Getting paid $15 a day and working 6 days a week as a bank officer or a policeman kind of brings that to light. None of them make a mention of getting welfare here, they just want a job with Aussie salaries and Aussie rights. Most of these people would be happy to work as kitchen hands or cleaners for $16 per hour.

I agree, the millionaires I've met don't really want to live here, they are very happy where they are and why wouldn't they be.

I think migration from any of the above would have minimal effect on house prices.


----------



## FlyingFox (28 December 2012)

Bill M said:


> I spend 4 to 6 Months a year living overseas, mostly in Asia. The people I talk to there, (hundreds of them locals) want to come to Australia to *work.* They just want that chance to build up wealth like you and I and millions of other Aussies have just by having decent jobs with decent salaries. Getting paid $15 a day and working 6 days a week as a bank officer or a policeman kind of brings that to light. None of them make a mention of getting welfare here, they just want a job with Aussie salaries and Aussie rights. Most of these people would be happy to work as kitchen hands or cleaners for $16 per hour.
> 
> I agree, the millionaires I've met don't really want to live here, they are very happy where they are and why wouldn't they be.
> 
> I think migration from any of the above would have minimal effect on house prices.




That is true as well Bill. A lot of people do want jobs and a chance to build wealth and I agree that this does not pose a problem to house prices.

I was speaking from my experience and apologies if this sounded like a generalisation.  

However on the issue of salaries, Australia is perhaps the exception, not the norm.


----------



## cynic (28 December 2012)

Bill M said:


> ...Most of these people would be happy to work as kitchen hands or cleaners for $16 per hour...




As would many of the currently unemployed Australians!

My apologies to the thread for being a little off topic.


----------



## Julia (28 December 2012)

cynic said:


> As would many of the currently unemployed Australians!



+1.
We have many Australians who have paid into the tax system all their lives, who have been retrenched due to the current and worsening downturn, and who are unable to access the meagre unemployment  benefit of around $240 p.w. until they have used up all their savings.  Often they will lose the homes they have saved for because they're unable to come up with the mortgage repayments.

If you are someone who has diligently saved for your retirement, eschewing other than compulsory contributions to Super, with the intention of providing for your own retirement, and are made redundant at, say, 50, you are in a dreadful position.
Let's worry about these Australians before we get too concerned about providing jobs for immigrants.

And ditto Cynic's apology for being off topic.  I just get pretty upset about this gross unfairness.


----------



## psailagroup (29 December 2012)

No one can forecast what will happen, that would be speculation...
But from my point of view the market is spilt into a few points
1) first home buyers / first time renters: the amount of young people opting to share is increasing, because of cost of living being so high most first time people wil move out in a group of three, so he demand for homes is already decreasing 
2) investing in property: rates, property management fees, water rates and insurance cost are increasing each year so yields are getting lower and lower
3) the biggest issue in my opionion is this, negative gearing, great way to create wealth when the economy is flying but once things slow down allot of Investors will own the bank more then what they paid the property for

Also investors always say I'm getting between 6%to 7% return on yeild from rental income , but how can some one say they are getting a return when most properties are negative geared???


----------



## young-gun (29 December 2012)

psailagroup said:


> Also investors always say I'm getting between 6%to 7% return on yeild from rental income , but how can some one say they are getting a return when most properties are negative geared???




First of all to say that MOST properties are negatively geared is a huge assumption that you will find is incredibly incorrect. There would be quite a few, but certainly not most. I wouldn't be boasting a 6% return either.



Julia said:


> +1.
> We have many Australians who have paid into the tax system all their lives, who have been retrenched due to the current and worsening downturn, and who are unable to access the meagre unemployment  benefit of around $240 p.w. until they have used up all their savings.  Often they will lose the homes they have saved for because they're unable to come up with the mortgage repayments.
> 
> If you are someone who has diligently saved for your retirement, eschewing other than compulsory contributions to Super, with the intention of providing for your own retirement, and are made redundant at, say, 50, you are in a dreadful position.
> ...




I sympathise with you on the above Julia, but I'm afraid the portion of australians that it applies to would be quite small? My partner works in recruitment, for the doll, and the amount of unemployed people that claim payments, and have no intention of working, or even looking for work is astronomical. It infuriates me to hear the stories she brings home. Some of these people can be labelled professional doll bludgers, they know the system inside-out and ensure they're payments will never be cut regardless of whether they look for work or not.

To think that there is so many of these people leeching off our tax dollars, and there are those you point out that are forced to draw down savings or are ineligible for payments for some obscure and stupid reason is a huge injustice.

Bottom line, a lot of those are unemployed because they want to be, and couldn't care less if jobs are given to foreigners.


----------



## medicowallet (29 December 2012)

psailagroup said:


> No one can forecast what will happen, that would be speculation...
> But from my point of view the market is spilt into a few points
> 1) first home buyers / first time renters: the amount of young people opting to share is increasing, because of cost of living being so high most first time people wil move out in a group of three, so he demand for homes is already decreasing
> 2) investing in property: rates, property management fees, water rates and insurance cost are increasing each year so yields are getting lower and lower
> 3) the biggest issue in my opionion is this, negative gearing, great way to create wealth when the economy is flying but once things slow down allot of Investors will own the bank more then what they paid the property for




The top 2 points are a couple of the dozens of reasons why the current bubble will return to trend, especially when the resource sector growth lowers.

But your third point makes little sense.  Yes, still a little, but I think the primary concern for people with negative gearing will be diminished cash flow, long before capital loss becomes truly apparent (as is quite evident from this forum, property owners live in a disneyland world where their property's value could never be influenced by the general market performance as theirs is "different").    Capital loss is occurring, but the paydown in debt that is occurring is due to cash flow realisation atm. 

MW

PS where is Robots?


----------



## medicowallet (29 December 2012)

Bill M said:


> I spend 4 to 6 Months a year living overseas, mostly in Asia. The people I talk to there, (hundreds of them locals) want to come to Australia to *work.* They just want that chance to build up wealth like you and I and millions of other Aussies have just by having decent jobs with decent salaries. Getting paid $15 a day and working 6 days a week as a bank officer or a policeman kind of brings that to light. None of them make a mention of getting welfare here, they just want a job with Aussie salaries and Aussie rights. Most of these people would be happy to work as kitchen hands or cleaners for $16 per hour.
> 
> I agree, the millionaires I've met don't really want to live here, they are very happy where they are and why wouldn't they be.
> 
> I think migration from any of the above would have minimal effect on house prices.




I think any increase in population above the capacity of the building industry to cope increases house prices.

I agree that the skilled people want to come over here to work, but as evidenced by reality, a lot of the unskilled people who come over here want our relatively generous welfare system.

MW


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## Julia (29 December 2012)

young-gun said:


> To think that there is so many of these people leeching off our tax dollars, and there are those you point out that are forced to draw down savings or are ineligible for payments for some obscure and stupid reason is a huge injustice.
> 
> Bottom line, a lot of those are unemployed because they want to be, and couldn't care less if jobs are given to foreigners.



You're quite right, of course.  It's the inequities in the system that so irritate me.  We should be a lot tougher on those who have no inclination to work.



medicowallet said:


> I agree that the skilled people want to come over here to work, but as evidenced by reality, a lot of the unskilled people who come over here want our relatively generous welfare system.
> 
> MW



Agree.  Viz the family from the Middle East I quoted a few days ago with thirteen children.  The whole family exists on welfare.


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## FlyingFox (29 December 2012)

Julia said:


> ......
> 
> Agree.  Viz the family from the Middle East I quoted a few days ago with thirteen children.  The whole family exists on welfare.




There are many many similar tales. Not helped by previous governments handouts for wanting a "BIG" Australia.

Anyways apologies all for digressing from the thread. I take blame for my initial comments. To try to bring the thread back on track I will ask my initial questions again.

"
Curious as to whether anyone thinks that this time there might be some fundamental changes to the way the economy works and property in particular? Is this the start of the Ponzi collapsing? Will there be growth in 3-5 yrs? 5-7 yrs?
"


----------



## burglar (29 December 2012)

Julia said:


> You're quite right, of course.  It's the inequities in the system that so irritate me.  We should be a lot tougher on those who have no inclination to work.
> 
> 
> Agree.  Viz the family from the Middle East I quoted a few days ago with thirteen children.  The whole family exists on welfare.




I have a family of 5, 
my parents, a family of 8, 
both grandparents 10 each. 
A previous generation had 14.


But what has that got to do with "Australian Property Prices":topic


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## medicowallet (29 December 2012)

burglar said:


> I have a family of 5,
> my parents, a family of 8,
> both grandparents 10 each.
> A previous generation had 14.
> ...




medicowallet decides to do some work

he has a family of 5

he earns $40000 per year


Mr unskilled comes over

he has a family of 8

he costs $30000 of welfare


Australia is worse off, but with a larger population.....   of course this, and other examples of poor immigration policy affect house prices.

The only winner is student X  who votes, with limited understanding of the real world, but he/she has a warm fuzzy feeling because he/she is going to change the world, heck, let's put a tax on carbon dioxide too while we are at it.

MW

PS Where is Robots


----------



## Bill M (29 December 2012)

FlyingFox said:


> Curious as to whether anyone thinks that this time there might be some fundamental changes to the way the economy works and property in particular? Is this the start of the Ponzi collapsing? Will there be growth in 3-5 yrs? 5-7 yrs?
> "




Thank you flyingfox for bringing the thread back on course. My opinion on your question is that nothing will seriously change over the next 3 to 7 years. Some areas where there is not much demand will probably see prices go down. Some areas in high demand where there are more people than units available will probably increase, how much is another question.

I invest on the Northern Beaches in Sydney. My property is walking distance to the beach, shops, transport and clubs. I never have a problem renting it out and it is a popular area that people want to live and they will pay higher rents to live there.

Right now I am looking at buying a 2 bedroom unit there. I know the area very well, street by street. I have lived there most of my life. I can tell you without any doubt that in the last 3 years (when I moved out of that area) that a good 2 bedroom unit with all the facilities I want as described above have gone up in price. It is very hard to find what I want. These units have gone up and I must pay more now than what I would have 3 years ago. I can't really see prices coming down in that area, however I can not speak for any other areas of Australia. Just my opinion.


----------



## FlyingFox (29 December 2012)

Bill M said:


> Thank you flyingfox for bringing the thread back on course. My opinion on your question is that nothing will seriously change over the next 3 to 7 years. Some areas where there is not much demand will probably see prices go down. Some areas in high demand where there are more people than units available will probably increase, how much is another question.
> 
> I invest on the Northern Beaches in Sydney. My property is walking distance to the beach, shops, transport and clubs. I never have a problem renting it out and it is a popular area that people want to live and they will pay higher rents to live there.
> 
> Right now I am looking at buying a 2 bedroom unit there. I know the area very well, street by street. I have lived there most of my life. I can tell you without any doubt that in the last 3 years (when I moved out of that area) that a good 2 bedroom unit with all the facilities I want as described above have gone up in price. It is very hard to find what I want. These units have gone up and I must pay more now than what I would have 3 years ago. I can't really see prices coming down in that area, however I can not speak for any other areas of Australia. Just my opinion.




I do agree with your views. I would want to live in the Northern Beaches too if I could afford it. However as an investor, are you happy with the yields you are getting say if prices remain flat?


----------



## Bill M (29 December 2012)

FlyingFox said:


> I do agree with your views. I would want to live in the Northern Beaches too if I could afford it. However as an investor, *are you happy with the yields you are getting say if prices remain flat?*




Yes I am as I do not have a mortgage on it. They are not spectacular yields, around 6% gross or 4% after expenses and tax. With very low interest rates now being offered for bank deposits I think I prefer leaving my cash in the IP at this stage and collect the rent. Remember though, everything I say here is very area specific. If my property was out in woop woop and I couldn't rent it then that would be a different story, cheers.


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## Miss Hale (2 January 2013)

Since the cricket finished early I went to an OFI on Saturday.  I only went because it was the front unit of a pair, the back one of which was auctioned about six months ago and I am curious to see if it goes for more, less or the same as the other one. Engaging in the usual chit chat with the agent she said now was a good time to buy, I muttered something about not being so sure and she fairly pounced on me and was most insistent that prices were going to rise and I had to get into the market NOW!!!  She was almost hysterical


----------



## psailagroup (2 January 2013)

Miss Hale said:


> Since the cricket finished early I went to an OFI on Saturday.  I only went because it was the front unit of a pair, the back one of which was auctioned about six months ago and I am curious to see if it goes for more, less or the same as the other one. Engaging in the usual chit chat with the agent she said now was a good time to buy, I muttered something about not being so sure and she fairly pounced on me and was most insistent that prices were going to rise and I had to get into the market NOW!!!  She was almost hysterical




Being an ex real estate agent when other agents said to me when i was buying "now was the right time to buy" I used to tell other agents why don't they buy that property themselves? 

I think every state, suburb, type of home will offer a different return and this will apply to shares as well, some shares will do well and some wont. But from my view Melbourne market has been very flat!!!


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## young-gun (3 January 2013)

Miss Hale said:


> Since the cricket finished early I went to an OFI on Saturday.  I only went because it was the front unit of a pair, the back one of which was auctioned about six months ago and I am curious to see if it goes for more, less or the same as the other one. Engaging in the usual chit chat with the agent she said now was a good time to buy, I muttered something about not being so sure and she fairly pounced on me and was most insistent that prices were going to rise and I had to get into the market NOW!!!  She was almost hysterical





She probably is hysterical, commissions have probably been down as well as sales. I don't think RE agents are the best people to speak to about prices. They may be good for local area advice such as schools transport shops etc, but would never listen to a word they say re investment.

When we first moved in to our rental the property manager(not RE agent) congratulated us on our move to sell our house and rent, reason being she saw prices coming down a lot further over the coming years. Everyone has a different opinion I guess.


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## Miss Hale (3 January 2013)

Latest figures from RP data, houses prices fall again.  Melbourne worst hit it would seem (may account for the hysterics from the agent I spoke to  ). 

The article also says rents are rising.  Being a tennant I keep a close eye on rentals in my area and can't see any evidence of them going up so I don't agree with that assertion (although other places may be different of course).

http://finance.ninemsn.com.au/newsbusiness/aap/8587769/home-prices-fall-again


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## psailagroup (3 January 2013)

Miss Hale said:


> Latest figures from RP data, houses prices fall again.  Melbourne worst hit it would seem (may account for the hysterics from the agent I spoke to  ).
> 
> The article also says rents are rising.  Being a tennant I keep a close eye on rentals in my area and can't see any evidence of them going up so I don't agree with that assertion (although other places may be different of course).
> 
> http://finance.ninemsn.com.au/newsbusiness/aap/8587769/home-prices-fall-again




Hi Miss Hale,

I have to agree with you on a couple of points and here is my view: 
1)	RP data shows Melbourne prices worst hit, 100% agree with you but I also think the figures are far worse than actually shown,  WHY is that the case? I used to use RP data when I was in real estate and allot of information was in correct at the time, Plus not all owners want to disclose what the house was sold for “Etc”. 

2)	Are rents rising or Not: It all depends on the acutaly suburb, For example in Melbourne, Keilor Village rentals are rising in price because the demand for rentals is very strong and the supply of homes available for rent is weak. 


Then you look at a suburb like Keilor downs, Only 1KM away from Keilor village, there are allot of homes vacant, rents are on the decrease, Docklands a prime example, high vacancy rates and apartments are decreasing in value and so are rents.

So every suburb has its own economy to deal with. 

By the way I live in Deer park, My home was valued by the Bank in 2010 for 420K got it revalued last year at 360K


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## Trade wind (3 January 2013)

Investment in Australia really has only three options: real estate, the stock market or cash. Cash has been king, but with falling interest rates, money is going to start flowing out of bank deposits to real estate, or stocks and funds. Which would you invest in? Falling interest rates are also good for the property market, so property might kick on again, but how high can prices go? Property is a great-long term investment, so 10 years-plus and you should do OK, but I think the share market will do more over the next few years. The stock market is still historically low, with plenty of potential for growth, much more than the property market. A lot of investors are still wary of stocks, but the bandwagon is building up steam again and your money isn't locked up for a decade. I'm certainly moving my money out of cash and back into stocks.

There will always be people wanting to buy a house, and I don't see any big collapse, but prices might stagnate in real terms for a decade, like the 1990s. If real estate prices tumble, along with mortgage rates, real estate is the place to be, but I don't see either happening.


----------



## CanOz (3 January 2013)

Trade wind said:


> Investment in Australia really has only three options: real estate, the stock market or cash. Cash has been king, but with falling interest rates, money is going to start flowing out of bank deposits to real estate, or stocks and funds. Which would you invest in? Falling interest rates are also good for the property market, so property might kick on again, but how high can prices go? Property is a great-long term investment, so 10 years-plus and you should do OK, but I think the share market will do more over the next few years. The stock market is still historically low, with plenty of potential for growth, much more than the property market. A lot of investors are still wary of stocks, but the bandwagon is building up steam again and your money isn't locked up for a decade. I'm certainly moving my money out of cash and back into stocks.
> 
> There will always be people wanting to buy a house, and I don't see any big collapse, but prices might stagnate in real terms for a decade, like the 1990s. If real estate prices tumble, along with mortgage rates, real estate is the place to be, but I don't see either happening.




Interesting, some comments on the Bloomy this morning also reflected a move into stocks in the US because of the lack of yield anywhere else...

CanOz


----------



## McLovin (3 January 2013)

Trade wind said:


> Investment in Australia really has only three options: real estate, the stock market or cash. Cash has been king, but with falling interest rates, money is going to start flowing out of bank deposits to real estate, or stocks and funds. Which would you invest in? Falling interest rates are also good for the property market, so property might kick on again, but how high can prices go? Property is a great-long term investment, so 10 years-plus and you should do OK, but I think the share market will do more over the next few years. The stock market is still historically low, with plenty of potential for growth, much more than the property market. A lot of investors are still wary of stocks, but the bandwagon is building up steam again and your money isn't locked up for a decade. I'm certainly moving my money out of cash and back into stocks.
> 
> There will always be people wanting to buy a house, and I don't see any big collapse, but prices might stagnate in real terms for a decade, like the 1990s. If real estate prices tumble, along with mortgage rates, real estate is the place to be, but I don't see either happening.




This.

The difference between stocks and property at the moment is the yield on offer. TLS is up 40% and still has a grossed up yield of 9%. The dividend yield goes part of the way to explaining how the ASX is sustaining PEs of 14-15x in a fairly subdued economy. The other part of the equation being the low debt on the balance sheet and that while things aren't great, the sky isn't falling in, IMO.


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## FlyingFox (3 January 2013)

Trade wind said:


> Investment in Australia really has only three options: real estate, the stock market or cash. Cash has been king, but with falling interest rates, money is going to start flowing out of bank deposits to real estate, or stocks and funds. Which would you invest in? Falling interest rates are also good for the property market, so property might kick on again, but how high can prices go? Property is a great-long term investment, so 10 years-plus and you should do OK, but I think the share market will do more over the next few years. The stock market is still historically low, with plenty of potential for growth, much more than the property market. A lot of investors are still wary of stocks, but the bandwagon is building up steam again and your money isn't locked up for a decade. I'm certainly moving my money out of cash and back into stocks.
> 
> There will always be people wanting to buy a house, and I don't see any big collapse, but prices might stagnate in real terms for a decade, like the 1990s. If real estate prices tumble, along with mortgage rates, real estate is the place to be, but I don't see either happening.





While I generally agree with your sentiments, as a potential investor I find it very difficult to make sense of the number when it comes to property investing in Oz. Real returns are still below term deposit rates and with house prices falling not increasing, there are no capital gains to be had in the near future. Of course if you look hard enough there are and will be decent returns but nothing great.

While this might change in the future. Will you be able to recover all your loses (yes if you hold it long enough but take opportunity cost into account as well)?. Also if it looks like prices will tumble then investors and home owners will hold off longer before pulling the trigger.

Personally I believe the "real" (not all the people who bought the tale of "but its saving you tax") investors will start chasing yields and for this to happen either rents go up or prices come down. I believe it will (have to?) be a mixture of the two as it is becoming to expensive to rent or own property for the younger generations. Collapse or not might depend on other factors. I see people weaning off the "but you have to get into market" sentiment slowly because its either too expensive to own property or comes at too great of cost to lifestyle etc.

Personally I don't think Australian companies will really begin to grow (apart from niche markets plus mining and gas depending on chinese demands) until the dollar comes down and with it the cost of doing business here. We might see some structural changes as well which might flow onto the housing markets.


----------



## Intrinsic Value (3 January 2013)

CanOz said:


> Interesting, some comments on the Bloomy this morning also reflected a move into stocks in the US because of the lack of yield anywhere else...
> 
> CanOz




I think it is inevitable that more money moves into the stock market when interest rates go down and the housing market is depressed.

In fact through the doom and gloom of the market pessimists I have been quite confident that money will move back into the market and that good performing companies that were undervalued would rise significantly.


----------



## Bill M (3 January 2013)

FlyingFox said:


> Real returns are still below term deposit rates and with house prices falling not increasing,* there are no capital gains to be had in the near future*. Of course if you look hard enough there are and will be decent returns but nothing great.




You keep going around in cirlces. I thought we addressed this further back. How do you explain that now I must pay more on the Northern Beaches for a decent 2 br unit than what I did 3 years ago? What makes you think there are no further gains? Again, I emphasise, research and pick your area carefully.

To answer your question regarding "real returns being below term deposits". try getting a term deposit over 4.8% now, you will be hard pushed to find one. It you did get one then good luck to you but where will you get capital growth? There will NEVER be any, is that a good investment? I will take 4.8% income from rents with a possibility of capital growth anytime over just leaving it in the bank.


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## againsthegrain (3 January 2013)

Bill M said:


> You keep going around in cirlces. I thought we addressed this further back. How do you explain that now I must pay more on the Northern Beaches for a decent 2 br unit than what I did 3 years ago? What makes you think there are no further gains? Again, I emphasise, research and pick your area carefully.
> 
> To answer your question regarding "real returns being below term deposits". try getting a term deposit over 4.8% now, you will be hard pushed to find one. It you did get one then good luck to you but where will you get capital growth? There will NEVER be any, is that a good investment? I will take 4.8% income from rents with a possibility of capital growth anytime over just leaving it in the bank.




http://www.infochoice.com.au/banking/savings-account/online-savings.aspx

wasn't very hard


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## Julia (3 January 2013)

CanOz said:


> Interesting, some comments on the Bloomy this morning also reflected a move into stocks in the US because of the lack of yield anywhere else...
> 
> CanOz



This has clearly been happening here since cash deposit rates began to fall significantly.
Even I am looking seriously at stocks again at present as what I'm getting on the cash at call is now only 4.75%.
Hesitating because (a) there has already been a good run up, and (b) there is still plenty of potential for the global patching up process to fall apart.


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## Bill M (3 January 2013)

againsthegrain said:


> http://www.infochoice.com.au/banking/savings-account/online-savings.aspx
> 
> wasn't very hard




What wasn't hard? Your link is only for online cash accounts which are higher. I was generous with the term deposits, it seems the best 5 year term deposits in fact are only 4.75%. Link here: http://www.infochoice.com.au/banking/savings-account/term-deposit-interest-rates.aspx


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## Miss Hale (3 January 2013)

Bill M said:


> To answer your question regarding "real returns being below term deposits". try getting a term deposit over 4.8% now, you will be hard pushed to find one. It you did get one then good luck to you but where will you get capital growth? There will NEVER be any, is that a good investment? I will take 4.8% income from rents with a possibility of capital growth anytime over just leaving it in the bank.




No capital growth with term deposits but no loss either.  While there is a possibility of capital growth on your real estate there is also the possibility of capital loss.


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## young-gun (3 January 2013)

Miss Hale said:


> No capital growth with term deposits but no loss either.  While there is a possibility of capital growth on your real estate there is also the possibility of capital loss.




Don't be ridiculous Miss Hale, hasn't anyone told you property always goes up(over a 10 year period)*?


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## white_goodman (3 January 2013)

Bill M said:


> You keep going around in cirlces. I thought we addressed this further back. How do you explain that now I must pay more on the Northern Beaches for a decent 2 br unit than what I did 3 years ago? What makes you think there are no further gains? Again, I emphasise, research and pick your area carefully.
> 
> To answer your question regarding "real returns being below term deposits". try getting a term deposit over 4.8% now, you will be hard pushed to find one. It you did get one then good luck to you but where will you get capital growth? There will NEVER be any, is that a good investment? I will take 4.8% income from rents with a possibility of capital growth anytime over just leaving it in the bank.




its important to look at things in real terms not nominal..


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## DB008 (3 January 2013)

young-gun said:


> Don't be ridiculous Miss Hale, hasn't anyone told you property always goes up(over a 10 year period)*?




I don't think Sydney or Brisbane has gone anywhere in the last few years - 'Sideways' ?


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## young-gun (3 January 2013)

DB008 said:


> I don't think Sydney or Brisbane has gone anywhere in the last few years - 'Sideways' ?




I was just taking the piss.

Brisbane(from the areas I know and have seen) hasn't really gone anywhere, backwards in some places.

There is always gonna be your one or two feel good stories about how they jagged the golden suburb, or golden property in a poorly performing suburb. As Julia often points out the gold coast has taken a beating, but I am sure there is someone that can find a property that has appreciated by a few % over the past couple of years.

Fact is prices are somewhat depressed in a lot of places, and the risk still favours the downside in my opinion. Until all the headwinds facing not only  the australian economy but the global economy are rectified, not just painted over with a thin coat, I will remain pessimistic about aussie RE. I'll continue to sit sidelined for now, missing the real opportunities yada yada.


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## Julia (3 January 2013)

young-gun said:


> There is always gonna be your one or two feel good stories about how they jagged the golden suburb, or golden property in a poorly performing suburb. As Julia often points out the gold coast has taken a beating,



Just a correction here:  I don't know anything about the Gold Coast.  I've been referring to the Fraser Coast, about four hours north of Brisbane, where property is down 25 - 30%.  
Anything over $500K is just sitting there.


> Fact is prices are somewhat depressed in a lot of places, and the risk still favours the downside in my opinion. Until all the headwinds facing not only  the australian economy but the global economy are rectified, not just painted over with a thin coat, I will remain pessimistic about aussie RE. I'll continue to sit sidelined for now, missing the real opportunities yada yada.



Agree.  And there seems to have been little response to the interest rate cuts thus far.


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## FlyingFox (4 January 2013)

Julia said:


> Just a correction here:  I don't know anything about the Gold Coast.  I've been referring to the Fraser Coast, about four hours north of Brisbane, where property is down 25 - 30%.
> Anything over $500K is just sitting there.




GC is just as bad if not worse. My dad keeps getting emails and phone calls from agents regarding heavily discounted apartments etc. A lot of foreigners liquidated after the A$ starting going north of 80-90 cents after the GFC. Even at discounted rates they made money due to FX differences.

I remember we were talking to a friend who works for Stockland and he was saying it was really bad in the GC. Mind you this was a year ago. I have since moved to Melbourne (from Brisbane not GC) so I am not sure what the situation is like atm but I can't see it improving dramatically.


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## Miss Hale (4 January 2013)

RP data results discussed also in an article on the front page of today's Age focussing on the Melbourne market with the headline "City in grip of property slump".  It also includes a bit of spruiking at the end from a couple of real estate agents for balance 



> However, some industry operators say the RBA's moves have laid the groundwork for a recovery this year and the current conditions are creating rare opportunities for buyers.
> 
> ''Auction clearance rates have improved and that's directly related to the interest rate cuts,'' said Nigel O'Neil, chief executive of agency Hocking Stuart. About 60 per cent of homes going under the hammer last spring sold, compared with barely half at the same time in 2011.
> 
> ...




http://www.theage.com.au/victoria/city-in-grip-of-property-slump-20130102-2c5oa.html


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## young-gun (4 January 2013)

Julia said:


> Just a correction here:  I don't know anything about the Gold Coast.  I've been referring to the Fraser Coast, about four hours north of Brisbane, where property is down 25 - 30%.
> Anything over $500K is just sitting there.




Apologies, I think I picked up gold coast from a back and forth of kincella and yourself, my mistake.


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## FlyingFox (4 January 2013)

Miss Hale said:


> RP data results discussed also in an article on the front page of today's Age focussing on the Melbourne market with the headline "City in grip of property slump".  It also includes a bit of spruiking at the end from a couple of real estate agents for balance
> 
> 
> 
> http://www.theage.com.au/victoria/city-in-grip-of-property-slump-20130102-2c5oa.html




I thought this was an interesting opinion piece with an "outsiders" perspective on house prices in general but especially in Melbourne. Granted this is on the exceptional end of things.

http://www.prosper.org.au/2012/11/01/goodbye-to-high-land-prices/


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## Miss Hale (4 January 2013)

FlyingFox said:


> I thought this was an interesting opinion piece with an "outsiders" perspective on house prices in general but especially in Melbourne. Granted this is on the exceptional end of things.
> 
> http://www.prosper.org.au/2012/11/01/goodbye-to-high-land-prices/




Thanks FlyingFox, that article is interesting.  Really puts into perspective the crazy situation we are in here.


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## prawn_86 (4 January 2013)

FlyingFox said:


> I thought this was an interesting opinion piece with an "outsiders" perspective on house prices in general but especially in Melbourne. Granted this is on the exceptional end of things.
> 
> http://www.prosper.org.au/2012/11/01/goodbye-to-high-land-prices/






Miss Hale said:


> Thanks FlyingFox, that article is interesting.  Really puts into perspective the crazy situation we are in here.




I had a read too, it is interesting. Depending on what stats you use, but we are in the top 10% for gross household income, and yet still would not be comfortable servicing a 1m mortgage (let alone a 2 - 4m dollar one in Port Melbounre), it would be basically an interest only loan and there is no way we would have it paid off in 30 years, based on paying 30% of our *gross* income off the mortgage.

I just fail to see how/why people in the top 10% of income cannot easily and/or comfortably afford a house in the top 10% of suburbs, something seems a bit out of whack to me.


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## Trembling Hand (4 January 2013)

prawn_86 said:


> I just fail to see how/why people in the top 10% of income cannot easily and/or comfortably afford a house in the top 10% of suburbs, something seems a bit out of whack to me.




Yeah but this is more out of wack,



> With our combined income, on paper, I think would put us in the top 1% of all earners in Australia. We have cut our lifestyle to the bare minimum. We share a single car between the two of us. We rarely go out to eat. All of our money goes to rent, childcare, and groceries.




BS!


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## prawn_86 (4 January 2013)

Out of interest does anyone have or know how to get a distribution of house prices in Aus? I would be interested to know what price range the top 10% of homes in Aus are.


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## FlyingFox (4 January 2013)

prawn_86 said:


> I had a read too, it is interesting. Depending on what stats you use, but we are in the top 10% for gross household income, and yet still would not be comfortable servicing a 1m mortgage (let alone a 2 - 4m dollar one in Port Melbounre), it would be basically an interest only loan and there is no way we would have it paid off in 30 years, based on paying 30% of our *gross* income off the mortgage.
> 
> I just fail to see how/why people in the top 10% of income cannot easily and/or comfortably afford a house in the top 10% of suburbs, something seems a bit out of whack to me.




I have been asking myself this question as well. Any house in a decent suburb is 1M or close to it.

To answer your question about income distribution. Top 10% is gross income greater than $172,432 from Bureau of stats survey of income etc 2009-2010. http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6523.02009-10?OpenDocument . Appendix 3, Table A-5.


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## McLovin (4 January 2013)

FlyingFox said:


> I have been asking myself this question as well. Any house in a decent suburb is 1M or close to it.
> 
> To answer your question about income distribution. Top 10% is gross income greater than $172,432 from Bureau of stats survey of income etc 2009-2010. http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6523.02009-10?OpenDocument . Appendix 3, Table A-5.




p16 gives the 90th percentile as having household income/week of $1,448...

It's hard to believe that the top 10% is as high as $172k.

ETA: I see you're discussing gross, whereas I'm discussing disposable. How are the two tables supposed to be reconciled?


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## FlyingFox (4 January 2013)

McLovin said:


> p16 gives the 90th percentile as having household income/week of $1,448...
> 
> It's hard to believe that the top 10% is as high as $172k.
> 
> ETA: I see you're discussing gross, whereas I'm discussing disposable. How are the two tables supposed to be reconciled?




The table gives both those values side by side. The quoted disposable income has been adjusted for various things. Haven't gotten around to reading all the methodologies.

EDIT: I quoted gross household income in my prior post.


----------



## Superb Parrot (4 January 2013)

prawn_86 said:


> I just fail to see how/why people in the top 10% of income cannot easily and/or comfortably afford a house in the top 10% of suburbs, something seems a bit out of whack to me.




Is it overseas money creating this disconnect between house prices (in certain areas ) and (local) income ?


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## tech/a (4 January 2013)

I would argue that most in the top 10.% weren't there in the 10% when they bought their first home.
Their equity in any further home would be much greater than a first home buyer.

So a lower income purchaser would also have less equity.


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## McLovin (4 January 2013)

FlyingFox said:


> The table gives both those values side by side. The quoted disposable income has been adjusted for various things. Haven't gotten around to reading all the methodologies.
> 
> EDIT: I quoted gross household income in my prior post.




The two numbers confuse me. The one you quoted adjusts household income by dividing it by the number of people in the house and their age, the one I quoted is a raw number. I don't understand how the raw number can be so much lower than the adjusted number.


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## prawn_86 (4 January 2013)

McLovin said:


> The two numbers confuse me. The one you quoted adjusts household income by dividing it by the number of people in the house and their age, the one I quoted is a raw number. I don't understand how the raw number can be so much lower than the adjusted number.




Yeh i noticed that a while back when i was looking at them months ago and was confused also.


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## FlyingFox (4 January 2013)

McLovin said:


> The two numbers confuse me. The one you quoted adjusts household income by dividing it by the number of people in the house and their age, the one I quoted is a raw number. I don't understand how the raw number can be so much lower than the adjusted number.




McLovin, its the other other way around. The number I quoted was unadjusted raw 90th percentile gross household annual income ($3316 per week). The number you quoted was the adjusted disposable household income ($1448 per week). Sorry, I can see why my post wasn't clear.

All the above information is in the Table I referenced previously.


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## McLovin (4 January 2013)

FlyingFox said:


> McLovin, its the other other way around. The number I quoted was unadjusted raw 90th percentile gross household annual income ($3316 per week). The number you quoted was the adjusted disposable household income ($1448 per week). Sorry, I can see why my post wasn't clear.
> 
> All the above information is in the Table I referenced previously.




You're right. I see now. Sorry, had the blinkers on!


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## FlyingFox (4 January 2013)

tech/a said:


> I would argue that most in the top 10.% weren't there in the 10% when they bought their first home.
> Their equity in any further home would be much greater than a first home buyer.
> 
> So a lower income purchaser would also have less equity.




While I don't dispute this, I think the distortion in prices is much much greater than can be accounted for by this fact alone. Most buyers in the top 10-20% will have an extremely hard time buying a "house" in top 10-30 maybe even 40% of suburbs as their first home.

Personally I think this came about due to the fact that housing and housing investment has been marketed as get rich quick scheme with the governments not helping. Thus we have a housing market which focused primarily on capital gains and produced inflated prices.

Whether this continues depends very much on how many young people get suckered into propping up the Ponzi scheme (you may dispute this but pls have a very careful read of tech/a's comment).


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## FlyingFox (4 January 2013)

McLovin said:


> You're right. I see now. Sorry, had the blinkers on!




Not a prob. I should be apologising as I muddled up my replies. Trying to reply between work and procrastinating doesn't help.


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## Vixs (4 January 2013)

Miss Hale said:


> Thanks FlyingFox, that article is interesting.  Really puts into perspective the crazy situation we are in here.




Nonsense, that puts into perspective how crazy that bloke and his wife are.

I know Sydney and Melbourne are leaps and bounds ahead of Brisbane affordability wise, but to be on $450k and crying poor like it's somebody elses fault is a joke.

Assuming the whole lot is taxed at the highest marginal tax rate, which it isn't, that is over $20,500 per month in net income from salary alone. If they have a car loan on a family car that's $19,500 per month. If he thinks he is living at his bare minimum let's call living costs for him and his 2 kids $5k per month. That's double what it costs me and my Mrs _including_ rent.

If they spent about half of what was left, $8,000, they can afford a million dollar mortgage over 30 years - at 8% p.a. let alone the 5.4% they'd get now - and have another $6.5k left over for calling up their friends and talking about how poor they are. Wage growth adds up when you're on that kind of income, so a few years down the track that 8k is now no longer 39%, it's 35%. A couple more and it's out of mortgage stress territory. You could by that stage even refinance it back over 30 years and reduce payments by $2.2k a month down to $5.8k.

If that's all too much work, buy a house that isn't a million bucks out in the suburbs a bit.

Bloody whingers. If they think that's too hard, Australia's loss my ****. They can have their 30 year 2% fixed rate loans on $250k McMansions back in the states. Earn an Australian wage and you can afford to pay Australian prices.

Deadset, what a load of crap. Where do you find 'journalists' without their head in their asses? I'm yet to see one.


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## Mrmagoo (4 January 2013)

Nah. For what you get, houses are crazily expensive.

A **** box in an over congested, poorly planned, smelly expensive to live and entertain city which is growing too fast which has infrastructure that is still like it was in the 1990's.  Women are uppity, people are rude, the servants are rude and the food is ****.

Why bother ? Get a job in and move to the country IMO.

Play golf on weekends, turn into a piss head, go fishing. Spend your life wondering what people mean when they say "peak hour" and why they pay 600k more for a falling apart house because it is closer to a dirty smelly, crowded pool of human defecate.

Anyone touting the "life style" element of melb our sydney is kidding. I will happily commute 45 minutes to get AWAY from those cities.


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## explod (4 January 2013)

Mrmagoo said:


> Nah. For what you get, houses are crazily expensive.
> 
> A **** box in an over congested, poorly planned, smelly expensive to live and entertain city which is growing too fast which has infrastructure that is still like it was in the 1990's.  Women are uppity, people are rude, the servants are rude and the food is ****.
> 
> ...




Good post.

Just moved up to Bendigo about 4 months ago from  the Mornington Peninsula.  No traffic or hold ups, all the shopping at the same prices, petrol the same, life is just great here.

And the Monash, forget it, in town it is choked and property prices will soon tumble as a result.  Loss of jobs, da de da and etc.,


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## FlyingFox (4 January 2013)

Mrmagoo said:


> Nah. For what you get, houses are crazily expensive.
> 
> A **** box in an over congested, poorly planned, smelly expensive to live and entertain city which is growing too fast which has infrastructure that is still like it was in the 1990's.  Women are uppity, people are rude, the servants are rude and the food is ****.
> 
> ...




Hahahaha better yet move to an island somewhere in xxxx (replace xx with name of exotic place). I grew up on one. No concept of time, traffic, bad weather (except for the occasional cyclone lol).


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## Miss Hale (5 January 2013)

Vixs said:


> Nonsense, that puts into perspective how crazy that bloke and his wife are.
> 
> I know Sydney and Melbourne are leaps and bounds ahead of Brisbane affordability wise, but to be on $450k and crying poor like it's somebody elses fault is a joke.
> 
> ...




You've missed the point of the article. Regardless of what these people are earning the point was they would pay a lot less for a home in US than what they would have to pay here. Just because they are earning big bucks doesn't mean they should pay over the odds for property.



> Earn an Australian wage and you can afford to pay Australian prices.




But that's the point, most people earning a Australian wage can't afford to pay Australian prices.


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## Vixs (5 January 2013)

Miss Hale said:


> You've missed the point of the article. Regardless of what these people are earning the point was they would pay a lot less for a home in US than what they would have to pay here. Just because they are earning big bucks doesn't mean they should pay over the odds for property.
> 
> 
> 
> But that's the point, most people earning a Australian wage can't afford to pay Australian prices.




Sorry, but I don't believe that's the case. Most people earning an Australian wage mustn't know how to budget or make luxury sacrifices for the short term, as well as lower their expectations for a first property until they have enough equity to put down a large deposit and have had enough wage growth to allow them to upsize.


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## Mrmagoo (5 January 2013)

Vixs said:


> Sorry, but I don't believe that's the case. Most people earning an Australian wage mustn't know how to budget or make luxury sacrifices for the short term, as well as lower their expectations for a first property until they have enough equity to put down a large deposit and have had enough wage growth to allow them to upsize.




OK show us a budget.

55k with a HECs debt, but a house.

(Gotta love these rich people who haven't budgeted since the 1990s try and write a budget threads)


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## Miss Hale (5 January 2013)

Vixs said:


> Sorry, but I don't believe that's the case. Most people earning an Australian wage mustn't know how to budget or make luxury sacrifices for the short term, as well as lower their expectations for a first property until they have enough equity to put down a large deposit and have had enough wage growth to allow them to upsize.




They might be able to save a deposit but taking out a mortgage that is between 5 and 10 times your annual salary is not sensible financially and yet that is what you would have to do in today's real estate market in most places to buy a house.  A house that costs more than 5 times your annual income is not affordable IMO.


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## McLovin (5 January 2013)

Miss Hale said:


> They might be able to save a deposit but taking out a mortgage that is between 5 and 10 times your annual salary is not sensible financially and yet that is what you would have to do in today's real estate market in most places to buy a house.  A house that costs more than 5 times your annual income is not affordable IMO.




Even worse, when people question it the usual retort is that they are wanting to "have it all". As though they are living some decadent lifestyle which is why they can't afford a home.

I've been looking at houses around the $1-$1.2m mark recently, I've also been considering moving back to the US, although I'll move to the West Coast not the East this time. Tbh, it's not just the price of housing, everything in Australia is overpriced. Yes, the quality of life is high, but once you reach a certain level of income, you're really subsidising someone else's quality of life.


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## DB008 (5 January 2013)

McLovin said:


> Even worse, when people question it the usual retort is that they are wanting to "have it all". As though they are living some decadent lifestyle which is why they can't afford a home.
> 
> I've been looking at houses around the $1-$1.2m mark recently, I've also been considering moving back to the US, although I'll move to the West Coast not the East this time. Tbh, it's not just the price of housing, everything in Australia is overpriced. Yes, the quality of life is high, but once you reach a certain level of income, you're really subsidising someone else's quality of life.




McLovin, if you move into a mansion in LA, can l rent a room from you?


----------



## prawn_86 (5 January 2013)

Vixs said:


> Sorry, but I don't believe that's the case. Most people earning an Australian wage mustn't know how to budget or make luxury sacrifices for the short term, as well as lower their expectations for a first property until they have enough equity to put down a large deposit and have had enough wage growth to allow them to upsize.




The point some people here are trying to make is why should someone in the top 5 - 10% of earners need to do this? Bascially you are then relying on further capital gains just in the hope of moving up the 'ladder'.

The suburb i live in the average house price is well over $1m. Show me how someone earning 250k pa gross can afford one of these houses? Someone earning that much is not likely to have a lot of further wage growth (depending on qualifications and industry, but assume no further wage growth as they are already top 10%)



McLovin said:


> Tbh, it's not just the price of housing, everything in Australia is overpriced. Yes, the quality of life is high, but once you reach a certain level of income, you're really subsidising someone else's quality of life.




Totally agree. Great lifestyle, but now the most overpriced country in the World by far


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## McLovin (5 January 2013)

DB008 said:


> McLovin, if you move into a mansion in LA, can l rent a room from you?




You're welcome anytime mate! There will be the obligatory day trip to Tijuana though.


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## DB008 (5 January 2013)

prawn_86 said:


> Totally agree. Great lifestyle, but now the most overpriced country in the World by far




Especially when some furniture is made in Indonesia.....(Off the Dick Smith website)



(Link)



Life Hacker Articles on Australian Pricing

Australia Has The Most Expensive IKEA Products In The Entire World

Ask LH: Why Does The Nexus 7 Tablet Cost So Much More In Australia?


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## DB008 (5 January 2013)

McLovin said:


> You're welcome anytime mate! There will be the obligatory day trip to Tijuana though.




Tijuana ??? - sounds dangerous.......


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## McLovin (5 January 2013)

DB008 said:


> Tijuana ??? - sounds dangerous.......




You'll be OK. You've got two kidneys right? Well, you only need one.


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## Garpal Gumnut (5 January 2013)

I'm thinking of buying a few rental houses in Cairns, I'm not all that keen on apartments with insurances and body corporates.

Has anyone any experience in the Cairns market.

I hear the Chinese comrades have discovered it as a tourist destination.

gg


----------



## prawn_86 (5 January 2013)

Garpal Gumnut said:


> I'm thinking of buying a few rental houses in Cairns, I'm not all that keen on apartments with insurances and body corporates.
> 
> Has anyone any experience in the Cairns market.
> 
> ...




I have looked at Cairns a few times as the market is quite cheap and in a slump at the moment. It is very tourist/boom driven, so if the AUD ever goes down that would be a good thing for Cairns property prices.

One thing to look out for, as you have already mentioned, are the body corp and insurance. Body corp seems very expensive for some unknown reason and insurance is quite high due to cyclone risk. These 2 generally take the advantage out of most cash-flow postive places, but if you are buying outright then it is a different story


----------



## FlyingFox (5 January 2013)

Garpal Gumnut said:


> I'm thinking of buying a few rental houses in Cairns, I'm not all that keen on apartments with insurances and body corporates.
> 
> Has anyone any experience in the Cairns market.
> 
> ...




Looked at Cairns maybe a yr or two back as there were a few cash flow pos places being marketed. However had similar concerns to what prawn_86 highlighted. Very dependent on tourism. With what was happening to the GC, we got put off. Mind you we were focusing more on small commercial.

Don't know what the market is doing at the moment.


----------



## Vixs (5 January 2013)

Mrmagoo said:


> OK show us a budget.



Here's mine and my fiancees:
590 Rent - We share a 4br house that is to big for us with a friend.
100 Transport - We both catch the bus to and from work. We live down the street from a shopping centre and walk there. Car recently died and decided not to replace it.
250 Food
60 Power
55 Gym Membership
135 2 Mobiles + Internet
50 Medical - Prescriptions/Basic Extras cover.
200 My spending money
200 Mrs spending money
$1640 Expenses per fortnight.
$1050 excluding rent.

$1280 Savings per fortnight.
$1870 with rent.

Can't afford to hold insurance policies personally at the moment so we both have appropriate Life/TPD/Income Protection cover through super funds, but other than that can't see any glaring omissions. That's been our budget for the last 1.5 years, seems to work for us.



Mrmagoo said:


> 55k with a HECs debt, but a house.




If that's steady income, and assuming that 55k is including super, you'd be eligibile for a loan of about $250-$275k. Property of about $285k with a 5% deposit of about $14500, capitalising LMI for a total LVR of about 96.5%. That would factor in $1200/mth living expenses by the bank - mine are about $1750 as shown above.

Payments would be about 46% of net income in the first year at current rates, well into 'mortgage stress' territory obviously, but for the first 5 or 6 years of the loan if you treat that as your savings + investments as well as housing costs, that's not terribly over budget. At the end of year 5, assuming growth over the period of 2.5% p.a. (not a given, but seems pretty reasonable to me that over a 5 year window a decently located property would at least keep up with inflation) you'd be below 80% LVR without making any extra repayments by the end of year 5. If you had no capital growth and didn't contribute any wage growth to the mortgage, you're looking at 10 years.

Your repayments, assuming wage growth of 3% and taking into consideration the extra amounts lost to increasing SGC percentages over the next few years, would still be about 42% after 5 years. You'd have about 65k equity in your property though, and could refinance the remaining amount over 30 years again - bringing repayments down to about 39.5% of net income if you wanted. Percentage of income will be higher as interest rates increase again, but assuming interest rate increases come about due to inflation including property you'll be better off sitting on an appreciating asset than getting 5% p.a. rent increases.

Considering that owning the roof over your head is a solid lifetime investment, I wouldn't have an issue with allocating my housing and savings/investments budget sections to the mortgage.

That buys a two bedroom apartment in Brisbane across the street from a train station that takes less than 20 minutes to get to central station.



Mrmagoo said:


> (Gotta love these rich people who haven't budgeted since the 1990s try and write a budget threads)




I'm 23, and while that's a very tight budget and buying a house on 55k on your own is likely to be even tougher, it doesn't look to me to be a bad decision financially.

Either I put more value in owning a home than some others here due to it's dual benefit of getting off the rent cycle and also having future access to an asset that can be leveraged highly for investment purposes, or I'm just not as frightened of paying that much 

Benefits: 
No terrible landlords. 
Rent money is no longer dead money, and the mortgage becomes a savings plan allowing you future access to cheaper investment lines of credit.

Costs:
It's tough for a few years paying off your residence on your own. Shock horror.

I spent far too much of my time putting that together considering it will no doubt be picked apart immediately. The numbers stack up for us though, and me and my partner are the only people that need to worry about that.

To each their own, I just can't help myself when people say "It can't be done!" when what they mean is "That will be tough and less than ideal!".


----------



## Garpal Gumnut (5 January 2013)

prawn_86 said:


> I have looked at Cairns a few times as the market is quite cheap and in a slump at the moment. It is very tourist/boom driven, so if the AUD ever goes down that would be a good thing for Cairns property prices.
> 
> One thing to look out for, as you have already mentioned, are the body corp and insurance. Body corp seems very expensive for some unknown reason and insurance is quite high due to cyclone risk. These 2 generally take the advantage out of most cash-flow postive places, but if you are buying outright then it is a different story






FlyingFox said:


> Looked at Cairns maybe a yr or two back as there were a few cash flow pos places being marketed. However had similar concerns to what prawn_86 highlighted. Very dependent on tourism. With what was happening to the GC, we got put off. Mind you we were focusing more on small commercial.
> 
> Don't know what the market is doing at the moment.




Thanks.

Good info

My aim would be to rent out to those workers and professionals benefitting from an upsurge in tourism, rather than the tourists themselves.

gg


----------



## DocK (5 January 2013)

Vixs said:


> I'm 23, and while that's a very tight budget and buying a house on 55k on your own is likely to be even tougher, it doesn't look to me to be a bad decision financially.
> 
> Either I put more value in owning a home than some others here due to it's dual benefit of getting off the rent cycle and also having future access to an asset that can be leveraged highly for investment purposes, or I'm just not as frightened of paying that much
> 
> ...




Just wanted to say well done!  It's great to see a youngster apply him/herself to a goal like you have.  Best of luck.


----------



## FlyingFox (5 January 2013)

Vixs said:


> To each their own, I just can't help myself when people say "It can't be done!" when what they mean is "That will be tough and less than ideal!".




Firstly, good on you Vix! I wish we were/are as good with our money. 

However no one said it can't be done (except in a few situations). I think what we are saying is that housing is Australia is absurdly expensive compared to most metrics and most other places around the world. 

Also why should I be sold into this scheme and be indebted to the banks for 30-60 yrs? There is no guarantees that I will work myself up the property ladder. I think to some of us it sounds ridiculous to be living in or on the verge of mortgage stress just to be in a house and not even where we want to live.

In any case, I want to congratulate you once again for sticking to your plan. I wish more young people thought as hard about their financial future,myself included.


----------



## wayneL (5 January 2013)

McLovin said:


> I've also been considering moving back to the US, although I'll move to the West Coast not the East this time. Tbh, it's not just the price of housing, everything in Australia is overpriced.




It is astonishing the bang for buck you can get in parts of the US. All the more irritating the absurdity of of prices in Oz (and NZ).


----------



## DB008 (5 January 2013)

Would this make an impact on property prices? 

Minimum wage (sorry, some Wiki involved)

*USA*


> As of July 24, 2009, the federal minimum wage in the United States is *$7.25 per hour*. Some states and municipalities have set minimum wages higher than the federal level, with the highest state minimum wage being $9.19 in Washington. Some U.S. territories (such as American Samoa) are exempt. Some types of labor are also exempt, and tipped labor must be paid a minimum of $2.13 per hour, as long as the hourly wage plus tipped income result in a minimum of $7.25 per hour.
> http://en.wikipedia.org/wiki/Minimum_wage_in_the_United_States




*Australia*


> Australia's minimum wage is *$15.96 per hour* or $606.40 per week. Generally, employees in the national system shouldn't get less than this.
> http://www.fairwork.gov.au/pay/national-minimum-wage/pages/default.aspx


----------



## wayneL (5 January 2013)

McLovin said:


> You're welcome anytime mate! There will be the obligatory day trip to Tijuana though.




Id be in that... been there before several times in my youf. I'd even pay for the petrol.... and the tequila


----------



## McLovin (5 January 2013)

DB008]Would this make an impact on property prices?

Minimum wage (sorry said:


> I'd even pay for the petrol.... and the tequila




Depending on where we end up, the two may be the same.


----------



## wayneL (5 January 2013)

McLovin said:


> Depending on where we end up, the two may be the same.




Well, the only thing to be decided is who pays off the La PolicÃ­a Mexicana.


----------



## DB008 (5 January 2013)

McLovin said:


> But then on the flipside, does someone flipping burgers at Macca's need to be paid $16/hour?




No.

I'm doing a RTW this year, l'll pop into LAX, but Mexico, l'm not so sure McLovin. Their drug war is out of control, but l've never tried Viagra (or Oxy), LOL! (All jokes)


----------



## MrBurns (5 January 2013)

Prices contine to ease across the board, outer suburbs the worst, inner suburbs are difficult between $1 and $2 million, suburbs such as Richmond (inner Melb) are actually booming.

Commercial property is very badly hit, banks dont want to lend .....why ? maybe they know something we dont.


----------



## FlyingFox (5 January 2013)

DB008 said:


> Would this make an impact on property prices?
> 
> Minimum wage (sorry, some Wiki involved)
> 
> ...




Not really. See McLovin comments. USA also as a much greater spread on income. I think the 90/10 ratio (ratio of the 90 percentile of income to the 10th percentile) there is something around 11 and here is somewhere between 4-5.


----------



## Garpal Gumnut (5 January 2013)

I do like Mexico.

They have such binding contracts.

My only contact with the country was a weeks stay in Nuevo Laredo in the early 70's.

Not a place to plant ones super.

gg


----------



## Mrmagoo (5 January 2013)

DB008 said:


> Would this make an impact on property prices?
> 
> Minimum wage (sorry, some Wiki involved)
> 
> ...




People on $15.96 an hour do not buy houses, nice try though.


----------



## Mrmagoo (5 January 2013)

DB008 said:


> No.
> 
> I'm doing a RTW this year, l'll pop into LAX, but Mexico, l'm not so sure McLovin. Their drug war is out of control, but l've never tried Viagra (or Oxy), LOL! (All jokes)




Inflation killed the economy. No debate there. The cause of inflation and HOW it destroys the economy is a different debate.

The church of the far right will say a 15.96 an hour wage in a trillion dollar economy caused inflation, those with half a mathematical brain know high minimum wages are the result of inflation. They're the god damned minimum, they're what people demand so that when they put in a days work at the end of it they can just afford to survive.

That doesn't fuel inflation. Think harder.


----------



## DB008 (5 January 2013)

Mrmagoo said:


> People on $15.96 an hour do not buy houses, nice try though.




But people on ~$30 an hour do......wait....hold on.....


----------



## Mrmagoo (5 January 2013)

DB008 said:


> But people on ~$30 an hour do......wait....hold on.....




The argument you're making is a classist political argument. It is about nothing more than the long held belief of a class stratified society.

The argument is attractive to skilled workers as they see it enabling them to pay someone to do their laundry cheaper. What they don't realise is that such a move would undermine the strength of the economy, removing the demand for their skills, landing them unemployed and in the same situation as the initial unskilled group.

For examples, see the USA. Their economy failed and are their wages sky high ?  LMAO.


----------



## Julia (5 January 2013)

Vixs said:


> I'm 23, and while that's a very tight budget and buying a house on 55k on your own is likely to be even tougher, it doesn't look to me to be a bad decision financially.
> 
> Either I put more value in owning a home than some others here due to it's dual benefit of getting off the rent cycle and also having future access to an asset that can be leveraged highly for investment purposes, or I'm just not as frightened of paying that much






> I spent far too much of my time putting that together considering it will no doubt be picked apart immediately. The numbers stack up for us though, and me and my partner are the only people that need to worry about that.
> 
> To each their own, I just can't help myself when people say "It can't be done!" when what they mean is "That will be tough and less than ideal!".



I can't see anything to be picked apart at all.  Totally congratulate you on your forward thinking and willingness to do it a bit tough in the short term for the longer term benefit.

Wish more had your attitude.


----------



## DB008 (5 January 2013)

Mrmagoo said:


> The argument you're making is a classist political argument.




Political? What?
I shall reply tomorrow.....


----------



## FlyingFox (5 January 2013)

Mrmagoo said:


> The argument you're making is a classist political argument. It is about nothing more than the long held belief of a class stratified society.
> 
> The argument is attractive to skilled workers as they see it enabling them to pay someone to do their laundry cheaper. What they don't realise is that such a move would undermine the strength of the economy, removing the demand for their skills, landing them unemployed and in the same situation as the initial unskilled group.
> 
> For examples, see the USA. Their economy failed and are their wages sky high ?  LMAO.




On the contrary, you remove many of the incentives for upskilling. Who would want to put them selves through 10 yrs of medical school if there isn't a significant gain to be had from this? (not taking the cost involved into account)


----------



## FlyingFox (5 January 2013)

Mrmagoo said:


> Inflation killed the economy. No debate there. The cause of inflation and HOW it destroys the economy is a different debate.
> 
> The church of the far right will say a 15.96 an hour wage in a trillion dollar economy caused inflation, those with half a mathematical brain know high minimum wages are the result of inflation. They're the god damned minimum, they're what people demand so that when they put in a days work at the end of it they can just afford to survive.
> 
> That doesn't fuel inflation. Think harder.





Well put. And of course it's a feedback loop.


----------



## wayneL (5 January 2013)

Mrmagoo said:


> The argument you're making is a classist political argument. It is about nothing more than the long held belief of a class stratified society.
> 
> The argument is attractive to skilled workers as they see it enabling them to pay someone to do their laundry cheaper. What they don't realise is that such a move would undermine the strength of the economy, removing the demand for their skills, landing them unemployed and in the same situation as the initial unskilled group.
> 
> For examples, see the USA. Their economy failed and are their wages sky high ?  LMAO.




Failed?

Well not yet, that may still come if the socialist, pseudo-Keynesian, mock monetists have their way, but not yet.

Never confuse the business cycle with failure.


----------



## cynic (5 January 2013)

Mrmagoo said:


> People on $15.96 an hour do not buy houses, nice try though.




I bought my first house on a net fortnightly wage of $484.60. I believe that my gross hourly rate at the time worked out to between $8 and $9. Houses were less expensive in those days but interest rates were so much higher!


----------



## psailagroup (5 January 2013)

DB008 said:


> Especially when some furniture is made in Indonesia.....(Off the Dick Smith website)
> 
> 
> 
> ...




Great point but easy to answers.
My opionion is based on working in the logistics industry.
1) shipping cost from Indonesia to Melbourne is 50% more vs Indonesia to melbourne
2) when the good arrive here, you have to pay duty and gst (duty) was designed to keep manfacturing in Australia alive but other cost have effected this law) rate for ikea furniture is 10% duty of the commercials value plus 10%gst 
So already the good have increased by 20% just on government charges
Australian port charges are the highest in the world, due to wages, government red tape etc
The bad part is there is so many other barges to add its not even funny 
10 years ago imported goods where cheap for the Australian public but now because we rely on importing has gone up through the roof


----------



## Mrmagoo (5 January 2013)

FlyingFox said:


> On the contrary, you remove many of the incentives for upskilling. Who would want to put them selves through 10 yrs of medical school if there isn't a significant gain to be had from this? (not taking the cost involved into account)




No medical school is 10 years.

If the only two jobs in the world were at Kmart or as a Doctor and no one wanted to be a Doctor and everyone wanted to work at Kmart. Then Maybe.


----------



## Julia (5 January 2013)

Mrmagoo said:


> No medical school is 10 years.



Rubbish.  If you want a specialist qualification, I doubt it would be fully achieved even in ten years.


----------



## Mrmagoo (5 January 2013)

Julia said:


> Rubbish.  If you want a specialist qualification, I doubt it would be fully achieved even in ten years.




Pass.


----------



## FlyingFox (5 January 2013)

psailagroup said:


> Great point but easy to answers.
> My opionion is based on working in the logistics industry.
> 1) shipping cost from Indonesia to Melbourne is 50% more vs Indonesia to melbourne
> 2) when the good arrive here, you have to pay duty and gst (duty) was designed to keep manfacturing in Australia alive but other cost have effected this law) rate for ikea furniture is 10% duty of the commercials value plus 10%gst
> ...




good points but this is a partial answer. 

1) Depending on the goods this can have a significant impact e.g large bulky goods but generally is a small portion of the final price. certainly does not double the price.

2) Many countries have import duties and trade quotas. The tax system in the US is even more complicated than here as you have state and federal levies. The GST is a consumption tax that applies to all goods sold regardless of origin (GST in Uk is now 20%, up form 17.5%). 

Source: My father was importer/exporter for many years both in Aus and overseas until retirement.

The single major factor in the equation is wage cost and general cost of doing business here. Another reason is that many overseas companies take a profit now so as to buffer prices changes when/if the dollar drop, well this is an argument used anyway (for example a lot of vehicles are still prices at exchange rates of 1 AUD = 0.8-0.9 US Dollars). 

However the most basic reason is that we the consumer's will gladly pay the price as we will gladly pay the price for houses. 

My pet peave is the one. I will certainly cop a lot of flack for this. Please be gentle lol.

http://www.porsche.com/usa/models/boxster/boxster/ 

Price in Oz, only 120K.


----------



## FlyingFox (5 January 2013)

Mrmagoo said:


> Pass.




Sorry mate. Lost all respect for your replies....

I think you'll be happy with everyone working at Kmart, Wollies etc. Mind you they pay really well. 

To add to Julia's answer, a colleague of mine finished his Geriatrics qualifications. I am not sure if he had to do post grad med but currently it is:

3-4 yrs for BSc plus Honours
4-5 yrs of Post grad Medicine
7 yrs of Geriatrics Training (got paid for this)

He has since been told that to get permanent positions in the field, he needed a PhD and he is now doing one.


----------



## Mrmagoo (6 January 2013)

FlyingFox said:


> Sorry mate. Lost all respect for your replies....
> 
> I think you'll be happy with everyone working at Kmart, Wollies etc. Mind you they pay really well.
> 
> ...




Only 4-5 years of which is "medical school" the rest is other stuff. 

Honestly the **** people come up with once the word "doctor" gets involved is amazing.


----------



## FlyingFox (6 January 2013)

Mrmagoo said:


> Only 4-5 years of which is "medical school" the rest is other stuff.
> 
> Honestly the **** people come up with once the word "doctor" gets involved is amazing.




No all of which is training he requires to practice as a Geriatrician. There are similar lengths of training required for other specialties including general practice. The pay in these training periods is nothing to write home about and you need to not only complete actual work but studies at the same time. Moreover you are never actually a qualified medical doctor unless you complete this. The "other stuff" is just as important if not more so. Finishing a uni degree is the easy part.

There are similar post qual training periods for most professions, e.g Lawyers, CPA for accountants but not necessary. 

I can't speak for other people but this is not ****. I am a "doctor" (I have a PhD, I work in medical research)!!


----------



## McLovin (6 January 2013)

FlyingFox said:


> No all of which is training he requires to practice as a Geriatrician. There are similar lengths of training required for other specialties including general practice. The pay in these training periods is nothing to write home about and you need to not only complete actual work but studies at the same time. Moreover you are never actually a qualified medical doctor unless you complete this. The "other stuff" is just as important if not more so. Finishing a uni degree is the easy part.
> 
> There are similar post qual training periods for most professions, e.g Lawyers, CPA for accountants but not necessary.
> 
> I can't speak for other people but this is not ****. I am a "doctor" (I have a PhD, I work in medical research)!!




I know an oncologist and a pediatrician. The oncologist didn't start "working" until he was into his 30's, the paediatrician didn't start until she was 28. They may not have been at school, but they sure as hell weren't treating patients unsupervised.


----------



## Vixs (6 January 2013)

FlyingFox said:


> Firstly, good on you Vix! I wish we were/are as good with our money.
> 
> However no one said it can't be done (except in a few situations). I think what we are saying is that housing is Australia is absurdly expensive compared to most metrics and most other places around the world.
> 
> ...




Cheers, I appreciate that, and I'm glad it was accepted with the tone I intended - as information and not an argument. That's not my plan, just in case there was any confusion - I'm not single, not looking to do all that on my own hehe - just wanted to demonstrate it was _possible_ per MrMagoo's post.

I do recognise our prices are by global standards extremely high, but I can't change that myself, and nor can anyone else until a substantial change is made to negative gearing. Only thing that can ruin your chances of success in this country is not having a job.

The hardest part of someones wealth creation seems, to me, to be that first step of getting out of the rent cycle and into your own house.


----------



## Mrmagoo (6 January 2013)

FlyingFox said:


> No all of which is training he requires to practice as a Geriatrician. There are similar lengths of training required for other specialties including general practice. The pay in these training periods is nothing to write home about and you need to not only complete actual work but studies at the same time. Moreover you are never actually a qualified medical doctor unless you complete this. The "other stuff" is just as important if not more so. Finishing a uni degree is the easy part.
> 
> There are similar post qual training periods for most professions, e.g Lawyers, CPA for accountants but not necessary.
> 
> I can't speak for other people but this is not ****. I am a "doctor" (I have a PhD, I work in medical research)!!




I missed the bit where that is all "medical school". 

The required, non paid bit was 5 years, one year more than an engineer needs. Big deal. 

Are you going to apologize for attempting to mislead people into thinking a medical degree is 10 years instead of 5 ?


----------



## FlyingFox (6 January 2013)

Mrmagoo said:


> I missed the bit where that is all "medical school".
> 
> The required, non paid bit was 5 years, one year more than an engineer needs. Big deal.
> 
> Are you going to apologize for attempting to mislead people into thinking a medical degree is 10 years instead of 5 ?





Fine I will correct myself and apologize if I mislead anyone. The required period of training for a medical doctor can be over 10 years; a part of which is paid. Currently most medical schools in Australia, US and UK are moving to a post graduate medical degrees. While the post graduate degree is only 4-5 yrs, the required undergraduate degree is another 3-4 yrs. In most cases this is a medical science degree. Therefore the total time in "medical school" is 7-8 years.

This does not change the point of my initial post. Why would someone spend X years getting training, accumulate HECS debt, work longer to be paid similar to someone working at K-Mart, Wollies etc? As weird as this sounds, it can be true for many new graduates......

Simple economic principles, can't have risk free reward. Opportunity cost always has to have a price!

This applies to whether you do engineering, law, accounting etc etc. Obviously the opportunity cost is different for each. Not to mention the risk of not actually succeeding/getting a job.


----------



## Vixs (6 January 2013)

Julia said:


> Rubbish.  If you want a specialist qualification, I doubt it would be fully achieved even in ten years.




Sounds about right Julia.

4 years for undergrad MBBS. (EDIT: Thought it was 6 for some reason, 4 for people who held a different degree. My bad.)
1-2 year internship.
4-6 years postgrad specialisation for surgeons/specialists.

Loosely recalled from a conversation I had with my cousin who is currently doing her postgrad.


----------



## FlyingFox (6 January 2013)

Vixs said:


> Cheers, I appreciate that, and I'm glad it was accepted with the tone I intended - as information and not an argument. That's not my plan, just in case there was any confusion - I'm not single, not looking to do all that on my own hehe - just wanted to demonstrate it was _possible_ per MrMagoo's post.
> 
> I do recognise our prices are by global standards extremely high, but I can't change that myself, and nor can anyone else until a substantial change is made to negative gearing. Only thing that can ruin your chances of success in this country is not having a job.
> 
> The hardest part of someones wealth creation seems, to me, to be that first step of getting out of the rent cycle and into your own house.




While there may not be a change possible without changes in negative gearing, recognizing that it is an issue is the first step. Left to it's own devices, the economy will correct it. Prices don't anywhere for a few years and all the "investors" may just see the error in the whole negative gearing argument.

Not having a job will certainly put a spanner in things but it is not a guarantee of success either. Here or else where.

The wealth creation bit depends on many factors. I was having a conversation with someone about the element of "luck" and "gut feeling" involved in wealth creation. I recently came across the story of William Knox D'Arcy. Have a read if you get a chance. Having said that, you will def not win if your not in it.

My personal issue is that a bad decision at the early stages can really set you back. Look up a post made by psailagroup a few days ago regarding his house valuations. Went from $420K to $360K in two years. Not saying that it has any impact on his situation or anyone else's. But that its a change of 60K or 14% in two years. Buy now and you have saved 3-4 yrs off your mortgage. 

Seen many people from my parent's and in-laws generation make an absolute killing in housing. Been told repeatedly to get into the market etc etc. Anyways...I am carrying on a bit....Good Luck!


----------



## FlyingFox (6 January 2013)

Vixs said:


> Sounds about right Julia.
> 
> 4 years for undergrad MBBS. (EDIT: Thought it was 6 for some reason, 4 for people who held a different degree. My bad.)
> 1-2 year internship.
> ...




Hmmm...forgot about the internship.

undergrad MBBS is atleast 5 years usually 6. Most schools are switching to postgrad now which is 4yrs.


----------



## So_Cynical (6 January 2013)

FlyingFox said:


> This does not change the point of my initial post. Why would someone spend X years getting training, accumulate HECS debt, work longer to be paid similar to someone working at K-Mart, Wollies etc? As weird as this sounds, it can be true for many new graduates......
> 
> Simple economic principles, can't have risk free reward. Opportunity cost always has to have a price!




I have a nasal polyp, cost to remove in Aust thru the private system $3500 approx with the surgeons fee being $1350 for maybe 2 hours work...its simple day surgery.

Cost to have the same day surgery done in the best Hospital In Manila with one of the top surgeons in the Philippines about $1100 .. less than a third.

Pretty sad that i am being forced in a round about way to get non emergency surgery done off shore...im really quite disgusted with the attitude of the medical industry here, the surgeons receptionist made me feel quite inadequate and poor with her attitude to my poverty.


----------



## Garpal Gumnut (6 January 2013)

So_Cynical said:


> I have a nasal polyp, cost to remove in Aust thru the private system $3500 approx with the surgeons fee being $1350 for maybe 2 hours work...its simple day surgery.
> 
> Cost to have the same day surgery done in the best Hospital In Manila with one of the top surgeons in the Philippines about $1100 .. less than a third.
> 
> Pretty sad that i am being forced in a round about way to get non emergency surgery done off shore...im really quite disgusted with the attitude of the medical industry here, the surgeons receptionist made me feel quite inadequate and poor with her attitude to my poverty.




Thats socialism for you mate.

It's on the nose.

Seriously though, if our public health system wasn't so full of receptionists and pay clerks on sick leave about being "bullied" it could provide better services to polyps such as yours.

Also there is a shortage of Specialists due to a closed shop attitude which only a Liberal government will be able to smash.

gg

gg


----------



## FlyingFox (6 January 2013)

So_Cynical said:


> I have a nasal polyp, cost to remove in Aust thru the private system $3500 approx with the surgeons fee being $1350 for maybe 2 hours work...its simple day surgery.
> 
> Cost to have the same day surgery done in the best Hospital In Manila with one of the top surgeons in the Philippines about $1100 .. less than a third.
> 
> Pretty sad that i am being forced in a round about way to get non emergency surgery done off shore...im really quite disgusted with the attitude of the medical industry here, the surgeons receptionist made me feel quite inadequate and poor with her attitude to my poverty.




It's across the board, not just medicine. Cost of tap washer 45c, Cost of changing said tap washer $45 (if your lucky). Cost of living for everyone is much higher here. 

But I agree that the system here is flawed. A lot of it does have to do with government and self imposed regulation on numbers in various specialities as well as other legislation. The people in the field are happy to keep is as is at it benefits them.


----------



## noirua (6 January 2013)

FlyingFox said:


> It's across the board, not just medicine. Cost of tap washer 45c, Cost of changing said tap washer $45 (if your lucky). Cost of living for everyone is much higher here.
> 
> But I agree that the system here is flawed. A lot of it does have to do with government and self imposed regulation on numbers in various specialities as well as other legislation. The people in the field are happy to keep is as is at it benefits them.




UK prices outside London: Plumbing prices for repair leaky tap
http://www.whatprice.co.uk/prices/plumbing/repair-leaky-tap.html

American faucet repair: Should You Repair a Dripping Faucet? | Wise Bread
http://www.wisebread.com/should-you-repair-a-dripping-faucet


----------



## KurwaJegoMac (6 January 2013)

Garpal Gumnut said:


> Thats socialism for you mate.
> 
> It's on the nose.
> 
> ...




On the money as always gg.

There's a bad smell on this forum, a gentleman with some goo (in his nose?) wonder if we can get the surgeon to remove him as well?


----------



## KurwaJegoMac (6 January 2013)

There's a lot of discussion here about cost of living being very high relative to other countries - as a youngen, this is 'normal' to me in Australia (as i have not seen any different in Australia)

I'd be very interested to hear some opinions from the more wiser posters in the forum, who have lived *& invested* in say the 70's-90's. During those years, did you feel our standard of living was overpriced relative to other countries, or is this a relatively new phenomenon? Note this is broader than just property (although that's a factor as well of course!)

Thanks in advance for any respnses


----------



## Mrmagoo (6 January 2013)

FlyingFox said:


> It's across the board, not just medicine. Cost of tap washer 45c, Cost of changing said tap washer $45 (if your lucky). Cost of living for everyone is much higher here.
> 
> But I agree that the system here is flawed. A lot of it does have to do with government and self imposed regulation on numbers in various specialities as well as other legislation. The people in the field are happy to keep is as is at it benefits them.




It is because of all the idiots sending everyone to university. They don't get jobs and end up in low wage slavery. Mean while we don't have enough plumbers s the plumber is charging $45 for 15 minutes work. It hurts everyone in the long run. But no one listens to me "education is the key" they say.

Yeah, well lets see your degree build a house.


----------



## moXJO (6 January 2013)

Mrmagoo said:


> It is because of all the idiots sending everyone to university. They don't get jobs and end up in low wage slavery. Mean while we don't have enough plumbers s the plumber is charging $45 for 15 minutes work. It hurts everyone in the long run. But no one listens to me "education is the key" they say.
> 
> Yeah, well lets see your degree build a house.




People are leaving trades in droves. Its no gravy train here. Just my cost of doing business is stupidly high and I run it as tight as possible. Plumbers generally charge $100+ hour because you can be out of work for 3 months  of the year during bad times. I know a few guys that went and got their plumbers,carpenters, electricians licence and leave the industry after 1-2years because they made more money in a wage job.


----------



## Mrmagoo (6 January 2013)

moXJO said:


> People are leaving trades in droves. Its no gravy train here. Just my cost of doing business is stupidly high and I run it as tight as possible. Plumbers generally charge $100+ hour because you can be out of work for 3 months  of the year during bad times. I know a few guys that went and got their plumbers,carpenters, electricians licence and leave the industry after 1-2years because they made more money in a wage job.




QLD ? Other parts of the country are different.


----------



## medicowallet (6 January 2013)

So_Cynical said:


> I have a nasal polyp, cost to remove in Aust thru the private system $3500 approx with the surgeons fee being $1350 for maybe 2 hours work...its simple day surgery.
> 
> Cost to have the same day surgery done in the best Hospital In Manila with one of the top surgeons in the Philippines about $1100 .. less than a third.
> 
> Pretty sad that i am being forced in a round about way to get non emergency surgery done off shore...im really quite disgusted with the attitude of the medical industry here, the surgeons receptionist made me feel quite inadequate and poor with her attitude to my poverty.




Firstly for everyone else, flyingfox is pretty much on the money with training etc.

For So_Cynical.

Why they can charge so much for ENT work is that it is EXTREMELY difficult to become an ENT surgeon, very competitive, and only some of the brightest and technically skilled surgeons in the country are suitable for this speciality.

Medicine is still very difficult to get into, surgery is very difficult to get into for those who get into medicine and ENT culls this lot much more.

This is why your ENT surgeon can charge for what they are worth, and why they are able to afford a nice house with their nice earnings for the year.


This situation will not change for a long time, however the growth of the mining boom is slowing for tradies, and hence the housing lackeys who have been overcharging since the FHVB kicked in.

I also see the ageing population as a massive positive for medical practitioners and a massive negative for the housing market 

MW

PS Where is Robots?


----------



## Julia (6 January 2013)

FlyingFox said:


> No all of which is training he requires to practice as a Geriatrician. There are similar lengths of training required for other specialties including general practice. The pay in these training periods is nothing to write home about and you need to not only complete actual work but studies at the same time. Moreover you are never actually a qualified medical doctor unless you complete this. The "other stuff" is just as important if not more so. Finishing a uni degree is the easy part.
> 
> There are similar post qual training periods for most professions, e.g Lawyers, CPA for accountants but not necessary.
> 
> I can't speak for other people but this is not ****. I am a "doctor" (I have a PhD, I work in medical research)!!



Thanks for the clarifying info, FlyingFox.  Congratulations on your remarkable capacity to remain polite to magoo despite considerable provocation to the contrary.



So_Cynical said:


> I have a nasal polyp, cost to remove in Aust thru the private system $3500 approx with the surgeons fee being $1350 for maybe 2 hours work...its simple day surgery.



Medicowallet has given you some reasons for this.
Why can't you have it done in the public system?  You are fond of advocating the notion that our Labor government is for the good of all the people etc.

Alternatively, why do you apparently not have private health insurance?
Surely all those profits from the market you keep telling us about should be enough to insure your health?



> Pretty sad that i am being forced in a round about way to get non emergency surgery done off shore...im really quite disgusted with the attitude of the medical industry here, the surgeons receptionist made me feel quite inadequate and poor with her attitude to my poverty.



Suggestion:  the receptionist didn't 'make you feel' anything.  You chose to feel slighted.



Garpal Gumnut said:


> Also there is a shortage of Specialists due to a closed shop attitude which only a Liberal government will be able to smash.



I'm not sure that you can blame the present government for this.  I have some memory of places being limited under the Howard government, in addition to the various colleges acting in their own interests by refusing to provide training for prospective specialists.  Happy to be corrected on this, however.



KurwaJegoMac said:


> There's a lot of discussion here about cost of living being very high relative to other countries - as a youngen, this is 'normal' to me in Australia (as i have not seen any different in Australia)
> 
> I'd be very interested to hear some opinions from the more wiser posters in the forum, who have lived *& invested* in say the 70's-90's. During those years, did you feel our standard of living was overpriced relative to other countries, or is this a relatively new phenomenon? Note this is broader than just property (although that's a factor as well of course!)
> 
> Thanks in advance for any respnses



KJM, I definitely think everything is tougher for young people these days than it was for in the period you mention.  But at the same time, there's a self-defeating attitude amongst many that it's "all too hard".
Before I got married we both worked two jobs to save for deposit on a house.
My parents made up the small shortfall as a wedding present.  We had a government loan at just 3% for the mortgage.  I can't now remember what non-government interest rates were at the time.

We had second hand furniture for some time.  Birthday and Xmas presents from parents were always some necessity for the house.  We grew all our own fruit and vegetables.

Employment was very easy.  I could leave a job one day and walk into a new one the next.  

Getting a tradesman in to fix something incurred an unremarkable cost, unlike today.

We had much less 'stuff'.  Somehow we managed our lives without feeling obliged to be in constant communication with others via some electronic device.

We spent more interesting time with friends because the above electronic obligations didn't absorb all our time, and I'd say were the richer for it.

Above all, and I'm only talking about New Zealand, there was a common acceptance that if you wanted to get ahead it was pretty much up to you.  The government did help with promoting home ownership via cheap loans, but the general ethos was an expectation of personal responsibility and a strong work ethic.

Not sure if any of this covers what you want to know.


----------



## Mrmagoo (6 January 2013)

I'd say a cheap house at 3% interest had a lot more to do with growing wealth than "growing your own vegetables".


----------



## Julia (6 January 2013)

Mrmagoo said:


> I'd say a cheap house at 3% interest had a lot more to do with growing wealth than "growing your own vegetables".



Magoo, do you ever make an effort to try for constructive comment?
It would appear not.  You seem entirely absorbed with the need to whine about how tough life is for you and to criticise the attempts of others.  Have to say I'm really tired of your attitude.

Of course a cheap loan was hugely helpful.  I was simply trying to draw an overall picture for the poster asking the question as to the main features of life quite some while ago.

There was also, unlike today, only the most minimal welfare available.  Now everyone seems to think their fellow taxpayers owe them something.  This imo is what has led to the prevalence of whining, misery-filled people like yourself.


----------



## starwars_guy456 (6 January 2013)

Off-topic - I'm pretty amazed at a number of comments on this thread regarding the internet and communications devices - the cost of maintaining these being "luxuries".

I argue for the opposing view. It's quite clear that the Australian economy is moving towards one based on information and knowledge. All cross-sections of our society need to be quite comfortable with using the internet and all the possibilities that flow from it - and for that to happen, I think that an internet connection and perhaps even a smartphone be widely used by all.


----------



## Mrmagoo (6 January 2013)

Julia said:


> Magoo, do you ever make an effort to try for constructive comment?
> It would appear not.  You seem entirely absorbed with the need to whine about how tough life is for you and to criticise the attempts of others.  Have to say I'm really tired of your attitude.
> 
> Of course a cheap loan was hugely helpful.  I was simply trying to draw an overall picture for the poster asking the question as to the main features of life quite some while ago.
> ...




Well you asked, the answer, it was incredibly easy in the 80s and 90s. I'm not complaining. I've got it pretty good. There are thousands if not millions of others who, if things continue, will be trapped in low wage slavery with no hope of owning. At least I have a chance.

I don't expect welfare. I just said houses are far too expensive these days. You got a 3% loan on a cheap property. Just think about that before you judge others less fortunate.


----------



## RandR (6 January 2013)

noirua said:


> UK prices outside London: Plumbing prices for repair leaky tap
> http://www.whatprice.co.uk/prices/plumbing/repair-leaky-tap.html
> 
> American faucet repair: Should You Repair a Dripping Faucet? | Wise Bread
> http://www.wisebread.com/should-you-repair-a-dripping-faucet




I just want to point out the the plumbing legislation *allows the homeowner to change tap washers himself *... you dont need to be a licensed plumber to do so 

But otherwise back to the housing whining woo waa... too expensive blaa blaa blaa ... why cant i just get one easy blaa blaa blaa .. everyone else that has one is a cheat blaa blaa blaa. 

Fark me its not really that hard at all to save a little coin and put together a deposit. You dont need to be a wage slave. Im on an average wage and we've got a house, we can do that and afford to do a bit of travelling, both have decent newish cars and have all the gadgets and doo daas we want. The secret is called saving. Get into it.

House prices might not be going anywhere for a while. I couldnt care less, I own a house because i need a place to live end of story theres no goal to make money from it and even if there was it increasing in price is absolutely pointless. Because it will always have the same relative value to other properties regardless of price movements. I couldnt care less if house prices double in the next decade or drop by half i'll still own it and will still be worth the same value relative to other properties and I only need one.


----------



## Bill M (6 January 2013)

RandR said:


> Fark me its not really that hard at all to save a little coin and put together a deposit. You dont need to be a wage slave. Im on an average wage and we've got a house, we can do that and afford to do a bit of travelling, both have decent newish cars and have all the gadgets and doo daas we want. The secret is called saving. Get into it.
> 
> House prices might not be going anywhere for a while. I couldnt care less, I own a house because i need a place to live end of story theres no goal to make money from it and even if there was it increasing in price is absolutely pointless. Because it will always have the same relative value to other properties regardless of price movements. I couldnt care less if house prices double in the next decade or drop by half i'll still own it and will still be worth the same value relative to other properties and I only need one.




Excellent post RandR and that's exactly what it's all about. When you pay it off there will be no more mortgage or rent payments to be made and that is absolute bliss. In the mean time you can do it up as you like and live without the threat of being thrown out at an inconvenient time. Cheers mate, I wish you all the best.


----------



## sydboy007 (6 January 2013)

Mrmagoo said:


> It is because of all the idiots sending everyone to university. They don't get jobs and end up in low wage slavery. Mean while we don't have enough plumbers s the plumber is charging $45 for 15 minutes work. It hurts everyone in the long run. But no one listens to me "education is the key" they say.
> 
> Yeah, well lets see your degree build a house.




I'd blame the economic rationalists for forcing Governments to privatise all the old business that used to churn out traddies.  Possibly their inefficiencies were the trade off for havign a lot more trade qualified workers?

These days unless the Govt throws money at business they don't want to train up someone, they'd rather bid up wages and poach them from another company.

The resource industry is a prime example of this.  Seems if you are a C level exect then being highly paid for your "skills" is OK, but when the same happens in the blue collar workforce it's a tragedy caused by the unions or labor Govt - usually both.

I do wish we could move away from uni being the idea, to something more like the Germans or Danes who value a trade just as highly.  The country would be a lot better off for it.


----------



## cynic (6 January 2013)

Mrmagoo said:


> Well you asked, the answer, it was incredibly easy in the 80s and 90s...




Sure was Magoo! 

Paying up to 18.75% interest rates on a mortgage from purchase of a house at an initial cost of approx. 4.5 X annual salary - piece of cake!

Subsequently becoming unemployed during the "recession we had to have" and then having to manage the commitment after a >70% reduction in income - dead easy! 

Please God, turn back the clock and bring back the good old days, the Magoos of this world have it way too tough!


----------



## Bill M (6 January 2013)

KurwaJegoMac said:


> There's a lot of discussion here about cost of living being very high relative to other countries - as a youngen, this is 'normal' to me in Australia (as i have not seen any different in Australia)
> 
> I'd be very interested to hear some opinions from the more wiser posters in the forum, who have lived *& invested* in say the 70's-90's. During those years, did you feel our standard of living was overpriced relative to other countries, or is this a relatively new phenomenon? Note this is broader than just property (although that's a factor as well of course!)
> 
> Thanks in advance for any respnses




This is a bit off thread but seeing as it has been asked I shall answer as best as I can.

My Mother is 80 years old, back in the 60's she worked 2 jobs part time and my Dad worked full time. Mum was a cleaner and Dad worked in a factory, not glamorous jobs. They had a mortgage then too but with 3 little kids sacrifices had to be made and that meant my Mother working nights cleaning offices. My Mother always says things are better now than back then. She always cites the cost of a refrigerator. She said back then you needed to save a whole Month of full time salary to buy a fridge. Now you can buy one with a weeks normal salary.

She says, back then there was no superannuation and women were paid less than men and were not even considered for a home loan. They were looked at as a liability, by that I mean the woman would get pregnant and could no longer work and therefore could not service a loan. I was a kid at the time, everything was hard so much so that my Mother couldn't even afford the proper school uniform I was suppose to wear.

She is now an old age pensioner living off the Government pension (remember, no super back then) and she says she can survive quite well on it. To answer your question my Mother says life is better now than back then both in price and standard of life.

For me I bought my first house in 1979, all I had to do was save 10% and borrow the rest so I did it. It isn't that different now. People have to start off basic or inconvenient, by that I mean travel to work long distances. It wasn't much different in the 70's.

I will use Sydney and the Central Coast as an example as I live in the area and know it well. Right now you can still buy a 2 bedroom timber or fibro cottage on the Central Coast for around $220,000. If I had to do it all over again I would hold a decent job in Sydney and buy that 2 br cottage for $220,000 and commute each day to work. Yes it is a pain, yes it is a bit far but I would do it in order to get ahead. How hard is it to save 10% which is $22,000 in this case? Then you borrow 200k for the rest. Would that really be that hard to pay back? I don't think so. Then a few years later down the track you can sell and upgrade to something nearer to your job.

To sum it up, home ownership isn't free, you have to work for it and you have to make sacrifices. Nothing has changed that much over the years, you just need to go out a bit further to do the hard yards.

As far as international travel is concerned, it is far better, cheaper and more common these days. In 1984 I paid $1,100 return for an airfare to the USA, these days I can still get it at that price on special. When I got there the USA was cheaper for everything than what it was in OZ so nothing has changed there. Now a days schoolies are going to Bali for end of the year parties, unheard of in the past. I think life for everybody is better now than in the past, just my opinion.


----------



## So_Cynical (6 January 2013)

Julia said:


> Medicowallet has given you some reasons for this.
> Why can't you have it done in the public system?  You are fond of advocating the notion that our Labor government is for the good of all the people etc.
> 
> Alternatively, why do you apparently not have private health insurance?
> ...




Medicowallets reasons made some sense but i doubt any ENT surgeon is really worth 600K+ per year.

That's right i don't have private health insurance mostly because every year i pay this thing called a Medicare levy, silly me thought it was some kind of medical coverage payment, turns out it only get me free GP visits, a discount on a specialist and free cat scans...what i need is just non cosmetic, elective surgery cover, know any fund that's offering that?

--

The receptionist was a stuck up bitch...made me feel like i had wasted her time because she decided i had cover and could afford what she had in mind.


----------



## Mrmagoo (6 January 2013)

Bill M said:


> As far as international travel is concerned, it is far better, cheaper and more common these days. In 1984 I paid $1,100 return for an airfare to the USA, these days I can still get it at that price on special. When I got there the USA was cheaper for everything than what it was in OZ so nothing has changed there. Now a days schoolies are going to Bali for end of the year parties, unheard of in the past. I think life for everybody is better now than in the past, just my opinion.




Baby boomers can still travel. Gen Y can't buy houses in the 1980s.

PS. Interest rates were only very briefly 18%. If that happened today..... wow 18% on 500k.


----------



## Garpal Gumnut (6 January 2013)

Mrmagoo said:


> Baby boomers can still travel. Gen Y can't buy houses in the 1980s.
> 
> PS. Interest rates were only very briefly 18%. If that happened today..... wow 18% on 500k.




Thank gawd, magoo, we are back on to property and away from SC's bloody nose.

gg


----------



## FlyingFox (6 January 2013)

RandR said:


> I just want to point out the the plumbing legislation *allows the homeowner to change tap washers himself *... you dont need to be a licensed plumber to do so




It was just an example. I change my own washers among other things. I will be much more explicit with my examples in the future!



RandR said:


> Fark me its not really that hard at all to save a little coin and put together a deposit. You dont need to be a wage slave. Im on an average wage and we've got a house, we can do that and afford to do a bit of travelling, both have decent newish cars and have all the gadgets and doo daas we want. The secret is called saving. Get into it.





If you read the posts carefully; not a lot, if any, of people the people are saying it's too hard and it can't be done. All they are saying is that by most metrics Australian housing is very expensive. Also the question has been asked, why can't someone on a significantly above average afford to buy into the suburb they prefer? 

Actually from my reading of the last couple of days posts, most people asking the above question, myself included can afford a house and possibly in the suburb they want. However the to us, it seems illogical, given the state of affairs around the world that housing here should be so expensive.



RandR said:


> House prices might not be going anywhere for a while. I couldnt care less, I own a house because i need a place to
> live end of story theres no goal to make money from it and even if there was it increasing in price is absolutely pointless. Because it will always have the same relative value to other properties regardless of price movements. I couldnt care less if house prices double in the next decade or drop by half i'll still own it and will still be worth the same value relative to other properties and I only need one.




Fair enough and good on you. I am sure the people that bought property in Tokyo before the housing market there collapsed said the same thing. Now they kids are probably paying off a mortgage for a property worth half the price. 

Out of curiosity, when did you buy your place?


----------



## FlyingFox (6 January 2013)

sydboy007 said:


> .......
> The resource industry is a prime example of this.  Seems if you are a C level exect then being highly paid for your "skills" is OK, but when the same happens in the blue collar workforce it's a tragedy caused by the unions or labor Govt - usually both.




No one trying to start a class system here. Some of the statements that were made were with regards to pay differences between different profession was looking at it from a purely economic standpoint and looking at opportunity cost. 



sydboy007 said:


> I do wish we could move away from uni being the idea, to something more like the Germans or Danes who value a trade just as highly.  The country would be a lot better off for it.




Being someone who has been through more of uni than most, I can safely say that this is not true. The government might be pushing the idea but that is not the general perception. We have great equality here and this is something to be cherished. From a financial perspective as well, blue collar jobs pay just as well if not better than "skilled" jobs. Leaving the exec's and medical and high level specialties out.


----------



## medicowallet (6 January 2013)

So_Cynical said:


> Medicowallets reasons made some sense but i doubt any ENT surgeon is really worth 600K+ per year.
> 
> That's right i don't have private health insurance mostly because every year i pay this thing called a Medicare levy, silly me thought it was some kind of medical coverage payment, turns out it only get me free GP visits, a discount on a specialist and free cat scans...what i need is just non cosmetic, elective surgery cover, know any fund that's offering that?
> 
> ...




1. Quite a few surgeons that I know make most of their money from the "fast" procedures ( an example might even be polyp removal), and make very little from "long" procedures, (an example might be laryngeal cancer).  I think $600k is fair pay for an ENT who could possibly have earned more money with their kind of dedication in alternative fields of interest.

2. Your accountant must be poor, as no doubt you would be paying extra on top of your medicare levy by NOT having private health insurance.

3. Almost all funds offer that, unless I misinterpret your meaning.

4. You can buy a new house each year if you earn $1mil before tax each year from your professional activities.

5. I don't earn $1mil each year 


MW


----------



## FlyingFox (6 January 2013)

So_Cynical said:


> Medicowallets reasons made some sense but i doubt any ENT surgeon is really worth 600K+ per year.
> 
> That's right i don't have private health insurance mostly because every year i pay this thing called a Medicare levy, silly me thought it was some kind of medical coverage payment, turns out it only get me free GP visits, a discount on a specialist and free cat scans...what i need is just non cosmetic, elective surgery cover, know any fund that's offering that?
> 
> ...




One big cost factor that didn't get talked about was liability insurance. A big chunk of that 600K goes to that. The surgeon in Oz screws up the op and you can sue him and get a payout. One in Philippines screws up?


----------



## Garpal Gumnut (6 January 2013)

Snot fair. We are back on to SC's putrid bloody polyps.

Start a bloody snot thread, if you think a specialist creeping upon or into SC's weeping nose is important.

This is a property thread.

gg


----------



## FlyingFox (6 January 2013)

Garpal Gumnut said:


> Snot fair. We are back on to SC's putrid bloody polyps.
> 
> Start a bloody snot thread, if you think a specialist creeping upon or into SC's weeping nose is important.
> 
> ...




Sorry. Point taken....back to property everyone....


----------



## Mrmagoo (6 January 2013)

What "other" professions could these surgeons enter to earn $6050 per hour ?

The fact that it has gotten so bad we're using a surgeons salary as an arguing point for buying a home.

I think we're really hit the end with house prices when we're needing to go back 50 years (that is a time where most of those arguing house prices are expensive were not even born) to try and justify things.


----------



## medicowallet (6 January 2013)

Mrmagoo said:


> What "other" professions could these surgeons enter to earn $6050 per hour ?
> .




Can't seem to remember to have posted that an ENT surgeon earns $6050 per hour

Even I think over $11mil per year is too much for an ENT

MW


----------



## Mrmagoo (6 January 2013)

medicowallet said:


> Can't seem to remember to have posted that an ENT surgeon earns $6050 per hour
> 
> Even I think over $11mil per year is too much for an ENT
> 
> MW




650 an hour, was typo.


----------



## medicowallet (6 January 2013)

Mrmagoo said:


> 650 an hour, was typo.




$650 per hour

Well that I guess is assuming 38 hours 48 weeks....

Perhaps if we go 50 hours 48 weeks will be closer to reality   = approx $400 per hour before expenses.


Sounds very reasonable to me.  

Other jobs?  Perhaps upper echelons of mining, government etc.  Not that difficult for these extremely proficient types of people.

MW


----------



## Julia (6 January 2013)

Mrmagoo said:


> Well you asked, the answer, it was incredibly easy in the 80s and 90s.



I did not say it was incredibly easy.  Don't distort what people have said,  magoo.
To qualify for that 3% loan we had to put down a 30% deposit.  I can't remember what we were earning, but it wasn't much compared to today's salaries.

Later when I bought the first IP I was paying 22% on the mortgage.  So just rid yourself of the idea that everything was easy a couple of decades or more ago.
There have always been people who will find a way to get ahead and do well, just as there will always be people like you whose main mission in life is to criticise anyone apparently doing better than they are.



> QUOTE=Bill M;746059]Excellent post RandR and that's exactly what it's all about.



+1.  Great comments, RandR.



So_Cynical said:


> That's right i don't have private health insurance mostly because every year i pay this thing called a Medicare levy, silly me thought it was some kind of medical coverage payment, turns out it only get me free GP visits, a discount on a specialist and free cat scans...what i need is just non cosmetic, elective surgery cover, know any fund that's offering that?



I'm mindful of gg's very reasonable request that we leave aside your nasal problems on the property thread, but are you actually saying it's impossible for you to have a nasal polyp removed in the public system?
I don't believe that for a moment.  You might have to sit on a waiting list for a long time, but you will be able to have it done at a public hospital at no cost to yourself eventually.

The reason most sensible people take out private cover is so that they don't have to endure this waiting, and so that they can have a procedure carried out by someone known to be competent, rather than risk some trainee ENT surgeon practising on them.  Shop around.  There are plenty of funds offering every conceivable private option.

If you're getting free GP visits on Medicare, that's more than most people are.


----------



## So_Cynical (6 January 2013)

Lol this thread hasnt been this funny since robots departed.


----------



## medicowallet (6 January 2013)

So_Cynical said:


> Lol this thread hasnt been this funny since robots departed.




Where is Robots?

MW

PS Where is Robots?


----------



## Garpal Gumnut (7 January 2013)

medicowallet said:


> Where is Robots?
> 
> MW
> 
> PS Where is Robots?




He is being held prisoner in the Sinai by a Jihadist Polyp.

gg


----------



## explod (7 January 2013)

Garpal Gumnut said:


> He is being held prisoner in the Sinai by a Jihadist Polyp.
> 
> gg




Was talking to him via pm some time back now and said something about meeting someone on the St Kilda tram.

Understand he is now busy putting on an extra room out the back for the computer.


----------



## againsthegrain (7 January 2013)

explod said:


> Was talking to him via pm some time back now and said something about meeting someone on the St Kilda tram.
> 
> Understand he is now busy putting on an extra room out the back for the computer.





maybye his a contenstant on the new block working hard and not allowed outside world communication


----------



## psailagroup (7 January 2013)

Julia said:


> I did not say it was incredibly easy.  Don't distort what people have said,  magoo.
> To qualify for that 3% loan we had to put down a 30% deposit.  I can't remember what we were earning, but it wasn't much compared to today's salaries.
> 
> Later when I bought the first IP I was paying 22% on the mortgage.  So just rid yourself of the idea that everything was easy a couple of decades or more ago.
> ...




Hi Julie,
I am 28 and love your reasons to the above points, I bought my first IP at 21 and I had to work three jobs to save a decent deposit in one year. I think the biggest issue we have is this, To many people are short sighted on a long term goals, people want everything now but are not willing to really push as well. Even thought My wife and I are comfortable I still work two jobs and my wife work one job (well she just got sacked lol), I always believe that you need two incomes, One income to purely save, the other income to service your expenses and if you budget correctly use that extra money to save.

Allot of people think Australia is a hard place now, Give it 10 years and things are going to get even harder, Dole will be scrapped and to top it off Medicare will also be scrapped as well.
And I also respect your point about “different times”  History always repeats its self but it just sounds different. Sure right now we face higher property prices but back then you had higher interest rates and in all fairness it was harder to get a home loan as well. 
Now funding is allot easier, interest rates are low but property prices are higher

The biggest issues humans face right now is not an expensive world but the ability to change to a changing environment.

PS yesterday at a BBQ a friend of mine who is on a low wage wants to move house, I said why?? We want a bigger home our 3 bedroom home is to small for me and my wife. Where planning to have kids in 3 to 5 years time. 

People want to much and not prepaired to give something back for it


----------



## againsthegrain (7 January 2013)

psailagroup said:


> Hi Julie,
> I am 28 and love your reasons to the above points, I bought my first IP at 21 and I had to work three jobs to save a decent deposit in one year. I think the biggest issue we have is this, To many people are short sighted on a long term goals, people want everything now but are not willing to really push as well. Even thought My wife and I are comfortable I still work two jobs and my wife work one job (well she just got sacked lol), I always believe that you need two incomes, One income to purely save, the other income to service your expenses and if you budget correctly use that extra money to save.
> 
> Allot of people think Australia is a hard place now, Give it 10 years and things are going to get even harder, Dole will be scrapped and to top it off Medicare will also be scrapped as well.
> ...




Typical FHOB mentality that was imposed on them by the baby boomers back at the peak. A bedroom for each pet and garage spot the the bicycle. Some people are going to get a bit bite from reality when it catches upto them.


----------



## sydboy007 (7 January 2013)

Seems the hissing sound of house price deflation is continuing.  Would definitely not want Melbourne property with their over building of apartments.

I'm just hoping unemployment holds up and we get a sideways crawl for a few more years on property prices while we keep on the slow grind to paying off some of the humongous private debt we've racked up.

It's an election year, so pretty please no more wasted home vendors grants that will suck in another round of first home owners bidding up prices and vendors pocketing the growth.

I just keep asking myself what's going to happen once the boomers find they need to start selling some of their IPs to fund their retirement?  In a low credit growth, trend income growth environment, couple with an uptick in sellers, will there be enough demand to hold prices at current levels, or will we see a dramatic revaluation of housing stock?

I'm thinking around 2022 is when this will become a big issue.


----------



## DB008 (7 January 2013)

Hmm...

http://www.sqmresearch.com.au/SQMResearchMediaReleasevacancyratesNovember2012.pdf


Domain.com



> Vacancy rates in a stable state
> 
> Melbourne's residential vacancy rate in August did not change from the 1.9 per cent recorded in July. As a result, the median rent for a house remained at $380 a week. The median rent for an apartment decreased by $1 - from $360 to $359 a week.
> 
> ...




I have a few IP's. Never had a problem renting them out.


----------



## young-gun (7 January 2013)

Bill M said:


> Excellent post RandR and that's exactly what it's all about. When you pay it off there will be no more mortgage or rent payments to be made and that is absolute bliss. In the mean time you can do it up as you like and live without the threat of being thrown out at an inconvenient time. Cheers mate, I wish you all the best.




You guys have got to stop boasting this old school mentality. How is having a mortgage for hundreds of thousands of dollars on what should be considered a LIABILITY a good idea? Everyone should be preaching to buy an investment property from the get go(obviously pick your timing). You pay rent for 300$ a week, have all the benefits of a *cashflow positive* property(not my fault if some idiots choose to negative gear) including the ability to write things off against the house, all the while paying down the mortgage far quicker than if you lived there forking it all out yourself?

Owning your own house is merely a luxury. You are going to progress much faster putting it on hold. Everyone on here talks about sacrifice, how about sacrificing the security of owning your own home for a few years so you generate an actual *investment* that can then help pay down your dream LIABILITY.

House prices stagnant to down.


----------



## Vixs (7 January 2013)

young-gun said:


> You guys have got to stop boasting this old school mentality. How is having a mortgage for hundreds of thousands of dollars on what should be considered a LIABILITY a good idea? Everyone should be preaching to buy an investment property from the get go(obviously pick your timing). You pay rent for 300$ a week, have all the benefits of a *cashflow positive* property(not my fault if some idiots choose to negative gear) including the ability to write things off against the house, all the while paying down the mortgage far quicker than if you lived there forking it all out yourself?
> 
> Owning your own house is merely a luxury. You are going to progress much faster putting it on hold. Everyone on here talks about sacrifice, how about sacrificing the security of owning your own home for a few years so you generate an actual *investment* that can then help pay down your dream LIABILITY.
> 
> House prices stagnant to down.




It's very much of a lifestyle choice and not a financial choice driving my position, personally.

Rent and invest is on paper the better financial move, but I want the security and peace of mind that comes with not having anyone to answer to about how I live.


----------



## Julia (7 January 2013)

Vixs said:


> It's very much of a lifestyle choice and not a financial choice driving my position, personally.
> 
> Rent and invest is on paper the better financial move, but I want the security and peace of mind that comes with not having anyone to answer to about how I live.



+1.  So much more to owning one's own home than the economic considerations.  For me, the peace of mind, the pleasure of creating an attractive and comfortable environment, is priceless.


----------



## Garpal Gumnut (7 January 2013)

Julia said:


> +1.  So much more to owning one's own home than the economic considerations.  For me, the peace of mind, the pleasure of creating an attractive and comfortable environment, is priceless.




+1

gg


----------



## Bill M (8 January 2013)

Vixs said:


> It's very much of a lifestyle choice and not a financial choice driving my position, personally.
> 
> Rent and invest is on paper the better financial move, but I want the security and peace of mind that comes with not having anyone to answer to about how I live.






Julia said:


> +1.  So much more to owning one's own home than the economic considerations.  For me, the peace of mind, the pleasure of creating an attractive and comfortable environment, is priceless.






Garpal Gumnut said:


> +1
> 
> gg




+ 2 (wife and I)

young-gun, when I was a renter back in the 80's I was asked to vacate a property when it was in 2 weeks before Christmas, this was in Manly/Sydney. I could just see us now, an older couple looking for accommodation right at the time when everything is taken or booked out, no thanks.


----------



## sydboy007 (8 January 2013)

I've noticed a few for lease signs in my area.  Seems to be taking a few weeks to get lodgers these days.  Only recently seen for lease signs even.  i think at least 1 is still vacant - highly unusual for my an inner west suburb.  I'm suspecting the landlord is asking too much, though could just be a bad time fo year to try and lease a property.

Was doing a bit of a check on what the current price is for a standard 3BR house with small courtyard and parking and it's quite sad that an 800K property is not getting much more than 750 / week in my suburb and the surrounds.

I count myself lucky I got in just as the boom was taking off in 97.  There's no way I'd want to shackle myself with the kind of mortgages people are taking out these days.

I do agree there's a lot of non financial reasons to own ya own home, and glad I bit the bullet, but if i was 25 now I'd pretty much accept I'm going to be a renter for a long time because I wouldn't be willing to spend 1+ hrs each way to and from work just to live in my own place.

The real question is when will the deleveraging finish?  Until then house prices can't really go up much with credit growth and decades low growth.


----------



## young-gun (8 January 2013)

Vixs said:


> It's very much of a lifestyle choice and not a financial choice driving my position, personally.
> 
> Rent and invest is on paper the better financial move, but I want the security and peace of mind that comes with not having anyone to answer to about how I live.




I've been renting for 2 years, and feel as if I own the house, we never hear a peep from anyone other than a quarterly hour inspection that we are never here for. We run a 12 month lease, and considerable notice has to be given if the landlord doesn't wish to extend for another term.



Julia said:


> +1.  So much more to owning one's own home than the economic considerations.  For me, the peace of mind, the pleasure of creating an attractive and comfortable environment, is priceless.




So priceless it couldn't wait a few years?(if you were in my shoes)



Garpal Gumnut said:


> +1
> 
> gg






Bill M said:


> + 2 (wife and I)
> 
> young-gun, when I was a renter back in the 80's I was asked to vacate a property when it was in 2 weeks before Christmas, this was in Manly/Sydney. I could just see us now, an older couple looking for accommodation right at the time when everything is taken or booked out, no thanks.




All the above sacrifices are exactly what I am talking about. The luxury of owning your own home for a FEW YEARS compared to becoming financially secure is not a smart move IMO, regardless of how many warm fuzzing feelings you get from owning your own home (which, believe it or not I know all about). Just differences in opinion I guess.

Everyone seems to think renting is the devil, it just simply isn't that case.

Bill your example I imagine is a rare one. If you were asked to vacate before the lease was up then(providing the laws were the same) the land-lord is required to find and provide you with alternate accommodation. Perhaps this wasn't the case back then.


----------



## Bill M (8 January 2013)

young-gun said:


> Bill your example I imagine is a rare one. If you were asked to vacate before the lease was up then(providing the laws were the same) the land-lord is required to find and provide you with alternate accommodation. Perhaps this wasn't the case back then.




Yeah you are right, now it's 60 days notice, it wasn't back then.


----------



## FlyingFox (8 January 2013)

sydboy007 said:


> .....
> I count myself lucky I got in just as the boom was taking off in 97.  There's no way I'd want to shackle myself with the kind of mortgages people are taking out these days.
> .....




+1

An honest, financially rational answer.


----------



## maffu (8 January 2013)

Vixs said:


> If that's steady income, and assuming that 55k is including super, *you'd be eligibile for a loan of about $250-$275k.* Property of about $285k with a 5% deposit of about $14500, capitalising LMI for a total LVR of about 96.5%. That would factor in $1200/mth living expenses by the bank - mine are about $1750 as shown above.
> 
> Payments would be about 46% of net income in the first year at current rates, well into 'mortgage stress' territory obviously, but for the first 5 or 6 years of the loan if you treat that as your savings + investments as well as housing costs, that's not terribly over budget. At the end of year 5, assuming growth over the period of 2.5% p.a. (not a given, but seems pretty reasonable to me that over a 5 year window a decently located property would at least keep up with inflation) you'd be below 80% LVR without making any extra repayments by the end of year 5. If you had no capital growth and didn't contribute any wage growth to the mortgage, you're looking at 10 years.




Fantastic post overall, and well done with the detail.
The problem with these nation wide debates is people from different cities will have very different opinions. You consider 250k a decent amount to buy a place in Brisbane, but in Sydney 250k is buying you rubbish. There are only 3 suburbs in greater Sydney that 250k will buy a median house.
For example, look at Sydneys cheapest suburbs.



> *Blackett $232,000
> Tregear $237,000
> Lethbridge $238,500
> Whalan $248,000*
> ...



http://smh.domain.com.au/list-sydneys-10-cheapest-suburbs-for-houses-20121022-280yy.html

These suburbs are all ~50km + from the CBD. With a commute time to the CBD of 1 hour plus in peak hour.

I have friends who are teachers in the public schools in Bidwill and Werrington. You would absolutely not send your kids to a school in the area. It is mostly housing commission, and the teachers get threatened to be stabbed, they are constantly abused, and it is considered a success if a kid gets through the HSC. Pretty much they are the absolute worst areas of Sydney. The local high school sued the Daily Telegraph newspaper years back because the headline when the HSC came out was "Class we failed" as not a single student from the school scored over 50% in the year 12 mark. None of the students from this local schools go onto university, its a cycle of poverty out there and the stories of the kids are pretty heart breaking.

Obviously you can pick up some apartments closer to the city, and the cheapest properties in other suburbs will fall below that 250k mark, but overall its slim pickings.

The cheapest median house price within 20km of the CBD is Granville with a median price of $430,000, and at the moment, there are no places (houses or units) available in  Granville for under 250,000
http://www.realestate.com.au/buy/be...lle,+nsw+2142;+/list-1?source=location-search

http://discover.realestate.com.au/buying/40-most-affordable-suburbs-near-your-capital-city


So using your figures, a person earning above the median salary in Australia of 55k, can only buy a median house in the 3 worst suburbs in greater Sydney, and can't get anything in the cheapest suburb within 20km of the CBD. 
It shows how there is a big disconnect between the wages being earned, and the house you can afford to buy. I actually find it a great example to illustrate that on average, the Sydney housing market is skewed.


----------



## young-gun (8 January 2013)

maffu said:


> consider 250k a decent amount to buy a place in Brisbane.




You don't live in brisbane do you.


----------



## Vixs (8 January 2013)

maffu said:


> Fantastic post overall, and well done with the detail.
> The problem with these nation wide debates is people from different cities will have very different opinions. You consider 250k a decent amount to buy a place in Brisbane, but in Sydney 250k is buying you rubbish. There are only 3 suburbs in greater Sydney that 250k will buy a median house.
> For example, look at Sydneys cheapest suburbs.
> 
> ...




Hi Maffu - there are a few things that I should clear up.

My post was written in response to this one by Mrmagoo



Mrmagoo said:


> OK show us a budget.
> 
> 55k with a HECs debt, but a house.
> 
> (Gotta love these rich people who haven't budgeted since the 1990s try and write a budget threads)




The 55k single income figure came from that statement. The median full-time employment income from the last census was a good bit higher than ~$1050/week.



maffu said:


> ...So using your figures, a person earning above the median salary in Australia of 55k, can only buy a median house in the 3 worst suburbs in greater Sydney, and can't get anything in the cheapest suburb within 20km of the CBD.
> It shows how there is a big disconnect between the wages being earned, and the house you can afford to buy. I actually find it a great example to illustrate that on average, the Sydney housing market is skewed.




On top of that, nearly 60% of Australians are married or in a de-facto relationship according to last census. Homes just aren't priced for single people to purchase and pay off on their own, dual income families have been the majority for a long time now. 

If you are single, you can expect to be able to afford half of what a couple can afford. If you earn less than the median, you can expect to buy a house in the lower half of the market. If you are single, borrowing with 1 income AND earn less than the median Australian wage, what can you really expect to buy on your own? Studio/1 BR apartments would be geared at that market, 2 bed 2 bath places would be geared at 2 or more borrowers/residents.

Whilst income figures are rather difficult to rely on, I daresay that the median salary in Sydney is higher than just about anywhere in the country for a non-resources worker. It certainly is in my field (finance), where I could expect 10-25% more money in the same position, as well as access to higher paid roles in the industry that don't exist outside Sydney & Melbourne. 

The fact is it costs more there because people have paid it or are paying it.


----------



## Julia (8 January 2013)

Vixs said:


> The fact is it costs more there because people have paid it or are paying it.




And that's the essence.  Simple market forces.
I have a cousin in Epping whose home has just gone onto the market for $1.5M.  The agent has assured her she will get close to this.
The area is very pleasant, peaceful and leafy, close to the station.
The house is original Federation style, always requires heaps of ongoing work, but very attractive if you like that older style.
However, it has only three bedrooms, one bathroom, and no air conditioning or even ceiling fans!!


----------



## FlyingFox (9 January 2013)

Julia said:


> And that's the essence.  Simple market forces.
> I have a cousin in Epping whose home has just gone onto the market for $1.5M.  The agent has assured her she will get close to this.
> The area is very pleasant, peaceful and leafy, close to the station.
> The house is original Federation style, always requires heaps of ongoing work, but very attractive if you like that older style.
> However, it has only three bedrooms, one bathroom, and no air conditioning or even ceiling fans!!




More like distorted market forces. Almost sounds incredulous that something of that description in a suburb that is 20 km from the city should command such a high price.


----------



## sydboy007 (9 January 2013)

Julia said:


> And that's the essence.  Simple market forces.
> I have a cousin in Epping whose home has just gone onto the market for $1.5M.  The agent has assured her she will get close to this.
> The area is very pleasant, peaceful and leafy, close to the station.
> The house is original Federation style, always requires heaps of ongoing work, but very attractive if you like that older style.
> However, it has only three bedrooms, one bathroom, and no air conditioning or even ceiling fans!!




It would be interesting to see what the valuation of the land is.

I think my postage stamp is around 127 s/m and the most recent valuation put it at around 400K.

When I was in Germany many moons ago on a back packing tour of the world, I rented the living room of a couple that had an apartment in east Berlin.  Say what you like about the Soviets, they know how to build family friendly infrastructure.

The apartment was a good size, 3 bedrooms, living room was around 30 s/m.  The block was around 5 stories high and in the middle of the complex was a nice garden when the retirees would sun themselves and kids could play without worry about them being in any danger.

I can't help but think these kind of apartments in middle ring suburbs would be 1 possible solution to affordable housing that doesn't require 2 hours of commute time a day.


----------



## maffu (9 January 2013)

Vixs said:


> Hi Maffu - there are a few things that I should clear up.
> 
> My post was written in response to this one by Mrmagoo
> 
> ...




The Australian median wage is actually much lower than 55k, as the workforce moves more and more to casual work and contract work, the full time median wage reflects a smaller and smaller proportion of the actual workforce each year. According to the 2011 census data, Australia's median *household* income is $64,168. So only a touch higher than the example of 55k per week we just used. So again, that shows that the median family in Sydney can not afford to buy a median house in Sydney, in fact they can't even afford to buy the cheapest house within 20km, and can only afford to live in the absolute cheapest ghetto area in Sydney.

So while I agree with you that purchasing a house will require a dual income, the market is still so skewed away from being good value, that the dual income median family earning 64k is going to be struggling.

Is it possible for the median family to buy a median house in Sydney? No
Is it possible for the median family to enter the property market in Sydney? Yes, using the numbers you provided, and the suburbs I showed, it is possible.
Is it worth it at the moment? Not even close in my opinion. Just like I won't buy stocks that I perceive as overvalued, I won't buy housing that is overvalued.


----------



## FlyingFox (9 January 2013)

For the record the median income for greater Sydney area was ~$75K. While higher than the national average, it is not by what people might think.


----------



## sydboy007 (10 January 2013)

maffu said:


> The Australian median wage is actually much lower than 55k, as the workforce moves more and more to casual work and contract work, the full time median wage reflects a smaller and smaller proportion of the actual workforce each year. According to the 2011 census data, Australia's median *household* income is $64,168. So only a touch higher than the example of 55k per week we just used. So again, that shows that the median family in Sydney can not afford to buy a median house in Sydney, in fact they can't even afford to buy the cheapest house within 20km, and can only afford to live in the absolute cheapest ghetto area in Sydney.




Not sure if it's still true, but I remember reading an article by Michael Pussey a good many years ago and he was saying that only around 30% of people earn the avg or more.  At that time the median was something like $125~ a week less than the average.

Possibly with the casualisation of work the average will be even more skewed to the higher earners???


----------



## FlyingFox (10 January 2013)

sydboy007 said:


> Not sure if it's still true, but I remember reading an article by Michael Pussey a good many years ago and he was saying that only around 30% of people earn the avg or more.  At that time the median was something like $125~ a week less than the average.
> 
> Possibly with the casualisation of work the average will be even more skewed to the higher earners???




There are graphs on the ABS website if you are interested.  The figures reported are medians which by definition mean that 50% of households earn more. However it is a very skewed distribution. 

Just had a look and the median and mean are not very far from each other but the point about 30% may still hold.


----------



## againsthegrain (10 January 2013)

http://www.realestate.com.au/property-other-vic-wantirna-111839875

as robots would say plenty of opportunities and little gems around guys, looks like a respectable residence in a respectable place for a average couple to start a family


----------



## maffu (10 January 2013)

FlyingFox said:


> For the record the median income for greater Sydney area was ~$75K. While higher than the national average, it is not by what people might think.




Good find.

So the median household income of Australia is about 64k, while the median household income of Sydney is 75k.
The median household income in Melbourne is 67k.

From a news article:
''The multiple between the median house price ($567,000) and median household income ($67,700) in Melbourne was 8.4. Sydney's multiple was 9.2.''

Nearly 10 years of a double income to pay off a median house in Sydney is a pretty massive chunk. I can only imagine these metrics will ease into the future. Especially in times when we have a recession. Considering we have not had a recession for so long, I highly doubt house prices will stay so high if we have a proper recession.


----------



## FlyingFox (10 January 2013)

maffu said:


> Nearly 10 years of a double income to pay off a median house in Sydney is a pretty massive chunk.




10 years if every single cent goes to your mortgage. 30 if your good with your mortgage; probably without much more savings for retirement.


----------



## againsthegrain (10 January 2013)

FlyingFox said:


> 10 years if every single cent goes to your mortgage. 30 if your good with your mortgage; probably without much more savings for retirement.




I know a few couples that bought it way over their heads, the above scenario they could only wish for. Its just amazing that at the moment those people say things like "ahh I dont' want to think about it" being in mid 20s to late 20s and facing 30+ years of repayments "if nothing goes wrong scenario" must have not sank in yet... but it will sooner or later already sitting on a loss faced with falling prices, increased living expenses and more unsecure jobs its only a matter of time before one decides to cut their loses and add to the oversupply


----------



## FlyingFox (10 January 2013)

againsthegrain said:


> I know a few couples that bought it way over their heads, the above scenario they could only wish for. Its just amazing that at the moment those people say things like "ahh I dont' want to think about it" being in mid 20s to late 20s and facing 30+ years of repayments "if nothing goes wrong scenario" must have not sank in yet... but it will sooner or later already sitting on a loss faced with falling prices, increased living expenses and more unsecure jobs its only a matter of time before one decides to cut their loses and add to the oversupply




True. Also difficult to say what other social and economic issues prop up due to this.


----------



## sptrawler (10 January 2013)

Well I haven't posted on here for quite a while, last time I was expecting a bust.
I can only talk from my immediate location, however things have gone bang again. Same for same properties, in the street I live in have jumped $100k in the last 12 months.
Actually it has screamed up recently, I tend to wonder if it is not the double whammy of dropping interest rates and the relaxing of the rules regarding SMSF buying residential property.
I really can't see how this won't all end in tears.


----------



## glen rosa (10 January 2013)

young-gun said:


> You guys have got to stop boasting this old school mentality. How is having a mortgage for hundreds of thousands of dollars on what should be considered a LIABILITY a good idea? Everyone should be preaching to buy an investment property from the get go(obviously pick your timing). You pay rent for 300$ a week, have all the benefits of a *cashflow positive* property(not my fault if some idiots choose to negative gear) including the ability to write things off against the house, all the while paying down the mortgage far quicker than if you lived there forking it all out yourself?
> 
> House prices stagnant to down.




So given this idea - i wonder what the future of rental prices is in Australia... I know there is a debate about whether house prices are going down or not - but does anyone know what happened to rental prices in places where the property market actually has tanked (USA, Japan...??) Have rents dropped to the same extent? or not?

thanks


----------



## FlyingFox (10 January 2013)

glen rosa said:


> So given this idea - i wonder what the future of rental prices is in Australia... I know there is a debate about whether house prices are going down or not - but does anyone know what happened to rental prices in places where the property market actually has tanked (USA, Japan...??) Have rents dropped to the same extent? or not?
> 
> thanks




Good question. No idea. I assume they would drop as well. However the it would depend on the situation to start with. What were the rental yields to start with? They're very low here. I would almost expect rents to rise here even with falling prices. Investors have to compensate for the loss of capital growth, principal etc.

Edit: If they really drop like parts of the US, Ireland etc than all bets are off I guess.


----------



## sydboy007 (11 January 2013)

In the US rental yields dropped in places where the over investment of housing occurred the most - Florida was prob the worst affected.

From reading about a few vulture property funds that have built up portfolios of distressed housing in the US it seems that as the lending criteria has become quite strict it had been a lot harder for renters to get a loan to by a house, which seemed to provide a level of support for rents.

The way I see it to make housing a decent investment you have to factor in

loan interest rates + holding costs - rental income - generally a negative value

you then need to factor in what kind of return the extra money you funnel into the loan could generate - I'd argue it's still relatively easy to get a 6% fully franked dividend yield in the market.

I'll use my house as an example since the area I live is the one I have the best understanding of.

I'll be conservative and say my house is worth 800K (more  likely 850)

You will borrow only 80% = 640K at 5.4% (seems a reasonable level at present)

3BR house with car space and small courtyard in Erskineville will get around $770 / week rent

Rental income = 40040

Annual interest = 34560

Council Rates = 1100

Water = 1050

Insurance = 500

Real Estate Agent Fees = 5% of 40040 = 2000

Net Total = 830

I would say this is biased to making the property look good as if it was bought as n IP then I would assume there's land tax and stamp duty involved too.

I compare this to 180K in shares providing a 6% fully franked dividend

Grossed up Dividend = 15428

Both have the risk / reward of capital growth as well.


----------



## FlyingFox (11 January 2013)

sydboy007 said:


> ...
> 
> Real Estate Agent Fees = 5% of 40040 = 2000
> ....




Can't speak for Sydney but the usual agents fees in Brisbane was around 7-9%. With the lower end usually reserved for clients with multiple IP's under management. I think it is similar in Melbourne but please correct me as I am new to Melbourne.


----------



## Julia (11 January 2013)

sydboy007 said:


> Council Rates = 1100



Really?  So cheap?  I pay around $3000



> Insurance = 500



Again, unbelievably cheap.  Is this factual?
I have just paid $1079


----------



## explod (11 January 2013)

FlyingFox said:


> Can't speak for Sydney but the usual agents fees in Brisbane was around 7-9%. With the lower end usually reserved for clients with multiple IP's under management. I think it is similar in Melbourne but please correct me as I am new to Melbourne.




Unbelievable, usual rates down south 3 to 2.5%  Sold a block through Property Shop (all online with just a sign on the block) at 1% fee in 2005

My Uncle was a Real Estate Agent for about 30 years on the Gold Coast, no wonder he did well.


----------



## FlyingFox (11 January 2013)

explod said:


> Unbelievable, usual rates down south 3 to 2.5%  Sold a block through Property Shop (all online with just a sign on the block) at 1% fee in 2005
> 
> My Uncle was a Real Estate Agent for about 30 years on the Gold Coast, no wonder he did well.




I was referring to management fees not selling fee. I don't know what those are/were.


----------



## KurwaJegoMac (11 January 2013)

property management fees are higher:7-8%

Similar to Julia, I paid about $1100 for insurance

You also need to budget for maintenance and repairs/replacements

You may also need to consider ongoing bank fees and land tax

Edit: i would also assume rentals for 50 weeks per year to account for transitions between tenant as well as signing your first one

Also you need to compare apples with apples. You're comparing the cashflow of an ungeared investment vs a very heavily geared one. Of course the ungeared one will give you better cashflow


----------



## young-gun (11 January 2013)

glen rosa said:


> So given this idea - i wonder what the future of rental prices is in Australia... I know there is a debate about whether house prices are going down or not - but does anyone know what happened to rental prices in places where the property market actually has tanked (USA, Japan...??) Have rents dropped to the same extent? or not?
> 
> thanks




It depends on the severity of the correction/crash/armageddon. If it is bad enough ie to the point of mass foreclosures then rents will take off. From what I have read and understand rents in alot of places have gone gangbusters. Reason being alot of Ip's foreclosed on, young people finally wake up and see owning your own home isn't all it's cracked up to be, so no one wants to buy. With less rentals on the market, and an increase in demand from those that are scared of getting burnt on their first purchase, or anyone who doesn't want to get burnt again, go into rentals. Less supplym more demand, rent heats up. JMO


----------



## young-gun (11 January 2013)

FlyingFox said:


> Can't speak for Sydney but the usual agents fees in Brisbane was around 7-9%. With the lower end usually reserved for clients with multiple IP's under management. I think it is similar in Melbourne but please correct me as I am new to Melbourne.






explod said:


> Unbelievable, usual rates down south 3 to 2.5%  Sold a block through Property Shop (all online with just a sign on the block) at 1% fee in 2005
> 
> My Uncle was a Real Estate Agent for about 30 years on the Gold Coast, no wonder he did well.




I could be wrong here but it appears fox is referring to property managers where plod you are referring to real estate agents.


----------



## Bill M (11 January 2013)

FlyingFox said:


> Can't speak for Sydney but the usual agents fees in Brisbane was around 7-9%. With the lower end usually reserved for clients with multiple IP's under management. I think it is similar in Melbourne but please correct me as I am new to Melbourne.




I pay 6.6% which includes GST to my Agent in Sydney.



> Council Rates = 1100






Julia said:


> Really?  So cheap?  I pay around $3000




I pay $1,100 for a Unit in Warringah Shire Council. I don't know what it would be for a house there.



> Insurance = 500






Julia said:


> Again, unbelievably cheap.  Is this factual?
> I have just paid $1079




On my rental property I only pay $371 for Landlords Insurance. The building Insurance is covered by the Body Corporate as a one policy for the whole building and that comes out of the levies raised.

Just to be on a level playing field, I should mention the levies/strata fees on my unit is close to $4,000 per year. That is the biggest expense.


----------



## Mrmagoo (11 January 2013)

```

```



sydboy007 said:


> In the US rental yields dropped in places where the over investment of housing occurred the most - Florida was prob the worst affected.
> 
> From reading about a few vulture property funds that have built up portfolios of distressed housing in the US it seems that as the lending criteria has become quite strict it had been a lot harder for renters to get a loan to by a house, which seemed to provide a level of support for rents.
> 
> ...




Not to mention the 200k you had to drop..


----------



## sptrawler (11 January 2013)

Bill M said:


> I pay 6.6% which includes GST to my Agent in Sydney.
> 
> .



In Perth the Agents cost to manage a rental, tends to be around 12% if compulsory inspections are included.


----------



## Bill M (11 January 2013)

sptrawler said:


> In Perth the Agents cost to manage a rental, tends to be around 12% if compulsory inspections are included.




That seems way over the top. In my case the Agent handles hundreds of rentals in the same area. It's all medium to high density unit blocks. They have multiple units in one block, I would think the volume brings the prices down. They do 3 Monthly inspections with photo reports as well.


----------



## psailagroup (11 January 2013)

What also turns me off from property these days is when you buy a house you have a beutifall thing called stamp duty, 5% of purchase price and of you borrow more then 80% lenders mortguage insurance kicks in as well
So glad that I sold my two IP two years ago...


----------



## IFocus (11 January 2013)

sptrawler said:


> In Perth the Agents cost to manage a rental, tends to be around 12% if compulsory inspections are included.





Pay 7 to 8% in Mandurah


----------



## sptrawler (11 January 2013)

IFocus said:


> Pay 7 to 8% in Mandurah




Well I was being charged 8% + p&p + gst + inspections + letting fee, in Mandurah. That's why I manage it myself now.


----------



## IFocus (12 January 2013)

sptrawler said:


> Well I was being charged 8% + p&p + gst + inspections + letting fee, in Mandurah. That's why I manage it myself now.




We had a number of properties in the area so got management for 7-8% after doing the rounds for a while negotiating.

Expected lower but just couldn't move the local agencies, now only hold a small block of units still paying 7-8% having said that my wife managers the manger pretty closely (and me ) so we likely do a bit more than most.


----------



## sptrawler (12 January 2013)

IFocus said:


> We had a number of properties in the area so got management for 7-8% after doing the rounds for a while negotiating.
> 
> Expected lower but just couldn't move the local agencies, now only hold a small block of units still paying 7-8% having said that my wife managers the manger pretty closely (and me ) so we likely do a bit more than most.




That's a good return, great little earner. Wouldn't I like to be getting that.


----------



## sydboy007 (12 January 2013)

Julia said:


> Really?  So cheap?  I pay around $3000
> 
> 
> Again, unbelievably cheap.  Is this factual?
> I have just paid $1079




I think Sydney City Council has some of the cheapest rates.  I pay about 270 / qtr

I have my building insurance for a value of 300K with coles insurance.  they were significantly cheaper than anyone else last year.

As for the management fees, i as erring on the low side.  If anything, my calculations are showing an IP in a very favourable light.  I have no idea why anyone would buy an IP in my area to make such a pathetic yield.  I have a 40K personal share portfolio which is paying me a tad under 3k a year with fully franked dividends.  capital gain of ~8% too (annualised to around 12%)


----------



## white_goodman (14 January 2013)

sydboy007 said:


> I have a 40K personal share portfolio which is paying me a tad under 3k a year with fully franked dividends.  capital gain of ~8% too (annualised to around 12%)




still below the benchmark


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## DB008 (14 January 2013)

white_goodman said:


> still below the benchmark




Which/who's benchmark?


----------



## white_goodman (14 January 2013)

DB008 said:


> Which/who's benchmark?




asx200 total return for the past year

ideally you would be generating alpha


----------



## DB008 (14 January 2013)

white_goodman said:


> asx200 total return for the past year
> 
> ideally you would be generating alpha




I don't get too involved in benchmarks or let them dictate me.

If l'm getting ~10% in todays environment, l'm happy with that.


----------



## white_goodman (14 January 2013)

DB008 said:


> I don't get too involved in benchmarks or let them dictate me.
> 
> If l'm getting ~10% in todays environment, l'm happy with that.




would you be happy with 10% if the investment vehicle/market you're in is averaging +50%?

no because the return you are getting isnt adequate for the amount of risk... there is a reason why fund managers are judged against he benchmark

would you be happy backing a horse at $1.50 and having it win if it was only a 50% chance of winning?


----------



## DB008 (14 January 2013)

DB008 said:


> I don't get *too* involved in benchmarks or let them dictate me.






white_goodman said:


> would you be happy with 10% if the investment vehicle/market you're in is averaging +50%?




My bolding...

Oh, and some common sense. Would you be happy getting 10% when everyone else is getting 50%?


----------



## sydboy007 (14 January 2013)

white_goodman said:


> still below the benchmark




I'm happy with the return.  I've target income over capital growth.

Any-who, the main point was to say that it's quite easy to have a small parcel of shares generate an above IP rate of return.

The amount of gearing required with an IP these days is just SCARY - at least for me.

Unless you can convince Australians to gear up even more, how can property prices increase much above wages growth??

Hopefully we wont see the woeful household savings rates that were around during the early noughties.  

It's rarely talked about, but why did Australians save so little during the Howard Govt???  I blame the halving of capital gains tax and the headlong rush into negatively geared property.


----------



## DB008 (14 January 2013)

sydboy007 said:


> It's rarely talked about, but why did Australians save so little during the Howard Govt???  I blame the halving of capital gains tax and the headlong rush into negatively geared property.




Come on. You know the answer to that. Even I know, and l'm a muppet.


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## FlyingFox (14 January 2013)

sydboy007 said:


> It's rarely talked about, but why did Australians save so little during the Howard Govt???  I blame the halving of capital gains tax and the headlong rush into negatively geared property.




+1. Thanks for the graphs. The scary thing is how many people, after showing them data like you did will still jump head first and with a smile into a 500K mortgage, either for their on home or for an IP.


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## psailagroup (14 January 2013)

Great graph!!!
IP"s have become a burden for most investors at the moment. I think people who have bought properties pre
Boom and holding will do well , the people who will struggle are the ones who have just recent bought Ip
Properties. When I was in real estate only 4 years ago my average open had 30 people, basically the way it worked was who ever wanted the house the most paid the most 
4 years later some of these houses are back on the market for allot lower then what they bought it


----------



## sydboy007 (15 January 2013)

The Economist Magazine has just released its latest round-up of Global House Price indicators.  According to the analysis, Australia’s house prices are 45 per cent overvalued on a price to rent ratio and 23 per cent overvalued on a price to income ratio.

This is down from the November 2011 assessment of a 53 per cent overvaluation on a price to rent ratio and 38 per cent overvaluation on a price to income ratio.

Seems like the Canadians are in worse shape than us.  If conversations I had a with some Vancouver cabbies last October are anything to go by, it sounds like a near impossibility for a first home buyer to aspire to buy less than an hour from downtown.  I am surprised the rent to property ratio is so bad there, as rents seemed to be a lot higher than Sydney.


----------



## CanOz (15 January 2013)

Yeah, couver just nudged out Sydney from the top spot of most unaffordable city one ear ago this month actually....

Thanks for that post, very informative

CanOz


----------



## sydboy007 (15 January 2013)

FlyingFox said:


> +1. Thanks for the graphs. The scary thing is how many people, after showing them data like you did will still jump head first and with a smile into a 500K mortgage, either for their on home or for an IP.




I remember a guy from my old job.  late 20s or early 30s.  Newly married - wife's family seemed to be pretty well off. I think the Indian heritage wasn't helping as there was a lot of pressure on him to buy a property since their peer group had all got at least 1 IP. 

The purchase price was in the high 500K range, but the rent was ridiculously low.  I had a bit of a chat with him 1 night shift and was gobsmacked that he had done nothing similar before signing on the dotted line.  I would say he'd be easily 6 figures under water now, and what really got me was we all knew our jobs were going over the next 6-12 months, so how you could set yaself up with that much debt when job security is not there, I have no idea.

A lot of the literature doesn't inflation adjust their figures, nor do they truthfully factor in holding costs for an IP, and they never ever talk about bad tenants.

We live in a land where mum and dad property investors purchase a property to be able to claim back more tax than their neighbours and workmates from the government (this is a definition of success in Australia), and hope to achieve capital growth that exceeds inflation, maintenance, depreciation and interest repayments. Rental Yields?  Why are they relevant to property prices???

I've yet to be convinced that "capital" gains deserve to be treated differently to income earned stacking shelves at the local coles or driving a truck between states.


----------



## Miss Hale (15 January 2013)

sydboy007 said:


> I remember a guy from my old job.  late 20s or early 30s.  Newly married - wife's family seemed to be pretty well off. I think the Indian heritage wasn't helping as there was a lot of pressure on him to buy a property since their peer group had all got at least 1 IP.
> 
> The purchase price was in the high 500K range, but the rent was ridiculously low.  I had a bit of a chat with him 1 night shift and was gobsmacked that he had done nothing similar before signing on the dotted line.  I would say he'd be easily 6 figures under water now, and what really got me was we all knew our jobs were going over the next 6-12 months, so how you could set yaself up with that much debt when job security is not there, I have no idea.
> 
> ...




Your anecdote reminds me of one of the reasons why I am quite bearish regarding property.  Back in the late '80s all my friends were buying property.  I had saved the equivalent of a house deposit but not to buy a house but to take a year off work and backpack around the world. All my friends told me I should use it to buy property instead  but I kept to my original plan and had a great time, I thought house prices were too high at the time.  Most of the ones who bought sold a few years later at a loss.


----------



## FlyingFox (15 January 2013)

sydboy007 said:


> I remember a guy from my old job.  late 20s or early 30s.  Newly married - wife's family seemed to be pretty well off. I think the Indian heritage wasn't helping as there was a lot of pressure on him to buy a property since their peer group had all got at least 1 IP.
> 
> The purchase price was in the high 500K range, but the rent was ridiculously low.  I had a bit of a chat with him 1 night shift and was gobsmacked that he had done nothing similar before signing on the dotted line.  I would say he'd be easily 6 figures under water now, and what really got me was we all knew our jobs were going over the next 6-12 months, so how you could set yaself up with that much debt when job security is not there, I have no idea.
> 
> ...




Hahaha I have many friends, relatives like the ones you've described, lucky for most of them, they got into the market a while back. Being from an Indian background, I have lost count of the number of times I have been told to "buy your own house or IP or you're will be left behind." 

I remember having a chat with a family friend who wanted to get an IP. He is a part of the family business and "their accountants" had suggested getting an Ip or doing a development to reduce tax and get easy capital gains. After about 10 mins of trying to convince him with back of the env figures that this is bad idea, he wouldn't budge (and his wife is an accountant). 

They bought an IP apartment and an old house on a large block (to develop into town houses) without calculating cost etc (I think this was ~2009-2010). The apartment is loosing them money even at today's interest rates and I have no idea how much they will lose on the old house assuming they just sell it, probably ~$200K.


----------



## againsthegrain (15 January 2013)

FlyingFox said:


> Hahaha I have many friends, relatives like the ones you've described, lucky for most of them, they got into the market a while back. Being from an Indian background, I have lost count of the number of times I have been told to "buy your own house or IP or you're will be left behind."
> 
> I remember having a chat with a family friend who wanted to get an IP. He is a part of the family business and "their accountants" had suggested getting an Ip or doing a development to reduce tax and get easy capital gains. After about 10 mins of trying to convince him with back of the env figures that this is bad idea, he wouldn't budge (and his wife is an accountant).
> 
> They bought an IP apartment and an old house on a large block (to develop into town houses) without calculating cost etc (I think this was ~2009-2010). The apartment is loosing them money even at today's interest rates and I have no idea how much they will lose on the old house assuming they just sell it, probably ~$200K.




It is a irrational fear of missing out on easy quick money forced onto them by a panicked group mentality. Phrases like get left behind, rent money is dead money, it will never go down is the real estate agents and developers best marketting weapon against the gullable. The property market is here today and will be here tomorrow, there will always be good bargains and bad.


----------



## WilkensOne (15 January 2013)

I am really enjoying all this discussion about property prices and their valuations compared to shares.

But does everyone still have the same opinion if you are purchasing the house as a PPOR?


----------



## FlyingFox (15 January 2013)

WilkensOne said:


> I am really enjoying all this discussion about property prices and their valuations compared to shares.
> 
> But does everyone still have the same opinion if you are purchasing the house as a PPOR?




I do. The major reason I am not buying a PPOR is that I perceive them to be very bad value. Not comparing to anything but levels of income and rent.

Edit: I also believe that prices will ease rather than go up.


----------



## WilkensOne (15 January 2013)

FlyingFox said:


> I do. The major reason I am not buying a PPOR is that I perceive them to be very bad value. Not comparing to anything but levels of income and rent.
> 
> Edit: I also believe that prices will ease rather than go up.




Yeah I understand your thinking, I am in the position to buy a house at about a $25k discount (family sale) and have a $45k deposit saved up. I am torn between buying the house and living in it with my girlfriend and 2 other housemates (who are going to live with us) which will significantly reduce the mortgage payments.

Alternative is the keep learning more about trading and invest/trade the money over the next few years until I have a more stable job then use any profits I have made towards a house deposit then.

Both have upsides/downsides but choosing which one to decide on is proving difficult, especially with all of the uncertainty around the economic future at the moment.


----------



## MrBurns (15 January 2013)

WilkensOne said:


> buying the house and living in it with my girlfriend :




After 12 months she might have a claim to half of it.


----------



## WilkensOne (15 January 2013)

MrBurns said:


> After 12 months she might have a claim to half of it.




Thanks MrBurns,

Luckily my sister is a lawyer and warned me of this, also a contract can be used to avoid this issue. 

Wilkens


----------



## MrBurns (15 January 2013)

WilkensOne said:


> Thanks MrBurns,
> 
> Luckily my sister is a lawyer and warned me of this, also a contract can be used to avoid this issue.
> 
> Wilkens




Doesnt do much for the relationship I imagine but cant be avoided.


----------



## WilkensOne (15 January 2013)

MrBurns said:


> Doesnt do much for the relationship I imagine but cant be avoided.




Yeah it wasn't the easiest subject to discuss, but luckily I have an understanding better half. Who understands the reasons for such things and agrees with it


----------



## Bill M (15 January 2013)

sydboy007 said:


> I've yet to be convinced that "capital" gains deserve to be treated differently to income earned stacking shelves at the local coles or driving a truck between states.




There is a reason for everything. Until 1985 everything was capital gains tax free. There were people speculating on property and stocks and some made a motza doing this and the Labor Government at the time thought it was unfair that these people were not paying their fair share of taxes. It was decided that the quarterly CPI figures that were recorded were going to be used for calculating capital gains. It was also decided that any capital gains above this was taxed at your marginal rate.

It was a taxation night mare working out your capital gains this way. It was particularly bad if you dividend reinvestment plans. You had to calculate each and every parcels capital gain adjusted to cpi.

After a few years the Liberal government brought in the 50% capital gains tax free system. This did away with the former more dificult calculations. It made it so much easier to work out your tax. It was a dead set pain looking up cpi tables in order to work out your capital gain.

So Labor bought it in and the libs streamlined it. Before 1985 no one paid any capital gains at all. The present system is the easiest I think and at least some tax is paid. Those that sell anything within 12 Months of purchase has to pay the full whack of tax even now.

Why isn't capital gains taxed the same as your salary? The answer would be to encourage investment in property, shares and business. A business owner would argue that it would be unfair to tax his/hers hard work in building up a business from scratch. Lets say someone starts a business from scratch, works 20 odd years at it with blood sweat and tears and turns it into a profitable business. Then they decide to sell it and it might be worth say $1 Million now. The business owner might say why should I pay capital gains tax on it if it was all my own hard word?

I think the system is quite fair now, do we really want to tax people to level where no one wants to invest in anything? The economy would be stuffed in no time, not good for Australia or it's people.


----------



## Bill M (15 January 2013)

WilkensOne said:


> I am really enjoying all this discussion about property prices and their valuations compared to shares.
> 
> *But does everyone still have the same opinion if you are purchasing the house as a PPOR?*




I would buy and have bought a house as a PPOR. I bought mine 3 years ago and I am now looking at upgrading but it all depends on the area. An area with high demand and low supply is best. No good buying out in woop woop if you want to move on a few years later and no one wants to buy it, you could well end up losing money that way.


----------



## WilkensOne (15 January 2013)

Bill M said:


> I would buy and have bought a house as a PPOR. I bought mine 3 years ago and I am now looking at upgrading but it all depends on the area. An area with high demand and low supply is best. No good buying out in woop woop if you want to move on a few years later and no one wants to buy it, you could well end up losing money that way.




Thanks Bill, appreciate the opinion. Have you experienced any capital growth on the property in that time period?

The house is in a developing area, there is a lot of redevelopment and building happening and is also about 8km from the Perth CBD. Surrounded by a school, university, parks and nearby shopping strip. I think that there is a lot of room for growing in the suburb personally otherwise I wouldn't have looked so much into it


----------



## FlyingFox (15 January 2013)

WilkensOne said:


> But does everyone still have the same opinion if you are purchasing the house as a PPOR?




I think you might want to rephrase this to :

But does everyone still have the same opinion if you are purchasing the house as a PPOR *and it was your first property*?



Bill M said:


> I would buy and have bought a house as a PPOR. I bought mine 3 years ago and I am now looking at upgrading but it all depends on the area. An area with high demand and low supply is best. No good buying out in woop woop if you want to move on a few years later and no one wants to buy it, you could well end up losing money that way.




The problem is that first home buyers have enough of a financial hurdle to buy in woop woop that buying in well established suburbs is out of the question. 

Also prices in these areas of high demand and low supply can go down as well. They usually attract a certain demographic and events such as the GFC can dramatically alter their market values.

Some *extreme examples* http://www.propertyobserver.com.au/...w-no-post-gfc-recovery-in-sight/2011113052610.


----------



## FlyingFox (15 January 2013)

Bill M said:


> There is a reason for everything. Until 1985 everything was capital gains tax free. There were people speculating on property and stocks and some made a motza doing this and the Labor Government at the time thought it was unfair that these people were not paying their fair share of taxes. It was decided that the quarterly CPI figures that were recorded were going to be used for calculating capital gains. It was also decided that any capital gains above this was taxed at your marginal rate.
> 
> It was a taxation night mare working out your capital gains this way. It was particularly bad if you dividend reinvestment plans. You had to calculate each and every parcels capital gain adjusted to cpi.
> 
> ...





Agreed. Alternatively you can just tax at a fixed rate e.g 20% for all capital gains.

I think the increase in house prices should not be pinned down to just one thing. It is probably due to a combination of Negative gearing, CGT concessions, ability to borrow at high LVRs and the public perception (infatuation even) with housing and investing with housing.


----------



## Bill M (15 January 2013)

WilkensOne said:


> Thanks Bill, appreciate the opinion. Have you experienced any capital growth on the property in that time period?
> 
> The house is in a developing area, there is a lot of redevelopment and building happening and is also about 8km from the Perth CBD. Surrounded by a school, university, parks and nearby shopping strip. I think that there is a lot of room for growing in the suburb personally otherwise I wouldn't have looked so much into it




Ok, my present PPOR can be considered as far out but not quite woop woop. I am 100 kms north of Sydney in a cheaper suburb that a lot of young families and some retirees come to live. I watch the prices in this area very closely and I would say that prices have stayed the same. I would get exactly what I paid for mine, take on 20K of moving in and out costs I would lose at this point. In the last 10 Months or so prices have been firming and everything that comes on to the market gets sold rather quickly. They seem to be going to Auction now, I don't know if that is good or bad but everything gets sold pretty quickly at roughly the same prices as 3 years ago.

I don't know Perth at all but 8kms from the CBD is not far at all, sounds good, seems to have everything. It's up to you to make the call, drop into a few auctions just for fun and see what happens. Good luck with whatever you do.


----------



## sydboy007 (15 January 2013)

Bill M said:


> Why isn't capital gains taxed the same as your salary? The answer would be to encourage investment in property, shares and business. A business owner would argue that it would be unfair to tax his/hers hard work in building up a business from scratch. Lets say someone starts a business from scratch, works 20 odd years at it with blood sweat and tears and turns it into a profitable business. Then they decide to sell it and it might be worth say $1 Million now. The business owner might say why should I pay capital gains tax on it if it was all my own hard word?
> 
> I think the system is quite fair now, do we really want to tax people to level where no one wants to invest in anything? The economy would be stuffed in no time, not good for Australia or it's people.




The prob with this argument Bill is that most "capital gains" occur on assets that already exist.

Now if the discount was limited to the formation of new assets then I could sort of accept that it has a place with encouraging NEW investments, but when it applies equally to assets that already exist, then to me it doesn't seem to really encourage investment.  To me the repeated buying and selling of the same asset isn't really investing per se, more like the churning of money.

The problem is the vast majority of capital gains is made by the rich.  Did some googling and couldn't find the exact figures, but I think most would agree that someone on less than the avg income is unlikely to have too many excess funds available to invest in assets that appreciate and take advantage of the CGT discount.

The issue I have is that the current regime does seem to pushing the churning of assets as the longer you hold it, the more the profit is eroded by inflation.

The problem is all levels of Govt are spending more than they tax.  People are constantly complaining that infrastructure isn't good enough, public transport / hospitals etc are not good enough, schools need more funding.  The list goes on.  They also want family tax benefits, paid parental leave, baby bonuses, and other dollops of middle class welfare on top.

Someone has to pay it, or we have to accept that the levels of civil society we want can't be achieved so we'll need to lower our expectations.  I just don't see why someone who works hard and puts their savings into a high interest savings account should have to pay more tax than someone who negatively gears an asset where the tax payer coughs up to nearly half the interest costs of borrowed money, and then on the sale of the asset the owner can get a 50% discount on the tax liable. 

BOOM, there you have a housing bubble inflated to near Olympic gold proportions


----------



## Miss Hale (15 January 2013)

FlyingFox said:


> I do. The major reason I am not buying a PPOR is that I perceive them to be very bad value. Not comparing to anything but levels of income and rent.
> 
> Edit: I also believe that prices will ease rather than go up.




+ 1


----------



## maffu (16 January 2013)

WilkensOne said:


> Yeah I understand your thinking, I am in the position to buy a house at about a $25k discount (family sale) and have a $45k deposit saved up. I am torn between buying the house and living in it with my girlfriend and 2 other housemates (who are going to live with us) which will significantly reduce the mortgage payments.
> 
> Alternative is the keep learning more about trading and invest/trade the money over the next few years until I have a more stable job then use any profits I have made towards a house deposit then.
> 
> Both have upsides/downsides but choosing which one to decide on is proving difficult, especially with all of the uncertainty around the economic future at the moment.




Regardless of if the market is going to boom or bust, there will be good deals in both markets.
Getting a discount from the family due to mates rates and no agents fee's etc, and renting out to 2 friends would put you in a unique situation of dramatically lowering the initial cost, as well as improving your cash flow. Being able to share house and rent out to friends is an opportunity that you will only have for a few years, as when you are older and have children you may need that extra room for yourself. 

Put together a spreadsheet looking through the numbers and how they work compared to your other options and see which looks the best to you. If you are renting out 2 spare rooms for an extra 15-20k a year, then that could definitely swing things towards buying as the best option in this case.

The other things to consider, how secure is your job, and how upset will you be if the house price does drop?


----------



## sydboy007 (16 January 2013)

Some interesting stats from businessspectator today

Minsky’s financial instability hypothesis can help to integrate the occurrences seen in the data. The speculative financing phase likely corresponds to the 1996-2000 period, as housing prices steadily increased but rental income still covered mortgage interest repayments and rental expenses. This relationship, however, broke down from 2000 onwards as housing prices rapidly escalated. Investors were then dependent upon rising capital values in order to realise a profit at sale and to cover the cost of mortgage debt.

This resembles the terminal Ponzi phase, where housing prices and the household debt to GDP ratio have boomed while net income losses have escalated. Accordingly, by these measures, the evidence suggests that the residential property market is currently experiencing a bubble, with prices detached from fundamental valuations. This appears to be the largest bubble on record, orders of magnitude larger than all preceding bubbles. When it does burst, heavily indebted property owners (recent home-buyers, negative gearers) will experience financial trouble, including the economy at large.

It's scary that IPs still loose 5B a year.  Add in 60% of IPs are running as IO loans and I do wonder how much longer it will be before the rush to get out of a loss making investment.  Just converting those loans to P/I would be a huge drain on the economy - I'd say you'd add something like 50%+ to monthly repayments??

Interesting to note that net rental income has been negative since the halving of CGT on assets held for more than 12 months


----------



## FlyingFox (17 January 2013)

Curious as to how everyone thinks 2013 will pan out for housing given the all the recent redundancy announcements?


----------



## young-gun (17 January 2013)

FlyingFox said:


> Curious as to how everyone thinks 2013 will pan out for housing given the all the recent redundancy announcements?




Unfortunately redundancy announcements don't seem to reflect anything. We had a period of 6 months there not long ago where you couldn't take 10 steps without seeing job cuts in the paper, on the news, or on the net.

With seemingly tens of thousands getting chopped, the unemployment rate remained steady. As I'm sure you're aware job numbers aren't worth the paper they are written on, although perhaps slightly more credible than the US.

Unemployment may be the catalyst to trigger the bust, but I think there is also a large number of other contributing factors ie loose credit, a love of RE investing, speculation etc. 2013 could very well be the year, but I'm not holding my breath, I thought 2012 was the year

Prices stagnant to down....at best.jmo


----------



## FlyingFox (17 January 2013)

young-gun said:


> Unfortunately redundancy announcements don't seem to reflect anything. We had a period of 6 months there not long ago where you couldn't take 10 steps without seeing job cuts in the paper, on the news, or on the net.
> 
> With seemingly tens of thousands getting chopped, the unemployment rate remained steady. As I'm sure you're aware job numbers aren't worth the paper they are written on, although perhaps slightly more credible than the US.
> 
> ...




True. However we have had a lot of money flowing through the system from the mining expansions and GFC stimulus. This is starting to dry up.


----------



## young-gun (17 January 2013)

FlyingFox said:


> True. However we have had a lot of money flowing through the system from the mining expansions and GFC stimulus. This is starting to dry up.




nothing like a bit of government meddling to throw a spanner in the works. FHOG didnt help either. After speaking to a couple of mates in the mines they believe thigns are slowing, but not much. Last time I saw iron ore prices they were back up substantially(couple of weeks ago that was). Unless china goes belly up, there will still be a reasonable stream of cash flowing from that sector I would think, agree that it does appear to be slowing though(or was).

Has anyone got any links to articles on how long it takes for stimulus to run through the economy? or is it one of those how long is a piece of string gigs.


----------



## sydboy007 (17 January 2013)

young-gun said:


> nothing like a bit of government meddling to throw a spanner in the works. FHOG didnt help either. After speaking to a couple of mates in the mines they believe thigns are slowing, but not much. Last time I saw iron ore prices they were back up substantially(couple of weeks ago that was). Unless china goes belly up, there will still be a reasonable stream of cash flowing from that sector I would think, agree that it does appear to be slowing though(or was).
> 
> Has anyone got any links to articles on how long it takes for stimulus to run through the economy? or is it one of those how long is a piece of string gigs.




The FHOG should be renamed to the Vendor grant since all it did was increase the sale price of most properties


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## drsmith (17 January 2013)

sydboy007 said:


> The FHOG should be renamed to the Vendor grant since all it did was increase the sale price of most properties



That's basically true and it should be removed, but like I have emphasised in other property tax/transfer discussions, it should be removed as part of a broader package of property tax reform.


----------



## sydboy007 (18 January 2013)

drsmith said:


> That's basically true and it should be removed, but like I have emphasised in other property tax/transfer discussions, it should be removed as part of a broader package of property tax reform.




The ACT is leadign this.  At least they have started the slow move away from inefficient stamp duties to a far more equitable annual land tax for all properties.

Michael Pascoe has a good article in the SMH today about how the states are currently spendign practically all the GST income on health care.  They've hit their revenue brick wall and will do a tanty or two to try and get the Federal Govt to bail them out, but at the end of the day they need to tell the population why they need to make the changes and then get on with it before they've racked up too much more debt!


----------



## Whiskers (24 January 2013)

sydboy007 said:


> The FHOG should be renamed to the Vendor grant since all it did was increase the sale price of most properties




Here in Qld the former Bligh gov 'Building Boost Grant' on top of the FHOG certainly lifted the asking price substantially through the end of 2011, especially on vacant land... but 6 months after the Building Boost grant ended, ie mid 2012, those asking prices were coming off by about 30% or more to get a sale. 

I can show you some properties that have been on the market for so long the signs have completely rotted away, 3, 4 years plus. While the Real Estate industry tries it's best to talk up the market at the first sign of good news, the next month continues to show flat or falling prices for most types of properties.

Many who invested in property for rental revenue in the last few years are facing capital losses atm. Even though vacancy rates are very low, they can't increase the rents any more in the current climate and are stuck with a long wait or take a loss. 

From what I understand there have been some larger building companies move in on the fringe of the mining areas with relatively cheap building developments, but I also hear the smart builders/tradies saying they won't be lured into cutting prices to compete and are happy to pick up a few local jobs rather than get run their legs off and probably end up with little or nothing to show for it when the dust settles and a builder or two falls over.


----------



## sydboy007 (24 January 2013)

Unless you can con people into increasing debt levels, there is no chance house properties can go to far from where they are.

Interesting article on macrobusiness yesterday that showed a lot of younger people see buying a property as too much of a risk in the current climate.

While renting costs half the price of buying there is little financial incentive to buy, especially when capital growth would barely be the same as rental yield at present.

So the argument that rent is dead money is a fallacy, when you factor in the much higher level of interest being paid to own the property, let alone all the other associated holding costs.

50% of properties are owned by the boomers.  Considering they will be selling en mass over the next 20-30 years that means a considerable amount of supply ready to flood the market should prices start to rise.


----------



## Julia (24 January 2013)

sydboy007 said:


> 50% of properties are owned by the boomers.  Considering they will be selling en mass over the next 20-30 years that means a considerable amount of supply ready to flood the market should prices start to rise.



Why will they be selling en masse over the next few decades?


----------



## Whiskers (24 January 2013)

Agree there sydboy007.

I saw some figures relating to Sydney where the rental yield from smaller properties was about double that of larger properties. I expect that is happening Australia wide and is indicative of more people particularly in urban areas scaling down and renting. 

However I'm thinking there are some bargains appearing in more outlying and rural areas.


----------



## DB008 (24 January 2013)

Julia said:


> Why will they be selling en masse over the next few decades?




And what about the number of immigrants who will also be seeking housing?


----------



## Mr Z (25 January 2013)

Julia said:


> Why will they be selling en masse over the next few decades?





Because as a group they are underfunded into retirement and they have become accustom to a high standard of living. This will lead to assets being liquidated and spent over time to fund the life style, SKI, die broke etc  Given that price moves at the margin, once enough of them make this move the pressure will be on the rest of them to follow as the asset price declines. 

Frankly it makes more sense for boomers to own dividend paying stocks at this point, they can get a good return and liquidated them piece meal as required.


----------



## Mr Z (25 January 2013)

DB008 said:


> And what about the number of immigrants who will also be seeking housing?




The boomers are around 50% of our working population and around 25% of our total population, immigrants are well outnumbered!


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## DB008 (25 January 2013)

Mr Z said:


> The boomers are around 50% of our working population and around 25% of our total population, immigrants are well outnumbered!




Ok.

If they sell off their family home, they still have to live somewhere? Pressure on rental vacancy rates?


----------



## Mr Z (25 January 2013)

DB008 said:


> Ok.
> 
> If they sell off their family home, they still have to live somewhere? Pressure on rental vacancy rates?




It is not the PPOR that is the issue, the boomers own large amounts of investment property, it is the one investment that has become religion to that generation. They will divest the investment property and they will also downsize the PPOR as the financial pressure of retirement comes to bear.


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## DB008 (25 January 2013)

Bit old, but still worthy.

ABS stats
http://www.abs.gov.au/ausstats/abs@.nsf/2f762f95845417aeca25706c00834efa/9352fb4d7f5cbd27ca2570ec007530a6!OpenDocument


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## Mr Z (25 January 2013)

93 was near the bottom of a cycle, we are near the top of the cycle that started then. Chalk and cheese in many ways.


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## DB008 (25 January 2013)

Not as detailed.

Sometimes trying to find info on the ABS is such a pain....

View attachment 41020_housing_indicators_2012(1) December.xls


(bottom of the page - http://www.abs.gov.au/socialtrends)

Mr Z,
In your opinion, when do you think we will see this shift? In the next 5 or 10 years? Or further out?


----------



## sydboy007 (25 January 2013)

Julia said:


> Why will they be selling en masse over the next few decades?




* Depending on debt levels the cash flow is poor

* Lumpy asset - can't sell 10%, unlike shares which can be sold in 10-20K lots as required

* Downsizing to fund retirement

* Selling to move into assisted care

* Falling off their perch and family selling


----------



## white_goodman (25 January 2013)

sydboy007 said:


> * Depending on debt levels the cash flow is poor
> 
> * Lumpy asset - can't sell 10%, unlike shares which can be sold in 10-20K lots as required
> 
> ...




the only thing i would say against your argument which i agree with largely is that for some more financial engineering in the reverse mortgage space


----------



## McLovin (25 January 2013)

Julia said:


> Why will they be selling en masse over the next few decades?




Interesting article earlier this week about the unpreparedness of boomers and how the family home is now the nestegg.



> A whopping 86% of Australia's 5.5 million baby boomers are, in varying degrees, financially under-prepared for retirement, according to research release by industry super heavyweight REST Industry Super today.
> 
> Dubbed The Journey Begins, the REST-commissioned white paper - based on the attitudes of 1,200 Australians approaching retirement - reveals a massive disconnect between what baby boomers expect their retirement to be like, and what reality has in store.
> 
> ...




http://www.financialstandard.com.au/news/view/24985805


----------



## Bill M (25 January 2013)

Hmmm there are some baby boomers that might expect more than what they have saved and then there are others that are quite switched on.

In my case, the house I live in, I don't care if it goes up or down. I got somewhere to live mortgage and rent free. With my rental property, I just raise the rent each year. This boomer is interested in income, not so much the capital gains. Nothing to worry about here and I do not expect a pension of any sort later in life but I will gladly hold my hand out if some government of any persuasion in the future is willing to give it to me.


----------



## Mr Z (25 January 2013)

DB008 said:


> Mr Z,
> In your opinion, when do you think we will see this shift? In the next 5 or 10 years? Or further out?




I suspect that we will see a weak property market for close to a decade, we have unprecedented private debt levels to work off and an unprecedented demographic headwind with the boomers moving into old age. Bear markets being what they are price should shift down quickly then stay lack luster for a while. So while the bottom might be say 3 to 5 years away it may be 10 years before it is really starts to recover in real terms.

That said, it all depends what our fearless leaders get up to, how much new money they print, how they respond to the baby boomers nadir with things like immigration policy etc...

When you are reading articles about how buying a house is a bad investment in comparison to stocks and interest rates are at eye watering levels then lever up and buy everything you can...


----------



## Mr Z (25 January 2013)

PS> Its been almost 5 years and the US looks to be finding the floor in its property market. IMO they will not come back strongly quickly but the value buyers seem to be coming out of the wood work slowly. I can't see why we would stray too far from their lead, though I suspect it will be a softer bust here.


----------



## Mr Z (25 January 2013)

Bill M said:


> I just raise the rent each year. This boomer is interested in income, not so much the capital gains.




Historically the issue with real estate in an inflationary (stagflationary) environment is that rents cannot be repriced quickly enough to keep pace with general cost increases. With the amount of money being pushed into the system globally it is only a matter of time before it manifests itself in significant price inflation. This will be the challenge, and it is very much a double edged sword, while initially it will help to "inflate the debt away" it will quickly translate into price pressure as all staples rise and start to stretch budgets, then when rates rise in the fight to kill the beast the screws will really tighten. So while you may find yourself getting a higher nominal rent it might not be covering the costs that it once did, you may not end up as self funded as you are at this point. It is sobering to remember that under 1% of retirees make it fully self funded. I know a pilot that retired with 1m+ 20 years ago, he was very comfortable, now he is still OK but on a part pension and rather surprised that it came to this. 1m was a heck of a lot more 20 years ago...!


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## Bill M (25 January 2013)

Mr Z said:


> I know a pilot that retired with 1m+ 20 years ago, he was very comfortable, now he is still OK but on a part pension and rather surprised that it came to this. 1m was a heck of a lot more 20 years ago...!




Poster tech/a often talks about this and it is what I fear most too. It's probably why I tend to be a bit frugal even though right now I don't need to be. Point taken very well.


----------



## Julia (25 January 2013)

Mr Z said:


> It is not the PPOR that is the issue, the boomers own large amounts of investment property, it is the one investment that has become religion to that generation. They will divest the investment property and they will also downsize the PPOR as the financial pressure of retirement comes to bear.



Can you provide a link to stats that demonstrate your claim that "the boomers own large amounts of investment property"?
I know this is a popular generalisation.  It's not something I've observed in reality.  Certainly a small proportion of boomers own several IPs, but your claim here is in opposition to your earlier claim that boomers will have to liquidate or downsize their PPOR in order to fund the standard of living they want in retirement.



white_goodman said:


> the only thing i would say against your argument which i agree with largely is that for some more financial engineering in the reverse mortgage space



Good point, and one which is largely overlooked in these discussions.




Mr Z said:


> PS> Its been almost 5 years and the US looks to be finding the floor in its property market. IMO they will not come back strongly quickly but the value buyers seem to be coming out of the wood work slowly. I can't see why we would stray too far from their lead, though I suspect it will be a softer bust here.



I can't see how you can compare the US property market, with all their subprime fall out, with that of Australia.


> It is sobering to remember that under 1% of retirees make it fully self funded.



I've just done a search to substantiate this figure and cannot find any such validation.  Perhaps you can provide a link to it?
(Wouldn't at all be surprised if it's true, but would like to see where the percentage came from.)


----------



## sydboy007 (26 January 2013)

some interesting stats in an article in the SMH today:

* the avg mortgage size has flat lined since 2009.  This has never happened since the stats were first started to be recorded in the early 90s.

* house prices don't look so over priced when you include super into incomes for Australians.


----------



## young-gun (26 January 2013)

Mr Z said:


> PS> Its been almost 5 years and the US looks to be finding the floor in its property market. IMO they will not come back strongly quickly but the value buyers seem to be coming out of the wood work slowly. I can't see why we would stray too far from their lead, though I suspect it will be a softer bust here.




Let's not forget what bernanke is trying to do, that is, inflate a new housing bubble. It's no real surprise prices are starting to climb, but it's not a genuine recovery, they are setting themselves up for another fall. Billions are being pumped in.


----------



## Uncle Festivus (26 January 2013)

Mr Z said:


> PS> Its been almost 5 years and the US looks to be finding the floor in its property market. IMO they will not come back strongly quickly but the value buyers seem to be coming out of the wood work slowly. I can't see why we would stray too far from their lead, though I suspect it will be a softer bust here.






young-gun said:


> Let's not forget what bernanke is trying to do, that is, inflate a new housing bubble. It's no real surprise prices are starting to climb, but it's not a genuine recovery, they are setting themselves up for another fall. Billions are being pumped in.




Billions are being pumped in, but nothing to show for it.....top end sales skewing prices up.....


----------



## Mr Z (26 January 2013)

Julia said:


> Can you provide a link to stats that demonstrate your claim that "the boomers own large amounts of investment property"? I know this is a popular generalisation.  It's not something I've observed in reality.




It is certainly the norm among the people that I know to own at least one IP, by far the minority own just their PPOR.

No I'm not going to spend time digging up proof for you, take it or leave it, I really don't mind.



Julia said:


> Certainly a small proportion of boomers own several IPs,




The number of IP's is not the main issue so much as the size of the generation, if on average they all only own one it is still a large supply... I actually doubt that the average is that high but that doesn't alter the fact that 50% of the working population own  a lot of property collectively and are moving toward retirement.



Julia said:


> but your claim here is in opposition to your earlier claim that boomers will have to liquidate or downsize their PPOR in order to fund the standard of living they want in retirement.




I never suggested that they will have to liquidate their PPOR, I suggested that they will, on average, downsize. That one you should be able to "see". I know many that have down sized, sea changed or tree changed.... and I know a good number of the latter two that have realized it was a mistake, the kids are too busy to come and stay/holiday etc and they now seek to swap the tree/sea change for a low maintenance townhouse near the grand kids. Looking that the relative stregths of some these markets I would s



Julia said:


> Good point, and one which is largely overlooked in these discussions.




I doubt it will be a major thing, after all what lender really wants the property at the end of the day? If they are unsure of the prospects for liquidation they be more circumspect with their lending in this area. JMO



Julia said:


> I can't see how you can compare the US property market, with all their subprime fall out, with that of Australia.




We are just as extended as they where, the level of debt is the key issue. Besides their issues started in sub-prime but they extended into all other areas of lending. We have bucket loads of "liars loans" etc and a hell of a lot of people that where prime that are now not... do you know any worried middle management... I certainly do! No matter the details it is the level of debt overall that is at an extreme and needs to contract... as sure as you breath in you must breath out.



Julia said:


> I've just done a search to substantiate this figure and cannot find any such validation.  Perhaps you can provide a link to it? Wouldn't at all be surprised if it's true, but would like to see where the percentage came from.)




No I can't, that number comes from a relation who ran a very successful investment firm. Now he is well and truly self-funded, he sold out to a much bigger operation.... for all the good that has done him as he is now fighting cancer.

Keep in mind that is a historic figure, it covers a period where we came from defined benefit pensions and have transitioned to defined contribution schemes. It will likely change, but enough to make a difference... I doubt it.

The thing with the boomer's is that whatever investment was popular among them, just due to the sheer size of the bubble in the population, has had a massive tail wind and conversely will run into the same head wind as they exit it... which they will,...even if it is only estate liquidation! Talk to a boomer about property, they all most all believe whole heartedly as it is the only sure bet that they have seen across their lives in this country. They are a self fulfilling bull and bear market, they will also be an issue when it comes to super liquidation... but that is probably an issue for the future.

 take it... leave it.


----------



## Mr Z (26 January 2013)

Uncle Festivus said:


> Billions are being pumped in, but nothing to show for it.....top end sales skewing prices up.....




Pumping it is easy, controlling it's flow is another issue altogether!... eh?


----------



## Mr Z (26 January 2013)

young-gun said:


> Let's not forget what bernanke is trying to do, that is, inflate a new housing bubble. It's no real surprise prices are starting to climb, but it's not a genuine recovery, they are setting themselves up for another fall. Billions are being pumped in.




There is true value to be found in that market, I know a guy in a forces town that can achieve a 20% returns with a constant supply of GI's as tenants. They have to leave the properties in good nick, their commandeers make it so. The houses are well below replacement value and high yielding. Given what you can invest in the US it is a monty... stuff all downside and big yield! Yet look at UST's, seriously you would have to be a mug to walk past RE for T's in that market.

+ the rumors are that the bulk of the money moving is smart money, not end user money.... they still can't lend that easily despite Ben's efforts.


----------



## Uncle Festivus (26 January 2013)

Mr Z said:


> Pumping it is easy, controlling it's flow is another issue altogether!... eh?




A bit like a muffin top held in by a pair of traccy dacks, like you see in Go Lo patrons - eventually somethings gotta give, and it aint gonna be pretty


----------



## Mr Z (26 January 2013)

Mr Z said:


> The number of IP's is not the main issue so much as the size of the generation, if on average they all only own one it is still a large supply... I actually doubt that the average is that high but that doesn't alter the fact that 50% of the working population own  a lot of property collectively and are moving toward retirement.




To be clear I'm actually referring to boomer households as opposed to individual boomer's, and yes the average ownership will likely be a low fraction but it illustrates the point that it is the large size of the generation having similar investments and needs across the same time span that produces the issue, not extremities in individual positions.... though they exist!

As and aside the boomers are also a challenge to our medical system.... not only do they represent a good % of the talent and are looking to retire, they are also becoming an increasingly larger part of the demand as age takes it toll. We are going to import more doctors and nurses! We have to! If you have had a look around nursing homes recently you will have noticed a majority immigrant staff, at least at everyone I visit..... less and less this year, they are all dying! Its an epidemic!


----------



## Mr Z (26 January 2013)

Uncle Festivus said:


> A bit like a muffin top held in by a pair of traccy dacks, like you see in Go Lo patrons - eventually somethings gotta give, and it aint gonna be pretty




What has been seen cannot be unseen.... yeesh... my minds eye has been damaged!


----------



## Mrmagoo (26 January 2013)

3 bed one bath house in the outer suburbs shouldn't cost more than 250k.

200k if it is just a basic no garage job.,

180k if it is more or less just the house.

Within 20kms of the CBD should  not be more than about 350k and if supply and demand limits this then they should build apartments to make up for lack of land. 350k is about 117k per bedroom which is still a lot of money.

If you track historic wage to earnings ratio this is about where they should be.

Earn 90k (which is a good wage) a 2 time multiplier for the family home on the city fringes is about right. Pay it off in under 5 years, just like people did in the 90s.

Yes - that is how cheap houses used to be.

For 450k you should be able to get a decent house say 20kms from the CBD. As that is still a hug amount of money. The difference would be a 15 year mortage instead of a 30 year one, so it would still cost people money from their pay packets. 

As I said if land supply becomes an issue, you just build density so people buy apartment for even cheaper.

The system is obviously corrupt 

People scoff at the 450k figure, but go on, save up that much and while you're at it pay 6% interest on 450k.

Not an easy task.


----------



## tech/a (26 January 2013)

Bill M said:


> Poster tech/a often talks about this and it is what I fear most too. It's probably why I tend to be a bit frugal even though right now I don't need to be. Point taken very well.




Passive income and ability to stay in front of inflation---when it comes it will come hard.
Cash will erode exponentially!

Negotiating on a property for development now.
First in 6 yrs.


----------



## medicowallet (26 January 2013)

tech/a said:


> Passive income and ability to stay in front of inflation---when it comes it will come hard.
> Cash will erode exponentially!
> 
> Negotiating on a property for development now.
> First in 6 yrs.




Absolutely true, unless a property crash comes beforehand...

MW


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## sydboy007 (26 January 2013)

Interesting to see how much land banking some of the developers have been up to.

Saw this in an article on macrobusiness last year - the below chart

In another interesting article on macrobusiness they show (from RP Data based on Census data)

Median rental payments as a % of income have increase from 18.5% in 2001 to 23.1% in 2011

Median multiples of income to dwelling prices increased from 4.5 in 2001 times to 6.3 times in 2011

Median mortgage payments as a % of median household income increased from 25.6% in 2001 to 33.7% in 2011

So median mortgage repayments have increased by 32% in a decade, and median rents have increased just under 25%

A household spending 33.7% of their pretax income on the mortgage must be living it tough I'd say, and 50% of the mortgage market is ABOVE that rate.  That's even scarier.


----------



## sydboy007 (26 January 2013)

Another scary statistic.

Australian residential mortgage debt currently sits at 80% of GDP


----------



## Mr Z (26 January 2013)

tech/a said:


> Cash will erode exponentially!




It forces speculation, witness Zimbabwe's stock market against its trashed economy. An extreme example but the mechanism is the same. Dividend payers with pricing power will be highly sort after.


----------



## DB008 (26 January 2013)

The Biggest Housing Bubble in the World Is in ... Canada?
http://www.theatlantic.com/business/archive/2013/01/the-biggest-housing-bubble-in-the-world-is-in-canada/272499/?google_editors_picks=true


----------



## Julia (26 January 2013)

Mr Z said:


> It is certainly the norm among the people that I know to own at least one IP, by far the minority own just their PPOR.



You must move in affluent circles.  I don't believe that is typical.



> take it... leave it.



Thank you. I appreciate the response.
 I'll largely leave it because you seem to be taking anecdotal situations from your own observations and milieu and asserting these constitute facts on a more general basis.




Mr Z said:


> As and aside the boomers are also a challenge to our medical system.... not only do they represent a good % of the talent and are looking to retire, they are also becoming an increasingly larger part of the demand as age takes it toll. We are going to import more doctors and nurses! We have to! If you have had a look around nursing homes recently you will have noticed a majority immigrant staff, at least at everyone I visit..... less and less this year, they are all dying! Its an epidemic!



With this, however, you're obviously correct.  The only redeeming feature is that the boomers have on the whole looked after their health pretty well, so hopefully this might offset some of the inevitable disease processes.
Governments are - as far as I can tell - failing to adequately plan for the situation a few decades on.


----------



## Mr Z (26 January 2013)

Julia said:


> Thank you.  I'll largely leave it because you seem to be taking anecdotal situations from your own observations and asserting these constitute facts on a more general basis.




Good, and thank you I need someone on the opposite side of my trade. 

Bye


----------



## Mr Z (26 January 2013)

DB008 said:


> The Biggest Housing Bubble in the World Is in ... Canada?
> http://www.theatlantic.com/business/archive/2013/01/the-biggest-housing-bubble-in-the-world-is-in-canada/272499/?google_editors_picks=true




Damn... I hate being beaten by Canucks!


----------



## Mr Z (26 January 2013)

Julia said:


> The only redeeming feature is that the boomers have on the whole looked after their health pretty well, so hopefully this might offset some of the inevitable disease processes.




That I think is questionable...


----------



## Julia (26 January 2013)

Mr Z said:


> That I think is questionable...



Of course you do.


----------



## Miss Hale (26 January 2013)

Here is another reason why I think baby boomers will start divesting themselves of their IPs.  If they still have them negatively geared and they stop earning then the negative gearing no longer applies and IPs just become an expense for them so naturally they will want to offload them, especially if they don't forsee any decent capital gain in the short term future.


----------



## Mrmagoo (26 January 2013)

Mr Z said:


> That I think is questionable...




No, it is darn right hilarious and denialist.


----------



## Mrmagoo (26 January 2013)

Miss Hale said:


> Here is another reason why I think baby boomers will start divesting themselves of their IPs.  If they still have them negatively geared and they stop earning then the negative gearing no longer applies and IPs just become an expense for them so naturally they will want to offload them, especially if they don't forsee any decent capital gain in the short term future.




More to the point. They'll stop going up 10% a year on year and the baby boomers won't like it because for once, they'll actually have to WORK for something. Rather than having it handed to them.


----------



## Mr Z (26 January 2013)

Julia said:


> Of course you do.




I dunno where you live or who you meet Julia but the boomers I see socially, and there are many, seem to have turned health concerns into an Olympic sport, mind you they are competitive on every other front so why not!

Just a quick google and the first link...

http://www.fitness.org.au/article.php?group_id=1528

They are falling to pieces, the only people that they are relatively healthier than is their children.... sadly.


----------



## tech/a (26 January 2013)

Mrmagoo said:


> More to the point. They'll stop going up 10% a year on year and the baby boomers won't like it because for once, they'll actually have to WORK for something. Rather than having it handed to them.




Wow
Bit of anger there.
I employ some of you guys
I'd back a baby boomer on efficiency/punctuality/reliability/
Work ethic/willingness to go the extra mile and longevity in a position
Over those younger.
I have 4 who have taken long service and 2 close to their second lot.
Biggest turn over of staff are in the 20-24 age group who are either 
Suffering from delusions of grandure which the other staff pick as quick
As look at you---or they want everyone else to make them look good.

The rest of the guys 20 - 50 pick that quick smart as well.
We pull our weight!

By the way
To afford the chance to take up opportunity banks need collateral
And serviceability. Neither comes from sitting on your arsse.


----------



## Mrmagoo (26 January 2013)

tech/a said:


> Wow
> Bit of anger there.
> I employ some of you guys
> I'd back a baby boomer on efficiency/punctuality/reliability/
> ...




erm. people leave when you pay them a lot less than they can get elsewhere.

Employers will just want you to work for nothing forever and it is worse if you are seen as a "youngster" because that means you do not deserve to get paid for the work you do.


----------



## Mr Z (26 January 2013)

I found this in my travels...

The orange square covers the boomers...

They are the wealthiest generation in terms of assets held period, I have never seen a stat that says otherwise! Although I believe a greater % of the older generations own homes they are smaller generations BUT the same argument applies them and they are far more likely to divest than invest going forward, that much I would think is self evident. 

I really can't see the logic in being on the same side of the boat as boomers when it is obvious that as a group they will need to raise funds going into retirement. I really looks to be a no brainer, ignoring demographic turning points like this and the lessons of other similar markets globally seems to me to be foolishly optimistic!

I'd concede that we have some mitigating circumstances so I expect an easier time of it but...


----------



## Mr Z (26 January 2013)

tech/a said:


> Wow
> Bit of anger there.
> I employ some of you guys
> I'd back a baby boomer on efficiency/punctuality/reliability/
> ...




This is a major part of the problem that the boomers pose, there is little follow through in terms of economic muscle to adsorb these assets as the boomers need to liquidate. There is literally a pot hole following these generations in many ways, skills, wealth etc... much of it due to the size of the generations, some of it due to the nature of the generations.


----------



## tech/a (26 January 2013)

Mrmagoo said:


> erm. people leave when you pay them a lot less than they can get elsewhere.
> 
> Employers will just want you to work for nothing forever and it is worse if you are seen as a "youngster" because that means you do not deserve to get paid for the work you do.




Err My people leave when they are told to leave.
My staff sort out the shirkers not me.

I have site supervisors who are 26 on $35/hr (46 hr week av) With a car and Fuel Card. They dont leave nor are they poached!
They are often called because they are damned good.

How did they get there?
They put in the hard yards on $18/hr for a few years and impressed their PEERS.
They adopted the qualities of stability and knowledge.
They didn't hop job to job looking for $$$$s

They bought enthusiasm,organisation and leadership commitment and respect to the table.
This is valuable to any employer. So when the Wannabe's roll up demanding top $$ my boys
and girls who are on top dollar sort out the chaff.

They demand equality and bludger's wont be tolerated.


----------



## tech/a (26 January 2013)

Mr Z said:


> I found this in my travels...
> 
> The orange square covers the boomers...
> 
> ...





ZZZZ *your not thinking* are you!

*(1)* Under 40 people haven't accumulated a great deal of Collateral and they are working toward the Accumulation of Investment and hence wealth phase which the baby boomers are now in---the younger they are the longer the road.

*(2)* Those over 60 have retired and those 70-80+ have been retired for years.
They dont have the same (In General terms) required cashflow to accumulate wealth.
When they did accumulate their wealth (Take my own Father now 90) At the time of retirement the average wage was 10-14K a year. Now its $65K so they dont have the clout and never will of those who are younger.

The *SAME* will happen in years to come when those in their 20s reach retirement and are compared with the holdings of the baby boomers. The average wage in 30 yrs time is likely to be $250K + a year.
Makes the $1.2 million used as a bench for retirement these days look sick!


----------



## Mr Z (26 January 2013)

tech/a said:


> ZZZZ *your not thinking* are you!




That is just insulting.



tech/a said:


> *(1)* Under 40 people haven't accumulated a great deal of Collateral and they are working toward the Accumulation of Investment and hence wealth phase which the baby boomers are now in---the younger they are the longer the road.




Taken into consideration... THEY ARE OUT NUMBERED SIGNIFICANTLY, it would take a herculean effort for them to bridge the gap to the boomers in aggregate.... DEMOGRAPHICS, DEMOGRAPHICS, DEMOGRAPHICS! While individually what you say is true as a group they would all have to exceed the average boomer performance significantly to bridge the gap in numbers. 



tech/a said:


> *(2)* Those over 60 have retired and those 70-80+ have been retired for years.
> They dont have the same (In General terms) required cashflow to accumulate wealth.
> When they did accumulate their wealth (Take my own Father now 90) At the time of retirement the average wage was 10-14K a year. Now its $65K so they dont have the clout and never will of those who are younger.




Your point is? In most cases they will still have to divest to make ends meet! Have you priced a retirement home recently? We did the exercise a few years ago for a relative.... 300K bond and 60K a year!



tech/a said:


> The *SAME* will happen in years to come when those in their 20s reach retirement and are compared with the holdings of the baby boomers. The average wage in 30 yrs time is likely to be $250K + a year.




Again it is the SIZE of the generation that is the issue, one that cannot be easily overcome. You point out simplistic dynamics... all other things being equal what you say is correct BUT all other things are not equal!



tech/a said:


> Makes the $1.2 million used as a bench for retirement these days look sick!




That is not enough today, it may take a few years for folk to work that out.


----------



## Mrmagoo (26 January 2013)

tech/a said:


> Err My people leave when they are told to leave.
> My staff sort out the shirkers not me.
> 
> I have site supervisors who are 26 on $35/hr (46 hr week av) With a car and Fuel Card. They dont leave nor are they poached!
> ...




Wait. You think $35 an hour is top dollar ? Please tell me you pay them overtime as well. Annual leave, sick pay ect too ?

You pay your workers $18 an hour ? Wow. You could get a job at Coles earning more than $18 an hour. That is barely 37k a year.  Not surprised you have trouble retaining people.

I knew things in the employment market had dried up a little but I didn't think it was that bad.

If hard working people are still only earning $18 an hour, what hope do they have to buy a house. That must influence the market at some point.


----------



## tech/a (26 January 2013)

Time to go again 
Had enough of romper room after a few posts
Leave you to it kiddies.


----------



## Julia (26 January 2013)

Mr Z said:


> That is just insulting.



You consider you have a monopoly on insults?


> Have you priced a retirement home recently? We did the exercise a few years ago for a relative.... 300K bond and 60K a year!



Perhaps you could describe the retirement situation you are referring to.  There are hundreds of high quality retirement villages where people can buy a property. either freehold or leasehold,  and still receive whatever level of care they need, at prices between $250K and $1M+.

A bond refers only to nursing homes which I doubt is what most baby boomers have in mind for their retirement fergawdsake!












tech/a said:


> Time to go again
> Had enough of romper room after a few posts
> Leave you to it kiddies.


----------



## Mr Z (27 January 2013)

Julia said:


> You consider you have a monopoly on insults?




I generally retort in kind. What is your problem Julia, you consider I have not been civil to you? Report me to teacher if that is the case.



Julia said:


> A bond refers only to nursing homes which I doubt is what most baby boomers have in mind for their retirement fergawdsake!




Yup but I was talking about the pre boomer generations at that point, that is the second time in this series of posts you have clearly missed my point. I should say the third as I feel you are over looking the salient point of boomer real estate investment i.e. it is the size of the generation not the rate of ownership that is the major issue and to put a finer point on it that size in relation to the size of the following generation. *VOLUME* is the key and the imbalance is certainly enough to tip price at the margin! Unless that balance is leveled by some unholy level of immigration, it will have an impact. The level of immigration required would very hard to sell politically considering most of the people you are trying to replace are still in the job market and voting, but still it is a way of fixing the issue. However that has its own issues as given our laws it is very hard to just allow in the demographic you want.... you end up with family as well etc, which can produce other population bulge issues down the track.

BTW - As an example of boomers divesting themselves of assets you may want to look at the sale of small enterprises. There are many good little businesses coming to market due to the vendors wish to retire. Many of the ones I have been watching have been hard to sell, many I have seen just close the doors due to lack of buyer interest. Again it is the relative size of the sell side of the market and the buy side but I suspect that the nature and inclination of the following generation is playing into it. The one bright spark here seems to be the number of worried middle managers around... they will often leap into a business if they can secure new employment, they normally have the means to do so. I know two recently put in this position, one setup by himself the other is weighing options.

I posted a chart, not brilliant stats I will acknowledge but it was used in a newspaper. It gives a reasonable idea of the boomers property ownership and those older, to which a very similar argument applies. Given debt levels are extended, by relative measures as well as absolute, and that we are dealing with a population bulge that has introduced distortions it is hard to see where th market support is going to come from. Maybe we start mass immigration? I hear we set a record with the Australia Day ceremony, that is a start.

*Sorry if I am a little too romper room for you adults, *BTW I am a boomer by the way many demographers draw the line... but then even that is a little blurry, its a fat line if you look across the industry!


----------



## Garpal Gumnut (27 January 2013)

Mr Z said:


> *Sorry if I am a little too romper room for you adults, *BTW I am a boomer by the way many demographers draw the line... but then even that is a little blurry, its a fat line if you look across the industry!




Z,

Mate,

The average attention span on the internet is 8 secs.

On ASF, due to it's collective above average IQ, it is more than likely less, approaching 7.8362 secs.

Keep it simple. I believe the simple call it KISS.

Dot point.

And listen to others.

They often can augment your point of view.

Just my thoughts.

gg


----------



## Mr Z (27 January 2013)

Garpal Gumnut said:


> Keep it simple. I believe the simple call it KISS.




Dumbed down conversations at cross purposes, where would forums be without them!

I come here for another reason entirely.

Watching the nature of this thread change has been interesting.

Anywhoooo... now I seem to have the textual equivalent of (hands on ears) LA, LA, LA, LA, ----> you are such a baby...as a general retort.... so I will grab a Guinness and return to my voyeuristic repose.

I remember some of these characters giving me stick about gold back in the Stock Central & Reefcap days.. what and interesting decade or so it has been, with more to come.

Toodles old chap, have fun!


----------



## Garpal Gumnut (27 January 2013)

Mr Z said:


> I come here for another reason entirely.




And what was that reason?

Z, don't choke mate.

gg


----------



## MR. (27 January 2013)

Mr Z said:


> Watching the nature of this thread change has been interesting.





http://www.goldcoast.com.au/article/2012/12/11/443450_gold-coast-commercial-property.html#comment

As the bulls turn bearish and the bears turn bullish........


----------



## MR. (27 January 2013)

From the link above:


> distressed commercial properties on the Coast showed investors were picking up bargains.
> 
> "This suggests there is demand for these properties at discount prices because investors can see they are undervalued assets," Ms Murdoch said.




They must be perceived as undervalued to sell? Huh! 
The property market should have a share price attached for realization.

Yes …, I know, it's all media selling papers and all..... Here's one I've just dug up. The latest sale for that particular area:

http://www.onthehouse.com.au/buy/property/51451177
45% loss in 6 years. $1,625,000 to $900,000 (Nov 2012)


----------



## Mrmagoo (27 January 2013)

MR. said:


> From the link above:
> 
> 
> They must be perceived as undervalued to sell? Huh!
> ...





Hilariously tragic. Someone just lost a fortune !


----------



## Sean K (27 January 2013)

Mrmagoo said:


> Hilariously tragic. Someone just lost a fortune !



Doesn't look right to me. Perhaps the 1.6m was actually 0.6m?


----------



## MR. (27 January 2013)

kennas said:


> Doesn't look right to me. Perhaps the 1.6m was actually 0.6m?




Hello Kennas, so it's a 50% profit in 6 years? That's better than a 45% loss. That's good going then! 

I know what you mean..... but what is likely, really?


----------



## Julia (27 January 2013)

Mr Z said:


> I generally retort in kind. What is your problem Julia, you consider I have not been civil to you? Report me to teacher if that is the case.



I'm sure you're 100% correct in everything you say. Obviously, you have decided only your opinion is worthwhile.  That's fine.   I haven't the interest or energy to argue.  Much more serious stuff to attend to after massive storm here over several days.
I wish you every success.


----------



## Sean K (27 January 2013)

MR. said:


> Hello Kennas, so it's a 50% profit in 6 years? That's better than a 45% loss. That's good going then!
> 
> I know what you mean..... but what is likely, really?




1996: 260k
2006: 1.6m
2012: 900k



I'm just not sure about these price sales figures. Anywhere.

Maybe prices really did explode between 96 and 06.


----------



## Mrmagoo (27 January 2013)

kennas said:


> 1996: 260k
> 2006: 1.6m
> 2012: 900k
> 
> ...




That is what we've been trying to say over 500 pages of thread.


----------



## MR. (27 January 2013)

kennas said:


> 1996: 260k
> 2006: 1.6m
> 2012: 900k




From a quick Gold Coast City Council search the land was registed in mid 1989. Possibly 7 years after the land could have still been vacant reflecting a sale at the 260K. Making the sale $96- per metre in 1996. (The land is 2678 square metres)

From experience in 2006 - 2007 I know the market hit $470 per metre for Gold Coast Industrial land. Making the land in question alone $1.258 million. To build 1000 square metres of tin shed would cost 1/2 that of a a tilt slab equating to $400- per metre. 1.258 + 400 = $1.658 million if the shed was new. Or $1658 per square metre of finished factory space. 

Tilt slab factory space was over $2000- per metre finished in 2006 - 2007. Burleigh Heads hit $3000- per metre although it would have been alot smaller dwellings. 

Vendors are hanging out for their $2000 per metre+ but they arn't going to get it anytime soon. A terrible possition many must be in and if you have to sell and there are no buyers what choice do you have? Every second to third factory is for sale or lease. If your a buyer "How long can you go without a tenant?"   

The figures would be accurate.....


----------



## Sean K (27 January 2013)

Mrmagoo said:


> That is what we've been trying to say over 500 pages of thread.




Yep, get that. 



MR. said:


> From a quick Gold Coast City Council search the land was registed in mid 1989. Possibly 7 years after the land could have still been vacant reflecting a sale at the 260K. Making the sale $96- per metre in 1996. (The land is 2678 square metres)
> 
> From experience in 2006 - 2007 I know the market hit $470 per metre for Gold Coast Industrial land. Making the land in question alone $1.258 million. To build 1000 square metres of tin shed would cost 1/2 that of a a tilt slab equating to $400- per metre. 1.258 + 400 = $1.658 million if the shed was new. Or $1658 per square metre of finished factory space.
> 
> ...



Thanks for the analysis. I thought the crazy hockey stick boom in SEQ land was from 2007-10. Geeesh.


----------



## Mr Z (27 January 2013)

Julia said:


> I'm sure you're 100% correct in everything you say. Obviously, you have decided only your opinion is worthwhile.  That's fine.   I haven't the interest or energy to argue.  Much more serious stuff to attend to after massive storm here over several days.
> I wish you every success.




Nice retort, lead with a bit of passive aggression, step into a slur of arrogance, feign disinterest and exit stage right. 

I just love people who feel the need to tell me what I think, that is always special.

Julia, you have done no more than assert that you choose not to accept my view while presenting no real counter argument let alone a credible counter thesis. You have given me nothing that I could take on board even if I rolled over and said "yes dear, of course you are correct". Yet you feel justified in serving up this tripe... incredible!

Good luck with the storm, my dad is in the midst of it all but so far no real concerns.


----------



## sydboy007 (27 January 2013)

Julia said:


> I'm sure you're 100% correct in everything you say. Obviously, you have decided only your opinion is worthwhile.  That's fine.   I haven't the interest or energy to argue.  Much more serious stuff to attend to after massive storm here over several days.
> I wish you every success.




See the below graph to understand what Mr Z is getting at.

In Summary

The 55-65 and 65+ age groups:

has around 3.231 million households

They would have around 2.691 million primary primary residences

I've not been able to find how many IPs this cohort own.

Now as this cohort progressively ages they will (as is currently happening):

Downsize - just look at how many lone households this group has
Sell up to move into assisted care
Fall off their perch

I would argue that the Children of the 65+ group already have a relatively high level of home ownership, so it's unlikely that their children will need the house as a primary residence, hence are quite likely to be sellers, especially if they want to avoid capital gains tax on the property.

To put things into a bit of perspective the under 45 years households collectively have around 1.546 million renting households.  Even if we add the 45-54 year renting group in that still only adds up to 1.9 million households.

Now I know we have the new formation of households due to population growth, but it does seem like there is going to be plenty of established dwellings coming onto the market over the next 30 years simply due to the passing of the 55+ generations.

This increased supply is likely to cap prices rises, especially considering the still highly geared nature of the Australian housing market can't really accommodate too much above CPI prices rises in general.


----------



## Mrmagoo (27 January 2013)

Yup. The Baby Boomer generation has monopolised prosperity for such a long time it has become normal. In the years to come, as they start to retire, things will adjust and generation x will largely be the managers of generation y who will replace the boomers. As gen y are largely non-home owning, prices will fall so that they can become the new generation of home owners otherwise the political system of central banking policy starts to fail. If no one is borrowing, no one will be lending and no new money will enter the system causing deflation and economic turmoil.


----------



## tech/a (27 January 2013)

You guys have such a narrow view.

Most of the boomers are freeholding asset for passive income.
They won't sell---won't/don't  want to sell.

They will have taught their siblings the power of passive income going forward as well.
When they cark it many of them won't sell either.

Your glut of housing won't eventuate.

The demographics in SA alone over the next 30 yrs is 52000 new homes in the South
And 158000 in he North.

The thing that will smash house pricing is world economies.
But if youown it it won really matter that much --- passive income


----------



## sydboy007 (27 January 2013)

Mrmagoo said:


> Yup. The Baby Boomer generation has monopolised prosperity for such a long time it has become normal. In the years to come, as they start to retire, things will adjust and generation x will largely be the managers of generation y who will replace the boomers. As gen y are largely non-home owning, prices will fall so that they can become the new generation of home owners otherwise the political system of central banking policy starts to fail. If no one is borrowing, no one will be lending and no new money will enter the system causing deflation and economic turmoil.




I can see this starting to happen already.  A lot of Gen-Y simply don't want to shackle themselves with huge debts on housing.  Why buy when the only way to afford it is to move so far out of the city you have to either buy a car or spend 1+ hours each way on public transport to work. 

I'm just hoping the bubble deflate over time due to inflation, with rents and income catching up, though that process could take quite awhile.

Should unemployment go up much past 6.5% then we'll probably have a good shake-out of the property market, and hopefully I'll have sold off my bank shares cause any major fall in property prices is going to cost the banks some number with 9 zeros after it.


----------



## tech/a (27 January 2013)

Deflation in the short term ---- next 10 years is un avoidable.

The un winding of world debt personal / institutional / government will 
Leave a trail of destruction of the deflationary kind --- but after that!


----------



## Mrmagoo (27 January 2013)

tech/a said:


> You guys have such a narrow view.
> 
> Most of the boomers are freeholding asset for passive income.
> They won't sell---won't/don't  want to sell.
> ...




Passive income is fine and I don't see why any government would want to tinker with that, it takes pressure off the public system. What will unwind will be investment in housing based on future expected capital gains.

As Gen Y start to having families they'll become a large group with a common interest and lets face it Gen Y is a hugely vast generation, which actually spans 2 or 3 generations and very few of them own their own homes. Some may have an "affordable" mortgage but those who have bought recently, which will entail the majority will be in hopeless debt and with little to no equity growth you can basically kiss goodbye one of your previous drivers of economic growth. 

What this means is that when they start having children they'll become a voting block without equity. You can already see it happening. Very few people under 30 want house prices to increase. People older than that who do not already own a home generally do not want to see house price growth. This contrasts to the previous decade where one was able to just get on with the job and buy a property as growth in prices had not yet exceeded income by any and all measures.

I can see definite changes to the tax and legal system to control house price growth. Governments all over the world appear to have learned their lesson and some Asian countries have already taken these drastic steps to curb house price growth. I would not be surprised if the generational paradigm will be to view housing like bread a milk in that we want the value of these items to decrease relative to incomes over time, rather than increase. You've got to remember that you have a generation of people who have really been kicked in the guys pretty hard regarding housing. There have not been fun and games at all. 

Never under estimate self interest. Young single people don't care, but once you put a crying screaming baby into the picture you're going to end up with a lot of very angry voters. Politicians will eventually respond. Good ole Ted in Victoria has already started the ball rolling, with mass land releases for his real estate mates. For a liberal he is definitely showing himself to be a champion of the people.


----------



## Mrmagoo (27 January 2013)

tech/a said:


> Deflation in the short term ---- next 10 years is un avoidable.
> 
> The un winding of world debt personal / institutional / government will
> Leave a trail of destruction of the deflationary kind --- but after that!




The days of boom time are well and truly gone. To see similar growth you'll be looking at 600k-1 million dollar properties in the outer suburbs and as you have shown with the pay rates you give to your workers that is just not affordable by the average person and they yeild in that  case could never justify the cost.

Even a 5% a year increase is still 25k a year on the average property, which means another 5k required on the deposit and I just can't see ordinary working people as able to make the down payment with that kind of growth.

House price are going to be either flat or down for a long time.


----------



## tech/a (27 January 2013)

Mrmagoo said:


> The days of boom time are well and truly gone. To see similar growth you'll be looking at 600k-1 million dollar properties in the outer suburbs and as you have shown with the pay rates you give to your workers that is just not affordable by the average person and they yeild in that  case could never justify the cost.
> 
> Even a 5% a year increase is still 25k a year on the average property, which means another 5k required on the deposit and I just can't see ordinary working people as able to make the down payment with that kind of growth.
> 
> House price are going to be either flat or down for a long time.




Don't know where your thinking of but all of my people live in areas where the median house price is around 400 k
Most bought even the younger ones in the 300s all partners work either full or part time. None are struggling.
A few rent $350 a week is average but both work as did my partner when I was younger.


----------



## Sean K (27 January 2013)

Are DINKS, delay in parenting and women in the workforce a consideration?

I haven't seen any figures or analysis on this but with women in the workforce for longer and less children this may  drive up prices?  

Maybe not..


----------



## Mrmagoo (27 January 2013)

Your supervisors get what ? 35 an hour ?

I'd hazard a guess take home would be around 1 - 1.2k a week with overtime. Mortgage payment is about 1257, add in rates and what not that is about 1320 a fortnight. So a bit over half the wage. Just for the mortgage. I'd say that fits the definition of mortgage stress pretty well. Add in utilities (i'm guessing they get a car on top of their wage but deduct the cost of just one car from the wage), food, misc expenses and you can probably kiss most of that income goodbye. Might be room for a little saving (say 200 a week).

Leaving the partners income. So you're in the situation of a working mother needs to support the family.

Hardly a good situation for a foreman. That is a pretty well paid supervisor. Never mind the normal workers.

Sure if you bought a few years ago for 300k you're in a better spot. None of this points to room for house price growth in the future.


----------



## Mrmagoo (27 January 2013)

kennas said:


> Are DINKS, delay in parenting and women in the workforce a consideration?
> 
> I haven't seen any figures or analysis on this but with women in the workforce for longer and less children this may  drive up prices?
> 
> Maybe not..




Nah. IMO DINK women just have higher expectations. I see them at work all the time. OMG A BABY MUST BUY BRAND NEW HOLDEN COMMO WAGON AS WE NEED IT FOR KID !!

Spend $4.5 in morning for coffee. Home made lunches more expensive than a shop bought one. Over seas holidays as a right of passage into knowledge. Can't live in a share house must get over priced apartment.

But as you said DINKS have the money so why not. I just can't see many of them saving it to reduce mortgage costs. They go into a tonne of debt instead.


----------



## Bill M (27 January 2013)

kennas said:


> Are DINKS, delay in parenting and women in the workforce a consideration?
> 
> I haven't seen any figures or analysis on this but with women in the workforce for longer and less children this may  drive up prices?
> 
> Maybe not..




Always has been kennas. Even when my wife and I bought our house in Sydney we gave up the idea of having kids in order to get ahead and that was 25 years ago. Today it would be the same, no different I would think.


----------



## Sean K (27 January 2013)

Mrmagoo said:


> Nah. IMO DINK women just have higher expectations. I see them at work all the time. OMG A BABY MUST BUY BRAND NEW HOLDEN COMMO WAGON AS WE NEED IT FOR KID !!
> 
> Spend $4.5 in morning for coffee. Home made lunches more expensive than a shop bought one. Over seas holidays as a right of passage into knowledge. Can't live in a share house must get over priced apartment.
> 
> But as you said DINKS have the money so why not. I just can't see many of them saving it to reduce mortgage costs. They go into a tonne of debt instead.



I'm just guessing that instead of spending a million on the chillins education DINKS put it on the apartment, townhouse, or holiday, etc. One less kid, is worth a million spare cash flow these days. Instead of buying out in the burbs they buy close to the action within 5km of the city and there's limited space. yada yada... Might just be a minority that that effects and no price mover. Maybe grasping at straws.



Bill M said:


> Always has been kennas. Even when my wife and I bought our house in Sydney we gave up the idea of having kids in order to get ahead and that was 25 years ago. Today it would be the same, no different I would think.




Ack, thanks Bill. Only thoughts on personal situation. I know if I had a few kids I'd be living in Frankston, or Liverpool...


----------



## Julia (27 January 2013)

tech/a said:


> You guys have such a narrow view.
> 
> Most of the boomers are freeholding asset for passive income.
> They won't sell---won't/don't  want to sell.
> ...



+1



Julia said:


> You consider you have a monopoly on insults?



You responded to this as if I was personally insulted by you.  Not so.  I was just commenting on your saying how insulted you felt because some other poster didn't actually agree with you.

You said: 







> Have you priced a retirement home recently? We did the exercise a few years ago for a relative.... 300K bond and 60K a year!



I replied:



> Perhaps you could describe the retirement situation you are referring to.  There are hundreds of high quality retirement villages where people can buy a property. either freehold or leasehold,  and still receive whatever level of care they need, at prices between $250K and $1M+.



This is just one example of my, politely,  questioning one of your statements.  A 'retirement home' would normally be considered a dwelling within a retirement village, certainly not a nursing home placement where a bond is required.
So imo a perfectly reasonable comment on my part.



Mr Z said:


> . It is sobering to remember that under 1% of retirees make it fully self funded.



Again, because I'm a fully self funded retiree I'm interested in this and would like to have known the context of your claim here.  I hardly think that's unreasonable.  Your response was that it was from a comment by someone you know who made this assertion.  Is that really a valid reference to such a definite assertion, stated as absolute fact?  Not for me.



Mr Z said:


> Nice retort, lead with a bit of passive aggression, step into a slur of arrogance, feign disinterest and exit stage right.



Oh please, spare me the pop psychology.  You have made several assertions, most based on your opinion.  That's fine.  All opinions are welcome.  No need to get aggressive when politely questioned as to the basis of those opinions.


----------



## sydboy007 (28 January 2013)

tech/a said:


> You guys have such a narrow view.
> 
> Most of the boomers are freeholding asset for passive income.
> They won't sell---won't/don't  want to sell.
> ...




You've totally missed the point.

That age cohort of the 55+ are going to be mostly gone over the next 30 years.

Look at my post with the age groups and housing.

Just look at how many spare bedrooms there are out there

There is no housing crisis.  There is no shortage of housing (in general).  Most households have at least a spare bedroom, quite a few have more than that.

There will be a huge increase in the number of properties for sale as the war generation and boomers fall off their perches.  Though it seems like it, they wont live forever.

If there's an increase in housing stock for sale on the market, then that has to depress prices.  It's not going to happen overnight, but it will ramp up over the coming decades.

Factor in that in aggregate terms Australian households just simply can't take on any more debt, then where do you think the price growth is going to come from?  Mortgage debt is already 80% of GDP!  If rents go up too fast then the number of spare bedrooms is going to decrease.  There is a massive amount of excess capacity out there.


----------



## CanOz (28 January 2013)

Tend to agree, the only thing that has helped the US stop the slide is the fed...and their bloated balance sheet.

CanOz


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## tech/a (28 January 2013)

> You've totally missed the pointi




In your opinion.

Fortunately your opinion has
No bearing on my future.

Self funded debt free with passive income.

Happy to have missed the point.

Evidently I'd missed the point in 1995 through 2003 as well.

You know you only have to get it right ONCE in a lifetime to
Join Julia in the 1%


----------



## sydboy007 (28 January 2013)

tech/a said:


> In your opinion.
> 
> Fortunately your opinion has
> No bearing on my future.
> ...




So your historical experience has relevancy to the future of house prices?

I'm not sure how old you are, what what do you expect to happen to your primary residence and any IPs you may have when you've passed on?  Unless things have changed, my understanding is that your family have 2 years to sell the house before they are liable for capital gains tax, so it would seem likely that the property holdings of the 55+ generations will be sold and the funds distributed, rather than held as n IP or as a primary residence for a family member.

Are you saying that because house prices skyrocketed over the 1995 - 2003 period that this is the likely thing to happen over the next 10-15 years??  Household debt sits at 155% of income.  How high do you see this going to push house prices higher?  Historically when it's hit 160% that seems to be the Oh s*&t moment and borrowing slows down for a bit.

MY basic argument is that:

* households already have too much debt to borrow much more
* rents are too low to justify investing in an IP as future capital gains will not be much above CPI.
* the 55+ age group already own a huge amount of the housing stock as their primary residence and IPs.  As they pass away this will release a lot of established dwellings onto the market.  As they move into assisted care and nursing homes they will need to their their primary residence and / or IPs to help fund this.
* A large proportion of renters have spare bedrooms.  Should rents start to increase too fast then we will see this excess capacity used up to help reduce the individuals rental costs.  How long that process goes on I don't know, but it will have a dampening effect on overall dwelling demand.
* Gen Y and the younger Gen X have become very wary of borrowing a huge amount of money to buy a property that involves long commute times and / or the need to own a car or become a 2 car family.


----------



## Mrmagoo (28 January 2013)

tech/a said:


> In your opinion.
> 
> Fortunately your opinion has
> No bearing on my future.
> ...




You guys had it handed to you. Julia got a 3% loan on her POPR during a time when prices were rock bottom and then they rose fast. Not hard to make a buck under those circumstances. All you needed was surplus income and a desire to invest.

Which is why you lot seem to think becoming wealth is just a matter of having the will to do so - because for your generation that is all that was required.


----------



## Mrmagoo (28 January 2013)

sydboy007 said:


> Factor in that in aggregate terms Australian households just simply can't take on any more debt, then where do you think the price growth is going to come from?  Mortgage debt is already 80% of GDP!  If rents go up too fast then the number of spare bedrooms is going to decrease.  There is a massive amount of excess capacity out there.




That is more to the point. Sick of this home investing ponzi bull****. It has already caused far too much human misery around the world.

House prices are the CAUSE not a symptom ? Get it through your heads. Housing investment is a greed fueled evil which needs to be stamped out. Repeat after me - it is not the bankers it is housing investors ruining the world.


----------



## orr (28 January 2013)

tech/a said:


> You know you only have to get it right ONCE in a lifetime to
> Join Julia in the 1%




You do notice the implicit out come there for the 99% Techo . That's a voting block to keep in mind.  Mind you a lot better odds than the Lotto, unless you believe the advertising.
Who was it that coined the phrase _'a queit life of despiration'_ Thoreau ?


----------



## tech/a (28 January 2013)

Dont know what you guys are on about.

I agree prices are likely to fall further and then stay flat for som years.
Eventually deflation will give way to growth could be many years.

As for what my family does with assets when I'm out a here.
That will depend on their own situations at the time.
They will get advice when that time comes.
A way off I hope.

Yeh yeh we got it so so easy!
You guys have got it so so hard.
We've never seen hard times.


----------



## sydboy007 (28 January 2013)

tech/a said:


> Dont know what you guys are on about.
> 
> I agree prices are likely to fall further and then stay flat for som years.
> Eventually deflation will give way to growth could be many years.
> ...




I'm n the same boat as you, generally.  I bought in 1997, but I know that it would be impossible for me to do the same now.  a 270K loan in 97 is prob now around 388K with an avg 2.5% inflation rate over the intervening years.

So a 388K loan at 6.8% - that's the rough avg I'd paid over the life of my home loan - would cost me $2700 a month for 25 years.  That's around 50% of my after tax income now.  Now lets see what a 430K property would get me.  Where I currently am, Erskineville Sydney, I'd be struggling to get much more than a 1 BR apartment, and most of those are older style and remind me of a battery hen cage.

Now, if I chose to rent in my area, I could get something similar to what I can afford for around $350-380 a week.

I know there's 13 months based on a weekly payment, but I'll let that extra month cover all the holding costs of owning a property.  Buying = 2700 or Renting = $1520

So now I have $1180 in cash flow.  What to do.  Hmm.  Considering how many shares are still offering grossed up dividend yields of 7%+, I think I'd like to buy meself 10K of shares each year.  Will be interesting to see who's better prepared for retirement in 25 years.

I would argue that for a family, with the exponential cost of loan repayments for a house to fit a family in, the cost savings of renting to buying are even bigger.  Factor in being able to afford to live somewhere that means you only need 1 car, you can prob find a months rent savings over a year just with that.


----------



## Macquack (28 January 2013)

Mrmagoo said:


> Sick of this home investing ponzi bull****. It has already caused far too much human misery around the world.
> 
> House prices are the CAUSE not a symptom ? Get it through your heads. Housing investment is a greed fueled evil which needs to be stamped out. Repeat after me - *it is not the bankers it is housing investors ruining the world*.




Mrmagoo, you make some very good points.

Having said that, I disagree with your assessment of the perpetrators.

Housing investors are mere pawns in a much larger game.

Where do you think the money comes from?

Fiat money, the only unlimited resource on earth.


----------



## white_goodman (28 January 2013)

Mrmagoo said:


> House prices are the CAUSE not a symptom ? Get it through your heads. Housing investment is a greed fueled evil which needs to be stamped out. Repeat after me - it is not the bankers it is housing investors ruining the world.




ok, do u plan on legislating away human nature?


----------



## Julia (28 January 2013)

Mrmagoo said:


> You guys had it handed to you. Julia got a 3% loan on her POPR during a time when prices were rock bottom and then they rose fast. Not hard to make a buck under those circumstances. All you needed was surplus income and a desire to invest.
> 
> Which is why you lot seem to think becoming wealth is just a matter of having the will to do so - because for your generation that is all that was required.



 So many assumptions there.  Your conclusion might have been right had I stayed married.  I didn't.  He got it all, despite my input, so glad was I to escape.  Try starting again from nothing in your mid 30's when interest rates were 18% on 1st mortgage and 22% for IPs.



orr said:


> You do notice the implicit out come there for the 99% Techo . That's a voting block to keep in mind.  Mind you a lot better odds than the Lotto, unless you believe the advertising.
> Who was it that coined the phrase _'a queit life of despiration'_ Thoreau ?



He said "Most men lead lives of quiet desperation".  I fail to see the relevance in your addressing this to Tech, whose life seems to me anything but one of desperation.


----------



## tech/a (28 January 2013)

orr said:


> You do notice the implicit out come there for the 99% Techo . That's a voting block to keep in mind.  Mind you a lot better odds than the Lotto, unless you believe the advertising.
> Who was it that coined the phrase _'a queit life of despiration'_ Thoreau ?




Your limiting your observation to the topic at hand.

Widen your view and youll note.

(1) The Tech Boom
(2) The 2000-2008 Bull Market.
(3) Gold $250/oz to $1700
(4) The Aussi $ 50C to $1.10
(5) The crash of 2008 (Short!).
(6) Oil $40 a barrel to $125.
(7) Mining boom.
(8) Housing boom of the late 90s early 2000


In the next 30 yrs you'll see many many many more opportunities 
just like these. Get one right with enough on it and youll change you life
Financially.



> whose life seems to me anything but one of desperation.




Clearly you've not seen my golf swing!


----------



## sydboy007 (28 January 2013)

Julia said:


> Try starting again from nothing in your mid 30's when interest rates were 18% on 1st mortgage and 22% for IPs.




While interest rates were higher, the price of property was much lower, and has been shown previously, the level of income devoted to mortgage repayments now are much higher than when you got to buy.

People need to stop using the past to justify investment in housing NOW.

Australian households CAN'T triple their debt levels again.

Australians HAVE gone back to their historical level of saving 10% of their income.

House prices CAN'T increase faster than wages growth unless you can encourage people to save less.  I would say we're a good decade away from people feeling that comfortable to go on a debt binge again.

It's not relevant that you've got a mortgage free IP or primary residence, or both.  What is relevant is what can realistically occur going forward, and as yet I've not seen any evidence to show that house prices in general can take off again.  If anything, lower interest rates are making people more scared and more likely to save than to go out and borrow.

Hands up anyone who knows someone with a home loan who has decreased their repayments due to lower interest rates?  None of my friends have done this.  Everyone I know who has debt is keenly focused on repaying it as fast as they can now.


----------



## tech/a (28 January 2013)

> Hands up anyone who knows someone with a home loan who has decreased their repayments due to lower interest rates? None of my friends have done this. Everyone I know who has debt is keenly focused on repaying it as fast as they can now.




Anyone who cant get more than 6% on their money would be best advised to do that.
Those who can would be Crazy!!


----------



## sydboy007 (28 January 2013)

tech/a said:


> Your limiting your observation to the topic at hand.
> 
> Widen your view and youll note.
> 
> ...




We are discussing the future of house prices.  If this was a thread on what could provide the best investment return over the next 20-30 years, then sure, I'd agree to open the field of options, but it become a bit irrelevant for someone who's trying to decide if they should get out of a current property, or to newly buy in.

As for you 20:20 hindsight view of the markets, how many did you pick, how many did anyone pick?

The markets ain't rational, it's just a herd game and the ones who can spot the change in herd direction earliest tend to do best.


----------



## MR. (28 January 2013)

sydboy007 said:


> We are discussing the future of house prices.  If this was a thread on what could provide the best investment return over the next 20-30 years, then sure, I'd agree to open the field of options, but it become a bit irrelevant for someone who's trying to decide if they should get out of a current property, or to newly buy in.
> 
> As for you 20:20 hindsight view of the markets, how many did you pick, how many did anyone pick?
> 
> The markets ain't rational, it's just a herd game and the ones who can spot the change in herd direction earliest tend to do best.




Tech's just pointing out the choices of the 1%, off the topic at hand, as he warned.

But geez it's easy looking back.....

To topic, I'm getting in! But it will depend on location. Like the share market different sectors find their bottoms at different times. Staying well clear of that herd for now, one day the herd will return in my favour for growth but I maybe an old man!


----------



## MR. (28 January 2013)

sydboy007 said:


> Hands up anyone who knows someone with a home loan who has decreased their repayments due to lower interest rates?  None of my friends have done this.  Everyone I know who has debt is keenly focused on repaying it as fast as they can now.




The above example even has a name. "The Paradox-of-Thrift". Not much good for the economy!
http://www.wisegeek.com/what-is-the-paradox-of-thrift.htm

Further more to : the lower the interest rate the more one can pay off their loan..... The lower the interest rate the less someone gets from a return of a term deposit, so they don't spend it anymore. It's a transfer directly from the loss of ones term deposit to the loan holder at the economies expense. (+1 to the young?)

Your point is ageed to by many, property isn't likely to take off anytime soon!


----------



## sydboy007 (28 January 2013)

MR. said:


> The above example even has a name. "The Paradox-of-Thrift". Not much good for the economy!
> http://www.wisegeek.com/what-is-the-paradox-of-thrift.htm
> 
> Further more to : the lower the interest rate the more one can pay off their loan..... The lower the interest rate the less someone gets from a return of a term deposit, so they don't spend it anymore. It's a transfer directly from the loss of ones term deposit to the loan holder at the economies expense. (+1 to the young?)
> ...




Yup, the Europeans are facing the paradox of thrift wall, and if unemployment goes up much in Australia we'll be facing it here too with all levels of Govt trying to save along with the private sector.  Where will demand come from?

Still the news papers are filled with reports on suburbs cheaper to buy than rent, property spruikers telling all and sundry that it's never been a better time to buy, and too many people focusing on the boom time where Australians went into negative savings territory and somehow think that can be repeated again.

I'd love to know how many boomers have negatively property, and how much they'd have to top up their loans to get to break even point.  I just can't help but think that if house prices in general stagnate or slowly decline, how logn can these people wear the losses before they start to sell up.  maybe sell day will happen when either side of politics decides to force retirees to take the majority of their super as an annuity rather than a lump sum that can be used to pay off private debt.


----------



## DB008 (28 January 2013)

With Europe - trying to compare Apples and Apples ain't gonna work. There are soooooo many variables, it's really hard to compare.


Minimum wage
Cost of living
Tax rates, laws and loopholes, etc etc...
Cost of utilities (when we don't even have nuclear)



*MINIMUM MONTHLY WAGES IN EUROPE*


http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country



> *Germany* - No statutory minimum wage, except for construction workers, electrical workers, janitors, roofers, painters, and letter carriers. Minimum wage is often set by collective bargaining agreements in other sectors of the economy and enforceable by law[13]






> *Greece* - â‚¬586 a month






> *Hungary* - 98,000 Hungarian forint per month




Per Month....FARK...I make more per week....seriously.....


----------



## Mrmagoo (28 January 2013)

You can't just convert the currency as prices will be different to Australia.


----------



## So_Cynical (28 January 2013)

I have recently purchased a small 2 bedroom unit of about 58 sq, still under construction and purchased off the plan on vendor finance, paying it off over 11 months so that the final payment will coincide with hand over, 7 months to go.

Capital city southern suburbs location, 4th floor of a 6 story building, On site security with 3 pools and a gym, water views with a train station and supermarket less than 700 meters away...overall happy to be getting back into the real estate market.

Bargain basement price too.


----------



## DB008 (28 January 2013)

Suburb?


----------



## So_Cynical (28 January 2013)

DB008 said:


> Suburb?




Muntinlupa  

http://maps.google.com.au/maps?q=Mu...ntinlupa+City,+Metro+Manila,+Philippines&z=13

I cant afford to buy property in Australia...so for the equivalent of a 10% deposit on a good unit in Sydney i bought a good unit outright in Manila.


----------



## moXJO (28 January 2013)

So_Cynical said:


> Muntinlupa
> 
> http://maps.google.com.au/maps?q=Mu...ntinlupa+City,+Metro+Manila,+Philippines&z=13
> 
> I cant afford to buy property in Australia...so for the equivalent of a 10% deposit on a good unit in Sydney i bought a good unit outright in Manila.




Do you live in Philippines now So_Cyn?
I like the idea of moving to an Asian country on the cheap.


----------



## CanOz (28 January 2013)

So_Cynical said:


> Muntinlupa
> 
> http://maps.google.com.au/maps?q=Mu...ntinlupa+City,+Metro+Manila,+Philippines&z=13
> 
> I cant afford to buy property in Australia...so for the equivalent of a 10% deposit on a good unit in Sydney i bought a good unit outright in Manila.




SC, well done!

We'll be purchasing a Condo in Thailand this year.

CanOz


----------



## prawn_86 (28 January 2013)

So_Cynical said:


> Muntinlupa




Good work. We have often thought about moving overseas and raising a family there. Definite pro's and con's though especially when kids are involved.

So there are no foreign ownership laws in Philipines?


----------



## So_Cynical (28 January 2013)

moXJO said:


> Do you live in Philippines now So_Cyn?




No just visit twice a year.



moXJO said:


> I like the idea of moving to an Asian country on the cheap.




The Philippines is about as cheap as it gets...they have the cheapest retirement visa program.

http://www.pra.gov.ph/main/retiree/active?page=1

Planning on moving there in 3 or 4 years time, taking early retirement and living off my own money until the super kicks in come 2021...bought the unit because it was just so cheap (46K) and i liked the idea of getting the big real estate purchase out of the way and sort of committing to my plans.

--------------



prawn_86 said:


> So there are no foreign ownership laws in Philipines?




Foreigners cannot own land at all, but can own apartments where the project land is owned by a Filipino legal entity.

--------------



CanOz said:


> SC, well done!
> 
> We'll be purchasing a Condo in Thailand this year.
> 
> CanOz




Nice work, BKK or Pattaya?


----------



## moXJO (28 January 2013)

So_Cynical said:


> No just visit twice a year.
> 
> 
> 
> ...





Well done So cyn, looks like you have the plan down pat. 
I like the idea, might have to lose the wife though


----------



## CanOz (28 January 2013)

So_Cynical said:


> Nice work, BKK or Pattaya?




Phuket...Probably close to Patong. Lots of shopping there to keep the wife busy, but not too close so that its not peaceful.

CanOz


----------



## tech/a (28 January 2013)

> How many dd you pick




3 One is still on the net live trading 2002 to 2008

One the crash I picked but didn't take full advantage of.
The other 2 ---- well you only need one.

To topic.
If you can positively gear it then do it.
If it's putting you into debt---don't.

This is a time to reduce debt not increase it.


----------



## Julia (28 January 2013)

sydboy007 said:


> While interest rates were higher, the price of property was much lower, and has been shown previously, the level of income devoted to mortgage repayments now are much higher than when you got to buy.



The price of property was then relatively proportionate to income levels.
Perhaps consider when you state that "the level of income devoted to mortgage repayments are (sic) now much higher than you got to buy", what women earned was massively less than the income of men.  Even today, after so much progress has been made in this regard, there is still not equality of income for women for similar work.

And just a couple of questions for those of you who complain so bitterly about how much harder it is for you:

1.  Are you and your partner both prepared to work two jobs throughout the week, and then another throughout the weekend, in order to save for a substantial deposit on the first home, and then to pay off the mortgage more quickly?  And continue doing this for years?

2.  Are you both prepared to do without new clothes (barring footwear and underwear), all travel and holidays, all entertainment, meals out etc, until you reach your goal?  

3.  When you do finally get that house, are you prepared to have second hand furniture and appliances while you continue to save to pay out the mortgage?

4.  Will you postpone having children in favour of continuing the above measures?

The above are just some of the choices we made.


----------



## MR. (28 January 2013)

Julia said:


> The price of property was then relatively proportionate to income levels.




It might be just me, but I don't believe that for a second!


----------



## orr (28 January 2013)

tech/a said:


> Your limiting your observation to the topic at hand.
> 
> Widen your view and youll note.
> 
> ...




I'll certainly not dispute the chances at opportunity, Edisons quip in this regard '_ opportunities are missed by most people because they're dressed in overalls and look like work'_is one I hold dear. But it matters not one jot  if only 1%(anecdotal?)  are too attain though whatever means the goal that we refer to here. That to me and other _radical socialists_ like Mark Carnegie(inheritance tax applied to the top 15%) see as being a structural inequity in need of redress.

Thoreau's broader sentiments in context, for anyone or everyone. You'll make the connection or you won't.
http://thoreau.eserver.org/walden1a.html


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## sptrawler (28 January 2013)

CanOz said:


> Phuket...Probably close to Patong. Lots of shopping there to keep the wife busy, but not too close so that its not peaceful.
> 
> CanOz




Phuket, is the dearest place in Thailand, check out Pataya.


----------



## sptrawler (28 January 2013)

sydboy007 said:


> While interest rates were higher, the price of property was much lower, and has been shown previously, the level of income devoted to mortgage repayments now are much higher than when you got to buy.
> 
> People need to stop using the past to justify investment in housing NOW.
> 
> ...




Interest rates were high in the 80's but people were conservative, "don't borrow more than rent payments if your unemployed" was the mantra of the day.
Due to tax breaks on housing everyone sees it as a license to print money, the government doesn't want a collapse in the building industry, the banks can't afford a collapse.
So the elastic band gets stretched further, sooner or later it breaks or someone has to release the tension.


----------



## Bill M (29 January 2013)

Julia said:


> And just a couple of questions for those of you who complain so bitterly about how much harder it is for you:
> 
> 1.  Are you and your partner both prepared to work two jobs throughout the week, and then another throughout the weekend, in order to save for a substantial deposit on the first home, and then to pay off the mortgage more quickly?  And continue doing this for years?
> 
> ...




I am glad you mentioned that Julia, we did the same and I can add a few too.

My wife worked full on 9 hour days then went to TAEF after work, got home at 8 PM, had dinner and a shower and off to bed early so she could wake up next day and do it all over again.

I was working shiftwork and on the changeover from day shift to night shift I spen the daytime working a second job.

Doing all the O/T i could get in order to pay off the mortgage ASAP rather than going to night clubs on a Friday night and buying $15 cocktails.

Living in a 1 bedroom unit many years before we could upgrade.

Scrounging around garage sales on a Saturday mornings to buy all those bits and pieces we couldn't afford new for the house.

I keep telling everyone, getting ahead means spending more time working hard and saving money and investing well. Nothing is free, hoping and wishing will not improve your financial situation.


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## Mrmagoo (29 January 2013)

Julia said:


> Even today, after so much progress has been made in this regard, there is still not equality of income for women for similar work.




Thnx. I'll remind my boss to pay me more as I should be getting paid more than the women I work with. Awesome. I'm getting a raise !


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## Mrmagoo (29 January 2013)

Bill M said:


> I am glad you mentioned that Julia, we did the same and I can add a few too.
> 
> My wife worked full on 9 hour days then went to TAEF after work, got home at 8 PM, had dinner and a shower and off to bed early so she could wake up next day and do it all over again.
> 
> ...




Kay. All my folks had to do was work at Coles and somehow were able to afford to buy a house.

I'll let the bank know their mortgage payment calculators are in error as I can't see how to afford a property on a Coles salary !


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## CanOz (29 January 2013)

sptrawler said:


> Phuket, is the dearest place in Thailand, check out Pataya.




Ooooh, yuk...old men and young Thais, Russians and filthy beaches...

Actually never been there, just what I've heard from the local expats...been to Phuket may times and there are some nice deals around rawai...

Cheers,


CanOz


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## CanOz (29 January 2013)

Mrmagoo said:


> Kay. All my folks had to do was work at Coles and somehow were able to afford to buy a house.
> 
> I'll let the bank know their mortgage payment calculators are in error as I can't see how to afford a property on a Coles salary !




I can understand your POV magoo. I see it here in china easily. Young people haven't a hope of buying a property. All the wealthy and upper middle class are hoarding apartments...empty ones. There is simply not enough assets in which to park thier cash, so everyone else suffers. We were lucky, my wife's father was a builder and he was able to buy a place for us to live for 300,000 rmb....years ago, as they do for thier kids.

Good luck mate...

CanOz


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## Bill M (29 January 2013)

Mrmagoo said:


> Kay. All my folks had to do was work at Coles and somehow were able to afford to buy a house.
> 
> I'll let the bank know their mortgage payment calculators are in error as *I can't see how to afford a property on a Coles salary !*




The Coles salary for a Service Assistant (checkout operator or shelf stacker) is currently $19.70 P/H not including Sundays which is $29.55 P/H. With 17.5% annual leave loading, a bit of O/T and some public holidays it can easily reach $42,000 P/A for a full time employee. That is roughly about $800 P/W gross.

Now even in an expensive area like the Northern Beaches of Sydney you can still buy a 1 br unit for 300K. Here is one just 5 minutes walk from the beach. http://www.realestate.com.au/property-unit-nsw-dee+why-112319279

Now how hard would it really be to save 29K for a deposit and borrow $260,000 and pay that off? According to UBanks calculator it would cost $1,455 P/M to pay off this loan at their current rate of 5.37%. $1,455 works out at $363 P/W. I can tell you now I would definitely be able to pay that off on my own even with a Coles salary. With a partner working as well it would be easier. Start small, work hard, be a bit frugal, save money, invest well and it will eventually all fall into place. If I was doing it all over again I would go this route which is the same route I took many years ago.


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## Miss Hale (29 January 2013)

Mrmagoo said:


> Kay. All my folks had to do was work at Coles and somehow were able to afford to buy a house.
> 
> I'll let the bank know their mortgage payment calculators are in error as I can't see how to afford a property on a Coles salary !




I know what you mean.  The baby boomers in my family were basically the same.  One of them bought a 3 bedroom house in the eastern suburbs of Melbourne and made the mortgage payments each month with money left over.   

Maybe some people had to struggle but that wasn't the norm and I don't think when we talk about housing affordability we should have as the benchmark two people working two jobs each and living on the smell of an oily rag in order to make the mortgage repayments.  Nor should we encourage people to take out motgages that are more than 5 times their annual income.


----------



## Miss Hale (29 January 2013)

Bill M said:


> The Coles salary for a Service Assistant (checkout operator or shelf stacker) is currently $19.70 P/H not including Sundays which is $29.55 P/H. With 17.5% annual leave loading, a bit of O/T and some public holidays it can easily reach $42,000 P/A for a full time employee. That is roughly about $800 P/W gross.
> 
> Now even in an expensive area like the Northern Beaches of Sydney you can still buy a 1 br unit for 300K. Here is one just 5 minutes walk from the beach. http://www.realestate.com.au/property-unit-nsw-dee+why-112319279
> 
> Now how hard would it really be to save 29K for a deposit and borrow $260,000 and pay that off? According to UBanks calculator it would cost $1,455 P/M to pay off this loan at their current rate of 5.37%. $1,455 works out at $363 P/W. I can tell you now I would definitely be able to pay that off on my own even with a Coles salary. With a partner working as well it would be easier. Start small, work hard, be a bit frugal, save money, invest well and it will eventually all fall into place. If I was doing it all over again I would go this route which is the same route I took many years ago.




That 1 bedroom unit is more than 7 times that person's annual salary.  Housing affordability is when you can buy a house for less than 5 times your annual salary (ideally about 3 times your annual salary). 

No one is saying it can't be done but some of us are arguing that housing was more affordable for the baby boomers and - generally speaking- they had it easier.


----------



## againsthegrain (29 January 2013)

As usual apples and not being compared with apples.

It is a fact back in the 90s it was possible to buy a house with land and pay it off in 10years working hard.

It is not possible to buy a house with land now and pay it off in 10years working now.

You can buy a shoebox 1 bedroom apt with no land, body corporate and no chance of future growth. Pay it off in 15 years working like a dog.

Times have changed, populations have increased, greed, inflation, tax all up also. It will never be the same situation NOW compared to when the baby boomers were around. They like to tell stories of how HARD they did it. Not saying it was all handed on a plate for them, but its easy to sit back and say rather then do.


----------



## shag (29 January 2013)

Macquack said:


> Mrmagoo, you make some very good points.
> 
> Having said that, I disagree with your assessment of the perpetrators.
> 
> ...




i agree too. its become a real scurge on society. pure greed. unlike shares, you are just pushing a ponzi scheme and not growing wealth.
a mate in 90, just post eng school, was onto his 3rd dorkland property when we visited his region. they identified through dwelling there, that it was a sure thing ie the nations econ. capital, a grt harbour and geographic settup, with the vital very limited supply of land.
in hindisight it was obvious where he was even tho we all purchased just post uni as hard as we could in our regions.
the several booms since then would mean a single of their properties would outstrip anything he could earn over a lifetime if he was on a standard prof. engineering salary, let alone the whole array of dwellings they must own by now.
look at the blue chip saga if you want to see the worst of overt property greed and bubbles. note the bankrupt is practising and living the hi life here now to escape the bankruptcy laws and aggrieved investors.

sydneys a similar market, so i dont see it breaking. look at kennas bondi pic...on a bad day....too. theres endless asian monies to soak up the joe bloggs whos gone from an affordable job decades ago, to a present value of several million. just look at the large swiss grand development and its virtual sellout within hours. a quality product for good dosh.

i know someone who has three good properties for various reasons, ones a huge time and dosh chewer, the other-a rental, barely breaks even given the overt property management costs. over the ditch has less restrictions than here, ie taxes, thus drives more greed. try 3k for a blocked drain, hundreds for a simple toilet cistern job....
grow, not clip the ticket.


----------



## sydboy007 (29 January 2013)

Julia said:


> The price of property was then relatively proportionate to income levels.
> Perhaps consider when you state that "the level of income devoted to mortgage repayments are (sic) now much higher than you got to buy", what women earned was massively less than the income of men.  Even today, after so much progress has been made in this regard, there is still not equality of income for women for similar work.
> 
> And just a couple of questions for those of you who complain so bitterly about how much harder it is for you:
> ...




Needing to make those kinds of choices, sorta shows how out of whack house prices have become.  Makes me remember in Sicko when George Bush is talking to the lady who has to work 3 jobs just to make ends meet.  What you describe is not living, more along the lines of existing.

We seem to forget the economy is meant to serve us, not we to serve it.

But in some ways you've made my point.  I'd argue with today's property market people would be better off earning a bit less, have the time to enjoy each others company, spend time with the kids, and do their long term saving in an alternative way to the Aussie tradition of paying off a mortgage.

I look at a couple I know.  Husband is an accountant, wife runs a consultancy business.  They used to live in a lovely penthouse in the city, but when the kids came along they decided to rent it out and they bought a house not far away and renovated it.  So they have a mortgage debt around the $2M mark.  They're not struggling by any means, but on a recent visit I was having a chat with the oldest boy of 5 and he sorta let slip that he misses the time he used to get with his parents, but now they're working so much.  Economically the kids will have it all, including a good private school education, but I think having the time with parents is probably just as valuable, probably more so.  Good parents will give you the moral compass to navigate life.

So kudos to you for going through what you did to get where you are, but I don't think we as a society should aspire to requiring everyone to do the same to have a decent life.


----------



## sydboy007 (29 January 2013)

sptrawler said:


> Interest rates were high in the 80's but people were conservative, "don't borrow more than rent payments if your unemployed" was the mantra of the day.
> Due to tax breaks on housing everyone sees it as a license to print money, the government doesn't want a collapse in the building industry, the banks can't afford a collapse.
> So the elastic band gets stretched further, sooner or later it breaks or someone has to release the tension.




Don't say it's so.  Are you starting to agree with my argument that the halving of the capital gains tax has something to do with this


----------



## Julia (29 January 2013)

MR. said:


> It might be just me, but I don't believe that for a second!



Your choice.  Immaterial to me.  Were you in NZ in the 70's and 80's?



againsthegrain said:


> As usual apples and not being compared with apples.
> 
> It is a fact back in the 90s it was possible to buy a house with land and pay it off in 10years working hard.
> 
> It is not possible to buy a house with land now and pay it off in 10years working now.



That's a wide statement.  Why not start with something less than a house with land?  As Bill suggested, make a start on home ownership, if that's what you want, with a small apartment in a suburb you aspire to move on from?  He has given you an example of the figures.
All the new houses I see these days have at least four bedrooms, a media room, two living areas, two bathrooms or more, double garage, maybe a pool.  You actually don't need all that at the start with its attendant mortgage commitment.



> Times have changed, populations have increased, greed, inflation, tax all up also.



Definitely agree about the greed in particular.  You don't mention that wages are also up, of course.


> It will never be the same situation NOW compared to when the baby boomers were around. They like to tell stories of how HARD they did it. Not saying it was all handed on a plate for them, but its easy to sit back and say rather then do.



Um, "say rather than do"????  We did it.




sydboy007 said:


> Needing to make those kinds of choices,



We all make choices all the time.  It was just that - a choice.  The aim was to have a fully paid off house asap.
Later it was to be able to retire well before retirement age, with financial independence.  Having done that, I have no regrets whatsoever.  It was absolutely worth it to have the peace of mind now.
Given that it's going to become increasingly difficult for governments to fund an age pension at anything like a comfortable level, I wouldn't like to be dependent on it, especially when the age demographic factors mean good healthcare is probably also going to have to be largely self funded also.



> What you describe is not living, more along the lines of existing.



As I said, it was a choice.  We had a goal, and then later I had my own goal, and that mattered more than exotic holidays and designer clothes.  If others make different choices, then that's fine and entirely their business, but please don't complain that it's impossible to get into basic home ownership.  It's all a matter of what your priorities are.  I think attitudes were different a generation ago.  There was a general acceptance that you sacrificed some of the fun stuff for a longer term goal.  There was probably also more DIY where possible, eg
we laid our own driveway, built the garage with family help etc.



> We seem to forget the economy is meant to serve us, not we to serve it.



Certainly, but the individual can't do much to control the overall economy, therefore has to make decisions within the reality of what is.



> So kudos to you for going through what you did to get where you are, but I don't think we as a society should aspire to requiring everyone to do the same to have a decent life.



Of course not, and you make good points about family life.  We had no children.


----------



## DocK (29 January 2013)

Miss Hale said:


> That 1 bedroom unit is more than 7 times that person's annual salary.  Housing affordability is when you can buy a house for less than 5 times your annual salary (ideally about 3 times your annual salary).
> 
> No one is saying it can't be done but some of us are arguing that housing was more affordable for the baby boomers and - generally speaking- they had it easier.




I do wonder how my kids are going to fare with the home ownership dilemma - although several years off.

I'm not going to provide links, stats etc to substantiate, so take it or leave it, but from my own experience:

When the spouse and I, and most of our similarly-aged friends, bought our first properties back in the late '80s to early 90's - our purchase prices were approx 1.5 to twice our combined annual gross incomes.  My first home cost $87,000 and we were earning about $65,000 gross combined at the time. The average wage then was $24,200 according to the ATO (google it yourself if you want).  It was a modest home, small house on a small block in an average suburb of the Gold Coast. Interest rates were 17% at the time - it was during the "recession we had to have".  That same house would now sell for approx $420,000, (I checked realestate.com.au) so to be comparable in terms of affordability the average wage would need to be $120,000 pa.  According to ATO it's more like $70,000 - $80,000, so if you assume $150K combined that makes the same house a factor of 2.8 x comb ave gross income, rather than the 1.74 x comb gross ave income it was back then.  This is relevant in my area - I assume the difference is greater in Syd & Melb etc.  

In summary, I do think affordability was easier for my generation, and the one before it, if you use the ave gross wage of the time as your guide.  

Whilst acknowledging that home ownership is entirely possible if you wish to make the sort of choices a couple of posters have outlined - I doubt that many would want to exist that way, and it's certainly not a way of life I'd like to see my kids live.  I've seen too many friends and relatives die before they get the chance to enjoy the fruits of their labour to advocate half living your life in the present.  Not many people lie on their deathbed and wish they'd saved more money or worked longer hours, but quite a few regret the lack of time spent with loved ones, or the experiences not enjoyed and places never visited.  

I think the number of children a family has makes a huge difference to its ability to afford housing also.  It's much easier for a DINK couple to buy a home, than for one with a few children, especially if private schooling is chosen.  Again, it's a choice - but many people would put having their children waaay in front of owning their home.  I guess it's just a matter of priorities. It's not just a case of what is possible, but what is desirable.  If owning means a substantial decline in lifestyle, more and more people will choose to rent instead.  At the end of the day there's a limit to how much young people will be prepared to pay for a roof over their heads.


----------



## Julia (29 January 2013)

DocK said:


> Whilst acknowledging that home ownership is entirely possible if you wish to make the sort of choices a couple of posters have outlined - I doubt that many would want to exist that way,



Let's not assume that such rigorous saving went on for half a lifetime, as some of you seem to be doing.
Probably about ten years, amongst which time was the taking of risk and opportunity in pretty equal measure.
viz references often from Tech/A about seeing where the opportunity exists and making the most of it.

So far I've had plenty of years to enjoy the fruits of my labour and anticipate many more to come.


> Not many people lie on their deathbed and wish they'd saved more money or worked longer hours, but quite a few regret the lack of time spent with loved ones, or the experiences not enjoyed and places never visited.



Or some people choose to do this sort of thing, if that's what appeals to them, at a different stage of their life.

I don't believe either Bill or I are advocating anyone else should necessarily emulate the choices we made.
My earlier comments were simply as a result of being a bit tired of constantly being told how easy we had it in every respect.



> I think the number of children a family has makes a huge difference to its ability to afford housing also.  It's much easier for a DINK couple to buy a home, than for one with a few children, especially if private schooling is chosen.  Again, it's a choice - but many people would put having their children waaay in front of owning their home.



Perhaps consider that not everyone wants to have children.  Not necessarily a choice between having a home or children, just no desire to procreate.


----------



## DocK (29 January 2013)

DocK said:


> (snip)
> 
> Whilst acknowledging that home ownership is entirely possible if you wish to make the sort of choices a couple of posters have outlined - I doubt that many would want to exist that way, and it's certainly not a way of life I'd like to see my kids live.  I've seen too many friends and relatives die before they get the chance to enjoy the fruits of their labour to advocate half living your life in the present.  Not many people lie on their deathbed and wish they'd saved more money or worked longer hours, but quite a few regret the lack of time spent with loved ones, or the experiences not enjoyed and places never visited.
> 
> I think the number of children a family has makes a huge difference to its ability to afford housing also.  It's much easier for a DINK couple to buy a home, than for one with a few children, especially if private schooling is chosen.  *Again, it's a choice *- but many people would put having their children waaay in front of owning their home.  I guess it's just a matter of priorities. It's not just a case of what is possible, but what is desirable.  If owning means a substantial decline in lifestyle, more and more people will choose to rent instead.  At the end of the day there's a limit to how much young people will be prepared to pay for a roof over their heads.






Julia said:


> Let's not assume that such rigorous saving went on for half a lifetime, as some of you seem to be doing.
> Probably about ten years, amongst which time was the taking of risk and opportunity in pretty equal measure.
> viz references often from Tech/A about seeing where the opportunity exists and making the most of it.
> 
> So far I've had plenty of years to enjoy the fruits of my labour and anticipate many more to come.



Fair enough, but I doubt that the majority of the younger population want to work 2 jobs and do without for a decade in order to get into their own home, if they can rent something comparable and enjoy a nice standard of life.   My comments were in relation to the affordability of housing for the next crop of first home owners - not a judgement on what you and Bill have chosen to do in the past.  Clearly it has worked for you, and you're happy with the decisions you made - but that's kinda irrelevant to the young ones who are now weighing up whether such sacrifice is worth it for them.  My post was directed at the general topic, and not towards you or your choices in particular, but more as an example of what _may_ be required to get into one's own home and whether it's worth it - for others.



Julia said:


> Or some people choose to do this sort of thing, if that's what appeals to them, at a different stage of their life.
> 
> I don't believe either Bill or I are advocating anyone else should necessarily emulate the choices we made.
> My earlier comments were simply as a result of being a bit tired of constantly being told how easy we had it in every respect.




Again, fair enough.  I know it's annoying to be told "you had it sooooo easy compared to my generation" - and I daresay every generation has said that to their elders at one point.  I remember bitterly complaining to my parents that they had it easier than me, and now my kids complain that I had things easier than them, and so it shall no doubt repeat endlessly.  I do think I had some things (like home affordability) easier than my children will have, but on the flip-side they have other aspects of life much easier than did I.  One can only hope that those young upstarts that like to blame the baby boomers for everything are one day facing the same attacks from their grandchildren's generation



Julia said:


> Perhaps consider that not everyone wants to have children.  Not necessarily a choice between having a home or children, just no desire to procreate.




See the part of my post I've bolded - I certainly acknowledged that it's a choice that people make.  Parenthood is not for everyone, and that's fine.  No, it doesn't need to be a choice of one or the other, but having one (children)  often makes the other (home ownership) less affordable.  It's just another factor in the affordability debate - not every family will be able to direct 30 - 50% of their income towards a mortgage.  There's a vast difference in net disposable income for a childless professional couple earning perhaps $200 - $250K combined, and a family of five with a combined income of $80 - $120K.  The future of Australian property prices might be impacted by which demographic the majority of future home buyers fits into.


----------



## KurwaJegoMac (29 January 2013)

I'm in my late 20s and can relate to a lot of what Julia and Bill have been saying. You need to make some sacrifices but the funny thing is, it's really not that hard.

On a single income (with no support from government, friends or family) I have my own PPOR and an IP. All paid for by my own savings and investments (that i made myself with my own money).

If I can do it - anyone can do it. No excuses. All it takes is some discipline and some small sacrifices.

What I have been doing:

- 2nd hand furniture for my home. Not the most 'modern' style but looks great
- No alcohol at bars and clubs except on rare occasions (buy from the bottle-o before hand instead)
- No daily coffees
- Only occassionaly dining out (once a week usually)
- Kept the same phone for 3-4 years and bought on contract to pay over time
- Drove the same, beat up old car for 8 years that cost me $3500
- No personal loans or credit card debt (except where the credit card is paid off by the end of the month)
- No designer clothing
- Travelled; been overseas every year for the last 5 years. Ski trips for a week every year for 7 years. At least 2-3 holidays a year interstate

What my friends have been doing:

- Expensive cars
- Travelling extensively
- Spending a lot at bars and clubs on the weekends
- Coffees and store bought lunches daily (you're paying $4 for some beans and hot water... )
- Lots of designer clothing ($450 jeans... really? LOL)
- Eating out a few days a week

What I have now:

- A positive cashflow IP
- A PPOR with mortgage repayments at 30% of my weekly earnings (thanks in part to the IP)
- A nice mercedes (2nd hand of course)

What my friends have now:

- Personal/credit card debt
- Downsized cars
- No assets

The best thing about all this is that I don't feel like I've missed out on a thing. I've never not been able to go out with my friends on trips. I've gone to all the events they've held - never had any issues. 

I got teased often because I tracked every dollar I spent, refused to buy overpriced alcohol at bars/clubs/restaurants and had monthly budgets with $$ set aside for everything (including recreation/fun/money to blow).

Now it's all second nature and takes almost no effort to maintain. I have assets and savings that are working hard for me and I still get to have fun.

You know what's the best thing about all of this? The fact that over the past year I've helped influence 4 of my friends. They're working hard to pay down their debt and sort out their finances. Two have purchased properties of their own and are managing just fine. All four are happier with their situation then they were before and that's awesome.

So I challenge you youngens like me who say it can't be done. Track your spending for 3 months - you'll be amazed at how much money you blow on trivial things ($4.50 for a glass of coke at a restaurant?) and how much money you can save with some small tweaks (you won't even feel the changes after a couple of weeks). Then with regular savings, some investing and compounding growth just watch it take off. 

You have time on your side - listen to the 50/60yr olds and learn from them, rather than whinging that life is too hard because I tell you what, life is damn easy in Australia. Travel a bit and you'll see that we have it amazing here (of course we're not perfect in all areas).

You can do it!


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## CanOz (29 January 2013)

Well done, great story KJM. I had to marry a thrifty woman to curb my spending...

Hows the prop gig going?

CanOz


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## KurwaJegoMac (29 January 2013)

CanOz said:


> Well done, great story KJM. I had to marry a thrifty woman to curb my spending...
> 
> Hows the prop gig going?
> 
> CanOz




Haha so long as you still get to have a bit of fun 

I got through to the trial and passed that ok - i was asked to stay on another month but i declined. HFT isn't for me - I just couldn't get into it as much as my regular trading. Then again, i was trading for 6 hours after working an 8 hour day so that may have been a factor.


----------



## CanOz (29 January 2013)

KurwaJegoMac said:


> Haha so long as you still get to have a bit of fun
> 
> I got through to the trial and passed that ok - i was asked to stay on another month but i declined. HFT isn't for me - I just couldn't get into it as much as my regular trading. Then again, i was trading for 6 hours after working an 8 hour day so that may have been a factor.




Ah well at least you got the experience and you know what its like!


----------



## DB008 (29 January 2013)

To 
prawn_86
CanOz
So_Cynical - well done of the property in the Philippines 

I have also been looking at property in Asia. Mainly in Phuket, Thailand.

1) Ownership  - my biggest concern is how you have to set up a fake board of directors (which you still control) to purchase an apartment. Houses are very difficult to purchase, and are usually done in the wives name.

2) Collecting income - don't trust them. Skimming off the top

3) Change of Government, could equal a change in property laws, not for the better.


----------



## CanOz (29 January 2013)

DB008 said:


> To
> prawn_86
> CanOz
> So_Cynical - well done of the property in the Philippines
> ...




There are many places that are run by expats that have partnerships with the Thais, so try to find one of them. Siam Real Estate was one of the better R.E. Agencies around a couple of years ago...that could have changed. As far as expat ownership is concerned, you are allowed to own up to three condos in a complex as a foreigner in Thailand. There is some geopolitical risk, but the Thais are quite settled into their version of democracy...the King is the caveat though.

CanOz


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## sydboy007 (29 January 2013)

DocK said:


> I do wonder how my kids are going to fare with the home ownership dilemma - although several years off.
> 
> Whilst acknowledging that home ownership is entirely possible if you wish to make the sort of choices a couple of posters have outlined - I doubt that many would want to exist that way, and it's certainly not a way of life I'd like to see my kids live.  I've seen too many friends and relatives die before they get the chance to enjoy the fruits of their labour to advocate half living your life in the present.  Not many people lie on their deathbed and wish they'd saved more money or worked longer hours, but quite a few regret the lack of time spent with loved ones, or the experiences not enjoyed and places never visited.  .




+1

I remember being questioned about my holiday spending years ago.  I'd say I spend 7-10% of my after tax income on travel each year.  A lot of my Asian friends thought I was being silly and should be solely focused on paying down debt.

For me the holidays were the sanity release of stressful work and escaping the rigours of shift work.  I also believed that I didn't want to be hit by a bus and not have walked around Angkor Watt or stood atop the Empire State building, just to name a few bucket list items.

The old saying - dying rich raises the loudest laughter in hell.

1 guy I worked with about 8 years ago used to live in St Leonards Sydney.  Would literally take him 20 mins to drive to work at Burwood.  His GF (now wife) had been hassling him they should buy a house.  They had to move to the central costs to afford it.  His train trip took an hour, then he had to tack on a 15 minute walk at the work side and a 30 min at the house side, or drive to the station.  The major issue was the train was an hourly service and he had to hope it was quiet at the end of his shift so he could leave work 20 mins early or he had to wait till 8 to get his train home. I'd warned him about how big an effect that would have on someone doing 12 hour shifts, but he didn't believe me.  After 12 months he was well and truly over it.  They sold up and moved to QLD to be able to buy cheaper property and have a much shorter commute time.


----------



## sydboy007 (29 January 2013)

CanOz said:


> There are many places that are run by expats that have partnerships with the Thais, so try to find one of them. Siam Real Estate was one of the better R.E. Agencies around a couple of years ago...that could have changed. As far as expat ownership is concerned, you are allowed to own up to three condos in a complex as a foreigner in Thailand. There is some geopolitical risk, but the Thais are quite settled into their version of democracy...the King is the caveat though.
> 
> CanOz




Location will be a factor, but some Thai friends of mine were complaining that the Condos they owned in BKK were struggling to give them a return.  I'd say Pattaya is as bad.

The prob is the influx of large amounts of new Condos, so people can always get the latest and greatest which depresses the price of the older ones, and lowers the rent you can expect to receive.

I'm hoping to team up with a friend in Thailand to build some student accommodation near the new University being built in his home town.  His dad has quite a few contacts in the area and local Govt, so that makes a lot of the issues of investing in Asia easier.  always helps to know who's into Chivas or Remey Martin 

If / When I make the move to Asia I think I'll just rent.  Looking at the rental market in most cities, it seems the yields there are as bad as a lot of Australia, so I'd prefer to have my money in assets producing 7% returns and paying rent at 4% and avoiding the holding costs of property.  I also like the idea of being able to move around as time goes by and sorta be a nomadic back packer with a base of operations.  Is easier to do this when you're single.


----------



## CanOz (29 January 2013)

sydboy007 said:


> Location will be a factor, but some Thai friends of mine were complaining that the Condos they owned in BKK were struggling to give them a return.  I'd say Pattaya is as bad.
> 
> The prob is the influx of large amounts of new Condos, so people can always get the latest and greatest which depresses the price of the older ones, and lowers the rent you can expect to receive.
> 
> ...




Yeah we're not really looking at this strictly from an investment POV. We really want a place to stay when we are there, but a little income to pay the fees while we are away. If we get some capital growth in the meantime then that would be great too.

CanOz


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## Mr J (29 January 2013)

KurwaJegoMac said:


> I'm in my late 20s and can relate to a lot of what Julia and Bill have been saying. You need to make some sacrifices but the funny thing is, it's really not that hard.
> 
> On a single income (with no support from government, friends or family) I have my own PPOR and an IP. All paid for by my own savings and investments (that i made myself with my own money).
> 
> If I can do it - anyone can do it. No excuses. All it takes is some discipline and some small sacrifices.




A person on an average income paying off a below average mortgage by the time they are 30 has done damn well. A $200k mortgage on a $50k salary is pretty tight.



> I got through to the trial and passed that ok - i was asked to stay on another month but i declined




Stay for another month of trial or for in-house? Just curious as I start soon.


----------



## KurwaJegoMac (29 January 2013)

Mr J said:


> A person on an average income paying off a below average mortgage by the time they are 30 has done damn well. A $200k mortgage on a $50k salary is pretty tight.
> 
> 
> 
> Stay for another month of trial or for in-house? Just curious as I start soon.




Agree - thats very tight, probably not worth risking. I would just save for a deposit and rent with friends; houses prices are gonna be flat/decreasing for a while so no need to rush. I've only got a PPOR coz I get older places, renovate and flip it for another reno job. I wouldnt buy otherwise - better to rent in a suburb you want to live in and buy IPs. Besides at such a young age you still wont be settled yet and career/family/etc can drastically change where you want to live so think hard before commiting to a purchase. 

Regarding propex - i got asked to stay on line for another month. I had a few good days and lots of flat days so they wanted to see my performance over a longer timeframe. I definitely recommend giving it a go - it was a great experience and as Canoz said it'll help you decide if it's right for you. Good luck!


----------



## Julia (29 January 2013)

DocK said:


> Fair enough, but I doubt that the majority of the younger population want to work 2 jobs and do without for a decade in order to get into their own home, if they can rent something comparable and enjoy a nice standard of life.



Fine.  I have already made clear that I wasn't suggesting anyone should regard what Bill or I did as any sort of recommendation.  Some people feel very strongly about home ownership, not just from a financial point of view but more for the knowledge that it's yours to do with it what you wish.
If some people want to rent, I respect that choice.  They will of course be subject always to the dictates of a landlord, dictates as to whether or not they may have a pet, whether they can change the paint colour etc etc.
I've rented while getting a deposit together and didn't enjoy the restrictions.
In the whole scheme of one's entire life, I don't regard about ten years of stringent saving too much, when the ultimate result has been financial independence at well before retirement age.



> Again, fair enough.  I know it's annoying to be told "you had it sooooo easy compared to my generation" - and I daresay every generation has said that to their elders at one point.  I remember bitterly complaining to my parents that they had it easier than me, and now my kids complain that I had things easier than them, and so it shall no doubt repeat endlessly.



I understand what you're saying, but I recall clearly my father's accounts of living through the Great Depression and how incredibly difficult it was.  No social welfare support in those days.  What a far cry from the middle class welfare so generously doled out as vote buying these days.

Then that generation were extremely grateful for the opportunities that came post-war, when most western societies enjoyed a level of affluence for those prepared to work hard such as they had never believed possible.
My parents - both previously professionally qualified and employed - gave up their careers to work very long hours in a convenience store, as a stepping stone to making more money.  They did very well, and I think were surprised at how much they actually enjoyed it, despite the awful hours.  It was a time when hard work and initiative was well rewarded.  

I guess we are all much influenced by what our parents and even grandparents have modelled to us as we grew up.  I absorbed the philosophy that if you wanted to do well, it was absolutely up to you, don't expect anything from anyone.  You're responsible for your own decisions and their outcomes.  It's a philosophy that I will always respect.



> I do think I had some things (like home affordability) easier than my children will have, but on the flip-side they have other aspects of life much easier than did I.  One can only hope that those young upstarts that like to blame the baby boomers for everything are one day facing the same attacks from their grandchildren's generation



Almost certainly they will.  It seems to be the pattern now.



KurwaJegoMac said:


> On a single income (with no support from government, friends or family) I have my own PPOR and an IP. All paid for by my own savings and investments (that i made myself with my own money).



Congratulations, KJM.  Really well done.  Good for you.  What a great example to set.


----------



## Tink (29 January 2013)

Agree with your posts Julia, about home ownership and the importance of. 
I was raised the same with making sacrifices if you want something in life, and I am extending the same to the children. Son is looking into property in the next few years.


----------



## So_Cynical (30 January 2013)

Bill M said:


> Now how hard would it really be to save 29K for a deposit and borrow $260,000 and pay that off? According to UBanks calculator it would cost $1,455 P/M to pay off this loan at their current rate of 5.37%. $1,455 works out at $363 P/W. I can tell you now I would definitely be able to pay that off on my own even with a Coles salary.




Lets see

 $17460 PA mortgage
 $2500 PA rates and unit fees
 $1000 PA insurance
 $3500 PA for a car that you don't drive much (just to coles )
$24500 gone just there, more than half your Gross wage of $42,000 P/A for a full time employee...and you haven't paid tax, private health or contributed to super, paid the gas/power, food, clothes the net and phone.

Even with a 10% deposit i doubt the bank would lend you the money.


----------



## Bill M (30 January 2013)

KurwaJegoMac said:


> If I can do it - anyone can do it. No excuses. All it takes is some discipline and some small sacrifices.
> 
> What I have been doing:
> 
> ...




Excellent post KurwaJegoMac and one that all people who want to save a bit of money and buy property should read. I really liked the part about the designer jeans for $450, I bought a pair of jeans at Lowes for $20 on special 5 years ago and they look good and I'm still wearing them now.

The best part about getting the property and mortgage knocked on the head early in life was that eventually I could retire early (not old). Retiring early means that I am young enough to travel and do all the things I want to do in my life while I still can. Short term pain has given me long term happiness, it was the most important thing in my life to get done. I can go away as I do on 4 or 5 Month expeditions and return home to a nice home and there is no better feeling than that. Congrats on everything that you have achieved.

PS: I make the best coffee at home from some of the best beans in Australia. Love doing it and tastes really good and better than any cafe, all for around 40c a cup.


----------



## tech/a (30 January 2013)

5 Years

Bill you really should take them off and give them a wash.

K 
What a tremendous and inspirational
Post.


----------



## Bill M (30 January 2013)

So_Cynical said:


> Lets see
> 
> $17460 PA mortgage
> $2500 PA rates and unit fees
> ...




It's not fair to include your car running costs as you could well do without one or that you would need to pay for that anyway whether you rent or buy. 

I posted that because magoo said it couldn't be done, it can be, the figures are there and as I said, if I had to do it all over again I would do it exactly the same way as I have done before. Paying 50% of your "Coles" salary for accommodation to live somewhere and eventually own it outright is worth it to me. *Maybe to others it is not but to me it is*. It is the end result of living rent and mortgage free that people should be concentrating on.


----------



## qldfrog (30 January 2013)

tech/a said:


> Anyone who cant get more than 6% on their money would be best advised to do that.
> Those who can would be Crazy!!




I very rarely disagree with you tech/a, but 6% tax free and risk free is what a repayment on a home Loan (PPOR) gives you.
This is the most sensible choice for the huge majority of people. Pay your mortgage first


----------



## tech/a (30 January 2013)

qldfrog said:


> I very rarely disagree with you tech/a, but 6% tax free and risk free is what a repayment on a home Loan (PPOR) gives you.
> This is the most sensible choice for the huge majority of people. Pay your mortgage first




I don't see the disagreement.
The huge majority would be those who cannot achieve better than 6% nett of tax
I'm personally decreasing mortgage exposure.
Which was 7 figures now low 6 figures 
My trading is only in the low 6 figures not enough return to 
Negate the mortgage exposure so sell and freehold as much as possible.

No arguement from me.


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## psailagroup (30 January 2013)

I am not sure why so many people believe that home ownership is out of the question, 
My generation (Y) frustrates me the most, All of my friends, cousins “Etc” all complain about how hard life is, so expensive and how I am lucky.

We all have the same opportunities in life, Some people will always make excuses and some people will make something of their life.
I started working when I was 14 at Mc donalds for some cash, I saved up 10K in two years, more money then most adults had at the time.
Any way, when I was 18 I was working two jobs and studying at the same time and bough my first IP at 21, I missed out on holidays, partying and a few other things but now at 28 I almost have my first PPOR paid off. 
I sacrificed 7 years of my life to have 60 years of a good life…..

Properties might “cost more” but the issue is so many people want things now but are not willing to put any effort in.  

Most people are just lazy and they think life should be easy for them, If you want your life to be easy you got to make it easy simple!!


----------



## KurwaJegoMac (30 January 2013)

psailagroup said:


> I am not sure why so many people believe that home ownership is out of the question,
> My generation (Y) frustrates me the most, All of my friends, cousins “Etc” all complain about how hard life is, so expensive and how I am lucky.
> 
> We all have the same opportunities in life, Some people will always make excuses and some people will make something of their life.
> ...




Great post. Well done on your success - keep working hard and don't listen to the nay sayers. You can see yourself what the results are!

I know what you mean though - everyone around me complains too yet they keep racking up debts on their credit cards, they don't bother learning about basic financial skills and they don't bother trying to save any money. Strangely my high-income earning friends are the worst. Despite earning well above the median _family_ wage they don't have a single $ saved up and average debt is about 30-40k. Though they do have nice flashy cars, designer clothes, $5k watches, etc - the worst thing about it all is that they say "i wish i could buy a house" or "i wish i could save like you" then they tell me about their great trip to hawaii where they bought $4000 worth of armani, gucci, etc


----------



## againsthegrain (30 January 2013)

group hug


----------



## psailagroup (30 January 2013)

All good post, my frustrations has produced one positive outcome, I am
In the process of writing and publishing a book / e book on this exact topic, I hope by mid year the book will be finished.
It's a book based on 5 simple topics
1) about how to balance your life and not over
Complicate it 
2) fincial education why it's important 
3) simple budgeting
4) networking with the right people 

Each topic has about 5 parts to
It, can't wait to get this book launched I really want to how
Any one that a bit of hard work will go
Along a way 

Pa I'm
Using. I phone lol


----------



## Julia (30 January 2013)

I've bolded the parts below which, obviously, I especially agree with.







psailagroup said:


> I am not sure why so many people believe that home ownership is out of the question,
> My generation (Y) frustrates me the most, All of my friends, cousins “Etc” all complain about how hard life is, so expensive and how I am lucky.
> 
> *We all have the same opportunities in life, Some people will always make excuses and some people will make something of their life.*
> ...






KurwaJegoMac said:


> Great post. Well done on your success - keep working hard and don't listen to the nay sayers. You can see yourself what the results are!
> 
> I know what you mean though - everyone around me complains too yet they keep racking up debts on their credit cards, they don't bother learning about basic financial skills and they don't bother trying to save any money. Strangely my high-income earning friends are the worst. Despite earning well above the median _family_ wage they don't have a single $ saved up and average debt is about 30-40k. Though they do have nice flashy cars, designer clothes, $5k watches, etc - the worst thing about it all is that they say *"i wish i could buy a house" or "i wish i could save like you" then they tell me about their great trip to hawaii where they bought $4000 worth of armani, gucci, etc *




The other phrase is "oh, you're so lucky"!!!  Yeah, it was all about luck:  not.


CanOz said:


> ------------------------------------
> 
> CanOz



Good on you, CanOz.  It's about attitude essentially.  Your wife sounds terrific.



Bill M said:


> Excellent post KurwaJegoMac and one that all people who want to save a bit of money and buy property should read. I really liked the part about the designer jeans for $450, I bought a pair of jeans at Lowes for $20 on special 5 years ago and they look good and I'm still wearing them now.
> 
> The best part about getting the property and mortgage knocked on the head early in life was that eventually I could retire early (not old). Retiring early means that I am young enough to travel and do all the things I want to do in my life while I still can. *Short term pain has given me long term happiness, it was the most important thing in my life to get done. I can go away as I do on 4 or 5 Month expeditions and return home to a nice home and there is no better feeling than that.* Congrats on everything that you have achieved.
> 
> PS: I make the best coffee at home from some of the best beans in Australia. Love doing it and tastes really good and better than any cafe, all for around 40c a cup.



Another good point.  There has been an assumption in this thread by some that, because one doesn't go out for $300 dinners and $7 coffees, there is no pleasure in life.  It's entirely possible to spend time with friends over a meal etc at your own homes where often the food is better than the under-portioned, over-priced stuff on a big white plate that the restaurant serves up with a swirl of some foamy stuff to justify the price.



againsthegrain said:


> group hug



Better a metaphorical group hug than some of the disdain for effort that has been evident on this thread.


----------



## MR. (30 January 2013)

Julia said:


> The price of property was then relatively proportionate to income levels.






DocK said:


> When the spouse and I, and most of our similarly-aged friends, bought our first properties back in the late '80s to early 90's - our purchase prices were approx 1.5 to twice our combined annual gross incomes.  My first home cost $87,000 and we were earning about $65,000 gross combined at the time. The average wage then was $24,200 according to the ATO (google it yourself if you want).  It was a modest home, small house on a small block in an average suburb of the Gold Coast. Interest rates were 17% at the time - it was during the "recession we had to have".  That same house would now sell for approx $420,000, (I checked realestate.com.au) so to be comparable in terms of affordability the average wage would need to be $120,000 pa.  According to ATO it's more like $70,000 - $80,000, so if you assume $150K combined that makes the same house a factor of 2.8 x comb ave gross income, rather than the 1.74 x comb gross ave income it was back then.  This is relevant in my area - I assume the difference is greater in Syd & Melb etc.




Good on ya docK, save's me the effort! She was comparing the house two doors up from Buckingham palace in the 70's to the general aussie property market or something!

It is harder for the young now than when I first bought as well. However, finally, there is a change at hand, and it may have legs yet!


----------



## Julia (30 January 2013)

MR. said:


> Good on ya docK, save's (sic) me the effort! She was comparing the house two doors up from Buckingham palace in the 70's to the general aussie property market or something!




You are assuming that DocK's comparison was equally valid to the NZ market.    I have never made any claims about proportionality in the Australian real estate market, just described my own experience.
Take it or leave it.  I'm pretty much over this petty stuff.


----------



## DocK (30 January 2013)

Julia said:


> There has been an assumption in this thread by some that, because one doesn't go out for $300 dinners and $7 coffees, there is no pleasure in life.




Just a little bit of exaggeration there    There's a vast difference between working 70 hours per week and never going out, buying clothes, taking holidays etc and what you've described above.  I daresay there are quite a lot of people who fall to the frugal side of the middle ground, but don't quite reach the extremes of doing without that you chose.

If we can all calm down and stop describing personal experiences (I'd actually fall into the thrifty camp byself, but thats besides the point imo) - the topic of this thread is "the future of Australian property prices".  What is possible, or advisable, is largely immaterial.  Of course it's possible to get ahead by doing without - people have always done so, and some always will.  The point is what is likely to be the attitude and behaviour of the majority of future first home buyers.  We all know that those on this forum are not necessarily typical of the "average Aussie".  If the present younger generation sees home ownership as too onerous a burden to take on for the benefits it provides, or decides that they're better off renting and investing the saved income in other ways to provide for their retirement (whether early or not) - this will determine at least partially the "future of Australian property prices".  Although owning your own home gives you choices re decorating, renovating etc - renting removes the worries of maintenance & upkeep, falling values due to new roads etc.  Rents may indeed rise if more people choose that option, and house prices may indeed stagnate or fall, until home ownership becomes more attractive.  I'd actually advise my children to purchase an investment property and live at home a little longer in order to build up some equity in the market before buying a PPOR themselves - but this is clearly not an option for everyone.  

Although it's ridiculous to compare the Australian property market and that of Europe, USA etc - there will be more and more of our highly paid professionals leaving this country to live overseas, and less immigrating here, if housing costs are too out of whack with those in other western nations.  

Another factor is that of inheritance.  Once upon a time parents or grandparents would live only 60 - 70 years or less on ave, and would be considerate enough to leave a nice inheritance to ease home ownership for their offspring/grandkids etc.  As the average lifetime lengthens, the turnover rate of wealth within a family stretches, if there is anything left to bequeath at all.  The knowledge that there's probably not going to be a nice lump sum inherited from the oldies to payoff any remaining debt at retirement is also a factor that might discourage some from taking on the larger mortgages required to get into the market.

Let's also not lose sight of the fact that it is possible to be a diligent saver/investor and manage to retire early on one's hard earned nest egg without necessarily owning property.  There seems to be a bit of assumption that if you don't own your home at retirement age you're doomed.  I know I'd certainly prefer the security of knowing my castle is my own, but some are quite happy to have amassed a nice passive income from other sources that can continue to pay their rent instead.

Just some thoughts.


----------



## Julia (30 January 2013)

> There has been an assumption in this thread by some that, because one doesn't go out for $300 dinners and $7 coffees, there is no pleasure in life.





DocK said:


> Just a little bit of exaggeration there    There's a vast difference between working 70 hours per week and never going out, buying clothes, taking holidays etc and what you've described above.  I daresay there are quite a lot of people who fall to the frugal side of the middle ground, but don't quite reach the extremes of doing without that you chose.



Again, assumptions.  I went out for plenty of just such dinners.  On a company credit card which I can remember handing over on many occasions in payment of a bill well in excess of $1000 for four people.

If one is out frequently on a business basis, then the idea of having friends at home was financially to my advantage and absolutely my preference.

No need to infer that anyone who made some sacrifices to achieve a goal necessarily endured a life of misery.

We will all have different aspirations and different ways of achieving these.  I have not criticised anyone else's lifestyle, spending habits or aspirations, and am frankly puzzled at the need of some people to do this.  It's certainly a discouragement toward attempting to contribute to a thread.


----------



## DocK (30 January 2013)

Julia said:


> Again, assumptions.  I went out for plenty of just such dinners.  On a company credit card which I can remember handing over on many occasions in payment of a bill well in excess of $1000 for four people.
> 
> If one is out frequently on a business basis, then the idea of having friends at home was financially to my advantage and absolutely my preference.
> 
> ...




Julia, I think you're taking things just a little too personally.  I, personally, have not implied that you endured a life of misery, nor have I criticised your choices.  I'm saying I doubt that the majority of young people would choose to make them, as a good deal of sacrifice was involved.  I, personally, would not have made the choices you did to the same extreme - but that's my opinion, not a criticism.  I don't really care one way or the other what you chose to do in your youth - it's not my concern.   I was very careful to state that your decisions were your choice and if you didn't regret them, fine - it's entirely your business and irrelevant to the thread.  In short - some posters, including you, have given examples of how young people certainly could afford a home if they're prepared to do without certain things - and I've expressed the view that I don't think it's likely that many would want to do so to some of the levels portrayed.  That is not a judgement, it's an opinion.  

What I am trying to discuss is the general rather than the personal.  I'm attempting to discuss the type of sacrifices necessary in order to afford a home at today's prices, and whether the average person is likely to want to make them.  Yes, I've used the examples given by you and Bill on how you set about attaining home ownership and said that I don't think they would appeal to most - but that is not a criticism of you or your choice, just an observation of the way I see today's population.  I'm actually trying to stick to the topic of the thread, rather than get drawn into an argument on whether what you, Bill, Kurwa.., psailagroup, Canoz, MrMagoo  or any other individual poster has chosen to do is right, wrong, desirable or not - that has no bearing on the subject. 

If we can stick to the topic: 

I think housing is less affordable in Australia now, than it was 30 or 40 years ago - in terms of ave income vs ave house prices.  If average income levels start to rapidly increase for some reason then obviously that would not remain the case.

I think the younger generation, apart from above-average income earners, will increasingly find they're either priced out of the market, or unwilling to make the type of sacrifices necessary to service the large debt they'd need to take on.  In short, I think the % of home ownership will reduce and renting will increase.

I think that the current price of housing in Australia, combined with our cost-of-living, will result in less high-income professionals wanting to make Australia their home, and may indeed see some of our home grown talent move offshore.

I think all of these factors combined give weight to the likelihood of house prices remaining flat.  I don't see how we could expect to see the rapid rises in capital values that were seen over the recent past.

I think it is possible to provide for a comfortable retirement without necessarily owning your own home.  I am not making a statement on whether I think it is advisable, desirable or not, just saying I think it is possible.

I think I'll now leave this thread - it's a little too contentious for me.


----------



## CanOz (30 January 2013)

Everything reverts to mean, eventually...so be it with property! That's my opinion of the future of property prices in Australia.

CanOz


----------



## prawn_86 (30 January 2013)

CanOz said:


> Everything reverts to mean, eventually...so be it with property! That's my opinion of the future of property prices in Australia.
> 
> CanOz




Where is the mean on a long term trend line i wonder?


----------



## MR. (30 January 2013)

DocK said:


> If we can all calm down and stop describing personal experiences




What?  this isn't the personal experience thread? 

(only got 9.76 seconds)

Has always been, people telling others how they did it. How there's no excuse why you can't just go out and buy that home or IP right now. (AND WORK IT OFF) The problem has been for some time "the timing".  I have no doubt many are wishing they never ventured when they did.


----------



## CanOz (30 January 2013)

prawn_86 said:


> Where is the mean on a long term trend line i wonder?




No idea, just trying to get back on topic...


----------



## young-gun (30 January 2013)

Things are always getting harder. Simple math. inflation is quoted at 2-3%. Inflation actually runs probably at 5-6%+ easily. Unless wages increase by more than say 6%, then every generation is going to find it harder than the last. Unless there is a point in time where prices fall instead of rise (deflation, recession i guess?) Then it only gets harder for the financially retarded.

I'm not complaining. Ill get to where I want to be regardless of what house prices were, are, or will be, 300k, 500k, or 1.5 mill I'm not concerned. But to argue that it was just as difficult back in the good ol' day doesn't make sense to me. I;m not interested in the 18% rates story either. Rates are only higher if there is too much money flying around in everyones pocket.

House prices down, or across. Certainly not up. Unless they boost first home owners to 50k. Then up, shortly followed by down.

PS Im enjoying watching this thread.


----------



## young-gun (30 January 2013)

KurwaJegoMac said:


> Great post. Well done on your success - keep working hard and don't listen to the nay sayers. You can see yourself what the results are!
> 
> I know what you mean though - everyone around me complains too yet they keep racking up debts on their credit cards, they don't bother learning about basic financial skills and they don't bother trying to save any money. Strangely my high-income earning friends are the worst. Despite earning well above the median _family_ wage they don't have a single $ saved up and average debt is about 30-40k. Though they do have nice flashy cars, designer clothes, $5k watches, etc - the worst thing about it all is that they say "i wish i could buy a house" or "i wish i could save like you" then they tell me about their great trip to hawaii where they bought $4000 worth of armani, gucci, etc




Is your issue with travelling? or over indulgent and unnecessary spending?

A trip to hawaii is actually quite affordable, and I'm assuming quite nice. Gotta see the world while your young, can't do it(properly) with kids, and a PPOR makes it more difficult. Also twice as expensive with kids.


----------



## Bill M (30 January 2013)

CanOz said:


> No idea, just trying to get back on topic...






young-gun said:


> House prices down, or across. *Certainly not up*.




My opinion is that in 5 years you will be paying 20% more for a home/unit in busy, popular, trendy, handy and want to live suburbs. And by that I mean not in an over supplied area like the Gold Coast where there are thousands of high rise units on the market. Pick your areas/towns and you will do ok, pick a bad suburb and you could well lose. I wouldn't be investing where I am if I thought I would be losing, that's for sure, cheers.


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## Macquack (30 January 2013)

Some of the back slappers on this thread who have done well for themselves should thank all the "free spirits"  who have pissed all their money up against the wall (creating income) and end up perpetual "renters" who provide the market for the achievers to rent their investment properties to.

No need to demonize the underachievers because without them there would be no over-achievers.


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## So_Cynical (30 January 2013)

psailagroup said:


> We all have the same opportunities in life




No we don't, a very common misconception...we are not all born equal into an equal society.


----------



## FlyingFox (30 January 2013)

DocK said:


> ......
> 
> If we can stick to the topic:
> 
> ...




+1 . Also sometimes it is not possible to make the sacrifices that are necessary. If I am working in the city, adding an hours compute just so I can own my own place is not an easy sacrifice to make.

Also the high-income professionals are either getting higher incomes or cheaper housing elsewhere. Actually it might surprise some as to how average some of the professional pay rates are, especially for starting salaries.

The dual income theory is also being brought up a few times. However if you have a family, it is very hard to maintain dual incomes at the levels prior to starting a family. If you need a dual income for 30 years to pay of a mortgage, you be in trouble when you have kids. Some of this is contributing to declining birth rates etc.


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## FlyingFox (30 January 2013)

Bill M said:


> My opinion is that in 5 years you will be paying 20% more for a home/unit in busy, popular, trendy, handy and want to live suburbs. And by that I mean not in an over supplied area like the Gold Coast where there are thousands of high rise units on the market. Pick your areas/towns and you will do ok, pick a bad suburb and you could well lose. I wouldn't be investing where I am if I thought I would be losing, that's for sure, cheers.




I currently rent in SE Melbourne. Some very nice suburbs in the area with attributes you described. The trouble is that any nice house is over $1M and we have seen a few. Now say you have 20% deposit and take out a $800K loan. You will be paying ~$45K in interest alone. That's close to 70% of the average disposable household income. 

Now you might say that it is over ambitious to do so as a first home buyer. My question to you is, why is it so unaffordable to buy a house where you want (and I am not talking about brighton or toorak) with an above average income and a very healthy deposit? Something wrong with the picture?

See DocK comments re: professionals leaving, I'm certainly considering it.


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## prawn_86 (30 January 2013)

FlyingFox said:


> Now you might say that it is over ambitious to do so as a first home buyer. My question to you is, why is it so unaffordable to buy a house where you want (and I am not talking about brighton or toorak) with an above average income and a very healthy deposit? Something wrong with the picture?
> 
> See DocK comments re: professionals leaving, I'm certainly considering it.




Yep i agree with both points. As i have said previously the average wage no longer buys the average house, and if you are in the top 10% of incomes you certainly can't afford the top 10% of houses

I looked for overseas jobs online for the first time today now i have the experience i need under my sleeve


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## Bill M (30 January 2013)

FlyingFox said:


> Now you might say that it is over ambitious to do so as a first home buyer. *My question to you is, why is it so unaffordable to buy a house where you want* (and I am not talking about brighton or toorak) with an above average income and a very healthy deposit? Something wrong with the picture?
> 
> See DocK comments re: professionals leaving, I'm certainly considering it.




You just answered your own question. "Where you want". This is what I have talked about all along. Do you think you are alone in wanting to live there? That's exactly it, there are only so many properties available and many more people that want to live there. This is not unusual really, however I don't know your area but I know mine well.

 A very wise real estate investor once told me, "Bill you are better off buying a 1br unit for 400k in Bondi or Manly than buying a 3br house out in the western suburbs." Why is that I asked? "Everybody wants to live there, money talks and everybody else goes west". Guess where my unit is? I really must stress, pick your suburbs and for everybody that's going overseas because it's too expensive here, don't worry there is 3 more coming in to take your place, just something to consider.


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## KurwaJegoMac (30 January 2013)

young-gun said:


> Is your issue with travelling? or over indulgent and unnecessary spending?
> 
> A trip to hawaii is actually quite affordable, and I'm assuming quite nice. Gotta see the world while your young, can't do it(properly) with kids, and a PPOR makes it more difficult. Also twice as expensive with kids.




I have no issue with travelling - in fact i encourage it. Everyone needs a break and you learn a lot about yourself (and can get some great perspectives too!). I think the more one experiences the wiser one becomes. I myself take an overseas holiday at least once a year to a new country. 

I'm also not against spending on clothes per se; moreso about excessive spending. We all need to buy ourselves something nice once in a while. The example above was a personal experience with a friend who often complained about not having savings to invest. Not hard to see why 

On a side note (not directed at you at all) I find it amusing that for the last 1000 pages there has been nothing but whining and complaining and that was accepted - then a couple of people took the opposing view and shared some personal experiences and were put down and mocked. Are you really that bitter? Why not change your mindset and learn from others rather than deriding their efforts. This thread used to be alive with healthy discussion but now it's filled with the same pessimistic people drowning in negativety. 

There's a reason why only some people "make it" - how about everyone treat everyone with respe t - particularly the young, naive posters deriding those that have been successful before all those experienced people leave and we no longer have the opportunity to learn from them.


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## psailagroup (30 January 2013)

So_Cynical said:


> No we don't, a very common misconception...we are not all born equal into an equal society.




We are not all born but we can sure hunt for it
One child is handed fish by his father (has allot of fish) and one man decides to teach his child how to make a better rod to catchier fish.

I prefer to be taught or self taught and get what I want in life.
In life there will always be a person who is richer, happier , smarter "etc" but there are also people who are going
To have less money, less health "etc" to me the most important thing is what I do with my
Life. 

Oppurtunties are every where and really if the biggest challenge we
Have in oz is buying a home I would rather have that, then live in a place where most people can't put food on the table 

I also believe the definition of wealth will
Change and with the crazy times we are living in one of the most important factors
To grow wealth is buying simply having less expenses and more income comming
Through


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## sydboy007 (31 January 2013)

young-gun said:


> Things are always getting harder. Simple math. inflation is quoted at 2-3%. Inflation actually runs probably at 5-6%+ easily. Unless wages increase by more than say 6%, then every generation is going to find it harder than the last. Unless there is a point in time where prices fall instead of rise (deflation, recession i guess?) Then it only gets harder for the financially retarded.
> 
> I'm not complaining. Ill get to where I want to be regardless of what house prices were, are, or will be, 300k, 500k, or 1.5 mill I'm not concerned. But to argue that it was just as difficult back in the good ol' day doesn't make sense to me. I;m not interested in the 18% rates story either. Rates are only higher if there is too much money flying around in everyones pocket.
> 
> ...




Not sure how you can say this.

I remember in 1990 buying my first computer for $1200.  A $100 tablet would have around 1000 times the processing capacity and well it has a 20MB HD - those were the good ol' days of DOS.

Clothes, shoes, electronics, holidays, flights, books are all considerably cheaper than a decade ago.  Gosh I remember flying SYD BNE return for like $600 in 1999.


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## young-gun (31 January 2013)

sydboy007 said:


> Not sure how you can say this.
> 
> I remember in 1990 buying my first computer for $1200.  A $100 tablet would have around 1000 times the processing capacity and well it has a 20MB HD - those were the good ol' days of DOS.
> 
> Clothes, shoes, electronics, holidays, flights, books are all considerably cheaper than a decade ago.  Gosh I remember flying SYD BNE return for like $600 in 1999.




Sorry I thought I put in an exemption for electronics and white goods etc. Where innovation and strong competition exists naturally prices are able to come down. As for the plane trip, it's hardly an everyday expense affecting people. Clothes are sonetimes cheaper but their life-span reduces substantially.


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## FlyingFox (31 January 2013)

Bill M said:


> You just answered your own question. "Where you want". This is what I have talked about all along. Do you think you are alone in wanting to live there? That's exactly it, there are only so many properties available and many more people that want to live there. This is not unusual really, however I don't know your area but I know mine well.
> 
> A very wise real estate investor once told me, "Bill you are better off buying a 1br unit for 400k in Bondi or Manly than buying a 3br house out in the western suburbs." Why is that I asked? "Everybody wants to live there, money talks and everybody else goes west". Guess where my unit is? I really must stress, pick your suburbs and for everybody that's going overseas because it's too expensive here, don't worry there is 3 more coming in to take your place, just something to consider.




I for one don't want to live in Bondi ( I lived in Sydney for 6 yrs before so I know where and what Bondi is) nor the Melbourne equivalent of St Kilda or Brighton. The difference now is that people that bought houses in those suburbs many years ago could afford them even though they were higher then the outer suburb prices. Now only people who have bought property long ago and have built up equity can afford these suburbs. Having said that, I thought the topic of the tread was property prices not just the trendy suburb's.

As for the Gold Coast, there was a big shortage in properties there prior to the GFC and the AU dollar going up. Then all of a sudden there was a big over supply, just like that.  

Your right about money talks but income does not unless your on a ridiculous one. 

Just a couple of points to consider:

1) Australia is already has one of the highest wage/salary rates in the world. If the AU dollar stays up above $1 US then there is no hope in hell of wages going up.
2) Our personal debt ratio's are among the highest in the world.
3) *When* the mining boom subsides, we will have no new industries to fund future exports etc

I will also agree with you that you will get 3 more people for everyone that leaves but do you really want 9 taxi drivers or shelf packers for a lawyer, an engineer and a scientist? Do you want to be footing their welfare bill instead on them footing your pension (not yours personally Bill but I am sure there is a Bill out there on a pension)? Something else to consider.....


----------



## FlyingFox (31 January 2013)

KurwaJegoMac said:


> I have no issue with travelling - in fact i encourage it. Everyone needs a break and you learn a lot about yourself (and can get some great perspectives too!). I think the more one experiences the wiser one becomes. I myself take an overseas holiday at least once a year to a new country.
> 
> I'm also not against spending on clothes per se; moreso about excessive spending. We all need to buy ourselves something nice once in a while. The example above was a personal experience with a friend who often complained about not having savings to invest. Not hard to see why
> 
> ...




Firstly I agree with your points about extravagant spending. This really must stop if you want to save. Having said that it's great for the economy right?

Secondly, it's great you were able to save and get your own place. Go on you (and I am not being sarcastic). 

Thirdly, I think we're having a great lively discussion. I don't think most people are drowning you out with negativity, we're just saying housing is expensive and all the stats agree with us. I thought that was the point of this thread otherwise it would be called "How you bought a prop - share your experiences". Many of the posters on the "negative" side can actually purchase their own props from what I have read in the threads, they just chose not to. 

I think also that many of the "negative" poster's are quite intelligent and do know what it takes to make it and are willing to learn. Even MrMagoo (for all his nuances; no offence) has a comp sci degree/background. We also realize that there are some circumstances that lead to the current price situation (baby boom + credit inflation) that have been unprecedented in human history. At least one of these is not continuing....the other may or may not follow.

We're giving hard facts and figures as to why prices will not continue to rise, not opinion.


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## FlyingFox (31 January 2013)

psailagroup said:


> I also believe the definition of wealth will
> Change and with the crazy times we are living in one of the most important factors
> To grow wealth is buying simply having less expenses and more income comming
> Through




+ 1. Leverage as we currently know it may become a thing of the past.


----------



## FlyingFox (31 January 2013)

prawn_86 said:


> Yep i agree with both points. As i have said previously the average wage no longer buys the average house, and if you are in the top 10% of incomes you certainly can't afford the top 10% of houses
> 
> I looked for overseas jobs online for the first time today now i have the experience i need under my sleeve




I would be surprised if the top 10% of incomes could get the top 20-30% of houses comfortably. Question to Bill. If everyone wants a nice place, in a nice suburb but your earning (significantly? ) more then them, then why can't you still afford to buy that place? Something to consider....


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## MR. (31 January 2013)

prawn_86 said:


> Where is the mean on a long term trend line i wonder?




and how do you gauge it?




I'd guess at 3-4 x income...... Is there a better way of measuring it? There's always an argument or fifty million on how things are different now!

So 3-4 x income..... 1997 pricing + wage growth! 

Must be close to the same pricing as properties sold (on average) in the year 2000 - 2001........
It's hard to picture a return to those levels on an average, although some properties are getting close with regards to the year.


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## Bill M (31 January 2013)

FlyingFox said:


> Having said that, I thought the topic of the tread was property prices not just the trendy suburb's.




All suburbs, trendy or otherwise fall into the topic of property prices don't they? You asked why certain suburbs are far more expensive than others and I clearly explained it is because people want to live there and there is less supply than the numbers of people who want to live there. That drives prices up. You can deal with that anyway you like, I would start small, build up equity, sell and upgrade and eventually you will have that house. It won't happen quick and has always been a challenge, that is where the hard work and sacrifices come in. 




> I will also agree with you that you will get 3 more people for everyone that *leaves but do you really want 9 taxi drivers or shelf packers *for a lawyer, an engineer and a scientist? Do you want to be footing their welfare bill instead on them footing your pension (not yours personally Bill but I am sure there is a Bill out there on a pension)? Something else to consider




That is just plain pigeon holing immigrants, putting labels on them, I thought you were above that. Last year I had to do several weeks of physiotherapy due to a back injury. I got to know my physio very well. He told me he can not recruit any Physio's in Australia to come and work in his practice. He told me he had to sponsor 2 Physio's from South Africa to come and work for him due to the shortage. I met them and they were nice people and happy to be working in Australia, most immigrants are not shelf packers or taxi drivers.


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## Bill M (31 January 2013)

FlyingFox said:


> I would be surprised if the top 10% of incomes could get the top 20-30% of houses comfortably. Question to Bill. If everyone wants a nice place, in a nice suburb but your earning (significantly? ) more then them, then why can't you still afford to buy that place? Something to consider....




You simply haven't saved enough money, that's all. Just keep on working and saving or move to a cheaper suburb where it may be within your budget. Or you could buy a small place to get your foot in the door, build equity and then upgrade later.

Everyone has choices, I would like to live in a 2 bedroom Penthouse in Manly with panoramic ocean views. It could cost $1.5 million for that. If I bought that then I would have work another 30 years to pay it off and build up retirement money. As I can't afford it I chose to live in a cheaper suburb. I bought a 3 br brick home for 340K and I am fully retired and spend 5 Months a year travelling the globe. I have made my choice to live in a cheaper suburb and be retired and live rent and mortgage free. It's all choice, what choices will you make?


----------



## FlyingFox (31 January 2013)

Bill M said:


> All suburbs, trendy or otherwise fall into the topic of property prices don't they? You asked why certain suburbs are far more expensive than others and I clearly explained it is because people want to live there and there is less supply than the numbers of people who want to live there. That drives prices up. You can deal with that anyway you like, I would start small, *build up equity*, sell and upgrade and eventually you will have that house. It won't happen quick and has always been a challenge, that is where the hard work and sacrifices come in.




My question was why does someone on a relatively high income (see prawn_86's example) not be able to afford a house in a nice suburb. I do realize it has to do with supply and demand but this is another statistic that shows how distorted our housing prices are.

Building equity is good but in current conditions you can be in negative equity especially if like you said, you picked the wrong suburb. Just was talking to a friend at a wedding on the weekend. They bought in North Lakes (Brisbane) a few yrs back when they moved from NZ. We warned them not to do that. Now they want to move to the south side of brisbane but are on negative equity and can't sell. This will eventually have flow on effects as the upgraders will not be able to push prices of the nicer suburbs up. Some people don't want to start small because they are planning families etc (and subjectively speaking houses are cheaper than townhouses / apartments when you factor in land etc). 

I completely agree with you about the hard work etc, no substitute for that. My dad is a self-funded, (semi?)-retired (at 55) businessman. He started out collecting empty glass bottles when he was young to help out.  

P.S Personally I can get the (town-)house I want, I chose not too.



Bill M said:


> That is just plain pigeon holing immigrants, putting labels on them, I thought you were above that. Last year I had to do several weeks of physiotherapy due to a back injury. I got to know my physio very well. He told me he can not recruit any Physio's in Australia to come and work in his practice. He told me he had to sponsor 2 Physio's from South Africa to come and work for him due to the shortage. I met them and they were nice people and happy to be working in Australia, most immigrants are not shelf packers or taxi drivers.




Yes I did. My sincere apologies for that. Seemed to have gotten out of the wrong side of bed this morning. However I think you will agree that the truth is somewhere between what you and I said and it is in part to the policies of the current and past governments of the last decade.


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## prawn_86 (31 January 2013)

Bill M said:


> You simply haven't saved enough money, that's all. Just keep on working and saving or move to a cheaper suburb where it may be within your budget. Or you could buy a small place to get your foot in the door, build equity and then upgrade later.
> 
> Everyone has choices, I would like to live in a 2 bedroom Penthouse in Manly with panoramic ocean views. It could cost $1.5 million for that. If I bought that then I would have work another 30 years to pay it off and build up retirement money. As I can't afford it I chose to live in a cheaper suburb. I bought a 3 br brick home for 340K and I am fully retired and spend 5 Months a year travelling the globe. I have made my choice to live in a cheaper suburb and be retired and live rent and mortgage free. It's all choice, what choices will you make?




I think the counter argument would be show me a 3br brick home anywhere in Sydney for under 400k nowadays. They just dont exist through a combination of factors such as population and previous credit growth.

Why should someone earning in the top 10% of wages have to buy in the bottom half of suburbs and then *hope* for capital gains in order to move up the property ladder? Of course sacrifices will need to be made when you purchase a property, but as DocK has said, it is possible that less people are going to be willing to commute for 10+ hours a week, just to own a house way out in the suburbs.

To me something just doesnt seem right to me someone earning 3x the average wage cannot afford (without paying >30% gross income) a house 2 - 3x the average house price


----------



## FlyingFox (31 January 2013)

Bill M said:


> You simply haven't saved enough money, that's all. Just keep on working and saving or move to a cheaper suburb where it may be within your budget. Or you could buy a small place to get your foot in the door, build equity and then upgrade later.
> 
> Everyone has choices, I would like to live in a 2 bedroom Penthouse in Manly with panoramic ocean views. It could cost $1.5 million for that. If I bought that then I would have work another 30 years to pay it off and build up retirement money. As I can't afford it I chose to live in a cheaper suburb. I bought a 3 br brick home for 340K and I am fully retired and spend 5 Months a year travelling the globe. I have made my choice to live in a cheaper suburb and be retired and live rent and mortgage free. It's all choice, what choices will you make?




I am not talking about my own situation. I have saved a decent deposit in the short period of time both myself and my wife have been working. Between "the fish we caught and the fish we are handed" we can definitely buy at least a townhouse where we want. 

I was talking in general. Moving to a cheaper "suburb" is ok if your retired but not when your working. Due to our work commitments, it makes the most sense for us to be in SE Melbourne. Likewise it makes sense for many others to stay closer to the city. Similarly moving to a "cheaper" country makes sense for some. I agree, all choices.


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## againsthegrain (31 January 2013)

FlyingFox said:


> I am not talking about my own situation. I have saved a decent deposit in the short period of time both myself and my wife have been working. Between "the fish we caught and the fish we are handed" we can definitely buy at least a townhouse where we want.
> 
> I was talking in general. Moving to a cheaper "suburb" is ok if your retired but not when your working. Due to our work commitments, it makes the most sense for us to be in SE Melbourne. Likewise it makes sense for many others to stay closer to the city. Similarly moving to a "cheaper" country makes sense for some. I agree, all choices.




I have said this before, me and my wife know many couples that bought 2 or 3 bedroom houses/units in melb south east. very overpriced suburbs considering the distance from the city. Seaford, Chelsea even Cranbourne. Within the 3 -5  years since they bought their dream houses they have probably both aged 10 years and have only been paying off interest. Thats right they haven't yet or just barely started to pay off the actual loan.

They are living in the exact scenario Julia and Bill have mentioned, taking up extra hours, working weekends but there is NO CHANCE those properties which have now dropped 10 - 15% in value will be paid off in the next 10 - 15 years. 

The ones who bought new houses off the plan have been hit the worst, always something wrong going on and the warranties are not worth the paper they are written on. Personal loans need to be taken out for emergency maintenance further increasing debt.

Meanwhile I have been happily renting with my wife for the last 5 years, have a 2 year old toddler by now and planning a second one. Never stress about maintenance since its our landlord who looks after it. He looks after us very well and we do exactly the same back. It is a great arrangement for us since we have a plan. 

Since everybody is bragging ill also mention we currently hold about 1/3 deposit in cash for a house but since life is good and we don't have to wake up to smell of oily rags why not continue and save for 1/2 cash deposit? Not like prices are going anywhere but down.

Since people are saying how you need to get the foot in the door by going into terrible debt or cramming into 1 bedroom apts in ghettos I thought I will present the flip side of the coin.

I am in no way against buying and owning, but times are different, sure if you worked since you were 14 and had no childhood saved up and bought at the right time then you are not the average aussie who is looking to buy now, not 5 10 or 20 years ago. 


We need to adjust to the times and realise with current wage/price ratio it is a totally different playing ground now. 

p.s most of the ones that bought have no chance starting a family yet


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## robz7777 (31 January 2013)

againsthegrain said:


> I have said this before, me and my wife know many couples that bought 2 or 3 bedroom houses/units in melb south east. very overpriced suburbs considering the distance from the city. Seaford, Chelsea even Cranbourne. Within the 3 -5  years since they bought their dream houses they have probably both aged 10 years and have only been paying off interest. Thats right they haven't yet or just barely started to pay off the actual loan.
> 
> They are living in the exact scenario Julia and Bill have mentioned, taking up extra hours, working weekends but there is NO CHANCE those properties which have now dropped 10 - 15% in value will be paid off in the next 10 - 15 years.
> 
> ...




Good points againstthegrain. 

From my own experience we are looking at places which would be affordable for us as first-home buyers, the partner is keen to buy asap but I am a lot more reluctant until we have a much healthier deposit and/or we have moved up a couple of rungs on the pay ladder. While neither of us work in the city we would still need to commute a fair distance from the affordable Frankston, Cranbourne, Seaford area to get to our current jobs. The alternative buying option would be to get a small unit closer to our workplaces; this however leads to problems in that the cost will be fairly similar to a home further from work, any capital appreciation is going to be lower as there is no land attached to the property, and at some stage we would like to start a family so there will be additional stamp-duty and other costs to pay if we want to upgrade to a bigger place. 

For us the best option may be to rent for a few years and save a decent deposit before buying which will allow us to start a family when we want to. I think it would be an unfortunate situation if we had to choose between starting a family and both continuing to work just to pay the mortgage.


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## McLovin (31 January 2013)

prawn_86 said:


> Why should someone earning in the top 10% of wages have to buy in the bottom half of suburbs and then *hope* for capital gains in order to move up the property ladder?




The greater fool theory, perhaps? There's plenty of people willing to get into extraordinary amounts of debt because apparently property doubles every 7-10 years, and leverage only works when things are going up.

That's been the trend for the last 30 years, seems pretty difficult to believe it will continue for the next 30 years, but old habits die hard.

I'd love to see a cost of living comparison between now and 25 years ago.


----------



## KurwaJegoMac (31 January 2013)

I agree with a lot of the points above - having what I have has shown me that housing is expensive and probably out of reach for many. It's very much possible if someone has the willpower, hard work ethic and discipline but are the prices reasonable? I dont think so. But on the flip side i dont think we'll be going much higher anytime soon - we'll have a typical flat period for a few more years. 

The stockmarket is rocketing up and a lot of money is floating in, businesses cut staff recently and have been exposed to the high dollar for a while now. I think the economy is on the rebound (retail sales are still growing well despite the high aud). The market seems to think so and it's only a matter of time before it bleeds into RE. In the absence of any black swans i think a lot of people will be caught with their pants down when the inflation hits. Keep a tight reign on your debt levels and hold appreciating assets coz it's going to be a wild ride soon


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## FlyingFox (31 January 2013)

KurwaJegoMac said:


> I agree with a lot of the points above - having what I have has shown me that housing is expensive and probably out of reach for many. It's very much possible if someone has the willpower, hard work ethic and discipline but are the prices reasonable? I dont think so. But on the flip side i dont think we'll be going much higher anytime soon - we'll have a typical flat period for a few more years.
> 
> The stockmarket is rocketing up and a lot of money is floating in, businesses cut staff recently and have been exposed to the high dollar for a while now. I think the economy is on the rebound (retail sales are still growing well despite the high aud). The market seems to think so and it's only a matter of time before it bleeds into RE. In the absence of any black swans i think a lot of people will be caught with their pants down when the inflation hits. Keep a tight reign on your debt levels and hold appreciating assets coz it's going to be a wild ride soon




I would think again if you think the economy is on the rebound.....the economy will not be going anywhere in a hurry unless:

1) The AUD is reined in. Think 80c to 1 US dollar.
2) There is significant stimulus spending by the rest of the world pushing up demand for our resources. 

The stockmarket is rocketing up due mainly to investors chasing yield and trend following. I personally think we have a disconnect between fundamentals and the market for a time now since the GFC. The Big end of town has realized they can milk the market because governments will not let things fall apart. The overseas markets especially have been bullish on the back of stimulus spending and not necessarily market fundamentals.

I do agree with your assessment about a wild ride. However I am not certain yet which way it will pan out, inflation or deflation. While the US is going to print itself to the last printing press, I don't know who else will follow. Also if everyone loses faith in fiat currency, you can still have real deflation of certain asset classes. Anyways that's points for another thread.


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## FlyingFox (31 January 2013)

McLovin said:


> The greater fool theory, perhaps? There's plenty of people willing to get into extraordinary amounts of debt because apparently property doubles every 7-10 years, and leverage only works when things are going up.
> 
> That's been the trend for the last 30 years, seems pretty difficult to believe it will continue for the next 30 years, but old habits die hard.
> 
> I'd love to see a cost of living comparison between now and 25 years ago.




Or a ponzi scheme . For anyone interested in base fundamentals, have a look at population and population trends of the 30 years up to 2005 and what has happened since and is predicted to happen over the next 20 years. May not be an issue for Oz but we are a global economy these days.


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## explod (31 January 2013)

FlyingFox said:


> Or a ponzi scheme . For anyone interested in base fundamentals, have a look at population and population trends of the 30 years up to 2005 and what has happened since and is predicted to happen over the next 20 years. May not be an issue for Oz but we are a global economy these days.




Yep, have to agree, such exponential expansion cannot be maintained and the correction when it comes, across the board, could be very ugly indeed from here.

And against fundamentals, predictions are pretty meaningless really.


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## prawn_86 (31 January 2013)

againsthegrain said:


> Meanwhile I have been happily renting with my wife for the last 5 years, have a 2 year old toddler by now and planning a second one. Never stress about maintenance since its our landlord who looks after it. He looks after us very well and we do exactly the same back. It is a great arrangement for us since we have a plan.
> 
> Since everybody is bragging ill also mention we currently hold about 1/3 deposit in cash for a house but since life is good and we don't have to wake up to smell of oily rags why not continue and save for 1/2 cash deposit? Not like prices are going anywhere but down.
> 
> We need to adjust to the times and realise with current wage/price ratio it is a totally different playing ground now.




We are similar, we could easily by a property i just don't see the value in it.

How do you go renting with a young family? We will be starting one in 4 - 5 yrs probably and while it would be nice to have a house for them to grow up in, there are other issues to consider as i do not want to be stuck in a 30yr mortgage when that money would probably be better spent on their education and travel


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## McLovin (31 January 2013)

FlyingFox said:


> I personally think we have a disconnect between fundamentals and the market for a time now since the GFC. The Big end of town has realized they can milk the market because governments will not let things fall apart. The overseas markets especially have been bullish on the back of stimulus spending and not necessarily market fundamentals.




Based on what? If you exclude resource stocks we're still 40-45% below where we were in 2008. Maybe that reason applies to the US but it's hard to say there has been a disconnect here.


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## againsthegrain (31 January 2013)

prawn_86 said:


> We are similar, we could easily by a property i just don't see the value in it.
> 
> How do you go renting with a young family? We will be starting one in 4 - 5 yrs probably and while it would be nice to have a house for them to grow up in, there are other issues to consider as i do not want to be stuck in a 30yr mortgage when that money would probably be better spent on their education and travel





Life goes on, don't think renting or owning with a young family at the stage where we are is any different. We take it one year at a time as thats how we get our contract. Suprisingly this year the rent has not been raised which is a nice bonus but nothing to brag or worry about.

One upside of renting with a young family is you learn alot with your first child. local playgrounds, childrens shops, small things that make a big difference when you have a baby+ so when we do buy our house we will have so many more things to consider and have experience in. Not to mention doing building inspections and a 1001 details during house hunting that you learn from your friends that bought and now complain about.

But like I said its totally psychological at the stage where I am, when I was straight out of uni owning a house, picturing a new car parked in the garage or driveway somehow made the grass greener. I guess being 29 and experiencing and doing it all in my younger days (not regretting any of it) taught me not to fall in love with phyisical posessions.

Back on track, ofcourse nobody plans to rent all their life, while I am young strong and full of energy it is good timing that things have slowed down now, possibly slide a bit so it only gives time to build up strong capital base.

As Kurwa said eventually inflation will start to chip in, so relating to the original topic in my opinion I do not see prices jumping out of control and reason to panic just yet. The demand/supply argument always for a brief moment raises a emotive thought but then as said before even in strongest demand there is only so much the average person can afford.


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## psailagroup (31 January 2013)

FlyingFox said:


> I would think again if you think the economy is on the rebound.....the economy will not be going anywhere in a hurry unless:
> 
> 1) The AUD is reined in. Think 80c to 1 US dollar.
> 2) There is significant stimulus spending by the rest of the world pushing up demand for our resources.
> ...




Hi Flying Fox

Interesting "thoughts", I am doing a part time leadership course at night. Last night was very interesting, My lecture is on the board of a BIG 4 Bank and I can’t name him or bank for certain reasons, But I asked him last night, from the point of view OF THE BANK how does the Australian economy look from a domestic and international point of view.

He basically said this, He has been working for the bank for 20 + years and the Australian property market will remain very steady for the next 5 years, He said “maybe” on average 5% growth over the next two years for property. 
His biggest concern is this, Lending has shrunk to alarming levels, They were writing more loans in the GFC then they are now. 
His other concern is this, he said “its true” Australia might have a undersupply of homes, but at the moment not much people are actually borrowing. 

I then said this, HEY the share market is a bit bullish lately, before I could even say anything else he has warned  me that the market “could turn” in any second because money is drying up from overseas. He also advised that the RBA will be making some drastic reductions in interest rates and the figures that the bank are predicting are pretty dam low.

So if these chain of events occur the postive thing is this:
1)	If homes don’t go up in value, Then buying into your first home would be allot easier, more time save, when the boom was on before you could even saved the property went up more then people saved
2)	Interest rates are going to be low for quite some time
3)	I honestly think a recession is needed to put allot of things back into prospective
4)	Prices are high for two reasons: Land: Land is very expensive in OZ but also building cost, we have so much red tape, licenses, unions, OH &S, high wages “etc” this drives up the price for building material, builders and tradesman.


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## KurwaJegoMac (31 January 2013)

ANZ said to the media that they anticipate that interest rates will fall by 100 bp this year. When's the last time you've heard a bank say that?

Tells you everything you need to know.


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## damien275x (31 January 2013)

Rates could be zero percent for all I care. I am 23 years old, and do not want any form of mortgage or debt. Most people in my age bracket have the same attitude towards a house. It's just a house, a pile of bricks and other material that deteriorates. It isn't fine wine, it doesn't get "better" with age, it only wears down. Why is hoarding now "investing"


I think people who want the big bucks for their houses will have to die before they get it, and they probably won't actually see their paper profits, why, because we can't and won't pay up.  Also regarding the foreign investment argument, I know a lot of asian business- types, and they are tighter than a ducks ass. Much tighter than Aussies are, so don't think they'll be driving prices up, they'll be the ones attending auctions asking for massive reductions along with everyone else, they do not pay a cent more and if something is overpriced, they will go elsewhere. This country is not that special or that amazing. Especially with these socialists running it wealth from hard workers and giving it to lazy and uneducated scummers who have kids who do the same thing etc.


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## explod (31 January 2013)

damien275x said:


> Rates could be zero percent for all I care. I am 23 years old, and do not want any form of mortgage or debt. Most people in my age bracket have the same attitude towards a house. It's just a house, a pile of bricks and other material that deteriorates. It isn't fine wine, it doesn't get "better" with age, it only wears down. Why is hoarding now "investing"
> 
> 
> I think people who want the big bucks for their houses will have to die before they get it, and they probably won't actually see their paper profits, why, because we can't and won't pay up.  Also regarding the foreign investment argument, I know a lot of asian business- types, and they are tighter than a ducks ass. Much tighter than Aussies are, so don't think they'll be driving prices up, they'll be the ones attending auctions asking for massive reductions along with everyone else, they do not pay a cent more and if something is overpriced, they will go elsewhere. This country is not that special or that amazing. Especially with these socialists running it wealth from hard workers and giving it to lazy and uneducated scummers who have kids who do the same thing etc.




That is a very good and sensible post.

And with money printing, or if you like debauching of currency values, the actual value of houses have dropped more than people realise.  A house at half a million two years ago, even though it may be half a million today that amount will no where near purchase what the half million did back then.  For example the daily newspaper has gone from $1.20 back then to today $2.00, most food is even worse and fuel up on average 20 cents a litre.

And mark my words with interest rates so low they can really go no further and with banks concerned at values the next move will be a rise in interest rates.

So yes to all those younger ones waiting for a home, the longer you save and hold off the better in my view.


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## tech/a (31 January 2013)

explod said:


> That is a very good and sensible post.
> 
> And with money printing, or if you like debauching of currency values, the actual value of houses have dropped more than people realise.  A house at half a million two years ago, even though it may be half a million today that amount will no where near purchase what the half million did back then.  For example the daily newspaper has gone from $1.20 back then to today $2.00, most food is even worse and fuel up on average 20 cents a litre.
> 
> ...




And in twenty years time when wages are 150k plus a year and petrol $5.00 a llitre
The $500 k home we see now bought with a deposit of 80k
What do you think that will now be.
Do you think the guy who struggled 20 yrs ago will be struggling now.
The young guy then wanting to buy will he not be singing the same tune of desperation?

Impossible
The scene you describe was 20 yrs ago
20 years before that the average weekly wage was $35 a week.
Rent $10 a house $12 k the same house worth a staggering 500k today.

Don't be complacent
Look for opportunity and take it.


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## FlyingFox (31 January 2013)

McLovin said:


> Based on what? If you exclude resource stocks we're still 40-45% below where we were in 2008. Maybe that reason applies to the US but it's hard to say there has been a disconnect here.




I was mainly referring to the US. We don't have a disconnect here but it could happen here too.

Edit: Investors are chasing yield here though. Case in point is the CBA. You would think that many investors would be scared given the exposure of the banks to local housing etc...


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## Vixs (31 January 2013)

damien275x said:


> Rates could be zero percent for all I care. I am 23 years old, and do not want any form of mortgage or debt. Most people in my age bracket have the same attitude towards a house. It's just a house, a pile of bricks and other material that deteriorates. It isn't fine wine, it doesn't get "better" with age, it only wears down. Why is hoarding now "investing"
> 
> 
> I think people who want the big bucks for their houses will have to die before they get it, and they probably won't actually see their paper profits, why, because we can't and won't pay up.  Also regarding the foreign investment argument, I know a lot of asian business- types, and they are tighter than a ducks ass. Much tighter than Aussies are, so don't think they'll be driving prices up, they'll be the ones attending auctions asking for massive reductions along with everyone else, they do not pay a cent more and if something is overpriced, they will go elsewhere. This country is not that special or that amazing. Especially with these socialists running it wealth from hard workers and giving it to lazy and uneducated scummers who have kids who do the same thing etc.




It's not the bricks that are worth anything in most cases. It's the land, the view, the time to walk to the train station, the time to drive kids to the school you want to send them to, how close you are to a medical centre, supermarket, service station, how loud the suburb is, how leafy the area is, how scummy the neighbours places look and how many places fly overhead or trains pass nearby in the middle of the night, is it flood prone, do you back onto a park, can you get high speed internet, where is the nearest childcare center that is on the way to work. *How does living here change the way you live your life, work, relax and spend time with family?*

Those are things that actually change the VALUE of LAND - at least to me. Those are the things you can't fix with a wrecking ball and a construction contract. That's what you pay for.

What colour are the bricks and does it have a pool? _Who cares?_ You can always build again.

If the option was spend money on a house or don't, the choice would be tougher, but the choice is rent or buy.

I'm not looking for a roof and four walls that someone allows me to inhabit for an increasing sum each year, I want a home.

I agree completely that many houses at the top end of the market that the boomers are sitting on may never get sold at the price they see on paper before they die.

As far as appetite for debt is concerned? Varies person to person, impacted on by relationship status, job security, earnings growth potential, how expensive the rest of the things they like to do are etc.


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## FlyingFox (31 January 2013)

tech/a said:


> And in twenty years time when wages are 150k plus a year and petrol $5.00 a llitre
> The $500 k home we see now bought with a deposit of 80k
> What do you think that will now be.
> Do you think the guy who struggled 20 yrs ago will be struggling now.
> ...




This may happen if they continue to print money. However, the underlying demand will be on the way down. Why? The population of most developed countries is dropping. UN projections say that world pop will peak in 2100 at 10 B. We are currently at 7B, we were at 2.5 B in 1950. The contribution to that peak will mainly be from Africa and partly India. Most other countries are expected to have a smaller pop than their respective peaks. We have had exponential growth in pop that has fueled demand and under pinned economics and policies. The printing is happening to keep inflation up because naturally we're heading towards deflation. 

For everyone that thinks that Japan is an exception, the alternative view is that they just have got to the party sooner than everyone else.

Agree about taking opportunities though.


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## prawn_86 (31 January 2013)

tech/a said:


> And in twenty years time when wages are 150k plus a year and petrol $5.00 a llitre
> The $500 k home we see now bought with a deposit of 80k
> What do you think that will now be.
> Do you think the guy who struggled 20 yrs ago will be struggling now.
> ...




Do you honestly think without credit growth that prices will continue like this? I personally cant see it happening but would love your opinion as to how it could.

Japan has been stuck in a deflationary era for 20 yrs and Shinzo is now trying to print his way out of it, but i understand that has been tried before unsuccessfully.


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## KurwaJegoMac (1 February 2013)

Comparing three very different countries on the one chart doesn't work (especially since the other two were used to paint a very specific picture by the author).

Imagine if you applied the same logic to comparing fruit prices and you picked apples, oranges and bananas. They're grown in different climates and areas of the world (generally) and are affected differently by different seasons. They're also shaped differently, weigh differently and taste differently. It would be silly to compare them in the same way. Maybe there's a global fad for bananas and we've reached peak banana production? Etc etc

All 3 countries have vastly different economies, vastly different population sizes, different sizes of habitable land, etc etc. have a good think about why those other two countries were selected. They paint a very specific picture albeit a very distorted one. Why isn't canada in there? Hong Kong? Singapore?

I think that there's also a fundamental misunderstanding by some about how inflation works and what it actually means. Suggest those posters learn a bit about it outside of mainstream media and then you'll see what Tech/a says isn't so far-fetched after all


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## KurwaJegoMac (1 February 2013)

Having said that, a good point by Prawn regarding credit growth driving prices. Credit growth is abysmal at the moment in Australia. It will translate to lower prices in the near term so completely agree with you there.

But i wouldnt want to be in non-appreciating assets with all the printing going on. The trick is to get those assets in time for the inevitable surge in inflation but to reduce your debt once interest rates rise to curb the soaring inflation. Tight window but one of great opportunity


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## FlyingFox (1 February 2013)

KurwaJegoMac said:


> Comparing three very different countries on the one chart doesn't work (especially since the other two were used to paint a very specific picture by the author).
> 
> Imagine if you applied the same logic to comparing fruit prices and you picked apples, oranges and bananas. They're grown in different climates and areas of the world (generally) and are affected differently by different seasons. They're also shaped differently, weigh differently and taste differently. It would be silly to compare them in the same way. Maybe there's a global fad for bananas and we've reached peak banana production? Etc etc
> 
> All 3 countries have vastly different economies, vastly different population sizes, different sizes of habitable land, etc etc. have a good think about why those other two countries were selected. They paint a very specific picture albeit a very distorted one. Why isn't canada in there? Hong Kong? Singapore?




Agree with you about comparing different economies and countries. However we do live in a global economy these days and money of all things flows a lot more easily than it used to. While a direct one-to-one comparison is ill advised, relative comparisons will teach us a lot. Why are those economies behaving differently? How are they different to us? 

Hong Kong and Singapore are actually outliers because they are one of the few countries where land *currently is a finite and restrictive resource.*



KurwaJegoMac said:


> I think that there's also a fundamental misunderstanding by some about how inflation works and what it actually means. Suggest those posters learn a bit about it outside of mainstream media and then you'll see what Tech/a says isn't so far-fetched after all




Inflation works due to two reasons:

1) Fundamental demand: People want to buy something for whatever reason e.g I really really want that house. More people, more demand.
2) Oversupply of money/ cheap money/printing: The cheaper money is spent and or "invested". e.g Buy houses, their price will double in 7 years.

I argue that inflation built into our economic system so that public and private debt can be grown much higher than would be allowed otherwise. Buy controlling the money, governments control inflation and combined with pop increase this has been positive for much of last century and and a half. The money supply was used to iron out ripples in the inflation curve. 

If the fundamental demand falls (due to whatever reasons), then you have to print much more. The problem is that if you continue to print money, people will lose faith in it. It has happened in the past.

P.S I hope this wasn't directed at prawn_86.


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## FlyingFox (1 February 2013)

KurwaJegoMac said:


> But i wouldnt want to be in non-appreciating assets with all the printing going on. The trick is to get those assets in time for the inevitable surge in inflation but to reduce your debt once interest rates rise to curb the soaring inflation. Tight window but one of great opportunity




Agreed. Just personally don't think housing is the best choice at the moment.


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## FlyingFox (1 February 2013)

psailagroup said:


> Hi Flying Fox
> 
> Interesting "thoughts", I am doing a part time leadership course at night. Last night was very interesting, My lecture is on the board of a BIG 4 Bank and I can’t name him or bank for certain reasons, But I asked him last night, from the point of view OF THE BANK how does the Australian economy look from a domestic and international point of view.
> 
> ...




Agree with him (flat market not necessarily growth) with the caveat that employment holds and there are no shocks leading to investors needing to sell up. Our businesses have held up well since the actual GFC and increase in AUD but your now starting to see many going into liquidation as capital buffers vanish. 

Similarly, investors *may* need to sell up. If that happens then you will see prices starting to fall. 



psailagroup said:


> I then said this, HEY the share market is a bit bullish lately, before I could even say anything else he has warned  me that the market “could turn” in any second because money is drying up from overseas. He also advised that the RBA will be making some drastic reductions in interest rates and the figures that the bank are predicting are pretty dam low.




Not surprising with what is happening in Europe etc. Also as soon as there is any weakness in the AUD, foreign funds will get pulled out. Why? If AUD goes from say 105 to 90 in a few short months, you've lost 15% compared to whatever you might have earned in the meantime. 

Agree about the rates as well. They are hopping to increase local consumption but with this they will also require a boost in exports to be effective. We're too small an economy to be driven by local consumerism alone. Just in the Waikato region of NZ at the moment. It's surprising the changes and growth of the area in the last four years (think normal growth not china type new city in a few months growth), mainly driven by Fonterra and dairy exports.



psailagroup said:


> So if these chain of events occur the postive thing is this:
> 1)	If homes don’t go up in value, Then buying into your first home would be allot easier, more time save, when the boom was on before you could even saved the property went up more then people saved
> 2)	Interest rates are going to be low for quite some time
> 3)	I honestly think a recession is needed to put allot of things back into prospective
> 4)	Prices are high for two reasons: Land: Land is very expensive in OZ but also building cost, we have so much red tape, licenses, unions, OH &S, high wages “etc” this drives up the price for building material, builders and tradesman.




1) Agreed. A major factor I believe will be the change in attitude of younger gens on home ownership. 
2) Agreed.
3) We're probably already in one (maybe not technically). 
4) Land is expensive because it is allowed to be. I have read a figure somewhere that some of the larger developers have land banked up to *30 years* worth of land supply and are drip feeding the market. Agree on the wages as well. Not only that but due to "shortages" they are probably disproportionately high on the trades side.


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## ftw129 (1 February 2013)

It's been quite interesting reading everyone's opinions on where the Australian property market is going in the future.

Property investors are best to have a long term view, especially in a peaceful country such as ours with less than 23 million people. We are the envy of the world and our land is abundant in valuable resources.

We are an expensive country so those abroad wishing to settle on our shores are likely to bring with them more money and opportunity.

Sure, like any asset property can't keep travelling up in a straight line and therein lies the opportunity.

Just like in the past, those that do not accumulate property over their life time will be bitterly disappointed as they watch the wealth grow around them.

Property is for the long haul.

Carry on.


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## KurwaJegoMac (1 February 2013)

FlyingFox said:


> Agree with you about comparing different economies and countries. However we do live in a global economy these days and money of all things flows a lot more easily than it used to. While a direct one-to-one comparison is ill advised, relative comparisons will teach us a lot. Why are those economies behaving differently? How are they different to us?
> 
> Hong Kong and Singapore are actually outliers because they are one of the few countries where land *currently is a finite and restrictive resource.*




Agree that we're all connected and what happens in one economy will affect another. The point I was trying to make is that you need to be aware of that author's agenda when they created that graph. They picked three distinct economies but excluded all the rest. These three happen to be very different to one another. 

E.g. Japan has one of the most dense populations per square km. It is also in a deflationary climate. Australia on the other had is still inflationary and is a sparsely populated with large, unhabitable land areas. Australia and the US have very different tax regimes particularly around income tax and property tax although Aus and US are a decent comparison.

Of course there are many more differences but these I see as the bigger, structural differences. 

I'd love to see Australia, Dubai and Canada together. Different countries yet again but they'd paint a very different picture (they'd look almost normal i'd bet). All depends on what the author wants you to see  




FlyingFox said:


> Inflation works due to two reasons:
> 
> 1) Fundamental demand: People want to buy something for whatever reason e.g I really really want that house. More people, more demand.
> 2) Oversupply of money/ cheap money/printing: The cheaper money is spent and or "invested". e.g Buy houses, their price will double in 7 years.
> ...




No this wasn't directed at prawn_86 - he/she was referring to credit growth limiting property price growth, which as per my other post above, I agree with. Credit growth is very low and that will (and has been) translating to lower prices and we're unlikely to see growth return in the short term to really continue driving up prices significantly.

Agree with your points above - at the moment we have a LOT of situation (2) occuring (in fact, it really scares me) but not a lot of situation (1)... yet. (1) will come back with a vengeance and probably quicker than most realise. By the time people will realise it's happening prices will be at/above peaks. 

I'm really really worried about inflation - or more specifically, the devaluation of money. A lot of people are going to suffer a lot over the coming years. The divide between the upper and lower class is going to get a lot bigger  - the middle class will be hollowed out. You can see a lot of it happening in the US and it is happening here too. 

I'm not saying to rush out on an asset buying frenzy (i would tread very carefuly right now, particularly around property) but everyone should be in a reading/learning frenzy to raise their financial awareness to help protect them from the coming pain.

... wow reading back on it I sound like such an alarmist!! Very unlike me but just goes to show how much current developments worry me.


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## prawn_86 (1 February 2013)

KurwaJegoMac said:


> Imagine if you applied the same logic to comparing fruit prices and you picked apples, oranges and bananas. They're grown in different climates and areas of the world (generally) and are affected differently by different seasons. They're also shaped differently, weigh differently and taste differently. It would be silly to compare them in the same way. Maybe there's a global fad for bananas and we've reached peak banana production? Etc etc




I would argue that it is more like the same type of fruit just grown in 3 different regions.



KurwaJegoMac said:


> Agree with your points above - at the moment we have a LOT of situation (2) occuring (in fact, it really scares me) but not a lot of situation (1)... yet. (1) will come back with a vengeance and probably quicker than most realise. By the time people will realise it's happening prices will be at/above peaks.
> 
> I'm really really worried about inflation - or more specifically, the devaluation of money. A lot of people are going to suffer a lot over the coming years. The divide between the upper and lower class is going to get a lot bigger  - the middle class will be hollowed out. You can see a lot of it happening in the US and it is happening here too.




What do you think will cause inflation to come back? With a high dollar, manufacturing continually declining, building down in the dumps, i just cant see what is going to kick off inflation agin. Obviously i could be wrong but a 5 - 10 yr sideways cycle a la Japan certainly isn't out of the question imo.

Or is it money printing you are more worried about? IE those holding cash at bank who will be effected the most and those holding assets such as houses will at least keep even.

I just cant see how as per Techs example that in 20yrs time the average house price will be double what it is now (well maybe 20 but i highly doubt 10yrs). Hopefully for my sake i'm not wrong... At this stage i am just not willing to put our entire savings in to one asset class that i do not understand how it will perform/grow over the coming years

EDIT - with that being said i would be happy to purchase a property through a SMSF for a long term hedge, just dont have enough funds in Super ot make it viable as yet


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## DocK (1 February 2013)

KurwaJegoMac said:


> I'm really really worried about inflation - or more specifically, the devaluation of money. A lot of people are going to suffer a lot over the coming years. The divide between the upper and lower class is going to get a lot bigger  - the middle class will be hollowed out. You can see a lot of it happening in the US and it is happening here too.




Agree.  I think there is going to be increasing amounts of unrest amongst "the 99%" in Australia.  I hope we never see protests such as those that took place in USA etc against "the 1%", but if young people feel strongly enough about affordability issues it's a possibility I guess.

The more I ponder the situation from a parent's perspective, the more I wonder if gen Y might not be better off (at least in lifestyle terms) to purchase a property they can afford as an investment property, but rent themselves in an area that suits them but in which they couldn't afford to buy.  This option gives them the dual advantages of being "in the market" and exposed to any capital gains property might enjoy, yet still able to live a reasonable commuting distance to work.  This way they could also take advantage of the negative-gearing and capital gains tax rules :  As they age, and equity is increased and lifestyles alter, they could choose to sell the investment property and use the equity and capital gain (if any) to get into their own home, or continue to rent themselves and add to a portfolio of rental properties, share investments etc.  Of course, this scenario is dependent upon there remaining a pool of tenants for the investment properties - but there's always going to be a segment of the population that can afford only the cheaper rental options.

The rent vs buy argument only makes sense if one is investing at least most of the savings made by renting vs mortgage in some way - otherwise you're up the proverbial come retirement.


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## KurwaJegoMac (1 February 2013)

prawn_86 said:


> I would argue that it is more like the same type of fruit just grown in 3 different regions.




- Grown in three regions that will have different climates that will affect supply (and thus demand). Kind of house each of the countries have a different economy both at the macro and local levels that will affect supply and demand

- They each are shaped differently and weigh a different amount. If bananas cost $2 per kg and apples cost $3 per kg does that make apples 50% overvalued? I liken this to comparing Japanese property to ours - they have a higher comparitive density of aparments and units owing to their population. We have very few in comparison (as a % of population) we're more McMansion style. Different sized homes, different sized land, different prices

On the surface it's just fruit (property) but dig a bit deeper and it becomes hard to make direct comparisons. 

Now if we had a graph with all major countries on it that would be quite interesting




prawn_86 said:


> What do you think will cause inflation to come back? With a high dollar, manufacturing continually declining, building down in the dumps, i just cant see what is going to kick off inflation agin. Obviously i could be wrong but a 5 - 10 yr sideways cycle a la Japan certainly isn't out of the question imo.
> 
> Or is it money printing you are more worried about? IE those holding cash at bank who will be effected the most and those holding assets such as houses will at least keep even.
> 
> ...




I'm mostly concerned about the money printing aspect. It will indirectly cause inflation at some point down the track as currencies are being devalued. We're all connected and it's only a matter of time before it hits our shores. Money will flow into the Sharemarket and RE and other assets to compensate for the devaluation. You'll then cause inflation as price of assets go up -> goods go up -> wages follow. The RBA will then come in and ramp up the cash rate (quickly - i'm talking 50-80 bp moves a quarter) and bring it all to a screeching halt. 

Either that or we get runaway inflation and cop another 80's/90's 'recession we had to have'

Maybe i'm being alarmist here and have it all wrong I don't know. All I know is you can't print the huge volumes they're printing now without devaluing your currency and stoking inflation (after all, they're doing this to stoke inflation). As we're all connected it's only a matter of time before we feel it too.


----------



## prawn_86 (1 February 2013)

I wonder how this will affect properties held under a SMSF if it was to be changed:

https://www.aussiestockforums.com/forums/showthread.php?t=24666



> THE federal government is understood to be looking at reintroducing a limit on tax-free superannuation payouts, imposing an exit tax on funds carrying balances close to $1 million


----------



## againsthegrain (1 February 2013)

prawn_86 said:


> I wonder how this will affect properties held under a SMSF if it was to be changed:
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=24666





they not printing anymore because the paper is starting to cost too much ... just making trillion dollar coins


----------



## FlyingFox (1 February 2013)

prawn_86 said:


> I wonder how this will affect properties held under a SMSF if it was to be changed:
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=24666




Both sides are talking about reducing super concessions, been all over the news in the past few days. CGT concessions and negative gearing might be next on the block. Sydboy might just get his wishes....


----------



## young-gun (1 February 2013)

againsthegrain said:


> they not printing anymore because the paper is starting to cost too much ... just making trillion dollar coins




The original will be made out of platinum, followed by some type of alloy coated in platinum, followed by just an alloy.

To the above posts/posters, Australia is no different, not special, not unique, this will become evident soon enough.


----------



## FlyingFox (2 February 2013)

KurwaJegoMac said:


> - Grown in three regions that will have different climates that will affect supply (and thus demand). Kind of house each of the countries have a different economy both at the macro and local levels that will affect supply and demand
> 
> - They each are shaped differently and weigh a different amount. If bananas cost $2 per kg and apples cost $3 per kg does that make apples 50% overvalued? I liken this to comparing Japanese property to ours - they have a higher comparitive density of aparments and units owing to their population. We have very few in comparison (as a % of population) we're more McMansion style. Different sized homes, different sized land, different prices
> 
> ...




There are many ways to compare these statistically. We're not saying that property here is expensive because it costs X dollars. We're comparing stats like price/income and price/rent. These tend to be more comparable. Moreover 

If you compared Australia to most other countries I think you will come to the conclusion that house prices are out of whack and may correct at some point (look at US, UK, Ireland, even Dubai). As for Canada, most commentator's agree that their house prices are overvalued as well (mining?).




KurwaJegoMac said:


> I'm mostly concerned about the money printing aspect. It will indirectly cause inflation at some point down the track as currencies are being devalued. We're all connected and it's only a matter of time before it hits our shores. Money will flow into the Sharemarket and RE and other assets to compensate for the devaluation. You'll then cause inflation as price of assets go up -> goods go up -> wages follow. The RBA will then come in and ramp up the cash rate (quickly - i'm talking 50-80 bp moves a quarter) and bring it all to a screeching halt.
> 
> Either that or we get runaway inflation and cop another 80's/90's 'recession we had to have'
> 
> Maybe i'm being alarmist here and have it all wrong I don't know. All I know is you can't print the huge volumes they're printing now without devaluing your currency and stoking inflation (after all, they're doing this to stoke inflation). As we're all connected it's only a matter of time before we feel it too.




No I agree with you on this. And this will have a flow on effect as well into RE; look at Germany. It used to be the typical description of what a normal housing market should be. Prices changed at or about inflation until 2011 and mainly 2012. Last year they went up about 10%. However in Aus, we are already way ahead of the curve.

However by most developed countries housing prices, German prices were undervalued (I say normal) as were many other European cities. I have a colleague from Antwerp who has a townhouse just outside of the city that they bought a few years back for ~150-180K Euro. They were living in East Malvern and they couldn't cover their rent here with the rent they got back home. They def are not planning on buying as comparable prop in Melb would be 2-3 X higher.

This is not the best thread to discuss printing so I won't add much but have a think about why they're printing and how much and how much bad debt is the US gov paying from propping up companies. Also at demographic factors in JP and Italy for example. The inflation we are seeing now may not be a direct result of the printed money flowing into the economy or lent but because everyone with money is chasing yields as bonds/deposits etc are at all time lows. They may still have a very hard time getting 2%.


----------



## sptrawler (2 February 2013)

prawn_86 said:


> I wonder how this will affect properties held under a SMSF if it was to be changed:




The problem I can't reconcile with buying a property in a SMSF is the historic rental return is quite poor after costs.
As the property is revalued annually and assuming its value is increasing, there will be a requirement to make larger drawdowns on your capital. It doesn't really stack up well against franked dividends.IMO


----------



## McLovin (2 February 2013)

sptrawler said:


> The problem I can't reconcile with buying a property in a SMSF is the historic rental return is quite poor after costs.
> As the property is revalued annually and assuming its value is increasing, there will be a requirement to make larger drawdowns on your capital. It doesn't really stack up well against franked dividends.IMO




How does one deal with the increasing draw down requirement if you own property in your SMSF?


----------



## sptrawler (2 February 2013)

McLovin said:


> How does one deal with the increasing draw down requirement if you own property in your SMSF?




Property prices have far outstripped rent rises, therefore the increase in value increases the amount of pension that must be drawn.
I was pointing out that you could end up in a situation of being assett rich and cash poor.
This could lead to a situation of having to sell assetts at a time not of your choosing.
If you have tons of money, it obiously isn't an issue, but for the punter with say $1m, it is worth being aware.  Especially if an extra impost of an exit tax is introduced, as prawn was sugesting in his post. .
Maybe I'm just cautious, it comes with age.


----------



## Mrmagoo (3 February 2013)

tech/a said:


> And in twenty years time when wages are 150k plus a year and petrol $5.00 a llitre
> The $500 k home we see now bought with a deposit of 80k
> What do you think that will now be.
> Do you think the guy who struggled 20 yrs ago will be struggling now.
> ...




If property prices rise faster than income then the guy who bought will be laughing.

The problem is if the price already factors in those future gains, which I suspect it does.

Which puts you in my point of view ; buy what you can afford for a place to LIVE not as a 100% risk free 10% return on 100% leveraged investment.


----------



## Garpal Gumnut (3 February 2013)

One can imagine an advertisement for a mansion in Herculaneum in 78 A.D.

In a good situation, overlooking the bay, faithfully restored by a Procurator for his family.
Quick access to Via, markets, slaves, and baths.
Centrally heated.

Cost : Knocked down due to owner heading off to a War.
         200,000 Sestertii

Then in 79 A.D. Mt. Vesuvius erupted.

So, property prices historically have not trended upwards in a predictable manner, in Herculaneum.

I would imagine the same would apply to Sydney, Hiroshima, Baghdad, Brisbane, Kabul, Port Douglas or any other place at risk of unforeseen events.

Basically anywhere.

gg


----------



## craft (3 February 2013)

I’m a bit thick – could somebody please explain this money printing concept discussed in this thread.

All I can see is sovereigns increasing their balance sheet to offset private balance sheet shrinkage but lack of velocity is making the job difficult even at near / actual negative real interest rates, a sign of deflation risk rather than inflation.  

At no stage has any sovereign (Zimbabwe excluded) printed without a corresponding commitment to repay at some stage so I see no lack of tools for containing inflation if/when velocity does pick up.

The real money creation enabler occurred prior to the GFC and was a result of trade imbalances and manipulation of some currencies causing major run ups in those countries foreign reserves and in turn funding lower than appropriate interest rates in an optimistic period.  – That all seems to be currently and continuing to unwind.

It’s not just my understanding of capital creation that is at odds with the printing press story; the actual statistics don’t compute either.




If somebody could explain it to me I would be pleased to learn something.


----------



## IFocus (3 February 2013)

craft said:


> I’m a bit thick – could somebody please explain this money printing concept discussed in this thread.
> 
> All I can see is sovereigns increasing their balance sheet to offset private balance sheet shrinkage but lack of velocity is making the job difficult even at near / actual negative real interest rates, a sign of deflation risk rather than inflation.
> 
> ...




If you print enough money then inflation follows no ifs no buts.

What is holding the show up at the moment is the amount of de-leveraging going on which causes a deflationary environment.

What I think most people miss is the current shenanigans has never been attempted on this scale before.............ever, what the end game is I don't think anyone really knows but inflation will absolutely be part of the picture.


----------



## DB008 (3 February 2013)

IFocus said:


> What I think most people miss is the current shenanigans has never been attempted on this scale before.............ever, what the end game is I don't think anyone really knows but inflation will absolutely be part of the picture.




CIA - The World Factbook

Country Comparison - Debt - Internal/External

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2079rank.html​


----------



## young-gun (3 February 2013)

craft said:


> If somebody could explain it to me I would be pleased to learn something.




Also, and this is just a guess, but when such a large scale operation is taken on I would imagine that you would have to pint-point the perfect time to start raising rates to curb inflation, and prevent stifling recovery. And what happens if inflation starts to take off before they have achieved the desired effects on the economy (eg 6% unemployment?). Higher rates with such a mountain of debt would cripple the US. I don't think they will ever be able to raise rates, or ever want to.


----------



## craft (3 February 2013)

IFocus said:


> If you print enough money then inflation follows no ifs no buts..




I‘m iffing and butting.


IFocus said:


> but inflation will absolutely be part of the picture.




 Can you explain to me why this is so?


----------



## FlyingFox (3 February 2013)

IFocus said:


> If you print enough money then inflation follows no ifs no buts.




Agreed. Plus sentiment. You need people to "borrow/invest" this money and for it to flow through.



IFocus said:


> What is holding the show up at the moment is the amount of de-leveraging going on which causes a deflationary environment.




That and the fact that a lot of this newly printed money is paying for the GFC related bad debts that the US government has taken up.



IFocus said:


> What I think most people miss is the current shenanigans has never been attempted on this scale before.............ever, what the end game is I don't think anyone really knows but inflation will absolutely be part of the picture.




Agreed. Nor do they realize the true extent of the bad debts/bad investments and deflationary environment that was/is around so a bit skeptical on if/when inflation will hit.


----------



## McLovin (3 February 2013)

FlyingFox said:


> Agreed. Plus sentiment. You need people to "borrow/invest" this money and for it to flow through.




Which is craft's point. They're not printing money they're swapping longer dated debt for cash. They haven't increased the money base.

It's been running for four years now, if the hyperinflation thing was going to happen it would have. It's really just the perma-bears and goldbugs hanging onto the story.


----------



## sinner (3 February 2013)

craft said:


> I’m a bit thick – could somebody please explain this money printing concept discussed in this thread.
> 
> All I can see is sovereigns increasing their balance sheet to offset private balance sheet shrinkage but lack of velocity is making the job difficult even at near / actual negative real interest rates, a sign of deflation risk rather than inflation.
> 
> ...




Hello,

This article is worth a read

http://fofoa.blogspot.com.au/2011/04/deflation-or-hyperinflation.html

and the followup

http://fofoa.blogspot.com.au/2012/05/inflation-or-hyperinflation.html

To vouch for the articles I'll include this quote from Rick Ackerman



> I’ve concluded there is little to gain arguing on the one hand with a guy who turns rabid whenever someone contradicts him, even in a friendly way; and on the other, with a preening narcissist who comes to argumentation in the same state of sexual arousal that Jeffrey Dahmer must have experienced hovering over the fresh corpses of teenage boys. These guys are bad news, as lacking in civility and manners as buzzards in a scrum, and you’d do well to avoid them both. You might try tuning instead to the hyperinflation arguments of Steve Saville, Peter Schiff and a few others who seem less concerned with trouncing, slicing and dicing opponents than with presenting facts that might better prepare you for the financial crisis ahead. The very best of them, in my opinion, is FOFOA blogspot, where the essays are erudite, the discussion elevated and the arguments as knowledgeable as any you will find on the web.


----------



## notting (3 February 2013)

McLovin said:


> Which is craft's point. They're not printing money they're swapping longer dated debt for cash. They haven't increased the money base.




Love it again.


----------



## sptrawler (3 February 2013)

IFocus said:


> If you print enough money then inflation follows no ifs no buts.
> 
> What is holding the show up at the moment is the amount of de-leveraging going on which causes a deflationary environment.
> 
> What I think most people miss is the current shenanigans has never been attempted on this scale before.............ever, what the end game is I don't think anyone really knows but inflation will absolutely be part of the picture.





Funnily enough I agree 100% again with you.
The only thing we disagree on is which party should win the next election.LOL

As far as inflation goes, house prices rise so do interest rates.

If you had $1,000,000 would you buy a house or put it in the bank at say 12%? That's $120,000/pa

Long term average interest rates are around 8%.

Currently they are runing around 5%


----------



## tinhat (3 February 2013)

Just following on from the more general economic discussion and Craft's comments and the responses...


The amount of money/money creation isn't really an issue until there is inflation. At the moment the developed economies are fighting off deflation, and as Craft mentioned, due the lack of credit growth in the private sector and general lack of confidence and aversion to risk. A question...

Will central banks (namely the US Fed) take the necessary action to soak up the money when inflation risks rise? There is some risk here because "now" is never a good time to start contractionary policy. Why was Alan Greenspan so loved (despite the fact that he was an intellectual, simpleton admirer of Ann Rand)?

Regulation of the finance sector is just as important as the inevitably ill-timed, ill-conceived, bubble-forming, capital misallocating, interferences of central banks. The US Fed's role since 1974 has been to prop up a monumental social and economic dystopia, characterised by the Vietnam War, that has only grown more monstrous since then. The greater folly has been the abandonment of any morality let alone an environment for orderly market conduct in global financial markets.

The issue of public sector indebtedness for developed world countries (mixed with aging and in many cases, shrinking, population time-bombs) is something that is going to, over the long run, accelerate the transfer of economic growth and prosperity away from declining developed nations toward the developing nations. Something I take great heart in.

But for now, I just want to know what market the next bubble is going to manifest itself in so I can hitch a ride. It's been thirteen years since the US stock market has been in the money (in nominal terms) - maybe its due? Personally, I suspect the next big rally is another three or four years off.


----------



## sptrawler (3 February 2013)

tinhat said:


> Just following on from the more general economic discussion and Craft's comments and the responses...
> 
> 
> The amount of money/money creation isn't really an issue until there is inflation. At the moment the developed economies are fighting off deflation, and as Craft mentioned, due the lack of credit growth in the private sector and general lack of confidence and aversion to risk. A question...
> ...




Did you think that all up, can I buy one of your hats?


----------



## FlyingFox (3 February 2013)

tinhat said:


> The amount of money/money creation isn't really an issue until there is inflation. At the moment the developed economies are fighting off deflation, and as Craft mentioned, due the lack of credit growth in the private sector and general lack of confidence and aversion to risk. A question...
> 
> Will central banks (namely the US Fed) take the necessary action to soak up the money when inflation risks rise? There is some risk here because "now" is never a good time to start contractionary policy. Why was Alan Greenspan so loved (despite the fact that he was an intellectual, simpleton admirer of Ann Rand)?




+1. Don't know if inflation will actually hit due to factors you mention latter on. However I don't think they can do much about it just like the RBA will have a very hard time devaluing the AUD.



tinhat said:


> Regulation of the finance sector is just as important as the inevitably ill-timed, ill-conceived, bubble-forming, capital misallocating, interferences of central banks. The US Fed's role since 1974 has been to prop up a monumental social and economic dystopia, characterised by the Vietnam War, that has only grown more monstrous since then. The greater folly has been the abandonment of any morality let alone an environment for orderly market conduct in global financial markets.




+1. It probably sounded like a great idea a long time ago. 



tinhat said:


> The issue of public sector indebtedness for developed world countries (mixed with aging and in many cases, shrinking, population time-bombs) is something that is going to, over the long run, accelerate the transfer of economic growth and prosperity away from declining developed nations toward the developing nations. Something I take great heart in.




This is a very important issue. Something that has possibly never happened and something that many people still don't see coming. Remember most of the pozni schemed economic models are based on near exponential growth in population. What will happen when they actually start decreasing?



tinhat said:


> But for now, I just want to know what market the next bubble is going to manifest itself in so I can hitch a ride. It's been thirteen years since the US stock market has been in the money (in nominal terms) - maybe its due? Personally, I suspect the next big rally is another three or four years off.




Let me know when you figure it out :. Have a bunch of cash siting around doing nothing atm


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## sptrawler (4 February 2013)

Thanks for the translation, Flying Fox, after three or four reds I couldn't finish reading it, before I had to start again.
Firstly, I agree with it.
Secondly, like you, I have money on the side line looking for a place to put it.


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## medicowallet (4 February 2013)

http://www.theage.com.au/victoria/s...as-major-projects-wind-up-20130204-2dumg.html

That be lots of builders etc looking for work.

I wonder if they will work for less money to keep food on the table?

I can only hope that any possible decrease in wages growth pressure for blue collar workers will translate to lower construction costs.

I also note that decreased wages growth pressure for healthcare workers will likely result in lower pressure for residential real estate price growth...

And it is quite possible that this is representative in a small way of what is going to happen in the short to medium term.

MW

PS Where is Robots?


----------



## Bill M (4 February 2013)

I have read several posts now with comments like "have plenty of cash on the sidelines, waiting for investment". Not only are there a lot of individuals with cash waiting for deployment also the banks are flush with funds too. They have been dropping interest rates for investors dramatically and have no interest in looking after their customer base, you could say "if you don't like our rates there's the door".

It has to go somewhere. I mean why invest in cash for 4% or 3% in a super fund? Could real estate get a boost out of this surplus cash? KurwaJegoMac was on to something when he mentioned inflation, where is all this "cash on the sidelines" going to go? Saw an advert tonight from RAMS homeloans, I am pretty sure it said you can buy a home with a 5% deposit, I haven't seen ads like that for a while. (Just to cover my a**e, if that is incorrect I apologise.)

So where will it all end up?


----------



## FlyingFox (4 February 2013)

Bill M said:


> I have read several posts now with comments like "have plenty of cash on the sidelines, waiting for investment". Not only are there a lot of individuals with cash waiting for deployment also the banks are flush with funds too. They have been dropping interest rates for investors dramatically and have no interest in looking after their customer base, you could say "if you don't like our rates there's the door".
> 
> It has to go somewhere. I mean why invest in cash for 4% or 3% in a super fund? Could real estate get a boost out of this surplus cash? KurwaJegoMac was on to something when he mentioned inflation, where is all this "cash on the sidelines" going to go? Saw an advert tonight from RAMS homeloans, I am pretty sure it said you can buy a home with a 5% deposit, I haven't seen ads like that for a while. (Just to cover my a**e, if that is incorrect I apologise.)
> 
> So where will it all end up?




Firstly your statement about a lot of individuals is a sampling anomaly. A lot of people on ASF is not representative of the general population. A lot of people are actually paying of their rather large mortgages. Secondly, the banks aren't necessarily flushed with cash but there is definitely a lack of demand. Add to this that they get cheap overseas funding plus a lot of funding coming from secondary overseas sources (did you ever before see adds from car companies advertising 1% car loans before?) means a depressed deposit market. 

Real estate could get a boost out of this but at a price point. If your getting a significant yield (CG + rent) difference (~1-2%) in real estate over deposits than yes, money will flow in. Also depends on sentiment. People need to believe that prices will not slide and interest rates will not increase in the short to medium term for highly leveraged investments. The last bit is the tricky situation for the RBA. If they drop interest to devalue the AUD , we will start importing inflation. Unfortunately we're at the mercy of others when it comes to AUD strength.  

However this could be positive for commercial property due to it's much higher yield. Again don't know if the sentiment is strong enough given the recent spate of bad news for small business.

BTW anyone have any numbers on rent increases (inflation) in the past year or 2?


----------



## psailagroup (5 February 2013)

The future of Australian properties is going to be interesting but like I mentioned before each state will be different.
It’s fair to say that every state has its own “economy”, With the flood effects of Queensland / Brisbane plus the government is pretty broke, what will be the future of Brisbane / Queensland. 

The property market will be hit in the coming months….

I am a Victorian and things are going to be pretty rough in Victoria for quite some time:
•	Construction is at a all time low
•	Unemployment figures are not that accurate in my opinion
•	Allot of business are closing down 
•	Yes people are trying to pay down as much debt as possible 

In the short term the winners will be:
•	People who are renting 
•	People have small mortgagees


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## Izabarack (7 February 2013)

psailagroup said:


> In the short term the winners will be:
> •	People who are renting
> •	People have small mortgagees




And anyone looking for an investment property?

Locality dependent again, but houses attracting 300 a week are going for under 250k in Brisbane's west.   With the recent floods, 220 and 230 a week are being talked about for 12 month leases.

Iza


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## FlyingFox (7 February 2013)

Izabarack said:


> And anyone looking for an investment property?
> 
> Locality dependent again, but houses attracting 300 a week are going for under 250k in Brisbane's west.   With the recent floods, 220 and 230 a week are being talked about for 12 month leases.
> 
> Iza




Interesting. Might have to look into that. Where about's in Brisbane? There are parts that were developed but never took of e.g North Lakes.


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## cordelia (14 February 2013)

There needs to be bunch of people in competition with each other, all  with loads of cash, wanting  to buy property to drive prices higher.

Does this sound possible in today's financial climate.


----------



## tech/a (14 February 2013)

cordelia said:


> There needs to be bunch of people in competition with each other, all  with loads of cash, wanting  to buy property to drive prices higher.
> 
> Does this sound possible in today's financial climate.




I would argue there needs to be little supply.

Currently we have massive supply and where you get that you get decreasing prices and there are suburbs where that is happening.
Where supply is lacking you'll have prices holding or indeed rising and there are suburbs where that is happening.

Demand is being met buy supply simple as that.
The desperate (or smart) sell at lower prices.


----------



## white_goodman (14 February 2013)

Bill M said:


> They have been dropping interest rates for investors dramatically and have no interest in looking after their customer base, you could say "if you don't like our rates there's the door".




plainly wrong.. aus banks have been dropping their mortgage rates in line with the overnight cash rate set by the RBA, however not passing through all BP's. Savings rates are not slashed nearly as much and have been relative to mortgage rates been much stronger. Why? banks have been trying to reduce reliance on wholesale offshore funding and more on domestic savings ie attracting them with a relative higher rate.

EDIT: http://www.rba.gov.au/publications/fsr/2012/sep/pdf/aus-fin-sys.pdf  pg21

"The risks Australian banks could face from their use
of wholesale funding are being mitigated through
the ongoing compositional change to the liabilities
side of their balance sheets (see ‘Box A: Funding
Composition of Banks in Australia’). Deposit growth
has remained strong, at around 9 per cent in
annualised terms over the past six months, reducing
banks’ wholesale funding needs. However, the
strong competition for deposits has widened their
spreads relative to benchmark rates, contributing
to an increase in banks’ funding costs relative to the
cash rate. Deposits now account for 53 per cent of
banks’ funding, up from about 40 per cent in 2008"


----------



## sinner (14 February 2013)

white_goodman said:


> plainly wrong.. aus banks have been dropping their mortgage rates in line with the overnight cash rate set by the RBA, however not passing through all BP's. Savings rates are not slashed nearly as much and have been relative to mortgage rates been much stronger. Why? banks have been trying to reduce reliance on wholesale offshore funding and more on domestic savings ie attracting them with a relative higher rate.
> 
> EDIT: http://www.rba.gov.au/publications/fsr/2012/sep/pdf/aus-fin-sys.pdf  pg21
> 
> ...




Thx good info. That's a significant reduction in reliance on European credit markets. However, the amount remaining as reliant on international credit growth is still very very high as a proportion of the total.


----------



## Bill M (14 February 2013)

white_goodman said:


> plainly wrong.. aus banks have been dropping their mortgage rates in line with the overnight cash rate set by the RBA, however not passing through all BP's. Savings rates are not slashed nearly as much and have been relative to mortgage rates been much stronger. Why? banks have been trying to reduce reliance on wholesale offshore funding and more on domestic savings ie attracting them with a relative higher rate.




The point of the original post was to highlight that cash deposit rates have indeed gone down more than the RBA rates. On Feb2012 the RBA rates were 4.25%, on Feb 2013 the rates are 3%. For that 12 Months it went down 1.25%. 

On the other hand I just looked at my UBANK statement. On 1/3/2012 the rate with bonus was 6.01% and now that same rate is 4.66% with bonus. That is a drop of 1.35%. If you do not have an automatic saving plan then that drops even further to 3.96%.

So my original comment was along the lines of why would you keep it in the bank getting 4% when you can do far better with other investments? Where is all this "cash on the sidelines" going to go? Shares have been good, maybe some of will flow into real estate too? Cheers.


----------



## Julia (14 February 2013)

Bill M said:


> So my original comment was along the lines of why would you keep it in the bank getting 4% when you can do far better with other investments? Where is all this "cash on the sidelines" going to go? Shares have been good, maybe some of will flow into real estate too? Cheers.



Is real estate (representing 'other investments' as above), really doing so much better?
I can't now recall the yield you've quoted for your investment property, but think it wasn't much over 4%?
Apologies if I'm quite wrong.

A  house in my street sold a few months ago and is now being rented out.  I did the calculation as to yield on the purchase price and, after expenses, it's well under 4%.  And that's without all the potential hassle of tenants, repairs and maintenance, rate rises outstripping rent increases etc.

Bank shares with grossed up yield would seem to be a better proposition, as would locked in term deposits of a few years ago, still bringing in 8% with no anxieties attached.


----------



## Ves (14 February 2013)

Julia said:


> I can't now recall the yield you've quoted for your investment property, but think it wasn't much over 4%?



Does it make a difference that the yield on cost (after outgoings) a property has the potential to at least track inflation over time?


----------



## Julia (14 February 2013)

Ves said:


> Does it make a difference that the yield on cost (after outgoings) a property has the potential to at least track inflation over time?



I suppose it depends on what period of time you're suggesting represents "over time".
This seems variable area to area.
Where I am the fact that prices have fallen up to 30% since the GFC and show no signs of picking up would be enough to put me off.


----------



## Bill M (15 February 2013)

Julia said:


> Is real estate (representing 'other investments' as above), really doing so much better?
> I can't now recall the yield you've quoted for your investment property, but think it wasn't much over 4%?
> Apologies if I'm quite wrong.
> 
> ...




Mine is returning about 4% after tax and expenses, so 4% net is not too shabby. With the interest returns of 4% I would still have to pay tax on that and there is no chance of capital gains. Property seems to be firming up around my area on the Central Coast and on the Northern Beaches in Sydney it just gets more expensive all the time. I reckon prices will be higher in 5 years time, in the mean time I just collect the rent. 

The IP is just one part of my investment portfolio, I also hold shares and listed interest securities. I have allocated capital to each of those roughly in one thirds. As you probably already know I am a long term investor, I don't buy and sell all that often. Real estate is definitely not a quick way to make a buck but by gosh it is a very steady source of income for me. I have rented out this property for over 3 years now and that Monthly deposit of rent into my account has always been there and that is very comforting, cheers.


----------



## cordelia (15 February 2013)

tech/a said:


> I would argue there needs to be little supply.
> 
> Currently we have massive supply and where you get that you get decreasing prices and there are suburbs where that is happening.
> Where supply is lacking you'll have prices holding or indeed rising and there are suburbs where that is happening.
> ...



he g


The big gains that were made in property pre GFC (at the expense of the average home owner) were because of imprudent lending, leverage and credit...things are different now....

you will not see the growth in property you have seen previously because the criminal activities associated with it's growth have been exposed....


anyone trying to make money out of property is a "johnny come lately"


----------



## sydboy007 (15 February 2013)

There was a good article by Philip Soos in the SMH yesterday

It's interesting to see that for a long time house prices were pretty static.  they've only really taken off since financial regulation was eased in the late 80s.

I will note that all the metrics for housing turn really nasty from 2000, when Howard and Costello gifted us with the halving of CGT.

While you can get more people to take on more debt the ponzi scheme will run its course, but considering we now have the one of the most indebted household sectors in the world I don't think the debt fuel has much longer to go.


----------



## sydboy007 (15 February 2013)

white_goodman said:


> plainly wrong.. aus banks have been dropping their mortgage rates in line with the overnight cash rate set by the RBA, however not passing through all BP's. Savings rates are not slashed nearly as much and have been relative to mortgage rates been much stronger. Why? banks have been trying to reduce reliance on wholesale offshore funding and more on domestic savings ie attracting them with a relative higher rate.




Since the GFC the banks have been paying depositors at rates higher than 90 day BBSW.  There's certainly been some compression over the last few months on how much extra the banks are paying, but it's still quite high by pre GFC standards.

I get the feeling the flood of money has started to hit the ASX.  Anything offering 6% yield seems to be taking off.  NAB is up 25% since November.  I'll take the ability to positively gear a share portfolio over negatively gearing a house any day.


----------



## cordelia (15 February 2013)

sydboy007 said:


> Since the GFC the banks have been paying depositors at rates higher than 90 day BBSW.  There's certainly been some compression over the last few months on how much extra the banks are paying, but it's still quite high by pre GFC standards.
> 
> I get the feeling the flood of money has started to hit the ASX.  Anything offering 6% yield seems to be taking off.  NAB is up 25% since November.  I'll take the ability to positively gear a share portfolio over negatively gearing a house any day.




you do realise how banks create money out of thin air don't you?

If I deposit $10 into ANZ they can then lend out $90 and charge the borrower the going interest rate plus fees for the privilege.....


wake up we are being shafted!!!!


If you are serious about trading the market you have to understand how money is created....
google...how money is created out of thin  air

good luck


----------



## white_goodman (15 February 2013)

cordelia said:


> you do realise how banks create money out of thin air don't you?
> 
> If I deposit $10 into ANZ they can then lend out $90 and charge the borrower the going interest rate plus fees for the privilege.....
> 
> ...




you literally have said nothing of value


----------



## FlyingFox (15 February 2013)

white_goodman said:


> you literally have said nothing of value




+1. Not to mention the very bad (wrong?) description of fractional reserve banking.


----------



## howmanyru (15 February 2013)

Julia said:


> Is real estate (representing 'other investments' as above), really doing so much better?
> I can't now recall the yield you've quoted for your investment property, but think it wasn't much over 4%?
> Apologies if I'm quite wrong.
> 
> Bank shares with grossed up yield would seem to be a better proposition, as would locked in term deposits of a few years ago, still bringing in 8% with no anxieties attached.




I agree Julia, I don' even get 4% return and endless hassles with my IP. And it is frustrating watching fairly safe blue chip stocks soar while my house price does nothing. Also, tenants depreciate the value of the property because they don't bother to look after it. The only advantage for me is that I can't make fast stupid mistakes like i can in the stock market. So for myself, with limited skills and high risk aversion, property feels safer. I could sell the house and put the money into term deposits, but we may end up with near 0% rates like the US. I am hopeful the government will continue to make poor policy decisions which continue to inflate the housing sector (sorry FHB)


----------



## McLovin (15 February 2013)

Just to throw the cat amongst the pigeons (it is Friday)...




http://www.businessinsider.com/matt-kings-most-depressing-slide-ever-2012-12

NB: I don't necessarily agree.


----------



## FlyingFox (15 February 2013)

McLovin said:


> Just to throw the cat amongst the pigeons (it is Friday)...
> 
> View attachment 50978
> 
> ...




Great Slide. Just a note that they are using the inverse dependency ratio which wasn't obvious to me until I went to the article. 

Curious as to why you don't necessarily agree with "one of the most powerful forces in all of economics: demographics", McLovin?

I will add though, this is a more solvable problem for Oz than most other countries as we are population wise a small country with robust immigration and immigration prospects.


----------



## Miss Hale (15 February 2013)

howmanyru said:


> I agree Julia, I don' even get 4% return and endless hassles with my IP. And it is frustrating watching fairly safe blue chip stocks soar while my house price does nothing. Also, tenants depreciate the value of the property because they don't bother to look after it. The only advantage for me is that I can't make fast stupid mistakes like i can in the stock market. So for myself, with limited skills and high risk aversion, property feels safer. I could sell the house and put the money into term deposits, but we may end up with near 0% rates like the US. I am hopeful the government will continue to make poor policy decisions which continue to inflate the housing sector (sorry FHB)




I agree with what you say about IPs and would add that they don't actually depreciate because tennants don't look after them, they will depreciate anyway due to the general wear and tear of having people living in them, the effects of weather etc.  Even if you have the best tennants in the world things wear out and get old over time and need replacing.  It's true that some tennants don't look after the place but others (like me) treat it as they would their own home and look after it very well.  Nevertheless, over time paint gets tired looking, hot water services wear out etc. etc. Bad tennants will make your property depreciate faster but it will depreciate anyway.  This is part of the reason I just can't see the attraction of IPs, you don't have to do running repairs to your shares.  Of course if the returns were very high it would be worth the extra costs, but at the moment the return om most IPs is low.


----------



## McLovin (15 February 2013)

FlyingFox said:


> Curious as to why you don't necessarily agree with "one of the most powerful forces in all of economics: demographics", McLovin?
> 
> I will add though, this is a more solvable problem for Oz than most other countries as we are population wise a small country with robust immigration and immigration prospects.




Looks like you answered the question yourself.

I'd add America to that list, even Ireland and Spain.


----------



## FlyingFox (15 February 2013)

McLovin said:


> Looks like you answered the question yourself.
> 
> I'd add America to that list, even Ireland and Spain.




Yes I did. A bit slow today. I was thinking more globally but than the thread title does say future of *Australian* property prices.

Yes Ireland and Spain are small enough and the US will get population support from Latin American which along with India, Africa and some Asian countries are the only ones with decreasing dep ratios. It will also depend on the policies of the country. e.g Japan. 

However China also had it's peak in the inverse dependency ratio somewhere between 2009 and now. I am still uncertain as to how things will reach equilibrium. 

BTW I think this were the "printing" is going. To stop the demographic changes from causing deflation. Something to add to the printing thread when I get time.


----------



## sptrawler (16 February 2013)

Ves said:


> Does it make a difference that the yield on cost (after outgoings) a property has the potential to at least track inflation over time?




Generaly, yes, however if you overpay for the property, not for a long time.

The problem at the moment is three fold.
1. Debt fuelled price increases over the last 10 years. Well documented.

2. Relaxing of foreign ownership rules.

3. Excessive wages due to mining boom

It can't last,IMO, if we continue on we will end up the working poor in our own country.

http://au.news.yahoo.com/thewest/business/a/-/national/16155306/investment-boom-to-peak-lower-rba/

Supply and demand will push down wages, 457's will push down wages. That gets rid of number 3

Relaxing foreign ownership rules will keep prices of houses up.

Australians personal debt is maxed out, so if real wages go down and foreign buyers stay in the market, OMG

That is worste case scenario, but I'm a doom and gloom guy.


----------



## Mrmagoo (17 February 2013)

I just want to see a return to social equity where a man can own what he bought with his own hard work. The housing market is a classic example of socialism for us, capitalism for you. The whole thing is out of whack and once again it is liberal government socialism which caused it.


----------



## sydboy007 (18 February 2013)

Interesting article in thebull today.

This slide shows how much we're spending on housing as a share of household income.  Nearing 20%.  Something needs to be done to reduce this as it's a huge drain on the country.


----------



## sydboy007 (18 February 2013)

from the same article, shows the crazy increase in how much interest costs have gone up compared to rental income.  Once again the debt fuel rocket of the CGT halving is clear to see


----------



## medicowallet (18 February 2013)

Mrmagoo said:


> I just want to see a return to social equity where a man can own what he bought with his own hard work. The housing market is a classic example of socialism for us, capitalism for you. The whole thing is out of whack and once again it is liberal government socialism which caused it.




I agree with the last sentence (and blame tax cuts as having a greater effect than FHVB)

However if liberal government socialism birthed it, Labor government manurish policies fertilised it.


----------



## Mrmagoo (19 February 2013)

medicowallet said:


> I agree with the last sentence (and blame tax cuts as having a greater effect than FHVB)
> 
> However if liberal government socialism birthed it, Labor government manurish policies fertilised it.




The current liberals are nothing but a bunch of steaming turds.


----------



## medicowallet (19 February 2013)

Mrmagoo said:


> The current liberals are nothing but a bunch of steaming turds.




I think both sides of politics are the worst I can remember in my life.  If I had to vote today, without a doubt, Abbott would get my vote, as even though it is likely, I do not know for sure he is an incompetent fool like the alternative.

Both Labor and liberal stuffed the housing market,

Both are useless, it is just that Labor is way more useless.
MW


----------



## DB008 (19 February 2013)

Mrmagoo said:


> The current liberals are nothing but a bunch of steaming turds.




And what would you call the muppets in power now?


----------



## Klogg (19 February 2013)

medicowallet said:


> I think both sides of politics are the worst I can remember in my life.




I agree with this, however I think they've dumbed themselves down to accommodate a much less intelligent nation.

How many people actually understand or care about good housing policies, or any good policies for that matter... The others just vote for reasons entirely unrelated to good policy - i.e. because they want a woman PM, or they think the PM should be married with kids.

The more time goes on, the more I think we should introduce the need to pass an exam to be able to vote...


----------



## Bill M (19 February 2013)

medicowallet said:


> I think both sides of politics are the worst I can remember in my life.
> MW




That should go down as the statement of the week, totally agree. Thankfully I will be out of the country on the day of the election so i won't have to vote for either of them.

Sorry, housing prices, where were we? I reckon some of the recent sharemarket profits might flow in real estate soon, prices steady to up in the near term IMHO.


----------



## IFocus (19 February 2013)

Bill M said:


> That should go down as the statement of the week, totally agree. Thankfully I will be out of the country on the day of the election so i won't have to vote for either of them.




Mate I have been in countries where people have died for this simple right, please give some one your vote don't take it for granted.


----------



## FlyingFox (19 February 2013)

medicowallet said:


> I think both sides of politics are the worst I can remember in my life.
> MW




+1.


----------



## Bill M (19 February 2013)

IFocus said:


> Mate I have been in countries where people have died for this simple right, please give some one your vote don't take it for granted.




Sorry IFocus, with great respect to you I just can't get enthusiastic about it and I will not be voting. Best leave it there as the thread will become another boring, pointless political one. Cheers mate.


----------



## sydboy007 (20 February 2013)

I suppose the huge issue for both sides is how do you make housing more affordable for those on he outside, when it will at best cause a long term stagnation in house prices, and most likely cause a reasonable decrease?

Considering the the over 55s own around 50~ of the housing stock they are a formidable voting block and one neither side can afford to antagonise.

I'd love a debate on why rising housing prices is good for the economy, let alone good for the welfare of the people.


----------



## wayneL (20 February 2013)

sydboy007 said:


> I'd love a debate on why rising housing prices is good for the economy, let alone good for the welfare of the people.




As a general principle, yes. 

But there has been an aberration which complicates the equation.


----------



## white_goodman (21 February 2013)

Klogg said:


> I agree with this, however I think they've dumbed themselves down to accommodate a much less intelligent nation.
> 
> How many people actually understand or care about good housing policies, or any good policies for that matter... The others just vote for reasons entirely unrelated to good policy - i.e. because they want a woman PM, or they think the PM should be married with kids.
> 
> The more time goes on, the more I think we should introduce the need to pass an exam to be able to vote...





the nation has dumbed-down that considerably since 07? Deteriorating economies shine a bit more light on the political process an ineptitude of pollies imo


----------



## explod (21 February 2013)

white_goodman said:


> the nation has dumbed-down that considerably since 07? Deteriorating economies shine a bit more light on the political process an ineptitude of pollies imo




I do find your last sentence here not making sense to me.  Could you perhaps rephrase it ?


----------



## McLovin (21 February 2013)

explod said:


> I do find your last sentence here not making sense to me.  Could you perhaps rephrase it ?




No one worries about largesse until the **** hits the fan.


----------



## damien275x (21 February 2013)

Know a girl who just committed at the end of 2010 to a $990,000 mortgage for an ugly Melbourne house. Not sure how the banks will dish that out when her and the partners  income is only $120k. Now she's trying to get out due to job loss and it's not getting any offers higher than $660, they obviously won't accept, but still - it doesn't look likely that the money will be recovered. It is a black hole investing.

The thing with the price charts is they don't take into account the disgustingly large amounts of homes that just won't sell, and believe me, from the looks of things and talking to my real estate  admin bitch friends (who are all being retrenched btw) - the boom seems to have lost a whole lot of steam and these companies, both developers and RE agents, are left scrambling to cover losses they didn't see coming. I think by 2017 should be over, or 2019 at the latest. Boom of the 2020s I will buy. Also if you are rich you can just average in as it continues to slide, but most people sell at the bottom then buy back in at the top like retards. Don't buy a house if you want to sell or flip it in 2 years, if you do that you deserve to lose 400k


----------



## Mr Z (23 February 2013)

I got this from DHA this AM.



> Hi Mr Z
> 
> How much money do you need to have to become a real estate investor?
> 
> ...




It is obviously designed to encourage me, DHA have become more active of late, pushing harder than normal. Anywhoooooo.... for some reason it had the opposite effect.


----------



## village idiot (23 February 2013)

looks like the s**t's hit the fan in nedlands, down 50% in 2 months


----------



## village idiot (23 February 2013)

but honestly all that chart proves is the uselessness of using the median price for comparison especially on small samples....


----------



## banco (23 February 2013)

Mr Z said:


> I got this from DHA this AM.
> 
> 
> 
> It is obviously designed to encourage me, DHA have become more active of late, pushing harder than normal. Anywhoooooo.... for some reason it had the opposite effect.




It's pretty strange that a Government body is pushing this stuff.


----------



## Julia (23 February 2013)

banco said:


> It's pretty strange that a Government body is pushing this stuff.



They consistently advertise quite aggressively in various papers.


----------



## Mr Z (23 February 2013)

banco said:


> It's pretty strange that a Government body is pushing this stuff.




It's what DHA do! Rather than use their capital to house the defense force they use ours... in return for rent. In some respects its a good deal but I have heard that they can treat owners badly.... either way its the income stat that is interesting, not much fat on those bones IMO.


----------



## Mrmagoo (23 February 2013)

village idiot said:


> but honestly all that chart proves is the uselessness of using the median price for comparison especially on small samples....




Yet they'll crap on about that same figure in boom time. yawn.


----------



## Cradled Gold (23 February 2013)

Mrmagoo said:


> Thnx. I'll remind my boss to pay me more as I should be getting paid more than the women I work with. Awesome. I'm getting a raise !




I would not advise anyone under 30yrs to buy a home without firstly having a good income paying job and a good savings! Contrary to belief, "you cannot have it all NOW" and "no one owes you anything"...the two greatest demons sitting on the shoulders of those laboured by these beliefs created by the academic bleeding hearts making up excuses for everyone! There are no excuses...there are no easy paths...there is such a thing as hard work, saving diligently, not buying everything new and having to 'keep up with the jones', spending less time wasting your money on too much booze and meals out...

And yes, property and the dollar is over valued in Australia; we pay way too much for most of what we purchase; no excuses! Each generation has had its financial hardships at some point in time. I believe property value will continue to fall...who knows what all that will bring! Remember last years ABC 7.30 Report on our own Banks Sub-prime mirrored faux pas?...we are yet to realise the financial costs to this behaviour!

I also believe that affluence has a great deal to answer for...and yes, kids need to have quality and quantity time with their parents! The 'Love' of money is taking over the 'Love' shared in a home! Many Baby Boomers saved up, did not mind second-hand clothes, furniture, cars, appliances...and insisted on their young people showing them a bit more respect than what the youth of today seem to ignore...or perhaps are simply ignorant of its personal value! 

Nevertheless, times are different now as times are different for each generation...but no excuses...make something out of what you have and not expect too much too soon...each individual has to work towards not only something material, but something that hopefully builds their moral fiber and helps them gain a bit of wisdom!!!


----------



## Julia (25 February 2013)

For those familiar with Sydney prices, this property goes to auction this coming Saturday.  It's in Chesterfield Road, Epping.  What do you think would be a realistic price?

http://www.realestateview.com.au/Re...Property-Details-buy-residential-4944533.html


----------



## FlyingFox (25 February 2013)

Julia said:


> For those familiar with Sydney prices, this property goes to auction this coming Saturday.  It's in Chesterfield Road, Epping.  What do you think would be a realistic price?
> 
> http://www.realestateview.com.au/Re...Property-Details-buy-residential-4944533.html




It's been a while since I was in sydney but I worked at Mac Uni for a year so I kinda have a vague idea about the area. Given the land size etc, a realistic price should be 700K-900K. The large range is because I haven't seen the property and I have been away from the Sydney market for a long time 

What will it go for? My guess is if it sells, it will be around the 1.2 to 1.4M range.

Too far off?


----------



## Julia (25 February 2013)

FlyingFox said:


> It's been a while since I was in sydney but I worked at Mac Uni for a year so I kinda have a vague idea about the area. Given the land size etc, a realistic price should be 700K-900K. The large range is because I haven't seen the property and I have been away from the Sydney market for a long time
> 
> What will it go for? My guess is if it sells, it will be around the 1.2 to 1.4M range.
> 
> Too far off?



Thanks, Flying Fox.  It's my cousin's house.  She says she will not accept less than 1.6M.  I have no idea how realistic that is which is why I put it up here.
I've been there.  It's a very pleasant area, a few minutes to the train station, leafy and quiet, surrounded by similar houses.  I'd have thought for that money, one would expect a decent driveway.


----------



## So_Cynical (25 February 2013)

Julia said:


> For those familiar with Sydney prices, this property goes to auction this coming Saturday.  It's in Chesterfield Road, Epping.  What do you think would be a realistic price?
> 
> http://www.realestateview.com.au/Re...Property-Details-buy-residential-4944533.html




I've walked past that house a few times, very quiet and a very good area....beautiful houses in surrounding streets but not over the top beautiful.

realistic price: over 1.1 would be my guess...it is Epping after all.


----------



## FlyingFox (25 February 2013)

Julia said:


> Thanks, Flying Fox.  It's my cousin's house.  She says she will not accept less than 1.6M.  I have no idea how realistic that is which is why I put it up here.
> I've been there.  It's a very pleasant area, a few minutes to the train station, leafy and quiet, surrounded by similar houses.  I'd have thought for that money, one would expect a decent driveway.




Sydney prices are crazy. Epping is (well was, its been over 6 yrs since I was in Syd) meant to be one of the outer suburbs for first home buyers and young families. Don't know how many people in that category can afford 1.6M?


----------



## Mr J (26 February 2013)

FlyingFox said:


> Sydney prices are crazy. Epping is (well was, its been over 6 yrs since I was in Syd) meant to be one of the outer suburbs for first home buyers and young families. Don't know how many people in that category can afford 1.6M?




You may call it entry level to a good area, i.e. the families will tend to be better off than those in cheaper suburbs further west. It is most certainly not an outer suburb, unless you are like me and insist on every west of the bridge to be "way out west" .

For 1.6m I know I would look at other areas.


----------



## FlyingFox (26 February 2013)

Mr J said:


> You may call it entry level to a good area, i.e. the families will tend to be better off than those in cheaper suburbs further west. It is most certainly not an outer suburb, unless you are like me and insist on every west of the bridge to be "way out west" .
> 
> For 1.6m I know I would look at other areas.




Fair enough. Like I said, it's been a while since I was in Sydney. The point being though, not many families can afford a entry level house in a good area.


----------



## Julia (26 February 2013)

Heavens, if this house can be considered 'entry level', then I have a new comprehension of why so many aspiring  home owners complain that getting into property is impossible!


----------



## McLovin (26 February 2013)

Julia said:


> Thanks, Flying Fox.  It's my cousin's house.  She says she will not accept less than 1.6M.




I think she'd be doing _very_ well for herself to get near $1.6m. I agree with others, around $1.1-$1.2m. Nice house too.


----------



## tech/a (26 February 2013)

I ll suggest handed in in the 1.3-1.4 range.
Then negotiation starts.
Anything over 1.4 would be a job well done.
To keep on holding for higher would be unwise in my view.
In 12 mths 1.4 ish will be seen as a great sale!

Ive sold quite a few over the last 6 yrs and still selling
some. Each sale while Id have liked more has been a good sale.

The only ones I wont negotiate on are those giving me massive passive income
IE they are freehold or close.
Other than that---Im out!


----------



## maffu (26 February 2013)

Julia said:


> Heavens, if this house can be considered 'entry level', then I have a new comprehension of why so many aspiring  home owners complain that getting into property is impossible!




I would consider Epping a pretty middle-class / upper middle-class suburb. Sydney has a median household income of about $1450 per week, while Epping is slightly higher at a median household income of $1683.

It's still a 40 minute commute away from the CBD, so its in the outer ring for professionals who need to commute in. So it's pretty fair to say that Epping was considered an affordable area for new professional families.

The median house price for Epping has been around $900,000 for the past year, so by Sydney standards its probably in the top 35-40% of suburbs by median price, but no where near the top. So sits nicely in the upper middle class suburb category.




If that house is significantly better than the rest of the houses in Epping, I have no idea. So maybe that is at the upper end of the Epping scale and not appropriate for first home buyers. But plenty of first home buyers would like a 4 bedroom house with parking in Epping.


----------



## Mr J (26 February 2013)

Julia said:


> Heavens, if this house can be considered 'entry level', then I have a new comprehension of why so many aspiring  home owners complain that getting into property is impossible!




Sorry, I was referring to the area, not the house. It would be one of the better houses in the area.

Flying Fox, it may be unaffordable for most young families, but it is a better part of Sydney. In that position I'd rather look at somewhere cheaper, further out with good transport and some nearby parks. Quiet leafy streets aren't what they used to be for the kids.


----------



## againsthegrain (26 February 2013)

There were links to similar properties that sold in the link under, and i saw this

http://www.realestateview.com.au/Real-Estate/hillside-crescent-epping/Property-Details-sold-residential-4773215.html

Had a very very quick look, but on first inspection seems like a very similar property, 4 bedrooms, slightly larger land size, 2 garages ... sold for 900k so alot less then the above property mentioned.


----------



## Julia (26 February 2013)

Thanks for the comments.  I've only been there once.  The area seemed pleasant but quite far out compared to where I lived in Sydney, viz Balmoral Beach and Double Bay.(I should be clear that we were renting!)

I suppose that same house in either of the above areas would be considerably more expensive?

I was pretty surprised when she said she wouldn't accept less than 1.6M.  However, the place has only been on the market for the pre-auction campaign of about a month.  If it's still sitting there in a few months, she might start to take a different view.

Mr J. thanks for clarifying the 'entry level' remark.  I'm relieved to know that much house is not necessarily considered a first step into property ownership.


----------



## McLovin (26 February 2013)

Julia said:


> I suppose that same house in either of the above areas would be considerably more expensive?




In Double Bay, a block that size (it looked enormous in the photos!) would probably go for $2.5m+. That size in Balmoral with water views, you could probably go for $5m+


----------



## Julia (26 February 2013)

McLovin said:


> In Double Bay, a block that size (it looked enormous in the photos!) would probably go for $2.5m+. That size in Balmoral with water views, you could probably go for $5m+



Ah, as I imagined.  Thank you, McLovin.  The Esplanade at Balmoral was just gorgeous - pretty, convenient, and the sound of lapping water at night.


----------



## FlyingFox (26 February 2013)

maffu said:


> I would consider Epping a pretty middle-class / upper middle-class suburb. Sydney has a median household income of about $1450 per week, while Epping is slightly higher at a median household income of $1683.
> 
> It's still a 40 minute commute away from the CBD, so its in the outer ring for professionals who need to commute in. So it's pretty fair to say that Epping was considered an affordable area for new professional families.




Agree with your first points. Now lets see....new professional family on median income in Epping. Gets a 1.1M house with 100K deposit. The P&I repayments on that is 1,237.96 a week at 5% for a 30 yr loan. Affordable?

Say you go with a median house with 100K deposit. The repayments on that is 990.37 a week. 

This is with a 40 min commute to the CBD (thats at the best of times).


----------



## McLovin (26 February 2013)

FlyingFox said:


> Agree with your first points. Now lets see....new professional family on median income in Epping. Gets a 1.1M house with 100K deposit. The P&I repayments on that is 1,237.96 a week at 5% for a 30 yr loan. Affordable?




You'll probably find that number quoted is median _equivalised_ household income, not gross.

Something like this...



> In Epping (NSW) (State Suburbs), for couple families with two incomes, the median income for those with children was $3,049 and those without children was $2,428.




http://www.censusdata.abs.gov.au/ce...11/quickstat/SSC10829?opendocument&navpos=220


----------



## FlyingFox (26 February 2013)

McLovin said:


> You'll probably find that number quoted is median _equivalised_ household income, not gross.
> 
> Something like this...
> 
> ...




I did realise that but I don't see a problem since we are using medians everywhere else. Are the numbers you quoted net or gross?


----------



## McLovin (26 February 2013)

FlyingFox said:


> I did realise that but I don't see a problem since we are using medians everywhere else.




The problem seems to be using that median to determine housing affordability.

Equivalised income is weighted toward how many people are in the household. If there are 10 people in a household and only one works earning $1,400/week then equivalised household income for the household will be $140/week. That's why I'm not sure how you can reach an housing affordability conclusion based on the equivalised median income. I would have thought the gross number is far more useful. Maybe I'm missing something?


----------



## FlyingFox (26 February 2013)

McLovin said:


> The problem seems to be using that median to determine housing affordability.
> 
> Equivalised income is weighted toward how many people are in the household. If there are 10 people in a household and only one works earning $1,400/week then equivalised household income for the household will be $140/week. That's why I'm not sure how you can reach an housing affordability conclusion based on the equivalised median income. I would have thought the gross number is far more useful. Maybe I'm missing something?




Sorry McLovin, I replied too soon without understanding your previous post. However my statement still stands. Even if you assume a *gross* income of $2,428-$3,049 a week, the repayments on the  1.1M property are still 50-40% of income. This is classified as mortgage stress if I am not mistaken.

I am happy to use gross income as well but with the understanding that it is gross income and that you have account for the disposable aspect of it (namely remove the tax component etc).

I agree with your point about stats but unfortunately that's the way the dice rolls . These are the universally used stats and while each has their own biases atleast everyone has the same understanding of them. Ideally you should look at distributions.

Edit: Corrected net to gross in second sentence.


----------



## Julia (26 February 2013)

I understand the principle of considering incomes etc to determine affordability, but perhaps there's another factor not being considered.  (Here, I'm again only going from what my cousin has told me, but she is usually pretty thorough in her research.)

She says there is much purchasing of property in Epping by affluent Chinese investors and that they have bought up a lot of residential property there.


----------



## medicowallet (26 February 2013)

The foreign investment boom can be chalked up as another Rudd failure..

Let's just hope the dollar stuffs em.

MW


----------



## FlyingFox (26 February 2013)

medicowallet said:


> The foreign investment boom can be chalked up as another Rudd failure..




How so?


----------



## sptrawler (26 February 2013)

FlyingFox said:


> How so?




Post GFC, Rudd relaxed foreign ownership rules and they have been further relaxed recently.

In the area I live, prices are booming, most of the buyers are of Indian or Asian descent.


----------



## FlyingFox (27 February 2013)

sptrawler said:


> Post GFC, Rudd relaxed foreign ownership rules and they have been further relaxed recently.




Fair enough.



sptrawler said:


> In the area I live, prices are booming, most of the buyers are of Indian or Asian descent.




Does not make them foreigners . 

While I believe that foreign ownership is a contributing factor, I find it hard to believe that it is having such a large impact as people have mentioned. 

However if it is true then I hope the rest of the country does not follow the Gold Coast......


----------



## sptrawler (27 February 2013)

FlyingFox said:


> Fair enough.
> 
> 
> 
> ...




No it doesn't worry me at all, it may worry my kids, but it doesn't worry me.

I hope it all works out for complacent Aussies, because I see agressive buying by overseas buyers in my area.lol

I will take great interest, in where all the current pollies, end up living lol


----------



## FlyingFox (27 February 2013)

sptrawler said:


> I hope it all works out for complacent Aussies, because I see agressive buying by overseas buyers in my area.lol




And by overseas buyers do you mean non-Australian residents or non-caucasians? This is a very important differentiation that people fail to make. In a lot of cases it might be parents who live overseas just helping kids out with deposits etc.


----------



## againsthegrain (27 February 2013)

Julia im curious how is this property that different then your cousins one?

http://www.realestateview.com.au/Real-Estate/hillside-crescent-epping/Property-Details-sold-residential-4773215.html

If this one is a 4bedroom on a 1200sqm block in epping and sold for 930k how does your cousin calculate 1.6m for hers?


----------



## Julia (27 February 2013)

againsthegrain said:


> Julia im curious how is this property that different then your cousins one?
> 
> http://www.realestateview.com.au/Real-Estate/hillside-crescent-epping/Property-Details-sold-residential-4773215.html
> 
> If this one is a 4bedroom on a 1200sqm block in epping and sold for 930k how does your cousin calculate 1.6m for hers?



I have no idea.  I'm in Qld and have only been to her home once, about five years ago.  I had only a cursory impression of the area which I thought was very pleasant - big trees, lovely old homes (if you like that style) and very close to the station.

I don't know the relative location of the property you quote above so perhaps that's a factor.  eg I live in a particular suburb but there are two very different parts of that suburb, one attractive and more expensive and the other, pretty awful.

Just having a look at the actual house you put up, it doesn't have that Federation style character which I know many people like and which is exemplified in my cousin's place.  It's just a house, without imo much style or character.

Personally I wouldn't go for either - much prefer something more modern and less labour intensive.

Btw I'm not at all suggesting her $1.6M is realistic.  I have no idea.  That's why I asked for views from others, as it struck me just from what I can see on realestate.com that her expectations might be on the high side.


----------



## againsthegrain (27 February 2013)

Julia said:


> I have no idea.  I'm in Qld and have only been to her home once, about five years ago.  I had only a cursory impression of the area which I thought was very pleasant - big trees, lovely old homes (if you like that style) and very close to the station.
> 
> I don't know the relative location of the property you quote above so perhaps that's a factor.  eg I live in a particular suburb but there are two very different parts of that suburb, one attractive and more expensive and the other, pretty awful.
> 
> ...




I see, thats a very good point about bad side of tracks and good one, I know exactly what you mean. Very curious to see how far off or over she will get from her expectation.


----------



## McLovin (27 February 2013)

againsthegrain said:


> Julia im curious how is this property that different then your cousins one?




Someone buying that house is probably thinking of spending 200-300k rennovating it. Julia's cousin's house looks like you could move straight in.

$1.6m is pretty unrealistic as has already been discussed but that house you linked to looks like it needs a fair bit of work. Even the kitchen looks like the set of Kingswood Country, with a couple of new appliances. And I'll go out on a limb and say that the fact there is no photo of the bathrooms is quite telling


----------



## Julia (27 February 2013)

McLovin said:


> And I'll go out on a limb and say that the fact there is no photo of the bathrooms is quite telling



I actually had a similar thought re my cousin's advertising not showing other than the main bedroom and bathroom.
I recall when she showed us through, we weren't taken to see the other three bedrooms or bathroom.


----------



## sptrawler (28 February 2013)

Now that interest rates are at all time lows, the alarm bells must be ringing.
House prices are moving up again, from an unsustainable level before.lol
The RBA must feel their gonads are in a vice.lol
I hear Paul Keating in the background saying " this is the recession we have to have"


----------



## Kingpin (1 March 2013)

Hi everyone I am very interested in buying real estate in the near future .

I am 19 years old with no debt or liabilities(besides a gym membership ) 
i currently have 3k saved and a small amount in stocks ( just bought DYL at 58 should of waited i know) I have been looking at land at various suburbs for around 20k-30k .
My question is  at my age would you continue to save for an investment and incur passive income 
or take out a personal loan for a block of land and wait for capital , i do realise i will have  to pay rates and etc but atm i belive this will be good debt .

I appreciate everyones advice on the subject as i know alot of people on this forum have been around the block a few times 
. my long term goal is to have a positive geared  investment by 21 
thank you all kingpin


----------



## Julia (1 March 2013)

Kingpin said:


> Hi everyone I am very interested in buying real estate in the near future .
> 
> I am 19 years old with no debt or liabilities(besides a gym membership )
> i currently have 3k saved and a small amount in stocks ( just bought DYL at 58 should of waited i know) I have been looking at land at various suburbs for around 20k-30k .



Where is this?  I haven't seen any decent land at such a price for many, many years.  Average price for a house block in the regional coastal Qld centre where I live is around $200K.  It will be a lot more in a capital city, I imagine.

If you were to buy that land, how and when would you anticipate it offering you some return?  Land alone is going to require outgoings on rates, without bringing you any revenue.

You don't say anything about your earning capacity.


----------



## Kingpin (1 March 2013)

griffith nsw quite a few in that are although i am not from there.
i have also looked at a few in broken hill.
i recently have landed a caual job paying between 800 - 1000 pw
to be honest i am not to sure when to expect a return it would be more like a pay and forget type investment if i could call it that.  i do realise the outgoings so i would be relying on the capital .


----------



## chops_a_must (1 March 2013)

I dunno.

Plenty of people underwater there with their properties at the moment.


----------



## Julia (1 March 2013)

Kingpin said:


> griffith nsw quite a few in that are although i am not from there.
> i have also looked at a few in broken hill.
> i recently have landed a caual job paying between 800 - 1000 pw
> to be honest i am not to sure when to expect a return it would be more like a pay and forget type investment if i could call it that.  i do realise the outgoings so i would be relying on the capital .



So what would you consider the potential for capital gain in either Griffith or Broken Hill?


----------



## tinhat (2 March 2013)

Kingpin said:


> Hi everyone I am very interested in buying real estate in the near future .
> 
> I am 19 years old with no debt or liabilities(besides a gym membership )
> i currently have 3k saved and a small amount in stocks ( just bought DYL at 58 should of waited i know) I have been looking at land at various suburbs for around 20k-30k .
> ...




Kingpin, if I were in your situation I would look into and consider a first home buyer savings accounts with one of the banks. You need to deposit a minimum of $1,000 per year for up to four years before you can withdraw the money to use for a deposit on a house. For the first $6,000 you deposit each year, the government will top up your account by another 17%. So if you deposit $6,000 the government will deposit $1,020 in the following financial year. The interest you earn is taxed at 15%. Great deal, but if you don't use it to buy a house and you want to close the account it will get put into your super and you won't be able to touch it until you retire.

I don't know of any other investment that will give you 17% (tax free) bonus on your contributions each year plus a tax break on your compounding interest.

See:
https://www.moneysmart.gov.au/managing-my-money/banking/savings-accounts/first-home-saver-accounts
http://www.ato.gov.au/individuals/pathway.aspx?pc=001/002/066


----------



## chops_a_must (2 March 2013)

And the catch is, you have to use it at the end of the 4th year.

They seem so much better to set up once you know you are going to buy a house... And then just dump your savings into your mortgage after the 4th year.


----------



## Tink (2 March 2013)

70% clearance in Melbourne last weekend, lets see what this weekend brings

http://www.reiv.com.au/Property-Research

http://www.rs.realestate.com.au/cgi-bin/rsearch?a=ars


----------



## qldfrog (2 March 2013)

Kingpin said:


> griffith nsw quite a few in that are although i am not from there.
> i have also looked at a few in broken hill.
> i recently have landed a caual job paying between 800 - 1000 pw
> to be honest i am not to sure when to expect a return it would be more like a pay and forget type investment if i could call it that.  i do realise the outgoings so i would be relying on the capital .



im ,y opinion, this is a very scary option: you will pay rate, then your neighbour might erect a fence, or need to repair it-> you have to pay half, 
it rains, the grass grows-> you need to maintain your lot; as you are away you need to call jim the mower guy or the kid next door every months at least...
hum let's see $500 rate a year 
new estate 3 neighbours with 3 fences 1k a year average shared cost in the first 5 years (with potential much higher one off outlay),
 Jim or the boy next door for mowing  and or removing declared weeds 40$ a month->500$ pa
so you spend 20k, leak 2k a year or 10% in cost and you do not get any other return , no negative gearing
add the costs to buy/sell (sollicitor, stamp duty (even if waived for first buy it means you will pay full SD when you actually purchase your first own property)
you buy a cheap asset and much of the cost will be mostly fixed or not proportional (more or less same amount as a 200k block)
unless it doubles in the next 3 years or so, you will loose money; and my own opinion is it will not double in that time 
For this to happen, you would anyway get 10% interest on your cash saving at the bank.
so do your sum but i would not even consider it unless you want to build and live there
DYOR as I am not in a position to give you advice


----------



## Kingpin (2 March 2013)

thank you tinhat for those links
 I actually seen my family finacial advisor and he talked me through the scheme but i believe that i could save a nice enough deposit on my own in the next year and a half rather the four .

qld frog you raised some very good points which i admit i did overlook , the reason iam interested in the land is because it is cheap and in my opinion it is good debt ( i may be wrong ) .
i do not have any intentions of building a house on the block it was merely for capital and julia i do not have an idea what to expect i do have alot of research ahead of me .

I think for now i will continue to save a nice deposit for an investment property and keep playing the stock game which i am loosing at the moment .

thank you all for the advice any more is very much so appreciated


----------



## sydboy007 (2 March 2013)

Tink said:


> 70% clearance in Melbourne last weekend, lets see what this weekend brings
> 
> http://www.reiv.com.au/Property-Research
> 
> http://www.rs.realestate.com.au/cgi-bin/rsearch?a=ars




Stock might be selling, but unless people are willing to increase their debt levels I can't see too much of the property market taking off.  Household debt levels are still over 150% of income which puts us up there just behind the Canadians and Dutch.

Other problem is the banks are seeing a lot less deposits flowing in over the last quarter of 2012.  I'd say that has continued into 2013.  Even with the run up in prices there's quite a few shares out there over 7%+ grossed up returns.  Certainly beats a 4.75% 5 year TD if you need to cash to live on.


----------



## qldfrog (2 March 2013)

Kingpin said:


> qld frog you raised some very good points which i admit i did overlook , the reason iam interested in the land is because it is cheap and in my opinion it is good debt ( i may be wrong ) .



Glad it helps, I agree on the "good debt" side but too costly, save a bit more and maybe target the area where you would get your fist home if still interested in pure land


----------



## Julia (2 March 2013)

qldfrog said:


> im ,y opinion, this is a very scary option: you will pay rate, then your neighbour might erect a fence, or need to repair it-> you have to pay half,
> it rains, the grass grows-> you need to maintain your lot; as you are away you need to call jim the mower guy or the kid next door every months at least...
> hum let's see $500 rate a year
> new estate 3 neighbours with 3 fences 1k a year average shared cost in the first 5 years (with potential much higher one off outlay),
> ...



And the above does not include repayment of the loan.  Kingpin, what would be the calculation when you say OK I have $X for a deposit, the cost of the land is $X, so the loan at X% p.a. is going to cost $X?


----------



## RandR (2 March 2013)

Kingpin said:


> thank you tinhat for those links
> I actually seen my family finacial advisor and he talked me through the scheme but i believe that i could save a nice enough deposit on my own in the next year and a half rather the four .
> 
> qld frog you raised some very good points which i admit i did overlook , the reason iam interested in the land is because it is cheap and in my opinion it is good debt ( i may be wrong ) .
> ...





The four years is only 4 financial years kingpin. Thereby currently 12-13,13-14,14-15, 15-16 being the fourth. So if started now in about 28 months from now you could have had a FHSA for four financial years of goverment bonuses.. only just over 2 calender years ...



> And the catch is, you have to use it at the end of the 4th year.
> 
> They seem so much better to set up once you know you are going to buy a house... And then just dump your savings into your mortgage after the 4th year.




You have not been kept up to date with the scheme chops .. you DONT have to use it at the end of the 4th year any more and if you do buy before the min time in the scheme has passed you can roll the money into a mortgage (this was not the case when it was first introduced)


----------



## Julia (2 March 2013)

FlyingFox said:


> What will it go for? My guess is if it sells, it will be around the 1.2 to 1.4M range.
> 
> Too far off?






So_Cynical said:


> I've walked past that house a few times, very quiet and a very good area....beautiful houses in surrounding streets but not over the top beautiful.
> 
> realistic price: over 1.1 would be my guess...it is Epping after all.






Mr J said:


> You may call it entry level to a good area, i.e. the families will tend to be better off than those in cheaper suburbs further west. It is most certainly not an outer suburb, unless you are like me and insist on every west of the bridge to be "way out west" .
> 
> For 1.6m I know I would look at other areas.






McLovin said:


> I think she'd be doing _very_ well for herself to get near $1.6m. I agree with others, around $1.1-$1.2m. Nice house too.






tech/a said:


> I ll suggest handed in in the 1.3-1.4 range.
> Then negotiation starts.
> Anything over 1.4 would be a job well done.




My cousin's auction held today.  Tech/a was right on the money - passed in at 1.37.

What she hadn't mentioned until today was that she turned down an offer a couple of weeks ago for $1.4M.
She is now, of course, castigating herself for that, and has belatedly realised her $1.6 was unrealistic.

A complication is that one prospective buyer had a building inspection done and it came up with a long list of faults.  This prospective buyer lives in the area and is, she says, telling everyone there are huge problems with the house.


----------



## Ves (2 March 2013)

Julia said:


> This prospective buyer lives in the area and is, she says, telling everyone there are huge problems with the house.



Sounds like a severe case of _sour grapes._  Who does that, seriously?


----------



## young-gun (2 March 2013)

Kingpin said:


> Hi everyone I am very interested in buying real estate in the near future .
> 
> I am 19 years old with no debt or liabilities(besides a gym membership )
> i currently have 3k saved and a small amount in stocks ( just bought DYL at 58 should of waited i know) I have been looking at land at various suburbs for around 20k-30k .
> ...





Investment property is definitely the way to go IMO. I personally wouldn't buy one yet(too many headwinds), but it sounds as though you may be a few years off anyway. A block of land is a gamble, an IP is a guaranteed return (it's not going to be vacant for too long, maybe a few weeks a year but check with your local agents as to what the vacancy rates are like). Your goal should be to have a cashflow positive property from day one, not by the time you are twenty one. if you can't find one right away then don't buy until you do. 

good on you for considering the IP also. Alot of people on here bang on about home ownership and just how wonderful it makes them feel, but it's utter crap. If you want to get ahead, make sacrifices now.

If you have to negative gear it it's not an investment  none of the above is advice, just things to consider.


----------



## young-gun (2 March 2013)

Julia said:


> Where is this?  I haven't seen any decent land at such a price for many, many years.  Average price for a house block in the regional coastal Qld centre where I live is around $200K.  It will be a lot more in a capital city, I imagine.
> 
> If you were to buy that land, how and when would you anticipate it offering you some return?  Land alone is going to require outgoings on rates, without bringing you any revenue.
> 
> You don't say anything about your earning capacity.




+1, land was an option when everything was going up over night, but now not only is it dam expensive but there is an abundance of it around brisbane in these community developments. Kind of contradicting myself though I guess, if there was such an abundance then prices should be coming down.


----------



## chops_a_must (2 March 2013)

RandR said:


> You have not been kept up to date with the scheme chops .. you DONT have to use it at the end of the 4th year any more and if you do buy before the min time in the scheme has passed you can roll the money into a mortgage (this was not the case when it was first introduced)




Really?

I was told this recently.

So I can now have an account indefinitely if I wanted? And it doesn't automatically roll into super after 4 years?


----------



## RandR (3 March 2013)

chops_a_must said:


> Really?
> 
> I was told this recently.
> 
> So I can now have an account indefinitely if I wanted? And it doesn't automatically roll into super after 4 years?




Correct. You can contribute into an account until the balance hits $90k. Or you turn 65? or simply buy a house.

You have been misinformed .. it definitly does not autoroll roll into super after 4 years. 

Read here .. http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00250962.htm&page=1&H1



> If you have to negative gear it it's not an investment none of the above is advice, just things to consider.




I have to disagree quite strongly with this young gun. As such a statement should surely be applied to all investment using leverage if you really believe in it. There is always the time and place to negative gear for people if it can be advantageous for their position. There is definitly a level of risk involved in negative gearing that the vast majority do not fully appreciate imo. But I believe there is also a real level of risk in a positively geared propery as well. 



> A complication is that one prospective buyer had a building inspection done and it came up with a long list of faults. This prospective buyer lives in the area and is, she says, telling everyone there are huge problems with the house.




Just about every proper building inspection will read like the house is about to fall over. Hardly surprising. Id be much more concerned personally if I had a report come back with not too many faults found.


----------



## chops_a_must (3 March 2013)

RandR said:


> Correct. You can contribute into an account until the balance hits $90k. Or you turn 65? or simply buy a house.
> 
> You have been misinformed .. it definitly does not autoroll roll into super after 4 years.
> 
> Read here .. http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00250962.htm&page=1&H1




Awesome. That changes things.

For more info: http://www.ato.gov.au/individuals/content.aspx?doc=/content/00155256.htm

Thanks for that by the way.


----------



## DB008 (4 March 2013)

Sydney is sooooooo expensive and is in a bubble..........


Think New York Is Costly? In New Delhi, Seedy Goes for 8 Figures



> NEW DELHI ”” The fading bungalow at 38 Amrita Shergil Marg does not immediately shout real estate bling.
> 
> There is no tennis court, no infinity pool, no Sub-Zero refrigerator or walk-in closet. The paint is chipped, the bathrooms are musty and the ceilings have water stains. The house may ultimately be torn down.
> 
> ...


----------



## sptrawler (5 March 2013)

Yes DB008, properties in Australia are going to keep doubling in value every 7 years, it doesn't worry me I own a few.
However, I can't prescribe to that belief, do you think the average price of houses in capital cities, is going to be $1m in 7 years time?
If that happens, IMO it will be supported by overseas buyers.
Which will in my opinion, leave our kids as third world workers.
They will always have to rent, probably from overseas owners, as their wages will have to be kept competitive.

It is all starting to look very much like South America. :1zhelp:
Politicians are dicks.

The only good thing is when it goes really pear shaped, the pollies will lose their pensions and perks.


----------



## Bintang (5 March 2013)

sptrawler said:


> The only good thing is when it goes really pear shaped, the pollies will lose their pensions and perks.




Don't count on it. Come hell or high water the pollies will take care of themselves first.


----------



## sptrawler (5 March 2013)

Bintang said:


> Don't count on it. Come hell or high water the pollies will take care of themselves first.



That's if the same country runs the government.lol

As Asia requires more food and has less productive land, they will look further afield. 
Blind Freddy can see that.
How do we sit back and say were fine, we don't use the north of the country, because it's too hot.
However you can't use it to feed yourselves, just sod off.
Best of luck with that tack.lol

What is it? 
2billion above us 20 million here.
That's big odds.lol


----------



## FlyingFox (1 April 2013)

This thread has been inactive for a while so I thought I'd generate some discussion. 

I don't know if it has been discussed before but the link below shows updated land holdings for publicly listed companies. 

http://www.macrobusiness.com.au/2013/03/prosper-responds-to-land-banking-developers/

It was originally published by prosper. The major developers have on average greater than 10 years of land supply ...


----------



## FxTrader (3 April 2013)

FlyingFox said:


> This thread has been inactive for a while so I thought I'd generate some discussion.
> 
> I don't know if it has been discussed before but the link below shows updated land holdings for publicly listed companies.
> 
> ...




Yet building approvals for private sector houses continue their declining trend (from the ABS)...




Whatever the business drivers are for land banking by developers it's not translating into housing availability or affordability primary due to planning restrictions.


----------



## FlyingFox (5 April 2013)

A controversial but good article on from the Gen Y point of view on housing affordability.

http://www.brisbanetimes.com.au/com...-dreams-of-finding-a-home-20130404-2h9i4.html


----------



## drsmith (5 April 2013)

Banks are reducing the intro bonus increment on online saving accounts thus improving their margins.

A cut to home loan interest rates outside the RBA's moves might be on the way.


----------



## ROE (5 April 2013)

I like this quote on AFR article today on properties...

"One thing we know about house prices is that past performance is a guide to future returns. In the economist’s jargon, there are significant “serial dependencies” which means that performance tends to “persist”. "

http://www.afr.com/f/free/blogs/chr...ousing_sceptics_proved_9N9nULnQzqQtqDVjLjABJJ

the first sentence I can understand, the second sentence, there are some cool word stitch together 
If some CEO speak like that in a stock, I would run  but housing is different...

that mean we cant losing on housing then, buy before you are price out of the market


----------



## Julia (8 April 2013)

I'd appreciate members' comments on the wisdom or otherwise of the following:

Single, early 50's, part time teaching, following settlement of sale of family home, about $10K in Super, is considering buying one house in Sydney and one in the Blue Mountains, dividing her time between these.
Declares she hates 'this vile city of Sydney" but needs to keep a home available for two teenage sons, one 18, one 16, both deaf but very capable (older one working and younger on scholarship at Hills Grammar).

The original plan was to sell the family home then, after clearing the minimal remaining mortgage, put some into Super.

I've suggested this is the old 'too many eggs in the one basket' idea, not to mention she is failing to generate any income and incurring two lots of expenses via rates, insurances etc.


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## drsmith (8 April 2013)

Julia said:


> I've suggested this is the old 'too many eggs in the one basket' idea, not to mention she is failing to generate any income and incurring two lots of expenses via rates, insurances etc.



If she's got the initial capital and income to support such an arrangement, why not.

If not, then it's a question of priorities.


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## againsthegrain (8 April 2013)

FlyingFox said:


> A controversial but good article on from the Gen Y point of view on housing affordability.
> 
> http://www.brisbanetimes.com.au/com...-dreams-of-finding-a-home-20130404-2h9i4.html





its just a state of mind, you don't need to start renting from the bank to start a family.


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## FlyingFox (8 April 2013)

Julia said:


> I'd appreciate members' comments on the wisdom or otherwise of the following:
> 
> Single, early 50's, part time teaching, following settlement of sale of family home, about $10K in Super, is considering buying one house in Sydney and one in the Blue Mountains, dividing her time between these.
> Declares she hates 'this vile city of Sydney" but needs to keep a home available for two teenage sons, one 18, one 16, both deaf but very capable (older one working and younger on scholarship at Hills Grammar).
> ...




I would have to agree with you on this. She would be much better off with more income producing assets given that she will not otherwise have any capital outside of the properties and have very little savings. However...



drsmith said:


> If she's got the initial capital and income to support such an arrangement, why not.
> 
> If not, then it's a question of priorities.




+1


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## FlyingFox (8 April 2013)

againsthegrain said:


> its just a state of mind, you don't need to start renting from the bank to start a family.




I think there are many more issues raised in the article above that. Also you need to feel slightly financially secure to start a family. 

Either renting or renting form the bank in the current inflated market cause a rather large drain on income.


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## sydboy007 (8 April 2013)

Julia said:


> I'd appreciate members' comments on the wisdom or otherwise of the following:
> 
> Single, early 50's, part time teaching, following settlement of sale of family home, about $10K in Super, is considering buying one house in Sydney and one in the Blue Mountains, dividing her time between these.
> Declares she hates 'this vile city of Sydney" but needs to keep a home available for two teenage sons, one 18, one 16, both deaf but very capable (older one working and younger on scholarship at Hills Grammar).
> ...




Tell her to by somewhere nice in the city.

I live in the Inner West and quite often feel like I'm back at my parents on the South Coast.

Got the serenade of the frogs right now, and a few cicadas thrown in.  Find it quite soothing 

I fear anyone who things sydney is crowded, fast paced, hectic has never been overseas.


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## qldfrog (8 April 2013)

Julia said:


> Single, early 50's, part time teaching, following settlement of sale of family home, about $10K in Super, is considering buying one house in Sydney and one in the Blue Mountains, dividing her time between these.
> Declares she hates 'this vile city of Sydney" but needs to keep a home available for two teenage sons, one 18, one 16, both deaf but very capable (older one working and younger on scholarship at Hills Grammar).



As I understand it, would be a massive investment in two houses with matching never ending costs yet no income???
In my opinion, better off with one house and rent for the actual needs of sydney residency( how long will it be required there? can she not match the rent with the sydney property $ equivalent in investments and be free of the worries as well as added flexibility
I would never go that way
but I am not a wise person in any case...


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## Julia (8 April 2013)

Thanks for responses - much appreciated.
Fine to own property in addition to that in which you live, but - especially when there are no other investments and no Super to speak of - I'd have thought that additional property needs to generate an income.

There seems to be a naive belief that just simply owning property is a sure ticket to massive capital gains.


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## sptrawler (8 April 2013)

I'm tending to think it is window of opportunity to look at buying a property in the U.K.

I've only thought about it recently, but it may be a winner.lol


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## damien275x (21 April 2013)

It's amazing how much the sentiment has changed in two years. The good news is that the young people I know are skilling up, earning more, saving more, and not buying houses, we're renting, sharing, doing everything we can to avoid paying for them because (in our opinion) it's a waste of  life to be stuck working long hours in an unstable job market just to hang onto a house that does nothing but cost you.

The downside is that even though prices have kind of stopped going up/gone backwards, the people holding the properties  *still* believe they're worth what they want, even though they put them to market and they just don't sell. I don't see a lot of these changing hands anytime soon if they're holding on to them. The positive is that due to old age, they will die first so if they won't sell, long term they have to give them over for free via inheritance etc anyway. What good is a pile of bricks when you can't wipe your own ass. Yes they can be rented out, but most people have a captal gain strategy, not a positive cash flow one, which is sad. If you went for passive income you'd be OK, but most people are kind of holding on hoping they make a giant profit when they sell. They won't.


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## DB008 (21 April 2013)

damien275x said:


> It's amazing how much the sentiment has changed in two years. The good news is that the young people I know are skilling up, earning more, saving more, and not buying houses, we're renting, sharing, doing everything we can to avoid paying for them because (in our opinion) it's a waste of life to be stuck working long hours in an unstable job market just to hang onto a house that does nothing but cost you.





Rent for 30 years, own nothing.
Get a mortgage, pay it off after 30 years, own a house/unit/property.

It's your choice really.


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## FlyingFox (21 April 2013)

DB008 said:


> Rent for 30 years, own nothing.
> Get a mortgage, pay it off after 30 years, own a house/unit/property.
> 
> It's your choice really.




can you show the sums for that?


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## DB008 (21 April 2013)

FlyingFox said:


> can you show the sums for that?




My basis for that is that in some suburbs in Australia (particularly in Sydney), it is cheaper to own that rent.

Quick Google
http://www.theage.com.au/business/property/where-its-cheaper-to-buy-than-to-rent-20121220-2bopa.html


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## banco (21 April 2013)

DB008 said:


> My basis for that is that in some suburbs in Australia (particularly in Sydney), it is cheaper to own that rent.
> 
> Quick Google
> http://www.theage.com.au/business/property/where-its-cheaper-to-buy-than-to-rent-20121220-2bopa.html




That list only factors in mortgage repayments and not other costs associated with owning a home.  Plus if it's cheaper to buy than rent that's a real red flag as far as expectations of future capital growth go.


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## FlyingFox (21 April 2013)

DB008 said:


> My basis for that is that in some suburbs in Australia (particularly in Sydney), it is cheaper to own that rent.
> 
> Quick Google
> http://www.theage.com.au/business/property/where-its-cheaper-to-buy-than-to-rent-20121220-2bopa.html




6 in Melbourne and 48 in Sydney out of how many suburbs in total??? Also banco beat me to it. There are many more costs associated with owning a home than just mortgage repayments. 

Don't always believe what the media tells you ...



banco said:


> That list only factors in mortgage repayments and not other costs associated with owning a home.  Plus if it's cheaper to buy than rent that's a real red flag as far as expectations of future capital growth go.




+1.


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## damien275x (21 April 2013)

DB008 said:


> Rent for 30 years, own nothing.
> Get a mortgage, pay it off after 30 years, own a house/unit/property.
> 
> It's your choice really.




Yes, it is. But who is to say after 30 years you own nothing? What's stopping you from owning significant shares or 100% ownership of a company? What's stopping you owning commodities, cash flow positive assets, trucks, boats, services, a product. Something that gives something back to the people? 

If you look at anyone who has been very successful, most of them rent. They don't buy to make money, they buy after achieving substantial success in business, and because they want to live there. Property is an investment for the middle class only because it forces them to save where they otherwise wouldn't. I think it's a stupid place to park $400,000 for such a pissy return, you can start a lot of other things up with much lower overheads and generate a much higher return. I guess it's all about risk/reward.


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## ftw129 (21 April 2013)

damien275x said:


> The downside is that even though prices have kind of stopped going up/gone backwards, the people holding the properties  *still* believe they're worth what they want, even though they put them to market and they just don't sell. I don't see a lot of these changing hands anytime soon if they're holding on to them. The positive is that due to old age, they will die first so if they won't sell, long term they have to give them over for free via inheritance etc anyway. What good is a pile of bricks when you can't wipe your own ass. Yes they can be rented out, but most people have a captal gain strategy, not a positive cash flow one, which is sad. If you went for passive income you'd be OK, but most people are kind of holding on hoping they make a giant profit when they sell. They won't.




http://www.news.com.au/realestate/s...ick-papadopoulos/story-fndbawks-1226624907407

lol


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## DB008 (21 April 2013)

damien275x said:


> Yes, it is. But who is to say after 30 years you own nothing? What's stopping you from owning significant shares or 100% ownership of a company? What's stopping you owning commodities, cash flow positive assets, trucks, boats, services, a product. Something that gives something back to the people?




Nothing is stopping you (you can own shares/property and a company) & instead of paying extra on mortgage repayments (for redraw), purchase shares instead.
As an example, I have paid extra into my mortgages (about ~60k), and now have the chance to invest elsewhere, with a 100k profit on the property price too.





damien275x said:


> If you look at anyone who has been very successful, most of them rent.




Where are the stats for this?
Gates?
Buffett?
Trump?
Abramovich?
Mittal?



damien275x said:


> I think it's a stupid place to park $400,000 for such a pissy return, you can start a lot of other things up with much lower overheads and generate a much higher return. I guess it's all about risk/reward.




If you purchase the right shares. It goes the same way for property. There are 'goods ones + bad ones' in both investment vehicles.

Instead of 'hypotheticals', I would rather take the advice of people who dabble in property/shares in the real world on a daily basis.

I don't know the answers, but I know that both property and shares go up and down....timing is the key...

I have my fingers in both pies (shares and property)


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## sydboy007 (21 April 2013)

I was a lucky pre boom purchaser in inner sydney back in 97. 

had to sell out of around 20K worth of shares at the time to help pay the purchase costs.  Those shares are all up somewhere between 5 and 10 times in value, not factoring in the dividends over a 15 year period.

Now the house is fully paid off, so I get to live relatively cheaply, but looking at how much interest I paid over the years AND maintenance costs, i can't help but think I would have been much better off renting and just topping up my shares every 6 months.

Anyone buying an investment property for a 4.5% gross yield is crazy in my POV, especially when there's still plenty of good quality companies paying 8-9% dividend yields once franking credits are taken into account.  I'd much rather be able to build my investments from cash flow than 

The only thing I am happy about with buying is I've been able to stay put since March 97.  Before that I'd moved around 5 times in 3 years which ain't fun.


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## FlyingFox (21 April 2013)

DB008 said:


> I don't know the answers, but I know that both property and shares go up and down....timing is the key...




Exactly. If you bought 20,15 10 years ago, good on you. Perhaps even 5 yrs ago. Would you buy today as an investment?


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## DB008 (21 April 2013)

FlyingFox said:


> Exactly. If you bought 20,15 10 years ago, good on you. Perhaps even 5 yrs ago. Would you buy today as an investment?




Yep. Up & Downs...it happens...

I am not master investor. I am trying to make a buck like everyone else.

I appreciate this thread and all input on ASF.


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## young-gun (21 April 2013)

FlyingFox said:


> Exactly. If you bought 20,15 10 years ago, good on you. Perhaps even 5 yrs ago. Would you buy today as an investment?




I don't think you could call it an investment? There is still opportunities out there though. If anyone is investing in hope of capital appreciation over the next decade I think they may be in for a shock.


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## prawn_86 (21 April 2013)

sydboy007 said:


> Before that I'd moved around 5 times in 3 years which ain't fun.




7 different cities/towns in 8 years for me  The flexibility of owning shares over a PPOR or having 100% of assets in an IP has allowed us to move around, which may have otherwise been difficult


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## FlyingFox (21 April 2013)

young-gun said:


> I don't think you could call it an investment? There is still opportunities out there though. If anyone is investing in hope of capital appreciation over the next decade I think they may be in for a shock.




I don't think many of the so called investors are investing in the hopes of anything else....it is not like you are getting decent returns in general.


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## FlyingFox (21 April 2013)

DB008 said:


> Yep. Up & Downs...it happens...
> 
> I am not master investor. I am trying to make a buck like everyone else.
> 
> I appreciate this thread and all input on ASF.




True...doesn't happen often enough and people tend to forget...

Neither am I.....just learning...


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## young-gun (21 April 2013)

FlyingFox said:


> I don't think many of the so called investors are investing in the hopes of anything else....it is not like you are getting decent returns in general.




I work with a guy who has 4 places. He said it's not worth his time buying anything that yields less than 10%, and I would agree. You have to go inter-state or to areas likely well out of your comfort zone to find these places though.


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## FlyingFox (21 April 2013)

young-gun said:


> I work with a guy who has 4 places. He said it's not worth his time buying anything that yields less than 10%, and I would agree. You have to go inter-state or to areas likely well out of your comfort zone to find these places though.




Yes this is true. There were some regional properties and some in mining areas that did and are doing quite well. If you timed it, you did really well. Just need to be careful in some cases as the demand will fall once construction/expansion operations at mines stop.


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## Julia (21 April 2013)

damien275x said:


> If you look at anyone who has been very successful, most of them rent.



Really?  What is the evidence for this claim.  No successful person I've known over some decades has not owned their own home.  Usually they have some IP as well, plus shares.

Owning your own home isn't just about the financial aspect.  It's also about the simple pleasure of creating an environment with which you can do what you want and which provides a sense of security being at the whim of a landlord fails to give. 



sydboy007 said:


> Anyone buying an investment property for a 4.5% gross yield is crazy in my POV, especially when there's still plenty of good quality companies paying 8-9% dividend yields once franking credits are taken into account.



Agree,  And that's without the consideration of potentially ghastly tenants.



FlyingFox said:


> Yes this is true. There were some regional properties and some in mining areas that did and are doing quite well. If you timed it, you did really well. Just need to be careful in some cases as the demand will fall once construction/expansion operations at mines stop.



Pivotal point.  Timing is everything.  There have been wonderful times to buy property for substantial capital gain.  Nothing like those times now.


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## damien275x (21 April 2013)

ftw129 said:


> http://www.news.com.au/realestate/s...ick-papadopoulos/story-fndbawks-1226624907407
> 
> lol




Well that's an extreme example but kind of true, he's 73 years old, wants a fortune for his house, and nobody wants to buy it. He'll be dead in 10. Someones gonna get lucky, wont be him


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## pasteurt (22 April 2013)

Julia said:


> Really?  What is the evidence for this claim.  No successful person I've known over some decades has not owned their own home.  Usually they have some IP as well, plus shares.
> 
> Owning your own home isn't just about the financial aspect.  It's also about the simple pleasure of creating an environment with which you can do what you want and which provides a sense of security being at the whim of a landlord fails to give.
> 
> ...




As a new home buyer, and a much least experienced investor - and even with all the talk about how property prices are likely going to drop - it's so tempting to buy a house just for that reason. I mean it's nice to know you own it and create something you can be comfortable in. 

Is Australia expecting rentals to increase? Cause currently people in my area (WA) are paying 300-350 rent, and if they had a mortgage for the same property (around 250-300k) you would look at 380-400 weekly payments instead. Obviously you would be forking out 250k for the interest over say 25 years. 
If I rented for 25 years, I would be paying: 
52 x 25 x $350 = $455000 - at the end of this I own nothing - assuming rent stays constant

If I took the mortgage I pay out:
52 x 25 x $390 = $494000 - at the end of this I have a house I decked out. Sure, I would probably spend like $$$$ on it but that aside, can someone explain to me why they feel renting and putting it in shares is better. 

With sincerity -  I honestly feel this is my lack of investment knowledge, and probably the property will drop in price in the long term? but I can't predict the price in 25 years.


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## FlyingFox (22 April 2013)

pasteurt said:


> As a new home buyer, and a much least experienced investor - and even with all the talk about how property prices are likely going to drop - it's so tempting to buy a house just for that reason. I mean it's nice to know you own it and create something you can be comfortable in.
> 
> Is Australia expecting rentals to increase? Cause currently people in my area (WA) are paying 300-350 rent, and if they had a mortgage for the same property (around 250-300k) you would look at 380-400 weekly payments instead. Obviously you would be forking out 250k for the interest over say 25 years.
> If I rented for 25 years, I would be paying:
> ...





Are you mortgage calculation on the total price of the property or just the mortgage amount? If just the mortgage amount, you need to include interest calculations on your deposit. You also need to add for expenditure that you have to have in a house such as insurance and rates that you don't pay in a rental. 

You should also include some depreciation for fixtures and fittings.

If you are interested in why many think that Australian property is over priced, have a look at this article

http://www.propertyobserver.com.au/...cord-and-will-crash-philip-soos/2013011658802

It has some great stats over a long time frame.


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## prawn_86 (24 April 2013)

RBA essentially admitting that the housing boom was based on access to easy credit and that unlikely to grow like that again in the foreseeable future:

http://www.abc.net.au/news/2013-04-24/strong-house-price-growth-a-thing-of-the-past/4648580


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## sydboy007 (25 April 2013)

prawn_86 said:


> RBA essentially admitting that the housing boom was based on access to easy credit and that unlikely to grow like that again in the foreseeable future:
> 
> http://www.abc.net.au/news/2013-04-24/strong-house-price-growth-a-thing-of-the-past/4648580




If Ridout and her mates at the AIG have any say in it the RBA will have rates so low as to encourage property speculation on a grand scale.


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## Julia (25 April 2013)

sydboy007 said:


> If Ridout and her mates at the AIG have any say in it the RBA will have rates so low as to encourage property speculation on a grand scale.




Heather Ridout is no longer with the AIG.  Now heads up Australian Super.  She's also a member of the RBA herself.


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## Mr Z (25 April 2013)

prawn_86 said:


> RBA essentially admitting that the housing boom was based on access to easy credit and that unlikely to grow like that again in the foreseeable future:
> 
> http://www.abc.net.au/news/2013-04-24/strong-house-price-growth-a-thing-of-the-past/4648580




Yes, total outstanding debt matters as much as rates. After all you can only service so much no matter how low the rate. We will not do this again until debt levels reset.


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## sydboy007 (25 April 2013)

Julia said:


> Heather Ridout is no longer with the AIG.  Now heads up Australian Super.  She's also a member of the RBA herself.




yes, but I'm sure she still lunches with plenty of the heavies at the AiG.

Now she has direct input into determining interest rates, and she's been pretty much constantly saying we need them lower.


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## sydboy007 (25 April 2013)

Mr Z said:


> Yes, total outstanding debt matters as much as rates. After all you can only service so much no matter how low the rate. We will not do this again until debt levels reset.




The problem is they haven't.  Household net debt has barely budged from the pre GFC highs.  A least the USA has seen a decent drop in debt levels.  They could have a reasonable swing up in housing prices before getting back to their previous highs.

I do wish the MSM would start to focus on private sector debt, especially households, as it is going to be THE problem than undermines things rather than Govt debt.


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## DB008 (25 April 2013)

sydboy007 said:


> The problem is they haven't. Household net debt has barely budged from the pre GFC highs. At least the USA has seen a decent drop in debt levels. They could have a reasonable swing up in housing prices before getting back to their previous highs.
> 
> I do wish the MSM would start to focus on private sector debt, especially households, as it is going to be THE problem than undermines things rather than Govt debt.





And here is the rebuttal......

http://www.dailytelegraph.com.au/money/money-matters/australians-saving-more-than-ever-but-some-more-than-others/story-fn300aev-1226628719943




> WE'RE saving more than ever and are less worried about debt and our mortgages with the average Australian household managing to triple savings in the past two years.
> 
> The latest ING DIRECT Financial Well-being Index has found Australians are not only more confident with their mortgages, but have become better at managing their finances better as well.
> 
> ...


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## sydboy007 (25 April 2013)

DB008 said:


> And here is the rebuttal......
> 
> http://www.dailytelegraph.com.au/money/money-matters/australians-saving-more-than-ever-but-some-more-than-others/story-fn300aev-1226628719943




Not from what I can see

I'm surprised that Korea seems to be in a worse position than Australia, while the Netherlands is just too horrific to consider.


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## FlyingFox (25 April 2013)

DB008 said:


> And here is the rebuttal......
> 
> http://www.dailytelegraph.com.au/money/money-matters/australians-saving-more-than-ever-but-some-more-than-others/story-fn300aev-1226628719943




What's an extra 5 grand next to a 500K mortgage?


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## DB008 (2 May 2013)

I have been looking at Sydney suburbs of North Parramatta, Clyde & Auburn the last 2 - 3 weeks - sub 300k (basically units).

Anything decent hitting the market has been gobbled/snapped up within a week (7 days), if not less.

Property market dead? In some parts of Sydney, l think not!


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## Bill M (2 May 2013)

DB008 said:


> I have been looking at Sydney suburbs of North Parramatta, Clyde & Auburn the last 2 - 3 weeks - sub 300k (basically units).
> 
> Anything decent hitting the market has been gobbled/snapped up within a week (7 days), if not less.
> 
> Property market dead? In some parts of Sydney, l think not!




Totally agree. I am looking at buying a 2 br unit on the Northern Beaches of Sydney, everytime I check back after a couple Months prices have gone up from the last time. As you say, if anything decent comes up it's gone in no time.


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## ftw129 (2 May 2013)

For those with a long term view..... The best time to buy property has and always will be, now.

Trying to time the property market is like trying to catch the Easter Bunny.

We may see another 20% upside before we see any reasonable pullback. Then, if prices retreat 30% from there it will be called a "crisis"!

The smart ones are taking advantage of these ultra low interest rates.


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## So_Cynical (2 May 2013)

My mum has her house on the Market again, third time unlucky in 4 years..its been 6 weeks since the agent put it online and in the papers, not a single inspection or inquiry and that's with a 60K price reduction from the last time she had it on the market 2 years ago.

Now keep in mind that my mum is a real estate millionaire and has bought and sold at least 20 houses over the last 30 years, even built 3 spec houses back in the early 2000's..she knows what she's doing, well did know..its all different now...she has never owned a house she couldn't sell before.


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## sptrawler (2 May 2013)

Well SC, it just shows the two speed economy.
The street I live in Perth, two years ago same for same they were selling for $600k, today $800k. 
It is stupid, people have lost the plot.


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## So_Cynical (3 May 2013)

sptrawler said:


> Well SC, it just shows the two speed economy.
> The street I live in Perth, two years ago same for same they were selling for $600k, today $800k.
> It is stupid, people have lost the plot.




Mum lives in Busselton WA...its a no speed economy there, even though there is like 6 FIFO flights per week.


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## Tink (3 May 2013)

Bill M said:


> Totally agree. I am looking at buying a 2 br unit on the Northern Beaches of Sydney, everytime I check back after a couple Months prices have gone up from the last time. As you say, if anything decent comes up it's gone in no time.




A friends daughter is going through the same, here in Melbourne. They are getting married next year, and have been in search for a house the last 4 months, every home they like gets sold before they can bid.

http://www.reiv.com.au/en/Property-Research


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## moXJO (3 May 2013)

So_Cynical said:


> Mum lives in Busselton WA...its a no speed economy there, even though there is like 6 FIFO flights per week.




Bit of nerves when it comes to areas that rose off the back of the mining boom. Times and strategies have changed a bit. And a lot of big investors are flogging off (or did so the previous few years) a lot of property. One currently is selling off a few of his big commercial properties.
It's a mixed market and investors a lot more fussy on what they are picking up. Some areas have dropped a bit  and IMO wont come back for a long time. Others close by to the good life are being snapped up. My only regret is I didn't snap up a couple more last year when people were selling at stupidly low prices in my area. Prices have now come back.


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## sydboy007 (3 May 2013)

from macrobusiness today

quite agree with their summary:

_For what it is worth, my tip is that Australian housing values will ultimately revert to around 2.0 times GDP – the level that existed prior to the huge run-up in housing values from the mid-1990s – as price growth going forward fails to match growth in GDP (i.e. the “slow melt” thesis)._


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## Mr Z (3 May 2013)

Tink said:


> A friends daughter is going through the same, here in Melbourne. They are getting married next year, and have been in search for a house the last 4 months, every home they like gets sold before they can bid.
> 
> http://www.reiv.com.au/en/Property-Research




The lower end seems to be moving OK everywhere I look, kids moving up and boomers moving down. It is when you look up the scale areas seem to be struggling. Don't mention sea and tree change destinations!


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## sptrawler (3 May 2013)

So_Cynical said:


> Mum lives in Busselton WA...its a no speed economy there, even though there is like 6 FIFO flights per week.




I was down that way a couple of weeks ago (daughters wedding)
There has been a huge amount of development in that area, with no industry to support it.
There are only so many fifo jobs. My guess is Busselton area has enough housing stock to last 20 years.


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## MrBurns (3 May 2013)

Outer fringe locations are suffering, inner popular locations are actually booming,the new generation value proximity to the cities lifestyle etc


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## FlyingFox (6 May 2013)

Missed this earlier but here is an article on the cost of negative gearing to the ATO.



> Bank of America economist Saul Eslake said on Tuesday. ''I have to translate the words 'negative gearing' to people overseas because it just sounds crazy to have a system that rewards people for losing money.




A few more gems in there including Saul Eslake's take on worst tax decisions in the last 20 years.

http://www.theage.com.au/opinion/po...s-a-key-drain-on-revenues-20130430-2ir6h.html


----------



## FxTrader (6 May 2013)

FlyingFox said:


> Missed this earlier but here is an article on the cost of negative gearing to the ATO.




This only highlights the cost of negative gearing to the budget and all taxpayers.  Why not try and quantify the cost in terms of what unlimted tax incentives to property investors cost the economy as a whole due to the upward pressure it places on home prices as investors compete against owner-occupiers?

Why not do this as recommended to the Senate in 2008... 

_*In 2008, the Senate Housing Affordability report echoed findings of the 2004 Productivity Commission report. One recommendation to the enquiry suggested that 'Negative gearing' should be capped and that "There should not be unlimited access. Millionaires and billionaires should not be able to access it, and you should not be able to access it on your 20th investment property. There should be limits to it.*_

Exactly!!!  But of course no politician has the backbone to support this recommendation now.  The horse has bolted and only a fiscal disaster will see such a recommendation get any oxygen.


----------



## sptrawler (6 May 2013)

FxTrader said:


> Exactly!!!  But of course no politician has the backbone to support this recommendation now.  The horse has bolted and only a fiscal disaster will see such a recommendation get any oxygen.




Currently, the situation looks like disaster waiting to happen.IMO


----------



## Klogg (6 May 2013)

I don't quite understand that argument...

If housing is treated as an investment, then shouldn't it have attached to it the same rules as all other investments, i.e. all interest payments are tax deductible?

If you don't want to have the concept of investment properties then by all means remove negative gearing... 
But as it stands, an investment, regardless of whether is stocks, houses or other types, is there to generate profits. So long as that's the case, the interest is tax deductible.

That being said, if you want affordable housing, just don't allow 'investment' properties. (I'm all for this BTW)


----------



## Bill M (6 May 2013)

Klogg said:


> I don't quite understand that argument...
> 
> If housing is treated as an investment, then shouldn't it have attached to it the same rules as all other investments, i.e. all interest payments are tax deductible?
> 
> ...




Klogg, I totally agree with your post. An investment is an investment, regardless of what it is, and it should all be treated the same. Why single out housing investment? How would all stock investors with margin loans feel if their interest was not tax deductible?

As you say, one way to have affordable housing is to build properties under some kind of scheme where investors are not allowed to buy them. Surely that would be fair to those with current investment properties (ie. can be bought and sold as investments) and those who buy the new cheaper homes on the scheme can only sell to owners occupiers. Sounds like a good idea to me however there would be 2 different RE markets. But at least with such a scheme those on low budgets who need somewhere to live can buy into affordable homes.


----------



## FlyingFox (6 May 2013)

FxTrader said:


> This only highlights the cost of negative gearing to the budget and all taxpayers.  Why not try and quantify the cost in terms of what unlimted tax incentives to property investors cost the economy as a whole due to the upward pressure it places on home prices as investors compete against owner-occupiers?
> 
> Why not do this as recommended by the Senate in 2008...
> 
> ...




That's great point. I would like to see some socio-economic quantification to this as well. Perhaps as more and more people raise their concerns about this and other policies, we might just get a change.

I agree with you however that this has been left a little too late and either way will hurt a lot of people.


----------



## FlyingFox (6 May 2013)

Klogg said:


> I don't quite understand that argument...
> 
> If housing is treated as an investment, then shouldn't it have attached to it the same rules as all other investments, i.e. all interest payments are tax deductible?
> 
> ...




They should be. However instead of being able to offset the "negative" amount against other income, the losses should be carried forward.

That way an investor is not disadvantaged and neither is there a great incentive to have capital gains.

Negative gearing is just part of the picture ...


----------



## Klogg (6 May 2013)

FlyingFox said:


> They should be. However instead of being able to offset the "negative" amount against other income, the losses should be carried forward.




But looking at it top down, the individual is still making a profit on the whole. As a result, the interest is just an expense as part of making that profit.

I can argue semantics either way, but I'm all for removing the concept of residential property as investment. The need for affordable housing far outweighs the government's need to turn over a few extra dollars from stamp duty and capital gains.


----------



## FlyingFox (6 May 2013)

Klogg said:


> But looking at it top down, the individual is still making a profit on the whole. As a result, the interest is just an expense as part of making that profit.




Yes but this skews it in favour of a system of capital gains over rental returns. Moreover a healthy discount is offered on CG.



Klogg said:


> I can argue semantics either way, but I'm all for removing the concept of residential property as investment. The need for affordable housing far outweighs the government's need to turn over a few extra dollars from stamp duty and capital gains.




There have been some great suggestions on this such as having a land tax instead of stamp duty and CG taxes on property. This also helps mobility of workers. Plus a simpler tax system may actually increase revenue due by reducing the collection costs.

You can still have negative gearing with carry forward loses.

However I suspect even these changes, if they were made may not change the situation too much. With the price of money (interest rates) low and going lower, the speculators will always jump in.


----------



## banco (6 May 2013)

Bill M said:


> Klogg, I totally agree with your post. An investment is an investment, regardless of what it is, and it should all be treated the same. Why single out housing investment? How would all stock investors with margin loans feel if their interest was not tax deductible?




Not saying getting rid of NG is a good thing but it's not hard to see why the Government might distinguish between shares and property policy wise.  Stock investing/prices don't have the same social implications as property investing.


----------



## FlyingFox (10 May 2013)

banco said:


> Not saying getting rid of NG is a good thing but it's not hard to see why the Government might distinguish between shares and property policy wise.  Stock investing/prices don't have the same social implications as property investing.




You don't have to be able to distinguish between different types. Just abolish negative gearing in general. I think many people still don't have a clear understanding of the concept. Most countries allow you to offset expenses against income. If any losses are made, they can be carried forward. Offsetting against other income is restricted. 

As far as I am aware, Australia, New Zealand and Canada are among a handful of countries that allow you to offset against other income. This means you can perpetually hold onto an asset that is losing you money while hopefully getting capital gains as long as you can sustain the losses. 

With the current interest rates the number might be lower, but you needed ~7%/yr capital gains on a property to break even over a five or ten yr period accounting for losses and transaction costs (I did the math for an investment property I was looking at 2 yrs ago but my memory fails me at the moment).

Considering that house prices have increased at ~CPI for most of history, how sustainable is this? You don't even need a property correction for most investors to be in a bad situation, prices staying stable will do.


----------



## ROE (10 May 2013)

Abolish all type of negative gearing..shares..properties..the lot
Allow loss to carry forward until you made the gain...

Get rid of 50% CGT concession and charge a flat capital gain rate like 25% or something...

That way rich and poor are on equal footing.....u make $100 bucks you pay $25 bucks tax
You rich and has more capital and make 200 bucks you pay $50 of tax ....

That should be able to fund most service with 10-20bn extra in the coffer


----------



## DB008 (10 May 2013)

ROE said:


> Allow loss to carry forward until you made the gain...




Can't you carry a loss in/through my trust until it makes a gain?


----------



## FlyingFox (10 May 2013)

DB008 said:


> Can't you carry a loss in/through my trust until it makes a gain?




Yes and you can't negative gear against non-trust income (well you can buy hybrid trusts are technically illegal...).


----------



## FlyingFox (12 May 2013)

There was a piece on toxic loans on today tonight the other night. The story can be found on the Banking and Finance Consumers Support Association http://bfcsa.com.au/index.php/entry...onight-channel-7-toxic-loans-by-adam-marchall.

According to Denise Brailey of BFCSA, there are approximately $100 B worth of toxic loan given out to borrowers who don't have the capacity to pay these back.

While this is a today tonight piece and they are not the most believable source of news, it got me wondering if and how prevalent this practice was in Australia?


----------



## howmanyru (12 May 2013)

FlyingFox said:


> There was a piece on toxic loans on today tonight the other night. The story can be found on the Banking and Finance Consumers Support Association http://bfcsa.com.au/index.php/entry...onight-channel-7-toxic-loans-by-adam-marchall.
> 
> According to Denise Brailey of BFCSA, there are approximately $100 B worth of toxic loan given out to borrowers who don't have the capacity to pay these back.
> 
> While this is a today tonight piece and they are not the most believable source of news, it got me wondering if and how prevalent this practice was in Australia?




No problem, who cares about toxic loans any more, banks now get bailed out no matter what they do. i suppose the problem is they ultimately get bailed out with tax payers money, so we all inherit the debt.


----------



## FlyingFox (12 May 2013)

howmanyru said:


> No problem, who cares about toxic loans any more, banks now get bailed out no matter what they do. i suppose the problem is they ultimately get bailed out with tax payers money, so we all inherit the debt.




That's true. However it would be prudent to keep an eye on the magnitude of the situation. $100 B if the number is correct is very big considering current national debt is ~100-200 B.


----------



## sydboy007 (21 May 2013)

some might find this interactive chart interesting

http://www.economist.com/blogs/dailychart/2011/11/global-house-prices

Any way you look at it, since 2000 a lot of unproductive debt has been taken on to inflate those house prices.

166% inflation adjusted growth is pretty scary.  How anyone can still think it can happen again really must start reading the fine print on all those glossy brochures they're sucked it by.


----------



## jank (21 May 2013)

Negative Gearing is going to lead eventually to the destruction of a generations wealth when the party stops. You know its bad when the Swedes are complaining about Australia being expensive. With the Mining Boom on its last legs expect massive budget deficits in the coming years where everyone will have to pay higher taxes as a result. No such thing as a free lunch. Australia has had it good for 20 odd years but its going to take about 10 years to get the country back to a competitive international level, mostly thanks to bank and house friendly legislation and spending. The future is very bleak in my opinion.


----------



## Uncle Festivus (12 June 2013)

It's quiet in here.......almost too quiet.......

Australia’s dollar fell to the lowest in almost three years versus the greenback after home-loan approvals grew at the slowest pace in three months, boosting the case for further cuts to borrowing costs.

“Housing is the one area most likely to make up for the mining investment downturn, and it’s disappointed,” said Joseph Capurso, a Sydney-based foreign-exchange strategist at Commonwealth Bank of Australia. “You’ve got to say that the Aussie’s going to keep on falling.”

Australian home-loan approvals rose 0.8 percent in April from the month before, the smallest increase since January. Economists surveyed by Bloomberg News forecast a 2 percent rise. March’s gain was revised to 4.8 percent from 5.2 percent.


----------



## tech/a (12 June 2013)

Sold a commercial property last month for what I paid for it.
Had 2 apartments up for sale for 10 mths and just took them off the market 
will continue renting them.

Have secured 3 housing sub divisions from one of Adelaides leading project builders.
They have already sold 2 of the 3 sub divisions all from the new home owners grant.
There are another 2 about to be released.

So not all doom and gloom.
Some fantastic prices from builders right now.


----------



## WilkensOne (12 June 2013)

tech/a said:


> Sold a commercial property last month for what I paid for it.
> Had 2 apartments up for sale for 10 mths and just took them off the market
> will continue renting them.
> 
> ...




This isn't a criticism tech, but what is your plan if prices start falling? Are you satisfied with the rental return you will be receiving and carry them until prices return to current levels? Just interested to know why it doesn't bother you?


----------



## moXJO (12 June 2013)

Bit of a building boom where I am and I'm flat out with work. But it is mixed feelings with others telling me they are doing it tough. The mines are really coming off the boil though and the stories of managers telling staff "don't run out and buy any big ticket items" are floating round.
Property prices don't look like they have shifted much, probably up if anything.


----------



## tech/a (12 June 2013)

WilkensOne said:


> This isn't a criticism tech, but what is your plan if prices start falling? Are you satisfied with the rental return you will be receiving and carry them until prices return to current levels? Just interested to know why it doesn't bother you?




I own them.
Freehold
Sick of the corporate title
Rubbish and tenants for 13 years.
Think I can get a better return elsewhere
Only have to wait 18 mths for freeway and
Rail. Worth the wait I think.

I'm also hearing that we are an anomaly in our industry
" Civil Construcion "


----------



## KurwaJegoMac (13 June 2013)

tech/a said:


> I own them.
> Freehold
> Sick of the corporate title
> Rubbish and tenants for 13 years.
> ...




Hi Tech/a,

Given the issues currently going on in your industry what are your thoughts on purchasing RE now?

I've been considering an apartment in Victoria - I'm haggling with a distressed vendor in a good inner-city location; currently sitting at a price 10% cheaper than what they paid for 2 years ago off the plan. 

The way I see it is this:

Pros:
- Record low interest rates (will we ever see something like this again, I don't know)
- Investor finance is well on the increase (up 21% last month, compared to owner-occupier 7%). I see it as a strong point (kind of like the stockmarket when the big boys get in before the general public; somehow I don't see too many in the general public confident enough to invest right now)
- Shortage of construction may equate to shortage of available dwellings
- Rents are rising

Cons:
- Record low interst rates (while a positive in the short term, my biggest fear is the whoppingly huge inflation that's going to hit us at some point in the future). Unemployment isn't falling, so while that's bad for sentiment it probably means inflation will be held off for a few years (will be watching like a hawk for when unemployment reverses)
- Sentiment; still very much subdued but as always, opportunities exist in good areas
- Victoria is getting pummeled economically

Part of me wants to take advantage of these record low rates - we all know what they do to asset prices. The other side of me is weighed down by inflation risks and the overall poor sentiment and outlook for investing in the short term.

Keen to hear any thoughts you may have considering your extensive experience over the years and you've probably been through almost all ups and dows! (others are welcome to chime in too of course)

Thanks.

KJM


----------



## McLovin (13 June 2013)

I bought a place last week. 3 bed terrace in Paddington. It's more than liveable, although in a few years I might do some rennovations. RE agents thought things were still pretty weak, although prices have somewhat recovered. They're definately not seeing the volume they used to.

If you're buying apartments in the capital cities, then know that you're competing with Chinese buyers who are not necessarily interested in yield.


----------



## WilkensOne (13 June 2013)

McLovin said:


> I bought a place last week. 3 bed terrace in Paddington. It's more than liveable, although in a few years I might do some rennovations. RE agents thought things were still pretty weak, although prices have somewhat recovered. They're definately not seeing the volume they used to.
> 
> If you're buying apartments in the capital cities, then know that you're competing with Chinese buyers who are not necessarily interested in yield.




Is this somewhere you are planning to live or investment?


----------



## McLovin (13 June 2013)

WilkensOne said:


> Is this somewhere you are planning to live or investment?




Live, there's no chance I'd buy an investment property. The returns just don't stack up, IMO.


----------



## tech/a (13 June 2013)

With enough equity and enough time Property will always be a sound investment.

The rest will be argued infinitum!


----------



## McLovin (13 June 2013)

Who doesn't like an "iron clad home with a pool"!

http://www.realestate.com.au/property-house-wa-port+hedland-410617851

In the middle of nowhere and yours to rent for only $3,600/week.

Roll on boom!

How does a dark coloured tin shed go in 40 degree + temps?


----------



## ROE (13 June 2013)

McLovin said:


> Who doesn't like an "iron clad home with a pool"!
> 
> http://www.realestate.com.au/property-house-wa-port+hedland-410617851
> 
> ...




Old news read AFR article today on the bust that happening up there now 
people buying thinking they get yield of 10% ouch!!


----------



## DB008 (13 June 2013)

McLovin said:


> Who doesn't like an "iron clad home with a pool"!
> 
> http://www.realestate.com.au/property-house-wa-port+hedland-410617851
> 
> ...




Port Hedland
Karratha
Dampier

All in the same boat.

$3,600 p/w = mine-site would rent for management material.


----------



## FlyingFox (15 June 2013)

KurwaJegoMac said:


> Hi Tech/a,
> 
> Given the issues currently going on in your industry what are your thoughts on purchasing RE now?
> 
> ...





I would have a good think about it. I would think that the 10% discount could be gotten from alot of inner city sellers from what they paid 2-3 yrs ago, distressed or otherwise. Many bought these properties thinking they would flip it when the properties completed. With the economic situation deteriorating and dearth of apartments in the pipeline (quick search reveals > 300 for sale in docklands now) in the next 3 years, it will be a difficult market. just my .


----------



## drsmith (15 June 2013)

McLovin said:


> Who doesn't like an "iron clad home with a pool"!
> 
> http://www.realestate.com.au/property-house-wa-port+hedland-410617851
> 
> ...



And it's in South Hedland too. 

There was a brief segment on the ABC news last week on the rental market in Karratha stating that residential rents there have almost halved in the past few months.


----------



## FlyingFox (15 June 2013)

drsmith said:


> And it's in South Hedland too.
> 
> There was a brief segment on the ABC news last week on the rental market in Karratha stating that residential rents there have almost halved in the past few months.




Link to AFR article re rent reduction etc in mining towns

http://www.afr.com/p/national/iron_ore_boom_town_burns_homeowners_KMU7sHtZineGs5Hn20psjK


----------



## Tyler Durden (16 June 2013)

McLovin said:


> If you're buying apartments in the capital cities, then know that you're competing with Chinese buyers who are not necessarily interested in yield.




Interesting. You're not the first person I've heard say that, and indeed, I agree with you. However, I do wonder where all these wealthy Chinese are getting their money from? My friend thinks they are corrupt Chinese government officials sending their money overseas and basically laundered into our real property to get it out of the hands of the Chinese government if caught.


----------



## CanOz (16 June 2013)

Tyler Durden said:


> Interesting. You're not the first person I've heard say that, and indeed, I agree with you. However, I do wonder where all these wealthy Chinese are getting their money from? My friend thinks they are corrupt Chinese government officials sending their money overseas and basically laundered into our real property to get it out of the hands of the Chinese government if caught.




Some is , some isn't Tyler. We know plenty of wealthy upper middle class that would rather buy overseas real estate because it's better value than china. Also, chinas cities are very polluted and they all want a foreign education for thier kids. Some of these people are wealthy entrepreneurs, with funds accumulated through this massive bubble.

Then there are also plenty of corrupt government officials and senior officers of chinas state owned enterprises.

Very tricky to get the money out though, 50k per year is the max currency conversion per person.

CanOz


----------



## FlyingFox (16 June 2013)

CanOz said:


> Some is , some isn't Tyler. We know plenty of wealthy upper middle class that would rather buy overseas real estate because it's better value than china. Also, chinas cities are very polluted and they all want a foreign education for thier kids. Some of these people are wealthy entrepreneurs, with funds accumulated through this massive bubble.
> 
> Then there are also plenty of corrupt government officials and senior officers of chinas state owned enterprises.
> 
> ...




Thanks for the insight CanOz. Do you think that means bad news for Oz property if bubble in China is pricked?


----------



## McLovin (16 June 2013)

CanOz said:


> Very tricky to get the money out though, 50k per year is the max currency conversion per person.
> 
> CanOz




Which, from my understanding, is about as enforced as the laws in Australia relating to non-resident, non-citizens buying residential property.

I've been going to a few auctions lately, and I'll say that once you hit the $1.2-$1.3m mark it's all foreigners.


----------



## FlyingFox (16 June 2013)

McLovin said:


> Which, from my understanding, is about as enforced as the laws in Australia relating to non-resident, non-citizens buying residential property.




I suspect it depends on who you are and whom you know.


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## CanOz (16 June 2013)

McLovin said:


> Which, from my understanding, is about as enforced as the laws in Australia relating to non-resident, non-citizens buying residential property.
> 
> I've been going to a few auctions lately, and I'll say that once you hit the $1.2-$1.3m mark it's all foreigners.





Perhaps the g'men can get around it, but not the ordinary folks like us....

This bubble ain't gonna burst easy, but boy when it does...I suppose it will affect allot asset markets, and maybe if they can't liquidate what's at home they'll liquidate foreign assets...no idea. Nothing has ever been seen on this scale?

CanOz


----------



## DB008 (16 June 2013)

CanOz said:


> Perhaps the g'men can get around it, but not the ordinary folks like us....
> 
> This bubble ain't gonna burst easy, but boy when it does...I suppose it will affect allot asset markets, and maybe if they can't liquidate what's at home they'll liquidate foreign assets...no idea. Nothing has ever been seen on this scale?
> 
> CanOz





What sort of time frame are you look at CanOz for the bubble to potentially pop?

I have heard from a few people that very recent figure coming out of China are very scary indeed. If China does burst, we'll be stuffed here in Australia.


----------



## CanOz (16 June 2013)

DB008 said:


> What sort of time frame are you look at CanOz for the bubble to potentially pop?
> 
> I have heard from a few people that very recent figure coming out of China are very scary indeed. If China does burst, we'll be stuffed here in Australia.





I really have no idea ya know, it's impossible to know. Can't even guess really, these things always drag on longer than you expect, that's why bears always get hurt calling tops.

The banks have a hundred billion or so of bad loans, a four high I think. Local governments have debts far exceeding the national GDP.

They still have a ton of assetts to sell if they wanted to privatize, they've started already. Actually I just had a lunch with a mate that runs one of the privatized assets for a foreign company now. So the process of privatizing has a double benefit. They get foreign cash for assets, then they are relived of the burden as well....

I heard one time that they suspect that privatization will be the next boom in China.

Works well.....once.

CanOz


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## sydboy007 (17 June 2013)

Slowing economy.

Stagnating employment even with increasing GDP

Most high employment sectors not really hiring.

Private sector debt barely lower than historically high 2007 levels pre GFC.

My feeling is since we're a nation of landlords now, we've never been through a recession with so many properties to sell.  Aussies have pretty much cut back on everything to pay the mortgage, but I doubt the same will be done for the investment property.

I have a feeling when the property market route sets in, it will be rather quick, and the falls will be quite large due to the fact that so many of those "investors" are loosing money and wont be able to afford that if they lose their jobs, or suffer a pay cut.

We wont see much lower interest rates, so that kick the can down the road is gone. 

Then there's all the FHBs who got conned into the market in 2008-09 who are still probably under water sine they tended to buy in the areas that have had the largest price falls over the last few years.

Those ILBs offering 3.5% + CPI are starting to look mighty tasty at present.

Oh and Aussie bank 5 yeards CDS have jumped from about 70 bps to over around 108 ie a 50% increase in a month.

Doesn't bode well for the banks passing on in full any further interest rate cuts


----------



## Tyler Durden (17 June 2013)

Read in the news today that Lend Lease's SP dropped like 8% due to announcement of restructuring because of flat construction industry. Not sure if Lend Lease does any residential stuff, but not good news in the property area in general.


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## FlyingFox (17 June 2013)

Tyler Durden said:


> Read in the news today that Lend Lease's SP dropped like 8% due to announcement of restructuring because of flat construction industry. Not sure if Lend Lease does any residential stuff, but not good news in the property area in general.




Lend Lease does a fair bit of residential. Communities/estates as well as high rises.


----------



## moXJO (18 June 2013)

Bears are out must mean more up in prices


----------



## ROE (18 June 2013)

CanOz said:


> Very tricky to get the money out though, 50k per year is the max currency conversion per person.
> 
> CanOz




Corrupt people bends the law and dipped their hand in the money and they cant work out how to get more than 50K a year out of the country? 

Laundering money is also illegal wonder how the underworld guys do it to buy their cars and mansion


----------



## FlyingFox (19 June 2013)

ROE said:


> Corrupt people bends the law and dipped their hand in the money and they cant work out how to get more than 50K a year out of the country?
> 
> Laundering money is also illegal wonder how the underworld guys do it to buy their cars and mansion




Legally it is very hard to get money out of the country. As with all laws (except for those of nature), there is a way around. 

As CanOZ was saying not everyone that is rich in China is corrupt. Many made a lot of money out of the property boom but unless they are connected or in business, it is very difficult to legally get the money out. Alternatively, if you have a mate in customs, nothing stopping you from walking onto a plane with your jacket stuffed with 100 dollar bills .


----------



## sydboy007 (19 June 2013)

The issue that worries me most, not so much because of the impact on house prices, but because it will cause huge issues for the banks and then the rest of the economy, is the net negative investor class.

We've never had a recession where $5-7B a year is lost on rental properties.  Prior to the halving of CGT on assets held over 12 months,  over the medium term investors were breaking even.  Since 2000 cumulative losses are north of $40B (worse if adjusted for inflation).

I'm not sure what the stats are in terms of those who are positively geared over negatively geared, but it doesn't take too high a % to get into trouble before we have a destructive feedback loop of falling property prices feeding int increasing bank bad debts, lower credit growth, high unemployment, banks unable to lend due to high debt loads.  It'll be just like the USA or Spain.

I wonder how long the Government will be able to stand strong against bailing the "investors" out.

Tally Ho with the mega FHB grant targeted to the purchase of existing dwellings I presume.


----------



## McLovin (19 June 2013)

sydboy007 said:


> The issue that worries me most, not so much because of the impact on house prices, but because it will cause huge issues for the banks and then the rest of the economy, is the net negative investor class.
> 
> We've never had a recession where $5-7B a year is lost on rental properties.  Prior to the halving of CGT on assets held over 12 months,  over the medium term investors were breaking even.  Since 2000 cumulative losses are north of $40B (worse if adjusted for inflation).
> 
> ...




It would have been a couple of years ago, and I don't have it to hand, but there was a survey done of property investors and how long they would continue to hold in a period of flat capital gains. It wasn't pretty. The point being, most property investors believe in the old spruiker's line of doubling every 7-10 years. Unlikely from here, IMO.


----------



## prawn_86 (19 June 2013)

McLovin said:


> The point being, most property investors believe in the old spruiker's line of doubling every 7-10 years. Unlikely from here, IMO.




Yeh I would be interested to see some stats of properties bought post 2008 and see if they are on track to double, as it is 5 years since the GFC


----------



## FlyingFox (19 June 2013)

McLovin said:


> It would have been a couple of years ago, and I don't have it to hand, but there was a survey done of property investors and how long they would continue to hold in a period of flat capital gains. It wasn't pretty. The point being, most property investors believe in the old spruiker's line of doubling every 7-10 years. Unlikely from here, IMO.




Its worse than them believing, they actually need almost that level of growth to support negative gearing losses (less so now with lower interest rates). Not to mention a very liquid market in case something goes wrong. 

A lending manager at my bank tried to run that line by me the other day lol ... "Imagine all the capital gains you are missing out on by renting."


----------



## FxTrader (19 June 2013)

FlyingFox said:


> Its worse than them believing, they actually need almost that level of growth to support negative gearing losses (less so now with lower interest rates). Not to mention a very liquid market in case something goes wrong.




Astute property investors focus on positive cash flow properties (once all tax deductions and concessions are taken into account). In that case, negatively geared property generates losses for tax offset. Capital appreciation potential is not the primary reason for holding the asset.

Negative after tax cash flow property investors are the ones relying on capital appreciation, and given the continuing flat or negative outlook for property prices in many local markets, are the investors/speculators most likely to head for the exits.


----------



## FlyingFox (19 June 2013)

FxTrader said:


> Astute property investors




Astute being the operative word. In my opinion although not an extinct species, they are few and far between.



FxTrader said:


> focus on positive cash flow properties (once all tax deductions and concessions are taken into account). In that case, negatively geared property generates losses for tax offset. Capital appreciation potential is not the primary reason for holding the asset.




Again, positive cash flow properties are rare in the big cities. Obviously this depends on the size of your deposit but the deposit needs to be taken into account when computing cash flow. You might not be in trouble, but you will still be losing money. 



FxTrader said:


> Negative after tax cash flow property investors are the ones relying on capital appreciation, and given the continuing flat or negative outlook for property prices in many local markets, are the investors/speculators most likely to head for the exits.




What proportion of investors fall in this category? There were survey results a while ago that said something like the majority of property investors had incomes below 80K.


----------



## matty77 (19 June 2013)

I will be honest and say I am thinking about selling some of my shares for a deposit and going and buying a house in Melbourne as might be moving there for work reasons in the next few months and I am not sure I really want to rent a house again.

Say $150k deposit with a total purchase of $500k house, repayments $500-$600 / week on the balance.

Looking at say a 4 year time frame before I move out of Melbourne and go somewhere else. Now the question is what will perform better over the next 4 years? Shares or property? And why?

conundrum..

Capital growth doesnt concern me as I would keep the house anyway when I leave and rent it out, and the low interest rates at the moment are very attractive which is why I am looking at it. That probably leads me more towards just buying a place.

I need to go update my spreadsheet and do the numbers...

What is the property market doing in Melbourne, I heard its a bit flat with some people saying down 20% while others saying not that bad.


----------



## FxTrader (19 June 2013)

FlyingFox said:


> Astute being the operative word. In my opinion although not an extinct species, they are few and far between.




Not really, I have met many but they are definitely not in the majority.



> Again, positive cash flow properties are rare in the big cities. Obviously this depends on the size of your deposit but the deposit needs to be taken into account when computing cash flow. You might not be in trouble, but you will still be losing money.



Smart, experienced investors understand that positive cash flow properties are generally not found close to the CBD and don't look for them there.  It's all about cash flow, not capital gain.  Some go the commercial property route to achieve this but it's higher risk.

You don't lose money unless you realize a loss by selling and even that is a capital loss credit.  Your calculated net worth will decline if the value of your property porfolio does but like I said, positive cash flow property investors focus primarily on cash flow. 



> What proportion of investors fall in this category? There were survey results a while ago that said something like the majority of property investors had incomes below 80K.




Quite a lot actually sit on negative cash flow property expecting value to rise to compensate on sale and this burden can sometimes force a sale.  The only reason to sell a cash flow positive property is when someone wants to pay you an incredible price for it or your circumstances change and you need to cash out.


----------



## kid hustlr (19 June 2013)

matty77 said:


> I need to go update my spreadsheet and do the numbers...




I think everyone needs to do their numbers. I'm by no means a property bull but off the top off my head a quick numbers example and property doesn't stack up that bad.

Say you have a 120k deposit (20%), 600k apartment in inner city syd which rents for say 600 a week call it 550 after prop manager costs. Say 5k in costs (water/council/strata). 5.5% variable interest rate.

None of these assumptions are that crazy.

Breaks down to:

Total Net rent: $28,600
Less costs (5k) and interest (480k*0.055) = $31,400

Comes at a loss of $2,800. Nothing really

This is a hugely simply example which doesn't factor in number of things (added property costs, tax deductions, adding value to a property, negotiating a good purchase, rent increasing over time etc etc) but at the end of the day 1% cap gains means you are in the black.

Compare this to other options (4% at call cash? volatility of  the share market) and you need to be a pretty big property bear for a long period of time to banish the idea of buying a place. Especially if you don't own a PPOR.

my 2c


----------



## Klogg (19 June 2013)

kid hustlr said:


> Compare this to other options (4% at call cash? volatility of  the share market) and you need to be a pretty big property bear for a long period of time to banish the idea of buying a place. Especially if you don't own a PPOR.
> 
> my 2c




This scenario doesn't really cater for house prices dropping... Given you're highly leveraged, what about the case where your asset drops 5% in value? Or more? (Negative equity anyone?)

That's not to say house prices WILL drop, just that the scenario should be considered...


----------



## kid hustlr (19 June 2013)

Klogg said:


> This scenario doesn't really cater for house prices dropping... Given you're highly leveraged, what about the case where your asset drops 5% in value? Or more? (Negative equity anyone?)
> 
> That's not to say house prices WILL drop, just that the scenario should be considered...




Yep agree, You could say the same for any investment choice although generally property has a higher level of leverage involved. It depends on your view of where the property market/your investment is heading I just think people are getting carried away. You don't need property prices to double every 7-10 to get a good return on your property.

If you're property drops 5% in value you've suffered a paper loss and little more unless you are forced to sell.


----------



## matty77 (19 June 2013)

Not so concerned about any drop in property prices really as it will be PPOR for 4 to 5 years then I will just move somewhere else and buy another house and rent this one out.

Again I would hold the property long term, this one would be sold for my kids when they need some $ in about 22 years time. Hopefully I would have seen some capital gains in a 22 year period.

hmmm


----------



## Klogg (19 June 2013)

matty77 said:


> Not so concerned about any drop in property prices really as it will be PPOR for 4 to 5 years then I will just move somewhere else and buy another house and rent this one out.
> 
> Again I would hold the property long term, this one would be sold for my kids when they need some $ in about 22 years time. Hopefully I would have seen some capital gains in a 22 year period.
> 
> hmmm




If your holding period is that long, the question is not around the size of your loss, but rather maximizing your gains.

Stock volatility long term won't really hurt you... In fact, if I were in the situation you're in, I'd be buying an index over property (if I wanted a minimal effort investment)

But each to their own.


----------



## FlyingFox (19 June 2013)

FxTrader said:


> Not really, I have met many but they are definitely not in the majority.
> 
> 
> Smart, experienced investors understand that positive cash flow properties are generally not found close to the CBD and don't look for them there.  It's all about cash flow, not capital gain.  Some go the commercial property route to achieve this but it's higher risk.
> ...




I think we are agreeing on the same things without explicitly saying it. Yes those with positive cash flow properties bought many moons ago have nothing to fear. Those with negative cash flow properties and those the purchased post GFC or even pre GFC stand to loose a fair bit. 

Agree with you totally about positive cash flow. It is difficult to find but that is what a real investor should be looking for. Both my parents and inlaws have largish prop portfolios (overseas not in oz) and they have done this via positive cash flow and doing the numbers properly.


----------



## FlyingFox (19 June 2013)

Klogg said:


> This scenario doesn't really cater for house prices dropping... Given you're highly leveraged, what about the case where your asset drops 5% in value? Or more? (Negative equity anyone?)
> 
> That's not to say house prices WILL drop, just that the scenario should be considered...




+1. Also you really need to do the sums properly. For an apartment you are looking at outgoings of between 15-25%. This includes agents fees, rates, insurance and strata. Also take into account that when you sell you will be liable for agents and legal fees. When you buy you will be liable for stamp duty and legal fees.


----------



## FlyingFox (19 June 2013)

kid hustlr said:


> Yep agree, You could say the same for any investment choice although generally property has a higher level of leverage involved. It depends on your view of where the property market/your investment is heading I just think people are getting carried away. You don't need property prices to double every 7-10 to get a good return on your property.
> 
> If you're property drops 5% in value you've suffered a paper loss and little more unless you are forced to sell.




But you need continuous capital gains just to stay at square one. Yes the leverage works for you but the sword cuts both ways.


----------



## FlyingFox (19 June 2013)

Klogg said:


> If your holding period is that long, the question is not around the size of your loss, but rather maximizing your gains.




Exactly and because property cycles tend to be longer you can be in two completely different positions in 22 years time depending on when you bought/buy in.

One thing to keep in mind is that the baby boom and the years leading to the GFC (1960-2005) are unlike any other point in history. We had the quickest and largest population doubling EVER! These people have gone through the cycles and have accumulated wealth and increased demand. Than came the credit growth. I doubt this will ever happen in human history again.


----------



## FlyingFox (19 June 2013)

matty77 said:


> Not so concerned about any drop in property prices really as it will be PPOR for 4 to 5 years then I will just move somewhere else and buy another house and rent this one out.
> 
> Again I would hold the property long term, this one would be sold for my kids when they need some $ in about 22 years time. Hopefully I would have seen some capital gains in a 22 year period.
> 
> hmmm




Have a look at Melbourne and the market before you decide to buy. Especially an inner city apartment or new developments on the fringe.


----------



## kid hustlr (20 June 2013)

FlyingFox said:


> +1. Also you really need to do the sums properly. For an apartment you are looking at outgoings of between 15-25%. This includes agents fees, rates, insurance and strata. Also take into account that when you sell you will be liable for agents and legal fees. When you buy you will be liable for stamp duty and legal fees.




Re-read my post, i factored those in. I'm aware its a simple example.



FlyingFox said:


> But you need continuous capital gains just to stay at square one. Yes the leverage works for you but the sword cuts both ways.




True. Leverage is directly related to how much risk you are willing to take on.

I didn't say property investment is the only option but when you stack it against alternatives it stacks up way better than what you guys are implying. If you aren't willing to take on a calculated risk then what do you do? throw it an at call account and which will give you circa real 2% growth after inflation?


----------



## FlyingFox (20 June 2013)

kid hustlr said:


> Re-read my post, i factored those in. I'm aware its a simple example.




Add the fact that even at call rates, you will be getting ~ 3 K after tax (at 37%) for your 120K deposit and your loss is now ~6K. That is a 1% loss at todays low interest rates.

Add to this that you will need a 3-5% gain in five years (say you will sell in five) to cover the cost of real estate agents and stamp duty and your at 1.5-2% losses per year with a whopping 20% deposit.



kid hustlr said:


> True. Leverage is directly related to how much risk you are willing to take on.
> 
> I didn't say property investment is the only option but when you stack it against alternatives it stacks up way better than what you guys are implying. If you aren't willing to take on a calculated risk then what do you do? throw it an at call account and which will give you circa real 2% growth after inflation?




Ofcourse investing is a calculated risk. There are still some good properties out there and property investment is generally less risky than other forms. One thing you do need to factor though in todays markets is the capacity of prices to rise. By many accounts we are at the top or near the top of a cycle, not at the bottom or the middle.


----------



## matty77 (20 June 2013)

FlyingFox said:


> Have a look at Melbourne and the market before you decide to buy. Especially an inner city apartment or new developments on the fringe.




Im flying to Melbourne this weekend to look around and suss out the property market a bit more. Still not sure if I will rent or buy!

Cant do apartments, needs to be a 3 bedroom house as I have kids! Also most apartments in Melbourne are 2 bedroom, and you pay through the nose on a 3 bedroom apartment in Melbourne.

Plus I want to secure land if possible, I feel Melbourne already has too many apartments around.


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## Klogg (20 June 2013)

matty77 said:


> Plus I want to secure land if possible, I feel Melbourne already has too many apartments around.




If I were in your position (not knowing your situation 100%), I'd look for a run-down house within the inner city, possibly with a fair bit of land.
Yarraville, Spotswood and Newport (I can mainly speak for the west) can have 600sqm blocks which can easily be subdivided and have 2-3townhouses put on them (there's atleast one in almost every street nowadays) and sold with very good margins.

Example:
600sqm in newport ~ 600k
Stamp duty + other costs = 50k
Plans/Building permits = 40k
Building costs ~250k each = 500k (4BR, 3Bath townhouse ~28squares)
Holding costs = 50k (roughly)
Total = 1240k
(Note: plenty of room for error in these builds - must be careful!)

Now keep in mind a 4BR townhouse down the road sold for 805k... and a 3BR for 730k (crappy layout TBH)

That is, ofcourse, if you're interested in these suburbs... and depending on what you can afford.

(and with all that in mind, my preference is still equities FYI)


----------



## FlyingFox (20 June 2013)

matty77 said:


> Im flying to Melbourne this weekend to look around and suss out the property market a bit more. Still not sure if I will rent or buy!
> 
> Cant do apartments, needs to be a 3 bedroom house as I have kids! Also most apartments in Melbourne are 2 bedroom, and you pay through the nose on a 3 bedroom apartment in Melbourne.
> 
> Plus I want to secure land if possible, I feel Melbourne already has too many apartments around.




Good idea. Will you be working in the city?


----------



## matty77 (20 June 2013)

FlyingFox said:


> Good idea. Will you be working in the city?




Working around Tottenham area.

@ Klogg - probably looking for similar but $600k may be slightly out of my price range, although talking with ANZ today they have a nice fixed rate @ 4.99% for 3 years at the moment so I could probably stretch out to that...

Ideally I want an older house that I can give a lick of paint to and chuck a new kitchen in, tidy up the yard, new carpet etc. Do this over the next year to make good enough to live in for the next 4 years, then rent it out after that when I leave. Something like that anyway.,..

subdivision etc, that would be down the track - 15-20 years could look at that but not immediate as it will be PPOR, but eventually yes if there is opportunity and we have paid the house down enough.


----------



## Trembling Hand (20 June 2013)

matty77 said:


> Working around Tottenham area.




You poor thing!


----------



## sydboy007 (20 June 2013)

Interesting article on macrobusiness today

Should set the highly geared chattering landlords into strident demands that the Government do something.  Admittedly overall the profits from sales far outweighed the losses, but to be over 10% selling at a loss when we're not even technically in recession yet.

_RP Data has today released its Pain & Gain Report for the March quarter of 2013, which reveals that 12.7% of all home which sold over the three months to March 2013 incurred a gross loss. This compares with a peak of 13.1% of re-sales recording a loss over the three months ending January 2013 

RP Data recorded 58,677 residential property re-sales nationally over the first quarter, of these, 12.7 per cent recorded a gross loss from the original purchase price. The gross value of the losses associated with these loss making re-sales totalled $463.9 million over the quarter. Conversely, 87.3 per cent of all March quarter re-sales recorded a gross profit relative to their original purchase price. The gross profit from these re-sales equated to $9.6 billion._


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## satanoperca (20 June 2013)

sydboy007 said:


> Interesting article on macrobusiness today
> 
> Should set the highly geared chattering landlords into strident demands that the Government do something.  Admittedly overall the profits from sales far outweighed the losses, but to be over 10% selling at a loss when we're not even technically in recession yet.
> 
> ...




You failed to mention that the calculations did not take into account, stamp duty and selling costs (agents fees) equating to another 6% of costs.

Also for homes purchased after Jan-2008 *25% recorded a loss* with another 32% recording a 0-10% profit. Now calculating in stamp duty and selling fees and this 32% would diminish to maybe 16% and the loss amount would increase to 41%. 41% of properties bought after Jan 2008 and sold before the end of the March quarter in 2013 recorded a loss.

Also, as it is impossible to collect any accurate data the holding costs, interest, rates, maintenance etc. Doesn't look like property is a win all the time, well certainly not in the last five years.

Finally a report which reflects a little more realistically about property as an investment. As a home, a whole different matter.

Cheers


----------



## sydboy007 (21 June 2013)

Philip Soos has another great article on Business Spectator today

The property PE chart should be shown to any would be investor.  Would anyone buy a company with a PE of 30?  You'd REALLY have to believe in it's growth potential to pay such a high amount for a share of the profits.

As for gross yields, would be great to see what net yields for investment properties are like.  Really makes pretty much any other kind of investment look good.

I'll ask again, why buy when someone is willing to lend to you at below cost.


----------



## moXJO (21 June 2013)

sydboy007 said:


> Philip Soos has another great article on Business Spectator today
> 
> The property PE chart should be shown to any would be investor.  Would anyone buy a company with a PE of 30?  You'd REALLY have to believe in it's growth potential to pay such a high amount for a share of the profits.
> 
> ...




So now every house on the market would be considered to have a PE of 30. Are you lot running for dumb statements of the year or what.


----------



## sydboy007 (24 June 2013)

moXJO said:


> So now every house on the market would be considered to have a PE of 30. Are you lot running for dumb statements of the year or what.




Most things in finance deal with averages and aggregate data.

I'd say a lot of investors are buying on a PE of around 30 these days.

Whatever the figure is, you'd have to be lucky to buy at a PE of say 14 these days.

From a purely financial perspective I just don't see the benefit of buying, especially since most people can only afford to buy in areas with poor public transport and generally long commute times to work.

I look at the shares i sold to buy my home in 1997.  Those shares are all 8-13 times higher, and I  have no idea how much the dividends would total to.  My house is maybe 2.5 times increased in value, but then need to account for the purchase and holding costs.

Personally, I think I could be retired now if I'd not bought my house and had continued investing in shares for the last 16 years.


----------



## moXJO (24 June 2013)

sydboy007 said:


> Most things in finance deal with averages and aggregate data.
> 
> I'd say a lot of investors are buying on a PE of around 30 these days.
> 
> ...



So you invest in shares by looking at the market average not the fundamentals of the individual stock. 
 If Id bought the property I wanted in 97 Id be smoking hundred dollar bills. Im not discounting the sharemarket either. 
Buying a home to live in is a risky investment imo and more about lifestyle


----------



## tech/a (24 June 2013)

sydboy007 said:


> Most things in finance deal with averages and aggregate data.
> 
> I'd say a lot of investors are buying on a PE of around 30 these days.
> 
> ...




I started buying in 1995
Why?
I could finance 100%
I could be positively geared immediately
I was buying 4 bed homes for $97K
$280/ week rent and Interest only at 6.5%

Just kept buying while the bank supplied the money.
Still hold 4 properties all freeholded from the initial
buys.

Now supplying passive income. (Which is my
primary investment goal).

Just showing how I recognised opportunity.
Not that hard!


----------



## prawn_86 (24 June 2013)

tech/a said:


> I was buying 4 bed homes for $97K
> $280/ week rent and Interest only at 6.5%




PE ratio of about 15. Almost half what it is now according to report linked a few posts ago.

Personally I think if you can get a property under 20PE it is probably worth further investigation


----------



## McLovin (24 June 2013)

prawn_86 said:


> PE ratio of about 15. Almost half what it is now according to report linked a few posts ago.




It's a pre-tax yield of close to 15% but a pre-tax PE ratio of 6.65

Good luck finding something yielding 15%!


----------



## sinner (24 June 2013)

McLovin said:


> It's a pre-tax yield of close to 15% but a pre-tax PE ratio of 6.65
> 
> Good luck finding something yielding 15%!




LOL the irony, as Earnings Yield (reciprocal i.e. E/P) of a 6.65 P/E is 15%! :


----------



## McLovin (24 June 2013)

sinner said:


> LOL the irony, as Earnings Yield (reciprocal i.e. E/P) of a 6.65 P/E is 15%! :




As much as I enjoy irony, I don't see any?


----------



## sinner (24 June 2013)

McLovin said:


> As much as I enjoy irony, I don't see any?




It's not ironic that the correct P/E of 6.65 for techs historical example just so happened to be almost the exact number you said good luck finding something yielding that (incorrect P/E)? :

I thought it was anyway.


----------



## McLovin (24 June 2013)

sinner said:


> It's not ironic that the correct P/E of 6.65 for techs historical example just so happened to be almost the exact number you said good luck finding something yielding that (incorrect P/E)? :
> 
> I thought it was anyway.




In 1995 apparently 15% yield on property was achieveable. I can't imagine you can get it anywhere today, so good luck finding it, which was my point.

ETA: A pe of 15 is probably achieveable if you looked hard enough.


----------



## tech/a (24 June 2013)

McLovin said:


> In 1995 apparently 15% yield on property was achieveable. I can't imagine you can get it anywhere today, so good luck finding it, which was my point.
> 
> ETA: A pe of 15 is probably achieveable if you looked hard enough.




Just rememberr the signs for when it happens again in our lifetime.

I'll be too old to give a damn but you younger ones may well get on it!


----------



## satanoperca (24 June 2013)

tech/a said:


> Just rememberr the signs for when it happens again in our lifetime.
> 
> I'll be too old to give a damn but you younger ones may well get on it!




Thinking I will be push up daisies before I see interest rates above 10% again, aka 1995. That was a time when having money was worth something, today, better to borrow it seems than save.

Cheers


----------



## FlyingFox (24 June 2013)

satanoperca said:


> Thinking I will be push up daisies before I see interest rates above 10% again, aka 1995. That was a time when having money was worth something, today, better to borrow it seems than save.
> 
> Cheers




You never know ... all the savers just need to start their own union or something lol.


----------



## satanoperca (24 June 2013)

FlyingFox said:


> You never know ... all the savers just need to start their own union or something lol.




Why save when central banks can just print it, our own government will sell out future governments to keep it for the short term. 

Bankers have become the drug dealers of choice.


----------



## FlyingFox (24 June 2013)

satanoperca said:


> Why save when central banks can just print it, our own government will sell out future governments to keep it for the short term.
> 
> Bankers have become the drug dealers of choice.




SOrry if it offended, it was tongue in cheek comment. Agree with what your saying. However short of just handing out the cash, the printing requires people to borrow to be effective. Yes if people keep taking ever increasing amount of debts, than the circus continues. However any crisis of confidence and things can change quiet quickly.


----------



## Mrmagoo (24 June 2013)

tech/a said:


> Just rememberr the signs for when it happens again in our lifetime.
> 
> I'll be too old to give a damn but you younger ones may well get on it!




We've been sold out by baby boomer politicians, we all know that. Expensive toll roads for rich people instead of public transport for young family bread winning gen y workers.

Things do change with time, people die of old age ect ... 

I don't think there will be another housing boom in our life time, people have no appetite for it, it will likely be the next true generation of people (i.e those who are born after the last of the baby boomers are dead) who experience what the baby boomers experienced.

The world will be ****ed and it will be up to gen y who will fix it and make things cheap and accessible again and then our grand children will be the new spoiled (i.e baby boomer) generation who will ruin it for two more generations yet again.

I could swear that there is a cycle like this.

First generation (silent generation) builds it.
Second generation (those who fought it WW2) builds on it.
Third generation (the baby boomers children of those who fought in WW2) destroy it.

Gen y builds it.
Their children build on it.
Their granchildren destroy it.

- - - Updated - - -



FlyingFox said:


> Exactly and because property cycles tend to be longer you can be in two completely different positions in 22 years time depending on when you bought/buy in.
> 
> One thing to keep in mind is that the baby boom and the years leading to the GFC (1960-2005) are unlike any other point in history. We had the quickest and largest population doubling EVER! These people have gone through the cycles and have accumulated wealth and increased demand. Than came the credit growth. I doubt this will ever happen in human history again.





Property cycle is made up, it is not a cycle because all it has ever done is gone up.

Pushing people out of housing. Just like a 3rd world country.


----------



## FlyingFox (24 June 2013)

Mrmagoo said:


> Property cycle is made up, it is not a cycle because all it has ever done is gone up.
> 
> Pushing people out of housing. Just like a 3rd world country.




Look again and past the baby boomer generation. Look at the US. Prices fell 30-40% and are on the way up.

Agree with your earlier comment though. Will not happen in our lifetime. Probably not ever because we will not have another boomer generation or the current debt explosion ever again.


----------



## medicowallet (24 June 2013)

tech/a said:


> Just showing how I recognised opportunity.
> Not that hard!




Lol

More like you were just in the right place at the right time.  Now I am not saying you don't know anything about the market, but every know it all mum and dad investor has made a killing with property during the boom, you are not special in this regard..

The true special person is the one who runs with the herd, and turns before the edge of the cliff, which is why over the last couple of years I was always asking A/Prof when he thought it was going to end.   If I could have my time over again, THIS is what I would be trying to learn, is the psychology around the herd mentality of investing, and how to spot the initial turning points with greater accuracy (as most people who have been investing successfully for at least 15-20 years can probably see some signs earlier than the people whose money they will be receiving)

So, when is it going to end?   Has it already ended?  Did it end 2 years ago?

imo, the market is flat, and will be in real terms for years, until there is either a shock (eg atm China is looking interesting) or underlying earnings have a decent catchup.

MW


----------



## sydboy007 (25 June 2013)

medicowallet said:


> imo, the market is flat, and will be in real terms for years, until there is either a shock (eg atm China is looking interesting) or underlying earnings have a decent catchup.
> 
> MW




My hope is the market limps along with no real price increases for an extended period, but rents have above CPI increases till there's a fundamental realignment between rental income and property prices.

How much the Governments help or hinder this process will determine how much pain we experience.


----------



## Mrmagoo (25 June 2013)

Rents won't climb. 

The fundamental sand block of the economy that is the consumerist working class person is ****ed.

There is no productivity left in the economy namely because of housing and transportation issues.

People are stuck working within a region close to them or paying huge amounts in money and time for transport.

We haven't invested in our economy and that is going to create capacity constraints.

Compare us to a place like europe whrere people are :

1) SMARTER
2) Better looking
3) Younger
4) Better educated
5) Willing to work for a whole lot less
6) an abundance of skills

because in europe :

1) You can live cheap in good quality apartments and good quality food for bugger all so your $8 euro an hour works out pretty good and easily catch public transport to work
2) The women all put out anyway so you don't need a huge wage to demand a fast card and flash apartment, plus the average looking girl is no obese so you don't need a hot one anyway
3) the education system is not run by nutbag left wing women

Australia is just a cash grab to escape the fact others are demanding more cash, compared to the rest of the world I don't see how we'll be sustainable in anything

this is not just about wages, it is about the whole lot.

ok so my post is tongue in cheek but there is a middle ground between the slavery of asia and the madness of australia

we can do it and it is about giving people the opportunity to buy MORE not LESS with their dollar

this mean sending a lot of bad businesses and investors to the wall

and investing in housing to make it dirt cheap for all

that is at least one to three hundred dollars in wage cuts we could all just take for nothing (or spend in the economy) and years of wage increases we won't be demanding for surival sake.

- - - Updated - - -

Rents won't climb. 

The fundamental sand block of the economy that is the consumerist working class person is ****ed.

There is no productivity left in the economy namely because of housing and transportation issues.

People are stuck working within a region close to them or paying huge amounts in money and time for transport.

We haven't invested in our economy and that is going to create capacity constraints.

Compare us to a place like europe whrere people are :

1) SMARTER
2) Better looking
3) Younger
4) Better educated
5) Willing to work for a whole lot less
6) an abundance of skills

because in europe :

1) You can live cheap in good quality apartments and good quality food for bugger all so your $8 euro an hour works out pretty good and easily catch public transport to work
2) The women all put out anyway so you don't need a huge wage to demand a fast card and flash apartment, plus the average looking girl is no obese so you don't need a hot one anyway
3) the education system is not run by nutbag left wing women

Australia is just a cash grab to escape the fact others are demanding more cash, compared to the rest of the world I don't see how we'll be sustainable in anything

this is not just about wages, it is about the whole lot.

ok so my post is tongue in cheek but there is a middle ground between the slavery of asia and the madness of australia

we can do it and it is about giving people the opportunity to buy MORE not LESS with their dollar

this mean sending a lot of bad businesses and investors to the wall

and investing in housing to make it dirt cheap for all

that is at least one to three hundred dollars in wage cuts we could all just take for nothing (or spend in the economy) and years of wage increases we won't be demanding for surival sake.


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## FxTrader (25 June 2013)

medicowallet said:


> So, when is it going to end?   Has it already ended?  Did it end 2 years ago?
> 
> imo, the market is flat, and will be in real terms for years, until there is either a shock (eg atm China is looking interesting) or underlying earnings have a decent catchup.




If you accept the premise that the rise in house prices since 2002 was driven primarily by a large rise in household debt facilitated by loose lending standards by banks competing for market share then yes, the party ended about 2 years ago now.

Now that the end of massive intervention by central banks to keep interest rates artifically low is winding down, it's seems quite likely that there will be downward pressure on house prices from here.  The RBA lowering interest rates may cushsion the market for a time but there is clearly a reluctance to lower rates much further.


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## odds-on (25 June 2013)

tech/a said:


> Just rememberr the signs for when it happens again in our lifetime.
> 
> I'll be too old to give a damn but you younger ones may well get on it!




Hi Tech/A,

Do you think it was a once in a lifetime opportunity for your generation?

Cheers


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## odds-on (25 June 2013)

medicowallet said:


> Lol
> The true special person is the one who runs with the herd, and turns before the edge of the cliff, which is why over the last couple of years I was always asking A/Prof when he thought it was going to end.   If I could have my time over again, THIS is what I would be trying to learn, is the psychology around the herd mentality of investing, and how to spot the initial turning points with greater accuracy (as most people who have been investing successfully for at least 15-20 years can probably see some signs earlier than the people whose money they will be receiving)
> MW




Hi MW,

Have you read "The Big Short" by Michael Lewis? It is an absolutely fascinating account about the guys who went against the herd. The psychological strains on Paulson and Burry were intense as they waited for their bets to come right.

Cheers


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## moXJO (25 June 2013)

odds-on said:


> Hi Tech/A,
> 
> Do you think it was a once in a lifetime opportunity for your generation?
> 
> Cheers




Theres more opportunity now to make a buck then before (not talking just about property). And a lot of it is in industries that are fairly new. You guys are not snoozing through it?


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## young-gun (26 June 2013)

tech/a said:


> Just rememberr the signs for when it happens again in our lifetime.
> 
> I'll be too old to give a damn but you younger ones may well get on it!




Tech I know you have read dents great crash ahead. What's your take on demographics fuelling credit demand and markets. If i recall correctly dent is predicting the next boom early to mid 20's. this being the time for gen y to start entering into their spending/housing/upgrading years. I tend to agree with him.


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## Knobby22 (26 June 2013)

With the dollar falling, inflation will rise.
I think we may get one more cut in interest rates at best. I can see it going the other way soon after.


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## sydboy007 (27 June 2013)

FxTrader said:


> If you accept the premise that the rise in house prices since 2002 was driven primarily by a large rise in household debt facilitated by loose lending standards by banks competing for market share then yes, the party ended about 2 years ago now.
> 
> Now that the end of massive intervention by central banks to keep interest rates artifically low is winding down, it's seems quite likely that there will be downward pressure on house prices from here.  The RBA lowering interest rates may cushsion the market for a time but there is clearly a reluctance to lower rates much further.




Rates could still go down a lot further.  I think the RBA may just change the capital risk weighting against property so as to not spark a big lending boom.

So far commodities have remained stagnant with the rise of the USD, so I don't think inflation is going to increase too badly.  There's so much over capacity int he world that there's no pricing power for most products, so that should also work to inhibit too much inflation being imported.

I received an email yesterday for a 2 level 1 BR apartment in ultimo sydney.  Asking price $435K current weekly rent $430

initially I though not bad:

Annual Yield: 22360 / 435 000 ~ 5.1%

Then I thought you need to take out - yearly council rates $800, water $700, landlord insurance $700, strata $2500

Annual yield (22360 - 4700) / 435000 = 4%

Then you'd also need to take out any management fees if you don't want to do that yourself.

I can buy Sydney airport 2030 ILB at ~4% + CPI yield and it will cost less to buy and nothing to hold.

I know which would be my preferred investment route.


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## Tano (27 June 2013)

Where can a retail 'investor' buy these Sydney Airport bonds?


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## HyperText (27 June 2013)

tech/a said:


> I started buying in 1995
> Why?
> I could finance 100%
> I could be positively geared immediately
> ...




Were these homes that you were buying in a country area or in a city such as Sydney? The reason I ask is because if you had bought is a country area these returns are typically higher than in a major city however it is more risky than the cities because country towns don't have as much growth which means you may have little or no capital gain.


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## sydboy007 (28 June 2013)

Tano said:


> Where can a retail 'investor' buy these Sydney Airport bonds?




fiig allow you to purchase them - they break them down from the 500K tranches you normally have to buy

they even started allowing you to buy in 10K lots instead of 50K

not sure if other companies provide a similar service.

i used them to buy an Envestra 2025 ILB that yields me 3.4% + CPI and has had capital growth of ~3% since December.

I've said in previous threads that a combination of ILB and IAB with some floating rate or fixed interest thrown in can provide quite good income streams at relatively low risk.

Southern Cross Airports Corporation Pty Ltd 2030 ILB currently offers a yield of 7.25% (CPI at 2.5%) and the 2020 ILB around 6.85%, with Envestra still offering 6.45%

I'm seriously considering selling out of more equities, but am already around 60% bonds / hybrids in my SMSF, but at the above kinds of yields am thinking I can live with those kinds of returns for the next 7 to 17 years


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## Tano (28 June 2013)

sydboy007 said:


> fiig allow you to purchase them - they break them down from the 500K tranches you normally have to buy
> 
> they even started allowing you to buy in 10K lots instead of 50K
> 
> ...




Thanks for the link and the info.


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## DB008 (30 June 2013)

And people are suggesting that Australia is in a bubble?

Bloomberg



> *San Francisco’s Million Dollar Homes Spur Condo Surge*
> 
> San Francisco’s median house price is poised to surpass $1 million this year after setting a record in May, the California Association of Realtors estimates. The county is the only one in the state with values to set a new high, said Leslie Appleton-Young, chief economist for the group. A limited supply of houses available for sale has allowed condo developers to step in and lure frustrated buyers such as Boortz.






> The San Francisco area had the biggest gain in home prices among 20 U.S. cities in the S&P/Case-Shiller index, according to data released yesterday. Single-family house prices in April jumped 24 percent from a year earlier, compared with gains of 12 percent of the broader gauge, which was still the biggest advance in more than seven years.
> The median price for a single-family home sold in the city was $947,260 in May, up 2.7 percent from April and 32 percent from a year earlier, according to the state Realtors group. It topped the $932,350 record set in 2007. Surpassing $1 million “certainly looks like it’s going to happen,” said Los Angeles-based Appleton-Young.




http://www.bloomberg.com/news/2013-06-26/san-francisco-s-million-dollar-homes-spur-condo-surge.html


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## Peak Debt (30 June 2013)

Useful chart here from APF, gives a good snapshot of the housing market today...


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## sydboy007 (16 July 2013)

i shake my head in disbelief 

The elderly owner of a dilapidated Surry Hills two-bedroom terrace watched in amazement as his home sold for $894,000 - almost $200,000 over reserve on Saturday. From his nursing home bed via video phone, he saw five groups do battle. There were 38 contracts out and 18 registered bidders for 74 Sophia Street, on a tiny 105 square metre block, with no hot water in the kitchen and an outdoor bathroom. He had paid less than $50,000 for it in the 1970s. "He just couldn't believe it,'' Spencer & Servi principal David Servi said. First home buyers had been interested, but it was bought by a builder in his 20s.

I'm only a 30 minute walk from the CBD and you could easily buy a ready to move in house for less than that - heck my 3 BR house with off st parking would be luck to sell for $895K than that and certainly is ready to move in.

Seems like the RBA is getting its wish on inflating the housing bubble yet again with artificially low interest rates.


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## ftw129 (16 July 2013)

sydboy007 said:


> Seems like the RBA is getting its wish on inflating the housing bubble yet again with artificially low interest rates.




Sarcasm? Surely you don't actually think that that's the reason for lowering interest rates...

In any case I believe that waiting for the property prices in Australia to come crashing down is a big mistake. 

Any slow down or correction will be a buying opportunity for the many that are seething about the fact that they did not buy many more in their younger years and instead wasted their money on holidays and coffee.

The best time to buy property is and always will be now.


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## sydboy007 (16 July 2013)

ftw129 said:


> Sarcasm? Surely you don't actually think that that's the reason for lowering interest rates...
> 
> In any case I believe that waiting for the property prices in Australia to come crashing down is a big mistake.
> 
> ...




One of the stated aims of lower interest rates has been to move growth from the resource sector back to housing and retail.

Would you like to put up some financial statics to compare buying versus renting and investing the difference?

rental yields are still lower than mortgage interest rates.  Factor in buying and selling costs, maintenance and holding costs, and it's clear from a financial point that renting is far cheaper than buying.  If you've decided to never buy a house and don't mind salary sacrificing some of the difference between renting and buying then you've got a nice low taxed way to save for retirement.

Factor in most people can afford to rent a lot closer to where they work than they can buy, and you win on the lower commute times.  I worked with a guy who finally gave in to his GFs nagging to buy a house.  They "emigrated" from St Leonards to the NSW Central coast as that had property in their price range (partly life style too since he liked to take his tinny our fishing).  His commute time went from 20 min door to door drive to 1.5 hours of drive train and walk, along with the regular train delays and cancellations he had to put up with.

So I say while property investors are ready to subisdise rent people might as well take advantage of it.


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## kid hustlr (16 July 2013)

Which suburb are you in?

Surry hills and around that area is in high demand, I completely agree that the sale in this case is way over price but you don't know his reasons for purchasing.

Times are changing. The picket fence and quarter acre out in the sticks isn't the dream anymore. people want to be close to the city and close to work. home owners would rather pay up for a 2br apartment or a small townhouse in a convenient area than endure a 1 hr commute each way.

I don't thnk the RBA is trying to 'inflate house prices' fwiw.


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## ftw129 (16 July 2013)

> One of the stated aims of lower interest rates has been to move growth from the resource sector back to housing and retail.




Do you have a link that I can refer to? I'd like to try to interpret this for myself.




> Would you like to put up some financial statics to compare buying versus renting and investing the difference?




No, but I'll be interested in reading yours since this is something that you're bringing up. (I'm relaxing with a book today and lot's of different varieties of tea )



> rental yields are still lower than mortgage interest rates.  Factor in buying and selling costs, maintenance and holding costs, and it's clear from a financial point that renting is far cheaper than buying.  If you've decided to never buy a house and don't mind salary sacrificing some of the difference between renting and buying then you've got a nice low taxed way to save for retirement.




A lot of generalisations here which may or may not apply to everyone.



> Factor in most people can afford to rent a lot closer to where they work than they can buy, and you win on the lower commute times.  I worked with a guy who finally gave in to his GFs nagging to buy a house.  They "emigrated" from St Leonards to the NSW Central coast as that had property in their price range (partly life style too since he liked to take his tinny our fishing).  His commute time went from 20 min door to door drive to 1.5 hours of drive train and walk, along with the regular train delays and cancellations he had to put up with.




Not sure what you're trying to convince me of here.



> So I say while property investors are ready to subisdise rent people might as well take advantage of it




I rent where I live and I own what I rent out, so clearly we agree on something here


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## sydboy007 (16 July 2013)

kid hustlr said:


> Which suburb are you in?
> 
> I don't think the RBA is trying to 'inflate house prices' fwiw.




I live in Erskineville which is fairly close to the city, but far enough away too.

Part of the process for lower interest rates is to inflate asset prices, and let the wealth effect encourage people to spend more.


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## ftw129 (16 July 2013)

sydboy007 said:


> Part of the process for lower interest rates is to inflate asset prices, and let the wealth effect encourage people to spend more.




Sounds a bit more sensible with the key word there being "part" and also not pointing directly to housing...

A far cry from




> Seems like the RBA is getting its wish on inflating the housing bubble yet again with artificially low interest rates.


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## Uncle Festivus (17 July 2013)

It would seem a fairly simple equation?

Global GDP falling to recessionary levels ie a new global recession.

Interest rates at 'emergency' lows - there are more savers than spenders now so less spending velocity in the economy?

Unemployment rising - similar story here to other developed economies, more part time burger flipper type jobs than full time good money jobs.

Spanner in the works - expats returning from Euro recession countries need to live somewhere?

It's been a great bubble for the last 50 years but even the best party must come to an end, just too many uninvited guests - who called the cops???

It's going to be a doozy of a Hangover.........

How long can these 2 charts keep going in the same direction?


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## sydboy007 (17 July 2013)

ftw129 said:


> Sounds a bit more sensible with the key word there being "part" and also not pointing directly to housing...
> 
> A far cry from




Non tradable inflation is humming along nicely at around 3.5%-4%.  The tradable sector has bounced back sharply and I'd say it wont be long before it turns positive too.

In that kind of scenario current interest rates are artificially low.

The RBA knows a housing bust in this country would pretty much bankrupt us.  Our banks are practically building societies with a bit of wealth management tacked on.  We've become a nation of loss making landlords.  Rental properties in aggregate have not made a profit since 2000.  The accumulated losses are around the $65B inflation adjusted.

Just for interest sake, what would you say the gross and net yield is on your IP? Is it +/- geared?

I think the 6% mark for unemployment is when we start to see the housing bubble deflate.  Underemployment will be a huge issue by then as well.  Already rental yields have started to stagnate in a lot of markets.  Some have turned negative.

Below are some of the scary stats Australia has in regards to property


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## KurwaJegoMac (17 July 2013)

sydboy007 said:


> Below are some of the scary stats Australia has in regards to property




Referring to your graphs:

Graph 1: Debt outstanding, % of GDP

How is this graph 'scary'? All I see is most developed countries having significantly higher debt (especially private debt) compared to Australia. We're at the bottom of that list and as far as I know only a handful of those countries above us had/have severe property downturns - in fact, most are still going strong yet have 50-200% more debt than us. We also appear to have the lowest % of public debt. Sounds more like a win for us.

Graph 2: Debt as a Percentage of Annual Disposable Income

All this graph shows is that property became seen as an investment vehicle in the early 90s. The start of the information age gave means for your average joe blow to learn to invest in property (something that the big boys have been doing since the dawn of time) - couple that with negative gearing being introduced and we have that graph... So what? Our average debt stands at 150% of *disposable* income? While it's higher than the past, it's not unreasonably high for an investment - hell, I wish I could buy strong business at that rate!!!

Graph 3: Net Rental Income

This one isn't as pretty, but nor is it that bad. If you borrowed 80% LVR against shares, your net income would show similar trends - your income will come in the future in the form of capital gains, the same as what people are expecting from property. So the question is, why is it ok for shares, but not for property?

Second - based on 2008-2010 the trend seems to be improving at a rapid rate. So how is this bad? Based on the trend in that graph we'll be at 2002 levels right now. Would be interesting to see recent data, but that might not paint the right picture for those presenting the information now would it?

Graph 4: Gross Yield

All this shows me, is that the yield on property has been largely consistent for the last 50 years - and that's a bad thing how? How is what happened 100 years ago relevant to the last few decades?

Do we pull up a chart of rental yields from 1400BC and bemoan that we cant get those rates today?

Graph 5: Peak to trough

This table is absolutely rubbish 

Go put together a table of all stocks and show the inflation adjusted fall since the stock hit it's individual peak and present it to everyone on the forum. You watch the reaction. 

-----------------------------------

Be objective in your analysis and think about what agenda the person is trying to push. 

As they say: There's lies, damn lies and statistics


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## ftw129 (17 July 2013)

This thread can and will go around in circles forever and that's great, that's what makes a market and creates opportunity but let's really step back and look at the bigger picture.

Ideally, property should be seen as a long term investment vehicle with a view to hold for as long as possible, preferably forever. It is far to expensive to trade in and out of and trying to predict and time the corrections is not worth the risk.  

For someone like myself, who intends to pretty much hold on for at least another 25-30 years minimum, I can only hope that there are some decent opportunities along the way where people are freaking out and dumping property. Fingers crossed but I won't hold my breath. I will buy when my finances allow me, not based on what I think the market will do. Not even the "experts" get that game right. Who cares what the price may or may not be in 5-10 years. Hopefully down so we can buy more right?

Trade in and out of shares, derivatives, currencies, whatever tickles your fancy but accumulate wealth in property. 

If there's anyone who truly believes that you will lose on good quality, sensibly located Australian property in either Sydney or Melbourne in 30 years time then I take my hat off to you for being so brave as to predict the beginning of the end of a long term trend that started at the beginning of the industrial world. 

The real future (30-50 years and beyond) of Australian property prices is and always will be UP.


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## satanoperca (17 July 2013)

KurwaJegoMac said:


> Referring to your graphs:
> 
> Graph 1: Debt outstanding, % of GDP
> 
> How is this graph 'scary'? All I see is most developed countries having significantly higher debt (especially private debt) compared to Australia. We're at the bottom of that list and as far as I know only a handful of those countries above us had/have severe property downturns - in fact, most are still going strong yet have 50-200% more debt than us. We also appear to have the lowest % of public debt. Sounds more like a win for us.




Love this rational, so we have cancer, it is just not at terminal stage yet.


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## sydboy007 (17 July 2013)

KurwaJegoMac said:


> Referring to your graphs:
> 
> Graph 1: Debt outstanding, % of GDP
> 
> ...




1 - So you feel OK that the private sector in Australia has a gearing ratio of around 300%?  One day it will cripply the economy.

2 - This debt is also highly concentrated.  I wish I could find something that actually showed the debt levels of those with debt.  Something like 1/3 of Australians have no mortgage.

3 - So you think a IP sector that in aggregate can't make a profit is sustainable?  It might be with a stable or growing economy, but what happens as Australian unemployment creeps up past 6%, and underemployment balloons as more workers get shifted to part time of casual hours - still statistically employed but a decent drop in income?

4 - It's gross yield.  I hate to think what the true net yield is.  I'd say you could easily slice of 0.5%.  Most likely a lot of IP is yielding < 3% net of all expenses.

5 - I understand what you're saying, but am posting in the property thread.  I just see too many people blinded by negative gearing and unrealistic projections of capital growth for property.  The holding costs and purchase / sale costs also tend to be glossed over.  Also too many people don't factor in inflation.  If you hold an asset for 10 or 20 years then inflation is a very detrimental part of the equation.  If you are losing money every year, inflation is taking another 2.5% a year, then I question why say an inflation adjusted negative yield of 5-5.5% is good.  That means capital growth of around 6% a year is required just to stand still.


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## KurwaJegoMac (17 July 2013)

satanoperca said:


> Love this rational, so we have cancer, it is just not at terminal stage yet.




Love how you see it as cancer.

Debt is not a cancer in itself. Cancer in this case is unsustainable levels of debt for the purchase of liabilities, or assets  reliant on the 'greater fool' theory.

From the table you can't determine what the debt is being used for and whether it is sustainable, so making assumptions that we have a 'cancer' based on that information is frivolous.

Be objective.


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## KurwaJegoMac (17 July 2013)

Thanks for responding in a pleasant manner, I like a healthy debate and we need more responders like that.



sydboy007 said:


> 1 - So you feel OK that the private sector in Australia has a gearing ratio of around 300%?  One day it will cripply the economy.




I don't feel comfortable for anyone (private or public) to have high levels of gearing - you risk hitting unsustainable territory. 300% - is it really that much? Unless I'm having a brain fart, we're talking about private sector being geared at 3 times what the nation produces (i.e. 3 times Australia's earnings). Maybe i'm missing something here, but that doesn't seem like much?  

Happy for anyone to elaborate on this.



sydboy007 said:


> 2 - This debt is also highly concentrated.  I wish I could find something that actually showed the debt levels of those with debt.  Something like 1/3 of Australians have no mortgage.




Fair enough. To counter, it appears to have always been highly concentrated and provided the concentration is on assets as opposed to liabilities the issue is more around the debt level than the concentration.

I too would love to see total debt and if you're stat around 1/3 of Aussies without a mortgage is correct then coupled with graph 1 that may be a problem. 



sydboy007 said:


> 3 - So you think a IP sector that in aggregate can't make a profit is sustainable?  It might be with a stable or growing economy, but what happens as Australian unemployment creeps up past 6%, and underemployment balloons as more workers get shifted to part time of casual hours - still statistically employed but a decent drop in income?




I'll assume you mean to say 'income' not 'profit' because the chart doesn't talk about profit. 

To answer your question on whether the IP sector not making an income is sustainable - well that depends on what you mean by sustainable. If you mean constant gains year on year, then no, it definitely will not be sustainable. If you mean over time you have a positive uptrend, then yes that will be sustainable. I think what we will see is a period of greater volatility than we're used to. Higher highs, lower lows - similar to the behaviour of shares.

The reason being is without a positive income, you're relying on capital appreciation and 'greater fool theory' - it means when things are going good, everyone will pile in and when things go bad, well we have the US as a great example. I think we have a very real danger in Australia, as well as most developed countries - it will not be a steady, predictable decline that we can forecast. If we are to drop, it will be a black swan event and when it falls, it will fall hard and fast.

The thing about black swans is you can't predict them so I think the best approach is to have appropriate risk mitigation in place rather than bet on a black swan which is what most people are doing.




sydboy007 said:


> 4 - It's gross yield.  I hate to think what the true net yield is.  I'd say you could easily slice of 0.5%.  Most likely a lot of IP is yielding < 3% net of all expenses.




Agree on those points above, but it does not change that the gross yield has not changed for the last 50 years. 

What we'd need then is to understand whether expenses have increased as a percentage of gross yield - then with that information we can understand what the net yield is and be able to draw a conclusion from the graph that helps us in our understanding.

As it stands, the graph is not useful and just shows we've been the same for the last 50 years (which in isolation, is actually a good thing).




sydboy007 said:


> 5 - I understand what you're saying, but am posting in the property thread.  I just see too many people blinded by negative gearing and unrealistic projections of capital growth for property.  The holding costs and purchase / sale costs also tend to be glossed over.  Also too many people don't factor in inflation.  If you hold an asset for 10 or 20 years then inflation is a very detrimental part of the equation.  If you are losing money every year, inflation is taking another 2.5% a year, then I question why say an inflation adjusted negative yield of 5-5.5% is good.  That means capital growth of around 6% a year is required just to stand still.




I get those points and they're all valid - they are however seperate points of discussion relative to what I'm talking about with that table. 

What benefit do you get from looking at all the states and evaluating their 'peak to trough' or 'highest point to current price'? I'll present this to you - "Brisbane is 16.7% lower than its' peak 5 years ago; I'm going to buy it because its' cheap relative to what it was!" Would you make an investment using this thought pattern? Certainly not. And do you care if Brisbane is 16.7% lower than _5 years ago_ compared to Sydney is 8.7% lower than _9 years ago_? Different time periods, different markets. 

------

Thanks once again for your polite response. Apologies if I sounded patronising or rude in my post, that was not intended. I get a bit fired up and passionate when debating  (i'm actually a property bear atm too!) :


----------



## sydboy007 (17 July 2013)

KurwaJegoMac said:


> Thanks once again for your polite response. Apologies if I sounded patronising or rude in my post, that was not intended. I get a bit fired up and passionate when debating  (i'm actually a property bear atm too!) :




It's this kind of discussion that I signed up for.  Much more interesting that what is the norm in the general chat forums 

Interesting snippet from the SMH today:

_Almost 1.3 million people own at least one investment property. About two-thirds of those, about 867,000 landlords with rental income, report a loss on their investment._

We've never had a recession where so many people have an IP, and it's a real worry that a decent chunk of IPs are negatively geared.

i read an article last year that said in Germany house prices have not increased in real terms over the last 30 years.  i wish the same could be said for Australia.  It would certainly make for a more resilient economy if we didn't have so much unproductive debt bleeding the country.

I think the black swan event will just be the typical increase in unemployment as the economy slows.

The below chart shows that IP debt is roughly equal to PPOR debt.  The level of debt seems to have flat lined for the last 3 years.  Without an increase in debt levels, I don't see that property prices can really go up that much.  But with the savings rate now back to around the historical average of 20% (pre rush into buying a negatively geared IP) I'd say in general terms prices can increase around the rate of growth in income of 3-4%.  Oh I add in super to the current savings rate to match the long term savings rate.

My main aim is to make people who are thinking of buying an IP to really think about the economics of it.  I've known at least 3 people who bought an IP only to realise when it was too late that they'd either over paid, or that a bad tenant could just about bankrupt them, and that loosing money every month for many years was a real drain on the finances.

I really wish negative gearing was quarantined against the income of the asset.  That would really save billions on the budget and also make people focus more on the overall income and growth of the asset than the tax effectiveness.

Personally I just don't see how you can make money on a negatively geared property when you need to get 5-6% capital growth a year just to break even.  Even a positively geared IP is not a great investment.  Net yield of 3% + whatever capital growth you get.  After 10 years of ownership you'll need to do a decent renovation to get top dollar on sale.

There's plenty of corporate bonds out there that give nice CPI+ returns with minimal risk and practically no holding costs.  As one of the charts below shows, real house price growth is a relatively recent thing for Australia, and the increase that has occurred is not repeatable, unless we start moving towards 300% of income debt levels.


----------



## FlyingFox (17 July 2013)

sydboy007 said:


> My main aim is to make people who are thinking of buying an IP to really think about the economics of it.  I've known at least 3 people who bought an IP only to realise when it was too late that they'd either over paid, or that a bad tenant could just about bankrupt them, and that loosing money every month for many years was a real drain on the finances.
> 
> I really wish negative gearing was quarantined against the income of the asset.  That would really save billions on the budget and also make people focus more on the overall income and growth of the asset than the tax effectiveness.
> 
> Personally I just don't see how you can make money on a negatively geared property when you need to get 5-6% capital growth a year just to break even.  Even a positively geared IP is not a great investment.  Net yield of 3% + whatever capital growth you get.  After 10 years of ownership you'll need to do a decent renovation to get top dollar on sale.





I find it amazing how difficult it is to get this point across, even to people I would consider to be relatively sharp. How is losing money to save tax a good idea? Especially if your not in the top tax bracket.

Also getting the point across that this doubling in 7 yrs is not historical. May have happened in the lat 10-15 max 20 years due to a once in a generation (or more) set of events culminating. That is not always!


----------



## KurwaJegoMac (18 July 2013)

FlyingFox said:


> I find it amazing how difficult it is to get this point across, even to people I would consider to be relatively sharp. How is losing money to save tax a good idea? Especially if your not in the top tax bracket.
> 
> Also getting the point across that this doubling in 7 yrs is not historical. May have happened in the lat 10-15 max 20 years due to a once in a generation (or more) set of events culminating. That is not always!




Totally agree - it amazes me how many times I get told the following by people I know:

"The point of property investing is to maximise your loss every year so you can get the biggest tax deduction"

 

I respond: "Wouldn't you prefer to make a profit?"

They respond: "No, because then you have to pay tax"



I even simplify it down for them: "What's better: earning $1, paying 30 cents in tax and being left with 70 cents in the bank account or losing $1 and getting a 30 cent tax deduction?" They STILL say it's better to lose the $1 because you get a tax deduction 

hmm... I think I need new friends...


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## FxTrader (18 July 2013)

FlyingFox said:


> I find it amazing how difficult it is to get this point across, even to people I would consider to be relatively sharp. How is losing money to save tax a good idea? Especially if your not in the top tax bracket.




The economics of postive cash flow property depends on tax deduction offsets against income to generate a net after tax profit each month.  "Losing money to save tax" is not really the point since property investors have different objectives for their investment.  Those who are willing to sustain negative cash flow in the hope that future capital gain will give them a profit are speculators IMO. 



> Also getting the point across that this doubling in 7 yrs is not historical. May have happened in the last 10-15 max 20 years due to a once in a generation (or more) set of events culminating. That is not always!




Indeed, and that is why cash flow should be emphasized over capital gain with IP.


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## sydboy007 (19 July 2013)

It looks like job losses in Perth are starting to hit the rental market there.  Breaking of leases has doubled compared to this time last year and the vacancy rate is now up at 3.3%


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## moXJO (19 July 2013)

Whoa movement on the property thread. Must be time to look at buying again


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## sptrawler (27 July 2013)

sydboy007 said:


> It looks like job losses in Perth are starting to hit the rental market there.  Breaking of leases has doubled compared to this time last year and the vacancy rate is now up at 3.3%




I will be amazed if the W.A housing sector, doesn't have a hard landing. My guess would be in 12 - 18 months time.
I'm not so sure about the Eastern States, don't live there, never have, so can't judge the dynamics.


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## sptrawler (28 July 2013)

sptrawler said:


> I will be amazed if the W.A housing sector, doesn't have a hard landing. My guess would be in 12 - 18 months time.
> I'm not so sure about the Eastern States, don't live there, never have, so can't judge the dynamics.




I am basing my beliefs on the normal boom and bust cycle we tend to see in W.A. The demand for housing tends to ebb and flow with construction and mineral cycles. This is mainly due to the high dependence on these two for employment.
Mining and mine development is very labour intensive and the last 10 years has seen an exponential growth. This feeds the secondry services economy in W.A, especially Perth and the surrounding areas.
From people I know in mining, it is contracting sharply and companies are laying off workers on a regular basis. Gold and Nickel are taking a big hit at the moment as the price of both is currently running at close to the cost of production.
Newmont and Newcrest have started winding down activity and Kalgoorlie based producers are cutting back.

The main problem W.A faces as opposed to the Eastern States, is the lack of manufacturing employment, also the lack of population density to provide services employment. Tourism is very limited and provides little in the way of steady employment.
Unless there is a rebound in commodity prices or worse still if there are further slides, I feel there will be an increase in unemployment in the next 12 months. This I feel, will have to have a flow`on effect to house prices.
Currently there seems to be a high proportion of Indian and Asian buyers( in my area) that appears to be holding prices up.
How long this can be sustained is anyones guess. I feel there will be an increase in housing stock, that must eventually exceed this demand.
The next 12 to 18 months should be interesting.


----------



## MARKETWINNER (28 July 2013)

Despite prediction on housing bear market by some experienced property investors and experts, housing prices didn't go down in New Zealand and Australia during last couple of years when we compare with Europe and USA.

Future housing market is depending on demand and supply, credit market, speculators and other strong economic activities etc. 

I don’t think property players can make profit as before in the coming decade in Australia and New Zealand. Either it will stagnate or prices will come down depend on type of houses that we have. There will be demand for three bed room houses than other houses in the coming decade. I have done more study on housing market in USA including sub-prime bubble. I am looking forward to do more study on housing market in Australia and New Zealand. Currently housing prices in Auckland is very high. Housing prices have stagnated in Wellington. There are some demands for houses in Christchurch now.

Experienced players have edge in housing market than others. First time home buyers should do home work before buy their houses in New Zealand, Australia and UK.

My ideas are not a recommendation to either buy or sell any security, property or currency. Please do your own research prior to making any investment decisions.


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## Julia (28 July 2013)

MARKETWINNER said:


> Despite prediction on housing bear market by some experienced property investors and experts, housing prices didn't go down in New Zealand and Australia during last couple of years when we compare with Europe and USA.



I don't know how you can make such a generalisation.  In the regional area of Qld where I live house prices have fallen around 30%.



> There are some demands for houses in Christchurch now.



That is because a large % of housing stock has been eliminated from the market as a result of the earthquake.
Ergo, way more pressure on existing stock which is selling at often unrealistic prices.  This is a situation unique to Christchurch and should not be taken as an overall indicator for NZ.


----------



## Smurf1976 (28 July 2013)

Knobby22 said:


> With the dollar falling, inflation will rise.
> I think we may get one more cut in interest rates at best. I can see it going the other way soon after.



I've noticed a definite trend toward higher prices at supermarkets recently. Either outright price increases of a noticeable amount or, increasingly common, shrinking package sizes of the actual product whilst maintaining the same price. A few random examples as follows.

Woolworths have shrunk the size of kebabs by 10%. Price is the same, but you get less.

Pasta sauce that I frequently buy has shrunk in size by 14%. Same price, just less product.

Cat food has gone up in price, mostly by the old trick of it being on special then when it comes off special the new price is higher than it used to be by 10% or so.

Petrol has increased in price by about 9% over the past few weeks.

Electricity keeps getting more expensive by significant amounts (the actual amount varies around the country but it's going up significantly).

Whilst serious tradies don't buy them, "cheap" tools are no longer so cheap judging by what I've noticed at hardware stores lately. For a DIY'er who just wants it for occasional use, they now have to pay double what they would previously have paid. That said, I suspect the quality might (might....) be slightly better, but that's not really an issue for the occasional user.

Solar panels have been falling in price quite sharply over the past few years. But now they've gone up around 10% (just for the panels, not sure about the prices for an installed system).

I've stopped trying to remember the price of bus fares etc in other Australian cities that I visit periodically simply because every time I go there, the price is higher than it was previously.

If you go to major sporting events, concerts, music festivals etc then slowly but surely they are getting more expensive. For annual events, you can be pretty damn sure that the price this coming summer will be higher than it was last summer. 

For events like Soundwave (as one that comes immediately to mind), the lower AUD combined with heavy reliance on overseas artists would be affecting costs pretty seriously I'd expect. At a guess, organisers will assume there's a limit to the extent to which ticket prices can be raised without attracting too much negative publicity, so will be forced to do a bit of quality reduction (that is, have fewer and/or cheaper bands performing) as well. That's just a guess but I think it's fairly likely. Rising fuel prices won't be helping there either.

So I think that we're already starting to see inflation feeding in, partly hidden by a reduction in quality. It's not in a huge way at the moment, but it's there.

Personally, it's the quality reductions which bother me more than the price rises as such but then I'm fairly fortunate. I can afford to pay more but money isn't much help if the band isn't on the lineup or there's poorer quality ingredients in the food. It's not just about paying more - some things just won't happen at all if costs go up sufficiently since they depend on volume to be viable and not everyone can, or will want to, pay the higher cost.

Unless you have a lot of mortgage debt (which contrary to media hype is only a relatively small portion of the population - the rest either rent, own outright or have a reasonably small mortgage) then there isn't really anything of significance that's getting cheaper to offset the rises elsewhere. Even if you really do buy a new TV etc every year, they are so cheap now anyway that any further fall in prices won't do much good in terms of an outright $ saving.

As for property prices, they're harder to judge since there isn't a daily market price on individual houses. But looking around my local area I'd say that prices for "average" houses are much the same as 2007, perhaps down very slightly but not a lot. But if that is expressed in "real terms" taking inflation into account then it's a substantial drop. 

At the upper end of the market there has been a substantial fall however. Overall, I'd say that the upper end of the market has definitely declined in price substantially, there has been minimal change at the middle level, and at the lower level prices have dropped 10 - 15% for "renovator's delights".

It's to the point that I could sell this house at close to what I paid for it, hand over another $100K, and buy a mansion just up the hill. I'm not a person who likes moving, and this house is perfectly adequate, but the idea is in the back of my mind. Also very noticeable is that many of the expensive places are clearly not being lived in (no furniture inside etc) and are quite blatantly noted as "must sell" type situations in real estate listings.

Also very noticeable is a new area developed nearby in 2007 - 2008. All the houses are large, many with somewhat fancy designs. And there are "for sale" signs all over the place now.


----------



## Tink (2 August 2013)

HOUSE prices in Perth, Sydney and Melbourne have led rises in most of the capitals with buyer confidence surging to its highest level since 2007, according to separate reports released yesterday. 

In Perth, residential prices rose 4.4 per cent for the three months to July 31 and were up 8.3 per cent for the year to a median of $494,600, while Sydney's residential values rose 3.7 per cent for the quarter and 6.5 per cent for the year to $570,000, according to RP Data. 
Melbourne's market rose 2.4 per cent for the three months.
Hobart was up 2.1 per cent for the quarter but down 0.4 per cent for the year. Canberra was up 1.4 per cent for the three months and 4.1 per cent for the year.
Adelaide (down 3.1 per cent for the quarter), Brisbane (down 0.7), and Darwin (down 0.9) were the cities in negative territory.

Research director for RP Data Tim Lawless said investors were back in the market, drawn by capital gains and rental yield rising 9.4 per cent, according to the group's accumulation index. However, this would also result in housing affordability being back on the agenda, Mr Lawless said
Next week the Reserve Bank is expected to cut the cash rate, which stands at 2.75 per cent.

http://www.theaustralian.com.au/new...ices-surge-ahead/story-e6frg6nf-1226689790063


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## sptrawler (10 August 2013)

Perth is still going gangbusters. However I am hearing from friends in the housing market, that rents are softening and days on the market are extending.

http://au.news.yahoo.com/thewest/a/-/newshome/18436969/perth-house-prices-surge-to-new-highs/


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## sydboy007 (10 August 2013)

A few snippets from the SMH today

_Average advertised mortgage rates are now slightly above those of late 2009, at the tail end of the financial crisis. But unlike four years ago, the response from consumers has been tame. Annual growth in housing credit is only just above a record low, at an annual pace of 4.6 per cent, less than half the growth rate before the financial crisis._

Seems we are now taking on extra mortgage debt at around the growth in wages - a good thing AFAIK

_Among the 37 per cent of people with mortgages, there is a trend towards keeping monthly repayments steady, rather than spending the extra cash made available by a rate cut._

So possibly we would have been better tweaking some other marco policy to stimulate growth considering only 1/3 people largely benefit from falling interest rates and a lot have lost psending power from them.

_Renters and people who own their own home outright, meanwhile, are getting a lower return on their bank deposits. In short, very cheap debt is having a more limited impact on key groups in the market, because Australians appear much more financially conservative._

Now it seems the economists are finally realising the debt burden means we really can't increase borrowings much more.  The credit cycle will have to go on a pretty extended breather before households are in a position to increase spending faster than incomes again.

_Unlike previous rate-cutting cycles, the economy is now grappling with the end of two boom periods. The first of these is well known, a mining investment boom that probably peaked earlier this year.

The second, however, is a long-term build-up in household debt levels over the 1990s and early 2000s facilitated by a one-off shift towards lower interest rates.

It is this second boom - often overlooked - that resulted in the ratio of household debt to disposable income ballooning from 50 per cent in the early 1990s to 150 per cent in 2010.

Now, economists suspect the end of this second boom is also preventing many people from responding to interest rate cuts as they have in the past._


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## Mrmagoo (10 August 2013)

That and everyone is broke and has nothing to spend and/or is under mortgage/rent stress. Seriously, 450 a week to rent a basic house and you wonder why the economy is slowing when the average wage is only 70 odd k ? Seriously ? Really ?


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## satanoperca (10 August 2013)

This chart tells a thousand stories.

It would seem we reach resistance at around 160% debt to disposable income.

It would also seem that the momentum increased :

After the last recession
Deregulation of the banking sector
Market flooded with cheap debt
The increase of women working full time which I believe as peak around 2010.

Most of the above has reached 100% saturation. 

Putting a rocket under a rocket ship doesn't always make it fly straight.

I foresee several things happening to the property market in the short term :


A recovery/uptick in prices due to low interest rates, people rushing to the market, herd mentality 
A period of stagnation where many who bought find the returns/yields to be insufficient and that negative gearing just isn't working as an investment strategy
Slowing of the economy and employment rising
Inflation starting to hurt the every day australian with rising costs and no way growth, RBA starts to look to the heavens for another solution
A turn point in structural beliefs in Australia society that property is a easy investment, everyday business getting tougher, the fit will survive but many have become slow over the last 30 years.
A slow but steady rush to the gate to offload property for the over indebted.

Price correct over many years. How much and how far, anyone's guess


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## sydboy007 (10 August 2013)

satanoperca said:


> View attachment 53764
> 
> 
> This chart tells a thousand stories.




Households are saddled with around $400B in excess relatively unproductive debt.

I've yet to have a property spruiker tell my why above wage growth increases in property prices is good for the economy.


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## sptrawler (10 August 2013)

satanoperca said:


> View attachment 53764
> 
> 
> This chart tells a thousand stories.
> ...




IMO either they inflate away the problem, or your prediction comes true.


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## moXJO (10 August 2013)

I have noticed property is selling fast again these last few weeks. I went to an open house today across the road from a property I own and was surprised that the owner had knocked back an offer of $575k and was holding out for more from another interested party (I wouldn't pay over $480k for it). I paid $375k a year and a bit ago and have probably double the land size. Some townhouses up the road sold for a lot more then what I thought they would as well. I'm just surprised people are paying those kinds of prices.

At this stage I'm thinking this might be the final push given that business in this country looks screwed on every front in general and I can't see the standard of living staying where it currently is once they start firing. In fact it looks downhill from here unless whatever govt in power starts to turn it around. But you never can tell how long these things can go on for. 

Property in the lower end of town looks like it fell pretty hard though, as there are some cheap houses in the areas I was looking.


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## moXJO (10 August 2013)

sydboy007 said:


> Households are saddled with around $400B in excess relatively unproductive debt.
> 
> I've yet to have a property spruiker tell my why above wage growth increases in property prices is good for the economy.




Why would they?
I don't think most people invest or buy a ppor with that in mind


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## sydboy007 (11 August 2013)

moXJO said:


> Why would they?
> I don't think most people invest or buy a ppor with that in mind




Seriously?  House prices is about the only thing that unites this country.

Isn't the great NIMBY all about protecting property values (always presented as protecting the general amenity of the area)

I think anyone willingly devoting half of their after tax income to a mortgage is crazy.

I say take advantage of brain addled negatively geared investors willing to lend you their property at below cost.  There's plenty of other ways to build wealth.


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## qldfrog (11 August 2013)

I have to say I agree with the bearish medium term but bullish in the next few months position:
SMSF are rushing to buy property (with return of 2.5%??????) and every John and his dog is dreaming of repeating the story of 10y ago.
During that time, jobs are falling everywhere (do not know where the government got its employement figures, what I hear around is job lost AND unable to find another one.
I know mining, IT business analysts, PM, and consultants , engineers, may not be the people counting in numbers and they never go to Centerlink, but they are the one which could pay these mortgage and IP, not the part time telstra shop assistants..
So a quick last burst then a period of stagnation (can not go down, RE will win over the long time, etc) then bank calling, need retirement cash with TD at 1% before tax and we get the rush to the exit..
The question is when to sell when you own, and where do you put your cash to ensure it will not be seized.
wait and see 
august 2013: today, euphoria till july 2014 panic by january 2015?
Let's see if i am wrong (actually wish I am as the depression Australia might need to have may not be pleasant for anyone)


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## banco (11 August 2013)

I for one look forward to the coming intra-baby boomer schism over interest rates between those who are mostly reliant on term deposits etc. versus those who are mostly reliant on rental income, capital growth in properties.


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## moXJO (13 August 2013)

sydboy007 said:


> I've yet to have a property spruiker tell my why above wage growth increases in property prices is good for the economy.



I was commenting on no one buys a house for the reason its good for the economy.

I'm sure there are some upsides for the economy:

It keeps construction ticking over on which supposedly 40% of the cost of new homes is taxes also flow on effects to the material suppliers.

Keeps unemployment and further drain on welfare down.

Bigger rates for council.

Should be an increase in building and lowering of prices/rents in the end.

Higher wages and spending 

Not sure if it offsets all the tax perks that comes with property though and I'm not interested in a counter list for the above as I think after 527 pages we all know them.


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## sydboy007 (14 August 2013)

from HnH at macrobusiness

looks like either interest rates will have to go up to lure depositors back, or we have to get more indebted to the rest of the world.  Hopefully APRA hold their nerve and don't let the banks go on another foreign debt binge.

Without tear away loan growth I don't see how house prices can take off.

_One of the under-explored areas of Australia’s post-mining economy, is to what extent credit growth is able to accelerate. By driving towards public surpluses in a current account deficit economy, our pollies are inherently relying upon private credit growth to drive GDP.

The credit growth required to keep house prices running, to keep consumption humming and to keep the services economy investing, is lower than it used to be owing to borrowers paying down their debts faster. However, we will still need to see rising credit growth if the economy is going to be able to rebalance away from mining investment and support current standards of living.

At the moment, RBA credit aggregates have accelerated only modestly with total credit growth running at 4.8% annualised per month or 3.1% year on year:

On the other hand, deposits are growing now at around 6%.

As we know, APRA continues to insist that the banks lend dollar-for-dollar deposits-in, loans-out. It is obvious in the data. The following is a chart of Australian deposit-taking institutions’s assets (loans) to deposits spread:

It hasn’t gone anywhere since 2009 and check out how fast it used to have to grow to keep the housing economy rolling.

What this tells you is that APRA (and ratings agencies) are not letting the banks increase the absolute level of their offshore borrowing to pour into local loans. By extension it caps local credit growth, which can only grow as fast as deposits allow it to.

Where is the cap? It’s impossible to know given households are paying down debt faster than they used to, freeing up new credit capacity in the process. Other variables include off-balance sheet lending such as non-bank loans via securitisation or cash purchases of houses by foreign buyers. There is also the likelihood that deposit growth will fall further as national income comes under pressure with further declines in the terms of trade and interest rates. Nevertheless, a rough calculation says we’re near the cap now now. 4.8% credit growth for the system in the year ahead would add $15 billion in new assets. 6% growth in deposits would add $10 billion. We’re shifting past deposit-funded lending capacity as we speak.

It does not take much to see that $5 billion deficit get much larger. Everything else being equal, if credit growth were to accelerate to 6% and deposit growth fall to 4%, the deficit becomes $12 billion per annum. At 7% and 3% it’s out to $18 billion.

This is a far cry from the heady growth of yesteryear, but it would still represent 4% growth in offshore liabilities per annum.

It think (hope) that this is unlikely. It may be the RBA’s job to boost growth but it’s APRA’s job to protect financial stability and the shift apparent in the above charts looks structural to me. After all, once the borrowing resumes, how is prevented from rising?
_


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## Judd (16 August 2013)

Well, der.



> *Rate rises will increase mortgage stress: Fitch*
> 
> Australian mortgage holders could be hit by future payment shocks as interest rates rise and the unemployment rate lifts, a global ratings agency has warned in a call for lending stress tests.
> 
> ...


----------



## sydboy007 (16 August 2013)

below graph shows why changes to NG will never occur.

I suppose the only good thing is there will be plenty of potentil buyers of IPs if a big crash does occur.

I am a bit shocked the jump in IP loans started so long ago


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## satanoperca (17 August 2013)

sydboy007 said:


> below graph shows why changes to NG will never occur.
> 
> I suppose the only good thing is there will be plenty of potentil buyers of IPs if a big crash does occur.
> 
> I am a bit shocked the jump in IP loans started so long ago




That chart is the exact reason why NG should be removed on existing properties.

The argument for NG has always been it adds to the rental supply, this just not seem to be a fair and balanced statement. It would seem that it does little to add to the rental supply and very little to adding to new rental supply.

It should only on new builds, this would bolster the construction sector while reducing pressure on prices for existing homes for people to live in.

Cheers


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## sydboy007 (17 August 2013)

satanoperca said:


> That chart is the exact reason why NG should be removed on existing properties.
> 
> The argument for NG has always been it adds to the rental supply, this just not seem to be a fair and balanced statement. It would seem that it does little to add to the rental supply and very little to adding to new rental supply.
> 
> ...




For sure.  The problem is your last statement.  House prices probably would decline if NG was only on new housing stock.  less investor demand = less falling house prices.

But just look at the squealing changes to car FBT caused, and that is affecting less than half the number of NG property owners out there.

NG on new property only, combined with NG on all assetts only able to offset the income on that assett and no other income, I'll glady vote for the party offering to do that.

These major changes to the tax system are probably only achieveable with bipartisan support.  I can't see that happening in the climate of negativity we've had.

IP income losss have totalled around the $65B mark (inflation adjusted) since 2000.

I'd say limit the halving of CGT to new assets as well.  Allowing it on current assets doesn't increase investment levels, just inflates prices.


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## Bill M (18 August 2013)

Prices are just going up here in Sydney, I am so glad I still have an IP there.

---
This time last year they may have been worth far less, but the Sydney market has begun to boom and $1 million or more for a home in an average suburb is now the new normal.

The conditions are perfect for sellers. Buyers are everywhere, thanks to record low interest rates and a severe shortage of listings, pushing price tags beyond what sellers would ever have imagined.

Full Story here: http://www.dailytelegraph.com.au/news/nsw/sydney-homeowners-sitting-on-houses-worth-over-1-million/story-fni0cx12-1226698978104
---


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## sydboy007 (18 August 2013)

Just reading a report I get for being a member with Macrobusiness

i think this graphs sums up quite nicely why the 150K couple feel poor

Nice to see Howard's spendathon against an RBA raising interest rates got the level of income required to pay mortgage interest back to the _recession we had to have_ levels.

No wonder a lot of people have no money left to spend on retail 

Please APRA, don't let the banks borrow more externally.


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## FxTrader (18 August 2013)

Bill M said:


> Prices are just going up here in Sydney, I am so glad I still have an IP there.
> 
> ---
> This time last year they may have been worth far less, but the Sydney market has begun to boom and $1 million or more for a home in an average suburb is now the new normal.
> ...




  77 year old Ms. Farmer is no longer eligible for the age pension with 1.2 million in the bank!  Perhaps she can now enjoy what years she has left and spoil herself instead of sitting on a next egg for her kids and collecting the age pension.  She's a good example of what many others in her position should give serious consideration to; sell up, get off the age pension, enjoy what's left of your life and forget about leaving the kids million dollar homes.


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## Smurf1976 (18 August 2013)

satanoperca said:


> I foresee several things happening to the property market in the short term :
> 
> 
> A recovery/uptick in prices due to low interest rates, people rushing to the market, herd mentality
> ...



Inflation in everyday living costs is already becoming significant. Electricity prices alone are having a noticeable impact on the psychology of people it would seem (judging by general comments on the subject) and in most states prices are still going up.

Now add in the impending gas price rises which will have a significant impact in Vic especially (since gas use is very widespread there - indeed residential use is amongst the highest in the world on a per capita basis).

AUD tending down and the oil price trending slowly up - here comes a rise in petrol prices.

Smoking isn't as popular as it once was, but plenty of people still do it and cigarette prices are set to rise significantly due to taxation. That alone won't break the bank, but it's another price rise that those who smoke are sure to notice.

Now add in everything else from cinema tickets to fish - it's all slowly getting more expensive.

Wage rises? Well the public service is a significant employer and in most states it's more about keeping your job than getting a pay rise. There seems to be a trend there to limit wage rises to below the inflation rate in order to get budgets closer to balanced. Wage rises of 2% per annum and the tax system will take a disproportionate share of that (ie the actual after tax pay increase will be less than 2%). Public sector workers are going nowhere.

A lot of private sector companies seem to be much the same. It's about keeping your job primarily, with any pay rise coming about through promotion rather than an across the board rise as such. There are exceptions of course, but that seems to be the overall trend. Rising unemployment means workers have less bargaining power to seek pay increases.

Then there's other employment-related things like overtime, travel, company cars etc which increase the pay of workers. They are usually the first things to be looked at when seeking to cut costs. Whilst I have no hard data, I do get the impression that cuts in this area are already underway in many places.

So overall it's rising costs for everyday purchases and little if any growth in income for the average worker. That's not going to help confidence once people accept this as reality. In my opinion, falling interest rates are the only thing keeping the game going at the moment - and there's a limit to how far they can fall both in absolute terms and also without crashing the AUD and sending prices (especially petrol) up sharply thus offsetting the effects of the lower interest rate.

So overall I have the impression that we are slowly but surely walking down the path which just happens to be a dead end. It's just that many (the majority?) of people haven't realised this yet and are assuming the path actually leads somewhere. Ultimately it will, but not without a lot of pain first I expect.

Thinking of my own life, I'm not too worried since I own the house outright and have low "essential" living costs. Pay rates, car rego and house / car insurance and buy food. I could pretty much stop spending on everything else for 12 months if I had to and not suffer too much. But looking at the overall employment and economic situation, I'd be extremely worried if I had a huge mortgage, no significant investments and a family to raise and a lot of people are in exactly that situation. I can't imagine they're likely to spend on anything they don't have to - hence a lot of businesses are struggling. 

House prices? In real terms they'll come down I'm sure (already have done significantly in my area). The question about nominal values comes down to whether we inflate or not. I suspect that globalisation has effectively put a lid on how much we can inflate wages in Australia these days unless everyone else does the same.


----------



## sydboy007 (20 August 2013)

another graph that shows the perverse effect the halving of CGT had in 2000.  It's like lift off into space.

The question is, if there's not enough income to support the loan, and the capital growth wont keep pace with inflation and losses, how long before the investors start to decide to sell.  Once the selling tide turns I can see it being a scary place to have your money locked up.


----------



## moXJO (21 August 2013)

sydboy007 said:


> another graph that shows the perverse effect the halving of CGT had in 2000.  It's like lift off into space.
> 
> The question is, if there's not enough income to support the loan, and the capital growth wont keep pace with inflation and losses, how long before the investors start to decide to sell.  Once the selling tide turns I can see it being a scary place to have your money locked up.




You need graphs on the % of people with incomes of x and home loans above y to get an idea of any future shock or distress.


----------



## sydboy007 (21 August 2013)

moXJO said:


> You need graphs on the % of people with incomes of x and home loans above y to get an idea of any future shock or distress.




I could be wrong, but my thinking is that it only takes a small % of IP owners to be in trouble and start selling for prices to start falling.

Once that happens, those not really in trouble start to look to the exits too.  Once the rush starts it's hard to stop.

It might not happen, but if we do get an uptick of 1% in unemployment, which really under reports the income distress being felt, I'd expect to see NG IPs hitting the market.

Once the house prices doubling in 7 years myth is finally killed, a lot of boomers will want to sell.


----------



## ftw129 (22 August 2013)

sydboy007 said:


> my thinking is that it only takes a small % of IP owners to be in trouble and start selling for prices to start falling.
> 
> Once that happens, those not really in trouble start to look to the exits too.  Once the rush starts it's hard to stop.
> 
> ...




Let's hope so


----------



## sydboy007 (4 September 2013)

Seems like for Abbot and Co the status quo will do quite nicely.

Out of 48 discussion papers for the Coalition not one mentions housing.  

At least family first have come up with a reasonable policy for reducing the cost of housing, but I dare say the big parties know a decent fall in the cost of housing could destabilise the B4 banks so there's not a great deal of incentive when the Govt is the one footing the bill in any shakeout.

http://tinyurl.com/ndzu4o8


----------



## sydboy007 (4 September 2013)

Some very good commentary by Saul Eslake on the housing market in Australia - http://tinyurl.com/pb9amzp

Some of the main points:

FHB Grants began in the 1960s and have been cancelled and then re-introduced a number of times ever since. According to Eslake, governments have spent a total of around $22.5 billion in grants in 2010-11 values over the past 50 years, yet homewonership rates have not increased over this period. They provide minimal benefit to FHBs, acting to inflate values for the benefit of vendors. In this regard, they have been a massive failure, although the recent shift towards newly constructed dwellings is a significant policy improvement.

In the United States, which hasn’t allow ‘negative gearing’ since the mid-1980s, the rental vacancy rate has in the last 50 years only once been below 5% (and that was in the March quarter of 1979); in the ten years prior to the onset of the most recent recession, it has averaged 9.1% (see Chart 8 above).

Yet here in Australia, which does allow ‘negative gearing’, the rental vacancy rate has never (at least in the last 30 years) been above 5%, and in the period since ‘negative gearing’ became more attractive (as a result of the halving of the capital gains tax rate) has fallen from over 3% to less than 2%.

During that same period, rents rose at rate 0.8 percentage points per annum faster than the CPI as a whole; whereas over the preceding decade, rents rose at exactly the same rate as the CPI.

65% of Landlords make a loss


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## Trade wind (4 September 2013)

sydboy007 said:


> Seems like for Abbot and Co the status quo will do quite nicely.
> 
> Out of 48 discussion papers for the Coalition not one mentions housing.
> http://tinyurl.com/ndzu4o8




Of course the Libs support the status quo: the haves (property owners and speculators) against the have nots (a whole generation being priced out of the market). The only way to make housing affordable is to get rid of negative gearing and toughen up CGT rules. Why should you be able to buy a house, sell it for a huge profit, and not pay tax? You pay tax on every other investment. And why should tax payers subsidise housing investors on their borrowing costs through negative gearing? With insane rorts like these driving the property market, you'd be mad not to put your money in real estate.

Don't expect Labor to do anything, though. Keating tried but got nowhere, and can you imagine the furore from vested interests if anyone started rolling back these sacred property industry cows. Think the campaign against the mining tax, then multiply it by 10.

Even Glenn Stevens is in on the act. For his stated concerns about "weakening economic conditions" read "falling property prices". House prices start to fall and Mr. Million Dollar Man hacks the hell out of interest rates. You can't blame him, really. The Australian economy has become the property market. We can handle a downturn in the mining industry, but if property prices collapse, so does the economy.

But while real estate investment has driven wealth creation, and therefore the Australian economy, in recent years, it is now strangling it. Why are restaurants, retail outlets, service industries, etc. struggling? Overpriced rents, and reluctant consumers counting their pennies because they are also struggling with punitive rents or enormous house borrowing costs. The economy is buckling, not under government debt, but private debt.

Logically, it all adds up to a crash in property prices. But you better hope it doesn't. We've gone too far now. Only prolonged recession will bring back affordable housing.


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## sydboy007 (4 September 2013)

50% of new home loans in NSW is currently going to specufestors.


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## sydboy007 (5 September 2013)

Real GDP per capita just 0.1% last qtr.

Going to be hard to find the income to support larger mortgages in the future.


----------



## moXJO (5 September 2013)

sydboy007 said:


> Real GDP per capita just 0.1% last qtr.
> 
> Going to be hard to find the income to support larger mortgages in the future.




Yes you would think we have already hit the ceiling for house prices in a lot of areas.


----------



## galumay (5 September 2013)

Has anyone come across a spreadsheet that is capable of comparing the potential of  investing say $100k in the share market as opposed to gearing the same $100k into property (eg deposit on 500k property)?

My wife is very keen to invest some of our funds into property (we have none now), and I cant see the economic sense in it in the current climate. 

I am concerned about the opportunity cost of tying up the $100k in the property market as well as the likely low overall returns provided by rent and capital growth.

She is uncomfortable having all our investments in shares.

I would like to be able to compare the potential pros and cons of both our strategies.


----------



## Bill M (6 September 2013)

Trade wind said:


> The only way to make housing affordable is to get rid of negative gearing and toughen up CGT rules. *Why should you be able to buy a house, sell it for a huge profit, and not pay tax?* You pay tax on every other investment.




That is just incorrect. You do pay tax on those so called "huge profits" if it is an investment property. It is just like any other investment, no special treatment. We are talking about capital gains on investments only, not negative gearing or principle place of residence.


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## Julia (6 September 2013)

galumay said:


> Has anyone come across a spreadsheet that is capable of comparing the potential of  investing say $100k in the share market as opposed to gearing the same $100k into property (eg deposit on 500k property)?
> 
> My wife is very keen to invest some of our funds into property (we have none now), and I cant see the economic sense in it in the current climate.
> 
> ...



I've seen various charts over the years offering such a comparison over decades but have no idea how you'd do it.  There are so many variables in each case.  If, eg you took a bit less than a decade in the 70's and 80's, at least where I was at the time, there was huge profit to be made out of property.  Other times if you jumped onto a bull run of shares, the same could apply.

I'd share your concerns.  I look at IP every now and again but the net yield is woeful and I don't have a lot of confidence re capital growth in the near future.  Might be quite wrong, however.


----------



## galumay (6 September 2013)

Julia said:


> I'd share your concerns.  I look at IP every now and again but the net yield is woeful and I don't have a lot of confidence re capital growth in the near future.  Might be quite wrong, however.




Thanks for your thoughts Julia, i may just continue to gently try to help my wife see my point of view!!


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## Whiskers (6 September 2013)

sydboy007 said:


> 65% of Landlords make a loss




Yeah, I think the key to making a profit with negative gearing is to be there before or early in a strong rising market. I was in the 1980's market and did well. 



Julia said:


> I'd share your concerns.  I look at IP every now and again but the net yield is woeful and I don't have a lot of confidence re capital growth in the near future.




My feelings too. There are a few exceptions however, if you are willing and able to invest far and wide... and maybe with the help of some early urban planning trends, even inside information. In Brisbane for example, if you invested in some areas near the city and out Ipswich way early, but generally while capital city prices are being quoted or maybe selectively touted as indicative of slow to modest rises, I'm seeing many rural areas stagnant and vacant land prices still being discounted from the GFC high asking prices... 30% common, I've seen isolated cases of over 50%, but still well above the purchase prices from the late 1990's... although not much after considering holding costs.

Interestingly, at least in my region, there is still quite a lot of vacant land, but builders are not reporting much interest in new construction. 

No doubt price inflation, particularly in energy costs, arguably as a result of carbon tax and state price gouging for revenue raising through their energy utilities is a significant factor.


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## qldfrog (6 September 2013)

galumay said:


> Thanks for your thoughts Julia, i may just continue to gently try to help my wife see my point of view!!




you could point out at the on going expenses (rate, body corporate, water, repairs insurance etc), the resulting pathetic return and the huge cost  to buy/sell 
and that is not thinking about the possible nightnmarish tenants and the fact a lot of your eggs are in the one basket
so illiquid it is not funny.
I could sell my share portfolio with onbe click at a cost of less than 1000$ for a 1 million portfolio..
and i can buy shares for gold, agricultural product industry, etyc here or world wide..
Why do you want to put most of your savings in a specific address in a specifc town/state/country???
This is gambling
yes you can win but a lot of people do lose too!!!
hope it helps
I do have one IP, own my own place but have no intention to increase the number of IP even here in Brisbane where I believe we will have a short term rise...
Cheers


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## sydboy007 (6 September 2013)

galumay said:


> Has anyone come across a spreadsheet that is capable of comparing the potential of  investing say $100k in the share market as opposed to gearing the same $100k into property (eg deposit on 500k property)?
> 
> My wife is very keen to invest some of our funds into property (we have none now), and I cant see the economic sense in it in the current climate.
> 
> ...




The issue with property is the gearing.  Works a treat when the value increases, but not so great if you're getting CPI+ return - think 2.4% + 3.5% NG loss just to break even, let along factoring in you could have been in positive territory with another asset class.

The advantage with shares is you don't have to gear, and should you need some money down the track you can easily sell some.  That is difficult to do with property.

Also factoring in the purchase, holding, sale costs of property and it's not pretty.

There's corporate inflation linked bonds offering CPI + 4%.  It's a pretty nice yield, and the advantage is the CPI component is not taxable until sold, so if you hold the bond for over a year then you've been able to wonderfully convert the CPI component into a capital gain and halve the taxation on it.  I've yet to find anything on the taxation implications should you hold to maturity.


----------



## galumay (6 September 2013)

qldfrog said:


> Why do you want to put most of your savings in a specific address in a specifc town/state/country???
> This is gambling
> yes you can win but a lot of people do lose too!!!
> hope it helps
> ...




Thanks, i have used most of your arguments! Her point is that real estate is a 'real' or tangible asset, she says that our shares could become worthless and we would have nothing, whereas even if the property market crashes we would still have the property. 

I have tried to point out that the sort of shares we own will never be worthless, but she is stuck on the 'real' aspect of property.



sydboy007 said:


> The issue with property is the gearing.  Works a treat when the value increases, but not so great if you're getting CPI+ return - think 2.4% + 3.5% NG loss just to break even, let along factoring in you could have been in positive territory with another asset class.
> 
> The advantage with shares is you don't have to gear, and should you need some money down the track you can easily sell some.  That is difficult to do with property.
> 
> Also factoring in the purchase, holding, sale costs of property and it's not pretty.




Thats what i really wanted the spreadsheet for, my suspicion is that you need to be making a +'ve return on about 105% of the purchase price. This accounts for the cost of finance as well as the opportunity cost on the deposit.

So if you can find a property that is cash-flow positive on 105% of purchase then it will be better than shares because of the gearing, but properties yielding that well are few and far between.

Otherwise you are relying on capital growth and its very hard to see what could drive CG much beyond modest CPI increases so the medium term future looks pretty flat to me.


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## sydboy007 (6 September 2013)

a very good look at the pros and cons of NG

http://www.businessspectator.com.au...nomy/big-budget-bucks-down-property-drainpipe


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## sydboy007 (6 September 2013)

galumay said:


> Thats what i really wanted the spreadsheet for, my suspicion is that you need to be making a +'ve return on about 105% of the purchase price. This accounts for the cost of finance as well as the opportunity cost on the deposit.




Current inflation is about 2.4%, from what I read net rental yield is around the 3.5% to 4% mark, so depending on your interest rate you might be facing 5% + 2.4% loss with a net yield of 4% so losing at least 3.4% per year.

I cannot understand why someone wants to have a guaranteed loss every year.  

To put that into perspective against an ILD offering CPI + 4% you are some 7.4% behind (less any capital growth) so on 100K investment you are looking at $7400

That's a pretty decent holiday, or a fair chunk of your living expenses.  Compound that over 5 or 10 years and it starts to look really nasty.

In such an uncertain economic climate as we face now, I really like the semi guaranteed return of an ILB.  Beats inflation and unless the business goes broke you don't have to worry, and if they go broke you're (usually) first in line to get ya money back depending on how far up the capital structure you are - can't go too far wrong with a tier 1 bond.


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## Julia (6 September 2013)

galumay said:


> Thanks, i have used most of your arguments! Her point is that real estate is a 'real' or tangible asset, she says that our shares could become worthless and we would have nothing, whereas even if the property market crashes we would still have the property.
> 
> I have tried to point out that the sort of shares we own will never be worthless, but she is stuck on the 'real' aspect of property.



galumay, it's probably of little help to you, but I've noticed over many years that people who are inexperienced in investing across the asset classes often take this point of view.  They can see the property, touch it, they live in a house, so formulate the view that everyone else also needs a house and therefore it's always going to be a profitable asset.  Try to explain the cyclical nature of all asset classes and their eyes glaze over.
(This is not at all meant to be demeaning to your wife:  she's very typical of probably the majority of the population.)

I had neighbours who - to their great credit - had paid off their home in their mid 30's and bought a couple of investment properties, negatively geared.   They kept saying what a great investment property was.
Eventually I asked about the actual return and they quoted a net yield of only about 4% (bank interest was up to 8% at the time), and their capital investment was down about 20%.  Yet they still refused to consider diversifying into shares or even some cash reserves.

So there you go.  An irrational devotion and belief in property investment which defies all the objective facts at the time.

This brings me to a conversation I had this afternoon with a couple of the same mindset as above and I'd be interested in ASF members' comments about this.

A couple around 60, effectively retired though not of retirement age, therefore unable to draw any government benefits and still paying tax, currently living in a small house (three brms one bathroom, rundown in an unattractive part of town, value around $270,000 at best) sharing with the inlaws, a situation which results in much dissent and unhappiness, have an IP close by, similar standard of dwelling, perhaps $300K value, which they rent out as holiday accommodation.  They have said they own both properties but I don't know if any mortgages are attached to either.   They claim that the IP is 'hugely profitable' and that rent is around $1000 p.w.
That doesn't sound unreasonable, I guess, for holiday accommodation.

However, when rates (about $3000 p.a.) insurance, maintenance, tax etc is taken into account, the yield is going to be reduced, plus unless they do the constant, arduous cleaning themselves, the cleaning wages are going to be considerable at several times a week x about $40 per hour.

I'm quite out of touch with IP these days and would be interested in others' views about additional expenses or alternatively benefits that would attach to this situation.

The town itself is well and truly in the doldrums, empty shops and stagnant property market.
Despite this, they're now trying to buy another IP an hour or so north.

If it's all so profitable, wouldn't most people be buying their own home to live in rather than endure the stresses of living with apparently cranky inlaws?  Maybe I'm missing something important here.
Also, not meaning to make judgements about what's important to other people:  maybe they're trying to shore up retirement funds.  I just find it an unusual situation.


----------



## Ves (6 September 2013)

galumay said:


> Her point is that real estate is a 'real' or tangible asset



I'm sure there is something in your portfolio that is has part of their business within 20km radius of where you live.   How can anyone say that businesses are less "real" than property?


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## ROE (6 September 2013)

galumay said:


> Thanks, i have used most of your arguments! Her point is that real estate is a 'real' or tangible asset, she says that our shares could become worthless and we would have nothing, whereas even if the property market crashes we would still have the property.




You can agree with her yes some shares can becomes worthless but you don't have one share you have 15-20
so it really less than 10% of your money goes up in smoke if it ever will....probably same risk as having a bad tenant that trash your place...

she probably understand better when you explain behind every share there is a business with real people....yes the ticker price go up and down every second but it is unlikely a business behave like that...most business just don't pack up and fold it has to suffer serious fraud or great mis-management of the business.

but with careful research you can mitigate a lot of this misfortunes and then if misfortune still comes it only happen to a few stocks ...it highly improbable that you lose all 20 stocks invest in solid business.


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## galumay (6 September 2013)

Ves said:


> How can anyone say that businesses are less "real" than property?




You haven't met my wife have you?! 



ROE said:


> You can agree with her yes some shares can becomes worthless but you don't have one share you have 15-20
> so it really less than 10% of your money goes up in smoke if it ever will....probably same risk as having a bad tenant that trash your place...




I have discussed these points with her, ROE. I think its like Julia said in her reply earlier, a lot of people can't get past the fact you can stand on your land and touch your building - its very tangible and real to them in a way that a share of a business can never be.

I suspect there is also some history there, family members buying Poseidon at the top or something!

Anyway thanks to all who have responded to my query, I do appreciate it and if nothing else it reinforces my world view!


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## craft (7 September 2013)

galumay said:


> You haven't met my wife have you?!





Maybe trying to argue using numbers is not the best approach.

Some years ago my wife suggested that we should buy some investment properties. I said what a great idea - *YOU* should definitely go for it - it will be great to have a passion for investing in common, you with houses me with shares.

We still don't have any IP's - never even came close.

ps

Be careful of being too supportive - I found buying a copy of 'rental properties and taxation' as a birthday present was as a tad too much support.


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## galumay (7 September 2013)

craft said:


> Maybe trying to argue using numbers is not the best approach.
> 
> Some years ago my wife suggested that we should buy some investment properties. I said what a great idea - *YOU* should definitely go for it - it will be great to have a passion for investing in common, you with houses me with shares.
> 
> We still don't have any IP's - never even came close.




Thats a great idea, i suspect the outcome will be the same.



> ps
> 
> Be careful of being too supportive - I found buying a copy of 'rental properties and taxation' as a birthday present was as a tad too much support.




GOLD!


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## sydboy007 (7 September 2013)

this article from MB shows why house prices are unlikely to take off any time soon

http://www.macrobusiness.com.au/2013/09/the-rbas-nominal-recession

Relevant points:

_The June quarter National Accounts revealed that the nominal economy expanded at an annual average rate of 2.5% in the 2013 financial year. This represents the softest outcome since the last recession, when nominal GDP grew by less than 2% in 1992. And it is well below trend growth in nominal GDP, of 5-6%.

the household saving ratio continued to creep up and has averaged more than 10% for the past five years, a level not seen since the mid-1980s.

Despite a modest 0.8% rise in the June quarter, unit labour costs have stagnated over the past year, the first time this has happened since 1999 (ex the financial crisis). The guidance comments from the ASX200 companies in the reporting season suggest that growth in unit labour costs (and inflation) will remain well contained, providing scope for the RBA to further ease policy._

-----------------------

If incomes ain't increasing, the household savings remains stable to slightly increasing, then I'm not sure what can drive future house price rices?  I'm hoping for the best of a sideways crawl in the market with a slow deflation in real terms of a few % each year, but even that won't help the affordability issues for a decade or more


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## satanoperca (7 September 2013)

sydboy007 said:


> If incomes ain't increasing, the household savings remains stable to slightly increasing, *then I'm not sure what can drive future house price rices*?  I'm hoping for the best of a sideways crawl in the market with a slow deflation in real terms of a few % each year, but even that won't help the affordability issues for a decade or more




Called SMSF's and baby boomers getting a low return on term deposits and frightened off the share market.

It is a frightening amount of savings/capital that can be be leveraged up significantly sitting there with the sharks smelling blood (all vested interests in property - so 70% of the population). I foresee the last gasp of air and a rise in property prices short term due to this. The interesting thing is, that the yield is no better than the banks and the higher prices go the inverse for yields. I cannot see any rent increases for the foreseeable future. 

So what will see a major property correction, a minor one first showing the baby boomers aka SMSFs how leverage works both ways and while the returns in the banks are low, they are guaranteed, not like property. A small scare, small correction in the market will see many rethink the investment philosophy on property and start to sell than see there capital get hit.

In all that has been discussed over the last few days, I have to say, there is no easy way of making money, one must look for opportunities and jump on them or be happy with the bank interest returns.

I personally have move my money in shares and property into new business start ups this year, as I believe I will be able to achieve better yields and capital appreciation running my own/some with business partners businesses for the next ten years. But that is a personal choice.

Cheers


----------



## sydboy007 (7 September 2013)

A nice little propaganda piece in the SMH today - http://smh.domain.com.au/real-estat...rtment-market-heads-north-20130906-2tan6.html

100 square metre apartment they bought through Savelle Property Group for $645,000 in The Tempo development in Mascot.

''I've done my research and, over the past 10 years, there has been a huge amount of growth in the Mascot area,'' Mr Chua said. ''It didn't make financial sense to keep renting in an area where you are paying $400 a week for a one-bedroom apartment.''

The median price for an apartment in Mascot has increased by 77 per cent over the past ten years to $580,000, according to figures from Australian Property Monitors.

-------------------------

lets put the 77% growth into perspective

In nominal terms the median price has gone from 327,683 to 580,000

Inflation eats ~27.2% of that growth so real purchase price has gone to a CPI adjusted purchase price of 416812

Holding costs for strata / water / council rates over 10 years in real terms would probably be $30K

So the purchase price is now at 446812

Now interest rates over the last 10 years have avergaed around 7%, but net rental yields have been lucky to be 4% so lets say you borrowed 90% of the purchase cost then I dare say you might have paid an extra 70K for buying the property in terms of interest than renting.

So your purchase costs are now 516812.

A 90% loan would have required you to pay for LMI - probably around $12000

So we're up to 528812 as the purchase costs.

There's probably some others costs like conveyancing or legals, and any loan application fees but i'l leave them out for now.

So you've made roughly $5200 a year in real terms by taking on a lot of leveraged risk.  I suppose you could argue you more than doubled your equity over the period, but bonds and shares would have beat the return by a long margin, with a lot less risk.


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## Macquack (7 September 2013)

sydboy007 said:


> If incomes ain't increasing, the household savings remains stable to slightly increasing, then I'm not sure what can drive future house price *rices*?




Sydboy, sorry if I am taking the piss, but I agree, people eating a lot of "rice" is the only way to drive house prices higher.


----------



## Macquack (7 September 2013)

satanoperca said:


> Called SMSF's and baby boomers getting a *low return on term deposits and frightened off the share market*.



I think of "bricks and mortar".



satanoperca said:


> The interesting thing is, that the yield is no better than the banks and the* higher prices go the inverse for yields*.



Very under-estimated point.



satanoperca said:


> I personally have move my money in shares and property into *new business start ups this year*, as I believe I will be able to achieve better yields and capital appreciation running my own/some with business partners businesses for the next ten years. But that is a personal choice.




I remember reading your posts and "highly rating" your opinion. So, please don't tease me and at least give a hint of the nature of your business interests.


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## sydboy007 (7 September 2013)

Macquack said:


> Sydboy, sorry if I am taking the piss, but I agree, people eating a lot of "rice" is the only way to drive house prices higher.






I had a flashback to primary school report cards

"Must watch spelling"

2 minute noodles might be a suitable alternative too.


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## satanoperca (8 September 2013)

Macquack said:


> I remember reading your posts and "highly rating" your opinion. So, please don't tease me and at least give a hint of the nature of your business interests.




1. A signage and promotional company focused on delivering innovative product for instore marketing and promotional campaigns. A graphic design and product design center that is located in South East Asia. Most product is sourced from China. Both traditional products and digital products and services are supplied. This is the key business and is developing into a brand management business. Very exciting and after almost a year into it, have picked up some excellent clients to work with.
2. Website development, SEO and mobile phone application partnership with a company that has offices in Malaysia, Indonesia, Singapore and recently opened Mayanmar. A change in business model to a rental/lease arrangement allowing business to better control there cash flows. Will be developing the Australian operation and assisting with expansion into the developing Asian countries.
3. Ecommerce business to work as a category killer for a bespoke products. Forecast, one year before can see a return on capital. An exercise in creating a turn key business. Will be heavily focused on SEO optimisation and google Adwords to drive business. Supplying product throughout Australia.
4. A new product aimed at the two key supermarket groups, Woolies and Coles. Developing product in Australia for overseas production. Half way through development, a simple product that has huge application. Expected product turnover is in the millions annual but a very low unit rate. Joint partnership.
5. Sports and Team photos, online ecommerce, an established business that I purchased as the old owner had done little to expand it and systemise it.

So business range from local clients, to Australia wide, to South East Asia. Both services and products are sourced from countries in South East Asia. I have little reliance on local service and product providers.

Cheers


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## sydboy007 (8 September 2013)

http://smh.domain.com.au/real-estate-news/a-vote-for-real-estate-20130907-2tc02.html

Nock down house I practically back onto sells for $890K

Prob not a bad deal judging from the size of the property.  My 127M of land is valued at $500K so I dare say they've been able to buy at near the land value.

But then this highlights the issue where it's the price of land that has caused most of the house price inflation over the last couple of decades.


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## Tano (8 September 2013)

What do you guys make of this?  Some marketing scam or is there alot of property investment from cashed up overseas buyers?

http://www.news.com.au/realestate/a...ng-their-budgets/story-fncq3era-1226714027139


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## Julia (8 September 2013)

sydboy007 said:


> Prob not a bad deal judging from the size of the property.  My 127M of land is valued at $500K so I dare say they've been able to buy at near the land value.
> 
> But then this highlights the issue where it's the price of land that has caused most of the house price inflation over the last couple of decades.



Unbelievable!  Just 127sqm.  What do you have on that?  Must be a very small dwelling.


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## DB008 (8 September 2013)

As I said a few months ago, the Sydney market is moving.


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## sydboy007 (8 September 2013)

Julia said:


> Unbelievable!  Just 127sqm.  What do you have on that?  Must be a very small dwelling.




I have a 2.5 story house with 3 bedrooms.  It's a decent sized house at around 150 sqm living space.  Even have parking out front which in this area is a rarity.

Helps the house was only a yr old when I bought it


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## 13ugs13unny (9 September 2013)

"A plain house in an average suburb has sold for $2.385" is the news heading.

'average' suburb, do banks lend this much for 'average' now do they?


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## moXJO (9 September 2013)

DB008 said:


> As I said a few months ago, the Sydney market is moving.




There is a ripple effect in certain areas out of sydney as well. It is a fairly hot market for good property at the moment. Iv'e been trying to snap up land that has development potential but prices have gotten to far ahead again for the numbers to be worth it.


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## sydboy007 (9 September 2013)

The Home Investors Prayer (copied from a poster at MB)

Now I lay me down to sleep,
I pray the RBAs neg gearing to keep,
If prices slide before I sell,
I pray new buyers be lured to hell,
May capital gains offset the rent,
And bless me in retirement. 
Amen.


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## moXJO (10 September 2013)

Did I just hear some stupid amount of population growth for NSW on the radio?

Might have to take another look at those properties I thought were to pricey


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## sydboy007 (10 September 2013)

I can't believe how many new apartments are going up around me in Erskineville SYDNEY.

We've just got a Woolworths too with apartments above, with another 3 blocks within a 10 min walk from my house mid construction to nearing completion.

It's certainly a lot more vibrant area than when I moved here in 97.


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## sydboy007 (10 September 2013)

http://www.thebull.com.au/articles/a/40594-home-equity:-australia's-growing-wealth-divide.html

Some of the more interesting info

Since the Survey of Income and Housing began in 1995, home ownership rates have hovered between 71%-69%, although the proportion of home purchasers (people with mortgages) began to exceed outright home owners in 2004.

While some speculated that Gen Ys were avoiding the responsibilities and commitment of home ownership by choice, a recent survey of Australian university students reveals that home ownership remains an overriding aspiration for younger people. However, affordability (saving a deposit and meeting repayments) is a major concern for these students. Despite relatively bright employment prospects they fear they may never be mortgage free.

Home owners are vastly more wealthy than renters. The latest ABS figures show that the net worth of renter households was on average only about 13% of that enjoyed by owners with no mortgage, and about a fifth of the net worth of home purchasers.

Falling rates of home ownership point to a looming problem. Government expenditure on older people, particularly the relatively low rate for the aged pension, depends on minimal housing costs and the capacity for co-payment (for care) by accessing home equity when the time comes. If older people retire with mortgage debt, and worse, without housing equity, ongoing government obligations for income and housing related payments will rise sharply.

Government subsidies for home ownership (largely through preferential tax treatment) amount to around $8,000 per household per year, but renters get only around $1,000 per year. Support for property investment equates to an additional $4,000. All up, that means in excess of $45 billion for home ownership compared to around $8 billion for renting, including concessions for private landlords through negative gearing.

In 2009/10 only 5.2% of houses sold were affordable to those on lower incomes, and 60% of low-income private renters were in housing stress (when housing costs exceed 30% of income). Overall homelessness has grown 17.3% since 2006, with more than 105,200 Australians sleeping rough, couchsurfing, in crisis or temporary accommodation in 2011.


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## Whiskers (10 September 2013)

Barnaby Joyce has been on about unrestricted foreign ownership of land, particularly by state owned entities, along the same lines as some in Labor and the Greens.

He said on the ABC last night that he's not aware of the FIRB blocking a single deal. That's got to be a concern.

He's got the work ahead of him to get changes made, but I expect he probably will prevail sooner or later. His main concern is from the rural perspective, but he correctly points out that the same principles apply to urban and residential property. 

As I understand, foreigners can buy as much land as they like and develop it into housing of various styles subject to FIRB approval, which seems rarely if ever denied. The do not need FIRB approval to sell them. It seems there has been a lot of foreign accumulation of land for some time and likely helped make places like Sydney, Melbourne and Perth relatively expensive on the international affordability index. 

If all the political parties keep there word policy wise and Barnaby works up a bit of patriotism on this issue, there is likely to be some further slowing of the economy with further downward pressure on prices.

Foreign invest is generally welcomed, but given Aus had a relatively low savings rate and conversely higher debt... and free or disposable income is key to future growth of the economy... if foreign ownership is artificially forcing up the prices and down the affordability of housing in our own country, surely we must exercise more control than we are at present.

So, just earn more wages you may say. The problem is our economy (and prices) has to grow a bit faster than the norm to cover higher wages. That gets back to the reasons and the terms of reference why our RBA hasn't lowered rates as much as many other countries which has lead to more cash pouring into Aus fuelling the cycle.  

There has to be some changes to at least some of the rules with foreign ownership and the RBA... or we will inevitably be priced out of our own land or fall into recession.


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## sydboy007 (10 September 2013)

Whiskers said:


> Barnaby Joyce has been on about unrestricted foreign ownership of land, particularly by state owned entities, along the same lines as some in Labor and the Greens.




There's a big difference between buying farm land away from capital cities and land that could be used for housing.

The biggest single factor to make housing more affordable would be basic guidelines (codes) with a right of use implying you can build it as long as it meets the code.  No one can challenge the development unless it is outside the code.

Should see a flurry of activity.

A vacant land land tax may also stop the developers from doing so much land banking.


----------



## sydboy007 (11 September 2013)

http://www.macrobusiness.com.au/2013/09/apra-slaps-wrists-as-rbnz-pulls-a-revolver/

Indeed, as we know, investors are at record proportions of lending and data released late last month by APRA suggests that there is a reasonable amount of higher risk lending going, namely:

38.7% of new home loans issued by banks over the June quarter were interest-only;
13.5% of new home loans had a loan-to-value ratio (LVR) of greater than or equal to 90%;
19.2% of new home loans had a LVR of between 80% and 90%;
meaning that 32.7% of total new home loans issued over the June quarter were above 80% LVR.

Seems the specufestors ain't worried about losing their jobs or having issues paying the interest only mortgage.


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## Whiskers (11 September 2013)

sydboy007 said:


> There's a big difference between buying farm land away from capital cities and land that could be used for housing.




At the micro level there is, but at the macro the business goal is the same... to profit from Australian resources and take it back to their homeland. 



> The biggest single factor to make housing more affordable would be basic guidelines (codes) with a right of use implying you can build it as long as it meets the code.  No one can challenge the development unless it is outside the code.
> 
> Should see a flurry of activity.




The FIRB does ensure foreign investment developments meet all local codes and guidelines, but the problem is these businesses often state owned can afford to land bank, which some have been doing for ages, until the economic conditions are most favourable for bigger profits.  



> A vacant land land tax may also stop the developers from doing so much land banking.




Nooo... no more new taxes please!

It would also force the unnecessary turnover of land, eg long held family farm land that has become inoperable for any number of reasons including urban encroachment, due to excessive taxes.

However to qualify you comment, the FIRB could enforce a rule that once purchased for (urban development) it must be developed immediately... to stop land banking exploiting our resources for capital gain.

The problem that arises with foreign agribusiness ownership is monopoly or near monopoly control over supply chains.

An issue with rural land is often the foreign ownership is integrated with commercial contracts to solely or preferentially supply the home state or business and 'dump' leftovers in surplus where the decide. 

People might recall the Emerald citrus canker outbreak a few years ago where thousands of trees had to be destroyed. It was infected plants brought into a foreign owned orchard without passing through proper quarantine inspection (avoiding inspection costs) that caused that problem.

Some disturbing statistics that you will not see in China or the USA.

44 million Ha (11%) of Australian farmland had some degree of foreign ownership
10% of water entitlements have foreign ownership
Grain trading and storage 40-55%
Dairy processing 50%
Sugar processing 60%
Red meat processing 40%
Vegetable processing foreign dominated
Pork 25% foreign
Cotton processing foreign dominated
Beef feedlots foreign dominated
Grain/oilseed processing 65-95%
http://www.ioa.uwa.edu.au/__data/assets/pdf_file/0008/2151692/2Mick-Keogh-Keynote-address-slides.pdf


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## sydboy007 (11 September 2013)

Whiskers said:


> Some disturbing statistics that you will not see in China or the USA.
> 
> 44 million Ha (11%) of Australian farmland had some degree of foreign ownership
> 10% of water entitlements have foreign ownership
> ...




How much of your investible wealth do you have devoted to these sectors?  I bought into it via AACO but gave up waiting for it to return anything.  

I don't see why a current owner of an asset should not be able to sell to the highest bidder.  If a foreigner is willing to pay more then what right do we have to say no you have to accept a lower bid from a local?

Would you be happy for tax payers to fund the difference between a lower local bid and higher foreign bid to keep these assets in local hands because that's the only way I can see it being fair on current owners, and that's a new tax i certainly don't feel like paying.

As for no land tax, it's one of the most efficient taxes.  It doesn't distort the allocation of resources nearly as much as most other taxes, and it allows some of the increase in wealth to be recouped by the public when it funds infrastructure rather than the current system that basically benefits those who gain access to the infrastructure.  A land tax can help to continually self fund new infrastructure.  It would easily replace council rates and other state taxes, and would be a much more reliable revenue base than stamp duties.


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## Whiskers (11 September 2013)

sydboy007 said:


> How much of your investible wealth do you have devoted to these sectors?




I was born into and invested most of my life directly in many of these sectors.



> I bought into it via AACO but gave up waiting for it to return anything.




Sorry you didn't make a return... but if you know the Holmes a Court family, they (especially the old man, now deceased, Robert) are shrewd business people. The whole idea of public listing was to gain more funds for expansion and development and release some of their private wealth in the business. 

However since listing abt 2001 there was severe drought across much of the country, heavy cattle losses from severe floods after the drought broke the live sheep and cattle industry has been belted around with sudden cuts to exports flooding the local market. Not to mention a political agenda that had scant regard for the rural sector.



> I don't see why a current owner of an asset should not be able to sell to the highest bidder.  If a foreigner is willing to pay more then what right do we have to say no you have to accept a lower bid from a local?




If you look at the world simply as a business to make profits, it would be hard to argue against that. But, the reality there is still a lot of protectionism in some countries that will not allow us to do there what we are blindly or gullibly letting them do here.




> Would you be happy for tax payers to fund the difference between a lower local bid and higher foreign bid to keep these assets in local hands because that's the only way I can see it being fair on current owners, and that's a new tax i certainly don't feel like paying.




Tax payers are paying the difference now through increased costs of products derived from them including supermarket products and housing... where the profit is largely taken out of circulation and sent to the homeland rather than substantially returned and recycled to the local economy.



> As for no land tax, it's one of the most efficient taxes.  It doesn't distort the allocation of resources nearly as much as most other taxes, and it allows some of the increase in wealth to be recouped by the public when it funds infrastructure rather than the current system that basically benefits those who gain access to the infrastructure.  A land tax can help to continually self fund new infrastructure.  It would easily replace council rates and other state taxes, and would be a much more reliable revenue base than stamp duties.




The short answer here is more is not necessarily better.

I suspect we have a different focus. I'm thinking long term sustainability of key asset and resource regulation as part of keeping our cost of living competitive and modifying our economic model to slow the impact of artificial price stimulus on our economic growth, which lead to the widening affordability issues (by international standards) I mentioned earlier.


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## Wysiwyg (12 September 2013)

> If you look at the world simply as a business to make profits, it would be hard to argue against that. But, the reality there is still a lot of protectionism in some countries that will not allow us to do there what we are blindly or gullibly letting them do here.



So true Whiskers. When Asians Google Earth, in Australia they see a vast expanse of 'unutilised' earth. It is "living organism" (human in this context) to seek greener pastures.


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## sydboy007 (12 September 2013)

Whiskers said:


> I suspect we have a different focus. I'm thinking long term sustainability of key asset and resource regulation as part of keeping our cost of living competitive and modifying our economic model to slow the impact of artificial price stimulus on our economic growth, which lead to the widening affordability issues (by international standards) I mentioned earlier.




I think we have similar perspectives.  I just see artifically trying to keep prices lower as not in the long term best interests of everyone as that just limits future investment.  High prices generally work because it encourages extra supply - just look at the iron ore and coal markets.

I do agree we are a lot more open than most countries.  It really gawls me everytime I hear China have a hissy fit over FIRB reviewing their investments here when they pretty much don't allow foreign investment in China, except under conditions that benefitt he locals so much I wonder if it's worth the effort.  I've read too many storeis of foreigners ending up in jail to have the business they grew with locals stolen from them.

As for housing, I think we lost the plot from the time we started to see shelter as an asset and not a basic human right.  How anyone could think the 100% house price inflation from 2000-2004 was in any way good for us, well they have a very different perspective to myself.

I just don't see how we move back from the affordability cliff we're on.  Someone has to suffer for housing to become more affordable.  Probably a half trillion dollars worth of value needs to be removed from the shelter market to get prices back to where they should be.  That wipes out the banks, al levels of Goverment, and a fair chunk of the public.

possibly the safest way is to change NG to apply to only new constructed housng, witht eh Govt using the savings to the budget to directly build affordable housing that they could then onsel at a later stage should the renters workt her way into a position of affordign to buy - similar tothe schee they have in WA.

Even a decade of no real price rices doesn't get us far along in terms of making shelter more affordable


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## jmoz (12 September 2013)

sydboy007 said:


> Someone has to suffer for housing to become more affordable.  Probably a half trillion dollars worth of value needs to be removed from the shelter market to get prices back to where they should be.  That wipes out the banks, al levels of Goverment, and a fair chunk of the public.
> (




This is what I can never get my head around. I see some really great arguments around the place as to why we are going to see a 10%/20%/40% drop in property, but the cynic in me always comes back to what government is ever going to throw the opposition that lob and vote themselves out?

with SO many vested interests in the housing sector, shouldn't that mean that its going to be a 'safe' investment for the foreseeable future, as the government/banks etc will always make sure there is a greater fool?


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## Klogg (12 September 2013)

jmoz said:


> with SO many vested interests in the housing sector, shouldn't that mean that its going to be a 'safe' investment for the foreseeable future, as the government/banks etc will always make sure there is a greater fool?




Yes, until you get an over-riding negative influence (e.g. subprime mortgage crisis) so large that those with self-interests cannot act with the order of magnitude required to negate it.
IMO, it'll continue to be propped up until it can't.


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## sydboy007 (13 September 2013)

Klogg said:


> Yes, until you get an over-riding negative influence (e.g. subprime mortgage crisis) so large that those with self-interests cannot act with the order of magnitude required to negate it.
> IMO, it'll continue to be propped up until it can't.




I had started to think things might get tricky next year, but the surprising surge and stabilisation of iron ore at ridiculously profitable levels ($12X when BHP and RIO hcost of production <$45) have, along with the slight fall in the AUD, meant the AUD export price has increased over the last few months.

It will all depend on unemployment and how much fat the landlords have to get through any future downturn without needing to sell the IP or 2.  I'm sure the primary residence will remain sacrosanct, but no idea how hard  specufestors will fight to keep the IPs?  Once sellers outweigh buyers the falls become pretty large and fast.


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## maffu (13 September 2013)

galumay said:


> Thanks for your thoughts Julia, i may just continue to gently try to help my wife see my point of view!!




I have a spread sheet comparing the rent & buy decision.
It is not very well set out as it was just a solution to a uni question, but it compares the return of renting & investing spare cash flow relative to buying property. It also takes into account if you want to take margin loans in the stock market.
Obviously, the results that you get depend completely on the assumptions you make. If you assume similar returns for Stock and Property investing, property will out perform due to the heavy leverage. If you take historical averages property will outperform a non leveraged stock portfolio, but would be similar to a stock portfolio with a modest margin loan.

I can send it to you if you let me know how.


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## medicowallet (14 September 2013)

maffu said:


> I have a spread sheet comparing the rent & buy decision.
> It is not very well set out as it was just a solution to a uni question, but it compares the return of renting & investing spare cash flow relative to buying property. It also takes into account if you want to take margin loans in the stock market.
> Obviously, the results that you get depend completely on the assumptions you make. If you assume similar returns for Stock and Property investing, property will out perform due to the heavy leverage. If you take historical averages property will outperform a non leveraged stock portfolio, but would be similar to a stock portfolio with a modest margin loan.
> 
> I can send it to you if you let me know how.




You are absolutely correct in that it depends on many assumptions.

People often make the mistake of not including

- varying interest rates
- Historical returns compared to the recent past (ie does a recent bull market affect the possibility of returns over the next short to medium term)
- Rates, insurance, replacement of worn out fixtures, maintenance etc (this is where a lot of people fail imo)
- Dollar cost averaging
- Cash flow for opportunities.

and many others.  

Then you have the benefits of property which are throughout this monster thread (for me one which is hard to price is the stability you get by not renting)

I cannot see many problems with a PPOR being a semi-priority for young people, even at current ridiculous prices, however to then go and concentrate on IP at the expense of diversification is crazy.

the benefit of going for shares whilst renting instead of a PPOR, well in this case, I think you need a well reasoned suitable alternative (which for me was a business) or some thought of a clear opportunity in the future. 

If you think, prepare for the shocks, I don't think many outperform the markets in a great sense, however if I was a young person, I would be quite wary of the current pricing of RE in this country... but then again, I have been saying this for years, and it hasn't come down (but it hasn't really gone up either  )

MW


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## sydboy007 (14 September 2013)

medicowallet said:


> You are absolutely correct in that it depends on many assumptions.
> 
> People often make the mistake of not including
> 
> ...




I think the biggest thing forgotten is inflation.  I'm sick of hearing people, and the MSM, talk about buy a property  $150k and selling it 10 years later for $500k and making out it's some amazing great "capital" growth.  Once you realise inflation account for around 1/3 of the "growth" the returns don't look quite so hot.

There's a lot of non financial reasons for buying a primary residence, but I often think I could be close to retiring if I'd stayed out of the property market and focused on building up other assets.  Rents are just so cheap compared to the value of the property that is being lent to you.  Why pay 6%+ of the asset value in holding costs when you can borrow it for around 4%, maybe lower.  Investing that 3% differential can pay quite handsomely, with alot less gearing and a lot more mobility to move for employment reasons.

Maybe it's the relief of being debt free, but a 500K mortgage would just scare the bejeezus out of me.  Trying to feed that monster for the next 25 years.  Nightmare.

The true test of property prices will be when we have our next recession.  Personally i think we're already in one.  The accounting tricks of net exports showing slightly below trend GDP wont cut it when most people aren't seeing much increase in their income, and most of us are seeing a fall in our real incomes.

Land should not represent over 60% of the value of a home.  It's crazy that we've willing allowed ourselves to see artificial scarcity as good for us


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## moXJO (14 September 2013)

Went to an auction today, a house on about 940m2. Older style home but I have been buying in this area as I knew it was going to get rushed pretty soon. I'd be pressed paying $410k for it, but I'm a tight ar$e so $430k would imo been the limit. The first thing I notice is the amount of people there, 40ish which is above normal for this area. The bidding starts at 400 and quickly goes to 450 (young couple in their twenties) they eventually go to market at $460k. Really that was $60k over what I would be willing to pay, lucky I have a back up down the road. I drive down to a pair of shops on a block 700m2 and that has a sold sticker on it as well. 
The agents know the market is heating up as well as they no longer give me the time of day on the low ball offers. Right now its a sellers market.
The sentiment between now and the beginning of last year is chalk and cheese. Might have a lot to do with booting out labor. Its like everyone decided its time to get back to work.




> The true test of property prices will be when we have our next recession. Personally i think we're already in one. The accounting tricks of net exports showing slightly below trend GDP wont cut it when most people aren't seeing much increase in their income, and most of us are seeing a fall in our real incomes.




I think we have already had one, conditions on the ground are improving. Business I am talking to have seen a pickup in the last few weeks and friends in Sydney are flat out. I know its not the big picture or hard numbers but things do seem to be picking up.

I think a heating up economy and interest rates will be interesting.


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## ftw129 (15 September 2013)




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## Bill M (17 September 2013)

From The Daily Telegraph

---
Sydney property prices will increase by up to 20 per cent next year, report predicts

Sydney property prices will boom by 15-20 per cent in 2014, leading an accelerated national housing recovery, according to a forecast released today.

Full Story Here: http://www.dailytelegraph.com.au/realestate/news/sydney-property-prices-will-increase-by-up-to-20-per-cent-next-year-report-predicts/story-fni0cly6-1226721103566
---


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## sydboy007 (18 September 2013)

I thought Sydney property prices were didonkulous but try the belwo game on canadian housing

http://www.crackshackormansion.com/


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## sydboy007 (20 September 2013)

http://www.macrobusiness.com.au/2013/09/misreading-housing-bubble-dynamics/

the below graph shows how far house prices have moved from the fundamentals

Just got to love that near hockey stick curve after the halving of CGT

Maybe we need to copy the way texas has been able to accommodate high population growth, income growth while mainting affordable housing

http://www.macrobusiness.com.au/2013/09/australia-must-look-to-texas-on-housing-policy

Imagine being able to buy a house in a major city for 3 tims the median wage?  In Australia - tell them they're dreaming.


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## sydboy007 (21 September 2013)

http://www.afr.com/p/markets/market_wrap/only_fools_ignore_bubble_trouble_tcMdVkWXAAWCs1PcK2SG9O

Residential property is the biggest source of household wealth and underlies the most important asset – home loans – held by Australia’s colossal and concentrated banking industry, which accounts for 30 per cent of the sharemarket’s value. There is $4 trillion of housing and $1.3 trillion of debt held against it. It is our most significant investment class…

…anyone not investing serious time contemplating housing hazards, including the prospect of destabilising bubbles, should wake up…

Capital gains exceeding incomes is OK, for a period. But with the major banks leveraged 80 times across their $1 trillion home loan books, one-third of all new mortgages approved with loan-to-value ratios greater than 80 per cent, nearly 40 per cent of loans accepted on an “interest only” basis, 20 per cent of borrowers fixing at historically low rates for only a few years, and the household debt-to-income ratio not far from its highs, there is little room for error…

You can ignore these threats like the US Federal Reserve did before 2007, or confront them and reduce the probability that history eventually repeats itself.


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## medicowallet (21 September 2013)

sydboy007 said:


> You can ignore these threats like the US Federal Reserve did before 2007, or confront them and reduce the probability that history eventually repeats itself.




The only ways I can think of to address these require bipartisan support to change regulation, which is not going to happen as there is too much to gain politically.

What we are guaranteed to end up with is a bust at some stage, which could be very bad, but the governments at all levels and of all types are too stupid to think about this.

MW


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## Garpal Gumnut (21 September 2013)

I pity anyone in a SMSF or privately geared in to property.

Many wiser than I are predicting the popping of an almighty bubble.

A house, is a house. Not an investment. It is to live, eat and sleep in, protect one from the elements and raise a family.

Houses have become tulips, whose price is decided by speculators and the madness of crowds.

gg


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## tech/a (21 September 2013)

Hmm $700k industrial site cost $310 k
Returns $5200 a month.

Better get rid of it then!

Sorry houses---how about apartments ?
Cost $200k
Retail $400k
Return $2300/mth better get rid of them to!

Don't feel too sorry!


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## againsthegrain (21 September 2013)

Hmm I wouldn't invest 400k to get a 2.3k return per month, get the same in a term deposit without rates, body corporate etc and not worry about losing value.

200k I'd think about it, but the thread is about future and current prices


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## sydboy007 (21 September 2013)

Garpal Gumnut said:


> I pity anyone in a SMSF or privately geared in to property.
> 
> Many wiser than I are predicting the popping of an almighty bubble.
> 
> ...




Very true.  I don't understand how as a society we came to view the basic need of shelter as an asset that HAS to increase in value above the inflation rate year in and year out.

The negatives on us at the individual and societal levels are massive.

It's rare for a bubble to fizzle.  They usually pop in a devastating way 

- - - Updated - - -



medicowallet said:


> The only ways I can think of to address these require bipartisan support to change regulation, which is not going to happen as there is too much to gain politically.
> 
> What we are guaranteed to end up with is a bust at some stage, which could be very bad, but the governments at all levels and of all types are too stupid to think about this.
> 
> MW




The sad fact is there isn't and probably never will be bipartisan support for the change we need.

NG has to be changed.  CGT prob needs to be reverted back to full taxation.

Artificial land supply constraints need to be removed.

NIMBYs need to get over themselves and allow development.


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## young-gun (21 September 2013)

tech/a said:


> Hmm $700k industrial site cost $310 k
> Returns $5200 a month.
> 
> Better get rid of it then!
> ...





Tech, you are one of very few that can afford to build/develop at these types of costs. Your situation isn't very relevant to the broader public, and likely most on this forum.

I re-engaged my interest in property recently. Every time I start researching and get down to the nitty gritty there is just so few good opportunities out there for people just trying to break into the market to make some money. Hats of to those like yourself that are in a position to capitalise on the next couple of years, and I'm not being sarcastic.

The only game that can be played by new starters IMO is renovate and flip, and you have to be SO careful and diligent when playing in the outter suburbs or you'll get burnt so easily. GG hit the nail on the head. Property has become a a speculating disaster, with negative gearing all the rage and the unsuspecting still being pulled into the market with low rates and sweeteners, I think  we could be in for a shock down the track. Taking longer than I anticipated.


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## tech/a (21 September 2013)

The broader public would---I suspect understand there is a time and place for each investment.
Now is not the time for property speculation.


----------



## sydboy007 (22 September 2013)

Some wonderful pearls of wisdom 

Mind you, if you buy a property through a DIY super fund you get the best of both yield and capital gains because the tax is much lower.

And you can use your boss's compulsory salary-sacrificed contributions, another tax break, to pay all the expenses.


_Read more: http://www.smh.com.au/money/property-and-shares-go-head-to-head-20130921-2u6pj.html#ixzz2fZFODLSJ_

He should know better than to be so simplistic about buying property within super.


----------



## young-gun (22 September 2013)

tech/a said:


> The broader public would---I suspect understand there is a time and place for each investment.
> Now is not the time for property speculation.




I don't think the broader public has ANY idea what they are doing, or they wouldn't be 'investing'(and i use the term VERY lightly) in vehicles that are losing them money. 4 guys at work now own 'investment' properties. The best case scenario is the one paying out only$50 a week out of his pocket. Robert kiyosaki said it best when he said that 'if you don't have the capital, all you get it the real estate deals that no one else wants', and for good reason.



sydboy007 said:


> Some wonderful pearls of wisdom
> 
> Mind you, if you buy a property through a DIY super fund you get the best of both yield and capital gains because the tax is much lower.
> 
> ...




It amazes me how these guys speak of population growth as if it's the catalyst to rocketing house prices. who's to say these people contributing to population growth have the money to drive prices higher? They will most likely just contribute to heat in the rental market, which will cause more investor stupidity and drive prices even higher.

If I were to buy even a small apartment (1-2 bedroom 1 bath) on the outskirts of brisbane, say in the area of strathpine(by no means a glamorous suburb) we would be looking at approx 220k or more. Meaning a deposit of approx 44k to avoid the sting of $10,000 mortgage insurance. Most in my generation simply do not and will not have this sort of money to sustain prices let alone push them higher. Hell some are still at uni working 2 jobs just to eat, and once done will be on 60k a year with a hex debt.

I just want to know where the money will be coming from to push prices much higher than they are now, with the exception of cashed up chinese investors, and some speculators here at home.


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## Bill M (22 September 2013)

young-gun said:


> I just want to know where the money will be coming from to push prices much higher than they are now, with the exception of cashed up chinese investors, and some speculators here at home.




You forgot to mention the southerners. Plenty of people selling up the family homes in Sydney and Melbourne for big money and then buying decent homes in Queensland for half the money. It is a great idea in my opinion and it can boost your retirement funds quite a lot which would provide for a decent retirement.


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## Judd (22 September 2013)

Bill M said:


> You forgot to mention the southerners. Plenty of people selling up the family homes in Sydney and Melbourne for big money and then buying decent homes in Queensland for half the money. It is a great idea in my opinion and it can boost your retirement funds quite a lot which would provide for a decent retirement.




A similar thing happened in the UK.  Retired owners in the South of the UK and in the London area, sold up their property and moved to the North - Hull and the like.  Problems emerged in that the unemployment in the area was already high (the South of England became an unaffordable region for those on welfare or low incomes), they bought no specific business with them and now the are authorities are finding that the demand for health and other services is increasing rapidly.

You never really know the outcome of unintended consequences until much, much later it seems.


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## kid hustlr (22 September 2013)

young-gun said:


> If I were to buy even a small apartment (1-2 bedroom 1 bath) on the outskirts of brisbane, say in the area of strathpine(by no means a glamorous suburb) we would *be looking at approx 220k or more*. Meaning a deposit of approx 44k to avoid the sting of $10,000 mortgage insurance. Most in my generation simply do not and will not have this sort of money to sustain prices let alone push them higher. Hell some are still at uni working 2 jobs just to eat, and *once done will be on 60k a year with a hex debt*.




FWIW I feel like someone on 60k a year (even with a hecs debt) could afford a 220k property. If that's a dual income situation (ie long term bf/gf or husband + wife or brothers or w/e) then they could pay off a 220k place in <10 years easily.


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## Garpal Gumnut (22 September 2013)

kid hustlr said:


> FWIW I feel like someone on 60k a year (even with a hecs debt) could afford a 220k property. If that's a dual income situation (ie long term bf/gf or husband + wife or brothers or w/e) then they could pay off a 220k place in <10 years easily.




Only problem is that it may only get $110k in 10 years time.

Then again they could trade up to something now worth $800k for $400k.

Interest rates may be 17% by then though.

gg


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## sydboy007 (22 September 2013)

young-gun said:


> It amazes me how these guys speak of population growth as if it's the catalyst to rocketing house prices. who's to say these people contributing to population growth have the money to drive prices higher? They will most likely just contribute to heat in the rental market, which will cause more investor stupidity and drive prices even higher.




http://www.macrobusiness.com.au/2013/09/misreading-housing-bubble-dynamics/

_Another interesting aspect of the US housing market is that underlying demand was running strong in the years leading-up to the bust. Unemployment was low, the US economy was motoring along, credit was readily available, and a record 1.7 million households were formed in 2005 – 500,000 more than the long-run average of 1.2 million household formations per year.

The surge in household formations led to numerous suggestions that the US was facing a housing shortgage, especially in areas where strict land-use regulations were in effect, such as California.

The rest is history. The US housing bubble popped, the economy tanked, and the rate of household formation fell to around half the long-run average (see below chart), leaving a vast oversupply of homes, even in severely supply-restricted markets like coastal California._

With the huge amount of spare rooms available, I can see a lot of Gen y and late Gen X heading back to the parents home if things turn south.  When a single bedroom apartment in Sydney can set you back $500+ a week it doesn't take too big a drop in income to turn that unaffordable.

- - - Updated - - -



Garpal Gumnut said:


> Interest rates may be 17% by then though.
> 
> gg




Now now GG.  We all know interest rates will always be lower under a Liberal government


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## McLovin (22 September 2013)

sydboy007 said:


> With the huge amount of spare rooms available, I can see a lot of Gen y and late Gen X heading back to the parents home if things turn south.  When a single bedroom apartment in Sydney can set you back $500+ a week it doesn't take too big a drop in income to turn that unaffordable.




The problem is that Australians don't even know what a recession is anymore. I don't think the property market is going to surge ahead despite what the pundits may say. I bought my place a few months ago, the other day I had a RE agent door knock and tell me that it would be worth at least 15% more than I paid for it. Around here it's mainly owner occupiers. Because the yields don't stack up for most investors.


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## sydboy007 (22 September 2013)

McLovin said:


> The problem is that Australians don't even know what a recession is anymore. I don't think the property market is going to surge ahead despite what the pundits may say. I bought my place a few months ago, the other day I had a RE agent door knock and tell me that it would be worth at least 15% more than I paid for it. Around here it's mainly owner occupiers. Because the yields don't stack up for most investors.




I dare say the yields haven't stacked up in over a decade.

Borrow at 1 to 2% more than the gross yield, which means you are probably around 2% over the net yield.

Crap investment IMHO.

I'll stick with minimal gearing and 6% grossed up returns.  Nothing like be a debt free home owner (2 years 3 months but who's counting ).


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## McLovin (22 September 2013)

sydboy007 said:


> I dare say the yields haven't stacked up in over a decade.
> 
> Borrow at 1 to 2% more than the gross yield, which means you are probably around 2% over the net yield.
> 
> ...




Yields are pretty low around here (Paddington, Sydney). On a $1m house (if you can find a house for under $1m!) you'd be lucky to pull in $900/week. That's fairly typical though, as you slide up the price scale the yield falls away. It's the reason property investors stick with low value property.


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## Smurf1976 (22 September 2013)

McLovin said:


> The problem is that Australians don't even know what a recession is anymore.



It sounds strange but having had to explain the concept to someone in their early 20's not long ago I agree.

Even after my explanation and examples of what happened last time (1 million unemployed, many people losing their homes, business failures etc) I'm not sure they believed me. Even when I pointed out that youth unemployment was somewhere in the order of 50% from memory, they still seemed to think this an unlikely event as though I was talking about some hypothetical scenario and not something which actually happened around the time they were born.

Despite all the technology we have today, humans still aren't very good at learning from previous mistakes it seems.


----------



## young-gun (22 September 2013)

Bill M said:


> You forgot to mention the southerners. Plenty of people selling up the family homes in Sydney and Melbourne for big money and then buying decent homes in Queensland for half the money. It is a great idea in my opinion and it can boost your retirement funds quite a lot which would provide for a decent retirement.





Not sure if this is an opinion you formed on your own bill but I actually watched an interview with Harry Triguboff and he was of the same opinion. Too expensive to live down there, sell up and by cheap up here. From what I gathered he was talking over the next decade or so as the boomers come through. I was referring the prices australia wide but I guess the scenario you outlined may see prices sustained in queensland, unless of course prices dive and people no longer believe it's safe to buy anywhere. I guess the question is how many people are prepared to make the move. I personally wouldn't move to sydney if the situation was reversed, but I'm in an entirely different generation.



kid hustlr said:


> FWIW I feel like someone on 60k a year (even with a hecs debt) could afford a 220k property. If that's a dual income situation (ie long term bf/gf or husband + wife or brothers or w/e) then they could pay off a 220k place in <10 years easily.




I agree but a 1 bedroom apartment isn't going to last long if they are considering marriage and family etc. saving 40-60k isn't an easy task for most, not to mention stamp duty on top of that.



McLovin said:


> Yields are pretty low around here (Paddington, Sydney). On a $1m house (if you can find a house for under $1m!) you'd be lucky to pull in $900/week. That's fairly typical though, as you slide up the price scale the yield falls away. It's the reason property investors stick with low value property.




I've been reading about people reno'ing and flipping high priced housing in inner sydney, seems as though some are doing alright out of it if they know what they are doing.

Never mind how low the yield is anyway Mclovin, haven't you heard about the magic of negative gearing? That's where the real money is made.....


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## McLovin (22 September 2013)

young-gun said:


> I've been reading about people reno'ing and flipping high priced housing in inner sydney, seems as though some are doing alright out of it if they know what they are doing.




I'd have my doubts about that. The SMH seem to always have a few of those look how much we flipped our reno for but it doesn't seem like they actually make much money off them. From what I've seen a lot of the places tend to be way over-capitalised. It seems like the same sort of people who have an ambition to open a hipster eatery in Surry Hills or East Sydney also enjoy flipping houses, probably because they watch too much of the Block.


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## banco (22 September 2013)

McLovin said:


> I'd have my doubts about that. The SMH seem to always have a few of those look how much we flipped our reno for but it doesn't seem like they actually make much money off them. From what I've seen a lot of the places tend to be way over-capitalised. It seems like the same sort of people who have an ambition to open a hipster eatery in Surry Hills or East Sydney also enjoy flipping houses, probably because they watch too much of the Block.




Yeah there was one last year (not sure if if it was in the SMH) where when you added it up it was clear they'd made a loss but it was presented as a win.


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## kid hustlr (23 September 2013)

sydboy007 said:


> I'll stick with minimal gearing and 6% grossed up returns.  Nothing like be a debt free home owner (2 years 3 months but who's counting ).




sydboy given you are so bearish property why not sell now whilst the market is over valued?


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## 13ugs13unny (23 September 2013)

kid hustlr said:


> sydboy given you are so bearish property why not sell now whilst the market is over valued?




well in my case I won't sell because the cost to buy another is way too high.

Re-purchasing favours the overseas buyer who buys off the plan to save stamp duty and takes advantage of lower dollar, hence artificiality inflating domestic prices.

Its not advice but I believe the best property investment is the one you live in. IMHO why would you spend 300k on for property in the low million dollar range or half that for a property in the 600k range?

Proposed purchase price 1.2 Mil.

Lend - 80%                                                                             
Loan amount - $960,000.00                                                                            
Lenders Mortgage Insurance - N/A                                                             
Required Deposit - $240,000.00                                                             
Solicitor / Conveyancing Costs - $3k approx                                  
Stamp Duty - $51803.50              

Simply its just not worth it if your not planning to live in it over 30 years to add value and hopefully the suburb gentrifies. big ifs. Then you got to consider the cost of giving half your life to it, in the hope your health and income don't cause the rug to be pulled from under your feet.


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## tech/a (23 September 2013)

kid hustlr said:


> sydboy given you are so bearish property why not sell now whilst the market is over valued?




Just like Stocks
Is it overvalued?
Ever noticed stocks continue to rise even if overvalued.
Property does the same.
Has done all my life.
When I was buying houses at $30K they were over priced--and over valued.
in 1987 when they were at 18% interest rates and $50K they were way way over valued.

In 20 yrs time todays prices are going to look CHEAP!

When I was 16 I remember my father knocking back a 5 Bedroom palatial property for $30000
I remember his words that the property was way over valued when his offer of $28500 was knocked back.
The last time I saw it for sale 2002 it was $690,000.--a forty year old property now!


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## pavilion103 (23 September 2013)

There have been other times that property has been overvalued, however we are in unprecidented territory. 

A kid could look at a graph of property price growth and point this out. 

We only need to look as far as things like the House price to median income ratio. The ease of credit over this boom period (105% lend, low doc, no docs) at historically low interest rates. I'd also be interested to see the stats of percentage of income contributing to mortgage repayments. I dare say we haven't seen the real figures about how distressed some of the current owners area. Obviously negative gearing as well has contributed to this bubble. 

I know in Adelaide the median price went from $140,000 to over $400,000 in about 10 years (and would have had some decent growth before this too). 

Look at yields. They are pathetic. Aren't we supposed to be investing for yields? Or do we think the gravy train of speculative gains will go on forever? Come on....

I'm not sure if there will be a catalyst which causes a crash (e.g. terrible retail -> unemployment -> default) but I am sure prices will at least go no where for a long time. And in real terms at least, property values will decline over an extended period. 

One property 'expert' that I saw talk a couple of years back suggested intergenerational loans like in Japan could be another step which keeps prices up/increasing. 

The state of the market is ridiculous. 

It will be interesting to see if there are a few more years of no/negative growth. When will those negatively gearing, holding on for speculative gains (investment properties), realise what is happening and say 'enough is enough'. Tens of thousands going OUT a year with NO growth to compensate for it. 


Surely it is obvious that we are in unprecedented times???


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## 13ugs13unny (23 September 2013)

tech/a said:


> Just like Stocks
> Is it overvalued?
> Ever noticed stocks continue to rise even if overvalued.
> Property does the same.
> ...




I agree with what you said. BUT there is a huge BUT. Something every investor trader should understand completely first.

There is a huge problem we all face locally, nationally and globally. when people complain everything can be pointed to the fact very few people understand:

The Exponential Function as explained by Dr. Albert Bartlett.

http://www.youtube.com/watch?v=LqcHG7QUK9k


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## sydboy007 (23 September 2013)

kid hustlr said:


> sydboy given you are so bearish property why not sell now whilst the market is over valued?




The issue is where to put the money once I sell.

Tax becomes a big issue then.  But hopefully the bubble can hold on fo ra few more years and once my personal savings have hit my target I plan to sell up and semi retire teaching English somewhere in Asia for rent money and have a relatively stress free life with a passive income of $30-35K a year.


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## tech/a (23 September 2013)

sydboy007 said:


> The issue is where to put the money once I sell.
> 
> Tax becomes a big issue then.  But hopefully the bubble can hold on fo ra few more years and once my personal savings have hit my target I plan to sell up and semi retire teaching English somewhere in Asia for rent money and have a relatively stress free life with a passive income of $30-35K a year.




regardless of when you sell it tax will be an issue with any capital gain.
to hold out on potential profit due to tax concerns is plain crazy.
Put in place tax minimization strategies---a good accountant will help out.

As for Asia.
Its NOT the Lucky country.
You will be seen as the rich outsider.
Not as Ideal a lifestyle as you think.

AND

Once your setup there you wont have the capacity financially to return (without massive hardship).
think very carefully I know quite a few who rue the day!


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## 13ugs13unny (23 September 2013)

tech/a said:


> regardless of when you sell it tax will be an issue with any capital gain.
> to hold out on potential profit due to tax concerns is plain crazy.
> Put in place tax minimization strategies---a good accountant will help out.
> 
> ...





On the flip side, to continue living in this country is unaffordable for many.

I am aware of many people who depart to live cheaply in asia or as some i know personally are doing USA, not looking back.  And correct me if I am wrong, if departing permanently can take their super with them.

I am thinking of departing as well in the future, especially if house prices continue to climb. 

If all you have is your house and can't afford to live here, or there is little prospects for a professional career, with what seems to me overseas professionals are preferred, what's the point?


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## sydboy007 (23 September 2013)

http://www.macrobusiness.com.au/2013/09/pimco-warns-on-housing-bubble-dollar/

…Anecdotal evidence from property developers along the east coast of Australia *suggests more intense activity, particularly among those setting up the funds to purchase property. From Queensland’s Gold Coast to Melbourne’s Docklands, developers claim off-the-plan purchases using limited recourse borrowing arrangements account for up to 90 per cent of sales, a four-fold increase in two years.

“In some instances in a single day a spruiker will have a consumer set up a SMSF, borrow heavily, and invest in a *property off the plan, which has been bought from related parties. Often it’s initiated with a cold call and then a high pressure *seminar.”

- - - Updated - - -



tech/a said:


> regardless of when you sell it tax will be an issue with any capital gain.
> to hold out on potential profit due to tax concerns is plain crazy.
> Put in place tax minimization strategies---a good accountant will help out.
> 
> ...




It's my primary residence so works out as a pretty good tax shelter and minimisation.

I've done my sums and it's pretty marginal as to whether I'm better off selling now and renting till I semi retire or just staying with the way things are.  At least i don't have to worry about being forced to move multiple times over the intervening period.

As for Asia, I've got some good friends in a few cities there.  I know it can be a bit tricky, but still feel I can make a go of it, and the advantage is in Asia most people still have respect for teachers, unlike here where parents blame them for every failing of their children.

I'm in no rush.  I told myself to stick with my current job till they decide to off shore us at some point in the future.  Just save and continue to build wealth and that is the way to provide myself with some choice in the future.


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## tech/a (23 September 2013)

sydboy007 said:


> http://www.macrobusiness.com.au/2013/09/pimco-warns-on-housing-bubble-dollar/
> 
> …Anecdotal evidence from property developers along the east coast of Australia *suggests more intense activity, particularly among those setting up the funds to purchase property. From Queensland’s Gold Coast to Melbourne’s Docklands, developers claim off-the-plan purchases using limited recourse borrowing arrangements account for up to 90 per cent of sales, a four-fold increase in two years.
> 
> ...





Ironfish?


My Sister in her 50s has just last month come back from a 2 yr
English teaching position in Vietnam.
Her daughter 24 is still over there doing the same.

Neither have Australian teaching Qualifications!


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## 13ugs13unny (23 September 2013)

tech/a said:


> Ironfish?
> 
> 
> My Sister in her 50s has just last month come back from a 2 yr
> ...




Not having Australian Qualifications is not held in the high regard it used to be in Asia.

Furthermore universities are now seen as more prestigious in some asian countries. 

Australia is seen as easy to get into provided you pay the money.


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## CanOz (23 September 2013)

sydboy007 said:


> The issue is where to put the money once I sell.
> 
> Tax becomes a big issue then.  But hopefully the bubble can hold on fo ra few more years and once my personal savings have hit my target I plan to sell up and semi retire teaching English somewhere in Asia for rent money and have a relatively stress free life with a passive income of $30-35K a year.




Let me know you if you're interested, there's a good school in my town here called the Canadian School. Its a Sino-Canadian JV with the Province of BC and there are about 60 teachers here now, i know the principle there. The pay is pretty good as well. If you're qualified as a teacher even better. Usually a Uni degree is a must near the big cities but up north anything goes...

I have a mate near Harbin that's backing nearly 40k CNY per month between teaching and home tutoring.

heres the link....

http://www.sinocanadahighschool.com/


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## sydboy007 (23 September 2013)

CanOz said:


> Let me know you if you're interested, there's a good school in my town here called the Canadian School. Its a Sino-Canadian JV with the Province of BC and there are about 60 teachers here now, i know the principle there. The pay is pretty good as well. If you're qualified as a teacher even better. Usually a Uni degree is a must near the big cities but up north anything goes...
> 
> I have a mate near Harbin that's backing nearly 40k CNY per month between teaching and home tutoring.
> 
> ...




Thanxs.  I've done my CELTA but probably do it again in a few years when i make the change.

Been thinking of Taiwan since i quite liked it when I've visited and the pay is OK.  Cost of living their is near Thailand (except for rents)

I'd not mind Cananada except for the cold


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## Smurf1976 (23 September 2013)

tech/a said:


> Just like Stocks
> Is it overvalued?
> Ever noticed stocks continue to rise even if overvalued.
> Property does the same.
> ...



I remember quite well that a former boss of mine paid the huge sum of $160,000 for a 5 bedroom house on a hill with good views.

Like most, I thought he was crazy at the time. $160K was a huge amount of money, and how on earth would he pay the mortgage given wages at the time?

Some years later I ended up working in that exact job and I bought a house at that time too. Needless to say, I ended up with a smaller house and I paid more than $160K for it. 

I agree that residential property is overvalued on most measures, but how and when it will correct is anyone's guess. Like most things, it's taking longer than logic would suggest, such that any fall in "real" value is being eaten by inflation anyway thus avoiding a significant drop in nominal values.


----------



## sydboy007 (24 September 2013)

http://www.thebull.com.au/articles/a/40895-can-lower-income-buyers-build-housing-wealth-too.html

has some interesting historical data.  whether the returns can be achieved again, I don't see how when house inflation has been so far above income growth since at least 1995.  Those with a mortgage seemed to be geared to a scary degree.

_Comparing the bid rent curves for five Melbourne corridors (western, northern, eastern, south-eastern and southern) showed that in 1981 the price curve was flat in all five corridors, with little difference in price as distance from the CBD increased. By 2008 that had changed, with all five corridors showing much higher prices in inner and middle ring suburbs and much lower out towards the fringe._

_Six of the cheaper and eight of the more expensive suburbs studied in the research performed better than the median increase in value over the 1981–2006 time period. Of the six areas with the largest increases in wealth between 1981 and 2006, four were lower price areas in 1981, and of these, three had been industrial suburbs close to the CBD that had housed working class families._

_*A startling 36% of growth zone homes sold four to five years after purchase were sold at a loss, while only 9% of inner zone homes were sold at a loss*; after six to seven years, 8% of growth zone homes sold at a loss compared with 6% of inner, showing that capital gains growth had caught up with the transactions costs (such as stamp duty and agent fees) involved in buying and selling a property._

_Research shows a land tax, based on land value and universally applied, will most affect higher value land concentrated in the inner and middle suburbs, causing land prices to drop and therefore increasing housing affordability._


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## Whiskers (24 September 2013)

sydboy007 said:


> _Research shows a land tax, based on land value and universally applied, will most affect higher value land concentrated in the inner and middle suburbs, causing land prices to drop and therefore increasing housing affordability._




Yeah... that's a reasonable economic argument, but it might just mean that the urban sprawl spreads further into viable agricultural land for the wrong reasons... just to get lower tax in the short term. Wouldn't the tax cost balance back after awhile as outlying values rise with competition?

I think we are seeing this happen with retail rents in particular in some places. People are moving out of the traditional CBD because of high rents, the CBD is becoming more deserted and neglected as satellite towns and shopping centres restart the cycle again. It's a bit of a dog chasing it's tail.

While it will tend to flatten out the price of land somewhat, I'm not sure that extending the urban sprawl is a good trade off.


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## McLovin (24 September 2013)

Smurf1976 said:


> I agree that residential property is overvalued on most measures, but how and when it will correct is anyone's guess. Like most things, it's taking longer than logic would suggest, such that any fall in "real" value is being eaten by inflation anyway thus avoiding a significant drop in nominal values.




I always thought the property market would slowly deflate over say 15-20 years, unless there was a major shock to the economy. There has been a lot of one offs over the last two or three decades (women entering the workforce/large cohort of people entering household formation age/sustained low unemployment/sustained low interest rates/a multi decade rise in real wages without any real pause). None of those are going to be repeated anytime soon and like anything would you really want to buy an asset that has had those sort of tail winds behind it?


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## satanoperca (24 September 2013)

I agree with McLovin, but that is not to say that property will continue to go up.

Reasons that property will continue to climb for the next decade :

Inflation >2%
Population growth 2% - inner city properties will be in greater demand than outer, more so as there is less of them
The economy is linked to continuing growth
Govnuts rely on its income through stamp duties and rates
Our desire for security
SMSF can leverage up with property, many baby boomers believe bricks and mortar are a better investment that the returns on bank deposits
IR's will stay low for the foreseeable future, any increase in IR's will break the camels bank. I see a greater chance of IR's going lower than higher
Australians are addicted to property
Foreign buyers have far greater purchasing power than Australians
China will keep buying our dirt
The govnuts will throw more stimulus at it if required
Govnuts around the world will not let it happen
Property has always been expensive at the time

[/LIST]

Reasons why property will stagnate over the next decade :

We are in debt up to our eyeballs
No more people in the household to fuel the debt, unless we can put our children to work from the age of 3
The economy hits the skids, more likely an external shock from the global economy
We find another planet to move to or aliens land and eat a few of us.
The credit boom is over.
The change the rules around negative gearing
The govnuts free up land supply
A broadbase land tax is implemented

Reasons why property may crash over the next decade :

A external financial shock
A black swan lands, eg massive earthquakes, a air borne killer virus, world war, meteor strike 


I have been a bear for to long, time to wonder in the forest.

Cheers


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## sydboy007 (24 September 2013)

http://www.macrobusiness.com.au/2013/09/perth-rental-vacancies-surge-on-mining-slowdown/

Perth landlords might be starting to worry - 1% increase in vacancies over the last year


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## sydboy007 (24 September 2013)

http://www.macrobusiness.com.au/2013/09/the-history-of-australian-property-values-redux

As at the 30 June 2013, all capitals except Darwin were still “underwater” in real inflation-adjusted terms, with house values nationally around 5% below their June 2010 peak.

As argued previously on this site, the strong growth in Australian Australian housing values has been caused by escalating land prices, which roughly doubled as a percentage of GDP from the trough in 1996 through to the peak in 2010.

A key determinant of the boom/bust cycle in the land market is the availability of credit/debt used to fund housing. The ratio of household debt to GDP (the majority of which is mortgages) has more than quadrupled since 1988, rapidly accelerating during the 90s and 2000s. The ratio peaked in 2010 as did real housing prices, which is clearly no coincidence.

*Despite mortgage rates falling to near record lows, the proportion of aggregate household income chewed-up by mortgage interest is still well above that of the late-1980s/early-1990s, when mortgage rates peaked at 17%. *This is because of the inflated housing values and the corresponding high debt loads carried by Australian households.


----------



## Smurf1976 (24 September 2013)

McLovin said:


> I always thought the property market would slowly deflate over say 15-20 years, unless there was a major shock to the economy.



Agreed that it will likely take a long time.

But for an owner occupier, as distinct from a landlord, that's double the time you're likely to own the one property and roughly a third of the time you're likely to own _any_ real estate (unless you live substantially longer than average or buy a house the day you turn 18).

So for an owner occupier, I see it as a case of getting on with life and not worrying about the value of houses too much. Even if it does drop 50% that's only a real issue if you are selling and not buying another property, which generally wouldn't be a relevant decision in this timeframe for those not currently owning their own home (assuming they would mostly be under 40 and thus not likely to be a "last home seller" anytime soon).

A lot of that comes down to personal preference. Personally, I'd rather take the risk of losing some paper wealth, but not physical wealth (the house won't suddenly halve in size even though its' price might) than put up with renting for the next decade or two. Sure, there are good rentals and good landlords but there's an awful lot of hassles with renting at times too.


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## medicowallet (24 September 2013)

Smurf1976 said:


> Agreed that it will likely take a long time.
> 
> But for an owner occupier, as distinct from a landlord, that's double the time you're likely to own the one property and roughly a third of the time you're likely to own _any_ real estate (unless you live substantially longer than average or buy a house the day you turn 18).
> 
> ...




Whilst I agree with your general message,  if prices fall and unemployment rises, there will be quite a few who *will* have to worry, as Mr Bankman will come knocking and asking for keys.

It has happened before, and will definitely happen again.

The smart will ensure that their exposure is not too great, the young mums and dads will be the ones hurt (as is the way with most crashes)



- - - Updated - - -



sydboy007 said:


> *Despite mortgage rates falling to near record lows, the proportion of aggregate household income chewed-up by mortgage interest is still well above that of the late-1980s/early-1990s, when mortgage rates peaked at 17%. *This is because of the inflated housing values and the corresponding high debt loads carried by Australian households.




and some people who live in disneyland think that rates will stay low forever.  They will not.

If our dollar stays low, inflation will increase, and rates will be forced up (look at petrol prices atm  )

MW

PS where is Robots?


----------



## Whiskers (24 September 2013)

> =sydboy007;795376
> *Despite mortgage rates falling to near record lows, the proportion of aggregate household income chewed-up by mortgage interest is still well above that of the late-1980s/early-1990s, when mortgage rates peaked at 17%. *This is because of the inflated housing values and the corresponding high debt loads carried by Australian households.




I was in the negative geared rental market then and everything seemed easier than now. 

I agree, and mentioned earlier, that price inflation has outstripped income and savings. I also believe our RBA should have lowered rates sooner, partly from the affordability perspective, but to allow generation of more savings. The RBA worries about stimulating demand too much by lowering too much, but in hindsight they should have realised by now the dynamics of the housing market was changing radically and in all the circumstances we saw in hindsight how incentives like the Qld $10,000 building boost scheme failed to stimulate first home ownership or new home building quite miserably while our savings rate increased slightly, but as you say it's still under pressure.

Despite the property spruikers (warning issued by ASIC) best efforts property prices have not increased in proportion to interest rate cuts, because of the changing dynamics of home buyers, economic uncertainty and trying to increase savings... the RBA should be lowering faster if it was more focused on the competitive and comparative interests of the country than just the banking system.

A lot of the problem is to do with the difference in the terms of operation for our RBA compared to the US FED and others and the core differences in their charter, especially relating to how they manage risk to the financial system and determine what is in the best interests of the country.


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## sydboy007 (24 September 2013)

Whiskers said:


> I agree, and mentioned earlier, that price inflation has outstripped income and savings. I also believe our RBA should have lowered rates sooner, partly from the affordability perspective, but to allow generation of more savings. The RBA worries about stimulating demand too much by lowering too much, but in hindsight they should have realised by now the dynamics of the housing market was changing radically and in all the circumstances we saw in hindsight how incentives like the Qld $10,000 building boost scheme failed to stimulate first home ownership or new home building quite miserably while our savings rate increased slightly, but as you say it's still under pressure.




TBH I think the current interest rates are reducing incomes more than increasing savings.  I'm also sick of providing money at barely above CPI rates.  The financial repression is probably doing more harm than good.  We have to find some other way to get the AUD lower than bloody negative real interest rates.

Unless the ultra restrictive building practices in Australia are wound back then the issue of affordability will never be addressed.  

The below graph makes me wonder if the liberaisation of financial markets was a good thing for the country.


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## Quincy (25 September 2013)

satanoperca said:


> I agree with McLovin, but that is not to say that property will continue to go up.
> 
> Reasons that property will continue to climb for the next decade :
> 
> ...




The following article lists what I see going on in and around where I live and is the reason, I believe, why there is a current surge in sales and increased prices in both Sydney and Melbourne.

I know one Chinese woman in my area (friend of a friend) with PR status who has purchased over 20 properties for overseas family and friends (all cash purchases - no Bank loans).

http://www.news.com.au/realestate/c...before-next-boom/story-fncq3era-1226704103879




> Chinese migrants are helping friends and family in China to skirt Australia's foreign investment rules by purchasing established homes on their behalf, agents have told News Corp newspapers.
> 
> And Chinese developers are swooping on run-down commercial properties in Sydney and Melbourne to "land bank'' and redevelop as apartments during the next boom.
> 
> ...


----------



## sydboy007 (25 September 2013)

Quincy said:


> The following article lists what I see going on in and around where I live and is the reason, I believe, why there is a current surge in sales and increased prices in both Sydney and Melbourne.
> 
> I know one Chinese woman in my area (friend of a friend) with PR status who has purchased over 20 properties for overseas family and friends (all cash purchases - no Bank loans).
> 
> http://www.news.com.au/realestate/c...before-next-boom/story-fncq3era-1226704103879




I suppose the only good things from this is that at least some of the pain will be siphoned out of Australia should the crash come.

Will be interesting to see what these foreign buyers do if the AUD does a free fall to 60c or even 50c like it has done before.  That's pretty heft currency losses for them, on top of any price falls due to increases in unemployment.


----------



## Tyler Durden (25 September 2013)

Question is, where are the Chinese getting all their money from?


----------



## againsthegrain (25 September 2013)

Tyler Durden said:


> Question is, where are the Chinese getting all their money from?




Slave labour, sweat shops you name it. The sad reality is from a country with such a big population and huge gap between the rich and the dirty poor. The 1% that take advantage of a whole population of people who are born into poverty and debt is still a huge number. The sad thing is if they buy everything out here guess who will be the new generation of workers for them and their kids .... you guessed it our kids


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## ROE (25 September 2013)

Quincy said:


> The following article lists what I see going on in and around where I live and is the reason, I believe, why there is a current surge in sales and increased prices in both Sydney and Melbourne.
> 
> I know one Chinese woman in my area (friend of a friend) with PR status who has purchased over 20 properties for overseas family and friends (all cash purchases - no Bank loans).
> 
> http://www.news.com.au/realestate/c...before-next-boom/story-fncq3era-1226704103879




In a few years you see articles that friend, relatives or who ever has the properties in their name and the actual owner want to sell and get their money they can't ..

This stuff repeat so many times in so many countries I am surprise people haven't learned -

Legally there is nothing they can do...I am surprise people that stupid hand over money to title they don't owned


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## satanoperca (25 September 2013)

againsthegrain said:


> Slave labour, sweat shops you name it. The sad reality is from a country with such a big population and huge gap between the rich and the dirty poor. The 1% that take advantage of a whole population of people who are born into poverty and debt is still a huge number. The sad thing is if they buy everything out here guess who will be the new generation of workers for them and their kids .... you guessed it our kids




Exactly, the USA conquers by War

The Chinese conquer by trade.

As for the slave labour, it is we who buy their products, without foreign demand for cheap goods where would they be.

Cheers


----------



## satanoperca (25 September 2013)

sydboy007 said:


> I suppose the only good things from this is that at least some of the pain will be siphoned out of Australia should the crash come.
> 
> Will be interesting to see what these foreign buyers do if the AUD does a free fall to 60c or even 50c like it has done before.  That's pretty heft currency losses for them, on top of any price falls due to increases in unemployment.




I know of several successful business men in Malaysia who have been buying properties in Australia over the years. They park their money in property in Aus when the exchange rate is low, when it goes up, they sell the properties and move the money back to Malaysia. They are less concerned with the increase in property and more concerned following the exchange rates. 

As for the dollar dropping to 60c, that would see us totally stuffed. Retail would get smashed, local manufacturers that all use imported materials totally killed off, transport costs around Australia would sky rocket. 

Somehow I think the RBA would jump in like they did last time to prevent it happening.

While I agree Aus property seems high on every metric, it is still the best and safest place to live.

From my understanding the Chinese don't need to buy extensive amounts of property in Aus, just $5M in the bank and you have residency. Ten of thousands of Chinese would have that cash.

Before people make comments on China, spend some time there, the people are amazing and the countries growth is incredible, they will rule the world one day.


----------



## prawn_86 (25 September 2013)

satanoperca said:


> I know of several successful business men in Malaysia who have been buying properties in Australia over the years. They park their money in property in Aus when the exchange rate is low, when it goes up, they sell the properties and move the money back to Malaysia. They are less concerned with the increase in property and more concerned following the exchange rates.




No offense but that sounds like a extremely poor way to invest in currencies. The holding costs and entry and exit costs for property is huge. If they are looking to play the currency markets there are other way way way more efficient means of doing so


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## See Change (25 September 2013)

.... Sigh .....

Came over here to find out what people thought is the direction of the stock market and the longest post is on property . 

Well Australian property prices are going up . Lead by Sydney and Perth ( ? Peaked in Perth ) . 

Sydney is hot and the herd's hoof beats are beating in various other markets . We've just bought property in Brisbane 

I'd bet my house on it ..... Actually three houses , two town houses and numerous units   Geared up and not looking for any more buys at the moment .

So what is happening in the stock market ...

Cliff


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## satanoperca (25 September 2013)

prawn_86 said:


> No offense but that sounds like a extremely poor way to invest in currencies. The holding costs and entry and exit costs for property is huge. If they are looking to play the currency markets there are other way way way more efficient means of doing so




No offense to me, as I don't have the 10 of millions they have to play with.

Cheers


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## Smurf1976 (25 September 2013)

See Change said:


> .... Sigh .....
> 
> Came over here to find out what people thought is the direction of the stock market and the longest post is on property



What's the problem with that?

Nobody ever said you need to read _every_ thread on the whole forum. I don't see a problem at all with a property thread on a stock forum - just only read the stock ones if you aren't interested in broader economics or property investment.

As for why it's the longest, that's easy to answer. There's a separate thread for every stock on the ASX versus one property thread covering every city, suburb and town in Australia.


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## medicowallet (25 September 2013)

See Change said:


> .... Sigh .....
> 
> Came over here to find out what people thought is the direction of the stock market and the longest post is on property .
> 
> ...




an account opened in 2005.

Resurrected now.

how is it Robots?

MW


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## moXJO (25 September 2013)

Tyler Durden said:


> Question is, where are the Chinese getting all their money from?




I've been working with some Chinese developers who tried to explain at least why some of the property was being bought up. They mentioned that cash bribes had been cracked down on and the companies get around it by sending the kids of those on the take to an aussie uni and paid for a unit. There is a ton of money flowing in and they landbank for a long time. Its only in certain areas though so I doubt it would have much effect beyond inner city.


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## See Change (26 September 2013)

medicowallet said:


> an account opened in 2005.
> 
> Resurrected now.
> 
> ...




Hi MW 

Sorry if your confusing me with someone else .  There will probably be people on this forum who know me in real life . I use the same nick on all forums.   If tech A is still around he has met me . 

I was a regular back on Stock central and then Reefcap and joined here soon after it was set up , but back in those days it was fairly quiet .... How things change . 

I've spent most of the last ten years concentrating on property and do all my property chatting on Somersoft.

we've been gearing up in property in Sydney since about one month after the GFC hit ( good buys then ) and was looking at getting back into shares.

No hidden agendas or identities or anything like.

Cliff


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## See Change (26 September 2013)

Smurf1976 said:


> What's the problem with that?
> 
> Nobody ever said you need to read _every_ thread on the whole forum. I don't see a problem at all with a property thread on a stock forum - just only read the stock ones if you aren't interested in broader economics or property investment.
> 
> As for why it's the longest, that's easy to answer. There's a separate thread for every stock on the ASX versus one property thread covering every city, suburb and town in Australia.




Hi Smurf

No problems with that and wasn't meant to indicate that , I thought it was more ironical that I've left my normal hangout ( somersoft , a property site ) and come to a share site and the longest thread is on property .

Cliff


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## ROE (26 September 2013)

See Change said:


> Hi Smurf
> 
> No problems with that and wasn't meant to indicate that , I thought it was more ironical that I've left my normal hangout ( somersoft , a property site ) and come to a share site and the longest thread is on property .
> 
> Cliff




Welcome back plenty of info here, use search and hang around long enough you should be able to find out those that has similar mindset and strategy to your and you can just participate in their stock selection and you can ignore
The one that you don't agree rather than start a flame war -

I only use a dozen or two threads the rest I have no interest ....I keep my focus sharp on certain subject and filter out the rest -


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## See Change (26 September 2013)

ROE said:


> ..  rather than start a flame war -




Wasn't trying to , however I know how easy it is for people to misinterpret posts inparticular if it's a poster that people aren't familiar with .

Cliff


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## See Change (26 September 2013)

My thoughts on where Property market is heading.

Sydney up . Has started moving strongly in last few months . People I know were buying in Mt Druitt over the last few years for around 170-180 . Now selling for mid to high 200's and more . I don't track that market closely enough to know exactly what is happening there . Given that market peaked around 240 at the top of the last cycle and the market roughly doubles each cycle , I expect prices to hit mid 400's  at the peak of this cycle in 2770.

We bought two units in Mosman shortly after the GFC hit and we're looking at over 50 % gain since then . 

We bought two units in Manly in our SMSF around 18 months ago and sitting on nice gain in capital growth and rent . Paying for themselves at this stage . Tried to buy more in lower northern beaches in last few months but got gazumped on one and saw a grotty unit in the worst street in Manly Vale go for around 50 K over agents expectations in bidding frenzy after one week on the market . Only value we saw was in an OTP development in Dee Why called cobalt and one member of the family bought into that .

We didn't see any other value in the area so moved to buying in brisbane .  Central area was hot  with most going under offer fairly quickly . We ended up buying in the manly wynnum area which , while it had recovered from it's recent low was still below it's 2010 highs . The market wasn't frenzied  so we were able to pick up a couple of well located town houses and a waterfront unit which are all giving good returns considering their postion. 

The middle ring of Brisbane still seems to be offering good value .

There seems to be a feeding frenzy in good central areas in Melbourne , though the perennial under performers in Melb , docklands and southbank seem to be performing to expectations. At some stage they have to improve , but at the moment , in property investing circles , they're are as popular as telstra was five years ago ....  

This thread gives an idea of where people on the somersoft forum think prices will go 

Cliff


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## FxTrader (26 September 2013)

sydboy007 said:


> Unless the ultra restrictive building practices in Australia are wound back then the issue of affordability will never be addressed.



The recent surge in property prices is largely being driven by investors (in particular SMSFs) as noted in The Australian today...

_"THE Reserve Bank has warned that an $80 billion plunge into the property market by self-managed superannuation fund trustees risks pushing up house prices and undermining financial stability."_

_"The Reserve Bank also said home buyers hoping to reap big capital gains were likely to be disappointed and should entertain "realistic expectations", noting the jump in investors' share of new housing loans to a decade high of 40 per cent, thanks mainly to a jump in activity in NSW."_

http://www.theaustralian.com.au/news/diy-super-funds-take-80bn-property-bite/story-e6frg6n6-1226727261613

Unleashing SMSFs (and the bricks and mortar investing bias of their trustees) onto the property market has led to a predictable outcome.  This will undoubtedly lead to significant losses for some, poor returns for many and an ever greater burden on the taxpayer through tax deductions on property related losses.  This at a time when economic headwinds should see property prices subdued.  Asset bubbles continue their inflation.


----------



## Judd (26 September 2013)

FxTrader said:


> ........Unleashing SMSFs (and the bricks and mortar investing bias of their trustees) onto the property market has led to a predictable outcome.  This will undoubtedly lead to significant losses for some, poor returns for many and an ever greater burden on the taxpayer through tax deductions on property related losses.  This at a time when economic headwinds should see property prices subdued.  Asset bubbles continue their inflation.




And for that, one can blame Government for allowing it. It has generally been that way with Governments bending to pressure groups, such as, the SPAA, and other such interested parties with wonderful ideas in which SMSFs should be permitted to invest.  Generally, these groups have their hands in the pockets of SMSFs but dumb trustees usually don't know it.


----------



## See Change (26 September 2013)

FxTrader said:


> Unleashing SMSFs (and the bricks and mortar investing bias of their trustees) onto the property market has led to a predictable outcome.  This will undoubtedly lead to significant losses for some, poor returns for many and an ever greater burden on the taxpayer through tax deductions on property related losses.  This at a time when economic headwinds should see property prices subdued.  Asset bubbles continue their inflation.




So would you advise every one to buy in shares in their SMSF's . I have met numerous people who did that and have had to delay or change their retirement plans. We were in cash at the time of the GCF and it was the best investment decision I made .

There are always winners and losers , If you buy well positioned properties eg Manly , you will always have tenants 

Personally I wouldn't buy in lesser areas in my superfund.

The reality at the moment we are not seeing a bubble even in Sydney . Prices have been relatively subdue since 2004 and it has only just started moving and breaking new highs . ( you wouldn't call that a bubble on the share market )  Even amongst property investors , they're only just starting to buy in their SMSF. We bought our first two less that two years ago , and at that stage almost every one we dealt with said  ' Now be patient , as I haven't done one of these before ... " .

We are starting to see movement within the PPOR market and the market in Good areas in Sydney is moving up to around 1.5 and now over , and very few , if any of these are within SMSF . We just bought a new PPOR ( turramurra ) and the people we were competing with were looking for new homes.  

My perception is that this is the RBA firing a warning shot . They can't increase rates at the moment to stop the property market as it would damage the rest of the economy . The only thing they can do is tighten up LVR's but this could have unintended consequences . It would affect First home buyers the most , and end up creating more renters , putting pressure on rents , increasing returns and making it more attractive for those who can buy to buy, so we would end up with a property market more driven by returns than by capital growth . Personally I have no problems with this as we are looking at going from a growth phase to a return phase in our investing .  It would flatten growth for a while , but after a few years of saving , the First home buyers will have saved a deposit  ( or been gifted it by parents or grandparents ) or be stuck as perpetual renters . For the perpetual renters there will be political pressure to increase / bring back the First home owners grant .

For longer term investors like myself , we're already only buying at 80 % LVR rates so it would have no impact and if I can get increased rents as a result of the increased pool of tenants I'll be happy.

Cliff


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## Judd (26 September 2013)

See Change said:


> ...We were in cash at the time of the GCF and it was the best investment decision I made ..........




Yep, agree.  It was happy time for me as well.  Wesfarmers @ $13.50, CBA under $30.  Bargains everywhere. Pure joy.


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## FxTrader (26 September 2013)

See Change said:


> So would you advise every one to buy in shares in their SMSF's . I have met numerous people who did that and have had to delay or change their retirement plans.



I advise nothing of the kind.  If you want to hold out property as some kind of GFC hedge and invincible asset class then one only has to reflect on the property crash in the U.S. and how that contributed to the GFC to realize that the Australian experience was primarily good fortune - thank you China.  

If the GFC had succeeded in bringing down the global financial system, and it came uncomfortably close to doing this, property investors in Australia would not be crowing about how wise they were in hindsight.  Unlike in the U.S. where you could walk away from your mortgage debt, jingle mail does not help the property investor here.



> We were in cash at the time of the GCF and it was the best investment decision I made.



To be more precise, that would be a risk exposure decision not an investment decision, a non-investment decision perhaps.



> There are always winners and losers , If you buy well positioned properties eg Manly , you will always have tenants



Tenants perhaps, but weather you make money or not depends on many factors including the tax breaks.

I note the heightened activity of property spruikers at present and regard this as a warning as much as what the RBA is putting out at present.  The value proposition of and returns available on residential property (commercial property already in a significant decline) at present is poor and unlikely to improve unless rates stay low for a prolonged period and economic conditions improve.

The churning of established residential housing stock at ever higher prices provides little economic benefit while driving up household debt and rents.  Such investing is non-productive, an economic burden to society and needs to be curbed.


----------



## See Change (26 September 2013)

So FX trader 

The churning of property for ever increasing prices is not not defensible  and the churning of shares and futures for ever increasing prices is ...

My recollection of the GFC isn't that the property was the problem , but the securitisation of property by merchant. Bankers into things that they were not was the problem . Along with over building etc.

Australia is a different market , we have a chronic under supply of property ......but I'll leave you to your opinions. They obviously differ from mine . 

Cliff


----------



## againsthegrain (26 September 2013)

See Change said:


> So FX trader
> 
> 
> 
> ...




starting to sound like robots more and more


----------



## FxTrader (26 September 2013)

See Change said:


> So FX trader the churning of property for ever increasing prices is not not defensible  and the churning of shares and futures for ever increasing prices is



That would be established residential property, not your generalization.  Shares are a form of business ownership, and many businesses produce something for profit that represent productive use of capital that generate economic activity, employment and benefit for society.  There is no comparing the increasing profitability of a business and it's increasing share price to the non-productive use of capital deployed in churning established residential property.



> My recollection of the GFC isn't that the property was the problem , but the securitisation of property by merchant. Bankers into things that they were not was the problem . Along with over building etc.



Actually it was reckless and criminal lending by the shadow banking sector as well as the CDO packaging but that's another topic.



> Australia is a different market , we have a chronic under supply of property...



That is a highly debatable and disputable statement.  My point remains, regardless of the market, the churning of established residential real estate is unproductive use of capital and very costly to society as a whole.


----------



## kid hustlr (26 September 2013)

Great to hear your thoughts Cliff, nice to get your point of view. As you can probably tell this thread generally has a bearish view on property at the moment. Maybe because Im on the north shore myself so I'm a little biased to that area.

I do agree with you on the Sydney market, it is definitely hot at the moment and those who purchased some 12-18-24 months ago are probably feeling quite good about themselves now.

I gather you are more comfortable holding the 'blue chip' properties in your SMSF as opposed to say, some of the more rural areas? Is this because should a downturn occur, you feel those 'nicer areas' or inner city type living areas are less likely to experience serious falls?


----------



## See Change (26 September 2013)

kid hustlr said:


> Great to hear your thoughts Cliff, nice to get your point of view. As you can probably tell this thread generally has a bearish view on property at the moment. Maybe because Im on the north shore myself so I'm a little biased to that area.




Is that a shares vs property thing or a considered opinion that now is not the right time to buy property . Currently many of the property investors I know are gearing up aggressively and thinking now is a once in a decade time to invest ...low interest rates , pent up demand , low supply are key drivers , along with memories of being burnt in shares and super in the GFC 



kid hustlr said:


> I do agree with you on the Sydney market, it is definitely hot at the moment and those who purchased some 12-18-24 months ago are probably feeling quite good about themselves now.




Sydney has been warm for a while , but the last few months it's been taking off .  Interestingly the western sydney outer area is taking off at the same time if not earlier that many central areas . A house has just sold for over a mill in Fairfield and this has doubled in the last 2-3 years .  Personally I wouldn't buy in places like that unless the market was earlier in the cycle .



kid hustlr said:


> I gather you are more comfortable holding the 'blue chip' properties in your SMSF as opposed to say, some of the more rural areas? Is this because should a downturn occur, you feel those 'nicer areas' or inner city type living areas are less likely to experience serious falls?




When I first started in property investing , the nice areas had already gone up , but we did very nicely buying in Logan , rockhamptom , Townsville Hobart which were all out of favour .

This time the nicer areas hadn't gone up significantly , so I'd prefer to buy there.

We may buy in lesser areas if they haven't gone up in around 1-2 years .

Cliff


----------



## kid hustlr (26 September 2013)

See Change said:


> Is that a shares vs property thing or a considered opinion that now is not the right time to buy property . Currently many of the property investors I know are gearing up aggressively and thinking now is a once in a decade time to invest ...low interest rates , pent up demand , low supply are key drivers , along with memories of being burnt in shares and super in the GFC
> 
> Cliff




To be honest I'm not sure, I personally don't have a view, but the general tone is definitely negative in this thread. I assume many would argue on a valuation basis (performance over the last 40 years has been very strong, debt to income ratios, yields, etc etc) that property is overvalued.

Personally I'm of the view that you gotta keep dancing til the music stops and right now I think the beat is loud and clear.


----------



## See Change (26 September 2013)

kid hustlr said:


> Personally I'm of the view that you gotta keep dancing til the music stops and right now I think the beat is loud and clear.




I'm a bit the same . The reality is that the property market has roughly double every ten years and in that time frame sydney has well and truly under performed . 

Currently there is a very strong sentiment out there that is driving the market , pretty well sydney wide . So it's not just me ..... And historically sydney leads the rest of Australia , and already the central parts of Brisbane are following in the same path . It's great to say it's not supported by the fundamentals , but the same came be said for any big share price rises .

Cliff


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## sydboy007 (26 September 2013)

FxTrader said:


> The churning of established residential housing stock at ever higher prices provides little economic benefit while driving up household debt and rents.  Such investing is non-productive, an economic burden to society and needs to be curbed.






Why we ever started to view teh family home as an asset, but that's the problem we have now.  Household debt approaching GDP, sky high rents, an economy growing under mortgage debt and Government too afraid to remove negative gearing from current assets so it bleeds around $30B a yearfrom probably more productive purposes.

It will be fun till the music stops, and then it'll be like the late 80s where tens of thousands, probably hundreds of thousands this time, will be wiped out as the debt house of cards is blown over.


----------



## sydboy007 (26 September 2013)

See Change said:


> SAustralia is a different market , we have a chronic under supply of property ......but I'll leave you to your opinions. They obviously differ from mine .
> 
> Cliff




The USA pre GFC was running at approx 1.7M household formations, well above the 1.2M average.

After the GFC hit it dropped to just 500K.  The undersupply quickly turned into oversupply.

There's a massive amount of spare rooms out there.  Demand can dry up very quickly when you can't afford to pay the rent any more.  Lets see how truly exception Australia is during the next recession.  I doubt our housing bust will be much different to any outher countries, except maybe in size and length.


----------



## sydboy007 (26 September 2013)

See Change said:


> I'm a bit the same . The reality is that the property market has roughly double every ten years and in that time frame sydney has well and truly under performed .
> Cliff




Real price rises for Australian property is a very recent phenomenon


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## young-gun (26 September 2013)

Can someone please tell me where the hell the growth in property prices is going to come from? Other than moronic speculators and a bunch of people(which other than this thread on occasion appears to be the vast majority) that still think property prices will only go up from here? The good ol' days have past. Those with a lot of capital may do well for a short period.

We are marching, and have been for some time, into unprecedented territory on a global scale.  Seems most have their eyes closed.


----------



## Smurf1976 (26 September 2013)

young-gun said:


> We are marching, and have been for some time, into unprecedented territory on a global scale.  Seems most have their eyes closed.



+1 And there are plenty of unique factors that we haven't experienced previously. Among them:

Development of China and other countries, greatly reducing the % of the world that is "undeveloped" and increasing that which is "developed".

Credit and other economic factors.

Demographics both Australian and overseas.

Oil supply (basically flat) versus surging consumption in previously undeveloped countries.

Transformation of the Australian economy from value added manufacturing to what is basically a traditional Third World model - the supply of raw materials for export plus a reliance on service industries.

The imminent surge rise in gas prices for most Australian states. This not only affects household bills but also manufacturing and to some extent electricity prices. So it affects practically every business and household in most Australian states.

Many things which used to be done either by government or "boring" privately owned monopoly utility companies are now privately run and are themselves a market. 

An unsustainable reliance on one-off asset sales to fund ongoing government operations.

Changing consumer preferences. Anecdotally, it seems that many 20-something's aren't overly interested in owning a car or even learning how to drive one these days whereas various forms of electronic downloads are now a significant business. The desire to own a suburban house on a reasonable sized block also seems to be declining, indeed in the major cities many seem to have already given up on the idea completely.

Australia hasn't been involved in a major military war for quite some time. Sooner or later, that will probably change (when and with whom is hard to predict, but there have always been wars and most likely always will be).

The information economy. What used to be either unavailable or obtained only by a few with niche interests is now freely available to everyone. And yet much actual knowledge, as distinct from information, is perhaps less known today than ever before.

Climate change. A controversial topic, but if the climate is changing (for whatever reason) then that has massive implications in all sorts of areas.

Globalisation of everything from the supply chain to consumer purchasing. No longer does a rise in retail spending translate to a boom in the shops in your own town, state or even country. Not long ago if you wanted to purchase something from the US (for example) then most would only consider it if they were already physically travelling to the US for some other reason (eg holidays). Now you shop overseas whilst sitting on the bus (for example) right here in Australia.  

And no doubt many more that I haven't listed. There are a lot of factors that are very different now to at any time in living memory.


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## sydboy007 (26 September 2013)

young-gun said:


> Can someone please tell me where the hell the growth in property prices is going to come from? Other than moronic speculators and a bunch of people(which other than this thread on occasion appears to be the vast majority) that still think property prices will only go up from here? The good ol' days have past. Those with a lot of capital may do well for a short period.
> 
> We are marching, and have been for some time, into unprecedented territory on a global scale.  Seems most have their eyes closed.




The debt levels of the household sector are just scary.  Nearly a years GDP IRRC.  Something like 1.2M landlords, so how a recession plays out when so many have negatively IPs, no idea, but I expect the fallout will be quite swift and brutal.  Only have to look at how things played out in the USA / Spain / Ireland to see how quickly house price inflation can evaporate.  It may be the least bad outcome for the country.

The big problem we all have is:

* Resi property is over priced

* Commercial property is fully priced and vacancy rates are starting to get quite high ~10% OZ wide.

* Share market is realtively fully valued with pockets of inflated prices (mainly due to the financial repression going on)

* Interest rates are artifically low so most forms of lending are barely worth it after inflation and tax.

About the only area I can see sort of worth investing in is the odd corporate bond, but I don't see that lastig too long as the hunt for a relatively stable income gets worse.  Lots of TDs are goign to be rolling over and people lookign at 40% income drops 

So with all that i can see why too many see the safety in bricks and mortar.


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## ftw129 (27 September 2013)

FxTrader said:


> The churning of established residential housing stock at ever higher prices provides little economic benefit while driving up household debt and rents.  Such investing is non-productive, an economic burden to society and needs to be curbed.






FxTrader said:


> That would be established residential property, not your generalization.  Shares are a form of business ownership, and many businesses produce something for profit that represent productive use of capital that generate economic activity, employment and benefit for society.  There is no comparing the increasing profitability of a business and it's increasing share price to the non-productive use of capital deployed in churning established residential property.
> 
> 
> That is a highly debatable and disputable statement.  My point remains, regardless of the market, the churning of established residential real estate is unproductive use of capital and very costly to society as a whole.






sydboy007 said:


> Why we ever started to view teh family home as an asset, but that's the problem we have now.  Household debt approaching GDP, sky high rents, an economy growing under mortgage debt and Government too afraid to remove negative gearing from current assets so it bleeds around $30B a yearfrom probably more productive purposes.
> 
> It will be fun till the music stops, and then it'll be like the late 80s where tens of thousands, probably hundreds of thousands this time, will be wiped out as the debt house of cards is blown over.




So, it's safe to assume then that when this inevitable collapse comes (that so many of you with such strong morals are waiting for) that you will not be jumping in on the feeding frenzy and buy as much as you possibly can... After all, such good people like yourselves need to lead by example right?

How very honorable. Good on you


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## DB008 (27 September 2013)

Supply and Demand.

Not enough new dwellings built over the years (ie, shortfall), there is high demand = prices go up.


----------



## FxTrader (27 September 2013)

ftw129 said:


> So, it's safe to assume then that when this inevitable collapse comes (that so many of you with such strong morals are waiting for) that you will not be jumping in on the feeding frenzy and buy as much as you possibly can... After all, such good people like yourselves need to lead by example right? How very honorable. Good on you



You can leave your assumption in the trash can of useless commentary where it belongs.  Predicting a downturn is quite different from wishing for one.  One wonders what high moral ground you're trying to occupy by attacking the assumed morals of others here, a judgement you make based on a few comments.  This says more about your character than anyone else here.


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## sydboy007 (27 September 2013)

ftw129 said:


> So, it's safe to assume then that when this inevitable collapse comes (that so many of you with such strong morals are waiting for) that you will not be jumping in on the feeding frenzy and buy as much as you possibly can... After all, such good people like yourselves need to lead by example right?
> 
> How very honorable. Good on you




Not sure why morality is part of this discussion?

I think you can easily see most people in this thread don't see the economics of property stacking up as an investment as things stand.  Very low yield, high holding costs.

Do I look forward to a property crash?  Nope.  Do I think we've been stupid enough to get ourselves into this situation and deserver what we get.  Yes.  Would I be tempted to invest in property if prices fell?  They'd have to at least halve and then it would depend on what the yield was with that scenario playing out.

No on forced all the over indebted to take on too much debt.  I never understood why someone wanted to sign up for a 25 year mortgage that consumes 30%+ of their income.  Talk about stress and precarious financial position.

If we could go back to seeing the family home as shelter, not an asset, I think the economy would be much better for it.


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## craft (27 September 2013)

sydboy007 said:


> Not sure why morality is part of this discussion?




The morals of the high housing price is interesting – not at an individual level but the bigger picture.

Paying high multiples of earnings and the associated large interest burden that goes with that over a lifetime means the new generation are paying a much higher percentage of their lifetime income for shelter then those of previous generations.  The beneficiaries are those who are leaving the market or downsizing and have enjoyed the run-up in prices over their lifetime.

It is effectively an intergenerational transfer of wealth, facilitated to some extent by the taxation arrangements put in place by the predominant voting bloc that benefit from that transfer of wealth.

To the extent the older generation does not consume the wealth that has been created by a younger generation paying too much to get into housing,  but instead pass the house or wealth on – In the absence of death duties that tax that rentier wealth you face another moral challenge of creating  a class distinction between those families that own housing and those that can’t break in due to the high prices.

A society without taxation warping the property market would see lower house prices and be much more equitable.


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## FxTrader (27 September 2013)

craft said:


> The morals of the high housing price is interesting – not at an individual level but the bigger picture.
> 
> Paying high multiples of earnings and the associated large interest burden that goes with that over a lifetime means the new generation are paying a much higher percentage of their lifetime income for shelter then those of previous generations.  The beneficiaries are those who are leaving the market or downsizing and have enjoyed the run-up in prices over their lifetime.
> 
> ...




 +1

Exactly right Craft, the entrenched interests of property investors in particular are driving the market distorting taxation policies that will ensure a greater proportion of future generations will be forced to rent rather than own.


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## ftw129 (27 September 2013)

FXTrader,



FxTrader said:


> My point remains, regardless of the market, the churning of established residential real estate is unproductive use of capital and very costly to society as a whole.






FxTrader said:


> The churning of established residential housing stock at ever higher prices provides little economic benefit while driving up household debt and rents.  Such investing is non-productive, an economic burden to society and needs to be curbed.




Sydboy has already admitted he will take advantage of significant falls should they arise.



sydboy007 said:


> Would I be tempted to invest in property if prices fell?  They'd have to at least halve and then it would depend on what the yield was with that scenario playing out.




Followed by



sydboy007 said:


> If we could go back to seeing the family home as shelter, not an asset, I think the economy would be much better for it.




How about you FXTrader? After doing a good job of convincing readers of how bad investing in residential property is, will you take advantage of significant falls when they occur? Let's say falls of at least 50%...


----------



## See Change (27 September 2013)

Hi Syd boy . 

I've seen that graph before , linked from one of the regular D&G posters we have on Somersoft . Personal research and statistical curve fitting to support one persons  theory . ( lies , damn lies and statistics ...) . 

The reality is that prices were not flat from 1880 to 1950.  

One thing I learn early on in my share trading days was to look at exponential charts . If he plotted that on an exponential chart the rise would be a straight line and certainly not as sinister as he would like to portray . 

I'm not that interested in " adjusted Values " . When I buy a property , I'm not personally paying the full Price . I'm borrowing everything ( the deposits come from an LOC on my PPOR which I fully own ) so what the property costs me is the cost of the holding  costs over the rent ) .  My borrowings stay the same and the value of my properties go up .  For example two units I bought just after the GFC have gone up around 500 K while costing me around 25 K to hold.   The rent has gone up and with a fairly inexpensive renovation  we can increase the rent to the point where we will have income coming in from these properties.  We'll get around to organising that soon , but at the moment we've been busy buying more properties.  Eventally my borrowings on those properties will be insignificant compared to their value and rental return.




young-gun said:


> Can someone please tell me where the hell the growth in property prices is going to come from? Other than moronic speculators and a bunch of people(which other than this thread on occasion appears to be the vast majority) that still think property prices will only go up from here? The good ol' days have past. Those with a lot of capital may do well for a short period.
> We are marching, and have been for some time, into unprecedented territory on a global scale.  Seems most have their eyes closed.




AS pointed out , prices go up because demand outstrips supply . Free market economics 101 . I'm surprised someone on a share forum needs to ask that .....

If as you suggest , the majority of people expect this  ( however wrong you may feel they are )  then in all likelhood it's going to happen .  

People are paying more for properties because they can afford too.... 

Sydney has only just started reaching new highs after 10 years of sideways movement.

Marching with their eyes closed .  Yes ,there are many people doing that . I'm not  . During the last boom I sold down many of the properties so when the GFC hit I had an LVR of around 15 % .  When the GFC hit we were able to make cash offers to people who hadn't been that prudent .  

Was it Buffet who said that wealth creation is the the transfer of money from the impatient to the patient . I'm patient . The business cycle is a reality and  I'm happy to take advantage of it .  

We will sell down our first property  somewhere between 1-3 years from now depending on how fast the market rises . We have purchased properties specifically with the aim of selling them to clear debt on our remaining properties . The aim at the end of the current boom is to have a portfolio completely paid off.

There will be another slump at the end of the next cycle . I'll be surprised if it's 40 % , but if it is I'll be on the sidelines waiting to buy.



sydboy007 said:


> The debt levels of the household sector are just scary.  Nearly a years GDP IRRC.  Something like 1.2M landlords, so how a recession plays out when so many have negatively IPs, no idea, but I expect the fallout will be quite swift and brutal.  Only have to look at how things played out in the USA / Spain / Ireland to see how quickly house price inflation can evaporate.  It may be the least bad outcome for the country.
> The big problem we all have is:
> * Resi property is over priced
> * Commercial property is fully priced and vacancy rates are starting to get quite high ~10% OZ wide.
> ...




Ever since I've become interested in investing I've seen people spouting their view on why various types of investing won't work . I've learnt not to listen to them and trust my own observations.  There are always Doom & Gloom merchants , some  more high profile than others. 

Currently we're hearing about a property buble and how we will have a 40 % slump .

 Do you remember Steve Keen ?  Despite the Great Recession , prices only came back around 5 % .


Currently the world economy is getting back on track and I don't expect the next slump for a while . By then I'll be debt free or with a very low LVR and bullet proof . 

In terms of a property bubble , as said my observations are the Sydney , which is the only hot market in australia at the moment is leading the charge  , but has only recently set new highs .

What does the the RBA say ?

_Last week, the Reserve Bank hosed down fears of a bubble as ''unrealistically alarmist'', saying prices were rising in line with incomes over the past decade_

Another fear raised has been that the RBA may cap the LVR at which banks can lend money . NZ has gone done this path to a degree , but they haven't put a blanket cap , just put a restriction on how many loans can be done at higher LVR but their central bank has greater powers.

While generally debunking concerns of a property bubble ANZ Australian chief executive Phil Chronican  said 

_if prices surged for a couple of years time and it concerned authorities, macroprudential policies could be appropriate.

If the Reserve Bank saw an asset price rise that concerned them, but otherwise wanted to keep interest rates low in order to stimulate other activity, they might look at whether they could in conjunction with APRA do something of that nature.
I don’t think we’re anywhere near that level of thinking at the moment_

A two year time frame is fine by me ( any times ok actually )  . By then I'll  have a low debt level and be looking for my next opportunity.

Another concern raised at the moment is the involvement of SMSF as being a factor in driving the Property . The reality at the moment 0.48 % of loans in property are within SMSF's... ( 

Guys , If you want to stay on the side line and winge about why prices shouldn't and won't go up , while they obviously are going up  , Fine by me . All yours and my pontificating on this forum wont change what is in the process of happening  . For me , the point of posting on a forum is to give back something in return for what other people gave me in terms of education ten years ago . If you want to listen .......

I always need people to pay the rents in my investments properties and the more Gen X'ers who invest in the share market or spend all their money on OS holidays or the latest 3 series rather than getting into the property market , the happier I am .

Now to the really important question for the weekend . After disposing of my swannies , can Freo go on and beat hawthorne . Go the Dockers 

Cliff


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## 13ugs13unny (27 September 2013)

See Change said:


> I always need people to pay the rents in my investments properties and the more Gen X'ers who invest in the share market or spend all their money on OS holidays or the latest 3 series rather than getting into the property market , the happier I am .




Depends, that's from your point of view & how you see it.

Gen X'ers I believe prefer the share market as it is more liquid. The Sydney property market has plateau'd and as you stated, soften somewhat, but I think it will stick around that scenario for sometime to come. As an Xgener I think another property boom being repeated is unlikely, even though I own my own.

Rent yields  in Sydney have declined due to enormous amount of new stock being constructed, and Gen X'ers have plenty to chose from, and the LAFHA {living away from home allowance has been abolished.}

If you own property as an xgener they're probably better to be considered as existing future bricks&mortar super funds, where Xgeners like me will rent them out as we downsize into one bedders or studios inner city like baby boomers have done.

Nothing wrong with property, but as a Xgener I feel a mix of cash. shares, and the home you own or rent to be a good mix, without running the risk of been shafted by higher interest rates in the up cycles as we were several times in the past{we've learnt our lesson}.


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## See Change (27 September 2013)

13ugs13unny said:


> The Sydney property market has plateau'd and as you stated, soften somewhat, but I think it will stick around that scenario for sometime to come.
> 
> Rent yields  in Sydney have declined due to enormous amount of new stock being constructed, and Gen X'ers have plenty to chose from, and the LAFHA {living away from home allowance has been abolished.}
> 
> .






Sorry Bugs but what planet are you on . ALL of the current commentary on the property market is concerning about whether Sydney is in a bubble. ( it's not )  Plateaux  .....Softening ....who mentioned that 

Softening rents ...We've just had a vacancy . increased the rent $ 50 / week and gone straight away .

People having plenty to choose from ... not any where I've heard about in sydney. 

Just bought a house in turramurra and we've rented it for $20 / week more than it was renting previously . Gone within a week.

Are you for real or are you still trying to work out who framed roger ...?. 

If you're going to contribute to this debate , getting you basic facts wrong undermines any credibility you think you might have had 

Cliff


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## sydboy007 (28 September 2013)

craft said:


> The morals of the high housing price is interesting – not at an individual level but the bigger picture.




totally agree with you.  But i felt the comment was at the individual level.

The whole transfer of wealth is why it gawls me to see pensioners with huge illiquid assets receiving full pensions, while below median wage earners are barely able to pay the rent and utilities to have the money left over for food and the odd luxury that makes life worth living.

But we have the tax system we have and until there's enough anger to take on the vested interests that are doing quite nicely from the status quo things wont change


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## sydboy007 (28 September 2013)

See Change said:


> Sorry Bugs but what planet are you on . ALL of the current commentary on the property market is concerning about whether Sydney is in a bubble. ( it's not )  Plateaux  .....Softening ....who mentioned that
> 
> Softening rents ...We've just had a vacancy . increased the rent $ 50 / week and gone straight away .
> 
> ...




I live in Erskineville Sydney.  Go back 12-18-24 months and i'd rarely see a fore rent sign on a property in the area.  They'd get advertised on line / agent and be rented out that quick no use putting up a sign.  Last 6+ months I've noticed properties with for retn signs out front for quite some time.

You like proeprty and have done well, that's fine, but you can't argue with the fact that part of the great wwonderful property boom was the halving of interest rates, the increase in double incoem families, and the advent of banks pushing credit onto anyone they could.

All those tail winds are gone, and now I see a future where the demographics move against housing


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## See Change (28 September 2013)

sydboy007 said:


> I live in Erskineville Sydney.  Go back 12-18-24 months and i'd rarely see a fore rent sign on a property in the area.  They'd get advertised on line / agent and be rented out that quick no use putting up a sign.  Last 6+ months I've noticed properties with for retn signs out front for quite some time.
> 
> You like proeprty and have done well, that's fine, but you can't argue with the fact that part of the great wwonderful property boom was the halving of interest rates, the increase in double incoem families, and the advent of banks pushing credit onto anyone they could.
> 
> All those tail winds are gone, and now I see a future where the demographics move against housing




I don't know erskinville personally so can't comment . One observation though is that agents like advertising themselves and will often leave signs up for a while after somewhere has sold or rented as ongoing advertising. 

The reality is that property has been doubling every ten or so years for a long time . 

We moved to Sydney in 69 and the preceeding year property had gone up significantly . My parents paid the really expensive price of  25 K for a house that he could have bought closer to 15 k the year before . ( someone paid mid 1's for it a few years ago and bulldozed it for land value. ) . There have been booms in the 70's . 80's etc on an ongoing basis . In the recession we had to have Prices where booming while rates were soaring . every one was buying as the rates went up so they could lock in before they went up further .

In the late 80's prices doubled in little over one year . Our friends bought in Concord west in the 90,000's . We rented it off them while they were over seas and two years  later we bought a Sh... hole two streets away for 205, OUtside toilet .. cracks in every wall and warped ceilings . Went sideways for next seven years .

Most of the booms I've been though didn't have the reason of double incomes , low rates or banks pushing loans.

As a newly graduated Professional in the mid 80's the banks wouldn't lend me money. When we bought in the late 80's the banks wouldn't lend us money until we got  a small loans for our parents to help with the deposit > I know many people who had to do the same , and most of those people help their kids out now. If not , you can get loans for 95 % LVR now , where as we could only borrow at 80 % so some things are easier.

There are always reasons why not to invest. 

I will be incredibly surprised if we see property in Sydney back to the level it is now and I expect it to go up around 50 % in the next 3-5 years and double in the next ten. I won't be surprised if that's conservative in time frame.

You will always get individual properties that sell very cheaply in a pull back for individual reasons. Stats say that around 1/3 of sales are under duress , but as a market as a whole , unlikely.

Cliff


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## Bill M (28 September 2013)

13ugs13unny said:


> Rent yields  in Sydney have declined due to enormous amount of new stock being constructed, and Gen X'ers have plenty to chose from, and the LAFHA {living away from home allowance has been abolished.}




This is not true. I currently own an IP on the Northern Beaches of Sydney and I have been renting it out for 4 years now. Every year the agent advises me to raise the rent so I do and the unit has never been vacant. In that 4 year period I have had 3 tenants, the last one just signed another 1 year lease and is commencing her 3rd year there. On the northern beaches there is very little stock to rent, just ask anyone who wants to rent a place how hard it is to find a place. Right now a mate of mine is renting a self contained converted garage in Brookvale for $285 p/w. Rents are continuously on the way up and so are prices.


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## See Change (28 September 2013)

*Don't expect the brakes applied any time soon*

One aspect to think about is that the Government will be relying on increasing property prices to boost the economy , peoples confidence wealth & spending will go up . The government aren't going to cut the deficit by cutting spending , b ut by increased income. The property industry is a prime mover in the economy .  So what shares should you be buying ...

_Treasurer Joe Hockey told reporters in Canberra that he was not worried about a housing bubble and rising prices should help generate new construction.

“The most important point at this stage is that there is confidence back in the real estate market in Australia,” Mr Hockey said.

“Rising house prices actually help to make marginal property development viable. And there is a shortage of supply out there and what this will do is make supply more readily available.”

Mr Abbott also welcomed rising property prices.

“Don’t forget … if housing prices go up, sure that makes it harder to get into the market, but it also means that everyone who is in the market has a more valuable asset,” he said…

“I would be confident that the Reserve has got its eye on housing prices and will appropriately manage the level of interest rates.”_

There are more people in the market , than trying to get in .....


Cliff


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## ftw129 (28 September 2013)

sydboy007 said:


> totally agree with you. But i felt the comment was at the individual level.




It was.



sydboy007 said:


> The whole transfer of wealth is why it gawls me to see pensioners with huge illiquid assets receiving full pensions, while below median wage earners are barely able to pay the rent and utilities to have the money left over for food and the odd luxury that makes life worth living.




sydboy007, I'm just trying to figure out what you're (and a few others) intentions are. You play the violin for the poor regular Aussie battler that just wants to put a roof over their heads for their family yet you openly admit you'll happily participate in the exact same thing that you're preaching against.

What exactly are you trying to achieve here?


----------



## See Change (28 September 2013)

13ugs13unny said:


> and the LAFHA {living away from home allowance has been abolished.}
> 
> .




I must admit the effect of this has been tragic  , especially on those poor people who own Sydney water front properties as the massive number of Senior Executives who rely on the LAFHA to afford these waterfront mansions opted for cheaper accomodation 

This market certainly did come back and until recently you could buy good Waterfront properties in Sydney for down to 4 mill. Sadly I couldn't afford one  . THey have started moving as people see this represents good value.

There was / is townhouse for sale on the waterfront in Seaforth recently  in the 2 mill's which sounded quite good value.

Luckily this factor didn't seem to affect anyone else 

cliff


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## moXJO (28 September 2013)

All I can say is prices are jumping a fair bit and Im getting out bid on a lot of the houses Ive been lookin at. Must be time to develop and sell.


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## sydboy007 (28 September 2013)

ftw129 said:


> It was.
> 
> 
> 
> ...




I have my own home so not that interested in more property.  Over the last year I've read a lot and started to change my attitude towards good corporate bonds.  They wont shoot that stars out, but do provide a reasonable stable income year in year out.

I do feel sorry for those younger than me (I'm 41) that weren't able to buy at  reasonable price like I did, and there's many factor to it, the worst probably being the very strict planning laws we have here and the way those in a suburb will do their best to repress new development.  I look at how much more 'vibrant" and liveable my area has become with the building of small 3 storey apartment blocks.  Erskineville village is quite a nice place these days, but 10 years ago it was half boarded shops for lease.  The initial negative reaction from some of the house owners around me was your typical NIMBYism.  I had no problem with it, especially since they were converting semi derelict warehouse and old electricity substation buildings.  It's probably good for the environment too since  a majority of these people work in the CBD or near by.

I'd say if we do hit a recession and most asset classes go to poo, I'd be more interested in buying stocks or bonds at cheap prices than property.  Why?  Because when i bought my house in 97 I sold 40K of shares to help fund the purchase.  Those shares would be worth around the 280-300K mark, not including all the dividends they'd have paid me over that period.  Throw in the extra money I'd have been saving and the return would have been far better than from my house.   Property is a big illiquid asset that's expensive to buy and sell.  It makes up too much of my personal wealth so until I have a diversity of wealth I really don't see myself buying more of it.

I don't think I'm participating in what I'm preaching against.  At the moment i think most of the people who are buying investment properties, and most buying a family home, are specufestors.  Their hope is that somehow the real growth in prices will continue, yet we've had nigh on 20 years of real growth, most of it above the rate of income growth.  So how long can a certain asset class increase in value more than incomes before no one can afford to buy it, or it's just a pass the parcel amongst those who can with the last one holding the exploding bomb?

I can't believe people are still buying with gusto now, especially when i think it's more likely unemployment is going to be higher next year than it is now, where the free income kick from rising commodity prices is going into reverse and likely to take another 20% or so from us, where boomer reitrements start to shift the demographics against housing.

The tax system in Australia has perverted the way we see property.  Most IP holders only talk about the negative gearing benefits, yet have trouble quantifying the annual cost of the property, and rarely do I hear them mention inflation.  Most seem to actively try to filter out when I say if you loose 1.5% to NG and inflation is 2.5% then you need to make 4-5% a year in capital growth just to stay even after maintenance costs are factored in.  To me that's not an investment, that speculation.  Generally an asset is worth the income it can produce, though (artificial) scarcity can drive the value up.

I'm sure some will stay make money out of property, kudos to them, but in general terms I don't see it turning out well for the majority who are highly geared into property.  Not when debt levels have barely retreated since the GFC.


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## ftw129 (28 September 2013)

sydboy007,

Firstly, thank you for your detailed response but I don't know if you don't understand what I'm trying to point out or if I'm not making myself clear.

You have clearly illustrated in many ways how you disapprove of the family home being used as an investment vehicle to profit off (I can't be bothered finding the many many ways in which you've expressed this) but then when asked if you would participate in the next cycle should there be a significant pull back then you admit that you would.



sydboy007 said:


> Would I be tempted to invest in property if prices fell?  They'd have to at least halve and then it would depend on what the yield was with that scenario playing out.




Do you not see the contradiction?

(At least you seem to be honest. I wonder if any of the others here that see residential property investment as some sort of cancer on society are willing to admit that they will take full advantage of the situation should some sort of crash occur and their "guidelines" for the "right" returns are met?)


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## joku (28 September 2013)

ftw129 said:


> I wonder if any of the others here that see residential property investment as some sort of cancer on society are willing to admit that they will take full advantage of the situation should some sort of crash occur and their "guidelines" for the "right" returns are met?)




There are plenty of people with that exact view, it's just a minority. I'd argue more people would agree with it if they knew more and weren't blinded by greed. It's not up to us as individuals to withdraw participation where we see flaws in a free market system. It's up to government to fix government policy failure. Whether it is by rolling back tax perks or just putting a limit on the number of residential properties an individual can own or whatever other effective method I don't really care. I can't see it happening though. We're too far down the track, and government these days is too busy fussing over short-term non-fundamental issues like creating jobs regardless of their benefit to society and increasing GDP... which is what gets us in messes like this in the first place.


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## Smurf1976 (28 September 2013)

Just about every problem we have today, economic, social, strategic and environmental, has short term thinking as its' ultimate cause.

The trouble with spending, using up, selling off etc everything now is that tomorrow does come.

If you measure wealth in real, physical terms rather than fiat money then it seems that we are slowly but surely going broke. A generation ago, Australia had the ability to manufacture just about everything we needed. Homes were either owned outright, or with relatively modest (relative to income) money borrowed from the bank. Public utilities were in public ownership and so on.

Now we have foreigners owning, via mortgages, much of the same housing we already had. In effect, as a nation we simply borrowed a lot of money from overseas, backed it with the same houses we already had, then spent that money on something else (consumption). In a broad sense, that's what we've done - borrowed a heap of money and spent it in order to obtain, well, not much at all. It's much the same with governments too. They sold the railways, buses, power stations and even office buildings to "private" owners who, it turns out, are quite often foreign governments and thus not "private" at all. Now the money has been spent, debts are soaring and we're in a far worse position than we were previously. The debt is back but we no longer have the physical assets we had previously.

All of this comes down to short term thinking. GDP may well be going up, but it is doing so largely because we keep exporting our real, tangible wealth in order to fund consumption. That must surely end at some point and future generations won't thank us that's for sure.


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## sydboy007 (28 September 2013)

Smurf1976 said:


> Just about every problem we have today, economic, social, strategic and environmental, has short term thinking as its' ultimate cause.




We can see this with the loss of oil refinery in the country.  The way we're going we wont even be able to make a subsidence level of petroleum products.  Just imagine going to war and not being able to fuel your army let alone the productive capacity of the country.

When I look at the debt bindge we went on after the financial deregulation of the 80s, I do wonder if it was a good thing for us.  We might feel richer, GDP is "bigger" and we can stand proud to be one of the largest economies in the world, but it's built on a mountain of debt.

I doubt things will change unless we change the tax system and stop making the family home some sacrosanct tax shelter.

Our political parties are more interested in getting into power than tackling the problems we face.  It grates on me that they never mention the demographic headwinds.  I've read articles that estimate properties prices are about 30% above what they would be due to the boomer population bulge, so with the increase in the dependency ration we're now facing a lot of that 30% is likely to be given up over the coming decades.


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## young-gun (28 September 2013)

See Change said:


> AS pointed out , prices go up because demand outstrips supply . Free market economics 101 . I'm surprised someone on a share forum needs to ask that .....




Was really more of a rhetorical question, but thanks so much for the clarification.



> If as you suggest , the majority of people expect this  ( however wrong you may feel they are )  then in all likelhood it's going to happen .




People have 'expected' prices to always go up in other countries too.



> People are paying more for properties because they can afford too....




Which brings me back to, where are these people coming from? You boomers are leveraged to the hilt, there is only so much more debt the ignorant ones can take on, not to mention theyll be shifting into retirement soon. Most in my generation cant afford to purchase to push prices higher. Gen X is smaller than the boomers also.



> Marching with their eyes closed .  Yes ,there are many people doing that . I'm not  . During the last boom I sold down many of the properties so when the GFC hit I had an LVR of around 15 % .  When the GFC hit we were able to make cash offers to people who hadn't been that prudent.




You seem to think property is on it's way to higher highs and more golden days, I'd say you have at least one eye closed. Also when you are dealing with 85% cash it removes a lot the major risk of a crash, would you care to start your property investing gig again today with say 10% of a property you desire? Plus the cash for stamp duty of course.



> Was it Buffet who said that wealth creation is the the transfer of money from the impatient to the patient . I'm patient . The business cycle is a reality and  I'm happy to take advantage of it.




Don't know, I'm not a big fan of buffett. 



> There will be another slump at the end of the next cycle . I'll be surprised if it's 40 % , but if it is I'll be on the sidelines waiting to buy.
> 
> *Currently the world economy is getting back on track* and I don't expect the next slump for a while . By then I'll be debt free or with a very low LVR and bullet proof .




Now I know for certain, you are just trolling.

In terms of a property bubble , as said my observations are the Sydney , which is the only hot market in australia at the moment is leading the charge  , but has only recently set new highs .

What does the the RBA say ?



> _Last week, the Reserve Bank hosed down fears of a bubble as ''unrealistically alarmist'', saying prices were rising in line with incomes over the past decade_




Great news, and right on cue might I add. Was it 2? or 3? months before Fed Res chairman Ben bernanke said that there was most definitely not a housing bubble, only to see it completely collapse?

I'm glad that house prices are in step with incomes. That must be how the median got to 6 times the average income instead of 3.



> A two year time frame is fine by me ( any times ok actually )  . By then I'll  have a low debt level and be looking for my next opportunity.




If that's all you need you may be ok. If we aren't in a bubble now low rates will see that we will be. Hard for people to identify a bubble until it's burst sometimes.

I'm not a fence sitter on property. I'm out. I know I know, I'm missing out on the opportunities of a life time.


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## sydboy007 (29 September 2013)

move along people, there's nothing to see here.  Hockey and Abbott would see rising property prices just one of the things to return them to the Golden Howard years.

From the AFR:

Treasurer Joe Hockey told reporters in Canberra that he was not worried about a housing bubble and rising prices should help generate new construction.

“The most important point at this stage is that there is confidence back in the real estate market in Australia,” Mr Hockey said.

“Rising house prices actually help to make marginal property development viable. And there is a shortage of supply out there and what this will do is make supply more readily available.”

Mr Abbott also welcomed rising property prices.

“Don’t forget … if housing prices go up, sure that makes it harder to get into the market, but it also means that everyone who is in the market has a more valuable asset,” he said…

“I would be confident that the Reserve has got its eye on housing prices and will appropriately manage the level of interest rates.€


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## Bill M (29 September 2013)

young-gun said:


> You boomers are leveraged to the hilt, there is only so much more debt the ignorant ones can take on, not to mention theyll be shifting into retirement soon.




Steady on Pal, I and a lot of my friends are boomers. I do not have even 1 cent of debt, totally debt free and so are most of my boomer mates. Shifting into retirement, yes we are but most of us enjoy the steady rental income that we receive. The same old question comes up with my boomer mates. It is, if I sell now what will I do with the money that can give me the same return on our long held IP's? Cash? 3% Term Deposits 4%. Shares? In retirement? Good luck with that, we do not want to lose our capital under any circumstances. (Super Funds are only just breaking even after 5 years). And as we debate it over a beer in the RSL club we just nod our heads and say, I'll just leave it where it is.


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## medicowallet (29 September 2013)

Smurf1976 said:


> Just about every problem we have today, economic, social, strategic and environmental, has short term thinking as its' ultimate cause.
> 
> The trouble with spending, using up, selling off etc everything now is that tomorrow does come.
> 
> ...




I would like to buy you a virtual beer : :drink:

If only people realised how stupid we are!

MW


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## young-gun (29 September 2013)

Bill M said:


> Steady on Pal, I and a lot of my friends are boomers. I do not have even 1 cent of debt, totally debt free and so are most of my boomer mates. Shifting into retirement, yes we are but most of us enjoy the steady rental income that we receive. The same old question comes up with my boomer mates. It is, if I sell now what will I do with the money that can give me the same return on our long held IP's? Cash? 3% Term Deposits 4%. Shares? In retirement? Good luck with that, we do not want to lose our capital under any circumstances. (Super Funds are only just breaking even after 5 years). And as we debate it over a beer in the RSL club we just nod our heads and say, I'll just leave it where it is.




Sorry I wasn't  generalising or hinting that cliff is up to his eye balls in debt. But fact is a lot are. Not everyone cares nor do they understand or even think about the few things you outlibe above. 

If I was a boomerwith little debt of course id hold all my properties  also. My arguement has always been that it makes little sense to START at this point in time.  Which would require loading up on debt with poor returns.


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## See Change (29 September 2013)

young-gun said:


> Sorry I wasn't  generalising or hinting that cliff is up to his eye balls in debt. But fact is a lot are. Not everyone cares nor do they understand or even think about the few things you outlibe above.
> 
> If I was a boomerwith little debt of course id hold all my properties  also. My arguement has always been that it makes little sense to START at this point in time.  Which would require loading up on debt with poor returns.





Wouldn't say up to eye balls , but geared up more than was  pre GFC . At that stage LVR was around 15 % , now up to around 65 % and the gross value of our portfolio has around tripled .

So how do you get debt free ? You can pay it down with rent and wage .... Very slow process , or you can sell properties and use the capital gain to pay off the remaining properties . This is part of the reason we've geared up . 

Actually I think now is a good time to start , if you haven't already started . 

The returns come from the capital gain . Will be interesting to see who is right . 

Cliff


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## 13ugs13unny (29 September 2013)

young-gun said:


> Sorry I wasn't  generalising or hinting that cliff is up to his eye balls in debt. But fact is a lot are. Not everyone cares nor do they understand or even think about the few things you outlibe above.
> 
> If I was a boomer with little debt of course id hold all my properties  also. My arguement has always been that it makes little sense to START at this point in time.  Which would require loading up on debt with poor returns.




And there it is. 

You can easily make out by the comments how the generational divides are getting so much wider, between Xgeners like me and baby boomers and Ygeners,  cliff was mentioning water front properties in Sydney before , probably afforded by 1% of the population which doesn't relate to any general consensus in regards to property anywhere else in Australia. Certainly a bridge too far for young gun.

The issue with the older posters here including myself is that we run the risk of the rug being pulled from under our feet by the younger generation that as young gun clearly states to the effect there is no point saddling up debt for the younger generation.

Property is a long term generational transfer of tangible type of asset -monetary or inheritance. If Xgeners don't buy from the boomers, and Ygeners don't take the first step, then I don't see a bullish property market. That is still my view. Why?

Because when Ygeners read jobs being out sourced overseas it doesn't give them job security therefore comfort, just one of a plethora of reasons too many to mention here.

X-geners I think can see both sides of the generational divide and become more conservative, instead of being mildly confident, I see X-geners as cautiously realistic and bearish.

Baby boomers passing their 60's and heading into retirement want and require  and the property boom to continue sky-rocketing prices to give them their golden parachute to head into a comfy retirement, that requires previous generations to saddle up with often debt that is over 10 times the average annual salary and was unreasonably climbing some time ago.

Many baby boomer's expect property prices to double every 10 years or so but don't understand the basic The law of exponential function http://www.youtube.com/watch?v=LqcHG7QUK9k 

Better see the you tube video by respected Dr Barlett, I think anyone considering getting into any sort of property should know this before buying.

My take on property is that people these days have unrealistic expectations, and as a xgener I would have to agree with young gun's point of view. There simply is no point being saddled with heavy unreasonable debt.

I think the low interest rates are trying to bridge the generational gaps to transfer property by saddling up X & Y geners will more debt, {on the promise property prices will rise and double every 10 years or so} but how long will the lower rates last when saddled debt in excess on 500k to up to 5m and more for some changes drastically when interest climbs just 25 basis points & when it rises in multiples of 25 basis points?

That's where it will sting. I don't think baby boomers trashing individual comments made by xgeners or y-geners is helping either as I think they are genuine concerns, and negative re-enforcement divides the generations further. Therefore I don't believe their will be another property boom like the aberration we had last decade, as the different generations are further apart than ever in their point of views.


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## See Change (29 September 2013)

BB 

I'm happy to leave you with your vision property investing as some sort of tool the evil Baby Boomers use to repress the following generations . Obviously your not going to change your views and you have a nice little group of fellow true believers who congratulate you when you take things out of context and ignore other things . 

Property investing is another tool for wealth creation that is available for any one who wants to use it . In the last few years I have seen people from all generations create wealth from investing in property . Just from people I know personally , I know two people in their 20's get to the point where they had signicant financial freedom . One paid cash for a house in Sydney's northern beaches , so it is not just BB' s who can and do benifit. My daughter , 24 , has just bought her first investment property and is looking forward to buying her second .

I wish you happiness along your journey.

Cliff


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## moXJO (29 September 2013)

I have been looking in some of the lower priced suburbs I had listed to see how they had been moving and all seem to have jumped beyond what I would be willing to pay. I was looking in these areas 1-2 years back with the streets I was looking at coming in around $240k for 3 bed. It's all over $320k now for similar properties. While I think prices will come back eventually, it has jumped a fair bit and the market is moving and selling. Everyone is back to selling at auction.
 The doomers (which I was one a few years back) on here have been that wrong regarding property and making money that its become a bit of a joke. In fact doing the exact opposite when doomers are at their peak are a good money spinner.


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## See Change (29 September 2013)

moXJO said:


> I have been looking in some of the lower priced suburbs I had listed to see how they had been moving and all seem to have jumped beyond what I would be willing to pay. I was looking in these areas 1-2 years back with the streets I was looking at coming in around $240k for 3 bed. It's all over $320k now for similar properties. While I think prices will come back eventually, it has jumped a fair bit and the market is moving and selling. Everyone is back to selling at auction.
> .




Hi MO 

Sounds like its western sydney ? Correct . Every one has been surprised by the strength out there , including me . 

I wouldn't hold my breath waiting for it to come down . It's called a property boom . I've seen several and they don't come back to where they started other wise I could still buy my parents house in warrawee for 25 k ....

There are some people I know who are still looking to buy , but most are happy to sit back and watch the growth and buy some where that isn't quite as hot.

Cliff


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## 13ugs13unny (29 September 2013)

See Change said:


> BB
> 
> I'm happy to leave you with your vision property investing as some sort of tool the evil Baby Boomers use to repress the following generations .
> Cliff




Cliff, pour scorn over my opinion if you wish, as you do to most other opinions on here furthermore your mistaken in the way you interpreted my opinion, based on the generational divides & understanding the exponential functions.

However if you believe most of Australia is based on your reality of "home & away" Sydney's northern beaches, then its too removed from the average citizen of this country IMHO. Probably a symptom of never having lived in many states or experienced anything outside your idyllic lifestyle.

Your entitled to your point of view but don't be disrespectful by trashing someone else for their point of view by installing something or interpreting outside what was actually stated.


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## Smurf1976 (29 September 2013)

For any economic activity to be sustainable, it must have an ongoing supply of the key ingredients.

If you want to make steel (for example) then you need iron ore, coal and ferro alloys. Without those you don't have steel. So it's no surprise to find that of the two operating steel works in Australia, one is in SA near a source of iron ore, the other is in NSW near a source of coal and both are within reasonable shipping distance of the TEMCO plant in Tas which produces ferro alloys. And the reason TEMCO is in Tas is because making those alloys needs lots of electricity, hence it was built in a place where that is available.

If you want to make paper then you need wood, power and quite a lot of water. Hence we built paper mills at sites near forests where water and power are also available. Nobody would built a paper mill at Alice Springs, for example, since the required resources aren't available.

Or for something like running concerts you need a large population base within reasonable travelling distance, somewhere to host the event and supporting infrastructure including transport, hotels and the like. Hence concert tours generally go only to Brisbane, Sydney, Melbourne and sometimes Adelaide and Perth where the required inputs are available. It's just not viable to take a major festival or concert tour to somewhere like Port Lincoln or Mt Isa, since the required inputs don't exist in those places.

House prices? Well the key things there are population and access to money. Without both of those, you don't have high house prices given that the supply of housing can (and is being) increased. It's not as though it's a rare and finite commodity - there's plenty of land and building materials available.

Population is growing that is true. But where is the money coming from? Wages aren't doubling every 10 years that's for sure. An individual might move from flipping burgers to manual work to a trade or profession and then onto management, increasing their income at each step but this does not hold true for the population as a whole since there is a limited need for higher paid positions in the economy. 

That leaves credit growth as the fuel for house prices. So long as a worker on average earnings can borrow ever increasing amounts of money, supported by declining interest rates, then the fuel is there for rising house prices. But, and here's the problem, interest rates are highly unlikely to keep falling forever. Whilst they are officially set by the RBA, the reality is that the RBA has a limited window in which to operate and this is determined by international factors. If interest rates rise globally, then there's little choice other than for the RBA to follow suit in due course. 

So at some point the downward tend in interest rates must end, and at that point the game is over for real house price growth unless a wages boom comes to the rescue. Just as a steel works can't continue to operate if the coal runs out, so too house prices need ongoing access to their fuel if they are to continue to rise.  

When it will happen is anyone's guess. But with the RBA cash rate at 2.5%, mortgage rates around 5% and official inflation at 2.4% there isn't a lot of room to move going forward. At the extreme, if the RBA cut rates to zero, that only halves the mortgage rate. More realistically, if we assume that the RBA doesn't go below 1% on account of the other issues that would entail, mortgage rates aren't going to drop more than about a third from where they are now. A one third drop in interest rates, that's roughly a 50% rise in the amount someone can borrow, is about as far as it can realistically go.

50% is of course significant growth, but it doesn't keep the game going beyond a few more years at most. And then, at some point, interest rates go back up. That's when the real trouble starts, when the fuel supply for house prices not only stops growing but actually goes into reverse. When is anyone's guess, but it will surely happen at some point. 

At best, it's plausible that we see a prolonged period of house price stagnation as falling interest rates are replaced by wages growth. A sort of "muddle through" situation which eventually takes us back to higher interest rates and house prices as a lower multiple of income. But it's being somewhat optimistic to expect such a smooth transition, and even this optimistic scenario doesn't involve rapidly rising house prices. 

At a broader level, it's ridiculous that Australia is apparently unwilling to invest sufficiently in everything from education to infrastructure to manufacturing and yet we're more than happy to borrow a fortune from overseas in order to change the nominal owner of the houses we already have. We're borrowing $ billions, just to change names on a piece of paper. That's not rational.


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## medicowallet (29 September 2013)

13ugs13unny said:


> Cliff, pour scorn over my opinion if you wish, as you do to most other opinions on here furthermore your mistaken in the way you interpreted my opinion, based on the generational divides & understanding the exponential functions.
> 
> However if you believe most of Australia is based on your reality of "home & away" Sydney's northern beaches, then its too removed from the average citizen of this country IMHO. Probably a symptom of never having lived in many states or experienced anything outside your idyllic lifestyle.
> 
> Your entitled to your point of view but don't be disrespectful by trashing someone else for their point of view by installing something or interpreting outside what was actually stated.




The problem is that some of my fellow older posters on here actually believe that they had it tougher than the young people, which is a load of rubbish, generated by their feeling of self importance (something I regularly indulge in)

It was quite reasonable for a low-mid income earner to pay off a house on single income, supporting a family only 30 years ago, and now, that is impossible... and by house I mean a house, not some dog box single bed unit that some here will spurt out as an option.

I am happy, I have made my money.  I am disappointed by the attitudes of some of the people in my generation who are quite happy to accept the "luck" when it came to property, and condemn the younger generations to a period of massive sacrifice, as we will control the vote, and we know it.

Sad times. 

MW


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## See Change (29 September 2013)

13ugs13unny said:


> However if you believe most of Australia is based on your reality of "home & away" Sydney's northern beaches, then its too removed from the average citizen of this country IMHO. Probably a symptom of never having lived in many states or experienced anything outside your idyllic lifestyle.
> .




Again incorrect assumptions . I have never lived on the northern beaches . I quoted that as an example . 

What I did do was work for longs 19 years in the social deprived area of mt Druitt , so I probably know more about different levels of the community than most people on this forum . 

.....sigh ...

Most people aspire to improve their lives . You seem to want to drag everyone down and say want can't be done . Is that the underlying motivation of D & G 's . A sort of my life's crap so no one else should be better than me jealousy .


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## See Change (29 September 2013)

Mmm

 I really do need to prof read better before replying .

Can't go back and correct typos on iPad


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## 13ugs13unny (29 September 2013)

See Change said:


> Most people aspire to improve their lives . You seem to want to drag everyone down and say want can't be done . Is that the underlying motivation of D & G 's . A sort of my life's crap so no one else should be better than me jealousy .




Mt Druitt is high class compared to my beginnings. And your assumptions are quiet inaccurate and are just assumptions- water of this ducks back.

My call is about being realistic, and not actually make dreams and aspirations unobtainable, bragging rights on how property prices are or will be north of squillions actually disempowers incentive and exacerbates hopelessness.

If people on here think rubbing wealth or success in peoples faces even in forums will help then they are mistaken.

I've believe in a tone that is measured so people can actually see there is a path to obtain their dreams , aspirations & desires. I prefer levelling mountains to seem like hills so to speak.

So would you believe me & be gullible enough if I was bullish and said property prices are going to double in 10 years and achieve 7-10% growth year on year? Do you want interest rates to double to 8-10% with mortgages north of million dollars? Just to send these people into mortgage stress and default all for naught? How do you think this will be received by Y-geners trying to make a go of it it from Mt druitt? or x-geners?

Tone is everything. Course property in Australia will be fine, but you don't make it impossible for people. With extremely bullish overtones. 

Those that want to improve their lives need to see opportunity to do so, and I think cost of living and housing affordability and employment security is a real concern, just as much of a concern as welfare being addictive and feeding hopelessness as it once did to me many decades ago.

Again as I said before I probably should have made it more clearer, its about bridging the generations so there is no disconnect, the y-geners need to see the opportunity to start out, the established xgeners need to buy off the retiring boomers, so they can retire comfortably, and bridging the generations by saddling x-geners and Y geners with debt is not the way {personal, state, or country}and that is my opinion, respect it.


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## See Change (29 September 2013)

BB 

Good luck with changing the world.  Most people don't look at the big picture . The reality is that most people don't look at all . All I control are my own actions and personally I want to be in as stong a financial position as I can , and property is enabling me to do that . 

The hardest think anyone can do is change themselves . On a large scale very few people will make an impact in changing the work . I know I'm not someone like that .

By coming here I'm not seeking to hype up the market .  You might be able to ramp a spec on hot copper but I do not think that my opinion  / our discussion here will move the property market at all .

As this thread is about " the future of the property market " I'm here giving my opinion of the future of the property market . This opinion is based on personally watching the market since the late 60's , much statistical research and reading and ongoing conversations with everyday people on a regular basis . It's the individuals who come together and create markets. Understanding what they think helps make informed decisions.

It's my opinion , and I believe it's a fairly informed one . So far since I became actively involved in property every investment I've made has out performed my expectations.

I watch the market with interest .


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## craft (29 September 2013)

Rainy Sunday afternoon and I’ve got a sore head – must be time to post on the property thread.

After readings Smurfs usual insightful post I decided to dig out some data from the national accounts – that should help the head.






Household income (from GDP Income components) in the National accounts is post interest on dwellings.  So a large % of the decrease in the ratio over the last few years is interest rate reductions.

If the ratio pushes higher here that ignores the screams of the younger generations on affordability which strikes me as ultimately unsustainable. Or it suggests that property buyers are thinking (consciously or otherwise) current interest rates are fairly permanent.  Not a view I would take a leveraged long term bet on. 

ps

It’s nice to see some humility in some posters here that have benefited from a certain set of circumstances that are no longer in place.


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## ftw129 (29 September 2013)

medicowallet said:


> It was quite reasonable for a low-mid income earner to pay off a house on single income, supporting a family only 30 years ago, and now, that is impossible... and by house I mean a house, not some dog box single bed unit that some here will spurt out as an option.




Actually I remember watching tv shows and movies (i'm 32) that portrayed the mother at home looking after the family of 2 or 3 children, in a big 2 story house and the father (a mechanic, a factory worker, a car salesman etc), supporting the whole family, which still went on holidays and had big christmasses with lot's of presents under the christmas tree.

Was this really possible back then?


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## Smurf1976 (29 September 2013)

ftw129 said:


> Was this really possible back then?



As long as nothing went wrong, yes.

Job security was a big part of it. So long as you had a job, you had an income. And for most workers the only reason to leave a job was to get a better one, quite possibly with the same employer. And in the unlikely event that the employer did go broke, then it was fairly straightforward to get another secure, permanent job somewhere else.

You only have to go back a generation or so to find a time when most things that people owned were made in Australia. Furniture, white goods, TV's, cars, clothes, tools - _of course_ you bought Australian made. Sure, there were foreign goods around, but most things were made right here. 

We have since gone down the track of trying to compete against countries with minimal standards for safety, environment etc and which pay wages an order of magnitude less than Australian rates of pay. It's a game we'll never win, the end result being that we've become reliant on selling rocks and borrowing money to keep the game going.

A current one which symbolises the change is at Burnie, Tas. The Pulp, which once employed 3500 people on high wages, is now just a pile of rubble being carted off to the tip. In its' place is to be a national chain hardware store which sells mostly imported goods and which might employ 100 or so on much lower wages than the Pulp provided. Sure, that factory had a downside in the form of very visible and undeniable pollution, but it actually made something of value, exported it and employed people by doing so. If it were still viable to manufacture in Australia, modern technology would have fixed the pollution, indeed there was considerable improvement in that regard happening in the latter years anyway. But it's gone now, all those jobs and those of suppliers and contractors with it, and it's not coming back. 

There are countless stories like this right across Australia. Where once something was made locally, now there's either nothing or at best a warehouse distributing imported product on the site. Hundreds or thousands of stable, high wage jobs in each case replaced with a lesser volume of lower paid work with far less stability.

Against that backdrop, it's inevitable that continuing to inflate house prices will leave many "locked out" of the market. Aside from mining and a few select trades and professional services, the economy no longer is able to provide the types of employment for the masses that would sustain such growth in the long term. If the best you can get is a casual job on $20 an hour then you're not going to be buying anything resembling a decent house anytime soon.


----------



## medicowallet (29 September 2013)

ftw129 said:


> Actually I remember watching tv shows and movies (i'm 32) that portrayed the mother at home looking after the family of 2 or 3 children, in a big 2 story house and the father (a mechanic, a factory worker, a car salesman etc), supporting the whole family, which still went on holidays and had big christmasses with lot's of presents under the christmas tree.
> 
> Was this really possible back then?




Well I see the doctors flipping around between specialities and all lovey dovey in the tv shows and I can tell you that it aint like that in the hospitals I go to!

But I stand by my comment, as many people I know did it.  

It is truly a shame that young people today cannot.

MW


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## moXJO (30 September 2013)

There are a few investors that have started out on low incomes and at a young age. One young kid Tony fleming out of a mag I was looking at started on a pizza delivery wage bought his first property in 2009 and now owns 8.


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## See Change (30 September 2013)

For those who like graphs , here is one ( copied from this thread on Somersoft  ) which shows a nice long term up trend. 

Obviously the comments relate to posters on Somersoft , in particular some of the resident Doom and Gloomers over there.

Notice at the moment the prices are below the long term average . If it was a share , what would you do ?

I know the D & G answer will be " The fundamentals suck and it's about to reverse " ......




Cliff


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## FxTrader (30 September 2013)

See Change said:


> Notice at the moment the prices are below the long term average . If it was a share , what would you do ?




Not bad, so in the 8 years from 2005 until now the Sydney median has risen ~38% (~$200,000 profit on the median of $520K).  That gives us an average annual return of 4.75% on capital invested (before any tax or expense considerations).  Unfortunately. the average risk free rate of return on bank interest over this period was about the same.

Let's see now (there are so many examples but one of my recent favorites will do) the share price of Carsales.com has risen 100% in 21 months.  Never compare the returns available on property with that of quality businesses like this, property doesn't even come close.

What would I do with a share that returned on average 4.75%/yr for 8 years - look elsewhere.  I always find it amazing that property investors roll out such charts and crow about how great the returns are in property.  Compared to what and over what period?


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## See Change (30 September 2013)

My mistake Fx Trader

I thought this was a " Future of the Property Market " thread , not a Shares Vs Property thread  , though I must admit I did raise the share thing , so I shouldn't really complain. I have actually found the skills that I've learnt in share investing have been very useful in Property . I started out in shares before I went into property and have found taking ideas from one area of investing and using them in another area has been a useful tool.

I misunderstood the game rules , so as I have suggested that property can potentially go up . with some evidence to suggest that is a plausible argument , you change the argument .... 

If I'd seen this as one of those Share Vs Property threads I won't have wasted my time. They both work. 

I thought people on this thread might have actually been interested on " the future of the property market "....

That's what my last post was about.  

I came over here ( ASF ) to catch up on what was going on in the share market and seeing this post , and knowing something about property investing , I thought I would contribute . It would seem that there are many people on here with closed minds . I find that disappointing. 

Cliff


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## TheUnknown (1 October 2013)

Property bugs will always throw charts around showing big gains , yes big gains but what period of time captain cook times until the early 2000s


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## So_Cynical (1 October 2013)

See Change said:


> For those who like graphs , here is one ( copied from this thread on Somersoft  ) which shows a nice long term up trend.
> 
> Obviously the comments relate to posters on Somersoft , in particular some of the resident Doom and Gloomers over there.
> 
> Notice at the moment the prices are below the long term average . *If it was a share , what would you do* ?




Price break below the long term trend, coupled with poor fundamentals, neutral sentiment and record low credit growth and record low capacity to borrow...most people would be selling.


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## moXJO (1 October 2013)

We have a chart on guys that made it big in property vs those in shares. I find it funny there is still this argument one is better than the other. For me developing pisses on anything I could make in shares. Business is better again.


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## Bill M (1 October 2013)

See Change said:


> I came over here ( ASF ) to catch up on what was going on in the share market and seeing this post , and knowing something about property investing , I thought I would contribute . It would seem that there are many people on here with closed minds . I find that disappointing.
> 
> Cliff




Hello Cliff, I am enjoying your imput, keep it up I love it. I myself have been investing in property since the late 70's. I've heard all the doom and gloom stories many times before and this time it is no different.

I attach an article I cut out of the northern beaches local rag 19 years ago. Have a look at the prices back then. Now you need to pay between 400K and 500K for a 1 br unit on the Northern Beaches and at this present time prices are rising rapidly. All the best.


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## kid hustlr (1 October 2013)

See Change said:


> I thought people on this thread might have actually been interested on " the future of the property market"




It is. 

Hopefully we can get the thread back on track. The needless argument about baby boomers vs the rest or shares vs property is not required.


----------



## sydboy007 (1 October 2013)

Bill M said:


> Hello Cliff, I am enjoying your imput, keep it up I love it. I myself have been investing in property since the late 70's. I've heard all the doom and gloom stories many times before and this time it is no different.
> 
> I attach an article I cut out of the northern beaches local rag 19 years ago. Have a look at the prices back then. Now you need to pay between 400K and 500K for a 1 br unit on the Northern Beaches and at this present time prices are rising rapidly. All the best.
> 
> View attachment 54643




what would the inflation adjusted prices be now?

That is the problem with most property investors, they hold the asset for a long period of time and never adjust up the purchase costs, and other associated holding costs, to give a true current valuation and profit / loss.

Considering the high inflation rates of the 70s and early 80s I dare say we're talking at least tripling the CPI adjusted prices on the left hand column.  I'd also say the units that were available for purchase back then, well not many people looking to buy a property today would want to live in one of them.

I must admit I've been surprised the property ponzi scheme has lasted as long as it has, but each time we get another leg up it just makes the eventual popping of the bubble that much bigger.  The household sector isn't able to take on much more debt, though if the anecdotal reports of Chinese buys and SMSFs now being a new source of buyers, maybe things can continue on as they are for a fair bit longer.

Oh for a major party to come up with a credible plan for affordable housing.


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## satanoperca (1 October 2013)

A good friend has recently purchased her first property :

Inner city 2 bedroom house in Melbourne
Buy price              $700k
Stamp Duty            $28K
Mortgage Insurance $25K
Other Fees              $2K 
Loan Amount        $650K

LVR 95% Loan repayments of $3.8K per month

Equivalent property to rent : $2.1K per month

Original deposit $90K

Her Salary $120K pa divorced with one child.



Why did she buy, her family convinced her that it was a good investment. I tried to convince her she was better off with a margin loan + her deposit and build up a share portfolio. But she is convinced her property will double within 10 years.

Her property needs to rise by 10% for to break even if she is forced to sell. When asked could she cope with IR's increasing by 2% she would have to sell. Responsible lending, no. Banks are just drug dealers pushing debt as the new cocaine. 

Cheers


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## DocK (1 October 2013)

satanoperca said:


> A good friend has recently purchased her first property :
> 
> Inner city 2 bedroom house in Melbourne
> Buy price              $700k
> ...



Do you know which bank/credit union/society she has borrowed from?  I'm well out of touch with modern home loans, but once upon a time the majors worked on a maximum monthly repayment/gross income ration of 30% (her's would be 38%) and mortgage ins would be required on a 95% lvr & they'd do likewise.  It is indeed alarming that lending is still taking place where the slightest rise in interest rates, or heaven forbid a period of unemployment, would result in a forced sale in a very short time period.


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## skc (1 October 2013)

satanoperca said:


> A good friend has recently purchased her first property :
> 
> Inner city 2 bedroom house in Melbourne
> Buy price              $700k
> ...




Wow. I can't imagine how that works. Income $120k is only ~$88k after tax or $7.3k per month. Loan repayment is over 50% of that, leaving $3.5k to live off. Without knowing anything about her lifestyle - she'd probably spend the majority of that. There's little margin for error (or an interest rate rise). I'd be stressed out in that situation.

She's basically spent 60% of her available equity on fees/one off charges that is un-recoverable. Although I don't know if a margin share portfolio is the right advice - but at least she won't be down 60% straight up.


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## FxTrader (1 October 2013)

See Change said:


> I thought this was a " Future of the Property Market " thread , not a Shares Vs Property thread  , though I must admit I did raise the share thing , so I shouldn't really complain.



Then don't, you posed a question and I responded.  Yes it's off topic to a degree but the modest returns available on property are nicely highlighted by the data provided.  It has been a steady rather than stellar asset class.

The price gains and returns related to property in the major metro markets are supported largely on the back of a huge increase in household debt, historically low interest rates and government subsidy to investors who now comprise 40% of the market.  These conditions may prevail for some time to come and the astute property investor will still make money but it's a very fragile combination of conditions supporting the property market at present IMO.


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## See Change (1 October 2013)

FxTrader said:


> Then don't, you posed a question and I responded.  Yes it's off topic to a degree but the modest returns available on property are nicely highlighted by the data provided.  It has been a steady rather than stellar asset class.




But you responded in terms of share vs property . Seem like all the detractors try to shift the arguement , or quote selective examples of times where it didn't work . Would you like be to do that with examples of shares ..... How many thousands of examples could I find ... But that's not the point 

I could equally attack shares in terms of what the average person makes from shares , which is bugger , most people loose , but I won't insult your intelligence doing that because I know there are many well informed share investors who make significant profits from shares on an ongoing basis . Hopefully , guys you're in that category . 

The whole point of being involved in a forum like this , is not to be average , but to be a well informed investor whether it's in share , property or in business . We've done two subdivisions in sydney and made lots of money doing these , but I'm not here promoting this as a time to do that . It's a specialised area .

If you look at average gross returns , property may well not stack up , but I don't buy average . The reason property works is because you are borrowing most , so the returns are not based on the gross cost .

Timing also has a lot to do with it , and if you get your timing right you will do much better . 

I buy bargains when the market has crashed 2009 to now up over 50 % . On 100 borrowings , what the return .... Infinity . Dollar terms 500 k . I'm happy . 

I also buy when the market is starting to move as it is now. Ignore it if you want to .

Cliff


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## sydboy007 (1 October 2013)

skc said:


> Wow. I can't imagine how that works. Income $120k is only ~$88k after tax or $7.3k per month. Loan repayment is over 50% of that, leaving $3.5k to live off. Without knowing anything about her lifestyle - she'd probably spend the majority of that. There's little margin for error (or an interest rate rise). I'd be stressed out in that situation.
> 
> She's basically spent 60% of her available equity on fees/one off charges that is un-recoverable. Although I don't know if a margin share portfolio is the right advice - but at least she won't be down 60% straight up.




Slightly off topic but 3.5K / month is plenty to live on.  IT would probably be a rude awakening for her to make the adjustment though.  I know I felt the pain for the first couple of years with a mortgage and my situation was a lot better than hers.

I've had some success in convincing friends that property is the risky way to get rich in the current climate, especially when they generally are looking to move further away from work and friends to afford to buy.  Once they realise they can achieve the same savings goal, though harder when renting as you can use the money for other things, they do see the benefit of not risking a huge mortgage for 25 years.


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## skc (1 October 2013)

sydboy007 said:


> Slightly off topic but 3.5K / month is plenty to live on.




Sure. It all depends on lifestyle, whether she drives to work and if she needs to pay for childcare etc etc.

It is relevant to the property thread I suppose, as banks have in-built assumptions on living costs in determining how much they would lend.

This link has some interesting information on living expenses.

https://www.moneysmart.gov.au/managing-your-money/budgeting/spending/australian-spending-habits


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## notting (1 October 2013)

All I see in the press is 'the press' saying that there is no real housing bubble but it's all you see in "the press."
WTF


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## FxTrader (1 October 2013)

See Change said:


> But you responded in terms of share vs property . Seem like all the detractors try to shift the arguement , or quote selective examples of times where it didn't work . Would you like be to do that with examples of shares ..... How many thousands of examples could I find ... But that's not the point...



No, I responded to your spruiking of property (not it's future) here by commenting on just how ordinary the returns are for property based on the data YOU provided.  If you're an experienced property investor or developer then no doubt returns can be far above the average.



> The whole point of being involved in a forum like this , is not to be average , but to be a well informed investor whether it's in share , property or in business . We've done two subdivisions in sydney and made lots of money doing these , but I'm not here promoting this as a time to do that . It's a specialised area



As you are a recent contributor to this long standing thread, please don't seek to lecture me or others here about what we should be getting out of this forum.  This thread is not about past investment glory or titled "How I became a millionare investing the property and how you can too".  As you noted it's about the future prospects for property prices based on current evidence, trends and economic conditions to name a few.

You are neither the first nor will you be the last property bull to come here, boast about past success and imply this will continue to infinity.  If I thought the prospects for residential property prices were good going forward I would say so but the available evidence suggets to me that the conditions supporting price growth now are precarious at best.  I ignore no evidence to the contrary and am watching the property market closely for opportunities.


----------



## skc (1 October 2013)

notting said:


> All I see in the press is 'the press' saying that there is no real housing bubble but it's all you see in "the press."
> WTF




Yes it's a bit worrying. I think it's healthy to have guys like Steve Keen to put out the dooms day warning every 6 weeks or so to tell us that we are in a bubble.

To have consensus that we are NOT in a bubble? That's a strong indication of a bubble!


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## sydboy007 (1 October 2013)

http://www.macrobusiness.com.au/2013/10/whos-doing-the-lending/

I wonder where they're getting the money from, or has APRA started to allow overseas borrowing for housing to take off again?


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## ftw129 (1 October 2013)

FxTrader said:


> Exactly right Craft, the entrenched interests of property investors in particular are driving the market distorting taxation policies that will ensure a greater proportion of future generations will be forced to rent rather than own.






FxTrader said:


> That would be established residential property, not your generalization.  Shares are a form of business ownership, and many businesses produce something for profit that represent productive use of capital that generate economic activity, employment and benefit for society.  There is no comparing the increasing profitability of a business and it's increasing share price to the non-productive use of capital deployed in churning established residential property.
> 
> My point remains, regardless of the market, the churning of established residential real estate is unproductive use of capital and very costly to society as a whole.






FxTrader said:


> The churning of established residential housing stock at ever higher prices provides little economic benefit while driving up household debt and rents.  Such investing is non-productive, an economic burden to society and needs to be curbed.






FxTrader said:


> I ignore no evidence to the contrary and am watching the property market closely for opportunities.






So what is it you're trying to convince everyone of? On one hand residential property should be "curbed" but you're "watching the property market closely for opportunities".

If you want to be taken seriously take a good look at what it is you're trying to say and stop contradicting yourself.


----------



## Julia (1 October 2013)

sydboy007 said:


> Slightly off topic but 3.5K / month is plenty to live on.  IT would probably be a rude awakening for her to make the adjustment though.  I know I felt the pain for the first couple of years with a mortgage and my situation was a lot better than hers.



Might be plenty for you to live on but you don't know her circumstances and expenses.

Moreover, as satanoperca and DocK have already mentioned, much of a rise in interest rates is going to render her situation impossible.  No doubt she is just one example of many in a similar situation.

There's a house here on which I made an offer a couple of years ago.  The asking price was about 20% over what was reasonable, but the owner said he 'simply had to get the asking price' because that was what they owe the bank, having *borrowed 100%* of the cost.  It's in a development in a good area, close to the beach and to the CBD, but where the blocks are just 600m and the building covenant dictated large homes.
At the time I made the offer, none of the surrounding blocks had been built on.  Now they have.  All large houses, as close to the boundary fence as is legal, all with massive skillion roof lines, and the result is a sense of being absolutely shut in and oppressed in the back yard.
So you could deduct at least another 10% because of this.

The owner said, 'oh we thought prices would just keep on going up!"


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## sydboy007 (1 October 2013)

ftw129 said:


> So what is it you're trying to convince everyone of? On one hand residential property should be "curbed" but you're "watching the property market closely for opportunities".
> 
> If you want to be taken seriously take a good look at what it is you're trying to say and stop contradicting yourself.




I'd say 90%+ on this forum would view property in general - as opposed to very small pockets - as over valued and not worth investing in.  The fact that most new investor loans are interest only, and the massive level of NG going on would only confirm this.  How long can an asset class continue to make income losses before enough people decide it's not a good investment and the capital growth required to make it worthwhile becomes unlikley enough that you get an increase in sellers?

Now when an asset is overvalued it doesn't mean you ignore it.  You'd be wise to keep an eye on it so should the reasons why you don't want to invest in it now change, you can take advantage of that change.

I dare say a lot of us on this forum are surprised the music has continued to play as long as it has.  I was sure after the GFC we'd see a decent housing correction, but Rudd kicked in with $20B of cash handouts, and let China opened the debt flood gates which stopped the commodity price free fall.  If things get tricky in the next few years neither of those life preservers is going to happen again.

I'll keep saying, why buy when you can borrow housing at below cost?  While landlords are blinded by NG and chasing the capital growth dragon renters might as well take advantage of the situation.  Sadly with the financial repression ongoing it's difficult to see where else one can put the money, but I'd take a year or 2 of no real returns to the guaranteed losses of property - 5-7 years to break even from what I've read.  Long time to have to hold before you can change ya mind without making a loss.


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## FxTrader (1 October 2013)

ftw129 said:


> So what is it you're trying to convince everyone of? On one hand residential property should be "curbed" but you're "watching the property market closely for opportunities".
> 
> If you want to be taken seriously take a good look at what it is you're trying to say and stop contradicting yourself.



Trolling again ftw?  I have not contradicted myself at all.  Your lack of comprehension of my posts aside, what I meant by curbing is capping government subsidized negative gearing on investment property not eliminating it.  You seem to imagine that I am some kind of anti-property investment doomsayer and continue posting based on this false premise thinking you are actually making a valid point.  Why not post something useful instead of just sniping at posters here on a singular issue of no significance to this topic whatsoever.


----------



## ftw129 (1 October 2013)

FxTrader said:


> Trolling again ftw?  I have not contradicted myself at all.  Your lack of comprehension of my posts aside, what I meant by curbing is capping government subsidized negative gearing on investment property not eliminating it.  You seem to imagine that I am some anti-property investment doomsayer and continue posting based on this false premise thinking you are actually making a valid point.  Why not post something useful instead of just sniping at posters here on a sigular issue of no significance to this topic whatsoever.




Haha. I don't know what sort of FXTrader you are but you would certainly make a good politician 

You're right, I'm totally focussed at the moment on something slightly off topic but it does bare some significance if you'll let me explain.

I guess for me, growing up with my older brother, we took 2 very different paths. He bought cars and holidays, I bought my first property at 21 and then my second at 25. Our parents, relatives and friends were always in awe of my ability, to save, plan and be very disciplined about the choices I made. To own an "investment property" was seen as something only the rich do. Me, I went out there, with my 37k pa income at the time and showed them how it's done and until this day I enjoy the way people look at me when they find out that I'm 32 and onto my second investment property ready for my third.

We all know that's it's just knowledge and being proactive that enables us to achieve what we want to achieve but for most people they see it all as too hard and would prefer to live for the moment buying lattes and cigarettes.

Anyway, I was raised to believe that property was a symbol of ultimate success. Unfortunately, from people who knew nothing about it but time will tell (lot's of time) if they were wrong. 

Reading certain posts in this thread actually opened my eyes up to the fact that perhaps it's not all it's cracked up to be (on a kind of moral level), however I'd be more inclined to believe the rhetoric if those people posting would stand behind what they were saying.

You FXTrader and sydboy007 just happen to be the most recent posters spurting the idea that property is some sort of cancer on the economy (if I've misinterpreted you I apologies but there's been plenty others in here that this applies to) and that the country would be better off without it and yet you're all waiting to jump in and cause the same mess you advocate against... which really kind of pisses me off. I'd have more respect for your opinions if you weren't rubbing your hands together waiting to feed off the system yourselves should it all go to hell for a while...

Anyway, that's what was getting up my nose but I've said my piece. Hopefully I've made a few people think about some of the stuff they are saying on here and think about their true intentions.

I will refrain now from bringing this up again. I realise it is off topic but my thoughts are that even if prices come crashing down all I have to do is hang in there and buy more because even people who have something against investing in residential property will be jumping in and pushing it up again.

The future of Australian property is and always will be, UP  

(but hopefully down in the short term so keep talking it down ladies and gents)


----------



## moXJO (1 October 2013)

satanoperca said:


> A good friend has recently purchased her first property :
> 
> Inner city 2 bedroom house in Melbourne
> Buy price              $700k
> ...




How is that property investing?
Thats the same gamble as getting a hot tip on stocks and doing all your dollars. You want dumb investor stories then I have a million and yes you can lose millions in shares off $100s of dollars as was evident from all those people who bought into that QLD company and were then up for paying the dividend.
Secondly I wouldn't really class PPOR as an investment.

 Personally if all you think you need to investing in is shares while missing the other investment classes you have rocks in your head. You guys are putting up bad examples to prove a pretty stupid point. Id question if many of you actually have any money behind you.

Imo there is a lot of opportunity across a few areas to make a killing right now. Preaching here is a waste of time.


----------



## sydboy007 (1 October 2013)

ftw129 said:


> I guess for me, growing up with my older brother, we took 2 very different paths. He bought cars and holidays, I bought my first property at 21 and then my second at 25. Our parents, relatives and friends were always in awe of my ability, to save, plan and be very disciplined about the choices I made. To own an "investment property" was seen as something only the rich do. Me, I went out there, with my 37k pa income at the time and showed them how it's done and until this day I enjoy the way people look at me when they find out that I'm 32 and onto my second investment property ready for my third.




So you invested at the begining of the main part of the housing boom and made a lot of money.  If you can do the same over the neext 10 years I'll be impressed.



ftw129 said:


> You FXTrader and sydboy007 just happen to be the most recent posters spurting the idea that property is some sort of cancer on the economy (if I've misinterpreted you I apologies but there's been plenty others in here that this applies to) and that the country would be better off without it and yet you're all waiting to jump in and cause the same mess you advocate against... which really kind of pisses me off. I'd have more respect for your opinions if you weren't rubbing your hands together waiting to feed off the system yourselves should it all go to hell for a while...




I'd say judging by the debt levels of a lot of households I might be one of the small percentage left in the country with no debt and able to step in to help stem the potential free fall in housing.  Let me say I don't see investment properties as bad but I do see:

* negative gearing on existing properties as a very wasteful subsidy - much cheaper for the Govt to spend $5B a year on building affordable housing

* assets that are cashflow negative as poor investments - just my personal point of view.

If NG was for new properties only, with any losses in excess of the income from rent capitalised onto the purchase price I'd be a lot more supportive of it.  Maybe removing the tax free status of the family home and allowing interest deductibility like the USA might be a way forward to stop investors from having such an unfair advantage over home owners, especially FHBs.

The current scenario rewards speculation by reducing the costs of speculation and doubling the rewards with the halving of CGT.



ftw129 said:


> The future of Australian property is and always will be, UP
> 
> (but hopefully down in the short term so keep talking it down ladies and gents)




Hopefully that smile of yours means you've said that in jest, otherwise I hope you're not too highly geared with your current IPs.

You only have to look to the USA / Spain / Ireland to see how fast the market can turn.


----------



## satanoperca (1 October 2013)

moXJO said:


> How is that property investing?
> Thats the same gamble as getting a hot tip on stocks and doing all your dollars. You want dumb investor stories then I have a million and yes you can lose millions in shares off $100s of dollars as was evident from all those people who bought into that QLD company and were then up for paying the dividend.
> Secondly I wouldn't really class PPOR as an investment.
> 
> ...




Take a chill pill buddy. Simply putting up an example of how some perceive they are investing in property and not gambling. I personally see it as silly but hey, I don't go baa baa little black sheep.

Oh and if you see lots of opportunities, cough a few up. Always interested.

And for preaching, I think you just have to look at the Catholic church for that and see how it has turned out.

Cheers


----------



## ftw129 (1 October 2013)

sydboy007 said:


> So you invested at the begining of the main part of the housing boom and made a lot of money.  If you can do the same over the neext 10 years I'll be impressed.




I hope it didn't come across as though I was trying to brag. This isn't the right crowd I feel comfortable bragging too 

But seeing as you did point that out I guess I'd also just like to add that I had no idea how well property was going to do when I bought in. The next 10 years wasn't and still isn't my focus. 

10 years went so quickly, you'd be pretty brave to be able to predict what's going to happen in the next 10 years.

40 years was my time frame and now 30.

I'm pretty comfortable with where property will be in 30 years time in Melbourne and Sydney and if I'm wrong, well no one can tell me I didn't try.

Property is a long term investment. It's far too expensive to buy and sell and timing the market has proven to be impossible no matter how much information one has. 

Generate cash through work and or trading. Pour that money into property and use it when you're old


----------



## tech/a (1 October 2013)

> You only have to look to the USA / Spain / Ireland to see how fast the market can turn.




Spent plenty of time in all three.
The glut in housing surpasses anything
You'll ever see in Aust.
It will take at least a generation to correct.

Comparing Australia to any one of these three
Is ridiculous.


----------



## doctorj (1 October 2013)

tech/a said:


> Spent plenty of time in all three.
> The glut in housing surpasses anything
> You'll ever see in Aust.
> It will take at least a generation to correct.
> ...




I’m not sure that I’d put all of those in the same bucket.  Over construction and over supply was definitely a problem in Ireland, but in Spain I’m not so sure.  There are some parts of the Spanish market where that is certainly the case, for example holiday homes by the sea in AndalucÃ­a, but I personally think that rising unemployment, prohibitively high taxes and reduced access to mortgage funding plays a much bigger role.

You only need to wander through Barcelona to see the problem.  A lot of the bank-foreclosed properties are actually available for rent directly from the bank and appear to be renting quite well.  The problem is that people don’t have the money to buy them, because even though banks will offer you a 95% or 100% mortgage to get the NPL off their books, you still need to meet the taxes of 10-15%.   For a non-foreclosed property, access to mortgage will be much more difficult as the banks seem to be enforcing much higher standards for credit than they’ve done in the past.

Even if you have the money for the taxes, paying a mortgage is tough without a job, which is an increasing problem in Spain, particularly for the younger cohorts. 

The point is, Australia is different, but not totally different.  All you need is increasing unemployment and/or a reduced willingness to lend and the impact on demand may overcome the artificially constrained supply that keeps Aussie property prices high.


----------



## sydboy007 (1 October 2013)

tech/a said:


> Spent plenty of time in all three.
> The glut in housing surpasses anything
> You'll ever see in Aust.
> It will take at least a generation to correct.
> ...




Considerign the massive excess of empty rooms the houseing 'deficit" can easily change.  Household formations went from 1.7M to 500K in just over a year in the USA.  I dare say a similar fall back could easily occur in Australia.

We have an artifical scarcity here.  Remove that and prices would drop quite readily, but as Tony has told us, it's great for current owners even if it does make it harder for the younguns, but since he fears the twitter generation are Labor voters I don't believe he has any interest in resolving this.


----------



## sydboy007 (1 October 2013)

http://www.abs.gov.au/ausstats/abs@....0~2012~Main Features~Housing Utilisation~128

_In 2009–10, most households enjoyed relatively spacious accommodation. For example, 87% of lone person households were living in dwellings with two or more bedrooms; 76% of two person households had three or more bedrooms; and 35% of three person households had four or more bedrooms. Over a fifth (22%) of three-bedroom dwellings, and 9% of four-bedroom dwellings, had only one person living in them._

See the below graph for just how many spare bedrooms there are out there.  Pretty much 80% of the current housing stock has a spare bedroom.  Tax policy is one of the major reasons for this.  Too many old people living in housing too big for them but they don't want to sell and move to a smaller property because it will likely decrease the level of pension they receive and generally due to the restrictive planning laws there's not much suitable smaller accommodation in the same area.

http://www.smh.com.au/business/housing-shortage-all-smoke-and-mirrors-20120622-20szh.html

_The Census revealed that the number of households in Australia is some 1 million less than assumed by the National Housing Supply Council (NHSC) in its estimates of Australia’s housing shortage.

The NHSC’s estimate of housing shortages, which is based on ‘underlying demand’, also failed to account for the fact that Australian households have responded to higher home prices by increasingly opting for shared (group) accommodation, which has resulted in a lower number of households than would otherwise have been the case.

There is certainly a shortage of affordable homes in Australia, but no housing shortage per se._

If you think unemployment wont be going up much, commodity prices will remain elevated to keep the ToT firmly in our favour, then property might turn out to be OK.  I think both of these are more likely to turn nasty over the next few years.  Europe is a ticking debt bomb.  Japan is a bigger debt bomb.  China is struggling with it's debt bomb.  The USA is playing chicken with it's debt bomb.  India / Indonesia have their debt issues.  It doesn't mater which one goes off first, but I see that being the start of a chain reaction which will see a repeat of the 90s recession.  QE and financial repression can only go so far.


----------



## See Change (2 October 2013)

FxTrader said:


> ...I responded to your spruiking of property ......




Spruiking .. ?  Implies i'm selling something . Not that I've seen....



FxTrader said:


> ...... commenting on just how ordinary the returns are for property based on the data YOU provided.




The point of my chart was to show the consistent long term trend .  As you are probably aware you can improve your yield by gearing . This makes the yields much more attractive . If you add timing in a medium time frame on top of that you can improve the yield even further . 



FxTrader said:


> ..... If you're an experienced property investor or developer then no doubt returns can be far above the average..




Actually the basics of property investing are fairly simple . 
My tag on Somersoft is " apprentice timing lord "  . My experience is that, with a fairly basic understanding of simple technical analysis involving , support , resistance , breakout and trend following , it is possible to make significantly more than average. Anyone who has spent  time studying share TA would be more than capable of doing this and getting above average results . I posted this thread a few years ago in advance of significant rises in rockhampton . 



FxTrader said:


> As you are a recent contributor to this long standing thread, please don't seek to lecture me or others here about what we should be getting out of this forum.




If Stock Central was still the leading stock forum in Oz, I'd be one of the longest members , with thousands of posts , but Austin decided to close it... I've been an active member of Reefcap .  I've been a member here since 2005 , though obviously more active as a poster recently.

I thought the aim of any forum was to provide a platform for eduction , opinions and debate. Isn't that correct or is this forum different . 

I'm not here to lecture you on anything . Just to share my opinion on the subject at hand . I think that's most people expect to get out of a forum , or am I wrong. 

Do you own this forum ? I know I don't . Just here to participate in the debate .

I find that by participating in debate , I help clarify my opinions . I like hearing different opinions and finding flaws and strengths in other peoples thoughts. Sometimes I learn something . Hopefully people learn from my contributions



FxTrader said:


> This thread is not about past investment glory or titled "How I became a millionare investing
> .




Why not ?  There have been many deviations in this thread , so why would that be any less valid than a deviation on the evils of property investing and how greedy baby boomers are making it impossible to get into the property market etc.....  

Ten years ago myself and several friends  learnt a hell of a lot from  posters such as The WIfe   ( Nivia Prior ) , Michael croft,  GeeCee.  Several of us are " property millionairs " as a result of listening to them and following their advice . 

I'm sure there are people here who would be interested in that . 

I'd prefer to listen to someone who has , been there , done that , than someone who is an opinionated arm chair expert who has read a book , or someone who wants to charge me $3000 to attend a weekend seminar to listen to " How I bought 135 properties in 5 years with no money down ..." .  

My biggest problem with many of these is that the presenter has made their money in the begining of a cycle with a technique that is fine at that stage , but inappropriate later on when they're flogging their system eg Henry Kaye who cause untold damage in the last cycle advising people to buy OPT with deposit bonds .



FxTrader said:


> You are neither the first nor will you be the last property bull to come here, boast about past success and imply this will continue to infinity.
> .




It's not my intention to boast , merely to provide examples of what can be done . All part of the information / education process of this forum . 

I don't believe that prices will continue to rise indefinitely .  I believe we are at the start of an uptrend and at some stage it will stop and then the property market will go  sideways and even backwards for a number of years  before the process starts again. 

Maybe there will be a shift in this paradigm in the future but I'm not seeing any willingness on the government to intervene . Quite the contrary , Hockey and Abbott have come  out and said they are quite happy for property prices to go up .  They're going to be in charge for at least the next six years .  



FxTrader said:


> If I thought the prospects for residential property prices were good going forward I would say so but the available evidence suggets to me that the conditions supporting price growth now are precarious at best.  I ignore no evidence to the contrary and am watching the property market closely for opportunities
> .




At some stage it will become obvious to everyone that the property market is going up .....  By then I'll be sitting on the sidelines , having cashed in some properties for a nice price while watching the rest go up with  increasing rents.  



sydboy007 said:


> I'd say 90%+ on this forum would view property in general - as opposed to very small pockets - as over valued and not worth investing in.  .




You might be surprised ...  From the response I've had in pm's , the main property related thing I've been told that is not worth investing in is this thread .... Given the continuing negativity ,  I think most of those who want to contribute an opinion which might imply there is potential in property investing give up in despair .... 



sydboy007 said:


> How long can an asset class continue to make income losses before enough people decide it's not a good investment and the capital growth required to make it worthwhile becomes unlikley ......




Well as I don't hold an asset class I can't comment on that , but individual properties , I can . 

Each property I've bought as an investment has seen significant growth within two years . I  continue to buy with the same expectation . Just settling on property in Brisbane at the moment.  This is based on buying bargains in troughs  ( two of those ) or well prices properties at the start of an uptrend ( many ) . If I stuff up , you're welcome to say I told you so . If I don't .......well ....



sydboy007 said:


> I'll keep saying, why buy when you can borrow housing at below cost?  While landlords are blinded by NG and chasing the capital growth dragon renters might as well take advantage of the situation.  .




How about I give you an example . Purchase Price 65 K , sold 8 years later for 240 K . Same tenant when we bought and when we sold . Initial rent $ 120 . final rent $300 . As they had been good tenants , we renewed the lease for a year before we sold the property and asked the agent to sell to another investor. 

So who was taking advantage of who ? 

This is one of the reasons why property investing works . Returns go up while the debt stays the same.



sydboy007 said:


> Sadly with the financial repression ongoing it's difficult to see where else one can put the money, but I'd take a year or 2 of no real returns to the guaranteed losses of property - 5-7 years to break even *from what I've read.*  Long time to have to hold before you can change ya mind without making a loss.




So as someone who hasn't invested in property , are you now an expert who can tell others what to do  ?  

You seem to be keen to take those of us who have successfully invested in property to task for wanting to contradict your  opinions . 

Yes, it is possible to lose money property investing . I know people who have gone bankrupt doing it , by over extending themselves and not having adequate fall back positions .

The first house we bought went sideways for seven years before we sold it . We bought at the peak of the boom in 1988.

Every one makes mistakes .  The important thing is to not make the same mistake twice and to learn from other peoples mistakes  ( forums are good for this ...) . That's why I stress the importance of timing . 

Since I learnt that lesson , every property I've bought as an investment has gone up significantly in the 1-2 years after I bought it .  In the last cycle , all the properties I bought had doubled 5-7 years later. 



sydboy007 said:


> So you invested at the begining of the main part of the housing boom and made a lot of money.  If you can do the same over the neext 10 years I'll be impressed..




For me the next ten years is a no brainer . I think we will see the property market double before that , though I'll happily take a doubling in the next ten years .  Some people  seems to think that property had only doubled since 2000. It's been doing that for a lot longer than that . Given Sydney has been well below that level of growth in the last ten years, I expect it to well and truly catch up in the next ten .  This is the reaon why I've " gone long " on sydney property.

We can see how things go from here.

Another example .  My parents bought a house in 1969 for 25 k 
If we look at what it should be worth  if it doubled every ten years we get
1970 25 k 
1980 50 K 
1990 100K
2000 200 K 
2010 400 K 
What happened in reality ? it sold around 2009 for 1.4 mill , a price it shouldn't  have reaches until somewhere approaching 2030 .
So the reality for the last 50 years is that sydney has more than doubled every ten years. I have seen similar examples in each market I have studied in detail . Sydney , Central Coast , Newcastle , Coastal NSW , Brisbane , Rockhampton , townsville cairns and hobart . 




sydboy007 said:


> * assets that are cashflow negative as poor investments - just my personal point of view.
> ..




yes , Finally something we agree one .

That's why I like the block of units in hobart that I bought for 220 ( 2004 ) , now worth 450 and with a rental return of 600 . Our best performer in cash flow terms . One day I should go down and see them ....

I'm not a big fan of negative gearing , but I'm happy to use it at the moment  .  The other way to get cash flow is to take capital gain on properties and use that to pay down others .   that's what I'm planning on doing in the next few years.



sydboy007 said:


> If NG was for new properties only, with any losses in excess of the income from rent capitalised onto the purchase price I'd be a lot more supportive of it.  Maybe removing the tax free status of the family home and allowing interest deductibility like the USA might be a way forward to stop investors from having such an unfair advantage over home owners, especially FHBs.
> ..




Actually that also makes sense 

A cap on LVR in some ways also makes sense .  I think the possiblity of people having multiple loans at an LVR of 95 % is reckless , but probaly no more than what some people get up to in the share market.

Cliff


----------



## kid hustlr (2 October 2013)

A+ post


----------



## sydboy007 (2 October 2013)

See Change said:


> We can see how things go from here.
> 
> Another example .  My parents bought a house in 1969 for 25 k
> If we look at what it should be worth  if it doubled every ten years we get
> ...




http://www.rba.gov.au/calculator/annualDecimal.html

The purchase price of 25K is the equivalent to 267K in 2012 dollars.  Do you think we can extrapolate your parents house for another 40 years?  That would mean in 2050 you'd expect to get $78.4M

I don't deny property has been a pretty good investment in the past, but mainly due to financial deregulation and artificial land scarcity.  I question if the House and Holes economy can provide us with the same increase in standard of living that occurred over the last 40 years.  There's a few billion hungry poor people out there that can mostly do our jobs.  Unless you're in a trade or a very creative industry there is no longer the kind of job security we and our parents knew.  Throw in APRA is not allowing the banks to increase their overseas borrowings and I'd say it wont take much of an increase in loans before the banks are not able to fund a further increase in lending unless they raise interest rates enough to get people back into TDs, which would certainly crimp the demand for credit as well.

When i bought my property in Erskineville Sydney in 1997 the land valuation was around the 150K mark, now is valued at 500K.  I'd probably be able to sell the house for 850-900K.  The purchase price (inc SD etc) was $322K or $486K in 2012 dollars.  Do I see the same happening over the next 16 years?  Not really, purely because who will be left who can afford to buy it from me?

The minute a state Government has the cajones to stop the artificial land scarcity and to ease restrictive zoning laws in established suburbs, house prices will start to fall and further real increases will be more in line with income growth as best.  Texas shows how this occurs, Germany too since they've had little to no real growth in house prices for 30 years.

If your not highly geared, have a stable income, wont have to sell unless you choose to, then the risks are manageable.  Sadly too many people do not set themselves up in that way.  I worked with woman who amassed a $1.5M property portfolio with her husband in the early 2000s.  I couldn't understand why they were still adding more property when we knew were were losing our jobs and she was pregnant.  I heard a few years ago that it blew up on them and sent them bankrupt and the marriage ended in divorce.

Too many people are blinded by NG and fail to do the basic math behind an IP.  If someone has done their homework then go for it, but my hope is that those who read this thread are encouraged to do their research rather than get lured in by the spruikers, and there's so many of them out there now.  The advantage of other asset classes is the easy diversity.  Property is such a concentrated risk.  For the deposit on a property I can gain a decent portfolio of shares and bonds and keep a bit in cash.  I can also move money around pretty much instantly to take advantage of changes in conditions, which you can't do with property.  

I keep thinking someone needs to build up an investment fund in rental properties, spread out over a number of geographic areas to give diversity.  I'd be tempted to invest in something like that IF the yield was right.  Could be a better way for many renters to get into the property market without the hassles of owning your own home, especially if that investment fund was willing to sign long term leases and provide some of the advantages of owning your own home along similar lines to say Germany where 50% of the population rent.


----------



## tech/a (2 October 2013)

My advice is *NOT* House or unit rental
but *INDUSTRIAL.*

*Forget domestic.*


There will ALWAYS be a shortage of Industrial property.

Cheaper do develop.
Less maintenance
Very long term leases
More $/Square meter.
ALL outgoings covered.
Great capital growth.
Less tenant issues.

Can put in your SMSF


----------



## See Change (2 October 2013)

sydboy007 said:


> http://www.rba.gov.au/calculator/annualDecimal.html
> 
> The purchase price of 25K is the equivalent to 267K in 2012 dollars.  Do you think we can extrapolate your parents house for another 40 years?  That would mean in 2050 you'd expect to get $78.4M




I agree , it sounds crazy doesn't it . If I'd asked my father in 1970 I he thought someone would buy this house for 1.4 mill and then put a bulldozer through it to build another house I can imagine what he would have said . Crazy . Similar reaction from the original person who might have paid around 200 pounds . Do you think this will sell 25 k ....crazy .

I also find it useful to look at other markets to get a comparison of what might happen. There is a house on the market in sydney for 100 mill . Not sure what it would have sold for in 1970 , but 1.4 would have probably picked it up . There are several sales in the 30 - 50 mill range . I know one of those sold for around 200 k in the 60's or 70's.

In Singapore ( quote other poster who I assume posted accurately but I haven't seen the actual figures ) on of their  friends sold his house for 25 mill , up from 7 mill. Apparently they're blaming some of the rises over their on the ability if super funds to invest in property .....




sydboy007 said:


> artificial land scarcity ......




You might make a case if you're talking about the periphery of sydney , you might make a case , but I would never recommend buying there as an investment .

I'd buy where you've bought . They can't make more land there or in manly , mosman , turramurra or wahroonga or the inner west 

So I don't see that as an issue.




sydboy007 said:


> Unless you're in a trade or a very creative industry there is no longer the kind of job security we and our parents knew.




Agree this is an issue . Just reading a book on this at the moment and it's a real issue . People need to take their individual circumstance into account.



sydboy007 said:


> If your not highly geared, have a stable income, wont have to sell unless you choose to, then the risks are manageable.  Sadly too many people do not set themselves up in that way.  I worked with woman who amassed a $1.5M property portfolio with her husband in the early 2000s.  I couldn't understand why they were still adding more property when we knew were were losing our jobs and she was pregnant.  I heard a few years ago that it blew up on them and sent them bankrupt and the marriage ended in divorce.




This is unfortunate and I know people who've had similar experiences . I also know several people who lost lots on money in shares and agricultural investments ( I still shake my head over this last one as I'm sure you would , how can smart be so dumb... ) 



sydboy007 said:


> Too many people are blinded by NG and fail to do the basic math behind an IP.  If someone has done their homework then go for it, but my hope is that those who read this thread are encouraged to do their research rather than get lured in by the spruikers, and there's so many of them out there now.  The advantage of other asset classes is the easy diversity.  Property is such a concentrated risk.  For the deposit on a property I can gain a decent portfolio of shares and bonds and keep a bit in cash.  I can also move money around pretty much instantly to take advantage of changes in conditions, which you can't do with property.




I agree . I think if an investment needs an artificial system to make it work , then I'd avoid it like the plague . My pet hate at the moment is the NRAS scheme which provides incentives to buy cheaper properties to rent to people who otherwise couldn't afford it .  A laudable ideal , but the marketeers are all over it , and many sales aren't being backed up by valuations etc . Personally I wouldn't buy one .



sydboy007 said:


> I keep thinking someone needs to build up an investment fund in rental properties, spread out over a number of geographic areas to give diversity.  I'd be tempted to invest in something like that IF the yield was right.  Could be a better way for many renters to get into the property market without the hassles of owning your own home, especially if that investment fund was willing to sign long term leases and provide some of the advantages of owning your own home along similar lines to say Germany where 50% of the population rent.




I seem to recall something like this being floated in the last cycle but not sure what happened . The logistics of running a business like this could be a nightmare with plenty of scope for people taking advantage of it . Also if you are buying that many properties , imagine how it could distort the market and drive prices up even further , more so than the threatened influx of SMSF money , but another interesting idea. 

Sydboy . I can see that you are not just a blinkered D&G re the same way that some people are and that you have put thought into what you post  I think you May be surprised at how closely are thoughts are aligned . Ditto to bugs .

Cliff


----------



## See Change (2 October 2013)

tech/a said:


> My advice is *NOT* House or unit rental
> but *INDUSTRIAL.*
> 
> *Forget domestic.*
> ...




Hi tech 

Nice to get your input . My recollection from the time we met down at the rocks is that you've made more money out of property and your business than out of shares . Is that still correct ? 

My perception of industrial is that it's more specialised , position is even more important as is the lease . As some one who runs their own business I can understand you would have the skills to do this , but I know my limitations and it's outside my comfort zone .

My main concern with industrial and retail will be the long term impact of globalisation as more and more production moves off shore and more retailing moves into the Internet . That's all unknown , where as people still need somewhere to live , and vacancies when they occure ( assuming you've bought well ) will be shorter .

Maybe higher rewards , but possibly higher risk . There is a poster on somersoft ( daz ) who by all reports has done very well with industrial in Perth , but my perception is that it's his business .

Cliff


----------



## tech/a (2 October 2013)

Cliff

Yes is still the case.
I doubt shares/futures will ever catch the other 2
Mind you the return from shares has been worth the effort.
I will be writing up a new thread shortly which will touch on
much of your and other posters/posts.
The key here for pretty well all of us is 2 things.

(1) Capital gain---rapid is better
(2) Capital accumulation for Retirement--sooner the better.

To your specifics.
Industrial covers a lot of TRADES
Builders/Plumbers/Carpenters/
Mechanics/Sure there are manufactures and many
retail STORAGE facilities.

I like Sheds--Iron Ones. I can get multiple leases on multiple sheds 
400 square meters or 4/100 m sheds $ 1000 a month each.
Cost including land (Still have 3300 meters not developed (Sheded)) $320,000

I'm glad there are people like you who view Industrial as too hard!
Perhaps worth investigating?


----------



## See Change (2 October 2013)

tech/a said:


> Cliff
> 
> I'm glad there are people like you who view Industrial as too hard!
> Perhaps worth investigating?




Fair enough ..  

I know there are many different ways to make money . At the moment I'm looking at getting back into shares.

I've got enough exposure to property at this stage and assuming things goes the way I anticipate I won't need to do anything else .

Cliff


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## maffu (4 October 2013)

moXJO said:


> How is that property investing?
> Thats the same gamble as getting a hot tip on stocks and doing all your dollars. You want dumb investor stories then I have a million and yes you can lose millions in shares off $100s of dollars as was evident from all those people who bought into that QLD company and were then up for paying the dividend.
> Secondly I wouldn't really class PPOR as an investment.
> 
> ...




I actually thought it sounded like a fair example. I believe in Sydney that 700k is about the median house price, and a household income of 120k is well above the median household income. So that seems to be a pretty decent set of numbers to put forward.
In fact, if I was to try and buy a place in Sydney, it would be pretty similar to my set of numbers, and that is why I don't buy as the risk is way to high. Massive leverage and massive interest rate risk.


----------



## Julia (8 October 2013)

I'm unfamiliar with NSW, outside of Sydney, so would appreciate any informed comments about the viability of buying IP in Morriset which I understand is about an hour by train from Sydney CBD.

Friends intend moving there and are suggesting they will sell their $800K house in the Sunshine Coast hinterland and buy smaller house plus IP.  They are academics and have no experience in any form of investing.
They bought at the best time (pre bubble) on the Sunshine Coast and seem to believe they will repeat the quadrupling of their investment over a decade in Morriset.  Perhaps they can.  I have no idea.

When I asked what % return they expected on their investment, they hadn't considered that.  Suggestion is that buying a place around $300K will yield $300 p.w.  Does that sound right for the area?
After expenses, tax etc, they're certainly going to need decent capital gain to make it worthwhile imo.

The further suggestion is that the area is 'about to take off' because people will be commuting to Sydney for work.

Any comments would be appreciated.


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## sydboy007 (8 October 2013)

Julia said:


> I'm unfamiliar with NSW, outside of Sydney, so would appreciate any informed comments about the viability of buying IP in Morriset which I understand is about an hour by train from Sydney CBD.
> 
> Friends intend moving there and are suggesting they will sell their $800K house in the Sunshine Coast hinterland and buy smaller house plus IP.  They are academics and have no experience in any form of investing.
> They bought at the best time (pre bubble) on the Sunshine Coast and seem to believe they will repeat the quadrupling of their investment over a decade in Morriset.  Perhaps they can.  I have no idea.
> ...




A quick search on domain shows you'd need a pretty special 2BR to get 300 a week, and most 3BR are going for the mid 300s a week.

Blocks of land are selling for 180K+

With the slow trains and reliability issues I'm not sure what the growth prospects are.  So far in Sydney i get the feeling the younger Gen X are happy to do apartment living in the city than make the move too far out for a house.  It's approx 116KM from Sydney Central station to Morisset so an hour is more realistically 1.5-2 in a car depending on traffic and the train is 2 hours at beast to 2.5 hours at worst, so I don't think it's going to appeal to people commuting into the Sydney CBD

With 800K they might be able to buy 2 properties in the area, but then you have concentration risk.  They might be better buying in 2 locations, but then that takes more effort to research.

Do they still work?  I'd nearly say downgrade and live there in a modest 2BR house and invest the rest in some floating rate bonds and higher yielding shares if they can hold through any market drops, but I'd say with some decent yielding 5.5-6.5% bonds they could afford to go fairly conservative


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## McLovin (8 October 2013)

sydboy007 said:


> With the slow trains and reliability issues I'm not sure what the growth prospects are.  So far in Sydney i get the feeling the younger Gen X are happy to do apartment living in the city than make the move too far out for a house.  It's approx 116KM from Sydney Central station to Morisset so an hour is more realistically 1.5-2 in a car depending on traffic and the train is 2 hours at beast to 2.5 hours at worst, so I don't think it's going to appeal to people commuting into the Sydney CBD




I agree. You couldn't pay me enough to want to do the F3 crawl 10x/week. By train it's 2 hours + each way. If you work in Sydney then you should be able to afford something on the Central Coast, which is closer and not that much more expensive.


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## Julia (8 October 2013)

sydboy007 said:


> A quick search on domain shows you'd need a pretty special 2BR to get 300 a week, and most 3BR are going for the mid 300s a week.
> 
> Blocks of land are selling for 180K+
> 
> ...






McLovin said:


> I agree. You couldn't pay me enough to want to do the F3 crawl 10x/week. By train it's 2 hours + each way. If you work in Sydney then you should be able to afford something on the Central Coast, which is closer and not that much more expensive.



Thanks for the above - much appreciated.  I'd thought maybe their estimate of just an hour to Sydney CBD was a bit optimistic.

I agree with your investment option, syd.  They won't accept that, sadly.  Have rejected my suggestions of diversifying into shares for years.


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## McLovin (8 October 2013)

Julia said:


> Thanks for the above - much appreciated.  I'd thought maybe their estimate of just an hour to Sydney CBD was a bit optimistic.




Have they lived in Sydney before? To put it in perspective, driving from Morisset to Sydney every day is likely to cost a couple of hundred $ in fuel costs alone/week. If someone can only afford $300 in rent/week it's a pretty unrealistic assumption to think they can afford the luxury of car travel to/from Sydney. And if they've been given a company car then it's unlikely they're in the $300/week market in the middle of nowhere. Which leaves public transport, and even then weekly transport costs will be $60/person/week. For $420/week you can get a small place in Sydney that might be within earshot of where you work.

On the other hand, Morisset might be a popular location for people who live in Newcastle. But then I wouldn't expect it to benefit from what drives prices in Sydney.


----------



## sydboy007 (8 October 2013)

http://www.smh.com.au/business/the-economy/one-in-eight-home-sales-are-at-a-loss-20131008-2v5jn.html

_One out of every eight homes sold is fetching less than it cost.

It's a sobering thought for investors still affected by the delusion that house prices never fall._

I bet if they take inflation into account that figure would be much higher


----------



## skc (8 October 2013)

sydboy007 said:


> http://www.smh.com.au/business/the-economy/one-in-eight-home-sales-are-at-a-loss-20131008-2v5jn.html
> 
> _One out of every eight homes sold is fetching less than it cost.
> 
> ...




I read the article and couldn't help but 

1 in 8 makes a loss = 7 out of 8 makes a profit. Talking about glass half empty!

And it take no account in transaction costs, holding costs, finance costs, improvements made etc.

This study is an embarrassment to the word "study".


----------



## sinner (8 October 2013)

skc said:


> I read the article and couldn't help but
> 
> 1 in 8 makes a loss = 7 out of 8 makes a profit. Talking about glass half empty!
> 
> ...




Is it really so simple?

If the owner selling for a loss is the one under stress then that's 12% of the market in that condition, which is a large number.

Hollowing out of the capital base has to start somewhere.


----------



## sydboy007 (8 October 2013)

skc said:


> I read the article and couldn't help but
> 
> 1 in 8 makes a loss = 7 out of 8 makes a profit. Talking about glass half empty!
> 
> ...




That the problem when dealing with property in this country.  Don't let the facts get in the road of the doubling in 7 or 10 years mantra.


----------



## Julia (8 October 2013)

McLovin said:


> Have they lived in Sydney before? To put it in perspective, driving from Morisset to Sydney every day is likely to cost a couple of hundred $ in fuel costs alone/week. If someone can only afford $300 in rent/week it's a pretty unrealistic assumption to think they can afford the luxury of car travel to/from Sydney. And if they've been given a company car then it's unlikely they're in the $300/week market in the middle of nowhere. Which leaves public transport, and even then weekly transport costs will be $60/person/week. For $420/week you can get a small place in Sydney that might be within earshot of where you work.
> 
> On the other hand, Morisset might be a popular location for people who live in Newcastle. But then I wouldn't expect it to benefit from what drives prices in Sydney.



Good points, McLovin, thank you.  They have accepted jobs in some obscure radio station with the capacity to use the facilities to further their own music careers.  I gather  the financial rewards are minimal at best, but they're in love with the idea and somewhat blind to some of the realities of their proposed plan.  At least they can both fall back on private practice if it all falls over, I guess.


----------



## sydboy007 (9 October 2013)

Julia said:


> Good points, McLovin, thank you.  They have accepted jobs in some obscure radio station with the capacity to use the facilities to further their own music careers.  I gather  the financial rewards are minimal at best, but they're in love with the idea and somewhat blind to some of the realities of their proposed plan.  At least they can both fall back on private practice if it all falls over, I guess.




Ouch.  I think that is the problem with a lot of the boomer generation.  They have a she'll be right mentality I'll never quite get.

I've always found and excel spreadsheet to work wonders on those trying to ignore reality.  A few euqations and you can show them the differing scenarios.

SD alone will set them back $13500 on a $420K property (inc purchase costs) which will be lucky to get them a 3BR property in Morisset.  At least the land values would be low enough they're not up for land tax on a rental property, but I don't see the point of spending $400K on an asset that provides maybe $18K a year in rent, but then loses $3k a year for council water insurance simple maintenance each year.  Net yield of 3.57%.  Woop Woop.  Can do that with a TD and less stress.  Can do that with an ILB and get CPI added to the capital value each qtr.

You can lead a horse to water....


----------



## FxTrader (9 October 2013)

sydboy007 said:


> Ouch.  I think that is the problem with a lot of the boomer generation.  They have a she'll be right mentality I'll never quite get.



This may be your perception but it's not reality.  As a member of the boomer club I will say in general that we are a resilient lot who have lived through the peaks and troughs of economic cycles and most realize that the last decade was a boom cycle.



> SD alone will set them back $13500 on a $420K property (inc purchase costs) which will be lucky to get them a 3BR property in Morisset.  At least the land values would be low enough they're not up for land tax on a rental property, but I don't see the point of spending $400K on an asset that provides maybe $18K a year in rent, but then loses $3k a year for council water insurance simple maintenance each year.  Net yield of 3.57%.  Woop Woop.  Can do that with a TD and less stress.  Can do that with an ILB and get CPI added to the capital value each qtr.



The problem with your argument is property investors would correctly counter that the yield is derived from borrowed money (bank leverage) since that is the only way they can acquire the asset.  If the property is cash flow positive then they are better off (capital gains aside).

If you had $400k in cash to invest then yes, TDs may look more attractive but a property investor would view such an amount as an opportunity to borrow another 2 million from the bank to acquire more investment property.


----------



## sydboy007 (9 October 2013)

FxTrader said:


> This may be your perception but it's not reality.  As a member of the boomer club I will say in general that we are a resilient lot who have lived through the peaks and troughs of economic cycles and most realize that the last decade was a boom cycle.
> 
> The problem with your argument is property investors would correctly counter that the yield is derived from borrowed money (bank leverage) since that is the only way they can acquire the asset.  If the property is cash flow positive then they are better off (capital gains aside).
> 
> If you had $400k in cash to invest then yes, TDs may look more attractive but a property investor would view such an amount as an opportunity to borrow another 2 million from the bank to acquire more investment property.




I understand that, but with gearing we are talking a WHOLE different level of risk compared to fully funding with cash which is what Julia's friends are planning to do.  Admittedly if they are willing to take on extra risk and gear up they could buy more properties, but by the sounds of it they need the income so gearing up is probably not something they can afford to do.

As for people in generally realising the last 10-15 years has been a boom period, I think not.  The general perception out there is property prices will continue to make their above real gains.  Too many people still believe in property doubling every 7-10 years depending on which MSM you trust the most for you investment mantra.

I'd love to know how many people hitting retirement still have significant levels of debt and are using lump sum super to pay it down and then maximise their pension.  Perfectly legal, but a stoopid and very costly loophole to have left in the system, but as Gottie said today the political party willing to close it will likely be voted out of office.  If they could get Gen X and Gen Y onside by showing how income taxes could be lowered by removing this incentive to gear up and let the tax payer wear the costs it might have a chance at rewarding the political party with the cajones to tackle this issue.

If taxpayers have to put in billions a year for super tax concessions, then it should be set up to tax any lump sums so people are encouraged to use their super for day to day living costs, not spending it to maximise their pension entitlement.  I was reading a question to one of the money advice sites and the individual was advised to use the lump sum to make repairs etc on their home then immediately go back to centre link with the reduced level of assessable assets so as to get more pension.  

With a super and tax welfare system like this, no wonder the budget is going to be in deficit for years to come


----------



## FxTrader (9 October 2013)

sydboy007 said:


> As for people in generally realising the last 10-15 years has been a boom period, I think not.  The general perception out there is property prices will continue to make their above real gains.  Too many people still believe in property doubling every 7-10 years depending on which MSM you trust the most for you investment mantra.



I was referring to asset prices generally, not just property, but I agree that many property investors (as evidenced in this thread) presume the "trend" will continue and the past is a reliable guide to the future for property prices.



> I'd love to know how many people hitting retirement still have significant levels of debt and are using lump sum super to pay it down and then maximise their pension.



As I said in the Superannuation thread, most boomers don't have enough money saved in super to do anything else other than construct a plan to draw the aged pension. Pay off debts, no mortgage and adjust assets accordingly. Not a plentiful retirement perhaps but a perfectly adequate one and many see it this way.  This is the primary reason I don't think there will be a glut of property coming onto the market from boomers selling up to downsize.

More to the point of this thread, I believe it's quite possible for property prices to continue rising given the main factors contributing to rising prices (low rates, SMSF entry, planning rules, unlimited tax incentives to investors etc.) remain in place and unlikely to change in the short term.  Do I think my home will be worth $1.4 million in 10 years (double)?  No, but I acknowledge it's possible and would be very happy indeed to sell at that price.


----------



## Julia (9 October 2013)

sydboy007 said:


> Ouch.  I think that is the problem with a lot of the boomer generation.  They have a she'll be right mentality I'll never quite get.



I don't think that's exactly the case here, syd, more just financial naivete.  They've both always had high incomes but have largely just spent most of it.  Even the current property they're selling at the Sunshine Coast was bought with an inheritance.



> I've always found and excel spreadsheet to work wonders on those trying to ignore reality.  A few euqations and you can show them the differing scenarios.
> 
> SD alone will set them back $13500 on a $420K property (inc purchase costs) which will be lucky to get them a 3BR property in Morisset.  At least the land values would be low enough they're not up for land tax on a rental property, but I don't see the point of spending $400K on an asset that provides maybe $18K a year in rent, but then loses $3k a year for council water insurance simple maintenance each year.  Net yield of 3.57%.  Woop Woop.



And then there will be tax, presumably at their marginal rate.  I thought of raising the idea of having the property in a SF to minimise the tax but don't think they'd be up to the administrative responsibilities of running a fund.



> You can lead a horse to water....



Exactly.  And beyond that, it would be intrusive.

FxTrader:  no gearing involved. No contemplation of gearing.  I wouldn't even suggest it.


----------



## tech/a (9 October 2013)

> I was referring to asset prices generally, not just property, but I agree that many property investors (as evidenced in this thread) presume the "trend" will continue and the past is a reliable guide to the future for property prices.




Well *duckenomics *dictates that in times like now--unless there is a reason for a price rise in an area.

Lack of supply
New Freeway/Railway/bus line
Property improvement or Development 
lower than current accepted market price.

Prices are likely to remain stagnant or fall
IF there are reasons for the price to fall.
Oversupply
Lack of demand
(which can be a result of temporary in balance in pricing).

BUT
Property will rise in Chunks (and is likely to fall in chunks).
rather than a prolonged rise or fall.

Property Investment isn't that hard, provided you understand the above.
There really is no need to complicate it.

Similar can be said of most investments.
They have set reasons for rising or falling
and will rise or fall in chunks (generally)

Simple *Duckenomics.*


----------



## FxTrader (9 October 2013)

tech/a said:


> Property Investment isn't that hard, provided you understand the above. There really is no need to complicate it. Simple *Duckenomics.B]*



*

There are of course many other reasons why property can rise of fall, let's not oversimplify.  There were quite a few "duckies" in the U.S. (a few I know personally) that generally followed your duckenomics and found their balance sheets full of buckshot during and immediately after GFC duck shoot.  Whether property prices fall in "chunks" or not, the point is they can and do fall - the "trend" is not always your friend.*


----------



## 13ugs13unny (9 October 2013)

sydboy007 said:


> If they could get Gen X and Gen Y onside




LOL. no, I don't see that many y & X geners leveraging up with debt on mass, with a confluence of insecure factors coming together, like outsourcing, low wages, sky-rocketing living costs, etc. It doesn't add up on my spreadsheet.


----------



## tech/a (9 October 2013)

FxTrader said:


> There are of course many other reasons why property can rise of fall, let's not oversimplify.  There were quite a few "duckies" in the U.S. (a few I know personally) that generally followed your duckenomics and found their balance sheets full of buckshot during and immediately after GFC duck shoot.  Whether property prices fall in "chunks" or not, the point is they can and do fall - the "trend" is not always your friend.




Me too.

I have good friends in the US of A and Britain and Spain.
All hold considerable property
2 are retired 
All are " living the dream "

The trend is always your friend its when its broken it can hit you.
Every investment I have known in 40 yrs. of working for myself will have a drawdown/s.'

Burying your head in sand flipping your feet and beak about wont help you.
You have to make decisions and handle the consequences of those decisions wether they prove to be right or wrong.

Learn how to *MITIGATE RISK *in *ALL* investments.
Evidently 95% of the population wont be able to self fund their retirement.

You'll be able to recognize them---the ones who don't fly high enough (Risk mitigation) to avoid Buck Shot.
Still flapping their beaks in 10/20 yrs time---about how the world is about to end financially.
One day they *WILL* get it right.
In the meantime--why wait to get shot!



> LOL. no, I don't see that many y & X geners leveraging up with debt on mass, with a confluence of insecure factors coming together, like outsourcing, low wages, sky-rocketing living costs, etc. It doesn't add up on my spreadsheet.




Mine neither--in your case.


----------



## 13ugs13unny (9 October 2013)

tech/a said:


> Mine neither--in your case.




.....and a vast majority. We are not the eggs in your basket to hatch into your world of ducklingonimics, just because of your pro property bias. It would have been better to accept there many that don't see it your way.


----------



## tech/a (9 October 2013)

13ugs13unny said:


> .....and a vast majority. We are not the eggs in your basket to hatch into your world of ducklingonimics, just because of your pro property bias. It would have been better to accept there many that don't see it your way.




Not only accept but agree in many cases.
There is a time and place for everything.
For many now is not the time and place for property.
For some it is fine.
I have developers on my books selling off plan subdivision house and land packages as fast as they can release them.
Not the "many" your talking about I agree but not everyone is without opportunity.


----------



## qldfrog (9 October 2013)

tech/a said:


> Not only accept but agree in many cases.
> There is a time and place for everything.
> For many now is not the time and place for property.
> For some it is fine.
> ...



In that case, they are the ones using/abusing the suckers..Not exactly the mainstream...


----------



## tech/a (10 October 2013)

qldfrog said:


> In that case, they are the ones using/abusing the suckers..Not exactly the mainstream...




Infact they are meeting demand.
These are subdivisions at the end of new freeways
Railways.
The house and land packages are targeted at entry
Level $270000 for both.
Hardly call that abusing suckers.
Believe it or not there are people who can easily afford
These opportunities to get out of the rent roll.

Not investors just normal people doing a normal
Thing --- buying a house.

In the whole of this thread I've not seen a RIGHT time
To buy property. Evidently there isn't!


----------



## prawn_86 (10 October 2013)

tech/a said:


> In the whole of this thread I've not seen a RIGHT time
> To buy property. Evidently there isn't!




It is definitely the right time to buy a property here in the US (with a few exceptions obviously). Prices appear to have stabilized, and there are positive net yields available on 95% of properties. I would argue that in the last 5 years there hasn't been a right time to buy a property in Aus (*on average*)


----------



## tech/a (10 October 2013)

prawn_86 said:


> It is definitely the right time to buy a property here in the US (with a few exceptions obviously). Prices appear to have stabilized, and there are positive net yields available on 95% of properties. I would argue that in the last 5 years there hasn't been a right time to buy a property in Aus (*on average*)




In general terms I agree
but like everything there are exceptions and those who do well out of property will find them.
Joe Average --- will find that he is NOT one of those who will find those exceptions.


----------



## 13ugs13unny (10 October 2013)

qldfrog said:


> In that case, they are the ones using/abusing the suckers..Not exactly the mainstream...




In general everyone becomes a sucker, new freeways, transport, schools and all services all have to be paid by the taxpayers to over reach outer areas the only winners are the developers who make a fast buck and disappear once the lots have sold and packages built. This concept was fine in the 1980's where they were built up against existing suburbs and services with little extra reach. Now they are built much further out.

These type of properties are fine if you have to nest cheaply where local day care can take care of the littlies for the first few years.

Then what?


----------



## tech/a (10 October 2013)

13ugs13unny said:


> In general everyone becomes a sucker, new freeways, transport, schools and all services all have to be paid by the taxpayers to over reach outer areas the only winners are the developers who make a fast buck and disappear once the lots have sold and packages built. This concept was fine in the 1980's where they were built up against existing suburbs and services with little extra reach. Now they are built much further out.
> 
> These type of properties are fine if you have to nest cheaply where local day care can take care of the littlies for the first few years.
> 
> Then what?




I'm interested in your town planning/solution/s.

How are you placed in the market?

What would be *YOUR* "Then What?"


----------



## moXJO (10 October 2013)

Julia said:


> I'm unfamiliar with NSW, outside of Sydney, so would appreciate any informed comments about the viability of buying IP in Morriset which I understand is about an hour by train from Sydney CBD.
> 
> Friends intend moving there and are suggesting they will sell their $800K house in the Sunshine Coast hinterland and buy smaller house plus IP.  They are academics and have no experience in any form of investing.
> They bought at the best time (pre bubble) on the Sunshine Coast and seem to believe they will repeat the quadrupling of their investment over a decade in Morriset.  Perhaps they can.  I have no idea.
> ...




median is roughly $383K
3 month growth 21.8%
12 month 2.4%
3 year 7.8%
5 year 5%
10 year 3.9%
median advertised rent $350
gross rental yield 5.7

I don't know the area and I am just quoting figures. There is a massive push into certain areas out of Sydney with wanky Sydney siders pushing up prices and pushing out locals.There are a few towns sprucing up their own little CBDs and are now attracting more people with money.


For me at this moment, prices have moved in the areas I was interested in. So now its renovate, sub-divide and develop. Property is selling off the plan at premium prices atm. I will probably cycle out of some property over the next 12 months. There are plenty of areas still a buy, but I'm interested in a couple of other sectors atm.
NSW business also seems to be coming back pretty hard. The last month is as if someone flicked the switch and work has been pouring in (perhaps the death of labor). There were a lot of desperate people this time last year. Hasn't been like this in a while and will be interesting to see if it continues.
Small business may be back in vogue and about bloody time.

- - - Updated - - -



13ugs13unny said:


> In general everyone becomes a sucker, new freeways, transport, schools and all services all have to be paid by the taxpayers to over reach outer areas the only winners are the developers who make a fast buck and disappear once the lots have sold and packages built. This concept was fine in the 1980's where they were built up against existing suburbs and services with little extra reach. Now they are built much further out.
> 
> These type of properties are fine if you have to nest cheaply where local day care can take care of the littlies for the first few years.
> 
> Then what?




Have you ever owned/made money out of property?


----------



## 13ugs13unny (11 October 2013)

moXJO said:


> median is roughly $383K
> 3 month growth 21.8%
> 12 month 2.4%
> 3 year 7.8%
> ...





Are you so bullish because your a liberal voter?, one week before the election budget emergency, doom & gloom next minute huge boom -everywhere.  in the famous words of our queen "*please explain*"?


----------



## moXJO (11 October 2013)

13ugs13unny said:


> Are you so bullish because your a liberal voter?, one week before the election budget emergency, doom & gloom next minute huge boom -everywhere.  in the famous words of our queen "*please explain*"?




Why are you important?

If you are too stupid to make property work, or too blind to see where NSW is at the current time don't bother quoting me. I'm not interested in guys who have no skin in the game and their head up their ass. And there is a lot of posters that fill the comfortable on my wage with pi$$ all investments, yet seem to have the all knowing opinion on everything they don't invest in. Good for you.


----------



## KurwaJegoMac (11 October 2013)

13ugs13unny said:


> Are you so bullish because your a liberal voter?, one week before the election budget emergency, doom & gloom next minute huge boom -everywhere.  in the famous words of our queen "*please explain*"?




You severely underestimate the power of sentiment. The herd moves as one and sometimes all they're looking for is one single excuse or trigger and BAM off it goes in a different direction.


----------



## medicowallet (11 October 2013)

KurwaJegoMac said:


> You severely underestimate the power of sentiment. The herd moves as one and sometimes all they're looking for is one single excuse or trigger and BAM off it goes in a different direction.




The older I get, the more this becomes the driving force of my investments.

The only thing I need to get better at is jumping off the train or onto the train at the right time, but no matter what the fundamentals of the ride are, it is hard to stop a train that is driven by idiots.

MW


----------



## Whiskers (11 October 2013)

FxTrader said:


> If you had $400k in cash to invest then yes, TDs may look more attractive but a property investor would view such an amount as an opportunity to borrow another 2 million from the bank to acquire more investment property.




One would have to expect that more money will sit in TD's than hit the property market in the near future with the prospect of rates rising again and shrinking yields @ ~ 4% for the last decade.

The conundrum atm is value with room for price rises for near or medium term capital gain are hard to find and despite low vacancy rates, rents (on average) have resisted moving up with prices to improve yields. 

Together with the steady trend for gen Y  to live in family home for longer and slight trend to higher density units over houses, it seems prices are facing strong resistance.

Then there are reports of heaps of unused commercial high rise that may be converted to more economical residential rentals.

Probably the most significant factor to influence future prices is the $A. If the fickle US growth falters with QE phasing out, and the USD falls... that will hit our household affordability and hurt the fed revenue again... only worse than with a mining boom like before.


----------



## medicowallet (11 October 2013)

Whiskers said:


> Probably the most significant factor to influence future prices is the $A. If the fickle US growth falters with QE phasing out, and the USD falls... that will hit our household affordability and hurt the fed revenue again... only worse than with a mining boom like before.




Ok, so USD decreases (hence ours increases in relative terms).  I assume you are thinking this indirectly affects "household" affordability, as I usually think increased dollar is good for purchasing imports... so please explain your thoughts to me..

I can make arguments that a decreasing dollar is good or bad for housing and vice versa.  It is difficult to really have a good understanding of the dollar effect since Rudd the fool opened up foreign investment into our residential housing stocks more greatly (what an idiot)

MW


----------



## Whiskers (11 October 2013)

medicowallet said:


> Ok, so USD decreases (hence ours increases in relative terms).  I assume you are thinking this indirectly affects "household" affordability, as I usually think increased dollar is good for purchasing imports... so please explain your thoughts to me..
> 
> I can make arguments that a decreasing dollar is good or bad for housing and vice versa.  It is difficult to really have a good understanding of the dollar effect since Rudd the fool opened up foreign investment into our residential housing stocks more greatly (what an idiot)
> 
> MW




Household affordability is driven by employment, debt levels and interest rates. Debt levels are still quite high, unemployment rising and expected to continue to keep rising in the near future just with fed budget cuts that translates into more unemployed, without allowing for additional from continued retraction of mining development. 

Everyone knows interests rates are close to bottom if not there and realise any increases will bite into disposable income and affordability.

My estimate is that the only short term hope for a strengthening Aus economy and property market is further lowering of the Aus $. That will not happen as much as I'd have hoped because of US monetary and fiscal policy. They are about to sneeze again and we will get the cold this time because our Gov and RBA isn't effectively countering the US and FED moves to try to protect their economy. The USD hasn't really gained in it's own right, it gained on the back of QE (which must end eventually) and because other currencies in the USDX weakened more.

In short, because the Howard government pretty much sold off the family farm on top of the early mining boom to balance a big spending budget and Labor largely squandered the last of the minng boom... we are to a large extent, as they say, up the creek without a paddle, in terms of the gov providing increased spending to boost the economy this time. 

High household debt, equity mostly flat or falling, unemployment rising and a broke gov means property hasn't got much upside, but lots of downside.


----------



## sydboy007 (12 October 2013)

http://www.smh.com.au/money/investing/not-a-time-for-tax-losses-and-capital-gain-20131008-2v4rf.html

_Only about a third of those who report to the Tax Office that they have an investment property make money.

Earlier this year, Cameron Kusher from RP Data looked at the Tax Office's negative gearing numbers for the 2010-2011 financial year, the latest available. He found the average annual loss for these investors is about $210 a week, or just under $11,000 a year.

But anybody buying a property today as a loss-maker, relying on capital gains to make good, should be very careful. It is likely that too many investors place too much importance on the tax breaks from negative gearing. The Reserve Bank warned recently that it expects growth in house prices to be more in line with income growth than a repeat of the earlier price boom._


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## FxTrader (12 October 2013)

sydboy007 said:


> _Only about a third of those who report to the Tax Office that they have an investment property make money.
> 
> Earlier this year, Cameron Kusher from RP Data looked at the Tax Office's negative gearing numbers for the 2010-2011 financial year, the latest available. He found the average annual loss for these investors is about $210 a week, or just under $11,000 a year.
> 
> But anybody buying a property today as a loss-maker, relying on capital gains to make good, should be very careful. It is likely that too many investors place too much importance on the tax breaks from negative gearing. The Reserve Bank warned recently that it expects growth in house prices to be more in line with income growth than a repeat of the earlier price boom._



The problem with quoting such data is that it ignores the bigger investment picture and therefore injects a bias.  The average annual loss number must be weighed in the context of all tax offsets associated with the investment.  All factors considered, the question then is simply whether or not the property is cash flow positive or negative and to what extent.

If an investment property reports a profit, that simply means income exceeds expenses (e.g. positively geared).  If 33% of property investors report a profit on their investment property that tells me they are quite conservative in terms of their gearing levels.  If find such a number slightly surprising given how heavily property investment is promoted in Aus as a wealth creation vehicle.

Most of the property investors I associate with analyze the cash flow of any potential acquisition prior to making a purchase decision.  Only focusing on the potential capital growth of a property is the mark of an amateur investor.


----------



## sydboy007 (12 October 2013)

FxTrader said:


> Most of the property investors I associate with analyze the cash flow of any potential acquisition prior to making a purchase decision.  Only focusing on the potential capital growth of a property is the mark of an amateur investor.




Fully agree with you, yet NG seems to blind so many when it comes to an IP.

I find those stats quite scary, especially as averages generally hide the outliers.  I'd like to know the median annual loss, and even better would be to know the 25% bands.  The problem as I see it is for those with large losses that need to be funded by other income are in a precarious situation.  Hours worked is still falling, yet more people are employed so not sure if that's a good or bad thing.

I just wonder what the tipping point is in terms of unemployment and low capital growth expectations.  The wilder beasts are fun to watch as they gently graze, but stampedes for the exit can be pretty traumatic.

I'm sure with specialised knowledge and some capital behind you there's still pockets of value in the market, but in general terms how much longer can rental yields keep falling?  How much longer can a real negative 5-6% yield be maintained in the residential market?

I thought in 2007 with interest rates going to 9% it would cause a shake out, then rates fell so rapidly post GFC, and home vendor grants propped up the market, now financial repression is encouraging further speculation.


----------



## medicowallet (12 October 2013)

Whiskers said:


> Household affordability is driven by employment, debt levels and interest rates. Debt levels are still quite high, unemployment rising and expected to continue to keep rising in the near future just with fed budget cuts that translates into more unemployed, without allowing for additional from continued retraction of mining development.
> 
> Everyone knows interests rates are close to bottom if not there and realise any increases will bite into disposable income and affordability.
> 
> ...




So indirectly, thanks for clarifying your thoughts.

Totally agree with your thoughts on Howard and the Labor govts too..  This is the problem with the country.  It is controlled by the vote of the masses (many of which are clueless) and hence what is done is NOT what is best for the whole, it is done for what is the best for the voters, many of which have no clue as to what would be best for the country.....   an example of this is the rollout of the NBN at the expense of rolling out infrastructure that would improve EXPORTS!!   crazy isn't it.. but then again, there aren't many politicians who have ever run successful companies or whatever..

MW


----------



## medicowallet (12 October 2013)

sydboy007 said:


> I'm sure with specialised knowledge and some capital behind you there's still pockets of value in the market, but in general terms how much longer can rental yields keep falling?  How much longer can a real negative 5-6% yield be maintained in the residential market?
> 
> I thought in 2007 with interest rates going to 9% it would cause a shake out, then rates fell so rapidly post GFC, and home vendor grants propped up the market, now financial repression is encouraging further speculation.




It will continue to be supported by:

1. A reserve bank which only has a weapon of interest rates that apply the same to business and personal loans.

2. Governments who continue to support negative gearing for property/shares.

MW


----------



## FxTrader (17 October 2013)

Roger Montgomery voices his concern about SMSF trustees being enticed to speculate on property...


----------



## ROE (17 October 2013)

FxTrader said:


> Roger Montgomery voices his concern about SMSF trustees being enticed to speculate on property...





He is trend chasing again..
this is the current topic of the day, get it when its hot and get a bit of exposure 
while ASIC and various authority throw a few headlines in paper he read

I remember him saying he got future gold contracts delivery when gold was hot...I wonder if that future is now


----------



## McLovin (17 October 2013)

ROE said:


> He is trend chasing again..
> this is the current topic of the day, get it when its hot and get a bit of exposure
> while ASIC and various authority throw a few headlines in paper he read
> 
> I remember him saying he got future gold contracts delivery when gold was hot...I wonder if that future is now






I agree. I think he struggles for attention these days. The guy just repeats what's in the newspaper. I like how he sits in that big armchair like a grandfather dolling out Wether's Originals to his grandkids.


----------



## Superb Parrot (18 October 2013)

I am not taking sides here, just responding to Luci Ellis from the RBA http://www.thebull.com.au/articles/a/41475-rba's-ellis-downplays-housing-bubble-talk.html

You see, this time it is different, whereas a decade ago there was a bubble. 

_The earlier period was marked by rapid growth in credit and in housing prices, low and falling rental yields, household spending exceeding income, new housing finance products, easing lending standards, and "really, really strong" investor interest._

And the difference to now ??


----------



## sydboy007 (18 October 2013)

Superb Parrot said:


> I am not taking sides here, just responding to Luci Ellis from the RBA http://www.thebull.com.au/articles/a/41475-rba's-ellis-downplays-housing-bubble-talk.html
> 
> You see, this time it is different, whereas a decade ago there was a bubble.
> 
> ...




Probably slow credit growth, but then we're near the household debt ceiling anyways at something like 160% of income.

Don't worry, Joe Ponzinomics Hockey has the perfect recepie for ensure Australian proeprty prices only go in one direction.

Restrictive zoning laws, high immigration, viewing shelter as an asset class all play their vital role in Hockey Ponzinomics


----------



## sydboy007 (23 October 2013)

http://www.macrobusiness.com.au/2013/10/rents-continue-to-decouple-from-population-growth/

possibly the massive amount of spare rooms are starting to be used

I suppose you can't leverage rent like you can property


----------



## kid hustlr (24 October 2013)

See Change must be popping champagne somewhere

http://smh.domain.com.au/real-estate-news/sydney-beats-700000-price-barrier-20131023-2w1la.html


----------



## trainspotter (24 October 2013)

Try a bit of evidence of reality 

https://www.commbank.com.au/content...ffordability Report Mar Qtr 2013 - Final.docx.

What's this? Even the Unconventional Economist agrees that housing is becoming affordable?

http://www.macrobusiness.com.au/2013/05/housing-affordability-continues-to-improve-2/


----------



## Whiskers (24 October 2013)

trainspotter said:


> Try a bit of evidence of reality
> 
> https://www.commbank.com.au/content...ffordability Report Mar Qtr 2013 - Final.docx.
> 
> ...




But the reality is that is largely, if not completely driven by global conditions forcing the RBA cash rate lower and partial flow to home loan interest rates.

There is little or nothing on the domestic scene improving better housing affordability... especially when the RBA starts rising again.

I would qualify that by... maybe a bit of recession and then only for those with low debt levels and sound income.


----------



## trainspotter (24 October 2013)

Whiskers said:


> But the reality is that is largely, if not completely driven by global conditions forcing the RBA cash rate lower and partial flow to home loan interest rates.
> 
> There is little or nothing on the domestic scene improving better housing affordability... especially when the RBA starts rising again.
> 
> I would qualify that by... maybe a bit of recession and then only for those with low debt levels and sound income.




Just frickin LOL at this one ... ummm didn't we just come through a GLOBAL FINANCIAL CRISIS? and what happened to house prices? and what happened to our banks? and what happened to all the mortgagee in possession sales? 

Chances of interest rates rising in the near to long term (due to global conditions) is less than a 5% chance and if so a very marginal lift would mean that inflation is increasing which means that house prices would be increasing at the same time. Not the first time in the rodeo for me.


----------



## Whiskers (24 October 2013)

trainspotter said:


> Just frickin LOL at this one




... and back to you, like water off a ducks back, with interest! :



> ... ummm didn't we just come through a GLOBAL FINANCIAL CRISIS? and what happened to house prices? and what happened to our banks? and what happened to all the mortgagee in possession sales?
> 
> Chances of interest rates rising in the near to long term (due to global conditions) is less than a 5% chance and if so a very marginal lift would mean that inflation is increasing which means that house prices would be increasing at the same time.




I suppose if you were dumb enough to think that the interaction between interest rates and inflation was going to be the same regardless of other macro and micro influences in every economic cycle...



> Not the first time in the rodeo for me.




Been in a few myself dude!... and learnt a bit about how to pick, or rather be in the best position to get the best ride, along the way.

That's the trouble you get yourself into when you try to blast a specific comment with a very wide generalisation.

House price increase is not always a factor of inflation and certainly does not always equate to less affordable housing.

If you can't see windows of housing affordability opportunity where Aus inflation and interest rates differ from the US (as a general measure of outside influences), then I'll send you some glasses!... and back to school in property investing.


----------



## trainspotter (24 October 2013)

oh dear .. I can see why I have not been in here for so long .. bye bye


----------



## Whiskers (24 October 2013)

trainspotter said:


> oh dear .. I can see why I have not been in here for so long .. bye bye




Whimp!

I've laid a smorgasbord of data on the table.

You have a short sharp tongue to defend and counter your scatter gun generalisation... but no fortitude for rational discussion!

PS: I'll help you out TS. Let's start with you show me a chart of direct and exact correlation between housing affordability and inflation in Aus.


----------



## trainspotter (24 October 2013)

Whiskers said:


> Whimp!
> 
> I've laid a smorgasbord of data on the table.
> 
> ...




Just for comedy purposes only ... READ THE TITLE OF THE THREAD ... "The future of Australian property prices" ... nothing to do with "affordability" ... go do your own research.

Go and re read my posts over the past 4 years whereby I have already enucleated this information to the nth degree.

Next time drop the name calling. I believe it was you who started with the generalisations:

_"But the reality is that is largely, if not completely driven by global conditions forcing the RBA cash rate lower and partial flow to home loan interest rates."_ This is YOUR opinion ... not a FACT

_"There is little or nothing on the domestic scene improving better housing affordability... especially when the RBA starts rising again." _ Once again a generalisation and YOUR opinion.

_"I would qualify that by... maybe a bit of recession and then only for those with low debt levels and sound income."_ I responded with WE HAVE JUST COME THROUGH A GFC !!! 

EPIC FAIL Whiskers ... the more things change the more they stay the same ... and in your case this has never been more definitive.

Later cats


----------



## Mr Z (24 October 2013)

trainspotter said:


> WE HAVE JUST COME THROUGH A GFC !!!




If only that where true, look a little closer... it is on going. Next big party should be before 2018 and it will dwarf 2008. 

Keep your eye on Japan...

Oh yeah, global conditions drive our rates, that is pretty much a FACT!


----------



## trainspotter (24 October 2013)

Mr Z said:


> If only that where true, look a little closer... it is on going. Next big party should be before 2018 and it will dwarf 2008.
> 
> Keep your eye on Japan...
> 
> Oh yeah, global conditions drive our rates, that is pretty much a FACT!




http://www.global-rates.com/interest-rates/central-banks/central-banks.aspx

Last time I looked the thread was still called "The future of Australian property prices"

EI: 'E was right. I was happier then and I had NOTHIN'. We used to live in this tiiiny old house, with greaaaaat big holes in the roof.

GC: House? You were lucky to have a HOUSE! We used to live in one room, all hundred and twenty-six of us, no furniture. Half the floor was missing; we were all huddled together in one corner for fear of FALLING!

TG: You were lucky to have a ROOM! *We* used to have to live in a corridor!

MP: Ohhhh we used to DREAM of livin' in a corridor! Woulda' been a palace to us. We used to live in an old water tank on a rubbish tip. We got woken up every morning by having a load of rotting fish dumped all over us! House!? Hmph.

EI: Well when I say "house" it was only a hole in the ground covered by a piece of tarpolin, but it was a house to US.

GC: We were evicted from *our* hole in the ground; we had to go and live in a lake!

TG: You were lucky to have a LAKE! There were a hundred and sixty of us living in a small shoebox in the middle of the road.

MP: Cardboard box?

TG: Aye.

MP: You were lucky. We lived for three months in a brown paper bag in a septic tank. We used to have to get up at six o'clock in the morning, clean the bag, eat a crust of stale bread, go to work down mill for fourteen hours a day week in-week out. When we got home, out Dad would thrash us to sleep with his belt!

My apologies to all the Monty's out there !


----------



## Mr Z (24 October 2013)

LOL...

Good Luck.


----------



## againsthegrain (25 October 2013)

lol @ trainspotter you might as well stick you your plan with stealing used light bulbs you won't make it in property


----------



## sydboy007 (25 October 2013)

http://www.macrobusiness.com.au/2013/10/60-say-property-vulnerable-to-significant-correction/

_This is the first time this question has been included in the RP Data – Nine Rewards survey. The results show 60% of survey respondents believe the Australian housing market may be vulnerable to a significant correction in values. The survey didn’t probe further about what level of value decline would be considered ‘significant’, however, it is clear that there is a level of unease about the future of Australian dwelling values._

Seems like it's only investors who remain confident of the capital growth to make their extreme negative gearing pay off.


----------



## trainspotter (25 October 2013)

againsthegrain said:


> lol @ trainspotter you might as well stick you your plan with stealing used light bulbs you won't make it in property




You your yoyo ... get some grammar and a real job.


----------



## Whiskers (25 October 2013)

sydboy007 said:


> http://www.macrobusiness.com.au/2013/10/60-say-property-vulnerable-to-significant-correction/
> 
> _This is the first time this question has been included in the RP Data – Nine Rewards survey. The results show 60% of survey respondents believe the Australian housing market may be vulnerable to a significant correction in values. The survey didn’t probe further about what level of value decline would be considered ‘significant’, however, it is clear that there is a level of unease about the future of Australian dwelling values._
> 
> Seems like it's only investors who remain confident of the capital growth to make their extreme negative gearing pay off.




As they say, you can fool some of the people some of the time but you can't fool all the people all the time. There are still some fundamental issues that Aus has not addressed adequately to look after our best interests in a still vulnerable global economy. 

My pet gripe is with the RBA policy guidelines and Terms of Reference that prevented us from receiving the benefit of lower interest rates sooner and for longer. They say they were always concerned with inflation running away, but for a large part that would have been because of external factors such as fuel prices... which would have been mitigated more with a more aggressive cash rate cut flowing through weaker upward pressure on the AUD... a more rounded less severe rise and fall. 

Sure imported goods would not have been quite as cheap which would have slowed consumer spending a bit (not necessarily a bad thing) improving (pre)cautionary savings rates probably, but the AUD falls impacting on prices for imported goods like fuel would not have impacted so hard and knee jerking confidence so much. 

The mining development boom as opposed to the export boom, might even have been extended a little, since a large cost to that is fuel costs and (lack of) confidence.

In a nutshell they are more concerned with the profitability of the big end of town than the wider best interest of Australia. They would have been less profitable if they cut more, sooner... but we would be in a stronger economic position as individuals and a country.



trainspotter said:


> You your yoyo ... get some grammar and a real job.




Well TS, at least I understand what he means and don't hold an intellectual difficulty or typo against him.

You seem quite articulate, full of bravado, tried unsuccessfully too often to shoot down the messenger... but hardly uttered a meaningful 'message' yet!

You would be well advised to go get some manners before someone you come face to face with :hammer: you down to size... or do you just reserve this nonsense for forum trolling!


----------



## trainspotter (25 October 2013)

Well Whiskers I dips me lid to your omniscience. Tell me do you get a nose bleed from being up so high and looking down on us mere mortals? :

Try reading post #5484 for some enlightenment of how to make money in RE at the moment. 

Are you threatening me Whiskers or just another internet hero banging his keyboard?  me a river big boy.

It seems that there is no end to the logorrhea that extrudes it's way out of your cranium and roughly transcends onto a keyboard to be posted in here. Good Grief man you must be a HOOT at parties !


----------



## Whiskers (25 October 2013)

trainspotter said:


> Try reading post #5484 for some enlightenment of how to make money in RE at the moment.




Soo, you were getting bored with general conversations about houses and prices in May 2011 and wanted to have a rant about yourself, some yield or capital gain from tin sheds.

A lot has changed since then and the discussion that you bought into with your nonsense, was about housing affordability now and in the near future... a bit of a variation from the thread title, like your tin shed.   

We are happy to talk generally, in third person, about the affordability of houses, but if you prefer to tell us about yourself, your own experience with tin sheds or skyscrapers or whatever atm, that's fine... if that's what turns you on.


----------



## trainspotter (26 October 2013)

Whiskers said:


> Soo, you were getting bored with general conversations about houses and prices in May 2011 and wanted to have a rant about yourself, some yield or capital gain from tin sheds.
> 
> A lot has changed since then and the discussion that you bought into with your nonsense, was about housing affordability now and in the near future... a bit of a variation from the thread title, like your tin shed.
> 
> We are happy to talk generally, in third person, about the affordability of houses, but if you prefer to tell us about yourself, your own experience with tin sheds or skyscrapers or whatever atm, that's fine... if that's what turns you on.




Oh quit your pontification and stylised point of views. You clearly are that myopic that you cannot see the wood from the trees old chum. Try posting something of relevance and stop surfing my wake, I am tired of doing all the heavy lifting for you.

In your own words "Some yield or capital gain from tin sheds" is exactly what this thread and topic is about and not some venemous spray from another internet hero pretending to be a guru. I note you used the word "WE" in regards to affordabilty .... it would seem that your grasp of english has suddenly evaporated as it was only you banging on about this subject.

I am quite happy to continue building "tin sheds or skyscrapers or whatever" for you see I am actually active in the marketplace and am actually contributing something to this thread other than fapping on about unrelated drivel. Your choice old bean to continue in this vein or you could post some ACTUAL figures correlating your vast experience in the real estate game.

And believe it or not "tin sheds or skyscrapers or whatever" are part of the future of Australian property prices.


----------



## trainspotter (26 October 2013)

Oh and another thing .... you might want to do some research on "imported fuel" 

FACTS ABOUT PETROL PRICES AND THE AUSTRALIAN FUEL MARKET

International Prices

Crude oil, petrol and diesel are different products and are bought and sold in their own markets.

Each market is typically regionally-based and there are linkages and transactions between regional markets.

Prices in regional markets reflect the supply and demand balance in each market and the physical characteristics and quality of each commodity.

Prices in regional markets can be volatile and can move in different directions from each other.

This can be due to the impact of factors and events unique to one market - such as supply and demand pressures in a region, hurricanes, wars and civil unrest.
This is why focusing on relevant markets and longer term price trends is more important than daily or week-to-week price movements.

Australia’s regional market for petroleum products is the Asia-Pacific market.

Key crude oil pricing benchmarks for the Asia-Pacific market including Australia are Tapis, Dated Brent and Dubai – not West Texas Intermediate (the US crude benchmark) widely reported in the media.

*The Singapore price of unleaded petrol (MOPS95 Petrol)) is the key petrol pricing benchmark for Australia*.

*To meet Australian fuel demand, around 15-20% of petrol is imported (mainly from Singapore)*. 

Singapore is the regional refining and distribution centre and among the world’s largest.
If Australia’s petrol prices were below Singapore prices, Australian fuel suppliers would have no commercial incentive to import to Australia (because sales of that fuel would be at a loss here). In addition, Australian refiners would have an incentive to export production.

‘Refiner margins’ margins' are the differences between product prices and crude oil prices, both of which are set by the market, not by oil companies (eg. Singapore petrol ‘refiner margin’ = MOPS95 Petrol price minus the relevant crude oil).

http://www.aip.com.au/pricing/facts/Facts_about_Petrol_Prices_and_the_Australian_Fuel_Market.htm

Just gotta love the facts


----------



## stevier95 (26 October 2013)

This forums becoming a joke with all this ****.


----------



## trainspotter (26 October 2013)

14 x 2 storey townhouses currently in at council waiting for building licences.

Sorry to the other ASFERS for being off topic for so long ... pm me for details if you want to know the specifics of this development.


----------



## Joe Blow (26 October 2013)

Folks, please keep it civil and stay on topic. 

Let's not let this thread degenerate into personal attacks and pointless bickering, when we could have thoughtful, constructive discussion instead.


----------



## lindsayf (26 October 2013)

As a potential IP buyer in the next few years I'm interested in the discussions about NG IP's not necessarily being a good investment due to low rental returns and the prospect of limited capital gains in the medium/long? term.
BUt most of this discussion seems to be metro based and I am in a regional centre (Albury/Wodonga).  Do the warnings equally apply to region centres?

Thanks


----------



## Whiskers (26 October 2013)

trainspotter said:


> 14 x 2 storey townhouses currently in at council waiting for building licences.




Is there a delay or problem (in the council) with getting the go ahead?

On the affordability issue... what return are you budgeting for, sale or rental?



lindsayf said:


> BUt most of this discussion seems to be metro based and I am in a regional centre (Albury/Wodonga).  Do the warnings equally apply to region centres?
> 
> Thanks




lindsayf , I'm in regional Qld and am personally out of the IP market atm, but getting close to getting back in, in special circumstances. Other family members are still getting a reasonable return from residential houses (mostly in regional areas) bought over some years, but their capital gain has evaporated in a couple of cases.

There are a lot of specific factors that can affect regional areas in isolation, but as a general rule I'm thinking another interest rate cut and waiting for the right cheaper lots to come along is the key. 

There are still a few 'getting desperate' sellers who bought vacant land in particular before the GFC, expecting prices to keep rising with spruiking from some agents and newspaper writers among others trying to beat up business. I'm seeing considerable asking price discounts, 30 to 40% not uncommon in my wider region, trying to get a sale before the bank steps in.


----------



## trainspotter (26 October 2013)

Whiskers said:


> Is there a delay or problem (in the council) with getting the go ahead?
> 
> On the affordability issue... what return are you budgeting for, sale or rent.




Like I said ... pm me for details and I will send you a raft of data and spreadsheets and funky pie graphs.

lindsayf: Same rules apply ... area specific analysis available but not info to be discussed on the boards matey boy/girl/investor in real estate.


----------



## lindsayf (26 October 2013)

Thks Whiskers



trainspotter said:


> lindsayf: Same rules apply ... area specific analysis available but not info to be discussed on the boards matey boy/girl/investor in real estate.




TS
Not clear what you mean here.
Obviously area specific analysis is required..but what else are you saying here re other 'info'?

thks


----------



## trainspotter (27 October 2013)

lindsayf said:


> Thks Whiskers
> 
> 
> 
> ...




I meant I will not and cannot  give this kind of analytical advice on a discussion thread. Please private message me for clarity of your situatiion.


----------



## Macquack (27 October 2013)

trainspotter said:


> 14 x 2 storey townhouses currently in at council *waiting for building licences*.




Who is the builder for this project?


----------



## trainspotter (27 October 2013)

Macquack said:


> Who is the builder for this project?




hahahaha ... good one Macquack


----------



## sydboy007 (27 October 2013)

I just keep asking myself where does the money come from?

I can sort of understand if there's an external injection of funds via Chinese investors that the local economic situation becomes less relevant, but surely they can't swamp what is a $5T market?

Besides being a developer, and from so many articles it sounds like getting a development proposal across the line is a real nightmare (except for Treasurer Ponzinomics who nominates it as one thing helping to prop up Aussie property prices) how do you make money buy buying at current prices?  Is it an intergenerational thing where the wealth built up by the boomers is now being depleted to help their children into the market?

I must admit I'm surprised at how things have panned out.  I've looked at the fundamentals too much when I suppose it's a classic follow the trend and hope you can get out before the final popping of the bubble occurs.

I suppose high immigration has a second effect on the housing market in that road and public transport congestion is bad, and continuing to get worse.  This seems to be pushing up the middle ring suburb prices as people move to where they have the best transport links to their work.

I still can't see resi property as a good investment on a net yield basis, but capital growth is still there for those with the good sense to buy in the right location.


----------



## MrBurns (27 October 2013)

sydboy007 said:


> I just keep asking myself where does the money come from?
> 
> I can sort of understand if there's an external injection of funds via Chinese investors that the local economic situation becomes less relevant, but surely they can't swamp what is a $5T market?
> 
> ...




It's the same conundrum, is this the end of a cycle or the start of an upward leg ?

The Chinese are certainly back in the market and people are taking huge mortgages because of low rates, when rates do rise the fallout will be substantial, they're gambling, gambling that the market will inflate them out of trouble, sometimes it does sometimes it goes the other way.............roll the dice.


----------



## Whiskers (27 October 2013)

trainspotter said:


> Like I said ... pm me for details and I will send you a raft of data and spreadsheets and funky pie graphs.
> 
> lindsayf: Same rules apply ... area specific analysis available but not info to be discussed on the boards matey boy/girl/investor in real estate.




Hey, what is this... a sales pitch... trying to sell off the plan? :

What is to stop anyone you PM the info to from posting it up somewhere anyway! 

Not interested in buying a unit or searching through truck loads of info, just curious what returns you expect to get.


----------



## MrBurns (27 October 2013)

Anyone know anything about land in Clyde Victoria being sold by NRG Concepts for Super Funds ???

Sounds a bit risky to me.


----------



## trainspotter (27 October 2013)

Whiskers said:


> Hey, what is this... a sales pitch... trying to sell off the plan? :
> 
> What is to stop anyone you PM the info to from posting it up somewhere anyway!
> 
> Not interested in buying a unit or searching through truck loads of info, just curious what returns you expect to get.




Basic parameters ... 600k to buy said parcel of land ... 3.8 million to construct thereon ... sale price of each unit = $385,000 ... you do the maths. 

And before everyone gets on about overheads/risk/profit/costs/interest component/stamp duty/contingency etc ... that is already factored into the construction costs.


----------



## sptrawler (28 October 2013)

MrBurns said:


> It's the same conundrum, is this the end of a cycle or the start of an upward leg ?
> 
> The Chinese are certainly back in the market and people are taking huge mortgages because of low rates, when rates do rise the fallout will be substantial, they're gambling, gambling that the market will inflate them out of trouble, sometimes it does sometimes it goes the other way.............roll the dice.




Perfectly put, Mr Burns.

A lot depends on the outcome, the powers that be want.


----------



## sydboy007 (28 October 2013)

sptrawler said:


> Perfectly put, Mr Burns.
> 
> A lot depends on the outcome, the powers that be want.




we're pretty much stuffed whatever happens

House prices fall significantly then the Govt is on the hook to keep the gang of 4 building societies from falling over.  Govt debt starts to look like Ireland or Greece then.

If house prices keep rising, then the economy will just get progressively less competitive as all kinds of rents are higher, wages have to be higher to compensate for the over inflated property prices.

The major political parties don't see a problem, and the vested interests in the property sector are way too powerful to take on, and the legions of NG property owners will vote out any Govt that tries to sort the system out.

So we're left with an economy built on houses and holes with a bit of LNG thrown in.


----------



## MrBurns (28 October 2013)

sydboy007 said:


> we're pretty much stuffed whatever happens
> 
> House prices fall significantly then the Govt is on the hook to keep the gang of 4 building societies from falling over.  Govt debt starts to look like Ireland or Greece then.
> 
> ...




If the banks get into trouble we're all stuffed , they have to be saved but doesn't mean they wont take a hit.

They've been factoring in a housing bust for a while now while simultaneously chasing mortgage business, that's the way it works.


----------



## trainspotter (28 October 2013)

**sniff sniff* ... what's this? A start of a "BOOM" again?*

Best performing house suburbs around $500,000 - Victoria !

Suburb / Median Value Now / 12-month growth / 5-year growth

Heathmont / $539,291 / 13% / 40%

Lilydale / $469,380 / 12% / 22%

Wantirna / $438,084 / 10% / 31%

http://www.news.com.au/realestate/r...mer-this-weekend/story-fncq3era-1226747103023

BANKS ??? Are they in trouble??? HARDLY !!!

*Australia's big four banks have been ranked the most profitable in the developed world for the third year running, reigniting criticism about their market dominance.*

With big bank profits likely to exceed $26 billion this year, figures show the Commonwealth Bank, Westpac, ANZ and NAB made better returns last year than lenders in 10 major developed countries, including Canada, the US, Britain and Europe.


Read more: http://www.smh.com.au/business/banks-make-71-million-profit--a-day-20130623-2oqrw.html#ixzz2iyfmZ7dh


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## trainspotter (28 October 2013)

sydboy007 said:


> we're pretty much stuffed whatever happens
> 
> House prices fall significantly then the Govt is on the hook to keep the gang of 4 building societies from falling over.  Govt debt starts to look like Ireland or Greece then.
> 
> ...




*WOW* so our economy is built on houses? HUH ? Very small factor of the economy in general. We are nothing like Greece.

Government income is tied to the size and growth of the economy, usually expressed as gross domestic product. And when we convert the debt growth shown in the chart to GDP terms, the picture looks very different. The 2011-14 debt growth is as follows: Slovenia 23.9 per cent of GDP, Spain 26.4 per cent, the UK 12.6 per cent, Greece 10.3 per cent, total OECD 9.6 per cent and the United States 8.1 per cent. Australia's increase is 6.7 per cent.
By 2014, every other country on the chart has a debt-to-GDP ratio between 1.25 and 5.6 times as big as Australia's. The chart's ''best'' performers, Germany and Switzerland, are cutting debt but, relative to GDP, still owe significantly more than Australia does. 

*Commonwealth debt is equal to about 10 months' revenue - most mortgage holders can only dream of such a burden.*


Read more: http://www.theage.com.au/comment/de...re-isnt-one-20130816-2s289.html#ixzz2iyulspJR


I think the mining companies contribute to our economy as well http://www.thisisourstory.com.au/our-contribution.aspx


----------



## CanOz (28 October 2013)

Everyone is so quick to call asset bubbles after the last big bust in 08-09. What most fail to consider is that asset bubbles are just a cycle. Sure, the cycle will will turn at some stage, until then the trend is up....

Housing prices can be a localized thing as well. Darwin still booming?

Someone tell me where the best deals are in Sydney or Queensland please....i wish this thing would pop too so we could buy at a discount...


----------



## trainspotter (28 October 2013)

CanOz said:


> Everyone is so quick to call asset bubbles after the last big bust in 08-09. What most fail to consider is that asset bubbles are just a cycle. Sure, the cycle will will turn at some stage, until then the trend is up....
> 
> Housing prices can be a localized thing as well. Darwin still booming?
> 
> Someone tell me where the best deals are in Sydney or Queensland please....i wish this thing would pop too so we could buy at a discount...




Exackery !! Picking the time to get in and get out without getting burned is the question.

Darwin is still going strong? Tenant Creek is not part of Darwin if that is what you are alluding to CanOz?

Quite broad parameters there CanOz for the Sydney and QLD request? Belmore average price $640,000 could be the next Marrickville IMO if you are looking for "close to city suburb" (15kms not that far really) depending on budget. 

Aaaahhhh Where in QLD exactly do you want to live? Slacks Creek in Logan has always done it for me:

http://www.realestate.com.au/property-house-qld-slacks+creek-114934995

Shhhhhhh don't tell anyone.


----------



## FxTrader (28 October 2013)

trainspotter said:


> **sniff sniff* ... what's this? A start of a "BOOM" again?*
> 
> Best performing house suburbs around $500,000 - Victoria !
> 
> ...




Heathmont is a good example of why a median price can be misleading.  I live nearby and know Heathmont well, it's an established area with a diverse mix of 50+ year old dilapidated weatherboard shacks, old ugly BVs, renovated and new homes.  $400 to $500k buys a shack or old BV or townhouse.  If you want a well presented renovated home or something modern try $700k to 1 million.

A friend has a beautiful renovated home there that's probably worth $900k+.  Next door is an awful unrenovated and poorly kept 50+ yo weatherboard.  The location is great but it's a mix of the good, bad and just plain ugly all on the same street.


----------



## CanOz (28 October 2013)

trainspotter said:


> Exackery !! Picking the time to get in and get out without getting burned is the question.
> 
> Darwin is still going strong? Tenant Creek is not part of Darwin if that is what you are alluding to CanOz?
> 
> ...




Thanks TS...fishing must good there too I'm guessing...


----------



## sydboy007 (28 October 2013)

trainspotter said:


> *WOW* so our economy is built on houses? HUH ? Very small factor of the economy in general. We are nothing like Greece.
> 
> Government income is tied to the size and growth of the economy, usually expressed as gross domestic product. And when we convert the debt growth shown in the chart to GDP terms, the picture looks very different. The 2011-14 debt growth is as follows: Slovenia 23.9 per cent of GDP, Spain 26.4 per cent, the UK 12.6 per cent, Greece 10.3 per cent, total OECD 9.6 per cent and the United States 8.1 per cent. Australia's increase is 6.7 per cent.
> By 2014, every other country on the chart has a debt-to-GDP ratio between 1.25 and 5.6 times as big as Australia's. The chart's ''best'' performers, Germany and Switzerland, are cutting debt but, relative to GDP, still owe significantly more than Australia does.
> ...




I don't see current Govt debt as a problem, I do see private sector debt as THE PROBLEM.

The below chart is a bit old, but from what I've read there's been little deleveraging in the household sector, more a flat lining the last few years.  So if the Coalition claimed Guv'ment gross debt at at < 20% is a CRISIS, then household debt at 100% must be <expletive> high.

For every property winner there's going to be a property loser.  I know the idea is to be on the winning side, but with prices where they are, and the high transaction costs involved, I fear it's easy to be trapped on the losing side.

I think it all boils down to unemployment and how far it increases during the current slow down.  Income growth per capita is turning negative in real terms, which to me is not supportive of rising prices, but if the media reports of the Chinese being big investors here then that external influence may make local economic conditions a moot point till China has it's own debt crisis.

Certainly the trend is for prices to start looking on the up in Sydney, but I'd say Perth is going nowhere for awhile, and lifestyle areas are probably still to be avoided.


----------



## trainspotter (28 October 2013)

FxTrader said:


> Heathmont is a good example of why a median price can be misleading.  I live nearby and know Heathmont well, it's an established area with a diverse mix of 50+ year old dilapidated weatherboard shacks, old ugly BVs, renovated and new homes.  $400 to $500k buys a shack or old BV or townhouse.  If you want a well presented renovated home or something modern try $700k to 1 million.
> 
> A friend has a beautiful renovated home there that's probably worth $900k+.  Next door is an awful unrenovated and poorly kept 50+ yo weatherboard.  The location is great but it's a mix of the good, bad and just plain ugly all on the same street.




Sensational report on Heathmont, FxTrader ... glad to hear a person with experience on the ground zero POV.

Me personally I would look for the most structurally built dilapidated weatherboard shack in the best street you can afford and renovate the FECK out it and take lotsa photos on the way to prove how clever you are.

Spend 500k and another $100k to make $900+ works for me every time.

Real Estate ... ya gotta love it.


----------



## medicowallet (28 October 2013)

trainspotter said:


> Spend 500k and another $100k to make $900+ works for me every time.




a $599100 loss.  (or are you selling it for $600900)

Sounds like my investments in MFS, BBG, PDN.

MW


----------



## trainspotter (28 October 2013)

medicowallet said:


> a $599100 loss.  (or are you selling it for $600900)
> 
> Sounds like my investments in MFS, BBG, PDN.
> 
> MW




Hey MW .... property thread Budge. Rental value would cover the interest component adequately.


----------



## trainspotter (28 October 2013)

CanOz said:


> Thanks TS...fishing must good there too I'm guessing...




Have a look at my mate Chris "Spess" "Crispy" on the deck doing a Starfish in the hook line and sinker thread. Property is showing signs of recovery is all I am saying.

$750 a week for a 400k house in Logan ... ask agents to present signed "potential" lease agreements to take to bank for finance. 1/2 hour to Gold Coast excites me personally.

Off to NT to fish for Barra in December during the rainy season. Pics to follow mate.


----------



## sptrawler (28 October 2013)

trainspotter said:


> Have a look at my mate Chris "Spess" "Crispy" on the deck doing a Starfish in the hook line and sinker thread. Property is showing signs of recovery is all I am saying.
> .




I hope your wrong I just sold a triplex block.lol


----------



## im sparticus (29 October 2013)

Time to get the moon boots back on!!!!


----------



## satanoperca (29 October 2013)

trainspotter said:


> Spend 500k and another $100k to make $900+ works for me every time.
> 
> Real Estate ... ya gotta love it.




Simple as just trading shares.

& why stop at $500K, why not by 10, then you are talking, nice $3M k profit. We should all be doing, living the dream.

Got to love it.


----------



## trainspotter (30 October 2013)

satanoperca said:


> Simple as just trading shares.
> 
> & why stop at $500K, why not by 10, then you are talking, nice $3M k profit. We should all be doing, living the dream.
> 
> Got to love it.




Now you are just being unrealistic .. back to sleepy timez .. g'night. 

Ya got to start somewhere satanoperca ... babies crawl before they walk.

If you had that kind of money to splurge there are far better things out there to make coin on in the long term.


----------



## againsthegrain (30 October 2013)

trainspotter said:


> Now you are just being unrealistic .. back to sleepy timez .. g'night.
> 
> Ya got to start somewhere satanoperca ... babies crawl before they walk.
> 
> If you had that kind of money to splurge there are far better things out there to make coin on in the long term.




LOL this is coming from a gay that wanted to go door to door and swap out people's light bulbs for used bulbs saying they are new at 50c profit a pop.

TS the truth is you bought one overpriced property and are still in the red thinking you can talk up the market on the internet. 

All you ever do is quote news.com.au which everybody knows is hardly a credible source and when people make smart comments about the economy you attack their "lack of spelling" or anything else to change the topic.


----------



## trainspotter (30 October 2013)

againsthegrain said:


> LOL this is coming from a gay that wanted to go door to door and swap out people's light bulbs for used bulbs saying they are new at 50c profit a pop.
> 
> TS the truth is you bought one overpriced property and are still in the red thinking you can talk up the market on the internet.
> 
> All you ever do is quote news.com.au which everybody knows is hardly a credible source and when people make smart comments about the economy you attack their "lack of spelling" or anything else to change the topic.




Oh why do I bother entering into discussions with people who are not equipped to defend themselves?

The light bulb idea was to show an example of a low cost start up business and I asked anyone else if they had any good ideas ... ipso facto. But it would seem that your lack of comprehension of the written word has come to the fore yet again.

As for calling me "gay", I do hope that you are saying that I am a "happy" person and not a person who is attracted to the same male gender. How churlish of you if it is the former and not the latter part of the aforementioned sentence.

Please if you have nothing to say about property why even bother posting in here?

I bid you adieu my mean spirited friend and I do hope that one day you find whatever it is you are looking for that will make you "gay" like me.

P.S. Go and read several years and a coupla thousand posts or so where I have explained in great detail as to the whereabouts of property during its cyclical phases.


----------



## maffu (30 October 2013)

lindsayf said:


> As a potential IP buyer in the next few years I'm interested in the discussions about NG IP's not necessarily being a good investment due to low rental returns and the prospect of limited capital gains in the medium/long? term.
> BUt most of this discussion seems to be metro based and I am in a regional centre (Albury/Wodonga).  Do the warnings equally apply to region centres?
> 
> Thanks




Any post I have made is generally Sydney focused, where on average the rental yield looks to be about 2-3% (less than a bank account!), which I personally find unacceptable as you are then just gambling on capital gains.

I have never been to Albury/Wodonga so can't comment on that, but in other regional areas in NSW that I have looked, there is much better rental yields available than those in Sydney, so while I think Sydney is over valued, there are other areas that seem fairly priced and that would give a reasonable yield.


----------



## trainspotter (30 October 2013)

No no no no this cant be true ...... its from a News Limited source! Oh wait ... the information is from the HIA and also from CommSec chief economist Craig James.

*A RISE in new home construction appears to be gaining traction with new home sales hitting their highest level in over two years. Sales of new homes increased by 6.4 per cent in September, seasonally adjusted, the strongest monthly growth since April 2012, according to the Housing Industry Association (HIA).*

The increase reflected a 4.5 per cent rise in sales of detached houses and a 19.9 per cent boost in multi-unit sales.

Over the September quarter, detached house sales rose 3.7 per cent - and by 25.2 per cent compared to the same period in 2012.

Total new home sales reached their highest level in over two years in September, HIA chief economist Harley Dale said.

"Given the recovery in sales is occurring from a record low and that the upward momentum appeared to be stalling in mid-2013, this September outcome is very positive," Dr Dale said.

http://www.news.com.au/business/bre...ear-high-in-sept/story-e6frfkur-1226749628921


----------



## satanoperca (30 October 2013)

trainspotter said:


> No no no no this cant be true ...... its from a News Limited source! Oh wait ... the information is from the HIA and also from CommSec chief economist Craig James.
> 
> *A RISE in new home construction appears to be gaining traction with new home sales hitting their highest level in over two years. Sales of new homes increased by 6.4 per cent in September, seasonally adjusted, the strongest monthly growth since April 2012, according to the Housing Industry Association (HIA).*
> 
> ...




Typical of news, just keep on smiling and don't mention any fall please.

 “Sales of multi-units fell by 5.7 per cent in the quarter and were largely flat compared with the same period in 2012.”   noted Harley Dale.

Yes good old news, reports just the good stuff.

But on a positive note, TH as you are far more worldly on these matters than certainly I am, is there anything in this :-
"CBA, Westpac and ING have all recently increased their interest rates despite expectations of further interest rate cuts by the Reserve Bank of Australia.

CBA added 0.44% to 6.19% to its 3-year fixed rate. Westpac lifted by 0.40% to 5.79% while ING increased it by 0.20% to 5.89%." 

Great rates still, but why the move up if everyone believes the next more is down. I like to see how this new boom we power through just a 1 or 2% increase in IR's.

Cheers


----------



## trainspotter (30 October 2013)

satanoperca said:


> Typical of news, just keep on smiling and don't mention any fall please.
> 
> “Sales of multi-units fell by 5.7 per cent in the quarter and were largely flat compared with the same period in 2012.”   noted Harley Dale.
> 
> ...




Ummm Harley Dale also said this in the link I inserted in the post _"Given the recovery in sales is occurring *from a record low *and that the upward momentum appeared to be *stalling in mid-2013*, this September outcome is very positive,"._

Ummmm yes there is something in this because A LOT of people are fixing their home loans for a 3 year fixed rate and it is the banks job to maximise profits back to it's shareholders. The old supply and demand thingy ya know? If something becomes popular then let's bump the price up and make a killing. ( look back a few posts where I placed an article as to how our banks are some of the most profitable in the WORLD )

Never said the word BOOM ... said that "property is showing signs of recovering." I believe that when banks etc do their sums when assessing the applicant for finance to purchase property that they have a duty of care to the client to make sure that their is a "buffer" on the interest rate side of things ... usually they will qualify you at a 3% margin higher than current standard variable rate.

Hope that clears this up for you satanoperca.

P.S. Interest rates rising is a good thing both for self funded retirees and for property investors !


----------



## im sparticus (30 October 2013)

maffu said:


> Any post I have made is generally Sydney focused, where on average the rental yield looks to be about 2-3% (less than a bank account!), which I personally find unacceptable as you are then just gambling on capital gains.*******TRY TELLING THAT TO THE GOLD BUGS ON THIS THREAD****
> 
> I have never been to Albury/Wodonga so can't comment on that, but in other regional areas in NSW that I have looked, there is much better rental yields available than those in Sydney, so while I think Sydney is over valued, there are other areas that seem fairly priced and that would give a reasonable yield.




Nope according to rpdata gross yield is currently 4.1% in sydney, melbourne has the lowest at an average of 3.6% and brisbane highest with around 4.8%. 5 capital city average is 4.1%



A real world example of mine: Currently 5.4% gross as of latest lease renewal and recent valuation and 7.5% as of original purchase price 8 years ago.
original yield was 5.2% ant total capital appreciation 40% on last val (probably closer to 50% on latest news) over some very hard times the returns have still outperformed cash. even more so if i only had 20% deposit.



You will generally find that the assets with anticipated future growth or growth in yield price to put gross yeild below borrowing costs and vice versa same goes for shares.......the highes P/E asset doesnt always win. Ya dig!


----------



## satanoperca (30 October 2013)

trainspotter said:


> Hope that clears this up for you satanoperca.
> 
> P.S. Interest rates rising is a good thing both for self funded retirees and for property investors !




Yes thank-you for your response, appreciated, makes perfect sense. 

Just one more question, I understand that self funded retirees would like higher rates like my mum and dad, but how does it benefit PI's. Please don't tell me because they can claim a greater tax loss. I cannot see PI's getting any capital gains if IR's go back up.

Also, I don't believe the banks show that much duty of care to the customer but certainty do to themselves. Of the four friends that I know of who have bought in the last year, if IR's increased  300 points then they all would be living at my place, unless you meant 3% above what they are currently paying. Ie 5% to 5.15% but that makes no sense. So given that if you are currently paying 5% on $600K and they went up to 8% that is only an increase of $346 pw or $1500 p.m or around 50% increase. Not much but those $3 pizzas from Coles would be looking mighty good.


----------



## sydboy007 (31 October 2013)

Falling yields across most markets over the last quater, and not looking pretty over the last 12 months either.

I'd love to know what the median net yield is these days.


----------



## maffu (31 October 2013)

im sparticus said:


> Nope according to rpdata gross yield is currently 4.1% in sydney, melbourne has the lowest at an average of 3.6% and brisbane highest with around 4.8%. 5 capital city average is 4.1%
> 
> 
> 
> ...




So when I said 2-3% yield, I should have specified Net Yield and our numbers are in the same ball park based on current sale prices in Sydney. I personally find that unacceptably low. Regional centers as the original poster mentioned can have much higher yields than Sydney, and would then be less reliant on capital gains to be a worthwhile investment.

I agree with you on the gold bugs. I also think they are gambling on capital gains with no yield.

Historical averages on the stock market show firms with the highest P/E ratios under perform shares with the lowest P/E ratios. Same with high M/B compared to low M/B. So you are correct, the highest P/E on average will lose out compared to the lowest P/E firm. I expect the same trends in Real Estate, which is why I would prefer low P/E real estate, which is why I think on average Sydney is over priced.


----------



## trainspotter (31 October 2013)

satanoperca said:


> Yes thank-you for your response, appreciated, makes perfect sense.
> 
> Just one more question, I understand that self funded retirees would like higher rates like my mum and dad, but how does it benefit PI's. Please don't tell me because they can claim a greater tax loss. I cannot see PI's getting any capital gains if IR's go back up.
> 
> Also, I don't believe the banks show that much duty of care to the customer but certainty do to themselves. Of the four friends that I know of who have bought in the last year, if IR's increased  300 points then they all would be living at my place, unless you meant 3% above what they are currently paying. Ie 5% to 5.15% but that makes no sense. So given that if you are currently paying 5% on $600K and they went up to 8% that is only an increase of $346 pw or $1500 p.m or around 50% increase. Not much but those $3 pizzas from Coles would be looking mighty good.




PI's would benefit if rates go up due to rental income increasing. Also means if rates are going up the only trigger the RBA has left in an attempt to slow inflation. Inflation = property prices increasing as well as rental income increasing to cover the interest component. A very simplified version of events but I don't want to go into projections and net yields of 2.3% of a blah blah blah *yawn*

I meant that the banks would qualify you on the current variable rate of approx 5.8% plus add a FULL 3% above this rate_* ie *_ 9% or thereabouts to see if the applicant can afford the debt levels they are getting themselves into.

But but but the banks are offering a 10 year rate of 7.33% so the chances of this MASSIVE interest rate rise is not likely to happen IMO. 

http://www.anz.com/promo/ANZ-home-loans/choosing_a_home_loan.asp

Start stocking up on the tin food and prepare a vege garden in the back yard mate ... it's all doom and gloom in property !


----------



## im sparticus (31 October 2013)

maffu said:


> So when I said 2-3% yield, I should have specified Net Yield and our numbers are in the same ball park based on current sale prices in Sydney. I personally find that unacceptably low. Regional centers as the original poster mentioned can have much higher yields than Sydney, and would then be less reliant on capital gains to be a worthwhile investment.
> 
> I agree with you on the gold bugs. I also think they are gambling on capital gains with no yield.
> 
> Historical averages on the stock market show firms with the highest P/E ratios under perform shares with the lowest P/E ratios. Same with high M/B compared to low M/B. So you are correct, the highest P/E on average will lose out compared to the lowest P/E firm. I expect the same trends in Real Estate, which is why I would prefer low P/E real estate, which is why I think on average Sydney is over priced.




Sorry i ment lowest p/e ratios dont always or usually win. I think your claim on historical averages of high p/es underperforming low p/es is faulse. rebuke me if you can! 

anywho the point im trying to highlight is the effect of growth and anticipated growth on price and yeild expressed as a percentage of price.


----------



## im sparticus (31 October 2013)

sydboy007 said:


> Falling yields across most markets over the last quater, and not looking pretty over the last 12 months either.
> 
> I'd love to know what the median net yield is these days.




oh brother please tell me your not serious?? % falls might have something to do with prices rising I highly doubt weather rents have actually fallen which is what you seem to be implying.


----------



## Macro Polo (31 October 2013)

im sparticus said:


> Sorry i ment lowest p/e ratios dont always or usually win. I think your claim on historical averages of high p/es underperforming low p/es is faulse. rebuke me if you can!
> 
> anywho the point im trying to highlight is the effect of growth and anticipated growth on price and yeild expressed as a percentage of price.




I'm pretty sure the body of evidence is heavily against you on this, which makes sense.

http://www.mebanefaber.com/2013/10/26/probabilistic-investing/

Or check out any of Robert Shillers work and so on, it all says the same thing.


----------



## Uncle Festivus (31 October 2013)

trainspotter said:


> Start stocking up on the tin food and prepare a vege garden in the back yard mate ... it's all doom and gloom in property !




It all depends on whether all the vested parties continue the game?

Are things so bad to warrant IR's at 'emergency lows' or it's all beer & skittles from here on? We can't have it both ways - or can we?

It's eventually going to revert to mean...........


----------



## DB008 (31 October 2013)

Off topic - interesting


*London's cheapest suburb? It's Barcelona*




> London's Sam Cookney caused a stir recently when he argued property prices in the UK capital were so high it would be cheaper to live in Barcelona and fly to work every day. Here he tells The Local what inspired his thinking.
> 
> "It all started as a bit of a fun for a couple of friends," the London-based social media manager told The Local about his viral blog piece.
> 
> ...




http://www.thelocal.es/20131030/welcome-to-londons-cheapest-suburb-barcelona


----------



## im sparticus (1 November 2013)

Macro Polo said:


> I'm pretty sure the body of evidence is heavily against you on this, which makes sense.
> 
> http://www.mebanefaber.com/2013/10/26/probabilistic-investing/
> 
> Or check out any of Robert Shillers work and so on, it all says the same thing.




Interesting sounds like an easy way to beat the index back the 100 lowest p/e stocks and fade 100 the highest of the xjo, good luck.

personally on average i also think capitals with lower % yields will also out perform regionals with higher %yields longterm.


----------



## 13ugs13unny (1 November 2013)

Uncle Festivus said:


> It all depends on whether all the vested parties continue the game?
> 
> Are things so bad to warrant IR's at 'emergency lows' or it's all beer & skittles from here on?
> 
> View attachment 55036




'emergency lows' is the only driver IMHO of our economy atm, It doesn't seem to be retail, small business or manufacturing. Unless your the BHP's of the world digging holes and selling the contents offshore.

Real-estate from a bubble to a bigger bubble is what I see.


----------



## trainspotter (4 November 2013)

13ugs13unny said:


> 'emergency lows' is the only driver IMHO of our economy atm, It doesn't seem to be retail, small business or manufacturing. Unless your the BHP's of the world digging holes and selling the contents offshore.
> 
> Real-estate from a bubble to a bigger bubble is what I see.




Ummmm banks are posting record profits on "emergency lows" ? Hate to think how much raping they would be doing if rates begin to rise?

*WESTPAC has announced a record $7.1 billion full year profit, and the bank expects improving consumer confidence to help it build on the result next year.
Westpac made a cash profit of $7.1 billion for the 12 months to September 30, an increase of eight per cent on last year's result.*

http://www.news.com.au/business/breaking-news/westpac-posts-71b-profit/story-e6frfkur-1226752529883

*NATIONAL Australia Bank chief executive Cameron Clyne has reassured investors the bank has no plans to change its capital management program after speculation the banking regulator had warned against paying bumper dividends due to new rules for banks considered too big to fail.

Reporting a record cash profit of $5.94 billion, Mr Clyne was quizzed by analysts about the upcoming capital charge, the level of which has not yet been revealed, for banks deemed “domestically systemically important”.*

http://www.theaustralian.com.au/bus...apra-speculation/story-fn91vch7-1226750153131

*ANZ Bank has lifted cash earnings by 11 per cent to $6.49 billion and will pay shareholders a bigger than expected dividend. The board believes that a full year dividend payout ratio of between 65 per cent and 70 per cent of cash profit is sustainable.  In a result that beat analyst forecasts, the bank today said cash profits were $6.49 billion in the year to September.*


http://www.smh.com.au/business/bank...cord-profit-20131029-2wclw.html#ixzz2jdCNNAcj

Sooooooo our banks are making record profits and offering 10 year fixed rates at 7.33%, RBA still has room to move either up or down depending on economy, inflation is under control, dollar is hovering around the 90 cents threshold, employment is steady, new government in to curb runaway spending and provide stability, house prices showing signs of recovering in CERTAIN areas. Bubble what bubble? :frown:


----------



## trainspotter (4 November 2013)

AUSTRALIAN capital city house prices rose 1.9 per cent in the September quarter, official data showed.
That followed a rise of 2.7 per cent in the June quarter.

*In the year to September, the house price index rose 7.6 per cent, the Australian Bureau of Statistics said on Monday.*

Economists had expected a rise of 2.2 per cent for the September quarter.

http://www.news.com.au/business/bre...rise-in-sept-qtr/story-e6frfkur-1226752670286

But but bit this cant be right as it is from news.com ...... no wait ....... Australia Bureau of Statistics. Surely they are wrong as well? Economists predict a 2.2% rise... Pfffffffffftttttttttt !


----------



## Macro Polo (4 November 2013)

trainspotter said:


> Ummmm banks are posting record profits on "emergency lows" ? Hate to think how much raping they would be doing if rates begin to rise?




I think you have your intuition backwards. Banks earn from a spread between assets and liabilities - Higher rates don't necessarily mean higher spreads. Emergency low rates I'd assume has some effect on peoples willingness to take on more debt, though this is offset by the lower interest payments. 

However, if rates rise from here I don't think it would be very healthy for continued property speculation and hence the banks main income source, rather the opposite. Spreads should not change AFAIK but speculative interest may wane.


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## trainspotter (4 November 2013)

Macro Polo said:


> I think you have your intuition backwards. Banks earn from a spread between assets and liabilities - Higher rates don't necessarily mean higher spreads. Emergency low rates I'd assume has some effect on peoples willingness to take on more debt, though this is offset by the lower interest payments.
> 
> However, if rates rise from here I don't think it would be very healthy for continued property speculation and hence the banks main income source, rather the opposite. Spreads should not change AFAIK but speculative interest may wane.




Banks were quoted as this:- "Higher borrowing costs" to justify as to why they did not trend with the RBA downwards. You can bet your last penny IF rates were to rise they would be using this excuse and some more clever theories/excuses as to why their rates are not in line with reality. Also shareholders want their divvies every year so if rates are rising then more people will deposit cash into said banks who in turn will lend it back to the punters at a HIGHER rate. It's called the velocity of money through the economy.

Too tired to go into spiel mode on this subject but needless to say if rates are increasing then it is a good thing for property "speculators". Have already posted as to WHY I believe this to be a fact and not an opinion. Pie graphs and charts etc along with links have been posted previously.


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## Macro Polo (4 November 2013)

trainspotter said:


> Banks were quoted as this:- "Higher borrowing costs" to justify as to why they did not trend with the RBA downwards. You can bet your last penny IF rates were to rise they would be using this excuse and some more clever theories/excuses as to why their rates are not in line with reality. Also shareholders want their divvies every year so if rates are rising then more people will deposit cash into said banks who in turn will lend it back to the punters at a HIGHER rate. It's called the velocity of money through the economy.
> 
> Too tired to go into spiel mode on this subject but needless to say if rates are increasing then it is a good thing for property "speculators". Have already posted as to WHY I believe this to be a fact and not an opinion. Pie graphs and charts etc along with links have been posted previously.




Right, so I read your rates rising = good for property speculation post earlier. I guess the RBA should be raising the OCR to 10% instead of cutting it to 2.5% if they really want to get a housing boom going? I'm being facetious, but clearly this would be terrible for house prices and would sharply cut discretionary spending and the amount people would be able to spend on rent given the rise in unemployment that would be involved. It would probably be deflationary also. I'm using an extreme example to prove a point here, I know.

Believing it to be a fact that rising rates will be good for property investors does not make it so, it is your opinion that your opinion is a fact - just like everyone else.


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## robz7777 (4 November 2013)

trainspotter said:


> Banks were quoted as this:- "Higher borrowing costs" to justify as to why they did not trend with the RBA downwards. You can bet your last penny IF rates were to rise they would be using this excuse and some more clever theories/excuses as to why their rates are not in line with reality. Also shareholders want their divvies every year so if rates are rising then more people will deposit cash into said banks who in turn will lend it back to the punters at a HIGHER rate. It's called the velocity of money through the economy.
> 
> Too tired to go into spiel mode on this subject but needless to say if rates are increasing then it is a good thing for property "speculators". Have already posted as to WHY I believe this to be a fact and not an opinion. Pie graphs and charts etc along with links have been posted previously.




Bank record profits are a result of them having a monopoly on lending in Australia.. Since 07 they have enjoyed increased domestic funding (cheaper = higher clip on the way through to borrowers) rather than borrowing from overseas.. 

If rates are rising people are more likely to keep their money in (risk-free) cash than to put it into an IP which is guaranteed to lose them money every year (assumes high levels of gearing).. Also have to take into account stagnant employment rates, subdued retail and ongoing global worries..


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## trainspotter (4 November 2013)

Macro Polo said:


> Right, so I read your rates rising = good for property speculation post earlier. I guess the RBA should be raising the OCR to 10% instead of cutting it to 2.5% if they really want to get a housing boom going? I'm being facetious, but clearly this would be terrible for house prices and would sharply cut discretionary spending and the amount people would be able to spend on rent given the rise in unemployment that would be involved. It would probably be deflationary also. I'm using an extreme example to prove a point here, I know.
> 
> Believing it to be a fact that rising rates will be good for property investors does not make it so, it is your opinion that your opinion is a fact - just like everyone else.




Be as facetious as you like. Please don't limit yourself to reading only a few of my posts over the last few weeks either. Higher interest rates means inflation. Inflation means house prices are going up. Rents will increase blah blah blah = FACT. Cant make it any simpler than this. I am also using a very simplified version to make it clearer.

Try some of these charts that will explain what the factors on monetary policy actually is.


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## trainspotter (4 November 2013)

robz7777 said:


> Bank record profits are a result of them having a monopoly on lending in Australia.. Since 07 they have enjoyed increased domestic funding (cheaper = higher clip on the way through to borrowers) rather than borrowing from overseas..
> 
> If rates are rising people are more likely to keep their money in (risk-free) cash than to put it into an IP which is guaranteed to lose them money every year (assumes high levels of gearing).. Also have to take into account stagnant employment rates, subdued retail and ongoing global worries..




I concur with this statement of FACT. I also said that if rates are rising then people will place "CASH" into the bank to receive a risk free return. No argument here. The bank will then lend it to "property investors" who may or may not be highly geared. 

Not so sure on the domestic funding statement?

Australian banks lend billions of dollars to Australian home owners every year. They don’t hold sufficient deposits in savings accounts from clients to cover these loans, nor do they obtain sufficient funding from the RBA. Instead, they obtain funds from the global wholesale money markets, in particular from Europe and the USA.
*For some banks and other financial institutions it has been reported that up to 40% of their mortgage funding comes from overseas money markets*. 

*In the case of the non-bank lenders, it is considerably higher.*

The money markets of Europe and the USA are not affected by interest rate changes by the RBA, so when the RBA cuts rates by 0.25% it does not mean that the banks are suddenly obtaining their entire mortgage funding at 0.25% less.

http://www.moneybuddy.com.au/home-loans/understanding-the-interest-rate-game


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## trainspotter (4 November 2013)

THE Reserve Bank has raised fresh doubts over banks’ justification for raising mortgage rates outside of official moves, saying lenders have benefited from a ‘‘significant’’ drop in the cost of borrowing.
ANZ sparked a political backlash after it  raised mortgage rates last week by 0.06 of a percentage point, blaming higher bank funding costs.

*But minutes from this month’s Reserve Bank board meeting, published yesterday, said the banks’ cost of wholesale debt had fallen in March, capping further falls in previous months.*

The minutes said bank funding costs  had  dropped ‘‘significantly’’ since the start of the year. Long-term debt  was 50 basis points cheaper, helping ‘‘alleviate the pressure of higher funding costs in coming months.’’


Read more: http://www.smh.com.au/federal-polit...ate-excuses-20120417-1x5uk.html#ixzz2jdnzpbvB

Sooooooooooo me thinks that when rates start rising the "spread" will be "significantly" higher


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## Uncle Festivus (4 November 2013)

trainspotter said:


> I concur with this statement of FACT. I also said that if rates are rising then people will place "CASH" into the bank to receive a risk free return. No argument here. The bank will then lend it to "property investors" who may or may not be highly geared.




'The bank will then lend it to "property investors" who may or may not be highly geared.' They would like to but if the cost of money is rising why would "property investors" take the 'riskier' path?

It's a perfect storm brewing, although several decades in the making and it's not just limited to Aus. The economic models by which our financial system operates, if you could call them that, have become more and more reliant on the cheapness of money to continually create the same effect in the real economy, and that usually shows up in the  hard asset that the general population doesn't need too many brain cells to get into - property.

So the storm is 

interest rates at record lows, 
lot's of money printing going on around the world, 
baby boomers selling the family home and travelling or downsizing, 
migration that is not supported by infrastructure


The cost of promises - anyone under 40 would not have a clue about economic downturns because rates have only been falling since the last recession? Now we are at the bottom there's only limited outcomes from here on in, none of them good? Enjoy it while you can.


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## Macro Polo (4 November 2013)

trainspotter said:


> Be as facetious as you like. Please don't limit yourself to reading only a few of my posts over the last few weeks either. Higher interest rates means inflation. Inflation means house prices are going up. Rents will increase blah blah blah = FACT. Cant make it any simpler than this. I am also using a very simplified version to make it clearer.
> 
> Try some of these charts that will explain what the factors on monetary policy actually is.




Look, you are confusing correlation and causation. Higher rates do not cause inflation - the causality runs opposite. High inflation induces the RBA to raise rates, at which point inflation stops and often a recession occurs. You should expect rising rates to stop inflation, not to cause it, hence it is bad for house prices. This should not be a contentious point...

Also, on the wholesale funding costs - do you think there won't be an increased risk premium for loans to Aussie banks who are heavily exposed to Australian property if rates start rising or property begins falling? Nobody wants to lend to banks that have an impaired asset side of the balance sheet, a rate induced recession will see higher delinquencies and asset write-downs for banks. I wouldn't make the assumption that funding costs will remain fixed because this is essentially assuming credit analysts don't really care about being compensated for risk.


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## trainspotter (4 November 2013)

Uncle Festivus said:


> 'The bank will then lend it to "property investors" who may or may not be highly geared.' They would like to but if the cost of money is rising why would "property investors" take the 'riskier' path?
> 
> It's a perfect storm brewing, although several decades in the making and it's not just limited to Aus. The economic models by which our financial system operates, if you could call them that, have become more and more reliant on the cheapness of money to continually create the same effect in the real economy, and that usually shows up in the  hard asset that the general population doesn't need too many brain cells to get into - property.
> 
> ...




Banks job is to lend money ...... not keep it under their pillow 

The future of pessimism has never looked so bright ! Simply put ... "they gotta live somewhere" UF


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## Uncle Festivus (4 November 2013)

trainspotter said:


> Banks job is to lend money ...... not keep it under their pillow
> 
> The future of pessimism has never looked so bright ! Simply put ... "they gotta live somewhere" UF




It's not pessimism it's reality - house prices at or close to record highs + interest rates at record lows - it's a no brainer bubble just waiting to go POP!



> Home values rose to a record high last month led by strong growth in Sydney and Melbourne, according to new housing data.
> 
> Figures released today by RP Data Rismark show capital city values peaked during September above the previous high set during the 2010 property boom.
> 
> ...




'A housing bubble may be on the horizon.' - so it's still ok to load up on property, it's not officially a bubble yet??

Good stuff there Macro Polo.......


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## trainspotter (4 November 2013)

Macro Polo said:


> Look, you are confusing correlation and causation. Higher rates do not cause inflation - the causality runs opposite. High inflation induces the RBA to raise rates, at which point inflation stops and often a recession occurs. You should expect rising rates to stop inflation, not to cause it, hence it is bad for house prices. This should not be a contentious point...
> 
> Also, on the wholesale funding costs - do you think there won't be an increased risk premium for loans to Aussie banks who are heavily exposed to Australian property if rates start rising or property begins falling? Nobody wants to lend to banks that have an impaired asset side of the balance sheet, a rate induced recession will see higher delinquencies and asset write-downs for banks. I wouldn't make the assumption that funding costs will remain fixed because this is essentially assuming credit analysts don't really care about being compensated for risk.




WOW ...... you are not quite getting this are you? Show me where I said higher rates *CAUSES* inflation? Go and read and understand the 3 charts I posted. INFLATION FIRST = HOUSE COSTS RISING = INTEREST RATES RISING = GOOD FOR PROPERTY INVESTORS ........ in that order. I can't make it any more simpler!! 

An astute property investor would be going hard into the market NOW ... BEFORE all of this happens as you would be getting in at the bottom of the cycle whereby property is CHEAP and money is CHEAP !!! 

The trick is to get in and get out BEFORE the recession !! DOH !!

Yep ... finally making sense on the exposure of the banks to residential loans etc. Moody's has already rung the alarm bells on this one. APRA is onto it as well http://www.apra.gov.au/adi/Publications/Pages/Quarterly-ADI-Property-Exposures-statistics.aspx

Nothing new here ... move on. 

P.S. In post 10880 I wrote the following: *"Also means if rates are going up the only trigger the RBA has left in an attempt to slow inflation."*


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## Macro Polo (4 November 2013)

trainspotter said:


> WOW ...... you are not quite getting this are you? Show me where I said higher rates *CAUSES* inflation? Go and read and understand the 3 charts I posted. INFLATION FIRST = HOUSE COSTS RISING = INTEREST RATES RISING = GOOD FOR PROPERTY INVESTORS ........ in that order. I can't make it any more simpler!!




Why do I bother?

Interest rate cuts are good for housing.

Interest rate rises are good for housing.

Good luck with your investments.


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## trainspotter (4 November 2013)

Uncle Festivus said:


> It's not pessimism it's reality - house prices at or close to record highs + interest rates at record lows - it's a no brainer bubble just waiting to go POP!
> 
> 'A housing bubble may be on the horizon.' - so it's still ok to load up on property, it's not officially a bubble yet??
> 
> Good stuff there Macro Polo.......




We been waiting for how long now UF? Heard it all before ... banks were collapsing now they having record profits. Prices of houses were to fall 40% ala Steven Keene style but now record highs pre GFC. WTF is going on  Doomsday preppers unite ! Start stocking up on the tin food ... Waaaaaaaaaaaaahhhhhhhh !


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## kid hustlr (4 November 2013)

TS I think everyone in this thread has an idea of the economic cycle and how it has traditionally worked. People also understand how and why (atleast at a basic level) monetary policy is used.

The contentious issue(s) are:

1. whether this is in fact the bottom of the 'economic cycle' from an interest rate perspective. 
and

2. Whether it is 'different' this time. When investors look at factors such as income to house price ratios or rent to house price ratios, there are many wondering even if it is the 'bottom of the economic cycle' is property really that strong of an investment?


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## trainspotter (4 November 2013)

Macro Polo said:


> Why do I bother?
> 
> Interest rate cuts are good for housing.
> 
> ...




Ditto.

Interest rate cuts are good for housing affordability.

Interest rate rising are good for property investors.

Luck has nothing to do with it.


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## againsthegrain (4 November 2013)

Macro Polo said:


> Why do I bother?
> 
> Interest rate cuts are good for housing.
> 
> ...




LOL join the rest of the gang, after all this is a guy that was thinking BIG and wanted to start a business swapping out peoples light bulbs for "more used" bulbs and pop 50c profit here and there.

There is no talking reason with somebody that clearly has not much knowledge about economy and finance when all they can do is being stuck on repeat using the same old articles and same old few points why property can never crash. At some stages reading the guys posts I have a feeling he is about to have a meltdown, very very edgy, but then who wouldn't be buying at the top and most likely being geared way too much.

You said it well, unemployment is at all time low, local business is best, huge wage raises are around the corner, interest rates are only going down from now on, its all happening. Don't forget the mass immigration of doctors and lawyers that are landing daily and buying up as soon as they arrive.  Only fools are not rushing in now.


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## satanoperca (4 November 2013)

trainspotter said:


> WOW ...... you are not quite getting this are you? Show me where I said higher rates *CAUSES* inflation? Go and read and understand the 3 charts I posted. INFLATION FIRST = HOUSE COSTS RISING = INTEREST RATES RISING = GOOD FOR PROPERTY INVESTORS ........ in that order. I can't make it any more simpler!!




Perfect explanation.


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## tech/a (4 November 2013)

You are quite correct Trainspotter.

Interest rates are raised to pull up inflation
Interest rates are dropped to stimulate.

The result of each gives rise to the opportunities you point to.


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## trainspotter (4 November 2013)

kid hustlr said:


> TS I think everyone in this thread has an idea of the economic cycle and how it has traditionally worked. People also understand how and why (atleast at a basic level) monetary policy is used.
> 
> The contentious issue(s) are:
> 
> ...




Sure thing kid. Traditionally this has worked on an average of a 7-10 year cycle. Property is a long term investment.

1. Rates on hold til 2014 is a given. Banks offering 10 year loans at 7.33% already. Pretty confident the bottom has been touched and 2.5% is a stopping point for now reading the RBA's comments. House prices from ABS 7.6% increase YTD September - ABS figures not mine. Possible signs of RE increasing means only need job figures to fall slightly and away we go again. (all of this is my opinion only) DYOR.

2. Sure as **** is "different" this time. Banks want left testicle and insane amount of paperwork proving that you do not need the loan. 110% of sales figures is what they are asking for. Not easy to get credit with more scrutiny on the setup of the company/corporation/unit trust/sinking fund blah. Punters are not mugs anymore and read the fine print. Cooling off periods for when you sell off the plan .... MAN the list goes on. House price ratios to rental income to all of these charts and % of bovine excrement is not what property is about. People have to live somewhere ... simple as that. 

I posted a link to a house in Logan that has the capacity to rent at $750 per week and was for sale at $389,000. Lets do some maths. $750 x 52 = $39,000 per annum. Lets say we borrow the lot and do not even haggle over price shall we and set this up for a 5 year fixed term at 5.95% = $23,145 in interest. Leaving $16,000 or thereabouts to spend on insurance/maintenance/land rates/fees and charges etc. Pretty sure that there would be money left over at the end of the day.


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## trainspotter (4 November 2013)

againsthegrain said:


> LOL join the rest of the gang, after all this is a guy that was thinking BIG and wanted to start a business swapping out peoples light bulbs for "more used" bulbs and pop 50c profit here and there.
> 
> There is no talking reason with somebody that clearly has not much knowledge about economy and finance when all they can do is being stuck on repeat using the same old articles and same old few points why property can never crash. At some stages reading the guys posts I have a feeling he is about to have a meltdown, very very edgy, but then who wouldn't be buying at the top and most likely being geared way too much.
> 
> You said it well, unemployment is at all time low, local business is best, huge wage raises are around the corner, interest rates are only going down from now on, its all happening. Don't forget the mass immigration of doctors and lawyers that are landing daily and buying up as soon as they arrive.  Only fools are not rushing in now.




Seriously mate ... why post in here if you have no clue as to what you are talking about. I don't know you and you certainly don't know me. I have never said that property can never crash. Quite the opposite in fact but due to your inability to comprehend the written word it does make it hard for me to write in crayon on a computer.

You are the weakest link ..... Goodbye.


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## trainspotter (4 November 2013)

"Strong auction results and rising house prices have begun to feed into housing construction activity, with solid growth in building approvals now pointing to an imminent turnaround in housing construction," Mr Colhoun said.

Who is Mr Colhoun you ask? Why he would be the chief economist for ANZ ... that's all.

http://www.theaustralian.com.au/bus...-three-year-fall/story-e6frg90f-1226752697219

Me thinks he is jumping the gun a bit myself ... one swallow don't make a summer.


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## trainspotter (5 November 2013)

> THE Reserve Bank has kept official interest rates on hold for the third month in a row, paving the way for an *interest rate rise* as early as the first half of next year.
> 
> The chance the Reserve Bank Board would cut the cash rate below 2.5 per cent, a record low, were already slim but shrank to near zero yesterday after it emerged retail sales bounced back strongly in September the same time as *capital city house prices were accelerating*.




http://www.theaustralian.com.au/bus...w-of-25-per-cent/story-e6frg916-1226753480956

Rates rising will also depend on US fiscal policy and if they decelerate the quantitative easing measures taking pressure off the Aussie dollar. IMO ... DYOR


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## Uncle Festivus (7 November 2013)

> One of three American economists who won the 2013 economics Nobel prize today for research into market prices and asset *bubbles* expressed alarm at the rapid rise in global housing prices.
> 
> Robert Shiller, who shared the 8 million Swedish crown ($1.31 million) prize with fellow laureates Eugene Fama and Lars Peter Hansen, said the US Federal Reserve's economic stimulus and growing market speculation were creating a "*bubbly*" property boom.
> 
> China, Brazil, India, Australia, Norway and Belgium, among other countries, were witnessing similar price rises. "There are so many countries that are looking *bubbly*," he said.




http://www.smh.com.au/business/worl...bubbly-global-home-prices-20131015-2vjh1.html



> Australia, where housing accounts for about 60 percent of average household wealth compared with a global average of 45 percent, joins countries from Canada to Sweden to China seeing rapid price gains amid low borrowing costs that are sparking fears of a housing bubble. For now, constrained housing supply and demand from investors are driving prices higher, overpowering the downdraft from *slower economic growth and a rising jobless rate*. “It’s easy to see how *bubble-like* conditions could emerge,” said Saul Eslake, chief Australia economist at Bank of America...



http://www.macrobusiness.com.au/category/australian-property/


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## Whiskers (7 November 2013)

trainspotter said:


> http://www.theaustralian.com.au/bus...w-of-25-per-cent/story-e6frg916-1226753480956
> 
> Rates rising will also depend on US fiscal policy and if they decelerate the quantitative easing measures taking pressure off the Aussie dollar. IMO ... DYOR




Also, their mid term elections. Apparently the far right tea party may have handed a good chunk of state and fed seats back to Obama's Democrats... or the Democrats at least, since not all Democrats are fans of Obama's policies. Not quite sure, but likely to translates into QE for longer, even if the Democrats get the numbers to raise more tax. 




Uncle Festivus said:


> http://www.smh.com.au/business/worl...bubbly-global-home-prices-20131015-2vjh1.html
> 
> 
> http://www.macrobusiness.com.au/category/australian-property/




The high % of household wealth that housing accounts for is something that our fiscal and monetary policy makers don't seem to be addressing very well. The impasse between Labor and the RBA over coordination of policy likely set us back in getting a competitive edge as a population as distinct from the economic identify of the country and it's major players.

With no substantial manufacturing to counter the lows of the mining cycle, the winding back of what we have and rural industries increasingly destabilised by government policy, must make us more prone to unemployment/lower income led house price stress. 

Could it be the recent rises in some areas are more the result of pent up demand released by enthusiasm, maybe over expectations of economic growth from the change of government?


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## trainspotter (7 November 2013)

Whiskers said:


> Also, their mid term elections. Apparently the far right tea party may have handed a good chunk of state and fed seats back to Obama's Democrats... or the Democrats at least, since not all Democrats are fans of Obama's policies. Not quite sure, but likely to translates into QE for longer, even if the Democrats get the numbers to raise more tax.




Seriously? If Obama gets stronger it means his policies are working which means QE will ease as unemployment is dropping !



> The high % of household wealth that housing accounts for is something that our fiscal and monetary policy makers don't seem to be addressing very well. The impasse between Labor and the RBA over coordination of policy likely set us back in getting a competitive edge as a population as distinct from the economic identify of the country and it's major players.




WTF are you talking about? Our identity as a country has exactly what to do with % of household wealth? 



> With no substantial manufacturing to counter the lows of the mining cycle, the winding back of what we have and rural industries increasingly destabilised by government policy, must make us more prone to unemployment/lower income led house price stress.




Got any proof of this bold statement? When did the government destabilise rural industries and by WHAT policy exactly?



> Could it be the recent rises in some areas are more the result of pent up demand released by enthusiasm, maybe over expectations of economic growth from the change of government?




Nup ... it's called lower interest rates and CHEAP housing prices. Has F@CK all to do with enthusiasm for a change in government. FHB will buy an established property. The owner of said property will then go and buy a larger property and then that previous owner will go and buy a more expensive property and .... no wait ... you might learn something.


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## Whiskers (7 November 2013)

trainspotter said:


> Seriously? If Obama gets stronger it means his policies are working which means QE will ease as unemployment is dropping !




No denying he will continue to lower unemployment, but the expected swing to him is more in rebut or retaliation of the Tea Party shutting down government to try to not increase debt limits more than anything else.

The question is how much increased debt and tax rates will counter the effects of lower unemployment.



> WTF are you talking about? Our identity as a country has exactly what to do with % of household wealth?




Simply if our wealth is substantially more than our home we have more flexibility and resilience to tough economic times. If you loose your job you are more likely to loose your home.



> Got any proof of this bold statement? When did the government destabilise rural industries and by WHAT policy exactly?




Labor's slashing of the live export trade was a big one. The upcoming issues of foreign investment and takeover of such as GrainCorp for example with the new government is another. There is an old and true saying in the country... when farmers are doing well the country towns do well. Graincorp, as an example, is already issuing retrenchment advice for staff in rural centres where their business was based in anticipation of centralising the business in Sydney and a couple of locations in NSW after the takeover. 

These sort of policies impact heavily on not only the economy but property prices for rural businesses and the towns that rely on them.



> Nup ... it's called lower interest rates and CHEAP housing prices. Has F@CK all to do with enthusiasm for a change in government. FHB will buy an established property. The owner of said property will then go and buy a larger property and then that previous owner will go and buy a more expensive property and .... no wait ... you might learn something.




But that's the point, people are increasingly realising houses aren't cheap, that it's a major investment... substantially more so than many other countries. It could be also said that with the centralisation of much business and government agencies again, it's forcing too many people to compete for limited space in the capital cities. Aus is one of the most centralised populations in the world, despite the abundance of land.   

FHB'ers are loathe to get in the market, we've come through a phase where we built bigger and more expensive houses... to what appears to be more people scaling down their houses and moving to smaller houses or apartment style accommodation and in the case of potential FHB Ã©rs tending to live at home for longer.


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## trainspotter (7 November 2013)

Whiskers said:


> No denying he will continue to lower unemployment, but the expected swing to him is more in rebut or retaliation of the Tea Party shutting down government to try to not increase debt limits more than anything else.
> 
> The question is how much increased debt and tax rates will counter the effects of lower unemployment.




More employment means more people to tax which means the velocity of money will increase through the system. Economics 101   Tea Party shot themselves in the foot by destabilising the system. The workers are the ones that suffered. DOH !



> Simply if our wealth is substantially more than our home we have more flexibility and resilience to tough economic times. If you loose your job you are more likely to loose your home.




Ummm .. If you have a home to live in and it is currently 65% of your wealth then you would be far more resilient to tough economic times? Or would you have us all living in a cardboard box but we have plenty of cash in the bank !! If you have plenty of equity in your home the bank will not foreclose for missing a payment. Also means when tough economic times hit and property prices fall then there is enough "cartilage" to be able to handle these kinds of fluctuations. BTW - "loose" and "lose" are a very basic typo for the young players. :



> Labor's slashing of the live export trade was a big one. The upcoming issues of foreign investment and takeover of such as GrainCorp for example with the new government is another. There is an old and true saying in the country... when farmers are doing well the country towns do well. Graincorp, as an example, is already issuing retrenchment advice for staff in rural centres where their business was based in anticipation of centralising the business in Sydney and a couple of locations in NSW after the takeover.
> 
> These sort of policies impact heavily on not only the economy but property prices for rural businesses and the towns that rely on them.




Get with the times buddy ... Australia does not live off the farmers back anymore  Country towns have been dying since the world changed from growing stuff to mining stuff. Not just this governments policies either. Also owning farms have gone from being passed from father to son for generations. It is big business now who owns the majority of farming entities. Economy of scale I think they call it.



> But that's the point, people are increasingly realising houses aren't cheap, that it's a major investment... substantially more so than many other countries. It could be also said that with the centralisation of much business and government agencies again, it's forcing too many people to compete for limited space in the capital cities. Aus is one of the most centralised populations in the world, despite the abundance of land.




Houses have always been a major investment. And they have never been cheap to the FHBers !! I was one of those once and I chose to put the noose around my neck and pay off a mortgage. BUT I chose not to get the BIG house with all the trimmings. I bought what I could afford at the time. Ya got to start somewhere. I think the reason most people live in such an urban environment has something to do with the LACK OF WATER ... 

*Together with sub-tropical regions and the mountain high plains, they form the rangelands, where rainfall is too low or unpredictable or where terrain is too inhospitable for sustainable cropping or timber harvesting. The rangelands amount to 70 per cent of Australia's land surface. By far the largest part is arid or semi-arid.*

http://www.csiro.au/science/arid-land-sustainability ..... CSIRO nonetheless?



> FHB'ers are loathe to get in the market, we've come through a phase where we built bigger and more expensive houses... to what appears to be more people scaling down their houses and moving to smaller houses or apartment style accommodation and in the case of potential FHB Ã©rs tending to live at home for longer.




Got any evidence?


----------



## Whiskers (7 November 2013)

TS, I can understand what you are trying to say, but detaching from yourself a bit... 

The short answer to your last comments is most people are not 'you' (or me) are influenced by different things and do things differently... especially those who have never been or anticipate being self employed. 

On the issue of arable land... step out of thinking from an Aus perspective and consider why the rest of the world is wanting us to relax our foreign investment and ownership rules for land in particular... land banking and profiteering mainly from urban land development and a food production source they can't do in their own country from rural land. They then bring in their own workers to work the land and process the goods and the problems for Aus economy escalate from there. They effectively supplement the needs of their own economy with an effective sequestration of part of our land for their own exclusive use.

Again not against foreign investment per se, but the slogan that they can't take away the land is dumb. They take away the productive output from the land and tend to strip the land bare of nutrition before divesting it back to local ownership... like Rupert Murdock became famous for stripping the guts out of businesses and flogging them off as a hollow shell that was devoid of real worth.

We just need better controls of foreign investment of land and key infrastructure.

It's true that more farms are company owned, but the company is still family owned in most cases. It is still their livelihood and one of the few things we have going for us... to produce all our own food and dig up minerals. 

You don't have to have much imagination to see the trouble ahead if too much of our key strengths are eroded away by foreign ownership. Mines close up for a rainy day or until overseas owners can import cheaper labor, the same for good residential and arable farm land.


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## trainspotter (7 November 2013)

Off to the bottom of the garden to talk to the fairies ... cat ya !


----------



## medicowallet (7 November 2013)

tech/a said:


> You are quite correct Trainspotter.
> 
> Interest rates are raised to pull up inflation
> Interest rates are dropped to stimulate.
> ...




But it depends where the inflation is.

It is not as simple as that, nor is the effect guaranteed, hence interest rates may need to go very high to stop "inflation" and no matter how they go they might not stimulate enough.


If inflation rises, and house prices are stagnant, then you lose...

MW


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## medicowallet (7 November 2013)

trainspotter said:


> Houses have always been a major investment. And they have never been cheap to the FHBers !! I was one of those once and I chose to put the noose around my neck and pay off a mortgage. BUT I chose not to get the BIG house with all the trimmings. I bought what I could afford at the time. Ya got to start somewhere. I think the reason most people live in such an urban environment has something to do with the LACK OF WATER ...




When I was a young medicowallet, you could buy a normal size house that needed work, and you and the owner knew its size, location and condition.

Now the "$%#$ boxes" are prices like the mcmansions for a lot of people.

It will come to an end.

I think I will be alive to see the worst of it.

House prices have gone down in real terms for quite a while, it could continue.

MW


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## CanOz (7 November 2013)

I was just looking at the prices in Ballarat today and i was quite surprised at them. I mean we're talking a piddley little rural city here...not a coastal town. A decent house in a good area in 350,000 and up. 

When i left, these places were 250 and up...Thats not bad in 8 years.

For us we'll need to think a little defensive, not put too much borrowed money into our place. Leave that for the IP...


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## Ves (7 November 2013)

CanOz said:


> I was just looking at the prices in Ballarat today and i was quite surprised at them. I mean we're talking a piddley little rural city here...not a coastal town. A decent house in a good area in 350,000 and up.
> 
> When i left, these places were 250 and up...Thats not bad in 8 years.
> 
> For us we'll need to think a little defensive, not put too much borrowed money into our place. Leave that for the IP...



I was born and bred in Ballarat.   Most of my family and friends still live there.

There's 100,000 people living there now.  It's the fifth largest inland regional city in Australia.   And it's growing fast.... recent Victorian Government planning suggests that they are targetting around 200,000 people to live there by 2050.   There's plenty of room to expand,  it's surrounded by farming land and plenty of potential for high-density residential in the city. 

My 1BR Unit (which used to be a PPoR) that I hung onto as safety net incase I ever wanted to move back is only a couple of kilometres from the CDB.   Almost fully paid off these days.  I've had the same tenant for almost five years and raised the rent every year.  Still 18 months on the latest lease to run.


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## trainspotter (8 November 2013)

> ANZ will keep its home mortgage rates on hold following the Reserve Bank of Australia's (RBA) Melbourne Cup day decision to leave the cash rate unchanged.
> The bank's standard variable rate remains at 5.88 per cent per annum, after the RBA's overnight rate was left at a record low of 2.5 per cent.
> 
> ANZ's small business lending rates are also unchanged.
> ...




http://www.news.com.au/business/bre...tes-left-on-hold/story-e6frfkur-1226755817532

So does this mean wholesale funding is stagnant and the banks posting record profits can't use this as an excuse to raise rates?



> THE Reserve Bank of Australia has made it clear that more interest rate cuts are possible, as the Australian dollar stays stubbornly high and amid concern that mining investment might fall at a faster rate.
> The RBA has left the cash rate unchanged at a record of 2.5 per cent since cutting it from 2.75 per cent at its August meeting.
> 
> "It was appropriate to hold the cash rate steady but not close off the possibility of reducing it further should that be needed to support economic activity," the RBA said in its quarterly statement on monetary policy, released on Friday.




Reduce it further to get that AUD to drop below 90 cents and BINGO ! Velocity of money improves through the system and the cash starts flowing again. But but but what does that mean? Aaaahhh ... inflation opens up it's evil eye ! 

Unemployment is the key factor for the second coming of the RE bubble ... Bwahahahahhahaaaaaa

http://www.news.com.au/business/bre...te-cut-door-open/story-e6frfkur-1226755757857


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## trainspotter (8 November 2013)

Uncle Festivus said:


> http://www.smh.com.au/business/worl...bubbly-global-home-prices-20131015-2vjh1.html
> 
> One of three American economists who won the 2013 economics Nobel prize today for research into market prices and asset bubbles expressed alarm at the rapid rise in global housing prices.
> 
> ...




This is the only bubbly I like !


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## Uncle Festivus (8 November 2013)

trainspotter said:


> Reduce it further to get that AUD to drop below 90 cents and BINGO ! Velocity of money improves through the system and the cash starts flowing again. But but but what does that mean? Aaaahhh ... inflation opens up it's evil eye !
> 
> Unemployment is the key factor for the second coming of the RE bubble ... Bwahahahahhahaaaaaa
> 
> http://www.news.com.au/business/bre...te-cut-door-open/story-e6frfkur-1226755757857




Yes a nice currency war would be good for no one but that's where we are so dropping rates further only hurts the savers and reduces discretionary spending as shown in the stats. Typical university bred economist ideology/theory by our central banksters?

Inflation? Exhibit A = housing = about the only thing benefiting from low rates? Low rates quickly negated by rising prices, net effect = society worse off! Good one Mr Stevens? Are you looking for a job at the US Fed?

Unemployment? Turning American = quality jobs going, being replaced by low quality part time.

It seems we are the only ones playing fair in global trade while our jobs go overseas and we let our farmers go out of business because of subsidised imports - let's start playing at their level and start imposing tarifs again!



> Job creation in Australia's economy remains sluggish, with a big fall in full-time jobs during October being only partially offset an increase in part-time positions.
> 
> Meanwhile, youth unemployment and the number of people looking for more work remains high.
> 
> ...


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## trainspotter (8 November 2013)

Uncle Festivus said:


> Yes a nice currency war would be good for no one but that's where we are so dropping rates further only hurts the savers and reduces discretionary spending as shown in the stats. Typical university bred economist ideology?
> 
> Inflation? Exhibit A = housing = about the only thing benefiting from low rates? Low rates quickly negated by rising prices, net effect = society worse off! Good one Mr Stevens? Are you looking for a job at the US Fed?
> 
> ...




OMG ... I actually agree with you for once UF ! (on most things anyways)


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## Mr Z (8 November 2013)

tech/a said:


> You are quite correct Trainspotter.
> 
> Interest rates are raised to pull up inflation.




Errrrrr.... NO! For gawd sake man...


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## trainspotter (8 November 2013)

Mr Z said:


> Errrrrr.... NO! For gawd sake man...




Care to expand on the graphs already posted how it all correlates nto a velocity of money. If people/business/financial controllers/CBDO/BANKS/partnerships/corporations//unit trusts et al ... possible pressure off the AUD? GLENN stevens ...  please call me. .

P.s. Pay ya bills ... asset rich ... cashflow poor is the new black. Waiting on money apparently?


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## aster (9 November 2013)

Uncle Festivus said:


> Yes a nice currency war would be good for no one but that's where we are so dropping rates further only hurts the savers and reduces discretionary spending as shown in the stats. Typical university bred economist ideology/theory by our central banksters?
> 
> Inflation? Exhibit A = housing = about the only thing benefiting from low rates? Low rates quickly negated by rising prices, net effect = society worse off! Good one Mr Stevens? Are you looking for a job at the US Fed?
> 
> ...




I feel that the currency is hugely over-priced. It should be around 75 US cents but the resource boom amongst other things has propelled it to new heights before knocking it back a little bit to the mid-90s. It's still extremely high.

I do agree about interest rates though raising them would also strengthen the currency unfortunately. Also keep in mind that the gov't had another worry on their minds: the property bubble bursting. A slump in interest rates certainly helped ward this off.

Quality jobs are being shipped abroad in almost all Western nations. I think the "corporate betrayal of working America" could well go down in history as the waning point of America's global economic dominance. Not only jobs being carved out of the nation and chucked abroad just to save $$$, but also a strong decline in the percentage of the national budget drived from corporate tax.

Australia, on the other hand, has been the victim of constant daylight robbery over the years. It does not matter who is in power as there is too much money involved to change this. Australia's natural resources should have made it one of the richest countries in the world if the mining/resource sector was properly run by the gov't. Instead we spread our legs and basically gave it all away, in return for nothing else but... jobs to carry out the plunder. Let's go to Brazil and tell the locals, "Hey guys, can we have all of your wood? We'll pay you to cut down the trees and load them onto our ships, so we will be creating new jobs for you guys in return for raping your country of its resources. How does that sound?"

You want an example of how the mining/resource sector should have been run you need to look at Norway. On TV you hear a lot about Qatar's massive sovereign wealth fund that is investing everywhere from left to right, even picking up football clubs like PSG along the way, but in reality it is a tiny, little operation compared to Norway's sovereign wealth fund which is the biggest in the world. And this is a nation of just 5mln people. But run by a smart government, who treats its natural resources as the wealth of the nation, not something that others can come and grab simply with the promise of handing over a shovel and a paycheck.


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## Macquack (9 November 2013)

aster said:


> Australia, on the other hand, has been the victim of constant daylight robbery over the years. It does not matter who is in power as there is too much money involved to change this. Australia's natural resources should have made it one of the richest countries in the world if the mining/resource sector was properly run by the gov't. Instead we spread our legs and basically gave it all away, in return for nothing else but... jobs to carry out the plunder. Let's go to Brazil and tell the locals, "Hey guys, can we have all of your wood? *We'll pay you to cut down the trees and load them onto our ships, so we will be creating new jobs for you guys in return for raping your country of its resources*. How does that sound?"




I agree, bloody good argument for the mining tax.


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## Smurf1976 (9 November 2013)

Macquack said:


> I agree, bloody good argument for the mining tax.



To a significant extent the boom in mineral exports is simply killing other industries rather than being growth as such.

Eg the LNG plants in Qld are set to triple the price of gas in the eastern states (including SA) thus killing manufacturing and harming the services sector (since electricity prices will also rise). We get some jobs building LNG plants and poking holes into coal seams but it comes at a significant price both economically and environmentally. I'm not totally against it per se, but I am opposed to it on the scale it is being done that's for sure.

Much the same could be said for other resources too. We export massive amounts of iron ore and coal and yet the domestic steel industry struggles to survive. There's plenty more examples like that.

The relevance of all this to property prices is, of course, that we are replacing labour-intensive industries which paid good wages with comparatively minimal labour industries in different locations. Total wealth may not be decreasing, it may even be growing, but it is becoming concentrated into fewer and fewer hands as a result of all these changes. There's a big difference between a factory employing thousands directly plus supporting many more contractors, suppliers etc versus simply loading the resource onto a ship which employs very few people.

Timber is a classic case in point. You can log some forests and put the best timber into saw mills and the rest into pulp and paper. It's not hard to employ thousands of people doing just that, with most of the jobs created being in the mills and things supporting them rather than the forests. Then along came the idea of export woodchipping, a truly nasty idea. You take all that wood and put it through a chip mill that requires just 4, yes 4, people to operate it. That's partly why environmentalists (and indeed most people according to the opinion polls) get so upset about it - there's just no real benefit to the community in return for logging the forests thus raising the "what's the point of it?" question.

Creating a society where GDP goes up and a few people get rich whilst the majority are stuck in casual service sector jobs isn't a recipe for social harmony and it's not good for house prices either. Nobody's going to buy a $500,000 house with a casual job paying $20 per hour.


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## Uncle Festivus (10 November 2013)

Another angle.....of the bubble



> The latest trend is Australians using their superannuation as collateral to buy residential property, as well as other forms of property. Residential real estate now accounts for 14% of so-called self managed super funds. That’s helped drive an 8% year-on-year increase in house prices in September.
> 
> Now I’m not sure if the practice of using superannuation or pensions as collateral to purchase property is used in any other country but the dangers are pretty obvious. Particularly when many developed countries, including Spain, are raiding pension funds to finance their QE programs.
> 
> ...










Source http://asiaconf.com/


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## trainspotter (10 November 2013)

Uncle Festivus said:


> Another angle.....of the bubble
> 
> 
> 
> ...




Interesting to note that our banks are some of the most profitable in he world? What does that tell you? I also note the US and UK with low ratios were the ones that suffered the most when their house prices fell through the floor !!! What does that tell you?


----------



## Whiskers (10 November 2013)

Uncle Festivus said:


> Another angle.....of the bubble




I find myself agreeing with that UF. The clue for me came back when the RBA and our big 4 banks and their economists started emphasising the need or desire to substantially increase local bank deposits (savings) and their (over) emphasis on the housing industry as our economic identity... and maintain monetary policy to support that with too high interest rate compared to the rest of the world. 

The main argument that the markets drive the currency higher because of the desire to invest in the mining boom, for me is shallow and misleading. If the RBA maintained a lower cash rate the pressure on savings rates would be more down, the investment flow into Aus, into interest raising bank accounts would be lower and the income from that mining investment would be lower in overseas currency conversion terms as well, (higher in AUD) tempering the boom bust cycle better.  

For me, the housing industry would not have overheated if they'd kept the rate lower, because the temptation to spend would not have presented as simplistically as some reckon with lower interest rates. The higher rate was the too the needed to increase their bank deposits.

It seems most of our inflation that they keep talking about in general terms in the media is imported inflation like fuel prices would not be so expensive with a lower AUD. On the other side of the equation imports would not have been so cheap for so long so there is a general levelling out of the available or disposable household income to roughly the same net effect. 

The main difference is there would be more business activity, our mining, agriculture, tourism and manufacturing would be more profitable to build real earnings and wealth into the wider economy for the longer term at the cost of some initial short term reduction to savings and term deposits which as you point out, the banks have got hold of control of too much of our economic destiny. 

I can't see them avoiding further cuts to resuscitate the real bread and butter parts of our economy, to make more from mining income and continue to promote resource development as well as stabilise agricultural, tourism and what manufacturing industries we have left.

Unfortunately, or probably more fortunately, I expect we will not be seeing a return to huge wide spread windfall gains in property, but more stagnation for longer. I expect the Banks including the Big L Liberal philosophy at the RBA are acutely aware of the sensitivity of the economy despite the public emphasis the put on the reasons for not cutting harder sooner as indicated by trying to talk down the AUD rather than having to cut and the big 4 banks deposits loose their attractiveness.

The qualification to all this is of course the steady availability of land for new construction, unhindered by foreign investment 'land banking' and the like.


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## maffu (10 November 2013)

trainspotter said:


> Interesting to note that our banks are some of the most profitable in he world? What does that tell you? I also note the US and UK with low ratios were the ones that suffered the most when their house prices fell through the floor !!! What does that tell you?




Risk and Return are always tied together. The Australian banks have the higher returns, and that may be due to them taking on the highest risk (via an undiversified lending portfolio).

Depending on the year of the data, the UK and US would have probably had ratios closer to Australia before they crashed, which shows what would happen to the Australian banks if property prices were to drop here.


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## Uncle Festivus (11 November 2013)

trainspotter said:


> Interesting to note that our banks are some of the most profitable in he world? What does that tell you? I also note the US and UK with low ratios were the ones that suffered the most when their house prices fell through the floor !!! What does that tell you?




Depends what you mean by 'profit'? As is the case globally, the perception is that all has recovered so they can reduce the loan loss reserve requirements and book it as a profit? The underlying revenue growth figures are average at best?



> New analysis from PricewaterhouseCoopers shows Australia’s big four banks posted collective underlying cash earnings in excess of $27 billion, despite a rise in annual costs and only moderate revenue growth.
> 
> Accounting firm Ernst & Young also released a comprehensive report on in which suggested the sector may be at a “tipping point” for growth and commended the banks’ ability to deliver returns in a difficult environment.


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## trainspotter (11 November 2013)

maffu said:


> Risk and Return are always tied together. The Australian banks have the higher returns, and that may be due to them taking on the highest risk (via an undiversified lending portfolio).
> 
> Depending on the year of the data, the UK and US would have probably had ratios closer to Australia before they crashed, which shows what would happen to the Australian banks if property prices were to drop here.




"Don't put all your eggs in the one basket" is what I believe you are alluding to. Not sure on the risk factor you mentioned? Australia has the least amount of default mortgages (exception of Canada at 1.44%) with a 5 year average of 1.56%. Just like the Japanese pride themselves on who can pay the most tax, Aussie mortgage belt borrowers will sell their grandmother before defaulting to the bank.


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## trainspotter (11 November 2013)

Uncle Festivus said:


> Depends what you mean by 'profit'? As is the case globally, the perception is that all has recovered so they can reduce the loan loss reserve requirements and book it as a profit? The underlying revenue growth figures are average at best?
> 
> _Accounting firm Ernst & Young also released a comprehensive report on in which suggested the sector may be at a “tipping point” for growth and* commended the banks’ ability to deliver returns in a difficult environment*._




So the big 4 banks maintain a 27 billion dollar underlying profit and are commended for doing so with a feathery warning that the sector "maybe" at a tipping point for growth? Damn straight they are at a tipping point for growth. It's their freaking job to lend money and to MAKE money for the shareholders. As they know that residential mortgage delinquency rates are very low in Australia they will then take larger risks either with commercial transactions (talking 100's of millions here in one dealing *ie* cbd buildings) or risky trades (thinking JPMorgan's $6.2 billion in losses from its 'whale trades' in 2012).

THAT is when it is going to get interesting !


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## trainspotter (11 November 2013)

I wrote this on the 7th November 11.21am.



trainspotter said:


> Seriously? If Obama gets stronger it means his policies are working which means QE will ease as unemployment is dropping !





*THE Australian dollar continues to be weighed down by strong US jobs data which support the case for tapering US quantitative easing sooner rather than later.*

http://www.news.com.au/business/aus...ong-us-jobs-data/story-fn6t6wad-1226757073987

Hmmmmmmm ... what would I know : Just need that pesky dollar to get under 90 cents and we are away again !

:horse:


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## Uncle Festivus (11 November 2013)

trainspotter said:


> I wrote this on the 7th November 11.21am.
> 
> If Obama gets stronger it means his policies are working which means QE will ease as unemployment is dropping !




Um, didn't the U rate increase to 7.3%?


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## trainspotter (11 November 2013)

Uncle Festivus said:


> Um, didn't the U rate increase to 7.3%?




Ummmmmm click on the link and read the article!



> *US employers added 204,000 jobs in October - an unexpected boost given that the federal government was partially shut down for 16 days.*
> 
> Employers also added 60,000 more jobs in the previous two months than earlier estimated.
> 
> The data dragged the Australian dollar lower, despite better-than-expected industrial production data out of China, Commonwealth Bank currency strategist Peter Dragicevich said.




Explanation please ?



> The Labor Department said that this was likely to be *because many federal workers were counted as unemployed* during the shutdown




http://www.bbc.co.uk/news/business-24870322

If you really want to get bogged down on semantics :- http://www.bls.gov/news.release/empsit.toc.htm


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## trainspotter (11 November 2013)

And they're off and racing ladeeez and generalmen ........ 



> UNITS in Lilyfield in Sydney, Belmont in Perth and St Clair in Adelaide have recorded the highest price growth of all capital city suburbs with *median prices rising as high as 50 per cent over the past 12 months.*
> 
> The top 50 suburbs from RP Data reveals units in Lilyfield jumped by 50 per cent this year from a median sale price of $480,000 to a whopping $720,000 this year.
> 
> Units in Belmont in Perth were selling for $327,500 in 2012 but this year, their median sale price is $477,750 - growth of 45.8 per cent. In third position is Gregory Hills in outer Sydney, where apartments are currently selling around $489,900 which is 44.1 per cent higher than last year. Saint Clair in South Australia is next with units now 43.6 per cent more expensive at $405,000.




http://www.news.com.au/realestate/b...wth-for-the-year/story-fndban6l-1226757322138

*sniff sniff* smells a bit bubbly to me !


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## Whiskers (12 November 2013)

Two strong factors in the current market are:

first home owners at decade low levels (12.5%), and 
record high lending for investment housing, apparently considerably more than half. 
Both are a sign for caution for me.

But a bit of a dark horse that's likely contributing to the perception of a housing shortage, or more precisely driving over excitement with increases in some areas is that there may be far more houses left vacant, unoccupied than previously thought. 

Some reasons are postulated for Melbourne here; http://www.abc.net.au/news/2013-11-05/vacant-housing-melbourne/5071460

_Land tax hikes could create rent incentive

Mr Soos says many owners are holding onto empty properties because the net return from rent is so low as to make it not worth the time and effort, while the real profit is to be made from rising property values.

He says an increased land tax would discourage investors from holding empty properties.

"An increase in the land tax has the effect of reducing rental income and stunting out capital growth in the value of the land under these properties," he said.

"And if this is the case then it also acts as a withholding cost which provides an incentive for a landlord to actually tenant the property in order to gain an income to pay down the increased land tax."​_
Another could be the large number of houses lost or still deemed inhabitable from wide spread floods in the last couple of years or even lost to fires and are facing long waits for insurance companies to payout on before repairing or rebuilding.

If there is a substantial amount of local and or overseas owned 'land banking' waiting for a capital gain, then a bit of a rising market could turn into an oversupplied market in a flash. I can point to quite a number of regional resort and tourism areas which suffered from over speculation of vacant land before and again just as the GFC was recovering. Especially those on the fringe have been sitting on the market for years and every now and then one cuts the asking price multiple times to as much as 30 to 40% off asking price as the Qld Building boost ended in 2012 and after a bit of a spurt in prices since fails to follow through. 

Which brings me back to the foreign investment issue. The problem with our foreign investment is at present we don't keep a log of foreign owned property. But then the capitalists would not want such records to be kept. It would be a pretty hot indicator of trouble spots. 

To blindly promote foreign investment without knowing how much and where it is and the effect it's having on the economy is to trust blind faith that everything will be all right... dumb.

We need a detailed foreign investment register, otherwise we have no idea how much of our land and housing is foreign owned, where that land is or what effect it has on land and house prices.

Add in our unique negative gearing tax scheme (which I admit to have exploited when younger) and the incentive to invest when there appears to be a price rise looming, further distorts the market dynamics as at present and costs the government billions of dollars in forgone revenue.

Apart from the global issues, the RBA monetary policy and our big banks protectionism... our internal structure such as the status of ownership and incentives such as negative gearing v first home owners or ownership per se, is unsustainable or at least unhealthy, even before the unknowns of foreign investment is considered.


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## trainspotter (12 November 2013)

And yet you still dont get it?


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## Whiskers (12 November 2013)

trainspotter said:


> And yet you still dont get it?




What!.. that Obama will decrease unemployment and the AUD will fall and hey presto our property market is up and away!?

I wonder if you see the US unemployment rate being more positive than it really is. In the detail there is a similar problem here in Aus... the more fundamental problem of less workforce participation and low to flatish household income. 

A looming spoiler is also our mining boom not falling away as some, including the RBA originally anticipated. What would you do when the government introduced a super profits tax? I expect most would bring forward development and maintenance etc to avoid the extra tax in the first year. The consequence of that is likely increased production and profitability in the second and third years as available tax minimisation measures decrease.

What is that going to do for local industry? Probably not a lot for employment and personal income as more production will likely be more mechanised. Since the majority of mine production is foreign owned most of the profits will go overseas, but we might collect a bit more mining tax until and if it is repealed. Then what of the pressure on the AUD/USD? If the carbon and mining tax are repealed could that see a flood of investment back into our economy and the AUD rise again before we know it, drive up imported inflationary pressures and the RBA itching for an excuse to raise rates again, thus killing off sustainable, organic internal driven growth in our economy?   

If the current rises are driven more by investment lending as it seems and if the capital gains and or rent revenues are not met it will turn back into a selling market quick smart. 

There is not a substantial lack of supply of land, not even developed land generally. There may be in certain areas where employment and or lifestyle preferences attract people, but there are plenty of less expensive housing opportunities further out in regional areas and interstate where people will migrate to when the cost differential becomes significant, as they did in the 1990's. 

For me the real issues are going to be affordability, a widespread growth in income, especially disposable income and a shift in monetary and fiscal policy as mentioned above, to foster home ownership more than investment.. then the RBA's fear of an overheating property market will be lessened due to less speculators in the market.


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## trainspotter (12 November 2013)

More white noise from another internet hero. You have missed the boat. Next please 

Try actually doing something for a change. Go and buy/build something instead of pontificating from a position of armchair theories and extruding palaver onto the great unwashed masses.

I have posted where 50% gains have been achieved in a 12 month period. I have posted as to WHY I do what I do and given valid reasons as to WHY this is happening as well as given enough information to evidence that 28% is an achievable result. And yet you still don't get it?

More action and less talk is required.


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## Whiskers (12 November 2013)

trainspotter said:


> More white noise from another internet hero. You have missed the boat. Next please




White noise: _a signal that contains equal power within any frequency band with a fixed width._

Yes that's what we need, more opinion power (white noise) about the economy in the same 'frequency' as, and to drown out more of the vested self-interests like realestate. 



> Try actually doing something for a change. Go and buy/build something instead of pontificating from a position of armchair theories and extruding palaver onto the great unwashed masses.




Yes, you do seem to do what you do quite well... BUT, with all due respect TS, the future of the Aus economy is much more than just about you or me. You really are quite intolerant of people who express a different opinion aren't you! :

The overemphasis on realestate (or any single aspect of the economy) as the measure of the strength of, or what's best for our economy is the great extruding palaver being pontificated on the Aus population atm.



> I have posted where 50% gains have been achieved in a 12 month period. I have posted as to WHY I do what I do and given valid reasons as to WHY this is happening as well as given enough information to evidence that 28% is an achievable result. And yet you still don't get it?




Not everyone needs to "buy/build" something for a better and stronger Aus. On the contrary, we need more people to be involved in working smarter... as in creativity to make something new out of little more than and idea plus a few of our natural resources tickled together with a bit of local manufacturing afforded some degree of national interest protection and 'sell' things overseas. That is what the US and Germany did, apart from realestate, to build up their manufacturing base to be world economic powers. 

The short critique of your case for the betterment of your business as opposed to the betterment of the wider economy is best exemplified by people with vested interests in property having too much influence controlling fiscal and monetary policy to the detriment of longer term sustainable, organic, internal growth in the economy from manufacturing while better protecting the big things Aus has going for it... agriculture, tourism and mining.



> More action and less talk is required.




On the contrary... in critical times like this after massive fiscal and monetary policy, knee-jerking a mash of good and bad policies and another hung government for at least 7 months, a bit of quality 'talk' to negotiate the impasse on major obstacles to improving our economy would be well advised... then people could get on with the 'action' in much better confidence for the future.

Just think about the Carbon and mining tax for example. If nothing changes we likely grind down to a slower economy with wealth concentrated more in the few. If they are repealed and the average household is refunded the impact of the tax as Abbott promised, 6 to 9% up to 14% according to industry... what a significant boost to household wealth that will be. How will people spend it? Will they spend it on realestate, something else, reduce their debt or just leave it in deposits?


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## trainspotter (12 November 2013)

The future of Australian property - CERTAIN areas up by 50%. Rates to rise to curb inflation/slow the market March/April 2014 (not necessarily from the RBA) Overall synopsis - limited time frame to make money before stagnation/peak. Possible 3 year period before plateau in prices. Prognosis - looks bubbly so drink it.


WHITE NOISE: in the metaphoric sense of "random talk without meaningful contents"


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## Uncle Festivus (12 November 2013)

trainspotter said:


> More white noise from another internet hero. You have missed the boat. Next please
> 
> Try actually doing something for a change. Go and buy/build something instead of pontificating from a position of armchair theories and extruding palaver onto the great unwashed masses.
> 
> ...




Nice attitude there. It's similar to the attitude of the law makers to not wanting to rock the boat or lose votes in order to correct wrongs. Wrongs like tax payer subsidised negative gearing - everyone agrees that it's a massive rort but nobody wants to abolish for fear of backlash and getting tossed out of power.

Property investing is the con inflicted on the masses by the financial industry in order to continually make ever growing 'profits', with complicit help from compromised lawmakers and their property developer financial backers.

At's all beer & skittles up until the point where something breaks and then the blame game starts. All those self proclaimed property mavericks while the ponzi scheme continued soon find themselves looking to blame somebody else for having been left without a chair when the music stops. But, as usual, most of the really smart money have already gotten out at the peak and were busy dumping to the late comers - I see it now, lot's of properties tightly held for generations are coming onto the market at exorbitant prices, and selling!

I saw this during the last recession and it's a far bigger bubble now than it was then - the bigger they come the harder they fall.


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## againsthegrain (12 November 2013)

It looks like the last desperate push up before exhaustion. You know it when spruiklers like ts come out of hiding for their annual desperate preech on the internet thinking they can make themselves a good exit then dissapear again.

The tune is already changing from huge gains to getting out soon and drinking bubbly with stories of past success. We all know it a slowdown/stagnation are around the corner maybye even a crash.


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## Whiskers (12 November 2013)

trainspotter said:


> The future of Australian property - CERTAIN areas up by 50%. Rates to rise to curb inflation/slow the market March/April 2014 (not necessarily from the RBA) Overall synopsis - limited time frame to make money before stagnation/peak. *Possible 3 year period before plateau in prices*.




Well, I just hope you have not got in out of your depth TS, on the expectation you have three years of spectacular rises up your sleeve.



> Prognosis - looks bubbly so drink it.




You are certainly quite flamboyant, even quite emotive at times. You are not overindulging, mixing work with pleasure, making business judgments in a pleasurable state, are you.

In any case, isn't it wise to not count your 'bubbly' until you have it in your hand?


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## Bill M (12 November 2013)

A lot of emotional posts here lately but one thing for sure, in my area on the Northern Beaches (Sydney) prices are strongly up and where I am living on the Central Coast properties are selling very quickly and in most cases before auction and for good prices. Prices are going up, that is what matters to me and everything else is just guesswork. As for the future of houses prices? In good areas and suburbs with low supply, definitely up and no I am not selling anything, building anything or spruiking anything, it's just my observations and my opinion.


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## trainspotter (12 November 2013)

THANKS BILL M .... I actually heard it from the mans mouth who is on the ground putting a report in on house values in their area rather than pontificating from an armchair with no skin in the game. Strong rising prices in your area is a good sign of property holding it's own. Semantics of why/wherefore/moreover has been done to death. Macro economics are a factor. Don't get me wrong. All the white noise/palaver/diatribe is relevant in context. I repeat for comedy purposes only ... CERTAIN areas will rise or in fact have risen 50%if you had 400k skin in the game. Factor interest rates and outgoings it is still 28% on ya money.

Them's the breaks eh?

Done the math yet on the figures I have evidenced Whiskers? Or if you PM me I will send you a PDF to disseminate at your will. Now before you begin squawking about "presales" at 110% of loan value before funding is required from bank you do realise the titles are valued at 1 mill plus. Happy with the rate of % from bank and the minimal conditions involved with the transaction. In and out in 2 years with 6 months interest free ... speculative ... you betcha it is. Your call.

Now enough about me ... how you guys going in the RE game? 

Yes there are areas of mortgage stress and the investors bought these toxic debts off the bank. The poor young couples who got duped into buying property from a spruiker and then their marriage breaks down cause he went and bought an SS commodore to go with the new house certainly hurts. Guess what ... they are now renting "their" house back to the investor for the same amount they were paying mortgage. 

Maths anybody on $280,000 IO and receiving $350 a week with "possible" cpi of 2.3% and I make 28% on 18 months debt free. Please factor in outgoings and tax deductibility on my income for the period. Also get to drink bubbly and fly planes.


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## DB008 (12 November 2013)

Did someone say we have the highest debt ratio in the world, or something to that extent ???




> *How South Korea Became a Credit Card Nation*
> 
> Over the course of two decades, South Korea quickly morphed from a country of savers to a nation of spenders and borrowers. The country now hold the most credit cards per capita in the world, according to statistics from the Bank of Korea, with five times as many credit cards as people.
> 
> Young-Sik Jeong, a research fellow at the Samsung Economic Research Institute in Seoul, tracks household debt in South Korea. In 1990, he found, Koreans saved on average 22.2 percent of their net household incomes. By 2012, that figure had dropped to 3.4 percent. And the ratio of household debt to disposable income in 2012 was 160””higher than the U.S. in 2007 before the housing bubble burst.




http://www.businessweek.com/articles/2013-11-11/south-koreas-debt-culture-fueled-by-spending-on-housing-education


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## CanOz (14 November 2013)

Ves said:


> I was born and bred in Ballarat.   Most of my family and friends still live there.
> 
> There's 100,000 people living there now.  It's the fifth largest inland regional city in Australia.   And it's growing fast.... recent Victorian Government planning suggests that they are targetting around 200,000 people to live there by 2050.   There's plenty of room to expand,  it's surrounded by farming land and plenty of potential for high-density residential in the city.
> 
> My 1BR Unit (which used to be a PPoR) that I hung onto as safety net incase I ever wanted to move back is only a couple of kilometres from the CDB.   Almost fully paid off these days.  I've had the same tenant for almost five years and raised the rent every year.  Still 18 months on the latest lease to run.




Thanks Ves. I'm interested in Ballarat as its the only place I lived for a length of time in Australia. Aside from the winters it was great there too!

The growth in Ballarat of property prices seems more steady and less frothy....is this an accurate way of describing it?


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## Uncle Festivus (14 November 2013)

Really?



> Inflated and inaccurate auction clearance rates may push misinformed buyers into the market, according to Aquasia strategist Mark Bayley.
> 
> Bayley, a chartered financial analyst for the corporate advisory company, has accused property data providers and media commentators of provoking over*excitement based on misleading figures.
> 
> ...




Thank god for APRA, standing extra vigilant at 98%  



> Home lenders are accepting smaller deposits from home buyers and increasing the amount they are loaning relative to the value of property prices, causing the Australian Prudential Regulation Authority (APRA) to be extra vigilant on lending standards.
> 
> Stephen Campbell, head of credit risk management at QBE’s lenders’ mortgage insurance business, said maximum loan-to-value ratios (LVRs) had reverted back up to 95 per cent (with a 5 per cent deposit), from about 90 per cent following the global financial crisis in 2008. Adding in the cost of lender’s mortgage insurance, the maximum LVR was about 98 per cent.
> 
> “Once you cross that 95 per cent on the base LVR, the level of claims jumps significantly, and that’s why we’re not in that space any more,” Campbell said at the Australian Securitisation Forum conference in Sydney.


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## Whiskers (15 November 2013)

trainspotter said:


> The future of Australian property - CERTAIN areas up by 50%. Rates to rise to curb inflation/slow the market March/April 2014 (not necessarily from the RBA) Overall synopsis - limited time frame to make money before stagnation/peak. *Possible 3 year period before plateau in prices.* Prognosis - looks bubbly so drink it.




Would your 3 year forecast be based on a full term for the government?


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## trainspotter (15 November 2013)

Whiskers said:


> Would your 3 year forecast be based on a full term for the government?




Got nothing to do with the government of the day. Historically low interest rates, unemployment steady, job security back to normal levels, CPI within target range of the RBA, pent up demand, amount of investors back in the market place, banks offering 3 year rates at 5.8% (which have just gone up 0.06% btw *interesting*) as well as quite a few "other" market indicators. But you know all this right? :


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## ftw129 (15 November 2013)

Anyone not taking advantage of these low rates now will be kicking themselves in a year or two....

May not see another opportunity like this for another 10 years or more.


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## Uncle Festivus (15 November 2013)

trainspotter said:


> Got nothing to do with the government of the day. Historically low interest rates, unemployment steady, job security back to normal levels, CPI within target range of the RBA, pent up demand, amount of investors back in the market place, banks offering 3 year rates at 5.8% (which have just gone up 0.06% btw *interesting*) as well as quite a few "other" market indicators. But you know all this right? :




Unemployment is rising - http://www.tradingeconomics.com/australia/unemployment-rate
job security back to normal levels - ???. More temp jobs than full time would mean less security??
pent up demand???? - low LVR from a financial system complicit in force feeding liquidity fed via media frenzy stories

Plain & simple liquidity trap where banks are looking to put to use excess loot.......


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## sydboy007 (16 November 2013)

Can't find the video again but was interesting a study in the USA over a 50 year period showed that those cities / states with the highest level of home ownership tended to have the highest unemployment down the track, mainly due to the lower mobility home owners have.

Looking to the EU it was similar there with Switzerland having the lowest unemployment and home ownership, whereas Spain did have the highest level of home ownership and now near the highest level of unemployment.

So why buy when specufestors will lend you a property for less than the current loan interest rate?  Got yaself at least a 1% saving there.  Juts rent and find another way to save people and prosper from the (false) belief you can't lose buying property.


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## prawn_86 (16 November 2013)

sydboy007 said:


> Can't find the video again but was interesting a study in the USA over a 50 year period showed that those cities / states with the highest level of home ownership tended to have the highest unemployment down the track, mainly due to the lower mobility home owners have.




Not trying to add or detract from this argument either way, but it is interesting to note the property taxes her in the US. I have heard stories of people paying well over 5% pa just in land/property tax. Surely this has to keep a lid on capital appreciation, if you are paying out 30k pa for a 500k property no-one is going to buy it unless they have that free cash flow to pay the taxes


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## Mrmagoo (17 November 2013)

sydboy007 said:


> Can't find the video again but was interesting a study in the USA over a 50 year period showed that those cities / states with the highest level of home ownership tended to have the highest unemployment down the track, mainly due to the lower mobility home owners have.
> 
> Looking to the EU it was similar there with Switzerland having the lowest unemployment and home ownership, whereas Spain did have the highest level of home ownership and now near the highest level of unemployment.
> 
> So why buy when specufestors will lend you a property for less than the current loan interest rate?  Got yaself at least a 1% saving there.  Juts rent and find another way to save people and prosper from the (false) belief you can't lose buying property.




Can you say "spurious variable" ?


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## sydboy007 (17 November 2013)

Mrmagoo said:


> Can you say "spurious variable" ?




So you don't believe home ownership acts as an anchor that limits a person's or family's willingness / ability to move to where employment opportunities are?

I'd say it's a big issue here due to the SD on housing purchases.


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## Smurf1976 (17 November 2013)

sydboy007 said:


> So you don't believe home ownership acts as an anchor that limits a person's or family's willingness / ability to move to where employment opportunities are?



How significant it is depends on the ability to sell or profitably rent that house.

I own a house in Tasmania. If I personally lose my job but the overall state economy remains stable then selling the house and relocating to another state is a realistic option. But if the overall Tas economy falls in a heap and local housing prices crash but the other states don't suffer the same fate then my options are more restricted. Either I sell the property cheaply (or not all) and move, or I continue living in it and potentially remain unemployed.

Since a large proportion of people could not reasonably afford to simply walk away from a house without selling or renting at a price that covers the original purchase cost, it's entirely possible for people to become "trapped" in a failing local, regional or state economy. There are plenty of examples of just that overseas (notably the US) and within Australia in towns where major employers have closed etc.

The other big restriction on mobility is relationships. If you're 20 years old and single then you can move pretty much anywhere as long as you can afford the physical cost of relocation. But if you lose your job, but your partner still has a decent job, then the decision to move becomes much more difficult. Not only do you need to get a job in the new location but so too does your partner - it's a much more complex situation. Now factor in family, friends and especially children if they are at school and it becomes more complex again. 

Home ownership is one limitation on mobility but it's certainly not the only one.


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## CanOz (18 November 2013)

My wife's Chinese friend has a friend that just bought five apartments in Melbourne, plus a house in toorak...

Imagine if there is one, there's a hundred.


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## trainspotter (18 November 2013)

CanOz said:


> My wife's Chinese friend has a friend that just bought five apartments in Melbourne, plus a house in toorak...
> 
> Imagine if there is one, there's a hundred.




And I imagine she is receiving a stipend from these purchases? People have got to live somewhere ! 

The name Toorak has become synonymous with wealth and privilege. The suburb has long had the reputation of being Melbourne's most elite, and ranks among the most prestigious in Australia. It has the highest average property values in Melbourne, and is one of the most expensive suburbs in Australia. It is also listed as the "highest money earning suburb" in the country. 

Mebbe on this purchase she is looking for capital growth? Average HOUSE price is 2.1mill and rent is $970 per week  Strangely enough it has one of the highest people looking per listed property in Australia as well?

That kind of maths does not compute at all !!!!!!!!!!!!


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## trainspotter (18 November 2013)

sydboy007 said:


> So you don't believe home ownership acts as an anchor that limits a person's or family's willingness / ability to move to where employment opportunities are?
> 
> I'd say it's a big issue here due to the SD on housing purchases.




An anchor? I would have thought that the banks would have lent the money to the purchaser BECAUSE they had steady employment and not the vice versa? Employment opportunities? What you talking about Willis? Have you not heard of FIFO?



sydboy007 said:


> Can't find the video again but was interesting a study in the USA over a 50 year period showed that those cities / states with the highest level of home ownership tended to have the highest unemployment down the track, mainly due to the lower mobility home owners have.
> 
> Looking to the EU it was similar there with Switzerland having the lowest unemployment and home ownership, whereas Spain did have the highest level of home ownership and now near the highest level of unemployment.
> 
> So why buy when specufestors will lend you a property for less than the current loan interest rate?  Got yaself at least a 1% saving there.  Juts rent and find another way to save people and prosper from the (false) belief you can't lose buying property.




USA home ownership to unemployment ratios is due to manufacturing companies going offshore in the 80's. Think Chrysler/Ford/GM and Detroit "Motor City." How many of these plants are still producing motor vehicles there today? So if the major industry shuts down and the majority of the workforce has one skill level so therefore practically unemployable what do you think this will do to house prices? I wont go on as to the rest of the USA as I am sure you are picking up what I am putting down.

The Switzerland pfizer - According to a 2010 study, “Why Do the Swiss Rent?” by Steven C. Bourassa at the University of Louisville and Martin Hoesli at the University of Geneva, tax policy provides much of the explanation. For example, owner-occupants in Switzerland pay income tax on what is known as the imputed rent they derive from living in their own homes ”” *yes, they pay tax on the rent they could be charging themselves*. This imputed rent is estimated by looking at market rents for similar properties.

The Spain pfizer - The majority of "owner occupied" homes in Spain are debt free as they have been passed on through the generations. No banks to repossess what you already owned for a 100 years or so in the family. Now before you get on the bandwagon and start monkey poo flinging about "housing bubble" and "Spain" this was not directly the case. Foreign investors cashing in on the tourism boom were building MULTI MULTI housing developments and MASSIVE resorts trying to cash in on foreigners purchasing "holiday homes/apartments" .... Hey Presto ! ..... GFC .... *POP* goes the banks. Nothing to do with the "residential" market. Just greedy investors and stupid banks not performing due diligence.

In the last thirty years the Spanish *unemployment rate has hovered around double the average* of developed countries, both in times of growth as in crisis. Knocking off at 12 o'clock for a "Siesta" for a few hours may have something to do with it as well as being a lazy population does not help !! Been there to see it first hand so PULLLEEEZE don't start. Oh yeah ... tourism is one of their MAJOR income streams. When people no longer go on holidays there ..... well you get the idea?

YES YOU CAN LOSE MONEY ON PROPERTY !!!!!!!!!!!


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## trainspotter (18 November 2013)

*Sydney home values grew an eye-watering 13.3 per cent this year, according to RP Data figures, with prices getting so high - and rental yields plunging as a result - that hopeful investors are now looking outside NSW for good deals.*

Brisbane prices were up just 3.5 per cent, and with RP Data revealing properties are also discounted an average 5.8 per cent before selling, inner-city suburbs offer value for investors.
"South Brisbane rents are the best for a blue-chip suburb anywhere in Australia," Positive Real Estate chief executive Sam Saggers said. "Yields are pressing 6.5 per cent if you buy well."

Central Coast sisters Ann Bettson-Barker and Amy Pidgeon bought a one-bedroom unit in South Brisbane for $412,000. They now rent it out for $530 a week - *a yield of 6.7 per cent.*

http://www.news.com.au/national/que...s-housing-market/story-fnii5v6w-1226762129823

Now this is SPRUIKING !


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## Whiskers (20 November 2013)

ftw129 said:


> Anyone not taking advantage of these low rates now *will* be kicking themselves in a year or two....
> 
> May not see another opportunity like this for another 10 years or more.




Not sure 'will' is the best word... 'may' may be more appropriate.

More particularly, with regard to Trainspotters perception of the rise in fixed rates by banks, they have got it wrong before, a couple of times in the last couple of years.

But did they just get it wrong or was it a spruiking tactic by the banks (building up expectations) to spook people into switching from variable to locking in a fixed rate before rates go lower.  

It is worth noting that the RBA is arguably too pre-occupied with talking up expectations of housing prices overheating as justification for not lowering the cash rate more and sooner, while the more significant macroeconomics influences, the GDP growth rate is trending lower and unemployment trending higher.

Clever, subtle tactic to lock in more profits.


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## trainspotter (20 November 2013)

Things must be heating up when the Yanks start commenting 



> EVEN for an economist from New York with its fabled cost of living, prices in Australia's property market seem high.
> 
> "For an American, coming to visit in Australia, things are expensive, and property's expensive," economist Robert Gay said, as he walked around Brisbane's CBD on Monday.
> 
> ...




http://www.news.com.au/realestate/b...omist-robert-gay/story-fndban6l-1226763042194

As per CanOz friend of a friend buying up BIG in Toorak etc. there is a limit to prices and to what the market can withstand. As shares go down (read plunge) "Black Monday, 19.10.1987" for example so can the prices of property IF and it's a pretty big IF a number of factors come into play.

1) RBA lowers interest rates AGAIN
2) Unemployment rising
3) FIRB relaxation of policy (read Asian purchasing)
4) ???? ... anybody care to comment?


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## Smurf1976 (20 November 2013)

trainspotter said:


> An anchor? I would have thought that the banks would have lent the money to the purchaser BECAUSE they had steady employment and not the vice versa? Employment opportunities? What you talking about Willis? Have you not heard of FIFO?



Circumstances can and do change after people take out mortgages. It might be a "secure" job today but that doesn't mean it won't be gone tomorrow. 

Just today there is news that BP is to put off 300 or so office workers in Melbourne. No doubt they all thought they were "safe" at some point - BP is a pretty big company after all and it's not as though the market for petrol has disappeared. But those jobs are going and the same could be said for every other "safe" employer who has cut staff or closed completely over the years. Few would have thought 15 years ago that Ansett would soon go bust or that the Newcastle steel works would be demolished. I mean, a job with Ansett or BHP was pretty much a "job for life", right? Things change, and when it happens it tends to happen fairly quickly from the perspective of those affected. 

From my own experience, the bank asked no further questions about employment as soon as they saw that I worked for a locally "too big to fail" employer. Never mind that it has a much smaller workforce than it once did or that it's not known for being particularly profitable. It's extremely well known locally, is "too big to fail" and I've been there quite a while. That was enough to satisfy the bank.

Suppose that somewhere like Tas or SA go bust in a big way. Doing FIFO to Melbourne to work in an office job paying $60K doesn't work too well economically. At least it doesn't unless you can stay at no cost with friends / family or are prepared to spend 5 nights a week sleeping in a backpackers. Even then, air fares and the cost of getting to and from the airport will be eating up 20% or so of your after tax income. A short term option maybe, but ultimately most would end up just relocating to where the work is in due course.

If you look at the people who actually do FIFO, in most cases there are two key factors. Firstly, the job itself is high paying such that transport costs aren't a huge factor. Second, the location is such that living nearby either isn't an option at all, or is in some way undesirable (middle of nowhere). Hence such jobs are commonly associated with mining and construction projects.

I personally know two people who do it. One drives about 300km each way from Hobart to Queenstown and the other flies to SA and back. Both are mining related jobs. The one who goes to Queenstown used to live there (still has the house there) and moved to Hobart due to greater recreation and educational opportunities for their teenage children. In due course they'll quite likely move back to Queenstown. The one who flies to SA is a contractor who also does somewhat specialised work locally - but there wasn't enough local work to sustain the business hence pursuing opportunities elsewhere. He seems to see it as a "wait and see" situation. Either the local economy picks up or in due course he'll relocate to SA and at that point his house in Hobart will be for sale or rent.

I really can't see a situation where we have significant numbers of people flying from one state to another to work in "ordinary" jobs. Mining and one-off contracts yes, but not things like bus drivers or administrative roles. If the economy in NSW (for example) goes down in a big way then we're not going to see a million or even 100,000 people flying out of Sydney every Sunday night to get to their accounting, bus driving, car salesman or whatever "normal" job in another state. In practice, they'd either stay in Sydney and get whatever work they can, or relocate somewhere else. Either way, they won't be needing a house in Sydney once they make the move.


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## Mrmagoo (23 November 2013)

sydboy007 said:


> So you don't believe home ownership acts as an anchor that limits a person's or family's willingness / ability to move to where employment opportunities are?
> 
> I'd say it's a big issue here due to the SD on housing purchases.




I believe there would be much more important variables.


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## Mrmagoo (23 November 2013)

CanOz said:


> My wife's Chinese friend has a friend that just bought five apartments in Melbourne, plus a house in toorak...
> 
> Imagine if there is one, there's a hundred.




I don't think any other country in the world allows this sort of thing to go on. Think about it. Most Aussies can't buy property overseas and would have little to no chance of working overseas yet we are allowing a tide of immigrants to come here and compete for jobs and houses so that a select few can get wealthy without having to lift a finger for it. It just isn't right. It is going to stuff up the lives of an entire generation.


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## sydboy007 (23 November 2013)

Mrmagoo said:


> I don't think any other country in the world allows this sort of thing to go on. Think about it. Most Aussies can't buy property overseas and would have little to no chance of working overseas yet we are allowing a tide of immigrants to come here and compete for jobs and houses so that a select few can get wealthy without having to lift a finger for it. It just isn't right. It is going to stuff up the lives of an entire generation.




I just got back a few days ago from a holiday in SE Asia.

Trust me, it's quite easy to buy property over there - admittedly just apartments.

Rental yields are pretty good at 6%+ and ongoing costs much cheaper than in Australia.  Throw in say a 10%+ currency drop gain and it's very tempting for me.  Was looking at quite a nice 1BR apartment in Soi 3 Silom for about $170K, and was advised that no locals had bought into it.  Pretty much just Singaporeans, Malays and HK.

As for stuffing up the lives of an entire generation, restrictive planning laws and urban growth boundaries have and will continue to do this until the vested interests are overcome and what should be cheap land is finally available for sale.  Texas has a population higher than Australia, had higher levels of population growth, income growth than Australia, yet REAL house prices have barely moved over 10+ years.  We could learn a lot from them, but it's probably too late now because the banks would collapse if there was a significant increase in housing supply and prices dropped 30%+

The bubble has continued for far far longer than I expected, but the proof of Australian exceptionalness in regards to property pricing will be when unemployment rises a couple of percent, and those earning decent money are forced into new jobs paying significantly less.  We manufacture barely nothing, import practically anything of value, yet somehow feel safe and secure with our ever increasing house prices


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## aster (24 November 2013)

trainspotter said:


> The Switzerland pfizer - According to a 2010 study, “Why Do the Swiss Rent?” by Steven C. Bourassa at the University of Louisville and Martin Hoesli at the University of Geneva, tax policy provides much of the explanation. For example, owner-occupants in Switzerland pay income tax on what is known as the imputed rent they derive from living in their own homes ”” *yes, they pay tax on the rent they could be charging themselves*. This imputed rent is estimated by looking at market rents for similar properties.




Same thing in Singapore. When you own a property you have to pay tax as if it were rented out.


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## aster (24 November 2013)

Mrmagoo said:


> I don't think any other country in the world allows this sort of thing to go on. Think about it. Most Aussies can't buy property overseas and would have little to no chance of working overseas yet we are allowing a tide of immigrants to come here and compete for jobs and houses so that a select few can get wealthy without having to lift a finger for it. It just isn't right. It is going to stuff up the lives of an entire generation.




Very easy to buy property abroad. The problem is different, opening up the housing market and allowing it to be a vehicle for speculative/investment capital for outside investors, or even for investors in general. So money starts flowing in and scooping up properties, sending prices up. A lot of investors from Asia don't even care if the apartment is rented or not. Here in Singapore it's quite normal for someone to fly in, buy three apartments at $5M each, and just keep them empty.

Allowing people to gamble and speculate ("invest") in crucial areas like housing is a big mistake imo. Countries like Norway, where people earn good wages and the price of everything from beer to cheese is high, happen to have very affordable property prices. Surprised? What they do is keep gamblers away from the housing market. The last time I was there I believe you were not allowed to buy a second home, so basically you can only buy a home if you haven't got one.

Same thing with oil prices. Speculators can send the price skywards by just gambling on what is a strategic resource without having ever seen a real barrel of oil.


----------



## aster (24 November 2013)

Uncle Festivus said:


> View attachment 55202
> 
> 
> View attachment 55203
> ...




What does that first chart show btw?

As for the second one, are all Australian banks so heavily dependent on property loans (and at risk if the property bubble bursts)? Is there a chart with a break-up showing what the percentage is for each particular bank?


----------



## sydboy007 (24 November 2013)

aster said:


> What does that first chart show btw?
> 
> As for the second one, are all Australian banks so heavily dependent on property loans (and at risk if the property bubble bursts)? Is there a chart with a break-up showing what the percentage is for each particular bank?




My understanding is pretty much the gang of 4 + the regionals are all glorified building societies with over 60% of loans for residential mortgages.


----------



## trainspotter (27 November 2013)

sydboy007 said:


> My understanding is pretty much the gang of 4 + the regionals are all glorified building societies with over 60% of loans for residential mortgages.




Got any proof? Are you saying that the big 4 banks have 60% market share or are you saying thier lending books consist of 60% of residential home loans?

Meanwhile back in reality:-



> *The financial regulator says it is "working assertively" with banks to make sure they do not slash their home lending standards to chase more business.*
> 
> The Australian Prudential Regulation Authority's chairman John Laker has told an economics lecture that banks need to remember the lessons of the US housing meltdown.
> 
> ...




http://www.abc.net.au/news/2013-11-27/apra-working-with-banks-on-lending/5119022



> 1) RBA lowers interest rates AGAIN
> 2) Unemployment rising
> 3) FIRB relaxation of policy (read Asian purchasing)
> 4) ???? ... anybody care to comment?




Number 4 ladeeez and generalmen ....

*4) Lending standards* (is the answer)

With economists predicting a rate REDUCTION in 2014 then the market is CERTAINLY showing signs of heading South. WHY ? Because the more banks lend at low rates and 95% LVR the more likely a default or mortgage in possession will result. What happens to prices then? A FIRE SALE results which then sends confidence tumbling as well as resulting in the banks tightening their lending ..... blah blah blah .... bored yet?


----------



## trainspotter (29 November 2013)

> HSBC chief economist Paul Bloxham said a lower exchange rate will also help the domestic economy and save the RBA from cutting its rate again.
> In the past six weeks the Australian dollar has steadily fallen, losing six US cents since October 25 to its current level just below 91 US cents.
> "RBA governor Glenn Stevens has suggested that it is his judgement that the Australian dollar is currently above levels that we would expect to see in the medium term," Mr Bloxham said.
> *"Our own view is still that the Australian dollar will be around 90 US cents at year end and will fall modestly through 2014 to 86 US cents."*
> ...




http://www.thebull.com.au/articles/a/42478-cash-rate-cutting-cycle-coming-to-an-end.html




> Rates rising will also depend on US fiscal policy and if they decelerate the quantitative easing measures taking pressure off the Aussie dollar. IMO ... DYOR



 #10912 posted 5th November




> Hmmmmmmm ... what would I know ... Just need that pesky dollar to get *under 90 cents* and we are away again !



 #10940 posted 11th November

Mr Bloxham must be reading this thread?


----------



## satanoperca (29 November 2013)

trainspotter said:


> http://www.thebull.com.au/articles/a/42478-cash-rate-cutting-cycle-coming-to-an-end.html
> 
> #10912 posted 5th November
> 
> ...




So, in your opinion what is the future of Australian property prices in 1 year, 3 years and 7 years, given your analysis of the above facts? 

Cheers


----------



## sydboy007 (29 November 2013)

trainspotter said:


> Got any proof? Are you saying that the big 4 banks have 60% market share or are you saying thier lending books consist of 60% of residential home loans?




--------------------

Current outstanding mortgages in Australia ~ $1.3 trillion

------------------

http://www.macrobusiness.com.au/2013/11/imf-pushed-apra-conservatism/

The IMF believes the dominance of the Commonwealth Bank of Australia, Westpac Banking Corp, ANZ Banking Group and National Australia Bank (NAB), which hold 80 per cent of banking assets and 88 per cent of residential mortgages, creates risks for the economy. “Significant and protracted difficulties in any one of them would have severe repercussions for the entire financial system and, in turn, the real economy,” the IMF’s review said last November.

------------------

http://www.macrobusiness.com.au/2013/07/australias-huge-property-market-gets-bigger/

graph from this article.

yes I'm in the real world


----------



## sydboy007 (29 November 2013)

trainspotter said:


> Got any proof? Are you saying that the big 4 banks have 60% market share or are you saying thier lending books consist of 60% of residential home loans?
> 
> Meanwhile back in reality:-




further reality check

http://blog.rpdata.com/2013/04/outs...redit-unions-is-growing-at-record-low-levels/

Every month the Australian Prudential Regulation Authority (APRA) publishes monthly banking statistics which include amongst other things the total value of outstanding loans on the books of Australian banks for owner occupied housing and investment housing.  This information is published individually for every bank operating in Australia.

As at February 2013, domestic banks had a total of $1.147 trillion in mortgages on their books; at the same time rpdata estimates that the total value of all housing in Australia was around $4.85 trillion. Over the month, 66.9% of all outstanding mortgage debt was for owner occupier homes compared to 33.1% for investment homes.  *Outstanding loans mortgage debt accounted for 63.1% of all outstanding loans of domestic banks.*

As mentioned, the total amount of outstanding mortgage debt to banks as at February 2013 was $1.147 trillion, to all ADI’s it was $1.2 trillion.   The data shows that banks are overwhelmingly the most popular institutions for mortgages in Australia, accounting for 95.8% of all outstanding mortgages. Of course the banking sector in Australia is dominated by four major players; ANZ, Commonwealth Bank (CBA), National Australia Bank (NAB) and Westpac.  *These four major banks, excluding CBA’s subsidiary BankWest but including Westpac’s subsidiary St George, hold 85.1% of all outstanding mortgage debt by banks operating in Australia and 81.5% of all outstanding mortgage loans to domestic ADI’s. * These figures indicate that more than four out of every five mortgages in Australia are to either ANZ, CBA, NAB or Westpac.

Pretty scary figures.  Any decent housing correction means at least 1 of the major banks is likely to require more help than the Government can provide.


----------



## trainspotter (30 November 2013)

Soooo the big 4 banks post a 27 billion dollar profit and their default rate is the lowest in the world  and you are claiming a reality check?  Just LOL at this syd. What catatrophic event can you predict will cause this to change?


----------



## sydboy007 (30 November 2013)

trainspotter said:


> Soooo the big 4 banks post a 27 billion dollar profit and their default rate is the lowest in the world  and you are claiming a reality check?  Just LOL at this syd. What catatrophic event can you predict will cause this to change?




Income shock due to mining boom fall and mining CAPEX cliff - looking at a headwind of around 2% of GDP each year till end of FY 14/15.

Current real wages growth is practically 0 economy wide, and for much of the bottom 50% is negative.  Real GDP per capita has been stagnant for over a year now.

If Abbott and Treasure Ponzi Joe actually do try to get the budget back to surplus that will also be another 1-2% cut to GDP as well.

Then we have China seemingly getting serious about rebalancing it's economy, which will be a short to medium term negative for Australia.

Spanish banks looked safe and sound before they crashed, Irish banks too.  The Spanish Govt was even running a decent budget surplus at the time.

http://www.macrobusiness.com.au/2013/08/banks-long-term-safety-questioned/

_Only 4.8 per cent of the $2.83 trillion in total assets of Westpac, CBA, National Australia Bank and ANZ is shareholders’ equity, according to Macquarie Bank, up from 4.1 per cent before the global financial crisis. The rest is debt._

_...given the amount of capital held against total credit exposures ranges from only 2.7% (Westpac) to 4.3% (NAB), with capital held against mortgages at around half that level._

I dun't know about you, but a 20 times "gearing" seems pretty scary to me.  Add in the low risk weighting given to resi mortgages (say up to 40 times gearing) and it doesn't take too much of a market downturn to cause the banks some major headaches. Our banks are just glorified building societies.

I just hope I'm ready for semi retirement and sell before the inevitable mean reversion kicks in and property prices fall back to be in line with their rental yield.

ps.  more than likely the "catastrophic event" is as likely to come out of left field as it is to be predictable.  Maybe another major terrorist attack, or a fighter pilot gets a little gung ho over some bird droppings encrusted islands in the south china sea and starts a small war.  World growth has been on the decline over the last 3 years.  Wont take much more of a downgrade before that starts to slow our rate of growth further and increase the rate of unemployment faster.


----------



## McLovin (30 November 2013)

sydboy007 said:


> Spanish banks looked safe and sound before they crashed, Irish banks too.  The Spanish Govt was even running a decent budget surplus at the time.




Hmmm...I'm not sure about that. At their peak, loans to developers were something crazy like 30% of all Spanish bank assets. I imagine a similar situation existed in Ireland given they were building more houses in Ireland than in all of the UK. Has there ever been a banking crisis in a period of weak credit growth?





			
				sydboy007 said:
			
		

> _Only 4.8 per cent of the $2.83 trillion in total assets of Westpac, CBA, National Australia Bank and ANZ is shareholders’ equity, according to Macquarie Bank, up from 4.1 per cent before the global financial crisis. The rest is debt._
> 
> _...given the amount of capital held against total credit exposures ranges from only 2.7% (Westpac) to 4.3% (NAB), with capital held against mortgages at around half that level._
> 
> I dun't know about you, but a 20 times "gearing" seems pretty scary to me.  Add in the low risk weighting given to resi mortgages (say up to 40 times gearing) and it doesn't take too much of a market downturn to cause the banks some major headaches. Our banks are just glorified building societies.




Well that's the nature of banking, and why it is (in this country at least) heavily regulated.


----------



## ROE (2 December 2013)

The Dutch lost their Triple AAA over the weekend due to housing down turn.... Interesting read 

http://www.bbc.co.uk/news/business-23681604


----------



## trainspotter (2 December 2013)

> Perth's median house prices have reached their highest level yet as the housing market comes out of a slump in turnover.
> Data from the Real Estate Institute of Western Australia showed that sales turnover lifted during both October and November, pushing Perth's median house price to a new record.
> Sales have returned to normal levels and Perth's median house price climbed to somewhere between $530,000 and $535,000 in the three months to November.




Read more: http://www.watoday.com.au/wa-news/p...een-so-high-20131202-2yks8.html#ixzz2mHC766PA

Just like shares - CERTAIN areas do well in a given timeframe. Note the 10km radius CBD property leading the charge. Inner city living is the new black in WA due to congestion on the road and rail links. 

It would appear that RE is gathering too much speed too quickly IMO, not good for the economy. See picture below for the reasoning:


----------



## sydboy007 (2 December 2013)

trainspotter said:


> It would appear that RE is gathering too much speed too quickly IMO, not good for the economy. See picture below for the reasoning:




Um, I've yet to hear the RBA, or any central bank for that matter, say they want to "lean against the wind" to try and minimise the rise of asset prices.

As for inflation in the economy, with more of us worried about job loses, I doubt wage inflation is going to be an issue, but imported inflation might be should the business community get their Christmas wish of an AUD worth circa 0.8 USD.

Nothing over the next 12-18 months look like providing the income boost needed to keep the property gravy train running, but the high LVR loans becoming more popular might give the bubble a little more pumping.


----------



## trainspotter (2 December 2013)

sydboy007 said:


> Um, I've yet to hear the RBA, or any central bank for that matter, say they want to "lean against the wind" to try and minimise the rise of asset prices.
> 
> As for inflation in the economy, with more of us worried about job loses, I doubt wage inflation is going to be an issue, but imported inflation might be should the business community get their Christmas wish of an AUD worth circa 0.8 USD.
> 
> Nothing over the next 12-18 months look like providing the income boost needed to keep the property gravy train running, but the high LVR loans becoming more popular might give the bubble a little more pumping.




Ummmmmmm you might want to do a bit more homework syd,



> *6.4 Asset prices*
> 
> *Interest rate changes can affect asset values,* which in turn affect people's wealth and therefore their spending decisions. There are several classes of assets through which this type of mechanism might be thought to work: houses, property investments, shares or other financial investments. *In theory, higher interest rates can be expected to reduce many asset values relative to what they would otherwise be, b*ecause they increase the opportunity cost of holding those assets. A fall in asset prices, in turn, could be expected to dampen spending by reducing wealth, and also by reducing borrowing capacity to the extent that the *assets concerned could have been used as collateral for loans*.




http://www.rba.gov.au/education/monetary-policy.html

Ummmmmm low interest rates are driving the property market at the moment syd. Which in turns increases asset price, which in turn affects inflation which in turn the RBA will yank the only lever they have. Which is? They are also trying to drive the AUD down ....... oh why do I bother?


----------



## sydboy007 (2 December 2013)

trainspotter said:


> Ummmmmmm you might want to do a bit more homework syd,
> 
> 
> 
> http://www.rba.gov.au/education/monetary-policy.html




Point me to an RBA publication that shows they support leaning against the wind in terms of asset price inflation?

Heck, the RBA can't even get it's head around using macroprudential tools to stem the rise in house prices while allowing lower interest rates.  The RBNZ has achieved it.


http://www.macrobusiness.com.au/2013/11/ubs-banks-are-waiving-servicing-criteria-not-lvr/

_Interest Only hit 40%; Loan “Outside serviceability” continues to rise
Interest Only loans continued to rise in the September quarter hitting 40% of Major bank mortgage approvals. While many of these loans are for investment property (maximising negative gearing) they appear increasingly popular with owner occupied borrowers. 

We also note that approvals “outside serviceability” (i.e. fail the interest rate sensitivity/affordability tests, but have been approved anyway) have grown 36% vs pcp and now represent ~3.3% of all mortgage approvals.

Approvals >80% LVR stabilise at 34%, Investment Property hit 35%
High LVR loans remain relatively elevated at 34% of approvals, but are down on the 37% peak seen during the First Home Buyer Grant period of FY09. Investment property (buy-to-let) continued at record levels of 35% of approvals in September._


----------



## trainspotter (3 December 2013)

satanoperca said:


> So, in your opinion what is the future of Australian property prices in 1 year, 3 years and 7 years, given your analysis of the above facts?
> 
> Cheers




1 year = 8 - 11% increase over 8 capital cities. Isolated growth pockets of 40% in CERTAIN areas. CERTAIN rural areas to remain stagnant with coastal larger population towns to show vigorous signs of infrastructure growth = capital gains.

3 year = Peak or near peak of cycle. Too many investors and mummy and daddy wannabes overheating the market. No sign of a FHB ANYWHERE. 

7 year = After a 4 year period of stagflation and redonkolous pricing structures (some property is selling very high and in the same street, similar property is selling very low = reason: mortgage stress) we will find ourselves in a very similar position to where we were in March 2011. At the beginning of another cycle.

NONE OF THIS IS ADVICE AND IS MY OPINION ONLY. DO NOT CONSTRUE THIS AS ANY FORM OF INFORMATION THAT CAN BE RELIED ON TO MAKE A FINANCIAL DECISION.


----------



## trainspotter (3 December 2013)

sydboy007 said:


> Point me to an RBA publication that shows they support leaning against the wind in terms of asset price inflation?
> 
> Heck, the RBA can't even get it's head around using macroprudential tools to stem the rise in house prices while allowing lower interest rates.  The RBNZ has achieved it.
> 
> ...




_________________________________________________



> As at 30 September 2013, the total assets of ADIs were $3.80 trillion, an increase of $191.6 billion (5.3 per cent) over the year. The total capital base of ADIs was $195.5 billion at 30 September 2013 and risk-weighted assets were $1.61 trillion at that date. The capital adequacy ratio for all ADIs was 12.1 per cent.
> 
> Impaired assets and past due items were $36.4 billion, a decrease of $4.9 billion (11.8 per cent) over the year. Total provisions were $22.7 billion, a decrease of $5.1 billion (18.4 per cent) over the year.
> 
> ADIs’ total domestic housing loans were $1.15 trillion, an increase of $80.4 billion (7.5 per cent) over the year. There were 4.88 million housing loans outstanding with an average balance of $231,000.




http://www.apra.gov.au/adi/Publicat...y ADI Property Exposures - September 2013.pdf

Might want to go to the source and do some research syd, note how he has cherry picked the data? Have a look on page 21 and show me where the "Outside Serviceability" loans have risen? OK technically they have risen BUT in line with the VOLUME of TOTAL loans written. As a percentage it has actually DECREASED ! 

As for the RBA ... have you been living under a rock or in a cave? The interest rate lever has ALWAYS been used to speed up or slow down the economy in Australia. 

Oh yeah ... average loan = $231,000, average house value = $534,000 ... 43% LVR is not that bad !!


----------



## sydboy007 (4 December 2013)

trainspotter said:


> _________________________________________________
> 
> 
> 
> ...




Averages hide the problems.

Western Sydney just before the GFC was a prime example of what goes wrong when lending standards fall and people have too much debt for their own good.

The increase in 90%+ LVR loans is not a good thing.  

The RBA uses interest rates against goods and services inflation.  I've yet to see them target asset price inflation.  They talk about it, but don't seem to quite know what to do about it.  Restricting high LVR loans would be a good start, as well as setting loan to income serviceability levels.

Can't see it happening since both the RBA and Govt are looking for housing to somehow save the economy.  More non productive housing, more debt, less ability to service the debt.


----------



## trainspotter (4 December 2013)

sydboy007 said:


> Averages hide the problems.
> 
> Western Sydney just before the GFC was a prime example of what goes wrong when lending standards fall and people have too much debt for their own good.
> 
> ...




There will always be an average. There will always be a top end as well as bottom end of the market.

Not just Western Sydney syd, Ipswich had severe mortgage stress as well. Just like Sydney the population is younger than the rest of the demographic as well as ethnicity percentile is higher. 
You figure it out !!

I agree with the 90%+ LVR statement which is why I wrote this several posts ago:



> *4) Lending standards (is the answer)*
> 
> With economists predicting a rate REDUCTION in 2014 then the market is CERTAINLY showing signs of heading South. WHY ? Because the more banks lend at low rates and *95% LVR the more likely a default or mortgage* in possession will result. What happens to prices then? A FIRE SALE results which then sends confidence tumbling as well as resulting in the banks tightening their lending ..... blah blah blah .... bored yet?




The RBA does not have the power to regulate the banks lending standards inclusive of serviceability ratios. The Australian Prudential Regulation Authority (APRA) is the watchdog on this one. 

Rates DIRECTLY effect house prices, see graph below as evidence:-




RBA not targeting assets by using interest rates? Pffffffffffffffttttttttttt ! Talk about a contradiction and a tautology at the same time. Logical contingent anyone?



> During 2002 and 2003, the RBA came in for some criticism from those who saw it as *exceeding its mandate* or who interpreted its actions as *targeting housing prices*. The RBA went to considerable lengths to explain its actions as consistent with flexible inflation targeting and to explain that it was not targeting credit growth or asset prices. *Developments in the housing market *were, however, given as one reason for *increasing interest rates* in response to general macroeconomic conditions sooner rather than later.




http://www.rba.gov.au/publications/confs/2011/kearns-lowe.html


----------



## CanOz (4 December 2013)

Really enjoying the discussion here guys, appreciating your presentation of facts and figures. So many can learn from an active property investor answering questions and responding to arguments like this...Thanks for keeping it civil.

Thanks!


----------



## trainspotter (4 December 2013)

Uncle Festivus said:


> Unemployment is rising - http://www.tradingeconomics.com/australia/unemployment-rate
> job security back to normal levels - ???. More temp jobs than full time would mean less security??
> pent up demand???? - low LVR from a financial system complicit in force feeding liquidity fed via media frenzy stories
> 
> Plain & simple liquidity trap where banks are looking to put to use excess loot.......




*Employment is rising in the retail secto*r:



> Ai Group chief executive Innes Willox says the service sector's momentum is slowly improving.
> "Confidence appears to be building with the* lift in employment* in November suggesting more optimistic hiring among services businesses in the lead-up to what is hoped to be a busy Christmas period," he said in a statement.




http://www.thebull.com.au/articles/a/42572-employment-helps-services-sector-recovery.html

*Dollar is heading to RBA target of just under 90 cents for Christmas:*



> The Australian dollar has shed more than half a US cent following a slightly weaker than expected economic growth result.
> At 1200 AEDT on Wednesday, the local unit was trading at 90.77 US cents, up from Tuesday's closing level of 90.67 cents.




http://www.thebull.com.au/articles/a/42575-$a-tumbles-after-gdp-print-disappoints.html

*Pent up demand answered:*



> Australian house prices are surging on tight supply, a lack of construction, pent up demand and increased interest from self-managed super funds.
> 
> But amidst the discussion of a possible housing bubble and a lack of affordability, comes a series of charts from ANZ which provides some perspective on the debate.
> 
> ...




http://www.businessinsider.com.au/e...n-housing-in-ten-brilliant-charts-2013-11#ANZ 

*Totally agree on the 95% LVR:*



> The prudential regulator has told banks not to increase risky lending as they compete aggressively for mortgage *customers, raising the prospect of more direct controls to prevent record low interest rates from fuelling a destabilising surge in house prices.
> 
> With housing prices at double-digit annualised rates in Sydney, Perth and elsewhere, the Australian Prudential Regulation Authority said there was a danger that banks would relax lending standards to attract borrowers, who may not be able to afford repayments when rates go up.




http://www.afr.com/p/business/finan...o_banks_on_risky_loans_BeyedI29NJFsu0mLxSxSCO

Caveat emptor and do your research on WHERE you buy


----------



## DB008 (5 December 2013)

trainspotter said:


> 1 year = 8 - 11% increase over 8 capital cities. Isolated growth pockets of 40% in CERTAIN areas. CERTAIN rural areas to remain stagnant with coastal larger population towns to show vigorous signs of infrastructure growth = capital gains.
> 
> 3 year = Peak or near peak of cycle. Too many investors and mummy and daddy wannabes overheating the market. No sign of a FHB ANYWHERE.
> 
> ...




I would also like to agree with this statement.

I dont have it on hand (as I'm using a smartphone to type this from Budapest), but there was a graph outling house price growth when newly elected Lib/ALP governments come into power.


Was along the lines of;

Libs come into power - house prices rise between 5-10% within 12 months (capital cities)

ALP come into power - house prices decline by 5-10% within 12 months (capital cities)

I'll post said graph when l get back to Oz...

(sorry for any typos)


----------



## trainspotter (5 December 2013)

NAB is under geared, similar loan book to the rest of the banks in OZ. Hardly adverse risk here.



> We can see the impact of these factors in NAB’s recent results. The bank’s average mortgage borrower is eight months ahead of the required payments, and *two-thirds of customers are at least one month ahead,* the average *loan to valuation ratio on its books is 48%*, and some 15% of the book is insured. The consequence is that the bank’s loss rate on mortgage lending is 0.04%. Clearly there are still risks, for example if a mortgage insurer were to collapse, but it looks quite safe.




http://www.thebull.com.au/articles/...nks-skirt-unofficial-home-lending-limits.html

EXCEPT BOQ who has the highest exposure to recalcitrant borrowers. In saying that they have tidied up their act in the last few years and moved out of residential and moved into commercial !!



> A near-doubling of impairment charges caused by its exposure to the ailing regional commercial property sector has seen Bank of Queensland’s annual profit slide by 13 per cent to $158 million.
> The Brisbane-based bank, one of the three remaining regional banks of any size left after the recent consolidation in the industry, saw its bad debt charges jump from $104 million just over a year ago to $200.5 million.




http://www.smh.com.au/business/bad-debts-hit-bank-of-queensland-profit-20111013-1lly5.html

 is the property market.


----------



## Trembling Hand (5 December 2013)

*Labour has introduced a members' bill that would allow only New Zealand citizens and residents to buy any existing house, flat or apartment*



> And while the chances of the bill ever becoming law are slight in the extreme - it first has to be picked from the ballot and then once given a first reading would likely be immediately torpedoed by the Government - any debate of the issue in the house would sure to be lively and emotive.
> 
> The issue of foreign ownership has become a heated one this year as house prices, particularly in Auckland, have headed skyward. Anecdotal tales have abounded about large numbers of offshore based buyers snapping up properties, but there is little hard evidence to either support or refute such tales.


----------



## satanoperca (5 December 2013)

Trembling Hand said:


> *Labour has introduced a members' bill that would allow only New Zealand citizens and residents to buy any existing house, flat or apartment*




f----k me, politicians looking after the people who voted them into power, who would have thought.

Thanks for the reply on the future of Ozzie property prices.

Cheero


----------



## trainspotter (6 December 2013)

*Low interest rates are gaining traction in the housing industry.*



> AUSTRALIAN housing construction activity has expanded for two months in a row for the first time since 2010, in a sign that low interest rates are slowly working.
> 
> The Australian Industry Group/Housing Industry Association's performance of construction index (PCI) rose by 0.8 points in November to 55.2.
> 
> ...




http://www.news.com.au/business/bre...on-expands-again/story-e6frfkur-1226776976122

Last thing we need is a change in the lending criteria ..... do they never learn?


----------



## CanOz (6 December 2013)

trainspotter said:


> *Low interest rates are gaining traction in the housing industry.*
> 
> 
> 
> ...




Greenspan's brother?


----------



## trainspotter (6 December 2013)

CanOz said:


> Greenspan's brother?




Might be? His laissez-faire capitalism certainly worked for the USA


----------



## CanOz (6 December 2013)

trainspotter said:


> Might be? His laissez-faire capitalism certainly worked for the USA




I mean that's it really isn't it? Create a debt fueled bubble based on lax lending standards (ninja etc.) then offset the risk by packaging it all up and selling it to overseas investors (so it takes the rest of the world to the brink) and domestic pension funds (so it forever enslaves the retirees)...

What a brilliant idea. 

So Australia has a housing bubble? Maybe a little frothy in places...


----------



## trainspotter (6 December 2013)

CanOz said:


> I mean that's it really isn't it? Create a debt fueled bubble based on lax lending standards (ninja etc.) then offset the risk by packaging it all up and selling it to overseas investors (so it takes the rest of the world to the brink) and domestic pension funds (so it forever enslaves the retirees)...
> 
> What a brilliant idea.
> 
> So Australia has a housing bubble? Maybe a little frothy in places...




Alan Greenspan April 2005 speech. Love how he praised subprime loans and the innovative way banks were lending money to "immigrants" (read suckers)



> "Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. Such developments are representative of the market responses that have driven the financial services industry throughout the history of our country ... With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers. ... *Where once more-marginal applicants would simply have been denied credit*, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending; indeed, today subprime mortgages account for roughly *10 percent of the number of all mortgages outstanding*, up from just 1 or 2 percent in the early 1990s"




He also yanked the interest rate lever on ARM's from 1% to 5.25% in less than 2 years. No regulatory body to control ADI's lending practices *HEY PRESTO* .... hello Mr Housing Bubble.




Greenspan was also against the regulation of derivatives, preferred a free market ideology as well as self-interest of lending institutions to protect shareholder's equity (BWAHAHAHHAHHWAAHHAHA) Matt Taibbi described the Greenspan put and its bad consequences saying: "every time the banks blew up a speculative bubble, they could go back to the Fed and borrow money at zero or one or two percent, and then start the game all over", thereby making it "almost impossible" for the banks to lose money. He also called Greenspan a "classic con man" who, through political savvy, "flattered and bull****ted his way up the Matterhorn of American power and ... jacked himself off to the attention of Wall Street for 20 consecutive years."

Could this happen in Australia? Nope. Will some people get ejected from their homes due to mortgage stress? You betcha. Mebbe they shouldn't have got the new car to go with the new house !!!


----------



## CanOz (6 December 2013)

lol....great post.....You're like the TH of the Property Thread.....After the GFC everyone is so gun shy that anything remotely looking like a bubble and they're all calling doomsday...

We will have another bubble, chances are the the next one might be bigger, but only a few will be able to pick the timing...in the meantime carry on carrying on.


----------



## trainspotter (6 December 2013)

Bottom cartoon depicts Howard, Costello and me old mate Macfarlane. Seems they had the same issues we are about to face yet again. Interest rate gun at the ready to tranquilize the asset increase


----------



## Macro Polo (6 December 2013)

CanOz said:


> lol....great post.....You're like the TH of the Property Thread.....After the GFC everyone is so gun shy that anything remotely looking like a bubble and they're all calling doomsday...
> 
> We will have another bubble, chances are the the next one might be bigger, but only a few will be able to pick the timing...in the meantime carry on carrying on.




I think a lot of it is terminology. The word bubble is very emotive - overvalued is probably less likely to cause a stir but amounts to the same thing. A lot of assets are overvalued at present.

But, there really are more 'bubbles' or overvalued assets recently, since there is so much liquidity sloshing around from exporting nations and other reserve accumulators, quantitative easing in the US and Japan - but there is no real productive investment to meet the demand of all this saving - we have too much excess capacity already and not much demand for stuff. In the western world we can't take on more debt, and the surplus countries have policies that restrict consumption. The end result is that it just squeezes up asset prices because it has nowhere else to go and needs to find a home.

At ZIRP in a world with basically no _real_ yield, everyone is betting on price increases for gains rather than an income stream. There are only a few true speculative-mania bubbles at the moment, like bitcoin, but that doesn't mean that everything is at fair value. The expected return on US stocks given it's current valuation is about 2% or less for the next 10 years. Maybe that's not a bubble but it's definitely not undervalued. Aussie stocks are closer to fair value, but the mining cap-ex unwind has barely even started so who knows.


----------



## waterbottle (8 December 2013)

I have been following this "housing bubble" for quite some time (since 2007) and am very disappointed in how it has persisted. There was an opportunity for the bubble to burst after Rudd's victory, although that was certainly scuttled with his boost to first-home owner's grants and the RBA's decision to cut (and maintain) interest rates at record lows.

I think it's time to admit that I've backed the losing side and that expensive housing is here to stay.


----------



## sptrawler (9 December 2013)

waterbottle said:


> I have been following this "housing bubble" for quite some time (since 2007) and am very disappointed in how it has persisted. There was an opportunity for the bubble to burst after Rudd's victory, although that was certainly scuttled with his boost to first-home owner's grants and the RBA's decision to cut (and maintain) interest rates at record lows.
> 
> I think it's time to admit that I've backed the losing side and that expensive housing is here to stay.




It's not all doom and gloom, banks are lifting their home loan interest rates.
The squeeze will come.lol
http://www.propertyobserver.com.au/mortgages/should-you-fix-your-mortgage-now-experts-have-their-say

The banks would be given the wink before the plebs are told.


----------



## waterbottle (9 December 2013)

sptrawler said:


> It's not all doom and gloom, banks are lifting their home loan interest rates.
> The squeeze will come.lol
> http://www.propertyobserver.com.au/mortgages/should-you-fix-your-mortgage-now-experts-have-their-say
> 
> The banks would be given the wink before the plebs are told.




The squeeze always seems to be "just around the corner" but some unexpected support always seems to pop up, whether that be foreign investment or government policy.


----------



## trainspotter (9 December 2013)

sptrawler said:


> It's not all doom and gloom, banks are lifting their home loan interest rates.
> The squeeze will come.lol
> http://www.propertyobserver.com.au/mortgages/should-you-fix-your-mortgage-now-experts-have-their-say
> 
> The banks would be given the wink before the plebs are told.




Too late my friend ... too late. Posted this awhile back.



> Got nothing to do with the government of the day. Historically low interest rates, unemployment steady, job security back to normal levels, CPI within target range of the RBA, pent up demand, amount of investors back in the market place, *banks offering 3 year rates at 5.8% (which have just gone up 0.06% btw *interesting*) *as well as quite a few "other" market indicators. But you know all this right?




Rates haven't moved. Banks are profiteering.


----------



## waterbottle (9 December 2013)

Hi TS,

I've seen you post a few times in this thread but am having a bit of trouble trying to figure out what your stance on the housing issue is.



trainspotter said:


> Too late my friend ... too late. Posted this awhile back.
> 
> 
> 
> Rates haven't moved. Banks are profiteering.




Are you trying to say that the banks have no need to increase rates? and that there won't ever be a squeeze?


----------



## trainspotter (9 December 2013)

waterbottle said:


> Hi TS,
> 
> I've seen you post a few times in this thread but am having a bit of trouble trying to figure out what your stance on the housing issue is.
> 
> Are you trying to say that the banks have no need to increase rates? and that there won't ever be a squeeze?




My stance is that property is just another money making venture with pitfalls and nuances that are quite easy to quantify once you have learned the rules of property investing. The market has a readable cycle and it depends as to when and where you buy will dictate as to how much money you will make or lose. Preferably the first part and not the second. 

Banks are currently profiteering as wholesale funding have not increased. The banks margins on the other hand are increasing exponentially more than their costings. Yes there will be a credit squeeze. We have just had one whereby the banks have already tightened their lending criteria. There are now calls from certain sectors of the industry for the banks to loosen their lending criteria. I am dead against this as then there will be a liquidity problem within the housing sector. 

Mainly the 95% LVR young people who have recently purchased in a non performing area. It is not their fault, it is because they do not know any different. Usually serviceability is income based and usually compounded by dual incomes. Only takes one of the borrowers to either lose their job, get pregnant, injure themselves blah blah blah and *HEY PRESTO*, mortgage stress. Or now they have their lovely new house they want all the trappings = 60 inch LCD TV with surround sound and the leather recliners in the lounge room all bought on the never never plan. Or suddenly the perfectly good car they had is now replaced with a $700 / month HP as Holden had a sale on. 

So not necessarily the banks fault the consumer has racked up the credit cards and the personal loans or that one of the borrowers has lost their job/pregnant/injured etc. Interest rates will rise. I have predicted March/April 2014 but not necessarily because the wholesale funding costs have risen. I did say it would be bank driven. ANZ is offering a 10 year rate of 7.18%. What does this tell you? 

I have posted a lot more information over a 4 year period. Maybe have a look at some of my previous posts to see exactly where my stance is.


----------



## trainspotter (10 December 2013)

And there off and racing Ladeeeeeez and Generalmen,



> *"It's a comfort to the Reserve Bank that low interest rates are working and with no interest rate rise on the horizon any time soon, you'd expect that housing finance approvals and other housing indicators continue to trend higher in coming months."*
> 
> JP Morgan economist Tom Kennedy said he was encourage by the increases in housing finance for the purchase of new dwellings, and the construction of dwellings.
> 
> ...




http://www.dailytelegraph.com.au/bu...s-rose-10-in-oct/story-fni0xqe3-1226779678338


----------



## trainspotter (12 December 2013)

Patchy with a chance of showers. Overall prognosis is with low rates only just starting to kick in and unemployment and CPI in RBA's target range (dollar still has got to drop under 90 ) then foreseeable future of Australian property prices is as I predicted. 3 year = Peak or near peak of cycle.



> The national housing market moved into a growth phase throughout 2013, with combined capital city home values 7.9 per cent higher than they were a year ago, according to RP Data.
> 
> The RP Data Quarterly Review shows that house prices rose 8.2 per cent over the first 10 months of 2013.
> 
> ...




http://www.propertyoz.com.au/Article/NewsDetail.aspx?p=16&id=8685


----------



## trainspotter (17 December 2013)

> "There had been further signs of the stimulatory effects of low interest rates, *most notably in the housing market,* and additional effects were still likely to be coming through," the RBA said.
> "At the same time, inflation remained within the target.
> "While the exchange rate had depreciated over the month, members agreed that it remained uncomfortably high and a lower level would likely be needed to achieve balanced growth in the economy."




http://www.thebull.com.au/articles/a/42883-the-cash-rate-cut-door-is-still-open.html

Dollar below 90 cents ... check
Lower interest rates having effect ... check
Banks softening lending practices ... check
RBA thinking about cutting rates again ... check
CERTAIN areas evidencing 20% + growth ... check

Employment is trending higher/lower/uncertain ... no check

Oh dear ..... here we go again !


----------



## waterbottle (17 December 2013)

trainspotter said:


> http://www.thebull.com.au/articles/a/42883-the-cash-rate-cut-door-is-still-open.html
> 
> Dollar below 90 cents ... check
> Lower interest rates having effect ... check
> ...




To the moon?! Again?! But China just got there yesterday


----------



## trainspotter (20 December 2013)

waterbottle said:


> To the moon?! Again?! But China just got there yesterday




And this is what they looked at .....



	

		
			
		

		
	
 ...


----------



## Quincy (21 December 2013)

Quincy said:


> The following article lists what I see going on in and around where I live and is the reason, I believe, why there is a current surge in sales and increased prices in both Sydney and Melbourne.
> 
> I know one Chinese woman in my area (friend of a friend) with PR status who has purchased over 20 properties for overseas family and friends (all cash purchases - no Bank loans).
> 
> http://www.news.com.au/realestate/c...before-next-boom/story-fncq3era-1226704103879





Interesting article (3 full page) in the AFR Weekend 21 December, 2013 by Matthew Cranston and Rebecca Thistleton.

Some of the content : - 



> *THE GREAT CHINESE TAKEAWAY*
> 
> With reports every week of Chinese and Chinese-backed buyers dominating home auctions and off-the plan apartment launches, especially in Sydney where house prices are up 11.6 per cent in the year to October, it is no coincidence the two biggest mansion deals in Australia in 2013 also involved hungry Chinese money. Australia is truly in the middle of The Great Chinese Takeaway.






> As in London, where house prices are up 10 per cent in a year, commentators are suggesting the booming prices in the market and the repercussions for affordability will soon all become the foreigners’ fault.
> 
> “This is what happens when property in your city becomes a global reserve currency” Michael Goldfarb wrote in The New York Times in October.
> 
> ...






> Juwai.com, which calls itself the largest Chinese international property portal, estimates 63.1 million Chinese have the wealth to invest in overseas property and 90 million Chinese search for property every month.






> Meanwhile, restrictions in China on investing in the housing market – on the amount of equity required for each dwelling purchase, which increases depending on how many you own – has also motivated Chinese investors to seek offshore markets.
> 
> Hengyi Australia’s co-founder and chairwoman, Min Wang, said Australian cities were easier to do business in “The Australian property market is more mature than China’s; its laws are clear, its business dealings simple and direct” she said.
> 
> Her view also reflects the desire of many mainland Chinese to counter political and economic uncertainties by investing their money in so-called safe-haven destinations such as Australia.






> Agent John McGrath describes the Chinese money as the biggest surge from an offshore market he has seen in his 30 years in real estate.  He says in some suburbs, 90 per cent of new product is selling to Chinese buyers.






> “Our [real estate] market is the Chinese market, just like coal and iron ore,”  *Triguboff  famously says of the Chinese buyers. (*billionaire Harry Triguboff of Meriton).






> Colliers International’s Andrew Scriven says the Chinese money is flowing in everywhere, not just the main cities.






> In 2011, south-east Melbourne agent John Castran reported that most of the off-the plan buyers in a $65 million block of apartments in Glen Waverley were selling to Australian Chinese residents. He described their enthusiasm: “They were queuing up like labradors with cheques in their mouths.”
> 
> Almost three years later, he says, the demand has not stopped.
> 
> ...






> At the big end of town, agent Michael Zhu says the decrease in the Australian dollar will drive further top-end investments by the Chinese. “This year, when the Australian dollar started to come down, the Chinese started to buy. I think next year, the Australian dollar will come down further, and you will see some big sales.”






> Landmark Harcourts has also entered the Chinese market using the luxury car client list of the Bentley Owner’s Club. And Ray White has also set up an office in Beijing.
> 
> Ray White’s Marcus Ng says the aim is to help Chinese money find the right property in Australia: “In the old days, it was like waiting for fish to jump on the boat; now we have the best boat and the best fishing rods to catch all the best fish.”


----------



## Bill M (21 December 2013)

Quincy, I went back to your post of September regarding a similar artice to what you posted today and I am replying to ROE's post below where he addressed his concerns.

I agree with ROE, what a terrible high risk proposition. I would never ever hand over even $100 let alone $1 Million to a friend who may be a permanent resident of another country for them to invest on my behalf. You have no control and they can swipe the money by selling the house anytime they like. 

The people who gave them the money in good faith wouldn't even know their property was sold and the "friend" could well be living on the otherside of the world by the time they found out. Bloody crazy if you asked me, too much risk and if they are foolish enough to make such an investment then they must bear all the losses too. That's what I call gambling, not investing.




ROE said:


> *In a few years you see articles that friend, relatives or who ever has the properties in their name and the actual owner want to sell and get their money they can't* ..
> 
> This stuff repeat so many times in so many countries I am surprise people haven't learned -
> 
> *Legally there is nothing they can do*...I am surprise people that stupid hand over money to title they don't owned


----------



## Mrmagoo (30 December 2013)

See Change said:


> BB
> 
> I'm happy to leave you with your vision property investing as some sort of* tool the evil Baby Boomers use to repress the following generations* . Obviously your not going to change your views and you have a nice little group of fellow true believers who congratulate you when you take things out of context and ignore other things .
> 
> ...




Please explain to us now how this is not the case, given the recent huge increases in Sydney exactly how is it not a tool of oppression ?

You don't create wealth with property you out right steal it from others.


----------



## tech/a (30 December 2013)

Mrmagoo said:


> Please explain to us now how this is not the case, given the recent huge increases in Sydney exactly how is it not a tool of oppression ?
> 
> You don't create wealth with property you out right steal it from others.




He just did read above!

How you doin Cliff!


----------



## Modest (7 January 2014)

>




Interesting. So someone like myself looking at buying my first home (24, Male) should wait until rates return to pre GFC levels as that is when average house prices will be at their lowest?

My plan of attack was originally to buy NOW and pay off the mortgage QUICKLY (5 - 7 yrs) but it seems like the wise option would be to rent with friends for the time being and build capital and pounce when the rates are high and the home prices low and pay off the mortgage even quicker. 

What kind of time frame are we looking at in regards to rates returning back to their highs?


----------



## sydboy007 (8 January 2014)

Modest said:


> What kind of time frame are we looking at in regards to rates returning back to their highs?




I'm thinking rates will be low for quite a bit longer with the way unemployment is increasing even while the participation rate is falling.

I'm not sure what the threshold for unemployment is before it starts to afect house prices, but the only thing that will keep house prices from falling is the reported foreign buyers, but then China is going through their own slow down so maybe that money will start drying up too??

Why buy when u can rent for and let the tax payer subsidise your living costs.  Council rates water rates insurance all add up quickly, strata fees too for an apartment.

Just rent and save the difference compared to a mortgage in super or bonds / shares / hybrids.  They'll al pretty much generate a better return than housing.  Heck, I'm looking at an annualised return over 10% with hybrids for the last 6 months with no debt worries.


----------



## matty77 (10 January 2014)

Modest said:


> Interesting. So someone like myself looking at buying my first home (24, Male) should wait until rates return to pre GFC levels as that is when average house prices will be at their lowest?
> 
> My plan of attack was originally to buy NOW and pay off the mortgage QUICKLY (5 - 7 yrs) but it seems like the wise option would be to rent with friends for the time being and build capital and pounce when the rates are high and the home prices low and pay off the mortgage even quicker.
> 
> What kind of time frame are we looking at in regards to rates returning back to their highs?




As long as you can save faster then what the house prices are growing then keep renting and saving.

As soon as that changes buy a house, because then you are getting behind everyday.


----------



## medicowallet (10 January 2014)

matty77 said:


> As long as you can save faster then what the house prices are growing then keep renting and saving.
> 
> As soon as that changes buy a house, because then you are getting behind everyday.




It would be extremely difficult to keep up with property over the longer term unless you are gearing into investments too (and that can be difficult as banks charge more for eg margin loans)   People probably make most money from property not on their principal, but due to the fact that they are gearing, often heavily (and I would say stupidly at the peaks)

MW

But don't ask me, ask Robots


----------



## dian11 (13 January 2014)

Finally we get some clear information as to what property prices are really doing. The ABS are publishing 'House Price Indexes'. It won't be distorted or massaged by self interested Real Estate Agents any more.


----------



## DB008 (13 January 2014)

matty77 said:


> As long as you can save faster then what the house prices are growing then keep renting and saving.
> 
> As soon as that changes buy a house, because then you are getting behind everyday.




http://www.smh.com.au/business/property/australian-capital-city-house-prices-rise-10-in-2013-20140102-306tk.html



> Sydney recorded the strongest yearly growth across the capital cities, with an annual rate of 14.5 per cent in 2013.




If you can save 40k a year (for a cheap unit in Sydney[400k unit]), then keep saving...if not...

Actually, l'm about to off-load some properties. Need capital for a business venture, so please don't take any of my advice.


----------



## sptrawler (14 January 2014)

DB008 said:


> http://www.smh.com.au/business/property/australian-capital-city-house-prices-rise-10-in-2013-20140102-306tk.html
> 
> 
> 
> ...




IMO good move danny, the amount of housing and infill development in Perth, is scary.

But like I said, IMO, and it isn't worth anything.lol


----------



## Value Collector (15 January 2014)

Mrmagoo said:


> You don't create wealth with property you out right steal it from others.




Can you explain, who the wealth is being stolen from? and how it was stolen?


----------



## Value Collector (15 January 2014)

Mrmagoo said:


> I don't think any other country in the world allows this sort of thing to go on. Think about it. Most Aussies can't buy property overseas and would have little to no chance of working overseas yet we are allowing a tide of immigrants to come here and compete for jobs and houses so that a select few can get wealthy without having to lift a finger for it. It just isn't right. It is going to stuff up the lives of an entire generation.




I think you are suffering from "Poor Me Syndrome", 

What do you mean "Most aussies can't buy property over seas", are you saying that there is only a special class of aussie that can buy property over seas.

I think you need to get your facts straight, Australian companies own property, businesses, mining rights and infrastructure all over the world. I even know private individuals who hold farm land over seas and realestate investments over seas.


----------



## DB008 (15 January 2014)

Value Collector said:


> Can you explain, who the wealth is being stolen from? and how it was stolen?




+1  

This is a weird post Mrmagoo


----------



## IFocus (15 January 2014)

552 posts and Robots is still right, crack me up.


----------



## Bill M (15 January 2014)

Mrmagoo has come out with some beauties before. This is what he said 14 Months ago. :1zhelp:



Mrmagoo said:


> A housing investor is no better than a drug dealer, pimp or stand over man.


----------



## drsmith (16 January 2014)

Listening to a real estate segment on ABC radio this morning, residential property sales in Perth have taken off but at the same time,



> THE economy shed almost 32,000 full-time jobs in the lead-up to Christmas, reviving talk of further cuts in official interest rates in coming months and knocking almost US1c off the Australian dollar.
> 
> The number of people looking for work rose to 722,000, the highest level in more than 15 years, underscoring a rise in the national unemployment rate from 5.7 per cent to 5.8 per cent between November and December.
> 
> The surprise job market deterioration was worst in states suffering from the resource slowdown: unemployment rates rose most in Queensland and Western Australia, to 5.9 per cent and 4.7 per cent respectively.




http://www.theaustralian.com.au/bus...-cut-speculation/story-e6frg926-1226803161706

Month to month job figures can be lumpy but it remains a tightrope for the RBA between encouraging employment growth and preventing a real estate asset bubble.


----------



## DB008 (16 January 2014)

drsmith said:


> Listening to a real estate segment on ABC radio this morning, residential property sales in Perth have taken off but at the same time,
> 
> 
> 
> ...




This might sound like a crazy idea, but if l were in Gov, l'd scrap 'unemployment benefits' altogether. They are trying to build a super massive national infrastructure project (aka - NBN).

Want a job? You got one....work for NBN Co. (Didn't the 'Snowy Mountains Hydro Scheme run for 25 years?)



> The Snowy Mountains Scheme was notable for its immigrant, mostly European, work force. [5] The scheme's construction is seen by many "as a defining point in Australia's history, and an important symbol of Australia's identity as an independent, multicultural and resourceful country".[2]
> http://en.wikipedia.org/wiki/Snowy_Mountains_Scheme




Provide training and experience. Have a sub 1% unemployment rate. Save money and give people skill in a technology sector which will grow for, well, pretty much forever...


----------



## trainspotter (16 January 2014)

IFocus said:


> 552 posts and Robots is still right, crack me up.




+ 1,000,000, rupiah. Just got back from Batam. Banks are eyeing off profitability margin between RBA and what they can charge customers. Small to begin with (0.06%) but will be a steady increase over next 12 months. Aduh!


----------



## DB008 (16 January 2014)

IFocus said:


> 552 posts and Robots is still right, crack me up.




What did Robots say?


----------



## JellySausage (17 January 2014)

DB008 said:


> What did Robots say?




I'm paraphrasing, but it was along the lines of, "If you're a real estate investor everything is and will always be, sunshine and lollipops"


----------



## DB008 (17 January 2014)

JellySausage said:


> I'm paraphrasing, but it was along the lines of, "If you're a real estate investor everything is and will always be, sunshine and lollipops"




But for how long?

Also, timing is key. Entry and exit, unless your in for the long hold....


----------



## IFocus (17 January 2014)

JellySausage said:


> I'm paraphrasing, but it was along the lines of, "If you're a real estate investor everything is and will always be, sunshine and lollipops"





Yes it was some thing along those lines, I hold property have been amazed it has held up so well.


----------



## sydboy007 (18 January 2014)

Vale the FHB

Yup, never been a better time to buy resi property in Australia.

Rising prices, while vacancies are rising in some of the capital cities (Perth and Melbourne in Particular), rents stagnant, and high inflation in some holding costs eg water and insurance.  Throw in more people worried about their jobs, but those house prices are gunna keep on doubling every 7 years.

Current stats make it look like Sydney is a giant game of pass the parcel amongst investors buying and selling properties with each other.

Vacancies in the resource boom towns not looking so hot now:

• Karratha – 8.0%
• Port Hedland – 6.3%
• Gladstone – 11.1%
• Mackay – 6.8%
• Townsville – 8.0%

Will i see the quarantining of NG against asset income in my lifetime?  Maybe a broad based land tax to help fund infrastructure for new housing developments?  Probablly not.  Our current crop of Federal and State pollies love the Property Quango Dance.


----------



## matty77 (19 January 2014)

It might be a mixed bag over the next few years.

Value in the major cities like MEL/BRI/SYD

and other smaller towns connected to Mining, Oil, Gas with retraction.

DAR/TOW/PH/KAR etc

Not much going on in ADL/PER

(cant wait for the ass to fall out of DAR in a few years)


----------



## trainspotter (22 January 2014)

Australian banks and property resilient? 

*Fitch says Australian homes expensive but crash unlikely*



> A major ratings agency says Australian housing is expensive, but not necessarily over-valued, and that price growth should moderate from last year's levels.
> 
> Fitch's global Mortgage and Housing Market Outlook looks at 17 nations, and finds Australia ranks inside the worst four countries on three key measures of housing affordability.
> 
> ...




http://www.abc.net.au/news/2014-01-...an-homes-expensive-but-crash-unlikely/5212536

Well DERRRRRRRRRRR .... we all know housing is expensive 



> Australian banks will continue to benefit from low bad debts and a recovery in credit growth over 2014, Goldman Sachs analysts have predicted.
> But after the sector’s blockbuster share price increases of last year, the investment bank says the valuations of most of the big four banks remain ‘‘stretched’’.
> With a housing market recovery tipped to drive stronger borrowing in 2014, Goldman analysts led by Andrew Lyons on Friday forecast 6.4 per cent growth in Australian bank cash profits for 2014.




http://www.smh.com.au/business/bank...ldman-sachs-20140120-314hb.html#ixzz2r5GtPx2z

Add a few more billion to the bottom line of the big 4 shall we? Note how the 7 and 10 year terms are the same. Some would suggest this means they are not expecting much to happen over this period of time that would affect their bottom line. Inflation figures should be in the RBA target zone so not expecting Glenn Stevens to hit the panic button just yet. Meanwhile the big 4 will bracket creep on the 1 - 5 year terms introducing a new swathe of fees and charges to keep up profitability.

*ANZ RATES FOR RESIDENTIAL HOUSING*
Term	     Interest rate	Comparison rate* +
1 year	  4.79% p.a.	5.35% p.a.
2 years	4.89% p.a.	5.34% p.a.
3 years	5.19% p.a.	5.41% p.a.
4 years	5.64% p.a.	5.57% p.a.
5 years	5.79% p.a.	5.68% p.a.
7 years	7.54% p.a.	6.79% p.a.
10 years	  7.54% p.a.	7.18% p.a.


----------



## trainspotter (22 January 2014)

> HIGHER than expected inflation will stop the Reserve Bank of Australia from cutting interest rates again, an economist says.
> The headline measure of inflation, known as the consumer price index (CPI), rose by 0.8 per cent in the December quarter, and by 2.7 per cent in the 2013 calendar year.
> Both measures were higher than economists' expectations of 0.5 per cent in the December quarter and an annual rate of 2.5 per cent, as holiday and accommodation and fruit and vegetable prices shot up.
> Commonwealth Bank of Australia chief economist Michael Blythe said big increases in fruit and vegetable prices were linked to weather impacts, and the weakening Australian dollar was boosting domestic tourism.
> ...




http://www.news.com.au/finance/business/aust-cpi-rose-08-in-the-dec-qtr/story-e6frfkur-1226807545087

Dead cat bounce due to Christmas spending and price of fruit and vegetables increase.


----------



## sydboy007 (22 January 2014)

with thanxs to CanOz for highlighting one of their other videos

https://www.youtube.com/watch?v=akFWvLGITE8


----------



## trainspotter (22 January 2014)

Supply and demand as per usual.


----------



## medicowallet (22 January 2014)

I did some research about property on the net and found this.. what do you think happens to the train next trainspotter?

http://www.youtube.com/watch?v=Yx9xO98kcBU

MW


----------



## trainspotter (23 January 2014)

medicowallet said:


> I did some research about property on the net and found this.. what do you think happens to the train next trainspotter?
> 
> http://www.youtube.com/watch?v=Yx9xO98kcBU
> 
> MW




Oooooerrrr .... you need to get out more Doc and lay off the meds !


----------



## medicowallet (23 January 2014)

trainspotter said:


> Oooooerrrr .... you need to get out more Doc and lay off the meds !




Sorry, a big week, the new interns are starting soon!

MW


----------



## trainspotter (24 January 2014)

0.8% CPI increase slams the door on a rate cut according to the RBA and the economists? What exactly brought on this magnificent bit of logic? Food, alcohol and tobacco as well as recreation and culture is the culprit !!

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6401.0

In general, percentages of GDP spent on recreation and culture are positively correlated with per capita income - the richer the country, the higher the percentage expenditure on culture and recreation. Sooo the proletariat/bourgeois are spending money on eating, drinking and being merry and this is a reason ? 

What does this mean for property prices? Steady as she goes skipper. You have missed the boat.


----------



## Mrmagoo (26 January 2014)

We're in a lot of economic trouble.

What do you think will happen to the economy when the people who used to be the FHB crowd are unable to purchase anything including consumer goods ?


----------



## sptrawler (27 January 2014)

sydboy007 said:


> Will i see the quarantining of NG against asset income in my lifetime?  Maybe a broad based land tax to help fund infrastructure for new housing developments?  Probablly not.  Our current crop of Federal and State pollies love the Property Quango Dance.




I personally think, you have a better chance of a change to NG under the coalition than labor.

The snouts in the trough would be less.IMO


----------



## trainspotter (27 January 2014)

Mrmagoo said:


> We're in a lot of economic trouble.
> 
> What do you think will happen to the economy when the people who used to be the FHB crowd are unable to purchase anything including consumer goods ?




Not much Mr. Magoo ... investors will buy them at auction and rent the same house back to the FHB Brigade. The investor takes on the risk and absolves the bank of any responsibility. The lovely young couple have to trade in the SS Commodore and pick up a cheap Camry and pay rent. If what you are leaning towards is total fiscal meltdown then I am sure they will go back and live with their parents. Or start a vege patch in their backyard. 

But but but the banks are lending 7.18*\* for 10 years. What catastrophic event is going to happen to force their hand to not be able to afford consumer goods?


----------



## satanoperca (27 January 2014)

trainspotter said:


> But but but the banks are lending 7.18*\* for 10 years.




The banks couldn't be wrong could they? 

Inflation up
Unemployment up
Dollar down down
China slowing
Interest rates who knows
Ageing population

Cheers


----------



## Value Collector (28 January 2014)

Mrmagoo said:


> We're in a lot of economic trouble.
> 
> What do you think will happen to the economy when the people who used to be the FHB crowd are unable to purchase anything including consumer goods ?




Why would they not be able to purchase consumer goods?


----------



## sptrawler (28 January 2014)

It will be interesting to see how the property market deflates, everyone acknowledges it is overpriced.

http://www.smh.com.au/money/borrowi...ave-they-missed-something-20140128-31jaz.html

That is an interesting article, the reporter thinks negative gearing and primary residence exemption from assett test, is cast in stone.
Nothing is forever.IMO


----------



## CanOz (28 January 2014)

sptrawler said:


> It will be interesting to see how the property market deflates, everyone acknowledges it is overpriced.
> 
> http://www.smh.com.au/money/borrowi...ave-they-missed-something-20140128-31jaz.html
> 
> ...




That's the book Tech/A read i think...


----------



## tech/a (28 January 2014)

CanOz said:


> That's the book Tech/A read i think...




I've read quite a few on Macro economics
Well the state of it according to some.

Thats not one of them.
There are conflicting long term views
At 180 Degrees with one another.

My PERSONAL view is govts will balance budgets with quantitative easing 
This will be wound down with the hope that economies will be saved and growth will
decrease the debts.

If past history has anything to do with the future ---this wont happen---ever!
The end is not pretty but must eventually come---it will only be fixed once its broken
and although that's the case now they need the plane to hit the ground first before recognizing that it wont pull out of the dive.

A long long time off I think.
These things have a way of drawing out.


----------



## CanOz (28 January 2014)

tech/a said:


> I've read quite a few on Macro economics
> Well the state of it according to some.
> 
> Thats not one of them.
> ...




ahh you mean Dent's books?


----------



## tech/a (28 January 2014)

CanOz said:


> ahh you mean Dent's books?




Dent on The negative side with Pento on the coming Bond Collapse.
For a bit of Balance Plunkett on the Next Boom.

Oh and I forgot the most important in my view.

"The Crisis of Crowding"
Chincarini

Nothing to do with population
Everything to do with Crowding in the financial markets.

Domino effect!
Must read in my view.
Still the case to this day.


----------



## sptrawler (28 January 2014)

tech/a said:


> I've read quite a few on Macro economics
> Well the state of it according to some.
> 
> Thats not one of them.
> ...




I agree that quantative easing can and is working in large economies, eg the U.S.

The devaluing of the $U.S has made their manufactured goods much more affordable, as can be seen by the resurgence of Jeep. The Grand Cherokee is outselling both the Toyota Landcruiser and the Prado.

It isn't going to have the same effect on our economy, we have very little manufacturing export focused anyway.
Therefore the only major beneficiary will be the mining sector, which already is geared up for increased production. 
This really doesn't help 'Joe average' though as the transition from construction to production, means less jobs.

So we end up with higher unemployment, low wages growth and high personal debt.
Like you said though, these things have a way of drawing.


----------



## satanoperca (28 January 2014)

sptrawler said:


> I agree that quantative easing can and is working in large economies, eg the U.S.




Sure it works until it stops, like giving drugs to an addict, no problem until they cannot get any more juice. Then the party really starts.

Quantitative only prolongs the period until reality must be faced.

QE will reduce debts if it brings inflation, but this doesn't seem to be the case in the US. Without QE the US would be in heavy deflation. 

I do agree the lower dollar will help with manufacturing, but as both a manufacturer and an importer it all equalizes out as all my raw materials are imported anyway. My manufacturing is not based anymore on labor but technology.

To me everything points to China and there is baking the biggest of the bubbles the world has seen.


----------



## tech/a (28 January 2014)

India
Africa
Indonesia.

It's going to take a while.
These emerging economies will take up the slack
I doubt I'll see the real melt down in my lifetime
30 yrs max.


----------



## McLovin (28 January 2014)

CanOz said:


> ahh you mean Dent's books?




Harry "even a broken clock is right twice a day" Dent.

The funny thing is that the guy is so often, so ridiculously wrong, and yet people still believe his BS.


----------



## CanOz (28 January 2014)

McLovin said:


> Harry "even a broken clock is right twice a day" Dent.
> 
> The funny thing is that the guy is so often, so ridiculously wrong, and yet people still believe his BS.




Yeah, i think that's mentioned in the story or the video...lol, i recall you mentioned it to me before.

Plunkett is  demographer as well...


----------



## trainspotter (29 January 2014)

What only 3% ?? The more things change the more they stay the same just with different rules.


----------



## Tyler Durden (29 January 2014)

Where on earth are the Chinese getting all this money from???



> “Anecdotally, Chinese buying has been a material driver of new-apartment purchasing activity in the last 12 to 18 months,” Scott Ryall, head of Australia research at CLSA Asia-Pacific Markets in Sydney, wrote in a report in September. “This is a significant potential tailwind for Australian property prices.”
> 
> By law, non-resident foreigners can only buy new homes, with exceptions to buy existing properties granted on a case-by-case basis.
> 
> While many Chinese immigrants buying in Australia pay cash, they take out mortgages for second or third properties to take advantage of tax rules, said Ray Chan, managing director of Sydney-based real estate broker Henson Properties, 95 per cent of whose clients are from China. Owners can claim tax deductions if expenses, including mortgage payments, are greater than their investments’ rental income.




http://www.smh.com.au/business/prop...y-property-hotspot-demand-20140129-31m1b.html


----------



## sptrawler (29 January 2014)

Tyler Durden said:


> Where on earth are the Chinese getting all this money from???
> 
> 
> 
> http://www.smh.com.au/business/prop...y-property-hotspot-demand-20140129-31m1b.html




Obviously they have decided, they want a part of the $13billion negative gearing tax refund.

I know an asian renting a house for $500/week in Perth and subletting the rooms for a return of $700/week.
There are no flies on the Chinese when it comes to making money.


----------



## sydboy007 (30 January 2014)

http://www.macrobusiness.com.au/2014/01/high-density-bias-is-putting-homes-out-of-reach-2/

Bob Day the SA Senator for Family First is able to make some headway into reforming the dysfunctional housing market in Australia.

_Since its inception in 1973, the South Australian State Government’s land agency has seen land prices rise from $15,000 per block (in current dollars) to $160,000 per block, more than a tenfold increase. By comparison, the cost of building a 135 square metre house increased from $97,000 in current dollars to just $102,000 over the same period, virtually no increase at all. Think about that for a moment – a ten-fold increase for a commodity (land) controlled by government (with a so- called “price containment” policy), compared with virtually no increase at all for a commodity (the house) controlled by the private sector (with no price containment policy). One can only conclude that had the private sector been allowed to manage land supply, like it has managed housing supply, we’d be enjoying land prices significantly lower than they are today._

I doubt the private sector would have been much better on land supply, except if we take Robert Gottliebsens' at face vaule that Harry Triguboff is a kind hearted soul who started selling his apartments now that the price had gotten too high so as to help contain the runaway growth in apartment prices.


----------



## Bill M (30 January 2014)

In December 2013 I was looking at brand new off the plan apartments for sale in the city of Gosford NSW at one particular site. Yesterday I searched these apartments again, all of them have got "under contract" under their ads. I thought I'd go and have a look at the site, very good position in the middle of town, walking distance to everywhere and an old building sits on the site. Off the plan and the whole lot has gone, with demand like this prices are only going to keep going up. My wife and I would like to buy a brand new apartment in a good location, finding one is near impossible, just not enough supply.


----------



## FxTrader (30 January 2014)

sydboy007 said:


> http://www.macrobusiness.com.au/2014/01/high-density-bias-is-putting-homes-out-of-reach-2/
> 
> Bob Day the SA Senator for Family First is able to make some headway into reforming the dysfunctional housing market in Australia.



Political affiliation aside, Day makes some excellent points.



> _It is important to remember that the “scarcity” that drove up land prices is wholly contrived – it is a matter of political choice, not geographic reality. It is the product of restrictions imposed through planning regulation and zoning.
> 
> While state governments embraced the opportunity to garner windfall profits by stifling the release of land, they were also responding to a wider ideological agenda driven by a powerful planning community that sought to curb the size of our cities. “Urban consolidation” became the new mantra…_




This combined with councils forcing developers to cover infrastructure costs with the resulting "assets" then transferred to council ownership combine to drive up land prices.  To a significant degree, the house price fiasco in Aus is attributable to market distorting government (local and federal) policy and regulation.  Not only is land scarcity contrived, the real estate market in general is a totally contrived marketplace manipulated, sustained and overinflated by government policy.  

While many a real estate investor and developer have profited from this ("living the dream" as TS likes to say), Day notes the inevitable consequences for society as a whole and the many living with the nightmare of unaffordability and mortgage stress...



> _In creating the conditions for home ownership to become the privilege of the few rather the rightful expectation of the many, state governments have produced intergenerational inequity and breached the moral contract between generations…_






> _One of the more pernicious aspects of high land prices ie high mortgages, is the forced misallocation of capital and family income into mortgage payments instead of higher standards of living, assets, goods, travel, children’s education, appliances or even foregone income to spend more time at home…_




IMHO, only a major economic crash will correct house prices now.  The market distorting policies that have artificially inflated property prices here are simply too entrenched and politically untouchable.


----------



## trainspotter (30 January 2014)

Cyclone Dylan to hit FNQ will increase inflation due to the banana crop about to be devastated. Larry in 2006 and Yasi in 2011 were blamed ... now it is Dylans turn. "Beware the Ides of March" ... when the RBA meets it will have to "look through" this blip ... I am not so sure the banks will and will use this as an excuse to increase margins.

https://theconversation.com/inflation-stokes-rate-rise-speculation-but-dont-blame-the-bananas-2562  - 2006 Larry

http://www.theaustralian.com.au/nat...-towards-the-sky/story-fn59niix-1226103020238  - 2011 Yasi

But it did not stop Westpac from increasing their retail rates ... anyone remember the cute video they produced?

http://www.youtube.com/watch?v=IN9B-rh3bM4 .. for a basic explanation of how economists think.

Westpac coup de grÃ¢ce video http://www.youtube.com/watch?v=dbRo98A1zZQ 

Sooooooooooo Perth has hit a new median high of $535,000 and expected to peak at $570,000 before a softening in the market late in 2014. Sydney is trending the same way and the rest of the capital cities remaining stagnant to slight increases would mean that there is still a little bit of puff left in this cycle. JMHO


----------



## sptrawler (30 January 2014)

trainspotter said:


> Sooooooooooo Perth has hit a new median high of $535,000 and expected to peak at $570,000 before a softening in the market late in 2014. Sydney is trending the same way and the rest of the capital cities remaining stagnant to slight increases would mean that there is still a little bit of puff left in this cycle. JMHO




It is pretty amazing trainspotter, prices are certainly defying gravity. 
That is unless Australia is entering a new 'norm', where $100,000pa is going to become the average wage sooner rather than later. That will require our $aus to go to about $ 0.50c U.S to be competitive, then we will have a real poverty problem.
Or trailer parks/cardboard boxes, will be the destiny for many Australians.


----------



## beachlife (30 January 2014)

trainspotter said:


> Sooooooooooo Perth has hit a new median high of $535,000 and expected to peak at $570,000 before a softening in the market late in 2014. Sydney is trending the same way and the rest of the capital cities remaining stagnant to slight increases would mean that there is still a little bit of puff left in this cycle. JMHO




But look at the volume
http://reiwa.com.au/Research/Pages/Perth-quarterly-market-charts.aspx

and look at the number of listings
http://reiwa.com.au/Research/Pages/Perth-listings-and-rental-trends.aspx

The lowest turn over for at least 6 years.  Hardly the frenzy of the good old days.


----------



## trainspotter (30 January 2014)

beachlife said:


> But look at the volume
> http://reiwa.com.au/Research/Pages/Perth-quarterly-market-charts.aspx
> 
> and look at the number of listings
> ...




Very true as the velocity of money has slowed down due to the banks stricter lending criteria. Also could mean that the uber rich are flogging off their McMansions and downsizing thusly increasing the mean average.


----------



## sptrawler (30 January 2014)

trainspotter said:


> Very true as the velocity of money has slowed down due to the banks stricter lending criteria. Also could mean that the uber rich are flogging off their McMansions and downsizing thusly increasing the mean average.




Also if we try and inflate away our housing debt, it just manifests itself as a reduction in pensioners savings buying power.
Which in turn results in a lower standard of living for them, which results in higher taxes to support higher pensions.
Isn't it great, smoke and mirrors, untill someone say's " hang on a minute".


----------



## Quincy (31 January 2014)

Tyler Durden said:


> Where on earth are the Chinese getting all this money from???
> 
> 
> http://www.smh.com.au/business/prop...y-property-hotspot-demand-20140129-31m1b.html





An article in today's Business Spectator by Florence Chong may give you some answers to your question - extract below. 

http://www.businessspectator.com.au...se-buyers-dont-want-your-house-they-want-land



> *Chinese buyers don't want your house, they want the land*
> 
> Juwai’s Taylor says China's economic ascendancy has unleashed unprecedented purchasing power for its citizens, and is now washing up on the shores of Australia, the United States, Europe, South America, and Southeast Asia.
> 
> ...


----------



## trainspotter (31 January 2014)

sptrawler said:


> Also if we try and inflate away our housing debt, it just manifests itself as a reduction in pensioners savings buying power.
> Which in turn results in a lower standard of living for them, which results in higher taxes to support higher pensions.
> Isn't it great, smoke and mirrors, untill someone say's " hang on a minute".




Is this a statement based on facts or just an opinion? 

If the housing debt is controlled by the banks and the banks are greedy then inflation will eventually rear it's head which means interest rates are rising which means pensioners savings will earn more interest? (very loose terms here) Vicious cycle really


----------



## pavilion103 (31 January 2014)

So will there be:

1) a catalyst/s for a crash at some point?

2) a long long period of zero growth (and a decrease in real terms)?


----------



## lusk (31 January 2014)

Tyler Durden said:


> Where on earth are the Chinese getting all this money from???
> 
> 
> 
> http://www.smh.com.au/business/prop...y-property-hotspot-demand-20140129-31m1b.html






Quincy said:


> An article in today's Business Spectator by Florence Chong may give you some answers to your question - extract below.
> 
> http://www.businessspectator.com.au...se-buyers-dont-want-your-house-they-want-land







They have dropped the gates and handing out money like no tomorrow. Credit increasing by 14 trillion since 2008 would have something to do with it. When opportunities are exhausted in China they are going to look elsewhere it has to go somewhere.

"Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. "They have replicated the entire US commercial banking system in five years," she said."

http://www.telegraph.co.uk/finance/...le-unprecedented-in-modern-world-history.html


----------



## trainspotter (31 January 2014)

pavilion103 said:


> So will there be:
> 
> 1) a catalyst/s for a crash at some point?
> 
> 2) a long long period of zero growth (and a decrease in real terms)?




I will take door number 2 thanks. Cant see what would be on the horizon that would qualify as an ELE.


----------



## satanoperca (31 January 2014)

lusk said:


> "Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. "They have replicated the entire US commercial banking system in five years," she said."




Their grand master plan to take over the world maybe. 

Hate the think what would happen if goes the same way as the USA but would be interesting seeing a whole suburb like Glen Waverly, Vic up for sale in one go as they sell assets to get cash.

All fun and games, or as it seems a wise old man said "sunshine and lollipops".


----------



## trainspotter (31 January 2014)

satanoperca said:


> Their grand master plan to take over the world maybe.
> 
> Hate the think what would happen if goes the same way as the USA but would be interesting seeing a whole suburb like Glen Waverly, Vic up for sale in one go as they sell assets to get cash.
> 
> All fun and games, or as it seems a wise old man said "sunshine and lollipops".




But the banks in Oz do not practice usury lending now do they? Can't imagine a whole suburb up for sale .. no wait .. that would be Ipswich a couple of years ago !


----------



## satanoperca (31 January 2014)

trainspotter said:


> But the banks in Oz do not practice usury lending now do they? Can't imagine a whole suburb up for sale .. no wait .. that would be Ipswich a couple of years ago !




Our banks might be, however, the scale of the Chinese banks system could cause systematic world financial collapse if it defaulted. 

A suburb that is majority owned by Chinese, both Chinese Australians and Chinese nationals could go up in a fire sale. I am thankful the it wouldn't be a Jewish fire sale.

Cheers

Off fishing with son in kayak.


----------



## sptrawler (31 January 2014)

trainspotter said:


> Is this a statement based on facts or just an opinion?
> 
> If the housing debt is controlled by the banks and the banks are greedy then inflation will eventually rear it's head which means interest rates are rising which means pensioners savings will earn more interest? (very loose terms here) Vicious cycle really




Just an opinion, also interest rates rising only help pensioners who have savings.
The rest are at the mercy of the rental market, therefore as house prices increase, so do rents. Those on a Government pension will already be feeling the pinch, if they are renters. 
As you said inflation follows which not only puts up rents but also the cost of everything else.
Therefore one would expect at some stage pensions would have to be increased.


----------



## sydboy007 (5 February 2014)

Only in NSW

_As Chinese investors are blamed for driving up Sydney house prices and accused of keeping first home buyers out of the property market, it has emerged that the government is giving them a helping hand.

…under the New Home Owner Scheme introduced in the 2012 state budget, buyers can own multiple homes in their country of origin and still apply for the grant for the purchase of Australian properties.

They don’t have to live in it. All they have to do is apply through the foreign investment review board to buy.

In fact, if an overseas buyer were to buy 20 off-the-plan apartments, they could apply for 20 $5000 grants, Treasurer Mike Baird’s office confirmed yesterday…_


----------



## ftw129 (5 February 2014)

Original



sydboy007 said:


> Only in NSW
> 
> _As Chinese investors are blamed for driving up Sydney house prices and accused of keeping first home buyers out of the property market, it has emerged that the government is giving them a helping hand.
> 
> ...




Updated



sydboy007 said:


> Only in NSW
> 
> _As foreign investors are blamed for driving up Sydney house prices and accused of keeping first home buyers out of the property market, it has emerged that the government is giving them a helping hand.
> 
> ...




I changed one single word in that article. 

One word is all it takes to change the angle of the story and be more respectful of our fellow brothers and sisters.

Peace.


----------



## DB008 (5 February 2014)

ftw129 said:


> Original
> 
> 
> 
> ...




If the Chinese are the majority of 'foreigners' purchasing property, I don't see a problem naming them. There is nothing offensive in it at all and l'm sure that sydboy007 never had a racist twist on it.

Please don't make this a PC issue, when it isn't.


----------



## sptrawler (5 February 2014)

sydboy007 said:


> Only in NSW
> 
> _As Chinese investors are blamed for driving up Sydney house prices and accused of keeping first home buyers out of the property market, it has emerged that the government is giving them a helping hand.
> 
> ...




It appears all and sundry are pouring stimulus into the housing sector, to try and prevent a huge jump in unemployment. 
It also has the side benefit of stimulating brickworks, cement works, earth moving, surveying, most trades also local council services, elect,water,sewage etc.
However it is a very short term hit, once the house is built it produces nothing, but carries a lot of debt.

Sooner or later wages have to go up to service the debt, which in turn makes our export position more uncompetitive. 
This will lead to more unemloyment a worsening balance of trade and a further fall in the $Aus. 
That results in higher prices( for imported goods), higher inflation, higher interest rates, less disposable income to pay the mortgage.
The other options are a correction, a slow squeeze with interest rates or a change to the taxation rules on property and a tightening of foriegn ownership rules.

Jeez I wish I knew which way they are going to play it. lol


----------



## Julia (5 February 2014)

sptrawler said:


> Just an opinion, also interest rates rising only help pensioners who have savings.



Only a small point, I guess, but hundreds of thousands of people with savings accounts are not pensioners.
Self funded retirees just as one example.  Many others who are, for example, saving for home deposit.

There are many more people with savings accounts than those with mortgages.


----------



## sptrawler (5 February 2014)

Julia said:


> Only a small point, I guess, but hundreds of thousands of people with savings accounts are not pensioners.
> Self funded retirees just as one example.  Many others who are, for example, saving for home deposit.
> 
> There are many more people with savings accounts than those with mortgages.




Very true, also people with no 'recovery time' are reluctant to invest in shares. Therefore they are in the unenviable position of feeling corralled into savings accounts.
Yet as I inferred in my last post, savings can be erroded as quickly as shares. 
Our $Aus is down about 20% in 12 months, this has to flow on to prices of imported goods eventually.
I think Australia is at the make or break point, we either work together to get our 'house' in order, or we are destined to become a third world nation.
Might be a bit over the top, but I don't think so.
These are only my opinions, just a chat.


----------



## Smurf1976 (5 February 2014)

sptrawler said:


> It appears all and sundry are pouring stimulus into the housing sector, to try and prevent a huge jump in unemployment.
> It also has the side benefit of stimulating brickworks, cement works, earth moving, surveying, most trades also local council services, elect,water,sewage etc.
> However it is a very short term hit, once the house is built it produces nothing, but carries a lot of debt.



Much the same with any sort of physical construction stimulus. 

There's some very impressive roads around Burnie Tas, and it's no secret that they were built largely to provide employment as the acid plant, Tioxide and the paper mill all slowly went broke and collectively laid off thousands of workers. So we massively upgraded the transport infrastructure but only after the productive industry was already in decline. It has some ongoing use for the port, but there's a limit to how many freight trucks actually need to get in and out of a port in a place the size of Tasmania. The road itself isn't really doing much at all in terms of ongoing benefits, although eventually it's going to need maintenance and no doubt maintaining 4 lanes will cost more than maintaining 2 lanes would have cost. It's a nice road though.

If we're going to pour money in to what is essentially a make work scheme then I'd rather we put it into something of ongoing use. Going back a very long way, to 1934 actually, two such projects were commenced here in Tas. One was the road up Mt Wellington, still in use today and whilst it was built solely to create employment amidst the Great Depression it subsequently enabled the TV transmission towers and tourism use of the Mountain so it has been of ongoing benefit. The other was Tarraleah power station, and 80 years later (76 years after it started production) it is still providing the light, heat and power it was intended to provide - indeed those exact words are embedded into the floor of the entrance foyer and still there today. It also indirectly provides much of Hobart's water supply, although that use didn't commence until the 1960's. Both of those have been of lasting value and create ongoing employment via tourism, industry using power and practical benefits to the general community.

It we're going to stimulate the economy, then propping up house prices seems like a very silly way to do it. More useful things which come to mind are (listed in random order):

1. Passenger transport (rail, bus, ferry) in the major cities (Melbourne and especially Sydney seem to have significant problems at present).

2. Freight rail to replace interstate trucking as a more fuel efficient means of transport.

3. High speed passenger rail between Melbourne and Sydney with a possible extension to Brisbane. In addition to saving significant amounts of aviation fuel, it may also remove or at least delay the need for another airport in Sydney with all the costs that entails. Rail is inherently more sustainable than air transport from an environmental perspective too.

4. For all its' faults, the NBN is at least better than simply making existing houses more expensive.

5. Large scale renewable energy - wind, solar, hydro, geothermal etc. It may well cost more than coal, but it at least has some ongoing benefits economically as well as environmentally.

6. Water infrastructure - we've got plenty in some parts of the country but not enough in others. Dams, canals, pipelines etc to move it from A to B.

7. Tourism facilities. At least it will provide some ongoing employment once its' built and to the extent that international tourists use it, or that it encourages Australians to holiday at home rather than overseas, it has broader economic benefits.

8. Environmental protection and restoration works. It won't make money, but it creates work and has a significant non-economic value. It's better than just inflating house prices.

9. Extend the gas network to towns that don't currently have a gas system but which are reasonably close to a bulk gas pipeline. Launceston, where air pollution from the use of firewood is a problem, comes immediately to mind.

10. Community recreational facilities. We've got a problem with obesity so anything that gets people out and about can't be too bad an idea. Walking and cycling paths that go to places where people will actually use them etc.

Propping up house prices just seems like a very poor use of financial and physical resources in my opinion when there are so many better things we could be doing with the money instead.


----------



## sptrawler (5 February 2014)

Absolutely Smurph, this is the issue I have, we are spending money on stimulating non productive debt(housing) and long long long term infrastructure NBN.
Yet when I catch a train to Kalgoorlie, it takes forever because you are sitting in sidings waiting for goods trains or ore trains to pass. If you aren't stopped in a siding the ore train or goods train is.lol
600k's from Perth to Kal, 300k's to Merredin half way. 
The Indian Pacific took 3 hours to Merredin then 6 hours to Kal. 
What a laugh, that can't be an efficient way to move export product.
Double the track from Perth to Kalgoorlie, one would think Kal is going to be a hub for some years to come.


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## Uncle Festivus (6 February 2014)

As Bill Gross recently said 'The days of getting rich quick by leverage are over'

And it's all about the appetite of Chinese investors for Oz property with leveraged yuan?

A similar thing happened 30 years ago with the Japanese buying up all and sundry on freshly printed yen, and we all know how that turned out.....and so too will the Chineses succomb from within as their economic model is terminally flawed.

I'm out then, putting a Melbourne unit on the market for now, see how we go........Brisbane & then Sydney to go....


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## trainspotter (6 February 2014)

> The total amount of Chinese investment in property, including residential, increased just $93 million from the 2010-11 financial year to the $4.187 billion reported for 2011-12 by the FIRE.




http://www.news.com.au/national/que...chinese-new-year/story-fnii5v6w-1226818350666

Year of the horse eh? More like year of the glue factory. 4 billion a year for the last coupla years and it only makes headlines now? I think UF is selling a bit premature for mine. I would keep the gunpowder dry for a few more months yet if it was me. Only my opinion of course.


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## Bill M (6 February 2014)

Uncle Festivus said:


> As Bill Gross recently said 'The days of getting rich quick by leverage are over'
> 
> And it's all about the appetite of Chinese investors for Oz property with leveraged yuan?
> 
> ...




There is a lot of holes in your argument. Yes the Japanese lost a lot back in the 80's but what were they losing it on? It was sugar cane farms in the north of Queensland that they were hoping to develop into Golf Clubs but it all fell to pieces. It was also Gold Coast property, sounded good at the time hey? 

To compare that with with Sydney and Melbourne is ridiculous. We don't have cane farms to sell, it is not FNQ, it is Sydney and Melbourne, totally different and with a big shortage of decent property, particularly of new apartments.

The Chinese investment now is in predominantly new dwellings, no requirement for approval from the FIRB. The thing is that there is bugger all stuff available in these 2 cites to buy. Tell me how that a brand new site can sell off the plan in 3 hours in these cities? How is it that in Gosford CBD a site was sold off the plan in 1 Month, total, all gone? 

I am a buyer too, I want an apartment walking distance to a railway station, near shops, near water and I will pay what it takes to get it. The thing is there isn't enough stock around to fill our appetites. This is where real estate is lacking and what is available is expensive.

Back to the Chinese, I totally understand what they want, hey hang on it is the same as me. I can't say I blame them, most of them are citizens of Australia just like you and me.

End result, not enough supply in the good areas and this will force prices up.


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## Uncle Festivus (7 February 2014)

Bill M said:


> To compare that with with Sydney and Melbourne is ridiculous. We don't have cane farms to sell, it is not FNQ, it is Sydney and Melbourne, totally different and with a big shortage of decent property, particularly of new apartments.




To say that the Japanese were only buying Queensland cane farms and Gold Coast is a bit narrow too? They were buying everything as I recall. Then they realised they bought at the top and also had to pay the debt back, which they are still doing 25 years later. So too will the Chinese...



Bill M said:


> I am a buyer too, I want an apartment walking distance to a railway station, near shops, near water and I will pay what it takes to get it. The thing is there isn't enough stock around to fill our appetites. This is where real estate is lacking and what is available is expensive.




? You admit it's expensive yet you are desperate to buy? Sounds like a mania to me.

In my view the _meaningful_ downturn (bust??) will come when the only thing holding oz prices up, Chinese investment, is curtailed because of problems with their own property bubble.

Property is but a dream for the _average_ Australian resident.

As for lack of supply, you only have to look up to see the huge pipeline of new units going to come on stream over the next year, especially in the Melbourne CBD, Southbank etc and around Sydney between the CBD and the airport etc. An agent (who only deals with the silver spooners) I spoke to said the 'banker types' are actively selling their IP's now - insiders knowledge??

The RBA won't be cutting rates anymore with inflation heading higher so essentially this is as good as it will get for locals. Sometimes you just have to simply take your profits and patiently wait for the next cycle..........for now for me it's Melbourne, Sydney will still have a bit to go....

Again, when the Chinese sneeze we will get bird flu.......only the timing is unknown, but their economy is already showing signs of contraction.....


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## Mrmagoo (7 February 2014)

Bill M said:


> There is a lot of holes in your argument. Yes the Japanese lost a lot back in the 80's but what were they losing it on? It was sugar cane farms in the north of Queensland that they were hoping to develop into Golf Clubs but it all fell to pieces. It was also Gold Coast property, sounded good at the time hey?
> 
> To compare that with with Sydney and Melbourne is ridiculous. We don't have cane farms to sell, it is not FNQ, it is Sydney and Melbourne, totally different and with a big shortage of decent property, particularly of new apartments.
> 
> ...




Try just getting an ordinary job and getting a 75k a year salary, starting from scratch, today, not with 20 years of experience behind you. That gives a better indication of the true state of things.


----------



## Bill M (7 February 2014)

Uncle Festivus said:


> You admit it's expensive yet you are desperate to buy? Sounds like a mania to me.




I am not desperate to buy. The point I was trying to make is that there is very little new apartments in good areas available to buy. I want to buy it for my wife and I to live in, it is not for investment. This will mean only one thing, unless we get more supply we will need to bite the bullet and just pay current asking prices.

This is what I call a good development and there isn't enough of this kind of stuff. I am talking about Sydney in particular. (My bolded parts)

---
In five hours on Saturday, Sydney property developer Legacy Property sold 90 off-the-plan apartments at the opening of a new tower in Bondi Junction.

*But it is not cheap. Studio apartments start at $575,000*, equivalent to the median price of a house in Sydney.

Buyers pay, on average, $14,500 per square metre and for the best, up to $17,500 per square metre.

*Mr Hyder said supply was the issue*.

*“Waverley Council fought us tooth and nail over this project but the public are starved of stock,”* he said.

http://www.afr.com/p/business/property/off_the_plan_goes_off_apartments_PMvEZShdYTtTtfuH2iDCpJ
---



> In my view the _meaningful_ downturn (bust??) will come when the only thing holding oz prices up, Chinese investment, is curtailed because of problems with their own property bubble.




Not only you but many others have been calling a bust for a long time ago. 2 years ago, 5 years ago and 7 years ago.... we are still waiting. Sydney property went up around 13% last year, they reckon that it might jump another 10% this year. If I had listened to all the doomsday marketeers over the last 35 years of investing I would have got nowhere in life.



> Property is but a dream for the _average_ Australian resident.




You can still buy a house/villa/unit on the Central Coast for $250,000, only an hour from Sydney. You got to start somewhere, people need to live where their incomes dictate. I started off in a 1 bedroom flat, built equity in it and traded upwards. I live in the Central Coast now, all my neighbours are _average_ Australian residents, simple people in ordnary jobs, most of them are paying off their houses and building equity. No Chinese buyers up here.



> As for lack of supply, you only have to look up to see the huge pipeline of new units going to come on stream over the next year, especially in the Melbourne CBD, Southbank etc and *around Sydney between the CBD and the airport etc. *




Sydney, on the way to the airport, no thankyou. That is exactly the area I do not ever want to live in. I am looking at the Manly Warringah area or on the North Shore somewhere decent like Hornsby, St Leonards or even Gosford, not much new stuff going up around those areas.


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## Bill M (7 February 2014)

Mrmagoo said:


> Try just getting an ordinary job and getting a 75k a year salary, starting from scratch, today, not with 20 years of experience behind you. That gives a better indication of the true state of things.




What has job seeking and salaries got to do with the future of Australian property prices? You might want to start a new thread on that.


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## Mrmagoo (7 February 2014)

Bill M said:


> What has job seeking and salaries got to do with the future of Australian property prices? You might want to start a new thread on that.






Salarie have everything to do with it because they're what people use to buy houses


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## Bill M (7 February 2014)

Mrmagoo said:


> Salarie have everything to do with it because they're what people use to buy houses




Well magoo how about saying something about property then, you made no mention of it. I thought I was on the "How to find a job that pays 75K a year" thread.

Oh yeah you are the person who said this.... nothing more needs to be said 



Mrmagoo said:


> A housing investor is no better than a drug dealer, pimp or stand over man.


----------



## Smurf1976 (7 February 2014)

Bill M said:


> What has job seeking and salaries got to do with the future of Australian property prices?




It's not direct, due to the influence of interest rates, demographics etc but there's a definite link between incomes and property prices.

At the extreme, if incomes went nowhere for the next 20 years then that's not conducive to property price growth since few could afford to pay double current house prices on today's incomes. So there's a link, albeit not a direct one.

If unemployment were to rise significantly, or if interest rates, income tax rates or essential living costs (food, transport, power etc) greatly increased then we could see rather a lot of people unable to afford their current mortgages.

Income tax? It's not something we've seen in recent times but given the state of government finances I wouldn't rule out a rise in tax rates at some point. It could happen and in the absence of corresponding wage growth it's effectively a cut in take home pay for the average worker.


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## sptrawler (7 February 2014)

Bill M said:


> What has job seeking and salaries got to do with the future of Australian property prices? You might want to start a new thread on that.




I personaly think it has a lot to with property prices.
Over the last 20 years wage inflation and the tax breaks afforded to property investment, has resulted in a rapid rise in both.

Now we find ourselves in a low inflation period, with resultant low wage increases. This limits the amount of money people can pay in rent and borrow to purchase.

The people such as yourself, who can afford to pay excessive prices will reduce and the market will contract.IMO

Also the idea that a tax break of $14b a year being sustainable, is questionable. Especially when the Government is saying the age of entitlement is over. Very hard to justify.IMO

Time will tell.


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## Mrmagoo (9 February 2014)

I think it is obvious.... when youngsters today can't easily make a 75k a year coin... who is going buy all of these overpriced properties ?

I tell you this much. I can pay $160 a week to live in someone else's house or I can pay sometimes $75 a week or more in fees alone plus roughly 1.2 time the rent in just interest payments.

So to buy a place for say... 350k I'd be looking at a minimum  $21,400 before even touching the principal then you've got LMI and stamp duty.

I don't know who is buying these houses, but it certainly aint people working for a wage !

Once the liberals crush the union cartels tradies on 120k a year will be few and far between. Interesting times ahead.


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## Mrmagoo (9 February 2014)

Bill M said:


> Oh yeah you are the person who said this.... nothing more needs to be said




I think it is a perfectly fair quote. Both make money off of the suffering of others and from making society a much worse place.


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## ftw129 (9 February 2014)

Mrmagoo said:


> I think it is a perfectly fair quote. Both make money off of the suffering of others and from making society a much worse place.




So MrMagoo, 

We can take that as your declaration, that you will not be investing in property. Even if the "predicted" housing crash happens.

I also wonder if your good conscience, stops you from buying imported goods from 3rd world countries, such as the clothes you're wearing and the appliances you use in your $165 per week rental.

You know, human suffering and all?

How else do you contribute to making the world a better place? You could even enlighten us on what stocks you buy. I'm sure they're all focused on healing the world too.

C'mon enlighten us and share the love.


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## Mrmagoo (9 February 2014)

ftw129 said:


> So MrMagoo,
> 
> We can take that as your declaration, that you will not be investing in property. Even if the "predicted" housing crash happens.
> 
> ...




I don't care about people from other countries. You need to understand. I cannot just go and work and live there. This where I can work and live so this is where I care. Most Australians don't understand that. This is our home. It is our only home so we need to take care of it.

I would never invest in ANYTHING I saw as harming the long term prosperity of Australia.


----------



## trainspotter (9 February 2014)

Mrmagoo said:


> I think it is a perfectly fair quote. Both make money off of the suffering of others and from making society a much worse place.




Cry me a river  What utter BS I have ever read in my entire life. Try working for a living and start at the bottom. The sheer arrogance of asking for 75k per annum straight off the bat is exactly what is wrong with the Australian society right now. Waaaaaahhhhhh like a spoiled kid with not enough toys to play with. Try living in another country with poverty and NO government handouts to assist you just to put food in your belly. No jobs either, so be thankful you are employed and paying rent.

There will always be people who rent, ERGO there will always be people who invest in property. How about this for a scenario:- No investors who own property then tell me where are you going to rent/live then? In the street under a bit of cardboard? Now that is suffering. No wait ..... this is already happening in many countries in the world. Go to Lisbon and get hit upon by beggars at least 20 times a day asking for 1 Euro and they all sleep in the park and huddle together to keep warm. Go to Surabaya and look at how 60 Javanese can live in a hut no bigger than 120m2 and live on $4 a day. Now that is suffering.

You acquaint drug dealers to property investors so thusly you are suffering because you are renting and society is a much worse place? So the roof over your head which is owned by a property investor is causing you such grief in your life why don't you move out? Or would that make society a much worse place to see you and your bit of cardboard looking for a park to sleep in? 

*RANT OVER* 


*Statement by Glenn Stevens, Governor: Monetary Policy Decision*



> At its meeting today, the Board decided to leave the cash rate unchanged at 2.5 per cent.
> Since the Board's previous meeting, information on the global economy has been consistent with growth having been a bit below trend in 2013, but with reasonable prospects of a pick-up this year. The United States economy continues its expansion and the euro area has begun a recovery from recession, albeit a fragile one. Japan has recorded a significant pick-up in growth, while China's growth remains in line with policymakers' objectives. Commodity prices have declined from their peaks but in historical terms remain high.
> The Federal Reserve has begun the process of curtailing stimulus measures but financial conditions overall remain very accommodative. Long-term interest rates and most risk spreads remain low. Equity and credit markets remain able to provide adequate funding, but for some emerging market countries conditions are considerably more challenging than they were a year ago.
> In Australia, information becoming available over the summer suggests slightly firmer consumer demand and foreshadows *a solid expansion in housing construction.* Some indicators of business conditions and confidence have shown improvement. At the same time, with resources sector investment spending set to decline significantly, considerable structural change occurring and lingering uncertainty in some areas of the business community, near-term prospects for business investment remain subdued. The demand for labour has remained weak and, as a result, the rate of unemployment has continued to edge higher. Growth in wages has declined noticeably.
> ...




http://www.rba.gov.au/media-releases/2014/mr-14-01.html

So there you have it folks ....... steady as she goes skipper


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## Smurf1976 (9 February 2014)

It is certainly a lot harder for a young person to buy a house today than it used to be and fundamentally that comes down to house prices being higher, relative to wages, than used to be the case.

In the past it was fairly straightforward. Get a job, save a deposit, buy a house and start paying the mortgages. With relatively high inflation your income would increase within a few years to the point where the mortgage becomes a relatively minor expense. It's all fairly easy when inflation erodes the real value of the debt.

Today, house prices are roughly double what they used to be relative to wages and that's a massive problem. There is also much lower inflation, meaning that you actually have to repay the debt rather than seeing your income rise rapidly thus eroding its' real value. And of course it is much harder these days to get ongoing, secure employment too.

I own my house outright but I don't doubt for a minute that it is very much harder now for someone in their mid-20's trying to buy their first home. Gone are the days when simply paying 3 times their annual wage / salary bought a modest house and when strong wages growth soon enabled moving to a better house. It's much, much harder now.

Also, there is limited option these days to earn higher income through harder work. The decline of manufacturing means that for most tradies and manual workers it is no longer a matter of simply choosing to do shift work + overtime for a few years and pay off the mortgage. You can't just turn up at the office of a large factory these days and expect to be given a job on good wages. And if you go down the uni route well then you've got a HECS debt and you're still stuck with the problem, in most professions, of relatively slow income growth in the years ahead.

In short, house prices are simply too high relative to wages and that transfers wealth from one generation to another. And so far as inter-generational conflict is concerned, it's a reality that it's Boomers, not gen Y, who made the decisions which brought us to this point. How many Gen Y's were on the boards of companies who moved manufacturing offshore? How many Gen Y's were part of the governments who privatised just about everything? Not one single Gen Y had any say in the matter due to age at the time and yet they are the ones stuck with the consequences so it's easy to understand some anger.

Solutions? Removing the barriers to land development would see a surge in supply and a fall in prices. I suggest a hefty tax on the holding of residential zoned land that is not either developed or actively in the process of being developed for housing. That ought to fix the problem there and then. Buying up huge amounts of land then sitting on it is doing nothing other than creating an artificial shortage and driving up prices.

Another problem is the ridiculous amount of red tape which stands in the way of housing construction. Each individual item might seem minor, but collectively there's a huge barrier to actually building anything these days. The various taxes are another problem too.

Another issue is the charges for water, sewage, power etc connection. In the past they were paid by the whole of society whereas today they are paid at the time of land development. Whilst I can see the point that it is fair to charge at the time of development, it is equally unfair that one generation had a free ride and another doesn't. There needs to be a compromise on this one.

Whilst there is a shortage of land in the inner city areas of Sydney and Melbourne, that certainly isn't the case in places like Adelaide, Canberra, Darwin, regional towns or the entire state of Tasmania. Something is seriously wrong when a house in a small town in Tas ends up costing $350K. Very wrong indeed as the intrinsic value of the land itself is close to zero in such places.


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## Smurf1976 (9 February 2014)

trainspotter said:


> Cry me a river  What utter BS I have ever read in my entire life. Try working for a living and start at the bottom. The sheer arrogance of asking for 75k per annum straight off the bat is exactly what is wrong with the Australian society right now. Waaaaaahhhhhh like a spoiled kid with not enough toys to play with.



Trouble is, the Boomers actually did get this once you adjust for inflation and there's the problem. You can't blame today's young people for wanting the exact same deal the previous generations had, especially given that it's the older generation they have to hand the money to in order to buy their houses anyway.

The Boomer generation really seems to struggle to understand just how good they had it. House prices today, relative to wages, are literally DOUBLE what they paid and that's the problem.


----------



## Mrmagoo (9 February 2014)

Crazy old people that no longer work for a living are usually not very good at understanding what working for a living actually means.

They'll just spout mean spirited pointless nonsense. Best ignore them.

I stand by what I said it is incredibly difficult to get a 75k a year salary and that won't get you into an entry level property :

<que fictional boomer math on affordability>


----------



## Mrmagoo (9 February 2014)

Smurf1976 said:


> Trouble is, the Boomers actually did get this once you adjust for inflation and there's the problem. You can't blame today's young people for wanting the exact same deal the previous generations had, especially given that it's the older generation they have to hand the money to in order to buy their houses anyway.
> 
> The Boomer generation really seems to struggle to understand just how good they had it. House prices today, relative to wages, are literally DOUBLE what they paid and that's the problem.




Look you might as well triple or quadruple it. 

In many situations the living conditions are this :

Wages have halved and the house prices have doubled.

Once you factor in the cost of living, renting and other assorted expenses the wage of many workers for house buying purposes is essentially zero. They can't save a deposit fast enough and they can't get enough surplus income to save for investments because of the cost of living.

These are not unskilled workers either.

Even if you do save 10 or 20 grand ? Big deal. It is still not big enough for a deposit. Prices have already risen by more than that anyway.


----------



## Smurf1976 (9 February 2014)

Mrmagoo said:


> I stand by what I said it is incredibly difficult to get a 75k a year salary




In a profession it will happen but not straight away. 4 years of uni, then a graduate position. Eventually you'll get there in most professions but not quickly.

For trades and manual workers it's nowhere as easy as it once was. Considering it locally around here, in the past you could always just get a job at EZ, ANM etc, put your hand up for overtime and add the annual bonus to that and Bingo! There's your house. An awful lot of people did just that, then went to work somewhere easier (that is, without the requirement for shift work) once the kids were in school and the mortgage was paid off. 

That doesn't work today however, those places are swamped with applicants whenever there's a vacancy and they sure aren't handing out heaps of overtime and bonuses as was once the case. It's no longer a case that anyone can earn a solid income simply by putting in some effort. With the general decline of manufacturing, there's been a huge loss of higher wage, stable jobs and their replacement with lower paying, less secure work in service industries with far fewer opportunities for career advancement or even simply working longer hours.


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## sptrawler (9 February 2014)

Mrmagoo said:


> Look you might as well triple or quadruple it.
> 
> In many situations the living conditions are this :
> 
> ...




Yes things have changed a lot, especially regarding the relative cost of a house.
In the early 1990's the two big costs to consumers were a house and a car.
Generally a car was a years salary and a house was three years salary (talking bread and butter car v bread and butter house)

Well the Basic Commodore, back then was $25k and had nowhere near the equipment, of the new Commodores.
Yet the new Commodore can be bought for mid $30k.
http://www.mynrma.com.au/motoring/reviews/car-reviews/holden/commodore-vr.htm

Back then in Perth, the 'bread and butter' houses $100k, now they are $450-$500K.

So in real terms, it is only house price growth, that has far outstripped wage growth.
To feel the problem can't be solved, is very foolish. 
One just has to ask the questions, what is supporting it and how long is that support needed.


----------



## Mrmagoo (9 February 2014)

sptrawler said:


> Yes things have changed a lot, especially regarding the relative cost of a house.
> In the early 1990's the two big costs to consumers were a house and a car.
> Generally a car was a years salary and a house was three years salary (talking bread and butter car v bread and butter house)
> 
> ...




90s commodores are fine. I have a 90s falcon. So does that mean I'm excused from 2010s house prices ?


----------



## cynic (9 February 2014)

Would anyone here be willing to pay 1990's real estate prices at 1990's interest rates whilst earning 1990's wages?


----------



## sptrawler (9 February 2014)

Mrmagoo said:


> 90s commodores are fine. I have a 90s falcon. So does that mean I'm excused from 2010s house prices ?




No, but it shows you buy with your head, why are 90% of taxis in Australia Falcons.
Because they are good for 1million k's and cheap to fix.
I think it is only a matter of time before house prices come back, or wages go forward.
The overtone of the Government doesn't seem to support the latter.


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## trainspotter (9 February 2014)

You did not answer one thing Mrmagoo ... class dismissed. Young people think they know it all and don't listen to us old fogies who have experienced it first hand. Go and do some research and get back to me when your eyes are fully open


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## sptrawler (9 February 2014)

cynic said:


> Would anyone here be willing to pay 1990's real estate prices at 1990's interest rates whilst earning 1990's wages?



Obviously the 'baby boomers' did and are reaping the capital gain today. 
However past performance, is not a gaurantee of future returns (isn't that what they say?)

For my personal opinion, I think we are close to one of those 'once in a lifetime events'.
That seem to happen every 5 - 10years.lol


----------



## cynic (9 February 2014)

sptrawler said:


> Obviously the 'baby boomers' did and are reaping the capital gain today.
> However past performance, is not a gaurantee of future returns (isn't that what they say?)



I'm not sure that you've understood what I am driving at! 

Remember that mean wages were much lower and interest rates were triple what they are today!!


----------



## trainspotter (9 February 2014)

cynic said:


> I'm not sure that you've understood what I am driving at!
> 
> Remember that mean wages were much lower and interest rates were triple what they are today!!




Head of the class. Try 17 percent ... yeahhh things were soooo much better when I bought my first house.


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## banco (9 February 2014)

trainspotter said:


> Head of the class. Try 17 percent ... yeahhh things were soooo much better when I bought my first house.




Hit 17 percent and then started a decline that hasn't stopped.  Given how much cheaper the asset was back then you baby boomers still come out way ahead.


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## Bill M (9 February 2014)

cynic said:


> Would anyone here be willing to pay 1990's real estate prices at 1990's interest rates whilst earning 1990's wages?




My wife and I did, never expected interest rates to go that high. Had to work 2 jobs to make ends meet, wife worked too, it was all pumped into the mortgage. But I am sure most of the younger folk think we had it easier.


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## trainspotter (9 February 2014)

banco said:


> Hit 17 percent and then started a decline that hasn't stopped.  Given how much cheaper the asset was back then you baby boomers still come out way ahead.




lol ... and so were wages. Bottom line is that nothing has changed ... do the research !


----------



## banco (9 February 2014)

trainspotter said:


> lol ... and so were wages. Bottom line is that nothing has changed ... do the research !




Remind me what multiple of wages the median house in Sydney was in the eighties versus today?


----------



## trainspotter (9 February 2014)

banco said:


> Remind me what multiple of wages the median house in Sydney was in the eighties versus today?




Remind me what interest rates and inflation was performing at back then ? Stop living in the past. Tell me what the FTSE, ASX and NASDAQ were peaking ?


----------



## trainspotter (9 February 2014)

banco said:


> Remind me what multiple of wages the median house in Sydney was in the eighties versus today?




HERE IS A TIP .... buy what you can afford and it does not have to be in Sydney !!!!!


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## Bill M (9 February 2014)

Meanwhile in Sydney in a very ordinary suburb this bloke and his wife just paid over $1 Million for this house. Now look at the crowd in the photo, no Chinese there, just plenty of true blues wanting their piece of paradise. Location is Northern Beaches, looks like a small timber home with bars on the windows.

---
Axel and Bernadette Steele bought their first home at Narraweena in Sydney's northern beaches for a cool $1,006,000. And it was all about location.

"We looked for 18 months, researching different locations," Mr Steele said.

"We would have to live way out west on smaller properties. This is where my family is and where I lived my whole life."

But getting the finances for a million dollar property was not too difficult for the electrician and childcare worker.
"We had money behind us and are in stable jobs," Mr Steele said. "I have been in my job for five years and Bernadette for six or seven."

http://www.news.com.au/finance/real-estate/ing-first-homes-buyers-increasingly-spending-a-million-dollars/story-fncq3era-1226820981579
---


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## banco (9 February 2014)

Here is a tip for you and the other old coot Bill M.  Either you and he made crappy or (at least mediocre) investments in the nineties as far as property goes (as there was little real growth) or it was a good investment because the gains far outpaced cpi (and as such it is  commensurately less affordable than it was when you brought).  It can't be both.


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## Bill M (9 February 2014)

trainspotter said:


> HERE IS A TIP .... buy what you can afford and it does not have to be in Sydney !!!!!




Exactly, just an hour drive North from the Narraweena property I posted about is a similar house, just a quarter of the price.

http://www.realestate.com.au/property-house-nsw-gorokan-115941267


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## trainspotter (9 February 2014)

banco said:


> Here is a tip for you and the other old coot Bill M.  Either you and he made crappy or (at least mediocre) investments in the nineties as far as property goes (as there was little real growth) or it was a good investment because the gains far outpaced cpi (and as such it is  commensurately less affordable than it was when you brought).  It can't be both.




 grow up and get in the real world. I retired at 40 ... and am actively involved in real estate right now. Nothing has changed. Banks are pr1cks , buyers are liars and the dollars don't count till it is in your bank account as cleared funds.

p.s.   I brought a cake to lunch ... I bought a cake with my money ... read the difference please.


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## Bill M (9 February 2014)

banco said:


> Here is a tip for you and the other *old coot* Bill M.




Name calling, well done, is that the best you can do?


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## banco (9 February 2014)

Bill M said:


> Name calling, well done, is that the best you can do?




Given neither of you have responded substantively to the point I made I guess calling me impolite is the best you can do.


----------



## Bill M (9 February 2014)

banco said:


> Given neither of you have responded substantively to the point I made I guess calling me impolite is the best you can do.




Sorry banco, I can not respond to people like you and Mrmagoo anymore. Mrmagoo said I was the same as a "Pimp and Drug dealer" for being a property investor and you have called me an old coot. Once the name calling starts you have lost the plot, you are enraged with jealousy, hatred or maybe both. All we are trying to do is help people like you get into property through our experiences. If only you could see that. Good luck with your future.


----------



## sptrawler (9 February 2014)

cynic said:


> I'm not sure that you've understood what I am driving at!
> 
> Remember that mean wages were much lower and interest rates were triple what they are today!!




Yes, and I borrowed and am where I am today? 
Interest rates were high, but house prices were low and you could negative gear the loses.


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## trainspotter (9 February 2014)

banco said:


> Given neither of you have responded substantively to the point I made I guess calling me impolite is the best you can do.




Go and do some research ... I will be waiting for your substantive response. And your point exactly is what again? Both Bill M and myself have the experience to back up what we are typing ... can you claim the same?


----------



## trainspotter (9 February 2014)

sptrawler said:


> Yes, and I borrowed and am where I am today?
> Interest rates were high, but house prices were low and you could negative gear the loses.




Still can negative gear last time I looked?  Lead a horse to water and all that stuff. Good night folks ... sleep well under the roof you have over your head whether it be a PPOR or an IP or a rental .... you know who you are ... cardboard box anyone?


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## cynic (10 February 2014)

sptrawler said:


> Yes, and I borrowed and am where I am today?
> ...



As did I, despite losing my job in "the recession we had to have". 
Negative gearing is only useful if there is actually some income to gear against!


----------



## sptrawler (10 February 2014)

cynic said:


> As did I, despite losing my job in "the recession we had to have".
> Negative gearing is only useful if there is actually some income to gear against!




Never been a problem getting tenants, just getting good tenants is the key. 
Also as average rents increase well above what can be met by the average wage, the problem becomes more acute.
That is unless the government keeps propping up your gamble on prices.?

Heads you win tails you lose.


----------



## Joe Blow (10 February 2014)

banco said:


> Here is a tip for you and the *other old coot* Bill M.




I understand that sometimes debates can get frustrating and a little heated, but insults *never* help. It's better to agree to disagree when you cannot find any common ground rather than start throwing around insults and personal attacks, which serve no purpose other than to inflame the situation.

Let's keep it civil please.


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## Smurf1976 (10 February 2014)

cynic said:


> Would anyone here be willing to pay 1990's real estate prices at 1990's interest rates whilst earning 1990's wages?




I'd do it in an instant. Most costs roughly the same as today relative to wages (notable exception of electronics) and houses a lot cheaper. It was a much better deal back then for first home buyers than it is today that's for sure. Well, it is unless someone is expecting 7% or so per annum wages growth (in the same job) and a decent fall in interest rates from this point.


----------



## Smurf1976 (10 February 2014)

cynic said:


> Remember that mean wages were much lower and interest rates were triple what they are today!!



Relative to house prices, mean wages 15 years ago were literally double what they are today and were followed by moderate growth in nominal wages, plus large falls in interest rates. All of which makes for a very cheap house purchase compared to the situation now.

I'm not going to enter any personal disputes, but it does amaze me how many struggle with a basic fact. Relative to average wages, houses today are double the price they were in the 1990's.

If petrol cost $3 per litre or if the price of bread doubled then many would be saying plenty about that, and yet petrol and bread are minor costs compared to housing for most people.

The rise in house prices has done nothing of real benefit to society so far as I can tell. All it's done is transfer wealth from those buying to those selling. In general, that's a transfer from the young to the old. Someone today, has to work twice as long to buy the exact same house someone bought 20 years ago and I don't see that as a benefit.


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## cynic (10 February 2014)

Smurf1976 said:


> I'd do it in an instant. Most costs roughly the same as today relative to wages (notable exception of electronics) and houses a lot cheaper. It was a much better deal back then for first home buyers than it is today that's for sure. Well, it is unless someone is expecting 7% or so per annum wages growth (in the same job) and a decent fall in interest rates from this point.



It's funny that you believe that. There were times when the interest bill on my PPOR substantially exceeded my annual income! It was little short of a miracle in financial alchemy that enabled me to retain ownership!

If I'd bought and mortgaged the same house at today's prices and interest rates, unemployment benefits alone would cover more than 80% of the mortgage payments and council rates. The same could not be said for 1990! My monthly interest bill alone was more than double my unemployment benefit!


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## Klogg (10 February 2014)

trainspotter said:


> Both Bill M and myself have the experience to back up what we are typing ... can you claim the same?




Hume's problem of induction at its best


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## craft (10 February 2014)

In aggregate terms today’s interest burden at record low interest rates is about the same as the interest burden early 90’s when interest rates were record high.

Risks at high interest rate are on the upside if rates fall. 
Risks at low interest rates are on the downside if rates rise. 
The risk equation has reversed.

I don’t know when or what will happen to house prices (especially as there is so much political intervention in the area) but they are a big risk to the economy at current levels given the amount of private debt secured against them.

triggers?

A slowing of national income from falling resource prices will put pressure on household income – particularly those that succumb to a rising unemployment level.

Imported inflation from a devaluing currency will put upward pressure on interest rates.

Younger generations have legitimate gripes over current political housing policies and their angst will eventually find political voice as voting power shifts.


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## sptrawler (10 February 2014)

craft said:


> View attachment 56750
> 
> 
> In aggregate terms today’s interest burden at record low interest rates is about the same as the interest burden early 90’s when interest rates were record high.
> ...




Great post craft, captured it perfectly


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## trainspotter (10 February 2014)

Klogg said:


> Hume's problem of induction at its best




Ermmmmmmmm NO ! Hume's Problem of Induction goes something like this:-

_We naturally reason inductively:  We use experience (or evidence from the senses) to ground beliefs we have about things we haven't *observed*._

As both Bill M and myself have *observed* and are using our experience to comment then Humes theory is not applicable.

Essentially, the principle of induction teaches us that we can predict the future based on what has happened in the past, which we cannot. Hume argues that in the absence of real knowledge of the nature of the connection between events, we cannot adequately justify inductive assumptions. 



> Price-to-income ratios are often used in isolation to assess ‘affordability’, that is, to assess how easily a  typical household can purchase a typical dwelling. However, this only makes sense if other factors affecting borrowing capacity are unchanged. As borrowing capacity increases, households have greater ability to purchase housing and so prices can be bid up more than the increase in incomes. So in this case, higher price-to-income ratios do not imply less affordable housing, but are a consequence of households’ greater ability to pay for housing.




http://www.rba.gov.au/publications/bulletin/2012/dec/pdf/bu-1212-2.pdf

Or does the RBA have it wrong as well ?

I am off to stock up on cardboard boxes


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## Ves (10 February 2014)

From Wiki:



> The problem of induction is the philosophical question of whether inductive reasoning leads to knowledge understood in the classic philosophical sense, since it focuses on the lack of justification for either:
> 
> 
> Generalizing about the properties of a class of objects based on some number of observations of particular instances of that class (for example, the inference that "all swans we have seen are white, and therefore all swans are white", before the discovery of black swans) or
> Presupposing that a sequence of events in the future will occur as it always has in the past (for example, that the laws of physics will hold as they have always been observed to hold). Hume called this the principle of uniformity of nature.





Hume is not saying that induction cannot be useful,   he is saying that there is no logical justification for it because the connection between the empirical observation and the prediction about another event cannot be shown via (deductive) reason.

It could be argued that Hume was saying that we cannot claim empirical or experiential observations as (deductive) reason not only because their is uncertainty of conclusions derived from induction but also because of doubts of the very principle through which those uncertain conclusions are derived.

I agree with Hume in somes sense, particularly in that  plenty of people on forums try to come across as if they are making statements that are "matters of fact",  but really all they are doing is providing statements based on past experience  (which _can but not always_ improve understanding) that may or may not be recurrent in the (uncertainty) of the future.   At this point it is more art than science  (and some people may be better than others),  so despite the bleating of the loudest or most successful or wisest individuals there is ess certainty of anything than they want you to believe.


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## trainspotter (10 February 2014)

Foxtrot Uniform Charlie Kilo me - The future of Australian property prices is the title thread. So far it has been trending upward. The doomsayers a la Steve Keen et al have been wrong.

Buy a house .. don't buy a house ... who really gives a fats rats clacker.


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## burglar (10 February 2014)

trainspotter said:


> Foxtrot Uniform Charlie Kilo me - The future of Australian property prices is the title thread. So far it has been trending upward. The doomsayers a la Steve Keen et al have been wrong.
> 
> Buy a house .. don't buy a house ... who really gives a fats rats clacker.




Any angler worth his salt knows how to use his worms! :


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## Klogg (10 February 2014)

trainspotter said:


> Ermmmmmmmm NO ! Hume's Problem of Induction goes something like this:-
> 
> We naturally reason inductively: We use experience (or evidence from the senses) to ground beliefs we have about things we haven't observed.
> 
> ...




Spot on about the principle of induction, but my point was this - you haven't observed a significant price reduction (US style) of housing in Aus, so on your experience/observations you're assuming it won't happen.

I think it's very applicable here...

Anyway, didn't mean to derail the thread - my apologies


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## McLovin (10 February 2014)

Klogg said:


> Spot on about the principle of induction, but my point was this - you haven't observed a significant price reduction (US style) of housing in Aus, so on your experience/observations you're assuming it won't happen.
> 
> I think it's very applicable here...




Something along the lines of stability creates instability because it encourages risk taking behaviour. Paying 30% of your wage on your mortgage repayments when interest rates are 15% is a much less risky scenario than paying 30% of your wage on mortgage repayments when interest rates are 6%.

Of course it may never come to pass, but the risk remains.


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## trainspotter (10 February 2014)

Klogg said:


> Spot on about the principle of induction, but my point was this - you haven't observed a significant price reduction (US style) of housing in Aus, so on your experience/observations you're assuming it won't happen.
> 
> I think it's very applicable here...
> 
> Anyway, didn't mean to derail the thread - my apologies




Ermmmmmmm NO again. Can't speak for Bill M but I certainly observed what happened in the USA, even flew to Portugal and Spain to go and have a look first hand right in the middle of the GFC. Did not get to the USA until last year but I note that things are on the improve. 

All of these countries were basket cases due to unregulated lending practices encouraged by their own government and or reserve bank. Over zealous investors and multi national companies trying to cash in on a quick buck. The banks would lend the money to these corporations with NIL presales and bugger all equity who would build VAST housing projects or town houses or villas or condominiums or whatever. These parasites then flogged these abodes off to the great unwashed masses with the banks greedily loaning 110% LVR as well as AMR lending practices. The excrement hits the fan and *POP* goes the housing bubble.

Does this happen in Australia? Tell me which bank would give me a couple of mill to develop a property with not much equity and no presales? Our banks are extremely profitable (27 billion between 4 banks last year) they also have one of the lowest toxic debt levels (bad payers) in the world. Unemployment is creeping up but within RBA expectations, AUD is in target range, lending practices by the banks have remained regulated and mummy and daddy are still paying the mortgages. 

The issue is going to be the banks will want more profits and with the RBA advising not likely interest rate increases for quite some time I have said on several occasions that the banks will start to bracket creep their fixed rates. ANZ already has lifted .06% on it's 3 year term. My prediction would be March/April 2014 that this will begin to occur.

But hey ... what would an old coot like me with experience know eh?


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## Smurf1976 (10 February 2014)

McLovin said:


> Paying 30% of your wage on your mortgage repayments when interest rates are 15% is a much less risky scenario than paying 30% of your wage on mortgage repayments when interest rates are 6%.




Exactly. If you buy when rates are 15% then you can reasonably assume that they are unlikely to rise much further. Give it a few years with wages growth and declining interest rates and it all becomes fairly easy.

But with rates at 6% and slow wages growth, you could well find yourself paying an increasing proportion of your income in interest payments in the years ahead. You don't have the benefits of falling rates and wage inflation working in your favour.  

There's a definite risk that interest rates rise faster than wages from this point - indeed with rates so low practically any adjustment represents a significant rise in the cost of borrowed money. Eg raising official interest rates by just 1% represents an approximate 18% jump in the cost of borrowed money to consumers which is rather significant.


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## trainspotter (10 February 2014)

Smurf1976 said:


> Exactly. If you buy when rates are 15% then you can reasonably assume that they are unlikely to rise much further. Give it a few years with wages growth and declining interest rates and it all becomes fairly easy.
> 
> But with rates at 6% and slow wages growth, you could well find yourself paying an increasing proportion of your income in interest payments in the years ahead. You don't have the benefits of falling rates and wage inflation working in your favour.
> 
> There's a definite risk that interest rates rise faster than wages from this point - indeed with rates so low practically any adjustment represents a significant rise in the cost of borrowed money. Eg raising official interest rates by just 1% represents an approximate 18% jump in the cost of borrowed money to consumers which is rather significant.




Maybe you are forgetting that interest rates were not always at 15% ... they ROSE to 17%. Prior to that they were around the 9% mark for quite some time. It is one thing to cherry pick the data it is another to completely ignore facts.

Why would interest rates bother you at the moment when you can get a 10 year FIXED loan under 7%? 

http://www.rams.com.au/home-loans/fixed-rate-home-loan/   or 6.77% to be precise !

Affordability? Things were a LOT worse back in the 80's my friend.


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## Smurf1976 (10 February 2014)

I think you are forgetting about having to actually repay the loan here. There's more to it than just interest payments. If you have fairly rapid wages growth then the real value of the debt diminishes pretty quickly. 

Going all the way back to 1983 (simply because it's 30 years ago - there isn't any useful data available for 2014 yet). For ease of calculation I've assumed a 100% loan and I've used the interest rate applying during June of each year. House price and wage data is for Melbourne (since it's a common place to live and the data is available).

Average house price = $52,500
Average wage = $20,493
Interest rate = 12.5%
Interest on a 100% loan thus takes 32% of gross income.

But by 1984, just one year later, wages had increased to $22,220 and interest rates had fallen to 11.5%. It now took only 27% of gross income to pay the interest on the loan even if none of the principal had been repaid.

1985 - wage $23,587 and interest at 12.0%. It takes 26.7% of gross income to pay the interest.
1986 - wage $25,407, interest 15.5%. It takes 32% of gross income to pay the interest.
1987 - wage $26,910, interest 15.5%. It takes 30.2% of income to pay the interest.
1988 - wage $29,063, interest 13.5%. It takes 24.4% of income to pay the interest.
1989 - wage $30,987, interest 17.0%. It takes 28.8% of income to pay the interest.
1990 - wage $31,200, interest 16.5%. It takes 27.8% of income to pay the interest.
1991 - wage $34,018, interest 13.0%. It takes 20.0% of income to pay the interest.
1992 - wage $34,575, interest 10.5%. It takes 15.9% of income to pay the interest.
1993 - wage $35,360, interest 9.5%. It takes 14.1% of income to pay the interest.

So over ten years, a combination of rising wages (up 72.5%) and a drop in interest rates from 12.5 to 9.5% results in the cost of interest on the original loan, if none of the principal has been repaid, declining from 32% to 14.1% of gross income.

Now consider someone who bought ten years ago in 2003.

Average house price = $361,300
Average wage = $51,298
Interest rate = 6.55%
It takes 46.1% of gross income to pay the interest.

2004 - wage $53,139, interest 7.05%. It takes 47.9% of gross income to pay the interest.
2005 - wage $53,534, interest 7.30%. It takes 49.3% of gross income to pay the interest.
2006 - wage $57,496, interest 7.30%. It takes 45.9% of gross income to pay the interest.
2007 - wage $60,434, interest 8.05%. It takes 48.1% of gross income to pay the interest.
2008 - wage $63,154, interest 9.0%. It takes 51.5% of income to pay the interest.
2009 - wage $66,040, interest 5.65%. It takes 30.9% of income to pay the interest.
2010 - wage $67,166, interest 6.65%. It takes 35.8% of income to pay the interest.
2011 - wage $66,872, interest 7.79%. It takes 42.1% of income to pay the interest.
2012 - wage $67,700, interest 6.99%. It takes 37.3% of income to pay the interest.
2013 - wage $69,460, interest 6.15%. It takes 32% of income to pay the interest.

It seems pretty clear to me that an average person, buying an average house in Melbourne in 2003, has seen a much greater portion of their income disappear in interest payments compared to someone who bought an average house in 1983. 

Someone who bought in 1983 paid an average of 25.35% of their income toward interest over the next decade, varying between 14.1% and 32% over those years. And after 10 years, it would take 1.48 years of average income to pay out the principal on the loan. 

Someone who bought 20 years later in 2003 paid an average of 42.45% of their income toward interest over the next decade, varying between 30.9% and 51.5% over those years. And after 10 years, it would take 5.2 years of average earnings to pay out the principal.

Someone who bought 30 years ago got a massively better deal than someone who bought 10 years ago. Whilst I don't doubt for a minute that the high interest rates circa 1989 caused massive pain at the time, they were relatively short lived compared to the situation today. And unless you actually bought in 1988 or 89, not even those high interest rates resulted in an interest to income ratio as bad as that experienced by the more recent home buyer. 

Someone who bought in, say, 1986 was a lot better off at 17% interest in 1989 (46.5% of income spent on interest) than someone who bought in 2003 was with 9% interest in 2008 (51.5% of income spent on interest). And the 1980's home buyer has a much smaller loan, relative to income, to actually repay too.

There is, of course, far more to it than just interest but again it's the same pattern. Paying off a $52,500 house when your income a decade later has risen to $35,360 is a lot easier than paying off a $361,300 house when your income is just under $70K a decade after you bought the house. You do the maths - unless you were unlucky enough to buy in 1988 or 89, the situation was a lot better back then than it is today and that comes down to lower house prices relative to wages combined with fairly strong wages growth. Neither of those are present today. 

Most of the data I've quoted here came from the following:

http://simplesustainable.com/topic/2463-melbournes-median-house-prices-vs-wages-1965-2010/

http://www.loansense.com.au/historical-rates.html


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## trainspotter (10 February 2014)

Smurf1976 said:


> I think you are forgetting about having to actually repay the loan here. There's more to it than just interest payments. If you have fairly rapid wages growth then the real value of the debt diminishes pretty quickly




In depth response Smurf1976 and very detailed. You have just realised what I have been bleating on about. You only take out IO loans only if you are investing in RE. The principal is not a tax deduction ... it is capital input The interest is on the other hand allowable as an ATO receipt to reduce your outgpings. Is this the system I advocate for ? Absolutely it is.

There is nothing wrong with making a profit. Believe me you have to pay capital gains tax on the damn velocity of money through the system. It balances out in the long run I can assure you.

Now back to 'affordability' ... If the picture you have painted is based on previous history then for the love of God why do we even bother? Let's all get off this merry go round and cause chaos. People have got to live somewhere right? This is the system that is in place .... the same one from 30 years ago. Now to be very specific when I say this ... you do not have to buy a PPOR as your first home. Being one sided and not seeing opportunities in RE is to only look at one side of the equation. To only look at affordability you are mainly looking at the FHOB Brigade. They do not own the entire market in Australia ... and diminishing fast. Does this mean that a small percentile of the populace wont be able to buy a home. Damn straight it does. Same thing in the 80's as well. 

Borrowing capacity is looking pretty swish for the next ten years at 6.77 per cent.  Stability in the market ? I would think so.


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## trainspotter (11 February 2014)

Great post Smurf1976 - except a few things outside the parameters will affect the overall outcome.



> Price-to-income ratios are often used in isolation to assess ‘affordability’, that is, to assess how easily a typical household can purchase a typical dwelling. However, this only makes sense if other factors affecting borrowing capacity are unchanged. As borrowing capacity increases, households have greater ability to purchase housing and so prices can be bid up more than the increase in incomes. So in this case, higher price-to-income ratios do not imply less affordable housing, but are a consequence of households’ greater ability to pay for housing.




http://www.rba.gov.au/publications/bulletin/2012/dec/pdf/bu-1212-2.pdf

You are relying on the home owner to be "static" as well as "average". There are several reasons as to why the median house price has increased so dramatically and the two most obvious ones is that construction costs have double over this period of time and the other is the willingness of punters to pay more for inner city or ocean side property thusly driving up the "median" prices. It's all a bit skewiff to only look at one piece of the equation.

As an "average" housing loan runs for a period of 11 years before the home owner either refinances or sells the property it is unlikely the figures you represent have any meaningful analysis other than to point out that the FHB Brigade is going to have to look at owning property further out and more affordable for them. I do not know of too many people who simply buy one house and live in it for the rest of their lives and pay off the mortgage. Property is a commodity to be bought and sold as RE cycles it's way through yet again another phase. 

Anyways Smurf1976 great post and as usual the detail is fantastic. Your maths is spot on but not taking into account several variables as I have pointed out above. If you sold the property in 2003 and used the profit to purchase another property or two and starting renting a few out then the maths gets really interesting !


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## trainspotter (11 February 2014)

Meanwhile back at the ranch the 8 capital cities continue to rise:-



> AUSTRALIAN capital city residential property prices rose 3.4 per cent in the December quarter, official data showed. That followed a rise of 2.4 per cent in the September quarter.
> In the year to December, the residential property price index rose 9.3 per cent, the Australian Bureau of Statistics said on Tuesday.
> Economists had expected a rise of three per cent for the December quarter.




http://www.news.com.au/finance/busi...-rise-in-dec-qtr/story-e6frfkur-1226823473136



> FINANCE continued to flow freely into the housing market right up to the end of 2013, keeping prices on a rising trend.
> *And investors grabbed a near record slice of the cash.*
> The value of loans approved for housing in December was $27.05 billion, according to seasonally adjusted figures from the Australian Bureau of Statistics (ABS).
> Despite a small fall of one per cent in December, that total was still $5.75 billion, or 27 per cent higher, than December 2012.
> ...




http://www.news.com.au/finance/busi...nding-are-strong/story-e6frfkur-1226823632554

And investors ruled the landscape at 40% leaving the FHB Brigade to pick up 9%. Hang on a minute ... that means the remaining 51% are purchasing a PPOR !!!! Looks like the RBA policy is working of the transition from mining to housing.


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## sydboy007 (11 February 2014)

trainspotter said:


> Now back to 'affordability' ... If the picture you have painted is based on previous history then for the love of God why do we even bother? Let's all get off this merry go round and cause chaos. People have got to live somewhere right? This is the system that is in place .... the same one from 30 years ago. Now to be very specific when I say this ... you do not have to buy a PPOR as your first home. Being one sided and not seeing opportunities in RE is to only look at one side of the equation. To only look at affordability you are mainly looking at the FHOB Brigade. They do not own the entire market in Australia ... and diminishing fast. Does this mean that a small percentile of the populace wont be able to buy a home. Damn straight it does. Same thing in the 80's as well.
> 
> Borrowing capacity is looking pretty swish for the next ten years at 6.77 per cent.  Stability in the market ? I would think so.




Why is shelter, a basic need, seen as an asset?

It's this that has caused the most harm at the individual level, and across the entire economy because it has made pretty much everything we do noncompetitive with pretty much every other country in the world since our rents have to be so high.

Why can't we emulate Texas and have high wage growth, high population growth, stable real shelter pricing??

For a country with so much land, it's disgusting that we've got ourselves into this situation.

Housing just hit $5T according to the ABS.  $5T of pretty unproductive "investment" that's drawn in hundreds of billions of dollars in foreign debt for no benefit.


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## Value Collector (11 February 2014)

sydboy007 said:


> 1, Why is shelter, a basic need, seen as an asset?
> 
> 
> 2, For a country with so much land, it's disgusting that we've got ourselves into this situation.
> ...




1, Why wouldn't it be an asset? an asset is defined as a "a useful or valuable thing or person"  Food is a basic need, are you saying we shouldn't consider farmland an asset, Water is a basic need, are you saying we shouldn't consider dams, desalination plants and water pipes assets.

2, Australia does have a lot of land, and the vast majority is very cheap, it's also desert. There is very cheap land and housing available, unfortunately if you are limiting your preferred location to where thousands of others also want to live you will have to out bid them, the fact that we have vast tracts of land that nobody wants will not lower the value of Sydney property.

3,  No benefit to housing???? you just described it as a basic need. which one is it, it is a basic need or does it have no benefit.


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## basilio (11 February 2014)

So how high can housing prices go in the capital cities?

I find it very hard to see how people will be able to finance the $500k plus  prices of most houses in Melbourne. Of course this figure is certainly on the low side side. The last time I looked at median house prices  for most suburbs there were only a few under $500k.

I'm particularly concerned with what will happen when the car industry closes in the next 2-3 years.  I can only see massive direct and indirect job losses and closures of  scores of factories that were part of the network of component suppliers. How will the tens of thousand of people affected manage to keep up payments ? 

http://www.reiv.com.au/en/Property-Research/Median-Prices/House-price-maps

http://www.reiv.com.au/Property-Research/Median-Prices/Market-History


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## Value Collector (11 February 2014)

basilio said:


> 1, So how high can housing prices go in the capital cities?
> 
> 2, I find it very hard to see how people will be able to finance the $500k plus  prices of most houses in Melbourne. Of course this figure is certainly on the low side side. The last time I looked at median house prices  for most suburbs there were only a few under $500k.
> 
> ...




1, Basically as high as the market can support, If the market can't support the price, the price will come back.

 But your question is how high can "Housing prices" go. That depends on what you define housing to be. If you consider "housing" to be 3 bedroom homes on 1/4acre blocks, then If the population continues to grow in the capital cities, and houses have to be demolished to make way for apartments, the cost of those houses will rise as the developers out bid people who want to occupy the houses. Houses in the suburbs where there is no development will then rise as the demand for the remaining house block rises. But the price of "housing" if you consider it to be any dwelling such as apartments etc, should be somewhat stable inline with average wages. But where as in the 1970's the average housing unit might have been a 3bed house, now it might be an apartment or townhouse, and if you try to go for a house you will find it more difficult.

2, As I pointed out above, as a population grows, land will become more expensive and the people in the lower income brackets will have to live in higher density styles of housing,


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## Mrmagoo (11 February 2014)

I think it is funny that boomers use retiring at 40 as an example of how hard they had it.

- - - Updated - - -



sydboy007 said:


> Why is shelter, a basic need, seen as an asset?
> 
> It's this that has caused the most harm at the individual level, and across the entire economy because it has made pretty much everything we do noncompetitive with pretty much every other country in the world since our rents have to be so high.
> 
> ...




Not only that, they make renting non-viable through facist treatment of tenants.

Then the system of inequality throug fiat money means that there is always someone willing to pay the price.

The rest of the economy as we're already seeing, fails.


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## sptrawler (11 February 2014)

Value Collector said:


> 1, Basically as high as the market can support, If the market can't support the price, the price will come back.
> 
> But your question is how high can "Housing prices" go. That depends on what you define housing to be. If you consider "housing" to be 3 bedroom homes on 1/4acre blocks, then If the population continues to grow in the capital cities, and houses have to be demolished to make way for apartments, the cost of those houses will rise as the developers out bid people who want to occupy the houses. Houses in the suburbs where there is no development will then rise as the demand for the remaining house block rises. But the price of "housing" if you consider it to be any dwelling such as apartments etc, should be somewhat stable inline with average wages. But where as in the 1970's the average housing unit might have been a 3bed house, now it might be an apartment or townhouse, and if you try to go for a house you will find it more difficult.
> 
> 2, As I pointed out above, as a population grows, land will become more expensive and the people in the lower income brackets will have to live in higher density styles of housing,




The whole housing situation has really entered uncharted water, it will be interesting to see if it can be supported.
As has been said already the FHB are pretty well frozen out, the baby boomers are entering retirement age so their activity should reduce.
That leaves cashed up overseas buyers, who don't need loans.


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## Smurf1976 (11 February 2014)

Value Collector said:


> Australia does have a lot of land, and the vast majority is very cheap, it's also desert. There is very cheap land and housing available, unfortunately if you are limiting your preferred location to where thousands of others also want to live you will have to out bid them, the fact that we have vast tracts of land that nobody wants will not lower the value of Sydney property.




Agreed in the case if the inner to middle parts of Sydney, Melbourne etc.

But how does one explain paying big $ for a house in Tasmania or a regional area in another state that is surrounded by undeveloped land within walking distance of the town center? The inherent value of that land is pretty close to zero, the only real value being in the house itself plus services (power, water etc) connected and the road that goes to it. The land itself isn't inherently valuable if it's surrounded by plenty more land that isn't being used and which isn't likely to be used for the foreseeable future.

But then we have various council laws and developers buying up land which they sit on, both of which create an artificial shortage of land.


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## Mrmagoo (11 February 2014)

Smurf1976 said:


> Agreed in the case if the inner to middle parts of Sydney, Melbourne etc.
> 
> But how does one explain paying big $ for a house in Tasmania or a regional area in another state that is surrounded by undeveloped land within walking distance of the town center? The inherent value of that land is pretty close to zero, the only real value being in the house itself plus services (power, water etc) connected and the road that goes to it. The land itself isn't inherently valuable if it's surrounded by plenty more land that isn't being used and which isn't likely to be used for the foreseeable future.
> 
> But then we have various council laws and developers buying up land which they sit on, both of which create an artificial shortage of land.




or 450k for a house in the outer burbs which used to be the middle of nowhere.


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## Value Collector (11 February 2014)

Smurf1976 said:


> But how does one explain paying big $ for a house in Tasmania or a regional area in another state that is surrounded by undeveloped land within walking distance of the town center?




I am not familiar with Tasmania, But It would be supply and demand.

Just because there is seemingly empty land doesn't mean it will reduce the price of established residential house and land. there are other factors such as zoning, land owners not wanting to sell, no willing developers etc etc.

But if the price of established estates is high, and the available land zoning allows it, and the land owner is willing to sell, then a developer will buy the land, put in roads and sell the blocks for a profit putting downward pressure on prices.


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## Value Collector (11 February 2014)

Mrmagoo said:


> or 450k for a house in the outer burbs which* used to *be the middle of nowhere.




"Used to", that's the key to the answer.

Sydney CBD "used to" be in the middle of no where. But now it's not. The population has grown exponentially in the last 200 years.

It's all supply and demand.


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## sptrawler (11 February 2014)

Value Collector said:


> "Used to", that's the key to the answer.
> 
> Sydney CBD "used to" be in the middle of no where. But now it's not. The population has grown exponentially in the last 200 years.
> 
> It's all supply and demand.




Just an off the cuff question, but what do you feel is a reasonable amount to borrow?

I know it is relative to the value of the property, but I'm just wondering what is a 'reasonable ammount' to borrow, I think I'm out of touch.


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## sptrawler (11 February 2014)

Smurf1976 said:


> Agreed in the case if the inner to middle parts of Sydney, Melbourne etc.
> 
> But how does one explain paying big $ for a house in Tasmania or a regional area in another state that is surrounded by undeveloped land within walking distance of the town center? The inherent value of that land is pretty close to zero, the only real value being in the house itself plus services (power, water etc) connected and the road that goes to it. The land itself isn't inherently valuable if it's surrounded by plenty more land that isn't being used and which isn't likely to be used for the foreseeable future.
> 
> But then we have various council laws and developers buying up land which they sit on, both of which create an artificial shortage of land.




Smurph, I can only talk for my street, suburb about 10k's out of Perth.
The prices have gone from $600k to $800k, in the last two years, they are knock over houses on duplex blocks.
It isn't Aussies buying them.

This headline shows how stupid it is.

http://www.theage.com.au/business/property/australian-homes-worth-5tn-20140211-32eyq.html

House values have gone up $184billion in three months, what a joke.


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## sptrawler (11 February 2014)

trainspotter said:


> And investors ruled the landscape at 40% leaving the FHB Brigade to pick up 9%. Hang on a minute ... that means the remaining 51% are purchasing a PPOR !!!! Looks like the RBA policy is working of the transition from mining to housing.




EEK mining investment that returns a dividend on investment, to housing that produces nothing after it's built.

Best of luck with that theory.
All it does is stimulate jobs for a short term, saturation point kicks in.

Then what?

The only 'true' statement I've heard is these things take a long time to unfold.


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## Value Collector (11 February 2014)

sptrawler said:


> Just an off the cuff question, but what do you feel is a reasonable amount to borrow?
> 
> I know it is relative to the value of the property, but I'm just wondering what is a 'reasonable ammount' to borrow, I think I'm out of touch.




Well thats going to come back to your personal situation, but generally the less you borrow the better, and if you have to borrow have a plan to clear that debt asap. But the most important thing is to not over commit yourself.


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## Value Collector (11 February 2014)

sptrawler said:


> EEK mining investment that returns a dividend on investment, to housing that produces nothing after it's built.
> 
> .




What do you mean housing returns nothing after its built, it generates a weekly rental return.


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## sptrawler (12 February 2014)

Value Collector said:


> What do you mean housing returns nothing after its built, it generates a weekly rental return.




What I was meaning was mining investment results in production, we sell a product offshore.
While a house is being built it generates productive debt i.e bricks, cement, tiles etc which support industry that employs people and pays wages.

When the house is completed, it sits there and sucks rent out of someone, it doesn't promote any more jobs growth.

Let's say that house is carrying $400,000 debt and is costing someone $400/wk to rent it, what is it producing?

Now let's say a factory unit is carrying $400,000 debt, but employs six people, that get paid $40k/yr each and they each can afford to buy their own house. Big difference.


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## Mrmagoo (12 February 2014)

Value Collector said:


> "Used to", that's the key to the answer.
> 
> Sydney CBD "used to" be in the middle of no where. But now it's not. The population has grown exponentially in the last 200 years.
> 
> It's all supply and demand.




Didn't even used to be part of Sydney. Middle of nowhere to me means something different to an inner city yuppy.

In europe you can live happily on 20k euro a year. In Australia, you mgiht be able to pay the rent with that.

That is why we're losing jobs.

It will only get worse.

- - - Updated - - -

The fact is the Australia I knew and loved is gone. The leaving of Holden and Ford is a symbolic death kneel. What rules Australia now is rampant inequality and cronyism. Those who have it all and those who can't even afford the basics. It is not about had work, but about getting access to fiat currency.


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## trainspotter (12 February 2014)

A baby boomer is a person who was born during the demographic Post–World War II baby boom between the years 1946 and 1964. Ummm not even close .... bit younger than that. Instead of whinging how hard you have it why don't you get off your ar*e and do something about it. Oh but you have it so haaaaaard now don't you !

Mrmagoo - Go and live in Europe, I prefer Monte Estoril in Portugal myself or Tarifa in Spain. You can get accosted by 20 homeless beggars asking for 1 euro. And here you are advocating how Australia is heading the same way. 

sptrawler - When a house is finished there are things that require maintenance_* ie*_ plumbing, painting, electrical ad infinitum. The house is now on the grid _*ie *_water, electricity, sewer ad infinitum. These services believe it or not actually employ people to keep the infrastructure running. The rent money being "sucked" out of someone is being paid back to a bank who EMPLOYS people or if there is no bank involved the money goes to an investor who will use that money to BUILD or BUY some more houses. 

The system we have is here to stay. Get used to it or LEARN how to take advantage of it to make money 

$378,500 house and land package in Ipswich http://www.realestate.com.au/property-house-qld-ipswich-115944659 ..... Yep it's all too hard now isn't it !


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## Value Collector (12 February 2014)

Mrmagoo said:


> 1, Didn't even used to be part of Sydney. Middle of nowhere to me means something different to an inner city yuppy.
> 
> 2, In europe you can live happily on 20k euro a year. In Australia, you mgiht be able to pay the rent with that.
> 
> .




1, Sydney "used to" not even be part of the industrialised world, Things change, 

2,  have you seen the unemployment rates in some European countries?


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## Value Collector (12 February 2014)

sptrawler said:


> What I was meaning was mining investment results in production, we sell a product offshore.
> While a house is being built it generates productive debt i.e bricks, cement, tiles etc which support industry that employs people and pays wages.
> 
> When the house is completed, it sits there and sucks rent out of someone, it doesn't promote any more jobs growth.
> ...




Remove all the housing from the country and see how productive it is, Houses provide shelter which as you pointed out is a basic need for life, that seems pretty productive to me.

One of the first thing mining companies build is accommodation for workers without it, you wouldn't have productive workers.

A house is not sucking rent from someone any more than any other product or service that they pay for,


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## Value Collector (12 February 2014)

sptrawler said:


> Let's say that house is carrying $400,000 debt and is costing someone $400/wk to rent it, what is it producing?
> 
> Now let's say a factory unit is carrying $400,000 debt, but employs six people, that get paid $40k/yr each and they each can afford to buy their own house. Big difference.




The house is producing a living space for a worker to live in, that factory that employs 6 people will have trouble finding reliable workers if there is no accommodation in the area for them to rent or buy. So how is taking away property investment going to be good for the factory or the workers.

Not to mention the factory itself is probably a rented property investment.


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## sydboy007 (12 February 2014)

Value Collector said:


> 1, Why wouldn't it be an asset? an asset is defined as a "a useful or valuable thing or person"  Food is a basic need, are you saying we shouldn't consider farmland an asset, Water is a basic need, are you saying we shouldn't consider dams, desalination plants and water pipes assets.
> 
> We've caused house prices to be too high due to speculation.  The tax system in this country encourages over "investment" in housing compared to more productive endeavors.  You seem to think overpriced housing is not a bad thing.  It's a productivity killer and burdens the country with hundreds of billions of dollars in excess debt.
> 
> ...




* I see no benefit in that we are "investing" are far larger amount of scarce capital in non productive housing.  It does provide shelter, but we're doing it at significantly higher costs than most countries.


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## sydboy007 (12 February 2014)

Value Collector said:


> 1, Why wouldn't it be an asset? an asset is defined as a "a useful or valuable thing or person"  Food is a basic need, are you saying we shouldn't consider farmland an asset, Water is a basic need, are you saying we shouldn't consider dams, desalination plants and water pipes assets.




We've caused house prices to be too high due to speculation.  The tax system in this country encourages over "investment" in housing compared to more productive endeavors.  You seem to think overpriced housing is not a bad thing.  It's a productivity killer and burdens the country with hundreds of billions of dollars in excess debt.



Value Collector said:


> 2, Australia does have a lot of land, and the vast majority is very cheap, it's also desert. There is very cheap land and housing available, unfortunately if you are limiting your preferred location to where thousands of others also want to live you will have to out bid them, the fact that we have vast tracts of land that nobody wants will not lower the value of Sydney property.




* There's plenty of land around the major cities.  Zoning laws and NIMBYs and BANANAs have pretty much enforced UGBs while fighting higher density housing.  Limiting council revenues makes them reluctant to develop land without the ridiculously high service charges, which once again increases mortgage debt.



Value Collector said:


> 3,  No benefit to housing???? you just described it as a basic need. which one is it, it is a basic need or does it have no benefit.




* I see no benefit in that we are "investing" are far larger amount of scarce capital in non productive housing.  It does provide shelter, but we're doing it at significantly higher costs than most countries.  It doesn't bring in export income, but it does cause a blowout in our forgien debt since over 40% of mortgage debt is foreign sourced.


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## trainspotter (12 February 2014)

According to some this is where we are going to end up


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## trainspotter (12 February 2014)

Did someone state that our cost of building is too high compared to Europe?



> Europe has five of the top 10 most expensive construction markets with Switzerland, Denmark, Sweden, France and Belgium all featuring in the rankings compiled by global built asset consultancy EC Harris.
> Hong Kong is the most expensive, followed by Switzerland, Denmark, Sweden, Macau, *Australia*, Japan, France, Singapore and Belgium. The cheapest locations to build are India, Indonesia and Vietnam
> 
> The report says that as Europe continues to struggle against the headwinds of Eurozone woes, deficit reduction and challenging export markets this represents a major competitive challenge for European markets.
> ...




http://www.propertywire.com/news/global-news/global-building-costs-study-201308278166.html



> By contrast Malaysia, Indonesia and the Philippines have very ambitious investment for economic diversification and social infrastructure programmes and are likely to *see significant growth in construction* over the next few years.




Which basically means that the construction costs are going to go up in these countries as well.

Sooooooooo there goes that theory !


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## Value Collector (12 February 2014)

sydboy007 said:


> * I see no benefit in that we are "investing" are far larger amount of scarce capital in non productive housing.  It does provide shelter, but we're doing it at significantly higher costs than most countries.




That's where we will have to disagree, you see no benefit in providing shelter, I see a great benefit in homes that provide shelter, and the average Aussie home provides more than just shelter, Compare what the average family in Tokyo live in to what the average Aussie family live in, the Aussie family home will have a much larger land content, more living and entertaining spaces you have to compare apples with apples.


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## satanoperca (12 February 2014)

Malaysia uses imported labour from Indo to keep their building costs down, millions of workers, many illegals.

Maybe we need to start doing the same thing, don't think the unions would mind.

Interesting report, look who wrote it. Love to see their methodology behind their figures.

Cheers


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## Value Collector (12 February 2014)

sydboy007 said:


> 1,We've caused house prices to be too high due to speculation.  The tax system in this country encourages over "investment" in housing compared to more productive endeavors.
> 
> 2, You seem to think overpriced housing is not a bad thing.  It's a productivity killer and burdens the country with hundreds of billions of dollars in excess debt.
> 
> ...




1, Any rise caused by speculation will be corrected in time. Which parts of the tax system " encourages over "investment" in housing compared to more productive endeavors"?

2, the only ultimate fix for overpriced things is greater supply, If you took investors out of the market you would have less supply.

3,  I wouldn't say there is plenty of land, But red tape certainly does limit potential supply

4, It does help provide production, because as I said before homeless workers would not be productive.


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## Value Collector (12 February 2014)

trainspotter said:


> View attachment 56779
> 
> 
> According to some this is where we are going to end up




lol, apparently that's how sydboy wants to house our mine and factory workers, It's just so inefficient to use capital to build houses they say.


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## cynic (12 February 2014)

There's nothing wrong with cardboard boxes.

All the millions of streetpeople worldwide simply cannot be wrong!

However, do please ensure that you only avail yourselves of boxes constructed from premium grade wax sealed cardboard! (We wouldn't want heavy rainfall to trigger the next housing collapse!)


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## trainspotter (12 February 2014)

One day son all of this will be yours ...........


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## trainspotter (12 February 2014)

But what is this? Building houses doesn't assist the economy ....



> SHARES in Australia's largest building materials company Boral have shot up to a three-year high after a 73 per cent jump in half year profit, excluding significant items.
> The company lifted underlying net profit to $90 million on the back of better *housing and road construction markets*, cost cutting and dry weather conditions.
> However, the company on Wednesday also warned of a slowdown in activity and earnings in the second half.
> Boral recorded a net loss of $26 million for the half, but that includes $117 million in one-off accounting charges related to its Gypsum plasterboard joint venture, due to be completed on February 28, that it says will be offset by gains in the second half.
> ...




http://www.news.com.au/finance/busi...ost-boral-profit/story-e6frfkur-1226824742334

But but but if we build a house we need to have roads and sewer and stuff that is not good for the economy 

Let alone the councils required to maintain the ......... oh never mind. Start stocking up on cardboard boxes and tinned food.


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## Mrmagoo (12 February 2014)

Value Collector said:


> lol, apparently that's how sydboy wants to house our mine and factory workers, It's just so inefficient to use capital to build houses they say.




Building houses is bebeficial. Problem is they dont build they speculate on existing stock.


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## trainspotter (12 February 2014)

Mrmagoo said:


> Building houses is bebeficial. Problem is they dont build they speculate on existing stock.




Ermmmmmmmmm nope.

*Building approvals retain gains*




> Separate Bureau of Statistics figures show the rise in real estate values and fall in interest rates last year is continuing to feed through into increased residential building activity.
> 
> The ABS building approvals numbers fell 2.9 per cent in December, with 16,141 homes cleared for construction by local governments.
> 
> ...




http://www.abc.net.au/news/2014-02-03/home-prices-surge-again-in-january/5233942


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## Value Collector (12 February 2014)

Mrmagoo said:


> Building houses is bebeficial. Problem is they dont build they speculate on existing stock.




Investors Build, renovate and develop properties. Over 90% of apartments sold off the plan go to investors.

But yes, a lot of investors buy and hold existing real estate, but that's good, without them buying and holding there wouldn't be properties available to rent, and there would be less developments going ahead if developers were not confident that enough buyers existed to buy the finished product.


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## Trembling Hand (12 February 2014)

Value Collector said:


> But yes, a lot of investors buy and hold existing real estate, but that's good, without them buying and holding there wouldn't be properties available to rent, and there would be less developments going ahead if developers were not confident that enough buyers existed to buy the finished product.




Nah thats not true. Investors out bid the bottom half of would be owners forcing up prices with very favourable tax breaks. If they didn't do that there would be a lot more owner occupies.


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## Value Collector (12 February 2014)

Trembling Hand said:


> Nah thats not true. Investors out bid the bottom half of would be owners forcing up prices with very favourable tax breaks. If they didn't do that there would be a lot more owner occupies.




I don't think that is true, I think the amount of extra investment in new stock that investors bring both directly and indirectly would more than offset the properties that they out bid on. I would actually think that owner occupiers would tend to out bid investors.

What are these favourable tax breaks your talking about?


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## Beej (12 February 2014)

Value Collector said:


> What do you mean housing returns nothing after its built, it generates a weekly rental return.




Or more generically, housing once built produces "accommodation"/"shelter", in many different grades/levels (from basic to luxurious, from poorly to well located etc) - something of real, and relative value, required by just about everyone. And this is produced for 50-100 years.

When you buy a house, you are buying the future provision of accommodation. When you rent you are renting the accomodation for a specified period of time for a specified price. In either case the property "produces" the accommodation.


----------



## Mrmagoo (12 February 2014)

Value Collector said:


> I don't think that is true, I think the amount of extra investment in new stock that investors bring both directly and indirectly would more than offset the properties that they out bid on. I would actually think that owner occupiers would tend to out bid investors.
> 
> What are these favourable tax breaks your talking about?




Investors don't produce new stock. Infact they campaign for the opposite. If new stock were invested in, then the price would be falling, not increasing.


----------



## Mrmagoo (12 February 2014)

trainspotter said:


> Ermmmmmmmmm nope.
> 
> *Building approvals retain gains*
> 
> ...




Building approvals are growing. Great, has nothing to do with investors who are proven to invest in existing stock.


----------



## Mrmagoo (12 February 2014)

Value Collector said:


> Investors Build, renovate and develop properties. Over 90% of apartments sold off the plan go to investors.
> 
> But yes, a lot of investors buy and hold existing real estate, but that's good, without them buying and holding there wouldn't be properties available to rent, and there would be less developments going ahead if developers were not confident that enough buyers existed to buy the finished product.




 They don't build anything at the very very best they buy something someone else built. i.e existing stock.

The only ones producing value are the building companies. Investors as we talk about they do jack. They just try to make a profit by speculating on existing dwellings.


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## beachlife (12 February 2014)

Trembling Hand said:


> very favourable tax breaks




In my case, the tax breaks over the years were insignificant when compared to the capital gains tax that I paid when I sold.  They are no more favaourable that those available to any other form of business that claim their expenses and depreciate their assets.

If investing in residential real estate and claiming tax breaks for negative cash flow was so good, the super rich would own entire suburbs.  There's probably a good reason why they dont.

Easy credit, a mining driven wages boom, and real estate agents drove the gains, not tax breaks.

BTW Mr Magoo, some of mine were ones I built and all were sold to owner occupiers.


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## trainspotter (12 February 2014)

Mrmagoo said:


> Building approvals are growing. Great, has nothing to do with investors who are proven to invest in existing stock.




Got a link to evidence this hard hitting statement? I have never bought established unless I could knock it down to build more units on the property. Depreciation schedule during course of construction, lower stamp duty as it is only applicable to the land value and not the building contract value, lower interest component as the money is drawn down and the bank pays the builder in installments (builder becomes the bank ... gotta love it) also product is brand new with manufacturers and builders guarantee/warranties to name a few reasons I prefer to build rather than buy established.

I think we are getting confused between a property developer and a mummy and daddy investor who buys one house for negative gearing/cash flow positive purposes ?


----------



## Mrmagoo (12 February 2014)

trainspotter said:


> Got a link to evidence this hard hitting statement? I have never bought established unless I could knock it down to build more units on the property. Depreciation schedule during course of construction, lower stamp duty as it is only applicable to the land value and not the building contract value, lower interest component as the money is drawn down and the bank pays the builder in installments (builder becomes the bank ... gotta love it) also product is brand new with manufacturers and builders guarantee/warranties to name a few reasons I prefer to build rather than buy established.
> 
> I think we are getting confused between a property developer and a mummy and daddy investor who buys one house for negative gearing/cash flow positive purposes ?




Perhaps I am not making stuff up at all and you're just talking about something different to justify your obviously flawed position.


----------



## Smurf1976 (12 February 2014)

Beej said:


> When you buy a house, you are buying the future provision of accommodation. When you rent you are renting the accomodation for a specified period of time for a specified price. In either case the property "produces" the accommodation.




Can't argue with that. A house produces accommodation just as a farm produces food, a train "produces" the movement of freight or passengers and a power station produces electricity. They're all somewhat capital-intensive in nature, with a long operating life (50 years - a few centuries for a house, 30 - 100+ years for a power station, not sure how long a train lasts but it's many years) and produce something of value once built. 

At the risk of stating the obvious, there's really two issues here. One is the investment return, either capital or income, on housing and that's relatively straightforward at least in terms of crunching the numbers.

The other is a social issue relating to the cost of accommodation. People need accommodation just as they need food, passenger transport (by whatever means) and they need power. If the cost of something essential to normal living, especially something that commonly takes a substantial portion of household income, rises significantly faster than wage growth then that has a lot of social implications which are generally unpleasant for those affected. 

Whilst an investor might be happy about a doubling of the price of houses, and an energy company might be happy to see the cost of power double, consumers certainly won't be happy and many will have their lives adversely impacted by such an increase. That is very different to an increase in the cost of, say, overseas travel or soap. Overseas travel is optional for the vast majority of people, if you can't afford it then you simply don't go, whilst soap is a very minor expense such that even a 10 fold increase in the price of soap wouldn't really hurt too many people to any great extent. But if something like housing, food, transport, power etc increases in cost then that's a definite problem for many people - it's a social issue as well as an economic one.

I won't say which one (for the record I'm not referring to Momentum), but there's an electricity and gas retailer that has about 50% of their entire customer base not paying bills on time and a significant number of those are on long term payment plans. That says rather a lot about the overall state of household cash flow I think - many people would seem to not have much free cash available.


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## beachlife (12 February 2014)

Back to the topic of where prices are headed, an investor/developer bought the house next to my mums house, knocked it over and built 2 new ones.  They lost around $200k.  One less investor in the market now and proof that from a development perspective, the suburb is over priced.  The entire suburb has been re-zoned but the numbers dont work, so nothing to spur future growth, and if growth stops, negative geared mums and dads will eventually be told by their accountant to sell their bad investment.  Add to that job losses that will force some workers to quit their negative geared investments and the downward spiral takes off.  Just ask someone from Ireland how fast that can happen.  What we have in the market place now is the equivalent of the famous shoe shine boy.


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## DB008 (12 February 2014)

sptrawler said:


> When the house is completed, it sits there and sucks rent out of someone, it doesn't promote any more jobs growth.




What about on-going costs for upkeep and value adding?

Paint (inside/outside)
Air-con/hot water (units and labor for someone to put it in)
Light(s)/Lighting
Timber/Wood (floor/balcony)
Gardening (soil/plants and tools/equipment)
etc... 
etc...

Surely some of the things listed above is made here??? (I hope)


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## trainspotter (12 February 2014)

Mrmagoo said:


> Perhaps I am not making stuff up at all and you're just talking about something different to justify your obviously flawed position.




Got any proof to back up your statements? 40% of all mortgages in Australia are taken up by "investors" as I evidenced a few posts ago with links to the ABS etc etc. Can you prove whereby you rationalise that "investors" only buy established? My obviously flawed position has had it's interest piqued.

Property developers actually BUILD something. Surely out of this 40% of "investors" obtaining finance from said banks a portion of that must belong to them?

BTW the banks are none too friendly to lend towards said property developers. Currently looking at 25% of on completion valuation of land component alone. 14 blocks @ 120k each x 25% = 420k loan. Not quite enough to develop as costs alone are more than this prior to even adding in overheads, contingencies and profit. Therefore the property developer has to chuck in a fair bit of his own money for some skin in the game to make it realistic and or viable.

The problem for Ireland was that government finances had become too dependent on property taxes – both capital gains taxes and stamp duties. In 1997, Ireland’s government cut the capital gains tax rate from 40% to 20% and extended property tax concessions, which helped fuel property speculation. In a nutshell, Ireland’s planning system was ineffective in mitigating price rises through easy credit and speculation, (banks were lending 100% LVR's) since the new housing was predominantly built too late in the process and only where they were permitted, rather than where the market demand was. The end result is a large number of empty estates of unwanted housing in remote locations far from amenities or employment, huge developer and bank losses.

SO the banks were lending 100% of valuation to punters whilst the big greedy property developers smashed out poor quality homes in areas where no one wanted to buy and funded by German banks who were lending at 3%. Gee that sounds familiar ... Portugal, Spain anyone?

As soon as Australia shows any sign of inflation the old handbrake of interest rate rises from the RBA rears it's ugly head ...... yet again. Not that hard to understand really? March 2011 was our bottom and November 2016 will be the downhill run. All aboard 

Will property prices fall ? You betcha ..... in CERTAIN areas. Mortgage stress I think they call it.


----------



## Trembling Hand (12 February 2014)

beachlife said:


> They are no more favaourable that those available to any other form of business that claim their expenses and depreciate their assets.




Not against PAYG earnings they don't. Any Tax breaks should be isolated to the assets or group of assets. That would be more likely to ensure investment decisions made on the asset rather than a government backed winner.


----------



## sydboy007 (12 February 2014)

Value Collector said:


> That's where we will have to disagree, you see no benefit in providing shelter, I see a great benefit in homes that provide shelter, and the average Aussie home provides more than just shelter, Compare what the average family in Tokyo live in to what the average Aussie family live in, the Aussie family home will have a much larger land content, more living and entertaining spaces you have to compare apples with apples.




You're definitely NOT comparing apples with apples.  Japan has a population of 127 million people in a tad under 378M square KM.  Land scarcity in Japan is a far bigger issue than Australia, though with years of negative population growth it's becoming less of an issue as time goes by.  The greater Tokyo metropolitan area has more people than the east coast of Australia!

We should be able to have affordable housing, but we don't.  Why is our housing so expensive?  It's not totally due to having some of the largest houses in the world, because you can buy similar housing stock in much ofthe USA for significantly cheaper prices.  Why is NG available on already constructed housing?  It doesn't increase the available housing stock, and over 90% of "investors" are buying established housing.

Huge mortgages to buy shelter is not good for the community and leaves the economy far more vulnerable to shocks. Huge mortgages lead to higher rents, also not good for society or the economy.  It's a property Quango designed around restrictive zoning laws that encourage land banking by developers.  Texas has a population greater than Australia - 25.6M, faster pop growth than Australia - something like 360K+ a year, higher income growth than Australia, and the only thing we beat them in is house price growth.  Dallas has a median price of just $244K (pop 1.22M), Houston $188K (2.14M), Forthworth $166K (pop 760K), San Antonio $196K (pop 1.3M).  All decent sized cities with very affordable housing compared to pretty much any Australian city.

We have 1.44M Aussies out of work, another 1.105M are underemployed.  Those stats do not seem supportive of continued above CPI growth for housing, let alone rental growth to feed the NG market, especially as unemployment is creeping up and underemployment will be increasing even faster.

The below graph is scary, especially considering mortgage interest rates are the lowest in decades.  It's a sad reflection on Australian society that it's now considered smart for a first home buyer to buy an investment property rather than their own home as the entry into the property market.


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## sydboy007 (12 February 2014)

Trembling Hand said:


> Not against PAYG earnings they don't. Any Tax breaks should be isolated to the assets or group of assets. That would be more likely to ensure investment decisions made on the asset rather than a government backed winner.






Quarantining any losses to add to the capital base so you pay less CGT on sale would help to ensure a more economic focus on investing in housing rather than seeing it as a giant tax lurk with the hope of making a capital gain greater than your losses.

I've yet to have an economically rational reason for why above CPI and above income growth house inflation is good for society or the economy.


----------



## sptrawler (12 February 2014)

sydboy007 said:


> I've yet to have an economically rational reason for why above CPI and above income growth house inflation is good for society or the economy.




There is nothing more compliant, than workers, scared to death and in debt to the eye balls.


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## Value Collector (12 February 2014)

Mrmagoo said:


> Investors don't produce new stock. Infact they campaign for the opposite. If new stock were invested in, then the price would be falling, not increasing.




Who is the largest buyers the apartments off the plan which allows developments to happen,... Investors

Who buys a vacant horse paddock and carves it up into a new estate,... Investors

who Buys an old house on a quarter arce block and builds a duplex on it,... Investors

I myself bought any investment property and built a decent flat out the back, creating new stock and a good cash flow stream in the process.


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## Value Collector (12 February 2014)

Mrmagoo said:


> Building approvals are growing. Great, has nothing to do with investors who are proven to invest in existing stock.




That's just simply untrue, investors invest across the board, new old, off the plan everything.

Even if it were true that investors only ever buy new stock, the fact that they are buying it allows developers to go and build more.


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## Value Collector (12 February 2014)

Mrmagoo said:


> They don't build anything at the very very best they buy something someone else built. i.e existing stock.
> 
> The only ones producing value are the building companies. Investors as we talk about they do jack. They just try to make a profit by speculating on existing dwellings.




So how many houses can a builder build if he has no one buying them or nobody paying him to build?


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## beachlife (13 February 2014)

Trembling Hand said:


> Not against PAYG earnings they don't. Any Tax breaks should be isolated to the assets or group of assets. That would be more likely to ensure investment decisions made on the asset rather than a government backed winner.




In some cases sole traders and partnerships can claim a loss against other income. From the ATO

_If you're a sole trader or a partner in a partnership, you may be able to claim business losses by offsetting them against other income - for example, income you earn from salary or wages_

Also once the property becomes positive the investor has to add the profit to the payg income and effectively pay tax in the highest bracket the wages put them in, unlike companies that get the very favourable reduced tax rate.

Again if the tax breaks were so good the super rich would own entire suburbs.  They dont.


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## sydboy007 (13 February 2014)

beachlife said:


> Also once the property becomes positive the investor has to add the profit to the payg income and effectively pay tax in the highest bracket the wages put them in, unlike companies that get the very favourable reduced tax rate.




Since 2000 residential rental properties have in aggregate lost money EVERY YEAR.  Strange how halving the CGT on assets held over 12 months correspond with this.



beachlife said:


> Again if the tax breaks were so good the super rich would own entire suburbs.  They dont.




Notice how the level of investment property ownership really takes off for those on 90K or more a year ie the top 10% by income, so while the rich may not own entire suburbs, they are the ones most likely to own multiple properties

The rich do have a higher level of properties that are positively geared, but they are also likely to have held an investment property for a longer period.

With todays jumbo mortgages I'd say it takes at least 15 years till you would break even and start to pay any taxes on the rental income.  Considering roughly 40% of IP loans are I/O it's conceivable that the property will never break even, or not until any non deductible debt has been repaid.

For the roughly $60B in 2013 $$ for NG losses, I'd argue the Govt would have been able to build a LOT of public housing at much cheaper prices.  Might have kept the speculators at bay, and FHBs would be able to buy a reasonably priced property.


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## Value Collector (13 February 2014)

sydboy007 said:


> 1, Strange how halving the CGT on assets held over 12 months correspond with this.
> 
> 
> 
> ...




1, the negative gearing and 50% CGT discount is no different whether you were investing in shares or property, so I can't see your point. Don't you think shareholders claim any interest they pay or losses they make against other income?

2, the ownership of all investments goes up for those with high incomes, 

3, One mans loss in another mans profit, the government gets its tax no matter what, If a property investor pays less tax because he paid interest that year, then the guy he paid the interest to will make a larger profit and pay extra tax.


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## trainspotter (13 February 2014)

sydboy007 said:


> For the roughly $60B in 2013 $$ for NG losses, I'd argue the Govt would have been able to build a LOT of public housing at much cheaper prices.  Might have kept the speculators at bay, and FHBs would be able to buy a reasonably priced property.




Why does the government have to build houses for every body? Why would it be cheaper for the government to build houses when they subcontract them out to private construction companies to build them anyways? Why would FHB's suddenly rush in to buy these homes? The prices would sure drop cause the place would resemble a ghetto. 

Everyone is whinging that the prices are too dear ..... boo hoo ..... Tell me what is wrong with this place?

http://www.realestate.com.au/property-house-qld-slacks+creek-109012126

Naaahhhh ...... why bother ...... I am getting a good stockpile of cardboard boxes together and am going to start building a block of flats.


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## Value Collector (13 February 2014)

trainspotter said:


> Why does the government have to build houses for every body? Why would it be cheaper for the government to build houses when they subcontract them out to private construction companies to build them anyways? Why would FHB's suddenly rush in to buy these homes? The prices would sure drop cause the place would resemble a ghetto.
> 
> Everyone is whinging that the prices are too dear ..... boo hoo ..... Tell me what is wrong with this place?
> 
> ...




yeah, look at what happened when the government got involved in the insulation business.


----------



## Klogg (13 February 2014)

sydboy007 said:


> For the roughly $60B in 2013 $$ for NG losses, I'd argue the Govt would have been able to build a LOT of public housing at much cheaper prices.  Might have kept the speculators at bay, and FHBs would be able to buy a reasonably priced property.




Forget spending any money at all... Just stop restricting the supply of land! ACT is a perfect example of this.
http://www.act.org.nz/?q=posts/artificial-restrictions-on-land-supply-behind-high-house-prices

Add to that the ridiculous amounts of red tape for planning and construction, the high cost of stamp duty, AND the incentive given to make an operating loss on investment properties (the $60B figure you mentioned) and you can easily find the cause.

The sad truth is the government, banks and majority of our economy are now dependent on high land prices... It either blows up (through too much leverage and high rates) or the status quo remains.


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## Value Collector (13 February 2014)

Klogg said:


> , AND the incentive given to make an operating loss on investment properties (the $60B figure you mentioned) and you can easily find the cause.




How is there an "Incentive" to lose money. People make it sound like the government are funding peoples losses, this is just untrue.


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## sydboy007 (13 February 2014)

Value Collector said:


> 1, the negative gearing and 50% CGT discount is no different whether you were investing in shares or property, so I can't see your point. Don't you think shareholders claim any interest they pay or losses they make against other income?




Yet prior to 2000 IPs made in aggregate only small surplus or negative income.  Don't you find it concerning that post 2000 the losses have at times been massive.  A rational market would not sustain losses of that magnitude.



Value Collector said:


> 2, the ownership of all investments goes up for those with high incomes,




The implication was that NG is not that big a thing for wealthy investors, yet the stats show they are the biggest beneficiaries of it.



Value Collector said:


> 3, One mans loss in another mans profit, the government gets its tax no matter what, If a property investor pays less tax because he paid interest that year, then the guy he paid the interest to will make a larger profit and pay extra tax.




Except that it causes house prices to be much higher than a rational market would be.  There is also considerable tax deferment, and because too many investors get blinded by the NG tax benefits, they fail to adequately look at the REAL total after tax return upon selling.  The newspapers are a calssic example of saying Mrs and Mrs Citizen bought their house in 1976 for just $15,000 and sold it for $450K in 2013.  Too many people see it as a $435K profit, never considering all the costs associated with the house, or the fact that inflation has eroded much of the gains.


----------



## sydboy007 (13 February 2014)

Value Collector said:


> How is there an "Incentive" to lose money. People make it sound like the government are funding peoples losses, this is just untrue.




Because that's how IPs are marketed by the industry.

Buy an IP and use negative gearing to lower the tax you pay.

Negative gearing by property investors reduced personal income tax revenue in Australia by $600 million in the 2001-02 tax year, $3.9 billion in 2004-05 and $13.2 billion in 2010-11.

So if you loose $8000 on your IP and that allows you to reduce your income tax by $3000 then isn't the Government subsidising your loses?  You are not bearing the full financial cost of the loss.

Plenty of property web sites have NG calculators to show you how much tax you'll save.


----------



## beachlife (13 February 2014)

Value Collector said:


> How is there an "Incentive" to lose money. People make it sound like the government are funding peoples losses, this is just untrue.




I hear the 'incentive' on the radio every day. Just about all of the sprukers market based on tax savings.  Which is probably why so many people get upset by it.  Save tax they spruke, what they dont add is but go home with less money in your pocket each week while you subsidise someone elses accomodation.



sydboy007 said:


> The implication was that NG is not that big a thing for wealthy investors, yet the stats show they are the biggest beneficiaries of it.




It depends on what you call wealthy.  I dont call a wage earner on $90k wealthy.  I dont see any people that hold 3 inv props motoring down the river in super yachts.  Most are working hard in their job trying to keep on top of the negative cash flow hoping that they dont lose their job next week.

Unemployment now at 10 year highs, that will trickle into the market.


----------



## sydboy007 (13 February 2014)

trainspotter said:


> Why does the government have to build houses for every body? Why would it be cheaper for the government to build houses when they subcontract them out to private construction companies to build them anyways? Why would FHB's suddenly rush in to buy these homes? The prices would sure drop cause the place would resemble a ghetto.
> 
> Everyone is whinging that the prices are too dear ..... boo hoo ..... Tell me what is wrong with this place?
> 
> ...




My point is that the argument for NG is that it encourages the building of rental properties.  It's not a free / costless option to the Government or society.

I'd argue that the Govt spending some $60B on public housing over the same period would have resulted in more NEW construction, since investors generally buy an EXISITING property 9 times out of 10.

Now if NG for only available on newly formed assets I could see it being usfule, but I don't see it has any benefit being available on exisiting assets.  Doesn't matter if housing / shares or any asset.

Imagine what $14B of public housing funding could have achieved in the 2010-11 year.


----------



## Value Collector (13 February 2014)

sydboy007 said:


> 1 ,Yet prior to 2000 IPs made in aggregate only small surplus or negative income.  Don't you find it concerning that post 2000 the losses have at times been massive.  A rational market would not sustain losses of that magnitude.
> 
> 
> 
> ...




1, the losses that other investors allow in their portfolio does not concern me, But don't you think there are many people with debt against companies paying 1% - 3% dividends while they pay 8% margin loan interest, don't you think they are negatively geared

2, they will be the biggest of everything, they will be the biggest holder of positively geared property also.

3, If anything, from my experience here, the real after tax return is ignored by people such as yourself. look at your example, your only counting the $435K capital gain, your ignoring the rental return, from 1984 onwards there property would have had a growing positive cash flow that dwarfed the $435K capital gain.

you see this kind of thinking on this site all the time, look at the gold thread, they compare the price of gold from 2000 till now to the price of a stock index over that period and say that gold beat the index, they for get to factor in the dividends the index compounded on the way.


----------



## sydboy007 (13 February 2014)

beachlife said:


> I hear the 'incentive' on the radio every day. Just about all of the sprukers market based on tax savings.  Which is probably why so many people get upset by it.  Save tax they spruke, what they dont add is but go home with less money in your pocket each week while you subsidise someone elses accomodation.




Very true, but NG is still costing the budget many billions.  If we're loking at efficiency for generating NEW CONSTRUCTION then I'd argue NG is a VERY EXPENSIVE way of achieving it.



beachlife said:


> It depends on what you call wealthy.  I dont call a wage earner on $90k wealthy.  I dont see any people that hold 3 inv props motoring down the river in super yachts.  Most are working hard in their job trying to keep on top of the negative cash flow hoping that they dont lose their job next week.




According to recent ABS figures a single income earner on 90K was better off than some 85% of income earners in 2010-11.  To me that makes you a wealthy income earner.  Last year a weekly pre tax income of 1343 put you in the 8th decile or higher income group.  Unless your definition of wealthy is the 1%, beating 15-20% of the population would appear to make you wealthy.



beachlife said:


> Unemployment now at 10 year highs, that will trickle into the market.




Yup, and yet investors are still out bidding up IPs, especially in SYD and MEL.  It's nearly a market of investors just flipping existing properties to each other at higher and higher prices.


----------



## Value Collector (13 February 2014)

sydboy007 said:


> So if you loose $8000 on your IP and that allows you to reduce your income tax by $3000 then isn't the Government subsidising your loses?  You are not bearing the full financial cost of the loss.
> 
> .




HAHAHA, what school of finance did you study at.

At best, you have to lose $1 to get a tax credit 45cents, If you think that's an incentive, you can send me $1000 every day of the week and all give you $450 back.

You are bearing the full financial cost of the loss. 

for example, 

You earn $200K for you day job as a lawyer, you own an IP which booked a $20,000 loss. You net reported earnings that year are $180,000 which you will pay tax on at your marginal rate.

That $20,000 loss is real, that money is gone, the government doesn't refund you any of that loss.

The government is in the business of taxing people based on their total profits, you can write off the loss from any genuine business venture against other income you earn, its the only fair way to do it.


----------



## sydboy007 (13 February 2014)

Value Collector said:


> 1, the losses that other investors allow in their portfolio does not concern me, But don't you think there are many people with debt against companies paying 1% - 3% dividends while they pay 8% margin loan interest, don't you think they are negatively geared




That's why I'd prefer to see NG available for only NEWLY created assets.  Then it is at least actively encouraging new investment.  How is it beneficial for NG to be available on existing assets?  All it does is increase asset price inflation.



Value Collector said:


> 2, they will be the biggest of everything, they will be the biggest holder of positively geared property also.




yes they are, yet the IP market has continued to make massive losses since 2000.



Value Collector said:


> 3, If anything, from my experience here, the real after tax return is ignored by people such as yourself. look at your example, your only counting the $435K capital gain, your ignoring the rental return, from 1984 onwards there property would have had a growing positive cash flow that dwarfed the $435K capital gain.




If the property has been negatively geared, then the rental income is not that relevant since they've still lost X $ while holding the property.  They'd also need to adjust for inflation their older losses to fully understand how much money they've lost, then also look at how much they could have made on a positively geared asset, or by not borrowing at all and just using surplus income to buy income producing assets as they could afford.

We over invest in property.  It doesn't generate export income, but does deplete a lot of our export income via the 10s of billions of dollars in interest payments it costs us.

Why do you believe above wage growth property inflation is good?


----------



## sydboy007 (13 February 2014)

Value Collector said:


> HAHAHA, what school of finance did you study at.
> 
> At best, you have to lose $1 to get a tax credit 45cents, If you think that's an incentive, you can send me $1000 every day of the week and all give you $450 back.
> 
> ...




If NG wasn't available, or was quarantined against the asset cashflow, do you think investors would be so inclined to pay the current prices they are?

I don't know how you can argue that NG is not a subsidy for losses.  The tax payer is helping out at up to 45c in the $ for the losses.


----------



## Value Collector (13 February 2014)

sydboy007 said:


> My point is that the argument for NG is that it encourages the building of rental properties.  It's not a free / costless option to the Government or society.
> 
> I'd argue that the Govt spending some $60B on public housing over the same period would have resulted in more NEW construction, since investors generally buy an EXISITING property 9 times out of 10.
> 
> ...




I think your view of negative gearing is warped. Its not simply to encourage people to build more rental property ( even though it does achieve this aim) the point of it is that it only fair that the government only tax you on your net profit each year.

the government basically owns the rights to 30% of the earnings of every citizen, If one citizen earns $100K in business A, but losses $50K in Business B the government is entitled to 30% of the net profits, it can't be said that he is having his $50K loss subsidised.

As I said before, negative gearing laws apply to all investments.

But also your $60B figure is way off, the $60Billion loss your quoting is only offset a much smaller portion of tax, at the most probably $20B, But the loss of the $60Billion caused others the book profits such as the banks, which they paid tax on which would offset a chunk of the $20B.


----------



## Value Collector (13 February 2014)

sydboy007 said:


> 1, If NG wasn't available, or was quarantined against the asset cashflow, do you think investors would be so inclined to pay the current prices they are?
> 
> 2, I don't know how you can argue that NG is not a subsidy for losses.  The tax payer is helping out at up to 45c in the $ for the losses.




1, I don't think the negative gearing affects the price they are willing to pay, it probably affects their ability to buy a second one, But what does that matter, why should a property investment be treated to harsher taxes than any other investment.

2, How is the taxpayer helping out. At no stage is the taxpayer handing over money to subsidise the loss. You can only claim a deduction against earnings and tax that you yourself have paid in that year. If you earned $0 from others sources and but had a $20,000 neg cashflow, you get nothing.

The only time you can deduct your neg cash flow is when you had other earnings in that year to offset.

Picture that I am a hard (but fair) stand over man (the tax office), I tell you that I want 30% of your earning each year or I'll put you in jail, at the end of the year you tell me you earned $200K from your lawyer practise, but lost $20K in a property investment.

So I( the hard but fair stand over man) says "Ok bud, so you really earned $180,000 net, give me $54,000 and I'll leave you for another year", You can't say that I gave you anything, I took 30% of your net earnings.


----------



## craft (13 February 2014)

sydboy007 said:


> If NG wasn't available, or was quarantined against the asset cashflow, do you think investors would be so inclined to pay the current prices they are?




Not if MIS is indicative. In just about every case non-economic long term decisions for the assets were made due to the immediate benefit of the tax cash flow. Take the tax break away and the assets turned out to be overpriced oversupplied and long-term returns were crap/non existent.

The tax code is warping the proper economical allocation of resources. Our productivity is being effected but its probably too late to change things without at least short term stability being effected. Tough situation but they can only kick the can so far down the road. The Sooner Negative Gearing goes the less damage the change will cause.


----------



## baby_swallow (13 February 2014)

House price increase comparison table - Australia is 5th on the list
Ours isn't as bad as the Kiwis... 

'



Also:
Canada’s government has announced that it is scrapping its controversial investor visa scheme, which has allowed waves of rich Hongkongers and mainland Chinese....

http://www.zerohedge.com/news/2014-02-12/did-canada-just-pop-its-housing-bubble


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## beachlife (13 February 2014)

> That $20,000 loss is real, that money is gone, the government doesn't refund you any of that loss.




Not all of it, the depreciation schedule is just smoke and mirrors.  A house remains livable well beyond the time frames used in the schedule.



Look at this chart http://reiwa.com.au/Research/Pages/Perth-house-price-chart.aspx  prices didnt crash when Keating got rid of NG and didnt take off when it came back.  So clearly NG tax deductions have very little impact.

But to me they have now formed what looks like a big bubble that followed the demographics and easy credit, and the rush of investors now just might be the last big push.  Where will the buyers come from once the mum and dad investors are hocked up to the eyeballs with 90% LVR's?


----------



## Value Collector (13 February 2014)

beachlife said:


> Not all of it, the depreciation schedule is just smoke and mirrors.  A house remains livable well beyond the time frames used in the schedule.




depreciation schedules normally go over 40years that's a pretty long period, and anything thing claimed as depreciation reduces the cost base used to calculate CGT, so it will increase the capital gains tax paid.

But depreciation is not limited to property, every business offsets a portion of their income through depreciation of their plant and equipment, depreciation is a real thing.


----------



## Value Collector (13 February 2014)

beachlife said:


> But to me they have now formed what looks like a big bubble that followed the demographics and easy credit, and the rush of investors now just might be the last big push.  Where will the buyers come from once the mum and dad investors are hocked up to the eyeballs with 90% LVR's?




Well if your right all the better for us, we will have some cheap property to add to our portfolios in the future.

But it's also a misconception that property investors are all up to their eyeballs in debt, there certainly are some that are, but everyone of them there is another one that has finished paying off there own home and have bought an investment, another that invests debt free, another that has debt but smashes it with his high income, another that has owned the property so long the debt is pretty small.

People here seem to think that 100% of the property investing community are undercapitalised speculators, this is not the case.


----------



## sydboy007 (13 February 2014)

Value Collector said:


> I think your view of negative gearing is warped. Its not simply to encourage people to build more rental property ( even though it does achieve this aim) the point of it is that it only fair that the government only tax you on your net profit each year.
> 
> the government basically owns the rights to 30% of the earnings of every citizen, If one citizen earns $100K in business A, but losses $50K in Business B the government is entitled to 30% of the net profits, it can't be said that he is having his $50K loss subsidised.
> 
> ...




What is the use of NG on exisiting assets?  It doesn't actually help to improve things.  If it encourages new shares to be issued, new companies to be formed, new housing stock to be built, I can see the use, otherwise why have it on exisiting assets and why aren't the losses amortised to the cost base instead of being able to reduce income tax.

The $60B in losses will work out to be less in forgone tax, but it's still a massive level of losses.  The most persistent argument by the Real estate industry for retaining NG is in helps to increase the amount of rental proeprties.  It clearly doesn't.

The fact is we over invest in property.


----------



## satanoperca (13 February 2014)

sydboy007 said:


> What is the use of NG on exisiting assets?  It doesn't actually help to improve things.  If it encourages new shares to be issued, new companies to be formed, new housing stock to be built, I can see the use, otherwise why have it on exisiting assets and why aren't the losses amortised to the cost base instead of being able to reduce income tax.
> 
> The $60B in losses will work out to be less in forgone tax, but it's still a massive level of losses.  The most persistent argument by the Real estate industry for retaining NG is in helps to increase the amount of rental proeprties.  It clearly doesn't.
> 
> The fact is we over invest in property.




Agree.

Stop all this bulls--t about NG being removed will see a shortage in rental properties and/or an increase in prices. 

The majority of investors by existing stock, in established areas. Why? Land increases in value, buildings do not. So why invest in the outer suburbs in a new build, when the returns are on land in established areas. 

NG should only be applicable to new builds, thus giving investors a reason to add to rental supply.

So simple.

And fully agree we over invest in property. Try running a small business and getting capital injections from investors, they would rather buy property and I cannot blame them under the current system. However, you need a business/employment before a home. You can live in a cardboard box and still go to work, but try buying a house without a job.

We must start investing in innovation.

Cheers


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## Value Collector (13 February 2014)

sydboy007 said:


> 1, What is the use of NG on exisiting assets?
> 
> 2, It doesn't actually help to improve things.  If it encourages new shares to be issued, new companies to be formed, new housing stock to be built, I can see the use, otherwise why have it on exisiting assets and why aren't the losses amortised to the cost base instead of being able to reduce income tax.
> 
> ...




1, It produces a fairer tax system that taxes people based on their net profits each year, Its an understanding that people may have several business ventures so it allows for annual tax to be charged based on the total net profit of all the business ventures combined.

2, because it makes sense to offset negative cash flows against other positive to get to a net bases each year. It's how every single business in Australia works.

3,  yes, a lot less at the absolute most it would be $27Billion, and as I said that $27Billion is further offset by taxes paid by the banks etc how are recording that $60Billion as profit on their books.

4, You can't argue that NG causes more houses to be bought without saying it also results in new houses being built. As I mentioned earlier, over 90% of off the plan developments are sold to investors, that's creating new stock. Flick through the pages of any property investing magazine and you will see property developments being marketed right around the country to investors, Also my dad sold his house to a property investor.

Infact the only part of NG that you could say is not always a true cash flow loss is depreciation, and that is biggest on new properties.


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## sptrawler (13 February 2014)

Value Collector said:


> 1, It produces a fairer tax system that taxes people based on their net profits each year, Its an understanding that people may have several business ventures so it allows for annual tax to be charged based on the total net profit of all the business ventures combined.
> 
> 2, because it makes sense to offset negative cash flows against other positive to get to a net bases each year. It's how every single business in Australia works.
> 
> .




If that were the case, losses of a capital nature would be able to offset against income, at present they can only be carried forward against a capital gain.
This is because the investment is seen as speculative.
Can't the same be said of an interest only loan against a property, where the purchase was to get capital appreciation.
 Why should the taxpayer have to pay the speculator the shortfall in their earnings, they took the loan on with the knowledge, it is unlikely to ever be rent possitive.
They should only be able to mitigate their losses upto the income they recieve from the investment.
To allow them to claim a tax refund for losses above that, just encourages speculation/gambling losses to be a tax deduction.


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## beachlife (13 February 2014)

Value Collector said:


> But depreciation is not limited to property, every business offsets a portion of their income through depreciation of their plant and equipment, depreciation is a real thing.




Depreciation on plant and vehicles makes sense because they do devalue and wear out, and will be on sold at a lower price, or scrapped.  Houses are onsold for a higher price, for now anyway.  A block of land with a 40 year old house is worth more than a vacant block in the same area, but if you consider the theory of depreciation the land with the house should be cheaper by the cost of demolition, since in theory the house is worthless and it will cost thousands to push it over.  It never is.  So for houses, depreciation is a rort.



Value Collector said:


> Well if your right all the better for us, we will have some cheap property to add to our portfolios in the future.
> 
> But it's also a misconception that property investors are all up to their eyeballs in debt, there certainly are some that are, but *everyone of them there is another one that has finished paying off there own home and have bought an investment, another that invests debt free*, another that has debt but smashes it with his high income, another that has owned the property so long the debt is pretty small.
> 
> People here seem to think that 100% of the property investing community are undercapitalised speculators, this is not the case.




The sprukers and the banks encourage investors to max out the borrowings to minimise the tax.  That's the marketing pitch.


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## Value Collector (13 February 2014)

sptrawler said:


> 1, If that were the case, losses of a capital nature would be able to offset against income, at present they can only be carried forward against a capital gain.
> This is because the investment is seen as speculative.
> 
> 2, Can't the same be said of an interest only loan against a property, where the purchase was to get capital appreciation.
> ...




1, Neg gearing is about offsetting a cashflow loss against a positive cashflow from another sources, it's no different to what happens anywhere else, eg, woolworths would currently be offsetting the losses its making at masters against the profits its making at its other businesses.

2, you could do it that way I guess, but everyone would have to do it that way, but how would you decide who is investing for capital gain and how is investing for income, and you would have to make everyone do it that way including shares with margin loans, woolworths with masters etc. It makes more sense to me to claim the loss in the year its made.

3, As explained above in another post, the tax payer does not pay any shortfall. its simply a recognition that a person made a $200K profit from source A, and a $20K loss from source B, lets charge them tax based on the net amount of $180K. the tax payer doesn't hand over any dollars.

4, many worthwhile investments do not generate positive cash flow in the early years, A neg cashflow property will usually be positive by about year 7, from then it will generate tax dollars.


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## Value Collector (13 February 2014)

beachlife said:


> 1,Depreciation on plant and vehicles makes sense because they do devalue and wear out, and will be on sold at a lower price, or scrapped.  Houses are onsold for a higher price, for now anyway.  A block of land with a 40 year old house is worth more than a vacant block in the same area, but if you consider the theory of depreciation the land with the house should be cheaper by the cost of demolition, since in theory the house is worthless and it will cost thousands to push it over.  It never is.  So for houses, depreciation is a rort.
> 
> 
> 
> 2, The sprukers and the banks encourage investors to max out the borrowings to minimise the tax.  That's the marketing pitch.




1, Houses wear out too, just over a longer period than a car. A 40 year old house would only be worth something if it has been maintained over that 40 years. If you went 40 years without redoing or fixing the roof, repaint, kitchens, bathrooms etc, the house component of the price would be worth almost nothing, the house would probably be bulldozed and so yes vacant land would be worth more if it is in exactly the same spot.

Bottom line is the building component of a property investment does lose money, and it requires constant replenishing over the years to hold its value. some parts such as brick work and the slab will last many decades, others such as carpets, curtains, kitchen and bathroom fittings, paint etc etc wont last 40years, 40years is just an number used to keep it simple.

Offcourse some things take longer, than cars, for example gas pipelines and railway lines are depreciated over 80 - 100 years, but every eventually becomes worthless or at most worth its weight as scrap metal.  

2, and if your silly enough to listen to spruikers you will lose your money


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## sptrawler (13 February 2014)

Value Collector said:


> 1, Neg gearing is about offsetting a cashflow loss against a positive cashflow from another sources, it's no different to what happens anywhere else, eg, woolworths would currently be offsetting the losses its making at masters against the profits its making at its other businesses.
> .




Comparing Wollies tax offset with personal tax offset, is a bit out there.
It works out untill the tax dept rules the investment isn't a bonafide business. 
That is why a lot of small businesses are not found to constitute a small business and have their tax claims overturned and penalties applied.
It is very easy for the ATO to decide personal investment property claims, can only be offset to certain amount, unless it is the prime income source of the individual.


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## Value Collector (13 February 2014)

sptrawler said:


> Comparing Wollies tax offset with personal tax offset, is a bit out there.
> It works out untill the tax dept rules the investment isn't a bonafide business.
> That is why a lot of small businesses are not found to constitute a small business and have their tax claims overturned and penalties applied.
> It is very easy for the ATO to decide personal investment property claims, can only be offset to certain amount, unless it is the prime income source of the individual.




A property investment is a bonafide business.

But look it makes complete sense to me to only tax people or companies on their net profit. Why would it not make sense to do it this way?


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## beachlife (13 February 2014)

Value Collector said:


> 1, Houses wear out too, just over a longer period than a car. A 40 year old house would only be worth something if it has been maintained over that 40 years. If you went 40 years without redoing or fixing the roof, repaint, kitchens, bathrooms etc, the house component of the price would be worth almost nothing, the house would probably be bulldozed and so yes vacant land would be worth more if it is in exactly the same spot.
> 
> Bottom line is the building component of a property investment does lose money, and it requires constant replenishing over the years to hold its value. some parts such as brick work and the slab will last many decades, others such as carpets, curtains, kitchen and bathroom fittings, paint etc etc wont last 40years, 40years is just an number used to keep it simple.
> 
> Offcourse some things take longer, than cars, for example gas pipelines and railway lines are depreciated over 80 - 100 years, but every eventually becomes worthless or at most worth its weight as scrap metal.




Now you are being silly and confusing maintenance (painting) with capital outlays.  Here's an example. My dad bought his house in 1967 for $19,000.  Its 72 years old.  He has done no improvements, still has original kitchen etc, even the carpet.  We just had it valued and the licensed valuer assigned a depreciated value to the improvements of $22,000.  Thats more than what it cost to buy with the land and a heck of a lot more than what it cost to build.  If an investor bought it they could start claiming against that.  Cash loses are real, but people that object to tax benefits have a fair claim with respect to depreciation, especially when each successive investor gets a new schedule drawn up.  Having said that I claimed it when I could, no reason not to take advantage of the system, even if its nonesense.

Anyway some real depreciation is on its way which will eclipse the paper claims.


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## Smurf1976 (13 February 2014)

trainspotter said:


> Why does the government have to build houses for every body? Why would it be cheaper for the government to build houses when they subcontract them out to private construction companies to build them anyways? Why would FHB's suddenly rush in to buy these homes? The prices would sure drop cause the place would resemble a ghetto.



I assume the original post was a reference to public housing, that is housing owned by government and made available to (mostly) low income people for them to live in.

Back in ye olde days, government did indeed build such houses and they did it using direct government employees. Then along came the idea that everything should be contracted out and the cost of doing literally any physical work went through the roof (or the quality dropped, one or the other depending on situation) when that happened.

Do it "in house" and you need to employ workers, buy materials (which for a government purchase in bulk will be relatively cheap) and build the houses, roads, dams or whatever.

Contract it out and you need an army of contract administrators and a legal team on both sides. Then you have a huge pile of paperwork. Then you need people to actually do the job and materials. Then you add a profit on top of all that - the work, materials, administration and so on. 

What you end up with is a situation where labour productivity "on the tools" tends to go up, but where a lot of people spend a lot of time not actually using any tools. The end result is that some jobs cost a bit less, the occasional one costs an order of magnitude more, and on average you get either a modestly higher cost for the same quality, or the same cost for lower quality. Either way it's a worse deal so far as the taxpayer is concerned. Been there, seen this one first hand.

The real problem with governments contracting things is that to be blunt, they're generally a pushover. As long as all the I's are dotted and the T's crossed, nobody really cares about too much else. For political reasons government will want the job done, and the incredible amount of work required to award a tender which complies with all the rules means that no sane public servant would want to go back through the tender process again should there be a contractor. Unless they actually stop doing the work, which generally doesn't happen, then it's far more practical to simply hand over the money and keep the project moving so that's what they do. There are good contractors and bad, trouble being that the bad ones generally still get paid due to the difficulty changing part way through a project. 

Working in the public service, I remember quite well tying up myself and two others for an entire week spending what would be around $10K in today's money on a single item. In due course the matter was resolved, meanwhile the supplier decided to raise the price since they knew it would take too long to repeat the purchasing process. So it ended up as $12K for the purchase plus another 5K in wages so $17K overall in order to buy something that retailed for $10K "off the shelf". In short, that's why things go wrong when government deals with private enterprise - too many rules and regulations means that government is an outright pushover.

So I can certainly see that government can't build cheap public housing for low income earners like they used to given that they've changed the way they do business. But they could always go back to the old model if they really wanted to as it's only ideology that stops them. Taxes could be reduced pretty much immediately if they did.

Go forward a couple of decades and everyone will have worked this out. It's a big cycle if you look at history with things like utilities, transport etc going from private to public and now mostly back to private. Once the pain of rising utility bills and the cost of taxpayer subsidies to privately owned operators of various things becomes an issue, and at some point it will, then things will start going back the other way over the next few decades. Then it will go back to private again. That's the lesson of history and I expect we'll repeat it. Tas bought back the railways not that long ago and WA has stopped outsourcing some things in the power industry so there's a bit of it happening already.

As for house prices, well if you have government buying existing houses so as to make them available as public housing then that's a very different situation to if government simply cleared the land, built a few houses here and there and sold the rest of the land to private owners. It's simple supply and demand there, with government having moved from being a source of supply to being a source of demand.


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## sptrawler (13 February 2014)

Value Collector said:


> A property investment is a bonafide business.
> 
> But look it makes complete sense to me to only tax people or companies on their net profit. Why would it not make sense to do it this way?





It isn't a business, as much as it is a speculative personal investment.


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## Smurf1976 (13 February 2014)

Value Collector said:


> People here seem to think that 100% of the property investing community are undercapitalised speculators, this is not the case.




I don't doubt that it's certainly not 100% of people in that situation. But some would be, and markets are made at the margin.


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## sptrawler (13 February 2014)

sptrawler said:


> It isn't a business, as much as it is a speculative personal investment.




Further to my previous post.
A business, is a venture that is expected to return a positive income.
Not a purchase that is expected to return a capital gain.lol
That probably falls under the same umbrella as a painting that you rent out to the museum.
See if you can negative gear that?

They both earn an income, which doesn't cover the carrying costs, why can't I negative gear it.lol


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## Value Collector (14 February 2014)

beachlife said:


> Now you are being silly and confusing maintenance (painting) with capital outlays.  Here's an example. My dad bought his house in 1967 for $19,000.  Its 72 years old.  He has done no improvements, still has original kitchen etc, even the carpet.  We just had it valued and the licensed valuer assigned a depreciated value to the improvements of $22,000.  Thats more than what it cost to buy with the land and a heck of a lot more than what it cost to build.  If an investor bought it they could start claiming against that.  Cash loses are real, but people that object to tax benefits have a fair claim with respect to depreciation, especially when each successive investor gets a new schedule drawn up.  Having said that I claimed it when I could, no reason not to take advantage of the system, even if its nonesense.
> 
> Anyway some real depreciation is on its way which will eclipse the paper claims.




I am not talking about improvements, i am talking about maintaining the value of the building by maintaining it, if you are honestly saying that your father has not maintained his building for 47 years and it hasn't lost any value then that is a very rare case.

Saying that though, some of the residual value that remains would have increased with inflation, but adjusting everything for inflation the building would be worth less than when it was new.


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## Value Collector (14 February 2014)

sptrawler said:


> It isn't a business, as much as it is a speculative personal investment.




Without you going and examining individuals portfolios and interviewing them on there entry and exit plans i cant see how you can come to that conclusion, I can tell you my property investments are very much a business and a key part to my business plan


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## Value Collector (14 February 2014)

sptrawler said:


> Further to my previous post.
> A business, is a venture that is expected to return a positive income.
> Not a purchase that is expected to return a capital gain.lol
> That probably falls under the same umbrella as a painting that you rent out to the museum.
> ...




All of my properties return a positve cash flow, not all of the companies on the asx do.


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## banco (14 February 2014)

Value Collector said:


> 3, As explained above in another post, the tax payer does not pay any shortfall. its simply a recognition that a person made a $200K profit from source A, and a $20K loss from source B, lets charge them tax based on the net amount of $180K. the tax payer doesn't hand over any dollars.




As far as Government revenue goes there's no difference between an upfront tax break and a tax return.


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## Value Collector (14 February 2014)

banco said:


> As far as Government revenue goes there's no difference between an upfront tax break and a tax return.




There is a big difference between the government funding something and the government giving you a tax return.

for example if you earn $30K during the year at mc donalds, but can show you had to outlay $500 on uniforms and shoes, the government will only charge you tax based on your $29,500 net earnings, It would be incorrect to say that the government has funded your uniforms, because they haven't, you paid the full price of those uniforms, the government just let you do it with pre tax dollars


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## sptrawler (14 February 2014)

Value Collector said:


> All of my properties return a positve cash flow, not all of the companies on the asx do.




If all of your properties return positive cashflows, any changes to negative gearing won't be an issue. 
All companies that continually run on negative returns, eventually go broke.

To have the Government tell Holden etc, that they can't keep getting tax payers dollars to prop up their losses, while propping up property speculators is a bit rank.


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## Value Collector (14 February 2014)

sptrawler said:


> 1, If all of your properties return positive cashflows, any changes to negative gearing won't be an issue.
> 
> 2,All companies that continually run on negative returns, eventually go broke.
> 
> 3, To have the Government tell Holden etc, that they can't keep getting tax payers dollars to prop up their losses, while propping up property speculators is a bit rank.




1, I know, I am not defending Neg gearing because I benefit from it, I don't. I am defending it because it is the logical way to tax people.

2, offcourse, but many businesses run at a loss for a loss in the beginning. The properties that are negatively geared today will probably be generating positive cashflows in the future, All my properties started out negatively geared, because to get into property I had to take on debt, but over time I cleared the debt and rents rise, and then bingo I have properties that aren't negatively geared and will continue to pay them selves off using there own positive cashflow

3, Try to understand this, There is a massive difference between holden asking the government to hand over $300 million dollars along with other special tax incentives and a person being charged tax on their net profit. At no stage does the government hand over cash paid by other taxpayers to people claiming a neg cashflow.


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## sydboy007 (14 February 2014)

Value Collector said:


> 1, I know, I am not defending Neg gearing because I benefit from it, I don't. I am defending it because it is the logical way to tax people.




The Australian NG system is unique in the world, from what I understand.  All other countries that have it amortise losses onto the capital base, so t would seem most other countries have a different kind of logic to ours.



Value Collector said:


> 2, offcourse, but many businesses run at a loss for a loss in the beginning. The properties that are negatively geared today will probably be generating positive cashflows in the future, All my properties started out negatively geared, because to get into property I had to take on debt, but over time I cleared the debt and rents rise, and then bingo I have properties that aren't negatively geared and will continue to pay them selves off using there own positive cashflow




For companies they carry their loss forward. They generally don't have other income they can offset the losses against and so reduce their tax.  Sole traders may be different, but in general terms business losses are carried forward and help to reduce tax payable when profits occur.  This would be a much better way for NG to operate than the present system.

Considering over $13B in NG income tax reduction occurred last year, conservatively that means around 30% of it was returned to the "investors" via reduced taxation of other income ie something close to $4B.  If even half of that is recycled back into property at say a 90% LVR then that means an extra $18B available to push up house prices.  I know it's not quite that simple, but the extra cash flow from the current NG system does allow investors to place higher bids on an asset than they could otherwise afford without the help from offsetting losses against other taxable income.

Loss amortisation would stop this from happening

If the stats are correct then we're seeing NG properties beign sold as new NG investments to the next investor.  Nearly half of IP loans are I/O only so the likelihood of the property ever being positively geared is quite low



Value Collector said:


> 3, Try to understand this, There is a massive difference between holden asking the government to hand over $300 million dollars along with other special tax incentives and a person being charged tax on their net profit. At no stage does the government hand over cash paid by other taxpayers to people claiming a neg cashflow.




Considering the IP market hasn't made a profit since 2000 one has to wonder what's going wrong.


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## Ves (14 February 2014)

sydboy007 said:


> The Australian NG system is unique in the world, from what I understand.  All other countries that have it amortise losses onto the capital base, so t would seem most other countries have a different kind of logic to ours.



Japan and NZ also have unrestricted NG systems much like our own.  Other countries like the US and parts of Europe have more restricted versions.



> Considering over $13B in NG income tax reduction occurred last year, conservatively that means around 30% of it was returned to the "investors" via reduced taxation of other income ie something close to $4B.  If even half of that is recycled back into property at say a 90% LVR then that means an extra $18B available to push up house prices.  I know it's not quite that simple, but the extra cash flow from the current NG system does allow investors to place higher bids on an asset than they could otherwise afford without the help from offsetting losses against other taxable income.
> 
> Loss amortisation would stop this from happening
> 
> ...




This article and the report it covers has some interesting facts.

http://www.macrobusiness.com.au/2013/11/abolish-negative-gearing-to-save-budget-billions/

In the long run it appears that applying NG losses against the cost base or delaying the claim until profits were made would result in a net saving of between $2B and $4B in the long run.

If housing in Australia is really worth $5T then NG tax benefits to investors of $4B doesn't really add that much in transactional power to the system.  Most NG benefits / tax refunds probably get offset against the loan balance or spent elsewhere.   Anyone going out to buy another property with their tax claim is going to face stamp duty and government charges,   I doubt tax benefits would cover this.  

You can keep buying NG properties and speculate to your heart's content,  but only until you cannot service the loans any more.   Tax benefits may help with that.... but at the end of the day,  if it's NG you have to come up with the remainder of the cash flow.  Obviously investors / speculators are finding a way.

I think there's much larger culprits in the large rises in the housing market than the current tax structure....


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## McLovin (14 February 2014)

sptrawler said:


> Further to my previous post.
> A business, is a venture that is expected to return a positive income.
> Not a purchase that is expected to return a capital gain.lol
> That probably falls under the same umbrella as a painting that you rent out to the museum.
> ...




It's a tax perk, as far as I can tell. If the definition of "carrying on a business" is so broad as to include something as passive as residential property investing, then the definition needs to be looked at. 

AFAIK (happy to be corrected), there are limits on the deductibility of business (eg you're selling scented candles at the local markets on Saturday) losses from wage income.


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## Ves (14 February 2014)

McLovin said:


> AFAIK (happy to be corrected), there are limits on the deductibility of business (eg you're selling scented candles at the local markets on Saturday) losses from wage income.



Yeah,  there are non-commercial loss tests. If you didn't pass them in the applicable financial year then you would have a carry forward loss quarantined against that business activity until a) it made a profit or b) you passed the tests in future years.



> You can offset a loss from your business against your other income if you meet the income requirement (broadly, that your income for non-commercial loss purposes is less than $250,000) and your business passes one of these tests:
> It produces assessable income of at least $20,000.
> It has produced a profit in three of the past five years (including the current year).
> It uses real property or an interest in real property worth at least $500,000 on a continuing basis.
> It uses other assets worth at least $100,000 on a continuing basis.



http://www.ato.gov.au/Business/Non-commercial-losses/


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## Value Collector (14 February 2014)

sydboy007 said:


> 1, The Australian NG system is unique in the world, from what I understand.  All other countries that have it amortise losses onto the capital base, so t would seem most other countries have a different kind of logic to ours.
> 
> 
> 
> ...




1, to me it's logical that each entity pay tax based on its total net profit each year.

2, companies offset the profits from profitable divisions with the losses from the ones that are not yet profitable. if a company or an individual has no other income then neither of them can offset their loss.

3,  for it to be a new NG investment there must have been a capital gain, and that would have offset prior losses,

4, find me somebody who bought an investment property in 2000, made the annual rental increases and is not currently positively geared


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## McLovin (14 February 2014)

Ves said:


> If housing in Australia is really worth $5T then NG tax benefits to investors of $4B doesn't really add that much in transactional power to the system.




But in any given year not all properties change hands.

Turnover is somewhere around 5-7%/annum, so that $4b is really only being applied to what is available. You could probably trim the actual number once you remove the top end of the market.




			
				Ves said:
			
		

> Yeah, there are non-commercial loss tests. If you didn't pass them in the applicable financial year then you would have a carry forward loss quarantined against that business activity until a) it made a profit or b) you passed the tests in future years.




Ahh thanks for that.


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## Ves (14 February 2014)

McLovin said:


> But in any given year not all properties change hands.
> 
> Turnover is somewhere around 5-7%/annum, so that $4b is really only being applied to what is available. You could probably trim the actual number once you remove the top end of the market.



The long term average is about 6%,   in the last few years it has been closer to 4-5% apparently.

http://www.rba.gov.au/speeches/2013/sp-ag-140313.html

Surely  NG doesn't make a gigantic difference in purchasing power of investors on $20-$25B?   I think it's way over-inflated to assume that investors use all of the $4B on new purchases. 

Sounds like it has more to do with cost and availability of finance,  ability to service debt,  growth in wages in the last 20-30 years than the taxation system.

If most people think they can make money they'll buy something - the focus was always on the profits,  they worry about tax as an after thought.   At least that was my experience in doing tax returns in the industry.


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## Value Collector (14 February 2014)

McLovin said:


> If the definition of "carrying on a business" is so broad as to include something as passive as residential property investing, then the definition needs to be looked at.




There are property trusts listed on the asx that are purely in the business of buying. maintaining and leasing out property, Would you say that is not a business.

same with companies listed that just passively hold other assets such as gas pipelines, railway track etc. By your definition are these not businesses either.

Now certainly a person in the business of leasing out his 3 houses is not as large scale as the asx listed companies but the business model is pretty much the same.


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## Value Collector (14 February 2014)

McLovin said:


> But in any given year not all properties change hands.
> 
> Turnover is somewhere around 5-7%/annum, so that $4b is really only being applied to what is available. You could probably trim the actual number once you remove the top end of the market.




No it wouldn't, there is no way that every neg cash flow investor buys a property every year with their return, so the $4B is not going to be used for that.


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## McLovin (14 February 2014)

Value Collector said:


> There are property trusts listed on the asx that are purely in the business of buying. maintaining and leasing out property, Would you say that is not a business.
> 
> same with companies listed that just passively hold other assets such as gas pipelines, railway track etc. By your definition are these not businesses either.




There's a world of difference between the two. If you want to compare a property trust like Westfield or Stockland to some punter who rents out his two bedder in Campbelltown then that's fine by me.


			
				Ves said:
			
		

> The long term average is about 6%, in the last few years it has been closer to 4-5% apparently.
> 
> http://www.rba.gov.au/speeches/2013/sp-ag-140313.html
> 
> ...




Sure, look what you're saying makes sense. I personally think the whole NG thing is a bit overdone. I was just playing devil's advocate because it's a Friday.


----------



## Ves (14 February 2014)

McLovin said:


> I was just playing devil's advocate because it's a Friday.



Gave me something to think about when I should be working 

If property is an unproductive asset,  then arguing about property could be considered equally unproductive on that measure.      That's my attempt at a Friday joke.


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## Value Collector (14 February 2014)

McLovin said:


> There's a world of difference between the two. If you want to compare a property trust like Westfield or Stockland to some punter who rents out his two bedder in Campbelltown then that's fine by me.




I am not talking about a company like westfield group, who are involved in management, development and ownership. But more of a property trust (like the westfield retail trust wrt) where they have nothing to do with management, development or anything because they pay a fee to westfield (WDC) to do that, they just sit there and collect the rent and managing their finances and paying dividends.

or,

something like the ethane pipline trust, where the own one asset, with one long term customer, which they pay APA to manage and they just sit there collecting and distributing funds.


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## trainspotter (14 February 2014)

ANZ leaves standard variable rate at 5.88% per annum 

UBank has a 5 year rate of 5.56% with $0 application fee.

Weighted average of 8 capital cities UP 9.3% http://www.abs.gov.au/ausstats/abs@.nsf/cat/6416.0

Average house price now $539,466.

The mean price of residential dwellings rose *$17,700* and the number of residential dwellings rose by 37,300 in the December quarter 2013.

Yep ..... non productive stuff this property.


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## McLovin (14 February 2014)

Value Collector said:


> I am not talking about a company like westfield group, who are involved in management, development and ownership. But more of a property trust (like the westfield retail trust wrt) where they have nothing to do with management, development or anything because they pay a fee to westfield (WDC) to do that, they just sit there and collect the rent and managing their finances and paying dividends.




So was I.


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## Value Collector (14 February 2014)

McLovin said:


> So was I.




So besides scale, what's the underlying differences in their operations as opposed to a guy that operates a portfolio of say 4 investment properties.


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## beachlife (14 February 2014)

trainspotter said:


> ANZ leaves standard variable rate at 5.88% per annum
> 
> UBank has a 5 year rate of 5.56% with $0 application fee.
> 
> ...




So before the rise the median was 539466-17700 = 521766.

So the quarterly growth was 17700/521766x100 = 3.4%

Do you really think that property will keep growing at this rate?  At these rates values will double in around 6 years.  I cant see that happening.


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## trainspotter (14 February 2014)

beachlife said:


> So before the rise the median was 539466-17700 = 521766.
> 
> So the quarterly growth was 17700/521766x100 = 3.4%
> 
> Do you really think that property will keep growing at this rate?  At these rates values will double in around 6 years.  I cant see that happening.




There is absolutely no way that this is sustainable. I have already put my head on the block and said that November 2016 will be the peak of this cycle. Things will start to slow in March / April 2014 (I have explained my reasons on many occasions already as to why I believe this) and things will remain at a plateau through 2015 until stagflation takes over in early 2016 with a downturn in late 2016. That's my take on events.

If it keeps up at this rate what do you think will happen? RBA will yank the one and only lever they know how to try and slow it down. Mortgage stress kicks in and then the houses begin to come back on the market at a lower price than what was originally paid (like a broken record this) and so the cycle of property is fulfilled.


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## sptrawler (14 February 2014)

trainspotter said:


> There is absolutely no way that this is sustainable. I have already put my head on the block and said that November 2016 will be the peak of this cycle. Things will start to slow in March / April 2014 (I have explained my reasons on many occasions already as to why I believe this) and things will remain at a plateau through 2015 until stagflation takes over in early 2016 with a downturn in late 2016. That's my take on events.
> 
> If it keeps up at this rate what do you think will happen? RBA will yank the one and only lever they know how to try and slow it down. Mortgage stress kicks in and then the houses begin to come back on the market at a lower price than what was originally paid (like a broken record this) and so the cycle of property is fulfilled.




Oh great trainspotter, just when I think it's time to jump in, you pull the rug out from under me.
Now I'll have to wait for the next cycle.


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## trainspotter (14 February 2014)

sptrawler said:


> Oh great trainspotter, just when I think it's time to jump in, you pull the rug out from under me.
> Now I'll have to wait for the next cycle.




March 2011 was the time to jump in. Cut and run prior to November 2016


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## sydboy007 (14 February 2014)

Value Collector said:


> 3,  for it to be a new NG investment there must have been a capital gain, and that would have offset prior losses,




That's a big assumption.  It's quite possible that the seller has sold at a real inflation adjusted loss, or even a straight out nominal loss.



Value Collector said:


> 4, find me somebody who bought an investment property in 2000, made the annual rental increases and is not currently positively geared




I'll repeat once again, that the IP market has made aggregate losses EVERY YEAR since 2000.  A market that makes losses for 13 years in a row is not functioning rationally.  Buying an asset that has a real income yield barely positive after inflation and tax is not a good investment.  Chasing capital gains as the sole way to get ahead seems to be a poor investment, especially since the income growth for most properties is quite low.  There was no growth in the median rent for Sydney last year.  Melbourne had spectacular growth of $10 a week.

National median rental growth for house was 0.9% or after tax and inflation a loss of roughly 3%.  Units actually fell 0.4% nationally so the loss was even worse.

Pretty much every share I own has provided me with above inflation income growth over the last year, baring my hybrid investments that followed the BBSW down.


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## beachlife (14 February 2014)

trainspotter said:


> If it keeps up at this rate what do you think will happen? RBA will yank the one and only lever they know how to try and slow it down. Mortgage stress kicks in and then the houses begin to come back on the market at a lower price than what was originally paid (like a broken record this) and so the cycle of property is fulfilled.




I doubt that, I think they will be more concerned about the exchange rate this time, but if this pans out as some predict it wont matter what they do.

http://www.marketwatch.com/story/sc...ins-traction-2014-02-11?link=MW_story_popular


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## trainspotter (14 February 2014)

beachlife said:


> I doubt that, I think they will be more concerned about the exchange rate this time, but if this pans out as some predict it wont matter what they do.
> 
> http://www.marketwatch.com/story/sc...ins-traction-2014-02-11?link=MW_story_popular




Bwhahahahah *gasp* hahahahaahhaaaaaaa The RBA will not let rampant inflation caused by housing to bring the curtain down. They will move rates up in an effort to wound it a bit .... THEN the banks will be shifting their rates at a MUCH greater rate then what the RBA has chosen. Profit gouging anyone? Coming to a bank near you real soon !

As for the correlation of the '29 crash to what is happening now I am pretty sure that this was done for entertainment purposes only. It just so happens to "fit" the '29 data. Nothing surprising here but we will see soon enough. May I think is the prediction isn't it?


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## beachlife (14 February 2014)

trainspotter said:


> Bwhahahahah *gasp* hahahahaahhaaaaaaa The RBA will not let rampant inflation caused by housing to bring the curtain down. They will move rates up in an effort to wound it a bit .... THEN the banks will be shifting their rates at a MUCH greater rate then what the RBA has chosen. Profit gouging anyone? Coming to a bank near you real soon !
> 
> As for the correlation of the '29 crash to what is happening now I am pretty sure that this was done for entertainment purposes only. It just so happens to "fit" the '29 data. Nothing surprising here but we will see soon enough. May I think is the prediction isn't it?




If the RBA decides to kill the housing market and at the same time kill whats left of the export market then heaven help us all.


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## Smurf1976 (14 February 2014)

So far as the "is it a business" argument is concerned, I agree with the notion that investing in property is indeed a business provided that the property is either available for rent or the business involves some form of active trading or development of either new or existing properties.

A business normally involves producing something of value. Renting out houses is the business of providing rental accommodation. Property development is the business of developing land or buildings which are then rented or sold. A gas pipeline is in the business of transporting gas from a source to consumers. Etc.

What I do not see as a real business is the practice of buying vacant land then sitting on it for a very long period. Nothing of value is being produced. There is no income and no regular capital gain is realised. Little or no activity takes place. That's not a business in my opinion, it's a passive investment just like buying shares in BHP and holding them for 20 years is a passive investment and does not constitute a share trading business.


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## trainspotter (14 February 2014)

beachlife said:


> If the RBA decides to kill the housing market and at the same time kill whats left of the export market then heaven help us all.




Not kill it ... slow it down a little.


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## Value Collector (14 February 2014)

sydboy007 said:


> 1, That's a big assumption.  It's quite possible that the seller has sold at a real inflation adjusted loss, or even a straight out nominal loss.
> 
> 
> 
> ...




1, if you hold a property for 10years the rental yield would have grown to the point that it is no longer negatively geared, the price should have also grown so you should book a capital gain and pay capital gains tax. The only way for you not to pay capital gains tax is to sell it at the same or lower price than you paid for it. If you held it for ten years and then sold at the same price you bought, the new buyer would not be negatively geared.

2, ok, the property market doesn't lose money every year for thirteen years, your adding 1 and 1 and getting 3. The only thing that causes people to be negatively geared is using to much debt, its the debt that causes the loss not the underlying asset. If you buy a property outright with cash you are not going to be neg geared, you will have your money earning a 4% inflation hedged return! where your capital and income should increase over time with inflation + maybe 1% growth due to population growth! its not as good as a growth stock! but it is certainly better than cash in the bank long term.

When you add to much debt you become neg geared, over time though inflation will push up rents and you should reduce your principle so you will become positively geared after a few years. I am not suggesting its good to be neg geared, cash flow is good, but if you just starting out you may have to be neg for a while.

As i said above a good share portfolio should out perform a property portfolio on an un leveraged basis, hence why i keep roughly 2/3 of my capital in shares, but that other third I have in property adds to the stability of my portfolio and makes my over all position more solid, i think shares and property are a great team


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## Value Collector (14 February 2014)

Smurf1976 said:


> What I do not see as a real business is the practice of buying vacant land then sitting on it for a very long period. Nothing of value is being produced. There is no income and no regular capital gain is realised. Little or no activity takes place. That's not a business in my opinion, it's a passive investment just like buying shares in BHP and holding them for 20 years is a passive investment and does not constitute a share trading business.




I agree that sitting on land is not a business, its a bit like sitting on gold, its just owning an asset, owning shares in bhp however is much more business like, because by buying the shares you immediately become a business owner.


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## beachlife (14 February 2014)

Smurf1976 said:


> What I do not see as a real business is the practice of buying vacant land then sitting on it for a very long period. Nothing of value is being produced. There is no income and no regular capital gain is realised. Little or no activity takes place. That's not a business in my opinion, it's a passive investment just like buying shares in BHP and holding them for 20 years is a passive investment and does not constitute a share trading business.




+1

The ATO agrees.   You can only claim yearly deductions against an income producing venture, which is why share traders and share investors are treated differently, and people that sit on land are treated differently to people that provide rental properties.

Owning shares does not make the holder a business owner, or anything resembling one because they have no say in the day to day running of that business.

- - - Updated - - -



trainspotter said:


> Not kill it ... slow it down a little.
> 
> View attachment 56816




Without school halls and pink batts this time it might be really slow.


----------



## Value Collector (15 February 2014)

beachlife said:


> Owning shares does not make the holder a business owner, or anything resembling one because they have no say in the day to day running of that business.
> 
> .




I think you are confusing business owners with business managers, shareholders are definitely part owners of the underlying businesses in the companies they own shares in. Shareholders own the businesses, management is employed by the shareholders to run the businesses.

If you don't think the bhp shareholders own bhp's businesses assets, who does?


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## sydboy007 (15 February 2014)

Smurf1976 said:


> What I do not see as a real business is the practice of buying vacant land then sitting on it for a very long period. Nothing of value is being produced. There is no income and no regular capital gain is realised. Little or no activity takes place. That's not a business in my opinion, it's a passive investment just like buying shares in BHP and holding them for 20 years is a passive investment and does not constitute a share trading business.




A land tax would help to overcome this issue.  Considering the large developers have something like 18 years of supply that they dole out in drips and drabs so as to maintain high prices.

A land tax would also help to provide the income stream that local Govt needs to build infrastructure.  Certainly a fairer way than forcing new construction to wear 50K+ developer levies.

ACT is moving down this path, but it's going to take 20 years to get there and I don't think we have near that long to restructure things.


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## sydboy007 (15 February 2014)

Value Collector said:


> 1, if you hold a property for 10years the rental yield would have grown to the point that it is no longer negatively geared, the price should have also grown so you should book a capital gain and pay capital gains tax. The only way for you not to pay capital gains tax is to sell it at the same or lower price than you paid for it. If you held it for ten years and then sold at the same price you bought, the new buyer would not be negatively geared.




Once again a big assumption.  Not every property makes a profit after purchase cost, holding costs, sale costs.  An article I read a couple of months back put the average break even period somewhere around 7 years, and that was during a period of high property inflation.



Value Collector said:


> 2, ok, the property market doesn't lose money every year for thirteen years, your adding 1 and 1 and getting 3. The only thing that causes people to be negatively geared is using to much debt, its the debt that causes the loss not the underlying asset. If you buy a property outright with cash you are not going to be neg geared, you will have your money earning a 4% inflation hedged return! where your capital and income should increase over time with inflation + maybe 1% growth due to population growth! its not as good as a growth stock! but it is certainly better than cash in the bank long term.




If the below doesn't show the property making consistent income loses, then what does it show?  How can you separate asset prices and debt.  The below household debt to GDP ration seems to show a very strong correlation between increasing debt and house prices.  NZ is showing what happens when you limit LVR to 80% - house price growth has slowed considerably.  the US shows what happens when long term interest rates rose in the second half of last year - housing finance slowed dramatically.

There's been longish periods where rental increases have been stagnant to negative, especially after inflation.



Value Collector said:


> When you add to much debt you become neg geared, over time though inflation will push up rents and you should reduce your principle so you will become positively geared after a few years. I am not suggesting its good to be neg geared, cash flow is good, but if you just starting out you may have to be neg for a while.




If nearly 50% of IP loans are I/O how does the principal get reduced?  I/O loans also increase the level of gearing available for the investor, since you nearly double the cashflow available for the loan eg a $450K loan with 5.2% at P/I has repayments of $2683/m.  Same loan I/O is $1950/m.  Keeping things I/I means you could increase the loan size from $450K to $620K.  What proportion of I/I loans have been used to do this?

Why do people add too much debt?  It seems to be a pervasive issue with investment properties in Australia.  Could it be the tax system?  Say a combination of NG and halving CGT?


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## Mrmagoo (15 February 2014)

The reason is that they are baby boomers who have different expectations and higher levels of wealth due to the time in which they were working/wealth building.

Many are so rich. They just don't care. Compared to Gen Y the boomers might as well be cashed up Chinese investors because the wealth difference is on a comparable scale.


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## Value Collector (15 February 2014)

sydboy007 said:


> A land tax would also help to provide the income stream that local Govt needs to build infrastructure.  Certainly a fairer way than forcing new construction to wear 50K+ developer levies.
> 
> .




So you want the guys that own a horse paddock, pineapple farm or just an acreage block to pay extra each year to fund the infrastructure for the new developments rather than the people who will actually use that infrastructure???

seems unfair to me.


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## McLovin (15 February 2014)

Value Collector said:


> So besides scale, what's the underlying differences in their operations as opposed to a guy that operates a portfolio of say 4 investment properties.




It's all about scale. It's the reason the ATO considers buying an IP (or a few) or buying a couple of thousand of BHP shares to be investing, not carrying on a business.


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## Value Collector (15 February 2014)

> Not every property makes a profit after purchase cost, holding costs, sale costs




Neither does every share purchase. But the point I am making is that you can't have it both ways, you can't claim that a property will be forever negatively geared, without producing a taxable capital gain. Because Inflation will in general push up the rental yield to the point where it is no longer neg geared. The only way the next owner could neg gear it is if he paid a higher price, which would create a taxable capital gain. If he didn't pay a higher price he would be positive geared.



> If the below doesn't show the property making consistent income loses, then what does it show?  How can you separate asset prices and debt



.

Because you are trying to say property in general loses money, when it doesn't. To weigh up whether an asset class is a viable investment you need to look at how it would perform debt free, a debt free property is a perfectly sound investment. It is then up to individuals whether they want to add debt based on their own judgement of the risks and rewards. 

Its like me saying the aussie share market has lost money for 13 years, because based on a 100% loan at 8% the annual dividends don't cover the interest charges. the fact is that statement is false because a) the dividends have increased almost every year and even if you took a 100% loan it would be positive now, b) the fact that I'm judging whether it is profitable based on debt is the wrong way to look at it.




> The below household debt to GDP ration seems to show a very strong correlation between increasing debt and house prices.




If you put up a price chart of crude oil, Iron ore, gold, Big macs, 600ml cokes, salmon and a whole host of other items you would see the same correlation.



> There's been longish periods where rental increases have been stagnant to negative, *especially after inflation*.




you keep mentioning "after" inflation, as if the a neg geared properties income needs to outpace inflation to become positively geared, when inflation actually increases the rental yield while the repayments to the bank stay the same. Also Inflation is one of the reasons property investment is preferred to cash, as inflation decreases the value of cash, your property investment will maintain its value and the income will increase with inflation, so you position is maintained.



> If nearly 50% of IP loans are I/O how does the principal get reduced?




even if it wasn't reduced, given time the property would still become pos geared, But I know I have reduced the amount of my I/O loans you can make lump sum payments into it whenever you want, you can also hold money in an offset account rather than pay it off directly, a lot of people prefer to do this. most people will wait till their non deductable debt is cleared though.



> I/O loans also increase the level of gearing available for the investor, since you nearly double the cashflow available for the loan eg a $450K loan with 5.2% at P/I has repayments of $2683/m.  Same loan I/O is $1950/m.  Keeping things I/I means you could increase the loan size from $450K to $620K.  What proportion of I/I loans have been used to do this?




no doubt they have been, but so what? Don't you think interest only loans are used in all sorts of businesses, the vast majority of business loans are interest only, the idea 



> Why do people add too much debt?  It seems to be a pervasive issue with investment properties in Australia.  Could it be the tax system?  Say a combination of NG and halving CGT?




All sorts of reasons, feeling that they don't want to miss out, wanting to invest but being undercapitalized, wanting to be look good at BBQ, having confidence in there ability to earn a high income to clear it.

The combination of NG and CGT is available on shares also.


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## Value Collector (15 February 2014)

McLovin said:


> It's all about scale. It's the reason the ATO considers buying an IP (or a few) or buying a couple of thousand of BHP shares to be investing, not carrying on a business.




Ok that's probably the difference in our thinking here, I wasn't using the strict tax definition of "Carrying on a business"

I was thinking of a more general usage of the word business ie, business - the activity of making, buying, or selling goods or providing services in exchange for money.

An IP certainly does fit the general definition.


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## McLovin (15 February 2014)

Value Collector said:


> Ok that's probably the difference in our thinking here, I wasn't using the strict tax definition of "Carrying on a business"




The ATO's position isn't arrived at by using a "tax definition". It's formed from case law of the court's interpretation of what constitutes "carrying on a business".

If anything, there should be a definition or set of rules defined in ITAA 36 & 97, because it's bloody vague as is, which is never a good thing in a tax system. Then again, it could be because of the large gray area that they've chosen not to define it.


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## sydboy007 (15 February 2014)

Value Collector said:


> Because you are trying to say property in general loses money, when it doesn't. To weigh up whether an asset class is a viable investment you need to look at how it would perform debt free, a debt free property is a perfectly sound investment. It is then up to individuals whether they want to add debt based on their own judgement of the risks and rewards.
> 
> Its like me saying the aussie share market has lost money for 13 years, because based on a 100% loan at 8% the annual dividends don't cover the interest charges. the fact is that statement is false because a) the dividends have increased almost every year and even if you took a 100% loan it would be positive now, b) the fact that I'm judging whether it is profitable based on debt is the wrong way to look at it.




You're talking about hypothetical situations, the current losses for NG are REAL.  People have chose to load up on debt.  It doesn't matter what the situation would be if there was no debt.  The current REALITY is there's over 1.2 TRILLION dollars of mortgage debt with ADIs.  Around 1/3 of that debt is for investors.

More than half that debt was taken on in the last 13 years.  100% increase in mortgage debt that happens at the same time as house prices do a near vertical price increase.  Seems owner occupiers and investors have decided to consume far more housing than is good for us.

High house prices, and land prices in general, destroy productivity, make it very difficult to compete against imports, and leaves the economy vulnerable to shocks.



Value Collector said:


> you keep mentioning "after" inflation, as if the a neg geared properties income needs to outpace inflation to become positively geared, when inflation actually increases the rental yield while the repayments to the bank stay the same. Also Inflation is one of the reasons property investment is preferred to cash, as inflation decreases the value of cash, your property investment will maintain its value and the income will increase with inflation, so you position is maintained.




The current situation is we have a low inflation environment, so inflation is not going to erode your debt away terribly quickly like it did pre 90s.  The current situation is wage growth in most industries is stagnant, so rental growth is also stagnant, as can be seen last year.  Combined with the fact 3/4 of housing stock has at least 1 spare bedroom there's plenty of excess capacity out there to keep rental growth stagnant for years to come as people accept they have to to get someone to help pay the rent.  I can see it in my suburb.  Properties that would have never had a for lease sign in front of them now seem to take weeks to lease, all with a gross house rental yield of 3.8%, yet house price inflation is rising faster than rental growth.  How long can house PE ratios keep on getting worse?  The capital city median rental yield is roughly 4.2%, or a P/E of 23.8.  Would you be keen to pay that kind of P/E for a share offering between -0.4% to 0.9% income growth?

You're also assuming property values can't decline.  Australian housing can only defy gravity for so long.  Either the debt bubble bursts via higher unemployment and falling participation rates in the work force, or a Government has the cajones to fix the constipated land supply issues and bring affordable land back onto the market.  Land price inflation has been enormous, whereas the cost to actually construct a house has risen much in line with inflation.



Value Collector said:


> most people will wait till their non deductable debt is cleared though.




Which causes other taxation to be higher than required.  For every dollar in reduced taxation from NG means either another dollar in taxation from another source, or a reduction in spending.



Value Collector said:


> no doubt they have been, but so what? Don't you think interest only loans are used in all sorts of businesses, the vast majority of business loans are interest only, the idea




Then can you at least acknowledge that I/O loans allow greater gearing, which also allows greater house price inflation?


----------



## Smurf1976 (15 February 2014)

sydboy007 said:


> High house prices, and land prices in general, destroy productivity, make it very difficult to compete against imports, and leaves the economy vulnerable to shocks.




Thinking of politics and mainstream thinking, for about 20 years from the mid-1980s onward there was a lot of talk about "competitiveness", the notion that Australia needed to compete internationally and that this could best be achieved by various reforms aimed at cost reduction.

Now listen to what's being said today. There is little or no mention of cost reduction anywhere outside an individual business or within government itself. Nobody is focusing on reducing costs in the broader Australian economy so as to make the country more competitive, indeed the reverse is largely true.

In the news today there is mention that SA Water could be sold for $13 billion. Now, it makes a profit of $362 million a year and is supposedly able to be sold for $13 billion, representing a yield of 2.8%. I don't think so! Far more likely is that if sold then we'll see an increase in profit (easy since it's a natural monopoly) to around the $1 billion a year mark. That represents effectively a tax (and a privately collected one at that) on every business in SA which uses water or which employs someone who uses water. For practical purposes that's every single business in the area served by mains water who will end up with higher costs and become less competitive as a result.

That is just one example of a broader shift that has taken place in the Australian economic debate. After 20+ years of focusing on being more competitive that is clearly no longer the case. The focus now seems to amount to dog eat dog, a form of capitalism that differs markedly from what happens everywhere else from the US to China. Instead of aiming to make all businesses more competitive, the aim now seems to be to create a very small number of large and highly successful businesses by effectively taxing all other economic activity. Qld gas exports are one, the discussion about SA Water is another.

Housing is much the same. From the perspective of the broader economic competitiveness of Australia, logic would say that cheaper housing and lower wages are better than expensive housing and an inevitable need at some point for a wages boom. But again, we've become focused on making a profit in one area that is a very basic part of economic activity (water, gas, accommodation) at the expense of everything else. 

It's not hard to see why practically every business which actually needs to compete and which doesn't have a huge natural advantage in its' favour (eg WA iron ore mines have a natural advantage due to easy accessibility of the ore) is struggling or closing altogether.

I can't see this ending well. How does an economy with little apart from mining, expensive housing and expensive water / gas / electricity and where very few businesses are competitive actually function? I just can't see how that's going to work in the longer term. We already have high costs and we're doing just about everything possible to push them even higher.


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## CanOz (15 February 2014)

Sums it up nicely smurf!


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## sptrawler (15 February 2014)

Yes smurph, it either ends in a bust or a devaluation of the $Aus to about $0.40cU.S, which is as good as a bust. IMO


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## sydboy007 (15 February 2014)

Smurf1976 said:


> In the news today there is mention that SA Water could be sold for $13 billion. Now, it makes a profit of $362 million a year and is supposedly able to be sold for $13 billion, representing a yield of 2.8%. I don't think so! Far more likely is that if sold then we'll see an increase in profit (easy since it's a natural monopoly) to around the $1 billion a year mark. That represents effectively a tax (and a privately collected one at that) on every business in SA which uses water or which employs someone who uses water. For practical purposes that's every single business in the area served by mains water who will end up with higher costs and become less competitive as a result.
> 
> It's not hard to see why practically every business which actually needs to compete and which doesn't have a huge natural advantage in its' favour (eg WA iron ore mines have a natural advantage due to easy accessibility of the ore) is struggling or closing altogether.
> 
> I can't see this ending well. How does an economy with little apart from mining, expensive housing and expensive water / gas / electricity and where very few businesses are competitive actually function? I just can't see how that's going to work in the longer term. We already have high costs and we're doing just about everything possible to push them even higher.




Considering the land of ultra free capitalism, the USA, doesn't have any privatised airports, and Australia has hocked pretty much all of them and we're now faced with some of the highest fees in the world.  Jetstar culled their Darwin hub expansion because the private owners got too greedy.

If a Government owned asset is reasonably efficiently run, provides enough cashflow to maintain and expand as required, then I don't see how selling it to the private sector benefits us.  As you say, it just adds a pervasive tax kept by the private sector.  Considering the lack of apprentices since most of the state utilities were privatised it's not been good for the economy.  We're stuck with some of the highest electricity / gas / water / rent costs in the OECD.

Our restrictive land zoning, urban growth boundaries, extremely slow processes to bring new supply to market all make what should be a relatively cheap input some of the most expensive land there is.

I fear we'll have to have our Greek economic slap down to reset things.  Even if by some miracle new land supply comes to market at affordable pricing it will decimate the value of existing stock, which will wipeout a lot of retirement savings and probably cause a banking Armageddon since the gang of 4 and regionals are all really just glorified building societies.  

We seem to have chosen economic suicide by doing our best to have the most expensive land in the world.  I suppose we'll console ourselves by continually selling existing properties too each other at ever higher prices and feeling like we're rich.  Anyone think we can double household debt again over the next 13 years and keep the economy roaring along??


----------



## sptrawler (15 February 2014)

sydboy007 said:


> Considering the land of ultra free capitalism, the USA, doesn't have any privatised airports, and Australia has hocked pretty much all of them and we're now faced with some of the highest fees in the world.  Jetstar culled their Darwin hub expansion because the private owners got too greedy.
> 
> If a Government owned asset is reasonably efficiently run, provides enough cashflow to maintain and expand as required, then I don't see how selling it to the private sector benefits us.  As you say, it just adds a pervasive tax kept by the private sector.  Considering the lack of apprentices since most of the state utilities were privatised it's not been good for the economy.  We're stuck with some of the highest electricity / gas / water / rent costs in the OECD.
> 
> ...




All you have to figure out, is how they are going to sort it out.
From my experience they are three steps ahead of us, if you can work it out, there is money to be made.


----------



## Smurf1976 (16 February 2014)

It's hard to see any real solutions to this one. 

Once you've sold the water pipes, dams, pump stations and so on (SA Water in this example) to someone and given them what amounts to a privately owned right to tax consumers then they aren't going to hand it back without one hell of a fight that's for sure. Same goes for airports, power and so on.

It says rather a lot that an old power station that was decommissioned in New Zealand was subsequently shipped to Victoria and reassembled. The equipment dates from the 1960's and is an outright fuel guzzler. Much the same happened in SA, although theirs was cobbled together from various old plants from several countries and all put together in SA. A nice "new" power plant that's already rusty - says it all really. It's a fuel guzzler as is the one in Vic and that's why nobody else wants it. 

As a country, I just don't see how it's going to all work. Expensive real estate, high wages, installing machinery that's obsolete, private "taxation" and so on. It's all making Australia an extremely uncompetitive place in which to do business.


----------



## burglar (16 February 2014)

Smurf1976 said:


> ... Much the same happened in SA ...




Which plant is that?


----------



## sptrawler (16 February 2014)

Smurf1976 said:


> It's hard to see any real solutions to this one.
> 
> Once you've sold the water pipes, dams, pump stations and so on (SA Water in this example) to someone and given them what amounts to a privately owned right to tax consumers then they aren't going to hand it back without one hell of a fight that's for sure. Same goes for airports, power and so on.
> 
> ...




Well if the state governments sell off all their infrastructure, they then only provide an administrative function.
If then they standardise the laws throughout Australia(which makes sense), then the function of the State Government can be carried out by an administrative commitee.
We then become a Country run by one Government, instead of a Federation.
That should lead to better utilization of our own resources, rather than as you say shipping a power station from New Zealand. We probably had one here that could have been relocated.
As for housing, the government has a multitude of things it can do, the reserve bank has limited tools.
High wages are relative, at $1U.S to $1 Aus, that's a high wage because our minimum wage is twice theirs. 
At $1 Aus to $0.50c our minimum wage is the same as theirs, and our houses are worth 50% of what they are now, in relative buying power. 
Like I said, if you can guess the end game, there is money to be made.
Simplistic, but it always scares me when polticians give themselves a 40% payrise, it tells me they know something I don't.lol


----------



## Uncle Festivus (16 February 2014)

sydboy007 said:


> We seem to have chosen economic suicide by doing our best to have the most expensive land in the world.  I suppose we'll console ourselves by continually selling existing properties too each other at ever higher prices and feeling like we're rich.  Anyone think we can double household debt again over the next 13 years and keep the economy roaring along??




Actually we've already moved past that point of flipping to each other - it's all about the Chinese appetite to 'diversify' to a 'safe' country. From what I can tell, it's pretty much exclusively Chinese buyers, particularly new developments, in the big capitals. Throw in some stupid government incentives/grants for foreign buyers and the usual NG farce for the locals and we have the perfect storm brewing.....


----------



## Bill M (16 February 2014)

Smurf1976 said:


> It says rather a lot that an old power station that was decommissioned in New Zealand was subsequently shipped to Victoria and reassembled. The equipment dates from the 1960's and is an outright fuel guzzler. Much the same happened in SA, although theirs was cobbled together from various old plants from several countries and all put together in SA. A nice "new" power plant that's already rusty - says it all really. It's a fuel guzzler as is the one in Vic and that's why nobody else wants it.




Bit off topic but we got one on the Central Coast ready to go with plenty of coal nearby and sitting there doing nothing. More info following:

---
Delta Electricity announced via media statement on the 3rd of July 2012 the closure of Munmorah power station after 45 years of operation due to decreasing energy demand. Units 3 & 4 had been maintained on standby but have not been in production since August 2010.

http://en.wikipedia.org/wiki/Munmorah_Power_Station
---


----------



## Bill M (16 February 2014)

Uncle Festivus said:


> Actually we've already moved past that point of flipping to each other - it's all about the Chinese appetite to 'diversify' to a 'safe' country. From what I can tell, it's pretty much exclusively Chinese buyers, particularly new developments, in the big capitals. Throw in some stupid government incentives/grants for foreign buyers and the usual NG farce for the locals and we have the perfect storm brewing.....




The Sydneyites are coming up to the Central Coast in droves, selling their properties there and buying one for half the price up here and pocketing the difference. I think this will go on a bit longer yet, I might put my IP up for sale towards the end of the year who knows. I can tell you everything that comes on to the market here is gone within 2 weeks at firm prices.


----------



## Smurf1976 (16 February 2014)

burglar said:


> Which plant is that?




Hallett. It's a collection of 12 old gas turbines from several countries all relocated to SA and assembled into the one plant. It works but suffice to say we've bought what someone else didn't want due to being too old and inefficient.

In the past, we sold our old stuff to Third World countries who couldn't afford the cost of buying new. We got new and efficient, they at least got something which was better than nothing since they couldn't afford anything else. Now we're the ones buying the old equipment which says rather a lot.

My point is really about the principle rather than power or water per se. We're doing rather a lot of things that ensure we remain a high cost country in which to do business. 

In terms of property prices, I see the relevance as simply the broader economic situation. Practically every business in the country is becoming uncompetitive and that can't end well.


----------



## beachlife (16 February 2014)

Value Collector said:


> I think you are confusing business owners with business managers, shareholders are definitely part owners of the underlying businesses in the companies they own shares in. Shareholders own the businesses, management is employed by the shareholders to run the businesses.
> 
> If you don't think the bhp shareholders own bhp's businesses assets, who does?




A business owner has control over their business.  I'm sure you own shares in a bank.  That does not make you an owner.  I would like to see you try and call a management meeting so you can instruct the managers that you supposedly employ.  I would like to see you remove one of your assets from a branch.  Go into one and ask them to give you a calculator - its your asset right?

As a shareholder you are not a business owner, you are a shareholder with limited entitlements.  The assets are owned by the company which is a legal entity in its own right.


----------



## DB008 (16 February 2014)

Stakeholder - 



> Stakeholder may refer to:
> Stakeholder (corporate), an accountant, group, organization, member or system who affects or can be affected by an organization's actions.
> 
> Stakeholder, an entity that can be affected by the results of that in which they are said to be stakeholders, i.e., that in which they have a stake.
> ...


----------



## McLovin (16 February 2014)

sydboy007 said:


> Considering the land of ultra free capitalism, the USA, doesn't have any privatised airports, and Australia has hocked pretty much all of them and we're now faced with some of the highest fees in the world.  Jetstar culled their Darwin hub expansion because the private owners got too greedy.




There are reasons for that. The two biggies are that unlike most countries, US airports are owned, in the main, by municipalities and cities, not the national government. The second one is because of the first, airlines can exert a lot of influence over airport management and decision making.


----------



## sptrawler (16 February 2014)

Well looking at the 20 year currency exchange rate charts, it looks as though we only need a recession and we're back on track.lol

http://www.exfin.com/historical-forex-aud


----------



## sydboy007 (17 February 2014)

Seems the financial sector has come up with a way to continue the housing price boom.

40 year home loans. That's right.  Pay off your home loan just about at retirement, and hey, if you haven't there's always that tax free lump sum you can use to get debt free then hold y hand out and expect a full pension from the Government.

7 lenders with 17 deals on 40 year mortgages.  Will we catch up to the Japanese and have intergenerational loans next?


----------



## sydboy007 (17 February 2014)

seems like the apartment sector is using the same tricks as the chocolate and breakfast cereal manufacturers.  Keep the price the same, just make things smaller.

_The Age reported the median size of a new one-bedder in inner Melbourne has dropped from 52 to 44 square metres in five years. The smallest apartment was 11.2 square metres plus a closet bathroom at 268 Flinders Street._

http://theage.domain.com.au/small-apartments-big-headaches-20140216-32tlb.html

No more chicken coops, we'll be packed in like sardines shortly.


----------



## sptrawler (17 February 2014)

sydboy007 said:


> seems like the apartment sector is using the same tricks as the chocolate and breakfast cereal manufacturers.  Keep the price the same, just make things smaller.
> 
> _The Age reported the median size of a new one-bedder in inner Melbourne has dropped from 52 to 44 square metres in five years. The smallest apartment was 11.2 square metres plus a closet bathroom at 268 Flinders Street._
> 
> ...




That really is a small apartment, do you think they will be tommorrows slums?


----------



## sydboy007 (17 February 2014)

sptrawler said:


> That really is a small apartment, do you think they will be tommorrows slums?




I can't really see it ending well.  If the apartments beng built had a decent range from studios to 3BR then I could see things working out not too badly, especially as more and more people don't really want the hassle of looking after a garden.

Family sized apartments are quite rare and cost as much, if not more as a house, and with strata fees probably more than a house.

Too much product designed for investors and not enough for the people who will live in it.

YAY constipated housing supply.


----------



## Value Collector (17 February 2014)

beachlife said:


> A business owner has control over their business.  I'm sure you own shares in a bank.  That does not make you an owner.  I would like to see you try and call a management meeting so you can instruct the managers that you supposedly employ.  I would like to see you remove one of your assets from a branch.  Go into one and ask them to give you a calculator - its your asset right?
> 
> As a shareholder you are not a business owner, you are a shareholder with limited entitlements.  The assets are owned by the company which is a legal entity in its own right.




If you own shares in a bank, then you along with all the rest of the shareholders are owners of that bank. The management running it are employees, hired by the board of directors who were selected by the shareholders. Shareholders can fire the board and install new management or even shut the operation down if the wanted. 

Ownership is not dependant on having control. 

I think we are probably dealing with semantics here though,


----------



## Value Collector (17 February 2014)

Bill M said:


> The Sydneyites are coming up to the Central Coast in droves, selling their properties there and buying one for half the price up here and pocketing the difference. I think this will go on a bit longer yet, I might put my IP up for sale towards the end of the year who knows. I can tell you everything that comes on to the market here is gone within 2 weeks at firm prices.




I was up there on the weekend looking at a few suburbs, It is certainly a lot cheaper than Sydney. Because I work from home now and I have family up there, I think its a real alternative to the Sydney rat race. Its an hour commute though if you have to work in Sydney.


----------



## beachlife (17 February 2014)

Value Collector said:


> If you own shares in a bank, then you along with all the rest of the shareholders are owners of that bank. The management running it are employees, hired by the board of directors who were selected by the shareholders. Shareholders can fire the board and install new management or even shut the operation down if the wanted.
> 
> Ownership is not dependant on having control.
> 
> I think we are probably dealing with semantics here though,




No you said that a share holder was more a business owner when compared to someone that just sits on a block of land or a holding of gold.  These were your words

_I was thinking of a more general usage of the word business ie, business - the activity of making, buying, or selling goods or providing services in exchange for money._

At an individual level, owning shares does not make you a business owner in the way that you have decribed what constitutes a business.  There is no control of assets, no input into how the business is run, no activity, just sitting doing nothing waiting for a return, the same as a land banker or gold holder, which is why ATO treats shareholders differently to business owners.


----------



## Value Collector (17 February 2014)

beachlife said:


> No you said that a share holder was more a business owner when compared to someone that just sits on a block of land or a holding of gold.  These were your words
> 
> _I was thinking of a more general usage of the word business ie, business - the activity of making, buying, or selling goods or providing services in exchange for money._
> 
> At an individual level, owning shares does not make you a business owner in the way that you have decribed what constitutes a business.  There is no control of assets, no input into how the business is run, no activity, just sitting doing nothing waiting for a return, the same as a land banker or gold holder, which is why ATO treats shareholders differently to business owners.




exactly I said "more of a business owner" than someone holding land or gold.

Because when you own shares there is a real business in which you have an ownership interest in, compared with vacant land which there is not an underlying business. 

Vacant land and gold just sit there, there is no activity or business going on.

when you own shares however there is a real business which you are part owner in, Making you a business owner. Now I am not saying that the shareholder plays an active part in the business other than voting in directors and other things, just saying that they are the owner, I really can't see why you don't think shareholders are owners.


----------



## Smurf1976 (17 February 2014)

beachlife said:


> At an individual level, owning shares does not make you a business owner in the way that you have decribed what constitutes a business.  There is no control of assets, no input into how the business is run, no activity, just sitting doing nothing waiting for a return, the same as a land banker or gold holder, which is why ATO treats shareholders differently to business owners.



+1

"Land banking" is the thing I have an issue with from a broader perspective. It's buying up a finite resource and sitting on it for no reason other than to force prices up and eventually profit from doing so. It adds nothing of value to the economy, and simply diverts money from production into the non-productive hoarding of land.

In the case of gold etc it's somewhat different since gold isn't required in order to operate practically every business or to simply live. It has some uses for jewellery and in electronics, but jewellery is a luxury item (ie not essential) and it's a very minor part of the cost of electronics. In contrast, land is an essential component of practically all economic activity and is itself a major cost.

It does happen in other industries (including the power industry by the way) but not to the scale that seems to be happening with land.


----------



## beachlife (17 February 2014)

Value Collector said:


> exactly I said "more of a business owner" than someone holding land or gold.
> 
> Because when you own shares there is a real business in which you have an ownership interest in, compared with vacant land which there is not an underlying business.
> 
> ...




It depends on your definitions of ownership and investing.

I see my local mechanic as a business owner.  He has control, makes decisions, provides a service, puts in his time, employs people,...he runs the business.  In a larger business the owners tell their managers what to do and set the direction of the company.  In both cases they play an active role.

I see a shareholder the same as a land banker.  Just a passive investor sitting there doing nothing hoping to be rewarded from the efforts of others.


----------



## CanOz (17 February 2014)

Smurf1976 said:


> "Land banking" is the thing I have an issue with from a broader perspective. It's buying up a finite resource and sitting on it for no reason other than to force prices up and eventually profit from doing so. It adds nothing of value to the economy, and simply diverts money from production into the non-productive hoarding of land.




Thats basically whats going here in China, rich folks buying up all the apartments, that are developed on land. They sit on them, meanwhile the apartments are empty and falling into disrepair in the harsh polluted climate. The buildings will be worthless soon and likely gone by the time the land lease expires... Stupid

No wonder why they're looking to Australia and the US!!


----------



## Value Collector (17 February 2014)

beachlife said:


> It depends on your definitions of ownership and investing.
> 
> I see my local mechanic as a business owner.  He has control, makes decisions, provides a service, puts in his time, employs people,...he runs the business.  In a larger business the owners tell their managers what to do and set the direction of the company.  In both cases they play an active role.
> 
> I see a shareholder the same as a land banker.  Just a passive investor sitting there doing nothing hoping to be rewarded from the efforts of others.




I would say your mechanic is self employed or an owner operator.

Yes in a larger business the owners tell the managers what to do, and in an even larger business the owners elect a board of directors to instruct the management.

If the land banker is in the business of developing and selling their land in stages! that would be a business, if they are just sitting on their land then its not a business.

But we can agree to disagree, i am not interested in debating the differences between ownership and management, All i will say is that in my opinion if you own something you are an owner if you manage something on behalf of someone else you are a manager, shareholders are the owners of the underlying businesses, so they are business owners which as i said does not require them to be involved in management. You seem to want to not regard a share holder as an owner and thats fine, but you have to understand it goes against pretty much all definitions both practical and legal of the word.


----------



## beachlife (17 February 2014)

Value Collector said:


> ...you have to understand it goes against pretty much all definitions both practical and legal of the word.




Yeah right, tell  that to the ATO.  They too disagree with you on this one.  They say that to be in business there must be some activity on your part.


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## FxTrader (17 February 2014)

beachlife said:


> Yeah right, tell  that to the ATO.  They too disagree with you on this one.  They say that to be in business there must be some activity on your part.



Why the semantic argument about what constitutes a business here?  A business is a legal entity with shareholders as owners.  The ATO may rule certain types of activity as conducting a business for tax purposes without the existence of a legal business entity and charge tax accordingly.

I don't know what number of land banking transactions over a given period the ATO would deem to be conducting a business but I would be surprised if no measure exists.  Land banking does seem to be a significant factor influencing land prices here.


----------



## beachlife (17 February 2014)

FxTrader said:


> Why the semantic argument about what constitutes a business here?




Good point.  It got side tracked because of the suggestion that the tax deductions allowed to property investors is the reason why house prices have gone too far too quick, and then a parallel was drawn between shareholders in westfield and a person with a few IP's.  Got off topic but was interesting to see different perspectives.

Back to topic I just heard the head of REIWA on the radio saying that its ok tp pay $50k more than you want because its insignificant over 20 years.  A sure sign of a bubble when advice like that is being aired on the radio.


----------



## satanoperca (17 February 2014)

beachlife said:


> A sure sign of a bubble when advice like that is being aired on the radio.




Are you serious, sounds like good marketing to me. Also agree, if you are buying a home, what is another 10% more, you are going to be there for sometime. If it is an investment, well if you believe the hype - good luck. 

But the statement does not constitute the definition of a bubble.

Anyway a bubble can form,grow and stretch to behind it normal physical parameters and still not pop, it just needs something a small prick to explode, then it was a bubble.

Off to buy some apartments, lucky I am Chinese.


----------



## sydboy007 (18 February 2014)

http://www.macrobusiness.com.au/2014/02/debunking-the-housing-banana/

The following are not cherry-picked; they are “representative”. Space prevents the provision of a full data set – for now.


Manchester UK: Population 2.2 million; population density 4,000 per sq km; INRIX congestion score 25.3; House price Median Multiple (M.M.) 5.2
Nottingham UK: Pop. 660,000; density 4,200 per sq. km; INRIX congestion score 21.9; House price M.M. 5.4
Liverpool UK: Pop. 820,000; density 4,400 per sq. km; INRIX congestion score 21.5; House price M.M. 5.2
Birmingham UK: Pop. 2.3 million; density 3,800 per sq. km; INRIX congestion score 20.5 ; House price M.M. 5.3

Versus:


Indianapolis: Pop. 1.5 million; density 800 per sq. km; INRIX congestion score 5.0; House price M.M. 2.3
Salt Lake City: Pop. 1 million; density 1,500 per sq. km; INRIX congestion score 3.1; House price M.M. 3.8
Oklahoma City: Pop. 900,000; density 800 per sq. km; INRIX congestion score 3.1; House price M.M. 2.9
Kansas City: Pop. 1.5 million; density 900 per sq. km; INRIX congestion score 2.8; House price M.M. 2.7
Omaha: Pop. 730,000; density 1,000 per sq. km; INRIX congestion score 1.0; House price M.M. 2.5

House price median multiples in my data set are from pre-crash (2007) data to avoid accusations that US house prices in the data are unrepresentative post-crash lows.

-------------------

I'm trying to imagine what a city is like with house prices averaging 3 times median income (which is even better than 3 times average pay).  maybe less Uk approach and more of the better planned US cities could help us.


----------



## trainspotter (18 February 2014)

I repeat ... We are NOT the U.K. nor the U.S.A. (or Portugal or Spain or Ireland or Greece) Our system of financing property and governance as well as employment history, manufacturing, tourism, export (mining) blah fricking BLAH is *TOTALLY *different from their working models as an economy 

Even down to our style of housing and lending criteria is *TOTALLY* different and the risk taken by the bank is minimal exposure as LMI and government guarantees protecting the big 4 banks are in place. 

http://en.wikipedia.org/wiki/List_of_countries_by_unemployment_rate

UNEMPLOYMENT is the key ...


----------



## McLovin (18 February 2014)

sydboy007 said:


> I'm trying to imagine what a city is like with house prices averaging 3 times median income (which is even better than 3 times average pay).  maybe less Uk approach and more of the better planned US cities could help us.




What are the property taxes like in those cities? A quick look and Indianapolis is 3%. Median house price in 2006 was $120k and median household income was $40k. 3% property tax means your still handing over 10% of your pre-tax income every year. Certainly changes things a bit.


----------



## prawn_86 (18 February 2014)

McLovin said:


> What are the property taxes like in those cities? A quick look and Indianapolis is 3%. Median house price in 2006 was $120k and median household income was $40k. 3% property tax means your still handing over 10% of your pre-tax income every year. Certainly changes things a bit.




Yeh i have been looking at buying a property over here in the states and between taxes, insurance and HOA fees a 400k townhouse has about 12-15k worth of costs each year. Obviously it varies state to state


----------



## beachlife (18 February 2014)

trainspotter said:


> UNEMPLOYMENT is the key ...




Holden, Toyota, Forge and today another 1000 jobs gone
http://www.theaustralian.com.au/bus...1000-out-of-work/story-e6frg8zx-1226830195047


----------



## trainspotter (18 February 2014)

beachlife said:


> Holden, Toyota, Forge and today another 1000 jobs gone
> http://www.theaustralian.com.au/bus...1000-out-of-work/story-e6frg8zx-1226830195047




Looks like my prediction from post #11281 is coming to the fore.


----------



## sydboy007 (18 February 2014)

McLovin said:


> What are the property taxes like in those cities? A quick look and Indianapolis is 3%. Median house price in 2006 was $120k and median household income was $40k. 3% property tax means your still handing over 10% of your pre-tax income every year. Certainly changes things a bit.




At least it stops land values increasing so much.  I'd be quite happy to have progressive land taxes help replace all the badly implemented stamp duties and a cut in income taxes.


----------



## sydboy007 (18 February 2014)

trainspotter said:


> I repeat ... We are NOT the U.K. nor the U.S.A. (or Portugal or Spain or Ireland or Greece) Our system of financing property and governance as well as employment history, manufacturing, tourism, export (mining) blah fricking BLAH is *TOTALLY *different from their working models as an economy
> 
> Even down to our style of housing and lending criteria is *TOTALLY* different and the risk taken by the bank is minimal exposure as LMI and government guarantees protecting the big 4 banks are in place.
> 
> ...




I don't understand your point.  Are you saying we have nothing to learn from the USA or UK?  Are you saying that Govt policy has no affect on house prices?

There is plenty we could do to help reduce the cost of housing in this country, but most of the effort appears to be going in to protecting those who are already in teh market at the expense of FHBs.

Considering the level of LMI risk concentration I'm not sure it'll be worth much in a downturn.  Either the banks insure themselves, or they get it from Genworth or QBE LMI.  Moodys has already downgraded both last year.

We have a constipated housing supply like California.  I'd prefer to see us emulate the policies of Texas and free up land for development.  urban growth boundaries and across the board heigh restrictions for apartments just fuel land price inflation.  it doesn't really benefit anyone, unless you're willing to sell up and move somewhere that has far less land inflation, but high land values choke the competitiveness of every business.


----------



## trainspotter (18 February 2014)

sydboy007 said:


> At least it stops land values increasing so much.  I'd be quite happy to have progressive land taxes help replace all the badly implemented stamp duties and a cut in income taxes.




And it really helped them now didn't it !


----------



## trainspotter (18 February 2014)

sydboy007 said:


> I don't understand your point.  Are you saying we have nothing to learn from the USA or UK?  Are you saying that Govt policy has no affect on house prices?
> 
> There is plenty we could do to help reduce the cost of housing in this country, but most of the effort appears to be going in to protecting those who are already in teh market at the expense of FHBs.
> 
> ...




U.K., U.S.A.. Portugal, Spain ad infinitum have totally different development policies. LARGE corporations borrowed money from financiers and used this money to develop vast housing estates which were onsold to nupties on 100% LVR.  Unemployment kicks in due to GFC and *HEY PRESTO* Mr. Housing Bubble is here to stay.

Which part of this are you not understanding? Does this happen in Australia? On a MUCH smaller scale it does but the majority of buyers who build are "singular" players. Ipswich had mortgage stress as a LOT of the players were 95% and FHB shoe horned into a debt they could not afford. MANY reasons as to WHY and I have written volumes as to WHY this occurred. 

Of course government policy effects buying patterns in the housing market. FHOG ... Originally introduced in 2000, the grant was doubled to $14,000 during 2008 and 2009 to support new homebuyers through the global financial crisis. While the grant has returned to its original figure of $7,000, there are still a range of extra state-specific incentives available for first homebuyers which can significantly assist in putting the debt noose around their necks.

So the banks making 27 billion dollar profits last year and you are saying we have a funding crisis? There is plenty of land available to develop. BUT the populace does not want to live out the back of bumf@ck and THUSLY driving up inner city and coastal valuations on property which in turn drives up the median house prices in the burbs.

Please explain to me how high land values choke the competitiveness of every business? *intrigued*


----------



## McLovin (18 February 2014)

prawn_86 said:


> Yeh i have been looking at buying a property over here in the states and between taxes, insurance and HOA fees a 400k townhouse has about 12-15k worth of costs each year. Obviously it varies state to state




California is a high tax state generally. I'm sure you've realised that. Isn't the top marginal rate on imcome 12% or something?

The other thing with these comparisons is that they always pick random cities in the Midwest or the south. Go to the major centres on either coast, ie in places you actually want to live, and the gap really shrinks.


----------



## McLovin (18 February 2014)

sydboy007 said:


> At least it stops land values increasing so much.  I'd be quite happy to have progressive land taxes help replace all the badly implemented stamp duties and a cut in income taxes.




I must have been dreaming about a recent property crash in the US.


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## sydboy007 (18 February 2014)

trainspotter said:


> And it really helped them now didn't it !
> 
> View attachment 56857




My point exactly.  Constipated land supply like in California causes bigger booms and busts.

Compare that to the strong right of use in Texas and there was barely a rise in real house prices.

I know which state went through the recession in the USA better, and it wasn't California.


----------



## trainspotter (18 February 2014)

sydboy007 said:


> My point exactly.  Constipated land supply like in California causes bigger booms and busts.
> 
> Compare that to the strong right of use in Texas and there was barely a rise in real house prices.
> 
> I know which state went through the recession in the USA better, and it wasn't California.




Speculators and large corporations building whole suburbs did not infiltrate Texas. It's growth was due to "singular" domestic migration who purchased established properties. The original owners of the established properties in turn bought land and built homes. A much more orderly supply chain.

Once again we are NOT the U.S.A. There is plenty of land to develop BUT the banks are not lending to property developers and making it very hard to obtain finance atm. AND the punters do not want to live in the "outer" burbs. Sounding like a broken record here !! 

"Entitlement Generation" I think they call it ... Coddled by their parents and the schools, raised with remarkable material wealth and opportunity, laden with self-esteem, technologically connected and routinely promised the world, many young people are ill-prepared for the challenges of real life, let alone the highly competitive, globalized workforce that awaits them upon leaving school. There was a post awhile back for someone demanding 75k a year and wanting to live in Bondi no doubt. Get real ... start at what you can afford.

This is where the problem lies. Everyone is talking about the "median" price and the "average" income ... The "TOP" end of town is skewiffing the nett averages due to the ridiculous prices being paid for the sought after properties. Why can't the FHB purchase a property in the burbs ... live in it for awhile and get used to having a mortgage and the associated costs that go along with it. Sell it in a period of time (hopefully they have purchased SMART) and make enough to place a deposit down on something a bit more substantial or closer to where you really want to live?? You know how us "old fogies" had to do it !! Who says you have to buy the one and only house and pay the mortgage off?? OPEN YOUR EYES !


----------



## satanoperca (18 February 2014)

trainspotter said:


> There is plenty of land to develop BUT the banks are not lending to property developers and making it very hard to obtain finance atm. AND the punters do not want to live in the "outer" burbs. Sounding like a broken record here !!




demand = price. Surely if land prices were cheap enough (price), people would move to the outer suburbs (demand) and banks would lend. 

There is something majorly wrong, if the banks are making huge profits and no new supply is being added to.

Great argument for changes in NG, maybe an incentive on new builds or a disincentive on existing.

TS - while high land prices do not effect every business, they do affect the vast majority and reduce our international competitiveness through higher wages and overheads.


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## prawn_86 (18 February 2014)

McLovin said:


> California is a high tax state generally. I'm sure you've realised that. Isn't the top marginal rate on imcome 12% or something?




Yes, yes, and yes a couple earning more than 1m pa has to pay 12% state tax, on top of federal tax


----------



## trainspotter (18 February 2014)

satanoperca said:


> demand = price. Surely if land prices were cheap enough (price), people would move to the outer suburbs (demand) and banks would lend.
> 
> There is something majorly wrong, if the banks are making huge profits and no new supply is being added to.
> 
> ...




1) No ... herd mentality, everyone wants the white picket fence and walk to work and driven by fear and greed they reduce themselves to paying premium prices in the inner city suburbs. Banks require 110% pre-sale as well a planning and development approvals in place prior to even looking at subdivision potential. Looking at minimum 2 years before a sod turning ceremony 

2) Banks are using residential mortgages as collateral to borrow more money. Very low default rates and easy pickings for the banks. Apartments are the new black so there will be plenty of supply, just slightly more density and banks do NOT like density. Too many eggs in the one basket and all that rubbish.

3) No changes to NG necessary. By doing so would cause 40% of the market to fall away. You want a housing "correction" ... you would get one immediately. Try getting the government to assist by partial ownership of properties to help the FHB and capping borrowing capacity outside of banks lending criteria. _*ie*_ got the house repayment but can't get the $700 a month car loan to go with it !! More stringent criteria on outside lenders like GE Money and Esanda etc etc. Credit Cards at 19% with 40k limits ... get my drift !!!

4) Last time I looked we are a developed nation competing globally and not a 3rd world country like the majority of our trading partners in Asia. Being a high wage, high cost country is not a bad thing. When you pay a high price, you're paying the wages of someone who will go off and buy something that pays the wages of someone else, maybe even yours. And so the economy goes round and round. Pssssssssssttttttt .. look at the Aussie dollar for some of our uncompetitiveness


----------



## McLovin (18 February 2014)

prawn_86 said:


> Yes, yes, and yes a couple earning more than 1m pa has to pay 12% state tax, on top of federal tax




It aint' called Taxifornia for nothing.


----------



## Smurf1976 (18 February 2014)

trainspotter said:


> There was a post awhile back for someone demanding 75k a year and wanting to live in Bondi no doubt. Get real ... start at what you can afford.




I was going to post some facts and figures, actual houses for sale, to shoot down your argument that it's affordable to live in the suburbs on a "normal" wage that a younger person would earn.

Just one problem, the data does not support my argument since a house in the poorer suburbs of Hobart that would have been worth $200 - 250K a few years ago is now listed around the $150K mark and there are plenty of them in several suburbs.

There's the price crash, it's actually happened it would seem at least in Tas. Sure, they're dodgy houses (mostly) in generally bad areas, but the bottom line is that there's been a pretty big decline in their value.

I'm not sure if the same has happened elsewhere, I'm not familiar enough with the suburbs of the major cities to be able to judge, but at the bottom end there's certainly been a price crash in Hobart.



> This is where the problem lies. Everyone is talking about the "median" price and the "average" income ... The "TOP" end of town is skewiffing the nett averages due to the ridiculous prices being paid for the sought after properties.




By definition the top or bottom do not skew a median average. A mean average yes, but not a median.


----------



## Smurf1976 (18 February 2014)

A quick look at my own area reveals some interesting figures.

I bought this house 6.5 years ago for about $350,000 after considerable negotiation. It's a normal house in a normal suburb and the price was at the lower end of what was available in this area at the time. The price I paid was typical of the selling price of similar houses in the area at that time.

Today, the full asking price for a similar house is around $320,000. Allowing for some haggling and noting the state of the market, you could probably get it for somewhat less. 

So whilst I bought it to live in and not to make a profit, as an investment it has very clearly been an outright dud over that time with declining value of at least 10% over that time.

I'm in a fairly middle socio-economic area, 8km by road from the Hobart CBD. No doubt the figures will vary between cities and states, but around here it seems that prices have definitely fallen.


----------



## trainspotter (18 February 2014)

Smurf1976 said:


> I was going to post some facts and figures, actual houses for sale, to shoot down your argument that it's affordable to live in the suburbs on a "normal" wage that a younger person would earn.
> 
> Just one problem, the data does not support my argument since a house in the poorer suburbs of Hobart that would have been worth $200 - 250K a few years ago is now listed around the $150K mark and there are plenty of them in several suburbs.
> 
> ...




Herein lies the problem. Statistics can be manipulated to support any argument depending on which side of the fence you want to sit. I have repeatedly stated that CERTAIN areas have dropped by +- 20% and that CERTAIN areas have risen by +- 20% and the SAME thing will happen in this cycle as well. It depends WHERE you buy and YES there will be winners and losers (just like the stock market eh?)

Note the word "skew" in my sentence? Then YES, the word *median* is the appropriate adjective in my sentence.



> These methods are both used to find a “typical” value from a set of data. The mean is the most commonly used measurement of central tendency, but there are cases where it is not appropriate. For example, the data may be *“skewed,” *meaning that most of the numbers are toward either the low or the high end of the scale, or that there is one value that is wildly different from all the others ”” this is known as an outlier. Especially in a small set of data, the average value in these cases will not be typical.




http://www.wisegeek.org/what-is-the-difference-between-median-and-mean.htm

Please note I was pertaining that the "TOP" end of town is skewiffing the nett averages due to the ridiculous prices being paid for the sought after property either inner city or for coastal.


----------



## wayneL (18 February 2014)

TS

I reckon reckon Rangeview could drop 75% and still be overvalued!

Wadayareckon?


----------



## sptrawler (18 February 2014)

Smurf1976 said:


> A quick look at my own area reveals some interesting figures.
> 
> I bought this house 6.5 years ago for about $350,000 after considerable negotiation. It's a normal house in a normal suburb and the price was at the lower end of what was available in this area at the time. The price I paid was typical of the selling price of similar houses in the area at that time.
> 
> ...




Well Smurph, I'll tel you how stupid Perth is.
I bought my house six years ago for $450,000, it like yours is in a middle socio-economic area, 10 km from CBD.
Similar house, in my street, sold six months ago for $700,000.
Last weekend, again in my street, first home open, under offer $799,000.

It has become stupid.


----------



## Smurf1976 (18 February 2014)

trainspotter said:


> Please note I was pertaining that the "TOP" end of town is skewiffing the nett averages due to the ridiculous prices being paid for the sought after property either inner city or for coastal.



High price alone won't change the median unless you mean that there is also a higher volume of sales at the top?

Take 5 houses:

$250K
$350K
$400K
$500K
$800K

The median is $400K. Even if that $800K house somehow sells for $50 million, the median remains unchanged at $400K. But if you sell 10 houses at $800K and only 4 at a lower price, well then that raises the median to $800K. Volume will move the median but an individual high price won't unless it involves a shift from below to above the median OR an increase in volume.


----------



## trainspotter (18 February 2014)

wayneL said:


> TS
> 
> I reckon reckon Rangeview could drop 75% and still be overvalued!
> 
> Wadayareckon?




Aaaaahhhh yes wayneL ... many a black pearl to be found in there 

1.2kms to my joint valued at 750k. RE does not make sense now does it? Location, location, location !


----------



## trainspotter (18 February 2014)

Smurf1976 said:


> High price alone won't change the median unless you mean that there is also a higher volume of sales at the top?
> 
> Take 5 houses:
> 
> ...




Yes the high end of town is performing well skewiffing the median average for this set of data. That is the problem ... it is increasing the "mean" average.


----------



## Smurf1976 (18 February 2014)

sptrawler said:


> Well Smurph, I'll tel you how stupid Perth is.
> I bought my house six years ago for $450,000, it like yours is in a middle socio-economic area, 10 km from CBD.
> Similar house, in my street, sold six months ago for $700,000.




Perth and Hobart are both cities located in the same country. They have the exact same changes in interest rates plus the exact same changes in any national laws (Eg income tax, negative gearing etc).

The only significant difference between in this context them is the state of the local economy. WA with the mining boom versus Tas with a clearly struggling local economy.

The local economic situation is a much bigger driver of house prices than most other factors so far as I can tell, and that is especially so in a situation where there is a disparity in economic performance between regions in the same country (since people will tend to migrate to the area with more employment opportunities).


----------



## sydboy007 (18 February 2014)

trainspotter said:


> Speculators and large corporations building whole suburbs did not infiltrate Texas. It's growth was due to "singular" domestic migration who purchased established properties. The original owners of the established properties in turn bought land and built homes. A much more orderly supply chain.
> 
> Once again we are NOT the U.S.A. There is plenty of land to develop BUT the banks are not lending to property developers and making it very hard to obtain finance atm. AND the punters do not want to live in the "outer" burbs. Sounding like a broken record here !!
> 
> ...




Seriously.  The coddled generation, being told you can't afford to buy a property to live in, so go the NG route and get an investment property to start the whole process off.  How warped is our society that we're considering it natural to force a family to buy their first home and then not live in it.

Then the argument of buying what you can afford and trading up.  If it generally takes around 7 years to break even on buying a property then selling and buying a second hopefully better property, then how long do you wait before trading up?  Even Liverpool NSW has a median house price of $447K.  That's an hour on the train into the city, or maybe $10 a day in tolls if you need to drive your car.  Liverpool is not a particularly affluent area.  Move further out to Penrith (50km) and the median house price drops to $372K, which is just over 7 times the median house hold income of the area.

Seems the current generation of home owners has forgotten how lucky they were.  I was able to buy my house in 97 for $300K which wasn't particularly cheap but I preferred to spend the extra money and have a short commute time to work.  With inflation that purchase price would be $464K.  I'd say I could sell for around the $900K mark.  In 1997 it was possible for a couple with kids to buy in my area and still have a decent life.  Now if you're trading up you'd still probably have a half million dollar loan.

How the property market will cope with the casualisation of the workforce I don't know.   Banks will be reluctant to loan to people who have variable pay.  No more secure jobs like the old fogies eh.  The below graph shows just how good the yunguns these days have it.

As for your 75K job hunter, what about the boomers giving themselves lump sum tax free super after 60 that can be used to pay off the mortgage, take a holiday, tart up the primary residence and then provide themselves with lifetime full aged pension.  Talk about having your cake and eating it.


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## sydboy007 (18 February 2014)

Smurf1976 said:


> Perth and Hobart are both cities located in the same country. They have the exact same changes in interest rates plus the exact same changes in any national laws (Eg income tax, negative gearing etc).
> 
> The only significant difference between in this context them is the state of the local economy. WA with the mining boom versus Tas with a clearly struggling local economy.
> 
> The local economic situation is a much bigger driver of house prices than most other factors so far as I can tell, and that is especially so in a situation where there is a disparity in economic performance between regions in the same country (since people will tend to migrate to the area with more employment opportunities).




That's true, but if an area has strong housing demand and brings new supply quickly to meet the demand, then prices don't tend to take off like a rocket.  You don't see new supply being released anywhere in Australia particularly quickly. Being able to bring new supply easily to the market also means land bankers have little incentive since there's not going to be too much real increases in land values.

A guy I worked with a few years back decided to buy a tear down out in the burbs of Sydney and put 2 or 3 town houses on the block.  Not particularly controversial you'd think.  Took him over a year to get through council and all the whinges from those around.  It was lucky he wasn't geared up.  It was his one and only foray into property development.  Stronger right of use / development for land owners would certainly help bring new supply quicker and cheaper to the market.  A national development code would also make it easier, but every local Govt has to have their own rules.  The NSW Govt has pretty much gave up the fight to improve things for developers.

We're a country without a national housing policy, seemingly the only rich country in the world without one.


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## sptrawler (18 February 2014)

Smurf1976 said:


> Perth and Hobart are both cities located in the same country. They have the exact same changes in interest rates plus the exact same changes in any national laws (Eg income tax, negative gearing etc).
> 
> The only significant difference between in this context them is the state of the local economy. WA with the mining boom versus Tas with a clearly struggling local economy.
> 
> The local economic situation is a much bigger driver of house prices than most other factors so far as I can tell, and that is especially so in a situation where there is a disparity in economic performance between regions in the same country (since people will tend to migrate to the area with more employment opportunities).




Very true, however, Perth is a very isolated city with a relatively small population when compared to Melbourne or Sydney.
Unlike those, we have a very small service industry and an even smaller tourist industry.
Everything is geared to the mining boom, it doesn't service any other industries. 

Perths industrial strip hasn't changed much in 40 years, if anything it is being run into the ground, no expansion or new industries.

I think we are in for a shock, but I've thought that for three years.


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## Julia (18 February 2014)

Smurf1976 said:


> Just one problem, the data does not support my argument since a house in the poorer suburbs of Hobart that would have been worth $200 - 250K a few years ago is now listed around the $150K mark and there are plenty of them in several suburbs.
> 
> There's the price crash, it's actually happened it would seem at least in Tas. Sure, they're dodgy houses (mostly) in generally bad areas, but the bottom line is that there's been a pretty big decline in their value.



All we seem to hear about is the price rise in capital cities, even a housing bubble etc.
But as above in Smurf's example, it ain't happening in other places.
I can only speak for regional coastal Queensland, attractive area, pop around 55,000, where average fall is more than 30% since the start of the GFC.

The houses are not dodgy.  They are ordinary, quite well kept houses in pleasant suburbs.  You can sell something in the $300Ks but anything over $500K, pretty well forget it.

New apartment buildings, even those right on the beachfront, are sitting empty.


----------



## sptrawler (18 February 2014)

Julia said:


> All we seem to hear about is the price rise in capital cities, even a housing bubble etc.
> But as above in Smurf's example, it ain't happening in other places.
> I can only speak for regional coastal Queensland, attractive area, pop around 55,000, where average fall is more than 30% since the start of the GFC.
> 
> ...




That is actually great news Julia. 
I for one, am fed up with the talk of meteoric rises in prices, it sounds like ramping to me.

It must be devastating for baby boomers, who don't own a house, that are nearing retirement.
All they hear or read about is stupid prices for houses, it is getting like the form guide for the horse racing.
Where is the next boom suburb? What will the median price be? How much will you have to pay?
Maybe a Royal Commission into how much corruption there is between the print media and the real estate industry could follow the union one.IMO


----------



## sydboy007 (19 February 2014)

Julia said:


> All we seem to hear about is the price rise in capital cities, even a housing bubble etc.
> But as above in Smurf's example, it ain't happening in other places.
> I can only speak for regional coastal Queensland, attractive area, pop around 55,000, where average fall is more than 30% since the start of the GFC.
> 
> ...




I suppose part of the focus on the capital cities is because that's practically where all of us live.  It's also easier to spin the story of property doubles every <insert number> years.  I'd say the smaller coast cities and areas that have been wearing the damage of the high dollar longest are the canaries of the housing market.  My parents live in a small town on the South Coast of NSW around 1.5-2 hours drives to Sydney depending on the traffic.  I suppose for a lot of wealthy Sydney siders it's a great holiday destination which has propped things up to a degree.  Plenty of empty holiday homes.  An avg 3 BR house still goes for a median of $550K and the price growth has been pretty good.  I'd say once you get a bit further from Sydney though the price gains are getting closing to falls as there's not a lot of work down there these days.



sptrawler said:


> That is actually great news Julia.
> I for one, am fed up with the talk of meteoric rises in prices, it sounds like ramping to me.
> 
> It must be devastating for baby boomers, who don't own a house, that are nearing retirement.
> ...




Keep dreaming.  The housing banking media politico complex feed off each other.  No one is going to do anything till we're sweeping up the ashes and staring around at utter devastation, being told no one could have foreseen what happened.

I say keep renting if you don't own a place, especially since rents are lower than interest rates.  You're way in front, especially if you're saving the difference between a mortgage and rent.


----------



## sydboy007 (19 February 2014)

could be the canaries in Sydney are having trouble keeping up the siren song of it's never been a better time to buy.


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## McLovin (19 February 2014)

trainspotter said:


> Yes the high end of town is performing well skewiffing the median average for this set of data. That is the problem ... it is increasing the "mean" average.




Except the median is the middle value of the dataset, not the average. That is if you have 5 houses arranged by price the median price will be the value of house number 3. There is no skewiffing because of high end houses.


----------



## Value Collector (19 February 2014)

Julia said:


> All we seem to hear about is the price rise in capital cities, even a housing bubble etc.
> But as above in Smurf's example, it ain't happening in other places.
> I can only speak for regional coastal Queensland, attractive area, pop around 55,000, where average fall is more than 30% since the start of the GFC.
> 
> ...




That goes along with what I said in an earlier post, the property bears continually reference Australia's large land mass as a reason against high property prices in the capital cities, the fact is though people seem hell bent on cramming themselves into the largest capital cities.

It doesn't matter how much desert we have or as you pointed out nice coastal towns or rural centres, the prices of the capital cities will be high as long as people refuse to move out of them.

people here complain about high prices and then in the same breath scoff at the idea of living more than 50kms from the cbd of a capital city, and not only that, the want to live in a large house, and scoff at the idea of living in a cupboard sized apartment like the English ones they compare the prices of aussie mcmansions to.


----------



## odds-on (19 February 2014)

sptrawler said:


> That is actually great news Julia.
> I for one, am fed up with the talk of meteoric rises in prices, it sounds like ramping to me.
> 
> It must be devastating for baby boomers, who don't own a house, that are nearing retirement.
> ...




The media analysis of the housing market is amusing. This is my favourite from NZ - http://www.interest.co.nz/property/rent-or-buy

Lots of data analysis, but as per the posts by “Basel Brush III” and “Philip O’Connor” the following assumptions are incorrect: 

1.	They compare renting a median house with buying a house in the first quartile
2.	No account of income generated from the deposit.

Surely, if we are analysing the national averages to obtain an objective view of the rent vs buy decision you would make the correct assumptions.

Cheers


----------



## McLovin (19 February 2014)

Value Collector said:


> That goes along with what I said in an earlier post, the property bears continually reference Australia's large land mass as a reason against high property prices in the capital cities, the fact is though people seem hell bent on cramming themselves into the largest capital cities.
> 
> It doesn't matter how much desert we have or as you pointed out nice coastal towns or rural centres, the prices of the capital cities will be high as long as people refuse to move out of them.
> 
> people here complain about high prices and then in the same breath scoff at the idea of living more than 50kms from the cbd of a capital city, and not only that, the want to live in a large house, and scoff at the idea of living in a cupboard sized apartment like the English ones they compare the prices of aussie mcmansions to.




I made the same comment about how those comparisons on housing affordability always seem to include places in the US that no one wants to move to. It's just a fact of life that more people are going to want to live in NY, LA, SF than are going to want to live in Indianapolis, Oklahoma City or Omaha. And people will pay more to live in those cities because of the amenity they offer.


----------



## trainspotter (19 February 2014)

sydboy007 said:


> Seriously.  The coddled generation, being told you can't afford to buy a property to live in, so go the NG route and get an investment property to start the whole process off.  How warped is our society that we're considering it natural to force a family to buy their first home and then not live in it.
> 
> Then the argument of buying what you can afford and trading up.  If it generally takes around 7 years to break even on buying a property then selling and buying a second hopefully better property, then how long do you wait before trading up?  Even Liverpool NSW has a median house price of $447K.  That's an hour on the train into the city, or maybe $10 a day in tolls if you need to drive your car.  Liverpool is not a particularly affluent area.  Move further out to Penrith (50km) and the median house price drops to $372K, which is just over 7 times the median house hold income of the area.
> 
> ...




JUST FRICKING *LOL* ... Go and sell your 900k inner city home and rent for Chrissake and do us all a favour and quityabitching ... You are on the roller coaster as well but you are chucking out venom to people who are making money out of RE. JUST FRICKING *LOL* !!

P.S. We all do not live in Sydney DERRRRRRRRRRR


----------



## trainspotter (19 February 2014)

McLovin said:


> Except the median is the middle value of the dataset, not the average. That is if you have 5 houses arranged by price the median price will be the value of house number 3. There is no skewiffing because of high end houses.




Ermmmmmmmmmmmmmmmmmmmmmmm not you as well !!!!!!!! 

The average price is being drawn up as the TOP end of town is selling for higher.

The median price is being drawn up as the TOP end of town is selling for higher which in turn makes people emotional and want to pay more for the lower end of houses as the spruikers keep pushing the same excrement upon them that NOW is the time to buy blah blah blah ... has anyone here actually got any experience in RE other than thinking about or just owning a singular residence? (or in some cases a few set and forget no brainer IP's)


----------



## Value Collector (19 February 2014)

odds-on said:


> 2.	No account of income generated from the deposit.




A deposit offsets interest you would have had to pay if you didn't pay a deposit.

So if you pay off $80,000 off the value of your house in the form of an initial deposit you are saving interest at probably a higher interest rate than if you had the money in the bank.

eg, $80,000 in the bank probably earns 3%, $80,000 in the home loan saves you 6%

Also the interest earned on the bank account is taxable, the interest saved by paying off your loan is not taxable.


________________

But to me, either way you are renting. You can either rent a house or you can rent money that you use to by the house.

Renting the house is cheaper at first, But your repayments on renting the money go down over the years where as your rent on the house will pretty much go up forever.


----------



## trainspotter (19 February 2014)

Have a look at this renting vs buying calculator.

http://www.yourmortgage.com.au/calculators/rent_vs_buy/

Do your own sums .... I personally believe their "appreciated home value" is WAY OFF !!! Well maybe if you bought in the CERTAIN areas that are performing this MIGHT be the case but I seriously doubt it.

Current trending is about equal IMO ... 

Gotta love the byline at the bottom _"There are many emotional reasons for wanting to own the home that you live in, even when the numbers don't necessarily justify the purchase"_


----------



## Bill M (19 February 2014)

This is what's going on at the Northern Beaches of Sydney, no shortage of buyers and it's all about location.

---
Derelict Mona Vale shack sells for $1.8 million

The old timber cottage hadn’t been listed for sale in half a century and had just two bedrooms and no garage.

Despite that, 47 contracts issued on the home and there was aggressive bidding and high emotion at the auction.

http://www.dailytelegraph.com.au/newslocal/northern-beaches/derelict-mona-vale-shack-sells-for-18-million/story-fngr8hax-1226830647942
---


----------



## trainspotter (19 February 2014)

Wanna know where all the money goes? To develop a 11 unit site just for Water Authority headworks fees is over $70,000 ... Electricty Supplier headworks fees is over $80,000 and this is just for them to look at the project and NOT actually install anything in the subdivision. No upgrading of meters or moving sewer connections nor installing a transformer on the property. Nuffin. And you wonder why developers are not building anything and why the costs are so expensive?



> A Centre for International Economics report found that taxes accounted for *$267,879* of the average total dwelling cost of $639,533.
> 
> “Government taxes are forcing developers out of the market,” said Peter Icklow, CEO of developer Monarch Investments. “I’m selling house-and-land packages for $500,000 each and then paying the government $50,000 for each settlement. “That’s after paying taxes all the way through the development process.”




http://www.news.com.au/finance/real...50k-per-property/story-fnd91nhy-1226831181270


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## Klogg (19 February 2014)

trainspotter said:


> Wanna know where all the money goes? To develop a 11 unit site just for Water Authority headworks fees is over $70,000 ... Electricty Supplier headworks fees is over $80,000 and this is just for them to look at the project and NOT actually install anything in the subdivision. No upgrading of meters or moving sewer connections nor installing a transformer on the property. Nuffin. And you wonder why developers are not building anything and why the costs are so expensive?




Yeah, I see this first hand... My dad is a builder (smaller scale, hasn't touched an 11 unit site as yet), but the planning stage is just a nightmare. Open space levy, Cultural Heritage Management plans (and in Sunshine [Melbourne] of all places!), lengthy planning approvals, shadow diagrams, landscape bonds, City West water approvals, Electricity Supplies (as trainspotter mentioned)... and the list goes on.
While not all of these are taxes, they take time and effort and ultimately add to cost.


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## trainspotter (19 February 2014)

Beware the Asian Invasion ... my @rse !!



> Under FIRB regulations, foreigners can only buy: *a new dwelling,* which must be purchased directly from the developer and cannot have been previously occupied for more than 12 months; a vacant block of land for residential development, and construction must commence within 24 months of approval; or vacant land for the development of multiple dwellings.
> 
> The only way foreign investors can buy an established property, is if they knock it down and develop multiple residences on the site.
> 
> If the property is uninhabitable, they can replace it with a single residence. In either case, the properties cannot be rented out prior to redevelopment. Because foreigners can only purchase brand new or off-the-plan, we can assume the “Asian packed” auctions of established houses in Chatswood, Eastwood and Epping are actually auctions full of Australians, who happen to have Asian ancestry




http://www.news.com.au/finance/real...ion-just-hot-air/story-fnd91nhy-1226829064131


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## satanoperca (19 February 2014)

trainspotter said:


> Beware the Asian Invasion ... my @rse !!
> 
> 
> 
> http://www.news.com.au/finance/real...ion-just-hot-air/story-fnd91nhy-1226829064131




Just because rules are in place doesn't mean they are being policed. It is illegal for people to sell drugs, but many still do and yes some get caught.

I wonder how many foreigners by vacant land and do develop within the defined period. Who is policing. I assume no one.


----------



## trainspotter (19 February 2014)

satanoperca said:


> Just because rules are in place doesn't mean they are being policed. It is illegal for people to sell drugs, but many still do and yes some get caught.
> 
> I wonder how many foreigners by vacant land and do develop within the defined period. Who is policing. I assume no one.




FIRB is data matching don't you know ? Every settlement is monitored and recorded as well as identity is checked by passports and birth certificates these days.



> FIRB will also undertake a significant new program of rolling three-way proactive data-matching using FIRB data, State and Territory lands and property office transactional data and Commonwealth Department of Immigration and Citizenship (DIAC) visa status data.
> 
> "I can confirm that we have already started this program through trials in Sydney and Melbourne," said the Assistant Treasurer.
> 
> ...




http://ministers.treasury.gov.au/Di...0/074.htm&pageID=003&min=njsa&Year=&DocType=0


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## Smurf1976 (19 February 2014)

Value Collector said:


> people here complain about high prices and then in the same breath scoff at the idea of living more than 50kms from the cbd of a capital city, and not only that, the want to live in a large house, and scoff at the idea of living in a cupboard sized apartment like the English ones they compare the prices of aussie mcmansions to.




I think the point is that someone who works in any given occupation expects to be able to afford a similar house to the one their parents could afford if working in the same job. Not exactly the same, it would be further out due to population growth in the cities, but similar.

It's the same with anything. Someone born today will grow up expecting to be able to afford a car when they're an adult. If the price of cars, petrol, rego etc doubles relative to wages then they're going to feel decidedly unhappy with such an outcome.


----------



## Smurf1976 (19 February 2014)

trainspotter said:


> Wanna know where all the money goes? To develop a 11 unit site just for Water Authority headworks fees is over $70,000 ... Electricty Supplier headworks fees is over $80,000 and this is just for them to look at the project and NOT actually install anything in the subdivision. No upgrading of meters or moving sewer connections nor installing a transformer on the property. Nuffin.



Ah yes, the wonders of de-regulation of the utilities. 

Prior to all this nonsense, if a sparky needed something connected then it was simply a matter of a quick phone call and someone turned up to do it, quite often the same day. Have the paperwork ready when the truck turns up and all good, nothing to worry about. And if it's just a query then no worries, someone will come out and have a look and we can meet on site to discuss it.

Someone will come out? Yes, I mean someone who knows about such things and can actually answer any likely question there and then. And if they can't answer it (eg does the existing line to the area have enough capacity for a 100 house sub-division to be built) then they'd just do a bit of investigation and come back with the answer. 

Then some idiot decided that everything had to be disaggregated, made competitive ("competitive" being slang for "expensive") and that a myriad of paperwork had to be done. And that all contact goes through a call center where you'd be lucky to find a single person who actually understands anything beyond the basics.

So now you need to contact the retailer and also the electrical safety regulator and fill out plenty of forms. Then at some point the distributor gets handed the job, and if it's a "complex" one then it gets passed on to the design team who are guaranteed to charge a fortune. A couple of months later they'll come back with a design and a quote that will make your eyes pop out. Then you accept that quote and within a few months it all gets done.

As I've noted previously in this thread, the concept of actual efficiency has been almost completely lost in Australia amidst a desire to replace what worked with what sounds good. Water, gas, electricity etc are so intertwined in everything that the increasing cost of those services directly adds to the cost of doing practically everything thus making Australia less competitive. A point that few decision makers seem to grasp.

As for the broader economic situation, it seems to be unravelling alarmingly fast at the moment. Ford, Holden then Toyota all going and the announcements weren't far apart especially for the latter two.

Then Forge went broke whilst SPC struggles on only due to state government assistance.

Yesterday Alcoa announced the closure of 3 plants, an issue that would at least partly related to energy costs given that electricity is a huge part of the cost of aluminium production. 

And now today there's media speculation that Shell have done a deal to sell their entire downstream assets in Australia, that is all the service stations and the only Shell refinery that they haven't already closed, to a new company which is expected to close the Geelong refinery.

A related key point is that Shell is essentially moving to pure resource extraction in the Australian context. Take it out of the ground and ship it overseas. Alcoa going half way down the same track. That says rather a lot about Australia's competitiveness - the only businesses which seem to be viable are those which for physical reasons are difficult to relocate (eg mining). Everything else is struggling at best. As another example, Rio Tinto currently has their entire downstream aluminium business for sale. They too see Australia's future as a hole in the ground rather than the production of something actually valuable.

Big job loss announcements coming not far apart one after another. Sounds awfully like the last recession to me.


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## Value Collector (19 February 2014)

Smurf1976 said:


> I think the point is that someone who works in any given occupation expects to be able to afford a similar house to the one their parents could afford if working in the same job. Not exactly the same, it would be further out due to population growth in the cities, but similar.
> 
> It's the same with anything. Someone born today will grow up expecting to be able to afford a car when they're an adult. If the price of cars, petrol, rego etc doubles relative to wages then they're going to feel decidedly unhappy with such an outcome.




There is a couple of problems with that though,

1, a lot seem to want to start where their parents finished, eg. There parents first home and early lifestyle would not be "good enough" for them

2, if the population grows each generation, something has to give, the land content gets more expensive, you'll have to expect higher density or move further out. If you try to maintain same density same location, it will be more expensive. It probably used to be possible to own  enough land to keep a horse in parramatta once, not anymore, its irrational to think you can expect to use the same land content your great grandparents did.

3, some people want to live consumer life styles never saving and taking on debt to fund cars and holidays in their 20's and then wonder why they cant buy a mc mansion. You cant live a lifestyle of hyper consumption and still expect to be able to buy large capital items.


----------



## qldfrog (19 February 2014)

Value Collector said:


> There is a couple of problems with that though,
> 
> 
> 
> 2, if the population grows each generation, something has to give, the land content gets more expensive, you'll have to expect higher density or move further out. If you try to maintain same density same location, it will be more expensive. It probably used to be possible to own  enough land to keep a horse in parramatta once, not anymore, its irrational to think you can expect to use the same land content your great grandparents did.



smurf was already pointing that this would be further out


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## satanoperca (19 February 2014)

trainspotter said:


> FIRB is data matching don't you know ? Every settlement is monitored and recorded as well as identity is checked by passports and birth certificates these days.
> http://ministers.treasury.gov.au/Di...0/074.htm&pageID=003&min=njsa&Year=&DocType=0




Come on Train, that was date 2010 and was a trial, I can find no mention that the trail was implement and resulted in new monitoring of the FIRB regulations through data matching. Geez, it should not be difficult to do.   Just more bulls''t rhetoric form pollies that we are attempting to do something. Rather poor, I see that all political parties are protecting Australians futures.  lol.

I can find no further mention that the FIRB laws regarding the purchase of residential property and being inforced. This is well within my expectations and very small sample of 2 Foreign investors that have purchased property in the last 12 months with any checks. I off to China again for a few weeks on business, I will ask my colleagues and suppliers what their perspective is on purchasing property in Australia without being a citizen.

I person think the govnuts do not care, it is all taxes and revenue for them. Property cannot go down, it is political suicide, it will never be a rational market. 

Cheers


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## Mrmagoo (19 February 2014)

Value Collector said:


> There is a couple of problems with that though,
> 
> 1, a lot seem to want to start where their parents finished, eg. There parents first home and early lifestyle would not be "good enough" for them




My parents started and finished in a very basic 3 bedroom house in the outer suburbs. That is all I want. That is what I am accustomed to having I don't need anything else. I don't mind an hour on the train. I can just read a book or use some computer device.

What I can't do is a 350k-400k mortgage that such a basic home will require.


----------



## sydboy007 (19 February 2014)

satanoperca said:


> Come on Train, that was date 2010 and was a trial, I can find no mention that the trail was implement and resulted in new monitoring of the FIRB regulations through data matching. Geez, it should not be difficult to do.   Just more bulls''t rhetoric form pollies that we are attempting to do something. Rather poor, I see that all political parties are protecting Australians futures.  lol.
> 
> I can find no further mention that the FIRB laws regarding the purchase of residential property and being inforced. This is well within my expectations and very small sample of 2 Foreign investors that have purchased property in the last 12 months with any checks. I off to China again for a few weeks on business, I will ask my colleagues and suppliers what their perspective is on purchasing property in Australia without being a citizen.
> 
> ...




http://news.domain.com.au/domain/no...leave-to-buy-598000-house-20130327-2gu0p.html

Rules governing foreign ownership of Australian real estate have been proved a farce after authorities granted a fictional person leave to buy a $598,000 Melbourne house.

It took less than one business day for the Foreign Investment Review Board to sign off on a pending purchase in Vermont South by "Chodley Wontok", a non-existent Russian national with a non-existent Australian visa.

"You can imagine my surprise when the email showed up saying I was allowed to buy the property," said the applicant behind the stunt, who asked for his real name to be withheld. "The system is a joke."

The stunt has exposed a potentially serious breach in the review board's online application system, OREN, which was introduced in 2011 and is designed to streamline the process and lower compliance costs for the government.

- - - Updated - - -



Mrmagoo said:


> My parents started and finished in a very basic 3 bedroom house in the outer suburbs. That is all I want. That is what I am accustomed to having I don't need anything else. I don't mind an hour on the train. I can just read a book or use some computer device.
> 
> What I can't do is a 350k-400k mortgage that such a basic home will require.




And these days that's considered cheap


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## satanoperca (19 February 2014)

sydboy007 said:


> http://news.domain.com.au/domain/no...leave-to-buy-598000-house-20130327-2gu0p.html
> 
> Rules governing foreign ownership of Australian real estate have been proved a farce after authorities granted a fictional person leave to buy a $598,000 Melbourne house.
> 
> ...




Yes, found that article on MB. I find it quite amusing that the Chinese Dragon will one day rule the western world. Conquer by trade not force. I find it also amusing that I cannot by property in China as non resident/citizen. 

I am sure glad I like Chinese food, because, as like the US, they will one day own us.

You can see how the indigenous people of this great land feel and it seems history does repeat itself.

Cheers


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## Uncle Festivus (20 February 2014)

satanoperca said:


> Yes, found that article on MB. I find it quite amusing that the Chinese Dragon will one day rule the western world. Conquer by trade not force. I find it also amusing that I cannot by property in China as non resident/citizen.
> 
> I am sure glad I like Chinese food, because, as like the US, they will one day own us.
> 
> ...




The whole of China is a bubble - get ready for the pop!



> China’s new home sales last year exceeded $1 trillion for the first time as property prices in cities the government considers first tier surged in the absence of more nationwide property curbs.
> 
> The value of new homes sold in 2013 rose 27 percent from 2012 to 6.8 trillion yuan ($1.1 trillion), National Bureau of Statistics said in a statement today. New-home prices in December climbed 20 percent in Guangzhou and Shenzhen from a year earlier, and jumped 18 percent in Shanghai and 16 percent in Beijing, the bureau of statistics said Jan. 18.




Here's some perspective of our very own debt financed 'not-a-bubble' bubble.......and this chart won't show the last 5 months of mayhem.....




http://www.google.com/trends/explore#q=Property+Bubble&cmpt=geo&geo=AU


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## Macro Polo (20 February 2014)

satanoperca said:


> Yes, found that article on MB. I find it quite amusing that the Chinese Dragon will one day rule the western world. Conquer by trade not force. I find it also amusing that I cannot by property in China as non resident/citizen.
> 
> I am sure glad I like Chinese food, because, as like the US, they will one day own us.
> 
> ...




Just like Japan and the Soviet Union eh comrade? Investment bubbles rarely end kindly, and China has a huge one.

More than that though, central planning has always proved to be horrendously wasteful and non-productive as an allocator of capital - China is no different, and only financial repression prevents insolvency and loss making enterprises from being realised. If investment bubbles are bad, centrally planned ones are probably worse due to the lack of return generated on silly projects and widespread corruption.


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## trainspotter (20 February 2014)

It would appear that "Chodley Wontok" is actually a journalist by the name of Leith van Onselen who also writes for the Unconventional Economist and for Macrobusiness. Leith has been squawking for years that property should be falling and it is a massive bubble.

Oh looky here he is bleating on about foreign investment and how the "excited young couples" are missing out on their dream home. More emotive words anyone?

http://www.macrobusiness.com.au/2014/02/foreign-property-investors-alter-social-fabric/



> Every weekend in Sydney, young Australian couples are turning up at auctions excited at the prospect of finally owning their own home, only to find that other bidders are wealthy foreign buyers with money to burn…




Ok so lets say "Chodley Wontok" has been "approved to purchase" from FIRB ... then what? Oh yeah that's right it has to go to a settlement agent or solicitor who WILL NOT settle on the property until they have established proof of identity (passport, visa, birth certificate) which then in turn is recorded with the relevant authorities (Titles office, State Revenue Dept etc) BEFORE a purchase can be completed.

Just FRICKING LOL at this one. A media beatup to suit an "economist" who has been rubbishing the "bubble" and has written volumes as to why it should burst ala Steven Keen style. Anyone fancy a walk from Kosciuszko ?

This assclown is lucky he is not sued for fraud IMO


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## prawn_86 (20 February 2014)

trainspotter said:


> Ok so lets say "Chodley Wontok" has been "approved to purchase" from FIRB ... then what? Oh yeah that's right it has to go to a settlement agent or solicitor who WILL NOT settle on the property until they have established proof of identity (passport, visa, birth certificate) which then in turn is recorded with the relevant authorities (Titles office, State Revenue Dept etc) BEFORE a purchase can be completed.




You dont think it is easy enough to find a bent lawyer etc who would look the other way? Shouldnt that step be part of the FIRB approval? Verifying who they are actually approving? What if he was a known criminal? I hope/assume they run even a basic name check, but with this story i would doubt it


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## trainspotter (20 February 2014)

Mrmagoo said:


> My parents started and finished in a very basic 3 bedroom house in the outer suburbs. That is all I want. That is what I am accustomed to having I don't need anything else. I don't mind an hour on the train. I can just read a book or use some computer device.
> 
> What I can't do is a 350k-400k mortgage that such a basic home will require.




http://www.realestate.com.au/property-villa-nsw-werrington-116173787

3 bedroom, 2 bathroom, Penrith/Werrington area and $310,000. FHB Grant of $7000 and NIL stamp duty applicable. Settlement fees of approx $3,000 and lets say a 5% deposit and borrowing IO $294,000 = $320 per week.

Yep no way I can afford that !


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## trainspotter (20 February 2014)

prawn_86 said:


> You dont think it is easy enough to find a bent lawyer etc who would look the other way? Shouldnt that step be part of the FIRB approval? Verifying who they are actually approving? What if he was a known criminal? I hope/assume they run even a basic name check, but with this story i would doubt it




So FIRB is not infallible. A bent lawyer cannot suddenly produce passports or birth certificates? They have to be sent to the Titles Office prior to them transferring the ownership to the new buyer. Just to pick on one link in the chain is completely ignoring the balances and checks in place prior to settlement. I am sure a bank is gonna want some ID prior to tending settlement? Oh that's right ... all "foreigners" pay CASH 

P.S. Is the story true or is a hack out there furthering his own agenda? I am sure FIRB would be taking a very BIG interest in this one !!


----------



## prawn_86 (20 February 2014)

trainspotter said:


> borrowing *IO* $294,000 = $320 per week.
> 
> Yep no way I can afford that !




Purely out of interest as i have no idea; Were Interest Only loans common 20 - 30 years ago? I would of thought some principal was being paid off on the original loans back then but i could be wrong. What happens in 15, 20, 30yrs when you have only paid off the interest and still have a large amount of debt?

A couple would need to be earning at least 100k combined before tax to classify this as below mortgage stress, which i believe is 30%, if they were to pay $500 pw in order the eat into the principal


----------



## prawn_86 (20 February 2014)

trainspotter said:


> So FIRB is not infallible. A bent lawyer cannot suddenly produce passports or birth certificates? They have to be sent to the Titles Office prior to them transferring the ownership to the new buyer. Just to pick on one link in the chain is completely ignoring the balances and checks in place prior to settlement. I am sure a bank is gonna want some ID prior to tending settlement? Oh that's right ... all "foreigners" pay CASH
> 
> P.S. Is the story true or is a hack out there furthering his own agenda? I am sure FIRB would be taking a very BIG interest in this one !!




My whole point is what role (if any) is the FIRB providing? Do they say to the lawyer/bank/title office; "We would like to see some ID docs when you have them"? Or do they simply rubber stamp anything in a single owners, private name?

If a fake name can get approved, what service are they actually providing?


----------



## trainspotter (20 February 2014)

prawn_86 said:


> Purely out of interest as i have no idea; Were Interest Only loans common 20 - 30 years ago? I would of thought some principal was being paid off on the original loans back then but i could be wrong. What happens in 15, 20, 30yrs when you have only paid off the interest and still have a large amount of debt?
> 
> A couple would need to be earning at least 100k combined before tax to classify this as below mortgage stress, which i believe is 30%, if they were to pay $500 pw in order the eat into the principal




It wasn't until the 1980's when deregulation occurred that IO loans became available. Why is it that everyone is so locked in on this 20 - 30 year loan thingy? An average loan lasts 7 years before refinancing or property sold ! Circumstances change. People change jobs, get married, die even. Nothing remains constant.

Can't argue with the maths on nett income/mortgage stress etc. How the hell do people pay of 600k loans then?  Must be on BIG money to afford this kind of debt is all I can think of.

FIRB provide guidelines that are enforceable after the balances and checks have been provided by "others". I do believe this is their role to investigate every application. Every time I have dealt with them it is at least 60 to 90 days before you get an answer and usually it is requesting more information and always in writing !! To have "Chodley Wontok" approved via email in ONE DAY is remarkable to say the least !!


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## sydboy007 (20 February 2014)

prawn_86 said:


> Purely out of interest as i have no idea; Were Interest Only loans common 20 - 30 years ago? I would of thought some principal was being paid off on the original loans back then but i could be wrong. What happens in 15, 20, 30yrs when you have only paid off the interest and still have a large amount of debt?
> 
> A couple would need to be earning at least 100k combined before tax to classify this as below mortgage stress, which i believe is 30%, if they were to pay $500 pw in order the eat into the principal




Pre mid 90s 15 year loans were fairly common

Then 25 year loans becamse the norm

With 30 years also acceptable.

Now it's 40 year loans.

If the only way for someone to get into the housing market is via I/O loans then REALLY REALLY need to be discouraged.  That kind of loan leaves little left over for when something goes wrong.


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## finnsk (20 February 2014)

sydboy007 said:


> If the only way for someone to get into the housing market is via I/O loans then REALLY REALLY need to be discouraged.  That kind of loan leaves little left over for when something goes wrong.



When I came to this country in 1991 all I was hearing from people I was working with that I/O loans is the way to go because prices always go up, we can buy a better property, it is like paying rent but with the owner ship of the property and therefor the increase in value, I dont like that idea but must admit that I have used I/O for the purpose for being able to pay of mortgage quickly and still have the facility for later when/if needed, also bank is holding the deed one less responsibility and for only $2 per month I think it is worth it


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## trainspotter (20 February 2014)

There are that many options out there for financing that IO is only one way to go. Revolving line of credit is another whereby you can choose to pay IO or place lump sums into your loan then redraw at will. 5.88% current rate with NAB. Split facilities with IO for a nominated % of loan and PI for a nominated % of loan. 

DYOR ...


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## trainspotter (20 February 2014)

Spot the difference in subdivisions:-




Ellenbrook - Perth - Western Australia




Port St Lucie - Florida - USA




Medina Sidonia - Cadiz - Spain




Westside - Galway - Ireland




Kellyville - Sydney - NSW


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## Smurf1976 (20 February 2014)

trainspotter said:


> Spot the difference in subdivisions



Based solely on those images:

Florida is obviously the most expensive to build, since there's a lot of work required to create the land itself assuming that's not a natural land formation which it doesn't appear to be. They'd have to either fill in land otherwise below water, or cut channels through land to let the water in. Either way that's big $ so definitely the highest cost in Florida. 

Sydney and Perth would be next. Nothing has really been done with the land itself other than roads etc and the houses.

Ireland would be next but is very high density not directly comparable to Perth, Sydney or Florida.

Spain would be cheapest to build just plonked in a field (the land itself being of little inherent value). 

So how does the cost of one of these houses actually compare? How much cheaper is a house in Sydney or Perth compared to those in Florida?


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## Smurf1976 (20 February 2014)

trainspotter said:


> Ermmmmmmmmmmmmmmmmmmmmmmm not you as well !!!!!!!!
> 
> The average price is being drawn up as the TOP end of town is selling for higher.
> 
> The median price is being drawn up as the TOP end of town is selling for higher which in turn makes people emotional and want to pay more for the lower end of houses as the spruikers keep pushing the same excrement upon them that NOW is the time to buy blah blah blah ... has anyone here actually got any experience in RE other than thinking about or just owning a singular residence? (or in some cases a few set and forget no brainer IP's)



The point being made by myself and others is about the maths, not about real estate as such.

Whether the top sells for $500K or $500 million does not in itself change the median price. For the median to go up, the price of a house in the middle needs to go up.

I don't doubt that the price of "top" houses may well influence the price of those in the middle. But it's the actual price of those in the middle, not the top, which determines the median.

The point being made is about maths, not real estate as such. By definition the median is always the one in the middle be it house prices, sports scores, weather or anything else.

If 5 houses are given away free and another 4 sell for $500K each then the median price is zero. If one of the 4 sold for $10 million then the median is still zero.


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## trainspotter (20 February 2014)

Smurf1976 said:


> Based solely on those images:
> 
> Florida is obviously the most expensive to build, since there's a lot of work required to create the land itself assuming that's not a natural land formation which it doesn't appear to be. They'd have to either fill in land otherwise below water, or cut channels through land to let the water in. Either way that's big $ so definitely the highest cost in Florida.
> 
> ...




Florida has created the land by digging into the ground and the water table naturally seeps in. Look at the style of houses built. ALL the same design and built by a developer and sold to nupties at 100% LVR. Hello Mr. Housing Bubble.

Ireland was developed by greedy developers with German money and in areas where no one wanted to live but council regulations insisted that this is where the subdivisions had to go. No jobs, infrastructure etc et al led to their housing bubble.

Spain ... ditto to above but was marketed to the Brits as "holiday" homes. Generally with a golf course and miles from the beach. Hello Mr Housing Bubble.

Perth - higher density but HUGE infrastructure costs as waste management (sewer etc) as well as POS zoning laws are insane in WA. Note the style and size difference in EVERY single house. Record peak at $539,000 median price range. More pus to be squeezed out YET but huge amounts of land available on the coast to be developed.

Sydney - The "spot to be" ... $655,000 median price range  Mainly due to coastal and "TOP" end of town dragging middle range properties higher as buyers get emotional. Signs of bubble territory.

Not possible to compare these on a flat out price comparison as 3 out of 5 have suffered massive price corrections. Spain also has massive unemployment (always has) so do you compare an income ratio? I am not sure if there is any way you could compare them unless you drew a line in the sand at "peak" price curve perhaps? Too much like research for mine.

It was more along the lines of that Australia is "different" in it's housing structure whereby singular dwellings are constructed for individual people. So if Australia was to show signs of a "bubble" it would be more along the lines of a "bubble wrap" as in a certain area would "pop" but not necessarily bring the whole circus tent toppling down.

Just my opinion of course and we may see a massive correction in the near future as predicted by the "economists".


----------



## trainspotter (20 February 2014)

Smurf1976 said:


> The point being made by myself and others is about the maths, not about real estate as such.
> 
> Whether the top sells for $500K or $500 million does not in itself change the median price. For the median to go up, the price of a house in the middle needs to go up.
> 
> ...




PULLLEEEEEZE ... The price in the middle IS going UP cause the people are being driven by fear and greed as they see the TOP end of town selling, then they get emotional that they might miss out and end up paying more for the middle / lower priced houses. I do understand what the difference is in a maths equation and I even posted a link 

http://www.wisegeek.org/what-is-the-difference-between-median-and-mean.htm



> These methods are both used to find a “typical” value from a set of data. The mean is the most commonly used measurement of central tendency, but there are cases where it is not appropriate. For example, the data may be *“skewed,” *meaning that most of the numbers are toward either the low or the high end of the scale, or that there is one value that is wildly different from all the others — this is known as an outlier. Especially in a small set of data, the average value in these cases will not be typical.




I am not sure Smurf1976 if what I am writing is obviously not making sense so I will endeavour to make my style of writing easier to understand in future. 

P.S. I also used the word skewiffed in my original statement. If the TOP end of town is selling more than the lower end in volume than what is the median doing?


----------



## Smurf1976 (20 February 2014)

trainspotter said:


> Why is it that everyone is so locked in on this 20 - 30 year loan thingy?




Because they are comparing now with the 1990's or earlier and those _buying_ a house reasonably expect to _own_ it at some point, the historic norm being within 25 years at most and that's what people are comparing to.

That was always possible in the past and if this country is going anywhere other than backwards should be possible now under similar circumstances.

It's a generational thing. Did the Boomers need to make constant payments for 40 years, with little benefit of rising wages due to inflation, in order to own a house? Someone might have but the vast majority had it a LOT easier than that, 17% interest rates included.

The whole debate about the social implications of house prices is essentially comparing one generation to another, and noting that housing today is considerably more expensive than was historically the case. 

It comes down to expectations. Like most I grew up fully aware that most adults worked in a single job at any point in time, lived in free standing houses that they either owned outright or were paying off, had at least one car per household sometimes two, practically everyone had access to decent food, water, electricity, a phone and so on. As such, I reasonably expect that I can also work one job at any given time and be able to afford all those things plus whatever else technology brings along (noting that as technology develops prices naturally decline in real terms).

The surest way to upset anyone is to create an expectation that is subsequently not fulfilled. Money, career, relationships, whatever - once an expectation is created, either it is met or they'll be unhappy. But they would not be unhappy if the expectation had never been created in the first place - nobody in 1980 was lamenting the lack of mobile phones or music festivals or having to get out of the chair and physically turn the knob on the TV to change between the two (or four in the bigger cities) TV stations that existed at the time. But there would be a lot of very unhappy people if mobiles, festivals and remote controls all disappeared tomorrow since they are now an expectation.


----------



## Smurf1976 (20 February 2014)

trainspotter said:


> I am not sure Smurf1976 if what I am writing is obviously not making sense so I will endeavour to make my style of writing easier to understand in future.




I, and I think a few others, have taken your comment as "a rise in prices at the top is pushing the median price up" and taking that to mean in a mathematical sense which is not correct.

But I think what you are really saying is that the actual price of a "median house" is being bid up to some extent due to the high prices being paid for "top" properties?

Anyway, we're on the same page now I think. Maybe some disagreements but it's a good debate let's not get bogged down on a definition.


----------



## trainspotter (20 February 2014)

Smurf1976 said:


> Because they are comparing now with the 1990's or earlier and those _buying_ a house reasonably expect to _own_ it at some point, the historic norm being within 25 years at most and that's what people are comparing to.




Dream on .. that was 1950's when the population bought one house and stayed in the one job. The times they are a changing. Sydney in 1981 was STILL the most expensive place to live in OZ at 5.2 times the average income. 1981 house Sydney = $79,000. Average income = $15,100. Anything above 5 is out there. Sydney now at 9 times is in the stratosphere. Now once again we are talking averages .. not everyone is "average"


----------



## trainspotter (20 February 2014)

Smurf1976 said:


> I, and I think a few others, have taken your comment as "a rise in prices at the top is pushing the median price up" and taking that to mean in a mathematical sense which is not correct.
> 
> But I think what you are really saying is that the actual price of a "median house" is being bid up to some extent due to the high prices being paid for "top" properties?
> 
> Anyway, we're on the same page now I think. Maybe some disagreements but it's a good debate let's not get bogged down on a definition.




I wrote this 







> The median price is being drawn up as the TOP end of town is selling for higher which in turn makes people emotional and *want to pay more* for the lower end of houses as the spruikers keep pushing the same excrement upon them that NOW is the time to buy blah blah blah




esok:


----------



## Ves (20 February 2014)

Signed the contract for the sale of my old residence in Ballarat today.  What originally started off as a place to live in turned into an investment / security blanket if I ever needed to return home to live again. Fairly mediocre return,  but positive in the end after holding for five years. Same tenant the whole time and raised the rent every year, usually more than CPI. Surprised that it sold within 3 weeks, I was expecting to twiddle my thumbs for a bit longer.   Will use the proceeds to pay off the small loan balance and then most of the mortgage on our PPOR.  Then we will be debt free with no plans of borrowing further.   Opens up quite a bit of cash flow for us to continue to invest as I have been. 

Pretty happy to be in the position that I am before I've turned 30.


----------



## sptrawler (20 February 2014)

trainspotter said:


> Dream on .. that was 1950's when the population bought one house and stayed in the one job. The times they are a changing. Sydney in 1981 was STILL the most expensive place to live in OZ at 5.2 times the average income. 1981 house Sydney = $79,000. Average income = $15,100. Anything above 5 is out there. Sydney now at 9 times is in the stratosphere. Now once again we are talking averages .. not everyone is "average"




You are spot on not everyone is on the "average" wage, but as more "higher than average" paying jobs disappear, the churning becomes more difficult.
If the government is determined to reign in a rampant market, it will do so. Any one for a game of "two up".


----------



## Bill M (20 February 2014)

Ves said:


> Signed the contract for the sale of my old residence in Ballarat today.  What originally started off as a place to live in turned into an investment / security blanket if I ever needed to return home to live again. Fairly mediocre return,  but positive in the end after holding for five years. Same tenant the whole time and raised the rent every year, usually more than CPI. Surprised that it sold within 3 weeks, I was expecting to twiddle my thumbs for a bit longer.   Will use the proceeds to pay off the small loan balance and then most of the mortgage on our PPOR.  *Then we will be debt free with no plans of borrowing further.*   Opens up quite a bit of cash flow for us to continue to invest as I have been.
> 
> Pretty happy to be in the position that I am before I've turned 30.




Well done Ves, it just goes to show that it's not impossible. No rent or mortgage before 30, I dips my hat to you.:aus:


----------



## trainspotter (20 February 2014)

Well done Ves ... you might even get to retire at 40  When you say mediocre return ... would you like to expand on this statement?


----------



## Ves (20 February 2014)

Bill M said:


> Well done Ves, it just goes to show that it's not impossible. No rent or mortgage before 30, I dips my hat to you.:aus:



Thanks Bill!  I save a large proportion of my salary  (which is around the average wage) and it has started to see some good results in the last few years as the stash builds. A few sacrifices along the way, but I dont feel like I've missed out on much. 



trainspotter said:


> Well done Ves ... you might even get to retire at 40  When you say mediocre return ... would you like to expand on this statement?



Yep,  plan is to retire around that age.

Return (excluding the FHB grant, think it was $18k at the time) was around 10% gain on purchase price (I overpaid by a few % because I was a 23yo dumby and fell for the "there's another buyer making a counter offer" trick).  Plus a few % for rent after expenses.  So not really fantastic.  But it was never intended to be an investment when I made the decision to buy and I never added any value,  so I wouldn't expect any more.


----------



## sptrawler (20 February 2014)

Ves said:


> Thanks Bill!  I save a large proportion of my salary  (which is around the average wage) and it has started to see some good results in the last few years as the stash builds. A few sacrifices along the way, but I dont feel like I've missed out on much.
> 
> 
> Yep,  plan is to retire around that age.
> ...




Sounds like you are happy with the outcome and no stress attached, well done.
Best of luck with your future investments.


----------



## Mrmagoo (20 February 2014)

trainspotter said:


> http://www.realestate.com.au/property-villa-nsw-werrington-116173787
> 
> 3 bedroom, 2 bathroom, Penrith/Werrington area and $310,000. FHB Grant of $7000 and NIL stamp duty applicable. Settlement fees of approx $3,000 and lets say a 5% deposit and borrowing IO $294,000 = $320 per week.
> 
> Yep no way I can afford that !




Funny. The result comes out for me at 460 a week, plus about 50-70 for rates and other assorted crap.

$530 a week ? Just not worth it.


----------



## Smurf1976 (20 February 2014)

trainspotter said:


> Dream on .. that was 1950's when the population bought one house and stayed in the one job.




Maybe I've missed something, but I've always considered that having more than one job at the same time to be fairly unusual. Sure, there are some who will work 9 to 5 then a second job on weekends or of an evening, but certainly the vast majority of people I have ever known have only had one job at any given time.

Obviously nobody expects to stay in the _same_ job for life these days, but that's an entirely different issue. Likewise most won't stay in the _same_ house and I don't think that anyone's suggesting that here. 

But if someone has a full time job then they reasonably expect to be able to eventually own outright a house. Maybe they'll have 10 jobs and 4 houses along the way, but by the time they're 55 or so it's  reasonable to expect that paying rent or a mortgage is a thing of the past. It was certainly possible in the past to do that, a great many people have actually done it, and it ought to be possible now in return for the same effort (or less effort given technology and productivity improvements etc).

The whole concept of buying a house is that at some point, generally before you retire, you own it outright. That along with avoiding the hassles of renting is the primary reason to buy rather than rent. If it takes 40 years to pay off the mortgage then that's getting a bit ridiculous. 

You only have to go back to the mid-1990's to find that 41% of Australians owned their primary residence outright and about 26% were buying (had a mortgage). That's ABS data from 1996 and clearly shows that outright ownership is a normal expectation - 41% had achieved it and most of the 26% with a mortgage would be expecting to achieve it at some future date. The majority of those who buy (rather than renting) do indeed end up paying off the mortgage or at least they did in the 1990's.

Go forward to 2011 and the number who own outright has dropped to 32% and 35% now have a mortgage. So it's still 67% of people "buying" a home, it's just that a significantly lower portion of those now actually own it outright and there's a fairly simple explanation - houses have become more expensive relative to income. 

That data can be found at the following link. For simplicity I've rounded the figures to the nearest whole %. http://www.ahuri.edu.au/themes/home_ownership

As for prices in Sydney, yes that has always been the most expensive city but then roughly 80% of Australians don't live there. For most of the country (including Melbourne) the real price of housing, relative to incomes, was a lot cheaper in the past than it is today.


----------



## sptrawler (20 February 2014)

Also Smurph, if there is a contraction in the jobs market and it causes a further contraction of wages.

Well, the sunshine, might melt the lolypops.

Something has to break this pyramid scheme.IMO

What's the old sayings. 

"if it's too good to be true".

"It's a dead cert winner, you can't lose"

"Trust me, property never goes down"


----------



## sydboy007 (21 February 2014)

Smurf1976 said:


> Maybe I've missed something, but I've always considered that having more than one job at the same time to be fairly unusual. Sure, there are some who will work 9 to 5 then a second job on weekends or of an evening, but certainly the vast majority of people I have ever known have only had one job at any given time.




That might be true if we're talking about full time employees, but with the increasing casualisation of the workforce it's quite common for people to have 2 or 3 jobs to pay the bills.

My old housemate had 1 primary and a couple of other jobs as they offered him weekend jobs if they were busy.

i think this will become a much bigger issue over the next few years as full time jobs are in the decline and hours worked is falling too.


----------



## trainspotter (21 February 2014)

Smurf1976 said:


> Maybe I've missed something, but I've always considered that having more than one job at the same time to be fairly unusual. Sure, there are some who will work 9 to 5 then a second job on weekends or of an evening, but certainly the vast majority of people I have ever known have only had one job at any given time.
> 
> Obviously nobody expects to stay in the _same_ job for life these days, but that's an entirely different issue. Likewise most won't stay in the _same_ house and I don't think that anyone's suggesting that here.




Depends on your work ethic and how hungry you are to succeed I s'pose. Not necessarily in the RE world but life in general. There is the unionised workforce and then there is the entrepreneurs 

It used to be that you left school and went to work in a job somewhere (usually an apprenticeship involved) and that is where you STAYED. You got married once and bought a  house once. Society conformed. Now it is more fluid and rampant consumerism has taken over. Buy and sell, leave the job, Mummy and Daddy will support me or the government will give me a handout is the mentality. 

WTF has this got to do with houses? Oh that's right ... affordability.


----------



## trainspotter (21 February 2014)

*U.K. building stats highest in 6 years !*



> BRITISH house building starts rose 23 per cent in 2013 to reach a six-year high of 122,590, UK Government statistics showed this week.
> The boost comes amid concerns that housing supply is not keeping pace with demand but the figure remains well off the peak of 183,000 in the 12 months to March 2006.
> On a quarterly basis, starts in the final three months of 2013 were up 23% on the same period a year before, while completions were up 6%.
> Communities Secretary Eric Pickles said: "This Government is fixing the broken housing market we inherited in 2010.
> ...




http://www.news.com.au/world/breaki...s-up-23-per-cent/story-e6frfkui-1226833908139

But but but they went from a bubble to a housing crash and now they have a housing shortage ? 

Look out Australia ... we are next according to the "economists"


----------



## sydboy007 (21 February 2014)

trainspotter said:


> *U.K. building stats highest in 6 years !*
> 
> 
> 
> ...




* A large % of the current housing stock has spare bedrooms

* Housing "shortage" in Australia was (recently) predicated on the assumption there was 8.7M households, when the real figure was 7.8M.

* Economic theory would say if there was a housing shortage in Australia that rents would show strong growth.  In general terms rents are not even keeping up with inflation.


----------



## Smurf1976 (21 February 2014)

trainspotter said:


> Depends on your work ethic and how hungry you are to succeed I s'pose. Not necessarily in the RE world but life in general. There is the unionised workforce and then there is the entrepreneurs




True although that has always been the case. But historically at least, working one full time job (or multiple part time jobs equivalent to a full time job) was sufficient to purchase a reasonable house to live in. Whilst the option was there to work longer, you could certainly buy a house without needing to do so.

If working 40 hours a week in 1980 was sufficient to buy (actually buy) a house with 25 year mortgage then working 40 hours a week in a similar job today ought to be sufficient to buy a similar house. If it's not then houses are less affordable now than they were a generation earlier.


----------



## Smurf1976 (21 February 2014)

sydboy007 said:


> * A large % of the current housing stock has spare bedrooms




I'd be interested to know how they calculated that?

Eg a 4 bedroom house with 2 adults and 2 children doesn't necessarily have a "spare" bedroom if the one not being used for sleeping is instead being used as a home office, study, hobby room or whatever as is reasonably common.


----------



## sydboy007 (22 February 2014)

Smurf1976 said:


> I'd be interested to know how they calculated that?
> 
> Eg a 4 bedroom house with 2 adults and 2 children doesn't necessarily have a "spare" bedroom if the one not being used for sleeping is instead being used as a home office, study, hobby room or whatever as is reasonably common.




http://www.abs.gov.au/ausstats/abs@...ummary&prodno=4130.0&issue=2011-12&num=&view=

not sure if they explain their methodology though.

It's an interesting snapshot.


----------



## sydboy007 (22 February 2014)

http://ftalphaville.ft.com/2014/02/19/1776182/affordability-backwards/

_But for someone who owned a house, they did get richer in the sense that their mortgage payment quickly shrinks as a proportion of their fast growing pay packet. This is where the analysis of affordability on the basis of initial mortgage payments, rather than over the life of a 25 year, is fundamentally flawed._


----------



## Mrmagoo (23 February 2014)

sydboy007 said:


> http://ftalphaville.ft.com/2014/02/19/1776182/affordability-backwards/
> 
> _But for someone who owned a house, they did get richer in the sense that their mortgage payment quickly shrinks as a proportion of their fast growing pay packet. This is where the analysis of affordability on the basis of initial mortgage payments, rather than over the life of a 25 year, is fundamentally flawed._




If rent doesn't increase and there are not capital gains you still win owning a home, but after many years. And if you assume a rate of return on the money you would have otherwise spent on the mortgage, you never win.

Owning your own home is very important because as you said the interest payments decrease.

Which is why affordability is such an important social issue. If people are locked out (as they are now) then they will NEVER have that benefit of nothing giving up some large % of their income in "rent".


----------



## Smurf1976 (23 February 2014)

Mrmagoo said:


> Owning your own home is very important because as you said the interest payments decrease.
> 
> Which is why affordability is such an important social issue. If people are locked out (as they are now) then they will NEVER have that benefit




True as long as wages growth is at least as rapid as any increase in interest rates.

But looking at current interest rates and wages growth, anything more than a 0.2% rise in rates over 12 months sends the recent home buyer into reverse financially. 

It comes down to leverage. A big debt at low rates leaves you drastically more exposed to risk than does a smaller debt at higher rates. When rates inevitably rise at some future time, that's when we'll see some rather interesting action in the property market.


----------



## sydboy007 (23 February 2014)

Smurf1976 said:


> True as long as wages growth is at least as rapid as any increase in interest rates.
> 
> But looking at current interest rates and wages growth, anything more than a 0.2% rise in rates over 12 months sends the recent home buyer into reverse financially.
> 
> It comes down to leverage. A big debt at low rates leaves you drastically more exposed to risk than does a smaller debt at higher rates. When rates inevitably rise at some future time, that's when we'll see some rather interesting action in the property market.




The issue is more so when combined with a low inflation environment and low wage growth.  People remember the 70s and 80s and seem to think the experience of paying off the mortgage over that time frame is still relevant today, but with inflation low and likely to stay low that's not going to be the case.

When nominal interest rates averaged 10% with a real interest rate of 3% and wages growing at 12%, after just a few years the debt becomes quite easy to pay off.

In a world where mortgage rates are around 5.2%, with real rates still around 2.5-3%, but wages growth at or below the inflation rate, then there's no free kick from inflating the debt away.  Those wage sapping mortgage payments when you start put will still be wage sapping after 20 years. 

http://www.news.com.au/finance/real...uble-in-10-years/story-fndbarft-1226618600333

_To the 2013 year some states saw a 152% increase in household income devoted to mortgage costs.  Over the same period wages rose by 54.5 per cent and inflation has climbed by 31.4 per cent.  


In NSW the average loan size in 2002 was $212,400 but has risen to $341,800 resulting in the average monthly repayment increasing by 61 per cent to $2295.
In Victoria the average loan rose from $175,900 to $306,500 and repayments increased by 74 per cent to $2058.
In Queensland the loan size rose from $152,700 to $289,900 and the average repayments climbed by 90 per cent to $1946.
In South Australia loans rose from $124,900 to $249,400 and repayments increased by 100 per cent to $1674.
In Western Australia the average loan rose from $141,000 to $302,500 and repayments increased by 115 per cent to $2031.
In Tasmania the average loan rose from $94,800 to $218,100 and repayments increased by 130 per cent to $1464.
In the Northern Territory the average loan increased from $133,500 to $337,000 and repayments increased by 152 per cent to $2262.
In the ACT the average loan rose by $160,500 to $350,700 and repayments increased by 119 per cent to $2354.
_

I know the top end tends to skew averages, but it's still a massive increase.

Sydney saw average home loans hit $505K last year.  A decade ago a $500K home loan would have been considered way above average.

The question is for how much longer can the amount devoted to mortgages increase faster than wages growth??


----------



## Mrmagoo (23 February 2014)

Hopefully with the liberal government there will be some sanity re-introduced to workplace relations and those on the lower end of the pay scale can have their pay drastically reduced.

That should help ease rental prices somewhat.


----------



## Value Collector (23 February 2014)

Mrmagoo said:


> Hopefully with the liberal government there will be some sanity re-introduced to workplace relations and those on the lower end of the pay scale can have their pay drastically reduced.
> 
> That should help ease rental prices somewhat.




Its not a matter of paying people less it a matter of increasing productivity,

In Australia, wages and benefits have increased faster than productivity, thats a problem.


----------



## Mrmagoo (23 February 2014)

Value Collector said:


> Its not a matter of paying people less it a matter of increasing productivity,
> 
> In Australia, wages and benefits have increased faster than productivity, thats a problem.




No just cut the wages of the working class. Cut the wages of the unskilled. It will be a good social experiment.

I suspect it will also cause rents to fall and house prices to fall.

There is little to no need to pretend like we care about each other in this country anymore. So why do we persist with this ancient socialist IR system ?

Especially one which reduces housing affordability ?


----------



## Smurf1976 (23 February 2014)

Ultimately, land prices are just another way in which Australia has become a structurally high cost country.

We have more land than most and yet it costs a fortune. 

We have unemployed workers and yet skilled labour is scarce because we stupidly messed about with TAFE etc.

We've got plenty of agricultural land and yet a substantial portion of food sold in supermarkets is imported.

And so on. We've simply become a high cost country in every way. From the perspective of the housing market, to a significant extent it's depending on Australia's high costs going even higher in the future. Meanwhile we've moved away from protectionism and now have to compete against much lower costs overseas. How's it going to work?


----------



## sptrawler (23 February 2014)

Value Collector said:


> Its not a matter of paying people less it a matter of increasing productivity,
> 
> In Australia, wages and benefits have increased faster than productivity, thats a problem.




That is it in a nutshell.

In mining there is a small labour content but a huge material output.
Therefore labour per unit/cost is minimal.
When you get down to the consumer level, the local shop, they pay someone to stand there even if they sell nothing.
But there is a massive difference in ability to pay wages.

- - - Updated - - -



Smurf1976 said:


> Ultimately, land prices are just another way in which Australia has become a structurally high cost country.
> 
> We have more land than most and yet it costs a fortune.
> 
> ...




Another hole in one smurph.


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## sptrawler (24 February 2014)

Interesting article, apparently Canada is clamping down on foriegn ownership, of housing.


http://www.smh.com.au/business/chin...-from-canada-to-australia-20140224-33ca8.html


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## sptrawler (24 February 2014)

sptrawler said:


> Yes smurph, it either ends in a bust or a devaluation of the $Aus to about $0.40cU.S, which is as good as a bust. IMO



 that post was mid Feb.

Well I wonder if the later will become true.

http://www.watoday.com.au/business/...g-benign-collapse-to-us66-20140224-33cfl.html

Now if that happens, and there is a cap on wages, it will make for an interesting period.

I personaly, being self funded, would find it most unfortunate.lol

Thems the breaks. 
It would certainly make a $1m nest egg in super look pretty average.
All of a sudden, all the SMSF's that Labor made out to be super rich, would be on a pension within 10 years.lol
With regard property, all the SMSF's that have bought residential property recently, will have to make a bigger drawdown. 
As the capital value has increased, but the rental yield may not have moved and in all probability will fall.


----------



## trainspotter (25 February 2014)

A portion of these will be sold off the plan to "investors". By the time they are finished they will have increased in value and then "flipped" to the suckers ... ooops I meant FHB Brigade. 



> FIVE new multi-storey towers, up to nearly 200 metres tall, are set to added to the Melbourne skyline.
> The towers, approved on Tuesday, will generate more than $550 million in private investment and 4000 jobs, and drive a construction boom in central Melbourne, the state government says.
> The tallest of the towers will be built in A'Beckett Street and reach to 196m and 63 storeys.
> It will contain 632 apartments and is worth $164 million.
> ...




http://www.news.com.au/national/bre...entral-melbourne/story-e6frfku9-1226836706133

Anyhoooo .... 4000 jobs in the construction industry can't be a bad thing for the economy now can it? And what about the manufacturing industry who will have to construct the structural steel or the building supply companies who employ people? 

My concern is the density and turning the CBD into a ghetto housing project. Also by the time these are finished being constructed the market would have turned and demand would not be there IMO


----------



## trainspotter (25 February 2014)

What would Warren Buffet know about RE?



> The billionaire uses two personal *real estate investments* he made to demonstrate some of his key principles: focus on what an investment will produce, not its price; stick to what you know; and don't try to predict what the economy or stock market will do.
> “You don't need to be an expert in order to achieve satisfactory investment returns. But if you aren't, you must recognise your limitations and follow a course certain to work reasonably well,” Buffett wrote. “Keep things simple and don't swing for the fences. When promised quick profits, respond with a quick 'no."'
> The examples Buffett cited were his 1986 purchase of a 400-acre Nebraska farm and his 1993 purchase of a retail property near New York University's campus. Both purchases were made after prices collapsed.




http://www.news.com.au/finance/mone...way-shareholders/story-e6frfmdr-1226836794534


----------



## Value Collector (25 February 2014)

trainspotter said:


> What would Warren Buffet know about RE?
> 
> 
> 
> http://www.news.com.au/finance/mone...way-shareholders/story-e6frfmdr-1226836794534




He does like Real Estate as a class, his main problem is price, He says its hard to find real estate investments at a price that would excite him.


----------



## trainspotter (25 February 2014)

Value Collector said:


> He does like Real Estate as a class, his main problem is price, He says its hard to find real estate investments at a price that would excite him.




Sorry ... I must have missed this emoticon ... 

He also said this _"focus on what an investment will produce, not its price"_


----------



## Wysiwyg (25 February 2014)

trainspotter said:


> He also said this _"focus on what an investment will produce, not its price"_



He outlasts everyone in the market. While everyone is "dancing in and out of the market", he is looking at accumulating business certainties. Far sighted he surely is though I wonder if he is addicted to 'more'. How much is enough?


----------



## tigerboi (25 February 2014)

Smartest property investor is my GF she
Bought a 1 bed unit at balmain in 1983
For $47,000 sold it last year for $415,000
Put it into the 5 bed home at camden worth
$440,000.
She paid balmain off in 10 years by paying
The high interest in the recession we had 
To have, she kept paying the high payments
After interest rates came down & it was 
Paid off real quick.smart girl...tb


----------



## Klogg (25 February 2014)

trainspotter said:


> _"focus on what an investment will produce, not its price"_




An asset isn't a good purchase at any price - i.e. Value is a function of price.
For example, you wouldn't pay $1.20 for a $1 note, but you'd definitely pay 80c.

He's simply stating that one should focus on the productive output of the asset and not on price fluctuations - the quote has been taken out of context.


----------



## Vixs (25 February 2014)

Wysiwyg said:


> He outlasts everyone in the market. While everyone is "dancing in and out of the market", he is looking at accumulating business certainties. Far sighted he surely is though I wonder if he is addicted to 'more'. How much is enough?




He's doing his job. There's never enough when you're a fund manager, it's your job to create more.


----------



## sydboy007 (25 February 2014)

tigerboi said:


> Smartest property investor is my GF she
> Bought a 1 bed unit at balmain in 1983
> For $47,000 sold it last year for $415,000
> Put it into the 5 bed home at camden worth
> ...




$47K of '83 dollars was $147K of 2013 dollars.

How much did the starta fees and council rates cost over the 30 years?

How much interest + management fees did she pay?

How much did the insurance cost?

How much maintenance and renovations costs did she pay?

Probably doesn't look like such a great annual return once you factor in inflation and holding costs.


----------



## sydboy007 (25 February 2014)

Wysiwyg said:


> He outlasts everyone in the market. While everyone is "dancing in and out of the market", he is looking at accumulating business certainties. Far sighted he surely is though I wonder if he is addicted to 'more'. How much is enough?




He's handing a billion a year of his wealth to the Bill and belinda Gates foundation with the proviso it has to be spent 
in that year.

He lives in the house he bought with his wife in the 50s, drives some bog standard car and wears off the rack suits.  He seems pretty grounded for one of the richest men in the world.

I can't honestly say I'd be living such a sedate lifestyle if I had his $$$


----------



## Mrmagoo (26 February 2014)

tigerboi said:


> Smartest property investor is my GF she
> Bought a 1 bed unit at balmain in 1983
> For $47,000 sold it last year for $415,000
> Put it into the 5 bed home at camden worth
> ...




Don't know how smart you would need to be to buy property as nuthing but a twinkle in your mothers eye.


----------



## Value Collector (27 February 2014)

trainspotter said:


> Sorry ... I must have missed this emoticon ...
> 
> He also said this _"focus on what an investment will produce, not its price"_




Yes, focus on what the investment will produce, as this is where you should aim to generate your profit, rather than hoping the price goes up next week, etc.

But price is an extremely important factor for buffet, not in the sense that he cares about where the price goes the week after he bought, but the price has to be low enough to justify the investment.


----------



## Value Collector (27 February 2014)

Wysiwyg said:


> He outlasts everyone in the market. While everyone is "dancing in and out of the market", he is looking at accumulating business certainties. Far sighted he surely is though I wonder if he is addicted to 'more'. How much is enough?




He says he enjoys the process of investing, like an ongoing puzzle that needs solving, its not about money for him ( except that $$$ is his game points) he has already given away the bulk of his fortune to charity.


----------



## Value Collector (27 February 2014)

sydboy007 said:


> $47K of '83 dollars was $147K of 2013 dollars.
> 
> How much did the starta fees and council rates cost over the 30 years?
> 
> ...




Those costs wouldn't be deducted from your capital gain, you would have paid for them with the annual rent you were earning ( or saving if you lived in it)

I constantly see people make similar comments on this thread, its like everyone forgets to add in the rent.

As soon as somebody says they have made a $x capital gain, people say you have to factor in all the annual costs against that gain, but if your going to factor in those annual costs, then you have to add in the 100's of thousands of $$$ of rent earned over that time.


----------



## qldfrog (27 February 2014)

True, but it may not be that positive and there is the opportunity cost:
you should indeed added  both these costs and incomes and then compare these on cash return or if braver  on the asx200.
then it becomes meaningful.
but I also agree that it is a much better outcome than having bought a new luxury car!!!!

In any case, I would be surprised if this was not a good outcome considering how overpriced the oz market is for real estate..
causes  have been dioscussed ad nauseum here


----------



## AAA (27 February 2014)

qldfrog said:


> In any case, I would be surprised if this was not a good outcome considering how overpriced the oz market is for real estate..
> causes  have been dioscussed ad nauseum here




I'm ofter bemused from discussions such as this with the same people stating that the total long term returns fron RE investment are crap whilst at the same time property is expensive.


----------



## Value Collector (27 February 2014)

qldfrog said:


> True, but it may not be that positive and there is the opportunity cost:
> you should indeed added  both these costs and incomes and then compare these on cash return or if braver  on the asx200.
> then it becomes meaningful.
> but I also agree that it is a much better outcome than having bought a new luxury car!!!!
> ...




people also make the same mistake in the gold thread,

They compare the price of gold increases from 2000 to present to the price of the asx 200 index over that time, without factoring in the dividends, which gives a phony outcome.

But a property will generally produce a lot more rent than the annual costs, I would be surprised if a landlord on average had to outlay more than 25% of rent received to cover all costs including maintance.


----------



## sydboy007 (27 February 2014)

Value Collector said:


> Those costs wouldn't be deducted from your capital gain, you would have paid for them with the annual rent you were earning ( or saving if you lived in it)
> 
> I constantly see people make similar comments on this thread, its like everyone forgets to add in the rent.
> 
> As soon as somebody says they have made a $x capital gain, people say you have to factor in all the annual costs against that gain, but if your going to factor in those annual costs, then you have to add in the 100's of thousands of $$$ of rent earned over that time.




You need to account for al costs and income to show what the true ROI was.

Just saying I bought at X in 83 and sold for Y in 2013 isn't very informative.  It's what most do when talking about housing.  Ignoring inflation over such a long time frame is not good.

I doubt the rent would have totalled to hundreds of thousands over the 30 years, even adjusting for inflation.


----------



## sydboy007 (27 February 2014)

Value Collector said:


> people also make the same mistake in the gold thread,
> 
> They compare the price of gold increases from 2000 to present to the price of the asx 200 index over that time, without factoring in the dividends, which gives a phony outcome.
> 
> But a property will generally produce a lot more rent than the annual costs, I would be surprised if a landlord on average had to outlay more than 25% of rent received to cover all costs including maintance.




then explain the below graph, or is interest something else than a cost??


----------



## trainspotter (27 February 2014)

sydboy007 said:


> You need to account for al costs and income to show what the true ROI was.
> 
> Just saying I bought at X in 83 and sold for Y in 2013 isn't very informative.  It's what most do when talking about housing.  Ignoring inflation over such a long time frame is not good.
> 
> *I doubt the rent would have totalled to hundreds of thousands over the 30 years, even adjusting for inflation*.




Oh really? Sept Qtr 1999 average rent was $230 per week for Sydney. There is 150k PLUS before I even begin to look further into this rash statement of yours. If housing is such a sh1te investment and there is no gain to be had WHY OH WHY is it SOOOOOOOOOOOOOOOO expensive and people are still making money out of it?



> The most recent Census data shows us that of those homes occupied, 29.6% are rented (investment properties).  Based on this data, if we assume that without the private sector building homes for investment purposes, the public sector would have to account for 29.6% of all dwelling approvals to cover those in rental accommodation.  Over the past 12 months this would have equated to 43,684 dwelling approvals.  If we also consider that the median home price across Australia as at October 2012 was $386,000, and if the Government had to buy the land and build 43,684 homes, *this would cost the Government of the day $16,861,900,480 *based on the number of approvals and the median home price.




http://blog.rpdata.com/2012/12/negative-gearing-and-its-impact-on-the-housing-market/

P.S. Yes you can negative gear shares a swell !!


----------



## Wysiwyg (27 February 2014)

Considering the total price paid for the dwelling -- Initial price + interest paid for the term of the loan + council rates paid for the duration of hold + maintenance required for the duration of hold + renovation/improvement to the dwelling over the duration of hold + utility services (gas, electricity, water, telephone, internet) + inflation. 

However, income producing and capital gaining investment property is another thing. 

Additionally, all other properties have increased in price so buying again will take around the same money as received from previous sale.


----------



## Value Collector (27 February 2014)

sydboy007 said:


> You need to account for al costs and income to show what the true ROI was.
> 
> Just saying I bought at X in 83 and sold for Y in 2013 isn't very informative.  It's what most do when talking about housing.  Ignoring inflation over such a long time frame is not good.
> 
> I doubt the rent would have totalled to hundreds of thousands over the 30 years, even adjusting for inflation.




Yes, correct. But generally people he don't factor in the income at all.

How much do you think 30years of rent would be? and don't forget to compound it, because the rent would be earning interest.


----------



## Value Collector (27 February 2014)

sydboy007 said:


> then explain the below graph, or is interest something else than a cost??




Including the cost of interest muddies the water, because its assuming that the property is leveraged.

and if you have leverage you have to work out the leveraged return, which is probably going to be massive in the last 10 years or so.

eg. if the person uses a puts in $20,000 to by a $200,000 property, and in 5 years it goes to $400,000. it would look like this.

$200,000 capital gain + $78,000 rent = $278,000 - $45,000 interest = $233,000 - $25,000 other costs = $208,000 total profit.

So the person got a $208,000 return on a $20,000 investment that's like a 1000% return.

So leverage can make the return super huge or super negative.

If your trying to workout whether property investment makes sense to begin with, work it out on an unleveraged basis, then decide if your willing to take the extra up and down risk by adding leverage.

To me Unleveraged property is a good investment to have in a mixed portfolio, or if you can't afford to be completely debt free, minimise the debt and have a plan to reduce it down asap.


----------



## tigerboi (27 February 2014)

Value Collector said:


> Those costs wouldn't be deducted from your capital gain, you would have paid for them with the annual rent you were earning ( or saving if you lived in it)
> 
> I constantly see people make similar comments on this thread, its like everyone forgets to add in the rent.
> 
> As soon as somebody says they have made a $x capital gain, people say you have to factor in all the annual costs against that gain, but if your going to factor in those annual costs, then you have to add in the 100's of thousands of $$$ of rent earned over that time.




The grand mother had a life tenancy so she
Paid the rent & strata the last 20 years


----------



## qldfrog (27 February 2014)

Value Collector said:


> Including the cost of interest muddies the water, because its assuming that the property is leveraged.
> 
> and if you have leverage you have to work out the leveraged return, which is probably going to be massive in the last 10 years or so.
> 
> ...



yes the property will be geared if not that amount would have been in a term deposit (or invested otherwise) and we can expect similar return so it need to be seen as geared (or using geared as a de facto opportunity cost)
in anycase, yes it can hardly have been a bad decision knowing all real estate jumped up the roof, to compare you need to do a proper $  in/out which will differ based on use, individual circumstances (tax braket etc);
Yes I believe RE in australia is overpriced, but I have a non geared IP on top of my own home (diversification);
all is not black and white...
if I had 10$ brokerage to see/buy IP. I would sell mine now...
But I live in the real world so this property will stay iirrespective of its valuation.
anyway, just my 0.2c opinion


----------



## sydboy007 (27 February 2014)

trainspotter said:


> Oh really? Sept Qtr 1999 average rent was $230 per week for Sydney. There is 150k PLUS before I even begin to look further into this rash statement of yours. If housing is such a sh1te investment and there is no gain to be had WHY OH WHY is it SOOOOOOOOOOOOOOOO expensive and people are still making money out of it?
> 
> 
> 
> ...




It's such a ****e investment because the income it produces is so poor.  It's tulip mania.  Those negative gearing need roughly 5% annual capital growth just to break even.  Most people buying do so because of FOMO.  I can't find the article from a few days ago but it asked investors the main reasons they were investing in property.  Admittedly NG came down near the bottom, but yield didn't rate at all.  Imagine that.  Making an investment and having no concern about the actual yield or cashflow of the investment.  To me that's speculation on capital growth, not investing.

Cut down on high LVR loans, capitalise NG loses to reduce CGT on sale, get the ACCC to investigate the land bankers and I can assure you the tulip mania will subside quite a bit.  The fact that a transfer of wealth on that scale from the asset rich to renters is not politically palatable is prob the main reason it'll never happen.

--------------------

http://www.propertyobserver.com.au/...f-home-buyers-requirement-lists/2014022668064

_The survey, of more than 1,000 home buyers, was undertaken by CommBank.

Of those looking to newly invest, 54% said that the motivation was that property “is the best way to invest my money”, while 30% cited low interest rates meaning it’s a good time to buy, with 27% pointing to retirement planning.
_

Wish I could find the article as it listed about 8 reasons


----------



## Value Collector (27 February 2014)

> It's such a ****e investment because the income it produces is so poor.




Well, the income is not that bad, you'll get an inflation hedged 4% return, where both your capital and income will be protected as inflation reduces the value of cash. Off course you have to compare that return to other investments, but the control you have, the regular weekly payments and the safety are pretty good factors. A mixed portfolio of stocks will probably beat it, but is sure beats a term deposit, and the returns will be less lumpy.




> Those negative gearing need roughly 5% annual capital growth just to break even.




Why is that? Interest rates are about 5% now, so the rent would be covering the majority! the neg cash flow wouldn't be 5%, especially if you have owned it a couple of years and done some rental increases.



> Admittedly NG came down near the bottom, but yield didn't rate at all.  Imagine that.  Making an investment and having no concern about the actual yield or cashflow of the investment.  To me that's speculation on capital growth, not investing



.

Do you think most people buying shares would answer dividends to a survey that asked reason for investment? 
Look at the gold thread, plenty of people buying gold zero cash flow there, but yes, just like shares, property would have its fair share of speculators, but if they are not smart, they will lose, thats our concern.




> Of those looking to newly invest, 54% said that the motivation was that property “is the best way to invest my money”, while 30% cited low interest rates meaning it’s a good time to buy, with 27% pointing to retirement planning.




Pretty standard answers, property is a good place to invest money, in my opinion its not suited to people with small capital bases though that have to take on huge debt, In my opinion you don't really want to get into property if you need a loan more than say 50%' unless you plan to clear it to that level fast.

I like having property in my portfolio,


----------



## Value Collector (27 February 2014)

> but if they are not smart, they will lose, thats our concern



.






Sorry, that should have said " thats not our concern"


----------



## trainspotter (28 February 2014)

sydboy007 said:


> It's such a ****e investment because the income it produces is so poor.  It's tulip mania.  Those negative gearing need roughly 5% annual capital growth just to break even.  Most people buying do so because of FOMO.  I can't find the article from a few days ago but it asked investors the main reasons they were investing in property.  Admittedly NG came down near the bottom, but yield didn't rate at all.  Imagine that.  Making an investment and having no concern about the actual yield or cashflow of the investment.  To me that's speculation on capital growth, not investing.




Sooooooooooo 13.8% capital growth for Sydney is a sh1te return? Better than interest from a bank surely?

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0

You are paraphrasing from nuptie investors who are "hoping" for a RoR at some stage cause their accountant or some financial guru has told them to do this. 

I am talking about buying and selling property (off the plan/flip/set and forget whatever) or buying vacant land and building duplex's, units, townhouses etc TO MAKE MONEY !! Profit & Risk as well as contingencies as well as rates and taxes as well as interest component as well as management fees and strata fees as well as development costs blah blah blah blah blah  AND STILL MAKE MONEY !! If it does not stack up THEN DON'T BUY IT !! Must have minimum 20% MINIMUM before I will even look at it.


----------



## Value Collector (28 February 2014)

sydboy007 said:


> It's such a ****e investment because the income it produces is so poor.






trainspotter said:


> Sooooooooooo 13.8% capital growth for Sydney is a sh1te return? Better than interest from a bank surely?




Even if we forget about capital growth, the return on property still beats cash at bank interest.

Say, we have $400,000 capital we want to put to work for a long time.

At the bank you will currently earn roughly 4% interest if you lock it away, But your $400,000 capital base will be eroded by inflation by roughly 3%. So you''ll end up paying roughly 25% of your bank interest in income tax and the other 75% of that interest you earned has to be added back onto the $400,000 capital base to maintain its earning power. 

So term deposits and other cash investments basically only maintain the value, they have no net earnings.

However, if you put your $400,000 into a well bought property, you will earn roughly 4% after costs and you capital base should increase over time to at least match inflation and the income should also increase with inflation.
So you end up with an after tax and inflation real net cash flow of 3%, 

Then on top of that, if the population grows, you should see some extra capital and income growth, which is pretty much assured of happening, but even if it doesn't, your still beating the cash return which is nothing.


----------



## trainspotter (28 February 2014)

> Analysts are predicting growth to slow to around six per cent this year, when more people are likely to list their properties believing the market has reached its top.
> *For prices to fall 50 per cent, the intense buyer demand would have to essentially disappear. For this to happen, unemployment would need to soar, making masses of people unable to pay their mortgages and everyone else unable to buy their houses from them, even at discounted levels.*
> The aforementioned low interest rates, along with a strengthening world economy and a new attitude among Australians, who became cautious about over-borrowing after the GFC, mean that this is extremely unlikely




http://www.news.com.au/finance/real...-remain-in-place/story-fnd91nhy-1226833483949

It has started already !! 5000 jobs gone QANTAS, 900 jobs going at SENSIS, 1400 jobs gone at FORGE, Toyota and Holden leaving, Willimastown ship building (BAE Systems) rattling the tin ... WAKE UP !!


----------



## Julia (28 February 2014)

Value Collector said:


> Even if we forget about capital growth, the return on property still beats cash at bank interest.
> 
> Say, we have $400,000 capital we want to put to work for a long time.
> 
> ...



A fair few positive assumptions in that summary.  I'm sure there are areas where you can reasonably have such expectations.  But if you'd bought in any number of regional Qld centres, say five years ago, your capital value would still be down by around 30% and you certainly wouldn't have seen any appreciation in rents.

Furthermore, if you wanted to get out, because of the above reality there are very few buyers.
And that's even with such low interest rates.

Does anyone know anything about a place called Calliope, apparently very close to Gladstone?
A friend of mine, academic with minimal financial experience, was sucked into going into a "Wealth Seminar" (the very name might have rung alarm bells!) and as a result has purchased a $460,000 "boutique" property, house on about 700sqm in a new subdivision in Calliope.  When I asked what a boutique property was, he wasn't sure.

He has been so convinced that this property is going to so massively and rapidly increase in capital value that he probably won't even bother with putting tenants in.   This largesse is apparently due to what he describes as all the huge investment which will keep on expanding in gas in the area.

I know nothing about the area and only vaguely about the gas exploration and production.  If anyone can offer an informed view about what is likely to happen with this supa dupa investment, I'd be grateful.


----------



## galumay (28 February 2014)

Julia said:


> If anyone can offer an informed view about what is likely to happen with this supa dupa investment, I'd be grateful.




Not sure about Calliope specifically, but values have fallen hard in the whole Gladstone area, mining, processing and exploration are all in a decline and the over inflated Gladstone market has suffered greatly, not only have values fallen but vacancy rates are up and rents are down by a lot.

I have a couple of friends with multiple negative gearing properties in that area who fell for the hype like your friend, they look like going under - no chance to service the debt and low clearance rates with falling values is a recipe for disaster.


----------



## sydboy007 (28 February 2014)

Value Collector said:


> Even if we forget about capital growth, the return on property still beats cash at bank interest.
> 
> Say, we have $400,000 capital we want to put to work for a long time.
> 
> ...




Those assumptions may hold true over the medium to long term, though real house price growth has been nearly non existent for large parts of Australia over the last decade.  Sydney is really only back to what it was in 2003 last year after you adjust for inflation.

Rents in a lot of areas are not rising at the inflation rate, but a lot of expenses are rising at or above CPI.

Considering 1 in 3 mortgages is interest only, 50% are going to investors, with many accepting a 4% yield while being geared at 80 or 90% is not a sustainable or rational market to me.

There are corporate ILBs offering 6-7% YTM for a CPI of 2.5%.  They're cheaper to buy, cheaper to sell, nearly as convenient as shares to buy and sell, no holding costs.

If we hit recession, and with the CAPEX cliff really starting to bite it seems inevitable now, the tone of conversation in this thread will change markedly.  No more assuming that property only ever goes up.

As Julia has said in the prior post, and I've seen it too, too many people get into proeprty without doing proper research.  More fool them, but they are (anecdotally) such a significant share of the market it makes a mad rush for the exit when the economy turns down far more likely.

Yes, if you are smart / lucky enough to have little to no gearing on a well located property you'll probably do OK to quite good, but for a lot of "investors" that's NOT what they're buying.  Ask any < 5 years investor in Gladstone, Docklands, parts of Perth, regional QLD, areas that were reliant on domestic tourism if they believe property only goes up and rents rise by a minimum of the CPI every year.


----------



## trainspotter (28 February 2014)

What is going on in Gladstone?

*Curtis Island LNG*



> The engineering, procurement and construction of the three LNG plants on Curtis Island, which is accessible only by water, represents the greatest concentration of Bechtel projects anywhere in the world. The three liquified natural gas (LNG) projects sit side-by-side, with the first plant scheduled for completion in 2014.
> 
> The Curtis Island LNG projects each have joint procurement, human resources, travel, accounting, legal, and community relations teams servicing them. This ensures efficiency and a quality service to our clients, reducing costs and streamlining processes and procedures. We work closely with the community, clients, key stakeholders, and government representatives to ensure a positive social impact for the duration of these projects.
> 
> *At the peak of construction, the workforce will be 8,800 strong.* These projects are also delivering a range of training and upskilling programs for the workforce.  Bechtel will intake 400 adult apprentices through the National Apprenticeships Program (NAP) to work on the three LNG projects.




http://www.bechtel.com/curtisisland_lng.html

*The Wiggins Island Rail Project*



> The Wiggins Island Rail Project (WIRP) is​ the staged development of n​ew rail lines and upgrading of existing lines to service the new Wiggins Island Coal Export Terminal (WICET) at the Port of Gladstone.​ WIRP will create a vital link between the new Wiggins Island Coal Terminal and mines in the southern Bowen and Surat Basins. ​It represents Aurizon’s commitment to the future growth of Queensland coal industry. This project will deliver a significant 30% increase in coal tonnage transported from the southern Bowen Basin by 2015.




http://www.aurizon.com.au/projects/wiggins-island-rail-project

80 billion dollars being spent over the next 7 years in Gladstone.

http://www.callioperealestate.com.au/buying/properties-for-sale/

Lotsa properties for sale in all different price brackets but a large number around the 400k mark. 20 kms SSW of Gladstone does not excite me. Would not have bought unless I had a guaranteed rental agreement in place for 3 x 3 with a 3 year option (GEHA or DHA) IMO Looks a bit too dense for my liking with similar houses being built by the same builder.




Sorry Julia I would have to say that this looks like a set and forget property that is not going to jump 20% in the next few years. It would appear that the market in the area has been saturated with too much of a good thing. Plenty of reasons to get frothy about with the infrastructure etc but the long term prognosis of a 10 year plan should see your academic friend recoup most of his/her hard earned. $460,000 also seems a lot for a "boutique" house and land package in the boondocks. Just my opinion of course and could be totally wrong


----------



## qldfrog (28 February 2014)

about Gladstone: lend lease will not proceed with participation with abbott point Coal facility, and this is not the first of these bad news; I doubt Gladstone workforce will increase  in the coming years as some of the projects are big but already engaged or decreasing: 
as for after, none of these infrastructures employ many people:we are not building factories there, just a channel to export  in an automated way our raw resources (I work in the mining industry in Brisbane so i have some decent knowledge there);
the house in calliope will be pure loss, as to why on hell would anyone want a suburban house 20km of town, surrounded by emptiness, For that price, I would get an acreage and a horse or two....


----------



## Value Collector (28 February 2014)

Julia said:


> A fair few positive assumptions in that summary.  I'm sure there are areas where you can reasonably have such expectations.  But if you'd bought in any number of regional Qld centres, say five years ago, your capital value would still be down by around 30% and you certainly wouldn't have seen any appreciation in rents.
> 
> Furthermore, if you wanted to get out, because of the above reality there are very few buyers.
> And that's even with such low interest rates.
> .




Well i did say if you "bought well" you can give examples of people who have lost money in any investment vehicle.

I dont think i am using overly positive assumptions, all i have assumed is that you you can rent the property out, and over time the capital value and rent increases with inflation.


----------



## sydboy007 (1 March 2014)

http://www.idiottax.net/2014/02/oldies.html#.UxEIxfmSz-U

a bit of tongue in cheek reality


----------



## Value Collector (1 March 2014)

sydboy007 said:


> http://www.idiottax.net/2014/02/oldies.html#.UxEIxfmSz-U
> 
> a bit of tongue in cheek reality




Makes sense to me, I wouldn't recommend older people keeping their homes till they die, as a minimum I would do some sort of reverse mortgage.

You have to be careful how early you start using it though, expenses can go through the roof later in life, But if you can trade down into something with less maintenance and end up with an extra few dollars in your pocket each week you should go for it.

I use my property portfolio for income now, but you can bet later in life when I need to I will be selling it off for the lump sums I need. its one of the benefits that people that own their own home have over those that never buy.


----------



## Julia (1 March 2014)

galumay said:


> Not sure about Calliope specifically, but values have fallen hard in the whole Gladstone area, mining, processing and exploration are all in a decline and the over inflated Gladstone market has suffered greatly, not only have values fallen but vacancy rates are up and rents are down by a lot.
> 
> I have a couple of friends with multiple negative gearing properties in that area who fell for the hype like your friend, they look like going under - no chance to service the debt and low clearance rates with falling values is a recipe for disaster.






trainspotter said:


> Lotsa properties for sale in all different price brackets but a large number around the 400k mark. 20 kms SSW of Gladstone does not excite me. Would not have bought unless I had a guaranteed rental agreement in place for 3 x 3 with a 3 year option (GEHA or DHA) IMO Looks a bit too dense for my liking with similar houses being built by the same builder.
> 
> Sorry Julia I would have to say that this looks like a set and forget property that is not going to jump 20% in the next few years. It would appear that the market in the area has been saturated with too much of a good thing. Plenty of reasons to get frothy about with the infrastructure etc but the long term prognosis of a 10 year plan should see your academic friend recoup most of his/her hard earned. $460,000 also seems a lot for a "boutique" house and land package in the boondocks. Just my opinion of course and could be totally wrong






qldfrog said:


> about Gladstone: lend lease will not proceed with participation with abbott point Coal facility, and this is not the first of these bad news; I doubt Gladstone workforce will increase  in the coming years as some of the projects are big but already engaged or decreasing:
> as for after, none of these infrastructures employ many people:we are not building factories there, just a channel to export  in an automated way our raw resources (I work in the mining industry in Brisbane so i have some decent knowledge there);
> the house in calliope will be pure loss, as to why on hell would anyone want a suburban house 20km of town, surrounded by emptiness, For that price, I would get an acreage and a horse or two....



You've all confirmed my thoughts even without having known much about the extent of the infrastructure etc in the area.

He was planning to retire in three years - has used money from his Super to make this purchase.  When I asked what the plan was if the property didn't appreciate as promised, he assured me that just 'couldn't happen'.
It is what it is.  Silly bugger.
Thanks for the comments.


----------



## Julia (1 March 2014)

Adding to the above, his introduction to this was via a cold phone call, followed by the wealth seminar, attended by about 50 people, 10 of whom took up the sales pitch.

Company is Zenith Wealth Management Ltd which appears to have its origins in Malaysia.  The actual (to be built) development in Calliope is called Cloudscape http://cloudscape-estate.com.au/about/gladstone/, and the building company is Tribeca Homes.

It's negatively geared, he says he has just paid about $4000 in 'the documentation stuff'.  Interest rate of 4.9%.

When I asked if he'd run the idea by a financial adviser he said yes, but not the person who will actually be managing his super when he retires.  When I asked why not, the response was that "well, he might be biased towards Super" (still thinks Super is some sort of specific thing in which to invest rather than simply a tax advantaged vehicle), so he used the Financial Adviser provided by the above 'wealth managers'.

Has anyone heard anything at all positive about either of the above organisations?
He's a really nice bloke, just naive, and I'm really sorry to see him being suckered if that's what is happening.


----------



## banco (1 March 2014)

Julia said:


> Adding to the above, his introduction to this was via a cold phone call, followed by the wealth seminar, attended by about 50 people, 10 of whom took up the sales pitch.
> 
> Company is Zenith Wealth Management Ltd which appears to have its origins in Malaysia.  The actual (to be built) development in Calliope is called Cloudscape http://cloudscape-estate.com.au/about/gladstone/, and the building company is Tribeca Homes.
> 
> ...




I wait with bated breath for him to blame the lack of Government regulation when this all goes pear shape.


----------



## satanoperca (1 March 2014)

banco said:


> I wait with bated breath for him to blame the lack of Government regulation when this all goes pear shape.




Sorry to jump in mid conversion but just thought I would give some on the ground feedback from China, as I travel through the country.

1. If you thought Australia was unaffordable for the average working, come to China, it is far worse.
2. Had several conversations with business owners who are starting to get concerned that China's property is reaching epic bubble proportions and cannot be sustained.
3. Many areas are showing declines over the last two years, major commercial centres.
4. The wealth in this country is incredible and the wealthy all are and have bought properties in Australia, NZ, Canada and the US.
5. The air pollution is incredible from one end of the country to the other. Even Shanghai is getting dirty
6. The rate of lung cancer in Beijing is increasing by 4% a year and is being reported as getting to epidemic proportions over the next decade.  This will also happen in all other major cities in the country.

Based on point 4-6, the Chinese will continue to buy in Australia but whatever means is available to them for one reason, clean air and I cannot blame them at all.

Conclusion, Australian property prices will remain high for an extended period of time, we have a great, clean, low population country and they will continue to buy, regardless of our own IR's and economic situation. The great middle and lower class squeeze is on. 

Cheers

China and it's people are inspiring, just a shame they have sacrificed their country for economic gain, but are we doing anything different.


----------



## Mrmagoo (2 March 2014)

Value Collector said:


> Makes sense to me, I wouldn't recommend older people keeping their homes till they die, as a minimum I would do some sort of reverse mortgage.
> 
> You have to be careful how early you start using it though, expenses can go through the roof later in life, But if you can trade down into something with less maintenance and end up with an extra few dollars in your pocket each week you should go for it.
> 
> I use my property portfolio for income now, but you can bet later in life when I need to I will be selling it off for the lump sums I need. its one of the benefits that people that own their own home have over those that never buy.




If you never buy you will live a life of misery. THat much is true. That is why affordability is such a big problem.

How is it that a person on the average wage could only afford to buy a studio on the outskirts of a city after years of saving ?


----------



## Tyler Durden (2 March 2014)

satanoperca said:


> Sorry to jump in mid conversion but just thought I would give some on the ground feedback from China, as I travel through the country.
> 
> 1. If you thought Australia was unaffordable for the average working, come to China, it is far worse.
> 2. Had several conversations with business owners who are starting to get concerned that China's property is reaching epic bubble proportions and cannot be sustained.
> ...




Thanks for this, I've been looking for this type of "on the ground" information for a while.

I wonder though, is it only the wealthy Chinese who have bought overseas properties? Or is there a "way" for the average Joe in China to do the same?


----------



## sydboy007 (2 March 2014)

Tyler Durden said:


> Thanks for this, I've been looking for this type of "on the ground" information for a while.
> 
> I wonder though, is it only the wealthy Chinese who have bought overseas properties? Or is there a "way" for the average Joe in China to do the same?




Probably not for the majority of the middle class individually - many are still on < $20K USD a year - but if you get an extended family pooling their resources then I think it's a possibility.  Even on that kind of pooling the potential investors is probably larger than the Australian population so it could be a significant issue moving forward.

On 1 hand if they are buying newly built properties they're at least increasing supply, but on the other hand they are also limiting access to the kinds of properties FHBs are looking at too.  Not sure if it's of benefit to the country or not.  Suppose at least when the bubble pops we're sharing the pain to a degree.

With unemployment on the up I'm starting to wonder how smart it is to continue with a 160K worth of population growth mainly grought about my immigration.  Most skills shortages are long gone so there seems to be little benefit to the economy except to repress wage and juice the housing market with increased demand.


----------



## satanoperca (2 March 2014)

Tyler Durden said:


> Thanks for this, I've been looking for this type of "on the ground" information for a while.
> 
> I wonder though, is it only the wealthy Chinese who have bought overseas properties? Or is there a "way" for the average Joe in China to do the same?




It is only the wealthy Chinese that are buying, but even so, there is a lot of them. In Shanghai at the moment and prices are crazy, so are the roads and the shops. With 20 million in the city, you only need a small percentage of them to have the ability and desire to buy in Australia to effect prices. They all talk about buying with cash.

The average Joe in China and Australia are no different, they are just wanting to be able to buy and pay off one property in a life time. Had dinner with a property investor last night who is flipping properties in America. The big difference he saw in the two countries was that Americans want to purchase everything on 100% credit, where as the Chinese have 20% or greater deposits.

When I asked if he thought Chinese property was in a bubble, the answer was no. The desire to own property and become wealthy through property in China was to strong in the minds and emotions of the Chinese people. They want everything the western countries have and more.

If there is a bubble in China and it goes pop, the US melt down will look like a drop in the ocean.

Cheers


----------



## Value Collector (2 March 2014)

Mrmagoo said:


> How is it that a person on the average wage could only afford to buy a studio on the outskirts of a city after years of saving ?




I don't believe that is the case,

Can you break down the numbers for me?

Eg, what is their wage? 
How many years was the " years of saving"
What is their savings rate?
And what exactly is this studio on the outskirts of a city, can you link a similar advertised property?


----------



## sydboy007 (4 March 2014)

I'm surprised we get any new land releases if it takes this long.  Nearly 10 years in NSW.  I really can't understand how we let ourselves get into such a position.


----------



## trainspotter (4 March 2014)

sydboy007 said:


> I'm surprised we get any new land releases if it takes this long.  Nearly 10 years in NSW.  I really can't understand how we let ourselves get into such a position.




2 words - Government inefficiency


----------



## sydboy007 (4 March 2014)

trainspotter said:


> 2 words - Government inefficiency




Only partly

More like greed by the various Government land agencies that have be charged with maximising profit over social benefits of cheap land.

Combined with NIMBYs and BANANAs who basically live in a land of double rainbows where population growth is somehow compaitble with UGBs and low density housing


----------



## Value Collector (4 March 2014)

sydboy007 said:


> Only partly
> 
> More like greed by the various Government land agencies that have be charged with maximising profit over social benefits of cheap land.
> 
> Combined with NIMBYs and BANANAs who basically live in a land of double rainbows where population growth is somehow compaitble with UGBs and low density housing




I know nimby, But what's a banana


----------



## trainspotter (4 March 2014)

sydboy007 said:


> Only partly
> 
> More like greed by the various Government land agencies that have be charged with maximising profit over social benefits of cheap land.
> 
> Combined with NIMBYs and BANANAs who basically live in a land of double rainbows where population growth is somehow compaitble with UGBs and low density housing




Errrrrrrrrrmmmmmmmmm NO !! They are paid by the hour so they work to rule. If they cranked at their job and actually had a performance clause in their job description then you would find approvals would be forthcoming a lot quicker. 

Planning approval from Planning Commission to take 3 months whilst it sits in someones IN TRAY is a joke. Development Approval to take 6 months at a local council level is a bigger joke. Titles Office to take 6 months to issue a title is a F@CKING big joke but the moment they receive the application they immediately start charging you rates and taxes as if they had already given approval.  

Services Departments (Electricity & Water etc) takes a further 3 - 6 months, then they want five to six thousand PER application for pending block of land as HEADWORKS FEES is where the money goes as to why it is so expensive. DON'T GET ME STARTED ON ROADS AND STORMWATER ISSUES !!!!!!!!!!!!!!

Have you done any developments before or are you musing again sydboy ?


----------



## Julia (4 March 2014)

Further to my earlier post about a friend who has bought into some property development in Calliope, Qld, as a result of being cold called by phone, I've just had a look for the organisation on the ASIC website, where I found the following:


> Business name: 	ZENITH PROPERTY CONSULTING AUSTRALIA
> Status: 	Cancelled
> Registration date: 	2/02/2009
> Renewal date: 	2/02/2013
> ...




This appears to suggest the company is no more or am I misunderstanding the above?

What other avenues exist to check the legitimacy of a company?  It's an area with which I'm completely unfamiliar, would be most appreciative of any help here.


----------



## sydboy007 (4 March 2014)

trainspotter said:


> Errrrrrrrrrmmmmmmmmm NO !! They are paid by the hour so they work to rule. If they cranked at their job and actually had a performance clause in their job description then you would find approvals would be forthcoming a lot quicker.
> 
> Planning approval from Planning Commission to take 3 months whilst it sits in someones IN TRAY is a joke. Development Approval to take 6 months at a local council level is a bigger joke. Titles Office to take 6 months to issue a title is a F@CKING big joke but the moment they receive the application they immediately start charging you rates and taxes as if they had already given approval.
> 
> ...




Can't find the post I made a month or two ago but it showed an example where the land supply for Adelaide had changed from one of meeting demand to maximising the income from land sales for the Government.

The whole land supply system is dysfunctional, and it will unlikley ever change because the wealth transfer from home owners and investors to renters would be in the hundreds of billions.  Once you remove artificial land scarcity, once we get a strong right of use for land owners things might start to improve prices would plumet.  

We voted for all the corporatisation of the public utilities over the years.  Long gone are the days where getting things done was a public service.  Now it's how much money can we rip off the developers.  It's crazy to have to pay for everything upfront.  Much better to have a land tax that allows all this infrastructure to be paid off, and more importantly stops the economic rent of public infrastructure being kept by the lucky few landowners.

Nearly all the increase in housing costs has been land.  

http://www.macrobusiness.com.au/2014/03/deflating-australias-land-bubble/

_Land is the largest tangible market in Australia… Our housing bubble is actually a residential land bubble, as the total land values to GDP ratio doubled between 1996 and 2010, when it reached a record high of 298 per cent ($4.1 trillion). In real terms, residential land values rose from $895 billion in 1996 to a peak of $3.2 trillion in 2010, a relative increase of 262 per cent. This ratio is closely matched by a similar rise in the value of the residential housing stock. The rise in residential land values, rather than structures, is responsible for almost all of the increase in the value of the housing stock…_

- - - Updated - - -



Value Collector said:


> I know nimby, But what's a banana




Build Absolutely Nothing Near Anything


----------



## trainspotter (4 March 2014)

Julia said:


> Further to my earlier post about a friend who has bought into some property development in Calliope, Qld, as a result of being cold called by phone, I've just had a look for the organisation on the ASIC website, where I found the following:
> 
> This appears to suggest the company is no more or am I misunderstanding the above?
> 
> What other avenues exist to check the legitimacy of a company?  It's an area with which I'm completely unfamiliar, would be most appreciative of any help here.




Could be something as simple as not paying their ASIC fees Julia? By the look of it there is a plethora of ZENITH PROPERTY CONSULTING (groups etc) Also could be that they have cancelled the company tagged with "AUSTRALIA" for when I searched it came up with this:-

Name:	ZENITH PROPERTY CONSULTING PTY LTD
ACN:	165730861
Registration date:	10/09/2013
Next review date:	10/09/2014
Former name(s):	GETHIN HOLDINGS PTY LTD

Status:	Registered
Type:	Australian Proprietary Company, Limited By Shares
Locality of registered office:	WEST END QLD 4101
Regulator:	Australian Securities & Investments Commission

http://www.zenithpropertyconsulting.com.au/

Fancy website and they are still taking calls to the main office?

Anyhooo .... cold calls, cancelling company structures, changing names of companies, no profiles of the people involved nor the experience they have on their website, offering incredulous rates of return (DOUBLE YOUR MONEY IN 7 YEARS according to the website) rings alarm bells for mine.

Seems as if your friend has been suckerpunched by a spruiker.

ASIC is the only corporate body for the registration of companies in Australia. Hope this helps Julia


----------



## MR. (4 March 2014)

Bill M said:


> ---
> Axel and Bernadette Steele bought their first home at Narraweena in Sydney's northern beaches for a cool $1,006,000. And it was all about location.
> 
> "We looked for 18 months, researching different locations," Mr Steele said.
> ...




"getting the finances for a million dollar property was not too difficult for the electrician and childcare worker."

Assuming 7-800K would be the loan. It's their first home..... Stable jobs and steady employment for 5 and 7 years. Don't appear to be self employed..... 

At anytime their employers could shut up shop. The bank has no way of defining how secure their jobs really are but here's 3/4 of a million smackaroonies! 

Not having ago at the investment location or investment decision here, just the *banks*. 

If this couple happened to be employed by a company which they are directors in. Receiving similar and better incomes from the company than the above. Employed for similar and longer periods of time. The bank insists in wanting copies of full company financials in addition to full private financials. Offering for the bank to give the companies financials a once over doesn't cut it. They still want copies of two years full company financials. I bet Mr. and Mrs Steele (above) didn't have to get the financials of their employer's to get their loan! 

I've experienced this in the past and abided 15 or so years ago. Offered to only show the bank company financials this time, not copies, which is definitely more information on the source of income than a standard employee situation. 

I think the bank's shown me the door.

Have others experienced similar?


----------



## trainspotter (5 March 2014)

Yeah MR. Being self employed aint what it is cracked up to be when it comes to proving serviceability for a loan. Your accountant does their best to minimise the tax thusly reducing the profit of the company. GREAT. Go and try to borrow money and not so GREAT as the banks just look at the bottom line. PERIOD.

They also want personal guarantees from the directors as well as requesting to take second mortgages of other assets which are held in personal names and not the companies. Westpac wanted me to sign a personal guarantee for more than what I wanted to borrow which I politely declined to accept. NAB once asked me to place my PPOR and other unencumbered properties up for security for a commercial dealing that had less than a 50% LVR. Thanks but no thanks.

Lord help you if you have several companies as they want 3 years financial on ALL of them even though they are completely separate identities performing entirely different vocations.


----------



## sydboy007 (6 March 2014)

Abbot and Hockey claim increase in house prices due to carbon tax.  Repeal will bring affordable housing to the masses 


/sarcasm - well they've blamed it for just about every other issue the economy is facing, yet the small business lobby has it as number 5 on their list of issues.


----------



## trainspotter (7 March 2014)

If Glenn Stevens is unsure as to which way rates are going to go then we are certainly in a period of flux 



> The bank has said in various communications this year that it plans to keep rates steady for a while until the economy shifts dramatically in one direction or another, and that was a message the RBA governor Glenn Stevens was keen to repeat to the Commonwealth Parliament's House Economics Committee.
> 
> "As well as the low level of rates generally, a sense of stability, if we're able to offer that, is something that, at the margins, should be of some help to businesses and households as they make their own plans," he told the committee.


----------



## kid hustlr (7 March 2014)

No he said he's unsure when the hike will come. he implied that the next move is up and hes made it clear the stance for now is a neutral one.

http://www.thebull.com.au/articles/a/44619-rba's-stevens-unsure-of-next-rate-move.html

he was also jawboning property prices warning investors not to get carried away.


----------



## trainspotter (7 March 2014)

kid hustlr said:


> No he said he's unsure when the hike will come. he implied that the next move is up and hes made it clear the stance for now is a neutral one.
> 
> http://www.thebull.com.au/articles/a/44619-rba's-stevens-unsure-of-next-rate-move.html
> 
> he was also jawboning property prices warning investors not to get carried away.




Aaahhhh I see it now .... he was touting for a possible reduction and is now set for neutral with a possible uptick in the near future.



> "As well as the low level of rates generally, a sense of stability, if we're able to offer that, is something that, at the margins, should be of some help to businesses and households as they make their own plans," he told the committee.
> 
> "That's a bit of a shift on our part, where we had been saying that *there might be scope to go down a bit more* if needed; I don't think we do need to, at this point in time."




http://www.abc.net.au/news/2014-03-...bility-despite-upbeat-housing-outlook/5305500


----------



## trainspotter (7 March 2014)

News Ltd seem to think he is confused ? 



> But the RBA doesn't know if that transition - the fabled "rebalancing" of the economy - will be achieved without the need for *more interest rate cuts*.
> The governor said he did not currently think that would be needed.
> And if it is achieved, it's not known how quickly or strongly that will happen, so the timing or size of any *eventual interest rate rises *can't be pinned down either




http://www.news.com.au/finance/business/rba-acknowledges-the-unknowns/story-e6frfkur-1226848259048


----------



## kid hustlr (7 March 2014)

ya perhaps a bit of confusion,

regardless my mail says on hold then up barring a disaster


----------



## sydboy007 (8 March 2014)

If this keeps up I think there's a chance we'll see some more rate cuts


----------



## Mrmagoo (8 March 2014)

Cutting rates is a stupid idea. The economy should be allowed to correct and enter a deflationary spiral so that productive investments cease to be crowded out by the current fiat currency allocated in a command like economy fashion to failing industries.

If my pay goes down to a quarter I won't care because everything will also be cheaper the only people who lose will be the ones currently getting the money for free.


----------



## satanoperca (8 March 2014)

trainspotter said:


> News Ltd seem to think he is confused ?
> 
> 
> 
> http://www.news.com.au/finance/business/rba-acknowledges-the-unknowns/story-e6frfkur-1226848259048




I can help him,  by selling him one of my crystal balls, predicts the future with 100% accuracy guaranteed once I have your money.  

Seems he is living in reality and telling the truth, they just don't know, but either does anyone else.

Sydboy, the new norm is interest rates at 2.50%. Cannot see the cash rate returning to above 5% for the foreseeable future.

As for house prices returning to 3-4 average household income, just not going to happen. The new norm is also 6-8 average household income. In the future it will be 8-10. 

In Shanghai it is more like 20-25 times the average salary. Do you hear people complain, no!

Cheers


----------



## Mrmagoo (8 March 2014)

satanoperca said:


> I can help him,  by selling him one of my crystal balls, predicts the future with 100% accuracy guaranteed once I have your money.
> 
> Seems he is living in reality and telling the truth, they just don't know, but either does anyone else.
> 
> ...




You do not hear them complain, probably because if they did, they communist government would shoot them.

In HK they do complain, loudly.

8-10 times the average salary means the average house will cost $750,000. It is already at that point. IT doesn't matter anymore. The average first home buyer is already utterly priced out of the market. IT is done.


----------



## trainspotter (8 March 2014)

AMEN ... If you read my posts previously you will see that it is part of the cycle. Still waiting for the March/April banks to want RoR on their endeavours ... nice call on the China default CanOz ... flow on effect will be banks claiming "higher cost of funding"in the near futire and blame "global conditions" as their excuse. Beware the Ides of March .... also keepan eye on the bankruptcy rates for companies in Australia ... just my opinion of course.

How does this effect home prices ?  Inflation is the reason


----------



## sptrawler (9 March 2014)

It will be interesting to see how SMSF, that have jumped into residential property go, when their drawdown amount increases with valuations.
I hope their rental return has risen in line with their property valuations.

It is all moving into uncharted waters.


----------



## qldfrog (9 March 2014)

And another one which is not good news for Iron Ore, and so Australia overall with direct ripple effect on RE:
http://www.sbs.com.au/news/article/2014/03/08/china-posts-unexpected-trade-deficit-government


----------



## sptrawler (13 March 2014)

Well NZ has started raising interest rates.

http://www.theage.com.au/business/m...nterest-rates-more-on-way-20140313-34n73.html

Apparently they expect to raise rates by 2% points over the next two years, back toward long term normal levels.

Could it be a precursor to our interest rate movements?


----------



## qldfrog (13 March 2014)

not si sure, the employment figure release today are actually  quite bad
a smoke and mirror:http://au.finance.yahoo.com/news/jobs-surge-mirage-060629184.html
I actually believe interest rate in Oz might go even lower to avoid a catastrophic unemployment effet


----------



## sptrawler (13 March 2014)

qldfrog said:


> not si sure, the employment figure release today are actually  quite bad
> a smoke and mirror:http://au.finance.yahoo.com/news/jobs-surge-mirage-060629184.html
> I actually believe interest rate in Oz might go even lower to avoid a catastrophic unemployment effet




You may be right, in W.A the proverbial is starting to hit the fan.

http://au.news.yahoo.com/thewest/a/21955763/jobless-rate-soars-to-pre-boom-levels/

People I talk to, who are directly involved in the retail economy, say it is the worste they've seen it in 40 years.

Currently, I can't believe the amount of infill housing and new housing estates, the frenetic building pace leads me to believe we must be expecting an allien invasion.


----------



## sptrawler (17 March 2014)

qldfrog said:


> not si sure, the employment figure release today are actually  quite bad
> a smoke and mirror:http://au.finance.yahoo.com/news/jobs-surge-mirage-060629184.html
> I actually believe interest rate in Oz might go even lower to avoid a catastrophic unemployment effet




Well a new bull on interest rates, Westpac's Bill Evans, has changed his mind and now thinks interest rates may rise.
He has being saying endlessly, they will continue falling.


----------



## trainspotter (17 March 2014)

sptrawler said:


> Well a new bull on interest rates, Westpac's Bill Evans, has changed his mind and now thinks interest rates may rise.
> He has being saying endlessly, they will continue falling.




*Hear ye Hear ye* ... to make Australia attractve on the bond rate as mining stalls as China stalls on repayments. *Hear ye Haahhahahaaaa*

Blaming global conditions no doubt !


----------



## satanoperca (18 March 2014)

trainspotter said:


> *Hear ye Hear ye* ... to make Australia attractve on the bond rate as mining stalls as China stalls on repayments. *Hear ye Haahhahahaaaa*
> 
> Blaming global conditions no doubt !




Come on, why are IR's so low. Everything is steaming along in this great country.

Property prices are up
Property prices are up
Property prices are up
Property prices are up
Property prices are up
New builds are up
Foreign investment is up
Employment is low 

Everything is going great guns

Now for inflation to raise it's ugly head

Then IR's up up up and away


----------



## Tyler Durden (18 March 2014)

This may be relevant:



> China faces the biggest property default on record as credit curbs threaten to break the housing boom, leaving a string of "ghost towns" across the country.
> 
> The Chinese newspaper Economic Daily News said Xingrun Properties, in the coastal city of Ningbo, is on the brink of collapse with debts of $US570 million ($627.3 million), mostly owed to banks. The local government has set up a working group to contain the crisis.




http://www.smh.com.au/business/worl...-after-developer-collapse-20140318-34yw1.html


----------



## satanoperca (18 March 2014)

Tyler Durden said:


> This may be relevant:
> 
> http://www.smh.com.au/business/worl...-after-developer-collapse-20140318-34yw1.html




Love this bit :



> The authorities are trying to wean the economy off excess credit after a $US16 trillion ($17.6 trillion) spike in loans since 2009 - equal in size to the entire US banking system - but lending curbs are beginning to expose the sheer scale of bad debt in the system.
> 
> Read more: http://www.smh.com.au/business/worl...er-collapse-20140318-34yw1.html#ixzz2wJWrGFG1




Isn't that the size of the US govnuts debt. 

and this 



> Three developers have abandoned half-built projects in the 2.5m-strong city of Yingkou, on the Liaodong peninsular




So that makes up hmmmm 0.25% of the population or less. Gee that is a threat.

and more 


> Prices have since roared back in the tier 1 cites such as Shanghai and Beijing but while these places capture the headlines, they account for just 5per cent of total building in China. Prices are falling in 43per cent of the tier 3 and 4 cities.




Wow, just a 43% of tier 3 and 4 cities, sounds exciting, but by how much?

More sensationalism. Of course Chinese property market will have some winners and losers, so do, do all property markets and for that, all businesses. Last month my sales were up 100%, this month they are down 20% based on last months sales.

and more 


> The yuan has fallen 2 per cent against the dollar since January




A whole 2%, the world is ending. F--k me, Oz must be dead then. How much has the AU$ ours fallen since the peak. 

Again, I think their leaders have a game plan and are well in control. Haven't they lifted several hundred million people out of poverty in 30 years, sucker the US in with cheap products, built entire new cities and public infrastructure. What the f---k have we done. Oh yes, we have manage to destroy manufacturing but have some of the highest property prices in the world, not bad given that we live on a massive big island. Not to mention sold of our natural resources so future generations have nothing to trade with.

Love the media and those who believe it.

Cheers

- - - Updated - - -



Tyler Durden said:


> This may be relevant:
> 
> http://www.smh.com.au/business/worl...-after-developer-collapse-20140318-34yw1.html




Love this bit :



> The authorities are trying to wean the economy off excess credit after a $US16 trillion ($17.6 trillion) spike in loans since 2009 - equal in size to the entire US banking system - but lending curbs are beginning to expose the sheer scale of bad debt in the system.
> 
> Read more: http://www.smh.com.au/business/world-business/china-facing-fresh-ghost-town-crisis-after-developer-collapse-20140318-34yw1.html#ixzz2wJWrGFG1




Isn't that the size of the US govnuts debt. 

and this 



> Three developers have abandoned half-built projects in the 2.5m-strong city of Yingkou, on the Liaodong peninsular




So that makes up hmmmm 0.25% of the population or less. Gee that is a threat.

and more 


> Prices have since roared back in the tier 1 cites such as Shanghai and Beijing but while these places capture the headlines, they account for just 5per cent of total building in China. Prices are falling in 43per cent of the tier 3 and 4 cities.




Wow, just a 43% of tier 3 and 4 cities, sounds exciting, but by how much?

More sensationalism. Of course Chinese property market will have some winners and losers, so do, do all property markets and for that, all businesses. Last month my sales were up 100%, this month they are down 20% based on last months sales.

and more 


> The yuan has fallen 2 per cent against the dollar since January




A whole 2%, the world is ending. F--k me, Oz must be dead then. How much has the AU$ ours fallen since the peak. 

Again, I think their leaders have a game plan and are well in control. Haven't they lifted several hundred million people out of poverty in 30 years, sucker the US in with cheap products, built entire new cities and public infrastructure. What the f---k have we done. Oh yes, we have manage to destroy manufacturing but have some of the highest property prices in the world, not bad given that we live on a massive big island. Not to mention sold of our natural resources so future generations have nothing to trade with.

Love the media and those who believe it.

Cheers


----------



## waterbottle (19 March 2014)

Tyler Durden said:


> This may be relevant:
> 
> 
> 
> http://www.smh.com.au/business/worl...-after-developer-collapse-20140318-34yw1.html




Looks like the Zhejiang Xingrun Real Estate Co. has already collapsed! 

http://www.bloomberg.com/news/2014-...-5-billion-yuan-in-debt-said-to-collapse.html

Interesting times.


----------



## trainspotter (26 March 2014)

trainspotter said:


> Things must be heating up when the Yanks start commenting
> 
> http://www.news.com.au/realestate/b...omist-robert-gay/story-fndban6l-1226763042194
> 
> ...






trainspotter said:


> Meanwhile back in reality:-
> 
> http://www.abc.net.au/news/2013-11-27/apra-working-with-banks-on-lending/5119022
> 
> ...






> *26th MARCH 2014* - Tread very carefully in the housing market, because rising prices and low interest rates won't last forever - that's the message for both banks and their customers.
> The financial system is performing strongly, the Reserve Bank of Australia said in its twice-yearly financial stability review released on Wednesday.
> But there's a catch.
> The more settled environment, with its more moderate rate of credit growth, *could limit the potential sources of profit growth for bank*s, the RBA said.
> "It will be important for financial stability that banks do not respond by unduly increasing their risk appetite or *relaxing their lending standards*."




http://www.thebull.com.au/articles/a/44993-rba-warns-on-housing-prices.html

Hmmmmmmmm I posted the above back in November 2013. 

Seems 4) is rearing it's ugly head ... only need the banks to raise their rates due to "global funding circumstances" but the RBA reckons it has got easier to get credit?


----------



## satanoperca (26 March 2014)

trainspotter said:


> http://www.thebull.com.au/articles/a/44993-rba-warns-on-housing-prices.html
> 
> Hmmmmmmmm I posted the above back in November 2013.
> 
> Seems 4) is rearing it's ugly head ... only need the banks to raise their rates due to "global funding circumstances" but the RBA reckons it has got easier to get credit?




Talk about **** covering by the RBA. They warned the public, so don't blame them if everything goes pear shape in the future, but they maintain there is no bubble.

As for the banks, they will do what ever is necessary to keep those mega profits flowing, including increase IR's and relaxing lending standards, that is if they can be loosened any further.

Come on RBA, increase rates, unemployment is low, building boom is happening, inflation is rising, the economy is bubbling away and house prices are inflating

As for the $, stop trying to manipulate something that you have little control over as has been shown. It will be back at parity soon. 

And why the need for a low $ anyway, manufacturing is gone and will not return, we export dirt and import everything else. + our economy is bullet proof as long as RE prices continue to rise, with exception to QLD, but they were always a banana state.

Personally I have gone from a net saver to f---k it, borrow as much as I can for productive pursuits other than RE.


----------



## trainspotter (26 March 2014)

Attaboy Satan ... living the dream man !!


----------



## satanoperca (26 March 2014)

trainspotter said:


> Attaboy Satan ... living the dream man !!




That is it, sunshine and lollipops for all. Pessimism is for the weak, attitude is what matters. 

Cannot be bothered with those who look at the negative, we live in a great country with endless opportunities, just have to get off your ****, take some risks and see if you are rewarded.

Nothing wrong with failure, it is how you deal with it that matters.

Cheers


----------



## Quincy (28 March 2014)

satanoperca said:


> Talk about **** covering by the RBA. They warned the public, so don't blame them if everything goes pear shape in the future, but they maintain there is no bubble.
> 
> As for the $, stop trying to manipulate something that you have little control over as has been shown. It will be back at parity soon.




My opinion is that the AUD will get back to between 0.85 - 0.87 within the next 6 months - or sooner (parity "soon" - well, not much chance of that).

Chinese "investment" in Australian residential property will most likely decline over the next 6 - 12 months. 

The future of Australian property prices is dependent upon the region. There is no "one size fits all" answer to that.

Sydney / Melbourne - flat to declining between now and end of 2014.

Just my opinions.


----------



## trainspotter (31 March 2014)

trainspotter said:


> AMEN ... If you read my posts previously you will see that it is part of the cycle. Still waiting for the March/April banks to want RoR on their endeavours ... nice call on the China default CanOz ... flow on effect will be banks claiming "higher cost of funding" in the near future and blame "global conditions" as their excuse. Beware the Ides of March .... also keep an eye on the bankruptcy rates for companies in Australia ... just my opinion of course.
> 
> How does this effect home prices ?  Inflation is the reason




But what is this ? Inflationary pressures already?



> *Inflation has continued to rise*, signalling the beginning of the end for the record low cash rate.
> The TD Securities Melbourne Institute monthly inflation gauge rose by 0.2 per cent in March and by 2.7 per cent in the 12 months to March - the same as in February.
> The increase was driven by price rises for fruit, vegetables, meat, seafood, travel and accommodation and offset by falls in rents, petrol and audio, visual and computing equipment and services.
> The March figures would bring little comfort to the Reserve Bank of Australia, TD Securities head of Asia-Pacific research Annette Beacher said.
> ...




http://www.thebull.com.au/articles/a/45081-inflation-pressures-build:-survey.html

Whaaaaaaaaaaa? "unexpected pickup in inflation" ..... blind Freddy could see the flow on effect from the low interest rates !! And these clowns are running our economy??


----------



## satanoperca (31 March 2014)

trainspotter said:


> Whaaaaaaaaaaa? "unexpected pickup in inflation" ..... blind Freddy could see the flow on effect from the low interest rates !! And these clowns are running our economy??




No one guessed that, did they?

Yes clowns are running the economy, that have one lever, forward or back to control everything. All for keep it simple, but that is ridiculous. 

Cheers


----------



## Wysiwyg (31 March 2014)

Don't panic Pop!



> "*Fairly benign numbers all round*, whether you take them at face value or trim out some of the extreme moves," said TD's head of Asia-Pacific research Annette Beacher.
> 
> But she is *expecting the Reserve Bank to increase the cash rate on Melbourne Cup day in November*.


----------



## satanoperca (3 April 2014)

An I thought property only went up.

What is this I see from The Block. Here I was thinking it is easy renovating houses and make tons of $$$$$.



> Property records reveal an apartment bought by the Crazy John group from the first The Block series in Bondi in 2003 did sell for less two years after it was auctioned. The apartment sold in 2003 for $670,000, but according to RP Data sold again in 2005 for $560,500.
> Another apartment in series two of The Block at Manly sold for $795,000 in 2004, and sold three years later for $820,000. It changed hands again during a low point in the market for $785,000 in 2012.



http://www.news.com.au/finance/real-estate/can-anyone-else-achieve-what-contestants-do-on-the-block/story-fncq3era-1226873141231
And I must be wrong in my belief that property doubles every 7 years. No gain in 8 years, oh well, must have doubled last year.

Cheers


----------



## Trembling Hand (4 April 2014)

Here is an interesting look at the false claims that negative gearing adds to stocks for renters and rumours that its going to be cut in the budget,

http://www.macrobusiness.com.au/2014/04/report-negative-gearing-is-on-the-chopping-block/


----------



## CanOz (4 April 2014)

So, if this happens it will have an affect on housing prices...

I wonder when they think they could pass the law?


----------



## trainspotter (4 April 2014)

Errmmmm I wonder if the writer of this diatribe has considered that when the investor buys that established property from Mr & Mrs Average that they go and purchase a block of land and construct a house thereon or purchase an off the plan apartment etc. Very narrow section of reporting IMO. Not all people who sell their house to an investor rents it back from them !! Yes some of them will buy an established property in either a better location or closer to the beach or downsize etc ad infinitum but I am sure that there would be a percentage that would build. 

The other point that has been conveniently overlooked in this missive is that it is FIRB's policy that only newly constructed houses are to be purchased by overseas investors. Not part of the equation ?

I especially loved this statement:-



> In the event that negative gearing was once again quarantined and a proportion of investment properties were sold, who does the HIA think they would sell to? That’s right, renters. In turn, those renters would be turned into owner-occupiers, reducing the demand for rental properties and leaving the rental supply-demand balance unchanged.




Ummmm they are called renters for a reason _*ie*_ they cannot afford to buy property which is why they rent 

A lot of assumptions here based on a wish list


----------



## CanOz (4 April 2014)

Its an interesting consideration....Todd Hunter from WhereGroup has some pretty strong view as a property investor on what could happen if they abolished NG all together....but thats not what they're considering...





> Losing negative gearing means that a very large proportion of investment properties would be dumped on the market to sell at the same time. For those properties negatively geared today, they will put them up for sale now. When interest rates go up (and they will at some stage) more and more properties will go onto the market. This will create a massive oversupply of properties on the market, as 1 in 3 properties are investment properties on average.




I wonder though, if they make it conditional what affect it would have? Would it be a cooling affect only?



> "Reports have emerged that the Government is seriously considering reforming Australia’s negative gearing rules, by _grandfathering arrangements for existing investors and potentially only allowing negative gearing on newly constructed dwellings_  "




As i replied to Todd...



> This bit here would still allow existing investors to keep thier properties and benefit from thier current arrangements. Since there has been very little growth in NG investment in new properties, the change may see some growth in this area.




Obviously I'm concerned that the price of properties would plummet.... Hence my great interest in the opinions of the property gurus on this site


----------



## trainspotter (4 April 2014)

Nothing would change. Negative gearing would still be viable but the "product" would change from established to construction. Yes there would be a cooling effect on the property market whilst the investors transition from one form of investing to another. As they are not outlawing NG completely and allowing the grandfather clause then I really so no difference.


----------



## beachlife (4 April 2014)

It would be interesting.  Many investors in established houses would kick the tenants out and put up a for sale sign.  That would mean a very limited supply of rentals in established areas so rent would go up in those areas.  It would also drive rentals to newer outer suburbs perhaps making them less desirable for owner occupiers.  It would be a mess.

I dont think it will happen though.  The govt wont be able to cope with all the families that will be kicked out.


----------



## sydboy007 (4 April 2014)

trainspotter said:


> Errmmmm I wonder if the writer of this diatribe has considered that when the investor buys that established property from Mr & Mrs Average that they go and purchase a block of land and construct a house thereon or purchase an off the plan apartment etc. Very narrow section of reporting IMO. Not all people who sell their house to an investor rents it back from them !! Yes some of them will buy an established property in either a better location or closer to the beach or downsize etc ad infinitum but I am sure that there would be a percentage that would build.
> 
> The other point that has been conveniently overlooked in this missive is that it is FIRB's policy that only newly constructed houses are to be purchased by overseas investors. Not part of the equation ?
> 
> ...




For a rental property to be sold, you have to find a buyer.  Whoever is buying the property has been able to afford the purchase price.  If a FHB wasn't able to buy pre NG changes, it's likely they will have a better chance afterwards due to reduced demand by the specuvestors.

Probably prices would fall a bit if NG was at least quarantined and capitalised on the property since specuvestors would find it harder to fund the losses each month - recently they're at the 40%+ mark in terms of new loans.  Bring in some MP like higher risk weightings for high LVR loans and you'll give prices another nudge down - RBNZ seems to think their MP initiative has reduced house prices by 2.5%


----------



## trainspotter (4 April 2014)

beachlife said:


> It would be interesting.  Many investors in established houses would kick the tenants out and put up a for sale sign.  That would mean a very limited supply of rentals in established areas so rent would go up in those areas.  It would also drive rentals to newer outer suburbs perhaps making them less desirable for owner occupiers.  It would be a mess.
> 
> I dont think it will happen though.  The govt wont be able to cope with all the families that will be kicked out.




Did you not read the article? It has a "grandfather clause" meaning that the existing investors will not be affected. It will only  apply to "new" investors to the NG market who will be forced to purchase newly developed houses or purchase a block and construct thereon. No "established" properties allowed.

Good points though if it were an across the board legislation but like you say ... not gonna happen.


----------



## trainspotter (4 April 2014)

sydboy007 said:


> For a rental property to be sold, you have to find a buyer.  Whoever is buying the property has been able to afford the purchase price.  If a FHB wasn't able to buy pre NG changes, it's likely they will have a better chance afterwards due to reduced demand by the specuvestors.
> 
> Probably prices would fall a bit if NG was at least quarantined and capitalised on the property since specuvestors would find it harder to fund the losses each month - recently they're at the 40%+ mark in terms of new loans.  Bring in some MP like higher risk weightings for high LVR loans and you'll give prices another nudge down - RBNZ seems to think their MP initiative has reduced house prices by 2.5%




Do you understand how NG works? Fund what losses? That is WHY you are doing it? It is the taxable income that is being reduced with the hope of being compensated for by a capital gain in the future. 

Here is how negative gearing works:



> Lisa, a property investor, buys a unit for $300,000, putting in $50,000 of her own money and borrowing the remaining $250,000. The interest of 7% each year is $17,500 and the weekly rent is $300 or $15,600 a year.
> 
> Financial flexibility
> 
> ...




http://finance.ninemsn.com.au/pfproperty/investing/8123730/negative-gearing-explained

In the example above the difference with NG is a lousy $1417 per annum = $27.25 per week !! If this piddly amount is going to break you financially then you should not be investing in property. 

Oh heres a thought ... let's put *UP *the rent to cover the shortfall. The property is now neutrally geared with the expectation of capital gain in the future. 

Cause that is exactly what will happen IMO.


----------



## Macquack (4 April 2014)

trainspotter said:


> In the example above the difference with NG is a *lousy $1417 per annum = $27.25 per week *!! *If this piddly amount is going to break you financially then you should not be investing in property. *




Firstly, no need to be so patronising, Sydboy knows what negative gearing is.

Secondly, you are wrong in your above example.

The piddly amount you are referring to is $3083 per annum, which equals = $59.29 per week !!.


----------



## trainspotter (4 April 2014)

Macquack said:


> Firstly, no need to be so patronising, Sydboy knows what negative gearing is.
> 
> Secondly, you are wrong in your above example.
> 
> The piddly amount you are referring to is $3083 per annum, which equals = $59.29 per week !!.




Dear GOD do I have to explain everything???????

The after-tax loss on the investment would be reduced from $4500 to $3083 = $1417 DIFFERENCE !!!!!!

Tax loss WITHOUT NG = $4500
Tax loss WITH NG = $3083
DIFFERENCE is $1417 per annum.

Apologies accepted anytime you like MacQuack 

(providing the investor is on the lower rate of tax at 31.5%)


----------



## Macquack (4 April 2014)

trainspotter said:


> Dear GOD do I have to explain everything???????
> 
> The after-tax loss on the investment would be reduced from $4500 to $3083 = $1417 DIFFERENCE !!!!!!
> 
> ...




Stop lecturing f***ing everybody when you don't even know how negative gearing works.

The lower the marginal tax rate, the less the after-tax saving, so the higher the after-tax net cost.

In your example the after tax cost to hold the property is $3083.


----------



## trainspotter (4 April 2014)

Macquack said:


> Stop lecturing f***ing everybody when you don't even know how negative gearing works.
> 
> The lower the marginal tax rate, the less the after-tax saving, so the higher the after-tax net cost.
> 
> In your example the after tax cost to hold the property is $3083.




You are not quite all there are you Macquack? Do you even understand how this works? Which is why there are 2 examples evidencing different tax rates. Please try and keep up old chum ... 

In my example the after tax cost to hold the property is $3083 with NG at 31.5 % tax rate
In my example the after tax cost to hold the property is $4500 without NG at 31.5 % tax rate

Let's remove the NG component and the DIFFERENCE is how much again? This extra cost will just be added onto the rent of the property to cover the loss of tax deductibility. Surely it is not that hard to understand?

But hey what would I know ... :

In your example the after tax cost to hold the property is $3083 with NG = $59.29 per week
In your example the after tax cost to hold the property is $4500 without NG = $86.54 per week

$86.54 MINUS $59.29 = (please place the figure of $27.25 per week here)


----------



## waterbottle (4 April 2014)

Why would rents increase if NG was quarantined?

AFAIK, rents are correlated with the renter's income, not with the value of the property or the value of the landlord's debt.


----------



## sydboy007 (5 April 2014)

trainspotter said:


> Do you understand how NG works? Fund what losses? That is WHY you are doing it? It is the taxable income that is being reduced with the hope of being compensated for by a capital gain in the future.
> 
> Here is how negative gearing works:




The average loss last year for NG "investors" was $10950.  Since averages is all we can deal with and the fact that nearly 3/4 of NG investors earn less than 80K a year I'l work with the rather large 32.5% marginal tax rate.

With NG quarantined you're looking at a reduction in cash flow of $3558 a year or a tad over $68 a week.

Would that be enough to reduce investor demand for property?  I'm not sure, but I think it's a good idea to find out.  If it doesn't then no harm done and reduces a cost to the budget.  If it does, house price growth will moderate due to the reduced demand making it easier for renters to save enough to become FHBs.

With rental properties now on a PE of 28 and limited income growth potential due to low to negative real wages growth, the only reason to buy is the belief that prices will continue to rise at CPI + NG loss + reasonable rate of return each year.  maybe foreign investor demand can continue to prop things up, but at 177% of household debt to GDP I don't think there's must juice left in that lemon to squeeze.

So I really hope that the rumours are true and soon NG will be for new housing only and hopefully losses capitalised onto the purchase price rather than being able to reduce unrelated income.  It would certainly help tp focus an investor on the merits of the property rather than be mesmerised by the spruikers and NG tax savings.


----------



## FxTrader (5 April 2014)

Trembling Hand said:


> Here is an interesting look at the false claims that negative gearing adds to stocks for renters and rumours that its going to be cut in the budget,
> 
> http://www.macrobusiness.com.au/2014/04/report-negative-gearing-is-on-the-chopping-block/




The summary in this article has been echoed in this thread many times...



> In short, negative gearing is costing the government billions in lost tax revenue, but is doing absolutely nothing to boost supply. It also creates additional demand from tax subsidised investors, placing upward pressure on home prices and locking-out would-be first time buyers.
> 
> There is little policy rationale in favour of keeping negative gearing in its current form, whose foregone funds could instead be used to fund schools, hospitals, housing-related infrastructure, or any number of other worthwhile endeavors.




I would be happy to see NG policy modified to promote new housing construction and discourage the churning of established property at ever higher prices to satisfy investor demand.  Let just see if the Libs and Hockey have the courage to make meaningful changes to NG policy that are long overdue.  They have set the tone to prepare the electorate for significant tax policy changes.


----------



## trainspotter (5 April 2014)

waterbottle said:


> Why would rents increase if NG was quarantined?
> 
> AFAIK, rents are correlated with the renter's income, not with the value of the property or the value of the landlord's debt.




Rents would increase as the "subsidy" of the NG was tken away from the equation so the investor would increase rents to cover the determined "loss".


----------



## banco (5 April 2014)

trainspotter said:


> Rents would increase as the "subsidy" of the NG was tken away from the equation so the investor would increase rents to cover the determined "loss".




I'm not sure this would be the case.  Think about it: you had an asset that was tax advantaged in one way and now it's not.  Either its yield would have to increase to compensate or its price would have to fall to reflect the fact that it's now less attractive as an investment.  I don't see why it wouldn't be the latter.  Especially since when buying houses after the change buyers will be aware of the changed tax situation and will take that into account when deciding what to pay.


----------



## trainspotter (5 April 2014)

sydboy007 said:


> The average loss last year for NG "investors" was $10950.  Since averages is all we can deal with and the fact that nearly 3/4 of NG investors earn less than 80K a year I'l work with the rather large 32.5% marginal tax rate.
> 
> With NG quarantined you're looking at a reduction in cash flow of $3558 a year or a tad over $68 a week.
> 
> Would that be enough to reduce investor demand for property?  I'm not sure, but I think it's a good idea to find out.  If it doesn't then no harm done and reduces a cost to the budget.  If it does, house price growth will moderate due to the reduced demand making it easier for renters to save enough to become FHBs.




$68 per week or $10 a day is not going to stop an investor at all. Bump the rent by half of this loss and the investor would not even blink but rents would certainly go up across the board. Simple maths and supply and demand.

Rents have now gone up making it harder to save. Prices plateau for a period of 6 months while the markets sorts itself out and shrugs off the negative effect of no tax loss applicable. "Product" changes to construction due to the tax deductibilty of depreciation during the course of construction plus the interest component blah de blah blah.

Nothing changes IMO


----------



## trainspotter (5 April 2014)

banco said:


> I'm not sure this would be the case.  Think about it: you had an asset that was tax advantaged in one way and now it's not.  Either* its yield would have to increase to compensate* or its price would have to fall to reflect the fact that it's now less attractive as an investment.  I don't see why it wouldn't be the latter.  Especially since when buying houses after the change buyers will be aware of the changed tax situation and will take that into account when deciding what to pay.




You've answered your own question (my bolds) The "attractiveness" of the investment is the perennial hope of capital gain at the end of the day


----------



## banco (5 April 2014)

trainspotter said:


> You've answered your own question (my bolds) The "attractiveness" of the investment is the perennial hope of capital gain at the end of the day




That assumes that property investors have the capacity to raise the rent to whatever they want to.


----------



## trainspotter (5 April 2014)

banco said:


> That assumes that property investors have the capacity to raise the rent to whatever they want to.




No assumption necessary.  The capacity of the person renting to pay and or cover the increase is the key.


----------



## Wysiwyg (5 April 2014)

I have witnessed over the last 5 years demand outstrip supply in which rents increased to way above average. The influx was due to construction work and workers that were paid in accordance with extra hours worked. In other words high income workers.

So not only did demand outstrip supply, the investors raised rents to what the influx were able to afford. The under supply of rental properties saw a large number of units/houses built at the peak but now the demand has dropped away considerably with construction tapering off. Rents have come off considerably as investors jockey for renters. Many investors caught buying at the peak to capture the high yields.  

Classic boom/bust cycle.


----------



## sydboy007 (5 April 2014)

trainspotter said:


> $68 per week or $10 a day is not going to stop an investor at all. Bump the rent by half of this loss and the investor would not even blink but rents would certainly go up across the board. Simple maths and supply and demand.
> 
> Rents have now gone up making it harder to save. Prices plateau for a period of 6 months while the markets sorts itself out and shrugs off the negative effect of no tax loss applicable. "Product" changes to construction due to the tax deductibilty of depreciation during the course of construction plus the interest component blah de blah blah.
> 
> Nothing changes IMO




Everything changes.  Rents can only be set at what the market can afford.  If rents go to high then I'd not be surprised to see younger peopl emove back with their parents, spare bedrooms used up.  If rents go up faster than income growth something has to give.

Restrictions on NG will reduce investor demand.  Less demand means lower house price growth, maybe even some falls.  Cheaper housing allows cheaper rents.

As for missing out on over $3.5K a year, I'd say that would make the investment property calculations look a bit different.  Certainly makes it harder for house price inflation to work its magic.


----------



## banco (5 April 2014)

trainspotter said:


> No assumption necessary.  The capacity of the person renting to pay and or cover the increase is the key.




Of course it's an assumption.  You are assuming the rental market is tight enough and other economic conditions are such that landlords can increase the rent to make up for the loss of negative gearing.  If the price of oil goes up the airlines can try and pass on 100% of the cost to passengers but in a competitive market if some of the airlines refuse to pass it on good luck to those that do.  The same would apply to landlords who put up the rent while others in the neighborhood hold rent steady. 

If it was so easy to pass the cost on to renters why do the used car salesmen that run the various real estate industry groups get so agitated at the prospect of negative gearing being curtailed?  It's not like they give a **** about renters.  It's because they are afraid the effect would be a fall in prices.


----------



## CanOz (8 April 2014)

From Zerohedge in regards to the US housing market...California has caught up to Sydney and Melbourne...

Hot Air Hisses Out Of Housing Bubble 2.0: Even Two Middle-Class Incomes Aren’t Enough Anymore To Buy A Median Home



> “Prices have gotten to the stage where we cannot buy a house, renovate it, rent it, and still make a reasonable return,” explained Peter Rose, a spokesman for Blackstone Group, a private equity giant whose real-estate division, Invitation Homes, has grown in two short years from nothing to the largest landlord in the country with 41,000 rental single-family houses to is name. “There was a moment in time where it made sense,” Rose said.
> 
> Not anymore. Blackstone already cut its purchases in California by 90% last year. It wasn’t alone. Another mega-buyer with access to nearly free money, Colony Capital, is doing the same thing. Oaktree Capital is trying to dump its portfolio of 500 homes before prices head south.
> 
> “Private capital made a lot of money early, and now they’re starting to pull back,” Dave Bragg, head of Residential Research at Green Street Advisors, told the LA Times. “Home prices are up significantly, and houses are definitely less attractive.”




I guess they don't have a property investor mentality in the US, thats why PE was able to go in and do what they've done...?

Some similarities but some differences to Australia's property market...Population growth, average wage comes to mind...

Its amazing, for all the meddling in the markets the Fed still can't understand that THEY cause bubbles. You give out enough Dosh to the Wall Street nuts and they'll find a way to make their coin at the expense of Joe Average, who'll get stuck holding the bag, again....


----------



## FxTrader (8 April 2014)

CanOz said:


> I guess they don't have a property investor mentality in the US, thats why PE was able to go in and do what they've done...?



There is no NG subsidy for investment property in the U.S.  Only the mortgage interest on PPOR is tax deductible.  Cashed up entities have stepped into the gutted real estate markets there and capitalised on the easy credit and the low interest rate environment but the opportunities to make fast money are fading quickly.  California real estate has always been expensive, especially the SF Bay area. 



> Its amazing, for all the meddling in the markets the Fed still can't understand that THEY cause bubbles. You give out enough Dosh to the Wall Street nuts and they'll find a way to make their coin at the expense of Joe Average, who'll get stuck holding the bag, again....



Yes indeed, the Fed has caused asset bubbles to reinflate across many asset classes with an explosion of speculative debt washing through markets.  It's hard to foresee how this money creation experiment will not end badly for the highly leveraged or indebted.


----------



## CanOz (8 April 2014)

Its not going to be pretty FXTrader...

Bear ETF anyone? Its not quite showing any bullish signs though, other than the volume at the historical lows recently...

DRV, Direxion Real Estate Bear 3x ETF


----------



## kid hustlr (8 April 2014)

sydboy007 said:


> *Rents can only be set at what the market can afford*.




Bolded for effect.

Can we revisit this, I've heard the standard line 'oh well if they cut NG then landlords will just increase rents'. My view is that of the above. You can't just raise rents, I don't think it works like that, unless I'm missing something?


----------



## Macro Polo (8 April 2014)

kid hustlr said:


> Bolded for effect.
> 
> Can we revisit this, I've heard the standard line 'oh well if they cut NG then landlords will just increase rents'. My view is that of the above. You can't just raise rents, I don't think it works like that, unless I'm missing something?




You aren't missing anything - property is sort of like fixed income (or any asset really) in that, if you need to be compensated with higher yield for holding that asset, the variable that moves is price. 

I.E. If there is credit risk for an issuer of fixed income, price will fall to raise the yield - but this only benefits new investors. However, issuers don't suddenly start giving you larger coupon payments to increase your yield - that is backwards. Those saying that landlords will increase rents are dreaming - price is the variable that moved out of line with incomes, and price will be the variable that falls back in to line to allow for a decent yield for new owners/investors.

If NG gets taken away, I would expect landlords will take whatever they can get to make sure they have a tenant to help pay the interest.


----------



## sydboy007 (8 April 2014)

Macro Polo said:


> You aren't missing anything - property is sort of like fixed income (or any asset really) in that, if you need to be compensated with higher yield for holding that asset, the variable that moves is price.
> 
> I.E. If there is credit risk for an issuer of fixed income, price will fall to raise the yield - but this only benefits new investors. However, issuers don't suddenly start giving you larger coupon payments to increase your yield - that is backwards. Those saying that landlords will increase rents are dreaming - price is the variable that moved out of line with incomes, and price will be the variable that falls back in to line to allow for a decent yield for new owners/investors.
> 
> If NG gets taken away, I would expect landlords will take whatever they can get to make sure they have a tenant to help pay the interest.




Every time I hear removing NG will cause landlords to sell and the rental market to dry up I laugh.  Who do the land lords sell to?  Other Investors?  Renters?  Unless they're selling to 1800-I_SAW_AN-ASIAN-AT-AN-AUCTION and they're leaving the property empty I don't see how quarantining NG to the income of the asset would have much immediate impact on the rental market.  Going further and also limiting it to newly formed assets would be even better.  There's much cheaper ways to provide low cost housing if that is what we as a society decide to do.

Now probably there will be less demand for investment properties in the future, but with the lower demand prices should moderate allowing FHBs back into the market and they wont be renters any more.


----------



## Vixs (9 April 2014)

The only way to get spending levels back to what they were to fuel growth (not saying that's a good idea, but hey, this is the economic system dependant on perpetual growth) we need HOME prices to increase and provide the wealth effect.

Investment property prices affect the investors, but for everyday people the biggest wealth effect boost they could get is from increasing home values.

Disregarding the current conversation on the possible consequences of the removal of negative gearing, many of the current renters WOULD like to be owners, and will be one day. There are certainly a lot of people that either are not financially secure enough to own, or are not in a fixed area long enough to warrant it, but many people given the ability to would buy not rent. Only when that happens can they participate in the wealth effect and ramp up their spending and other investing accordingly.


----------



## wayneL (9 April 2014)

What about the small issue of servicing the debt?


----------



## sydboy007 (9 April 2014)

wayneL said:


> What about the small issue of servicing the debt?




mm.  The banks don't consider it to be too much of an issue, the Genworth IPO (LMI monline) coming out somewhere around book value seems to indicate investors don't see it as an issue, APRA is still letting the gang of 4 game the system by fudging their internal models for capital adequacy so not an issue there, RBA still has interest rates at historic lows and arguing against MP so no problem there either.

Seems there's no debt servicing issue, just moral hazard bubbling away for the mother of all bank bailouts.


----------



## satanoperca (9 April 2014)

Vixs said:


> The only way to get spending levels back to what they were to fuel growth (not saying that's a good idea, but hey, this is the economic system dependant on perpetual growth) we need HOME prices to increase and provide the wealth effect.




Yes, continuing inflation of property prices will provide sustainable spending levels. lol

How about people create something other than buying into this myth. All going to end badly.

Cheers


----------



## kid hustlr (10 April 2014)

market top?

http://www.smh.com.au/entertainment/tv-and-radio/the-block-winners-chantelle-ford-and-steve-odonnell-pocket-736000-20140409-36dgp.html


----------



## sydboy007 (10 April 2014)

kid hustlr said:


> market top?
> 
> http://www.smh.com.au/entertainment/tv-and-radio/the-block-winners-chantelle-ford-and-steve-odonnell-pocket-736000-20140409-36dgp.html




There's 65 million Chinese loking to buy overseas property.  How can there be a top 

It's the new growth engine for the Australian economy.  Construct substandard chicken coup apartments, sell them to foreign investors who leave them empty and keep the pressure on the locals via higher land prices.  A real boon to the RBA and Government, massive productivity killer though


----------



## CanOz (10 April 2014)

sydboy007 said:


> There's 65 million Chinese loking to buy overseas property.  How can there be a top
> 
> It's the new growth engine for the Australian economy.  Construct substandard chicken coup apartments, sell them to foreign investors who leave them empty and keep the pressure on the locals via higher land prices.  A real boon to the RBA and Government, massive productivity killer though




Yup, and count us in too!


----------



## sydboy007 (11 April 2014)

2 graphs that sum up why NG needs to be changed.  95% of specuvestors buying pre-existing properties and there's been pretty much no growth over nearly 2 decades in new dwelling investment by specuvestors.


----------



## CanOz (11 April 2014)

There are still allot of property investors that are not NG'd. If you want to engineer a property crash, possibly throwing the economy into a recession, then go ahead and make hasty changes to a key part of the economy...

Whatever they do, they need to do some careful unbiased research first.


----------



## Wysiwyg (11 April 2014)

sydboy007 said:


> 2 graphs that sum up why NG needs to be changed.  95% of specuvestors buying pre-existing properties and there's been pretty much no growth over nearly 2 decades in new dwelling investment by specuvestors.



Reason 1) New properties are out of town, further from established schools, shops, hospitals etc.
Reason 2) New properties are marked up in price so all involved make a profit from land developer through to real estate salesperson.


----------



## banco (11 April 2014)

Wysiwyg said:


> Reason 1) New properties are out of town, further from established schools, shops, hospitals etc.
> Reason 2) New properties are marked up in price so all involved make a profit from land developer through to real estate salesperson.




Neither of which negates the fact that one of the defences for NG (encourages more building) used by the used car salesmen doesn't hold up.


----------



## FxTrader (11 April 2014)

Wysiwyg said:


> Reason 1) New properties are out of town, further from established schools, shops, hospitals etc.



True in general, and for this we can thank planning and zoning restrictions and the "not in my neighbourhood" attitude to higher density development. 



> Reason 2) New properties are marked up in price so all involved make a profit from land developer through to real estate salesperson.



It's the land component of the price that's the culprit here thanks again to your local council and planning authorities and land banking by the large developers.  Even so, investors are simply outbidding other buyers for established property in areas were captital growth or rental returns are attractive.


----------



## Wysiwyg (11 April 2014)

FxTrader said:


> It's the land component of the price that's the culprit here thanks again to your local council and planning authorities and land banking by the large developers.



I was hoping someone would note that fact. Housing estates with house blocks 700sq. m. for 250 - 260k. After building, first unimproved land valuation for council rates setting comes in at 220k. Good for lower rates but someone pocketed a nice profit on the dirt.


----------



## sydboy007 (12 April 2014)

FxTrader said:


> True in general, and for this we can thank planning and zoning restrictions and the "not in my neighbourhood" attitude to higher density development.
> 
> 
> It's the land component of the price that's the culprit here thanks again to your local council and planning authorities and land banking by the large developers.  Even so, investors are simply outbidding other buyers for established property in areas were captital growth or rental returns are attractive.




Pretty much all the increase in housing prices is land.  The value of the dwellings hasn't really changed - in theory they should fall over time due to depreciation and need to spend on renovations.

NIMBYism and extremely long times to get any development through the approval process don't help.  Restricting supply while pimping investor demand gives us what we have today.

Below chart from SMH.  Not sure if they mean the full purchase price or not.  My last valuer general rating was $500K for approx 128sqm or $3.9K/sqm which would probably nearly double if the house was included.

Ho we're expected to be able to be globally competitive with land prices like this I don't know.  Business rents are probably double or triple most of our competitors, especially in the retail space.  Wages HAVE to be higher or the mortgages and rents can't be paid.  It's taking longer than I ever expected, but when the crash comes it's going to be huge.  

I wonder what the pain point is for a lot of the specuvestors with highly NG property?  How much cash flow do they have to lose before they have to sell???  The stats say the majority of NG properties are owned by people earning less than $80K so wonder what kind of buffer the most marginal ones have, say the most fragile 10%??


----------



## DB008 (12 April 2014)

I got burned (crucified) last time I said this, but l'll go out on a limb and say it again.

Get rid of NG, investors will put money elsewhere (like shares and not into building more property) = less supply, same demand (renters), prices go up. And (as usual, any) costs get passed onto renters.

*Didn't they try to get rid of NG in the 80's?
What happened then?*


----------



## sydboy007 (13 April 2014)

DB008 said:


> I got burned (crucified) last time I said this, but l'll go out on a limb and say it again.
> 
> Get rid of NG, investors will put money elsewhere (like shares and not into building more property) = less supply, same demand (renters), prices go up. And (as usual, any) costs get passed onto renters.
> 
> ...




* rental growth over the period when negative gearing was last quarantined was nothing special, with periods of higher rental growth recorded both prior to and subsequently.

* 4 major city markets had increased rental growth, 4 had falls.

Now if there's less investor demand what happens to the price growth of residential realeastate??  I'd say it will slow to turn negative.  renters will be able to be come FHBs in that scenario.

Why should tax payers subsidise cheaper rents?  rents can only be set to a level that renters can afford.  Removal of NG does not mean rents have to rise - they might but only if the market can afford them and with low to negative real wages growth I'd say landlords will have limited ability to raise rents.  Too easy for gen y and younger gen x to move back home.

If NG is for new builds only that will make it easier for FHBs to buy pre-exisiting housing as the specuvestors will not be getting a taxpayer subsidy of 30%+.


----------



## DB008 (13 April 2014)

sydboy007 said:


> * rental growth over the period when negative gearing was last quarantined was nothing special, with periods of higher rental growth recorded both prior to and subsequently.
> 
> * 4 major city markets had increased rental growth, 4 had falls.
> 
> ...




I agree with your points. I have used NG in the past and will probably continue to do so in the future, if the law says I can. Why should I pay more tax for a bleeding hearts? Learn to manage your money wisely. 

It seems crazy that you can book a loss, then be rewarded for it. In regards to fixing NG, it's almost in a 'too big to fail' category and when someone (Gov, Lib/ALP) goes to fix it, it will turn ugly for a period.


----------



## FxTrader (13 April 2014)

DB008 said:


> It seems crazy that you can book a loss, then be rewarded for it.



Just as the interest on a margin loan to buy shares is tax deductible, so is mortgage interest on investment property.  Depreciation on plant and building allowance are allowed deductions for income producing property assets.  These combine to determine whether the cash flow on a property is positive or negative.  A negatively geared property investment is not necessarily cash flow negative. 

Just as a capital gains are taxable, capital loss offsets future capital gain.  This is part of the business of property investing, nothing crazy about any of this.  The taxation system creates incentive for taking on investment risk.  However, if key goals of property related taxation policy are to stimulate construction activity and create more affordable residential rental accommodation then such policy has clearly failed.  Further, if such policy has the unintended consequence of contributing to the unaffordability of residential housing then it seems clear the policy must be changed.


----------



## McLovin (13 April 2014)

sydboy007 said:


> Ho we're expected to be able to be globally competitive with land prices like this I don't know.  Business rents are probably double or triple most of our competitors, especially in the retail space.  Wages HAVE to be higher or the mortgages and rents can't be paid.  It's taking longer than I ever expected, but when the crash comes it's going to be huge.





Judging by the number of foreign retailers building huge new stores in Sydney and Melbourne, I'd say it's having no effect.

I think you need to read more than just MB, syd.


----------



## sptrawler (13 April 2014)

DB008 said:


> it's almost in a 'too big to fail' category and when someone (Gov, Lib/ALP) goes to fix it, it will turn ugly for a period.




To my way of thinking the Government are big winners if it fails.

From memory, the last time NG was stopped only 13% of residential property was NG, now it is near 40%.

If it is stopped what happens?

Those that are overgeared have to sell. Which should put downward pressure on prices.
Those that can afford to hold, will be more motivated to ensure it is rented. Which should put downward pressure on rents.
If it causes a collapse, there is a lot of cheap welfare housing for the Government to pick up, or the next generation of landlords. You have to remember these are suplimentary houses, not PPR.

The only real issue is the shock it would cause to the banks and the $A. But once the dust settles, the banks still hold the properties, their share price halves and the dividend dries up for a couple of years. Then the merry go round fires up again and the $A is too high anyway.

Sorry but I can't see any downside for the government, maybe you can enlighten me.


----------



## banco (13 April 2014)

sptrawler said:


> To my way of thinking the Government are big winners if it fails.
> 
> From memory, the last time NG was stopped only 13% of residential property was NG, now it is near 40%.
> 
> ...




I'm for getting rid of negative gearing but it may have a flow on effect to consumer confidence in the short term. Lots of pissed off speculators who are now poorer and are less likely to spend.


----------



## sptrawler (13 April 2014)

banco said:


> I'm for getting rid of negative gearing but it may have a flow on effect to consumer confidence in the short term. Lots of pissed off speculators who are now poorer and are less likely to spend.




Speculators get burnt all the time, they have a sook for awhile, then before you know it they are getting a margin loan.

It may cause a minor ripple, or it may cause a surge in consumer sentiment, when people actually see house prices falling.

The losers, investors who have geared into property with a capital gain being the sole underpinning rationale.

The winners, the government, tenants and prospective home buyers.


----------



## banco (13 April 2014)

sptrawler said:


> Speculators get burnt all the time, they have a sook for awhile, then before you know it they are getting a margin loan.
> 
> It may cause a minor ripple, or it may cause a surge in consumer sentiment, when people actually see house prices falling.
> 
> ...




I think there are a lot more 'naive' speculators among property investors.  We are not talking doctors with margin loan accounts who lose when the stock market goes into a bear market.  We are talking people on $70,000-$80,000 who aren't going to take a loss lightly.


----------



## sydboy007 (14 April 2014)

McLovin said:


> Judging by the number of foreign retailers building huge new stores in Sydney and Melbourne, I'd say it's having no effect.
> 
> I think you need to read more than just MB, syd.




In the prime areas of the capital cities that may be true, but then take a walk to say Oxford St, or King St Newtown in Sydney and wander past the many vacancies.  I'm sure other capitals have similar once popular shopping areas now nearly deserted.

As for having no effect, the fact we're paying far higher prices for the goods provided by the foreign retailers is a pretty important one I'd think.  Very high rents are probably not the sole reason, but an important one.  Add in the fact that Australian management of a lot of retail companies is shockingly bad and I'm quite surprised the foreign invasion has taken so long.  Will be interesting to see how DJs is performing in 2016 under new management.  Wonder how long it will be before myer is taken over too.


----------



## sydboy007 (14 April 2014)

sptrawler said:


> To my way of thinking the Government are big winners if it fails.
> 
> From memory, the last time NG was stopped only 13% of residential property was NG, now it is near 40%.
> 
> ...




The only way the current Govt will be able to make any changes to NG is if they grandfather the current situation.

I don't have any problem with that.

The rumours are still vague so not sure if they will still allow NG against other income or if it will be capitalised onto the cost base and reduce CGT on sale (my preferred way forward).

Eitherway, there should be reduced demand from specuvestors on established properties, and hopefully with an increase in FHBs that will mean any newly built apartments will have to be a bit better than the crap being churned out at present otherwise it's going to be hard to rent out.

Another NG change could be to only allow it for say 80% of the purchase price.  Probably easier than getting the RBA to bring in MP via higher risk weightings for > 80% LVR


----------



## banco (14 April 2014)

I'll be shocked if they do anything about negative gearing.  I think the overlap between property investors and liberal voters would be very high.


----------



## sptrawler (14 April 2014)

banco said:


> I'll be shocked if they do anything about negative gearing.  I think the overlap between property investors and liberal voters would be very high.




Your quotes seem to be contadictory, on one hand you are saying it is mainly lower income earners($70 - $80k)that will be hurt. Then you say the majority are Liberal voters.
Negative gearing when you are on $70-$80k is hardly worth it, as your marginal tax rate is so low, you only recover a small percentage of your losses.
The bottom line is, the government and it doesn't matter which party, is supporting NG to supply rental accomodation.
Once it costs more than it saves, and that is not only in a fiscal sense, they will jump on it.


----------



## sptrawler (14 April 2014)

sydboy007 said:


> The only way the current Govt will be able to make any changes to NG is if they grandfather the current situation.
> 
> I don't have any problem with that.
> 
> ...




That is what I have read also.
Another one they could do is say that all NG losses can only be offset upto the value of the rental income, any further losses have to be capitalised.


----------



## banco (14 April 2014)

sptrawler said:


> Your quotes seem to be contadictory, on one hand you are saying it is mainly lower income earners($70 - $80k)that will be hurt. Then you say the majority are Liberal voters.
> Negative gearing when you are on $70-$80k is hardly worth it, as your marginal tax rate is so low, you only recover a small percentage of your losses.
> The bottom line is, the government and it doesn't matter which party, is supporting NG to supply rental accomodation.
> Once it costs more than it saves, and that is not only in a fiscal sense, they will jump on it.




No I'm saying that that most negatlively geared property investors are earning average wages and they aren't going to take the loss of NG on the chin.  Negative gearing on an average wage may not be worth it but a lot of people still do it:

http://blog.rpdata.com/2013/05/ther...ared-property-over-the-201011-financial-year/

According to the above data there were over a million individuals who are NG and I'd still suggest that a high proportion of them (including the average income aspirational voters) are liberal voters.


----------



## sptrawler (14 April 2014)

banco said:


> No I'm saying that that most negatlively geared property investors are earning average wages and they aren't going to take the loss of NG on the chin.  Negative gearing on an average wage may not be worth it but a lot of people still do it:
> 
> http://blog.rpdata.com/2013/05/ther...ared-property-over-the-201011-financial-year/
> 
> According to the above data there were over a million individuals who are NG and I'd still suggest that a high proportion of them (including the average income aspirational voters) are liberal voters.




Fair enough, who knows, it will be interesting to see what happens when the 'powers that be' are over the housing boom.
When it has served its purpose, it will be just another boom that has run its course.
At the moment it is the only sector that Government and RBA can control, that can keep unemployment down, without using Government money.
Bit of a double edged sword, though, because house prices put upward pressure on wage claims.


----------



## McLovin (14 April 2014)

sydboy007 said:


> In the prime areas of the capital cities that may be true, but then take a walk to say Oxford St, or King St Newtown in Sydney and wander past the many vacancies.  I'm sure other capitals have similar once popular shopping areas now nearly deserted.
> 
> As for having no effect, the fact we're paying far higher prices for the goods provided by the foreign retailers is a pretty important one I'd think.  Very high rents are probably not the sole reason, but an important one.  Add in the fact that Australian management of a lot of retail companies is shockingly bad and I'm quite surprised the foreign invasion has taken so long.  Will be interesting to see how DJs is performing in 2016 under new management.  Wonder how long it will be before myer is taken over too.




I live 100m from Oxford St, Paddington, so I'm pretty aware of its problems. The problem isn't that the rent is too high (although it was very high) it's that it no longer has the foot traffic to support the rent. It's been sandwiched between two massive upmarket Westfields.

There are obviously people willing to pay the far higher prices because everytime I go into Westfield Bondi Junction it's packed. Commercial land prices are driven by cap rates. Cap rates are driven by what tennants are willing to bear. Unlike residential, commercial is not priced at how much borrowing capacity the buyer has.


----------



## trainspotter (14 April 2014)

banco said:


> I'll be shocked if they do anything about negative gearing.  I think the overlap between property investors and liberal voters would be very high.




So in your theory Liberalism = Capitalism? vice versa does Laborism = Socialism?

I think it doesn't matter a fat rats clacker what political lien you have when it comes to investing in property.


----------



## sydboy007 (17 April 2014)

Rumour is Triguboff has received an offer for Meriton and is considering selling up to half the company to a Chinese investor.

Maybe the new co owners will help to improve the quality of the apartments???


----------



## medicowallet (3 May 2014)

I wait in anticipation for the budget.

I expect that any middle class welfare cutback will dampen the housing market by not giving access to the geared amount serviceable by the funding given by the govt

More affordable housing would be great for the current generation and perhaps this will be another catalyst


----------



## CanOz (3 May 2014)

Well, we signed the contract on our first IP last night, hopefully the vendor signs today and in 30 days we'll own a two bedroom unit and a studio in the same complex, yielding 4.5% net....at normal vacancy.

Onto the next one! Thanks TS as well for getting us started


----------



## Bill M (3 May 2014)

CanOz said:


> Well, we signed the contract on our first IP last night, hopefully the vendor signs today and in 30 days we'll own a two bedroom unit and a studio in the same complex, yielding 4.5% net....at normal vacancy.
> 
> Onto the next one! Thanks TS as well for getting us started




Where did you buy CanOz? Any more details you might like to share? My agent has been calling me asking if I want to sell. My unit has jumped from 420k (valued in 2012) to 490k ish in 2 years. I am seriously thinking of selling but am hanging off as I have some pending travel coming up. Well done on the purchase!


----------



## CanOz (3 May 2014)

Bill M said:


> Where did you buy CanOz? Any more details you might like to share? My agent has been calling me asking if I want to sell. My unit has jumped from 420k (valued in 2012) to 490k ish in 2 years. I am seriously thinking of selling but am hanging off as I have some pending travel coming up. Well done on the purchase!




We bought in Brisbane, within 10km of the CBD. Love the weather here! It's raining in Sydney today....off to see the swans play the lions tonight at the gabba!


----------



## Bill M (3 May 2014)

CanOz said:


> We bought in Brisbane, within 10km of the CBD. Love the weather here! It's raining in Sydney today....off to see the swans play the lions tonight at the gabba!




Good stuff, good location, enjoy the game.


----------



## CanOz (3 May 2014)

Bill M said:


> Good stuff, good location, enjoy the game.




Thanks Bill, we just got the news that the vendors signed the contracts, so happy about that. We used a buyers agent this time as we were not familiar with QLD. I will post some info on them later when we get back to China but suffice it to say they were worth every penny and they did a great job finding properties for us and crunching the numbers with great detail. We also were able to pick thier brains and learn as much as possible from them...

I mentioned the central coast to him and he suggested that if the agents were calling you they must be getting short on stock to sell

Good luck if you do sell Bill!


----------



## trainspotter (4 May 2014)

Congrats CanOz ... Welcome to the property circus. It would appear that you have done your due diligence and have purchased after much consideration of the pros and cons of the real estate world.


----------



## CanOz (4 May 2014)

trainspotter said:


> Congrats CanOz ... Welcome to the property circus. It would appear that you have done your due diligence and have purchased after much consideration of the pros and cons of the real estate world.




Yeah this was a great eye opener, plus we got to see two of Australia's awesome cities, the first time for me...now off to the Gold Coast tomorrow!


----------



## Quincy (4 May 2014)

trainspotter said:


> Congrats CanOz ... Welcome to the property circus. It would appear that you have done your due diligence and have purchased after much consideration of the pros and cons of the real estate world.




The talk in the media over the past month or so has been about the Brisbane market being the next one to take off due to Sydney / Melbourne pretty now reaching saturation point for affordability for the "main-stream" investor.

Brisbane being cheaper (more affordable) than  SYD / MEL is an obvious location for consideration.

Good luck !  Hold for another 5 to 7 years and you will double your money  . . . . and so on ad infinitum.

Look out for those Black Swans however. Reports are there are few nesting around the Port of Brisbane - however Brisbane City Council is trying its best to eliminate any possibility of these black swans from remaining in the local area.

http://www.brisbanetimes.com.au/environment/battle-to-save-brisbanes-swan-lake-20131024-2w4na.html


----------



## sptrawler (7 May 2014)

Well the boom keeps rolling on, trainspotter has been right, house prices continue to defy gravity as household debt goes to 1.8 times household income.

http://www.abc.net.au/news/2014-05-07/household-debt-the-big-threat-to-australian-economy/5435844


----------



## trainspotter (7 May 2014)

Wrote this on the 27th November 2013



trainspotter said:


> Meanwhile back in reality:-
> 
> http://www.abc.net.au/news/2013-11-27/apra-working-with-banks-on-lending/5119022
> 
> ...






> "We're only six years from when poor lending practices dropped us into the global financial crisis and now these loans seem to have found their way back into the mix," Mr Godfrey said.
> "Whether it's a low deposit loan, 40-year loan or family guarantee, they're very high risk products and they can leave consumers in a great deal of financial distress.




http://www.thebull.com.au/articles/a/45857-risky-loans-'could-leave-people-homeless'.html

Choice Magazine is all over this now eh ?? 

I am a bit surprised the banks did not adjust their loan margins in March/April as I predicted ... 3 year rate moved a bit but I was sure they would have moved on the 10 year yield as well ?? 10 years = 7.33% p.a. at ANZ. 7 year rate is equivalent . 

http://www.anz.com/promo/ANZ-home-l...gages&ef_id=U2ncVQAAARmk6EE4:20140507071013:s


----------



## Uncle Festivus (8 May 2014)

CanOz said:


> We bought in Brisbane, within 10km of the CBD. Love the weather here! It's raining in Sydney today....off to see the swans play the lions tonight at the gabba!




I could have sold you mine...in the CBD, just sold.

Just sold a unit in Sydney for suburb record price.......this is just scary now! Race to exchange unconditional type sale....bubble...

Melbourne CBD already signs of past peak.....just a glut of units now.....anybody want to buy one....cheap?


----------



## Bill M (8 May 2014)

Uncle Festivus said:


> I could have sold you mine...in the CBD, just sold.
> 
> Just sold a unit in Sydney for suburb record price.......this is just scary now! Race to exchange unconditional type sale....bubble...
> 
> Melbourne CBD already signs of past peak.....just a glut of units now.....anybody want to buy one....cheap?




Things are certainly booming in Sydney. In my block a unit went to market at  "From 495K", then a week later it was advertised at "From 500K". This week it has been confirmed sold for 515K.

I am in the process of doing contracts for my unit, up for sale later in the year. Even the agent said he thinks it will keep going for a while but also said nothing is guaranteed. Well done on your sale.


----------



## CanOz (8 May 2014)

Uncle Festivus said:


> I could have sold you mine...in the CBD, just sold.
> 
> Just sold a unit in Sydney for suburb record price.......this is just scary now! Race to exchange unconditional type sale....bubble...
> 
> Melbourne CBD already signs of past peak.....just a glut of units now.....anybody want to buy one....cheap?




Was this an apartment UF.? 

Also looking at a house now around the Albany creek area.


----------



## sydboy007 (9 May 2014)

http://www.demographia.com/dhi.pdf

http://www.newgeography.com/content/004261-urban-containment-land-price-up-5-times-income-smaller

These graphs sum up quite nicely the ponziness of Australian property


----------



## trainspotter (9 May 2014)

> Rachel de Graaf represents a generation of Sydneysiders giving up on the Aussie dream. The 26-year-old marketing manager has been renting in the inner city for eight years and can’t buy.
> “I would like to own a property but I don’t think I’ll ever be able to afford anything in Sydney,” she said.
> “I’ve drawn that conclusion from looking at the cost of buying in comparison to my salary and it doesn’t really equate.”
> Ms de Graaf said renting in the inner city made saving for a deposit even more difficult.
> “I’d rather* live conveniently in inner Sydney area* than move further out and save *because I don’t drive *so I need to live in an area that is public transport-friendly.”




http://www.news.com.au/finance/real...y-or-rent-a-home/story-fncq3era-1226907065854

Me me me me me I I I I me me me ... it's all about ME "*I* don't drive" and "It's convenient for *me*" 

Owning property is not a right of this country .. it is a privilege. You actually have to get off your @rse and do something about it instead of whinging and whining. I bet she doesn't give up her $300 shoes and $500 dresses she would buy to look glitzy on a Saturday night out with the gurls !!


----------



## Vixs (9 May 2014)

trainspotter said:


> http://www.news.com.au/finance/real...y-or-rent-a-home/story-fncq3era-1226907065854
> 
> Me me me me me I I I I me me me ... it's all about ME "*I* don't drive" and "It's convenient for *me*"
> 
> Owning property is not a right of this country .. it is a privilege. You actually have to get off your @rse and do something about it instead of whinging and whining. I bet she doesn't give up her $300 shoes and $500 dresses she would buy to look glitzy on a Saturday night out with the gurls !!




Yeah I picked up on that too TS - the way that's written sounds like she's not prepared to sacrifice a damn thing!


----------



## medicowallet (9 May 2014)

trainspotter said:


> http://www.news.com.au/finance/real...y-or-rent-a-home/story-fncq3era-1226907065854
> 
> Me me me me me I I I I me me me ... it's all about ME "*I* don't drive" and "It's convenient for *me*"
> 
> Owning property is not a right of this country .. it is a privilege. You actually have to get off your @rse and do something about it instead of whinging and whining. I bet she doesn't give up her $300 shoes and $500 dresses she would buy to look glitzy on a Saturday night out with the gurls !!




In my generation, we could do so on a single income.

Now it takes dual incomes and a long time, and whilst I understand my fist car was not new, and my first TV was tiny etc, 

I am still old and mature enough to recognise that my generation had vastly greater opportunity to buy affordable, quality housing that the GENYers do not.  

Though she is probably whining, I think your post disrespects the problem that my generation has contributed to.

I am sad about how things have gone, and hope that Hockey rips out middle class welfare, and property plummets.   I await a housing bust/recession we have to have, to reset our stupidly unrealistic lifestyles and expectations.

MW


----------



## CanOz (9 May 2014)

medicowallet said:


> In my generation, we could do so on a single income.
> 
> Now it takes dual incomes and a long time, and whilst I understand my fist car was not new, and my first TV was tiny etc,
> 
> ...




This sort of ignores the 'Asia' effect MC?


----------



## againsthegrain (9 May 2014)

This whinging girl and her generation are going to be the ones looking after you in aged care so be prepared for more of that attitude, well thats unless in 20-30 we will all be speaking mandarin, working 14 hour 7 week days for our Chinese business friends/overlords.

Either way the greed of the baby boomer generation will contribute to either situation. The ones that will be fortunate enough to die of age or disease while splurging their investments will be the only winners.


----------



## CanOz (9 May 2014)

againsthegrain said:


> This whinging girl and her generation are going to be the ones looking after you in aged care so be prepared for more of that attitude, well thats unless in 20-30 we will all be speaking mandarin, working 14 hour 7 week days for our Chinese business friends/overlords.
> 
> Either way the greed of the baby boomer generation will contribute to either situation. The ones that will be fortunate enough to die of age or disease while splurging their investments will be the only winners.




What laugh, most of Australia only works five hours a day, four and half days a week for ten months a year!!!

Then y'all wonder why it's so bloody expensive here!!...lol!!


----------



## medicowallet (10 May 2014)

CanOz said:


> This sort of ignores the 'Asia' effect MC?




Yes and no.

I don't think it is a good idea to allow foreigners to own australian real estate or farming land.

But booms from overseas have happened before, they stopped eventually, but we obviously learned nothing from that.


I still believe that the major problem is "us" and not "them", and though I have earned some $$ in my time, it was / is mostly in businesses so I actually helped employ many people etc.

Unlike the obscene amounts of "money" sitting in residential real estate which could have been effectively invested in money producing / employment generating assets such as ports / rail / education etc.     Then again, that would require the individual to consider what is best for the group (and hence for themselves too) but then again, people probably don't understand the scene from a beautiful mind.

MW


----------



## SuperGlue (10 May 2014)

medicowallet said:


> I don't think it is a good idea to allow foreigners to own australian real estate or farming land.
> 
> But booms from overseas have happened before, they stopped eventually, but we obviously learned nothing from that.
> 
> MW




Property bust will be coming soon, just round the corner. Which corner, we don't know.

Some of you will recall when the Japanese were buying up big down the Gold Coast, Cairns, Yeppoon, Queensland in the 80s.
Then the bust came, they had to sell.

Now you don't hear of the Japanese buying any properties over here anymore.

In the 1993 movie "Rising Sun", where Sean Connery utters the line:
Quote:
"The Japanese have a saying: if you sit by a river long enough, you'll see the body of your enemy float by."

It's just a cycle, it will happen.
Prime example, look at the US.

Both the above, are caused by financial crisis in their very own country.


Interesting reading.
China heading toward a debt crisis with global ramifications: Banking vet

Last year Suntech Power, a Chinese solar energy company, defaulted on a $541 million bond followed by Shanghai Chaori Solar failing to make a $14.7 million interest payment on March 7. On March 18, Zhejiang Xingrun Real Estate Company defaulted on a $400 million loan. China is also taking large (and potentially unsustainable) debts in emerging markets prompting investor concern. China’s hard currency debt exposure was $223 billion at the end of 2013, according to Nomura Securities."

Link:  
http://finance.yahoo.com/blogs/dail...ith-global-impact--banking-vet-121832857.html


Please DYOR, the above are just my own personal opinion and me think aloud.


----------



## ROE (11 May 2014)

though I don't subscribe to doom and gloom theory on any asset and I do own houses

my observation lead me to believe a lot of people are maxing out on housing and mortgage and we
reach a stage where there is a high chance of correction or at least housing asset is now just too expensive based on fundamental...this may be the last hooray anyone buying in these time face higher probability of a correction though no one know when or how..

just like the stock market, when down turn hits there will be a lot of people making money out of this and there will be many more will cry and regret that they over leverage..

human tend to believe in trend when it has non interrupted run, just like people in the US believe in Las Vegas run
while housing through out the US has cycle ...Las Vegas has 25 years of grow and people believe it doesn't apply to Las Vegas, then GFC change everything it dropped sharply ...the old saying the higher it goes the bigger the drop.

There are many reasons to believe Housing never go down in Australia but history has been written what ever human believe in, the opposite happen.


----------



## rryall (11 May 2014)

I went to an auction in Brunswick, VIC yesterday and a 2 bedroom house that was been leased for $400 a week sold for $725,000 which was about 100k over reserve. A first home buyer had an opening bid of $550,000 and the eventual winner came over the top with a $660,000 bid and the property was immediately on the market. Apparently the winning bidder hadn't even seen the property and he was bidding strongly in 10k increments. Unbelievable.

Really does destroy the confidence for my generation. The budget that will conveniently leave the baby boomer generation out of assisting in reducing government deficits just adds salt to the wounds.


----------



## Julia (11 May 2014)

That seems a lot for a two brm house.  I don't know Melbourne at all.  What sort of suburb is Brunswick?
ie does the location constitute substantial relevance to the price?

When you feel miserable about house prices, have you considered living somewhere other than such an expensive capital city?  Lots of much more affordable areas if your work situation can accommodate a move.


----------



## McLovin (11 May 2014)

Julia said:


> That seems a lot for a two brm house.  I don't know Melbourne at all.  What sort of suburb is Brunswick?
> ie does the location constitute substantial relevance to the price?




That's cheap for inner city in the southern capitals. Actually, having a quick look at my own suburb, in the last few months the cheapest two bedder was $1.145m, most were around $1.3m. You'd be lucky to get a 2 bed apartment for $725k. I'm amazed that in places like Alexandria, a suburb you wouldn't have wanted to park your car on the street at night ten years ago, small 2 bed cottages are going for over $1.1m.


----------



## luutzu (11 May 2014)

since 2000, i think there's around 4 housing cycles in NSW/Australia.
I know because i've seen people boasting how they own 3 properties and won't even sell 1 to make an easy $100k profit... then the same people running around borrowing family $50 for fuel because the tenant didn't pay on time... then soon forced to sell an aprtment in QLD at massive loss

Same thing happen to different people i know every couple of years.

Thank god for the Chinese though. They're here investing into new properties and soon it will collapse and maybe a couple more young aussie family could afford a house then.


----------



## Wysiwyg (12 May 2014)

SuperGlue said:


> Property bust will be coming soon, just round the corner. Which corner, we don't know.
> 
> Some of you will recall when the Japanese were buying up big down the Gold Coast, Cairns, Yeppoon, Queensland in the 80s.
> Then the bust came, they had to sell.



A few of you on this thread need to read this book. I will try to remember from this day 12/05/2014 for a future check on whether the predictions are true or not.
Australia: Boom to Bust: The Great Australian Credit and Property Bubble [Kindle Edition]


----------



## rryall (12 May 2014)

McLovin said:


> That's cheap for inner city in the southern capitals. Actually, having a quick look at my own suburb, in the last few months the cheapest two bedder was $1.145m, most were around $1.3m. You'd be lucky to get a 2 bed apartment for $725k. I'm amazed that in places like Alexandria, a suburb you wouldn't have wanted to park your car on the street at night ten years ago, small 2 bed cottages are going for over $1.1m.




I thought it was expensive relative to the yield - $400 a week represents a before costs yield of 2.9%. With wages growth expected to go nowhere in future years you are banking on further capital growth - i.e. prices going even further away from fundamentals.


----------



## rryall (12 May 2014)

Julia said:


> That seems a lot for a two brm house.  I don't know Melbourne at all.  What sort of suburb is Brunswick?
> ie does the location constitute substantial relevance to the price?
> 
> When you feel miserable about house prices, have you considered living somewhere other than such an expensive capital city?  Lots of much more affordable areas if your work situation can accommodate a move.




Thanks Julia. It's a very nice inner city suburb with lots of bars and cafes etc. Before anyone makes the comment of 1st home buyers wanting to live in these inner city suburbs I'm just merely commenting on the price relative to the yield.

I'm in the fortunate position of running my own business from home so I could essentially live anywhere. My girlfriend is currently based overseas so there are some considerations. I'd rather live overseas for an extended period than buy property at these inflated prices.


----------



## trainspotter (12 May 2014)

As predicted ... Lending Standards:-



> *The Greater Building Society has thrown in international and domestic holidays as well as a cruise on to several of their home loans to attract new customers.*
> This includes trips to Los Angeles, Fiji, the Gold Coast or a South Pacific Cruise depending on the size and type of loan signed by new customers.
> The bank’s head of marketing Matt Hingston said they offered holiday deals as a bonus for customers to reward them while also trying to stand out in an extremely competitive mortgage market.




http://www.news.com.au/finance/real...rtgage-customers/story-fndban6l-1226912076570

Whats this ? Doctors getting treated favorably by banks? No LMI ?? 



> Recent home loan discounting hit unprecedented levels with banks dropping as much as 1.4 per cent off advertised rates.
> Doctors were also discovered to be getting deals others could not get by* not being charged *the hefty cost of lenders mortgage insurance despite having deposits of just 5 per cent and no savings history.




This is going to get interesting after the toe cutting budget tomorrow.


----------



## Vixs (12 May 2014)

Trainspotter the medico no LMI deals aren't new, they've been around for years and it's far from the first time they've been reported on.

Slightly less sweet deals are also around for law firm partners, CPAs and CFPs.

Surprise surprise that those with high incomes and lower risk profiles are treated better by banks 

The lenders with the most high risk offerings, like Adelaide & Bendigo Bank's 95% LVR + Cap full LMI + a $20k credit card that can be used to pay settlement costs like stamp duty? They've been pulled.

The reason a non-major lender has to compete with gimmicks is because the offerings from the big banks and other major lenders are good for borrowers.


----------



## sptrawler (12 May 2014)

Vixs said:


> Trainspotter the medico no LMI deals aren't new, they've been around for years and it's far from the first time they've been reported on.
> 
> Slightly less sweet deals are also around for law firm partners, CPAs and CFPs.
> 
> ...




At these low interest levels, it must be very difficult for the second line lenders to attract business. I suppose they may also have to pick up the higher risk borrowers.


----------



## ftw129 (13 May 2014)

ftw129 said:


> For those with a long term view..... The best time to buy property has and always will be, now.
> 
> Trying to time the property market is like trying to catch the Easter Bunny.
> 
> ...




I've said this once and I'll say it again.

Our beautiful, young and underpopulated country is the envy of the world. We are rich in resources and live in a "nanny state" where even the slightest hint of some sort of property "crisis" will be heavily protected by our government and the banks.

Supporting property prices is in everyone's best interests.

Unlike our Asian neighbors we are raised with parents that allow their children too much freedom and they grow up not knowing the importance and the value of money.

Giving up the enormous drug habit (alcohol) that this country suffers from yet promotes, wasting $4-5 on coffee everyday (if not a couple of times a day), being stupid enough to still smoke cigarettes are all a massive drain on peoples income and would easily be enough to service an IP from a young age. I bought my 2 bedroom apartment in Toorak, (one of Australia's most affluent suburbs) when I was 23 and earning $35k per year. I'd saved since I was a child enough for the deposit earning minimum wage in all the jobs I worked in from the age of 14 and 9 months. 

There should be a subject in school from very early on next to maths and English about money. Saving, investing, budgeting and planning for ones future.


----------



## CanOz (13 May 2014)

ftw129 said:


> I've said this once and I'll say it again.
> 
> Our beautiful, young and underpopulated country is the envy of the world. We are rich in resources and live in a "nanny state" where even the slightest hint of some sort of property "crisis" will be heavily protected by our government and the banks.
> 
> ...





+1 .... Agree!

Was laughing at the smokers I saw, rare as hens teeth....every time I saw one  I'd nudge my wife and say look, rich man!

I wish I had got into property earlier as well, but there's no time like the present and agree that Australia's climate, culture and economy will continue to drive growth...there will be pockets of value better than others, markets within the market that are overlooked, but still value for those willing to put in the effort.


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## medicowallet (14 May 2014)

At least some middle class welfare will be removed from the picture.  Next stop pensioners in 4 bedroom houses getting full pensions. 

A couple external shocks and it could get interesting with the govt with less ammo than previously

House prices to go flat again is definitely a possibility


----------



## prawn_86 (14 May 2014)

medicowallet said:


> At least some middle class welfare will be removed from the picture.  Next stop pensioners in 4 bedroom houses getting full pensions.
> 
> A couple external shocks and it could get interesting with the govt with less ammo than previously
> 
> House prices to go flat again is definitely a possibility




From the budget, I was thinking about the 6 month no access to Newstart for under 30's.

I know that people in that situation generally wouldn't be buying houses, but it may flow on to rents, or if someone loses their job then they may have to sell that negatively geared IP?

Bit of a long shot, but for younger people it just increases the risk of owning property (albeit only minor) imo


----------



## Tink (31 May 2014)

Melbourne Auction Results, if anyone is interested.

http://www.reiv.com.au/Property-Research


----------



## Ken Oath (1 June 2014)

Tink said:


> Melbourne Auction Results, if anyone is interested.
> 
> http://www.reiv.com.au/Property-Research





Does anyone have any info on the amount of foreign investment going into the property market?

Maybe as auction sales percentage.


----------



## sydboy007 (1 June 2014)

Ken Oath said:


> Does anyone have any info on the amount of foreign investment going into the property market?
> 
> Maybe as auction sales percentage.




FIRB have poor records and what they do have is very outdated.  From what I've read it seems pretty easy to get approval for purchases that break the rules.

But don't worry, the RBA has just told us it's not an issue, much like the high price growth in Sydney and Melbourne isn't an issue.

Move along, nothing to see here.

I have an issue with so much foreign money getting into the established market.  I can accept it going into creating new housing stock, but then they are tending to be competing with FHBs and beating them in a similar style to the NG investors.  Seems we prefer a market built around speculation than providing shelter to families.  If NAB is right then they are having a significant impact on the property market.

http://www.theaustralian.com.au/new...plurge-on-houses/story-e6frg6nf-1226841536609

_Foreigners spent twice as much buying established residential housing during 2012-13, when mining investment slipped 12.6 per cent.

New data from the Foreign Investment Review Board reveals that foreign purchases of established homes rose eightfold during the financial downturn.

Offshore buyers bought a record 5091 established homes worth $5.4 billion last financial year, compared with just 647 properties worth $810 million in 2009-10.

A further 4499 new apartments and homes worth $2.9bn were sold to foreigners off the plan last financial year - more than double the investment recorded three years earlier.

Nearly half the established home sales were in Melbourne and Sydney, where Asian buyers have been targeting properties close to the CBD and on Sydney’s north shore.

Chinese buyers poured $5.9bn into property investment last financial year, topping the list of foreign buyers.

Foreign investment in vacant land doubled last year to $1.4bn, for development and “land banking”.

National Australia Bank’s senior property economist, Robert De Iure, said foreigners purchased 11 per cent of new properties and 6.5 per cent of established homes last year. Investment had doubled in the past two years._


----------



## Mrmagoo (1 June 2014)

trainspotter said:


> http://www.news.com.au/finance/real...y-or-rent-a-home/story-fncq3era-1226907065854
> 
> Me me me me me I I I I me me me ... it's all about ME "*I* don't drive" and "It's convenient for *me*"
> 
> Owning property is not a right of this country .. it is a privilege. You actually have to get off your @rse and do something about it instead of whinging and whining. I bet she doesn't give up her $300 shoes and $500 dresses she would buy to look glitzy on a Saturday night out with the gurls !!




I'd rather have nice looking women all over the place than a few rich old buggers getting a little bit richer off property for something they did not even need to lift a finger to do.

Who knows, if more young women start dressing awesome and buying fewer houses it could be a win win for the Australian male. Nice look birds everywhere and cheap houses.


----------



## Ken Oath (2 June 2014)

I have an issue with so much foreign money getting into the established market.  I can accept it going into creating new housing stock, but then they are tending to be competing with FHBs and beating them in a similar style to the NG investors.  Seems we prefer a market built around speculation than providing shelter to families.  If NAB is right then they are having a significant impact on the property market.

Thanks Sydboy. Foreign investment particularly from Asia certainly seems to be a trend that's gaining momentum. Doesn't seem that long ago our media was pushing the message hard to invest in American property. No prizes for guessing what the Chinese media are pushing.

The comment regarding a market built around speculation rather than providing shelter to families really struck home to me. Have we forgotten what housing is really about?


----------



## sydboy007 (3 June 2014)

Ken Oath said:


> The comment regarding a market built around speculation rather than providing shelter to families really struck home to me. Have we forgotten what housing is really about?




I find in a sad reflection on our society that the family home is now an investment.  It's viewed in a totally different manner to say 30+ years ago.

I think it's the marketising and financialising of all aspects of society.

The fact is we should have very affordable housing in this country.  It SHOULD be a competitive advantage for us, yet we've somehow chosen to restrict supply, force massive upfront costs on new shelter construction, fueled it with unsustainable immigration levels - 500K in 13 months - and designed our tax system in a way to promote price growth speculation via socialising a lot of the losses and privatising the profits.

I'm hoping when the crash comes it causes a reboot on the way we see housing and it goes back to being shelter, not an asset.


----------



## FxTrader (8 June 2014)

sydboy007 said:


> The fact is we should have very affordable housing in this country.  It SHOULD be a competitive advantage for us, yet we've somehow chosen to restrict supply, force massive upfront costs on new shelter construction, fueled it with unsustainable immigration levels - 500K in 13 months - and designed our tax system in a way to promote price growth speculation via socialising a lot of the losses and privatising the profits.



There is no real mystery here, local council and state planning policies along with tax incentives for investing in residential real estate, population trends, foreign ownership laws etc. all contribute to the ongoing inflation of the property price bubble here.  It seems unstoppable, but there are warning signs emerging with the RBA taking notice.  The fairly recent entrance of SMSFs leveraging into property and the impacts were noted in an article in the Age today...



> *Fears over SMSF property lending*
> A five-fold increase in borrowing to help fund a $40 billion splurge on property for self-managed super funds has prompted the Reserve Bank of Australia to warn about further increasing investor debt-load through more borrowing.
> 
> The nation's monetary mandarins warn the spending and borrowing binge is ''raising concerns'' about exposure to increased risks, such as another market crash wiping out property values, or interest rate rises creating repayment difficulties.
> ...



http://www.smh.com.au/business/fears-over-smsf-property-lending-20140606-39oha.html#ixzz342wAKVLQ


----------



## sydboy007 (9 June 2014)

NSW Govt has just provided some extra support to overpriced housing.

FHBs can now get their 15K grant for newly constructed housing up to 750K, increased from 650K.

Not sure it's a good idea to be encouraging FHBs to be entering the market for shelter at those levels, but hey the housing ponzi has to be kept inflated at all costs.


----------



## DB008 (9 June 2014)

sydboy007 said:


> NSW Govt has just provided some extra support to overpriced housing.
> 
> FHBs can now get their 15K grant for newly constructed housing up to 750K, increased from 650K.
> 
> Not sure it's a good idea to be encouraging FHBs to be entering the market for shelter at those levels, but hey the housing ponzi has to be kept inflated at all costs.




So what is the solution then SYD?


----------



## sydboy007 (9 June 2014)

DB008 said:


> So what is the solution then SYD?




Increase supply rather than demand.

Get rid of the constipated housing supply issues in all the capital cities.  Stop forcing new housing to pay upfront for all infrastructure at usually gold plated levels.

Rethink urban growth boundaries as all they do is increase the value of land within them then force people to migrate way out past the boundary.

Bring in land taxes for all commercial and residential zoned land so that infrastructure an be semi self funding since some of the uplift in land values will be captured by the tax and can be recycled into further infrastructure.

I'd be very concerned about a FHB that feels they can't get into the market under $650K.  May not be in the best location or the largest property, but getting a newly constructed property under that value shouldn't be terribly difficult.

Do you see a problem with the current market for shelter?  Do you have any suggestions on how we can get back to an affordable housing level of roughly 3 times the average wage.


In 1991 the median house price was five times the average income.  In 2011 it is seven times the average income and can only be worse today.
The average first home loan has gone from three times the average annual income in 1996 to six times the average annual income in 2010. Once again this figure would be worse today.
 6 times the average wage is nearly 10 times the median wage ie 50% of the population would find the average home loan is over 10 times their annual income
One in four Australians aged between 24 and 35 now live with their parents.  This has been increasing over the last 20 years.
Every year the Federal Government gives out $8 billion in tax breaks to property investors but we still have high rents and low vacancy rates.

From back in 2010: http://www.news.com.au/finance/real-estate/couples-work-twice-as-long-for-a-house/story-e6frfmd0-1225837806405#

AUSTRALIANS have to work almost three times harder to pay off the average family home than they did 50 years ago.

Figures compiled by CommSec for The Sunday Telegraph reveal home buyers on the average income now have to work for 19,374 hours to buy the average Australian house with the average mortgage.
Based on an eight-hour day and a five-day working week, that equates to about 10 years of work. In reality, it takes much longer to own a home, because wages must pay for all living expenses, not just housing.
In 1960, it took homebuyers just 7500 hours to pay off the average mortgage.


----------



## trainspotter (9 June 2014)

sydboy007 said:


> AUSTRALIANS have to work almost three times harder to pay off the average family home than they did 50 years ago.
> 
> Figures compiled by CommSec for The Sunday Telegraph reveal home buyers on the average income now have to work for 19,374 hours to buy the average Australian house with the average mortgage.
> Based on an eight-hour day and a five-day working week, that equates to about 10 years of work. In reality, it takes much longer to own a home, because wages must pay for all living expenses, not just housing.
> In 1960, it took homebuyers just 7500 hours to pay off the average mortgage.




What a load of FAFF !! In the 1950s the average size of a new house was 115 square metres. By 1985 it had grown to 170 square metres, and in the last 15 years it has shot up to 221 square metres. As a result, the amount of space for each occupant in a new house has more than doubled since the early 1970's.

Maybe the rampant consumerism as well as the "Keeping up with the Jones's" has something to do with this eh? Statistics can be skewiffed to entail whatever outcomes the propaganda machine wants you to chow down on.

It is also not three times HARDER ... it is three times LONGER 



> Previously the lifestyles of the rich were seen to be out of reach of ordinary people. But rising incomes and television images have meant that many average families now aspire to luxury consumption goods previously reserved for the wealthiest in society. There is a ‘relentless ratcheting up of standards’ and increasing pressure to consume at higher and higher levels.
> 
> The effect has been dubbed ‘affluenza’, the ‘bloated, sluggish and unfulfilled feeling that results from efforts to keep up with the Joneses’ or, more seriously, as an unhealthy relationship with money. While addictions to alcohol, gambling and eating are widely accepted as pathological, the spread of affluenza suggests that consumption in general has taken on a pathological character. Consumption behaviour has become central to the construction of personal identity and lack of access to this activity would cause severe distress to many.




http://www.tai.org.au/documents/dp_fulltext/DP49.pdf


----------



## sydboy007 (10 June 2014)

trainspotter said:


> What a load of FAFF !! In the 1950s the average size of a new house was 115 square metres. By 1985 it had grown to 170 square metres, and in the last 15 years it has shot up to 221 square metres. As a result, the amount of space for each occupant in a new house has more than doubled since the early 1970's.
> 
> Maybe the rampant consumerism as well as the "Keeping up with the Jones's" has something to do with this eh? Statistics can be skewiffed to entail whatever outcomes the propaganda machine wants you to chow down on.
> 
> It is also not three times HARDER ... it is three times LONGER




Which ever way you spin it the fact is home loans are massive compared to what they were a couple of decades ago, and more and more people are hitting retirement still with mortgage debt.

The inescapable fact is the value of the land for housing is the MAJOR determinant to the cost increases for shelter.  We've seen the average plot of land fall from 700 sqm to just 500 sqm.  So the size is reduced by 28% but the cost went up 500%

The ACT has recently cut back on new land sales to help prop up the market.  Pretty much any time the market tries to get back to some semblance of affordability some level of Govt steps in to keep the ponzi going.  Not sure how many more re-inflations it can go through before the final bursting.

Research showing median prices per hectare of vacant land on Melbourne’s urban fringe increased following the introduction of the Urban Growth Boundary (UGB) in 2003. Measured in 2008 dollars, vacant land inside the UGB rose from $308 843 in 2003 to around $1.2 million in 2006. At the same time, land prices outside the UGB increased much slower from $98 378 per hectare in 2003 to just short of $200 000 in 2008””a doubling of land value as opposed to land value increasing by four within the UGB.

Fix up land supply and you pretty much fix the affordability issues.


----------



## trainspotter (10 June 2014)

sydboy007 said:


> Which ever way you spin it the fact is home loans are massive compared to what they were a couple of decades ago, and more and more people are hitting retirement still with mortgage debt..




Ermmmmm you did not get what I posted obviously. The home loans are MASSIVE because the house sizes are a lot larger. Surely syd you of all people can recognise this fact? If they have hit retirement age and still have a mortgage debt is mainly due to them SPENDING on filling their BIGGER houses and keeping up with the Joneses' with the latest doodads that they must have. Consumerism and all that ... we are no longer content to raise 6 kids in the 3 bedroom bungalow and keep the single roof over our heads ....... OH WHY BOTHER ! 

You are right .... property is doomed we should all just do a Steven Keen and sell now and avoid losing 50% of our home value when this massive ponzi scheme comes crashing down


----------



## satanoperca (10 June 2014)

trainspotter said:


> Ermmmmm you did not get what I posted obviously. The home loans are MASSIVE because the house sizes are a lot larger. Surely syd you of all people can recognise this fact? If they have hit retirement age and still have a mortgage debt is mainly due to them SPENDING on filling their BIGGER houses and keeping up with the Joneses' with the latest doodads that they must have. Consumerism and all that ... we are no longer content to raise 6 kids in the 3 bedroom bungalow and keep the single roof over our heads ....... OH WHY BOTHER !
> 
> You are right .... property is doomed we should all just do a Steven Keen and sell now and avoid losing 50% of our home value when this massive ponzi scheme comes crashing down




TS, has the cost of the housing per m2 gone up or down in the last 30 years after adjusting for inflation?

I would have thought that a 2 bedroom house 30 years ago would have cost the same as a 3+study house today?

Cheers


----------



## trainspotter (10 June 2014)

satanoperca said:


> TS, has the cost of the housing per m2 gone up or down in the last 30 years after adjusting for inflation?
> 
> I would have thought that a 2 bedroom house 30 years ago would have cost the same as a 3+study house today?
> 
> Cheers




Hi there satanoperca ... if you have been picking up what I am putting down you would comprehend what I am banging on about. CONSUMERISM ... houses are a lot bigger then what they used to be which in turn entails that there is more furniture/whitegoods/electronics/knick nacks/etc going into the houses along with a new car in the driveway. Airconditioning, Foxtel outlets, insulation, state of the art hotwater systems, I could go on but I will desist here as I have been through this tirade several times already.



> In the 1980s things started to rapidly change. The banking industry deregulated, more banks entered the market and lending criteria was relaxed. All that was needed was something to entice people to borrow the large sums on offer. So Australia was introduced to the mighty American McMansion, a mass-produced mini-mansion even the middle-class masses could aspire to build, with the help of the banks.
> 
> *Unlike their frugal parents, the baby boom generation was not afraid of debt so they started to trade in their modest first houses to build these super-sized houses and so started a period of major change to Perth’s entire suburban character. *
> 
> A decade or so later the children of the baby boomers, the so-called Generation ‘X’, were also ready to own a McMansion – with all the extras. This generation was raised in a world of *conspicuous consumption *and, like their parents, embraced debt. These latest houses range in size from around 220 to 350 square metres. Most are upward of 300 square metres. They all have a home theatre, a restaurant-standard kitchen, a special space just for using computers and the children’s bedrooms are all the size of a traditional master bedroom. Other rooms include a living room, an activity room, a home office and a master bedroom more like a hotel suite with its dedicated parent’s retreat and Jacuzzi. Of course any modern house is not complete without a large roofed alfresco area resplendent with tiled floors, an outdoor kitchen and a bar and because modern mothers all feel compelled to drive large four-wheel drive vehicles the garages are huge. *The living areas alone in these houses are around 100 square metres which used to be the size of an entire family home just a few generations ago*.​




http://www.aiuswa.org.au/resources/Affordability-through-Modesty--AIUS.pdf

P.S. Building codes as well as materials have changed radically to answer the question with any relevance satanoperca as  I would not be comparing like with same.

P.P.S. A lot of the debt has been consolidated into the housing loan to pay for these goodies !


----------



## Serpentis (10 June 2014)

I totally agree with you trainspotter. The greed and consumerism of the baby boomer generation has resulted in unnecessarily large houses, which younger generations simply don't want. I don't know anyone who wants these big houses, they want smaller, comfortable apartments. But instead of building these smaller, affordable places that younger generations want to buy the construction industry keeps building lavish or large places, leaving the investors to fight it out instead. 

Younger generations will always be the main driving force for purchasing property, but this current generation is largely shunning it. They are very much aware it's bad value and they don't want these houses, they only buy out of necessity to avoid the dreadful renting laws in this country. When the foreigners run out of money and the investors want to cash in, I'd hate to be the one left holding the mortgage.


----------



## trainspotter (10 June 2014)

Adding further to the changing of the bank lending standards has also contributed to this increase in borrowings. Once upon a time the bank would only lend against the house and you could not add in the car loan on top nor consolidate your credit card debt etc into the housing loan. IP's also incurred extra fees to set up the loan and a higher interest rate to boot. You also had to have a proven savings history with said bank as well as a substantial deposit as there was no such thing as LMI. My how things have changed 

Meanwhile the kettle has come off the boil somewhat in the housing industry. Even the home renovations shows are attracting less viewing audience, so using my brilliant powers of deduction (dartboard while drunk) I would be predicting we are very near peak saturation.


----------



## qldfrog (10 June 2014)

a young colleague just signed a contract in Brisbane Forest Lake for a 310k first house;(established)
he got it nearly 10% less than asking price and for less than a buyer proposed a few month ago.
I believe the trend is down here in Brisbane..but with no job, not surprised


----------



## banco (10 June 2014)

Somehow Trainspotter I doubt you are living in a shack somewhere, living off your own vegetables and recycling your urine to drink as you rant against consumerism.


----------



## sydboy007 (10 June 2014)

trainspotter said:


> Ermmmmm you did not get what I posted obviously. The home loans are MASSIVE because the house sizes are a lot larger. Surely syd you of all people can recognise this fact? If they have hit retirement age and still have a mortgage debt is mainly due to them SPENDING on filling their BIGGER houses and keeping up with the Joneses' with the latest doodads that they must have. Consumerism and all that ... we are no longer content to raise 6 kids in the 3 bedroom bungalow and keep the single roof over our heads ....... OH WHY BOTHER !
> 
> You are right .... property is doomed we should all just do a Steven Keen and sell now and avoid losing 50% of our home value when this massive ponzi scheme comes crashing down




So you're saying that if someone built the exact same house on the exact same block of land as it was 30 years ago that in inflation adjusted terms it would be the same price?

You're ignoring the fact that the value of the land for a new property, be it a house or apartment, has gone up much faster than any other cost.  The fact that blocks of land in new releases are smaller than a coupe of decades ago, yet costs 5 times as much.  Land inflation has been ridiculously high, mainly due to land banking, urban growth boundaries and nimbyism over medium and high density living

Prices rising faster than wages growth is not sustainable.  A property market that's nearly 50% investors is not sustainable.  An investor market that see's continually falling yields as prices rise faster than rental yields is not sustainable.


----------



## sptrawler (10 June 2014)

sydboy007 said:


> Which ever way you spin it the fact is home loans are massive compared to what they were a couple of decades ago, and more and more people are hitting retirement still with mortgage debt.
> .




Aren't they the selfish fatcat baby boomers?


----------



## sydboy007 (10 June 2014)

sptrawler said:


> Aren't they the selfish fatcat baby boomers?




Could be.  Could be the fact that the land component of housing has sky rocketed while the actual cost to build hasn't gotten much more expensive in real terms over the years.

Once you establish a UGB land within takes off and land outside increases much more slowly, and you then force people to leapfrog even further out to get affordable shelter.


----------



## sptrawler (10 June 2014)

sydboy007 said:


> Prices rising faster than wages growth is not sustainable.  A property market that's nearly 50% investors is not sustainable.  An investor market that see's continually falling yields as prices rise faster than rental yields is not sustainable.




I think that is the most accurate thing you've posted, greed isn't age related.


----------



## sptrawler (10 June 2014)

sydboy007 said:


> Could be.  Could be the fact that the land component of housing has sky rocketed while the actual cost to build hasn't gotten much more expensive in real terms over the years.
> 
> Once you establish a UGB land within takes off and land outside increases much more slowly, and you then force people to leapfrog even further out to get affordable shelter.




Land values close to CBD's of major financial or business hubs, always increase.
When the GFC hit, prices in central London hardly moved.
Likewise in Australia, as the population increases, land prices inner city Sydney, Melbourne, Brisbane and Perth, will escalate.
These are the cities that will grow as our economy grows, due to their fiscal and business infrastructure, or proximity to the mineral and energy reserves.
As our population and business activity increases, the pressure on land values near the cbd grows, this in turn puts pressure on land further out.
Then the land further out becomes inner city, when the population of the city goes from 2million to 10million people.
I think speculators are expecting it to happen quicker than what it is, and an oversupply is imminent.


----------



## trainspotter (11 June 2014)

banco said:


> Somehow Trainspotter I doubt you are living in a shack somewhere, living off your own vegetables and recycling your urine to drink as you rant against consumerism.




Once again banco you have missed the point. The reason home loans are so LARGE these days is that people are building and borrowing LARGER homes/amounts. They are also consolidating their credit cards and personal loans into the home loan. This was not allowed prior to the deregulation of the banks. And you are right ... I am not recycling my own urine ala' Bear Grylls style


----------



## trainspotter (11 June 2014)

sydboy007 said:


> 1) So you're saying that if someone built the exact same house on the exact same block of land as it was 30 years ago that in inflation adjusted terms it would be the same price?
> 
> 2) You're ignoring the fact that the value of the land for a new property, be it a house or apartment, has gone up much faster than any other cost.  The fact that blocks of land in new releases are smaller than a coupe of decades ago, yet costs 5 times as much.  Land inflation has been ridiculously high, mainly due to land banking, urban growth boundaries and nimbyism over medium and high density living
> 
> 3) Prices rising faster than wages growth is not sustainable.  A property market that's nearly 50% investors is not sustainable.  An investor market that see's continually falling yields as prices rise faster than rental yields is not sustainable.




1) Errmmmm that is not what I am saying at all. 

2) I believe sptrawler has answered this Q on my behalf.

3) Maybe you should chat to Steven Keene and form a circlejerk as you both seem to share the same point of view !


----------



## Quincy (11 June 2014)

trainspotter said:


> Once again banco you have missed the point. The reason home loans are so LARGE these days is that people are building and borrowing LARGER homes/amounts. . .




What about purchasers taking out home loans for Units / Apartments / Townhouses / Villas ?  Unit floor space for new Units in Sydney/ Melbourne is generally decreasing in size but prices have (generally) been increasing substantially.


----------



## trainspotter (11 June 2014)

Quincy said:


> What about purchasers taking out home loans for Units / Apartments / Townhouses / Villas ?  Unit floor space for new Units in Sydney/ Melbourne is generally decreasing in size but prices have (generally) been increasing substantially.




I believe sptrawler said it best:



> Land values close to CBD's of major financial or business hubs, always increase.
> When the GFC hit, prices in central London hardly moved.
> Likewise in Australia, as the population increases, land prices inner city Sydney, Melbourne, Brisbane and Perth, will escalate.




I was also referring to the loan amount becoming LARGER and not just the house size.


----------



## trainspotter (11 June 2014)

sydboy007 said:


> So you're saying that if someone built the exact same house on the exact same block of land as it was 30 years ago that in inflation adjusted terms it would be the same price?
> 
> You're ignoring the fact that the value of the land for a new property, be it a house or apartment, has gone up much faster than any other cost.  The fact that blocks of land in new releases are smaller than a coupe of decades ago, yet costs 5 times as much.  Land inflation has been ridiculously high, mainly due to land banking, urban growth boundaries and nimbyism over medium and high density living
> 
> Prices rising faster than wages growth is not sustainable.  A property market that's nearly 50% investors is not sustainable.  An investor market that see's continually falling yields as prices rise faster than rental yields is not sustainable.




I think this article pretty much sums up what I have been alluding to:



> One difficulty with long-run property price data is that fact that observations are typically based on median house prices, which does not take into account *changes in the quality of houses. The median house in 2009 may be “better” than the median house in 1955 and changes in price may reflect this change in quality as well as price appreciation. *
> 
> Stapledon has attempted to take this into account by constructing an index for Australian house prices (six capital cities) that is adjusted for both inflation and standardised to “constant quality”. The trend in real prices, adjusted for quality over the period 1955-2009 has been an increase of 2.1% per annum over inflation. This compares to an increase of 2.7% per annum over inflation without adjusting for quality. So, at a national level, quality changes overstate the trend growth rate by 0.7%. While Stapledon has not constructed a quality-adjusted index for Sydney, assuming that the national trend applied would lead to the conclusion that Sydney house prices have a trend growth rate of 2.4% over inflation.




http://www.stubbornmule.net/2009/06/property-prices/

Houses like everything else we buy depends on WHAT (and where) you buy.

GTHO Phase III in 1971 = $5300.00 .... same car today in concourse condition INXS of $350,000.

But what is this? Surely this cannot be right? *Effects of Housing Quality*



> Houses have many attributes, including size, garages and swimming pools, central heating and air conditioning, kitchens of various qualities, and so on. *Generally the quality of dwellings rises over time.* For example, the size of new homes has increased over many years by around 2 per cent per annum. Between 1984-85 and 2002-03, *the average floor area of new houses in Australia rose by 40 per cent* (from 162 m2 to 227.3 m2) and the average floor area of other new dwellings rose by 35 per cent (from 99.2 m2 to 134 m2).




http://www.econ.mq.edu.au/Econ_docs/research_papers2/2004_research_papers/Abelson_9_04.pdf

The future of Australian Property prices? You should have bought in March 2011


----------



## sydboy007 (11 June 2014)

trainspotter said:


> I believe sptrawler said it best:
> 
> 
> 
> I was also referring to the loan amount becoming LARGER and not just the house size.




yet land values on the urban fringe are more expensive than ever.  They're getting smaller too.  How do you explain that?

ps  could you forgo your snide remarks.  they're not appropriate in a public forum.


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## medicowallet (11 June 2014)

Gee, get a room you two!

Unfortunately both of you are right.

Houses are bigger, with better finishings now (although I question the quality of the build of some of the newer ones)

However one can not deny that some developers / people are making an absolute killing out of the government's ridiculous support of a booming sector of the economy which imo only has negative impact on the future prosperity of the nation.

MW
Then again the older statespeople around here have seen this all before, and we will see the fall (unfortunately probably after it comes!)


----------



## trainspotter (11 June 2014)

sydboy007 said:


> yet land values on the urban fringe are more expensive than ever.  They're getting smaller too.  How do you explain that?
> 
> ps  could you forgo your snide remarks.  they're not appropriate in a public forum.




Development costs is the answer but I have explained all of this before. 

P.S.  As you have nade yourself the "snide remark police"  I will refrain from commentng furthermore.


----------



## FxTrader (12 June 2014)

trainspotter said:


> I think this article pretty much sums up what I have been alluding to: http://www.stubbornmule.net/2009/06/property-prices/
> 
> Houses like everything else we buy depends on WHAT (and where) you buy.GTHO Phase III in 1971 = $5300.00 .... same car today in concourse condition INXS of $350,000.
> 
> But what is this? Surely this cannot be right? *Effects of Housing Quality*http://www.econ.mq.edu.au/Econ_docs/research_papers2/2004_research_papers/Abelson_9_04.pdf



The analysis that home size and quality are major contributors to higher prices ignores all the other factors driving house price momentum in Australia as well.  Yes house size and quality has increased but what about the cost per square meter (including land cost) to construct a home adjusted for inflation?

It's really nonsensical to argue that the price of Australian housing as a proportion of household incomes has not become historically distorted by any measure.  Excerpt from an article in The Age today...



> Australian homes are among the most expensive in the world when household incomes and rents are taken into account, International Monetary Fund figures show.
> 
> As part of a move to push governments to act against housing bubbles, the fund unveiled comparative data on Thursday morning intended to underline the high cost of homes.
> 
> ...


----------



## trainspotter (12 June 2014)

FxTrader said:


> The analysis that home size and quality are major contributors to higher prices ignores all the other factors driving house price momentum in Australia as well.  Yes house size and quality has increased but what about the cost per square meter (including land cost) to construct a home adjusted for inflation?
> 
> It's really nonsensical to argue that the price of Australian housing as a proportion of household incomes has not become historically distorted by any measure.  Excerpt from an article in The Age today...




Why don't you go and do the research yourself and let us all know if you are so worried about the cost per square meter (including land cost) to construct a home adjusted for inflation 

I was pointing out to sydboy007 some "other" contributing factors as to WHY the price-to-income ratios were so distorted. All I hear is how HARD it is to own a home and how AFFORDABILITY is beyond the reach of the layman and the poor little diddums have to live OMG in the outer suburbs and not able to walk to work. 

Babies crawl before they walk.


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## FxTrader (12 June 2014)

trainspotter said:


> I was pointing out to sydboy007 some "other" contributing factors as to WHY the price-to-income ratios were so distorted. All I hear is how HARD it is to own a home and how AFFORDABILITY is beyond the reach of the layman...



Perhaps that's due to the reality that housing affordability is an important issue to many, just not to you.  Your unsypathetic and patronizing tone shows you just don't give a damn about the impact of housing affordability.  That's fine, but why denigrate those who do or those impacted by this issue?


----------



## trainspotter (12 June 2014)

FxTrader said:


> Perhaps that's due to the reality that housing affordability is an important issue to many, just not to you.  Your unsypathetic and patronizing tone shows you just don't give a damn about the impact of housing affordability.  That's fine, but why denigrate those who do or those impacted by this issue?




Housing affordability is a very important issue FxTrader .. don't get me wrong. My issue is using "mean averages" when the likes of Sydney and Melbourne prices is skewiffing the results. It is not good logic to only look at one small piece of the equation and come to an "informed" opinion on the subject matter. Sydboy007 is on the side of it's all to hard, ponzi scheme, affordability, housing bubble (insert negative aspirations here) side but only a few posts ago he was bragging how cheaply he bought a house in inner city Sydney and how much it is worth today. Hypocritical at best IMO ... no?

I am unsympathetic when people demand that it is their right to own a penthouse in the CBD and walk to work as a FHB. This truly sticks in my craw as the new age of entitlement Gen ? whatever's want their cake and eat it too. My first house was a 3 bedroom in the outer burbs, no driveway, no paint to walls, no window sills, no insulation, tiny bedrooms, small kitchen .... you get my drift right?

I am merely pointing out that by posting "the mean average house affordability is 7 times the average wage compared to 1970 when it was only 3" is not exactly the truth the whole truth and nothing but the truth. Yeah sure it is a statistic but there are many outliers and variables that need to be considered as to WHY this has happened which no one seems to mention when they post. Just another headline and not much substance as to WHY this has occurred. Nevermind the house we live in at 2014 is 4 times the size of the house in 1970. Nevermind the loan we have on the aforementioned house also has consolidated the car loan/credit card and big screen TV in every room. Getting warmer now? 

As for my posting style it is not for the feint hearted. If people are willing to post redonkolous claims without any substance other than charts stolen from Steven Keenes website then I was under the impression that there is a right of reply with equal amount of redonkolous claims the other way. If this is interpreted as denigrating or patronizing to their opinion then I apologize in the first instance if I have offended their over sensitive egos.

As I actually dabble in real estate and have a little bit of practice on the subject matter at hand other than buying one house and being a slave to a mortgage than I assumed (wrongly as it turns out) that my experience would be taken with more than a grain of salt. 

But I digress ... real estate is a commodity like any other that can be bought and sold to make a profit. It is all in the timing and location. I currently have 4000m2 of zoned CBD for either a 30 unit motel site or 2 storey town houses. As the market in the city where it is located has gone off the boil I am prepared to sit on it until the market cycles yet again.

But what would I know ...


----------



## trainspotter (18 June 2014)

CanOz said:


> Watching this thread with interest. We're thinking of buying a property in Australia soon. My wife wants to go and have a look soon and I've been saying that* things looked a bit frothy around Sydney*. One of her friends is a builder in Brisbane and he was saying that Brisbane was one of the better 'buys' at the moment.
> 
> This would be a property that we would buy now to live in later. Perhaps we would rent it out for a while, a few years.
> 
> ...




CanOz posted this on the 14th April 2012 ... to start thinking about it then and 15th May 2014 to pull the trigger. Not bad going CanOz 

6.1% growth in 2012, 14.5% in 2013 and so far 15.7% in 2014 for Sydney growth rates.


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## Macquack (19 June 2014)

trainspotter said:


> Housing affordability is a very important issue FxTrader .. don't get me wrong. My issue is using "mean averages" when the likes of Sydney and Melbourne prices is skewiffing the results. It is not good logic to only look at one small piece of the equation and come to an "informed" opinion on the subject matter. Sydboy007 is on the side of it's all to hard, ponzi scheme, affordability, housing bubble (insert negative aspirations here) side but only a few posts ago he was bragging how cheaply he bought a house in inner city Sydney and how much it is worth today. Hypocritical at best IMO ... no?
> 
> I am unsympathetic when people demand that it is their right to own a penthouse in the CBD and walk to work as a FHB. This truly sticks in my craw as the new age of entitlement Gen ? whatever's want their cake and eat it too. My first house was a 3 bedroom in the outer burbs, no driveway, no paint to walls, no window sills, no insulation, tiny bedrooms, small kitchen .... you get my drift right?
> 
> ...




I honestly don't know where you are coming from Trainspotter?

For the uninitiated, you are a failed property developer (Horizon Homes). No excuses.

You have an ego bigger than the state you live in.

You post views from your abode (not even waterfront) and try to impress people.

****ing try hard.


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## Vixs (20 June 2014)

Macquack said:


> I honestly don't know where you are coming from Trainspotter?
> 
> For the uninitiated, you are a failed property developer (Horizon Homes). No excuses.
> 
> ...




Macquack that's literally added nothing to this conversation except pathetic personal attacks. Are we to only take input from people sipping champagne on their yachts at Marina Mirage? Historically that hasn't ended too well either. Do we need to post our CV to have an opinion?

Trainspotter I don't agree with everything you say but I appreciate many of your posts because they generally contain more than "No, I'm right and your generation are the worst ever!" Getting involved in a game of getting 1 up on others doesn't help - you can put your perspective out there but it's hardly worth the energy to convince others to share it.

"forum
noun
1. a meeting or medium where ideas and views on a particular issue can be exchanged."

To some of the posters who seem to have forgotten what a forum is for, it's for sharing opinions and viewpoints in the hope that we might learn something from each other or get a different perspective to those we are used to. You don't need to agree, just try to keep the level of responses above


----------



## trainspotter (20 June 2014)

Macquack said:


> I honestly don't know where you are coming from Trainspotter?
> 
> For the uninitiated, you are a failed property developer (Horizon Homes). No excuses.
> 
> ...




Thanks for the words of encouragement Macquack !

Errmmmm ... not quite old chum, you are gilding the lily somewhat there. The building company that was building a  development I was involved in went bankrupt and not me or my companies. I am sure Horizon Homes would like to know they have gone bankrupt ! http://www.horizon-homes.com.au/contacts.html

You have to have big Kahunas to take a punt as to whether the people are going to buy what you are putting on the ground.

Waterfront living is not what it is cracked up to be. Better to be up the hill a bit with uninterrupted views of the ocean as you look down on the people in the waterfront 

But thanks again for your poignant words of wisdom


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## Julia (20 June 2014)

Vixs said:


> Macquack that's literally added nothing to this conversation except pathetic personal attacks. Are we to only take input from people sipping champagne on their yachts at Marina Mirage? Historically that hasn't ended too well either. Do we need to post our CV to have an opinion?
> 
> Trainspotter I don't agree with everything you say but I appreciate many of your posts because they generally contain more than "No, I'm right and your generation are the worst ever!" Getting involved in a game of getting 1 up on others doesn't help - you can put your perspective out there but it's hardly worth the energy to convince others to share it.
> 
> ...



+1.   I've learned so much from this forum, TS included.


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## qldfrog (20 June 2014)

Trainspotter,
I aften disagree with you but just want to add, as the others:
I appreciate your input as I do Syd, and was not amused by what I consider a personal attack against you;
let this not prevent you from further debate entries!!
have a great week end


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## cynic (20 June 2014)

Macquack said:


> I honestly don't know where you are coming from Trainspotter?
> 
> For the uninitiated, you are a failed property developer (Horizon Homes). No excuses.
> 
> ...




Are you sure that you don't know? 

When I see or hear people making such statements, I often get the impression that they are making a concerted effort to misunderstand!

Basically they don't actually want to know or entertain any information that conflicts with their personal fantasy!!!!

On the topic of failure, there's a popular saying that goes something like this:

 "The man that never made a mistake never made anything!"

The first property I ever bought was an apt reflection of my inexperience, but the last property I bought and sold was a glowing reflection of my accumulated experience.


----------



## maffu (20 June 2014)

trainspotter said:


> Waterfront living is not what it is cracked up to be. Better to be up the hill a bit with uninterrupted views of the ocean as you look down on the people in the waterfront




So true. I was excited to live in a waterfront apartment for 2 years. Even my knives in the chopping blocks managed to go rusty in that time period. The metal thing that holds shampoo etc in the shower rusted and had to be replaced with a plastic one, my cofee table with a metal frame rusted, everything that had metal managed to rust with the damp salty sea breeze!

I'll be happy to move a few blocks away up a hill


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## medicowallet (20 June 2014)

Whilst I cannot claim to be Mr Calm, and have had heated exchanges with fellow ASFers

I must say Macquack's post is a little too personal.    

I am sure that it was said at a time of frustration?? or such, TY TS for a civil response. Hopefully personal attacks end there. 

I Like both Macquack's posts and TS's posts on these forums, and hope they continue.

MW

Edit: Just read down to Vixs' post.. said much better than mine... but there you go!


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## Judd (21 June 2014)

Yes a little bit unfortunate.  However as many are aware there are two valid ways of dealing with it one being the Ignore function.  The other is just as effective.  It's the scroll wheel on the mouse, simply ignoring any supposed slight and not responding or reacting to a post.  Works for me.

:1luvu: youse all. :


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## Tyler Durden (21 June 2014)

> The buyers started queuing at about 7.30am for their allotted appointment with a sales agent. There was little doubt that Sydney's latest off-the-plan offering - Darling Square at Darling Harbour - was going to be a sell-out.
> 
> And by late afternoon on Saturday it was.
> 
> ...




http://smh.domain.com.au/real-estate-news/darling-square-sells-out-off-the-plan-20140621-zsha6.html


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## Mrmagoo (22 June 2014)

trainspotter said:


> Ermmmmm you did not get what I posted obviously. The home loans are MASSIVE because the house sizes are a lot larger. Surely syd you of all people can recognise this fact? If they have hit retirement age and still have a mortgage debt is mainly due to them SPENDING on filling their BIGGER houses and keeping up with the Joneses' with the latest doodads that they must have. Consumerism and all that ... we are no longer content to raise 6 kids in the 3 bedroom bungalow and keep the single roof over our heads ....... OH WHY BOTHER !
> 
> You are right .... property is doomed we should all just do a Steven Keen and sell now and avoid losing 50% of our home value when this massive ponzi scheme comes crashing down




Now THAT is a load of nonsense. Raising 6 kids in a 3 bedroom bungalow was never the norm but was and still is the sole domain of the irresponsible.


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## Mrmagoo (22 June 2014)

Vixs said:


> Macquack that's literally added nothing to this conversation except pathetic personal attacks. Are we to only take input from people sipping champagne on their yachts at Marina Mirage? Historically that hasn't ended too well either. Do we need to post our CV to have an opinion?
> 
> Trainspotter I don't agree with everything you say but I appreciate many of your posts because they generally contain more than "No, I'm right and your generation are the worst ever!" Getting involved in a game of getting 1 up on others doesn't help - you can put your perspective out there but it's hardly worth the energy to convince others to share it.
> 
> ...





Trainspotter is the one handing out the personal attacks. A FHB wanting a CBD penthouse ? Really ?

Those types of "views" are highly over done and highly offensive.  That being said he is allowed to have his point of view but when someone calls him on it and calls a spade a spade I don't know why you start suddenly running for the "personal attack" cover when the entire discussion started from a page long personal attack on renters and FHBers.


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## sydboy007 (22 June 2014)

Mrmagoo said:


> Now THAT is a load of nonsense. Raising 6 kids in a 3 bedroom bungalow was never the norm but was and still is the sole domain of the irresponsible.




Well, not the norm for maybe the last 40ish years, but I live in the (very) inner west of Sydney and there's lots of the old workers cottages from when this area was quite industrial.  I do not know how families of 6 or more lived in what was a living room, bedroom, kitchen and ~30-40 sqm "backyard" but it seems with the continual reduction from the 1/4 acre block to the near dog boxes / chicken coup apartments being build that this is the future we are rushing towards.

Maybe we were too greedy with our space requirements before?  Maybe we'll just have to accept that  able to fit a double bed and not much else are the norm these days?

If there wasn't SD, and a host of other expenses, with house sales and purchases then maybe buying and trading up over the years makes sense, but if you only get 1 bite at the cherry, and you start out affordable ie 3 or 4 times the median income for a couple which is around $300-400K you might just be able to get something in the 3BR range which will allow you to have kids and not have to move till the oldest is getting up around 10.  The next property purchase could end up quite expensive depending on the SD and other factors.  Too often the transaction costs are forgotten about.  For example, in NSW a non FHB looking at a 400K property is up for 13.5K in SD.  If they happened to be trading up and looking at a 600K property (which in Sydney is nothing flash) then they'd be up for 22.5K.  Add in removal and legal fees and it's quite likely they'd be paying out a years worth of interest just to "upgrade" when it's more like acquiring a liveable level of living space rather than a true upgrade.


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## Mrmagoo (22 June 2014)

I grew up in a 3 X 1 with 3 kids with only 1 lounge room and a small asian car for a family car it was fine... both of my folks were probably only on close to or on the minimum wage it was fine. People cry and carry on about all this stuff we supposedly have but it is really only our rich masters and DINK couples or young people who are lucky enough to have a high income that get it.

For me to buy the house I grew up in is about $350,000k now which I cannot really afford as I now only earn 88k a year which works to about $1200 a week after tax. I could only just afford to pay it off after 30 years on my current income if rates never went up and I never had any actual human adult wage earning expenses. That is the contrast between now and 30 years ago. My folks driving a taxi and working at Coles could buy something I can't afford on a supposedly decent wage. Before you kick me in the guts and say 88k plus super is peanuts (which I know it is peanuts) it is also a fairly hard wage to get. Unless you are a tradesman or something in which case you are probably already a property owner. I earn more than literally every other graduate I know. So I don't know where all these engineering/com sci ect graduates on 100k a year with 5 years of experience are, I guess there are not many. That is what most of my friends did and I out earn them. The only ones who out earn me are TRADESMEN. And they are all loaded. 

I have lived most of my adult life in share housing, which means my personal space is only one room. I am currently renting a one bedroom apartment... because I can. 

Meanwhile my folks live on their own in a massive house with spare bedrooms and a huge lounge with all the fancy appliances. They also have new cars and spend money like I can't understand how.

I don't begrudge them for it as they have worked hard and made their own fortune, but the generation divide is stark.

Often boomers are just reflecting on how they hate their own personal life style choices as too materialistic.

A lot of what they complain about in terms of young people is just young people competing for the chance to mate. The girls need to look good and the boys need to do a whole bunch of other stuff I can't be bothered listing.


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## sydboy007 (22 June 2014)

trainspotter said:


> Housing affordability is a very important issue FxTrader .. don't get me wrong. My issue is using "mean averages" when the likes of Sydney and Melbourne prices is skewiffing the results. It is not good logic to only look at one small piece of the equation and come to an "informed" opinion on the subject matter. Sydboy007 is on the side of it's all to hard, ponzi scheme, affordability, housing bubble (insert negative aspirations here) side but only a few posts ago he was bragging how cheaply he bought a house in inner city Sydney and how much it is worth today. Hypocritical at best IMO ... no?
> 
> I am unsympathetic when people demand that it is their right to own a penthouse in the CBD and walk to work as a FHB. This truly sticks in my craw as the new age of entitlement Gen ? whatever's want their cake and eat it too. My first house was a 3 bedroom in the outer burbs, no driveway, no paint to walls, no window sills, no insulation, tiny bedrooms, small kitchen .... you get my drift right?
> 
> ...




TS

I wasn't bragging, just stating the facts, and I've said many times on this forum I think someone willing to pay $900K or more for my house is just crazy.  The main cause of the value increase has been the sky rocketing land values.  You'd probably argue that it's my prime location, yet when I show you that even on the UGB the value of land has taken off, and the effect of UGBs is to cause higher land price inflation within the boundary than outside, you seem to ignore it.

The fact is there is not much affordable in Sydney these days.  Yes you can get a small old 2BR apartment out at Liverpool then spend an hour or more each day getting to work, possibly spending another $100+ on tolls and petrol too if the sad public trasnport doesn't conveniently get you to where you need to go.  It might get you into the market, but once you think about starting a family you'll most likely need to move.

You don't seem to think that the current planning system is to blame for much of the affordability issues those outside the market for shelter face.  When even a simple renovation has to go through multiple stages of the local council and hope there's no complaints form a neighbour, or someone who can't even see the renovation - I've received a number of council notices about renovations that I should in no way be asked to comment on yet that's the system we have.

Somehow those in the market seem to think it's Ok to say I want things to stay the way they are ie very low density housing in the suburb - but then feel it's Ok to criticise FHBs who are priced out of the market for having the temerity to complain.  If you restrict the new supply of land, if you restrict increases in density, then the only logical outcome of a legislated lack of supply is an increase in price.  It's a false scarcity.  There's probably 2 decades worth of land that COULD be released on the edges of Sydney, yet it's sitting there idle and being brought to market in dribs and drabs.

Factor in we now make FHBs pre pay for all their infrastructure, and the public authorities force developers to gold plate it by building at far higher standards than they would, is just another nail in the affordability coffin.

We're basically following the British approach and it's failing woefully.  It's time we looked at other countries or cities that have been able to provide affordable shelter and see what they are doing right and start to introduce those measures here.  I'll say again, that Texas has been able to cope with wages growth in line with Australia, population growth equivalent to Australia yet around 15% smaller than NSW, is something to be celebrated.  maybe not everything they've done can be translated to here, but surely it's worth investigating rather than waiting for a major crash to reset things.  Maybe we could look to Germany which has had little in the way of real increases in house prices for decades - central to this is that German municipal authorities consistently increase housing supply by releasing land for development on a regular basis. The ultimate driver is a  central government policy of providing financial support to municipalities based on an up-to-date and accurate count of the number of residents in each area.

Artificially high land prices are killing the economy.  It's destroying what should be a massive competitive advantage to us.  High land prices force business rents and fixed costs to be higher.  It forces wages to be higher because otherwise staff can't afford to rent or pay the mortgage.  Then we have the issue of our foreign debt ballooning to support the massive borrowing binge we've been on.  It literally caused the banks to be insolvent.  If the Govt hadn't stepped in to guarantee the banks we'd have been in financial Armageddon.  This because over 60% of bank lending was foreign sourced.

We also have the lunacy of NG which 95% of "investors" use to buy a pre-existing dwelling, so at a net cost of some $8B a year we're further locking out FHBs for little social gain.  Add in half CGT on sale and no wonder it's gear up and pray the capital gains outweigh the losses over the next X years.


----------



## Julia (22 June 2014)

Mrmagoo said:


> For me to buy the house I grew up in is about $350,000k now which I cannot really afford as I now only earn 88k a year which works to about $1200 a week after tax. I could only just afford to pay it off after 30 years on my current income if rates never went up and I never had any actual human adult wage earning expenses. That is the contrast between now and 30 years ago. My folks driving a taxi and working at Coles could buy something I can't afford on a supposedly decent wage. Before you kick me in the guts and say 88k plus super is peanuts (which I know it is peanuts) it is also a fairly hard wage to get. Unless you are a tradesman or something in which case you are probably already a property owner. I earn more than literally every other graduate I know. So I don't know where all these engineering/com sci ect graduates on 100k a year with 5 years of experience are, I guess there are not many. That is what most of my friends did and I out earn them. The only ones who out earn me are TRADESMEN. And they are all loaded.



When you quote the house as being now about $350K, you don't say whether it's in a city, an outer or inner suburb, a regional centre.
I wouldn't have thought most people would regard $88K as peanuts.  In fact would have thought that unless paying very high rent (not just proportion of rent when sharing with others) it would be possible to save for a house deposit on that level of income.

We don't know how old you are, how long you've been working or any other detail.  I'm not asking, but just observing that no one could make much of an assessment of your situation - or offer any suggestions - when much is unknown.

Syd, I appreciate the points  you're making.  But perhaps remember that you're talking about capital city situations.  It's absolutely different in much of Australia's regional areas.
Anecdotal only, I acknowledge, for regional SE and Central Qld but prices are still very depressed, still about 20% at least below levels before the GFC.  Minimal sales for investment also because the net yield would be lucky to be 3%.


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## sydboy007 (23 June 2014)

Julia said:


> Syd, I appreciate the points  you're making.  But perhaps remember that you're talking about capital city situations.  It's absolutely different in much of Australia's regional areas.
> Anecdotal only, I acknowledge, for regional SE and Central Qld but prices are still very depressed, still about 20% at least below levels before the GFC.  Minimal sales for investment also because the net yield would be lucky to be 3%.




The issue is there's little job prospects in those areas.  The majority live in the capital cities due to the fact they have to work to pays the bills.  If we had some way to redistribute the jobs to larger regional cities we'd be better off, but that's not how modern economies work.  You'll find that certain sectors will aggregate due to the network effect.  The more similar companies in a particulaur suburb or city the greater the synergies.  Possibly we could force that to happen, but I've not read of any Govt program to do this that has been terribly successful.

Sydney's pop is over 4.5M while the rest of NSW supports just 3M.

Brisbane pop is over 2M and the rest of the state supports just 2.6M

Victoria is worse with Melbourne supporting 4M and the rest of the state just over 1.7M.

If we can fix planning rules, force supply of land to meet demand, bring uniform medium density regulations for our cities so construction can occur more quickly, stop forcing new developments to prepay for all the infrastructure then I'd say new housing stock could be brought to market at least 20% cheaper.

When most new subdivided blocks on the edge of Sydney have over 50K developer levies. If we say that $300-400K is the median affordability level for a couple, then we're adding ~15% to the purchase costs.  In Texas they use MUD (Municipal Utilities District) bonds to solve this issue.  The below link has some details on how it works.  It seems a more sensible option that what we've got today.  Get the interest rate right and I'd say you'd be swamped with buying from the SMSF sector.  Would be perfect for an IAB (Inflation Adjusted Bond) that provides a certain yield above CPI for 20 years.

http://us2.campaign-archive2.com/?u=368ce55919dfdca57fc0d8cb6&id=c7358f05bf&e=fefa04b54f

_An MUD is statutory authority or water district that has a board of directors, and is responsible for providing water service to its residents who pay an ad valorem tax to finance it. Developments are typically around 400 to 500 acres (202 hectares), although some are much larger, up to 12,000 acres.

These developments are done in stages; typically after the first stage, when enough value has been created, the MUD can issue bonds against that value (typically 20 years) to finance the rest of the development. To recoup the investment, it can charge a tax of up to $1.50 per $100 of value in two parts: a debt servicing charge and an operational charge (to run the utility). For a house worth $300,000 this means $4,500 a year. However, over time as the debt is retired, this component reduces; for residents in some MUDs, the charge for services is as low as 17c per $100 of value: a utility tax rate of 0.17%. For the same house worth $300,000, this is $510 per year [note typical starter homes in Houston cost around $150,000 only - the median household income is 50740]._


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## medicowallet (23 June 2014)

Exactly Syd,

Having come from a regional area originally, the lifestyle people gravitate to in cities baffles me.

Govt needs to lead the way and relocate govt agencies to regional areas etc.

But, once again, politics will always rule over common sense.

MW


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## sydboy007 (23 June 2014)

medicowallet said:


> Exactly Syd,
> 
> Having come from a regional area originally, the lifestyle people gravitate to in cities baffles me.
> 
> ...




maybe the Govt could move some jobs to those areas, but then I don't think it would be fair to move them al to regional centres.  Looking to the USA only NYC and LA are comparable to Australian cities in size.  Chicago and Houson are slightly larger than Brisbane.

So in a country of 300M there's only 4 major cities with a population > 2M.  Phoneix at number 5 is smaller than Perth's population, and only 9 cities above 1M population.

If only we could get the population distribution like that, but with a country mostly desert it's not so easy.


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## McLovin (23 June 2014)

sydboy007 said:


> maybe the Govt could move some jobs to those areas, but then I don't think it would be fair to move them al to regional centres.  Looking to the USA only NYC and LA are comparable to Australian cities in size.  Chicago and Houson are slightly larger than Brisbane.
> 
> So in a country of 300M there's only 4 major cities with a population > 2M.  Phoneix at number 5 is smaller than Perth's population, and only 9 cities above 1M population.
> 
> If only we could get the population distribution like that, but with a country mostly desert it's not so easy.




Err...I think you're misinterpreting those populations. The city population would be the equivalent of how many people live in the City of Sydney LGA. Metro areas are what counts.

NYC: 20m
LA: 13m
Chi-Town: 10m
DFW: 7m
Houston: 6.5m
Killadelphia: 6m
DC: 6m
Miami: 6m
ATL: 5.5m
Boston: 4.5m
SF: 4.5

And so on...


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## Mrmagoo (23 June 2014)

Nonsense, jobs are in the big cities because of the relatively low population in Australia meant there was nowhere else to locate the business.

The reason they jobs haven't decentralized is because of corruption. There are too many people making too much money and taking too many kick backs out of making our cities ****.

If you don't think that Australia (or at least NSW) is fantastically corrupt, then you are a much more positive person than myself. 

Do you think it is an accident things are the way they are and that certain parties are making a fortune ? Don't get me started on commercial real estate.


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## Mrmagoo (23 June 2014)

The problem with creating jobs is that unless the towns or small cities can take it it just ****s everything up and makes the place expensive and hallows out the economy. Like what happens to the small mining towns.

I don't know how you can create any jobs with unions the way they are. When a sparky costs 150k a year what are you going to do ? On the world market, someone needs to pay that or they can invest somewhere else in a developed economy and get one for probably 1/8 of the cost.


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## trainspotter (23 June 2014)

> In comparison, a six-year-old, four-bedroom home at 4 Galloway Court, Greenvale, sold at auction for $620,000.
> *The property had modern features on a 350sq m floorplan.*
> He said estates popping up along Mickleham Rd were also steering the Greenvale market and building on the interest in the suburb.
> Mr Biner agreed, saying volume builders were offering house-and-land deals at the newer estates for between $400,000 and $550,000, which could cause established house prices to stabilise as competition intensified.




http://www.news.com.au/finance/real...r-cent-in-a-year/story-fndbawks-1226961389869

*Sydboy007* - Let's discuss land size to price ratio later once you have comprehended that house SIZE has significantly increased which in turn is increasing the loan amount which in turn is increasing the income to price ratio blah blah blah. Also all the references to the USA is wonderful but will never be implemented in Australia as it would take a complete overhaul of the system currently in place. Not gonna happen.

*Mrmagoo* - do you believe that historically the "modern family" has significantly deceased numerically? In the 50's it was not uncommon for a family unit to have many siblings (my reference to 6 kids) who all lived in the 3 bedroom bungalow? Just because your experience is not what I was referencing does this mean the general information supplied is incorrect?

*McLovin* - Keeping it real !! As you have been to the USA I am sure you are right. Statistics are there to be manipulated to match the opinion of the person making such bold statements. Or they have completely misread the facts.

*Tyler Durden* - Market is still "popping" in CERTAIN areas but it is the last gasp of the needy and the greedy who always buy too late for too much and when the downturn comes they bleat as to how much money they lost. Same old same old. The trick is to get in when the market is in the "lull" and sell in the "high" - just like the stock market the majority of the money gets dumped into the bull market in the last 2 years prior to the correction. 


On that note my fellow ASFers I am off on an extended holiday and I bid you a fond farewell - until next time - TS.


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## Junior (23 June 2014)

Mrmagoo said:


> Nonsense, jobs are in the big cities because of the relatively low population in Australia meant there was nowhere else to locate the business.
> 
> The reason they jobs haven't decentralized is because of corruption. There are too many people making too much money and taking too many kick backs out of making our cities ****.
> 
> ...




High speed rail, Melbourne - Canberra - Sydney - Brisbane.  

Every stop in between these 4 cities can grow around the train station.


----------



## skc (23 June 2014)

Mrmagoo said:


> For me to buy the house I grew up in is about $350,000k now which I cannot really afford as I now only earn 88k a year which works to about $1200 a week after tax. I could only just afford to pay it off after 30 years on my current income if rates never went up and I never had any actual human adult wage earning expenses.




Are you sure? $88k is a decent wage and according to this online calculator you should be able to afford something at $350k.



http://www.aussie.com.au/borrowing-calculator.htm

A single income family with 2 dependents would be stretching it... but a single person at this income should quite comfortably afford a $350k home in the current rates environment. You could even rent out the spare rooms to help things out (with corresponding tax implications of course).



Mrmagoo said:


> That is the contrast between now and 30 years ago. My folks driving a taxi and working at Coles could buy something I can't afford on a supposedly decent wage.




Have you compared how they spend vs how you spend? Plus they do have double income.


----------



## Mrmagoo (23 June 2014)

skc said:


> Are you sure? $88k is a decent wage and according to this online calculator you should be able to afford something at $350k.
> 
> View attachment 58435
> 
> ...




Please stop doing that. It doesn't reflect the true cost of owning a home. Do you think I am an idiot incapable of adding and multiplying numbers ?


----------



## Mrmagoo (23 June 2014)

trainspotter said:


> http://www.news.com.au/finance/real...r-cent-in-a-year/story-fndbawks-1226961389869
> 
> *Sydboy007* - Let's discuss land size to price ratio later once you have comprehended that house SIZE has significantly increased which in turn is increasing the loan amount which in turn is increasing the income to price ratio blah blah blah. Also all the references to the USA is wonderful but will never be implemented in Australia as it would take a complete overhaul of the system currently in place. Not gonna happen.
> 
> ...




Has family size grown since the 1950s ? I don't know and I don't flapping care. I am not a demographer. For the 1950s you're talking about grandparents. People who fought in a combination of WW1 and WW2 and a combination of immigrants and refugees so you're talking complete nonsense about a time that doesn't matter anymore.

Why not just bring up cavemen and dinosaurs ? I hear for dinosaurs a first home was very expensive cause you could get eaten which forced up house prices close to public transport as TREX only has small arms so doesn't like using the train.


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## Wysiwyg (23 June 2014)

Junior said:


> High speed rail, Melbourne - Canberra - Sydney - Brisbane.
> 
> Every stop in between these 4 cities can grow around the train station.



Is the demand there? I don't think so as rail will never be faster or less expensive than plane.


----------



## Mrmagoo (23 June 2014)

Wysiwyg said:


> Is the demand there? I don't think so as rail will never be faster or less expensive than plane.




Really ?

Taxi to and from airport sets you back a minimum of $100. With a train you just jump on the in CBD and 3 hours latter you are where you want to go...

Been to Europe and used their system ? It is amazing. So uncomfortable flight either. You sit in your chair and play on your laptop enjoying the sights.

It is 1st world stuff. Flying is primitive.


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## Wysiwyg (23 June 2014)

skc said:


> Are you sure? $88k is a decent wage and according to this online calculator you should be able to afford something at $350k.
> 
> A single income family with 2 dependents would be stretching it... but a single person at this income should quite comfortably afford a $350k home in the current rates environment. You could even rent out the spare rooms to help things out (with corresponding tax implications of course).
> 
> Have you compared how they spend vs how you spend? Plus they do have double income.



88k gross is about $1200 in the hand per week or *$4800 per month*. With your calcs. repaying $2233 / month plus $3000 expenses is *$5223 per month*. Magoo would have to adjust living expenses to suit.


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## Mrmagoo (23 June 2014)

Wysiwyg said:


> 88k gross is about $1200 in the hand per week or *$4800 per month*. With your calcs. repaying $2233 / month plus $3000 expenses is *$5223 per month*. Magoo would have to adjust living expenses to suit.




Plus body corporate, rates, taxes, strata.. or rent for $300-$350 a week. Or just rent... for not much.

Only time you need to buy is when you've got kids. Otherwise the sums don't work.


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## Wysiwyg (23 June 2014)

Mrmagoo said:


> Really ?
> 
> Taxi to and from airport sets you back a minimum of $100. With a train you just jump on the in CBD and 3 hours latter you are where you want to go...
> 
> ...



You reckon a 1000klm trip from Sydney to Brisbane in around 4 hours is gonna be cheap? Going on snail train costs today it definitely won't be less.


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## Junior (23 June 2014)

Wysiwyg said:


> Is the demand there? I don't think so as rail will never be faster or less expensive than plane.




I think so..Melb to Syd is one of the busiest air routes in the world.  High speed rail can be integrated into existing metro rail networks.  No security/customs, more comfortable, no driving or taxi to and from airports.  The 2 or 3 major stops between melb/syd could grow into cities, with high density commercial development in a radius around the train station.

It would take pressure off inner city property prices and population growth in Melbourne and Sydney, and create job opportunities and growth in other parts of the country.


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## sydboy007 (23 June 2014)

skc said:


> Are you sure? $88k is a decent wage and according to this online calculator you should be able to afford something at $350k.
> 
> Have you compared how they spend vs how you spend? Plus they do have double income.




That loan would be 50% of after tax income for someone on 88K.  The situation would deteriorate pretty quickly if rates were to ever get up around 7% or more.  Might happen faster than people think with inflation already at 2.9% and any further fall in the AUD would see inflation take off even more.


----------



## sydboy007 (23 June 2014)

Wysiwyg said:


> You reckon a 1000klm trip from Sydney to Brisbane in around 4 hours is gonna be cheap? Going on snail train costs today it definitely won't be less.




In Europe most airlines have stopped flying a lot of routes that are around 1000KM.  HSR is able to be competitive over those distances door to door when you factor in most of the train stations are int eh centre of town while airports are a long trip out.

I was looking at a trip from Paris to Amsterdam on the HSR and it was easy to get a ticket for around $93, or $143 for a business class seat.  Travel time was about 3H40M IIRC.

The issue is we don't really have the population to make it work here.  Maybe we should contract it to the Chinese to build.  Allow them to bring in their own workers and agree to a fixed price.  the amount of HSR they've built in the last decade is staggering.  I do think we're stuffed without it because once jet fuel starts getting back to $200 a barrel it will make flying quite expensive.  Spending money on straightening the current track and improving signalling to allow the current trains to operate at their maximum speed on the route may be a more feasible alternative for now.


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## Mrmagoo (23 June 2014)

We do because the capital cities are large hubs. As I said, corruption won't allow it. They want property values to go up.
TBH you can treck around parts of europe for almost nothing if you're willing to ride share with locals.

If they did that here there would be "regulatory" issues.


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## Mrmagoo (23 June 2014)

Junior said:


> I think so..Melb to Syd is one of the busiest air routes in the world.  High speed rail can be integrated into existing metro rail networks.  No security/customs, more comfortable, no driving or taxi to and from airports.  The 2 or 3 major stops between melb/syd could grow into cities, with high density commercial development in a radius around the train station.
> 
> It would take pressure off inner city property prices and population growth in Melbourne and Sydney, and create job opportunities and growth in other parts of the country.




Build satellite sities full of apartments, greenery and facilities for the young to enjoy, the old can have their concrete camber well jungle with a big concrete yard.


----------



## Mrmagoo (23 June 2014)

Wysiwyg said:


> You reckon a 1000klm trip from Sydney to Brisbane in around 4 hours is gonna be cheap? Going on snail train costs today it definitely won't be less.





Don't care I'd pay it to escape the bullcrap of having to fly.

Seriously, Europe. It was frigging amazing.


----------



## McLovin (23 June 2014)

sydboy007 said:


> I do think we're stuffed without it because once jet fuel starts getting back to $200 a barrel it will make flying quite expensive.




Just some back of the envelope calculations here...

Burn rate for a 737-800 is ~2,400kg/hour or around 3,000 litres/hour in cruise. Once you take into account climb and descent you'll probably burn through around ~3,000kg of fuel on say SYD-MEL or SYD-BNE

3,000kg of fuel = 3,753 litres. Lets round up to 4,000 litres

The price of fuel is ~$1,600/thousand litres. 

So to fill her up will cost $6,400. 

They seat around 160pax, so at say 85% capacity that's 136 pax. The cost per passenger is $47 (and I'd say that would be on the high side because I've been pretty generous with the fuel allowance). Even assuming the price of oil doubles, I doubt HSR will be competitive with air travel.

That's certainly been the European outcome. Rail just can't compete on price.


----------



## Value Collector (23 June 2014)

Mrmagoo said:


> Taxi to and from airport sets you back a minimum of $100. With a train you just jump on the in CBD and 3 hours latter you are where you want to go...
> 
> .




well catch the train to the airport


----------



## Junior (23 June 2014)

It may not be cost effective right now, but given the unrelenting population growth in this country you'd think it would be viable in the not too distant future.


----------



## Mrmagoo (23 June 2014)

Value Collector said:


> well catch the train to the airport




Funny stuff.

In case you are serious.

Due to corruption in our nation trains either don't go to an airport or have huge charges attached.


----------



## sptrawler (23 June 2014)

McLovin said:


> Just some back of the envelope calculations here...
> 
> Burn rate for a 737-800 is ~2,400kg/hour or around 3,000 litres/hour in cruise. Once you take into account climb and descent you'll probably burn through around ~3,000kg of fuel on say SYD-MEL or SYD-BNE
> 
> ...




Especially if high speed rail, is using high cost electricity.
Which currently, is costing more and more, to produce.

Maybe when solar genaration and power storage becomes usefull, then HSR will be viable.


----------



## Value Collector (28 June 2014)

Mrmagoo said:


> Funny stuff.
> 
> In case you are serious.
> 
> Due to corruption in our nation trains either don't go to an airport or have huge charges attached.




What city do you live in, brisbane airport train puts you right next to the taxi rank


----------



## Bill M (28 June 2014)

Value Collector said:


> What city do you live in, brisbane airport train puts you right next to the taxi rank




Same in Sydney. I travel by train from the Central Coast (over 100 kilometers) to Sydney international terminal. I go up 3 flights of escalators and I am in the departure lounge and it only costs me $21.20.


----------



## Mrmagoo (28 June 2014)

Value Collector said:


> What city do you live in, brisbane airport train puts you right next to the taxi rank




How nice for Brisbane, they also have affordable housing there. Hint : I live in one of the cities that doesn't have a train to the airport, obviously. I also have to fly a bit for work, so I know, because I catch the taxis and see how much they cost.....


----------



## Julia (28 June 2014)

Mr Magoo, when I read your posts I sometimes wonder if there is anything at all in your world that makes you happy?  Even a little bit?


----------



## Mrmagoo (29 June 2014)

Julia said:


> Mr Magoo, when I read your posts I sometimes wonder if there is anything at all in your world that makes you happy?  Even a little bit?




Property prices certainly don't bring me happiness.


----------



## Glen48 (29 June 2014)

18% of property sale in OZ are the Chinese buying..some agents have published booklets in Chinese to attract over seas buyers.
 A construction company in Sydney is building a high rise using Feng Shui principles so there is no number 4 the 4th and 14th floor don't exist.

A garden was to be on top of the building but after talks with the Feng expert it was decided to place it in the middle of the building due to some myth about a man with  green hat having an affair.
So expect a lot Chinese take always to open up any day soon.


----------



## skyQuake (29 June 2014)

Glen48 said:


> 18% of property sale in OZ are the Chinese buying..some agents have published booklets in Chinese to attract over seas buyers.
> A construction company in Sydney is building a high rise using Feng Shui principles so there is no number 4 the 4th and 14th floor don't exist.
> 
> A garden was to be on top of the building but after talks with the Feng expert it was decided to place it in the middle of the building due to some myth about a man with  green hat having an affair.
> So expect a lot Chinese take always to open up any day soon.




Source on the 18%? Even the RBA ain't too sure about stats due to the lack of reliable figures.


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## Glen48 (29 June 2014)

Agree no one knows the true figures , this quoted on ABC about the 18% but China has it's eyes on there.


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## sydboy007 (14 July 2014)

From the ABS today

According to the ABS, investor finance commitments in New South Wales in May were 30% higher than May 2013. New South Wales investor loans were also up by 41% in rolling annual terms in the year to May 2014, well above the national average increase of 28%.

Further, as at May 2014, investors accounted for an astonishing 54.1% of total housing finance commitments (excluding refinancings) in New South Wales – a new record. Victoria’s (read Melbourne’s) share of investor mortgages also rose to 45.7%, which was also a record share for that state.


----------



## Value Collector (14 July 2014)

Mrmagoo said:


> How nice for Brisbane, they also have affordable housing there. Hint : I live in one of the cities that doesn't have a train to the airport, obviously. I also have to fly a bit for work, so I know, because I catch the taxis and see how much they cost.....




what about a bus or an airport shuttle service?


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## prawn_86 (15 July 2014)

Surprised no-one has commented on this:

http://www.abc.net.au/news/2014-07-14/renting-or-buying-an-even-money-call-says-reserve-bank/5595814

Granted there are limitations to the study, but as I have said for the past 5 years, there is limited tangible upside to buying in the current environment (Generally speaking)

Personally, if I had bought a house straight out of uni, I probably wouldn't of been able to afford, or feel comfortable moving overseas with a mortgage over my head


----------



## So_Cynical (15 July 2014)

Mrmagoo said:


> Due to corruption in our nation trains either don't go to an airport or have huge charges attached.




$14 each way in Sydney and the train drops you right under the international terminal, domestic involves some walking.


----------



## sydboy007 (15 July 2014)

prawn_86 said:


> Surprised no-one has commented on this:
> 
> http://www.abc.net.au/news/2014-07-14/renting-or-buying-an-even-money-call-says-reserve-bank/5595814
> 
> ...




I've believed since the early noughties that renting is better than buying.  I can't imagine what the stress is like knowign you have a monster mortgage of 600K+ to feed for the next 25-30 years.  Seems naive of me to think a 270K mortgage back in 97 was huge.

I say while rents are lower than interest rates accept the subsidy that landlords and other tax payers are providing and rent, just save via salary sacrificing or some other form of investing / savings.


----------



## Smurf1976 (15 July 2014)

I had a look at houses for sale in my area recently. Not that I'm seriously considering moving, it was just for curiosity.

In short, even if I paid the full asking price with no attempt to negotiate, I could buy a better house than mine for about the same price I actually paid (which was a bit below the asking price) in 2007.

So prices have fallen a few % in nominal terms in my area over the past 7 years. It's not a huge fall, only a few %, but they certainly haven't gone up.

Location is suburban Hobart, 8km by road from the CBD.


----------



## sydboy007 (15 July 2014)

Smurf1976 said:


> I had a look at houses for sale in my area recently. Not that I'm seriously considering moving, it was just for curiosity.
> 
> In short, even if I paid the full asking price with no attempt to negotiate, I could buy a better house than mine for about the same price I actually paid (which was a bit below the asking price) in 2007.
> 
> ...




That's like an 18% fall if you take inflation of 2.5% a year into account.  3BR apartments in my area are now going for 1.1-1.35M off the plan, though a 4BR townhouse (3 floors) is going from 875K at auction, or a bargain priced 3BR apartment for $729K with 6K in strata fees a year, though the 2 smaller bedrooms don't enable cat swinging by the looks of the floor plan.

Cheap land should be a major competitie advantage for Australia, but somehow we've turned it into a mill stone around our necks.


----------



## DeepState (15 July 2014)

prawn_86 said:


> Surprised no-one has commented on this:




The study has the following items which I find 'interesting'.

It is based on a matched sample of rental properties and rent levels.  In other words, the study is restricted to rentals.  These are not indicative of the wider stock of housing, but may be relevant to housing purchased under leverage by investors taking out investor mortgages.

They elected to eschew measures like Price-Rent and Price-Income for statistical reasons.  Because these relationships have not shown reversion in Australia they are not useful....What?  Precisely.

The approach is to take an econometric model on levels.  Those econometricians out there know what I'm on about.  The idea is to infer a 'cost' of ownership which includes things like interest rates, cost of owners' equity, depreciation, ... , expected future appreciation.  If this cost matches rents, the prices are taken to be fair value.

The composite cost of interest rates and imputed opportunity cost for owners is ... wait for it ... taken to be the real yield inferred from mortgage rates.  These mortgage rates are observed from the 10yr fixed figure and offset by a maturity adjustment of 1.3%.  Inflation is taken from the swap curve.

A very important figure is expected future returns.  These are hedonically adjusted and, therefore, do not represent the nominal price movements you might see.  They have chosen a figure equal to the average return over the period since 1955.  Hence, it is backward looking and assumes that this type of thing is mean reverting.  If we have been in a secular housing boom, as well we might, it just assumes this keeps going and justifies current housing prices.  The structure of household incomes and interest rate levels have moved in favour of housing in a secular manner. How much further can this go?  Interest rates are at record lows and.. gosh.. should each set of house occupants get a second wife/husband to help pay for the mortgage? Hopefully that illustrates the bullishness in this figure.

Overall, these guys are smart and know about housing as they have prior publications on the matter.  However, I am skeptical about some of the reasons why simple and illustrative measures like P-Rent and P-Income are omitted on the basis of econometric rationale rather than just common sense.  They are routinely used in other locations because their numeric properties satisfy certain things...and, somehow, things are different in Australia.  These measures would show Australia to be in an elevated level of pricing.  In its place, a structurally valid model has been estimated.  Some of the assumptions are, to my mind, hard to support with confidence or seem outright bullish by design. Finally, the sample related to rental properties only.  Whilst delightful to a statistician, no effort was made to relate these findings to the total capital stock.  

I remained inclined to think that residential property has a modest outlook.


----------



## Wysiwyg (15 July 2014)

Smurf1976 said:


> In short, even if I paid the full asking price with no attempt to negotiate, I could buy a better house than mine for about the same price I actually paid (which was a bit below the asking price) in 2007.



My first home was purchased at what has turned out to be the local peak in November 2012. There was excess demand due to large scale industrial development so property developers went gangbusters to increase supply. Now there is a glut of dwellings and at a guess I think if I tried to sell now I would take a 50k to 80k loss including mortgage interest already paid. Obviously, being my PPOR, I am not selling in the next 20 years at least.


----------



## prawn_86 (16 July 2014)

DeepState said:


> The study has the following items which I find 'interesting'
> ....
> 
> I remained inclined to think that residential property has a modest outlook.




Yeh it is far from a perfect study but still interesting nonetheless imo


----------



## sydboy007 (16 July 2014)

A nation of loss making landlords


----------



## Vixs (16 July 2014)

sydboy007 said:


> A nation of loss making landlords




It would be nice to know what impact depreciation has had on those losses, i.e. non-cash losses, and to what extent people are 'losing'.

It's quite possible to be cash flow positive and have a tax loss.


----------



## sydboy007 (16 July 2014)

Vixs said:


> It would be nice to know what impact depreciation has had on those losses, i.e. non-cash losses, and to what extent people are 'losing'.
> 
> It's quite possible to be cash flow positive and have a tax loss.




True, but my marginal tax rate is likely to be higher whatever the tax loss is made up from.

The below graphs shows that investors are not the freind of FHBS / renters.


----------



## qldfrog (16 July 2014)

am I doing something wrong, I am not losing money on my IP???


----------



## Smurf1976 (16 July 2014)

sydboy007 said:


> The below graphs shows that investors are not the freind of FHBS / renters.



Interesting to see that the current level is at an extreme so far as that graph shows. Interesting.....


----------



## sydboy007 (16 July 2014)

Smurf1976 said:


> Interesting to see that the current level is at an extreme so far as that graph shows. Interesting.....




I wish the graph would go back a few more decades.  It would most likely look even more extreme.  Definitely not a rational market.


----------



## medicowallet (16 July 2014)

qldfrog said:


> am I doing something wrong, I am not losing money on my IP???




Not saying this is you, but most landlords are so clueless, that they wouldn't even know if they are making a loss.

MW


----------



## DeepState (16 July 2014)

sydboy007 said:


> Definitely not a rational market.




It's rational to the extent that investors believe that capital appreciation adjusted for improvements will outweigh the net rent loss such that the total return meets whatever they might call a cost of capital.  As to whether that's all rational or not...I'll leave it to you.


----------



## qldfrog (16 July 2014)

medicowallet said:


> Not saying this is you, but most landlords are so clueless, that they wouldn't even know if they are making a loss.
> 
> MW



hum from last year: had a bit of work to do on flooring but managed 8k profit for a current value of 300k (paid 275k 3 years ago)-> so a still pathetic 2.7% return (aka inflation and that is it)
depreciation will add 1.5k as the cherry on the miserable cake.
So not that great return yet fully rented, nice location, etc
If I had to have a loan-> would be a loss/negative gearing;
I could max the loan there, make a loss, give 5% to the bank, have negative gearing, but not sure i would beat the 5% return (after tax) on any other investment I would take with that freed money so just keep the morgage to 0 and have a nice buffer ready to be used on the next market correction;


----------



## medicowallet (16 July 2014)

qldfrog said:


> hum from last year: had a bit of work to do on flooring but managed 8k profit for a current value of 300k (paid 275k 3 years ago)-> so a still pathetic 2.7% return (aka inflation and that is it)
> depreciation will add 1.5k as the cherry on the miserable cake.
> So not that great return yet fully rented, nice location, etc
> If I had to have a loan-> would be a loss/negative gearing;
> I could max the loan there, make a loss, give 5% to the bank, have negative gearing, but not sure i would beat the 5% return (after tax) on any other investment I would take with that freed money so just keep the morgage to 0 and have a nice buffer ready to be used on the next market correction;




As long as people take into account wear and tear / replacement / renovation costs, inflation then it is fine.

Sure as you alerted to, opportunity cost is there, but that is just asset selection bs.  There is always an argument to be made retrospectively, but imo as long as I outperform inflation, I will never be hypercritical of opportunities I lost out to, otherwise you will believe you fail every year.

I have a similar buffer position at the moment it seems.  I just don't have any decent non-business area where I am comfortable (ie shares or residential property) as I believe both are on shaky ground.

MW


----------



## Value Collector (16 July 2014)

> I just don't have any decent non-business area where I am comfortable (ie shares or residential property) as I believe both are on shaky ground.




Can't you treat shares the same way as your other business interests? 

I mean if you use your business skills to identify good share investments, you should feel comfortable in both areas.


----------



## Value Collector (16 July 2014)

medicowallet said:


> Not saying this is you, but most landlords are so clueless, that they wouldn't even know if they are making a loss.
> 
> MW




Same with a lot of share investors, all they look at are share prices, they will panic sell if the share price falls even if their company is making good profits and expanding its business, or they will hold a stock thats going up even if its profits are not growing and the business doesn't justify the price.


----------



## sydboy007 (17 July 2014)

DeepState said:


> It's rational to the extent that investors believe that capital appreciation adjusted for improvements will outweigh the net rent loss such that the total return meets whatever they might call a cost of capital.  As to whether that's all rational or not...I'll leave it to you.




Yeah, I just don't know how much longer the capital growth party go on for when fewer and fewer locals can afford to buy, and renting is becoming the same.


----------



## McLovin (17 July 2014)

sydboy007 said:


> Yeah, I just don't know how much longer the capital growth party go on for when fewer and fewer locals can afford to buy, and renting is becoming the same.




Just let foreigners start buying. Our capital cities will become like London. 

I still think decentralising our states makes sense. We're a long way from that though.


----------



## DeepState (17 July 2014)

sydboy007 said:


> Yeah, I just don't know how much longer the capital growth party go on for when fewer and fewer locals can afford to buy, and renting is becoming the same.




Here's the a key point, I think.  Although fewer locals can afford to buy, those already on the property ladder locally are doing so.   Further, foreign buyers are coming in with a pretty significant tilt coming ultimately from China in recent years.  Chinese property ownership is rampant due to financial repression and also the desire to hold hard assets.  A good chunk of the investment properties in China are held totally vacant with no intention of renting.  The belief is that renting will spoil the asset because it has been used.

Whether or not you think the cash is tainted, it is coming in via various mechanisms.  SB, you'd know that property transactions are being less financed via leverage and thus more by equity.  This equity could actually be credit from offshore that is classified as equity in Australia because APRA stats aren't taken on such matters.  With easy credit still available and part of CB or government strategy, that's a pretty big pump.

When you have a country with a current account surplus (although trade surplus has now vanished), some of this gets recycled out and smuggled out.  This figure is probably large and is likely to get larger as Chinese capital accounts get opened.

The price for property is set at the margin.  At any given time there are a finite amount of properties for sale [how many home owners actually make a decision to sell the family home because they made a valuation decision that renting was preferable? Further, it has been observed by others on this thread that investor properties exhibit momentum effects] and, sort of like oil, demand when you are facing rubbish effective interest rates, poor alternative investment choices and a desire just to get the heck outta here means that prices can escalate a lot further due to demand inelasticity.  This is particularly so in certain inner city locations so it doesn't impact the entire capital stock equally.  Development in these locations is not likely to reduce prices much even if efforts are made to increase density.  Development at the borders of urban areas where I think most of the large estates get built might help lower prices in the general vicinity after adjustment for quality. Location location location.  Crikey, is this the 'New Normal' of property?  Valuation via rentals and domestic income may not be relevant for years as capital movement just swamps it.  If your alternatives are worse, property is less bad and therefore a buy.  

Ultimately, value will prevail, but we might have to wait a while.  Meanwhile capital distortion causes spillovers.  Depending on where these are directed, it is not a given that this is altogether a simple matter of efficient capital allocation espoused in some LM-IS curve.  This only occurs in theory.


----------



## qldfrog (17 July 2014)

Following Retiredyoung, property has a very strong emotional component , and I would add coming from O/S  is strongly embedded in the Australian psyche;
I would bet anything that even after years of pathetic return and yield, the average Aussie would still remember how you never loose on property;
I bought my first PPOR in a Brisbane suburb after arriving in the 95's at the same price as the vendor bought it 10 years earlier
that was when Australia had double digit inflation, 10+morgage rates and that family did some improvement and paid all the usual rates etc
What a disaster Real estate was for them!!!!
But even this relatively new experience is not acknowledged;
Even the rich and famous are not immune
http://www.brisbanetimes.com.au/domain/real-estate-news/shane-watson-loses-out-on-gold-coast-pad-20140712-zt5lp.html


----------



## skyQuake (17 July 2014)

DeepState said:


> ...when you are facing rubbish effective interest rates, poor alternative investment choices and a desire just to get the heck outta here means that prices can escalate a lot further due to demand inelasticity. This is particularly so in certain inner city locations so it doesn't impact the entire capital stock equally.




Great post RY.


----------



## Glen48 (17 July 2014)

qldfrog said:


> Following Retiredyoung, property has a very strong emotional component , and I would add coming from O/S  is strongly embedded in the Australian psyche;
> I would bet anything that even after years of pathetic return and yield, the average Aussie would still remember how you never loose on property;
> I bought my first PPOR in a Brisbane suburb after arriving in the 95's at the same price as the vendor bought it 10 years earlier
> that was when Australia had double digit inflation, 10+morgage rates and that family did some improvement and paid all the usual rates etc
> ...





Same here turned over about 10 properties in my time only made quick money out of two,the last one when up not due to house prices but low interest rates and as IR's
 come down there will be another boom.


----------



## sydboy007 (17 July 2014)

McLovin said:


> Just let foreigners start buying. Our capital cities will become like London.
> 
> I still think decentralising our states makes sense. We're a long way from that though.




Easier said than done, but yes it makes great sense to stop trying to cram most of the population into 3 mega cities on the east coast.

If we could get some Govt action on assisting the tradeables sector we might see some businesses moving into more regional areas due to relatively low cost land.  That's require more than jawboning from the RBA on the dollar, and some serious policy changes to stop so much money being directed to residential property.  I must be dreaming to think anything like that is likely to occur with the current poisonous politics we've got now.


----------



## sydboy007 (23 July 2014)

An interesting concept of expensive housing as a form of inflation hedging.  In a previous article he saw investment properties similar to a pension annuity style investment. 

http://principlesandinterest.wordpress.com/2014/07/22/when-is-housing-too-expensive-a-hedge-to-hold/

_I should be clear at this point that connecting pension hedging to house prices is (today) a minority position. What is the upshot of this minority view? Well, although housing looks (to me) overvalued as a punt given my expectation of a rise in debt-service ratios over the next couple of years (eg it is a hedge that fewer people will be able to afford if rates rise, dampening demand), it doesn’t look like the most expensive hedge out there given changes in cost of other forms of inflation hedging (for those with the means to hedge). And there’s the tax incentive too (eg, as an owner you pay yourself rent out of your gross income, as a renter you pay someone else rent out of your net income). Which is not insubstantial._


----------



## Vixs (23 July 2014)

sydboy007 said:


> Easier said than done, but yes it makes great sense to stop trying to cram most of the population into 3 mega cities on the east coast.
> 
> If we could get some Govt action on assisting the tradeables sector we might see some businesses moving into more regional areas due to relatively low cost land.  That's require more than jawboning from the RBA on the dollar, and some serious policy changes to stop so much money being directed to residential property.  I must be dreaming to think anything like that is likely to occur with the current poisonous politics we've got now.




Now there's a post of yours that I can wholeheartedly say I agree with sydboy007 

So much capital is tied up in housing investment, and until it starts looking like a bad idea to the masses nothing's going to change...


----------



## Smurf1976 (23 July 2014)

Glen48 said:


> as IR's come down there will be another boom.



I don't doubt that a further fall is possible, but there's a limit to how much lower IR's can go realistically given that we're already at a very low level.

It's like saying that things will change during Summer as the temperature rises. Then you realise that it's already 42 degrees - there's not a lot of room left for a further rise of any significance.


----------



## Glen48 (23 July 2014)

Yes if banks are charging you to deposit money like they are doing in Europe then you know they have gone about as low as possible.


----------



## Macro Polo (24 July 2014)

Glen48 said:


> Yes if banks are charging you to deposit money like they are doing in Europe then you know they have gone about as low as possible.




Hi Glen,

The negative deposit rate only applies to excess liquidity held by banks at the ECB.

The negative rate doesn't apply to things like a savings account, only to banks deposits at the central bank.

Banks would not have much fun trying to attract depositors with negative rates.


----------



## qldfrog (24 July 2014)

Smurf1976 said:


> I don't doubt that a further fall is possible, but there's a limit to how much lower IR's can go realistically given that we're already at a very low level.
> 
> It's like saying that things will change during Summer as the temperature rises. Then you realise that it's already 42 degrees - there's not a lot of room left for a further rise of any significance.



well and that is when a totally unexpected event happens:
for temperature in summer: global warming, 


for IR.. who knows, taxing savings is a nice way to have real world  negative interest rate and that is happening now coupled with inflation;
ie TDat 3.5% inflation at 3% tax at 52% not much left and you risk your TD being below inflation by the time it matures
IR imho will fall a bit more, but mostly the RBA will let inflation run;
maybe not the official figure (to keep a pretence) but real inflation will go up (as soon as AUD falls, and as a result of taxes aka services bills, rates etc not linked to free market, the mandatory expenses which sems to go up by 6/7% a year  irrespective of the economy)
In that case, more reasons to get some brick and walls.


----------



## Glen48 (24 July 2014)

Business can put up prices to compete with inflation but if there is no confidence buyer's will curl up and save.
so watch the news over the next few mths..QE500 is due to cease in Oct which will be the key point.

However house prices will rise as the AUD falls and IR come down.

The French are building 1.6B worth of war ships for Russia but USA want the French to sanction Russia so nothing is certain in the mad world of money.


----------



## sydboy007 (6 August 2014)

http://blog.australiaboomtobust.com/2014/08/propertied-federal-political-class/

The public should ask “Are the property holdings of our federal politicians negatively influencing policy and causing them to ignore evidence?” The parliamentary register of members’ interests may help to answer this question, allowing for a summary report of real estate holdings for each Australian federal politician (which may be jointly owned with their spouse).

It is evident that politicians are heavily invested in the property game, with the 226 members in both houses of parliament with an ownership stake in a total of 563 properties – an average of 2.5 properties per member, conservatively estimated at around $300 million (563 multiplied by the median dwelling price of $530,000 as of July 2014).

Australia’s federal political class own an enormous property portfolio, with only 13 of the 226 members (6 per cent) not holding any real estate. In the Senate, 76 members own a total of 202 properties – 2.7 properties per Senator – estimated to be worth around $107 million.

Further, 91 per cent of all Senators own real estate (57 per cent investment/commercial property/vacant land, 41 per cent owner-occupied and 2 per cent recreational), 75 per cent have a mortgage, and the top ten control a colossal 95 properties.

Senator Xenophon maintains an impressive portfolio of eight investment properties, along with Senator Barry O’Sullivan from the National Party who owns an incredible fifty properties (see Table 2). The high concentration of landed gentry in the Senate acts as a vested interest to pass policies which inflates housing (land) prices.

The 150 members in the House of Representatives also have substantial property interests. In total, they own 361 properties – 2.41 properties per member – estimated to be worth around $191 million.

Moreover, 95 per cent of all Representatives own real estate (54 per cent investment/commercial property/vacant land, 43 per cent owner-occupied and 3 per cent recreational), 86 per cent have a mortgage, and the top ten own an astonishing 92 properties. Double-digit property holdings are maintained by David Gillespie (NP, 18 properties), Clive Palmer (PUP, 13 properties), Natasha Griggs (CLP, 12 properties) and Karen Andrews (LIB, 10 properties) (see Table 2).

The trends in the data suggest a sizeable majority of federal politicians have a vested interest in maintaining high housing prices, particularly since most have mortgages over their own investments. A fall in housing prices may cause many politicians to fall into negative equity, providing a strong incentive for politicians to enact legislation which has helped fuel a housing bubble, enriching owners.

*When the top twenty members of the landed gentry in federal parliament own 191 properties, it is difficult to believe that politicians will address the real causes of housing unaffordability, despite the recommendations from government reports.*


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## CanOz (6 August 2014)

Wow, that's a great way to spin the facts there...well done.

Anyone who makes more than 150k per year in Australia would very likely own multiple properties. Unless of course they're an overpaid union Bogan that smokes and drinks their salary each month, then uses the other half to pay their alimony...

CanOz


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## Value Collector (6 August 2014)

Glen48 said:


> Business can put up prices to compete with inflation but if there is no confidence buyer's will curl up and save.
> so watch the news over the next few mths..QE500 is due to cease in Oct which will be the key point.
> 
> However house prices will rise as the AUD falls and IR come down.
> ...




You can baffle yourself if you spend to much time trying to read the future by watching the macro events.

In my opinion it's much better just to focus on the micro things happening that affect your portfolio, and spend your time looking for value and adding it to your portfolio where you can.


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## sydboy007 (6 August 2014)

CanOz said:


> Wow, that's a great way to spin the facts there...well done.
> 
> Anyone who makes more than 150k per year in Australia would very likely own multiple properties. Unless of course they're an overpaid union Bogan that smokes and drinks their salary each month, then uses the other half to pay their alimony...
> 
> CanOz




So you fully believe that a politician with multiple properties would have no second thoughts about pushing through policies that would see more affordable housing released which could cost them tens to hundreds thousands of dollars?

Do you find it interesting that Xenophon has 8 properties and is lobbying for FHBs to be able to tap into their super to buy a property?


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## satanoperca (6 August 2014)

sydboy007 said:


> *When the top twenty members of the landed gentry in federal parliament own 191 properties, it is difficult to believe that politicians will address the real causes of housing unaffordability, despite the recommendations from government reports.*




Why would they? They are in it for themselves, not for the good of the country. Ideals are for those that don't have money, unfortunately.

And secondly, divorce is expensive. Sorry honey, I voted for legislation that will make housing more affordable, but it also means you cannot have your allowance any more for frivolous spending on dresses, haircuts and coffee with your friends as our net wealth will decrease.

Cheers


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## CanOz (6 August 2014)

sydboy007 said:


> So you fully believe that a politician with multiple properties would have no second thoughts about pushing through policies that would see more affordable housing released which could cost them tens to hundreds thousands of dollars?
> 
> Do you find it interesting that Xenophon has 8 properties and is lobbying for FHBs to be able to tap into their super to buy a property?




And i suppose they benefit from the carbon tax repeal as well? In fact i bet they benefit from all the laws they make somehow, either directly or indirectly...Labor and Liberal, Green or Blue

My main point was the way you spin everything? 

Syd are you a labor party spin mule?


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## satanoperca (6 August 2014)

CanOz said:


> And i suppose they benefit from the carbon tax repeal as well? In fact i bet they benefit from all the laws they make somehow, either directly or indirectly...Labor and Liberal, Green or Blue
> 
> My main point was the way you spin everything?
> 
> Syd are you a labor party spin mule?




Hi Canoz,

Whether he is Labor biased or not, allowing FHB to access their super does not address the issue of housing affordability and making for a better society for everyone to prosper in.

High property prices do not make a community wealthy, nor does it mean it is a great place to live and prosper.

I think his point is, how can you expect our elected official to make good decision when they are biased towards their own needs. The real question is, are there any elected officials that don't have a vested interest in their policy decisions. I doubt it. 

Back to work for me, doing something productive for our society, while benefit me and my family.

Life goes on.


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## sptrawler (11 August 2014)

I have noticed a lot more 'for lease' signs in the suburbs around my area. 
I don't know if it will result in an increase in financially stressed investors. However a downturn in mining and an oversupply of rental properties looks possible in Perth.IMO


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## sydboy007 (11 August 2014)

According to the ABS, investor finance commitments in New South Wales in June were 34% higher than June 2013. New South Wales investor loans were also up by 42% in rolling annual terms in the year to June 2014, well above the national average increase of 29%.

Further, as at June 2014, investors accounted for an astonishing 54.5% of total housing finance commitments (excluding refinancings) in New South Wales – a new record. Victoria’s (read Melbourne’s) share of investor mortgages also rose to 46.2%, which was also a record share for that state.

Seems like the NSW VIC market is NG investors flipping to NG investors.

Madness


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## rimtas (11 August 2014)

Looks like these record figures will mark a 5+ year correction top in property prices. Extremes in sentiment always precede a turn to another direction. Though we can't be sure that these extremes can go even more extreme, but when you hear the words like "record", o "selling like hotcakes" it is worth to be cautious  and to think twice before putting your money into real estate or taking a mortgage. 
Real estate is the same asset that follows the same market rules as stocks, currencies, commodities etc.  I myself was looking for a house this year but after a few months of reading and hearing an over-optimistic agent talks about how property prices are "set so soar' and that it is the "best time to buy", I abandoned this idea and will keep renting.

If stocks are turning down now, property will follow soon and in a couple of years should hit a new lows(compared to 2009). Then it would be a really good time to buy.


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## CanOz (11 August 2014)

rimtas said:


> Looks like these record figures will mark a 5+ year correction top in property prices. Extremes in sentiment always precede a turn to another direction. Though we can't be sure that these extremes can go even more extreme, but when you hear the words like "record", o "selling like hotcakes" it is worth to be cautious  and to think twice before putting your money into real estate or taking a mortgage.
> Real estate is the same asset that follows the same market rules as stocks, currencies, commodities etc.  I myself was looking for a house this year but after a few months of reading and hearing an over-optimistic agent talks about how property prices are "set so soar' and that it is the "best time to buy", I abandoned this idea and will keep renting.
> 
> If stocks are turning down now, property will follow soon and in a couple of years should hit a new lows(compared to 2009). Then it would be a really good time to buy.




Yeah, makes sense...seems like a top might be in...hang tight in QLD


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## Wysiwyg (11 August 2014)

rimtas said:


> Real estate is the same asset that follows the same market rules as stocks, currencies, commodities etc.  I myself was looking for a house this year but after a few months of reading and hearing an over-optimistic agent talks about how property prices are "set so soar' and that it is the "best time to buy", I abandoned this idea and will keep renting.



Do you mean as in supply and demand factors? 

I bought my first property because I could afford to and because I did not want to give another cent toward renting from a property investor which in some cases is contributing to their loan repayments. So not for any rules as such but I could have bought it for less, like 10 years ago when the block was just bush at the crest of a hill.


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## DB008 (18 August 2014)

Anyone read last weekends Fin ?

Very interesting article about how Canada had problems with the Chinese buying up lots of their property and raising prices (up to 20% in 1 year). 

I think that Australia should clamp down on foreign buyers snapping up our property. It, at the very least, should be a 2 way street (eg - Can I buy a house/apartment in Japan as a foreigner? No. Well, too bad, you can't buy here either. Can I buy in USA? Yes. Well, you can buy here. Why shoot ourselves in the foot?)


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## studmuffin (18 August 2014)

DB008 said:


> Anyone read last weekends Fin ?
> 
> Very interesting article about how Canada had problems with the Chinese buying up lots of their property and raising prices (up to 20% in 1 year).
> 
> I think that Australia should clamp down on foreign buyers snapping up our property. It, at the very least, should be a 2 way street (eg - Can I buy a house/apartment in Japan as a foreigner? No. Well, too bad, you can't buy here either. Can I buy in USA? Yes. Well, you can buy here. Why shoot ourselves in the foot?)




Actually foreigners can buy Japanese property. But what you are proposing is quite fair.


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## sydboy007 (20 August 2014)

not pretty if you're landlording outside Sydney and Darwin.  hate to think what it's like to be a perth landlord now.


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## sptrawler (20 August 2014)

sydboy007 said:


> not pretty if you're landlording outside Sydney and Darwin.  hate to think what it's like to be a perth landlord now.




I think it will get really bad in Perth, the amount of infill housing under construction and new subdivisions on the go, is scary.

Combine this with the outflow of workers, that were dependent on mining construction jobs and I think the perfecr storm is brewing for Perth property. 
The big difference with Perth is, there isn't a large service sector as opposed to Sydney and Melbourne, so alternative employment isn't readily available.


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## TheUnknown (20 August 2014)

I have been out of Aus since dec 2013 and only returned 2 weeks ago.....looking at property prices they have really went up looked at a block of land before i left was selling for 330k now 400k.........is this sustainable? I think it's going to go downhill unless people are earning 300k these days. thoughts?


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## Wysiwyg (20 August 2014)

TheUnknown said:


> I have been out of Aus since dec 2013 and only returned 2 weeks ago.....looking at property prices they have really went up looked at a block of land before i left was selling for 330k now 400k.........is this sustainable? I think it's going to go downhill unless people are earning 300k these days. thoughts?



Yes the ask prices are ridiculous but with the very low home loan rates; over 25 years makes it affordable for the average wage earner. Increase rates by + 2% and mortgage stress will be evident. They reckon inflation is below par but most goods and services (& houses) have risen sharply. Maybe there is a lag between data and reality. Actually it is the 'fixed' way inflation is calculated.


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## sptrawler (20 August 2014)

Wysiwyg said:


> Yes the ask prices are ridiculous but with the very low home loan rates; over 25 years makes it affordable for the average wage earner. Increase rates by + 2% and mortgage stress will be evident. They reckon inflation is below par but most goods and services (& houses) have risen sharply. Maybe there is a lag between data and reality. Actually it is the 'fixed' way inflation is calculated.
> 
> View attachment 59115




Yes Wysiwyg, add in local government rates, electricity, gas, public transport i.e unavoidable costs and I think the picture will be different.
One thing I have noticed a lot of small commercial property, that has sat vacant for years, is now being bought. 
I guess this is the shift in the economy the RBA keeps talking about, the unemployed construction people becomming self employed.

The time lag will be significant.IMO


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## sydboy007 (26 August 2014)

got to wonder what the buffers are like when I/O loans are running at such a high level

http://www.digitalfinanceanalytics.com/blog/interest-only-loans-up-to-43-2-in-june-apra/

ADIs with greater than $1 billion of residential term loans held 98.4 per cent of all residential term loans as at 30 June 2014. These ADIs reported 5.1 million loans totalling $1.21 trillion and an average loan size was approximately $237,000

There are a number of interesting observations within the data, but the one which stands out is the continued growth in interest only loans. Looking at the new loans written, we see that 43.2% were interest only loans. This is the highest ever, and reflects the growth in investment loans where tax offsets are maximized by keeping the balance as high as possible.

We also see a growth in the number of loans which are approved outside normal criteria. It lifted to more than 3.5% of all loans written in the quarter. At a time when regulators are stressing the importance of good lending practice, this is a surprise, but reflects the fact that larger loans are required by some to chase inflated house prices.

Investment loans across all ADI’s now make up 33.8% of all lending in the portfolio.

The average loan balances across the portfolio for loans with offsets, and interest-only mortgages continues to rise, with the average balance for the latter now at $299,000.


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## sptrawler (26 August 2014)

sydboy007 said:


> got to wonder what the buffers are like when I/O loans are running at such a high level
> 
> http://www.digitalfinanceanalytics.com/blog/interest-only-loans-up-to-43-2-in-june-apra/
> 
> ...




Lending for investment loans, is good for the banks, as they tend to need a larger deposit 20%.

I just can't believe, that people are still pouring into investment properties, it will end in tears.IMO

Unemployment rising, rental returns falling, Government impasse on reduced spending = increase in taxes, reduced business expenditure, increase in unemployment as business cut costs.
Fall in income tax reciepts, increase in indirect taxes = further fall in consumer confidence, less spending.
Further lay off's = more delinquent tenants.

Property as an investment doesn't quite stack up at the moment.IMO


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## sptrawler (27 August 2014)

I suppose unsustainable property prices, unsustainable wages, unsustainable welfare payments, unsustainable superannuation,unsustainable electricity prices.

It all ays one thing.


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## Mrmagoo (30 August 2014)

Wysiwyg said:


> Yes the ask prices are ridiculous but with the very low home loan rates; over 25 years makes it affordable for the average wage earner.
> 
> View attachment 59115




YOu're kidding right ?


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## Mrmagoo (30 August 2014)

DB008 said:


> Anyone read last weekends Fin ?
> 
> Very interesting article about how Canada had problems with the Chinese buying up lots of their property and raising prices (up to 20% in 1 year).
> 
> I think that Australia should clamp down on foreign buyers snapping up our property. It, at the very least, should be a 2 way street (eg - Can I buy a house/apartment in Japan as a foreigner? No. Well, too bad, you can't buy here either. Can I buy in USA? Yes. Well, you can buy here. Why shoot ourselves in the foot?)




A lot of people are dual citizens and don't care about Australia. Our latest 2 PMS have been EU nationals. I bet once they've made a buck they both go back to Europe. This is part of the reason so much of our country is designed at making a quick buck and does not consider the long term.


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## DB008 (31 August 2014)

Further to my previous post, RE: Chinese buyers...



> *House price pain shifts spotlight to Chinese*
> 
> A proposal to hit Chinese property *buyers with extra stamp duties or fees is under active consideration by a *parliamentary committee charged with finding a solution to the nation’s housing affordability crisis.
> 
> ...






> Stuart Button, First National Real Estate’s national communications manager - speaking to AFR Weekend after addressing the hearing on Friday – *said his company’s agents had found that in key parts of Sydney and *Melbourne mainland Chinese buyers were likely responsible for one in four of the top end purchases.*




http://www.afr.com/p/business/property/house_price_pain_shifts_spotlight_Bj2VOVa9YQWnooX4R2T8VL


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## qldfrog (31 August 2014)

Mrmagoo said:


> A lot of people are dual citizens and don't care about Australia. Our latest 2 PMS have been EU nationals. I bet once they've made a buck they both go back to Europe. This is part of the reason so much of our country is designed at making a quick buck and does not consider the long term.



just a note:
I am dual citizen and I do care about Australia, actually I care far far more than any of of the Australia born people I frequent;
I have the advantage to know and be able to compare Australia and other models; to see the best and the worst and Australia not being a leader in many political filed/experiment, to know exactly what is shaping ahead of the latest fad here!

Do you really believe any European born PM would ever think about going back considering all the rort they can have here?
I actually found that among people involved in sustainable actions, land care and conservation, etc: there is a high imbalance of european born aussies.And we (as collective) are facing a huge majority of Aussie born and bred who often see this country as a rape and pillage resource: to mine, subdivide  and sell more real estate, 
Proud of the latest great $ with Nana's beach shack or house in the inner suburbs.We are not talking top elite, just the usual bbq talk you will have ..
just wanted to put this straight


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## banco (31 August 2014)

DB008 said:


> Anyone read last weekends Fin ?
> 
> Very interesting article about how Canada had problems with the Chinese buying up lots of their property and raising prices (up to 20% in 1 year).
> 
> I think that Australia should clamp down on foreign buyers snapping up our property. It, at the very least, should be a 2 way street (eg - Can I buy a house/apartment in Japan as a foreigner? No. Well, too bad, you can't buy here either. Can I buy in USA? Yes. Well, you can buy here. Why shoot ourselves in the foot?)




I just wish the various commentators who say foreigners can only buy new properties etc. under the law would STFU.  The Foreign Investment Review Board has admitted these rules are completely unenforced.


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## FxTrader (1 September 2014)

banco said:


> I just wish the various commentators who say foreigners can only buy new properties etc. under the law would STFU.  The Foreign Investment Review Board has admitted these rules are completely unenforced.



True enough.  No doubt existing and especially new property owners welcome this influx of foreign investment in our residential property market, billions are at stake if the price bubble collapses.  As for future local aspirants hoping to buy a house one day, STFU or become politically activist because entrenched, well established policies favor the status quo and very few politicians (many of whom are property investors themselves) have any real interest in the housing affordability issue (yet).

The insanity continues, would you pay 2 million for this, even as a developer?...
http://www.theage.com.au/victoria/rotting-richmond-house-to-sell-for-millions-20140831-10ams7.html


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## Value Collector (1 September 2014)

FxTrader said:


> The insanity continues, would you pay 2 million for this, even as a developer?...
> http://www.theage.com.au/victoria/rotting-richmond-house-to-sell-for-millions-20140831-10ams7.html




That's a pretty big block, I guess it comes down to how much the four townhouses would sell for once complete, I am not familiar with that area, But the quality of the existing house is meaningless if the all the value is tied up in the land.

There is certainly areas around Sydney where even a vacant block would be worth well over $2million, I am guessing Melbourne would be the same.


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## kid hustlr (1 September 2014)

http://smh.domain.com.au/real-estate-news/strongest-winter-for-property-since-2007-20140901-10atrf.html

Major capital cities still strong.

Been a lot of negativity towards house prices in this thread over the past few years and whilst some very good arguments have been made, you can't argue with results.


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## Smurf1976 (1 September 2014)

kid hustlr said:


> Been a lot of negativity towards house prices in this thread over the past few years and whilst some very good arguments have been made, you can't argue with results.




Can't argue with the facts but they defy logic especially in the smaller cities.

Perth up 3.5% despite the mining boom winding down.

Adelaide up 5.9% whilst the SA economy struggles and more job losses (eg Holden) are known to be virtually guaranteed in the years ahead.

The only one that makes any real sense is Canberra, where the 1.4% rise is below CPI, in a city where the largest employer (public service) is having significant job cuts. Also possibly Hobart where the 2.8% rise, roughly in line with overall inflation, in a economy that could best be described as "muddle through".

Sydney's 16.2% sure isn't backed by anything solid. Wages, economy, population - none of it is growing anywhere near that fast and it's not as though there's any sort of major, transformational development on the cards either (and it's pretty hard to do something transformational in a city that size, easier somewhere like Darwin or Hobart but not Sydney).


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## Quincy (2 September 2014)

Smurf1976 said:


> Sydney's 16.2% sure isn't backed by anything solid. Wages, economy, population - none of it is growing anywhere near that fast and it's not as though there's any sort of major, transformational development on the cards either (and it's pretty hard to do something transformational in a city that size, easier somewhere like Darwin or Hobart but not Sydney).




The two word response to your above question regarding Sydney (generally) is "Chinese buyers".




> Around 10 million of the wealthiest Chinese families, or around one in seven, are interested in migrating to Australia, according to a survey conducted by the broker. And home ownership in a desirable destination country is “a key reason” for the flood of money coming into the Sydney and Melbourne property markets



http://www.smh.com.au/business/prop...o-continue-20140815-104bpj.html#ixzz3C7h4R71g




> Chinese nationals 'illegally' buying luxury Australian real estate are forcing prices up by 30 per cent, leading agent claims



http://www.dailymail.co.uk/news/art...cing-prices-30-cent-leading-agent-claims.html




> Chinese rush for Australia's homes is here to stay



http://www.smh.com.au/business/chin...as-homes-is-here-to-stay-20140806-100vnc.html




> 10 million Chinese buyers look to buy Australian homes



http://www.heraldsun.com.au/news/vi...042127068?nk=7d82ce93586163573246cbb452c9f31b




> However fears that the surge in money from China could overwhelm the local market have become inflamed in recent months following the *publication in March by investment bank Credit Suisse of a report forecasting Chinese nationals would buy around $44 billion in residential real estate over the next seven years.



http://www.afr.com/p/business/property/house_price_pain_shifts_spotlight_Bj2VOVa9YQWnooX4R2T8VL


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## Value Collector (2 September 2014)

Smurf1976 said:


> Perth up 3.5% despite the mining boom winding down.




Even in a city of static population growth, 3% should roughly be the norm, that pretty much just takes Inflation into account.

In a city that is growing its population either organically or through immigration you will see the price of land rising faster than the 3% inflation rate.

The price of land can grow faster than wages if the population is growing and density is increasing, eg if you can fit more households onto a block by building town houses or apartments, then the price of that block can go up without the wages of the households increasing at the same rate.

also the prices tend to stall and surge, so a surge of 16% in Sydney, may just be playing catch up from slow or no growth a few years earlier, or if it has over shot, a stall my take place, But in general it should offer a sound hedge against inflation, while also producing income or offsetting rent if you live in it.


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## Quincy (2 September 2014)

Value Collector said:


> Even in a city of static population growth, 3% should roughly be the norm, that pretty much just takes Inflation into account.
> 
> In a city that is growing its population either organically or through immigration you will see the price of land rising faster than the 3% inflation rate.
> 
> ...




What you are saying makes sense "on paper" - but normal economic principles are out the window now (see my above post - 2 posts above - regarding Sydney).


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## DB008 (2 September 2014)

*House price correction inevitable, warns David Gonski*



> ANZ chairman David Gonski says a correction in the housing market is inevitable amid growing concerns that soaring house price growth in the capital cities risks further inflating a property bubble in Australia.
> 
> After new statistics this week showed that house price growth accelerated in the past three months, Mr Gonski said in Melbourne today that all the banks “are very aware of history”.
> 
> ...




http://www.theaustralian.com.au/business/property/house-price-correction-inevitable-warns-david-gonski/story-fn9656lz-1227045173078


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## sptrawler (2 September 2014)

DB008 said:


> *House price correction inevitable, warns David Gonski*
> 
> 
> 
> http://www.theaustralian.com.au/business/property/house-price-correction-inevitable-warns-david-gonski/story-fn9656lz-1227045173078




It will be interesting to see what Glen Stevens does.
He has indicated, he believes a further drop in interest rates won't improve the situation.
If as he says, the government needs to enact change to stimulate growth, it will be interesting to see which way interest rates go.
Lets not forget, the RBA cranked up interest rates, when Labor were sending out cheques to all and sundry.


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## Mrmagoo (2 September 2014)

It is fairly obvious the RBA are corrupt. I mean they dropped rates when the economy was booming causing a housing boom. I bet they all had bought shares in the CBA and bought properties knowing full well everything was going to boom. 

Australia must be among the most corrupt nations in the world. So corrupt our corruption is ignored. So corrupt it has been written in the letter of the law that corruption is now legal


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## Value Collector (3 September 2014)

Mrmagoo said:


> It is fairly obvious the RBA are corrupt. I mean they dropped rates when the economy was booming causing a housing boom. I bet they all had bought shares in the CBA and bought properties knowing full well everything was going to boom.
> 
> Australia must be among the most corrupt nations in the world. So corrupt our corruption is ignored. So corrupt it has been written in the letter of the law that corruption is now legal




Only mining was booming, the high interest rates caused the aussie dollar to rise and put pressure on manufacturing. Interest rates were dropped to protect the rest of the economy.

Magoo, the world is not against you, you need to not be so negative, you'll never get anywhere.


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## satanoperca (3 September 2014)

This seems to have become common in the media of lately :



> The palatial bayside home that served as the contestant compound for the hit TV show MasterChef has been whipped off the market by an offshore investor.
> 
> Sources understand the purchaser is a* China-based investor.*



.

Where is FIRB on this. Shouldn't the RE be taken to task?

When are our elected officials going to represent the citizens of this country and our societies best interest?

How does selling a home to a foreigner help our society?

Treason is the only word that comes to mind.

Hang the bankers, politicians and the RE agents and start again.


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## Mrmagoo (3 September 2014)

Value Collector said:


> Only mining was booming, the high interest rates caused the aussie dollar to rise and put pressure on manufacturing. Interest rates were dropped to protect the rest of the economy.
> 
> Magoo, the world is not against you, you need to not be so negative, you'll never get anywhere.




The establishment is against my generation.


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## tech/a (3 September 2014)

Yeh it was against mine in the 80s

Interest 18%


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## kid hustlr (3 September 2014)

People continue not to get it.

For those who sat on the side lines for the last 2 years waiting for the impending doom before buying. What now?


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## Mrmagoo (3 September 2014)

tech/a said:


> Yeh it was against mine in the 80s
> 
> Interest 18%



 wish they were that now they should be


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## Value Collector (3 September 2014)

Mrmagoo said:


> The establishment is against my generation.




You and I are probably the same generation, how old are you?

who is the establishment?


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## Value Collector (3 September 2014)

Mrmagoo said:


> wish they were that now they should be




why is that, all it would do is make our dollar go through the roof, destroy the Australian export industry and make all other non cash investments unviable.


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## Mrmagoo (3 September 2014)

Value Collector said:


> why is that, all it would do is make our dollar go through the roof, destroy the Australian export industry and make all other non cash investments unviable.




It would be ****ing awesome, people who work for a living would be rewarded, those who borrow would be punished. Excellent system. 18% interest rates for the win !

These days you are either credit leveraged.

Or part of the corrupt union/government/credit consortium to demand unsustainable high wages. i.e why minor pay rises for people in actual industries are a big deal and the union construction companies are on something like 60 dollars an hour plus a list of entitlement 4 pages long, all paid for on the international credit card.


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## Smurf1976 (3 September 2014)

Value Collector said:


> so a surge of 16% in Sydney, may just be playing catch up from slow or no growth a few years earlier, or if it has over shot, a stall my take place, But in general it should offer a sound hedge against inflation, while also producing income or offsetting rent if you live in it.




If you look at Sydney then it's more like a surge after a surge. Prices were high to start with, now they're higher.

It's a bit like saying it's going to be 40+ degrees for a week in January. OK so far, but somewhat extreme if every other day in the past two months was also 40+ degrees. Normally, you expect a cooler period between heatwaves but we haven't really had that with property prices at least in the faster growing areas.

Agreed though that in the long term property ought to be an effective hedge against inflation and that it does provide income. It's a real, tangible asset after all and if it's in a city then it won't become redundant (unlike, say, a mining town with no other industries where property ends up effectively worthless when the mine closes).


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## banco (3 September 2014)

tech/a said:


> Yeh it was against mine in the 80s
> 
> Interest 18%




For 6 months on your $50,000 house.


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## Mrmagoo (3 September 2014)

banco said:


> For 6 months on your $50,000 house.




Less than 50k... you gotta remember, working classes houses existed too ! Only t hey were purchased by working class people. For reference my parents bought their 2nd home in the early 90s for $60,000. Outer suburban family home...


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## pixel (4 September 2014)

tech/a said:


> Yeh it was against mine in the 80s
> 
> Interest 18%




Honestly, I didn't see it as "against me" at all. Rather an opportunity.

At the time of 18% mortgage rates, I happened to be changing jobs, which included a move from a small town into the City. The old place I had to leave, we had bought for under $20k, spent mostly elbow grease and the wife's designer talents to do up, and sold it for 100%+ profit. But instead of buying a big house in the new City, loading ourselves with a $50k mortgage at 18%, we rented for a few years and invested our cash at close to 18%. OK, the Crash of October 87 helped: The week after, I bought RIO (or CRA as it was then) for $5.85; also loaded up on some promising IPOs, e.g. WAN for $1. All the while paying about 4% "interest" in rent.

Was I part of the maligned "Establishment"? Definitely not! We simply did our sums, made the most of the situation, and bought the next house *mortgage-free* with the money saved, plus profits made when an opportunity presented itself.


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## Value Collector (4 September 2014)

Mrmagoo said:


> It would be ****ing awesome, people who work for a living would be rewarded, those who borrow would be punished. Excellent system. 18% interest rates for the win !
> 
> These days you are either credit leveraged.
> 
> Or part of the corrupt union/government/credit consortium to demand unsustainable high wages. i.e why minor pay rises for people in actual industries are a big deal and the union construction companies are on something like 60 dollars an hour plus a list of entitlement 4 pages long, all paid for on the international credit card.




Where would the workers be working??? The Australian dollar would go so high local businesses would be shutting down left right and centre, the mining industry would be killed, 

The only people being rewarded would be those who stock pile cash, no other investment would be viable, why risk starting a business and employing people when you can earn 18%, no investment no jobs.


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## prawn_86 (4 September 2014)

pixel said:


> Was I part of the maligned "Establishment"? Definitely not! We simply did our sums, made the most of the situation, and bought the next house *mortgage-free* with the money saved, plus profits made when an opportunity presented itself.




While I like the strategy and love the story due to the fact that the house to income multiple has increased dramatically this is now much harder to achieve. Even if the average household could save 20k per year after tax(which I think is unlikely) its still going to take them 15 or so years to save enough to buy the average house at todays prices


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## tech/a (4 September 2014)

banco said:


> For 6 months on your $50,000 house.




Was $70 k and wage was $450 a week
Not the 5.5 % now and an average wage of $1200 a week.

Whingers!

Every generation has crosses the bare.
You can take what seems to be the easy road or knuckle down
And slug out the harder road.
It's not until your my age you see lost/wasted opportunity.


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## Julia (4 September 2014)

pixel said:


> Honestly, I didn't see it as "against me" at all. Rather an opportunity.
> 
> At the time of 18% mortgage rates, I happened to be changing jobs, which included a move from a small town into the City. The old place I had to leave, we had bought for under $20k, spent mostly elbow grease and the wife's designer talents to do up, and sold it for 100%+ profit. But instead of buying a big house in the new City, loading ourselves with a $50k mortgage at 18%, we rented for a few years and invested our cash at close to 18%. OK, the Crash of October 87 helped: The week after, I bought RIO (or CRA as it was then) for $5.85; also loaded up on some promising IPOs, e.g. WAN for $1. All the while paying about 4% "interest" in rent.
> 
> Was I part of the maligned "Establishment"? Definitely not! We simply did our sums, made the most of the situation, and bought the next house *mortgage-free* with the money saved, plus profits made when an opportunity presented itself.



Hallelujah!!   Exactly.   The actual interest rate wasn't really relevant when considered in the whole context.
I was paying 22% (in NZ on second mortgage on IPs) but the capital gain and high rents more than compensated.  As pixel says 100% in a fairly short time was very possible.  Many more people could have done it but saw the high interest rate as an insurmountable hurdle and walked away without completing the whole projected calculation.



prawn_86 said:


> While I like the strategy and love the story due to the fact that the house to income multiple has increased dramatically this is now much harder to achieve. Even if the average household could save 20k per year after tax(which I think is unlikely) its still going to take them 15 or so years to save enough to buy the average house at todays prices



Agree, prawn.  It was a fairly rare opportunity back in the 80's and to make the most of it required willingness to borrow quite heavily.  I'd be surprised if we - at least here in Australia - ever see inflation at that level again.

There are nevertheless smaller pockets of opportunity every now and again, viz during the credit squeeze of a few years ago 8% on term deposit.


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## Value Collector (4 September 2014)

prawn_86 said:


> its still going to take them 15 or so years to save enough to buy the average house at todays prices




why would they want to save up the full purchase price, you only need to save a deposit.

I mean if you don't buy a house your going to have to pay rent anyway, so you only have to save enough deposit to get into the house and then you can use your normal rental payments + the $20,000 / year savings to pay it off.


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## sydboy007 (4 September 2014)

Value Collector said:


> why would they want to save up the full purchase price, you only need to save a deposit.
> 
> I mean if you don't buy a house your going to have to pay rent anyway, so you only have to save enough deposit to get into the house and then you can use your normal rental payments + the $20,000 / year savings to pay it off.




But rental yields are lower than mortgage rates, and net rental yields are even worse.  As a home owner you're looking at paying out at least $3K a year for council / water / insurance / strata.  Repairs then need to be added on top of that.

If land inflation continues then the gearing inherent with buying a property can give a decent return on your money, but we went nearly a decade through the noughties in Sydney with no real property price growth.  Long time to wait for a profit, especially if you're negative gearing and loosing thousands every year.

With real wages growth negative, the ToT continuing to fall, I don't see income growth being strong for at least the next few years.  Unless foreigners continue to bid up the market I don't see how it's possible for house price growth to maintain the above income growth trajectory.


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## Smurf1976 (4 September 2014)

tech/a said:


> Was $70 k and wage was $450 a week
> Not the 5.5 % now and an average wage of $1200 a week.




Therein lies the problem. That house is probably worth $350 - 400K now at a rough guess, so 5 - 6 times what you paid for it. But wages are less than 3 times the amount they were back then. In real terms, house prices have increased greatly.

It works provided that interest rates stay around the present level for the next 20+ years, or if any rise in interest rates is matched by wages growth. 

That won't likely happen of course, we'll see all sorts of unexpected things happen over the next two decades, and there's the problem. But if something is already at an extreme, and that is certainly the case with today's low interest rates, then it's a brave move to literally bet the house that there won't be a trend reversal this side of 2030.

I'm not some whinger who missed out on the boom, I own my residence (outright) and have no debts of any kind whatsoever. But the current high debt / low IR model poses a major risk to the broader economy if the tide turns and interest rates start to rise. We'll see a degree of chaos if (when?) that happens.

Gut feeling says that it may well work out OK and that we'll "muddle through" but there's a risk that we won't manage to do that.


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## Value Collector (4 September 2014)

sydboy007 said:


> But rental yields are lower than mortgage rates, and net rental yields are even worse.  As a home owner you're looking at paying out at least $3K a year for council / water / insurance / strata.  Repairs then need to be added on top of that.
> 
> If land inflation continues then the gearing inherent with buying a property can give a decent return on your money, but we went nearly a decade through the noughties in Sydney with no real property price growth.  Long time to wait for a profit, especially if you're negative gearing and loosing thousands every year.
> 
> With real wages growth negative, the ToT continuing to fall, I don't see income growth being strong for at least the next few years.  Unless foreigners continue to bid up the market I don't see how it's possible for house price growth to maintain the above income growth trajectory.




If you have a decent deposit, the interest on the loan would be about the same or less than your rental payment, your $20k/ year savings can be used to clear principle and pay costs.

But that is just year one, no doubt rents will continue to increase with inflation, however your interest payments will be getting less every year as you pay down the loan. Your incomes will probably go up with inflation also, so the payments take up less and less of your earnings.

Eventually you'll own your home, and generation next will say you had it easy and the world has changed since 2015,


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## Value Collector (4 September 2014)

sydboy007 said:


> but we went nearly a decade through the noughties in Sydney with no real property price growth.  Long time to wait for a profit, especially if you're negative gearing and loosing thousands every year.
> 
> With real wages growth negative, the ToT continuing to fall, I don't see income growth being strong for at least the next few years.  Unless foreigners continue to bid up the market I don't see how it's possible for house price growth to maintain the above income growth trajectory.




You keep mentioning real price growth and real wages growth

Do you understand that your loan is not affected by inflation, so even if your income or asset price only increases by inflation, then that is a net benefit to you because your repayment won't increase with inflation.

Also, while your talking about "real" things, why not think about "real" interest rates eg, if your paying 5% on your loan and the inflation rate is only 3%, then the real cost of that loan is 2%, because while you actually pay 5% the capital value of the house will increase with inflation and offset a chunk of that interest! and not to mention the rent you are offsetting is affected by inflation also.

So all that time your saying sydney had no "real" wages or price growth, the only people that were not benefiting was the renters, because they had no inflation hedge, all wages growth was offset by increases in expenses, the home owners also had the wage increases, but didn't suffer the increased expenses to the same extent, and they had a chunk of their capital which was in a real asset providing a natural inflation hedge.


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## pixel (4 September 2014)

prawn_86 said:


> While I like the strategy and love the story due to the fact that the house to income multiple has increased dramatically this is now much harder to achieve. Even if the average household could save 20k per year after tax(which I think is unlikely) its still going to take them 15 or so years to save enough to buy the average house at todays prices




True, Dendrobranchiata - but only to an extent
The first home we bought was in a small town; it had 2 bedrooms and cost the equivalent of one year's gross income. No, my salary wasn't that exorbitant, but we didn't buy our first home in the "average" market bracket, but picked one that we knew we could afford. 
Not in a posh suburb.
No home theatre.
One poky bathroom.
...
We paid cash, and only accepted the company's 90% mortgage because the subsidised interest was lower than what we got in a term deposit. We didn't miss the Big City Life and found it quite amusing that the company volunteered an "incentive" to get us to move and settle 200k's away from Perth.

And then we got to work on renovations and extensions. First an entertainment area in the backyard, so we could have friends over for bush dances and barbecues. Some of them even helped putting a carport together, and turning the double garage into half workshop, half games room.

I'm sure there could be similar houses still on the market, at affordable prices, if first home buyers were prepared to compromise and invest their spare time into more productive endeavours than following each other on facebook and tweeting twaddle to other twits.
But maybe that only shows my age and fossil status


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## Mrmagoo (4 September 2014)

pixel said:


> I'm sure there could be similar houses still on the market, at affordable prices, if first home buyers were prepared to compromise and invest their spare time into more productive endeavours than following each other on facebook and tweeting twaddle to other twits.
> But maybe that only shows my age and fossil status




This is not correct. You are sure there are houses in the exact same situation as in 1980 but things have changed, that is, the reason we are calling it unaffordable is not because you can make minor compromises and pay it off with one years salary. If that were the case, houses would be affordable.


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## Julia (4 September 2014)

Value Collector said:


> If you have a decent deposit, the interest on the loan would be about the same or less than your rental payment, your $20k/ year savings can be used to clear principle and pay costs.
> 
> But that is just year one, no doubt rents will continue to increase with inflation, however your interest payments will be getting less every year as you pay down the loan. Your incomes will probably go up with inflation also, so the payments take up less and less of your earnings.
> 
> Eventually you'll own your home, and generation next will say you had it easy and the world has changed since 2015,






Value Collector said:


> You keep mentioning real price growth and real wages growth
> 
> Do you understand that your loan is not affected by inflation, so even if your income or asset price only increases by inflation, then that is a net benefit to you because your repayment won't increase with inflation.
> 
> ...



+1 to both above posts.


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## Mrmagoo (4 September 2014)

The rich get richer, the poor get poorer. That saving now just means you can one day borrow against a 5% deposit and the interest will be similar to rent (completely forgetting all other expenses of owning) is an indication of how sick our society has become.


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## Smurf1976 (4 September 2014)

Value Collector said:


> You keep mentioning real price growth and real wages growth
> 
> Do you understand that your loan is not affected by inflation, so even if your income or asset price only increases by inflation, then that is a net benefit to you because your repayment won't increase with inflation.




Bingo!

10% inflation and 13% interest on a small debt beats 2% inflation and 5% interest easily for that reason. The higher inflation rapidly erodes the real value of the debt - after a few years it becomes a truly trivial % of income even if you're paying 15%+ interest on it.

But if you've got low inflation, then you basically end up having to repay that debt as such without its' real value being inflated away. 

1980's - lower debt relative to wages but with a high interest rate such that loan repayments were a similar % of income to today. But after just a few years those repayments ended up being trivial as a % of a rapidly growing income. Nobody regularly gets 10% pay rises these days in the same or similar job, nor do they have the benefit of a trend of declining interest rates.

If someone bought at 17% interest rates and paid 50% of their income in mortgage repayments then within a few years that was under 25% of income and falling. A lot of people ended up making trivial repayments as a % of income within a decade, leaving the mortgage open only to avoid various bank fees etc. Nobody's likely to do that today, unless we see the RBA cut the cash rate to zero and there's a wages boom - possible but I doubt it.

If someone bought a property on 1 January 1990 then as a % of income their interest repayments would have dropped by about 52% just 4 years later. Eg keeping it simple and using 50% of income in 1990, it was down to just 24% of income in 1994 and 16% by the year 2000. In contrast, if they'd bought in 2003 then they were still paying 38% of their income in interest a decade later. A very different situation there. Note that I've used RBA inflation data as proxy for same job wages here, and mortgage interest rates from here http://www.loansense.com.au/historical-rates.html

The trend of interest rates after you buy, not the actual rate itself, determines the outcome. Easy if rates fall after you buy, the mortgage ends up as just another household bill and nothing to really worry about. But you're completely stuffed if you buy at 5% with a mortgage as a high % of the purchase price and then rates go up significantly. Whilst it hasn't happened yet, there's a very real risk that interest rates could rise from present levels well before wages catch up - even a 1% rise in IR's, a minor move by historical standards, will seriously stretch many borrowers today. Better hope we don't see multiple rises in the same day.....

Housing is somewhat unique as an expense for most consumers, but the only one where prices increasing is often seen as a good thing. Nobody's likely to cheer too much if food or petrol prices double as a % of income. Witness all the fuss about electricity costs in recent times - but it's still a minor expense compared to a high mortgage at low interest rates.


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## sydboy007 (4 September 2014)

Value Collector said:


> You keep mentioning real price growth and real wages growth
> 
> Do you understand that your loan is not affected by inflation, so even if your income or asset price only increases by inflation, then that is a net benefit to you because your repayment won't increase with inflation.
> 
> ...




I mention real income growth because that's what will allow someone to pay more for the house than you did.  I don't see how we can double the price to income ratio for the next generation like has occured in the last 25ish years.  Households are already at a 155%+ debt to income level on average.  I don't see that sustainable long term.  The next economic shock will cause a major shake out of the market.  In that case I'd prefer to be a renter able to cut their costs easier than someone with a mortgage.

You seem to be ignoring interest rates changing.  Pre GFC mortgage rates were a real 5.5% or more.  Rents were definitely not increasing at a rate to make that cost shock easier to deal with.  Real net rental yields in some parts of Sydney are close to 0 with a lot < 1%.  In my area a 3 BR house goes for around $850 a week and would be worth from $900K.  A 600K loan would set you back 3800 a month at 5%, bumping to 4388 at 6.5%.  A renter is up for $44.2K, the owner for $45.6K to $52.65K depending on interest rates, with another 3-4K in holding costs.  Borrow more and the cost differential starts to get larger very quickly

A renter investing the difference between renting and a mortgage into income producing assets would have access to inflation hedging.  They'd also be in a far more secure situation as selling shares / bonds is easier than a house.  Holding costs are pretty close to zero too.  depending on income level some salary sacrificing might also be a good option, once a decent buffer has been built up.


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## Value Collector (5 September 2014)

Mrmagoo said:


> The rich get richer, the poor get poorer. That saving now just means you can one day borrow against a 5% deposit and the interest will be similar to rent (completely forgetting all other expenses of owning) is an indication of how sick our society has become.




Interest will be equal to rent in first year, then decrease exponentially as the loan reduces, rent will increase exponentially with inflation. 

The expenses of owning are lower than the rent you pay, and interest as i pointed out is temporary, it reduces every year till its gone.


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## Value Collector (5 September 2014)

Some of you talk like property owner have to pay interest charges forever, the interest decreases over time.

And if your worried about rate rises, you can take a 5 year fixed rate, after five years your principle would have reduced and wages probably increased, so even if rates went up it's effect would not be so much because the principle would be lower, and wages increased.

You also don't have to go large from the start you can start in a smaller home or apartment.


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## sptrawler (5 September 2014)

Value Collector said:


> You also don't have to go large from the start you can start in a smaller home or apartment.




That's a novel thought these days.

That brings the reply "Why should we, why can't we and I'll super size it and add fries"


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## prawn_86 (5 September 2014)

Value Collector said:


> why would they want to save up the full purchase price, you only need to save a deposit.
> 
> I mean if you don't buy a house your going to have to pay rent anyway, so you only have to save enough deposit to get into the house and then you can use your normal rental payments + the $20,000 / year savings to pay it off.




 was comparing to Pixels post where he saved and bought a house outright


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## Mrmagoo (5 September 2014)

Value Collector said:


> Interest will be equal to rent in first year, then decrease exponentially as the loan reduces, rent will increase exponentially with inflation.
> 
> The expenses of owning are lower than the rent you pay, and interest as i pointed out is temporary, it reduces every year till its gone.




Ah okay, please show me the law which says this ?

Because my place is $300 a week in rent and the interest on it would be $330 a week, plus 70-100 a week for body corporate and rates ect.. plus maintenance, which as a tenant I don't pay for so I'm interested when the government will force me  to pay this difference.


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## Mrmagoo (5 September 2014)

Or better yet those Sydney properties with extremely low yields where the bank will just refund the difference !


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## Mrmagoo (5 September 2014)

sptrawler said:


> That's a novel thought these days.
> 
> That brings the reply "Why should we, why can't we and I'll super size it and add fries"




The point is that those properties are unaffordable. Investors buy them because they were cheap, forcing up the prices.

How a forum of people who buy stocks can't understand that additional buyers = higher prices is beyond me.


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## Value Collector (5 September 2014)

sptrawler said:


> That's a novel thought these days.
> 
> That brings the reply "Why should we, why can't we and I'll super size it and add fries"




On that point I agree, A lot of people aim to buy to big, they also aim to rent to big, and when they rent to big, they get discouraged because they are un able to save because of large rent payments, and they know they could never afford to buy the home.


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## Value Collector (5 September 2014)

Mrmagoo said:


> Ah okay, please show me the law which says this ?
> 
> Because my place is $300 a week in rent and the interest on it would be $330 a week, plus 70-100 a week for body corporate and rates ect.. plus maintenance, which as a tenant I don't pay for so I'm interested when the government will force me  to pay this difference.




I said if you put a decent deposit down your interest payment should be about 1 year, $30 difference is pretty close, But what size deposit did you use in your calculation? If you were concerned just save for a few more months and put a large deposit.

But even if your interest was $330 and rent $300, that $330 interest will be getting less and less each year and the $300 rent would be going up.

It's up to you, but I would rather be on the side where my costs reduce each year down to a nominal rate, rather than the side where they will continue to increase forever.


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## Value Collector (5 September 2014)

Mrmagoo said:


> How a forum of people who buy stocks can't understand that additional buyers = higher prices is beyond me.




Investors also help bring more stock to market, many development projects would not get off the ground if investors hadn't purchased off the plan, or investors knocking down old houses and rebuilding duplexes of town houses, or investors subdividing horse paddocks etc.


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## sptrawler (5 September 2014)

Mrmagoo said:


> Ah okay, please show me the law which says this ?
> 
> Because my place is $300 a week in rent and the interest on it would be $330 a week, plus 70-100 a week for body corporate and rates ect.. plus maintenance, which as a tenant I don't pay for so I'm interested when the government will force me  to pay this difference.




I understand your frustration Mrmagoo, however if someone purchases something they can afford, then when their equity improves sell it and upgrade.
If people chose to keep renting, eventually time runs out for them, as baby boomers who are nearing retirement, are finding out.
Some of my friends are in a terrible situation.


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## Mrmagoo (5 September 2014)

Value Collector said:


> I said if you put a decent deposit down your interest payment should be about 1 year, $30 difference is pretty close, But what size deposit did you use in your calculation? If you were concerned just save for a few more months and put a large deposit.
> 
> But even if your interest was $330 and rent $300, that $330 interest will be getting less and less each year and the $300 rent would be going up.
> 
> It's up to you, but I would rather be on the side where my costs reduce each year down to a nominal rate, rather than the side where they will continue to increase forever.




Okay your calculations are wrong. Im not arguing this they are factually wrong.


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## sydboy007 (5 September 2014)

Value Collector said:


> Investors also help bring more stock to market, many development projects would not get off the ground if investors hadn't purchased off the plan, or investors knocking down old houses and rebuilding duplexes of town houses, or investors subdividing horse paddocks etc.




90% of "investors" buy pre exisiting properties, so the benefit they provide is well and truly out weighed by the increase in demand when supply is so restricted.

https://www.youtube.com/watch?v=o6udqn_tOlA

Bob Day did his maiden speech and focused on youth unemployment and the craziness of house prices in Australia.

The single most important factor affecting housing affordability has been land. In no other area of the economy has the interference of government been so pronounced, so unsuccessful in its implementation and so catastrophic in its effect. The deliberate policy to limit urban growth””that is, limiting the supply of land on the urban fringes of our cities by introducing urban growth boundaries and, at the same time, promoting urban densification””has been a disaster socially, economically and environmentally. And it was all designed for one purpose: to make money. It had nothing to do with the environment, the cost of infrastructure, public transport or any other reason put forward.

Land developers, in cahoots with state government land management agencies, have made billions of dollars and, at the same time, ruined the home ownership prospects of a whole generation of young Australians. If there is one commodity Australia is not short of, it is land. Yet, to buy a block of land on which to build their first home, young couples are forced to camp out overnight by rent-seeking land developers and their state government cronies for the privilege of paying an exorbitant amount of money for a measly one-tenth of an acre of former farmland””land that developers and state governments between them managed to convert from $10,000 a hectare to $1 million a hectare. It leaves all other forms of price gouging in its wake. When challenged about this and asked, ‘Why are you letting this happen?’, a senior state government politician admitted, ‘We need the money.’ It is why politicians are so easily captured and conned by the constant procession of rent-seeking crony capitalists whose job it is is to enrich one group of Australians””themselves””at the expense of another: first homebuyers. Rent seekers are the scourge of business and politics. They tarnish the political process, distort the market and, in the case of land development, distort the entire economy.

The second barrier is the proliferation of federal, state and local government planning and building controls, which add cost, confusion and delay. Let me give you one example. A few years ago I bought a block of land on a very busy main road in one of Australia’s capital cities. I submitted plans to the local shire council to build 12 semidetached home units on the land and, as the zoning allowed for such a development, I did not expect any problems. That was, of course, until I came up against the shire council town planner, who said he would recommend the development for approval subject to the provision of noise attenuation devices across the front of the property. ‘Noise attenuation’ is a fancy name for soundproofing.

I tried to point out to him that there were thousands of kilometres of main roads across the country with many hundreds of thousands of dwellings along them and that it seemed to work in most places without sound attenuation. In any event, I told him that the project was actually geared towards older people, many of whom prefer the noise of traffic and pedestrians. They say they feel safer on a main road than in some quiet backstreet or cul-de-sac. But he was having none of it. He wanted his noise attenuation devices. Naturally, I tried commercial arguments on him, saying that people who did not like noise would not buy them and that the market would sort it out. But, for reasons known only to town planners but obscure to common sense, he rejected all my pleas and I had an acoustic engineer design a front fence to assist with noise attenuation.* No sooner had I finished the job than the royal society for the deaf bought the units””all 12 of them.* The point in telling that story is not just to mention the addition of unnecessary cost to say that there is no greater insult to the integrity of a human being than for the state to presume that it knows what is best for you.


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## Value Collector (5 September 2014)

sydboy007 said:


> A renter investing the difference between renting and a mortgage into income producing assets would have access to inflation hedging. .




Yes, depending on the underlying asset, eg cash based assets such as bonds would not offer the inflation hedge. 



> They'd also be in a far more secure situation as selling shares / bonds is easier than a house.




That is providing they ever got around to saving and buying the shares. Generally renters just fritter away most of the savings they make. home ownership is like a forced saving plan.


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## Mrmagoo (5 September 2014)

sptrawler said:


> I understand your frustration Mrmagoo, however if someone purchases something they can afford, then when their equity improves sell it and upgrade.
> If people chose to keep renting, eventually time runs out for them, as baby boomers who are nearing retirement, are finding out.
> Some of my friends are in a terrible situation.




That is the point. What is affordable these days ? Nothing more or less. Even small units far out cost a bomb especially for what they offer.


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## sptrawler (5 September 2014)

Mrmagoo said:


> That is the point. What is affordable these days ? Nothing more or less. Even small units far out cost a bomb especially for what they offer.




That's true, but history does show that the capitalist system requires inflation to function.
It is a bit like Value Investor says, even if there is a correction, it won't go back to what it was 10 years ago.
This is because wages, prices and therefore underlying value has increased.

It is always difficult, but depending on a persons age, the old motto of the worst house in the best street still holds true


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## Value Collector (5 September 2014)

sydboy007 said:


> 90% of "investors" buy pre exisiting properties, so the benefit they provide is well and truly out weighed by the increase in demand when supply is so restricted.
> 
> .




that's not the important thing, because even existing properties can be converted to duplexes, knocked down and rebuild as town houses etc.

The important thing is how much of new development is funded directly or indirectly by investors, eg buying an existing property from a developer allows the developer to develop another property etc,





> If there is one commodity Australia is not short of, it is land.




and land is cheap outside of the capital cities, How does the fact that Australia has abundant land help Sydney house prices when 3million + people are hell bend on squeezing into a section of land boxed in by the ocean to the east, mountains to the west, and national park north and south.

Try it yourself, go invest in  sub dividing some land 100Km west of bourke and see how you go


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## prawn_86 (5 September 2014)

http://www.smh.com.au/comment/sydne.../02/2014-edtrs_socialshare-all-nnn-nnn-vars-o

Doesnt reference the statistics, but states that houses in Sydney now take 9 times the average salary, when it was 3 times not that long ago.

So in real terms, not matter what way you slice it, affordability has gone down.


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## Value Collector (5 September 2014)

prawn_86 said:


> So in real terms, not matter what way you slice it, affordability has gone down.




it also depends what they are using to measure as a house, In a city with an expanding population land will increase faster than wages growth, because as the population grows housing becomes more dense, more dwelling fit on each block of land. So if the measurement is being taken using a house and land it may be false.

Also the average household has a large number of wage earners these days. in the past there was a greater number of single income households, as the number of households with double incomes increases, families will bid more to secure a house, this leads to higher prices.

On top of that the average new home build has a lot more features than the average home build 30 years ago, it's larger, with more mod cons, 

Compare the homes that are built today with the ones you grew up in. all these things add up.


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## kid hustlr (5 September 2014)

What about the risk of being *wrong*. You sit out of the market and it doesn't drop. Now prices are higher and your rent bills are going up. Not having atleast one property could be considered a risk.

What about the fact that despite all your metrics on valuation its possible your timing is *wrong*. If there are people willing to pay higher prices they will buy it. No one knows when the tipping point will be.

There has been a lot of doubters and nay sayers about property in this thread over the past few years. They make good points. real wages, real incomes, income to price ratios etc etc, they are all true, but if the market is willing to pay more for house prices, spend more of their disposable income on a mortgage and live that dream then so be it. your analysis is *wrong*

A well planned, well executed property investment 2,3,4 years ago would have provided a return better than almost any other option. Add to that value add techniques or actually having the ability to subdivide etc and I'd say theres plenty out there who have proven the skeptics *wrong*.


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## sptrawler (5 September 2014)

kid hustlr said:


> What about the risk of being *wrong*. You sit out of the market and it doesn't drop. Now prices are higher and your rent bills are going up. Not having atleast one property could be considered a risk.
> 
> What about the fact that despite all your metrics on valuation its possible your timing is *wrong*. If there are people willing to pay higher prices they will buy it. No one knows when the tipping point will be.
> 
> ...




All very true, but as has been pointed out the only areas that have really sky rocketed are capital cities. 
Those that are not in the housing market, may have to look further afield and consider travelling. 
This may have to be the case for retirees also, those nearing retirement may have to look at prices in country towns with facilities.

As time runs out so do options, as you say sitting on the sidelines waiting for a correction, is risky. One has to have a plan 'B' .


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## sydboy007 (5 September 2014)

Value Collector said:


> that's not the important thing, because even existing properties can be converted to duplexes, knocked down and rebuild as town houses etc.
> 
> The important thing is how much of new development is funded directly or indirectly by investors, eg buying an existing property from a developer allows the developer to develop another property etc,
> 
> ...




But the stats show that 90% of investors are buying pre existing dwellings.  If you are buying a property from a developer I would consider that to not be a pre existing dwelling.  Developers do not build properties with the goal of holding onto them.  They want a sale as fast as possible.  over 50% of the property sales in NSW have been to investors for a large chunk of the year.  That's not a sustainable or rational market.  FOMO is what's driving first home buyers to camp out for a few nights to get a $500K block of land on the city fringe.  How is that affordable?

So unless investors are actually providing the capital for developers to bring new apartments and houses onto the market, all they're really doing is using NG and probably their existing primary residence as a way to out bid first home buyers and those looking to trade up / down.


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## Value Collector (5 September 2014)

sydboy007 said:


> But the stats show that 90% of investors are buying pre existing dwellings.  If you are buying a property from a developer I would consider that to not be a pre existing dwelling.  Developers do not build properties with the goal of holding onto them.  They want a sale as fast as possible.  over 50% of the property sales in NSW have been to investors for a large chunk of the year.  That's not a sustainable or rational market.  FOMO is what's driving first home buyers to camp out for a few nights to get a $500K block of land on the city fringe.  How is that affordable?
> 
> So unless investors are actually providing the capital for developers to bring new apartments and houses onto the market, all they're really doing is using NG and probably their existing primary residence as a way to out bid first home buyers and those looking to trade up / down.




yes but picture this, A developer sells a property off the plan to an investor, which allows the development to go ahead 18months later once the property is built the original "off the plan" investor flips the property to another "buy and hold" investor. If that transaction were the only transaction the figures would say 50% of investors buy existing, even though both transactions were part of bringing that 1 new rental property to market. So the figures can be off.

Also an investor may buy an existing property, and convert it to a duplex or town houses, yes he bought an existing, but he also added to supply.

But all that doesn't even matter, because your focusing on the wrong number, what counts is not what percentage of investors buy existing compared to new, what counts is what percentage of the new supply is created by investors.

Existing home sales make up a much larger portion of the total sales than do new sales, So if 90% of total sales are existing home sales, you would expect that 90% of investors are buying existing homes. If new home sales only make up 10% of total sales you can't expect all of the investor purchases to be limited to that 10% of the market.


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## Mrmagoo (5 September 2014)

kid hustlr said:


> What about the risk of being *wrong*. You sit out of the market and it doesn't drop. Now prices are higher and your rent bills are going up. Not having atleast one property could be considered a risk.
> 
> What about the fact that despite all your metrics on valuation its possible your timing is *wrong*. If there are people willing to pay higher prices they will buy it. No one knows when the tipping point will be.
> 
> ...




How about buying a place to live in when the time is right for you and not as some get rich quick scheme which deprives others of a home.


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## Julia (5 September 2014)

kid hustlr said:


> What about the risk of being *wrong*. You sit out of the market and it doesn't drop. Now prices are higher and your rent bills are going up. Not having atleast one property could be considered a risk.
> 
> What about the fact that despite all your metrics on valuation its possible your timing is *wrong*. If there are people willing to pay higher prices they will buy it. No one knows when the tipping point will be.
> 
> ...



Good point.

The whole question also goes to attitudes and expectations.  eg Mr Magoo, you're consistently critical and negative.  If you're trying to buy a place in Sydney that's pretty understandable, but what are you doing to improve your situation?   eg are you sharing your rental place with at least one other person, maybe more?
Are you prepared to take a second job?

Every generation has its advantages and disadvantages.  If you took a cross section of the population at any given time, placed them all in an identical environment, gave them all an equal amount of capital, I'd be very surprised if at the end of, say, a decade or two, some had not done extremely well whilst others had nothing.

Even just reading through this thread, a couple of people are always negative, can see no viable opportunities, are focused entirely on how difficult their situation is.  But others can see a way round an apparent negative, find an opportunity, and have the self belief and initiative to put that opportunity to use.

If you compare the generation who are the parents of the baby boomers, they'd come through the stresses and deprivations of war, many of the men fighting overseas, prisoners of the Japanese etc, and determined on their return home to create a better life for their children.   The only credit most of them knew was in the form of a mortgage for that all important family home.  They saved until they could afford to buy what they needed, made do with second hand furniture.  There was a culture of "if you don't work hard you won't get anywhere" and most of all a culture of saving, not just to acquire appliances, a car etc., but also for a sense of security.

My early childhood was spent in a pleasant suburban house with extensive garden in a good area.  Parents both worked in professional practices.   When I was 8 they decided there would be more money to be made in a business so they threw in their comfortable middle class existence and bought a six day, 15 hours a day corner store, where my father was up at 3.30am to go to the markets for produce to stock the shop.   

We moved into the old rundown accommodation behind the shop.  The suburb was pretty awful also.
I was expected to help, including working in the shop.  The only vehicle was a run down old truck for transporting produce.  The entertainment the radio.

But the hard work and adjustment of attitude produced a healthy income and a build up of good will which allowed the business to be sold for an excellent profit.  And so on through several more businesses, until the target was reached and we returned to suburbia and my father back to his original career.

There was nothing unusual about such a path.   They did what they needed to achieve their goals.

It just seems such a huge contrast to me looking at the current gen Y, who I rarely see without a container of take away coffee in their hands:  say $5 twice a day, = $50 p.w.
And no one is without the latest electronic device, most expect to travel extensively before thinking about a house deposit, take for granted going out where cocktails are $15 each, must have latest fashion etc.

That's fine.  It's enjoyable to have all that.  But sometimes, if you want something enough, you might have to change your priorities, be prepared to compromise on that oh so desirable area or choose a small flat as a starter rather than your four bedroom house or smart inner city apartment.


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## FxTrader (5 September 2014)

Value Collector said:


> and land is cheap outside of the capital cities, How does the fact that Australia has abundant land help Sydney house prices when 3million + people are hell bend on squeezing into a section of land boxed in by the ocean to the east, mountains to the west, and national park north and south.



Capital cities are were the majority of wealth and opportunity are concentrated, the crowding effect will only intensify and keep upward pressure on house prices. 

Land release and use policies are a significant factor for house prices but urban sprawl will turn out to be a failed development model due to the cost of fuel in the future.  Unless fringe suburbs are blessed with excellent public transport the cost of commuting to them will eventually become uneconomic for many.


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## Value Collector (5 September 2014)

FxTrader said:


> Capital cities are were the majority of wealth and opportunity are concentrated, the crowding effect will only intensify and keep upward pressure on house prices.
> 
> .




Yes, that was the point I  was making. Another poster was suggesting that the fact Australia has so much land, land prices shouldn't be so high, I was making the point that the vast amounts of Australia with little development do not at all reduce the pressure on Sydney house prices.

eg.  the fact that this exists.

http://www.realestate.com.au/property-house-nsw-bourke-111035035

won't reduce the price of this,

http://www.realestate.com.au/property-house-nsw-willoughby-117578747


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## Mrmagoo (5 September 2014)

Julia said:


> Good point.
> 
> The whole question also goes to attitudes and expectations.  eg Mr Magoo, you're consistently critical and negative.  If you're trying to buy a place in Sydney that's pretty understandable, but what are you doing to improve your situation?   eg are you sharing your rental place with at least one other person, maybe more?
> Are you prepared to take a second job?
> ...



Those are the gen y you chose to notice as you are rich were born well off and so are they. Your story really just tells me you dont know how the other half (particulary gen y) live and there is nothing wrong with that anyway, who wants to be poor ? Poor is a bad.

You also dont get what improving your lot means either. You dont just go buy a house these days because someone on the i ternet said to buy one. You think the only way to work hard is to borrow a fortune ? Ps boomers were in their 20s in the 80s and 70s not the post war era...


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## banco (5 September 2014)

Julia said:


> It just seems such a huge contrast to me looking at the current gen Y, who I rarely see without a container of take away coffee in their hands:  say $5 twice a day, = $50 p.w.
> And no one is without the latest electronic device, most expect to travel extensively before thinking about a house deposit, take for granted going out where cocktails are $15 each, must have latest fashion etc.
> 
> .




You forgot the big screen TV in your list of cliches.


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## sydboy007 (5 September 2014)

Value Collector said:


> yes but picture this, A developer sells a property off the plan to an investor, which allows the development to go ahead 18months later once the property is built the original "off the plan" investor flips the property to another "buy and hold" investor. If that transaction were the only transaction the figures would say 50% of investors buy existing, even though both transactions were part of bringing that 1 new rental property to market. So the figures can be off.
> 
> Also an investor may buy an existing property, and convert it to a duplex or town houses, yes he bought an existing, but he also added to supply.
> 
> ...




The points I'm trying to make are:

* restrictive land use / zoning in capital cities makes land scarce and therefore more expensive

* NG / FHB grants / demand side policies meet restricted supply side policies.

* Demand is outstripping supply.  prices go up.

Investors are not really benefiting the rental market.  If most of them are buying relatively old housing stock and they're representing something like 50% of the market, then that extra demand is really only bidding up prices.

As for your duplex scenario, you've obviously not tried to do it.  I know some people in Sydney who bought tear down properties to build town houses on the large block and it was a 3 year process by the time they were able to start building.  NSW can take up to 119 months to rezone land!  I doubt investors looking to do this are a significant % of property investors.

We are in a relatively low inflation environment when compared to the pre mid 90s Australia, the level of borrowing to buy a basic dwelling is 2 to 3 times what it was 25+ years ago, and a lot of workers are receiving below CPI wage increases.  Over time inflation is not stealing away the borrowings like a lot of the home owners on this forum experienced - smurf summed it up quite nicely.  Workers aren't receiving 10 or 12 % pay rises each year so say after 5 years the level of income required for their mortgage isn't half to a third of what most home buyers are faced with today.

The politicians can't afford to fix the issue - as has been shown at the federal level a lot of them are heavily geared into property.  The boomers can't afford the issue to be fixed because they've used property as their main savings vehicle.  The banks can't afford the issue to be fixed because a large drop in property values would see their bad debts jump and the 2 LMI issuers would face a wipe-out.


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## Value Collector (5 September 2014)

sydboy007 said:


> The points I'm trying to make are:
> 
> * restrictive land use / zoning in capital cities makes land scarce and therefore more expensive
> 
> ...




Yes, I have actually converted a house into a duplex, albeit in Brisbane not Nsw


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## Value Collector (5 September 2014)

Mrmagoo said:


> Those are the gen y you chose to notice as you are rich were born well off and so are they. Your story really just tells me you dont know how the other half (particulary gen y) live and there is nothing wrong with that anyway, who wants to be poor ? Poor is a bad.
> 
> You also dont get what improving your lot means either. You dont just go buy a house these days because someone on the i ternet said to buy one. You think the only way to work hard is to borrow a fortune ? Ps boomers were in their 20s in the 80s and 70s not the post war era...




You might beable to charge julia with not understanding gen y, but I am gen y myself, and have personally found the last 10 years to be full of opportunity, and still can see opportunity everywhere.

Also I think julia was talking about the parents of the boomers


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## Mrmagoo (5 September 2014)

Value Collector said:


> You might beable to charge julia with not understanding gen y, but I am gen y myself, and have personally found the last 10 years to be full of opportunity, and still can see opportunity everywhere.




(You know I graduated right before the GFC hit right ? Lots of people either lost their jobs or had offers reneged).

There were people of each generation saying the same thing who did really well for themselves. If you have, good on you ! I don't envy success. But that is not a general statement about the economy or housing affordability in general and it doesn't mean the system should punish others for daring not to be successful as one individual declares they should be.

Most Gen Y I know have modest incomes of between 55-75k a year are tertiary qualified and VERY modest spenders compared to our parents. Of about 40 people I know me and two others are the only ones to break 100k. A lot of my friends just bounce from low paid contract to low paid contract. It must be depressing. You can't buy a house on a 55k-65k 12 month state of employment. It is not possible. 

They may buy a coffee in the morning, but most workplaces where you get paid a decent amount will provide coffee. 

That is the older half, the younger half are just ruined. There are not jobs and everything is expensive. I really feel sorry for them even if they do get a job there is usually no money in the budget for their pay rises.


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## sptrawler (5 September 2014)

Mrmagoo said:


> (You know I graduated right before the GFC hit right ? Lots of people either lost their jobs or had offers reneged).
> 
> There were people of each generation saying the same thing who did really well for themselves. If you have, good on you ! I don't envy success. But that is not a general statement about the economy or housing affordability in general and it doesn't mean the system should punish others for daring not to be successful as one individual declares they should be.
> 
> ...




Well it all sounds doom and gloom, I can't talk for the Eastern Seaboard, but Perth is supposed to be right up there in the unaffordable stakes.
However, you can buy a house on a triplex block less than 500m from the waterfront, the suburb is serviced by the main metro electrified rail system, for less than $400k.
Yet because of the percieved 'bad area' tag, no one is buying.
I would bet, in 10 years, gen y will be saying remember when.
One has to look past what everyone else is chasing, and find the gems everyone is overlooking, nothing has changed.
If it has amenity, ambiance, services, proximity to water eventually the money will want it.


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## ROE (5 September 2014)

The best time to buy a house to live in is when you can afford one, ignore
the bull and bear predictor.

Dont wait for a crash or correction it may comes but you maybe too old 
good if you can buy during down turn or correction or crash but dont wait

investing is different you need the number to stack up ... but it is always
a good time to buy when you can afford a place and call your own home.

you may have to alter your life style and sacrificed a bit in order to afford it but 
in the long  9/10 it will be worth it.

and it is not my advice it advice from the richest man in Babylon book 
and I heed his advice and it works out super


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## sydboy007 (5 September 2014)

sptrawler said:


> Well it all sounds doom and gloom, I can't talk for the Eastern Seaboard, but Perth is supposed to be right up there in the unaffordable stakes.
> However, you can buy a house on a triplex block less than 500m from the waterfront, the suburb is serviced by the main metro electrified rail system, for less than $400k.
> Yet because of the percieved 'bad area' tag, no one is buying.
> I would bet, in 10 years, gen y will be saying remember when.
> ...




The Median Multiple indicator, recommended by the World Bank and the United Nations, rates affordability of housing by dividing the median house price by gross [before tax] annual median household income). This indicator rates housing affordability on a scale of 0 to 5 with categories 3 and under being affordable. From 3 to 5 the categories are rated as moderate (3.1 to 4.0), serious (4.1 to 5.0) and severe unaffordability (5.1 and over).

So lets look at how that "less than $400K" property and just how affordable it is.

Lets make it $370K

So how many households would find that to be above the 3 times median household income level?  You'd need a household income of ~ 123K to make it into the affordability stakes.  You'd be somewhere in the mid 7th decile of household incomes ie 75% of households would find that property unaffordable.

So lets take a couple with a household income of $94K which is equivalent to them both earning the ~47K median income.  We're now getting close to 4 times income or nigh on the boundary of  serious unaffordability.

How about a median household income of $1330 a week.  That $370K property is up at 5.3 times income or severe unaffordability.

So what would be affordable for that median income family? Something under $210K.  A household at the boundary to the 5th decile would once again find that 210K at 3.9 times income.

How much housing is available at < $210k that has reasonable employment opportunities?


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## Julia (5 September 2014)

Mrmagoo said:


> Those are the gen y you chose to notice as you are rich were born well off and so re
> they. Your story really just tells me you dont know how the other half (particulary gen y) live



The above comment says a lot about how you completely distort the circumstances of people you don't know.
As Value Collector has pointed out, I was describing the circumstances of my parents, not myself.  After the war, when they married, they had literally nothing.  Both worked hack jobs while they acquired tertiary education, entirely via night study.  Not for a moment did they sit around and say, hell life's tough, but no way out of it.  The same parents ensured I worked through all school holidays.  One entire summer of six weeks spent in the local post office, before mechanisation, hand stamping every envelope that came in.  Complaints of wrist pain were dismissed with the injunction:  put up with it, you're working towards a goal.

You actually  p*** me off so much that I can hardly be bothered to respond to the rest of your post.
But however, you allege I  was born well off.  I'd say I was born of parents who knew what it was like to struggle, to have to work hard to make their way out of mediocrity.  

Why do you assume that I am 'rich'?   Even if that were true, which I don't believe it is at all, what do you know of what sacrifices I might have made to not be dependent on the Australian taxpayer in retirement?   I've been in my mid 30s without any money at all, no home, no job, so you will not tell me that I don't know what it's like to be poor.
I've just rejected the notion that that was my destiny, something you seem to embrace, and sought opportunities to get out of that situation.



> You also dont get what improving your lot means either. You dont just go buy a house these days because someone on the i ternet said to buy one.



For god's sake, do you really think someone a few generations ago just said to themselves, "let's go and buy a house," and voila, it happened.  What ridiculous, stupid rubbish.  On the contrary, people worked two and three jobs to accumulate the deposit for a house.



> You think the only way to work hard is to borrow a fortune ?



Where did I say that?  I talked about the time when people saved until they could afford what they needed.
At the same time, if there's a good opportunity to make money, it makes sense to borrow to increase into that position to maximise the profit.  

But you're so mired in your own misery that you can't see anything else but what you perceive as your own uniquely disadvantaged circumstances.

Meantime, others will continue to seek and use opportunities and you'll be left ever further behind with even more to whine about.
Good luck.


> Ps boomers were in their 20s in the 80s and 70s not the post war era...



Quite so.  If you read my post you would see I was referring to the parents of the boomers.



banco said:


> You forgot the big screen TV in your list of cliches.



Thank you so much banco.  I can always depend on you to find something to quibble about.
Much as above with Magoo, it's no wonder people don't bother joining in a discussion, when they know any genuinely related circumstance will elicit petty objections just for the sake of it.



Value Collector said:


> You might beable to charge julia with not understanding gen y, but I am gen y myself, and have personally found the last 10 years to be full of opportunity, and still can see opportunity everywhere.
> 
> Also I think julia was talking about the parents of the boomers



Yes, I was.  And your first paragraph above endorses what I said earlier about those who see opportunity where others see nothing but gloom.

Syd, you can quote figures to your heart's content, and if stats say the cost of property v average wage is more difficult than it was some while ago, I wouldn't dispute that.
All I'd say, however, is "why would you then be content to accept the average wage?   Why not think of some way to increase your income, even if it encompasses some hardship for a few years".

I note that Magoo has not responded to my query about whether he is prepared to share his accommodation in order to increase availability of saving for deposit on property, or for that matter, get a second job.
Obviously no obligation to make any such response, but the omission says plenty.


----------



## sptrawler (5 September 2014)

sydboy007 said:


> The Median Multiple indicator, recommended by the World Bank and the United Nations, rates affordability of housing by dividing the median house price by gross [before tax] annual median household income). This indicator rates housing affordability on a scale of 0 to 5 with categories 3 and under being affordable. From 3 to 5 the categories are rated as moderate (3.1 to 4.0), serious (4.1 to 5.0) and severe unaffordability (5.1 and over).
> 
> So lets look at how that "less than $400K" property and just how affordable it is.
> 
> ...




As I said, that is a reasonable house on a triplex block, i.e investment potential.

You can buy a two bedroom unit same location for $200k, or a 3 bedroom house on a split block for $270k.

Just depends where your level of risk return, money/time available, sits.

I'm just fed up with the constant whinging, I agree and have done always that housing has become stupidly priced.
But you can't sit there forever, you have to think outside the box, otherwise inflation, wages, prices swallow up the outrageous gap.
So if you can't afford the big stakes table, look for the next oportunity.


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## Mrmagoo (5 September 2014)

Problem with property investors is they're so wound up about property they don't see any way to live life or be motivated. Everything is about the house.


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## sptrawler (5 September 2014)

Mrmagoo said:


> Problem with property investors is they're so wound up about property they don't see any way to live life or be motivated. Everything is about the house.




Tell that to someone who is 59 years old and can't find a job, with a missus at home saying how do we pay the rent?

He has to tell her, "well if you think that's bad, I can't get a pension till 66 years old, so we are on job search till then.

It is about time people realised owning shelter is important, much more important than the capital appreciation.

It is first and foremost shelter, everyone needs it, if you make money on it really is secondry if you don't have it.

As I said in the previous post, if the big game table is too expensive, look for opportunities on a lower stakes table.

Peoples expectations are clouding the the fundamental issues.IMO


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## sydboy007 (5 September 2014)

Julia said:


> Syd, you can quote figures to your heart's content, and if stats say the cost of property v average wage is more difficult than it was some while ago, I wouldn't dispute that.
> All I'd say, however, is "why would you then be content to accept the average wage?   Why not think of some way to increase your income, even if it encompasses some hardship for a few years".




At least the figures give some benchmark to what people are saying is possible, or to be honest, just how difficult it really is.

As for increasing income, not that easy the last few years.  Since the GFC I've had 2 pay rises of roughly 2% each.  People in the retail sector would likely find getting extra income even more daunting.  There isn't the work like there was pre GFC when people were equity mating their life styles.  In the IT industry, contract work is being increasingly the way employers want to higher staff.  That lack of job security makes it difficult for someone to commit to a house as well.  Retail and Service sector staff have also faced below CPI wage increases, so their costs of living are taking an increasing share of their income which leaves less to save.

With the outrageous prices of property now I don't know why anyone would want to put themselves through the stress of a 4 or 5 times household income mortgage, especially when unemployment is on the rise.  Borrowing a house is relatively cheap, all ya got to have is the instinct to force yourself to save without the need of a mortgage to enforce that on you.


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## sydboy007 (5 September 2014)

sptrawler said:


> Tell that to someone who is 59 years old and can't find a job, with a missus at home saying how do we pay the rent?
> 
> He has to tell her, "well if you think that's bad, I can't get a pension till 66 years old, so we are on job search till then.
> 
> ...




At some point in the last 20 years, and I think it was in 2000, property went from being for shelter to being an asset.  It's now siphoning just about all credit growth in the economy, with business credit actually falling.  This attitude has caused a massive cost inflation for everything.  All rents are higher than they should be, causing the cost of most goods and services to be higher.  Wages have to be higher to support al the increased costs.  It's a pernicious cycle in the economy.

The number of property investors who have no idea of the yield that their property is making pretty much shows just how screwed up the housing market has become.


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## FxTrader (6 September 2014)

sydboy007 said:


> As for increasing income, not that easy the last few years.  Since the GFC I've had 2 pay rises of roughly 2% each.  People in the retail sector would likely find getting extra income even more daunting.  There isn't the work like there was pre GFC when people were equity mating their life styles.  In the IT industry, contract work is being increasingly the way employers want to higher staff.  That lack of job security makes it difficult for someone to commit to a house as well.



It is difficult to foresee the emerging job opportunities that will sustain the housing price boom in capital cities going forward.  The IT industry, once a source of many high paying jobs, has been gutted by offshoring and rampant abuse of the 457 visa system.  Given my recent experiences with tradesmen (electricians, plumbers etc.) and the rates they charge, they seem to be doing well for the moment but wage growth in most industries is poor indeed.  



> With the outrageous prices of property now I don't know why anyone would want to put themselves through the stress of a 4 or 5 times household income mortgage, especially when unemployment is on the rise.



Probably the fear of being consigned to renting for the rest of their lives.  Getting on the property ladder is getting more difficult.  When I attend opens I see mostly investors, upgraders and downsizers these days, the lack of young couples is quite noticeable.  Younger buyers tend to concentrate on the fringe suburbs for obvious reasons.


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## sptrawler (6 September 2014)

sydboy007 said:


> At some point in the last 20 years, and I think it was in 2000, property went from being for shelter to being an asset.  It's now siphoning just about all credit growth in the economy, with business credit actually falling.  This attitude has caused a massive cost inflation for everything.  All rents are higher than they should be, causing the cost of most goods and services to be higher.  Wages have to be higher to support al the increased costs.  It's a pernicious cycle in the economy.
> 
> The number of property investors who have no idea of the yield that their property is making pretty much shows just how screwed up the housing market has become.




Agree with you completely, but it is what it is, people who don't have a house have to have a plan.

Constantly complaining won't bring the prices down, a recession will, but who's to say the person who wants a house still has a job when the oportunity presents.

Investors need to be given a shock, to get them out of the market and stop this myth that houses can't go down, perpetuating.
However as you said, it looks as though too many politicians have their nose in the NG trough.

The other problem is the RBA trying to nurse Australia through this transition period. They have interest rates at a level that encourages property speculation, to provide employment in the building industry.

Maybe they should give us another recession we have to have, like the good old days.


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## Value Collector (6 September 2014)

FxTrader said:


> It is difficult to foresee the emerging job opportunities that will sustain the housing price boom in capital cities going forward.  .




You don't need boom prices for property to make sense, all you need is an understanding that for the next 40 years you will need to live somewhere and standard 3% inflation.


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## ROE (6 September 2014)

sydboy007 said:


> The number of property investors who have no idea of the yield that their property is making pretty much shows just how screwed up the housing market has become.




That is a big assumption, banks usually get them to spell out the income from the properties and various other financial factors for them to approve the loan.

don't worry there are always people who tell you not to buy because it is too expensive on the way up
and not to buy because it will go lower on the way down 

only action and some sacrificed is what works, the rest are all cheap talk 

I am not pro-properties but I been around long enough to know what works


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## FxTrader (6 September 2014)

Value Collector said:


> You don't need boom prices for property to make sense, all you need is an understanding that for the next 40 years you will need to live somewhere and standard 3% inflation.



Agree, but not for the reason you suggest.  Renting cheaply and buying IP makes more sense if you view property as an investment grade asset class.  The government provides you with generous tax incentives to invest in property for other people to rent, not for property to live in yourself.  A PPOR is best deferred until one's investment property portfolio provides the wealth to buy a home either outright or with a low mortgage.  The equity can easily be used to leverage into more IP if you wish.


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## Mrmagoo (6 September 2014)

sptrawler said:


> Agree with you completely, but it is what it is, people who don't have a house have to have a plan.
> 
> Maybe they should give us another recession we have to have, like the good old days.




What you don't understand is we're buying for shelter. I will buy a house if/when I am married and the wife has kids. Otherwise I don't need to own a house. Compulsory savings is one point, but the numbers don't stack up at all right now. If it is just me all I really need is a one bedroom unit and they represent terrible value. Just because I am not at the point in my life where I need to own does not mean I should  be punished with another 300k debt. Life and the economy shouldn't be about buying as much property as soon as you can.

The problem with share housing is the type of person you will attract to sharing in a low demographic area is not good. Again, people will say "oh you're just being a snob and a precious gen y" because they're never experienced it. Low demographic areas are 100% fine for sharing a home with your family. You'll get kids that can't pay rent or keep the place clean. Older guys who are drug addicts or gambling addicts and women who have mental problems. 

The % of people who are just grown adults earning a modest income looking for a place to live is small and identifying them from the above is nearly impossible  no one goes to an interview and says "Yup I'm a drug addict who will destroy your rented home and get you in trouble with the agent or damage the place you just bought and not pay rent". 

Sharing a house you own is going to be a case of paying 350-450 a week to effectively be in a share house, to have 1 bedroom in a 3 bedroom house in the middle of nowhere.  It is not a cheaper solution.

All because investors have pushed up prices to ridiculous levels.


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## Mrmagoo (6 September 2014)

FxTrader said:


> Agree, but not for the reason you suggest.  Renting cheaply and buying IP makes more sense if you view property as an investment grade asset class.  The government provides you with generous tax incentives to invest in property for other people to rent, not for property to live in yourself.  A PPOR is best deferred until one's investment property portfolio provides the wealth to buy a home either outright or with a low mortgage.  The equity can easily be used to leveraged into more IP if you wish.




What if you view it as a home ? You're forgotten among a sea of investors wanting free money.


----------



## Mrmagoo (6 September 2014)

Value Collector said:


> You don't need boom prices for property to make sense, all you need is an understanding that for the next 40 years you will need to live somewhere and standard 3% inflation.




No one is disputing that owning a house is superior to renting in everyday. What they are disputing is the prices that are being asked for that privilege are not reflective of the value of a home but reflective of the free money investors want to steal from FHBers.

If I could find a decent unit at a reasonably affordable price I'd buy one tomorrow. The fact is they don't exist and any purchase would financially cripple me.

Investors flip houses to each other, the hot potato is intended to land with a FHB.


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## Value Collector (6 September 2014)

Mrmagoo said:


> No one is disputing that owning a house is superior to renting in everyday. What they are disputing is the prices that are being asked for that privilege are not reflective of the value of a home but reflective of the free money investors want to steal from FHBers.
> 
> If I could find a decent unit at a reasonably affordable price I'd buy one tomorrow. The fact is they don't exist and any purchase would financially cripple me.
> 
> .




even at todays prices, it still works out cheaper to own than to rent, if you worked out how much you would have to pay in rent over 25 years, I bet it is a lot more than the cost of ownership over that time, and that's before you add in the inflation hedging.


----------



## Julia (6 September 2014)

sydboy007 said:


> At least the figures give some benchmark to what people are saying is possible, or to be honest, just how difficult it really is.
> 
> As for increasing income, not that easy the last few years.  Since the GFC I've had 2 pay rises of roughly 2% each.  People in the retail sector would likely find getting extra income even more daunting.



Does extra work have to be in your same full time industry?   Something entirely different?  I know people who, to achieve a goal, worked several nights in a factory, or even an abbattoir.  Neither would be great, I agree, but it all depends how much you want what you want.  
Maybe some very personalised IT service marketed via letterbox drop?



> There isn't the work like there was pre GFC when people were equity mating their life styles.  In the IT industry, contract work is being increasingly the way employers want to higher staff.  That lack of job security makes it difficult for someone to commit to a house as well.  Retail and Service sector staff have also faced below CPI wage increases, so their costs of living are taking an increasing share of their income which leaves less to save.



Yep, all true and all just more reasons to think on a different level about additional alternatives.



sydboy007 said:


> At some point in the last 20 years, and I think it was in 2000, property went from being for shelter to being an asset.  It's now siphoning just about all credit growth in the economy, with business credit actually falling.  This attitude has caused a massive cost inflation for everything.  All rents are higher than they should be, causing the cost of most goods and services to be higher.  Wages have to be higher to support al the increased costs.  It's a pernicious cycle in the economy.



Again, you're (understandably) talking about big cities.   Regional property prices are still low, virtually no recovery from GFC fall.  As more people are able to work remotely that might be some assistance.



sptrawler said:


> The other problem is the RBA trying to nurse Australia through this transition period. They have interest rates at a level that encourages property speculation, to provide employment in the building industry.



Agree.  And two guesses as to what will happen to many of those who have bought on the basis of current rates when inevitably rates rise again.



Mrmagoo said:


> What you don't understand is we're buying for shelter. I will buy a house if/when I am married and the wife has kids. Otherwise I don't need to own a house. Compulsory savings is one point, but the numbers don't stack up at all right now. If it is just me all I really need is a one bedroom unit and they represent terrible value. Just because I am not at the point in my life where I need to own does not mean I should  be punished with another 300k debt. Life and the economy shouldn't be about buying as much property as soon as you can.



Fine if that's how you feel.   The impression you always give, though, is that you'd like to buy rather than rent but find it impossible.

I think it's difficult to totally differentiate buying for shelter and for overall investment.   On a personal basis I value highly the security and just the general pleasure of owning a place where no one can tell you what you may do with it, a garden you can make beautiful and which provides privacy, but at the same time, unless you never intend to sell that it should appreciate in value over time also is relevant.
Someone once offered me the advice "never buy an IP you wouldn't be prepared to live in yourself".  



> The problem with share housing is the type of person you will attract to sharing in a low demographic area is not good. Again, people will say "oh you're just being a snob and a precious gen y"



Or maybe they'd say "why couldn't that other person be someone just like yourself?"   Many of us started out in less salubrious areas many of which offered good capital gain.



> The % of people who are just grown adults earning a modest income looking for a place to live is small and identifying them from the above is nearly impossible  no one goes to an interview and says "Yup I'm a drug addict who will destroy your rented home and get you in trouble with the agent or damage the place you just bought and not pay rent".



No, but you're going to surely get a pretty good impression of someone in an interview.   I shared with some great people when living in Sydney at about the age you are now, had a lot of fun and saved money toward buying eventually.

I don't think anyone is saying it's easy, Magoo, to get into property for the first time.  Just that there are different ways to approach it and that what you see as impossible others see as a hurdle which they'll find a way to get over.

Btw my earlier comment about gen Y spending on take away coffee etc was not intended as necessarily criticism.  We can all spend on what we choose.  Rather I was attempting to illustrate the huge difference in the lifestyle of what we might call 'the war generation', those who went through two world wars, where they learned stoicism and determination in the face of adversity, and whose lives were uncomplicated by sophisticated electronics, take away anything other than fish and chips, and whose lives revolved around their family and their community.


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## Mrmagoo (6 September 2014)

Value Collector said:


> even at todays prices, it still works out cheaper to own than to rent, if you worked out how much you would have to pay in rent over 25 years, I bet it is a lot more than the cost of ownership over that time, and that's before you add in the inflation hedging.




It required a pretty high % gain to break even, simply because as an owner you have a lot of over head costs. 

I agree in principle that you should always buy and you will always be better off buying for a lot of reasons which is the entire point of this thread. I don't know why you can't understand that. People want to buy it is just too expensive.

Do you think people have resigned  themselves to a life of renting because they hate the idea of owning ?


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## sydboy007 (6 September 2014)

Value Collector said:


> even at todays prices, it still works out cheaper to own than to rent, if you worked out how much you would have to pay in rent over 25 years, I bet it is a lot more than the cost of ownership over that time, and that's before you add in the inflation hedging.




depends if you're comparing apples to apples.

Most people can comfortably afford to rent in a better location than they can afford to buy.  A guy I used to work with was living in a nice apartment with his GF at St Leonards.  His travel time to work was 20 mins door to door.  The GF wanted to have their own place and the they ended up on the central coast.  His travel time was now up to 1.5 hours or so each way IF the trains ran on time and he could leave work a little early since the 1 per hour train left exactly on the hour and he had a 15 minute walk to the station.

Someone buying a property to live in is likely to see their transport costs increase, especially if they're now reliant on a car and paying exorbitant toll roads.

For myself, in real terms my house has roughly doubled in value in 17 years.  The shares I sold eg ANZ / BHP / WOL to fund the deposit and stamp duty have all made much higher returns over that period.  I'm pretty confident to say that if I'd invested the difference between my rent and the mortgage into shares and bonds over that period I'd be in a much better financial position now.  Would have had an extra $22K to invest rather than lost to buying costs, along with no council & water rates, building insurance costs, repairing toilets / dead water heaters / dishwashers etc.  All those costs generally get ignored when looking at the benefits of owning property.  They add up and take away from the ability to reduce the compounding of interest on the mortgage.

Certainly the non financial reasons for owning a home are nice, and I went from moving 5 times in a few years to stability for 17, but those benefits don't put food on the table or get you closer to a comfortable retirement.

The advantages of compounding works nicely with investing if you have the ability to reinvest all the income generated.  You get similar with paying off a mortgage, but I'd prefer to start with a small number and see it increasing with compounding, than taking a large number and trying to get ahead of compound interest.

If the value of the land you own doesn't go up, then you'll be in strife with property, because the actual building is pretty much losing value every year.  Any policy that makes land use easier, say allows knock downs of older housing for higher density dwellings will cause land price inflation to slow or reverse.  Probably wont happen in my lifetime, but I try to remain hopeful.


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## sydboy007 (6 September 2014)

ROE said:


> That is a big assumption, banks usually get them to spell out the income from the properties and various other financial factors for them to approve the loan.




The bank is not interested in the yield, only in your ability to make up the difference.  The rent they provide the bank is probably from the realestate agent they're buying through, unless the property is currently let.  I've experience too many people at various jobs talking about a property they're buying and when I ask what's the net yield after all costs and they're not able to tell me.  They generally know how many thousands in tax they'll "save"



ROE said:


> don't worry there are always people who tell you not to buy because it is too expensive on the way up and not to buy because it will go lower on the way down




happens with shares and bonds as well.


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## Mrmagoo (6 September 2014)

sydboy007 said:


> depends if you're comparing apples to apples.
> 
> Most people can comfortably afford to rent in a better location than they can afford to buy.  A guy I used to work with was living in a nice apartment with his GF at St Leonards.  His travel time to work was 20 mins door to door.  The GF wanted to have their own place and the they ended up on the central coast.  His travel time was now up to 1.5 hours or so each way IF the trains ran on time and he could leave work a little early since the 1 per hour train left exactly on the hour and he had a 15 minute walk to the station.




Hahhaha. That was exactly my life. Except I'd usually get home at about 9pm, 8pm on a good day. 

Gotta love these "just move further out" people. They have no clue.


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## Value Collector (6 September 2014)

sydboy007 said:


> depends if you're comparing apples to apples.
> 
> Most people can comfortably afford to rent in a better location than they can afford to buy.  A guy I used to work with was living in a nice apartment with his GF at St Leonards.  His travel time to work was 20 mins door to door.  The GF wanted to have their own place and the they ended up on the central coast.  His travel time was now up to 1.5 hours or so each way.




I am saying it would be cheaper for them to own that apartment they were renting, than it is to rent it for 25years. 

No doubt moving to the central coast put them in an entirely different sort of property, I am guessing a house. If it's a house they wanted, then that's what it may take, because you can't get a house and land near st leonards for the average wage, there is far to much demand.


> Someone buying a property to live in is likely to see their transport costs increase, especially if they're now reliant on a car and paying exorbitant toll roads.




only if they are moving into a different sort of property, eg moving from an apartment to a house, or they were over renting to begin with.

If people are getting stuck on the idea that they must have a house and land, then yes they will have to move further out, it's simple maths, not everyone can live on a 1/4 acre block within 20kms of the cbd. and if they try, prices and the debt needed with go through the roof.



> For myself, in real terms my house has roughly doubled in value in 17 years.  The shares I sold eg ANZ / BHP / WOL to fund the deposit and stamp duty have all made much higher returns over that period.  I'm pretty confident to say that if I'd invested the difference between my rent and the mortgage into shares and bonds over that period I'd be in a much better financial position now.




Maybe, but as I said you have to factor in increased rent, and the possibility of choosing the wrong stock the average punter doesn't make the best share market investor, and the average punter probably would have freaked and sold during the gfc,also most people can not stand the temptation of seeing $100K of shares without selling to buy a car or a holiday where as the unseen equity doesn't have the same temptations.



> along with no council & water rates, building insurance costs, repairing toilets / dead water heaters / dishwashers etc.




all those would be more than covered by the rent your not paying.

work out how much 25 years rent would cost, then compare it to the interest on a 25 year loan and 25years holding costs, you will find the rent is a much larger figure.




> The advantages of compounding works nicely with investing if you have the ability to reinvest all the income generated.  You get similar with paying off a mortgage, but I'd prefer to start with a small number and see it increasing with compounding, than taking a large number and trying to get ahead of compound interest.




Mortgage interest doesn't compound.



> If the value of the land you own doesn't go up, then you'll be in strife with property, because the actual building is pretty much losing value every year




I own a few rental properties, and I can tell you the rent received is a lot more than any building maintenance, 

It's like saying your going to lease a car, instead of owning it outright because then you don't have to pay maintenance, owning a car out right would be cheaper than renting one.


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## Value Collector (6 September 2014)

Mrmagoo said:


> Hahhaha. That was exactly my life. Except I'd usually get home at about 9pm, 8pm on a good day.
> 
> Gotta love these "just move further out" people. They have no clue.




so your saying you earn $100K, and live 1.5hours away from where you work and you still can't afford to buy???

I think you have a spending problem, not a housing cost problem.


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## Value Collector (6 September 2014)

> It required a pretty high % gain to break even, simply because as an owner you have a lot of over head costs.
> 
> I agree in principle that you should always buy and you will always be better off buying for a lot of reasons which is the entire point of this thread. I don't know why you can't understand that. People want to buy it is just too expensive.
> 
> Do you think people have resigned themselves to a life of renting because they hate the idea of owning ?






I just did some quick calculations,

If you Bought a $500,000 house, and paid it off over 25years, your total interest bill would be $394,600

If you rented that house and paid $550 / week ( and never had a rental increase ), your rent would be $715,000

 So you would have $320,400 spare to pay rates and repairs with, which in reality wouldn't come close to that. Also your now in the position of owning your home, no more interest, just maintenance and rates, where the renter has to continue putting in $550 a week / another $715,000 for the next 25years.

Now that's a pretty good result for the owner, but lets factor in inflation.


After 25 years of 3% inflation, the owners property is now worth $1,046,888, it's gone up $546,888 which completely offsets the $394,600 interest they paid.

and the renter's rental payment of $550 in year one would have gone up to $1046 / week by year 25. So his actual rent paid over 25 years will be $1,048,000.

so over 25 years the owner will pay $394,000 Interest + holding costs, but he will have an extra $546,888 on top of the principle he paid in, and now can live paying only maintenance and holding costs. 

and over 25 years the renter will pay $1,048,000 in rent, but have not have any extra asset value. and now needs to continue paying rent at an ever increasing amount due to inflation.

-----

now, lets think about it, the renter has to pay $1,048,000 in rent, and will always have a large portion of his earnings going in rent, while the owner after the first few years is enjoying a much cheaper housing cost, Who is going to be in a better place to salary sacrifice into super, or build an investment portfolio.

The owner is going to be better placed to use their earnings to build wealth.

 -------

the calculations above are only based on inflation.

If we had price increases caused by population growth, which translated to rent and capital growth increases of 1% or 2% more than inflation, It would be even more in the owners favour, by a very good margin.


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## Mrmagoo (6 September 2014)

Value Collector said:


> so your saying you earn $100K, and live 1.5hours away from where you work and you still can't afford to buy???
> 
> I think you have a spending problem, not a housing cost problem.




That is a personal attack and I would appreciate it if you kept those out of the discussion.

You make a lot of assumptions in your analysis which might not be true. You also do not include expenses if you don't like them. If it were as  simple as interest rate vs rent and I could own a home outright by just paying interest on fixed sum, then great.


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## Mrmagoo (6 September 2014)

Add to that :

Rates : 75 per week.

Body corporate : 50 per week.

Maintenance and improvement over the life probably another 5k a year.

Then if you do any major renovations. Not to mention the garden.

Then you need to look at any difference between rent and all of the total payments and apply a rate of return to that too.


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## Value Collector (6 September 2014)

Mrmagoo said:


> Add to that :
> 
> Rates : 75 per week.
> 
> ...




I think $5000 / year is a gross over exaggeration, especially if your factoring in an amount for major renovation and body corp which covers a lot of the maintenance, but even so, there is still a lot in the owners budget left for that.


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## againsthegrain (6 September 2014)

60k @ 18%
500k @ 5% 

Think the 60k looks better from whatever way you look at it. All the same arguments as usual baby boomers trying to tell the young generation how hard they had,  numbers and % can be span both ways,  but in the end it is just not possible to pay off a house or save for a house like it was in the baby boomer generation. 

The quality of housing has dramatically decreased too, you get a few more gadgets that fall apart after a few years, walls crack and rendering washes away with the rain. The warranty is as good as the oroginal build quality so dont expect much there. 

But the pyramid scheme goes on, thats fair enough money is to be made but pyramids are not infinite,  the younger generation is either becomming more switched on like mrmagoo or simply priced out. Now its all down to the chinese investors,  socially this is heading toward trouble. 

China has the worst ratio of rich vs very poor,  most of the rich got there by corruption and exploitation. Their country is destroyed now they are looking for a clean fresh start. 

For people who pump chemicals into drinking water exploit their fellow man into 24/7 labour they are those investors comming here along with that mentality. 

Sure jobs and infrastructure will be created by their money but it looks like the new generation might be slowly sold off to our new overlords and as cheap local labour and renters for life. 

The govt and the baby boomer genetation are quiet happy to close their eyes because they are set up,  retirement around the corner and 20 years of cheap thai holidays left is all they need. 

Im not ranting,  I have close to 200k in the bank but continue to rent,  paying 500k for a little shack to make somebody 200% is not my aussie dream. 

Soon Australia will not be such a paradise to live in like all the investors claim,  social divides just keep getting greater and will be interesting to see where it goes. 

Altho it is very hard to see a crash it also is risky to be buying a house to live in at the current market

We all just might have to start learning mandarin and forget free Saturdays to keep the precious housing going

Ps This is what i saw today when going for a walk,  like said the divides are starting to show


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## Value Collector (6 September 2014)

Mrmagoo said:


> That is a personal attack and I would appreciate it if you kept those out of the discussion.
> 
> You make a lot of assumptions in your analysis which might not be true. You also do not include expenses if you don't like them. If it were as  simple as interest rate vs rent and I could own a home outright by just paying interest on fixed sum, then great.




It's not a personal attack, i actually think that you may not be budgeting correctly, i mean $100k is a lot of income, and to say you cant afford a 1 bedroom flat 1.5hr away from your work seems very weird.


----------



## Mrmagoo (6 September 2014)

Value Collector said:


> It's not a personal attack, i actually think that you may not be budgeting correctly, i mean $100k is a lot of income, and to say you cant afford a 1 bedroom flat 1.5hr away from your work seems very weird.




Because you're obsessed with property and like most Australians don't understand the concept of value for money, buying property, any old property for any old price is not always a good idea...

I'm not paying 400k for something used to be cheaper than a car.


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## Mrmagoo (6 September 2014)

Value Collector said:


> I think $5000 / year is a gross over exaggeration, especially if your factoring in an amount for major renovation and body corp which covers a lot of the maintenance, but even so, there is still a lot in the owners budget left for that.




I worked at Bunning's for 7 years, people spend a fortune on their homes.


----------



## sydboy007 (6 September 2014)

Value Collector said:


> I just did some quick calculations,
> 
> If you Bought a $500,000 house, and paid it off over 25years, your total interest bill would be $394,600
> 
> If you rented that house and paid $550 / week ( and never had a rental increase ), your rent would be $715,000




You seem to be basing your interest assumptions on historically low interest rates.  If they average say 6.5% (my experience was closer to 7%) then the interest paid jumps to 512K over 25 years.

Before I bought my property I was sharing in a large house.  My rent was just $540 / w and I was living walking distance to work.  After buying the house the mortgage repayments were ~950 / month and closer to $1100 when holding costs were factored in.

If you read my previous comments from last night you'll see that 500K is not affordable by most households.  70% of households make less at 1663 / week or 86.5K a year.  a 500K mortgage at 6.5% would take at least 19% of gross household income at the start of the 7th income decile, and 61% of the median household annual income of 53K.

Mortgage interest may not compound, but most of the money you are repaying each month goes to cover interest for the first 10 years.  Households move on average each 7-10 years.  Moving house will likely steal $30-40K from you in selling / SD / moving costs.

Lets say you're a couple each bringing in the median income of $94K a year - beating over 70% of households.  You're willing to go on struggle street and pay up to 4 times income for a 2 BR apartment.  So you've got up to 400K price limit.

You can't afford to get a 2 BR apartment in parramatta so decide to look at the surrounding suburbs, even though that's likely to mean increased travel times to work - no express trains and less services per hour.  Old style unrenovated apartments are selling from $330K with newer ones from $360k, so you decide you don't have the time to go through a reno so go for something liveable at $360K.  You wack down a 50K deposit, and since you're first home buyers only need to handover $321 in SD to the Govt.

Monthly repayments are $2K a month at 6%.  Strata & Water add another $220 / month to your costs.  28% of gross income is required.  Borderline for mortgage stress.

A comparable rental property will cost you $1500 a month.  You have $720 / month to invest.

Possibly the property owner wins out due to gearing, but factoring in risk and the high level of income devoted to the mortgage, I'm not sure I'd be willing to go through that kind of risk and stress.  Certainly will put a lot of strain on the relationship in the early years.

As a renter you have easier flexibility to move should your work require it, though you're also at the whim of landlords raising the rent or selling and asking you to move out, but then as a home owner you face the same when the RBA does interest rate rises.

If you've got the ability to save for a number of years for a house deposit, then you've got the ability to invest over the long term.  The equity mate adds from a decade ago show that people are just as easily tempted to use their house as an ATM as they are their other investments.


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## Julia (6 September 2014)

Value Collector said:


> ...... the average punter doesn't make the best share market investor, and the average punter probably would have freaked and sold during the gfc,



If you sold near the start of the GFC, took advantage of reasonably good deposit rates until a market uptrend recurred, then bought back in, you'd have done much better than holding throughout.  The market is still some distance from regaining the pre-GFC high.



Mrmagoo said:


> Because you're obsessed with property and like most Australians don't understand the concept of value for money, buying property, any old property for any old price is not always a good idea...
> 
> I'm not paying 400k for something used to be cheaper than a car.



Is that logical?  Prices are driven by sentiment, supply and demand, rather than actual value.
Your rejecting the 'value' the market is putting on prices won't alter what is.



Mrmagoo said:


> I worked at Bunning's for 7 years, people spend a fortune on their homes.



Again with the generalisations.   Some people do constantly make changes.  That's discretionary.  Normal maintenance, unless you buy some very rundown shack, won't be $5000 p.a.

FWIW my total outgoings including rates, electricity, water, home & contents insurance, private health insurance, car insurance, rego, phone and internet, maintenance of house, pool and garden run out at around $15,000.  Food, clothing, social stuff, vet bills in addition.  Renting a similar property would be about $25,000, and you'd still have the electricity, insurance, rego on top.

Goes to sptrawler's point about the situation when the mortgage is no longer a factor versus ever increasing rents.


----------



## Value Collector (6 September 2014)

Mrmagoo said:


> Because you're obsessed with property and like most Australians don't understand the concept of value for money, buying property, any old property for any old price is not always a good idea...




I understand value quite well, it's my life's work.

And i am not obsessed with property, i have more invested in the stock market than i do property.



> I'm not paying 400k for something used to be cheaper than a car.




Don't really get how that is relevant.


----------



## Value Collector (6 September 2014)

Sydboy

There is a correlation between interest rates and inflation, if you want to factor in higher interest rates, then you should probably factor in a larger capital gain which would offset it.

As I said i think the fact your basing your calculations on what happens in the earlier years vs the over all long term picture your getting a false picture of property ownership being expensive.


----------



## Value Collector (6 September 2014)

Julia, i dont think the average punter can be expected to time the market that well, they would probably sell to late after the fall, and not buy back in, then buy gold at the top and sit in it as it fell, double whammy. 

Its a mathematical impossibility for the majority to sell out at a high and buy in at a low.


----------



## sydboy007 (6 September 2014)

Just had a pensioner putting some Alexandria Residents Action Group flyers in mailboxes have a yack to me on the way home from the super market.  He was warning me about how the Government is looking to redevelop the land and air corridor from the Golburn St car park just past central station out to near MacDonaldtown station.

Most of the unused land is for the old eveleigh rail yards and encompasses the technology park.  Potential floor space double the Branangaroo redevelopment.  He was telling me they want 40,000 people living there, with buildings up to 18 stories high.  He was concerned how this was going to impact the area.  The he jump[ed in about the Ashmore precinct development that's going to bring in another 8000 people into the area.  I hadn't heard of it before so did a quick google and it seems they're planning for just 6000 people in 17 hectares of land.  352 / hectare is terribly high density in my way of thinking.

I asked him what he was concerned about, and he mentioned lack of parking.  I asked him is he concerned about affordable housing and he said he was.  So i asked him with the affordability issues in Sydney isn't this the kind of development we need where it's close to transport and making a lot better use of land that is pretty much sitting vacant at present.  He said they shouldn't be forcing so many people into the area, it's not fair on those living here already.  I asked him where should they build new houses then.  By this time he could see I wasn't automatically  going to be part of Team Alexandria and walked away.

It's this attitude of restricting building any further out of the city combined with no more people in my area that really ****$ me off.


----------



## Value Collector (6 September 2014)

On that we can agree Sydboy,

I am all for increased density, especially along the rail lines, you should have seen the nimby's protesting when the state government pressured north shore councils to allow apartment s along the pacific highway between chatswood and Hornsby, but it was very much needed.

This sort of infill development should not be stopped by some squeaky wheels.


----------



## Mrmagoo (6 September 2014)

Value Collector said:


> I understand value quite well, it's my life's work.
> 
> And i am not obsessed with property, i have more invested in the stock market than i do property.
> 
> ...




No your attitude is just to buy any old place because you can afford it, which to live in is probably okay if you don't care about money. The problem is that you also think that if you wait 2 yeas to buy for life reasons that having to pay another 300k for the identical thing is perfectly okay. The get in now or be in a huge amount of debt later on mentality is really ****.


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## Value Collector (6 September 2014)

> No your attitude is just to buy any old place because you can afford it, which to live in is probably okay if you don't care about money.




I don't get what you mean by that sentence, one of the reasons I prefer to own my own home is because i do care about money.



> The problem is that you also think that if you wait 2 yeas to buy for life reasons that having to pay another 300k for the identical thing is perfectly okay. The get in now or be in a huge amount of debt later on mentality is really ****.




Prices on everything changes, the market doesn't wait for mr magoo, 

You don't have to buy, i don't really care if you do or not, just don't say that renting is cheaper long term because its not, and don't say there is no way you could by, because i rekon with a proper budget you could.


----------



## Mrmagoo (6 September 2014)

Value Collector said:


> I don't get what you mean by that sentence, one of the reasons I prefer to own my own home is because i do care about money.
> 
> 
> 
> ...




Gawd I don't care about you at all. I'm simply making the statement that housing is unaffordable and to buy one now to make money is just stupid.

You don't know if renting will or won't be cheaper in 25 years.


----------



## Smurf1976 (6 September 2014)

Value Collector said:


> I think $5000 / year is a gross over exaggeration, especially if your factoring in an amount for major renovation and body corp which covers a lot of the maintenance, but even so, there is still a lot in the owners budget left for that.




Maintenance isn't expensive if done sensibly. I bought this house nearly 7 years ago, required maintenance thus far:

About $2000 to fix known problems before moving in, main one being new oven etc needed and also a few electrical issues.

Since moving in:

Painted exterior timber. Back door etc and also varnished the timber step. Spend $100 or so on paint and varnish, and have plenty left for next time.

Hot water system sprang a leak late 2009. $2650 for new heat pump system including plumbing work. DIY electrical (yes I'm licensed to do so).

Outdoor tap at rear needed new washer. Replaced washer. A couple of $.

Two sensor lights outside have failed. $80 for parts.

Tap came loose in bathroom. A few minutes tinkering with a spanner fixed it. No cost.

Rats moved into the roof space. Whilst I'm not keen on poisons in principle, I couldn't find any other way to get rid of them unfortunately. A few $ for a box of rat poison.

Clothes dryer seems to be developing a fault, suspect it's the motor start capacitor. Will investigate and just buy a new capacitor it needed. A few $, nothing major.

A few light bulbs have broken. But landlords don't normally pay for those anyway, so they're a cost whether renting or owning. 

All up it seems pretty cheap to me, the key being that I don't go breaking things or replacing them for the sake of it etc as seems to be a reasonably common practice these days. But a real benefit of owning is that if the tap breaks then I fix the tap, no waiting 6 months and having to make threats in order to get some cheap skate landlord to pay up and get it fixed. 

Overall, I've spent money on improvements but very little has needed doing in terms of repairs or maintenance. As long as you're not replacing the entire kitchen every 2 years for the sake of it or knocking holes in the walls, owning is pretty cheap in that regard.


----------



## Value Collector (6 September 2014)

Mrmagoo said:


> Gawd I don't care about you at all. I'm simply making the statement that housing is unaffordable and to buy one now to make money is just stupid.
> 
> You don't know if renting will or won't be cheaper in 25 years.




I am pretty confident inflation will continue, and i am also confident the population will grow, so it would seem silly to bet against that, but its your choice, time will tell.


----------



## Value Collector (6 September 2014)

Smurf1976 said:


> Maintenance isn't expensive if done sensibly. I bought this house nearly 7 years ago, required maintenance thus far:
> 
> About $2000 to fix known problems before moving in, main one being new oven etc needed and also a few electrical issues.
> 
> ...




+1 thats been my experience also, if I had to spend $5000 across all three of my rental properties in a year, that would be an unusual year.


----------



## Julia (6 September 2014)

Value Collector said:


> Julia, i dont think the average punter can be expected to time the market that well, they would probably sell to late after the fall,



Well, that just goes to the lack of financial and market literacy across the general population.
Any half savvy investor/trader with minimal understanding of trends could have done it.
I'm not saying it's possible to exactly pick tops and bottoms, but it was absolutely possible, especially with an understanding of the global situation pre actual GFC, to exit with minimal giving back of profits, and ditto on the way back up.  Given that the market lost around 50%, even with very inexact timing it was possible to liquidate shares and use those funds to buy many more of the same when the uptrend returned, obviously also in the process increasing grossed up yield from the greater number of shares.



> Its a mathematical impossibility for the majority to sell out at a high and buy in at a low.



But this whole thread is essentially about not being part of 'the majority'.  You have set yourself outside the average in your peer group by identifying opportunities and taking them up and I absolutely congratulate you for that as well as for your sensibly positive attitude.
Surely doing the same thing within the share market is no different?


----------



## Mrmagoo (6 September 2014)

In 25 years time Australia will resemble Poland 15 years ago.


----------



## Value Collector (6 September 2014)

Julia said:


> Well, that just goes to the lack of financial and market literacy across the general population.
> Any half savvy investor/trader with minimal understanding of trends could have done it.
> I'm not saying it's possible to exactly pick tops and bottoms, but it was absolutely possible, especially with an understanding of the global situation pre actual GFC, to exit with minimal giving back of profits, and ditto on the way back up.  Given that the market lost around 50%, even with very inexact timing it was possible to liquidate shares and use those funds to buy many more of the same when the uptrend returned, obviously also in the process increasing grossed up yield from the greater number of shares.
> 
> ...




Yes, it sure is possible to outperform the market, but when I say the average guy can't, I am not talking about any individual person, I mean the mathematical average person, can not out perform the market. Because who would be there to buy at the high if the consensus average were all selling, and who would be there to sell at the low when the consensus average were buying.

Financial literacy would probably cause the highs to be lower and the lows to be higher, but it's also takes emotional stability, lots of people make the wrong choices out of fear or greed.

Only a small percentage of people have the emotional stability, focus, knowledge and skill it takes to out perform, everyone else that tries will probably fail, and give up their return to the ones that have those things. The average guy doesn't have those attributes, so is at a high risk of failing and under performing if he tries to outperform.

If the average guy focused on spending less than he earns, buying his own home and investing his savings in an asx and global index fund, and ignoring the media he will get a good average return, the rest of us can try and out perform, some of us will succeed at the expense of those that tried but failed.



> You have set yourself outside the average in your peer group by identifying opportunities and taking them up and I absolutely congratulate you for that as well as for your sensibly positive attitude




Thanks, I do think you have to have a sanguine attitude when it comes to being an investor, i don't mean walk around with rose coloured glasses, but you have to be able to see the opportunities that are always there, and if your as negative as mr magoo, you won't find anything.


----------



## Value Collector (6 September 2014)

Mrmagoo said:


> In 25 years time Australia will resemble Poland 15 years ago.




Ok, as I said time will tell. You make your decisions based on that and i'll make my decisions based on Australia's population being a little larger and a little more productive and producing a lot of goods and services over that time.


----------



## againsthegrain (6 September 2014)

Value Collector said:


> Ok, as I said time will tell. You make your decisions based on that and i'll make my decisions based on Australia's population being a little larger and a little more productive and producing a lot of goods and services over that time.




The way things are going everything is being produced offshore and services being outsourced there too. 
Local skeleton jobs for serving cofee and stacking shelves at minimum wage just under full time hours so no benefit entitlements are given. 

Population increase with basic skilled migrants who are more productive at bottom price for bottom quality,  see all the mass produced matchbox suburbs produced not even 10 years ago falling apart due to cheap materials and low build quality. 

This looks more like the new local generation being enslaved by debt to our new lords from up north.


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## Value Collector (7 September 2014)

againsthegrain said:


> The way things are going everything is being produced offshore and services being outsourced there too.
> Local skeleton jobs for serving cofee and stacking shelves at minimum wage just under full time hours so no benefit entitlements are given.
> 
> Population increase with basic skilled migrants who are more productive at bottom price for bottom quality,  see all the mass produced matchbox suburbs produced not even 10 years ago falling apart due to cheap materials and low build quality.
> ...




Well, i am sorry you see things that way, it must be debilitating, when all you can focus on is the bad.

I look at Australia and see.

- A country full of natural resources that can be exploited, offering investment opportunities, high paying jobs and services contracts, and government royalties and taxes.

- A country full of great tourist destinations, bringing in foreign income, offering more investment opportunities, jobs, service contracts and government taxes.

- A country with a clean and green food production record, with strong bulk food commodity exports, but massive room for growth in value added exports, eg wines, beer and spirits, processed and branded meats, diary products, seafood, honey, cereals and other packaged foods.

- A country with many home grown international enterprises that do business around the world, and repatriate earnings to Australia.

These are just some of the export industries, but they are complimented by all the local industries also, and the benefits flow right through the economy.

As i said i see opportunity everywhere, i have no trouble finding great investments.

I know there is a whole sub culture of people that want to sit in their basement clinging to gold bars, writing blogs about how the world is going down, but i just don't see it, every where i look in the economy i find people wanting goods and services, and people willing to work, and people looking to improve there situations by doing more business. Capitalism works.


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## qldfrog (7 September 2014)

Value Collector said:


> Capitalism works.



real capitalism works 
oligacy does not work (may it be with duopoly,tyrans, bi parties)
now where does Australia stands?
And what is the trend? i moved it twenty years ago and was able to do here what i could not do in constrained Europe;
i would not be able to repeat this anymore and by far;
the real state of Australia is half way between your rosy picture and the doom and gloom, but i definitively do not like the trend , and worse the fact that what has been done can not be undone...
low skill migration, destruction of manufacturing, IT knowledge and generally exodus of ideas


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## Mrmagoo (7 September 2014)

So what businesses have you started ? How many people do you employ ? What product do you create ? And to which countries do you export ?


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## McLovin (7 September 2014)

Deary me. There's so much doom and gloom in this thread. If you think Australia is screwed then you should see the rest of the world.

What do I see? An open, educated, prosperous country that after 200 years of being relatively isolated is now geographically placed for where the new centre of the world economy will be. I'd rather be doing anything in Australia today than 20-25 years ago when it was just emerging from being a closed shop.


----------



## sptrawler (7 September 2014)

McLovin said:


> Deary me. There's so much doom and gloom in this thread. If you think Australia is screwed then you should see the rest of the world.
> 
> What do I see? An open, educated, prosperous country that after 200 years of being relatively isolated is now geographically placed for where the new centre of the world economy will be. I'd rather be doing anything in Australia today than 20-25 years ago when it was just emerging from being a closed shop.




You hit the nail on the head there, Macca.

Mum, Dad and 4 kids in a 2 bedroom 12 square, weatherboard house. Suplimenting the food shop with, rabbit meat, not that I dislike rabbit, it just became monotonous.
Then on the weekend you all pile into the old Valiant, burn the back of your legs on the plastic upholstery and down with the windows, heaters were an option on the cars then, a/c only the rich had cars with a/c.

Ah the good old days, life was simpler, goals were much easier to set.

There wasn't any talk about buying a house, just being able to afford a reasonable car was an achievement.

Talk of buying a house came after the kids, when you had a job that the bank deemed secure enough to give you a loan, that was as long as you had 25% deposit.


----------



## Mrmagoo (7 September 2014)

sptrawler said:


> You hit the nail on the head there, Macca.
> 
> Mum, Dad and 4 kids in a 2 bedroom 12 square, weatherboard house. Suplimenting the food shop with, rabbit meat, not that I dislike rabbit, it just became monotonous.
> Then on the weekend you all pile into the old Valiant, burn the back of your legs on the plastic upholstery and down with the windows, heaters were an option on the cars then, a/c only the rich had cars with a/c.
> ...





Oh that was 1989 was it ? Sounds more like 1950.

1989 Australians hunting rabbits in inner city Sydney during the stock market crash and Nintendo! Did  Hawthorn also win the VFL grand final in black and white TV ?


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## Value Collector (7 September 2014)

Mrmagoo said:


> So what businesses have you started ? How many people do you employ ? What product do you create ? And to which countries do you export ?




I started one business, it employed 3 people, it was involved in remanufacturing equipment that otherwise had to be imported, didn't export much, except one customer relocated to the Middle East and would still place the occasional order.

I have since sold the business and retired, and now i own shares in companies that export billions of dollars and employ thousands.


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## Julia (7 September 2014)

McLovin said:


> Deary me. There's so much doom and gloom in this thread. If you think Australia is screwed then you should see the rest of the world.
> 
> What do I see? An open, educated, prosperous country that after 200 years of being relatively isolated is now geographically placed for where the new centre of the world economy will be. I'd rather be doing anything in Australia today than 20-25 years ago when it was just emerging from being a closed shop.



Isn't the doom and gloom scenario a variation of confirmation bias to at least some extent?     ie our world view is influenced by our personal circumstances and vice versa?

So it's more comfortable for someone who has a negative outlook, and a reluctance to observe and act on opportunities, to attribute their circumstances to a difficult environment rather than consider adjusting their own outlook and attitude.

A similar phenomenon occurs when people constantly move, only staying in one place for months or just a few years.   They attribute their dissatisfaction to their environment and find various aspects of that environment to justify their unhappiness.  Moving to a better place, they say, will fix their lives.    It doesn't, so they move on again.


----------



## Mrmagoo (7 September 2014)

Value Collector said:


> I started one business, it employed 3 people, it was involved in remanufacturing equipment that otherwise had to be imported, didn't export much, except one customer relocated to the Middle East and would still place the occasional order.
> 
> I have since sold the business and retired, and now i own shares in companies that export billions of dollars and employ thousands.




That is awesome. That is the sort of thing which should allow a person to make money, not depriving others of a place to live by using government to restrict the supply of housing.

Three people got a job vs people  LOSING their jobs because of the housing industry.


----------



## Mrmagoo (7 September 2014)

Julia said:


> Isn't the doom and gloom scenario a variation of confirmation bias to at least some extent?     ie our world view is influenced by our personal circumstances and vice versa?
> 
> So it's more comfortable for someone who has a negative outlook, and a reluctance to observe and act on opportunities, to attribute their circumstances to a difficult environment rather than consider adjusting their own outlook and attitude.
> 
> A similar phenomenon occurs when people constantly move, only staying in one place for months or just a few years.   They attribute their dissatisfaction to their environment and find various aspects of that environment to justify their unhappiness.  Moving to a better place, they say, will fix their lives.    It doesn't, so they move on again.




Don't care. Another 20 years the rich old people will all be dead and people of my generation can take the leadership to steer this country back to a capitalist one.


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## qldfrog (7 September 2014)

Value Collector said:


> I started one business, it employed 3 people, it was involved in remanufacturing equipment that otherwise had to be imported, didn't export much, except one customer relocated to the Middle East and would still place the occasional order.
> 
> I have since sold the business and retired, and now i own shares in companies that export billions of dollars and employ thousands.



Great but so do you genuinely believe you could follow the same path today?
How the hell could you be competitive in any industry against imports with the current AUD rate and the cost of living here?
I arrived here with education and knowledge in the 90's: started as employee, then contractor/consultant building 'intelligent" software in aerospace/telco/and mining for the last 15 years(most of them for export or used in major export scheme;
Leading edge stuff, we/I  took market from the US initially (aero/telco), developed genuine new R&D solutions for the mining industry; i worked for CSIRO/CSC/big corporations always as an independent for the last 15 years (so not your typical public servant/researcher); now where could I emulate such a path today?
I did well and am happy with my own situation but i really believe a lot of baby boomers live with an extrapolation of the past as a model of their view of today's world;

No research or investment money by corporate or government, extreme currency exchange issues to be competitive vs india/vietnam [where you do not pay 50% tax on your income, have to pay 9.5% super or need to pay a sparky 100$ an hour to change a switch];
The only place I could start a nice career today would probably be by reselling IP to SMSF or chinese investor; something I would say is borderline crook;
but open to suggestion? food industry?tourism
Is the company you sold still alive and making any profit?
you see my drift;
This is not all doom and gloom, but please no lessons without real analysis...and i am one of a generation who did enjoy the fruits of Keating's change and the years of plenty.
i hope this is not taken as a personal attack, it is not, i have several baby boomer in my circles and good on them!


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## Value Collector (8 September 2014)

Mrmagoo said:


> not depriving others of a place to live by using government to restrict the supply of housing.
> 
> .




As a property investor, i am providing housing, not depriving them, I have bought an existing house and converted it into a duplex, providing housing for an extra family.

How much extra housing stock have you created?


----------



## Value Collector (8 September 2014)

qldfrog said:


> Great but so do you genuinely believe you could follow the same path today?
> How the hell could you be competitive in any industry against imports with the current AUD rate and the cost of living here?;
> !




Yes, i only sold the business recently, and the business is still operating profitably under the ownership of one of my old staff, i am not a baby boomer, I am Gen Y, I am 32, I spent half my working life since i was 18 in the military and the other half in business, and have been a student of finance and investment since i was 14, and am now comfortably retired (though i prefer to call myself an investor rather than retired). 

A low aussie dollar would give the business a tail wind, however quality products, good marketing, good customer service and attention to detail are far more important, its not all about price, a lot of the time its just being there when your customer needs you, offering after sales support that they wouldn't expect, i couldn't count the number of times i was at a customers site at 8.30 at night or 7.30 am on a Saturday to fit a part urgently and only made $40 gross for a couple of hours but when the next refit needed doing and the $2000 job was on the line, they generally remember me and thats what counts, not some faceless guy in china quoting $10 less, with a 7 day lag.


----------



## againsthegrain (8 September 2014)

Value Collector said:


> Yes, i only sold the business recently, and the business is still operating profitably under the ownership of one of my old staff, i am not a baby boomer, I am Gen Y, I am 32, I spent half my working life since i was 18 in the military and the other half in business, and have been a student of finance and investment since i was 14, and am now comfortably retired (though i prefer to call myself an investor rather than retired).
> 
> A low aussie dollar would give the business a tail wind, however quality products, good marketing, good customer service and attention to detail are far more important, its not all about price, a lot of the time its just being there when your customer needs you, offering after sales support that they wouldn't expect, i couldn't count the number of times i was at a customers site at 8.30 at night or 7.30 am on a Saturday to fit a part urgently and only made $40 gross for a couple of hours but when the next refit needed doing and the $2000 job was on the line, they generally remember me and thats what counts, not some faceless guy in china quoting $10 less, with a 7 day lag.




That exactly the same story Tysonboss1 used to have,  yet you denied posting under that username in the usernames thread....  one lie leads to another and yet another


----------



## McLovin (8 September 2014)

Julia said:


> Isn't the doom and gloom scenario a variation of confirmation bias to at least some extent?     ie our world view is influenced by our personal circumstances and vice versa?
> 
> So it's more comfortable for someone who has a negative outlook, and a reluctance to observe and act on opportunities, to attribute their circumstances to a difficult environment rather than consider adjusting their own outlook and attitude.
> 
> A similar phenomenon occurs when people constantly move, only staying in one place for months or just a few years.   They attribute their dissatisfaction to their environment and find various aspects of that environment to justify their unhappiness.  Moving to a better place, they say, will fix their lives.    It doesn't, so they move on again.




Something like that, I think, Julia. I agree with many of the points others have made about housing being unaffordable but I also try and see the other side of the coin that Australia isn't doing too badly. In the early 1980's the comparison being made was that Australia would be the next Argentina (at the turn of the last century they were the two richest countries on Earth); a country rich in natural resources that through tariffs and poor government would strangle itself. 

Today we have a vastly different economy. Industries like tourism, biotechnology and education are the result of the reforms of the 1980's and 1990's. While we have had some favourable tailwinds such as the China mining boom, it still amazes me that we have had 23 years of unbroken economic growth. Growth through the Asian financial crisis, September 11 and the GFC. Australia is one of the easiest places in the world to do business and has a well targeted skilled migration program that overwhelmingly attracts the sort of people you'd want as your neighbours. Over this extended period of prosperity we've managed to do a pretty good job of sharing the spoils, unlike other countries where the benefits of their booms have largely gone to the owners of capital. We don't have the racial/social divide of countries like the US or many European countries. It might be considered a "soft" factor, but I think social cohesion and social mobility are incredibly important; we want the best in our society to be tomorrow's leaders and we don't want the divisiveness of a society fractured along class/race/ethnicity/religious lines.

Of course we have issues, the lack of housing affordability is one and the flow of resources into housing stock that would otherwise be invested elsewhere. The complete disinterest by government to pursue genuine reform: The complete disinterest of most of the electorate to pursue any reform that means they receive less from the government. The dumbing down of the school curriculum and the rise of universities as vocational schools and my real pet peeve the constant reduction of funding to the sciences. There is definite need for reform and if we're sitting here in ten year's time and nothing has changed then we'll be in a far worse state than we are.

So we have challenges but overall, I think we are doing OK. Now I'll probably get flamed for sitting on the fence and posting about nothing to do with real estate!


----------



## Value Collector (8 September 2014)

againsthegrain said:


> That exactly the same story Tysonboss1 used to have,  yet you denied posting under that username in the usernames thread....  one lie leads to another and yet another




???

Care to share a link.


----------



## againsthegrain (8 September 2014)

Value Collector said:


> ???
> 
> Care to share a link.











I could troll through alot more posts that you posted as tysonboss1 but why waste my time its obvious


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## Mrmagoo (8 September 2014)

Lol he bought in 2000 before the credit boom when gen y were  still in school... not repeatable. Such a shame. Seemed mitivstional enough.


----------



## Value Collector (8 September 2014)

againsthegrain said:


> View attachment 59326
> 
> View attachment 59327
> 
> ...




I can asure you that wasn't me, any way that guy said he started at 12, so he had a 2 year jump on me. There are thousands of people in the army, and a lot of them are into property.


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## pixel (8 September 2014)

*Everybody:*
Let's stick to the topic please and leave personal accusations out of the debate.
There is no indication that tyson and VC have ever shared an IP address.


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## Bill M (8 September 2014)

Value Collector said:


> Well, i am sorry you see things that way, it must be debilitating, when all you can focus on is the bad.
> 
> I look at Australia and see.
> 
> ...




I agree with everything Value Collector says. I am currently holidaying and posting from Thailand. Whilst I like being here and love the weather, food and the attractions I do not believe it would be a place I would like to invest in. 

Australia has everything, most of all a democratically elected government. It is a safe haven for investment, we have rules and regulations with little corruption. It isn't perfect but it sure comes close to being perfect. I see Australia growing and becoming better and better in the future. We need to concentrate on what we can offer to others, not what we can not offer.

People have been complaining about house prices for as long as I can remember, all the same things were said in the 70's, 80's, 90's, 2000's and now. There were people calling a housing crash on this forum 7 years ago, 5 years, 2 years ago and also right now. 

I had my IP valued 2 years ago, right now it is worth 100K more than what is was then, it keeps going up because it is in a top notch area of Sydney where there is little or no supply. I have it on the market now for sale, it will sell soon. If I had listened to the people who were calling crashes then I would not be in the position I am in now, that is, making that 100K in 2 years. Will it go on? I don't know, I buy, I wait, I sell when the time is right for me.

With the proceeds of my IP I intend to buy a better more expensive Principle Place of Residence. It needs to be fairly new and again in a top location. Yes I am selling but only to trade up into a better place so my wife and I can live in comfort for the rest of our lives. 

Am I concerned about what I am going to pay for the new place? Yes of course, I would like to buy it as cheap as possible but the market is hot right now and if we want to live somewhere decent we will have to pay for it at current market rates. I certainly won’t be renting, hoping and wishing prices will come down.

There is and always will be ways to make money in the real estate game. You just need to pick the right locations, know the prices and move fast when a good one comes along and seal the deal. As the Principle Place of Residence is still the only investment or asset (and yes your own home is an asset) that is still capital gains tax free I intend to work within our laws and maximize my returns from this. 

One day when my wife and I are too old and our super runs out we will draw on the equity of our house, that is our plan, if the rules change then so might our plan. The Principle Place of Residence is one of the best assets/investments you can possibly buy and hold. It gives you piece of mind of not been forced to live on the streets or having to pay ever increasing rents. It is peace of mind living in your own home and knowing that it generally keeps going up in value and if you ever do need to sell in the future there (at present) is no capital gains tax either.


----------



## qldfrog (8 September 2014)

pixel said:


> *Everybody:*
> Let's stick to the topic please .



I am a bit guilty there and my apologies. 
VC: well done business wise,  but believe me it depends on the sector you work in and probably even more on the type of customers you deal with (mega corporate for me), note I diversify!

Let's go back to RE; I do have PPOR, and own some IP (inc commercial) to keep a balance.
RE will probably go higher as the economy slows, jobless rate increases causing interest rate to go even lower which may lead to a bubble burst instead of a slow down, but as we all know, the government in place(whoever it is in our duopoly) will prefer to bankrupt the whole country before letting house price (and 4 banks) collapse.
In the short to medium term, the can will be pushed, and RE will go up;that is my view
but are you ready to invest in RE for a medium term? with the risk of a bust anytime?
depends on your situation
Back to the thread


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## Smurf1976 (8 September 2014)

qldfrog said:


> the government in place(whoever it is in our duopoly) will prefer to bankrupt the whole country before letting house price (and 4 banks) collapse.




Housing and the big 4 banks are very much in the "too big to fail" category. Indeed they're a lot bigger than that. If the big banks did go bust then they'll take practically every other business down with them. 

Very few small businesses could survive long if consumers don't have money and the business doesn't have banking facilities. Even with large businesses, with the possible exception of the big miners with plenty of capital and no real reliance on the local economy, most of them would fail or at least very seriously struggle too. 

So it's a horror scenario that no government, be it Labor, Coalition, Green, PUP or anything else, is going to willingly have such a situation arise. At most, if they did decide that property prices needed to come down, they'd seek an orderly transition over many years that didn't involve too many people going broke.

Back to the thread as such, there's really two issues here. The price of property as such, and the broader social and economic effects of those prices. 

Housing is both an investment and a consumer necessity. Everyone needs a place to live, so a rise in the price of housing does have social and broader economic implications. It's not like saying that the price of shares in BHP have gone up since nobody actually needs to own BHP shares in order to live their life, a decision to invest is purely a financial one. But they do need a home, be it rented or owned, in order to live.

The same applies to non-housing things as well. If the price of oil doubles then that has broad social and economic implications certainly. But there's also the investment opportunity via owning shares in oil companies or speculating on the commodity itself. Just because someone owns oil stocks, doesn't mean they necessarily _want_ the price to rise as such. They'd be just as happy with stable oil prices and investing in something else. But if they do expect the price to rise, then investing accordingly is a logical thing to do from a personal perspective.

So there's two issues really. One is investment, the other is the broader implications of a rise in the price of a necessity. I see no conflict between owning property, oil or whatever whilst also being aware of those broader issues.


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## qldfrog (8 September 2014)

Smurf1976 said:


> So there's two issues really. One is investment, the other is the broader implications of a rise in the price of a necessity. I see no conflict between owning property, oil or whatever whilst also being aware of those broader issues.



same here so my disclaimer that I own properties even if I do believe RE is overpriced in Oz and has a very negative factor on the country


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## Bill M (9 September 2014)

Here is a 15 minute video that's just come out a few hours ago. It's about the housing market in Australia and talks about the economy as well. It's an interesting discussion and may be of benefit to some of our readers.

http://www.businessspectator.com.au/article/2014/9/9/australian-news/dangers-wildly-imbalanced-housing-market


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## Quincy (16 September 2014)

Foreign buyers of Australian residential property using US Dollars to fund purchases will have more AUD equivalent to spend if AUD / USD Exchange Rate keeps dropping over the next 12 months.

Foreign investment in Australian housing continues to ramp up but it may be that "we ain't seen nothin' yet".


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## Quincy (16 September 2014)

*Liberal MP flags tougher foreign buyer rules*



> Speaking at a Bloomberg economic summit in Sydney, the chair of the House of Representatives Economics Standing Committee Kelly O'Dwyer says there has been worrying evidence of foreign investment restrictions not being enforced.
> 
> Ms O'Dwyer says the Foreign Investment Review Board (FIRB) has not mounted a prosecution or made a divestment order for breaches of the rules since 2006.
> 
> Ms O'Dwyer says the committee is also looking at introducing penalties for people who aid and abet foreign buyers in contravening the rules, such as real estate agents or conveyancers.




http://www.abc.net.au/news/2014-09-...oreign-real-estate-penalties-and-enfo/5747072


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## sydboy007 (17 September 2014)

definitely got to be some suffering perth landlords


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## Uncle Festivus (17 September 2014)

Smurf1976 said:


> So it's a horror scenario that no government, be it Labor, Coalition, Green, PUP or anything else, is going to willingly have such a situation arise. At most, if they did decide that property prices needed to come down, they'd seek an orderly transition over many years that didn't involve too many people going broke.




Unfortunately politicians only have a myopic view of the future, out to about the next election - if there's any real reform to be done to the abysmal property sector and associated rorts it won't be done on their shift - so it never get's done.

When property finally crashes it's going to take us all down with it - not doubt at all - and the politicians won't be able to do a thing about it!



qldfrog said:


> same here so my disclaimer that I own properties even if I do believe RE is overpriced in Oz and has a very negative factor on the country




True. If it wasn't for housing we'd all have better lifestyles, not just the baby boomers who have made the rules.....

It's ridiculous that we have to aquire so much money and spend so much time simply allowing for the cost of a basic neccesity - housing!


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## satanoperca (17 September 2014)

Uncle Festivus said:


> It's ridiculous that we have to aquire so much money and spend so much time simply allowing for the cost of a basic neccesity - housing!




This is the most profound statement for a very long time on this thread.

If only it could be understood by the masses.

Cheers


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## Wysiwyg (17 September 2014)

Uncle Festivus said:


> It's ridiculous that we have to aquire so much money and spend so much time simply allowing for the cost of a basic neccesity - housing!



Location location location. If one has affordability issues then the bush and bark huts are still optional.


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## tech/a (17 September 2014)

Wysiwyg said:


> Location location location. If one has affordability issues then the bush and bark huts are still optional.




Rent/share house/house sit/move to a third world country and bum around.
There are plenty of choices
Owning a Home or a Mc Mansion is just one.


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## sptrawler (17 September 2014)

tech/a said:


> Rent/share house/house sit/move to a third world country and bum around.
> There are plenty of choices
> Owning a Home or a Mc Mansion is just one.




The issue seems to be more about, where can I buy a house, that will make me money.

Rather than where can I afford to buy a house.

I agree with your sentiments tech/a.

Also I don't think it will be many years, before your above sugestions, become the norm.


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## tech/a (17 September 2014)

sptrawler said:


> The issue seems to be more about, where can I buy a house, that will make me money.
> 
> Rather than where can I afford to buy a house.
> 
> ...




If your going to do this (Make money from buying established houses) You are up against it due to Stamp duty.
You must live in it otherwise capital gains tax will kill you. On the other side you cant claim for improvements.

Unfortunately if you want to make money from property now you need to be able to develop
The old money makes money.
Will be a while before Joe average sees gains in middle or lower domestic housing.


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## McLovin (17 September 2014)

tech/a said:


> Unfortunately if you want to make money from property now you need to be able to develop
> The old money makes money.




No point developing it. Just buy the land get a few approvals rezoning etc and flick it to a Chinese developer for 50% more than you paid for it.


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## Knobby22 (17 September 2014)

Uncle Festivus said:


> When property finally crashes it's going to take us all down with it - not doubt at all - and the politicians won't be able to do a thing about it!




I don't think property will crash until we go through a final stage of irrational exuberance, as occurs in the share market. Unfortunately, I am starting to think that we are heading into this stage despite the warnings from various groups such as the Reserve Bank and the IMF.  

My take is that Chinese, Singapore and Australian investors will force up the prices substantially over the next 2 years and everyone not in property will feel they are missing out. 

Honestly I caught a taxi last week and the taxi driver was telling me about his housing development. The single Mum at cubs was telling me about her property portfolio that she is building up from nothing 2 years ago. It's like the shoeshine boy asking for stock tips just before the Great Depression. It scares me.


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## tech/a (17 September 2014)

McLovin said:


> No point developing it. Just buy the land get a few approvals rezoning etc and flick it to a Chinese developer for 50% more than you paid for it.




Wow wish it was that easy.

The Chinese are already looking at potentials just as we are they're not that dumb---regardless of folk law.


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## McLovin (17 September 2014)

tech/a said:


> Wow wish it was that easy.
> 
> The Chinese are already looking at potentials just as we are they're not that dumb---regardless of folk law.




It ain't folklore. I'm not talking about buying a couple of blocks in some backwater, these were prime sites within 10km of Sydney CBD and I'm talking about deals north of $50m. They're happy to take much lower returns than the average Australian developer.


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## Judd (17 September 2014)

Don't know what the problem is should there be one.  Anyway, it'll all be solved soon.  Just ask this lot which have applied for a Australian Financial Services Licence.

http://www.theage.com.au/business/c...inancial-planning-market-20140916-10hljo.html



> One of the country's biggest real estate agencies, Ray White, has stunned the financial services industry by setting up a financial planning arm at a time when the sector is suffering from a crisis in confidence following a series of scandals.
> 
> An Australian Financial Services Licence (AFSL) is imminent and the family real estate business, which has a network of 750 real estate agencies across Australia and 500 mortgage origination brokers, is expected to open its financial planning business before Christmas.
> 
> ...


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## tech/a (17 September 2014)

McLovin said:


> It ain't folklore. I'm not talking about buying a couple of blocks in some backwater, these were prime sites within 10km of Sydney CBD and I'm talking about deals north of $50m. They're happy to take much lower returns than the average Australian developer.




This is my domain.
Civil Construction.
My experience is the exact opposite.
Very astute.


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## Uncle Festivus (17 September 2014)

Knobby22 said:


> I don't think property will crash until we go through a final stage of irrational exuberance, as occurs in the share market. Unfortunately, I am starting to think that we are heading into this stage despite the warnings from various groups such as the Reserve Bank and the IMF.
> 
> My take is that Chinese, Singapore and Australian investors will force up the prices substantially over the next 2 years and everyone not in property will feel they are missing out.
> 
> Honestly I caught a taxi last week and the taxi driver was telling me about his housing development. The single Mum at cubs was telling me about her property portfolio that she is building up from nothing 2 years ago. It's like the shoeshine boy asking for stock tips just before the Great Depression. It scares me.




Yes, the Chinese have moved to greener pastures ie from _their_ market crash, to adding the final touches to _ours_. It's all about hot CB money chasing the ever diminishing pool of assets to bubble.......

The RBA would just love to raise rates to cool property but it can't for obvious reasons. Maybe it's time property investors got their very own interest rate, say 5% above the RBA rate. And scrapped neg gearing. And scrapped deductions. And scrapped developer donations to lickspittle polies. 

Make the incentive to add to the pool by building new homes/units instead of speculation!


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## sptrawler (17 September 2014)

McLovin said:


> No point developing it. Just buy the land get a few approvals rezoning etc and flick it to a Chinese developer for 50% more than you paid for it.




That is the way I see it, if you develop it, the builder cleans up. 
Then if you on sell, the tax man cleans up, unless you keep the property for five years.


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## Julia (17 September 2014)

Judd said:


> Don't know what the problem is should there be one.  Anyway, it'll all be solved soon.  Just ask this lot which have applied for a Australian Financial Services Licence.
> 
> http://www.theage.com.au/business/c...inancial-planning-market-20140916-10hljo.html



Fantastic!   We really need some of the real estate market's most unscrupulous players getting into offering the full packaged deal.  House, Land, Finance, Insurance, we have it all covered.  The ultimate one stop shop.

One would hope in the light of so much being uncovered about such 'advisers' people will be wary.
The reality will be quite different.


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## sydboy007 (18 September 2014)

Thank you Alan Kohler for these gems of wisdom.

“[Is it] all that bad if prices are high? Everyone’s complaining that Australian houses are overvalued. And I’m saying ‘yeah it’s bad for first home buyers’… [My kids'] are complaining to me that they can’t buy a house cause they are having to rent all the time. Well, actually is that so bad? So rent!”…

“The fact that house prices are overvalued is great for retirees. So then they can support their poor renting kids… But the kids don’t reallyneed to buy a house”.


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## Junior (19 September 2014)

sydboy007 said:


> Thank you Alan Kohler for these gems of wisdom.
> 
> “[Is it] all that bad if prices are high? Everyone’s complaining that Australian houses are overvalued. And I’m saying ‘yeah it’s bad for first home buyers’… [My kids'] are complaining to me that they can’t buy a house cause they are having to rent all the time. Well, actually is that so bad? So rent!”…
> 
> “The fact that house prices are overvalued is great for retirees. So then they can support their poor renting kids… But the kids don’t really need to buy a house”.




Renting is fine except where kids and pets enter the equation.  You have no security with only a 12 month lease, and majority of landlords say no pets....major advantage of being able to buy over having to rent.


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## Smurf1976 (20 September 2014)

Junior said:


> Renting is fine except where kids and pets enter the equation.  You have no security with only a 12 month lease, and majority of landlords say no pets....major advantage of being able to buy over having to rent.



+1

I own not for any financial reason but because of non-financial factors. No landlords taking 6 months to fix a minor problem whilst worrying that the pet mouse will escape and demolish the house or that the cat will rip the carpets up. Etc. 

There are good landlords and bad of course. The benefit of owning, of course, is that I am the landlord. And thus far at least, neither the mouse and it's squeaky exercise wheel nor hanging pictures on the wall has caused the house to fall down.


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## sydboy007 (20 September 2014)

Junior said:


> Renting is fine except where kids and pets enter the equation.  You have no security with only a 12 month lease, and majority of landlords say no pets....major advantage of being able to buy over having to rent.






Smurf1976 said:


> +1
> 
> I own not for any financial reason but because of non-financial factors. No landlords taking 6 months to fix a minor problem whilst worrying that the pet mouse will escape and demolish the house or that the cat will rip the carpets up. Etc.




That's Ok if renting is by choice, but when it's the only option available due to restrictive zoning laws and lack of construction, well I felt Kohler was being a bit facetious to tell younger people that they just have to suck it up and accept they wont have the same opportunities of home ownership as his generation had.

Getting housing affordable again would be a massive productivity boost.  Lower residential and commercial rents would allow a lot more money to be invested into far more productive parts of the economy.


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## Mrmagoo (20 September 2014)

We've had 2005 written all over us for a while now. For those that don't remember, in 2005 the internet was full of Americans crapping on about how the stock market will continue to rise forever.

In Australia we've had a GFC, continued slow economic growth, continuous downturn in the employment market and now some pretty solid falls in the stock market yet property continues to boom ?


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## Mrmagoo (20 September 2014)

Smurf1976 said:


> +1
> 
> I own not for any financial reason but because of non-financial factors. No landlords taking 6 months to fix a minor problem whilst worrying that the pet mouse will escape and demolish the house or that the cat will rip the carpets up. Etc.
> 
> There are good landlords and bad of course. The benefit of owning, of course, is that I am the landlord. And thus far at least, neither the mouse and it's squeaky exercise wheel nor hanging pictures on the wall has caused the house to fall down.




There are no good landlords. None of them fix anything. They pretty much don't get it that tenants don't own the house, therefore don't pay for capital improvements or maintenance.

What makes it worse is they want the laws changed so that they can make tenants pay for removable parts.


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## Julia (20 September 2014)

Mrmagoo said:


> There are no good landlords. None of them fix anything. They pretty much don't get it that tenants don't own the house, therefore don't pay for capital improvements or maintenance.



What a typically inaccurate generalisation.   Plenty of us here have been or are landlords.  I'd be very surprised if others wouldn't also do as I've done and ensured absolutely everything has been done to ensure tenant satisfaction.

If for no other reason, it's the most sound way to ensure your tenant will look after the place.


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## Miner (20 September 2014)

Mrmagoo said:


> There are no good landlords. None of them fix anything. They pretty much don't get it that tenants don't own the house, therefore don't pay for capital improvements or maintenance.
> 
> What makes it worse is they want the laws changed so that they can make tenants pay for removable parts.




Not sure if this opinion can be any where to truth and generalisation without stats / market sense is unfortunate . I am sure we all know tenants are our assets and all good landlords will do everything to keep the tenant happy as a cash cow. 
I have been like many others a land lord and always supported better way to keep tenants happy and 100% occupancy.


----------



## Mrmagoo (20 September 2014)

Julia said:


> What a typically inaccurate generalisation.   Plenty of us here have been or are landlords.  I'd be very surprised if others wouldn't also do as I've done and ensured absolutely everything has been done to ensure tenant satisfaction.
> 
> If for no other reason, it's the most sound way to ensure your tenant will look after the place.




I have never known a landlord to do any maintenance EVER. Without having their arm nearly twisted off !

Renting in this country is a very poor quality of life. You can't do ANYTHING and you are under threat of getting kicked out almost anytime.

People who are proposing it as a genuine alternative to owning need to get real. You can't do this long term. If you plan on having kids - forget it. 

The tribunals are just full of landlords renting to families then trying to sue the tenants for ridiculous amounts of money. Luckily the tribunals are fair about it and say "well no, you rented to a family, additional wear and tear is expected".

There is no middle ground, you don't own the  house, you don't pay to replace things. Landlords need to get that into their heads and for renting to be any sort of way to live the laws need to be seriously looked at. Renting just sucks by design.

Especially with vacancy rates the way they are in Sydney, there are working people who end up homeless. You guys need to come down and live on planet earth. People are suffering so others can get unearned riches.


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## Vixs (20 September 2014)

If our household were large enough to utilise the space and justify the rent, we'd be happy renting from our current landlord indefinitely. We are now just two people living in a 4 bedroom house, however, so the space and accordingly the rent are unsustainable since we no longer house share. The owner is prompt with maintenance, pro-active and has no qualms about spending a dollar now to avoid spending ten dollars later on repairs. He also treats us with RESPECT, and is grateful that we look after his property.

The property manager and the owner of the property I rented to previously, on the other hand, were some of the most inconsiderate, horrible human beings I've had the displeasure of dealing with. Some people really have no business being landlords.


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## qldfrog (21 September 2014)

Mrmagoo said:


> I have never known a landlord to do any maintenance EVER. Without having their arm nearly twisted off !
> 
> Renting in this country is a very poor quality of life. You can't do ANYTHING and you are under threat of getting kicked out almost anytime.
> 
> ...



I own an IP, replaced the whole flooring (still quite OK)  last week with top of the range non allergen flooring as my tenant has asthma, fighthing Body Corporate on their behalf as another tenant (smoker) give them grief, Jesus
all that for 3% return based on a purchase price well below current valuation.
get real: tenants are subsidised by IP owners.
in my case for diversification of asset, for others as unrealistic dream of ever increasing prices
MrMagoo, with such an attitude, to be frank, I doubt I would select you as tenant so you may get the worst of landlords..negativivity can self generate


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## Uncle Festivus (21 September 2014)

qldfrog said:


> get real: tenants are subsidised by IP owners.




And IP owners are subsidised by the taxpayer, the renter pays tax (sometimes??) so it's a funny old loop isn't it?

Let's get back to basics and hope we get some politicians with spine to change the rules in the not too distant future?

Speculating in housing is just faux wealth at the expense of the current generation and hoping (or just being blissfully ignorant will do) not to be the one holding the baby when the music stops......which may be pretty close, as shown by the million dollar garage renos in Sydney recently?

http://www.dailymail.co.uk/news/art...illion-owners-converted-two-bedroom-home.html


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## tech/a (21 September 2014)

Magoo what a tripper


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## Mrmagoo (21 September 2014)

qldfrog said:


> I own an IP, replaced the whole flooring (still quite OK)  last week with top of the range non allergen flooring as my tenant has asthma, fighthing Body Corporate on their behalf as another tenant (smoker) give them grief, Jesus
> all that for 3% return based on a purchase price well below current valuation.
> get real: tenants are subsidised by IP owners.
> in my case for diversification of asset, for others as unrealistic dream of ever increasing prices
> MrMagoo, with such an attitude, to be frank, I doubt I would select you as tenant so you may get the worst of landlords..negativivity can self generate




Tenants pay market rent. Your % return is irrelevant. Just because you purchased a loss making asset for tax purposes does not mean the tenant is being subsidised. You're the one being subsidised.


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## Mrmagoo (21 September 2014)

Uncle Festivus said:


> And IP owners are subsidised by the taxpayer, the renter pays tax (sometimes??) so it's a funny old loop isn't it?
> 
> Let's get back to basics and hope we get some politicians with spine to change the rules in the not too distant future?
> 
> ...




I can assure you there is no subsidy given to the tenants. We pay higher rent because of the high price of purchasing a property + costs, which is caused by subsidies given to investors.

This is Australia... we don't help people in need ! We give more money to the upper class people who are old enough to have caught the credit boom. 

Subsidising tenants... what a laugh. In Australia ? Helping a hard working person in need ? . Utterly laughable. It doesn't happen.

Case in point :

Average income young person :

One sided rental contracts.
Expensive housing.

Cashed up investor :

Subsidies to speculate on housing negative gearing, CGT ect (driving up costs for the average income young person).

Where is the care for the person innocently trying to live ? But there is plenty of money for the speculators trying to make it harder for the average young person to live.


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## Mrmagoo (21 September 2014)

Uncle Festivus said:


> And IP owners are subsidised by the taxpayer, the renter pays tax (sometimes??) so it's a funny old loop isn't it?
> 
> Let's get back to basics and hope we get some politicians with spine to change the rules in the not too distant future?
> 
> ...




If I had $1.2 million I'd just take it and relocate overseas, not buy a house. If I had a 350k in the bank. I would buy a house. Well not anymore. I couldn't. These people are making purchases with money they simply don't have. That is very scary.


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## Uncle Festivus (21 September 2014)

Mrmagoo said:


> I can assure you there is no subsidy given to the tenants. We pay higher rent because of the high price of purchasing a property + costs, which is caused by subsidies given to investors.




I agree - should you have qouted/replied to qldfrog?


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## Smurf1976 (21 September 2014)

Mrmagoo said:


> I can assure you there is no subsidy given to the tenants.




Subsidies by their nature are a complex subject. I've been in quite a few debates about subsidies and they always end up messy. One side is firmly convinced that a subsidy exists, the other thinks otherwise. Once you add the maths in both end up completely confused.

The basic business model of renting property isn't much different to how many people view shares. How many people here can honestly say that they only consider dividends when evaluating a share purchase, and take no account of capital growth?

Is capital growth of share prices effectively subsidising companies, enabling them to pay lower dividends than would otherwise be the case? 

Or could it be argued that if share prices were lower to start with, then many companies would indeed be paying an attractive dividend on a % return basis, such that the real problem is that share prices have become too high?

In a market system where everything is floating against everything else, and nothing is fixed as such, it's pretty much impossible to work out the "correct" price of anything in terms of what it "should" cost to produce.


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## qldfrog (21 September 2014)

mtmagoo had a statement "there is no good landlord" which I take I believe with good reason as a personal attack;
then went over the board when I stated that I am actually subsidising my tenants;

I would just like him to consider what happens if/when a country follows what would be his wishes;
In Paris (a place that I know) people still buy real estate, speculate, etc .
but then owners do not bother leasing anymore.There is accute shortage of accomodation
so no subsidy to tenant indeed there , just no lease at all;
what would happen if such a 'pro tenant aka  class warfare' would happen here?
Do you believe I would sell my IP?
No, my son would move in. And later on, I would use it as a bed sitter  in the city.
anyway what can i say. If your mind is set who cares about facts...


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## tech/a (22 September 2014)

qldfrog said:


> mtmagoo had a statement "there is no good landlord" which I take I believe with good reason as a personal attack;
> then went over the board when I stated that I am actually subsidising my tenants;
> 
> I would just like him to consider what happens if/when a country follows what would be his wishes;
> ...




Frog

I'm with you and haven't bothered to become involved.

Gave one tenant 6 mths free rent when her son was diagnosed with leukaemia
and she had to give up work to get treatment underway.

Physically threw one tenant out when he put the head of his partner through a plate glass window---she went home to her parents ---don't know and don't care what he did---copped a $500 fine for tossing him out---small fee for getting rid of un desirables---I wont tolerate it.

Found a grow room in one of 5 bedrooms for a family renting from us $4655 Damage.

But hey we should cop it we are the rich!!


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## Joe Blow (22 September 2014)

Mrmagoo said:


> There are no good landlords.




Mrmagoo, this is a gross generalisation that is unsupportable, unless of course you have met every single landlord. You may have had negative experiences with your landlords, in which case it's better to qualify your remarks rather than make generalisations that don't really add much to the discussion.


----------



## Mrmagoo (22 September 2014)

Apologies, based on my experience I expect that 93.37% to 100% of  all landlords can be classified as bad (a subjective measure) with with 95% certainty based on a sample of 12 landlords over 12 years across 5 tenants.


----------



## tech/a (22 September 2014)

Mrmagoo said:


> Apologies, based on my experience I expect that 93.37% to 100% of  all landlords can be classified as bad (a subjective measure) with with 95% certainty based on a sample of 12 landlords over 12 years across 5 tenants.




So based on those figures
Id say with 100% Certainty
your terribly INEXPERIENCED.


----------



## medicowallet (24 September 2014)

Oh dollar drop, I welcome the inflation you bring
Oh Iron ore drop, I welcome the wages realism you bring
Oh housing price drop, I welcome the fairness and equity you bring to my children.


Happy days, sunshine, rainbows, lollipops and sparkly bunny ears.

MW


----------



## Uncle Festivus (24 September 2014)

medicowallet said:


> Oh dollar drop, I welcome the inflation you bring
> Oh Iron ore drop, I welcome the wages realism you bring
> Oh housing price drop, I welcome the fairness and equity you bring to my children.
> 
> ...




Well this will be interesting. How will the RBA 'fight' import price inflation this time?

Raise rates and kill the golden property egg or lower more to help the poor old consumer pay for more expensive imported nick nacks?

They are essentially already 'zero bound' for fear of an even bubblier property bubble?

They (the RBA board) might finally have to work for their pay for once.....


----------



## sptrawler (24 September 2014)

Uncle Festivus said:


> Well this will be interesting. How will the RBA 'fight' import price inflation this time?
> 
> Raise rates and kill the golden property egg or lower more to help the poor old consumer pay for more expensive imported nick nacks?
> 
> ...





Interesting times for sure, especially with the Government saying it won't interfear, looks like a lose/lose situation.

If interest rates go down, first home buyers lose, if inflation kicks off everyone loses.


----------



## sydboy007 (25 September 2014)

http://www.businessspectator.com.au...perty/renters-wont-bail-out-housing-investors



> And in the absence of capital gains, investors need to take a second look at yields -- they become, by default, value investors rather than growth investors.
> 
> In the run-up to the turn-of-the-century property boom, something quite striking had happened to rental yields. A national average gross rental yield of 7.8 per cent in 1996 slipped to 4.0 per cent by early 2004.
> 
> ...






> In the same report quoted above, the RBA noted: “The insensitivity of our results to changing assumptions about growth in rents contrasts with the literature on stock market valuation, which finds substantial sensitivity to assumptions about earnings growth. The main reason is that studies of equity valuation typically assume that higher growth in earnings feeds back into greater appreciation whereas we do not.”
> 
> Translated, that means that when sharemarket dividends (or expected dividends) rise, that yield is pretty quickly factored into the share price by analysts and investors.
> 
> ...


----------



## sptrawler (25 September 2014)

sydboy007 said:


> http://www.businessspectator.com.au...perty/renters-wont-bail-out-housing-investors




It is even worse for SMSF as valuations increase so does the pension drawdown. Yet income is falling.


----------



## Uncle Festivus (26 September 2014)

Surprised nobody has posted this?

The RBA jawboning again - trying to get a reaction?



> In a speech yesterday in Melbourne, the RBA governor, Glenn Stevens said macroprudential tools could prove useful in helping to control the exuberant housing market. That said, he was still skeptical about their effectiveness.
> 
> He made the point that whilst monetary policy can’t solve every problem (i.e. interest rates alone) and there may be a need to take other steps if “at the margins they are helpful,”he didn’t consider macroprudential tools a simple solution to the problem, referred to in yesterdays Stability Review of strong investment lending.




http://www.macrobusiness.com.au/2014/09/captain-glenn-finally-embraces-macroprudential/

Go Sydney!



> Household credit growth has picked up, almost entirely driven by investor housing credit, which is growing at its fastest pace since late 2007. The willingness of some households to take on more debt, combined with slower growth in incomes, means that the debt-to-income ratio has picked up a little in the past six months.
> 
> The increase in household risk appetite is most evident in the continued strength of investor activity in the housing market. The momentum in investor housing activity has been concentrated in Sydney and (to a lesser extent) Melbourne. Investor housing loan approvals are almost 90 per cent higher in New South Wales than they were two years ago and are 50 per cent higher over the same period in Victoria. As a share of approvals, both are back around previous peaks.




http://www.digitalfinanceanalytics.com/blog/rba-on-housing-lending-in-financial-stability-review/


----------



## DB008 (9 October 2014)

I don't think that there will be genuine reforms anytime soon...


*The propertied federal politicians: Pollies and their $300 million property portfolio*




> “With more and more Australians finding it difficult to break into home ownership, adopting the Canadian scheme would make a difference to thousands of Australians each year,” Senator Xenaphon said.
> 
> “As HomeStart Finance said this week, there’s something strange about being able to access your super fund if you are about to default on your housing loan, but you can’t access it to put a deposit on a home in the first place,” he said.







> The public should ask “Are the property holdings of our federal politicians negatively influencing policy and causing them to ignore evidence?” The parliamentary register of members’ interests may help to answer this question, allowing for a summary report of real estate holdings for each Australian federal politician (which may be jointly owned with their spouse).
> 
> It is evident that politicians are heavily invested in the property game, with the 226 members in both houses of parliament with an ownership stake in a total of 563 properties – an average of 2.5 properties per member, conservatively estimated at around $300 million (563 multiplied by the median dwelling price of $530,000 as of July 2014).







> Senator Xenophon maintains an impressive portfolio of eight investment properties, along with Senator Barry O’Sullivan from the National Party who owns an incredible fifty properties (see Table 2). The high concentration of landed gentry in the Senate acts as a vested interest to pass policies which inflates housing (land) prices.





http://www.propertyobserver.com.au/forward-planning/investment-strategy/politics-and-policy/34160-the-propertied-federal-political-class-politicians-and-their-300-million-property-portfolio.html


----------



## See Change (18 October 2014)

Mrmagoo said:


> Apologies, based on my experience I expect that 93.37% to 100% of  all landlords can be classified as bad (a subjective measure) with with 95% certainty based on a sample of 12 landlords over 12 years across 5 tenants.




Maybe it's not the land lords that are the issue ....

Cliff


----------



## See Change (18 October 2014)

DB008 said:


> I don't think that there will be genuine reforms anytime soon...
> 
> 
> *The propertied federal politicians: Pollies and their $300 million property portfolio*
> ...





Have to agree with you .

Make hay while the sun shines , and it's shining in Sydney at the moment .

Cliff


----------



## syd (18 October 2014)

Stumbled across this thread while doing some googling.  A little odd it's on a shares website, but it seems well tended to, if a little heated at times.

I'm a Sydney renter who is starting to be pushed towards buying by my significant other.  NSW housing website and basic excel tell me that in the last 10 years Sydney prices have risen by a whopping 4.4% p.a.

The benefits of property ownership, at least in Sydney's recent history, seem to be mostly non-financial, which I guess I have to come to terms with

But it does leave me with the question of why the "issue" of property prices gets so much media attention, and why it often seems to bring out the worst in people.  Any thoughts?


----------



## Smurf1976 (18 October 2014)

syd said:


> Stumbled across this thread while doing some googling.  A little odd it's on a shares website, but it seems well tended to, if a little heated at times.




Welcome to ASF! 

Whilst ASF is primarily a share forum, property, commodities etc are still investments so tend to generate some interest. 



> But it does leave me with the question of why the "issue" of property prices gets so much media attention, and why it often seems to bring out the worst in people.  Any thoughts?




The social (as distinct from purely financial) implications. Everyone needs somewhere to live, and a large portion of the community prefer to own rather than rent for many reasons, most of which are not purely related to finance.

In contrast, nobody actually _needs_ to own shares in Woolworths (to pick a random well known stock). Their shops are open to everyone, shareholder or not, so not owning shares has no impact on someone's life as such. The decision to invest / trade the company's shares is purely a financial one.

If housing goes up then some gain whilst others lose and to a large extent there's a generational divide there. Most 50 year olds own a property, most 20 year olds don't. In contrast, if shares go up then, apart from the small minority who engage in short selling (for purely financial reasons), nobody actually loses anything. Even if you haven't got a cent invested in anything, you still don't actually lose anything if the share market rises. Not so if property goes up and you haven't already bought.


----------



## CanOz (18 October 2014)

syd said:


> why it often seems to bring out the worst in people.  Any thoughts?




Because there are those that have too much, by definition of those that have too little. Those that have too much are looking for max yield / min risk through a balanced portfolio of equities/property/bonds etc. This tends to scare up a few emotions from those that believe the property market is for houses....err to live in. Imagine!

Cheers,


CanOz


----------



## CanOz (18 October 2014)

I might add that if we had to locate to Sydney for work etc.,(quite possible in the next three years) we would likely buy in the CBD, with some leverage (2-3 bdrm apartment). We would live there for a few years and pay heaps off the mortgage. Then we'd either hang on or flog it off later depending on the market at the time. 

CanOz


----------



## syd (27 October 2014)

Thanks for the welcome

An adjustment to my below post; 4.4% p.a. is 10 year growth rate for Sydney inner ring, greater Sydney is 3.3% p.a..

I can't work out how to quote postings, so apologies if the below is a little messy



> large portion of the community prefer to own rather than rent for many reasons, most of which are not purely related to finance




Are you're saying people are unable to reconcile their non-financial reasons for ownership with the financial cost of ownership?  The obvious answer I see is that if you think it costs too much to buy then rent, but I can understand that's not an ideal answer for some.



> If housing goes up then some gain whilst others lose and to a large extent there's a generational divide there




I've taken inflation (www.rba.gov.au/calculator/quarterDecimal.html) into account in my calculation and arrived at real 10 year growth rates of 1.6% p.a. for Sydney inner ring and 0.5% for greater Sydney.  Even with the benefit of rental income and government subsidies/preferential treatment it doesn't look like the older generation are making a killing from Sydney property.

I think part of the problem is big numbers.  If I told you I bought a property for $1,000,000 10 years ago and sold it today for $1,550,000 you'd congratulate me; I made $550,000!  But if I told you I made a real gain on my investment of 1.6% p.a. you'd buy me a drink to help me get over how poor the growth was.  It's the same return.



> we would likely buy in the CBD, with some leverage (2-3 bdrm apartment)




The real 10 year growth rate of CBD strata has been the same as Sydney inner ring; 1.6%.  Can you explain why you'd buy?


----------



## Vixs (28 October 2014)

syd said:


> Thanks for the welcome
> 
> An adjustment to my below post; 4.4% p.a. is 10 year growth rate for Sydney inner ring, greater Sydney is 3.3% p.a..
> 
> ...




Fair enough points - 1.6% real return on a price basis isn't that exciting (although it is still a real return above inflation). The return on equity invested is a more meaningful number though, and laying down a $100,000 deposit for that $1m property and holding it through that period is generating a much greater real return than 1.6% on the capital used to make the purchase. At that price point of course yields are pretty terrible, so there are some holding costs along the way. 

Assuming the cost of holding the investment outstrips the yield and you've got an annual cash return of -2% on the $1m purchase price... For the sake of a simple argument the cost to hold the property over that 10 years is $200,000 of which the tax man returns them 39% (37%+2% medicare levy) or $78,000. The net holding costs would be $122,000.

For putting down $100,000 and running a net loss of $122,000 over a 10 year period, you've now got $550,000 worth of capital gains and $650,000 equity, $900,000 debt.

Sell house, repay loan and deduct 2.5% for selling costs and you've got $611,250 in the bank. Pay your discounted CGT bill on the proceeds, that's 50% of the gain taxed at the same MTR, $107,250 gone. $504,000 in the bank. Your $100,000 deposit and $122,000 net holding costs are now $504,000 after tax. 227% return over 10 years or an annualised nominal return of 8.54%, real return of 5.54%.

The maths are all rough and there are a lot of things to consider (opportunity cost of what the losses to hold the property could have returned had they been saved/invested, factoring in rental increases and gradual reduction in holding costs as a result etc etc) but the point is the numbers stack up - not without risk, but they stack up.
The added value of having security available to access further finance and buy more is also a lure - there's a few more deposits locked up in the equity in that property...What does it look like in another 10 years with 5 properties?

I'm not a property bull, I don't believe residential housing should be the investment that it is when many people are kept poor as a result of not being able to buy a home, but the numbers make sense even when you increase the holding costs and drop back the return a bit. There are a few levers that would change the viability, the first being the removal of negative gearing increasing the real holding costs to $300,000. That would result in a 5.32%p.a. return over 10 years or a 2.32%p.a. real return. That's not looking as rewarding now, but the reality is rental increases over that period would take some of the sting out of that.

The other lever to adjust would be removing the CGT discount resulting in our $504,000 actually dropping to $396,750. Assuming negative gearing is still in play and the holding costs were $222,000 then that's a 5.98% p.a. nominal return, 2.98% real return. Better than the outcome above.

The only circumstance where those figures don't add up is if they removed negative gearing and the CGT discount, in which case the effective cost of $300,000 to get an after tax $396,750 would mean a nominal return of 2.83% and a negative real return. Not adequate reward for carrying nearly a million dollars debt for a decade and the risk that entails.

Reducing the amount of leverage to increase the required deposit would also have the effect of watering down returns and is another lever that could be tweaked, but I've got places to be today and no more time for excel, even if it is interesting to me!


----------



## DB008 (4 November 2014)

*Portugal Finds Chinese Make 90% of Bids at Property Sale*



> As bargain-hunters waited in a packed room at a property auction in Lisbon last month, one language dominated their chat: Mandarin.
> 
> About 90 percent of the bidders for the government-owned apartments and stores on offer were Chinese, according to Jorge Oliveira, the official overseeing the asset sale. They ended up acquiring more than two-thirds of the 45 properties, he said.
> 
> ...




http://www.bloomberg.com/news/2014-11-03/portugal-sees-chinese-do-90-of-bids-at-property-auction.html


----------



## Tyler Durden (8 November 2014)

> The Reserve Bank has warned that Australians face unprecedented mortgage pressure over the next decade as lagging wages growth fails to keep up with record household debt, making it harder to pay down mortgages as interest rates inevitably rise.
> 
> The Reserve Bank said on Friday that in New South Wales and Victoria – where house prices have risen much faster over the last year than the rest of the country – the share of income required to service an average home loan over the next 10 years "is close to historical highs."
> 
> ...




http://www.smh.com.au/business/rese...e-warning-to-home-owners-20141107-11ipxl.html

If people need to use a bigger share of their income to pay off their mortgages in the coming years, then they will have less to spend on other things...which may lead to the 'R' word?


----------



## Mrmagoo (9 November 2014)

yeah right, they'll just revise the way they count growth and claim we narrowly avoided recession thanks to cutting red tape


----------



## DB008 (9 November 2014)

Mrmagoo said:


> There are no good landlords. None of them fix anything. They pretty much don't get it that tenants don't own the house, therefore don't pay for capital improvements or maintenance.
> 
> What makes it worse is they want the laws changed so that they can make tenants pay for removable parts.




What a load of rubbish!!!

If you rent a unit/townhouse/villa in a complex in QLD, most of them, if not all, have an onsite manager.

You can actually purchase the on-site management, they are called 'Management Rights'.

You also need to hold a Restricted Real Estate License because you handle the rent/trust accounts and control the letting pool.

Here are some agents who specialise in management rights;

Venz - http://www.venz.com.au/directory/

The Onsite Manager - http://www.theonsitemanager.com.au/

MrSales - http://www.mrsales.com.au/search/

RAAS Rights - http://www.raasrights.com.au/content.php


----------



## Taltan (10 November 2014)

This is my first post on this site in about 3 years however I have to acknowledge I was a property bear who debated with many on this site to the point where the old property prices forum was shut down in 2009.

I have to admit I was wrong the craziness has continued and yields have got lower and lower and buyers keep buying. Prices have not run away but they have performed better then trend. I did not think 18+ good years would turn into 23 and counting.


----------



## Vixs (10 November 2014)

Taltan said:


> This is my first post on this site in about 3 years however I have to acknowledge I was a property bear who debated with many on this site to the point where the old property prices forum was shut down in 2009.
> 
> I have to admit I was wrong the craziness has continued and yields have got lower and lower and buyers keep buying. Prices have not run away but they have performed better then trend. I did not think 18+ good years would turn into 23 and counting.




That's it, right? We might not like property prices as they are, but without policy change it's tough to bet against them!


----------



## sydboy007 (12 November 2014)

How long before investors decide 7%+ price growth is no longer sustainable?

Seems there's a very strong link between the level of investors in the market and house price growth.

Funny how negative gearing doesn't affect house prices, yet it will cause a mass exodus from the market if it's curtailed in some way.


----------



## sydboy007 (12 November 2014)

http://www.macrobusiness.com.au/2014/11/the-melbourne-ghost-city-revealed/

Prosper Australia has released its annual speculative vacancies report, authored by Catherine Cashmore, which has revealed that parts of Melbourne’s inner-city apartment complexes are becoming ‘ghost towers’, with large numbers of unused or barely used homes.

The report is unique because it uses water use data from Melbourne’s three main metropolitan water retailers to determine whether a home is being used, with very low recordings of water consumption data used as a proxy to determine vacant dwellings.

Speculative Vacancies (SVs) are measured as properties with abnormally low water usage. That is, any residential landholding using less than 50 litres per day (LpD), averaged over a 12 month period is deemed a speculative vacancy. In many cases, these are likely held for speculative gain by property investors.

Because these properties are not for rent, they are overlooked by current short-term vacancy measures reported by real estate firms.

Analysis was undertaken of 94.4% of 1,475,771 residential properties in 393 suburbs over the calendar year of 2013. Data indicates 64,386, or 4.4 per cent of Melbourne’s housing stock is potentially vacant and unused.

An examination of 126,529 non-residential properties in 399 suburbs over the same period identifies 29,357 or 23.2 per cent of Melbourne’s commercial stock is also potentially vacant and unused.


----------



## qldfrog (12 November 2014)

sydboy007 said:


> http://www.macrobusiness.com.au/2014/11/the-melbourne-ghost-city-revealed/
> 
> An examination of 126,529 non-residential properties in 399 suburbs over the same period identifies 29,357 or 23.2 per cent of Melbourne’s commercial stock is also potentially vacant and unused.



Sydboy, just a note;
I own an investment non residential property in qld
as every other lot in the precinct, it is connected to the water/sewerage and I do pay for the fact that I am connected  but that unit consumption is 0;
the pipe is not connected to anything;
even if it was I doubt that 50l a day would be used.
While the water usage is a good indicator of residential use, it is basically useless for commercial/industrial lots which have huge variation in potential use; from 0 to massive based on industry


----------



## satanoperca (12 November 2014)

A simpler way if the information was available would be :

1. Is the power connected, if no, it is vacant. This applies for both residential or commercial.
2. If power is connected and the power usage is less than a 60 watt light bulb on average over a 3 month period, then it is deemed vacant, applicable to both residential and commercial.

Or 

Simply apply a broad based land tax and who cares if they sit empty. Landlord has a choice, meet the market on rental price to cover the tax or not.


----------



## Smurf1976 (12 November 2014)

The emergence and popularity of rainwater capture systems for properties still connected to mains water makes water consumption data less useful than it was in the past. It's entirely possible that someone has zero water consumption as measured, but is still living in the property if they are using rainwater to supply all their water consumption (plausible if there's not a drought, it's a free standing building with a roof and they don't water the garden).

Same with electricity. Someone installs solar and has minimal nighttime power use due to lifestyle (eg shift worker). They'll use very little electricity from the grid, especially if they also have gas / solar hot water etc too.

That said, I don't doubt that there are properties sitting empty and neither for sale nor for rent.


----------



## qldfrog (12 November 2014)

satanoperca said:


> A simpler way if the information was available would be :
> 
> 1. Is the power connected, if no, it is vacant. This applies for both residential or commercial.
> 2. If power is connected and the power usage is less than a 60 watt light bulb on average over a 3 month period, then it is deemed vacant, applicable to both residential and commercial.
> ...




as a landlord, I would not disconnect when looking for a tenant;
usage yes,but not connection
about 
"
Simply apply a broad based land tax and who cares if they sit empty. Landlord has a choice, meet the market on rental price to cover the tax or not.
"
guess what, this is already happening, as land tax but also for water bill, for rates and mostly for electricity,
So the need for higher rent to cover these


----------



## satanoperca (12 November 2014)

Smurf1976 said:


> That said, I don't doubt that there are properties sitting empty and neither for sale nor for rent.




This is a naive statement, just debunk any statistical measure, Oh please, last I check God made me.

I lived in the Docklands, Victoria for 8 years, was president of the body corporate of one of the towers for several years. At all times at least 1 in 10 properties was empty, this figure often got as high as 3 in 10. The vast majority of investors where overseas investors who preferred to leave the property empty than deal with annoying tenants.

I sold my apartment to a Chinese investor who wanted to pay cash and registered it in their daughters name who was study here. It has remained empty for 2 years and this is significant as the body corporate was $12K p.a.

Friends recently took possession of their dream 2 bedroom apartment in Fitzroy and then wanted to move out within weeks and finding out over 50% of the apartments would remain empty due to mainly overseas investments and the complex was soulless without people who can create a community.

Doubt is equal to an assumption, research further before making guesses.


----------



## Smurf1976 (12 November 2014)

satanoperca said:


> This is a naive statement, just debunk any statistical measure




I suggest you read my post a little more carefully and note the use of the word "don't".


----------



## satanoperca (12 November 2014)

Smurf1976 said:


> I suggest you read my post a little more carefully and note the use of the word "don't".




Yes you are correct, turns and bend over waiting for the kick up the ****, my apologies


----------



## sptrawler (12 November 2014)

qldfrog said:


> as a landlord, I would not disconnect when looking for a tenant;
> usage yes,but not connection
> about
> "
> ...




I agree a broad based land tax may put a lot of upward pressure on rents. I'm sure the government would rather tackle negative gearing.

Property has become a never fail, can't go down investment. Why put money in the bank, just keep gearing up.:1zhelp:


----------



## Quincy (26 November 2014)

satanoperca said:


> Just because rules are in place doesn't mean they are being policed. It is illegal for people to sell drugs, but many still do and yes some get caught.
> 
> I wonder how many foreigners by vacant land and do develop within the defined period. Who is policing. I assume no one.







trainspotter said:


> FIRB is data matching don't you know ? Every settlement is monitored and recorded as well as identity is checked by passports and birth certificates these days.
> 
> 
> http://ministers.treasury.gov.au/Di...0/074.htm&pageID=003&min=njsa&Year=&DocType=0






*FIRB ‘failing’ to enforce rules on foreigners buying Australian homes*

http://www.theaustralian.com.au/nat...australian-homes/story-fn59nm2j-1227135170289

My bolding shown in referenced article.



> NEW details have emerged of the near-total inaction of the Foreign Investment Review Board in penalising foreign investors who illegally buy established homes in Australia.
> 
> The FIRB has told the chair of a parliament committee inquiring into foreign investment in real estate that is has not asked a single offshore investor to sell off an illegally acquired house since 2008.
> 
> ...


----------



## Quincy (27 November 2014)

Quincy said:


> *FIRB ‘failing’ to enforce rules on foreigners buying Australian homes*
> 
> http://www.theaustralian.com.au/nat...australian-homes/story-fn59nm2j-1227135170289
> 
> My bolding shown in referenced article.





Hot off the press : - 

http://www.abc.net.au/news/2014-11-...s-to-be-strengthened/5921518?section=business



> A parliamentary committee has recommended stronger enforcement of rules around foreign property investment.
> 
> The key recommendations are:
> 
> ...


----------



## trainspotter (28 November 2014)

BREAKING NEWS !!



MACCA350 said:


> Spoke to a mate who is a real estate agent, he said 1 in 2 contracts he signs are to international buyers......even he (who is earning a bucket load due to this) is concerned about the ramifications.
> 
> cheers




MACCA350 wrote this on the 1st December 2009 waaaaaaaaaaaaaaaaayyyyyyyyy back at post #91 on this thread.


----------



## sptrawler (1 December 2014)

sptrawler said:


> I have noticed a lot more 'for lease' signs in the suburbs around my area.
> I don't know if it will result in an increase in financially stressed investors. However a downturn in mining and an oversupply of rental properties looks possible in Perth.IMO




That was August.
I read today, there is a 43% increase in available rental properties, than the same time last year.


----------



## trainspotter (13 December 2014)

It would appear the "noise" is exactly just that:-



> *Exclusive Melbourne agency Nyko Property said the “noise” surrounding overseas investment was “wildly inaccurate”.*
> “Vision on our television networks of people of Asian appearance bidding at auctions and outbidding other Australians does, in our opinion, simply kindle xenophobia and is anathema to the long-term goal of Australian policymakers to further integrate our economy with Asia — the fastest-growing economic region in the world,” its submission stated.
> The inquiry concluded that the industry experts were correct.
> “The committee is also satisfied from the evidence received that* foreign investment is not causing the market distortions* that have been advocated in some quarters, particularly for first home buyers,” the final report states.
> “This is because foreign investment levels are not large enough to do so overall because overseas buyers mainly operate at a different price bracket from first home buyers and buy different types of properties.




http://www.news.com.au/finance/real...-property-prices/story-fndban6l-1227154627010


----------



## banco (13 December 2014)

trainspotter said:


> It would appear the "noise" is exactly just that:-
> 
> 
> 
> http://www.news.com.au/finance/real...-property-prices/story-fndban6l-1227154627010




Well on the one hand you have people in the real estate industry who claim that it's not a big deal but then when you propose tightening the rules on foreign ownership to them they go bat****. I think it's a case of thou doth protest too much.


----------



## Uncle Festivus (14 December 2014)

trainspotter said:


> It would appear the "noise" is exactly just that:-
> 
> http://www.news.com.au/finance/real...-property-prices/story-fndban6l-1227154627010




Well I just sold a unit in Melbourne to somebody from Malaysia.

Cast the net wider to include new immigrants from Asia, particularly China, and it's clear Asian investors are 'distorting' the market.

Anyone know how the unit glut in Melbourne is going?


----------



## trainspotter (14 December 2014)

banco said:


> Well on the one hand you have people in the real estate industry who claim that it's not a big deal but then when you propose tightening the rules on foreign ownership to them they go bat****. I think it's a case of thou doth protest too much.






> The Reserve Bank of Australia's concerns about overheating property markets are growing deeper, with the central bank declaring it is in discussions with other regulators about "further steps" to tighten bank lending standards which would reduce the amount of credit made available to buy houses.
> "The composition of housing and mortgage markets is becoming unbalanced," the RBA said in its twice-yearly Financial Stability Review, released on Wednesday.
> With house prices in Sydney and Melbourne continuing to gallop ahead in recent months, the central bank said bank lending standards did not appear to have eased but "a crucial question for both macroeconomic and financial stability is whether lending practices across the banking industry are conservative enough for the current combination of low interest rates, strong housing price growth and higher household indebtedness than in past decades."
> The stability review highlighted a pick-up in the debt-to-income ratio of households, *which is currently at a historically high level of 150 per cent. *The RBA said it was currently talking to the Australian Prudential Regulation Authority and other members of the Council of Financial Regulators about "further steps that might be taken to reinforce sound lending practices, particularly for lending to investors".




Read more: http://www.smh.com.au/business/the-...home-loans-20140924-10l9eb.html#ixzz3LpSkKz3C

No need to panic Mr Mannering.


----------



## waterbottle (14 December 2014)

trainspotter said:


> Read more: http://www.smh.com.au/business/the-...home-loans-20140924-10l9eb.html#ixzz3LpSkKz3C
> 
> No need to panic Mr Mannering.




Trainspotter, I don't understand your position on Australian housing. Are you saying that this debt to income ratio is okay? That foreign investment is not having an influence on house prices? That the rise will continue?


----------



## sydboy007 (14 December 2014)

the below poses some interesting questions.  well worth asking them of ourselves

http://www.macrobusiness.com.au/2014/12/australian-real-estate-prices-and-the-economy-we-want/



> At essence the question is fairly simple and has been put to me this week as …….
> 
> ‘Can Australia craft a productive economy, and generate income with a competitive exposed sector, with house prices, and the debt to support those house prices, where they currently are?’


----------



## Bill M (14 December 2014)

I don't know about any other areas of Australia other than the northern beaches area of Sydney and the Central Coast of NSW and that is where my observations are based on.

Last Month I sold a unit in Sydney. 2 years ago I got a written valuation for it and at that time it was worth around 425K. I sold that unit for 525K and I sold it in 3 weeks flat. I had several buyers through and had offers starting from 485K. As the offers were coming in I just patiently waited until the offer of 525K came up and the agent advised me that it was the top price for my unit block and that I probably should consider accepting it, I did. The buyer was an Aussie, Aussies love the Northern Beaches and will pay what it takes to get in. 

Since that time I have been actively observing and looking at units around the Gosford (Central Coast) area. I have also been looking online at units in Horsnby. There is very little around and there are hoards of buyers, I am competing with them all.

The big problem is that there very little stock around, too many buyers to compete with. There are unit blocks planned for development but in most cases the projects just have not started. One block in particular was selling units off the plan over a year ago and the original building on site still hasn't been demolished yet, not an iota of progress with most of these approved developments. This only forces existing stock prices to go up.

Some more popular developments like this one in Hornsby are all sold off the plan, nothing left, click on any level in the link to view. This is the kind of apartment I would like to buy, link here: http://www.pacificpoint.com.au/Floorplans.php

Selling a property is the easy part, buying a new one of quality is the hard part. I personally think that if they could build 20,000 extra new apartments around Sydney and Gosford they will all be sold easily. There is a massive shortage, I know as I am looking right now. I ideally would like to see more projects get started and completed, we need the stock.

As for foreign buyers, no doubt they have some influence on the new stock coming onto market but I will say that for existing stock most are are Australians or permanent residents. On Saturday I bumped into some Asian groups looking and they spoke with a Dinky Di accent, just because some people look Asian doesn't mean they are not Australian citizens. They, like me, only just want to buy a decent property and it is not an easy job doing those Saturday open for inspections with the hoards.

So what does this mean for prices? It's only going to keep going up under the circumstances. Anyone have any idea why these approved projects take so very long to get started and completed? I thought there was an increase in unemployment, what's going on?


----------



## trainspotter (15 December 2014)

waterbottle said:


> Trainspotter, I don't understand your position on Australian housing. Are you saying that this debt to income ratio is okay? That foreign investment is not having an influence on house prices? That the rise will continue?




My position of Australian Housing has not changed. The debt to income ratio is WAAAYYYY to high which is why the RBA is looking at ways of reducing this by talking to the Australian Prudential Regulation Authority. The RBA is also looking at restricting interest only loans as a way of regulation:-



> The co-ordinated steps by regulators to put the brakes on investment property loans will pave the way for the Reserve Bank of Australia to cut interest rates, analysts say.
> On Wednesday, the Australian Prudential Regulation Authority unveiled speed limits on investment property loans. The move was part of a decision by the Council of Financial Regulators, which includes the RBA, the Australian Securities and Investment Commission, and federal Treasury.
> The RBA has signalled its intention to use "macro-prudential" type tools that typically place restrictions on home loans that would it allow it to cut rates without fuelling exuberant *property investment.




Read more: http://www.smh.com.au/business/curb...-cut-rates-20141211-124q1g.html#ixzz3LvEDaF4K

Foreign investment has skewiffed statistics due to the lack of reliable data. Like everything in Real Estate it is CERTAIN areas that will increase / decrease due to market forces (read foreign investors)

The rise is over. The RP Data - Rismark report shows the strongest growth in home values over the past six months has been at the *more pricey end of the market at 6.8 per cent*, while more affordable homes have risen 3.5 per cent over that period and been flat nationally over the last three months.

My


----------



## trainspotter (17 December 2014)

Kudos to Bill M for cranking 100k less fees is a great result. Just wondering if you have done a spread sheet on this transaction? Date purchased and all that and maybe capital gain if applicable?

Developers need risk ratio and banks need deposits and binding contracts to make the contract work. Also council / shires need time to think about it. 

Unemployment is going to bite hard in March on the Guvmint purse strings. RBA will continue to make noise to APRA who will restrict interest only loans. Mortgage Insurance companies will tighten guidelines. Business as usual.


----------



## Bill M (17 December 2014)

trainspotter said:


> Kudos to Bill M for cranking 100k less fees is a great result. Just wondering if you have done a spread sheet on this transaction? Date purchased and all that and maybe capital gain if applicable?




Thanks for asking. I don't do spread sheets as such, I wouldn't know how but I have all the figures in my head. I know what it cost me, what I net sold for and the rentals received.

The whole point of stating the 100K part was that at that time a lot well known people on this forum were calling a housing crash, it didn't happen and still hasn't. Had I have listened to these people I wouldn't have made the money I did.

But to be honest the unit was a mediocre return at best. 
Bought the the property in 2003 for 390K all in including all costs.
Sold the property in October 2014 net profit after all expenses 510K. That gave me a clear capital gain of 120K. I bought the unit brand new and paid more than I would have for existing stock, that's why the capital gain is only mediocre. 

During that period of ownership I lived in it for 7 years (that part will be capital gains tax free). Street market value rental would have been $400 p/w. The tenant paid $430 p/w in the last 5 years of ownership.

Capital gains net 120K
Rent I didn't have to pay for 7 years (no mortgage) 145K
Rent received from tenant for nearly 4.5 years was around 100K (no mortgage)

Then there were expenses that need to come out of that, levies, water, insurance, rates etc. As a mate of mine said, it's not that great a return but it's better than losing and you lived in it for free for 7 years.

I reiterate, the last 2 years is where it jumped the most, I had no intention of selling when all the doom and gloomsters were saying the market was going to crash. But then again I never do or think like the herd anyway, just the way I am.


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## sydboy007 (17 December 2014)

perth and darwin investors must be hurting with those kind of rental falls


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## trainspotter (17 December 2014)

Bill M said:


> I reiterate, the last 2 years is where it jumped the most, I had no intention of selling when all the doom and gloomsters were saying the market was going to crash. But then again I never do or think like the herd anyway, just the way I am.




Perfect Bill M


----------



## sydboy007 (18 December 2014)

quite an interesting article.  gives a good historical contex to current prices

http://www.macrobusiness.com.au/2014/12/the-history-of-australian-property-values-redux-2/



> Since 2000, almost all mortgages from both bank and non-bank lenders have allowed for a loan to value ratio (LVR) equal to or more than 80 per cent; in 2008, 26 per cent of mortgage offerings had LVRs equal to or more than 100 per cent. Loan offerings should not be confused with loan approvals.




I/O loans now make up over 60 of investor loans, and over 40% of all mortgages.



> Net rental income losses have mounted for investors, as rents have generally tracked the rate of inflation while housing prices and mortgage debt have simultaneously boomed. The losses are larger than indicated because the ATO does not record data on principal payments, as it is not a legal deduction. Two-thirds of investors were negatively-geared in 2012, a significant rise from the 1990s when only half of this cohort were in the same position.




Probably explains why NG is so untouchable these days.



> The reason why property investors are negatively geared, on aggregate, is the rising interest payment burden on the exponentially-growing stock of mortgage debt. Housing-related expenses have remained steady at around 50 per cent of gross rental income.


----------



## sptrawler (18 December 2014)

sydboy007 said:


> quite an interesting article.  gives a good historical contex to current prices
> 
> http://www.macrobusiness.com.au/2014/12/the-history-of-australian-property-values-redux-2/
> 
> ...




I/O loans at these low rates, makes for very cheap money, if you are in the highest tax bracket. 
It must be under the microscope, however can't see the Government doing anything, other than take any proposed changes to the election.


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## trainspotter (18 December 2014)

sptrawler said:


> I/O loans at these low rates, makes for very cheap money, if you are in the highest tax bracket.
> It must be under the microscope, however can't see the Government doing anything, other than take any proposed changes to the election.




Government won't be doing anything about interest only loans to investors. RBA will muscle APRA into doing this:-



> The Australian Prudential Regulation Authority (APRA) has today written to authorised deposit-taking institutions (ADIs) outlining further steps it plans to take to reinforce sound residential mortgage lending practices. These steps have been developed following discussions with other members of the Council of Financial Regulators.
> 
> In the context of historically low interest rates, high levels of household debt, strong competition in the housing market and accelerating credit growth, APRA has indicated it will be further increasing the level of supervisory oversight on mortgage lending in the period ahead.
> At this point in time, APRA does not propose to introduce across-the-board increases in capital requirements, or caps on particular types of loans, to address current risks in the housing sector. However, APRA has flagged to ADIs that it will be paying particular attention to specific areas of prudential concern.
> ...




http://www.apra.gov.au/MediaReleases/Pages/14_30.aspx

:sleeping:


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## sydboy007 (18 December 2014)

sptrawler said:


> I/O loans at these low rates, makes for very cheap money, if you are in the highest tax bracket.
> It must be under the microscope, however can't see the Government doing anything, other than take any proposed changes to the election.




I'm starting tot hink any changes should be held off till the slow down / recession impact is fully felt.

If APRA does start to limit I/O loans, or NG is quarantined to new builds, any fall in property prices will be blamed on the changes, rather than the unsustainable fundamentals of falling yields while unemployment increases.


----------



## trainspotter (18 December 2014)

sydboy007 said:


> I'm starting to think any changes should be held off till the slow down / recession impact is fully felt.
> 
> If APRA does start to limit I/O loans, or NG is quarantined to new builds, any fall in property prices will be blamed on the changes, rather than the unsustainable fundamentals of falling yields while unemployment increases.




I concur with this statement. The changes are designed to slow down the property market. Talk about shutting the gate after the horse has bolted.


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## sptrawler (19 December 2014)

sydboy007 said:


> I'm starting tot hink any changes should be held off till the slow down / recession impact is fully felt.
> 
> If APRA does start to limit I/O loans, or NG is quarantined to new builds, any fall in property prices will be blamed on the changes, rather than the unsustainable fundamentals of falling yields while unemployment increases.



We are between a rock and a hard place. It isn't going to end well without a brilliant balancing act. I don't think we can pull it off. Anyway I'm looking to buy a bike before they go up.lol


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## banco (19 December 2014)

trainspotter said:


> Government won't be doing anything about interest only loans to investors. RBA will muscle APRA into doing this:-
> 
> 
> 
> ...




That is remarkably weak stuff even for the piss weak financial regulators that Australia is burdened with.


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## Mrmagoo (1 January 2015)

Allowing foreign institutional investors would actually be a good thing as they'll invest for the yield (if you set it up right) and will want long term tenants. They also won't play the control freak power mind games that private land lords play. Many kick tenants out just for the power of it because they can and enjoy seeing a struggling family having to move on. They are sick individuals.


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## waterbottle (1 January 2015)

I remember reading something on macrobusiness (an economics blog) about the long-awaited macroprudential finally being introduced by the end of 2014. Doesn't look like it has


----------



## DB008 (1 January 2015)

Mrmagoo said:


> Allowing foreign institutional investors would actually be a good thing as they'll invest for the yield (if you set it up right) and will want long term tenants. They also won't play the control freak power mind games that private land lords play. Many kick tenants out just for the power of it because they can and enjoy seeing a struggling family having to move on. They are sick individuals.




Wow. The amount of BS you write is comical.

So what your saying is, landlords kick out tenants, just for the sake of it. Yeah right! Can you provide a source to back up your outrageous claims?

A person with an IP would kick out a tenant, not get a good return on their investment (not maximized), for $hit's and giggles. 

I have a feeling from your past posts that you got booted out or had a bad experience with property and it left your with a bitter taste in your mouth.

Simple as that.


----------



## lesm (1 January 2015)

Mrmagoo said:


> Allowing foreign institutional investors would actually be a good thing as they'll invest for the yield (if you set it up right) and will want long term tenants. They also won't play the control freak power mind games that private land lords play. Many kick tenants out just for the power of it because they can and enjoy seeing a struggling family having to move on. They are sick individuals.




What a load of rubbish. A good long term tenant is what a lot of landlords would prefer.
Kicking tenants just as part of a power game is not in a landlord's interests.

There are tenants that deserved to be kicked that don't pay rent or meet their lease obligations and become constantly on breach of the lease.

Agree with the previous poster's comment regarding the potential that you have had a bad experience and now appear to tar all landlords with the same brush.

There are good and bad landlords and tenants.


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## Mrmagoo (5 January 2015)

DB008 said:


> Wow. The amount of BS you write is comical.
> 
> So what your saying is, landlords kick out tenants, just for the sake of it. Yeah right! Can you provide a source to back up your outrageous claims?
> 
> ...




You are probably from QLD or something where the situation is similar. I worked in an office with property investors and the discussions they had about their tenants were saddening.

The reason they can do it is because the next day they will have had 40 people lining up desperate for the place.

That is what happens when you have a housing shortage. People suffer. Something you rich people never seem to understand.


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## Mrmagoo (5 January 2015)

lesm said:


> What a load of rubbish. A good long term tenant is what a lot of landlords would prefer.
> Kicking tenants just as part of a power game is not in a landlord's interests.
> 
> There are tenants that deserved to be kicked that don't pay rent or meet their lease obligations and become constantly on breach of the lease.
> ...




Money corrupts people. Turns them into something they're not. It brings out the evil in everyone. Tenants are just collateral damage in the property boom. Most Australians  are horrid people. They are anti slavery, but given the chance would sell their neighbor into slavery to make a quick buck. Tell me it is not true. You can't.


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## Julia (5 January 2015)

Magoo, I really feel for you.  It must be quite awful to go through life thinking in such a way.

Have you ever considered focusing on all there is for which to be grateful?   There's so much.


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## tech/a (5 January 2015)

Mrmagoo said:


> Money corrupts people. Turns them into something they're not. It brings out the evil in everyone. Tenants are just collateral damage in the property boom. Most Australians  are horrid people. They are anti slavery, but given the chance would sell their neighbor into slavery to make a quick buck. Tell me it is not true. You can't.




Try telling the benificiaries of this group that!

http://en.m.wikipedia.org/wiki/The_Giving_Pledge

Your view is one commonly held by the lower socio- economic groups.
Their laziness extends to armchair observation.

There are bad apples everywhere.
Hop over to a third world country and view corruption on STEROIDS!


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## luutzu (5 January 2015)

Julia said:


> Magoo, I really feel for you.  It must be quite awful to go through life thinking in such a way.
> 
> Have you ever considered focusing on all there is for which to be grateful?   There's so much.




I don't think it's awful to think that way - it may very well be how the world is.

I think you think it's awful because you assume that those who see the world like that are automatically bitter and hateful and just angry and not happy in general. That might be possible, and if that is the case, then it is awful.

But it could very well be that Mr Magoo see that that's how most people are and sadden by it but are not bitter or hateful - just... philosophical.

He might very well try to be a better person seeing the kinda things people do and the misery it cause others. Maybe even try to help more people from seeing that that's how the world often is.


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## Julia (5 January 2015)

luutzu said:


> I think you think it's awful because you assume that those who see the world like that are automatically bitter and hateful and just angry and not happy in general. That might be possible, and if that is the case, then it is awful.



In the case of Magoo, luutzu, no one needs to assume anything.  Just read a few of his posts.  They make clear that despite his earning over $100K p.a., he feels deprived and is indeed full of bitterness and anger.

That's up to him.  It was foolish of me to waste a skerrick of sympathy on his personal choice to look just at what he dislikes.


----------



## Mrmagoo (5 January 2015)

If you think 100k is a lot then you are the fortunate one, because anything less these days pretty much excludes you from the property market as a FHB.


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## Mrmagoo (5 January 2015)

100k is peanuts. compared to cost of living australian wages are very low. we have working poor all over the place now. they run up their credit cards then they live even worse.


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## tech/a (5 January 2015)

Mrmagoo said:


> 100k is peanuts. compared to cost of living australian wages are very low. we have working poor all over the place now. they run up their credit cards then they live even worse.




It's not how much you earn--- it's how you make it work for you.

To someone who squanders their $100k on consumables trying to look like a millionair
Then it's peanuts.
Someone who makes it work for them it's more than adequate.


----------



## waterbottle (5 January 2015)

tech/a said:


> It's not how much you earn--- it's how you make it work for you.
> 
> To someone who squanders their $100k on consumables trying to look like a millionair
> Then it's peanuts.
> Someone who makes it work for them it's more than adequate.




Not everyone can be a winner.

Some food for thought:
In NSW, an above-average salary of $100k (before tax) will allow you to take out a mortgage of $675 167. This figure is according to the CBA home loan calculator and assumes no other monthly expenses, is a 30 year loan and assumes that record low interest rates remain low for the duration of the mortgage.
The average dwellingprice in NSW is $681,900 (likely higher in Sydney, moreso for houses).

The average salary in NSW is actually $75 868
. Assuming a two-person household, the average household income becomes $151 736. According to the CBA loan calculator, this allows you to borrow $1 020 661 - again, assuming record low interest rates, $0 monthly expenses and a 30 year mortgage.


----------



## Julia (5 January 2015)

tech/a said:


> It's not how much you earn--- it's how you make it work for you.
> 
> To someone who squanders their $100k on consumables trying to look like a millionair
> Then it's peanuts.
> Someone who makes it work for them it's more than adequate.



+1.



Mrmagoo said:


> 100k is peanuts. compared to cost of living australian wages are very low. we have working poor all over the place now. they run up their credit cards then they live even worse.



If $100K is peanuts, how on earth can it be that people on the average wage, worse still, those on government benefits, somehow manage to be content with their lot.  They maybe find an extra job, work additional hours, decline to have a $10 take away lunch every day etc, save discretionary income instead of clubbing it away every weekend.

Find a low priced property as first investment.  Build from there.  Most of us have done that, along with mattress on the floor, second hand furniture etc as a start up.

Easier, though, to do no such thing and just keep whining.


----------



## Mrmagoo (5 January 2015)

Julia said:


> +1.
> 
> 
> If $100K is peanuts, how on earth can it be that people on the average wage, worse still, those on government benefits, somehow manage to be content with their lot.  They maybe find an extra job, work additional hours, decline to have a $10 take away lunch every day etc, save discretionary income instead of clubbing it away every weekend.
> ...




Because they bought pre-boom. The ones that rent, they don't survive. They run up credit card debts and end up screwed for life.

You are being deliberately very ignorant because you do not want to accept reality. There are no low priced properties for people on low incomes to purchase anymore.

Most of you bought cheap properties, yes. I agree. Because back then property was cheap.


----------



## sptrawler (5 January 2015)

Mrmagoo said:


> Because they bought pre-boom. The ones that rent, they don't survive. They run up credit card debts and end up screwed for life.
> 
> You are being deliberately very ignorant because you do not want to accept reality. There are no low priced properties for people on low incomes to purchase anymore.
> 
> Most of you bought cheap properties, yes. I agree. Because back then property was cheap.




Obviously you want a property in an area you can't afford.

On $100k/PA there will be areas you can afford, it may be a one bedroom or two bedroom flat, but it will be shelter.
Then you pay it down as quickly as possible, then sell it and upgrade, interest rates at this level give great opportunities.
In a capitalistic system, there will always be inflation, you say it is a boom but when wages etc re balance the price now becomes the norm.

Houses in the 70's were 3 years wages, now they are 7 years wages. But that is only in capital city sought after areas.
Also in the 70's a car was 2 years wages, now they are 1/4 of a years wages, a Black and Decker drill in the 70's was $30 a weeks wages now they are $20 pi$$ money.

Get over it, find an area you can afford, buy a place. Get of your ar$e and fix it up, sell it and move further up the ladder.
Otherwise you will find yourself 60 years old without a house and rents triple what they are know.

Or do you think, the world will stop till you catch up?


----------



## Mrmagoo (5 January 2015)

sptrawler said:


> Obviously you want a property in an area you can't afford.
> 
> On $100k/PA there will be areas you can afford, it may be a one bedroom or two bedroom flat, but it will be shelter.
> Then you pay it down as quickly as possible, then sell it and upgrade, interest rates at this level give great opportunities.
> ...



bla bla bla bla bla.

Life is going to be **** because of deteriorating economic conditions. There is very little if anything that can be done about it outside of major reforms.  

Buy a one  bedroom unit for 300k add in the all the fees and **** and you might as well just buy a house.


----------



## sptrawler (5 January 2015)

Mrmagoo said:


> bla bla bla bla bla.
> 
> Life is going to be **** because of deteriorating economic conditions. There is very little if anything that can be done about it outside of major reforms.
> 
> Buy a one  bedroom unit for 300k add in the all the fees and **** and you might as well just buy a house.




Could try a bit of hard work and restore a dump, rather than bawl your eyes out in self pity.

If you are going to rely on improving economic conditions, for a free ride, get over it.
It ain't going to happen.


----------



## tech/a (6 January 2015)

> *Not everyone can be a winner.*




Yes your right.
I think it has to be in your DNA

We are all born Penniless and naked.

I know this guy reasonably well.
In 1987 at age 30 he had a knock on the door from a bailiff---with a summons from the NAB---$470,000 in 21 days or bankruptcy proceedings to follow.

At that time he wasn't making anything---obviously as he couldn't service his debt/s.
He failed Leaving (year 11).So not the smartest knife in the draw.

His home was worth $63,000 so you could say he started way way behind your $100K guy.

Against advice he didn't go Bankrupt.
Lost everything including Wife no 1 and 2 young ones.

Today a very different story.
He did get his year 11
and most--everything else he made a target through life.

But he had that Rare DNA.

*If you haven't got it---you haven't got it!*


----------



## Mrmagoo (6 January 2015)

tech/a said:


> Yes your right.
> I think it has to be in your DNA
> 
> We are all born Penniless and naked.
> ...




Worth 63k in 1987 ? By age 30 ? He was earning far more than me. How the hell could be borrow 470k ? Sounds c like you gad one  of those huge 80s incomes.


----------



## tech/a (6 January 2015)

Mrmagoo said:


> Worth 63k in 1987 ? By age 30 ? He was earning far more than me. How the hell could be borrow 470k ? Sounds c like you gad one  of those huge 80s incomes.




Self employed.
Debt was business and property related.
In the end profit couldn't service the loan/s interest.
Hence the bank moved in.

All pretty normal except for the 18 % interest rates and
The effect that had on business and individuals alike.

Magoo you need to look outside your shoe box.
Your whokepurpose world is in that box.
Lif the lid and go discover a whole new world.


----------



## Mrmagoo (6 January 2015)

tech/a said:


> Self employed.
> Debt was business and property related.
> In the end profit couldn't service the loan/s interest.
> Hence the bank moved in.
> ...




I've come to learn most rich people were just overpaid tradies from a decade where the unions caused wages and houses to boom. Has very little to do with perspective or anything like that.


----------



## tech/a (6 January 2015)

Mrmagoo said:


> I've come to learn most rich people were just overpaid tradies from a decade where the unions caused wages and houses to boom. Has very little to do with perspective or anything like that.




Yeh $475 k in the red.
Booming wages and housing.
Perfectly spotted Magoo.


----------



## Mrmagoo (6 January 2015)

tech/a said:


> Yeh $475 k in the red.
> Booming wages and housing.
> Perfectly spotted Magoo.




I don't care about your silly little business. Good on you if it made some money. I really don't care about your life story.

What has that got to do with housing ? I could probably go borrow 700k tomorrow. Big deal. That is not achieving a god damned thing.


----------



## Bill M (6 January 2015)

Mrmagoo said:


> What has that got to do with housing ?




Dear Mrmagoo, people on ASF have been trying to help you, they are not against you or anybody else. 2 years ago you wrote something along the lines of "how can a person on Coles salary afford to buy a house". I took that comment on board and showed you clearly how you can, anybody can and how I would have done it there and then at the time of your comment. Then you just disappeared like you usually do and came back a few weeks later with all your cursing and hatred centered around property again.

That was 2 years ago. Since then the Coles salary has increased by around 3% and interest rates came down further. That means that the mortgage you would have taken out would be easier and cheaper to service now. But also one other big thing has happened, the price of that property has jumped around 30%. It's been a busy 2 years since then. If you bought back then you would be sitting on a nice tidy profit right now, in fact you could sell that one bedroom unit now for around 400K and end up with decent hard equity/cash to put towards a bigger 2 bedroom unit.

We are all trying to help you buddy, follow the link in my post, it is still active. That unit sold back then for 297K, today it's worth around 400K.......... just think about that.



Bill M said:


> The Coles salary for a Service Assistant (checkout operator or shelf stacker) is currently $19.70 P/H not including Sundays which is $29.55 P/H. With 17.5% annual leave loading, a bit of O/T and some public holidays it can easily reach $42,000 P/A for a full time employee. That is roughly about $800 P/W gross.
> 
> Now even in an expensive area like the Northern Beaches of Sydney you can still buy a 1 br unit for 300K. Here is one just 5 minutes walk from the beach. http://www.realestate.com.au/property-unit-nsw-dee+why-112319279
> 
> Now how hard would it really be to save 29K for a deposit and borrow $260,000 and pay that off? According to UBanks calculator it would cost $1,455 P/M to pay off this loan at their current rate of 5.37%. $1,455 works out at $363 P/W. I can tell you now I would definitely be able to pay that off on my own even with a Coles salary. With a partner working as well it would be easier. Start small, work hard, be a bit frugal, save money, invest well and it will eventually all fall into place. If I was doing it all over again I would go this route which is the same route I took many years ago.


----------



## tech/a (6 January 2015)

Mrmagoo said:


> I don't care about your silly little business. Good on you if it made some money. I really don't care about your life story.
> 
> What has that got to do with housing ? I could probably go borrow 700k tomorrow. Big deal. That is not achieving a god damned thing.




How terribly unkind.
I'm so hurt Magoo 

Plenty of housing here in SA under $300k
House and land or established.


----------



## skyQuake (6 January 2015)

Mrmagoo said:


> ...most rich people were just overpaid tradies from a decade where the unions caused wages and houses to boom. Has very little to do with perspective or anything like that.




No part of the sentence is true.

Source plz


----------



## Mrmagoo (6 January 2015)

Bill M said:


> Dear Mrmagoo, people on ASF have been trying to help you, they are not against you or anybody else. 2 years ago you wrote something along the lines of "how can a person on Coles salary afford to buy a house". I took that comment on board and showed you clearly how you can, anybody can and how I would have done it there and then at the time of your comment. Then you just disappeared like you usually do and came back a few weeks later with all your cursing and hatred centered around property again.
> 
> That was 2 years ago. Since then the Coles salary has increased by around 3% and interest rates came down further. That means that the mortgage you would have taken out would be easier and cheaper to service now. But also one other big thing has happened, the price of that property has jumped around 30%. It's been a busy 2 years since then. If you bought back then you would be sitting on a nice tidy profit right now, in fact you could sell that one bedroom unit now for around 400K and end up with decent hard equity/cash to put towards a bigger 2 bedroom unit.
> 
> We are all trying to help you buddy, follow the link in my post, it is still active. That unit sold back then for 297K, today it's worth around 400K.......... just think about that.




This is the problem. Borrow 300k, create nothing, DO NOTHING, that is the path to riches. Leverage yourself to the hilt and buy a home. Society is far too used to that easy road. I understand why you think that is the path to riches and the only way to run a society because it is what you're used to happening.

40k a year from working 50k a year from property price increases. Now the next guy has to front up 400k. You don't see anything wrong with that ?


----------



## banco (6 January 2015)

sptrawler said:


> If you are going to rely on improving economic conditions, for a free ride, get over it.
> It ain't going to happen.




Isn't a free ride what any baby boomer with half a brain has relied on with regards to housing prices over the last 30 years or do they think that the price of their property holdings increased due to their virtue?


----------



## sptrawler (6 January 2015)

banco said:


> Isn't a free ride what any baby boomer with half a brain has relied on with regards to housing prices over the last 30 years or do they think that the price of their property holdings increased due to their virtue?




When baby boomers bought their houses, there was no guarantee the value was going to increase.
There are a lot of baby boomers, that don't own a house, didn't want to take the risk. 
Like I've already stated before, my first house was 50 year old fibro ant tile, jinkered and re stumped on a rural block.

That can still be done today, actually people are prepared to give the house away, as long as the purchaser removes it. So what is wrong with someone going that path? Other than it is bloody hard work.


----------



## banco (6 January 2015)

sptrawler said:


> When baby boomers bought their houses, there was no guarantee the value was going to increase.




You're right. They got a free ride from being in the right place at the right time and dumb luck.


----------



## Bill M (6 January 2015)

Mrmagoo said:


> This is the problem. Borrow 300k, create nothing, DO NOTHING, that is the path to riches. Leverage yourself to the hilt and buy a home. Society is far too used to that easy road. I understand why you think that is the path to riches and the only way to run a society because it is what you're used to happening.
> 
> 40k a year from working 50k a year from property price increases. Now the next guy has to front up 400k. You don't see anything wrong with that ?




You are missing the point magoo, the point is it can be done anytime. The only difference now from 2 years ago is that the price jumped more than what it normally does. The Sydney market was slow for quite a few years and in the last 2 years it caught up. The other difference is that in the next 2 years it might not jump at all..............Is it worth taking the risk to rent and get nowhere or buy and have a place of your own? If I was a Coles employee today, I would still buy that 1 br unit and suck it up for being an idiot not buying earlier. Eventually, you will come out in front, it just might take longer than expected.

It has never been an easy road, I am a baby boomer and I bought my first property in Sydney in the late 80's. I worked 2 jobs and my wife worked full time as well, she also juggled TAFE studies 3 nights a week. Cooking a meal at 8 PM after TAFE to save a bit of money is the kind of things we did back then. The road was never easy or guaranteed it was all RISK ON!


----------



## Mrmagoo (6 January 2015)

oh no ! cooking a meal !? at 8pm ! how did you manage  ?


----------



## tech/a (6 January 2015)

Mrmagoo said:


> oh no ! cooking a meal !? at 8pm ! how did you manage  ?




It was tough then
Now we just get the staff to cook it!


----------



## Bill M (6 January 2015)

Mrmagoo said:


> oh no ! cooking a meal !? at 8pm ! how did you manage  ?




Honestly magoo, you are a lost cause. For someone on a 100K a year you are a very bitter person, I can't believe you didn't do the right thing by yourself and save some money and buy a place. 

Anyhow, as they say UP TO YOU..........do what you like buddy.


----------



## Mrmagoo (6 January 2015)

Bill M said:


> Honestly magoo, you are a lost cause. For someone on a 100K a year you are a very bitter person, I can't believe you didn't do the right thing by yourself and save some money and buy a place.
> 
> Anyhow, as they say UP TO YOU..........do what you like buddy.




You convinced me. Why 1 ? Lets do 6 !!!!!! I'll be a millionaire in 2 years time. Won't even need to work for it. Just sick back and watch the cash flow in.  (sadly this is actually true). Only suckers like what I was work for living. Lets just buy houses. Only way to be a good person. Only way to succeed. 

Wonder where those poor people who weren't smart enough to buy 6 houses like me will live ? Who cares hey ? In the gutter. Maybe a hot tin shed ! Doesn't matter. To the moooonn !! Never been a better time to buy.

Gonna talk to my bank manager tomorrow. Need to borrow 2 mill.


----------



## Mrmagoo (6 January 2015)

tech/a said:


> It was tough then
> Now we just get the staff to cook it!




Yup. I admire you. Working hard to watch houses appreciate is hard work. I hear you had to mingle with peasants at one point and had to once eat baked beans ! Is that also true ?


----------



## waterbottle (6 January 2015)

Mrmagoo said:


> You convinced me. Why 1 ? Lets do 6 !!!!!! I'll be a millionaire in 2 years time. Won't even need to work for it. Just sick back and watch the cash flow in.  (sadly this is actually true). Only suckers like what I was work for living. Lets just buy houses. Only way to be a good person. Only way to succeed.
> 
> Wonder where those poor people who weren't smart enough to buy 6 houses like me will live ? Who cares hey ? In the gutter. Maybe a hot tin shed ! Doesn't matter. To the moooonn !! Never been a better time to buy.
> 
> Gonna talk to my bank manager tomorrow. Need to borrow 2 mill.




MrMagoo, I agree that it is ridiculous to have to be spending so much money on housing, especially when higher prices are being driven up by speculation and government policy. 
But what is the point of complaining? It isn't going to change investor behaviour or policy - and if it did, it would take a long time.

I used to express the same frustrations that you do now. The direction in which society was/is heading because of unaffordable housing is not one that I liked. Fact is, if society wants to head in this direction who are you to stop it?

The options as I see it are:

Accept high house prices and join the herd
Refuse high house prices and move to a different society
Stay the same


----------



## Centaur (6 January 2015)

Interesting thread over the past couple of years. Best summed up as follows :

The best time to plant a tree was 20 years ....the next best time is today
Trying to pick peaks and troughs in the property cycle has seen far more losers than winners.
Key to buying property is location, location, hold.
Property Investment is a great component of any diversified wealth creation strategy.

Just some thoughts. Mr Magoo - "You don't fatten a cow by weighing it"


----------



## Mrmagoo (6 January 2015)

waterbottle said:


> MrMagoo, I agree that it is ridiculous to have to be spending so much money on housing, especially when higher prices are being driven up by speculation and government policy.
> But what is the point of complaining? It isn't going to change investor behaviour or policy - and if it did, it would take a long time.
> 
> I used to express the same frustrations that you do now. The direction in which society was/is heading because of unaffordable housing is not one that I liked. Fact is, if society wants to head in this direction who are you to stop it?
> ...




Nope. Tomorrow I'm going to do it. Then when they reject my loan application for not having 500k in the bank I'm sure the financial wizards on this  forum will find me a broker !


----------



## Bill M (6 January 2015)

Mrmagoo said:


> You convinced me. Why 1 ? Lets do 6 !!!!!! I'll be a millionaire in 2 years time. Won't even need to work for it. Just sick back and watch the cash flow in.  (sadly this is actually true). Only suckers like what I was work for living. Lets just buy houses. Only way to be a good person. Only way to succeed.
> 
> Wonder where those poor people who weren't smart enough to buy 6 houses like me will live ? Who cares hey ? In the gutter. Maybe a hot tin shed ! Doesn't matter. To the moooonn !! Never been a better time to buy.
> 
> Gonna talk to my bank manager tomorrow. Need to borrow 2 mill.




Where I live is not a brilliant area, Central Coast that is, it's not Sydney. Over here we have the battlers, unemployed and the real true blue Aussies who are willing to commute to Sydney 200 KMS return to make a living. No rich foreigners buying here yet. If there is one thing I can say and have learnt is that the poor people have pride in themselves, they have their fibro homes and fly an Aussie flag on a flagpole in their front yard. They might not have much but that fibro home is theirs and they are happy. This is the true Aussie spirit, they are great people and I respect them. It's not about the money, it's about living in your own home, everyone can do it, you can too.


----------



## Mrmagoo (6 January 2015)

Bill M said:


> Where I live is not a brilliant area, Central Coast that is, it's not Sydney. Over here we have the battlers, unemployed and the real true blue Aussies who are willing to commute to Sydney 200 KMS return to make a living. No rich foreigners buying here yet. If there is one thing I can say and have learnt is that the poor people have pride in themselves, they have their fibro homes and fly an Aussie flag on a flagpole in their front yard. They might not have much but that fibro home is theirs and they are happy. This is the true Aussie spirit, they are great people and I respect them. It's not about the money, it's about living in your own home, everyone can do it, you can too.




The true Aussie spirit is about taking from the less fortunate and giving to yourself.


----------



## Bill M (6 January 2015)

Mrmagoo said:


> The true Aussie spirit is about taking from the less fortunate and giving to yourself.



You love stirring people up don't ya. All the best magoo, take it easy.


----------



## ROE (6 January 2015)

there is a simple thing people can do if everything else is too hard

start with

change your thoughts and you will change your world -

being happy, learn from others and your world will be filled
with happiness and you acquire knowledge that you can use to better
your life and other close to you 

being grumpy, envy you will live in misery and the world
will be against you.

you have the power to pick which side you want to be on each day


----------



## banco (6 January 2015)

ROE said:


> there is a simple thing people can do if everything else is too hard
> 
> start with
> 
> ...




I'm surprised all that can fit in a fortune cookie.


----------



## Julia (6 January 2015)

ROE said:


> there is a simple thing people can do if everything else is too hard
> 
> start with
> 
> ...



+1.  Attitude is everything.


----------



## Julia (6 January 2015)

ROE said:


> there is a simple thing people can do if everything else is too hard
> 
> start with
> 
> ...



+1.  Attitude is everything.  
Every time we pick ourselves up from some untoward event is an opportunity to build resilience and strength for the future.


----------



## Mrmagoo (6 January 2015)

Julia said:


> +1.  Attitude is everything.




As are low interest subsidised government loans.


----------



## waterbottle (6 January 2015)

Mrmagoo said:


> As are low interest subsidised government loans.




I don't know what you want to hear


----------



## Mrmagoo (6 January 2015)

waterbottle said:


> I don't know what you want to hear




Nothing at all. I make a post and a bunch of boomers decided I've asked for their advice which I haven't asked for.


----------



## againsthegrain (7 January 2015)

Its all going to finish one way or another,  the so called true aussies are slowly selling themselves out to china. 

The only true aussies were the aborigines,  now the Anglo-Saxon will be the next aborigine while our new overlords from the north get ready to flush oir rivers with acid waste and inject plastic into food to make it even more cheaper to produce


----------



## Mrmagoo (7 January 2015)

Oh yteah this true blue Aussie wants me and others to buy up all the affordable housing where he comes  from so that all the poor people won't be able to afford to live anywhere in Australia. It is the Australian w ay !


----------



## Mrmagoo (7 January 2015)

againsthegrain said:


> I
> The only true aussies were the aborigines,  now the Anglo-Saxon will be the next aborigine while our new overlords from the north get ready to flush oir rivers with acid waste and inject plastic into food to make it even more cheaper to produce




That is so far from true and incredibly racist.

You also discount the impact of Celtic people's and miscellaneous European and Chinese migrants who have called Australia home for the last 200 or so years and have no other nationality to speak of.


----------



## luutzu (7 January 2015)

againsthegrain said:


> Its all going to finish one way or another,  the so called true aussies are slowly selling themselves out to china.
> 
> The only true aussies were the aborigines,  now the Anglo-Saxon will be the next aborigine while our new overlords from the north get ready to flush oir rivers with acid waste and inject plastic into food to make it even more cheaper to produce




Keep dreaming Musashi.

The Chinese investors are being screwed by the Australians, both true blue and not so true blue, and don't know it.

It's all going to end in tears when interest rates are raised and some sort of foreign ownership levy are added... Never learn.


----------



## againsthegrain (7 January 2015)

luutzu said:


> Keep dreaming Musashi.
> 
> The Chinese investors are being screwed by the Australians, both true blue and not so true blue, and don't know it.
> 
> It's all going to end in tears when interest rates are raised and some sort of foreign ownership levy are added... Never learn.




Lets hope so


----------



## Quincy (7 January 2015)

Bill M said:


> Where I live is not a brilliant area, Central Coast that is, it's not Sydney. Over here we have the battlers, unemployed and the real true blue Aussies who are willing to commute to Sydney 200 KMS return to make a living. *No rich foreigners buying here yet*. . . .




I was born in Eastwood well over half a century ago and am currently renting here.  I go to most of the auctions in and around Eastwood and I can't remember the last house to sell in Eastwood that was not bought by "a rich foreigner" (Chinese). The below article says it all (albeit that the subject sale occurred a bit over a year ago now).

I find it quite amusing that in the article, Wayne Vaughan (Selling Agent) is quoted as saying :-


> In 24 years I have never seen anything like it," Mr Vaughan, of McGrath Epping, said. "There's just no rhyme or reason behind it."



 Well Wayne, the photo of the auction might provide a logical explanation.


http://www.news.com.au/finance/real...ng-their-budgets/story-fncq3era-1226714027139

*A plain house in an average suburb has sold for $2.385 million as desperate buyers keep blowing their budgets *



This Eastwood property sold for $1 million above reserve. Source: Supplied 


IT is an ordinary house in an average Sydney suburb, but for the owners it held a $1 million surprise.  

The only thing unusual about the small, three-bedroom home at 13 Richards Ave in Eastwood, northwest Sydney, is the 999sq-m corner block.

But estate agent Wayne Vaughan - who sold the house last week for an amazing $2.385 million - said even that didn't account for it reaching $1 million above reserve, proving there is no limit to what desperate buyers will currently fork out for their dream home.

"In 24 years I have never seen anything like it," Mr Vaughan, of McGrath Epping, said. "There's just no rhyme or reason behind it."



Crowds at the Eastwood auction. Source: Supplied 

"We looked at recent sales in the area," he said. "During the campaign, a five-bedroom, two-bathroom house at 16 Auld Ave (an adjoining street) sold for $1.48 million. That was on 1030sqm.

``Another home at 4 Auld Avenue sold for just over $2 million. That was one of the best homes in the suburb and was sitting on 1200 sqm, which highlights how amazing this result was."

Large blocks usually attract developers, but the winning bidder was a mother and son team.

"Developers looking to subdivide were out of play from about $1.2 million," said Mr Vaughan. "It was an estate property, so the son and daughter handling it have both become instant millionaires."



Inside the Eastwood property. Source: Supplied 

During the bidding, the vocal crowd helped push the price well beyond reason.

"Before the auction, I hadn't even contemplated anything over $1.5 million," Mr Vaughan said. "Those big crowds help build the atmosphere. There was a huge cheer when it hit $2 million."


----------



## tech/a (7 January 2015)

Well that's the Richest group of Asian buyers I've ever seen!!
How then do the well heeled dress!!

But I think you may be looking at it (This sale) from a one-sided view.

If Its a corner block of 1000 meters you could get 4 or 5 apartments on it.
At a building cost of say $350/$450K each 
it wouldn't be unreasonable to expect $1.1 or so for each to sell for.

There is a drink in that to the tune of around $500K

If you understand that stupid prices *AREN'T* paid by stupid people---
*The ridiculous will look totally different*.

Many years ago I passed in a Corner block at $850K and it was sold for $965K
My remark to others was someone didn't do their home work As Id come up with 4 blocks
Turns out it was *ME!!*

They subdivided it into 5 and made a killing!


----------



## needsajet (7 January 2015)

It seems that residential rental yields have fallen to the point that residential property prices should stabilize, or maybe plus/minus 5% in the capital city markets for 2015. I've read that commercial property price growth has lagged behind residential. Would this be a good time to look at commercial property? Or with a slowdown coming, it might be a bit early? I'm really interested to hear what others are thinking about future property prices.


----------



## Mrmagoo (7 January 2015)

tech/a said:


> Well that's the Richest group of Asian buyers I've ever seen!!
> How then do the well heeled dress!!
> 
> But I think you may be looking at it (This sale) from a one-sided view.
> ...




The article was about $1 million over reserve, not 115k.


----------



## tech/a (7 January 2015)

Mrmagoo said:


> The article was about $1 million over reserve, not 115k.




Magoo
You didn't get to year 11 did you?

Say 5 apartments --land cost $2.38 million/5 = $476K
Development costs say $450K each
Total cost to B/E $926K each
So if they got $1.1 million each thats $170K profit each.
OR
If they sold for $990,000 each thats $64000 each still $320K.

My reply was *HOW and WHY *---well possibly.


----------



## Mrmagoo (7 January 2015)

tech/a said:


> Magoo
> You didn't get to year 11 did you?
> 
> Say 5 apartments --land cost $2.38 million/5 = $476K
> ...




Not sure  how that is relevant ? Is the profit the price over reserve for which the property sold or am I missing something ? Because it seems like you're talking about a profit making venture not sale over reserve price.


----------



## tech/a (7 January 2015)

needsajet said:


> It seems that residential rental yields have fallen to the point that residential property prices should stabilize, or maybe plus/minus 5% in the capital city markets for 2015. I've read that commercial property price growth has lagged behind residential. Would this be a good time to look at commercial property? Or with a slowdown coming, it might be a bit early? I'm really interested to hear what others are thinking about future property prices.




Personally I'm staying away from Commercial.

I sold my last holding last year at my cost. I couldn't get that now.
I've just sold one of 2 units to reduce my rental portfolio as I agree with you.
Stagnant rental and less than acceptable capital gain has me not wanting
the rental hassell. The other is on the market.

That leaves development which is in my view the only way to go with
property in today's markets.
Looking for Corner blocks with good size to fit minimum
of 3 on to Torrens Title---Best sellers are individual dwellings not corporate or Strata--in my opinion.


----------



## tech/a (7 January 2015)

Mrmagoo said:


> Not sure  how that is relevant ? Is the profit the price over reserve for which the property sold or am I missing something ? Because it seems like you're talking about a profit making venture not sale over reserve price.




Magoo---seriously???

The OP was as was the Agent blown away by the price over reserve. (Yes the seller pocketed a packet.)

There is a thread of argument that these greedy Chinese are coming in and paying stupid 
prices that us mere mortals cant even entertain.

I'm showing you and others why the figure is just a business deal and pointing out that the people in the crowd were no different to 95% of blue collar Australia---other than their obvious race.
I guarantee that next door---not on a corner block would only sell ate standard retail pricing.

There is *NO MYSTERY*.
Other than the Dumb agent---


----------



## Mrmagoo (7 January 2015)

tech/a said:


> Magoo---seriously???
> 
> The OP was as was the Agent blown away by the price over reserve. (Yes the seller pocketed a packet.)
> 
> ...




So have they subdivided it ?

I think you've just had a it really good for a very long time and are detached from reality. Most people are detached from reality once they become wealthy so it is normal. To think that $2 million for a  basic home is justifiable just shows how long you have been out of the real world and how little attachment (if any) you have to people who work for a living and don't speculate on real estate.

I take home what ? 60k a year ? So to me even a 280k mortgage is a hell of a lot of money. Your $2 million business deal for a normal family home defies belief. 

The fact you expect others to pay 900k for a small unit so you can make 320k for doing nothing also defies belief. Where is your understand of the value of money ? Do you have any idea how long it would take to earn 900k ?

Would you even have that much money if it weren't for the property boom ?


----------



## tech/a (7 January 2015)

Magoo

*Let me not only introduce you to reality but also educate you.*

Years ago Greeks/Italians/Yugoslavs did as the Chinese and Indian Cultures do today (Some of them).
They form together as Co-ops. There maybe 10 or more of them in one (Co Op) like the one you see presented as "Remarkable"
This explains why there are so many people at the auction---all wanting to be able to see how their group go.

They start with the eldest in the group and free hold a home for them first and finish with the youngest.
As a group they can achieve that which an individual cannot.   
Not only that-----they need only employ a licensed Project manager and they can build themselves without a great deal of labor cost---more profit for the Co op!!
Ill guarantee you most of the constituents in the Co Op wont be earning as much as you.

*This is the way of life now.*

We --developers who started Naked and penniless just like you---have to compete with these guys!
My first home was $37K and my wage $8k a year.----and interest rates 10% that went to 18%

Don't give me the woe is me rubbish---get smart---even a dumb ass with no year 11 made it!


----------



## Mrmagoo (7 January 2015)

tech/a said:


> Magoo
> 
> *Let me not only introduce you to reality but also educate you.*
> 
> ...




Stop trolling. Prices were at 3 times income, they're now 8 to 10 times income. What do you want ? 30 times income in another 30 years ? Great social development.


----------



## tech/a (7 January 2015)

Mrmagoo said:


> Stop trolling. Prices were at 3 times income, they're now 8 to 10 times income. What do you want ? 30 times income in another 30 years ? Great social development.




Sorry ---- perhaps some other members will find benefit from the posts.
Your handle of Magoo is brilliant!


----------



## Value Collector (7 January 2015)

Mrmagoo said:


> To think that $2 million for a  basic home is justifiable just shows how long you have been out of the real world and how little attachment (if any) you have to people who work for a living and don't speculate on real estate.




It is justifiable for a developer, because he is not paying that price for the basic family home, He is paying that price for the development potential.



> I take home what ? 60k a year ? So to me even a 280k mortgage is a hell of a lot of money. Your $2 million business deal for a normal family home defies belief.




Just because its a normal family home today, doesn't mean it will always be. and just because you couldn't personally fund such an investment in your present state, doesn't mean it's wrong or immoral that others can.

I mean right now there is a large shopping centre development going near my home, it will probably run into the 100's of millions, does the fact that I couldn't afford to do a development that large mean it's immoral that another group can? offcourse the development group could out bid the average punter for the land, because the average punter doesn't have the skill set required to fund and complete a large shopping centre, but again that's not wrong, its just how it is.

If you want part of it you can invest some of your $60K salary in a development company.




> The fact you expect others to pay 900k for a small unit so you can make 320k for doing nothing also defies belief. Where is your understand of the value of money ? Do you have any idea how long it would take to earn 900k ?




Again, just because you don't want to buy something, or can't afford it, doesn't mean others can not.

If the developer over pays for that land, so what? it's their money at risk.




> Would you even have that much money if it weren't for the property boom




that's the same with everything, the vast majority of rich people, are rich because they made prior investments.


----------



## trainspotter (7 January 2015)

tech/a said:


> Sorry ---- perhaps some other members will find benefit from the posts.
> Your handle of Magoo is brilliant!




Give up tech/a .. stoopid is as stoopid does.


----------



## trainspotter (7 January 2015)

HERE IS HOW IT IS DONE KIDDIES:-

HYPOTHETICAL SUBDIVISION OF	Lot 26 ANYWHERE IN AUSTRALIA


GROSS REALISATION			AUD			
Fourteen two storey apartment site	                    8 	 AT	 $ 375,000 	= $3,000,000 	
		                                                                    6 	AT 	 $ 395,000 	= $2,370,000 	


                                                               TOTAL		14 				    $5,370,000 

LESS				ADVERTISING/SELL LEGAL AT		3.00%		            $161,100 			
STRATA TITLE FEES
	1.00%	$53,700                                                                                       $214,800 


SUBTOTAL							                                                    $5,155,200 

DEVELOPMENT COSTS INFRASTRUCTURE		13.50%			                    $613,174 

SUBTOTAL						                                                  	   $4,542,026 


BUILDING COSTS							


COST PER UNIT	$220,000 					                                   $3,080,000 	
MANAGEMENT	3.00%					                                                   $92,400 	
							                                                                   $3,172,400 
							                                                                   $1,369,626 

INTEREST ON DEVELOPMENT COSTS					
OVER HALF THE DEVELOPMENT PERIOD OF	0.333 	  YEARS			
AND HALF OF THE SELLING PERIOD OF	0.333 	  YEARS			
AT			10.00%	  P.A.		                                                           $105,641 
							                                                                   $1,263,986 



						                                                           Subtota    $1,263,986 

RATES AND TAXES OVER ALL THE					
DEVELOPMENT/APPROVAL PERIOD OF	1.5 	  YEARS			
AND HALF THE SELLING PERIOD OF	1.5 	  YEARS		    $20,521 	      $20,314.00 
AT			1.00%	  P.A.			                                              $1,243,672 


							                                                             $1,243,672 

ADOPT HOUSE COMPONENT VALUE				                          AUD     $1,240,000 



GST EXCLUSIVE VALUATION                                                                          $1,240,000.00 


GROSS REALISATION % COMPLETE		23.09%	
	                                                                                                             $5,370,000 					


GST INCLUSIVE VAL
	(CURRENT VALUE *11)/(10+.75.20)			$1,333,214


----------



## Julia (7 January 2015)

needsajet said:


> It seems that residential rental yields have fallen to the point that residential property prices should stabilize, or maybe plus/minus 5% in the capital city markets for 2015. I've read that commercial property price growth has lagged behind residential. Would this be a good time to look at commercial property? Or with a slowdown coming, it might be a bit early? I'm really interested to hear what others are thinking about future property prices.



I was thinking about commercial property a couple of months ago:  development of professional suites adjacent recently completed private hospital.  Details offered included 8% yield plus potential for capital gain.
However, an almost identical block over the road has been completed for some months now and only two out of, I think, 8 are leased.  So occupancy would be a vital factor.
My conclusion was that money in stocks is more liquid, with much less potential worry and uncertainty.
If the SP drops one can instantly get out.  No tenants, no maintenance, no body corporate, yada yada.


----------



## tech/a (7 January 2015)

Where's your land cost?


----------



## trainspotter (7 January 2015)

tech/a said:


> Where's your land cost?




The land cost is the 1.24 million. This is a reverse valuation to see what you would pay for a block of land to develop. It is in an EXCEL spreadsheet but it did not translate all the cells / data across when I uploaded it here. 

There should also have been a profit and risk margin in there at 8% of gross sale value in the figures. Another 400k or so in the pocket.


----------



## tech/a (7 January 2015)

trainspotter said:


> The land cost is the 1.24 million. This is a reverse valuation to see what you would pay for a block of land to develop. It is in an EXCEL spreadsheet but it did not translate all the cells / data across when I uploaded it here.




Thnx


----------



## Mrmagoo (7 January 2015)

Value Collector said:


> It is justifiable for a developer, because he is not paying that price for the basic family home, He is paying that price for the development potential.
> 
> 
> 
> ...




Don't care about individual money making ventures. I'm saying society is screwed beyond repair.


----------



## Joe Blow (7 January 2015)

I've removed a couple of posts from this thread that I have deemed inappropriate. Can we make a fresh start from this point on please? No insults, no attacking others, just discussion of Australian real estate.

Thank you for your co-operation.


----------



## paulyy (7 January 2015)

Hi all, long time reader, first time poster. my partner and I have a business, and are currently renting a home also. We have been looking at getting a commercial property (buy or rent) and trying to live in it also. From what I can gather, a business is allowed to have '24/7' security which appears to be the loophole people use to live in commercial property. We also may be able to sway it so that I purchase the property, and the business (in her name) could lease it from me. Anyone's thoughts or experience on any of this?


----------



## trainspotter (9 January 2015)

paulyy said:


> Hi all, long time reader, first time poster. my partner and I have a business, and are currently renting a home also. We have been looking at getting a commercial property (buy or rent) and trying to live in it also. From what I can gather, a business is allowed to have '24/7' security which appears to be the loophole people use to live in commercial property. We also may be able to sway it so that I purchase the property, and the business (in her name) could lease it from me. Anyone's thoughts or experience on any of this?




Hey paulyy - Not sure on the "living" arrangements in commercial property but I know that local councils etc. frown upon this matter. I have spent many a night sleeping in a commercial property (read too pissed to drive) but it was never a long term thing even though there was an ablution block internally. I have heard of people living inside the shed in a caravan and getting away with it as the caravan is movable / transportable?

Maybe a phone call to the local council/shire and to your accountant might clear this matter up for you.


----------



## Julia (9 January 2015)

Hey, magoo, how about a 'tiny house'?   I've been hearing about a lot of people finding this a solution.
http://tinyhousesaustralia.com/


----------



## McLovin (9 January 2015)

trainspotter said:


> Hey paulyy - Not sure on the "living" arrangements in commercial property but I know that local councils etc. frown upon this matter. I have spent many a night sleeping in a commercial property (read too pissed to drive) but it was never a long term thing even though there was an ablution block internally. I have heard of people living inside the shed in a caravan and getting away with it as the caravan is movable / transportable?
> 
> Maybe a phone call to the local council/shire and to your accountant might clear this matter up for you.




I'm pretty sure the council will tell you it's a no-goer. Twenty four hour security is not the same as setting up camp. Aren't there differences as well wrt to fire safety?


----------



## sptrawler (9 January 2015)

trainspotter said:


> Hey paulyy - Not sure on the "living" arrangements in commercial property but I know that local councils etc. frown upon this matter. I have spent many a night sleeping in a commercial property (read too pissed to drive) but it was never a long term thing even though there was an ablution block internally. I have heard of people living inside the shed in a caravan and getting away with it as the caravan is movable / transportable?
> 
> Maybe a phone call to the local council/shire and to your accountant might clear this matter up for you.




A mate of mine lived in his factory unit for 30 years, bought himself a house 6 months ago. As far as I know, he just kept it low key and flew under the radar. That was a factory unit with 10k's of Perth CBD.


----------



## qldfrog (11 January 2015)

keep low is the key, but nothing prevent you having proper kitchen/toilet/shower in your office and a bed to have a nap;
It is done indeed
would be different if you have a family with kids  etc but as a single or maybe even couple...


----------



## trainspotter (11 January 2015)

McLovin said:


> I'm pretty sure the council will tell you it's a no-goer. Twenty four hour security is not the same as setting up camp. Aren't there differences as well wrt to fire safety?




Well it's a definite no-goer due to health regulations and commercial sheds are classified as non habitable areas (Class 10a Building Codes of Australia)  http://www.abcb.gov.au/


----------



## Value Collector (11 January 2015)

trainspotter said:


> Well it's a definite no-goer due to health regulations and commercial sheds are classified as non habitable areas (Class 10a Building Codes of Australia)  http://www.abcb.gov.au/




What about those retail strip shops that have flats attached for the owners to live in?


----------



## tech/a (11 January 2015)

It's all about ZONING


----------



## sptrawler (14 January 2015)

IMO The implosion in Perth has commenced, I think 2015 will be ugly in W.A.

https://au.news.yahoo.com/thewest/a/25989147/perth-rents-take-a-tumble/


----------



## stockGURU (26 January 2015)

With the Australian dollar on the decline, will this make Australian real estate more attractive to overseas buyers and help support prices by increasing demand?


----------



## waterbottle (29 January 2015)

To the property experts: Do house prices ever reach a limit, even with continuous rate cuts?
I would imagine that price is ultimately dependent on what people can pay, and this is dependent on how well people can service a loan, which in turn is dependent on what people can earn.
So if income never increases, even with falling interest rates, is it possible for house prices to remain stagnant? Has anything like this happened before?


----------



## sydboy007 (29 January 2015)

http://www.thebull.com.au/articles/a/51688-queensland-worst-for-mortgage-defaults.html

Queensland was the worst performing state, with five of the worst 20 performing postcodes by number of bad mortgages, and eight of the worst 20 postcodes by value.

Four regions in the state's south east - Ipswich, Logan, Gold Coast East and Gold Coast West - have been among the worst performing regions for mortgage repayments since March 2011.

WORST 10 POSTCODES FOR LATE MORTGAGE PAYMENTS, BY NUMBER
1 - Kingston, Qld (postcode 4114)
2 - Cessnock, NSW (2325)
3 - Goodwood/Montrose, Tas (7010)
4 - Aldinga, SA (5173)
5 - Green Valley, NSW (2168)
6 - Laidley, Qld (4341)
7 - Mount Isa, Qld (4825)
8 - Hillside, Vic (3037)
9 - Budgewoi, NSW (2262)
10 - Corio, Vic (3214)


----------



## sydboy007 (29 January 2015)

stockGURU said:


> With the Australian dollar on the decline, will this make Australian real estate more attractive to overseas buyers and help support prices by increasing demand?




I tend not to want to buy an assett in a curreny that is likely to fall strongly against the AUD.

It will be interesting to see how the Chinese react, especially since they're losing massively in the currency wars with their major pegging against the USD.

If you can get the money out before any devaluation occurs you could make some good profits.

Still for a lot of Chinese it's just getting the money out of the country that's important.  The return on investment seems to be a very secondary consideration.


----------



## waterbottle (29 January 2015)

sydboy007 said:


> I tend not to want to buy an assett in a curreny that is likely to fall strongly against the AUD.
> 
> It will be interesting to see how the Chinese react, especially since they're losing massively in the currency wars with their major pegging against the USD.
> 
> ...




x2 why would you invest in AUD when you can invest in USD? All they would be doing is exposing themselves to a greater downside currency risk


----------



## moXJO (3 February 2015)

Prices have surprised to the upside in my area. I was expecting the heat to come off a bit/lot about june 2014. Man was I wrong.

 I am seeing a lot of middle class families struggling though at the moment with regards to money/work. Half a dozen I directly know that cannot afford eating dinner every night. Not sure what the mortgage/bill stress is overall but it must eventually have an effect. 

I think those that are under stress in sydney sell then move out to cheaper areas from others under stress with the same idea. At the moment the market is still holding up fine. Haven't looked at the rental figures though. 

Friend sold their house the other day in the first hour of opening (told them to bump the price up by $50k as it was to cheap). Agents seem to be drastically under quoting  what a house is currently worth just to get the sale. 
Still a sellers market by a mile.


----------



## ROE (5 February 2015)

I sold a property recently and it is a hot market, sold within a week
low interest rate is having another resurgent in price after a year or two of sleep.

and Tuesday rate cut, it is a seller market right now.

The doom slayer has to stay low for while before predicting another crash


----------



## Tyler Durden (8 February 2015)

Been talking to a couple of Chinese friends who have friends and relatives from China buying property here, and they said the Chinese still think the prices here are cheap.


----------



## CanOz (8 February 2015)

Tyler Durden said:


> Been talking to a couple of Chinese friends who have friends and relatives from China buying property here, and they said the Chinese still think the prices here are cheap.




TD, they're correct in their thinking. Its not easy to compare apples with apples though. For example, the place I'm living in now in northern China, across from a major international hotel, alongside the river, would cost about 3-4 milion CNY. That would buy a house on the beach on Magnetic Island in QLD. No CBD, no Chinatown though. No great schools, or shopping.

So lets take a big city, second city to the capital, say Sydney. Close to the CBD, apartment for apartment i reckon would be the closest to apples and apples, say a nice townhouse in Randwick, 1.6 million. Shanghai, 15 million for a comparable place not too far from the CBD. 

They don't get rural, they just don't understand rural land. You could pick up 120 acres in QLD not far from Brisbane. They're not looking at rural unless they're looking to raise dairy cattle and export milk.

How about the GC, 1-2 million for a high rise on the GC. That's not going to get you much here for that lifestyle...not the clean air, clean water, lack of crowds, pleasant climate.

Then on top of all this, you've got the currency difference. A million doesn't equate to allot of value here. So when you tell them that a house is a million bucks in Australia, they're skeptical and are thinking maybe we should look for a bigger house, or better location...

Lots to compare, but difficult to compare.

CanOz


----------



## banco (8 February 2015)

Tyler Durden said:


> Been talking to a couple of Chinese friends who have friends and relatives from China buying property here, and they said the Chinese still think the prices here are cheap.




All the more reason to enforce the laws and keep them out.


----------



## Mrmagoo (10 February 2015)

ROE said:


> I sold a property recently and it is a hot market, sold within a week
> low interest rate is having another resurgent in price after a year or two of sleep.
> 
> and Tuesday rate cut, it is a seller market right now.
> ...




Okay mate you keep believing that when the economy goes to **** and prices crashed you already sold out right ? To the next sucker. I wouldn't listen to a guy giving advice if that advice makes HIM rich.


----------



## Value Collector (11 February 2015)

banco said:


> All the more reason to enforce the laws and keep them out.




All foreigners? or just the Chinese ones?

Do you care if Americans or Brits make investments in Australia?


----------



## banco (11 February 2015)

Value Collector said:


> All foreigners? or just the Chinese ones?
> 
> Do you care if Americans or Brits make investments in Australia?




All foreigners. But I don't see many Americans or Brits buying up houses in Australia.


----------



## So_Cynical (11 February 2015)

waterbottle said:


> To the property experts: Do house prices ever reach a limit, even with continuous rate cuts?
> I would imagine that price is ultimately dependent on what people can pay, and this is dependent on how well people can service a loan, which in turn is dependent on what people can earn.




On the news last week someone said that something like 45% of all property purchases are with interest only loans, and you can only get an interest only loan if you secure it with real estate, so about half of all real estate purchases are by rich people who have considerable real estate holdings.


----------



## Value Collector (11 February 2015)

banco said:


> All foreigners. But I don't see many Americans or Brits buying up houses in Australia.




So how would we justify Australians and Australian companies making foreign investments if we Ban foreign investment here.


----------



## Value Collector (11 February 2015)

So_Cynical said:


> On the news last week someone said that something like 45% of all property purchases are with interest only loans, and you can only get an interest only loan if you secure it with real estate, so about half of all real estate purchases are by rich people who have considerable real estate holdings.




I think your logic is a bit faulty there.

When you buy realestate with a loan, the real estate you just purchased becomes primary security for the loan. 

So people getting interest only loans doesn't mean they have multiple properties, you can put your loan on interest only even if it's your only property.


----------



## banco (11 February 2015)

Value Collector said:


> So how would we justify Australians and Australian companies making foreign investments if we Ban foreign investment here.




I'm not sure your reading comprehension is very good.  I'm merely saying we should actually enforce the existing laws on foreign ownership of residential properties (ie foreigners can't buy built residential properties).


----------



## Value Collector (11 February 2015)

banco said:


> I'm not sure your reading comprehension is very good.  I'm merely saying we should actually enforce the existing laws on foreign ownership of residential properties (ie foreigners can't buy built residential properties).




I am in favour of loosening the laws, Australians invest in residential realestate over seas, I can't see a problem with allowing broader investment here.


----------



## banco (11 February 2015)

Value Collector said:


> I am in favour of loosening the laws, Australians invest in residential realestate over seas, I can't see a problem with allowing broader investment here.




Lots of places have restrictions on foreigners buying property. Just because other jurisdictions decide to shoot first home buyers in the foot doesn't mean we should do the same.


----------



## Bill M (12 February 2015)

banco said:


> Lots of places have restrictions on foreigners buying property. Just because other jurisdictions decide to shoot first home buyers in the foot doesn't mean we should do the same.




I don't know about you Banco but I have a lot of foreign friends and I have travelled extensively overseas and Australians can and do buy property overseas. This is not a new thing and it is easy to do. Some countries are almost begging for foreign buyers. I have mates who own properties in USA, UK, Thailand, Indonesia, Spain and the Philippines and they are just some of the countries I know about for sure.

In the mean time, local rates are down, homes still selling easily and prices are going up.

Up on a visit to the Gold Coast right now, prices hit a peak just before Christmas and have tappered off a little but there is still strong interest in houses that are waliking distance to the shops and the beach.


----------



## Uncle Festivus (13 February 2015)

Bill M said:


> In the mean time, local rates are down, homes still selling easily and prices are going up.




Shouldn't that be ringing alarm bells? 

Why are rates (going) down if all is well?

The is only one reason why Australia, and others, have a property bubble - there is a global glut of money looking for a home. Very little to do with demand as that _perceived_ demand is predicated on the liquidity glut. How it ends, or more importantly when, is unknown, but I think it won't be any more beer and skittles from the sunshine & lollipops brigade.


----------



## DB008 (13 February 2015)

Speaking to engineers (based around Oz) and people in Perth (specifically) - there are zero major projects going forward.

This is ringing alarm bells to me...


----------



## tech/a (13 February 2015)

DB008 said:


> Speaking to engineers (based around Oz) and people in Perth (specifically) - there are zero major projects going forward.
> 
> This is ringing alarm bells to me...




Have friends in Construction in Perth.
They are finding it tough.

Here in Adelaide we are flat out in Civil Construction and plenty of tenders.
Our sister Company in Melbourne is the same.
Brisbane where we have a major supplier---he tells me he's also flat out.

So then there is Sydney----


----------



## qldfrog (13 February 2015)

tech/a said:


> Brisbane where we have a major supplier---he tells me he's also flat out.



????
please tell me if you know what/where they are doing these jobs, I will change my focus to fit..
Am not aware of anything but project on final delivery stage and closing be it residential prop /infrastructure projects
anyway, lucky them..


----------



## tech/a (13 February 2015)

qldfrog said:


> ????
> please tell me if you know what/where they are doing these jobs, I will change my focus to fit..
> Am not aware of anything but project on final delivery stage and closing be it residential prop /infrastructure projects
> anyway, lucky them..




Concrib.
Flat out.


----------



## jank (13 February 2015)

tech/a said:


> Magoo
> You didn't get to year 11 did you?
> 
> Say 5 apartments --land cost $2.38 million/5 = $476K
> ...




1.1 million for a unit in Eastwood? Why would one pay that when they can get similar much much closer to the CBD say inner west or Surry Hills? Also, then 1.1 million for a Unit?

The thing I have learned seeing the wreckage of a property bubble on a country is that people DO pay stupid money for property in the belief that down the road someone else will pay more for said asset. The castles in the sky theory.

This is not going to end well for many. I wonder are there any statistic out there indicating what % of properties are bought for foreigners and/or as buy to let. Someone mentioned that 45% of loans are interest only, that is a sure sign of trouble. When the usually conservative RBA are making noises about Sydney house prices then one has a right to be worried. However, I can't see much changing until the China tap is turned off. When it does, get the popcorn!

Being an immigrant myself, I love this country. Am now a citizen but the only thing that stops me putting down roots here is the insane obsession with property and its frankly crazy prices. This damages a country to a great extent as so much energy and effort is put into the business of building and selling properties to each other. Believe me I have seen this already in Ireland and the results are not pretty!

So many people want the train to keep on rolling though, no one will say stop until external influences dictate it. This then creates huge macro economic issues for Australia due the type of industries its involved in.


----------



## jank (13 February 2015)

Also to add, I know many people who have left OZ, due to the high cost of living here. Too hard to get ahead now. We are talking white collar professionals from Ireland, the UK and US here as well. When I heard now that London is cheap compared to Sydney, it tempts and surprised me. I can earn more over there contracting, have cheaper cost of living (London property prices are falling now) and be much closer to home and live in arguable the most important city in a region of 350 million people (don't tell the French that though.)


----------



## burglar (13 February 2015)

tech/a said:


> Concrib.
> Flat out.




Concrib 
Noice!!

I like the Gabion as well!!

And Farm Gates, Aww I love farm gates!


----------



## McLovin (13 February 2015)

jank said:


> Also to add, I know many people who have left OZ, due to the high cost of living here. Too hard to get ahead now. We are talking white collar professionals from Ireland, the UK and US here as well. When I heard now that London is cheap compared to Sydney, it tempts and surprised me. I can earn more over there contracting, have cheaper cost of living (London property prices are falling now) and be much closer to home and live in arguable the most important city in a region of 350 million people (don't tell the French that though.)




I wouldn't call London cheap. My house in Sydney (Eastern Suburbs) I paid $1.3m for about 18 months ago, today it's probably worth about $1.6m. If I wanted something of equivalent size in London, in a similar area, I wouldn't be getting change from $5m. You can earn more there in certain industries (banking/finance/media) otherwise you're probably worse off there. The difference between London and the Australian capitals is that in Australia there's less of a divide, so you end up with a lot of relatively inexpensive places to live that you wouldn't want to walk around at night and a smaller number of places that have very high prices but have the amenity that you associate with Sydney/Melbourne. And then you've got be able to live with the rain and winter darkness at 3pm.

I think there's a lot of grass is greener.

ETA: I really love London probably my favourite city after Sydney, so I'm not trying to slate it just adding a bit of reality.


----------



## jank (13 February 2015)

Oh, London ain't cheap. Never said it was but I know people who have moved back there from Sydney and they tell me that they find day to day living there cheaper than Sydney. Of course some areas in London are uber expensive just like Sydney. All I am saying is what I heard.
How about a place that has a similar climate e.g. LA, what would 1.3 million buy you there? A lot I would say. 
There are serious issues ahead if property in Australia keeps going to way its going.


----------



## McLovin (13 February 2015)

jank said:


> Oh, London ain't cheap. Never said it was but I know people who have moved back there from Sydney and they tell me that they find day to day living there cheaper than Sydney. Of course some areas in London are uber expensive just like Sydney. All I am saying is what I heard.
> How about a place that has a similar climate e.g. LA, what would 1.3 million buy you there? A lot I would say.
> There are serious issues ahead if property in Australia keeps going to way its going.




I looked at LA late last year because business was seeing me spend so much time in the Americas I considered a move there. Overall I found LA property to be slightly more expensive than Sydney. The places in the US that are cheap are places you wouldn't want to live. Kansas anyone? 

I'm not saying property isn't expensive, but this is a global phenomenon of global cities having inflated property. It's not just Australia.


----------



## jank (14 February 2015)

McLovin said:


> I looked at LA late last year because business was seeing me spend so much time in the Americas I considered a move there. Overall I found LA property to be slightly more expensive than Sydney. The places in the US that are cheap are places you wouldn't want to live. Kansas anyone?
> 
> I'm not saying property isn't expensive, but this is a global phenomenon of global cities having inflated property. It's not just Australia.




Oh of course, global cities will be more expensive because more people want to live and work there.
However, the medium house price in LA is about $529,00, compare to Sydney its well over $800,000. Prob closer to $900,000 now once the new stats are out.

http://www.trulia.com/home_prices/California/Los_Angeles-heat_map/
http://www.zillow.com/los-angeles-ca/home-values/

Now of course if you want to live on Mullholland Drive, Bel Air or by the coast around Malibu then it will be more expensive. There will always be more expensive places in cities.

However, the madness seems to have spread to average homes in average estates. I saw the very same thing in Dublin when I was working and living in Ireland. Average homes in average estates were going for a fortune, for no other reason other then cheap credit and someone who had access to cheap credit would buy it. The crash in 2007/2008 has cut more than 50% of the price of property in Dublin to this day. Dublin is not London or LA but it is the European Silicon Valley in many ways and also a european capital. A 2nd tier city so to speak.

Once the cheap credit tap is turned off either by the RBA or cashed up Chinese, then havoc will reign in the Sydney property market. I just find is strange that intelligent people who are financially literate get sucked into this as well saying this is all 'normal' behaviour. We know through histories how bubbles develop and burst. It is the reason to this day why I will not buy any Australian Bank share. All those SMSF will be sorry in years to come to see their life savings take a hammering. Think it can't happen. Ireland today has NO private bank, all of the nationalised or part nationalised. In the mid 2000's they were the kings on the hill.

I suppose I see it differently, where I lived through the mania and saw a bubble burst at first hand. I see the same things going on here. Some differences may I add, like the influx of cashed up foreigners. The crash will have a different flavour and smell but it will leave the place bloodied and will destroy many a life and savings.


----------



## McLovin (14 February 2015)

jank said:


> Oh of course, global cities will be more expensive because more people want to live and work there.
> However, the medium house price in LA is about $529,00, compare to Sydney its well over $800,000. Prob closer to $900,000 now once the new stats are out.
> 
> http://www.trulia.com/home_prices/California/Los_Angeles-heat_map/
> http://www.zillow.com/los-angeles-ca/home-values/




Well you're comparing houses in Sydney to all home types in LA. What's the median dwelling price in Sydney? I'd guess it's closer to $650k-$700k. That's pretty much exactly what the median LA price is in AUD. And really, who is going to live in some of the really cheap parts of LA like Pacoima or Compton.


----------



## jank (14 February 2015)

McLovin said:


> Well you're comparing houses in Sydney to all home types in LA. What's the median dwelling price in Sydney? I'd guess it's closer to $650k-$700k. That's pretty much exactly what the median LA price is in AUD. And really, who is going to live in some of the really cheap parts of LA like Pacoima or Compton.




Im comparing all homes in Sydney to all homes in LA, i.e. the medium price.  Saw today in the Daily Telegraph that the medium house price in Sydney is over $870k at the end of 2014 with one million being expected expected by the end of 2015.... sure its all normal.

I think one is trying to defend the indefensible here. I have family near Pasadena who have a house in a lovely safe respectible neighbourhood. One can buy a decent 4 bed house there for about 650kish.


----------



## waterbottle (15 February 2015)

Bubble or not, prices will never come down until access to credit is made more restrictive or household incomes begin to fall.
Glen Stevens warned in 2011/2012 that Sydney prices were too high and that "one should not think that property will continue to increase in price just because it did in the past" (to paraphrase) but come 2015 and we've seen record prices.

The RBA says alot of things, but I think it's more important to take note of what they actually do. Interest rates have gone down. There is no way they would resume cutting interest rates in 2015 without an additional rate cut(s), especially with the fall in commodities and high AUD. So the outlook for the future (at least for 2015) is that credit will become cheaper - expectation is that house prices will continue to increase.
A popular macrobusiness blog seems to be championing the idea that macroprudential tools could be used to quell house prices while maintaining the availability of cheap credit (to be used in restructing the economy). They've been pushing this idea for the past 5 or so years, and although it has gained traction, nothing has come of it. My guess is that nothing will come of it, not at least for the next few years.

So you're looking at a picture where credit is cheap; will become cheaper; and will remain cheap for some years to come. The only game in town is property and you have no choice but to play lest you find yourself losing by sitting out on the sidelines.


----------



## banco (15 February 2015)

waterbottle said:


> Bubble or not, prices will never come down until access to credit is made more restrictive or household incomes begin to fall.
> Glen Stevens warned in 2011/2012 that Sydney prices were too high and that "one should not think that property will continue to increase in price just because it did in the past" (to paraphrase) but come 2015 and we've seen record prices.
> 
> The RBA says alot of things, but I think it's more important to take note of what they actually do. Interest rates have gone down. There is no way they would resume cutting interest rates in 2015 without an additional rate cut(s), especially with the fall in commodities and high AUD. So the outlook for the future (at least for 2015) is that credit will become cheaper - expectation is that house prices will continue to increase.
> ...




I don't think APRA would dare introduce serious macroprudential tools.


----------



## waterbottle (15 February 2015)

banco said:


> I don't think APRA would dare introduce serious macroprudential tools.




I completely agree. There was an announcement made approximately mid last year stating that some form of macroprudential was guaranteed to be introduced by the end of 2014, yet nothing was actually done.

Nothing will ever be done.

Hence why housing will continue to increase, until the stance towards cheap credit and higher incomes changes.


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## jank (16 February 2015)

waterbottle said:


> Bubble or not, prices will never come down until access to credit is made more restrictive or household incomes begin to fall.
> Glen Stevens warned in 2011/2012 that Sydney prices were too high and that "one should not think that property will continue to increase in price just because it did in the past" (to paraphrase) but come 2015 and we've seen record prices.
> 
> The RBA says alot of things, but I think it's more important to take note of what they actually do. Interest rates have gone down. There is no way they would resume cutting interest rates in 2015 without an additional rate cut(s), especially with the fall in commodities and high AUD. So the outlook for the future (at least for 2015) is that credit will become cheaper - expectation is that house prices will continue to increase.
> ...




Interesting post. Do banks have guidelines here on what level your mortgage is against your income? Only the past few weeks the Irish Central bank has issued rules on mortgage lending.

http://www.centralbank.ie/press-are...wregulationsonresidentialmortgagelending.aspx

This has been done in an effort to save the banks from themselves, while also taking the poker out of the fire. It seems that this alone has stopped a surge in property prices especially in Dublin.

RBA looks powerless at the moment, too much vested interest in letting property prices grow and grow.


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## McLovin (16 February 2015)

jank said:


> Im comparing all homes in Sydney




No, you're comparing houses. Not everyone lives in houses.



jank said:


> I think one is trying to defend the indefensible here. I have family near Pasadena who have a house in a lovely safe respectible neighbourhood. One can buy a decent 4 bed house there for about 650kish.




The median price in Pasadena is AU$1m and there are a total of eight, four bed homes for sale at $650k or less. None of them I would describe as "decent", but then I guess that's open to interpretation.

Perhaps a case of the grass always being greener? And let's not start talking about San Francisco.


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## Wysiwyg (16 February 2015)

> principal dwelling houses (PDH) mortgage loans are subject to a limit of 3.5 times loan to gross income.




I am sure that ratio is higher in Australia. At a guess, 5 times.


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## jank (16 February 2015)

McLovin said:


> The median price in Pasadena is AU$1m and there are a total of eight, four bed homes for sale at $650k or less. None of them I would describe as "decent", but then I guess that's open to interpretation.




I said _near_ Pasadena 
Where are you getting that $1m figure?
http://www.zillow.com/pasadena-ca/home-values/
http://www.trulia.com/home_prices/California/Los_Angeles-heat_map/



McLovin said:


> Perhaps a case of the grass always being greener? And let's not start talking about San Francisco.




I think its more the case of looking at more sane and affordable homes and property markets around the world than looking at the Sydney property market and think its normal. The Sydney property market is definitely not 'normal' given any historical metrics or any standard metric to measure affordability related to income or rents. Majority of property in Sydney is bought by investors, who are primarily interested in Captial Gains of their underlying asset. Income is a secondary consideration and for foreign buys doesn't even enter the criteria at that much. Of course those who have already bought are on the express train, so have no interest in stopping the train as they themselves now benefit from inflated asset prices, hence why property bubbles emerge so commonly. It is why negative gearing is rarely mentioned. Too many voters benefit from it so no one is going to dare scrap it even though its just a big tax break for property investors with the results self evident.


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## McLovin (16 February 2015)

jank said:


> I said _near_ Pasadena
> Where are you getting that $1m figure?
> http://www.zillow.com/pasadena-ca/home-values/
> http://www.trulia.com/home_prices/California/Los_Angeles-heat_map/






You need to learn the difference between a house and a home. There's a tab on that Zillow page to change it to "single family" under "home type", that's a house. The median for those is $774k or AU$1m. Oh and just for interest's sake, the median price for a four bedroom home in Pasadena is AU$1.3m.

None of this means Sydney is cheap, but it's not unique in that regard. And I certainly wouldn't be moving to LA because houses are cheap.


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## jank (17 February 2015)

Again, for the third time I said that 4 bed house was _near_ Pasadena not in it... and then you accuse me of mixing up house and home? 
Also, bear in mind when the AUD has taken the guts of 20% of its value against USD then of course Sydney prices on paper look better against their international counterparts even though they are still over valued. Add to the mix of course that prices in LA are back to their 2007 peak.... Two huge tailwinds there working for your argument it must be said but I do concede the general point.

However, take for example this.
http://www.zillow.com/homedetails/966-Worcester-Ave-Pasadena-CA-91104/20865390_zpid/

One has to remember that pasadena and the area around it would be regarded as one of the better areas in LA. We are talking northern beaches type of demo graphs here. Would one be able to buy similar home like above for anywhere the same price? The currency is after skewing my arguments against my favor but 6 months ago, that property would have been cheaper in paper and in real terms. However, looking at zillow you will see that the average discount from the list price is a little over 11% (but is falling)

Many other examples.
http://www.zillow.com/homedetails/966-Worcester-Ave-Pasadena-CA-91104/20865390_zpid/
http://www.zillow.com/homedetails/1244-E-Villa-St-Pasadena-CA-91106/20870336_zpid/
http://www.zillow.com/homedetails/426-Santa-Paula-Ave-Pasadena-CA-91107/20878116_zpid/

These are normal decent sized 4 bed houses for your average run of the mill middle class family which are within reach. Nothing like that is within reach in Sydney unless you want to be way out west or settle for a unit. I have no idea of your means but I take it you move in different circles than I do especially when you mention the types of property you were looking at in London and LA. 

See, I am the type of person you should be convincing to a) stay in Australia and b) make roots here. I arrived here as an immigrant over 5 years ago on a Sunday evening and started work that Monday morning and have not been out of work a day since. I have saved the guts of 200k since then with the future in mind. It may be peanuts to you but its a lot of money to me. I know that if you want something you have to go out and earn it. I am not a latte drinking gen Y who thinks everything should fall on their lap, who spends all their income on crap and then wonders why they cant have a McMansion to live in! I am a fiscal conservative who would probably veer on the libertarian side of the liberal party. Yet all is said and done and I just cannot at this moment in time see myself staying here with property so expensive. Why should I do sign my life away for a huge debt, when I could go back to Ireland, the UK, Europe or the US where I could get a job in my field at similar-ish pay, where the cost of living is dramaticly reduced and where property if I wanted to jump in there be much more attainable? As I mentioned many are leaving Australia due to the cost of living pressure. I hardly have any friends left that I made years ago because people are moving on and setting up roots in the US and Europe. Wages are good here. People are making hay while the sun shines, so they are saving like crazy for a few years, then moving on with their lump sum, sometimes to buy a house outright with cash or if not outright a small mortgage that could be paid off in a few years.

I could stay here for another year or two, then go home and buy a 4 bed house with cash, or buy in Sydney and be in debt for over a million even though my deposit could be 300k...... its a no brainer...
I could take my 300k to the US in the quieter parts and buy outright, or go to the Bostons and the LA's of this world and pay for 40-50% of a house leaving something very very manageable to pay off.

Lastly, I have to love the passive aggressive sentiments of the property spruikers... its like 2006 all over again in Ireland. Mention anything negative about property, you were basically lynched by special interests. Remember, when a well respected Irish economist mentioned a negative outlook on Ireland's property market, the PM of the day basically told him to go kill himself....

All documented in Michael Lewis book 'Boomerang'.
http://www.finfacts.ie/biz10/Michael-Lewis-on-ireland.pdf
Required reading for everyone!


----------



## McLovin (17 February 2015)

jank said:


> Again, for the third time I said that 4 bed house was _near_ Pasadena not in it... and then you accuse me of mixing up house and home?




There are houses "near" Sydney that cost a hell of a lot less than US$650k, you could even get one _in_ Sydney for that money. The point remains LA is not some dreamland of affordable housing. Sydney isn't the only city in Australia either, and the median house price in Melbourne is $669k or about $80k cheaper than LA. Brisbane is cheaper still. Maybe consider moving there?



jank said:


> Also, bear in mind when the AUD has taken the guts of 20% of its value against USD then of course Sydney prices on paper look better against their international counterparts even though they are still over valued.




The AUD was at a multi-decade high, I hardly think that should be the basis for comparison. 



jank said:


> One has to remember that pasadena and the area around it would be regarded as one of the better areas in LA. We are talking northern beaches type of demo graphs here.




I see it as being the same as the Hills district, a wealthy inland area. I wouldn't compare house prices to the Northern Beaches because that thin strip of coast line is where everyone wants to live and consequently prices are high. The demography of the two areas (Hills/Nth Beaches) is virtually the same (incomes/% Australian born, university attainment -- ie they're just as insular as eachother) but housing is way more affordable. Plenty of work out that way too, unlike the Nth Beaches which requires a commute down the worst road in Sydney.

As an example...

http://www.realestate.com.au/property-house-nsw-glenhaven-118366887

http://www.realestate.com.au/property-house-nsw-cherrybrook-118411879

http://www.realestate.com.au/property-house-nsw-beaumont+hills-118636987

http://www.realestate.com.au/property-house-nsw-beaumont+hills-118647847

And they all look a little bit more "ready to move into" than the ones you posted.

ETA: That four poster bed in 966 Worcester Ave, Pasadena, looks absolutely ridiculous. It gave me a good chuckle.


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## jank (19 February 2015)

100% increase for some homes with large Chinese demographs in the space of 5 years? All normal as rain I suppose....

http://news.domain.com.au/domain/re...-year-of-the-sheep-dawns-20150218-13i7bz.html


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## Value Collector (23 February 2015)

The first home buyer myth

http://www.smh.com.au/business/the-economy/the-great-first-home-buyer-myth-20150223-13ltlm.html

Turns out first home buyers outnumber investors and foreign buyers.


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## delaroche (23 February 2015)

Value Collector said:


> The first home buyer myth
> 
> Turns out first home buyers outnumber investors and foreign buyers.




This isn't quite 100% accurate as around 1/3 of those FHB are investors themselves (normally referred to as FTB or first time buyers, not first time HOME buyers). This means the % of FHB is still ~15% and investors still outnumber them.


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## Tyler Durden (23 February 2015)

delaroche said:


> This isn't quite 100% accurate as around 1/3 of those FHB are investors themselves (normally referred to as FTB or first time buyers, not first time HOME buyers). This means the % of FHB is still ~15% and investors still outnumber them.




Sorry I don't quite understand the distinction?


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## Modest (23 February 2015)

Value Collector said:


> The first home buyer myth
> 
> http://www.smh.com.au/business/the-economy/the-great-first-home-buyer-myth-20150223-13ltlm.html
> 
> Turns out first home buyers outnumber investors and foreign buyers.




Wouldn't read anything by the SMH regarding RE in AU. Owned by Fairfax, all their RE related stuff is a circle jerk how its up up and away, no mention of WA's declining housing market or anything negative to do with RE.


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## needsajet (23 February 2015)

Modest said:


> Wouldn't read anything by the SMH regarding RE in AU. Owned by Fairfax, all their RE related stuff is a circle jerk how its up up and away, no mention of WA's declining housing market or anything negative to do with RE.




It is indeed hard to get useful information!  +1


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## Value Collector (24 February 2015)

needsajet said:


> It is indeed hard to get useful information!  +1




Not really, all the information you need to make real estate investments is pretty easy to get.

What sort of information are you after?


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## needsajet (24 February 2015)

Value Collector said:


> Not really, all the information you need to make real estate investments is pretty easy to get.
> 
> What sort of information are you after?




Thanks for asking, Value Collector. I'm most interested in the residential sales ratio of owner-occupiers v. investors, with investors broken down to overseas and domestic. I found figures on borrowing, but would like to learn more based on sales amounts and number of units. Capital cities only would be great, or overall national figures. Household formation rates would also be good, but I'll admit I haven't dug around for those on my own yet.


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## ROE (24 February 2015)

Tyler Durden said:


> Sorry I don't quite understand the distinction?




First Home Buyer you buy to live in, first time buyer mostly likely investor or someone who buy them initially not to live in but to rent out and get a foot in the market.

Not much different but cash flow wise it probably is, home buyer end up paying the mortgage which cap
at what price they can afford, first home buyer could be living at home with mum and dad and can bid a bit more
as they got rent money coming in without paying too much out going so their cash flow is a bit better.

if you competing a property with someone like that they probably can outbid you if they want the place bad enough.


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## ROE (24 February 2015)

needsajet said:


> Thanks for asking, Value Collector. I'm most interested in the residential sales ratio of owner-occupiers v. investors, with investors broken down to overseas and domestic. I found figures on borrowing, but would like to learn more based on sales amounts and number of units. Capital cities only would be great, or overall national figures. Household formation rates would also be good, but I'll admit I haven't dug around for those on my own yet.




I cant see any of this information useful for property investment.

property investment is all about if the number stack up, the location of the property, the infrastructure surrounding it and surrounding population.


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## needsajet (24 February 2015)

ROE said:


> I cant see any of this information useful for property investment.
> 
> property investment is all about if the number stack up, the location of the property, the infrastructure surrounding it and surrounding population.




My interest in residential property stats relates to share market investing and general economic conditions. I'm not a residential property investor. I'm most interested in the trends as indicators of what else might happen.


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## banco (26 February 2015)

It's hilarious to see the panic from the RE industry with regard to the new rules on foreign buying.  I thought foreign buying had only a negligible impact on house prices (according to the RE industry)?


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## McLovin (26 February 2015)

banco said:


> It's hilarious to see the panic from the RE industry with regard to the new rules on foreign buying.  I thought foreign buying had only a negligible impact on house prices (according to the RE industry)?




Yes, I thought it was pretty funny the way they were carrying on. If you're paying $1m for a house you're not going to say "sorry, deal's off" over $5k.


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## banco (26 February 2015)

McLovin said:


> Yes, I thought it was pretty funny the way they were carrying on. If you're paying $1m for a house you're not going to say "sorry, deal's off" over $5k.




I don't think the $5k will make anyone blink but the prospect of 25% of the value of the home as a civil penalty and forced sale might.


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## Quincy (27 February 2015)

McLovin said:


> Yes, I thought it was pretty funny the way they were carrying on. If you're paying $1m for a house you're not going to say "sorry, deal's off" over $5k.




Instead of the purchase price going $250,000 over the reserve, it will now probably only go $240,000 over.


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## sydboy007 (1 March 2015)

worth 10 minutes to listen to.


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## satanoperca (1 March 2015)

sydboy007 said:


> worth 10 minutes to listen to.





Sydboy, nothing to see or hear in that interview. It is all sunshine and lollipops, as a great man once said.

Was out on the weekend, attended an auction in Elwood, Victoria. 2 bedroom apartment, 103m2, sold for just under $800K, sounds fair, what could go wrong. Well that seems to be the consensus in the crowd. Same apartment would rent for 
approx $530 pw, or approx 3.4% gross returns. Not bad given what you will get with a term deposit in the banks. Property is still showing better yields than other investments and bricks and mortar are safe. lol

I personally think property market will go 10-15% in Melbourne and Sydney before we see a correction of any sorts. 

This bear prefers to smell the roses while they are in bloom.


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## moXJO (1 March 2015)

satanoperca said:


> Sydboy, nothing to see or hear in that interview. It is all sunshine and lollipops, as a great man once said.
> 
> 
> 
> This bear prefers to smell the roses while they are in bloom.




The moral to the story is that Robots was right.


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## qldfrog (2 March 2015)

satanoperca said:


> Same apartment would rent for
> approx $530 pw, or approx 3.4% gross returns. Not bad given what you will get with a term deposit in the banks. Property is still showing better yields than other investments and bricks and mortar are safe. lol



just to be very sure it is irony is it 
cause 3.4 gross minus costs:Body corp, rates, etc etc etc
you loose on inflation every year and you'd better be sure to have a few 10% + years to cover you stamp duties and agent fees


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## Bill M (2 March 2015)

Hi qldfrog and all other Queenslanders. Could you please state your opinion on the Gold Coast residential housing market? I mean houses only, (no units) and 1km walk to schools, shops and the beach. Is it still hot or has it cooled off a bit? 

What is your opinions on this very specific market?


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## qldfrog (3 March 2015)

Bill M said:


> Hi qldfrog and all other Queenslanders. Could you please state your opinion on the Gold Coast residential housing market? I mean houses only, (no units) and 1km walk to schools, shops and the beach. Is it still hot or has it cooled off a bit?
> 
> What is your opinions on this very specific market?



Sorry, did not look at all at gold coast but wondering about sunshine coast.
Qld is still a very sick economy but tourism might start again with lower dollar etc, and that could help both gold coast/sunshine.Could still take a while to see a reversal(economy wise)
Yet not very optimist on a full size house on the GC;
who would rent/buy it? With what jobs to pay rent/morgage?


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## syd (4 March 2015)

Hi All

Some interesting posts, mostly less personal which is good.

A question for the stats monkeys out there (or at least those than remember high school maths); Sept quarter Housing NSW report shows the Sydney median residential property price was unchanged, while the ABS result show a 2.7% increase in average prices. Is such a difference in median and average reasonable? Is the most likely cause a small number of incredibly high value properties?

Links
www.housing.nsw.gov.au/About+Us/Reports+Plans+and+Papers/Rent+and+Sales+Reports/Latest+Issue/
www.abs.gov.au/AUSSTATS/abs@.nsf/al...30C59F82E328A064CA257DE7000F1EF5?opendocument


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## Quincy (9 March 2015)

It seems that the measures promised in a Press Release of 24 April, 2010 by Assistant Treasurer for the Rudd Government at the time (Nick Sherry) were never implemented.

http://ministers.treasury.gov.au/Di...0/074.htm&pageID=003&min=njsa&Year=&DocType=0




> A parliamentary inquiry recently found there had not been a single prosecution of a foreign investor since 2006 and no divestment orders since 2007.




http://www.afr.com/p/national/hockey_orders_sale_breach_point_4vfndyC0uTrYvcShhGyu8M


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## sptrawler (9 March 2015)

Quincy said:


> It seems that the measures promised in a Press Release of 24 April, 2010 by Assistant Treasurer for the Rudd Government at the time (Nick Sherry) were never implemented.
> 
> http://ministers.treasury.gov.au/Di...0/074.htm&pageID=003&min=njsa&Year=&DocType=0
> 
> ...




Housing is the only sector providing employment, manufacturing, borrowings, state taxes and public housing.
Why would the Government want it to fall over?

People may want it to fall over from a personal perspective, but it is the last thing a Government with a contracting economy would want.


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## CanOz (10 March 2015)

qldfrog said:


> Sorry, did not look at all at gold coast but wondering about sunshine coast.
> Qld is still a very sick economy but tourism might start again with lower dollar etc, and that could help both gold coast/sunshine.Could still take a while to see a reversal(economy wise)
> Yet not very optimist on a full size house on the GC;
> who would rent/buy it? With what jobs to pay rent/morgage?




We're also looking at houses in brissy or sunshine Coast...looks like the coast is better value...this would be a ppor...


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## satanoperca (10 March 2015)

sptrawler said:


> Housing is the only sector providing employment, manufacturing, borrowings, state taxes and public housing.
> Why would the Government want it to fall over?
> 
> People may want it to fall over from a personal perspective, but it is the last thing a Government with a contracting economy would want.




Because it is unsustainable. The debt just keeps rising, bring forward future demand and productivity.

How the govnuts try thinking outside the square and we become a nation of innovators, embracing new business and technologies which can in future pay for the housing.

If housing is the only sector that is providing, how do people pay for the houses if they don't have jobs.

It is just to easy for the govnuts to float the boat with housing while the rest of the economy sinks.

What is their plan B?


----------



## qldfrog (10 March 2015)

CanOz said:


> We're also looking at houses in brissy or sunshine Coast...looks like the coast is better value...this would be a ppor...



PPOR is different; I consider a house a home and then feelings, personal conform etc matter most
And if I really find a place i like why would I ever think of selling....so who cares about capital gain
but I am not 20 anymore and have set my priorities past $ so..
All the best in your searches


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## CanOz (10 March 2015)

qldfrog said:


> PPOR is different; I consider a house a home and then feelings, personal conform etc matter most
> And if I really find a place i like why would I ever think of selling....so who cares about capital gain
> but I am not 20 anymore and have set my priorities past $ so..
> All the best in your searches




Yeah, I get that. However I don't want to buy in an area that experiencing the top of the market either...we plan on staying there permanently but still...

So brissy and sunshine Coast are not too toppy yet right?


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## sptrawler (11 March 2015)

satanoperca said:


> Because it is unsustainable. The debt just keeps rising, bring forward future demand and productivity.
> 
> How the govnuts try thinking outside the square and we become a nation of innovators, embracing new business and technologies which can in future pay for the housing.
> 
> ...




IMO at the moment, there isn't a plan B.

We aren't competitive, we have a small market place and as a country we spend heaps more than we make.

You tell me what you would invest in? that is going to make money.

Other than fast food and welfare.lol


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## qldfrog (11 March 2015)

sptrawler said:


> IMO at the moment, there isn't a plan B.
> 
> We aren't competitive, we have a small market place and as a country we spend heaps more than we make.
> 
> ...



if only we could lol
fast food yes
health stocks (old, sick on junk food, but last thing people stop paying, well usually "taxpayers" stop paying)
any security/crime related stock (prison, home alarm)
lawyers
debt recovery agency (I am heavily exposed CLH)
gambling 
and basic food but aldi may be better  bet..oops can not be done on the asx
crossing finger for my settlement in a fortnight to be done and over, no more residential IP for me


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## sptrawler (11 March 2015)

qldfrog said:


> if only we could lol
> fast food yes
> health stocks (old, sick on junk food, but last thing people stop paying, well usually "taxpayers" stop paying)
> any security/crime related stock (prison, home alarm)
> ...




Investment properties during a major downturn, don't add up.IMO
Delinquent tenants, become an issue, also more IP come on the market.
We may be wrong frog, but I'm with you.


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## Mrmagoo (13 March 2015)

You guys are nuts.

Economic down turn = no immigrants = massive vacancies in Melbourne and Sydney. Means plummeting rents and plummeting prices.


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## Mrmagoo (13 March 2015)

satanoperca said:


> Sydboy, nothing to see or hear in that interview. It is all sunshine and lollipops, as a great man once said.
> 
> Was out on the weekend, attended an auction in Elwood, Victoria. 2 bedroom apartment, 103m2, sold for just under $800K, sounds fair, what could go wrong. Well that seems to be the consensus in the crowd. Same apartment would rent for
> approx $530 pw, or approx 3.4% gross returns. Not bad given what you will get with a term deposit in the banks. Property is still showing better yields than other investments and bricks and mortar are safe. lol
> ...




2 bedrooms in elwood 800k ? you call that fair ? hilarious delusion.


----------



## Nortorious (13 March 2015)

Mrmagoo said:


> You guys are nuts.
> 
> Economic down turn = no immigrants = massive vacancies in Melbourne and Sydney. Means plummeting rents and plummeting prices.




Migrants the only group pushing the demand pedal? I probably don't agree with that but I could be wrong and it certainly wouldn't be the first time...or last.


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## Mrmagoo (13 March 2015)

Nortorious said:


> Migrants the only group pushing the demand pedal? I probably don't agree with that but I could be wrong and it certainly wouldn't be the first time...or last.




imo they 100% are because all of those falling apart piece of crap middle to inner city suburbs have their rentals filled with immigrants. Take that away and then there is not the same demand.


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## Smurf1976 (13 March 2015)

Nortorious said:


> Migrants the only group pushing the demand pedal? I probably don't agree with that but I could be wrong and it certainly wouldn't be the first time...or last.




It's the old "markets are made at the margin" situation.

Take a few % of the demand away, from anything, and the price collapses. Witness the well known situation with oil in recent times - supply has only increased a few % but demand increased by a smaller amount = price crash. 

Housing isn't consumable in the sense that oil is, but there's a limit to how many empty houses landlords would be willing (or able) to hold onto without selling.


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## Bintang (13 March 2015)

Smurf1976 said:


> It's the old "markets are made at the margin" situation.




So Smurf, what's going on down in Hobart?  - see the SQM research report below.
http://www.sqmresearch.com.au

Looks like pretty good rent increases down there over the last 12 months.

View attachment SQM Rents.tiff


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## Mrmagoo (14 March 2015)

Bintang said:


> So Smurf, what's going on down in Hobart?  - see the SQM research report below.
> http://www.sqmresearch.com.au
> 
> Looks like pretty good rent increases down there over the last 12 months.
> ...




Sigh* that is such a ridiculous argument I can't be bothered answering. If anyone else has the energy to deal with this for me, feel free.


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## Bintang (14 March 2015)

Mrmagoo said:


> Sigh* that is such a ridiculous argument I can't be bothered answering. If anyone else has the energy to deal with this for me, feel free.




It's not an argument about anything. Just an observation that Hobart appears to be different to the trend elswhere (especially Units) - that is if the data is correct.

If all you can do is belittle don't bother posting anything at all.


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## Smurf1976 (14 March 2015)

Bintang said:


> So Smurf, what's going on down in Hobart?




I suspect it's the economy.

Looking at unemployment, most of the past 30+ years Tasmania has underperformed the other states. But looking at it right now, the unemployment rate in Tas is lower than in SA, the same as Qld and only 0.2% higher than NSW and Vic (based on ABS data for February 2015).

The Tas economy isn't doing that well, there's no denying that, but there's not much of a gap between Tas and the other states at least in terms of unemployment at the moment. That plus we've got a bit of a boom, at least it's a boom by local standards, happening in commercial construction in Hobart with a number of projects either underway or about to start.


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## Mrmagoo (15 March 2015)

Bintang said:


> It's not an argument about anything. Just an observation that Hobart appears to be different to the trend elswhere (especially Units) - that is if the data is correct.
> 
> If all you can do is belittle don't bother posting anything at all.




You're just trying to derail the discussion with nonsense. Tasmania is not even connected to the mainland. 

WHAT IS HAPPENING IN ARMADALE AND HOW WILL IT AFFECT INNER  CITY PRICES ??? OH WOW LOOK AT ME I CAN POST RIDICULOUSNESS TOO !!!!


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## Smurf1976 (15 March 2015)

Mrmagoo said:


> You're just trying to derail the discussion with nonsense. Tasmania is not even connected to the mainland.




It's part of Australia and all Australian citizens are free to move between the Australian states as they see fit. If someone living in Sydney finds a reason why they want to live in Hobart, Darwin or wherever then there's nothing to stop them moving there. Just as huge numbers of people have over the years permanently left Tas in order to find employment in other states.

If the economy in NSW (for example) collapses and unemployment goes to 20% whilst there is no such collapse in the other states, then you can be pretty sure that plenty of people now living in NSW will move somewhere else in order to find employment. Hence we'll never likely see 20% unemployment in one state and 2% in another, enough people will move to at least partly balance it out. Same concept with every state, Tas included.

So far as housing is concerned, I expect that the substantial difference in pricing between Sydney versus Hobart would be luring at least a few people to move down here. Work a few years in a well paid job in Sydney, at which point you've got either a deposit for a house 2 hours commute from the Sydney CBD or you could buy outright, or at least with a relatively small mortgage, in Hobart 15 minutes from the CBD. Some will find that idea attractive despite the lifestyle and climate differences. The hard part, of course, is finding a job down here.

As for the connection bit, well there's the ferry to Vic, direct flights to Qld, NSW and Vic and connecting flights via Melbourne or Sydney to SA, WA and NT on a daily basis so it's not exactly difficult to get on or off this island.


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## waterbottle (15 March 2015)

Smurf1976 said:


> So far as housing is concerned, I expect that the substantial difference in pricing between Sydney versus Hobart would be luring at least a few people to move down here. Work a few years in a well paid job in Sydney, at which point you've got either a deposit for a house 2 hours commute from the Sydney CBD or you could buy outright, or at least with a relatively small mortgage, in Hobart 15 minutes from the CBD. Some will find that idea attractive despite the lifestyle and climate differences. The hard part, of course, is finding a job down here.





I was actually considering doing this within the next 2 years but as you say, it is difficult to find a similarly paid job. The jobs that I would be working in do exist, but the pay is probably 10-20% less than that offered in NSW (public service jobs).
I haven't done the calculations to determine if the cost of living:income ratio would be lower in Tas though.


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## Bintang (15 March 2015)

Smurf1976 said:


> It's part of Australia






waterbottle said:


> I was actually considering doing this within the next 2 years …….





Mrmagoo said:


> You're just trying to derail the discussion with nonsense. Tasmania is not even connected to the mainland.




SQM obviously thinks that Tasmania is ‘connected’ enough to warrant including Hobart in its weekly research reports.  And because the data point for Hobart looked a bit unusual I raised a point of discussion with a question to Smurf, who I happen to know is living in Hobart and because I thought his perspective on the subject might be useful. (By the way Smurf, thanks for your response – as usual informative and constructive).
----------------------------------------------------------------------------------------------------------------------
*Mrmagoo*, it is your kind of behavior, which derails discussion and helps to discourage others from contributing to this forum.

If I had realized how fragile your sensibilities are I suppose I could have sent Smurf a PM, which I have done on other occasions on other subjects but then other forum readers would miss out on the discussion.

I am fairly sure that when other forum readers compare your response to my post with the responses of Smurf  and Waterbottle they are likely to form a very different conclusion than yours about who is trying to derail the discussion.

Are you by any chance a regular poster on the Australian Property Forum? If you aren’t you might enjoy it more because your type of behaviour is rampant over there.


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## Mrmagoo (17 March 2015)

No. I dont normally post on that forum. The truth is i was in some medication which had side effects and I actually read different words to what you and smurf had written. For starters i thought he had quoted me when he hadnt and secondly i thought he was telling me to move to Tasmania because the property market there is so great among other things, a common way to troll people in these discussions. The medication also produced some unexplained rage which i cannot explain as it shouldnt really do that. Having read what was actually written i have to apologise to you and smurf. However you should also understand part of the reason i read words which werent there is because incidents of abuse on this thread towards me became so common i just assumed that was the case when it wasnt. So i do apologise for that as i have clearly done the wrong thing. (Posting from my phone hard to type).


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## Smurf1976 (17 March 2015)

No worries. 

For the record, I'm not suggesting that anyone should, or shouldn't move to Tas or any other particular state. I am just observing that there is a significant difference in the price of comparable housing between (say) Sydney versus Hobart or Adelaide and that this would logically lead to at least some people considering a move for financial or other reasons. That is particularly so in the case of those who wish to purchase property but who cannot afford to buy in the major cities but who have sufficient cash to make a large deposit, or even buy outright, in Tas, SA or a regional town / city in the other states. 

Same concept with anything. Someone who cannot afford to by a new Mercedes would logically consider buying a used Commodore or Camry as a sensible alternative since that will still lead to them owning a reasonable car, albeit not a "prestige" one, with which to get from A to B.


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## sptrawler (18 March 2015)

Smurf1976 said:


> No worries.
> 
> For the record, I'm not suggesting that anyone should, or shouldn't move to Tas or any other particular state. I am just observing that there is a significant difference in the price of comparable housing between (say) Sydney versus Hobart or Adelaide and that this would logically lead to at least some people considering a move for financial or other reasons. That is particularly so in the case of those who wish to purchase property but who cannot afford to buy in the major cities but who have sufficient cash to make a large deposit, or even buy outright, in Tas, SA or a regional town / city in the other states.
> 
> Same concept with anything. Someone who cannot afford to by a new Mercedes would logically consider buying a used Commodore or Camry as a sensible alternative since that will still lead to them owning a reasonable car, albeit not a "prestige" one, with which to get from A to B.




Interestingly my wife made the suggestion, about moving to Hobart, when the grandkids get older. 
I thought, yes, what a great idea, also we can enjoy the amenity my taxes have built.


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## rryall (18 March 2015)

There has been a lot of media attention recently regarding negative gearing etc. so I decided to take same action and write Mr Hockey an email stating my displeasure at his inaction on housing affordability. His email address is joe.hockey.mp@aph.gov.au for anyone interested in doing the same. Email was as follows:

Dear Mr. Hockey,

I'm a 31 year old non-homeowner and single working professional and I wanted to state my displeasure at your lack of real action on tackling affordability issues of housing for young Australians. 

You have previously stated recently that "I get a lot of people approaching me saying that young people should be able to use their superannuation to fund a deposit on their home". Now this is obviously very different to "I get a lot of young people saying they should be able to use their superannuation to fund a deposit on their home". If I was a baby boomer with investment properties and I was only concerned for my own welfare I'd probably want young people to access Superannuation also as this additional buying power would go straight into my pockets. However, I'd like to think I put the welfare of Australia first before my own benefit - These people do actually exist Mr. Hockey.

By focusing purely on increasing demand you do very little to increase housing affordability and this simply increases already extremely high housing. The same thing happened when First Home Owner Grants were double or even tripled by the Labor Party during the last financial crisis it simply brought future demand forward and increased the cost of housing. Young people don't want gimmicks to assist with housing they want cheaper housing which the generations before them received.

In regards to negative gearing which you have talked about recently you stated that this actually increased the costs of rents when it was previously removed by the Hawke/Keating government in 1985. You are 100% correct that rents increased during this period however clearly you don't understand the difference between correlation and causation or you are choosing to ignore the real reason rents increased. As you are aware this was an extremely high inflationary period so if we actually adjusted for inflation rents were actually stable during this period although they did rise in Sydney and Perth but fell in every other state in inflation adjusted terms. 

I think we should constantly strive to be the best country in the world and at the moment if I was being honest I feel ashamed to be Australian. High house prices does not create wealth it creates debt. For every seller there must be a buyer it is a zero-sum game. We had a once in a life time mining boom and we have nothing to show for it except for high housing. The fascinating thing about basic economic theory is you can constantly change the rules (i.e. negative gearing, FHOG, leverage for super funds etc.) as much as you want but you are only prolonging the inevitable when things revert to the mean. So you can either take some initiative now or potentially be remembered as the treasury who led us into the next depression. Three out of four of the major bank CEO's have left in the last six months or so and the current CEO of CBA recently sold a property in Paddington, Sydney. Perhaps they see the writing on the wall.. 

Although I would benefit greatly from a crash in house prices this is not my wish. The only way to prevent a crash from occurring is to take action today. Sadly I think real tax reform will only happen during times of crisis which is a real shame. All the work has already been done for you Mr Hockey with the David Murray inquiry and the Ken Henry tax review. It is just awaiting someone of your capacity to implement. Wouldn't you rather have this as your legacy? 

Regards,


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## moXJO (19 March 2015)

Smurf1976 said:


> No worries.
> 
> For the record, I'm not suggesting that anyone should, or shouldn't move to Tas or any other particular state. I am just observing that there is a significant difference in the price of comparable housing between (say) Sydney versus Hobart or Adelaide and that this would logically lead to at least some people considering a move for financial or other reasons.




There are some really cheap houses down in TAS. Have prices moved up much in recent years smurf?


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## Smurf1976 (20 March 2015)

moXJO said:


> There are some really cheap houses down in TAS. Have prices moved up much in recent years smurf?




Circa 1996 I remember someone I knew buying a house for $160K. I thought they were crazy, since that was a ridiculously high price to pay for a house at that time. They got a 5 bedroom place with water views in a nice suburb of Hobart. A more typical house at that time was around $100K give or take a bit.

Today, an typical house would be around the $350K mark but that hasn't changed much since around 2007-08, prior to which prices were going up at a ridiculous pace and roughly quadrupled in a decade. But I could buy a comparable house today for the same price I paid for this one 7.5 years ago so not much movement since no matter what any official stats might say.

Overall, it very much depends on where in the state. Hobart isn't doing too badly economically. But if you go to Burnie then things are pretty dismal up there so far as employment is concerned. And if you look at somewhere like Queenstown well then it's jobs? What jobs? With the mine shut there really aren't any apart from a handful in tourist accommodation, local shops, with the local council and on the (steam) railway. Hence house prices vary hugely across the state. 

The mine at Queenstown may reopen someday, that is a definite possibility although it is by no means certain. House prices there will rise if it does get going again. But if you look at Burnie, well manufacturing will never recover there because the big factories that once dominated the place haven't simply downsized, they've closed altogether and are now physically demolished. They're not coming back and whatever economic future exists in that region depends largely on the shipping port, tourism, agriculture and things like that.


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## sptrawler (23 March 2015)

It sounds as if oversupply, and a mass exodus of people, is starting to bite in Perth. 

https://au.news.yahoo.com/thewest/wa/a/26765387/price-growth-warning-as-housing-glut-hits-early/

That is what makes Perth a bit different to Sydney, Melbourne, it is a bit of a one trick pony.

Once mining goes ar$e up, so does Perth, oh well sit back and wait for India to fire up.


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## trainspotter (24 March 2015)

Mrmagoo said:


> The medication also produced some unexplained rage which i cannot explain as it shouldnt really do that. Having read what was actually written i have to apologise to you and smurf.




Quincy Magoo (or simply Mr. Magoo) is a cartoon character created at the UPA animation studio in 1949. Voiced by Jim Backus, Quincy Magoo is a wealthy, short-statured retiree who gets into a series of comical situations as a result of his nearsightedness, *compounded by his stubborn refusal to admit the problem*. However, through uncanny streaks of luck, the situation always seems to work itself out for him, leaving him no worse than before.

http://en.wikipedia.org/wiki/Mr._Magoo

Glad we have sorted this one out Mrmagoo.



> Over the last 20 years, the cost of building a new house has increased nearly fourfold. The increase can be partly explained by a 32.7% increase in the average size of new houses.




http://www.abs.gov.au/ausstats/abs@...2609898B87F95519CA25792D000E2DF5?OpenDocument

Old data I know but it does evidence what I have been banging on about. No one wants a 3 bedroom 1 bathroom starter home anymore. Consumerism has been rampant for a while now and will not show any signs of slowing down IMO


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## banco (24 March 2015)

trainspotter said:


> Quincy Magoo (or simply Mr. Magoo) is a cartoon character created at the UPA animation studio in 1949. Voiced by Jim Backus, Quincy Magoo is a wealthy, short-statured retiree who gets into a series of comical situations as a result of his nearsightedness, *compounded by his stubborn refusal to admit the problem*. However, through uncanny streaks of luck, the situation always seems to work itself out for him, leaving him no worse than before.
> 
> http://en.wikipedia.org/wiki/Mr._Magoo
> 
> ...




Your diagnosis would be more convincing if 3 bedroom, 1 bathroom homes hadn't also increased massively in price.


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## sptrawler (24 March 2015)

trainspotter said:


> Old data I know but it does evidence what I have been banging on about. No one wants a 3 bedroom 1 bathroom starter home anymore. Consumerism has been rampant for a while now and will not show any signs of slowing down IMO




I think you are right again trainspotter, probably the reason why country W.A is struggling and inner city Perth has been rampant.
Everyone figures buy close to the city, no matter what the cost, develop it no matter what the cost and make a zillion dollars.

Simple logics don't worry about the debt, you're going to double your money.


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## trainspotter (25 March 2015)

banco said:


> Your diagnosis would be more convincing if 3 bedroom, 1 bathroom homes hadn't also increased massively in price.




You have trouble understanding the written word do you not? So price increase 4 fold in a 20 year period to construct a home with 1/3 of the cost due to the increase in size of the home means nothing to you? SHEEEEEEEEEESH !!


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## qldfrog (25 March 2015)

trainspotter said:


> You have trouble understanding the written word do you not? So price increase 4 fold in a 20 year period to construct a home with 1/3 of the cost due to the increase in size of the home means nothing to you? SHEEEEEEEEEESH !!




point taken for the average house but that would not apply to units.There are only so many shiny european appliances you can add in a unit, sizes are even smaller and quality (real aka insulation, etc) is not exactly great


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## trainspotter (25 March 2015)

qldfrog said:


> point taken for the average house but that would not apply to units.There are only so many shiny european appliances you can add in a unit, sizes are even smaller and quality (real aka insulation, etc) is not exactly great




Sorry qldfrog but the point I am trying to make is that the price increase for CONSTRUCTION has been 4 fold in a 20 year period. PERIOD. It does not matter if they are units or houses or town houses or complexes or whatever you want to call it. The COST to build has risen 400% in 20 years. Let's do some maths shall we:

$50,000 to build a "whatever" in 1980
$70,750 IN 1985 - Year 5
$100,111 IN 1990 - Year 10
$141,657 IN 1995 - Year 15
$200,445 IN 2000 - Year 20

Or a rate of 41.5% COST increase over a 5 year period to construct thereon. Approx 7.19346% per annum compounding (date range is for comedy purposes only and to evidence a formulae)

NOT forgetting that the SIZE of the home has increased by 33% as well. Ipso facto the cost of building as well as the size increase has contributed to the overall increase of the price of homes. Not saying that this is the be all and end all of WHY houses are so expensive. Just trying to explain as to not all of it is the Guvmints fault but some of the blame has to be borne by the CONSUMERISM of society who demand they want bigger homes with more sophisticated methods of construction as well as higher end internal finishes (read marble tops and glass splash backs cause they saw it on telly)

*RANT OVER*


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## qldfrog (25 March 2015)

trainspotter said:


> Sorry qldfrog but the point I am trying to make is that the price increase for CONSTRUCTION has been 4 fold in a 20 year period.



Fair but basically even if you want a fairly basic home /unit as a result as well of the construction cost increases you mention (and that should actually point to the hourly rate in Australia of the sparky/brick layers/carpenters), you end up having no fair priced option.
Of course, some will say that 100$ an hour for a sparky is required as he /she has to buy a house as well to live in.
But indeed, negative gearing (as it is most often seen as the culprit) is not IMHO such a big deal;
land and red tape (council mostly) are more to blame.
All this in one of the less populated place on earth.


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## SuperGlue (25 March 2015)

This is what we need ASAP - 3D printed homes.

Might solved the govt. current superannuation housing problems, insurances companies will love it - cyclone damage, no worries - new house in 2 days cheaper than repairing, bring house prices down - with labour costs higher than materials costs,  etc, etc.

No tradies trying to rip off and of course most of them will be out of work.

Go away for the weekend and have your home ready when you're back.



http://news.domain.com.au/domain/re...block-20150122-12vkri.html?rand=1421894371139


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## sptrawler (25 March 2015)

trainspotter said:


> Sorry qldfrog but the point I am trying to make is that the price increase for CONSTRUCTION has been 4 fold in a 20 year period. PERIOD. It does not matter if they are units or houses or town houses or complexes or whatever you want to call it. The COST to build has risen 400% in 20 years. Let's do some maths shall we:
> 
> $50,000 to build a "whatever" in 1980
> $70,750 IN 1985 - Year 5
> ...




Fair point TS, a friend of mine owner built a triplex 20 years ago 5 k's from Perth cbd, cost $360,000.

He has decided to knock over his own home and owner build a double storey composite home, steel frame, thermal insulated cladding, high spec fit out.
He said at the conception phase, he would build two for less than $1m and sell one for $1m. I said he would get a shock.
Well he has now got the fixed price contract in, $800k each.
Double what he expected, and he is an astute investor, just shows how costs have quietly blow out, during the mining boom.


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## Mrmagoo (28 March 2015)

Consumerism and large houses are a Gen X and Baby boomer thing. Gen Y simply can't afford them. If anything they get very small houses in the outer suburbs. Often only a two bedroom townhouse. The boomers did not start with such small properties. Most were able to buy f family sized by 1s. Most Gen Y are simply struggling to survive. The older part of Gen Y at least have careers but the young ones of today don't even have that.

Drive around any prestige estate in the outer burbs and all you will see is empty Nester baby boomers with massive houses. They're the one's buying the 4 bedroom 2 bathroom plus study homes. Gen Y  don't have that sort of coin. Maybe some of the older one's who were very successful might but they'd be more likely to take on a bigger mortgage and be closer to work. So that really only leaves the rich young tradesmen who might buy these mansions and they do. However, that is only a small portion of Gen Y. That is like saying all boomers are rich because they worked in the mines in the 1980s. 

Living close to the city is not about prestige. You live close to the city so that you don' end up leaving home at 6:30 in the morning and getting home at 9:00 pm. The inner city is mostly dirty and over crowded. You end up having a much happier healthier life in suburbia.


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## Smurf1976 (28 March 2015)

In the past it was pretty common to see a young couple, early-20's, buy a modest 3 bedroom home with 1 bathroom in a reasonable suburb. Then a couple of years later, they were down to one income once the kids came along and the woman stopped work, or worked part time at most.

Plenty of people did that, indeed being married with kids and a house in the suburbs was society's "normal" expectation by the time someone was in their mid-20's.

Social attitudes and expectations have certainly changed, what was "old" to be getting married or having children is considered "young" today, but the point here is about housing. What was affordable then, even at much higher interest rates, is not affordable today. Housing has become far more expensive relative to the normal, typical jobs that someone in their 20's or even 30's is likely to actually have.

Society is increasingly divided. On one side are various professions and some trades as well as a few successful entrepreneurs etc. On the other side is the rest. What was available to just about anyone in the past, provided they were willing to work, is not available to many people today under the same circumstances.


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## Smurf1976 (28 March 2015)

Mrmagoo said:


> Living close to the city is not about prestige. You live close to the city so that you don' end up leaving home at 6:30 in the morning and getting home at 9:00 pm. The inner city is mostly dirty and over crowded. You end up having a much happier healthier life in suburbia.




Part of the issue there is that I strongly suspect that both Sydney and Melbourne have exceeded their most efficient scale. What, exactly, does having over 4 million people in a city achieve that can't be achieved with 2 million? Just about every business, public event and other thing that is viable in Sydney or Melbourne is also viable in Brisbane with roughly half the population.

Take a look at a map of Australia. Now realise that we've got 40% of our entire population living in just two cities. That doesn't make a lot of sense to me. Firstly there's the problem of transport around big cities in terms of both time taken and the cost. Secondly it's a massive strategic risk to have so much in just two places.


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## banco (28 March 2015)

Smurf1976 said:


> Part of the issue there is that I strongly suspect that both Sydney and Melbourne have exceeded their most efficient scale. What, exactly, does having over 4 million people in a city achieve that can't be achieved with 2 million? Just about every business, public event and other thing that is viable in Sydney or Melbourne is also viable in Brisbane with roughly half the population.
> 
> Take a look at a map of Australia. Now realise that we've got 40% of our entire population living in just two cities. That doesn't make a lot of sense to me. Firstly there's the problem of transport around big cities in terms of both time taken and the cost. Secondly it's a massive strategic risk to have so much in just two places.




Thing that annoys me is when they say: "a rising population is fine as long as we build the infrastructure required".  The infrastructure required isn't going to get built for a variety of reasons (nimbyism, budget issues etc.) so immigration policy etc. should factor that in.


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## Bintang (28 March 2015)

Smurf1976 said:


> Society is increasingly divided. On one side are various professions and some trades as well as a few successful entrepreneurs etc. On the other side is the rest. What was available to just about anyone in the past, provided they were willing to work, is not available to many people today under the same circumstances




But Australia is supposed to be one of the most ‘egalitarian’ countries in the world!
I guess that just means there is one egalitarian class who own property and another egalitarian class who rent it.  Or to put it another way, _everyone is egalitarian but some are more egalitarian than others._


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## Smurf1976 (28 March 2015)

Smurf1976 said:


> Secondly it's a massive strategic risk to have so much in just two places.




Suppose that something drastic happens in Sydney or Melbourne. Cyclone, major earthquake, major terrorist attack, whatever. The risk may be low, but it's not zero and never will be. We're pretty much stuffed as a country in terms of ability to deal with that given that 20% of the national population lives in each of those cities.

Obviously it wouldn't be good if something drastic happened somewhere smaller, say Adelaide or Newcastle, but at least it's more manageable in terms of scale both in terms of the physical effects and the broader economic ones.

I'm not suggesting that we go as far as reducing population in the 2 big cities, but it would be logical to direct growth elsewhere. And if you look at the sorts of economic activity which actually occurs in Sydney and Melbourne, well a lot of it has no reason to be there other than due to the current population balance. It's not like a mine which has to be where the minerals are, an office can be anywhere. And if we had more such businesses in Adelaide, Newcastle etc then it becomes viable for more people to live there.

Water? We already bring water quite some distance to Melbourne and Sydney. Same with power, it mostly comes from 150 - 200km away. Gas in Sydney comes all the way from Vic and SA. Food is mostly from quite some distance away as well. There's nothing stopping us, apart from the will to do so, from bringing those things into some other city if the population increases there.


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## Mrmagoo (28 March 2015)

I don't know that the landmass supports much industry or population outside of population centers. This is not Europe.


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## Smurf1976 (28 March 2015)

A city doesn't need a specific land type to be viable when you consider that practically everything a city needs is brought in from outside the urban environment anyway.

Historically the Australian state capitals were set up where water was available. But if you look at it today, well most water in Adelaide doesn't come from the Torrens and even Hobart gets 80% of its' water from sources other than Mt Wellington and the Hobart Rivulet which flows from it. Much the same everywhere.

Food - most of it isn't grow in cities. It is grown elsewhere and brought in by road and rail.

Water - the existing cities have already grown too large for their local water sources, now bringing it in from more distant areas and in more recent times desalination which works anywhere you've got access to sea water.

Power - Apart from Darwin (virtually the entire supply), Adelaide (about half the supply) and to a lesser extent Perth, not much electricity is produced within city environments these days apart from rooftop solar (which works anywhere the sun shines). For Sydney and Melbourne, most of it already comes from 150 - 200km or more away.

Gas - piped in from gas fields. It's pure coincidence that Melbourne and Darwin aren't too far from gas fields, they weren't know about when the cities were established and in any event, it's easy to pipe gas over long distances. Sydney's gas comes from Vic and SA, for example, all gas in Tas comes from Vic and until a few years ago all gas in Darwin came from the other end of the NT.

Transport fuel - easily shipped or piped in. Practically all the petrol, diesel etc we use is from crude oil produced nowhere near the point of use. In Sydney, the whole lot is shipped in already refined and it's the same in NT, SA and Tas. There are refineries in and near Perth, Melbourne and Brisbane but they're largely processing oil from distant sources either Australian or foreign.

Manufactured goods - a factory can be set up anywhere and in any event, most of what we buy these days is imported. There's no fundamental reason why we had to make cars in Adelaide for example, the factories could have been built somewhere else. And if you do build a big factory in a small town, well then it becomes a bigger town pretty quickly - plenty of places have seen that happen over the years.

Looking at a map, I don't see that Melbourne is the only place in Victoria, or Sydney is the only place in NSW, where a city of 2 million people could exist. And then there's existing cities other than Sydney, Melbourne, Brisbane and Perth, many of which would arguably benefit from greater scale since they're nowhere near the point of diminishing returns yet. 

So far as housing is concerned, a great deal of our problems are because we're trying to cram everyone into just two cities. 

As an example of a possible approach, if the company tax rate were lowered by even just 1% for companies with an Australian head office located outside the big cities then that alone would do wonders for regional development and fixing the infrastructure problems in the major cities.


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## McLovin (28 March 2015)

Smurf1976 said:


> As an example of a possible approach, if the company tax rate were lowered by even just 1% for companies with an Australian head office located outside the big cities then that alone would do wonders for regional development and fixing the infrastructure problems in the major cities.




My suggestion was/is that their should be payroll tax concessions/elimination for companies employing >x number of employees at the same site outside capital cities. I remember years ago when I last "worked" in Sydney in IB we had so many admin staff, who performed back office functions, that trundled in 1-2 hours by train to work in the CBD when they could just have easily done it in Albury/Port Macquarie/Newcastle/Bowral etc etc. There was absolutely no reason for them to be in CBD.


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## Mrmagoo (29 March 2015)

What industry are you going to set up in Bendigo to make it a viable economic center ? In my view the trade unions have made any serious economic expansions virtually impossible.  You would need something big like a motor company or a pharmaceutical  company to move to these locations. We have places like Newcastle and Canberra which represent small cities but their population is nothing compared to a city like Cologne. 

Unless we can get some actual competitive advantage in something I can't see how the existence of small cities is a realistic prospect. You'd just be creating economic backwaters and as soon as some jobs did somehow move there property investors would smell blood driving prices through the roof which could potentially defeat the purpose of the whole thing and might even drive wages up causing the employer to leave.

The problem is with incentive and borrowing. A centralised city of 5 or 6 million should be able to manage just fine.


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## Mrmagoo (29 March 2015)

McLovin said:


> My suggestion was/is that their should be payroll tax concessions/elimination for companies employing >x number of employees at the same site outside capital cities. I remember years ago when I last "worked" in Sydney in IB we had so many admin staff, who performed back office functions, that trundled in 1-2 hours by train to work in the CBD when they could just have easily done it in Albury/Port Macquarie/Newcastle/Bowral etc etc. There was absolutely no reason for them to be in CBD.




Messing with the market in such ways  is not a good idea. You could cause population drives into those cities without building housing. It will simply make the problem worse. You'd have junior administration staff sleeping in their cars, no one would want to move to this city and you'd end up paying 35% more to get people to go. An underclass develops in these cities and drugs become a problem.


----------



## paulyy (13 April 2015)

https://au.pfinance.yahoo.com/our-e...ting-some-perspective-on-the-property-bubble/ what are everyone's thoughts?


----------



## trainspotter (30 April 2015)

What a difference a year can make in real estate eh? 



> The Jollys, who polarised viewers more than any other team this season, *pocketed $835,000 over reserve for their pad*, which they renovated room by room over 10 weeks. They also earned themselves a $100,000 winner's cheque.
> 
> Last year, they were distraught after collecting just $10,000 for months of hard work on the Glasshouse series in Prahran




http://news.domain.com.au/domain/re...ost-1-million-at-auction-20150429-1mw74e.html


----------



## Macquack (30 April 2015)

"The Block" is a crock of ****.

Jolly must have threatened legal action from the last series for the "reserves" to be set so unrealistically low.

Anyone in the building industry knows the contestants have zero input into these projects and are just celebrity labourers who do very little labouring.

I confess I watch it from time to time to reinforce how pathetic it is.


----------



## Quincy (30 April 2015)

"The Block: A reality TV show without the reality"

http://news.domain.com.au/domain/re...ality-20150430-1mwlh8.html?rand=1430358429976



> Like most of reality television, the screen-time version is a skewed version of real life. Strip back The Block branding and the outcome would have been entirely different.






> Buyer's agent and valuer Greville Pabst​, of the WBP Property Group, who also appeared as a judge on the show, said the show's reserves "bear no relevance to reality".


----------



## So_Cynical (18 May 2015)

Meanwhile over the ditch the Kiwis have hit the panic button.



			
				http://www.globalpost.com/ said:
			
		

> The Reserve Bank of New Zealand (RBNZ) said that property investors in Auckland, home to a quarter of New Zealand's population, would *require a deposit of at least 30 percent* when seeking a mortgage from Oct. 1.




And new rules for foreign buyers and CGT.



			
				http://www.nzherald.co.nz/ said:
			
		

> Two-year ownership requirement and curbs on foreign buyers announced as Govt moves to cool the Auckland market.




Amazing what a reserve bank can do when they are serious.


----------



## banco (18 May 2015)

So_Cynical said:


> Meanwhile over the ditch the Kiwis have hit the panic button.
> 
> 
> 
> ...




I'm pretty sure that's APRA's remit in Australia.  If there is a property crash guarantee you the RBA will be leaking against APRA saying they were too close to the banks and didn't institute tough macroprudential rules etc.


----------



## MrBurns (18 May 2015)

So_Cynical said:


> Meanwhile over the ditch the Kiwis have hit the panic button.
> 
> And new rules for foreign buyers and CGT.
> 
> Amazing what a reserve bank can do when they are serious.




That's a brave move and will stop their market in it's tracks.............


----------



## trainspotter (19 May 2015)

Ask and ye shall receive .. or is it that they are just copying NZ ?

*Investor home loans tighten as regulator APRA clamps down*



> *Lending for investment properties appears to have suddenly tightened, as the banking regulator's efforts to rein in the sector appear to be succeeding.*
> 
> Mortgage brokers are reporting credit conditions in Australian housing lending market have become a lot tougher in the past two weeks according to CLSA's leading bank analyst Brian Johnson.
> 
> ...




http://www.abc.net.au/news/2015-05-18/investor-home-loans-tighten-as-regulator-clamps-down/6477134


----------



## MrBurns (19 May 2015)

trainspotter said:


> Ask and ye shall receive .. or is it that they are just copying NZ ?
> 
> *Investor home loans tighten as regulator APRA clamps down*
> http://www.abc.net.au/news/2015-05-18/investor-home-loans-tighten-as-regulator-clamps-down/6477134




This looks accurate -  see number 5 and what's next.............


----------



## trainspotter (19 May 2015)

Where is robots when we need him? Is that a Minsky graph?

Minsky proposed theories linking financial market fragility, in the normal life cycle of an economy, with speculative investment bubbles endogenous to financial markets. Minsky claimed that in prosperous times, when corporate cash flow rises beyond what is needed to pay off debt, a speculative euphoria develops, and soon thereafter debts exceed what borrowers can pay off from their incoming revenues, which in turn produces a financial crisis. As a result of such speculative borrowing bubbles,* banks and lenders tighten credit availability*, even to companies that can afford loans, and the economy subsequently contracts.


----------



## MrBurns (19 May 2015)

trainspotter said:


> Where is robots when we need him? Is that a Minsky graph?
> 
> Minsky proposed theories linking financial market fragility, in the normal life cycle of an economy, with speculative investment bubbles endogenous to financial markets. Minsky claimed that in prosperous times, when corporate cash flow rises beyond what is needed to pay off debt, a speculative euphoria develops, and soon thereafter debts exceed what borrowers can pay off from their incoming revenues, which in turn produces a financial crisis. As a result of such speculative borrowing bubbles,* banks and lenders tighten credit availability*, even to companies that can afford loans, and the economy subsequently contracts.




I've seen it happen before in the last downturn, banks closing in on businesses unfairly causing all sorts of problems.
Let's face it the banks are in control, if they tighten the money supply values will go down and the banks will want people to top up their equity....and down it goes from there.


----------



## trainspotter (19 May 2015)

MrBurns said:


> I've seen it happen before in the last downturn, banks closing in on businesses unfairly causing all sorts of problems.
> Let's face it the banks are in control, if they tighten the money supply values will go down and the banks will want people to top up their equity....and down it goes from there.




For sure similar situation as the last time insomuch that the banks are tightening their regulatory lending practices. But I note it is only towards the "investors" at the moment trying to curb the growth of the property market and over exposure to the banks to the "investors".

APRA forcing the big 4 banks to have stronger capital ratios would dilute the banks returns on mortgages opening up the way for regional and prudential banks to start risky lending practices??



> The increase in capital requirements is likely to result in higher mortgage rates, as the banks charge more to recoup the costs of holding more capital, to maintain their high returns.
> 
> Deutsche Bank analyst Andrew Triggs said the banks would raise capital by retaining profits and reprice home loans to protect their profits.
> 
> "With an oligopoly market structure dominated by four large rational players, we think the banks will eventually reprice their mortgage books – we estimate 20 to 30 basis points on average required to hold returns on equity flat," he said in a note to clients.




http://www.smh.com.au/business/bank...-threat-of--apra--action-20150430-1mx5aw.html


----------



## Klogg (19 May 2015)

> APRA forcing the big 4 banks to have stronger capital ratios would dilute the banks returns on mortgages opening up the way for regional and prudential banks to start risky lending practices??




I believe this relates to the Advanced Basel accrediatation that the big banks have. This allows them to apply their own internal values to some risk weighting variables, resulting in a (possibly, but likely) lower capital requirement.
If they change these parameters, it's likely this will just bring them in-line with other banks who don't have this accreditation.

I'd say the wording of the article is a little off, and should refer to banks with this advanced accreditation. 
(Not sure if Bendigo Bank has this yet)


Check this link out:
http://www.australianbankingfinance.com/banking/bendigo-laments-uneven-playing-field/

This section is relevant:


> Advanced accreditation and technology
> 
> The rate of change won’t slow, said Johanson, hence the bank has invested in Basel II advanced accreditation and new digital and online technologies.
> 
> ...


----------



## trainspotter (22 May 2015)

*Banks put brakes on investor lending*



> ANZ Bank said it would no longer offer discount interest rates to new property investors who did not already have a mortgage over their own home with the bank. National Australia Bank and Commonwealth Bank have also reduced the discounts offered to new investor borrowers. CBA also told mortgage brokers last week it would scrap a $1,000 rebate for new investor borrowers.
> 
> Westpac has not changed its loan-to-valuation rules or announced changes to pricing, but this month it said it would apply tougher tests to new property investor borrowers when assessing how they would cope with higher interest rates. It is tightening its lending criteria for "non-resident" home lending, suggesting foreigners will find it harder to borrow.




http://www.smh.com.au/business/bank...akes-on-investor-lending-20150521-gh6imi.html

More likely headline

*Banks put valve cover on leaky property bubble*


----------



## trainspotter (22 May 2015)

Fund managers point the finger at the likely cause of the "crash" ...



> Neither fund manager said they were concerned about the idea of a property bubble or swaths of Australians defaulting on their mortgages, unless there was a significant rise in unemployment rates.
> 
> "I've been calling the death of the property market for a while; on the metrics of average income to property prices it's at a very high level," Mr Skamvougeras said.* "But you're not going to see a property crash without an employment crash."*




http://www.smh.com.au/business/bank...t-legs-say-fund-managers-20150521-gh6vi0.html

Clever these hedge fund managers eh?

I wrote this on the 4th May 2012 in this thread.



> *GOSH* ... has anyone been paying attention??
> 
> JOBS JOBS JOBS ....... IS THE TRIGGER POINT !!!!!!
> 
> ...


----------



## jank (24 May 2015)

So, is anyone still arguing that Sydney prices are not fubar'd?


----------



## waterbottle (24 May 2015)

trainspotter said:


> Fund managers point the finger at the likely cause of the "crash" ...
> 
> 
> 
> ...




I also remember you saying that property prices were linked to credit availability and that we should "watch what the banks do" to determine what direction property would take.

Given the recent LVR restrictions and the fact that many jobs are dependent on the availability of housing credit, do you think that Sydney now has an opportunity to experience a fall in prices?


----------



## ftw129 (24 May 2015)

I have been travelling the world for the last few years and although we may not live in the most "glamourous" of countries we certainly do live in one of safest, cleanest, beautiful, well run and most importantly, under populated. Further more from all the people that I've met, most dream of or plan on seeing Australia.

 We really do live in a country that is the envy of the world with many millions who would love to live here and are trying.

I would not be counting on seeing any (1) significant and (2) permanent falls in property prices in this country, especially in the major capital cities on the East Coast. Not in our lifetime anyway.

The Furure of Australian Property Prices is up. Stagnation or temporary pull backs will be inevitable for sure. But nothing disastrous or permanent.

(Just my own humble opinion)


----------



## ftw129 (24 May 2015)

ftw129 said:


> I have been travelling the world for the last few years and although we may not live in the most "glamorous" of countries, we certainly do live in one of safest, cleanest, beautiful, diverse, well run and most importantly, under populated. Furthermore, from all the people that I've met, most dream of or plan on seeing Australia.
> 
> We really do live in a country that is the envy of the world with many millions who would love to live here and are trying.
> 
> ...




(Typo fix)


----------



## waterbottle (24 May 2015)

ftw129 said:


> I have been travelling the world for the last few years and although we may not live in the most "glamourous" of countries we certainly do live in one of safest, cleanest, beautiful, well run and most importantly, under populated. Further more from all the people that I've met, most dream of or plan on seeing Australia.
> 
> We really do live in a country that is the envy of the world with many millions who would love to live here and are trying.
> 
> ...




This is a silly analysis.

The "Australian" lifestyle can be found in many Western nations. There is nothing inherently unique about Australia that justifies the overinflated prices being charged, save for the fact that we pulled out all stops to bolster house prices during the GFC and made housing credit more easily available.


----------



## sptrawler (24 May 2015)

ftw129 said:


> I have been travelling the world for the last few years and although we may not live in the most "glamourous" of countries we certainly do live in one of safest, cleanest, beautiful, well run and most importantly, under populated. Further more from all the people that I've met, most dream of or plan on seeing Australia.
> 
> We really do live in a country that is the envy of the world with many millions who would love to live here and are trying.
> 
> ...




I think you are spot on, Australia is a relatively young Country and does have a growing population and economy.

Therefore there will be ebbs and flows, however the GDP, population and economy will continue to grow, over the longer term.
Unlike some of the Western Countries, which have a large population, and a mature economy.


----------



## ftw129 (25 May 2015)

waterbottle said:


> This is a silly analysis.
> 
> The "Australian" lifestyle can be found in many Western nations. There is nothing inherently unique about Australia that justifies the overinflated prices being charged, save for the fact that we pulled out all stops to bolster house prices during the GFC and made housing credit more easily available.




The lifestyle is one thing but the quality of it is another.

The "prices being charged" are set by us, (the market) and are relative.

As I stated at the end of my original post, this is just my own humble opinion, I am in no position to make any type of analysis, even a "silly" one, as you so put it.

I am merely just trying to inject a little bit of common sense in to this ongoing, emotionally charged and passionate debate.

Just like any other market, you can have an unlimited amount of "analysis" being done by the "best" people in the business but in the end, price action, driven by market sentiment are the reality. 

My point here is, that the sentiment around the world regarding Australia, is extremely positive. "Envious" even.

Over the long term, there is only one way for property prices to go. Trying to argue about why they can't or shouldn't is "interesting" but expecting them not to, is only going to cause heart ache, when those who look back 30 years from now didn't buy as much as they possibly could. I suspect, that's where a lot of the "bitterness " from some of the posters in this thread comes from. 

I just wouldn't bet the house (pun intended), on prices going down. Not significantly or permanently.
Well, not in this great country, anyway 


----------



## trainspotter (25 May 2015)

waterbottle said:


> I also remember you saying that property prices were linked to credit availability and that we should "watch what the banks do" to determine what direction property would take.
> 
> Given the recent LVR restrictions and the fact that many jobs are dependent on the availability of housing credit, do you think that Sydney now has an opportunity to experience a fall in prices?




Too late waterbottle.



> Palm Beach houses, 2005: $2.28 million, 2015: $2.25 million
> Clareville houses, 2005: $1.45 million, 2015: $1.27 million
> Terrigal units, 2005: $575,000, 2015: $575,000
> Gosford houses, 2005: 430,000, 2015: $465,000
> ...




http://www.news.com.au/finance/real...lling-conditions/story-fncq3era-1227365747081

Go talk to this guy about WHERE to buy http://www.wheregroup.com.au/

(I am not affiliated in any way nor do I recommend his services)


----------



## trainspotter (25 May 2015)

ftw129 said:


> I have been travelling the world for the last few years and although we may not live in the most "glamourous" of countries we certainly do live in one of safest, cleanest, beautiful, well run and most importantly, under populated. Further more from all the people that I've met, most dream of or plan on seeing Australia.
> 
> We really do live in a country that is the envy of the world with many millions who would love to live here and are trying.
> 
> ...




2 thumbs up for this one. 

At last .. somebody who has ACTUALLY left the country and realised how good we have it here.


----------



## banco (25 May 2015)

ftw129 said:


> I have been travelling the world for the last few years and although we may not live in the most "glamourous" of countries we certainly do live in one of safest, cleanest, beautiful, well run and most importantly, under populated. Further more from all the people that I've met, most dream of or plan on seeing Australia.
> 
> We really do live in a country that is the envy of the world with many millions who would love to live here and are trying.
> 
> ...




This is the kind of pablum I'd expect from a poor politician.


----------



## Tyler Durden (25 May 2015)

> *The narrowest house on the market in Sydney has sold for $965,000*
> 
> 
> When the hammer fell on $965,000, making the land worth more than $25,000 per square metre, agents, bidders and onlookers were all left in shock.
> ...




http://www.dailytelegraph.com.au/re...-sold-for-965000/story-fni0cly6-1227366582131

I'm assuming the buyer has seen photos of the property, or maybe even seen it in person when he/she was in Australia previously. But doesn't it reek of speculation that someone overseas bidding over the telephone is willing to over pay so much for such a small property? Or maybe desperation to get money out of China?


----------



## banco (25 May 2015)

Tyler Durden said:


> http://www.dailytelegraph.com.au/re...-sold-for-965000/story-fni0cly6-1227366582131
> 
> I'm assuming the buyer has seen photos of the property, or maybe even seen it in person when he/she was in Australia previously. But doesn't it reek of speculation that someone overseas bidding over the telephone is willing to over pay so much for such a small property? Or maybe desperation to get money out of China?




Probably the latter.


----------



## Mrmagoo (25 May 2015)

Hard workers and savers such as myself are getting screwed in favor of lazy speculators who do not want to work !


----------



## waterbottle (25 May 2015)

trainspotter said:


> Too late waterbottle.
> 
> 
> 
> ...




Thanks TS! I find it hilarious that a unit in Avoca beach is now similarly priced to units in Canterbury! Apples to oranges I guess.

Yes, I am broadening my search. I don't think it'd be a good idea to purchase a PPOR in Sydney within the next 10 years - this place seems to be changing too fast


----------



## Mrmagoo (25 May 2015)

trainspotter said:


> 2 thumbs up for this one.
> 
> At last .. somebody who has ACTUALLY left the country and realised how good we have it here.




There are those societies which are barbaric, which will never evolve, which add nothing to the beauty of humanity and bring only suffering to their own people. We don't compare ourselves to those people. 

If you're a born member of the middle class and the dominant ethnic group in almost any western European and when economic conditions are not heavily in our favor you're almost always better off overseas. That is why before the recent boom we had stupid numbers of Australians suddenly remember their grandparent was english and take off to the UK.

Lets drop Aussie wages by 20%, and drop the AUD/EUR to .4 where it used to be and then lets see how wonderful Australia is. We go back to being that poor country full of white people in the middle of Asia that has kangaroos.


----------



## waterbottle (25 May 2015)

ftw129 said:


> The lifestyle is one thing but the quality of it is another.
> 
> The "prices being charged" are set by us, (the market) and are relative.
> 
> ...




I appreciate the fact that everyone is entitled to their own opinion, but when you attribute the past few decades of house price rises to Australia essentially being heaven, then I think you are just doing yourself and the readers a disservice.
There is nothing about or within Australia that cannot be found elsewhere in the Western world. Vancouver and Toronto have experienced similar rises in house prices - I don't recall them being a part of Australia. A similar phenomenon, albeit now being moderated, is also being experienced in Auckland - another city outside of Australia.

The issue here is credit and asset price inflation. Money has been made more easily accessible ever since central banks began their race to ZIRP. This excess money has found its way into commodities, stock markets and housing.
How this will end up is anyone's guess. I hoped that the bubble would burst post-GFC, but I never expected the Government to pull out all stops to keep prices high.

For me it is not so much bitterness, but disappointment in having watched people and our Government plunge ridiculous amounts of money into unproductive speculation at immense societal and economic cost.


----------



## satanoperca (25 May 2015)

waterbottle said:


> For me it is not so much bitterness, but disappointment in having watched people and our Government plunge ridiculous amounts of money into unproductive speculation at immense societal and economic cost.




This is the reality and the question must be then asked, will Australia be the heaven that the rest of the world wants in the coming decades?

I have traveled to many countries, lived in a few. I feel Australians are living on luck, rather than hard work, innovation and creativity that made this country great. 

Where have our innovators and creators gone, or has our culture become one of complacency.

High property prices bring as much happiness to society in the long term as a good hit of meth brings in the short term.

Cheers


----------



## qldfrog (26 May 2015)

satanoperca said:


> I have traveled to many countries, lived in a few. I feel Australians are living on luck, rather than hard work, innovation and creativity that made this country great.



+1
And the bubble in RE price has cost so much to this economy, paralysing politics and destroying the root of our own previous successes.
Prettu scary as well how this supposed wealth with high AUD and RE price is  so local; most of australians would see their wealth halves should RE halves, and a hige number would be even worse than that due to IP pyramidal schemes.
and no, not bitter 1M$+ home, just sold my residential property.
But caring for Australia: i did not migrated here decades ago to live again the slide to doom experienced in Europe.


----------



## trainspotter (26 May 2015)

Mrmagoo said:


> There are those societies which are barbaric, which will never evolve, which add nothing to the beauty of humanity and bring only suffering to their own people. We don't compare ourselves to those people.
> 
> If you're a born member of the middle class and the dominant ethnic group in almost any western European and when economic conditions are not heavily in our favor *you're almost always better off overseas*. That is why before the recent boom we had stupid numbers of Australians suddenly remember their grandparent was english and take off to the UK.
> 
> Lets drop Aussie wages by 20%, and drop the AUD/EUR to .4 where it used to be and then lets see how wonderful Australia is. We go back to being that poor country full of white people in the middle of Asia that has kangaroos.




Tell that to Spain, Greece, Ireland, Portugal, France whose unemployment rate is what exactly? Also you might want to look at their property prices


----------



## sptrawler (26 May 2015)

Mrmagoo said:


> There are those societies which are barbaric, which will never evolve, which add nothing to the beauty of humanity and bring only suffering to their own people. We don't compare ourselves to those people.
> 
> If you're a born member of the middle class and the dominant ethnic group in almost any western European and when economic conditions are not heavily in our favor you're almost always better off overseas. That is why before the recent boom we had stupid numbers of Australians suddenly remember their grandparent was english and take off to the UK.
> 
> Lets drop Aussie wages by 20%, and drop the AUD/EUR to .4 where it used to be and then lets see how wonderful Australia is. We go back to being that poor country full of white people in the middle of Asia that has kangaroos.




So with your obvious disenchantment with Australia, why do you stay here?


----------



## Mrmagoo (26 May 2015)

trainspotter said:


> Tell that to Spain, Greece, Ireland, Portugal, France whose unemployment rate is what exactly? Also you might want to look at their property prices




The lifestyle is better and you are kind of being a bit of a troll because I said when economy circumstances do not favor us heavily. I get tired of responding to these troll posts. I can only assume you're trolling because my post was very clear on this.


----------



## Mrmagoo (26 May 2015)

sptrawler said:


> So with your obvious disenchantment with Australia, why do you stay here?




So your solution is to migrate rather than fix the very fixable problem at home ? 


Firstly, the Schengen area has much stricter rules for skilled migrants, secondly I very clearly stated that if you're part of the dominant ethnic group in those countries and economic conditions do not favor us heavily, then you're better off over there. 

example :

If I was a German born German with all of the middle class education and middle class contacts that come with being middle classed you would be better off in Germany. 

You don't see boat loads of Germans trying to come to Australia. Australia is a good country, but it is not this wonderful paradise where birds **** happiness that some rich old men make it out to be. Growth in home prices has been because of easy credit, and China. We are one of few nations that allow them to invest with impunity.


----------



## trainspotter (27 May 2015)

Mrmagoo said:


> The lifestyle is better and you are kind of being a bit of a troll because I said when economy circumstances do not favor us heavily. I get tired of responding to these troll posts. I can only assume you're trolling because my post was very clear on this.




The lifestyle is  better ?? HOW??? Not what I saw when I was there. People selling veges out of foam boxes in their front window to make a few $$$. A couple of chickens in the back yard for eggs. Men sitting around idly at cafe's and bars with no work to be had. Houses boarded up and derelict. No sanitation in the way of garbage removal from the streets. Shopping centres with 50% empty shops. Yep .. the "lifestyle" is so much better.

I can only assume by the tone of your post you have not taken your meds in the last week.

And what the hell is _"economy circumstances do not favor us heavily"_ 

If the macro and micro economic circumstances are not good in Australia you can bet the sheep station that things are pretty SH!TE in Europe.


----------



## Mrmagoo (27 May 2015)

trainspotter said:


> The lifestyle is  better ?? HOW??? Not what I saw when I was there. People selling veges out of foam boxes in their front window to make a few $$$. A couple of chickens in the back yard for eggs. Men sitting around idly at cafe's and bars with no work to be had. Houses boarded up and derelict. No sanitation in the way of garbage removal from the streets. Shopping centres with 50% empty shops. Yep .. the "lifestyle" is so much better.
> 
> I can only assume by the tone of your post you have not taken your meds in the last week.
> 
> ...




I am not sure if you could be any more racist if you tried. Do you think  all Europeans just sit around being unemployed ? Germany has an unemployment rate LOWER than Australia's. As do many other European nations, including the czech republic, norway, switzerland and the UK. Who also have lower house prices.

House prices AND unemployment rates are lower in Germany. They also have a vastly more developed country. Paradise my ass.


----------



## waterbottle (27 May 2015)

trainspotter said:


> The lifestyle is  better ?? HOW??? Not what I saw when I was there. People selling veges out of foam boxes in their front window to make a few $$$. A couple of chickens in the back yard for eggs. Men sitting around idly at cafe's and bars with no work to be had. Houses boarded up and derelict. No sanitation in the way of garbage removal from the streets. Shopping centres with 50% empty shops. Yep .. the "lifestyle" is so much better.
> 
> I can only assume by the tone of your post you have not taken your meds in the last week.
> 
> ...




To be fair, the countries that you listed had been hugely impacted by the GFC, entered recession or are on the border all whilst being members of an economic zone that seems be slowly spiraling downwards. 
Meanwhile, Australia has been attached to China's bossom for the past 15+ years and has had massive, continuous growth with no severe recessions.

Nobody knows what Australia will look like when we finally enter a proper recession (i.e. no massive stimulus, no budget surplus, no stimulatory China). It could be worse or better than the countries you listed, but I doubt that many Australians will maintain their current standard of living except for the wealthy.


----------



## Klogg (28 May 2015)

waterbottle said:


> Nobody knows what Australia will look like when we finally enter a proper recession (i.e. no massive stimulus, no budget surplus, no stimulatory China). It could be worse or better than the countries you listed, but I doubt that many Australians will maintain their current standard of living except for the wealthy.




Spot on. Nobody can be certain of the outcome either way, but they can avoid the risks where they see them.

And this is the problem with the majority of the discussions had around housing. It's either it will or won't crash, not identification and mitigation of risks. Obviously if everyone was out to mitigate risk, the level of leverage on residential property wouldn't be where it is today.


----------



## trainspotter (28 May 2015)

Mrmagoo said:


> I am not sure if you could be any more racist if you tried. Do you think  all Europeans just sit around being unemployed ? Germany has an unemployment rate LOWER than Australia's. As do many other European nations, including the czech republic, norway, switzerland and the UK. Who also have lower house prices.
> 
> House prices AND unemployment rates are lower in Germany. They also have a vastly more developed country. Paradise my ass.




So first of all you called me a troll and now I am a racist. I responded to your outlandish claim that:-



> If you're a born member of the middle class and the dominant ethnic group in *almost any western European* and when economic conditions are not heavily in our favor you're almost always better off overseas.




I pointed out that you were blatantly WRONG in this statement. You are not BETTER OFF overseas. You ever been to Europe Magoo? Slip on down to Monte Estoril or Cascais and have a good look around. This where the "rich" are supposed to live. NOT WHAT I SAW !!  You might learn something about "Europe". Not satisfied there? Go to Tarifa or Seville in Spain to broaden your outlook. The "lifestyle" is better? Pfffffffffffffffffffftttt !

I think you need to check the dosage of your medication there before you make more observations that do not have a ring of truth to them.

Then you wrote this:- 







> I am not sure if you could be any more racist if you tried. Do you think  all Europeans just sit around being unemployed ?




This is what I observed in the countries that I visited ALL THROUGH Europe. So I am racist profiling because I am telling the truth? It is their "lifestyle" remember that you are after. Half of frickin Spain shuts down for "siesta" in the afternoon. Yeahhhh ... that's the "lifestyle" for me. As for the "other" European countries you mentioned having lower unemployment rates have a look at the population compared to Australia and then have a look at the "average" wage compared to Australia to support your ridiculous cherry picking claims.

Germany = 80,000,000 people
Australia = 23,000,000 people

In Germany the gap between rich and the poor is this ... the top 20% of the population earn more than four times as much as the bottom 20% Oh and you might want to check on the tax laws as well ... 

Then you went on with this gem:- 



> As do many other European nations, including the czech republic, norway, switzerland and the UK. *Who also have lower house prices.*




Ermmmmmm you do realise that nearly all of the population of the countries you have listed live in either apartments, town houses or villas. They do not have "suburbs" similar to Australia whereby Mum & Dad buy a block of land close to the city and build a house of their own choice to live in. Green titles and white picket fences and fricking McMansions are the norm in Australia. You don't have that in Europe. It's either a HUGE apartment block or a villa behind a gated community. Compare Berlin prices to Sydney prices and see how you go champ.

Just like you I am tired of people like yourself making inane comments in this thread on a subject matter they clearly know nothing about. I bid you adieu as this will be the last time I respond to your nonsense.


----------



## trainspotter (28 May 2015)

waterbottle said:


> To be fair, the countries that you listed had been hugely impacted by the GFC, entered recession or are on the border all whilst being members of an economic zone that seems be slowly spiraling downwards.
> Meanwhile, Australia has been attached to China's bossom for the past 15+ years and has had massive, continuous growth with no severe recessions.
> 
> Nobody knows what Australia will look like when we finally enter a proper recession (i.e. no massive stimulus, no budget surplus, no stimulatory China). It could be worse or better than the countries you listed, but I doubt that many Australians will maintain their current standard of living except for the wealthy.




Completely agree waterbottle. Australia is MORE than just Sydney and Melbourne. In just about ALL the rest of Australia you will find it has already declined to the point of mortgage stress in MANY areas. That is a given. Some areas of regional Australia have declined in value by 30% from pre GFC values. Shops ARE shutting. The velocity of money through the economy is slowing. It has started already. 

*GOSH* the little Aussie battler might have to stop driving the SS commodore and NOT have the latest 60 inch LCD curved 3 D TV stuck on the bedroom wall. A reality check is what is needed for the people who live in this great country. Go to Europe, go to America, go to a third world country and LOOK at how good we have it here before whinging "Oh woe is me I cant afford to buy a HOUSE right next door to where I work"


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## sptrawler (28 May 2015)

trainspotter said:


> Completely agree waterbottle. Australia is MORE than just Sydney and Melbourne. In just about ALL the rest of Australia you will find it has already declined to the point of mortgage stress in MANY areas. That is a given. Some areas of regional Australia have declined in value by 30% from pre GFC values. Shops ARE shutting. The velocity of money through the economy is slowing. It has started already.
> 
> *GOSH* the little Aussie battler might have to stop driving the SS commodore and NOT have the latest 60 inch LCD curved 3 D TV stuck on the bedroom wall. A reality check is what is needed for the people who live in this great country. Go to Europe, go to America, go to a third world country and LOOK at how good we have it here before whinging "Oh woe is me I cant afford to buy a HOUSE right next door to where I work"




Spot on TS, not that you are allowed to say it.

There would have been smelling salts all round this morning, when the novice property investors were reading the paper, over weeties.

https://au.news.yahoo.com/thewest/a/28239740/tax-clampdown-on-landlords/

"Mum what was that crash?" "Nothing dear, dad just fainted on the kitchen floor, choking on his weeties"


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## banco (28 May 2015)

trainspotter said:


> *GOSH* the little Aussie battler might have to stop driving the SS commodore and NOT have the latest 60 inch LCD curved 3 D TV stuck on the bedroom wall. A reality check is what is needed for the people who live in this great country. Go to Europe, go to America, go to a third world country and LOOK at how good we have it here before whinging "Oh woe is me I cant afford to buy a HOUSE right next door to where I work"




You tell them Ted.


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## trainspotter (28 May 2015)

The Kingswood ... you're not taking the bloody Kingswood!


----------



## Mrmagoo (28 May 2015)

trainspotter said:


> Completely agree waterbottle. Australia is MORE than just Sydney and Melbourne. In just about ALL the rest of Australia you will find it has already declined to the point of mortgage stress in MANY areas. That is a given. Some areas of regional Australia have declined in value by 30% from pre GFC values. Shops ARE shutting. The velocity of money through the economy is slowing. It has started already.
> 
> *GOSH* the little Aussie battler might have to stop driving the SS commodore and NOT have the latest 60 inch LCD curved 3 D TV stuck on the bedroom wall. A reality check is what is needed for the people who live in this great country. Go to Europe, go to America, go to a third world country and LOOK at how good we have it here before whinging "Oh woe is me I cant afford to buy a HOUSE right next door to where I work"




Retail figures show this is not what is happening.  The only people buying big ticket items are asset rich baby boomers. You're completely out of touch. Just because YOU have lived a life of excess and largesse doesn't mean that is the standard for Australia. Most work hard and save over many years to have what little they do have. The same as in Europe. Some people take out big debts and appear to have a flashy life-style but they're just living on borrowed time.

To suggest that high house prices are because Australia is somehow a superior place to live compared to anywhere else is just ludicrous, it is not the best place in the world to live and high house prices have been caused by foreign investment, credit growth, government policy and SMSF.

I'll agree if you're a baby boomer or X'er who simply rode the asset booms and did almost no work* to accumulate their money other than buying houses then the picture looks a bit different that what it does if you're a hard worker.

*(although in their little minds making the minimal repayments on their 1.5X annual income home was a big sacrifice)


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## Mrmagoo (28 May 2015)

trainspotter said:


> So first of all you called me a troll and now I am a racist. I responded to your outlandish claim that:-
> 
> 
> 
> ...




Australia is just as unequal if not more unequal than any European nation. The difference is that we do it through asset prices and locking our youth out of home ownership and by giving unfair tax breaks to the rich.

I have family who were born in Europe, their children (my cousins)  have and continue to live and work in Europe. You need to understand we pay insane premiums for so many things in Australia that with our $20 an hour basic wage, you're probably realistically eating up $15 an hour of it in basic costs. 

Sure,  if you're a boomer on 100k a year with a partner on the same and you already own a home due to buying cheap then you're obviously very rich. Few non-boomers non-early-X'ers fall into that category.

The sustainability of it all is built on the assumption of future growth, which means it will only get worse for people the younger they are.


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## Tyler Durden (28 May 2015)

This will be interesting to see...



> AFTER the shock sale price of Surry Hills’s skinny house on Saturday, it’s equally skinny neighbour has now hit the market.
> 
> With 29 Terry St selling under the hammer for $965,000, shocking agents and onlookers alike, 31 Terry St will be trying to match or better that result.




http://www.news.com.au/national/the...w-hit-the-market/story-e6frfkp9-1227372730703


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## Mrmagoo (28 May 2015)

lol... looking out that window... sydney paradise... haha what a joke.


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## trainspotter (28 May 2015)

Beware the Ides of March ... (or how to lose 200k without trying)



> MEDIAN house prices in the Pilbara town of Karratha have plunged almost 34 per cent as the mining downturn prompts residents to leave.
> Real Estate Institute of Western Australia data for the year to March shows the average price in Karratha has fallen to $450,000. That compares to $650,000 in the *March quarter* last year.




http://www.news.com.au/finance/real...e-in-was-pilbara/story-fndbaln9-1227370424077

Sooner or later Godwins Law will come into play ....




First the Northwest of Australia then Sydney's turn is next 

And now to inject some intelligence back into this thread ...



> "House prices and housing investment are now rising in over half of the OECD economies. In Europe, strong house price growth is continuing in Germany *(based on data from the big cities)* and Switzerland, and has also resumed in the United Kingdom, even though UK prices are already above longer-term norms relative to rents and incomes. Markets remain softer in other parts of the euro area, reflecting weak income growth and tighter financing conditions.




http://www.telegraph.co.uk/finance/...pest-and-most-expensive-property-markets.html

Notice how they quantified their bold statement thusly *(based on data from the big cities)* ... much like Australia really now isn't it. Take out the ridiculously overheated markets in the "big cities" (read Sydney & Melbourne] Except for the "lifestyle" is much better over there in Europe. As long as you are employed that is. 

Aaaaaaah the sheer bliss of living in a country where house prices NEVER go down eh?


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## wayneL (28 May 2015)

How are things going in Gero TS?


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## sptrawler (28 May 2015)

wayneL said:


> How are things going in Gero TS?




As with all places in W.A, softening.


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## trainspotter (29 May 2015)

wayneL said:


> How are things going in Gero TS?




Softer than a Mr Whippy ice cream cone wayneL. Anything above 500k is taking 6 to 8 months to sell and generally below replacement value or vendor taking a haircut. In general I would say a 15 to 20 percent drop across the board from 2007 prices. In other words it has corrected to where it should have been all along. Commercial values are still strong but rental income is down to around 90/m2 for shed space and about 150m2 for cbd shop front.

Something must be going to happen in the next 5 years that I don't know about as a BIG food retail chain has purchased 18 acres to develop in a Northern suburb that is yet to be developed. There are 2000 blocks to be placed on the ground. Earthworks had started already. Hong Kong hedge  fund is behind the sub division. They are talking about a 2019 start date for the complex ?? 89 specialty shops as well as the junk food outlets given a corner each.


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## rryall (30 May 2015)

Went to check out this Auction in Preston VIC today..

http://www.realestate.com.au/property-house-vic-preston-119688615

Advertised between $470k-$520k. Watch a young Australian couple with a baby go head to head with about 5 to 10 foreigners investors. They were priced out almost immediately and it ended up selling to a what one can only assume was a Chinese foreigner for $727k which was almost $200k over reserve. I understand this is on a large block 492m2 but think these examples are a national disgrace. As I watched them bid it was like money was no object..

My take on cases such as these are the following in no particular order:

1) When I purchase my first home in next 12m I'll be steering well clear of properties that are favourable with foreigners (i.e. eastern suburbs and large inner city blocks where the property will be domolished and are simply paying for the land)

2) How come there are NO checking mechanisms in place on foreign purchases? How difficult it is to have a registrar in place to make sure any purchase of existing property is solely for Australian residents and companies/trusts etc. When a foreign student purchases an exisiting property (which they shouldn't even be allowed to do) what checks are done to make sure they are sold on departure? When the point piper mansion which was sold for $39 million earlier this year was found to be an illegal purchase the agents said they thought it was an Australian company making the purchase. What a complete joke. There appears to more identity checks for welfare (after my recent visit to centrelink to get carers allowance for my mum) than there is for property purchases. 

The Australian economy appears to be heading towards the toilet yet Australian property continually bucks the trend. Real wages growth is currently negative and although our public debt is low compared globally our (government guaranteed) private debt is ludicrous. When is Australia going to wake up and look at increasing productivity (NOT via population growth) instead of going down the path of astronomically high house prices which is non-productive and simply creates additional debt. 

Apologies for the rant but as a young professional I'm becoming less patriotic by the day...


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## MrBurns (30 May 2015)

rryall said:


> Went to check out this Auction in Preston VIC today..
> 
> http://www.realestate.com.au/property-house-vic-preston-119688615
> 
> ...




It is a disgrace...

Why is nothing done ? because Govt is useless at anything except milking the public dry.

Property is in a bubble and all bubbles eventually burst, I hope China goes bad and these foreigners have to sell in a hurry......wishful thinking.


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## tech/a (30 May 2015)

MrBurns said:


> It is a disgrace...
> 
> Why is nothing done ? because Govt is useless at anything except milking the public dry.
> 
> Property is in a bubble and all bubbles eventually burst, I hope China goes bad and these foreigners have to sell in a hurry......wishful thinking.




They are doing those couples a favor.

When the bubble bursts
Who do you think will be wearing it?


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## Wysiwyg (30 May 2015)

tech/a said:


> They are doing those couples a favor.
> 
> When the bubble bursts
> Who do you think will be wearing it?



Not to mention the seller who made a nice capital gain.


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## MrBurns (30 May 2015)

tech/a said:


> They are doing those couples a favor.
> 
> When the bubble bursts
> Who do you think will be wearing it?




We've been waiting for this bubble to burst for years now, when it does go, duck for cover.......


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## Uncle Festivus (1 June 2015)

trainspotter said:


> Something must be going to happen in the next 5 years that I don't know about as a BIG food retail chain has purchased 18 acres to develop in a Northern suburb that is yet to be developed. There are 2000 blocks to be placed on the ground. Earthworks had started already. Hong Kong hedge  fund is behind the sub division. They are talking about a 2019 start date for the complex ?? 89 specialty shops as well as the junk food outlets given a corner each.




Well that's just great - our soon to be, very own ghost cities funded by hot, freshly printed Chinese money!


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## rryall (1 June 2015)

Lots of interesting details coming to light regarding the point piper mention which was sold illegally a to Chinese company earlier this year for $39 million.

http://news.domain.com.au/domain/re...ve-web-of-chinese-wealth-20150531-ghdfid.html

What a joke it was sold off market especially after all the controversy and publicity...

All the black money coming out of China is now a real concern. It is frustrating when the answer appears to be so simple in regards to improving anti money laundering (AML) regulations when so many properties are bought with cash.

http://www.theage.com.au/business/c...-politicians-in-the-face-20150531-ghdjw7.html


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## luutzu (1 June 2015)

rryall said:


> Lots of interesting details coming to light regarding the point piper mention which was sold illegally a to Chinese company earlier this year for $39 million.
> 
> http://news.domain.com.au/domain/re...ve-web-of-chinese-wealth-20150531-ghdfid.html
> 
> ...




On an individual level, I can understand the frustration. On the national level, nothing beats having foreigners coming in to your home with mountain of cash, building and buying stuff they can't take home with them.


----------



## rryall (1 June 2015)

luutzu said:


> On an individual level, I can understand the frustration. On the national level, nothing beats having foreigners coming in to your home with mountain of cash, building and buying stuff they can't take home with them.




Although I agree with this perception in theory I don't think it holds up when you think about it at a deeper level. There is not much benefit having mountains of cash/property when unemployment/crime rates start to increase dramatically. You cant really put a price on a harmonious society but apparently the Australian government and financial institutions have no qualms in doing so and selling out the country.

I can fully understand people selling homes now in Melbourne/Sydney are rejoicing at the large capital gains. However, this is short sighted and will come at a cost to society at some point in the future.


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## luutzu (1 June 2015)

rryall said:


> Although I agree with this perception in theory I don't think it holds up when you think about it at a deeper level. There is not much benefit having mountains of cash/property when unemployment/crime rates start to increase dramatically. You cant really put a price on a harmonious society but apparently the Australian government and financial institutions have no qualms in doing so and selling out the country.
> 
> I can fully understand people selling homes now in Melbourne/Sydney are rejoicing at the large capital gains. However, this is short sighted and will come at a cost to society at some point in the future.




It greatly benefits the average boomers with property to sell or to rent, also benefit property developers and investors and all that job in construction and related industries.

It's not doing the young families and first-home buyers any favour but on a social policy side, it does get them into financial debt and with debt they'll work harder for less pay and that's good for capitalist friends of "our" leaders 

So on the one hand you got an important segment of society getting richer out of it and liking your political savvy, on the other you got young and troublesome idealists in too much debt to do much complaining or/and enjoying the high price and "profit" they're seeing from their mortgage to really think much about it to complain or care for those who can't buy in...

All the leaders needs now is to bring it to a soft landing and hope for the next big big thing to kickstart the economy again.

If it goes on for longer then yea you'll get social unrest... but then you got the mainstream media, terrorists, Russians, Chinese and other ethnic minorities... and a militarized police force to take care of that.

Win, Win, Win... a handful of Aussies are losing, but then if you make them win too there won't be any more Aussie battler to sing about.

In all seriousness, we've done this before.. and foreign investors have paid handsomely trying to own us.


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## sydboy007 (1 June 2015)

Wages growth down to 2.2% growth, barely level with inflation.

Prices going gangbusters in Sydney and Melbourne.

Investors over haalf the market in Sydney and Melbourne

Household debt back to 160% of GDP and counting.

How could anything go wrong


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## sptrawler (1 June 2015)

sydboy007 said:


> Wages growth down to 2.2% growth, barely level with inflation.
> 
> Prices going gangbusters in Sydney and Melbourne.
> 
> ...




Well on the other hand, an astute investor, would sell and buy back after the crash.


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## tech/a (1 June 2015)

Your suggesting for investors

Sell
Capital gains 
Then another round of stamp duty.

Nah


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## Tyler Durden (1 June 2015)

luutzu said:


> On an individual level, I can understand the frustration. On the national level, nothing beats having foreigners coming in to your home with mountain of cash, building and buying stuff they can't take home with them.




I never thought about this, but from their perspective, how prudent is it to buy something which may go down in value? Let's assume these foreigners are buying just for the sake of getting cash out of their own country and don't care about the yield. 

Would they be right in thinking real estate is the safest place to put it in? What if there is a market crash? Wouldn't that semi-defeat their purpose? Would they even care if their "investment" goes down in value 10%, or 20%?


----------



## sptrawler (1 June 2015)

tech/a said:


> Your suggesting for investors
> 
> Sell
> Capital gains
> ...




I wasn't suggesting do it.

Only pondering why, the ones that say a crash is imminent, don't do it.

It is somewhat like Mclovin, said he sold out of the banks, three weeks ago, since then they have dropped 20%.

If he buys back in, that is 20% more shares and or dividends, it takes balls but backing your judgement beats talking up a storm, everytime.

Did I sell the banks? no, didn't have the balls.lol


----------



## qldfrog (2 June 2015)

sptrawler said:


> I wasn't suggesting do it.
> 
> Only pondering why, the ones that say a crash is imminent, don't do it.
> 
> ...



I did sold my IP in Brisbane at the end of March, i was out of banks and reentering now.
I have no regret on these two calls, but having balls as you say can also be costly and i have made costly mistakes, i am usually too early in all cycles; and it is not nice $ wise to be a trend setter in shares: you buy and sell too early and end up average as per the lemmings


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## trainspotter (2 June 2015)

It's now unequivocal ...



> Treasury secretary John Fraser has warned that Sydney is "unequivocally" in a housing bubble, as the latest data shows annual growth rates picking up again.
> 
> Mr Fraser raised concerns that having interest rates at historically low levels was encouraging people to over-invest in real estate.
> 
> ...




http://www.abc.net.au/news/2015-06-...-in-may-but-annual-growth-strengthens/6511068




Notice how the RBA allows wriggle room for themselves when they quantify it as "some parts of the country" ....   

Meanwhile back in reality ... 

Perth house prices "DIP" http://www.abc.net.au/news/2015-04-07/perth-house-sales-drop/6376182

Darwin house prices "DROP" http://www.ntnews.com.au/realestate...ity-in-australia/story-fnk4wt05-1227289127955

12 per cent Brisbane price "DROP" nothing to worry about http://news.domain.com.au/domain/re...p-nothing-to-worry-about-20150414-1mkhs6.html

Adelaide prices could "FALL" http://www.news.com.au/national/aus...-property-market/story-e6frfkp9-1227278627860

Not going to bother with Canberra ... have I missed anyone?


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## trainspotter (2 June 2015)

Uncle Festivus said:


> Well that's just great - our soon to be, very own ghost cities funded by hot, freshly printed Chinese money!




And here it is ... must be the location being so close to the ocean that has got them all excited?


----------



## luutzu (2 June 2015)

Tyler Durden said:


> I never thought about this, but from their perspective, how prudent is it to buy something which may go down in value? Let's assume these foreigners are buying just for the sake of getting cash out of their own country and don't care about the yield.
> 
> Would they be right in thinking real estate is the safest place to put it in? What if there is a market crash? Wouldn't that semi-defeat their purpose? Would they even care if their "investment" goes down in value 10%, or 20%?




I don't know. Don't think they think property will ever go down. Might believe what some of us do that property will either slow down or stay the same, never go down.

Saw docos where some property expert in China said what he's seeing in China will make the US property bubble that spark the GFC like a walk in the park. There's some 60 million empty apartments in China (this was 2 years ago) and a lot more that's bought and owned but empty because the rich and connected bought it as investment... some of them have only a safe in it for them to stash cash in. Contrast that to the average Chinese who sleeps an entire family to a room, can't afford much beside paying the bills.

So maybe what's happening in the Australian property market is relatively safe to them. 

Who knows, they might walk away with a good lesson or two.


----------



## satanoperca (2 June 2015)

trainspotter said:


> It's now unequivocal ...
> 
> 
> 
> ...




Is that it? hardly any price changes except Brisbane and even then big deal.

Nothing to see here folks, the sunshine and lollipops still abound.

Thanks for the links, appreciated.

But I will throw this one out:

Not a single major city has seen negative growth in the last 12mnths even though the RBA thinks are economy is going to the dogs, keeps dropping IR screwing savers and pensioners at that same time

http://www.corelogic.com.au/media-release/capital-city-dwelling-values-rise-9-over-past-12-months-as-capital-gains-take-a-breather-in-may


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## Value Collector (2 June 2015)

satanoperca said:


> keeps dropping IR screwing savers




What rate above the rate of inflation do you believe a government guaranteed deposit should earn?

In my opinion a bank deposit that have first claim to the banks capital, and is government guaranteed should only earn enough to offset the loss caused by inflation. In an environment of low inflation or deflation the deposit should earn nothing more than a small token interest payment.


----------



## satanoperca (2 June 2015)

Value Collector said:


> What rate above the rate of inflation do you believe a government guaranteed deposit should earn?
> 
> In my opinion a bank deposit that have first claim to the banks capital, and is government guaranteed should only earn enough to offset the loss caused by inflation. In an environment of low inflation or deflation the deposit should earn nothing more than a small token interest payment.




Firstly, the govnuts shouldn't be guaranteeing private institutions, it is fool hardy at best. Ireland comes to mind to some degree. Banks are responsible to their shareholders, govnuts should not get involved.
Second, the guarantee will not cover all savers under a certain value, the guarantee is not a 100% of your savings up to a fixed amount.
Third, the official inflation rate is hardly a true indication of the increase to the basic cost of living each year.

So to answer you question, a reasonable rate of return after tax and say 50% above inflation.

But I ask you this, if the govnuts didn't offer the guarantee, what value would the banks place on deposits and what return would savers demand knowing that they money is not 90% safe? Currently it is not even 70% safe with the guarantee. Or even better, would people become more astute with their savings and look for opportunities that could grow their savings other than mostly non productive pursuits like property. Like innovation and creativity.


----------



## Value Collector (2 June 2015)

satanoperca said:


> Firstly, the govnuts shouldn't be guaranteeing private institutions, it is fool hardy at best. Ireland comes to mind to some degree. Banks are responsible to their shareholders, govnuts should not get involved.
> .




The government guarantees depositors only, the banks shareholders, bond holders and other debtors will all have their capital wiped out before the government pays anything to depositors.

So when you are looking at the capital structure of a bank, the depositors sit at the very top, every one else loses 100% before they lose a cent, plus the government kicks in a guarantee.

So it's as close to risk free as possible, So if inflation didn't exist, how much should they be entitled to earn? given that you are going to have to pay bond holders and other debt holders more because they are taking a larger risk and locking up funds for fixed terms, you kind of have to start by paying the depositors very little.

Also, any over payment to savers, is just taking away from the equity holders, who are the first to lose because they have the riskiest position, equity holders have neither a guarantee on capital or income. 




> So to answer you question, a reasonable rate of return after tax and say 50% above inflation.




whats the reasonable rate of return after tax? lets just say inflation doesn't exist, how much should they get.



> But I ask you this, if the govnuts didn't offer the guarantee, what value would the banks place on deposits and what return would savers demand knowing that they money is not 90% safe? Currently it is not even 70% safe with the guarantee. Or even better, would people become more astute with their savings and look for opportunities that could grow their savings other than mostly non productive pursuits like property. Like innovation and creativity




Deposits are very safe even without the guarantee, but yes without the guarantee the strongest institutions would get the most deposits, but the rate that is available to pay those deposits still have to be much less than the multitude of other securities that sit lower in line for payment.

I don't get how you can say they are 70% safe, the deposits are mostly secured by the banks borrowers ability to earn, then real assets eg houses, farms, factories etc which on average have quite low LVR, then the deposits have the banks capital, if that fails, they sit ahead of the banks bond holders and other debtors.

People should be looking for other opportunities to grow their money if that what their goal is, bank deposits are for safe storage of cash, with a bit of inflation hedging.


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## satanoperca (2 June 2015)

Value Collector said:


> plus the government kicks in a guarantee.




But not a 100% guarantee for savings under $250K.



Value Collector said:


> plus the government kicks in a guarantee.
> 
> Deposits are very safe even without the guarantee.




Not true and if it was, why the govnuts off it, maybe a bank run. Hence they are not 100% safe



Value Collector said:


> I don't get how you can say they are 70% safe.



 The govnuts have allocated $20B to each institution if I am correct, this does not cover 100% of all deposits under $250k. The larger banks I believe you will be lucky to see 50 cents in the dollar.

I will maintain, that all banks would have to offer high IR's than just over inflation if there was not bank guarantee as the public just don't trust the bastards.

Anyway, my disgust is not with the IR rates for savers, but how Australia has downed themselves in debt on the belief that property is the sole source of prosperity.

We have become a dumb and boring country with low aspirations to the achieve. F---k we have holes and houses, don't need to think past that.


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## Value Collector (2 June 2015)

satanoperca said:


> The govnuts have allocated $20B to each institution if I am correct, this does not cover 100% of all deposits under $250k. The larger banks I believe you will be lucky to see 50 cents in the dollar.
> .




That would be $20Billion on top of the physical assets backing the banks loans, on top of the banks own equity, and on top of the borrowers ability to repay loans, and on top of the capital that bondholders have injected.

That's an extremely safe position.


----------



## satanoperca (2 June 2015)

Value Collector said:


> That would be $20Billion on top of the physical assets backing the banks loans, on top of the banks own equity, and on top of the borrowers ability to repay loans, and on top of the capital that bondholders have injected.
> 
> That's an extremely safe position.




Again, if that is all true, why did the govnuts need to put the taxpayers on the line. Bank run, they don't have your cash that you deposited, so the depositor wants also a return higher than inflation.


----------



## Tyler Durden (2 June 2015)

> James Packer's Macau casino company, Melco Crown, has been hit by yet another slump in gaming revenues at the world's largest gambling hub due to the impact of a corruption crackdown and slower growth in China's economy.
> 
> Macau's gross gaming revenue in May fell by 37.1 per cent to 20.35 billion patacas ($3.33 billion) from 32.3 billion patacas a year earlier, although the steep fall was slightly ahead of Bloomberg consensus, which forecast a 38.5 per cent drop.




http://www.smh.com.au/business/melc...pressure-on-james-packer-20150602-ghesqc.html

If the corruption crackdown in China is enough to affect a casino's revenue, would it be enough to affect property prices here?


----------



## Value Collector (3 June 2015)

satanoperca said:


> Again, if that is all true, why did the govnuts need to put the taxpayers on the line. Bank run, they don't have your cash that you deposited, so the depositor wants also a return higher than inflation.




Central banks have levers to pull to halt bank runs.

The depositor may want a return above inflation, Hell I wish I could get 20% on my at call, government guaranteed, senior cash deposits, but I would not be entitled to it. 

the fact is banks deposits are almost risk less when you factor in their senior position in the banks capital structure, the central bank support, and finally they government guarantee. Any return more than a token above the inflation rate is unearned income and comes at the expense of others in the system that are taking real risks of loss of principle and income.

My point is, don't feel sorry for "savers", they are not entitled to larger earnings unless they put some of their cash at risk lower down they capital structure.


----------



## Mrmagoo (3 June 2015)

Value Collector said:


> Central banks have levers to pull to halt bank runs.
> 
> The depositor may want a return above inflation, Hell I wish I could get 20% on my at call, government guaranteed, senior cash deposits, but I would not be entitled to it.
> 
> ...




Property infestors get the greatest unearned incomes of them all ! Not only that but they do it at the expensive of others: housing stress, rental  stress, general homelessness and renters for life. They are the very definition of self entitlement.


----------



## Mrmagoo (3 June 2015)

http://www.forbes.com/fdc/welcome_mjx.shtml

You can easily buy a one bedroom apartment near central Berlin (by our ridiculous standards) for 100k euro, monthly rent would be about 500.

An entire different world.

Imagine if Australia had such cheap housing... we would be able to put money into investments and ingenuity. With our mining boom who knows where we would be now.

The difference is rich old men who only ever held blue  collar jobs would not be super rich like they are now and the hard working kids with engineering degrees would be living it up rather than on struggle street working at a 7/11 because there are no jobs to speak of.


----------



## tech/a (3 June 2015)

> The difference is rich old men who only ever held blue collar jobs would not be super rich like they are now and the hard working kids with engineering degrees would be living it up rather than on struggle street working at a 7/11 because there are no jobs to speak of.




------1974----Id have written a very similar lament.

There were many Italian/Greek/Polish Migrants who worked their butts off
and were those Blue Collar rich you speak of. Rich beyond our comprehension at the time.

The difference is/was---commitment and passion.
You have it or you don't.

Wonder where you'll be Magoo on 40 yrs time?


----------



## Mrmagoo (3 June 2015)

tech/a said:


> ------1974----Id have written a very similar lament.
> 
> There were many Italian/Greek/Polish Migrants who worked their butts off
> and were those Blue Collar rich you speak of. Rich beyond our comprehension at the time.
> ...




In 1974 things changed differently. 

The point is going off and getting a blue collar job is not supposed to make you rich. Especially not when someone else who worked smarter and harder is doing worse. That our political system continues to support those who did not work harder (the baby boomers and property infestors ) in retaining and growing undeserved wealth is a disgrace. 

People who work hard can't afford a home, while government policy supports those who are already rich to buy more homes to make housing even more unaffordable to workers. It is nuts. 

Essentially this is the story of rich old blokes:

1990 union job for 30k a year. Good money. Buys a house in an inner city working class suburb for 60k. Says wow I am struggling to pay this mortgage off gee I worked hard. Gets a redundancy for 25k. Uses it to pay off mortgage. Gets a new job in 1991, pay isn't so great. Wow the recession we had to have really hurt me ! Buys dirt cheap investment property 1993 - pays 30% of income on mortgage for 6 months - WOW STRUGGLE STREET HERE WE COME. 

By 1997 property is paying itself off, buys another one which pays for itself. Then comes the early 2000s property booms.

By that stage it is probably still all okay, yeah no worries the guy had a fortunate life - no big deal. The issue starts to arise around 2005-2006 when many young whipper snappers are finding they can't get into the property market - in practical locations. Okay, move further out you say. No big deal. 

By 2007 that wasn't practical either. Basic family homes in the burbs went very slyly from 180-250k which is affordable to a family, to 350k to 400k which is not. This happened around the time of the GFC  right when everyone lost their high paying jobs.

The rich old guy has a 1.5 million dollar house, one worth 850k and another worth 500k. He can cash out for nearly 2 million despite never really doing much of anything. In his pea sized brain he has worked so hard surviving the recession we had to have and working 50 hours a week ! wow an entire 50 hours ! 

The  real problem is that all of that debt used to make that old bloke rich is in the system, it is all getting put on the credit card, gen y couples are using their hard earned to pay that **** off. The old bloke will be dead before long. The young folk are literally working their asses off, studying hard, going to to uni, even getting trades to fund that  rich old bastards life style and it is all on credit card. 

You lot are just putting more and more debt onto the private + public credit system because you know future generations will have to pay it off - not you. No one has earned any of it. You earn what you worked for or what your business produces. Not what you can suck out of others through speculative investments. 

This is not just a case of working all your life its obvious a fundamental change in how the system works. I know you know that you're just trolling me to get a reaction.


----------



## Value Collector (3 June 2015)

Mrmagoo said:


> The difference is rich old men who only ever held blue  collar jobs would not be super rich like they are now and the hard working kids with engineering degrees would be living it up rather than on struggle street working at a 7/11 because there are no jobs to speak of.




Yeah, How dare those those blue collar workers build up some wealth over their life by working hard serving others and then spending less than they earn and investing the difference.

Tech A is right,  and I don't think you have what it takes, you are far to pessimistic to build any real wealth, your destined to live in a fog of hopelessness in a world of your own design where everyone is against you.



> The point is going off and getting a blue collar job is not supposed to make you rich




And it doesn't, compounding does, and thats available to all, you should try it.


----------



## Mrmagoo (3 June 2015)

Value Collector said:


> Yeah, How dare those those blue collar workers build up some wealth over their life by working hard serving others and then spending less than they earn and investing the difference.
> 
> Tech A is right,  and I don't think you have what it takes, you are far to pessimistic to build any real wealth, your destined to live in a fog of hopelessness in a world of your own design where everyone is against you.
> 
> ...




Because they haven't worked, the system unfairly benefits the old. At the direct expense of the young.


----------



## Mrmagoo (3 June 2015)

Value Collector said:


> And it doesn't, compounding does, and thats available to all, you should try it.




Not responding to fantasy facts. It if were simply a matter of compounding I would say "good on you".


----------



## Mrmagoo (3 June 2015)

You'd need to be severely numerically challenged to think recent house price growth is comparable to compound interest. So you're clearly just trolling me.


----------



## sydboy007 (3 June 2015)

not sure how similar the NZ and AUS housing markets are, thought Aukland Snd Sydney seem to both be bubblicious, but the findings of teh RBNZ could indicate some serious issues in the medium term for Australia.

No hope of the RBA following:


Restrict property investment residential mortgage loans in the Auckland region at LVRs of greater than 70 percent to 2 percent of total property investment residential mortgage commitments in Auckland.
Retain the existing speed limit of 10 percent for other residential mortgage lending, as a proportion of total non-property investment residential mortgage commitments, in the Auckland region at LVRs above 80 percent.
Increase the speed limit on residential mortgage lending at LVRs above 80 percent outside of Auckland to 15 percent of residential mortgage commitments outside Auckland.


http://www.rbnz.govt.nz/financial_s...olicy/Consultation-Paper-investor-housing.pdf



> “Residential property investment loans appear to have relatively low default rates during normal economic circumstances. However, the Reserve Bank has looked at evidence from extreme housing downturns during the GFC, and this clearly indicates that default rates can be higher for investor loans than for owner occupiers in severe downturns. *For example, as shown in table 1, forecast loss rates on Irish mortgages were nearly twice as high for investors as for owner-occupiers. Similarly, actual arrears rates were about twice as high for investor loans (29.4 percent) than for owner occupied loans (14.8 percent) as at December 2014. Furthermore, studies which have separately estimated default rates by LVR for investor loans and owner occupier loans suggest that investor loans are substantially riskier at any given LVR.* The data  shows an estimate of default rate based on current LVR. For example, if a loan was initially written at a 70 percent LVR and then prices fell 30 percent, the loan would appear in the chart below as LTV=100. This would have a mildly increased rate of default compared to a low-LVR loan for an owner occupier. But for an investor, the rate of default would be higher, and would have increased more sharply as a result of a given decline in house prices.”


----------



## Value Collector (3 June 2015)

Mrmagoo said:


> Because they haven't worked, the system unfairly benefits the old. At the direct expense of the young.




The habits old rich people had when they were young is why they are now old and rich.



Mrmagoo said:


> Not responding to fantasy facts. It if were simply a matter of compounding I would say "good on you".




Wealth generation is all about compounding. Whether your talking about property or shares.

Even just paying off your mortgage you have the benefits of compounding, as the mortgage is paid of faster and faster as the principle gets smaller and smaller generating less interest and a larger priciple reduction each month, its compounding in reverse.

and obviously your second property gets paid of even quicker, because you have the income from the first helping pay it off, and then more so for the 3rd / 4th/ 5th etc.

Compounding.



Mrmagoo said:


> You'd need to be severely numerically challenged to think recent house price growth is comparable to compound interest. So you're clearly just trolling me.




Compounding in the form of population growth etc assists in price movements. But the real wealth generation comes from compounding of the savings you direct into and retain in your investment operation, whether that be property or any other income producing asset class.


----------



## Mrmagoo (3 June 2015)

Yes, yes nearly any number can be expressed as a series which is very likely to include multiplying one thing by another thing lots of times. 

What you're trying to imply is different and is  that the last 2 decades of house price growth is due to good ole fashioned slow and steady bank like interest rates compounding to generate wealth for the little old fella saving his pennies. Which is a load of rubbish. It was credit fueled boom from an extraordinarily low base. 

If you look at stock price graphs that was probably true till about 1995.

You took a successful economy, with German like levels of affordability (it really was like that house prices even fell) then changed direction and made it credit fueled unaffordable due to corrupt interest groups.


----------



## tech/a (3 June 2015)

> In 1974 things changed differently.
> 
> The point is going off and getting a *blue collar job is not supposed to make you rich*. Especially not when someone else who worked smarter and harder is doing worse.




Haha wealth is limited to or should be limited to those with a degree!!

Magoo
Who is smarter---those with a degree *OR* those who employ those with a degree?

Ill back business/street smarts in the big wide scary world over a degree any day.

*



			Wealth generation is all about compounding
		
Click to expand...


*
Let me illustrate this with a very true story.
Back when I was 23 in 1977 I worked a mid shift at Chryslers.

There was a Polish guy there I remember his name ---Dem Dresmanis.
He worked on the production line and was well liked. He didn't speak much English.
EVERY Payday there was a guy who'd come around and look for $1 it was as he put it
a compulsory raffle for Dem's wages. It was a tradition and had been going for 6 yrs.

I wondered why he would raffle his wages.
Later I found out that 228 people bought tickets and many multiple tickets.
Even White Collar management.
Dem's wage was $179 and it was common for him to more than double that with his raffle proceeds.

So Dem would go home very happy and someone would basically double his wages as well.
Many lost a $ or 2.

Compounding at its best!

Get out of the Box Magoo there is a whole new *EXCITING* world out there!

Forget about other influences---look after your own area of influence.

But I think Magoo you'll argue yourself to poverty.


----------



## Value Collector (3 June 2015)

Mrmagoo said:


> What you're trying to imply is different and is  that the last 2 decades of house price growth is due to good ole fashioned slow and steady bank like interest rates compounding to generate wealth for the little old fella saving his pennies. Which is a load of rubbish. It was credit fueled boom from an extraordinarily low base.
> 
> 
> 
> .




If you look at the people sitting on large property portfolios that are debt free or near to it, they have generally systematically used compounding to build and pay off their portfolio.



> If you look at stock price graphs that was probably true till about 1995.




Compounding has worked for the stock indexes all along and has never stopped, it didn't stop in 1995. 

If you want to see compounding, be sure to look at the accumulation indexes though, so you can see the benefits of the retained income.


----------



## Mrmagoo (3 June 2015)

tech/a said:


> Haha wealth is limited to or should be limited to those with a degree!!
> 
> Magoo
> Who is smarter---those with a degree *OR* those who employ those with a degree?
> ...




You don't understand how the world works you are detached from reality. You won't get a plum union, blue collar job, full time with wages and conditions unless you know someone. Even then it still might not be enough to buy a house.

Many would love to get a factory job, do overtime and get 100k a year plus benefits. Dream job. It aint happening. Not unless you know someone.

You need a white collar job or a trade wage to afford a house. Maybe even two of those incomes. You are 100% living in the past I hate to say.


----------



## Mrmagoo (3 June 2015)

Value Collector said:


> If you look at the people sitting on large property portfolios that are debt free or near to it, they have generally systematically used compounding to build and pay off their portfolio.
> 
> 
> 
> ...




I put 500 a week into telstra/CBA stocks. I am much poorer than property speculators in sydney.  especially with all the fees I pay.


----------



## Klogg (3 June 2015)

Mrmagoo said:


> You don't understand how the world works you are detached from reality. You won't get a plum union, blue collar job, full time with wages and conditions unless you know someone. Even then it still might not be enough to buy a house.
> 
> Many would love to get a factory job, do overtime and get 100k a year plus benefits. Dream job. It aint happening. Not unless you know someone.
> 
> You need a white collar job or a trade wage to afford a house. Maybe even two of those incomes. You are 100% living in the past I hate to say.




I think TechA has a point here - Time and time again it has been proven that those who are wealthy got there through cost controls, not through an inflated wage. And if they can couple this with strong business knowledge, they're well ahead of anyone else.

Even if that 100k factory job is not available, those with discipline will come out ahead in the long run. And in the long run, these people can afford a house.


----------



## Mrmagoo (3 June 2015)

Klogg said:


> I think TechA has a point here - Time and time again it has been proven that those who are wealthy got there through cost controls, not through an inflated wage. And if they can couple this with strong business knowledge, they're well ahead of anyone else.
> 
> Even if that 100k factory job is not available, those with discipline will come out ahead in the long run. And in the long run, these people can afford a house.




Problem is that these are just words based on nothing.

I am saving.

I am careful with what I spend.

I am well and truly behind Sydney home buyers over the last 2 years.


----------



## Klogg (3 June 2015)

Mrmagoo said:


> Problem is that these are just words based on nothing.
> 
> I am saving.
> 
> ...




You're right - I didn't provide any evidence. I'll try to do so when I get home and have time to find it.

I might also add that 2 years isn't a very long time.


----------



## Value Collector (3 June 2015)

Mrmagoo said:


> I put 500 a week into telstra/CBA stocks. I am much poorer than property speculators in sydney.  especially with all the fees I pay.




Lots of speculators in property have made money, lots of speculators have lost money.

CBA stocks have out performed property since 1995 (that's the date you picked), not to mention the higher dividend return if compounded into more cba shares means that since 1995 Cba has really out performed property.

To the point that a long term property invested ended up in a better position than a long term CBA shareholder might be explained by the property investor probably using leverage to increase their return. But there is nothing immoral about using leverage, by doing so they also took more risk, so the extra gain was not free.


----------



## tech/a (3 June 2015)

> You don't understand how the world works you are detached from reality.




Reality is simply a perception.
No one said its easy or common
to all---

I'm sure my kids and grand kids
are thankful that my perception 
of reality is vastly different to yours.

Good luck Magoo---you maybe
lucky and one day the light will 
flick on.---You'll crawl out of your box.


----------



## Value Collector (3 June 2015)

Mrmagoo said:


> Problem is that these are just words based on nothing.
> 
> I am saving.
> 
> ...




Who cares, who you are behind, run your own race.

If you are investing $500 per week in Telstra and CBA, I think you have done fairly well over the last 2 years, and you should have a decent capital base that is compounding for you now.


----------



## Mrmagoo (3 June 2015)

tech/a said:


> Reality is simply a perception.
> No one said its easy or common
> to all---
> 
> ...




More meaningless words. I understand though. It can be hard to let go of your ego, especially with all the real estate agents and property managers constantly telling you how great you are and how hard you've worked ect.


----------



## tech/a (3 June 2015)

Mrmagoo said:


> More meaningless words. I understand though. It can be hard to let go of your ego, especially with all the real estate agents and property managers constantly telling you how great you are and how hard you've worked ect.




Sorry I seem to have stumbled into Romper Room.


----------



## trainspotter (3 June 2015)

tech/a said:


> Sorry I seem to have stumbled into Romper Room.




Forget it tech/a ... it's a perception thing plus he is too young to remember Romper Room


----------



## Knobby22 (3 June 2015)

Mrmagoo said:


> Problem is that these are just words based on nothing.
> 
> I am saving.
> 
> ...




You and your friends need to get political and stop being the generation being trampled on.
You saw Abbott just made a comment that he wants prices to continue to climb and he is not planning on correcting any of the imbalances in the system. Labor also will do little. The reason they will do little is that that gen Y aren't a voting force in politics.


----------



## sptrawler (3 June 2015)

Mrmagoo said:


> I put 500 a week into telstra/CBA stocks. I am much poorer than property speculators in sydney.  especially with all the fees I pay.




If you keep doing that, it will enable you to break into the property market, when the opportunity presents.

Which it will.


----------



## Junior (4 June 2015)

Mrmagoo said:


> I put 500 a week into telstra/CBA stocks. I am much poorer than property speculators in sydney.  especially with all the fees I pay.




As others have said, if you can set aside $500 a week for a few years, you'll be in the market soon enough.

Why are you paying high fees?  Are you purchasing units in both stocks every week?  Might be better off accumulating cash and making a purchase once every month or two, to reduce brokerage costs.


----------



## rryall (4 June 2015)

It is OK everyone Domain Group senior economist Andrew Wilson says we are not in a bubble... Fancy that someone from within the housing industry saying everything is sunshine and lollipops 

http://news.domain.com.au/domain/re...-unemployment-the-dollar-20150604-ghes4d.html


----------



## MrBurns (4 June 2015)

Worst trade deficit on record, the share market doesn't like it , surely housing will follow shortly.


----------



## Tyler Durden (4 June 2015)

rryall said:


> It is OK everyone Domain Group senior economist Andrew Wilson says we are not in a bubble... Fancy that someone from within the housing industry saying everything is sunshine and lollipops
> 
> http://news.domain.com.au/domain/re...-unemployment-the-dollar-20150604-ghes4d.html




I actually think this is good - escalates and speeds up the bubble process


----------



## Mrmagoo (8 June 2015)

Tyler Durden said:


> I actually think this is good - escalates and speeds up the bubble process




Hehe. I have a lot of friends who are sitting on the sidelines not buying anything. It is pretty amazing how simply many generation Y chose to live compared to the stereotypes and the lavish excess of the baby boomers.


----------



## tech/a (8 June 2015)

Mrmagoo said:


> Hehe. I have a lot of friends who are sitting on the sidelines not buying anything. It is pretty amazing how simply many generation Y chose to live compared to the stereotypes and the lavish excess of the baby boomers.




Circumstance necessitate choice.
We all have them
We all make them


----------



## Mrmagoo (8 June 2015)

tech/a said:


> Circumstance necessitate choice.
> We all have them
> We all make them




Don't worry the next generation will be too ignorant and poor to know about the boomer excesses and how good things actually used to be. You can just lie to them. They won't know any different. They might even admire you for being a "hard worked". LMAO.


----------



## Uncle Festivus (9 June 2015)

It's official - it's a bubble?



> It is the B-word that few with their hands on the levers of Australia's economy have dared to publicly utter.
> 
> Until now.
> 
> ...




There has been some discussion recently about property investing being such a no brainer for those who are smart enough or for those who are diligent in their methodology and commitment etc etc. It doesn't take any brains at all to get a loan and buy an IP in a rising market. It has very little to do with 'smarts' and a lot to do with the complicity of political law changes created to placate the whinging populace mostly with keeping the status quo with negative gearing and allowing one to use their retirement savings to buy IP's, along with all the other baby boomer created laws and systems which mostly benefit them. (The influence of 'black' Chinese money on the bubble is another big factor, but that's another story....)

Unfortunately for the rest of society it is those who made and make the rules who have benefited most from the property bubble ie the baby boomer generation, through the various schemes brought into play over the years - mostly negative gearing and superannuation - the rule makers have been able to feather their collective nests at the expense of all other levels of society. 

And no doubt it will be they who will whinge the loudest when it pops.

At least The Greens now have one decent policy???



> The Greens have released Parliamentary Budget Office (PBO) modelling that shows the Government could save $3 billion in four years by abolishing negative gearing.
> 
> The tax break allows investors to claim expenses for rental properties and reduce tax paid on any other income.
> 
> ...


----------



## tech/a (9 June 2015)

> The Greens have released Parliamentary Budget Office (PBO) modelling that shows the Government could save $3 billion in four years by abolishing negative gearing.
> 
> The tax break allows investors to claim expenses for rental properties and reduce tax paid on any other income.





Investors will build to sell not to rent.
Good luck with that.


----------



## Uncle Festivus (9 June 2015)

tech/a said:


> Investors will build to sell not to rent.
> Good luck with that.




Politicians don't have the backbones to do what is right so no need to worry about NG being abolished any time soon.

If they wanted to tip-toe around the problem then they could start with only have NG apply to new dwellings.

As we know NG on existing properties serves no purpose at all other than to drive up prices and make the economy poorer.


----------



## satanoperca (9 June 2015)

tech/a said:


> Investors will build to sell not to rent.
> Good luck with that.




Excuse my ignorance, but don't the vast majority of "investors" by established properties in the first place.

NG should be on new builds only, this would at least funnel some of the investors money into adding supply.

Cheers


----------



## tech/a (9 June 2015)

satanoperca said:


> Excuse my ignorance, but don't the vast majority of "investors" by established properties in the first place.
> 
> NG should be on new builds only, this would at least funnel some of the investors money into adding supply.
> 
> Cheers




I agree but would widen it to encompass refurbishments and additions to older home investment properties.
Limited to those works.

I wouldn't say most investors go for established.
Many meet the demand in new housing and apartment development


----------



## banco (9 June 2015)

I really don't understand what investors are thinking buying when interest rates are this low?  Surely the time to buy property is when interest rates are relatively high?


----------



## CanOz (9 June 2015)

banco said:


> I really don't understand what investors are thinking buying when interest rates are this low?  Surely the time to buy property is when interest rates are relatively high?




Sydney and Melbourne are both sellers markets, the savy investors are not buying.....


----------



## Klogg (9 June 2015)

banco said:


> I really don't understand what investors are thinking buying when interest rates are this low?  Surely the time to buy property is when interest rates are relatively high?




Well interest rates alone aren't a good indication - I'd use them more as the 'risk free' rate for my cash, and would expect net rental yields to be greater than these; i.e. if IR are 7%, but net rental yield is 11%, then it may be worthwhile.

It's more the idea of picking up an asset that generates less cash than a term deposit and hoping for it to go up in value that doesn't really make much sense to me.


----------



## tech/a (9 June 2015)

banco said:


> I really don't understand what investors are thinking buying when interest rates are this low?  Surely the time to buy property is when interest rates are relatively high?




For me my holding costs are lowest ever.
More buyers off plan locking in rates.


----------



## banco (9 June 2015)

Klogg said:


> Well interest rates alone aren't a good indication - I'd use them more as the 'risk free' rate for my cash, and would expect net rental yields to be greater than these; i.e. if IR are 7%, but net rental yield is 11%, then it may be worthwhile.
> 
> It's more the idea of picking up an asset that generates less cash than a term deposit and hoping for it to go up in value that doesn't really make much sense to me.




My understanding is that net rental yields are pretty terrible in melbourne and sydney if you were buying today.


----------



## satanoperca (9 June 2015)

tech/a said:


> For me my holding costs are lowest ever.
> More buyers off plan locking in rates.




Tech/A for someone in your business, it should be a dream come true, or close to it


The lowest interest rates in a very very long time
Easy access to huge piles of debt
A consumer/customer who is unaware or just ignorant to what is happening at a macro level with Australia and world wide.

Apart from the normal difficulties of running a successful business, your greatest task I would guess, is when to exit the game in this cycle, not get holding to many non performing assets. I believe that is still some time away unless the rainbow swan appears and like all good rainbows one cannot predict when and where they will be until after the fact.

Oh, while I cannot reference exact stats at the moment, I believe the vast amount of passive property investors by established properties as this is where the capital growth is. Active investors are developers under my definition. If NG was only on new builds, it would see far more passive investors turn into active investors and provide much need stimulus and housing for greater society. 

To be a passive investors takes no where near the due diligence and smarts as a passive and we have become a lazy nation.

Cheers


----------



## tech/a (9 June 2015)

> I believe the vast amount of passive property investors by established properties as this is where the capital growth is.




I have held many Established properties over the last 20 yrs.
I now only hold 2---One I have on the market and the other is 
my business premises which collects rent from my company into my super.

Holding Established property here in SA is not a sound investment and hasn't been for over 5 yrs.
Your just chewing up capital with very low return on rent.
I'm in it for capital gain and the only place I can get decent capital gain on my money (Or I should say a lot of the banks) is building---developing. Here a 15% return on capital at work is a minimum and 30% is possible in 12 mths.

The return on my own money is massive even at 15% 

I buy the land and borrow the development building costs.
On a 1.5-2 mill development there is around 20% so $300K
Land on a 3 apartment build on average $350K

So after holding costs of say $45k and Sub division and legal's of
$30K there is a drink.


----------



## kushi212 (9 June 2015)

Junior said:


> As others have said, if you can set aside $500 a week for a few years, you'll be in the market soon enough.
> 
> Why are you paying high fees?  Are you purchasing units in both stocks every week?  Might be better off accumulating cash and making a purchase once every month or two, to reduce brokerage costs.




Agree to what junior said.


----------



## DB008 (9 June 2015)

*Scorching Vancouver house prices put pressure on politicians​*


> The average price for detached homes within the city of Vancouver has rocketed to a record $2.23-million as the provincial government faces pressure to cool off the scorching housing market.
> 
> Prices for those coveted properties in Vancouver proper have surged amid low interest rates, limited listings and an influx of international buyers in a seller’s market. Industry observers say buyers with ties to China have been especially keen on high-end houses, though the broader impact of offshore buyers is unclear because of a lack of data.The record monthly average price of $2.23-million in Vancouver for existing single-family detached homes sold in May is a 19.2-per-cent jump from $1.87-million in the same month last year, according to new statistics obtained by The Globe and Mail from the Real Estate Board of Greater Vancouver.
> 
> ...





More on link below...

http://www.theglobeandmail.com/report-on-business/economy/housing/blistering-bc-housing-prices-put-pressure-on-politicians/article24836765/​


----------



## satanoperca (9 June 2015)

tech/a said:


> I have held many Established properties over the last 20 yrs.
> I now only hold 2---One I have on the market and the other is
> my business premises which collects rent from my company into my super.
> 
> ...




I don't think you are the majority, you fit the active investor model. It is what the masses are doing that is of interest, they move markets. 

Smart, calculated, well researched and hardworking individuals will benefit in all markets.

The majority are not the above.


----------



## tech/a (9 June 2015)

Never wanted to be in a majority in ANY field.

So thanks!


----------



## Wysiwyg (9 June 2015)

Canada .....



> Ms. Clark said it doesn’t make sense to clamp down on foreign investors. “Experts estimate that local investors are 3 to 4 times more active in the region’s housing market than foreign investors,” she wrote in a letter dated June 4 to Mr. Robertson. *“Using any method of new taxation with the goal of driving down the price of housing could have the unintended effect of hurting current homeowners across the region.”*




Australia .....



> Foreign nationals who want to buy a house in Victoria must pay a three per cent surcharge on stamp duty from July 1, which is expected to raise about $279 million over four years.
> A land tax surcharge - an extra 0.5 per cent from 2016 - will also scoop a collective $52.5 million for the government.
> *Mr Pallas said the new taxes would ensure foreign property investors paid their "fair share"* towards infrastructure, and the added cost was a small component of the overall price and would not affect investor demand.
> A $600,000 home would attract a surcharge of about $18,000 for a foreign buyer under the new taxes.


----------



## Tooth Faerie (10 June 2015)

Klogg said:


> Well interest rates alone aren't a good indication - I'd use them more as the 'risk free' rate for my cash, and would expect net rental yields to be greater than these; i.e. if IR are 7%, but net rental yield is 11%, then it may be worthwhile.
> 
> It's more the idea of picking up an asset that generates less cash than a term deposit and hoping for it to go up in value that doesn't really make much sense to me.




Thank you.

You've just expanded my ming regarding property.


----------



## satanoperca (10 June 2015)

Hi Tech/A,

As I mentioned earlier, I didn't believe most investors borrow money for new builds (construction) but rather for established dwellings.

It was a lot higher than I thought. 90% of housing financial commitments are for existing. 

NG gearing on existing is a rort.


----------



## Junior (10 June 2015)

satanoperca said:


> Hi Tech/A,
> 
> As I mentioned earlier, I didn't believe most investors borrow money for new builds (construction) but rather for established dwellings.
> 
> ...




It really is.  

All of the arguments FOR negative gearing are only relevant to new properties, not for existing.  Tax deductible expenses relating to the property purchase should be quarantined and carried forward, only to be offset against future rental income or capital gain relating to that specific property.

Rules to remain as they are for newly constructed dwellings.


----------



## tech/a (10 June 2015)

satanoperca said:


> Hi Tech/A,
> 
> As I mentioned earlier, I didn't believe most investors borrow money for new builds (construction) but rather for established dwellings.
> 
> ...




Yes I know.
They in general terms will be lucky to profit in the long run.
unless you get a good run on capital gain it really is non productive for producing an income even if you buy it freehold. Being negatively geared is pretty easy to do---even when you think you'll be positively geared.
You need any tax benefit you can get.

You end up as is the case now with many holding property in hope of a capital gain but finding its costly to hold on.
eventually many will get sick of the drain and sell out.
When interest rates increase---watch the exodus!
Bubbles Popping Everywhere.


----------



## Uncle Festivus (10 June 2015)

tech/a said:


> When interest rates increase---watch the exodus!
> Bubbles Popping Everywhere.




And therein lies the problem for central bankers....too many people with too much leverage paid for with debt!

More than just a pop?


----------



## CanOz (10 June 2015)

Uncle Festivus said:


> And therein lies the problem for central bankers....too many people with too much leverage paid for with debt!
> 
> More than just a pop?





Yes Tyler, doom and gloom


----------



## wayneL (10 June 2015)

It's different this time


----------



## trainspotter (10 June 2015)

Uncle Festivus said:


> And therein lies the problem for central bankers....too many people with too much leverage paid for with debt!
> 
> More than just a pop?




ROFLMAO .... you know when you have gone to the servo and you look at your tyres and notice the front left is looking a bit flat but you did not notice that it had gone down? It has already happened and you did not know about it 

Pretty soon we will be "living in palaces eating Spam” - Thanks Professor Steve Keen for the quote.

Now that we are not credit risk averse anymore then I pity the Gen -Z's in the future who will inherit the toxic debt as it becomes increasingly difficult to roll over


----------



## Smurf1976 (10 June 2015)

satanoperca said:


> 90% of housing financial commitments are for existing.




Whether or not that is sensible depends on the location. Eg Sydney (high population growth) there's a definite need for new builds but that isn't really the case in, say, north-west Tasmania where the population is stagnant at best.


----------



## trainspotter (15 June 2015)

Smurf1976 said:


> Whether or not that is sensible depends on the location. Eg Sydney (high population growth) there's a definite need for new builds but that isn't really the case in, say, north-west Tasmania where the population is stagnant at best.




Well what can we do to entice the good folk of Sydney to translocate north-west Tasmania ?

RBA has gloomy news for everyone who owns a home:-



> This paper examines whether it costs more to own a home or to rent. We argue this is a useful criterion for assessing housing overvaluation. We use a new Australian dataset, which includes prices and rents for matched properties, letting us value housing in levels. We find that if real house prices grow at their historical average pace, then owning a home is about as expensive as renting. If prices grow more slowly, as some forecasters predict, the framework used in this paper suggests that the average home buyer would be financially better off renting. We decompose house prices into contributions from rents, interest rates and expected capital gains, which may help policymakers in the detection of housing bubbles. *Recent data do not show signs of a bubble.*




http://www.rba.gov.au/publications/rdp/2014/2014-06.html

But, but, but ... they said there was no bubble.



> ​The Reserve Bank has warned of *even higher home prices*, saying stocks of unsold land suitable for development in Sydney and parts of other cities are getting "unusually low".
> 
> Builders have also lifted their margins, as record low interest rates encouraged more investors and owner occupiers to borrow to buy property.




http://www.smh.com.au/business/the-...even-higher-house-prices-20150615-gholmq.html


----------



## Klogg (17 June 2015)

trainspotter said:


> If prices grow more slowly, as some forecasters predict, the framework used in this paper suggests that the average home buyer would be financially better off renting.




The problem here is that they've based this statement on continued house price growth. 
What if wages don't continue to grow as quickly as they have been? 
What if households can't borrow anymore?
What if rates can't drop any lower?

I would argue we're nearing the limits of the last two, and the first is slowing down hugely.

Also, this is from June 2014. House prices have grown in Sydney/Melbourne since then (other markets not so much)

I would say statements from the Head of Treasury, Head of APRA, Head of ASIC and Head of the RBA would trump the findings of a 1-year old paper.


----------



## sptrawler (21 June 2015)

The property price slide in W.A, appears to be accelerating.

http://www.perthnow.com.au/realesta...407289548?sv=fe8b70ba935e3af5c94ebc61ebe00831


----------



## waterbottle (21 June 2015)

sptrawler said:


> The property price slide in W.A, appears to be accelerating.
> 
> http://www.perthnow.com.au/realesta...407289548?sv=fe8b70ba935e3af5c94ebc61ebe00831




Those are some pretty significant falls. I am not too familiar about Perth and its surrounding suburbs, but I can't imagine that a >10% fall in South Perth (i.e. next to the CBD) is a good sign.


----------



## sptrawler (21 June 2015)

waterbottle said:


> Those are some pretty significant falls. I am not too familiar about Perth and its surrounding suburbs, but I can't imagine that a >10% fall in South Perth (i.e. next to the CBD) is a good sign.




W.A is always sensitive to the mining sector, the double whamy is public sector downsizing.

I think the wave we have been riding in the West,is dumping big time. 
Consolidation phase is approaching, as population growth slows, or turns negative and housing supply is still strong.

Probably due to the time lag between signing up and the project completion. Apparently there is a 50% increase in housing supply on the market, compared to 12 months ago.

Long term buying opportunities, may present in the near future, however holding cost, versus rental security is moving into scary territory.IMO


----------



## banco (22 June 2015)

sptrawler said:


> The property price slide in W.A, appears to be accelerating.
> 
> http://www.perthnow.com.au/realesta...407289548?sv=fe8b70ba935e3af5c94ebc61ebe00831




Good stuff.


----------



## wayneL (22 June 2015)

If WA property returned to intrinsic value, It be worth moving back there.


----------



## sptrawler (22 June 2015)

wayneL said:


> If WA property returned to intrinsic value, It be worth moving back there.




I'm sure it will, unlike Vic & NSW, Western Australia has minimal service industry and tourism jobs.

Surviving in W.A is difficult, without a network of friends. Many investment property owners will find it a very cold winter.IMO


----------



## waterbottle (22 June 2015)

The falls in WA are interesting and encouraging development. Now there are calls that property will crash in Victoria (I believe from Phillip Sous who seems to be bearish on housing overall).

What would happen if we had price falls in both WA in Vic? Surely those who invested in these markets but live in other states would be losing money and therefore be restricted in which properties they can further purchase in their home states. Further, if those markets get to a low enough price then maybe residents of more expensive states (i.e NSW) will begin migrating to them. Couple this with the recent measures to reduce mortgage credit and things aren't looking good for Australian property


----------



## sptrawler (22 June 2015)

waterbottle said:


> The falls in WA are interesting and encouraging development. Now there are calls that property will crash in Victoria (I believe from Phillip Sous who seems to be bearish on housing overall).
> 
> What would happen if we had price falls in both WA in Vic? Surely those who invested in these markets but live in other states would be losing money and therefore be restricted in which properties they can further purchase in their home states. Further, if those markets get to a low enough price then maybe residents of more expensive states (i.e NSW) will begin migrating to them. Couple this with the recent measures to reduce mortgage credit and things aren't looking good for Australian property




I tend to think W.A isn't reflective of the other states, it is quite unique, being remote extremely large and a very small population.

W.A will tank big time, due to the resources cycle, the Eastern States aren't as exposed.


----------



## waterbottle (22 June 2015)

sptrawler said:


> I tend to think W.A isn't reflective of the other states, it is quite unique, being remote extremely large and a very small population.
> 
> W.A will tank big time, due to the resources cycle, the Eastern States aren't as exposed.




Right, but W.A isn't its own independent nation. 

Do none of the Eastern citizens own property in WA?
Do the IP owners in WA own property in the Eastern states?
Can residents from the Eastern states cross borders and take their money West?

I just don't think you can have a crash in one part of the country and loss of capital without having some sort of effect on another part.


----------



## sptrawler (22 June 2015)

waterbottle said:


> Right, but W.A isn't its own independent nation.
> 
> Do none of the Eastern citizens own property in WA?
> Do the IP owners in WA own property in the Eastern states?
> ...




Well the dynamics are completely different, Sydney has minimal resources or minerals, but has a population close to 5 million. Therefore most of their wealth is generated through servicing the population, which is condensed into an area about 100klm by 100klm.

W.A is very reliant on pockets of mining activity, this has to support a population of 2 million people spread over an area of 3,000klms by 2,000 klms.

It is a completely different dynamics, NSW and Vic will continue to grow, due mainly to critical mass of population.

W.A doesn't have that, therefore their fortunes are more aligned to how well their local economy is performing, much like our country towns.


----------



## rimtas (22 June 2015)

I noticed that in the recent years the TV Reality Shows about Real Estate are poping out like mushrooms after the rain.
House Wreck Rescue, 60 minute makeover, House Rules, The Block, Whole House Reveal-you name it. Add few Brittish ones that are also repressing the growing Thirst of everything that relates to the House, Home, or Real Estate.  I do not have the graph showing the number of reality shows ploted on the house prices, but this increase of REATV shows is one more good indicator capturing an extremity of sentiment towards Real Estate. 

There were little or none Reality TV Shows on or after 2009, showing that market  "hated" Real Estate at some point and interest to buy it cheaper was low, not to mention escalating it on TV with exitment. That's a classic example how waves of optimism and pessimism creates conditions that points to reversal in social mood trends.

Smell of a Tulips in Real Estate... Sydney posted record surplus because of the bubble. 
Hard to see this to continue  much longer.


----------



## Smurf1976 (23 June 2015)

I know a few who have moved to WA in recent years and they all moved for the same underlying reason. Jobs. Either they couldn't get a job at all in their previous location and saw WA's then booming economy as the answer, or they could get themselves a substantially better job by moving.

To the extent that WA is no longer a booming economy then that reason to move there disappears and thus cuts future demand for housing. To the extent that recent arrivals become unemployed, or end up in a lower level (either pay or position) role than they could get in the eastern states then they have no real reason to stay in WA at all. They've got family and friends elsewhere after all, and are only in WA in the first place for the money.

Go back a couple of years and "I'll just move to WA" was pretty much the standard response for anyone faced with the prospect of becoming unemployed and not able to secure employment in their current location. That idea doesn't really work anymore it seems and that removes the reason to move to WA.

Go back a generation or two and Perth and Adelaide were about the same size in terms of population. Since then, Perth has grown far more rapidly on the back of WA's mining-based economy whilst Adelaide has almost stagnated as the city's manufacturing industries have declined or disappeared completely. Without the mining based growth, it's highly doubtful this would have been the case. Needless to say, if mining falls hard enough then that's the end of the WA growth story.


----------



## sptrawler (23 June 2015)

Smurf1976 said:


> I know a few who have moved to WA in recent years and they all moved for the same underlying reason. Jobs. Either they couldn't get a job at all in their previous location and saw WA's then booming economy as the answer, or they could get themselves a substantially better job by moving.
> 
> To the extent that WA is no longer a booming economy then that reason to move there disappears and thus cuts future demand for housing. To the extent that recent arrivals become unemployed, or end up in a lower level (either pay or position) role than they could get in the eastern states then they have no real reason to stay in WA at all. They've got family and friends elsewhere after all, and are only in WA in the first place for the money.
> 
> ...




You're pretty well spot on smurph.

The only thing between W.A surviving, or ending up like S.A and Tasmania, is Barnie.IMO

http://www.abc.net.au/news/2015-06-23/wa-government-and-woodside-reach-browse-gas-deal/6567708

The only politician that is showing any vision.IMO


----------



## waterbottle (23 June 2015)

sptrawler said:


> You're pretty well spot on smurph.
> 
> The only thing between W.A surviving, or ending up like S.A and Tasmania, is Barnie.IMO
> 
> ...




Off topic, but I think there would be a number of people who would strongly disagree with you if you are suggesting Premier Barnett has/had vision.

http://www.macrobusiness.com.au/?s=barnett


----------



## sptrawler (23 June 2015)

waterbottle said:


> Off topic, but I think there would be a number of people who would strongly disagree with you if you are suggesting Premier Barnett has/had vision.
> 
> http://www.macrobusiness.com.au/?s=barnett




It was off topic and apologies for that, however time will tell the Barnett tale, be it good or bad.

With regard W.A, unless it can develop a sustainable economy, that isn't 100% reliant on resources, it is doomed to cyclical property prices.

There is one thing that is a certainty, if W.A doesn't expand its fiscal base, when the resources are gone, so is W.A.

A good surf break at Margaret River, won't support the population.


----------



## sptrawler (25 June 2015)

Well vacancy rates in Perth are rising, it is all turning a bit shakey over here, for investors. 

https://au.news.yahoo.com/thewest/a/28553224/empty-perth-rental-properties-on-the-rise/


----------



## waterbottle (25 June 2015)

sptrawler said:


> Well vacancy rates in Perth are rising, it is all turning a bit shakey over here, for investors.
> 
> https://au.news.yahoo.com/thewest/a/28553224/empty-perth-rental-properties-on-the-rise/




Yup, rents sure have fallen. Anyone have access to data from another source?

How low would the price have to fall before investors are forced out of their current position?


----------



## sptrawler (25 June 2015)

waterbottle said:


> Yup, rents sure have fallen. Anyone have access to data from another source?
> 
> How low would the price have to fall before investors are forced out of their current position?




It is all dependant on how much equity the investor has, and how long they can absorb the loses.

Those investors who are geared into 10 properties, with minimal equity, will be sweating somewhat.IMO

As one of the posted articles said, investors are bailing out and cutting their loses, it is no different to the stock market.

It is just a confidence and equity equation, those who can't afford to hold have to sell, those who can afford to hold, do.
There are others who will sell and buy back.
The holding costs on housing in a down market is much higher than dividend paying shares.IMO

It may end up giving people, a more balanced view on property, as an investment .

Must qualify the post, I'm only talking from a W.A perspective.


----------



## rimtas (25 June 2015)

Homebuilding stocks are a leading indicator of house prices, and square footage is a lagging indicator.

As an example I take a US Real Estate market. In a chart below one can see that the S&P index of homebuilding stocks topped in 2005. Home prices topped in 2006. And the average square footage of newly built houses peaked in 2008. This progression should repeat in the current cycle. 

Today the homebuilding stock index is losing upside momentum. It may have peaked. When it turns down decisively, it will portend a peak in home prices. The only graph in this chart making a new high today is the average square footage of a house. Fewer people are buying new homes, but those who are in the market are building mansions.









I tried to find the same data about Australian Housing market, but was able to find only couple long term charts of Australia's house prices and one particularly interesting is Melbourne's price chart. 

Applying Wave Principle we can see that from 1980 low prices managed to sport five waves up, (with the latest data through Dec 2014,) on both charts, with the smaller degree fifth wave from 2012 still in progress. Melbourne's rise is likely the "thrust" out of consolidation Triangle, meaning that when it finishes it should fall back to test the apex.








The data on these charts suggest that the TOP in Real Estate is fast approaching, the underlying sentiment is so extreme, that even RBA said that "prices will get more crazy", expressing a linear thinking.
 Reality TV Shows that I mentioned in earlier post is also a good sentiment measure, pointing that masses are completely engulfed in chasing the dream https://www.aussiestockforums.com/forums/showthread.php?t=17967&p=872758&viewfull=1#post872758 

Meanwhile, the leading indicator-construction companies stocks-turned down decisively. The same as  REIT's, most builders managed to rise in three waves from 2009 bottom, like AV Jennings or Fletcher Builders others Toped in early 2013, as Monadelphous Group.   The chart below illustrates the point- Fletcher Builders should experience hard times ahead, along with others in this industry, as appetite for expensive houses will start to wane soon. 




The square footage data is hard to find, but everyone must agree that houses got bigger and more popular now than 5 years ago.  One lucky seller after he sold his 4bed  house in one of premiere Cairns northern beaches, extoled-"Do not buy 2 or 3 bed house-everybody now wants no less than 4 bedroom 2 bath home". This captures nicely about how appetite for bigger has grown up in recent years. 

The bottom line is-it is the Best time to SELL, though realestate agents in their newsletters highly disagree-they say that given the low rate environment  it is the best time to BUY. Well, market will decide.


----------



## sptrawler (25 June 2015)

From my understanding, there is a huge fundamental difference, between the U.S and Aust property markets.

In the U.S, the property carries the responsibility for the loan. In Australia the individual carries the responsibility.

Therefore from my understanding, in the U.S you can forfeit the property, with no recourse.

That isn't the case in Australia, the bank sells the property and the owner is responsible for any shortfall.

So comparing U.S charts to Aust charts may be misleading.IMO


----------



## rimtas (25 June 2015)

Hi sptrawler, this is not comparison, this is a universal way of how realestate market works, no matter where.  It obeys the same principles as the stock market, creating boom and bust cycles despite underlying fundamentals. There were thousands of reasons in US in 2007 why House prices can't fall. Ignoring all of them, market send them under.

 If you can't pay your loan, it doesn't matter  that you are responsible-bank still sells your property, creating supply.


----------



## sptrawler (25 June 2015)

rimtas said:


> Hi sptrawler, this is not comparison, this is a universal way of how realestate market works, no matter where.  It obeys the same principles as the stock market, creating boom and bust cycles despite underlying fundamentals. There were thousands of reasons in US in 2007 why House prices can't fall. Despite all of them, they did.
> 
> If you can't pay your loan, it doesn't matter  that you are responsible-bank still sells your property, creating supply.




That is very true, the difference is, the banks wear the loss in the U.S, the vendor wears the loss in Australia.

It is a small but pertinent point.IMO


----------



## rimtas (25 June 2015)

So you basically claim that because vendor is responsible, prices can't fall, just rise. It would be interesting to see argument why, keeping discussion going.


----------



## ROE (25 June 2015)

sptrawler said:


> From my understanding, there is a huge fundamental difference, between the U.S and Aust property markets.
> 
> In the U.S, the property carries the responsibility for the loan. In Australia the individual carries the responsibility.
> 
> ...




This is a myth, most states in the US has recourse law, read up on Deficiency Judgments in the US
the two biggest state with fore closure are Florida and Nevada and they have full recourse law.


----------



## ROE (25 June 2015)

rimtas said:


> So you basically claim that because vendor is responsible, prices can't fall, just rise. It would be interesting to see argument why, keeping discussion going.




I dont think it makes any differences if the loss is wear by vendors or lenders, when people don't have jobs or money to support the loan and it not confine to a dirty dozen loans but to a few percentage of the population asset start to fall.

There is no if or but or it cant happen here, that the law of money but Australia is not there yet, until unemployment rise and people without jobs asset price will fall.


----------



## sptrawler (25 June 2015)

rimtas said:


> So you basically claim that because vendor is responsible, prices can't fall, just rise. It would be interesting to see argument why, keeping discussion going.




Well that is a pretty stupid comment, if you had read my last few posts, I have being saying property prices in Perth are falling.

So from that you must have some ulterior motive, which is nice to know. Cheers

Rimtas, memory bank, kachink.lol


----------



## trainspotter (27 June 2015)

sptrawler said:


> That is very true, the difference is, the banks wear the loss in the U.S, the vendor wears the loss in Australia.
> 
> It is a small but pertinent point.IMO




LMI wears the brunt of the risk. When that fails and mortgagee in possession prevails then the valuer who signed off on it had better make sure his insurance policy is in place. So several layers of underwrites taking the love risk of mortgage stress is the key. Who owns the LMI toxic debt is the question?


----------



## waterbottle (27 June 2015)

trainspotter said:


> LMI wears the brunt of the risk. When that fails and mortgagee in possession prevails then the valuer who signed off on it had better make sure his insurance policy is in place. So several layers of underwrites taking the love risk of mortgage stress is the key. Who owns the LMI toxic debt is the question?




The taxpayer hahahahaha


----------



## Mrmagoo (28 June 2015)

It is amazing how Australia has changed from a good country where working class people could earn a decent life to a country of privilege where wealth is handed to the elite few. The process has been exponential since the GFC. Even if you get a really good job you cannot compete with the old money created in the 1990s. Amazing. Australia is now a text book example of a failed socialist state. Housing policy designed to "spread the wealth around" has had the exact opposite effect. Spreading the wealth around to some but not to others. Seems some Australians are more equal than others. Obviously they'll fight to the death to retain their privileges while the rest of us work to pay tax to keep rich old men who never worked for it even richer. Gotta love socialism.


----------



## againsthegrain (28 June 2015)

Mrmagoo said:


> It is amazing how Australia has changed from a good country where working class people could earn a decent life to a country of privilege where wealth is handed to the elite few. The process has been exponential since the GFC. Even if you get a really good job you cannot compete with the old money created in the 1990s. Amazing. Australia is now a text book example of a failed socialist state. Housing policy designed to "spread the wealth around" has had the exact opposite effect. Spreading the wealth around to some but not to others. Seems some Australians are more equal than others. Obviously they'll fight to the death to retain their privileges while the rest of us work to pay tax to keep rich old men who never worked for it even richer. Gotta love socialism.




Hit the nail on the head again magoo, good post


----------



## luutzu (28 June 2015)

Mrmagoo said:


> It is amazing how Australia has changed from a good country where working class people could earn a decent life to a country of privilege where wealth is handed to the elite few. The process has been exponential since the GFC. Even if you get a really good job you cannot compete with the old money created in the 1990s. Amazing. Australia is now a text book example of a failed socialist state. Housing policy designed to "spread the wealth around" has had the exact opposite effect. Spreading the wealth around to some but not to others. Seems some Australians are more equal than others. Obviously they'll fight to the death to retain their privileges while the rest of us work to pay tax to keep rich old men who never worked for it even richer. Gotta love socialism.




What you've described there, according to a couple notable economists I've listened to, is not socialism - it's rampant capitalism without regulation.

The socialism you might be referring to would be those Communist states' form of "socialism" - like China or Vietnam. Where it really is not socialism at all, but more of totalitarianism, oligarchic society where wealth and power is concentrated in the hands of the few.

But wealth and power has always been concentrated in the hands of the few - it was only after WW2 until the 1970s/80s that Capitalist states like the US, Aus., the West... thought that maybe the colored people could vote too, maybe the rich should be taxed higher, maybe there should be social security to take care of the sick and the old and the weak, maybe there should be regulation against monopolies and strong regulation to avoid financial system collapse. 

Then facing the Red threat from the Soviets, and probably WW2 and the economic collapse wiping out most concentrated wealth and most industries, Big Business weren't that big and there are alternative form of gov't that sounds pretty good to the masses... so capitalism, with regulation and social welfare, were adopted.

Since the 1980s, all that are slowly being dismantled... tax on the rich were at 95% in the US back in the 50s, it's now 15% on average; banks have little regulation and the too big to fail are getting bigger and badder as we speak... since deregulation, Stiglitz said there's about 100 financial crisis around the world. etc. etc.

So it's not "socialism" that's doing the US and Australia in - it's unregulated capitalism. But then what we're seeing is not even capitalism, it's more corporate-socialism where the gov't (thru taxpayers) guarantee big banks and big businesses and will bail them out if they fail - so they can take all the risks they want, higher risks mean higher profit.. .and when it's profitable they take the profit, when it's screwed the taxpayer bail them out. They don't even share the profit when it's extremely profitable - that would be anti-competitive or whatever... but when it hits the fan, they threaten to cut jobs or move overseas so gov't help them out, then they cut jobs and stay a while.

BUt what do you expect when the high priests of modern day society is the likes of Ayn Rand and Gordon Gecko - where greed is good and it's every man for himself. Where the sick and the laggard ought to be cut and destroy and abandon because they pull society down. Where you measure a person's character and contribution by how much money they have (Packer getting a state funeral?); and where profit and costs are measured in terms of direct income and expense, and costs to the environment, costs to society.. .those costs are free.

Anyway, despite the headlines... Australia is in pretty good shapes relative to other countries.. and it needs more "socialism" and less the US/UK kind of free market capitalism that almost crash the world twice in the last 15 years and looks to do it for the third time soon.


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## SmokeyGhost (28 June 2015)

luutzu said:


> ........BUt what do you expect when the high priests of modern day society is the likes of *Ayn Rand* and Gordon Gecko - where greed is good and it's every man for himself..........




In regard to Ayn Rand, I have always found it rather bemusing and a tad contradictory that at the end of her life she received assistance from Social Security benefits and the American form of Medicare.


----------



## Smurf1976 (28 June 2015)

Looking at the overall economic changes over the past 35 or so years, the net effect is basically to produce a one-off spending spree by means of running down capital.

There's plenty of real life analogies, but the basic concept is that if you stop worrying about the future then you can certainly ramp up spending, production, enjoyment or whatever today. It works just fine until tomorrow comes.

Australia's economy circa 1980 and in the decades prior was basically about making stuff. Manufacturing was huge and everything else, that is mining, administration, retail, banking and so on, basically existed to either supply the factories and other "real" industries (eg agriculture, traditional service industries), distribute the products or administer the whole thing.

What we've got now is basically the liquidation of capital in order to produce a one-off boom. Manufacturing has been largely wiped out, we're running down infrastructure, we're running down natural capital at an alarming rate and so on. Meanwhile we're borrowing to fund consumption as well.

In broad terms, we've shifted from sustainable to unsustainable. We had something that could have continued on an ongoing basis but now we've got something that is very much finite in its nature - there's only so much iron ore, coal and gas in the ground and we're hell bent on making damn sure that the whole lot is gone well within the lifetime of a child born today. Meanwhile we're gotten rid of manufacturing etc and run up huge debts.

Like anything, you can have a lot more of it in the short term if you don't worry about tomorrow. There's plenty of money if you just borrow it. There's plenty of water if you don't mind the dams running completely dry. You can have one almighty party if you're not worried about a hangover tomorrow. Any job is faster if you don't worry about health and safety. And just think how much time you could free up by not exercising and just eating take away food. All completely unsustainable of course and not something that's wise to do but as a nation it's pretty much what we've actually done. Now we're starting to suffer the consequences with house prices being just one of the myriad of problems we face.


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## luutzu (28 June 2015)

SmokeyGhost said:


> In regard to Ayn Rand, I have always found it rather bemusing and a tad contradictory that at the end of her life she received assistance from Social Security benefits and the American form of Medicare.




I didn't know that, that's pretty funny. 

Also funny that American politicians are all saying how Medicare and medicaid is socialism, are bad and horrible and inefficient... and yet they're all on it and it works great - for them.

Then there's the hundreds of billions bailing out the banks in hope that they would use that to stay afloat and lend to the economy to get it moving again... but they figured since they got the loan from the gov't for next to nothing, the economy is in a bad shape and too risky to lend so decided it's better to lend it to the Chinese or elsewhere and to also buy US gov't bond that pay a higher rate than the rate the gov't lend to them at. 

You really can't make these stuff up.


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## luutzu (28 June 2015)

Smurf1976 said:


> Looking at the overall economic changes over the past 35 or so years, the net effect is basically to produce a one-off spending spree by means of running down capital.
> 
> There's plenty of real life analogies, but the basic concept is that if you stop worrying about the future then you can certainly ramp up spending, production, enjoyment or whatever today. It works just fine until tomorrow comes.
> 
> ...




Was watching Joe Stiglitz lecture at UNSW and, repeating what he said of Australia (my opinion wouldn't be worth two cents anyway)...

That like any resource rich countries, we really got to think and reinvest for the future because those mines and reserves aren't going to be there forever. When it runs out and we haven't been investing in infrastructure, investing in education and training to bring the workforce into the service industry and modernise our workforce... we're going to be in a lot of trouble.

So at the moment when interests rate is extremely low, when our debt level is relatively low, if not the lowest of any developed economies, when the economy is in a recession... the return on investment in infrastructure and all that is just amazing - not just the percentage return but the employment and wage increases and increase demand etc. That it'd be crazy not to invest. 

But we're too focused on the deficit and we all see spending as expenditure and not as investment.

But with the recent changes, hopefully, we see in investment in the NT, the continuous ship building promise to SA and other infrastructure programmes... That and joining the China-led Infrastructure Bank... maybe there's hope that we have tried some sort of austerity and Abbott is starting to think maybe it's not working so well.


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## awg (28 June 2015)

I apologise if posting this here is inappropriate, but an unusual thing popped up today, and despite having some experience, I am not on any property forums. There would be much wisdom here no doubt

Have to get onto the matter on Monday morning 

So i have been informed of a property that the vendor is desperate to sell urgently, but is not officially on the market, they are secretive, dont want an agent, seeking a quick settlement...and especially a quick deposit

The house is not occupied and needs some work,(apparently).. but is a conservative 25% discount imo,
unless it has worse internal damage than I have been led to believe.

I am of the opinion I could lower the mentioned asking price.


Good:  large block, 20min from centre of Newcastle  and University, asking $130K 

Bad:   right on the highway, noisy and undesirable suburb, house and yard is run down.

I expect rates are unpaid, but I dont think it is in a flood zone, will do a "walk outside" inspection asap.

Any tips on research, things to be wary of etc...any comments at all would be welcome (even negative ones),
especially prior to speaking to my solicitor about this

This is a strange & unusual situation, of course I would not buy without an internal and structural inspection.

A friend of mine got a bargain in a similar fashion a few years ago


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## trainspotter (28 June 2015)

awg said:


> I apologise if posting this here is inappropriate, but an unusual thing popped up today, and despite having some experience, I am not on any property forums. There would be much wisdom here no doubt
> 
> Have to get onto the matter on Monday morning
> 
> ...




Ermmmmmmm ....  are you asking for an opinion? This is a no brainer IMO 

Q: What is the block worth ?


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## satanoperca (28 June 2015)

trainspotter said:


> Q: What is the block worth ?




Interested Trainspotter. It is 25% off market, sounds to go to be true. 

I am always dubious of a bargain. Nothing is cheap for no reason.

Cheero


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## sydboy007 (29 June 2015)

sptrawler said:


> That is very true, the difference is, the banks wear the loss in the U.S, the vendor wears the loss in Australia.
> 
> It is a small but pertinent point.IMO




The non recourse issues is more a media beat up than reality

The claim that all mortgages in the United States are nonrecourse is wrong. Only eleven states constrain the recourse that lenders hold over delinquent mortgage borrowers. The other 39 states place no limits on the ability of lenders to recover what they are owed by getting deficiency judgments, which are legal claims to any and all of the borrower's assets to cover the deficiency, or the difference between what the lender recovers from foreclosure and what the borrower owes. Of the 11 states that limit””but do not forbid””recourse, California, for example, prohibits deficiency judgments only if the loan is a purchase mortgage and the lender wants to pursue "fast-track," nonjudicial foreclosure. If the loan is a refinance or the lender wants to pursue a judicial foreclosure, California offers no protection from recourse.

One obvious question is that if lenders can chase down borrowers to recover unpaid debts, why did they lose so much money? The answer is pretty simple. Most borrowers who default on their mortgages probably have no assets to go after. The reason that the borrower defaulted on the mortgage was that they had run out of money. One important point to note is that the deficiency judgment is treated as an unsecured debt of the borrower's, and the borrower can extinguish that debt by filing for bankruptcy. And this complicates the whole argument, because it means that borrowers can walk away from their mortgage if either the loan is nonrecourse or bankruptcy laws are generous.


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## awg (29 June 2015)

satanoperca said:


> Interested Trainspotter. It is 25% off market, sounds to go to be true.
> 
> I am always dubious of a bargain. Nothing is cheap for no reason.
> 
> Cheero




Well one problem is I cant really evaluate the blocks worth to my satisfaction. 

Other sales are in the 180-200 range but with nicer houses, same block size.

The block is fairly large being ~ 20m x ~60m 

There are not many houses/sales in the area.

It is zoned Environmental 2, and is in flood zone, but flooding is very rare according to council

It is swampy and noisy.

However the vendor is desperate for a quick sale, and has offered a reduction, I intend to try and inspect inside tommorow.

Apparently it has 3 bedrooms, and I am thinking I can put 3 uni students in it, for cashflow + from day 1, 
and flip it for 30K+ profit in a year or so, if I dont want to be bothered anymore.

Yes, it sounds like a no brainer, but it flies in the face of RE advice to buy the worst house in the best suburb, this is the worst in the worst. 

An obvious complication is the vendor is not very stable, and also that their solicitor may advise them not to accept my offer, and in fact "cheat" me, by advising them to sell to one of their wealthy cronies at a higher price


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## qldfrog (29 June 2015)

awg said:


> the vendor is not very stable,
> AND
> advising them to sell to one of their wealthy cronies at a higher price



is it a kind of deal you celebrate with a magnum . but not of the vineyard variety: this rings far too many alarm bell to be worse the potential trouble risk:
we do not want to discover you again when next derdging the port


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## rimtas (29 June 2015)

awg said:


> Any tips on research, things to be wary of etc...any comments at all would be welcome (even negative ones),
> especially prior to speaking to my solicitor about this



If you do not have where to live, price is irrelevant as long as you have money and do not need to take a  loan.

But if property is for investment  purposes and financed through bank, then it is a subject to market fluctuations. 
If market tanks in the years to come, all real estate will follow, and the price paid today will look really expesive two years later. You will be paying off $130K for the property that will be worth $70K (as an example). 
Keeping cash tight those times is the best decision, as you can get caught on the top of the bubble, with an asset that will be impossible to sell due to liquidity problems at the worst time.


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## Ald123 (30 June 2015)

The only reason there is a crisis in property prices in Australia today is because Of Australians. It is Australians who  want it to be that way and only Australians who have caused it and only Australians that are ensuring that it continues.  It's nobody else. The young Australians want to pay crazy prices for property and the old Australians want to sell the property to the young at the crazy prices. The Australian government also wants the property prices in Australia to be high, as does every single Australian Workers Union. Every single one of the Australian banks also wants the property prices in Australia to be crazy high.

So please stop complaining about it, turning it into some mysterious phenomenon, or blaming the Chinese when the Australians in China are promising Chinese families that they can become permanent residents just by buying property. It is the Australian government that wants the high prices to attract the foreign capital it needs to bring into its economy and which ensures there are methods to be able to do this. It is the Australian government that wanted the tidal wave of printed money to arrive via Australian banks and be distributed amongst Australians. This tidal wave of free printed American money that caused this massive amount of debt that private Australians have accumulated was allowed by the Australian people, banks and government and businesses. It is the Australians, Australian business and Australian government that wanted endless credit cards and finance plans so that everything could be bought. It is the Australian state governments that are being fully supported by the Australian people to take on massive debts in the billions to build footy stadiums and pubs. It is the Australians who are selling their land and resources to foreigners and foreign companies. 

When the Americans and Europeans printed this fantastical amount of money and handed it out to Australians the Australians took it by the bucket loads. When the Americans and Europeans stopped giving it for a little while,  the Australian government got it from other sources and handed it to you as increased first home owners grants, roofing insulation and solar panel subsidies and tax rebates or for your businesses to spend with. 

So stop blaming everyone else, blame yourselves. 
It's your country, it's the house that Bruce and Shazza built and that's exactly how you wanted it. 

If you don't like it change it but stop complaining to your government , they read you better then you can read yourselves and they give you exactly what your hearts desire. 
Enjoy the beaches and the sunshine and accept what you have built.


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## moXJO (30 June 2015)

rimtas said:


> If you do not have where to live, price is irrelevant as long as you have money and do not need to take a  loan.
> 
> But if property is for investment  purposes and financed through bank, then it is a subject to market fluctuations.
> If market tanks in the years to come, all real estate will follow, and the price paid today will look really expesive two years later. You will be paying off $130K for the property that will be worth $70K (as an example).
> Keeping cash tight those times is the best decision, as you can get caught on the top of the bubble, with an asset that will be impossible to sell due to liquidity problems at the worst time.




You think real estate will almost halve? 
Good luck with that.


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## CanOz (30 June 2015)

moXJO said:


> You think real estate will almost halve?
> Good luck with that.




Totally agree, there's a million Asian investors ready to pick the bottom...


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## Macquack (30 June 2015)

CanOz said:


> Totally agree, there's a million Asian investors ready to pick the bottom...




They think it is the bottom NOW.

Where is Noco when you need him? We are allowing a "Commo" government to use their "freshly printed up out of thin air" money to buy out our country from underneath us.

The problem is, no politician today has a brain and the concept of educating the public to how the international financial system actually works is considered to be a scare campaign.


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## sydboy007 (6 July 2015)

from the AFR



> One of the country’s biggest mortgage brokers, Mortgage Choice, says the clampdown on lending to landlords has dragged property investors’ share of its loan approvals to a 20-month low.
> 
> In a sign banks’ tighter credit standards are having some impact, Mortgage Choice says the proportion of its loan approvals going to property investors fell from 34 per cent in May to 30 per cent in June, the lowest share since late 2013.
> 
> ...


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## sydboy007 (8 July 2015)

quite an interesting read that pulls apart the propaganda being produced to con the public on NG

http://blog.lvrg.org.au/2015/07/con...t-limiting-negative-gearing-to-new-homes.html


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## sptrawler (8 July 2015)

I am noticing a lot of homes in my area, have sea containers, on the front lawns.

It could be "hi ho silver aaaway", for many. 

House building is still galloping away, my guess is an oversupply of some magnitude, in 12 months.


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## waterbottle (8 July 2015)

sptrawler said:


> I am noticing a lot of homes in my area, have sea containers, on the front lawns.
> 
> It could be "hi ho silver aaaway", for many.
> 
> House building is still galloping away, my guess is an oversupply of some magnitude, in 12 months.




Yes, I'm noticing this alot in Sydney's Inner West - you could probably find an apartment block being constructed on every road!


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## Wysiwyg (9 July 2015)

A Re-Max ad. has just reminded me that when buying a house you don't act on first impressions.


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## sptrawler (9 July 2015)

Further confirmation of Perth's housing woes.

http://www.abc.net.au/news/2015-07-09/perth-rental-prices-drop/6605778


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## Smurf1976 (9 July 2015)

The situation looks pretty grim in SA with unemployment now at 8.2% and rising sharply.

There's more "big ones" come too with Holden and the Port Augusta power stations (and associated Leigh Creek mine) still to close. In the case of Leigh Creek, that pretty much wipes the whole town off the map economically.

I can't see this being good for house prices in SA. It's not a bad place in many ways, but nobody needing a job would likely consider moving there anytime soon and some will no doubt end up leaving to pursue jobs elsewhere. 

http://www.adelaidenow.com.au/news/...7435004822?sv=bf33fe66c255de5aef249e8dccb7920


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## Mrmagoo (12 July 2015)

sptrawler said:


> Further confirmation of Perth's housing woes.
> 
> http://www.abc.net.au/news/2015-07-09/perth-rental-prices-drop/6605778




Not housing woes. People will be able to afford to live again !


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## rimtas (12 July 2015)

Perth is not alone, and the tendency is not looking bright,.


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## sptrawler (12 July 2015)

rimtas said:


> Perth is not alone, and the tendency is not looking bright,.
> 
> 
> View attachment 63365





Yes, at the moment there is a rush for property in a first world country, with a first world health, education and welfare system.

It will be interesting to see how it all looks in 10 years time.


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## sydboy007 (13 July 2015)

latest info from RP data

doesn't look pretty for a few of the capital cities


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## sydboy007 (13 July 2015)

I see in NSW that mortgage stamp duty is now roughly 10% of Govt revenue.  It's probably at a more extreme level than most states due to the massive increase in property values.

It just seems unfair that the roughly 5% who purchase a property each year provide ~10% of Govt spending.

Take out GST and Federal grants and then it starts to become obvious how much a small minority are contributing too funding hospitals schools and public infrastructure in the state.

Then when I read articles like the below it shows how not having a land tax makes hoarding property a relatively cheap option

https://www.prosper.org.au/2014/11/13/report-speculative-vacancies-7/



> “The state built a $110 million train station in Williams Landing. Consistent land re-zonings have been handed to developers to meet affordability demands but the thanks home buyers get is a doubling of the speculative vacancy rate there from 3.1% – 8.3%. This compares to the dismissible 1.9% published as the ‘to let’ vacancy.”
> 
> “The state’s leading export industry, tertiary education, was warmly welcomed with a 14.7% vacancy rate in Carlton South. No wonder rents are so high for international students.”







Rumours are this issue is widespread in Sydney as well.

But the Govt agencies responsible for keeping track of foreign money being forced into the housing market are non existent, so all we have are rumours and anecdotal evidence on just how widespread the problem is.  How many students finish their studies and keep the house they're supposed to sell within 3 months of leaving the country?  No Govt dept seems charged with keeping accurate records or following up.  Would other countries sell out locals like we do by allowing foreigners to force out younger families from owning their own home?

Bringing in a broadly based land tax, with appropriate protections for those who would face financial hardship from the change of policy, would seem to be the best way forward.  Unlike a lot of other taxes this would actually bring in extra cash into the economy.  It would also hopefully force hoarders to either start letting the properties, or sell them to either a FHB or investor who will let the property.  Either way there would be an increase in housing supply.

It would also see people who don't move house start paying a fairer share of the costs of all the services we demand as a first world country.  It's also a far more stable income source, with stamp duty revenues changing up to 50% on a yearly basis, which are also pro cyclical.


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## nioka (13 July 2015)

"It just seems unfair that the roughly 5% who purchase a property each year provide ~10% of Govt spending."

What makes it doubly unfair is that it destroys the economics of those that need to relocate. They can't transfer from one home to another at equal value.

And again this was one tax that was supposed to be phased out when GST was introduced. 

Also consider the petrol tax. Introduced many years ago as the 3 x 3 tax, a tax of 3cents a litre for 3 years which was "to fix all the states roads in three years. ??????????

This country is top heavy with underworked and overpaid bureaucrats.


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## sydboy007 (13 July 2015)

Release by ABS today

According to the ABS, investor finance commitments in New South Wales in May were 22.1% higher than May 2014. New South Wales investor loans were also up by 30.0% in rolling annual terms in the year to May 2015, well above the national average increase of 22.6%.

As at May 2015, investors accounted for an astonishing 59.4% of total housing finance commitments (excluding refinancings) in New South Wales (Sydney) – a new record. Victoria’s (read Melbourne’s) share of investor mortgages also hit a record high 49.1% in May

Even in SA / QLD / WA investors were around the 40% mark.


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## waterbottle (13 July 2015)

sydboy007 said:


> Release by ABS today
> 
> According to the ABS, investor finance commitments in New South Wales in May were 22.1% higher than May 2014. New South Wales investor loans were also up by 30.0% in rolling annual terms in the year to May 2015, well above the national average increase of 22.6%.
> 
> ...




No doubt many of those 60% investors are first-time buyers trying to get into the market by purchasing an investment property rather than PPOR.


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## sydboy007 (14 July 2015)

who'd a thought that SA would have the 3rd highest cost of residential land


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## qldfrog (14 July 2015)

sydboy007 said:


> who'd a thought that SA would have the 3rd highest cost of residential land
> 
> View attachment 63443



it does not look again!!


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## sydboy007 (14 July 2015)

qldfrog said:


> it does not look again!!




Check the cost on a per sqm basis.

Only Sydney and Perth beat it.


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## sptrawler (14 July 2015)

sydboy007 said:


> Check the cost on a per sqm basis.
> 
> Only Sydney and Perth beat it.




It really does ring alarm bells, why is property going so stupid?

There must be an underlying driver, blind freddy knows it is over priced, so why is the driver still there?

Either we are not seeing the bigger picture, or a lot of cashed up punters see something we don't.


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## qldfrog (14 July 2015)

sydboy007 said:


> Check the cost on a per sqm basis.
> 
> Only Sydney and Perth beat it.



hum, but that is probably because adelaide land is still within the actual  (relatively) central area: small city block within 10k, vs far outskirts;
anyway, i just looked at the average price, but do agree that for a city (quite pleasant nevertheless) with a closing industry and no replacement, this is ridiculous


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## Smurf1976 (14 July 2015)

I'm puzzled as to why the average size is so low in Adelaide? 

Logically on account of population and density etc I'd have expected it to be the second largest of that list and certainly not smaller than Sydney and Melbourne.


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## sptrawler (14 July 2015)

Smurf1976 said:


> I'm puzzled as to why the average size is so low in Adelaide?
> 
> Logically on account of population and density etc I'd have expected it to be the second largest of that list and certainly not smaller than Sydney and Melbourne.




I'm guessing, but it may be due to the difficulty of supplying services.

In Perth, it sits on sand, so digging trenches is easy, sprawl dig sprawl dig.


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## sydboy007 (15 July 2015)

the grattan institute is now campaigining for the states to get rid of SD on house transaction and replace with a broadly based land tax

http://grattan.edu.au/report/property-taxes/



> Property Taxes, the second working paper in Grattan’s Budget Repair series, finds that a levy of just $2 for every $1000 of unimproved land value would raise $7 billion a year with an annual charge of $772 on the median-priced Sydney home, $560 on the median-priced Melbourne home, and lower average rates in other cities and the regions.






> While property taxes can be unpopular because they are highly visible and hard to avoid, they are also efficient and fair, and don’t change incentives to work, save and invest. *Unlike capital, property is immobile – it cannot shift offshore to avoid taxes.* Over the last 25 years, tax on property and property transactions have been the only significant growth taxes for states, with revenues keeping pace with the economy.




Being sensible policy reform the chances of it happening are low at the moment, but if a property bust does come for a state, they may be forced into action when SD levels drop to the point they're forced to change.


----------



## qldfrog (15 July 2015)

Smurf1976 said:


> I'm puzzled as to why the average size is so low in Adelaide?
> 
> Logically on account of population and density etc I'd have expected it to be the second largest of that list and certainly not smaller than Sydney and Melbourne.



adelaide is full of small bangalows within 10km of the city, most people can afford to buy land there relatively near from the city but these are smaller blocks
my uninformed 2c advice


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## tech/a (15 July 2015)

The reason I think you'll find is the development of land very close to the city.
Very large sub divisions have popped up and developers have squeezed every
Cent out of available land.

Get out of the city area and it's very different.


----------



## notting (15 July 2015)

F#*K Iron Or Lets now sell them towering infernos.

I actually don't mind investors buying new apartments in bulk, even from China.
Looks like times are good and going to get better in the short term.



> *Chinese developers have been snapping up Australian property since the Shanghai Composite Index started tumbling.*
> 
> Australia's property brokers are cashing in on China's stock market calamity.
> 
> ...




http://news.domain.com.au/domain/real-estate-news/china-doubles-down-on-australian-real-estate-20150715-gicgju.html?utm_source=Twitter&utm_medium=link&utm_campaign=social


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## sydboy007 (15 July 2015)

notting said:


> F#*K Iron Or Lets now sell them towering infernos.
> 
> I actually don't mind investors buying new apartments in bulk, even from China.
> Looks like times are good and going to get better in the short term.
> ...




What a load of BS.  te Sydney Morning Domain just pushing the property angle.

I don't think most Chinese property investment companies jump out to buy with just 2 or 3 weeks due diligence.  Heck I'd say it be nigh impossible to get all the legals worked through in that time.

But hey, ut's never been a better time to buy, especially in WA.  One of their talking heads is predicting the WA market is going to catch up to the east coast next year due to the slow growth recently.


----------



## trainspotter (21 July 2015)

Lenders LVR for SMSF are dropping ....



> Effective tomorrow St George will reduce their SMSF LVR from 80% to 70% - this is on the back of them requiring 10% surplus after purchase.
> 
> St George have been our main lender of choice due to their offset feature - these changes are going to be make them far less competitive...... unless other lenders follow suit.




https://propertychat.com.au/community/threads/st-george-smsf-70-lvr.1614/

Don't you worry about what we are up to in WA ... http://www.glenfieldbeach.com.au/


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## Uncle Festivus (22 July 2015)

sydboy007 said:


> the grattan institute is now campaigining for the states to get rid of SD on house transaction and replace with a broadly based land tax
> 
> Being sensible policy reform the chances of it happening are low at the moment, but if a property bust does come for a state, they may be forced into action when SD levels drop to the point they're forced to change.




This is like creating a problem to fix a problem?

Why should I and the vast majority of homeowners pay yet another tax to fix a 'problem' caused by other issues?

The focus should be on the act of the transaction if anything. There could be many ways to adjust the current SD - charge at the GST rate as a max with a sliding scale lower under a certain amount?? But the tax should still be on the transaction, not on those who simply live in their house for many years ie don't flip.


----------



## Uncle Festivus (22 July 2015)

sptrawler said:


> It really does ring alarm bells, why is property going so stupid?
> 
> There must be an underlying driver, blind freddy knows it is over priced, so why is the driver still there?
> 
> Either we are not seeing the bigger picture, or a lot of cashed up punters see something we don't.




Um, Chinese money and Australian bank money (financed from OS) probably chasing a finite resource. State government unwilling to stop the stamp duty gravy train. Developers landbanking. Deficient policies. Poor regulatory oversight. Literally zero cost of finance - low interest rates.

Take your pick, but put em together and you have a bubble.


----------



## trainspotter (23 July 2015)

This guy doesn't think so ...



> NSW’s strengthening economy and rising levels of migration will ensure Sydney property prices continue growing in the near future, despite persistent rumours of a housing bubble, predicts real estate kingpin John McGrath.
> The McGrath Estate Agents founder and chief executive said the current housing boom wouldn’t last, but instead of coming to an abrupt end would gradually come off the boil.
> *“The boom will end at some point, but that doesn’t mean price growth will end, but rather continue in a more moderate fashion,”* Mr McGrath said.




http://www.news.com.au/finance/real...mes-off-the-boil/story-fnd91nhy-1227452541613


----------



## Klogg (23 July 2015)

trainspotter said:


> This guy doesn't think so ...
> 
> http://www.news.com.au/finance/real...mes-off-the-boil/story-fnd91nhy-1227452541613




In my opinion, the idea of a plataeu just doesn't work. If people are losing money every year (negative gearing) and are seeing no capital appreciation, at some point they'll pull the plug...

Not to say that house prices will crash in a spectacular fashion, but there will be a few people selling at a loss at some point.


----------



## satanoperca (23 July 2015)

trainspotter said:


> This guy doesn't think so ...
> 
> 
> 
> http://www.news.com.au/finance/real...mes-off-the-boil/story-fnd91nhy-1227452541613




I wonder why, no vested interest at all. He is a salesman after all. Interpreting his statement, don't worry sheepe, there is no bubble and no need to worry about any future property declines as it is all up up and up, goes not as fast as it has been for the last few years, no better time to invest.

My overtake on Australian property prices.

I can foresee any decline greater than 10% in the near future for the reasons that if it does :-

1. RBA will drop IR's to 0%
2. The Govnuts will open the flood gates to foreign investment without restrictions, not that there are any enforced restrictions at the moment. The govnuts will do this as they are all heavily invested in property.

The second point is the scary one for me when I think of the life style and opportunities my son will have lost when he becomes an adult, maybe he will feel similar to the native peoples of this great land.


----------



## wayneL (23 July 2015)

Here's a left field view of relative values.

In my profession (farrier), the median house price is over 4000 multiples of the average professional fee to shoe a horse here in Brisbane. 

In Sydney, its 6500-7000 times, even with higher farrier prices. Other capital are somewhere between the two. 

I decided to poll my overseas colleagues on their relative costs. So far the ramge has been 1800 - 2400 times.

Food for thought?


----------



## trainspotter (23 July 2015)

Klogg said:


> In my opinion, the idea of a plataeu just doesn't work. If people are losing money every year (negative gearing) and are seeing no capital appreciation, at some point they'll pull the plug...
> 
> Not to say that house prices will crash in a spectacular fashion, but there will be a few people selling at a loss at some point.




I think Sydney prices increased by 23% in the last fiscal year? Perth backwards by 1.4 % and Melbourne 10.3% upwards. Go figure?


----------



## trainspotter (23 July 2015)

wayneL said:


> Here's a left field view of relative values.
> 
> In my profession (farrier), the median house price is over 4000 multiples of the average professional fee to shoe a horse here in Brisbane.
> 
> ...




What did Joe Hockey say? http://www.smh.com.au/federal-polit...job-that-pays-good-money-20150609-ghjqyw.html 

LZ 129 Hindenburg anyone?


----------



## Uncle Festivus (23 July 2015)

Mmmmm.....another vested interest wanting the rest of us to pay for them? I suggest increasing stamp duty for properties over $1M perhaps?



> Increasing the GST to 12.5 per cent, expanding its base, and imposing a 0.25 per cent universal land tax would raise enough money to abolish stamp duty and cut the company tax rate to 27 per cent.
> 
> The Property Council of Australia said the plan would "increase economic well-being by just over $10 billion per annum" by getting rid of taxes that stymied economic activity.
> 
> ...




Goodbye great Aussie dream - for that will be all it is for Aussies?



> Sydney's median house price has climbed higher than London to top $1 million, Domain Group figures show.
> 
> The 22.9 per cent increase in the year to June to $1,000,616 – the quickest pace of gain since at least the late 80s – put the NSW capital above London, where the equivalent was $900,000, but still below New York, where it was $1.5 million, and Paris, where it was about $2 million.
> 
> The rise – from $814,285 a year earlier – did nothing to dampen the city's attraction for investors, Domain senior economist Andrew Wilson said.


----------



## wayneL (24 July 2015)

trainspotter said:


> What did Joe Hockey say? http://www.smh.com.au/federal-polit...job-that-pays-good-money-20150609-ghjqyw.html
> 
> LZ 129 Hindenburg anyone?




I made 4k this week, is that good enough?


----------



## MrBurns (24 July 2015)

wayneL said:


> I made 4k this week, is that good enough?




You made it off me, that's about what I lost on shares, I'll PM you my address so you can send me a cheque.


----------



## Value Collector (25 July 2015)

Uncle Festivus said:


> Mmmmm.....another vested interest wanting the rest of us to pay for them? I suggest increasing stamp duty for properties over $1Ms?




Why?

Why not just increase the stamp duty on gold transactions?

Seems just as silly


----------



## Mrmagoo (25 July 2015)

The bottom line is we're going to have a catastrophic recession. Had it happened 5 years ago, at that level of debt we would simply have had a really, really big economic catastrophe. Now I don't know what will happen. Our sovereignty could even be threatened if the Chinese come in and buy up all of the bad debt. 

I can't believe Baby Boomers are so stupid as to believe that just sitting on a house that they bought for nearly nothing means they "earned" 2 million dollars, or nearly 75k a year, every year, after tax. For just owning a house and that this won't have dire consequences for the economy.


----------



## MrBurns (25 July 2015)

Auction results aren't looking too flash in some States - 

https://www.realestate.com.au/auction-results/wa


----------



## Uncle Festivus (25 July 2015)

Value Collector said:


> Why?
> 
> Why not just increase the stamp duty on gold transactions?
> 
> Seems just as silly




Why? Because basic housing shouldn't be an speculative investment to make money off while ever people go homeless or pay exorbitant rents. 
What does it have to do with gold, unless people make houses out gold?


----------



## shouldaindex (25 July 2015)

Since 1988 the ASX has dropped over 15% 7 times and property prices have declined (by various %) 7 times.

They all happened together, and there was no other 15% drop in ASX or housing decline outside of those 7 times.


----------



## rimtas (25 July 2015)

shouldaindex said:


> Since 1988 the ASX has dropped over 15% 7 times and property prices have declined (by various %) 7 times.
> 
> They all happened together, and there was no other 15% drop in ASX or housing decline outside of those 7 times.




This is true, because house prices are regulated by the same processes as stock prices. Applying fundamental reasoning (like population growth or house shortage) as to why house prices fluctuate are just dead wrong. When mood turns down, stock and house prices fall.  
And as stock market is pointing to another dramatic fall, people buying property today find themselves trapped if they are investing, or feel like fools if they buy it for living, because they overpaid. Now is sellers paradise, but as in a stock market, this will be realized just after the fact-when those prices are gone.

If one succeed in real estate, he must succeed in stock market too, and vice versa. Just majority think that holding a leveraged "investment" like a house is less risky than holding stock portfolio, which is wrong. Both carry the same risk, and because houses usually are under leveraged money, they are even riskier investments, but a confidence  towards buying a house is greater because of "having something real", which is an illusion developed from the century long uptrend.


----------



## trainspotter (27 July 2015)

wayneL said:


> I made 4k this week, is that good enough?




Should get you a two room bedsit in Redcliffe mate 

http://www.realestate.com.au/property-unit-qld-redcliffe-118207151

You could become a member of the Humpybong Yacht Club


----------



## trainspotter (27 July 2015)

Meanwhile back in the real world ....

ANZ and CBA increase rates to would be investors. Talk about shutting the gate after the horse has bolted. 



> It was ANZ Banking Group that kicked off on Thursday the new mortgage repricing cycle, raising the variable interest rate for property investors by 0.27 percentage points. Fierce competitor Commonwealth Bank of Australia moved less than 24 hours later by precisely the same amount. Analysts expect other banks to follow suit.




http://www.afr.com/business/banking...erest-rates-are-headed-higher-20150727-gikhio



> CBA's earnings will be lifted by 2 to 3 per cent from its move on Friday, while NAB could gain 1 to 2 per cent and Westpac 3 to 4 per cent should they follow suit, according to BOAML's Hill. All up, the big four banks' combined profits would be boosted by almost $800 million


----------



## Tyler Durden (27 July 2015)

Met a friend's friend who is a real estate agent with a focus on selling to the Chinese from China. Even he admitted that there is currently a property bubble in Australia and thinks that prices will drop slightly by June 2016.


----------



## trainspotter (27 July 2015)

Uncle Festivus said:


> Why? Because basic housing shouldn't be an speculative investment to make money off while ever people go homeless or pay exorbitant rents.
> What does it have to do with gold, unless people make houses out gold?




And somehow they do .... Think of the speculative bubble on Sydney housing prices ... 23% give or take. Also it is an asset I can drive by and perform an inspection and deduct it for business purposes. A speculative investment in Sydney property would be a mistake (stick tongue in cheek here). Also in the mix lot's of Mummy and Daddy investors will get burned. No sacrifice here ... when it drops there will be people crying from balconies of tears. 

BOO HOO> 
OO --)O0o


----------



## Uncle Festivus (27 July 2015)

trainspotter said:


> ....... lot's of Mummy and Daddy investors will get burned. No sacrifice here ... when it drops there will be people crying from balconies of tears.
> 
> BOO HOO>
> OO --)O0o




I can just imagine it...........Tony Abbot getting blamed by these very same investors for not 'protecting' them from the bubble burst - lot's of um's and uh's in his usual staccato way?

I think the Chinese fall-out will be positive initially then the jettisoning of IP's owned by Chinese will begin in earnest?


----------



## trainspotter (27 July 2015)

Uncle Festivus said:


> I can just imagine it...........Tony Abbot getting blamed by these very same investors for not 'protecting' them from the bubble burst - lot's of um's and uh's in his usual staccato way?
> 
> I think the Chinese fall-out will be positive initially then the jettisoning of IP's owned by Chinese will begin in earnest?




Whoever is the head of the ATO who has to announce this filthy policy will be burdened to the back teeth for at least the next 15 months. Abbott will tell you " I told you so " under no circumstances. Property like shares is a risk. As I have been banging on about it is CERTAIN areas that do perform if picked at the right time. Just like shares.

Me personally have realised the next wave is property. Reason being is banks lend money to property investors. Banks lend on margins. Who is taking the least amount of risk at LVR's at 30% ?? The banks. What risk ? 

FHB are at 95% ... LMI is 1.7$ of margin ... anyone in? Toxic stuff.


----------



## sptrawler (2 August 2015)

There was an interesting list, in the real estate section, of the weekend paper.

First time I've seen it.

TOP 10 SUBURBS
FOR SELLING BELOW ASKING PRICE.
Units
Cottesloe     -10.2%
Spearwood   -8.1%
Doubleview   -8.0%

And So On

Maybe a sign of the times.

Doesn't seem that long ago, that they were telling us about buyers lining up, to pay above asking price.


----------



## Smurf1976 (2 August 2015)

sptrawler said:


> TOP 10 SUBURBS
> FOR SELLING BELOW ASKING PRICE.
> Units
> Cottesloe     -10.2%
> ...




Just wondering what sort of areas those are? Rich? Poor?

Anything undesirable happened recently or being planned which may make them less attractive? 

Or is it just plain old supply and demand pushing prices down?


----------



## wayneL (2 August 2015)

Getting tales of woe from my upmarket Brissy western burbs (moggill
, bellbowrie, anstead res rural) clients. 

Realised prices going down the chit chute.


----------



## sptrawler (2 August 2015)

Smurf1976 said:


> Just wondering what sort of areas those are? Rich? Poor?
> 
> Anything undesirable happened recently or being planned which may make them less attractive?
> 
> Or is it just plain old supply and demand pushing prices down?




The lists were: the top 10 suburbs for selling below asking price, units then houses. The next list was the top 10 bargain suburbs.
They listed the suburbs and their respective % falls. the biggest falls were in the expensive suburbs and they filled the top 5 in both lists.
The next 5 were fairly normal 'middle class suburbs.
The percentages ranged from a high of 22% to the lowest 6%.

If someone is really interested, I could copy out the whole list, but as a one finger typist I'm not really that keen.


----------



## trainspotter (3 August 2015)

wayneL said:


> Getting tales of woe from my upmarket Brissy western burbs (moggill
> , bellbowrie, anstead res rural) clients.
> 
> Realised prices going down the chit chute.




The high end stuff is always the most volatile. It falls back to reality with the middle market whilst the bottom end climbs to be out of the reach of the FHB.


----------



## sptrawler (3 August 2015)

trainspotter said:


> The high end stuff is always the most volatile. It falls back to reality with the middle market whilst the bottom end climbs to be out of the reach of the FHB.




Fro memory you were pretty spot on, with your prediction a long time back, that property would fall on its ar$e mid 2015.


----------



## clowboy (3 August 2015)

sptrawler said:


> The lists were: the top 10 suburbs for selling below asking price, units then houses. The next list was the top 10 bargain suburbs.
> They listed the suburbs and their respective % falls. the biggest falls were in the expensive suburbs and they filled the top 5 in both lists.
> The next 5 were fairly normal 'middle class suburbs.
> The percentages ranged from a high of 22% to the lowest 6%.
> ...




A scanned copy would be appreciated if you have a scanner.


----------



## sptrawler (3 August 2015)

clowboy said:


> A scanned copy would be appreciated if you have a scanner.




A scanner I have a 2004 laptop and a monochrome printer, that's it. The list was in the real estate section of the Sunday Times.


----------



## CanOz (3 August 2015)

wayneL said:


> Getting tales of woe from my upmarket Brissy western burbs (moggill
> , bellbowrie, anstead res rural) clients.
> 
> Realised prices going down the chit chute.




Wayne, I'm in Brisbane now and looking....mid 600 town houses are only lasting a week on the market...auction clearance rates on the high side for qld....

What suburb you in?


----------



## qldfrog (3 August 2015)

CanOz said:


> Wayne, I'm in Brisbane now and looking....mid 600 town houses are only lasting a week on the market...auction clearance rates on the high side for qld....
> 
> What suburb you in?



in Brisbane, Canoz, do not buy on auction, and for a mid 600, why would you get a townhouse when you can have land and standalone house ;think chapel hill, everton park
short cycle ride to cbd or 10min train

Qldfrog in Brisbane (living rural acreage north west brisbane)
you can get decent house on 2.5 acres in a nice part of brisbane (where I live) for asking price 700/750 k
so a townhouse for 600+?


----------



## DB008 (3 August 2015)

qldfrog said:


> in Brisbane, Canoz, do not buy on auction, and for a mid 600, why would you get a townhouse when you can have land and standalone house ;think chapel hill, everton park
> short cycle ride to cbd or 10min train
> 
> Qldfrog in Brisbane (living rural acreage north west brisbane)
> ...




+1

A further 10 minutes past my place there is acreage starting from ~450/500k - about 40 minutes from the city.


----------



## wayneL (3 August 2015)

CanOz said:


> Wayne, I'm in Brisbane now and looking....mid 600 town houses are only lasting a week on the market...auction clearance rates on the high side for qld....
> 
> What suburb you in?




Im in Anstead.on acreage.

Nice spot... feels rural but only 24 clicks to cbd, 15 min to  Westfield Indro.

No bogans either.


----------



## trainspotter (3 August 2015)

sptrawler said:


> Fro memory you were pretty spot on, with your prediction a long time back, that property would fall on its ar$e mid 2015.




Sunshine and Lollipops as a true believer once wrote


----------



## CanOz (3 August 2015)

wayneL said:


> Im in Anstead.on acreage.
> 
> Nice spot... feels rural but only 24 clicks to cbd, 15 min to  Westfield Indro.
> 
> No bogans either.




Nice spot, too bad the missus wouldn't go for that.......


----------



## trainspotter (3 August 2015)

Was in Brizvegas a few weeks ago burying the old man (QLD frog take note) and was in Fortitude Valley. Across the road from the Wickham is a proposed town house project that caught my eye. Did note starting price was $385,000 for a single bed sit on lower floor levels. Also noted inner city apartments were on the rise with other developments around it also targeting this market. Had a beer or 2 at the Wickham ... interesting wall art in the lounge bar ... has an appeal if you are that way inclined. 

Keep your powder dry on these inner city investments as banks retract


----------



## CanOz (4 August 2015)

trainspotter said:


> Was in Brizvegas a few weeks ago burying the old man (QLD frog take note) and was in Fortitude Valley. Across the road from the Wickham is a proposed town house project that caught my eye. Did note starting price was $385,000 for a single bed sit on lower floor levels. Also noted inner city apartments were on the rise with other developments around it also targeting this market. Had a beer or 2 at the Wickham ... interesting wall art in the lounge bar ... has an appeal if you are that way inclined.
> 
> Keep your powder dry on these inner city investments as banks retract




We're keeping most of our powder dry, but we need a place to live...thanks for the view on Brisbane though TS.


----------



## qldfrog (4 August 2015)

trainspotter said:


> Was in Brizvegas a few weeks ago burying the old man (QLD frog take note) and was in Fortitude Valley. Across the road from the Wickham is a proposed town house project that caught my eye. Did note starting price was $385,000 for a single bed sit on lower floor levels. Also noted inner city apartments were on the rise with other developments around it also targeting this market. Had a beer or 2 at the Wickham ... interesting wall art in the lounge bar ... has an appeal if you are that way inclined.
> 
> Keep your powder dry on these inner city investments as banks retract



sold my IP(1bedroom nice flat) 4 minutes walk from valley station for 290k earlier this year as I saw hundred if not thousands of newly released flat built around (RNA area).
No regret: the rent return on the newly built ones will be abysmal" no real demand and very expensive aslking price


----------



## Mrmagoo (5 August 2015)

We gonna have a Greek like default. If not answer me this:

Property is going gangbusters so why aren't the banks ?


----------



## waterbottle (6 August 2015)

trainspotter said:


> Was in Brizvegas a few weeks ago burying the old man (QLD frog take note) and was in Fortitude Valley. Across the road from the Wickham is a proposed town house project that caught my eye. Did note starting price was $385,000 for a single bed sit on lower floor levels. Also noted inner city apartments were on the rise with other developments around it also targeting this market. Had a beer or 2 at the Wickham ... interesting wall art in the lounge bar ... has an appeal if you are that way inclined.
> 
> Keep your powder dry on these inner city investments as banks retract




Brisbane was being spruiked as the next city to follow the Sydney boom. Lots of investors on SS and PC seem to have entered with the hopes of similar returns.


----------



## CanOz (6 August 2015)

Mrmagoo said:


> We gonna have a Greek like default. If not answer me this:
> 
> Property is going gangbusters so why aren't the banks ?




Another empty permabear prediction, exactly when do you predict this event to happen? Banks don't do well when the interest rate cycle hasn't bottomed...

You permabears are all the same, sooner or later you're right

Meanwhile the rest of us that worked our butts off for the last twenty years are buying property in the most beautiful westernised country in Asia pacific.

CanOz


----------



## trainspotter (6 August 2015)

> *AUSTRALIA’S major banks have raked in a record cash haul of more than $28 billion this year.*
> 
> The nation’s second-biggest lender, Westpac, was this morning the last of the ‘big four” to report full-year results, lifting its cash profit 8 per cent to $7.6 billion for the year to September.
> 
> ...




http://www.heraldsun.com.au/busines...-for-coming-year/story-fni0dcne-1227110536485

Naaaahhh .... not going gangbusters at all PFFFFFFFFFFFFFFFFFTTTTTTTTTTtttttttttttt !!


----------



## trainspotter (6 August 2015)

waterbottle said:


> Brisbane was being spruiked as the next city to follow the Sydney boom. Lots of investors on SS and PC seem to have entered with the hopes of similar returns.




All about timing my learned adversary. Some will and some won't


----------



## againsthegrain (6 August 2015)

Mrmagoo said:


> We gonna have a Greek like default. If not answer me this:
> 
> Property is going gangbusters so why aren't the banks ?




Very good point Magoo,  the cracks are starting to show


----------



## DeepState (6 August 2015)

Mrmagoo said:


> We gonna have a Greek like default. If not answer me this:
> 
> Property is going gangbusters so why aren't the banks ?




Cash component of housing purchases are higher.
Banks were priced as the most expensive in the developed world and are being partly de-rated.
APRA/Basel III capital requirements are diluting earnings.
Other macro-prudential requirements to slow loan growth.
Loan growth rates outside of property aren't accelerating. Apparently there is more to banks than property.
...
Shall I go on?


Greece-like default?  In any case, you probably want it to happen so you can get set in property.  An idea: move to Greece now and buy a property so you can join the middle class there and oppress the under-class.  When the Australian dollar collapses as our banks and entire credit system catches fire, you can sell that and buy Bondi.


----------



## Macquack (6 August 2015)

CanOz said:


> Meanwhile the rest of us that worked our butts off for the last twenty years are buying property in the *most beautiful westernised country in Asia pacific*.
> 
> CanOz




You mean China right? 

If not, you are *just another Chinese investor *in Australia. 

We don't really need you at the moment, particularly if you like Sydney. Because, you are f***ing over the locals BIG TIME.


----------



## againsthegrain (6 August 2015)

CanOz said:


> Another empty permabear prediction, exactly when do you predict this event to happen? Banks don't do well when the interest rate cycle hasn't bottomed...
> 
> You permabears are all the same, sooner or later you're right
> 
> ...





Not for long,  the beatifull and westernised Sydney is going to turn into the next Beijing where corruption and industrial waste flows down every river


----------



## CanOz (6 August 2015)

Macquack said:


> You mean China right?
> 
> If not, you are *just another Chinese investor *in Australia.
> 
> We don't really need you at the moment, particularly if you like Sydney. Because, you are f***ing over the locals BIG TIME.




Actually I'm a Canadian investor, my wife is Australian though....I don't really need you, neither does the rest of the country....mate!


----------



## Macquack (6 August 2015)

CanOz said:


> Actually I'm a Canadian investor, my wife is Australian though....I don't really need you, neither does the rest of the country....mate!




I knew that. I was just making a play on your current location. Touchy subject.


----------



## sptrawler (6 August 2015)

There is still a long way for it to go, before it plays out in W.A.

http://www.watoday.com.au/wa-news/k...n-was-pilbara-mining-hub-20150806-git3w7.html

The only thing that will save W.A, will be to cut back on the fifo's, and base the workforce locally.

Which really is the only way, country towns can survive, over the longer term.


----------



## trainspotter (6 August 2015)

againsthegrain said:


> Not for long,  the beatifull and westernised Sydney is going to turn into the next Beijing where corruption and industrial waste flows down every river







For the life of me ....


----------



## trainspotter (6 August 2015)

Macquack said:


> I knew that. I was just making a play on your current location. Touchy subject.







CanOz


----------



## waterbottle (7 August 2015)

DeepState said:


> Cash component of housing purchases are higher.
> Banks were priced as the most expensive in the developed world and are being partly de-rated.
> APRA/Basel III capital requirements are diluting earnings.
> Other macro-prudential requirements to slow loan growth.
> ...




Or just move to Perth


----------



## againsthegrain (7 August 2015)

trainspotter said:


> View attachment 63751
> 
> 
> For the life of me ....




Still selling used light bulbs I see


----------



## trainspotter (7 August 2015)

againsthegrain said:


> Still selling used light bulbs I see




Still living in Mum and Dads garage?

Meanwhile in the real world ... who is actually exposed to this downturn?



> The wealthiest 5 per cent of Australians have well over 50 per cent of their wealth tied up in property, while individuals in between the 50th and 75 percentiles have just a quarter of their wealth invested in property. A far higher proportion of the portfolios of lower income groups is invested in cash and term deposits.




http://news.domain.com.au/domain/re...property-prices-collapse-20150806-gisq7z.html

So the rich get the picture this time eh?


----------



## Klogg (7 August 2015)

trainspotter said:


> Still living in Mum and Dads garage?
> 
> Meanwhile in the real world ... who is actually exposed to this downturn?
> 
> ...




Interesting fact, but correlation is not causation. It could be that the 'rich' bought their properties long ago, and still hold it. 

Not to mention that percentage of wealth probably isn't the best way to estimate who would get hit the hardest. If I had $20m to my name, and lost 70%, I'd still live just fine. On the contrary, if I had 200k and lost 50%, it would hurt big time.


----------



## Mrmagoo (7 August 2015)

DeepState said:


> Cash component of housing purchases are higher.
> Banks were priced as the most expensive in the developed world and are being partly de-rated.
> APRA/Basel III capital requirements are diluting earnings.
> Other macro-prudential requirements to slow loan growth.
> ...




You know you  can't just move to an EU country right ? Those are first rate nations,  where most migrants want to go first, we're 3rd or 4th on the list after EU and USA, but you keep believing the lies.


----------



## ROE (7 August 2015)

Mrmagoo said:


> You know you  can't just move to an EU country right ? Those are first rate nations,  where most migrants want to go first, we're 3rd or 4th on the list after EU and USA, but you keep believing the lies.




Plenty of migrants cant come here either but some how, without English,  hard work and determination and the right mind set they end up here and a lot of them end up rich


----------



## waterbottle (8 August 2015)

ROE said:


> Plenty of migrants cant come here either but some how, without English,  hard work and determination and the right mind set they end up here and a lot of them end up rich




eh... that's debatable. Our immigration policy is definitely skewed towards letting in the rich, skilled, healthy migrants into our country whilst send the poor, unskilled and unhealthy to Nauru.
We are definitely selective about who we let in, so it's false to paint immigrants who have been allowed to enter as some sort of downtrodden underclass.


----------



## waterbottle (8 August 2015)

Well Hockey just got on abc24 and announced that he's selling off 6 foreign-owned properties and investigating another 400.

Pretty strict penalties too: loss of all capital gains with the transaction, possible fine & 3yrs imprisonment for those who assist.


----------



## qldfrog (8 August 2015)

waterbottle said:


> eh... that's debatable. Our immigration policy is definitely skewed towards letting in the rich, skilled, healthy migrants into our country whilst send the poor, unskilled and unhealthy to Nauru.
> We are definitely selective about who we let in, so it's false to paint immigrants who have been allowed to enter as some sort of downtrodden underclass.



yes we do for migrants (even if the selection has got very loose lately as the need to prop up the housing boom got more urgent..
but we do no selection on the so called refugees or illegal immigrants to name same properly who may not arrive by boat so much lately but still get off planes in our airports everyday


----------



## waterbottle (9 August 2015)

qldfrog said:


> yes we do for migrants (even if the selection has got very loose lately as the need to prop up the housing boom got more urgent..
> but we do no selection on the so called refugees or *illegal immigrants to name same properly who may not arrive by boat so much lately but still get off planes in our airports everyday*




That in itself is selection - if you can manage to come here by plane then you're allowed in, by boat you get sent to Nauru


----------



## sptrawler (9 August 2015)

waterbottle said:


> That in itself is selection - if you can manage to come here by plane then you're allowed in, by boat you get sent to Nauru




With regard property, if you came in by plane you have a passport, so you have the proof of identity to buy a property.

If you came in by shonky boat from Indonesia, you would have either given your passport to the smugglers, or thrown it overboard.
Which then makes it somewhat difficult to buy property. 

Maybe we could get all the do gooders, to go guarantor for them.


----------



## banco (9 August 2015)

waterbottle said:


> Well Hockey just got on abc24 and announced that he's selling off 6 foreign-owned properties and investigating another 400.
> 
> Pretty strict penalties too: loss of all capital gains with the transaction, possible fine & 3yrs imprisonment for those who assist.




I'll be interested to see how far they go with it as anecdotally seems like the number of properties that have breached the rules are in the thousands. 

Also shows how useless FIRB are/were.  Although I think FIRB was ideologically disposed to not bother enforcing the law.


----------



## qldfrog (10 August 2015)

waterbottle said:


> That in itself is selection - if you can manage to come here by plane then you're allowed in, by boat you get sent to Nauru



boat is not cheaper, it is a matter of getting some (false or otherwise passport and a tourist visa;
the selection is then on country of origin, not $
many irakis or iranians have more assets than many indians, yet landing as a tourist is not as easier for the formers as for the later;
the passport you travel with when coming in can then disappear once you are here.


----------



## trainspotter (10 August 2015)

Sell em a house boat then


----------



## SmokeyGhost (10 August 2015)

Could always buy at Roxby Downs.  Properties going cheap(er) there.


----------



## waterbottle (10 August 2015)

South Australian unemployment could hit 9%

I don't know if this is even including the expected pull out by Holden in 2017.

I wonder what all those investors who bought into SA property expecting a boom were expecting 

EDIT: just punched in Adelaide, SA into the house.ksou.cn search engine and it's stating that the median house price is 28% lower compared to last year!!! Is this real life????


----------



## sptrawler (10 August 2015)

waterbottle said:


> South Australian unemployment could hit 9%
> 
> I don't know if this is even including the expected pull out by Holden in 2017.
> 
> ...




Well it had to happen, sooner or later.

W.A isn't far behind.IMO


----------



## Smurf1976 (11 August 2015)

I'm a moderately frequent visitor to SA, been there twice this year thus far, and my anecdotal "on the street" observation is that things aren't good economically.

It's not dead by any means, but it's not exactly crowded anywhere either. Places which used to be full are now somewhat empty. Events which sell out elsewhere either don't sell out in SA or aren't bothering to go there at all. There's cranes on the Adelaide skyline yes, but most of them are at the new hospital site and that's a one-off government project. Just walking around the CBD it's not hard to find something that looks rundown.

Even without looking at unemployment stats, I'd say that SA has overtaken Tas for the "bottom of the heap" title economically. Not that Tas is exactly booming, but it seems to be doing better than SA at the moment. Just my observations as a reasonably frequent visitor - things seemed to start going downhill a couple of years ago and that was before the big announcements with Holden etc closing.


----------



## Mrmagoo (11 August 2015)

waterbottle said:


> South Australian unemployment could hit 9%
> 
> I don't know if this is even including the expected pull out by Holden in 2017.
> 
> ...




Well we can only hope that figure falls further so that people living and working in SA can afford to buy again.

Cheap houses prices are a good thing for the economy.


----------



## tech/a (11 August 2015)

Like everywhere else there are pockets of doom
And there are pockets of amazing opportunity.

There are the few who wallow in doom and
There are the few who can benefit from opportunity

Unfortunately the Magoos of the world can't 
Take part in property opportunities.
Even here in SA.

Money makes Money.
But that's always been the case
And always will be.

Best get a few bucks!
Or be happy with what you've got


----------



## qldfrog (15 August 2015)

anyone on the impact of the yuan recent moves:
will chinese money be slowed down or will it be seen as another push to get out of china as soon as possible by chinese buyers?


----------



## tech/a (15 August 2015)

Well Chinese investors have been pretty astute so far.
May slow things down but then again may speed things
Up. If I was a wealthy Chinese I'd be diversifying.


----------



## CanOz (15 August 2015)

qldfrog said:


> anyone on the impact of the yuan recent moves:
> will chinese money be slowed down or will it be seen as another push to get out of china as soon as possible by chinese buyers?




I've heard whispers, a few calling the top of the Australian property market as the yuan devalues....

It's got to have an affect somehow....but the Aussie dollar hasn't gained that much against the yuan, it's fallen as well....


----------



## waterbottle (17 August 2015)

Just reporting some extra things that I've read about:

APRA is targetting the big banks AND smaller institutions RE: home loan lending. They are going after all ADIs with assets > $1 billion. Limiting home loan growth to <10.9% p.a with no rules as to how that is achieved.
ATO will soon request that lends provide them with the TFNs of applicants in an effort to root out illegal foreign purchases.


----------



## sptrawler (17 August 2015)

waterbottle said:


> Just reporting some extra things that I've read about:
> 
> APRA is targetting the big banks AND smaller institutions RE: home loan lending. They are going after all ADIs with assets > $1 billion. Limiting home loan growth to <10.9% p.a with no rules as to how that is achieved.
> ATO will soon request that lends provide them with the TFNs of applicants in an effort to root out illegal foreign purchases.




It won't only be illegal foreign purchasers, IMO it will be any purchaser without underlying means, i.e money laundering, proceeds of crime etc.

Apparently the tax dept computer, has amazing data matching capability, limited only by imagination.


----------



## sydboy007 (20 August 2015)

Macroprudential likley to tighten further after ASIC's findings



> ASIC’s review of more than 140 consumer loan files from bank and non-bank lenders identified:
> 
> 
> In 40% of files reviewed, the affordability calculations assumed the borrower had longer to repay the principal on the loan than they actually did
> ...


----------



## waterbottle (20 August 2015)

Looks like the cash faucet is going to be running alot slower in the coming months...


----------



## CanOz (20 August 2015)

sydboy007 said:


> Macroprudential likley to tighten further after ASIC's findings




Too little too late...its amazing how this stuff comes out now, when the market is toppy. Why can't we have good lending practices...all the time?


----------



## rimtas (21 August 2015)

REIT's are one of the best holding sector but it should give ground soon as well. Lucky are those who are selling property now to those unaware of what is going to happen next.


----------



## gartley (21 August 2015)

A possible historic top in the process. We will see how Australians love affair with property pans out in the years ahead. It's had 20 year great run without a correction. 

The last property bear market in the early 90's saw buyers "dissappear " within a few months.
The mind boggles as to how many irrationally exuberant, over leveraged in debt property bulls are out there. Most of which have never experienced a bear


----------



## Smurf1976 (22 August 2015)

CanOz said:


> its amazing how this stuff comes out now, when the market is toppy.




It always seems to be the way when something is destined to end. It all goes along fine for longer than anyone expected, then everything goes against it pretty much all at once and that's it, game over.

That's not limited to property. Take a business that is struggling. It goes along for years then all of a sudden a few things happen and it collapses amazingly fast once the tipping point is reached.

Same principle with crooks, con men, anything destined to end at some point. Seems unstoppable until a few things go wrong then it all falls down real quick.


----------



## gartley (22 August 2015)

Smurf1976 said:


> It always seems to be the way when something is destined to end. It all goes along fine for longer than anyone expected, then everything goes against it pretty much all at once and that's it, game over.
> 
> That's not limited to property. Take a business that is struggling. It goes along for years then all of a sudden a few things happen and it collapses amazingly fast once the tipping point is reached.




That's very true, and I think the main reason is because "people get caught up in the trend". What is the average Joe Blow thinking at a market peak? What I have noticed in the past ( and this includes myself years ago) is that people sitting on gains will project the current trend into the future. In this instance house prices have been rising for 20 years and every pullback is a buying opportunity. But at this juncture a surprising disappointment lies ahead for property bulls. That maybe now or maybe years ahead but it will happen. In Elliott wave terms a 4th wave retracement. 

The last time Australia had a major panic and thereafter bearmarket was in 1890. That panic was triggered by problems English colonial ties to Argentina. But in reality the trigger can be anything and the primary cause is extreme optimisim. If sentiment is extremely optimistic it means they already have their money in the market waiting for prices to go up and make them rich. And if they already have their money in their it means there is very little money left to go in in which case prices have only one way left to go and that it down.

Every credit induced boom throughout history has ended in bust without exception. Some have been short others have lasted so long that it seems like forever but that they have ALL ended in bust. Looking at the Private debt to GDP chart attached we can see the last credit induced boom in Australia peaked in 1890. I call this Wave 1. The subsequent decline which was a 2 wave correction took 70 years to pan out. Lending standards where completely different when I was a young boy in the 60's and 70's. The explosion in private debt since then has been staggering and this is wave 3 on our chart. A typical wave 4 retraces between 38.2 to 50% of the previous wave 3. So when it arrives it will be felt very hard. Deflationary forces are already at work and deflation in the credit supply is fast coming.

Since the advance has been fueled by debt in the first place the attached chart of inflation adjusted Median Melbourne house prices almost mirrors the profile/pattern of trend of the debt to GDP chart. Interestingly on this chart after house prices peaked in 1890, it took them almost 100 years to reach the same levels in real (inflation adjusted) terms.

So some interesting times ahead.


----------



## tech/a (22 August 2015)

> it took them almost 100 years to reach the same levels in real (inflation adjusted) terms



.

Yes it *WAS* a once in a lifetime opportunity!

But the world and in particular Australia is a very different place than it was 100 yrs ago.
An argument or discussion that will continue for another 100 yrs.
like all assets the shrewd will always make a buck sometimes at others expense.

While demand remains so will price.
True for anything really.


----------



## waterbottle (22 August 2015)

tech/a said:


> .
> 
> Yes it *WAS* a once in a lifetime opportunity!
> 
> ...




Demand is irrelevant when there isn't any money to meet your price


----------



## gartley (22 August 2015)

tech/a said:


> .
> 
> 
> But the world and in particular Australia is a very different place than it was 100 yrs ago.




Yes it is John. But what propels markets (people) are the same. Unfortunately hope, greed, and fear in people will NEVER change.


----------



## tech/a (22 August 2015)

gartley said:


> Yes it is John. But what propels markets (people) are the same. Unfortunately hope, greed, and fear in people will NEVER change.




Hasn't yet!


----------



## Klogg (22 August 2015)

waterbottle said:


> Demand is irrelevant when there isn't any money to meet your price




If there's not enough money/credit, there's no demand. 
To put it another way; on a supply/demand graph, the demand curve just shifts to the left, hence demand at lower prices.


----------



## tech/a (22 August 2015)

waterbottle said:


> Demand is irrelevant when there isn't any money to meet your price




Demand remains
Price varies


----------



## qldfrog (23 August 2015)

and demand  is based only partly on numbers and need
psychology is key: as in stockmarket PE, reason/facts, on short term, do not always win , and if panic/fear strikes however real the need, low the price, you can not sell.
This worked the other way round when this bubble was expanding, now we might see the other side


----------



## gartley (23 August 2015)

tech/a said:


> Hasn't yet!




That's right!!  

-  In 1991 the Japanese housing market hadn't yet either and is now down 50% in a deflationary spiral that has not ended. But the warning signs where there 1 year earlier when the stock market crashed.

- In 2006 the US market hadn't either but the warning signs where there.

- In April this year the All Ords was 1000 pts higher than now it hadn't YET either but the warning signs where there.

- Two months ago in China the Shanghai Composite index  hadn't YET either but now it has capitulated, warning signs where there.

- Two weeks ago the DJIA was near record levels and hadn't YET but look now. Warning signs where there.

Nothing lasts for ever, anything is possible at any time in any market. Peaks often coincide with the sort of complacency that is cascading out of your mouth and the most of the Australians who think property prices will never stop rising.

When a market peak comes it usually takes everyone by surprise and events unravel very quickly.

This country has had it too good for too long. In 2 years there will be little manufacturing left in this country. Next to zero value added goods. Mining boom is long gone and contracting further every day. What do we have here that's keeping things going? An overheated property market, contracting retail spending because nearly everything is spent servicing loans, and the services.

In 2008 we our told how our property market and economy has next to immune from the global shock because of our smart thinking RBA quickly slashing rates and providing stimulus. If the world has another shock, the RBA has very little space to manoevere having already played it's cards.

Others say that it's overseas investors (mainly from China) that will keep buying into our property market. Back in the late 80's early 90's cashed up Japanese where doing the same. Then the Nikkei crashed and their economy went backward. Where are these investors now. 
Right now the the Chinese stock market bubble has burst and you can bet your bottom dollar foreign Chinese buyer interest will slowly start dissipating in the years ahead.


----------



## MrBurns (23 August 2015)

The share market is in deep trouble so where will the money go ? 

Traditionally into cash but the rates haven't been increased so no go there.

Perhaps into property ? The Chinese will be flooding our property market as their economy dies.

I fear that Australia will be majority Asian before long if it keeps going this way..........we are being pushed to one side.


----------



## Modest (23 August 2015)

AFR on how to sell your house in the next 18 weeks... 

http://www.afr.com/real-estate/resi...mas-and-have-a-happy-new-year-20150817-gj0wh9


----------



## waterbottle (23 August 2015)

MrBurns said:


> The share market is in deep trouble so where will the money go ?
> 
> Traditionally into cash but the rates haven't been increased so no go there.
> 
> ...




I am a bit skeptical about property prices continuing to rise because of Chinese capital as they are losing too much purchasing power: The yuan being devalued, and will probably continue to fall; Chinese markets being devalued, and also probably continue to fall; and new laws from 1 November that may actually have do their job of preventing foreign ownership. Even Australian citizens are being restricted - new APRA initiatives have started to restrict credit availability for investors and importantly, the big banks have decoupled from the RBA and begun to increase interest rates.
All of this points to a restriction on credit-driven demand, meanwhile we've got new constructions happening on virtually every corner in Inner West Sydney. It's hard to see prices continuing as they have been, let alone increasing any further.


----------



## Klogg (23 August 2015)

gartley said:


> That's right!!
> 
> -  In 1991 the Japanese housing market hadn't yet either and is now down 50% in a deflationary spiral that has not ended. But the warning signs where there 1 year earlier when the stock market crashed.
> 
> ...




Reminds me of Taleb's turkey analogy. From this link:
http://www.businessinsider.com.au/nassim-talebs-black-swan-thanksgiving-turkey-2014-11



> “Consider a turkey that is fed every day,” Taleb writes. “Every single feeding will firm up the bird’s belief that it is the general rule of life to be fed every day by friendly members of the human race ‘looking out for its best interests,’ as a politician would say.
> 
> “On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief.”


----------



## trainspotter (23 August 2015)

satanoperca said:


> View attachment 53764
> 
> 
> This chart tells a thousand stories.
> ...




*BINGO* .... posted on 10th-August-2013 11:31 AM 

You HAD been warned !


----------



## shouldaindex (23 August 2015)

I read it'll take unemployment going up to 7-8% before there's a even a 5-10% decline in house prices.

That would take a major China and/or US meltdown affecting actual $ in Australia (not just negative sentiment), doesn't look like it'll happen this year, but I'm not an expert on global stuff.


----------



## Smurf1976 (23 August 2015)

A common logic seems to be that "the money has to go somewhere, so if not property then where?" followed by arguments that it won't be shares, gold etc because they're already not doing too well.

If we get what used to be known as a credit crunch, and there seem to be a few hints that we're heading that way at least to a modest extent with tightening lending criteria and so on, well then that changes everything. You don't need to worry about where the money will go if there isn't much money around in the first place. 

Thinking of people I know and businesses that I know a bit about, they're pretty much all doing the same thing. Repaying debt and reducing risk. I don't see anyone borrowing big to buy anything they don't need but I do see plenty choosing to not travel or otherwise spend so as to reduce debt. Obviously that's a small sample, but I do think that mindset is becoming a lot more common that it was a few years ago. Now, if this idea becomes mainstream and "normal" then, given the huge amount of private debt that's around, it could continue for a very long time.

So will the money keep going into property? Or will it be stocks or gold or bonds? Or will the money simply be repaid and not be invested in anything? That outcome seems plausible to me at least to some extent.


----------



## rimtas (23 August 2015)

Smurf1976 said:


> A common logic seems to be that "the money has to go somewhere, so if not property then where?"





Why money has to go somewhere? Money doesn't has legs, it is not moving by itself. It is the state of mind that controls movements of money. When everyone is scared, they will be more than happy to earn 1% per anum in their savings accounts.
Also, money kept in hares and real estate just disappears, goes in smoke, they won't move anywhere. Only cash is capable of moving somewhere if the owner allows this action.


----------



## wayneL (23 August 2015)

Money simply repaid = collapse of fiat money system. This is the problem we currently (possibly) face.... Credit saturation.


----------



## waterbottle (23 August 2015)

trainspotter said:


> *BINGO* .... posted on 10th-August-2013 11:31 AM
> 
> You HAD been warned !




eh, the Aus Guvmint found a solution to this problem: import demand from overseas in the form of Chinese speculators.
What was once Australian FHOB v. Aussie Investor/speculator has now turned into Aussie Investor/speculator v. Chinese speculator with the only certain winners being developers.


----------



## sptrawler (23 August 2015)

wayneL said:


> Money simply repaid = collapse of fiat money system. This is the problem we currently (possibly) face.... Credit saturation.




That could be the reason China is stockpiling gold. They own $hit loads of U.S bonds money etc and the U.S has being undermining the value of their dollar, to make their businesses competitive.

I guess sooner or later, there will be a call to again tie currencies, to an underlying asset. 

It won't work every time, to just print money, it worked for the U.S this time, but I can't see everyone wearing it again.


----------



## sydboy007 (26 August 2015)

me thinks this is the proverbial taxi drivers talking about stocks




Just think, there's no limit to what you can earn from being a broker.


----------



## shouldaindex (26 August 2015)

I'd turn up for an Apple TV!

Anyways, the real bear leg of the market will probably move when house prices move.

Been an entertaining few days on the market, but we're back to 5183 now (Friday afternoon's price).


----------



## RazzaDazzla (27 August 2015)

Sounds a bit like the white label "stock trading" platforms that people can re-sell with a borrowed AFS license.

I digress. My Mortgage broker told me today of CBA offering 2 year fixed loan for 4.19%. This is considerably cheaper than their discounted variable rate. My gut says this is because CBA thinks interest rates are heading lower.


----------



## scub (27 August 2015)

Just read back to the beginning of thread .
Apparently in 2009 Melbourne was in the throes of a property bubble.

Another aspect of our current " over valuation" is  over seas buyers (esp if locked into pound or USD ( read Yuan  till 2 weeks ago)) see AUS  property as one third cheaper to buy than 2 years ago !!

So we are  not overpriced ; we just have to move out of the way for the next lot ( maybe it's Khama)   

Scub


----------



## shouldaindex (27 August 2015)

In 2009, prices grew 5.5% in the quarter this thread was started.

2 quarters later, property declined for 2 years.

http://www.abs.gov.au/AUSSTATS/abs@...6C98C9DCC772ECD4CA257B63001430EA?opendocument

Similar 2004, 3 quarters of 4, 5, 6% before going negative for 18 months.

http://www.abs.gov.au/AUSSTATS/abs@...70FFF157FB8E05B9CA2568A90013937B?opendocument


----------



## MrBurns (27 August 2015)

Anyone know what happened to robots ?


----------



## Junior (28 August 2015)

MrBurns said:


> Anyone know what happened to robots ?




I miss that guy....sunshine and lollipops.


----------



## trainspotter (1 September 2015)

MrBurns said:


> Anyone know what happened to robots ?




Living the dream and riding on the trams man !

APRA must be wringing their hands ...



> Loans to property investors across Australia kept on rising in July, according to figures released on Monday, despite banks starting to try to discourage landlords.
> 
> The Australian Prudential Regulation Authority (APRA) monthly banking statistics show that $539.5 billion worth of loans to property investors were on the books in July 2015, a jump of 22.8 per cent since July 2014.




http://www.domain.com.au/news/apra-figures-yet-to-show-signs-of-investor-slowdown-20150831-gjbbas/

Hmmmm maybe they aren't aware of this ....



> The Reserve Bank of Australia said last year that clearance rates were highly correlated to house prices.
> 
> *Sydney recorded its lowest clearance rate of the year at 80 per cent on the weekend*, according to Domain's latest auction data, which is the first sign of a slowing market.
> 
> "Over the last six weeks we have seen five drops and the trend is clearly down," Domain's senior economist Andrew Wilson said.




Read more: http://www.afr.com/real-estate/resi...ousing-slowdown-20150713-giayov#ixzz3kSrPE1uP


----------



## satanoperca (1 September 2015)

http://www.afr.com/news/policy/budg...mulative-deficits-in-60-years-20150505-gguuug
Got to love numbers.



> Back in the 1977 and 1983 recessions, the household debt-to-income ratio was only 34 per cent and 37 per cent, respectively. Even in the 1991 recession, it was just 48 per cent, which is one reason why home loan arrears were so benign.
> 
> Yet by 2015, the household debt-to-income ratio had jumped 3.2 times to an incredible *154 *per cent, which is above its pre-GFC climax because families *haven't deleveraged*.




Nothing can go wrong, just ask Joe - worlds best treasurer 3 years running


----------



## trainspotter (1 September 2015)

satanoperca said:


> http://www.afr.com/news/policy/budg...mulative-deficits-in-60-years-20150505-gguuug
> Got to love numbers.
> 
> Nothing can go wrong, just ask Joe - worlds best treasurer 3 years running






> A DEBT binge by households is putting people in dangerous financial positions and leaving them unprepared for future interest rate rises.
> 
> Despite falling interest making it easier to pay down loans, Australian households now owe* almost $1600 billion, a 28 per cent rise in just five years,* and economists say our personal borrowing levels are among the highest in the world.




http://www.news.com.au/finance/mone...-billion-in-debt/story-e6frfmcr-1227289530147

I blame the Labor Government for this .... $900 bonus and all HAHA !!



> Mr Woskett said most people aged under 40 could not remember Australia’s last recession in the early 1990s. _“Maybe some older folk may also have dusty memories,”_ he said.
> 
> “Then in 2008 we had a GFC. The government of the day built some schools as part of the stimulus package, while many people received *a bonus $900 to go shopping*. I recall younger workers saying to me *‘hey, if this is a crisis, bring it on’.*”




http://www.news.com.au/finance/mone...-billion-in-debt/story-e6frfmcr-1227289530147

Just gonna dust off my memory bank ... ERROR ERROR


----------



## sptrawler (1 September 2015)

trainspotter said:


> http://www.news.com.au/finance/mone...-billion-in-debt/story-e6frfmcr-1227289530147
> 
> I blame the Labor Government for this .... $900 bonus and all HAHA !!
> 
> ...




I've never seen anything like it, the young don't stress about debt, the way I did.


----------



## waterbottle (1 September 2015)

sptrawler said:


> I've never seen anything like it, the young don't stress about debt, the way I did.




Why should they when all they've been taught is that debt is good and debt is the only path to riches :


----------



## gartley (5 September 2015)

I was wondering if anyone has ever had anything to do with, or heard of this guy?

He claims to be a property cycle guru and is saying current cycle is no where near finishing and will run for at least another  14-15 years.  Hard believe if the stock price trend of the big four banks is any guide at present??

He says property prices follow cycles of 14 years of expansion followed by 4 years of contraction (18 year fixed cycle)


http://www.phillipjanderson.com/18-year-real-estate-cycle/


----------



## Junior (5 September 2015)

What would 14 more years of property price expansion do to this graph?

I guess we might find out!  The 4 year 'debt reduction' phase which follows would be interesting.


----------



## shouldaindex (5 September 2015)

RE: That sales person. I love cyclical information, but it's dangerous to make black and white judgements from them.


----------



## Mrmagoo (10 September 2015)

Question:

If the AUD drops, what happens to the cost of funding credit ?


----------



## sydboy007 (10 September 2015)

Mrmagoo said:


> Question:
> 
> If the AUD drops, what happens to the cost of funding credit ?




Why do you think all the banks were so quick to rush with rate rises on IP loans 

CBA CDS spreads have been on a continual rise over the year.  

Atg least before the GFC we had generational high interest rates.  They were able to mask the 130+ basis points increase in rates the banks had to pay for off shore borrowing.  Remember local 5 year TDs got to 8%.

Now, the RBA might be able to help insulate the first 100 basis points then after that it's either bank profits or higher interest rates.


----------



## sinner (10 September 2015)

Mrmagoo said:


> Question:
> 
> If the AUD drops, what happens to the cost of funding credit ?




If the funding happens in other currencies then the cost of funding is partially a function of the AUD exchange rate.

If the funding happens in AUD (which I think it mostly does these days), nothing.


----------



## sydboy007 (10 September 2015)

It's never been a better time to buy




Pity those with an IP in Darwin or Perth, and the mining CAPEX cliff has much further to drop us.


----------



## trainspotter (10 September 2015)

gartley said:


> I was wondering if anyone has ever had anything to do with, or heard of this guy?
> 
> He claims to be a property cycle guru and is saying current cycle is no where near finishing and will run for at least another  14-15 years.  Hard believe if the stock price trend of the big four banks is any guide at present??
> 
> ...




Does not make sense? If he is stating it takes 14 years of growth and 4 years of shrinkage he is sadly mistaken as property has risen consistently for 20 years now in the capital cities. CERTAIN areas are contracting (Perth & Darwin) but this is due to mining associated downturns. Heat has come out of the market with APRA and banks slowing lending to investors blah blah blah ... me thinks he is spruiking?

http://www.macrobusiness.com.au/2013/02/the-history-of-australian-property-values/

Taken from his website ...



> 2013:
> THE NEXT GREAT BOOM IS COMING
> 
> ‘We are now (have been since the late 1990s commodity lows) on the upside of the Kondratiev commodity price wave,* so commodity prices will stay high, (relatively) and indeed are set to go higher till the mid 2020s.* (Assuming I suppose the cycle repeats.) With effectively zero holding costs on real estate, unemployment low, *commodity prices set to stay high*, does this help you to see why I stay bullish on world events? Add to this mix the relentless technological developments AND the* lower and set-to-go-even lower energy costs*, and you have things tailor-made for another real estate cycle in the mid 2020s, something similar to all the prior ones we’ve had.’




http://www.phillipjanderson.com/past-forecasts/

DERP ! 

WHOOPS ... He meant the US of A and "generally" the rest of the world !



> *Granted, I make an assumption*. And that is the cyclical behaviour I’ve discovered will repeat. But once you discover the fundamental law of economics — 19th Century economist David Ricardo’s Theory of Rent — you’ll see that a repeat is all but inevitable. Why? Because the underlying structure of the economy never changes, despite the endless fiddling and additions in regulations and laws.
> 
> You can see this most clearly in the *history of the United States*.




http://www.phillipjanderson.com/18-year-real-estate-cycle/


----------



## sinner (11 September 2015)

trainspotter said:


> Does not make sense? If he is stating it takes 14 years of growth and 4 years of shrinkage he is sadly mistaken as property has risen consistently for 20 years now in the capital cities. CERTAIN areas are contracting (Perth & Darwin) but this is due to mining associated downturns. Heat has come out of the market with APRA and banks slowing lending to investors blah blah blah ... me thinks he is spruiking?




On his website it has a bunch of his calls.

I like this one from 2013:


> 2013:
> The Next Great Boom is Coming
> 
> ‘We are now (have been since the late 1990s commodity lows) on the upside of the Kondratiev commodity price wave, so commodity prices will stay high, (relatively) and indeed are set to go higher till the mid 2020s. (Assuming I suppose the cycle repeats.) With effectively zero holding costs on real estate, unemployment low, commodity prices set to stay high, does this help you to see why I stay bullish on world events? Add to this mix the relentless technological developments AND the lower and set-to-go-even lower energy costs, and you have things tailor-made for another real estate cycle in the mid 2020s, something similar to all the prior ones we’ve had.’




I wonder which commodities he meant


----------



## notting (14 September 2015)

OOops



> Tenants market: residential rents are barely budging.
> 
> Chinese are struggle to shift money out of the country following Beijing's move to tighten capital controls, the AFR is reporting quoting local property agents.
> 
> ...




I have been waiting for this!  In the hope that there will now be a glut in supply and apartment prices in Melbourne and Sydney will collapse and we can start buying entire blocks from developers.

But it was a bit of hope for the economy as it was a significant investment countering the effects of the drop off in mining investment.  I don't mind the Chinese buying new apartments, because I new it was a losing game.


----------



## velloxal (17 September 2015)

http://www.macrobusiness.com.au/2013/02/the-history-of-australian-property-values/


Thanks for fantastic site.  Saved me time to look for it :


----------



## Mrmagoo (20 September 2015)

Lets see... silly geriatrics thought $1 million appears out of thin air because "they worked so hard" and that money was borrowed, from a clever investor (i.e banks etal).

Mythical, magical, and borrowed money coming out of a magic goats **** making property owners rich. No one thought to question that ? I can think of another country where magical borrowed money flowed out of a goats ****. Greece.


----------



## notting (21 September 2015)

> There is a tsunami of home supply coming," said Nigel Stapledon, head of real estate research at the University of New South Wales Business School and former chief economist at Westpac.
> 
> "The market is going to be tested in accepting this sort of supply. It's not like there is economic growth to support it. Income growth has gone from boom time to the lowest in a number of years and population growth has eased back."




Coupled with China curbing the leaky boat of money fleeing into international property. It's about time we had a reality check.


----------



## sptrawler (21 September 2015)

notting said:


> Coupled with China curbing the leaky boat of money fleeing into international property. It's about time we had a reality check.




It's a win/win for the Government, there is an oversupply of housing, which deflates prices, rents and supplies housing for the poor.


----------



## Mrmagoo (22 September 2015)

Can't wait for the boomer tears /s

Boomers

"I just got laid off from my 100k a year job of thirty years working in an office organising stationary that I worked hard for after finishing year 10. I only got a $200,000 redundancy and can now only afford to buy 6 investment properties instead of 7 and will have to cut short our yearly trip to Europe during retirement from 4 months to 3 months. It still may be okay because I have a $1,000,000 in inheritance coming soon. It is so unfair that my work life was cut short, please Mr Government do something to ease our suffering boo hoo hoo".

Gen Y:

"I now have to sleep in my car"
"We can't afford to feed our children anymore"


----------



## trainspotter (22 September 2015)

Try Googling Gen Y "Age of Entitlement" ....



> Boomers are committed, hard working and career focused – which has caused them to be tagged as workaholics by Gen X and Gen Y. The Baby Boomer work ethic is also characterised by dedication, loyalty and a willingness to stay in the same job for a long time. They have a lot to offer businesses with their work and life experience, skills and knowledge that many younger people can’t offer. They tend to work longer hours – and respect is paramount when managing a Baby Boomer.




http://www.careerfaqs.com.au/news/news-and-views/workplace-warfare-baby-boomers-gen-x-and-gen-y/



Gen Y 

"We can't afford to feed our kids but we have the Iphone 6s strapped to our ears and blindingly fast internet"

Or you could do this instead ...



> THEY’RE in their mid-20s and earn average incomes, yet Emily Sharp and Luke Rogers own 22 homes ”” 19 purchased in the last year alone.
> The Sydney couple’s $3 million property portfolio includes homes in Sydney, the Blue Mountains, Central Coast and Queensland, which they’ve purchased mostly over the past 12 months despite one of the biggest price booms in history.
> Ms Sharp, 25, and Mr Rogers, 24, purchased their homes with no financial help from friends or family and have relied instead on a clever home buying strategy and savings from their salaries ”” she works a graduate position in marketing, he works in the army.
> They owe their success to a mix of determination and strict saving, Mr Rogers said.




http://www.news.com.au/finance/real...in-a-single-year/story-fnd91nhy-1227533445956


----------



## satanoperca (22 September 2015)

Hi TS,

While I agree with your opinion on Boomers vs Gen Y (who are generally lazy as they have not experienced a recession due to our RBA delaying it, you need a recession to reset things when they get out of wack).

The article you linked to is a bit mainstream B...S. It doesn't mentioned their debt levels or LVR's. They could only have 10% equity in their entire portfolio, not much to go by if there is a correction.

Cheers


----------



## trainspotter (22 September 2015)

satanoperca said:


> Hi TS,
> 
> While I agree with your opinion on Boomers vs Gen Y (who are generally lazy as they have not experienced a recession due to our RBA delaying it, you need a recession to reset things when they get out of wack).
> 
> ...




Not my opinion at all ... I am a Gen X myself being born after 1964 

Mrmagoo was whinging how HARD it is and how EASY the Boomers have had it Pffffffffffttttttttttt !!!!!!

The article was to evidence that it is possible to be in your 20's and own property. How much they are leveraged and do they have income to cover loss of rental $$$ who cares or in the event of a downturn it is all doom and gloom. The fact of the matter is that it is possible to own property in this current climate.


----------



## sptrawler (22 September 2015)

trainspotter said:


> Not my opinion at all ... I am a Gen X myself being born after 1964
> 
> Mrmagoo was whinging how HARD it is and how EASY the Boomers have had it Pffffffffffttttttttttt !!!!!!
> 
> The article was to evidence that it is possible to be in your 20's and own property. How much they are leveraged and do they have income to cover loss of rental $$$ who cares or in the event of a downturn it is all doom and gloom. The fact of the matter is that it is possible to own property in this current climate.




Well TS, I'm a boomer and pretty comfortable, due to hard work and doing without.
I tried to instill this in my kids, but have failed miserably, they spend everything they earn.

We still don't spend money on phones, cosmetics, going out etc.
The only extravagence would be one overseas holiday a year.

Now that things are getting tight, they are getting worried, due to no savings and excessive debt.

As they say, you can't put old heads on young shoulders, they have to learn from experience.


----------



## vrahul1984 (24 September 2015)

trainspotter said:


> *BINGO* .... posted on 10th-August-2013 11:31 AM
> 
> You HAD been warned !




hi, price hike purely depends upon country's economic condition as few of above mentioned authors tries to conclude some points to show the reason behind price hike. well, i must say, if you want to earn a property in Australia, you need to plan it properly with government aided funds.

Regards !


----------



## Mrmagoo (25 September 2015)

trainspotter said:


> Try Googling Gen Y "Age of Entitlement" ....
> 
> 
> 
> ...





Are you honestly suggesting that technological progress is the fault of generation Y ?

Are you ignorant or are you just attempting to troll me ? Because in all seriousness, the iPhone argument would suggest that it is made by someone either trolling or suffering some form of brain injury. And I don't mean that to be insulting, brain injuries can affect the logical center of the brain.

Either way I don't see a reason to continue to argue this one. However, if you genuinely believe what you said I suggest making a trip to your local GP to get some brain scans done.


----------



## Mrmagoo (25 September 2015)

sptrawler said:


> Well TS, I'm a boomer and pretty comfortable, due to hard work and doing without.
> I tried to instill this in my kids, but have failed miserably, they spend everything they earn.
> 
> We still don't spend money on phones, cosmetics, going out etc.
> ...




Hehe it is coming in a big way, people are tired of the system, they're sick of the system. The young people have given up trying to fit into it. There are no houses, no jobs, if you move further out there is no transport or infrastructure. You have now a generation of people who do not fit into society. 

I feel for the young ones of today. We have made the world bad for them when it used to be good.

My generation should have done a better job of protesting the baby boomers take over when we were young, but I guess we were too busy finding working a jobs during the boom times to notice.


----------



## satanoperca (29 September 2015)

Well this might just be the start.



> Apartments sold at a loss hit 12.6pc, CoreLogic RP Data says




Some more interesting statements :

http://www.corelogic.com.au/media-release/corelogic-pain-gain-report-reveals-biggest-winners-losers



> 9.1 % of all homes resold of the June quarter recorded a gross loss when compared to their previous purchase price, and slightly higher than the results for the March 2015 quarter at 8.9% and a slightly higher result than the 8.6% recorded over the June 2014 quarter.




Growing trend and to think with the Chinese Government implementing even tighter capital outflow controls today. Putting a cap on annual cash withdrawals, of CNY100,000 for Chinese citizens using bank cards at overseas ATMs. 

How are the developers going to fair when it comes for the large % of Chinese investors come to settle. Can see some fire sales coming on.



> For the capital city and regional markets, the lowest proportions of loss making resales are currently found in: Sydney (2.0%), Melbourne (5.7%), Perth (8.6%) and Regional Vic (8.6%).
> The highest proportions of loss making resales were recorded in: Regional WA (24.5%), Regional Qld (22.5%), Regional SA (20.9%) and Regional Tas (19.9%).




Those regional mining towns aren't looking good with the collapse in commodities.

Cannot see how the banks are going to cover **** this time. I see there has been a break down from a triangle on a downward trend on a few of the big four, how low can they go this time given they are mortgaged to the hilt this time around. To big to fall or to fail is the question.

Cheers - My brother might be coming to town after a little rest of a couple of years.


----------



## shouldaindex (29 September 2015)

I have yet to see anyone change their mind about anything on stock market forums, so people tend to find information that supports their theories, including me.

We all know a housing downturn is going to happen, but nobody knows by how much or when.


----------



## sptrawler (30 September 2015)

shouldaindex said:


> I have yet to see anyone change their mind about anything on stock market forums, so people tend to find information that supports their theories, including me.
> 
> We all know a housing downturn is going to happen, but nobody knows by how much or when.




Well my two cents worth, don't buy in Perth or country W.A, just yet.


----------



## Modest (30 September 2015)

sptrawler said:


> Well my two cents worth, don't buy in Perth or country W.A, just yet.




What are you on about mate.....

Perth is safe according to David Airey (perth property agent and former reiwa president).

“We are looking forward to a big jump in the market,” Mr Airey said.
“I don’t think there is any risk of a correction here.”

http://www.afr.com/real-estate/resi...to-march-across-the-nullarbor-20150929-gjxdos


----------



## sptrawler (30 September 2015)

Modest said:


> What are you on about mate.....
> 
> Perth is safe according to David Airey (perth property agent and former reiwa president).
> 
> ...




I'd love to know, what he is smoking.

I think, I read  that W.A has a negative population growth at the moment.


----------



## Uncle Festivus (6 October 2015)

Property bubble popped, fallout = recession. Get ready.


----------



## sptrawler (6 October 2015)

Uncle Festivus said:


> Property bubble popped, fallout = recession. Get ready.




There's nothing like a recession, to give Gen X & Y's the opportunities, the baby boomers had.

Yep, they can jump into cheap rental properties.

Distressed companies, great companies at bargain prices.

Just set up your line of credit, and jump on the opportunity. 

Let's see how many do it.

My guess, it will be similar numbers, to the baby boomer's.

Nothing much changes.


----------



## Modest (7 October 2015)

http://www.perthnow.com.au/realesta...nt-up-reiwa-data/story-fnhlgriw-1227558922440


----------



## sptrawler (7 October 2015)

Modest said:


> http://www.perthnow.com.au/realesta...nt-up-reiwa-data/story-fnhlgriw-1227558922440




Who would have guessed that?

A unit over the road, was put on the market 3 months ago, for $299,000

I see it now, has a sticker price of $249,000 ONO.

Will we have generation Z saying to us in 20 years time, jeez you were lucky with those prices.

Or will we have them saying, why the hell did you pay that much?

That is why, those who don't take chances can gloat, when those who do stuff up.

But those who do take chances and win, are just lucky and have to say nothing.lol


----------



## Bill M (7 October 2015)

Uncle Festivus said:


> Property bubble popped, fallout = recession. Get ready.




Still waiting for as new, 2 bedroom , 2 bathroom apartments in good suburbs of Sydney to come down in price but it isn't happening. Why is this so?


----------



## tech/a (7 October 2015)

Bill M said:


> Still waiting for as new, 2 bedroom , 2 bathroom apartments in good suburbs of Sydney to come down in price but it isn't happening. Why is this so?




Bill

Have you ever considered Small project development.
3 or 4 to a block?


----------



## Bill M (7 October 2015)

tech/a said:


> Bill
> 
> Have you ever considered Small project development.
> 3 or 4 to a block?




I'd consider buying into one but I would never contemplate buying the land and doing it myself. I don't think I have enough money to do that or the brains to do it. I'd probably have to borrow, which I don't want to do and then hire all the professionals to do the job. I'll put that in the too hard basket, too much risk involved.


----------



## sptrawler (13 October 2015)

Perth IMO, will be in an oversupply position, in the next 12 - 18 months. 

http://www.perthnow.com.au/realesta...t/news-story/00d9da45e3ab1ce612382246335b3e10

A correction is long overdue. IMO


----------



## Modest (13 October 2015)

sptrawler said:


> Perth IMO, will be in an oversupply position, in the next 12 - 18 months.
> 
> http://www.perthnow.com.au/realesta...t/news-story/00d9da45e3ab1ce612382246335b3e10
> 
> A correction is long overdue. IMO




I have my fingers crossed the prices return to reality as I am sitting in all cash position at the moment looking for the right time to pounce for my first home.


----------



## sptrawler (13 October 2015)

Modest said:


> I have my fingers crossed the prices return to reality as I am sitting in all cash position at the moment looking for the right time to pounce for my first home.




Just make sure you research it well, you usually make the profit, when you buy. Not when you sell.

Long term, I think Perth is a great investment, just buy wisely.


----------



## PeterJ (13 October 2015)

sptrawler said:


> Just make sure you research it well, you usually make the profit, when you buy. Not when you sell.
> 
> this is great advice
> look for motivated sellers,
> ...




I have been here for 3 years now,
prices were ridiculous then and still are, even though they have dropped a little
great idea to start with a house and not an apartment

all the best 
Peter


----------



## Tom32 (13 October 2015)

sptrawler said:


> Perth IMO, will be in an oversupply position, in the next 12 - 18 months.
> 
> http://www.perthnow.com.au/realesta...t/news-story/00d9da45e3ab1ce612382246335b3e10
> 
> A correction is long overdue. IMO




From your Perth now article:

"RE/Max’s Geoff Baldwin believes WA should be reassured by the US market rebound since the GFC, despite predictions it would take that market many decades to recover."

I imagine that statement is cold comfort for property owners. as nice as it is to be a homeowner I don't expect it to be a winning investment as employment goes from mining / construction work to services / tourism if we are lucky. Not a recipe for wages growth.

One positive for owners though; on abc radio property segment this afternoon they were explaining at present is a good opportunity for upsizers as the 500k bracket hasn't fallen as far as the 1M bracket which in their example they put 150k falls as the potential saving on the table now. I don't think my employment prospects in this fine state warrant that move for myself but I can see their logic. Even if you own a home if you plan on upsizing a fall isn't the end of the world.


----------



## Klogg (14 October 2015)

Tom32 said:


> One positive for owners though; on abc radio property segment this afternoon they were explaining at present is a good opportunity for upsizers as the 500k bracket hasn't fallen as far as the 1M bracket which in their example they put 150k falls as the potential saving on the table now. I don't think my employment prospects in this fine state warrant that move for myself but I can see their logic. Even if you own a home if you plan on upsizing a fall isn't the end of the world.




I'm curious to know if this is a general rule - that higher priced property is more volatile, hence drops more during a cyclical downturn (and increases more during the upswing).

Do any statistics give this level of detail?
(Sorry, I'm being lazy - haven't investigated it a whole lot myself)


----------



## poverty (14 October 2015)

Well here we go, Westpac do a capital raising @$25.50 to protect themselves from a potential property bubble.  They just confirmed the bubble!


----------



## Tom32 (14 October 2015)

Klogg said:


> I'm curious to know if this is a general rule - that higher priced property is more volatile, hence drops more during a cyclical downturn (and increases more during the upswing).
> 
> Do any statistics give this level of detail?
> (Sorry, I'm being lazy - haven't investigated it a whole lot myself)





From what I've seen the biggest gains / falls occur in the top end but in percentages it's probably around even with exceptions Thinking through it id say it depends:

Sometimes cheap markets can go up dramatically like 2 or 3 times current price over a year or two. Things to look for here are markets where the cost to replace is 2-3 times current price. A bit of population growth and before one new house gets built (except for eccentric reasons) the market has to lift to this replacement cost minus depreciation on the existing dwellings. Think remote / rural towns. I've seen this happen plenty of times moving to these places with others to build new infrastructure etc. the premium properties don't move as much but tend to be acreages too so the replacemt cost isn't so much a factor.

I can think of government policy that would hold up the bottom of the market with the top end becoming weak. Think beaker creep and no tax changes. I can think of other changes that would hurt the bottom end: think minimum deposit requirements.


----------



## Uncle Festivus (15 October 2015)

A regional city near me, at the coal face (hint), Chinese 'investors' are still sitting on empty dwellings even though several coal mines have closed with several hundred jobs lost, which may explain why prices have not tanked completely. Just what their tolerance is and when to sell will be interesting to see, and will almost definitely result in a 'tsunami' of supply.....


----------



## poverty (15 October 2015)

Uncle Festivus said:


> A regional city near me, at the coal face (hint), Chinese 'investors' are still sitting on empty dwellings even though several coal mines have closed with several hundred jobs lost, which may explain why prices have not tanked completely. Just what their tolerance is and when to sell will be interesting to see, and will almost definitely result in a 'tsunami' of supply.....




So far we know that the faceless Chinese investors know how to buy houses.  However, I'm yet to see any evidence that they know how to sell them.


----------



## tech/a (15 October 2015)

poverty said:


> So far we know that the faceless Chinese investors know how to buy houses.  However, I'm yet to see any evidence that they know how to sell them.




They probably don't have to.
They have other agendas.
Currency protection.
Once they have an AUSSI asset 
If the $A remains stronger than the Yuan
Then they are not concerned as much with
Price fluctuations


----------



## tech/a (15 October 2015)

Further as you can see someone buying an AU property with Yuan in 2011-12
due to currency weakening they are around 50% better off than holding Yuan 
as a cash asset.

So pretty clever these Chinese are!


----------



## craft (15 October 2015)

tech/a said:


> View attachment 64658
> 
> 
> Further as you can see someone buying an AU property with Yuan in 2011-12
> ...




???????


Hope they are smarter then a duck

Frack to bunt.


----------



## skyQuake (15 October 2015)

craft said:


> ???????
> 
> 
> Hope they are smarter then a duck
> ...




Looks like they're breaking even at best. 

On the flip side if they're cashed up its a 2nd chance to buy @ 2011 prices! (in CNY)


----------



## tech/a (15 October 2015)

Yes your right.

Seems todays buyers are the smart ones.


----------



## craft (15 October 2015)

tech/a said:


> Yes your right.
> 
> Seems todays buyers are the smart ones.




Maybe, Maybe not.

Take a look at the Chinese balance of trade – it could be argued that the Yuan is still undervalued so currency strength could be a theme for a long time yet. The suppression of the Yaun and accumulation of the Chinese surplus has really been a suppression of the purchasing power of Chinese labour whilst concentrating the wealth in the hands of the capital holders.  That’s about run its course – China needs to transition from being so reliant on export and capital investment to more internal consumption so even if the Yaun never freely floats I can’t see it remaining as suppressed as it was even remaining as a controlled currency.  

Can’t say I see Aust real estate as cheap, at least not the stuff they are buying. – If the price stop rising, Chinese real-estate buyers would start to feel the currency macro tide - No more flat lining in currency adjusted terms.  If prices fall it could become a rip tide with two macros against them. How committed would they be to a losing investment?


----------



## wayneL (15 October 2015)

In keeping with the high end taking it up the @## theme, we (a group of specialist equine practitioners) have just offered 2.5m on a 4m asking price.

They haven't told us to £%& off yet. I sorta hope they don't accept, we'll get it for 1.8 next year.


----------



## CanOz (15 October 2015)

wayneL said:


> In keeping with the high end taking it up the @## theme, we (a group of specialist equine practitioners) have just offered 2.5m on a 4m asking price.
> 
> They haven't told us to £%& off yet. I sorta hope they don't accept, we'll get it for 1.8 next year.




Wayne was that on acreage? One of the RE guys we were speaking with in Brissy just paid 900k for 50 acres just outside town, for his horses....

FWIW, there's an entire housing estate right on the lake here that's bought and paid for, sitting almost completely empty...the thing they don't get is if they don't maintain these places they'll be rotted away to nothing by the time they go to do anything with them....


----------



## wayneL (15 October 2015)

CanOz said:


> Wayne was that on acreage? One of the RE guys we were speaking with in Brissy just paid 900k for 50 acres just outside town, for his horses....
> 
> FWIW, there's an entire housing estate right on the lake here that's bought and paid for, sitting almost completely empty...the thing they don't get is if they don't maintain these places they'll be rotted away to nothing by the time they go to do anything with them....




Yep acerage, Brisbane river frontage,flash as a rat with a gold tooth, only about 15 km from cbd


----------



## qldfrog (15 October 2015)

wayneL said:


> Yep acerage, Brisbane river frontage,flash as a rat with a gold tooth, only about 15 km from cbd



flooded every 10y?


----------



## wayneL (15 October 2015)

qldfrog said:


> flooded every 10y?




Nup, good side of the river. Still no accept or reject/counter offer.


----------



## Uncle Festivus (16 October 2015)

craft said:


> Maybe, Maybe not.
> 
> If the price stop rising, Chinese real-estate buyers would start to feel the currency macro tide - No more flat lining in currency adjusted terms.  If prices fall it could become a rip tide with two macros against them. How committed would they be to a losing investment?




Spot on. Starting now on both counts.......with an added supply 'tsunami'



> A home-building frenzy that is shoring up Australia's economy as the mining boom ends may also be what finally takes the steam out of one of the world's most expensive property markets.
> The case in point: Green Square. Nearly 10,000 apartments will be built in one of Sydney's newest suburbs in the next four years to satisfy investor demand, which has already sent property prices in the city to the highest ever. It will also add to the record 213,000 new home starts across the country amid slowing population and economic growth, prompting Goldman Sachs to warn of a supply glut by 2017.


----------



## tech/a (16 October 2015)

Uncle Festivus said:


> Spot on. Starting now on both counts.......with an added supply 'tsunami'




Yeh but it really seems to be localized.

Sydney 
Melbourne
Inner areas

Mining towns.

In Adelaide we work on Subdivisions and they are popping up
every week. They are released in stages and* aren't let to 
contractors to sub divide until they are at least 50% sold.*

We are currently working 3 in the outer suburbs which roll from
one to the next. Demand for these is very strong.
These are what Id call middle class suburbia. The land is either owned
by large land developers like Land SA or the bigger builders like Hickenbotham.

They sell to the public and other builders.
No land 
No building companies
No employment.
I'm seeing demand here.---been like this since 2011


----------



## satanoperca (27 October 2015)

Maybe no subprime lending by Australian banks directly, but it seems it is still happening through Chinese banks, with the Chinese buying a significant share of new apartments in Melbourne and Sydney.

From the AFR:

http://www.afr.com/markets/market-data/interest-rates/zero-deposit-loans-for-chinese-investors-to-spur-australian-property-market-20151025-gkhujs



> One of China's biggest financial institutions is offering zero-deposit home loans for off-the-plan apartments in Melbourne and the Gold Coast, a practice at odds with efforts by Australian regulators to tighten lending standards and cool the property market.




So the Chinese lending stumps up the deposit and the Australian bank loans the rest. No skin in the game makes it easier for the speculator to walk away at settlement if the price did not rise.

Nothing can go wrong here at all. 

Maybe the next global shock will come from China itself and it's poor and loose lending practices.


----------



## sptrawler (27 October 2015)

satanoperca said:


> Maybe no subprime lending by Australian banks directly, but it seems it is still happening through Chinese banks, with the Chinese buying a significant share of new apartments in Melbourne and Sydney.
> 
> From the AFR:
> 
> ...




I don't think so, China knows exactly what it is doing, the Australian banks aren't stupid.


----------



## sptrawler (1 November 2015)

Modest said:


> What are you on about mate.....
> 
> Perth is safe according to David Airey (perth property agent and former reiwa president).
> 
> ...




I told you he must be smoking something.

https://au.news.yahoo.com/thewest/a/29964289/perth-house-prices-hit-by-record-fall/


----------



## wayneL (2 November 2015)

Reality check

36 squares, 30 min drive from Houston CBD. Not even the best value just mid range in the burbs

http://www.realtor.com/realestatean...-Park-Ln_Houston_TX_77070_M84656-67781?row=10


----------



## tech/a (2 November 2015)

Wayne
That's still about $400k AUD
You can get similar here in Adelaide.
20k out. No doubt it's good buying!

You wouldn't in Sydney,Brisbane,Perth or Melbourne

Nor would you in LA,Washington,Chicago or New York.


----------



## Bill M (2 November 2015)

For 400K AUD you can buy this house which is 1 hour north of Hornsby or 1 and a half hours from Sydney. I think I would prefer the Central Coast to Houston.

http://www.realestate.com.au/property-house-nsw-hamlyn+terrace-120671689


----------



## Beej (2 November 2015)

tech/a said:


> Wayne
> That's still about $400k AUD
> You can get similar here in Adelaide.
> 20k out. No doubt it's good buying!
> ...



Not to mention the annual property taxes you have to pay on a house in Houston - on that property you would be looking at $US5k-$10k/year or more - that's the equivalent to paying another $US100k-$US200k up front for the property (roughly, based on a 5% interest rate) - due to the higher ongoing (forever) property tax liability compared to Oz, making it equivalent to a purchase of an oz house for probably around $AU600k-$700k+.

Maybe not as cheap as you think?


----------



## McLovin (2 November 2015)

tech/a said:


> Wayne
> That's still about $400k AUD
> You can get similar here in Adelaide.
> 20k out. No doubt it's good buying!
> ...




Not to mention the $10k/year in property taxes on that property. No state income tax in TX so they make up for it with property taxes.


----------



## qldfrog (2 November 2015)

well, I invite you to look at the actual houses (open links and visit) and I do not think the houses can compare in any way;
I am sure you can find cheap houses in the middle of woop woop in the US too.
Even with the lower AUD, houses here are still far too expensives compared to O/S


----------



## luutzu (2 November 2015)

qldfrog said:


> well, I invite you to look at the actual houses (open links and visit) and I do not think the houses can compare in any way;
> I am sure you can find cheap houses in the middle of woop woop in the US too.
> Even with the lower AUD, houses here are still far too expensives compared to O/S




I don't know how high 19ft ceiling is or how big 4000 sq feet it, going to Houston 

Went to those homeworld places and a house similar to that would cost something like 800 to $1M to build here.


A couple years ago a few houses near my parents in Fairfield, Western Sydney... land around 850m2, good flat land with wide frontage... fibro house will need to be cleared and two of them goes for $700k each; the third sold for $920 a few months later.

It's insane.


----------



## finnsk (3 November 2015)

Try this for insane
http://www.domain.com.au/402-7-sylvan-avenue-balgowlah-nsw-2093-2012306994?sp=4


----------



## luutzu (3 November 2015)

finnsk said:


> Try this for insane
> http://www.domain.com.au/402-7-sylvan-avenue-balgowlah-nsw-2093-2012306994?sp=4




Maybe it's really nice and spacious on the outside


----------



## trainspotter (3 November 2015)

Now this is INSANE !!!!!!!

http://www.heraldsun.com.au/realest...a/news-story/fad2aebbe74810c1a07fad8374a7a0b8

When you read it make reference to the EDDIE McGUIRE veiled finger point. 

$30,000 / sqm Pffffffffffffffffffftttttttttttttttt !!!!!!!!!!


----------



## Bill M (3 November 2015)

finnsk said:


> Try this for insane
> http://www.domain.com.au/402-7-sylvan-avenue-balgowlah-nsw-2093-2012306994?sp=4






luutzu said:


> Maybe it's really nice and spacious on the outside




I know that building and area like the back of my hand. It is a fairly new complex, city buses at the door, a big club on it's premises, big supermarket downstairs, Bunnings down the road, several boutique shops within a couple of minutes walk, Dentists and Doctors in the complex, bottle shops and several restaurants within walking distance and Manly is a 5 minute bus or car ride away. It is all about position, position, position, whether it's worth 895K is another matter, but it's a nice area. You wouldn't really need a car living there. I lived on the northern beaches most of my life.


----------



## CanOz (3 November 2015)

finnsk said:


> Try this for insane
> http://www.domain.com.au/402-7-sylvan-avenue-balgowlah-nsw-2093-2012306994?sp=4




I like that, not a bad deal at all for Sydney.


----------



## luutzu (4 November 2015)

Bill M said:


> I know that building and area like the back of my hand. It is a fairly new complex, city buses at the door, a big club on it's premises, big supermarket downstairs, Bunnings down the road, several boutique shops within a couple of minutes walk, Dentists and Doctors in the complex, bottle shops and several restaurants within walking distance and Manly is a 5 minute bus or car ride away. It is all about position, position, position, whether it's worth 895K is another matter, but it's a nice area. You wouldn't really need a car living there. I lived on the northern beaches most of my life.




Don't tell me you sold a similar place and got out of town

Yea I can see the attraction. Wouldn't mind living in the city when I was young and if the folks were loaded  Still don't mind now seeing the museums and other attractions... but will need a spare $5 to $10M for the kind of place I'd like... yup, when you're dreaming might as well dream big I'd say.

But yea $895K is another matter for that flat.
How do you start a family there? Maybe 1 kid til they're 2 years before you need to upgrade. But then you can't because you just spent $1m on the place and the market just crashed.


----------



## luutzu (4 November 2015)

trainspotter said:


> Now this is INSANE !!!!!!!
> 
> http://www.heraldsun.com.au/realest...a/news-story/fad2aebbe74810c1a07fad8374a7a0b8
> 
> ...




Hard to beat that insanity.

Maybe except for those couple Chinese who bought those $20 million, perfectly liveable estates just to knock it down and rebuilt?

I'm starting to think that maybe some rich people didn't get rich because they know how to handle money or have much sense about money.


----------



## Bill M (4 November 2015)

luutzu said:


> *Don't tell me you sold a similar place and got out of town*
> 
> Yea I can see the attraction. Wouldn't mind living in the city when I was young and if the folks were loaded  Still don't mind now seeing the museums and other attractions... but will need a spare $5 to $10M for the kind of place I'd like... yup, when you're dreaming might as well dream big I'd say.
> 
> ...




Yeah I did but not at those kinds of prices. The type of people who buy those sorts of places are high income couples working in the city with no kids, "DINKS" they use to call them them (double income no kids). They have plenty of disposable income and use their weekends to entertain and drink fine wine on their extra large balconies. 

They buy that sort of place for the convenience of getting to town and having everything at their doorstep and they love modern apartments with top class appliances and building security. Normally they work hard and save their $$$ and by the time a kid comes along it's time to move on and they buy a house.  If that apartment was 2 bedroom it would be worth it to me but only 1 bedroom? I don't think so.


----------



## poverty (4 November 2015)

luutzu said:


> I'm starting to think that maybe some rich people didn't get rich because they know how to handle money or have much sense about money.




Definitely true in China, corruption and bribery is the path to riches there.


----------



## Mrmagoo (4 November 2015)

wayneL said:


> Reality check
> 
> 36 squares, 30 min drive from Houston CBD. Not even the best value just mid range in the burbs
> 
> ...




400k aud, but it is a big well kept home is a decent area, 30 minutes from the CBD.

That is what Australia used to be like.

The homes far away were cheap, for working class people. The homes a bit closer were bit more for people with careers and jobs/two incomes.

It wasn't "must be a millionaire" territory as it is now.


----------



## Mrmagoo (4 November 2015)

tech/a said:


> Wayne
> That's still about $400k AUD
> You can get similar here in Adelaide.
> 20k out. No doubt it's good buying!
> ...




There are more job opportunities in the USA. Their unemployment rate is lower. Australia is only better if you're a rich tradesman or property investor.


----------



## McLovin (4 November 2015)

qldfrog said:


> well, I invite you to look at the actual houses (open links and visit) and I do not think the houses can compare in any way;
> I am sure you can find cheap houses in the middle of woop woop in the US too.
> Even with the lower AUD, houses here are still far too expensives compared to O/S




I'd hardly call the Central Coast whoop-whoop. Median household income in Sydney ~$75k, in Houston US$44k or roughly $60k at current fx rate. Add in the $10k in property tax and that house in Houston doesn't look  like such a steal.

And that's before you get to the part where you have to live in Houston.


----------



## skcots (4 November 2015)

McLovin said:


> I'd hardly call the Central Coast whoop-whoop. Median household income in Sydney ~$75k, in Houston US$44k or roughly $60k at current fx rate. Add in the $10k in property tax and that house in Houston doesn't look  like such a steal.
> 
> And that's before you get to the part where you have to live in Houston.




From a numbers game the house in Houstan is appealing whether I would like it there or not is a different story. 

Property tax on that house would be $7500 AUD which is far less then the income tax and medicare levy of $17500 AUD for Mr Median.


----------



## McLovin (4 November 2015)

skcots said:


> From a numbers game the house in Houstan is appealing whether I would like it there or not is a different story.
> 
> Property tax on that house would be $7500 AUD which is far less then the income tax and medicare levy of $17500 AUD for Mr Median.




The tax on that house last year was $US6,558 so around AU$9,400, the year before that it was over US$7,000. Property tax is not a replacement for income tax. You would still be paying US federal income tax at marginal rates _and_ FICA at 6.2%.

ETA: It's 30 miles (50kms) from the Houston CBD, not 30 minutes, unless you own a helicopter.


----------



## skcots (4 November 2015)

McLovin said:


> The tax on that house last year was $US6,558 so around AU$9,400, the year before that it was over US$7,000. Property tax is not a replacement for income tax. You would still be paying US federal income tax at marginal rates _and_ FICA at 6.2%.




So much the same annual cost as living in Sydney then.



McLovin said:


> ETA: It's 30 miles (50kms) from the Houston CBD, not 30 minutes, unless you own a helicopter.




Google maps says 26 minutes with no traffic or helicopter.


----------



## McLovin (4 November 2015)

skcots said:


> So much the same annual cost as living in Sydney then.




Not really. You'd be about $7k worse off. I imagine for someone earning $75k/year that's not chicken feed. Let's say you're earning the Sydney median in Houston, that's ~US$52,500. You'll be left with US$42,140, so you will have paid AU$14,800 in income tax + FICA. In Australia you would have paid $17,422 in tax. So you're about $2,600 better off on income tax (but you've got no healthcare). Then you have to add $9,400 in property taxes. So you end up $6,800 worse off in Houston. I'm not suggesting houses are cheap in Australia but wages are substantially lower in Houston and property is more highly taxed so you'd expect property to be cheaper.



skcots said:


> Google maps says 26 minutes with no traffic or helicopter.




Well then I'm wrong.


----------



## wayneL (4 November 2015)

Guys, guys!

I really thought you lot would be smart enough not to use exchange rates for comparative valuations.

Not so long ago it would have made the Houston house even cheaper.

You have to use the earnings of a family that might live in a house like that (and property taxes ARE a good point thanks McLovin, but even then only as a component of overall tax take). WIthout doing the maths, I believe it still represents better value than Oz... and in particular the cramped hovel that BillM offered up.

I had a colleague come out from Texas for some CPE, she was stunned, no, completely ****ing blown away by ( as a ratio to achievable net earnings in my field) a/ our far greater cost of living and b/ the ridiculous cost of real estate here.... and this was western burbs Brisbane, not even Sodom and Gomorrah to the south.


----------



## Vixs (4 November 2015)

wayneL said:


> Guys, guys!
> 
> ...
> 
> I had a colleague come out from Texas for some CPE, she was stunned, no, completely ****ing blown away by ( as a ratio to achievable net earnings in my field) a/ our far greater cost of living and b/ the ridiculous cost of real estate here.... and this was western burbs Brisbane, not even Sodom and Gomorrah to the south.




Comparing Sydney and Melbourne to Sodom and Gomorrah is by far my favourite part of this thread so far.


----------



## CanOz (4 November 2015)

wayneL said:


> Guys, guys!
> 
> I really thought you lot would be smart enough not to use exchange rates for comparative valuations.
> 
> ...




There is no question that property prices are too high in Australia. We just paid north of 500k for a 3 bedroom TH in Morningside. I could have bought a mansion in Maine, on the water (waterfront).

The question is, how long will they stay like this? No one knows....until the Chinese decide to start selling maybe?

The US i feel is not a great comparision. Wages are the polar oppostite of Union land....My mate that works for a Michigan based steel works makes 30 per hour double time the entire time he is seconded to here, skilled trade too. Him and i had drinks with an old pal of mine from B'rat that we met in TL, a Union rep no less that drives a water hose on night shift, he was making 25 / hour straight time! That 400k house can seem out of reach to those guys...My mates house in Michigan is a shack, he paid 30k for it on 2 acres. Thats in the thumb, middle of no where. Down the road in the 'city' close to Bad Axe, they'll pay 130k for decent 3 bedroom place on a couple of acres.


----------



## qldfrog (4 November 2015)

CanOz said:


> ..My mates house in Michigan is a shack, he paid 30k for it on 2 acres. Thats in the thumb, middle of no where. Down the road in the 'city' close to Bad Axe, they'll pay 130k for decent 3 bedroom place on a couple of acres.



but your mate could buy a crappy place cheap, I am afraid in australia, this is not the case.
I am actually surprised by the lack of differential between capital city commuting range and real outer area with no job;
Alice Spring would not offer you a shack on 2 acres for 50kAUD..
I check just in case


----------



## qldfrog (4 November 2015)

140k cheapest place in AS greater area
1 bedroom motel room style..for "investor"
seriously


----------



## CanOz (4 November 2015)

qldfrog said:


> 140k cheapest place in AS greater area
> 1 bedroom motel room style..for "investor"
> seriously




Alice is a little touristy....

In my mind someplace similar to the thumb might be like Smithton Tas.


----------



## qldfrog (4 November 2015)

tasmania is not exactly texas  in term of comparison but very seriously:
What/where is the cheapest place in australia nowadays? 
And how much is this cheapest place, taking it as a given it will not be touristy, offer any employment or great environment...
That is what I mean, in Oz even crap is dear, and relatively uniformally dear
cheapest I could find is a trailer park in stanley tasmania for 109000!! yeap
Even Smithton Tas is too dear


----------



## qldfrog (5 November 2015)

http://www.realestate.com.au/property-other-tas-queenstown-120676257
queenstown, 25k probably lowest?
And in Qld, blackwater  a former darling of the crazy rent during the mining boom now has quite a few below 50k offers


----------



## Smurf1976 (5 November 2015)

Whilst historically Queenstown has been absolutely tied to mining, a point that's _extremely_ obvious as soon as you get there, these days the town is trying (with some success) to reinvent itself as a tourist destination.

The West Coast Wilderness Railway (steam) is the big one but there's also a few other things. Tours down the mine is one thing (pretty sure it's the only mine in Australia where literally anyone can go underground for a look) and also there's a rafting business set up on the King River. They've also got the Queenstown Heritage & Arts festival going with considerable success with the most recent one. 

Employment is still a huge problem, but they haven't simply rolled over to die as many other former mining towns have done around the country. Population has dropped, thus creating a surplus of housing, but the town isn't dead and locals seem pretty determined not to end up that way.


----------



## trainspotter (5 November 2015)

Guess where this spot is and you can buy in for $99,000 (vacant land) for 310m2 and 200m walk to the ocean?


----------



## trainspotter (6 November 2015)

Here is a hint https://www.youtube.com/watch?v=ZeJXVJLN0Gw&feature=youtu.be


----------



## Wysiwyg (6 November 2015)

Where's the trees, bro? Actually, I don't mind the flat, windy, saltbush and sand environment.


----------



## sptrawler (6 November 2015)

Perth's property prices keep rolling along, it's just a shame it's down hill and the pace is accelerating.

http://www.perthnow.com.au/realesta...t/news-story/da43bc1cd034231cfd72605f8d055b2d


----------



## banco (6 November 2015)

sptrawler said:


> Perth's property prices keep rolling along, it's just a shame it's down hill and the pace is accelerating.
> 
> http://www.perthnow.com.au/realesta...t/news-story/da43bc1cd034231cfd72605f8d055b2d




Shame for who?


----------



## trainspotter (6 November 2015)

Wysiwyg said:


> Where's the trees, bro? Actually, I don't mind the flat, windy, saltbush and sand environment.




Trees?? Cut them all down to do the development bro.


----------



## McLovin (6 November 2015)

wayneL said:


> Guys, guys!
> 
> I really thought you lot would be smart enough not to use exchange rates for comparative valuations.
> 
> ...




I more or less agree with you, wayne. I only used exchange rates to be illustrative. There are so many inputs that go into determining property prices that it's pretty hard to make broad generalisations (beyond the obvious that prices are high in Australia).

After income tax and health insurance I'd say you would be at best in the same situation, disposable income wise, as  in Australia. Add in the property tax and you're really setting a pretty low ceiling for the average home-buyer before they max out their budget. You could of course make a reasonable argument that a tax on property to keep gearing down isn't such a bad thing.


----------



## McLovin (6 November 2015)

McLovin said:


> I more or less agree with you, wayne. I only used exchange rates to be illustrative. There are so many inputs that go into determining property prices that it's pretty hard to make broad generalisations (beyond the obvious that prices are high in Australia).
> 
> After income tax and health insurance I'd say you would be at best in the same situation, disposable income wise, as  in Australia. Add in the property tax and you're really setting a pretty low ceiling for the average home-buyer before they max out their budget. You could of course make a reasonable argument that a tax on property to keep gearing down isn't such a bad thing.




Oh yeah, and I'll repeat myself, you have to actually_ live_ in Houston. I'd call it Lagos without the charm.

If it slid into the Gulf of Mexico I don't think anyone would shed a tear.

Check it out sometime. The weather is usually about 35 degrees with 100% humidity, and you've always got a good chance of being belted by a hurricane. It's dirty, it's one of the most violent cities in the US, it's racially segregated and it's endless suburban sprawl, with all the culture that entails (ie strip malls with Old Country Buffet's and Denny's). 

When I lived in the US I went out with a girl who was from there. Her family lived "inside the belt" which is the tony part of town, and they were certainly not poor. I still couldn't get to the airport fast enough.


----------



## Gringotts Bank (6 November 2015)

trainspotter said:


> View attachment 64916
> 
> 
> Guess where this spot is and you can buy in for $99,000 (vacant land) for 310m2 and 200m walk to the ocean?




Reverse image search yields nothing.  Looks like somewhere north of Perth...yes?

edit - I see Geraldton.  Is this your development trains?


----------



## trainspotter (6 November 2015)

Gringotts Bank said:


> Reverse image search yields nothing.  Looks like somewhere north of Perth...yes?
> 
> edit - I see Geraldton.  Is this your development trains?




Suburb about 7kms North of Geraldton called Glenfield Beach. Stage 1 is underway with titles in January 2016.

Not my development (as in ownership) but is funded by a global hedge fund. I get the job of branding/advertising & marketing for this one. Should do OK but the market is very slow here but in saying that the level of inquiry has been steady 

Just had the sod turning ceremony and a bit of press/editorial. Advertising campaign is about to ramp up over the next few weeks.


----------



## sptrawler (8 November 2015)

trainspotter said:


> Suburb about 7kms North of Geraldton called Glenfield Beach. Stage 1 is underway with titles in January 2016.
> 
> Not my development (as in ownership) but is funded by a global hedge fund. I get the job of branding/advertising & marketing for this one. Should do OK but the market is very slow here but in saying that the level of inquiry has been steady
> 
> Just had the sod turning ceremony and a bit of press/editorial. Advertising campaign is about to ramp up over the next few weeks.



I used to know an old Dutch guy, called Ben, that lived there. 
He had a motorcycle museum, I would buy parts off him, Glenfield motorcycles, just a bit of useless information.

He was a top bloke, his missus hated the bikes, but he had some real classics. Vincent HRD Black Shadow and three Aerial square fours, to name a few.


----------



## trainspotter (9 November 2015)

sptrawler said:


> I used to know an old Dutch guy, called Ben, that lived there.
> He had a motorcycle museum, I would buy parts off him, Glenfield motorcycles, just a bit of useless information.
> 
> He was a top bloke, his missus hated the bikes, but he had some real classics. Vincent HRD Black Shadow and three Aerial square fours, to name a few.




Yeah I remember him ... in Okahoma Road I believe ? I was riding a KLX 250 back then and used to ride out to see what he was tinkering with. Mainly British and very old bikes he was interested with but had some beautifully restored bikes that were not for sale.


----------



## sptrawler (10 November 2015)

trainspotter said:


> Yeah I remember him ... in Okahoma Road I believe ? I was riding a KLX 250 back then and used to ride out to see what he was tinkering with. Mainly British and very old bikes he was interested with but had some beautifully restored bikes that were not for sale.




I used to get parts for my BSA 650 from him, heard an American bought the whole bike collection, and sent them to the U.S. 

Anyway a bit off topic, but it does show how much Geraldton has grown, his place was miles out of the township. It now sounds as though suburbia has reached there.


----------



## sptrawler (17 November 2015)

Well back on thread and the Perth situation.

http://www.perthnow.com.au/realesta...r/news-story/cb8afa0878b705218eca608bfef13948


----------



## satanoperca (1 December 2015)

The coming year will see what effect all those foreigners who weren't buying established properties has on the Victorian and Sydney markets. 



> From today, a foreign national that has been found to have purchased an established dwelling without prior Foreign Investment Review Board (FIRB) approval, or has failed to dispose of a property once they have left Australia (in the case of temporary residents), faces increased penalties, including:
> 
> Criminal penalty of $135,000 or 3 years imprisonment; or
> Civil penalty of the capital gain made on divestment of the property or 25% of the purchase price or market value of the property (whichever is greater).
> For the first time, third parties that knowingly assist foreigners to illegally purchase Australian homes will also face penalties of $45,000 individually or $225,000 for a company.




http://http://www.macrobusiness.com.au/2015/12/judgement-day-arrives-for-illegal-foreign-buyers/


----------



## notting (7 December 2015)

It's all a cometh a downeth.



> Tenants market: residential rents are barely budging.
> 
> 4:31pm: Chinese demand, which helped propel a surge in Sydney homes, has dropped as much as 15 per cent from a year earlier as China's stocks tumbled and the economy slowed, according to real estate agent McGrath.
> 
> Buyers from mainland China are turning away from Sydney and Melbourne and looking at southeast Queensland where dwelling values are "compelling," John McGrath, chief executive officer of McGrath, said after the firm debuted on the Australian share market in Sydney on Monday. The shares opened at $1.94 compared with the issue price of A$2.10 in an initial public offering that raised $129.6 million.




Yikes  :22_yikes:

Would have loved to have sucked them into the new housing commission flats with lipstick in the big cities for a bit longer.  Damnet.


----------



## satanoperca (15 December 2015)

Thread has been quiet for sometime.

Been wrong in the past, but calling the top for Australian Property prices. Stagnation for the next five years at best.

Good luck to those who are slaves to the overlords - banks.


----------



## sptrawler (23 December 2015)

An update on the property market, over here in the West.

https://au.news.yahoo.com/thewest/wa/a/30427165/sellers-lose-out-as-home-prices-slump/

Well it's a sad situation, but 'blind Freddy', could see it coming.


----------



## trainspotter (14 January 2016)

sptrawler said:


> From memory you were pretty spot on, with your prediction a long time back, that property would fall on its ar$e mid 2015.




AHEM ... pure luck my knowledgeable compadre !!



> "The housing sector, which plays an important role in shaping the Australian economic cycle, will likely be less stimulatory for growth in 2016 than in 2015," ANZ's co-head of Australian economics Cherelle Murphy said.
> *"There will not be a significant downturn*, but a more muted profile for housing construction and prices this year."




http://www.thebull.com.au/articles/a/57674-sharp-decline-in-housing-sector-confidence.html

Ermmm nope ... watch this space for a rush to the exit door.



> After three years of solid price growth, home values in Sydney are now falling, data released on Tuesday shows.
> 
> Dwelling prices fell 1.4 per cent in November, resulting in a 1 per cent drop over the past three months, according to the CoreLogic RP Data Home Value Index released on Tuesday.
> 
> Houses were hardest hit – falling 1.4 per cent over the quarter, while units bucked the trend increasing 0.6 per cent.




http://www.domain.com.au/news/sydney-house-prices-fall-in-november-report-20151130-glc03x/

ANZ is taking happy pills ...



> *"Despite the headwinds facing the housing market through the second half of 2015*, we see little significant downside risk to the housing market outlook in 2016. That is not to say house prices won't fall. They may," ANZ's senior economist, David Cannington and economist Daniel Gradwell said.
> 
> "*But strong underlying demand for housing is likely to contain any price falls in the major capital cities to less than 10 per cent in the absence of an economic downturn.*"




http://www.afr.com/real-estate/hous...-likely-in-2016-20151130-glbbzt#ixzz3xBCAXvmC 

Apartments are not risk adverse either ...



> The supply of new apartments and a retreating, resource-based economy is starting to weigh on the market, with more units selling at a loss in the June quarter than the previous three months.
> 
> The proportion of apartments selling for less than the purchase price rose in Melbourne, Brisbane, Canberra, Perth and Darwin in the second quarter, bringing the capital city average to 8.4 per cent from 8.1 per cent in June, CoreLogic RP Data's latest Pain & Gain report shows. Nationally, loss-making apartment sales ticked up to 12.6 per cent from 12.5 per cent.
> 
> The greatest effect of new supply on prices was seen in the Melbourne central business district CBD, where as many as 20 per cent of all sales – where the product is overwhelmingly apartments –* were sold at a loss, for a median figure of $28,125 per transaction.*




http://www.afr.com/real-estate/melb...-sold-at-a-loss-20150929-gjxdn5#ixzz3xBCdNLqd


----------



## shouldaindex (14 January 2016)

Nothing that doesn't surprise there.

Basically saying the trend now is that we're in the other side of the cycle, which historically has been up to a 10% correction.


----------



## Junior (15 January 2016)

shouldaindex said:


> Nothing that doesn't surprise there.
> 
> Basically saying the trend now is that we're in the other side of the cycle, which historically has been up to a 10% correction.




Whilst many of us will agree, that property in this country is overvalued by much more than 10% on almost all metrics, I think you're right, at this stage up to a 10% correction.

Rates are still super-low and strong job ads/unemployment numbers mean prices are likely supported at these levels, for the time being.


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## Mrmagoo (24 January 2016)

What suggests strong job numbers ?


----------



## Ald123 (24 January 2016)

These losses are actually grossly understated, in reality they are much higher.

To buy a house you pay stamp duty. 
When you borrow money you pay interest.

So if you buy a house for $800000 assuming you have $300000 deposit and you bought 5 years ago in Perth in a good suburb. That house is now worth exactly the same amount of money or less. So assuming you wanted to sell today you might get about $750000. 

So loss a) is $50000

Stamp duty and settlement costs you paid when you bought the useless piece of ship investment is a loss. 

So loss b) is say about $20000

After 5 years of paying it of you would have spent $3500 a month on it. 

So loss c) is $210000

Then if you did renovations there is another loss. but let's ignore this for simplicity.

So the total cost of the property is about $1,080,000 

Therefore the real loss at selling the property is between $280,000 and $330,000

Let's assume you rented it out and got $130,000 in rent, or you say that you had to live somewhere and therefore by living in it you saved rent, but either way your loss is still between $150,000 and $200,000. 
If you rented it you had to deal with the useless stupid children that are rental property managers or tenants. For anybody who has had tenants in Australia you will no what I mean, no respect for your or your property, attitude of entitlement to everything and who all imagine that you are ripping them off and crap a golden dozen eggs every month. 

Any idiot can see that Australia is the worst place to invest in Property since 2008 and nobody makes money on it except those who are rich and don't need to loan money from the bank. Such a person who bought the property cash would have made money on the property. That's the only way to do it.

Any idiot can see that in Australia unless you are filthy rich you can't make money on the stock exchange either.

Imagine you are a young person and take a $1000 bucks and are able to pick a stock that over one week rose 10%. Do you know how hard that is? 

You thus make $100 dollars profit from your hard earned $1000 which you risked loosing. 
But along comes the government slut which risking nothing and contributing nothing takes $30 of your money. What's even more amazing is nobody complains to their minister about this. Paying tax is fine but not that much. 
Then the next slut , the bank comes along and they steal $30 from you for facilitating the trade. 

You therefore took $1000 dollars and risked it all and earned only $40. Well you would be better of cleaning toilets for a week because you would have earned $500. 

Such is life in Australia.


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## Wysiwyg (24 January 2016)

Ald123 said:


> Such is life in Australia.



Well if you look for a solution to anything then you might be good to save up and position yourself for catching distressed sellers in the future. Like when interest rates start to rise then the highly geared and maxed out mortgagees might have to sell. I remember in 2000 when I was looking at taking out a loan to buy a house the interest rates were over 8% and thought that was alot. Eventually bought when interest rates were just over 5% and now pay 4.4% interest. Cycles and supply/demand are worth gathering some information on.


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## trainspotter (24 January 2016)

Ald123 said:


> So if you buy a house for $800000 assuming you have $300000 deposit and you bought 5 years ago in Perth in a good suburb. That house is now worth exactly the same amount of money or less.  piece of ship investment is a loss.
> 
> Such is life in Australia.




Great post Ald123 ... you Sir belong in the Darwin Awards.

Let's say I bought $800,000 worth of BHP shares on 20th February 2015 @ $32.30.

On the 15th January 2016 the price of BHP shares were around $15.07 mark.

ERGO I lost over $400,000 of my capital input. Same way you create fictitious assumptions about property anybody can pick a losing (NOT LOOSING) stock.

The trick with property is the same with shares. Like Kenny Rogers sung:-

_You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
And know when to run
You never count your money
When you're sittin' at the table
There'll be time enough for counting
When the dealin's done_

Now before you get your panties in a bunch and state that you would have sold BHP on the 2nd March 2015 when they were $34.12 and you pat yourself on the back that you made a tidy $45,000 in a 10 day turnaround. WELL DID YOU?? I am guessing not.

So why would you spend $800,000 on a house in a good suburb in Perth unless you are looking for it to be a LONG term investment *ie* YOU will actually be living in it and raise a family and it's close to your work and it is your dream home and the wife loves it and it has a swimming pool ... ad infinitum.

You could have bought 5 houses in Wagin for the same money and returned 17.2% growth 

BLUE CHIP SHARES they said ... buy em they said ... can never go down they said ... should be a part of everybodies portfolio they said ... solid returns they said.


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## Ald123 (24 January 2016)

Ok Mr Trainspotter 

Let's say that I do deserve the Darwin Awards and by lucky chance I have come across you.

Please let me know how to make some money, you come across as somebody who obviously knows how.


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## trainspotter (24 January 2016)

Define "how to make some money"?

If it is a trading platform you are after then you would be best served reading everything Tech/a and Trembling Hand and skc to name a few who have posted their trading styles and in depth knowledge on the boards.

If it is in Real Estate then my perceptions would be to keep your gun powder dry for another 18 months whilst the regulatory bodies pick over the carcass of what is left of Australian property prices. By the time FIRB and APRA as well as the banks criteria have squeezed the life out of the market by over regulation and when they come to realise that they are in the business of lending money, the regulations will loosen once again to increase lending to the housing sector.

Remember there is a Federal election due before 14th January 2017 and if I was a betting man I would say we are going to the polls around Sept - Oct this year. If Libs get re-elected then you could safely say that Feb - March 2017 you will start to see an uptick in property prices in the 8 capital cities due to consumer and investor confidence. If Labor gets in then it has been an historical fact that vacant land and building is the investment vehicle of choice as they prefer to stimulate the grass roots economy and not the big end of town _*ie*_ (commercial CBD etc)

But hey ... this is just my opinion and I could be just tapping away at a keyboard with no clue. 

Alternatively - Go to casino and put it all on 13 black and take the house down.


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## Ald123 (24 January 2016)

Thank you for giving some sage advice.


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## Ald123 (24 January 2016)

The problem as I see it is that basically it's been 7 years of downward spiral. This time the liberals have not done much. Things are super expensive in Australia, they will blow money again on election promises. The debt will not be erased before the election. I don't really see anything improving until iron ore goes up in price, along with gas oil and coal. There is nothing much else in Australia. Turnbull would like to create a Silicon Valley but he doesn't understand that there is no culture in Australia of mathematics, engineering, coding and science to speak off. There is a love of footy and footbal stadiums, or cricket stadiums, a love of beer wine and drugs and going for a surf or meeting in a pub. Setting up a business in Australia and employing somebody is a nightmare of bureaucratic paperwork. You won't have people in Australia like you have In The United States, 100's of engineers working together on developing the hyper loop for no money in a shared company, hoping to get paid in stock options once the company takes off. There is no rewards for clever people here, whether you suck at what you do here or are brilliant you get paid the same amount and are taxed to the eyeballs. They can't even get a single national identity card happening here and a single national drivers licence, and motor registry, thus eliminating millions of dollars in wasted bureaucracy.


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## trainspotter (24 January 2016)

Yes these are the parameters you have to work with in Australia. Could be worse ... you could be in Detroit ...



> The median home value in Detroit is* $37,800.*  Detroit home values have declined -6.9% over the past year and Zillow predicts they will fall -0.9% within the next year. Mortgage delinquency is the first step in the foreclosure process.




http://www.zillow.com/detroit-mi/home-values/ 

But bit bit it is turning around ...

http://www.freep.com/story/money/real-estate/2015/07/12/detroit-home-values-rising/29169949/



> Home values in Detroit neighborhoods are finally experiencing some upward momentum after years of rock-bottom prices.
> 
> Still among the cheapest places in the nation to buy a house, Detroit neighborhoods are seeing prices inch up on most residential blocks with substantial gains in the strongest areas.
> 
> A Free Press analysis of land records shows the median sale price of any home in the city was $30,000 last month, more than four times the $7,000 median in 2009, an especially dark year for the economy and real estate.




Not sure where you are basing figures on 7 year downward spiral? Sydney and Melbourne have been doin OK ?? Only 44% over a 5 year period. Peanuts really.

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0


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## So_Cynical (25 January 2016)

trainspotter said:


> Not sure where you are basing figures on 7 year downward spiral? Sydney and Melbourne have been doin OK ?? Only 44% over a 5 year period. Peanuts really.
> 
> http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0




7 year downward spiral except for the housing bubble.


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## Ald123 (25 January 2016)

Detroit is a good example of how house prices should be. No artificial maintenance by limiting supply, flooding with cheap foreign money from America to banks or China corruption to Australia, home buyers grants. if we had proper highways and smartly designed cities with 130km/h 4 lane freeways leaving the cities with no traffic lights then land shortage would be no problem.


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## Junior (25 January 2016)

Mrmagoo said:


> What suggests strong job numbers ?




http://theconversation.com/factcheck-is-job-growth-in-australia-the-greatest-its-been-since-2006-53372

Unemployment rate has fallen from 6.2% to 5.8% in the past few months.  Lowest rate since late 2013.


http://www.abc.net.au/news/2016-01-11/job-ads-point-to-stable-unemployment/7081362

Job ads grew by 10% through 2015.


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## trainspotter (25 January 2016)

So_Cynical said:


> 7 year downward spiral except for the housing bubble.




Yeah ... bet you are glad you did not buy in Sydney in 2010 

There will be a significant correction in the latte' sipping section of the LZ129 Hindenburg.


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## trainspotter (25 January 2016)

Ald123 said:


> Detroit is a good example of how house prices should be. No artificial maintenance by limiting supply, flooding with cheap foreign money from America to banks or China corruption to Australia, home buyers grants. if we had proper highways and smartly designed cities with 130km/h 4 lane freeways leaving the cities with no traffic lights then land shortage would be no problem.




Yeahhh let's all go to Detroit where the unemployment rate is killer ...

Nov. 30, 2015	10.70%
Oct. 31, 2015	13.00%
Sept. 30, 2015	11.50%
Aug. 31, 2015	12.70%
July 31, 2015	13.90%
June 30, 2015	13.10%
May 31, 2015	13.00%
April 30, 2015	10.20%
March 31, 2015	11.70%
Feb. 28, 2015	12.50%
Jan. 31, 2015	14.30%
Dec. 31, 2014	12.90%
Nov. 30, 2014	13.90%
Oct. 31, 2014	16.00%
Sept. 30, 2014	16.30%
Aug. 31, 2014	17.70%
July 31, 2014	19.30%
June 30, 2014	17.40%
May 31, 2014	16.90%
April 30, 2014	15.60%
March 31, 2014	17.80%
Feb. 28, 2014	18.10%
Jan. 31, 2014	18.00%

https://ycharts.com/indicators/detroit_mi_unemployment_rate

The 4 lane freeway leaving Detroit serviced them well with over 400,000 people leaving the city since 1990 or approximately 26,667 people per year 

No artificial stimulus from the guvmint and all that dirty China money propping up the system certainly helped the residents of Detroit ... yeah let's be like Detroit.

As Junior has pointed out ... Jobs is the key *wink*


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## Junior (25 January 2016)

Junior said:


> http://theconversation.com/factcheck-is-job-growth-in-australia-the-greatest-its-been-since-2006-53372
> 
> Unemployment rate has fallen from 6.2% to 5.8% in the past few months.  Lowest rate since late 2013.
> 
> ...




To clarify I am not a property bull.  Have been anticipating a fall in prices for a few years now, and I have been very wrong!

It's hard to see a significant fall until unemployment and/or interest rates rise.  

Income and availability/cost of credit are key drivers, Aussies love property and prices won't fall until participants are restricted in their ability to pay, IMO.  That day will come, *when* is the difficult question.


----------



## trainspotter (25 January 2016)

It is happening right now. Started around June 30th last year


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## Ald123 (25 January 2016)

Yes but Detroit house prices means that the city can easily rise from the ashes. People can now buy houses for cash.
Once some employer sorts out all the union issues anyone buying in Detroit gets to start a good life in the future. Detroit will be. The best city in America within 12 years time.

Here the young are stifled from spreading their wings, from risking. You can't risk anything in Australia because everything is expensive and everyone from the baker to the government to the landlord has their knife out waiting for you to not pay and you can fall off the train quickly here and land up on **** street. In America or Europe you can live in a house with roaches druggies for neighbours and a leaky roof and pay $100 a week while the really nice place is $700 a week. Food is super cheap as is transport. Soup kitchens and cheap canteens everywhere. 
In Australia the roaches, druggies and leaky roof are pretty standard but the rent is $350 and food is super expensive as is transport and then taxes screw you massively. A nice house costs $800 but that's like the $600 place in America. No soup kitchen in sight.

Tradies in Australia thick as planks earn massive money while highly educated scientists and engineers have to fix their own houses and do their own plumbing.


Let's chat about when the next stock crash is coming. I really thought it was going to be in 2015. I put my super into cash last April and reaped the benefits of a massive increase in value. I am waiting for the crash so that I can invest in high growth funds again.


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## Trendnomics (26 January 2016)

Why Germany's housing policies are never brought up as a sterling example, is beyond me. Europe's most productive country, with banking policies that encourage business loans and where large deposits are required for residential property loans. 

Most people will argue that large deposits would make property less attainable, but in Germany's case this has halted the insane mortgage debt expansion we have seen in other countries (including Australia). Thus, property prices have tracked inflation, the cost of living has remained competitive and private debt has remained low.

http://www.economist.com/blogs/dailychart/2011/11/global-house-prices

Large gains in the property market, is almost always associated with credit expansion (more debt) - people will argue that this time it is different due to "these" fundamental reasons - but in the end you have to pay the piper...


----------



## trainspotter (26 January 2016)

Trendnomics said:


> Why Germany's housing policies are never brought up as a sterling example, is beyond me. Europe's most productive country, with banking policies that encourage business loans and where large deposits are required for residential property loans.




I wrote this over 5 years ago ... still rings true today.

*29th-August-2010 09:00 AM POST #2782*
_
There are differences between most countries property markets that result in anomalies to their relative performance. 

1) Relative population growth rates (high in Australia, but much lower in the US and UK and negative in Japan)

2) Mortgage default rates ”” the 90 day default rate on Australian home loans is about 15 and 30 per cent of the level of equivalent default rates on US and UK loans despite historically higher interest rates.

3) Tax treatment of housing - in the US capital gains tax is levied on owner-occupied housing while mortgage interest repayments are tax deductible, neither applies to Australia. 

4) Size of their public housing markets - the public housing market share in the UK is far larger than Australia, which in turn has a much bigger private rental market.

5) Rates of home ownership (APPROXIMATES ONLY - 54 per cent in the Netherlands, 42 per cent in Germany, and 35 per cent in Switzerland, but about 70 per cent in Australia) 

6) Responsiveness of housing supply to changes in demand - low in supply-constrained countries such as Australia, but higher in many countries such as the US, which has had a problem of excess supply.

7) Urbanisation of their population living in their largest cities as measured by the so-called “Zipf curve” (high in Australia but considerably lower in the US, UK)

Zipf's law, an empirical law formulated using mathematical statistics, refers to the fact that many types of data studied in the physical and social sciences can be approximated with a Zipfian distribution, one of a family of related discrete power law probability distributions. 

http://en.wikipedia.org/wiki/Zipf's_law

Some of the reasons as to why "It's different here" - Now this does not mean we are bullet proof to a possible correstion but are some "reasons" that IMO believe when the rates start biting and the IRS & CDF's and USD falter then we have a slightly stronger model that the "other countries". Then again I could be completely wrong and the whole housing market will collapse by 40% at 11.37am on the 11th January 2011 compliments of Steven Keen. 

Pretty boring stuff these informative posts. Can't we go back to the name calling again?_

Things have changed ... the more they stay the same.


----------



## satanoperca (26 January 2016)

trainspotter said:


> Pretty boring stuff these informative posts. Can't we go back to the name calling again?[/I]




Your a d""khead TH for presenting facts.


----------



## shouldaindex (26 January 2016)

Germany prices have risen 30% compared to Australia 20% since 2010.

Can probably angle that stat to suit a few different points of view.


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## wayneL (26 January 2016)

shouldaindex said:


> Germany prices have risen 30% compared to Australia 20% since 2010.
> 
> Can probably angle that stat to suit a few different points of view.




Only with a healthy dose of confirmation bias


----------



## luutzu (27 January 2016)

wayneL said:


> Only with a healthy dose of confirmation bias




A report yesterday showed Australia to be the 2nd most expensive place to buy a house in the entire world. Just behind Hong Kong.

Average house in Syd is 12.2 times avg. income. Anything above 4 or 5 times is considered unaffordable.

But maybe we're special and it will all end just fine.


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## Ald123 (27 January 2016)

German house prices have had stable increases over the last decade, not the massive jumps caused by cheap money.

The Australian government acted scandalously in allowing cheap money to flood the country since 2004 and be used for mortgages. This is plain economic terrorism. Without it Australia would have had house prices that would be about 50% lower and salaries that were high but not so high as to cripple the country. Right now we would have a low personal debt and innovation would be thriving. The government would probably have a trillion dollars in surplus and it could be used for real nation building.

Instead now the governments of Australia have a policy of making money from taking away from the children's pocket money. Inventing taxes for everything and using any means to raise revenue moral or not.


----------



## Trendnomics (27 January 2016)

shouldaindex said:


> Germany prices have risen 30% compared to Australia 20% since 2010.
> 
> Can probably angle that stat to suit a few different points of view.




*Reply - Part #1*

That is correct - Germany was playing a little catch-up:




But if we add an extra 10 years on the time frame you have provided (i.e. 2000 - now), then *Germany +28%* and *Australia +196%*:




If we add an extra 10 years on top of this adjusted time frame (i.e. 1990 - now), then *Germany +55%* and *Australia +327%*:




Furthermore, if we apply an inflation adjustment to the prices from 1990 to now, then we can clearly see that the German prices have tracked inflation almost perfectly (slight dip in the 2000's, *hence the recent run to catch up to the actual inflation adjusted price*):




The strong economic machine of Germany has also delivered excellent wage growth, thus housing is actually more affordable today than in the early 1990's:


----------



## wayneL (27 January 2016)

Great graphs, thanks Trend.


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## Trendnomics (28 January 2016)

shouldaindex said:


> Germany prices have risen 30% compared to Australia 20% since 2010.
> 
> Can probably angle that stat to suit a few different points of view.




*Reply - Part #2*

Property price increases have also closely tracked rent increases (a sign of sound housing policies - i.e. not choking supply or over expanding credit):




In conclusion:

The fact that Germany is Europe's most productive nation is no coincidence - sound housing policies have ensured that housing prices (which directly impacts living costs) have remained low, thus ensuring the maintainability of cost competitive productivity;
Germany's "poor" housing price performance was the laughing-stock of Europe during the "boom" years in the 2000's (but you can't build true wealth from ever expanding debt - a nation's true wealth lies in it's productivity - un-afordable housing leads to high living costs - which results in the death of cost competitive productivity - see dutch disease);
Government policies have forced German banks to focus more on business loans (i.e. productive nation building loans), instead of private sector property loans - for a long time the average deposit for a home-loan was 50% of the purchase price (this slowed credit expansion);
All people are greedy - I recently watched The Big Short (Movie) and was quite annoyed by the fact that all the blame was assigned to the banks - Yet the un-servicable loans were taken up at free-will by everyday people (greedy people) - in this lies the crux of the issue - i.e. people will borrow as much as they can, up to their eyeballs, if they are allowed to (i.e. low deposit requirements) - resulting in credit expansion - which inflates house prices (everyone feels rich - but this is not true wealth - i.e fool's gold) and then when it all comes crashing down (i.e. time to pay the piper), only blame the banks.


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## qldfrog (28 January 2016)

ghreat simple and detailled explanations.Like it and agree with it, and thinking Germany has just added 1m people in a year (a disaster but that is another thread), the same thing in Australia would have doubled house price with local psyche.


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## Bill M (28 January 2016)

From THE AUSTRALIAN, it's an interesting read. You may need a paid subscrition to read that, if so you can find the story here as well: http://www.businessspectator.com.au/news/2016/1/28/economy/debt-paid-record-levels


---
Aussies pay off debt at record levels

Australians are paying off their mortgages and other debt at record levels, new figures show.

http://www.theaustralian.com.au/business/economics/aussies-pay-off-debt-at-record-levels/news-story/2df8737a2221edd8c650572f54700e5a
---


----------



## trainspotter (28 January 2016)

satanoperca said:


> Your a d""khead TH for presenting facts.




Yeah .. you are right satanoperca .. sunshine and lollipops for everyone in the property market as a noted professor used to say 

Meanwhile back at the coal face ....




http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0

It would seem only Sydney is performing the heavy lifting with Melbourne playing catch up.


----------



## CanOz (28 January 2016)

trainspotter said:


> Yeah .. you are right satanoperca .. sunshine and lollipops for everyone in the property market as a noted professor used to say
> 
> Meanwhile back at the coal face ....




Any more recent stats TS?


----------



## trainspotter (28 January 2016)

CanOz said:


> Any more recent stats TS?




Sydenycentric mainly .... http://www.domain.com.au/news/sydney-house-prices-drop-3-per-cent-domain-group-20160127-gmd7pl/



> Sydney’s median house price dropped 3.1 per cent over the December quarter 2015, the first drop since June 2012, the Domain House Price Report released on Thursday shows.




Watch the video on the link ... it has all the stats for the 8 major capital cities.


----------



## trainspotter (28 January 2016)

It's six o'clock ....


----------



## satanoperca (28 January 2016)

trainspotter said:


> It's six o'clock ....
> 
> View attachment 65666




I must have been asleep.

When was there falling real estate prices? 3% is hardly a fall after %15+ gains in one year.

I also must have slept through the recession.


----------



## CanOz (28 January 2016)

Thanks for the links TS!

Yeah, i reckon all the Global QE have rooted the clock, i think its in need of some kind of re-calibration.


----------



## notting (28 January 2016)

satanoperca said:


> When was there falling real estate prices? 3% is hardly a fall after %15+ gains in one year.




Careful what you read in the papers.

Yeah, we be looking a little more like 3 O'clock and we haven't had our property correction as they did in the GFC well, unless you live in Karratha.  Gonna start somewhere!! Trickle trickle


----------



## CanOz (28 January 2016)

notting said:


> Careful what you read in the papers.
> 
> we haven't had our property correction as they did in the GFC




I wouldn't be expecting a repeat, why would you? What are the similarities? Its a bubble? All bubble are not alike....


----------



## wayneL (28 January 2016)

CanOz said:


> I wouldn't be expecting a repeat, why would you? What are the similarities? Its a bubble? All bubble are not alike....




Prices are set at the margins. This is the area to watch.


----------



## notting (28 January 2016)

CanOz said:


> I wouldn't be expecting a repeat, why would you? What are the similarities? Its a bubble? All bubble are not alike....




I think there is a massive overbuild in apartments.  That's where the bubble is.  Guess who's buying, Yep The Chinese I did have a chat with a Lend Lease guy the other day, he said it's all still going strong.  I said, 'your selling everything to the yellow fellas aren't ya.'  He said 'yep!'  I said, 'you concerned about the slow down and clamp down on the funny money?,' he said, 'people don't get it' and 'it's still going like hot cakes.'  I caught his eye a little later on, in the evening, he looked a little sheepish!  Not sure why.  
But it will end soon enough and we can all pick up $150,000 apartments that were sold for 300k or 400k. 
Cash up


----------



## Bill M (29 January 2016)

notting said:


> I think there is a massive overbuild in apartments.  That's where the bubble is.  Guess who's buying, Yep The Chinese I did have a chat with a Lend Lease guy the other day, he said it's all still going strong.  I said, 'your selling everything to the yellow fellas aren't ya.'  He said 'yep!'  I said, 'you concerned about the slow down and clamp down on the funny money?,' he said, 'people don't get it' and 'it's still going like hot cakes.'  I caught his eye a little later on, in the evening, he looked a little sheepish!  Not sure why.
> But it will end soon enough and we can all pick up $150,000 apartments that were sold for 300k or 400k.
> Cash up



In all my years of investing I have never seen half price or 60% reductions of real estate in Sydney. It won't happen, it never has before and it won't in the future, good luck with hoping, wishing and praying for that.


----------



## trainspotter (29 January 2016)

satanoperca said:


> I must have been asleep.
> 
> When was there falling real estate prices? 3% is hardly a fall after %15+ gains in one year.
> 
> I also must have slept through the recession.




More to property prices in Australia then just Sydney satan 

Amortise 3% over a full year and the 15% gain does not seem that much anymore 

The clock is not specific to Australia either. Remember Portugal, Italy, Ireland, Greece, Slovenia, Belgium, United Kingdom / half of the Eurozone? Pretty sure they were in recession. 



> Cottesloe is a suburb revered for its relaxed beach-side lifestyle. Close to the city, yet still far enough away to not be exposed to its hyper-urban nature, Cottesloe is an ideal location for those who want the best of both worlds. Its land area spans four square kilometres and is characterised by a blend of historical and modern residences.




PERTH METRO AREA
10.8 % decline http://reiwa.com.au/wa/cottesloe/6011/ Median house price $1,700,000 - High end market
2.6% decline http://reiwa.com.au/wa/morley/6062/ Median house price $554,300 - Medium end market

ADELAIDE METRO & MAJOR TOWNS
https://www.sa.gov.au/topics/housin...vice-for-buyers/median-house-sales-by-quarter

TOWNSVILLE - December 2014


> Domain Group figures showed the median house prices for the six months ended December 14 was *$370,000* – *6.3 per cent lower than five years *earlier*. The median price for units was $283,000 or 18 per cent down on 2009 prices. *Ms Grice said she was confident about 2015*.




http://www.afr.com/real-estate/resi...erty-market-on-downward-trend-20150129-131ka1

TOWNSVILLE - March 2015


> However, *the agency advises that it is currently "a good time to buy" *in Townsville, given low median prices and low interest rates. According to the Real Estate Institute of Queensland (REIQ), Townsville's median house price was down 5.6% in the September quarter to *$340,000*, with a 27% increase in sales activity.




http://www.propertyobserver.com.au/...-for-townsville-market-herron-todd-white.html

Hmmmm more to property then just Sydney and Melbourne eh? Regional Australia RE is doing it tough.


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## luutzu (29 January 2016)

Bill M said:


> In all my years of investing I have never seen half price or 60% reductions of real estate in Sydney. It won't happen, it never has before and it won't in the future, good luck with hoping, wishing and praying for that.




That's what they all thought in the US, and elsewhere, before the subprime mortgage crisis hit and we got the GFC.

I can't imagine it would halved in Australia, but it's not going to stay where it is either.

Remember a friend back maybe 15 years ago.. .the guy was just starting out and bought an investment apartment in the CBD for around $550K. The market collapsed and he have to quit his part time uni, pick up another job so that's two jobs just to barely keep up with the mortgage. He couldn't sell it else he would lose $150K or so. Since then he's been working in factories.

The way it is now, houses are not affordable without a lot of loans from relatives and both couple having to work 3 jobs between them. I personally know a couple of property owners who couldn't collect their rent recently because the tenants have to send some cash back to their parents in Vietnam for the Lunar New Year.

I mean, rent in the West is around $450 a week; take home pay maybe $700... Most couldn't do it without sharing with a relative or a friend.

We're all on very thin ice. Let's just hope it's brought down slowly and not collapse in a hurry.


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## trainspotter (29 January 2016)

luutzu said:


> That's what they all thought in the US, and elsewhere, before the subprime mortgage crisis hit and we got the GFC.
> 
> I can't imagine it would halved in Australia, but it's not going to stay where it is either.
> 
> We're all on very thin ice. Let's just hope it's brought down slowly and not collapse in a hurry.




1) We don't have jingle key loans here. We have full recourse loans. Mortgage arrears are at 7 year lows 

2) Sydney will be the market that will be corrected to be around 15% IMO. Mainly from the HIGH END market contracting which skewiff sales/pricing data. Rest of the country has already stagnated. Started about 3 years ago.

3) Nope ... I read somewhere money owing on housing loans taken out by households was equivalent to 29% of the value of residential land and dwellings owned by households. Pretty good shape really. Must mean there are a lot of people with huge equity in residential property !

4) Steady as she goes skipper.


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## luutzu (29 January 2016)

trainspotter said:


> 1) We don't have jingle key loans here. We have full recourse loans. Mortgage arrears are at 7 year lows
> 
> 2) Sydney will be the market that will be corrected to be around 15% IMO. Mainly from the HIGH END market contracting which skewiff sales/pricing data. Rest of the country has already stagnated. Started about 3 years ago.
> 
> ...




If they declare bankruptcy, how will the bankers get their money back? Send over the lawyers, the goons and then prison or what? 

Money still owing on the loans is 29% of land/property value... and if land/property value now is at an all time high... that's not a good thing at that rate either.

Say I still owe the bank $300K; my property is valued at $1000K [1 million]. That's around 29% of property value right?

But if my property should be worth, say, $500K... and if the market correct itself and it get to say $600K.. my loan is now 50% of value, so my equity is much less. And if it get to that ratio, might not be able to borrow against the property/ies.

I think more accurate ratio would be something like debt owing to total borrowed.
So if I borrowed $1M and had paid off $700k, still owing only $300k. The other ratio doesn't make sense to me.


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## trainspotter (29 January 2016)

luutzu said:


> If they declare bankruptcy, how will the bankers get their money back? Send over the lawyers, the goons and then prison or what?
> 
> Money still owing on the loans is 29% of land/property value... and if land/property value now is at an all time high... that's not a good thing at that rate either.
> 
> ...




1) The banks foreclose on the house and sells it for the current market achievable rate. Any losses incurred is the responsibility of the mortgagee. If there is LMI in place then the LMI underwrites the bank then pursues the mortgagee. If the house sells for LESS than what it is valued for then the bank and the LMI pursue the VALUER. Which is why they pay so much in indemnity insurance. End of the day the bank/LMI/valuer then will pursue the mortgagee for any losses. If they declare bankruptcy then the bank will look internally as to WHO approved the loan and pursue them (as in they get the sack)

2) Better than anywhere else in the world 

3) Yes give or take 1%

4) Are you saying there will be a 40% correction? Are you Steven Keen? You can borrow up to 90% with LMI in a refinancing option under current bank guidelines. Therefore your 600k house you can borrow up to $540,000 depending on income and debt serviceability ratios etc etc. REMEMBER this ratio is over ALL residential property in Australia. Like I said there MUST be a lot of people who own houses outright or have huge equity in them. Most of the people I know are around the 20% equity mark and contributing over 35% of income to mortgage.

5) You have not accounted for the DEPOSIT you would have been required to place down on the property to borrow 1 million? Let's say you purchased a property for 1 million in Sydney and you placed a 20% deposit down. You do the math


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## luutzu (29 January 2016)

trainspotter said:


> 1) The banks foreclose on the house and sells it for the current market achievable rate. Any losses incurred is the responsibility of the mortgagee. If there is LMI in place then the LMI underwrites the bank then pursues the mortgagee. If the house sells for LESS than what it is valued for then the bank and the LMI pursue the VALUER. Which is why they pay so much in indemnity insurance. End of the day the bank/LMI/valuer then will pursue the mortgagee for any losses. If they declare bankruptcy then the bank will look internally as to WHO approved the loan and pursue them (as in they get the sack)
> 
> 2) Better than anywhere else in the world
> 
> ...




Let's just hope the insurer still have cash to pay claims when they come calling then. But then taxpayers will bail them out if they're big enough anyway.   Our money, somebody else's wealth. Awesome.

Don't know what the correction would be, or when it will happen. But I just know that Australia, with all its land and few people, shouldn't have property prices at a HK level.


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## notting (29 January 2016)

Bill M said:


> In all my years of investing I have never seen half price or 60% reductions of real estate in Sydney. It won't happen, it never has before and it won't in the future, good luck with hoping, wishing and praying for that.




I'm not hoping for anything. And I never said Sydney, I said apartments.  I'm not talking about the old style blocks in great locations I'm talking about the high rise housing commission flats with lipstick going up all over the place.

Regarding your experience 
My uncle owned a really nice 5 bedroom house, with a pool, spa, sauna, tennis court, in one of the best leafy streets in one of the best suburbs in the most livable city in the world.

About 10 years before a sub-developer bought the big block and chopped it in two and built two of em.  They were exactly the same apart from the wrapping paper. The one next door sold for 1.1million my uncles was passed in about 15 months later for 665,000.  I've seen it right outside my window!!!!!!!!!!!!!!!!!!!  There probably worth about 5 million each today.


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## Bill M (29 January 2016)

notting said:


> I'm not hoping for anything. And I never said Sydney, I said apartments.  I'm not talking about the old style blocks in great locations I'm talking about the high rise housing commission flats with lipstick going up all over the place.




I am talking specifically, Sydney and the Northern Beaches of Sydney, that is where most a my buying and selling has been done and 90% of all the real estate I bought there was apartments. There is no such thing as "high rise housing commission flats with lipstick" in that whole area. Most of it is 3 level apartments, those that are higher are all privately owned apartments. Manly to Palm Beach is some 40 kilometers in distance, it has never ever suffered a 50 to 60% drop in prices. I reckon a mass of bargain hunters would be out and about looking if only a 10% correction happened. 

This is an area that Chinese buyers aren't interested in much, it's all the locals who are buying it up. People who love the Aussie beach lifestyle, people who wouldn't live anywhere else as their fathers and grandfathers all grew up there and will pay a little more to live there. 

When you make statements like 







> *But it will end soon enough and we can all pick up $150,000 apartments that were sold for 300k or 400k*



 You need to quantify that, like where exactly, ...etc. I can tell you now, price drops like you are suggesting of 60% won't happen ever in this area, it never has. 400K won't even buy you a 1 bedroom unit in this high demand area. 

My question to you is, do you really think that a nice 2 br apartment with views that is now selling on the Northern Beaches for $1M today, will one day be worth 400K?......... NEVER.  There are people with serious money in these high demand beach areas, just a minor correction and they will be out in droves buying....... believe me I had no trouble selling my last property 14 Months ago and they are still selling easily now.

I am currently out of investment property, I've made my money. But if those 60% reductions ever came along I'd be buying 2 for the price of one with my ears pinned back, so yes it is only wishful thinking.



> About 10 years before a sub-developer bought the big block and chopped it in two and built two of em.  They were exactly the same apart from the wrapping paper. The one next door sold for 1.1million my uncles was *passed in about 15 months later for 665,000*.  I've seen it right outside my window!!!!!!!!!!!!!!!!!!!  There probably worth about 5 million each today.




I note that it was passed in at 665K, means nothing. I had a property in Manly that went to auction that didn't even attract a bid. I ended up selling it 3 weeks later for a nice profit. Thanks for mentioning that each of those properties are worth $5 Million today, I wouldn't have sold at the throw away bid of 665K either.


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## luutzu (29 January 2016)

Bill M said:


> I am talking specifically, Sydney and the Northern Beaches of Sydney, that is where most a my buying and selling has been done and 90% of all the real estate I bought there was apartments. There is no such thing as "high rise housing commission flats with lipstick" in that whole area. Most of it is 3 level apartments, those that are higher are all privately owned apartments. Manly to Palm Beach is some 40 kilometers in distance, it has never ever suffered a 50 to 60% drop in prices. I reckon a mass of bargain hunters would be out and about looking if only a 10% correction happened.
> 
> This is an area that Chinese buyers aren't interested in much, it's all the locals who are buying it up. People who love the Aussie beach lifestyle, people who wouldn't live anywhere else as their fathers and grandfathers all grew up there and will pay a little more to live there.
> 
> ...




You and TS might be right about the fringes and Northern beaches, but for most other folks their dream of owning a home now is either for the market to collapse by 30 to 50%; or that they'd earn enough to be able to afford a $1M+ property. Which dream is more likely give the state of the economy and housing market?


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## Bill M (29 January 2016)

There are a lot of new readers here so I will re post an article I cut out of the local rag on the northern beaches of Sydney 22 years ago. The article was about the previous 25 years (before 1994) and the next 25 years, we are nearly there now. Read the article, nothings changed, same old commentaries, very interesting. Click to expand.


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## Bill M (29 January 2016)

luutzu said:


> You and TS might be right about the fringes and Northern beaches, but for most other folks their dream of owning a home now is either for the market to collapse by 30 to 50%; or that they'd earn enough to be able to afford a $1M+ property. Which dream is more likely give the state of the economy and housing market?




Neither, nothing will change. Those that can and do afford expensive homes always will, those that can't will move out west or up to the Central Coast. I can't remember how many times my work mates use to say to me "why do you live on the northern beaches in a flat when you can buy a 4 bedroom house out here in the west for the same price?" It's just choice and ability to pay, I wouldn't live out west for free but happy to live and pay for the beaches area. You pay for lifestyle and in areas where there is no land left (like the northern beaches) it can only mean one thing, prices will keep on going up.

Considering how expensive it may be now, how do you explain this:

---
*Australians paying off debt at record levels
*
New figures show Australians are paying off their mortgages and other debt at record levels.

The number of Australians owning their homes outright or switching from renting to ownership has risen to its highest level since 2010, according to results from the latest St George-Melbourne Institute Household Financial Conditions Report.

Forty-five per cent of those surveyed had paid off their mortgages, while 47.3 per cent reported having no debt at all.

The level of renting, at 15 per cent, is the lowest recorded since the survey started in 2001 when 25 per cent of respondents were renting.
- See more at: http://www.skynews.com.au/business/...bt-at-record-levels.html#sthash.4Paoqpeg.dpuf
---


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## luutzu (29 January 2016)

Bill M said:


> There are a lot of new readers here so I will re post an article I cut out of the local rag on the northern beaches of Sydney 22 years ago. The article was about the previous 25 years (before 1994) and the next 25 years, we are nearly there now. Read the article, nothings changed, same old commentaries, very interesting. Click to expand.




But it's fair to say you don't really believe this boom is going to keep going right? That's why you're out of the market.

Say the average home in Sydney is now $1M, at 4% growth [2% above currently ~2% inflation], in 25 years an average home would be $2.7M. If an average wage is $75K, at same growth they'd be earning some $200K a year. 

I'm having trouble imagining an average Aussie being paid that much.

I haven't looked at the figures so correct me if I just have no clue, but when they work out the average Australian wage they literally takes the pay of all working Australians divide by number of them right?

Same approach to average property prices I'm guessing.

The problem with these averages is that while income from high income earners and professionals skewed the average, move the bell curve but house prices are not evenly distributed - that is, you may have less people earning multiple times many people; but house prices are not as skewed. 

e.g. A blue collar person earning $50K a year made 1/3rd a person who earn $150K a year. But the house a better paid person can buy is, say $1M but that does not mean the house a $50K person could buy is $330K. It'd be at least $600K.

So an average income of $75K wage does not mean half the working population earn that or less while the other have evenly distributes it out; but for house prices they're more even. 

That's not to sound doom and gloom or have no faith in the country; just for a lot of working people, housing affordability is a real concern and top line average figures can be quite misleading.


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## luutzu (29 January 2016)

Bill M said:


> Neither, nothing will change. Those that can and do afford expensive homes always will, those that can't will move out west or up to the Central Coast. I can't remember how many times my work mates use to say to me "why do you live on the northern beaches in a flat when you can buy a 4 bedroom house out here in the west for the same price?" It's just choice and ability to pay, I wouldn't live out west for free but happy to live and pay for the beaches area. You pay for lifestyle and in areas where there is no land left (like the northern beaches) it can only mean one thing, prices will keep on going up.
> 
> Considering how expensive it may be now, how do you explain this:
> 
> ...




Can't argue with that. People pay for what they can afford and pay for the lifestyle they like (and can afford). 

I'm sure you're right that places by the sea and up North will always have keen buyers. I mean, even I look at those places even though I'd have to drive a couple hours a week to do the shopping - but since you're saying it never going to halve, there goes my dream. 

----

Don't think we could trust surveys, especially surveys about houses from a bank. 

When people call me to ask how much debt I have... it'll depend. If it's the tax office then please sir, I am in a whole world of pain; If it's a bank and I might want a loan then it's what debt? If you give me the money for next to nothing I might consider borrowing it because I like to help you out.


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## Bill M (29 January 2016)

luutzu said:


> But it's fair to say you don't really believe this boom is going to keep going right? That's why you're out of the market.



I am out of the market for 3 reasons. 1st. the price jumped the most in the last 2 years before the sale, so the price was good. 2nd. was there was a threat of a major development next door to my building and 3rd. was that it wasn't suitable for my wife and I anymore. It meant sell, money in the bank.

Now with record low interest rates prices have moved even further north and perhaps further big increases are over. Maybe when interest rates start to rise prices might stagnate or go slightly south, that is the feelings I have. However when I go looking at property there are still swarms of people all doing the same thing, so for now it is still stable.

If I was somebody new to property buying now, I would wait. Bank the money, build a pot and wait for interest rate increases and see if it shakes out a few people. Things change all the time, when I bought my house in 2009 up here on The Central Coast it was expensive and hard to find. It seemed very difficult for me to find the right place. 2 years later (around 2011) the markets froze. They could not sell 2 br timber houses on 500 SQM for 200K. Today they are selling everything that comes onto the market, so the time to buy may not be now.

The whole point of my original post was that 60% discounts do not happen in the areas where I am interested in, doesn't matter if it's houses, flats or timber bungalows. The best I reckon we will ever see would be a 10% drop when interest rates start going up or a long period of stagnation.



> That's not to sound doom and gloom or have no faith in the country; just for a lot of working people, housing affordability is a real concern and top line average figures can be quite misleading.




I started off sleeping on the couch in a mates place in Manly when I first got there in the early 80's. I use to pick up the Manly Daily and look at the property prices and just shake my head as to how could anyone buy a unit there. I just worked my ar$e off doing o/t and extra jobs just to get in the market. Bought a 1 br flat, sold, rebought, sold rebought over and over. Once I owned my own place fully I bought investment property. It has never been easy, I never finished high school and didn't go to uni, I had nothing but simple jobs. I just put my money in real estate while others were drinking as much beer as they could on a Friday night. The rest is history.


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## qldfrog (30 January 2016)

Bill M said:


> I started off sleeping on the couch in a mates place in Manly when I first got there in the early 80's. I use to pick up the Manly Daily and look at the property prices and just shake my head as to how could anyone buy a unit there. I just worked my ar$e off doing o/t and extra jobs just to get in the market. Bought a 1 br flat, sold, rebought, sold rebought over and over. Once I owned my own place fully I bought investment property. It has never been easy, I never finished high school and didn't go to uni, I had nothing but simple jobs. I just put my money in real estate while others were drinking as much beer as they could on a Friday night. The rest is history.



Good on you Bill, but as long as you realise you were also surfing an economic wave which is not there anymore;
Doing exactly the same thing in the US or UK/Ireland could have seen you bankrupted or extremely worse than you are now, for the same effort and sweat.
the reasons have been discussed ad nauseum here and on other threads

I would also not use the "never/impossible" about the potential 60% fall of price for selected North Beaches suburbs.the AUD has lost more than 30% of its value against the USD in the last few years.
If the RE price stay the same in $ term,but the AUD collapses and people who do have income under hyperinflation earn double while most are unemployed, you would be right  strictly speaking but the real value of your house/unit there would be cut in half.
I am seeing mostly a defaltion scenario ahead world wide, so you should be good but I would not discard an australia specific collapse as per current Brazil situation (similar economically in some ways).
our debt is owned O/S, is enormous now both for government and individuals, if markets freeze and CBA/government can not get its needed injection of foreign currency, everything can go down very very fast, and with term deposit at 20% in a RE price collapse, many of the few with money then will wait before jumping onto distressed sales.So never say never.
But good on you, I arrived in Australia a bit to late to get the fiull benefit of the wave, but enjoyed it while it staid and Australia treated me well too.A bear in nature always happy when i am wrong...


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## Mrmagoo (31 January 2016)

trainspotter said:


> It's six o'clock ....
> 
> View attachment 65666




It is 12 oclock. Interest rates haven't even risen yet. And prices are rising. Can't even read your own made up clock.


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## Mrmagoo (31 January 2016)

luutzu said:


> e.g. A blue collar person earning $50K a year made 1/3rd a person who earn $150K a year. But the house a better paid person can buy is, say $1M but that does not mean the house a $50K person could buy is $330K. It'd be at least $600K.
> 
> So an average income of $75K wage does not mean half the working population earn that or less while the other have evenly distributes it out; but for house prices they're more even.




Don't bother. They're rich old blokes who had it too easy to know what adversary looks like.


----------



## trainspotter (31 January 2016)

Mrmagoo said:


> It is 12 oclock. Interest rates haven't even risen yet. And prices are rising. Can't even read your own made up clock.




Your lack of understanding is stupifying. There is more to property in Australia then Sydney. Please troll away  as your posts reveal as to what level of medication you are currently on. I will write it in crayon next time so you might comprehend.


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## Mrmagoo (31 January 2016)

trainspotter said:


> Your lack of understanding is stupifying. There is more to property in Australia then Sydney. Please troll away  as your posts reveal as to what level of medication you are currently on. I will write it in crayon next time so you might comprehend.




As I said can't even read your own clock. In which universe have interest rates increased and values fallen ? Property prices are up massively over Australia. Maybe they're down in a few of your cherry picked locations.


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## trainspotter (31 January 2016)

Mrmagoo said:


> As I said can't even read your own clock. In which universe have interest rates increased and values fallen ? Property prices are up massively over Australia. Maybe they're down in a few of your cherry picked locations.




You are not the full quid are you Mrmagoo? The clock is not week by week nor month by month.



> *After controversially lifting mortgage rates last year independently of official moves,* the big banks are tipped to use the same playbook to offset earnings pressure that is showing no sign of letting up.
> 
> While the banks’ “repricing” of their mortgage books over the past 12 months provided a reprieve from adverse regulatory changes, their margins are under renewed pressure from rising wholesale funding costs and fierce competition.
> 
> ...




http://www.theaustralian.com.au/bus...s/news-story/d9468334bbc160a2d420d2698f942626

Sydney house prices recently in the last quarter have done what exactly?



> After a year of strong growth, *a fall in Sydney home prices h*as dragged the national average flat in the last month of 2015.
> 
> While the national average capital city home price rose 7.8 per cent over 2015, it went nowhere in December and actually fell *1.4 per cent over the last three months of the year.*
> 
> Sydney was the prime mover on all fronts - its 11.5 per cent annual gain was the strongest of any capital city market and its* 2.3 per cent third quarter decline also the biggest*.




http://www.abc.net.au/news/2016-01-04/home-prices-stagnate-in-december-after-2015-surge/7065954

Now for the crayon part so you might understand ....



> Gladstone, Qld
> 
> The construction phase for three LNG facilities created a house price boom in Gladstone, but it started winding down in 2012 as workers began seeking jobs elsewhere and developers started constructing a mass of dwellings. Many of the workers that remain in the area have been accommodated in camps, circumventing the local housing market.
> 
> ...




http://www.dailytelegraph.com.au/re...t/news-story/3d6492972780d3fb40df9ec813289d07

Cherry picked eh? Get out of Sydney and have an optitractomy - you know the operation where they remove the link from your eyeballs from your anus to improve your sh!tty outlook on life.


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## luutzu (1 February 2016)

Mrmagoo said:


> Don't bother. They're rich old blokes who had it too easy to know what adversary looks like.




It's true that on average the current generation may have it tougher than the average of the last few generations, but I think it's unfair to say that these old blokes had it easy or they don't know what adversary is either.

I mean, you know what Trainspotter have to do to earn a living? He bloody stick sharp objects into oysters balls for crying out out; it's so tough running his oyster business that the dude seem to take enjoyment from watching those old trains blowing steams and waking up entire neighbourhood with each chugs. Or BillM who started out sleeping on his mates flat but will probably now be charging extra if a tenant let his mate sleeps over 

All jokes aside, it is tough. I know people who works very hard but still could only afford to rent. Also know people who does not work  all that hard, but that's because they're "white collar", and still couldn't really buy a house - maybe a flat... or a modest house if they're both working - I guess that's why some people like to marry rich people and some people just like to make money by any means 

But I think it all comes down to it being how life is supposed to be - tough as heck but you try to make the best out of what you have and maybe it will work out a bit better as you go along.

I'm not trying to lecture. I mean, the opportunities I missed or not taken advantage of properly; that and even though I am currently at a better place than a few years ago, it wouldn't surprise me if others are still looking at me as an example of what not to do in life (and they'd be wrong, gid dam it, very very wrong )

I think we all think, at one time or another, that people ought to care a bit more, ought to give a dam about our adversity... But most people don't because, well some are just brought up that way; but most don't give a dam because they got their own problem to worry about. So don't take it personally.

I'm sure we all have dreams where this and that are given or taken away to make life easier on us, but you know the saying.. if it doesn't kill you, it'll first try to break you and get you to do it for them. So it's up to us to make something of it I guess.

If life is too easy and things are just handed to us, how will we know how awesome we are?

Take me for example... each time I hear well to do people talk about them "building" their house, inside my head I'd go... did you draw it up yourself? No. Did you knock the old one down yourself? No. Did you study how to wire up and form the foundation? No. Did you learn and do plumbing? No. Did you read up then estimate quantity then engineer then frame the entire house by yourself? No. Did you then do all the roofing and plaster and tiling (except the floor, that's freaking hard).. No... then you did not build your house. I on the other hand, did. 

See, if you were well off all you'd be saying is something like: uuhhhh, and I just love the $25,000 lanscaped garden you had done. It is so hard to pick the right plant that you'd like from Bunnings and dig a hole to put it in.


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## luutzu (1 February 2016)

Bill M said:


> I am out of the market for 3 reasons. 1st. the price jumped the most in the last 2 years before the sale, so the price was good. 2nd. was there was a threat of a major development next door to my building and 3rd. was that it wasn't suitable for my wife and I anymore. It meant sell, money in the bank.
> 
> Now with record low interest rates prices have moved even further north and perhaps further big increases are over. Maybe when interest rates start to rise prices might stagnate or go slightly south, that is the feelings I have. However when I go looking at property there are still swarms of people all doing the same thing, so for now it is still stable.
> 
> ...




Nice try Bill. You sold because you're too smart to think you could take all the money and leave no hope for the other fella 

But nice work though.


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## Mrmagoo (1 February 2016)

I love how an 11% YOY increase is a fall and record low interest rates are increasing interest rates and improving employment conditions indicate a recession.

This guy cherry picked a few mining towns.

Not that it matters as the "property clock" is complete bull****. The only cycle we've seen in property has ben "up, up and up some more".


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## Mrmagoo (1 February 2016)

luutzu said:


> All jokes aside, it is tough. I know people who works very hard but still could only afford to rent. Also know people who does not work  all that hard, but that's because they're "white collar", and still couldn't really buy a house - maybe a flat... or a modest house if they're both working - I guess that's why some people like to marry rich people and some people just like to make money by any means
> .




Blue collar work is better. White collar work = you get fired from job for being too ugly or too old too asian or not asian enough too male or too female too tall or tall short, unpaid overtime, stupid office politics, leftist, tumblr bull**** sometimes or other times insane amounts of abuse that you can't say squat back to and you have to wear stupid impractical clothes for no good god damned reason.

I'd love to be a blue collar worker get paid just to get a job done and be allowed to act like a complete and utter degenerate at all t imes and not only keep your job but win praise and admiration from your colleagues. And usually blue collar work pays more.


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## trainspotter (1 February 2016)

Mrmagoo said:


> I love how an 11% YOY increase is a fall and record low interest rates are increasing interest rates and improving employment conditions indicate a recession.
> 
> This guy cherry picked a few mining towns.
> 
> Not that it matters as the "property clock" is complete bull****. The only cycle we've seen in property has ben "up, up and up some more".






> Quincy Magoo (or simply Mr. Magoo) is a cartoon character created at the UPA animation studio in 1949. Voiced by Jim Backus, Quincy Magoo is a wealthy, short-statured retiree who gets into a series of comical situations as a result of his nearsightedness, *compounded by his stubborn refusal to admit the problem*.




https://en.wikipedia.org/wiki/Mr._Magoo

Funny how art imitates life now isn't it 

Even when FACTS are presented he still refuses to admit he is wrong. Get out of Sydney and open your eyes.


----------



## Mrmagoo (1 February 2016)

trainspotter said:


> https://en.wikipedia.org/wiki/Mr._Magoo
> 
> Funny how art imitates life now isn't it
> 
> Even when FACTS are presented he still refuses to admit he is wrong. Get out of Sydney and open your eyes.




This is like an episode of the loony tunes. Australia is not in recession. Interest rates have not risen. Property prices have been increasing. If anything, we're at 12:15. That is assuming this made up clock has any resemblance to reality.


----------



## trainspotter (1 February 2016)

Mrmagoo said:


> This is like an episode of the loony tunes. Australia is not in recession. Interest rates have not risen. Property prices have been increasing. If anything, we're at 12:15. That is assuming this made up clock has any resemblance to reality.






Mrmagoo said:


> *This is like an episode of the loony tunes.* Australia is not in recession. Interest rates have not risen. Property prices have been increasing. If anything, we're at 12:15. That is assuming this made up clock has any resemblance to reality.




Your words not mine  

Have you thought this might be a"global" clock and not specific to Australia and is to be used as a reference point only?

So when the banks raised interest rates last year above what the RBA had sanctioned this did not occur in your world right? As per the link I provided. Watch what they will do in the next few months as they blame the "cost of funding" because the US of A is doing it 



> *THE most telegraphed US rate rise in history is expected to provoke bigger moves on financial markets than what’s been seen so far.*
> The federal funds rate today rose a quarter of a percentage point to a range between 0.25 per cent and 0.5 per cent. The Australian dollar’s reaction to the US Federal Reserve’s first rate hike in almost a decade was fairly muted, while the local share market rallied.
> But Commonwealth Bank of Australia economists predict a stronger response to play out over the next few days.
> “We haven’t yet seen the full reaction, partly because a lot of market participants around the globe were closed for business given the time zones,” CBA chief economist Michael Blythe said.
> ...




http://www.news.com.au/finance/us-f...s/news-story/00e170643b03a7acd6488c7879fa921d

Naaahhhh ... interest rates aint rising eh? 

Australia is not in recession but look what happened in the Eurozone. Did they have a recession? You betcha.

So you think this is all about Sydney right and prices have gone up and up and up ALL across Australia but you fail to perform the most simplest research that EVIDENCES regional Australia house prices are falling dramatically and not just in the "cherry picked" mining towns I posted. Go and have a look at Townsville (which by the way has suffered a 20% decline) 

Here is another "cherry picked" town ... Oh yeah and not mining either ... DERP !!

2010 Mt Tarcoola, Geraldton average median price $448,000
2015 Mt Tarcoola, Geraldton average median price $373,000
A $75,000 LOSS in 5 years on median price range for 1 suburb

Another suburb in same town has lost over $80,000 in the same period. I will place the link here http://www.domain.com.au/suburb-profile/wandina-wa-6530 for you to gorge yourself on actual DATA and FACTS   

You Sir, are a replicant of your moniker. I bid you adieu in your trolling exercise as the bait you are using is a bit smelly and the fish do not feel like biting (read educating) you anymore.

P.S. Like it or lump it we are not completely isolated to global market forces which will have an effect on The future of Australian property prices.


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## satanoperca (1 February 2016)

trainspotter said:


> Your words not mine
> 
> Have you thought this might be a"global" clock and not specific to Australia and is to be used as a reference point only?
> 
> ...




Thanks TS,

You have just shown, that property is not different to any other investment vehicle, you need to know when to enter and when to exit to remain profitable. 

I believe nothing has changed in that regards since man began to walk on two legs instead of four.

Just played a game a tennis with my 10 year old, worth more than all the houses in Sydney or Melbourne, cannot buy that experience.

Sometimes (all the time)  life riches are not what we own but rather what we experience


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## trainspotter (1 February 2016)

That's very philosophical satanoperca and TA for the compliment. Only been banging on about this for 7 years now and a couple of thousand posts  

Even remember telling people what towns to buy in, which ones to steer clear of and expected ROR as well


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## trainspotter (1 February 2016)

condog said:


> :horse: This debate is like flogging a dead horse...
> 
> Both property and shares are great and or poor investments at different points in time....each out performs at differnet times and that depends entirely on which property and which shares are selected....and a multitude of other micro and macro economic factors.....
> 
> ...




I miss condog


----------



## Quincy (2 February 2016)

trainspotter said:


> https://en.wikipedia.org/wiki/Mr._Magoo
> 
> Funny how art imitates life now isn't it
> 
> Even when FACTS are presented he still refuses to admit he is wrong. Get out of Sydney and open your eyes.




Yeah - funny how art imitates life isn't it  

http://www.collinsdictionary.com/dictionary/english/trainspotter

 someone who is very interested in trains and spends time going to stations and recording the numbers of the trains that they see
2. (informal)* someone who is odd or boring * because they are interested in knowing everything about a particular subject,  _ * even very small, unimportant details   *_⇒  ■ He's a rather over-serious disco trainspotter with a record collection *instead of a brain*.,    ⇒  ■ _They looked like boring, trainspotter types_.

Probably zero chance that you are from Sydney or have ever, ever, EVER lived in Sydney or purchased or owned property in Sydney but hey you are the self-professed expert on the Sydney market aren't you !

Sydney has many property markets, it is not just one property market. As Bill M has alluded to : the Northern Beaches is doing its own thing . . . same as many other Sydney Suburbs that may be forging ahead or otherwise.


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## trainspotter (3 February 2016)

Quincy said:


> Yeah - funny how art imitates life isn't it
> 
> http://www.collinsdictionary.com/dictionary/english/trainspotter
> 
> ...




Hey ... I resemble that remark. Describes me to a T 

I wrote in post #12714 ...



> 2) Sydney will be the market that will be corrected to be around 15% IMO. *Mainly from the HIGH END* market contracting which skewiff sales/pricing data. Rest of the country has already stagnated. Started about 3 years ago.




Not just me saying it either ...



> "Throughout 2016, we may see further *moderate value declines* in Sydney and Melbourne," Tim Lawless, head of research at CoreLogic,
> 
> The trend reversed after banks raised interest rates for landlords for the first time in five years in July and for owner occupiers in November following a regulatory directive to limit growth in investor mortgages to 10 percent a year and increase the capital the lenders hold against mortgages.
> Economists from Macquarie Group to Bank of America Merrill Lynch forecast a decline in prices over the next two years. ANZ Bank said in a note late in November "strong underlying demand" is likely to contain any price declines in the major capital cities to less than 10 percent in the absence of an economic downturn.




http://www.smh.com.au/business/sydn...terly-drop-in-four-years-20160104-glyy7l.html

More sobering stuff here (and it is suburb specific)

http://www.domain.com.au/news/sydney-house-prices-drop-3-per-cent-domain-group-20160127-gmd7pl/

I have not been specific on Sydney suburbs other than the statement above and I have stated that there are regional property markets (as in NOT Sydney or even NSW) that have dropped over 20% in a 5 year period.

Sydney? Where is Sydney again?










Never been there 

I also have a penchant for this ...



> *Trainspotter* - A person who can successfully identify obscure music a DJ plays. A hardcore trainspotter can take it a step further and identify the source of obscure samples.
> 
> Trainspotter: "Thats track B off of the first pressing of So and So record"
> Friend: "You're such a trainspotter."




http://www.urbandictionary.com/define.php?term=trainspotter

Or are you simply feeling empathy for your namesake Quincy?




Go and talk to this guy .. he lives in Sydney 



> Sydney and Melbourne are done – I called it all the way back in April. So let’s move on and see what actually happens after an area booms?
> 
> Firstly, the ridiculous prices paid for properties disappear. That $800k house may achieve $900k in a booming property market due to desperate buyers, but this desperation quickly vanishes when a market cools.
> 
> The first sign of this cooling is disappearing Auction sign boards. The ‘For Sale’ board returns. Auctions are great only when 4 or 5 bidders knuckle it out. But with one or no buyers, the fact is auctions are simply boring & embarrassing for the agent! And if you haven’t noticed, it’s all about agent image!




http://www.wheregroup.com.au/bye-bye-boom-what-happens-next/

(Note the date it was written as well)


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## luutzu (3 February 2016)

trainspotter said:


> View attachment 65750
> 
> 
> Never been there




Blond suits you pretty well.


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## luutzu (3 February 2016)

Mrmagoo said:


> Blue collar work is better. White collar work = you get fired from job for being too ugly or too old too asian or not asian enough too male or too female too tall or tall short, unpaid overtime, stupid office politics, leftist, tumblr bull**** sometimes or other times insane amounts of abuse that you can't say squat back to and you have to wear stupid impractical clothes for no good god damned reason.
> 
> I'd love to be a blue collar worker get paid just to get a job done and be allowed to act like a complete and utter degenerate at all t imes and not only keep your job but win praise and admiration from your colleagues. And usually blue collar work pays more.




You mean being self-employed right?

Blue collar people do have it pretty bad man. 

The only people who don't get told off are those who's their own boss. But then the boss do have their real boss and if the income aren't constant will also get told off too.

This young bricklayer who did work on my folks house got really upset a couple times because it rained most of the week and he couldn't do his work and can't get pay and his wife was giving him a hard time because they're all stressed.

I did work for my father as a signwriter and we generally get good and fair customers - the pay is also pretty decent too. But some customers, especially the wives of the "professional" ones, can be a bit much sometime.

But yea, blue or white collar... you can choose to not put up with people's crap. Money can be made at other jobs.


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## PennD (3 February 2016)

For Mr Magoo...
https://m.youtube.com/watch?v=agC7SoihH-o


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## luutzu (6 February 2016)

Quincy said:


> Yeah - funny how art imitates life isn't it
> 
> http://www.collinsdictionary.com/dictionary/english/trainspotter
> 
> ...




It takes a real man to appreciate fine machines and great engineering. Something only real men would appreciate I guess.

I might not be that much of a man but I've been on Sydney's latest train fleet when they were testing it. Was probably about 7AM and I was up at 5 that day but to hear it whizzed to life man... Something you don't forget.

Best part of going overseas was walking up and along those 737s like you do in Thailand with Air Asia. 

As to the old trains... saw a real one at that museum in Darling Harbour... how do you not be amazed by it?


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## Glen48 (17 February 2016)

60 Minutes CH 9 this Sunday are claiming house prices are facing a 50% down turn...Be interesting to see what they have to say..


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## Wysiwyg (17 February 2016)

Glen48 said:


> 60 Minutes CH 9 this Sunday are claiming house prices are facing a 50% down turn...Be interesting to see what they have to say..


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## satanoperca (17 February 2016)

Wysiwyg said:


>





If it is on 60 minutes it must be true.

Better sell now before it is toooooooooooo late. ha ha ha Well before Sunday and the rest of the population freaks out.

Cheers


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## Wysiwyg (17 February 2016)

satanoperca said:


> If it is on 60 minutes it must be true.
> 
> Better sell now before it is toooooooooooo late. ha ha ha Well before Sunday and the rest of the population freaks out.
> 
> Cheers



Yes it a broad, sweeping statement. I doubt, if it is true, the whole Australian property market will experience this. Who is making the call and what credibility they have should reveal more.

p.s. - my house goes on the market tomorrow.


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## qldfrog (17 February 2016)

satanoperca said:


> If it is on 60 minutes it must be true.
> 
> Better sell now before it is toooooooooooo late. ha ha ha Well before Sunday and the rest of the population freaks out.
> 
> Cheers



Joke aside, the fact that 60 minutes release that type of "info-entertaiment" means the "majority" ois ready for it; this is just a reflection of the current psyche


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## Wysiwyg (21 February 2016)

Glen48 said:


> 60 Minutes CH 9 this Sunday are claiming house prices are facing a 50% down turn...Be interesting to see what they have to say..



What did you think of that story? I think using a mining town (boom/bust cycles) as an example of what could happen is unrealistic. Moranbah, can you believe it.   Poor lending practices and 10% unemployment would trigger such an event and like the property nostradamus said 'not if but when'. Wake me up when it starts.


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## satanoperca (21 February 2016)

Wysiwyg said:


> Poor lending practices




That is the only thing that was valid. How wide spread are such poor lending practices regardless of location, actually if the banks are willing to lend in high risk area with no equity, then what has their lending regime been like in the major cities?

I can only deduce that if 50% of loans are interest only and we have tapped every conceivable source of funds to pump into the property sector, it will be had to show the gains that have occurred in previous years, mind you in the long term I can only see property going up while we have population growth.


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## MrBurns (21 February 2016)

satanoperca said:


> If it is on 60 minutes it must be true.
> 
> Better sell now before it is toooooooooooo late. ha ha ha Well before Sunday and the rest of the population freaks out.
> 
> Cheers




60 Minutes has gone so far downhill it's nothing like the original show, that story was absolute rubbish the "expert" they had was wearing a t shirt and looked like he needed a bath. 
The town they chose was not a typical example of what going on out there. 
I never watch that show anymore but thought I'd have a look because of the subject matter.....
There probably will be a downturn and a big one but that story was so bad it was cringeworthy.


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## Glen48 (22 February 2016)

Agree there was suppose to be a down turn in USA R E ....but it never happened


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## pilots (22 February 2016)

I liked the bit when the bimbo was complaining that the bank lent her 6MIL, it was all the banks fault, what a joke she was.


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## Tyler Durden (22 February 2016)

Wysiwyg said:


> What did you think of that story? I think using a mining town (boom/bust cycles) as an example of what could happen is unrealistic. Moranbah, can you believe it.   Poor lending practices and 10% unemployment would trigger such an event and like the property nostradamus said 'not if but when'. Wake me up when it starts.




I agree using Moranbah was a bit weak. I looked up the top 20 suburbs for mortgage defaults and Moranbah wasn't even there.

However, I do wonder if this means that 60 Minutes is early to the topic. Perhaps Moranbah will play a role in triggering a domino effect?

It was interesting to hear about the lending practices and the significant drop in prices of some property, I think it is a bit of a wake up call for people who think property can never go down. Also thought it was funny how if these people had made (a tonne of) money, they'd be boasting about how smart they were, but when they lose money they seemed to shift the blame onto someone else (ie. the bank shouldn't have lent me that money).


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## Tyler Durden (22 February 2016)

Also, here is an article in response (and opposition) to the views expressed by Jonathan Tepper in 60 Minutes:

http://www.domain.com.au/news/claim...re-outrageous-economists-say-20160222-gmzvkd/

I wonder if such an emotional response reflects an effort to cover up the truth?


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## Glen48 (22 February 2016)

CH 9 news Tuesday night has a story about houses selling some where for 30K ...So wait until they come down


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## Wysiwyg (23 February 2016)

Tyler Durden said:


> Perhaps Moranbah will play a role in triggering a domino effect?



Definitely not. See they had to use a town, and I am sure of other mining towns, where property prices have crashed in line with mine closures and retrenchments. I believe that y.o.y. valuations have to moderate because a 100k house 20 years ago worth 500k today doesn't convert well for a 500k house now to be worth 2.5 million in 20 years time.


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## Bill M (23 February 2016)

Tyler Durden said:


> Also thought it was funny how if these people had made (a tonne of) money, they'd be boasting about how smart they were,




They did, they made that magazine for being the number one property investors (or something like that) and were all smiles in the photos.



> but when they lose money they seemed to shift the blame onto someone else (ie. the bank shouldn't have lent me that money).




It's always blame someone else isn't it?

As soon as I saw that program I thought....
1. I never heard of that town
2. It's a 1 mine coal town......*danger*
3. What if it closes down? Who will buy these houses? Who will they rent them too?
4. Interest only loans? Who in their right mind would do that?
5. Why buy so many houses all in one area, considering all of the above?

As the reporter said, it was gambling. And now, oh shucks lets blame the banks.

But hey, you make a poor stock selection and the company goes bust, you pay, no one helps.
You buy debentures and they go bust, you pay, no one helps.

I'm sorry but I do not have any compassion for anyone who admits they were "GREEDY". One thing going for that lady is that she is 24 y/o, she can go bankrupt and start all over again and put it down to an expensive lesson learn't.


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## SmokeyGhost (23 February 2016)

Bill M said:


> They did, they made that magazine for being the number one property investors (or something like that) and were all smiles in the photos.
> 
> 
> 
> ...




They took the risk and it blew up.  Tough.

Now it's going to be an issue for the financiers as they will want the money back and it is a little difficult getting funds from people who don't have any.  Um, oh mighty property investors, you did enter into a contract by the way.

From what I have seen over the years, the most successful investors are rarely, if ever, in the news.  And they seem to prefer to keep it that way.


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## satanoperca (23 February 2016)

Bill M said:


> It's always blame someone else isn't it?
> 
> As soon as I saw that program I thought....
> 1. I never heard of that town
> ...




The scary thing is the banks lent the money in the first time, where was their risk assessment?

I assume that as prices rose, the couple gained more paper equity which the banks lent against. I would have thought the banks which have put a higher risk rating on the area due to the some of your points above, if this is the case, then how over leveraged could some of our city dwellers be, given the assumption the banks place a lower risk rating of property values in the major cities. If my assumptions are correct, it might not take a 50% fall in prices like the above case to cause damage to investors but a much smaller decrease in home values.

But why do the banks care, they have a tax payer funded $350B pool of money to tap if things go pear shape just a little in the major cities and my children will be paying for it for the rest of their lives.

I find the whole situation quite comical with the current govnuts promoting innovation while supporting tax breaks for property, funneling capital into property instead of businesses that could provide innovation.

Cheero


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## Tyler Durden (23 February 2016)

Found out today she actually has a website trying to flog her book. Guess she's just trying to make lemonade when given lemons...

http://www.katemoloney.com


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## waterbottle (23 February 2016)

trainspotter said:


> Cherry picked eh? *Get out of Sydney *and have an optitractomy - you know the operation where they remove the link from your eyeballs from your anus to improve your sh!tty outlook on life.




x10000000

I moved out of Sydney for the first time this year - and not out of choice! Best thing to have ever happened. 

I didn't realise how hard it is to just "live" in Sydney until I got out. No more 45 min commutes to work when you only live 12km away. No more 10 min drives "down the road" to shops. Far fewer frustrated people. Far cheaper housing. Same priced goods & services.

If you can get a job outside of Sydney, then do it.


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## shouldaindex (24 February 2016)

Big 4 Banks bad debt ratios decreased every year since 2012 to hit record lows in 2015.

Same period of time that story was happening.


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## Tyler Durden (24 February 2016)

Was talking to a friend tonight about the 60 Minutes segment, and he relayed to me a story about a friend of his, who had a deposit saved up but had no job at the time of applying for a home loan. No problem. Documents were fudged a bit, deposit paid, no questions asked about how he was going to service the loan despite being unemployed.

My friend doesn't know either how his friend manages to service the loan (though we guess it must be some cash/slightly dodgy stuff going on).


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## shouldaindex (24 February 2016)

Big difference between using narrative v facts to invest though.


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## Bill M (25 February 2016)

Tyler Durden said:


> Was talking to a friend tonight about the 60 Minutes segment, and he relayed to me a story about a friend of his, who had a deposit saved up but had no job at the time of applying for a home loan. No problem. Documents were fudged a bit, deposit paid, no questions asked about how he was going to service the loan despite being unemployed.
> 
> My friend doesn't know either how his friend manages to service the loan (though we guess it must be some cash/slightly dodgy stuff going on).




I can tell you with absolute certainty that of the 13 different home loans I have had over my life time, none were easy to get. I even went through 3 Mortgage Brokers on 3 different occasions to make it easier but it wasn't. They wanted everything, work history, last 3 years of tax returns, my bosses name and the company I worked for and it was all followed up.

Once, quite some time ago I went to a credit union to borrow a some money (about 20K) to buy into a small business venture. Even though I owned my apartment outright they knocked me back because at the time I wasn't working. Of course I wasn't, I was trying to start a business.


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## qldfrog (25 February 2016)

Bill M said:


> Once, quite some time ago I went to a credit union to borrow a some money (about 20K) to buy into a small business venture. Even though I owned my apartment outright they knocked me back because at the time I wasn't working. Of course I wasn't, I was trying to start a business.



Bill, australian banks do not finance business , they at most agree to lend it some money against your own house, unless you are Palmer,  or Bond
Lending for real estate is still bloody easy


----------



## Tyler Durden (26 February 2016)

> It was like a scene from the film The Big Short. A hedge-fund manager and an economist pose as a gay couple on a combined income of $125,000 and tour Sydney's western suburbs viewing housing developments and meeting mortgage brokers for research to determine if there's a housing bubble.
> 
> The conclusion is it's worse than they thought.
> 
> ...




http://www.afr.com/news/economy/employment/uncovering-the-big-aussie-short-20160223-gn130w


----------



## fraa (26 February 2016)

Nothing new here, if property crashes he becomes famous, if if doesnt ppl will forget about him as we get these predictions every few years. Asym payoff so of course pundits are bears.


----------



## Tyler Durden (27 February 2016)

fraa said:


> Nothing new here, if property crashes he becomes famous, if if doesnt ppl will forget about him as we get these predictions every few years. Asym payoff so of course pundits are bears.




Well, what I kinda like about this one is he hasn't just made a claim based on stuff he read or stats he's seen, but he's actually gone out into the field to undertake some practical research...


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## MrBurns (29 February 2016)

> When it comes to bubbles, Australian property ticks pretty much all the boxes. If there is a sharp correction in the eastern states it will have a devastating impact on our banks and economy, writes Ian Verrender.
> 
> "There is no cause to worry. The high tide of prosperity will continue." Andrew W. Mellon, US Secretary of the Treasury. September 1929.
> 
> "These consultations confirm our view that the underlying economy remains sound." White House statement, Black Monday, October 19, 1987.





http://www.abc.net.au/news/2016-02-29/verrender-housing-bubble-is-building/7206678


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## Tyler Durden (9 March 2016)

Talking to a friend over dinner tonight, found out a mutual friend of ours had recently bought three off the plan apartments in a short span of time after being introduced to someone akin to a mortgage broker. All she had to pay was 10% deposit for each one, without actually obtaining a bank loan for the balance. Apparently the loan is only required once the apartment is complete, but the plan is to re-sell this (at a profit hopefully) before completion.

If this is not gambling then I don't know what is. At least with the casino you know the odds.


----------



## Uncle Festivus (9 March 2016)

So it's looking like the entire property bull in places like Vancouver, Sydney, Melbourne, London & New York can be attributed largely to the corresponding increase in China's money supply and subsequent attempts to reign in capital flight out of the country? Now that the Chinese authorities are slowly shutting down each of the exporting channels we should see a similar slow down in property price increases? In fact it's already started here, although Vancouver is still 'frothy'.

No more Smurfing ;(

http://www.bloomberg.com/news/artic...uise-billions-in-china-illicit-money-outflows

http://www.bloomberg.com/news/artic...eat-cash-controls-sending-real-estate-soaring


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## Bill M (10 March 2016)

Tyler Durden said:


> Talking to a friend over dinner tonight, found out a mutual friend of ours had recently bought three off the plan apartments in a short span of time after being introduced to someone akin to a mortgage broker. All she had to pay was 10% deposit for each one, without actually obtaining a bank loan for the balance. Apparently the loan is only required once the apartment is complete, but the plan is to re-sell this (at a profit hopefully) before completion.
> 
> If this is not gambling then I don't know what is. At least with the casino you know the odds.




It's certainly high risk. I did it once, waited until it was finished and then decided to borrow the money and buy it proper as prices were a bit soft. You got have the "what if prices go south plan". Having 3 and markets going south before completion is a recipe for disaster but if it goes north good profits will come for a relatively low outlay. High risk gambling in any market.


----------



## Mofra (16 March 2016)

Tyler Durden said:


> Was talking to a friend tonight about the 60 Minutes segment, and he relayed to me a story about a friend of his, who had a deposit saved up but had no job at the time of applying for a home loan. No problem. Documents were fudged a bit, deposit paid, *no questions asked about how he was going to service the loan *despite being unemployed.



As an ex lender I would guess that either your friend is lying / exaggerating (preaching to a position you clearly hold as evident by posts here) or has taken the low-doc loan route with a 30% deposit which gives a lot of leeway to the lender.


----------



## notting (30 March 2016)

https://www.aussiestockforums.com/forums/showthread.php?t=17967&p=896759&viewfull=1#post896759




> More bad news for Melbourne property investors: central Melbourne off-plan apartments fell about 11 per cent in the first year between their original purchase and pre-settlement valuation, figures from valuation firm WBP Property Group show.
> The average 11.5 per cent decline - equivalent to nearly $68,000 - in the value of 14 apartments WBP valued within a year of their sale date gives an indication of the extra equity buyers of off-plan apartments may have to produce when the projects into which they have bought come due to settle.
> Banks rely on the valuations of firms like WBP and are using lower values, as well as a string of other conditions to reduce their exposure to what many regard as oversupplied apartment markets.



corn:


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## sptrawler (30 March 2016)

The number of houses being built in W.A, doesn't seem to have slowed down, yet there is a negative population growth.

Either people know something I don't, or many are going to be caught with unoccupied rental properties.IMO

Apparently, there are also an above average amount of properties for sale, at the moment.


----------



## Vixs (30 March 2016)

sptrawler said:


> The number of houses being built in W.A, doesn't seem to have slowed down, yet there is a negative population growth.
> 
> Either people know something I don't, or many are going to be caught with unoccupied rental properties.IMO
> 
> Apparently, there are also an above average amount of properties for sale, at the moment.




Is this reflected in ongoing development and construction approvals or is this just the properties and developments from 2 years ago being finished?

Wouldn't surprise me to see places pop up that had great rental appraisals but with noone to live in them anymore - that's (part of) what happened in Central QLD.


----------



## ggkfc (31 March 2016)

Now who's gonna bail out the chumps with 3-4 properties, barely making repayments on low incomes when interest rate goes up


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## Toyota Lexcen (31 March 2016)

when are the interest rates going up?


----------



## poverty (31 March 2016)

Toyota Lexcen said:


> when are the interest rates going up?




Not any time soon that's for sure.


----------



## shouldaindex (31 March 2016)

I know someone who is a great bell weather in terms of timing busts.

They got into Milk stocks late last year, Oil stocks just before the crash, and bought a Melbourne CBD Apartment 6 months ago.

I don't think this is a coincidence either, they tend to buy the "great assets to buy" narrative (perhaps otherwise known as a bubble), not knowing that when the idea gets that popular to hear about it within their social group, it's probably already peaked.


----------



## ggkfc (1 April 2016)

shouldaindex said:


> I know someone who is a great bell weather in terms of timing busts.
> 
> They got into Milk stocks late last year, Oil stocks just before the crash, and bought a Melbourne CBD Apartment 6 months ago.
> 
> I don't think this is a coincidence either, they tend to buy the "great assets to buy" narrative (perhaps otherwise known as a bubble), not knowing that when the idea gets that popular to hear about it within their social group, it's probably already peaked.




well that fella is your best friend. when he buys you sell and when he sells you buy.. guaranteed riches


----------



## Value Collector (1 April 2016)

shouldaindex said:


> I know someone who is a great bell weather in terms of timing busts.
> 
> They got into Milk stocks late last year, Oil stocks just before the crash, and bought a Melbourne CBD Apartment 6 months ago.
> 
> I don't think this is a coincidence either, they tend to buy the "great assets to buy" narrative (perhaps otherwise known as a bubble), not knowing that when the idea gets that popular to hear about it within their social group, it's probably already peaked.




lol, yes if everyone around you thinks your investment Idea is fantastic, its probably a dud because you are about to over pay for what ever asset it is you are buying.


----------



## Uncle Festivus (3 April 2016)

poverty said:


> Not any time soon that's for sure.




That depends? If our (country) credit rating deteriorates we will need to increase rates to attract funding? One big negative feedback loop....the economists would say that 'as we transition from mining to ????' yet Chinese tourists & property buyers can't prop up the economy indefinitely, just as they couldn't keep buying our resources to create multiple gluts eg iron ore/steel?


----------



## notting (13 April 2016)

https://www.aussiestockforums.com/forums/showthread.php?t=17967&p=896759&viewfull=1#post896759



> Sydney inner city apartment prices are starting to mirror pricing patterns in the troubled Melbourne CBD apartment market falling as much as 19 per cent in the last quarter of 2015 in some areas, a report by global real estate group, JLL, has shown.




Ooooh goody goody gum drops.


----------



## trainspotter (13 April 2016)

If it's good enough for Mike Smith ........



> Mike Smith still hasn't sold his house. The former ANZ chief executive put his five-bedroom, six-bathroom Toorak home on the market in mid-February, targeting a $15 million sale.
> 
> A sales campaign for the 2 Hopetoun Road mansion ended on 22 March and it remains unsold.
> 
> Mr Smith and his wife Maria aren't twiddling their thumbs while they wait. Last month they paid former International Olympic Committee vice president, Kevan Gosper and his wife Judith $5.75 million for their three-bedroom apartment on Domain Road, also in Toorak.




http://www.afr.com/real-estate/ex-a...melbourne-prestige-sales-slow-20160412-go47e0

Oh yeah .. paid 9.65 million for it in 2007


----------



## sptrawler (13 April 2016)

trainspotter said:


> If it's good enough for Mike Smith ........
> 
> 
> 
> ...




Come on Trainspotter, if anyone knows how stupid Aussie house buyers are, the CEO of a bank does.


----------



## Monkey C Doo (13 April 2016)

trainspotter said:


> If it's good enough for Mike Smith ........
> 
> 
> 
> ...




Yeah.... but everyone knows that property doubles in price every ten years. My maths say that property is 2 million too cheap


----------



## sptrawler (14 April 2016)

Like a said a few years back, the only god thing about this property bubble is, it is a win win for Government.

Heaps of employment building them, heaps of stamp duty and GST being paid on them, and heaps of excess housing for the poor when it falls on its ar$e.


----------



## againsthegrain (15 April 2016)

sptrawler said:


> Like a said a few years back, the only god thing about this property bubble is, it is a win win for Government.
> 
> Heaps of employment building them, heaps of stamp duty and GST being paid on them, and heaps of excess housing for the poor when it falls on its ar$e.




Not really,  when it does fall,  not if the poor won't be in a position to buy either way. 

Those with cash on hand will be the only ones with access to 'cheap excess housing' 

The poor get poorer while the rich get richer,  and cash is becoming king again


----------



## sptrawler (15 April 2016)

againsthegrain said:


> Not really,  when it does fall,  not if the poor won't be in a position to buy either way.
> 
> Those with cash on hand will be the only ones with access to 'cheap excess housing'
> 
> The poor get poorer while the rich get richer,  and cash is becoming king again




I was more thinking about the affordability of renting, with the oversupply in Perth rents have dropped a lot. 
Actually buying a property, will always be a problem for the poor, as it always has been.


----------



## bit827 (16 April 2016)

poverty said:


> Not any time soon that's for sure.




http://www.afr.com/real-estate/resi...lenders-hike-home-loans-rates-20160413-go5b6p


----------



## poverty (16 April 2016)

bit827 said:


> http://www.afr.com/real-estate/resi...lenders-hike-home-loans-rates-20160413-go5b6p




That's a bugger for home buyers.  At least my margin loan interest hasn't gone up (yet).  Still, the official RBA cash rate shows no sign of heading north, more likely now to head down further to counteract the banks moving out of turn!


----------



## satanoperca (17 April 2016)

Some questions to be considered when predicting the direction of Australian property prices :

1. Can the expansion of credit/debt continue at current levels for the next few years? If it cannot, how will banks maintain they profits - increase IR's maybe, but that is a negative feedback loop, with less people taking on new debt.
2. How much more debt can the Australian household take on, we are already one of the highest private indebted nations in the world?
3. If the RBA drops interest rates further, will the bank pass them on? Doubt
4. Even if the banks do pass on any drop in IR's as a percentage of what they are already charging, it makes relatively little difference. I doubt you will ever be able to get a home loan at less than 3.5%.
5. The govnuts have the capacity to open the flood gates to foreign investors. Ohhh, they already have. This alone can keep the property market afloat.
6. Where else can money come from to support the property market, supers can already leverage, IR's are at historical lows, Australians believe that property can never go down, that leaves only one item left, allowing first home buyers to access their super to by property, bad move, but more than feasible.
7. Given the amount of money floating around, where do you store your wealth that is safe or safer than the alternatives - property.
8. Will Australia become like other nations and just print money?
9. If property was to correct, the govnuts will do whatever they can to stop it, even if it means bankrupting the country.

Some food for thought.


----------



## Bill M (17 April 2016)

satanoperca said:


> 7. Given the amount of money floating around, where do you store your wealth that is safe or safer than the alternatives - property.




This one stood out for me. The family home is still totally TAX FREE when you sell it and it is NOT asset tested. You can pump as much money as like into it and you don't lose your pension. In fact the family home can be a $10 Million mansion and you can still collect the aged pension if you have no other assets. Bloody good country dis a Australia.


----------



## sptrawler (18 April 2016)

Bill M said:


> This one stood out for me. The family home is still totally TAX FREE when you sell it and it is NOT asset tested. You can pump as much money as like into it and you don't lose your pension. In fact the family home can be a $10 Million mansion and you can still collect the aged pension if you have no other assets. Bloody good country dis a Australia.




The problem is the money is tied up, I can't see the point in having most of your money tied up in your house, just to access a pension.


----------



## Uncle Festivus (19 April 2016)

Uncle Festivus said:


> If our (country) credit rating deteriorates we will need to increase rates to attract funding?






bit827 said:


> http://www.afr.com/real-estate/resi...lenders-hike-home-loans-rates-20160413-go5b6p






> The rises come as lenders face profit-margin pressure because of *rising costs to wholesale funding* at a time when they also need to build up large capital reserves to meet new prudential rules.




The _other_ interest rate world.......


----------



## Tyler Durden (23 April 2016)

Heard from a couple of my friends that banks had been tightening their lending standards.

However, the other day I was logged into netbank and there was an option to see how much I could borrow for a home loan. I was bored so gave it a shot. Answered a few questions and got a figure much lower than I had wanted.

Next day CBA called me asking me about my "home loan application" lol. I told them I was just playing around with it, but the girl kept trying to lure me into a branch to speak with a specialist, telling me I only needed 5% deposit and that the figure the website gave was sometimes a lot different to what they could give me in a person to person interview.


----------



## nulla nulla (24 April 2016)

> The rises come as lenders face profit-margin pressure because of rising costs to wholesale funding at a time when they also need to build up large capital reserves to meet new prudential rules.




Hard to understand how they claim there is "rising costs to wholesale funding" when the central European banks are paying negative interest rates and the motivation to their member banks is to force them to lend the money to encourage economic activity?


----------



## satanoperca (24 April 2016)

It is a guise, maybe the truth is that mortgage debt issuing is not accelerating at over 10% a year as it has been the case in the last previous years, making it harder for them to make profit.

Crap, they could try lending to business, but that requires work, lending to households to fuel the property market is sooooo much easier.

With Australians private indebtedness being one of the highest in the world, how much higher can it go before a correction?

When will central banks learn, lending on brings forward demand, it does not necessarily promote sustainable economic activity for the future.


----------



## notting (20 May 2016)

> What keeps former NAB boss and BHP chairman Don Argus up at night?
> 
> Iron ore prices? Interest rate rigging scandals? No. It is interest-only home loans.
> 
> ...






> Tenants market: residential rents are barely budging.
> 
> 11:59am: What correction? We're in one of the biggest, and certainly most dangerous, house price cycles in history, the AFR's Chris Joye writes:
> 
> ...




Just sayen


----------



## satanoperca (20 May 2016)

notting said:


> Just sayen




Come on Notting, house prices in Australia only ever go up. Nothing to worry about at all, we can keep this ponzi scheme going for decades, well sort of, IR's down have much further to go to get to ZIRP.


----------



## Tyler Durden (27 June 2016)

So this is what you're getting for your hard earned cash:




Looks like a normal wall right?

Nope!


----------



## qldfrog (27 June 2016)

US or Australia?


----------



## CanOz (27 June 2016)

Tyler Durden said:


> So this is what you're getting for your hard earned cash:
> 
> View attachment 67244
> 
> ...




I think it might be picked up on a building inspection....


----------



## Tyler Durden (28 June 2016)

qldfrog said:


> US or Australia?




In the very heart of Sydney


----------



## sptrawler (1 July 2016)

satanoperca said:


> Come on Notting, house prices in Australia only ever go up. Nothing to worry about at all, we can keep this ponzi scheme going for decades, well sort of, IR's down have much further to go to get to ZIRP.




Things might be hunky dory, over East, but they sure ain't good here in the West. 

https://au.news.yahoo.com/thewest/wa/a/31958966/figures-reveal-more-properties-selling-at-a-loss/

Country towns over here are faring worse, as most are dependent on mining, in one way or another.


----------



## Bill M (1 July 2016)

Home prices moderate, but Sydney and Melbourne continue to surge

The two largest east coast capitals continued to dominate, with Sydney posting house price growth of 6.8 per cent during the quarter and 11.3 per cent for the year.

http://www.abc.net.au/news/2016-07-01/home-prices-moderate-but-sydney-and-melbourne-soar/7560508


----------



## Tyler Durden (20 July 2016)

Tyler Durden said:


> Met a friend's friend who is a real estate agent with a focus on selling to the Chinese from China. Even he admitted that there is currently a property bubble in Australia and thinks that prices will drop slightly by June 2016.




Met up with this friend's friend recently again. He said the banks' recent restrictions on foreign lending had hurt the market somewhat, especially those who bought off the plan intending to resell before settlement, but told these clients not to panic, as a 'solution' would come up within a year.

He didn't elaborate on what that solution was, but I wonder...


----------



## sptrawler (25 July 2016)

Tyler Durden said:


> Met up with this friend's friend recently again. He said the banks' recent restrictions on foreign lending had hurt the market somewhat, especially those who bought off the plan intending to resell before settlement, but told these clients not to panic, as a 'solution' would come up within a year.
> 
> He didn't elaborate on what that solution was, but I wonder...




Mass immigration springs to mind, hope the have some skills and money, to offer.


----------



## Tyler Durden (26 July 2016)

Interesting articles:



> A growing industry of private lenders is offering temporary funding to Chinese investors to settle their apartment purchases in Australia while they wait for Chinese capital restrictions to lift, Chinese agents and analysts say.
> 
> There are projects across Australia – mostly those which have been marketed mainly to Chinese investors – which are struggling to close apartment settlements but the foreign investor market has not toppled over, they added.
> 
> The use of private lenders, as major banks clamped down foreign lending and Beijing clamped down outward bound transfers, is a temporary measure for investors to pay off their purchases.




http://www.afr.com/real-estate/nonb...vestors-settle-unit-purchases-20160725-gqdbnd

I think it fails to mention these private lenders charge a higher interest rate.

Also another article:



> Off-the-plan buyers of Australian apartments are in crisis as tough new borrowing rules mean thousands of investors who have paid a deposit are struggling to complete their purchases, according to local and overseas mortgage brokers and financiers.
> 
> Shanghai-based financiers claim their Chinese clients' funding from Australian banks has been frozen and they face foreclosure - or usurious interest rates - from private financiers.
> 
> ...




http://www.afr.com/real-estate/resi...alian-property-funding-crisis-20160725-gqcxxt


----------



## Bill M (26 July 2016)

I don't know about anywhere else but the Sydney market is as hot as hell, very little on the market and I'm talking about good 2 berdroom units in a good location. I am on the market looking to buy, I got to pay nearly $700,000 in Hornsby for such a 2br unit. Further north on the Central Coast there are several apartment blocks that have been approved by Gosford Council for Gosford, very few have started the build. Off the plan they start at 500K for a 2br unit, you need more, much more for 3br unit or townhouse up to 750K. And Gosford is classed as regional.

The biggest problem I face in looking for a decent 2br apartment is the supply, there is almost zero around and when they do come on the market they are gone within a week. Sure you can find older style junk but we are looking for quality but there is very little around. Build you guys, BUILD.


----------



## sptrawler (27 July 2016)

Bill M said:


> I don't know about anywhere else but the Sydney market is as hot as hell, very little on the market and I'm talking about good 2 berdroom units in a good location. I am on the market looking to buy, I got to pay nearly $700,000 in Hornsby for such a 2br unit. Further north on the Central Coast there are several apartment blocks that have been approved by Gosford Council for Gosford, very few have started the build. Off the plan they start at 500K for a 2br unit, you need more, much more for 3br unit or townhouse up to 750K. And Gosford is classed as regional.
> 
> The biggest problem I face in looking for a decent 2br apartment is the supply, there is almost zero around and when they do come on the market they are gone within a week. Sure you can find older style junk but we are looking for quality but there is very little around. Build you guys, BUILD.




Didn't you sell in Sydney a few years back, Bill?


----------



## Bill M (28 July 2016)

sptrawler said:


> Didn't you sell in Sydney a few years back, Bill?




Yeah long story but that unit was too small for our needs and there was a credible threat that there was going to be a construction zone next door, so we sold and banked the money.

We now live in a house in periurban Central Coast NSW. We don't like it up here. We are isolated and we like the city lifestyle. We want to buy in a upmarket apartment block, high floor with total security system and have access to a nearby railway station. Hornsby and Gosford fits this requirement well. Can walk to shopping malls, railway and the hospital. I like to be able to walk everywhere. Plus we need a place we can just slam the door behind us and disappear for 6 Months without worrying about a thing. We travel a lot.

When I wrote in my previous post about units going within a week, it happened again. Unit came on market last week. I called the agent yesterday to arrange for an inspection today, he said sorry we have a buyer on this one already and he offered me other stuff that is totally what we don't want. Gone in a week, that's what happens around here.

I have to be patient, the right one might come along. My other options are a retirement village or to buy an apartment off the plan but that is dangerous to do. I've seen a lot of projects fail or not proceed for many years. We are getting older and I have no desire to spend my time cutting lawns, cutting hedges, pulling weeds, fixing fences, painting or anything like that. Just want a nice place in a nice location and let the body corp do all the work.

In all my years in the Sydney area it has always been the same story. It is far more difficult to buy the place you want than it is to sell the place you have, the search continues.


----------



## poverty (28 July 2016)

Looks like we're going to get another interest rate cut in August.  This bubble ain't done yet!


----------



## Tyler Durden (10 August 2016)

> Off the plan apartment sales in Brisbane's inner city have taken a dive with the June quarter showing a 44 per cent decline in sales compared with the last quarter, raising concerns about settlement risk and valuations.
> 
> Place Projects' latest report shows that overall the inner Brisbane apartment market recorded a total of 464 unconditional transactions during the June quarter, the lowest level of sales since the December quarter in 2012.
> 
> ...




http://www.afr.com/real-estate/bris...-now-key-focus-for-developers-20160809-gqo5jz


----------



## CanOz (11 August 2016)

Tyler Durden said:


> http://www.afr.com/real-estate/bris...-now-key-focus-for-developers-20160809-gqo5jz




I think this is a good consequence and intended by the removal of the loophole for fraudulent employment statements....

However, i heard recently that they are still trying to find ways a round it. Our builder was telling us one case where they actually had an 'employer' answer the phone. In the end they could not provide an official tax statement or something...but they're still trying to get around the requirements.


----------



## banco (11 August 2016)

CanOz said:


> I think this is a good consequence and intended by the removal of the loophole for fraudulent employment statements....
> 
> However, i heard recently that they are still trying to find ways a round it. Our builder was telling us one case where they actually had an 'employer' answer the phone. In the end they could not provide an official tax statement or something...but they're still trying to get around the requirements.




It's a bit like securing your home I guess. You just need to make it hard enough that they look elsewhere. They might find it easier to wash their money in London, Canada or the US at this rate. Although Canada is cracking down at the moment.


----------



## lockscombi (11 August 2016)

Bill M said:


> I have to be patient, the right one might come along. My other options are a retirement village or to buy an apartment off the plan but that is dangerous to do. I've seen a lot of projects fail or not proceed for many years. We are getting older and I have no desire to spend my time cutting lawns, cutting hedges, pulling weeds, fixing fences, painting or anything like that. Just want a nice place in a nice location and let the body corp do all the work.
> 
> In all my years in the Sydney area it has always been the same story. It is far more difficult to buy the place you want than it is to sell the place you have, the search continues.




Hey. I thought body corporate's were the middle men scum of property??? A mate of mine from Brissy told me that when he had a 3 unit portfolio at one stage of his life, but the fees from these middle men made it too hard for him in the end. I shudder when I hear the name of body corporates or strata

I don't own any property though so be gentle


----------



## trainspotter (12 August 2016)

lockscombi said:


> Hey. I thought body corporate's were the middle men scum of property??? A mate of mine from Brissy told me that when he had a 3 unit portfolio at one stage of his life, but the fees from these middle men made it too hard for him in the end. I shudder when I hear the name of body corporates or strata
> 
> I don't own any property though so be gentle




"Caveat Emptor" are the words you are looking for. The "middle men scum" clearly outline the rights and obligations under the strata fees prior to you purchasing. Once purchased you have a voting right to not agree with the "increase in charges" under the strata act.

DYOR. http://stratatitle.com.au/ go here and observe.


----------



## lockscombi (12 August 2016)

trainspotter said:


> "Caveat Emptor" are the words you are looking for. The "middle men scum" clearly outline the rights and obligations under the strata fees prior to you purchasing. Once purchased you have a voting right to not agree with the "increase in charges" under the strata act.
> 
> DYOR. http://stratatitle.com.au/ go here and observe.




Yeah ok but in reality do these guys tend to rip people off? I mean why can't people look after their own property. If the so call property had a bit of gardening to do then start a friendly committee or something. It's win win. Be neighborly and save money.


----------



## trainspotter (12 August 2016)

lockscombi said:


> Yeah ok but in reality do these guys tend to rip people off? I mean why can't people look after their own property. If the so call property had a bit of gardening to do then start a friendly committee or something. It's win win. Be neighborly and save money.




Some corporate bodies are run as a "profit" based business and the fees are quite high for insurance on the common areas, maintenance and gardening etc. Others are made up of the actual tenants who run the show by themselves but do it on a volunteer basis and the cost is the cost spread evenly amongst everyone.

People have to look after their own property. It is the common areas that are jointly owned under the Strata Act. Some corporations will only use "certain" trades and there will be restrictive covenants in the fine print. Like I said earlier if you don't like the conditions being imposed then don't buy the damn thing.


----------



## lockscombi (13 August 2016)

Ok. Fair enough


----------



## Bill M (13 August 2016)

lockscombi said:


> Yeah ok but in reality do these guys tend to rip people off? I mean why can't people look after their own property. If the so call property had a bit of gardening to do then start a friendly committee or something. It's win win. Be neighborly and save money.




Hi, sorry I missed your posts. The "Body Corporate" are all of the owners of the units together as a group. They generally hire a Body Corporate Manager to run the day to day requirements of the building, ie: repairs, gardens, cleaning etc. The "Strata Title" is like the rules and laws for that particular unit block.

In order to run the Strata Title correctly the owners vote in a small number individual unit owners called the "owners committee". The "owners committee" are suppose to be the representatives of the majority of owners. They pass on requests to the body corp managers in order to get things done, ie: cleaning, gardening, lifts etc.

It is the Body Corporate Managers that have offices offsite that get paid to do this job. The reason why the owners hire Body Corporate Managers is because generally they don't want to do the job themselves, none of them. You have to have meetings, send letters, table minutes, do financials, liaise with builders etc. most people don't want to do this job for free.

Where it goes wrong is that sometimes the body corp managers waste money. For example, Joe Blow complains a light is out in his corridor, he tells the owners committee and they pass on the info to the body corp managers. For a small job they get an an electrician in and sometimes these tradespersons charge way over the top. No one checks the job and when the yearly minutes come out someone will say why did it cost $1,117 to fix that $10 light in the corridor. No real checks and balances. For bigger jobs they need to get a few quotes and the owners decide which contractor gets the job.

Sometimes individual owners are out voted on a project or a new ruling. These owners then tend to blame "The Body corp" for this but usually it has been democratically voted for.

Body Corporates and Strata Titles are not that bad when it all works but when it doesn't it can become a nightmare. I would strongly recommend to anyone who is buying a Strata Title unit to get their Solicitor to do a "Strata Title Search" on the place they want to buy. It is only in there you will find if there is anything wrong in that building. That won't show personality clashes with other owners though. Yes there are pluses and minuses.


----------



## CanOz (13 August 2016)

Bill M said:


> Hi, sorry I missed your posts. The "Body Corporate" are all of the owners of the units together as a group. They generally hire a Body Corporate Manager to run the day to day requirements of the building, ie: repairs, gardens, cleaning etc. The "Strata Title" is like the rules and laws for that particular unit block.
> 
> In order to run the Strata Title correctly the owners vote in a small number individual unit owners called the "owners committee". The "owners committee" are suppose to be the representatives of the majority of owners. They pass on requests to the body corp managers in order to get things done, ie: cleaning, gardening, lifts etc.
> 
> ...




Strata title searches may not actually be worth the money, as my experience illustrates. We has the search done and nothing showed up in the mm minutes. However anyone actually reading the minutes could have noticed the history of poor build quality, skylight leaks, while balconies collapsing....nothing on the search. Now we are in for rising maintenance costs, special levies, etc....

Lesson learned.


----------



## MrBurns (13 August 2016)

It's Owners Corporation these days. Many of them have enormous problems with Committee members deciding things in their own interests. I own a unit with those problems the Chairman of the Committee is a sociopath and I will take him to VCAT if things don't improve.


----------



## Bill M (14 August 2016)

CanOz said:


> Strata title searches may not actually be worth the money, as my experience illustrates. We has the search done and nothing showed up in the mm minutes. However anyone actually reading the minutes could have noticed the history of poor build quality, skylight leaks, while balconies collapsing....nothing on the search. Now we are in for rising maintenance costs, special levies, etc....
> 
> Lesson learned.




Those reports can cost up to $1,000 or more. Sounds like someone didn't do their job properly. I mean you paid someone to check this and they didn't do it properly. Yes, another problem to add to the list, thanks for sharing.



MrBurns said:


> It's Owners Corporation these days. Many of them have enormous problems with Committee members deciding things in their own interests. I own a unit with those problems the Chairman of the Committee is a sociopath and I will take him to VCAT if things don't improve.




We had a sociopath on the other side. He was a lone owner who took the Manager and the committee to the tribunal, he ended up losing his argument totally. He just wanted things to be done his way and not the majorities way. Another cost added on the body corp fees.

I've been living in my house for 7 years, over that period I've spend $3,000 for repairs, fences etc. In 7 years, you will pay $28,000 in levies for a unit with only a $1,000 per quarter levy fees. If your unit has $2,000 per quarter fees then that blows out to $56,000 in maintenance for the same period.

I might stay where I am, I'm talking myself out of buying a unit.


----------



## MrBurns (14 August 2016)

Talk to some of the other owners before you buy.


----------



## Knobby22 (14 August 2016)

A senior work colleague ran his body corporate for 5 years. During that time he fixed many poor build problems with specisl levies such as a new roof and upgrading the security system. Like me he is a consulting engineer. 

I would buy in now as its all fixed and high levies are no longer required. You need to see the history and whether it's been run properly. As long as you don't have structural issues then  the history should show residents fixing the problems. The danger is patch ups and incompetance.


----------



## sptrawler (28 September 2016)

W.A still doing it tough, and no sign of it letting up.

https://au.news.yahoo.com/thewest/wa/a/32748614/one-in-five-perth-homes-sell-at-a-loss/#page1


----------



## DB008 (28 September 2016)

Resource boom is well a truly over, W.A. is doing it tough all right S.P.

Wheatstone LNG Project construction up North, nothing else in W.A. (or Australia) to be honest. I think we will be in a world of pain if things don't pick up.


----------



## sptrawler (28 September 2016)

DB008 said:


> Resource boom is well a truly over, W.A. is doing it tough all right S.P.
> 
> Wheatstone LNG Project construction up North, nothing else in W.A. (or Australia) to be honest. I think we will be in a world of pain if things don't pick up.




Indeed, the transition from $150k/p.a to real world wages, will not be without pain.

Meanwhile the property sector must be kept on life support, now the retirees will kick in with upgrading to qualify for the new pension limits.

Then low and behold, IMO the PPR will be included in the assets test in five years time, causing them all to jump out and downsize. :1zhelp:

It seems to be a long and torturous path, to bring us in line with everyone else.IMO

The one thing that is constant, is the Governments work on a long time scale, as the song goes "Time is on my side" is the Government mantra.


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## webbrowan (30 September 2016)

It is never an easy feat to predict how the housing market would go on due to constant fluctuations that make the patterns seem rather confusing endlessly. Even if we do manage to work something out but there will still be a sudden turn of events which would make our calculations useless eventually. Thus, estimations are often put in place to have a basic idea instead of expecting to know the exact situation.


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## Joules MM1 (3 October 2016)

Pete Wargent ‏@PeteWargent

Darwin dwelling values now where they were 7 years ago; Perth dwelling values retraced to 2007 levels 

http://corelogic.com.au/news/capita...n-september-to-be-2-9-higher-over-the-quarter … #ausbiz


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## CanOz (3 October 2016)

Joules MM1 said:


> Pete Wargent ‏@PeteWargent
> 
> Darwin dwelling values now where they were 7 years ago; Perth dwelling values retraced to 2007 levels
> 
> http://corelogic.com.au/news/capita...n-september-to-be-2-9-higher-over-the-quarter … #ausbiz




Mean reversion!


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## Modest (3 October 2016)

Joules MM1 said:


> Pete Wargent ‏@PeteWargent
> 
> Darwin dwelling values now where they were 7 years ago; Perth dwelling values retraced to 2007 levels
> 
> http://corelogic.com.au/news/capita...n-september-to-be-2-9-higher-over-the-quarter … #ausbiz




Wowzer thanks for posting that Joules! I am surprised MSM hasn't made a big deal out of those Perth figures... Ohh wait all the MSM outlets have vested interest in property rising!


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## MrBurns (7 October 2016)

I've got a feeling it's about to go bust.


http://www.fool.com.au/2016/10/06/311000-homeowners-have-zero-or-negative-equity-in-their-homes/


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## luutzu (7 October 2016)

MrBurns said:


> I've got a feeling it's about to go bust.
> 
> 
> http://www.fool.com.au/2016/10/06/311000-homeowners-have-zero-or-negative-equity-in-their-homes/




NAB's CEO deny there's a property bubble though 

http://www.smh.com.au/business/banking-and-finance/nab-cautions-on-apartment-glut-20161006-grwmym.html

Report of some 300k+ home owner having no equity... more than a handful in there would also be owing family and friends for that deposit and stamp duty too.

Seems there's now a rush to go out and buy in case it goes up further. Wouldn't end well.


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## Klogg (7 October 2016)

MrBurns said:


> I've got a feeling it's about to go bust.
> 
> 
> http://www.fool.com.au/2016/10/06/311000-homeowners-have-zero-or-negative-equity-in-their-homes/




I dont think banks will start foreclosing because LVR is at 100%... CEOs of banks have a limited lifespan, and when bad debts get out of hand, they lose their bonuses and eventually their jobs.

That said, I think if they mess with credit availability too much, then we have a different problem on our hands.


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## MrBurns (7 October 2016)

Klogg said:


> I dont think banks will start foreclosing because LVR is at 100%... CEOs of banks have a limited lifespan, and when bad debts get out of hand, they lose their bonuses and eventually their jobs.
> 
> That said, I think if they mess with credit availability too much, then we have a different problem on our hands.




My 28 year old son with no credit history was offered $1M by a bank no problems....there's the problem.


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## ukulele (7 October 2016)

Your son must be on a good wicket though?


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## MrBurns (7 October 2016)

ukulele said:


> Your son must be on a good wicket though?




Nothing in particular the banks just want to get the money out the door.


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## Klogg (7 October 2016)

MrBurns said:


> My 28 year old son with no credit history was offered $1M by a bank no problems....there's the problem.




This is related to my point. If credit keeps flowing, then we have no big problem for a while (people keep borrowing and buying, pushing up prices). Sure, there's a ceiling (repayment amounts), but as soon as any stresses start to show, the RBA comes to the rescue (sort of the point of monetary policy, just that we need some more macro-prudential policies)

On the other hand, as soon as foreclosures occur, banks make their own problems worse.


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## kid hustlr (7 October 2016)

Incredible variation across the country in the return on prices.

Sydney/Melbourne is a joke whilst outside the eastern sea board the country is on its knees. Very interesting.

There's an opportunity there somewhere.


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## McLovin (7 October 2016)

kid hustlr said:


> Incredible variation across the country in the return on prices.
> 
> Sydney/Melbourne is a joke whilst outside the eastern sea board the country is on its knees. Very interesting.
> 
> There's an opportunity there somewhere.




There is a real lack of supply that is feeding the beast and squeezing buyers in Sydney at the moment. A house close to me was listed at $1.4 and ended up going for $1.7m. No off street parking, two bedrooms, one bathroom. There's so much FOMO at the moment. It's not healthy. Falling rents and rising house prices is not healthy. SMSF's being used by property developers as lenders of last resort is not healthy. The wave will probably break when all these apartments being built come on line in the next few years.




My house is old. I found a property valuation for it from 1921. Would have been yours for £102. Back then it was owned by a slumlord. How's that for compounding!


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## Klogg (7 October 2016)

McLovin said:


> There is a real lack of supply that is feeding the beast and squeezing buyers in Sydney at the moment.* A house close to me was listed at $1.4 and ended up going for $1.7m. No off street parking, two bedrooms, one bathroom. There's so much FOMO at the moment. It's not healthy. *Falling rents and rising house prices is not healthy. SMSF's being used by property developers as lenders of last resort is not healthy. The wave will probably break when all these apartments being built come on line in the next few years.




I just don't get it... To rent the place, you're paying about 3% of the asset value at most, and that's gross.
There are downsides to renting of course, and people pay a premium - but there's limits.

The place I'm renting is achieving a gross yield of 2.4% (estimating value on similar sales) - inner east of Melbourne (Surrey Hills). Sure, there's the whole negative gearing thing. But making a loss for tax purposes on the hope that the greater fool theory holds out doesn't really appeal to me.

I always think there's something I'm missing...


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## McLovin (7 October 2016)

Klogg said:


> I just don't get it... To rent the place, you're paying about 3% of the asset value at most, and that's gross.
> There are downsides to renting of course, and people pay a premium - but there's limits.
> 
> The place I'm renting is achieving a gross yield of 2.4% (estimating value on similar sales) - inner east of Melbourne (Surrey Hills). Sure, there's the whole negative gearing thing. But making a loss for tax purposes on the hope that the greater fool theory holds out doesn't really appeal to me.
> ...




Perhaps it needs to be thought of from the perspective of the owner-occupier not the investor? The low returns are a function of the premium people are willing to pay to live in their own home.

That house I mentioned was bought by an owner-occupier.


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## Klogg (7 October 2016)

McLovin said:


> Perhaps it needs to be thought of from the perspective of the owner-occupier not the investor? The low returns are a function of the premium people are willing to pay to live in their own home.
> 
> That house I mentioned was bought by an owner-occupier.




Yeah, that was sort of my line of thinking:


> There are downsides to renting of course, and people pay a premium - but there's limits.




My problem is I keep framing it in terms of my own opportunity set for using my capital, or even buying index funds/picking decent fund managers. Not everyone is willing or knows about them, so their opportunities are far more limited.

When framed that way, it does start to make sense. 
Credit availability (too much of it) is another issue though...


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## greggles (7 October 2016)

> At a sale last week, auctioneer Baldwin took 134 bids for a drab, two-bedder in Greenacre, 18 kilometers west of Sydney, before dropping the hammer at A$926,000. That’s 19 percent more than the median price for that size of property. Baldwin said the main draw wasn’t even the house; it was the chance to knock it down and build anew. *Some buyers are saying: ‘we’d better get in or we’ll never get in,’ he said.*




http://www.bloomberg.com/news/artic...zy-in-sydney-gnaws-at-efforts-to-contain-risk

Here's what you get 18km west of Sydney for a little less than a million dollars.




When this bubble ends, it's going to be a very hard landing.


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## kid hustlr (8 October 2016)

Being a 30 year old Sydney Sider I can honestly say I don't think there will be a 'pop'.

Not saying property is a good investment now in Sydney but those expecting the worse need a catalyst to cause it.

Agreed about the rental argument and that's why any spare funds I have will be invested in the share market (6% gross!) vs sydney property (3% gross!)


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## luutzu (8 October 2016)

kid hustlr said:


> Being a 30 year old Sydney Sider I can honestly say I don't think there will be a 'pop'.
> 
> Not saying property is a good investment now in Sydney but those expecting the worse need a catalyst to cause it.
> 
> Agreed about the rental argument and that's why any spare funds I have will be invested in the share market (6% gross!) vs sydney property (3% gross!)




The catalyst will come in a few ways.

The big one is interest rate rising back to its normal "non-zero" real rate - say, 5%.

Then there's renters losing their job, or Centrelink giving them a hard time, and can't afford to pay rent for a couple weeks.

Combine that with owners usually owning 3 properties and paying only the interest payment. When interest and principal requirement kicks in, and enough renters missing payment here and there... you'll see the rush to get the heck out.


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## Bill M (8 October 2016)

kid hustlr said:


> Being a 30 year old Sydney Sider I can honestly say I don't think there will be a 'pop'.




I agree and I been around a lot longer. I am actively looking for a 2 br x 2 bathroom unit with views, balcony, quiet and walking distance to a railway station. Some Saturdays I don't even go for open for inspections because nothing new has come up.

And who is buying? Anyone and Everyone. There are young couples, working couples, Chinese families, gay couples and virtually any type of person you can imagine, come from all cultures and walks of life. All want the same thing as my wife and I. We end up following each other around at the open days.

The thing is, as long as there is so much demand and so little around, prices will not be coming down. Only the junk units stay on the market, good ones we have to try jump on before the first open day as they don't last long.

Everybody I talk to who is looking in our market says the same thing, so little around and too much off the plan  stuff where they haven't even turned a sod yet. Today we stayed home, nothing of interest came on the market, the search continues.


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## kid hustlr (8 October 2016)

luutzu said:


> The catalyst will come in a few ways.
> 
> The big one is interest rate rising back to its normal "non-zero" real rate - say, 5%.
> 
> ...




Don't get me wrong, I think the system is broken, but I'm also being realistic. People were on here 4 years ago calling the end. I could name 10 people right now who would pay what most of Australia think is obscene money for a nice Sydney metro area. There is demand there.

Catalysts. Who knows. I can't see rates rising any time soon. Black swan unemployment event maybe. Some of your assumptions are off the mark though, I'm talking solid sydney locations and they will always be wanted.

I'm annoyed at myself I've missed s huge opportunity. I was lucky enough to buy an apartment in a good area a few years back with a conservative mortgage partly due to this thread lol. If I'd pulled the trigger on something and stretched myself I'd be laughing


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## luutzu (8 October 2016)

kid hustlr said:


> Don't get me wrong, I think the system is broken, but I'm also being realistic. People were on here 4 years ago calling the end. I could name 10 people right now who would pay what most of Australia think is obscene money for a nice Sydney metro area. There is demand there.
> 
> Catalysts. Who knows. I can't see rates rising any time soon. Black swan unemployment event maybe. Some of your assumptions are off the mark though, I'm talking solid sydney locations and they will always be wanted.
> 
> I'm annoyed at myself I've missed s huge opportunity. I was lucky enough to buy an apartment in a good area a few years back with a conservative mortgage partly due to this thread lol. If I'd pulled the trigger on something and stretched myself I'd be laughing




I'm not wishing for a crash or anything, and of course good luck to all those who's laughing all the way to the bank.

It's pretty easy to look like a real genius when the market for your asset is booming. And it'll make people look really smart in near future given that everything that could go right is going right for the property market.

While not wanting to rain on that parade, it's worth thinking how long the good time can roll on for. And what will happen when the music stop.

And it will stop because capital gains is the only reason investors are flocking into property at the moment. The rental yield just ain't there. So how much gain would make it worthwhile for current owners and also worthwhile for new buyers? 

Say you buy a property for $1m. Stamp duty and legal fees about $45k? Assume negative gearing and rentals would even out the interest you're paying... How much would you want to sell that $1.045m in 5 years time to make it worthwhile?

Say 10% a year gain is fair enough?

So $1.6m? Plus $50k stamp duty, plus $50k renovation. $1.7m... 

So either adjust annual gain expectation or believe that the average aussie can afford a $1m to a $1.7m apartment.

Anyway, just put it down to me not understanding this stuff.


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## greggles (9 October 2016)

So what is it about this bubble that makes it different from those that came before?

Prices can only go so high before demand must drop away due to people's inability to service mortgages that outstrip their income. 

It all still looks very overinflated to me, in spite of any short term supply issues.


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## Smurf1976 (9 October 2016)

greggles said:


> So what is it about this bubble that makes it different from those that came before?




The sheer scale of it seems far bigger than anything Australia has experienced in the past. If / when it pops then we're in for a world of hurt economically and that's true even for those who don't own property.

That plus the effect that high housing costs are having on our overall economic competitiveness. Many will say, and I see their point as valid, that Australian wages are too high by international standards. On the other hand, the cost of housing alone would justify a pretty decent wage hike real quick on affordability grounds. There's a big dilemma there - Australians can't afford to live in their own country on wages that would make us internationally competitive in practically any industry.


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## InsvestoBoy (9 October 2016)

Bill M said:


> I agree and I been around a lot longer. I am actively looking for a 2 br x 2 bathroom unit with views, balcony, quiet and walking distance to a railway station. Some Saturdays I don't even go for open for inspections because nothing new has come up.
> 
> And who is buying? Anyone and Everyone. There are young couples, working couples, Chinese families, gay couples and virtually any type of person you can imagine, come from all cultures and walks of life. All want the same thing as my wife and I. We end up following each other around at the open days.
> 
> ...




I am only new here so I don't know how much my opinion counts for on this matter.

That said, I think this view of "who is buying" forgets the major factor in all of this price rise over the last 20-30 years, which has far outstripped inflation, wages, etc. 

The forgotten factor is: mortgage origination! Essentially there is only a very few people, essentially nobody, buying places for cash. That means for increase in the price of housing, or even for it to stay steady, must mean someone can apply for and receive a bank mortgage to pay a little more than the last person who bought it paid.

You can see in articles like this one from a month or so ago, that Aus big 4 banks are already capping their origination on new apartments:
http://www.abc.net.au/news/2016-09-02/foreigners-funding-the-apartment-boom/7809752 ..if there is no new mortgages, then prices on those apartments are not going to magically get bid up to the prices property developers probably assumed and need for decent profits. Also worth to point out, that the banks have their finger on the market pulse, if they sense risk in those apartments enough to cap origination, then there probably is *some risk*.

But while the banks do essentially loan this money into existence based on your creditworthiness, regulation dictates it's not a magical infinite spigot of credits, those loans are funded from somewhere and that is what makes up the banks "Net Interest Margin" that everyone talks about. Australian private sector is in deficit, it consumes more than it saves, so after bank deposits are used as funding for some loans, the rest comes from overseas. A lot of that "overseas" funding is from Europe and other places in much more precarious financial position than our own.

You can read some more recent stuff about this topic here http://www.afr.com/business/banking...mix-under-the-spotlight-again-20160407-go0vet

I am not predicting it would happen tomorrow or something like that, but let's face it, the funding risk for banks globally is huge, even if we are in a good position, we may "catch a cold when the rest of the world sneezes". You might see a lot of people at the auctions and open houses today, but are they going to be there if the banks can't originate mortgages because of funding stress? 

There will always be someone who wants to sell. Maybe they can't afford it anymore, maybe they need a bigger or smaller one, maybe they are selling a deceased estate. If there are no mortgages available to bid at the current price, then supply will have to price offers lower to find bid demand. 

That is why I think it is entirely possible for prices to go lower (potentially much lower?) without an obvious shock, regardless of how many are waiting to buy.


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## InsvestoBoy (9 October 2016)

Also one other note, houses as an investment is just like any other investment:

As long as you assume a relatively stable currency purchasing power, then the investment return is bounded by some sort of mathematics. At the very edges, we can all agree that an investment property will never return rents of 100% per annum, or -50% per annum. There are boundaries in the *real* returns even if the currency purchasing power is fluctuating.

Because of this there must certainly be some upper bound influenced by stuff which falls under the category of "borrower creditworthiness". So even if prices are going to go up, it seems unlikely they will continue at the same pace as we saw over the last decades, because that would mean average house price in Sydney will be $2 million, or $4 million before very long! The higher the price goes, the lower your creditworthiness is, regardless of your industry or job stability. So maybe house prices go up at the pace matching inflation, but if house prices continue rise 10% per annum while the inflation rate is close to 0% and wage growth is also close to 0%, then who will be creditworthy enough to get a mortgage? It doesn't make sense!


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## sptrawler (20 October 2016)

Smurf1976 said:


> The sheer scale of it seems far bigger than anything Australia has experienced in the past. If / when it pops then we're in for a world of hurt economically and that's true even for those who don't own property.
> 
> That plus the effect that high housing costs are having on our overall economic competitiveness. Many will say, and I see their point as valid, that Australian wages are too high by international standards. On the other hand, the cost of housing alone would justify a pretty decent wage hike real quick on affordability grounds. There's a big dilemma there - Australians can't afford to live in their own country on wages that would make us internationally competitive in practically any industry.




That is only because our currency is still relatively high.


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## So_Cynical (20 October 2016)

Roger Montgomery says he is holding 50% cash in his fund because he fears a housing collapse, earning 2% interest is better than losing 20% of your capital in property.


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## greggles (20 October 2016)

Economist Chris Richardson of Deloitte Access Economics predicts Australian property is set to become the "worst investment" over coming decades.

http://www.news.com.au/finance/econ...t/news-story/879ccda89e9a975db95c60a4fefb2c43


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## Bill M (20 October 2016)

greggles said:


> Economist Chris Richardson of Deloitte Access Economics predicts Australian property is set to become the "worst investment" over coming decades.
> 
> http://www.news.com.au/finance/econ...t/news-story/879ccda89e9a975db95c60a4fefb2c43




Interesting article, and I would like to discuss a couple of points. The young fellow who goes out and eats $22 breakfasts and lives a good life and then complains of house prices is most likely a wasteful person and will most likely end up like a few mates of mine who are 60 y/o and rent rooms or garages to live in. We sacrificed a lot when we bought our property, we never went to cafe's paying $44 for 2 people to have breakfast and now that we are retired we still don't. Saving for a house means going without, it's not buying the latest iphone or the latest new motor car or loading up the credit card to buy those breakfasts that's for sure. 

Secondly, the guy is right that transport is crap in Australia, particularly in Sydney. Sure you can still buy a house for 300K on The Central Coast, but the M1 is clogged both ways into the city during peak hours. A train takes 2 hours to get into town and another 2 to get back home. That's 4 hours on top of another 8 of work. But hey I was doing 12 hour shifts during my working days too. It isn't pleasant but you need to do what you need to do to get ahead, right? We need better, faster and more frequent trains. Since they opened the Gosford line some 56 years ago not much has improved, typical successive useless governments.

But the part you failed to quote from the same article is what Dr Nigel Stapledon of the UNSW Business School said. I tend to agree with what his opinion is, seen this play out a few times over the years.
---
He said Sydney had already gone through a period between 2004 and 2011 when the market wasn’t particularly good but the big falls didn’t happen as predicted.
While this had been helped by the resources boom, Dr Stapledon said there shouldn’t be huge falls this time if immigration was kept at reasonable levels.
“We’ve had periods of pretty flat performance pretty frequently,” he said.
“It’s a good story for affordability issues, these things tend to balance out and we want some adjustment.
“Prices can get ahead of themselves but when you talk about prices falling 30-40 per cent, that doesn’t look particularly plausible to me, those scary scenarios.
“It’s still going to be profitable to go in and some people will still do OK in the real estate market but it’s going to be harder.”
http://www.news.com.au/finance/economy/australian-economy/property-set-to-become-worst-investment/news-story/879ccda89e9a975db95c60a4fefb2c43
---


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## dpgrubesic (20 October 2016)

Land will always go up as long as the population increases people need places to live majority of people in Sydney and Melbourne work in or around the city and there is only so much land that is available thus demand is always rising but supply stays the same! 

Thus land value will always increase HOWEVER property prices for say apartments  can oversupply and there may be a crash may crash regarding certain times of properties but land itself will always make money.

The real question is, will property prices continue to double every 7-10 years maybe/maybe not


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## Klogg (20 October 2016)

Bill M said:


> Interesting article, and I would like to discuss a couple of points. The young fellow who goes out and eats $22 breakfasts and lives a good life and then complains of house prices is most likely a wasteful person and will most likely end up like a few mates of mine who are 60 y/o and rent rooms or garages to live in. We sacrificed a lot when we bought our property, we never went to cafe's paying $44 for 2 people to have breakfast and now that we are retired we still don't. Saving for a house means going without, it's not buying the latest iphone or the latest new motor car or loading up the credit card to buy those breakfasts that's for sure.
> 
> Secondly, the guy is right that transport is crap in Australia, particularly in Sydney. Sure you can still buy a house for 300K on The Central Coast, but the M1 is clogged both ways into the city during peak hours. A train takes 2 hours to get into town and another 2 to get back home. That's 4 hours on top of another 8 of work. But hey I was doing 12 hour shifts during my working days too. It isn't pleasant but you need to do what you need to do to get ahead, right? We need better, faster and more frequent trains. Since they opened the Gosford line some 56 years ago not much has improved, typical successive useless governments.
> 
> ...




A couple things I'll point out:

- Is there, perhaps, a hint of commitment/availability bias in what you've written?

- Just because the property investment ended up well for you, will it do the same for others in future? Amongst a massive drop in interest rates, it was easier (note: not "easy") to do well. It's possible that people buying the $20 brunches will end up ahead because they haven't committed to a large amount of debt to 'get ahead'
Your working life was had during a time when inflation was high, interest rates tumbled and wages increased faster than they're doing so now. I have no doubt at all that it was hard work (anyone younger who says it was easy is just making excuses for themselves now), but the same outcome will likely not be had if it was repeated now.

- It's not 'buy a house or nothing'. One can rent, save and invest that money elsewhere. Arguably, this is a far better option at present.

- House prices don't need to decline for it to be a bad investment. What if they just don't go up?


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## Bill M (20 October 2016)

Klogg said:


> - Just because the property investment ended up well for you, will it do the same for others in future? Amongst a *massive drop in interest rates*, it was easier (note: not "easy") to do well.




What? We had our mortgage in the early 90's, we had interest rates at 18% at one stage. We just stopped going out for a couple years and worked extra jobs/o/t to get ahead. Our mortgage was paid out by 2001. I can assure you it wasn't easy or easier, however now it is because we have no rent or mortgage to pay. This is what everyone should aim for. No use being 60 and still working just to pay the rent.



> - It's not 'buy a house or nothing'. One can rent, save and invest that money elsewhere. Arguably, this is a far better option at present.
> 
> - House prices don't need to decline for it to be a bad investment. *What if they just don't go up*?




A lot of people say that about investing money elswhere, fair comment. Some of my mates did that too only to have their saving discipline go down the drain. The overseas travel, fancy cars and nice rental apartments got the better of them, those things cost a lot of money. Those savers saving elsewhere must remain disciplined, otherwise they will get no where. They also have to have the knowledge to protect themselves from sharemarket crashes if they are investing there. 

House prices can and do stagnate, a buyer must be prepared for this. The Dr Nigel Stapledon article I posted stated this too. Each to his own but I will say this this, as an older Australian I would rather own my own place outright rather  than be paying my pension check out for rent. It's a choice each individual has to make, the hard yards will have to be done sooner or later. You either suffer a bit when you are younger or suffer a lot when you are older.


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## Klogg (20 October 2016)

Bill M said:


> What? *We had our mortgage in the early 90's*, we had interest rates at 18% at one stage. We just stopped going out for a couple years and worked extra jobs/o/t to get ahead. Our mortgage was paid out by 2001. I can assure you it wasn't easy or easier, however now it is because we have no rent or mortgage to pay. This is what everyone should aim for. No use being 60 and still working just to pay the rent.




See this graph from the RBA:



You had your mortgage at a time interest rates were above 10% (if at the start of the 90s). Yes, they increased for a period of time, but after that you got the tailwind of lower rates (which means more affordable repayments, meaning people can borrow more).

Yes, it is still do-able with hard work, but the tailwind that once existed to boost the value of your house can no longer be repeated.



Bill M said:


> Some of my mates did that too only to have their saving discipline go down the drain. The overseas travel, fancy cars and nice rental apartments got the better of them, those things cost a lot of money.



That's not the fault of the strategy, only a matter of poor implementation. In fact, there's nothing stopping someone who bought their house, from redrawing on their mortgage and spending on the same items.


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## sptrawler (20 October 2016)

Bill M said:


> It's a choice each individual has to make, the hard yards will have to be done sooner or later. You either suffer a bit when you are younger or suffer a lot when you are older.




This is the mantra I've said over and over to my children, did it help? I think not.

There are two problems:
1. The system is geared, to load you up, as you try to increase your wealth.

2. Most people don't have the self discipline, to deny themselves immediate gratification, and the system encourages them to borrow and spend.

Bill, you may remember, when it was difficult to get a loan, even for a small amount. 
That made you save, if you didn't have the money you didn't get it, not so now.
Now if you don't have the money, you just get it on credit and whinge when you can't pay for it, then hope someone will take up your cause. 

Today, everything is someone else's fault.


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## Joules MM1 (25 October 2016)

@David_Scutt

This unbelievable statistic shows the scale of Australia's apartment building boom (via @BIAUS) http://www.businessinsider.com.au/t...han-there-are-in-all-of-north-america-2016-10 … #ausbiz #buildathon


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## CanOz (25 October 2016)

Joules MM1 said:


> View attachment 68543
> 
> 
> @David_Scutt
> ...




Nice graphic joules...I've noticed allot more cranes since we started coming to brisbane two years ago....an epidemic with Chinese origins...


----------



## lockscombi (26 October 2016)

I have a mate at Sydney uni who is living in a tent on another mates rented lawn. He loves it. I'm no camper unfortunately and i'm trying to save millions for house in the Shire. 

I'm about 1 million short


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## ChloeBB (26 October 2016)

InsvestoBoy said:


> Also one other note, houses as an investment is just like any other investment:
> 
> As long as you assume a relatively stable currency purchasing power, then the investment return is bounded by some sort of mathematics. At the very edges, we can all agree that an investment property will never return rents of 100% per annum, or -50% per annum. There are boundaries in the *real* returns even if the currency purchasing power is fluctuating.
> 
> Because of this there must certainly be some upper bound influenced by stuff which falls under the category of "borrower creditworthiness". So even if prices are going to go up, it seems unlikely they will continue at the same pace as we saw over the last decades, because that would mean average house price in Sydney will be $2 million, or $4 million before very long! The higher the price goes, the lower your creditworthiness is, regardless of your industry or job stability. So maybe house prices go up at the pace matching inflation, but if house prices continue rise 10% per annum while the inflation rate is close to 0% and wage growth is also close to 0%, then who will be creditworthy enough to get a mortgage? It doesn't make sense!




Hi there, 

I'm getting married soon and my fiance and I were thinking about buying a house in Sydney as soon as possible.

I was convinced that buying asap is more affordable and smarter option long-term, although it would be a huge (almost impossible) investment for us. Namely, I've red that prices could be growing like crazy in future... but then I did some research and realized that prices are pretty high already. Seems to me that if you're trying to buy a place near-ish the city, you can't get anything decent under 1.2mil (according to this property price info I've found)... Is it just me, or that is quite high?

Anyway, I'm such a newbie when it comes to real estate market and price prediction, but after reading your comment I've started to wonder is it better to wait and save for a few years..


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## dpgrubesic (26 October 2016)

ChloeBB said:


> Hi there,
> 
> I'm getting married soon and my fiance and I were thinking about buying a house in Sydney as soon as possible.
> 
> ...




if it a place to live then you just have to pay the money housing prices wont drop in Melbourne or Sydney anytime soon they may not grow at the same levels as seen historically but demand is only increasing but supply stays the same. 

My only advice would be steer clear of apartments


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## lockscombi (26 October 2016)

ChloeBB said:


> Hi there,
> 
> I'm getting married soon and my fiance and I were thinking about buying a house in Sydney as soon as possible.
> 
> ...




Don't buy a house in Sydney or Melbourne. People have seriously lost the concept of value here. Paying over 1 million in a city with poor infrastructure and deteriorating social conditions is silly imo. 

If your rich do what they do. Buy a waterfront house and avoid the public at all costs


----------



## Boggo (26 October 2016)

dpgrubesic said:


> My only advice would be steer clear of apartments




I had a look at an apartment in the Adelaide CBD ages ago (being nosey), had to fill out my email address etc.

Recently I have noticed that I am getting a lot more emails promoting existing apartment sales and new developments etc leading me to think that that market may be feeling the pressure.

tech/a may be up to date with what is happening with that area of the market, I think he has sold off the apartments he had on the south coast.

Apparently Sydney and Melbourne apartment prices are feeling the pressure of oversupply but I am just going on what I am reading and hearing, certainly seems to be the case in Adelaide.


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## Bill M (26 October 2016)

lockscombi said:


> Don't buy a house in Sydney or Melbourne. People have seriously lost the concept of value here. Paying over 1 million in a city with poor infrastructure and deteriorating social conditions is silly imo.
> 
> If your rich do what they do. Buy a waterfront house and avoid the public at all costs




This is quite a good post. If you don't need to be in Sydney then it's far better to stay out of there. I had a look at last weeks clearance rates and prices at this link and it's way up there. Just have a look at the first 2 properties, a 1 bedroom unit in Alexandria for 673K and a 2 br unit for 950K. Link here: https://www.realestate.com.au/auction-results/nsw

And the do what the rich do? How true. Have any of you done the Spit Bridge to Manly walk? Multi Million $$$ houses, darn nice views and sheltered beaches along the way.



Boggo said:


> Apparently Sydney and Melbourne apartment prices are feeling the pressure of oversupply but I am just going on what I am reading and hearing, certainly seems to be the case in Adelaide.




Not quite in Sydney Boggo. Still too many buyers and not enough units. Went to one 2 Months ago in Hornsby, old 3 br unit in need of renovation inside and out. Told the agent it was not my cup of tea and wouldn't take it on for 500K. The agent called me after it was sold, went for 760K, too many buyers, not enough good units about.

About 2 weeks ago there was an article on the news about Sydney's population, they said that in 20 years it will jump from the present 4.5 million people to 6.5 million. Are there enough units for another 2 million people? If there isn't enough now, will they get it right by then? Some how I don't think so, but, sometimes those in control do get it right.


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## Bill M (26 October 2016)

Boggo said:


> Recently I have noticed that I am getting a lot more emails promoting existing apartment sales and *new developments* etc leading me to think that that market may be feeling the pressure.




Those new developments can be catch, on occassions they take deposits and then nothing. I have seen it time and time again, the builders go broke, sometimes into liquidation and the deposits are frozen. Sometimes council has a dummy spit and forces the builders to come up with new plans. I saw a project draw out over 10 years before it got built!! Others I've seen sit idle for 7 years because a builder went broke.

To all people thinking of buying off the plan, ask this question to the agent. 

What happens if the project doesn't go ahead or the builder goes into liquidation? Get the reply in writing and make your decisions accordingly. If there are no guarantees then keep in mind the risk you are taking on. You could blow the lot.:dunno:


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## Boggo (27 October 2016)

Bill M said:


> Those new developments can be catch, on occassions they take deposits and then nothing. I have seen it time and time again, the builders go broke, sometimes into liquidation and the deposits are frozen. Sometimes council has a dummy spit and forces the builders to come up with new plans. I saw a project draw out over 10 years before it got built!! Others I've seen sit idle for 7 years because a builder went broke.
> 
> To all people thinking of buying off the plan, ask this question to the agent.
> 
> What happens if the project doesn't go ahead or the builder goes into liquidation? Get the reply in writing and make your decisions accordingly. If there are no guarantees then keep in mind the risk you are taking on. You could blow the lot.:dunno:




I personally wouldn't touch the off the plan projects for the reasons you say and in addition I know of a case where the developer reduced the size of each apartment so he could add two while blaming the council even though all they did was approve the variation.

In this link is the current advertising focus of the Adelaide CBD developers telling anyone who will listen how much they are saving.
https://www.revenuesa.sa.gov.au/taxes-and-duties/stamp-duties/off-the-plan-concesson

SA has the highest combined Stamp Duty and fees of any state in Aust., no surprises really when you look at the current incompetent state mob that are wrecking the place.

and state by state stamp duty and fees comparison link
http://www.realestate.com.au/calculators/stamp-duty-calculator/


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## satanoperca (7 December 2016)

http://switzer.com.au/video/david-murray-20161201/

David Murray, cannot be that a former banker is say property might be in a bubble.


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## NewbieTrader1982 (10 February 2017)

HI Guys,

New to this forum and a complete newbie when it comes to trading. My background has been in property investment and property development over the last 8 or so years. This forum has an amazing amount of knowledge and I look forward to reading the stories and wisdom over the next few months and will try to contribute my 2 cents when it comes to real estate.

Cheers
NT


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## rryall (17 February 2017)

What is everybody's thoughts on the future of property prices specifically in Melbourne? I've been on the sidelines last 3 or 4 years waiting for a good time to buy. In hindsight 2012 would have been great. In the upcoming May budget I very much doubt we will get much reform in terms of reducing the capital gains tax discount as has been proposed. Much more likely in my opinion will be an significant increase in the First Home Buyers Grant to tackle "Housing Affordability" which has really lost all meaning. All this does is exacerbate the problem even further and brings future demand forward. I feel Australia is on the brink of a recession but the government will do anything to keep house prices steady as they don't want an economic collapse under their watch. I currently rent a great place for a fraction of the cost of buying so don't really want to bite the bullet until there is at least a small retraction. Would be great to hear peoples thoughts.


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## NewbieTrader1982 (17 February 2017)

rryall said:


> What is everybody's thoughts on the future of property prices specifically in Melbourne? I've been on the sidelines last 3 or 4 years waiting for a good time to buy. In hindsight 2012 would have been great. In the upcoming May budget I very much doubt we will get much reform in terms of reducing the capital gains tax discount as has been proposed. Much more likely in my opinion will be an significant increase in the First Home Buyers Grant to tackle "Housing Affordability" which has really lost all meaning. All this does is exacerbate the problem even further and brings future demand forward. I feel Australia is on the brink of a recession but the government will do anything to keep house prices steady as they don't want an economic collapse under their watch. I currently rent a great place for a fraction of the cost of buying so don't really want to bite the bullet until there is at least a small retraction. Would be great to hear peoples thoughts.




My perspective. Start with property education. I pretty much ignore alot of the macro stuff, ignore 99% of what people say and understand Supply and Demand of different property markets in Australia of which there are thousands. Often people talk about 'A property market' but there is a huge problem with that understanding becasue there is no ONE property market but a vast number which offer all kinds of opportunities ALL THE TIME.

I don't have much to go off from your post but this is what I would want to focus on from my perspective, and believe me I know its not easy, nothing worthwhile is ever easy.

1. Change your mindset/philosophical outlook. My suspicion is that it has caused you (and most others in society to sit on the sidelines of some massive bull markets in the last 5 years.
2. Property education: Books, youtube, networking with others. There is definitely a body of knowledge investors need to lean in order to 1. Avoid the common mistakes most 'property investors' make and 2, understand how to build your property business from the floor up, with a very strong foundation.
3. Determine what your goals are and what is your risk profile
4. When ready take action.

Really it all starts from one's philosophical outlook. I have noticed something time and time and time again from very successful investors: If they believe the world is exploding and there is no money to make then they will make no money. If they believe there are endless opportunities no matter what then they tend to find the opportunities and do very well.

Good luck


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## Wysiwyg (17 February 2017)

rryall said:


> I currently rent a great place for a fraction of the cost of buying so don't really want to bite the bullet until there is at least a small retraction. Would be great to hear peoples thoughts.



I bought first home 4 years ago and consider the 52 k that has gone from rent into my own asset is a pleasing event. On top of that, interest rates have dropped over 1.56%  ... 

Start mortgage rate = 07 NOV 2012 5.550% P.A.
Present mortgage rate (most recent adjustment) = 01 SEP 2016 3.990% P.A.

which leads me to why I posted. I don't know when interest rates will rise but we are at the lowest in history. You could wait for rates to rise and you could have a house price fall as less people come into the market. I don't know if that is how it works. Anyway I have a couple of screenshots to point out what a 2% increase means for interest rates and then you have to consider loan serviceability at higher repayments. I presently repay 2700/month and I can handle about 7% interest rates. Also houses cost money to maintain although I bought a year 2010 house so not much yet, the rates and water cost 3k per year, home insurance 1k per year and yard upkeep I do myself. The freedom of own home is worth it. Like I put earlier the rent that goes into my own future owned asset is all worth it.

Anyway the two examples ... one of 4% over 25 years and 6% over 25 years.


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## Valued (19 February 2017)

NewbieTrader1982 said:


> My perspective. Start with property education. I pretty much ignore alot of the macro stuff, ignore 99% of what people say and understand Supply and Demand of different property markets in Australia of which there are thousands. Often people talk about 'A property market' but there is a huge problem with that understanding becasue there is no ONE property market but a vast number which offer all kinds of opportunities ALL THE TIME.
> 
> I don't have much to go off from your post but this is what I would want to focus on from my perspective, and believe me I know its not easy, nothing worthwhile is ever easy.
> 
> ...




I want to start investing in property soon (as in the next 12 months - 24 months). Are there any particular resources you would recommend? Any particular books to get started? If property is anything like trading, there is a lot of crap out there.


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## CanOz (19 February 2017)

Valued said:


> I want to start investing in property soon (as in the next 12 months - 24 months). Are there any particular resources you would recommend? Any particular books to get started? If property is anything like trading, there is a lot of crap out there.




There's a decent podcast on YMYC. It's not bad to get some ideas on where to invest. For me, it's price, location, and yield preservation, in a nut shell.


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## kid hustlr (19 February 2017)

Any sydney sider who followed this thread and didn't buy is now completely out of the market. i feel for them.


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## NewbieTrader1982 (19 February 2017)

Valued said:


> I want to start investing in property soon (as in the next 12 months - 24 months). Are there any particular resources you would recommend? Any particular books to get started? If property is anything like trading, there is a lot of crap out there.




There are some good books by Michael Yardney, Lomaz and Helen Kogteves. There is no Holy Grail, its a good idea to read a few and to get an overall perspective of approaches, strategies etc and then choose a strategy that suits your 1. Goals and 2. Risk profile. It really all comes down to 3 things.

1. Your *goals *and timeframe to achieve it
2. Your* mindset*, attitude, discipline, effort put in (this needs to match the goals you've set. The lower the goals the more mediocre mindset/discipline is acceptable. The loftier the goals the more sophisticated you'll need to be in mindset and approach.
3. *Income/serviceability*. In the world of property you wil get no where if you don't have an income from a job and serviceability to be able to buy assets. Its much different from stocks in this regard because anyone can buy stocks and trade but not anyone can buy a property asset. It takes serious commitment, sacrificing and dedication. But its not rocket science to make money in real estate. The body of knowledge is relatively simple and not as copious as stock trading seems to be.
4. *Acquiring the foundational knowledge* so you know what to do, what to avoid, the different strategies, how to mitigate risk, negotiations, finance etc etc. The nitty gritty of learning the trade.

Mindset is key imo for success in wealth creation in general.


In my 14 years of investing, the biggest error in judgement I see from all kinds of investors  is they want to achieve great things in short periods of time with a very mediocre mindset. Rarely do they ever succeed with that formula.


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## Smurf1976 (19 February 2017)

NewbieTrader1982 said:


> In my 14 years of investing, the biggest error in judgement I see from all kinds of investors  is they want to achieve great things in short periods of time with a very mediocre mindset. Rarely do they ever succeed with that formula.



A good point and it applies to pretty much everything.

Investing (in anything), getting fit, careers, relationships and just about everything else.

If you're going to succeed then effort and time is required to acquire knowledge and to put it into practice. 

Become a millionaire by the end of this year, lose 50kg in a month and other such notions won't succeed under normal circumstances but real knowledge combined with consistent application has a much greater likelihood of success.


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## NewbieTrader1982 (19 February 2017)

Smurf1976 said:


> real knowledge combined with consistent application has a much greater likelihood of success.




Agreed, at least from my experience and from many other successful people who I have spoken to and read about.


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## sptrawler (14 March 2017)

I think a lot of the property crisis and indeed public opinion, is being manipulated by the media.

http://www.smh.com.au/federal-polit...y-a-house-scott-morrison-20170312-guwnm1.html

The header in the smh, had a picture of Scott Morrison smiling, while making that statement.
My question is, did the article say he was happy about that? because the snippet I could access alluded to that?


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## Bill M (14 March 2017)

Just a quick update on the Sydney and outer suburbs on the Central Coast market. There are plenty of buyers still around and not enough stock to go around. I recently bought an apartment, there was so much competition that I had to pay more than the asking price to secure the place for ourselves. Then last week we put our house on the market, we are downsizing. Within 1 week we had 15 groups through, plus email and SMS enquiries. Offers are being submitted this week. We have already had an offer we could accept but we will wait for the agent to do his work and come up with a good final price.

I read recent commentary that there are 100,000 extra people pouring into the Sydney area every year. At that rate Sydney's population is expected to double in around 25 years. The slow rate that they are building decent supply to meet this demand IMO won't be enough. Plenty of new apartment blocks are planned to go ahead but very few have actually started. By the time they are done 10 years might have passed by, we are getting older by the year, can't wait that long and that's why we didn't buy a new place.

What an awful situation for those wanting to buy a place. They come up with some stupid ideas sometimes. The other night they were talking about affordable housing for teachers, Police and hospital staff, so they could be near their workplace. They mentioned cheaper loans. First thing my wife and I said was WHAT ABOUT EVERYONE ELSE? Then they talked about accessing Super Savings for first home buyers, another silly idea. What they need is more supply at a fair price for everyone. Come on Guvnuts stop coming up with these band aid one line solutions.


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## kefa (14 March 2017)

Having more supply would definitely help. However I think the low interest rate environment globally has had been the biggest driver on property prices. Looking at how property prices have gone up in the last 12 months I think it was a mistake of the RBA to have cut rates twice last year. Now they are stuck between the proverbial rock and hard place. With the Fed looking to move a few times this year I think this is going to be a wake up call to other reserve banks around the world, that leaving interest rates so low for so long has created a lot of dangerous market distortions.


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## luutzu (15 March 2017)

sptrawler said:


> I think a lot of the property crisis and indeed public opinion, is being manipulated by the media.
> 
> http://www.smh.com.au/federal-polit...y-a-house-scott-morrison-20170312-guwnm1.html
> 
> ...




If he doesn't like the current housing affordability crisis, he can change it. So of course he's smiling. Probably was thinking of his many houses too.

I'm no Treasurer but how would removing negative gearing drive rent through the roof?

We all agree that NG does drive up property prices right?

That put a lot of people out of the property market. i.e. higher demand for rental.

With higher costs of property, investor would want a decent rental yield... that decent yield on a high property price mean higher rent.

High yield plus high demand equal rents going through the roof.

If we reverse that... more people could afford a house to live in, i.e. less demand for rental properties. Lower costs of property mean investors can live with a lower rental price as it would be the equivalent yield, or higher, depends.

So wtf? Do we need some economic degree and big title to become stupid?


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## satanoperca (15 March 2017)

luutzu said:


> So wtf? Do we need some economic degree and big title to become stupid?




No just become a state or federal treasurer.


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## moXJO (16 March 2017)

Negative gearing removal will drive up rents at the moment. Its a supply issue in NSW.


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## luutzu (16 March 2017)

moXJO said:


> Negative gearing removal will drive up rents at the moment. Its a supply issue in NSW.





How?


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## satanoperca (16 March 2017)

moXJO said:


> Negative gearing removal will drive up rents at the moment. Its a supply issue in NSW.



Any proof for that?


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## moXJO (16 March 2017)

satanoperca said:


> Any proof for that?



Yeah the current market is proof of that.
 There is not enough supply of family housing.

 We have an influx of overseas cashed up immigrants that dont care about negative gearing. Chinese investors are stacking tenants 12 deep in a three bedroom.  Properties are selling for ridiculous prices in a matter of days because of a shortage of well located stock.
Yet somehow negative gearing will magical bring stock online. Not at this stage of the market. No ones selling enough houses because of negative gearing changes. However its a reason to jack up rents to cover costs in a tight market.

You want a sure fire way to lower prices, then tighten lending and jack up rates,  then you add negative gearing tinkering and then it will tank. It would be a sure fire bet that it crashes the economy with it. Property cycle is sure to turn south eventually so wait it out.

Unit prices would probably drop under negative gearing changes. And its all about location as well. Well located ain't tanking anytime soon.

You want low prices, then wait for the economy to tank.


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## Modest (16 March 2017)

* Please note that the information for the current financial year may not be complete (red bars) due to the inclusion of recent property sales that have not yet settled.

Still an interesting trend for Perth, I am all for it! 




Source: https://www0.landgate.wa.gov.au/property-reports/market-trends/property-hotspots


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## moXJO (16 March 2017)

Prices will eventually tank....Its inevitable. 

Perth was awash with mining money and things got stupid. Im sure NSW will follow eventually.


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## sptrawler (24 March 2017)

trainspotter said:


> It's six o'clock ....
> 
> View attachment 65666




That was over a year ago, trainspotter, in W.A the clock is stuck at six o'clock. 
The jobs situation feels like it is, flattening, but the housing oversupply will be a problem for some time.IMO

https://thewest.com.au/news/wa/housing-fear-as-population-rise-slows-ng-b88424530z

https://thewest.com.au/business/markets/soft-wa-home-market-hits-brickworks-again-ng-b88424793z

http://www.abc.net.au/news/2017-03-21/wa-housing-prices-to-fall-as-oversupply-hits-state/8373564


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## moXJO (25 March 2017)

Here come the rate rises. Things will get interesting


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## sptrawler (27 March 2017)

moXJO said:


> Here come the rate rises. Things will get interesting




It is just a case of squeezing those, who can't afford the rent shortfall, to sell to those who can.
Then squeezing some more, until they can't, only the greedy will get caught.
Those who cut their loses, or lock in their wins, will be o.k

As for the Government, well it is a win win, as was predicted.
In W.A there is a huge oversupply of rental properties, rents become more affordable and the Government didn't have to build them. Just have to supply the bond, for tenants, to fill them. 
Just my thoughts.


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## kid hustlr (27 March 2017)

Still buyers in Sydney but blind freddy can see it's starting to turn.

Probably get 10 years of flat


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## sptrawler (27 March 2017)

kid hustlr said:


> Still buyers in Sydney but blind freddy can see it's starting to turn.
> 
> Probably get 10 years of flat




It depends on how much building has been going on, in W.A heaps of building, heaps of people leaving.
I don't know the situation in NSW, in W.A it was obvious two years ago, supply was going to outstrip demand.


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## greggles (24 April 2017)

UBS call the top of the Australian property market.

http://www.abc.net.au/news/2017-04-24/housing-market-top-called-by-investment-bank-ubs/8466198


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## sptrawler (24 April 2017)

What, we have enough landlords on board, now we just have to see how many fall out of the tree in a declining market.


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## Bill M (25 April 2017)

sptrawler said:


> I don't know the situation in NSW



It is still hot. Record prices are being received in most suburbs. I just sold my house in a week and there were 5 buyers fighting for it. I downsized so there will be some chump change left over for us. The thing with these types of markets is that it makes people want to move. Common story line is a Westie in Sydney sells a 3 bedroom timber cottage for $1 Million and then buys a 3 bedroom brick house on the Central Coast for 500k. Only a 100K out (1 hour) and at half the price, retires and lives the good life.

As for construction and supply? There is plenty in the pipeline but very few completed. That means there is still not enough supply. I have been observing an apartment block being built in my area, has about 50 apartments, 2 years later and it is still not completed. Several plots of dirt selling apartments off the plan...........still a sod has not being turned. With slow construction like that and thousands of people pouring into Sydney each week there is no way they can keep up.



moXJO said:


> And its all about location as well. Well located ain't tanking anytime soon.
> 
> You want low prices, then wait for the economy to tank.




I like moXJO's assessment. Sometimes they build apartments in really awful out of the way areas with bad transport and no walking distance shopping facilities. What people really want is a railway station and shopping center walking distance away, these apartments always sell out quickly. Location, location location, will always get tenants and the price rarely drops. Who the hell wants to drive a car to the supermarket, fight for a parking spot and then have a time restriction on that spot, that isn't living? Come on you building companies out there, build us what we want where we want.


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## basilio (25 April 2017)

_"It is still hot. Record prices are being received in most suburbs. I just sold my house in a week and there were 5 buyers fighting for it. I downsized so there will be some chump change left over for us. The thing with these types of markets is that it makes people want to move. Common story line is a Westie in Sydney sells a 3 bedroom timber cottage for $1 Million and then buys a 3 bedroom brick house on the Central Coast for 500k. Only a 100K out (1 hour) and at half the price, retires and lives the good life."_ Bill M

It is mad. Melbourne is the same. Median price of houses is $844k.  Most established houses in reasonable suburbs well over $1m .  Yet one can buy lovely places in say Ballarat for $350k.  Comfortable. Great medical facilities. Enough city for  almost everything one wants but no mad traffic jams, endless suburbs, huge high rises and extortionate parking fees. Only 75 min by train to Flinders St - every hour.  Certainly makes sense as retirement option.


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## luutzu (14 May 2017)

basilio said:


> _"It is still hot. Record prices are being received in most suburbs. I just sold my house in a week and there were 5 buyers fighting for it. I downsized so there will be some chump change left over for us. The thing with these types of markets is that it makes people want to move. Common story line is a Westie in Sydney sells a 3 bedroom timber cottage for $1 Million and then buys a 3 bedroom brick house on the Central Coast for 500k. Only a 100K out (1 hour) and at half the price, retires and lives the good life."_ Bill M
> 
> It is mad. Melbourne is the same. Median price of houses is $844k.  Most established houses in reasonable suburbs well over $1m .  Yet one can buy lovely places in say Ballarat for $350k.  Comfortable. Great medical facilities. Enough city for  almost everything one wants but no mad traffic jams, endless suburbs, huge high rises and extortionate parking fees. Only 75 min by train to Flinders St - every hour.  Certainly makes sense as retirement option.




When the property market crash, it's gonna be quite a sight.

The prices in Sydney is just insane. Yet everyone I know laughs at the idea that it could crash, or even drop by more than 10%. The most they believe is that it's insane but it will just stay the same for the next decade then pick up again. That it just will not crash because... because Sydney is awesome and we're all rich enough to afford a $1M+ "house" that'll need another $200K to fix up to be liveable, or $500K to knock down and rebuild.


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## CanOz (14 May 2017)

Prices will crash when no one's expecting it....likely when the endless stream of Chinese credit finally dries up.


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## Gringotts Bank (14 May 2017)

luutzu said:


> When the property market crash, it's gonna be quite a sight.




It will be.  Today as I drove around Melbourne with 5 million others (or rather sat in traffic jams), I reflected on how Melbourne has gone from being the 'most livable' to quite undesirable.  Seems like the penny hasn't dropped yet.

Here's my ratings for the once great city:

traffic and parking: D
weather: used to be a B, now C (depends what you like)
services: B
healthcare: B-C
education: depends how much you pay
sport: A
culture and arts:  B
food:  fresh food A, C if you live >10km from CBD
restaurants:  same as any other big city
crime: C


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## Quant (14 May 2017)

CanOz said:


> Prices will crash when no one's expecting it....likely when the endless stream of Chinese credit finally dries up.



First time RBA raise rates it will be the beginning of the end . Take that to the bank  and short any banks pops while you at it


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## MrBurns (15 May 2017)

Yes this is the bubble of a lifetime people have been calling it for 10 years and now it's front page news. Interest rates are rising the interest only investors will bail first and the rest will follow, down 30 or 40% I estimate. Like watching grass grow but it's an inescapable reality now. Have a look at the CEC report http://cecaust.com.au/main.asp?sub=media&id=Aus_Weekly_Report.html
Interesting viewing. The new GFC is happening now.


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## moXJO (15 May 2017)

I'm seeing a slowing in how quickly houses are selling. 

Its all about immigration as far as I am concerned. A lot of cashed up people want to live here. If you have a stream of buyers entering Australia and not enough stock. And all the while you have the next generation born here wanting to buy. Then its pretty simple that demand is outstripping supply.

 You can tinker all you want with policy, but you will just make it worse. Fast speed rail needs to be considered and other policy to ease prices in and around the cities. People will build, develop and invest further out to stop the strain. 
Or you could stop immigration for a few years.


----------



## Junior (15 May 2017)

A significant rise in interest rates, and the perception that they will continue to rise, is the only thing that will cause a crash in my opinion.  There are still huge numbers of participants trying to enter the market.  A 5% or 10% fall in prices will enable those who are waiting on the sidelines to enter.....higher rates or difficult in obtaining credit is the only thing that will truly dry up demand.


----------



## luutzu (15 May 2017)

CanOz said:


> Prices will crash when no one's expecting it....likely when the endless stream of Chinese credit finally dries up.




Just last October/December, Beijing put a brake on capital outflow. Not sure how tightly they can control back channels but it definitely slowed down Chinese companies from making overseas acquisition of overpriced property and entertainment assets.


----------



## Bill M (15 May 2017)

Just thought I'd post this one for those that don't know what's going on in Sydney, it is unbelievable. A knock down old house selling for nearly $2 Million. Click on the link, check it out.
---
The decaying three-bedroom home, at 25 Browning Street, was owned by the same family for 100 years and sold for $1,915,000
http://www.dailytelegraph.com.au/ne...e/news-story/6514c9085517978e84eb48885ad4d5f8
---


----------



## MrBurns (15 May 2017)

Bill M said:


> Just thought I'd post this one for those that don't know what's going on in Sydney, it is unbelievable. A knock down old house selling for nearly $2 Million. Click on the link, check it out.
> ---
> The decaying three-bedroom home, at 25 Browning Street, was owned by the same family for 100 years and sold for $1,915,000
> http://www.dailytelegraph.com.au/ne...e/news-story/6514c9085517978e84eb48885ad4d5f8
> ---




This as to be money from overseas just being parked here....surely.
Like all the empty units in Melbourne, thousands of them, owned by Chinese.


----------



## Bill M (15 May 2017)

I just watched that 60 Minutes program on the Sydney Real Estate market. The PM, the builders, the investors, the first home buyers, the economists, virtually everybody said you need more supply in order to bring prices down. So all these people with all the power from top to toe know what needs to be done but they don't seem to be doing much. One builder said something like, I can put up 60 apartments for sale off the plan today and by Monday they are all sold. I can go 10 doors down do it again and they will all be sold.

So everyone knows the problem but it isn't getting fixed, why?


----------



## luutzu (15 May 2017)

Bill M said:


> I just watched that 60 Minutes program on the Sydney Real Estate market. The PM, the builders, the investors, the first home buyers, the economists, virtually everybody said you need more supply in order to bring prices down. So all these people with all the power from top to toe know what needs to be done but they don't seem to be doing much. One builder said something like, I can put up 60 apartments for sale off the plan today and by Monday they are all sold. I can go 10 doors down do it again and they will all be sold.
> 
> So everyone knows the problem but it isn't getting fixed, why?




Did you watch it on TV Bill? They don't seem to have a web version.

The last time a property bubble hit, a friend of mine got royally screwed. It must have been around 2001 or so, he was at uni and doing a part time job. Got some savings and decides to invest in an apartment in Sydney CBD.

His one-bedroom apartment, bought off the plan for about $550,000, got to him just as the bubble popped. I remember looking up prices for similar apartments when I heard the news, and they were going for something like $400K by then. 

The poor guy couldn't afford to offload it and realise the loss so he quit uni, take on two full time jobs. Last I heard of him he was driving forklifts.

This current bubble is going to hurt a whole bunch of people.


----------



## Bill M (16 May 2017)

luutzu said:


> Did you watch it on TV Bill? They don't seem to have a web version.



Yes I did, we pre recorded last Sunday's 60 Minutes. Here is part of the program, after the fellow finishes his interview it goes on to another persons point of view.
https://www.9now.com.au/60-minutes/2017/clip-cj2oj49jw00010ho41torq6l8


----------



## moXJO (16 May 2017)

luutzu said:


> Did you watch it on TV Bill? They don't seem to have a web version.
> 
> The last time a property bubble hit, a friend of mine got royally screwed. It must have been around 2001 or so, he was at uni and doing a part time job. Got some savings and decides to invest in an apartment in Sydney CBD.
> 
> ...



One reason why you have to let the air out slow. Too many people will go underwater. Everyone else will lose their jobs. Banks will be up the creek and the economy will suffer. 
Foreigners will still be cashed up.
There was no stemming of credit from China. From what I've been told, they are deliberately investing into Australia. They have the numbers to deliberately change the demographic. Business and property is being snapped up in Sydney. Hell even my 2nd Mrs Moxjo wife is Asian.


----------



## luutzu (16 May 2017)

Bill M said:


> Yes I did, we pre recorded last Sunday's 60 Minutes. Here is part of the program, after the fellow finishes his interview it goes on to another persons point of view.
> https://www.9now.com.au/60-minutes/2017/clip-cj2oj49jw00010ho41torq6l8




Thanks Bill.

Saw the whole segment and the "property experts" and our PM are getting this wrong.

It's not really a "supply" problem, not the kind of apartment the developers are supplying. So unless the plan is some sort of social engineering where a block with one house on it is no longer desirable for the gov't - as it increases need for infrastructure etc. that they'd need to fund - and so people are forced into apartments. 

Man that young tycoon is quite something. People can't afford houses because they splurge on $19 smash avocado. His other solution is for the gov't [taxpayers] to either fund homebuyers so they can afford more of his stock; or make it easier for the kids to access their parents' property earlier than having to wait for them to die or something.


----------



## luutzu (16 May 2017)

moXJO said:


> One reason why you have to let the air out slow. Too many people will go underwater. Everyone else will lose their jobs. Banks will be up the creek and the economy will suffer.
> Foreigners will still be cashed up.
> There was no stemming of credit from China. From what I've been told, they are deliberately investing into Australia. They have the numbers to deliberately change the demographic. Business and property is being snapped up in Sydney. Hell even my 2nd Mrs Moxjo wife is Asian.




They got to you too ey. Being all pretty and loving, then soon enough get either half or all of our stuff. 

Yea, Australia does have a history of knowing how to land the property market softly, and for all our sake maybe they could do it again this time round. But from what some experts are saying, we got out of the GFC unscathed mainly due to the Mining Boom, and then racking up a lot of personal/household debt. 

We're at something like 1.2 or 2.1 times household debt to GDP. With an average homeowner in Sydney, at 2016 data, having something like 1 month's worth of cushion if they lose their job. If the economy tank a bit, there'll be a whole lot of trouble in the property market.


----------



## moXJO (16 May 2017)

luutzu said:


> They got to you too ey. Being all pretty and loving, then soon enough get either half or all of our stuff.
> .




Think I would have learnt the first time around.


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## PeterJ (16 May 2017)

We're at something like 1.2 or 2.1 times household debt to GDP. With an average homeowner in Sydney, at 2016 data, having something like 1 month's worth of cushion if they lose their job. If the economy tank a bit, there'll be a whole lot of trouble in the property market.[/QUOTE]

PERTH !!!!!!
(outer suburbs only have been hit VERY hard)


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## luutzu (16 May 2017)

PeterJ said:


> We're at something like 1.2 or 2.1 times household debt to GDP. With an average homeowner in Sydney, at 2016 data, having something like 1 month's worth of cushion if they lose their job. If the economy tank a bit, there'll be a whole lot of trouble in the property market.




PERTH !!!!!!
(outer suburbs only have been hit VERY hard)[/QUOTE]

How far by train is the outer suburbs of Perth there Peter?

In Sydney's Cabramatta/Fairfield area - about an hour by train to CBD - houses on the wrong side of the track, in low-lying areas goes for about $1100+ per m2. That's generally $800K to $1.2M. And the house is a knock down fibro or old rotten cladding to boot.

There's a couple I saw that's between a river, a major highway and an industrial park where I know council require you to build on stilts - due to 100 year flooding... they're asking over $1M. Because it's a water front property or something.

These are areas where the average income would be around $50K to $70K a year. 

A million is still a lot of money right? It's not just me right?


----------



## PeterJ (16 May 2017)

_How far by train is the outer suburbs of Perth there Peter?_

around one hour, 
however many of the outlying suburbs are not serviced by rail !
Perth would be close to 300km north to south
_
A million is still a lot of money right? It's not just me right?
_
yes, but it is relative
when i bought my first home in the 80s,
within 10km of Adelaide i paid $130k,
cheaper the further out you went,
the average wage was 12k
interest rates were 18.5%
much of a muchness, if you want to buy a house you need(ed)  2 incomes
less distractions back then that cost $


Peter


----------



## luutzu (23 May 2017)

Uh oh. 

*Rush of Australian securitized home loans tempts yield-starved Japanese*


http://www.reuters.com/article/us-australia-securitisation-idUSKBN18J0JX?il=0


Australia has become the world's most active market for securitized home loans, with sales at their highest in a decade as lenders seek to take advantage of surging demand from yield-starved Japanese investors.

Issues of residential mortgage-backed securities (RMBS) total of A$67 billion, with A$12 billion ($9 billion) sold so far this year.

The strong overseas demand comes amid warnings over the country frothy property market from regulators, the central bank and the International Monetary.

Home prices in Australia's two biggest cities of Sydney and Melbourne have doubled since 2009.

Offshore buying accounts for as much as half of certain Australian bond offers, estimated Will Mortimer, head of securitized products at Citibank Australia. International investors had completely vanished after the 2008-2009 global financial crisis.

While demand from Europe, the U.S. and Asia has been growing, Japan is the clear stand out....


----------



## Bill M (23 May 2017)

luutzu said:


> Uh oh.
> 
> *Rush of Australian securitized home loans tempts yield-starved Japanese*



I get 3% for my cash in a government guaranteed online bank account and they want to essentially buy RBMS's at a 2.5% yield and take on all the risk? Good luck to them, I wouldn't touch them with a barge pole.

Honestly, why don't they just buy an Australian High Yield Share ETF and pull 6%?


----------



## luutzu (23 May 2017)

Bill M said:


> I get 3% for my cash in a government guaranteed online bank account and they want to essentially buy RBMS's at a 2.5% yield and take on all the risk? Good luck to them, I wouldn't touch them with a barge pole.
> 
> Honestly, why don't they just buy an Australian High Yield Share ETF and pull 6%?




Sure beats me. Maybe those Japanese fund managers have an eye out for those cushy job with a couple of our banks when the thing is over? You know, I destroy other people's savings to your benefit, you give me a nice couple million a year job.

Man, this is just the those stinking CDOs crashing the world all over again.


----------



## sptrawler (12 June 2017)

This is the problem with buying rental properties .IMO
https://thewest.com.au/news/wa/tena...ty-in-worst-condition-ever-seen-ng-b88505158z
That is just a nonsense headline, I've had a property where it was just easier to demolish it and sell off the land, rather than fix it.
Why would you bother going to the media? As if they have any sympathy for a landlord.lol
The property slide will continue for several years, as disposable income limits rental returns.IMO


----------



## Quant (13 June 2017)

Banks now doing the job of RBA  , cash rate & actual available interest rates disconnect


http://www.smh.com.au/business/bank...ed-to-pay-higher-premium-20170611-gwoy42.html


----------



## Cam019 (5 July 2017)

RBA holding TCR at 1.5% yesterday. CBA announcement from last week states that as of Friday, IO owner occupier and investor interest rates will increase by 30bps to 5.77% and 6.24% respectively. P & I investor rates are holding steady at 5.80%, whilst P & I owner occupier rates have been cut by 3 bps to 5.22%. Friday will bring a 102 bps difference between IO investor and P & I owner occupier rates. Things are getting interesting.


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## sptrawler (5 July 2017)

Cam019 said:


> RBA holding TCR at 1.5% yesterday. CBA announcement from last week states that as of Friday, IO owner occupier and investor interest rates will increase by 30bps to 5.77% and 6.24% respectively. P & I investor rates are holding steady at 5.80%, whilst P & I owner occupier rates have been cut by 3 bps to 5.22%. Friday will bring a 102 bps difference between IO investor and P & I owner occupier rates. Things are getting interesting.




I wonder if many IO investors, are converting their loans to P & I ?


----------



## Cam019 (5 July 2017)

sptrawler said:


> I wonder if many IO investors, are converting their loans to P & I ?



Well, a weekly repayment on an IO $500,000 loan over 30 years (10 years interest only) would currently be $571 per week. If they stay with IO, Friday will see that payment increase to $600 per week. If they change to P & I over 30 years, that will take their weekly payment to $677 per week. Some may convert to P & I but due to the $106 weekly increase I believe there will be a large number who cannot afford to. The lenders have become greedy and somewhat complacent which will end up being to the detriment of the borrowers and I believe it won't be too long before we start seeing that in the market. Either way, people are going to be squeezed tighter and tighter as IO interest rates increase and people become unable to swap to P & I repayments because they will be unable to service the debt.


----------



## sptrawler (5 July 2017)

Cam019 said:


> Well, a weekly repayment on an IO $500,000 loan over 30 years (10 years interest only) would currently be $571 per week. If they stay with IO, Friday will see that payment increase to $600 per week. If they change to P & I over 30 years, that will take their weekly payment to $677 per week. Some may convert to P & I but due to the $106 weekly increase I believe there will be a large number who cannot afford to. The lenders have become greedy and somewhat complacent which will end up being to the detriment of the borrowers and I believe it won't be too long before we start seeing that in the market. Either way, people are going to be squeezed tighter and tighter as IO interest rates increase and people become unable to swap to P & I repayments because they will be unable to service the debt.




It is bound to have an impact, it possibly could start the stampede for the door, so to speak.
I suppose a lot will depend on what collateral, the investor has put up. 
I doubt an IO loan is only backed by the property, therefore an investor may think it prudent to bail out, at this point in time.
Over here in W.A, we have had a major contraction, but I'm not seeing many mortgagee sales.
I am hearing of people getting large discounts, on the asking prices though.


----------



## Cam019 (5 July 2017)

sptrawler said:


> It is bound to have an impact, it possibly could start the stampede for the door, so to speak.
> I suppose a lot will depend on what collateral, the investor has put up.
> I doubt an IO loan is only backed by the property, therefore an investor may think it prudent to bail out, at this point in time.
> Over here in W.A, we have had a major contraction, but I'm not seeing many mortgagee sales.
> I am hearing of people getting large discounts, on the asking prices though.



Agreed. I think it will be the investors who come to the realisation that they can no long afford the repayments and sell before the lenders need to repossess the properties. Out of curiosity, what is the % discount range on the properties your have heard about?


----------



## sptrawler (5 July 2017)

Cam019 said:


> Agreed. I think it will be the investors who come to the realisation that they can no long afford the repayments and sell before the lenders need to repossess the properties. Out of curiosity, what is the % discount range on the properties your have heard about?




A friend of mine's daughter and her partner, put an offer of $325k on a house listed at $385k, it was accepted.
There are a lot of houses for sale, in Perth's outer suburbs, it's a bit of a smorgasboard.


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## luutzu (5 July 2017)

sptrawler said:


> A friend of mine's daughter and her partner, put an offer of $325k on a house listed at $385k, it was accepted.
> There are a lot of houses for sale, in Perth's outer suburbs, it's a bit of a smorgasboard.




Man, I haven't heard of any house at that price for about a decade here.

Maybe in a couple of years I'll be seeing it again.

I'm starting to see some listings of cleared/knocked-down land for sale around my old neighbourhood. That and a few to be consolidated blocks from some builder with big dreams who now want to offload it. 

If nothing serious is done soon, all these will end in total disaster.


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## notting (10 July 2017)

Just a statistic 
Grattan shows that* if interest rates went up 2 percentage points, *which is possible, stress levels would be the *highest on record* apart from the squeeze in 1989, which scarred a generation of home-owners."


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## luutzu (11 July 2017)

notting said:


> Just a statistic
> Grattan shows that* if interest rates went up 2 percentage points, *which is possible, stress levels would be the *highest on record* apart from the squeeze in 1989, which scarred a generation of home-owners."





This property cycle is not going to end well. 

Weren't long ago that a $1M property does actually look and feel like a million dollar. Now for $1.9M you could get a cheapy 5 year old McMansion on some 850m2 in freaking Canley Vale - 30km west of Sydney. ANd for about $900k you can get a cleared blocked of about 850m2 near a busy road that's too far to walk to a station but too close to drive.


----------



## notting (11 July 2017)

If this is the new normal, when it goes it will stay gone for a looooooooong time! -

"Today, the number of single adults in the U.S. – and many other nations around the world – is unprecedented. And the numbers don’t just say people are staying single longer before settling down. More are staying single for life.

I’m a social scientist, and I’ve spent the past two decades researching and writing about single people. I’ve found that the rise of single living is a boon to our cities and towns and communities, our relatives and friends and neighbors. This trend has the chance to redefine the traditional meaning – and confines – of home, family and community.

The majority of unmarried Americans are not living with a partner or living alone, but are living with their parents or with various combinations of friends, roommates, parents, children and other relatives."

The Airbnb thing could get really creative, like, 'why own a house when you can share a house?'  kind of thing kicks in due to initial unaffordability becomeing a revolution in house, room and land sharing could kick in and get very interesting!
It's already kind of crazy to own a holiday house when you see what is on offer and the shear variety and affordability of Airbnb stuff.


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## luutzu (1 September 2017)

Check out ABC's report on Aussie property.

http://www.abc.net.au/news/2017-08-...-affect-home-loan-stress/8798274#DSIstressmap


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## moXJO (2 September 2017)

luutzu said:


> Check out ABC's report on Aussie property.
> 
> http://www.abc.net.au/news/2017-08-...-affect-home-loan-stress/8798274#DSIstressmap
> 
> View attachment 72457



Bit of a wan.k map for bears.

I'm seeing property turnover  slowing where I am. Stupidly high prices are sitting on the market for weeks now. Where as before they were going in days.


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## Smurf1976 (2 September 2017)

A quick look at my own area (suburb of Hobart) on a common real estate website finds that firstly there are _very_ few houses for sale, at least there are very few listed on that website.

As for the price, it would be almost exactly the same for a similar house as what I paid for this one 10 years ago.

Prices might be booming in Sydney but they're flat for the past decade around here it would seem. No doubt someone can twist some stats to say otherwise but that's my observation based on properties actually for sale at the moment.


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## McLovin (2 September 2017)

moXJO said:


> I'm seeing property turnover  slowing where I am. Stupidly high prices are sitting on the market for weeks now. Where as before they were going in days.




Me too. I considered selling about 6 months ago, because of where prices had gone. I bought in 2013 for $1.5m had done a bit of work, but not much, and was looking at around $2.7ish as a reasonable sale price. From what I've seen around here, the market has cooled a lot in the last couple of months. I reckon I'd still get that price, but it would take a while and there wouldn't be much chance of it going much higher.


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## luutzu (2 September 2017)

moXJO said:


> Bit of a wan.k map for bears.
> 
> I'm seeing property turnover  slowing where I am. Stupidly high prices are sitting on the market for weeks now. Where as before they were going in days.




Scary map. Full of pending horror and opportunities.


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## luutzu (2 September 2017)

McLovin said:


> Me too. I considered selling about 6 months ago, because of where prices had gone. I bought in 2013 for $1.5m had done a bit of work, but not much, and was looking at around $2.7ish as a reasonable sale price. From what I've seen around here, the market has cooled a lot in the last couple of months. I reckon I'd still get that price, but it would take a while and there wouldn't be much chance of it going much higher.




I think $2.7m is more than reasonable man.


----------



## noirua (3 September 2017)

*Time to build a new city in Australia. Maybe near *
*Lake Eyre Canal.*

*https://en.wikipedia.org/wiki/Lake_Eyre*
*Lake Eyre* (/ˈɛər/ _*AIR*_), officially known as *Kati Thanda–Lake Eyre*,[1] contains the lowest natural point in Australia, at approximately 15 m (49 ft) below sea level (AHD), and, on the rare occasions that it fills, is the largest lake in Australia covering 9,500 km² (3,668 sq mi). The shallow endorheic lake is the depocentre of the vast Lake Eyre basin and is found in Northern South Australia, some 700 km (435 mi) north of Adelaide.

Energy and Lake Eyre
http://mikesprojects.net/lake eyre project.htm

*How to build a city from scratch: the handy step-by-step DIY guide*
https://www.theguardian.com/cities/2015/jun/30/how-build-city-step-by-step-diy-guide


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## Value Hunter (3 September 2017)

McLovin the problem with selling your place of residence is that you have to live somewhere. If you sold would you move to another city?

For example in Sydney somebody with a decent house in the eastern suburbs (i.e. near the beaches) or north shore (also near the beaches) or Surry Hills (walking distance to the CBD), etc has gotten used to certain lifestyle factors and I doubt they would want to sell and move to crappy Western Sydney and buy a house there for half the price. For example somebody living in Sydney or Melbourne could sell and buy a house in a prestige suburb with good lifestyle in Perth or Adelaide, or Hobart for much less and invest the remainder.


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## McLovin (3 September 2017)

Value Hunter said:


> McLovin the problem with selling your place of residence is that you have to live somewhere. If you sold would you move to another city?




No. My intention is to stay in the same area, but upgrade.


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## Value Hunter (3 September 2017)

So you are saying that houses are too expensive but you want to upgrade to an even more expensive house.....


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## Glen48 (3 September 2017)

On 16 July @017 Bitcoin was 2500 today 3/09 it hit 6k..did make 6300 earlier,,, I would be selling for something cheaper and buying Crypto,,,


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## McLovin (3 September 2017)

Value Hunter said:


> So you are saying that houses are too expensive but you want to upgrade to an even more expensive house.....




Err, where did I say that? I was just agreeing with moxjo's comment that the market had slowed.


----------



## luutzu (3 September 2017)

Value Hunter said:


> McLovin the problem with selling your place of residence is that you have to live somewhere. If you sold would you move to another city?
> 
> For example in Sydney somebody with a decent house in the eastern suburbs (i.e. near the beaches) or north shore (also near the beaches) or Surry Hills (walking distance to the CBD), etc has gotten used to certain lifestyle factors and I doubt they would want to sell and move to crappy Western Sydney and buy a house there for half the price. For example somebody living in Sydney or Melbourne could sell and buy a house in a prestige suburb with good lifestyle in Perth or Adelaide, or Hobart for much less and invest the remainder.




Oi! What's wrong with crappy Western Sydney? Just because practically all its houses are blocked in between major highways, freeways, toll ways and industrial parks... and are selling for some $1M a piece. Oh wait. 

We all get used to where we live. So yea, property quotes rising are just psychological feel-good for those who have one property. Strange though for that those with multiple investment properties, most that I know tend not to sell on the high either.


----------



## moXJO (3 September 2017)

luutzu said:


> I think $2.7m is more than reasonable man.



Unless you want to buy again near the center of  Sydney. $2.7m ain't that much.


----------



## luutzu (3 September 2017)

moXJO said:


> Unless you want to buy again near the center of  Sydney. $2.7m ain't that much.




Ain't that much money or it don't buy you that much?

My "reasonable" was referring to McLovin putting out some $300K to net some $800k in 3 or so years. That's pretty dam good.

For the buyer forking out at that $2.7m to gain similar returns... ermmm... But then again I never really appreciate property for its investment purposes, hence still poor 

I was going to buy a property around 2013. Based it off my parent's purchase price a couple of years before, did a compound growth rate at a generous 5% and put the value at $560k. Decent enough for a McMansion I'm going to put on once I hit the big time. 

Auction hit some $630k after a few bid so I didn't even have a chance before it hit $670k.

Same block would go for some $900k or more now. 

I just don't see how something that would cost me another $8.5k to knock down could be worth almost a million. That'd  be a $1.5m home... I'm just getting used to buying a $1.50 can of coke.


----------



## McLovin (3 September 2017)

luutzu said:


> My "reasonable" was referring to McLovin putting out some $300K to net some $800k in 3 or so years. That's pretty dam good.




What $300k?


----------



## luutzu (3 September 2017)

McLovin said:


> What $300k?




I was just assuming the 20% deposit [it wasn't 20% a few years back right?], sell it and after all expenses, possibly negative gearing gains to offset the interests etc. an average person buying at that price to sell for that other price would net some $800k?

Just a quick estimate with a few assumptions. Nothing specific to you.


----------



## McLovin (3 September 2017)

luutzu said:


> I was just assuming the 20% deposit [it wasn't 20% a few years back right?], sell it and after all expenses, possibly negative gearing gains to offset the interests etc. an average person buying at that price to sell for that other price would net some $800k?
> 
> Just a quick estimate with a few assumptions. Nothing specific to you.




Nah I had a much, much higher deposit. No negative gearing 'cause I live in it. If/when I upgrade it will not involve a larger mortgage.


----------



## luutzu (3 September 2017)

McLovin said:


> Nah I had a much, much higher deposit. No negative gearing 'cause I live in it. If/when I upgrade it will not involve a larger mortgage.




Good work man, congrats.

I never thought it's possible to upgrade from a $2.7m home but yea, there goes my wife's dream of owning one of those houses by Centennial Park or Taronga Zoo whenever we accidentally get lost in the area.


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## moXJO (4 September 2017)

luutzu said:


> but yea, there goes my wife's dream of owning one of those houses by Centennial Park or Taronga Zoo whenever we accidentally get lost in the area.




Not with that attitude luutz

All my Vietnamese mates are some of the most ambitious buggers around. They are into everything. Making viet movies,  importing timber,  owning clubs. There were some tearing up old train tracks and using the old rare timbers in furniture.


----------



## luutzu (4 September 2017)

moXJO said:


> Not with that attitude luutz
> 
> All my Vietnamese mates are some of the most ambitious buggers around. They are into everything. Making viet movies,  importing timber,  owning clubs. There were some tearing up old train tracks and using the old rare timbers in furniture.




I'm at a stage in my life where I count wealth in the number of friends I have. Wait... definitely poorer with that metric 

Yea, there are some very enterprising Viets out there. They definitely know how to turn a buck beyond the first generation's second-hand furniture, over-priced tuition workshop and exploiting later arrivals by sub-contracting sweatshops to their home.

Those rail sleepers definitely make great furniture. Use them with those old floor joists and rafters... real solid timber those.


----------



## satanoperca (4 September 2017)

Nothing to do with property, but my software development team are in Hanoi and they rock.

Have worked with dev teams in Malaysia, India, Bangladesh all cheaper than Vietnam, but the Vietnamese are the most astute and hard working


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## moXJO (5 September 2017)

luutzu said:


> Yea, there are some very enterprising Viets out there. They definitely know how to turn a buck beyond the first generation's second-hand furniture, over-priced tuition workshop and exploiting later arrivals by sub-contracting sweatshops to their home.




I think the Thais have taken over this segment.


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## luutzu (5 September 2017)

moXJO said:


> I think the Thais have taken over this segment.




Have they? I guess subbing the work out for 10c on a dollar is too good an opportunity. 

The folks was watching some news today where this American-Viet guy successfully sued the VNese gov't for screwing him out of his hundreds of millions. Headline said he was awarded $US1.25Billion. That's Billion with a B. 

That makes him one of the few luckier entrepreneurs investing back in the the Motherland. I've known of some half dozen small fries going back there to invest just to see "the state" or relative taking everything.


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## satanoperca (5 September 2017)

luutzu said:


> Have they? I guess subbing the work out for 10c on a dollar is too good an opportunity.
> 
> The folks was watching some news today where this American-Viet guy successfully sued the VNese gov't for screwing him out of his hundreds of millions. Headline said he was awarded $US1.25Billion. That's Billion with a B.
> 
> That makes him one of the few luckier entrepreneurs investing back in the the Motherland. I've known of some half dozen small fries going back there to invest just to see "the state" or relative taking everything.




FAKE NEWS. He is suing, but has not been awarded or won settlement. The minute you mentione $1B USD sounded suspicious. The person suing is an angel, lol.

Unless proven otherwise, please check before you listen to mum and dad.

5 minute google search might help.


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## luutzu (5 September 2017)

satanoperca said:


> FAKE NEWS. He is suing, but has not been awarded or won settlement. The minute you mentione $1B USD sounded suspicious. The person suing is an angel, lol.
> 
> Unless proven otherwise, please check before you listen to mum and dad.
> 
> 5 minute google search might help.




I saw the headline in a Viet paper saying he won. Let's check.


----------



## luutzu (5 September 2017)

satanoperca said:


> FAKE NEWS. He is suing, but has not been awarded or won settlement. The minute you mentione $1B USD sounded suspicious. The person suing is an angel, lol.
> 
> Unless proven otherwise, please check before you listen to mum and dad.
> 
> 5 minute google search might help.




Google's no help when I don't know any keyword 

Will take a pic next time.


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## satanoperca (5 September 2017)

*Dutch businessman sues Vietnam gov't for $1.25 billion in decades-long dispute*

*http://www.sbs.com.au/yourlanguage/...h-vietnamese-investor-sues-vietnam-government*


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## Value Collector (6 September 2017)

Could Parking spaces be causing High property prices?


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## luutzu (6 September 2017)

satanoperca said:


> *Dutch businessman sues Vietnam gov't for $1.25 billion in decades-long dispute*
> 
> *http://www.sbs.com.au/yourlanguage/...h-vietnamese-investor-sues-vietnam-government*




Cool. Took a pic of the paper today. They put a "?" at the end of the headline of him winning. 

I don't follow the case, just from way too many people my parents know and heard of, his claims that the gov't make excuses to take his cash is quite credible. 

There's this couple my folks knew who went back there in the 90s to open a sweatshop, seeing how they did pretty well with it here and I guess thought the model would work better at even cheaper labour costs. Soon enough explosives were found hidden in some corner of their factory and they lost everything because they were plotting to overthrow the gov't. 

There are people who buy properties for retirement, putting it in their kid's or sibling's name over there. Letting them live in it while they're back overseas just to find it permanently belonging to their named relative when they came back a year or two later.

You learn a lot about life visiting VN. It's like learning a lot about politicians with Trump as president.


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## luutzu (6 September 2017)

Value Collector said:


> Could Parking spaces be causing High property prices?





Self-driving cars will change these in a hurry.

But no, parking isn't what's causing the current property prices.


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## Value Collector (6 September 2017)

luutzu said:


> Self-driving cars will change these in a hurry.
> 
> But no, parking isn't what's causing the current property prices.



 It certainly adds to the cost, have you seen how deep they dig the holes under most new apartment buildings to add all those car spaces.


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## luutzu (6 September 2017)

Value Collector said:


> It certainly adds to the cost, have you seen how deep they dig the holes under most new apartment buildings to add all those car spaces.




Yea I've parked below ground  

True that it does add to the cost, but there's always been parking space requirement and property prices hasn't gone up this much due to that.

There's this guy that own most of the commercial properties in Canley Vale. Heard that he was going to knock those typical single storey shops down to build some complex but haven't because parking space requirements would cost him too much. So in that case, it doesn't cost consumers anything extra 

Fairfield Council is getting pretty enterprising lately I am very upset yet have to admire: They pass the costs of practically everything on to the homeowner/developer or ratepayers, and then some.

When I was in HS, they put a fee to park in Cabra's then one major car park. Saying the fee is to upgrade that and then build a bigger one next door then remove the fees. 

They collect for some 10 odd years then a few years ago turn that promised carpark space into a ground level shopping complex with only two or so storey parking on top. The old car park get a fresh coat of paint and I think the fees are still on.


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## Value Collector (6 September 2017)

luutzu said:


> Yea I've parked below ground
> 
> True that it does add to the cost, but there's always been parking space requirement and property prices hasn't gone up this much due to that.
> 
> ...




More of the new supply is apartments and town houses, where adding parking is necessary


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## luutzu (7 September 2017)

Value Collector said:


> More of the new supply is apartments and town houses, where adding parking is necessary




Town Houses definitely need more than the single garage with one visitor's space. My folks' place is right opposite a few units and there's hardly any parking on the street. I have a feeling that they've turned their garage into a liveable room.

A bit strange that for a continent this big with only some 24 million people, Australia somehow have a housing shortage and affordability issue.


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## satanoperca (7 September 2017)

luutzu said:


> A bit strange that for a continent this big with only some 24 million people, Australia somehow have a housing shortage and affordability issue.




I have read a lot of bull**** about this topic, but your single sentence sums up the situation perfectly.

I know the reasons why it has happened, my question is why have we allowed it to happen?


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## luutzu (7 September 2017)

satanoperca said:


> I have read a lot of bull**** about this topic, but your single sentence sums up the situation perfectly.
> 
> I know the reasons why it has happened, my question is why have we allowed it to happen?




By "we" you mean the population or the government carrying out the will of the people? 

Strange but people, probably myself included, like to buy stuff then watch the neighbour's stuff sells for higher thinking that when we goes to sell, we too will sell for at least that and then some.
----------

For most people, a rapidly rising property market is actually a bad thing if they stop and think about it. For one, it'll costs that average Joe and Jane more to buy; and buy in a real hurry, without too much consideration about location or proper inspection. 

There's the increased taxes and council rates... 

There's that feeling of being rich so you refinance your mortgage, splurge and if you lose your job or interest rise etc., you'd be screwed.

Then there's the macro stuff... too much financial debt mean stress and no spending beside the absolute essential. Bad for business....

Anyway, it makes no economic sense. Makes political sense though... that and it helps with controlling the population, use that invisible hand to push their heads to the grindstone so they'll work hard and won't question much about safety or raises.


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## Value Collector (8 September 2017)

luutzu said:


> Town Houses definitely need more than the single garage with one visitor's space. My folks' place is right opposite a few units and there's hardly any parking on the street. I have a feeling that they've turned their garage into a liveable room.
> 
> A bit strange that for a continent this big with only some 24 million people, Australia somehow have a housing shortage and affordability issue.




Empty desert doesn't help when everyone wants to live with a handful of capital cities.

I mean if you suggest that people move to the other side of the blue mountains to find cheaper housing they freak out.


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## luutzu (8 September 2017)

Value Collector said:


> Empty desert doesn't help when everyone wants to live with a handful of capital cities.
> 
> I mean if you suggest that people move to the other side of the blue mountains to find cheaper housing they freak out.




Heard a few months ago some Canadian expert was saying that Supply/Demand, i.e. population growth, aspect doesn't holds up for their Vancouver and Toronto markets. That the net population growth for those two was something like 2% versus their runaway property market rising in the 20% p.a. past few years. Then there's those empty houses/apartments. 

I haven't looked up the stats for Australia, but given our deserts and habitable areas within those congested roads... I mean, 40 minutes drive from the CBD and it's pretty empty. No need to go beyond the wrong side of the mountains. 

Population density: Wikipedia

Australia ranked 235th with 8.5 per km². Sydney at 400/km² (2015).
Hong Kong ranked 4th with 16,444 people per km². In Kwun Tong it goes to 57,250 [HK gov.]

Sydney [Australia?] was the 2nd most expensive property market behind Hong Kong a couple of years running right?

The maths and economics just doesn't add up. 

The other explanation would be that we Sydnese [] are all doing financially well, our economy is great and all that. But... but most of us are struggling to make ends meet. I mean, that ABC stats just showed that about 1 in 4 Aussies cannot pay their bills [and mortgages] at the current low interest rate. 

-----------------

The thing about property prices is that trading volume isn't very high so all you need is a few thousand idiots [or cashed up investors with a broken calculator] to make the prices look like we ought to go out and get into debt over our pay packages.

From memory, that ABC report show Fairfield has only some 3,500 mortgagees. Probably need more accurate and detailed transaction data to make a proper conclusion... but most houses aren't for sale or just sold. 

But yea, the current market is beyond my maths. 

I mean, a typical master builder's McMansion wouldn't costs the builder more than $200k to build. If a person become an owner-builder, they definitely could build a massive 5 bedroom, 2 storey, some 450m2 brick-veneer for about $300k... say $350k for the fancy (solid) timber flooring and marble tiles....

So it's not the cost of construction that's driving up the prices either. That and most properties selling for $1M in Western Sydney need a proper demolition just to be safe.


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## MrChow (8 September 2017)

I think the dynamics (leading to similar income to price ratios) in NZ, Canada and Australia are pretty similar.


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## Smurf1976 (4 November 2017)

A few questions about the technicalities of real estate transactions since I’ve only ever bought one house and never sold.

I’m just going through some initial thoughts, working out costs and so on at the moment. It’s not a given that I’m moving but I just want to work out all the costs and cash flows.

First question - if selling then at what point in the process do real estate agents want payment of their fees? 

From a cashflow perspective can I use the proceeds of the sale to pay those costs? Or do I need to pay them before the $ from the property sale is received?

Second question - I see various statistics relating to the average gap between asking prices and actual selling price. Eg in one particular city I see that the average selling price is a 6% discount on the asking price. What I want to know is how this is calculated given that listing prices are  typically a range not a single figure?

Eg a house is listed for sale at $500 to $550K. What figure is considered to be the price when those average vendor discount figures are calculated? Are they basing it on $500K? On $550K? Half way so $525K? Something else?

Someone here will know I’m sure.


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## MrBurns (4 November 2017)

Agents may want the advertising up front but the commission is deducted from the deposit at settlement.
The asking price in a private sale is more than they expect naturally.
With an auction in this market the agents quote low to generate interest, it's illegal to underquote but it happens all the time.


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## moXJO (4 November 2017)

MrBurns said:


> With an auction in this market the agents quote low to generate interest, it's illegal to underquote but it happens all the time.



This happens all the time where I am. Goes for $100k plus above asking.


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## Smurf1976 (4 November 2017)

MrBurns said:


> Agents may want the advertising up front but the commission is deducted from the deposit at settlement.



Thanks for that. 

Not something I've done before so just trying to get my mind around it all at this stage. 

As for the prices bit, that's a question less specific to me personally. I'm referring to various reports I've seen that "selling prices last month were x% of asking prices" and trying to understand how that's calculated given that asking prices, around here at least, are typically a range rather than a precise figure. Someone must be converting a price range, eg $420K to $460K, into a firm number in order to be able to do such a calculation. 

My thinking there is that if the market's turning down then the gap between asking and selling would, if actual selling prices tend to be lower than the asking price as they are at least in many places outside Sydney and Melbourne, would tend to widen and that would be one sign of a deteriorating market. My interest there is more in the overall economics side than any personal consideration - I just want to know how they calculate such a figure?

As an example, I saw in the newspaper recently that the average vendor discount in West Hobart (that's an actual suburb name not a broad area) was 4.2%. Now I'm just wondering exactly how that's calculated given that most vendors list a price range not a specific figure?

At a guess they're using the top of the price range as the basis of that calculation? 

Anyone know for sure how they come up with these numbers?


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## moXJO (4 November 2017)

Smurf1976 said:


> Thanks for that.
> 
> Not something I've done before so just trying to get my mind around it all at this stage.
> 
> ...



They will go off lowest price they can get away with. If they can quick flick your house- they still make their profit.

How fast are houses selling in your area? 
Are they at all time highs, or slipping down? 

Most of the agents I meet try to low ball you for quick profit.


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## Smurf1976 (4 November 2017)

moXJO said:


> How fast are houses selling in your area?
> Are they at all time highs, or slipping down?



Where I'm selling = prices are at an all time high, up about 19% over the past 12 months and 8% over the past quarter. I know pretty much what my house is worth within a few % so not too worried about that aspect. There's strong demand in the area, it's one of the highest capital growth areas in the state. Average days on market = about 25.

Where I'm considering buying = prices are about 5% below the peak in early 2017 and the trend is down since then. Info online is that average selling prices are 5 - 6% below asking price hence why I'm trying to understand exactly how that's calculated. Average days on market = just over 70.

It's not a given that I'm moving but I always like to know the answers well before I plunge into anything. I'm just crunching the numbers at this stage and seeing how it all looks.

My reason for _possibly_ moving is unrelated to housing prices although obviously that's a definite issue I need to consider.


----------



## moXJO (4 November 2017)

Smurf1976 said:


> Where I'm selling = prices are at an all time high, up about 19% over the past 12 months and 8% over the past quarter. I know pretty much what my house is worth within a few % so not too worried about that aspect. There's strong demand in the area, it's one of the highest capital growth areas in the state. Average days on market = about 25.
> 
> Where I'm considering buying = prices are about 5% below the peak in early 2017 and the trend is down since then. Info online is that average selling prices are 5 - 6% below asking price hence why I'm trying to understand exactly how that's calculated. Average days on market = just over 70.



Possibly discount due to time on market.


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## notting (20 November 2017)




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## moXJO (24 November 2017)

notting said:


>



Things are definitely moving slower where I am. Suburbs that were less attractive prior to boom, are not selling for the stupid prices that they were. And a lot are sitting on the market for extended periods.


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## greggles (24 November 2017)

The Party Is Over for Australia's $5.6 Trillion Housing Frenzy

I don't think the bubble is going to burst, but I think we're going to see an extended period of low interest rates and price stagnation.


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## Junior (24 November 2017)

Record population growth, 30 years of falling interest rates to a record low and highest debt levels on record.  Add to that the high concentration of jobs in our capital cities....

The next few years will be interesting.


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## notting (24 November 2017)

moXJO said:


> Things are definitely moving slower where I am. Suburbs that were less attractive prior to boom, are not selling for the stupid prices that they were. And a lot are sitting on the market for extended periods.




I'm seeing the same, the frenzy is over and Agents are ringing me, as an investor, instead of me ringing them!


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## luutzu (24 November 2017)

notting said:


> I'm seeing the same, the frenzy is over and Agents are ringing me, as an investor, instead of me ringing them!




The property market is not going to end well. The oversupply and the debt will crash it so hard the grandkids will feel it.

Builders, tradies, home rennovators, handyman... they're all busy and overcharging. 

It's not just the new houses and apartments, it's the granny flats boom too. 

I know a few who bought a house or two recently and immediately take out more loans to build a granny flat. Those who bought a decade or so ago also take out loans to also build granny flats, extension and other creative stuff to make the rental yield meet the interest repayment half way. 

A typical 60m2 GF now cost $150K to $200K. At such prices, tradies and half-baked builders still can't find enough time to accept the work.


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## moXJO (25 November 2017)

notting said:


> I'm seeing the same, the frenzy is over and Agents are ringing me, as an investor, instead of me ringing them!



It begs the question: Is our high immigration going to keep house prices going up?
High cost of living must be making Australia less attractive to live in.

It also comes down to how many dwellings we are building a year (in places people want to live) as opposed to how many we are letting in.

We would have corrected long ago if not for immigration numbers. I personally don't think it's sustainable.


----------



## luutzu (25 November 2017)

moXJO said:


> It begs the question: Is our high immigration going to keep house prices going up?
> High cost of living must be making Australia less attractive to live in.
> 
> It also comes down to how many dwellings we are building a year (in places people want to live) as opposed to how many we are letting in.
> ...




Interest rate increase, oil prices upping a bit more... those would do it far more effective than immigration figures. 

I don't have the stats of how many properties are bought by foreigners or new immigrants, but going by anecdotal evidence, there are plenty of OZ-born Aussies buying plenty of properties around areas I know.

They might look Asian, might be Chinese... but Asian/Chinese Australian buyers. Not always foreigners.


Given the current level of crazy-high mortgage and personal debt, over the next few years the only ones who can afford their own home would be new immigrant and refugees, and of course working Australians who's currently not in too much debt.

Immigrants or refugees, on average - we're not talking the rich and well connected ones, are probably renting or have enough to just buy one property to live in. So their debt level are either zero or quite manageable... zero debt because bankers are less likely to lend to refugees, and refugees are unlikely to even think about getting a mortgage.

When the crash happen, those who are currently overleveraging will get screwed. Properties will be cheaper and so those without financial trouble then can buy at cheaper or more affordable prices.

I've withnessed this pretty much first hand in the late 80s to early late 90s.


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## Smurf1976 (25 November 2017)

Taking a few steps back and looking at it:

Wages haven’t kept pace with rising costs of living including housing.

Consumers have borrowed to fill the gap and carry on spending particularly on housing.

In the absence of ongoing falls in interest rates this approach of debt growing more rapidly than income is unsustainable and will thus end at some point.

How long it lasts is anyone’s guess but if something is unsustainable then ultimately it will end. 

The rest is detail. Will we see a wages boom which effectively replaces growing debts and keeps everything else going? Or no wages boom and consumption spending is forced down?

Suffice to say I don’t see any real sign of a wages boom for the majority of the workforce. Could happen but it doesn’t seem to be happening at the moment.


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## luutzu (25 November 2017)

Smurf1976 said:


> Taking a few steps back and looking at it:
> 
> Wages haven’t kept pace with rising costs of living including housing.
> 
> ...





Saw some news report a few months ago stating that for the average worker to be able to afford an average property in Canada, US, their current average income will need to increase by some 30% to 40%.

Try walking into the boss's office to ask for that kind of raise. Or any kind of raise. 

A typical "professional" would be lucky to get 2% a year "raise". When I was starting out, a new graduate friend was over the moon when he got a 3% raise after two years' work. 

Companies and businesses know the likelihood of their employees being deeply mortgaged. That kind of knowledge mean no raise negotiation, possibly more work for no extra pay too. 

Worker insecurity by design.


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## sptrawler (7 December 2017)

Smurf1976 said:


> Taking a few steps back and looking at it:
> 
> Wages haven’t kept pace with rising costs of living including housing.
> 
> ...




I think you are on the money, prices slide, wages growth, currency devaluation and migration.
This will end up with a soft landing of property prices, and "my gov" will sort out the rest. lol


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## luutzu (7 December 2017)

Soft with a THUD. 

The current price level is either the new norm or the same old crazy mania. 

It can't be the new normal because real wages hasn't grown with prices on anything but maybe electronic gadgets. And you can't eat gadgets.

Pretty much everywhere you look in Sydney you see apartments being built. Built in places I just don't see the benefit of living that high and that crammed.

On top of that, just about everyone I know with a property are putting in a Granny Flat out back to rent. Some even extend their house up or back a bit, then add a granny flat. 

Council used to decide what land and what parking spaces etc. get to have a granny. Now that NSW has their SEPP CODE in... people with a block above 450m2 can have get a 60m2 gflat.

So not only are people indebted with one or two investment property, they're also indebted from the extra $120-$150K for that additional Granny Flat.

Extremely high private debt the likes of which Australia hasn't seen before; record low interest rate that's about to follow other countries and get a kick up a bit; new apart and affordable granny flat about to glut the market... 

If the RBA and myGov can bring this to a soft landing like other times, they deserve a few Nobel Prizes for miracles.


----------



## sptrawler (10 December 2017)

Don't know about the Eastern states, but W.A has had a soft landing, I'd say house prices are post gfc level at the moment.
There are mortgagee sales, but generally things have bottomed without mass hysteria.

The thing is, there may be as many first home buyers sitting on the sidelines, as indebted speculators who may have to sell.
It isn't as though there are only people in debt, up to their eyeballs, who have a house.
My daughter just sold her house, for $75,000 below asking price, she built it 6 years ago so still came out in front.
But someone got a bargain, the people next door to her, bought their similar house for $120,000 more, just two years ago.
So someones loss is someone else's gain, life goes on.
There will be a fall in house prices in Sydney, they are stupid, people will get burnt.
Life will go on.
A few will lose everything, others will loose their investment egg, others will jump in and pick up what they percieve is a bargain.
The thing is, I don't think prices will go below, the price they were pre boom.
Wages will rise(they have to), interest rates will rise(they have to) and the wheel will start moving again.
Just my opinion.
I tend to think, the plan is, the dollar will go down and wages will go up.


----------



## greggles (10 December 2017)

sptrawler said:


> interest rates will rise(they have to)




They do, but my guess is they won't be going up much anytime soon. I think they have bottomed out for now but with so many people mortgaged to the hilt, an interest rate rise of any significance will put an enormous amount of economic stress on a lot of borrowers. That effect of that sort of stress will be felt at the ballot box.

Interest rates will follow wage growth up IMO. It appears to be the only way to avoid a hard landing.

The Sydney and Melbourne property markets are overheated. However, I think there is still growth to be had in cities like Brisbane and Adelaide.


----------



## sptrawler (10 December 2017)

greggles said:


> Interest rates will follow wage growth up IMO. It appears to be the only way to avoid a hard landing.



Absolutely, the only problem is, affluence and laziness follows wage growth, as was proven this boom.
IMO the only way they can counteract that, is with major currency devaluation, then as the wages go up the mortgage stress is relieved.
The down side is the consumer stress is increased, but as long as it is gradual, the economy adjusts.
You can only do without a fridge, or a cooktop, for so long.
Maybe the rent to buy companies will do well.


----------



## luutzu (11 December 2017)

sptrawler said:


> Don't know about the Eastern states, but W.A has had a soft landing, I'd say house prices are post gfc level at the moment.
> There are mortgagee sales, but generally things have bottomed without mass hysteria.
> 
> The thing is, there may be as many first home buyers sitting on the sidelines, as indebted speculators who may have to sell.
> ...




WA might have had a soft landing because those without a job there can migrate to the East to send money back to the bankers there while they rent here. Then there are investors from the East coast going over to pick up a few bargains.

What would happen if the East coasters are also stuffed? 

Yes, true that there are people with savings sitting on the sidelines; or people with money, period. Just I don't see how there could be too many with savings of $200K+ just sitting there waiting. 

I don't know how anyone on an average wage would have any savings to be honest. The rent alone would eat up most of an average wage. 


The last (few) times Australian property "corrected" itself, Aussies aren't as indebted as they are now. No where near where we are now.

The Chinese weren't in too much debt then either. There weren't capital flight control from Beijing etc.

The maths just don't add up.


----------



## greggles (13 December 2017)

And on a lighter note, High school girls at Sacred Heart College in Geelong have discovered that house prices are cheaper in streets with silly names.

http://www.abc.net.au/news/2017-11-27/house-prices-lower-on-streets-with-silly-names/9197366

So if you don't mind living in Butt Street, Wanke Road or Grogan Court you might be able to get into the property market at a much better price.


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## satanoperca (12 January 2018)

Ah, the truth finally comes out.

Unbelievable growth in property while inflation low, interest rates, low, wage growth f---kd, GDP crap, but property to the moon in the last 5 years. 

Couldn't be foreigners buyer our shelter and land.

No, said all, govnuts and polies lied? No.

Foreigners have had no effect on shelter prices.

"Foreign buyers will account for 18.1 per cent of residential sales in NSW in the three months to March 2018, down from 23.6 per cent in the same period a year ago, the latest ANZ and Property Council quarterly research found.

in Melbourne, foreign buyers are expected to cover 21 per cent of residential property purchases in the first quarter of 2018, compared with 25.2 per cent a year ago, according to the report."

This bit is just a pisser.

"But experts say the drop in foreign purchases is coming off such a high base that there’s no immediate danger of a substantial shift in market dynamics."

I am just a numbers man, but a 5% drop is significant but if the overseas raiders stop buying, lets see who is standing naked.

Homes are for Australians, if foreigners want to invest in Australia, try the ASX, sh--t it has done nothing for year.


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## luutzu (12 January 2018)

satanoperca said:


> Ah, the truth finally comes out.
> 
> Unbelievable growth in property while inflation low, interest rates, low, wage growth f---kd, GDP crap, but property to the moon in the last 5 years.
> 
> ...




Property prices is, still, just unbelievable in Australia.

Weren't long ago that with $200K you could pay half the house off. Now, the same $200K barely covers the deposit and stamp duty.


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## DB008 (12 January 2018)

I've always maintained that the laws should be reciperical

Here is an example of Thai/Aussie laws simplified....

Can l purchase land in Thailand as an Aussie?
No
Well, guess what, Thai nationals can't purchase land here.

Can I purchase a condo/unit in Thailand as an Aussie?
Yes, provided l set up a shell company and appoint 51% on the board as Thai's. Well, guess what? It will be the same for Thai nationals here (51% Aussies on the board)

Why are we giving this country away?


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## Value Collector (13 January 2018)

DB008 said:


> I've always maintained that the laws should be reciperical
> 
> Here is an example of Thai/Aussie laws simplified....
> 
> ...




I think it would be far better to just develop foreign investment laws based on our need for capital, rather than based on some tit for tat law.

If we need foreign investment some where why deny it just because that country would deny us?


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## Value Collector (13 January 2018)

DB008 said:


> Why are we giving this country away?




We aren’t, we are selling it to the highest bidder.

If they want to over pay for an asset let them, they can’t take it overseas, it has to stay here, and if they are truly overpaying then eventually the market will correct, and there capital injection would have helped our economy.


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## luutzu (13 January 2018)

Paper presented at RBA workshop show cutting Negative Gearing will be good for the economy and owner-occupier. Freed up to 30% of properties currently being rented out at a loss so that people can buy and live in it without the taxpayers having to pay landlords for their losses but have half the eventual profit be taxable only.

The Liberals says... no way! 

http://www.smh.com.au/federal-polit...commissioned-study-finds-20180112-h0hjwz.html


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## Smurf1976 (13 January 2018)

Value Collector said:


> If we need foreign investment some where why deny it just because that country would deny us?



One thing’s for sure.

We don’t need foreign investment in existing residential real estate.

New builds might be OK but there’s no national benefit in having foreigners buy what we’ve already got. It just pushes the price up but adds nothing tangible at all.


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## luutzu (13 January 2018)

Smurf1976 said:


> One thing’s for sure.
> 
> We don’t need foreign investment in existing residential real estate.
> 
> New builds might be OK but there’s no national benefit in having foreigners buy what we’ve already got. It just pushes the price up but adds nothing tangible at all.




Nothing tangible for the Aussie buyers but how else will the gov't get people on an average $80K a year being more than happy to get a loan for $1M and keep on smiling as they pay the equivalent of one year's wage on interest alone?


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## explod (13 January 2018)

Smurf1976 said:


> One thing’s for sure.
> 
> We don’t need foreign investment in existing residential real estate.
> 
> New builds might be OK but there’s no national benefit in having foreigners buy what we’ve already got. It just pushes the price up but adds nothing tangible at all.



A good point there smurf,  a local employee may cost a lot more but at least his/her wages stay here and is spent/circulated back into the community. 

As for property,  as per Maslow's Law,  all are entitled to the basics of survival.   Our system should provide a home/shelter for all and I do not believe a home should even be a cost.  Yeh I know,  that's a bit left.


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## luutzu (13 January 2018)

explod said:


> A good point there smurf,  a local employee may cost a lot more but at least his/her wages stay here and is spent/circulated back into the community.
> 
> As for property,  as per Maslow's Law,  all are entitled to the basics of survival.   Our system should provide a home/shelter for all and I do not believe a home should even be a cost.  Yeh I know,  that's a bit left.




A home should be affordable. It's good for the owner-occupier, their family, marriage... might even permit some innovative risk-taking ventures low to zero debt would permit.

Then there's the hiring of local tradies to work on home improvement. Results in more income being spread around. Results in people living in a healthier house. Reduces illness and costs to the health system etc. etc.

But na.


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## Smurf1976 (13 January 2018)

explod said:


> As for property,  as per Maslow's Law,  all are entitled to the basics of survival.   Our system should provide a home/shelter for all and I do not believe a home should even be a cost.  Yeh I know,  that's a bit left.




I see the point although I'm not that far to the Left as to suggest that it ought to be free. At least not beyond basic shelter.

What I do see though is that the situation with house prices, personal debt and low wages growth has pushed Australia into an economic trap really.

Raise interest rates even modestly and that'll cause chaos. One 0.25% rise might be OK but another one would surely push at least some borrowers over the edge given it's a pretty substantial increase in repayments coming from a very low interest rate base.

Wages aren't growing at a rate which will meaningfully erode the debt anytime soon.

One way or another it will be paid for and my thoughts are that via a rather convoluted process savers will end up being the big losers out of it all. That's what tends to happen.


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## sptrawler (16 January 2018)

explod said:


> A good point there smurf,  a local employee may cost a lot more but at least his/her wages stay here and is spent/circulated back into the community.
> 
> As for property,  as per Maslow's Law,  all are entitled to the basics of survival.   Our system should provide a home/shelter for all and I do not believe a home should even be a cost.  Yeh I know,  that's a bit left.




Didn't Clive Palmer give a free house to some needy people, then cop a $100,000 damage bill?

It all sounds good and everyone thinks that all the needy require is a break, I've been there done that, trust me they don't appreciate it.
They think you can afford it, so suck it up, it doesn't end well. IMO


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## sptrawler (16 January 2018)

Smurf1976 said:


> Wages aren't growing at a rate which will meaningfully erode the debt anytime soon.
> 
> One way or another it will be paid for and my thoughts are that via a rather convoluted process savers will end up being the big losers out of it all. That's what tends to happen.




The problem is savers, don't have any safe haven, they always lose, they have the money everyone else needs.lol


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## sptrawler (28 February 2018)

Well ATM, it looks like the powers that be, think the Sydney housing market won't be a problem.
It may be a softening of prices, that results in a wealth transfer without pain, as usual.

http://www.abc.net.au/news/2018-02-...unlikely-to-collapse/9490216?section=business

Over here in the West, I am seeing a lot of sold signs, on houses with duplex potential.
Maybe the tide has turned and the horse has bolted, in W.A?
Also I'm not sure it is up and coming aussie's, buying the opportunity, they seem to be buying the coffee shop image ATM.
No doubt we will hear from them, when they realise the next opportunity passed them by, and it is the baby boomers fault.


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## basilio (2 March 2018)

This story about bank lending practices on house loans is ominous

*A focus on responsible lending will uncover huge problems for the banks*


*.....Overstated income *
The banks' Achilles heel — irresponsible lending — is shaping up as a major threat to the banks and financial system, depending on the outcome of the banking royal commission and a low-profile battle currently being waged in courts.

"Irresponsible lending is endemic in Australia," Digital Finance Analytics director Martin North said.

"More than 900,000 households are already in mortgage stress.

"We're seeing a lot of households who are actually getting loans that are five, six, seven, eight, nine times income and that is astronomically high and in my mind will lead to grief later."

Even though customers of the big four banks are representative of the Australian population, their claims about the incomes of those customers are not.

Bank disclosures suggest that 30 per cent of households with an owner-occupied mortgages have an average income of at least $200,000 a year, an extraordinarily large number of high-income earners.

It jumps to 40 per cent for those with investor loans.

UBS banking analyst Jonathan Mott has benchmarked the disclosures against the population using Census, ABS and ATO data.

His conclusion is that the bank disclosures "do not appear logical and are highly improbable".

What's more, the bank data suggests a whopping 42 per cent of customers earning at least $500,000 per annum took out a mortgage last year.

The most plausible explanation for all of this is that a vast number of borrowers have overstated their incomes.

http://www.abc.net.au/news/2018-03-...ractices-will-leave-the-banks-exposed/9498992


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## luutzu (2 March 2018)

sptrawler said:


> Well ATM, it looks like the powers that be, think the Sydney housing market won't be a problem.
> It may be a softening of prices, that results in a wealth transfer without pain, as usual.
> 
> http://www.abc.net.au/news/2018-02-...unlikely-to-collapse/9490216?section=business
> ...




I think that most people who want/need a house to live would buy it the moment they can afford it. Most would even buy when they could barely afford it but could find ways and help just to make it. 

So it's somewhat of a myth that those who can't afford a house are either lazy or sipping latte and splurge on overseas holiday. 

And I don't think they blame anyone else but themselves for not being able to buy it either. Maybe now and then pointing out that it was a lot easier back then to buy a house than it is now... that's not blaming, that's just pointing to a fact.

Take an average tradie in the 80s and early 90s. Average wage then was some $25 to $30K? An average house with a backyard, 3 bedroom goes for $120K to $150K?  Or 4 or 5 times their earnings.

An average wage is now some $80K? A blue-collar tradie maybe earn $50K? 

An average house that was sold for $120ks back then now goes for some $1.2M to $1.5M. An average duplex or townhouse some $800K... i.e. some 10 times the average wage.

Then there's the privatised power, water and other utilities... job insecurity, higher costs of living, the offshoring of most jobs, automation. 

Not saying that life was easier back then and such... But it's not easy now for the young either.


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## sptrawler (2 March 2018)

luutzu said:


> I think that most people who want/need a house to live would buy it the moment they can afford it. Most would even buy when they could barely afford it but could find ways and help just to make it.
> 
> So it's somewhat of a myth that those who can't afford a house are either lazy or sipping latte and splurge on overseas holiday.
> 
> ...




I don,t know about Sydney, but in Perth a tradie won't get out of bed for less than $100,000 a year.
It is $700 to put in a back to back split AC system, they put in about 5  per day.
A plumber won't change a tap washer for less than $90.
Your obviously living in a time warp.
Even factory workers at Holden were on $100k when they talked about shutting it down.
The RBA wants wages lifted, the Gov wants the wages lifted .Get used to the property prices, they will soften, they won't collapse. IMO


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## qprjames (3 March 2018)

I can only see house prices dropping quite hard in 2018. Again it depends on where you are buying, but places which have seen big price rises over the last few years, or areas with an over supply to the market (too many new builds i.e. Southbank / Docklands) will see large drops in 2018, particularly if interest rates start creeping up. Most 'young professionals' who buy into the market, have really stretched themselves already financially to get their foot onto the ladder, and I doubt they have any idea what mortgage rates were at back in 2009 (7%). I'm not suggesting rates will go to 7% but even 1 basis point rise will see these first homebuyers seriously struggling. I think they might be in for a real shock in the coming year or two when rates start creeping up. They might have saved paying no stamp duty with the government offer, but it might end up costing them more in the long run from buying in an already over-heated market.


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## satanoperca (3 March 2018)




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## luutzu (3 March 2018)

sptrawler said:


> I don,t know about Sydney, but in Perth a tradie won't get out of bed for less than $100,000 a year.
> It is $700 to put in a back to back split AC system, they put in about 5  per day.
> A plumber won't change a tap washer for less than $90.
> Your obviously living in a time warp.
> ...




$100K a year also include material. Depends on the trade but material could easily take 30% to 50% of the job. 

For most trades, particularly self-employed ones... there's not that many years they could work. It's hard, heavy, labour intensive work where by the time they're 50 the game's almost over. That doesn't include the injuries and health hazards etc. 

Some tradies do charge insane prices like you say. We've all dealt with them. Just whether or not their prices are accepted depends on the customer. 

The RBA and gov't somehow figured that with tax cuts corporations will somehow pass the savings onto higher wages. Not happening. Not here, not in the US, not in Korea or Japan. 

Read somewhere where the gov't was expecting wage increase of about 2 to 3% to be passed on from the tax cuts. Surveys of corporations in above countries said nope, maybe an average of 1% or so increase. That's below inflation.


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## Smurf1976 (3 March 2018)

In Hobart you can still buy a perfectly reasonable house in a "middle" suburb for $400K and that does seem to be driving quite a bit of interstate migration. It's a ridiculous situation though. 20 years ago you could buy houses like that for $110K and whilst wages have increased they sure haven't gone up _that_ much in the past 20 years.

As for banks and incomes, well I certainly find it hard to believe that 42% of all people earning over $500K actually took out a mortgage in the past 12 months. It's hard to come up with a scenario where that's the case without using some creative accounting at best and outright fraud at worst.

The boom's still going full steam ahead down here though.


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## Trendnomics (3 March 2018)

In your mind (every time you hear it), replace "Ireland" with "Australia" - and add a dash of aussie accent.

Luckily I'm not relying on property in any shape or form to reach FIRE before 40. Good luck to everyone else.


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## luutzu (3 March 2018)

Trendnomics said:


> In your mind (every time you hear it), replace "Ireland" with "Australia" - and add a dash of aussie accent.
> 
> Luckily I'm not relying on property in any shape or form to reach FIRE before 40. Good luck to everyone else.





Australia is one big island with lotsa sunshine... great place to for a tax haven once this bubbles goes the way of Ireland.


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## sptrawler (4 March 2018)

Well I was one several years ago, that screamed they should have stopped the housing bubble, along with sydboy.
But having lived as long as I have, I think it is all accounted for, just get ready for pay rises, inflation and a big drop in the dollar. IMO


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## Smurf1976 (4 March 2018)

sptrawler said:


> just get ready for pay rises, inflation and a big drop in the dollar. IMO



That’s my conclusion too.

Love it or hate it but inflation looks like the most obvious (only?) way out that government could orchestrate for a problem involving high debts and house prices.

Given that we seem to be going back in time with the slow but steady move to protect various things, the US imposing import tariffs and Russia restarting the Cold War it’s only a matter of time until this trip back through the 1990’s lands us in the 1970’s complete with high inflation.


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## sptrawler (4 March 2018)

Yep, you keep your house, but you cop a drop in living standards.


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## satanoperca (4 March 2018)

sptrawler said:


> W just get ready for pay rises, inflation and a big drop in the dollar. IMO




Inflation, tried and tested method of inflating debt away, worked in the past, but may not be possible in the future.
Everyone knows the inflation figures are b...sh..t. 

But lets say inflation does take off, over 3%, interest rates are hiked, great for savers and pensioners, bad for the heavily indebted community that is Australia.

Result = property drops, confidence drops, construction comes to a stand still, job losses, bankruptcies etc.

Pay rises, where are they going to come from, we live in a global community and Australia is no longer competitive.

Manufacturing - gone, cannot compete with East Asia.
IT - again, outsourcing is far far cheaper.
Retail Sector - online is shrinking this sector for labor requirements
Middle Management - AI will take it over.
Construction sector, ah, with a country so over indebted in this sector, and maybe inflation > rate hikes, also a no go.
Govnuts Sector - pay rises to the moon, as they are unaccountable and the money comes from the every growing indebted public purse.
Falling dollar : this has many implications, so good, some bad.



Tourism sector benefits, increase in jobs
Manufacturing sector, greater exports but this industry sector has already been destroyed by the high dollar and will take many years to rebuild
Petrol Price, not good for the consumer and will lead to a negative feedback loop on inflation
IT Sector, these outsourcing, but would need to drop significantly for employers to build up local development teams again.
Property Sector, excellent news for all those foreigners snapping up farming land and prime residential property.
Bank Sector, even hedged offshore borrowings will get effected resulting in lower margins for banks who will then increase IR's out of step with the RBA
Agricultural sector, great news as farmers and produces will be able to further increase their share of the massive Asian markets for produce. Downside, us Aussie will be paying significantly more for our locally produced foods, further increasing inflation
Retail sector : bad news, products will cost more and given the current state of retail space, the only winners if you can call them that in the retail sector will be the online businesses.
The end result is the same as I have been arguing for over a decade, high property prices do not make a country wealth and they do not create a great standard of living for those living in the country.

The RBA has it hands tied and which ever lever it pulls on will have a negative effect.

The best we can hope for is a slow decline or stagnation in property and the dollar, with moderate inflation to see us through this storm.

Question is, do you trust the RBA, treasury and our brilliant bunch of comedians (pollies) to be able to manage this process effectively with sinking the ship altogether.

And one final note, just remember in the coming years when at dinner parties, the pub, around the barbecue or talking with colleagues and family, NO ONE COULD HAVE SEEN THIS COMING.


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## Smurf1976 (4 March 2018)

satanoperca said:


> do you trust the RBA, treasury and our brilliant bunch of comedians (pollies) to be able to manage this process effectively




The lack of leadership at the federal level is a massive problem in itself even without the other issues.

My personal view is that it will take a recession to get our politics focused again. Sad but I think that’s what it’ll take.


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## Value Collector (4 March 2018)

luutzu said:


> A home should be affordable. It's good for the owner-occupier, their family, marriage... might even permit some innovative risk-taking ventures low to zero debt would permit.
> 
> Then there's the hiring of local tradies to work on home improvement. Results in more income being spread around. Results in people living in a healthier house. Reduces illness and costs to the health system etc. etc.
> 
> But na.




It depends on the definition of "home", I mean if a "home" is a 4 bedroom house on a 1/4 acre block within 10km of the cbd you simply will not be able to fit 1,000,000 + of them in that space, 

I think Australians need to expand what they are willing to accept and where it's located.


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## luutzu (4 March 2018)

Value Collector said:


> It depends on the definition of "home", I mean if a "home" is a 4 bedroom house on a 1/4 acre block within 10km of the cbd you simply will not be able to fit 1,000,000 + of them in that space,
> 
> I think Australians need to expand what they are willing to accept and where it's located.




Dude, I don't know anybody who expects a 1/4 acre block with a house on top to be an acceptable home. Well, we all want that for sure... just people tend to set their sight a bit lower given their $1M budget.

From my browsings, a detached home averages some $1,000 a metre for a clad/fibro home; for brick McMansion it's about $2K a metre. And that's some 30 to 40k from the CBD. Or however far Fairfield/Cabramatta is. 

Within some 15km, they go for about $1.5K to $2K or more. 

Flats... new ones goes for $600K to the high $700K for a 1 bedroom, or some 100m2 or less. The price per m2 is a bit crazy there, why I don't know. It's not that much closer to the station or anything. Maybe a couple hundred metres.

For old, maybe 50years+ flats... 2 bedrooms you're looking at $450K to $550K. 

So I don't think apartment are cheap. If anything, it's more expensive than a detached house. Just it's within the budget of a family with two income so people just thought it's affordable to a $1.5M detached with some 120m2 of living space and a lawn to mow. 


Driving around lately and you'll noticed more truckies and tradies are starting to park their truck and utes either on the street or the front of their duplex driveway. That's just accidents or stolen gears waiting to happen. 


With most of the wages going to mortgage repayment, not a whole lot of businesses will do much business. The banks will do pretty well until it all collapses, then all those winnings are flushed downt he toilet anyway... so we're in for a once in two generation ride soon enough I reckon. It's going to be like the late 80s all over again.


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## sptrawler (5 March 2018)

luutzu said:


> Dude, I don't know anybody who expects a 1/4 acre block with a house on top to be an acceptable home. Well, we all want that for sure... just people tend to set their sight a bit lower given their $1M budget.
> 
> From my browsings, a detached home averages some $1,000 a metre for a clad/fibro home; for brick McMansion it's about $2K a metre. And that's some 30 to 40k from the CBD. Or however far Fairfield/Cabramatta is.
> 
> ...




Don't stress too much, it will come back, to what the market can bear.


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## Value Collector (5 March 2018)

luutzu said:


> Dude, I don't know anybody who expects a 1/4 acre block with a house on top to be an acceptable home. Well, we all want that for sure... just people tend to set their sight a bit lower given their $1M budget.
> 
> From my browsings, a detached home averages some $1,000 a metre for a clad/fibro home; for brick McMansion it's about $2K a metre. And that's some 30 to 40k from the CBD. Or however far Fairfield/Cabramatta is.
> 
> ...




They could get a big house on a 1/4 acre block if they chose not to continue playing sardine in the capital cities


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## luutzu (5 March 2018)

Value Collector said:


> They could get a big house on a 1/4 acre block if they chose not to continue playing sardine in the capital cities




Not really. 

Looked at Campbelltown, you know where that is right? Over an hour to the city - Tolled freeway?

A new master build house on some 450m2 goes for about $800K to $900K. Empty block of similar size goes for about $450K to $500K. 

But then maybe they're expecting Sydney's second airport so it's priced almost like Sydney CBD? Not sure why people want to live near an airport or under flight paths but yea. 

Seems that the current market is priced not for living but for "potential" development, S.T.C.A... subject to council approval 

Seem any block bigger than 450m2 is described as "huge" potential. Duplex, or townhouse, or villas. No dude, there's zoning control, there's lot size requirement, there's slope and stormwater/easement issue... there's the costs and time of building all them potential. 

I don't know that many people but seems anyone with a house or two are building a granny flat at the back, turning their garage into another rental and either live in the main house or rent that out too. 

The coming apartment glut, highly probable interest rate rise/s, an average personal debt in the hundreds of thousands if not a million... don't want to be a pessimist and such but I can't see how this will end well. Not just the young families on that property ladder recently, but for the entire economy. 

I mean, with so much of people's wages going towards mortgage repayment, the economy can't do too well. Then if property investment suffer a loss, or just stand still... the generous negative gearing and capital gains mean nobody's going to be paying income taxes... corporate tax cuts further reduces the state revenue...

There's only so much you can collect from drivers and their phone use. 

Maybe there's the infrastructure boom where the gov't and private enterprise work together, spent a lot of money and put plenty of tolls on them that nobody uses.


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## Value Collector (5 March 2018)

luutzu said:


> Not really.
> 
> Looked at Campbelltown, you know where that is right? Over an hour to the city - Tolled freeway?
> 
> .




You know Australia is a big place right, and there are places out side the capital cities past Campbell town, hahaha.

https://www.realestate.com.au/property-house-nsw-toormina-126938578


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## luutzu (5 March 2018)

Value Collector said:


> You know Australia is a big place right, and there are places out side the capital cities past Campbell town, hahaha.
> 
> https://www.realestate.com.au/property-house-nsw-toormina-126938578




Do they even have schools there? jk. And it's number 4. Unlucky number, haha

Just looked up Austral, just outside of Liverpool. I didn't know you could sub-divide land to some 250m2 per lot. They don't even allow land that small in Fairfield. Minimum is 450m2 from memory.

What the heck can you build on 250m2? Unless they allow you to build over the entire lot... if Floor Space Ratio is 50%... for some $300K, slap on another $100K for a garage/house... might as well buy a flat near civilisation a bit.


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## Value Collector (5 March 2018)

luutzu said:


> Do they even have schools there? jk. And it's number 4. Unlucky number, haha
> 
> Just looked up Austral, just outside of Liverpool. I didn't know you could sub-divide land to some 250m2 per lot. They don't even allow land that small in Fairfield. Minimum is 450m2 from memory.
> 
> What the heck can you build on 250m2? Unless they allow you to build over the entire lot... if Floor Space Ratio is 50%... for some $300K, slap on another $100K for a garage/house... might as well buy a flat near civilisation a bit.




My whole point is that if the population was willing to move out over the blue mountains, or past the Hawkesbury river, we could have much lower property prices, its mainly because we have a growing population, boosted by immigration intent on playing sardines.


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## luutzu (5 March 2018)

Value Collector said:


> My whole point is that if the population was willing to move out over the blue mountains, or past the Hawkesbury river, we could have much lower property prices, its mainly because we have a growing population, boosted by immigration intent on playing sardines.




I think property is just in a bubble at the moment. 

There's plenty of land around Sydney still. 

Sure people prefer to live closer to the city where transport, amenities and jobs are easier to come by. But even around where I live I see a fair few new apartment sitting empty. They've been on the market at least 6 months now... no lights on at 8pm.


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## Value Collector (5 March 2018)

luutzu said:


> Sure people prefer to live closer to the city where transport, amenities and jobs are easier to come by. .




if there was a shift away from they capital cities, more of those would start appearing else where.


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## Smurf1976 (5 March 2018)

Value Collector said:


> My whole point is that if the population was willing to move out over the blue mountains, or past the Hawkesbury river, we could have much lower property prices



What's really needed to make that work is for business to realise that there are places other than Sydney and Melbourne where they can locate.

In the past big companies had offices in places like Adelaide and even a few in places like Launceston. These days it's incredibly concentrated in the big two cities and that has created a situation where anyone needing employment in a white collar job would be well advised to base themselves in Sydney or Melbourne and that fuels demand for property in those cities no matter what the price.

I'm sure that if a lower rate of company tax applied to all companies with greater than x% of their total workforce located in parts of Australia other than the current major cities then a lot of the "problems" preventing decentralisation would magically disappear.


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## InsvestoBoy (5 March 2018)

Value Collector said:


> if there was a shift away from they capital cities, more of those would start appearing else where.




Barnaby Joyce, is that you?

Jokes aside, do you think they start appearing by magic? I think you have it backwards.

If the Government would build infrastructure that matches what's available in the capitals:
- Schools,
- Hospitals,
- Shops (groceries, doctors, etc),
- Fast internet.

and then incentivise business to open offices, teachers and doctors to move, and thus create jobs there, then people would move there! Undoubtedly. The cost of living and pressure to make ends meet is simply too high to not.

But they don't. It's almost as if they have a vested interest in the status quo.


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## McLovin (5 March 2018)

Value Collector said:


> if there was a shift away from they capital cities, more of those would start appearing else where.




Infrastructure in Australia is generally hopeless. How does a city the size of Sydney have no metro? Why does someone going to Penrith get on the same train at Central as someone going to Newtown? There are plenty of people who could work from home and only come into the office every now and then, but they can't because the internet in Australia is third world.

If they build a credible rail network along the east coast with HSR then all those places between Sydney and Canberra become commuter towns. Ditto Newcastle. I'd much rather live in the Southern Highlands than out in Western Sydney.


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## luutzu (5 March 2018)

McLovin said:


> Infrastructure in Australia is generally hopeless. How does a city the size of Sydney have no metro? Why does someone going to Penrith get on the same train at Central as someone going to Newtown? There are plenty of people who could work from home and only come into the office every now and then, but they can't because the internet in Australia is third world.
> 
> If they build a credible rail network along the east coast with HSR then all those places between Sydney and Canberra become commuter towns. Ditto Newcastle. I'd much rather live in the Southern Highlands than out in Western Sydney.




I guess the planners were thinking that someone from Penrith wouldn't be catching anything from Central anyway. And if they do, there's the "express" and a couple of changes. 

Australia definitely need high speed rail along the coasts. There's hardly anything between Sydney and Newcastle. That's a lot of real estate by the water and bushes.


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## Value Collector (5 March 2018)

InsvestoBoy said:


> Barnaby Joyce, is that you?
> 
> Jokes aside, do you think they start appearing by magic? I think you have it backwards.
> 
> ...




chicken or the egg.

But with the money you would save on housing by moving to say Coffs Harbour for example, you could afford a car, and with less traffic and smaller distances transport wouldn't be a worry.


----------



## InsvestoBoy (5 March 2018)

Value Collector said:


> chicken or the egg.
> 
> But with the money you would save on housing by moving to say Coffs Harbour for example, you could afford a car, and with less traffic and smaller distances transport wouldn't be a worry.




I can already afford a car. But I catch public transport everywhere.

I did actually look at what jobs are going in and around Toormina because I'd love to be out of Sydney. 

My industry is IT. I've invested 15 years of my life into it, have a senior technical role which is challenging and rewarding.

In the whole Coffs region there are only 4 jobs going on Seek. 4 in total. In Sydney they post 4 new IT jobs probably every hour.

All 4 of those jobs are entry level low paying crap like "mobile phone repair technician" and "IT support". No challenge, no opportunity for growth, soul crushing work.

Maybe housing is cheap there because all the people I know from between Bellingen and Sawtell have moved to either Sydney or Brisbane...


----------



## Value Collector (5 March 2018)

InsvestoBoy said:


> I can already afford a car. But I catch public transport everywhere.
> 
> I did actually look at what jobs are going in and around Toormina because I'd love to be out of Sydney.
> 
> ...




My original comment was that if the population in general spread out it would lower the concentration of sardines.

There is no reason that some of the industries that are in the capital cities couldn't move out into other regions, and hence bring jobs with them. there is no reason why Australia's population is limited to the arbitrary number of cities we have, except for that no one seems to want to be the first to move (either house or business)


----------



## McLovin (5 March 2018)

Value Collector said:


> There is no reason that some of the industries that are in the capital cities couldn't move out into other regions, and hence bring jobs with them. there is no reason why Australia's population is limited to the arbitrary number of cities we have, except for that no one seems to want to be the first to move (either house or business)




A small population makes it hard to decentralise, you need some scale to attract workers and industry. Sydney and Melbourne are not big cities by global standards, they just lack adequate infrastructure that makes living anywhere outside 10km of the CBD an hour trip each way to get to work. It's a far easier task to unscramble the transport links into the big cities that creates satellite cities, like Newcastle, Bowral, Wollongong even Canberra than trying to set up an IT hub in Coffs Harbour. It keeps Sydney at the centre but makes living and working outside the metro area viable and possible.


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## InsvestoBoy (5 March 2018)

Value Collector said:


> My original comment was that if the population in general spread out it would lower the concentration of sardines.




Very insightful, if X then X and also if Y then Y. Are you going to tell me that if Z then it would Z too? 

You said it's a chicken and egg problem but it's not. Salaried workers don't move to the boonies if there are no jobs or infrastructure. Investment is needed. Business and Government have the capacity to make investment. For example we seem to have $1 billion to give to Adani, or $17 billion on F-35 fighter jets.

I personally don't make anything near 1 billion dollars.



> There is no reason that some of the industries that are in the capital cities couldn't move out into other regions, and hence bring jobs with them. there is no reason why Australia's population is limited to the arbitrary number of cities we have, except for that no one seems to want to be the first to move (either house or business)






The internet in Sydney is barely adequate for my job. At my last job, the internet I had at my house was better than the office internet (of a NYSE listed technology company with a market cap of nearly $150 billion USD).

You might say "that's because you work in IT". But white collar workers in all sectors need fast internet because *everything* is on the cloud these days.

There is a BIG REASON why certain industries can't move out of capital cities, and short termism from successive Governments unwilling to make investments (there is that word again) is that reason.


----------



## sptrawler (7 March 2018)

Value Collector said:


> My original comment was that if the population in general spread out it would lower the concentration of sardines.
> 
> There is no reason that some of the industries that are in the capital cities couldn't move out into other regions, and hence bring jobs with them. there is no reason why Australia's population is limited to the arbitrary number of cities we have, except for that no one seems to want to be the first to move (either house or business)




The reason that everything is centralised around Sydney, Melbourne, is because that is where the executives want to live.
The problem is, they drag middle and lower management with them, then the plebs have to compete with them for properties.
The good thing is, there is only so many upper and middle management jobs, and also only so many cashed up foreigners.
So the market will become saturated, and prices will drop, to the dislike of many posters who have properties in these areas.


----------



## Toyota Lexcen (8 March 2018)

They can experience what shareholders get up too


----------



## Smurf1976 (8 March 2018)

sptrawler said:


> The reason that everything is centralised around Sydney, Melbourne, is because that is where the executives want to live.
> The problem is, they drag middle and lower management with them, then the plebs have to compete with them for properties.



Interesting. Hadn't thought of that aspect previously but it makes some sense.


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## Wysiwyg (8 March 2018)

> Bank disclosures suggest that 30 per cent of households with an owner-occupied mortgages have an average income of at least $200,000 a year, an extraordinarily large number of high-income earners.
> 
> What's more, the bank data suggests a whopping 42 per cent of customers earning at least $500,000 per annum took out a mortgage last year.



That would be the whole family. Husband, wife and their parents equity.


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## McLovin (8 March 2018)

sptrawler said:


> The reason that everything is centralised around Sydney, Melbourne, is because that is where the executives want to live.




Partly true, which is why it's easier to build satellite cities and a commuter belt around Sydney, Melbourne and SE Qld than expect companies to want to start opening offices in Adelaide and Cairns.


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## luutzu (21 March 2018)

Some sellers in Sydney reportedly have to drop prices up to 30%. 

Seems these pockets are in the richer suburbs. Which is either strange or could be scary as I was told that the richer suburbs are ones best able to hold their prices during a correction/crash.

I noticed that there are a bit more ads showing a fixed price rather than auction. It's just my observation here but that's usually a sign that the auctions aren't going well and property is beginning to cool.

Got a long way to drop though. I mean, I seriously don't know how anyone on that average $80K could afford that average $800k to $1.4M property as housing.

News.com.au

*Home sellers drop listed prices by up to 30 per cent in pockets of Sydney*
SYDNEY home sellers have had to accept GFC-level price declines due to a weakening market that has given buyers more bargaining power, but some suburbs have been more affected than others.

HOMEOWNERS in pockets of Sydney have been selling properties for up to 30 per cent below their advertised price after a steep fall in buyer demand.

Property experts claim sellers have been forced to accept GFC-level price declines due to a weakening market which makes it difficult to achieve the inflated sums properties were fetching six months or even a year ago.

Sydney’s median home price fell 1.3 per cent over the three months to December and by another 2.5 per cent in the following three months to March, according to property research group CoreLogic.

The latest three-month decline was the largest since August 2008, near the height of the GFC, and helped push the typical price of a home back down to $880,743.

Further falls are expected — CoreLogic forecasts the citywide median home price will drop a total five per cent over 2018.

The soft market means sellers are facing rising competition from other homeowners also vying for buyer interest.

There are currently about 25 per cent more homes for sale compared to a year ago and only 80 per cent as many people actively looking for property, industry figures reveal.

Buyers have capitalised by dragging sellers to the negotiating table.

The average house seller in the inner city suburb of Darlinghurst had to cut 30.6 per cent off their advertised price to sell.

Bellevue Hill sellers dropped their prices by an average of 16 per cent before selling, while in Vaucluse the adjustment was 13 per cent.

Down south, sellers in nearby suburbs Sutherland and Alfords Point slashed an average of more than 15 per cent off their listed prices prior to selling.

Other suburbs where sellers discounted their prices by more than 10 per cent included Narrabeen, Cammeray, Tempe, Coogee, Mascot, Belfield and Matraville

“Sydney prices have hit the point where they’re unaffordable for a lot of buyers. The prices some sellers are setting initially are not what buyers are prepared to pay,” Mr Kusher said.

Recent listings with high prices relative to the condition of the homes include a terrace on Harris St in Balmain listed with a guide of $1.65 million.

The three-bedroom home is uninhabitable with caved in ceilings and other damage.

etc....


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## sptrawler (22 March 2018)

Perth is back to GFC levels, I would expect Sydney and Melbourne to do the same, once the market reaches saturation.


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## CanOz (22 March 2018)

Each city in Australia is different. Perth retraced due to the end of the mining boom. The economic drivers of the east coast are different. The catalyst will be different. I spoke to a guy yesterday, real estate agent, was saying how many places he sells to Chinese that never live in them. When the music stops, they'll need thier cash, that will be the telling moment in Sydney, Melbourne and maybe even brisbane by then....


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## Smurf1976 (22 March 2018)

sptrawler said:


> Perth is back to GFC levels




In what way?

Actual prices? 

Sales volume / time it takes to sell?

Amount of new construction going on?

Just seeking clarification


----------



## sptrawler (22 March 2018)

Smurf1976 said:


> In what way?
> 
> Actual prices?
> 
> ...




Perth prices, speaking generally have retracted to near GFC levels, I'm talking generally.
There will be some pockets that have done better some worse.
For example in an area near where I live approx 10klm from the City, I will use that area due to the fact it is a middle of the road area, 3x2, 4x1 on non development blocks.
Post GFC, they were in the low $400,000, at the peak they went to about $600,000 give or take, now they are back to low $400,000. A friend of mine, is looking in that area for a house, which his daughter can purchase.
My daughter and her husband bought a house and land package 7 years ago, in a new suburb, sold it 3 months ago, made $60k


----------



## luutzu (23 March 2018)

sptrawler said:


> Perth prices, speaking generally have retracted to near GFC levels, I'm talking generally.
> There will be some pockets that have done better some worse.
> For example in an area near where I live approx 10klm from the City, I will use that area due to the fact it is a middle of the road area, 3x2, 4x1 on non development blocks.
> Post GFC, they were in the low $400,000, at the peak they went to about $600,000 give or take, now they are back to low $400,000. A friend of mine, is looking in that area for a house, which his daughter can purchase.
> My daughter and her husband bought a house and land package 7 years ago, in a new suburb, sold it 3 months ago, made $60k




That $6oK before or after stamp duty?

No one I know believe properties in Sydney would drop that much. If it does, it'd be 5%, maybe 10%, they say. But it'll most likely just stay at this level for 10 years then pick up again.

If that's the case, an average house in Sydney would be $2m in 20 years time. I just don't see how the average wage could increase enough by then to afford that.


----------



## sptrawler (23 March 2018)

luutzu said:


> That $6oK before or after stamp duty?
> 
> No one I know believe properties in Sydney would drop that much. If it does, it'd be 5%, maybe 10%, they say. But it'll most likely just stay at this level for 10 years then pick up again.
> 
> If that's the case, an average house in Sydney would be $2m in 20 years time. I just don't see how the average wage could increase enough by then to afford that.




There is no stamp duty when you sell a house in W.A, it sold for $60 more than it cost for the house and land originally, that is not including improvements.


----------



## Wysiwyg (24 March 2018)

luutzu said:


> If that's the case, an average house in Sydney would be $2m in 20 years time. I just don't see how the average wage could increase enough by then to afford that.



Yes the double ups and triple ups become unsustainable affordability wise. Easy to double/triple/quadruple/quintuple 100k house and find buyers in the old days but as you note, 500k to 1million and then onto 2million is unaffordable.


----------



## luutzu (24 March 2018)

sptrawler said:


> There is no stamp duty when you sell a house in W.A, it sold for $60 more than it cost for the house and land originally, that is not including improvements.




Oh yea, no stamp duty when selling here as well.


----------



## luutzu (24 March 2018)

Wysiwyg said:


> Yes the double ups and triple ups become unsustainable affordability wise. Easy to double/triple/quadruple/quintuple 100k house and find buyers in the old days but as you note, 500k to 1million and then onto 2million is unaffordable.




Yea. True, it's a very high base to grow from.

On top of that, houses that were built back then are a lot stronger than today's. There's the hardwood on even the very modest of houses. Solid brick on slightly pricier ones.

I mean, most of those houses you could repaint or re-gyprock and they're quite liveable. It'll cost some $100K to completely re-shell but that's not too bad if the structure are alright and you're living in it.

Nowadays, unless it's owner-built, all master-built houses are not designed to last more than 30 years, if that. They're nice and comfortable enough. And 20 to 30 years isn't a bad idea seeing how housing style and new tech/material make most old ones obsolete anyway....

But if a young couple were to buy today's houses in 20 years' time, and bought them for $2m... chances are they're just buying the land. Then add on top at least $500k to have it knock down and rebuild. 

So either the average Australian are going to get a lot richer, or housing become completely unaffordable, or property will have a very bad couple of decades.


----------



## Smurf1976 (24 March 2018)

luutzu said:


> And 20 to 30 years isn't a bad idea seeing how housing style and new tech/material make most old ones obsolete anyway....



Truly terrible environmentally though. 

People make a fuss about regular household garbage and recycling etc but the volumes are nothing compared to what's involved building and demolishing things. Even a minor renovation will produce far more solid waste than you could possibly dispose of via your normal wheelie bin.

As someone who's planning to move soon and thus paying some attention to real estate at the moment I do find it all rather interesting though. Looking at an area that's had progressive development since the 1960's with houses still being built nearby today (obviously this isn't an inner city area), it seems that anything pre-1980 is being sold with at least a hint that you'd want to knock it down and that you're really only buying the land.

It could suit me rather nicely though since I couldn't give a damn if it's a bit out of date and I'm capable of doing most work around the place myself anyway.


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## Smurf1976 (24 March 2018)

This could be of some importance:

http://www.thebull.com.au/articles/a/73363-banks-probe-may-make-home-loan-hard-to-get.html


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## sptrawler (24 March 2018)

Smurf1976 said:


> This could be of some importance:
> 
> http://www.thebull.com.au/articles/a/73363-banks-probe-may-make-home-loan-hard-to-get.html




I would say that is highly likely, otherwise the Royal Commission will be seen as a waste of money, which in reality it probably is.
But it gives the outcome a degree of credibility, for the masses.


----------



## luutzu (25 March 2018)

Smurf1976 said:


> Truly terrible environmentally though.
> 
> People make a fuss about regular household garbage and recycling etc but the volumes are nothing compared to what's involved building and demolishing things. Even a minor renovation will produce far more solid waste than you could possibly dispose of via your normal wheelie bin.
> 
> ...




Yea, reno and construction produce crazy amount of waste. Even the packaging could take a few of weeks if it goes through the wheelie bin.

Which reminds me to never, ever get free "clean soil" as fill. Or buy a farm. I guess unless I know where all the bodies are buried.

Some demo guys would buy farmland or hire it out with the owner's permission and tip their waste there. I don't know how they're not caught but yea, layered the truck with clean soil on top and real nasty stuff under, head for the farm.

They used to do that around the fringes of residential areas, on bigger blocks. Dumping asbestos and topsoil over. I heard of an owner who bought one some 15 years ago... got permit to build his dream home then Council dropped by for the first inspection. Saw that the land is higher than his neighbours, kick a bit and order the owner to clear the site of asbestos.

He can't sue the previous owner because apparently Council only care who the current one is. Cost him some $100K. Back when a similar lot goes for no more than $400K.

-----

It's great that you're handy around the house. Unless a person has lots of money and don't mind being generous with it on tradies, it'd be a nightmare to have anything done by tradies nowadays.

I swear it's almost like winning a lottery when a trade does what was agreed, and does it properly.

--------

Oh yea, just saw a listing of a newly built house asking for $1.8-$1.9M.

Land is probably no bigger than 600m2. House itself is modern and new but nothing special.

Downside... It's on the border of an industrial zone. Right behind its fence is literally a factory; to its left a small creek and before that a massive rail depo I think Aurizon was planning to do something with. A million is still a lot of money right?


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## luutzu (25 March 2018)

sptrawler said:


> I would say that is highly likely, otherwise the Royal Commission will be seen as a waste of money, which in reality it probably is.
> But it gives the outcome a degree of credibility, for the masses.




They should also crack down on how they define home "equity". It's almost like "the Big Short" kind of play at the moment.

Apparently even if you bought your house 2 or 3 years ago, paid nothing back but the interest... the bank would lend you more if the property has gone up in prices, which it certainly has.

Say you borrowed $1M for a $1.2M property. You can top up, get more equity out of the property if the valuer comes back with a higher figure. 

If it's been a decade or two, I can understand that. But during a booming market and the bank would lend you 80% of whatever the value is, year on year? That's nuts.


----------



## sptrawler (25 March 2018)

luutzu said:


> They should also crack down on how they define home "equity". It's almost like "the Big Short" kind of play at the moment.
> 
> Apparently even if you bought your house 2 or 3 years ago, paid nothing back but the interest... the bank would lend you more if the property has gone up in prices, which it certainly has.
> 
> ...



There are plenty of people doing that, all they are doing is spending any equity they have gained, to support their lifestyle.
Then in 10 years time they will be wondering why they haven't got ahead, and blaming the banks for letting them do it.
I know someone who bought a property 20 years ago, and still hasn't paid anything off it, because of the tax advantage.
I asked him what he had done with the savings, he hadn't invested any of it, so he hasn't paid anything off the investment property or his principal residence.
But they have had a great time.


----------



## luutzu (25 March 2018)

sptrawler said:


> There are plenty of people doing that, all they are doing is spending any equity they have gained, to support their lifestyle.
> Then in 10 years time they will be wondering why they haven't got ahead, and blaming the banks for letting them do it.
> I know someone who bought a property 20 years ago, and still hasn't paid anything off it, because of the tax advantage.
> I asked him what he had done with the savings, he hadn't invested any of it, so he hasn't paid anything off the investment property or his principal residence.
> But they have had a great time.




Yea, some people can be a bit too complacent. Somehow they think that debt is not other people's money but are really theirs to spend.


----------



## luutzu (6 April 2018)

If you haven't already, check out CoreLogic's YT videos. 

Pretty good summary of Australia's property market by months and quarters.



*Check this out:*

Assuming that by "under construction" they mean new ones starting construction each period. i.e. not double counting.

So from 2009 to 2017... I did a rough cumulative sum and it's about 1.3M units having been built.

Assuming again that each unit house 2 people. That's 2.6M people. 

Not counting houses and the people living in them... 

What's the population of Sydney again?

We're so stuffed.


----------



## greggles (5 May 2018)

*NSW dad made $90,000 in just nine months after investment property skyrocketed in value
*
http://www.news.com.au/finance/real...e/news-story/0a0c7824176c22df5c88aada5247d03c

Surely news articles like this represent the last, dying gasp of Australia's residential real estate boom.


----------



## Wysiwyg (6 May 2018)

3 kids and the ppor already paid off. He has done well before property investing. I think finding value in real estate for investment purposes would be very possible and an exciting challenge. All towns are in a state of rise, peak, fall and trough.


----------



## luutzu (6 May 2018)

Wysiwyg said:


> 3 kids and the ppor already paid off. He has done well before property investing. I think finding value in real estate for investment purposes would be very possible and an exciting challenge. All towns are in a state of rise, peak, fall and trough.




It's not possible for property in Australia, or anywhere in the world really, to grow anymore. The best that could be hoped for is that they flatline... for a very long time.

Costs of financing for the banks are going up. There's that added capital requirement APRA slugs on them. There's the new requirement to have no NINJAs and other high net worth people in the outer suburbs buying a few investment properties.

Then there's the oversupply glutting the market.

Apartments and granny flats are everywhere. Those who couldn't afford to buy will find the rent going for very cheap.

With higher costs of credit, sluggish wage growth and job uncertainty; with the Chinese being told to keep their Yuan at home, harder for investor to get more credit, oversupply; fuel and cost of living rising... If any country in the world sneezes, game's over.


----------



## luutzu (6 May 2018)

greggles said:


> *NSW dad made $90,000 in just nine months after investment property skyrocketed in value
> *
> http://www.news.com.au/finance/real...e/news-story/0a0c7824176c22df5c88aada5247d03c
> 
> Surely news articles like this represent the last, dying gasp of Australia's residential real estate boom.




For sure.

Almost impossible to find honest opinions in the media about property. Shane Oliver of AMP is always quoted in Fairfax... and his assessment of property is that it'll probably drop by 5%. But it wouldn't crash or take any dramatic correction.

Don't think so Shane.


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## Smurf1976 (6 May 2018)

luutzu said:


> Almost impossible to find honest opinions in the media about property.



A difficulty there is that most adults have, or perceive that they have, a vested interest in the subject.

Commercial media also has a vested interest.

Put the two together and it would be unwise to expext unbiased commentary.


----------



## luutzu (7 May 2018)

Smurf1976 said:


> A difficulty there is that most adults have, or perceive that they have, a vested interest in the subject.
> 
> Commercial media also has a vested interest.
> 
> Put the two together and it would be unwise to expext unbiased commentary.




yea, true. 

I also find that those I am close to and so would talk honestly with... that when I said from what I read and could figure out, property is going to go down and they really should think about reducing their debt, maybe realise profit on one or two of their properties, just in case.

They tend to not like hearing it at all. They tend to put it down to me being harmless and don't know what I'm talking about, or just being a prick. 

But yea, no one wishes or hope property doing a major correction i.e. crash. Just that the way things are, there doesn't appear to be any other way but down, real hard. And we're all going to be affected.

For every sleezy broker "owning" six or more investment properties, and keep telling everyone to load up... there are young families, I know quite a few of those, who saved and borrowed from their parents, worked hard to just get one they could one day call their own. They work two jobs, fix the place after work and on weekends to rent out... maybe those with one property should do alright no matter what happened.


----------



## Junior (7 May 2018)

luutzu said:


> For sure.
> 
> Almost impossible to find honest opinions in the media about property. Shane Oliver of AMP is always quoted in Fairfax... and his assessment of property is that it'll probably drop by 5%. But it wouldn't crash or take any dramatic correction.
> 
> Don't think so Shane.




Strong population growth, low unemployment, low interest rates.

At least one of the above would need to move significantly in order for a real crash to occur, IMO.

Another risk is a Labour victory at the next election.  End neg gearing and tax hikes on the table.


----------



## luutzu (7 May 2018)

Junior said:


> Strong population growth, low unemployment, low interest rates.
> 
> At least one of the above would need to move significantly in order for a real crash to occur, IMO.
> 
> Another risk is a Labour victory at the next election.  End neg gearing and tax hikes on the table.




Bank of England and the Feds just kept their rate as is. They raised it a couple months ago from memory... so maybe seeing things that scare them a bit and want to pause the hike. 

Those increase have yet to be passed on by our banks, as far as my scanning of the headline tells me anyway. But it will increase the costs of of funding for our banks and they will pass it on... maybe just waiting for the commission and heat to be over first... maybe they don't want to bring the house down if they do it too suddenly. But I heard that the Canadians have already passed on the increased cost to home borrowers.

We'll need a massive infrastructure boom to help save our skins. So far there's some in Australia so hopefully it's about to pick up and construction work can be transferred to infrastructure work. 

That or maybe our people's representative want to sweat the plebs a bit more, get them to work harder for less, maybe get a few thousand to lose their savings and investment so friends can come in to scoop it all up... all that before they try to "save" the plebs in case there'll be riots. 

They've done it in the US post GFC. Some 10 million households lost everything. Hedge funds and rich people scooped up for next to nothing, made themselves billions renting and kicking out people.


----------



## satanoperca (7 May 2018)

Little by little is all it takes


----------



## Wysiwyg (7 May 2018)

That's it. I am soooo depressed about Australian property after reading these last posts that all bets are off.


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## luutzu (11 May 2018)

$US 200K+ for a car parking spot in HK. 


------

https://www.reuters.com/article/us-...park-money-down-in-the-lot-idUSKBN1IB367?il=0

"
Her parking spots, marked out in mustard-colored paint, have more than doubled in value in the past 18 months, with one surging to HK$1.6 million ($203,850.22) from HK$720,000.

Those gains have greatly outpaced the price growth of the flats in the building above them in Tai Wai district, some 30 minutes’ drive from the central business district on Hong Kong island.

It took about seven years for the flats, measuring only around 300 square feet (28 square meters), to record the same growth of 120 percent, according to data from Centaline Property Agency. The flats currently go for about HK$4.7 million per unit.

City-wide, while Hong Kong’s private homes roughly doubled in value between 2010 and 2017, the price of a parking spot in residential complexes around the city tripled to an average of HK$1.4 million, according to data from an independent website dedicated to the asset, CarparkHK.com.


“Flats are expensive, but their value won’t jump 100 percent in roughly a year,” said Fan, who does not drive and rents both spaces out for HK$2,300 a month each. “But that’s what’s happening with parking spots. It’s incredible.”

The boom is being fueled by a surge of cars on Hong Kong’s roads and a red-hot housing market that pushes investors to park their money in assets with lower entrance fees.
"


----------



## Value Collector (11 May 2018)

luutzu said:


> Those gains have greatly outpaced the price growth of the flats in the building above them in Tai Wai district, some 30 minutes’ drive from the central business district on Hong Kong island.
> 
> 
> "




I have no idea how much a car spot in HK should be worth or whether existing prices represent a bubble.

How ever, it makes sense to me that in certain situations the value of a car spot may rise faster than the value of residential apartments.

For example, if more and more apartments are being produced with no parking or less parking than older apartment buildings, then that can mean the ratio of apartments to car parking spaces is growing, and would increase demand for existing parking facilities.

eg, if from 1990 - 2010 every apartment built came with at least 1 car space, but from 2010 - present only 50% of apartments came with a car space, then the growth in apartment numbers might be subduing apartment prices, while population growth is increasing demand for car spaces.


----------



## luutzu (11 May 2018)

Value Collector said:


> I have no idea how much a car spot in HK should be worth or whether existing prices represent a bubble.
> 
> How ever, it makes sense to me that in certain situations the value of a car spot may rise faster than the value of residential apartments.
> 
> ...




Yea, true. But we'd have to assume other factors being equal. For example, every new apartment's tenant actually need a parking spot; that every apartment not having a spot ought to have one; every spot available are where it's needed and the supply/demand spreads out evenly. 

I did the maths before on the rental income each spot managed to rent out for... yield is about 1.7%p.a.
Not a great investment in that income-producing sense. But then if someone else offer higher soon enough... but then that'd be speculation. 

Not to mention a parking lot tend to not have much of a moat. Nearer the fire exit and elevator maybe, but not much of an advantage. Then there's the future of auto pilot.


----------



## Value Collector (11 May 2018)

luutzu said:


> Yea, true. But we'd have to assume other factors being equal. For example, every new apartment's tenant actually need a parking spot; that every apartment not having a spot ought to have one; every spot available are where it's needed and the supply/demand spreads out evenly.
> 
> I did the maths before on the rental income each spot managed to rent out for... yield is about 1.7%p.a.
> Not a great investment in that income-producing sense. But then if someone else offer higher soon enough... but then that'd be speculation.
> ...




Not every apartments tenant needs to demand a car space for prices to rise, all that needs to happen is that the demand per capita stay about the same, while the number supplied per capita fall.

Eg there has always been people that don’t need spaces,

Yes the car spaces need to be located well, but also those that are located well may increase faster in value than others.

1.7% return might be good compared to a residential property, once you deduct all the maintenance, insurance, water rates etc.

If you believed that you would get a 1.7% cash flow return with zero maintenance, and the capital value and cash flow is protected from inflation, some people would see that as meeting their investment goals.

Car space is still space, space is valuable, whether its a parking garage or an apartment.


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## luutzu (11 May 2018)

Value Collector said:


> Not every apartments tenant needs to demand a car space for prices to rise, all that needs to happen is that the demand per capita stay about the same, while the number supplied per capita fall.
> 
> Eg there has always been people that don’t need spaces,
> 
> ...





Yea, I supposed one could always set up a meter in front of the space. Charge the main parker the day rates and special half-price night owl rate  

I wasn't making fun of you btw, just thinking how people could take out a mortgage on a single parking spot. 

1.7%... my simple maths put that at 58.8 years for the cash flow to repay the initial investment. Assuming it's inflation adjusted everything.

So if no other buyer were to take it off me, and assuming I don't need to sell unless one were to offer a better price... the kids will have a good inheritance.


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## orr (12 May 2018)

Well fella's it looks like from the mood above I'm soon to be gaurding my potato patch with the trusty Kalishnikoff(who's view of the future was that?)... That being the case I'll need good soil good rain fall, this stuff quiet often come with good air and good neighbours and time to talk to them. 
My judgement, for what it's worth, wont see the Domain section of 'The Land' tanking like Albert Park Meriton unit. Make that switch soon if you haven't already...If you've got the skills of course.

As an aside; Check what the Snowy 2.0 done for the communitee's PV's closely assosiated. God Damb that Central Planning... 
Karl Marx 200.....


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## Value Collector (12 May 2018)

luutzu said:


> 1.7%... my simple maths put that at 58.8 years for the cash flow to repay the initial investment. Assuming it's inflation adjusted everything.
> 
> So if no other buyer were to take it off me, and assuming I don't need to sell unless one were to offer a better price... the kids will have a good inheritance.




Thats just a flaw in the capital model, not all all assets are suitable to high leverage.

Just because an asset would produce terrible results if it were financed 100%, doesn't mean it is not a sound investment in itself.

by the way I dont own any car parks (well except those attached to other assets, such as the Disney car parks etc which by the way make go money for Disney).

Look at Westfields, they learned years ago they could increase their rental yield of their centres by letting kiosks set up in the middle of the walkway, whether they are cutting keys, selling mobile phone cases, ice creams, coffee or juice people will rent those kiosk spaces that are not much bigger than a car spot.

As I said above space is space, and as long as there are people willing to pay to use that space, owning space can be a sound investment, whether that space is an apartment people want to live in, or a storage locker they want to put their crap in, or a spot where they can erect their Saturday market stall tent or park a food truck, or shop to rent, and office to use, a place to farm, host an event, film a movie, host a concert etc etc.


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## luutzu (12 May 2018)

Value Collector said:


> Thats just a flaw in the capital model, not all all assets are suitable to high leverage.
> 
> Just because an asset would produce terrible results if it were financed 100%, doesn't mean it is not a sound investment in itself.
> 
> ...





wait. what's "financed 100%"? You mean 100% equity financing? 

Debt financing, leverage, can do wonders. Just I reckon it's better, and safer, to see all financing as my own equity with a cost on it. That mean that if the debt can be had for cheaper, that's just icing on top. 

As to leverage... it's better to not leverage with debt but to leverage through that moat, market position, political influence. Debt could bankrupt a company when the tide turn; the other leverages tend to get bigger and better no matter what happen.


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## Value Collector (12 May 2018)

luutzu said:


> wait. what's "financed 100%"? You mean 100% equity financing?
> 
> .




No, I am talking about your example of using a mortgage to buy it.

Off course if you use a 5% mortgage to fund something producing a 2% return, you may struggle to get a sound result in a reasonable time.

However if you funded it with your own equity, you might get a result the was ok, (attest compared to holding the cash)




> Debt financing, leverage, can do wonders.




Only when the return on capital is higher than the interest rate paid on the debt.



> Just I reckon it's better, and safer, to see all financing as my own equity with a cost on it. That mean that if the debt can be had for cheaper, that's just icing on top.




I look at each asset and simply ask "will owning this asset generate a better return than holding the cash I am swapping it for?"

Forgetting about price Bubbles for a second,

Lets imagine a car space did offer a 1.7% free cashflow return after all out goings, and the capital value of the car space would at least increase with inflation, and the cashflow would increase with inflation.

if that were true we would have basically an inflation hedged bond, albeit a low return bond, but given its inflation hedging ability, it would be far better than a bank account or even a 5% bond where the capital is eaten away by inflation, the after tax return of the car space at 1.7% cash flow would be about equal to a 6% bond once inflation and tax is adjusted for.

Once we have decided that the asset its self is a good investment, only then should we decide to use leverage or not, now if we could get financing at 1% maybe we would, if it was only available at 5% we wouldn't.


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## luutzu (13 May 2018)

Value Collector said:


> No, I am talking about your example of using a mortgage to buy it.
> 
> Off course if you use a 5% mortgage to fund something producing a 2% return, you may struggle to get a sound result in a reasonable time.
> 
> ...




Good points. 

You raised a point I've been thinking, thought I settled on an answer but seeing how smarter people I've talked to tend not to see it that way... 

You were saying that if an investor purchase, say that car spot, and it returns say 2%. It's fully funded (i.e. no debt) and the only other alternative at the moment, and into a foreseeable future, is a lowly bank deposit. 

So a 2% return looks pretty good. Especially because it's not from borrowed money where if we were to borrow it'd cost us, say, 4%... and our alternative is 1.7% at the bank.

That makes sense, technically. But my thinking is that shouldn't an investor have a price on their own equity and only invest it towards assets that, assuming the investor accurately appraised it, return above that required rate of return [cost +].

So it'd be better to put it in a bank deposit box; or in short term bonds... where, yes, it doesn't do much but when you find the opportunity you are pretty much guaranteed you can take that parked cash/principal out intact, with a few bucks in interests... and invest it in a more profitable [above or at your required cost]. 

To put in an asset that may or may not fetch the original invested capital when you need it... and in the meantime it return a fairly low return you set for yourself. That might not work out well in the longer term. 


I'm raising this because I know a fair few property investors who own property/ies they bought some years back. Owed little to nothing on it... have a return that's pretty low compare to the current capital gained/market price... but are pretty high compare to when the price they first bought it at. e.g. Say they bought a property for $300K some decades back. It now yield 10% if we compare to that $300K. But yield, say, 2% on the current $1M quoted price.

Assuming that the investor is not being lazy, can't be asked and are aiming to maximise return.... 

Question is, it does not make sense for them to say that... well, it return me 10% on my investment [made years ago] so I'm way ahead. 

Or... a property investor who had made capital gain but whose current rental yield is still low saying that, one day when it's all paid off I'll get rental money for nothing.


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## Value Collector (14 May 2018)

luutzu said:


> Good points.
> 
> You raised a point I've been thinking, thought I settled on an answer but seeing how smarter people I've talked to tend not to see it that way...
> 
> ...




Sure you can and probably should have a minimum likely investment return you are willing to accept.

But this amount will be different for each investor, based on many factors eg capital base, income requirements, risk vs reward, knowledge etc etc.

But my main point was that an asset can have a cash flow that can appear low, but if it truly has a built in inflation hedge, it can out perform fixed dollar assets that generate higher cash flows.

What you described above is basically how Buffett operates, hence the reason he is currently sitting on about $100 Billion of bonds earning about 1% (while inflation hits them at 2%) creating an after inflation negative return.

In an interview where he discussed buying into the airlines, he basically said although they weren’t his favorite businesses, he felt as a group the equity of the airlines he purchased will outperform the bonds he traded in to buy the airline stock.

I guess the bigger your cash pile grows the smaller the premium above the cash rate has to be to make you feel like swapping some of the cash, for investments earning at a higher rate, especially when bonds are producing negative real returns.


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## greggles (31 May 2018)

Some corners of the mainstream media now appear to be pushing a "the sky is falling" take on residential real estate prices. House prices are set to "tumble" and buyers are "fleeing". An interesting turn of events after years of endlessly plugging the real estate boom.

https://www.news.com.au/finance/eco...e/news-story/239b695952fd07ffd4b270fcfcdef637


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## luutzu (1 June 2018)

greggles said:


> Some corners of the mainstream media now appear to be pushing a "the sky is falling" take on residential real estate prices. House prices are set to "tumble" and buyers are "fleeing". An interesting turn of events after years of endlessly plugging the real estate boom.
> 
> https://www.news.com.au/finance/eco...e/news-story/239b695952fd07ffd4b270fcfcdef637




Average OZ properties in the major cities will need to drop to about $500k to $800K to be affordable.

$500K for that standard blue-collar, working class hero, house in suburbia. $800K for the professional office type in "inner" suburbia.

Prices of late are floating on the back of cheap and easy financing plus a rigged tax-payer funded subsidy for higher income earner. That and lots of hope, dreams and an army of creative brokers who know how to use Acrobat Pro.

There are For Sale signs on a fair number of flats around where we live. I'm starting to see a few, not many, but a higher number, of properties being listed that are either half complete or with DA plans ready for that dream home.


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## greggles (1 June 2018)

luutzu said:


> Average OZ properties in the major cities will need to drop to about $500k to $800K to be affordable.
> 
> $500K for that standard blue-collar, working class hero, house in suburbia. $800K for the professional office type in "inner" suburbia.
> 
> ...




Houses on a decent block near the CDB in any capital city won't be going backwards in price. Too much demand. Inner city units will struggle in the short to medium term but are a good long term bet as long as the quality of construction is there. 

I think the price drops will occur in the middle ring where prices have been bid up unrealistically and  beyond many people's ability to withstand interest rate rises. Those 10k from the CBD having paid $750K for a house needing work on a small block. That is where the defaults will begin when interest rate pressure starts to bite. Demand will cool and under stress borrowers will put the houses on the market just to get out and relocate or downsize or maybe even rent again. Better than than taking the kids out of their private school.


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## luutzu (1 June 2018)

greggles said:


> Houses on a decent block near the CDB in any capital city won't be going backwards in price. Too much demand. Inner city units will struggle in the short to medium term but are a good long term bet as long as the quality of construction is there.
> 
> I think the price drops will occur in the middle ring where prices have been bid up unrealistically and  beyond many people's ability to withstand interest rate rises. Those 10k from the CBD having paid $750K for a house needing work on a small block. That is where the defaults will begin when interest rate pressure starts to bite. Demand will cool and under stress borrowers will put the houses on the market just to get out and relocate or downsize or maybe even rent again. Better than than taking the kids out of their private school.




I saw surveys where those in wealthier suburbs are also having financial/mortgage stress just as much as those from lower-income suburbs. 

The recent data I read somewhere showed that prices in richer suburbs are dropping at a faster rate than the poorer ones. 

So it's either that those who bought higher priced houses can afford to get out sooner to take their gains while those in the poor suburbs are the typical owner/occupier who's trying everything they can to keep their one and only place. 

But yea, you're probably right that the wealthier suburbs wouldn't see their prices go down to too much. But then it's hard to know what those suburbs are.

Brother in law was just saying that a brand new, double storey house on 450m2 block near his parents is asking for $2.7M. Still listing after a few months now. Just last year, a similar one a few doors down sold for $2.5M.

In Ryde, a property that was purchased for $1.5M a year ago just got repraised at $1.25M. 

Property are often worth what someone else is willing to pay for it. So I reckon the moment investorsfeel the tide is turning, it's not going to calmly drop down to that fair and reasonable price.


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## greggles (1 June 2018)

luutzu said:


> I saw surveys where those in wealthier suburbs are also having financial/mortgage stress just as much as those from lower-income suburbs.
> 
> The recent data I read somewhere showed that prices in richer suburbs are dropping at a faster rate than the poorer ones.
> 
> ...




I'm thinking of a quality house on at least a 500 square metre block 5km or closer to the CBD. That is probably your best bet because the amount of stock is limited and demand is always high.

The ultra high end is definitely susceptible to big losses. If you're paying $2 million+ you can see big swings. But the rich can take a $150,000 hit and shrug their shoulders. You can also go backwards if you choose poorly and/or overpay.

Good quality house on a good size block less than 5km from the CBD is hard to lose on if you're prepared to hang on for five years. Just don't overpay and you'll be fine. Get in at market prices.


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## luutzu (1 June 2018)

greggles said:


> I'm thinking of a quality house on at least a 500 square metre block 5km or closer to the CBD. That is probably your best bet because the amount of stock is limited and demand is always high.
> 
> The ultra high end is definitely susceptible to big losses. If you're paying $2 million+ you can see big swings. But the rich can take a $150,000 hit and shrug their shoulders. You can also go backwards if you choose poorly and/or overpay.
> 
> Good quality house on a good size block less than 5km from the CBD is hard to lose on if you're prepared to hang on for five years. Just don't overpay and you'll be fine. Get in at market prices.




Yea, property tend to do well over time if the investor/buyer manages to hang on through thick and thin. Not trying to be smart there, just agreeing with your point. 

I mean, if it's a property people live in and they have enough savings and a steady job to repay; or if it's a property they owe little to nothing on... a correction or a crash wouldn't bother them much. It'd be like me with my few bucks in stocks. You just don't brag about it but don't really mind if it crashes 'cause you don't need the money yet.

Weren't too long ago when the idea of owing $500,000 to the bank scares the heck out of people, or at least me. Now it seems owing a million is just normal.


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## luutzu (10 June 2018)

Pretty good channel on Australian general economics and property.

Lots of facts and statistics. Little to no commentaries and opinions. That's always good I think. 

Here's an interview with a buyer agent on his take on the current market condition.


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## sptrawler (16 July 2018)

luutzu said:


> Now it seems owing a million is just normal.




Only to the dumb, or those who can afford to carry it, or lose it.

It scares you, because you consider the outcomes(good or bad), the dumb ones only consider the upside. 

You want to protect those that lose money, but you can only do that by stopping them borrowing, how do you do that without them complaining you are depriving them of opportunity to make money?


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## luutzu (16 July 2018)

sptrawler said:


> Only to the dumb, or those who can afford to carry it, or lose it.
> 
> It scares you, because you consider the outcomes(good or bad), the dumb ones only consider the upside.
> 
> You want to protect those that lose money, but you can only do that by stopping them borrowing, how do you do that without them complaining you are depriving them of opportunity to make money?




Man that's so true. 

I did try to tell a couple of people I consider I'm closed to... telling them a few years back to seriously sell one or two of their three or four properties. Time to take profit I reckon. 

Yea, they look at me like I'm stealing from them. One asked how my stock thingy's going. Not cool man, that was the wrong time to measure my genius


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## sptrawler (17 July 2018)

luutzu said:


> Man that's so true.
> 
> I did try to tell a couple of people I consider I'm closed to... telling them a few years back to seriously sell one or two of their three or four properties. Time to take profit I reckon.
> 
> Yea, they look at me like I'm stealing from them. One asked how my stock thingy's going. Not cool man, that was the wrong time to measure my genius




A lot of would be investors have been caught in W.A.
Also the other people who have been caught, or have missed an opportunity IMO, are those who have not paid down their mortgage while interest rates are low.
But in W.A record numbers of people are going to Bali, and Australia has the Worlds highest growth rate, in passenger numbers taking cruises.


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## luutzu (17 July 2018)

sptrawler said:


> A lot of would be investors have been caught in W.A.
> Also the other people who have been caught, or have missed an opportunity IMO, are those who have not paid down their mortgage while interest rates are low.
> But in W.A record numbers of people are going to Bali, and Australia has the Worlds highest growth rate, in passenger numbers taking cruises.




I guess those state planners "wealth effect" idea have their merits. Jack up the price, lure foreign capital and local debt serfs into the market. The price keeps going up, we all feel really rich so take a cruise, a holiday, charge up the credit cards... increase consumer purchases. 

They don't really care how all that's going to end. But that's other people's problems I guess.

It wasn't long ago when a $600K brick house on a quarter acre seems a bit pricey. And getting a $400K mortgage makes me sweaty. 

All those have since double or triple. Costs of living and everything else also goes up. Everything except wages and job security. Can't end well can it?


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## sptrawler (17 July 2018)

luutzu said:


> I guess those state planners "wealth effect" idea have their merits. Jack up the price, lure foreign capital and local debt serfs into the market. The price keeps going up, we all feel really rich so take a cruise, a holiday, charge up the credit cards... increase consumer purchases.
> 
> They don't really care how all that's going to end. But that's other people's problems I guess.
> 
> ...




It will end o.k, it is always cyclical, the prices will never go back to what they were pre boom.
But they will go back to the point of equilibrium, where the market can afford them, at the new interest rate.
Those who over extended, lose some equity and either have to hang on, or sell out.
Those who purchased a house pre boom, won't notice anything and those waiting to get on the roundabout have to time it.
Those who spent all their equity, on holidays cars etc, will have a drop in living standards as the redraw option is withdrawn.
Life goes on, nothing much changes, dot com boom, housing boom, they all go boom eventually, when you run out of buyers.


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## MrBurns (17 July 2018)

sptrawler said:


> It will end o.k, it is always cyclical, the prices will never go back to what they were pre boom.
> But they will go back to the point of equilibrium, where the market can afford them, at the new interest rate.
> Those who over extended, lose some equity and either have to hang on, or sell out.
> Those who purchased a house pre boom, won't notice anything and those waiting to get on the roundabout have to time it.
> ...




Dropped 30% last time plenty of people went broke, I think the build up this time is much worse but wait and see.


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## luutzu (17 July 2018)

sptrawler said:


> It will end o.k, it is always cyclical, the prices will never go back to what they were pre boom.
> But they will go back to the point of equilibrium, where the market can afford them, at the new interest rate.
> Those who over extended, lose some equity and either have to hang on, or sell out.
> Those who purchased a house pre boom, won't notice anything and those waiting to get on the roundabout have to time it.
> ...




I have a feeling that this time, it will be different. 

But yea, those who aren't over-leveraged, or could afford to pay their dues... It doesn't really matter, to the medium term, what happens in the market.


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## sptrawler (20 July 2018)

luutzu said:


> I have a feeling that this time, it will be different.
> 
> But yea, those who aren't over-leveraged, or could afford to pay their dues... It doesn't really matter, to the medium term, what happens in the market.




It wasn't long ago, that everyone was crying for those who couldn't get into the market, Now I bet those poor sods who couldn't get into a house are saying thank god.

https://thewest.com.au/business/housing-market/perth-houses-most-affordable-on-record-ng-b88901143z

Now we will hear all the same bleeding hearts, crying about all those people who are in financial trouble, for getting into the market.
Is there any wonder you get cynical about people's sympathy, how about letting people make their own decisions, and allowing them to be responsible for the outcomes.


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## Smurf1976 (20 July 2018)

Shhh about this house prices falling stuff.

The photographer and person drawing the plans for house I’ve got for sale only left literally 15 minutes ago.

Should there be any slump on the way, could it please be kind enough to wait until I’ve got the place sold.


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## sptrawler (20 July 2018)

Smurf1976 said:


> Shhh about this house prices falling stuff.
> 
> The photographer and person drawing the plans for house I’ve got for sale only left literally 15 minutes ago.
> 
> Should there be any slump on the way, could it please be kind enough to wait until I’ve got the place sold.




Smurph, do the Christmas lights go with the house?


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## luutzu (20 July 2018)

Smurf1976 said:


> Shhh about this house prices falling stuff.
> 
> The photographer and person drawing the plans for house I’ve got for sale only left literally 15 minutes ago.
> 
> Should there be any slump on the way, could it please be kind enough to wait until I’ve got the place sold.




Nothing to worry about if they're going to have perfectly lush fake lawn and blurred bright lights all over the listing photos 

It took me a while to realised they photoshop a lot of their listing. At first I thought they were just using fancy cameras but na, google maps showed the lawn are very different in real life.


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## luutzu (20 July 2018)

sptrawler said:


> It wasn't long ago, that everyone was crying for those who couldn't get into the market, Now I bet those poor sods who couldn't get into a house are saying thank god.
> 
> https://thewest.com.au/business/housing-market/perth-houses-most-affordable-on-record-ng-b88901143z
> 
> ...




Yea, while I do have sympathies for first home buyers rushing in for fear of missing out... you're young, wanting to own something, start a family... Mr Market wasn't very nice.

For investors generally... meh.


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## Smurf1976 (20 July 2018)

sptrawler said:


> Smurph, do the Christmas lights go with the house?



No but they're in boxes and combined that's 4 pallets worth.....


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## sptrawler (20 July 2018)

luutzu said:


> Yea, while I do have sympathies for first home buyers rushing in for fear of missing out... you're young, wanting to own something, start a family... Mr Market wasn't very nice.




Mr Market is always pushing, that is one of life's first lessons, don't panic buy.
Everyone gets a seat in the school of hard knocks, for some they learn and graduate, for others they get to repeat.


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## luutzu (20 July 2018)

sptrawler said:


> Mr Market is always pushing, that is one of life's first lessons, don't panic buy.
> Everyone gets a seat in the school of hard knocks, for some they learn and graduate, for others they get to repeat.




Yea, I have a feel that, unfortunately, the coming lesson is one that will last a lifetime.

Heard some American investor, hedge fund guy who was shorting some Canadian mortgage lender I think... he was saying that if we do not believe housing/property could crash, just pick up the phone and call anyone in Japan. 

oh btw, thanks for that advise... keep hammering and something will give. Wise words.


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## sptrawler (20 July 2018)

luutzu said:


> oh btw, thanks for that advise... keep hammering and something will give. Wise words.




Jeez, I think that was said a long time ago. 

But I'm pleased it helped.


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## sptrawler (24 July 2018)

Well at last house prices are falling, now all the young have to do is save a bigger deposit, at last equilibrium is approaching.

http://www.abc.net.au/news/2018-07-16/finding-it-harder-to-get-a-loan-heres-why/9999912


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## sptrawler (27 July 2018)

I have never seen this amount of people dumping DHA houses, funny how everyone wanted to bail into houses, now everyone wants to bail out. 
Check out the mid term lease sales, on their website, it is a mile long.
It wasn't that long ago, everyone was up in arms, because the young couldn't get into the market. 
Well now the young that got in, will be up in arms, because they didn't wait.


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## luutzu (28 July 2018)

sptrawler said:


> I have never seen this amount of people dumping DHA houses, funny how everyone wanted to bail into houses, now everyone wants to bail out.
> Check out the mid term lease sales, on their website, it is a mile long.
> It wasn't that long ago, everyone was up in arms, because the young couldn't get into the market.
> Well now the young that got in, will be up in arms, because they didn't wait.




Hard to blame people for being scared of missing out. 

I mean, even those investors I know who own houses since ever, have watched it going up and down over the decade or three... even they think property will just keep rising or flatline for a bit then rise again.

So if you're a young couple who haven't seen or experience a correction, let alone a crash... quite understandable to get in in case you miss the boat.

-------------
A new report from Reuters.

When Wall St screw main street on the way up and on the way down.

I'm definitely sure we're going to see this happening to Australians en mass coming few years. 

They've engineered a property boom... made crap load of money on the way up.

Now it's time to engineer a proper crash, push millions of Australian families out of their over-leveraged property. Then load them up on the cheap, rent them back out again. 

We're going to see a massive increase in homelessness and a generation of mainly landless peasants. 

https://www.reuters.com/investigates/special-report/usa-housing-invitation/


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## luutzu (28 July 2018)

sptrawler said:


> Jeez, I think that was said a long time ago.
> 
> But I'm pleased it helped.




Yea, been a while. Have been hammering away since... more often than not 

Almost there.


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## sptrawler (28 July 2018)

luutzu said:


> -------------
> A new report from Reuters.
> 
> When Wall St screw main street on the way up and on the way down.
> ...




See, now your humanitarian side, is swinging from wanting to help people to get into houses, to wanting to help people get out of houses.
Basically all you want to do is help, whether it does or doesn't, isn't important as long as you feel you are trying. 
You're just one of life's nice guys.


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## notting (28 July 2018)

Interest rates are all that matters when it comes to property and they matter a lot!


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## Wysiwyg (28 July 2018)

luutzu said:


> I'm definitely sure we're going to see this happening to Australians en mass coming few years.
> 
> They've engineered a property boom... made crap load of money on the way up.
> 
> ...



I like how you always expose the financial system as a cold, callous devourer of the hard working average person's money.


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## luutzu (28 July 2018)

sptrawler said:


> See, now your humanitarian side, is swinging from wanting to help people to get into houses, to wanting to help people get out of houses.
> Basically all you want to do is help, whether it does or doesn't, isn't important as long as you feel you are trying.
> You're just one of life's nice guys.




I don't think people should lose their home.

If they're investors and load up on a few hoping to flip it... well, investment can go bad so those will just have to wear it. 

I'm referring to people who jumped into their first home because they just want a house to live in, think they could afford it... did everything right but then gets the rug pulled from under them. That's not cool.

I mean, sure that's life and all that. And one can point the finger to them being naive or greedy or stupid... But can't really do that when we know that these policies aren't handed down from God or some sort of natural phenomenon. They're designed, not accidental.

During the GFC, over 10 million families lost their home. It's their biggest asset... all wiped out. Then hedge funds and other masters of the universe, most of whom got bailed out, moved in... gentrified certain places; turn others into ghettos and seek rent.


----------



## luutzu (28 July 2018)

Wysiwyg said:


> I like how you always expose the financial system as a cold, callous devourer of the hard working average person's money.




And I chose finance as a career for some reason. 

I guess we all like sausages until we find out how they're made.


----------



## luutzu (29 July 2018)

notting said:


> Interest rates are all that matters when it comes to property and they matter a lot!




Yea, and principal. 

Read somewhere that about 1/3rd [?] of OZ loans are due to roll into interest and principal repayment by 2019 to 2020?

When the big banks pass on the full cost of their borrowings, and won't allow interest only repayment... wooo. Not going to be pretty.


----------



## sptrawler (29 July 2018)

luutzu said:


> Yea, and principal.
> 
> Read somewhere that about 1/3rd [?] of OZ loans are due to roll into interest and principal repayment by 2019 to 2020?
> 
> When the big banks pass on the full cost of their borrowings, and won't allow interest only repayment... wooo. Not going to be pretty.



The thing is, if people took an interest only loan, they either couldn't afford it, or they were just gambling on a capital gain.


----------



## Smurf1976 (29 July 2018)

notting said:


> Interest rates are all that matters when it comes to property and they matter a lot!



And being able to borrow the money in the first place.


----------



## willy1111 (29 July 2018)

sptrawler said:


> The thing is, if people took an interest only loan, they either couldn't afford it, or they were just gambling on a capital gain.




Or rather than paying principle and earning an after tax return of approx 4% (today's rates) they took the principle part of the payment and invested it elsewhere for a higher expected return.

Also most loans these days are set on a 30 yr term, of course extra repayments can pay it off sooner. 

If the customer wants an interest only loan, generally most lenders will offer upto 5 yrs interesy only and then the loan reverts to P&I for the remaining 25 yr term. Some lenders offer 10 yr terms and one or two offer up to 15 yr, well they use to. 

When the lender initially calculates the borrowers capacity to repay at the start of the loan term  they do it on the remaining P&I term. 

So a lender will lend less to a borrower wishing to take an interest only loan compared to a 30 yr p&i term.

As such it should cause much less issues than most believe.


----------



## luutzu (29 July 2018)

willy1111 said:


> Or rather than paying principle and earning an after tax return of approx 4% (today's rates) they took the principle part of the payment and invested it elsewhere for a higher expected return.
> 
> Also most loans these days are set on a 30 yr term, of course extra repayments can pay it off sooner.
> 
> ...




That's just another way of saying they speculate on a capital gain like Homer was saying. 

Interest only loan is a major factor in the property boom. First they make it attractive to speculate on borrowed money, make property flipping easy and quite profitable for those with a friendly lender/broker.

Second, they make it "easier" for genuine property owner to get in at a higher price than they otherwise would. 

People, when worried or greedy enough, can be quite optimistic. They might know that they wouldn't be able to pay both the interest and the principle now... but in a few years' time, life's going to change, they'd get a promotion or a pay raise... or worst comes to worst they can just sell out at a profit because property will always go up etc. etc.


----------



## luutzu (29 July 2018)

sptrawler said:


> The thing is, if people took an interest only loan, they either couldn't afford it, or they were just gambling on a capital gain.




Most couldn't afford a deposit I reckon. I know a few who could only because they borrow from family or relatives. 

After stamp duty, deposit and other fees... Jeez man, that's anywhere from $100K to $250K in savings. For most people, it takes a lot of hardwork to have that kind of cash sitting in the bank.

I actually heard of shady loan sharks lending to property investor/buyer for a deposit. At a bargain 2% a month or so.


----------



## sptrawler (29 July 2018)

willy1111 said:


> Or rather than paying principle and earning an after tax return of approx 4% (today's rates) they took the principle part of the payment and invested it elsewhere for a higher expected return.




That's a small scale ponzi scheme, with yourself and your banker.
If it works out well, that's great everyone's a winner, if it goes bad everyone is looking for someone to blame.


----------



## willy1111 (30 July 2018)

luutzu said:


> They might know that they wouldn't be able to pay both the interest and the principle now..




The bank calculates that they can afford to pay principle now, but allows them the flexibility/choice not to.


----------



## willy1111 (30 July 2018)

sptrawler said:


> That's a small scale ponzi scheme, with yourself and your banker.
> If it works out well, that's great everyone's a winner, if it goes bad everyone is looking for someone to blame.




One could argue the whole financial system is a big ponzi scheme 

Who really cares...as long as we find a way to use it to our advantage and manage risk accordingly. 

I guess you are trying to say that if they aren't paying principle then they are not managing risk well.

But how far do you take it, should they be debt free before investing elsewhere.

Everybody has a different risk tolerance.


----------



## luutzu (30 July 2018)

willy1111 said:


> The bank calculates that they can afford to pay principle now, but allows them the flexibility/choice not to.




Yes, that's what they told ASIC, APRA and the Royal Commission too. 

Soon they'll pull an Alan Greenspan and tell the Senate hearing that they thought it was a good idea at the time to help the struggling aussie battlers out.


----------



## luutzu (30 July 2018)

willy1111 said:


> One could argue the whole financial system is a big ponzi scheme
> 
> Who really cares...as long as we find a way to use it to our advantage and manage risk accordingly.
> 
> ...




Property prices beyond the rental yield and generous tax allowances is pretty much a ponzi. Especially when it comes to residential property. 

Well, unless you get creative, break a few council code and build, partition your rental however you like... to get the extra income. 

That's not saying the ponzi will just collapse or wouldn't be profitable. Just investors or homeowner lucky enough to get in early, or get in late but managed to hang on through the bad years... it will work out because live do go on and population and economic growth do make property more valuable, eventually.


----------



## Smurf1976 (30 July 2018)

As long as it holds up a few more days......

Just signed the contract accepting an offer to buy my place half an hour ago. Now just hoping the buyer doesn’t cool off and does get their finance approved.


----------



## sptrawler (30 July 2018)

Smurf1976 said:


> As long as it holds up a few more days......
> 
> Just signed the contract accepting an offer to buy my place half an hour ago. Now just hoping the buyer doesn’t cool off and does get their finance approved.




That didn't take long Smurph, you must have priced it right.


----------



## luutzu (30 July 2018)

Smurf1976 said:


> As long as it holds up a few more days......
> 
> Just signed the contract accepting an offer to buy my place half an hour ago. Now just hoping the buyer doesn’t cool off and does get their finance approved.




Good luck Smurf.

There goes the stock market then.


----------



## Smurf1976 (30 July 2018)

sptrawler said:


> That didn't take long Smurph, you must have priced it right.



Put it online last week, first open home on Saturday, received an offer that was decent but a bit low, negotiated it up a bit and effectively sold that afternoon apart from the paperwork.

Which makes now a good a time as any to post on ASF that I'm doing something very different both for work and life and won't be living in Tas or keeping the lights on any more. Some sadness in some ways, excitement in others, but everything has a time and quite simply everything just aligned and it all made sense.

South Australia here we come.......


----------



## sptrawler (30 July 2018)

Smurf1976 said:


> Put it online last week, first open home on Saturday, received an offer that was decent but a bit low, negotiated it up a bit and effectively sold that afternoon apart from the paperwork.
> 
> Which makes now a good a time as any to post on ASF that I'm doing something very different both for work and life and won't be living in Tas or keeping the lights on any more. Some sadness in some ways, excitement in others, but everything has a time and quite simply everything just aligned and it all made sense.
> 
> South Australia here we come.......




All the best Smurph, hope you have enough time to put a few posts on the forum.

We will miss the state of the system updates, you were good enough to post, many thanks. The new job must be something special, congratulations.


----------



## willy1111 (30 July 2018)

luutzu said:


> Yes, that's what they told ASIC, APRA and the Royal Commission too.
> 
> Soon they'll pull an Alan Greenspan and tell the Senate hearing that they thought it was a good idea at the time to help the struggling aussie battlers out.




And when they stop lending to the battlers...they will also be the villains as the battlers won't be able to get finance to buy a home.

People need to stop being victims and take personal responsibility. Maybe they should be required to undergo some financial literacy education prior to taking on financial products such as a mortgage.

At the end of the day it is just a product, it is up to the user to determine if it will be used for their benefit or not.


----------



## willy1111 (30 July 2018)

luutzu said:


> Property prices beyond the rental yield and generous tax allowances is pretty much a ponzi. Especially when it comes to residential property.
> 
> Well, unless you get creative, break a few council code and build, partition your rental however you like... to get the extra income.
> 
> That's not saying the ponzi will just collapse or wouldn't be profitable. Just investors or homeowner lucky enough to get in early, or get in late but managed to hang on through the bad years... it will work out because live do go on and population and economic growth do make property more valuable, eventually.




Is it a Ponzi or a simple case of supply and demand?

Property in mining towns went up as demand increased and supply didn't keep up. Then demand dropped like a rock and so did the prices.

Capital city property seems to always be in demand, as long as demand exceeds supply it will continue to hold up assuming those with the demand have the money or can get the finance.


----------



## Smurf1976 (31 July 2018)

sptrawler said:


> All the best Smurph, hope you have enough time to put a few posts on the forum.



I won't be disappearing from ASF. Temporarily yes but not for long.

I'll have to cut my posts in half though. With the price of electricity in SA being approximately 100% higher than in Tasmania if I use 50% less of it then that should work out just fine.

So i'll just leave every second word out then each post should take half as long. All worked out you see..... 

As for property prices, well I'm selling in a boom area and buying in a place that hasn't had a boom so that's worked out rather nicely.

New house is solid but dated to an almost unbelievable extent as though the previous owners had gone out of their way to ensure nothing was modernised. All good, price reflects that so I'm happy. Best way I can describe it = welcome to 1965.


----------



## sptrawler (31 July 2018)

willy1111 said:


> Is it a Ponzi or a simple case of supply and demand?
> 
> Property in mining towns went up as demand increased and supply didn't keep up. Then demand dropped like a rock and so did the prices.




Yes and a woman from Karratha has been busted, for running a ponzi scheme, welcome to the wild,wild west.


----------



## luutzu (31 July 2018)

willy1111 said:


> And when they stop lending to the battlers...they will also be the villains as the battlers won't be able to get finance to buy a home.
> 
> People need to stop being victims and take personal responsibility. Maybe they should be required to undergo some financial literacy education prior to taking on financial products such as a mortgage.
> 
> At the end of the day it is just a product, it is up to the user to determine if it will be used for their benefit or not.




There are predators out there ey. 

So if the OZ bank goes full blown GFC, will they and their shareholders take "responsibility" or will they go to Canberra for a bail out?

What about the average OZ that were irresponsible and buy a house to live in for some reason? Will they get a bail out too? Or would that be a "moral hazard" seeing how we all should be aware and take personal responsibility?

These free-market line of reasoning are all nice and good, just it always only apply to one group of people. For the rest there's big brother with other people's money to bail them out. 

I mean, even the local council have more sense than our great public servants with big titles. See, the council require all pools be fenced. They do spot checks to make sure that fences are up to scratch around the pool. 

Why? Because stupid kids seeing water will gravitate towards it and most likely drown. And you can't blame the kid now can you? 

But of course when we're over 18, we're all grown up and should know better than to work hard, find ways to pay for that house to start a family. Then get screwed by the broker, the banker, the policy makers. That's just life kids. Now get back to work.


----------



## luutzu (31 July 2018)

willy1111 said:


> Is it a Ponzi or a simple case of supply and demand?
> 
> Property in mining towns went up as demand increased and supply didn't keep up. Then demand dropped like a rock and so did the prices.
> 
> Capital city property seems to always be in demand, as long as demand exceeds supply it will continue to hold up assuming those with the demand have the money or can get the finance.




There are some 20,000 empty apartments in Sydney I think. There's another few truckloads coming on line over next couple of years. So much for demand.

There's always demand. Just it's not a real demand unless it's backed up by cold hard cash, or a friendly neighbourhood mortgage broker who know a guy who know another guy who can use Adobe pro. 

So if property prices are within people's pocketbook, or their borrowing capacity... then it could be in the millions and still be "cheap". If not enough people are willing or able, it'll be worth under its rental and tax yield... which is somewhere between 40 to 50% their current prices. 

But ey, don't take anything from me as financial wisdom,I got like $5 in the bank.


----------



## sptrawler (31 July 2018)

The problem with Australia is we are bombarded with negative news, how we are always in deep $hit, whether we are or not.
Two years ago, everyone was stressing about getting into the market, the newspapers were full of it, now they are full of talk about bankruptcy and falling house prices.
The whole joint is ridiculous, the sooner the news goes out of business the better, people should stop reading the news or watching it for a while it would reduce their stress levels.

There is an interesting article on the ABC website.

http://www.abc.net.au/news/2018-07-...me-eases-anxiety-us-not-so-australia/10052594

I mean you just have to read this thread to realise the stress involved, everyone was stressing about Sydney house prices going up a couple of years ago, now everyone is stressing about them going down.


----------



## Smurf1976 (31 July 2018)

sptrawler said:


> people should stop reading the news or watching it for a while



Like most people there are relatively few things where I know with absolute certainty what the facts are.

Once I realised that the mainstream media rarely reported on these few subjects with accuracy I have simply assumed that they won't likely be reporting anything else accurately either. 

Only reason I've watched TV news in the past 20 or so years is if either myself or someone I know is on it and even then I'm only watching to check the accuracy of how it has been edited etc. Same with newspapers.


----------



## lindsayf (1 August 2018)

Smurf1976 said:


> Like most people there are relatively few things where I know with absolute certainty what the facts are.
> 
> Once I realised that the mainstream media rarely reported on these few subjects with accuracy I have simply assumed that they won't likely be reporting anything else accurately either.
> 
> Only reason I've watched TV news in the past 20 or so years is if either myself or someone I know is on it and even then I'm only watching to check the accuracy of how it has been edited etc. Same with newspapers.



Yes the news industry has become a ridiculous parody of what it could and should be.
Quite crazy.


----------



## sptrawler (1 August 2018)

Here is a typical headline by a newspaper. House prices fall by the fastest rate in 6 years.

https://www.theage.com.au/business/...astest-rate-in-six-years-20180801-p4zuuc.html

Then when you read on, the article says house prices have gone up 45% in the last 5 years, in Sydney and Melbourne. 
So any fall will be the fastest in the last 6, if they went up for 5 of them, weird stuff.


----------



## luutzu (1 August 2018)

sptrawler said:


> Here is a typical headline by a newspaper. House prices fall by the fastest rate in 6 years.
> 
> https://www.theage.com.au/business/...astest-rate-in-six-years-20180801-p4zuuc.html
> 
> ...




Those ads don't sell themselves Homer.


----------



## luutzu (1 August 2018)

sptrawler said:


> Here is a typical headline by a newspaper. House prices fall by the fastest rate in 6 years.
> 
> https://www.theage.com.au/business/...astest-rate-in-six-years-20180801-p4zuuc.html
> 
> ...




So the market gained some 40% past few years, just dropped about 7.5% but it will "stablise" next year, says the experts... because.... why? 

No one can predict the future and all that, but come on guys.


----------



## sptrawler (29 August 2018)

This idea on changes to negative gearing, makes a lot of sense, Labor's proposal is like taking a sledge hammer to a walnut.

http://www.abc.net.au/news/2018-03-07/report-reveals-new-negative-gearing-proposal/9519586


----------



## CanOz (29 August 2018)

sptrawler said:


> Here is a typical headline by a newspaper. House prices fall by the fastest rate in 6 years.
> 
> https://www.theage.com.au/business/...astest-rate-in-six-years-20180801-p4zuuc.html
> 
> ...




This drives me crazy, that's why I like Twitter, I follow the credible sources and not the "tabloids" as they're all just out to sell news....


----------



## luutzu (29 August 2018)

sptrawler said:


> This idea on changes to negative gearing, makes a lot of sense, Labor's proposal is like taking a sledge hammer to a walnut.
> 
> http://www.abc.net.au/news/2018-03-07/report-reveals-new-negative-gearing-proposal/9519586




That doesn't sound like a sledgehammer at all homer.

A sledgehammer would be getting rid of that welfare program in one go. They're trying to get the more well-off to not own like 5 properties, making "losses" on all of them, sit back and wait for another boom to cash in.

Here, the average mom and pop can own, maybe a couple, investment  property and still get the tax-subsidy


----------



## sptrawler (29 August 2018)

luutzu said:


> That doesn't sound like a sledgehammer at all homer.
> 
> A sledgehammer would be getting rid of that welfare program in one go. They're trying to get the more well-off to not own like 5 properties, making "losses" on all of them, sit back and wait for another boom to cash in.
> 
> Here, the average mom and pop can own, maybe a couple, investment  property and still get the tax-subsidy




The articles say's only the low income earners get existing benefits, middle income get reduced benefits and high income earners get no benefit. It sounded good to me, but I am not saying you should like it.

Labor is suggesting reducing the offset to 25% for everyone, I thought that was heavy handed, but if you find it not so that is your prerogative.


----------



## Junior (29 August 2018)

sptrawler said:


> This idea on changes to negative gearing, makes a lot of sense, Labor's proposal is like taking a sledge hammer to a walnut.
> 
> http://www.abc.net.au/news/2018-03-07/report-reveals-new-negative-gearing-proposal/9519586




I'm opposed to adding new layers of complexity to the tax system, which is what this does.  Income tax rates are already progressive.  

Grandfather existing arrangements and disallow neg. gearing for new arrangements.  Rental property expenses are quarantined and can be offset against rental income.  Where expenses exceed income, these can be carried forward to future years.


----------



## sptrawler (29 August 2018)

Junior said:


> I'm opposed to adding new layers of complexity to the tax system, which is what this does.  Income tax rates are already progressive.
> 
> Grandfather existing arrangements and disallow neg. gearing for new arrangements.  Rental property expenses are quarantined and can be offset against rental income.  Where expenses exceed income, these can be carried forward to future years.




The problem I see with that Junior is, 80% of people negative gearing are low to middle income earners, who make very little return out of it.
Yet they provide the majority of the low cost rental housing, if there is no return in it, they would be dumb to do it. Just my opinion.
Time will tell, but my guess is it will be the first major back flip, the Labor Party does.
It is the same as Labor's dumb idea on franking credits, to SMSF's, how much money will that save now the new pension caps are in? Sod all is my guess.


----------



## sptrawler (29 August 2018)

While on housing and associated costs, Westpac has put up interest rates, blaming funding cost pressures.


----------



## Junior (29 August 2018)

sptrawler said:


> While on housing and associated costs, Westpac has put up interest rates, blaming funding cost pressures.




The thing which drives me mad, is how they cut rates for New Business, while at the same time hiking rates for existing customers, and blaming increased cost of funding.  Loyalty is punished under this system - same strategy used by energy retailers, Foxtel, Life insurance companies etc.


----------



## sptrawler (29 August 2018)

Junior said:


> The thing which drives me mad, is how they cut rates for New Business, while at the same time hiking rates for existing customers, and blaming increased cost of funding.  Loyalty is punished under this system - same strategy used by energy retailers, Foxtel, Life insurance companies etc.




This is indicative of our society ATM.
The above companies not only charge new business less, they use existing customers premiums to advertise and bring the new customers. I would have thought it better, to reward loyal customers first.
It is the same with those who save to stay off welfare.
It is just the way it works here, loyalty and endeavour, are not highly regarded in our society.
If you lost your house because your business went broke, you would be told to get over it, you wouldn't even rate a mention.
If you lost all your money at the casino, then lost your house, the casino would be blamed you would probably get on t.v and a go fund me page would be started for you.


----------



## DNA2013 (1 September 2018)

https://mywealthforlife.com/buy-property-now-or-wait-for-prices-to-crash/

End of the day it is up to people's choices and circumstances.


----------



## luutzu (1 September 2018)

DNA2013 said:


> https://mywealthforlife.com/buy-property-now-or-wait-for-prices-to-crash/
> 
> End of the day it is up to people's choices and circumstances.




Nice website. 

End of the day, it gotta make financial sense. 

You're right there that if a person need housing they'd just have to buy or rent or such depends on their credit. But for the investor though... an investment decision shouldn't be made based on personal choices should it?

Sure there are businesses and companies an investor might not want to associate with, but regarding property as an investment, I think the price will need to make financial sense. At current prices, I'm not sure how the maths and the tax subsidies make any sense. 

I guess if the investor has unlimited amount of cash and doesn't see anywhere to put it... otherwise, interest rate will rise; oversupply in apartments, granny flats will mean yield is going to be practically nothing. 

So that leave the capital gains and negative gearing. It's hard to see a property gaining anywhere near an acceptable rate of return of, say, 5%p.a. over next decade. If it were to gain that much, a property in the outer west would be in the $1.5M to $2M range... I can't imagine an average working family being able to afford that.


----------



## sptrawler (2 September 2018)

Iuutzu, we have been talking about this for a long time, there will be a crash as has happened in W.A, the only difference next time the worker will struggle to get a loan to buy a house.


----------



## luutzu (3 September 2018)

sptrawler said:


> Iuutzu, we have been talking about this for a long time, there will be a crash as has happened in W.A, the only difference next time the worker will struggle to get a loan to buy a house.




When there's a crash this time, we're going to hear it, real loud. 

So far it's just the sound of stress creaking away. The wind's coming.

From what I saw growing up in the early 90s... seem that those who aren't over-leveraged during the boom a few years prior... the crash allow them the rare opportunity to get a property. 

Price crashed, they've been saving up and working hard, pick up one property real cheap... then soon enough get to call later generation lazy whiners who don't work hard enough to buy a property for "only" a million or so


----------



## Smurf1976 (3 September 2018)

luutzu said:


> When there's a crash this time, we're going to hear it, real loud.
> 
> So far it's just the sound of stress creaking away. The wind's coming.



I now have visions of houses physically falling over, not just in terms of price. 

As for prices, well I had no trouble selling my house for the exact price I was expecting but I do see a lot of signs that the market is slowing (indeed the agent I'm using confirmed this).


----------



## sptrawler (3 September 2018)

The combines effect of interest rate rises, tighter lending standards, changes to negative gearing and capital gains, will have the desired result, I think.


----------



## sptrawler (3 September 2018)

luutzu said:


> When there's a crash this time, we're going to hear it, real loud.
> 
> So far it's just the sound of stress creaking away. The wind's coming.
> 
> ...




I think Sydney, will always be difficult to break into, even if there is a crash, I doubt Sydney will feel it as much as everywhere else.
Simple supply and demand, most want to live there, so there will always be competition.


----------



## luutzu (3 September 2018)

sptrawler said:


> I think Sydney, will always be difficult to break into, even if there is a crash, I doubt Sydney will feel it as much as everywhere else.
> Simple supply and demand, most want to live there, so there will always be competition.




You're right that Sydney and Melbourne are tough to get into and over the long run, should recover/do better than other cities. 

As to not feeling the crash if it comes... I don't know what it's like to lose a couple or more hundred thousands, but I bet the people that do will feel it though. 

My brother in law's friend, and brother's friend... the lost a couple hundred thousand in value on their property this year.

One got their off the plan apartment valued at $1M couple years ago... paid the deposit etc., and just recently went to CBA to have it settled. They came back with $800K valuation so the guy have to either lose the deposit or cough up the extra above what the bank will lend. 

I guess it's not too bad if the buyer bought to live in it. But as an investment... gotta earn pretty high salary for the Nanny State to ease the pain a bit.


----------



## luutzu (3 September 2018)

Smurf1976 said:


> I now have visions of houses physically falling over, not just in terms of price.
> 
> As for prices, well I had no trouble selling my house for the exact price I was expecting but I do see a lot of signs that the market is slowing (indeed the agent I'm using confirmed this).




Quite a few of the million dollar home I see will probably fall over too. 

Weren't long ago that a million-dollar house actually do look and feel like a million buck. Nowadays... jeez man, am I getting older and poorer or what.


----------



## DNA2013 (4 September 2018)

I just feel sorry for those who purchase a property in the last 2-3 years....seems to be going negative equity for those putting hard earned cash into properties.

However, it's not just the banks, personal responsibilities need to taken into factor as well. Just because you can borrow X max amount doesn't mean you need to gear to the tilt. 

https://mywealthforlife.com/the-australian-debt-bubble/


----------



## luutzu (4 September 2018)

DNA2013 said:


> I just feel sorry for those who purchase a property in the last 2-3 years....seems to be going negative equity for those putting hard earned cash into properties.
> 
> However, it's not just the banks, personal responsibilities need to taken into factor as well. Just because you can borrow X max amount doesn't mean you need to gear to the tilt.
> 
> https://mywealthforlife.com/the-australian-debt-bubble/




But if you don't gear to the tilt, how will you get to the very last dime of that juicy negative gearing subsidy pie. Buy stocks and purposely lose it all, for real?

The state treasury will have a fun time following this coming collapse. Lots of people are not going to be paying income taxes for a quite a while.

So much for the "free market".


----------



## DNA2013 (4 September 2018)

Credit growth doesn’t just happen.  It needs people who want to borrow and people who are willing to lend.  There are no shortage of people with superficially plausible schemes who are willing to lend to whom would borrow.  

Sadly, there are too many lenders willing to lend –  attracted by some mix of the high fees, high credit spreads (such as some payday or fintech lenders), the mood the times, expectations of shareholders’ (everyone else is booking high profits, why not you?) and very few people willing to say no.


----------



## Smurf1976 (4 September 2018)

DNA2013 said:


> Sadly, there are too many lenders willing to lend –  attracted by some mix of the high fees, high credit spreads (such as some payday or fintech lenders), the mood the times, expectations of shareholders’ (everyone else is booking high profits, why not you?) and very few people willing to say no.



Very true and from an investment perspective it's always wise to consider that the herd is usually going in the wrong direction.


----------



## sptrawler (4 September 2018)

It will certainly be interesting, if all the stars line up, U.S stock market correction, interest rate rises and tighter lending requirements.
Hopefully it lands gently, but it is starting to look like that won't happen.
U.S growth over 4%, our $ heading under 70c, can't see interest rates sitting still.


----------



## sptrawler (4 September 2018)

DNA2013 said:


> I just feel sorry for those who purchase a property in the last 2-3 years....seems to be going negative equity for those putting hard earned cash into properties.
> 
> However, it's not just the banks, personal responsibilities need to taken into factor as well. Just because you can borrow X max amount doesn't mean you need to gear to the tilt.
> 
> https://mywealthforlife.com/the-australian-debt-bubble/




Yes, if you read through the thread, everyone felt sorry for those who couldn't buy a property.

Now we will hear people feeling sorry, for those that did buy a property, and now can't afford it.

Then we will hear about the selfish, lucky people who didn't buy in the boom, and now are buying someone else's loss. 
They are tomorrow's recipients of adverse newspaper coverage, so I hope they enjoy what they can now, because they will be demonised in the future as lucky fat cats.

And the cycle keeps turning.


----------



## Smurf1976 (4 September 2018)

sptrawler said:


> U.S growth over 4%, our $ heading under 70c, can't see interest rates sitting still.



If I could pick one potential external trigger that would bring chaos to Australia financially it would be an oil price shock.

To have a surge in the oil price when the AUD is falling, at a time when we've recently partially linked our domestic gas and electricity prices to international oil prices too which wasn't the case previously, whilst our net oil imports at 75% of consumption are the highest since the 1960's, would bring the house of cards down rather spectacularly I expect.

That's an observation of a risk not a prediction that it will happen although the probability isn't zero.

Edit: One aspect of that scenario is that it conveniently provides someone to blame. That the "someone" just happens to be an assortment of countries centered on the Middle East adds an entire new dimension to it all politically. Never mind the truth that we got ourselves into the situation in the first place.


----------



## luutzu (5 September 2018)

Smurf1976 said:


> If I could pick one potential external trigger that would bring chaos to Australia financially it would be an oil price shock.
> 
> To have a surge in the oil price when the AUD is falling, at a time when we've recently partially linked our domestic gas and electricity prices to international oil prices too which wasn't the case previously, would bring the house of cards down rather spectacularly I expect.
> 
> That's an observation of a risk not a prediction that it will happen although the probability isn't zero.




Heard some pundit saying that if the US/Israel goes to war with Iran, and Iran choke off the Strait of Hormuz [?] or make it difficult for oil export out of the Persian Gulf... oil could easily hit US$250/bbl.

Hoping that doesn't happen. But today's news show Trump is heading a UN meeting on Iran.... Venezuela is being softened, it's almost ready too. 

But assuming sanity prevail and no direct war come, there's the supply side issue.

Three or so years without much replacement, particularly the offshore fields... will naturally see supply going down pretty soon.

Add to that oil service companies needing to demand higher fees to make up for their cuts and belt tightening during the previous/current decline.

Then there's the neglect in investment in alternatives when oil was so cheap.

There's also China making a more serious switch to replace their coal with cleaner LNG. They've been transitioning towards LNG, renewables past decade, but the switch as ordered from the top is going to kick into high gear soon.

Historical level of both national and personal debt all over the world; the masters of the universe playing financial games more than actual investment in business or job creation...


----------



## moXJO (5 September 2018)

Smurf1976 said:


> If I could pick one potential external trigger that would bring chaos to Australia financially it would be an oil price shock.
> 
> To have a surge in the oil price when the AUD is falling, at a time when we've recently partially linked our domestic gas and electricity prices to international oil prices too which wasn't the case previously, whilst our net oil imports at 75% of consumption are the highest since the 1960's, would bring the house of cards down rather spectacularly I expect.
> 
> ...



I think we have a "perfect storm" brewing. Drought, dollar falling,  US trade tariffs, high debt,  the expectation that wages can keep going up, energy prices. I could keep going on with that list and thats on top of oil.

I don't see things getting better anytime soon.


----------



## DNA2013 (5 September 2018)

Reminds me of Paul Keating's famous saying "the recession we had to have"


----------



## sptrawler (10 September 2018)

Come on Billy. lol
http://www.abc.net.au/news/2018-09-...-may-be-about-to-hit-by-sledgehammer/10210876


----------



## sptrawler (18 September 2018)

Things seem to be struggling in W.A, but having said that, the amount of new building going on is amazing if somewhat confusing.
http://www.abc.net.au/news/2018-09-...who-has-sold-out-of-the-perth-market/10247652


----------



## luutzu (18 September 2018)

sptrawler said:


> Things seem to be struggling in W.A, but having said that, the amount of new building going on is amazing if somewhat confusing.
> http://www.abc.net.au/news/2018-09-...who-has-sold-out-of-the-perth-market/10247652




There's about 4 or 5 new cranes popping up around Bankstown just couple months I drove by. They're all within a couple block of each other. 

There's one massive block with a massive crane that's been sitting idle for at least 6 months nearby too. Just one massive crane rising from a massive hole where the underground carpark is going to be. 

A typical 60 year old 33 bedder is down, but still around $1M. Ones in better condition in a nicer suburb... still in the inner West... still asking for $2 to $2.5M. 


Part 2 of 2 from 60 Minutes. 

40% crash could happen, soon.


----------



## Smurf1976 (18 September 2018)

luutzu said:


> A typical 60 year old 33 bedder




33 bedrooms?

That’s either a rather massive house, a hotel, or a typo.


----------



## luutzu (18 September 2018)

Smurf1976 said:


> 33 bedrooms?
> 
> That’s either a rather massive house, a hotel, or a typo.




Typo 

new wi-fi keyboard doesn't work very well. It need a bit of persuasion to get going.


----------



## IFocus (18 September 2018)

sptrawler said:


> Things seem to be struggling in W.A, but having said that, the amount of new building going on is amazing if somewhat confusing.
> http://www.abc.net.au/news/2018-09-...who-has-sold-out-of-the-perth-market/10247652




I am looking at down sizing so looking to buy in the Mandurah southern suburbs, just about all the home opens its just me and the wife no one else around agents say the market is dead


----------



## sptrawler (18 September 2018)

IFocus said:


> I am looking at down sizing so looking to buy in the Mandurah southern suburbs, just about all the home opens its just me and the wife no one else around agents say the market is dead



There is some amazing value around Mandurah, you should do well.


----------



## sptrawler (20 September 2018)

The real estate sector isn't exempt from media distortion, the media is become a journalists fantasy outlet, just work out what you want said then cut and paste until you get it right. 

https://www.realestate.com.au/news/...nutes-appearance/?rsf=syn:news:nca:dt:article

From the article:
_ONE of Australia’s pioneers in property research has slammed current affairs show 60 Minutes for having “distorted” his views in an interview aired on the program last week.

Housing expert Louis Christopher of SQM Research appeared in the segment Bricks and Slaughter, which aired on Sunday.

The program included forecasts of a 40-45 per cent crash in housing values, along with comments from Mr Christopher about real estate being overvalued.

But Mr Christopher has since written in a post published on web portal Property Observer that he was “disappointed” and “unhappy” with how the segment portrayed his views.

“The interview I conducted with the 60 minutes team spanned approximately 45 minutes, of which approximately one minute was featured in the segment,” he said._


----------



## luutzu (20 September 2018)

sptrawler said:


> The real estate sector isn't exempt from media distortion, the media is become a journalists fantasy outlet, just work out what you want said then cut and paste until you get it right.
> 
> https://www.realestate.com.au/news/...nutes-appearance/?rsf=syn:news:nca:dt:article
> 
> ...




Been watching a few interviews and docos lately on the 10th anniversary of the GFC... from what I gathered were to two possible action a gov't could take in the (very, very likely) event of a crash to prevent homeowners from losing everything... they're not going to do it.

1. George Soros gave an interview where he said he recommended to Larry Sumners - Obama's economic advisor - that while the banks do need a cash injection, the cash should go to the equity side.

i.e. the gov't buy out the banks. Own it. Then as the banks are saved by taxpayers money, when it return to profitability, the taxpayers too will gain as they took the risk, bought at the low, and can refloat the banks again at a profit.

Soros said Sumner goes nah, stuffed that. We're a capitalist country, we don't do socialism.

But, Soros laugh, you're bailing out failed businesses. That's pretty much socialism. You're just doing it to benefit your pals on Wall St and the current shareholders. Doing it at the cost to taxpayers without any benefit to them.

That and by putting cash into the capital/asset side instead of the equity... you'd need to put in a lot more cash to deleverage.

That's where trillions of dollars were spent... giving cash away and taking in [buying] toxic assets.

If Australian lenders were proven to be corrupt and lend to anyone with a pulse... will our gov't let the banks fail or do what Soros suggest or do what Obama's admin did and let some 10M families lose their homes while Wall St get bailed out and big bonuses in a couple years?


2. Economic Professor [can't remember his name] was saying that one or two US lawmakers suggest to let the banks collapse. The gov't take over its ownership.

With that the gov't can then reduce the mortgages to those tens of millions of American families. Bringing to mortgage down to a "reasonable" level, not letting them either drown or quit declaring bankrupt... can never buy a house again if they have money... and just live their life renting.

All that while those who could manage to mortgage are so under the debt that the economy in general goes to sleep for a decade.


So unless Canberra do things like that... Australian who are in debt will go the way of their American friends a decade ago.

Bankers will get bailed out. Maybe one or two mid-level lamb will get slaughtered but yah... It's going to crash and remain, as is still the case in the US, Ireland, Spain etc., for another decade and still not recover.


----------



## sptrawler (20 September 2018)

luutzu said:


> Been watching a few interviews and docos lately on the 10th anniversary of the GFC... from what I gathered were to two possible action a gov't could take in the (very, very likely) event of a crash to prevent homeowners from losing everything... they're not going to do it.
> 
> 1. George Soros gave an interview where he said he recommended to Larry Sumners - Obama's economic advisor - that while the banks do need a cash injection, the cash should go to the equity side.
> 
> ...




Instantly, I see problems with both, due to human nature.
The first one if the Government bought it out with taxpayers money, then re floated it to taxpayers, the rich would pick it if it was a bargain. Just look at the Telstra float, what a FFk up. Big business bought the first float at $3.40, mums and dad's bought into T2 at $7.40, just another bunch of baby boomer fat cats.lol

The second suggestion the Government picks up the debt, and has to increase taxes to account for it, every taxpayer loses, not those who don't pay tax big business and those on welfare, only the productive side of the economy. lol I think they've been stiffed enough.


----------



## luutzu (20 September 2018)

sptrawler said:


> Instantly, I see problems with both, due to human nature.
> The first one if the Government bought it out with taxpayers money, then re floated it to taxpayers, the rich would pick it if it was a bargain. Just look at the Telstra float, what a FFk up. Big business bought the first float at $3.40, mums and dad's bought into T2 at $7.40, just another bunch of baby boomer fat cats.lol
> 
> The second suggestion the Government picks up the debt, and has to increase taxes to account for it, every taxpayer loses, not those who don't pay tax big business and those on welfare, only the productive side of the economy. lol I think they've been stiffed enough.




Yea, ideally you'd want to see companies that failed due to their own greed and corruption go to the dustbin and its executives to prison. But... capitalism mean you gotta protect those who own the place.

That and these banks are systemic. Too freaking big to fail. They know it, we all know it...

The Royal Commission have shown that watchdogs like ASIC and APRA are in their pockets. So will the honourable ministers step up to make sure laws are enforce? Crimes punished?  I wouldn't bet on it.

So if we go down the road of the US... they just print and borrow more money. 

The benefit of printing more money is that the debt you owe to foreigners became cheap. The interest rates became nothing... Then to add the cherry on top you use the money to bail out the rich folks, save their literal azzes.

Win-win for everyone except those on "entitlement", food stamps and gov't services.

Got to remember that this driving up of property prices aren't just to lure the Chinese and other rich foreign idiots to part with their cash. It's also a tool to control the plebs. 

People in democracies have too much rights you can't just force them into slave labour with sticks and stones.

You get them into debt. They soon enough get screwed. Then work a few jobs without much complain about working conditions or rights and safety. 

With enough financial worries, they're also not going to care about those imaginary widows and orphans either. Or read or think too much about anything beside the next meal or the next work hour. 

It's called freedom.


----------



## sptrawler (20 September 2018)

luutzu said:


> Yea, ideally you'd want to see companies that failed due to their own greed and corruption go to the dustbin and its executives to prison. But... capitalism mean you gotta protect those who own the place.
> 
> That and these banks are systemic. Too freaking big to fail. They know it, we all know it...
> 
> ...




So we should move to China and Russia, for the freedom that socialism brings, and the caring nature of its regime?

Or maybe load up the boats and move to Indonesia, Philippines, Singapore,Vietnam, must be much better than here, or should we wait until it sinks? lol


----------



## luutzu (20 September 2018)

sptrawler said:


> So we should move to China and Russia, for the freedom that socialism brings, and the caring nature of its regime?
> 
> Or maybe load up the boats and move to Indonesia, Philippines, Singapore,Vietnam, must be much better than here, or should we wait until it sinks? lol




We should try to save what have been achieved since WWII.

Namely, properly regulated capitalism with social safety nets, social mobility - where you work hard, go to school, get a job that feeds the family. etc.

We've been following the new US model for far too long and are starting to pay for it the way the American plebs have.

Western civilisation created a great society not because it goes nuts on imperialism and kick the poor while they're down.

Most, if not all, of the "values" and egalitarianism and all that good stuff we believe have always been there since Christ was born... they were achieved mostly when the West came to respect women's rights; afford free education to its peasants, giving them opportunities to gain productive employment, advance themselves... Those weren't around until maybe 100 years ago.

Then came the civil rights for the coloured coolies; then the gays a few years ago... protect the environment; provide socialist programmes like electricity and affordable clean drinking water to every citizen.

Most of these achievements have, sine about the 1970s, been systematically removed. The plebs are being turned stupid, ignorant and against themselves and those worst off then they are.

So while they argue with refugees and immigrants over crumbs; how many jobs they ought to work; whose nibbles are showing and what great stupid meal they ought to save up a weeks wage to "treat themselves"... the foundation, and the treasury, that made a more fair and equal society are being looted from under them.

--------

Places like China, Vietnam... you don't need me to tell you they're worst. But they're worst for the many... those few in the know have done very, very well.

They're worst because they're just a few steps ahead of where the West is heading back to - yes, the West is in reverse.

If we want to see how unfettered capitalism works... go to those places. Also get to learn how it'll end up too.

I mean, just look at the working conditions of Amazon's "associates". The only difference between them and those slave labourers working for Apple's Foxconn's Chinese operations is a literal safety net stopping them from committing suicide when they get cheated out of their wages - leaving nothing to send home to take care of their children or elderly parents.

Heck, at least China is starting to recognise you can't keep on polluting your rivers and atmosphere... Trump's America just shrugs. What hog manure, ponds of toxic waste and chemicals being stored where hurricanes every couple of years will just wash them all away into (poor) people's towns and suburbs.

Competition in all thing is good, I suppose.


----------



## sptrawler (20 September 2018)

luutzu said:


> We should try to save what have been achieved since WWII.
> 
> Namely, properly regulated capitalism with social safety nets, social mobility - where you work hard, go to school, get a job that feeds the family. etc.



So the pension is $35,500 for a couple.
and about $25,000 for a single.
How much should it be?


----------



## luutzu (21 September 2018)

sptrawler said:


> So the pension is $35,500 for a couple.
> and about $25,000 for a single.
> How much should it be?




Depends on their life circumstances. 

"To each according to their need." as Uncle Ho quotes Marx 

Or as Lao Tzu says... have much and be distressed. Have enough and be contend.

Have nothing and watch with glee the coming property collapse


----------



## sptrawler (22 September 2018)

luutzu said:


> Depends on their life circumstances.
> 
> "To each according to their need." as Uncle Ho quotes Marx
> 
> ...




Well the pensioners, just have to wait until March, then it will be indexed again. 
It won't be long before the married pension, will earn more than working at Bunnings. Funnily enough I have my name down for a job there, I think I will be re assessing my options.


----------



## willy1111 (22 September 2018)

Reading a book yesterday...a 350 yr study of house prices in the Netherlands from 1627 to the 1950's showed that after adjusting prices for inflation, houses prices rose on average 0.2% p.a. 

In Australia in the last 24 odd years, house prices after adjusting for inflation grew an average of 3.6%. The book suggested the main reason was that interest rates went from 15.5% to 6.5%. They have continued to fall since the book was written and prices have continued to grow.

Normally they would just grow with wage inflation.

If interest rates can't fall much further, house prices are unlikely to increase faster than wage inflation.

Then again there is so much variation between cities/suburbs/price brackets


----------



## CanOz (22 September 2018)

I reckon house price growth in Australia had as much to do with loose monetary policy in China as well as Australia....


----------



## tech/a (22 September 2018)

Well while away I purchased the house behind me.
I knew it was coming up and I was going to be away 
So appointed a buying agent.
They secured it and we did the paperwork over the net.

The house is directly behind me.
I live on the Esplanade so the non
Esplanade property will soon add more to my property 
And I’ll purpose build on the rest for B&B rental up market.

There are still opportunities out there.


----------



## luutzu (22 September 2018)

sptrawler said:


> Well the pensioners, just have to wait until March, then it will be indexed again.
> It won't be long before the married pension, will earn more than working at Bunnings. Funnily enough I have my name down for a job there, I think I will be re assessing my options.




Old people  don't work at Bunnings for the pay, they work there for the sharing of wisdom, don't they?

I noticed that they've cut back a lot of staff at Bunnings the past few years.

Used to be you could find a staff every couple aisle... and one or two of them grey hairs really know their stuff.

Now they're mainly a few younger people who's just there to stack stuff.


----------



## luutzu (22 September 2018)

willy1111 said:


> Reading a book yesterday...a 350 yr study of house prices in the Netherlands from 1627 to the 1950's showed that after adjusting prices for inflation, houses prices rose on average 0.2% p.a.
> 
> In Australia in the last 24 odd years, house prices after adjusting for inflation grew an average of 3.6%. The book suggested the main reason was that interest rates went from 15.5% to 6.5%. They have continued to fall since the book was written and prices have continued to grow.
> 
> ...




A similar study by that Yale professor [of Irrational Exuberance] in the US also find the same, practically inflation adjusted zero-gain in property.

Though I think his interpretation/assumption are wrong though. So the conclusion is, mathematically, right... but the reality proves such conclusion wrong.

I haven't read the original paper but my guess is that they define "housing" as a "house"... a roof over people's head.

But a house back a century ago would most likely be on a much bigger block of land. Land that have since been sliced and diced - i.e. making great amount of profit to the investor. 

Then there's the further dicing and partitioning of a large house into four unit, say. 

But yea, housing can't grow beyond people's ability to pay for it. If it is above their pay rate, they'll just have to get creative, downsize etc. to have a place to sleep. 

For Australian property investor, there's plenty of land in Australia. The only think that they lack would be utilities and infrastructure... So I'd count an abnormal profitability in it a once or twice in a generation event.

If a person happen to be lucky enough to buy at the cycle's low, they should do well over 20 to 30 years. If they buy at the height... would be lucky to break even over 20 years.


----------



## sptrawler (23 September 2018)

tech/a said:


> Well while away I purchased the house behind me.
> I knew it was coming up and I was going to be away
> So appointed a buying agent.
> They secured it and we did the paperwork over the net.
> ...



Sounds like opportunities, to stay at your place. Yeh


----------



## luutzu (23 September 2018)

sptrawler said:


> Sounds like opportunities, to stay at your place. Yeh




He did say "up market", Homer. 

It's a lot different to the caravan park by the sea shore-ish.


----------



## tech/a (23 September 2018)

sptrawler said:


> Sounds like opportunities, to stay at your place. Yeh




Of course.
Back a little I had 2 apartments down the road (sold in 2014)
A couple of guys from “The Chartist” came over and stayed 
So in a couple of years I’ll be setting a good rate for ASF members.

If it’s of interest I’m thinking of perhaps running a development thread on the project for those who have an interest in property.
Just perhaps the process ups and downs of which there will be plenty.
Happy to answer questions about and during the process.Photos etc.

Settlement is end of September.
I haven’t been inside yet.


----------



## sptrawler (23 September 2018)

All the people who felt they missed out on the last housing boom in Perth, can now start and pick up properties at pre 2007 prices, so feel free to jump in. 

https://thewest.com.au/lifestyle/re...ining-boom-affordability-levels-ng-b88969580z


----------



## sptrawler (2 October 2018)

Property could be in for a real shock, next year. IMO
All the ducks are lining up.
Tighter lending criteria, higher interest rates, lower loan to valuation loans, reduced investor tax offsets.
The only upside at the moment, is immigration, which is becoming a political hot potato.
IMO unless we have some spectacular wage growth, the house prices will return to the long term average, which means a correction.


----------



## SirRumpole (2 October 2018)

sptrawler said:


> IMO unless we have some spectacular wage growth, the house prices will return to the long term average, which means a correction.




And that's bad ?


----------



## willy1111 (2 October 2018)

sptrawler said:


> Property could be in for a real shock, next year. IMO
> All the ducks are lining up.
> Tighter lending criteria, higher interest rates, lower loan to valuation loans, reduced investor tax offsets.
> The only upside at the moment, is immigration, which is becoming a political hot potato.
> IMO unless we have some spectacular wage growth, the house prices will return to the long term average, which means a correction.




Certainly some headwinds.

I don't think there will be much growth, but I also don't think there will be much of a correction, more so a few years of pretty flat.

For a correction, there have to be more sellers than buyers... if the sellers can't get their price they may be more likely to hold on. 

5 yr fixed rates are still under 5% so I don't think rates will rise enough to force enough into mortgage distress that would be forced to sell and create a correction.


----------



## Smurf1976 (2 October 2018)

willy1111 said:


> For a correction, there have to be more sellers than buyers... if the sellers can't get their price they may be more likely to hold on.



True although there will always be some who have to sell regardless of price.

Death, divorce, moving to a nursing home, loss of income, relocation for work, etc.


----------



## sptrawler (2 October 2018)

Smurf1976 said:


> True although there will always be some who have to sell regardless of price.
> 
> Death, divorce, moving to a nursing home, loss of income, relocation for work, etc.




Exactly and the result from those sales, is the lead in price for the next sale, if everyone can hold out until the prices return to present prices all is good.
That applies to most things.
Well not true, if you had held on to your Tandy TRS80 computer that you bought in 1981 for $Aus1,500, it is a sad scenario.
https://www.ebay.com/itm/RADIO-SHAC...561372?hash=item5210f1349c:g:pbgAAOSwSGRbrUOB
Thankfully I was a quick learner, I sold it in 1983 for $Aus 1,400 to someone who saw more potential than me.


----------



## CanOz (3 October 2018)

Brisbane housing market holding up nicely...


----------



## DNA2013 (3 October 2018)

Australia experienced this in the commercial property sector in the early 90's and took a battering in terms of defaults and capital losses.

It took at least a decade to say early 2000 before people saw some genuine capital growth in commercial properties.


----------



## tech/a (3 October 2018)

DNA2013 said:


> Australia experienced this in the commercial property sector in the early 90's and took a battering in terms of defaults and capital losses.
> 
> It took at least a decade to say early 2000 before people saw some genuine capital growth in commercial properties.




Yes this is true.
Commercial generally follows 3-5yrs behind.
Due to move up again.


----------



## SirRumpole (3 October 2018)

"Unintended consequences" of the banking Royal Commission ?

http://www.abc.net.au/news/2018-10-...n-could-trigger-house-price-collapse/10333150


----------



## Toyota Lexcen (3 October 2018)

On the radio the other day a mortgage broker was saying if you don't have ALL your documents in order then you will find it difficult to get a loan.

Couldn't find the thread on the Royal Commission, but "shadow" banking is starting to grow. Plenty of ads on radio from Pepper, Prospa, Ahmed Fahour's new firm. The Commissioner will have to look closely at the outcome.


----------



## luutzu (3 October 2018)

willy1111 said:


> Certainly some headwinds.
> 
> I don't think there will be much growth, but I also don't think there will be much of a correction, more so a few years of pretty flat.
> 
> ...




I'm betting you're wrong on that one.

The costs of everything is going up. Wages are flat or declining.

Interest rate is rising overseas, it will get here soon.

There's the oversupply of housing and apartments. Yes, an over supply. More are coming. Man, there's at least some 10 cranes just popping up a couple months ago within 10km radius of where I live.

With granny flat to practically every house, a couple millions of new apartments; who knows how many subdivision and duplexes over the past few years....

and still the average house goes for about $900K if it's an renovator's dream; or $1.2M to $1.5M if it's a new 3-bedroom, single garage duplex.

How does an average family on $80K per mum or pop afford a house? How can they afford to do any fixing or rennovating over the next 20 years if an entire parent's income pays to mortgage while the other one pay for the food and clothing?

--------

I reckon we're just at the beginning of what's going to be one heck of a recession.

The vicious loop from this property crisis will need a miracle to get out of.

For one, no one's but the working poor will be paying income taxes as they'll negate the capital losses from their income. That'll do wonders to the state and federal budget.

They'll cut costs, the costs will be passed onto the poor and mid-range plebs... they won't be able to buy anything; that will further reduce employment.


SirRumpole said:


> "Unintended consequences" of the banking Royal Commission ?
> 
> http://www.abc.net.au/news/2018-10-...n-could-trigger-house-price-collapse/10333150




The guy they quoted is not thinking straight. 

First, why would a Royal Commissioner take notes from the RBA etc., to learn about the impact of his commission's recommendation on this or that market?

Whatever happen to telling the truth, enforcing prudential regulation and let the market fall where it may?

But mainly, first home buyers aren't going to be disadvantaged and can't buy if the RC recommend proper paper work and sensible lending practices like not assuming people can pay 13x their income.

If anything, proper paperwork and sensible lending will see property prices drop to where people can sensibly pay for it. 

That will mean more people can afford it, honestly rather than fudging their income; or really stretching the family budget to get housing; or leverage to their eyeballs thinking that it's safe and smart.


----------



## sptrawler (3 October 2018)

Don't worry Iuutzu, help is on its way, so to speak.

http://www.abc.net.au/news/2018-10-...n-could-trigger-house-price-collapse/10333150

From the article:
_In the lead-up to the next federal election, though, shadow assistant treasurer Andrew Leigh said Labor would be sticking to its policies around capital gains tax and negative gearing in order to take further price pressure off the market.

He welcomed the exodus of investors but said first home buyers still needed more support_.

Also I have heard Bowen say recently, they will definately go ahead with the CG and Neg Gearing changes, so I would say prices will tank big time.


----------



## explod (3 October 2018)

"Also I have heard Bowen say recently, they will definately go ahead with the CG and Neg Gearing changes, so I would say prices will tank big time."

A home (shelter) tops Maslow's Law.  Anything to drop prices and take homes away from the investment platform is to be applauded.


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## sptrawler (3 October 2018)

explod said:


> "Also I have heard Bowen say recently, they will definately go ahead with the CG and Neg Gearing changes, so I would say prices will tank big time."
> 
> A home (shelter) tops Maslow's Law.  Anything to drop prices and take homes away from the investment platform is to be applauded.




The only problem with that is, who will house those who can't afford a house? It hopefully doesn't become a problem.
Also just maybe, the State Governments will get back into public housing, as they should. IMO


----------



## Trendnomics (4 October 2018)

Prepare your angus ... we are most likely facing a banking crisis (cash will carry risk).

Canary in the coal mine: https://www.google.com/search?q=asx+gma


----------



## Klogg (4 October 2018)

_"I don't think there will be much growth, but I also don't think there will be much of a correction, more so a few years of pretty flat."
_
I'm not so sure of that. Flat means losses in this case, as cost of finance is greater than rental yield. And that doesn't include agency fees, maintenance, rates, insurance, etc.

If landlords see 2-3 years of nothing but a lower taxable income, I think the sentiment will change.


_For a correction, there have to be more sellers than buyers... if the sellers can't get their price they may be more likely to hold on."_

A correction doesn't mean more sellers, just means the marginal seller/buyer has shifted (i.e. the ones that meet to perform the transaction). Given the cost of finance is increasing (increased reason to sell/lesser reason to buy) and it's harder to get finance (even less reason to buy), the marginal buyer moves down in what they can afford.

Volumes will definitely decrease (as they have), but anything that forces a few sellers; for example, an inability to refinance an IO loan, or inability to service the higher interest rate, will cause transactions to occur at lower prices than current. 

In basically every other housing downturn, the RBA has cut rates to get credit flowing again. Our current RBA head seemingly wants to avoid this, and in light of the RC findings, I think he's right.


More interestingly, Phil Lowe wrote a piece on managing a credit bubble many years ago, and how to deal with the early and late stages of credit bubbles to avoid catastrophe. 
I'm not categorically saying that this is a bubble (although I think it looks like one), but it looks like he's following his own playbook, tracking to the 'late stage' set of instructions. It could be a coincidence, but I'm not so sure.


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## SirRumpole (8 October 2018)

Psychology and physics in the property market.

http://www.abc.net.au/news/2018-10-08/australian-housing-market-good-bad-and-ugly/10348856


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## moXJO (9 October 2018)

Banks have really tightened up lending.

Petrol, bills, groceries  are all expensive.

People do not want to work but expect high wages.

Large debt.

Chinese have disappeared.
Theres a lot more as well, chinese australia relationship, drought, etc

I think we are in for a continuing drift down.

If tradies start struggling its only going to add to the problem.
And labors ng tinkering will be interesting.

Its slowly drifting down in my area with property on market for a lot longer.
Lots of Subdivision going on and what feels like the last rushed unit builds.


----------



## sptrawler (9 October 2018)

moXJO said:


> If tradies start struggling its only going to add to the problem.
> And labors ng tinkering will be interesting.




At the moment IMO, the tradies are causing a problem for themselves, they cranked up their labor charges as the mining wages went up.
But they haven't wound them down with the economy, so the establishment steps in and squeezes them, now a 'sparky' can do a five day course and install split system air cons.
Why? because the prices Reefer's charged for installs became stupid.
It is the same Australia wide, no one can gently milk the system, they all have to pull the #!^$ off it. 
Within a few years refrigeration mechanics, will be a thing of the past, much like instrumentation mechanics.
The way this will affect housing will be, houses will be modular construction, pre fabricated and dropped on a slab in a few years. IMO


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## luutzu (9 October 2018)

sptrawler said:


> At the moment IMO, the tradies are causing a problem for themselves, they cranked up their labor charges as the mining wages went up.
> But they haven't wound them down with the economy, so the establishment steps in and squeezes them, now a 'sparky' can do a five day course and install split system air cons.
> Why? because the prices Reefer's charged for installs became stupid.
> It is the same Australia wide, no one can gently milk the system, they all have to pull the #!^$ off it.
> ...




From personal experience, the White tradies' prices are a bit stupid. A lot stupid actually. 

Got a Telstra cable booked some years ago. The dude turned up and wanted $800 to run a phone/internet cable inside the house. Why so much man? It's hard because blah blah. 

Telstra told me it's free 'cause I only want one socket. 
Na mate, not free 'cause yours hard. Have to climb under the house to run it.

So called Telstra again and they sent an Italian gentleman. He used the old cable we had as a pull wire and it's done in half an hour. For FREE. 

Another one... wife's friend was doing a renovation some years back and the plumber charged $1200 to move the sewage connection around the old bathroom. Timber floor with crawl space... maybe $50 worth of piping and glue if you're generous with hit. 

But I guess the husband want to have it done right instead of a couple hours on YT.

Anyway, I find that tradies around here are generally quite reasonable with their prices. Some can be a bit unreasonable if they see you got a nice house though.


----------



## sptrawler (9 October 2018)

Housing has been a stop gap, to prop up the economy, but the economy is picking up.
The problem is, those connected to the housing, haven't worked it out.IMO


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## moXJO (9 October 2018)

sptrawler said:


> At the moment IMO, the tradies are causing a problem for themselves, they cranked up their labor charges as the mining wages went up.
> But they haven't wound them down with the economy, so the establishment steps in and squeezes them, now a 'sparky' can do a five day course and install split system air cons.
> Why? because the prices Reefer's charged for installs became stupid.
> It is the same Australia wide, no one can gently milk the system, they all have to pull the #!^$ off it.
> ...




I'm finding its pretty cut throat out there in regards to prices. I know from personal experience that prices can be high on the downturn due to lack of work and excess bills.
Tradies don't get a weekly wage. Some months you are flat ass broke and the bills keep rolling in.
But there are guys out there (sole traders) working for $150 a day. Stuff that.

Glad I transitioned out of the building game. To many friken headaches,  to much risk and to much hard work.


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## moXJO (9 October 2018)

sptrawler said:


> The way this will affect housing will be, houses will be modular construction, pre fabricated and dropped on a slab in a few years. IMO



I repaired a few of these and they are rubbish. I think we still have a fair way to go before that becomes an issue.


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## moXJO (9 October 2018)

luutzu said:


> From personal experience, the White tradies' prices are a bit stupid. A lot stupid actually.
> 
> Got a Telstra cable booked some years ago. The dude turned up and wanted $800 to run a phone/internet cable inside the house. Why so much man? It's hard because blah blah.
> 
> ...




Some guys just don't want the job and jack up the price.

Any electrical, or plumbing just be careful as insurance won't pay if something happens and they can prove it was unlicensed. And insurance companies don't want to pay out anything right now.

I do love youtube though.
 All the building standards can be found over at 

sai-global if you need to make it A/S. The booklets cost a lot though. Just remember they show the minimum standard.


----------



## sptrawler (9 October 2018)

moXJO said:


> I'm finding its pretty cut throat out there in regards to prices. I know from personal experience that prices can be high on the downturn due to lack of work and excess bills.
> Tradies don't get a weekly wage. Some months you are flat ass broke and the bills keep rolling in.
> But there are guys out there (sole traders) working for $150 a day. Stuff that.
> 
> Glad I transitioned out of the building game. To many friken headaches,  to much risk and to much hard work.




Yes, a few of my mates have done the contract game, most end up bailing out to a salary job with the perks.


----------



## sptrawler (9 October 2018)

moXJO said:


> Some guys just don't want the job and jack up the price.
> 
> Any electrical, or plumbing just be careful as insurance won't pay if something happens and they can prove it was unlicensed. And insurance companies don't want to pay out anything right now.




I still have a current A grade electrical license, but I still pay for an electrical contractor, to do electrical work in the house.
Firstly any changes have to have an electrical safety certificate, registered with the electrical authority, if I want to do it myself I have to apply for a temporary electrical contracting license.


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## luutzu (9 October 2018)

moXJO said:


> Some guys just don't want the job and jack up the price.
> 
> Any electrical, or plumbing just be careful as insurance won't pay if something happens and they can prove it was unlicensed. And insurance companies don't want to pay out anything right now.
> 
> ...




Yea, I don't muck around with the electrical mains. Splitting one light bulb or powerpoint into a few is pretty easy though.

Plumbing I might actually do a better job than most plumbers. But that's because I know a few tradies, looked it up and actually learn the various parts - that's how you pass yourself as a pro and get yourself a tradies account 

For example, pretty much all tradies connect the bathroom's vanity, bath and shower to one floor waste through a riser. It saves them money on the parts. It works fine but over time the gunk built up will stink up the place. So best to put a P trap under the shower, the bath separately. Direct it to the mains. Less odour. That and a couple of air vents, plenty of clean out just in case. 

Used to have access to Sai Global from my brother's work. Great stuff. Used it to engineer my house frame and load bearing walls. Will need it again soon to help with the spans and support with oregon joists. 

------

Yea, construction and trades is a tough job. If it's done proper it's very hard to make money. I mean you could earn a living by your labour, but to get profit on top as a capitalist after paying your own labour, that's pretty much impossible if it's done up to scratch. 

Hired a few tradies earlier in the year and because I know how hard the work is, I offer them drinks and sometime free lunch. A couple of them reckon the only reason I did that was because they charge too cheap so they demanded more pay and give me a hard time about it. 

Came very close to a couple of punch ups. Lots of young cowboys out there.


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## Triple B (9 October 2018)

Hired a few tradies earlier in the year and because I know how hard the work is, I offer them drinks and sometime free lunch. A couple of them reckon the only reason I did that was because they charge too cheap so they demanded more pay and give me a hard time about it.

Came very close to a couple of punch ups. Lots of young cowboys out there.


Serious? sounds like a bunch of F#$k wits. I appreciate a glass of cold water on a hot day. even like a cup of coffee if offered. My Tip is to ask friends or neighbours who have had work done, who they used and if they were happy , get the ph nos. picking numbers out of ph book or gumtree etc is a lottery.
since department of fair trading raised lic requirements from $1000 to $5000 jobs there has been a steady increase of "cowboys" into the game. I have had to repair plenty of other "plasterers ' work . Some of it looks like a 5 year old was let loose with a trowel and a bucket of mud! and they charged as much as me by the hour!!!


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## IFocus (10 October 2018)

sptrawler said:


> I still have a current A grade electrical license, but I still pay for an electrical contractor, to do electrical work in the house.
> Firstly any changes have to have an electrical safety certificate, registered with the electrical authority, if I want to do it myself I have to apply for a temporary electrical contracting license.




Hey SP wired up the shed the other month(only took 24 years) all you have to do is apply to the board they give it a tick and then just do a safety cert (online) and you're good check the Safety Energy web site I was surprised how easy it was it did take 6 weeks to get approved.


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## moXJO (10 October 2018)

sptrawler said:


> .
> 
> Hired a few tradies earlier in the year and because I know how hard the work is, I offer them drinks and sometime free lunch. A couple of them reckon the only reason I did that was because they charge too cheap so they demanded more pay and give me a hard time about it.
> 
> Came very close to a couple of punch ups. Lots of young cowboys out there.



There were/are a lot of dodgy old generation of tradies and there's a lot of clueless younger generation ones.
I've seen some shocking work out there that people paid top dollar for. I think they were doing away with licenses for tradies in nsw. That won't help.

Agree with the "do it yourself". If you plan a bit, you can end up with a better product. Some guys don't though.


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## moXJO (10 October 2018)

IFocus said:


> Hey SP wired up the shed the other month(only took 24 years) all you have to do is apply to the board they give it a tick and then just do a safety cert (online) and you're good check the Safety Energy web site I was surprised how easy it was it did take 6 weeks to get approved.



Do you have a license,  or just wired it and had it checked?


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## sptrawler (10 October 2018)

IFocus said:


> Hey SP wired up the shed the other month(only took 24 years) all you have to do is apply to the board they give it a tick and then just do a safety cert (online) and you're good check the Safety Energy web site I was surprised how easy it was it did take 6 weeks to get approved.



Thanks for the info, I was led to believe, it was quite difficult. Good to know it isn't. Cheers


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## IFocus (10 October 2018)

moXJO said:


> Do you have a license,  or just wired it and had it checked?




I have an electrical  licence in WA you are allowed to do the work for yourself or direct family for no profit outside of that you require an electrical contractors ticket.
I asked a few electrical contractors if they would put a ticket for me if I did the wiring (which is legal)  but none were interested so sussed out the new process to apply which was surprisingly easy.


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## luutzu (10 October 2018)

Triple B said:


> Hired a few tradies earlier in the year and because I know how hard the work is, I offer them drinks and sometime free lunch. A couple of them reckon the only reason I did that was because they charge too cheap so they demanded more pay and give me a hard time about it.
> 
> Came very close to a couple of punch ups. Lots of young cowboys out there.
> 
> ...




Yea, true story. 

Lucky we decided to stop him before the final estimated 3 days he said it'll take to finish the slabs.

Turns out he was just a concretor and have no idea how to set up or reinforce steelworks for the foundation. In hindsight I should have stopped the work on day one, not let it go on for another four days.


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## sptrawler (10 October 2018)

luutzu said:


> Yea, true story.
> 
> Lucky we decided to stop him before the final estimated 3 days he said it'll take to finish the slabs.
> 
> Turns out he was just a concretor and have no idea how to set up or reinforce steelworks for the foundation. In hindsight I should have stopped the work on day one, not let it go on for another four days.



I've had problems with Tradie's, about 10 years ago I wanted to do up the bathroom, pull out the bath make it  into a shower you know all that stuff.
Anyway, I said to the tiler, I wanted to have a rubber membrane painted throughout the shower recess, he went balistic said it wasn't needed grout had worked for 3,000 years.
I ended up doing it myself, then he came back the next day and tiled, now it is mandatory.FFS


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## Smurf1976 (10 October 2018)

moXJO said:


> Agree with the "do it yourself". If you plan a bit, you can end up with a better product. Some guys don't though.



My work background on the tools has always been one where the finished product is required to be perfect with the potential for seriously bad stuff to happen if an error is let through.

Downside = I’d probably go broke if I tried doing household stuff on a daily basis and had to compete on price with those taking shortcuts.

Most stuff at home I’ll do myself, including electrical since yes I’m licensed, but there are certainly situations where I’ll call in an expert. Recently paid someone to assist and check my work on a system that’s oil-fired since there’s obviously potential for bad outcomes if it goes wrong. Turned out I was on the right track, just needed to unstick the metering valve. All good now. Well, all good apart from the price of oil but that’s another story.


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## luutzu (11 October 2018)

sptrawler said:


> I've had problems with Tradie's, about 10 years ago I wanted to do up the bathroom, pull out the bath make it  into a shower you know all that stuff.
> Anyway, I said to the tiler, I wanted to have a rubber membrane painted throughout the shower recess, he went balistic said it wasn't needed grout had worked for 3,000 years.
> I ended up doing it myself, then he came back the next day and tiled, now it is mandatory.FFS




Yea, not all old school stuff are good. Technology and stuff do progress. 

They demand the entire wet area floors be waterproofed now. Up to 300mm up the wall all round. 1.8m etc. aroun shower area.

Makes a lot of sense when you have experience doesn't it.

But my dad is something else though. His bathrooms  you could turn into a pool no problem. I (was forced to) coat it about 5 or 6 times. 

The edges he wanted that aluminium coated with I think bitumin. So we angled it up behind the fibre cement board [none of that cheap, does the job blue plasterboard stuff]. 

Then silicone all the joints. Tops up with two coats of waterproofing. 

Then just to be safe, he wanted fibre-glass all round in front of the edges, top up with a couple more coats. 

Should see the two massive columns at the front. They're about 600x1000 almost two storey up. Solid brick shaped it then concrete poured in with spare reo all caged when the balcony was poured.

The guy who will demo his house about 1200 years from now will not be making any money.


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## Smurf1976 (11 October 2018)

One reason tradies don’t make huge profits is they keep losing tools.

In addition to the leaves and junk found in the roof of my new place I’ve also found a knife and tonight I spotted a torch sitting in a spot from which retrieving it would best be done from on the roof not in it.

Now, I wonder if there’s any gold bars hidden anywhere by chance?


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## SirRumpole (11 October 2018)

I scored a very nice tape measure from a plumber.


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## luutzu (11 October 2018)

Smurf1976 said:


> One reason tradies don’t make huge profits is they keep losing tools.
> 
> In addition to the leaves and junk found in the roof of my new place I’ve also found a knife and tonight I spotted a torch sitting in a spot from which retrieving it would best be done from on the roof not in it.
> 
> Now, I wonder if there’s any gold bars hidden anywhere by chance?




I was hoping for gold too when I dig up the back. All I found was mud and buried asbestos. 

Just saw a news clip from ABC about the rising incidents of Siliosis [?]. From workers dry cutting man-made Caesar stones, breathing in silica dust.


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## sptrawler (11 October 2018)

This is drifting into a D.I.Y thread IMO.
So to get it back on track, Iuutzu tell all those poor young people you were worried couldn't get into a property market, to get their deposit ready.lol
That once in a lifetime crisis, that seems to happen every 10 years, is imminent.
With the stock market correction, lining up with silly Billy getting elected, the property prices should really tank.

https://www.smh.com.au/business/the...980s-says-morgan-stanley-20181011-p5091w.html

IMO it won't bode well for the baby boomers, but hey no one likes them anyway, also they are retiring so they don't pay tax. What's the down side?


----------



## luutzu (11 October 2018)

sptrawler said:


> This is drifting into a D.I.Y thread IMO.
> So to get it back on track, Iuutzu tell all those poor young people you were worried couldn't get into a property market, to get their deposit ready.lol
> That once in a lifetime crisis, that seems to happen every 10 years, is imminent.
> With the stock market correction, lining up with silly Billy getting elected, the property prices should really tank.
> ...




Oh, the DIY was just in preparation for the bargain hunting.

Nobody listens to me Homer. I need a Lexus and a job at the office to have any weight. 

I honestly don't think the coming "correction" will be 10% or 15% some big investment bank is saying. It'll be a lot worst.


----------



## luutzu (11 October 2018)

sptrawler said:


> This is drifting into a D.I.Y thread IMO.
> So to get it back on track, Iuutzu tell all those poor young people you were worried couldn't get into a property market, to get their deposit ready.lol
> That once in a lifetime crisis, that seems to happen every 10 years, is imminent.
> With the stock market correction, lining up with silly Billy getting elected, the property prices should really tank.
> ...




Most people like baby boomers. They're the flower power people, hippies, do-gooders right? Most of them anyway. 

It's their kids that kinda rebel against all that love and set about screwing the world, again.


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## sptrawler (11 October 2018)

luutzu said:


> I honestly don't think the coming "correction" will be 10% or 15% some big investment bank is saying. It'll be a lot worst.



If Labor get in and make the proposed changes, the correction will be more like 30% from the peak, in some areas of Sydney IMO 
Similar to what has happened in Perth.


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## moXJO (11 October 2018)

luutzu said:


> Oh, the DIY was just in preparation for the bargain hunting.
> 
> Nobody listens to me Homer. I need a Lexus and a job at the office to have any weight.
> 
> I honestly don't think the coming "correction" will be 10% or 15% some big investment bank is saying. It'll be a lot worst.



Its all down to how much the debt bomb  blows up. It can get real messy on a panic.

 Boomers must be draining their super funds now as well. Wasn't that a big talking issue about a decade ago


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## satanoperca (11 October 2018)

Regardless is if it or is not a drop of greater than 15% from peak, if it remains 10% down from peak for a sustained period of time, the mindset will change that property only ever goes up.

I agree with you Luutzu, I have believed for over 8 years, that when the next correction happened it would be significant, what I was able to predict 8 years ago, was that the whole nation would pile into debt and make the situation even worse when the time come.

I also feel, that the govnuts will work out a way to kick the can a little further this time, which in turn will make the situation worse when it does arrive in full force.

Homes are for shelter, we all need shelter


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## luutzu (11 October 2018)

satanoperca said:


> Regardless is if it or is not a drop of greater than 15% from peak, if it remains 10% down from peak for a sustained period of time, the mindset will change that property only ever goes up.
> 
> I agree with you Luutzu, I have believed for over 8 years, that when the next correction happened it would be significant, what I was able to predict 8 years ago, was that the whole nation would pile into debt and make the situation even worse when the time come.
> 
> ...




I think property investors will soon wake up and wonder what the heck they were thinking. 

About 6 years ago I started to noticed that property was getting a bit pricey. That was when the average property was about $500K - $600K?

Good thing I don't short anything.


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## satanoperca (12 October 2018)

From Corelogic :
In Sydney, 30% of off-the-plan unit valuations were lower than the contract price at the time of settlement in September, double the percentage from a year ago.  In Melbourne, 28% of off-the-plan unit settlements received a valuation lower than the contract price.  In Brisbane, where unit values remain 10.5% below their 2008 peak, the proportion was substantially higher, at 48%, although the trend is easing due to the unit construction cycle peaking two years ago and much of the unit supply now absorbed.  

So let just play the % game for Melbourne and yes I am making a lot of assumptions :

Bought 2 Bedroom Apartment OTP for $700,000 several years ago, with a 5% deposit.
Time comes for settlement, property is valued at $630K - 10% less than purchase price. 
I have to come up with x2 my deposit or $35K. If all I had was $35K to start with, where do I find another $35K or X2 my initial savings.
Question is what to do. I can find the money, but I am still down x2 my initial deposit and wait for the market to return. I can loose the deposit and possibility be sued by the developer.

So, if everyone who bought these apartments was under the belief that they would increase in price (free money), what happens when they realise that it can work in reverse, but under this scenario they realise the free money on the way up, turns into hardcore savings on the down side

Got to love leverage and numbers and for 80% of the population blind belief.


----------



## willy1111 (12 October 2018)

Off the plan apartment in Melb where Vals come in low are normally the high rise stuff. They aren't good for cap growth coz they just keep pumping them out.

This was very common through 07-08. A lot of high rise type apartments (blocks that have 100 units+) bought in 07-08 sold 10 yrs later for more or less same price. Didn't stop the rest of stock in Melb, houses, villa units, townhouses, older style apartments with 12 or so in a block increasing 60-100%+ over the same period.

Melb has just gone through 5m population and is expected to hit 8m in the next 30yrs. With that much demand I don't see a massive crash in house prices. There should be reasonable demand for well located, quality housing/apartments to hold prices just as there always has been.


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## luutzu (12 October 2018)

willy1111 said:


> Off the plan apartment in Melb where Vals come in low are normally the high rise stuff. They aren't good for cap growth coz they just keep pumping them out.
> 
> This was very common through 07-08. A lot of high rise type apartments (blocks that have 100 units+) bought in 07-08 sold 10 yrs later for more or less same price. Didn't stop the rest of stock in Melb, houses, villa units, townhouses, older style apartments with 12 or so in a block increasing 60-100%+ over the same period.
> 
> Melb has just gone through 5m population and is expected to hit 8m in the next 30yrs. With that much demand I don't see a massive crash in house prices. There should be reasonable demand for well located, quality housing/apartments to hold prices just as there always has been.




There will always be demand, for pretty much everything. But as they say in economics, no money no demand. 

For instance, around the world, only 10% of total R&D are spent trying to solve 90% of the world's health crisis while 90% are spent trying to solve 10% of the health issue. Some of which aren't really health issue, they being wrinkles and hair lost etc.

Why? No money to be made helping those without money. So demand all you want. Not going to change without cash.

Now... property is just housing really. I'm sure most of us would like a McMansion close to civilisation as much as we all like a healthy home cooked meal all days of the week.

But without easy credit, a person will find housing that suits their budget, not their demand. 

The record low interest rate environment is ending; interest-only mortgages are over... Those on them will find it hard to renegotiate when most of them switch to normal coming year or two. 

Employers know the likelihood of job seekers and employees being in financial stress... so no pay rise, no negotiation.

Potential investors are unlikely to pour more cash into property... lost of jobs, lost of income.

If people haven't overleveraged and can hang on, I'm sure it will work out alright next couple decade. For those that were too optimistic about property... it's not going to be good I reckon.


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## sptrawler (14 October 2018)

From memory, it wasn't long ago that the IMF was bagging Australia, for its un affordable housing, now they are bagging New Zealand for doing something about it.

https://www.rt.com/business/425529-new-zealand-home-sales/

Everyone seems to have an agenda, but none disclose it.


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## satanoperca (18 October 2018)

Prices are down, down, down and will keep going down for some period of time.


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## SirRumpole (23 October 2018)

House prices falling $1,000 a week in Sydney and Melbourne.

https://www.abc.net.au/news/2018-10...g-as-interest-rates-wage-growth-move/10418278


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## sptrawler (23 October 2018)

SirRumpole said:


> House prices falling $1,000 a week in Sydney and Melbourne.
> 
> https://www.abc.net.au/news/2018-10...g-as-interest-rates-wage-growth-move/10418278




I would expect that to accelerate next year.


----------



## luutzu (23 October 2018)

sptrawler said:


> I would expect that to accelerate next year.




Some US Fed guy said he expect 3 more rises by them over next year just to bring the rates back to normal. 

I don't think the bank have passed on much of their new costs of borrowing though right? 

Yea, should be more pain coming.

Was talking to brother in law the other day... he was saying how at $800K for a 2 bedroom apartment... the buyer still need to save $200K for a deposit. Average wage is now some $81K. Not easy to save that much for a deposit at that pay. 

Something gotta give. If it ain't the bank giving easy credit or the bosses giving a raise, sellers will either have to lower by a lot or hang on for a while.


----------



## sptrawler (30 October 2018)

We have been saying for a while, that there is a perfect storm coming for housing, when Labor take over Government.
Looks as though the main stream press, have finally taken note of the indicators, they are starting to print quite a lot on the issue. I think it is about 12 months too late.

https://www.smh.com.au/business/the...on-morgan-stanley-report-20181030-p50crc.html


----------



## SirRumpole (30 October 2018)

sptrawler said:


> We have been saying for a while, that there is a perfect storm coming for housing, when Labor take over Government.
> Looks as though the main stream press, have finally taken note of the indicators, they are starting to print quite a lot on the issue. I think it is about 12 months too late.
> 
> https://www.smh.com.au/business/the...on-morgan-stanley-report-20181030-p50crc.html




In the housing market, as in the stock market there will always be winners and losers, you can't protect everyone all the time nor should you try.

It's been a sellers market in property in the major cities for decades now it's gone the other way, that's what happens in the marketplace.


----------



## luutzu (30 October 2018)

sptrawler said:


> We have been saying for a while, that there is a perfect storm coming for housing, when Labor take over Government.
> Looks as though the main stream press, have finally taken note of the indicators, they are starting to print quite a lot on the issue. I think it is about 12 months too late.
> 
> https://www.smh.com.au/business/the...on-morgan-stanley-report-20181030-p50crc.html




It's a good thing we don't rely on these guys to tell us where the cliff ends.


----------



## sptrawler (31 October 2018)

luutzu said:


> It's a good thing we don't rely on these guys to tell us where the cliff ends.



It's a good thing, first home buyers, couldn't afford to get into the housing market IMO.
There will always be booms and busts, in a capitalist system, it just takes nerve to not have a FOMO.
There will be many opportunities, through a persons life, having a realistic goal and a plan to achieve it is paramount. IMO
No one will tell you where the cliff ends, that's your personal responsibility, it is where greed and common sense meet head on.
There is still a long way to go with the housing downturn.IMO

https://www.smh.com.au/business/com...cent-on-compliance-costs-20181031-p50d11.html


----------



## luutzu (31 October 2018)

sptrawler said:


> It's a good thing, first home buyers, couldn't afford to get into the housing market IMO.
> There will always be booms and busts, in a capitalist system, it just takes nerve to not have a FOMO.
> There will be many opportunities, through a persons life, having a realistic goal and a plan to achieve it is paramount. IMO
> No one will tell you where the cliff ends, that's your personal responsibility, it is where greed and common sense meet head on.
> ...




Yea, seems that it's not just Fear OR Greed. Sometime they both happen at once.


----------



## sptrawler (7 November 2018)

Well everyone is coming on board. 

https://www.smh.com.au/business/the...-40-years-macquarie-says-20181107-p50ejz.html


----------



## satanoperca (7 November 2018)

F--k me, some expert(s) realise that a home in the outer suburbs of a major city in Australia (an island in the middle of nowhere) is worth X8 the average income or under the new metric (x6 the average household income - as who care who looks after the children) is sustainable. 
Seems reasonable to me, not. 

What happened to the country of innovation and not house flipping and cheap credit.


----------



## satanoperca (7 November 2018)

sptrawler said:


> Well everyone is coming on board.
> 
> https://www.smh.com.au/business/the...-40-years-macquarie-says-20181107-p50ejz.html



Sprawler, great link, the tide has turned, just read the comments, Scomo and the RBA should have pulled the heads out of each other arses to realise that how this would play out.

Houses are for shelter, everyone needs shelter, even if it is a tent. Deployment of capital should be for productive means that benefit all in our society.


----------



## sptrawler (7 November 2018)

satanoperca said:


> Sprawler, great link, the tide has turned, just read the comments, Scomo and the RBA should have pulled the heads out of each other arses to realise that how this would play out.
> 
> Houses are for shelter, everyone needs shelter, even if it is a tent. Deployment of capital should be for productive means that benefit all in our society.




At the end of the day, people bought into the bubble, those who think like you and me didn't.

So who you blame is subjective, I find these day's, there is always someone else to blame for people's bad choices.


----------



## satanoperca (7 November 2018)

sptrawler said:


> At the end of the day, people bought into the bubble, those who think like you and me didn't.
> 
> So who you blame is subjective, I find these day's, there is always someone else to blame for people's bad choices.



I don't blame anyone. Everyone makes their own choices.


----------



## luutzu (7 November 2018)

satanoperca said:


> Sprawler, great link, the tide has turned, just read the comments, Scomo and the RBA should have pulled the heads out of each other arses to realise that how this would play out.
> 
> Houses are for shelter, everyone needs shelter, even if it is a tent. Deployment of capital should be for productive means that benefit all in our society.




Too idealistic there Satan.

If the plebs aren't indebted to their eyeballs, how will they listen, beg for a job or three? 

They'll go wild asking for raises every year, demand safety at work, spend weekends with their family or worst... read and think and enjoy life. 

So if you're in charge and a bit short sighed, somewhat psychotic... you'd lower the interest rate to abnormal level to discourage saving, encourage them to borrow. You tell your watchdogs to look the other way, assume that everyone could afford a million or two worth of property, per property. 

that way, you get the less experienced to jump up and down wanting to indebt themselves, pay you and you friends crazy prices with borrowed money. Then you take the cash, take a few holidays... watch and wait as it crashes then you load them for half the price.


----------



## luutzu (7 November 2018)

sptrawler said:


> At the end of the day, people bought into the bubble, those who think like you and me didn't.
> 
> So who you blame is subjective, I find these day's, there is always someone else to blame for people's bad choices.




Choice is often an illusion.

It's like my wife telling me that she will be emptying the bins. That SHE will do it because it's really, really full. She will, right after doing to dishes and putting the kids to bed.

I sometime let her follow her wishes though.


----------



## SirRumpole (7 November 2018)

The thing that annoys me is that some people expect property prices to go up forever. They just don't realise that if house prices exceed the capacity of people to pay then the buyers stop bidding.

It's not rocket science, perpetual motion doesn't exist.

And the scare tactic about negative gearing is just a scare tactic. It's all grandfathered, people who ng now will still be able to do it and it will still be available on new properties. I doubt if the proposed ng changes will have much effect either way.


----------



## luutzu (7 November 2018)

SirRumpole said:


> The thing that annoys me is that some people expect property prices to go up forever. They just don't realise that if house prices exceed the capacity of people to pay then the buyers stop bidding.
> 
> It's not rocket science, perpetual motion doesn't exist.
> 
> And the scare tactic about negative gearing is just a scare tactic. It's all grandfathered, people who ng now will still be able to do it and it will still be available on new properties. I doubt if the proposed ng changes will have much effect either way.




The proposed changes to ng might actually increase property prices more than normal market/credit availability would have it now. For the short term anyway.


----------



## satanoperca (7 November 2018)

luutzu said:


> The proposed changes to ng might actually increase property prices more than normal market/credit availability would have it now. For the short term anyway.



Can you provide some insight into this statement. Given you did clearly state the short term, but still interested in your thoughts.


----------



## luutzu (7 November 2018)

satanoperca said:


> Can you provide some insight into this statement. Given you did clearly state the short term, but still interested in your thoughts.




Being "fully grandfathered" mean properties purchased before the law is enacted will not be affected by the proposed changes. 

So those high income earners who can still afford property now will jump in to take advantage of the current generous subsidies. 

Them jumping in increased property, temporarily. 

I wouldn't know by how much and all that, but that's the logic I reckon.


----------



## satanoperca (7 November 2018)

That sounds reasonable.


----------



## satanoperca (7 November 2018)

Why was ng introduced in the first place? to add to supply of housing so people could have shelter and reduce the burden on govnuts to provide.

I support NG on new builds and think it is a positive policy for govnuts, however this ideal (current situation) has not delivered its intended ideal, instead, investors bought established properties (where the profit has been), not adding to the requirement of shelter (supply), nor adding to economic expansion, business and innovation.


----------



## sptrawler (7 November 2018)

luutzu said:


> Being "fully grandfathered" mean properties purchased before the law is enacted will not be affected by the proposed changes.
> 
> So those high income earners who can still afford property now will jump in to take advantage of the current generous subsidies.
> 
> ...




If that was the case Luu, with the election only 6 months away, I would have thought the price movement would have started happening.
But the price fall, is accelerating, so the next six months will prove you right or wrong.
I'm willing to put money on the fact prices will fall, there is no way anyone is going to house people for minimal gain, unless it is a first time investor.
I got out of it years ago, because it was more trouble than it was worth, that was when negative gearing and CGT was o.k.
Add to that, the first time investor is going to have more difficulty getting a loan, I think you're being optimistic.


----------



## sptrawler (7 November 2018)

satanoperca said:


> Why was ng introduced in the first place? to add to supply of housing so people could have shelter and reduce the burden on govnuts to provide.
> 
> I support NG on new builds and think it is a positive policy for govnuts, however this ideal (current situation) has not delivered its intended ideal, instead, investors bought established properties (where the profit has been), not adding to the requirement of shelter (supply), nor adding to economic expansion, business and innovation.




You may not have bought investment properties, but from my experience, the return on new build investment properties is very low. At best you get a 5% return, without costs, at worst you have a crap tenant or no tenant.


----------



## satanoperca (7 November 2018)

sptrawler said:


> You may not have bought investment properties, but from my experience, the return on new build investment properties is very low. At best you get a 5% return, without costs, at worst you have a crap tenant or no tenant.




I hate forums, this is the exact reason I should not engage, for fu-ks sack, what was the reason behind NG, to add to the supply of rental accommodation by the private sector, so the govnuts didn't have to provide. This is why the policy has not worked, as it is better to invest in established properties, better CG, but not the reason for the policy.

Cheers to all, finished with this forum, wish all a good life, smell the roses, enjoy the sunrise and sunset. But a 1000 post or more, I have enjoyed.


----------



## luutzu (7 November 2018)

sptrawler said:


> If that was the case Luu, with the election only 6 months away, I would have thought the price movement would have started happening.
> But the price fall, is accelerating, so the next six months will prove you right or wrong.
> I'm willing to put money on the fact prices will fall, there is no way anyone is going to house people for minimal gain, unless it is a first time investor.
> I got out of it years ago, because it was more trouble than it was worth, that was when negative gearing and CGT was o.k.
> Add to that, the first time investor is going to have more difficulty getting a loan, I think you're being optimistic.




If my assumptions [guess work? ]  are reasonable, then the fall lately would have been a lot more if investors being attracted to NG wouldn't jump in to have their investment property grandfathered before Labor ruin the party.

Yea, property investment is a pain. Without gov't subsidies, investors and those fund managers better work harder to earn their salt than chugging the cash into property, receive the subsidies and wait for the capital gain.


----------



## willoneau (7 November 2018)

As far as I am aware the government introduced NG so they could get out or at least reduce their property managing ,that also reduces their risk .


----------



## sptrawler (7 November 2018)

satanoperca said:


> I hate forums, this is the exact reason I should not engage, for fu-ks sack, what was the reason behind NG, to add to the supply of rental accommodation by the private sector, so the govnuts didn't have to provide. This is why the policy has not worked, as it is better to invest in established properties, better CG, but not the reason for the policy.
> .




Hang on a minute I didn't mean to upset you, but why should a working person invest their hard earned money into rental properties, when as you say the Government don't want to do it.
Have you seen the losses the Government cop, from social housing, that is why they introduced incentives.
It isn't a lot of fun renting properties, it is a bit like lending your car to someone, that usually doesn't end well either.
I would never recommend building a house to rent, as an investment, for my children.


----------



## SirRumpole (8 November 2018)

sptrawler said:


> Hang on a minute I didn't mean to upset you, but why should a working person invest their hard earned money into rental properties, when as you say the Government don't want to do it.





The politicians seem to do pretty well out of it.

Maybe it should only be available on units rather than single houses, more bang for the buck in terms of accommodation of people.


----------



## notting (12 November 2018)

Disclaimer - Remembering that it is the best place in the world to live.


----------



## sptrawler (19 November 2018)

Also house sizes are at a 22 year low, well that's what the headline says, if you read the article houses are still 30% bigger than 30 years ago.

http://www.thebull.com.au/articles/a/78436-australian-home-size-hits-22-year-low.html


----------



## luutzu (20 November 2018)

sptrawler said:


> Also house sizes are at a 22 year low, well that's what the headline says, if you read the article houses are still 30% bigger than 30 years ago.
> 
> http://www.thebull.com.au/articles/a/78436-australian-home-size-hits-22-year-low.html




True, new builts are bigger than the old 3-bedders in the 80s. But for $1M a pop vs what... $120K? It better be. Land is way, way down though. 

The build quality might not be too good either. I think the builders' engineers have been working overtime to bring the costs down. Waffle pods slabs that sit directly on the ground, would move in clayey soil if the owner decided not to concrete an apron around... plastic water/gas pipes the rats will get to after a few years.

That's just from a fair number of anecdotals.


----------



## sptrawler (20 November 2018)

luutzu said:


> True, new builts are bigger than the old 3-bedders in the 80s. But for $1M a pop vs what... $120K? It better be. Land is way, way down though.
> 
> The build quality might not be too good either. I think the builders' engineers have been working overtime to bring the costs down. Waffle pods slabs that sit directly on the ground, would move in clayey soil if the owner decided not to concrete an apron around... plastic water/gas pipes the rats will get to after a few years.
> 
> That's just from a fair number of anecdotals.




Families have got smaller also, I think there will be a return to smaller houses, as the cost to heat and cool them climbs.


----------



## luutzu (20 November 2018)

sptrawler said:


> Families have got smaller also, I think there will be a return to smaller houses, as the cost to heat and cool them climbs.




Small apartment. Loads of debt. Thin walls. No performance and little interests to have more than 1, letting accident bring the second.


----------



## sptrawler (20 November 2018)

luutzu said:


> Small apartment. Loads of debt. Thin walls. No performance and little interests to have more than 1, letting accident bring the second.



Yep won't be long and we will be getting on leaky boats and heading for Asia.


----------



## luutzu (20 November 2018)

sptrawler said:


> Yep won't be long and we will be getting on leaky boats and heading for Asia.




Wouldn't be that bad.  That and Asia [China] will head here to claim the place soon enough.

Good thing Uncle Sam and our ScoMo is working with PNG to set up a military base there. Protecting gas and oil first... other things second. Nobody's going to exploit Australians other then the (Western) NeoCons my friend. 


Spoke to an VNese tradie yesterday. He said Australia is fast becoming like the VN he escaped when it come to property. 

In VN, most young kids can just forget about owning their own home. It's not even in the mind of most he said. They just have to either be born rich, or live in the countryside where the parents could slice off a corner somewhere on their lot. 

Just looked at properties and they're still very, very high. The average property will need another $300K off to make any sense. Seems that those within 1h train to the city are still priced at that builder/re-development potential. i..e $1.5M for a corner lot you could knock down, put up two small mcMansion on ~350m2 with flipping price at about $1.2M+ a pop soon 

We're Australia right? Not the size of HK yah?


----------



## sptrawler (20 November 2018)

luutzu said:


> Wouldn't be that bad.  That and Asia [China] will head here to claim the place soon enough.
> 
> Good thing Uncle Sam and our ScoMo is working with PNG to set up a military base there. Protecting gas and oil first... other things second. Nobody's going to exploit Australians other then the (Western) NeoCons my friend.
> 
> ...




Well Thailand is getting heaps of manufacturing industries, their quality of life is improving very quickly.
A very good friend of mine has a Thai partner and spends 50% of his time up there, he says things are going crazy up there.


----------



## satanoperca (20 November 2018)

The slide down hill is gaining some momentum, still just a small correction. Been waiting for the apartments to start falling, that is when things will get interesting.

As proof of how property is a long term investment :
2 Bedroom House in Port Melbourne sold mid 2017 for $1,040,000
Sold on the weekend $1,007,000
Take into consideration just stamp duty and selling fees and a nice little 10% lose or $100,000


----------



## luutzu (20 November 2018)

satanoperca said:


> View attachment 90394
> 
> The slide down hill is gaining some momentum, still just a small correction. Been waiting for the apartments to start falling, that is when things will get interesting.
> 
> ...




Property investors, particularly those getting in the past couple years, are either already under or very close to losing it. Not going to end well. 

A quick look on REA listings for Chipping Norton, Western Sydney... similar sized land with similar house sold last year for about $1.1M... a couple I saw that sold in Nov goes for the low $900K. 

And that's a nicer, more expensive area in that neck of the woods. It's quite a nice place but if you google map it, too close to heavy industrial area, in those 100-year flood plane. But close to the waters and parks. Just hope no industrial accidents or fire.

Come to think of it, most of Western Sydney's full of industrial parks with highways. Average, run-down small houses... and somehow they're all going for $800K+ on average.


----------



## luutzu (20 November 2018)

sptrawler said:


> Well Thailand is getting heaps of manufacturing industries, their quality of life is improving very quickly.
> A very good friend of mine has a Thai partner and spends 50% of his time up there, he says things are going crazy up there.




Yea, life's pretty good for those with dollars over there now. But then life's good anywhere for those with dollars I guess 

But they're definitely getting richer than a few decades ago. It's quite noticeable. 

Reminds me of my honeymoon there some years ago. I went into a jewellery shop to exchange the AUD. Tried to negotiate with the owner for a better rate, saying that I got a large amount to exchange.

She asked how much to exchange... $300 dollars! 

"That's not big. $300 is not big."


----------



## sptrawler (29 November 2018)

I said ages ago there seemed to be a lot of building going on, while the population of W.A seemed to be falling, well the oversupply situation has hit home.
Building starts in W.A are the lowest since records were started.

https://thewest.com.au/business/hou...tion-falls-to-lowest-on-record-ng-b881034793z


----------



## sptrawler (4 December 2018)

luutzu said:


> Property investors, particularly those getting in the past couple years, are either already under or very close to losing it. Not going to end well.
> .




It may well end up, that those who got in in the past 10 years, wished they hadn't. At least then everyone can say, lucky young people, they've never had it so cheap.

https://www.smh.com.au/business/ban...d-to-dwarf-90s-recession-20181203-p50jvi.html

Imo in about 5-10 years, there will be an outcry, for the poor' baby boomers'.


----------



## luutzu (4 December 2018)

sptrawler said:


> It may well end up, that those who got in in the past 10 years, wished they hadn't. At least then everyone can say, lucky young people, they've never had it so cheap.
> 
> https://www.smh.com.au/business/ban...d-to-dwarf-90s-recession-20181203-p50jvi.html
> 
> Imo in about 5-10 years, there will be an outcry, for the poor' baby boomers'.




Sydney property flippers are getting into trouble...

https://www.afr.com/real-estate/syd...gn_code=nocode&promote_channel=social_twitter


Buyers in the business of flipping houses are starting to come unstuck with many finding they have mistimed the market and now face substantial losses. 

In the past two years a buyer frenzy across Sydney saw old houses ripe for renovation being snapped up for inflated prices by investors hoping to make a tidy profit after a quick makeover.

In a hot market it was a tried and tested method that could garner clever investors hundreds of thousands of dollars in profit. But prices have now fallen 9.5 per cent since they peaked in July 2017 and those who bought and renovated just as the market turned are now facing problems when they go to sell.

"Now is not the time to be flipping," director at Ray White Surry Hills Ercan Ersan said. "Last year there was a real fear of missing out, there was a sense the market would keep going up and up, but, whether it's shares, property or cash itself, markets fluctuate.....


----------



## sptrawler (4 December 2018)

luutzu said:


> *"Now is not the time to be flipping,*" director at Ray White Surry Hills Ercan Ersan said. "Last year there was a real fear of missing out, there was a sense the market would keep going up and up, but, whether it's shares, property or cash itself, markets fluctuate.....




Now is not the time for flipping, like hell, IMO when labor get in they will be stuck with the house for years. 
I would say it is the perfect time to cut your losses, if you're having trouble carrying the debt, it isn't going to get better in the foreseeable future.


----------



## luutzu (4 December 2018)

sptrawler said:


> Now is not the time for flipping, like hell, IMO when labor get in they will be stuck with the house for years.
> I would say it is the perfect time to cut your losses, if you're having trouble carrying the debt, it isn't going to get better in the foreseeable future.




The agent the article quoted reckons now is the best time to buy and also to sell 

He wasn't referring to his business interest of course. 

Like a recent agent description I read... investors and renovators, bring your tool box or your demolition machine. 

Which is it? A reno is very different to a demo.


----------



## sptrawler (4 December 2018)

luutzu said:


> The agent the article quoted reckons now is the best time to buy and also to sell
> 
> He wasn't referring to his business interest of course.
> .




I read somewhere that home listings had jumped 8%, the biggest jumps in Sydney and Melbourne, apparently.
It doesn't sound like a sellers market to me, especially when prices are falling.


----------



## sptrawler (11 December 2018)

All the ducks are lining up, just one more requirement. IMO
Should be some good buys, for first home buyers mid to late next year.

https://thewest.com.au/business/pro...enario-in-housing-market-crash-ng-b881045566z


----------



## luutzu (11 December 2018)

sptrawler said:


> All the ducks are lining up, just one more requirement. IMO
> Should be some good buys, for first home buyers mid to late next year.
> 
> https://thewest.com.au/business/pro...enario-in-housing-market-crash-ng-b881045566z




Yay. The plebs can finally pay $650K for a 3 bedroom run down fibro in Western Sydney. All that's needed now is $300K on top for the knock down, rebuild, rental accommodation.

At an average salary of some $50K in the area, it'll take about two lifetime to pay it off.


----------



## sptrawler (11 December 2018)

luutzu said:


> Yay. The plebs can finally pay $650K for a 3 bedroom run down fibro in Western Sydney. All that's needed now is $300K on top for the knock down, rebuild, rental accommodation.
> 
> At an average salary of some $50K in the area, it'll take about two lifetime to pay it off.



The areas around Perth where you can pick up 3 X 1's for $250K.
Oh I forgot the World revolves around Sydney.


----------



## luutzu (11 December 2018)

sptrawler said:


> The areas around Perth where you can pick up 3 X 1's for $250K.
> Oh I forgot the World revolves around Sydney.




Revolves around places that matter Homer 

Perth... a fancier mining town for mineral executives and con artists.


----------



## PZ99 (11 December 2018)

Despite dire predictions this week of a looming collapse of the property market, which would trigger economic disaster, new figures show a lift in the number of recent homebuyers.

Housing finance data released today by the Australian Bureau of Statistics (ABS) has revealed an increase in both the number and total value of mortgages issued in October

https://www.news.com.au/finance/eco...s/news-story/e737e15771171de17c8c0006fba184d6


----------



## sptrawler (11 December 2018)

PZ99 said:


> Despite dire predictions this week of a looming collapse of the property market, which would trigger economic disaster, new figures show a lift in the number of recent homebuyers.
> 
> Housing finance data released today by the Australian Bureau of Statistics (ABS) has revealed an increase in both the number and total value of mortgages issued in October
> 
> https://www.news.com.au/finance/eco...s/news-story/e737e15771171de17c8c0006fba184d6




Hopefully, that's the bottom then.


----------



## satanoperca (11 December 2018)

If you need to understand the current status quo, then watch this video, it is brilliant.


----------



## qldfrog (11 December 2018)

ato will receive thank you letters from china soon:
https://www.businessinsider.com.au/housing-foreign-buyers-government-crackdown-2018-12


----------



## sptrawler (19 December 2018)

I am starting to see a lot of houses, that are put under contract, being returned to the market.
The banks must be meeting their lending obligations.
Interesting that the RBA and the W.A Government, are now asking the banks not to tighten lending, it's a funny old World.IMO


----------



## sptrawler (8 January 2019)

Well it looks as though the worst might be over for the Banks. The housing sector supplies a lot of jobs, now all we need do, is get people to want to build one. lol

https://thewest.com.au/business/hou...as-regulator-vows-no-more-hits-ng-b881066211z


----------



## basilio (8 January 2019)

No surprise to realise housing prices in the big cities are falling.  Found an excellent report on ABC which analyses where  prices are collapsing and looks at historical comparisons.
* House of cards *
By Inga Ting, Geoff Thompson and Alex McDonald

7.30

Updated 17 Dec 2018, 10:12am
Published 10 Dec 2018, 6:02am
The tide is turning on Australia’s $7.6-trillion property market.

Home prices in more than four out of five council areas have reached their peak and are sliding towards an unknown nadir, according to the latest figures from property market analyst CoreLogic.

As the slump moves into its second year with little or no prospect of rebound, the downturn in capital city property markets threatens to drag down the rest of the economy.

And with a mixed outlook for the global economy, doubts are surfacing about where Australia is going to find the fuel to extend its near-record run of 27 years of unbroken economic growth.

“The likelihood of Australia facing the longest housing downturn in history has increased,” says UBS chief economist George Tharenou.

“It seems quite plausible to me that house prices will continue to fall for all of the next year into 2020.”
https://www.abc.net.au/news/2018-12...as-property-downturn-hit-your-suburb/10588960


----------



## SirRumpole (8 January 2019)

basilio said:


> “It seems quite plausible to me that house prices will continue to fall for all of the next year into 2020.”




So why is it bad news that housing is becoming more affordable ?

Incentives for investors distorted the market in the first place, now that investors are pulling out prices will go to a level that the average income earners will be able to afford.


----------



## sptrawler (8 January 2019)

basilio said:


> No surprise to realise housing prices in the big cities are falling.  Found an excellent report on ABC which analyses where  prices are collapsing and looks at historical comparisons.
> * House of cards *
> By Inga Ting, Geoff Thompson and Alex McDonald
> 
> ...




It is the same as most items in an open market, once the supply outstrips demand, the price falls untill the supply meets the demand again.


----------



## sptrawler (8 January 2019)

SirRumpole said:


> So why is it bad news that housing is becoming more affordable ?
> 
> Incentives for investors distorted the market in the first place, now that investors are pulling out prices will go to a level that the average income earners will be able to afford.




That's what the media would have you believe, but the Sydney/Melbourne boom, commenced recently negative gearing commenced 30 odd years ago.
One of the easiest things to manipulate is public opinion, what drove the prices so hard and fast IMO was easy credit and greed, now that greed is being punished. 
So be it, at the end of the day, all a house does is keep the weather off you.


----------



## luutzu (8 January 2019)

basilio said:


> No surprise to realise housing prices in the big cities are falling.  Found an excellent report on ABC which analyses where  prices are collapsing and looks at historical comparisons.
> * House of cards *
> By Inga Ting, Geoff Thompson and Alex McDonald
> 
> ...




Great article there Bas. Very well researched.


----------



## SirRumpole (8 January 2019)

sptrawler said:


> easy credit and greed, now that greed is being punished.




Greed by whom ?


----------



## luutzu (8 January 2019)

SirRumpole said:


> So why is it bad news that housing is becoming more affordable ?
> 
> Incentives for investors distorted the market in the first place, now that investors are pulling out prices will go to a level that the average income earners will be able to afford.




Bad because people got to learn to struggle to make ends meet with a roof over their heads? 

Investors aren't making any money so that's bad. 

No more stamp duty for that gravy train. Bad too.

Councils might, though I doubt it, have to reduce their rates seeing how property is crashing now. So that's bad. 

Construction making up some 15% [?] of the workforce will be struggling. Infrastructure and all that boom is almost off the drawing board... 

No consumption and spending beyond the absolute minimum; capital gains and negative gearing will  mean little to no tax for most Aussies for years to come. 

Yea, we're about to get properly done for.


----------



## basilio (8 January 2019)

SirRumpole said:


> So why is it bad news that housing is becoming more affordable ?
> 
> Incentives for investors distorted the market in the first place, now that investors are pulling out prices will go to a level that the average income earners will be able to afford.




In theory I totally agree with you Rumpy. In fact for a long time the value of properties was tied to
1) How much potential buyers could afford based on one income families
2) A rent return of around 5%. Again the rents were in line with capacity to pay.

The housing market has been corrupted by the process of turning it into a get rich quick  ponzi scheme. It has been financed by banks and promoted by real estate agents and property gurus. As long as enough people believed the hype it was self supporting. When belief in the "bigger bunny" concept failed, the artificially inflated markets can't sustain themselves.

The broader issue is the amount of debt floating around the world which has pumped up asset prices of property, shares and almost any other asset that could be "invested".

https://www.abc.net.au/news/2018-11...-cause-of-the-next-stock-market-jolt/10486554
https://www.abc.net.au/news/2018-11...ng-housing-and-why-we-fear-the-truth/10509138
https://www.abc.net.au/news/2018-12-10/how-low-can-stocks-and-property-go/10598708


----------



## sptrawler (8 January 2019)

SirRumpole said:


> Greed by whom ?



By all that were driven by FOMO, whatever the reason, nobody pushed anyone's arm up their back to buy into the bubble.
The same happens with the share market, herd mentality. When it takes off people jump on, when it crashes, people get burnt.
Life is about choices and consequences, we are trying to find ways of encouraging people to make choices, without explaining there are consequences.
Just another way of dumbing down people.
That's why people now, always blame someone else, for their poor choices.
Maybe they should think more, before making the decision, in the first place.
What are we hearing now, I can't afford the loan, why did they give it to me. DUH


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## basilio (8 January 2019)

One of the key points made in the ABC stories is that* we don't have a buyers market in property. *Property prices are falling but basically it is because 

1) The music has stopped for the  get rich quick brigade and they are now caught trying to sell properties they don't own, at prices they can't sustain to people who can't afford them.

2) Real dinkum buyers (not speculators) are unable to get the credit for house purchasers at anywhere near their current prices as banks drastically tighten lending criteria.


----------



## basilio (8 January 2019)

sptrawler said:


> Life is about choices and consequences, we are trying to find ways of encouraging people to make choices, without explaining there are consequences.
> Just another way of dumbing down people.
> That's why people now, always blame someone else, for their poor choices.




Interesting observation. I would have really liked there to have been more consequences around when financial institutions were throwing money at people to buy property because it would never go down.
I wouldn't mind  some consequences for the myriad property gurus who created the ponzi scheme in the first place.
And at the start of the line there are the political parties who introduced capital gains exemptions and encouraged and took part in the property speculation game.  Any consequences for them?


----------



## SirRumpole (8 January 2019)

luutzu said:


> No consumption and spending beyond the absolute minimum; capital gains and negative gearing will mean little to no tax for most Aussies for years to come.




Cheaper houses, lower mortgage repayments, more disposable income , increased consumer spending, more GST revenue ?


----------



## sptrawler (8 January 2019)

basilio said:


> Interesting observation. I would have really liked there to have been more consequences around when financial institutions were throwing money at people to buy property because it would never go down.
> I wouldn't mind  some consequences for the myriad property gurus who created the ponzi scheme in the first place.
> And at the start of the line there are the political parties who introduced capital gains exemptions and encouraged and took part in the property speculation game.  Any consequences for them?



There you go, all the people who forced the person, into taking out a loan.
It's a bit like all the fast food outlets, causing obesity.
The biggest ponzi scheme going in Australia, is telling everyone that it isn't their fault, then they can feel good while they keep repeating the mistake.
The people telling them, should be fined.


----------



## sptrawler (8 January 2019)

SirRumpole said:


> Cheaper houses, lower mortgage repayments, more disposable income , increased consumer spending, more GST revenue ?



We will see how that works out, the figures should be coming through soon.


----------



## luutzu (8 January 2019)

SirRumpole said:


> Cheaper houses, lower mortgage repayments, more disposable income , increased consumer spending, more GST revenue ?




Yes, true. But that's reconstruction after the demolition. The phase we're in right now is the demo.

Looking around where my folks live, forget about where I live, it's a few hundreds K more... working class area; basically 50+ year old houses, mostly cladding/fibro and brick veneer 3-bedder... Still going for some $700k. The cheaper $650 are fibros you need to knock down. 

Man, it's a big ask on the budget to ask working people to pay close to a million if they want a liveable house.


----------



## sptrawler (8 January 2019)

luutzu said:


> Yes, true. But that's reconstruction after the demolition. The phase we're in right now is the demo.
> 
> Looking around where my folks live, forget about where I live, it's a few hundreds K more... working class area; basically 50+ year old houses, mostly cladding/fibro and brick veneer 3-bedder... Still going for some $700k. The cheaper $650 are fibros you need to knock down.
> 
> Man, it's a big ask on the budget to ask working people to pay close to a million if they want a liveable house.




Don't worry, it has a way to go yet.
Friends of ours, have a unit they paid $140k, 15years ago, the one next door just went under offer $180K.


----------



## luutzu (8 January 2019)

sptrawler said:


> Don't worry, it has a way to go yet.
> Friends of ours, have a unit they paid $140k, 15years ago, the one next door just went under offer $180K.




Yea, especially apartments. 

Sad to see but the poor people buying apartments and are hoping to hang on through this cycle to hopefully have something for retirement... I think they'll be in for a big disappointment. 

The built quality and lowering of standards mean they'll be lucky to not have major rework after a few years. Hanging onto them longer and they'll realise that buildings do deteriorate and the cost to renovate ain't cheap. And that's if the original builder did a proper job with the foundation and structural stuff. 

Judging by Opal and other stories I've heard... these aren't built to last.


----------



## satanoperca (8 January 2019)

Still in correction mode only, nothing to fear just yet.


----------



## Smurf1976 (8 January 2019)

sptrawler said:


> the Sydney/Melbourne boom, commenced recently negative gearing commenced 30 odd years ago.



I don’t know when it commenced but it was getting out of hand by 2003 that I recall most definitely. The other states likewise about that time were getting more expensive and that’s also when the boom in TV property shows was getting going.


----------



## sptrawler (8 January 2019)

Smurf1976 said:


> I don’t know when it commenced but it was getting out of hand by 2003 that I recall most definitely. The other states likewise about that time were getting more expensive and that’s also when the boom in TV property shows was getting going.



The point I was making was, the Sydney/Melbourne house price rise can't be laid solely at the feet of negative gearing, as it happened over such a short period.
Greed and the ability to buy and flip at a profit, to another buyer in a short period, caused the prices to skyrocket as happens in the stock market, bit coin etc.
The ease of getting a loan helped, but I'm sure you nor I jumped on board, when it would have been quite easy to do so.
Probably because we are conservative investors, not because we couldn't have got a negative geared loan.
But now I'm expected to believe, it was the ability to get a loan that was the motive behind the purchase, not the expectation of making money.
Negative gearing should have been tightened up years ago, I had that debate with Sydboy a long time ago.
But it has its place, however what Labor is suggesting, is going from the sublime to the ridiculous. IMO


----------



## jbocker (8 January 2019)

luutzu said:


> Yea, especially apartments.
> 
> Sad to see but the poor people buying apartments and are hoping to hang on through this cycle to hopefully have something for retirement... I think they'll be in for a big disappointment.
> 
> ...



Add to that the costs of Strata fees there is a huge variance, seen some in Perth $1100 a quarter, no pool, no lift elevator. Relatively new build. Must be a scam ongoing collection system set up.
I am currently looking for a place to buy and live, a buyers market but I haven't found anything that meets all requirements yet.


----------



## satanoperca (8 January 2019)

Negative gearing is a failed policy, with over 80% of investors purchasing established properties, it is hardly adding to the rental stock, cannot blame investors, as the growth has been and always will be in established areas.

This recent boom can be attributed to 3 things :
1. Cheap or very cheap money and IO loans
2. Foreign investors being able to purchase established property, how does that benefit the population
      A) like to add, the massive growth in apartment developments funded by foreign money might be of pure luck an advantage down the track.
3. High immigration to offset that we have being going backwards as an economy, something had to replace the mining boom.


----------



## sptrawler (8 January 2019)

satanoperca said:


> Negative gearing is a failed policy, with over 80% of investors purchasing established properties, it is hardly adding to the rental stock, cannot blame investors, as the growth has been and always will be in established areas.



If you can only negative gear new build properties, and capital gains is going to be about 38%.
Who would build a rental property for a return of 3% after costs?
I may be wrong, but anybody who has the money to build a new home, is highly unlikely to want to rent it out. Unless it is their first foray into the rental market. IMO
The other thing with negative gearing, there is already a rule in place, that states that the investment should have a likely hood of becoming positive geared, the ATO is in control of that.


----------



## satanoperca (8 January 2019)

sptrawler said:


> If you can only negative gear new build properties, and capital gains is going to be about 38%.
> Who would build a rental property for a return of 3% after costs?
> I may be wrong, but anybody who has the money to build a new home, is highly unlikely to want to rent it out. Unless it is their first foray into the rental market. IMO




Interesting, don't understand the 38% CG (over what period of time), however, why do investor buy established properties and rent them out for 3% (current best market return in the major cities).

" I may be wrong, but anybody who has the money to build a new home, is highly unlikely to want to rent it out. Unless it is their first foray into the rental market."
You are wrong, you assumed houses, why do you think there has been a boom in apartments, they are new and are properties.

Regardless, housing is for shelter, until we as a nation look towards other endeavors to build wealth say through innovation, nothing will change, except our standard of living will decline.

I don't blame investors for the current situation, it fairly sits with our gutless pollies who provide no other alternative but to invest in established properties.


----------



## Skate (8 January 2019)

jbocker said:


> Add to that the costs of Strata fees there is a huge variance, seen some in Perth $1100 a quarter, no pool, no lift elevator. Relatively new build. Must be a scam ongoing collection system set up.
> I am currently looking for a place to buy and live, *a buyers market* but I haven't found anything that meets all requirements yet.




jbocker, best of luck on your house hunting.

I'm a bit over it, constantly being told *"it's a buyers market"*

Well, it is a buyers market, till you want to buy one.

Skate.


----------



## Smurf1976 (8 January 2019)

satanoperca said:


> Regardless, housing is for shelter, until we as a nation look towards other endeavors to build wealth say through innovation, nothing will change, except our standard of living will decline.



This.

Extracting or making something physical or providing services and intellectual content of actual value builds wealth. Ramping up the price of a pile of bricks that have been sitting there for 50 years doesn’t.

We’ve got 40% of our national population living in two cities both of which have become heavily reliant on money shuffling rather than producing anything of actual value. That’s not a good situation.


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## SirRumpole (8 January 2019)

Smurf1976 said:


> Extracting or making something physical or providing services and intellectual content of actual value builds wealth. Ramping up the price of a pile of bricks that have been sitting there for 50 years doesn’t.




That's the point of Labor's NG proposal, keep it for new properties only.


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## sptrawler (8 January 2019)

SirRumpole said:


> That's the point of Labor's NG proposal, keep it for new properties only.



You mean keep it for the wealthy only.


----------



## satanoperca (8 January 2019)

Smurf, I am confused, I don't understand what you are discussing.

Removal NG on established is good? YES/NO
Removal of the 50% discount on CG is good? YES/NO


----------



## sptrawler (8 January 2019)

Well it looks as though the Libs are going to wedge Shorten, on the negative gearing and capital gains changes, it should make for an interesting argument.

https://www.smh.com.au/politics/federal/frydenberg-20190108-p50q67.html


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## SirRumpole (8 January 2019)

sptrawler said:


> You mean keep it for the wealthy only.




Keep it for the productive not the non productive.


----------



## sptrawler (8 January 2019)

satanoperca said:


> Interesting, don't understand the 38% CG (over what period of time), however, why do investor buy established properties and rent them out for 3% (current best market return in the major cities).



Question 1. If the investor is on the top tax bracket, which is what everyone is saying, is forcing first home buyers out of the market.
(Back of the napkin) top tax rate approx 49%, capital gain 50% reduction at 49% tax rate =approx 25% tax. Change that to 25% reduction = +12.5% on top of the 25% approx 37.5% effective tax.

Question 2. Investors buy established in most cases, because they can buy to suit their pocket and secondly they are ready to go as soon as the property settles, to build can take 12 months. 
Also most investment properties are owned by people on $150k or less, they can buy a cheap house or unit in a cheap suburb and rent it out, to the less fortunate. Then build up equity and sell, then buy something better, what is it someone on here said "wash, rinse, repeat".
It is how a lot of working class people get ahead, whether you believe silly Billy or not.


----------



## sptrawler (8 January 2019)

SirRumpole said:


> Keep it for the productive not the non productive.



Well then stop it for all, not just the working class.
Or is it o.k now for Labor to give tax breaks to the rich?


----------



## SirRumpole (8 January 2019)

sptrawler said:


> Well then stop it for all, not just the working class.
> Or is it o.k now for Labor to give tax breaks to the rich?




I wouldn't care if NG disappeared completely but encouraging people to build houses and add to the supply and therefore reducing the price  doesn't seem a bad idea to me.


----------



## sptrawler (8 January 2019)

SirRumpole said:


> I wouldn't care if NG disappeared completely but encouraging people to build houses and add to the supply and therefore reducing the price  doesn't seem a bad idea to me.



Right, so if James Packer builds a $10m house and Murdoch builds a $10m house, then lease them to each other and claim a $9m loss that's fine?
But as long as someone can't negative gear a $200k 3 x 1 in Tamworth, all is good in the land of milk and honey?
Weird reasoning.IMO
But I guess as long as Labor come up with it, it must be good for you.
Just another brain fart, from Labor. IMO


----------



## Smurf1976 (8 January 2019)

satanoperca said:


> Smurf, I am confused, I don't understand what you are discussing.



I was expanding a bit on your comment that housing is for shelter and the nation needs to look to other things as a means of wealth creation. 

I think it's a point that hasn't been well grasped at the political or general public level that simply funneling more and more money into things which already exist isn't going to make the nation prosper.

On the question of negative gearing and so on, my main concern is that property prices are now so far out of alignment with anything else that the primary focus needs to be on bringing about an orderly fix rather than an abrupt one which would have broader economic effects. So my thought is that policy change should be done with a firm eye on the market rather than for purely ideological reasons. A sudden crash won't help first home buyers if it takes the broader economy with it and puts them out of a job.

The housing bubble has grown so large that fixing it is going to take years. Either prices slowly dropping over years or an abrupt fall and then we spend years cleaning up the economic mess that results. There's no good answer but the former sounds better to to me than the latter. Either way it's going to take years though.


----------



## sptrawler (8 January 2019)

Smurf1976 said:


> On the question of negative gearing and so on, my main concern is that property prices are now so far out of alignment with anything else that the primary focus needs to be on bringing about an orderly fix rather than an abrupt one which would have broader economic effects. So my thought is that policy change should be done with a firm eye on the market rather than for purely ideological reasons. A sudden crash won't help first home buyers if it takes the broader economy with it and puts them out of a job.




That pretty well nails it Smurph.
Ill thought out vote catching, garbage. IMO
Probably silly Billy will dump it, as is being mentioned in the press, and Bowen will be thrown under the bus. Kills two birds with one stone, gets rid of a stupid idea and also gets rid of the opposition for his job.IMO


----------



## SirRumpole (8 January 2019)

sptrawler said:


> Right, so if James Packer builds a $10m house and Murdoch builds a $10m house, then lease them to each other and claim a $9m loss that's fine?




No it isn't fine.

Limiting the number of ng properties per taxpayer would be better, don't know if Labor thought of that though.


----------



## sptrawler (8 January 2019)

SirRumpole said:


> No it isn't fine.
> 
> Limiting the number of ng properties per taxpayer would be better, don't know if Labor thought of that though.



Just about anything would have been better, than what they came up with.IMO
Limit NG of established homes, to a maximum of $400k and a gross income of less than $150k.
People on over $150k can only NG new builds, to a maximum of $750k in total.
It isn't rocket science.
At least that would allow the low value rental market to survive, and let low income workers build a small asset base, for their retirement.
Even the franking credit changes, only really effects the little person.
The big issue is why labor is hitting the little man? while leaving the big end of town alone.
I guess it is because they can.


----------



## luutzu (8 January 2019)

Smurf1976 said:


> I was expanding a bit on your comment that housing is for shelter and the nation needs to look to other things as a means of wealth creation.
> 
> I think it's a point that hasn't been well grasped at the political or general public level that simply funneling more and more money into things which already exist isn't going to make the nation prosper.
> 
> ...




If it's anything like the US post-GFC, a lot of rich people will clean up alright.

Some ten million families lost their homes and life's savings. BlackStone/Rock [?] and entrepreneurs loads up hundreds of millions of properties; smarter ones like Mnuchin buy a bank or two... then go to work owning the properties to rent the new landless peasants.

In nicer places, closer to the city etc., they gentrify the heck out of it. In everyday poor neighbourhood, hike up and invented new fees for every freakin thing.

Change's coming to Australia. And it ain't good.


----------



## satanoperca (9 January 2019)

From the AFR - interesting. https://www.afr.com/real-estate/mal...pc-default-rate-on-apartments-20181218-h199jj

"In all, 97 per cent of the apartments have already sold off the plan, with about 70 per cent of those selling to offshore buyers. Prices ranged from $485,000 for a one-bed apartment to $875,00 for a two-bed, two-bath unit."

So the truth is 85% of apartments selling to offshore buyers.
And they are cheap at nearly $900K for a 2 bedroom apartment. If you want a 5% gross yield, only $865 per week, a bargain, teachers, nurses and 75% of the average wage earners can afford that. NOT

"Home prices have dropped 7 per cent in Melbourne in the last year and new apartments, which fell up to 20 per cent in value upon settlement in 2018, "

Don't see that in the papers, so the developer is saying from purchase of the plan to settlement, on a 2 bedder, I have just lost a small $175K, based on Joe - the best treasurer in the world that is only 1 years salary for the average worker.

"One of the biggest apartment developers in Melbourne – Malaysia's UEM Sunrise – is prepared for as much as a 10 per cent default rate on the settlement of apartments in its $330 million CBD tower"

That is good to hear, only 10% - bull****

But this to me shows the height of the bubble that has been created :

"Mayfair comprises 158 residences of one- to five-bedrooms, ranging in size from 70 square metres to 556 square metres. Prices start at $823,000. The penthouses are listed for up to $13.1 million."

F--k me, luxury one bedroom for $823K, would want a blow j-b every day for that price. Again 5% gross yield, over $850 per week, sounds like a bargain to me.


----------



## satanoperca (9 January 2019)

sptrawler said:


> Just about anything would have been better, than what they came up with.IMO
> Limit NG of established homes, to a maximum of $400k and a gross income of less than $150k.
> People on over $150k can only NG new builds, to a maximum of $750k in total.
> It isn't rocket science.




Yes it is rocket science, or it would have been solved decades ago.

Great idea, just one question, how do you police your policy. 
Secondly, not to much to buy at under $400K, and what happens when a property goes from 300K to 410K, I can no longer NG it. Stupid arse policy.

KISS theory always applies. 
NG on new builds only and/or you can clam expenses on established property against the same asset class.


----------



## luutzu (9 January 2019)

satanoperca said:


> From the AFR - interesting. https://www.afr.com/real-estate/mal...pc-default-rate-on-apartments-20181218-h199jj
> 
> "In all, 97 per cent of the apartments have already sold off the plan, with about 70 per cent of those selling to offshore buyers. Prices ranged from $485,000 for a one-bed apartment to $875,00 for a two-bed, two-bath unit."
> 
> ...




I like both the facts and the illustration.


----------



## sptrawler (9 January 2019)

satanoperca said:


> NG on new builds only and/or you can clam expenses on established property against the same asset class.



So it stays as a tax dodge for the rich at the expense of the poor.
By the way are we going to reduce the debate to a slanging match?


----------



## sptrawler (9 January 2019)

satanoperca said:


> Great idea, just one question, how do you police your policy.



The ATO can police anything they wish, just check out how they police super and its changes.
When you report on an investment property at year end, there is a section for maint/repairs, statutory costs and loan interest. 
So if a maximum that a person can borrow is known and the current interest rate is known, it isn't rocket science to work out the maximum allowable deduction. FFS


*Secondly*, not to much to buy at under $400K, and what happens when a property goes from 300K to 410K, I can no longer NG it.[/QUOTE]

I live in Perth, I'm quoting what I'm familiar with, of course.

Secondly, what happens when the property goes from $300k to $400k, well as you would say F*** all, because the loan against the property hasn't changed.
It still cost $300 and that is the loan that is geared, obviously for some it will be rocket science and possibly beyond their mental ability.

Just because you think it is a stupid arsed idea, doesn't in itself make you correct.


----------



## satanoperca (9 January 2019)

Sorry Sptrawler, I failed to understand your discussion.

Funny how you slang Labor for their policy, but if someone questions your idea, you are upset, weird world we live in.

"So it stays as a tax dodge for the rich at the expense of the poor." The rich will find another asset class to invest in, allowing your moms and dads a chance at a much reduced price.


----------



## sptrawler (9 January 2019)

satanoperca said:


> Sorry Sptrawler, I failed to understand your discussion.
> 
> Funny how you slang Labor for their policy, but if someone questions your idea, you are upset, weird world we live in.
> 
> "So it stays as a tax dodge for the rich at the expense of the poor." The rich will find another asset class to invest in, allowing your moms and dads a chance at a much reduced price.



Mate you are the one who started the personal abuse.

I will slag off against a Government policy if I think it is stupid, I wouldn't slag off against another poster, unless they start the practice.
You didn't question my idea, you said it was stupid, there is a difference.

The rich will always find ways to minimise tax, because it is worth their effort.
What annoys me, is when Labor who profess to look after the interests of the 'average working man', is doing something that hurts them in a big way.
While protecting the scam for the wealthy.


----------



## Darc Knight (9 January 2019)

sptrawler said:


> The ATO can police anything they wish, .




Say what??? How much tax has your Mate Rupert paid? Wasn't it something like 2% or thereabouts!


----------



## satanoperca (9 January 2019)

"What annoys me, is when Labor who profess to look after the interests of the 'average working man', is doing something that hurts them in a big way."

Please explain how, removing NG on established homes, hurts the average working man. The average working man just tries to survive, doesn't have the capacity to buy IP's.

Regardless, remove NG, the average joe can invest in shares, or blow me dead, could try and setup a business or at least save and put the money into term deposits.

Property is for shelter first and foremost.


----------



## sptrawler (9 January 2019)

Darc Knight said:


> Say what??? How much tax has your Mate Rupert paid? Wasn't it something like 2% or thereabouts!



Rupert is a small bear at the end of my bed, he pays no tax.


----------



## sptrawler (9 January 2019)

satanoperca said:


> Please explain how, removing NG on established homes, hurts the average working man. The average working man just tries to survive, doesn't have the capacity to buy IP's.



From what I have read, nearly 80% of investment properties, are owned by families earning less than $150k.
I know when I was working as an electrician, in a Power company, a lot of the guys had a rental property.
All of them where established homes, not one built to rent, it was too expensive and took too long before it could earn an income.
As for buying shares, not many blue collar workers are comfortable buying shares, they feel much more comfortable with bricks and mortar.

Property is for shelter, first and foremost.
Agreed, but someone has to provide shelter for those who are on welfare and can't afford it. It has to be really low cost shelter, some don't have much, to pay rent.
But hey, you would expect Labor to know that.


----------



## satanoperca (9 January 2019)

sptrawler said:


> From what I have read, nearly 80% of investment properties, are owned by families earning less than $150k.
> I know when I was working as an electrician, in a Power company, a lot of the guys had a rental property.



These not get stats in the way :
Well, the median gross household income was *$1616* a week for 2015-2016, the most recent figures available from the Australian Bureau of Statistics. That equates to *$84,032* a year.
*So your so called battlers are hardly average on $150K.
*
Lets keep it simple, as you stated it is not rocket science.

There are 2 island on the planet earth, each island has 100 families.

_Island 1 called : I believe I should have more at the cost of society_
50 Families own PPOR
50 Families rent - the IP's are owned by the first 50 families
1 Family kids grow up and want to move into their own home.
1 IP comes up for sale, as it is established home as their are no tax incentives to build new.

 What happens on the sale?
1. The renters of the property have to find somewhere to live
2. The investors on Island 1 have a tax incentive regardless of income or cost of the housing that gives them a financial benefit over the renters and the grown up kids.

Outcome : investors purchases and 1 group has no where to live.

_Island 2 called : Housing is for shelter, and wealth is built through services and innovation_
Same population, demographics as Island 1, with the exception, the govnuts of Island 2 change the tax laws so that only NG gearing applies to new homes.

 What happens on the sale?
1. Investors have no financial advantage in purchasing the existing home
2. Investors see a tax advantage in building a new home.

Outcome : while there is a few possible outcomes, one is the renters purchase the home and the investors decide that is it financially beneficial to build new giving the tax advantage, upon building the kids more out and into the new rental property.
Or the renters of the established property move into the new property and the kids move into the new home.

Either way, by removing NG on established properties you are promoting the addition of new stock into the rental market.


----------



## Junior (9 January 2019)

I support removal of NG on established homes.  As others have said, this should hurt the supply of new housing stock, as tax breaks will remain for buyers of new homes.

People will still purchase existing properties and rent them out, it just means the investment will actually have to stack up in terms of rental yield, rather than relying on a tax cut as a key reason to invest.


----------



## SirRumpole (9 January 2019)

Junior said:


> I support removal of NG on established homes.  As others have said, this should hurt the supply of new housing stock, as tax breaks will remain for buyers of new homes.
> 
> People will still purchase existing properties and rent them out, it just means the investment will actually have to stack up in terms of rental yield, rather than relying on a tax cut as a key reason to invest.




Do you mean "this should *not* hurt the supply of new housing stock"  ?


----------



## sptrawler (9 January 2019)

Well there is one thing for sure, we will find out, one way or another. Everyone has an opinion, time will tell, which proves correct, if any.
It appears to me many are making the assumption, that demand exceeds supply, as it does in Sydney and Melbourne, shame that isn't the whole of Australia. 
Oh well, that could be just collateral damage, if there is any.


----------



## luutzu (9 January 2019)

sptrawler said:


> Rupert is a small bear at the end of my bed, he pays no tax.




THe old Grizzly don't pay any tax either.


----------



## luutzu (9 January 2019)

Darc Knight said:


> Say what??? How much tax has your Mate Rupert paid? Wasn't it something like 2% or thereabouts!




"job creators" don't pay tax Batman. 

You really got to admire capitalists... or any douche that run the place really. 

So profit from capital investment isn't really earnings, it's some kind of magic that earns money except it isn't really earnings... and if you tax it the same as those from sweat and tears, it'll not work as hard.

But if you want plebs to work harder, you obviously got to tax them. Both on the income they earn, and on every damn thing they consume... except those rare few occasions they take a holiday and goes through the duty-free shop for a box of chocolate or something. 

Then there's the investment losses being carried forward to reduce later year's earnings.

It's kinda like you were having it good and earn $200k a year, then lost your job for an entire year where you make no money... next year you got a job and so can deduct it against the losses... like that, except it isn't 'cause labourers can't have it.


----------



## sptrawler (9 January 2019)

satanoperca said:


> These not get stats in the way :
> Well, the median gross household income was *$1616* a week for 2015-2016, the most recent figures available from the Australian Bureau of Statistics. That equates to *$84,032* a year.
> *So your so called battlers are hardly average on $150K.
> *
> ...



Now I see where you are coming from, my idea of average worker, is a person who has some form of technical training or skill set e.g rigger, tradie, nurse,garbo etc. who can expect to earn approx $80-110k per annum. A close mate of mine is a council worker on verge collection, he earns approx$90k.
These days both partners need to work, to have any chance of paying of your PR and investing and with both working $150k is achievable.

Your idea of average household, would appear to include those, whose main source of income is probably welfare.
Well I can't argue, they will probably never be able to afford, an investment property.
*I also never said someone on $150k was a battler, a battler wouldn't be buying an investment property, so don't make up $hit*.


----------



## SirRumpole (9 January 2019)

sptrawler said:


> Your idea of average household, would appear to include those, whose main source of income is probably welfare.




You think people can get $80k pa on welfare ?


----------



## luutzu (9 January 2019)

SirRumpole said:


> You think people can get $80k pa on welfare ?




An average worker wouldn't be getting $80k either. 

These average and median wage statistics are a bit funny. It's a bit like GDP per capita where... if you, me and Bill Gates assets were summed up and divvy, on paper, into 3... we're all billionaires. Except only one of us is.


----------



## SirRumpole (9 January 2019)

luutzu said:


> An average worker wouldn't be getting $80k either.
> 
> These average and median wage statistics are a bit funny. It's a bit like GDP per capita where... if you, me and Bill Gates assets were summed up and divvy, on paper, into 3... we're all billionaires. Except only one of us is.




The median wage is what 50% of income earners are getting which gives a better indication of the income distribution.

The average or mean is distorted upwards by a small number of very high income earners so it doesn't  represent the real distribution but it's the one government politicians like to quote so they can pretend they have raised wages.


----------



## sptrawler (9 January 2019)

SirRumpole said:


> You think people can get $80k pa on welfare ?




If you read *his* post, it is the mean average household income, so that would include households on a lot less and a lot more than $80k.
On $80k I would not expect their main income to be welfare, but a household on $26k, I would expect to receive a fair bit of welfare.


----------



## sptrawler (9 January 2019)

luutzu said:


> An average worker wouldn't be getting $80k either.
> .




The quoted $80k is household income, it includes those with two income families.

But here is a paste of average wages in Australia.

https://www.livingin-australia.com/salaries-australia/

My daughter in law, started work about 8 months ago, for a road maintenance company not a big company. More pot hole repairs, culverts etc.
She obtained her H/R license, traffic control tickets etc, she is on $90k+


----------



## Darc Knight (9 January 2019)

Homer, were you always a "right wing screw over the slack arse workers" type even before you retired?
I ask this as I once knew a construction worker who was a staunch BLF and every Union flag waver. He then moved into Management started buying investment properties and turned real right wing - ratting on the working class to advance his position further.

(His Life actually fell to pieces - lost all his money, marriage and kids, now he's back to being an ordinary "pleb")


----------



## Sdajii (9 January 2019)

luutzu said:


> An average worker wouldn't be getting $80k either.
> 
> These average and median wage statistics are a bit funny. It's a bit like GDP per capita where... if you, me and Bill Gates assets were summed up and divvy, on paper, into 3... we're all billionaires. Except only one of us is.




That would be the case if they used mean. It's the whole reason they use median instead. The median of you, me and Bill Gates is the wealthier of you and myself (unless you're wealthier than Bill Gates, in which case it's him). Median wage is a good representation of the typical but not 'average' person.


----------



## luutzu (9 January 2019)

Sdajii said:


> That would be the case if they used mean. It's the whole reason they use median instead. The median of you, me and Bill Gates is the wealthier of you and myself (unless you're wealthier than Bill Gates, in which case it's him). Median wage is a good representation of the typical but not 'average' person.




Yea, true. Though wouldn't the Mode be more representative? It's been a while since my stats years.

I was referring to "per capita"... that's an average still popularly used to show how rich we're all getting each time the Gates and Murdoch of the world gain a few hundred million dollars.

btw, did you know that the top 10% of the US own some 87% of all the listed stocks? The top 1% own some 40%? 

Wouldn't it be cool if that's changed?


----------



## luutzu (9 January 2019)

sptrawler said:


> The quoted $80k is household income, it includes those with two income families.
> 
> But here is a paste of average wages in Australia.
> 
> ...





You the numbers aren't right when NT earns more than NSW.




Wait... WA earns more too? I thought you guys have a property crash over there.


----------



## sptrawler (9 January 2019)

Darc Knight said:


> Homer, were you always a "right wing screw over the slack arse workers" type even before you retired?
> I ask this as I once knew a construction worker who was a staunch BLF and every Union flag waver. He then moved into Management started buying investment properties and turned real right wing - ratting on the working class to advance his position further.
> 
> (His Life actually fell to pieces - lost all his money, marriage and kids, now he's back to being an ordinary "pleb")



I don't see myself a right wing screw, always worked for wages, was a supervisor from about 32 to 35 years old, but went back to being a pleb.

I guess it all is about perceptions, some people think tax incentives to encourage people to invest, take risk and save are bad.
Others think people spending everything they earn, to obtain someone else's tax is bad.

I wouldn't call anybody on here left or right, I would say most on here are fairly balanced, but again that is only my opinion.
I've seen a lot of so called 'christians', do very 'unchristian' things, yet they will swear black and blue they're christian.
Same goes for this left and right crap. 
I've seen many 'greenies', driving $hit boxes blowing oil smoke everywhere, with stickers on the back saying save the whales and shut down coal.
So you saying I'm right leaning, is worth what it cost.


----------



## Smurf1976 (9 January 2019)

Once you start looking at wage / salary rates, you start to become aware of just how divided our society has become. 

Wages are both a symptom and a cause of that as are housing prices. 

Which brings another point to mind as I typed that last sentence.

When the issue first started getting out of hand it was invariably referred to as "house" prices. It's been going so long now that this is no longer appropriate, since the idea of living in an apartment, itself renamed from the previous term of "flat", has become far more common. 

An orderly, gradual winding back of the bubble is what we need. Slow and steady over an extended period not an almighty crash that takes down however many businesses, jobs and the stock market with it.

As for wages, well an issue there is that other than internally within large organizations there's no one wage rate for any given occupation and it's not always the best and brightest who get paid the most, in some cases it's the worst who are in that situation (squeaky wheel syndrome). That in itself is another huge problem.


----------



## sptrawler (9 January 2019)

luutzu said:


> You the numbers aren't right when NT earns more than NSW.
> 
> View attachment 91230
> 
> ...




NT and W.A have a lot of mine related work, it does pay well, this tends to force up wages in the other areas to hold workers.
Like I said my mate is a council garbo and reckons he will crack $100k this year.


----------



## luutzu (9 January 2019)

sptrawler said:


> NT and W.A have a lot of mine related work, it does pay well, this tends to force up wages in the other areas to hold workers.
> Like I said my mate is a council garbo and reckons he will crack $100k this year.




I'm heading to Perth. Half a million property that's liveable in, $90k average wage... what's going on?


----------



## satanoperca (9 January 2019)

sptrawler said:


> Now I see where you are coming from, my idea of average worker, is a person who has some form of technical training or skill set e.g rigger, tradie, nurse,garbo etc. who can expect to earn approx $80-110k per annum. A close mate of mine is a council worker on verge collection, he earns approx$90k.
> These days both partners need to work, to have any chance of paying of your PR and investing and with both working $150k is achievable.
> 
> Your idea of average household, would appear to include those, whose main source of income is probably welfare.
> ...




You are off your trollie. If you think that, I know many a person with a least one degree, who doesn't earn above $85K.

A rigger, a gabbo are hardly skilled in my profession, crap an electrician only connects up wires, not rocket science and a rocket scientist would not earn what you think you do.

Yes I am being abusive/rude or whatever you want to say, but you live in a fantasy land that doesn't exist anymore.


----------



## sptrawler (9 January 2019)

satanoperca said:


> You are off your trollie. If you think that, I know many a person with a least one degree, who doesn't earn above $85K.
> 
> A rigger, a gabbo are hardly skilled in my profession, crap an electrician only connects up wires, not rocket science and a rocket scientist would not earn what you think you do.
> 
> Yes I am being abusive/rude or whatever you want to say, but you live in a fantasy land that doesn't exist anymore.



Well you had better sit down and have a chill pill, you must be on pretty crappy wages, by the sound of it. That explains everything.
I just looked on Seek for what jobs were around Perth, not all show hourly rate, but here you go.
https://www.seek.com.au/job/3805486...6fc-42bb-4af7-8c2d-2ed608eea80c&type=standout

$50.49/hr 10-12 hours/ day.

$50.49 x 10x 5 days x 48 weeks= $121,176

Obviously investing is outside your pay grade, but that is normal for an industrial sparky in W.A. If you want to go FIFO you can add about 20 - 30k to that. 

There is only one of us who is off his trolley, and it isn't me.
You be as rude as you like, if I had your attitude, i would probably be angry also.


----------



## sptrawler (9 January 2019)

luutzu said:


> I'm heading to Perth. Half a million property that's liveable in, $90k average wage... what's going on?




Everyone wants to live in Sydney and Melbourne, that's what is going on, simple supply and demand.

Plenty of people = low wages, due to competition + high house prices, due to competition.

Add to that, all the immigrants want to settle there.


----------



## luutzu (9 January 2019)

sptrawler said:


> Everyone wants to live in Sydney and Melbourne, that's what is going on, simple supply and demand.
> 
> Plenty of people = low wages, due to competition + high house prices, due to competition.
> 
> Add to that, all the immigrants want to settle there.




That's a good point. 

Though they might choose the cities 'cause White country people makes them nervous. Why I don't know 

Spoke to a couple tradies before and a sparky said when he was younger he and his wife stayed in the country for a while. It apparently goes pitch dark after the sunset?


----------



## Smurf1976 (9 January 2019)

I generally keep out of these "personal" debates as a matter of principle but I'll make an exception and simply say this.

Wage rates in a market economy are a function of supply and demand. Simple as that. They are not an accurate reflection of anyone's intelligence or contribution to society.


----------



## Ann (9 January 2019)

luutzu said:


> Spoke to a couple tradies before and a sparky said when he was younger he and his wife stayed in the country for a while. It apparently goes pitch dark after the sunset?



Sure does Luu, there are no city lights to reflect off the clouds. That is why you can see a sky full of stars up the bush, it is magic!


----------



## Smurf1976 (9 January 2019)

luutzu said:


> Spoke to a couple tradies before and a sparky said when he was younger he and his wife stayed in the country for a while. It apparently goes pitch dark after the sunset?



If you're working with electricity and find yourself in complete darkness then generally that means something hasn't gone to plan..... 

Seriously, assuming you're referring to the "glow" of cities yes it's extremely different in the country and does get completely dark. If it's overcast then you've got no stars or moon visible and thus zero light. Zero as in literally can't see your own arms or the person standing right next to you.


----------



## luutzu (9 January 2019)

Smurf1976 said:


> If you're working with electricity and find yourself in complete darkness then generally that means something hasn't gone to plan.....
> 
> Seriously, assuming you're referring to the "glow" of cities yes it's extremely different in the country and does get completely dark. If it's overcast then you've got no stars or moon visible and thus zero light. Zero as in literally can't see your own arms or the person standing right next to you.




Yea, that would be a bit wrong 

I think he wasn't a sparky when he was there though. Just got here so probably did some farmwork. Maybe the experience got him into proper power and lights?


----------



## luutzu (9 January 2019)

Ann said:


> Sure does Luu, there are no city lights to reflect off the clouds. That is why you can see a sky full of stars up the bush, it is magic!




That sounds nice. I have seen pictures of the Milky Way taken from the outback. Wow.

Can't wait for retirement then.


----------



## satanoperca (9 January 2019)

sptrawler said:


> Well you had better sit down and have a chill pill, you must be on pretty crappy wages, by the sound of it. That explains everything.
> I just looked on Seek for what jobs were around Perth, not all show hourly rate, but here you go.
> https://www.seek.com.au/job/3805486...6fc-42bb-4af7-8c2d-2ed608eea80c&type=standout
> 
> ...




I waste my time with uneducated fools. From you own stats, oh I laugh, contract rate, casual temp.

Try $50.49 x 8 x 5 x 46 week - insurance and work cover = might be $85-90K, still not bad for a tradie.


----------



## sptrawler (9 January 2019)

luutzu said:


> That sounds nice. I have seen pictures of the Milky Way taken from the outback. Wow.
> 
> Can't wait for retirement then.



Out toward Alice Springs the night skies are amazing, the extra number of stars you can see as opposed to in the City, is unbelievable.


----------



## satanoperca (9 January 2019)

"You be as rude as you like, if I had your attitude, i would probably be angry also"

No just tied of trying to have an intelligent, educated conversion on forums with uneducated fools.


----------



## satanoperca (9 January 2019)

An homer please learn how to search for information :


----------



## sptrawler (9 January 2019)

satanoperca said:


> I waste my time with uneducated fools. From you own stats, oh I laugh, contract rate, casual temp.
> 
> Try $50.49 x 8 x 5 x 46 week - insurance and work cover = might be $85-90K, still not bad for a tradie.




You really need to get a grip of yourself, from my original post #13381 :

_Now I see where you are coming from, my idea of average worker, is a person who has some form of technical training or skill set e.g rigger, tradie, nurse,garbo etc. who can expect to earn approx $80-110k per annum_. 

A fool shouts loudly, to try and impress, maybe you should tone it down a bit.


----------



## sptrawler (10 January 2019)

satanoperca said:


> An homer please learn how to search for information :
> View attachment 91238




Well maybe you should try, you certainly are a try hard, struggling with traction.

https://au.indeed.com/salaries/Electrician-Salaries,-Western-Australia

*How much does an Electrician make in Western Australia?*
The average salary for an Electrician is $51.28 per hour in Western Australia, which is 27% above the national average. Salary estimates are based on 390 salaries submitted anonymously to Indeed by Electrician employees, users, and collected from past and present job advertisements on Indeed in the past 36 months. The typical tenure for an Electrician is less than 1 year.


----------



## satanoperca (10 January 2019)

I work with people who have multiple degrees and more and are not in the over $110K pay bracket.

I employee people overseas who have far more qualifications and skills than the average joe in Australia and do not even earn close to the $80K AUD.

You live in a fools paradise or maybe just geared up to much on Perth property, thinking that average joe earns $150K and can afford your rental properties while the tax payer subsidizes your investment.

Wish you the best of luck. I LIKE SHOUTING, it helps the idiots of this world LEARN.


----------



## satanoperca (10 January 2019)

sptrawler said:


> Well maybe you should try, you certainly are a try hard, struggling with traction.
> 
> https://au.indeed.com/salaries/Electrician-Salaries,-Western-Australia
> 
> ...




You are quoting mining jobs, hardly representative of the rest of Australia.

STOP cherry picking you data, we have been discussing medians and averages as metrics for discussion.


----------



## sptrawler (10 January 2019)

satanoperca said:


> You live in a fools paradise or maybe just geared up to much on Perth property, thinking that average joe earns $150K and can afford your rental properties while the tax payer subsidizes your investment.
> 
> Wish you the best of luck. I LIKE SHOUTING, it helps the idiots of this world LEARN.




I can see why you struggle to deal with issues, *I never said an average Joe earns $150k*, I said an average Family with *both partners* working could earn $150k. Post #13381 again.

I certainly hope you listen more than you talk, when dealing with your employees, but I somehow doubt it.
Have a good night.


----------



## sptrawler (10 January 2019)

satanoperca said:


> You are quoting mining jobs, hardly representative of the rest of Australia.
> 
> STOP cherry picking you data, we have been discussing medians and averages as metrics for discussion.




Again, I always said W.A, unlike yourself I try to keep my statements to something I know is fact.
I have no idea what someone in NSW earns or any other State come to that, because I haven't worked there and also don't know anyone who does.


----------



## luutzu (10 January 2019)

You two not getting along?


----------



## sptrawler (10 January 2019)

luutzu said:


> You two not getting along?




No, apparently he is tied of talking to uneducated fools.
Maybe he should stop and practice spelling.


----------



## satanoperca (10 January 2019)

sptrawler said:


> I certainly hope you listen more than you talk, when dealing with your employees, but I somehow doubt it.
> Have a good night.




One who makes assumptions, is one that makes an arse out of oneself.

Back to the topic.
Will the removal of NG on established properties and only apply to new builds benefit society as a whole?

Or more importantly, is Aus property overvalued and going to cause disruption to our economic activity as a nation and see a reduction in standards of living?


----------



## sptrawler (10 January 2019)

satanoperca said:


> One who makes assumptions, is one that makes an arse out of oneself.
> 
> Back to the topic.
> Will the removal of NG on established properties and only apply to new builds benefit society as a whole?
> ...




To quote yourself above, one who makes assumptions, is one that makes an arse out of oneself.
To answer the question, I would be making assumptions. 
If you want to debate it, I will, if you want to be antagonistic and rude, I won't.
To debate is to exchange ideas and test them, to be rude and loud is to try and force your opinion, which is all it is your opinion.


----------



## satanoperca (10 January 2019)

Again I will ask the simple, none rocket science questions :
Will the removal of NG on established properties and only apply to new builds benefit society as a whole?
Or more importantly, is Aus property overvalued and going to cause disruption to our economic activity as a nation and see a reduction in standards of living?


----------



## SirRumpole (10 January 2019)

satanoperca said:


> Will the removal of NG on established properties and only apply to new builds benefit society as a whole?




Apparently it will save about $3 billion a year which can be spent on other things, so the answer may well be yes.


----------



## sptrawler (10 January 2019)

satanoperca said:


> Will the removal of NG on established properties and only apply to new builds benefit society as a whole?



IMO not necessarily, it will make it that the only rental properties, viable as an investment are new builds, to get a reasonable return on that investment may well make average rents rise.

It may also make the value of established older style rentals fall, which in turn makes them knock over jobs, this compounds the shortage as people with money land bank the blocks or worse still board up the houses.

The assumption is that a fall in value, means poorer people buy the property, but as has been shown in W.A, that doesn't necessarily follow.
House prices have crashed back to 2006 prices, it hasn't resulted in more low income buyers, it has just increased the amount of knock overs.
The only thing that is guaranteed, is that the wealthy will have a bigger market share of the NG market, be that as a developer or a landlord. Obviously they are the only ones who will be able to avail themselves of the tax break.
There is obviously a lot more to it and we will debate it.



satanoperca said:


> Or more importantly, is Aus property overvalued and going to cause disruption to our economic activity as a nation and see a reduction in standards of living?




The property market is re adjusting, as has happened in W.A and I agree with changes to N.G. Just not the ones that Labor are suggesting.
If the property market is hit extremely hard, there will be a recession and that will see a reduction in living standards as unemployment increases. I've lived through two major recessions, they aren't fun.
A slow gradual deflation of prices will benefit everyone, IMO what Labor are suggesting will cause a crash.
I am sure many builders and property investors, are salivating at Labors proposal, but they will be collateral damage if there is a recession.

IMO
The only way to increase living standards, is by increasing poor peoples wealth, the best to do that is by encouraging them to buy their own home.
Be that through investing, or direct ownership, it has been proven the best thing a retiree can have is their own home debt free.
The problem is, the symptom is being addressed not the problem, with Labors proposal.


----------



## sptrawler (10 January 2019)

SirRumpole said:


> Apparently it will save about $3 billion a year which can be spent on other things, so the answer may well be yes.




It is entirely dependent on the social outcome, which is an unknown. IMO


----------



## qldfrog (10 January 2019)

SirRumpole said:


> Apparently it will save about $3 billion a year which can be spent on other things, so the answer may well be yes.



Like new obsolete submarines for the next 20y...our government needs some engineers to get the BS out of technical issues lobbied by interest groups. My experience for gov  in the last 10 y is give them a billion they will spend 2


----------



## Smurf1976 (10 January 2019)

qldfrog said:


> our government needs some engineers to get the BS out of technical issues lobbied by interest groups.



Strongly agreed and I expect there would be a valid role for experts in other fields too for the same reason.


----------



## satanoperca (10 January 2019)

sptrawler said:


> IMO not necessarily, it will make it that the only rental properties, viable as an investment are new builds, to get a reasonable return on that investment may well make average rents rise.
> 
> It may also make the value of established older style rentals fall, which in turn makes them knock over jobs, this compounds the shortage as people with money land bank the blocks or worse still board up the houses.
> 
> ...




I still fail to see whatever you think is a solution, other than don't change anything as it might effect me.

Current situation, one of highest privately indebted per ca pita in the world. where is all this debt, property, has it benefited society and community no. Is it productive? NO

A recession is like a flood down a river, you cannot stop it and it is a natural cycle, cleans out the dead and replenishes with new. We havn't had one in 30 years, because govnuts keep damming the river (economic cycles).

Sorry to say this old man, but it seems you are just dirty that you should have more out of life, and maybe that is the difference between us, I am happy living in great community with little, as I require only happiness, friends and family. Wealth as it seems to be defined is nothing to do with how much or how many properties you own.

Again, housing is for shelter, one of the 4 basic requirements in life, and supporting any policy that will allow people to obtain it is a good thing.


----------



## qldfrog (10 January 2019)

Smurf1976 said:


> Strongly agreed and I expect there would be a valid role for experts in other fields too for the same reason.



And my apologies for being off topic here.


----------



## sptrawler (10 January 2019)

satanoperca said:


> I still fail to see whatever you think is a solution, other than don't change anything as it might effect me.




I guess that is the difference between us, you see it as black and white, leave it as it is or do what Labor say's.

I think there would be a mirriad of solutions, which can be enacted, and would be far more beneficial to Australian society.
Also I'm not arrogant enough, to think I could come up with the best solution, however I do believe there are people smart enough to come up with better solutions.
The first thing to work out is who you are trying to help, IMO Labor are helping the wealthy, with their proposal.
Not only are they only going to make it, so that only the well off can invest in a property, they are even going to give them subsidies to rent them out as well as the negative gearing.

https://theconversation.com/shortens-subsidy-plan-to-boost-affordable-housing-108881

So not only can you negative gear, you can get an $8,500 payment, for 15 years.

Now to me with my obvious limitations, I see that as just another perk for the rich.
If the Government wants to help the poor, IMO it isn't by subsidising thier rent, it should be focused on helping people get into their own homes and off the rental trap.
Subsidising their rent for 15 years, is like giving a gambler a discount at the casino, it just reinforces their vulnerable position.

Why not have a system, where the Government  lets low income workers, have a tax deduction on their home loans.
Why not have a system, where if companies build low cost social housing, the Government puts in the $8500/PA for 15 years in a joint purchase plan with a low income earner. They just have a caveat on the property, that if it is sold, the Government gets a part or all of their contributions back. Then that money can be re lent to others less fortunate.

Like I said, it isn't rocket science, it just depends on the outcome you want, poor people owning houses or Government rental subsidy for life.

The only people who benefit greatly from Labors policy, is builders and people who have the money to afford to build a rental from scratch.
The people who gain nothing, are low income earners and renters.
Like I said only my opinion
By the way I don't own a rental property, am retired and do share my house with extended family.


----------



## SirRumpole (10 January 2019)

sptrawler said:


> The only people who benefit greatly from Labors policy, is builders and people who have the money to afford to build a rental from scratch.




Do you have an objection to helping the building industry ?

All those brickies, electricians, tilers, plumbers, carpenters, painters etc that the industry employs ?

Investors who bought established houses did nothing to help them, but that is what ng was designed for in the first place, to keep the building industry going as well as adding to the stock of homes.


----------



## sptrawler (10 January 2019)

SirRumpole said:


> Do you have an objection to helping the building industry ?
> 
> All those brickies, electricians, tilers, plumbers, carpenters, painters etc that the industry employs ?
> 
> Investors who bought established houses did nothing to help them, but that is what ng was designed for in the first place, to keep the building industry going as well as adding to the stock of homes.




I'm a bit shocked, you don't see my point of view, I thought you would agree. Oh well.
I guess being rusted on causes anguish.


----------



## qldfrog (10 January 2019)

[QUOTE="SirRumpole, post: 1009197, member: 58631",]

..it that is what ng was designed for in the first place, to keep the building industry going as well as adding to the stock of homes.[/QUOTE]
I do not often disagree with sir rumpole but i naively thought that negative gearingvwas just the simpler fact that, if you do an investment..any investment business shares building and are taxed on profit, the basic rule of taxation is that you should be able to offset the cost of that investment.
Otherwise investment diseappear

As i note before, ng will only be used if it makes sense aka in a raising market or if rental income is worthwhile.why would you loose money purposely?
To paraphrase
You need to have your head checked if you pay more tax than you need,
But similarly, you need to have a check if you are happy to loose money to pay less taxes.
A lot of talking for a problem which may sort itself alone pretty quickly with a real estate crash
My 2c


----------



## SirRumpole (10 January 2019)

sptrawler said:


> I'm a bit shocked, you don't see my point of view, I thought you would agree. Oh well.
> I guess being rusted on causes anguish.




I might agree with your point of view if I knew what it was. 

You seem all over the shop. NG  is there to increase housing supply to to provide a tax dodge for those who can afford their own house and someone else's as well.

So if the government saves $3 billion a year by cutting down NG and puts that into subsidised rents as you suggested, would that be a bad thing ? (Maybe only if Labor thought of it. )


----------



## sptrawler (10 January 2019)

SirRumpole said:


> I might agree with your point of view if I knew what it was.
> 
> You seem all over the shop. NG  is there to increase housing supply to to provide a tax dodge for those who can afford their own house and someone else's as well.
> 
> So if the government saves $3 billion a year by cutting down NG and puts that into subsidised rents as you suggested, would that be a bad thing ? (Maybe only if Labor thought of it. )



Fair enough, like I said, it depends what outcome you are chasing.


----------



## PZ99 (10 January 2019)

If offsetting debt must be a burden on the taxpayer I'd rather it be for something more useful than housing.... such as small business debt. Business employs people. Housing doesn't.


----------



## SirRumpole (10 January 2019)

PZ99 said:


> Business employs people. Housing doesn't.




Building and maintaining and renovating housing employs a lot of people and creates a lot of businesses.


----------



## Darc Knight (10 January 2019)

Yes, and when people build new Houses they tend to buy new furniture etc, stimulating the retail and manufacturing sectors.

_"That’s because people who buy or build homes tend to head to the shops next to buy things to fill their new house."
https://amp.news.com.au/finance/bus...s/news-story/98bb7283570e6c4d4bf3e3b583684c01_


----------



## willy1111 (10 January 2019)

SirRumpole said:


> So if the government saves $3 billion a year by cutting down NG and puts that into subsidised rents as you suggested, would that be a bad thing ? (Maybe only if Labor thought of it. )




Maybe it would be better used to help those who don't have a home get one rather than handing it to the investors investing in property.

Like a government loan scheme in some form or another, or government owns x% of the house to be repaid when said house is sold...use it to get the pemanent renters out of the forever renters cycle as opposed to giving it to property investor.


----------



## PZ99 (10 January 2019)

Building, maintenance, renovations and associated retail all happen without the impetus of NG.

Currently my taxes are paying for a scheme where investors go into huge housing debt where in some cases they sit on empty houses solely to deduct their income. Not much employment there.

To me it's a bit self defeatist because all I'm really doing is sponsoring someone else's lifestyle.

I'd rather sponsor employment directly by having that $3b a year go into lowering business tax.


----------



## Darc Knight (10 January 2019)

PZ99 said:


> I'd rather sponsor employment directly by having that $3b a year go into lowering business tax.




Pretty sure that trickle down economics theory isn't sound


----------



## PZ99 (10 January 2019)

Darc Knight said:


> Pretty sure that trickle down economics theory isn't sound




If we are saying NG stimulates employment it's trickle down economics either way.


----------



## Darc Knight (10 January 2019)

PZ99 said:


> If we are saying NG helps employment it's trickle down economics either way.




I think they said U.S. Comp Tax cuts won't flow through as much as people expect.


----------



## PZ99 (10 January 2019)

Darc Knight said:


> I think they said U.S. Comp Tax cuts won't flow through as much as people expect.



No argument there. I'm talking more about using the saved money to kill off payroll taxes or something similar. During the GFC the WA Liberal Govt rolled back payroll tax and it worked from what I read.

Unlike the US Australia doesn't make anything anymore. So we are mostly a services economy and as such rely on small business. And they rely on keeping operating costs low. 

In my view it's a more productive way of dispersing tax revenue rather than paying for someone's housing debt (which then mostly goes to the banks anyway)


----------



## SirRumpole (10 January 2019)

Payroll tax is the most stupid tax in existence.

I thought it was supposed to go when the GST came in.


----------



## SirRumpole (10 January 2019)

willy1111 said:


> Maybe it would be better used to help those who don't have a home get one rather than handing it to the investors investing in property.




Sure. I have no interest in negative gearing, get rid of it completely for all I care, but the Libs won't do that because it's their voters getting the benefit, and Labor are afraid of being attacked for "politics of envy", so if you can persuade either party to ditch NG then good on you.

It distorts the market. If people want houses built and can afford them, then they will be built.


----------



## Smurf1976 (10 January 2019)

SirRumpole said:


> Payroll tax is the most stupid tax in existence.
> 
> I thought it was supposed to go when the GST came in.



There are many misconceptions about what was "supposed" to happen when the GST came in.

Ultimately most of those "supposed to happen" things were based on a GST of 15% but our politicians in their wisdom decided to go for a GST at 10%, exempt a few things, and keep various other separate taxes.


----------



## sptrawler (10 January 2019)

willy1111 said:


> Maybe it would be better used to help those who don't have a home get one rather than handing it to the investors investing in property.
> 
> Like a government loan scheme in some form or another, or government owns x% of the house to be repaid when said house is sold...use it to get the pemanent renters out of the forever renters cycle as opposed to giving it to property investor.




I think we are a voice in the wilderness willy, obviously no one really gives a rats about renters and low income poverty pits. lol
I think it makes perfect sense, for the Government to get involved in joint owner ship, to me it makes a lot more sense than throwing money at the private sector.
All they will do is crank up rents to make the 20% less than market, the same as what the market rent was pre introduction of the scheme.

Also the naysayers that say it can't work, should maybe have a look at Singapore, they have a Government/ private home loan system. Funnily enough Singapore has 90% home ownership.
Like I said, I think we are wasting our breath.


----------



## satanoperca (10 January 2019)

sptrawler said:


> I think we are a voice in the wilderness willy, obviously no one really gives a rats about renters and low income poverty pits. lol
> I think it makes perfect sense, for the Government to get involved in joint owner ship, to me it makes a lot more sense than throwing money at the private sector.
> All they will do is crank up rents to make the 20% less than market, the same as what the market rent was pre introduction of the scheme.
> 
> ...




You just do not give up. The current system works for the low income earners, NOT, but those low incomers on $150K a year should be able to get ahead. 
So what is your alternative, the same or an alternative.

As for Singapore, you need to live there first and understand the demographics. You make me laugh, go back to wiring houses as long as they don't need any voltage they should be okay.


----------



## sptrawler (10 January 2019)

satanoperca said:


> You just do not give up. The current system works for the low income earners, NOT, but those low incomers on $150K a year should be able to get ahead.




You still have to miss quote, to try and make sense, try reading slowly.


----------



## Smurf1976 (10 January 2019)

In my view a spectacular bust is not in anyone's best interest apart from a small minority of cashed up investors waiting to buy.

For businesses and workers it's a pretty sure way to bring on a recession with all that entails - business failures and mass unemployment.

For the banks it's a problem if they suddenly find themselves with lots of mortgages which are in practice partly unsecured since the property is now worth considerably less than debt.

The problem is the scale of the bubble. Any solution is going to need a very careful and pragmatic approach to bring prices down slowly and steadily over an extended period. Realistically, with the scale of the problem if it can be cleaned up within a decade then that's about the best we can hope for. I say that as someone who tends to want things done yesterday but in this case it's just not practical and the risk of ending up with an outright crash is real and dangers.


----------



## luutzu (10 January 2019)

Smurf1976 said:


> In my view a spectacular bust is not in anyone's best interest apart from a small minority of cashed up investors waiting to buy.
> 
> For businesses and workers it's a pretty sure way to bring on a recession with all that entails - business failures and mass unemployment.
> 
> ...




Would be good to know how much of the toxic mortgage the big four have already offloaded to "sophisticated investors" in the new version of CDOs. 

Read some years ago they started doing it, offloading to Japanese, and maybe Chinese, managed funds. 

There would be at least a couple smart bankers pulling a Goldman Sachs this time round right?

But yea, a property crash wouldn't benefit anyone but those with ready cash and strong credit.


----------



## sptrawler (10 January 2019)

It may not be as bad as we think, who knows? 
All we are doing here is throwing our thoughts around, I'm sure other than the few of us on the forum, no one else thinks or even cares about it.
We certainly aren't here to form a G20 forum.


----------



## luutzu (11 January 2019)

sptrawler said:


> It may not be as bad as we think, who knows?
> All we are doing here is throwing our thoughts around, I'm sure other than the few of us on the forum, no one else thinks or even cares about it.
> We certainly aren't here to form a G20 forum.




We plebs are here to try and save the world. 

Those suits at the G20 get together to figure out how to steal more of the damn place. 

Guess who's winning?

You about the Yellow Vest current plan to do a run on the banks in France?

Heard they plan to ask the French to all go to the branch and withdraw their cash as a protest. 

The current global credit/asset bubble haven't burst yet and revolution's already brewing. Might not be too much fun for WEstern civilisation if the proverbial hits the fan soon ey.


----------



## Sdajii (11 January 2019)

luutzu said:


> Yea, true. Though wouldn't the Mode be more representative? It's been a while since my stats years.




It shows. With something like income, the mode would be irrelevant unless you arranged the incomes into lumped categories, which would be a laborious and pointless extra step, and probably would give you a result heavily skewed to poverty. You'd almost certainly come up with minimum full time wage. Median is the appropriate one to use.



> I was referring to "per capita"... that's an average still popularly used to show how rich we're all getting each time the Gates and Murdoch of the world gain a few hundred million dollars.




That's mean (not 'you're mean' mean, statistical mean, ie., what most people mean when they say average. Gee, I just used the word mean in three different ways without using it. I really wish language was better designed). It would be stupid to use that. That's why it's never used in situations like this.



> btw, did you know that the top 10% of the US own some 87% of all the listed stocks? The top 1% own some 40%?
> 
> Wouldn't it be cool if that's changed?




Not as cool as irrelevant trivial no longer being brought up by cowards trying to use it as distractions, but yes, it would.


----------



## Darc Knight (11 January 2019)

sptrawler said:


> I think we are a voice in the wilderness willy, obviously no one really gives a rats about renters and low income poverty pits. lol
> I think it makes perfect sense, for the Government to get involved in joint owner ship, to me it makes a lot more sense than throwing money at the private sector.
> All they will do is crank up rents to make the 20% less than market, the same as what the market rent was pre introduction of the scheme.
> 
> ...




You're a funny bugger at times Homer. I'm not even going to try and argue with you. You're retired, you can type, Corgi at your feet while your Servants bring you cups of tea and nourishment. Heck, I'll bet you even get the Butler to post while you duck off to the Can


----------



## sptrawler (11 January 2019)

Darc Knight said:


> You're a funny bugger at times Homer. I'm not even going to try and argue with you. You're retired, you can type, Corgi at your feet while your Servants bring you cups of tea and nourishment. Heck, I'll bet you even get the Butler to post while you duck off to the Can



There is nothing wrong with stimulating discussion, too many are too ready, to parrot what the media want to feed them.IMO
"Here, chook, chook ,chook", is the call of the day, free thinking is a thing of the past.
Too many uni graduates with Arts degrees, got sod all better to do, than sit and write blogs to the SMH.


----------



## Junior (11 January 2019)

Smurf1976 said:


> In my view a spectacular bust is not in anyone's best interest apart from a small minority of cashed up investors waiting to buy.
> 
> For businesses and workers it's a pretty sure way to bring on a recession with all that entails - business failures and mass unemployment.
> 
> ...




Stagnating prices or low growth over an extended period, coupled with wages growth over that same period, would be a best case scenario.  We will probably need very stable mortgage rates to achieve this.

Easier said than done.


----------



## Darc Knight (11 January 2019)

Australia’s construction sector went from bad to worse in late 2018.
Activity levels declined at the fastest pace in over five years. For the residential sector, particularly for apartment construction, activity levels basically collapsed.
Weaker conditions were also seen across commercial and engineering construction.
New orders — a lead indicator on activity levels — also fell at a faster pace. Declines were seen across all parts of the industry.
Analysts say the downturn will ultimately weigh on the broader Australian economy
https://www.businessinsider.com.au/australia-economy-gdp-housing-market-downturn-2019-1


----------



## sptrawler (11 January 2019)

Well everyone seems to have gone quiet on the NG issue, so what does everyone think about the proposed changes to capital gains.

Wow make a profit of $100,000 on an investment, get $75,000 chucked on top of your wages.
That's a good incentive, to build that beautiful NG geared property, to rent out. Priceless.

Well that should get some posters falling from the rafters.
Especially those who buy shares to make money, what if you make $100,000 you pay tax on $75,000.
If you lose $100,000, you can keep that to yourself, until you make $100,000 profit.


----------



## sptrawler (11 January 2019)

satanoperca said:


> I work with people who have multiple degrees and more and are not in the over $110K pay bracket.
> 
> I employee people overseas who have far more qualifications and skills than the average joe in Australia and do not even earn close to the $80K AUD.




Hate to go back to old posts, but this one of yours, I found interesting.

I was reading in the SMH, that Sydney's train drivers get $130,000/pa, with no qualifications, obviously the degrees aren't worth much.

https://www.smh.com.au/business/wor...ning-more-than-a-dentist-20190107-p50py7.html

Or you work at a place, that pays $hit wages.


----------



## Junior (11 January 2019)

sptrawler said:


> Well everyone seems to have gone quiet on the NG issue, so what does everyone think about the proposed changes to capital gains.
> 
> Wow make a profit of $100,000 on an investment, get $75,000 chucked on top of your wages.
> That's a good incentive, to build that beautiful NG geared property, to rent out. Priceless.
> ...




I'm very much opposed to this policy.  I don't see what the issue is with the current system.

If you hold an asset long term, even if the value only grows with inflation, you'll be hit with a big tax bill following sale.  I feel as though this policy will simply encourage people to hold investments until retirement or death, purely to ease the tax burden upon sale.  Is that a good thing?


----------



## sptrawler (11 January 2019)

Junior said:


> I'm very much opposed to this policy.  I don't see what the issue is with the current system.
> 
> If you hold an asset long term, even if the value only grows with inflation, you'll be hit with a big tax bill following sale.  I feel as though this policy will simply encourage people to hold investments until retirement or death, purely to ease the tax burden upon sale.  Is that a good thing?



I think it will discourage people from investing in the first place, especially when interest rates get back to normal.


----------



## SirRumpole (11 January 2019)

Not directly related to prices, but certainly a matter of concern:-

https://www.theguardian.com/austral...vernment-for-failure-to-reform-building-rules


----------



## Knobby22 (11 January 2019)

Junior said:


> I'm very much opposed to this policy.  I don't see what the issue is with the current system.
> 
> If you hold an asset long term, even if the value only grows with inflation, you'll be hit with a big tax bill following sale.  I feel as though this policy will simply encourage people to hold investments until retirement or death, purely to ease the tax burden upon sale.  Is that a good thing?



I have no problem with the negative gearing changes proposed but also think the capital gain tax reduction is a bit of a problem considering the high marginal tax rates we already have. I think it should be rethought.


----------



## sptrawler (11 January 2019)

SirRumpole said:


> Not directly related to prices, but certainly a matter of concern:-
> 
> https://www.theguardian.com/austral...vernment-for-failure-to-reform-building-rules




That sounds ominous, there could be a nasty fallout by the sounds of it.


----------



## satanoperca (11 January 2019)

Sptrawler, try this link for some basic information on wages.
https://www.theage.com.au/business/...t-make-her-a-high-earner-20190102-p50p9f.html



Pays to do a trade, only 3 years part time study and no debt. 







So based on some very basic figures, you would need 2 electricians in a family to make $150K.


----------



## sptrawler (11 January 2019)

satanoperca said:


> Sptrawler, try this link for some basic information on wages.
> https://www.theage.com.au/business/...t-make-her-a-high-earner-20190102-p50p9f.html
> 
> View attachment 91284
> ...



On basic figures, train drivers in Sydney are on $95k, but apparently with allowances they get $130k and the ones who chase O/T $185k.
But getting back to where we started, I made an off the top of the head example, of how the NG could be tweaked to have a less dramatic effect.
I didn't do a thesis on it, the numbers were chosen as an example, the $150k was I thought reasonable for a working married couple to aspire to.
Then above that I would class as becoming well off.
You have got all out of shape about it, God knows why, did Labor commission you to come up with the idea? You certainly are behaving like you have skin in the game. Lol


----------



## satanoperca (11 January 2019)

Once again, be careful making assumptions, I work with data/numbers only and based on the figures I do make assumptions
I was a liberal supporter for most of my life, now I only vote for one party and it is not labor, it is the sex party - why, the more sex people have, the happy they are.


----------



## Smurf1976 (11 January 2019)

I normally keep out of these "personal" debates as a matter of principle but I'll make an exception.

White collar, blue collar, dog collar or anything else tells you something about the persons business or employment but tells you absolutely noting about the integrity or intelligence of the individual. 

Never judge books by their covers.


----------



## sptrawler (11 January 2019)

One of the best quotes I have ever heard, was on a pretty average movie, starring an actor I don't particularly like( but the other half does).

It was 'Under Siege'.

The quote was, ' assumption is the mother of all f#&K ups'.
That has to be one of the classic statements.IMO


----------



## SirRumpole (11 January 2019)

sptrawler said:


> The quote was, ' assumption is the mother of all f#&K ups'.




Or to put it simpler,

If you assume, you make an ass out of u and me.


----------



## Value Collector (12 January 2019)

Knobby22 said:


> I have no problem with the negative gearing changes proposed but also think the capital gain tax reduction is a bit of a problem considering the high marginal tax rates we already have. I think it should be rethought.




I totally agree, if the capital gains tax discount is abolished, we should not have to pay tax on capital gains at our marginal rate. 

Imagine if the government attempted to add 10 years of a workers income into 1 Years tax return and then charged them tax at the highest marginal rate as if it was all earned in that one year.

That basically what would be happening to investors if we didn’t have the discount.

The discount just limits tax on capital gains to 22.5%, which is still higher than other countries like the USA that limit cap gains tax to 15%.


----------



## sptrawler (12 January 2019)

That is the whole issue, this is a stock forum, so everyone takes exception to the CG issue, if it was a real estate Forum, they would take exception to both the NG and CG.
Just shows no one cares as long as it doesn't affect them.
By the way, neither bother me, the franking credit does.lol


----------



## Value Collector (12 January 2019)

sptrawler said:


> That is the whole issue, this is a stock forum, so everyone takes exception to the CG issue, if it was a real estate Forum, they would take exception to both the NG and CG.
> Just shows no one cares as long as it doesn't affect them.
> By the way, neither bother me, the franking credit does.lol




I don’t have a problem with NG either, both shares and property can be negatively geared.

What do you mean by franking credit bothers you? Are you for or against the changes.

Personally I am against the changes to franking credits also.


----------



## sptrawler (12 January 2019)

Value Collector said:


> I don’t have a problem with NG either, both shares and property can be negatively geared.
> 
> What do you mean by franking credit bothers you? Are you for or against the changes.
> 
> Personally I am against the changes to franking credits also.




I'm against the changes, mainly because I structured my retirement, taking into account the existing conditions. The constant meddling just erodes the capital faster, which in turn will force retirees, to avail themselves of the pension sooner.
Unless they change the access criteria, yet again, which wouldn't suprise me. 
That is the thing nowadays, you can't trust a word they say, which makes planning ahead very difficult.


----------



## Humid (12 January 2019)

sptrawler said:


> NT and W.A have a lot of mine related work, it does pay well, this tends to force up wages in the other areas to hold workers.
> Like I said my mate is a council garbo and reckons he will crack $100k this year.



Had a beer with a local Garbo last night he wants to know what council pays that?


----------



## luutzu (12 January 2019)

Humid said:


> Had a beer with a local Garbo last night he wants to know what council pays that?




I reckon Homer just wanted to lure us all over to Perth so he can unload his properties 

Heard of a couple enterprising garbo picking up extra cash during their normal paid rounds. 

They see houses under construction and, for $100 a pop, would take the owner's trash too.


----------



## Humid (12 January 2019)

A bit late for me I’m already here...

https://www.realestate.com.au/property-house-wa-koondoola-129188810
This is probably 20 minutes to the city in peak traffic
Not the best of areas but cheap as compared to east


----------



## Smurf1976 (12 January 2019)

sptrawler said:


> Unless they change the access criteria, yet again, which wouldn't suprise me. That is the thing nowadays, you can't trust a word they say, which makes planning ahead very difficult.



Regardless of the actual rules I do see a very definite problem with change for the sake of change.

For the past ~30 years the message has been that we all need to fund our own retirement, the pension won't be enough and may even be hard to get.

Now all of a sudden the message seems to be that the pension is the way to go.

The issue here isn't so much about the detail but about the shifting goal posts. It's the same as the debacle in the energy industry - there's a lack of willingness to invest or even to simply maintain existing facilities when policy keeps changing as often as it has.

We need stability in government and policies with a bipartisan approach to things like this.


----------



## SirRumpole (12 January 2019)

Smurf1976 said:


> Now all of a sudden the message seems to be that the pension is the way to go.




Not sure about that.

Some people want the superannuation guarantee levy lifted from 9% to 12% . This seems to be an encouragement or compulsion to invest in super rather than rely on the pension. Maybe its even more intrusion by government into people's financial affairs, but left to their own devices a lot of people will spend hard early with the knowledge that the pension is there to fall back on.

So it's a bit of a cleft stick either way. Force people to contribute to super throughout their lives, or face an ever increasing pension bill.


----------



## luutzu (12 January 2019)

SirRumpole said:


> Not sure about that.
> 
> Some people want the superannuation guarantee levy lifted from 9% to 12% . This seems to be an encouragement or compulsion to invest in super rather than rely on the pension. Maybe its even more intrusion by government into people's financial affairs, but left to their own devices a lot of people will spend hard early with the knowledge that the pension is there to fall back on.
> 
> So it's a bit of a cleft stick either way. Force people to contribute to super throughout their lives, or face an ever increasing pension bill.




It's just a way for Labor to hand more cash to the finance industry.

I did my maths thing and figured that if our fund managers were to return that average 8%p.a. an index fund generally does... the average wage remaining flat... current contribution over 40 years should give them $2.5m to retire on. 

At a lower 5%p.a. return on the same, it's about $1.2m... not a bad $50Kp.a. for retirement of some 20 years. 

So unless the case is that fund managers couldn't meet that Index return; or the fees too high and the return too low we all better save more just to meet the same return, hopefully.

12% savings is no chump change. And it's not 12% employers pay anyway... employers all have their budget per head. You increase the super they have to pay, it'll just come out of the wage they'll pay.


----------



## sptrawler (12 January 2019)

I read an article today, that suggested there may be a limit on credit cards, when taking out a mortgage.
That will bring some interesting results, with it. IMO


----------



## sptrawler (12 January 2019)

Smurf1976 said:


> In my view a spectacular bust is not in anyone's best interest apart from a small minority of cashed up investors waiting to buy.
> 
> For businesses and workers it's a pretty sure way to bring on a recession with all that entails - business failures and mass unemployment.
> 
> ...




To underpin your and my beliefs, even the experts are getting nervous.

https://www.smh.com.au/business/the...ed-alone-in-an-apartment-20190112-p50qzh.html


----------



## Knobby22 (13 January 2019)

sptrawler said:


> To underpin your and my beliefs, even the experts are getting nervous.
> 
> https://www.smh.com.au/business/the...ed-alone-in-an-apartment-20190112-p50qzh.html



That points out the basic problem. A large proportion of the country make their money through building and or infrastructure. As the apartment building slows then this will increase unemployment causing a recession causing further housing price falls and failure of the numerous cafes etc.
Combine this with the disruptive effects on retail through the internet, we could have a few problems coming up.


----------



## sptrawler (13 January 2019)

Knobby22 said:


> That points out the basic problem. A large proportion of the country make their money through building and or infrastructure. As the apartment building slows then this will increase unemployment causing a recession causing further housing price falls and failure of the numerous cafes etc.
> Combine this with the disruptive effects on retail through the internet, we could have a few problems coming up.




Well that's what smurph and I think, many think there won't be a problem, others say bring it on as long as it drops prices in Sydney and Melbourne.
I personally think a perfect storm is coming, unless silly Billy does the biggest back flip, in history.


----------



## Smurf1976 (13 January 2019)

sptrawler said:


> I personally think a perfect storm is coming



I’d rather we weren’t in this situation in the first place but reality is that for first home buyers there’s one thing even worse than high prices and that’s being unemployed.

A disorderly collapse which takes down countless businesses and jobs with it isn’t going to help anyone not sitting on a big pile of cash and that’s not your average first home buyer.

A gradual correction is what we need. Slow and steady not a crash.


----------



## InsvestoBoy (13 January 2019)

Smurf1976 said:


> A gradual correction is what we need. Slow and steady not a crash.




These are things you have to set up on the way up, not try and manage at the peak. Eventually (at least, IMHO) capital misallocation and fraud and mismanagement are baked into the cake and you can't avoid their consequences.

Blaming policy changes for what was already inevitable is missing the forest for the trees. 

The cake is baked and that's all there is to it.

In the 2006-2009 period in the US, there was no accomodative policy they didn't try to keep the whole thing from falling over. It fell over anyway.


----------



## SirRumpole (13 January 2019)

Smurf1976 said:


> I’d rather we weren’t in this situation in the first place but reality is that for first home buyers there’s one thing even worse than high prices and that’s being unemployed.
> 
> A disorderly collapse which takes down countless businesses and jobs with it isn’t going to help anyone not sitting on a big pile of cash and that’s not your average first home buyer.
> 
> A gradual correction is what we need. Slow and steady not a crash.




I can't really see the problem of the proposed ng changes and personally I think panic has been rustled up by a scare campaign from "the other side" without much foundation.

Those who are currently ng'ing can continue to do so, new properties which is where the construction jobs are will continue to be eligible for ng and more housing will be available for owner occupiers. 

I can't see the problem really.


----------



## InsvestoBoy (13 January 2019)

SirRumpole said:


> I can't see the problem really.




Only a problem if the reality on the ground is much worse than the picture painted by media and spruikers


----------



## Value Collector (13 January 2019)

PZ99 said:


> Business employs people. Housing doesn't.




That’s got to be one of the silliest statements I have seen on this forum.

As rumple rightly pointed out, housing creates many layers of business activity, and supports a wide array of primary, manufacturing and trade industries.


----------



## sptrawler (13 January 2019)

SirRumpole said:


> I can't really see the problem of the proposed ng changes and personally I think panic has been rustled up by a scare campaign from "the other side" without much foundation.
> 
> Those who are currently ng'ing can continue to do so, new properties which is where the construction jobs are will continue to be eligible for ng and more housing will be available for owner occupiers.
> 
> I can't see the problem really.




You may well be right, and I really do hope you are.
The problem I see is, there will be a large drop in the established market, also in the build to rent market, as the CG changes IMO will make the risk too high for the reward received.
I guess time will tell, I certainly hope it is a fairly bumpless transition.

By the way, I'm talking about the W.A market, Sydney and Melbourne have a strong demand, W.A is in the doldrums. Which can only get worse with the changes. IMO
If the rest of Australia goes into recession, Sydney and Melbourne get to join in, I don't think people think about that.


----------



## PZ99 (13 January 2019)

Value Collector said:


> That’s got to be one of the silliest statements I have seen on this forum.
> 
> As rumple rightly pointed out, housing creates many layers of business activity, and supports a wide array of primary, manufacturing and trade industries.



Silly is your attempt to selectively quote one sentence and take it out of context in your reply.

Investors who negatively gear empty apartments and leave them empty aren't employing anyone.

They are merely sending me a tax bill every year. I want better value for my money.


----------



## Smurf1976 (13 January 2019)

SirRumpole said:


> I can't really see the problem of the proposed ng changes and personally I think panic has been rustled up by a scare campaign from "the other side" without much foundation.



My concern is simply about the scale.

This bubble has been building for a very long time indeed I've commented on it more than a decade ago on this forum so that's not something I've come up with using the power of hindsight.

It has been at the point of being outright dangerous for quite some time now.

There's a danger if it bursts suddenly. What does that do to banks, the stock market and the general economy? The answers there are unlikely to be in any way good.

There's a danger if it doesn't burst at all. How long before we see those who missed out, and that's an entire generation now, say enough's enough? If it comes to that point then we're in a world of pain.

I thus see the most important thing being to act pragmatically not ideologically. It's too late to avoid pain but don't make it any worse than it needs to be.

If I were sufficiently cynical then I'd think the Coalition have deliberately "blown" the upcoming election to avoid the blame for the inevitable. The goose is cooked and they know it.


----------



## Value Collector (14 January 2019)

PZ99 said:


> Silly is your attempt to selectively quote one sentence and take it out of context in your reply.
> 
> Investors who negatively gear empty apartments and leave them empty aren't employing anyone.
> 
> They are merely sending me a tax bill every year. I want better value for my money.




So building that apartment didn’t employ anyone? I bet it employed more people than if that person bought a bar of gold.

They aren’t sending you a tax bill, they are just sending a smaller tax check than they otherwise would have to.


----------



## Darc Knight (14 January 2019)

Value Collector said:


> So building that apartment didn’t employ anyone? I bet it employed more people than if that person bought a bar of gold.
> 
> They aren’t sending you a tax bill, they are just sending a smaller tax check than they otherwise would have to.




I think what he's getting at is the lost tax revenue due to negative gearing. Tax revenue which will have to be made up/gained elsewhere.


----------



## Value Collector (14 January 2019)

Darc Knight said:


> I think what he's getting at is the lost tax revenue due to negative gearing. Tax revenue which will have to be made up/gained elsewhere.




If an investor “loses” some revenue, that revenue will be earned by some some one else.

Eg, any loss an investor has due to interest charges, will create a taxable gain to a bank via profits or bank employee via wages or depositor via earns interest etc etc.

If some one is actually buying a property and literally holding it empty, are taking a property off the market, so are increasing demand for property which will
Either increase the price other investors can earn for their properties on the market, or increases the demand for new properties to be built.


----------



## Humid (14 January 2019)

sptrawler said:


> Well that's what smurph and I think, many think there won't be a problem, others say bring it on as long as it drops prices in Sydney and Melbourne.
> I personally think a perfect storm is coming, unless silly Billy does the biggest back flip, in history.




Plenty of rentals vacant in WA at the moment even more for sale
Do we blame Scomo for this or are you waiting for an election.


----------



## sptrawler (14 January 2019)

Humid said:


> Plenty of rentals vacant in WA at the moment even more for sale
> Do we blame Scomo for this or are you waiting for an election.



I would have thought, it is because of the pending changes to CG, I know I would be selling if I was sitting on a decent capital gain.
Labor are a shoe in the win the election, and it will be too late once that happens.
Just my opinion.
But you are right there are a lot coming onto the market, I ride a push bike around and there are a lot of signs going up, on my normal route.


----------



## Humid (14 January 2019)

Value Collector said:


> So building that apartment didn’t employ anyone? I bet it employed more people than if that person bought a bar of gold.
> 
> They aren’t sending you a tax bill, they are just sending a smaller tax check than they otherwise would have to.



 You’ve never worked in a gold mine!


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## Value Collector (14 January 2019)

Humid said:


> You’ve never worked in a gold mine!




No I haven’t worked in a gold mine, but building a house or apartment requires a lot of mining also eg steel, copper, clay, cement etc etc, not to mention the multiple layers of manufacturers making all components and then the trades assembling it all. 

But if you want to talk waste, mining gold has to be at the top of the list.


----------



## jbocker (14 January 2019)

The way I see it, in Perth wrt Property prices. There was a large spike in approvals to build a lot of apartments late in the mining boom to cover the growing shortage of housing. The boom ending and people started to leave the state, causing a downward pressure on pricing as homes became more and more available. Add to this jobs were lost and wages decreased (less hours worked and hourly rates deflated). Banking royal commission had started, have spooked the banks and they reacted in making applications FAR more stringent. Now we have the Interest Only loans converting to Principle and Interest, causing repayments to rise significantly and causing stress. Rents have reduced significantly, but have stabilised and have had a very mild recovery.
That plethora of building approvals have been in construction and now many are hitting the market putting a lot of pressure on the roughly 700-800,000 market, which is falling and consequently pressuring the lesser valued homes. Yet the big end of town, the western suburbs (west is more desirable in Perth), have had some significant drops but sell very quickly, typically there is not the same issues for those with big bucks.
Some relief in that banks will make more Interest Only loans? Hmm not so sure, as I think (by the end of the commission findings) the initial approval process will need the banks to show due diligence that the mortgage holder can accommodate the Principal and Interest loans when it becomes due. This is going to be difficult for those who may not be able to explain their income growth potential or mortgage reduction capacity.
So for the year it is going to be tough and getting tougher for sellers. The new builds, the offloads and stress sales will take some time to be absorbed by the market. No need to rush, you might leave a lot of money on the table. 
Yet I feel that magic median price value I think may fall on a number that marginally higher than it is now. And as usual that solitary number wont be telling the whole story.
The govt decisions on NG etc whatever that might be, is going to be secondary in Perth, till the market sorts itself out, but is unlikely to help or ease the situation.


----------



## PZ99 (14 January 2019)

Value Collector said:


> So building that apartment didn’t employ anyone? I bet it employed more people than if that person bought a bar of gold.
> 
> They aren’t sending you a tax bill, they are just sending a smaller tax check than they otherwise would have to.



No they are sending me a tax bill because they are using NG to artificially lower their tax liability.

And I bet that apartment building would've been built with or without NG.

As for the bar of gold.. you show me yours I'll show you mine 

BTW your bank profits being directed to employees/depositors theory has one major obstacle - greed.

Last time I checked - the NAB are axing 6000 jobs.


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## Value Collector (15 January 2019)

PZ99 said:


> No they are sending me a tax bill because they are using NG to artificially lower their tax liability.
> 
> And I bet that apartment building would've been built with or without NG.
> 
> ...




They would have purchased it from a developer, who will then go and build another apartment, because that’s what they do.

If the bank saves money by firing staff, they will pay more tax and pay higher dividends.


----------



## PZ99 (15 January 2019)

Value Collector said:


> They would have purchased it from a developer, who will then go and build another apartment, because that’s what they do.
> 
> If the bank saves money by firing staff, they will pay more tax and pay higher dividends.



So they aren't creating employment - which goes to my original point.

If taxpayers have to fund a gravy train of debt servicing I'd rather it be for small business which benefits communities around the country as opposed to a handful of inner city developers and  latte sipping high income earners


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## Smurf1976 (15 January 2019)

Value Collector said:


> If the bank saves money by firing staff, they will pay more tax and pay higher dividends.



Unless they hand it to a select few like the CEO and so on.


----------



## jbocker (15 January 2019)

Smurf1976 said:


> Unless they hand it to a select few like the CEO and so on.



Naaaaahhhhh No Way. They wouldn't do that would they?


----------



## sptrawler (16 January 2019)

Just posting this, so we have something to reference back to.

https://www.smh.com.au/politics/fed...st-liberal-seats-hardest-20190115-p50rg4.html

https://www.abc.net.au/news/2018-11-16/fact-check-negative-gearing-under-80000/10387552

https://www.abc.net.au/news/2016-03-03/fact-check-negative-gearing-scott-morrison/7180812


----------



## Humid (17 January 2019)

sptrawler said:


> Just posting this, so we have something to reference back to.
> 
> https://www.smh.com.au/politics/fed...st-liberal-seats-hardest-20190115-p50rg4.html
> 
> ...




I don’t think NG was set up for rich people flipping houses in Sydney’s east
Should of been capped years ago where it might encourage people to invest in affordable rentals


----------



## sptrawler (18 January 2019)

Humid said:


> I don’t think NG was set up for rich people flipping houses in Sydney’s east
> Should of been capped years ago where it might encourage people to invest in affordable rentals



Agree 100%, my post from Feb 2014 #11247.

_If that were the case, losses of a capital nature would be able to offset against income, at present they can only be carried forward against a capital gain.
This is because the investment is seen as speculative.
Can't the same be said of an interest only loan against a property, where the purchase was to get capital appreciation.
Why should the taxpayer have to pay the speculator the shortfall in their earnings, they took the loan on with the knowledge, it is unlikely to ever be rent possitive.
They should only be able to mitigate their losses upto the income they recieve from the investment.
To allow them to claim a tax refund for losses above that, just encourages speculation/gambling losses to be a tax deduction_.

The problem I see now, is that the problem has been left too long and has become too big, to rectify it in one foul swoop could cause more issues than it solves.
I think a gradual approach, in stages over period of a few years, would be a much better approach. Just my opinion, and we have already seen not many agree with it.


----------



## qldfrog (19 January 2019)

This is a bit more general, not sure where to drop this..feel free to reallocate to other thread:
But i found this letter worth reading

https://www.smh.com.au/business/the...storm-our-leaders-ignore-20190117-p50rw4.html


----------



## sptrawler (19 January 2019)

qldfrog said:


> This is a bit more general, not sure where to drop this..feel free to reallocate to other thread:
> But i found this letter worth reading
> 
> https://www.smh.com.au/business/the...storm-our-leaders-ignore-20190117-p50rw4.html




Interesting read, explains the precarious position, but like most doesn't know what will cause the house of cards to fold.


----------



## qldfrog (19 January 2019)

As any instable system, a butterfly on the other side of thevplanet, in the most unexpected time and place will pop the balloon.
But we know of the ballon, of the popping effects so lets be ready..
Been trying to sell a warehouse for 15months and still on the market regardless of price


----------



## sptrawler (19 January 2019)

qldfrog said:


> As any instable system, a butterfly on the other side of thevplanet, in the most unexpected time and place will pop the balloon.
> But we know of the ballon, of the popping effects so lets be ready..
> Been trying to sell a warehouse for 15months and still on the market regardless of price



Here in my area, South of Perth, a lot of stock going onto the market.


----------



## qldfrog (19 January 2019)

Here too, a lot of new stock still built, not a tenant in sight


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## sptrawler (19 January 2019)

I see a headline in the Australian, says Shorten may 'wait and see' about the changes to negative gearing, untill after the next election.
Maybe even he has realised how stupid, what he is suggesting, would be.


----------



## sptrawler (23 January 2019)

Perth housing now most affordable in 20 years, and prices still falling, shows what can happen with a loss of confidence.

https://thewest.com.au/business/hou...dable-in-more-than-two-decades-ng-b881081091z

Now project that over the whole economy.


----------



## PZ99 (23 January 2019)

Not in Tasmania 

According to this Perth’s median house price is around 5% higher above $500K which is around 6 times the average wage which is still high but obviously better than Sydney/Melbourne.

I remember housing in Sydney/Melbourne was around 7 times the wage in 2007 when the election was debated on housing affordability.


----------



## sptrawler (23 January 2019)

PZ99 said:


> Not in Tasmania



Tasmania, top spot, we spent 4 weeks travelling around a couple of years ago.
I guess a lot of Melbourne retirees, are cashing in and moving down there, seems like a great idea to me.

Well I would never have guessed Perth has gone up, hopefully that was the bottom, but I wouldn't put money on it.


----------



## satanoperca (23 January 2019)

sptrawler said:


> Perth housing now most affordable in 20 years, and prices still falling, shows what can happen with a loss of confidence.
> 
> https://thewest.com.au/business/hou...dable-in-more-than-two-decades-ng-b881081091z
> 
> Now project that over the whole economy.




Isn't lower property prices good for Australia and it's economy?


----------



## sptrawler (23 January 2019)

satanoperca said:


> Isn't lower property prices good for Australia and it's economy?



Absolutely.


----------



## qldfrog (23 January 2019)

Fundamentaly good but for most household involved the loss of potentially decades of saving worths can not help the economy, nor will the reduction of demand and tradies out of jobs
What is left? Mining to a China which do not need our stuff?


----------



## sptrawler (23 January 2019)

qldfrog said:


> Fundamentaly good but for most household involved the loss of potentially decades of saving worths can not help the economy, nor will the reduction of demand and tradies out of jobs
> What is left? Mining to a China which do not need our stuff?



This is exactly what I was talking about a while ago.
The lowering of Australian house prices is critical, that people will be hurt, is unavoidable.
The only thing that can reduce the pain and economical impact, is by deflating prices as slowly as possible, but having said that everyone except you and smurph bagged me for suggesting that. 
So it obviously doesn't worry most ASF members, and if they represent the feeling of the majority of Australians, I think we are in for one hell of a shock.


----------



## qldfrog (24 January 2019)

Let's hope our future globalist leaders will hear the voice of reason ,


----------



## moXJO (24 January 2019)

sptrawler said:


> This is exactly what I was talking about a while ago.
> The lowering of Australian house prices is critical, that people will be hurt, is unavoidable.
> The only thing that can reduce the pain and economical impact, is by deflating prices as slowly as possible, but having said that everyone except you and smurph bagged me for suggesting that.
> So it obviously doesn't worry most ASF members, and if they represent the feeling of the majority of Australians, I think we are in for one hell of a shock.



I agree with deflating slowly. The current government is on the right track with this.
Housing is currently sliding down in price where I am. Tradies are also getting hard up for work and dropping prices. Many are working out of area at reduced prices which has a flow on effect. I'm also wondering about peoples levels of savings. Seems to be a lot living week to week. 

I think if its played wrong then Australia is in for a major shock.


----------



## satanoperca (24 January 2019)

Source : Domain


----------



## sptrawler (24 January 2019)

moXJO said:


> I agree with deflating slowly. The current government is on the right track with this.
> Housing is currently sliding down in price where I am. Tradies are also getting hard up for work and dropping prices. Many are working out of area at reduced prices which has a flow on effect. I'm also wondering about peoples levels of savings. Seems to be a lot living week to week.
> 
> I think if its played wrong then Australia is in for a major shock.



You make a good point about tradies, I am getting a gas HWS changed over to electric and a gas cooktop changed to inductive.
I was expecting a rude shock from the plumber, he quoted $200, that wouldn't have happened a couple of years ago. You would have been lucky to get one and the price would have been triple.


----------



## Ann (28 January 2019)

*House price index in Australia dropped by 1.5 percent quarter-on-quarter in the three months to September of 2018.*


----------



## luutzu (29 January 2019)

sptrawler said:


> You make a good point about tradies, I am getting a gas HWS changed over to electric and a gas cooktop changed to inductive.
> I was expecting a rude shock from the plumber, he quoted $200, that wouldn't have happened a couple of years ago. You would have been lucky to get one and the price would have been triple.




Why electric from gas? Aren't electricity more expensive and doesn't cook as well? OR it's Perth and always sunny so your solar does most of the work?

We replaced our old hot water tank. Those gas ones that's always on. Switched to instantaneous hot water system and the saving is quite noticeable. Maybe $150 a quarter less.


----------



## sptrawler (31 January 2019)

It sounds as though Sydney could be doing it tough this year, with property. Still it was one hell of a bubble, like all bubbles, some make money some get burnt.

https://www.watoday.com.au/business...ts-line-up-for-fire-sale-20190130-p50ulb.html

All I can say is, welcome to the Perth market, ours has been in the doldrums for a few years.


----------



## luutzu (31 January 2019)

sptrawler said:


> It sounds as though Sydney could be doing it tough this year, with property. Still it was one hell of a bubble, like all bubbles, some make money some get burnt.
> 
> https://www.watoday.com.au/business...ts-line-up-for-fire-sale-20190130-p50ulb.html
> 
> All I can say is, welcome to the Perth market, ours has been in the doldrums for a few years.




Maybe load up on property-related stocks in a couple years time. Alright, maybe a decade's time.


----------



## sptrawler (31 January 2019)

luutzu said:


> Maybe load up on property-related stocks in a couple years time. Alright, maybe a decade's time.



I suppose it will really hit REIT's, which I was starting to look at, with the impending franking changes.


----------



## luutzu (31 January 2019)

sptrawler said:


> I suppose it will really hit REIT's, which I was starting to look at, with the impending franking changes.




Yea, REITs gonna either go broke or a massive cap raising.

I bought Australand some years back. Doubled my (very tiny) money twice on it. First was a minor, practically nothing compared to the recent property boom... Lucky to sold out early before the correction.

Then pick up after it barely survived from a massive dilution and cap raising. Sold out a month or two before the takeover... could have made a few more bucks but yea.

REITS... shopping centres; stupid Boral and CSR, James Hardies. Not that I have any special insight, but it looks like the coming crash will take a fair chunk of time to recover from... I'm a bit shy of jumping in too early like I did with Santos and barely made it out alive.


----------



## willy1111 (31 January 2019)

sptrawler said:


> I suppose it will really hit REIT's, which I was starting to look at, with the impending franking changes.




My understanding, which could be wrong, is that a REIT is a Real Estate Investment Trust...trusts pass through all income, thus no company tax paid. 

No company tax paid = no franking credits = would not be effected by any changes to franking credit refunds.


----------



## luutzu (31 January 2019)

willy1111 said:


> My understanding, which could be wrong, is that a REIT is a Real Estate Investment Trust...trusts pass through all income, thus no company tax paid.
> 
> No company tax paid = no franking credits = would not be effected by any changes to franking credit refunds.




I don't know, can't remember. Though don't remember any franked dividends from ALZ.

I'm not too worried about these franking credit stuff from Labor. Maybe that's 'cause I'm not needing the dividends from my investment yet. So if Labor does it, companies would, say, buy back more stocks and return dividend that way, I think.


----------



## satanoperca (31 January 2019)

Got to love a self interested person expelling word of wisdom to the masses of uneducated fools.
https://www.news.com.au/finance/rea...9/news-story/1ac365cc99fb76cbebb2fad2f0b2d419 

"
Billionaire apartment developer Harry Triguboff has warned this year could be worse than 2018 for Sydney and Melbourne’s already battered housing markets.

The Meriton founder called for easing of taxes to coax foreign buyers back into the market and for young people to be able to access their superannuation to buy a home."

F---k me, are you for real. Yes more foreign buyers and tax breaks will help young buyers be able to purchase a home. 

Self interested twit.

"Mr Triguboff added that number of borrowers in negative equity was growing, but banks so far were not calling in loans. “And people are paying,” he told the paper. “In some ways the banks are doing a good job — they are not sending people to the wall.”"

No you di--khead, ridiculously high property prices are, and you who just wants more money, you are self interested, if you cared so much, offer people a break, gee you are only a $B air, need more money that you cannot spend.

Sorry, the idea of tax breaks and accessing super so this self interested twit can have more money that he doesn't need, is just stupid and it is time people spoke out more.

A 1 bedroom apartment in Sydney for $700K sounds like a great deal - NOT


----------



## Smurf1976 (31 January 2019)

sptrawler said:


> So it obviously doesn't worry most ASF members, and if they represent the feeling of the majority of Australians, I think we are in for one hell of a shock.



I think the problem is that it's simply so long since we last had a recession. It's now to the point that "the recession" to the younger half of the population is a bit like "World War 2" was to the previous generation. You know it happened and was bad but have no real comprehension of it beyond a few basic facts. Since it was so long ago and hasn't happened again you've got no serious expectation of personally living through anything like that.

We thus have people going about their activities, businesses, investments and so on either oblivious to what can happen or having dismissed it as about as likely as martians landing in one of those green spaceships with 3 legs and a red light on top like in the cartoons.

The logical and concerning conclusion from that is that many will have left absolutely no buffer to cope with something they haven't considered a credible occurrence. As such, if it does occur then it'll be rather spectacular I expect. 

In contrast, in the past recessions were periodic things frequent enough that nobody would get to the point of being in senior management, of anything, without having experienced a few. Likewise with housing, most would have seen at least one recession by the time they were looking to buy property so the concept was a very real thing in their mind.


----------



## sptrawler (1 February 2019)

I remember in 1982, due to a family health issue I had to relocate to Perth, unfortunately it was bang in the middle of the recession.
The only job advertised in Perth for an electrician, was in a small family run electronics business that employed four people. 
I went for the interview and when it finished, I asked how many people were they interviewing, they said they had short listed 170.


----------



## Junior (1 February 2019)

sptrawler said:


> I remember in 1982, due to a family health issue I had to relocate to Perth, unfortunately it was bang in the middle of the recession.
> The only job advertised in Perth for an electrician, was in a small family run electronics business that employed four people.
> I went for the interview and when it finished, I asked how many people were they interviewing, they said they had short listed 170.




Did you get the gig?


----------



## satanoperca (1 February 2019)

Economies and river eco systems have a lot in common.

For a river eco system to flourish and grow, it requires a flood to clear out built up debris that has accumulated over time, the flood in turn, replenishes the dams and billabongs along it edges, where new life can be created and nutured until the next flood, where it is returned to the main river way.
We are seeing this first hand along the Murray Darling basin at the moment, result, no floods, system is dying.

So an economy is no different, replace flood with recession, debris with debt. Dams and billabongs, with startups and new ideas.

We dammed the recession for 2 long, we haven't allowed the natural course of events to transpire, we continue to kid the can down the road, in this case built a bigger dam wall, but the bigger it gets the greater the chance of major structural meltdown. In this case we have accumulated massive amount of debt and the river system (economy) is starting to get sick and slowly die. 


We have lowered IR to the lowest in history, 
we have tap every conceivable pool of capital in the economy and leverage against it with debt (future capacity), 
we have sold our land to foreigners, which should be for Australians, 
we have allowed our retires to leverage up against their super, their retirement into one asset class, 
we continue to promote economical models that are not relevant to the current world we live in.  
we need more discussion on not how to prevent a recession but how we will grow from it, flourish again and improve. 
We can keep ignoring it, but just like a tumor, if we ignore it 2 long, eventually you die. 

No one likes a flood and no one likes a recession, but they are inevitable, you can try and control them, but nature will always win.   

We need to accept, that if we enter into a recession, it is for a reason;

it makes the economy and the people within it more lean, 
more hungry to survive, 
it promotes change of thinking, 
it brings on creativity, 
it flushes out inefficiency that have accumulated, 
it makes people more alert, 
more determine, 
more planned.

_We have become lazy as a nation, our politicians even more so, this is a time for leaders to stand up, face adversity and work together to get us through this oncoming flood. 
_
I use the term "we" as all of us are in this together, that is what makes a great community, a great society and a great country.

BLAME today and in the future will not see us through this, passion and determination to make our country better than it was yesterday, the week before, the year before etc etc will.

We need to look forward and work together.

Someone kindly told me I was an idealist, they were correct, but if one cannot dream, one cannot have passion, a willingness to change and face adversity, then I wonder why one wishes to live.


----------



## sptrawler (1 February 2019)

Junior said:


> Did you get the gig?



Is the Pope a catholic? does Dolly Parton sleep on her back? do the bears $hit in the forest?
Yes I got the gig, thank God, I really needed it. It was a terrible time in my life.


----------



## sptrawler (1 February 2019)

satanoperca said:


> Economies and river eco systems have a lot in common.
> 
> For a river eco system to flourish and grow, it requires a flood to clear out built up debris that has accumulated over time, the flood in turn, replenishes the dams and billabongs along it edges, where new life can be created and nutured until the next flood, where it is returned to the main river way.
> We are seeing this first hand along the Murray Darling basin at the moment, result, no floods, system is dying.
> ...



You are right, people reason from experience.
How does the song go? You don't know what you've got till its gone.

You can tell people something a million times, unless they have experienced it they really struggle to believe, once they have experienced it they then want to pass on that knowledge.

A bit like when you tell a child that something is hot, they look at you like you have two heads, once they have burnt themselves they take much more notice.
It actually applies to most facets of life, untill you attain an age where you listen, and process the information. Some people never get there.


----------



## sptrawler (1 February 2019)

Anyway back on topic, just read this in the SMH.

https://www.smh.com.au/business/the...national-property-market-20190201-p50uzt.html

We may see some circus tumbling back flips, from silly Billy soon. IMO
I certainly hope not, like santanaperca says, sometimes we need a good enema.
The good thing is Canberra isn't feeling it, so the reality might not sink in for the pollies.


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## Darc Knight (1 February 2019)

Geez, I've been beating this drum for yonks. Let's bring on this Recession, preparedness first, clear out the deadwood Companies, then we can all start making some easy money again.


----------



## sptrawler (1 February 2019)

Darc Knight said:


> Geez, I've been beating this drum for yonks. Let's bring on this Recession, preparedness first, clear out the deadwood Companies, then we can all start making some easy money again.



I think you are right, oops don't take that the wrong way.


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## luutzu (1 February 2019)

Darc Knight said:


> Geez, I've been beating this drum for yonks. Let's bring on this Recession, preparedness first, clear out the deadwood Companies, then we can all start making some easy money again.




Seems they prefer a bushfire as a way to clear deadwood.

Firesales aren't bad for those with the cash though.


----------



## sptrawler (1 February 2019)

luutzu said:


> Seems they prefer a bushfire as a way to clear deadwood.
> 
> Firesales aren't bad for those with the cash though.



I've never liked the idea of holding property in the SMSF, however if the crash is big enough, my mind could be changed.
No CG in the super, oh well there is more than one way to skin a sausage (bit of PC)


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## tech/a (1 February 2019)

sptrawler said:


> I've never liked the idea of holding property in the SMSF, however if the crash is big enough, my mind could be changed.
> No CG in the super, oh well there is more than one way to skin a sausage (bit of PC)




Have quite a bit but not Domestic.
Commercial one of which is my place of business.
Returning $100K a year into the fund.

You get to a point where you cant put any more in /year!


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## sptrawler (1 February 2019)

tech/a said:


> Have quite a bit but not Domestic.
> Commercial one of which is my place of business.
> Returning $100K a year into the fund.
> 
> You get to a point where you cant put any more in /year!



It's fat ducks like you, that are giving the rest of us SMSF retirees, look bad.


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## satanoperca (1 February 2019)

tech/a said:


> Have quite a bit but not Domestic.
> Commercial one of which is my place of business.
> Returning $100K a year into the fund.
> 
> You get to a point where you cant put any more in /year!




This is smart and logical for anyone who runs their own business and needs premises to work out of.
Business needs premises and has 3 choices, lease for X, lease for business owners where property is help under SMSF or buy property.

The preferred option is available and feasible, is option 2. 

Why? When business owner wishes to return, they sell the business, but the property still returns a rental income for their retirement.

In many situations that I come across, the asset that a business has built up for the owners is the premises they worked from, in most small business cases, the business is not sell-able when the business owner decides to retire


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## sptrawler (1 February 2019)

The sad story of another young person struggling to get out of the housing market, oh how times have changed.
https://www.smh.com.au/business/the...kes-hold-of-home-sellers-20190201-p50v43.html


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## luutzu (1 February 2019)

sptrawler said:


> I've never liked the idea of holding property in the SMSF, however if the crash is big enough, my mind could be changed.
> No CG in the super, oh well there is more than one way to skin a sausage (bit of PC)




Yea, pretty tough to make a case for property in super. Especially when you're a decade away from retirement. I reckon it's just another scam those property spruikers want the gov't to let us hand over our cash to them today.

I told my siblings that at our current rate of contribution and my geniuses, we would retire with at least $30M [$10M a pop]... but then even I don't believe that so yah, gotta check the compound calculator a few time to still not believe it


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## satanoperca (6 February 2019)

https://www.afr.com/real-estate/mel...s-to-pay-in-renminbi-in-china-20190205-h1avuk

"The developer also offered a generous commission of 6 per cent to agents who sell the three and four-bedroom townhouses set on lots of 150 to 300 square metres. Prices for the homes start at $1.2 million."

Townhouses are in Burwood, Vic. Obsolute bargain at $8,000 m2.


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## sptrawler (9 February 2019)

It tells you, the writing is on the wall, when Aussie John is selling into a falling market.
It will be hard to move existing expensive property, post election.

https://www.domain.com.au/news/auss...smh&utm_medium=link&utm_content=pos4&ref=pos1


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## sptrawler (11 February 2019)

I hope things over East don't accelerate too quickly, AV Jennings 90% drop in profit seems a lot.

https://www.smh.com.au/business/com...lampdown-for-profit-dive-20190211-p50wxk.html


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## luutzu (11 February 2019)

sptrawler said:


> I hope things over East don't accelerate too quickly, AV Jennings 90% drop in profit seems a lot.
> 
> https://www.smh.com.au/business/com...lampdown-for-profit-dive-20190211-p50wxk.html




She'll be right, mate. She'll be right.

I know of people who bought apartment four years ago and still haven't made any money. Paper-based or otherwise. And to add insult to injury, the apartment need a reno if its standard is to be above a slump or a rundown rental.


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## satanoperca (11 February 2019)

From above article :
"“The company believes that confidence is being suppressed by a combination of political uncertainty (especially federal tax policy), sensationalist press commentary about the outlook for residential markets and the relatively sudden tapering of residential property lending appetite of banks,” company directors told shareholders."

So everyone is tapped out on debt and debt is harder to get. Result : prices decline.

The masses are starting to see that property is not always an instant path to riches, given that the same sensationalist press who are now painting a doom picture, in the past have painted the opposite.


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## satanoperca (11 February 2019)

Melbourne catching up to Sydney fast. 

The apartment market in Sydney starting to follow, I believe it will be in this market segment (apartments) we will see the largest falls.


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## moXJO (11 February 2019)

House next to me selling for $890-990k.
A year ago it would have fetched $1.4 mill. Good block, big house..... been on the market 2 weeks so far. The one across the road is trying to get $1.2mill,  but good luck with that. Been on the market 4 months now.

I'm seeing a slide of $300k plus on some houses in my area from the peak about a year ago. 

Building is starting to slide. Once it goes here, Sydney will be affected.

But keeping a watch on immigration and how many dwellings are available will be important. Every time you think housing is going off a cliff, they let more rich immigrants in. And its an endless supply to tap.


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## sptrawler (11 February 2019)

moXJO said:


> House next to me selling for $890-990k.
> A year ago it would have fetched $1.4 mill. Good block, big house..... been on the market 2 weeks so far. The one across the road is trying to get $1.2mill,  but good luck with that. Been on the market 4 months now.
> 
> I'm seeing a slide of $300k plus on some houses in my area from the peak about a year ago.
> ...



A relative who was a real estate agent, told me if it has sold in 6 weeks, it is priced wrong.
The immigrant thing is true, but I think from what I've read, Sydney and Melbourne are at capacity regards infrastructure.


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## sptrawler (11 February 2019)

sptrawler said:


> A relative who was a real estate agent, told me if it has sold in 6 weeks, it is priced wrong.
> The immigrant thing is true, but I think from what I've read, Sydney and Melbourne are at capacity regards infrastructure.



That should read, has *not* sold in 6 weeks,


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## moXJO (12 February 2019)

sptrawler said:


> A relative who was a real estate agent, told me if it has sold in 6 weeks, it is priced wrong.
> The immigrant thing is true, but I think from what I've read, Sydney and Melbourne are at capacity regards infrastructure.



Yeah,  he wants way too much for it. He missed the top.

Immigration and government intervention is what can throw you. They have been ramping "big australia" for years. We are probably only halfway of where they want to be.


----------



## sptrawler (12 February 2019)

moXJO said:


> Yeah,  he wants way too much for it. He missed the top.
> 
> Immigration and government intervention is what can throw you. They have been ramping "big australia" for years. We are probably only halfway of where they want to be.



That's true, but because they used housing as a buffer, when the mining boom bust, they didn't put limits on where migrants could go to.
So now they have everybody fighting to get into Sydney and Melbourne, but the infrastructure obviously can't keep up, so they have to take a breather.
Next year in my opinion, is going to be really interesting. IMO


----------



## qldfrog (12 February 2019)

There will be not limit..the more the better..more voters for labour, cheaper labor for the liberals


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## sptrawler (12 February 2019)

qldfrog said:


> There will be not limit..the more the better..more voters for labour, cheaper labor for the liberals



That is why they like open borders.


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## Humid (12 February 2019)

sptrawler said:


> That should read, has *not* sold in 6 weeks,



How about
If it sold in 6 weeks what did you need a real estate agent for.
If you can manage your super through the mine fields you could flog a house.


----------



## sptrawler (12 February 2019)

Humid said:


> How about
> If it sold in 6 weeks what did you need a real estate agent for.
> If you can manage your super through the mine fields you could flog a house.



In W.A people are very reluctant to buy privately, I have sold property privately, but usually to someone I knew who wanted it.


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## sptrawler (12 February 2019)

Looks like everyone is sitting back, with their feet up, waiting for Labor.

https://www.smh.com.au/politics/fed...r-fastest-rate-since-gfc-20190212-p50x8z.html

Oh well there might be a silver lining to the cloud, maybe a home back on the river and a part pension, allow for the worst hope for the best.


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## Toyota Lexcen (12 February 2019)

That's probably right. Could be good outcome for liberals.




qldfrog said:


> There will be not limit..the more the better..more voters for labour, cheaper labor for the liberals


----------



## moXJO (14 February 2019)

sptrawler said:


> Looks like everyone is sitting back, with their feet up, waiting for Labor.



Some truth in this. No one will be investing much until labor shows its hand. 

On another note... I can't believe people are jumping and cheering get slugged with more taxes. If the taxes were well spent,  I could understand. But Australian pollies are the biggest bunch of deadshits when it comes to wasting our dollars.
Not only that, but the money gets chewed up on paper pushers that add nothing  substantial to the project.


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## Ann (19 February 2019)

Here is a good site for weekly Auction clearances around Australia...

*Auction Results & Recent Sales*
Australian auction results, clearance rates and recent sales for the week ending Sun 17 Feb 2019


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## basilio (19 February 2019)

moXJO said:


> Some truth in this. No one will be investing much until labor shows its hand.
> 
> On another note... I can't believe people are jumping and cheering get slugged with more taxes. If the taxes were well spent,  I could understand. But Australian pollies are the biggest bunch of deadshits when it comes to wasting our dollars.
> Not only that, but the money gets chewed up on paper pushers that add nothing  substantial to the project.




It will be interesting to see what Labour proposes doing with any increase in tax revenue from it's proposals.  Deciding ahead of the day that anything any government does is a waste of dollars or employ a bunch of pen pushers is, in my mind, unfair.

A few examples. Liberal governments have been cutting the  public service for years and outsourcing programs that they have said can be more effectively provided by the private sector.

One of the really big winners of this has been the many Job Start  private industries which take the unemployed and keep churning them into nothing  while creating great wealth for their owners. The government pays out heaps but all that is really happening is creating a select umber of wealthy entrepreneurs.

The privatising  of building inspectors, the dismantling of publicly held power companies, the  commissioning of private companies to take care of refugees (pun intended) .
Don't tell me the private sector offers a better model of service delivery. It's just not true.


We need


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## Junior (19 February 2019)

basilio said:


> It will be interesting to see what Labour proposes doing with any increase in tax revenue from it's proposals.  Deciding ahead of the day that anything any government does is a waste of dollars or employ a bunch of pen pushers is, in my mind, unfair.




The difference this time, is that Labor are proposing changes which will see a big sugar hit of tax revenue flowing into their coffers, to spend as and where they see fit.  I think many Aussies don't want to see a bigger Government and bigger welfare state than what we already have.  This big hike in taxes at a time when the economy is already slowing and fragile, carries many risks.


----------



## basilio (19 February 2019)

Junior said:


> The difference this time, is that Labor are proposing changes which will see a big sugar hit of tax revenue flowing into their coffers, to spend as and where they see fit.  I think many Aussies don't want to see a bigger Government and bigger welfare state than what we already have.  This big hike in taxes at a time when the economy is already slowing and fragile, carries many risks.




Again I think you are making assumptions about what Labour would do with any new tax revenue.
There is every chance they would propose changes to the tax system that benefit low and middle income earners. This would be be a redistribution of income amongst current tax payers.

I think a re examination of current outsourced  (government paid ) Jop Start programs is well overdue. I wouldn't be surprised to see proposals for greater government intervention in energy infrastructure to support a renewable energy economy.

I think that business can be very two faced about the role of Big Government. When it comes to R & D support, big contracts from government for infrastructure building or taking over tasks once done by government they are all in. After all it is  Government (tax payers..) money sent to them. 

If on the other hand the Government decides they should do the job they scream .  "Our hard earned money being wasted "


----------



## sptrawler (19 February 2019)

Junior said:


> The difference this time, is that Labor are proposing changes which will see a big sugar hit of tax revenue flowing into their coffers, to spend as and where they see fit.  I think many Aussies don't want to see a bigger Government and bigger welfare state than what we already have.  This big hike in taxes at a time when the economy is already slowing and fragile, carries many risks.



The election campaign hasn't started in earnest yet, and the property prices in the two major markets are still in free fall, when the spectre of a massive price collapse with Labors changes is thrown into the mix anything can happen.
You never know, silly Billy, may well snatch the hand of defeat from the jaws of victory, he has never polled well on a personal level so it is becoming an interesting election.IMO


----------



## basilio (19 February 2019)

Back to the property market.

I think the market is certainly unraveling in  Melb and Sydney. I wouldn't want to be holding investment properties and needing to refinance them.

I  also understand that the banks do have a look at their portfolios and if they think particular clients loans don't have enough security they take steps to obtain  further  security to protect their investment.  That means wanting extra collateral or pay downs of principal to ensure the loan isn't underwater. Has anyone come across this situation ?


----------



## sptrawler (19 February 2019)

basilio said:


> Back to the property market.
> 
> I think the market is certainly unraveling in  Melb and Sydney. I wouldn't want to be holding investment properties and needing to refinance them.
> 
> I  also understand that the banks do have a look at their portfolios and if they think particular clients loans don't have enough security they take steps to obtain  further  security to protect their investment.  That means wanting extra collateral or pay downs of principal to ensure the loan isn't underwater. Has anyone come across this situation ?



There was an article on that exactly issue, in last weekends AFR.
Also in W.A councils are repossessing houses due to delinquent rate arrears, which has made the news, I guess everyone is worried about getting their money as prices implode.


----------



## qldfrog (19 February 2019)

Such optimistic view, Basilio


> There is every chance they would propose changes to the tax system that benefit low and middle income earners. This would be be a redistribution of income amongst current tax payers.



ROL
But please ping me when this happen, I will celebrate with you
And by the way 
Why do you want a redistribution of income, fondamentally..i am all for, i stopped working.


----------



## basilio (19 February 2019)

qldfrog said:


> Such optimistic view, Basilio
> 
> ROL
> But please ping me when this happen, I will celebrate with you
> ...




Well we could always go the Liberal way ? You know BIG tax cuts for the hard working people making $180k plus funded by slashing Health education welfare and the ABC. But we have tried that havn't we and somehow the other 98% didn't think this too flash ..

I believe Labour will (have to) come up with some big picture proposals for this election. If they are going to be crucified for tackling top end rorts then they will have to come up with a compelling program to justify it to the rest of the population and show them the benefits. And that must be bigger than the welfare sector.


----------



## Smurf1976 (19 February 2019)

basilio said:


> I think a re examination of current outsourced  (government paid ) Jop Start programs is well overdue.



I'd change that to:

"a re examination of current outsourced  (government paid ) programs is well overdue"

There are some things which should sensibly be outsourced but there's a lot of money being wasted in this manner that's for sure.


----------



## sptrawler (19 February 2019)

basilio said:


> Well we could always go the Liberal way ? You know BIG tax cuts for the hard working people making $180k plus funded by slashing Health education welfare and the ABC. But we have tried that havn't we and somehow the other 98% didn't think this too flash ..
> 
> I believe Labour will (have to) come up with some big picture proposals for this election. If they are going to be crucified for tackling top end rorts then they will have to come up with a compelling program to justify it to the rest of the population and show them the benefits. And that must be bigger than the welfare sector.



They can't give much more to the welfare sector.
It is already marginal, whether to work, or save for retirement.
What is it over 50% pay no effective tax, maybe 75/25% would be better.


----------



## sptrawler (19 February 2019)

Well the Reserve Bank is starting to get worried.

https://www.smh.com.au/business/the...conomy-says-reserve-bank-20190219-p50ys4.html


----------



## Junior (20 February 2019)

basilio said:


> Well we could always go the Liberal way ? You know BIG tax cuts for the hard working people making $180k plus funded by slashing Health education welfare and the ABC. But we have tried that havn't we and somehow the other 98% didn't think this too flash ..
> 
> I believe Labour will (have to) come up with some big picture proposals for this election. If they are going to be crucified for tackling top end rorts then they will have to come up with a compelling program to justify it to the rest of the population and show them the benefits. And that must be bigger than the welfare sector.




A combination of the two would be appropriate.  Bracket creep has been eating into middle & high incomes, some relief is required.

50% of Aussies don't pay any tax, so of course they'll be opposed to any cuts to income tax rates, because they don't pay income tax to begin with!

You can't keep slugging the wealthy over and over again without creating unintended consequences which affect all of us.  Labor want to hit small business owners as well.  These are the groups who create the majority of employment in this country.


----------



## Smurf1976 (20 February 2019)

Junior said:


> You can't keep slugging the wealthy over and over again without creating unintended consequences which affect all of us.  Labor want to hit small business owners as well.  These are the groups who create the majority of employment in this country.



There are two orders of wealth in this context are there not?

1. Investors with somewhere from a house + $100K of other assets through to a few $ million or small business owners.

2. Big corporations and a few individuals with serious wealth and their own lawyers and other employees who can and will find every possible way to avoid paying tax.

The latter are the ones causing any problems through their large scale, ongoing yet supposedly "unprofitable" business ventures which, since they are "unprofitable", don't pay much if any tax. And yet somehow they can afford to send $$$ to parent companies overseas and pay their local management team a few $ million each. But they're unprofitable of course. These are the ones who need to be targeted not the former.

If all those with reasonable wealth were paying tax then there would be no need to even consider increasing the rate. Increasing the rate just hits those already doing more than most.


----------



## Junior (20 February 2019)

Smurf1976 said:


> There are two orders of wealth in this context are there not?
> 
> 1. Investors with somewhere from a house + $100K of other assets through to a few $ million or small business owners.




Yes, I'm not defending the top 0.1%, I'm defending the top 20%, this group already pay the vast majority of tax in this country and create the vast majority of jobs.  This group will take a further hit from the proposed tax changes, and there will be consequences for all of us.  

I hope the extra tax revenue is spent wisely, but history shows this is rarely the case.


----------



## sptrawler (20 February 2019)

Junior said:


> Yes, I'm not defending the top 0.1%, I'm defending the top 20%, this group already pay the vast majority of tax in this country and create the vast majority of jobs.  This group will take a further hit from the proposed tax changes, and there will be consequences for all of us.
> 
> I hope the extra tax revenue is spent wisely, but history shows this is rarely the case.



Labor want everyone except themselves and their cronies, on welfare, much easier to control the poor just use My Gov.
The hardest thing to control in an economy, is affluent workers.


----------



## basilio (21 February 2019)

I suggest there will be major new impact on the housing market in the next few months.

The issue of dangerous/non compliant cladding has just been dramatically expanded. And it won't be good news for recent home and apartment buyers.

*Cladding crisis spreads into the suburbs as nine more materials are classed as non-compliant*
By James Oaten
Updated 43 minutes ago


* Photo:* The latest cladding ban could affect many family homes. (ABC News) 
*Related Story:* When your home is a fire risk but you can’t afford to fix it
*Related Story:* Melbourne apartment buildings to be re-checked for flammable cladding in wake of tower fire 
Thousands more homeowners could now find themselves caught up in Australia's cladding crisis, after authorities issued an alert banning the use of another nine types of cladding.

*Key points:*

The withdrawn cladding systems are commonly used on one and two-storey buildings
Previously, combustible cladding issues have been largely restricted to buildings above three storeys
The Australian Institute of Building Surveyors has issued urgent advice to builders

The alert affects an unknown number of dwellings, including single-storey family homes, which had previously been largely unaffected but are now not compliant with building codes.

Until now, most of the concern relating to non-compliant cladding was focused on flammable material used primarily on medium and high-rise buildings.

The decision, by Australia's leading building product accreditation agency, to withdraw support for the cladding materials has left industry experts stunned and residents potentially facing massive rectification costs.
https://www.abc.net.au/news/2019-02-21/cladding-crisis-spreads-to-suburbs-materials-banned/10832164


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## moXJO (2 March 2019)

House next to me sold last week  $870k 
Asking $890-990.


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## satanoperca (3 March 2019)

As I have mentioned before, the real declines will not start until the apartment sectors starts to show rapid declines. I am expecting in the Melb/Syd apartments markets to fall at least 15% this year. The momentum is starting to gather place, with tighter restrictions on lending, Chinese leaving the sicking boat and global growth stalling, the apartment market is the one to watch. 2 Bedroom apartments $800K + is not normal.

Also note, property prices are based on massive leverage, while it is hard to loose $150K of your own money, it is even hardier to loose the same amount and still owe it to someone else.


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## basilio (3 March 2019)

I think apartments will come under immense pressure in 2019

1) Settlements will start to fall due and it will be clear that settlement price is  out of line with current market price. As a result banks won't provide sufficient finance and/or buyers will cut their losses and renege.
2) There is a multitude of problems with cladding across new and recently built dwellings.This will throw a scare across many potential buyers and make sellers even more vulnerable.
3) The new sets of apartments being built will have almost impossible financial figures to achieve. They will be on expensive land with price projections beyond current market capacity to pay. They will have to be built far more carefully (despite the cost consideration) to avoid the cladding issues  and poor workmanship that has trashed the Opal construction. *And then they have to compete in a market that will see many other apartments selling at  substantially reduced prices.  *Could get very ugly.

On the other hand I could see a creative State/Federal government offering to take these apartments as cheap housing.  Would be a clever way to prop up the market and create public housing at a price that would normally be impossible. The developers might at least get away even.


----------



## sptrawler (8 March 2019)

Wait until the negative gearing rules are changed, so that existing appartments cant be geared, and investors leave the market.
That will leave only buyers who want to live in an appartment, then we will see a real fall in value.


----------



## satanoperca (8 March 2019)

sptrawler said:


> Wait until the negative gearing rules are changed, so that existing appartments cant be geared, and investors leave the market.
> That will leave only buyers who want to live in an appartment, then we will see a real fall in value.




No, we will see the true value of a "home" regardless if it is a house or apartment. 

Negative gearing does not add to the supply, this has been proven over and over again. 90% of investors buy established properties. Just think if resources/investments are moved away from the established property market, they move into shares, increasing share prices and offsetting you soon to be lost franking credits, lol.


----------



## sptrawler (8 March 2019)

Its a bit sad but I think you will probably be proven right.lol


----------



## Humid (8 March 2019)

sptrawler said:


> Wait until the negative gearing rules are changed, so that existing appartments cant be geared, and investors leave the market.
> That will leave only buyers who want to live in an appartment, then we will see a real fall in value.




So your expecting a big run on before the election?


----------



## sptrawler (9 March 2019)

Humid said:


> So your expecting a big run on before the election?



I'm expecting a reduction in buyers of established homes, when the new rules come in, which in turn should put downward pressure on prices.


----------



## Humid (9 March 2019)

sptrawler said:


> I'm expecting a reduction in buyers of established homes, when the new rules come in, which in turn should put downward pressure on prices.




After the Opal fiasco the lame current government  falling prices zero wage growth 
Who would invest in one now
But in a years time you'll conveniently forget that and blame labors policy changes. ........hang on you already have
Lol


----------



## sptrawler (9 March 2019)

Humid said:


> After the Opal fiasco the lame current government  falling prices zero wage growth
> Who would invest in one now
> But in a years time you'll conveniently forget that and blame labors policy changes. ........hang on you already have
> Lol



I don't disagree with you, but are you trying to say that removing investors from that market, wont have an effect. Oh of course not. lol


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## basilio (9 March 2019)

Once-upon-a-time an investor in property expected a gross 5% rent yield and a small steady capital gain on the property.

There was also the realisation that as long as there was a worthwhile land component there was every likelihood the underlying value of the asset would appreciate.

However since property has become a get-rich-quick scheme the emphasis has been on 
1) Expecting capital gains to be steep and spectacular 
2) Living with yields own to 1-2 maybe 3%
3) Encouraging foreign nationals to buy often at any price. 
4) Expecting to  negatively gear the property against other income to save tax 
5) Using creative accountancy to achieve the maximum negative gearing.

*This model only works when sufficient people chase properties and banks offer  100% credit to anyone with a pulse.
*
We know that has all changed now. Lending criteria are are more stringent. Property prices are falling destroying the equity of many recent buyers. 
Perhaps more significantly IMV , is that most of the recent development has been in apartments . The real risks of poor quality construction are now apparent. The pain for owners and investors in correcting these problems will be immense.
*Finally there is minimal land value in an apartment.* If in 40 years time the units become unviable because of poor construction the individual value of the flats could be disappointingly small. 
 We know that new apartments almost always sell at a premium to older stock. That means that the new $600k apartment today will be worth maybe $500k next year. And after that ?


----------



## moXJO (9 March 2019)

basilio said:


> Once-upon-a-time an investor in property expected a gross 5% rent yield and a small steady capital gain on the property.
> 
> There was also the realisation that as long as there was a worthwhile land component there was every likelihood the underlying value of the asset would appreciate.
> 
> ...



This is just top of the property clock stuff. Its not new,  its happened before and will happen again.
People forget all that Japanese investment  back in the 80s. Couple of "white elephants" round coffs way.

We could crash hard if we get retarded policy.

They can still up immigration to intervene.
Easy foreign buying restrictions.
Relax lending.

Too many things the government could do to keep things afloat.
For now I think they have got it right. Lock up credit a bit and let the market simmer down.


----------



## sptrawler (10 March 2019)

It is just the same ending as most bubbles, they pop, at the moment the deflation is calm and slow.
It will be interesting to see, if it continues on that path.


----------



## Humid (10 March 2019)

moXJO said:


> This is just top of the property clock stuff. Its not new,  its happened before and will happen again.
> People forget all that Japanese investment  back in the 80s. Couple of "white elephants" round coffs way.
> 
> We could crash hard if we get retarded policy.
> ...




Not sure if it happened before on the scale I just witnessed in WA


----------



## sptrawler (10 March 2019)

Humid said:


> Not sure if it happened before on the scale I just witnessed in WA



You are spot on there humid, W.A in a lot of areas are back to pre mining boom values.
The thing I find interesting is, people still aren't buying, yet wages to house price ratios are the best they have been in 25 years. IMO
I think a lot of the issue is, the current generation are seeing that the doing without and scrimping by their parents, has in reality got them no where. 
So the current generation are just spending it as they earn it, which in hindsight isn't a bad idea. IMO
There has never been a generation that travels like this generation, weekends in Bali etc, good on them I really think enjoy it while you can.
The fall out this time, is going to be massive IMO, time will tell.


----------



## moXJO (10 March 2019)

Humid said:


> Not sure if it happened before on the scale I just witnessed in WA



90s hit hard recession wiped a lot out. Surfer's, noosa from memory were smashed pretty bad. Along with a lot of mid north coast. 

Things can get a lot worse from here. But even the crash in 87 before that. I was only a kid but I always remember walking into a mates garage and finding his dad swinging from the rafter. 

He was a tradie that lost the lot, a friend of the family. All I remember from that time was guys necking themselves. And no jobs. 

Things can get really bad if the government doesn’t intervene in the right areas.


----------



## satanoperca (10 March 2019)

sptrawler said:


> You are spot on there humid, W.A in a lot of areas are back to pre mining boom values.
> The thing I find interesting is, people still aren't buying, yet wages to house price ratios are the best they have been in 25 years. IMO
> I think a lot of the issue is, the current generation are seeing that the doing without and scrimping by their parents, has in reality got them no where.
> So the current generation are just spending it as they earn it, which in hindsight isn't a bad idea. IMO
> ...




While I agree with your comments, need to put some more perspective into it:
Generation 20-40 year olds
Growing up, "You can be anything you want. You just have to work hard."
Taught during school, there are only winners and no losers, you are all winners.
Reality : Studied hard, went to uni, got saddled with massive debts, went into the work place, globalization has reduced real incomes in a lot of professions, jobs where hard to find, let alone well paying ones, unless your a mate of old Joe, best treasure in the world Hocking.
Want to buy a house, so far out of reach for the average you person, becomes very hard but not impossible.
Result, why save, spend what I earn and enjoy life as we told lies. You cannot be anything you want regardless of how hard you work, it is almost impossible to buy a home and job opportunities are hard to find, there are winners and losers, even more so with casualisation, and I still have to pay the uni debt off that other generations did not have to.  

This is why we see young people not able to take on criticism in the work place, want a pay rise and promotion every 6 months etc


----------



## sptrawler (10 March 2019)

How long was Hockey treasurer for?


----------



## satanoperca (10 March 2019)

Who cares, he was a dick!


----------



## Ann (10 March 2019)

sptrawler said:


> How long was Hockey treasurer for?



Two years 2013 - 2015


----------



## sptrawler (10 March 2019)

satanoperca said:


> Who cares, he was a dick!



Jeez that's a bit rough, Parliament is full of them, to single him out is ridiculous.
The only thing he did, was call a spade a spade, which is unacceptable these days.lol
But having said that, he as many of the politicians, don't have a strong self appraisal mechanisms.
He was right saying Australians feel entitled, the problem is politicians, feel the most entitled of all. IMO


----------



## satanoperca (10 March 2019)

sptrawler said:


> He was right saying Australians feel entitled, the problem is politicians, feel the most entitled of all. IMO



An there is the issue, if our elected leaders feel entitled, why should the masses behavior be any different.
An YES, he was a dick, and hardly a treasurer. Just another wanta be, who thought he was entitled. He made little, if not difference to our society.


----------



## sptrawler (10 March 2019)

satanoperca said:


> An there is the issue, if our elected leaders feel entitled, why should the masses behavior be any different.
> An YES, he was a dick, and hardly a treasurer. Just another wanta be, who thought he was entitled. He made little, if not difference to our society.



That would apply to all the treasurer's, since Costello, they have all been dicks.


----------



## Smurf1976 (12 March 2019)

satanoperca said:


> While I agree with your comments, need to put some more perspective into it:
> Generation 20-40 year olds
> Growing up, "You can be anything you want. You just have to work hard."



Another issue we have is that it has been so long since we had a recession that pretty much everyone under age 40, and that includes virtually all current first home buyers, has zero practical experience of a recession.

It's an alien concept they've heard reference to but have no first hand experience of. It's about as relevant a concept in their minds as WW2 or disco music. They know it was a thing but yeah, whatever, that was in a previous generation's time right?

End result is likely to be total unpreparedness for what is sure to happen at some point given the economy is cyclical by nature.


----------



## sptrawler (12 March 2019)

Further to your comments smurph, at last the truth of the situation, is starting to be acknowledged.

https://www.smh.com.au/politics/fed...ated-the-property-market-20190311-p513ak.html

People are living in a bubble alright.


----------



## satanoperca (12 March 2019)

satanoperca said:


> View attachment 92656



Posted not that long ago


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## sptrawler (12 March 2019)

Well if everyone thought it was bad, just read this article.

https://thewest.com.au/business/hou...alls-21-per-cent-to-gfc-levels-ng-b881132825z

From the article:
_New investor loans fell 4.1 per cent in January — and *28.6* *per cent over 12 months* — to $4.67 billion_.

Now add to that, the effect that removing investors from the established homes market, this is going to be fun. I wonder if silly Billy and who cares Chris, are looking nervously at each other.


----------



## Smurf1976 (12 March 2019)

sptrawler said:


> Well if everyone thought it was bad, just read this article.



So new investor loans down 28% and I saw elsewhere that the total value of mortgages is down 21%. Also new car sales are down more than 10%.

It all seems a bit doom and gloom yes.


----------



## Ann (13 March 2019)

*Australian property price forecasts are diverging*




_There is a little bit of everything for those who like to forecast Australian property prices at the moment. 

If you love your doom and gloom laid on super thick, it is hard to go past LF Economics founder Lindsay David, who made the claim that prices could halve or at least fall by 40% from their peak in Sydney and Melbourne.


He claims that on a “base case’’ of a 20% price fall in the major capitals this year alone, followed by a financial armageddon in which the profitability of the big banks evaporates, properties go unsold after mortgage defaults, the residential construction industry virtually halts, unemployment soars and banks have to be bailed out or nationalised.More..._


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## moXJO (13 March 2019)

Ann said:


> *Australian property price forecasts are diverging*
> 
> 
> 
> ...



I just don't think the government would allow it. And thats where these forecasters get it wrong.


----------



## sptrawler (13 March 2019)

moXJO said:


> I just don't think the government would allow it. And thats where these forecasters get it wrong.



My guess is Labor will backflip on the negative gearing changes, which may stop the rot, but it is hard to turn the herd when it is running.
The continuing slide in W.A property prices, shows that once the market cools, it is hard to reignite it.
W.A property has been going down for 2-3 years and though it has slowed it is still sliding.
Prices are now back to about post GFC lows.
The other problem now raising its head is Billy talking about major rises to the basic wage, which is nice, but I'm seeing a lot of small businesses going broke a major wage rise could accelerate that.
Interesting times, Labor are certainly shaking the can, the outcomes could be dramatic.


----------



## Ann (13 March 2019)

sptrawler said:


> My guess is Labor will backflip on the negative gearing changes, which may stop the rot, but it is hard to turn the herd when it is running.
> The continuing slide in W.A property prices, shows that once the market cools, it is hard to reignite it.
> W.A property has been going down for 2-3 years and though it has slowed it is still sliding.
> Prices are now back to about post GFC lows.




If the government does away with SMSF under $500,000 then there will be a lot less investment in property. I saw figures once that the average SMSF has one investment property and some cash and a few shares. If this sort of SMSF is outlawed then there will be a much smaller market for property. This could see a real drop in demand and potentially a flow through into falling prices.

*AustralianSuper declares war on SMSFs*
_
AustralianSuper chief executive Silk will today call for a clampdown on self-managed super in response to the Productivity Commission's finding that SMSFs with less than $500,000 tend to perform "significantly worse" than regular super funds.

Mr Silk, who runs the nation's biggest super fund with $145 billion under management, will tell the Conference of Major Super Funds on the Gold Coast that an inquiry is needed into SMSF performance, and that the probe should lead to a "revamped and smaller SMSF sector" with tighter regulatory safeguards._


----------



## sptrawler (13 March 2019)

Ann said:


> If the government does away with SMSF under $500,000 then there will be a lot less investment in property. I saw figures once that the average SMSF has one investment property and some cash and a few shares. If this sort of SMSF is outlawed then there will be a much smaller market for property. This could see a real drop in demand and potentially a flow through into falling prices.
> 
> *AustralianSuper declares war on SMSFs*
> _
> ...



The industry funds have been chasing the retirees from SMSF's for years, it is a really big sector and the industry funds want the money in their coffers, that is the driving force behind Labor's changes.
I would rather spend it, than give my money to someone else to look after, how many have lost their money through bad managers? FFS we just had a royal commission highlight it.
Now they want to legislate so someone else gets YOUR money, as I've already said the younger ones are going to lose out big time with all of the proposed changes coming up.
The problem is no one is thinking of the long term ramifications, of the changes, but that's the way it goes.


----------



## sptrawler (14 March 2019)

Even though house prices in Perth, have fallen back to GFC levels in W.A, the slide isn't stopping.
Houses haven't been this affordable for years, but people still aren't buying, I don't think this is going to end well.lol

https://thewest.com.au/business/hou...rket-still-has-further-to-fall-ng-b881135449z


----------



## PZ99 (14 March 2019)

Perth is looking better for me each month. Wouldn't mind having the market open at 7am


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## satanoperca (14 March 2019)

Ann, the real question is how much leverage into property are SMSF in?

If the figure is large, this would be another attributing factor to why property increased so much in the last 10 years. If this pool dries up, yes we could expect property to fall further.


----------



## satanoperca (14 March 2019)

Even more interesting:
"
The ATO's next focus would be on rental income and deductions, with auditors having now completed over 300 audits on rental property claims and found errors in almost nine out of 10 returns reviewed, he said.

"We're seeing incorrect interest claims for the entire investment loan where it has been refinanced for private purposes, incorrect classification of capital works as repairs and maintenance, and taxpayers not apportioning deductions for holiday homes when they are not genuinely available for rent," Mr Jordan said.

"When you consider that rentals include over 2.1 million taxpayers claiming $47.4 billion in deductions, against $44.1 billion in reported income, you can get a sense of the potential revenue at risk."

https://www.abc.net.au/news/2019-03...-post-panama-papers/10899518?section=business


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## sptrawler (14 March 2019)

satanoperca said:


> Ann, the real question is how much leverage into property are SMSF in?
> 
> If the figure is large, this would be another attributing factor to why property increased so much in the last 10 years. If this pool dries up, yes we could expect property to fall further.



From memory i don't think there is a lot of exposure by SMSF, the rules were only relaxed during Gillards reign, so I don't think it had time to get a lot of traction.
I could be wrong, but i'm sure I read it was a small number somewhere.


----------



## sptrawler (14 March 2019)

satanoperca said:


> Even more interesting:
> "
> The ATO's next focus would be on rental income and deductions, with auditors having now completed over 300 audits on rental property claims and found errors in almost nine out of 10 returns reviewed, he said.
> 
> ...



That is going to be a big can of worms, people I spoke to when I was working, who had rental property didn't have a clue as to the limitations.
They just claimed everything, against the rent, for the full year.
When in actual fact you can only claim against the period it was rented.
This will be even more pronounced, with airbnb style renting.

The ATO will have to employ more auditors.


----------



## satanoperca (14 March 2019)

And lets not forget all those AirBnB properties where the owners havn't declared the income and in some cases were dumb enough to claim the expenses and not the income.

I have a friend who has been quite happy AirBnB their property out for 3 years (they live in it), they are in the top tax bracket, when I suggested they should declare the rental as income I got the response, it is my home why should I. When I informed them that the ATO is now linked to the AirBnB database and they would have to pay >45% tax on the income, they said it wasn't worth it.

I will assume this would account for a large number of AirBnB properties


----------



## sptrawler (14 March 2019)

satanoperca said:


> And lets not forget all those AirBnB properties where the owners havn't declared the income and in some cases were dumb enough to claim the expenses and not the income.
> 
> I have a friend who has been quite happy AirBnB their property out for 3 years (they live in it), they are in the top tax bracket, when I suggested they should declare the rental as income I got the response, it is my home why should I. When I informed them that the ATO is now linked to the AirBnB database and they would have to pay >45% tax on the income, they said it wasn't worth it.
> 
> I will assume this would account for a large number of AirBnB properties




Yes and when they go to sell their house, they will be subject to capital gains tax, if they have airbnb'd a room in their PPR.


----------



## basilio (14 March 2019)

The issue of  expensive cladding risks in recent housing  apartment constructions is still on the march.
This story expands on that topic and has a table showing the location of 500 plus housing developments around Melbourne currently being investigated for inflammable cladding.
If there is an average of 30 units per location that would be 15,000 plus owners with  a big bill coming up.

*Two towers, two fires - but both signed off by same engineering firm*
Clay LucasMarch 14, 2019 — 10.47am

Send via Email
The fire safety engineering firm found by a tribunal to be most to blame for a 2014 flammable cladding blaze in Docklands also signed off on Neo200, the Spencer Street apartment tower that caught alight in February.

Last month the Victorian Civil and Administrative Tribunal found that safety engineering company Thomas Nicolas, whose sole director is Con Nicholas, was responsible for the largest portion of the almost $6 million it will cost to reclad the Lacrosse apartment tower on Latrobe Street.

https://www.canberratimes.com.au/po...by-same-engineering-firm-20190312-p513np.html


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## Humid (14 March 2019)

sptrawler said:


> The industry funds have been chasing the retirees from SMSF's for years, it is a really big sector and the industry funds want the money in their coffers, that is the driving force behind Labor's changes.
> I would rather spend it, than give my money to someone else to look after, how many have lost their money through bad managers? FFS we just had a royal commission highlight it.
> Now they want to legislate so someone else gets YOUR money, as I've already said the younger ones are going to lose out big time with all of the proposed changes coming up.
> The problem is no one is thinking of the long term ramifications, of the changes, but that's the way it goes.




Would a bad fund manager be someone who suggested relying heavily on franking credits?


----------



## sptrawler (14 March 2019)

Humid said:


> Would a bad fund manager be someone who suggested relying heavily on franking credits?



Not for the last 20 years.
Also the industry funds will still be relying heavily on them, it is just their mates are screwing over the little guy, for them.


----------



## Smurf1976 (14 March 2019)

Humid said:


> Would a bad fund manager be someone who suggested relying heavily on franking credits?



I would define a bad fund manager as anyone who is charging their clients fees for managing their funds but who has in practice simply tracked an index or other benchmark or, worse still, has under performed it.


----------



## qldfrog (15 March 2019)

A good fund manager? Easy
Fee should be only a percentage and maybe high one of the fund overperformance vs the index
Say will get half of the overperformance over the asx inc dividends over a period :quarteror year..
Easy to understand or implement
If you know one or some, tell me.
If there are none, it means simply no fund can be trusted to beat the indexes


----------



## Bill M (15 March 2019)

Smurf1976 said:


> I would define a bad fund manager as anyone who is charging their clients fees for managing their funds but who has in practice simply tracked an index or other benchmark or, worse still, has under performed it.






qldfrog said:


> If you know one or some, tell me.
> If there are none, it means simply no fund can be trusted to beat the indexes




And this is the reason why a lot of people have a SMSF. You set it up with someone like Esuperfund and pay your $1300 a year all in no matter what your balance is. Then you can take out multiple Term Deposits and buy ETF's with low MER's and there is no skimming for ongoing "Admin" fees. Maybe those Industry Super Fund CEO's don't like the fact that it is very easy to do, really it is. 

Why pay a .64% ongoing fee for the total of your super balance when you can do it yourself? Here is the difference in fees for a $500,000 Super Account

abc Super Company = $3,200

ESuperfund (or similar) = Just your yearly $1300 - $1500 fee no matter how big your balance is. Some people only want Term Deposits and ETF's. To me it sounds like these Big Wig CEO's are getting worried about something that has nothing to do with them. Why question how individual wants to run *their* own Super Fund?


----------



## Bill M (15 March 2019)

^^^Whoops, so sorry, for some reason I thought I was posting in the Super Cash Cow thread. I am off topic and if mods want to move or delete the above post please go ahead.^^^


----------



## Zaxon (15 March 2019)

Bill M said:


> And this is the reason why a lot of people have a SMSF. You set it up with someone like Esuperfund and pay your $1300 a year all in no matter what your balance is. Then you can take out multiple Term Deposits and buy ETF's with low MER's and there is no skimming for ongoing "Admin" fees.




They really should drop the requirement for having to spend $1300 for compliance. If you can do you own taxes for free, and comply with tax law, then you should be able to manage your own SMS for free, and comply with super law.  That would open it up to far more people who really only want to do simple things like Term Deposits and ETFs.


----------



## Junior (15 March 2019)

Bill M said:


> And this is the reason why a lot of people have a SMSF. You set it up with someone like Esuperfund and pay your $1300 a year all in no matter what your balance is. Then you can take out multiple Term Deposits and buy ETF's with low MER's and there is no skimming for ongoing "Admin" fees. Maybe those Industry Super Fund CEO's don't like the fact that it is very easy to do, really it is.
> 
> Why pay a .64% ongoing fee for the total of your super balance when you can do it yourself? Here is the difference in fees for a $500,000 Super Account
> 
> ...




Hi Bill M, admin for an SMSF can be very time consuming, as I'm sure you know.  Many retirees don't want the hassle.

Also, retail super funds are getting cheaper and cheaper.  Many have a cap on the admin fee, which can be as low as $2,500 per annum....for larger balances this can start to make more sense than the burden of an SMSF.  You have access to shares, TDs, ETFs.  Don't have to do a tax return, get an audit etc. and can view all your reporting online.


----------



## qldfrog (15 March 2019)

Junior, you have a point but it is a given that people with higher balances will subsidise the ones with 10 or 20k when in a fund.
I am with sunsuper with low balance of 300k or so..minimum contribution as i do not trust gov now, even less in 10y+..
But i i  not want to pay for surfer ads or getting below market returns on my cash options


----------



## Humid (15 March 2019)

qldfrog said:


> Junior, you have a point but it is a given that people with higher balances will subsidise the ones with 10 or 20k when in a fund.
> I am with sunsuper with low balance of 300k or so..minimum contribution as i do not trust gov now, even less in 10y+..
> But i i  not want to pay for surfer ads or getting below market returns on my cash options




I payed 80k in tax last year.......am I subsidising franking credits?


----------



## Junior (15 March 2019)

qldfrog said:


> Junior, you have a point but it is a given that people with higher balances will subsidise the ones with 10 or 20k when in a fund.
> I am with sunsuper with low balance of 300k or so..minimum contribution as i do not trust gov now, even less in 10y+..
> But i i  not want to pay for surfer ads or getting below market returns on my cash options




This is true of most Industry funds, where fees are a flat percentage of your balance, but retail (bank) funds often have a cap on the admin fee, and you can choose to invest in direct shares, TDs etc. where you don't pay any fund manager fees.


----------



## sptrawler (15 March 2019)

Humid said:


> I payed 80k in tax last year.......am I subsidising franking credits?



No, but you are probably paying for four on the dole, while we import 457 cleaners for the camps you live in.


----------



## Zaxon (15 March 2019)

Junior said:


> you can choose to invest in direct shares, TDs etc. where you don't pay any fund manager fees.




My super allows for direct share buying, but the brokerage is very high, far higher than what I'm charged outside of super.  You'd think that a large super fund would have the leverage to negotiate better brokerage rates?  No.  Their rates are more expensive.

In addition, they charge you a monthly fee just for having the direct share facility, which isn't charged if you don't have it.  So if you add up all those expenses, and then compare them to the fees for holding one of their funds, it can be difficult to work out how the expenses of these options really line up.


----------



## Humid (15 March 2019)

Nah


sptrawler said:


> No, but you are probably paying for four on the dole, while we import 457 cleaners for the camps you live in.




Nah mate kiwis


----------



## Junior (18 March 2019)

Zaxon said:


> My super allows for direct share buying, but the brokerage is very high, far higher than what I'm charged outside of super.  You'd think that a large super fund would have the leverage to negotiate better brokerage rates?  No.  Their rates are more expensive.
> 
> In addition, they charge you a monthly fee just for having the direct share facility, which isn't charged if you don't have it.  So if you add up all those expenses, and then compare them to the fees for holding one of their funds, it can be difficult to work out how the expenses of these options really line up.




I do these comparisons for work.  You're spot-on, they make it very difficult to compare like-for-like, but it can be done.  Brokerage rates through most retail funds are around $30 or 0.10% per trade.


----------



## greggles (18 March 2019)

Nearly half of new apartments in Sydney and Melbourne are now valued less than what the buyer paid off-the-plan.

https://www.news.com.au/finance/bus...t/news-story/4abe890c87a405964057f74af9d6f166


----------



## sptrawler (19 March 2019)

greggles said:


> Nearly half of new apartments in Sydney and Melbourne are now valued less than what the buyer paid off-the-plan.
> 
> https://www.news.com.au/finance/bus...t/news-story/4abe890c87a405964057f74af9d6f166



It will certainly be interesting if people try to sell out of their position, they could well be carrying a fair bit of debt, when offloading. That is if there are buyers, as investors will be scarce, the price fall may well accelerate. IMO
With these off the plan apartment purchases, can you just forfeit the deposit and walk away?


----------



## satanoperca (19 March 2019)

sptrawler said:


> With these off the plan apartment purchases, can you just forfeit the deposit and walk away?




NO you cannot, developers has the right to take you to court for any loses.

Ie Purchased for $1M, 10% Deposit $100K, you walk away, Dev keeps the deposit, then Dev puts property back onto the market and sells if for $800K, they come chasing you for the difference $100K.

But the real issue is the banks, in the above case say the property is valued at $900K at time of completion. You the purchaser now have 0% equity and the bank will not loan you 100% so you default. 

To complicate things further, say the bank required you to have 20% deposit on purchase. On settlement the value is $900K, you still have $100K left, but bank requires you to have $180K/20% of the value of the property at time of completion, you need to come up with another $80K.

This is in reverse to how everyone who bought thought it would work. 

In the above example most buyers thought it would work like this:
$1M Purchase price 10% deposit, bank LVR 80% - at the time of purchase buyer did not have the other 10% required, however they thought on time of completion the property would have gone up %10, hence when it came to settlement they had the 20% equity in the property (10% deposit + 10% instant equity)

You can see how this can unwind fast.


----------



## sptrawler (19 March 2019)

It sounds as though the manure, will really hit the fan. Also from memory, if a new build is sold within 5 years of completion, someone is up for GST to the tax office.


----------



## Junior (19 March 2019)

satanoperca said:


> N
> 
> $1M Purchase price 10% deposit, bank LVR 80% - at the time of purchase buyer did not have the other 10% required, however they thought on time of completion the property would have gone up %10, hence when it came to settlement they had the 20% equity in the property (10% deposit + 10% instant equity)




I very, very briefly worked for a group who sold OTP properties in the outer suburbs of Melbourne.  One of their big selling points was that you get "12 months of free capital growth" whilst the property is being constructed.  I used to cringe whenever I heard it.


----------



## sptrawler (19 March 2019)

https://www.smh.com.au/business/the...nding-across-the-country-20190319-p515eb.html

Next, wait for the Labor hit.


----------



## jbocker (19 March 2019)

Junior said:


> I very, very briefly worked for a group who sold OTP properties in the outer suburbs of Melbourne.  One of their big selling points was that you get "12 months of free capital growth" whilst the property is being constructed.  I used to cringe whenever I heard it.



12 months FREE capital losses.
Some super slimy salesperson would try to sell you that as a good thing.


----------



## jbocker (19 March 2019)

satanoperca said:


> NO you cannot, developers has the right to take you to court for any loses.
> 
> Ie Purchased for $1M, 10% Deposit $100K, you walk away, Dev keeps the deposit, then Dev puts property back onto the market and sells if for $800K, they come chasing you for the difference $100K.
> 
> ...



Thanks for that advice. I daresay there must be a quite a few people waiting out this miserable experience.
It makes me wonder what happens to those who bought off a plan and the building does not go ahead or is subject to long start up delays.


----------



## Zaxon (19 March 2019)

jbocker said:


> It makes me wonder what happens to those who bought off a plan and the building does not go ahead or is subject to long start up delays.




Most apartment builders have "sunset" clauses.  If they're not able to finish the building by a certain date, they just refund your deposit.  During the property boom, some unscrupulous builders deliberately delayed their build, hit the sunset date, so they could relist the same properties at a new, higher price.


----------



## sptrawler (19 March 2019)

Zaxon said:


> During the property boom, some unscrupulous builders deliberately delayed their build, hit the sunset date, so they could relist the same properties at a new, higher price.




Developers did that at some apartments near where I live, just prior to the GFC, they still have a lot of unsold apartments 10 years later.
Now they will be hit again, for every winner, there's a loser.


----------



## moXJO (19 March 2019)

Almost 10 years from this thread and about 4 years from the previous and we are finally here!

Well maybe.

Like I said before I think we will float till after the election and we get a better idea of government direction.


----------



## sptrawler (20 March 2019)

moXJO said:


> Almost 10 years from this thread and about 4 years from the previous and we are finally here!
> 
> Well maybe.
> 
> Like I said before I think we will float till after the election and we get a better idea of government direction.




Well affordability is back, here is a post on some prices, in the State capitals.

https://www.msn.com/en-au/money/hom...our-capital-cities/ar-BBUYSU4?ocid=spartandhp


----------



## moXJO (20 March 2019)

sptrawler said:


> Well affordability is back, here is a post on some prices, in the State capitals.
> 
> https://www.msn.com/en-au/money/hom...our-capital-cities/ar-BBUYSU4?ocid=spartandhp




They went from about $150k to 
$1million  in my area over 20 years. I'd like to see it well back under $500k.
A lot of stuff needs to go wrong for that to happen though.


----------



## sptrawler (20 March 2019)

moXJO said:


> They went from about $150k to
> $1million  in my area over 20 years. I'd like to see it well back under $500k.
> A lot of stuff needs to go wrong for that to happen though.



As usual, some areas will go back, some wont. 
If your area is well located, there will still be demand, as always.
20 years ago, people realised it is land value that matters, not the house.


----------



## Smurf1976 (21 March 2019)

sptrawler said:


> 20 years ago, people realised it is land value that matters, not the house.



Compare two houses.

One is 50 years old on a big block of land and currently valued at $500K.

The other is brand new on a third as much land just across the road and currently valued at $600K.

The former looks a bit shabby but is perfectly OK to live in. In due course it will be worth more than the latter and all the owner needs to do for that to occur is to continue to own it. 

That aspect is one which most seem to have overlooked. Well located land appreciates but buildings always depreciate.


----------



## qldfrog (21 March 2019)

Fully agree, and so for me a house is always better than a flat, and even without considering the ripoff of body corporate vs self managed repairs and maintenance
But i own both


----------



## basilio (21 March 2019)

Detailed analysis of what is happening to property prices around Australia.
* House prices keep dropping – and there's no end in sight *
Greg Jericho

https://www.theguardian.com/busines...ices-keep-dropping-and-theres-no-end-in-sight


----------



## sptrawler (21 March 2019)

Prices in Sydney wont stop falling, untill buyers believe fair value has been reached, and prices wont fall further. I think there is a long way to go before that point is reached, a further 1/2% cut in interest rates wont do a thing, but it will help the banks balance sheets. 
Just my opinion, but once the herd is running for the doors, it is hard to turn them.


----------



## moXJO (21 March 2019)

Some houses I was looking at in 2014 for average of $250k (one area) still over the $500k mark. Seems to be holding up atm. Its one of those areas that the bottom should drop out of as well.
Kind of my bellwether for the broader area.
I think it can hit $250k  again. 

Something completely irrelevant:
I noticed lotto jackpots are hitting highs a lot quicker. I wonder if it could indicate the numbers struggling  and getting desperate.


----------



## sptrawler (21 March 2019)

moXJO said:


> Some houses I was looking at in 2014 for average of $250k (one area) still over the $500k mark. Seems to be holding up atm. Its one of those areas that the bottom should drop out of as well.
> Kind of my bellwether for the broader area.
> I think it can hit $250k  again.



Wait for the next hit when the NG changes come.



moXJO said:


> Something completely irrelevant:
> I noticed lotto jackpots are hitting highs a lot quicker. I wonder if it could indicate the numbers struggling  and getting desperate.



Royal Caribbean are increasing the number of cruises from the East Coast next year, due to excessive demand, people have just changed their focus from housing to enjoying the moment. 
Once this happens, it takes a long time to change peoples focus, because money they had for a deposit, gets spent on something else.
We just did a cruise from Sydney on the Ovation, I chatted to a lot of people, the boat was packed to capacity with families and age pensioners.
The housing situation in Perth has been in free fall for five years, and it doesn't look like slowing. 
The house next to us sold 5 years ago for $700k and is on the market ATM, so it will be interesting to see what it eventually goes for, the owner has gone O/S so it should sell.


----------



## jbocker (21 March 2019)

Close relative of mine is going for a loan. The repayments will be $8 per week more than the rent they are currently paying. The bank has been mauling over their figures for nearly 5 weeks now. While the fixed 2 year rate is a little under 4% they are calculating everything like it is at a rate of little over 7%.
Probably a good thing and probably a fallout of the Royal commission, but I think more to ensure the banks R's is completely covered.
The effect no doubt is the huge tightening of money and consequently the lack of buyers and add to this the repayment struggles of many sellers already holding mortgages in P&I loans. The Grey Boomers are no longer investing or have slowed down.

More than ever this makes Cash THE absolute KING during this time. While interest earned on it is dismal its buyer power is huge.


----------



## sptrawler (21 March 2019)

jbocker said:


> Close relative of mine is going for a loan. The repayments will be $8 per week more than the rent they are currently paying. The bank has been mauling over their figures for nearly 5 weeks now. While the fixed 2 year rate is a little under 4% they are calculating everything like it is at a rate of little over 7%.
> Probably a good thing and probably a fallout of the Royal commission, but I think more to ensure the banks R's is completely covered.
> The effect no doubt is the huge tightening of money and consequently the lack of buyers and add to this the repayment struggles of many sellers already holding mortgages in P&I loans. The Grey Boomers are no longer investing or have slowed down.
> 
> More than ever this makes Cash THE absolute KING during this time. While interest earned on it is dismal its buyer power is huge.



My son just bought a block of land, after pre approval, he went back for the money and had to put up another $40k.
I guess they will be working it out on 7%, because that is the long term average, or it was. lol
It would be nice to get back to it, then pay rises would flow and the economy would start moving again.


----------



## moXJO (21 March 2019)

sptrawler said:


> It would be nice to get back to it, then pay rises would flow and the economy would start moving again.



Usually about 5-7 years of stagnation in the economy when it happens though.


----------



## Humid (21 March 2019)

sptrawler said:


> Wait for the next hit when the NG changes come.
> 
> 
> Royal Caribbean are increasing the number of cruises from the East Coast next year, due to excessive demand, people have just changed their focus from housing to enjoying the moment.
> ...




Would’ve have anything to with the banks shifting the goal posts


----------



## jbocker (21 March 2019)

Humid said:


> Would’ve have anything to with the banks shifting the goal posts



Yes they have taken them off the park. Grabbed our balls and taken them too. Making it impossible for some to kick goals.


----------



## sptrawler (21 March 2019)

Humid said:


> Would’ve have anything to with the banks shifting the goal posts



That has already kicked in, when you take investors out of the market, the competition for owner occupiers will obviously affect pricing.
Anyway we will soon find out.


----------



## sptrawler (27 March 2019)

Interesting graphs on migration, it is easy to see why property prices in Melbourne and Sydney stayed so buoyant for so long.




https://thewest.com.au/business/eco...ts-abandon-west-for-east-coast-ng-b881149162z


----------



## satanoperca (27 March 2019)

The ponzi scheme is starting to fail.


----------



## explod (27 March 2019)

satanoperca said:


> The ponzi scheme is starting to fail.



Can't tick you on this S, this is going to be very tough and sad for many people not prepared.


----------



## satanoperca (27 March 2019)

Should have explained myself better :
Mining boom - we sell our resources to the highest bidder, fantastic, generates wealth of Australia
We do not utilize this income productively, we squander it - govnuts
Govnuts then realise the gravy train is coming to an end, sh--it themself and look for another boom
This time they find 2 sources of income :
1. Construction brought on by debt as the result of low interest rates
2. Increase immigration and juice up demand for property
3. Sell the farm and anything else to anyone around the world, given this approach why spend $50B on subs, what to protect our borders when the land within the borders is up for sale anyway

Result :
Huge national private debt (future capacity to pay it back bought forward for a short term sugar hit)
Congested public infrastructure, hospitals, roads, education. So govnuts need to find even more revenue to help solve this issue, increase taxes making it harder for innovation to thrive.

Final end result : the recession we have not had for 30 years, to reset everything back to the mean


----------



## Smurf1976 (27 March 2019)

satanoperca said:


> Mining boom - we sell our resources to the highest bidder, fantastic, generates wealth of Australia
> We do not utilize this income productively, we squander it



I'll add to that:

*We've give up much of our productive industry that actually produced something of value. All too often we now have "big box" stores filled with imported goods standing on the site of what were once productive manufacturing industries.

*The fire sale of resources has undermined future potential to establish higher value industries based upon them and in at least some instances has directly lead to the closure of existing industry.

*What I'll refer to as essential service industries, and by that I mean things like utilities, transport and so on, that is the necessary supports for most forms of commercial activity, have in most cases become inefficient and expensive compared to the rest of the world.

At some point there's a shock coming for many who seem completely unaware of reality.


----------



## sptrawler (27 March 2019)

We seem to be stretching the elastic band on most fronts, taxes, wages, power costs, welfare, price of housing, personal debt.
Something has to give soon, as a nation we seem to be scrounging around, to see where we can conjure up money to support our lifestyle. IMO
Yet we are being promised more, smoke and mirrors, I think are the call of the day.
As you say smurph, a shock appears a certainty.


----------



## Humid (27 March 2019)

Stopped the boats and opened the airports


----------



## Smurf1976 (28 March 2019)

sptrawler said:


> We seem to be stretching the elastic band on most fronts, taxes, wages, power costs, welfare, price of housing, personal debt.
> Something has to give soon



30 years ago we had 5 car manufacturers, we were 85% self-sufficient in oil and related fuels, most household goods were locally made, we had the third cheapest electricity in the developed world, and so on.

Now we have no car manufacturers, are net 74% reliant on imported oil, virtually all household goods are imported and we are among the most expensive countries on the planet for rather a lot of things including utilities and housing.

Whatever underlying problems we had economically a generation ago, they would seem to be far worse today.


----------



## sptrawler (4 April 2019)

W.A's housing slide continues, I guess the Eastern States will follow suite, now the slide has started. It is very hard to turn public opinion, and at the moment, it isn't in favour of buying a house.

https://thewest.com.au/opinion/dani...eatens-to-drag-down-wa-economy-ng-b881156774z


----------



## jbocker (4 April 2019)

jbocker said:


> Close relative of mine is going for a loan. The repayments will be $8 per week more than the rent they are currently paying. The bank has been mauling over their figures for nearly 5 weeks now. While the fixed 2 year rate is a little under 4% they are calculating everything like it is at a rate of little over 7%.
> Probably a good thing and probably a fallout of the Royal commission, but I think more to ensure the banks R's is completely covered.
> The effect no doubt is the huge tightening of money and consequently the lack of buyers and add to this the repayment struggles of many sellers already holding mortgages in P&I loans. The Grey Boomers are no longer investing or have slowed down.
> More than ever this makes Cash THE absolute KING during this time. While interest earned on it is dismal its buyer power is huge.



To follow up on this post the loan got approved today,  more than 8 weeks after the application. If you are about to go for a loan allow a decent finance approval period would be my advice. Additionally when they are assessing the loan at 7+% they are doing that to all your existing loans.


----------



## Toyota Lexcen (4 April 2019)

What do people think are going to happens with rents and property prices if Labour win election?

If you build a new house/unit you would have to sell at some stage.


----------



## sptrawler (4 April 2019)

Toyota Lexcen said:


> What do people think are going to happens with rents and property prices if Labour win election?
> 
> If you build a new house/unit you would have to sell at some stage.



What makes me laugh is, they say people can't afford to buy their own house, yet they are going to be given assistance to build an investment house.

Talk about perks for the rich.


----------



## Humid (5 April 2019)

Toyota Lexcen said:


> What do people think are going to happens with rents and property prices if Labour win election?
> 
> If you build a new house/unit you would have to sell at some stage.




What do you think would of happened if the current government had done something about this 5 years ago
Nah we’ll just blame a government that hasn’t been elected yet


----------



## Toyota Lexcen (5 April 2019)

Sorry what do you think will happen?


----------



## Humid (5 April 2019)

Ill tell you what would of happened if that peanut Abbott had a royal commission into the banks and not take on the unions we wouldn't be having this conversation


----------



## Humid (5 April 2019)

And to answer your question 
Its happening NOW


----------



## satanoperca (5 April 2019)

First: property prices are sinking/correcting fast with a Liberal govnuts.
Why: over indebtedness. All while we have the lowest interest rates in history and the highest population growth.

What may happen if Labor gets in?
Prices will continue to correct.
If the change NG
Prices will rebalance but rents will remain unchanged. More investment in construction will flow and people will have to look at other investment opportunities other that sitting on established homes.
The current policies have caused record high property price but resulted in diminished standed of living and a poorer community


----------



## sptrawler (5 April 2019)

satanoperca said:


> First: property prices are sinking/correcting fast with a Liberal govnuts.
> Why: over indebtedness. All while we have the lowest interest rates in history and the highest population growth.
> 
> What may happen if Labor gets in?
> ...




And cause the next price bubble there, you can't change people.
The other thing is, it will still be related to housing, we just don't know how it will manifest itself yet.
Because we don't know how the rich, who will be building the new builds, will wrangle it.
You should know and have seen it before, all that is going to happen is, the lower and middle group, will be locked out of the investment market.
Meanwhile the trusts, will build the houses and pay company tax rates.
I've yet to see interference, end up, with a better outcome.
W.A is back to pre boom prices, every boom has a bust, the greedy get burnt life goes on.
To change the dynamics of the market, will just change the outcomes and it wont be better for those at the bottom of the ladder, it never is. Just my opinion.


----------



## sptrawler (5 April 2019)

To add to the post below, without Government interference, the Perth property market is back to pre boom levels, the country Towns are worse. Country Towns are back to the lowest levels in 20-25 years, IFocus could confirm prices in Mandurah, are at ridiculous lows. The Goldfields, Pilbara and the lower S/W are all stuggling, to interfere with regulation will decimate the established market. IMO

https://thewest.com.au/business/hou...e-prices-plunge-to-2006-levels-ng-b881158018z


----------



## Smurf1976 (5 April 2019)

sptrawler said:


> The Goldfields, Pilbara and the lower S/W are all stuggling, to interfere with regulation will decimate the established market.



Goldfields and Pilbara I assume relates to mining employment etc but is there some trigger / cause for the lower south-west?


----------



## Toyota Lexcen (5 April 2019)

Isn’t Liberal delivering what a lot want? Lower prices

See rents raising by at least 15-20% where there is a low vacancy rate.


----------



## sptrawler (5 April 2019)

Smurf1976 said:


> Goldfields and Pilbara I assume relates to mining employment etc but is there some trigger / cause for the lower south-west?



It mostly is related to Perth prices and relativity.
I would guess S.A has a similar issue, the prices in country towns , will in some way be a reflection of what a house in Adelaide can be purchased for.


----------



## Humid (5 April 2019)

Smurf1976 said:


> Goldfields and Pilbara I assume relates to mining employment etc but is there some trigger / cause for the lower south-west?




Possibly holiday houses/hobby farms.


----------



## Humid (6 April 2019)

Also i knew a lot of peeps who did fifo from down there before it went quiet
During construction they even got an allowance and morning flight to travel

Rio were flying from Busselton?

No work around Mandurah


----------



## sptrawler (8 April 2019)

This is what happens, when the wealthy land bank and pick up cheap established homes.

http://www.thebull.com.au/articles/...inst-'rent-insanity',-seek-expropriation.html

From the article:
They singled out companies such as Deutsche Wohnen and Vonovia, which have bought thousands of buildings in a capital with one of the cheapest real estate prices in Europe.
They raze exiting structures to build luxury apartments and rented them out at higher rates.


----------



## sptrawler (10 April 2019)

Any tradies out there that want a house for $30-$40k, plenty of work in the areas, located in the mid West and Goldfields of W.A. 

https://www.watoday.com.au/national...buy-a-house-with-a-catch-20190408-p51c0p.html


----------



## Ann (1 May 2019)

*Australia Property Slump May Be Through Worst as Drop Moderates*

Australia’s property price slide moderated in April, suggesting the worst of the housing slump may have passed.


Housing values in the combined state and territory capitals fell 0.5 percent in April, compared to a 0.7 percent drop in March, according to CoreLogic Inc. data released Wednesday. From a year ago, prices have dropped 8.4 percent.
*Key Insights*

While house values are still falling, the rate of decline has been easing since prices tumbled 1.1 percent in December. “We are seeing further evidence that the worst of the housing market conditions are now behind us,” CoreLogic’s head of research Tim Lawless said in the statement.  More...


----------



## satanoperca (7 May 2019)

Every market needs a little rest before going hard again -up or down.

Be very surprised if this is the end of the falls, suspect that the falls will start permeating to the outer suburbs of Melb/Syd.

And hold on IR, what will happen if IR's we to rise, everyone will become vegan?


----------



## moXJO (23 May 2019)

So I noticed they loosened the lending rules the other day. Might stabilize house prices.  I'm not convinced the economy is in the best of shape to see a full recovery.


----------



## gartley (25 May 2019)

It will only lead to a bounce or sucker rally my 2c worth.
IMO, this is gonna be a long bear market, and we are only in the early stages. They will  try to bring the bubble back, creating bounces and suckers rallies on the way down ( nothing goes down in a straight line), but the larger trend will remain down for years and many buying into these rallies will be burnt.  The larger trend in most of the worlds property markets (excluding Japan and some other countires whose bubbles bursted years ago) has been up since the early 1950's.   I have noticed a "textbook" Elliottwave Structure develop in the UK property market since 1952 and the the bear market already looks to be underway there as it is in Australia which also exhibits a similar chart but with the exception that wave 5 went into a parabolic blow off move of which the rate of change of price cannot be sustained.


----------



## sptrawler (4 June 2019)

I don't know about the Eastern States, but here in the West the property market is shot and Labor wonder why their negative gearing idea wasn't well received.
I was talking to an elderly Lady on the weekend, she is trying to sell her 3x1 unit in central Mandurah (60klm South of Perth), it was valued by the Bank in 2006 when she bought it for $365,000.
It is on the market for $220,000 and she can't get an offer.
https://thewest.com.au/business/hou...use-prices-back-to-2006-levels-ng-b881218873z


----------



## SirRumpole (4 June 2019)

sptrawler said:


> I don't know about the Eastern States, but here in the West the property market is shot and Labor wonder why their negative gearing idea wasn't well received.
> I was talking to an elderly Lady on the weekend, she is trying to sell her 3x1 unit in central Mandurah (60klm South of Perth), it was valued by the Bank in 2006 when she bought it for $365,000.
> It is on the market for $220,000 and she can't get an offer.
> https://thewest.com.au/business/hou...use-prices-back-to-2006-levels-ng-b881218873z




Swings and roundabouts mate, that is the property cycle.

What goes up must come down. But I suppose you will blame the Labor Party as usual when we have had a Coalition government for 6 years.


----------



## sptrawler (4 June 2019)

SirRumpole said:


> Swings and roundabouts mate, that is the property cycle.
> 
> What goes up must come down. But I suppose you will blame the Labor Party as usual when we have had a Coalition government for 6 years.



No it has nothing to do with Labor, the market has been sliding here since the end of the mining boom, the problem is it hasn't stopped sliding.
I haven't seen an extended fall like this before.


----------



## Humid (4 June 2019)

My thoughts it was driven by negative gearing and greed on a previously unseen construction boom
And the fact that people enjoying the boom didn’t want to pay tax
My neck of the woods anyway and I was in the thick of it


----------



## willy1111 (4 June 2019)

Or possibly there were numerous eastern staters that moved to Perth to work in the mines and get ahead...when the mining boom finished, they got sick of the fly in fly out or saved enough... they sold their homes in Perth and took their money back east and bought homes in the east.


----------



## sptrawler (4 June 2019)

Both good points, there did seem to be a lot of new housing construction going on during the boom and post boom a mass exodus from W.A.
But at current prices, it is cheaper to buy than rent, it is as though people are just not interested in property.


----------



## lusk (5 June 2019)

sptrawler said:


> Both good points, there did seem to be a lot of new housing construction going on during the boom and post boom a mass exodus from W.A.
> But at current prices, it is cheaper to buy than rent, it is as though people are just not interested in property.




Have 2 mates that have come back to Victoria both with homes over in Perth hanging on to them hoping to get out when prices rise again. I wonder how many others have returned but are trapped and don't want to accept the loss.


----------



## moXJO (6 June 2019)

Talk on most property forums is negative. Most saying it is harder to squeeze money out on renos or development. Some talk of looking at WA for cash flow + buys.


----------



## sptrawler (6 June 2019)

moXJO said:


> Talk on most property forums is negative. Most saying it is harder to squeeze money out on renos or development. Some talk of looking at WA for cash flow + buys.



W.A is really in the doldrums, prices are ridiculously low IMO, however as Humid, lusk and others have said, there was a lot of stock built during the boom.


----------



## moXJO (6 June 2019)

sptrawler said:


> W.A is really in the doldrums, prices are ridiculously low IMO, however as Humid, lusk and others have said, there was a lot of stock built during the boom.



Yeah I feel there will be better opportunities down the track.
 Some property investors really know their stuff and have a lot more confidence then me.


----------



## sptrawler (6 June 2019)

moXJO said:


> Yeah I feel there will be better opportunities down the track.
> Some property investors really know their stuff and have a lot more confidence then me.



Property is a long game, but as with shares, you also need to know when to get out.
There is opportunity in Perth, but it will be hard to attract tenants, as there is a smorgasbord for them to chose from. 
Also the population growth in Perth, isn't what it is over East, so long distance ownership will be a long and tortuous path to riches. IMO


----------



## moXJO (6 June 2019)

sptrawler said:


> Property is a long game, but as with shares, you also need to know when to get out.
> There is opportunity in Perth, but it will be hard to attract tenants, as there is a smorgasbord for them to chose from.
> Also the population growth in Perth, isn't what it is over East, so long distance ownership will be a long and tortuous path to riches. IMO



Yeah I agree.

  Worth keeping an eye out on good located property. But you really need to do the figures. I'm banking on further falls unless govt relaxes the overseas buying rules. That in itself will just create bigger problems down the road.


----------



## sptrawler (10 June 2019)

This is another example of collateral damage in a falling housing market.

https://thewest.com.au/business/homeless-fears-for-sterling-first-investors-ng-b881225119z

Having said that, what were these people thinking, sinking their life savings into a scam like that.


----------



## jbocker (11 June 2019)

sptrawler said:


> This is another example of collateral damage in a falling housing market.
> 
> https://thewest.com.au/business/homeless-fears-for-sterling-first-investors-ng-b881225119z
> 
> Having said that, what were these people thinking, sinking their life savings into a scam like that.



They got a piece of me. I have a comparative small amount invested waiting on the float. Use RMA on managing one of my properties and the front line office (tenant managers) have been great. I liked the concept and in better times may have worked quite well. But in this market as you say, difficult to achieve anything.


----------



## IFocus (11 June 2019)

sptrawler said:


> This is another example of collateral damage in a falling housing market.
> 
> https://thewest.com.au/business/homeless-fears-for-sterling-first-investors-ng-b881225119z
> 
> Having said that, what were these people thinking, sinking their life savings into a scam like that.




Shezzas that's ugly


----------



## sptrawler (11 June 2019)

jbocker said:


> They got a piece of me. I have a comparative small amount invested waiting on the float. Use RMA on managing one of my properties and the front line office (tenant managers) have been great. I liked the concept and in better times may have worked quite well. But in this market as you say, difficult to achieve anything.



Investing in them, is different to putting your future living arrangements in their hands, with no security of tenure.


----------



## Smurf1976 (6 July 2019)

Seems to be cracking up now with apartments:

https://www.dailymail.co.uk/news/ar...ding.html?utm_source=share&utm_medium=ios_app


----------



## sptrawler (8 July 2019)

Things don't appear to be getting better, yet.

https://www.abc.net.au/news/2019-07-08/corelogic-property-pain-and-gain/11287638

Perth has some ugly figures:
Across the capitals, the share of properties resold at a loss varied significantly — Sydney (9pc), Melbourne (6.4pc), Brisbane (11.5pc), Adelaide (8.4pc), Hobart (2.1pc) and Canberra (10.2pc).

Meanwhile, resale losses for Perth (32.8pc) and Darwin (45.5pc) were at record levels.

However, these figures were not as severe compared to regions that are still grappling with the end of the mining boom.

The weakest property market in the March quarter was, by far, Darwin — 58.2pc of apartment vendors sold for a loss, compared to 40.8pc for house vendors.

It was followed closely by losses in regional Western Australia (apartments: 47.4pc, houses: 37.3pc) and Perth (apartments: 49.2pc, houses: 28.8pc).


----------



## sptrawler (10 July 2019)

Here is another post that shows the suburbs, that had the worst results, with regard selling for a loss.

https://au.yahoo.com/finance/news/a...ng-worst-property-price-losses-013245413.html


----------



## satanoperca (10 July 2019)

This is fantastic news for the community and society as a whole.

However % mean nothing, how about the average loss in $$$ terms over a period, say 3 years. Making it more real and less sensationalized.


----------



## IFocus (10 July 2019)

satanoperca said:


> This is fantastic news for the community and society as a whole.
> 
> However % mean nothing, how about the average loss in $$$ terms over a period, say 3 years. Making it more real and less sensationalized.




Really common around my area for those that brought land and built are selling out $100K less than what they paid.

BTW I am selling and got a lot of estimates from agents $300K less than I wanted.

Accepted an offer yesterday for around $250k more than the agents were telling me, my place was a bit different which they didn't want to accept.


----------



## moXJO (11 July 2019)

IFocus said:


> Really common around my area for those that brought land and built are selling out $100K less than what they paid.
> 
> BTW I am selling and got a lot of estimates from agents $300K less than I wanted.
> 
> Accepted an offer yesterday for around $250k more than the agents were telling me, my place was a bit different which they didn't want to accept.



Never listen to agents. They will lowball for quick turnover and minimal work.


----------



## sptrawler (11 July 2019)

IFocus said:


> Really common around my area for those that brought land and built are selling out $100K less than what they paid.
> 
> BTW I am selling and got a lot of estimates from agents $300K less than I wanted.
> 
> Accepted an offer yesterday for around $250k more than the agents were telling me, my place was a bit different which they didn't want to accept.



So are you fully down South now Ifocus?


----------



## IFocus (11 July 2019)

sptrawler said:


> So are you fully down South now Ifocus?




Not yet need to buy in the deep south........Falcon to Dawesville cut area


----------



## sptrawler (11 July 2019)

IFocus said:


> Not yet need to buy in the deep south........Falcon to Dawesville cut area



There is some unbelievable bargains there, I ride the push bike down to there and back to Mandurah, via the estuary terrific area. They just have to stop the overseas guests, from fishing out the cut.


----------



## IFocus (11 July 2019)

Yes value at the moment a lot of of places siting for a year or so will see how I go with cash offers in a few weeks time.

Dont mind the fishing but an issue when they kill, bleed and gut fish next to where I surf brings in the Great Whites all fired up.


----------



## IFocus (12 July 2019)

sptrawler said:


> I ride the push bike down to there and back to Mandurah, via the estuary terrific area.




I ride the coastal side as well (water boy for the daughter marathon training) views are very good through the rolling hills around Seascapes, coffee at the Falcon bay cafe or at the other end Halls head Dome......what more could a man ask for


----------



## sptrawler (12 July 2019)

IFocus said:


> I ride the coastal side as well (water boy for the daughter marathon training) views are very good through the rolling hills around Seascapes, coffee at the Falcon bay cafe or at the other end Halls head Dome......what more could a man ask for



I do that side in summer,  I would say that area, is the best bang for bucks in Australia ATM.


----------



## Smurf1976 (27 July 2019)

It seems that cracks maybe starting to appear in Melbourne too:

https://www.theage.com.au/national/...wer-complain-of-cracking-20190726-p52azy.html


----------



## sptrawler (27 July 2019)

Smurf1976 said:


> It seems that cracks maybe starting to appear in Melbourne too:
> 
> https://www.theage.com.au/national/...wer-complain-of-cracking-20190726-p52azy.html



I wonder if all the publicity, has caused a stampede for the exits?
I know I would be trying to get out of a $1m appartment contract.
I also know my dream of owning an apartment with a view, is out the window, so to speak.


----------



## sptrawler (31 July 2019)

Well when Adelaide Brighton cement is feeling the downturn, it has to be bad, obviously the housing market hasn't turned yet.

https://www.abc.net.au/news/2019-07...righton-ralan-group/11369548?section=business


----------



## PZ99 (31 July 2019)

Smurf1976 said:


> It seems that cracks maybe starting to appear in Melbourne too:
> 
> https://www.theage.com.au/national/...wer-complain-of-cracking-20190726-p52azy.html



Right next to the Yarra river at zero elevation and 101 stories with a single core. It's gonna move.

One earthquake and they'll get liquefaction to boot


----------



## sptrawler (2 August 2019)

Smurf1976 said:


> It seems that cracks maybe starting to appear in Melbourne too:
> 
> https://www.theage.com.au/national/...wer-complain-of-cracking-20190726-p52azy.html




It looks as though the apartment industry is starting to suffer from the fall out, the opal towers and other high rise apartment issues must be kicking in by now, I know I wouldn't be putting a deposit down in a hurry.
Those with a deposit now have an apartment that will be worth less than when they signed up, and not many buyers in the market, who said stocks were more speculative than property?
https://www.abc.net.au/news/programs/the-business/2019-08-01/high-rise-downturn/11376142

From the article:
Administrators for Ralan, one of Australia's biggest private property groups has collapsed,* leaving three thousand unfinished apartments in Sydney and the Gold Coast.*

Also from Sir Rumpole's post in the state of the economy thread.
https://www.abc.net.au/news/2019-08...cks-showing-as-major-developer-falls/11374464


----------



## basilio (2 August 2019)

As SP points  out we are seeing  a confluence of issues around property that should make investors  think very carefully about their savings

1) *Widespread serious problems around the integrity of many new builds.*  These threaten to undermine the value of whole apartment blocks .

2) *Hundreds of apartments built with inflammable cladding *. This is now certain. What is not known is how much rectification will cost and ho this will impact on individual owners and body corporates

3)* Collapse of demand for apartments. *As factors 1 and 2 kick in potential buyers are looking at  settling on properties worth substantially less than they signed up for.  Walking away now seems likely. So the developers are going down.

There will be knock on effects. I 'm wondering how the insurance industry is going to  survive the litigation that will follow issues 1 and 2. At the very least we can expect big jumps in  the cost of insurance across the board as companies attempt to balance the books.

I see the banks as having some serious problems. When do they reassess the value of the collateral against loans to suspect apartments? How big  is this issue ? When should investors be told ?

What about property trusts ? What is their exposure in this situation ? They are usually the first  investments to fail in these situations.

What is the status of lenders who are financing the high rise developments ? I wouldn't want to have funds in these bodies at the moment.

Cash looks good...


----------



## qldfrog (2 August 2019)

Just a point:
Yesterday watched a house hunter show on Life tv
Young family looking for a house near New York
45min commuting to Manhattan,
Small acreage with typical 4 bedrooms 3 bathrooms , living room the size of a hall and walk in pantry the size of a Melbourne studio
750k usd
So 1.2m Aud
Should i say more
https://www.zillow.com/katonah-ny/
We are talking posh up market estates with deers in the yard and 30m tall established trees,pool, deck etc
Australian prices have a lot to go down....

So putting on sell next week
Anyone interested in a huge acreage in Brisbane north, less than 1h door to door from either airport or cbd and amazing views.
Pm me before i sign the re contract


----------



## sptrawler (2 August 2019)

qldfrog said:


> Just a point:
> Yesterday watched a house hunter show on Life tv
> Young family looking for a house near New York
> 45min commuting to Manhattan,
> ...



This is the problem Australia has, the whole economy is geared around housing and owning one.
The underpinning thing to it is wages, wages keep chasing the cost of housing and vice versa, it has become a vicious cycle driven by an obsession. We have become disengaged from the reality of Countries like the U.S and U.K, our lifestyle is envied by those who come from overseas, how long it can be maintained is the question?
I guess as long as we can keep digging $hit up and selling it, while maintaining a relatively small population, in reality we sell the same stuff as Brazil but they support 220million we only support 25million, big difference.
Just my opinion.


----------



## SirRumpole (2 August 2019)

basilio said:


> As SP points  out we are seeing  a confluence of issues around property that should make investors  think very carefully about their savings
> 
> 1) *Widespread serious problems around the integrity of many new builds.*  These threaten to undermine the value of whole apartment blocks .
> 
> ...




Apparently we have a big influx of migrants (as we always have had), so where are they living, and why are all these apartments unwanted ?

It's pretty difficult to understand why housing goes empty and property prices are falling while our transport infrastructure is cracking at the seams with the weight of population growth.

Has anyone got any ideas about this, because I sure don't.


----------



## jbocker (2 August 2019)

I love this site (Aussie stock forums) able to review comments from the past...
I looked up a comment I made 10 years ago....and I don't see it has changed much but for the boomers have pretty much left the market. I don't think much will change till the children of boomers get cashed up into their 50s. Also we add to that the children of the immigrants.


jbocker said:


> Agree with you, baby boomers have to some degree been through their big spending years, ie they are on big earnings, little debt so can spend and invest big money.Banks et al have tried to suck this out of the baby boomers and everyone else to the point where the sub-prime crisis has fallen upon us. Superann in turn has copped a flogging and the retiring baby boomers now are interested in scraping together enough to retire on. Licking their wounds, they probably wont be chasing the investment with such enthusiasm for a while (living in fear, greed will come again no doubt but will the cash be there to spend?). Boom and Bust the cycle continues, growth will return, not at the rates we have just seen, for a while anyway. For the youngsters these are good buying years.


----------



## jbocker (2 August 2019)

SirRumpole said:


> Apparently we have a big influx of migrants (as we always have had), so where are they living, and why are all these apartments unwanted ?
> 
> It's pretty difficult to understand why housing goes empty and property prices are falling while our transport infrastructure is cracking at the seams with the weight of population growth.
> 
> Has anyone got any ideas about this, because I sure don't.



Living in cars, on side streets and parklands??? Cars and vans are the new homes??


----------



## basilio (2 August 2019)

SirRumpole said:


> Apparently we have a big influx of migrants (as we always have had), so where are they living, and why are all these apartments unwanted ?
> 
> It's pretty difficult to understand why housing goes empty and property prices are falling while our transport infrastructure is cracking at the seams with the weight of population growth.
> 
> Has anyone got any ideas about this, because I sure don't.




Simple unfortunately

Many migrants are sharing homes.  This can be  doing it formally or with multiple beds in apartments or houses. 
These days  many people rent rooms not houses. A house has 5-6 lockable bedrooms and the landlord rents out individual rooms.  This is not simply house sharing as we knew it but renting a room.

The empty apartments? I believe mostly owned by overseas investors from China. Sort of land bank idea.

One of the big population influxes is overseas students.


----------



## basilio (2 August 2019)

sptrawler said:


> This is the problem Australia has, the whole economy is geared around housing and owning one.
> The underpinning thing to it is wages, wages keep chasing the cost of housing and vice versa, it has become a vicious cycle driven by an obsession. We have become disengaged from the reality of Countries like the U.S and U.K, our lifestyle is envied by those who come from overseas, how long it can be maintained is the question?
> I guess as long as we can keep digging $hit up and selling it, while maintaining a relatively small population, in reality we sell the same stuff as Brazil but they support 220million we only support 25million, big difference.
> Just my opinion.




I don't think this is accurate SP. Once-upon-a-time people were determined to own their on home and for a good period of time were able to afford a house on a single age and then perhaps 1-5 incomes. Houses were priced at these approx wage levels. Banks loaned to people based on their wage and their saved deposit

In my view the big changes happened around 2001-2 . I believe that was when we saw some serious turbocharging of buying houses as a way to become wealthy. The pitch was to borrow 100% of the house cost put in a tenant,  get a tax deduction on your investment loss and wait for capital gain to make you a millionaire .

This suddenly  created a whole new group of buyers who were not constrained by their income and were willing to bid up properties prices to build their portfolio. If I remember correctly there was one particularly property guru who kicked this pyramid off. (forget his name..)

And so for the next 15 years we saw the self fulfilling situation of property investors pushing up prices an then basking in their paper millions. Meanwhile "real" purchasers struggled to match the ever increasing house prices - becasue they couldn't.


----------



## qldfrog (2 August 2019)

From my experience especially with chinese travelling holidays visa guests
Landlord rent 1 house or flat to a Chinese speaking tenant
That tenant sublets beds in the place, multiple per room, no formal arrangement 
Flexibility, low costs and after 2 weeks in Brisbane, the young boy/girl leaves for the next city
Someone is doing a killing, but that is not the landlord.ALP can rest..


----------



## SirRumpole (2 August 2019)

Maybe all the migrants go from one AirBnb to the next.


----------



## qldfrog (2 August 2019)

But sir rumpole, we all know migrants are either refugees housed in public housing or valuable skilled workers filling jobs no Australian can fill: brain surgeons, rocket scientists, etc stabilising Toorak market.
It can not be a problem
Can not be a problem


----------



## sptrawler (2 August 2019)

basilio said:


> I don't think this is accurate SP. Once-upon-a-time people were determined to own their on home and for a good period of time were able to afford a house on a single age and then perhaps 1-5 incomes. Houses were priced at these approx wage levels. Banks loaned to people based on their wage and their saved deposit
> 
> In my view the big changes happened around 2001-2 . I believe that was when we saw some serious turbocharging of buying houses as a way to become wealthy. The pitch was to borrow 100% of the house cost put in a tenant,  get a tax deduction on your investment loss and wait for capital gain to make you a millionaire .
> 
> ...




That may be the case with the market over East, but here in W.A it was mainly driven by wage growth in the early 2000's, wages grew and house prices were low.
Therefore people upgraded and built, then it didn't take long for RE agents to realise prices could be lifted and houses kept selling suburbs started getting built.
The population grew and the prices kept going, then all of a sudden the missus needed a job to be able to afford the price.
Then bang the mining boom burst in 2014-15, we are still going down, prices are back to early 2000 levels people still are reluctant to buy.
Of course in very expensive areas of Perth, it is still expensive, but in outer suburbs 3x1's can be bought for low $200k.
Sydney and Melbourne will always be expensive, because most people want to live there, so there will always be a buyer. It is the same in any Country, take the U.K a 'normal' worker can buy a nice family home in the NE of England for a reasonable price, that doesn't mean the same person could afford a similar house in London.
Those investors in Sydney, Melbourne will be on 60minutes in the foreseeable future. IMO
Greed will always have its casualties.


----------



## basilio (2 August 2019)

I can see that difference SP.  I am talking about Melbourne and I suppose Sydney house prices.


----------



## sptrawler (2 August 2019)

basilio said:


> I can see that difference SP.  I am talking about Melbourne and I suppose Sydney house prices.



Yes the problem with that is, the fallout from hitting Sydney/ Melbourne with a hammer, would have ended up with the rest of the Country being a waste land.
Labor were pandering to the out of control investor problem in Sydney/Melbourne, without thinking about the collateral damage, to the other 95% of Australia.
Like I said in another thread, Labor have great ideas, it is the poor implementation and lack of thought to detail that lets them down.
The same applies to the greenie's unfortunately.


----------



## Smurf1976 (3 August 2019)

basilio said:


> As SP points  out we are seeing  a confluence of issues around property



This sort of thing happens at the end of every bull market.

All sorts of issues suddenly come to attention and it's never just the purely financial ones but other things of a quality nature as well. 

The details will depend on the industry but same concept always. Eg poor quality can be with physical things (eg buildings) or it can be things like the quality of borrowers, contracts or government legislation or that there have been systemic breaches of the law or that the product is deadly or whatever but it usually emerges when the finances are under stress anyway.


----------



## moXJO (3 August 2019)

I was talking to a department of fair trading building inspector. Guy really knew his stuff. Apparently he thought that the unit fiasco was blown out of proportion by the media. 

Housing seems to be stable at the moment. It may just do a slow drift down. 
I'm unsure on the economy. I was favoring everything going to sht. But the last month has me scratching my head. Retail is flat, but other areas seem to have bumped up. Possibly just a tax return pump.


----------



## basilio (3 August 2019)

moXJO said:


> I was talking to a department of fair trading building inspector. Guy really knew his stuff. Apparently he thought that the unit fiasco was blown out of proportion by the media.
> 
> Housing seems to be stable at the moment. It may just do a slow drift down.
> I'm unsure on the economy. I was favoring everything going to sht. But the last month has me scratching my head. Retail is flat, but other areas seem to have bumped up. Possibly just a tax return pump.




Fundamental problem there moxjo.  One of the major issues in Opal was  substandard  steel supports  and poor quality cement being used. If that situation has also occured in other projects there will be systemic problems.
_
The incident prompted the State Government to commission a report on the building, spearheaded by three of NSW's leading engineers.

It found parts of the tower were constructed using "lower-strength concrete" and that "under-designed" critical support beams had burst under extreme pressure._


----------



## SirRumpole (3 August 2019)

basilio said:


> Fundamental problem there moxjo.  One of the major issues in Opal was  substandard  steel supports  and poor quality cement being used. If that situation has also occured in other projects there will be systemic problems.
> _
> The incident prompted the State Government to commission a report on the building, spearheaded by three of NSW's leading engineers.
> 
> It found parts of the tower were constructed using "lower-strength concrete" and that "under-designed" critical support beams had burst under extreme pressure._




So, do we know who actually built Opal Tower and what other projects they have done ?


----------



## sptrawler (3 August 2019)

The moxjo post that i found most interesting and will probably bring about a change in proceedure IMO, was the one that mentioned the delay in delivery of concrete to site, I wouldn't be surprised if it isn't mandatory to install a batch plant at site if delivery times can't be guaranteed.
Once I read it and thought about the cement trucks trying to get through Syndey, it would be a nightmare trying to get a reliable continuous pour happening, interesting subject I would hate to be the project manager.


----------



## moXJO (3 August 2019)

basilio said:


> Fundamental problem there moxjo.  One of the major issues in Opal was  substandard  steel supports  and poor quality cement being used. If that situation has also occured in other projects there will be systemic problems.
> _
> The incident prompted the State Government to commission a report on the building, spearheaded by three of NSW's leading engineers.
> 
> It found parts of the tower were constructed using "lower-strength concrete" and that "under-designed" critical support beams had burst under extreme pressure._



Yes I know, I posted similar before. However he seemed to think that there wasn't a huge spike in dodgy buildings as an overall %.

I don't think I agree with him. But he was closer to the action. 

In my opinion there is some dodgy units out there. Another reason I've never been a fan of them.


----------



## basilio (4 August 2019)

The repair price for the Mascot Towers residents is jumping to at least $10m. That has to put a huge dent in the value of the properties because the proposed levy to pay for the repairs will be tied to each apartment for the next 15 years.

And there is no guarantee this is the final cost...
And what happens if some people can't/won't pay the extra levy ?  

*Mascot Towers repair bill passes $10 million as residents hit with special levy funding arrangement*
*...*
In the minutes of an owners meeting to be held on August 22, owners will be forced to vote on the $10 million levy to fund the works, with the money paid in quarterly instalments over 15 years.

In June Mascot Towers owners voted to raise $1 million for initial works through a similar special levy.

But since that meeting the price tag for the building, which is too old to fall under warranty, appears to have jumped significantly. 
https://www.abc.net.au/news/2019-08-03/mascot-towers-owners-face-$10-million-repair-bill/11380902


----------



## sptrawler (4 August 2019)

basilio said:


> The repair price for the Mascot Towers residents is jumping to at least $10m. That has to put a huge dent in the value of the properties because the proposed levy to pay for the repairs will be tied to each apartment for the next 15 years.
> 
> And there is no guarantee this is the final cost...
> And what happens if some people can't/won't pay the extra levy ?



If the owner won't/can't pay, there are steps the Strata as with any business, can invoke legal steps to recover any monies owed.
Not a nice position for the owners to find themselves in, there must be some sleepless nights for apartment owners at the moment, I think it will take quite some time for confidence to return to the apartment market.
Having said that, there may well be some very good investment opportunities in that market, for the brave investor or someone looking to adopt apartment living.
There are a lot of apartments, not all will have the issues that have presented.


----------



## satanoperca (6 August 2019)




----------



## moXJO (6 August 2019)

satanoperca said:


>



Feels like we could drop a lot more and it would still be too expensive.


----------



## StockyGuy (6 August 2019)

Some of those regional increases make me chuckle - such as regional NT 3.1% YTD; must be increase based on very low average.

Chuckles aside, always surprises me how few people are willing to give the regional centres a chance.  Not everyone's career is feasible out there but many are.  Lower wages yes, but for normal people it's still entirely possible to own a three bedroom house outright in well under a decade.


----------



## moXJO (6 August 2019)

StockyGuy said:


> Some of those regional increases make me chuckle - such as regional NT 3.1% YTD; must be increase based on very low average.
> 
> Chuckles aside, always surprises me how few people are willing to give the regional centres a chance.  Not everyone's career is feasible out there but many are.  Lower wages yes, but for normal people it's still entirely possible to own a three bedroom house outright in well under a decade.



Some really nice towns as well. Forbes seemed like a very nice,  clean  town. The nightlife would kill me though.


----------



## satanoperca (6 August 2019)

moXJO said:


> Feels like we could drop a lot more and it would still be too expensive.



.
For melb and syd- Yes


----------



## sptrawler (14 August 2019)

Market forces, starting to apply pressure in Sydney and Melbourne rental market, as always happens after a bubble.

https://www.domain.com.au/research/...d-masthead&utm_source=the-age&utm_medium=link


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## sptrawler (15 August 2019)

The fall out from the falling property market is starting to bite, residential property construction in sharp decline, infrastructure needs to start rolling out. Hopefully not too quickly, or we end up with the disasters, we have had previously.

https://www.abc.net.au/news/program...esidential-construction-is-faltering/11415118


----------



## satanoperca (15 August 2019)

Blind Freddie could have seen this, kicking the can continuously was never going to work.

The dumb arse RBA wishing to drop IR to 0% just shows how incompetent they are, the Govnuts not willing to acknowledge that high immigration is and will continue to cause a drop in the standard of living for Australians also goes to prove that we a governed by dim wits.

While I am with your Sptrawler, I hope the decline is slow, given world events and our incredibly high private debt levels, my gut is telling me this downward spiral is going to gain momentum fast.

Funny how old Scomo has been so quiet lately. No amount of PR or marketing spin can change the outcome this time.

I feel for retirees, they are being screwed over big time.


----------



## sptrawler (15 August 2019)

Yes, if China and the U.S take a dump, we are in the can.


----------



## satanoperca (15 August 2019)

Well in the can we are, just when is the question. 

RBA has no ammo left.


----------



## sptrawler (20 August 2019)

This is interesting reading, shows the problems with long settlements and buying with speculative gains.

https://www.theage.com.au/national/...a-home-to-find-it-gutted-20190820-p52iu5.html

What is the old saying? Don't spend it, till it is in your pocket.


----------



## basilio (21 August 2019)

This story from a builder makes it absolutely clear how  the public has been bent over by the developers in the past 15-20 years.

*Dodgy high-rise apartments are making developers rich but owners are forgotten*
By Catherine Williams

Leaking, cracking, flammable and creaking: by now, most of us are aware of defects plaguing high-rise residential apartment towers.

There is an urgent need to re-build public confidence in a sector which, through poor self-regulation, has churned out more and more homes needing costly repairs. Some are uninhabitable.

But we should also be asking about what return owners are really receiving on these apartment homes which are making property developers filthy rich.

*As a licensed builder and a spectator of real estate trends,* I feel the most frustrating element of the current predicament is that the bill for repairing the current stock of dodgy apartments will ultimately lie with current owners.

Many have already unwittingly delivered astronomical profits to developers, who will cash their chips and run.

These developers have made large profits through a combination of the housing bubble and a quirk in the regulatory system that treats high-rise and low rise developments differently.

https://www.abc.net.au/news/2019-08-21/the-high-rise-apartment-sector-needs-reform/11431732


----------



## Junior (21 August 2019)

satanoperca said:


> Well in the can we are, just when is the question.
> 
> RBA has no ammo left.




QE!!  Because that has worked so well elsewhere.....


----------



## satanoperca (21 August 2019)

basilio said:


> This story from a builder makes it absolutely clear how  the public has been bent over by the developers in the past 15-20 years.
> 
> *Dodgy high-rise apartments are making developers rich but owners are forgotten*
> By Catherine Williams
> ...




F--k me.

This is going to get very very messy.

From above article:
"State Governments agreed to exempt builders from providing this type of insurance in buildings above three stories."


----------



## basilio (23 August 2019)

There has been talk about badly built apartment blocks around Melbourne.  Seems that someone has bitten the bullet and basically declared  a whole block of units a dangerous risk and  with so many defects it is uninhabitable.

I suggest 17 home  owners and their banks are facing very big losses.

*Melbourne apartment block unsafe to live in due to cladding and fire safety, residents told to leave*
Posted about 2 hours ago


* Photo:* An emergency evacuation order was issued giving residents 48 hours to leave. (ABC News: Chris Le Page) 
*Related Story:* Building surveyor suspended over flammable cladding vows to appeal decision
*Related Story:* 'On our third balcony collapse': Could dangerous cladding be the tip of the iceberg?
*Related Story:* Prominent Sydney buildings at risk from combustible fire cladding
Residents have been ordered to leave an apartment building in Melbourne's south-east which is covered in combustible cladding.

*Key points:*

Authorities ruled the building had a number of defects including combustible cladding and mould
All remaining residents in the Mordialloc building have been ordered to leave within 48 hours
The local council has offered to help residents who cannot find their own emergency accommodation

The Mordialloc building has been deemed unsafe to occupy after an inspection by the Victorian Building Authority's (VBA) statewide cladding audit yesterday.

Most of the decade-old complex's 17 units were already vacant, with the four remaining residents given 48 hours to move out.

The VBA's chief executive officer, Sue Eddy, said the decision was not taken lightly.

*She said the building had a number of defects including combustible cladding on the external walls, insufficient essential safety measures and significant water damage that had led to extensive mould.*

"An expert panel was convened and they made an assessment after looking at all the essential fire safety measure of this building that it was not viable for this building to remain occupied and that it needed to be vacated in the interests of public safety," Ms Eddy said.
https://www.abc.net.au/news/2019-08...ces-residents-out-of-apartment-block/11443976


----------



## basilio (23 August 2019)

The above story reflects what is already happening with investigations of badly built apartments.

 Print Email  Facebook  Twitter  More
*Combustible cladding removal will uncover 'litany' of problems, expert warns*
https://www.abc.net.au/news/2019-07...-will-reveal-other-building-problems/11318746


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## qldfrog (23 August 2019)

I think a lot of concrete cancer (aka rusted internal frame) will be discovered:
I saw a seaside unit balcony I would not dare  staying on this week on the coast...
all good behind cladding...


----------



## sptrawler (23 August 2019)

qldfrog said:


> I think a lot of concrete cancer (aka rusted internal frame) will be discovered:
> I saw a seaside unit balcony I would not dare  staying on this week on the coast...
> all good behind cladding...



From just an engineering background, all concrete reinforcing on seaboard structures should be stainless, especially in areas of the concrete that are exposed to the elements.
Having said that, if you read the global warming thread, it all becomes pointless, as it will all be underwater within the next 80 years.
So I guess they should be putting in place building regulations, that reflect ocean front exposure, to those being built on top of the blue mountains.


----------



## moXJO (24 August 2019)

Home warranty insurance is useless. Council is happy to take extortionate fees so the should be providing proper inspections while its being built. Otherwise up inspections on anything over a certain amount with a team of thorough inspectors. 

The problem at the moment is shonky inspectors and builders only showing the best 3 units to inspect. Fair trading seems reactive not proactive. Pointing out problems after its done is too late. 

Architects need to be hung as well. They often are the cause by specifying or leaving detail off tricky areas. You have to follow the plan if you are a tradie or it will come back on you. I would often tell the architect that "this is not up to Australian standard" (and thats the very minimum you should be doing from an engineering perspective). Just so my work would be done right. 
God only knows how many others didn't simply due to lack of knowledge. I have seen catastrophic oversights on plans.

The other thing is information on problem products can be non existent. And there is little information for many trades beyond the standards books.


----------



## Humid (26 August 2019)

basilio said:


> There has been talk about badly built apartment blocks around Melbourne.  Seems that someone has bitten the bullet and basically declared  a whole block of units a dangerous risk and  with so many defects it is uninhabitable.
> 
> I suggest 17 home  owners and their banks are facing very big losses.
> 
> ...




I lived in a timber house painted with lead based paint in East Freo for years.......
Pretty sure that cladding was flammable too.


----------



## sptrawler (27 August 2019)

It isn't just the young doing it tough with housing.

https://www.abc.net.au/news/2019-08...der-australians-distress-study-finds/11450958
From the article:
Average mortgage debt among older Australians has blown out by 600 per cent since the late 1980s after accounting for inflation, the study says, and nearly half of all homeowners aged 55 to 64 are still paying off a mortgage, up from just 14 per cent 30 years ago.

"These statistics are quite shocking," said Rachel Ong ViforJ, professor of economics at Curtin University and lead author of the study for the Australian Housing and Urban Research Institute (AHURI).

"More and more older Australians are finding it increasingly difficult to pay off their mortgage debt before they retire.

"Our research shows that if you are carrying a mortgage debt and having difficulty repaying it in later life, then your mental health is likely to be poorer than someone who does not have this issue


----------



## sptrawler (10 September 2019)

If people are expecting Sydney house prices to crash to pre boom levels, tell them they are dreaming.

https://www.smh.com.au/interactive/2019/sydney2030/population/index.html

From the article:
_Sydney’s population will be 5,878,238 by 2031, projections say, with half a million new dwellings needed by then _.

It is a simple supply and demand equation.


----------



## SirRumpole (10 September 2019)

sptrawler said:


> If people are expecting Sydney house prices to crash to pre boom levels, tell them they are dreaming.
> 
> https://www.smh.com.au/interactive/2019/sydney2030/population/index.html
> 
> ...




Yeah, but the vacancy rate has been steadily increasing too.

https://sqmresearch.com.au/graph_vacancy.php?region=nsw-Sydney&type=c&t=1


----------



## sptrawler (10 September 2019)

SirRumpole said:


> Yeah, but the vacancy rate has been steadily increasing too.
> 
> https://sqmresearch.com.au/graph_vacancy.php?region=nsw-Sydney&type=c&t=1



Also I think there will be plenty of vacant apartments.


----------



## SirRumpole (17 September 2019)

Looks like the building quality issue is really starting to bite.

https://www.abc.net.au/news/2019-09...se-sees-investors-facing-huge-losses/11492920


----------



## sptrawler (17 September 2019)

SirRumpole said:


> Looks like the building quality issue is really starting to bite.
> 
> https://www.abc.net.au/news/2019-09...se-sees-investors-facing-huge-losses/11492920



Off the plan has always scared me, putting my hard earned down on a dream just makes me naturally nervous, one of the reasons I have always bought an existing house.


----------



## qldfrog (17 September 2019)

Was actually a ponzi scheme using deposit moved into no recourse loan with 15pc return.


----------



## sptrawler (17 September 2019)

qldfrog said:


> Was actually a ponzi scheme using deposit moved into no recourse loan with 15pc return.



Wow, that sounds nasty, poor sods caught up in that.


----------



## SirRumpole (17 September 2019)

qldfrog said:


> Was actually a ponzi scheme using deposit moved into no recourse loan with 15pc return.




Another failure of governance.

Regulators go missing again, heads should roll.


----------



## sptrawler (1 October 2019)

This article gives a good analysis of the Perth property situation, and probably why Perth people were scared to death of the proposed changes to negative gearing, most believed it would have made a bad situation catastrophic.

https://www.abc.net.au/news/2019-10...ate-cut-to-fix-perths-housing-market/11558586


----------



## SirRumpole (21 October 2019)

Not good news for apartment buyers in Sydney and Melbourne.

https://www.abc.net.au/news/2019-10...partments-worth-less-than-bought-for/11613256


----------



## sptrawler (21 October 2019)

Someone is going to be carrying some hefty on paper loses, I wonder how many companies will hit the wall, in the near to mid term until the structural issue saga becomes a distant memory. Once confidence is lost, it takes a long time to restore it.


----------



## sptrawler (23 October 2019)

It looks as though the pain is just beginning, this current up tick in prices in Sydney, Melbourne, may be just a bounce on the bottom.

https://www.smh.com.au/business/com...-in-sydney-and-melbourne-20191016-p5318u.html


----------



## Bill M (23 October 2019)

sptrawler said:


> It looks as though the pain is just beginning, this current up tick in prices in Sydney, Melbourne, may be just a bounce on the bottom.
> 
> https://www.smh.com.au/business/com...-in-sydney-and-melbourne-20191016-p5318u.html




Not only do we have to contend with dodgy builders that go broke before your apartment is built but now you have dodgy builds as well. Look at the debacle of the Opal Tower in Sydney. Those flats they built 50 years ago are still standing strong, some of the new builds can not be occupied. Unbelievable, we are going backwards. 
---
*In Sydney's Opal Tower, 169 apartments remain empty almost four months after evacuation.
https://www.abc.net.au/news/2019-04...l-tower-unoccupied-four-months-later/11002796*
---


----------



## SirRumpole (23 October 2019)

Bill M said:


> Not only do we have to contend with dodgy builders that go broke before your apartment is built but now you have dodgy builds as well. Look at the debacle of the Opal Tower in Sydney. Those flats they built 50 years ago are still standing strong, some of the new builds can not be occupied. Unbelievable, we are going backwards.
> ---
> *In Sydney's Opal Tower, 169 apartments remain empty almost four months after evacuation.
> https://www.abc.net.au/news/2019-04...l-tower-unoccupied-four-months-later/11002796*
> ---




One explanation for this crisis perhaps.

https://www.theage.com.au/politics/...g-industry-privatisation-20190717-p5287b.html


----------



## sptrawler (23 October 2019)

Bill M said:


> Not only do we have to contend with dodgy builders that go broke before your apartment is built but now you have dodgy builds as well. Look at the debacle of the Opal Tower in Sydney. Those flats they built 50 years ago are still standing strong, some of the new builds can not be occupied. Unbelievable, we are going backwards.
> ---
> *In Sydney's Opal Tower, 169 apartments remain empty almost four months after evacuation.
> https://www.abc.net.au/news/2019-04...l-tower-unoccupied-four-months-later/11002796*
> ---



Self regulation at its finest.
Snap, Rumpy.


----------



## SirRumpole (23 October 2019)

sptrawler said:


> Self regulation at its finest.
> Snap, Rumpy.




Not being political sp, the LNP probably started the rot but Labor were too lazy to stop it.


----------



## sptrawler (23 October 2019)

SirRumpole said:


> Not being political sp, the LNP probably started the rot but Labor were too lazy to stop it.



It's the same old story, the more the pollies can offload, the less responsibility for the same or more money. Human nature.


----------



## SirRumpole (23 October 2019)

sptrawler said:


> It's the same old story, the more the pollies can offload, the less responsibility for the same or more money. Human nature.




Yes, but the government gets the blame in the end.

That's probably not a concern for Jeff Kennet or Joan Kirner or Steve Bracks who got out before the manure hit the propellor.


----------



## sptrawler (23 October 2019)

SirRumpole said:


> Yes, but the government gets the blame in the end.
> 
> That's probably not a concern for Jeff Kennet or Joan Kirner or Steve Bracks who got out before the manure hit the propellor.



Yep, as we have said before, you can delegate responsibility, but not accountability. They make their lives easier by giving the responsibility to the private sector, but in the end they are responsible for making the sure the private sector maintain standards.
They will probably have to resurrect the technical sections of town planning and inspections, which wouldn't be a bad thing, as it would give jobs to engineering graduates.
I wonder in the end, if the Government will have to knock over these towers, fine the builders and have the towers re built.


----------



## sptrawler (23 October 2019)

Looks like the first step on the 'long road back', to reasonable building practices, still a shame for those caught up in the current debacle.

https://www.smh.com.au/politics/nsw...to-construction-industry-20191023-p533ev.html


----------



## sptrawler (23 October 2019)

A bit of stamp duty relief, to kickstart W.A's anemic property market, I wouldn't hold my breath on it working.

https://www.abc.net.au/news/2019-10...wa-apartment-buyers/11632164?section=business


----------



## satanoperca (23 October 2019)

sptrawler said:


> A bit of stamp duty relief, to kickstart W.A's anemic property market, I wouldn't hold my breath on it working.
> 
> https://www.abc.net.au/news/2019-10...wa-apartment-buyers/11632164?section=business



So long as property can revive in Perth, everything we be OK?


----------



## SirRumpole (15 November 2019)

Property too expensive ?

Here's one that's dirt cheap.

https://www.abc.net.au/news/2019-11-14/earth-bag-dome-home-new-way-cost-sustainable-housing/11699840


----------



## jbocker (15 November 2019)

SirRumpole said:


> Property too expensive ?
> 
> Here's one that's dirt cheap.
> 
> https://www.abc.net.au/news/2019-11-14/earth-bag-dome-home-new-way-cost-sustainable-housing/11699840



Dirt bag vs brick. Fundamentally the same thing just one is a hell of a lot thicker.
I am not surprised it took 2 years to get council approval. Then 2 years to build. How is that sustainable?


----------



## qldfrog (15 November 2019)

I thought the same, on my own land, with no connection required to either water, power..already there and sewerage, there was 20k council fees, 12k sewerage treatment plus various related fees, fire rating and windows door to standard 10k
So 42k just to basically start building with bag bricks or whatever
The housing cost in australia is first and mostly a regulatory cost, and see after the bushfires how we will get another layer of the same


----------



## Bill M (4 January 2020)

Here's one I didn't know about. Watch out all you people who live overseas. 

*Thousands of Australian expats face tax slug under changes to CGT main residence exemption*

*https://www.abc.net.au/news/2020-01-02/australian-expats-face-tax-slug-cgt-main-residence-exemption/11836094?section=business*


----------



## qldfrog (4 January 2020)

Bill M said:


> Here's one I didn't know about. Watch out all you people who live overseas.
> 
> *Thousands of Australian expats face tax slug under changes to CGT main residence exemption*
> 
> *https://www.abc.net.au/news/2020-01-02/australian-expats-face-tax-slug-cgt-main-residence-exemption/11836094?section=business*



Yes, aware of that one..so you need to sell all land assets before moving, and then the question will be why come back, but ehh i am sure the ato knows better


----------



## fergee (4 January 2020)

qldfrog said:


> The housing cost in australia is first and mostly a regulatory cost, and see after the bushfires how we will get another layer of the same



It was a bit of a nightmare in NZ after the Christchurch EQ red tape slowed rebuilding, insurance pay outs took years, labour to rebuild was scarce. 

Ironically this could end up being another boost to Aussie house prices People loose homes to fires ~ need new places to live ~ housing market tightens ~ need to build new houses labour tightens ~ need immigrants to support rebuild ~ immigrants need houses too ~ housing market tightens even more pushing prices up. Just saying as this is what happened in NZ after the EQ.


----------



## jbocker (5 January 2020)

fergee said:


> It was a bit of a nightmare in NZ after the Christchurch EQ red tape slowed rebuilding, insurance pay outs took years, labour to rebuild was scarce.



Did a tour through NZ and I was fascinated by the rebuild of Napier (which I think took around 2 years including a worldwide study of suitable architecture) and I then went onto the Christchurch which still had large areas still in ruins many years after the event. Clearly the two disasters had their differences in repair, but I think the administrators / regulators have a LOT to answer for in Christchurch. Hey how about some regulations on the timeliness of the regulators.

Napier has excellent Art Deco architecture well worth a stay.

Post these dreadful bushfires I sincerely hope that relief is rapid and that a better solution on building requirements in fire prone areas is done QUICKLY. I fear a confusing muddle of regulators wasting a lot of time and resources coming up with a disparate range of confusing laws and bylaws differing from one shire to the next. Meanwhile the insurance companies will resolve their issues within weeks by upping insurance costs across the board and apply further strangulation on claimable events, while at the same time drag their feet to pay out claims.


----------



## fergee (5 January 2020)

jbocker said:


> Meanwhile the insurance companies will resolve their issues within weeks by upping insurance costs across the board and apply further strangulation on claimable events, while at the same time drag their feet to pay out claims.




Exactly what happened in NZ meanwhile people are homeless waiting for the insurance payout and suffering PTSD while the government can't figure out which shoe to put on which foot. I hope Australia can learn from these mistakes and do better. What I also noticed after the EQ was a real sense of community and people helping each other and pulling together to support each other. I have no doubt Aussies will be like that too after this bush fire situation is under control!


----------



## qldfrog (5 January 2020)

fergee said:


> I have no doubt Aussies will be like that too after this bush fire situation is under control!



I sadly doubt it will happen when you see the appropriation of the fire disaster by some.
At least, no one blamed the earthquake on CC..well actually some start doing it...
I expect the following
Myriads of codes and regulations and extra fees if possible by every agency and department around
A huge fee frenzy, then laws mandating forced evacuation in case of fire...
Increase insurance premium still unrelated to actual location based on obsolete council maps..with rezoning corruption magnets
Next fire wave will then see an highest ever number of houses lost, and matching premium second wave of increases
Bush living becoming unaffordable
.population herded back in their chookpen of high density suburbs becoming more and more dumb units of consumption, potentially all receiving universal income until we sell the last lump of coal iron ore Asia wants to buy.
Great future for infill blocks ahead


----------



## fergee (5 January 2020)

qldfrog said:


> Bush living becoming unaffordable



That would be a crying shame.

I meant Aussies will rally around the communities and help each other which I am certain they will even if that is made harder by all the red tape that's going entangle all things remotely related to fires.

Why are people blaming the government for a natural disaster?
I think they should have deployed the military much sooner and Scomo has acted like a right goose going on Holidays right in the middle of it but what precautions could have been taken to prevent this?


----------



## jbocker (6 January 2020)

I see a lot of finger pointing at Morrison, but I think we need to be point and pound desks far more broadly.  Stop pissing about whether he is taking holidays etc. He and I would say most others at his level are or seem seem unqualified in what to do. Morrison McCormack Albanese all the elected members in rural and near city electorates need to URGENTLY consult and formulate plans for such events as it is pretty clear we have major shortfalls at these levels of disaster. I personally thought we have come a long way in managing fire events, but these fires have exposed us.
Whether blame is climate change or not I believe we are witnessing an event that will likely repeat itself with greater frequency. If we are not going to bother finding the cause then put effort into prevention or prepare ourselves dealing with the consequences.

In keeping in line with the thread Effects on Property Prices, It goes without saying loss, damage and repair has already devastated many poor people, and for those lucky to escape disaster then fire risk zones will likely be enlarged with greater fees, levies, non compliance fines and insurance cost will be just the start. House prices affected in fire risk areas as the appeal is diminished for living in the bush, potentially new builds will be need greater regulation for fire resistance. Infrastructure improvements (replacement) to better manage future fire events. The push to urbanised areas will be greater.


----------



## Smurf1976 (6 January 2020)

fergee said:


> Ironically this could end up being another boost to Aussie house prices People loose homes to fires



Also just the simple supply and demand aspect.

A small number of lives lost thankfully but a much greater number of homes destroyed. In the short term at least that's going to tighten the market given they're going to have to live somewhere even if it's not in the town they're from.


----------



## fergee (6 January 2020)

These people will need new homes, as qldfrog and Smurf1976 stated above, so we could assume they will move to another town or possibly towards the coast and cities in the mean time. A lot of people left Christchurch in the couple of years after the EQ because of red tape/bad memories/fear of another EQ/PTSD.



> In the short term at least that's going to tighten the market



 As @jbocker said the push to urban areas will increase so it looks like it should drive up coastal towns and to a lesser degree major cities housing prices over the next couple of years all things being equal.

Rural houses that survive unscathed maybe a good buying opportunity as people could try to exit emotionally. The risk would be future regulation costs that may be imposed on home owners in those rural areas. (rereading this it sounds cold as F* as this disaster is happening right now so I do apologise to everyone going through this)


----------



## sptrawler (7 January 2020)

It looks as though ASIC is trying to tighten lending criteria, without saying exactly what it should be, sounds familiar.

https://www.abc.net.au/news/2020-01-07/asic-guides-banks-and-brokers-on-home-loans/11810994

From the article:
_In a much anticipated ruling, Justice Nye Perram found that thousands of home loans made by Westpac were not irresponsible, despite using a relatively low benchmark rather than customers' actual living expenses to assess the loans.

However, ASIC is appealing that decision, further muddying the waters for lenders about the standard that is expected as they await the final outcome from the court.

In the meantime, ASIC has released updated guidance, which it says is "principles-based", with the aim of showing what actions a lender might take in particular circumstances to meet their responsible lending obligations, but not prescribing what has to be done in every case_.

From the article there was one shining light a young woman entering the housing market, sensibly.
From the article:
_For Michelle Winata, that balance meant purchasing land and building a house in another city, taking on a more affordable mortgage than if she had tried to jump straight into the Sydney market.

"Ideally the ultimate goal is that I can sell it and then buy a house in Sydney, because at the moment the Sydney prices are just too crazy," she said.

For now, she's waiting for construction to wrap up so she can contemplate her next move, and still enjoy a holiday in the meantime_.


----------



## sptrawler (13 January 2020)

This article IMO, highlights the problem associated with fixing Sydney/Melbourne's run away house prices, without at the same time absolutely smashing the value of houses in every country town in Australia.
https://au.news.yahoo.com/home-pric...-10-years-ago-in-these-regions-014128606.html

From the article:
*Worst-performing regions where values are less than they were 10 years ago*


Source: RiskWise Property Research, CoreLogic
_All the regions are in Western Australia, Queensland and the Northern Territory, Peleg said, noting that there were no regions in Sydney or Melbourne where prices were worth less than they were just five years ago. 

In the majority of regions in NSW and Victoria, current prices are higher than they were in 2014 and earlier. 

“This shows us very clearly that economy is crucial when it comes to driving property prices and that proximity to employment hubs that provide sustainable employment, for example Greater Sydney and Melbourne, carries lower risk,” he said_.

I would say that in W.A, the median prices given on the chart, are actually higher than what is being achieved.


----------



## Smurf1976 (13 January 2020)

sptrawler said:


> I would say that in W.A, the median prices given on the chart, are actually higher than what is being achieved.




The situation in WA shows pretty clearly what happens to the wider economy and community when a key industry slows down, in WA's case that being the ending of the mining boom.

Knock out a pillar or two and everything else comes down with it.


----------



## sptrawler (29 January 2020)

Looks like people are saving, for another housing splurge in Sydney, Melbourne, sorry I mean Australia.

https://www.smh.com.au/money/invest...t-odds-with-weak-economy-20200122-p53trh.html


----------



## Humid (29 January 2020)

sptrawler said:


> Looks like people are saving, for another housing splurge in Sydney, Melbourne, sorry I mean Australia.
> 
> https://www.smh.com.au/money/invest...t-odds-with-weak-economy-20200122-p53trh.html




Are surveys like polls.....


----------



## sptrawler (29 January 2020)

Humid said:


> Are surveys like polls.....



Yes I take them with a grain of salt, I reckon the surveys are paid to get an outcome.


----------



## sptrawler (16 February 2020)

Sydney's mortgage debt is 30% higher than the national average, the annoying part is, the media want it to be everyone else's problem IMO.
Every banking adjustment, political policy and national rhetoric is focus on either Sydney or Melbourne.
Yet the fall out of those setting affects the whole of Australia, it is a bit like the China sneezes Australia gets a cold analogy, instead the Sydney market sneezes the rest of Australia's RE market gets a cold.
Just my opinion.

https://www.smh.com.au/business/ban...er-than-national-average-20200215-p5412l.html


----------



## sptrawler (27 February 2020)

Here is an article on housing affordability in Perth.
https://www.macrobusiness.com.au/2020/02/perth-bust-drives-housing-affordability-to-30-year-high/


----------



## orr (16 March 2020)

Why so little activity on this and so many other _first order_ threads?
Anything with a potatoe patch (currently producing) is looking to have  a few prospective buyers.

All those years of oiling the kalashnikov look like paying off.


----------



## sptrawler (16 March 2020)

orr said:


> Why so little activity on this and so many other _first order_ threads?
> Anything with a potatoe patch (currently producing) is looking to have  a few prospective buyers.
> 
> All those years of oiling the kalashnikov look like paying off.



There will be some action in the property market, very shortly, IMO.


----------



## againsthegrain (16 March 2020)

sptrawler said:


> There will be some action in the property market, very shortly, IMO.



Only problem making it even less liquid is people won't be too keen on attending auctions and open inspections to mix with the crowds


----------



## moXJO (16 March 2020)

House up the road from me sold in 2 weeks.  Still moving quick on the market in good areas


----------



## sptrawler (16 March 2020)

moXJO said:


> House up the road from me sold in 2 weeks.  Still moving quick on the market in good areas



Where is that? Sydney/Melbourne


----------



## moXJO (17 March 2020)

sptrawler said:


> Where is that? Sydney/Melbourne



South of Sydney


----------



## basilio (17 March 2020)

I can't really make sense of the belief that property prices will still hold or soar.  There seem to be too many fundamentals that go against that possibility

1) The collapse of the stock market, just to date, has wiped out hundreds of billions of dollars of value from peoples nominal wealth.  That has to be causing a squeeze

2) Almost all businesses is suffering from collapsed demand . That is wages, profits and even viability.

3) There has to be  increasing forced sales of assets.  An this at a time when points 1 and 2 are in play. I'm sure bottom feeders will be out but that just crystallizes distress prices on property sales

4) Banks would be reeling at the moment. I don't want to think at how tough their credit  guidelines would be with regard to repayments.

5) There has to be risk of widespread defaults on rents and mortgages as business closures take effect.

Am I missing something ?


----------



## moXJO (17 March 2020)

basilio said:


> I can't really make sense of the belief that property prices will still hold or soar.  There seem to be too many fundamentals that go against that possibility
> 
> 1) The collapse of the stock market, just to date, has wiped out hundreds of billions of dollars of value from peoples nominal wealth.  That has to be causing a squeeze
> 
> ...



Safe as houses.....

Money goes into something.

Personally I don't see prices making new highs, or holding at highs.


----------



## againsthegrain (17 March 2020)

moXJO said:


> Safe as houses.....
> 
> Money goes into something.
> 
> Personally I don't see prices making new highs, or holding at highs.




I heard that some people are not paying their rent, stocking up on food and supplies takes away the monthly rent especially when you live month by month. When it comes to eating or paying somebody else mortgage its a simple choice. Then its a ripple effect.... if the IP is not paying itself off it must go even at a loss


----------



## jbocker (17 March 2020)

basilio said:


> 4) Banks would be reeling at the moment. I don't want to think at how tough their credit guidelines would be with regard to repayments.



They are already tough enough. People will start to become unqualified for loans as their wage receipts show inconsistencies. Banks may 'help out' by allowing people to become interest only on existing P&I loans for a period.


----------



## sptrawler (17 March 2020)

againsthegrain said:


> I heard that some people are not paying their rent, stocking up on food and supplies takes away the monthly rent especially when you live month by month. When it comes to eating or paying somebody else mortgage its a simple choice. Then its a ripple effect.... if the IP is not paying itself off it must go even at a loss



From my experience of renting, you are spot on, the last person in the line is the landlord.
Those heavily geared properties in Sydney, Melbourne are going to hurt, even if the landlord is overseas.


----------



## basilio (17 March 2020)

From a Research Fellow in Real Estate.

* How will coronavirus affect Australia's real estate market and house prices? *
It will lose momentum and there could be falls. But it will be a short, sharp shock
https://www.theguardian.com/austral...ustralias-real-estate-market-and-house-prices


----------



## jbocker (17 March 2020)

I would think that house prices would stagnate or decline slowly and not by much, there will be the opportunistic buy of a desperate sale but the overall transaction numbers would be declining. Hard to see any increases, as buyers have lost a lot buying power AND confidence, sellers will be desperate to hold their assets, as they would have seen their 'share asset' value ripped away from them. I think they would chat the bank about their loan before plugging a for sale sign into the front lawn. At least I would be, as their are elements of monetary easing in the community.

But like most people in this environment I could easily be way off the mark.


----------



## sptrawler (17 March 2020)

jbocker said:


> I would think that house prices would stagnate or decline slowly and not by much, there will be the opportunistic buy of a desperate sale but the overall transaction numbers would be declining. Hard to see any increases, as buyers have lost a lot buying power AND confidence, sellers will be desperate to hold their assets, as they would have seen their 'share asset' value ripped away from them. I think they would chat the bank about their loan before plugging a for sale sign into the front lawn. At least I would be, as their are elements of monetary easing in the community.
> .



IMO it will completely depend on how geared people are, getting rent off people in hard times, becomes very difficult.
If we don't get the out of control infection rate like Italy, you may be spot on and we may slide through this relatively unscathed, that would be nice.


----------



## jbocker (17 March 2020)

againsthegrain said:


> I heard that some people are not paying their rent, stocking up on food and supplies takes away the monthly rent especially when you live month by month.



So why not mortgage holders in the same position, not pay the mortgage? Being a tenant doesn't mean you wont honour you commitment.
The answer is to negotiate a way forward, not just use an excuse and cry poor (when you are perfectly capable) to bail out of commitment.


----------



## banco (17 March 2020)

A property crash would be the silver lining to covid19.


----------



## sptrawler (17 March 2020)

banco said:


> A property crash would be the silver lining to covid19.



It is certainly deflating some of the cheap money bloating, that has occured.
The other benefit, if it hurts property investors, it will make them a bit more circumspect before jumping into a ponzi scheme next time. IMO


----------



## Humid (17 March 2020)

jbocker said:


> So why not mortgage holders in the same position, not pay the mortgage? Being a tenant doesn't mean you wont honour you commitment.
> The answer is to negotiate a way forward, not just use an excuse and cry poor (when you are perfectly capable) to bail out of commitment.




After seeing people negotiating in the supermarket recently I don’t hold a lot of faith in much


----------



## sptrawler (17 March 2020)

Humid said:


> After seeing people negotiating in the supermarket recently I don’t hold a lot of faith in much



For a lot of property investors, this will be the first time they will have experienced something like this, it will be a huge shock for some.IMO
By the time this is finished the Banks will be wanting more equity from a lot of investors, to meet the liquidity requirements, then it will get interesting. Hopefully the virus goes through before the financial strain really hits.
Just my opinion.


----------



## jbocker (17 March 2020)

banco said:


> A property crash would be the silver lining to covid19.



? Did you enjoy the stock market crash? 
Crash means damage and hurt.


sptrawler said:


> It is certainly deflating some of the cheap money bloating, that has occured.



A more manageable solution I would suggest.


----------



## sptrawler (17 March 2020)

jbocker said:


> ? Did you enjoy the stock market crash?
> Crash means damage and hurt.
> 
> A more manageable solution I would suggest.



There is a lot of 'fat' in the system, especially in Sydney, Melbourne, wages are indirectly linked to house prices. So something has to give IMO.


----------



## banco (17 March 2020)

jbocker said:


> ? Did you enjoy the stock market crash?
> Crash means damage and hurt.




The interests of young people who don't own a house aren't aligned with the interests of people with houses. Boomers etc. cheered house prices on the way up. Why shouldn't millennials cheer them on the way down?


----------



## sptrawler (17 March 2020)

banco said:


> The interests of young people who don't own a house aren't aligned with the interests of people with houses. Boomers etc. cheered house prices on the way up. Why shouldn't millennials cheer them on the way down?



Nothing wrong with that, it happens all the time, look back to the 1987 crash, the GFC, don't feel as though you are missing out or will miss out in the future.


----------



## InsvestoBoy (17 March 2020)

jbocker said:


> Crash means damage and hurt.




Crash means a return to equilibrium by clearing out unsustainable excess.

Those who get hurt will be those who took extravagant risk at the expense of taxpayer subsidies like negative gearing, leveraging tax discounted superannuation and at the expense of affordability for other generations.


----------



## againsthegrain (17 March 2020)

InsvestoBoy said:


> Crash means a return to equilibrium by clearing out unsustainable excess.
> 
> Those who get hurt will be those who took extravagant risk at the expense of taxpayer subsidies like negative gearing, leveraging tax discounted superannuation and at the expense of affordability for other generations.



A crash also means a return to better efficiency,  atm we are far from it.


----------



## sptrawler (17 March 2020)

InsvestoBoy said:


> Crash means a return to equilibrium by clearing out unsustainable excess.
> 
> Those who get hurt will be those who took extravagant risk at the expense of taxpayer subsidies like negative gearing, leveraging tax discounted superannuation and at the expense of affordability for other generations.



Don't worry, your generation will get a go, every generation does, then those who invest will make money and the next generation will complain about it...
Don't forget, there are plenty of poor baby boomers, as there will be in your generation, investment and risk is a fact of life in a capitalist system.
Put another way, would you buy a house to subsidies someone else's lifestyle, if the only hope you have of making a profit is a capital gain, if yes you shouldn't be investing.
Just my opinion.


----------



## InsvestoBoy (17 March 2020)

sptrawler said:


> Don't worry, your generation will get a go, every generation does, then those who invest will make money and the next generation will complain about it...
> Don't forget, there are plenty of poor baby boomers, as there will be in your generation, investment and risk is a fact of life in a capitalist system.




How do you know what generation I'm in?

It's funny when people who had the Government subsidising their investments and cutting rates to protect from a healthy market for decades talk about risk in capitalism.


----------



## sptrawler (17 March 2020)

InsvestoBoy said:


> How do you know what generation I'm in?
> 
> It's funny when people who had the Government subsidising their investments and cutting rates to protect from a healthy market for decades talk about risk in capitalism.



I presume you aren't talking about me?


----------



## moXJO (17 March 2020)

A crash means most people won't have jobs or money anyway. Overseas buyers could probably outbid locals again if they haven't already changed the threshold. I already know a lot of Chinese landlords. 
If drastic falls came:
Banks won't be lending (especially to young people).

Massive  debt will be the last thing on most people's mind.

Investors would make hay once again.


----------



## Trendnomics (19 March 2020)




----------



## wayneL (19 March 2020)

In a laissez faire economy, I have no doubt property would tank, but let's face it, Australia has used property speculation to prop up it's economy for quite some time now.

If property tanks, we are royally screwed, hence I reckon every effort will be made to keep it (over)inflated.


----------



## banco (19 March 2020)

wayneL said:


> In a laissez faire economy, I have no doubt property would tank, but let's face it, Australia has used property speculation to prop up it's economy for quite some time now.
> 
> If property tanks, we are royally screwed, hence I reckon every effort will be made to keep it (over)inflated.




The fundamentals will swamp whatever the Government tries to do.


----------



## satanoperca (19 March 2020)

wayneL said:


> If property tanks, we are royally screwed, hence I reckon every effort will be made to keep it (over)inflated.




Agreed we would be screwed, agree that the govnuts will bankrupt the country to keep it afloat.

Can hear the shrills from the PM already, "Who could have seen this coming?"

Blind Freddie and Deaf Dandy did. Having some of the highest property prices in the world, mass immigration and grossly indebted nation. What could possibly go wrong?


----------



## moXJO (19 March 2020)

satanoperca said:


> Agreed we would be screwed, agree that the govnuts will bankrupt the country to keep it afloat.
> 
> Can hear the shrills from the PM already, "Who could have seen this coming?"
> 
> Blind Freddie and Deaf Dandy did. Having some of the highest property prices in the world, mass immigration and grossly indebted nation. What could possibly go wrong?



Given the laws to lock customers  money into banks just recently, feels like they knew already.


----------



## satanoperca (19 March 2020)

GMA Gemworth good forward indicator of what is going to happen to property prices


----------



## No Trust (20 March 2020)

This heading into Great Depression 2 territory...


----------



## No Trust (20 March 2020)

Spot on




againsthegrain said:


> A crash also means a return to better efficiency,  atm we are far from it.


----------



## jbocker (20 March 2020)

moXJO said:


> A crash means most people won't have jobs or money anyway. Overseas buyers could probably outbid locals again if they haven't already changed the threshold. I already know a lot of Chinese landlords.
> If drastic falls came:
> Banks won't be lending (especially to young people).
> 
> ...




Halt overseas buyers buying up (another round) of our housing. 
Our $ must have them drooling all over themselves.


----------



## againsthegrain (20 March 2020)

jbocker said:


> Halt overseas buyers buying up (another round) of our housing.
> Our $ must have them drooling all over themselves.




All the ones from China with property here are seeing their values slashed but the number of them wanting to buy in probably outweights the ones who already bough it,  we really need to block this or became a state of china


----------



## moXJO (20 March 2020)

jbocker said:


> Halt overseas buyers buying up (another round) of our housing.
> Our $ must have them drooling all over themselves.



Govt is addicted to the taxes and propping up of value. There are a huge number of rich overseas buyers. Many times our entire population. People forget the scale of overseas buyers. 

If it was a choice of banks going underwater, along with everyone with an overpriced loan. Or prop up the industry so it doesn't collapse. Which one do people think the govt is going to do?
The days of letting things crash and let the market do it's thing seems to be over. Govt intervention and stimulus is the new normal.


----------



## againsthegrain (20 March 2020)

moXJO said:


> Govt is addicted to the taxes and propping up of value. There are a huge number of rich overseas buyers. Many times our entire population. People forget the scale of overseas buyers.
> 
> If it was a choice of banks going underwater, along with everyone with an overpriced loan. Or prop up the industry so it doesn't collapse. Which one do people think the govt is going to do?
> The days of letting things crash and let the market do it's thing seems to be over. Govt intervention and stimulus is the new normal.




Means a generation of rent payers sending it straight overseas and working all the bottom jobs to service our new masters


----------



## moXJO (20 March 2020)

againsthegrain said:


> Means a generation of rent payers sending it straight overseas and working all the bottom jobs to service our new masters



I'd like to see prices go down. Hopefully we get a drift down to something more sensible.
But we are selling farms off to overseas buyers. That should be warning enough that money talks.
Overseas investors are not bad. Too many is the problem.


----------



## wayneL (20 March 2020)

jbocker said:


> Halt overseas buyers buying up (another round) of our housing.
> Our $ must have them drooling all over themselves.



I don't believe the government will do any such thing because it is really probably only the Chinese now who can keep our overinflated real estate market propped up to some degree.

It is the real estate market / credit bubble with, admittedly some help from the minerals super cycle, that has prevented this economy hitting the skids in a big way already.

It's serious property market correction will have us in an alpha right depression unless some other miracle comes along.

there are several opportunities for Australia to prosper going forward but nobody will have the vision or the cahoneys to pursue them.


----------



## IFocus (20 March 2020)

I dont think its that hard to judge given the expected 7% plus unemployment rate to come I would expect it to be much higher.

If that happens last decent recession it took 14 years to get back any where close to the unemployment figures where it all started.

The unemployment this time around will likely be right thought all levels, that's a lot of mortgages to try and prop up or fall over.

Just cannot see it looking that good for demand or pricing.


----------



## againsthegrain (20 March 2020)

IFocus said:


> I dont think its that hard to judge given the expected 7% plus unemployment rate to come I would expect it to be much higher.
> 
> If that happens last decent recession it took 14 years to get back any where close to the unemployment figures where it all started.
> 
> ...




https://www.google.com/amp/s/amp.th...the-wall-in-coronavirus-recession-experts-say



> Some economists, such as AMP’s Shane Oliver, estimate that prices could fall as much as 20% if the recession lasts more than six months


----------



## moXJO (20 March 2020)

IFocus said:


> I dont think its that hard to judge given the expected 7% plus unemployment rate to come I would expect it to be much higher.
> 
> If that happens last decent recession it took 14 years to get back any where close to the unemployment figures where it all started.
> 
> ...



We won't see those ridiculous highs again. 

But last crash we saw:
 record high interest rates.

I don't think they stimulated into the market.

We weren't China's supermarket.

In saying that we are probably in a worse position these days in all reality. Time will tell though.


----------



## jbocker (20 March 2020)

IFocus said:


> I dont think its that hard to judge given the expected 7% plus unemployment rate to come I would expect it to be much higher.
> 
> If that happens last decent recession it took 14 years to get back any where close to the unemployment figures where it all started.
> 
> ...




Next 14 years will see a lot of us boomers off to heaven, what will all the health care going to do for work? There will be a flush of ex boomer housing and investments out there too for all the grandkids.


----------



## wayneL (20 March 2020)

jbocker said:


> Next 14 years will see a lot of us boomers off to heaven, what will all the health care going to do for work? There will be a flush of ex boomer housing and investments out there too for all the grandkids.



Perhaps Harry Dent was correct about the boomer crash after all, just a decade or two late


----------



## sptrawler (20 March 2020)

moXJO said:


> Govt is addicted to the taxes and propping up of value. There are a huge number of rich overseas buyers. Many times our entire population. People forget the scale of overseas buyers.
> 
> If it was a choice of banks going underwater, along with everyone with an overpriced loan. Or prop up the industry so it doesn't collapse. Which one do people think the govt is going to do?
> The days of letting things crash and let the market do it's thing seems to be over. Govt intervention and stimulus is the new normal.



You have to remember, both major parties want Australias population to increase a lot and we have a negative birthrate.
It isnt rocket science, what the outcome will be.


----------



## satanoperca (20 March 2020)

When unemployment shoots up, which it will who will be buying overpriced property?
IR's are as low as than can go.
Confidence is shot.
Pressure will mount on both sides of politics to reduce immigration while the economy recovers.
We haven't even started to recover from the bushfires.
Tourism will take 6-12months min to recover.
Can only see property prices going down.

Exception : govnuts allow any foreigner to park their money in Australian Property.


----------



## moXJO (20 March 2020)

satanoperca said:


> Exception : govnuts allow any foreigner to park their money in Australian Property.



They also let them in if they have money. Our dollar is low and we are pretty stable otherwise. It won't go up but government intervention may stop it going down a lot as well.


----------



## wayneL (21 March 2020)

FWIW


----------



## matty77 (21 March 2020)

Some questions you need to ask yourself about property right now:

Will the population continue to grow over the next few years? I think no growth or negative growth is possible.

Will the Chinese continue to invest into the Australian Property Market? They have pretty much stopped now, they wont invest into a falling market, plus tighter restrictions may come in once the Government realize our reliance on China.

Will interest rates go up? Probably not anytime soon

Will unemployment go up? Pretty sure unemployment will increase over the next few years, the flow on effect is less people spending money, thats less people buying houses. We have not seen the effects of this yet.

Will the pass on of wealth from the elderly push the market along? I dont think so, people will want to pay down debt, so I can see people paying off home loans from inheritances.

Will rents rise over the next few years? I doubt it for the reasons above, less people, less money. People will stay at home longer, yields will continue to drop.

How will commercial property go over the next few years? Its going to be a wild wild ride, I think it will get smashed initially, but when this is all over could be a boom if countries like australia try to invest into into factories and producing stuff themselves.

I dont think we will see a property crash, but I think a declining market over the next 5 years will be the norm - see whats been happening in Perth the last few years and apply that to the rest of Australia and 30% drops..


----------



## banco (21 March 2020)

Clearance rates in the 60s for melbourne and sydney and quite a few of them were sold more than a week before today.


----------



## wayneL (21 March 2020)

This guy is a PhD Economics Candidate

FWIW


----------



## kid hustlr (21 March 2020)

Of course  property will slow but lololololol Martin North he's been calling it for years and years


----------



## CBerg (21 March 2020)

kid hustlr said:


> Of course  property will slow but lololololol Martin North he's been calling it for years and years



Old saying about broken clock is never more true for Martin.


----------



## orr (1 April 2020)

I don't see the next season of 'the Block' happening...(small mercies)
The Value of Costa's Gardening Australia though ... it's on a 'rocket' ....


----------



## wayneL (1 April 2020)

kid hustlr said:


> Of course  property will slow but lololololol Martin North he's been calling it for years and years



"It's different this time"


----------



## IFocus (1 April 2020)

Talking to a local real estate agency owner he said they just had the best three months  for 11 years now.....dead and buried.


----------



## sptrawler (2 April 2020)

IFocus said:


> Talking to a local real estate agency owner he said they just had the best three months  for 11 years now.....dead and buried.



That would be true, the last three months a lot of property that has been sitting for years around Mandurah, have been sold. The wife and I do a lot of cycling around and had definitely noticed it.
It is hard to see W.A property prices falling much, they have been pretty well bouncing along on the bottom for a few years, so to drop from here would be unusual IMO.
One would think Sydney would be hit by some panic selling, due to the employment problems caused by the virus, I suppose it might be delayed while these Bank honeymoon periods and stimulus money plays out.


----------



## qldfrog (2 April 2020)

Our ppor on the market still, very very niche so not surprising, will take months, but what is surprising is a lot of std house on 5 acres are being sold now..


----------



## moXJO (2 April 2020)

The new foreign buyers rules may make an impact. I know some sellers who are going to wait till all this is over. 

You would think prices would reduce a lot.


----------



## hja (2 April 2020)

qldfrog said:


> Our ppor on the market still, very very niche so not surprising, will take months, but what is surprising is a lot of std house on 5 acres are being sold now..



There are a lot of standard houses on a 5 acre property? Well ok, in woop woop I suppose.

There are a lot of new, useless, ugly high-rise apartments all over the place in the metro (or suburbs) areas that should be demolished and replaced with sprawled and lower density housing. That would have been more desirable in the first place!


----------



## satanoperca (2 April 2020)

Tic Tok, all going to plan.

https://www.realestate.com.au/news/...into-foreign-hands/?rsf=syn:news:nca:news:spa


----------



## Humid (2 April 2020)

Can you run me through the plan I’m a bit slow on the uptake


----------



## satanoperca (2 April 2020)

Decimate the worlds western economies and then buy, buy. buy.

The fact the our dumb arse elected officials are still allowing any foreigner to purchase any residential properties is beyond me.


----------



## qldfrog (2 April 2020)

hja said:


> There are a lot of standard houses on a 5 acre property?



25km from Brisbane CBD,
 less than 1h door to door to your office in Creek Street or BNE airport
Not exactly woop woop and you can get that for less than 1million
Posh suburbs, good schools...but NOT in Sydney Melbourne..thanks God..


----------



## hja (2 April 2020)

qldfrog said:


> 25km from Brisbane CBD,
> less than 1h door to door to your office in Creek Street or BNE airport
> Not exactly woop woop and you can get that for less than 1million
> Posh suburbs, good schools...but NOT in Sydney Melbourne..thanks God..



Oohhh nice... I must be very Sydney- and Melbo-centric 

Well 15-20km from Sydney there are actually rows and rows of high-rise blocks of concrete godzillas with their cubicles (apartments) encroaching over and encircling main centres, like shopping centres, train stations, etc....


----------



## againsthegrain (2 April 2020)

satanoperca said:


> Decimate the worlds western economies and then buy, buy. buy.
> 
> The fact the our dumb arse elected officials are still allowing any foreigner to purchase any residential properties is beyond me.




Plenty of other smart governments around 

e.g

Foreigners cannot buy land in *Thailand*, only condominium units and apartments. Foreigners cannot make up more than 40% of the condominium´s unit-owners. However, a foreigner can buy a whole building, minus the land on which it is built.


----------



## sptrawler (2 April 2020)

satanoperca said:


> The fact the our dumb arse elected officials are still allowing any foreigner to purchase any residential properties is beyond me.



I agree with you, but both major parties, want the Australian population to grow, which in reality does have to happen.
Unfortunately people here enjoy the affluent lifestyle, so don't have many, if any kids.
Therefore we are buying a population increase, by allowing overseas people to immigrate here and buy property.
There has been baby bonuses and other incentives, to try and increase our population internally, but that is seen as middle class welfare and is very unpopular.
So I guess an increase in house prices is the outcome, as we continue to build our population, pretty unavoidable really.
It is a bit of a self fulfilling prophecy really, don't like seeing middle class people getting something, so get increased house prices instead.
But that is Australia all over, cut off the nose to spite the face. 
Just my opinion.


----------



## Humid (2 April 2020)

satanoperca said:


> Decimate the worlds western economies and then buy, buy. buy.
> 
> The fact the our dumb arse elected officials are still allowing any foreigner to purchase any residential properties is beyond me.




It’s only on new builds is that correct?


----------



## againsthegrain (2 April 2020)

Humid said:


> It’s only on new builds is that correct?



or on established builds through relatives here


----------



## sptrawler (2 April 2020)

againsthegrain said:


> or on established builds through relatives here



Or buy the new build, get the permanent residency, then upgrade.
Or keep the original one as a rental for the aussies.lol


----------



## againsthegrain (2 April 2020)

sptrawler said:


> Or buy the new build, get the permanent residency, then upgrade.
> Or keep the original one as a rental for the aussies.lol




yeah plenty of ways around it,  im sure the re agents have panthlets full of it.

however through buying a population increase we are not increasing the work force because all they will do is horde property and rent to Aussies for life


----------



## sptrawler (2 April 2020)

againsthegrain said:


> yeah plenty of ways around it,  im sure the re agents have panthlets full of it.
> 
> however through buying a population increase we are not increasing the work force because all they will do is horde property and rent to Aussies for life



Aussies love it. 
As long as they are kicking their fellow aussies, who are trying to get ahead in the groin, all is good, the tall poppy syndrome. Lol


----------



## Smurf1976 (2 April 2020)

One chance I can see is that those who have the option to own their PPOR but have chosen not to do so will likely be rethinking that now.

Consider:

Person A - owns their home and indeed everything else they have outright. Applying the same conservative logic, they've been happy to have a reasonably safe salary job with a large company.

Person B - has the money to own outright but worked out that they'd be better off putting all that into shares and renting a house, leasing a car and so on. Applying the same approach, they knocked back the salary job and became a contractor because it pays better.

I think we all know which one will have been sleeping soundly over the past month and which one is getting seriously worried.


----------



## InsvestoBoy (2 April 2020)

Smurf1976 said:


> One chance I can see is that those who have the option to own their PPOR but have chosen not to do so will likely be rethinking that now.
> 
> Consider:
> 
> ...




FWIW, I'm person B. No car though.

Sleep like a baby, although I am looking for a permanent role now, plenty of opportunities in my field.

The main reason all the Person A's are sleeping good is because the Government bails them out every time.


----------



## againsthegrain (2 April 2020)

Smurf1976 said:


> One chance I can see is that those who have the option to own their PPOR but have chosen not to do so will likely be rethinking that now.
> 
> Consider:
> 
> ...




You forgot option C

PPOR purchased with 5-10% deposit, .5~1M  loan and shitting bricks will have to sell at a loss to some os bargain hunter which will never let it go, 
id say a fair percentage of those around


----------



## sptrawler (2 April 2020)

againsthegrain said:


> You forgot option C
> 
> PPOR purchased with 5-10% deposit, .5~1M  loan and shitting bricks will have to sell at a loss to some os bargain hunter which will never let it go,
> id say a fair percentage of those around



Also option D

27 year old, article in the main newspaper property section, look at me I'm 27 years old and own 20 properties, all geared. It's easy.

They are renting to option E

Laid off worker, now on center link with extra payment and the landlord at option D can't evict them.
Suck the bones out of that, baby.


----------



## Humid (2 April 2020)

InsvestoBoy said:


> FWIW, I'm person B. No car though.
> 
> Sleep like a baby, although I am looking for a permanent role now, plenty of opportunities in my field.
> 
> The main reason all the Person A's are sleeping good is because the Government bails them out every time.



I’ve been sleeping good nothing to do with bail outs.....it’s called beer


----------



## againsthegrain (2 April 2020)

sptrawler said:


> Also option D
> 
> 27 year old, article in the main newspaper property section, look at me I'm 27 years old and own 20 properties, all geared. It's easy.




A and B will be all right,  but C and D are in trouble


----------



## Humid (2 April 2020)

sptrawler said:


> Also option D
> 
> 27 year old, article in the main newspaper property section, look at me I'm 27 years old and own 20 properties, all geared. It's easy.





sptrawler said:


> Also option D
> 
> 27 year old, article in the main newspaper property section, look at me I'm 27 years old and own 20 properties, all geared. It's easy.



 I met a few of them during the construction boom 
Funny thing was if you ever challenged their logic they would move on to someone else until they found someone doing the same thing


----------



## Humid (2 April 2020)

againsthegrain said:


> A and B will be all right,  but C and D are in trouble




Thing is so will B if they have bank shares


----------



## againsthegrain (2 April 2020)

Humid said:


> Thing is so will B if they have bank shares




yeah B is a bit of 50/50 territory depending what you are holding,  im more skewed towards B that holds mostly cash and/or safe(er) investments.  B is the middle ground where you might get through this and actually do all right or go down with the ship


----------



## wayneL (3 April 2020)

Smart Bs would've got the hell out of Dodge at some point.


----------



## Garpal Gumnut (3 April 2020)

Dodge may not be the worst place to be, but only for a combo of A and B.

It will be the last place to be hit by Coronavirus.

Owning your own house is most important thing, whether outright or mortgage. Government will bail out the latter.

The geared and speculators prior virus will be toast, and to paraphrase Paul Keating " they will be done slowly " as one after another prop by the government for the economy runs out of puff.

Water, Food, Roof, Sex are the four most important, not in any particular order at any particular time imo.

In the meantime I will continue to practise Omphaloskepsis.

gg


----------



## lindsayf (3 April 2020)

Omphaloskepsis...a worthy pursuit indeed..


----------



## qldfrog (3 April 2020)

Garpal Gumnut said:


> Dodge may not be the worst place to be, but only for a combo of A and B.
> 
> It will be the last place to be hit by Coronavirus.
> 
> ...



Thanks GG, you are improving my English in every post..i had to google


----------



## wayneL (3 April 2020)

I usually find a bit of lint and wonder why I didn't have the balls to buy a helluva lot more gold than I did last year.


----------



## InsvestoBoy (3 April 2020)

wayneL said:


> I usually find a bit of lint and wonder why I didn't have the balls to buy a helluva lot more gold than I did last year.




Because you've got no process or framework to buy gold?


----------



## moXJO (3 April 2020)

InsvestoBoy said:


> Because you've got no process or framework to buy gold?



Could you expand on this?


----------



## InsvestoBoy (3 April 2020)

moXJO said:


> Could you expand on this?




20+ years of media/financial pundits saying gold is dumb, dead asset, no yield, etc. Spend all your time looking at financial assets.

Now maybe you feel like you want to buy gold, sense something is wrong with the official narrative, whatever.

No process or framework to understand gold as an asset class, how much you can hold, impact on overall portfolio, possible scenarios, price drivers, asset class beta, etc, etc, etc == don't know how much you can buy, feel uncomfortable buying as soon as your allocation >2-3% of your total net worth, trying to time it because you don't believe in it/understand it, etc.


----------



## InsvestoBoy (3 April 2020)

Also, even if you live in Australia, probably spend all the time you look at gold charts looking at USD priced COMEX futs. Wrong chart.


----------



## wayneL (3 April 2020)

InsvestoBoy said:


> Because you've got no process or framework to buy gold?



No, because like all of us, I'm a lot smarter in hindsight. 

I went 25%. if my crystal ball had have been working I would have gone a hundred percent, dammit, maybe even leveraged to the max.

Would've bought 1,000 lots of WTI a coupla days ago too.

Give me 6 months and I'll tell you what I would have bought today too


----------



## InsvestoBoy (3 April 2020)

wayneL said:


> I went 25%.




25% is plenty. What would you have done if it had dropped by 50%? What will you do if it drops by 50% today?


----------



## wayneL (3 April 2020)

InsvestoBoy said:


> 25% is plenty. What would you have done if it had dropped by 50%? What will you do if it drops by 50% today?



I'll tell you in 6 months. I will be smarter about today by then.


----------



## Trendnomics (4 April 2020)

Trendnomics said:


> In your mind (every time you hear it), replace "Ireland" with "Australia" - and add a dash of aussie accent.
> 
> Luckily I'm not relying on property in any shape or form to reach FIRE before 40. Good luck to everyone else.





A quote from this video: "........and then something happens........" *cough* *cough*


----------



## sptrawler (8 April 2020)

This is going to get very ugly, very soon.
https://www.smh.com.au/politics/fed...avirus-rent-strike-grows-20200407-p54hwo.html
From the article:
_A letter to landlords in the Yarra City Council area sent on March 31 on behalf of 24 renters said they would "not be paying rent, starting in April".

"We believe that housing is a right. During this crisis, all landlords and agents should work hard to support people's basic needs," the letter said.

Among the demands made by the group are an indefinite amnesty on rent and mortgage payments, a continued ban on all evictions until everyone had recovered from the crisis, no debts, fines or retaliatory rent hikes for tenants, and no adverse rental histories for those who do not pay rent.

The rent and mortgage strike campaign is targeting particular areas in Melbourne, Sydney and Queensland. The suburb-based Facebook group is being run by the Industrial Workers of the World, known as ‘the Wobblies,’ an international socialist group not affiliated with the Australian Council of Trade Unions or particular workplaces_.

I wonder who is going to pay the mortgage on the rental?

There could be some cheap rental properties on the market, when this event is over.
Just my opinion.


----------



## againsthegrain (8 April 2020)

sptrawler said:


> This is going to get very ugly, very soon.
> https://www.smh.com.au/politics/fed...avirus-rent-strike-grows-20200407-p54hwo.html
> From the article:
> _A letter to landlords in the Yarra City Council area sent on March 31 on behalf of 24 renters said they would "not be paying rent, starting in April".
> ...




After corona virus many things will change, with property not being a safe and cushy investment it looks like it


----------



## sptrawler (14 April 2020)

The apartment train wreck continues, sad for off the plan purchasers.
https://www.domain.com.au/news/off-...age&utm_medium=link&utm_content=pos5&ref=pos1


----------



## qldfrog (14 April 2020)

Could be a boost for acreage and big lot / semi rural properties.  downsizing to live in a cube in the city sharing everything with the public, lift, pool, doors, ..you do not need a car, get a uber, reuse your plastic bags and coffee mugs..yeah right...
Why not be semi self sufficient by the sea or the trees,  remotely working the same anyway, leave the cbd and inner cities to the new migrants refugees and students
Few want the NY lifestyle now...


----------



## Humid (14 April 2020)

qldfrog said:


> Could be a boost for acreage and big lot / semi rural properties.  downsizing to live in a cube in the city sharing everything with the public, lift, pool, doors, ..you do not need a car, get a uber, reuse your plastic bags and coffee mugs..yeah right...
> Why not be semi self sufficient by the sea or the trees,  remotely working the same anyway, leave the cbd and inner cities to the new migrants refugees and students
> Few want the NY lifestyle now...




Ideally have both


----------



## qldfrog (15 April 2020)

Humid said:


> Ideally have both



Got, but in case of lockdown you have to choose a main place of residence and having 2vplaces is a bit of a drain$ wise


----------



## SirRumpole (15 April 2020)

matty77 said:


> Some questions you need to ask yourself about property right now:
> 
> Will the population continue to grow over the next few years? I think no growth or negative growth is possible.
> 
> ...




Another question is what will be the immigration intake while there is no vaccine. That would be a source of buyers and also renters which will be negligible if immigration is zero or close to zero.

So, good buying opportunities for those who have the money, another case of the rich getting richer.


----------



## sptrawler (15 April 2020)

SirRumpole said:


> Another question is what will be the immigration intake while there is no vaccine. That would be a source of buyers and also renters which will be negligible if immigration is zero or close to zero.
> 
> So, good buying opportunities for those who have the money, another case of the rich getting richer.



Or those who have time and a deposit on their side.
Genuine first home buyers should be fine, interest rates at 0 and a 30 year loan magic, if you have saved a deposit and are employed.
So in reality a great opportunity may present in the near future for the not so rich.


----------



## qldfrog (15 April 2020)

SirRumpole said:


> So, good buying opportunities for those who have the money, another case of the rich getting richer.



ahh ideology...Too ingrained
Most of the losses will be with the so called rich
It is actually a great opportunity for the not so rich, unless anyone with a job is rich....bloody bastards 
Seriously SirRumpole who is losing money so far?
tenants or landlords?


----------



## sptrawler (15 April 2020)

SirRumpole said:


> So, good buying opportunities for those who have the money, another case of the rich getting richer.



Another thing Rumpy, you can't have it all ways, when silly Billy was going to decimate established home prices you said it was great.
But the rich would have cleaned up, with that plan.
The rich will always get richer, because they have money to invest.


----------



## satanoperca (15 April 2020)

I believe it will be many months before we see the true fallout of the current situation on property price, but note :

Interest rates can only go up now, well they can go down maybe 25 basis points and then that is it
Unemployment to sky rocket and will take years to return to pre virus levels
Many small businesses will close up shop, many small businesses have loans secured against their PPOR
Airbnb will get hit hard
Reduced immigration
Tourism smashed
Banks reluctant to lend
A guess but LVR's will be dramatically reduced
Heading into a recession
So guess would be a minimum 20% fall from peak, but could go further. If they don't I all in on property, if the current situation cannot return values to a reasonable level, nothing will apart from all out war, which is still a possibility with old Trump looking for escape goats.


----------



## Humid (15 April 2020)

sptrawler said:


> Another thing Rumpy, you can't have it all ways, when silly Billy was going to decimate established home prices you said it was great.
> But the rich would have cleaned up, with that plan.
> The rich will always get richer, because they have money to invest.



You can but things need to be capped


----------



## sptrawler (15 April 2020)

Humid said:


> You can but things need to be capped



Yes lift the top tax bracket back to 60cents as it used to be, that caps the rich, introduce it at $180k.

*Personal income tax top marginal rate*




Only joking, you are right everything requires a sliding scale applied to it, as no matter what it is if there is a line between getting something and not getting it, there will be inequity.


----------



## SirRumpole (15 April 2020)

sptrawler said:


> Another thing Rumpy, you can't have it all ways, when silly Billy was going to decimate established home prices you said it was great.




That's your opinion of the effect of Labor's policy, but we'll never know will we ?

Unless the Libs are so strapped for cash that they'll have to swallow their pride and adopt Labor's policy.


----------



## Junior (15 April 2020)

sptrawler said:


> Yes lift the top tax bracket back to 60cents as it used to be, that caps the rich, introduce it at $180k.
> 
> *Personal income tax top marginal rate*
> 
> ...




I don't mind a higher MTR, but $180k is waaay too low IMO.  That's one area where Bill stuffed up.  He talked about the 'top end of town' but his policies were set to smash the middle class more than anything.


----------



## sptrawler (15 April 2020)

Junior said:


> I don't mind a higher MTR, but $180k is waaay too low IMO.  That's one area where Bill stuffed up.  He talked about the 'top end of town' but his policies were set to smash the middle class more than anything.



I was just highlighting, to someone on $250k, how they in years gone by would have been hammered lol.
From memory the 60% tax rate cut in at about $35k in 1986, that was what a foreman in the workshop was on, so any O/T was taxed at 60 cents in the dollar.

Also they were probably paying a mortgage at 18% interest, now those people are despised if they saved to self fund.
We have produced a weird society, that will implode on its own IMO, jeez I hope this recession is really bad a reality check is way overdue.


----------



## qldfrog (16 April 2020)

sptrawler said:


> I hope this recession is really bad a reality check is way overdue



While i agree reality check overdue, i do not hope it is really bad, as really bad means everything will be seized from me, and i do not have time to rebuilt here or oversea.
No lesson learnt, push for increased taxation already
By the same people who opposed budget cut during the good times and slugged us with NDIS and cie
A proper economy is balanced and repay debt during the good years to smooth the effect during bad ones..well, that was valid till Howard, but now we start from the gutter.


----------



## Humid (16 April 2020)

sptrawler said:


> I was just highlighting, to someone on $250k, how they in years gone by would have been hammered lol.
> From memory the 60% tax rate cut in at about $35k in 1986, that was what a foreman in the workshop was on, so any O/T was taxed at 60 cents in the dollar.
> 
> Also they were probably paying a mortgage at 18% interest, now those people are despised if they saved to self fund.
> We have produced a weird society, that will implode on its own IMO, jeez I hope this recession is really bad a reality check is way overdue.




I have a mixed group of friends most will be self funded some will need assistance
No one despises anyone
Find some new friends


----------



## InsvestoBoy (16 April 2020)

> Also they were probably paying a mortgage at 18% interest, now those people are despised if they saved to self fund.




Oh come off it, the rate was less than 18%, for a couple of years, then it started to go down every year from then.




Meanwhile

inflation in the 80s was running 8% average,
wage price growth 3.5%
house prices trading 3x the average annual wage, so you can save for a 20% deposit in 

So you got to lever up into a real asset at cheap valuations with inflation running hot and a 30 year bear market in rates. And all the while banks are letting you buy more houses using bull market equity, unlike anywhere else in the world.

Not despised for saving to self fund.  If anyone like that is despised it is because they were so lucky and yet usually take any opportunity to make such tone deaf and ridiculous comments to people who are in a completely different economic environment.



> We have produced a weird society, that will implode on its own IMO, jeez I hope this recession is really bad a reality check is way overdue.




Ever stop to consider that it's your perception that is weird?

What a disgusting thing to say, that you hope a recession is going to be really bad.


----------



## sptrawler (16 April 2020)

InsvestoBoy said:


> What a disgusting thing to say, that you hope a recession is going to be really bad.



Why? people have done nothing but complain about over inflated asset prices for the last 10 years, now the time comes when there is a chance that asset prices can be reset to realistic levels and everyone gets out of shape about it.
There is every chance after a recession, that the young people will be able to get into the housing market again, usually it is only the geared that get hammered heavily in a recession.
Time some people took a spoon of cement, princess.


----------



## Humid (16 April 2020)

Lol boomer on roids


----------



## InsvestoBoy (16 April 2020)

sptrawler said:


> Why? people have done nothing but complain about over inflated asset prices for the last 10 years, now the time comes when there is a chance that asset prices can be reset to realistic levels and everyone gets out of shape about it.




What kind of bull**** myopic thinking makes up your brain?

People die more in recessions. People can't get medical care as easily. Homelessness goes up. Domestic violence goes up. 

What the ****.


----------



## sptrawler (16 April 2020)

InsvestoBoy said:


> What kind of bull**** myopic thinking makes up your brain?
> 
> People die more in recessions. People can't get medical care as easily. Homelessness goes up. Domestic violence goes up.
> 
> What the ****.



Don't talk nonsense, those on welfare stay on welfare, those who lose a job go on welfare, the rich get poorer. The poor stay poor.
Get a life mate. Not everyone works on the top floor of the stock exchange.
Believe it or not the real workers will still be working, someone has to pick up the rubbish.


----------



## sptrawler (16 April 2020)

The Mascot Towers saga continues.
https://www.smh.com.au/national/nsw...-skyrocket-by-10-million-20200416-p54kb6.html
Mascot Towers owners will be asked to consider selling the complex which has been cracked since June last year following an escalation in remediation costs.

Remediation works were initially forecast to be between $12 million and $20 million, but have now skyrocketed by an additional $10 million.
The owners will be asked to consider selling or repurposing the building, possibly into affordable housing, at an extraordinary general meeting, most likely to be conducted via a video link. The date is yet to be set.


----------



## PZ99 (16 April 2020)

sptrawler said:


> Why? people have done nothing but complain about over inflated asset prices for the last 10 years, now the time comes when there is a chance that asset prices can be reset to realistic levels and everyone gets out of shape about it.
> There is every chance after a recession, that the young people will be able to get into the housing market again, usually it is only the geared that get hammered heavily in a recession.
> Time some people took a spoon of cement, princess.



I seem to remember saying something similar before the election regarding the Neg gearing 

But falling house prices in a recession combined with high debt leading to negative equity is bad news all round for everyone whether it's self inflicted or not. Just my view


----------



## sptrawler (16 April 2020)

PZ99 said:


> I seem to remember saying something similar before the election regarding the Neg gearing
> 
> But falling house prices in a recession combined with high debt leading to negative equity is bad news all round for everyone whether it's self inflicted or not. Just my view



It has to happen, otherwise asset values just continue to rise unabated, then the gap between the have and have nots just gets bigger and bigger.
There really isn't a nice way of resetting, the elastic band gets streched and streched, then something comes along and twang it comes screaming back.
What would the price of a house in Sydney or Melbourne be, in 10 years, if they just continued on their merry way?
I agree with you regarding negative gearing, as usual it was the implementation method that was crazy.


----------



## PZ99 (16 April 2020)

sptrawler said:


> It has to happen, otherwise asset values just continue to rise unabated, then the gap between the have and have nots just gets bigger and bigger.
> There really isn't a nice way of resetting, the elastic band gets streched and streched, then something comes along and twang it comes screaming back.
> What would the price of a house in Sydney or Melbourne be, in 10 years, if they just continued on their merry way?



Without a readjusted Govt policy they would probably blow out of proportion. It's one of the reasons I think the fed Govt should revisit negative gearing and state Govts look at their stamp duty % for expensive highrises held together with elastic bands and gold cladding


----------



## sptrawler (16 April 2020)

PZ99 said:


> Without a readjusted Govt policy they would probably blow out of proportion. It's one of the reasons I think the fed Govt should revisit negative gearing and state Govts look at their stamp duty % for expensive highrises held together with elastic bands and gold cladding



Absolutely, remove negative gearing for a period of time, then if it is required re introduce it.
To just have it on new builds and not on established, will just skew property investment to the wealthy and the resulting drop in established values would encourage land banking.
Stamp duty IMO should be replaced by a land tax, the tax being mainly on the cost of purchase unfairly loads the purchase price.


----------



## matty77 (16 April 2020)

I wouldnt be doing anything right now to reduce the value for investing in property, its probably going to go down or at at least not go up for some time, too many factors happening at once that will cause this, the only thing that isn't going to happen is high interest rates....

Unemployment will go up
Foreign investment in house will go down
Rental returns will be reduced
The ability to actually get to a property to view is harder at the moment
Commercial property is screwed, with people in both commercial and residential they may look to sell to reduce debt

I just cant see property going up at the moment, its more of a hold on and see what happens type thing I think.


----------



## orr (24 April 2020)

Some subscribe to the fairy tales of Ayn Rand...
For others there are the lessons of History... 
I'd more than welcome critique on the following;
https://thesocialist.org.au/short-history-rent-control-australia/

Leveraged in property??? ........ooh dear...
Over leveraged in property... Oh ooOh dear....and pray for rent control. You'll might well be needing it.

Small wonder why Dutton(8 negatively geared properties? or more?) & co in the Government are stepping wide from the suggestion of any form of pay cut...  putting themselves in the same basket as the rest of the citizenry......Pull team OZ we're all in it together... parasites and all.


----------



## wayneL (24 April 2020)

Oh for Gawdsake @orr 

What a mishmash of ideological bias and bullcrap. This is how threads get derailed.


----------



## matty77 (24 April 2020)

you lost me at socialist...


----------



## sptrawler (24 April 2020)

orr said:


> Some subscribe to the fairy tales of Ayn Rand...
> For others there are the lessons of History...
> I'd more than welcome critique on the following;
> https://thesocialist.org.au/short-history-rent-control-australia/
> ...



I'm sure I read Nick Xenophon, champion for the downtrodden had 20 negative geared properties lol
Also lets not forget, the proposed changes to negative gearing, were only to stop funding for cheap properties not all properties.
The only proposed changes to negative gearing, favoured those wealthy enough to build a new one and it was going to include not only negative gearing but government rental assistance also.


----------



## Dona Ferentes (24 April 2020)

sptrawler said:


> I'm sure I read Nick Xenophon, champion for the downtrodden had 20 negative geared properties lol



as have the 'progressive left' and greens in ACT Legislature. Not 20, but enough.


----------



## macca (24 April 2020)

sptrawler said:


> I'm sure I read Nick Xenophon, champion for the downtrodden had 20 negative geared properties lol
> Also lets not forget, the proposed changes to negative gearing, were only for cheap properties not all properties.
> the only proposed changes to negative gearing, favoured those wealthy enough to build a new one and it was going to include not only negative gearing but government rental assistance also.




Nick listed assets as owning 8 properties in 2014, no mention if negative geared or not


----------



## Dona Ferentes (24 April 2020)

macca said:


> Nick listed assets as owning 8 properties in 2014, no mention if negative geared or not



Not geared! What do you reckon? Dream on. Overpaid poodlefanciers, that have a 'marginal tax problem' so they take the bait and gear up, hear the siren call and aim for that deduction ..... pretty good wicket when you have job security (until it isn't)

Now Covid is 'shaking the tree' and its going to be interesting to see what is littering the ground in the aftermath.

Leverage works both ways.


----------



## sptrawler (24 April 2020)

macca said:


> Nick listed assets as owning 8 properties in 2014, no mention if negative geared or not



I may be wrong but usually when I read something like that it sticks, if not i appologies.
Not because because I think he has done anything wrong, because he wouldn't have, if the rules allow it anyone can do it.
Those heavily into negative gearing now will be burnt badly, that is the name of the game, you take your chances and the ups and downs.
What I dislike is when anything is changed to affect only a certain group, if you want to have equity i.e risk and return, make it overall.
Just stop negative gearing for a period of time if the market is distorted, don't just distort one section, because the section you want to distort in Sydney, has the same distortion in country towns which might suffer much more.


----------



## sptrawler (24 April 2020)

Dona Ferentes said:


> Not geared! What do you reckon? Dream on. Overpaid poodlefanciers, that have a 'marginal tax problem' so they take the bait and gear up, hear the siren call and aim for that deduction ..... pretty good wicket when you have job security (until it isn't)
> 
> Now Covid is 'shaking the tree' and its going to be interesting to see what is littering the ground in the aftermath.
> 
> Leverage works both ways.



Absolutely, what gets up my nose is when you have to hear the bleeding hearts on t.v, when they get burnt.
Like I said a while back and was slammed for it, I hope the recession is hard , short and sharp, it blows the ponsi schemes.
The property market has become an absolute ponsi scheme and needs to be shot to $hit, it does nothing for the economy and makes people wage slaves IMO.
El Dorado, come to Sydney or Melbourne, hock yourself up to the eyeballs and wait for a profit.
That isn't a great way to try and build Australia's future wealth and it isn't a healthy plan for our youth to aspire to. IMO
There is much more productive and creative ways to produce wealth, than join a Government funded, Sydney- Melbourne based ponsi scheme.


----------



## macca (24 April 2020)

To slow negative gearing activity the RBA needs to mandate a minimum unencumbered deposit of X on investment properties, perhaps 20% would mean that Negative gearing is far less attractive

In NZ it has been the rule for a while now

<<First, because of the loan to value ratio (LVR) restrictions, investors have required a deposit of at least 30% for several years now and, on average, will be less likely to be making operating losses than in the past – hence, less likely to actually be utilising the tax advantage. Sure, many will still be using it. But it’ll be less common than in the absence of the LVR rules. Second, and perhaps most importantly, it’s a ring-fence, not complete removal. Investors will still be able to use losses to reduce their tax bill, just on>>

https://www.macrobusiness.com.au/2019/05/nz-go-alone-negative-gearing-reform/


----------



## sptrawler (24 April 2020)

If you want to deflate house prices, yet allow first home buyers into the market, allow first home buyers to be able to clain their home interest as a tax offset upto a certain house price say $750k.
Then cancel negative gearing untill the market settles.
That would encourage first home buyers to either build or buy upto $750k, anyone else can only claim a tax offset upto the value of the rent received.
So if an investor buys a house and get $30k rent, they can claim a $30k max offset for interest and maintenance etc.
Then the property is bought for a realistic return, not just as a tax offset.
The property market then has to return to sustainable market values, also non Australian citisens should not be allowed to buy, only lease.


----------



## Dona Ferentes (24 April 2020)

sptrawler said:


> a Government *subsidised*, Sydney- Melbourne based Ponzi scheme.



And even worse distortion, in regional Aust! Where Capital Gains are sluggish, but yields are high. Clever Richard Accountant or Ms Takin (yr money) points out the deduction to be realised against tax, and the mugs rush in. Destroys the local economy, where median incomes are low and prospects precarious.

Watch Cairns and Hobart, and most places in between, plummet.


----------



## sptrawler (24 April 2020)

Dona Ferentes said:


> And even worse distortion, in regional Aust! Where Capital Gains are sluggish, but yields are high. Clever Richard Accountant or Ms Takin (yr money) points out the deduction to be realised against tax, and the mugs rush in. Destroys the local economy, where median incomes are low and prospects precarious.
> 
> Watch Cairns and Hobart, and most places in between, plummet.



The result of 20 years of filling the vacuum left by loss of manufacturing, with a ponsi based housing boom, it has to end in crash and burn or else we will end up like Bali.
Waiters to overseas rich tourists and holiday property owners, we are living in a fools paradise IMO.
Everyone sitting back cruising, thinking life is great, while everything of value is either being stripped or bought by overseas interests.


----------



## orr (26 April 2020)

wayneL said:


> Oh for Gawdsake @orr
> 
> What a mishmash of ideological bias and bullcrap. This is how threads get derailed.




Difficult I know Anyle; It's a three minute read... It's history not propaganda.
Try, if possible to be enlightening, for once. Find me a potted history of rent control from any conservative view point.
There may be one but it was way too tempting to hit the buttons of the learn nothing know nothing brigade of reactionary conservatives that haunt these threads with their most feared boogie man.... 

And more pertinent son, it's very relavant to this thread, for those with any analytical capacity. 

*A short history of rent control in Australia*
EDITOR, SEPTEMBER 24, 2018

Reading Time: 3 minutes


Lots of people have heard that rent control, or rent regulation, exists in some counties in Europe, or in some states in the US, but very few are aware that it has also existed at various times in Australia.

For the most part governments have been forced to reign in private landlords during times of economic and social crisis.

Rent control was first introduced in New South Wales during the First World War in 1916, as part of the Fair Rents Act. This Act was amended in 1928 to wind back rent controls, but during the Great Depression rent controls were reintroduced with the Reduction of Rent Act (1931). This resulted in a 23% reduction in rents and restrictions on evictions.

The powers-that-be once again ended rent control with the Landlords and Tenants (Amendment) Act in 1932. This chopping and changing mostly coincided with changes of government at the New South Wales state level.

At the beginning of World War Two, 50% of all households were tenants of private landlords. The Commonwealth, under its defence powers, introduced the National Security (Fair Rents) Regulations 1939. This gave the states the power to freeze rents and establish Fair Rent Boards.

A form of rent control existed in most states across Australia and continued until August 1948. At this point there was a constitutional challenge against the government’s right to continue wartime price controls.

These controls were kept in the context of social unrest, strikes, communist agitation and the recent experience of the Great Depression. The constitutional challenge led to an unsuccessful referendum, where the Chifley government attempted to gain back rent and other price control measures.

The Landlord and Tenants Act 1948 maintained rent control in New South Wales beyond this, in order to provide security of tenure to all tenants. This was because of the dire need for accommodation following the war.

In 1954 however, all newly constructed buildings were exempted from the Act, and by 1956 a premise could be ‘decontrolled’ when vacated if registered with the Fair Rent Board.

In 1960 there were still 207,000 controlled dwellings, which amounted to two thirds of all private rental properties. In 1968, ‘wealthy tenant provisions’ were introduced to bring rents up to market value, winding back rent control further.

By 1974 there were only 20,000 rent-controlled tenancies in New South Wales and by 1986 no new protected tenancies could be created. The exception to this was ‘inheritance’, where if tenant died then a spouse or dependent could continue the lease.

A similar story played out in Victoria, where the Landlord and Tenants Act 1958 restricted the application of rent control provisions to ‘prescribed premises’.

In 1956 there were 180,000 protected tenants, but this was slowly whittled away. The Residential Tenancy Act 1980 aimed to remove rent control on the remaining premises over a period of two years. It was estimated that up to 10,000 pensioners still had rent control at that stage, and this Act caused a massive increase in rents for those least able to afford it.

In place of rent control, a new system was established in Victoria where a tenant could complain to the Residential Tenancy Tribunal if an increase in their rent was considered excessive. This was nowhere near as effective as proper government regulation.

Western Australia commenced the decontrol of rent in 1951. In Tasmania, rent control ended in 1955. In Queensland, protected tenancies were abolished in 1970 and in South Australia in 1962.

Today renters face renewed financial pressures, with millions once again suffering from rent stress. This is a direct consequence of landlords, developers and speculators making billions of dollars from people’s intrinsic need for a place to live.

As it stands, the rights of renters in Australia have been severely curtailed. There is a desperate need to build a movement of renters to pressure governments to overhaul the laws and grant renters much improved rights.

Rent control and other reforms have been won in the past, they can be won again. Let’s renew the fight!

**


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## Bill M (26 April 2020)

orr said:


> Rent control and other reforms have been won in the past, they can be won again. Let’s renew the fight!



Why on earth would anyone want to buy a residential investment property only to have even more government controls put on you. I am so very glad I sold my investment property, now I have absolutely no worries at all.


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## macca (26 April 2020)

Bill M said:


> Why on earth would anyone want to buy a residential investment property only to have even more government controls put on you. I am so very glad I sold my investment property, now I have absolutely no worries at all.




This is an investment forum so surely all can understand that should more controls be brought in then there would be less investment properties available for rent.

In the initial stages it would work in tenants favour but as properties got sold and less investments properties were purchased, rents would escalate dramatically at the time of the initial tenancy.

Market forces work both ways, if it is not profitable then it won't happen.


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## sptrawler (26 April 2020)

Bill M said:


> Why on earth would anyone want to buy a residential investment property only to have even more government controls put on you. I am so very glad I sold my investment property, now I have absolutely no worries at all.



Im with you on that Bill, it is hard work for a very average rate of return, my guess is it is going to be even harder in the current climate.
No migrant intake, jobless rates increasing, very little sympathy for landlords = a world of pain for landlords, especially those with loans that have PPR as collateral.
Just my opinion, lots of family stress in those households.


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## jbocker (26 April 2020)

orr said:


> Difficult I know Anyle; It's a three minute read... It's history not propaganda.
> Try, if possible to be enlightening, for once. Find me a potted history of rent control from any conservative view point.
> There may be one but it was way too tempting to hit the buttons of the learn nothing know nothing brigade of reactionary conservatives that haunt these threads with their most feared boogie man....
> 
> ...



In history how was relaxing rent controls offset by things like state housing, Home Start Assistance Home grants etc? Nice summary of history but seems an incomplete view of rental housing. 
Could we promote extensive State housing as competition against the landlords. If we have more state housing then everyone pays to create homes for those who choose to rent. And you have rent control. Could fight for that.


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## sptrawler (26 April 2020)

jbocker said:


> In history how was relaxing rent controls offset by things like state housing, Home Start Assistance Home grants etc? Nice summary of history but seems an incomplete view of rental housing.
> Could we promote extensive State housing as competition against the landlords. If we have more state housing then everyone pays to create homes for those who choose to rent. And you have rent control. Could fight for that.



In reality the only reason we have negative gearing, is because the Government is bribing people to supply rentals, because they wanted to get out of supplying State Housing.
They know how much hard work it is with delinquent tenants, damage and maintenance.


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## wayneL (27 April 2020)

orr said:


> Difficult I know Anyle; It's a three minute read... It's history not propaganda.
> Try, if possible to be enlightening, for once. Find me a potted history of rent control from any conservative view point.
> There may be one but it was way too tempting to hit the buttons of the learn nothing know nothing brigade of reactionary conservatives that haunt these threads with their most feared boogie man....
> 
> ...



Great read, some proper input Mr Borre. That woulda been preferable to your verbal vomit previously.


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## againsthegrain (27 April 2020)

wayneL said:


> Great read, some proper input Mr Borre. That woulda been preferable to your verbal vomit previously.




Looks like the govt is feeling the hit from decreased stamp duty due to low sales

https://www.news.com.au/world/coron...c/news-story/abdc4b1c4dfb0aeb3fab225bb850dea8


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## qldfrog (27 April 2020)

Just a though coming from an exchange on another thread 
10y ago 1 aud was getting 1.1 USD.
Now 1 AUD get 0.6 USD
For an international buyer in 2020, isn't Australian RE cheaper now than it was 10y ago in usd term,?
At worse similar
And could RE price not be symptomatic of our currency decline, an inflation stability process wo name?


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## Bill M (28 April 2020)

qldfrog said:


> Just a though coming from an exchange on another thread
> 10y ago 1 aud was getting 1.1 USD.
> Now 1 AUD get 0.6 USD
> For an international buyer in 2020, isn't Australian RE cheaper now than it was 10y ago in usd term,?
> ...



Yes you are right. At that time some Aussies were going over to the USA buying distressed residential units and they did alright out of it, except for a couple that were murdered by disgruntled tenants. Yep, so now those USA citizens can buy our real estate at a discount all these years later. Definitely has something to do with our currency going down.


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## basilio (29 April 2020)

On the bigger picture this analysis is unsettling. I think all the points are quite valid.  Bringing them together on one list is daunting.
If correct  collapsing property values will be just one outcome.

* Ten reasons why a 'Greater Depression' for the 2020s is inevitable *
Nouriel Roubini
Ominous and risky trends were around long before Covid-19, making an L-shaped depression very likely

After the 2007-09 financial crisis, the imbalances and risks pervading the global economy were exacerbated by policy mistakes. So, rather than address the structural problems that the financial collapse and ensuing recession revealed, governments mostly kicked the can down the road, creating major downside risks that made another crisis inevitable. And now that it has arrived, the risks are growing even more acute. Unfortunately, even if the Greater Recession leads to a lacklustre U-shaped recovery this year, an L-shaped “Greater Depression” will follow later in this decade, owing to 10 ominous and risky trends.

https://www.theguardian.com/busines...-depression-for-the-2020s-is-inevitable-covid


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## satanoperca (29 April 2020)

basilio said:


> On the bigger picture this analysis is unsettling. I think all the points are quite valid.  Bringing them together on one list is daunting.
> If correct  collapsing property values will be just one outcome.
> 
> * Ten reasons why a 'Greater Depression' for the 2020s is inevitable *
> ...




So we all as Australian citizens need to answer the following questions:

Is shelter a basic need?
Should shelter be for Australians and not an investment vehicle for foreigners?
Does having some of the highest property prices in the world benefit Australians?
Having high property prices (with a large debts associated with) make for a better society?
Do our politicians or better, our political parties produce policies that will provide the same or better standard of living for Australians.
So as I type, I reflect on one word that I have used, Australians. 

Did our for fathers fights for being Australian, is it acceptable to be national. 

I don't know. But everyone in this great country should be able to access one of the 4 basic needs to survive, shelter

Should we as a nation be more focused on innovation, productivity and well being (f--k we has some of the best beaches in the world, some of the most incredible landscapes in the world, we should appreciate them)?

If we as Australians want to be like the US, China and the rest of the world. I am moving to Tasmania.


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## sptrawler (29 April 2020)

satanoperca said:


> So we all as Australian citizens need to answer the following questions:
> 
> Is shelter a basic need?
> Should shelter be for Australians and not an investment vehicle for foreigners?
> ...



Firstly I agree with your sentiments, however you have to remember the only place where prices are stupid are Melbourne, Sydney area.

Something has to be done about that, I think it needs more of a surgical approach, rather than a sledge hammer approach that hits areas that have been struggling for years.
The land tax rather than stamp duty may help, as the holding costs will be higher, also land banking by wealthy developers will be hammered.

There was a suggestion at the last election to remove negative gearing from established homes and only allow it on new builds, as this apparently would encourage new builds for rentals. 
IMO I think that would hammer the rental market, as it would encourage the rich to buy cheap property and land bank until the vacancy rates fell to the point that building the rental would be attractive.

Why not remove negative gearing from new builds and allow first home buyers to claim a tax deduction on their mortgage interest? Then the first home buyers are getting the help, instead of the rich landlords, who can afford to build new properties to rent?


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## macca (29 April 2020)

The quickest way to ease pressure in the Capitals is to stop the flood of people into Oz

After CV19 that may well happen, surely we will close the borders until we work our way out of this mess


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## satanoperca (29 April 2020)

sptrawler said:


> however you have to remember the only place where prices are stupid are Melbourne, Sydney area.




I agree Syd and Mel are stupid prices, but can you elaborate on other areas in Australia that are not?

Before you do, I ask you to look at the region and its ability to provide an income and not just comapre a one bedroom apartment in Sydney to a 3 bedroom house 3 hours drive away for the center.


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## sptrawler (29 April 2020)

macca said:


> The quickest way to ease pressure in the Capitals is to stop the flood of people into Oz
> 
> After CV19 that may well happen, surely we will close the borders until we work our way out of this mess



IMO it may well happen in the short term, but alas I think in the long term the immigration will continue.
Australia without immigration has a falling birth rate, everyone screams about immigration, but the fact is we enjoy our lifestyle and don't want it ruined by paying for kids.
The other fact is, in reality to support business and manufacturing growth and with it our lifestyle, we need a bigger market place at home.
So there is two options:
Option 1. Immigration.

Option 2. Encourage people in Australia to have more children. The problem with that is married couples lose a lot of money, when the wife stops work to have children, so they only have one or two kids.
The Government tried to overcome that to some degree by introducing child support, which encourages Australians to have children and lessens the financial impact.

The problem is the general public don't like it, as it is seen as middle class welfare, so the outcome is the only people who have extra children, are those on welfare who get extra for having them and the public like that.

So immigration is here to stay, until we have a self supporting population, at the moment the only 'Australians' with an increasing population is the aboriginals and migrants from memory.


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## joeno (29 April 2020)

If you bought property 3 years ago, it was clearly a dumb choice. Now i'd say it's reasonable considering how worthless the AUD is. A decent house in Sydney is $800,000AUD. This would've been $1mm+ in '17. $800k is about $500k USD. Not exactly expensive for a capital city.

It's obvious the govt has gone the route of saving housing (as well as boosting export industry) by devaluing the AUD to make it one of the WORST performing currencies in the developed world. I foresee an even greater rate of inflation in the next few years.


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## sptrawler (29 April 2020)

satanoperca said:


> I agree Syd and Mel are stupid prices, but can you elaborate on other areas in Australia that are not?
> 
> Before you do, I ask you to look at the region and its ability to provide an income and not just comapre a one bedroom apartment in Sydney to a 3 bedroom house 3 hours drive away for the center.



Well in W.A prices are down a long way from the peak, I can give you an honest example close to home.
My son had two properties that he sold about 6 months ago, so that he could purchase a new PPR.
The first house was a duplex 10klm from Perth CBD he bought it 25years ago for $65k sold $200k, that isn't a lot of gain in 25 years. The second property was in the goldfields bought 15 years ago for $250k, sold $165k.
Most of W.A is in the doldrums and has been since the mining boom finished, I can't comment on Eastern States, but whatever Federal changes are made affect W.A as well.
I just quickly googled new appartments close to Perth, the Precinct starts at $478k in a very upmarket suburb and area.
http://saltproperty.com.au/project/precinct-mount-pleasant/

Here is a better link.
https://www.norupwilson.com/projects/current-projects/the-precinct-mount-pleasant

So you can imagine how much an older style apartment in the same area is valued at, imagine trying to sell it if investors can't negative gear yours, but can negative gear one of those new apartments?


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## sptrawler (29 April 2020)

joeno said:


> If you bought property 3 years ago, it was clearly a dumb choice. Now i'd say it's reasonable considering how worthless the AUD is. A decent house in Sydney is $800,000AUD. This would've been $1mm+ in '17. $800k is about $500k USD. Not exactly expensive for a capital city.



That will get you on the river in Perth, about 10klm out, I would guess the same applies in Tassie and S.A.



joeno said:


> It's obvious the govt has gone the route of saving housing (as well as boosting export industry) by devaluing the AUD to make it one of the WORST performing currencies in the developed world. I foresee an even greater rate of inflation in the next few years.



The Government hasn't devalued the dollar, our currency is floated and it is valued by the international money markets.
The RBA has been trying to drop the value of our currency for quite some time, by dropping interest rates, but it remained stubbornly high until very recently.
The reason ours is one of the worst performing currencies, is because it is one of the worst performing economies, we are basically a one trick pony 'mining'.
We are just lucky, we don't have a large population, so we can have a first World lifestyle with a third World economy.
It wont last IMO.


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## sptrawler (29 April 2020)

satanoperca said:


> I agree Syd and Mel are stupid prices, but can you elaborate on other areas in Australia that are not?
> 
> Before you do, I ask you to look at the region and its ability to provide an income and not just comapre a one bedroom apartment in Sydney to a 3 bedroom house 3 hours drive away for the center.



Here is another example from Perth, in a cheaper area but just as close, $378k.
http://www.vantageperth.com.au/

https://offtheplan.com.au/properties/vantage-riversedge-apartment/

Again, like I said, you can imagine what prices out in the suburbs are like.


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## joeno (30 April 2020)

sptrawler said:


> That will get you on the river in Perth, about 10klm out, I would guess the same applies in Tassie and S.A.
> 
> 
> The Government hasn't devalued the dollar, our currency is floated and it is valued by the international money markets.
> ...




well Australia has a better case than many other "first world" countries. I'm in the UK now. it's propped up by some fragile financial services businesses that can be outsourced to India. it's Australia minus the land and resources.

US is even worse. He's the druggie  thatowes everyone money to fuel his addiction. Home of propaganda, political espionage, and irony to call itself a "open market capitalist" society with all of the market manipulation lately.

Anyways Australia will likely not meet the same fate as Japan. we'll sacrifice savers and force people to spend their steadily worthless currency while assets like property keep rising (in terms of AUD that is).


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## Dona Ferentes (30 April 2020)

rental dynamics are changing


> Realestate.com.au says rental listings on its platform were up 8 per cent across the country, compared to this time last year, with the biggest increase in listings in New South Wales, Victoria and Tasmania, while Western Australia had the largest decline in listings. Domain Group saw a 10 per cent rise nationally between March 30 and April 26, compared to a year ago, with Sydney and Melbourne listings up 19 per cent and Hobart listings up 24 per cent, while listings in Perth fell 10 per cent. Nationally, SQM Research said there were more than 105,000 properties listed for rent as of Saturday — up from around 84,000 in early March.





> The increased supply of rental properties comes as demand decreases. "People who have lost jobs or income are trying to save money so are moving back in with parents, moving in with friends, dissolving share houses," Domain economist Trent Wiltshire said. "Net immigration has also fallen, there are fewer international students and workers … fewer young people looking to move out." [and t]here's another source of properties being put up for rent — holiday rentals that are sitting empty.



https://www.abc.net.au/news/2020-04...rge-prices-drop-airbnb-holiday-homes/12199262


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## againsthegrain (30 April 2020)

> The freedom of Victorian tenants to choose where they live could be substantially restricted under new COVID-19 laws.
> 
> Legislation that cleared state parliament last week to combat effects of coronavirus on the state economy now requires renters on month-to-month leases to get a Victorian Civil and Administrative Tribunal order if they want to move out.




Id hate to have a empty rental on the market now,  or moving from short stay to long stay rental,  going to be sitting empty for a good 6 months.

Can't rent, nobody will buy

https://www.google.com/amp/s/amp.th...s/news-story/7b39053d950388d5acc73cf15c64d7fa


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## orr (30 April 2020)

jbocker said:


> ? Nice summary of history but seems an incomplete view of rental housing.




Obviously a redux to a few hundred words 'incomplete'...
What gives more BIG picture detail is Picketty's 'Capital in The 21st Century'... see within these pg's the importance of the capital/income ratio... there is a limited elastisity to this ratio... And a $hit load of things that might help some contributers here...(from making fools of themselves)
DYOR


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## moXJO (1 May 2020)

Not much reduction in price round my area. Even the shitty areas seem to be higher priced. 
Personally even if I saw a 30% reduction I'd be thinking the prices were a tad high.  Perhaps my thinking is just stuck in the past.

Imo immigration is the reason for ever higher prices. Jamming millions more people into the country will keep the prices high. Be interesting to see the aftermath of COVID.


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## Dona Ferentes (1 May 2020)

sptrawler said:


> IMO it may well happen in the short term, but alas I think in the long term the immigration will continue. Australia without immigration has a falling birth rate, everyone screams about immigration, but the fact is we enjoy our lifestyle and don't want it ruined by paying for kids....
> So there is two options:
> Option 1. Immigration.
> Option 2. Encourage people in Australia to have more children.
> ...



the borders are closed; have been since March. Population won't increase for a while, but its my speculation we'll see mass immigration afterwards. Here and NZ. Call them Covid Refugees, voting with their feet, the rich ones with some money and no desire to stay in densely packed northern hemisphere food deficit cities. Chinese who have seen their one party state enforce social control (again), Europeans who have stayed in airless boxes for weeks, and probably people from USA who can see what's happening there (militias in state parliaments, poorly-functioning health system, fractured governance).  

Of course, let's wait till the second wave of the virus; got to get through winter yet.


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## againsthegrain (1 May 2020)

Dona Ferentes said:


> the borders are closed; have been since March. Population won't increase for a while, but its my speculation we'll see mass immigration afterwards. Here and NZ. Call them Covid Refugees, voting with their feet, the rich ones with some money and no desire to stay in densely packed northern hemisphere food deficit cities. Chinese who have seen their one party state enforce social control (again), Europeans who have stayed in airless boxes for weeks, and probably people from USA who can see what's happening there (militias in state parliaments, poorly-functioning health system, fractured governance).
> 
> Of course, let's wait till the second wave of the virus; got to get through winter yet.




Those that have money in the Northern hemisphere or Asia don't live in airless apartments,  they can afford a life just as good here back where they live.

those that live in airless apartments can't afford to live in Australia and move anyway.

There will be some % in between that might make the move but don't see it so dramatic as compared to Australia having 0 cases and deaths being a true safe haven

Chinese who have seen their one party state enforce social control might have to juggle between Australia where everybody is starting to hate them and not feeling safe in public


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## satanoperca (1 May 2020)

moXJO said:


> Imo immigration is the reason for ever higher prices. Jamming millions more people into the country will keep the prices high. Be interesting to see the aftermath of COVID.




Agree, the high immigration has resulted in pushing prices higher, however :
1. The RBA have no more bullets left to decrease unemployment
2. If the govnuts keep high levels of immigration, don't you think the soon 15% of the population that will be without a job might get just a little upset. Govnuts currently can hide the true figures with all the cash they are handing out.

So if we get back to the levels that cause high property prices:
1. Cheap credit, think the end of the cycle is close
2. High immigration, govnuts can try defending that, but will fail, when so many Australians do not have a job.
3. Allowing foreigners to purchase residential properties (shelter for Australians), before anyone says it is against the law, laws need to be enforced, but they have not. So the govnuts can turn a blind eye to it, but for how long?
4. Part of the problem, was allowing people to leverage their super in SMSF against property, so the only cash that is left to tap is super, well they have just allowed that. Short term sugar hit for long term pain.

So, it would be great if anyone can point out how property prices will increase in the current environment (next 6months) and the next 3 years.


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## moXJO (1 May 2020)

satanoperca said:


> Agree, the high immigration has resulted in pushing prices higher, however :
> 1. The RBA have no more bullets left to decrease unemployment
> 2. If the govnuts keep high levels of immigration, don't you think the soon 15% of the population that will be without a job might get just a little upset. Govnuts currently can hide the true figures with all the cash they are handing out.
> 
> ...



If they were going to do it:
Pump immigration/students. Lower restrictions for buying. Watch Chinese investors flood back in. 
We just gave our nation a gold star safety rating.

Everyone underestimates just how many Chinese investors willing to spend in Australia there are. We are a safe haven for Chinese who don't want the CCP getting their grubby hands on their investment.
India is on the rise as well. 

Lot of people with money in the world. And only 25 million or so of us. All government has so far been hell bent on doubling our population. And we seem to be willing to sell everything in a crisis.

Look at what happened after the gfc.  

I don't like it but it wouldn't surprise me.


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## sptrawler (1 May 2020)

moXJO said:


> If they were going to do it:
> Pump immigration/students. Lower restrictions for buying. Watch Chinese investors flood back in.
> We just gave our nation a gold star safety rating.
> 
> ...



I think this is what people forget, Kev let the cat out of the bag, when he said  Australia needs a minimum population of 50 million.
Immigration is the only way that will happen, baby bonus was shot down by the general public.
So it boils down to the coalition encouraging wealthy Asian migrants, or Labor encouraging refugees.
But one way or another our population will increase, thats for sure.


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## satanoperca (3 May 2020)

sptrawler said:


> I think this is what people forget, Kev let the cat out of the bag, when he said  Australia needs a minimum population of 50 million.
> Immigration is the only way that will happen, baby bonus was shot down by the general public.
> So it boils down to the coalition encouraging wealthy Asian migrants, or Labor encouraging refugees.
> But one way or another our population will increase, thats for sure.




The one area that has been driving economic growth and housing prices might soon disappear, immigration.

https://www.theage.com.au/politics/...-slowdown-shock-20200501-p54p3r.html#comments

Basically : net immigration could take a massive hit, >50%

What is even more interesting is the comments on this article.

Maybe we can make Australia be great again, through innovation and hardwork and not through the ponzi scheme of property and mass immigration.

I get excited by these challenging times, need to think outside the box, create, innovate and work hard.

Lets see what the future holds.

Property down 20% over the next 2 years and stagnate for a long time.

The world has changed, embrass the future and adapt.


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## bux2000 (3 May 2020)

I apologise if this clip has been posted before


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## basilio (4 May 2020)

*Role of the Banks. How important will a strong banking system be to keeping the economy functioning let along the property market ?

Are Australia's big four banks equipped for recession?*

Peter King assumed control of Westpac just four weeks ago.

A 25-year veteran of the outfit, he joined shortly after it almost imploded during the recession of the early 1990s when it was crippled by an ongoing series of soaring debts; first from busted entrepreneurs who went belly-up after the 1987 market crash and then commercial property.

This morning, Mr King will deliver Westpac's first half result, at a time when Australia again is tipping into recession, with unemployment soaring amidst the economy's deepest and sharpest contraction in a century.

Like his contemporaries at ANZ and National Australia Bank last week, Mr King will announce that he's been forced to put aside massive reserves to cover rising bad debts and defaults.

For Westpac, that will be around $2.2 billion — cash that will come straight off the bottom line.

And like his rivals, Mr King will agonise over whether to cut or even suspend dividends to the army of investors who rely upon the steady stream of cash as income.

*How safe are our banks from COVID-19?*


The COVID-19 pandemic is forecast to wipe hundreds of billions of dollars from Australia's economic activity. Stephen Long looks at whether the major banks can survive the inevitable losses.

Read more
NAB last week slashed its payout while ANZ cut its altogether.

The amount of money involved is enormous. 
https://www.abc.net.au/news/2020-05-04/are-australias-big-four-banks-equipped-for-recession/12210538


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## sptrawler (4 May 2020)

Hooray, at last the ponzi scheme, is getting a bit of air.
Pauline gets down and dirty, she doesn't leave anyone wondering what she thinks, the PC lobby has lost a bit of cred with the virus IMO.

https://www.news.com.au/finance/eco...k/news-story/29c5e0ad0a4ac0c40784948b2fdbf364

_Ms Keneally said the coronavirus pandemic had given the nation an opportunity to “put Australian workers first” and “shift away” from temporary foreign labour.

“While Australia’s high level of migration played a key role in our economic prosperity, in recent years the shape and size of our intake has hurt many Australian workers, contributing to unemployment, underemployment and low wage growth,” she wrote.

“The post-COVID-19 question we must ask now is this. When we restart our migration program, do we want migrants to return to Australia in the same numbers and in the same composition as before the crisis? Our answer should be no.”

She said governments run by both major parties had relied on high levels of migration to fuel economic growth — calling it a “lazy approach”.

“Letting lots of migrants come to Australia is an easier way to drive economic growth than increasing productivity or investing in skills or training,” said Ms Keneally.

Ms Hanson quickly pounced on Ms Keneally’s piece yesterday, claiming Labor had adopted her own party’s rhetoric after criticising it for years.

“It’s enough to make you sick,” she wrote on Facebook.

“Despite decades of being called ‘racist’ for my strong stance on jobs for Australians first, and my constant call to reduce immigration numbers to keep up with the country’s infrastructure demands, the Labor Party may finally be listening.

“I guess we’ll have to see whether they’re genuine when we get back to parliament.
The One Nation leader continued to rub it in during an appearance on Channel 9’s Today program this morning.

“Kristina Keneally, first time she’s probably agreed with me,” Ms Hanson said.

“To call for protecting Australian jobs, and to cut immigration — you know, when I said it I was called ‘racist’. When Kristina Keneally says it it’s supposed to be ‘controversial’. It’s a debate that we need to have.

“Why shouldn’t we protect Australian jobs? Why shouldn’t we look at immigration numbers? The government’s used immigration over the years purely to prop up the economy.

“It’s just ridiculous we keep bringing these numbers, people who are not compatible with our culture and our way of life, and yet we bring them in purely to prop up the economy. It’s got to stop somewhere, otherwise it’s a Ponzi scheme_.


----------



## noirua (9 May 2020)

*The tide is starting to turn on Australian property prices, with capital city price growth turning negative for the first time since August*
https://www.businessinsider.com.au/...et-auctions-coronavirus-capital-growth-2020-4

In theory Australia and New Zealand should not come out too badly over the covid19 epidemic as China will recover quickly. However, America and Europe will probably see a sharp slide in property prices of up to 30% in some regions. The UK is already seeing a rise in mortgage rates and the government's NSandI savings recent rate reductions have been reversed and this despite the Bank of England's Minimum lending rate being reduced to 0.05%.
https://www.moneyobserver.com/news/nsi-reverses-cuts-to-premium-bonds-and-interest-rates

The USA is now putting pressure on Asia and China as an America first policy hardens and it becomes everyone for themselves. Certainly I'd prefer to see a gold bar on my shelf rather than the deeds for a property. Buy American and shun everything you possibly can that is foreign and especially Chinese. America may put such sanctions on its own companies that have products made in China and they will shut up shop over there, and that may well include Asia.
I expect the UK and America to draw closer together in 2021 to the increasing exclusion of Europe that is now an economic opponent.
America will cutoff aid to very many countries unless they comply with their wishes.

*Global US dollar crunch puts pressure on Asia debt*
https://www.straitstimes.com/business/economy/global-us-dollar-crunch-puts-pressure-on-asia-debt
The yield on Indonesia's benchmark 10-year bond has climbed to 8.38 per cent, the most since 2018, while that on Malaysia rose to 3.58 per cent, near an eight-month high.

*Global markets recoil as Trump threatens US-China trade war*
https://www.theguardian.com/busines...trump-us-china-trade-war-coronavirus-covid-19
Reports suggested the White House is crafting renewed import tariffs that would be applied to Chinese imports in retaliation, in a major escalation of the trade standoff.


----------



## noirua (9 May 2020)

UK expectation on property prices as deals freeze up. Will Australia also slump 30%?
https://www.telegraph.co.uk/propert...fall-has-happen-worst-case-30pc-market-crash/

Don't underestimate how bad it is in America and the UK and probably the rest of Europe in the property sector. Be absolutely sure 'It Is Dire'.


----------



## moXJO (11 May 2020)

Property still selling quick round my way. Few extra rentals coming on line. Hopefully rent drops and prices adjust.


----------



## sptrawler (18 May 2020)

The push is starting.
https://www.smh.com.au/politics/fed...r-visa-increase-labor-mp-20200515-p54td4.html


----------



## satanoperca (20 May 2020)

Reality is not want you want to show, so just hid it, must be getting bad out there, if they pull the perfect index from reporting.



Love the wording, if the indexes don't show green, then we will hide them.

Be interesting if they turn it back on in coming months.

Don't believe the hype, without immigration and decreasing cost of credit, property can only go one way.


----------



## wabullfrog (20 May 2020)

The Property Council of Australia certainly are after a "bit" of assistance.

https://www.smh.com.au/politics/fed...raises-property-concerns-20200519-p54ue5.html

https://au.finance.yahoo.com/news/50000-boost-for-new-home-buyers-005142012.html


----------



## sptrawler (8 June 2020)

Well this is certainly a splash of cash for first home buyers in W.A, add to that the depressed housing market and it may be the pot of gold at the end of the rainbow for young working couples.
https://www.domain.com.au/news/wa-g...campaign=Insider_08062020_DI&utm_medium=email
From the article:
_First-home buyers in Western Australia could receive almost $70,000 in government grants if they build a new home, after the state government announced a building bonus on Sunday.

West Australians could receive up to $45,000 in grants for building a home, with the state government announcing a $20,000 bonus for new residential builds on top of the $25,000 already offered by the HomeBuilder scheme announced by the Morrison government on Thursday.


First-home buyers would also be eligible for the existing $10,000 first home owner grant and stamp duty concessions, meaning some WA first-home buyers could qualify for up to a $69,440 benefit_.


----------



## wayneL (15 June 2020)

LJ Hooker in administration !

Holy Dooley


----------



## sptrawler (15 June 2020)

wayneL said:


> LJ Hooker in administration !
> 
> Holy Dooley



Ouch, that will put the fear of god up a few businesses, so much for the papers saying the real estate market is recovering. 
Now Morrison's home building package makes sense.
It must be bad.


----------



## wayneL (15 June 2020)

sptrawler said:


> Ouch, that will put the fear of god up a few businesses, so much for the papers saying the real estate market is recovering.
> Now Morrison's home building package makes sense.
> It must be bad.



 More news, it is just some of the entities of the group, but still.... 

Franchised offices not affected apparently.


----------



## sptrawler (15 June 2020)

wayneL said:


> More news, it is just some of the entities of the group, but still....
> 
> Franchised offices not affected apparently.



That sounds a bit better, your first post sounded like something. the media would print.


----------



## sptrawler (15 June 2020)

wayneL said:


> More news, it is just some of the entities of the group, but still....
> 
> Franchised offices not affected apparently.



It must be pockets of the market that are being effected.
I know over here in the West (Perth, Mandurah), the property prices haven't really changed much since the fall from the end of the mining boom, you can only hit rock bottom then you just bounce along.
I am seeing some of the real estate agencies, reducing their floor space and trying to lease out the excess.
In Mandurah, I am seeing a lot of the house, units selling, but they are very good value for money.
One I know that sold recently after 2 years on the market, sold to an old couple wanting to get better returns on their nest egg, they must be new to renting because the first thing they did was gut the place.
It wasn't in bad condition, as the previous owner was a single lady in her 70's, so it will be interesting to see how it pans out.
Maybe a lot of SMSF are getting into renting, I personally hope not, as I don't think it is a game for those in their twilight years especially in lower socioeconomic areas.
Just my opinion.


----------



## wayneL (15 June 2020)

sptrawler said:


> It must be pockets of the market that are being effected.
> I know over here in the West (Perth, Mandurah), the property prices haven't really changed much since the fall from the end of the mining boom, you can only hit rock bottom then you just bounce along.
> I am seeing some of the real estate agencies, reducing their floor space and trying to lease out the excess.
> In Mandurah, I am seeing a lot of the house, units selling, but they are very good value for money.
> ...



I think dramatic falls, *if any*, will take at least six months to even start to show up and probably play out over 2 to 3 years. The gu'mint is going to move heaven and earth to keep real estate prices propped up, because the bastards are all hocked up to the eyeballs on it.

But, a game I like to play in markets, especially commodity markets is trying to figure out the minimum value... eg, gold when at any lower prices, they start closing mines, coffee when they start plowing in their coffee plants and planting something else and so on.

I thought that with gold at 1200 to 1250 last year.

So what's the minimum price for a property? At what price would it be no longer feasible to even build anything comparable, new? (All things considered of course).

We're probably not far away from that in Perth already, in some sections. yet in other parts of the market I think there is still some over valuation in my opinion.

Similar story in Queenzealand, probably South Australia too.

The other three states I think are going to get very interesting FWIW


----------



## SirRumpole (15 June 2020)

sptrawler said:


> I think this is what people forget, Kev let the cat out of the bag, when he said  Australia needs a minimum population of 50 million.
> Immigration is the only way that will happen, baby bonus was shot down by the general public.
> So it boils down to the coalition encouraging wealthy Asian migrants, or Labor encouraging refugees.
> But one way or another our population will increase, thats for sure.




How about making it more affordable for mums and dads or prospective ones to afford their own roof over their heads, instead of pandering to real estate agents and property investors by bringing in cashed up investors from overseas to drive up prices ?

People won't have kids if they can't afford a house to put them in.


----------



## sptrawler (15 June 2020)

SirRumpole said:


> How about making it more affordable for mums and dads or prospective ones to afford their own roof over their heads, instead of pandering to real estate agents and property investors but bringing in cashed up investors from overseas to drive up prices ?
> 
> People won't have kids if they can't afford a house to put them in.



Agree 100%, but while people pay stupid prices for houses, they keep selling, so they keep going up.
In W.A the prices for starter homes, have dropped back to prices of 20 years ago, because people stopped buying after the mining boom fell over and there was a mass exodus.
The other thing that can be done, is give assistance so both husband and wife don't have to work, but everyone screams middle class welfare, so it comes back to immigration.


----------



## Tink (16 June 2020)

For Victoria..


----------



## wayneL (18 June 2020)

A trading halt for property?

https://www.abc.net.au/news/2020-06...ng-for-real-estate-transaction-pause/12363222

I realise the clown world has been upon us for some time now but good God, can things get any more insane?


----------



## sptrawler (18 June 2020)

wayneL said:


> A trading halt for property?
> 
> https://www.abc.net.au/news/2020-06...ng-for-real-estate-transaction-pause/12363222
> 
> I realise the clown world has been upon us for some time now but good God, can things get any more insane?



Just shows how worried they are, about the domino effect. If the Eastern States property market fell like the W.A market, with the amount of gearing people have over there, it would be a catastrophe.


----------



## wayneL (18 June 2020)

sptrawler said:


> Just shows how worried they are, about the domino effect. If the Eastern States property market fell like the W.A market, with the amount of gearing people have over there, it would be a catastrophe.



is there any clearer illustration that we no longer live in a capitalist society?


----------



## satanoperca (18 June 2020)

Went for a 3 hour bike ride around inner city Melbourne today. 

Never seems so many retail shops/mainly strip shops with for lease signs since 1990's.

But maybe Australia can prove Newton wrong, gravity is not real when it comes to Australian property prices.

Interesting article.
https://www.theguardian.com/austral...hen-covid-rent-laws-expire-and-welfare-halves


----------



## Klogg (18 June 2020)

satanoperca said:


> Went for a 3 hour bike ride around inner city Melbourne today.
> 
> Never seems so many retail shops/mainly strip shops with for lease signs since 1990's.
> 
> ...



Interestingly, it's not every retailer that's having issues.

Shaver Shop, Kmart, Beacon Lighting, Adairs/Mocka, Super Retail Group, Accent Group - these are all doing quite well in the situation.

However, it's usually at the cost of landlords. The retailers have discovered just how strong a good online offering is, so they're willing to ditch stores. Rents are coming down, and quickly.

I'm not so sure this will flow onto house prices though.


----------



## Value Collector (18 June 2020)

SirRumpole said:


> People won't have kids if they can't afford a house to put them in.




Australia already has a higher home ownership rate than most other countries, with only 30% of Australians renting vs 70% owning , compared to other countries such as Germany where those figures are pretty much reversed where 61% of the population rent and only 39% own.

-------

We can argue all we want, at the end of the day its the fact that Australia's population attempt to squeeze into a few capital cities rather than spreading out while also wanting detached homes
 that keeps the price high.


----------



## sptrawler (18 June 2020)

satanoperca said:


> Went for a 3 hour bike ride around inner city Melbourne today.
> 
> Never seems so many retail shops/mainly strip shops with for lease signs since 1990's.
> 
> ...



This is the problem, when our major population areas are dependent on the service industries, rather than manufacturing.
My guess is Sydney/Melbourne are heavily dependent on consumer spending, which becomes a real issue when they have gig economy jobs, rather than manufacturing.
If the consumers haven't got a job, the shops don't have customers, that's why the pump priming on welfare payments.
Shows how fragile our economic model is, the only real jobs are in W.A, North Queensland and S.A, but everyone wants to live in Sydney/Melbourne where the jobs rely on someone having the money to pay for your service.
Long term disaster in the making.


----------



## SirRumpole (18 June 2020)

Value Collector said:


> Australia already has a higher home ownership rate than most other countries, with only 30% of Australians renting vs 70% owning , compared to other countries such as Germany where those figures are pretty much reversed where 61% of the population rent and only 39% own.
> 
> -------
> 
> ...




That's a pretty simplistic argument. The majority of the jobs are in metro areas because there has been no decent attempt at decentralisation and you can't ignore the fact that our immigration levels have been high for the last 20 years at least which exacerbates the problem.


----------



## Value Collector (18 June 2020)

SirRumpole said:


> That's a pretty simplistic argument.



 Its a pretty simplistic problem


> The majority of the jobs are in metro areas because there has been no decent attempt at decentralisation



yep, its a chicken / egg situation.

the jobs are in metro areas because thats where the people live, if people move into other areas, it would naturally create Jobs in those areas to service the population.




> and you can't ignore the fact that our immigration levels have been high for the last 20 years at least which exacerbates the problem.




Given the size of our country, (even ignoring the desert and out back areas) immigration levels shouldn't be an issue, unless we are all trying to squeeze into a box called Sydney or Melbourne.


----------



## sptrawler (18 June 2020)

That pretty well sums it up VC, we pander to people demanding their right to live in Sydney and Melbourne, when in reality the whole country needs to be populated to grow.


----------



## Value Collector (19 June 2020)

sptrawler said:


> That pretty well sums it up VC, we pander to people demanding their right to live in Sydney and Melbourne, when in reality the whole country needs to be populated to grow.




People love racing those rats in Sydney, and then wonder why they can't have free range children.


----------



## SirRumpole (19 June 2020)

Value Collector said:


> Given the size of our country, (even ignoring the desert and out back areas) immigration levels shouldn't be an issue, unless we are all trying to squeeze into a box called Sydney or Melbourne.




Do you live in a rural area yourself, or are you one of the lemmings ? 

I do live in a rural area and apart from seasonal fruit picking the majority of the jobs have gone to China or India. There needs to be more than just lip service paid by politicians to decentralisation, regional areas need to actually be made more attractive before people will move and its up to governments to put money where their mouths are and get more services and permanent jobs into the "bush".


----------



## wayneL (19 June 2020)

SirRumpole said:


> Do you live in a rural area yourself, or are you one of the lemmings ?
> 
> I do live in a rural area and apart from seasonal fruit picking the majority of the jobs have gone to China or India. There needs to be more than just lip service paid by politicians to decentralisation, regional areas need to actually be made more attractive before people will move and its up to governments to put money where their mouths are and get more services and permanent jobs into the "bush".



That's one thing I noticed in the US... in the south at least where I have rellies. You'll be driving along some country back road, people with two heads and confederate flags everywhere, and out pops a 100,000sq ft factory with hundreds of cars in the parking lot.

Happened all the time.

As screwed up the US is, they've had a better crack at decentralisation than us.... AND the housing is affordable in those areas.


----------



## qldfrog (19 June 2020)

And you have buy US, made in USA everywhere, for republicans at least, very strong nationalism


----------



## SirRumpole (19 June 2020)

wayneL said:


> That's one thing I noticed in the US... in the south at least where I have rellies. You'll be driving along some country back road, people with two heads and confederate flags everywhere, and out pops a 100,000sq ft factory with hundreds of cars in the parking lot.
> 
> Happened all the time.
> 
> As screwed up the US is, they've had a better crack at decentralisation than us.... AND the housing is affordable in those areas.




Also a much bigger population for about the same land mass so they need to decentralise more. 

They also make much more use of groundwater for domestic and industrial use than we do. Available and potable water supplies is probably the most limiting factor for decentralisation in Australia.


----------



## qldfrog (19 June 2020)

True, they built dam and did not have to wait 10 y of red tape for that
An idea for our 20pc unemployment problem


SirRumpole said:


> Also a much bigger population for about the same land mass so they need to decentralise more.
> 
> They also make much more use of groundwater for domestic and industrial use than we do. Available and potable water supplies is probably the most limiting factor for decentralisation in Australia.


----------



## Value Collector (19 June 2020)

SirRumpole said:


> Do you live in a rural area yourself, or are you one of the lemmings ?
> 
> I do live in a rural area and apart from seasonal fruit picking the majority of the jobs have gone to China or India. There needs to be more than just lip service paid by politicians to decentralisation, regional areas need to actually be made more attractive before people will move and its up to governments to put money where their mouths are and get more services and permanent jobs into the "bush".




I am not in a “forever home” at the moment, I am in an area where I have some rental properties while I renovate them, I am certainly not going to be moving back into the Sydney rat race again, (been there done that)

but I am not suggesting people have to live in rural areas, there are heaps of nice towns up and down the coast with cheaper property prices.

I also suggested higher density dwellings, it’s a simple fact that if we all want to live in large capital cities, out bidding each other for detached house and land is not going to be a way to reduce pricing, there is only so many houses that fit inside a certain area.


----------



## SirRumpole (19 June 2020)

Value Collector said:


> I also suggested higher density dwellings, it’s a simple fact that if we all want to live in large capital cities, out bidding each other for detached house and land is not going to be a way to reduce pricing, there is only so many houses that fit inside a certain area.




Well, that's true and apartments suit a lot of people. The days of the picket fence are over, but it's a matter of whether people want it that way or it's forced on them.


----------



## sptrawler (19 June 2020)

SirRumpole said:


> Well, that's true and apartments suit a lot of people. The days of the picket fence are over, but it's a matter of whether people want it that way or it's forced on them.



There really isnt any other option, if everybody wants to live in the same space, the problem becomes trying to find jobs, for the increase in people who want to live there.
The more people, doesn't equate to the same proportion of extra jobs, then the unemployment increases and the lefties complain about the lack of jobs and people not being able to afford to live there.
Just shows how F@#cking stupid everyone is.


----------



## Value Collector (20 June 2020)

SirRumpole said:


> Well, that's true and apartments suit a lot of people. The days of the picket fence are over, but it's a matter of whether people want it that way or it's forced on them.




It is a choice, if you want a big house on a quarter acre block, move out of the city.


----------



## SirRumpole (20 June 2020)

Value Collector said:


> It is a choice, if you want a big house on a quarter acre block, move out of the city.




It's a circular argument, people go where the jobs are and they are not in the city.

Our Ponzi population import scheme is being driven by real estate agents, property developers and  investors who want the biggest number of buyers to drive the prices up at the expense of the average home buyer.

It's about time that first home buyers got a better deal and hopefully the immigration pause due to covid will give them one for a while.


----------



## SirRumpole (20 June 2020)

SirRumpole said:


> It's a circular argument, people go where the jobs are and they are not in the city.




I meant they are not in the *bush*.


----------



## Value Collector (20 June 2020)

SirRumpole said:


> It's a circular argument, people go where the jobs.




Well, not entirely.

There are large sections of the population that don’t require a job, retires etc that can relocate away, and jobs will follow Them.

Also, to a certain extent the government can relocate large amounts of its work force away from cities, think about all the army, navy and air force That are located in Sydney for example, check out the size of Holsworthy army base, Sydney city and the inner city suburbs would fit inside it.


----------



## SirRumpole (21 June 2020)

Value Collector said:


> Well, not entirely.
> 
> There are large sections of the population that don’t require a job, retires etc that can relocate away, and jobs will follow Them.
> 
> Also, to a certain extent the government can relocate large amounts of its work force away from cities, think about all the army, navy and air force That are located in Sydney for example, check out the size of Holsworthy army base, Sydney city and the inner city suburbs would fit inside it.




Fair points indeed, which is why I said governments need to do more planning and ensure services are available in regional areas before they can expect people (especially retirees who need a certain range of services) to move there.


----------



## joeno (21 June 2020)

Value Collector said:


> People love racing those rats in Sydney, and then wonder why they can't have free range children.





Lol if that's your idea of Sydney then you will not like London Oxford Street / London Bridge (in usual times). Agoraphibics nightmare. It makes Sydney look like a vacation town in comparison.

On topic though, i own a house in Sydney. Somewhat regret that decision due to house correction in the last years. would've been better to rent and save up to buy somewhere more affordable with higher growth rates.

I'm not pessimistic about house prices however. Since we're likely to see higher inflation and asset price increases in the coming years. Also Sydney is not all that expensive when you factor everything in terms of USD rather than our beaten down AUD.


----------



## Bill M (21 June 2020)

SirRumpole said:


> Fair points indeed, which is why I said governments need to do more planning and ensure services are available in regional areas before they can expect people (especially retirees who need a certain range of services) to move there.



Yes absolutely! To me having a decent public hospital near me is a key point as to where I live. I have read some horror stories from people living in western NSW where their local hospital could not see them and they had to go drive 300 kms to the next hospital. No way would I put up with that, it's insane. 

Like you say, if they want people to live out of major cities then how about providing the services. God help you if you get an illness that requires travel to Sydney for treatment. Too much for one to cope with on top of their illness. Silly governments, full of ideas but no idea how to action plan them.


----------



## Value Hunter (21 June 2020)

I have always been of the view (I was even saying the same thing to people 5 years ago) that you should never buy newly built properties because building quality in Australia has continually degraded over time. I would say a good general rule of thumb is not to buy anything built this century. Sure properties from the 1970s and 1980s sometimes might have minor issues with minor leakages, inadequate soundproofing, etc but usually its nothing compared to existential structural issues that threaten many newer buildings. 

Also if a property has already been around for 20 years and stood the test of time with no major problems occurring you know its probably pretty safe.


----------



## Value Hunter (21 June 2020)

Value Collector said:


> Australia already has a higher home ownership rate than most other countries, with only 30% of Australians renting vs 70% owning , compared to other countries such as Germany where those figures are pretty much reversed where 61% of the population rent and only 39% own.
> 
> -------
> 
> ...




Value Collector I think you are missing the point that in a lot of smaller countries (I mean smaller in terms of land mass) like Germany or Italy, etc that a lot of these towns are much closer to the major cities. 

There are many small towns in Germany where you can live there and drive 45 minutes to Berlin or Munich or Frankfurt, or Hamburg, etc. So people can live in a smaller city or small town, etc and commute to work in the major cities. 

Sure we have some people that live in Geelong and commute to work in Melbourne or people that live in Wollongong and commute to work in Sydney, but places like Geelong or Wollongong are the exception. Most of the smaller cities or towns are way too far away for people to commute to work in a major city. So its not really fair to compare us to a country like Germany. 

In 8 hours you can drive from one side of Germany to the other side. In Australia there are so many regional towns that are 10 or 12 hours drive away from the nearest capital city!!


----------



## Bill M (21 June 2020)

Value Hunter said:


> I would say a good general rule of thumb is not to buy anything built this century. Sure properties from the 1970s and 1980s sometimes might have minor issues with minor leakages, inadequate soundproofing, etc but usually its nothing compared to existential structural issues that threaten many newer buildings.



Spot on and I've lived in unit blocks in Sydney most of my life and can vouch for what you have said. Look at all those 3 storey walk ups built in the 1960's, 1970's unit blocks in Dee Why for example. Hundreds upon hundreds of them and they are all still standing strong. There is a 10 storey 60's style block built brick by brick in my area, still standing strong and yet anything built in the last 10 years have got serious problems. 

Why is it so? NSW dipstick Government including the present one that has abolished high rise 7 year building defects insurance on anything over 3 storey high and no Government engineers checking sites. The old private sector certifying private sector works never has and never will work. It's like the wild west, builders can do what they like and get away with it and changing specs along the way. Just the other day I saw 2 aircon installers walk out a non occupied almost finished mid rise unit block, I said looking good, they replied "looks good but **** quality", kind of sums it all up. And still the NSW Government lets them build crap with no consequences. Opal Tower, Mascot Towers anyone? As far as I understand Queensland has the best building code in the country now, with Government inspectors.


----------



## SirRumpole (21 June 2020)

Bill M said:


> Like you say, if they want people to live out of major cities then how about providing the services. God help you if you get an illness that requires travel to Sydney for treatment. Too much for one to cope with on top of their illness. Silly governments, full of ideas but no idea how to action plan them.




It's also about getting highly skilled personnel ie doctors and nurses to move to regional areas.

We have a brand new hospital in my area (Orange) but people I know still had to go to Sydney for treatment because that's where the specialists are.

Country areas have trouble keeping doctors of all types including GP's , mainly I think because of the fear that they will be left alone without sufficient backup and they will never get a break.


----------



## wayneL (21 June 2020)

SirRumpole said:


> It's also about getting highly skilled personnel ie doctors and nurses to move to regional areas.
> 
> We have a brand new hospital in my area (Orange) but people I know still had to go to Sydney for treatment because that's where the specialists are.
> 
> Country areas have trouble keeping doctors of all types including GP's , mainly I think because of the fear that they will be left alone without sufficient backup and they will never get a break.



Wow, and property ain't cheap there either!

Holy Dooley!


----------



## sptrawler (21 June 2020)

SirRumpole said:


> It's also about getting highly skilled personnel ie doctors and nurses to move to regional areas.
> 
> We have a brand new hospital in my area (Orange) but people I know still had to go to Sydney for treatment because that's where the specialists are.
> 
> Country areas have trouble keeping doctors of all types including GP's , mainly I think because of the fear that they will be left alone without sufficient backup and they will never get a break.



Also the investment opportunity and FOMO, drives them to the major cities, that's where the money is.


----------



## sptrawler (21 June 2020)

Bill M said:


> Spot on and I've lived in unit blocks in Sydney most of my life and can vouch for what you have said. Look at all those 3 storey walk ups built in the 1960's, 1970's unit blocks in Dee Why for example. Hundreds upon hundreds of them and they are all still standing strong. There is a 10 storey 60's style block built brick by brick in my area, still standing strong and yet anything built in the last 10 years have got serious problems.
> 
> Why is it so? NSW dipstick Government including the present one that has abolished high rise 7 year building defects insurance on anything over 3 storey high and no Government engineers checking sites. The old private sector certifying private sector works never has and never will work. It's like the wild west, builders can do what they like and get away with it and changing specs along the way. Just the other day I saw 2 aircon installers walk out a non occupied almost finished mid rise unit block, I said looking good, they replied "looks good but **** quality", kind of sums it all up. And still the NSW Government lets them build crap with no consequences. Opal Tower, Mascot Towers anyone? As far as I understand Queensland has the best building code in the country now, with Government inspectors.



I had a second story extension put on the house, it was unbelievable the poor quality tradesmen and complete lack of regard, if I wasn't retired and watching them it would have been a complete disaster.
But it wouldn't have shown up, because most of the dodgy stuff was under the outer coverings, eg a 2.4m window required a lintel strenghening, the steel wasn't there so they just carried on regardless I had to threaten them to get it done post build. 
The bathroom sub tile waterproof membrane the contractor didn't  have any plastic corner molding, so said I will use cardboard, while he was getting his gear ready I drove to bunnings and bought the correct gear.
The builders, pay the subbies crap money, so the subbies just want to get in and out ASAP, if the correct gear isn't there they improvise they don't intend coming back later.
Absolute nightmare, heaven help people who just leave it completely to the builder.


----------



## Dona Ferentes (21 June 2020)

Two factors at play (imo)

1. In the 1990's, there was significant change to building codes. Corporatisation, Deregulation and, even worse, self-regulation occurred. Things were dumbed down.


> Building Code of Australia (*BCA*) is contained within the National Construction Code (*NCC*) and provides the minimum necessary requirements for safety, health, amenity and sustainability in the design and construction of new buildings (and new building work in existing buildings) throughout Australia



States nthen developed their own regulations (it's a Federal system).

2. Also, there's a marked difference between private residences built as one-offs, mostly by sole contractors and subbies, and large scale jobs that have unionised work forces. Not saying one is better than the other.


----------



## Value Collector (21 June 2020)

joeno said:


> Lol if that's your idea of Sydney then you will not like London Oxford Street / London Bridge (in usual times). Agoraphibics nightmare. It makes Sydney look like a vacation town in comparison.




I don't mind visiting London or Sydney for vacation, or short term visits, But I lived in Sydney for 18 years, and having moved away could not imagine choosing to live there again.

Sure there is some beautiful parts of Sydney, its a great town, but for day to day life I prefer to not have to pay a higher cost of living for the benefit of sitting in heavy traffic.


----------



## Value Collector (21 June 2020)

Value Hunter said:


> Value Collector I think you are missing the point that in a lot of smaller countries (I mean smaller in terms of land mass) like Germany or Italy, etc that a lot of these towns are much closer to the major cities.




There is no reason Australia could not develop in that way, you could easily fit more large hubs between Sydney and Brisbane for example that could become cities in themselves.


----------



## Smurf1976 (21 June 2020)

Value Collector said:


> I am not suggesting people have to live in rural areas, there are heaps of nice towns up and down the coast with cheaper property prices.



Trouble is, in the minds of many anywhere that isn't within 20km of the Sydney or Melbourne CBD is "rural" and they want nothing to do with that.

That there's 2.3 million people living in Brisbane, 2 million in Perth and 1.3 million in Adelaide plus about 9 million Australians who aren't living in any of the 5 largest cities is a concept that many just can't grasp it seems.


----------



## Dona Ferentes (21 June 2020)

Value Collector said:


> There is no reason Australia could not develop in that way, you could easily fit more large hubs between Sydney and Brisbane for example that could become cities in themselves.



https://www.abs.gov.au/ausstats/abs@.nsf/Lookup/3222.0main+features72012 (base) to 2101

Adding a Canberra every year, if the (pre Covid) growth continued. 
Does anyone remember the Whitlam era plans, .... Bathurst-Orange, Albury-Wodonga and Monarto?


----------



## qldfrog (21 June 2020)

Toowombah Warwick here in qld 
Driving 1500km north from brisbane and seeing deserted areas with so much more resources in term of water than most of the US all within 1h from the seaside...so not exactly purgatory lifestyle
A road a train line, an hospital and a regional centre and we could move all welfare and pensioner there for s happier life than in shitty metropolitan suburbs.this would be enough to trigger economic poles


----------



## Smurf1976 (21 June 2020)

Value Hunter said:


> There are many small towns in Germany where you can live there and drive 45 minutes to Berlin or Munich or Frankfurt, or Hamburg, etc. So people can live in a smaller city or small town, etc and commute to work in the major cities.




For that matter go to the UK and Leeds, Manchester and Sheffield are all no more than about 70km from each other in a triangle. They're all cities as such, each with a comparable population about 500K each.


----------



## Smurf1976 (21 June 2020)

sptrawler said:


> Shows how fragile our economic model is, the only real jobs are in W.A, North Queensland and S.A,




There's still a few "real" things in Tas by the way.

The Incat shipyard is an obvious one as is the presence of the world's third largest electrolytic zinc smelter. 

Basic point agreed though, just pointing out that technicality. Measured in a straight line I used to live just under 3km from the zinc works.


----------



## SirRumpole (21 June 2020)

Dona Ferentes said:


> https://www.abs.gov.au/ausstats/abs@.nsf/Lookup/3222.0main+features72012 (base) to 2101
> 
> Adding a Canberra every year, if the (pre Covid) growth continued.
> Does anyone remember the Whitlam era plans, .... Bathurst-Orange, Albury-Wodonga and Monarto?




Bathurst-Orange was canned because of lack of viable water supply I believe.

A report of the failure of the BODC for those interested.

https://rune.une.edu.au/web/bitstream/1959.11/12112/9/open/SOURCE04.pdf


----------



## Dona Ferentes (21 June 2020)

SirRumpole said:


> Bathurst-Orange was canned because of lack of viable water supply I believe.



Most places west of the* Great Divide *(the 'cancel crowd' should be on to renaming that one?!!) would find it hard to support anything other than medium sized towns/ cities. Canberra as an entity only got up because of the investigation of water, by surveyor Charles Scrivener in 1908. The Western boundary of the ACT defines the catchment.


----------



## Value Collector (22 June 2020)

Smurf1976 said:


> Trouble is, in the minds of many anywhere that isn't within 20km of the Sydney or Melbourne CBD is "rural" and they want nothing to do with that.




and that’s ok if that’s what they want, but then they shouldn’t complain about prices.


----------



## sptrawler (25 June 2020)

Anyone for a tree change, well not many trees at Mt Magnet, but a few around Morowa.
A lot of cheap housing in rural W.A

https://www.abc.net.au/news/2020-06-25/morawa-fights-rural-decline/12059982

Morowa is about 350klm north of Perth, broad acre farming and bigger machinery has decimated work, in these wheatbelt towns.
Mt Magnet is 540klm north of Perth, mining town was once thriving, now with fifo it is dying.


----------



## sptrawler (7 July 2020)

Well it looks as though the Sydney/Melbourne property, market may get a second wind, as people from Hong Kong relocate their wealth.

https://www.smh.com.au/national/aus...6-p559fp.html?js-chunk-not-found-refresh=true


----------



## Tink (10 July 2020)

In Victoria


----------



## explod (10 July 2020)

Clearance rates tell us little.

Many sellers are reducing prices to meet mortgage stress and tenants not able to pay so clearance goes up.


----------



## silverstar (15 July 2020)

does it mean its not a good time to buy an investment property?


----------



## sptrawler (15 July 2020)

silverstar said:


> does it mean its not a good time to buy an investment property?



I guess that depends on your personal financial position.


----------



## explod (15 July 2020)

silverstar said:


> does it mean its not a good time to buy an investment property?



Not for anyone to give advice but if it was me seeking a property I'd be waiting for awhile.


----------



## jbocker (16 July 2020)

silverstar said:


> does it mean its not a good time to buy an investment property?



It is a good time somewhere, it is a bad time elsewhere.
Location, property price and condition, amenity of the area, ability to obtain and service any required loan, rental or renovator: what will be the rate of return, preparedness to take on the risk, and ability to keep up with interest rates. There is a bucket full of questions to consider and answer.
It is always simultaneously a good time AND a bad time in property investment.

It is a ALWAYS a great time to put something into Investment (not necessarily in property). 
Keep looking, and then doing it.


----------



## sptrawler (22 July 2020)

Well if Mark McGowan gets his was, the price of houses in W.A country towns, may at last show a glimmer of hope.
This is something that should have been done years ago IMO.

https://www.abc.net.au/news/2020-07...-longer-sustainable/12476202?section=business
Councils in Western Australia have thrown their support behind a possible move away from resource companies using interstate fly in, fly out (FIFO) workers.
Today Premier Mark McGowan called on resources companies to employ state-based workers.

"I don't think flying in workers from over east is sustainable any longer," he said.


----------



## jbocker (23 July 2020)

I believe there is an argument to wind back to have more mining towns. FIFO is not an easy lifestyle; neither are some mining towns.  I believe there is a need to develop regional communities and diversify communal existence outside of cities.


----------



## sptrawler (23 July 2020)

jbocker said:


> I believe there is an argument to wind back to have more mining towns. FIFO is not an easy lifestyle; neither are some mining towns.  I believe there is a need to develop regional communities and diversify communal existence outside of cities.



It really has to be done, the only way we can efficiently develop Australia's remote areas, is to provide work there.
To do that, we need to develop industries that value add to the minerals we dig up, it is too inefficient to dig up the minerals transport them down South to process them and then ship them North to the markets.
If we are going to develop a huge hydrogen industry in the North, we need to accept that we need to have people live and work there, flying your workforce of tens of thousands of people 4,000klm every 8 days is not sustainable.
We can't keep going the way we have been doing it the last 20 years, it is crazy and it will end up making Australia a third world country, everyone gets on the band wagon of what are we leaving future generations well digging and shipping leaves nothing.


----------



## basilio (23 July 2020)

sptrawler said:


> It really has to be done, the only way we can efficiently develop Australia's remote areas, is to provide work there.
> To do that, we need to develop industries that value add to the minerals we dig up, it is too inefficient to dig up the minerals transport them down South to process them and then ship them North to the markets.
> If we are going to develop a huge hydrogen industry in the North, we need to accept that we need to have people live and work there, flying your workforce of tens of thousands of people 4,000klm every 8 days is not sustainable.




In theory I agree with you SP. I just wonder how many people will be required to maintain these new industries ? I can see a large work force in the build stage but I'm not sure how many will be required when plants are fully operational.

There are plans to develop huge solar/hydrogen projects up north. One of the concerns however will be the effect of a warming climate  will have on living conditions in far north Australia - in fact many, many regions of Australia. That issue isn't going away and will need to be factored in at some stage.

https://asianrehub.com/
https://www.climatechangeinaustrali...s_page_media/176/CCIA_Australian_cities_1.pdf


----------



## sptrawler (23 July 2020)

basilio said:


> In theory I agree with you SP. I just wonder how many people will be required to maintain these new industries ? I can see a large work force in the build stage but I'm not sure how many will be required when plants are fully operational.
> 
> There are plans to develop huge solar/hydrogen projects up north. One of the concerns however will be the effect of a warming climate  will have on living conditions in far north Australia - in fact many, many regions of Australia. That issue isn't going away and will need to be factored in at some stage.
> 
> ...



I'm not talking about the basic process, I'm talking about processes and industries that can be built that make use of the energy.
Australia will become a third world country, when the easily extracted minerals are depleted, then global warming will have an effect when no one can run a air con. Maybe then they will wake up.
Another way of looking at it is, no one is certain what the effect of global warming will actually be, there is certain degree of assumption.
Everyone knows, what effect having no raw materials to export, will do to Australia's living standards and it is happening every day in larger and larger quantities in the back of trucks.
It is a shame no one seems to worry about that, IMO it will have a much bigger influence on our children than the emissions Australia makes, but no one worries about that while sitting back with their feet up sipping on the chardonay..


----------



## basilio (23 July 2020)

sptrawler said:


> I'm not talking about the basic process, I'm talking about processes and industries that can be built that make use of the energy.
> Australia will become a third world country, when the easily extracted minerals are depleted, then global warming will have an effect when no one can run a air con. Maybe then they will wake up.




Point taken.
Your saying that with the energy and hydrogen from these new projects we should be creating industries that transform raw materials into more finished products. That could be further refinement or full on manufacturing.

My hesitation about the effects of global warming on the climate in Northern Australia still stands. No one wants to talk about this but we are tracking for a situation where living in these areas may not be possible in the medium term future.

It doesn't need to be super, super hot *all* the time to make a place nonviable. Weeks of extreme temperature would be sufficient.


*Climate projections for the Pilbara*
Climate projections show very high confidence for substantial temperature increases to continue in the Pilbara, with the north-west of Western Australia warming more than elsewhere in Australia.

Annual average temperature is projected to increase:

by 2030 a rise of 0.6–1.5°C for all emission scenarios
*by 2090 a rise of 1.5–3.1°C for medium (RCP4.5) and 3.1–5.6°C for high (RCP8.5) emission trajectories.*
Annual rainfall is projected to remain largely unchanged to 2090 and there is high confidence that natural rainfall variability will remain the primary driver of rainfall changes to 2030. There is medium confidence that tropical cyclones will become less frequent in future, but will increase in intensity.

There is high confidence that potential evaporation will increase, but only medium confidence in the magnitude of the change.

https://www.agric.wa.gov.au/climate-change/climate-pilbara-region-western-australia


----------



## jbocker (23 July 2020)

basilio said:


> There are plans to develop huge solar/hydrogen projects up north. One of the concerns however will be the effect of a warming climate will have on living conditions in far north Australia - in fact many, many regions of Australia. That issue isn't going away and will need to be factored in at some stage.



With these abundant sources of energy have *HUGE* discounts to local industries, housing and amenities to promote the regions. There are towns scattered all through the country in dire need of population  work (and water). There needs to be a catalyst to add into the equation VERY CHEAP POWER might be it. Use free sunlight to provide the power for industries and desalination of water.


----------



## sptrawler (23 July 2020)

basilio said:


> Point taken.
> Your saying that with the energy and hydrogen from these new projects we should be creating industries that transform raw materials into more finished products. That could be further refinement or full on manufacturing.
> 
> My hesitation about the effects of global warming on the climate in Northern Australia still stands. No one wants to talk about this but we are tracking for a situation where living in these areas may not be possible in the medium term future.
> ...



Bas you don't need to tell me about how hot it is up North, I lived up there as a kid in the 60's and with my young family in the early 80's, with no air conditioning.
The fact is if Australia stays on the same dig it and ship it trajectory, they wont be affluent enough to do anything about climate change, they will be too busy worrying about where their food is going to come from like most other third world countries.
We talk about how the middle East will be in trouble when oil runs out, well in reality we have the same fate, it is just we don't talk about it.
https://www.abc.net.au/news/2020-07...-to-australian-manufacturing-revival/12481568
From the article:
_Australia only produces two thirds of the amount of manufactured goods it consumes while most developed nations produce excess.

Manufacturing as a percentage of GDP has fallen from almost 30 per cent in the 1950s and 60s to just under 6 per cent last year_.


----------



## basilio (23 July 2020)

sptrawler said:


> Bas you don't need to tell me about how hot it is up North, I lived up there as a kid in the 60's and with my young family in the early 80's, with no air conditioning.




Clearly SP you know how hot it was 30 years ago.  Stinking hot for sure from the trips I took.
Well it can and all understandings will get hotter still.
There is a point where plants ,animals and people can't survive..


----------



## sptrawler (23 July 2020)

basilio said:


> There is a point where plants ,animals and people can't survive..



Yes there is and it isn't all related to climate change.


----------



## SirRumpole (18 August 2020)

One view on the housing market.

https://theconversation.com/when-ho...an-house-prices-and-how-to-get-it-back-144076

_"Broadening annual land value taxes to primary residences as well as investors housing would be part of the change, introduced at a low initial rate and with options for delayed payment or borrowing against future sales for those on low incomes."
_
Stuff that for a joke, these are already in place and are  called council rates.


----------



## sptrawler (19 August 2020)

sptrawler said:


> Well if Mark McGowan gets his was, the price of houses in W.A country towns, may at last show a glimmer of hope.
> This is something that should have been done years ago IMO.
> 
> https://www.abc.net.au/news/2020-07...-longer-sustainable/12476202?section=business
> ...



At last a company with some sense, all workers will be local based, no FIFO.

https://www.abc.net.au/news/2020-08-19/no-fifo-workers-at-new-pilbara-urea-plant/12570494
What a great move IMO.
Very hard to build a bigger better Australia, when you aren't building anything, just flying people in and out from capital cities.
How do you start communities, apprenticeships, local jobs, local industries, if you don't have locals?
FIFO, Australia, raping Australia IMO.


----------



## SirRumpole (22 August 2020)

Is the true state of the property market being covered up ?

https://www.abc.net.au/news/2020-08...g-internal-tensions/12584112?section=politics


----------



## over9k (22 August 2020)

Property prices where?

There's a LOT of boomers getting ready to GTFO of the hellscape that the cities have become. I can't say I blame them. Sell your three bedroom ensuiteless unit for a lazy million, move to the country, buy a palace, live the livestyle... 

Even gen Y'ers are all either planning to leave the cities or already have. I know a sum total of one couple that's stayed in sydney and not intending to leave at some point. One. 

There's even that series "escape to the country" running on ABC now, and we actually have interstate/intrastate migration patterns to show how people are moving. 

Like London, if not for the migration, a lot of populations would actually be in decline.


----------



## wayneL (22 August 2020)

TBH. Whatever the RE market does, it will take at least two or three years to play out. 

To expect a trajectory now with all the government distortion present is a bit foolish IMO. 

I expect substantially down, to a greater or lesser degree depending on local factors, but I guess that depends on what continues to happen on a central bank level.


----------



## wayneL (22 August 2020)

over9k said:


> Property prices where?
> 
> There's a LOT of boomers getting ready to GTFO of the hellscape that the cities have become. I can't say I blame them. Sell your three bedroom ensuiteless unit for a lazy million, move to the country, buy a palace, live the livestyle...
> 
> ...



Yep.

I'm on Brisbane semi rural outskirts.... and I want to get further away from the lunacy too.

I'm thinking Margaret River, growing dreads and making pottery and hemp cloths or something like that


----------



## IFocus (22 August 2020)

wayneL said:


> Yep.
> 
> I'm on Brisbane semi rural outskirts.... and I want to get further away from the lunacy too.
> 
> *I'm thinking Margaret River, growing dreads and making pottery and hemp cloths or something like that*




I used to be a rate payer down there, a lot of my mates are still there, they mad rabbit lefties 

It has changed some what with the FIFO but still has some charm I guess.


----------



## Garpal Gumnut (22 August 2020)

@wayneL @IFocus . The downturn in Australian immigration due to travel bans worldwide will affect the housing market in the larger cities certainly. Rural and regional areas will see an increase in sales, but I believe there is a huge hidden backlog in those properties, so prices may not increase so much in places such as Margaret River.

While many years ago I was a great believer in Mining and FIFO to regenerate the North and West, I am aware of the social, in particular substance use problems attendant on the mining boom. In retrospect I would now oppose it. One needs to be careful one's only neighbour for 100 acres is not Stephen Bannon re-arranging his jacuzzi room. 

gg


----------



## over9k (22 August 2020)

wayneL said:


> Yep.
> 
> I'm on Brisbane semi rural outskirts.... and I want to get further away from the lunacy too.
> 
> I'm thinking Margaret River, growing dreads and making pottery and hemp cloths or something like that



Depends on the state for me. 

If I lived in melbourne, it'd be gippsland or yarra valley (I haven't been out as far as sale etc yet but want to take a look), if I lived in sydney it'd be wollongong if I was going to live on the coast or if I just went inland it'd be to dubbo, if I lived in brisbane it'd be further north to airlie beach or something like that (or maybe somewhere around the sunshine coast) or toowoomba way if I went inland. 

Nowhere reaaally stood out to me when I lived in adelaide and I haven't lived in perth yet but there's a lot of coastline between broome & fremantle so I'm sure there'd be somewhere nice to find.

Tell you one place that a LOT of boomers are moving to though: Tasmania. My parents live there now and the amount of retirement villages, interstate retired boomers buying vacant blocks and building on them and so forth is beyond belief. That was another one that the ABC actually did a whole series on (tasmania booming property market, population growth etc etc). 

There isn't much of tasmania that isn't absolutely gorgeous/the perfect place to retire though so I can't say I blame them. My parents have made friends with an interstate couple and apparently all of their still-interstate friends are all seriously thinking about moving down as well.


----------



## wayneL (22 August 2020)

over9k said:


> Depends on the state for me.
> 
> If I lived in melbourne, it'd be gippsland or yarra valley (I haven't been out as far as sale etc yet but want to take a look), if I lived in sydney it'd be wollongong if I was going to live on the coast or if I just went inland it'd be to dubbo, if I lived in brisbane it'd be further north to airlie beach or something like that (or maybe somewhere around the sunshine coast) or toowoomba way if I went inland.
> 
> ...



I've lost 5 clients to Tasmania in the last 12 months and none were actually boomers. Several others are talking about it. So yeah. RE aint cheap down there anymore though.

Perth...  Heading north head gets hot and bloody windy, the south-west is cool and pleasant. Not including Margaret River there are some really really nice spots.

Qld.... I actually quite like the sunshine coast. You can keep Toowoomba,although there are still some and pleasant aspects of it, I think it's going downhill... fast.


----------



## over9k (24 August 2020)

wayneL said:


> I've lost 5 clients to Tasmania in the last 12 months and none were actually boomers. Several others are talking about it. So yeah. RE aint cheap down there anymore though.
> 
> Perth...  Heading north head gets hot and bloody windy, the south-west is cool and pleasant. Not including Margaret River there are some really really nice spots.
> 
> Qld.... I actually quite like the sunshine coast. You can keep Toowoomba,although there are still some and pleasant aspects of it, I think it's going downhill... fast.



Yeah I'm with you RE: toowoomba a bit. I just meant as a country vs coast kind of thing.

Hobart's only the same price as adelaide, so hardly expensive. Key difference is that hobart has 1/5th of the population, so you can literally live in a country town and still not even be as far out as adelaide's outskirts, let alone melbourne or sydney.

Those people that live 60-90 minutes commute from work are absolutely insane IMO. And not even from a time perspective, you look at travel costs vs just paying a bit extra rent to live closer and you quickly realise you're adding 10 hours of commuting to save like $50/week in rent.

Melbourne's outer suburbs like pakenham (which literally used to be a country town and is now a suburb) are the equivalent of oatlands to hobart in tasmania. It's just insane.

But with the rise of work-from-home meaning that even once coronavirus is over people will not be returning to full time office work (probably only going back in for the odd client meeting etc) I can see a lot more people moving waaay out and just dealing with the long commute to work when it's only once a fortnight or something.

Hell, you could even live in a different state and just fly in if you absolutely had to. 

The times are a-changin'.


----------



## wayneL (24 August 2020)

over9k said:


> Yeah I'm with you RE: toowoomba a bit. I just meant as a country vs coast kind of thing.
> 
> Hobart's only the same price as adelaide, so hardly expensive. Key difference is that hobart has 1/5th of the population, so you can literally live in a country town and still not even be as far out as adelaide's outskirts, let alone melbourne or sydney.
> 
> ...



Tell you what, if I didn't have to take a 50%  realisable income cut, I'd seriously consider looking at Tas and coast into retirement. Hobart seems like a nice sized city.


----------



## over9k (24 August 2020)

It's lovely. It's sooooo relaxed. But yes, work is thin on the ground there and being a small place it works on connections. Unless you have some kind of nepotistic ticket into the public service (which earns nationally standardised wages, so you'd get the same salary in hobart as you would in sydney if you can find the same position as being a state it has to have all those publicly funded bodies and institutions that a state does) then you're going to have to take a serious income cut. 

Source: I grew up there. 

I left years ago, but still visit the family pretty frequently.


----------



## wayneL (24 August 2020)

There is actually plenty of work for my trade there, they are desperate for someone with my skills. However it's a funny game in that certain areas have formulated what they think should be a maximum price. 

That price is about 2/3 if what is here in Queensland and overheads and material costs slightly higher. I would say most trades would be similar and with what you say about other jobs, that's what makes me question the real estate prices there.

Still, would love to check it out one day.


----------



## over9k (24 August 2020)

If you're serious, send me a PM. I can show you around once coronavirus is over as I'll obviously be flying down to see the old farts as soon as I'm actually able to.


----------



## SirRumpole (26 August 2020)

The urban exodus continues.

https://www.abc.net.au/news/2020-08...rty-markets-covid-urban-tree-changer/12541598


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## over9k (26 August 2020)

SirRumpole said:


> The urban exodus continues.
> 
> https://www.abc.net.au/news/2020-08...rty-markets-covid-urban-tree-changer/12541598




"CoreLogic's Eliza Owen thinks regional markets will benefit in the long term from the normalisation of remote working."

Nahhhhh... you think?


----------



## againsthegrain (29 August 2020)

over9k said:


> "CoreLogic's Eliza Owen thinks regional markets will benefit in the long term from the normalisation of remote working."
> 
> Nahhhhh... you think?




- A single millenial moving to the country for the same price as outer suburb ~40km from melb cbd

- 600k must of had a ~300K deposit (was renting previously so nothing to sell)

Spruiking regional re much?


----------



## Smurf1976 (29 August 2020)

over9k said:


> Even gen Y'ers are all either planning to leave the cities or already have. I know a sum total of one couple that's stayed in sydney and not intending to leave at some point. One.




Much the same here. Sydney seems better if you don't need to worry too much about money.

One couple I know moved there, hated it, gone within two years. They were renting an apartment.

Only couple I know who've been there a long time, 20 years now, aren't too worried about money. They're a fair way out by choice, it's ~30km or so by road to the CBD area, but nice big block with trees in the backyard and so on. 

The entrepreneurial one of the two just bought a business by the way. Price paid for the business would best be described as "fire sale" on account of the pandemic and effects thereof.


----------



## sptrawler (29 August 2020)

Well my brother in law is the state manager of a large company, I dont see him a lot but met last week.
I asked how the company was coping with the virus, he said remote meetings were the way they are going to continue, it has highlighted how much time is wasted flying people to attend meetings.
So from that I would guess a lot of people are going to relocate, to where they want to live, rather than proximity to head office.


----------



## sptrawler (17 November 2020)

NSW to phase out stamp duty:








						NSW to phase out stamp duty
					

That’s a saving of around $34,000 on the median Sydney property.




					au.yahoo.com
				



From the article:

_Perrottet said stamp duty will now be optional, with buyers given the option between paying a large property tax upfront or a smaller annual land tax on new property transactions. The state government estimates the policy shift will add $11 billion to NSW’s economy over four years.

The tax would be set at a fixed rate, in addition to a rate applied to the unimproved land value. And, once the property becomes subject to the new tax, future owners will also pay the tax.

Owner-occupied homes would attract a lower rate of tax than investment properties, but Perrottet said there would also be protections against landlords subsequently hiking rental rates.

The Treasurer said the state’s centuries’ old stamp duty structure needed an update, but the state government will consult with the community on its proposed model until March_.

_Those who have already bought a home and who have already paid stamp duty on the purchase will not be impacted by the new plan_.


----------



## over9k (18 November 2020)

"NSW politicians raise the prices of their investment properties by the cost of stamp duty"


----------



## qldfrog (18 November 2020)

sptrawler said:


> NSW to phase out stamp duty:
> 
> 
> 
> ...



Slowly we inch as someone would say..
So let's explain it in the context of the big reset
Overal increase of taxation , link to social policies so ultimately state controlled rent orice fixing.
Public housing paid directly by private funds with returns decided by government.what can go wrong..the inevitable creeping march of socialism.we are just 20y behind my birth country and aiming to reproduce its successful harmonious economy and social peace..
Irony..just in case😊


----------



## over9k (18 November 2020)

Yes, there's some very ugly stuff brewing in europe at the moment frog


----------



## moXJO (9 December 2020)

Talked to a friend that's been in the real estate game forever. Reckons they have never been busier


----------



## satanoperca (9 December 2020)

They are flying, and not because our economy is doing great.
$300B + dumped into the Economy by govnuts and


----------



## over9k (9 December 2020)

Exactly. Hence why whenever anyone bangs on about inflation, I just laugh. 

The question is not whether we're seeing inflation, the question is whose inflation?


----------



## moXJO (9 December 2020)

It seems like I'm waiting on a bust that is never going to come. We have been talking of deep structural problems with the economy for years. Now we can add China to the list.


----------



## sptrawler (9 December 2020)

over9k said:


> Exactly. Hence why whenever anyone bangs on about inflation, I just laugh.
> 
> The question is not whether we're seeing inflation, the question is whose inflation?



Very true, inflation can manifest itself in many ways, one is the price of goods going up, another is the buying power of your money going down, another is disposable income changes in the form of statutory charges and non discretionary costs.


----------



## satanoperca (9 December 2020)

moXJO said:


> It seems like I'm waiting on a bust that is never going to come. We have been talking of deep structural problems with the economy for years. Now we can add China to the list.



Patience. Just look at the history of Japan, we are following the same path.


----------



## againsthegrain (9 December 2020)

satanoperca said:


> Patience. Just look at the history of Japan, we are following the same path.




You have to be right eventually, keep betting 1 chip on 0 and the ball will eventually land there


----------



## satanoperca (9 December 2020)

againsthegrain said:


> You have to be right eventually, keep betting 1 chip on 0 and the ball will eventually land there



I don't bet. I calculate risk


----------



## over9k (9 December 2020)

We should have had financial pain years ago. Problem is, the powers that be keep kicking the can down the road trying to avoid it because no politician wants to be the one that "had the economy go bad on their watch" or words to that effect.

None of it should have ever been set in motion in the first place, but people at the time voted for it and are now trying to make everyone else pay the piper.

The result is that nothing gets done about it, so it just gets forestalled to be even worse in the future/for someone else to deal with. The people who have done it will never be held responsible. Never. 

Fact is there really isn't much ammo left to fight this thing and it couldn't have happened at a worse time. I've said this before and I'll say it again: The economics isn't the concern, it's what the politicians are going to do (or not do) that has me worried.


----------



## satanoperca (9 December 2020)

over9k said:


> We should have had financial pain years ago. Problem is, the powers that be keep kicking the can down the road trying to avoid it because no politician wants to be the one that "had the economy go bad on their watch" or words to that effect.
> 
> None of it should have ever been set in motion in the first place, but people at the time voted for it and are now trying to make everyone else pay the piper.
> 
> The result is that nothing gets done about it, so it just gets forestalled to be even worse in the future/for someone else to deal with. The people who have done it will never be held responsible. Never.




You are 100% correct, those responsible will never be held to account, but all dam walls break when they are made out of straw.

2% interest rates on home loans, can we take (auction) 1%. No. what we can do is rack up more debt. I believe in the long term one man might be correct - Steven Keen.


----------



## over9k (9 December 2020)

moXJO said:


> It seems like I'm waiting on a bust that is never going to come. We have been talking of deep structural problems with the economy for years. Now we can add China to the list.



Debt is your smoking gun here moxjo. The moment that starts to get paid down is the moment everything goes to ****. 

I am not taking the piss when I say that the last 20 _years _of economic "growth" has been funded by debt. Subtract the debt from it, and there's been almost no economic growth at all.


----------



## satanoperca (9 December 2020)

And to add to my stance, shelter should be for Australians and no one else as all Australians need it.
It is an essential part of creating a great community and society and should not be sold out.


----------



## againsthegrain (9 December 2020)

satanoperca said:


> And to add to my stance, shelter should be for Australians and no one else as all Australians need it.
> It is an essential part of creating a great community and society and should not be sold out.



nor used as a vehicle for financial speculation


----------



## satanoperca (9 December 2020)

over9k said:


> Debt is your smoking gun here moxjo. The moment that starts to get paid down is the moment everything goes to ****.
> 
> I am not taking the piss when I say that the last 20 _years _of economic "growth" has been funded by debt. Subtract the debt from it, and there's been almost no economic growth at all.




You can switch the other way around, when everyone cannot pay it down it all goes to ****.

Or when everyone realises they have been taken for a ride by the central banks, it all goes to ****.

Or when 30% of the Australian population, retirees who worked hard and saved, cannot get a return on their hard-earned capital, <1% on term deposits and ask for the pension (which will not exist in 10 years time), the grey nomads might rise up and give ***** to those that cannot be held responsible.

Or we can simply hang the central bankers.


----------



## over9k (9 December 2020)

Everyone knows that unless you have an investment property for your retirement, you're f***ed. They have _been _people's retirement plans. Investment properties have absolutely smoked super returns. Why do you think the powers that be won't let prices fall?

The other one is dodging income taxes by salary sacrificing into super. You don't need a decent rate of return when you're already dodging 30% or so worth of income tax - that's your return right there.


----------



## sptrawler (9 December 2020)

over9k said:


> We should have had financial pain years ago. Problem is, the powers that be keep kicking the can down the road trying to avoid it because no politician wants to be the one that "had the economy go bad on their watch" or words to that effect.
> 
> None of it should have ever been set in motion in the first place, but people at the time voted for it and are now trying to make everyone else pay the piper.
> 
> ...



Spot on, this started in the 1970's, accelerated in the 1990's and has been out of control since 2000's.
We had a speed hump with the GFC, but this latest splurge has really sucked the credibility tank dry. IMO
Something has to happen, who knows, what it will be?
But lifting 1.4 billion out of poverty, from a given pot of money, while maintaining first world living standards, doesn't add up.
As we are finding out.
Just my opinion.


----------



## againsthegrain (9 December 2020)

sptrawler said:


> Spot on, this started in the 1970's, accelerated in the 1990's and has been out of control since 2000's.
> We had a speed hump with the GFC, but this latest splurge has really sucked the credibility tank dry. IMO
> Something has to happen, who knows, what it will be?
> But lifting 1.4 billion out of poverty, from a given pot of money, while maintaining first world living standards, doesn't add up.
> ...




There is only so many Millions a house can be worth and as close to 0% interest rates can be before physically you cannot borrow that much and repay it in a lifetime.

As said before we are slowly approaching a brick wall, the mainstream population seems to think we are still on course to the moon and beyond however nobody can explain the fundamentals behind this. 

Interesting times to watch from the sidelines


----------



## over9k (9 December 2020)

againsthegrain said:


> There is only so many Millions a house can be worth and as close to 0% interest rates can be before physically you cannot borrow that much and repay it in a lifetime.
> 
> As said before we are slowly approaching a brick wall, the mainstream population seems to think we are still on course to the moon and beyond however nobody can explain the fundamentals behind this.
> 
> Interesting times to watch from the sidelines



Exactly right. Interest rates are nothing but a throttle on house prices. If you halve the interest rate, people can borrow twice as much. It really is that simple. 

And in case you haven't noticed, house prices aren't even considered in the inflation basket.


----------



## moXJO (9 December 2020)

People on $1500 a week keep telling me they don't know where the money goes and its not enough to cover bills. 

We also were apparently in a recession. Funny that a lot had one of the best years ever. Or so they tell me. We can't even do recession right anymore. 

Shouldn't complain, but I do wonder what happens when we run out of stimulus. The current predicament with China is bigger then they are letting on. I have no doubt China knows this as well, if it wasn't planned years ago.


----------



## againsthegrain (9 December 2020)

moXJO said:


> People on $1500 a week keep telling me they don't know where the money goes and its not enough to cover bills.
> 
> We also were apparently in a recession. Funny that a lot had one of the best years ever. Or so they tell me. We can't even do recession right anymore.
> 
> Shouldn't complain, but I do wonder what happens when we run out of stimulus. The current predicament with China is bigger then they are letting on. I have no doubt China knows this as well, if it wasn't planned years ago.




The magic hat where the bunny is pulled from seems to be bottomless and we the audience keep waiting with anticipation what comes out next. 

Back when first home owner grants were given prices were alot lower, rates alot higher...  alot of bunnies could be pulled. 

Now not much room on either front,  a 10k or even 20k grant on a 1m+ property is not much of a diff,  banks need profits too so they can't follow rba all the way to the bottom and give mortgages for free.

I am waiting on something totally left field here next.


----------



## over9k (9 December 2020)

The next step will be negative rates and/or money printing. And immigration like we've never seen before.


----------



## againsthegrain (9 December 2020)

over9k said:


> The next step will be negative rates and/or money printing. And immigration like we've never seen before.




With so much vested interest and bad stimulus money sunk after bad money there will be no other way out,  who wants to be the guy in history who will be remembered as raising the white flag?

The more logically I try to approach it the more illogical the whole situation gets,  can't stop digging on better to dig deeper then stop.

How will it ever be possible to bring rates up if average mortgage size is 1M and a .25pc move wipes out large numbers of population?

I guess this will be a worldwide phenomenon, but what if what if rates around start going up and we can't follow?

Do we became the global safe heaven for the worlds elites?  All the rich from India and China bail out the market and live in the safest "covid free zone" while the locals became their workforce?

No scenario ends up looking good


----------



## sptrawler (9 December 2020)

againsthegrain said:


> With so much vested interest and bad stimulus money sunk after bad money there will be no other way out,  who wants to be the guy in history who will be remembered as raising the white flag?
> 
> The more logically I try to approach it the more illogical the whole situation gets,  can't stop digging on better to dig deeper then stop.
> 
> ...



You have to remember, those $1m mortgages are mainly centered around Sydney, Melbourne, we don't dig a lot of raw materials up there or grow a lot of produce there.
They are full of people in the service industries, trying to make money by selling a house for more than they bought it for, in most other capitals and country areas people have more moderate mortgages to just provide them shelter.
So I guess from a housing perspective, there are really only two issues, or should I say two problem areas.
I would also add to that, I bet the smart money, is selling up and moving elsewhere ATM.


----------



## againsthegrain (9 December 2020)

sptrawler said:


> You have to remember, those $1m mortgages are mainly centered around Sydney, Melbourne, we don't dig a lot of raw materials up there or grow a lot of produce there.
> They are full of people in the service industries, trying to make money by selling a house for more than they bought it for, in most other capitals and country areas people have more moderate mortgages to just provide them shelter.
> So I guess from a housing perspective, there are really only two issues, or should I say two problem areas.
> I would also add to that, I bet the smart money, is selling up and moving elsewhere ATM.




This is a fair point, however on the flip side those 2 cities have 10m population together so 1/3 of Aus,  this is a large chunk of people that are the no1 protected species atm


----------



## sptrawler (9 December 2020)

againsthegrain said:


> This is a fair point, however on the flip side those 2 cities have 10m population together so 1/3 of Aus,  this is a large chunk of people that are the no1 protected species atm



Were a protected species, pre the stop on immigration, pre the banking RC and the Chinese issue that is currently unfolding.
Parents of O/S students, would have been a big influence, on the market. 
Banks lending to support the ponzi scheme, will be a bit gun shy after the government enforced repayment and foreclosure freeze, their sphincters will only just be releasing and they wont be too keen on throwing money out the door for a while IMO.
Just my thoughts.


----------



## moXJO (9 December 2020)

People are flooding out of Sydney, or so I'm being told be RE agents. 
The other thing is rates get ratcheted up with all these rises. You add this to all the other leech costs and it looks even more painful. 

All these govt "costs" can't just keep heading up.


----------



## againsthegrain (9 December 2020)

sptrawler said:


> Were a protected species, pre the stop on immigration, pre the banking RC and the Chinese issue that is currently unfolding.
> Parents of O/S students, would have been a big influence, on the market.
> Banks lending to support the ponzi scheme, will be a bit gun shy after the government enforced repayment and foreclosure freeze, their sphincters will only just be releasing and they wont be too keen on throwing money out the door for a while IMO.
> Just my thoughts.




I am on the same page as you,  would like to see this and balance restored.  Just became a pessimist over the years being a sideline spectator.  Btw im born in the 80s and live in Melbourne,  totally lost trust in the govt a long time ago


----------



## sptrawler (9 December 2020)

The problem Australia has and I might sound like a dick, but it is running out of easy ways to make money, welfare is good so taxation is high, so wages have to be high.
From the 1990's through to now wages accelerated, but also as wages rose quickly so did what people could pay for a house and the merry go round started. Then Federal and State Governments started making money hand over fist from property related taxes be it GST, wages or stamp duty etc.
No point in re going over what has already been said, but Australia is running out of ways to make easy money, IMO either Sydney and Melbourne have a bust or everyone will suffer.
We really are at the point of robbing Peter, to pay Paul, somebody has to pay to maintain the status quo.
The elastic band is stretched as far as it can go ATM and unless some structural changes are made, it will come back hard and hit some sector of society very hard.
My guess is death duties or similar on the PPR >$1m, that will deflate the Sydney, Melbourne prices.
Just my thoughts.


----------



## over9k (9 December 2020)

Yeah if not for the immigration the population would actually be in decline. Same with london, california, everywhere migrants stream in, the locals leave. 

Which only makes the powers that be bring in even more people in an attempt to keep demand propped up.


----------



## sptrawler (9 December 2020)

over9k said:


> Yeah if not for the immigration the population would actually be in decline. Same with london, california, everywhere migrants stream in, the locals leave.
> 
> Which only makes the powers that be bring in even more people in an attempt to keep demand propped up.



The other thing with migrants, they are either wealthy or prepared to work together as a family unit, that enables them to break into markets Australians can't.
The Australian psyche is to paddle your own canoe, whereas Asian and subcontinent cultures work as family units and three generations may work together, to build an asset base.
It has all come to screaming halt with the virus, but whether the Government wants to return to that model will be interesting.
I personally think it has skewed Australian society too much, as immigration has focused on living in Sydney/Melbourne, that is because the capital gains there make rapid wealth gain possible. Also coming from poorer countries they are very attuned to opportunity and are  entrepreneurial .
One thing for sure, the Government departments do modelling and they know what is going on, they just have to decide if it is worth it, in the long run.
Just my thoughts.


----------



## Smurf1976 (10 December 2020)

moXJO said:


> Talked to a friend that's been in the real estate game forever. Reckons they have never been busier



House near me had the for sale sign up on Friday last week and an open house on Sunday.

I'm told there was a building inspector there yesterday (Wednesday) so presumably they've got at least one offer just like that.

Places seem to be selling quickly.


----------



## moXJO (10 December 2020)

Smurf1976 said:


> House near me had the for sale sign up on Friday last week and an open house on Sunday.
> 
> I'm told there was a building inspector there yesterday (Wednesday) so presumably they've got at least one offer just like that.
> 
> Places seem to be selling quickly.



Its crazy. A couple weeks of slowdown if that. 

Reminds me of when Rudd's stimulus went through. I only briefly bet on "bear" these days.
Watching stimulus wash through back in the gfc was a real education.


----------



## satanoperca (10 December 2020)

moXJO said:


> Its crazy. A couple weeks of slowdown if that.
> 
> Reminds me of when Rudd's stimulus went through. I only briefly bet on "bear" these days.
> Watching stimulus wash through back in the gfc was a real education.



I agree.

If you had $10M to invest, where would you put it?
Shares some.
Bank deposits, hmmm risky and no return.
Property - YES
A business venture - need to have big balls


----------



## wayneL (10 December 2020)

satanoperca said:


> I agree.
> 
> If you had $10M to invest, where would you put it?
> Shares some.
> ...



And this encapsulates precisely what is wrong in our economy and why we should do a little bit more long term thinking about where we should put our hard-earned.

for now and probably for the foreseeable future your assessment I think is absolutely correct, but is it sustainable? 

For some indeterminate period of time I think it is sustainable but at some point it won't be. The question is when and can one be financially nimble and forward-thinking enough to make the changes at the right time? (Lay opinion only of course)

As as we have consistently seen, forecasting is a mugs game.... nobody can do it effectively, unless by luck... And I think it is at demonstrable fact about our government will chuck the kitchen sink at popping up the real estate market

But can the hallucinogen of easy and cheap money from Central Banks be maintained? What ifwns  things change? But if interest rates start cranking up?

What happens in ”The Reset"?


----------



## satanoperca (10 December 2020)

wayneL said:


> And this encapsulates precisely what is wrong in our economy and why we should do a little bit more long term thinking about where we should put our hard-earned.
> 
> for now and probably for the foreseeable future your assessment I think is absolutely correct, but is it sustainable?
> 
> ...




In short, not it is not sustainable (for how long is the question for investors), but I am not in control and few choose to listen or understand.


----------



## over9k (10 December 2020)

Cross-post:




Just in case anyone needed any clarity.


----------



## Smurf1976 (10 December 2020)

Smurf1976 said:


> House near me had the for sale sign up on Friday last week and an open house on Sunday.
> 
> I'm told there was a building inspector there yesterday (Wednesday) so presumably they've got at least one offer just like that.
> 
> Places seem to be selling quickly.



Walked past it a short time ago - SOLD sticker is on the sign.

So realistically it sold at the first open. Everything beyond that would be just time to formally accept the offer, get the building and pest inspection done and so on but it would presumably have been sold as such at the first opportunity anyone had to look at it.


----------



## satanoperca (10 December 2020)

over9k said:


> Cross-post:
> 
> View attachment 116151
> 
> ...



Being simple, as I am, so what that chart states, is money I have to work for and save, is worth less than what I worked for, given inflation and other inputs.

So soon I will not have to run a business, I simply will have to borrow money and those that I borrow off, will pay me for contracted with them that I will pay the money back at some time in the future, the original amount that will be worth less than the borrowed amount.

We live in one f----kd up world.


----------



## againsthegrain (10 December 2020)

satanoperca said:


> Being simple, as I am, so what that chart states, is money I have to work for and save, is worth less than what I worked for, given inflation and other inputs.
> 
> So soon I will not have to run a business, I simply will have to borrow money and those that I borrow off, will pay me for contracted with them that I will pay the money back at some time in the future, the original amount that will be worth less than the borrowed amount.
> 
> We live in one f----kd up world.


----------



## sptrawler (10 December 2020)

What the crucial figure will be, is what percentage are investment purchases and what is for ppr.
Buying an investment property, on the hope you will rent it to someone who isnt on jobseeker or jobkeeper, is brave investing, but the borrowed money is cheap.
That leads to the question how much do you have to borrow to make it tax effective, the other option of course is to hope on a capital gain.
Shares paying 4%, with franking take some beating ATM.


----------



## Garpal Gumnut (10 December 2020)

I am resting in the Northern Rivers of NSW and Coolangatta.

It is a good time to be selling RE. The agents are often just asking for expressions of interest as the prices rise daily and buyers are flying in to Cooly Airport with wads of money from Melbourne.

Gawd help them when the bank foreclosures begin in April and mortgagee in possession sales begin. Locals in the know expect a 20% drop.

gg


----------



## Smurf1976 (10 December 2020)

sptrawler said:


> Buying an investment property, on the hope you will rent it to someone who isnt on jobseeker or jobkeeper, is brave investing, but the borrowed money is cheap.



For many I think the problem is lack of perceived alternatives.

In the past someone could put their money in any bank and receive decent interest. That option is now not simply reduced but as of 2020 it's gone completely or at least gone so far as being of any use is concerned.

Go back to the 1980's and there was also the option of handing your money over to Australian National (the railways), the various water authorities, Telecom, the SECV etc. They'd all gladly take your term deposit, pay you interest at rates higher than the banks and repayment of your capital was government guaranteed. For those not aware, that's how rather a lot of infrastructure was funded in the past. Government-backed authorities borrowed directly from the public and did so very openly.

For the mainstream that leaves shares and houses so no surprise to see plenty of money flowing into both.


----------



## over9k (11 December 2020)

sptrawler said:


> What the crucial figure will be, is what percentage are investment purchases and what is for ppr.
> Buying an investment property, on the hope you will rent it to someone who isnt on jobseeker or jobkeeper, is brave investing, but the borrowed money is cheap.
> That leads to the question how much do you have to borrow to make it tax effective, the other option of course is to hope on a capital gain.
> Shares paying 4%, with franking take some beating ATM.



renting has been well below mortgage yield for years. it's pure capital gain (speculation) making up the difference.


----------



## over9k (11 December 2020)

againsthegrain said:


> View attachment 116158



This post is so, so, so wrong.



The money should look like this:


----------



## wayneL (11 December 2020)

over9k said:


> This post is so, so, so wrong.
> 
> 
> 
> ...



Give it (a little) time.


----------



## over9k (11 December 2020)

The irony is that a bit (a bit) of money supply inflation is exactly what we need to ease the debt burden.


----------



## sptrawler (11 December 2020)

The problem is, as a self funded retiree, it is the last thing I want.


----------



## over9k (11 December 2020)

Hence why neither it nor a reduction in house prices will ever happen - the boomers have spent their entire lives voting to benefit themselves and **** the consequences/who has to pay for it and that sure isn't going to stop now.


----------



## satanoperca (11 December 2020)

over9k said:


> Hence why neither it nor a reduction in house prices will ever happen



Wouldn't bet on a house of cards.

Record low IR's
Record high debt to GDP
Govnuts up to their eyeballs
Wage growth in reverse
Trade war with our biggest trading partner
Retirees running low on funds
2 Entitled generations
The slow death of Democracy
A CPI Index that is out of touch
CB banks that are just trying to cover their arses with outdated models of economics
Hope those little green men will come down and show us who is who.


----------



## over9k (11 December 2020)

I'll see your 10 points of government irresponsibility and raise you one printy boi:


----------



## sptrawler (11 December 2020)

over9k said:


> Hence why neither it nor a reduction in house prices will ever happen - the boomers have spent their entire lives voting to benefit themselves and **** the consequences/who has to pay for it and that sure isn't going to stop now.



That is a bit nasty and sounds like woe is me, why don't you man up take a spoon of cement get off your butt and go to where the money is, or maybe where the hard work is.
Rather than bitching about missing out on the Sydney - Melbourne gravy train, some of us live in areas that have gone down in value, grow a pair and get over yourself.
Mate I have worked bloody hard all my life and I now have sold a bloody good house to help my kids and my grandkids so don't shove that $hit in my face.


----------



## over9k (11 December 2020)

sptrawler said:


> That is a bit nasty and sounds like woe is me, why don't you man up take a spoon of cement get off your butt and go to where the money is, or maybe where the hard work is.
> Mate I have worked bloody hard all my life and I now have sold a bloody good house to help my kids and my grandkids so don't shove that $hit in my face.



That's not exactly typical of your generation though. It wasn't a personal dig at you. Fact is that housing "investment" is zero sum and thus by definition is a wealth transfer.

What I was saying is that too many boomers own investment properties for the powers that be to ever let prices fall. When an entire generation's retirement prosperity is literally dependent on how much house prices increase, the second anyone goes near housing is the second they lose an election in a landslide.


----------



## satanoperca (11 December 2020)

sptrawler said:


> That is a bit nasty and sounds like woe is me, why don't you man up take a spoon of cement get off your butt and go to where the money is, or maybe where the hard work is.
> Mate I have worked bloody hard all my life and I now have sold a bloody good house to help my kids and my grandkids so don't shove that $hit in my face.



Leave it Sptrawler, my parents worked very hard all their lives, they were granted some benefits of property increases, but as retirees, living of fvsavings they are being royally screwed by low IR's, the younger generations, think the boomers had it easy, all generations have and will have different circumstances to deal with in their production years.

I feel granted, I worry about my teenage son, job opportunities, cost of education and a f----kd environment all make me think, everyone has it hard in their own way.


----------



## Smurf1976 (11 December 2020)

over9k said:


> Hence why neither it nor a reduction in house prices will ever happen - the boomers have spent their entire lives voting to benefit themselves and **** the consequences/who has to pay for it and that sure isn't going to stop now.



I don't think any one generation can be blamed for the whole situation.

An awful lot of the damage was done through the 1970's and the Boomers didn't have a great deal of influence at the time. They might have marched in a rally or something but they weren't in charge of any central banks, they weren't the leader of any significant country, they weren't even on corporate boards or in senior management positions at that stage. 

They failed to put the fire out but they didn't light it and to be fair, well I'm not seeing Gen X or Millennials do anything much to put the fire out either.


----------



## sptrawler (11 December 2020)

satanoperca said:


> Leave it Sptrawler, my parents worked very hard all their lives, they were granted some benefits of property increases, but as retirees, living of fvsavings they are being royally screwed by low IR's, the younger generations, think the boomers had it easy, all generations have and will have different circumstances to deal with in their production years.
> 
> I feel granted, I worry about my teenage son, job opportunities, cost of education and a f----kd environment all make me think, everyone has it hard in their own way.



Yeh I know, but it is so soul destroying when you have FFking lived in $hit conditions in tthe North of W.A with only ceiling fans, to save your butt off and now you are being screwed by the government, by the banks, and try like %hit to help your kids and some dick who cant buy a FFFking house in Sydney is whinnninng like a baby.
I just wish we could discuss it man to man.


----------



## over9k (11 December 2020)

sptrawler said:


> Yeh I know, but it is so soul destroying when you have FFking lived in $hit conditions in tthe North of W.A with only ceiling fans, to save your butt off and now you are being screwed by the government, by the banks, and try like %hit to help your kids and some dick who cant buy a FFFking house in Sydney is whinnninng like a baby.
> I just wish we could discuss it man to man.



I made quite a point of saying that your experience isn't typical trawler. It was not a personal dig at you.


The fact that there's almost no other way to make money in this country (outside of a mine) should really be ringing alarm bells for _everyone. _Perpetual house price increases does not an economy make.


----------



## sptrawler (11 December 2020)

over9k said:


> That's not exactly typical of your generation though. It wasn't a personal dig at you. Fact is that housing "investment" is zero sum and thus by definition is a wealth transfer.
> 
> What I was saying is that too many boomers own investment properties for the powers that be to ever let prices fall. When an entire generation's retirement prosperity is literally dependent on how much house prices increase, the second anyone goes near housing is the second they lose an election in a landslide.



Mate that might be the case in FFking Sydney - Melbourne, where the real work is done is in W.A and actually if you bought an investment house here 15 years ago, you are still loosing money.
Get your head out of your butt, if you want to buy in Sydney-Melbourne in the yuppy chinese market, well it means you need to pick up your act and stop blaming your parents.
If you want to live in Perth, Adelaide, Darwin, you can probably live in an up market area and be smug.
But you will have to take some tickets off yourself and accept your level of achievement, blaming your parents for your failure to achieve you ambitions is a cop out.


----------



## over9k (11 December 2020)

Ok, continuing this conversation is pointless. Moving on.


----------



## sptrawler (11 December 2020)

I agree, I will leave you with a post and hopefully it will make you reflect on being bitter about chasing the market.
I have never done that, I've always been inwardly looking to what I and my family really need, shelter, food, and the ability to ride through the worst scenario.








						How has Australia's housing marking changed since 2010?
					

Back in 2010, Perth prices were higher than those in Adelaide and Brisbane, and it was cheaper to buy in Melbourne than in Canberra.




					www.domain.com.au
				




Anything above that is a win, the kids don't remember what carpet was on the floor, what they remember is what it was like to live with mum and dad.
Just my opinion


----------



## sptrawler (11 December 2020)

over9k said:


> That's not exactly typical of your generation though. It wasn't a personal dig at you. Fact is that housing "investment" is zero sum and thus by definition is a wealth transfer.
> 
> What I was saying is that too many boomers own investment properties for the powers that be to ever let prices fall. When an entire generation's retirement prosperity is literally dependent on how much house prices increase, the second anyone goes near housing is the second they lose an election in a landslide.



And that is exactly why a death duty will be introduced.
Inter generational wealth transfer is killing Australia.

According to the Williams Group, 70% of wealthy families lose their wealth by the *2nd generation*, and 90% lose their wealth by the 3rd *generation*. The *saying* is: “The *first generation makes it, the second generation* spends it, and the third *generation* blows it. 

Guess what, by your reckoning, you are the 2nd generation. lol


----------



## sptrawler (12 December 2020)

over9k said:


> I made quite a point of saying that your experience isn't typical trawler. It was not a personal dig at you.
> 
> 
> The fact that there's almost no other way to make money in this country* (outside of a mine)* should really be ringing alarm bells for _everyone. _Perpetual house price increases does not an economy make.




Well at least you are are honest and up front.
Also the alarm bells are ringing, thanks for the heads up.


----------



## sptrawler (15 December 2020)

The long awaited Sydney, Melbourne property reset may yet happen, as we said earlier with the lack of immigration the demand may drop, add to that the Government throwing money at building properties, the uncertainty with China and supply may outstrip demand.
That is exactly what happened in W.A when the mining boom busted, mass exodus of people to the Eastern States, oversupply, end result massive contraction in prices.
https://www.smh.com.au/politics/fed...strips-demand-until-2023-20201214-p56n8o.html
From the article:

_While record low interest rates and government programs have propped up the property market through the pandemic, population growth is already slowing rapidly due to the closure of the international border.

Net overseas migration is expected to fall from 154,000 people in 2019-20 to minus 72,000 by the end of this financial yea_r.


Whether migration recovers, will depend a lot on the virus and Government settings, who knows there may be a new norm coming.
We can only hope.


----------



## againsthegrain (15 December 2020)

sptrawler said:


> The long awaited Sydney, Melbourne property reset may yet happen, as we said earlier with the lack of immigration the demand may drop, add to that the Government throwing money at building properties, the uncertainty with China and supply may outstrip demand.
> That is exactly what happened in W.A when the mining boom busted, mass exodus of people to the Eastern States, oversupply, end result massive contraction in prices.
> https://www.smh.com.au/politics/fed...strips-demand-until-2023-20201214-p56n8o.html
> From the article:
> ...




I read many forums,  all different target markets. It is really good to get a insight into what people on non financial forums say and think about property,  because now from computer to car forums there is always a housing thread. 

The similarity I notice all across the board is majority people from all backgrounds all think or rather hope quiet aggressively Melbourne and Sydney will be jumping in 10% or even 20% leaps annually. Nobody has any explanations except printing money and heavy govt interest in re. Obviously those 2 exist and are there I don't know how much more push they have. 

I think it actually comes down to group mentality at the moment. Alot of people have some vested interest and everybody all the way up from the uber driver to a middle manager are talking it up.  This, low interest rates and govt incentives are the only things keeping the push at the moment.  I would say if anything its not a push but rather treading water not to sink. 

What fundamentals?  Satanoperca already spelled it out,  no wage growth,  rental yelds are dead etc etc

We will see how group irrationality will go against heavy laws of gravity,  but its 2020 everything is upside down


----------



## sptrawler (15 December 2020)

Well put @againsthegrain.
As you say, there are non so blind as those who don't want to see. I think the Government will have more on its plate, than subsidising property, in the near future.
Every boom has a bust, it is all about timing. With the current virus/China episode, the last thing I would want is a huge mortgage over my head.


----------



## moXJO (15 December 2020)

over9k said:


> The fact that there's almost no other way to make money in this country (outside of a mine) should really be ringing alarm bells for _everyone. _Perpetual house price increases does not an economy make.




It is concerning. And let me tell you, the building industry for smaller businesses is getting harder and harder to turn a coin. There are that many leech industries attached to it that the implosion would be epic when we see a downturn.


----------



## moXJO (15 December 2020)

sptrawler said:


> Every boom has a bust, it is all about timing. With the current virus/China episode, the last thing I would want is a huge mortgage over my head.



We have had a forever boom. Apparently our war with China has sent iron ore sky-rocketing. Australia truly is the arse-iest country when it comes to continuing the boom.


----------



## Garpal Gumnut (16 December 2020)

I've just been reading The Times of London today and some analysts are predicting the prices of property in London will fall by 70%.

There is a move to the Regions gaining momentum due to Covid-19 and from politicians too scared to not invest outside the capital. 

It discusses "Foreign Ownership", Office and Home Property Bubbles, and elections being decided in the Regions. 

Remind anyone of places closer to home here in Australia?

gg


----------



## sptrawler (16 December 2020)

Garpal Gumnut said:


> I've just been reading The Times of London today and some analysts are predicting the prices of property in London will fall by 70%.
> 
> There is a move to the Regions gaining momentum due to Covid-19 and from politicians too scared to not invest outside the capital.
> 
> ...



If there is a fall of 70% in London prices, I will be buying, take that to the bank.


----------



## wayneL (16 December 2020)

sptrawler said:


> If there is a fall of 70% in London prices, I will be buying, take that to the bank.



Oooo yeah... A nice little detached cottage near the Wimbledon Common and the Hand in Hand pub to live out our dotage.

Count me in too!


----------



## sptrawler (16 December 2020)

wayneL said:


> Oooo yeah... A nice little detached cottage near the Wimbledon Common and the Hand in Hand pub to live out our dotage.
> 
> Count me in too!



Well we have certainly served our apprenticeships, of dealing with wombles, so it should be easy to fit in. 😂


----------



## Smurf1976 (17 December 2020)

moXJO said:


> the building industry for smaller businesses is getting harder and harder to turn a coin. There are that many leech industries attached to it that the implosion would be epic when we see a downturn.



I know a few tradies who've lost interest in it simply because of what they see as too much nonsense.

I don't mean safety and sensible things like that. I mean things like not being allowed to drill a hole in the box because the manufacturer's instructions haven't specified that a hole is to be drilled and government regulations say thou shalt follow the manufacturer's instructions, which were written by their marketing department not anyone technical, to the letter or else you'll be fined.

The basic complaint is about "dumbing down" and trade skills not being allowed to be applied because it doesn't say on the page to do x therefore x cannot be done even though it's the most sensible and effective way to approach the task.

They became tradies in the first place because they didn't want to work with that sort of nonsense.


----------



## Smurf1976 (17 December 2020)

wayneL said:


> A nice little detached cottage near the Wimbledon Common and the Hand in Hand pub to live out our dotage.



If we're going to Commons, Parks or Heaths in London then I'll pick Hampstead Heath.

It has the Stone of Free Speech in it.  Nothing special about the stone, actually it looks like it's just painted concrete, but I like the name at least.

The Wombles and tennis are between them probably more fun though. 

A 70% fall though. Well that would make London property ridiculously cheap compared to Sydney or Melbourne, indeed it would be cheap compared to Adelaide or Hobart. The UK might end up flooded with Aussie immigrants looking for somewhere they can afford to buy a house with a backyard. Oh the irony.....


----------



## JamesBrown89 (17 December 2020)

I think that the Labour government destroyed the Australian economy, allowing China to control our country's real estate from 2008 to 2013. Julia Gillard and Kevin Rudd welcomed CCP. When destruction and war come our country needs its citizens, not these foreign investors. Australians during WW1 and WW2 fought well, so this generation can live in joy and peace, but these politicians have ruined our nation just for the sake of money.


----------



## sptrawler (17 December 2020)

I hope you have a thick flack jacket @JamesBrown89, you will cop some serious comments, talking down our magnificent Labor Party.


----------



## wayneL (19 December 2020)

"Australia ‘will pay foreigners up to $50,000’ to buy a new home as Perth market set to boom".

The WA government should f*** right off. And when they have f***** right off they should f*** off some more.

After that I am sure there is plenty more they can f*** right off again.

Because that is the message they are giving local home buyers


----------



## againsthegrain (19 December 2020)

wayneL said:


> "Australia ‘will pay foreigners up to $50,000’ to buy a new home as Perth market set to boom".
> 
> The WA government should f*** right off. And when they have f***** right off they should f*** off some more.
> 
> ...




So how come locals don't get the same amount?


----------



## wayneL (19 December 2020)

againsthegrain said:


> So how come locals don't get the same amount?



The mind boggles, mate.

It's a question that all but the complicit proles are asking.


----------



## Dona Ferentes (19 December 2020)

Garpal Gumnut said:


> I am resting in the Northern Rivers of NSW and Coolangatta.
> 
> It is a good time to be selling RE. The agents are often just asking for expressions of interest as the prices rise daily and buyers are flying in to Cooly Airport with wads of money from Melbourne.
> 
> Gawd help them when the bank foreclosures begin in April and mortgagee in possession sales begin. Locals in the know expect a 20% drop.



Brother at Tweed Heads; there's always been a _Southern Premium_ at the Goldie. Local sport, it would seem.


----------



## sptrawler (4 January 2021)

Interesting that the property prices have remained buoyant, obviously the housing stimulus money did its job, will this mean the big 4 banks will have dodged a bullet? The next reporting season should be interesting, we may see a bank bounce so to speak IMO.









						Property prices defy coronavirus pandemic
					

Capital city property values increased 2 per cent over the year, while country home prices increased 6.9 per cent.




					www.smh.com.au
				



From the article:
_The coronavirus pandemic also changed when people were willing and able to sell, and when the virus hit sales volumes dropped 40 per cent. But by the end of the year there were more sales than 12 months ago, CoreLogic research director Tim Lawless said. 
"Record low interest rates played a key role in supporting housing market activity, along with a spectacular rise in consumer confidence as COVID-related restrictions were lifted and forecasts for economic conditions turned out to be overly pessimistic," Mr Lawless said. 

At the height of the virus, major bank economists were predicting a major city property price crash shaving more than 20 per cent of home values. These forecasts were largely made before the introduction of federal government stimulus measures, including the $100 billion wage subsidy program JobKeeper, and emergency assistance from lenders to allow repayment holidays.

"Containing the spread of the virus has been critical to Australia’s economic and housing market resilience," Mr Lawless said_.


----------



## Mrmagoo (9 January 2021)

JamesBrown89 said:


> I think that the Labour government destroyed the Australian economy, allowing China to control our country's real estate from 2008 to 2013. Julia Gillard and Kevin Rudd welcomed CCP. When destruction and war come our country needs its citizens, not these foreign investors. Australians during WW1 and WW2 fought well, so this generation can live in joy and peace, but these politicians have ruined our nation just for the sake of money.




AS a long time ALP supporter I agree, they did and they are responsible. Least of all they had control back then and housing affordability was much worse than now. Wages were lower, rents were about the same depending on where you live but they weren't orders of magnitude different from today. It was a bad period in time.


----------



## Mrmagoo (9 January 2021)

sptrawler said:


> That is a bit nasty and sounds like woe is me, why don't you man up take a spoon of cement get off your butt and go to where the money is, or maybe where the hard work is.
> Rather than bitching about missing out on the Sydney - Melbourne gravy train, some of us live in areas that have gone down in value, grow a pair and get over yourself.
> Mate I have worked bloody hard all my life and I now have sold a bloody good house to help my kids and my grandkids so don't shove that $hit in my face.




Tell me a number or a yearly salary how much should we earn ? What I observe is very hard working people on very high incomes buying very low end housing for huge sums of money.


----------



## Mrmagoo (9 January 2021)

sptrawler said:


> Yeh I know, but it is so soul destroying when you have FFking lived in $hit conditions in tthe North of W.A with only ceiling fans, to save your butt off and now you are being screwed by the government, by the banks, and try like %hit to help your kids and some dick who cant buy a FFFking house in Sydney is whinnninng like a baby.
> I just wish we could discuss it man to man.




Lol why can't your kids help themselves ?


----------



## sptrawler (9 January 2021)

Mrmagoo said:


> Lol why can't your kids help themselves ?



Three of the four can, the fourth is disabled LOl.
But still trying to achieve as normal a life as possible, without government handouts, which seems to be fairly unique these days.


----------



## qldfrog (10 January 2021)

sptrawler said:


> Three of the four can, the fourth is disabled LOl.
> But still trying to achieve as normal a life as possible, without government handouts, which seems to be fairly unique these days.



Why reject gov hand-outs?
To then have your property super or assets seized at the next labour win or reset move?do not expect gratitude from either government or populace....
Philosophical issue i know but i made my mind


----------



## Mrmagoo (10 January 2021)

sptrawler said:


> Three of the four can, the fourth is disabled LOl.
> But still trying to achieve as normal a life as possible, without government handouts, which seems to be fairly unique these days.




..... but does expect handouts from a rich dad instead ? Wouldn't it make more sense.. for housing to be related to incomes.  Imagine for a moment the plight of the disabled without rich folks to bail them out.

Also what is wrong with government handouts ? Property investors seem to get an awful lot of them each year so I don't see the issue to be honest !


----------



## Mrmagoo (10 January 2021)

qldfrog said:


> To then have your property super or assets seized at the next labour win or reset move?




This is true, the next ALP government will almost certainly crash property prices. They will be smarter about it this time and not openly admit it...


----------



## sptrawler (10 January 2021)

Mrmagoo said:


> ..... but does expect handouts from a rich dad instead ? Wouldn't it make more sense.. for housing to be related to incomes.  Imagine for a moment the plight of the disabled without rich folks to bail them out.
> 
> Also what is wrong with government handouts ? Property investors seem to get an awful lot of them each year so I don't see the issue to be honest !



Two things, first I've always promoted the Singapore model of public housing.
Secondly I'm not rich, lol always was a wage slave, just never had delusion s of grandeur and had beer tastes with beer money.


----------



## Mrmagoo (10 January 2021)

sptrawler said:


> Two things, first I've always promoted the Singapore model of public housing.
> Secondly I'm not rich, lol always was a wage slave, just never had delusion s of grandeur and had beer tastes with beer money.




eh the singapore model is pretty awful, i think having house prices track wage growth is a much better model.

If people want to get rich they should have to work hard for it not just sit on their lazy bums and buy houses.


----------



## sptrawler (10 January 2021)

Mrmagoo said:


> eh the singapore model is pretty awful, i think having house prices track wage growth is a much better model.
> 
> If people want to get rich they should have to work hard for it not just sit on their lazy bums and buy houses.



I think the Singapore model is far better than ours, but  only my opinion.
As you say people should have to work hard for a house, I did my time in the bush in mining and construction, the conditions were crap but the money was far better than in the city.
The problem is, you do your time, then the government and general public say your a fat cat.lol
No pleasing people.


----------



## wayneL (10 January 2021)

Mrmagoo said:


> ..... but does expect handouts from a rich dad instead ? Wouldn't it make more sense.. for housing to be related to incomes.  Imagine for a moment the plight of the disabled without rich folks to bail them out.
> 
> Also what is wrong with government handouts ? Property investors seem to get an awful lot of them each year so I don't see the issue to be honest !



 it's called a safety net for a reason, it means that if for reasons you cannot afford to live in our society that society will catch you as you slip through the cracks.

Universal welfare is socialism with all the attendant debate about that.

As to your question, what is wrong with government handouts? The problem with government handouts is that  *productive* members of society have to pay for them via taxation (or inflation).

When it becomes a better proposition to rely on government handouts, people will no longer be willing to be productive. This is the absolute folly of socialism and why it has never, and never will work.


----------



## qldfrog (10 January 2021)

wayneL said:


> it's called a safety net for a reason, it means that if for reasons you cannot afford to live in our society that society will catch you as you slip through the cracks.
> 
> Universal welfare is socialism with all the attendant debate about that.
> 
> ...



You know me and fully agree with the folly of this but i would also say what's wrong with hand-outs?if you qualify get these.we have reached the critical threshold where more than half of Australians do not pay tax.gst excluded i think.
In a scenario lke that, just join the party otherwise you are just the sucker...


----------



## sptrawler (10 January 2021)

qldfrog said:


> You know me and fully agree with the folly of this but i would also say what's wrong with hand-outs?if you qualify get these.we have reached the critical threshold where more than half of Australians do not pay tax.gst excluded i think.
> In a scenario lke that, just join the party otherwise you are just the sucker...



Funny you mention that, my daughter who is challenged, has always paid her way it gives her a great deal of pride.
Like she has a low paid job around $38k on a normal year, has always paid private hospital coverage because of her physical situation, but has hardly used it, she paid for IVF and has had two kids (about $20k out of pocket), she has paid for her own cochlear implant ($8k).
Well she has just met another deaf person who understands the system, well lets say it has been an awakening for her, as she worked so hard to become a talking deaf person, she actually missed out on a myriad of services that are available for deaf people.
It is an interesting world in Australia, long may it last, but I fear many will destroy it by exploiting it.
Anyway drifting a bit off topic.


----------



## wayneL (10 January 2021)

qldfrog said:


> You know me and fully agree with the folly of this but i would also say what's wrong with hand-outs?if you qualify get these.we have reached the critical threshold where more than half of Australians do not pay tax.gst excluded i think.
> In a scenario lke that, just join the party otherwise you are just the sucker...



Yeah sick of being the sucker TBH. Just gotta figure out how to get on the public teet.

... haven't even been to a quack in donkey's years.


----------



## sptrawler (10 January 2021)

wayneL said:


> Yeah sick of being the sucker TBH. Just gotta figure out how to get on the public teet.



Unfortunately that is the reality of Australia today, if you are on the public teet, you are a very unfortunate person who deserves all the assistance that the taxpayer can pay, it isn't your fault you can't find a job.
If you are not on the public teet, you are a fat cat who deserves to be taxed to the point you are forced onto the public teet, only then have you paid your penance for your endeavour.
Welcome to the Australia we are making, I can't understand who is going to foot the bill, when everyone just says fluck it and goes on the public teet.
But as frog says, if you can't beat them join them. 😂
I think you spend way too much time worrying about it Wayne, the days of a fair days pay for a fair days work, has changed to a fair days pay but forget the work bit. 
The small businesses are complaining they can't get workers because of jobkeeper, the media wants jobkeeper to stay, so people don't need to go to work, interesting times.


----------



## Mrmagoo (11 January 2021)

I agree socialism is a failure but I think welfare is necessary and important. An example of failed socialist policy is special treatment and tax treatment given to housing investors and the housing industry. Australia would be much better off without it.  Also, welfare isn't really a feature of socialist nations exclusively and you will find most socialist nations have relatively low levels of welfare compared to developed western nations.


----------



## Warr87 (11 January 2021)

Mrmagoo said:


> I agree socialism is a failure but I think welfare is necessary and important. An example of failed socialist policy is special treatment and tax treatment given to housing investors and the housing industry. Australia would be much better off without it.  Also, welfare isn't really a feature of socialist nations exclusively and you will find most socialist nations have relatively low levels of welfare compared to developed western nations.




ummm, explain to me how special treatment and tax treatment in relation to housing investors is socialism? Seems like a thoroughly capitalist idea to subsidize investors ....


----------



## qldfrog (11 January 2021)

Mrmagoo said:


> I agree socialism is a failure but I think welfare is necessary and important. An example of failed socialist policy is special treatment and tax treatment given to housing investors and the housing industry. Australia would be much better off without it.  Also, welfare isn't really a feature of socialist nations exclusively and you will find most socialist nations have relatively low levels of welfare compared to developed western nations.



Developed western nations are mostly socialists in nature, they are democratic..well kind of , and play a us vs them game.
Then any socialist leader can get and retain leadership as long as he seizes and redistributes the wealth of the 49% toward the 51%...
Obviously, slightly caricatural but in essence, this is it.
Given the choice, people prefer getting richer or even with a neighbour, more than poorer, even with more actual wealth
Venezuela, France, you name it.
Once this system sets in, even the so call concervatives are just socialists in hiding.
Look here...
Anyway, getting off track


----------



## Mrmagoo (11 January 2021)

Warr87 said:


> ummm, explain to me how special treatment and tax treatment in relation to housing investors is socialism? Seems like a thoroughly capitalist idea to subsidize investors ....




Because capitalism shouldn't be subsidising investors.


----------



## Warr87 (11 January 2021)

Mrmagoo said:


> Because capitalism shouldn't be subsidising investors.




agreed. and it does. so im confused as to why you are attributing that to socialism? i really don't think you understand what socialism is becauase it is capitalism that is subsidising investors, giving corporate handouts, etc., even though under a capitalism framework that shouldn't be happening (which always makes me wonder why people say capitalism works when it is bailing out companies or giving massive tax breaks to said companies so they can operate at huge profits). i dont think ive heard of any socialist who advocate to subsize investors?


----------



## basilio (11 January 2021)

The cynical(*but accurate) description of our current economic system is
"Privatising the profits and socialising the losses"

Essentially if you're canny enough to do well in business or create some sort of questionable process for making a buck the profits are all yours.
But on the way or at the end see if you can drop any business costs or big losses on the Government/taxpayer.

Examples:

Mining companies that go conveniently  broke and  leave huge environmental problems rehabiliting old mine sites to the Government
Businesses that go broke or phoenix into a new form and leave employees wages and super and leave and customers deposits and payments for government to pick up
Banks that loan truck loads of money to questionable investment schemes and then look for government support when it all goes south


----------



## basilio (22 January 2021)

Probably along the lines of "No xhit Sherlock"  but the pressure on retail shopping centres with COVID and the loss international students is biting hard. Not good news for Property Trust investors









						Sales Rebound Can't Fully Offset Reduced Traffic for Vicinity – ShareCafe
					

Despite the solid rebound in retail sales, the continuing shortfall in the numbers of shoppers, tourists and CBD office workers has seen Vicinity Centres knock another half a billion dollars off the value of its centres.




					www.sharecafe.com.au


----------



## gartley (22 January 2021)

Why house prices could jump 30 per cent
					

Heightened borrower confidence in record low interest rates could push property prices sky-high according to analysis by the Reserve Bank of Australia.




					www.news.com.au
				




So RBA tipping property prices will rise 30% in the next 3 years.

Maybe time to sell.......


----------



## over9k (22 January 2021)

Government policy is what determines that. 

I.e flood of foreign students/migrants or not. 

This is nothing other than a supply & demand problem. People forget that.


----------



## sptrawler (23 January 2021)

over9k said:


> Government policy is what determines that.
> 
> I.e flood of foreign students/migrants or not.
> 
> This is nothing other than a supply & demand problem. People forget that.



So true, I think while the covid situation is rampant therefore there is no migration, so the requirement for rental properties is reduced.
The focus should change to first home buyers, the obvious stimulus IMO is, first home buyers can claim there interest as a tax deduction, until they either sell the property and or earn over a certain amount.
Also a cap would have to be put on the amount that could be borrowed, otherwise you would have rich people funding their children to build harbourside mansions.
But it shouldnt be too hard to regulate and would take the pressure off young couples, so maybe they could think about reversing the birth rate, rather than chasing an elusive dream.
Just my opinion.


----------



## over9k (23 January 2021)

Yeah, rentals around the uni's are reeeeally cheap at the moment. 

Housing "investment" is a zero sum game and this is the problem the powers that be find themselves in - you bleed everyone dry through housing, spending everywhere else dries up, so jobs (and the money needed to bid house prices up in the first place) vanish. 

You can only alleviate (kick the can down the road) by dropping interest rates for so long before you run out of ammo, and we're now at that point. There's a saying in the military about what to do when you're in a jam and it's just the very simple observation that sometimes you can reach a point where you simply have no good options, and we're there. 


I've said this before and I'll say it again: This isn't actually what worries me. What the politicians are going to do, however, now that's something to think about.


----------



## Smurf1976 (23 January 2021)

Warr87 said:


> explain to me how special treatment and tax treatment in relation to housing investors is socialism?



It's a redistribution of wealth in a manner that wouldn't naturally occur in a competitive market and also doesn't occur in a regulated "cost plus x" monopoly.


----------



## sptrawler (23 January 2021)

Well with the pandemic, they obviously arent going to maintain a population growth through imigration, so it is going to have to be through birthrate.
Politicians always want a growing population, one side wants it through refugees, because they vote their way.
The other side wants it through skilled immigration and natural internal birthrate, because they tend to vote their way.
So as you say it is political, but the virus has thrown in a wild card.


----------



## Smurf1976 (23 January 2021)

basilio said:


> Probably along the lines of "No xhit Sherlock" but the pressure on retail shopping centres with COVID and the loss international students is biting hard. Not good news for Property Trust investors



A purely personal observation that I don't have facts to back but 1990's and early 00's there seemed to be a massive increase in the number of shops and satellite "shopping CBD's" that far outstripped the rise in population over that time to the point that the actual city CBD has become mostly irrelevant as a location for shopping.

I've long wondered how some of them make any money when there's multiple of the same chain store within easy driving distance and none of them are even slightly crowded inside.


----------



## over9k (23 January 2021)

sptrawler said:


> Well with the pandemic, they obviously arent going to maintain a population growth through imigration, so it is going to have to be through birthrate.
> Politicians always want a growing population, one side wants it through refugees, because they vote their way.
> The other side wants it through skilled immigration and natural internal birthrate, because they tend to vote their way.
> So as you say it is political, but the virus has thrown in a wild card.



Yes, a lot of government policies throughout the entire world are offline at the moment.

But what are they going to do once the virus is over?

Follow-up question to that: What are they going to do in response to baby boomer mass retirement? It's not like there's a sovereign wealth fund to fund the pensions, healthcare spending etc etc that will be necessary. In fact, we're in massive debt even ignoring the coronavirus debt that's been added, and that's while we have the boomers still working and paying IN to the system rather than drawing OUT of it once they retire. So we see the tax revenue disappear at the same time as the drawing OUT of the system goes into overdrive. 

Just where is the money going to come from?


----------



## gartley (23 January 2021)

over9k said:


> Government policy is what determines that.
> 
> I.e flood of foreign students/migrants or not.
> 
> This is nothing other than a supply & demand problem. People forget that.



I don't doubt that, but what component of the supply and demand equation as it stands is going to drive up properly prices 30% in the next few years as the RBA is expecting?
Remembering of course when it comes to market forecasts the RBA (and  other world central banks don't have such a good track record).
Example: RBA and the BOE  selling the bulk of the countries gold reserves right at the bottom  in 2000.  Later in 2012 the US FED buying Gold at the very top.......


----------



## basilio (23 January 2021)

over9k said:


> Yeah, rentals around the uni's are reeeeally cheap at the moment.




Not sure which ones you are talking about here. 

If you mean "normal" houses flats I think they are still very pricey. There will be a ton of  purpose built student accommodation available for example  by companies like Scape.  Couple of issues here
1) Rental costs start at $475 pw  and go to $650
2) They are absolute dog boxes. Total size of the studio units will be 2.1m x 4.5 m. - roughly half the size of  single room in a normal house

I can't see how these units  at these prices will  be appropriate for a wider market than captive o/s students. 




__





						Scape Swanston – Scape Student
					






					www.scape.com


----------



## over9k (23 January 2021)

basilio said:


> Not sure which ones you are talking about here.
> 
> If you mean "normal" houses flats I think they are still very pricey. There will be a ton of  purpose built student accommodation available for example  by companies like Scape.  Couple of issues here
> 1) Rental costs start at $475 pw  and go to $650
> ...



Oh I wasn't talking about purpose built student housing, just places that uni students used to live in.

But the same does actually go with the uni student accommodation - if there's nobody to live in them, are they just going to sit empty or will they rent dirt cheap?


Or are the powers that be going to open the floodgates to half a million+ people a year in order to artificially prop up housing demand and therefore artificially prop up housing prices?




gartley said:


> I don't doubt that, but what component of the supply and demand equation as it stands is going to drive up properly prices 30% in the next few years as the RBA is expecting?
> Remembering of course when it comes to market forecasts the RBA (and  other world central banks don't have such a good track record).
> Example: RBA and the BOE  selling the bulk of the countries gold reserves right at the bottom  in 2000.  Later in 2012 the US FED buying Gold at the very top.......




Immigration.


----------



## gartley (23 January 2021)

over9k said:


> Immigration.



Unless something changes drasitcally with respect to borders I can't see immigration alone propelling the housing market up 30% in in the next few years. Having said that it never ceases to amaze at the lengths governmants will go to protect the ponzi's namely the Australian Housing Bubble and Zombie markets in the US propelled in large part by FED policy. Thus, it is now “common knowledge” that the housing market cannot go down because the RBA and government will not allow it. 
This is a false mythology and also a psychological vestige of the waning days of the great gull market.


----------



## againsthegrain (23 January 2021)

gartley said:


> governmants will go to protect the ponzi's namely the Australian Housing Bubble




This seems to be the only fundamental left that most clever investors are buying on these days


----------



## over9k (23 January 2021)

gartley said:


> Unless something changes drasitcally with respect to borders I can't see immigration alone propelling the housing market up 30% in in the next few years. Having said that it never ceases to amaze at the lengths governmants will go to protect the ponzi's namely the Australian Housing Bubble and Zombie markets in the US propelled in large part by FED policy. Thus, it is now “common knowledge” that the housing market cannot go down because the RBA and government will not allow it.
> This is a false mythology and also a psychological vestige of the waning days of the great gull market.



9% average for a three year period... It's done it before.




againsthegrain said:


> This seems to be the only fundamental left that most clever investors are buying on these days



Exactly. You want to know what the most protected investment in the country (and probably the highest yielding too) is? Just look at what the politicians hold.

Hence my major concern that they will do literally anything to keep house prices rising.


----------



## gartley (23 January 2021)

over9k said:


> 9% average for a three year period... It's done it before.
> 
> 
> 
> ...



Best of luck with your future property investments.  Since the government has your back  then property investment is a risk free trade or is it?....
Basing investment decisions on the trust and promises of governments is definately not for me.


----------



## Smurf1976 (23 January 2021)

basilio said:


> I can't see how these units at these prices will be appropriate for a wider market than captive o/s students.



Apart from the presence of the very small kitchen, the basic layout makes me think of hotel rooms or ship cabins.

I'd expect that the market is limited mostly to those either with limited $ or for short term use.


----------



## qldfrog (23 January 2021)

RBA quote 30pc increase but not inflation rate.if cpi goes at 10pc, you will have RE serious increases


----------



## Mrmagoo (23 January 2021)

Whats the consensus prediction. If prices jump 30% Aus will be a messed up place but its something good to know in that case you should buuy now.


----------



## over9k (23 January 2021)

gartley said:


> Best of luck with your future property investments.  Since the government has your back  then property investment is a risk free trade or is it?....
> Basing investment decisions on the trust and promises of governments is definately not for me.



Why not? Do you think their top priority is something other than their own money?


----------



## gartley (23 January 2021)

over9k said:


> Why not? Do you think their top priority is something other than their own money?



I'm sure it is.....   But the manipulation can't last for ever, water will eventually seek it's own level with respect to prices, irrespective of continued government interventions which eventually end up being a trap.
Just like when Scomo gave the buy signal in stocks and property after the election only for investors portfolios to get smashed 1.5 years later.
For now the RBA has already played all it's cards and has nowhere left to manoevere sooner or later rates will have nowehere left to go but up as hyperinflation will slowly emerges. The government has pulled out all stops to keep the levitation alive,  negative gearing, lucrative first buyer grants, endelss migration policies when there not even enough jobs here for the existing population. In the end they will ultimately fail  natural price discovery will take it's course.  
The history of markets is full of widespread government intervetions, in the end the result is always the same.


----------



## sptrawler (23 January 2021)

Mrmagoo said:


> Whats the consensus prediction. If prices jump 30% Aus will be a messed up place but its something good to know in that case you should buuy now.



I can see some property markets moving 30%, but not Sydney, Melbourne, they are already ridiculous in relation to average wages.
Without O/S migration, the only thing that will drive the local market, is increased savings as a result of reduced spending on travel, because of covid.
However I can see Perth rising 30%, due to increased demand from Eastern States workers relocating for work, however Perth is starting from a very low base due to the exodus after the mining bust.
So in reality it is just another wave in W.A's boom and bust cycles.
So did the RBA mention where there will be a 30% increase, or is it just sensationalising by the media? I mean really in the last 5 years Sydney, Melbourne property prices have doubles, Perth has halved.
So in Sydney, Melbourne you had a property boom, in Perth you have had a property bust, so it just depends how you want the story to read.


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## qldfrog (23 January 2021)

sptrawler said:


> I can see some property markets moving 30%, but not Sydney, Melbourne, they are already ridiculous in relation to average wages.
> Without O/S migration, the only thing that will drive the local market, is increased savings as a result of reduced spending on travel, because of covid.
> However I can see Perth rising 30%, due to increased demand from Eastern States workers relocating for work, however Perth is starting from a very low base due to the exodus after the mining bust.
> So in reality it is just another wave in W.A's boom and bust cycles.
> ...



Here on the sunshine coast, i would not be surprised to be told we have had a 20pc RE increase in the last 6months.time will tell but it is booming.
Inflation will be the factor: if inflation and still pathetic returns on deposit, add a share market crash and RE will explode up the qioted 30pc..ready to then crash a big way


----------



## over9k (23 January 2021)

gartley said:


> I'm sure it is.....   But the manipulation can't last for ever, water will eventually seek it's own level with respect to prices, irrespective of continued government interventions which eventually end up being a trap.
> Just like when Scomo gave the buy signal in stocks and property after the election only for investors portfolios to get smashed 1.5 years later.
> For now the RBA has already played all it's cards and has nowhere left to manoevere sooner or later rates will have nowehere left to go but up as hyperinflation will slowly emerges. The government has pulled out all stops to keep the levitation alive,  negative gearing, lucrative first buyer grants, endelss migration policies when there not even enough jobs here for the existing population. In the end they will ultimately fail  natural price discovery will take it's course.
> The history of markets is full of widespread government intervetions, in the end the result is always the same.



The money printing hasn't even begun, and house prices aren't counted in the inflation calculations. 

As long as the printed money is diverted into house prices alone, we won't see interest rate increases but we will see house price increases. 

They know how to keep it going.


----------



## againsthegrain (23 January 2021)

over9k said:


> The money printing hasn't even begun, and house prices aren't counted in the inflation calculations.
> 
> As long as the printed money is diverted into house prices alone, we won't see interest rate increases but we will see house price increases.
> 
> They know how to keep it going.




The only thing that is going up is cost of living, wage growth is dead and will be stagnant for a good while.  Rba has nothing left I can't see this going much higher.  Job keeper is ending,  seeker is getting trimmed to 40 bux a day... printer is low on ink


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## over9k (24 January 2021)

Sure it can. "Home buyer's grant", funded with freshly printed cash.


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## againsthegrain (24 January 2021)

over9k said:


> Sure it can. "Home buyer's grant", funded with freshly printed cash.




The grant stands at around what 10k right now?   Doubling the grant would not double or add 30% to property prices,  it would add another 10k or 15k to prices which is a drop in the ocean.  Perhaps if the grant was 100k or even 200k then yeah to the moon babey...  is that a realistic scenario?


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## jbocker (24 January 2021)

gartley said:


> Unless something changes drasitcally with respect to borders I can't see immigration alone propelling the housing market up 30% in in the next few years. Having said that it never ceases to amaze at the lengths governmants will go to protect the ponzi's namely the Australian Housing Bubble and Zombie markets in the US propelled in large part by FED policy. Thus, it is now “common knowledge” that the housing market cannot go down because the RBA and government will not allow it.
> This is a false mythology and also a psychological vestige of the waning days of the great gull market.



Not sure this is an Aus wide comment. But it seems totally non applicable in WA. I know of  many properties that are still underwater since the mining boom broke a few years back. Investors had stopped building. People left in droves. Property prices went DOWN and significantly. a lot of selling properties remained on market for many months.
Covid comes along and the house prices were going to fall off the planet, rentals (tenants) became heavily protected till March 2021. It was going to be dire straits.
Today - Right now you put a property up for sale, do not put an upper price limit on it, you probably be under offer within two weeks. If you want to rent GOOD LUCK be prepared to wait in a long long line. The buyers are nearly entirely home owners. Now do we call the stimulus and building grants packaging contributors to the ponzi scheme, now the prices are going up. You could test the theory and pull up to a couple of building sites and yell out you want to talk about how they are wrapped up in a ponzi. Remember to take your hard hat.
Oh and guess what there has been very little overseas immigration unless you want to count returning Aussies. Most immigration is the interstate FIFOs now living in the state where they work due to border restrictions, and frankly the way it should be.
Supply and demand will be the greatest driver in housing prices, as it is with nearly everything else.  Well in WA at least. Interested in the state of play in other states - maybe there a ponzi is applicable.


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## sptrawler (24 January 2021)

Spot on @jbocker , my oldest son was down yesterday from the Goldfields, he was one of the female engineers who is married, hasn't been home to Qld in 6 months.
She is going to buy a house in Perth.
The Eastern States FIFOs are worried about going home and the borders closing, or having to do quarantine.


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## gartley (24 January 2021)

over9k said:


> The money printing hasn't even begun, and house prices aren't counted in the inflation calculations.
> 
> As long as the printed money is diverted into house prices alone, we won't see interest rate increases but we will see house price increases.
> 
> They know how to keep it going.



Easy money policies will only produce a temporary illusionary growth and will fail to improve the the fundamentals of a stagnant economy. The more they will try the more the less it will respond. The BOJ tried it for 15 years and got nowhere( and house prices in Japan continued to capitulate).  The  US now is the same boat, the FED and other central banks must inflate or die.
Forget about perpetually rising asset prices, they already off the planet and whilst they may continue to persist for a short while it won't last because this debt bubble is no different to any other bubble in history. They  all eventually end in bust WITHOUT exception.
Markets are now at the crossroads. Most are expecting a slow transition away from the Covid Winter back to normality and the "good times".
Covid is here and will fizzle out in time, but the psychological and economic reality as  result of Central Bank reckless monetery policies will not and there will be a heavy price to pay by all of us in the end.
Look at your charts you will see that as a bull market progresses and nears the terminal phase this is characterized by wide ranging bars both up and down and an increase in volatility. We are already there in the US markets (not to mention the housing market here), look at the volatility the last 12 months alone. This sets up for momentum divergence that eventually lead to final high.
Prepare for a lost decade charactirized by large swings up and down and a traders market.


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## over9k (24 January 2021)

againsthegrain said:


> The grant stands at around what 10k right now?   Doubling the grant would not double or add 30% to property prices,  it would add another 10k or 15k to prices which is a drop in the ocean.  Perhaps if the grant was 100k or even 200k then yeah to the moon babey...  is that a realistic scenario?



They'll find a way dude. "Highest home buyer's grant package ever" or some such bull****. They don't even need to make prices increase by much, as long as they're the only safe haven for cash, people will pump money into them and that's all it will take.

It's ridiculously easy for the powers that be to trigger a run. Governments are incompetent as hell at the best of times, but the one thing politicians ARE good at is lining their own pockets. They will find a way, they always do.

The only time I would ever sell an IP is when the politicians start selling theirs.


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## Maddamted (24 January 2021)

nunthewiser said:


> I did find this prediction rather funny though



When have Economists got it right.
Prefer to look at intrinsic value and supply and demand for the particular investment.


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## over9k (24 January 2021)

Maddamted said:


> When have Economists got it right.
> Prefer to look at intrinsic value and supply and demand for the particular investment.



Economists are almost always right in their purely economic modelling etc. It's when other factors (generally just governments) get involved that the predictions go out the window. 

We've been due for a housing correction for over a decade now for example, and yet...


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## sptrawler (24 January 2021)

Economists tend to predict on the status quo remaining, when in reality disruptors always happen, it is like monitoring any process looking at the charts relies on the future being the same as the past.
I always remember when my wife was doing a post grad in management, she came home from a lecture one day and mentioned the lecturer had said "this is how the stock market should work, but in reality it is driven by emotion".


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## gartley (30 January 2021)

Since this thread has focused more on economic drivers I thought I would give my 2c worth interms of Elliot Wave Analysis on both house prices and interest rates. For the older ones like myself we can remember back in 1981/82 with interest rates at 17% it could have been really tough to sell a property at the price you wanted with much lower turn out rates at auctions.
With the environment we have today, with rates close to zero we are at the other extreme the current hyper bullish forecasts coincide with what appears to be an almost completed and very clear and textbook 5 wave structure from the 1980/81 low. Now being in the fifth and final wave up coming out with a thrust from the wave 4 triangle. Wave 4 triangles are the penultimate moves to the last wave up and the biggest clue a market is coming into a top in the next and last leg up to follow.  Once this impulse completes the largest correction or decline may start since the impulse wave started in 1980



Conversely interest rates are in the last throws of  a 5 wave structure to the downside during the same period. More importantly the 5th wave is characterized by an ending diagonal type pattern or wedge. When these types of patterns complete the ensuing reversal can buy quite abrupt and usually finds resistance at the same level the ending diagonal started at.
So it will be very interesting to see what type of reversal emerges and when.


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## over9k (31 January 2021)

Mmm and this is where the economists step in. Just what are the powers that be going to do?


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## Smurf1976 (31 January 2021)

jbocker said:


> Interested in the state of play in other states



House near me was put up for sale late last year, sold at the first open home a couple of days after listing.

Another nearby house, a rental, previous tenant broke lease a few weeks before it ran out. New tenant moved in 2 weeks later.

That's in SA.


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## gartley (31 January 2021)

over9k said:


> Mmm and this is where the economists step in. Just what are the powers that be going to do?



Initially nothing. Because they won't see it coming and will continue 
projecting the current trend into the future.
Wouldn't mind seeing a current statistical bullish consensus amongst economists


----------



## qldfrog (31 January 2021)

Smurf1976 said:


> House near me was put up for sale late last year, sold at the first open home a couple of days after listing.
> 
> Another nearby house, a rental, previous tenant broke lease a few weeks before it ran out. New tenant moved in 2 weeks later.
> 
> That's in SA.



Sunshine coast hinterland,many houses sold after 2 to 7 days in the market.mindblowing


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## basilio (31 January 2021)

I have to say the current situation of housing loans at 2% gives me the absolute willies. Theoretically a person could borrow $700k at 2% interest and have a yearly interest bill of  a mere $14k or less than $300 a week.

At that price "Great lets buy a house... or three. " and all will be well..

Of course if interest rates rise by a miserable 1% to  3% the interest bill has now jumped *50%  to  *$*21k a year or $450 a week. *

And of course to actually pay off the $700k principal there would need to be capital repayment of roughly  $30k a year for 25 years. Is this amount included in the loan calculations ?

Honestly I can't see a happy ending here *- except for the banks perhaps?









						Best home loan rates - 3 expert picks for June 2022 | Finder
					

Looking for the best home loan rate for you? We've analysed rates, fees and features from 100+ home loans to help you find a better deal.




					www.finder.com.au
				



*


----------



## basilio (31 January 2021)

Best home loan rates - 3 expert picks for June 2022 | Finder
					

Looking for the best home loan rate for you? We've analysed rates, fees and features from 100+ home loans to help you find a better deal.




					www.finder.com.au


----------



## basilio (31 January 2021)

I  should have posted clearer details of the current finance packages available for home loans. A $700k loan will cost $620-650 a week repayments.  Please  see attached.

But having said that the question of what repayments would look like with a mere 1% increase in interest rates still stands.











						Best home loan rates - 3 expert picks for June 2022 | Finder
					

Looking for the best home loan rate for you? We've analysed rates, fees and features from 100+ home loans to help you find a better deal.




					www.finder.com.au


----------



## againsthegrain (31 January 2021)

basilio said:


> I  should have posted clearer details of the current finance packages available for home loans. A $700k loan will cost $620-650 a week repayments.  Please  see attached.
> 
> But having said that the question of what repayments would look like with a mere 1% increase in interest rates still stands.
> 
> ...




Obviously the govt is not allowed to raise rates for the next 20-30 years or ELSE!


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## Warr87 (31 January 2021)

i really don't think people understand how uncomfortable its going to get when rates eventually rise in the future. like you it gives me the willies to see it so low.

on another note, I wish I could borrow $500,000 @ 2% for trading, though apparently 'too risky' lol.


----------



## againsthegrain (31 January 2021)

Warr87 said:


> i really don't think people understand how uncomfortable its going to get when rates eventually rise in the future. like you it gives me the willies to see it so low.
> 
> on another note, I wish I could borrow $500,000 @ 2% for trading, though apparently 'too risky' lol.




Most people are under the impression they will pay down a big chunk of the loan down 30% + before rates start creeping. Others are convinced bottom rates are here to stay and even qe to kick in by 22-23 so yeah.... fundamentals,  what fundamentals?


----------



## over9k (31 January 2021)

basilio said:


> I  should have posted clearer details of the current finance packages available for home loans. A $700k loan will cost $620-650 a week repayments.  Please  see attached.
> 
> But having said that the question of what repayments would look like with a mere 1% increase in interest rates still stands.
> 
> ...



Hence why small changes are such a big deal now - the proportions have changed. 

100 basis points on a 17% loan is a very different thing to a 2.2%.


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## Warr87 (31 January 2021)

i think the smart play would be to keep your borrowing amount the same as it would have been when rates where 5% or so. im sure some have tried to squeeze out more with lower rates. probably not ideal. and the savy investor would be trying to pay that down super quick before rates rise. sounds like too much of a gamble for me though. but knowing my risk tolerance and moderating my risk is probably why I like trading, lol.

i feel sorry for whatever government is in power when rates rise. its gonna be a train wreck. it'll be easy pickings for any journo wanting to write a piece as well. the analogy i think is fitting is a hot potato lol.


----------



## againsthegrain (31 January 2021)

Warr87 said:


> i think the smart play would be to keep your borrowing amount the same as it would have been when rates where 5% or so. im sure some have tried to squeeze out more with lower rates. probably not ideal. and the savy investor would be trying to pay that down super quick before rates rise. sounds like too much of a gamble for me though. but knowing my risk tolerance and moderating my risk is probably why I like trading, lol.
> 
> i feel sorry for whatever government is in power when rates rise. its gonna be a train wreck. it'll be easy pickings for any journo wanting to write a piece as well. the analogy i think is fitting is a hot potato lol.




Unless we happen to have a outbreak and lockdown every year, print more money keep rates down... as @over9k said govt is getting more and more creative and keeping the ball pumped up


----------



## satanoperca (31 January 2021)

againsthegrain said:


> Unless we happen to have a outbreak and lockdown every year, print more money keep rates down... as @over9k said govt is getting more and more creative and keeping the ball pumped up



Will someone please think about the retirees.

In saying that, why is property moving again and the share market going as well, well stupidly low interest rates and nowhere to park your money except to investment classes, property & shares.

You need to have big ba---ls these days to start a business (something that might be a positive for society and the country)


----------



## over9k (31 January 2021)

Low interest rates change the required P/E. Dump the rates and the price will be bid up until the P/E has changed the same proportion. This is finance 101 stuff guys.


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## sptrawler (31 January 2021)

@basilio I'm wondering how a housing collapse is good for the banks.
Obviously some have better understanding of Bank solvency than I do, maybe you can enlighten me


----------



## satanoperca (31 January 2021)

sptrawler said:


> @basilio I'm wondering how a housing collapse is good for the banks.
> Obviously some have better understanding of Bank solvency than I do, maybe you can enlighten me



Simply, it wouldn't.

Banks have maintained a long term average of 200 basis point spreads between RBA and retail IR.

RBA has no room to move, okay maybe they can drop it to -0.1, maybe. But there is a reason why it is at 0.1 and not 0. Once it is 0, the public realizes the economy is f---kd, as negative means everything that the general public understand about financial instruments like IR goes out the door. The game played by central banks and economists is EXPOSED, for all to see.

It is similar but not the same as pricing product A @$1.99 as it is perceived to be cheaper than $2, but in today's world it is the same.

So, the banks are not in the business of owning homes, they are in the business of loaning money and have a contract that they own the home until you pay the money, fear.

Maybe Gartely's, predictions are correct, elliot wave is an interesting lens to view things, may he/she is wrong, but one thing is certain, the RBA and all central banks are out of ammo and even wall street has been exposed with Gamestop.

Interesting times for all.

All I can say is smile (cost you nothing) and say hello to strangers, collectively it can change how we all will deal with the changes that are upon us.


----------



## sptrawler (31 January 2021)

Thats what I thought @satanoperca , I was just wondering why Bas a couple of posts back, would think the Banks would be happy.
I think the banks will be wad punching their undies, but I guess most people think the banks are there to be screwed, when in reality everyone is screwed if the banks are.
They go under and then the overseas money lenders take over the mortages, I dont think they would have any trouble finding people to buy the properties, they just might not be aussies.🤣


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## Warr87 (31 January 2021)

sptrawler said:


> @basilio I'm wondering how a housing collapse is good for the banks.
> Obviously some have better understanding of Bank solvency than I do, maybe you can enlighten me



Only thing I can think of is the fact is that its too big to fail. 2008 saw a lot of financial institutions receive handouts. But who knows. I don't know how it would work when the cards collapse.

Its also why I dont like winding back any responsible lending practices. Don't need more room for more leverage. Im not in the property market but it certainly won't be good for anyone.


----------



## basilio (31 January 2021)

I don't think a housing collapse would be "good" for banks. My point was that I think many  homeowners with mortgages  could be under pressure if this house of cards gets tipped over. 

Obviously banks don't want to end up with a string of houses on their books. That is why they, theoretically, do everything they can to ensure their loan can be covered in the event of default. 20% deposit and so on.  

IMV the banks have been one of the architects behind the boom in housing prices over the past 20 years.  Can you remember the 105% loans given to people in the early 2000's ?  The easy encouragement of allowing people to buy a second investment property using the built up equity of their first home ? The  loan applications that were hugely fudged  by mortgage brokers and still passed by banks to keep the game alive ? The unwillingness to explore the wider debts of aspiring home owners - Credit Cards, personal loans, Harvey Norman loans ?

*The critical point is the leverage on 2% loans*. As has been pointed out a simple 1% increase represents a 50% jump in interest costs. When loans were 10% it would take a 5% increase in interest to reach that outcome. Even at 5% loans which seems only yesterday  (less than 18months ago) it would take  a 2.5% increase to have such an effect.  

People often quote the ratcheting of interest rates to 17%  in the late 80's as the spark that caused the collapse of property prices in the early 90's .. However mortgage rates were around 13% before this squeeze so, in fact, the rise was  much less than 50%.

For some perspective check this out. The rest of the story is also worth a read.









__





						History of Interest Rates in Australia - InfoChoice
					

The history of interest rates in Australia tracks our national economic development and some of the biggest political and financial events in this country.




					www.infochoice.com.au


----------



## Smurf1976 (31 January 2021)

Warr87 said:


> i feel sorry for whatever government is in power when rates rise.



Agreed although it'll be outside their control when it does occur.

No politician will utter the words, lest it becomes their signature quote that's still aired 30 years later, but it'll be "the mortgage crisis we had to have".

My thinking is that at some point inflation rises and gains enough momentum to ultimately force the RBA's hand. 

What I think everyone needs to be aware of is the risk of government using the financial resources of those who are prudent to bail out those who are foolish. That's a real risk in my view and there's lots of ways it could be done.


----------



## qldfrog (31 January 2021)

Warr87 said:


> Only thing I can think of is the fact is that its too big to fail. 2008 saw a lot of financial institutions receive handouts. But who knows. I don't know how it would work when the cards collapse.
> 
> Its also why I dont like winding back any responsible lending practices. Don't need more room for more leverage. Im not in the property market but it certainly won't be good for anyone.



Pay your PPOR ASAP, unload any investment property then who cares if prices jump or fall, you can slwaus change and swap areas etc at relatively similar amount of dollars.
When it hurts is when thete are new huge differences between areascurrently overpriced sydney Melbourne and some peripheral areas Byron Bay, Noosa for the places 8 know.usually, a free market would tend to level these differences and keep economics ruling.
In our new universal income/jobkeeper workd you earn the same in Sydney Melbourne or Gympie Eden...that is bad news for Sydney Melbourne and very good news for previously cheap areas.
And so very very bad news for negative gearing IP investors...
This is happening now.


----------



## over9k (1 February 2021)

Alternatively, the migration, "foreign student" (citizenship buyers), and foreign "investment" (capital flight) floodgates are deregulated (opened) to simultaneously increase demand from population increase as well as get cashed up foreigners to keep bidding the prices up when aussies no longer have enough money to do so:



People forget that aus is actually a tiny country. You don't need much migration and "foreign investment" to drive housing demand up _significantly. _Australia is 3% of china's population alone.

Allow significant numbers of cashed up chinamen to buy the existing housing stock or significant numbers of cashed up foreign students to rent them and watch what happens. Then imagine what happens if (when) we allow _both_.

The reserve bank might be out of ammo, but the politicians sure aren't.



No disrespect meant: I think you guys are focusing on the wrong thing here.


----------



## over9k (1 February 2021)

Warr87 said:


> i really don't think people understand how uncomfortable its going to get when rates eventually rise in the future. like you it gives me the willies to see it so low.
> 
> on another note, I wish I could borrow $500,000 @ 2% for trading, though apparently 'too risky' lol.



They won't raise rates. They'll fudge the inflation calculations (change the way inflation is measured) before they do that. Not to say that actual inflation (living costs) might mean that people can't borrow as much and house prices might (might) come down that way, but the interest rate itself won't change.

I hear you about the inability to borrow, but I believe a lot of it is actually legal - commbank wouldn't even give me an overdraft without a proper PAYG income. Like hey, I've got 500k in one of your other accounts but you won't let me overdraw 500 bucks on my everyday account if I see a cheap car part or something come up that I want to buy? Nope.


I don't know the specifics behind it all (any loans officers on this board?) but I wouldn't be surprised if they're actually legally prevented from lending you the money even if they wanted to. The only ones that will give me anything are the loan sharks or very close to it, and those contracts have all kinds of traps in them like missing a single payment adding 20% to your interest bill and all kinds of nasty stuff like that. A single dip in the market that you don't want to sell on/make a loan payment with can therefore wipe you out, so I won't go near them.


----------



## againsthegrain (1 February 2021)

over9k said:


> They won't raise rates. They'll fudge the inflation calculations (change the way inflation is measured) before they do that. Not to say that actual inflation (living costs) might mean that people can't borrow as much and house prices might (might) come down that way, but the interest rate itself won't change.
> 
> I hear you about the inability to borrow, but I believe a lot of it is actually legal - commbank wouldn't even give me an overdraft without a proper PAYG income. Like hey, I've got 500k in one of your other accounts but you won't let me overdraw 500 bucks on my everyday account if I see a cheap car part or something come up that I want to buy? Nope.
> 
> ...




Sounds a bit to me like you just might have a bias in the re market,  you didn't happen to buy a ip recently?


----------



## qldfrog (1 February 2021)

againsthegrain said:


> Sounds a bit to me like you just might have a bias in the re market,  you didn't happen to buy a ip recently?



not sure if you were replying to me, or one of my ignored list.No: I did not bought an ip recently and offloaded 2 in the last few years, only have kept one seaside apartment for my old days.abysmal ROI


----------



## qldfrog (1 February 2021)

qldfrog said:


> Pay your PPOR ASAP, unload any investment property then who cares if prices jump or fall, you can slwaus change and swap areas etc at relatively similar amount of dollars.
> When it hurts is when thete are new huge differences between areascurrently overpriced sydney Melbourne and some peripheral areas Byron Bay, Noosa for the places 8 know.usually, a free market would tend to level these differences and keep economics ruling.
> In our new universal income/jobkeeper workd you earn the same in Sydney Melbourne or Gympie Eden...that is bad news for Sydney Melbourne and very good news for previously cheap areas.
> And so very very bad news for negative gearing IP investors...
> This is happening now.



apologies for abysmal typing, phone keyboard is too small


----------



## againsthegrain (1 February 2021)

qldfrog said:


> not sure if you were replying to me, or one of my ignored list.No: I did not bought an ip recently and offloaded 2 in the last few years, only have kept one seaside apartment for my old days.abysmal ROI



no I was replying to over9k...must be on your ignore


----------



## satanoperca (1 February 2021)

Dire warning for Aussie housing market
					

When outsiders think about Australian culture, they might think of laid back people defined by sun, sand and backyard barbecues.




					www.news.com.au
				






> The Morrison government committed to $507 billion in stimulus policies, encompassing the JobKeeper program and JobSeeker supplement, among others.
> 
> At the same time the Reserve Bank (RBA) committed to up to $200 billion in near free (0.10 per cent interest) funding for the banks at a time when bank funding costs were spiking due to rising risks in financial markets.
> 
> To put these measures into perspective the entire Rudd-Gillard Global Financial Crisis era stimulus package was $51 billion spread over four years.



Explains it all, Libs will bankrupt the country before they allow property price to even decline a little bit, let alone crash.


----------



## over9k (1 February 2021)

againsthegrain said:


> Sounds a bit to me like you just might have a bias in the re market,  you didn't happen to buy a ip recently?



Nope? Not sure where you're getting the bias bit from at all actually? 

Like I've said before, there's two politicians in the country that don't own an investment property. Two. Fill in the blanks from there.


----------



## sptrawler (1 February 2021)

satanoperca said:


> Dire warning for Aussie housing market
> 
> 
> When outsiders think about Australian culture, they might think of laid back people defined by sun, sand and backyard barbecues.
> ...



Im sure if it was in the best interest of most Australians, for a property collapse a Government would bring it about.
In Perth the property market is just coming out of the doldrums, after 8 years of property price losses.
Oh but I forgot there are only two places in Australia that property prices matter, Sydney and Melbourne, who gives a $hit about the rest of Australia.
Do people really care about property prices, or is it that the most vocal, want to get on board the Sydney ,Melbourne ponzi scheme, for personal gain.


----------



## satanoperca (1 February 2021)

sptrawler said:


> Im sure if it was in the best interest of most Australians, for a property collapse a Government would bring it about.



Are you serious, do you think our elected officials give a rats arse about you or me, they are only interested in their own requirements to survive, for their property investments to keep going up in value.

Simple, the govnuts will bankrupt this country to keep property prices rising, they are not interested in invovations, manufacturing, service based industries, just one asset class that they all invest in property.


----------



## againsthegrain (1 February 2021)

satanoperca said:


> Are you serious, do you think our elected officials give a rats arse about you or me, they are only interested in their own requirements to survive, for their property investments to keep going up in value.
> 
> Simple, the govnuts will bankrupt this country to keep property prices rising, they are not interested in invovations, manufacturing, service based industries, just one asset class that they all invest in property.




1% landlords 99% renters.. sunshine and lollipops


----------



## sptrawler (1 February 2021)

Well IMO a lot of the problem Australia has is highlighted by the response to the quarantine  guy in Perth, many are saying they should increase the pay, so they dont have to have a second job driving Uber.
I bet if you tripled their pay, they would still do a second job, if time allowed.
The problem is most Aussies have become lazy, the people who come from real underpriviliged countries can see the opportunity and will jump at it.
Eventually they will leapfrog the Aussies, so who is wrong?
Just my opinion.


----------



## over9k (2 February 2021)

sptrawler said:


> Well IMO a lot of the problem Australia has is highlighted by the response to the quarantine  guy in Perth, many are saying they should increase the pay, so they dont have to have a second job driving Uber.
> I bet if you tripled their pay, they would still do a second job, if time allowed.
> The problem is most Aussies have become lazy, the people who come from real underpriviliged countries can see the opportunity and will jump at it.
> Eventually they will leapfrog the Aussies, so who is wrong?
> Just my opinion.



Thing is trawler, our minimum wage will buy you a palace in india or bangladesh or wherever, so as far as they're concerned, they're being paid a fortune. Hence the maximum effort.


----------



## againsthegrain (2 February 2021)

over9k said:


> Thing is trawler, our minimum wage will buy you a palace in india or bangladesh or wherever, so as far as they're concerned, they're being paid a fortune. Hence the maximum effort.




It also works when living the same standard of life as they are used to e.g   2 or 3 families in a small unit/apartament. Its not that Aussies are lazy its we are used to a different standard of life.  Working min wage or 15 hour days is not sustainable for a whole lifetime.  Who wishes they worked a 3rd job on their deathbed?


----------



## satanoperca (2 February 2021)

So what have been the drivers to property price increases over the last decade:
1. Mass Immigration - increase in demand, inability to meet supply
2. Allowing the other 6billion people on this planet to buy shelter which is meant to be for Australians
3. Availability of cheap credit - ability to pay more for less, driving up demand
4. Sociology - this is one of the biggest driving demand, Aussies feel that property only ever goes up and for the last 30years they have been correct.

What changed with Covid:
1. Mass Immigration came to a halt, should have seen prices correct, but alias our gonuts come to the table with
2. Massive injection of capital from RBA and Govnuts, and when I mean massive, I mean massive, never in the history before us, have we seen the govnuts pump borrowed money into one sector, this was via bank mortgage amnesties - backed by the govnuts, RBA injection of $200B, jobkeeper and jobseeker, along with govnuts grants to businesses, govnut grants on stamp duties and renovations.

So we had a classic example of demand being reduced (people needing homes/shelter) and demand being increased (people looking to make money with only 2 options left, shares or property).

So fundamentals are out the door, when govnuts interfere.

My question, is if the govnuts think the economy is going great, why are interest rates at almost zero, and if the economy is going crap are IR to be -2% - then why work, the banks will pay you to borrow.

The reserve bank and in the ineptitude of our elected official is staggering, but the  complacency of Australians also staggers me, the majority believe that property is a means to wealth, without realising that without a community to live in that is safe, house prices mean nothing.

I feel that it is going to be sometime before we see a reset to good old fashion values and my children will be able to work hard and buy shelter.


----------



## over9k (2 February 2021)

satanoperca said:


> So what have been the drivers to property price increases over the last decade:
> 1. Mass Immigration - increase in demand, inability to meet supply
> 2. Allowing the other 6billion people on this planet to buy shelter which is meant to be for Australians
> 3. Availability of cheap credit - ability to pay more for less, driving up demand
> ...



My thoughts exactly. So the question is, what happens next? The only thing we can be certain of is that the politicians will at least try to keep the bubble pumped, and whilst australians might be out of ammo (credit), cashed up foreigners sure aren't, and there's a hell of a lot more of them too. Interest rates (credit) are only one type of ammo that they've run out of - they still have several others. 

As I've said before, only once the politicians start selling up should we be thinking about doing the same. In the meantime, there's really only inheritance.


----------



## satanoperca (2 February 2021)

over9k said:


> So the question is, what happens next?



Only time will tell, and there lies the problem to your question, time. 1yr, 5yrs, 10yrs in the future.

I have no confidence that our elected govnut officials will change anything, show direction, be leaders and make decisions for the betterment of the country of Australia, today, tomorrow, and in 10 years time.

Likewise, I don't think the Australians as a whole, really care to elect people of leadership, that can forge economic decisions that benefit Australia as a whole for not just today but in 2 decades time, most Australian's or that be it humans are only interested in what they can gain individually today rather than collectively in the future. 

So, to answer your question, nothing will happen, it will be the same rinse and repeat strategies from the RBA and the Govnuts, until a collective mass of voters rise up and present a different way/ideas of governance.



over9k said:


> Interest rates (credit) are only one type of ammo that they've run out of - they still have several others.



Agreed
1. Any foreigner can buy shelter in Australia, big world we live in (crap that has already been unofficially been happening for decades, please don't tell anyone)
2. Super, release the hounds, a very large amount of capital that can support prices
3. More govnuts stimulus to the housing sector, govnuts can borrow and then deploy capital into supporting prices as they are not responsible for the long term payments or repayments of said debt.

And so at some time in the future when this all unravels, our elected officials and employees of the RBA, govnut economists will all say the same old adage :
"NO ONE COULD HAVE SEEN THIS COMING"

I will add as a species, we are failing badly, with all the knowledge we have, we are destroying the planet and reducing happiness for all humans that have to exist on the one piece of property we have to exist, called Planet Earth.

When the aliens, come down, or future generations look back at our generation, they will perceive us as basic organisms, trying to compete for resources that we can all share, but were greedy as a collective and destructive as a whole.

But in whole, nothing has change in thousands of years.


----------



## over9k (2 February 2021)

Took the words right out of my mouth. 

So in the meantime, if the politicians hold - we hold.


----------



## gartley (2 February 2021)

over9k said:


> Took the words right out of my mouth.
> 
> So in the meantime, if the politicians hold - we hold.



Personally I don't care to hold anything backed by the promises of politicians other than hard assets like precious metals and even Bitcoin.
It may seem that for example the housing trend will continue indefinitely because it has already persisted for such a long time. But let's face it, it's a ticking time bomb. The sad hard facts are that every debt bubble throughout history has eventually ended up in bust without exception.  This bull market started in the early 1980's, and that by any standards is very long bull market, more importantly without any significant corrections along the way. That makes it downright scary.
What will make it go bust? Certainly as you say the powers that be will continue to pull out all stops to continue the good times. But things like IR are not entirely in control of the RBA but subject over the long term to the broader global bond market movements. So there is only so far the RBA can go…
I don't like to predicting, I like to look at the charts and look at circumstances from which to trade from, but looking at things based on  what has taken place so far this year, initially (perhaps in the next 2-3 years) a driver maybe unemployment.
Generally lockdowns have decimated many SME owners, especially retail.
These SME pay their taxes and employ people and they are now becoming endangered species. We see this trend worldwide and as
SME usually make up 50% of GDP, the government has by imposing lock downs entered into a suicide pact with the economy.
 It will very interesting in the months ahead as the stimulus is ceased...


----------



## over9k (2 February 2021)

I don't disagree with you at all - but you think the politicians won't get their money out of dodge before anything really happens?


----------



## gartley (2 February 2021)

over9k said:


> I don't disagree with you at all - but you think the politicians won't get their money out of dodge before anything really happens?



No doubt some will , but most will have the blinkers on and continue to hold like most of the population. Because  they will have the conviction of thinking " the market always goes up and never has or will ever go into a bear market". 
For now they have thrown everything at their disposal to keep the levitation intact. The question now is, what do they have left?  Especially since they will be tapering the stimulus as in Scomo's words yesterday: the economy cannot continue depending to survive solely on tax payers money....


----------



## jbocker (2 February 2021)

over9k said:


> As I've said before, only once the politicians start selling up should we be thinking about doing the same. In the meantime, there's really only inheritance.



Hmmmm, better watch what my kids bring around for dinner!


----------



## satanoperca (2 February 2021)

over9k said:


> I don't disagree with you at all - but you think the politicians won't get their money out of dodge before anything really happens?



Again I agree, but pollies are dumb and don't have any comprehension of market and market forces.

2 months ago, did the hedge funds in the USA think that they could be disrupted by a group of forum users against the $$$$$$ they had until control, NO.

Times can change fast, pollies can change just as fast, ask Mr Chump, Past President of the largest economy in the world, months later cannot find a reputable lawyer to stand by his lies.

Pollies will lie to protect themselves, not something you can bank on.


----------



## sptrawler (2 February 2021)

jbocker said:


> Hmmmm, better watch what my kids bring around for dinner!



They aren't talking about us in planet Perth jbocker, they are talking about trying to jump on the roundabout in Sydney or Melbourne, where real Australians live. 
Not in the other 97% of Australia's land mass, where the unwashed masses like us live. 😂 

I lay awake at night worrying about people who can't afford a house in Sydney or Melbourne, it must be absolutely devastating for them.


----------



## sptrawler (2 February 2021)

satanoperca said:


> 2 months ago, did the hedge funds in the USA think that they could be disrupted by a group of forum users against the $$$$$$ they had until control, NO.



If all prospective property buyers in Sydney and Melbourne organised themselves the same way, I have no doubt they could bring about the same result, but getting people to *not* join the ponzi scheme is difficult. Everyone wants to buy a certain winner.


----------



## over9k (2 February 2021)

satanoperca said:


> Again I agree, but pollies are dumb and don't have any comprehension of market and market forces.
> 
> 2 months ago, did the hedge funds in the USA think that they could be disrupted by a group of forum users against the $$$$$$ they had until control, NO.
> 
> ...



Mmm talk is cheap though. 

Everyone always look at things like CEO's selling or buying their holdings in the very company they run as a very reliable signal to follow but don't do the same with politicians at a macro level. It kind of baffles me to be honest, if people can recognise why to do this with a chief exec buying/selling whatever they're in control of, why is it not also a good idea to do with politicians and whatever they're in control of?


----------



## gartley (2 February 2021)

over9k said:


> Mmm talk is cheap though.
> 
> Everyone always look at things like CEO's selling or buying their holdings in the very company they run as a very reliable signal to follow but don't do the same with politicians at a macro level. It kind of baffles me to be honest, if people can recognise why to do this with a chief exec buying/selling whatever they're in control of, why is it not also a good idea to do with politicians and whatever they're in control of?




So follow the politicians? Yeah right!!
After Scummo won the election he came and said buy, buy, buy, .Nine months later the stock market crashes 40%.
I wonder if the polllies sold their shares before before hand, surely they had "inside information"?
Instead we heard the Australian economy is robust and strong. "Look here, don't look there".
Wanna know the real reason why housing is protected?  Because this country has nothing else and when that goes (and it will eventually get hit)  we are in deep excrement.   In the last 8 years our manufacturing base has been decimated entire industries have disappeared, exports in the last 5 months have smashed, education income has disappeared, tourism and hospitality non existent, small businesses going by the day, retail well the list goes on and on....
Feel sorry for our kids...


----------



## over9k (2 February 2021)

gartley said:


> So follow the politicians? Yeah right!!
> After Scummo won the election he came and said buy, buy, buy, .Nine months later the stock market crashes 40%.
> I wonder if the polllies sold their shares before before hand, surely they had "inside information"?
> Instead we heard the Australian economy is robust and strong. "Look here, don't look there".
> ...



You know full well the crash in the market was caused by the virus.

One republican senator sold about 60 million worth of stock just a couple of days before trump closed the U.S border. Nancy pelosi just bought a whole mountain of tesla calls literally the day before biden executive ordered federal vehicles to be electric. This kind of stuff is absolutely endless.

Are you seriously going to sit here and genuinely argue that politicians don't insider trade basically _constantly_?


Again, why does this logic apply with chief exec's buying/selling what they control but not politicians buying/selling whatever they control?


----------



## againsthegrain (2 February 2021)

over9k said:


> You know full well the crash in the market was caused by the virus.
> 
> One republican senator sold about 60 million worth of stock just a couple of days before trump closed the U.S border. Nancy pelosi just bought a whole mountain of tesla calls literally the day before biden executive ordered federal vehicles to be electric. This kind of stuff is absolutely endless.
> 
> ...




So where do you monitor which politicians are selling and what? 

Do you monitor it?  Sure if it happens to come up in the paper but otherwise I don't think I know anybody that keeps tabs on all the politicians in aus.  On asx there is automatic statements when large sales/buys take place,  however with re?  I don't know


----------



## Smurf1976 (2 February 2021)

againsthegrain said:


> Working min wage or 15 hour days is not sustainable for a whole lifetime.



I've "been there, done that" with working 7 days a week and so on in the past.

It's very doable for a while but nobody in their right mind would plan on doing it for a lifetime.

Incidentally that's a common element among everyone I know who's reasonably comfortable financially. They've all gone through a few years where life's a blur amidst the chaos of work, work and more work. Most seem to try and bring it to a halt once the house is paid off.

There might be a way for the ordinary person to get ahead without that, but it's the common element from what I've seen.


----------



## satanoperca (2 February 2021)

over9k said:


> Mmm talk is cheap though.
> 
> Everyone always look at things like CEO's selling or buying their holdings in the very company they run as a very reliable signal to follow but don't do the same with politicians at a macro level. It kind of baffles me to be honest, if people can recognise why to do this with a chief exec buying/selling whatever they're in control of, why is it not also a good idea to do with politicians and whatever they're in control of?



I think you and I are looking at housing differently, I see it as a basic requirement for building and maintaining a productive and safe society, and left in the hands of greedy pollies and banks will not meet its primary need, shelter, I did not see it as an asset class to trade for profit as a general rule. That is for the building and development of businesses which in turn can help provide for need one shelter through employment and wage growth.

But each to their own.


----------



## sptrawler (3 February 2021)

Smurf1976 said:


> I've "been there, done that" with working 7 days a week and so on in the past.
> 
> It's very doable for a while but nobody in their right mind would plan on doing it for a lifetime.
> 
> ...



That kind of sums up what I said to a friend, who asked how did you get set up, I said for most people it isnt easy.
At some time in your life, you have to go hard to get ahead, if it was easy everyone would be comfortable and most arent.
Relying on luck isnt a plan.


----------



## over9k (3 February 2021)

satanoperca said:


> I think you and I are looking at housing differently, I see it as a basic requirement for building and maintaining a productive and safe society, and left in the hands of greedy pollies and banks will not meet its primary need, shelter, I did not see it as an asset class to trade for profit as a general rule. That is for the building and development of businesses which in turn can help provide for need one shelter through employment and wage growth.
> 
> But each to their own.



 


This is an investment forum. We're discussing how to make money. My personal opinions on how the country should be run etc are irrelevant and I haven't mentioned them for that very reason.


----------



## gartley (3 February 2021)

over9k said:


> You know full well the crash in the market was caused by the virus.
> 
> One republican senator sold about 60 million worth of stock just a couple of days before trump closed the U.S border. Nancy pelosi just bought a whole mountain of tesla calls literally the day before biden executive ordered federal vehicles to be electric. This kind of stuff is absolutely endless.
> 
> ...



Our economy has been in a gradual decline for te last 8 years and long before the virus came along.  In so far as the markets go, the virus was just a trigger. Besides market continued to trend strongly for months whilst even while the virus was in news.The correction was well overdue and if it wasn't the virus then something else would have triggered a correction albeit not with the same speed and depth because time was up for the trend for that leg up.
Everyday people look to justify what the market has done after it has already moved.
For example many attribute the crash during 9/11 to a terrorist attack, but the markets where in decline well before that, and it was just a trigger for the final capitualtion.
Back in 1929 when the stockmarket crashed the government of the day had no idea why it happened as fundamentals where shown to be strong shortly before( which is usually the case before a crash, everything seems normal).  They appointed economist Edward  Dewey  to to find the reasons for the crash. His findings?  Simple: It was cyclical, when time is up and the market has reached an extreme, the trend must change. The same in 1987


----------



## over9k (3 February 2021)

gartley said:


> Our economy has been in a gradual decline for te last 8 years and long before the virus came along.  In so far as the markets go, the virus was just a trigger. The correction was well overdue and if it wasn't the virus then something else would have triggered a correction albeit not with the same speed and depth because time was up for the trend for that leg up.
> Everyday people look to justify what the market has done after it has already moved.
> For example many attribute the crash during 9/11 to a terrorist attack, but the markets where in decline well before that, and it was just a trigger for the final capitualtion.
> Back in 1929 when the stockmarket crashed the government of the day had no idea why it happened as fundamentals where shown to be strong shortly before( which is usually the case before a crash, everything seems normal).  They appointed economist Edward  Dewey  to to find the reasons for the crash. His findings?  Simple: It was cyclical, when time is up and the market has reached an extreme, the trend must change. The same in 1987



The economy has been in decline for a hell of a lot longer than 8 years. 

Take a look at the debt graphs (both public and private) and that'll tell you everything you need to know. Much of the western world has been running on little more than credit expansion for an entire generation. 

The question is when everyone are going to be tapped out and what are the politicians going to do about it. As I keep saying, internal demand from credit is only one piece of the puzzle. There's a lot of external demand that can be tapped yet.


----------



## gartley (3 February 2021)

over9k said:


> The economy has been in decline for a hell of a lot longer than 8 years.
> 
> Take a look at the debt graphs (both public and private) and that'll tell you everything you need to know. Much of the western world has been running on little more than credit expansion for an entire generation.
> 
> The question is when everyone are going to be tapped out and what are the politicians going to do about it. As I keep saying, internal demand from credit is only one piece of the puzzle. There's a lot of external demand that can be tapped yet.



Agreed. But most of the damage and the loss of the industries that built this country has been recent, although they where in decline before that little has been done by the government of the day to support and save them.


----------



## joeno (3 February 2021)

I have a property in Sydney. While i'm not bullish on property and have not gained much from the investment, it's still better than Aussie trash cash. Which in turn is better than the joke that is US dollars.

I put it roughly around Gold. Defensive investment. Too bad it ran up quite a lot after the GFC so it's likely we're going to get mediocre returns ranging around 0-5% for the next 5-10 years. Before we have another property bull run.


----------



## over9k (3 February 2021)

gartley said:


> Agreed. But most of the damage and the loss of the industries that built this country has been recent, although they where in decline before that little has been done by the government of the day to support and save them.



But again, it doesn't matter. We're only here to discuss what will happen with housing and why and how to make money. 

There's plenty of bullets the powers that be can still fire at housing, this is a fact.


----------



## againsthegrain (3 February 2021)

over9k said:


> But again, it doesn't matter. We're only here to discuss what will happen with housing and why and how to make money.
> 
> There's plenty of bullets the powers that be can still fire at housing, this is a fact.




So where and how do you keep tabs on what the politicians currently hold buy or sell? How do you know when a sell off is happening if it is not in the media?


----------



## sptrawler (3 February 2021)

gartley said:


> Agreed. But most of the damage and the loss of the industries that built this country has been recent, although they where in decline before that little has been done by the government of the day to support and save them.



The history of the decline in manufacturing in Australia started in the 1970's, accelerated through the 1980-90's and has basically been a lost cause since the early 2000's.
We have discussed it endlessly on the forum, once tariffs were dismantled and globalistation (build it in the cheapest place) started, Australia's manufacturing didn't stand a chance.




__





						Australian Manufacturing: A Brief History of Industry Policy and Trade Liberalisation
					

Research Paper 7 1999-2000 Michael Emmery Economics, Commerce and Industrial Relations Group 19 October 1999 Contents Major Issues Introduction Australia's Experience with Trade Liberalisation Overseas experience Conclusion Endnotes Glossary APEC	Asia-Pacific Econo




					www.aph.gov.au


----------



## jbocker (3 February 2021)

over9k said:


> Like I've said before, there's two politicians in the country that don't own an investment property. Two. Fill in the blanks from there.



Wow. that is a precise number.


againsthegrain said:


> So where and how do you keep tabs on what the politicians currently hold buy or sell? How do you know when a sell off is happening if it is not in the media?



Do politicians have to disclose their investment info (in the case of IPs)? I thought that most would be hidden inside alternative names, eg spouse, trusts, companies and other? holdings). I appreciate that they probably do need to disclose the information _somewhere_ and it could be discoverable using things like IP data although not sure this links back to the person when its held in a company.
Yes if all the pollies were to dump their IPs, it would be a sure sign of doom.


----------



## againsthegrain (3 February 2021)

jbocker said:


> Wow. that is a precise number.
> 
> Do politicians have to disclose their investment info (in the case of IPs)? I thought that most would be hidden inside alternative names, eg spouse, trusts, companies and other? holdings). I appreciate that they probably do need to disclose the information _somewhere_ and it could be discoverable using things like IP data although not sure this links back to the person when its held in a company.
> Yes if all the pollies were to dump their IPs, it would be a sure sign of doom.




Thats right however it would be well too late for the average aussie or mum and dad investor,  it could be happening right now and we wouldn't know until the dust settled - just a example 

Just referencing this



over9k said:


> Took the words right out of my mouth.
> 
> So in the meantime, if the politicians hold - we hold.


----------



## over9k (3 February 2021)

Ok so you guys are obviously looking for my sources on a lot of this stuff, so what I'll say is that macrobusiness is your bible with this 



With that being said - there's a lot of people that keep their fingers on this particular pulse. Follow the right news services/people and you'll get the information pretty quickly. e.g https://www.businessinsider.com.au/...icians-own-a-staggering-524-properties-2017-4 

All you need to do with most of this kind of stuff is just follow the handful of services that are actually worth following and just check in on them each day. It takes a few minutes a day at most. That's it. And this is true for almost everything.


----------



## againsthegrain (3 February 2021)

over9k said:


> Ok so you guys are obviously looking for my sources on a lot of this stuff, so what I'll say is that macrobusiness is your bible with this




Last time I checked the stats it was about 96% of politicians owned a property however around 50%, some sources say 2/3 own a investment property, and yes just a brief google search as I really have no stakes here


----------



## againsthegrain (3 February 2021)

over9k said:


> Ok so you guys are obviously looking for my sources on a lot of this stuff, so what I'll say is that macrobusiness is your bible with this
> 
> 
> 
> ...




Yeah but that article is APR 20, 2017, 5:26 PM


----------



## over9k (3 February 2021)

Yeah that post was a 30 second google search. But you can see how easy it was to get a precise number (though that particular article is obviously out of date now). You can see how it was a goldmine at the date of publication though. 

Again, this is not hard stuff to find if you're willing to spend a bit of time looking. It's even easier if you just follow the kind of services that you pay a subscription fee to do it for you


----------



## againsthegrain (3 February 2021)

over9k said:


> Yeah that post was a 30 second google search. But you can see how easy it was to get a precise number (though that particular article is obviously out of date now). You can see how it was a goldmine at the date of publication though.
> 
> Again, this is not hard stuff to find if you're willing to spend a bit of time looking. It's even easier if you just follow the kind of services that you pay a subscription fee to do it for you




I know what you are saying,  but on the flip side what I am trying to get at is when I buy a stock I can look at live data, market depth, recent announcements, see if any substantial changes to holdings took place etc. 

Googling around and getting secondary or worse info from news portals which usually lag with stats and info isn't exactly keeping tabs and following what the pollies are holding. 

If I was balls deep say $1m in property and sweating trying to mirror politician's moves im not sure those sources would do for me.

Just saying you don't know who's doing what until the party is over,  right now music is playing still.

p.s  as we all agree on 1 thing, politicians only care about their own interests,  so once they exit at a good time screw the rest


----------



## sptrawler (3 February 2021)

Here is something from 2014 and 2017, I'm sure there are newer reports, but they are interesting.








						Aussie politicians and their $300 million property portfolio
					

Are politicians' own vested interests driving flawed reforms that actually increase house prices? Research and commentary compiled by David Lindsay, Philip Soos and Paul Egan.




					independentaustralia.net
				












						How many properties does your local politician own?
					

Find out how many properties your local member has here.




					www.abc.net.au


----------



## gartley (3 February 2021)

sptrawler said:


> The history of the decline in manufacturing in Australia started in the 1970's, accelerated through the 1980-90's and has basically been a lost cause since the early 2000's.
> We have discussed it endlessly on the forum, once tariffs were dismantled and globalistation (build it in the cheapest place) started, Australia's manufacturing didn't stand a chance.
> 
> 
> ...



Agreed, and having worked in the auto industry for 35 years I saw this happening first hand. But it's the predecessors of the current government Abbott/Hockey that accelerated the process and put the final nails in the coffin. Toyota had made a commitment to continue manufacturing in Australia until 2023. Now Scummo says we made a mistake and need to revive it. Too  late, once those skills are gone it will take a long time to bring them back.


----------



## Smurf1976 (3 February 2021)

gartley said:


> For example many attribute the crash during 9/11 to a terrorist attack, but the markets where in decline well before that, and it was just a trigger for the final capitualtion.



If someone looked purely at the sequence of events, they'd conclude that stock market declines cause planes to crash into buildings not the reverse. It was as you say well underway before anyone heard of 11 September as being anything other than simply a date or for those watching more closely a protest group.


----------



## Smurf1976 (3 February 2021)

over9k said:


> The economy has been in decline for a hell of a lot longer than 8 years.



Reminds me of a discussion I had with someone I worked with circa 2002-03. Remember it extremely well due to their furious response to my comment that Holden and Ford were both doomed at least in Australia and it was just a question of the detail of when they'd close.

That was the point I grasped the concept that religious-like beliefs have a far wider application than actual religion as such. Holden was a religion of sorts, so was Ford, so is "house prices always go up", so are a few other things. Challenge someone's religion at your peril.

The writing was however well and truly on the wall at that time which is my point. It just took the next 15 years to play out which is an important point - you can be right about something but it can take so long to actually occur that the prediction isn't of any real use in practice.

Same could be said about housing. There's an abundance of reasons why it "should" crash and that's been the case for years but never underestimate the inventiveness of those who seek to kick the can down the road. However long logic says it ought to take, it'll take far longer in practice.


----------



## gartley (3 February 2021)

Smurf1976 said:


> Same could be said about housing. There's an abundance of reasons why it "should" crash and that's been the case for years but never underestimate the inventiveness of those who seek to kick the can down the road. However long logic says it ought to take, it'll take far longer in practice.



When I first started trading about 25 years ago I remember going to a seminar and the speaker was presenting his thoughts about investor psychology/behavoiur.  One key element of his presentation has stuck with me to this day,  It takes no skill to find yourself in a winning trade,  but very few know when to get out. The market will do what it wants, it can be a short  trend or a long trend no one knows, and what we need to decide is  1/ Is it a good time to jump on board and how much will it cost me to see if this trend continues or not, 2/ If we are on board is the trend at risk?


----------



## gartley (3 February 2021)

With regard to the housing market the EW chart I posted some days ago suggests this drive up is a 5th and last wave and the move down in IR is and an ending diagonal. These patterns are not set in stone, 5th waves can extend. But it's a warning sign that we are in the tail end of this trend that began 40 years ago based on the cycles approach of Elliot wave. Exact timing is very hard in fact impossible and to be left for the gamblers.
But this  5 wave structure is not just in Australia, it's across the world. Look at the chart below of UK house prices, London house prices  in the pink 5 wave structure and UK as whole as well as  Scotland, Wales likewise and Ireland showing a truncation.  Once again property prices are mirrors of IR in reverse.  The IR is largely dependant on the movement of the global bond market specifically in the US.
The only difgference is the magnitude of the rises. Australias market has been much more parabolic in nature and our curve has gone vertical. As you know markets don't stay vertical for very long.
But as I say the key takeaway here is not that the market must turn here, but rather that this current juncture is a 5th wave


----------



## over9k (3 February 2021)

againsthegrain said:


> I know what you are saying,  but on the flip side what I am trying to get at is when I buy a stock I can look at live data, market depth, recent announcements, see if any substantial changes to holdings took place etc.
> 
> Googling around and getting secondary or worse info from news portals which usually lag with stats and info isn't exactly keeping tabs and following what the pollies are holding.
> 
> ...



Here's a hot tip for you:

Join a political party (you know which one), and go to the meetings. You wouldn't believe the whispers you'll hear 


Smurf1976 said:


> Reminds me of a discussion I had with someone I worked with circa 2002-03. Remember it extremely well due to their furious response to my comment that Holden and Ford were both doomed at least in Australia and it was just a question of the detail of when they'd close.
> 
> That was the point I grasped the concept that religious-like beliefs have a far wider application than actual religion as such. Holden was a religion of sorts, so was Ford, so is "house prices always go up", so are a few other things. Challenge someone's religion at your peril.
> 
> ...



My point exactly.

And housing isn't even in structural (forgive the pun) decline yet.


----------



## againsthegrain (3 February 2021)

over9k said:


> Here's a hot tip for you:
> 
> Join a political party (you know which one), and go to the meetings. You wouldn't believe the whispers you'll hear




This is actually not a bad idea


----------



## over9k (3 February 2021)

againsthegrain said:


> This is actually not a bad idea



It is an excellent idea


----------



## againsthegrain (3 February 2021)

over9k said:


> It is an excellent idea



ha ha yeah well if I was at least knees deep in re id prob do it at any chance of some inside trading kind of info


----------



## over9k (3 February 2021)

Well, I think my thoughts on this matter I've made more than clear. I think them for a reason. You can probably fill in the blanks from there.


----------



## againsthegrain (3 February 2021)

over9k said:


> Well, I think my thoughts on this matter I've made more than clear. I think them for a reason. You can probably fill in the blanks from there.



I still think you are spruiking it, but its the right thread so no objections here


----------



## over9k (3 February 2021)

I don't think I'm exactly going to influence the market on an internet forum dude... 

If I actually was a spruiker, I wouldn't be a very good one.


----------



## dyna (3 February 2021)

Smurf1976 said:


> I've "been there, done that" with working 7 days a week and so on in the past.
> 
> It's very doable for a while but nobody in their right mind would plan on doing it for a lifetime.
> 
> ...



Me too.back in the high interest 1980's and negatively geared to the hilt.Looking back,just madness.Would never recommend it.Still,I've kept the properties,mainly because ....dunno,don't need any more money,I guess.Real estate! A mad game,for sure.


----------



## sptrawler (3 February 2021)

dyna said:


> Me too.back in the high interest 1980's and negatively geared to the hilt.Looking back,just madness.Would never recommend it.Still,I've kept the properties,mainly because ....dunno,don't need any more money,I guess.Real estate! A mad game,for sure.



I went through the same period of time, anyone who thinks renting out investment properties is fun, had better make sure they have a strong marriage before they start on the path. 
I sold out years ago, just way too many bad tenants for me, the good tenants bought their own place the bad tenants stayed. 😂 
I think you have to have the right sort of personality for renting out properties, I certainly didn't, way too soft.


----------



## gartley (3 February 2021)

sptrawler said:


> I went through the same period of time, anyone who thinks renting out investment properties is fun, had better make sure they have a strong marriage before they start on the path.
> I sold out years ago, just way too many bad tenants for me, the good tenants bought their own place the bad tenants stayed. 😂
> I think you have to have the right sort of personality for renting out properties, I certainly didn't, way too soft.



Likewise, been there done that and not a good outcome at all for me either. I'll stick to the markets!!


----------



## over9k (3 February 2021)

Foreign students are generally good tenants


----------



## gartley (3 February 2021)

over9k said:


> Foreign students are generally good tenants



What students?    I worked at a university in Melbourne the last 6 years. From the day I started the uni borrowed hand over first to build student apartments and dormatories all over the place. Now most are empty...


----------



## over9k (3 February 2021)

Yeah, that's now. But once the borders are opened and we need the money even more than we did before, you just watch...


----------



## gartley (3 February 2021)

over9k said:


> Yeah, that's now. But once the borders are opened and we need the money even more than we did before, you just watch...



Who knows, Uni's hit really hard with the average international student bringing in $44K a year just for tuition. Most from China


----------



## gartley (3 February 2021)

So houses only go up?  Not when measured against real money  they don't. In fact forget about doubling every 10 years. Try  more than halving in the last 10 to 15 years!! Keep stacking those bars...


----------



## sptrawler (4 February 2021)

gartley said:


> So houses only go up?  Not when measured against real money  they don't. In fact forget about doubling every 10 years. Try  more than halving in the last 10 to 15 years!! Keep stacking those bars...
> View attachment 119506
> View attachment 119507



Could you throw up the Perth graph? Lol


----------



## frugal.rock (4 February 2021)

over9k said:


> Yeah, that's now. But once the borders are opened and we need the money even more than we did before, you just watch...





gartley said:


> Who knows, Uni's hit really hard with the average international student bringing in $44K a year just for tuition. Most from China



If you haven't got the picture, Australians are rascist.
Disinformation campaigns inside China are discouraging students from attempting to come to Aus.

My thoughts are, NZ uni's will have em flocking there as soon as their able.... that and France.
🐙


----------



## joeno (4 February 2021)

gartley said:


> So houses only go up?  Not when measured against real money  they don't. In fact forget about doubling every 10 years. Try  more than halving in the last 10 to 15 years!! Keep stacking those bars...
> View attachment 119506
> View attachment 119507




You can't rent out gold.


----------



## over9k (4 February 2021)

Nor will a bank let you borrow squillions to lever into it either.


----------



## Smurf1976 (4 February 2021)

gartley said:


> I worked at a university in Melbourne the last 6 years. From the day I started the uni borrowed hand over first to build student apartments and dormatories all over the place. Now most are empty...



Same pretty in most (all?) states I think.

Universities could themselves be classified as very bubble-like in their behaviour in recent times which seemed to be extrapolating recent growth trends into the indefinite future. 

In less than a generation, they've gone from a functional place people went in order to obtain a tertiary education to a big business in their own right.


----------



## againsthegrain (4 February 2021)

Smurf1976 said:


> Same pretty in most (all?) states I think.
> 
> Universities could themselves be classified as very bubble-like in their behaviour in recent times which seemed to be extrapolating recent growth trends into the indefinite future.
> 
> In less than a generation, they've gone from a functional place people went in order to obtain a tertiary education to a big business in their own right.




Not to mention uni fees are in a similar bubble as re prices,  very discouraging to local kids


----------



## basilio (4 February 2021)

Greg Jericho always uses good research to backup his analysis of economic trends. He has some startling statistics to show the upward pressure on housing prices  at teh moment - and why this is happening.











						Australia's housing market is boosted by policies designed to ensure prices keep rising | Greg Jericho
					

One thing you can count on in politics is that any government will look after homeowners




					www.theguardian.com


----------



## gartley (4 February 2021)

joeno said:


> You can't rent out gold.



I ain't the gold the owner is renting out it's the house. The renter can pay owner out whatever they agree on be it a slab of beer or any currency they decide on......


----------



## gartley (4 February 2021)

over9k said:


> Nor will a bank let you borrow squillions to lever



It's the unit of measure that's important.  Do the same for DOW and it can be seen that it actually peaked in the year 2000 .
It shows that the subsequent inflated price rises in terms of fiat are artificial ie from QE as well as other government and central bank manipulations.
A few years ago  whilst Gold was falling in terms of USD it had already bottomed against other currencies such as AUD, CAD, GBP and EUR.  This was suggesting  it was only a matter of time before a turn up  in the terms of USD was at hand.
The same can be said about other assets relative to gold......


----------



## gartley (4 February 2021)

sptrawler said:


> Could you throw up the Perth graph? Lol


----------



## sptrawler (4 February 2021)

Thanks @gartley, that graph pretty well sums up the state of housing in Perth, yet all we hear is how housing in Australia is in a bubble. 😂


----------



## basilio (4 February 2021)

sptrawler said:


> Thanks @gartley, that graph pretty well sums up the state of housing in Perth, yet all we hear is how housing in Australia is in a bubble. 😂




That's an interesting observation SP and clearly you live in the West so you have that   local perspective.
However if you check out the post I made on housing demand in Oz there was a particular note on the huge (83- 87%) increase in WA housing finance in the past 12 months.  Post 14323

Perhaps the tide is turning ?


----------



## sptrawler (4 February 2021)

basilio said:


> That's an interesting observation SP and clearly you live in the West so you have that   local perspective.
> However if you check out the post I made on housing demand in Oz there was a particular note on the huge (83- 87%) increase in WA housing finance in the past 12 months.  Post 14323
> 
> Perhaps the tide is turning ?



There is also $200billion in extra savings, due to the virus, so if there is a lot of savings and cheap housing one meets the other. Add to that $65,000 incentives and there will be further fuel to the fire, but as happened last time once the demand is fulfilled things will go back to the long term norm.
_The first paragraph in your article said enough for me.
The latest housing loan figures show Australia’s housing market* continues on its merry way*. The market is still boosted by government policies designed to ensure prices keep rising, even in an environment where wages are unlikely to grow and interest rates look unlikely to rise significantly for many years_.

Perth has been on rock bottom for 8 years, I don't know how the statement "continues on it merry way" applies.
But of course I'm not in that property island of Sydney/ Melbourne, which is the only one that is talked about and matters.

The next paragraph:
_*I must admit at the start of the pandemic to being a bit concerned that house prices might fall*. I should apologise for my naivety in thinking the government would ever let such a thing happen. If there is one thing you can count on in politics it is that a Coalition government (and to be honest an ALP one as well) will look after homeowners._

Perth's house prices couldn't have fallen any further, they were already rock bottom_. 😂_
So I'm supposed to be all cut up, because people are still bidding up Sydney/ Melbourne house prices, well I'm actually not.👍
More fool them IMO.


----------



## moXJO (4 February 2021)

againsthegrain said:


> Not to mention uni fees are in a similar bubble as re prices,  very discouraging to local kids



Not to mention pricing many overseas students into sex slavery.


----------



## againsthegrain (4 February 2021)

moXJO said:


> Not to mention pricing many overseas students into sex slavery.




Im sure it happens on a lower scale but most international students have to prepay and their rich parents do that for them,  anyway I put priority worrying about local kids first.  International students chose to come and study here, local kids are local kids.  International students wil come and go, while education should be given priority to local talent that will stick around and shape Aus in the future.


----------



## basilio (4 February 2021)

moXJO said:


> Not to mention pricing many overseas students into sex slavery.



Che ? That's pretty gratuitous.  Don't want to go too far down that  rabbit hole but...

1) I suggest many (not necessarily all) OS students are well supported by families
2)  Are you suggesting that local uni students don't do sex work "or even up as sex slaves" despite also facing expensive fees and living expenses?
3) Perhaps there is another route for young girls from O/S ending up as sex slaves. Say hospitality visa spread like confetti amongst the industry? Or people brought in as farm workers and ending up as virtual bonded labour ?

Just saying..


----------



## over9k (4 February 2021)

basilio said:


> Che ? That's pretty gratuitous.  Don't want to go too far down that  rabbit hole but...
> 
> 1) I suggest many (not necessarily all) OS students are well supported by families
> 2)  Are you suggesting that local uni students don't do sex work "or even up as sex slaves" despite also facing expensive fees and living expenses?
> ...



Nobody's said that all the dodgy stuff is unique to foreign students. Again, they're just one piece of the puzzle. 

The one thing all of this has in common is immigration because it is the migrants which are the supply of it. Close the borders and it all goes away.


----------



## moXJO (4 February 2021)

basilio said:


> Che ? That's pretty gratuitous.  Don't want to go too far down that  rabbit hole but...
> 
> 1) I suggest many (not necessarily all) OS students are well supported by families
> 2)  Are you suggesting that local uni students don't do sex work "or even up as sex slaves" despite also facing expensive fees and living expenses?
> ...



I know for a fact it is happening. Uni course is touted as a visa pathway. But ends up a pathway to ridiculous fees that end up in abused and drug addicted girls. 

One of the rorts third parties play is to pay for all the girls fees up front, then she has to pay them back at triple the price. 

It happens and is happening. A lot of women get ruined by it and end up destitute and pregnant.


----------



## gartley (4 February 2021)

over9k said:


> Nobody's said that all the dodgy stuff is unique to foreign students. Again, they're just one piece of the puzzle.
> 
> The one thing all of this has in common is immigration because it is the migrants which are the supply of it. Close the borders and it all goes away.



Also don't forget some students ( don't know what %) end up being permanent residents. It all adds up and now that probabaly won't be the case for quite a long time. I understand the migration intake has obviously dropped significantly  but "skilled" migrants still being bought in..
However there has also been quite an exodus from the cites during the pandemic and even before, of residents choosing to move to the country, and that probably explains the demand in the regional areas. Can see myself doing the same in the years ahead.


----------



## Smurf1976 (4 February 2021)

basilio said:


> 2) Are you suggesting that local uni students don't do sex work "or even up as sex slaves" despite also facing expensive fees and living expenses?



I don't want to take the thread off topic, the subject is property prices, but for the record I'm friends with someone who's done that sort of work in the past.

As she puts it, it's a unique industry.

Only job where you're almost certain to be hired if you apply and where resignations really are outright refused and don't for a minute think you can simply not turn up. Getting out of the industry is far harder than getting in.

On the plus side - for those who've got some smarts, take it seriously and remain strictly focused on business it's one way to meet people in positions of power and get rich.


----------



## basilio (4 February 2021)

moXJO said:


> I know for a fact it is happening. Uni course is touted as a visa pathway. But ends up a pathway to ridiculous fees that end up in abused and drug addicted girls.
> 
> One of the rorts third parties play is to pay for all the girls fees up front, then she has to pay them back at triple the price.
> 
> It happens and is happening. A lot of women get ruined by it and end up destitute and pregnant.




I have heard of such activities but they were overwhelmingly associated with Vocational colleges  and hospitality visas for the industry. Basically just far cheaper to finance these situations (fees wern't 35k plus a year)  and the girls didn't need  to jump the academic hoops to get into a Uni course so they had more vulnerable clients.

Very ugly stuff. Probably comes under the heading of modern day slavery and trafficking.









						How International Students Benefit from Vocational Education Training in Australia - Barrington College Australia
					

Business, Hospitality and International training courses for people who dream big, and want to reach a vision of a great future career.




					www.barringtoncollege.edu.au
				











						Why international students to turn sex
					

THEY are lured by the dream of a new life, a chance to build a better future while also providing for loved ones still stuck back home.




					www.news.com.au


----------



## basilio (4 February 2021)

This  research highlights Moxjos, mine and others observations about the manipulation of OS students/workers into  the sex industry.








						Asian international students coaxed into sex work
					

International students from Asia are increasingly being lured into prostitution on the promises of "easy money" and permanent residency.




					www.macrobusiness.com.au


----------



## jbocker (4 February 2021)

Last few posts have been off topic (really off) but thanks for the info. I have learned something. I recall an earlier post, a student accommodation plan layout that intrigued and appalled me, as it was exceptionally tight but still accommodated a double bed. (post 14202  page 711 by @basilio ) I thought to myself well that might be handy if you 'get lucky'. Maybe the layout it is much more sinister in its overall plan. It would interesting to see if these were collectively owned and run by criminals.


----------



## basilio (4 February 2021)

I think the really relevant aspect of OS students and Australian Universities is their financial contribution to housing demand and economic demand in the big cities.  The loss of hundreds of thousands of these students will punch a hole in Uni budgets and staffing and  undermine economic activity in the cities and regional cities that host these students. 

Just for a start the huge purpose built O/S student housing flats will stay empty for at least another 6 months.


----------



## basilio (4 February 2021)

jbocker said:


> Last few posts have been off topic (really off) but thanks for the info. I have learned something. I recall an earlier post, a student accommodation plan layout that intrigued and appalled me, as it was exceptionally tight but still accommodated a double bed. (post 14202  page 711 by @basilio ) I thought to myself well that might be handy if you 'get lucky'. Maybe the layout it is much more sinister in its overall plan. It would interesting to see if these were collectively owned and run by criminals.



No I don't believe so. I suspect you will find that the company that builds these complexes sells individual flats to investors and thenoffers to manage them.

I came across the prospectus for  some of these orgs a few years ago,


----------



## Smurf1976 (4 February 2021)

jbocker said:


> Last few posts have been off topic (really off) but thanks for the info. I have learned something.



I could say a lot more but I’m conscious of it being well off topic and a subject that some may see as inappropriate or detracting from the forum.

I’ll simply say that it’s a subject where society cringes and avoids what could be politely termed a very inconvenient truth.

I’ll leave it at that - back to house prices.


----------



## satanoperca (4 February 2021)

basilio said:


> I think the really relevant aspect of OS students and Australian Universities is their financial contribution to housing demand and economic demand in the big cities.  The loss of hundreds of thousands of these students will punch a hole in Uni budgets and staffing and  undermine economic activity in the cities and regional cities that host these students.
> 
> Just for a start the huge purpose built O/S student housing flats will stay empty for at least another 6 months.



I hope you are correct, as that will mean better opportunities in both education and housing for the younger Australian generation.


----------



## moXJO (5 February 2021)

basilio said:


> Just for a start the huge purpose built O/S student housing flats will stay empty for at least another 6 momonths.



It may well take longer. The cash economy infrastructure that kept a lot of these students employed has been decimated. Rents should be coming down. I'm really surprised the market has held up so well.


----------



## sptrawler (24 February 2021)

Well the combination of Government stimulus housing grants and lockdown induced saving, has certainly put a rocket under home buyers, while property investors have taken a back seat.








						What’s different about this property boom?
					

Latest quarterly figures from CoreLogic imply the national market is growing at 11.2 per cent a year. But unlike the last boom, investors are not the driving force.




					www.smh.com.au
				



From the article:
_Latest quarterly figures from CoreLogic, when annualised, imply the national property market is growing at 11.2 per cent a year.

However, there are some big differences between the latest price upswing and previous booms in Australian bricks and mortar.
A glaring distinction is the market is overwhelmingly being driven by owner-occupier homebuyers, rather than investors, who turbo-charged the property surge of the past decade.

CoreLogic’s Tim Lawless says at the peak in 2015, property investors made up about 46 per cent of all new mortgage lending. Today, investors account for just 23 per cent.
“Weaker rental demand, especially in the investment enclaves of Melbourne and Sydney’s inner-city unit markets, is likely a significant disincentive for investors,” Lawless says.

Peter King, chief executive of Westpac, has also described the investor market as “relatively quiet.”

Another unusual feature of the latest property boom is that it is occurring amidst the slowest population growth since the First World War – something that you might expect to detract from housing demand_.


Like we have said for ages, it is amazing how much money people can save, if they stop going out for a while. 
Another article on the state of Australian housing.








						Why are Australian home prices rising again and can it last?
					

Don’t values drop when there’s a recession? What’s going on – and can the rise continue?




					www.smh.com.au


----------



## dyna (24 February 2021)

"We don't need icecream-lickers at $20 million auctions"   Selling agent's quote,last Saturday, to registered bidders on a Portsea, unrenovated clifftop mansion on 4,400 sq. m. They were only allowed a look-see,if prepared to bid above the $16.5 mill reserve.Anyway,the riff-raff were warned off and it was all over in minutes.The joint sold for a bit over $22 mill.
"Lifestyle" huh? I think that's agent-speak for tax free capital gains.The great australian ponzi scheme(great australian dream,I mean) carries on its merry way....onwards and upwards,we hope.Comes with a huge cost though.First up, an eye watering stamp duty has got to be handed over to a state government for doing.... not much at all,then the necessary reno for the next auction fool. Imagine the council rates and repairs on a place like that.Keeps a few tradies employed but there's not much else in the way of real economic input.The game works,I suppose,so shoudn't knock it.


----------



## jbocker (24 February 2021)

dyna said:


> Keeps a few tradies employed but there's not much else in the way of real economic input.



Hey Now that explains why so many shoddy home constructions in boom times.. keep tradies busy in maintenance and repair for years to come. That is brilliant - repeat business. 

Talking with someone selling new constructions (WA). They have shut down display homes because they have so many homes for construction they cannot keep up. They have so many slabs to lay by cut off grant deadline (I think they said end of March) they are genuinely concerned some will miss. They are putting down slabs and telling owners they wont be back for some time.


----------



## dyna (16 March 2021)

According to Digital Finance Analytics,tens of thousands of property owners are facing negative equity.In Sydney over 5,000 apartments(and 48 houses) were valued at less than the current loan amount.Mostly due to over supply,low demand,nil migration and defects, in the high rise sector.For Melbourne,9,000 apartments(and 108 houses) were affected.Perth was not spared either.1in 10 households in Mandurah are underwater on their mortgage to valuation.


----------



## Smurf1976 (16 March 2021)

jbocker said:


> Hey Now that explains why so many shoddy home constructions in boom times.. keep tradies busy in maintenance and repair for years to come.



It's the old time, cost, quality - pick any two.

If time is fixed then you choose between cost and quality.

At a guess, most will choose cost which means quality suffers.


----------



## over9k (16 March 2021)

dyna said:


> According to Digital Finance Analytics,tens of thousands of property owners are facing negative equity.In Sydney over 5,000 apartments(and 48 houses) were valued at less than the current loan amount.Mostly due to over supply,low demand,nil migration and defects, in the high rise sector.For Melbourne,9,000 apartments(and 108 houses) were affected.Perth was not spared either.1in 10 households in Mandurah are underwater on their mortgage to valuation.



Good. Property prices have needed to come down for a long time. 

The idea of perpetual expansion is just... ugh. I genuinely wonder how this country is so stupid at times. 

Then I remember that the boomers are profiting from it.


----------



## Warr87 (16 March 2021)

yea prices definitely need to come down. though i still feel sorry for many that probably haven't done anything wrong and now have negative equity. on the flip side, i have no sympathy for anyone who over leveraged on the basis of perpetual growth and almost 0% interest rates.


----------



## sptrawler (16 March 2021)

I have had my house for 14 years and it has gone up 50%, that is some profit.🤣


----------



## Bill M (17 March 2021)

over9k said:


> Good. Property prices have needed to come down for a long time.



The point is, they aren't coming down, well not just yet anyway. In Sydney and further up through the Central Coast, Newcastle and the Hunter prices are still climbing. A lot of properties being sold before they even hit the market, I am watching it each week. Sydneysiders are cashing in and moving north and therefore fuelling prices in regional areas as well. It isn't coming down until it really is coming down.  

*Domain House Price Report: December Quarter 2020
Capital city: Average house price: Year-on-year growth:
*
Sydney $1,211,488 + 6.7 per cent

Melbourne $936,073 + 3.9 per cent

Brisbane $616,387 + 5.6 per cent

Adelaide $574,264 + 6.1 per cent


----------



## qldfrog (17 March 2021)

Bill M said:


> The point is, they aren't coming down, well not just yet anyway. In Sydney and further up through the Central Coast, Newcastle and the Hunter prices are still climbing. A lot of properties being sold before they even hit the market, I am watching it each week. Sydneysiders are cashing in and moving north and therefore fuelling prices in regional areas as well. It isn't coming down until it really is coming down.
> 
> *Domain House Price Report: December Quarter 2020
> Capital city: Average house price: Year-on-year growth:*
> ...



still ongoing crazy price rises here in Sunshine Coast/ Noosa


----------



## sptrawler (17 March 2021)

qldfrog said:


> still ongoing crazy price rises here in Sunshine Coast/ Noosa



Perth/ Mandurah the same, it is interesting that this run appears to be Australia wide, as opposed to the Sydney/ Melbourne bubble.
It might be because of the extra savings slushing around, added to the State and Federal incentives, but also there may be overseas money buying sight unseen after the way the virus was handled here?
There is a huge amount of new builds going up, so I'm expecting another oversupply problem in the West again, in three to four years.
Just my thoughts.


----------



## qldfrog (17 March 2021)

sptrawler said:


> Perth/ Mandurah the same, it is interesting that this run appears to be Australia wide, as opposed to the Sydney/ Melbourne bubble.
> It might be because of the extra savings slushing around, added to the State and Federal incentives, but also there may be overseas money buying sight unseen after the way the virus was handled here?
> There is a huge amount of new builds going up, so I'm expecting another oversupply problem in the West again, in three to four years.
> Just my thoughts.



Here, just people from Sydney Melbourne Brisbane, WFH and retired moving north.
Covid sped the move and with Sydney Melbourne still h9gh, some are rushing to sell and move.
You do not need a huge influx to significantly affect price..
works the other way too😊


----------



## over9k (17 March 2021)

Interest rates.


----------



## Dark1975 (17 March 2021)

I know the rba said rates are on hold currently till 2024, but highly unlikely,
Give another 2-3 months of rising housing prices. 
Then i bet the rba will re-adjust there tune, they will need to lift interest rates to curb consumer confidence,
Well not the only answer, could curb confidence with tax on investment properties/ land tax/stamp duty , but im hedging rates go higher .
Anyways enjoying the current bull cycle , 
Tho interest rates could change the current rederick. 😉


----------



## over9k (17 March 2021)

House prices aren't factored into the inflation calculation - it's precisely why they've been able to inflate so much over the past couple of decades. 

The even crueller twist is that the more expensive housing gets, the less money is left over to inflate the price of everything else, and thus the more the central bank will actually DROP interest rates, and thus make house prices even higher. 

It's in this way that you can understand that increasing house prices are actually in a feedback loop with lowering interest rates. 


I keep saying to all the econ students/kids whenever I talk to them, we've actually seen massive, revolution-causing inflation over the past 20 years, it's just all been concentrated in house prices and not the cpi. 


The better question to ask is whether any of this is an accident, and what the politicians are going to do when the piper has to be paid. Those are much more concerning.


----------



## Dark1975 (17 March 2021)

over9k said:


> House prices aren't factored into the inflation calculation - it's precisely why they've been able to inflate so much over the past couple of decades.
> 
> The even crueller twist is that the more expensive housing gets, the less money is left over to inflate the price of everything else, and thus the more the central bank will actually DROP interest rates, and thus make house prices even higher.
> 
> ...



I agree,

But I look at not housing prices rising is the devaluing of the $dollar, just takes more useless dollars to be the same asset in the future ,
Hence the type of deflationary/ inflation discussed,
The dollar devalues over time as more stimulus or printing of money continues.

Hence a hyperthical debate in the future of a reset.
Like nixon in 1972 took gold of the standard of curriences , I think the governments around the world are setting up quite quickly
Digital cuttencies.
Hence ripple / XRP are in court with SEC,
Its no secret that SEC needs a large case against the second oldest cypto 'XRP to set new laws in place for the digital / crypto space.
People can belive what they want with xrp being a security, but i think the question is that SEC is setting forth a case to in act new laws to better move in to digital currencies.
XRP are on there last stage with testing currencency transfers with the central bank.
The chess pieces are set.
So i think a Reset is a possible outcome.
I've actually moved 30% of my capital from stock to the cypto markets.
I think crypto / defi  coins are still in its infancy stage like google / amazon was 20 years ago.

Maybe should have moved this topic in curriences 😏


----------



## againsthegrain (17 March 2021)

Average citizens are starting to complain,  this is another headache for the govt 









						$100k savings ‘impossible’ to buy house
					

Despite having $100,000 in savings, Amy Kitts and her husband Ben feel “hopeless” about their dream of ever owning a house in Sydney and say they are priced out of the market, despite their huge chunk of money.




					www.news.com.au


----------



## over9k (18 March 2021)

Dark1975 said:


> I agree,
> 
> But I look at not housing prices rising is the devaluing of the $dollar, just takes more useless dollars to be the same asset in the future ,
> Hence the type of deflationary/ inflation discussed,
> ...



Yeah but look at which assets have increased faster than the currency has been debased. It's basically only housing (and if you break that down further, it's actually just the land) that's more expensive in real terms.

What should happen in a properly functioning market is that we see DEFLATION as we constantly figure out more efficient (cheaper) ways of doing/producing stuff. And yet, the cost of living keeps getting more expensive.

Hence, fuckery being afoot.


againsthegrain said:


> Average citizens are starting to complain,  this is another headache for the govt
> 
> 
> 
> ...




Nah, the government's run by boomers for boomers and they haven't cared since the 90's.

In John Howard's immortal words, "Nobody's ever complained to me about their house price going up".

The only thing we're likely to see are home buyer "assistance" packages (paid for by cutting spending somewhere else) that do nothing but pump the price by whatever the amount of the assistance package. The only silver lining that can possibly come from it is that they might actually cut something that needs to be cut in order to pay for it (I'm looking at you, universities).


----------



## Smurf1976 (18 March 2021)

over9k said:


> Yeah but look at which assets have increased faster than the currency has been debased. It's basically only housing (and if you break that down further, it's actually just the land) that's more expensive in real terms.



Thus far agreed.

More recently though, well I'm definitely starting to see prices of consumer items starting to rise.

Supermarkets it's not most things going up, just random products but all of a sudden they jump significantly. Specials and discount brands seem most affected.

At Bunnings I bought a particular item two years ago for $299 and had thoughts of buying a second. Had a look whilst I was there today to see if they still have them - yes they do, exact same item now $449 so that's a 50% price rise.

Some random things I've bought online have also been far more costly than a comparable item would previously have been. Not 10% more, it's more like 5 or 10 times the price. A $2 item is now $15 etc.

It's not affecting most products yet but I'm certainly starting to notice random individual items jumping in price. It seems to be extending beyond housing now.


----------



## Smurf1976 (18 March 2021)

over9k said:


> the government's run by boomers for boomers



The Prime Minister and every state Premier except Tasmania are all too young to be Boomers.

Even in Tassie, Peter Gutwein scrapes into the Boomer category by a mere 10 days.

The Boomers' influence on the world is very rapidly diminishing at this point. It's not over but it's well past its peak. It's largely Gen X in charge these days with Millennials also increasingly in positions of authority.


----------



## over9k (18 March 2021)

Smurf1976 said:


> Thus far agreed.
> 
> More recently though, well I'm definitely starting to see prices of consumer items starting to rise.
> 
> ...



By more recently, do you mean with the virus hitting? Because the virus was always going to inflate certain prices whilst decimating others. I don't think you can compare now vs a couple of years ago. 2019 vs 2024, maybe.


Smurf1976 said:


> The Prime Minister and every state Premier except Tasmania are all too young to be Boomers.
> 
> Even in Tassie, Peter Gutwein scrapes into the Boomer category by a mere 10 days.
> 
> The Boomers' influence on the world is very rapidly diminishing at this point. It's not over but it's well past its peak. It's largely Gen X in charge these days with Millennials also increasingly in positions of authority.




It's hardly a hard & fast line. The tail end of the boomers are still in charge IMO. Also worth noting the demographics of the political parties - far more boomers in the liberals than the greens for example, and the libs are in charge. Also worth noting that state governments can actually do very little as most of this is determined at the federal level, i.e it's the federal government and their policies that matter, not the states'. 

I just can't see anything reverting this house price trend until the boomers start flogging their investment properties (assuming they need to). Then there's the supply of credit (interest rates), national debt vs budget deficits/surpluses, immigration...

There's just too many balls in the air/bullets that can still be fired IMO. Even now with the borders shut, they've just dumped interest rates and kept prices inflated that way and even gen X have quite a few investment properties despite being a smaller generation.

Unless you can think of a way of bringing house prices down without it A: costing all the real estate developers that donate to the liberal party a lot of money, B: costing state governments massive amounts in lost stamp duty and C: causing uproar as a lot of retirement nest eggs lose value, we're kind of in a jam.

In all seriousness, can you imagine if a politician got up on the news and ran on the platform of reducing house prices. Can you imagine how many politicians/industry lobbyists/boomers/"experts"/etc etc etc would come swarming out of the woodwork "explaining" why this would be such a "bad idea".

There's just no desire from, well, almost anyone, to bring house prices down. Even the most hardcore left wing greens etc express desire to do it whilst simultaneously supporting the very thing causing much of it - mass immigration.

So even the few people consciously opposing high house prices are still unconsciously actually supporting it.


As I've said before, whether this will keep going doesn't lose me sleep in the slightest because it's beyond even a shadow of a doubt that it will. What does have me worried is what they're going to do to keep it going and then what they'll do when it eventually can't go any further. Those two questions are _very _worrying.


----------



## dyna (20 March 2021)

Until the day comes,when Labor(?) allows tradies from the Philippines into this place,house prices ain't never coming down.Never,ever!


----------



## moXJO (22 March 2021)

dyna said:


> Until the day comes,when Labor(?) allows tradies from the Philippines into this place,house prices ain't never coming down.Never,ever!



That won't help because we already get them. The cost of doing business here is expensive. 
If you look at most small time tradies, they are far from rich.


----------



## basilio (22 March 2021)

Wry observation on the Sydney property market.

*House Floating Down Sydney Street Sells For $3 Million   
* 



An un-renovated terrace (??) in Marrickville (at the time of writing) has sold for $800,000 over its reserve.

Billed as having good bones with plenty of scope for improvement (STCA), the three-bedroom home was said to be in need of a new kitchen and bathroom, as well as new foundations and land.                                                                                

“You won’t find a 3-bedroom terrace in Sydney for less than this,” real estate agent Hugo Tarnby told bidders, as they swam to keep up with the property. 

The home, which started in the sought-after suburb of Enmore, before floating to Marrickville and then Tempe, was at times close to shops, public transport and other amenities.

“It’s close to everything, eventually,” Tarnby said. “It has 360 degree absolute waterfront views. Don’t let this one pass you by. And I mean that very literally”.

Successful bidders Jo Granton and Jeremy Peach said they were ecstatic to finally get onto the property ladder. “It’s not perfect, but it’s got great potential. Of course we would’ve loved a house that was connected to the ground, but this is Sydney! You can’t have everything.”








						House Floating Down Sydney Street Sells For $3 Million
					

“You won’t find a 3-bedroom terrace in Sydney for less than this"




					www.theshovel.com.au


----------



## sptrawler (22 March 2021)

basilio said:


> Wry observation on the Sydney property market.
> 
> *House Floating Down Sydney Street Sells For $3 Million
> *
> ...



Brings a whole new meaning to the term house boats, doesn't it?
The pictures on the news will certainly make some O/S buyers nervous, especially when they are buying sight unseen.


----------



## over9k (22 March 2021)

Ah yes, Sydney real estate.

The world's largest cleaning house for Chinese dirty money.


----------



## Warr87 (22 March 2021)

dyna said:


> Until the day comes,when Labor(?) allows tradies from the Philippines into this place,house prices ain't never coming down.Never,ever!




seriously? you are blaming house prices never coming down on something that hasn't happened based on the racist notion that immigrants are going to make things worse?


----------



## over9k (22 March 2021)

Warr87 said:


> seriously? you are blaming house prices never coming down on something that hasn't happened based on the racist notion that immigrants are going to make things worse?



Supply & demand have nothing to do with race. 

Go back to reddit.


----------



## greggles (22 March 2021)

Warr87 said:


> seriously? you are blaming house prices never coming down on something that hasn't happened based on the racist notion that immigrants are going to make things worse?




I think he is suggesting that the cost of labour, especially in trades, is so high in Australia (as compared to developing nations) that real estate prices are likely to stay high because the cost of construction keeps going up, creating an ever increasing floor price for real estate.


----------



## basilio (22 March 2021)

In my view the most troubling aspects of the housing bubble is the acceleration of apartment construction and ownership. Why ?

1) The build quality of high rise apartments ranges from shoddy to questionable.  Flammable cladding, poor construction procedures  are showing up in many units

2) Each Block has multiple owners.  Hence there will huge problems addressing end of life and maintenance issues

3) If/when the  block becomes too costly to renovate the final value of each apartment will be a small portion of the land size less demolition costs. Historically even when a house becomes dilapidated the land value has risen substantially.  This will not be the case for apartment buyers in the 21st Century.

The critical time will come when banks and insurance companies have to insure  the sale of older units. We'll see.


----------



## over9k (22 March 2021)

And the dodgy developers will have dissolved the company and rebirthed it under a different name long before anyone is able to sue it.


----------



## Beaches (22 March 2021)

greggles said:


> I think he is suggesting that the cost of labour, especially in trades, is so high in Australia (as compared to developing nations) that real estate prices are likely to stay high because the cost of construction keeps going up, creating an ever increasing floor price for real estate.





The price of land is appreciating far more than the price of construction.


----------



## Smurf1976 (22 March 2021)

greggles said:


> I think he is suggesting that the cost of labour, especially in trades, is so high in Australia (as compared to developing nations) that real estate prices are likely to stay high because the cost of construction keeps going up, creating an ever increasing floor price for real estate.



Agreed the cost of construction is high but employee trades make far less than most seem to realise.

Plenty of other non-professional jobs pay the same or better.

Where the money does come in trades is either working seriously long hours or running a business but that's true for most occupations.


----------



## moXJO (22 March 2021)

basilio said:


> In my view the most troubling aspects of the housing bubble is the acceleration of apartment construction and ownership. Why ?
> 
> 1) The build quality of high rise apartments ranges from shoddy to questionable.  Flammable cladding, poor construction procedures  are showing up in many units
> 
> ...



It's affordable compared to housing. And often well positioned for the price.

Large building company can lock up the maintenance contract. Some places in Sydney will re-paint, change fittings, outdoor furniture etc every so many years. 

All in one living. You have gyms, supermarkets, parks, restaurants all located in some of these apartment complex. A lot of these big companies keep on profiting by these lifestyle type complex. People like the convenience.

You can fit a lot more on the land by building up. Basic principle, but you simply can make a heap of money the more units you make.

Some people simply like being surrounded by other people as well. 

I'm not a fan but I  enjoy the social side. In saying that I only visit on occasions.


----------



## over9k (22 March 2021)

To be fair, most tradies are not exactly wise with money either.


----------



## moXJO (22 March 2021)

Smurf1976 said:


> Agreed the cost of construction is high but employee trades make far less than most seem to realise.
> 
> Plenty of other non-professional jobs pay the same or better.
> 
> Where the money does come in trades is either working seriously long hours or running a business but that's true for most occupations.



People think tradie=business.
Two different things. Business is business. I don't see it done in other businesses (eg chef/owner of restaurant). I always say the same thing: "go do it" if you think they are rolling in money.
Of the 7 or so guys that trained me or I learnt from all of them died 45 -60. All of them but two were broke when they died. And all owned businesses. And that's one specific trade.


----------



## moXJO (22 March 2021)

over9k said:


> To be fair, most tradies are not exactly wise with money either.



That's not true and is true at the same time. Most are trying to get out of the trades and will do share seminars etc. Gen x onwards and licensed.

I met a lot on sites and conversations would go towards alternative revenue sources. One guy even learnt how to program to design his own app. Most guys have an escape plan.

I had to edit because most won't get it to work


----------



## sptrawler (22 March 2021)

The problem with trade related businesses, if you are the business, you only get paid for the time you put in and there is only so many hours in a day.
If you want to make more money you have to employ more people and that brings with it a whole new set of headaches and overheads.
The best businesses are those that you are only limited by how many people buy your stuff, that is why online has taken off, basically middle men that don't have to rely on foot traffic and minimal overheads.
I've known a lot of tradie's that have started a business, not many make a good living, a few get big but most go broke.


----------



## greggles (23 March 2021)

Beaches said:


> The price of land is appreciating far more than the price of construction.




But not everywhere, only in high demand areas. Land is cheap outside the capital cities but the cost of construction remains relatively high everywhere. I don't know any tradies (other than apprentices) that work for less than $60/hr. Globally, that is very high for tradespeople and given that labour represents at least 50% of the cost of a new house, has a huge impact on the price of residential construction in Australia.


----------



## moXJO (23 March 2021)

greggles said:


> But not everywhere, only in high demand areas. Land is cheap outside the capital cities but the cost of construction remains relatively high everywhere. I don't know any tradies (other than apprentices) that work for less than $60/hr. Globally, that is very high for tradespeople and given that labour represents at least 50% of the cost of a new house, has a huge impact on the price of residential construction in Australia.



25- 40 bucks an hour they get paid. 

If running a business then you are charging min $100/h.

Because you have to cover:
Quotes
Travel
Times you are not working ( wet days, no work).
On top of the usual business expenses.

Across the world Labor costs are in fact 40%
Canada
UK
US

And Philippines non-provincial up to 45%, provincial 35%. 

You can build a cheap house here if you don't build the mansions everyone has become accustomed to.


----------



## greggles (23 March 2021)

moXJO said:


> 25- 40 bucks an hour they get paid.
> 
> If running a business then you are charging min $100/h.
> 
> ...




The actual cost is the amount charged to the consumer not the amount paid to the employee. I haven't paid an independent contractor less than $60/hr for a number of years now. I'm sure on residential builds the cost of plumbers, sparkies and other tradies can't possibly be less than $60/hr as the builder will be marking up their services to make a profit on the project.



moXJO said:


> Across the world Labor costs are in fact 40%
> Canada
> UK
> US
> ...




You could be right here. I'm only going off my own experience.


----------



## Warr87 (23 March 2021)

over9k said:


> Supply & demand have nothing to do with race.
> 
> Go back to reddit.




supply and demand don't. but his comments were blatantly racist.

you can take that racist ideology elsewhere.


----------



## againsthegrain (23 March 2021)

Warr87 said:


> supply and demand don't. but his comments were blatantly racist.
> 
> you can take that racist ideology elsewhere.




What was racist about it?  Because tradies over there work for less? 
everything seems racist thesedays


----------



## over9k (23 March 2021)

Warr87 said:


> supply and demand don't. but his comments were blatantly racist.
> 
> you can take that racist ideology elsewhere.



No they weren't. Go back to reddit.


----------



## Warr87 (23 March 2021)

dyna said:


> Until the day comes,when Labor(?) allows tradies from the Philippines into this place,house prices ain't never coming down.Never,ever!






Warr87 said:


> seriously? you are blaming house prices never coming down on something that hasn't happened based on the racist notion that immigrants are going to make things worse?






over9k said:


> Supply & demand have nothing to do with race.
> 
> Go back to reddit.






againsthegrain said:


> What was racist about it?  Because tradies over there work for less?
> everything seems racist thesedays






over9k said:


> No they weren't. Go back to reddit.




seriously? He specifically mentions house prices wont go down because Labour are going to let in Filipino trades. He specifically mentions race, but its not racist? Sure, placing bad house prices on an immigration policy that doesn't exist for a situation that hasn't occured on a specific set of people isn't racist? Are you an idiot? lol

Supply and demand has nothing to do with race, you are correct. Blaming future immigration on high house prices shouldn't have anything to do with it, if the argument was purely about supply and demand.

and telling me to go back to reddit? what is that? i don't understand. i'm not on reddit. but i guess this is meant to be an insult? you could try using an argument.


----------



## againsthegrain (23 March 2021)

He said the opposite to what you stated. Prices won't go down until Labour lets in Philo tradies, hence tradies that will work for less (more competitive) he never said they are bad or do a bad job.. why is everybody so sensitive


----------



## moXJO (23 March 2021)

greggles said:


> The actual cost is the amount charged to the consumer not the amount paid to the employee. I haven't paid an independent contractor less than $60/hr for a number of years now. I'm sure on residential builds the cost of plumbers, sparkies and other tradies can't possibly be less than $60/hr as the builder will be marking up their services to make a profit on the project.
> 
> 
> 
> You could be right here. I'm only going off my own experience.



It's roughly the same % all over the world. 

Tradies subcontracting get screwed by the builders. I wasn't cheap because I'd do the job right. I trained all my guys myself and ended up having to pay a premium to keep them. 

I could make good coin running a large business but it comes with more costs and risks. You literally risk everything on some jobs and can lose the lot. 


I was also making better money in the 90s and my old man use to say it was better in the 80s which I only caught the back end of.

The price charged by a tradie running a business should be min $100 an hour to survive. It's unpredictable work. 

Housing downturns literally means you don't eat.


----------



## over9k (23 March 2021)

Warr87 said:


> seriously? He specifically mentions house prices wont go down because Labour are going to let in Filipino trades. He specifically mentions race, but its not racist? Sure, placing bad house prices on an immigration policy that doesn't exist for a situation that hasn't occured on a specific set of people isn't racist? Are you an idiot? lol
> 
> Supply and demand has nothing to do with race, you are correct. Blaming future immigration on high house prices shouldn't have anything to do with it, if the argument was purely about supply and demand.
> 
> and telling me to go back to reddit? what is that? i don't understand. i'm not on reddit. but i guess this is meant to be an insult? you could try using an argument.




Australia's immigration policy is to use immigration to push wages down and real estate (land) prices up through a simple mass influx of people who need both a job and a place to live in. So far, they've successfully done this to basically all uni grads through "skilled" (uni educated) migration, but this has driven the price of housing construction up as the increase in demand for housing has not been offset by a commensurate increase in the supply of housing itself nor the people needed to build them. Increase that supply and construction costs will come down, land prices will go up, and tradies will all be working for peanuts just like everyone else currently are.

He mentioned the Philippines because that's the government's preferred source of foreign tradies to use to place downwards pressure on local tradies wages and with it, construction prices.

The Philippines are a country, not a race. "Immigrant" is not a race either.


If you find yourself agreeing with a federal liberal party policy, you should probably take a step back and have a very good think.


----------



## moXJO (23 March 2021)

againsthegrain said:


> Prices won't go down until Labour lets in Philo tradies, hence tradies that will work for less



I know its not your comment.

We already did this and they raised their prices. 

I'd like to buy a gourmet dinner for $2 but I'm not stupid enough to think letting in foreign chefs is going to make it happen. Just because I can get something on the streets of Asia doesn't mean jack here. Costs are high for a reason.


----------



## Joe Blow (23 March 2021)

Warr87 said:


> seriously? He specifically mentions house prices wont go down because Labour are going to let in Filipino trades. He specifically mentions race, but its not racist? Sure, placing bad house prices on an immigration policy that doesn't exist for a situation that hasn't occured on a specific set of people isn't racist? Are you an idiot? lol
> 
> Supply and demand has nothing to do with race, you are correct. Blaming future immigration on high house prices shouldn't have anything to do with it, if the argument was purely about supply and demand.
> 
> and telling me to go back to reddit? what is that? i don't understand. i'm not on reddit. but i guess this is meant to be an insult? you could try using an argument.




OK, I've got to jump in here before this thread goes completely off topic.

This is my interpretation of the disputed post.

Firstly, Filipino is a nationality, not a race. Filipinos are people who are native to or citizens of the country of the Philippines.

The mention of "Labor" is followed by a question mark. I suspect that this means that the author is suggesting that Labor is the political party most likely to implement an immigration policy that allows tradies from lower wage countries to come to Australia to work... but that is open to question. However, the entire statement seems to be largely rhetorical because even if foreign labour were brought into the country, foreigners of any nationality working in Australia for lower wages (except perhaps for backpackers picking fruit) would be hugely controversial and unlikely to be legal. So he/she seems to me to be suggesting that it will never happen, period, and real estate prices are destined to remain high.

The reference to Filipinos seems to be out of convenience only and could have referred to citizens of any country where the cost of labour is significantly lower than in Australia. Perhaps he/she has been to the Philippines and is familiar with the cost of labour there?

I sense conservatism in the post, but not blatant racism.


----------



## over9k (23 March 2021)

basilio said:


> In my view the most troubling aspects of the housing bubble is the acceleration of apartment construction and ownership. Why ?
> 
> 1) The build quality of high rise apartments ranges from shoddy to questionable.  Flammable cladding, poor construction procedures  are showing up in many units
> 
> ...



Not sure where you're situated but some of the high rise 'scrapers in melbourne's southbank that have been built over the past decade or so are rapidly approaching the point of resembling old communist blocks from the soviet union.

I & the other half briefly rented one when I was living there and it beggared belief. The fumes when you stuck your head out the window/stood on the bakery at tea time were incredible as hundreds upon hundreds of meals were cooked on bbq's, woks etc on 3/4 of the balconies in southbank all at the same time.

And then there was the absolute state of some of the places when you got the occasional look (or smell) through a neighbour's door or over the road to the building opposite etc etc. It was damn near squalor.

9/10ths of the residents didn't care about any of it.

Most of them would have to be vertical ghettos by now.


----------



## moXJO (23 March 2021)

over9k said:


> Not sure where you're situated but some of the high rise 'scrapers in melbourne's southbank that have been built over the past decade or so are rapidly approaching the point of resembling old communist blocks from the soviet union.
> 
> I & the other half briefly rented one when I was living there and it beggared belief. The fumes when you stuck your head out the window/stood on the bakery at tea time were incredible as hundreds upon hundreds of meals were cooked on bbq's, woks etc on 3/4 of the balconies in southbank all at the same time.
> 
> ...



They actually banned BBQ on patios in a lot of apartments in Sydney due to complaints. Same thing was happening.


----------



## againsthegrain (23 March 2021)

Sorry off the topic, saw your in Melbourne @over9k you don't happen to have the same custom plates on your car do you?  Saw a bmw not long ago around bayside with plates "over9k"


----------



## moXJO (23 March 2021)

againsthegrain said:


> Sorry off the topic, saw your in Melbourne @over9k you don't happen to have the same custom plates on your car do you?  Saw a bmw not long ago around bayside with plates "over9k"



Oh no you outed him now.
Was it a blue 2004 model


----------



## againsthegrain (23 March 2021)

moXJO said:


> Oh no you outed him now.
> Was it a blue 2004 model




Driving the opposite direction on the main road,  but yeah darkish bluish older bwm


----------



## over9k (23 March 2021)

Well this is awkward.


----------



## over9k (23 March 2021)

Nah I'm not in melb any more. Couldn't stand the place. Trying to unlock the infinite money code so I can move to vaucluse. 

If my gains of the last year continue, I should be able to move there sometime in the next 10,000 years.


----------



## Smurf1976 (23 March 2021)

greggles said:


> I don't know any tradies (other than apprentices) that work for less than $60/hr.



That might be the rate charged to the customer but no ordinary tradie doing mainstream work will get that as an employee for working normal hours. Not even the unions' preferred rates are that high.

To get that as an employee you'd need to be doing more than just run of the mill trades work on the tools. Supervisor isn't high enough to get that either.

To earn that you'll need to do one of:

Running your own business and being better at it than most.

Working very long hours. Been there, done that in the past as have many although WHS laws pretty much preclude it these days.

Are in a specialised field where the focus is on quality of work and perfection and where management will pay whatever they need to pay to retain skilled staff.

Doing something else apart from actual trades work. Their real value to the employer is in whatever those other things are, any actual trades work is just a sideline. In my "on the tools" tradie days I ended up doing everything from meeting with politicians to turning a stop/slow sign. (And before anyone asks, yes I had the required ticket to be turning that sign).

You won't get $60 an hour just doing very mainstream trades work for an employer working normal hours though. Not with most employers at least.


----------



## qldfrog (23 March 2021)

/*If running a business then you are charging min $100/h.
Because you have to cover:
Quotes
Travel
Times you are not working ( wet days, no work).
On top of the usual business expenses.*/
Sure but however you see this , whether it is indeed required by high costs etc (I do not deny that) , it means an Australian  tradie is charging as much as an graduate engineer or scientist/or even a GP by the hour, you do whatever sum you want but this is not sustainable in an open world where hundreds of millions do the same tradie job at around $10 an hour
The cost of life and doing business is the same for a GP/scientist or engineer here than a tradie so the only difference is that the *relative* standard of living of a tradie in australia is much higher than elsewhere around the world.
And imbalance tend to sort themselves out either by reduction of the tradie rate or overall reduction of the Australian living standard.usually multi-generational shift but will happen.


----------



## basilio (23 March 2021)

This wake up call has been made many times.  I think the latest disaster in NSW will reinforce it with a vengeance.
What will be the consequences of global warming on infrastructure ?  How do we ensure that development will survive  heightened flood and fire threats ? What impacts can we forsee on the financial institutions that rely on a flourishing property market if that market has serious structural problems?

I commented earlier on the rapid building of high rise apartments whose value will collapse as the buildings deteriorate. Same thing will happen for fire and flood prone areas.

Flood insurance costing $30,000 highlights which areas should not be developed for housing​Thousands of the people enduring the heartbreaking sight of their homes sinking beneath a rising brown tide across the east of NSW are doing so knowing they don't have insurance coverage.

.....'A certain insanity' in development​What a $30,000 annual insurance bill is telling us is not necessarily that we need socialised home and contents insurance, rather that an awful lot of housing has been built where it probably shouldn't have been, or hasn't been built in a way to suit its location.

"We've now got more than a hundred years of data, we really understand where land floods in this country, and we need to be doing more in ensuring that data is available and governments are making the right land planning decisions," Mr Hall argued.



> "One of the problems we've got in this country is that we've allowed housing developments to occur in areas that are at risk of high flood.











						If your insurance bill is $30,000 per year it's sending a message – don't live there
					

State and local governments continue to allow development in flood-prone areas they know are practically uninsurable, and prospective owners don't always even need to be made aware of the risks.




					www.abc.net.au


----------



## sptrawler (23 March 2021)

basilio said:


> This wake up call has been made many times.  I think the latest disaster in NSW will reinforce it with a vengeance.
> What will be the consequences of global warming on infrastructure ?  How do we ensure that development will survive  heightened flood and fire threats ? What impacts can we forsee on the financial institutions that rely on a flourishing property market if that market has serious structural problems?
> 
> I commented earlier on the rapid building of high rise apartments whose value will collapse as the buildings deteriorate. Same thing will happen for fire and flood prone areas.
> ...



Add to that the bushfire risk and on the East coast it is really becoming a problem, to find a safe housing area.


----------



## Smurf1976 (23 March 2021)

basilio said:


> This wake up call has been made many times. I think the latest disaster in NSW will reinforce it with a vengeance.



A concept often overlooked pretty much everywhere outside the mining and energy industries is resource grade.

Pick any natural resource, land included, and the total supply of it ranges from extremely good quality to outright rubbish. Much the same way as a mineral resource ranges from high grade through to low grade, a renewable energy resource ranges from reasonably consistent through to extremely intermittent and so on.

Now in mining and energy it's usually the case that somewhere around half the total in a given location is actually worthwhile, the rest being either too expensive, technically problematic or it's simply too inferior in quality for anyone to want it.

Land in a given area is going to be much the same. Some will be good and well suited to housing. Some has a tendency to be flooded and isn't at all well suited to that use. 

It's a mistake to simply draw a radius of x km from the CBD on a map and assume that all land within that can be developed. For all sorts of reasons some of it's best left either in its natural state or put to some use that doesn't suffer greatly if it ends up under water, on fire or whatever. 

That situation exists even without the climate issue although that obviously could make it worse.


----------



## moXJO (23 March 2021)

qldfrog said:


> /*If running a business then you are charging min $100/h.
> Because you have to cover:
> Quotes
> Travel
> ...



GP charge about $50 every 4 minutes.
They will often charge extra.
Engineering business charge huge sums.
An engineer can make a decent wage with no risk if he has a job. He can charge excessively if he owns a business.

Tradies run a business that is unpredictable and risky. It's a business. People need to distinguish between take home money and business money. 

I can see a doctor for $6 get a meal for $2 and the weekly shop for $40 in another country. Yes it's expensive as sht in this country. As it is in most of the western world.


----------



## moXJO (23 March 2021)

basilio said:


> This wake up call has been made many times.  I think the latest disaster in NSW will reinforce it with a vengeance.
> What will be the consequences of global warming on infrastructure ?  How do we ensure that development will survive  heightened flood and fire threats ? What impacts can we forsee on the financial institutions that rely on a flourishing property market if that market has serious structural problems?
> 
> I commented earlier on the rapid building of high rise apartments whose value will collapse as the buildings deteriorate. Same thing will happen for fire and flood prone areas.
> ...



It's up to council to ensure standards are met. You can build over almost anything if its done right.


----------



## qldfrog (23 March 2021)

moXJO said:


> GP charge about $50 every 4 minutes.
> They will often charge extra.
> Engineering business charge huge sums.
> An engineer can make a decent wage with no risk if he has a job. He can charge excessively if he owns a business.
> ...



I still believe a gp will bring home less than a tradie per hour worked.
Different obviously if you own the business but same for tradies


----------



## Smurf1976 (23 March 2021)

qldfrog said:


> I still believe a gp will bring home less than a tradie per hour worked



What’s the going rate for an employee GP?


----------



## basilio (23 March 2021)

moXJO said:


> GP charge about $50 every 4 minutes.




Really ? Like  $750 an hour ( $50 x 15 )
Would you like to recheck that and then consult the Medicare schedules for GPs.

Private GPs will charge more of course .





__





						Item 23 | Medicare Benefits Schedule
					






					www9.health.gov.au


----------



## moXJO (23 March 2021)

qldfrog said:


> I still believe a gp will bring home less than a tradie per hour worked.
> Different obviously if you own the business but same for tradies



I can assure you the majority don't. Doctor can work as late as he likes. Can do it till he is 80 yo. And there ain't many tradies driving BMW's. I've worked for multiple gps, specialists, surgeon's and they all enjoyed the advantages of being loved by banks. Banks hated tradies


basilio said:


> Really ? Like  $750 an hour ( $50 x 15 )
> Would you like to recheck that and then consult the Medicare schedules for GPs.
> 
> Private GPs will charge more of course .
> ...



About half that number usually bas. 

 Most earn roughly $200-300k a year and with extra shifts it's $500k it's what now $40 something bucks per consultation bulk billed and $85 when they charge?

Oh and you still have to cut out the expenses. That's not take home pay.

I still wouldn't want their life either.


----------



## qldfrog (23 March 2021)

moXJO said:


> I can assure you the majority don't. Doctor can work as late as he likes. Can do it till he is 80 yo. And there ain't many tradies driving BMW's. I've worked for multiple gps, specialists, surgeon's and they all enjoyed the advantages of being loved by banks. Banks hated tradies
> 
> About half that number usually bas.
> 
> ...



https://www.redbankmedical.com.au/jobs so first search result up to 2k..up to ok...
Then 71% of billing so up to 1.4k a day, remember up to..

Now who pays the public liability insurance, want to compare that with a tradie..or the cost of tool of the tradie?
At the very least comparable..i am not gp
And i know as a graduate engineer, after 5y uni, and not years of gender studies,you get around 800$ a day of on your own as contractor, or  70k a year in a job in your first years as i say comparable to a tradie.australian tradies are well better paid than other o/s tradies simply due to the fact we do not have millions of illegal immigrants ready to do the job for half.
I think that was the idea of the original post and i agree.
That will not change here until a labour gov opens the gates a la Biden.and so re will remain high for aistralians


----------



## basilio (23 March 2021)

moXJO said:


> I can assure you the majority don't. Doctor can work as late as he likes. Can do it till he is 80 yo. And there ain't many tradies driving BMW's. I've worked for multiple gps, specialists, surgeon's and they all enjoyed the advantages of being loved by banks. Banks hated tradies
> 
> About half that number usually bas.
> 
> ...




Get real please.  Medicare gives $38.75 per 20 minute consultaion. A fast GP will do 5 per hour including hello and goodbye and interactions with staff. That's $200 gross P/H not $750. 
A huge difference.

The business costs are substantial.  Practice costs, Offices, Medical Insurance, compulsory yearly education programs. 

I suspect that if the gross is $250k they  might net, before tax, $130k -150k. Yes there is an extra $30-40 per consultation for  non medicare . But conversely those patients demand a more detailed level of care/interest. Swings and roundabouts.

But I agree in the end.  I wouldn't want their life either.


----------



## sptrawler (23 March 2021)

A quick look on Mr Google:




__





						Doctor Locum and Permanent Jobs
					

We help doctors find better permanent and locum job opportunities. We’re preferred suppliers to hospitals and GP clinics across Australia and New Zealand.




					www.medrecruit.com
				



Average GP salary. Based on a salary survey in Australia, a full-time General Practitioner on average earns between *$200,000* and *$350,000* per annum. However, by working more shifts in the evenings, weekends, completing procedures and managing chronic disease patients, earnings could increase to *$500,000*+.

I still wouldn't want to do the job either.


----------



## Smurf1976 (23 March 2021)

Best advice I can give anyone with tradies is forget price.

If you find anyone who does a top notch job and the reason you're hiring them is to do work on a place you own well then just pay their price. One quote and give them the job, no "three quotes" nonsense.

Reason = there's an awful lot of shoddy ones around.

I'm half way through helping someone rebuild a carport.

Long story short, you really shouldn't secure structural timber that holds the roof up using two tek screws. Oh no you shouldn't, that's a really, really bad idea. 

Not a good idea to install mismatched roofing profiles either, especially not if you can't even be bothered to put any proper flashing between them. Funny thing is, there's enough sheets of the correct profile roofing stashed behind the shed..... 

Roofing screws need a washer under them too. Otherwise there's a problem when stuff, known as rain, falls from the sky.

Also exposed steel needs to be galvanized or otherwise protected from corrosion. See point above about "rain" - it's a real thing yes.

Don't put timber straight in the ground either. Stick food in front of the termites and strangely enough they eat it.

Someone was paid to build that that. 

No doubt with the property price frenzy there'll be some similarly shoddy work being done, leaving some surprises for whoever buys the place. There are good tradies of course, but a boom means the bad ones have no trouble getting work too.....


----------



## moXJO (23 March 2021)

moXJO said:


> *lasting less than 20 minutes*



Professional attendance by a general practitioner at consulting rooms (other than a service to which another item in the table applies),* lasting less than 20 minutes* and including any of the following that are clinically relevant:


----------



## sptrawler (23 March 2021)

Smurf1976 said:


> Best advice I can give anyone with tradies is forget price.
> 
> If you find anyone who does a top notch job and the reason you're hiring them is to do work on a place you own well then just pay their price. One quote and give them the job, no "three quotes" nonsense.
> 
> ...



I will add to that, ask people if they can recommend a tradesman, people will soon tell you if they have had a bad tradesman work on their place. 
Do your research and know what you actually want done, there is no point being vague about the job, or they will be vague about the price.


----------



## moXJO (23 March 2021)

qldfrog said:


> https://www.redbankmedical.com.au/jobs so first search result up to 2k..up to ok...
> Then 71% of billing so up to 1.4k a day, remember up to..
> 
> Now who pays the public liability insurance, want to compare that with a tradie..or the cost of tool of the tradie?
> ...



All my engineer buddies are multi millionaires so I'm the wrong guy to argue with. One actually said he got rich by buying big expensive equipment. Where as anyone could buy a hammer and drill.


Here's some stats remembering that these include subbies and sole traders. Also that the national average income in Australia, according to the ABS, is *$88,140*.

Here's the site actually:

https://www.traderisk.com.au/how-much-do-tradies-earn

Like I said to everyone that thinks they make too much. Grab a hammer and find out


----------



## qldfrog (23 March 2021)

sptrawler said:


> I will add to that, ask people if they can recommend a tradesman, people will soon tell you if they have had a bad tradesman work on their place.
> Do your research and know what you actually want done, there is no point being vague about the job, or they will be vague about the price.



and to compare vs other western countries, assuming this is proper figures but seems reasonable:
	

		
			
		

		
	



17euro is 26AUD so that is the average hourly rate..just saying
 and life in France is not cheap is it?
but French tradesmen do not drive 100k new utes, competing with Real Estates agents....That is definitively a factor in our property price, whether this hurts sensitivities or not. 
I do not really care, let's them enjoy it why this last, and it will for a while as they are a key part of the electorate


----------



## moXJO (23 March 2021)

qldfrog said:


> and to compare vs other western countries, assuming this is proper figures but seems reasonable:
> 
> 
> 
> ...



France median wage in Australian dollars is $60564.94

Australia median is $88140


----------



## qldfrog (23 March 2021)

moXJO said:


> All my engineer buddies are multi millionaires so I'm the wrong guy to argue with. One actually said he got rich by buying big expensive equipment. Where as anyone could buy a hammer and drill.
> 
> 
> Here's some stats remembering that these include subbies and sole traders. Also that the national average income in Australia, according to the ABS, is *$88,140*.
> ...



like your link, demonstrate what needs to be demonstrated .Plumber = mechanical or process engineer
See below.I invite you now to compare the difference  O/S and you will, surprise surprise discover that this is not replicated, and we have one of the most expensive housing in the world..This is what the thread is about.
Is there a link? definitively.


as for grabbing an hammer I do...


----------



## moXJO (23 March 2021)

qldfrog said:


> like your link, demonstrate what needs to be demonstrated .Plumber = mechanical or process engineer
> See below.I invite you now to compare the difference  O/S and you will, surprise surprise discover that this is not replicated, and we have one of the most expensive housing in the world..This is what the thread is about.
> Is there a link? definitively.
> View attachment 121779
> ...



Engineers earn that year on year. Tradies earn it in a good year.  Not to mention sole traders are running a business still. 

We are still 40% Labor to material same as any other country. Everything is expensive here and that's the real problem. 

If it were just the fact that tradies priced more then we would see a blow out in the cost ratio. If people are willing to pay that much for housing then it's a supply issue. 

I was just looking for houses in my local area and there are none on the market and possibly 3 rentals. Surrounding suburbs and its 2 houses for sale.
The other problem, they ain't making any more land where people want to live.

Tradies wages crash after a cycle and then you starve. And I mean literally starve.


----------



## Smurf1976 (23 March 2021)

Thread seems to have gone off the topic of property prices but for what it's worth, well I made quite a few $ back in the day operating a machine like this:



Just remember it's a big blade and a powerful motor, there's almost as much power as a small car there. Not a job for those who rush and make mistakes.

Generic video that's not actually me.


----------



## moXJO (23 March 2021)

qldfrog said:


> like your link, demonstrate what needs to be demonstrated .Plumber = mechanical or process engineer



I was thinking of doing plumbing at one stage. Then a guy came to fix our sewer pipe and I watched him up to his knees and armpits in ****. And so ended the dream.
They earn their keep as far as I'm concerned.

Couldn't stomach corn for a while either


----------



## qldfrog (23 March 2021)

Smurf1976 said:


> Thread seems to have gone off the topic of property prices but for what it's worth, well I made quite a few $ back in the day operating a machine like this:
> 
> 
> 
> ...




I have no issue with manual work, I did my side while a student, even cleaning smelters etc, my point is just that some people do not want to admit that , as opposed to other countries, what we call tradies: the man and his Ford Ranger be he plumber, electrician, carpenter, bricklayer who is freelancing with retail housing construction is paid well above the pay scale  they do in other countries including major western ones. 
And this has to have a major impact on housing  in a country where most  housing are still built piecemeal way with very limited prefab/manufactured components. So the input in this thread, after we can deny it, be it, as I say, I do not care...


----------



## Smurf1976 (24 March 2021)

qldfrog said:


> I have no issue with manual work, I did my side while a student, even cleaning smelters etc, my point is just that some people do not want to admit that , as opposed to other countries, what we call tradies: the man and his Ford Ranger be he plumber, electrician, carpenter, bricklayer who is freelancing with retail housing construction is paid well above the pay scale they do in other countries including major western ones.



No argument there but to look at both sides, it was largely those in suits who created the situation.

Once the state electricity authorities, railways, water boards and so on were required to become "efficient" and stop training thousands of apprentices for the sake of training them meanwhile all manner of "compliance" regulations were introduced, the rest was straightforward economics from there.

A big cut to supply combined with enforced higher demand = wages boom. 

Go back to the days of very deliberate flooding of the market with qualified tradies plus there being no such thing as "compliance jobs" and it was a very different story. 

Men in suits created the wages boom and, somewhat ironically, most tradies opposed it at the time. I remember those union meetings.....


----------



## Clansman (24 March 2021)

moXJO said:


> Engineers earn that year on year. Tradies earn it in a good year.  Not to mention sole traders are running a business still.
> 
> We are still 40% Labor to material same as any other country. Everything is expensive here and that's the real problem.
> 
> ...



I have a suspicion strongly that they will..... starve that is..... for a time.


----------



## moXJO (24 March 2021)

qldfrog said:


> I have no issue with manual work, I did my side while a student, even cleaning smelters etc, my point is just that some people do not want to admit that , as opposed to other countries, what we call tradies: the man and his Ford Ranger be he plumber, electrician, carpenter, bricklayer who is freelancing with retail housing construction is paid well above the pay scale  they do in other countries including major western ones.
> And this has to have a major impact on housing  in a country where most  housing are still built piecemeal way with very limited prefab/manufactured components. So the input in this thread, after we can deny it, be it, as I say, I do not care...



Well it is true that housing is expensive because of tradies wages. However it's kind of chicken and egg stuff as everything is expensive. And the 40% Labor to material is still bang on.
I'm  still getting my head around median wage being $88k. I know its just skewed by big earners but still.

I can take a photo of every tradie I know and they are all driving bombs. The only guy that isn't, has a $50k hilux and is borrowing a couple hundred off his dad every week.

My mate that does something in the office is on $250k a year and he looks like he is bloody struggling. Felt like kicking him in the bum. But it shows that shts too dear round the cities.


Clansman said:


> I have a suspicion strongly that they will..... starve that is..... for a time.



Guaranteed. Just hard to pick the cycle anymore. Interest rates disappeared.


----------



## frugal.rock (24 March 2021)

moXJO said:


> An engineer can make a decent wage with no risk if he has a job. He can charge excessively if he owns a business.



Had thought most Civil Engineers these days were required to have their own indemnity insurance even as a private employee. 
Some employers pay an allowance to assist in this matter.
Maybe just a NSW thing.


----------



## qldfrog (24 March 2021)

frugal.rock said:


> Had thought most Civil Engineers these days were required to have their own indemnity insurance even as a private employee.
> Some employers pay an allowance to assist in this matter.
> Maybe just a NSW thing.



of course, as do GPs, even in IT...


----------



## over9k (24 March 2021)

frugal.rock said:


> Had thought most Civil Engineers these days were required to have their own indemnity insurance even as a private employee.
> Some employers pay an allowance to assist in this matter.
> Maybe just a NSW thing.



They do. The excess is usually 10% of the legal settlement if they **** something up too.

A friend of mine a while back worked for volvo trucks that were building a warehouse, they got a structural/civil engineer in to do the sums on what concrete/foundation(s) they needed for all their pallet racking etc, he did the sums, the concreters came in and laid a $600,000 slab and then when the racking mob came in to install all the racking and went through all the paperwork, foundation inspections etc etc as part of the ass-covering process they realised that the engineer had ordered the wrong grade of concrete and then the whole thing had to be demo'd and redone.

He paid.


----------



## basilio (24 March 2021)

moXJO said:


> GP charge about $50 every 4 minutes.




No problem here.  Lets use the current Sidney Powell defamation defense. Good for just about anything.
_
A key member of the legal team that sought to steal the 2020 election for Donald Trump is defending herself against a billion-dollar defamation lawsuit by arguing that “no reasonable person” could have mistaken her wild claims about election fraud last November as statements of fact.








						Pro-Trump lawyer says ‘no reasonable person’ would believe her election lies
					

Lawyers for Sidney Powell argued conspiracies she laid out constituted legally protected first amendment speech




					www.theguardian.com
				



_


----------



## moXJO (24 March 2021)

basilio said:


> No problem here.  Lets use the current Sidney Powell defamation defense. Good for just about anything.
> 
> _A key member of the legal team that sought to steal the 2020 election for Donald Trump is defending herself against a billion-dollar defamation lawsuit by arguing that “no reasonable person” could have mistaken her wild claims about election fraud last November as statements of fact.
> 
> ...



I was told that by a doctor. You want to revisit what you said above?


----------



## moXJO (24 March 2021)

frugal.rock said:


> Had thought most Civil Engineers these days were required to have their own indemnity insurance even as a private employee.
> Some employers pay an allowance to assist in this matter.
> Maybe just a NSW thing.



Haven't heard it paid for by a private employee.


----------



## over9k (24 March 2021)

Can we all just agree that there are a lot of costs that go into running basically any business (ones that the customer usually doesn't see) and move on?


----------



## moXJO (24 March 2021)

over9k said:


> Can we all just agree that there are a lot of costs that go into running basically any business (ones that the customer usually doesn't see) and move on?



Yeah let's talk about that over9k number plate. What's the back story on that.

Oh and houses. There's nothing on the market so houses are going to go up more. No rentals either except for units


----------



## over9k (24 March 2021)

moXJO said:


> Yeah let's talk about that over9k number plate. What's the back story on that.
> 
> Oh and houses. There's nothing on the market so houses are going to go up more. No rentals either except for units



Not sure if you saw my other post but it wasn't actually me. I've lived in Melbourne before but don't now, have never had a number plate made, and have never owned a BMW.


Lately, I've actually been investigating all these "road registerable units" etc that can be set up on land without council permissions. If you live on acreage and can get them installed like I could/don't care that some randoms are living at the back of your property, the P/E is astounding. You can get a 50% ROI if you rent one one out. 

The even sadder part is that most of them are actually bigger than a lot of the shoebox apartments that now exist (like the student housing posted earlier).

When you can buy a caravan with a secured loan from the bank for single digit interest, it's literal free money.


----------



## basilio (24 March 2021)

moXJO said:


> I was told that by a doctor. You want to revisit what you said above?



Ha Ha!! Excellent.  So what do we have here ?

Possibilities
1) Yep a  GP told you he can or does charge $50 every 4 min. 

2)  You chose to believe him and quote this as the basis for  suggesting doctors  are making  a mint. (The extrapolation I made was $750 p/h)

3) Does your belief in such a statement with no other corrorobative evidence give it validity or should we stand back and say  "No reasonable person would believe this ?"

4) Or perhaps it's  just hyperbole and should be seen as such

By the way I would certainly  accept that some consultations take only a few minutes. I suggest the misdirection is using that as a basis for estimating the total income. In fact we came to roughly the same figure.

And I also know a few doctors.


----------



## moXJO (24 March 2021)

over9k said:


> Not sure if you saw my other post but it wasn't actually me. I've lived in Melbourne before but don't now, have never had a number plate made, and have never owned a BMW.
> 
> 
> Lately, I've actually been investigating all these "road registerable caravans" etc that can be set up on land without council permissions. If you live on acreage and can get them installed like I could/don't care that some randoms are living at the back of your property, the P/E is astounding. You can get a 50% ROI if you rent one one out.
> ...



Must have glossed over it.

Funny you should say that. There was a lady on gumtree that had one (caravan) and was basically paying rent to park out the back of your house and use the electricity and water.

I saw a guy that had a bunch of shipping containers that had converted them to student accommodation in Sydney in a warehouse. Stacked on top of one another as well. I think he ended up on the news.


----------



## over9k (24 March 2021)

Very simple supply & demand equation.


----------



## Joe Blow (24 March 2021)

Can we bend this discussion back towards property prices please? It's gone completely off topic. 

The thesis was that the cost of residential construction is high because the cost of labour, and presumably materials, is higher than in other countries.


----------



## moXJO (24 March 2021)

basilio said:


> Ha Ha!! Excellent.  So what do we have here ?
> 
> Possibilities
> 1) Yep a  GP told you he can or does charge $50 every 4 min.
> ...



When times are busy they do exactly that in medical centres. You seem to imply that I think all doctors do it or that it's even possible to keep that level up. But many do indeed use that basis to work from to cover.
The argument was that tradies made near gp levels in charging which is no where near the case. Doctors have the ability to make $40-80 per 4 minutes and I've personally been in and out in less.

My uncle ran a major hospital for a time. Was a surgeon till the drink made his hands shake and is still a gp at 80 something as he can't find anyone to take over his position. Time poor asset rich. He will most likely die in the office even though he has wanted out for years, but duty of care with him. I worked for a lot of doctors on their houses and IPs. I watched one married pair of doctors go broke on a job then work everyday from 7-7 to be flush with cash again. 

Comparisons between tradies wages is an insult.


----------



## moXJO (24 March 2021)

Joe Blow said:


> Can we bend this discussion back towards property prices please? It's gone completely off topic.
> 
> The thesis was that the cost of residential construction is high because the cost of labour, and presumably materials, is higher than in other countries.



It's hard to get people to engage if I'm not a chatty pratt.

But it is circling back round.


----------



## qldfrog (24 March 2021)

moXJO said:


> Must have glossed over it.
> 
> Funny you should say that. There was a lady on gumtree that had one (caravan) and was basically paying rent to park out the back of your house and use the electricity and water.
> 
> I saw a guy that had a bunch of shipping containers that had converted them to student accommodation in Sydney in a warehouse. Stacked on top of one another as well. I think he ended up on the news.



Well for student accomidation?, good luck on him now.i believe we will see Sydney Melbourne price go down as people with money move out.lets talk in a year.
For what it is worth, in Brisbane, student accommodation companies crying for help as the market is decimated.
Even my son aussie studying at UQ with a job in CBD is not going to stay in Toowong and considering the coast or outer suburbs as there are hardly any physical uni Courses and his job is done remotely.
Student accommodation, top market in my opinion the firsts affected with a side egfect of no more Chinese investors.i agree some expats may come back but some aussies will jump out as soon as possible to fly out too


----------



## Dark1975 (24 March 2021)

Joe Blow said:


> Can we bend this discussion back towards property prices please? It's gone completely off topic.
> 
> The thesis was that the cost of residential construction is high because the cost of labour, and presumably materials, is higher than in other countries.



Agreed 👍


----------



## moXJO (24 March 2021)

qldfrog said:


> Well for student accomidation?, good luck on him now.i believe we will see Sydney Melbourne price go down as people with money move out.lets talk in a year.
> For what it is worth, in Brisbane, student accommodation companies crying for help as the market is decimated.
> Even my son aussie studying at UQ with a job in CBD is not going to stay in toowong and considering the coast or outer suburbs as there is hardly any physical uni Courses and his job is done remotely.
> Student accommodation, top market in my opinion the first affected with a side egfect of no more chonese investors.i agree some expats may c9ne back but some aussies will jump out as soon as possible to fly out



That was about 6-7 years ago. I'd say it was a lot easier to dismantle then some of these student units. 
I'll see if I can sneak a photo from one of my contacts in one of the 'plyboard room' office floors in Sydney. About 500mm wider than a single mattress. Possibly 60 rooms on that floor at $200ish. They charged for blankets as well. 

Not even sure it survived after covid.


----------



## qldfrog (24 March 2021)

moXJO said:


> That was about 6-7 years ago. I'd say it was a lot easier to dismantle then some of these student units.
> I'll see if I can sneak a photo from one of my contacts in one of the 'plyboard room' office floors in Sydney. About 500mm wider than a single mattress. Possibly 60 rooms on that floor at $200ish. They charged for blankets as well.
> 
> Not even sure it survived after covid.



No they are not (surviving) but i doubt many will pity them, i will not.


----------



## qldfrog (24 March 2021)

The move to livestyle areas is clear on these interactive maphttps://www.domain.com.au/research/...urne-and-brisbane-changed-since-2019-1036969/
And these are just outer suburbs so not gold coast or sunny coast


----------



## againsthegrain (2 April 2021)

New Zealand trying to deflate prices slowly, interesting changes.  Wonder if it will have any impact on au









						NZ kills tax loophole on property to slow soaring house prices
					

The Ardern government will effectively kill New Zealand’s version of negative gearing as it tries to slow 25 per cent spike in house price growth.




					www.smh.com.au


----------



## sptrawler (2 April 2021)

againsthegrain said:


> New Zealand trying to deflate prices slowly, interesting changes.  Wonder if it will have any impact on au
> 
> 
> 
> ...



It will be interesting to watch the areas that it affects.


----------



## TechnoCap (2 April 2021)

My take on residential, commercial and industrial real estate in Australia is extremely bullish. 
Regional location are dominating currently with massive influx of domestication occurring driving prices and rentals through the roof.
Will this continue? Yes. Money is cheap and now sellers are realising if they are to capitalise on their profits they are buying back into the same hot market plus there are low to no rental properties resulting in a problem.
We have a mass shortage over the next ten years of residential real estate in Australia.
My company specialise in buying real estate for clients so I have on the ground knowledge of what is happening, what is driving the market, why this is happening and what is likely to occur once the borders re-open. Whooshka continues in the Australian frame of real estate given we are a safe place to travel, invest, go to school plus we have lifestyle like no other.
As they say as safe as houses as long as you're in the market.


----------



## dyna (9 April 2021)

sptrawler said:


> It will be interesting to watch the areas that it affects.



Goldman Sachs says NZ's restrictions on negative gearing(to be phased out over the next 4 years and holding period for CG Tax exemption extended from 5 to 10 years) could curb prices by 20% in the medium(?) term,as well as slice 1% off GDP. Our Labor party will be watching this one closely.Might embolden them to take it to the next election.Similar to OZ,the problem over there is not speculators per se,but housing supply. Be interesting to see how things develop,once immigration gets back into full swing again.


----------



## over9k (9 April 2021)

Which will be an election loser. Too many boomers (and even some X'ers) with IP's.


----------



## sptrawler (9 April 2021)

over9k said:


> Which will be an election loser. Too many boomers (and even some X'ers) with IP's.



That might be the case over East in the Sydney, Melbourne bubble, but over here in W.A, the people I know around the 55-80 group are all offloading.
But I guess the last 12 month moratorium on evictions and the subsequent loss of rent has been a wake up call to many, shares or super are sooo much easier. 😂
Also the current surge in prices, is too good to miss, after property prices in W.A have only just got back to 2007 levels. 
My 43 year old son who has worked and lived in the Goldfields for the last 17 years, has sold up everything and decided on a lifestyle change, which is 100 acres self sufficient and possibly lecturing in TAFE.
Great move IMO, life isn't a trial run.


----------



## bux2000 (9 April 2021)

sptrawler said:


> shares or super are sooo much easier.




It would appear Kiwis have a love affair with selling houses to one another.









						Record smashing month for Auckland market, Barfoot says
					

Auckland’s biggest real estate agency says it had the strongest trading month in its history in March.




					www.stuff.co.nz
				




bux


----------



## sptrawler (9 April 2021)

bux2000 said:


> It would appear Kiwis have a love affair with selling houses to one another.
> 
> 
> 
> ...



It certainly is weird, when I was there on holidays about 20 years ago everyone seemed to be working three jobs and house prices in real estate shop windows were stupid then.
Obviously it hasn't improved, a bit like Sydney , Melbourne it has become a status symbol obviously, a must have if you want to impress your friends while sipping the chardonnay overlooking the bay.
I find it weird, to me a house is something that keeps the weather off you and somewhere to lock up your $hit.
You can't eat it, you can't drive it, you can't take it on holidays and you have to sell it to spend it, just a dumb expense IMO.
If someone offers me a $3m house, or $3m, i'll take the money every time. 
Lets look at it another way, Sydney house prices have gone ballistic in the last three months up 20% after dropping 15%, well NAB were $15 last year they are nearly $26 today, I know what I bought and own. 🤪
My appologies, just checked, $26.72.


----------



## over9k (9 April 2021)

To be fair, like cars, there comes a point where you need to spend a LOT of extra money to get a significant difference. 

You don't get twice as much house for 3 mil as you do for 1.5, not even close.


----------



## Smurf1976 (9 April 2021)

over9k said:


> To be fair, like cars, there comes a point where you need to spend a LOT of extra money to get a significant difference.



Prestige.

It's a reality that people do place a value on having a desirable postcode / suburb name and an identical house in the next street may be worth substantially less if it sits over the boundary and that's a different suburb.


----------



## Robbo (9 April 2021)

over9k said:


> Which will be an election loser. Too many boomers (and even some X'ers) with IP's.



I'm not so sure, remembering that Labor took many controversial policies that would have targeted investment properties to the last election and only lost by a few seats. Just because 67% of the population own a house/investment property, doesn't mean everyone in that group will be voting with the value of their property/investment as their sole interest.

The political risk to property prices is in my view heavily underestimated and the more prices increase the more pressure will build from the community, particularly in the labor and green base, for policies to tackle it. The shelved (for now) tax proposals will likely be top of the agenda within those parties.


----------



## Humid (9 April 2021)

I dont think anyone is going to mention retrospective so.....


----------



## sptrawler (9 April 2021)

Humid said:


> I dont think anyone is going to mention retrospective so.....



Like I said, in W.A I think most are taking the current boom in prices to offload property even Mandurah is selling, Sydney, Melbourne well that IMO is property lotto "everyone's a winner.
In W.A most are realists, they have seen the highs and seen the lows, my guess is most are bailing out.
So it will be interesting to see what policies are suggested, to curtail the Melbourne, Sydney lotto scheme.


----------



## Humid (9 April 2021)

sptrawler said:


> Like I said, in W.A I think most are taking the current boom in prices to offload property even Mandurah is selling, Sydney, Melbourne well that IMO is property lotto "everyone's a winner.
> In W.A most are realists, they have seen the highs and seen the lows, my guess is most are bailing out.
> So it will be interesting to see what policies are suggested, to curtail the Melbourne, Sydney lotto scheme.



But are they offloading to homeowners or more investors?


----------



## sptrawler (9 April 2021)

Smurf1976 said:


> Prestige.
> 
> It's a reality that people do place a value on having a desirable postcode / suburb name and an identical house in the next street may be worth substantially less if it sits over the boundary and that's a different suburb.



I remember years ago when I was looking for an investment property, a real estate agent taking the wife and i around said "when you buy an investment property, it is important that it is something that you can be proud to show off to your friends". well he showed me one property and I thought WTF was that about.
I bought a crappy house on a triplex block and let the tenant stay rent free, when he left I demolished it and kept the block, then sold it ten years later.
Also I didn't show my friends, like why would you be trying to impress your friends by gloating, what the hell is wrong with people.


----------



## sptrawler (9 April 2021)

Humid said:


> But are they offloading to homeowners or more investors?



I'm really not sure sure yet, because it has only happened in the last couple of months, but one thing I think is having an effect is FIFO's from Eastern states relocating to W.A.
Also the Federal and State handouts I think they can total $65k, is going to change the dynamics, because if you add to that the amount of money people are not spending by the virus it really becomes a situation we haven't seen in a long time.
Just going off someone close, who has a working wife and three kids, he is a wage earning tradie in mining and is paying off nearly $10k a month, that is a $hirt load of money IMO.
So the virus has caused a huge change in the financial dynamics and it will take some time to work out where the money is flowing.
Also you have overseas countries like HK. U.K the U.S.A etc that their residents are seeing Australia's advantages, when something like the virus hits, take Helmsworth and all the U.S Hollywood brigade, that all of a sudden call Australia home.
I think us and our media are the only ones trying to take the pi$$ out of ourselves, everyone else is going, how the fluck do we get there.
So that is probably having an effect on the buy without seeing brigade that have heaps of money.
Then add to that list old retirees, who have an investment property that doesn't pay rent and the tenant can't be evicted, they would be saying, "I'm too old for this $hirt, property prices are up, I'm out".
A lot of strange issues have surfaced due to the virus, that have never been seen in recent history, but many probably think might become more regular.
Just my thoughts.


----------



## over9k (10 April 2021)

Smurf1976 said:


> Prestige.
> 
> It's a reality that people do place a value on having a desirable postcode / suburb name and an identical house in the next street may be worth substantially less if it sits over the boundary and that's a different suburb.



True, but how much keeping up with the joneses is actually driving the market? I mean it exists of course, but it's not enough to keep an entire city going. 

There's also the very simple fact that younger people are bailing out of the cities like mad due to the affordability problems and I can't say I blame them. I'd live in wollongong long before I lived in western sydney for example.


----------



## moXJO (10 April 2021)

Ok, so there is a national timber shortage. 
House prices will be up a lot. Apparently between the fires, housing boom and covid we are running out.
We are going to be very short on stock.

Mates house up $200k in 3 months just out of Sydney.


----------



## SirRumpole (20 April 2021)

A pretty sobering account of the rental shortage in Brisbane.

Great for landlords, not great for tennants.









						'We have to be brutally honest': Residents told to relocate or live in a car 'for the rest of your life'
					

Renters struggling to find a home are being advised to move hundreds of kilometres away to secure long-term housing as there are so few accommodation options in popular coastal regions.




					www.abc.net.au


----------



## moXJO (22 April 2021)

Market is ridiculously hot in Sydney and surrounds. Barely any stock. And anything on the market sells quickly. Where I am its selling before the signs go up. 

They can't build to keep up with the pace fast enough. And once immigration comes back, it's bound to get worse.


----------



## Tyler Durden (10 May 2021)

moXJO said:


> Market is ridiculously hot in Sydney and surrounds. Barely any stock. And anything on the market sells quickly. Where I am its selling before the signs go up.
> 
> They can't build to keep up with the pace fast enough. And once immigration comes back, it's bound to get worse.




Prices keep going up. But where is the additional money coming from?


----------



## over9k (10 May 2021)

0% interest rates. 


(credit)


----------



## sptrawler (10 May 2021)

Tyler Durden said:


> Prices keep going up. But where is the additional money coming from?



From people staying at home and not buying anything but toilet rolls. 😂


----------



## moXJO (11 May 2021)

Tyler Durden said:


> Prices keep going up. But where is the additional money coming from?



Same with everything though. Who the hell is buying all this Doge coin?


----------



## qldfrog (11 May 2021)

moXJO said:


> Same with everything though. Who the hell is buying all this Doge coin?



Simple,billions and billions of debt money..sorry stimulus with no creation of value so inflation of liquidity.
Your wages might have been flat for 5y or more but there is money overload and serious inflation in day to day costs.people rush to buy things..houses,shares, Cryptos , certificates of..ownership of thin air, and they can not get enough cars,pets,etc in their gilden house arrests.
In that case, real estate makes a lot of sense, not for IP, but just to improve your jail cell.


----------



## sptrawler (11 May 2021)

Tyler Durden said:


> Prices keep going up. But where is the additional money coming from?






qldfrog said:


> Simple,billions and billions of debt money..sorry stimulus with no creation of value so inflation of liquidity.
> Your wages might have been flat for 5y or more but there is money overload and serious inflation in day to day costs.people rush to buy things..houses,shares, Cryptos , certificates of..ownership of thin air, and they can not get enough cars,pets,etc in their gilden house arrests.
> In that case, real estate makes a lot of sense, not for IP, but just to improve your jail cell.











						Budget to bet on consumers spending their $130 billion savings
					

Australians saved $130 billion through the pandemic. Josh Frydenberg is hoping they will spend that cash to offset a huge fall in COVID government support.




					www.smh.com.au
				



From the article:
Treasurer Josh Frydenberg’s budget and the fate of the country’s recovery from the coronavirus recession will depend on consumers spending more than $130 billion of pandemic savings to offset the biggest one-year drop in government expenditure on record.

There are already signs that after spending much of the stimulus showered on them through 2020, consumers are starting to run out of things to buy with the quantity of retail goods bought through the March quarter falling.
Total household bank deposits grew to more than $1.1 trillion in March this year, up a record $130 billion since just before the pandemic started in February last year.


----------



## dyna (15 May 2021)

They're back! (In NSW, at least), investor loans now account for 1 in  3 new mortgages. The largest rise in this type of lending since 2003. Even in WA, loans for IP's have doubled in the past 12 months.
According to CoreLogic IP loans surged13% during March having fallen from 46% of mortgage commitments in early 2015,to a record low of 23% last January.
Morgan Stanley estimates about 1.5 million households now hold 1 IP and  there are about 40,000 with 2.
Any one who has made a motser out of real estate over the last 25 years or so, knows you always make your money when you buy and nobody with half a brain buys into a sellers market, that we see today. I can clearly remember the 1980's and even into the first half of the next decade, when real estate prices pretty much went nowhere.


----------



## Warr87 (15 May 2021)

i continue to  be amazed at the crazy prices of houses.


----------



## dyna (17 May 2021)

How much of a house do you get for $2 Million, in the Victorian market? Anything over that,you're "rich" and fair game for the socialist State Government's new stamp duty extortion of $110,000 up front, plus 6.5% on top of that.


----------



## over9k (17 May 2021)

If I had that kind of money to drop on a place, I wouldn't be doing it in victoria.


----------



## dyna (18 May 2021)

Make the "rich" pay? Economist Saul Eslake says "How is it fair that someone who lives in the same property for 25 years [such as a Toorak mansion] contributes nothing to the cost of providing schools,hospitals,police,roads and public transport.But someone who moves 3 times because they change jobs or their family is growing, do?"


----------



## dyna (6 June 2021)

During the last real estate boom from 2013-15,Sydney house prices rose 12 % p.a. compound.
The last peak before the current boom was in June 2017 followed by a downturn of 9% the following year. This was exacerbated by a sort of "fear of missing out" among the herd of nervous sellers, who,by this time,had missed the top of the market.
Currently,in this city, the median house price sits at $1,187,000 which will require a buyer's Stamp Duty of over $52,000. The grand kids will end up paying the last bit, off the mortgage. It's a great racket ,innit? For state governments , developers, building suppliers, all the way down to the lowly tradies.


----------



## TechnoCap (6 June 2021)

I'm founder of a nationwide buyers agency representing investors from local and abroad.

Most areas in Australia are experiencing strong demand due to low supply.

The eastern side of the country is our primary focus and regional over city for affordability, desirability, growth, yields and manufactured growth strategies. Regional job adverts generally speaking are 10-20x that of the capital cities.

We've paid down considerable debt during the pandemic which leaves a concoction of low supply of property or land, government stimulus and low interest rates. What we have found is that investors have only use started t re-enter the market which highlights an owner occupier driven pandemic recovery.


----------



## sptrawler (6 June 2021)

TechnoCap said:


> I'm founder of a nationwide buyers agency representing investors from local and abroad.
> 
> Most areas in Australia are experiencing strong demand due to low supply.
> 
> ...



Interesting comments, especially the last sentence.


----------



## MovingAverage (6 June 2021)

over9k said:


> Which will be an election loser. Too many boomers (and even some X'ers) with IP's.



This sums up everything--the entitled generation blaming the older generations for not having everything handed to them


----------



## over9k (6 June 2021)

MovingAverage said:


> This sums up everything--the entitled generation blaming the older generations for not having everything handed to them



It's very hard to get someone to understand something when they are financially enriched by not understanding it.

Boomers are the first generation since the great depression to live better than both their parents and their children. Or, to put it another way, we are the first generation to not live as well as our parents since the great depression.


----------



## MovingAverage (6 June 2021)

over9k said:


> Or, to put it another way, we are the first generation to not live as well as our parents since the great depression.



The world is not fair--that's just the reality of life. The sooner some generations accept this and get on with it the better it will be for them


----------



## over9k (6 June 2021)

MovingAverage said:


> The world is not fair--that's just the reality of life. The sooner some generations accept this and get on with it the better it will be for them



"I'm ******* you over, and you should just deal with it"


----------



## MovingAverage (6 June 2021)

over9k said:


> "I'm ******* you over, and you should just deal with it"



That’s not what I’m suggesting. What I’m saying is that every generation has its opportunities and challenges. Your generation has opportunities that future generations will not and good luck to you and I wish you all the best for being able to benefit from them. I certainly hope future generations do not try to diminish the benefits you get from the actions you are taking now.


----------



## sptrawler (6 June 2021)

over9k said:


> It's very hard to get someone to understand something when they are financially enriched by not understanding it.
> 
> Boomers are the first generation since the great depression to live better than both their parents and their children. Or, to put it another way, we are the first generation to not live as well as our parents since the great depression.



How do you know that, until you get to the same age as your parents are now, I have four kids who range through all aspects of the socio economic spectrum.
What Im seeing is, wages are higher as a percentage of living costs, than they were when I was at their stage.
Inflation increased the value of baby boomers ppr, but not many earned enough to buy an IP.
Where you are making a flawed assumption IMO, is that you think your assets wont inflate, by the time you are the age your parents are now.

Also the inflated value of your parents assets will be passed on to you.

The baby boomers parents were poor, so baby boomers inherited nothing, I actually inherited my fathers belt, which was very symbolic and my 90 year old mother has nothing other than the pension.

So Im really finding it hard to be sympathetic to your plight.lol
But hey you keep telling everyone how hard it is for you.
Over 9k, you make some great posts and great points, but the fundamentals of capitalism is, that someone starts a business and makes something, then sells it at a profit, that profit then translates in to increased wages, as the people who supply the resources get paid more for them and so it goes on.
If everything is sold at a loss, businesses go broke, people lose jobs and buying power drops.
So wages go up, buying power goes up, prices go up. Thats capitalism, the governments just have to keep it within the desired  range.
So your assets if they have intrinsic value, will go up over time, that is the down side in trading you are always having to pick winners.


----------



## sptrawler (6 June 2021)

Following on from last post, forgot to mention, Mum sold the PPR 20 years ago, so there isnt any inheritance between me and my three siblings, when Mum finally passes.

So really the baby boomers arent in as good a situation, as the next generation that cant stop complaining.

It will be a real hoot, if the media get their way and convince the entitled generation that they are right and the baby boomers should have an inheritance tax applied to their ill gotten gains.
That would be hillarious.
It is only the boomers that are holding it off, sooner or later they will say,why bother.lol


----------



## over9k (7 June 2021)

MovingAverage said:


> That’s not what I’m suggesting. What I’m saying is that every generation has its opportunities and challenges. Your generation has opportunities that future generations will not and good luck to you and I wish you all the best for being able to benefit from them. I certainly hope future generations do not try to diminish the benefits you get from the actions you are taking now.



I would trade places/times with my grandparents in a heartbeat. 


sptrawler said:


> *How do you know that, *until you get to the same age as your parents are now, I have four kids who range through all aspects of the socio economic spectrum.
> What Im seeing is, wages are higher as a percentage of living costs, than they were when I was at their stage.
> Inflation increased the value of baby boomers ppr, but not many earned enough to buy an IP.
> Where you are making a flawed assumption IMO, is that you think your assets wont inflate, by the time you are the age your parents are now.
> ...



Cold hard economic data trawler. It's a fact. In fact it's so much of a fact that boomers have given up even trying to deny it and have instead changed the argument by this point. We're now getting rubbish like "well that just means you're going to inherit more" and so forth like you're giving me now. 

I don't need the money in 20 years when my parents are dead. I need to put a roof over the head of their grandchildren *now. *

And that's what your generation just doesn't get - it's not your kids that are the real victims of what you've done, it's your grandchildren. I/we simply cannot provide for them what we should be able to. We simply cannot. My children are not going to live as well/have as good a childhood as I did. They just aren't. 

And they just aren't because of their grandparents, not me.


----------



## Smurf1976 (7 June 2021)

over9k said:


> I would trade places/times with my grandparents in a heartbeat.



There's good and bad.

Houses were cheap, that's the good bit.

A blind eye was turned to all manner of things which would be regarded as unacceptable or even outright criminal today. 

Massive social pressure to conform to all sorts of things but especially marriage and kids at a young age.

Complete disregard to human health and safety in practically every situation.

Every consumer durable item other than houses cost an outright fortune.

The past had cheap houses and I agree that's a truly massive problem today but the past did come with plenty of problems of its own, there's a lot to dislike about how things used to be.


----------



## over9k (7 June 2021)

Smurf1976 said:


> There's good and bad.
> 
> Houses were cheap, that's the good bit.
> 
> ...



Depends what class you were, what job you had etc etc. My parents are from complete opposite ends of the socio-economic spectrum (they're the oddest couple I've ever known but hey, 35 years of marriage later they're still together...) so I saw each pair of grandparents/know life from both ends. 

Working class life is better now, not least of all because tradies are all making a fortune. Anything above that, previous generations had it _way _better.


----------



## sptrawler (7 June 2021)

over9k said:


> Depends what class you were, what job you had etc etc. My parents are from complete opposite ends of the socio-economic spectrum (they're the oddest couple I've ever known but hey, 35 years of marriage later they're still together...) so I saw each pair of grandparents/know life from both ends.
> 
> Working class life is better now, not least of all because tradies are all making a fortune. Anything above that, previous generations had it _way _better.



Trades are paid a lot better now than they were last generation.
I think the major problem for today's generation is, there are a huge amount of outside influences that put pressure on people to spend their money.
The 24/7 media and the advertising that comes with it, means that a lot of disposable income, finds its way into non productive spending.
The boomer generation didn't have that problem, there were no mobile phones, no internet, no netflicks, no afterpay, no 100's of t.v channels showing what you should be spending your money on.
I'm seeing it with my kids, one has lived in the bush for 20 years, he and his wife earning heaps, yet had nothing to show for it except all the toys, now they have decided they want to move back to civilization they have bought a place and are paying it down at $8k a month.
If they had done that for the last 20years, they would have a McMansion.
So maybe set your bar lower, then when that is paid off, sell and move up the ladder? It was always impossible to jump in at the top even though everyone wanted to.
In my situation, I had 3 kids by the time I bought my first house, it was a weatherboard and tile chopped in half taken on two truck 200kl and re stumped.
Then I spent two years doing  it up, sold it and made 150% profit and moved to the city, bought a house in an outer suburb again worst house in the best street of a crap suburb, did it up sold 10 years later 100% profit and moved to a nicer suburb rear stata house.
My son in law late 30's runs a 6 person business, they have three kids just built a McMansion in Mt Pleasant Perth and has paid it off but he wastes nothing.
So I really think that either you are either looking in the wrong place to buy a house, or are in the wrong job for the house you want.
Just my opinion and I'm not criticising, just looking at it from my own families position and I was always a sparky on wages.


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## over9k (7 June 2021)

sptrawler said:


> Trades are paid a lot better now than they were last generation.
> I think the major problem for today's generation is, there are a huge amount of outside influences that put pressure on people to spend their money.
> The 24/7 media and the advertising that comes with it, means that a lot of disposable income, finds its way into non productive spending.
> The boomer generation didn't have that problem, there were no mobile phones, no internet, no netflicks, no afterpay, no 100's of t.v channels showing what you should be spending your money on.
> ...



Good grief. I'm surprised you didn't mention avocado toast.

If you think you can function in the modern world without a smartphone or internet connection then you're even more out of touch than I thought.


People have  looked into this. The grattan institute has done report after report after report after report on it. My generation actually spends less on discretionary expenses than yours did. In fact, the only thing my generation spends more on than yours did is rent. I pulled these up in 30 seconds from an old uni assignment I did so they're a few years old but you get the point:






"I think" and "The data shows" are two very different statements. 

Compare like for like - see what, say, a doctor from your generation could afford vs what one from mine can. Doctors from my generation are buying houses off of mechanics from yours. Just think about that for a moment, take all the time you need.


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## sptrawler (7 June 2021)

over9k said:


> Compare like for like - see what, say, a doctor from your generation could afford vs what one from mine can. Doctors from my generation are buying houses off of mechanics from yours. Just think about that for a moment, take all the time you need.



I've never had avacado's so wouldn't know.

If you buy a house now, in 30 years time, a young doctor will have trouble affording to buy it from you, same for same.
That has never changed from one generation to the next, if in 1994 a mechanic had bought 1,000 CBA shares @$10, a young doctor today would have trouble buying them.
If in 2010 you had bought a house in Perth, it would not have moved in price, until this year, now they have gone up about 20-30% in a matter of months.
It is ridiculous to whinge about it, if you can't afford to buy where you want to live, move somewhere else, get a different job, start a business.
If you want to buy in Sydney/Melbourne, it is going to be a huge outlay and a huge gamble and my guess is that it is driven by greed.
So my guess is eventually like crypto it will end in tears, that is why I haven't bought in Sydney or crypto, I've missed out on huge gains, but i haven't lost anything either.
I have nothing but admiration for those with the gonads to take the gamble, kudo's to them and I'm not going to complain about it.
Anyway getting all bitter and twisted and blaming others certainly wont change anything, it is what it is, build a bridge as they say.


----------



## over9k (7 June 2021)

sptrawler said:


> I've never had avacado's so wouldn't know.
> 
> If you buy a house now, in 30 years time, a young doctor will have trouble affording to buy it from you, same for same.
> That has never changed from one generation to the next, if in 1994 a mechanic had bought 1,000 CBA shares, a young doctor today would have trouble buying them.
> ...



A lot could/would change if the people causing the problem were to stop causing it


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## sptrawler (7 June 2021)

over9k said:


> A lot could/would change if the people causing the problem were to stop causing it



Yes if people stopped using Sydney/Melbourne, crypto etc as a ponzi scheme, but you can't stop that happening, all you can do is choose whether to join in or not.
The same happened in the NW of W.A Karratha, Port Headland in the early 2000-2013 houses went up to $1m for bog standard 4x2, then 2013 crash down to $250k, now this year they are heading up the same way. Not because people want to live there but because they want to milk it, someone ends up holding the bunny, when it goes pear shaped next time.
Wait and see house prices in Sydney/ Melbourne when something causes it to pop, be that a serious problem with China or inflation moving and with it interest rates.


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## againsthegrain (7 June 2021)

sptrawler said:


> Yes if people stopped using Sydney/Melbourne crypto etc as a ponzi scheme, but you can't stop that happening, all you can do is choose whether to join in or not.




unless you were born too late to join


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## sptrawler (7 June 2021)

againsthegrain said:


> unless you were born too late to join



Then as I said you have to build up to it, buy somewhere you can afford pay iy down, improve it, flip it and move up.
Or the other answer is take an eye watering loan and gamble on making more when you sell it.
I took the first option and never made it to the dizzy hights but I do own what I have.


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## againsthegrain (7 June 2021)

sptrawler said:


> Then as I said you have to build up to it, buy somewhere you can afford pay iy down, improve it, flip it and move up.
> Or the other answer is take an eye watering loan and gamble on making more when you sell it.
> I took the first option and never made it to the dizzy hights but I do own what I have.




Its a argument that has been done just 1 too many times,  I am not going on that ride


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## Smurf1976 (7 June 2021)

over9k said:


> A lot could/would change if the people causing the problem were to stop causing it



No disagreement there but, key point, that’s governments, central banks, developers and so on primarily.

Someone who just happened to be born at a certain time isn’t the cause just by virtue of when they were born, bearing in mind that the average person in the older half of the population isn’t a landlord.


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## sptrawler (7 June 2021)

Smurf1976 said:


> No disagreement there but, key point, that’s governments, central banks, developers and so on primarily.
> 
> Someone who just happened to be born at a certain time isn’t the cause just by virtue of when they were born, bearing in mind that the average person in the older half of the population isn’t a landlord.



That is the crux of the matter, I bet Dennis Lillee wishes he was born 20 years later, so he would be on $1m a year.
Rather than having to have a second job and getting $1,000 a test match in the 1970's when he was the best bowler in the World.


----------



## moXJO (7 June 2021)

Sooner or later interest rates become a thing again.


----------



## sptrawler (7 June 2021)

moXJO said:


> Sooner or later interest rates become a thing again.



That is a given, i mean you have to have rocks in your head to think interest rates are going to stay at this level, the RBA has said for years they want them between 3 - 5%.
The system only works with inflation, no inflation = no growth, no growth = no profits, no profits= no investment, no investment= no jobs, no jobs= no spending and a downward spiral starts.


----------



## againsthegrain (7 June 2021)

sptrawler said:


> That is a given, i mean you have to have rocks in your head to think interest rates are going to stay at this level, the RBA has said for years they want them between 3 - 5%.
> The system only works with inflation, no inflation = no growth, no growth = no profits, no profits= no investment, no investment= no jobs, no jobs= no spending and a downward spiral starts.




I miss the days of 7% rates used to get  ~$500 a month from 50k savings account with a bonus rate... now ~$150 from 500k


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## sptrawler (7 June 2021)

againsthegrain said:


> I miss the days of 7% rates used to get  ~$500 a month from 50k savings account with a bonus rate... now ~$150 from 500k



I feel your pain, i stopped work at 55 with two knees replaced and a hip replaced, still living on savings and dividends, neither have been great the last 12 months.
Only 12 months to go to be eligible for Government assistance. Yah.


----------



## MovingAverage (7 June 2021)

againsthegrain said:


> I miss the days of 7% rates used to get  ~$500 a month from 50k savings account with a bonus rate... now ~$150 from 500k




I haven't gone near term deposits in decades but recently had reason to shop around. Best I could find for $200k over 12 months was 1%  Think I'd rather buy that storage unit I was looking at in Western Sydney. Recent development consisting of 45 units. $170k, outgoing of circa $1500 a year and would net around 7% yield annually, which is pretty attractive in the current environment


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## sptrawler (7 June 2021)

MovingAverage said:


> I haven't gone near term deposits in decades but recently had reason to shop around. Best I could find for $200k over 12 months was 1%  Think I'd rather buy that storage unit I was looking at in Western Sydney. Recent development consisting of 45 units. $170k, outgoing of circa $1500 a year and would net around 7% yield annually, which is pretty attractive in the current environment



It all boils back to your personal circumstances, I have three generations living with me, I really couldn't do that if I lost my savings.
So I have a very conservative approach, it has to last a long time, hopefully.  
God willing.🤣


----------



## Smurf1976 (7 June 2021)

If interest rates were higher then that would be a huge step toward lower property prices.

1. Gives another credible option for those needing to invest in something thus deterring at least some from property speculation.

2. Directly lowers the amount banks will lend on any given property under otherwise the same circumstances.

Where this will become extremely painful is when whatever circumstance arises which effectively forces a rise in interest rates. That's going to bring a world of pain to many. It'll be a step to lowering house prices of course but not without a downside at the time.


----------



## MovingAverage (7 June 2021)

sptrawler said:


> It all boils back to your personal circumstances, I have three generations living with me, I really couldn't do that if I lost my savings.
> So I have a very conservative approach, it has to last a long time, hopefully.
> God willing.🤣



Personal circumstances...that’s a very important factor 👍


----------



## againsthegrain (7 June 2021)

Smurf1976 said:


> If interest rates were higher then that would be a huge step toward lower property prices.
> 
> 1. Gives another credible option for those needing to invest in something thus deterring at least some from property speculation.
> 
> ...




The inflation is there,  prices are slowly creeping.  Not huge jumps but in the shops milk bread etc 5c 10c here and there.  Also I have seen some job recruitment agencies hinting at wage increases on the horizon.  Altho I sense rba will do anything to push it back.  We do need rates to move up, retirees,  savers, business you name it. 

Meanwhile I still sit on 80-90% cash similar as sptrawler,  I have a old school before my generation mentality save save save and only buy with what you saved.  However im slowly picking up some dividend paying shares,  only some.


----------



## sptrawler (7 June 2021)

Smurf1976 said:


> If interest rates were higher then that would be a huge step toward lower property prices.
> 
> 1. Gives another credible option for those needing to invest in something thus deterring at least some from property speculation.
> 
> ...



Then we will hear those who have over extended themselves, complaining that they were told interest rates were going to stay low forever and the media will support them as it makes good sensational doom and gloom headlines.
And so life goes on.


----------



## MovingAverage (7 June 2021)

Smurf1976 said:


> If interest rates were higher then that would be a huge step toward lower property prices.



The media and others love to blame neg gearing, CGT discounts and a raft of other tax incentives associated with houses as the root of all evil when it comes to the current unaffordable housing predicament. Now I’m no economist, but I reckon it is the low interest environment that driving house prices up. There is so much cheap money floating around. If the government was serious about putting a lid on the property market then it could just wind up interest rates. However, we all know the predicament that would place the government in—we’re in a stagnant environment (maybe deflationary environment) and winding up interest rates would further bring the economy to grind. I think at the moment the reserve bank is more concerned with keeping the economy going than it is with tempering the housing market so low interest rates are here to stay for a while.


----------



## sptrawler (7 June 2021)

againsthegrain said:


> The inflation is there,  prices are slowly creeping.  Not huge jumps but in the shops milk bread etc 5c 10c here and there.  Also I have seen some job recruitment agencies hinting at wage increases on the horizon.  Altho I sense rba will do anything to push it back.  We do need rates to move up, retirees,  savers, business you name it.



I have noticed a huge increase in people doing their major grocery shop in Aldi, they have only been operating in W.A for a relatively short time, but I have noticed my wife is topping up at Woolies and Coles rather than topping up at Aldi.
When I asked why, she said Woolies and Coles have been cranking up their prices since the virus and haven't stopped.
So I as you say there is inflation, obviously the RBA wants it to get traction, before moving.


----------



## gartley (7 June 2021)

sptrawler said:


> That is a given, i mean you have to have rocks in your head to think interest rates are going to stay at this level, the RBA has said for years they want them between 3 - 5%.
> The system only works with inflation, no inflation = no growth, no growth = no profits, no profits= no investment, no investment= no jobs, no jobs= no spending and a downward spiral starts.



Unfortunately for the RBA for the larger part it's not up to them. They are at the mercy of global debt markets, which most likely has the 40 year bear market as complete.
Unfortunately people like to project current trends into the future.
Back in the 1970s and early 80s of the high inflation years both stocks and property did jack being net sideways inflation adjusted basis.  
Definitely not a buy and holders market....


----------



## sptrawler (7 June 2021)

gartley said:


> Unfortunately for the RBA for the larger part it's not up to them. They are at the mercy of global debt markets, which most likely has the 40 year bear market as complete.
> Unfortunately people like to project current trends into the future.
> Back in the 1970s and early 80s of the high inflation years both stocks and property did jack being net sideways inflation adjusted basis.
> Definitely not a buy and holders market....



I kind of wonder if somehow all this isn't leading toward a World crypto currency, just trying to join the dots, it seems to me with the EU, China and U.S trying to work out how to tax electronic data e.g google, facebook, weibo, wechat etc an electronic currency somehow attached to data transfer seems like an option.
Which then does lead back to the RBA, working with a clunky abacus system, in a faster and faster paced monetary system, I think big changes aren't far away.
What the changes are I have no idea, but to me it seems the governments either speed up, or loose control of their currency.


----------



## over9k (7 June 2021)

We've seen massive, unprecedented inflation for 22 years running now, we've just seen it in something that isn't counted in the metric: Housing.

Hence why housing can (will... has) go stratospheric and the central bank does nothing. Which is exactly what has happened.

Only NZ is even so much as acknowledging this, which of course begs the question of whether it's an accident or not 


Fact is that there's only two politicians in the country that don't own an investment property. Two. That should really tell you everything you need to know reference what is going to happen/continue to happen to house prices.


----------



## qldfrog (7 June 2021)

sptrawler said:


> I kind of wonder if somehow all this isn't leading toward a World crypto currency, just trying to join the dots, it seems to me with the EU, China and U.S trying to work out how to tax electronic data e.g google, facebook, weibo, wechat etc an electronic currency somehow attached to data transfer seems like an option.
> Which then does lead back to the RBA, working with a clunky abacus system, in a faster and faster paced monetary system, I think big changes aren't far away.
> What the changes are I have no idea, but to me it seems the governments either speed up, or loose control of their currency.



The big issue is the USD ending its refuge status.it could go very quickly.
Look at the swiss Franc.20y ago, you would have seen the Swiss franc in any currency chart.now gone and dusted..
If you have money and you have inflation you need a safe refuge, will not be the USD, or the Euro..
as Aussies,i suspect the USD fall will mirror the AUD.so we will have a problem
People will avoid staying in cash and will move to real assets: gold, land and for the small fry Real Estate.
But we will also see an exit of foreign investment RE here, and a smaller increase of interest rates..so not all rosy.
Add increase taxation, land tax, etc and pathetic returns for leasing.
I see PPOR ok, but not that great for commercial or IP.
So in my opinion price will stagnate after inflation is taken into account, and for pure ip, industrial, fall..
Talking 3y ahead


----------



## sptrawler (7 June 2021)

over9k said:


> We've seen massive, unprecedented inflation for 22 years running now, we've just seen it in something that isn't counted in the metric: Housing.
> 
> Hence why housing can (will... has) go stratospheric and the central bank does nothing. Which is exactly what has happened.
> 
> ...



Well that does beg the question, why don't you buy a house, if Sydney is unaffordable, relocate to somewhere that is.
Obviously if this trend is going to just keep going, you have to catch the trend, everywhere will go up and wages will go up and prices will go up.
So if you don't mind me asking, what is your plan?


----------



## sptrawler (7 June 2021)

qldfrog said:


> The big issue is the USD ending its refuge status.it could go very quickly.
> Look at the swiss Franc.20y ago, you would have seen the Swiss franc in any currency chart.now gone and dusted..
> If you have money and you have inflation you need a safe refuge, will not be the USD, or the Euro..
> as Aussies,i suspect the USD fall will mirror the AUD.so we will have a problem
> ...



I think you are generally right but, you haven't joined the dots.
The Swiss Franc dusted, the U.S reserve currency failing, so what is next?


----------



## over9k (8 June 2021)

sptrawler said:


> Well that does beg the question, why don't you buy a house, if Sydney is unaffordable, relocate to somewhere that is.
> Obviously if this trend is going to just keep going, you have to catch the trend, everywhere will go up and wages will go up and prices will go up.
> So if you don't mind me asking, what is your plan?



Inflation does not measure wage growth either. It measures the cost of food, and consumer goods, which are almost entirely made overseas (china) now - like the jobs as well. 

You can't relocate if there isn't any employment, can you?


----------



## sptrawler (8 June 2021)

over9k said:


> Inflation does not measure wage growth either. It measures the cost of food, and consumer goods, which are almost entirely made overseas (china) now - like the jobs as well.
> 
> You can't relocate if there isn't any employment, can you?



Well I guess it depends what you do, but most jobs and services are the same in all Capital cities.
High paid mining jobs are either in Perth, Brisbane or Adelaide.
So I cant think of a job that is only available in Sydney, Melbourne, other than high paid barrista.
What is a possibility, is relocating and buying an investment property where you want to end up.
Then someone is paying you rent on your future home and any losses are a tax deduction.
The only down side is, you have to move, well I moved every couple of years in my life, so I dont see that as an issue.


----------



## over9k (8 June 2021)

sptrawler said:


> Well I guess it depends what you do, but most jobs and services are the same in all Capital cities.
> High paid mining jobs are either in Perth, Brisbane or Adelaide.
> So I cant think of a job that is only available in Sydney, Melbourne, other than high paid barrista.
> What is a possibility, is relocating and buying an investment property where you want to end up.
> ...



Again, you're completely out of touch here. The jobs market for uni grads is anything from extremely competitive to non-existent, depending on where you live. I _had _to move to a more expensive place to live just to get employment. *That's the exact problem. *

The cheaper places to live simply do not have any employment. They don't. Or, if they do, the wages are way, way lower. Not to mention what absolute shitholes they are.

Cheap things (cheap places to live) are cheap for a reason.



But you're again telling us to do things that your generation simply didn't have to. You personally might have, but your experience is not typical.

Every boomer response can be summarised as one giant "I don't give a ****". It used to be denial of reality but your generation has lost that argument and the mask has now slipped.

Your generation simply doesn't care about anything other than yourselves, up to and including your own children and grandchildren. I point out how your grandchildren are/are going to live as a consequence of what you have voted for and your response is "go and do X, go and do Y etc etc" that most of you never had to. It's a joke.


----------



## Smurf1976 (8 June 2021)

over9k said:


> I _had _to move to a more expensive place to live just to get employment. *That's the exact problem.*



I don't doubt that's the case but it's also not a new thing.

Unemployment shot up during the early-1980's recession and remained persistently high right through to about the year 2000 apart from a brief period in the late 80's when it came down a bit before shooting straight back up to new highs.

Since then unemployment has come down but underemployment has gone up in its place.

Getting work hasn't been easy since the 1970's, it's not a new problem, and nobody now aged under 60 has spent any significant portion of their working life in that environment.

What has changed is houses have become expensive and there's also a rather odd trend of knocking down perfectly good ones. 25 years ago weatherboard houses were seen as valuable enough to relocate and put back together. Now it's common enough to knock down brick houses, yes brick not weatherboard, that there are companies doing nothing but.


----------



## over9k (8 June 2021)

Let's just say that I've heard (and the data shows) different.


----------



## Smurf1976 (8 June 2021)

over9k said:


> Let's just say that I've heard (and the data shows) different.











						Australia Unemployment rate - Economy
					

Facts and statistics about the Unemployment rate of Australia. Updated as of 2020.



					www.indexmundi.com
				




The past 20 years has been a dream run compared to the previous 20 years so far as unemployment is concerned indeed that's one thing that has fuelled the house price boom, there's an entire generation that isn't factoring in the risk of being out of work when deciding to sign up for a massive loan.

Suffice to say I remember those days all too well and no chance I'd want to live through that again. Survived but yeah, not pleasant even slightly at the time and seemed like it would never end.

Chart doesn't show the last year but it's sufficient to illustrate the point. Even with a pandemic we're not back to 1990's levels of misery so far as jobs are concerned.


----------



## over9k (8 June 2021)

You forget that the numbers are fudged now. Howard & co made sure of that


----------



## qldfrog (8 June 2021)

sptrawler said:


> I think you are generally right but, you haven't joined the dots.
> The Swiss Franc dusted, the U.S reserve currency failing, so what is next?



Land gold and maybe a surprise tlike a Putin gold indexed currency.. probably crypto
I see RE going up but Australia more and more isolated. Distance..expensive flight and Covid measures...
So not sure where we end up
invest in RE in Moscow, Shanghai,Rio, Geneva.
Here in aus invest in your property not a 2bedroom rental unit


----------



## MovingAverage (8 June 2021)

over9k said:


> Every boomer response can be summarised as one giant "I don't give a ****". It used to be denial of reality but your generation has lost that argument and the mask has now slipped.



Man, do you have an axe to grind with boomers. Do yourself a favour and get out and talk to a few—just a few. I think you’ll quickly realise that not all have that response. You might even find that some are more worried about the plight of younger generations than you think. You keep throwing up data and quoting folks like the Grattan, but not once have you made a serious connection between that data and you’re issues with boomers. To me you just seem outright pissed you weren’t born a few generations ago with the benefit of hindsight so you can now be in the position of the boomers you dislike. Envy is commonly at the root of a lot of hatred. Rock on 🤘


----------



## Junior (8 June 2021)

I would have thought it's easier than at just about any point in history to get a job right now in Australia.  There are chronic shortages across a range of industries, and this has been massively exacerbated by the loss of immigration & backpackers.  They may not be the jobs that you want, or that you are trained for, but if you're willing to work decent hours and you are physically & mentally healthy I can't imagine you'd struggle to get by.  

If you're fresh out of uni looking for a relevant grad position, yes that is tough, you'll have to work unskilled jobs and keep relentlessly hunting until you find something.  When you do, the pay ( & culture) might be ****....but that's what happens early in your career.

Cost and availability of housing near job centres, for families, is genuinely an issue.  If you're single or childless, you will need to share-house or apartment to keep your costs low.  If you have kids it's much much more challenging .


----------



## sptrawler (8 June 2021)

MovingAverage said:


> Man, do you have an axe to grind with boomers. Do yourself a favour and get out and talk to a few—just a few. I think you’ll quickly realise that not all have that response. You might even find that some are more worried about the plight of younger generations than you think. You keep throwing up data and quoting folks like the Grattan, but not once have you made a serious connection between that data and you’re issues with boomers. To me you just seem outright pissed you weren’t born a few generations ago with the benefit of hindsight so you can now be in the position of the boomers you dislike. Envy is commonly at the root of a lot of hatred. Rock on 🤘



As you say the boomers are worried about their kids, there is nothing a parent wants more, than to see their kids doing well.









						First home buyers tap the bank of mum and dad
					

More first-time buyers are receiving financial help from their parents than ever as they struggle to raise a deposit in the wake of the latest property boom.




					www.smh.com.au


----------



## wayneL (8 June 2021)

Junior said:


> I would have thought it's easier than at just about any point in history to get a job right now in Australia.  There are chronic shortages across a range of industries, and this has been massively exacerbated by the loss of immigration & backpackers.  They may not be the jobs that you want, or that you are trained for, but if you're willing to work decent hours and you are physically & mentally healthy I can't imagine you'd struggle to get by.
> 
> If you're fresh out of uni looking for a relevant grad position, yes that is tough, you'll have to work unskilled jobs and keep relentlessly hunting until you find something.  When you do, the pay ( & culture) might be ****....but that's what happens early in your career.
> 
> Cost and availability of housing near job centres, for families, is genuinely an issue.  If you're single or childless, you will need to share-house or apartment to keep your costs low.  If you have kids it's much much more challenging



Certainly true in my trade.

I've just moved home to Western Australia, my last move. I expected to be twiddling my thumbs for 2 or 3 months but I have been absolutely inundated with work in the first 5 weeks, due to an absolute shortage of qualified tradesmen in my field.

Guys are finding it impossible to get apprentices. We are pretty well paid but the work is hard and our clients are generally freaking nuts in some way... Easier to sit in an air conditioned Haulpak listening to country music up in Newman or somewhere.

Guys like me that can do specialised stuff can just name our price, because literally almost nobody can do it here.

The Gap has been filled in the past by 457 Poms, but they ain't happening now.


----------



## sptrawler (8 June 2021)

wayneL said:


> Certainly true in my trade.
> 
> I've just moved home to Western Australia, my last move. I expected to be twiddling my thumbs for 2 or 3 months but I have been absolutely inundated with work in the first 5 weeks, due to an absolute shortage of qualified tradesmen in my field.
> 
> ...



Great to see you up and about Wayne, wondered where you had got to.


----------



## Smurf1976 (8 June 2021)

over9k said:


> You forget that the numbers are fudged now. Howard & co made sure of that



They are but is that really any different?

Hawke in the 80's and Keating in the 90's simply shoved everyone into "training courses" to keep the statistics down.

The 1990's recession brought with it a huge push to send practically every high school student on to university regardless of whether they were well suited, or even interested, or not. It kept them out of the workforce and thus off the unemployment statistics. They were paid Austudy rather than the dole and not counted as unemployed.

That's partly where the boom in wages for the trades started, any reasonably bright high school student who suggested they might become an electrician, plumber or whatever was firmly steered away from the idea. A lot of reasonably smart people who might have otherwise gone into a trade didn't and combined with the drop in apprenticeship numbers the end result is anyone who's genuinely good at their trade is now being paid rather a lot.


----------



## Smurf1976 (8 June 2021)

Junior said:


> If you're fresh out of uni looking for a relevant grad position, yes that is tough, you'll have to work unskilled jobs



That I spent many weekends operating one of these is how I paid my first house off:



That's a generic video from YouTube, that's not actually me but same machinery.

I've done my share of manual labour work jack hammering things and turning stop/slow signs too. The latter cops quite a bit of abuse from the public by the way.


----------



## MovingAverage (8 June 2021)

Smurf1976 said:


> The 1990's recession brought with it a huge push to send practically every high school student on to university regardless of whether they were well suited, or even interested,
> 
> That's partly where the boom in wages for the trades started, any reasonably bright high school student who suggested they might become an electrician, plumber or whatever was firmly steered away from the idea. A lot of reasonably smart people who might have otherwise gone into a trade didn't and combined with the drop in apprenticeship numbers the end result is anyone who's genuinely good at their trade is now being paid rather a lot.



It really is a great shame what has become of a once terrific education and training system we had in TAFE.

My experience with it in the mid 80's was fantastic and I am forever grateful for the start it gave me. Unfortunately the TAFE system I once knew has slowly and surely been dismantled, neglected, and left to die over the past 20 years in favour of those ridiculous private training "colleges". To your point, this has no doubt been a significant contributor to our current position.


----------



## over9k (8 June 2021)

MovingAverage said:


> It really is a great shame what has become of a once terrific education and training system we had in TAFE.
> 
> My experience with it in the mid 80's was fantastic and I am forever grateful for the start it gave me. Unfortunately the TAFE system I once knew has slowly and surely been dismantled, neglected, and left to die over the past 20 years in favour of those ridiculous private training "colleges". To your point, this has no doubt been a significant contributor to our current position.



Hah. If you think that's bad, just take a look at the shite that is being pumped into the heads of kids at uni now. 

One conversation with the average 19 year old uni student should tell you everything. I genuinely think the entire system needs to be completely defunded, and I do mean completely.


----------



## sptrawler (8 June 2021)

over9k said:


> Hah. If you think that's bad, just take a look at the shite that is being pumped into the heads of kids at uni now.
> 
> One conversation with the average 19 year old uni student should tell you everything. I genuinely think the entire system needs to be completely defunded, and I do mean completely.



It certainly needs a shakeup, degree sausage machines, don't lend themselves to quality outcomes IMO.


----------



## MovingAverage (8 June 2021)

over9k said:


> Hah. If you think that's bad, just take a look at the shite that is being pumped into the heads of kids at uni now.
> 
> One conversation with the average 19 year old uni student should tell you everything. I genuinely think the entire system needs to be completely defunded, and I do mean completely.



I’ll agree with you on that—for sure. The day universities shifted focus away from functioning as higher learning and research institutions to operating as businesses—that’s when the rot started to set in.


----------



## over9k (8 June 2021)

wayneL said:


> Certainly true in my trade.
> 
> I've just moved home to Western Australia, my last move. I expected to be twiddling my thumbs for 2 or 3 months but I have been absolutely inundated with work in the first 5 weeks, due to an absolute shortage of qualified tradesmen in my field.
> 
> ...



What's the trade & how much are you paying the apprentices?


----------



## Smurf1976 (8 June 2021)

I think the way this conversation has gone says rather a lot in itself really.

Universities, TAFE and so on. The housing crisis, and I do agree it is a crisis, is symptomatic of a much broader problem not confined to housing itself.

The only thing I think the younger ones miss, is the past also had problems. Different problems yes but don't kid yourself into thinking it was all just fine. There were some good things in the past, cheap housing is one of them, but there were some very definite problems that the older half is all too aware of and wouldn't wish on anyone.

Back to house prices specifically well I question how it's really going to go much higher?

Immigration has fallen in a heap and population is a definite driver of the requirement for housing.

Meanwhile the amount of building work going on means supply is being ramped up.

Interest rates can't realistically go any lower.

Etc.


----------



## MovingAverage (8 June 2021)

Smurf1976 said:


> I think the way this conversation has gone says rather a lot in itself really.
> 
> Universities, TAFE and so on. The housing crisis, and I do agree it is a crisis, is symptomatic of a much broader problem not confined to housing itself.
> 
> ...



I think one thing that is often overlooked when comparing houses prices from decades ago to current day prices—is that I vividly remember when my parents were seeking out their first home loan in the early 70s it was extraordinary difficult for most people to get a home loan from a bank. The banks’ approach to loans and monetary policy in general was extremely tight and you had to jump through a lot of hoops to get a loan and the rejection rate was very high. Relative to back then—it is just so easy for people to get loans these days. Downside of that is that there is far more cheap money floating around which is driving prices up. Is this not the result of decades of government deregulation, easing of monetary policies and generally winding back government influence and letting the market decide it’s own course?


----------



## gartley (9 June 2021)

over9k said:


> We've seen massive, unprecedented inflation for 22 years running now, we've just seen it in something that isn't counted in the metric: Housing.
> 
> Hence why housing can (will... has) go stratospheric and the central bank does nothing. Which is exactly what has happened.
> 
> ...



Interestingly appreciations in stocks and property have coincided with declining IR in the last 40 years. This amongst all drivers especially in property this is the most significant one.
As for the property markets going to the stratosphere, since 2017 it has not. Sure we have good thrust the last 6 months but this came off a decline and the MSM rants have made it sound bigger than what it is. ( They don't talk about the earlier decline much)
In reality since 2017 this market has made multiple false break highs only to retreat.
Looking at median prices today they are not much higher than the peak of 2017 and no doubt this will end up being being another false break high ( probably the final one) as IR reversal picks up steam and catches the FOMO buyers out.


----------



## wayneL (9 June 2021)

over9k said:


> What's the trade & how much are you paying the apprentices?



I'm a farrier. Don't know what farrier apprentices get paid as I don't have them, but someone coming out of their time could easily earn over 100k.


----------



## dyna (9 June 2021)

This from today's AFR.

ATO's latest numbers of negative gearers [ for financial year 2018-19 ]

931,132 with 1 negatively geared property
250,035 with 2
74,955 with 3
26,719 with 4
10,935 with 5
11,226 with 6

Due mainly to the lower interest rates on their I.P. loans,there were 19,113 fewer negatively geared landlords than the previous year. That still leaves 1.3 million of them declaring a net rental loss in 2018-19. All up, 2.2 million Aussie taxpayers own at least one I.P.
Bound to be quite a few pollies in those numbers,for sure.


----------



## MovingAverage (9 June 2021)

Some interesting charts from the AIHW (which is a Fed Gov department) website based on census info. Like all these types of charts it is pretty issue to come to an incorrect conclusion without digging into the data behind the chart. But my initial thoughts on these charts are:

The below chart shows a similar trend in the rate of growth of owners with a mortgage and renters with a private landlord. I would have thought (and I may be wrong) that if there was a broad based housing affordability "crisis" then the growth rate of owners with a mortgage would not be trending up as shown, but would be trending down or at least flat and be opposite to the up trend of the renter with a private landlord. Interesting the delta between owners with a mortgage and renters with a private landlord has been rough the same across the entire period of 1994 through to 2018.

It is interesting to note that downward trend of owners without a mortgage--perhaps we are a nation of folks busting to pay of their mortgages. 




The chart below shows ownership rate by birth dates. Yes it would seem younger generations have a lower ownership rate, but the gap is not as great as I would have thought.




Finally, the chart below shows the percentage of households across several age groups in private rental. It would appear that all age groups are see similar increases in the percentage of households in rental accommodation. Is it fair to assume from this chart that housing affordability has been impacting all age groups?




If you're interested in digging further into this data you can visit the AIHW website here: https://www.aihw.gov.au/reports/australias-welfare/home-ownership-and-housing-tenure


----------



## Smurf1976 (9 June 2021)

MovingAverage said:


> It is interesting to note that downward trend of owners without a mortgage



I don't think that's only due to ability to repay it but also an intentional choice not to.

How true it all is I don't know, but the media's outright full of "withdrawing equity" type thinking and the idea of doing whatever it takes to get the mortgage paid off, then being very sure to never borrow money again, seems decidedly old fashioned.

On that one I'm happy to be labelled as old fashioned. 

If the choice is a modest house owned outright versus a McMansion with a mortgage, I'll take the modest one owned outright no question.


----------



## Smurf1976 (11 June 2021)

It's not the greatest house in the world I acknowledge that, but paying almost $1 million for a place with the intent of turning it into rubble?









						Felixstow property fetches huge price at auction following strong competition - realestate.com.au
					

Most of the hopeful buyers interested in this dated house wanted it just to knock it down. That didn’t stop them from making high bids at auction though.



					www.realestate.com.au
				




No doubt they're making money out of it but it's a strange situation in my view when the building itself is seen as only worth knocking down.

House looks imperfect but good enough to me, I'd live in it. Just needs painting and so on. Many are too fussy in my view.....

My house is 1960's for the record. Partly renovated but still have the 1960's pink bathtub.


----------



## over9k (11 June 2021)

There's a line in the article: 

_“I think it was mainly the block people wanted as most people were looking at it (to build) two decent sized properties,” _he said.


----------



## wayneL (11 June 2021)

Smurf1976 said:


> It's not the greatest house in the world I acknowledge that, but paying almost $1 million for a place with the intent of turning it into rubble?
> 
> 
> 
> ...



Agreed, it is nice to have some decent digs, but holy smokes, does it have to resemble the interior of Buckingham palace and maintained like a show home?

The most friendly place that we ever had was a 10 square 1950s fibro drivers cottage on 16 acres, which which was once part of the midland abattoirs holding paddocks.

It was a s**thole we made somewhat liveable by begging, borrowing and stealing decent second-hand stuff. 

The back verandah used to always fall down when the Easterlies were blowing.

... But everybody dropped in all the time and weekend mornings invariably entailed navigating through overhung bodies and empty bottles of  woobla (it was even an empty of Grange on the floor one morning lol)

But once we could afford The fairly big joint on acreage in Kalamunda, everything changed. Well, we hadn't changed but people's perception had. Suddenly everyone became rather stiff and worried about spilling red on the carpet.... And we only lived in about a third of the house anyway.

Our next digs are going to be humble and friendly. We want to be seen for our character, not the edifice that we have spent way too much money on creating.

We may not choose a place with a pink bath however


----------



## Humid (11 June 2021)

Family Lives The New Australian Dream Of Barely Being Able To Pay Mortgage On Yardless Display Home
					

More to come.




					www.betootaadvocate.com
				




Boomered lol


----------



## Warr87 (12 June 2021)

Smurf1976 said:


> It's not the greatest house in the world I acknowledge that, but paying almost $1 million for a place with the intent of turning it into rubble?
> 
> 
> 
> ...




my area is mixed with newer buildings (appartments or townhouses) and the rest older houses like that one. I like those older house, they're still standing. Much to be said, lol. Though with the house in the link I'd probably change the interior walls and update the kitchen. But otherwise fine haha.


----------



## sptrawler (12 June 2021)

wayneL said:


> Agreed, it is nice to have some decent digs, but holy smokes, does it have to resemble the interior of Buckingham palace and maintained like a show home?
> 
> The most friendly place that we ever had was a 10 square 1950s fibro drivers cottage on 16 acres, which which was once part of the midland abattoirs holding paddocks.
> 
> ...



This is the problem today IMO, too many see their PPR as an investment, in reality it isnt, it is the place that keeps the weather off your $hit.
An investment is something you can buy and sell, without it affecting your living standard.
Like my mum used to say, the kids dont remember what the carpet or curtains were like, the just remember whether it was a happy family.
You buy a house, work like hell get home grumpy, then sell the house, buy another one get home even more grumpy with more debt and so it goes on.
Then at the end you sell it to make some money to live on, meanwhile your kids think you were always a grumpy bar$tard and cant wait for you to kick the bucket.lol
Or you get the other ones, who think that you are a prick and should be taxed to death, for your effort.lol
Best you just paddle your own canoe, help the kids when you can, but forget about the Joneses.


----------



## sptrawler (12 June 2021)

Humid said:


> Family Lives The New Australian Dream Of Barely Being Able To Pay Mortgage On Yardless Display Home
> 
> 
> More to come.
> ...



Muppets, I bet you didn't buy there Humid. 
Crazy stuff.


----------



## sptrawler (12 June 2021)

Here is the problem with the media demonising the boomers, they are flicking them the 'bird', why should they downsize?
They are critisised for having the property, they are penalised by the centrelink if they sell it, why wouldn't they just flick the 'bird'?
The whining kids on mega bucks driving around in their Ford rangers, bitching about the price of properties, when they are on $200k a year fifo.
Jeez it is about time, the boomers started to kick up. 








						Boomers fight back against calls to leave family home
					

There is a rebellion against the rising pressure for older people to downsize, with many seniors — dubbed anti-downsizers — refusing to let go of their large family homes.




					thewest.com.au
				




Maybe if the fifo's stayed in their accommodation, rather than getting pizzed every night in the wet canteen, they could stop whining about how tough it is and save some money to buy a house?
I'm not saying they all do it, but many people who live in glass houses, shouldn't throw stones.









						FIFO charged after shocking mine site rape allegation
					

A WA fly-in, fly-out worker has been charged over the alleged rape of a woman at a Pilbara mining camp.




					www.perthnow.com.au
				












						Paramedic: ‘Toxic FIFO sexism must end’
					

A whistleblower who raised the alarm about a culture of sexist bullying and harassment on Rio Tinto mine sites has spoken out after she was let go after making the report.




					thewest.com.au


----------



## sptrawler (13 June 2021)

I really think, there is going to be a big backlash from boomers, the constant media demonising, is going to cause a huge amount of resentment.
Maybe that is the objective, who knows, but the losers will be the the ones who are complaining the most IMO.
It will be interesting, but talking to just normal boomers i know they are getting fed up with being criticised for being frugal, maybe the term spending the kids inheritance may come to fruition.
I hope they enjoy it.🤣


----------



## Smurf1976 (13 June 2021)

sptrawler said:


> I really think, there is going to be a big backlash from boomers, the constant media demonising, is going to cause a huge amount of resentment.



Replace the word "boomer" with a descriptive term for pretty much any other group and those saying it would be up in arms alleging all sorts of wrongdoing and rightly so. And yet when they're doing it themselves there's silence.

Sexism. 

Racism.

Homophobia.

Ageism.

All from the same book of evil and all belong in the same place. 

There's an issue with house prices I agree but targeting an entire generation is nothing more than the age old tactic of rallying the troops behind an identified target who isn't the real enemy. That one's as old as the hills and never solves the problem.


----------



## Smurf1976 (13 June 2021)

Warr87 said:


> Though with the house in the link I'd probably change the interior walls and update the kitchen. But otherwise fine haha.



Same here.

It just seems mighty strange to me that we've got a situation where people can't afford housing but at the same time we're knocking over perfectly good houses routinely.

Go for a wander around some parts of Adelaide and ~50 year old houses being knocked down is so common it's routine. It's not a rare event, there's a pretty constant stream of them.

First sign is usually a skip bin in the driveway then before you know it the place looks like a bomb's gone off, anything of value being removed, then the rest's cleared in the space of a day or at most two.

Then the block usually sits empty for ages before anything gets done with it.

Now my real point, and this is not a boast or anything like that but just an observation, is that if I look at people I know who I'd classify as reasonably wealthy well none of them lives in a house that resembles a palace. They're quite happy with ordinary sorts of houses and have better things to do than worry about that sort of thing.

Personally though, well I'm not top of the wealthy list but nonetheless I could probably do with a different colour scheme in the bathroom:




Pink bath, pink tiles. Guess what colour the floor is? Yep, that's pink too. The ceiling was also painted pink although I've changed that to a bland white.

Blue mat because that's the ones they had in the shop. The yellow ducks are the cat's by the way, not mine.

Cat standing up wants the water turned on.


----------



## over9k (13 June 2021)

Smurf1976 said:


> Replace the word "boomer" with a descriptive term for pretty much any other group and those saying it would be up in arms alleging all sorts of wrongdoing and rightly so. And yet when they're doing it themselves there's silence.
> 
> Sexism.
> 
> ...



Who is the real enemy?


----------



## greggles (13 June 2021)

over9k said:


> Who is the real enemy?




Why does there have to be an enemy? If anything, the enemy is circumstance. The property market is what it is. The moment people stop paying the prices vendors are asking is the moment prices will start to decline.


----------



## over9k (13 June 2021)

greggles said:


> Why does there have to be an enemy? If anything, the enemy is circumstance. The property market is what it is. The moment people stop paying the prices vendors are asking is the moment prices will start to decline.



Do you actually think that the current state of the housing market is some kind of accident/unintended side effect?


----------



## sptrawler (13 June 2021)

over9k said:


> Who is the real enemy?



These days, pretty much anybody, that gets in the way of what you want.


----------



## greggles (13 June 2021)

over9k said:


> Do you actually think that the current state of the housing market is some kind of accident/unintended side effect?




Like all markets, the primary driving force in the property market is supply and demand. If buyers want to pay the asking price for an asset, a sale will occur. If buyers do not want to pay the asking price for an asset, sellers will eventually lower their asking price and prices will decline.

Buyers have never had interest rates this low before. This easy access to finance coupled with limited supply in certain desireable areas is currently driving prices up in a lot of areas, but not all. You don't have to buy a $1 million house. Much cheaper houses are available in outlying areas in most capital cities. Here's a three bedroom house on 665 m² in Ipswich, west of Brisbane, for sale for offers over $279,000. There are many more in the same price range. I'm sure you can find the same in Adelaide and Perth, although probably not in Sydney or Melbourne.

The point is, if you want to get into the current property market and you don't have a huge income or $1 million then compromise is the name of the game, not complaining or looking for "enemies" to blame.


----------



## Mrmagoo (13 June 2021)

This is not true, the primary driving force is government policy. As soon as the ALP gets in there is a real risk they will do things to crash/cool the market. You're a loser if you didn't get into the market by this point, no matter what you do from here on you will lose.


----------



## Mrmagoo (13 June 2021)

Houses in cheap areas are already pushing a million it is basically over. The bulls won. A million will get you a modest home in an outer suburb. I don't care what "cheaper" houses are out there, a very, very modest home in a very basic suburb is a million. That's your price point.


----------



## greggles (13 June 2021)

Mrmagoo said:


> This is not true, the primary driving force is government policy. As soon as the ALP gets in there is a real risk they will do things to crash/cool the market. You're a loser if you didn't get into the market by this point, no matter what you do from here on you will lose.




Labor will not crash or cool the property market. They will simply introduce new incentives or grants. There are no votes or political future in destroying the property market in Australia through government intervention. It will not happen.



Mrmagoo said:


> Houses in cheap areas are already pushing a million it is basically over. The bulls won. A million will get you a modest home in an outer suburb. I don't care what "cheaper" houses are out there, a very, very modest home in a very basic suburb is a million. That's your price point.




This is demonstrably incorrect in every city except maybe Sydney. In Brisbane a million will still get you a nice house five or six kms from the CDB. If you go 15 kms out you can get set for $500,000-$600,000. Further out you can get a house for under $300,000 and still be on a direct train line to the city with a one hour commute each way.


----------



## over9k (13 June 2021)

sptrawler said:


> These days, pretty much anybody, that gets in the way of what you want.






greggles said:


> Like all markets, the primary driving force in the property market is supply and demand. If buyers want to pay the asking price for an asset, a sale will occur. If buyers do not want to pay the asking price for an asset, sellers will eventually lower their asking price and prices will decline.
> 
> Buyers have never had interest rates this low before. This easy access to finance coupled with limited supply in certain desireable areas is currently driving prices up in a lot of areas, but not all. You don't have to buy a $1 million house. Much cheaper houses are available in outlying areas in most capital cities. Here's a three bedroom house on 665 m² in Ipswich, west of Brisbane, for sale for offers over $279,000. There are many more in the same price range. I'm sure you can find the same in Adelaide and Perth, although probably not in Sydney or Melbourne.
> 
> The point is, if you want to get into the current property market and you don't have a huge income or $1 million then compromise is the name of the game, not complaining or looking for "enemies" to blame.



Right so we weren't talking about what best to do from here, we were talking about where to point the finger. Additionally, they aren't mutual exclusives - one can go about whatever advice you suggest whilst also pointing a finger. 


For example, do you happen to notice any correlations here: 






Say, right around 99/00? 



You're right, it's a simple question of supply & demand, and the demand is completely artificial/as a result of government policy. So again, I ask you, do you think that this is an accident/unintended side effect? 

Or do you think that every politician in the country bar two owning an investment property might have some kind of effect on the intentions of government policy?


----------



## Humid (13 June 2021)

More than 2 cities in Australia last time I looked
Heres a job....and your house 25 minutes to the city 5 to the beach


----------



## sptrawler (13 June 2021)

over9k said:


> Right so we weren't talking about what best to do from here, we were talking about where to point the finger. Additionally, they aren't mutual exclusives - one can go about whatever advice you suggest whilst also pointing a finger.
> 
> 
> For example, do you happen to notice any correlations here:
> ...



The thing is, it happens in every Country, try buying in or around London, NY, any major city in the world.
It doesn't just happen in Sydney, Melbourne, the thing is if someone really wants to live there they have to compete with the other buyers in the market.
If they can't compete, they either have to look elsewhere, or come up with a way to be able to compete.
If the house prices in Sydney halved, you would get twice as many buyers and the prices would skyrocket again.
With regard population, Australia has a negative birth rate, because as affluence increases the amount of children people are prepared to have drops, as China is finding out, so migrants are required.

There is no easy answer.


----------



## over9k (13 June 2021)

sptrawler said:


> The thing is, it happens in every Country, try buying in or around London, NY, any major city in the world.
> It doesn't just happen in Sydney, Melbourne, the thing is if someone really wants to live there they have to compete with the other buyers in the market.
> If they can't compete, they either have to look elsewhere, or come up with a way to be able to compete.
> If the house prices in Sydney halved, you would get twice as many buyers and the prices would skyrocket again.
> ...



What do you mean "it happens in every country"? Migration?

It doesn't have to.


And why would prices in sydney halve? Because there's less demand for housing for example? So people could thus get better places for their money?

There _is _a very simple answer: Close the borders, deport all non-citizens. Done.


----------



## over9k (13 June 2021)

Humid said:


> More than 2 cities in Australia last time I looked
> Heres a job....and your house 25 minutes to the city 5 to the beach



Pretty rich to tell me to just go & get one of these blue collar jobs after literally every single boomer/elder I ever spoke to in my teens told me to go to university. 

You pushed an entire generation into university, we then get out, tell you we can't afford a house because our degree didn't exactly do a great deal for us, and you then respond by going "see that's your silly/lazy fault, you should have done a trade". 

It's truly astounding.


----------



## greggles (13 June 2021)

over9k said:


> Right so we weren't talking about what best to do from here, we were talking about where to point the finger. Additionally, they aren't mutual exclusives - one can go about whatever advice you suggest whilst also pointing a finger.
> 
> 
> For example, do you happen to notice any correlations here:
> ...




You can't exclude investors from the property market. Australia has had negative gearing for decades and we have still had long periods of flat and declining property prices such as the late 70s, late 80s and mid-90s. Yes, increased migration has also increased demand for property, no question about it. However, migration is currently down due to COVID but property prices are still going up (in some areas).

The big problem that nobody seems to want to talk about is the desire to live in state capitals and close to the CBD. There is only so much housing in these areas due to the size of residential properties. There's not many places in the world where you have houses on 750 m² of land a few kilometres from the city centre. Most places in the world are far more decentralised and have more population centres. Australia only has huge cities and small towns. We could use more small cities between 500,000 and one million people. There's no shortage of land in this country.

@over9k - are you trying to get into the property market? If so, what city do you live in?


----------



## over9k (13 June 2021)

greggles said:


> You can't exclude investors from the property market. Australia has had negative gearing for decades and we have still had long periods of flat and declining property prices such as the late 70s, late 80s and mid-90s. Yes, increased migration has also increased demand for property, no question about it. However, migration is currently down due to COVID but property prices are still going up (in some areas).
> 
> The big problem that nobody seems to want to talk about is the desire to live in state capitals and close to the CBD. There is only so much housing in these areas due to the size of residential properties. There's not many places in the world where you have houses on 750 m² of land a few kilometres from the city centre. Most places in the world are far more decentralised and have more population centres. Australia only has huge cities and small towns. We could use more small cities between 500,000 and one million people. There's no shortage of land in this country.
> 
> @over9k - are you trying to get into the property market? If so, what city do you live in?



Prices and affordability are not the same thing. 

C'mon dude, the problem is CLEARLY immigration. I'll ask this a third time, do you think the current state of affairs to be an accident? 

I have a house. Not the kind of place I should and not where I should either, but I have one.


----------



## Humid (13 June 2021)

over9k said:


> Pretty rich to tell me to just go & get one of these blue collar jobs after literally every single boomer/elder I ever spoke to in my teens told me to go to university.
> 
> You pushed an entire generation into university, we then get out, tell you we can't afford a house because our degree didn't exactly do a great deal for us, and you then respond by going "see that's your silly/lazy fault, you should have done a trade".
> 
> It's truly astounding.



If you read all of  that in that post you should go out more
Was showing eastern centric people other opportunities
I wasnt smart enough to go to uni lol


----------



## greggles (13 June 2021)

over9k said:


> Prices and affordability are not the same thing.
> 
> C'mon dude, the problem is CLEARLY immigration. I'll ask this a third time, do you think the current state of affairs to be an accident?
> 
> I have a house. Not the kind of place I should and not where I should either, but I have one.




I'm not disputing that immigration has had an impact. But I can see what they're doing and why they're doing it. They're increasing the working age tax base to grow the economy. More working age people means a larger labour force, more consumers, more jobs and economic growth. With Boomers retiring you need more young taxpayers and Australians aren't having kids like they used to.

But I think the largest problem is the geographical problem I outlined above, but there is no easy solution to that problem.


----------



## over9k (13 June 2021)

greggles said:


> I'm not disputing that immigration has had an impact. But I can see what they're doing and why they're doing it. They're increasing the working age tax base to grow the economy. More working age people means a larger labour force, more consumers, more jobs and economic growth. With Boomers retiring you need more young taxpayers and Australians aren't having kids like they used to.
> 
> But I think the largest problem is the geographical problem I outlined above, but there is no easy solution to that problem.



Urbanisation etc was occurring long before 2000.


----------



## wayneL (13 June 2021)

Where do y'all reckon central banks and the debt market fit into this?

Maybe that's the hidden enemy?


----------



## sptrawler (13 June 2021)

over9k said:


> Pretty rich to tell me to just go & get one of these blue collar jobs after literally every single boomer/elder I ever spoke to in my teens told me to go to university.
> 
> *You pushed an entire generation into university, we then get out, tell you we can't afford a house because our degree didn't exactly do a great deal for us, and you then respond by going "see that's your silly/lazy fault, you should have done a trade".*
> 
> It's truly astounding.



That is very true, it was the craziest bit of social engineering ever done, closing down manufacturing increasing mining and making everyone get degree.
What a disaster, then having to import trades from overseas, while those with a degree fight for barista's jobs, an absolute tragedy IMO.
By the way non of my kids went to uni.


----------



## greggles (13 June 2021)

over9k said:


> Urbanisation etc was occurring long before 2000.




So has migration. But the urbanisation problem has gotten worse as the population in capital cities has increased. Yes, a big contributor to that has been immigration. We have had more than 3 million net migration in the last 15 years. If we had a more decentralised population the impact on property prices would have been much less. My personal view is that they shouldn't have been permitted to all settle in capital cities. No reason why many couldn't have migrated to regional centres.


----------



## sptrawler (13 June 2021)

wayneL said:


> Where do y'all reckon central banks and the debt market fit into this?
> 
> Maybe that's the hidden enemy?



I read that inflation in the U.S is 5%, so the ship may be turning at last?


----------



## sptrawler (13 June 2021)

greggles said:


> So has migration. But the urbanisation problem has gotten worse as the population in capital cities has increased. Yes, a big contributor to that has been immigration. We have had about 3.4 million net migration in the last 15 years. If we had a more decentralised population the impact on property prices would have been much less. My personal view is that they shouldn't have been permitted to all settle in capital cities. No reason why many couldn't have migrated to regional centres.



The other thing that has had a major effect, is the cost of air travel, it has reduced to the point that workers can live where ever they like.
Not only has this decimated country towns, it has caused prices in cities to climb, through increased demand.


----------



## greggles (13 June 2021)

wayneL said:


> Where do y'all reckon central banks and the debt market fit into this?
> 
> Maybe that's the hidden enemy?




I don't know too much about this. Do you have something you can point me to (video or website) with more info?


----------



## againsthegrain (13 June 2021)

sptrawler said:


> I read that inflation in the U.S is 5%, so the ship may be turning at last?




www.wsj.com/amp/articles/us-inflation-consumer-price-index-may-2021-11623288303

still being downplayed as temporary, see what happens


----------



## Smurf1976 (13 June 2021)

over9k said:


> Who is the real enemy?



In the context of those wanting affordable housing:

Government.

They created much of the situation themselves and allow central banks, retail banks and developers to do the rest.


----------



## sptrawler (13 June 2021)

Smurf1976 said:


> In the context of those wanting affordable housing:
> 
> Government.
> 
> They created much of the situation themselves and allow central banks, retail banks and developers to do the rest.



Putting public housing out to the private sector, with negative gearing assistance, was the thin edge of the wedge IMO.
Another example of privatisation gone wrong.


----------



## MovingAverage (13 June 2021)

sptrawler said:


> Muppets, I bet you didn't buy there Humid.
> Crazy stuff.



The Betoota Advocate is not a real media outlet. It just takes the piss.


----------



## againsthegrain (13 June 2021)

Hey this is a half serious post but I actually liked everything better in the 90s, as a response to the argument housing was cheaper but other things weren't as good as now
- cars were better
- tv shows were better (yes tvs were smaller but somehow we saw it just fine) 
- not having a mobile phone was maybe better in hindsight (less distractions) 
- houses were cheaper, built and designed better (personal preference) 
- political correctness wasn't as stupid and aggressive as it is now
- there was more time for family time
- schools and universities were more sensible and cheaper
- interest rates were fairer 

Anyway I was a teenager so I'm sure everything was better for that reason. 

p.s what happened to robots? he was big when I joined up here.. professor robots as he called himself


----------



## MovingAverage (13 June 2021)

againsthegrain said:


> Hey this is a half serious post but I actually liked everything better in the 90s, as a response to the argument housing was cheaper but other things weren't as good as now
> - cars were better



Hell yeah...the 90s produced some of the best super cars. I really miss that era of cars


----------



## sptrawler (13 June 2021)

MovingAverage said:


> The Betoota Advocate is not a real media outlet. It just takes the piss.



That figures, coming from Humid, at least you get laugh with him. 🤣 
Sucked me in.


----------



## sptrawler (13 June 2021)

againsthegrain said:


> Hey this is a half serious post but I actually liked everything better in the 90s, as a response to the argument housing was cheaper but other things weren't as good as now
> - cars were better
> - tv shows were better (yes tvs were smaller but somehow we saw it just fine)
> - not having a mobile phone was maybe better in hindsight (less distractions)
> ...



I grew up in the 70's and 80's, as you say everything is different, there was very few consumer goods to buy, now the problem is there is too much choice.
Housing was cheaper as a percentage of wages but in the 70's you had to have 25% deposit and the top tax rate was 60% at $35k. I know my Dad and Mum didn't buy their first house until they were in their 40's.
My first house was a 30 year old weatherboard and tile, chopped in half and transported 200klm, then re stumped.
With political correctness, I think it will actually cause more problems than it solves, people were usually called names and type cast because of a certain trait.
By coping a bit of crap because of that trait, it actually changed perceptions and made people integrate, by being able to laugh at it.
Now political correctness, drives the comments underground IMO, and people don't learn how to laugh at it, because it isn't in the open.
Strange times ATM in my opinion, they are trying to make everyone the same, but not everyone is the same, so it actually warns those with weird and destructive thoughts to keep them to themselves, which IMO isn't good because the only time you find out about the weirdo, is when the weirdo does something weird, not before. In the 'old days' everyone said watch out for so and so they are a weird sod.🤣
But probably off topic.


----------



## MovingAverage (13 June 2021)

Mrmagoo said:


> This is not true, the primary driving force is government policy. As soon as the ALP gets in there is a real risk they will do things to crash/cool the market. You're a loser if you didn't get into the market by this point, no matter what you do from here on you will lose.



I’m not so sure about that. The ALP has has several opportunities to change some of the fundamentals of the housing market to address the issues they continually point the finger. But guess what, the ALP has changed nothing despite having had the opportunity to do so. They’re full of hot air and deep down I think they know that interfering in the housing market is likely to have far reaching implications to the broader economy. What the ALP say and what the ALP do are two very different things


----------



## Dona Ferentes (13 June 2021)

Humid said:


> Family Lives The New Australian Dream Of Barely Being Able To Pay Mortgage On Yardless Display Home
> 
> 
> More to come.
> ...



It's satire.


----------



## MovingAverage (13 June 2021)

over9k said:


> Do you actually think that the current state of the housing market is some kind of accident/unintended side effect?



Yes


----------



## MovingAverage (13 June 2021)

greggles said:


> I'm not disputing that immigration has had an impact.



Really? Immigration has pretty much ceased since Covid yet here we are seeing record prices


----------



## MovingAverage (13 June 2021)

againsthegrain said:


> www.wsj.com/amp/articles/us-inflation-consumer-price-index-may-2021-11623288303
> 
> still being downplayed as temporary, see what happens



Yup....for all those out there with million dollar plus mortgages...inflation is coming...your mortgage repayments are about to get seriously painful


----------



## over9k (13 June 2021)

greggles said:


> So has migration. But the urbanisation problem has gotten worse as the population in capital cities has increased. Yes, a big contributor to that has been immigration. We have had more than 3 million net migration in the last 15 years. If we had a more decentralised population the impact on property prices would have been much less. My personal view is that they shouldn't have been permitted to all settle in capital cities. No reason why many couldn't have migrated to regional centres.



I grew up in a regional centre. I had to move to an expensive city precisely to _get_ work. That's the problem - no work where it's cheap, or housing is so expensive where there _is _work that you're being bled dry by rent, bills etc etc and saving nothing anyway. It's a no-win situation.

Migration has increased the supply of labour whilst also increasing the demand for housing, so housing skyrockets whilst wages get pushed down to nothing. We have downwards pressure on wages and upwards pressure on housing _at the same time. _

Again, this is not an accident. 


MovingAverage said:


> Yes



Then you're a fool.


MovingAverage said:


> Really? Immigration has pretty much ceased since Covid yet here we are seeing record prices



Prices and affordability are not the same thing. Prices are dictated by interest rates. Affordability is dictated by supply & demand.


----------



## over9k (13 June 2021)

Smurf1976 said:


> In the context of those wanting affordable housing:
> 
> Government.
> 
> They created much of the situation themselves and allow central banks, retail banks and developers to do the rest.



And who elects the government on what policies/sales pitch? 

In John Howard's immortal words: 

"Nobody's ever complained to be about their house price going up".


----------



## MovingAverage (13 June 2021)

over9k said:


> Then you're a fool.




that response coming from you is no surprise.


----------



## Mrmagoo (13 June 2021)

sptrawler said:


> That is very true, it was the craziest bit of social engineering ever done, closing down manufacturing increasing mining and making everyone get degree.
> What a disaster, then having to import trades from overseas, while those with a degree fight for barista's jobs, an absolute tragedy IMO.
> By the way non of my kids went to uni.




Yet the white collar job market pays well despite have every single thing going against it. Trades pay a lot more, but can you imagine if the kids who go to uni went to TAFE instead ? Trades would pay min wage.


----------



## Mrmagoo (13 June 2021)

lol if you couldn't borrow a mill at 2% and if the govt didnt throw money at it there would be no boom, lets not kid ourselves.


----------



## Humid (13 June 2021)

MovingAverage said:


> I’m not so sure about that. The ALP has has several opportunities to change some of the fundamentals of the housing market to address the issues they continually point the finger. But guess what, the ALP has changed nothing despite having had the opportunity to do so. They’re full of hot air and deep down I think they know that interfering in the housing market is likely to have far reaching implications to the broader economy. What the ALP say and what the ALP do are two very different things



Its 2021 run me through the Labor parties several opportunities to change the fundamentals


----------



## over9k (13 June 2021)

MovingAverage said:


> that response coming from you is no surprise.



I've tried pointing out the saturation of investment property ownership among politicians several times now. I'll point to it yet again, and yet again, ask if you think that this might have some kind of effect on government policies and the intentions of government policies? 


Honestly, if you genuinely think that the establishment of the liberal party stands for literally anything other than lining their own pockets/the pockets of their donors, then you're as dumb as a brick. I'm a liberal party member and I'm flatly telling you it because I've seen/listened to the conversations that go on at party meetings etc, so if you don't believe it now, there's really nothing else I can say to you. 


And in case you haven't noticed, aside from a very brief interlude with the rudd-gillard bull****, the liberals have been in power for 25 years now.


----------



## Mrmagoo (13 June 2021)

If every election the govt put billions into STEM then STEM would pay a fortune too, it is all a planned economy like  under communism.


----------



## over9k (13 June 2021)

Mrmagoo said:


> lol if you couldn't borrow a mill at 2% and if the govt didnt throw money at it there would be no boom, lets not kid ourselves.



Exactly. Interest rates dictate P/E. That's literally what they do.

But prices and affordability are not the same thing.


Humid said:


> Its 2021 run me through the Labor parties several opportunities to change the fundamentals



Not sure if this was sarcasm but labor's policies won't do a damn thing to improve housing whilst the immigration floodgates remain open. Hell, rudd upped the level to even higher than the libs were running it.


----------



## Smurf1976 (13 June 2021)

sptrawler said:


> Strange times ATM in my opinion



Comparing now with the 1980's or 90's a lot of things make no sense at all.

1. Governments, individuals and even business spend money as though it were unlimited and just fell from the sky. Pretty much everyone lives like a king.

Despite the above there's apparently no money to spend on health care, the environment, wages or paying decent interest on deposits.

2. Perfectly good appliances, furniture, cars and even houses are scrapped for no particular reason.

Despite the above many can't afford a house to live in and there's a constant stream of professed concern for the natural environment and use of resources.

3. Pretty much every large business extolls the virtues of their employment policies and in particular that they embrace diversity.

Despite the above the standard HR approach to hiring is to only hire people much the same as those who already work there. Monocultures and conformity, not diversity, are all but forced in practice.

And so on. There's an awful lot of contradictions in society these days, situations where there's too much but at the same time not enough or where something's actively promoted but you'd be marched out of the building if you did it. And so on, there's a lot of stuff like that in the modern world.

My explanation is that it all comes down to not having had a proper recession for 30 years now. All sorts of economic and societal imbalances have built up and grown to extremes. Without anything to cull the weeds, they've built up to the point of stifling growth of the flowers to such an extent that those of a younger age don't recognise the weeds as what they are.

The only real solution that comes to mind is an actual, proper recession that clears out the dead wood. In the absence of that, it'll need some other major trigger to bring change both to the economic extremes such as house prices and to the strange way of thinking which seems to be present today.


----------



## MovingAverage (13 June 2021)

Humid said:


> Its 2021 run me through the Labor parties several opportunities to change the fundamentals



You have a seriously short memory—do I need to remind you of the dreadful Dudd, Gillard, Dudd Fed government era. Do you want me to go through some of the recent state government ALP opportunities?


----------



## Humid (13 June 2021)

over9k said:


> I've tried pointing out the saturation of investment property ownership among politicians several times now. I'll point to it yet again, and yet again, ask if you think that this might have some kind of effect on government policies and the intentions of government policies?
> 
> 
> Honestly, if you genuinely think that the establishment of the liberal party stands for literally anything other than lining their own pockets/the pockets of their donors, then you're as dumb as a brick. I'm a liberal party member and I'm flatly telling you it because I've seen/listened to the conversations that go on at party meetings etc, so if you don't believe it now, there's really nothing else I can say to you.
> ...



This should be repeated daily they dont even disguise it anymore


----------



## MovingAverage (13 June 2021)

over9k said:


> I've tried pointing out the saturation of investment property ownership among politicians several times now. I'll point to it yet again, and yet again, ask if you think that this might have some kind of effect on government policies and the intentions of government policies?
> 
> 
> Honestly, if you genuinely think that the establishment of the liberal party stands for literally anything other than lining their own pockets/the pockets of their donors, then you're as dumb as a brick. I'm a liberal party member and I'm flatly telling you it because I've seen/listened to the conversations that go on at party meetings etc, so if you don't believe it now, there's really nothing else I can say to you.
> ...



Your position of playing the victim and blaming older generations for your problems is pretty evident


----------



## Humid (13 June 2021)

MovingAverage said:


> You have a seriously short memory—do I need to remind you of the dreadful Dudd, Gillard, Dudd Fed government era. Do you want me to go through some of the recent state government ALP opportunities?



Im ready


----------



## Humid (13 June 2021)

Humid said:


> Im ready



Compare them to the state Liberal ones like NSW


----------



## MovingAverage (13 June 2021)

Humid said:


> Im ready



Your silence on my comment re Dudd-Gillard-Dudd’s failure to address affordable housing is deafening


----------



## MovingAverage (13 June 2021)

Humid said:


> Compare them to the state Liberal ones like NSW



Deflecting again are you...how is the cost of housing going in Melbourne. Remind me again who that state government is?


----------



## Humid (13 June 2021)

MovingAverage said:


> You have a seriously short memory—do I need to remind you of the dreadful Dudd, Gillard, Dudd Fed government era. Do you want me to go through some of the recent state government ALP opportunities?



The dreadful era.....like debt 
What was dreadful compared to now


----------



## Humid (13 June 2021)

MovingAverage said:


> Deflecting again are you...how is the cost of housing going in Melbourne. Remind me again who that state government is?



And Sydney


----------



## greggles (13 June 2021)

MovingAverage said:


> Really? Immigration has pretty much ceased since Covid yet here we are seeing record prices




I think there are different factors at work at the moment. Regarding migration generally, I don't think you can bring more than 3 million new working age people into the country in 15 years without that having a significant impact on demand for residential property, especially in cities. That increased demand is likely to have a significant upward pressure on real estate prices.

What's happening at the moment is a rush to hard assets - of which property has always been king - in a time of very limited supply. There simply isn't much stock around at the moment and that lack of property for sale is pushing up prices more than usual.


----------



## over9k (13 June 2021)

MovingAverage said:


> Your position of playing the victim and blaming older generations for your problems is pretty evident



That's because they *are *the cause of my (and everyone else my age's) problems, and I've explained why quite conclusively - I've shown you the data, I've pointed out an awful lot of "coincidences", I've mentioned what I've overheard at party meetings, what more proof do you need? 

Like I've said before, it's very hard to get someone to understand something when they are financially enriched by not understanding it. 

In reality, I think you understand just fine, you just don't give a **** and know you can't admit that you don't. 


And I say all this as a liberal party member, with a house, and with a house that I'm renting out for an absolutely ridiculous amount knowing that the only reason I can get the kind of rent for it that I do is because of the massive, totally artificial, way-above-natural-level demand for housing that this country's immigration policy has created. I won't even be negatively geared once the renovations are done, it'll be a pure wealth extraction vehicle out of the pocket of a renter stuck in the poverty trap and into my pocket instead.  

I shouldn't be *able* to do it, and yet I can, and I'm going to, because there's no alternative. 


Anyone with a brain would think that if an economy is organised in such a way as to make extracting wealth the only way to get ahead then there might be a problem, but not this country apparently.


----------



## over9k (13 June 2021)

I don't know why you're laughing, I'm dead serious.


----------



## MovingAverage (13 June 2021)

Humid said:


> And Sydney



Deflect....🙄


----------



## MovingAverage (13 June 2021)

over9k said:


> I don't know why you're laughing, I'm dead serious.



Oh, I’m laughing because I know you are very serious.


----------



## over9k (13 June 2021)

greggles said:


> I think there are different factors at work at the moment. Regarding migration generally, I don't think you can bring more than 3 million new working age people into the country in 15 years without that having a significant impact on demand for residential property, especially in cities. That increased demand is likely to have a significant upward pressure on real estate prices.
> 
> What's happening at the moment is a rush to hard assets - of which property has always been king - in a time of very limited supply. There simply isn't much stock around at the moment and that lack of property for sale is pushing up prices more than usual.



Bingo. The demand is completely artificial.


----------



## over9k (13 June 2021)

Use the block button humid. I'm about to. 

(for the reason you posted)


----------



## MovingAverage (13 June 2021)

over9k said:


> Use the block button humid. I'm about to.
> 
> (for the reason you posted)



Do me a favour man


----------



## Joe Blow (13 June 2021)

Please folks, use the ignore feature rather than use insults or obscenities. Let's not go there.


----------



## Smurf1976 (13 June 2021)

sptrawler said:


> try buying in or around London, NY, any major city in the world.



Only a sample of one but I know someone who lives in London.

A look online at what appear to be virtually identical terrace houses in the same block sold within the recent past and converting prices to AUD finds it's worth $1.6 million.

3 bedrooms, 2 storey but it's small by Australian standards, measuring from Google maps it would be about 75m2 per floor and the outside land area is literally zero, the building goes right to the property boundary both front and back. Garden is in pots up on the roof which is flat and intended to be walked on with a greenhouse sort of thing up there as well.

Only been there once, since I've only been to London once, but I'd describe the building as old but solid. Internal walls are brick, painted in the bedrooms and bathroom but unpainted in the open plan kitchen / dining / lounge area. No laundry, the washing machine and dryer are in the kitchen under the benches. No air-conditioning but there's hydronic radiators in every room.

Big cities aren't cheap generally.


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## Humid (13 June 2021)

Joe Blow said:


> Please folks, use the ignore feature rather than use insults or obscenities. Let's not go there.



Deflect


----------



## over9k (13 June 2021)

Smurf1976 said:


> Only a sample of one but I know someone who lives in London.
> 
> A look online at what appear to be virtually identical terrace houses in the same block sold within the recent past and converting prices to AUD finds it's worth $1.6 million.
> 
> ...



But again, the question is why?


A good place to look here is the U.S - take a look at property prices in california vs texas, internal migration patterns, so on and so forth. The united states is actually currently undergoing is largest _internal _migration in its history, true story.

And people are moving _away _from the coasts and _into _middle america, which is the complete opposite to essentially three generations' before now.

Again, we need to be focusing on why, not what, and you need only talk to anyone who has left or is going to leave california to hear the exact same explanation every single time.



And it's the same thing you hear whenever you ask someone why they have (or are going to) left sydney, or london: It's an expensive, congested, clusterfuck.


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## sptrawler (13 June 2021)

Really the only way Sydney/ Melbourne are going to have a reset, is as smurf says, a major recession. 
But having said that, how we are going to have a recession, when governments decide to print money is anyone's guess.
The only other way could be if there is a major conflict with China, that will bring house prices down, but whether people could then afford to pay their rates etc is another thing.


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## Mrmagoo (13 June 2021)

over9k said:


> Exactly. Interest rates dictate P/E. That's literally what they do.
> 
> But prices and affordability are not the same thing.
> 
> Not sure if this was sarcasm but labor's policies won't do a damn thing to improve housing whilst the immigration floodgates remain open. Hell, rudd upped the level to even higher than the libs were running it.



The simple fact of the matter is housing is not affordable. Housing in some very poor quality areas is affordable to those on a high income. That is not that same as saying housing is affordable in general.


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## sptrawler (13 June 2021)

Mrmagoo said:


> The simple fact of the matter is housing is not affordable. Housing in some very poor quality areas is affordable to those on a high income. That is not that same as saying housing is affordable in general.



The problem is only a major issue in Sydney/Melbourne, most other State capitals don't have the runaway prices Sydney/Melbourne do.
To make a blanket statement that housing is unaffordable is misleading, when 95% of the country isn't unaffordable.
I truly do feel sorry for people trying to buy in Sydney/Melbourne, but there is the option to relocate to another area, that is affordable.
What other option is there? If prices aren't coming down there is only so many things a person can do, going on endlessly about it may make someone feel better, but I don't think it will affect Sydney/Melbourne prices.


----------



## Mrmagoo (14 June 2021)

Smurf1976 said:


> Only a sample of one but I know someone who lives in London.
> 
> A look online at what appear to be virtually identical terrace houses in the same block sold within the recent past and converting prices to AUD finds it's worth $1.6 million.
> 
> ...




I really don't get this "by Australian standards" thing. Unless you are wealthy, the housing options are quite small.



sptrawler said:


> The problem is only a major issue in Sydney/Melbourne, most other State capitals don't have the runaway prices Sydney/Melbourne do.
> To make a blanket statement that housing is unaffordable is misleading, when 95% of the country isn't unaffordable.
> I truly do feel sorry for people trying to buy in Sydney/Melbourne, but there is the option to relocate to another area, that is affordable.
> What other option is there? If prices aren't coming down there is only so many things a person can do, going on endlessly about it may make someone feel better, but I don't think it will affect Sydney/Melbourne prices.




Rubbish, houses are expensive everywhere. There is no other option, Australia is a backwards backwater, all of the good jobs and infrastructure are in Melbourne and Sydney.


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## Smurf1976 (14 June 2021)

Mrmagoo said:


> I really don't get this "by Australian standards" thing. Unless you are wealthy, the housing options are quite small.



Point is simply that a house that's seen as "quite small" in Australia isn't quite small at all and just about anywhere else that same house would be seen as average or large.

The average new home in Australia is 235m2 according to Google.

In most other countries simply having a home that size would of itself be a pretty clear indication that whoever's living there is doing pretty damn well financially and is very much at the upper end of society in terms of wealth. And yet somehow that has become _average_ in Australia.

On one hand I do agree that housing has become more expensive in real terms than it used to be. That's proven beyond reasonable doubt for the cities at least.

On the other hand, there seems to be a lot of people expecting to buy a rich person's house without actually being rich. That is not and has never been a reasonable expectation.

Same as it has always been the case that most people don't travel First Class, they don't stay in 5 star hotels, they don't own designer anything, they don't eat at restaurants every day and they don't own a fancy car. That stuff has always been the domain of those at the top and even there not all of them actually want or have it.

If first home buyers can't afford a ~140m2 house with 3 bedrooms and 1 bathroom in a working class suburb then that's a problem yes I agree. If they can't afford a mansion in a rich suburb well that's not surprising, pretty much nobody's ever had that as their first home unless they're from a wealthy family or won the lottery.

I see it as a combination of problems. Housing has become more expensive definitely but at the same time there's at least some with expectations that were never realistic. We're not in Hollywood, most people aren't movie stars.


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## qldfrog (14 June 2021)

And science was science, facts were facts with the communists in Europe admitting at last that there was no paradise behind the iron curtain.
Freedom was coming, so much hope but the seeds of todays problems had been planted

Totally out of subject....
I revert to housing craziness
my ppor took 40% in last 9 months with basically a good initial buy, and a serious cosmetic work.full paint landscaping.
this makes it a mockery of wages taxed jobs when flippers can do that type of deals.
PS..no flipping for the frog








Smurf1976 said:


> Comparing now with the 1980's or 90's a lot of things make no sense at all.
> 
> 1. Governments, individuals and even business spend money as though it were unlimited and just fell from the sky. Pretty much everyone lives like a king.
> 
> ...



I thought i was the only weirdo thinking the best thing which could happen to the current world is a real crisis, where priorities would be reset: food shelter, ..not FN and money meaning something,  taking value not meme as selection criteria
Do not employ someone because he she is lgbt or non white or transsexual, but because he she bring value to the company.
I can dream, and no, covid is not the crisis

Just noticed 2 different posts are merged


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## over9k (14 June 2021)

sptrawler said:


> The problem is only a major issue in Sydney/Melbourne, most other State capitals don't have the runaway prices Sydney/Melbourne do.
> To make a blanket statement that housing is unaffordable is misleading, when 95% of the country isn't unaffordable.
> *I truly do feel sorry for people trying to buy in Sydney/Melbourne, but there is the option to relocate to another area, that is affordable.*
> What other option is there? If prices aren't coming down there is only so many things a person can do, going on endlessly about it may make someone feel better, but I don't think it will affect Sydney/Melbourne prices.



But there isn't trawler, there isn't any work anywhere else. I've been saying this for several pages now. 

I didn't want to move, but I had to to get work.


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## Smurf1976 (14 June 2021)

over9k said:


> there isn't any work anywhere else



This would obviously depend on what industry someone's in but agreed it's a problem for any industry which exists only or primarily in the big two cities.


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## moXJO (14 June 2021)

I know Thailand doesn't sell land to foreigners and houses prices are increasing. Not sure if it is on par with Western nations as to lazy to look for a graph. There is a huge number of people entering middle-class status across Asia. We have a butt tonne of stimulus money. China's globalisation push enriched a lot of people. And the fact we had massive immigration without being able to keep up with housing stock. We are behind by years, which is represented by the price. 

Interestingly enough I had a look at build prices on a single story 4 bedroom that came back as $430000- 380000. I could probably do it myself  for about $240000. But once again we have multiple factors for the price increase. Even simply things like the size of homes these days. And land availability.

As for boomers, any generation would have taken advantage of that era. Let's make no mistake about that. I don't agree with the "Big Australia" immigration policy and it was tied directly to supporting the older generations pension. Labor was letting everyone in regardless during their short time. 




over9k said:


> I didn't want to move, but I had to to get work.



Didn't you move out of Victoria?
That's a blessing not a curse.
Right now the cost of living is ridiculous. I cannot fathom how anyone could justify the prices. I feel for young people. I had to wait about 10 years to time the market for property acquisitions. That was about 8 years ago. Many people don't have that luxury of waiting. 

Something is definitely on the horizon to pop this cycle though


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## MovingAverage (14 June 2021)

moXJO said:


> As for boomers, any generation would have taken advantage of that era. Let's make no mistake about that. I don't agree with the "Big Australia" immigration policy and it was tied directly to supporting the older generations pension. Labor was letting everyone in regardless during their short time.



I don't agree with the Big Australia approach either--not because I'm against immigration but because as a country we are simply not geared up for it nor are we taking proper steps to support it (you don't have to look to far to see Australia is already stretched to support the current population). Successive government are not prepared to invest in the long term change that is required. Anyway, the point I want to make here is that supporting older generations' pension was not a major driver in Big Australia. Conventional wisdom states that to keep an economy growing (and apparently all the economy experts keep telling us we need the economy to grow) you need a certain underlying rate of growth in the population to get there and the fastest and cheapest way to get there is through immigration. We need a growing economy to support a huge range of things not just pensions.


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## moXJO (14 June 2021)

MovingAverage said:


> . Anyway, the point I want to make here is that supporting older generations' pension was not a major driver in Big Australia. Conventional wisdom states that to keep an economy growing (and apparently all the economy experts keep telling us we need the economy to grow) you need a certain underlying rate of growth in the population to get there and the fastest and cheapest way to get there is through immigration. We need a growing economy to support a huge range of things not just pensions.



It was a factor as the boomer population was too large to support without the growth. Personally I think its lazy politics to add to the taxable base. I think the demographic has shifted in favour of gen y now but can't really remember off the top of my head. Japan suffers similar with the older population realistically they are shrinking and have been zombie for a while.


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## MovingAverage (14 June 2021)

moXJO said:


> It was a factor as the boomer population was too large to support without the growth. Personally I think its lazy politics to add to the taxable base. I think the demographic has shifted in favour of gen y now but can't really remember off the top of my head. Japan suffers similar with the older population realistically they are shrinking and have been zombie for a while.



Agree it was a factor. Was just trying to highlight there are other more pressing economic reasons for Big Oz.


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## sptrawler (14 June 2021)

As @moXJO and @MovingAverage both say it has been brought about by lazy politics, on both sides.
There is no point in having population growth, without having secondary and  tertiary sector growth, importing a population into an economy where the only growth is in the service sector is a recipe for a third world living standard.
Without encouraging manufacturing and higher skilled job opportunities, importing more competition for fewer and fewer jobs, just festers resentment.
Both parties have been asleep at the wheel regarding this since the early 1980's, it is o.k to reduce tariffs to improve productivity, but when you don't put in place a structure to nurture industrial growth, you end up exactly where we are now, 40 years on.
Neither party can take the moral high ground on the demise of Australian manufacturing, they are both equally to blame. 
With the advent of renewables and the pandemic, it gives an opportunity for a kickstart of a growth economy, not completely focussed on mining.
Whichever Party comes up with a viable plan, will win the upcoming election IMO, the ball is in both parties court.


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## over9k (14 June 2021)

sptrawler said:


> As @moXJO and @MovingAverage both say it has been brought about by lazy politics, on both sides.
> There is no point in having population growth, without having secondary and  tertiary sector growth, importing a population into an economy where the only growth is in the service sector is a recipe for a third world living standard.
> Without encouraging manufacturing and higher skilled job opportunities, importing more competition for fewer and fewer jobs, just festers resentment.
> Both parties have been asleep at the wheel regarding this since the early 1980's, it is o.k to reduce tariffs to improve productivity, but when you don't put in place a structure to nurture industrial growth, you end up exactly where we are now, 40 years on.
> ...



Alternatively, it's deliberate.


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## moXJO (14 June 2021)

over9k said:


> Alternatively, it's deliberate.



Deliberate stupid short term thinking perhaps. Politicians are not smart enough to pull off a Deliberate plan. This is to well executed otherwise.


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## over9k (14 June 2021)

moXJO said:


> Deliberate stupid short term thinking perhaps. Politicians are not smart enough to pull off a Deliberate plan. This is to well executed otherwise.



Opening the borders is not exactly difficult.


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## sptrawler (14 June 2021)

moXJO said:


> Deliberate stupid short term thinking perhaps. Politicians are not smart enough to pull off a Deliberate plan. This is to well executed otherwise.



I think the problem was brought about by Australia agreeing, with most of the other industrialised nations, to offshore a lot of manufacturing to lift the third world countries out of poverty and it has worked to a degree.
However Australia's unique situation of being a large country a long way from any markets, makes it a problem to entice manufacturing back here, from a business perspective it is a no brainer to build your product in a low taxing, low labour cost country close to the market places.
Therefore Australia's tax base shrinks to income tax, GST and resources, as the higher paying manufacturing tax base dried up, so you have to increase the income tax base by importing tax payers to increase the government revenue.

The real issue is how to get manufacturing back here, which isn't easy, we are a high taxing country, as we have to be, because it is a small population. 
Yet we supply first world infrastructure in a large sparsely populated land mass, add to that the welfare systems and it is all very expensive on a per capita basis.

The opportunity presenting at the moment IMO is, we have a distinct advantage over all the other first world countries, when it comes to renewables and especially hydrogen.
If there is a push to clean up industry e.g steel production etc, Australia is in the box seat to have the process done here, as transporting hydrogen will be problematic.
So if manufacturers decide to produce the steel here, where the raw materials and the clean energy is, rather than transport both ingredients O/S for processing, Australia as a manufacturing base becomes viable again.
Let's see if any of the parties can come up with a plan, or else it will be back to importing taxpayers, to support our lifestyle, until it can't do it anymore, then $hits are trumps.


----------



## MovingAverage (14 June 2021)

Mrmagoo said:


> Unless you are wealthy, the housing options are quite small.
> 
> 
> Rubbish, houses are expensive everywhere.



Beginning to think I was a little out of touch with the housing market so thought I'd do a little research. Adopted the persona of a first home buyer and did a little research on domain. Found this cute little 3 bedroom house in Granville NSW: https://www.domain.com.au/16-o-neill-street-granville-nsw-2142-2017032371?topspot=1 I didn't have to look too hard to find this and I'm sure if I was a little more motivated I could find more options.

The house presents well, is clean and very livable. Has 3 bedrooms and is on about 370 square meter. Granville is hardly the bush and is well serviced by public transport for an easy commute into the Sydney CBD if need be. Granville is also a livable area and far from a bad area. HAs some good public schools and the other stuff young families might like. This place would serve a first home buyer with a young family well.

A quick check on propertyvalues.com has the place priced at $800k to $900k. https://www.propertyvalue.com.au/property/16-o'neill-street-granville-nsw-2142/2585466 Now, I here you say it's worth more blah blah but let's stick to the data we have at hand.

So let's see, several years back the ALP more or less came out and said if you earn more that $150,000 per year you're rich.  https://www.news.com.au/finance/bus...s/news-story/5fed388c14abfbdd40803cf772c42cf7

Ok, so let's assume I'm not rich and I have a combined pre-tax income of $140,000 with my wife and I've saved up a $40,000 deposit. My wife and I both earn around $70,000 per year so we have a combined after tax income of around $111,406: https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=STC&anchor=STC#STC/report . This ATO tax calculator link show the tax payable on just one of our incomes. This after tax combined income of around $111,406 leaves us with around $9300 per month after tax income.

I'm not very financially literate so I go straight to CBA for a home loan. I apply for an $800,000 loan over 30 years, which at current interest rate comes in at around $3240 per month. https://www.commbank.com.au/digital/home-buying/calculator/home-loan-repayments

So with our income of around $9300 per month we have to pay $3240 per month on the mortgage leaving us with around $6000 per month on all other living expenses. Things might be a little tight but hey, gotta make some sacrifices to get into the market

I agree my back of envelop calculations are pretty high level--but the point I'm trying to make is that on face value you do not need to be wealthy (as defined by the ALP) to get into Sydney real estate. Sure, if you want an inner city terrace in a trendy suburb with 1 or 2 k's of the city you will probably need some serious cash behind you, but to make a blanket statement that houses are expensive everywhere--I'm not so sure. I know I haven't factored in things like stamp duty but I'm sure the bank of mum and dad will come to the rescue there


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## sptrawler (14 June 2021)

Following on from that, @MovingAverage and using your start point on google maps, I looked further out, with good train access.
Penrith is 1hr and 4min out on the fast train, similar distance as living in Mandurah and working in Perth, which many do.
So I looked on Real Estate dot com and saw this on the first page.


			https://www.realestate.com.au/property-house-nsw-penrith-136531606
		

To my mind getting a $800,000 loan is asking for problems, I would buy further out, pay down as quick as possible then flip and move closer. The first house is just saving you rent and giving you the opportunity to buy equity and hopefully get some capital gain IMO.
Rinse, wash, repeat, but I'm just very risk averse.


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## greggles (14 June 2021)

Another problem related to urbansiation in Australia is that infrastructure has not kept up with population growth. There should be trains and express buses travelling on dedicated bus lanes from all corners of the city going into the city. However, public transport and roads have not kept up with growth in capital cities, and as far as I can tell this is universal and a problem in all capital cities.

Governments are happy to generate revenue from us, but they can't seem to spend it on critical infrastructure that will make getting around our crowded cities easy and quick.


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## MovingAverage (14 June 2021)

sptrawler said:


> Following on from that, @MovingAverage and using your start point on google maps, I looked further out, with good train access.
> Penrith is 1hr and 4min out on the fast train, similar distance as living in Mandurah and working in Perth, which many do.
> So I looked on Real Estate dot com and saw this on the first page.
> 
> ...



Couldn't agree with you more. My first house many years ago was a long long way out of the CBD and we bought it for the very reason you mention. I suspect the way you and I think is considered old fashioned these days


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## over9k (14 June 2021)

greggles said:


> Another problem related to urbansiation in Australia is that infrastructure has not kept up with population growth. There should be trains and express buses travelling on dedicated bus lanes from all corners of the city going into the city. However, public transport and roads have not kept up with growth in capital cities, and as far as I can tell this is universal and a problem in all capital cities.
> 
> Governments are happy to generate revenue from us, but they can't seem to spend it on critical infrastructure that will make getting around our crowded cities easy and quick.



Again, you think this an accident?


----------



## sptrawler (14 June 2021)

over9k said:


> Again, you think this an accident?



Maybe not an accident, maybe unintended consequences, that have actually gotten out of control?
A bit like crypto, once the herd saw that buying crypto, was a sure fire way of making money it is difficult to stop.
Even more so with Syd, Mlb property, because whatever the gov put in place to crash Syd/Mlb hits the other 95% of the country where their isnt the same problem.


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## moXJO (14 June 2021)

over9k said:


> Opening the borders is not exactly difficult.



Kevin Rudd thought the same when it came to offshoring detention centres. Majority of decisions are not well thought out by either side.


----------



## greggles (14 June 2021)

over9k said:


> Again, you think this an accident?




I think this is:

1. Governments generally thinking and planing one election cycle at a time.
2. Urban planning is not given the priority it deserves.
3. Outer suburbs receive less funding than inner, wealthier suburbs

I think it's a mix of bureaucratic incompetence and suburbs populated by those on lower incomes getting the shaft. Governments favour special interest groups, and those on lower incomes do not fall into those special interest groups. Wealthy suburbs receive better services. Their roads are fixed faster and more money is pumped into them. Suburbs further out of the city are overlooked and often ignored, especially when it comes to public transport. It's always been this way, but as our cities get more crowded it appears to be getting worse.


----------



## MovingAverage (14 June 2021)

greggles said:


> I think this is:
> 
> 1. Governments generally thinking and planing one election cycle at a time.
> 2. Urban planning is not given the priority it deserves.
> ...



The money will go where the government (local, state or federal) needs votes or to sure up its power base. It rarely goes to those areas in desperate need.


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## sptrawler (14 June 2021)

MovingAverage said:


> The money will go where the government (local, state or federal) needs votes or to sure up its power base. It rarely goes to those areas in desperate need.



So true, it doesn't go to safe seats either, the marginal seats is where the money goes. 🤣


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## MovingAverage (14 June 2021)

sptrawler said:


> So true, it doesn't go to safe seats either, the marginal seats is where the money goes. 🤣



Good old fashioned pork barreling


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## Smurf1976 (14 June 2021)

sptrawler said:


> There is no point in having population growth, without having secondary and tertiary sector growth, importing a population into an economy where the only growth is in the service sector is a recipe for a third world living standard.



High population growth.

Resource extraction is a key activity.

Lots of people working in service industries.

Those three are common to most Third World countries.


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## over9k (14 June 2021)

greggles said:


> I think this is:
> 
> 1. Governments generally thinking and planing one election cycle at a time.
> 2. Urban planning is not given the priority it deserves.
> ...



The fact that none of the high (or even medium) rise blocks etc have been built in eastern sydney should really tell you everything you need to know. 

This is no accident.


----------



## moXJO (14 June 2021)

Agree with the speaker in the video. Pretty much sums it up.


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## moXJO (14 June 2021)

Second video.
Interesting comment of investing into China as the US $ is on the nose.


----------



## Gunnerguy (14 June 2021)

MovingAverage said:


> Beginning to think I was a little out of touch with the housing market so thought I'd do a little research. Adopted the persona of a first home buyer and did a little research on domain. Found this cute little 3 bedroom house in Granville NSW: https://www.domain.com.au/16-o-neill-street-granville-nsw-2142-2017032371?topspot=1 I didn't have to look too hard to find this and I'm sure if I was a little more motivated I could find more options.
> 
> The house presents well, is clean and very livable. Has 3 bedrooms and is on about 370 square meter. Granville is hardly the bush and is well serviced by public transport for an easy commute into the Sydney CBD if need be. Granville is also a livable area and far from a bad area. HAs some good public schools and the other stuff young families might like. This place would serve a first home buyer with a young family well.
> 
> ...




@MovingAverage

Great analysis !!!

I’ve been watching this discussion for a while now and there are lots of well made points. I’m going to add my 2 cents worth ……. And I’m a (younger) Boomer …..

1. Comments by politicians on levels of wealth are, and should be, ignored.
2. ‘Expensive’ is a relative and subjective term.
Objectively I have done a little bit more research to add to yours.

80% of couples earn less than your combined pre-tax income of $140,000. So I think in your analysis you are a bit high. (https://mccrindle.com.au/insights/blog/australias-income-and-wealth-distribution/). I believe (can’t remember the source) 40% earn less than $40,000.

The Average Gross combined income in Australia is about $116,584, giving a combined after tax monthly take home of $7,948, which is 15% lower than your number of $9,300.

Loan repayments on your example of $800,000 for 30 years is at a rate of 2.69%. Although this is may be the ‘advertised’ banks now generally stress test a couple of percentage points higher in order to get a loan, eg. 4.69%. Although your 2.69% is ‘advertised’ you will likely have to be able to service a loan on 4.69% in order to actually get the loan, $4,144 per month.

Yes wages are different across the country, as are prices, but your $800,000 house loan for an ‘average’ couple will only be provided by the lender is they can pay $4,144 pm on an income of $7,948 pm, which is 52% of disposable income. If we stick with the 2.69% we are $3.240 of $7,948 which is 40% of disposable income.

I hate to admit is, as a Boomer, up to 4-5 years ago I thought the Millennial’s were just whinging. I looked in to this a lot closer over the years and it is just simply shown by the numbers. I don’t envy the younger generation(s). This generation are by far worse off than I was in the 1990’s when I and Ms.Gunnerguy bought our first house.

1993 – Home loan was 33% of our combined after tax monthly disposable income. Two bedroom house in the suburbs. My commute was 1 hour each way to the CBD.
2021 –The average Australian combined after tax disposable income used on a loan is 40% of disposable income (or 52% if stress tested). Granville is a 45 minute commute I believe by public transport.

So, many variables, and subjective components, but yes I hate to admit it, I spent 33% of my take home pay on a loan, but nowadays you need 40%, if not higher if you are an average income earner.

In short 33% in 1990, and about >40% in 2021, but always difficult to do apples to apples, and as a Boomer I admit its well harder today.
The reasons/solution .... thats for another post.

Gunnerguy.
(Analysis freak)


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## Mrmagoo (15 June 2021)

MovingAverage said:


> Beginning to think I was a little out of touch with the housing market so thought I'd do a little research. Adopted the persona of a first home buyer and did a little research on domain. Found this cute little 3 bedroom house in Granville NSW: https://www.domain.com.au/16-o-neill-street-granville-nsw-2142-2017032371?topspot=1 I didn't have to look too hard to find this and I'm sure if I was a little more motivated I could find more options.
> 
> The house presents well, is clean and very livable. Has 3 bedrooms and is on about 370 square meter. Granville is hardly the bush and is well serviced by public transport for an easy commute into the Sydney CBD if need be. Granville is also a livable area and far from a bad area. HAs some good public schools and the other stuff young families might like. This place would serve a first home buyer with a young family well.
> 
> ...



This is one of the more absurd examples. You've basically just gone - borrow a mill two people can pay it off - with a $9000 a month income. That is not realistic for most people.


----------



## Mrmagoo (15 June 2021)

sptrawler said:


> Following on from that, @MovingAverage and using your start point on google maps, I looked further out, with good train access.
> Penrith is 1hr and 4min out on the fast train, similar distance as living in Mandurah and working in Perth, which many do.
> So I looked on Real Estate dot com and saw this on the first page.
> 
> ...




Yeah, sure, take out a 800k loan then the ALP gets in and slow stuff down. Oopps negative equity. You simply can't buy atm.


----------



## Mrmagoo (15 June 2021)

Here is what is going to happen in the next few years :
1) another financial crisis
2) people will default
3) prices will fall
4) ????
5) Profit. 

Who knows, really what will happen but another financial crisis is 100% on the way.


----------



## MovingAverage (15 June 2021)

Mrmagoo said:


> This is one of the more absurd examples. You've basically just gone - borrow a mill two people can pay it off - with a $9000 a month income. That is not realistic for most people.



Ok then do the maths and show me why it can’t be paid off? CBA’s mortgage calculator has a very different opinion to you...$800k over 30 years will be paid off. If you’re arguing that $800k mortgage is too high then that is a different issue—but don’t say it is not possible to buy because it is. I went the extra step on that CBA mortgage app to see if I could get preliminary approval and guess what—I could.


----------



## MovingAverage (15 June 2021)

Gunnerguy said:


> @MovingAverage
> 
> Great analysis !!!
> 
> ...



You raise some good points, and I too do not envy the younger generation today and I acknowledge it isn’t easy. But one thing that makes my bloody boil is the blanket statement that housing is out of reach for all now, because it is not—yes you’ll have a sizeable mortgage and yes things will
Probably be right for some time, but I remain convinced it’s doable. I think what has changed is people’s standards and expectations. Yes for some sections of society housing is genuinely out of reach. When I was typing out my crude example I had in mind a young couple...the guy working in a trade and the girl working as a teacher. You don’t have to look too far to see a tradie such as an electrician can earn $90k plus and a teacher around $70k. So I think my use of a combined income of $140k per year is not unrealistic. Sure there are people that earn less but I’m not suggesting housing is affordable for everyone—it never has been. Anyway, appreciate you detailed analysis and you raised some great points.


----------



## MovingAverage (15 June 2021)

Mrmagoo said:


> Here is what is going to happen in the next few years :
> 
> 3) prices will fall



Been hearing that for 40 years. Keep calling it long enough and it might just come true


----------



## Humid (15 June 2021)

MovingAverage said:


> Ok then do the maths and show me why it can’t be paid off? CBA’s mortgage calculator has a very different opinion to you...$800k over 30 years will be paid off. If you’re arguing that $800k mortgage is too high then that is a different issue—but don’t say it is not possible to buy because it is. I went the extra step on that CBA mortgage app to see if I could get preliminary approval and guess what—I could.



Children can seriously reduce your income.....got any?


----------



## MovingAverage (15 June 2021)

Humid said:


> Children can seriously reduce your income.....got any?



Two. 

The reason I selected Granville in my original post is that I expected someone would raise that as "I still can't afford to buy a house because"--so thank you. The house I picked is located within the catchment area of a public school that appears to get reviews. Have a look. Education fees can be one of the biggest expenses for a young family so should be manageable via a public school. Unless of course you have plans to send your kids to high end private school like Knox, SCEGGS, Shore etc etc


----------



## sptrawler (15 June 2021)

Humid said:


> Children can seriously reduce your income.....got any?



That is very true and is something that has changed over the years, which has caused a lot of the house price disparity between the boomers and todays young people.
In the 1970's there wasn't a lot of female participation in the workforce, other than in retail, so most married women were home makers.
This in a lot of ways kept a lid on house prices, as the loan affordability was worked out on one wage and a 25% deposit required, so really the pool of potential buyers were limited by wages and how many children in the family. There was no childcare, so mothers had to really stay home, in most instances.
Then with the advent of childcare services and women being able to join the workforce, it wasn't long before the amount of money available to purchase a house increased, which then lead to competition for the properties and so the upward spiral starts.


----------



## Mrmagoo (15 June 2021)

MovingAverage said:


> Ok then do the maths and show me why it can’t be paid off? CBA’s mortgage calculator has a very different opinion to you...$800k over 30 years will be paid off. If you’re arguing that $800k mortgage is too high then that is a different issue—but don’t say it is not possible to buy because it is. I went the extra step on that CBA mortgage app to see if I could get preliminary approval and guess what—I could.




Because you are clutching at straws big time. You're assuming a very high household income and a very expensive loan very far from the city. Are you going to buy back those mortgages off young ppl when it goes south ?


----------



## Mrmagoo (15 June 2021)

sptrawler said:


> That is very true and is something that has changed over the years, which has caused a lot of the house price disparity between the boomers and todays young people.
> In the 1970's there wasn't a lot of female participation in the workforce, other than in retail, so most married women were home makers.
> This in a lot of ways kept a lid on house prices, as the loan affordability was worked out on one wage and a 25% deposit required, so really the pool of potential buyers were limited by wages and how many children in the family. There was no childcare, so mothers had to really stay home, in most instances.
> Then with the advent of childcare services and women being able to join the workforce, it wasn't long before the amount of money available to purchase a house increased, which then lead to competition for the properties and so the upward spiral starts.




Firstly the 70s don't matter they were so long ago its pointless.  What matters is the period between then. In the 70s most of the boomers would of been kids so it doesn't matter. Boomers would have been late 30s to early 40s in the 90s. Houses were cheap as and if you were a bit of a person who got left behind you essentially got the easiest loans possible by the early 2000s when the youngest of the boomers were in their 40s. Boomers had one hell of an easy ride as a generation. Then watched their assets go into the millions in their 50s and 60s. I do have sympathy for low income boomers who get lumped in there as they didn't have the same opportunities but gen y low income people have it far worse.


----------



## Humid (15 June 2021)

MovingAverage said:


> Two.
> 
> The reason I selected Granville in my original post is that I expected someone would raise that as "I still can't afford to buy a house because"--so thank you. The house I picked is located within the catchment area of a public school that appears to get reviews. Have a look. Education fees can be one of the biggest expenses for a young family so should be manageable via a public school. Unless of course you have plans to send your kids to high end private school like Knox, SCEGGS, Shore etc etc



Not talking about schooling more about the who raises the kids


----------



## Mrmagoo (15 June 2021)

Humid said:


> Children can seriously reduce your income.....got any?




Its not just children, but the assumption that everyone clears a grand a week. Lots of people don't. That means by definition many, many households wouldn't have 9 grand a month income and that is to buy in a basic, simple outer suburb.


----------



## MovingAverage (15 June 2021)

Mrmagoo said:


> Because you are clutching at straws big time. You're assuming a very high household income and a very expensive loan very far from the city. Are you going to buy back those mortgages off young ppl when it goes south ?



Explain to me why I'm clutching at straws or why the numbers I put up are ridiculous? Seriously, how is a teacher on $70k and a tradie on $90k a high household income. Sure there are people that earn less and I'm not suggesting everyone can afford a house--but the hypothetical I put forward is not unrealistic. If you don't like a $800k mortgage then move further out as someone else noted--you can't have you cake an eat it. Buying a house has never been easy nor without risk. To me it sounds like you're definition of affordable housing is that every single working person should be able to buy a house regardless of income?

I don't get your point about me buying back mortgages--can you expand on that further?


----------



## sptrawler (15 June 2021)

MovingAverage said:


> Buying a house has never been easy nor without risk. To me it sounds like you're definition of affordable housing is that every single working person should be able to buy a house regardless of income?
> 
> I don't get your point about me buying back mortgages--can you expand on that further?



Not only should every working person be able to buy a house, but should be able to buy a house close to the centre of Sydney, if that was the case I would be buying one there as an investment. 🤣 
People in the 1990's bought CBA shares for $5, I was busy paying off a house at the time, but now I am retired and have some spare cash CBA are $100, that just isn't fair. 🤪


----------



## sptrawler (15 June 2021)

Mrmagoo said:


> Firstly the 70s don't matter they were so long ago its pointless.  What matters is the period between then. *In the 70s most of the boomers would of been kids* so it doesn't matter. Boomers would have been late 30s to early 40s in the 90s. Houses were cheap as and if you were a bit of a person who got left behind you essentially got the easiest loans possible by the early 2000s when the youngest of the boomers were in their 40s. Boomers had one hell of an easy ride as a generation. Then watched their assets go into the millions in their 50s and 60s. I do have sympathy for low income boomers who get lumped in there as they didn't have the same opportunities but gen y low income people have it far worse.



Mate the baby boomers were born between 1946 and 1964, I was born in 1955, so right in the middle.
By 1981 (25 years old) I had three kids and a wife who stayed home to raise them, most boomers had their children early and didn't travel the world or buy new cars. Our first overseas trip was 2004, I was 50, most young people today, have taken multiple trips O/S by the time they are 25.
I couldn't afford to buy a house, I actually took the kids and the missus to the NW of W.A to a god forsaken hole, to save enough to buy a 30year old piece of crap that was transported and restumped on a cheap block out of the city.

That option is still available today and guess what those with a bit of drive and gumption are still doing it, there are plenty of young people getting high paying fifo jobs, saving and starting from scratch, rather than just hoping they can find batteries for their magic wand.









						All Houses For Sale | Nylund House Transporters
					

Home Is Where We Move It




					www.nylund.com.au
				




Personally I think you should open your horizons, Sydney/Melbourne is obviously out of reach, make a plan B.
People say there is jobs outside Sydney, for my skills, well change your skill set or get a job that doesn't require a lot of skills but pays well e.g haulpac driver.


----------



## againsthegrain (15 June 2021)

sptrawler said:


> Not only should every working person be able to buy a house, but should be able to buy a house close to the centre of Sydney, if that was the case I would be buying one there as an investment. 🤣
> People in the 1990's bought CBA shares for $5, I was busy paying off a house at the time, but now I am retired and have some spare cash CBA are $100, that just isn't fair. 🤪




That is not a good comparison, shares are for investing. Houses are for basic shelter, family survival etc

People are not upset they missed on the gains, they are upset they can't have the Aussie dream


----------



## Mrmagoo (15 June 2021)

MovingAverage said:


> Been hearing that for 40 years. Keep calling it long enough and it might just come true
> 
> View attachment 126052




But it has happened,  twice, in 2007 lots of people lost their homes. In 2017 we had a crash which nearly ended up with lots of  people under water if it wasn't for covid and the stimulus.  In QLD and WA were under water for a long, long time. And at these points in time, debt was a lot less and wages relatively a lot higher.


----------



## MovingAverage (15 June 2021)

sptrawler said:


> Not only should every working person be able to buy a house, but should be able to buy a house close to the centre of Sydney, if that was the case I would be buying one there as an investment. 🤣
> People in the 1990's bought CBA shares for $5, I was busy paying off a house at the time, but now I am retired and have some spare cash CBA are $100, that just isn't fair. 🤪



And I was a poor old student back in Sept 1985 and didn't have any cash to buy investments before then. All those lucky people holding investments prior to Sep 1985 don't have to pay CGT. Boo Hoo...it's not fair that when I started to come into some cash in the early 90s I then had to pay sizable chunks of cash in CGT while all those freeloaders buying pre 1985 don't have to pay CGT


----------



## Mrmagoo (15 June 2021)

sptrawler said:


> By 1981 (25 years old) I had three kids and a wife who stayed home to raise them, most boomers had their children early and didn't travel the world or buy new cars. Our first overseas trip was 2004, I was 50, most young people today, have taken multiple trips O/S by the time they are 25.
> I couldn't afford to buy a house, I actually took the kids and the missus to the NW of W.A to a god forsaken hole, to save enough to buy a 30year old piece of crap that was transported and restumped on a cheap block out of the city.




None of this matters. Housing was very cheap. If you were unable to secure gainful employment I'm sorry to hear that but that is on you. A very basic job would be enough to afford a house in a very decent location back then.


----------



## MovingAverage (15 June 2021)

againsthegrain said:


> That is not a good comparison, shares are for investing. Houses are for basic shelter, family survival etc
> 
> People are not upset they missed on the gains, they are upset they can't have the Aussie dream



This is a very good point. And while we have a situation where the housing market is left to the free market--like it currently is--it will always be a major focus for investors small and large (let's not forget it's not just cashed up billionaire investing in realestate--a lot of mum and dad investors are right into it). Governments over the decades have only tinkered around the edges with attempting to winding back the investors and this is usually so they can get a few minutes on TV claiming to be fighting the good fight for battlers. I just can't see any way the government can seriously wind back the market and bring it under control now unless they seriously step in and take over the market, which will never happen. But yes, I think we have lost sight of the major priority of housing--basic shelter and family survival.


----------



## sptrawler (15 June 2021)

Mrmagoo said:


> None of this matters. Housing was very cheap. If you were unable to secure gainful employment I'm sorry to hear that but that is on you. A very basic job would be enough to afford a house in a very decent location back then.



Mate I was a dual trade inst/elect sparkie my whole working life , so right in the sweet spot for the 'middle class', don't try and make your reality fit the narrative.
Get out there and make something happen, otherwise the time available will disappear, that is one thing that doesn't change you get older and you options get reduced.


----------



## sptrawler (15 June 2021)

againsthegrain said:


> That is not a good comparison, shares are for investing. Houses are for basic shelter, family survival etc
> 
> People are not upset they missed on the gains, they are upset they can't have the Aussie dream



If that was the case AG, they wouldn't be so particular where they bought the shelter, these days the complaint is solely focused on Sydney/ Melbourne where houses have become an investment decision rather than a shelter decision IMO.


----------



## MovingAverage (15 June 2021)

Mrmagoo said:


> But it has happened,  twice, in 2007 lots of people lost their homes. In 2017 we had a crash which nearly ended up with lots of  people under water if it wasn't for covid and the stimulus.  In QLD and WA were under water for a long, long time. And at these points in time, debt was a lot less and wages relatively a lot higher.



Have a look at this data: paints a slightly different picture. Arrears where generally trending up from the low of 2002. We saw a spike in arrears in mid 2007 from about 5% to about 7/8% in Nov 2007, but then quick dropped of from the Nov 2007 peak to slide back to the 4/5% mark in Nov 2009. Note the increased volatility in the arrears from around May 2005 through to May 2008 so was this just a continuation of that trend. Interestingly you didn't mention 2011 (guess it wasn't making front page news of the mainstream media), which saw arrears peak back up to their 2007 highs. If you overlay house prices on this arrears chart I think it is a stretch to suggest there was a broad based crash in the housing market in 2007. Yes, people were impacted, but it wasn't a broad based crash. I acknowledge that this is a generalized national chart and specific areas may well look very different.


----------



## Mrmagoo (15 June 2021)

sptrawler said:


> Mate I was a dual trade inst/elect sparkie my whole working life , so right in the sweet spot for the 'middle class', don't try and make your reality fit the narrative.



Then you are simply not being truthful.


----------



## over9k (15 June 2021)

It's more the fact that trawler's experience is not typical of his generation. 

My inlaws fell into jobs after graduating for example. ****, companies used to recruit out of the uni's/chase the uni grads. Now, it's the other way around, and you're competing with literally hundreds of other applicants.


----------



## Mrmagoo (15 June 2021)

over9k said:


> It's more the fact that trawler's experience is not typical of his generation.
> 
> My inlaws fell into jobs after graduating for example. ****, companies used to recruit out of the uni's/chase the uni grads. Now, it's the other way around, and you're competing with literally hundreds of other applicants.




Electricians and Plumbers might as well be doctors as they make very high incomes.  It is simply not truthful to say you couldn't afford to buy a house in a good area in the 80s. People were buying houses in areas that are now 2-3 million plus areas as first home buyers up until around the late 2000s as the prices relative to incomes were a lot lower.


----------



## greggles (15 June 2021)

over9k said:


> It's more the fact that trawler's experience is not typical of his generation.




Boomers are not some homogeneous demographic who all lived some charmed life and all got rich. This is some Millennial fantasy invented to fuel Boomer resentment. The Boomers who did well bought and held assets over decades. Some ended up dead broke. Some ended up somewhere in the middle. You don't hear about the ones living in caravan parks or boarding houses, but they're there. Plenty of them too.

There are always opportunities for those who want to get ahead financially. You just have to be a bit smarter today.


----------



## sptrawler (15 June 2021)

Mrmagoo said:


> Electricians and Plumbers might as well be doctors as they make very high incomes.  It is simply not truthful to say you couldn't afford to buy a house in a good area in the 80s. People were buying houses in areas that are now 2-3 million plus areas as first home buyers up until around the late 2000s as the prices relative to incomes were a lot lower.



I'm not saying it isn't harder to buy houses in Sydney and Melbourne, of course it is, they are in a huge ponzi bubble.
What I'm saying is that is the reality of Sydney/ Melbourne, you can't change that. 
All you can change, is either where you want to buy, or how much you earn.
That is the reality.


----------



## qldfrog (15 June 2021)

greggles said:


> Boomers are not some homogeneous demographic who all lived some charmed life and all got rich. This is some Millennial fantasy invented to fuel Boomer resentment. The Boomers who did well bought and held assets over decades. Some ended up dead broke. Some ended up somewhere in the middle. You don't hear about the ones living in caravan parks or boarding houses, but they're there. Plenty of them too.
> 
> There are always opportunities for those who want to get ahead financially. You just have to be a bit smarter today.



Not a boomer myself, gen X it seems
Bought my first house in late 90s.bought it at same price as it was sold to the seller 10y before. interest were 9%,seller had gone for 15% plus interest.
Bloody boomer who made a 
fortune.was so easy for them 🤣
i sold my property last year :
20y after purchased, sold roughly x3.
In the meantime, interest rate from 8% to 2%, salaries at least doubled, and when i sold had a new cottage, kitchen , full Reno, paint etc
If i remove the additions, basically doubled initial purchase orice with salaries doubled and rates smashes..
Do not cry me a river at least in Brisbane outer region.
And if we all want migrants in, have to realise own home dteam is over, if you can own a 3 bedroom unit, you are doing better than most of Europeans...
There is no entitlement to owning your own house...


----------



## MovingAverage (15 June 2021)

Mrmagoo said:


> Electricians and Plumbers might as well be doctors as they make very high incomes.




Not according to the ATO. They don't even rate in the top 10 earning professions and are well behind Doc's etc.


----------



## Mrmagoo (15 June 2021)

qldfrog said:


> Not a boomer myself, gen X it seems
> Bought my first house in late 90s.bought it at same price as it was sold to the seller 10y before. interest were 9%,seller had gone for 15% plus interest.
> Bloody boomer who made a
> fortune.was so easy for them 🤣
> ...




Europe is categorically a better place to live than Australia unless you are already wealthy here in Australia. Notice I said "live" to not accumulate a fortune in property speculation.


----------



## Mrmagoo (15 June 2021)

MovingAverage said:


> Not according to the ATO. They don't even rate in the top 10 earning professions and are well behind Doc's etc.
> 
> View attachment 126079




This is a silly chart because we all know Plumbers and Electricians don't have taxable incomes so won't show up.


----------



## MovingAverage (15 June 2021)

Mrmagoo said:


> This is a silly chart because we all know Plumbers and Electricians don't have taxable incomes so won't show up.



Oh this this explains why all my local plumbers and electricians were listed all over the Panama papers hey?

I knew it, the ATO is just turning a blind eye to all that undeclared income being raked in by plumbers and electricians.


----------



## sptrawler (15 June 2021)

Electricians wages aren't the same as someone who owns an electrical business, here is the award rate that the guy who works for wages gets.

To get decent wages a sparkie, plumber or any mechanical trade has to do fifo or live in an outback mining town, that is a fact.

For most workers, somewhere along the trip of life they have to do it hard to get ahead, if it was easy everyone would be rich.

You obviously think all electricians and plumbers have a successful business, like I said a reality check, is what is needed.


----------



## Mrmagoo (15 June 2021)

I'm not going to bother dismissing all of the half truths you lot are telling.  A very pointless discussion.


----------



## sptrawler (15 June 2021)

Mrmagoo said:


> I'm not going to bother dismissing all of the half truths you lot are telling.  A very pointless discussion.



It certainly is pointless, if you are expecting someone to tell you how to buy a house in Sydney/Melbourne, I'd have one if I knew where to find a lazy $1m.
It is simple market forces:
*  House prices in Sydney are high, because people are prepared to pay the money, because they want to live there.
*  Wages are lower in Sydney, because there is a lot of people with the same skill set, competing for the same job.
*  Wages are higher in the bush, because the companies have to pay big money, to get workers to go there.
*  Houses are cheaper in the bush, because people don't want to live there.

It isn't rocket science, if you want to buy in Sydney, get some money together, how you do that is determined by your skills and what someone is prepared to pay for them.
Life's all about choices and compromises. 
Way too many today with champagne tastes, on beer money.


----------



## greggles (15 June 2021)

Mrmagoo said:


> I'm not going to bother dismissing all of the half truths you lot are telling.  A very pointless discussion.




I'll tell you what's pointless. Pointless is whinging about a market you cannot change. There is opportunity in every market if you look hard enough.

The endless stream of Millennial tears is hard to take. You guys need to harden up a little.


----------



## Humid (15 June 2021)

sptrawler said:


> Mate I was a dual trade inst/elect sparkie my whole working life , so right in the sweet spot for the 'middle class', don't try and make your reality fit the narrative.
> Get out there and make something happen, otherwise the time available will disappear, that is one thing that doesn't change you get older and you options get reduced.



A dual trade is known in the industry as a cross dresser


----------



## sptrawler (15 June 2021)

Humid said:


> A dual trade is known in the industry as a cross dresser



Well I was a dual trade, well before it became fashionable. 🤣


----------



## Humid (15 June 2021)

sptrawler said:


> Well I was a dual trade, well before it became fashionable. 🤣



Its a cert 4 now,its like a hilux.....everyone has one


----------



## Humid (15 June 2021)

One thing is it was hard to get banks to give you money in the 80s
These days easy money with little job security would trouble me at 900k for 30 years!


----------



## sptrawler (15 June 2021)

Humid said:


> Its a cert 4 now,its like a hilux.....everyone has one



Yes instrumentation has been made obsolete by technology, when I started my apprenticeship, it was all 3-15 psi huff and puff link and lever controllers.
Now it is plug and play 4 - 20ma, times certainly have changed, I did both apprenticeships in the 70's because there was no tafe course for instruments. After the apprenticeship I stuck to electrical, bit off topic, ah memories.


----------



## sptrawler (15 June 2021)

Humid said:


> One thing is it was hard to get banks to give you money in the 80s
> These days easy money with little job security would trouble me at 900k for 30 years!



That is the thing, even if you are on good money a huge loan is a massive risk. Let alone the family stress involved.
I always took small steps, loans are one of those things that are easy to get and bloody hard to pay off, time is the enemy.
You can only go hard for so long and it is easier to do it when you are young, the older you get the harder everything gets, well most things. 😂


----------



## Humid (15 June 2021)

With work places full of casuals and labour hire


----------



## Mrmagoo (15 June 2021)

sptrawler said:


> It certainly is pointless, if you are expecting someone to tell you how to buy a house in Sydney/Melbourne, I'd have one if I knew where to find a lazy $1m.
> It is simple market forces:
> *  House prices in Sydney are high, because people are prepared to pay the money, because they want to live there.
> *  Wages are lower in Sydney, because there is a lot of people with the same skill set, competing for the same job.
> ...




All of this is because the government intervened and made it this way. 

What a pointless discussion.. now your answer is "have more money". :/


----------



## sptrawler (15 June 2021)

Humid said:


> With work places full of casuals and labour hire



That is true Humid, but you know same as I, that prices in Perth had gone nowhere for the last 10 years, until the boom this year.
In outer suburbs, a 3x1 could be bought for around $250k Maddington, Langford etc, most couples are on $120+ combined.
I can only go of people I know, a couple of mates who work on waste management in the council as laborers and their wives work as cleaners in same council, are on $160 combined income.
So where they get this 7 times from is debatable IMO, Sydney?Melbourne maybe, and now post pandemic, low interest rates, scary stock market is probably driving the other capitals up.
I know in Perth a lot of demand is being driven by fifo's relocating here, due to border issues, even the mining towns are starting to pick up again.


----------



## over9k (15 June 2021)

greggles said:


> Boomers are not some homogeneous demographic who all lived some charmed life and all got rich. This is some Millennial fantasy invented to fuel Boomer resentment. The Boomers who did well bought and held assets over decades. Some ended up dead broke. Some ended up somewhere in the middle. You don't hear about the ones living in caravan parks or boarding houses, but they're there. Plenty of them too.
> 
> There are always opportunities for those who want to get ahead financially. You just have to be a bit smarter today.



No, but on AVERAGE, things were easier/better.


----------



## over9k (15 June 2021)

sptrawler said:


> Electricians wages aren't the same as someone who owns an electrical business, here is the award rate that the guy who works for wages gets.
> 
> To get decent wages a sparkie, plumber or any mechanical trade has to do fifo or live in an outback mining town, that is a fact.
> 
> ...



I don't know a single tradie from my generation that *isn't* absolutely rolling in it, not least of all because they bought a house (or two) a good half decade or more before the rest of us. A couple of my mates have just flatly said there's no way they could buy their house again if they had to buy it now, not a hope.

One mate is an IT tech with two houses, wife, kid, kid #2 on the way and looking at buying a third place so he'll have one IP to gift to each of his kids when they turn 25 or whatever. He actually hits me up for financial planning/advice, stock tips etc all the time.


Like I keep saying, you are completely out of touch with the reality of my generation - tradies are rolling in it, uni grads are struggling. The complete OPPOSITE of everything we were told back in our teens etc when these decisions needed to be made. 

That's how things are now.


----------



## sptrawler (15 June 2021)

Mrmagoo said:


> All of this is because the government intervened and made it this way.
> 
> What a pointless discussion.. now your answer is "have more money". :/



If it was just because of government intevention, everywhere would be the same, but they aren't because the demand isn't the same.
The demand in Parkes, isn't the same as the demand in Sydney, Why, because less people want to live there and there is less jobs therefore less demand.
You could have the same, if not better lifestyle moving to say somewhere like Parkes, borrowing very little and working in Bunnings. As you would borrowing $800k to buy in Sydney and work like a hamster in a wheel for the rest of your life.
Like I said, life is about choices and compromises, change what you can, accept what you can't, but sitting in the corner holding your breath and going blue changes nothing.

I'm struggling to understand what you are wanting to hear from people, yes it is difficult to buy a house in Sydney, yes it wasn't as difficult 50 years ago.
That changes nothing it is what it is, is it sad yes, but a day of mourning wont change it.
Hopefully a government will, without doing damage to the rest of the country in the process.


----------



## over9k (15 June 2021)

sptrawler said:


> If it was just because of government intevention, everywhere would be the same, but they aren't because the demand isn't the same.
> The demand in Parkes, isn't the same as the demand in Sydney, Why, because less people want to live there and there is less jobs therefore less demand.
> You could have the same, if not better lifestyle moving to say somewhere like Parkes, borrowing very little and working in Bunnings. As you would borrowing $800k to buy in Sydney and work like a hamster in a wheel for the rest of your life.
> Like I said, life is about choices and compromises, change what you can, accept what you can't, but sitting in the corner holding your breath and going blue changes nothing.
> ...



Not when your generation continue to vote for them not to they won't.


----------



## sptrawler (15 June 2021)

over9k said:


> I don't know a single tradie from my generation that *isn't* absolutely rolling in it, not least of all because they bought a house (or two) a good half decade or more before the rest of us. A couple of my mates have just flatly said there's no way they could buy their house again if they had to buy it now, not a hope.
> 
> One mate is an IT tech with two houses, wife, kid, kid #2 on the way and looking at buying a third place so he'll have one IP to gift to each of his kids when they turn 25 or whatever. He actually hits me up for financial planning/advice, stock tips etc all the time.
> 
> ...



Well then you are in the wrong profession, simple really, a fifo haulpac driver one of the barmaids at the local pub went fifo to Mt Keith, she is on $120k. In the pub she was on $50k going nowhere, now she is buying her own place.
What the hell are you after? A shoulder to cry on, go start a go fund me page.
Sorry but i just can't see what this is about, ridiculous prices in Sydney? and?


----------



## sptrawler (15 June 2021)

over9k said:


> Not when your generation continue to vote for them not to they won't.



Well wait for this election, Morrison is on the nose and hopefully we get a change of government.
When that doesn't change anything, who do you blame next? what's your plan B?
Let's be honest what this is about is you want to get on the ponzi scheme? You had every chance last year, you could have bought crypto and or afterpay at $8 and made a motza.
Obviously you didn't risk it, so now comes the bitterness?


----------



## over9k (15 June 2021)

sptrawler said:


> Well then you are in the wrong profession, simple really, a fifo haulpac driver one of the barmaids at the local pub went fifo to Mt Keith, she is on $120k. In the pub she was on $50k going nowhere, now she is buying her own place.
> What the hell are you after? A shoulder to cry on, go start a go fund me page.
> Sorry but i just can't see what this is about, ridiculous prices in Sydney? and?






sptrawler said:


> Well wait for this election, Morrison is on the nose and hopefully we get a change of government.
> When that doesn't change anything, who do you blame next? what's your plan B?
> Let's be honest what this is about is you want to get on the ponzi scheme, you had every chance last year, you could have bought crypto and or afterpay at $8 and made a motza.
> Obviously you didn't risk it, so now comes the bitterness?



And the mask slips.


----------



## sptrawler (15 June 2021)

over9k said:


> And the mask slips.



What are you talking about? Get a grip.
What are you going to say to the next generation, when they say to you, it was easier for you than us? Because if the population is going to 50 million which has been said, it will be twice as bad for the next generation.
Best you take a panadol and have a sit down, if you are expecting someone with a magic wand to fix things for you, the reality is as the population grows the demand for the prime property will grow.









						Kevin Rudd says Australia should increase its population to 50 MILLION
					

Speaking at Parliament House for the release of Peter Hartcher's Quarterly Essay on Australia and China on Tuesday, Mr Rudd claimed Australia cannot rely on its allies in the long-term.




					www.dailymail.co.uk
				



from the article:
Former prime minister Kevin Rudd wants Australia to double its population to 50 million to defend itself against threats from China. 

Speaking at Parliament House on Tuesday for the release of journalist Peter Hartcher's Quarterly Essay on Australia and China, Mr Rudd suggested Australia could not rely on the United States in the long-term.

'Australia must also look to mid-century when we may increasingly have to stand to our own two feet, with or without the support of a major external ally,' he said.
Mr Rudd said President Donald Trump's 'America-first' rhetoric wasn't just a political phase - referencing Australia's long-standing defence relationship with the US.
The former Labor leader said the nation must plan for a 'big and sustainable Australia', adding it was what he advocated while in office.  
Mr Rudd explained it meant comprehensive action on climate change and environmental sustainability, while also doubling the population.   
'Only a country with a population of 50 million later this century would begin to have the capacity to fund the military, security and intelligence assets necessary to defend our territorial integrity and political sovereignty long term,' he said.


----------



## over9k (15 June 2021)

sptrawler said:


> What are you talking about? Get a grip.
> What are you going to say to the next generation, when they say to you, it was easier for you than us?



What am I talking about? I'm talking about your total callous disregard for any and every thing other than yourself up to and including your own children and grandchildren, that's what. 


And if my kids said this stuff to me, I'd say "prove it with data", like my generation has with you. 

This isn't a matter of opinion, you're just wrong, and you know it - hence the snark, the "cry me a river" type comments and everything else. You've lost the argument and you know you have, so now it's just thinly veiled "I don't give a ****" in every post. 


The one thing that gives me solace is knowing that this chicken is going to come home to roost eventually because there will come a time when your generation has to be stuck in nursing homes and the like and I can assure you, that when the time comes, you are going to absolutely rot.


----------



## againsthegrain (15 June 2021)

l







over9k said:


> What am I talking about? I'm talking about your total callous disregard for any and every thing other than yourself up to and including your own children and grandchildren, that's what.
> 
> 
> And if my kids said this stuff to me, I'd say "prove it with data", like my generation has with you.
> ...




Ha I actually thought about this a few times in the past, skilled immigrants will take good care of them 😂


----------



## over9k (15 June 2021)

againsthegrain said:


> l
> 
> Ha I actually thought about this a few times in the past, skilled immigrants will take good care of them 😂



When the boomers start complaining to me about the horrors they are being subjected to in the nursing homes we stick them in, I am going to give them the exact same response they gave me when I was complaining  to them about putting a roof over the head of my children:

If you want a shoulder to cry on, start a go-fund-me page.


----------



## sptrawler (15 June 2021)

over9k said:


> What am I talking about? I'm talking about your total callous disregard for any and every thing other than yourself up to and including your own children and grandchildren, that's what.
> 
> 
> And if my kids said this stuff to me, I'd say "prove it with data", like my generation has with you.
> ...



I don't have a callous disregard and I do worry for my kids and grandkids, I'm just at a loss to what you guys want to hear.

That it is going to get better, I have been saying for years that we are heading to a third world economy. 
You have to come to grips with the fact, that there needs to be a minor miracle happen to stop the trajectory we are on and both parties got us there.


----------



## sptrawler (15 June 2021)

over9k said:


> When the boomers start complaining to me about the horrors they are being subjected to in the nursing homes we stick them in, I am going to give them the exact same response they gave me when I was complaining  to them about putting a roof over the head of my children:
> 
> If you want a shoulder to cry on, start a go-fund-me page.



And you have the audacity to talk about callousness OMG. 🤣  🤣  🤣

You can put a roof over your kids heads, it just isn't up to the standard and location, you believe you are entitled to.
Let's be honest.


----------



## sptrawler (15 June 2021)

againsthegrain said:


> l
> 
> Ha I actually thought about this a few times in the past, skilled immigrants will take good care of them 😂



Skilled immigrants will take care of all of us.


----------



## over9k (15 June 2021)

sptrawler said:


> I don't have a callous disregard and I do worry for my kids and grandkids, I'm just at a loss to what you guys want to hear.
> 
> That it is going to get better, I have been saying for years that we are heading to a third world economy.
> You have to come to grips with the fact, that there needs to be a minor miracle happen to stop the trajectory we are on and both parties got us there.



bull****. The liberal party, the baby boomer party of australia, which has been in power for what, 90% of the past 25 years, has got us here. 

Your generation voted to create this problem because it enriched you and you continue to vote to perpetuate it because it enriches you. This could all be solved virtually overnight if you actually wanted to reverse it, but you don't, do you? 

C'mon trawler, who do you normally vote for?


----------



## sptrawler (15 June 2021)

over9k said:


> bull****. The liberal party, the baby boomer party of australia, which has been in power for what, 90% of the past 25 years, has got us here.
> 
> Your generation voted to create this problem because it enriched you and you continue to vote to perpetuate it because it enriches you. This could all be solved virtually overnight if you actually wanted to reverse it, but you don't, do you?
> 
> C'mon trawler, who do you normally vote for?



I'll tell you that, when you explain what policies you are talking about and which have been started by the Liberals and Labor.
Then at least we have something to debate other than your emotions.


----------



## over9k (15 June 2021)

sptrawler said:


> I'll tell you that, when you explain what policies you are talking about and which have been started by the Liberals and Labor.
> Then at least we have something to debate other than your emotions.



I/We have been posting cold hard economic facts for pages now. You haven't made a single actual rebuttal. 

The chief cause of the state of both the housing and the jobs market is immigration. This is a fact. 

Answer my question.


----------



## Humid (15 June 2021)

sptrawler said:


> That is true Humid, but you know same as I, that prices in Perth had gone nowhere for the last 10 years, until the boom this year.
> In outer suburbs, a 3x1 could be bought for around $250k Maddington, Langford etc, most couples are on $120+ combined.
> I can only go of people I know, a couple of mates who work on waste management in the council as laborers and their wives work as cleaners in same council, are on $160 combined income.
> So where they get this 7 times from is debatable IMO, Sydney?Melbourne maybe, and now post pandemic, low interest rates, scary stock market is probably driving the other capitals up.
> I know in Perth a lot of demand is being driven by fifo's relocating here, due to border issues, even the mining towns are starting to pick up again.



This thread has nothing to do with Perth but youre a bit off the mark with 10 years I think


----------



## sptrawler (15 June 2021)

over9k said:


> I/We have been posting cold hard economic facts for pages now. You haven't made a single actual rebuttal.
> 
> *The chief cause of the state of both the housing and the jobs market is immigration. This is a fact.
> 
> Answer my question*.



*YES, *and I posted that Kevin Rudd as recently as this week has been pushing for the immigration to be increased, which he also did when he was in office.
He is Labor, so how does that fit in your narrative?
Also the biggest importation of 457 visa workers was under Labor's 2012 - 2013 years.


----------



## sptrawler (15 June 2021)

Humid said:


> This thread has nothing to do with Perth but youre a bit off the mark with 10 years I think



We have had a 30% rise in the last 6 months, here is a house $319k, about 12klm out of the CBD.


			https://www.realestate.com.au/property-house-wa-maddington-136284730


----------



## Humid (15 June 2021)

over9k said:


> I don't know a single tradie from my generation that *isn't* absolutely rolling in it, not least of all because they bought a house (or two) a good half decade or more before the rest of us. A couple of my mates have just flatly said there's no way they could buy their house again if they had to buy it now, not a hope.
> 
> One mate is an IT tech with two houses, wife, kid, kid #2 on the way and looking at buying a third place so he'll have one IP to gift to each of his kids when they turn 25 or whatever. He actually hits me up for financial planning/advice, stock tips etc all the time.
> 
> ...



Not the engineering grads I have been working with the last 10 years and believe me theres lots 
Still not quite sure what they do in iron ore but?


----------



## over9k (15 June 2021)

sptrawler said:


> *YES, *and I posted that Kevin Rudd as recently as this week has been pushing for the immigration to be increased, which he also did when he was in office.
> He is Labor, so how does that fit in your narrative?
> Also the biggest importation of 457 visa workers was under Labor's 2012 - 2013 years.



Not really sure what you're trying to say here. Do you think that liberal & labor are the only two parties that can be voted for or something?


----------



## Humid (15 June 2021)

sptrawler said:


> We have had a 30% rise in the last 6 months, here is a house $319k, about 12klm out of the CBD.
> 
> 
> https://www.realestate.com.au/property-house-wa-maddington-136284730



And here it is again


----------



## sptrawler (15 June 2021)

over9k said:


> Not really sure what you're trying to say here. Do you think that liberal & labor are the only two parties that can be voted for or something?



I was just responding to the statement you made 30 minutes ago.

*Quote:*
_bull****. The liberal party, the baby boomer party of australia, which has been in power for what, 90% of the past 25 years, has got us here._

*Followed by your Quote:*

_I/We have been posting cold hard economic facts for pages now. You haven't made a single actual rebuttal.

The chief cause of the state of both the housing and the jobs market is immigration. This is a fact.

Answer my question._

*To which I responded:

YES, *and I posted that Kevin Rudd as recently as this week has been pushing for the immigration to be increased, which he also did when he was in office.
He is Labor, so how does that fit in your narrative?
Also the biggest importation of 457 visa workers was under Labor's 2012 - 2013 years.


----------



## Humid (15 June 2021)

sptrawler said:


> I was just responding to the statement you made 30 minutes ago.
> 
> *Quote:*
> _bull****. The liberal party, the baby boomer party of australia, which has been in power for what, 90% of the past 25 years, has got us here._
> ...



Do 457s buy houses?


----------



## Gunnerguy (15 June 2021)

MovingAverage said:


> Explain to me why I'm clutching at straws or why the numbers I put up are ridiculous? Seriously, how is a teacher on $70k and a tradie on $90k a high household income. Sure there are people that earn less and I'm not suggesting everyone can afford a house--but the hypothetical I put forward is not unrealistic. If you don't like a $800k mortgage then move further out as someone else noted--you can't have you cake an eat it. Buying a house has never been easy nor without risk. To me it sounds like you're definition of affordable housing is that every single working person should be able to buy a house regardless of income?
> 
> I don't get your point about me buying back mortgages--can you expand on that further?



70K + 90K = 160K household income.
Current ‘median’ HHI is 116K.
So firstly 50% are below this.
Plus the median value will be pulled up due to older workers earning more in the pay scale plus empty nesters earning more.
I don’t know the numbers but this would certainly suggest that a couple under 30 have a HHI of less than 100K so monthly take home would be less than 7K.

Using my example of 33% of HHI to pay the loan ($2,300) gives you a loan of possibility of $600,000 at about IR 1.5% with no stress testing !!

Thus I think $800K is certainly unaffordable for more than 50% of young families.

Just working the numbers here.

Gunnerguy


----------



## over9k (15 June 2021)

sptrawler said:


> I was just responding to the statement you made 30 minutes ago.
> 
> *Quote:*
> _bull****. The liberal party, the baby boomer party of australia, which has been in power for what, 90% of the past 25 years, has got us here._
> ...



Well labor haven't been in power much, have they? 

Unless you're trying to say this was all caused by the couple of years of krudd/gillard we had?


----------



## sptrawler (15 June 2021)

Humid said:


> And here it is again



Yes a lot are getting flipped in the current boom, everything is selling, like I said prices in low price areas have gone 30% in the last six months.


----------



## Humid (15 June 2021)

Humid said:


> And here it is again



Down 50k


----------



## greggles (15 June 2021)

over9k said:


> What am I talking about? I'm talking about your total callous disregard for any and every thing other than yourself up to and including your own children and grandchildren, that's what.
> 
> 
> And if my kids said this stuff to me, I'd say "prove it with data", like my generation has with you.
> ...




You Millennials are seriously the most bitter and twisted generation in history. You are also the most privileged, entitled and coddled. Must have been all those particpation trophies that made you think you were special. No wonder they call you guys the Crybaby generation.

Most of you are in your 30s, the eldest Millennials are turning 40. So you have had 10 or 15 years to get into property, back when prices were about half of what they are at the moment.

I'm Generation X. When I graduated from university I walked into a recession and 15% interest rates in the early 90s. The economy has been booming since the GFC, both property and financial markets. If you guys had been investing instead of buying iPhones and going on overseas trips you'd be absolutely rolling it in by now. But you guys pissed money away on stuff that doesn't matter so you could look good on social media and impress you friends, and now here you are.

If the train has left the station, it's because you guys just sat there waiting for the property market to correct and it didn't. You should have jumped on and enjoyed the ride up with other property owners. But you guys don't want cheap houses, you want McMansions with media rooms and swimming pools. Nothing but the best of everything for you Millennials.

All Ords Feb 2009 to June 2021 - More than doubled, even with COVID-19.




In June 2009, the average Sydney house price was $495,000. Now it's over $1 million. It's more than doubled. Why weren't you Millennials on board the train?

Sorry for the rant, but you guys need to accept responsibility for your situation instead of blaming others. You haven't been denied opportunity, you have bloody well squandered it and then sat there and pissed and moaned about it. and blamed others. You personally have blamed Boomers and immigrants for your woes. Stop complaining and take responsibility.

You're a home owner and even that's not good enough for you.



over9k said:


> I have a house. *Not the kind of place I should and not where I should either*, but I have one.




You own property, but you're bitter that it's not a nicer house or in a better neighbourhood. Nothing is ever good enough for you Millennials. You want everything the boomers have but you want it 20 years before they got it.


----------



## over9k (15 June 2021)

Gunnerguy said:


> 70K + 90K = 160K household income.
> Current ‘median’ HHI is 116K.
> So firstly 50% are below this.
> Plus the median value will be pulled up due to older workers earning more in the pay scale plus empty nesters earning more.
> ...



You'd have to break this down by age as you don't buy a place when you're 50 or whatever. 

You're not going to find many 28 year olds on 90k.


----------



## sptrawler (15 June 2021)

over9k said:


> Well labor haven't been in power much, have they?
> 
> Unless you're trying to say this was all caused by the couple of years of krudd/gillard we had?



You were saying immigration is the root cause of the problem, I only stated that both parties are responsible, you are trying to lay the blame at one parties feet.
Which is incorrect and probably driven by emotion, as opposed to data.


----------



## sptrawler (15 June 2021)

Humid said:


> Down 50k



Did you attach a link? it isn't showing.


----------



## Humid (15 June 2021)




----------



## over9k (15 June 2021)

greggles said:


> You Millennials are seriously the most bitter and twisted generation in history. You are also the most privileged, entitled and coddled. Must have been all those particpation trophies that made you think you were special. No wonder they call you guys the Crybaby generation.
> 
> Most of you are in your 30s, the eldest Millennials are turning 40. Most of you have had 10 or 15 years to get into property, back when prices were about half of what they are at the moment.
> 
> ...



Be right back mate just gotta pull 100 grand out of my ass at 19 to buy a place. Because 19 year olds have that kind of money to just throw around.

Not spend 5 years at uni like you told me to only to find myself 50k in debt earning less than the dickheads that bombed out of school at 16 to be a plumber.

I took your generation's advice (go to uni go to uni to go uni go to uni) and finished uni to find myself behind 5 years of savings, 5 years of debt, $300k of mortgage repayments and earning less than if I'd bombed out of school to be a plumber and you have the gall to tell me that this is all MY fault after I did what YOU told me to.


----------



## Humid (15 June 2021)

Humid said:


> View attachment 126098



Cheaper than rent
You want to live in the prime eastern seaboard pay the price you fools lol


----------



## sptrawler (15 June 2021)

Humid said:


> Do 457s buy houses?



No, I was just using it as an example that encouraging immigration isn't party specific, they both have a vested interest in increasing the population, so really neither party has the moral ground on it.
I personally would rather see immigration stay really low until a manufacturing and sustainable technological industry base had been developed.
Everything has been let slip and this pandemic and the reliance on imported essential equipment has highlighted it, it really is up to one of the parties to plan a turnaround for Australia.
ATM neither party seems to have a clue, how to do it.


----------



## Humid (15 June 2021)

over9k said:


> Be right back mate just gotta pull 100 grand out of my ass at 19 to buy a place. Because 19 year olds have that kind of money to just throw around.
> 
> Not spend 5 years at uni like you told me to only to find myself 50k in debt earning less than the dickheads that bombed out of school at 16 to be a plumber.
> 
> I took your generation's advice (go to uni go to uni to go uni go to uni) and finished uni to find myself 5 years of savings, 5 years of debt, $300k of mortgage repayments and earning less than if I'd bombed out of school to be a plumber and you have the gall to tell me that this is all MY fault after I did what YOU told me to.



Ouch ....I left school at 16 to be a plumber
Dont do it anymore ........**** job


----------



## over9k (15 June 2021)

sptrawler said:


> You were saying immigration is the root cause of the problem, I only stated that both parties are responsible, you are trying to lay the blame at one parties feet.
> Which is incorrect and probably driven by emotion, as opposed to data.



How can labor be responsible if they haven't been in power?


----------



## Humid (15 June 2021)

sptrawler said:


> No, I was just using it as an example that encouraging immigration isn't party specific, they both have a vested interest in increasing the population, so really neither party has the moral ground on it.
> I personally would rather see immigration stay really low until a manufacturing and sustainable technological industry base had been developed.
> Everything has been let slip and this pandemic and the reliance on imported essential equipment has highlighted it, it really is up to one of the parties to plan a turnaround for Australia.
> ATM neither party seems to have a clue, how to do it.



No 457s are not immigration you sound like a liberal.....


----------



## over9k (15 June 2021)

Humid said:


> Ouch ....I left school at 16 to be a plumber
> Dont do it anymore ........**** job



I wish I'd bombed out of school at 16 to get a trade.

But the boomers told me it was a much better idea to go to uni you see, so that's what I did.


They now tell me I am lazy & entitled for expecting half a decade of study, lost income and uni debt to give me an earning capacity greater than the average tradie.

This expectation is clearly completely unreasonable. I mean I've studied twice as hard to end up with half the purchasing power the boomers did, but I am still lazy and entitled.


----------



## MovingAverage (15 June 2021)

I'm not sure what is hotter...the Sydney property market or this thread.


Gunnerguy said:


> 70K + 90K = 160K household income.
> Current ‘median’ HHI is 116K.
> So firstly 50% are below this.
> Plus the median value will be pulled up due to older workers earning more in the pay scale plus empty nesters earning more.
> ...




The problem with your logic is this...the median figure you are using (and I think you got this from the ATO because they publish a similar figure) is that--if I may use a stock trading analogy--it is not "volume weighted" and you have made the assumption that 50% of earners are below this medium figure. The distribution of incomes across the population is not gaussian so you cannot draw the conclusion that 50% of earners are below the medium. You can download the raw data from the ATO statistic website and plot in Excel so you will quickly see that the distribution is skewed and not gaussian and those below the medium is not 50%. I'm just working with statistics here.


----------



## sptrawler (15 June 2021)

over9k said:


> How can labor be responsible if they haven't been in power?



It may have escaped your attention, but they were in power for 6 years, during which time they didn't reduce immigration.

At the time they were in power, they quoted that they were in favour of an increase in immigration to 50 million.

Let's not forget I'm not the one who is blaming anyone for anything, I agreed with you that immigration is a major cause, I'm only saying it isn't only one side of politics that espouse the benefits of immigration.

It is your belief that it is only the Liberals that encourage immigration, I'm just trying to keep you from distorting your data.


----------



## over9k (15 June 2021)

sptrawler said:


> It may have escaped your attention, but they were in power for 6 years, during which time they didn't reduce immigration.
> 
> At the time they were in power, they quoted that they were in favour of an increase in immigration to 50 million.
> 
> ...



No it isn't? I've never said anything of the sort. Stop putting words in my mouth.


----------



## sptrawler (15 June 2021)

over9k said:


> No it isn't? I've never said anything of the sort. Stop putting words in my mouth.



Your posts #14,722.


over9k said:


> bull****. The liberal party, the baby boomer party of australia, which has been in power for what, 90% of the past 25 years, has got us here.
> 
> Your generation voted to create this problem because it enriched you and you continue to vote to perpetuate it because it enriches you. This could all be solved virtually overnight if you actually wanted to reverse it, but you don't, do you?
> 
> C'mon trawler, who do you normally vote for?



your post # 14,724


over9k said:


> I/We have been posting cold hard economic facts for pages now. You haven't made a single actual rebuttal.
> 
> The chief cause of the state of both the housing and the jobs market is immigration. This is a fact.
> 
> Answer my question.




I'm not putting words in your mouth, those are your quotes, the Liberals have caused the problem and the root cause is immigration.

I'm really sorry if you don't like me correcting you, but if you are quoting facts, at least be accurate.


----------



## Humid (15 June 2021)

over9k said:


> I wish I'd bombed out of school at 16 to get a trade.
> 
> But the boomers told me it was a much better idea to go to uni you see, so that's what I did.
> 
> ...



Bombed out ....I think people have been blowing wind up your arrrrse for a long time and if you had chose engineering 
But seriously if anyone below your education level bombed out ....get a grip


----------



## over9k (15 June 2021)

sptrawler said:


> Your posts #14,722.
> 
> your post # 14,724
> 
> ...



You said that it is my belief that it is only the liberals that want mass immigration. I've never said anything of the sort. I've said that they have overwhelmingly been in power, and they want mass immigration. These are two completely different statements. 

I've never once said that it is unique to the liberal party. I have pointed to the liberal party because they have been the ones in power. Again, two completely different things.


----------



## greggles (15 June 2021)

over9k said:


> Be right back mate just gotta pull 100 grand out of my ass at 19 to buy a place. Because 19 year olds have that kind of money to just throw around.




Nobody said you had to buy a house. You could have bought a studio apartment and it still would have doubled in price.



over9k said:


> Not spend 5 years at uni like you told me to only to find myself 50k in debt earning less than the dickheads that bombed out of school at 16 to be a plumber.
> 
> I took your generation's advice (go to uni go to uni to go uni go to uni) and finished uni to find myself behind 5 years of savings, 5 years of debt, $300k of mortgage repayments and earning less than if I'd bombed out of school to be a plumber and you have the gall to tell me that this is all MY fault after I did what YOU told me to.




I'm Generation X, I didn't tell you to do anything. We're not that much older than your generation.


----------



## moXJO (15 June 2021)

over9k said:


> I/We have been posting cold hard economic facts for pages now. You haven't made a single actual rebuttal.
> 
> The chief cause of the state of both the housing and the jobs market is immigration. This is a fact.
> 
> Answer my question.



I think the bigger problem is too much stimulus. 
It's at unprecedented levels. 
Everything is up. That's not just on immigration. That was to keep everything turning. Not sure I like the house of cards that's been built.

There's also the policy of not letting recessions happen, or markets crash without massive stimulus injections.


----------



## over9k (15 June 2021)

Humid said:


> Bombed out ....I think people have been blowing wind up your arrrrse for a long time and if you had chose engineering
> But seriously if anyone below your education level bombed out ....get a grip



Bombing out implies failing academically. A lot of guys who were failing academically left school and got trades - which is the definition of bombing out. 

Our teachers told us that these guys were all going to struggle their entire lives, we'd be much better off than them on account of us staying in school etc etc etc. 

In reality, the complete opposite has happened.


----------



## Humid (15 June 2021)

MovingAverage said:


> I'm not sure what is hotter...the Sydney property market or this thread.
> 
> 
> The problem with your logic is this...the median figure you are using (and I think you got this from the ATO because they publish a similar figure) is that--if I may use a stock trading analogy--it is not "volume weighted" and you have made the assumption that 50% of earners are below this medium figure. The distribution of incomes across the population is not gaussian so you cannot draw the conclusion that 50% of earners are below the medium. You can download the raw data from the ATO statistic website and plot in Excel so you will quickly see that the distribution is skewed and not gaussian and those below the medium is not 50%. I'm just working with statistic here.



Want to throw in the statistic of divorce in 30 years its probably more likely than fulfilling the banks expectation


----------



## sptrawler (15 June 2021)

moXJO said:


> I think the bigger problem is too much stimulus.
> It's at unprecedented levels.
> Everything is up. That's not just on immigration. That was to keep everything turning. Not sure I like the house of cards that's been built.
> 
> *There's also the policy of not letting recessions happen, or markets crash without massive stimulus injections.*



That is the current scary part, it may end up in tears IMO.


----------



## over9k (15 June 2021)

greggles said:


> *Nobody said you had to buy a house. You could have bought a studio apartment and it still would have doubled in price.*
> 
> 
> 
> I'm Generation X, I didn't tell you to do anything. We're not that much older than your generation.



With what money?


----------



## Humid (15 June 2021)

over9k said:


> Bombing out implies failing academically. A lot of guys who were failing academically left school and got trades - which is the definition of bombing out.
> 
> Our teachers told us that these guys were all going to struggle their entire lives, we'd be much better off than them on account of us staying in school etc etc etc.
> 
> In reality, the complete opposite has happened.



Maybe the academic  didnt fit their needs.....as I go to the fridge in the house I own.....complete with bad plumbing


----------



## greggles (15 June 2021)

over9k said:


> With what money?




The bank's? You probably could have got a studio apartment in a reasonable suburb for $200,000 back then. $30,000 deposit and a job would have been enough to get a loan.


----------



## Humid (15 June 2021)

over9k said:


> Bombing out implies failing academically. A lot of guys who were failing academically left school and got trades - which is the definition of bombing out.
> 
> Our teachers told us that these guys were all going to struggle their entire lives, we'd be much better off than them on account of us staying in school etc etc etc.
> 
> In reality, the complete opposite has happened.



This has always been the problem as I see it
If everyone was university educated who collects your garbage?


----------



## sptrawler (15 June 2021)

over9k said:


> Bombing out implies failing academically. A lot of guys who were failing academically left school and got trades - which is the definition of bombing out.
> 
> Our teachers told us that these guys were all going to struggle their entire lives, we'd be much better off than them on account of us staying in school etc etc etc.
> 
> In reality, the complete opposite has happened.



The reason being, that with the loss of manufacturing the requirement for engineering, scientists etc has fallen dramatically, so there are very few positions that require a degree.
But with the explosion in mining, the requirement to build stuff and fix things up that break, has increased dramatically.
Again it can't be laid at the feet of one party, tariffs being removed killed manufacturing and a push to over educate the population happened when intellectuals took over the political stage.


----------



## over9k (15 June 2021)

Humid said:


> Maybe the academic  didnt fit their needs.....as I go to the fridge in the house I own.....complete with bad plumbing



Oh no doubt. I wasn't attacking plumbers at all - I wish I'd done what they did.


greggles said:


> The banks? You probably could have got a studio apartment in a reasonable suburb for $200,000 back then. $30,000 deposit and a job would have been enough to get a loan.



The idea that a 19 year old uni student can buy a studio apartment even a decade ago is absolutely ludicrous. If you seriously think that, I can see why you have the opinion that you do.


----------



## sptrawler (15 June 2021)

Humid said:


> This has always been the problem as I see it
> If everyone was university educated who collects your garbage?



Absolutely.


----------



## over9k (15 June 2021)

Humid said:


> This has always been the problem as I see it
> If everyone was university educated who collects your garbage?



I agree completely. If I had my time again, I wouldn't do it.


----------



## moXJO (15 June 2021)

Humid said:


> Ouch ....I left school at 16 to be a plumber
> Dont do it anymore ........**** job



why not?
 Apparently plumbers make heaps.

Just no one actually wants to be one to make heaps. They just seem to be the go to for people to complain about. People that have never actually worked as one.


----------



## againsthegrain (15 June 2021)

greggles said:


> The bank's? You probably could have got a studio apartment in a reasonable suburb for $200,000 back then. $30,000 deposit and a job would have been enough to get a loan.




What about somebody that just finished uni now 2021? what advice?


----------



## sptrawler (15 June 2021)

moXJO said:


> why not?
> Apparently plumbers make heaps.
> 
> Just no one actually wants to be one to make heaps. They just seem to be the go to for people to complain about. People that have never actually worked as one.



How can you go wrong, $1,500 pw and as much pizz as you can drink. 🤣


----------



## MovingAverage (15 June 2021)

Humid said:


> Want to throw in the statistic of divorce in 30 years its probably more likely than fulfilling the banks expectation



What the hell has that got to do with the price of fish...we're talking incomes here


----------



## moXJO (15 June 2021)

sptrawler said:


> How can you go wrong, $1,500 pw and as much pizz as you can drink. 🤣



Personally I think they are underpaid.


----------



## over9k (15 June 2021)

againsthegrain said:


> What about somebody that just finished uni now 2021? what advice?



See the funny part is that uni numbers are actually down for gen Z. Uni numbers peaked in 2010-2011 and have been on the decline ever since, true story. 

There's a few reasons why, but one is no doubt because they saw how it did absolutely nothing for my generation/my generation have all been screaming at them NOT to do it. 


For the kids that have still gone to uni, man, if I thought things were bad for me, I can only imagine being a 21 year old gen Z'er and trying to get started in life. They are absolutely done for and will simply never own a place until (if) they inherit one.


----------



## Humid (15 June 2021)

MovingAverage said:


> What the hell has that got to do with the price of fish...we're talking incomes here



The bit when it goes 70/30


----------



## greggles (15 June 2021)

over9k said:


> The idea that a 19 year old uni student can buy a studio apartment even a decade ago is absolutely ludicrous. If you seriously think that, I can see why you have the opinion that you do.




Well, maybe after you graduated and got a job you could have done it.



againsthegrain said:


> What about somebody that just finished uni now 2021? what advice?




Firstly, if you live in Sydney or Melbourne, move to Brisbane or Adelaide.

Then, identify the best value outer ring suburb with potential and find a house that needs some work. In Brisbane these can be easily found for under $300,000, some are $250,000. Spend your weekends fixing it up and improving the property. Landscaping, painting inside and out, etc. You can't rely on capital growth alone. Improve the property yourself with your own labour and you will reap the rewards.


----------



## Humid (15 June 2021)

againsthegrain said:


> What about somebody that just finished uni now 2021? what advice?



With an arts degree I would say a big mac with fries please


----------



## Humid (15 June 2021)

greggles said:


> Well, maybe after you graduated and got a job you could have done it.
> 
> 
> 
> ...



Even better is these days look at what shopping centres at least in Perth are being redeveloped because its where people want to live
Now they encompass dentists,doctors and food etc units tend to spring up in infill


----------



## over9k (15 June 2021)

greggles said:


> Well, maybe after you graduated and got a job you could have done it.
> 
> 
> 
> ...



Ah yes, because grad jobs have been SO plentiful since the GFC. 

Look man you are just completely out of touch. Completely. I know people with masters degrees still bagging groceries. I know one guy with a PhD that's still driving a forklift in a warehouse. 


Here's a hilarious data point to follow up on my previous post: 

Bachelor degree enrolments are down, they peaked in 2010-2011. But postgraduate degree enrolments are actually up. Why? Because the entire generation that were at uni in 2010-2011 have had to either write the study off entirely or go & get a postgraduate degree to actually be competitive in the workplace. We've all realised that we now need a masters to get what a bachelor's used to. It's just a very simple time lag. 

It, too, will pass.


----------



## Smurf1976 (15 June 2021)

Mrmagoo said:


> Electricians and Plumbers might as well be doctors as they make very high incomes. It is simply not truthful to say you couldn't afford to buy a house in a good area in the 80s.



I was working as an employee electrician for a period in the 1990's.

Just over $14 per hour and that was a "normal" wage at the time and one the unions weren't complaining much about. Drive your own car to work and any form of paid overtime was highly unusual.

I distinctly recall my boss at the time buying a house for $160k. Everyone's jaws dropped - nobody knew he was rich enough to afford that. Average houses at the time were about $110k.

Late-1990's and through the 00's there was a huge boom in incomes in the trades and last I knew (a couple of years ago) the same employer paid just under $43 per hour for the exact same job, indeed some of the same people are still there doing it. Company car provided and with overtime you'd easily take the income to $110k a year not including the car.

Professional and other non-trades salaries with the same employer didn't increase to anywhere near the same extent in % terms over that period, something that upset a few of those who progressed to administrative, professional or management roles.

Last time I sawed any concrete I was paid $88 per hour working weekends. Almost certainly they could have found someone cheaper - but I was 100% reliable at turning up.


----------



## Humid (15 June 2021)

moXJO said:


> why not?
> Apparently plumbers make heaps.
> 
> Just no one actually wants to be one to make heaps. They just seem to be the go to for people to complain about. People that have never actually worked as one.



I make more money doing instrumentation tubing


----------



## moXJO (15 June 2021)

My good mate went to uni. Bit of a lazy bugger. He went and worked in the US for a while in an unrelated field. Then came back here. Probably about 25 years all in and about 20 years to start making serious money.
Younger gen X.

Anyway he's on $250k- $350k a year. Does bugger all from the looks of it. He literally tells me he does bugger all. Works from home now. He was good at making social contacts.

His pay is only going to increase and realistically could work another 30 years. All the builders and trades I know that are my age (45) have broken bodies and want out. 
And that's the difference for the pay scale. 

I pushed my son through to year 12 but he is now doing electric trade for his job. Year 12 made it easier for him to ace his tests. Also I believe it has the best chance of employment into the future as its looking like everything is electric. Might push him through uni at a later date. 

People simply don't plan their careers or work their marketability and create contacts. Uni never guaranteed a job. It was a lot of sht paying jobs for 20 years until you really start to earn.


----------



## over9k (15 June 2021)

Smurf1976 said:


> I was working as an employee electrician for a period in the 1990's.
> 
> Just over $14 per hour and that was a "normal" wage at the time and one the unions weren't complaining much about. Drive your own car to work and any form of paid overtime was highly unusual.
> 
> ...



I wonder if even tradie wages have kept up with housing costs over the past few years.

They're certainly going to be a better alternative to uni, but I wonder if a gen Z sparky or whatever will do as well as a gen Y one.

My suspicion is no. I suspect housing has increased more than even trade wages have. But that is pure gut instinct/based on nothing.


----------



## Humid (15 June 2021)

I really cant comprehend how so many educated people havnt figured out that a country that makes nothing pays service trades so much!
With no overseas travel we can fix the house mindset plus iron ore in the west is booming the jobs market here back to boom days through the lack of labour....get on board


----------



## greggles (15 June 2021)

over9k said:


> Ah yes, because grad jobs have been SO plentiful since the GFC.
> 
> Look man you are just completely out of touch. Completely. I know people with masters degrees still bagging groceries. I know one guy with a PhD that's still driving a forklift in a warehouse.
> 
> ...




It sounds like you're angry that your degree didn't lead to the kind of job you were hoping it would. To be fair, that's your mistake. 

You're only 35, you can retrain. If I could have my time over, I'd do the same and focus on IT instead of what I ended up doing.


----------



## Humid (15 June 2021)

moXJO said:


> My good mate went to uni. Bit of a lazy bugger. He went and worked in the US for a while in an unrelated field. Then came back here. Probably about 25 years all in and about 20 years to start making serious money.
> Younger gen X.
> 
> Anyway he's on $250k- $350k a year. Does bugger all from the looks of it. He literally tells me he does bugger all. Works from home now. He was good at making social contacts.
> ...



Sparky is best for money but unbelievbly brain dead job and will be forever
Take the money I say


----------



## moXJO (15 June 2021)

Humid said:


> I make more money doing instrumentation tubing



Isn't that just  plumbing for guys that don't want to be elbows deep in sht?


----------



## Humid (15 June 2021)

over9k said:


> Ah yes, because grad jobs have been SO plentiful since the GFC.
> 
> Look man you are just completely out of touch. Completely. I know people with masters degrees still bagging groceries. I know one guy with a PhD that's still driving a forklift in a warehouse.
> 
> ...



You single out trades but hide behind a degree.....a degree in what


----------



## Humid (15 June 2021)

moXJO said:


> Isn't that just  plumbing for guys that don't want to be elbows deep in sht?



Believe me $hit is better than chinese restaurant grease traps.....or for that matter any grease trap


----------



## Smurf1976 (15 June 2021)

over9k said:


> I suspect housing has increased more than even trade wages have.



Trades wages (same job, same employer) about 200% increase over past 25 years. That's based on information now a couple of years old but assuming they'd have added a few % since then.

House price in same location (Hobart) just under 400% increase over the same time from a quick Google search.

I'm in SA now and not really familiar with the economic history of anything here so can't comment locally at present.


----------



## sptrawler (15 June 2021)

over9k said:


> I wonder if even tradie wages have kept up with housing costs over the past few years.
> 
> They're certainly going to be a better alternative to uni, but I wonder if a gen Z sparky or whatever will do as well as a gen Y one.
> 
> My suspicion is no. I suspect housing has increased more than even trade wages have. But that is pure gut instinct/based on nothing.






Humid said:


> I really cant comprehend how so many educated people havnt figured out that a country that makes nothing pays service trades so much!
> With no overseas travel we can fix the house mindset plus iron ore in the west is booming the jobs market here back to boom days through the lack of labour....get on board



As Humid says, there is heaps of money to be made if you are prepared to go bush, my oldest son is an underground sparkie over $150k.
If it is so hard to earn good money in Sydney, wouldn't it be worth renting the house out and relocating to a mining town where the house is subsidised.
I know that is an issue if the degree isn't of any use, but the degree can be used to fast track to other areas of learning, be that engineering/ trade/ operations/ accounting/ admin etc.
It is either that, or hope that better openings happen in Sydney in your chosen field, but that is taking a very passive path and relies on the ducks lining up IMO.


----------



## moXJO (15 June 2021)

Humid said:


> Sparky is best for money but unbelievbly brain dead job and will be forever
> Take the money I say



It's worse for him as its mainly electronics. He already hates his life. 2 more years of tafe and 1 more year with the boss. He is killing it at the moment though.


----------



## Joe Blow (15 June 2021)

We're off property and onto careers and employment. It would be nice to get this thread back on topic. If we can't I may have to split this discussion off and create a new thread.


----------



## sptrawler (15 June 2021)

Smurf1976 said:


> Trades wages (same job, same employer) about 200% increase over past 25 years. That's based on information now a couple of years old but assuming they'd have added a few % since then.
> 
> House price in same location (Hobart) just under 400% increase over the same time from a quick Google search.
> 
> I'm in SA now and not really familiar with the economic history of anything here so can't comment locally at present.



I moved to Perth when I finished my apprenticeship in 1976, electrician at a BHP blast furnace $11k/ annum, house and land package 3x1 in nearby Rockingham $27k. Didn't buy one got married 3 kids blew that idea.
Anyway today an industry day shift sparkies at Alcoa, SEC etc  is earning approx $120k/ year, 3x2 house and land package in Rockingham $340K.


			https://www.realestate.com.au/property-house-wa-rockingham-136425094


----------



## over9k (15 June 2021)

greggles said:


> It sounds like you're angry that your degree didn't lead to the kind of job you were hoping it would. To be fair, that's your mistake.
> 
> You're only 35, you can retrain. If I could have my time over, I'd do the same and focus on IT instead of what I ended up doing.



It's the complete opposite of every single thing I was told to do by every single one of my elders when I was in my teens. Meanwhile, the people who did the complete opposite of what they were advised to, have ended up far better off, not least of all because of how much more expensive housing became a few years later.

This is what you're not getting: It's not like we ignored advice and have paid the price for it. We did exactly what we were told to, and it was basically the complete opposite of what we should have done. 

Even if the degree upped your earning capacity by 30% or whatever, if housing has increased by 50% in the time it took you to get the degree, then net, you're behind. Combine a housing increase with an effective drop in uni grad wages, and you have a catastrophe.


----------



## moXJO (15 June 2021)

Joe Blow said:


> We're off property and onto careers and employment. It would be nice to get this thread back on topic. If we can't I may have to split this discussion off and create a new thread.



Trying to find the best career to afford a house.


----------



## Smurf1976 (15 June 2021)

over9k said:


> Look man you are just completely out of touch. Completely. I know people with masters degrees still bagging groceries. I know one guy with a PhD that's still driving a forklift in a warehouse.



It's a consequence of Australia's increasingly narrow economic base.

Mining and service industries creates a pretty narrow range of employment and in practice most end up in fairly low end service jobs. Go to any Third World country and there are countless such people you'll encounter even just as a tourist.

In contrast manufacturing requires not just assembly workers and so on (but of course that's a perfectly reasonable job for someone - imperfect but it sure beats being on the dole) but it creates employment for all sorts of people from non-technical product design to engineering to science to logistics to accounting. There's far more of all those needed to make something from scratch than there are to just unpack shipping containers sent from somewhere overseas.

Trouble is, getting people to join the dots and grasp that it's all interconnected. An economy based on financial bubbles, digging holes in the ground and with most of the rest in low end services is an economy that isn't going to work too well for most people. One _symptom_ of that is unaffordable housing but that's a symptom not the disease.

Trying to bring the thread back on topic, what happens next with housing is the question and suffice to say the recent price action looks very much like a blow off top to me in the absence of any real fundamentals to underpin it.

With migration drying up with COVID restrictions and the associated things like overseas students and tourists not requiring accommodation, where's this sudden need for housing coming from?

The whole thing looks extremely speculative to me and something that isn't sustainable.


----------



## Humid (15 June 2021)

moXJO said:


> It's worse for him as its mainly electronics. He already hates his life. 2 more years of tafe and 1 more year with the boss. He is killing it at the moment though.



Yeah im talking  mining /construction but when he has done his time
Here its just terminating boards ,cable pull ,cable tying.....
sites highest payed lol


----------



## over9k (15 June 2021)

Smurf1976 said:


> It's a consequence of Australia's increasingly narrow economic base.
> 
> Mining and service industries creates a pretty narrow range of employment and in practice most end up in fairly low end service jobs. Go to any Third World country and there are countless such people you'll encounter even just as a tourist.
> 
> ...



This problem is not unique to australia though, is it?


----------



## sptrawler (15 June 2021)

over9k said:


> This problem is not unique to australia though, is it?



No, you are dead right, in the U.K and U.S average workers can't afford to buy in popular cities.








						When Is The Los Angeles Housing Market Going To Crash?
					

As a Los Angeles financial planner, who has grown up in Southern California, I have seen the real estate market boom and bust over the years.  Is the Los Angeles Real Estate Market headed for a crash?




					www.forbes.com
				












						Why is San Francisco So Expensive? The Real Estate Story
					

In the past five years, San Francisco real estate has increased in price ten fold. So Why is San Francisco so expensive?



					www.upnest.com
				












						Why house prices are rising so fast in a pandemic
					

House prices are increasing at their fastest rate for more than a decade. These graphics explain why.



					www.bbc.com


----------



## moXJO (15 June 2021)

Personally I think we are on the end of a nasty housing cycle. It can't hold up forever. 
Not sure if I mentioned this a page back or not. But my parents house just got valued at $1.3 million. And there is no way it's worth that much in my mind. 

Something has to break because there is no way this is sustainable. This is all just stimulus run-off and fed would want to make a move soon.


----------



## MovingAverage (15 June 2021)

moXJO said:


> Personally I think we are on the end of a nasty housing cycle. It can't hold up forever.
> Not sure if I mentioned this a page back or not. But my parents house just got valued at $1.3 million. And there is no way it's worth that much in my mind.
> 
> Something has to break because there is no way this is sustainable. This is all just stimulus run-off and fed would want to make a move soon.



it’s worth what the market will pay...if they get $1.3 then it’s worth it


----------



## MovingAverage (15 June 2021)

sptrawler said:


> I moved to Perth when I finished my apprenticeship in 1976, electrician at a BHP blast furnace $11k/ annum, house and land package 3x1 in nearby Rockingham $27k. Didn't buy one got married 3 kids blew that idea.
> Anyway today an industry day shift sparkies at Alcoa, SEC etc  is earning approx $120k/ year, 3x2 house and land package in Rockingham $340K.
> 
> 
> https://www.realestate.com.au/property-house-wa-rockingham-136425094



As a multiple of annual salary looks like not much has changed there 👍


----------



## Humid (15 June 2021)

MovingAverage said:


> it’s worth what the market will pay...if they get $1.3 then it’s worth it



This is why I follow you
I will sleep sound tonight my friend


----------



## sptrawler (15 June 2021)

MovingAverage said:


> it’s worth what the market will pay...if they get $1.3 then it’s worth it



As you say, something is worth what someone else will pay, but it is getting scary.



Smurf1976 said:


> With migration drying up with COVID restrictions and the associated things like overseas students and tourists not requiring accommodation, where's this sudden need for housing coming from?
> 
> The whole thing looks extremely speculative to me and something that isn't sustainable.




I'm 100% with you on that, this has to end badly for some, no one will see it coming.


----------



## MovingAverage (15 June 2021)

Humid said:


> This is why I follow you
> I will sleep sound tonight my friend



Didn’t think my dribble was worth following, but I guess there is no accounting for taste


----------



## sptrawler (15 June 2021)

MovingAverage said:


> As a multiple of annual salary looks like not much has changed there 👍



Perth really peaked in 2010 GFC, crashed then double topped just before the mining boom popped and we are only really getting back to the 2010 prices now. I down sized in 2010, my old place is still only worth what it was then, it might have jumped a small amount in the last 6 months, but really I think it would only sell quicker at the moment not for more money.
The thing with Perth, there is a lot of land releases, so established is always competing with new house and land packages, or new infill housing.
I'm surprised by the way Sydney has gone, when i was working in about 2009 I received an email from defense housing , there was a really nice town house in a group of 4 for sale $800k. I thought that is a lot of money, it was located midway between Sydney CBD and Bondi, I think it was called Double Bay. Obviously that was another missed opportunity.


----------



## MovingAverage (15 June 2021)

sptrawler said:


> Perth really peaked in 2010 GFC, crashed then double topped just before the mining boom popped and we are only really getting back to the 2010 prices now. I down sized in 2010, my old place is still only worth what it was then, it might have jumped a small amount in the last 6 months, but really I think it would only sell quicker at the moment not for more money.
> The thing with Perth, there is a lot of land releases, so established is always competing with new house and land packages, or new infill housing.
> I'm surprised by the way Sydney has gone, when i was working in about 2009 I received an email from defense housing , there was a really nice town house in a group of 4 for sale $800k. I thought that is a lot of money, it was located midway between Sydney CBD and Bondi, I think it was called Double Bay. Obviously that was another missed opportunity.



Reckon you’d need an $800k deposit alone to get into double bay now 😂


----------



## Humid (15 June 2021)

MovingAverage said:


> Didn’t think my dribble was worth following, but I guess there is no accounting for taste



bit of fun mate 
opinions are good.....show me backgrounds


----------



## MovingAverage (15 June 2021)

Humid said:


> bit of fun mate
> opinions are good.....show me backgrounds



Opinions are also like something else 😂😂


----------



## sptrawler (15 June 2021)

Well I wonder if Elon can burst the bubble? Even he must think it is toppy.








						Elon Musk is selling his 'last remaining house'
					

This tweet comes after Elon Musk said last week that he has only one house in the San Francisco Bay Area, which has been rented out for events




					www.businesstoday.in


----------



## qldfrog (15 June 2021)

Mrmagoo said:


> Europe is categorically a better place to live than Australia unless you are already wealthy here in Australia. Notice I said "live" to not accumulate a fortune in property speculation.



feel free to move/move back to these failing states..leaving Europe [to Australia] was the best move I ever made...no regret for leaving, probably should have gone to the USA in hindsight..but too late now


----------



## qldfrog (15 June 2021)

sptrawler said:


> I moved to Perth when I finished my apprenticeship in 1976, electrician at a BHP blast furnace $11k/ annum, house and land package 3x1 in nearby Rockingham $27k. Didn't buy one got married 3 kids blew that idea.
> Anyway today an industry day shift sparkies at Alcoa, SEC etc  is earning approx $120k/ year, 3x2 house and land package in Rockingham $340K.
> 
> 
> https://www.realestate.com.au/property-house-wa-rockingham-136425094



so in 76, house was around 3x raw income, now...around same 3xraw income..same same unless we consider the real tax rate has increased too much ?


----------



## sptrawler (15 June 2021)

qldfrog said:


> so in 76, house was around 3x raw income, now...around same 3xraw income..same same unless we consider the real tax rate has increased too much ?



Yes once you are away from the CBD Perth's house prices really haven't changed much as a multiple of incomes.
The incomes in W.A have increased considerably with the mining boom, also that has been reflected in wages in the metropolitan area, there is currently a post covid boom going on which is seeing a lot of stock hit the market.
But with the State and Federal home buyer and renovator stimulus, there is also a boom in new builds, which when everything settles down will no doubt leave a lot of overhang in the market and stagnate prices again.
Here is a house not far from my place, in the last boom it would have been about the same price, hasn't sold so it is overpriced.


			https://www.realestate.com.au/property-house-wa-riverton-136356810?sourcePage=rea%3Abuy%3Asrp-map&sourceElement=listing-tile
		

If you are a young guy and work in the city and want an apartment, within walking distance.


			https://www.realestate.com.au/property-apartment-wa-burswood-136403098?sourcePage=rea%3Abuy%3Asrp-map&sourceElement=listing-tile
		


Or if you want something a bit more up market.


			https://www.realestate.com.au/property-apartment-wa-south+perth-136230818?sourcePage=rea%3Abuy%3Asrp-map&sourceElement=listing-tile


----------



## moXJO (15 June 2021)

MovingAverage said:


> it’s worth what the market will pay...if they get $1.3 then it’s worth it



That's what worries me.


----------



## Gunnerguy (16 June 2021)

over9k said:


> You'd have to break this down by age as you don't buy a place when you're 50 or whatever.
> 
> You're not going to find many 28 year olds on 90k.



I think that is what I am saying .....


----------



## Gunnerguy (16 June 2021)

Well I think I’ve followed this forum enough now. I’ve got better things to do. I’ve added my 2 cents worth, which in short is, as a boomer I believe it’s more difficult to get on the housing ladder today than when I was a 20 year old.
Open discussion of opinions is good but this, for me, just seems to be an argument.
I’m off for a beer, but as a leaving comment, I pay tax, but I can’t vote, so what can I do ? I’m an immigrant. 
I am sorry to see this good, interesting forum discussion on a really interesting and important topic being dragged in to one of insults and non bi partisan discussion.
Oh well moving on to see what the adults are discussing.
Gunnerguy
(sad and depressed that this interesting discussion has just gone downhill)


----------



## over9k (16 June 2021)

Gunnerguy said:


> Well I think I’ve followed this forum enough now. I’ve got better things to do. I’ve added my 2 cents worth, which in short is, as a boomer I believe it’s more difficult to get on the housing ladder today than when I was a 20 year old.
> Open discussion of opinions is good but this, for me, just seems to be an argument.
> I’m off for a beer, but as a leaving comment, I pay tax, but I can’t vote, so what can I do ? I’m an immigrant.
> I am sorry to see this good, interesting forum discussion on a really interesting and important topic being dragged in to one of insults and non bi partisan discussion.
> ...



Well the boomers can't respond with data because the data disproves their assertions. 

In reality, they know we're right/they're wrong, they just won't admit it. 


When you respond to data with mudslinging, you've lost.


----------



## MovingAverage (16 June 2021)

NSW average house price cracks $1m
					

Australian residential real estate hits $8 trillion, four times GDP and $1 trillion more than the ASX, superannuation and commercial real estate combined.




					www.afr.com


----------



## moXJO (16 June 2021)

MovingAverage said:


> NSW average house price cracks $1m
> 
> 
> Australian residential real estate hits $8 trillion, four times GDP and $1 trillion more than the ASX, superannuation and commercial real estate combined.
> ...



To me this is just insane. And I trade crypto and meme stocks.


----------



## gartley (16 June 2021)

moXJO said:


> To me this is just insane. And I trade crypto and meme stocks.



Talk about being "all in"  a SURE thing. Reminds me of the peak in the Nikkei in 1990....


----------



## sptrawler (16 June 2021)

Gunnerguy said:


> Well I think I’ve followed this forum enough now. I’ve got better things to do. I’ve added my 2 cents worth, which in short is, as a boomer I believe it’s more difficult to get on the housing ladder today than when I was a 20 year old.
> Open discussion of opinions is good but this, for me, just seems to be an argument.
> I’m off for a beer, but as a leaving comment, I pay tax, but I can’t vote, so what can I do ? I’m an immigrant.
> I am sorry to see this good, interesting forum discussion on a really interesting and important topic being dragged in to one of insults and non bi partisan discussion.
> ...



My apologies, if I added to your disappoint, the issue seemed to escalate due to people trying to put forward options, when that isn't what the other side wanted. The other side only wanted a forum to vent on, which is o.k, but it did go on and become a circular discussion.
Again my apologies and hopefully you will stay with the forum as this style of discussion isn't usual.


----------



## sptrawler (16 June 2021)

moXJO said:


> To me this is just insane. And I trade crypto and meme stocks.



It certainly shows there is a fundamental flaw when your housing market, is worth more than your stock market, especially when you consider there are only about 10 million private dwellings in Australia at the 2016 census.
It does raise a red flag IMO, how that many houses can be worth $1 trillion more than all the companies on the ASX, is just nonsense.
It is the thing crashes are made of IMO, I wonder how much non productive debt is attached to that $8 trillion?


----------



## MovingAverage (16 June 2021)

moXJO said:


> To me this is just insane. And I trade crypto and meme stocks.



Australian domestic housing worth $8 trillion--this is exactly why governments (left, right, center) will never make serious changes to the housing market. They all know it will have a devastating impact on the economy. All governments are idiots, but they are smart enough to know that they do not want to be responsible for killing off a market worth $8 trillion. The great Aussie dream shifted a long time ago from owning your own house to being able to own an investment property.


----------



## Humid (16 June 2021)

MovingAverage said:


> Australian domestic housing worth $8 trillion--this is exactly why governments (left, right, center) will never make serious changes to the housing market. They all know it will have a devastating impact on the economy. All governments are idiots, but they are smart enough to know that they do not want to be responsible for killing off a market worth $8 trillion. The great Aussie dream shifted a long time ago from owning your own house to being able to own an investment property



They dont mind fiddling with super though


----------



## sptrawler (16 June 2021)

It looks as though the situation has gone far enough, lets see if anything is done, talk is one thing action is another.








						Liberal MPs suggest radical plans to tackle housing affordability crisis
					

Liberal MPs are demanding the federal government consider radical plans to bring the runaway housing market under control.




					www.theage.com.au
				



From the article:
Liberal MPs are demanding the federal government consider radical plans to bring the runaway housing market under control after new figures showed the value of the nation’s homes soared by a record $450 billion in three months.

Sydney MP John Alexander said some of his own government’s policies were feeding into dysfunctional property market while Melbourne MP Tim Wilson said the tax system has to be overhauled to bring some balance back to house prices.
Data from the Australian Bureau of Statistics released on Tuesday showed dwelling prices jumped by 5.4 per cent through the March quarter, the largest quarterly lift since the end of 2009.
All cities reported an increase, led by Sydney (up by 6.1 per cent). Canberra prices jumped by 5.6 per cent, in Perth they were up by 5.2 per cent while in Melbourne they increased by 5.1 per cent.

The total value of the nation’s 10.6 million residential dwellings increased by $450 billion to $8.3 trillion, the single largest quarterly rise on record.
Mr Alexander said all governments had to work together to put in place policies that would gradually bring house prices down to about three times annual household income. In parts of Sydney, they are currently at 17 times income.
He believes an independent authority should set the proportion of losses an investor could deduct for their investment properties, based on trends in the property market.

Similar to how the Reserve Bank targets an inflation rate of between 2 and 3 per cent, this authority could be able to reduce deductibility to 50 per cent of expenses when investor activity is driving up house prices.

“I think you have to put in place policies that are far sighted, ones that make our biggest asset class as safe as houses,” he said. “The common wealth of this nation is tied to home ownership. But we now have home ownership at its lowest level in 60 years.”
“There are too many factors driving money into homes to think if we just tinker with supply, prices will decline – the biggest barrier for young Australians to buy their first home is saving enough for a deposit while renting,” he said. For this reason, Mr Wilson wants first home buyers to be able to tap into their superannuation for a deposit.

He also wants a rebasing of the tax system, with the same rate of tax applied to income also applied to capital growth. Several other Coalition MPs support his push, including Senator Gerard Rennick who wants capital gains tax charged on homes sold for more than $2 million.

Labor’s housing spokesman Jason Clare said the federal government could take some pressure out of the market by backing the efforts of NSW and the ACT to get rid of stamp duty.

“A bit of leadership from the federal government is desperately needed here. Getting rid of stamp duty is a good idea and the federal government could help coordinate this across the country,” he said.
“Doing this will cut the cost of buying a home by tens of thousands of dollars and also get rid of one of the big obstacles that stops people moving and downsizing. We also need to build more affordable housing and more social housing.”


----------



## MovingAverage (16 June 2021)

sptrawler said:


> It looks as though the situation has gone far enough, lets see if anything is done, talk is one thing action is another.
> 
> 
> 
> ...



This is without doubt one of the biggest ill-informed brain farts I've heard from a politician. Sure, lets allow people to put more money into a market that is already awash with lots and lots of cheap money. Is there no end to politicians' inability to tackle this problem


----------



## MovingAverage (16 June 2021)

Maybe old mate Tim Wilson should stop making superficial statements about solutions and do a little research into the potential impact of what he's suggesting.

Interesting study out of Deakin Uni on the impact of the first home buyers grant scheme--what a surprise, putting more money into the system just fueled an increase in house prices. Abstract below and full paper attached

The learned Mr. Wilson's suggestion of dipping into super will just have the same impact and further rob them of an important part of their retirement savings. Where do they get these ideas?


----------



## sptrawler (16 June 2021)

MovingAverage said:


> Maybe old mate Tim Wilson should stop making superficial statements about solutions and do a little research into the potential impact of what he's suggesting.



I agree, dipping into super wont do a thing, same as reducing stamp duty, that IMO is just another brain fart that will just allow people to borrow more money and push the prices up by the amount the stamp duty drops.

IMO they just have to remove all negative gearing on all residential property new and established, until some sort of equilibrium is found, grandfather existing for 24 months to give people time to bail out. Then remove interest as a tax deduction on a housing investment loan, it would cause some pain for a while, rents would go up, prices would go down, but it has to be better than the current ponzi scheme.
Jeez Sydney /Melbourne have become government guaranteed money making gambles, that is just tax payer funded roulette, with every number a winner.
The other bonus would be,it would reduce the amount of investment houses being built, the State governments could then use the slack caused in the building industry, to put a massive push back into social housing, which has been neglected for years.
They self perpetuating property bubble has to be broken, so that the investment money can be freed up and re directed into productive debt like manufacturing and resources etc.


----------



## MovingAverage (16 June 2021)

sptrawler said:


> I agree, dipping into super wont do a thing, same as reducing stamp duty, that IMO is just another brain fart that will just allow people to borrow more money and push the prices up by the amount the stamp duty drops.
> 
> IMO they just have to remove all negative gearing on all residential property new and established, until some sort of equilibrium is found, grandfather existing for 24 months to give people time to bail out. Then remove interest as a tax deduction on a housing investment loan, it would cause some pain for a while, rents would go up, prices would go down, but it has to be better than the current ponzi scheme.
> Jeez Sydney /Melbourne have become government guaranteed money making gambles, that is just tax payer funded roulette, with every number a winner.



I'm on the fence with negative gearing--I'm not convinced it is the driver of the recent ramp in house prices. Not saying it isn't a contributor, I question whether it is the root of all evil. Recent ATO data (maybe posted here) shows deductions of IPs have been reducing and more properties being breakeven or positively geared--which is put down to reduced interest expenses and rising rents.  To me the major issue we currently have is down to cheap and easy money. Now I'm no economist but if this is the issue then why not tackle the problem head on. Why not allow folks current market interest rates for the PPOR, but you want a second house for an investment, well jack the interest rate right up for that. Of course to your point of negative gearing I acknowledge that jacking up interest rates will potentially allow greater interest rate deductions but that could be limited. This of course assumes that the problem is investors and I have not seen any data to support the fact that investors are the ones driving the prices up. My only limited observations on the houses that have been selling around me is that they are owner occupiers buying and not investors. I don't for one minute suggest there is a simple solution to this problem, but I do wish the governments would stop paying lip service to the issue and tackle it head on.


----------



## sptrawler (16 June 2021)

MovingAverage said:


> I'm on the fence with negative gearing--I'm not convinced it is the driver of the recent ramp in house prices. Not saying it isn't a contributor, I question whether it is the root of all evil. Recent ATO data (maybe posted here) shows deductions of IPs have been reducing and more properties being breakeven or positively geared--which is put down to reduced interest expenses and rising rents. .



If the negative gearing isn't a driver, it should have minimal effect, therefore removing it shouldn't cause a problem.
If some are burnt because of the removal of it, that would show they were only in the market for the tax deduction and there was no realistic way of it becoming positively geared.
If there is a very good possibility of the property becoming positive geared, then the investment should be able to stand on its merits and the tax component wont have an effect on the viability of the investment.
If the property investment can't stand up , without the tax advantage, it really isn't an investment, it is a gamble or a speculative punt.
Not saying it will fix things, but it is a move in the right direction IMO.


----------



## moXJO (16 June 2021)

Cheap money and to much of it is the problem.


----------



## MovingAverage (16 June 2021)

sptrawler said:


> If the negative gearing isn't a driver, it should have minimal effect, therefore removing it shouldn't cause a problem.



Couldn't agree more. I wasn't advocating that it should remain as is...I was in a round about way suggesting your point. Tinkering with it or removing it is--IMHO--unlikely to take any broad based heat out of the market and that the solution would probably require something far more significant than a focus on neg gearing.


----------



## over9k (16 June 2021)

sptrawler said:


> It looks as though the situation has gone far enough, lets see if anything is done, talk is one thing action is another.
> 
> 
> 
> ...



Nothing but mild tweaking and nothing but talk about it either. 

Even if all this stuff happens (it won't) it won't do a damn thing about the problem anyway. Classic case of trying to make it look like you're doing something.


----------



## moXJO (16 June 2021)

over9k said:


> Nothing but mild tweaking and nothing but talk about it either.
> 
> Even if all this stuff happens (it won't) it won't do a damn thing about the problem anyway. Classic case of trying to make it look like you're doing something.



NZ recently tried something with not much results


----------



## MovingAverage (16 June 2021)

moXJO said:


> NZ recently tried something with not much results



negative gearing?


----------



## over9k (16 June 2021)

moXJO said:


> NZ recently tried something with not much results



Repeating myself yet again: 

Was that an accident? Or did they know full well all along that it wouldn't do a damn thing?


----------



## dyna (16 June 2021)

Humid said:


> The bit when it goes 70/30



Jeebus. I thought they could only halve you !


----------



## Mrmagoo (17 June 2021)

Grants help because the system is mostly about leverage. The capital allows FHB to enter to the market as it gives them access to leverage.


----------



## sptrawler (17 June 2021)

MovingAverage said:


> Couldn't agree more. I wasn't advocating that it should remain as is...I was in a round about way suggesting your point. Tinkering with it or removing it is--IMHO--unlikely to take any broad based heat out of the market and that the solution would probably require something far more significant than a focus on neg gearing.



That is true, if they wanted to prick the housing bubble, just crank up interest rates.
The problem with that, highlights my issue with negative gearing, if interest rates go up it affects home owners much more than investors as they can't write off their loses.
Negative gearing on residential property just encourages  non productive investment, to supply social housing IMO.
The money would be better spent supplying industrial growth, that has a chance of employing people and maintaining living standards.
The Government should be supplying social housing and if they want to help people get into a house, possibly allow first home owners to negative gear their loan, not investors.
Or at least move in that direction, as is shown in Melbourne/Sydney, a lot of investment money is directed into property with no hope of it ever being positively geared and any losses are subsidised by the taxpayer. What is the point?
Just my thoughts and I'm no economist.


----------



## qldfrog (17 June 2021)

sptrawler said:


> That is true, if they wanted to prick the housing bubble, just crank up interest rates.
> The problem with that, highlights my issue with negative gearing, if interest rates go up it affects home owners much more than investors as they can't write off their loses.
> Negative gearing on residential property just encourages  non productive investment, to supply social housing IMO.
> The money would be better spent supplying industrial growth, that has a chance of employing people and maintaining living standards.
> ...



Do you really believe negative gearing cost money to the government?
As a single line in the accounting sheet, yes, but this pushes RE prices up , with both ATO and states gorging on stamp duty, cgt on resale of ip and even local councils adding 3pc yearly increase (we are reasonable) to rates on a number jumping by 15pc a year: valuation
Look where the money is and then you understand why no politician is serious about RE affordability, they all have their heads in the gravy 
in the same way as: do not fight the market/the feds for shares, do not fight the decision makers in Australia.get into RE.


----------



## MovingAverage (17 June 2021)

qldfrog said:


> Do you really believe negative gearing cost money to the government?
> As a single line in the accounting sheet, yes, but this pushes RE prices up , with both ATO and states gorging on stamp duty, cgt on resale of ip and even local councils adding 3pc yearly increase (we are reasonable) to rates on a number jumping by 15pc a year: valuation
> Look where the money is and then you understand why no politician is serious about RE affordability, they all have their heads in the gravy
> in the same way as: do not fight the market/the feds for shares, do not fight the decision makers in Australia.get into RE.



Nailed it.

Sometimes I think governments are deliberately highlighting neg gearing as the problem merely to distract the gullible general public away from the fact that--as you so rightly point out--governments are absolutely rolling in cash from CGT, land tax, stamp duty etc etc.


----------



## Humid (17 June 2021)

sptrawler said:


> That is true, if they wanted to prick the housing bubble, just crank up interest rates.
> The problem with that, highlights my issue with negative gearing, if interest rates go up it affects home owners much more than investors as they can't write off their loses.
> Negative gearing on residential property just encourages  non productive investment, to supply social housing IMO.
> The money would be better spent supplying industrial growth, that has a chance of employing people and maintaining living standards.
> ...



At what size does it stop being social,I think NG is ok under 500k in WA anyway
I think money could of been spent on social housing rather than mansion renos


----------



## sptrawler (17 June 2021)

Humid said:


> At what size does it stop being social,I think NG is ok under 500k in WA anyway
> I think money could of been spent on social housing rather than mansion renos



I agree taxpayer assistance should be for those who need it, not for property portfolio builders.
As you say a lid of a certain amount on any subsidy is the way to go, you need to encourage endeavour, but when it becomes just a way of giving the uber rich more incentives, it leads to ponzi schemes.


----------



## Gunnerguy (18 June 2021)

CBA raised their ‘assessment’ IR from 5.1%  to 5.25% today. As I commented a few days ago, although they offer 2.1% they assess if the borrower can afford 5.25% now. That $800K house just got more expensive ....


----------



## MovingAverage (18 June 2021)

Gunnerguy said:


> CBA raised their ‘assessment’ IR from 5.1%  to 5.25% today. As I commented a few days ago, although they offer 2.1% they assess if the borrower can afford 5.25% now. That $800K house just got more expensive ....



Ok...I concede.


----------



## Smurf1976 (18 June 2021)

Gunnerguy said:


> CBA raised their ‘assessment’ IR from 5.1% to 5.25% today.



Regardless of the immediate impact it has on prices, I see the fact of a very large bank having raised the interest rate they're basing it on upwards as being significant in itself.


----------



## sptrawler (19 June 2021)

Smurf1976 said:


> Regardless of the immediate impact it has on prices, I see the fact of a very large bank having raised the interest rate they're basing it on upwards as being significant in itself.



Well for how long has the RBA been saying it wants inflation around 3%? It isn't as though blind Freddy couldn't see that interest rates at 0%, won't last forever.
I mean really how can a capitalist system work, where borrowing money costs nothing?
At the end of the day, if people are prepared to pay stupid prices, to buy something that they could buy for a lot less in another location, they deserve to get burnt IMO.
Imagine if someone tried to sell a Toyota Corolla in Sydney for $100k, when you could buy the same car in Adelaide for $10k, everyone would say I'll go to Adelaide.
But tell them to buy a house with the same reasoning and they have a white out.lol


----------



## qldfrog (19 June 2021)

sptrawler said:


> Well for how long has the RBA been saying it wants inflation around 3%? It isn't as though blind Freddy couldn't see that interest rates at 0%, won't last forever.
> I mean really how can a capitalist system work, where borrowing money costs nothing?
> At the end of the day, if people are prepared to pay stupid prices, to buy something that they could buy for a lot less in another location, they deserve to get burnt IMO.
> Imagine if someone tried to sell a Toyota Corolla in Sydney for $100k, when you could buy the same car in Adelaide for $10k, everyone would say I'll go to Adelaide.
> But tell them to buy a house with the same reasoning and they have a white out.lol



I actually found suburban Australians weird in their attitude to relocation.even within capital cities,staying often in same suburbs when moving.
Whereas my perception is the US is more open to huge relocations.
Anyway, this is what a culture is made of, and this is what it is.
Does not help the RE situation


----------



## gartley (19 June 2021)

If property bulls think low IR are here to stay, think again. A completed impulse wave from 1980 high looks complete and if count correct, then IR landcape will change dramatically over the next 5 to 8 years compared to current levels....


----------



## gartley (19 June 2021)

To add weight to the 10 yr chart analysis the following is the 2yr chart, although no reversal yet the pattern in play which is a classic EW ending diagonall suggests a sharp reversal.... How times have we all seen these types of patterns in any timeframe in the markets!


----------



## wayneL (19 June 2021)

Jayzuz!

Logically, I'm with you Gartley. However I'm not so sure The Fed and other Central Banks I want to play the game according to the rules.

I personally think that rates should have been raised a hell of a long time ago. I mean if we take a true picture of CPI, *all* things considered, we have had negative real rates for years.

how long can central Banks kick the can further and further down the road? Bloody hell of a lot longer than I ever thought possible.

 BWTFDIK


----------



## over9k (19 June 2021)

sptrawler said:


> Well for how long has the RBA been saying it wants inflation around 3%? It isn't as though blind Freddy couldn't see that interest rates at 0%, won't last forever.
> I mean really how can a capitalist system work, where borrowing money costs nothing?
> At the end of the day, if people are prepared to pay stupid prices, to buy something that they could buy for a lot less in another location, they deserve to get burnt IMO.
> Imagine if someone tried to sell a Toyota Corolla in Sydney for $100k, when you could buy the same car in Adelaide for $10k, everyone would say I'll go to Adelaide.
> But tell them to buy a house with the same reasoning and they have a white out.lol



Cars can be transported, houses cannot.


----------



## sptrawler (19 June 2021)

over9k said:


> Cars can be transported, houses cannot.



That's very true, but people can be transported, going down with the ship, is probably an outdated mantra.
Whatever someone does for a living, if it isn't resulting in the outcome they want, they need to change something.
To keep trying to change the world around us to fit our desired outcome, usually isn't an option, I either adapt or reconfigure my situation.


----------



## Smurf1976 (19 June 2021)

wayneL said:


> how long can central Banks kick the can further and further down the road? Bloody hell of a lot longer than I ever thought possible.



I recall thinking circa 2003 that housing was getting out of hand and a correction would be imminent.

2003, that's a damn long time ago.

A child born in 2003 is now an adult.

A car made in 2003 is quite likely scrapped by now and if not then it's close to worthless.

Etc but the housing bubble has continued to inflate.


----------



## againsthegrain (19 June 2021)

Smurf1976 said:


> I recall thinking circa 2003 that housing was getting out of hand and a correction would be imminent.
> 
> 2003, that's a damn long time ago.
> 
> ...




It is not a bubble according to many


----------



## over9k (20 June 2021)

sptrawler said:


> That's very true, but people can be transported, going down with the ship, is probably an outdated mantra.
> Whatever someone does for a living, if it isn't resulting in the outcome they want, they need to change something.
> To keep trying to change the world around us to fit our desired outcome, usually isn't an option, I either adapt or reconfigure my situation.



Sure but there's plenty of things beyond your control. 

Move to a cheap area: Unemployed. 

Find work: It's in a horrendously expensive area and every cent is being spent on living expenses. 


It's a no-win situation.


----------



## wayneL (20 June 2021)

againsthegrain said:


> It is not a bubble according to many



One's opinion on that is most likely tied to one's position in the market and their emotional investment.

By any objective assessment, it's a bubble. 

The question people should ask themselves, is where would the market be without property welfare?

Negative gearing
Cap gains discount
Buyer/renovation grants
Artificially low (negative real) interest rates.
Ultra high immigration
(Actually I agree with very low/no cap gain tax if swapping one investment for another, but that's a discussion for another time)

It wouldn't be where it is, that is for sure.


----------



## MovingAverage (20 June 2021)

wayneL said:


> One's opinion on that is most likely tied to one's position in the market and their emotional investment.
> 
> By any objective assessment, it's a bubble.
> 
> ...



The introduction of CGT in 1985 would appear to have done absolutely nothing to tempter folks enthusiasm for investing in property. My personal opinion is that even if you removed all of the tax concessions currently available to RE investors I doubt in the long term it would take the heat out of the market. So long as people can make money out of RE on the backend then investors will always be in the market. My feeling is a lot of investors are focused in the cap gain and some of the tax concessions along the way (e.g neg gearing) are a nice little bonus along the way. Have a look at the ATO’s stats on CGT, a lot of people are making a lot of money off the sale and gain of property and the Gov makes considerably more of CGT to more than offset the current $10 bill it cost the ATO in IP deductions. Just my 2 cents.


----------



## over9k (20 June 2021)

wayneL said:


> One's opinion on that is most likely tied to one's position in the market and their emotional investment.
> 
> By any objective assessment, it's a bubble.
> 
> ...



You'll also notice that there's only the other tweaking around the edges type stuff that anyone in power is actually talking about. 

(Because those tweaks will do absolutely **** all about the problem and they know it. It isn't a problem from their perspective.)


----------



## greggles (20 June 2021)

over9k said:


> You'll also notice that there's only the other tweaking around the edges type stuff that anyone in power is actually talking about.
> 
> (Because those tweaks will do absolutely **** all about the problem and they know it. It isn't a problem from their perspective.)




That's because political parties are in the business of gaining power and staying in power. The days of political parties making tough, pragmatic decisions are a relic of the 20th century. It's all about populism and prosperity now. We will continue to see money printing and the protection of the residential property market as policy priorities of all major parties.

It's a game of political musical chairs. One day it's all going to end, and when the music eventually stops nobody is going to want to be in power, because things are going to get very ugly.


----------



## wayneL (20 June 2021)

greggles said:


> That's because political parties are in the business of gaining power and staying in power. The days of political parties making tough, pragmatic decisions are a relic of the 20th century. It's all about populism and prosperity now. We will continue to see money printing and the protection of the residential property market as policy priorities of all major parties.
> 
> It's a game of political musical chairs. One day it's all going to end, and when the music eventually stops nobody is going to want to be in power, because things are going to get very ugly.



Damn straight!

But when, is the $64,000,000 question. (Which will probably be median Sydney price by then </tongueincheek>)


----------



## Smurf1976 (20 June 2021)

wayneL said:


> By any objective assessment, it's a bubble.



Agreed but I'm not going to underestimate what government and central banks will do.

It's a bubble but it's one that could well get a lot bigger.....

As an analogy, government seems determined to keep the sprinklers gushing and say nothing about a drought until the dam is literally bone dry with not a drop left. Then we go straight into a monumental crisis.


----------



## wayneL (20 June 2021)

Smurf1976 said:


> Agreed but I'm not going to underestimate what government and central banks will do.
> 
> It's a bubble but it's one that could well get a lot bigger.....
> 
> As an analogy, government seems determined to keep the sprinklers gushing and say nothing about a drought until the dam is literally bone dry with not a drop left. Then we go straight into a monumental crisis.



And who wins from that scenario?

Somebody does, and you can be sure those people will be the so called "elites". (And hopefully a few of we plebs will pick up a few crumbs if we're smart/lucky enough)


----------



## greggles (20 June 2021)

Get as debt free as possible is my advice, even if it's just an old shack on a block of land large enough to grow some food. Those who are the most debt free and self sufficient will come out of the other end in the best shape.

I walk into supermarkets now and all I see is ready made everything, gourmet this, gourmet that. Everything is being done for us because we no longer have the time, or so I am told. We are being encouraged to lose the skills that make us self sufficient. I believe this is deliberate.

If I could do things over again, I would make the effort to be a lot more proficient with a hammer, screwdriver and saw. That way I could improve a property myself without relying on someone who charges $80 an hour. It's probably my greatest regret. I can do this and that but I just don't have the skillset I wish I did.


----------



## MovingAverage (20 June 2021)

greggles said:


> I walk into supermarkets now and all I see is ready made everything, gourmet this, gourmet that. Everything is being done for us because we no longer have the time, or so I am told.



I came to the conclusion a while back that we have hit peak laziness when I started seeing Coles and Woolworths selling bags of pre-made mixed lettuce leaves and salad. Really, have we become so busy that we don’t have time to make a salad 😂


----------



## greggles (20 June 2021)

MovingAverage said:


> I came to the conclusion a while back that we have hit peak laziness when I started seeing Coles and Woolworths selling bags of pre-made mixed lettuce leaves and salad. Really, have we become so busy that we don’t have time to make a salad 😂




Agree. The one that still amazes me is these meal kit companies, Hello Fresh and Marley Spoon and others. What a ridiculous rip off. All they do is give you the raw ingredients for a meal and you cook it yourself. For that privilege you pay double or triple what the stuff is actually worth. 🤣

There are literally hundreds of thousands of recipes available for free on the internet. All you have to do is visit a fruit and veg barn (or even Woolworths or Coles if you like being ripped off on your fruit and veg) and buy some ingredients for the recipes you like and then learn how to use a knife and a stovetop or oven.

Does anyone here subscribe to these meal kits? I want to understand the reasoning behind it, because I can't grasp it. It takes 15 minutes to do some fruit and veg shopping. Why don't we have enough time?


----------



## qldfrog (20 June 2021)

greggles said:


> Get as debt free as possible is my advice, even if it's just an old shack on a block of land large enough to grow some food. Those who are the most debt free and self sufficient will come out of the other end in the best shape.
> 
> I walk into supermarkets now and all I see is ready made everything, gourmet this, gourmet that. Everything is being done for us because we no longer have the time, or so I am told. We are being encouraged to lose the skills that make us self sufficient. I believe this is deliberate.
> 
> If I could do things over again, I would make the effort to be a lot more proficient with a hammer, screwdriver and saw. That way I could improve a property myself without relying on someone who charges $80 an hour. It's probably my greatest regret. I can do this and that but I just don't have the skillset I wish I did.



Never too late, get youtube, become an apprentice to the next tradie doing work at your place and in a few years you have reasonsble knowhow for painting,tiling, carpenter or plasterboard work, etc..and you do not need much more than that.do own plumbing in sheds or chook pen.not rocket science and once you have the few trade tricks, you are fairly competent, not as quick or flawless as a 10000h practise tradie but not that bad, enough to do the job


----------



## Humid (20 June 2021)

greggles said:


> That's because political parties are in the business of gaining power and staying in power. The days of political parties making tough, pragmatic decisions are a relic of the 20th century. It's all about populism and prosperity now. We will continue to see money printing and the protection of the residential property market as policy priorities of all major parties.
> 
> It's a game of political musical chairs. One day it's all going to end, and when the music eventually stops nobody is going to want to be in power, because things are going to get very ugly.



Some parties are better at it than others if you look at the stats
Some parties do try to introduce change through mining taxes,franking credits and talk about negative gearing but are shot down as left loonies and poor economic managers and look where we are biggest debt ever......you make your choices


----------



## MovingAverage (20 June 2021)

Humid said:


> look where we are biggest debt ever......



So you’d prefer it if the libs did nothing? So you think the libs should have just let people do it tough so long as our national debt remained unchanged? This debt comment is ridiculous given that Covid impacted a lot of hard working ordinary people. Explain to me why exactly you think our current  debt is bad—and please don’t just wheel out the usual “generations to come will pay for it”


----------



## Humid (20 June 2021)

MovingAverage said:


> So you’d prefer it if the libs did nothing? So you think the libs should have just let people do it tough so long as our national debt remained unchanged? This debt comment is ridiculous given that Covid impacted a lot of hard working ordinary people. Explain to me why exactly you think our current  debt is bad—and please don’t just wheel out the usual “generations to come will pay for it”



Since the GFC was before this and labor was in power maybe you go first why debt seemed to be a problem then as it was an election issue with the current government


----------



## MovingAverage (20 June 2021)

Humid said:


> Since the GFC was before this and labor was in power maybe you go first why debt seemed to be a problem then as it was an election issue with the current government



Huh…I did say debt was a problem…you did.


----------



## Humid (20 June 2021)

Humid said:


> Some parties are better at it than others if you look at the stats
> Some parties do try to introduce change through mining taxes,franking credits and talk about negative gearing but are shot down as left loonies and poor economic managers and look where we are biggest debt ever......you make your choices



No I said the left were touted as poor economic managers you concluded the rest in your head


----------



## MovingAverage (20 June 2021)

Humid said:


> No I said the left were touted as poor economic managers you concluded the rest in your head



The left are poor economic mangers, but we digress from Aussie house prices


----------



## Humid (20 June 2021)

MovingAverage said:


> I came to the conclusion a while back that we have hit peak laziness when I started seeing Coles and Woolworths selling bags of pre-made mixed lettuce leaves and salad. Really, have we become so busy that we don’t have time to make a salad 😂



on topic


----------



## Humid (20 June 2021)

MovingAverage said:


> So you’d prefer it if the libs did nothing? So you think the libs should have just let people do it tough so long as our national debt remained unchanged? This debt comment is ridiculous given that Covid impacted a lot of hard working ordinary people. Explain to me why exactly you think our current  debt is bad—and please don’t just wheel out the usual “generations to come will pay for it”



Like Gerry Harvey


----------



## MovingAverage (20 June 2021)

Humid said:


> on topic



Ok…I just can’t be bothered arguing with you on which side of politics is better…right or left. I suspect we will not cover any original ground and will be confined to you usual issues that headline the mainstream media


----------



## MovingAverage (20 June 2021)

Humid said:


> Like Gerry Harvey



🙄 like I said…confined to main stream media issues…boring


----------



## Humid (20 June 2021)

Educate yourself turn off Sky and the main media then









						Budget Spin: Labor's debt a 'disaster'; Coalition's debt, three times larger, 'sustainable' - Michael West
					

Debt of 16.8% under Labor a “debt disaster”; Coalition debt of 50% is “strong and sustainable”. Galling hypocrisy but media is shtum.




					www.michaelwest.com.au


----------



## Humid (20 June 2021)

Yeah lets talk about salads


----------



## MovingAverage (20 June 2021)

Humid said:


> Yeah lets talk about salads



Ok…I am a big fan of feta cheese in a tossed salad. I’m also more of a fan of rocket instead of iceberg lettuce. When cherry tomatoes are in season I also like them in a salad. I don’t care too much for mushrooms. As for dressings, Paul Newman’s balsamic is my go to.


----------



## Humid (20 June 2021)

MovingAverage said:


> Ok…I am a big fan of feta cheese in a tossed salad. I’m also more of a fan of rocket instead of iceberg lettuce. When cherry tomatoes are in season I also like them in a salad. I don’t care too much for mushrooms. As for dressings, Paul Newman’s balsamic is my go to.



A bit main stream


----------



## MovingAverage (20 June 2021)

Humid said:


> A bit main stream



My taste in salads is a little pedestrian but you did ask


----------



## sptrawler (20 June 2021)

Humid said:


> Some parties are better at it than others if you look at the stats
> Some parties do try to introduce change through mining taxes,franking credits and talk about negative gearing but are shot down as left loonies and poor economic managers and look where we are biggest debt ever......you make your choices



Yes, the rich gave it the tick of approval, the working  class thought it was pretty average and made their choices.
What an amazing turn around in what the parties project these days, the Libs giving workers money to stay home during the pandemic and being criticised for it. 
It will be interesting to see the platform the parties take to the next election, with respect to house prices IMO.


----------



## Humid (20 June 2021)

MovingAverage said:


> My taste in salads is a little pedestrian but you did ask



Similar to your taste in news......


----------



## Humid (20 June 2021)

sptrawler said:


> Yes, the rich gave it the tick of approval, the working  class thought it was pretty average and made their choices.
> What an amazing turn around in what the parties project these days, the Libs giving workers money to stay home during the pandemic and being criticised for it.
> It will be interesting to see the platform the parties take to the next election, with respect to house prices IMO.



Tinker around the edges and do nothing


----------



## MovingAverage (20 June 2021)

sptrawler said:


> the Libs giving workers money to stay home during the pandemic and being criticised for it.



and yet the left still complain...oh the irony


----------



## over9k (20 June 2021)

greggles said:


> That's because political parties are in the business of gaining power and staying in power. The days of political parties making tough, pragmatic decisions are a relic of the 20th century. It's all about populism and prosperity now. We will continue to see money printing and the protection of the residential property market as policy priorities of all major parties.
> 
> It's a game of political musical chairs. One day it's all going to end, and when the music eventually stops nobody is going to want to be in power, because things are going to get very ugly.



Don't forget, they're all real estate "investors" too


----------



## sptrawler (20 June 2021)

over9k said:


> Don't forget, they're all real estate "investors" too



It would be interesting to see if any are off loading the IP's.


----------



## MovingAverage (20 June 2021)

sptrawler said:


> It would be interesting to see if any are off loading the IP's.



the lefties ?


----------



## sptrawler (20 June 2021)

MovingAverage said:


> the lefties ?



I wouldn't know, but people talk over a couple of beers, so if something is being considered, the pollies will be the first to know I guess.


----------



## Dona Ferentes (20 June 2021)

sptrawler said:


> It would be interesting to see if any (one) is off loading the IP's.



anecdotally  ... suburb I live in is close to the CBD, and sought after (water glimpses), the usual inner city terrace jumble of cramped but usually renovated/ updated, with street parking as a rule ...  then YES, the IPs are being sold (and selling).

Reason is that as _des res _location, many have been rented to the 2-3 year contract hotshots, from both OS and IS, but these people are now working remotely, and tenancy/ leasing is waning. And, no beach, no nightlife, so the AirBnB mob are few and far between.

Speaking of which, and I have refrained from commenting on this thread because it is underbaked, but here I go:
- One contributing factor I have observed as a driver of scarcity is the, for want of a better descriptor, _short term stay crowd_. The socio-economics would be, to an extent, that those on short stays are leaving behind an empty nest. Not reciprocating, not house swapping but essentially *accounting *for *two residences*, the rented one and the empty one at home they will return to. This dynamic in Covid times has switched from the inner suburbs to the getaway locations, the coastal and scenic towns within a few hours of home.
 - Another comment/ observation is that the current surge in asset pricing is NOT a localised phenomenon. Local factors and govt policy are only a bit of the story. It is worldwide.


----------



## wayneL (20 June 2021)

Dona Ferentes said:


> - Another comment/ observation is that the current surge in asset pricing is NOT a localised phenomenon. Local factors and govt policy are only a bit of the story. It is worldwide.



Yes indeed.

This is why I'm staying right out of the Liberal/Labor "economic management" conundrum.

There is a layer of decision making above national gu'mint, as manifested by the coordinated actions of the various central banks.

Left Vs right is a distraction to befuddle the plebs... IMNTBCHO


----------



## gartley (21 June 2021)

wayneL said:


> Jayzuz!
> 
> Logically, I'm with you Gartley. However I'm not so sure The Fed and other Central Banks I want to play the game according to the rules.
> 
> ...



Central banks are the feudal lords of money markets. They're big players and they almost always get what they want.
But back in Feb money market traders, who buy and sell the $US90 trillion odd worth of government debt swirling around on global markets, decided they were wrong. All of them.
If sustained, it will lead to higher borrowing costs because banks will have no option but to pass those rate hikes on.
So it will be very interesting moving forward as the market has had a small pullback and consolidation and soon I believe will continue bullishly. 
And that means central banks would have to abandon their ultra-loose interest rate policies earlier than expected. The trickle of selling on bond market will  soon swell  in the future , it will eventually turn into  a tsunami. Bond prices will eventually collapse further forcing the yields — market interest rates — to soar.

The battle is on.


----------



## over9k (21 June 2021)

Which, if your thesis is correct, will only pull the market back down again. 

A better thing to look at is how much of this country (the world's) "growth" has been debt financed. It's pretty easy to keep the credit expanding if you make credit cheaper (dump interest rates) but you eventually run out of ammo at 0%. 

After that, your only option is to start QE, which might give you a nominal increase, but a nominal and a real increase are not the same thing. 

So then you start fudging the numbers, like making sure you keep house prices out of the CPI so you can make it look like the cost of living hasn't increased nearly as much as it actually has. 

Sure enough, you reach runaway inflation (a bubble), but only in asset prices. Capital gets diverted out of other actually productive endeavours and into asset price speculation (because there's far more to be made there) which creates an entire economy dependent on a perpetual increase in housing "investment", something which can only be maintained through a perpetual increase in the demand for housing (be it from credit, foreign purchases, migration cramming ever more people into each dwelling, so on and so forth). 

You then have a completely bifurcated economy consisting of asset (housing) owners and everyone else - people simultaneously owning assets that wage earners cannot even hope to access the necessary credit to outbid those who already own housing on account of how much more favourable the loan conditions (interest rates) are for them whilst also bleeding those same people (their competition) dry with rent due to housing, like medicine, being a good that the normal rules of supply & demand do not apply to on account of the fact that it's not the kind of thing that you can simply go without/not buy. 

And voila, you get Australia. 


Historically, the last time you saw conditions like this, where the exact same phenomenon of a small number of people who owned the assets that couldn't simply be gone without (housing, railways, water networks etc etc) bleeding everyone else dry, was in the gilded age. 

This then gave rise to/was the perfect conditions for the support of the most left wing position there is: communism. 


And wouldn't you know it, compared to a generation ago, we now see the political left just about as far left/completely off the deep end as you can imagine now. 

Funny that, isn't it?


----------



## againsthegrain (21 June 2021)

10% from 500k is 50k  10% from 1m is 100k  10% from 2m is 200k and so on. 

How can we keep seeing the same gains on and on?  I do realise they can throw incentive and grants.  How much do u throw/can afford to throw at increases of 200k to keep people being able just to scrape in and afford it?  Even tho I can't see it stopping I also can't see a way to keep pumping it at such a momentum we are at now. 

Somebody will have to pull out something totally off left field soon


----------



## over9k (21 June 2021)

againsthegrain said:


> 10% from 500k is 50k  10% from 1m is 100k  10% from 2m is 200k and so on.
> 
> How can we keep seeing the same gains on and on?  I do realise they can throw incentive and grants.  How much do u throw/can afford to throw at increases of 200k to keep people being able just to scrape in and afford it?  Even tho I can't see it stopping I also can't see a way to keep pumping it at such a momentum we are at now.
> 
> Somebody will have to pull out something totally off left field soon



Immigration and foreign ownership. Just allow cashed up chinese to buy everything and foreigners to pour in and cram ever more people into an ever (relatively) diminishing space.

You hear about those places with 12 people living in a 3 bed/2 bath house and so forth for a reason. ****, I stayed in one as a cheap airbnb a couple of years ago not knowing what I'd actually booked.

Same as you get those two bedroom apartments where the living area has false walls installed and been "converted" into another bedroom too. I've seen that more times than I can even think.

Sometimes they're not even set up with walls, they're just tents pitched inside:













						Multiple tents found pitched in Melbourne apartments and rented out
					

Looking for an affordable apartment with all the ambiance of the outdoors? Then this might be the place for you...




					www.theage.com.au


----------



## againsthegrain (21 June 2021)

over9k said:


> Immigration and foreign ownership. Just allow cashed up chinese to buy everything and foreigners to pour in and cram ever more people into an ever (relatively) diminishing space.
> 
> You hear about those places with 12 people living in a 3 bed/2 bath house and so forth for a reason. ****, I stayed in one as a cheap airbnb a couple of years ago not knowing what I'd actually booked.
> 
> ...




The irony is they all escape the 3rd world slums to come to the west and slowly work or turning it to the same standards.


----------



## over9k (21 June 2021)

againsthegrain said:


> The irony is they all escape the 3rd world slums to come to the west and slowly work or turning it to the same standards.



Thing is, even total shitholes here are paradise compared to a slum in brazil or whatever, and that's before we even start on wages - they deliberately live in destitution so they can send every spare cent back home because the money goes so much further there. Our minimum wage will damn near buy you a palace in some parts of the world so if you can save a hundred bucks a week by living in a shithole then so be it, that hundred bucks will feed your entire family for 6 months back home. 

Again, just simple economics.


----------



## over9k (21 June 2021)

You'll also note how none of the high rise what I call "vertical slums" are ever built in eastern sydney out at vaucluse or wherever for example, where all of the most vocal pro-migration voices (landlords) live. 

Again, just another one of those total coincidences, you know?


----------



## moXJO (21 June 2021)

over9k said:


> This then gave rise to/was the perfect conditions for the support of the most left wing position there is: communism.
> 
> 
> And wouldn't you know it, compared to a generation ago, we now see the political left just about as far left/completely off the deep end as you can imagine now.
> ...



Big indicator to the beginning of the end imo. Just look at any other south American Communist sht hole and how it all began to unravel.


----------



## sptrawler (21 June 2021)

moXJO said:


> Big indicator to the beginning of the end imo. Just look at any other south American Communist sht hole and how it all began to unravel.



I don't think people have though about the ramifications of what was recently proposed, with regard to tax breaks and incentives for landlords of new build rentals, that would have pushed the gap between rich and poor to new heights IMO..
Any changes to the tax breaks on property IMO, have to be universal to maintain relativity between dwellings. 
There is no point crashing established home prices, while increasing new build prices, that just makes it more difficult to get from a house suitable for a couple, to a house suitable for a family.


----------



## Smurf1976 (21 June 2021)

againsthegrain said:


> 10% from 500k is 50k 10% from 1m is 100k 10% from 2m is 200k and so on.
> 
> How can we keep seeing the same gains on and on?



The problem of constant compound growth.

It works until a point comes where it doesn't work.

1, 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024, 2048, 4096, 8192, 16384, 32768, 65536, 131072, 262144, 524288, 1048576, 2097152, 4194304, 8388608, 16777216, 33554432, 67108864, 132217728, 268435456, 5368780912, 1073741824, 2147438648, 4294967296, 8589934592, 17179869184, 34359738368, 687194768736, 137438953472, 274877906944, 549755813888........

Keep doubling and even if you start from a really low base it ends up reaching a point where it's simply ridiculous.

Do the same exercise with anything from roads to utilities to house prices and it ends up the same way. It keeps going until it can't and then it comes crashing down pretty quickly.


----------



## over9k (21 June 2021)

moXJO said:


> Big indicator to the beginning of the end imo. Just look at any other south American Communist sht hole and how it all began to unravel.



Well that's the thing isn't it, what's going to give?


----------



## againsthegrain (21 June 2021)

Smurf1976 said:


> The problem of constant compound growth.
> 
> It works until a point comes where it doesn't work.
> 
> ...




Much like the Martingale system in roulette which every beginner thinks can win by doubling up their bet, simple double $5 eight times and you are on $1280 suddenly very quickly blow your budget and blocked by house maximum.  In this case the house is corrupt no maximum and even lets you borrow all you can lose.. until comes time to cash out


----------



## moXJO (21 June 2021)

over9k said:


> Well that's the thing isn't it, what's going to give?



Any ability to get ahead and rights/freedoms are generally first to go. 
So long as iron ore holds up we should steam along for a while.


----------



## sptrawler (21 June 2021)

moXJO said:


> Any ability to get ahead and rights/freedoms are generally first to go.
> So long as iron ore holds up we should steam along for a while.



I think a lot will depend on how feasible this hydrogen production becomes and how serious the EU and the western world is about emissions.
If it does go the way they are talking and it is just talk really, there may be a possibility of clean steel production being viable in the NW of W.A, where that would lead to is anyone's guess but it is all pie in the sky stuff at the moment.
On a lot of levels it does make sense, especially if the move away from China being the sole provider of manufacturing, gains momentum.
Transporting the hydrogen and transporting the iron ore etc, to process it in Europe doesn't make sense, but shipping green steel may be economically viable.
That would give Australia a long term option, but if we continue the way we are going, we go to Rio. 😂
The next 20 years will cast our destiny IMO and with it the future living standards for our kids.


----------



## over9k (21 June 2021)

againsthegrain said:


> Much like the Martingale system in roulette which every beginner thinks can win by doubling up their bet, simple double $5 eight times and you are on $1280 suddenly very quickly blow your budget and blocked by house maximum.  In this case the house is corrupt no maximum and even lets you borrow all you can lose.. until comes time to cash out



If it's a housing meltdown then it'll trigger mass bankruptcies etc. 

So it'll just be what happened to the yanks (i.e the same things/patterns will occur in the same ways for the same reasons) with the GFC but way worse.


----------



## sptrawler (21 June 2021)

over9k said:


> If it's a housing meltdown then it'll trigger mass bankruptcies etc.
> 
> So it'll just be what happened to the yanks (i.e the same things/patterns will occur in the same ways for the same reasons) with the GFC but way worse.



It may bring about mass bankrupts in Sydney/Melbourne, I'm not sure it will cause a meltdown anywhere else.
When the mining boom popped in 2015, house prices in Karratha, Port Hedland dropped by upto 70% from their peak, now they are on the way back up again.
A similar thing happened in areas of Perth, they drop about 30-40%, it didn't cause mass bankruptcies, no doubt those who were over   extended and lost employment were affected but there are others who just soldier on and maintain their payments.
For mass bankruptcies, it really requires mass unemployment, otherwise people adjust and some unwind their gearing, others plod on as it is their PPR and they maintain their payments.


----------



## moXJO (21 June 2021)

I'd say to just prepare for things to run higher in the meantime. Housing has a way of taking forever to pop.


----------



## wayneL (21 June 2021)

moXJO said:


> I'd say to just prepare for things to run higher in the meantime. Housing has a way of taking forever to pop.



It will pop when we've all given up on the Idea of it ever popping... When I've flogged all my shares and gold and buy property


----------



## gartley (23 June 2021)

The yield on 3-year Australian Government Bonds has EXPLODED in the past 24 hours to 0.45%, well above the RBA’s official Yield Curve Control target of 0.1%!

Has the market OVERPOWERED the RBA? 

According to the RBA’s own website, the 0.1% target on 3-year Australian Government Bonds is still official RBA Board policy.

ALARM BELLS going off in the financial markets & the banks?


----------



## over9k (23 June 2021)

First there was: 




Then: 





Followed by: 




Result: 





Whilst everyone lost their minds on the short term yields shown here: 




Note the date on the screencap of the yield curve flattening: 17th of June. 


You know, right where the market took off like a gunshot.


----------



## MovingAverage (23 June 2021)

sptrawler said:


> It may bring about mass bankrupts in Sydney/Melbourne, I'm not sure it will cause a meltdown anywhere else.



Can't help but think if the Sydney/Melbourne markets sneeze the other markets will get a cold.


----------



## sptrawler (23 June 2021)

MovingAverage said:


> Can't help but think if the Sydney/Melbourne markets sneeze the other markets will get a cold.



I can see areas in the immediate vicinity of Sydney/Melbourne being affected, central coast etc.
But the prices of houses in Sydney/Melbourne, have never had any impact on prices in W.A, from my memory.
Maybe over East a crash, may encourage people who commute, to sell up and move to the city?


----------



## Smurf1976 (23 June 2021)

sptrawler said:


> But the prices of houses in Sydney/Melbourne, have never had any impact on prices in W.A, from my memory.



One thing I note is that prices in several cities are about the same:

Brisbane = $616,387
Adelaide = $574,264
Perth = $563,214
Hobart = $533,845
Darwin = $533,845

So all within a few % of Perth with only Canberra ($855,530), Melbourne ($936,073) and Sydney ($1.2 million) being substantially different.









						Australia's average house price is now more than $850,000
					






					www.9news.com.au


----------



## sptrawler (23 June 2021)

Smurf1976 said:


> One thing I note is that prices in several cities are about the same:
> 
> Brisbane = $616,387
> Adelaide = $574,264
> ...



Which is what everyone, including the politicians and media, arent taking into account.
That is the whole problem with trying to burst a bubble, with legislation, it affects everywhere not just the area you want to pop.
That is one of the reasons Shorten imploded, trying to get votes in one small area, lost votes in the rest of Australia that didnt have the same problem.
It all boils back to Australia, been run by politicians who live in Canberra, focussed on Sydney, Melbourne and their own backyards.


----------



## sptrawler (24 June 2021)

At last the media is starting to talk about the underlying issue, interest rates and the banks sound worried.








						Interest rates could rise: Economists warn home owners about higher repayments in 2022
					

Home buyers taking on huge loans to get into Australia’s property market could face higher mortgage repayments as early as November next year.




					www.smh.com.au
				



From the article:
Commonwealth Bank head of Australian economics Gareth Aird on Wednesday said not only would the RBA have to reconsider its interest rate strategy, but the federal government may have to make a choice between higher wages growth or letting in more immigrants to help staff local businesses.
Mr Aird said a cash rate of 0.5 per cent by the end of next year, reaching 1.25 per cent by the third quarter of 2023, was now much more likely. An increase in the cash rate to 0.5 per cent would take the monthly repayments on a 25-year, $450,000 mortgage to $2158, an increase of $93.

The last time the RBA increased interest rates was in November 2010 when they were taken to 4.75 per cent.

AMP Capital chief economist Shane Oliver expects a rate hike in 2023, although he said next year wasn’t completely out of the question.

Westpac chief economist Bill Evans, who is tipping the cash rate to be pushed up to 0.75 per cent by the third quarter of 2023, said the jobs market was much stronger than when the RBA first made its 2024 pledge.

RBA assistant governor Luci Ellis on Wednesday maintained the bank’s position about interest rate movements, saying it was committed to “maintaining highly supporting monetary conditions”.
“It is far easier for a firm to change business models when demand is robust, and far easier for a worker to switch industries or careers when there are plenty of jobs available,” she said.


----------



## over9k (24 June 2021)

Wage growth is not a concern for this government.


----------



## dyna (25 June 2021)

Credit Swiss Australia says, when interest rates rise, this will dampen current asset prices. Thanks to booming real estate, last year, 400,000 Aussies ( 1 in 10 adults)  became a $US millionaire. The median adult finished last year with a $US 1/4 Mill. net worth, richer than any other country. Next in line, were those of Belgium, HK and NZ.
Core Logic says this country's households own 95% of its housing, compared to 80% in the USA and 70% in Germany. Financial assets were 42% of householder's net worth, a bit below the 55% of typical high income countries.


----------



## MovingAverage (25 June 2021)

dyna said:


> Credit Swiss Australia says, when interest rates rise, this will dampen current asset prices. Thanks to booming real estate, last year, 400,000 Aussies ( 1 in 10 adults)  became a $US millionaire. The median adult finished last year with a $US 1/4 Mill. net worth, richer than any other country. Next in line, were those of Belgium, HK and NZ.
> Core Logic says this country's households own 95% of its housing, compared to 80% in the USA and 70% in Germany. Financial assets were 42% of householder's net worth, a bit below the 55% of typical high income countries.



I wonder what the general public narrative will be if a rate rise does cool off the current enthusiasm and we see a pull back in housing prices. No one likes to see their investments/assets drop in value especially those buying in a peak. My tip is the public narrative will shift to one of expecting the government to prop up and drive up housing prices


----------



## dyna (25 June 2021)

Only just noticed .....no sign of the good 'ole USA on Credit Suisse Australia's "median" list of 20 countries.
"Median" being where 1/2 the folks in those places have more dough, 1/2 have less.....Let's call a spade, a shovel, here. Life just ain't fair in the Land of The Free.
You have to go to the "mean" list to see our good buddies....thar they be, in 2nd spot behind Switzerland. HK is next. Then us.( With our " mean" net worth jacked up to $US 1/2 Mill.)


----------



## wayneL (25 June 2021)

MovingAverage said:


> I wonder what the general public narrative will be if a rate rise does cool off the current enthusiasm and we see a pull back in housing prices. No one likes to see their investments/assets drop in value especially those buying in a peak. My tip is the public narrative will shift to one of expecting the government to prop up and drive up housing prices



How could they not? It has been the norm for the last 20 years.


----------



## dyna (27 June 2021)

For the March quarter, Australian Bureau of Stats. reveal housing loans increased by $21 Billion for the period, but investor loans,  by a little over $3 Billion. That's just the second (quarterly) I.P. loan increase  since 2018. So, there's not likely to be a glut of rentals any time soon, by the look of it.


----------



## dyna (28 June 2021)

CoreLogic's 1/4ly dwelling values chart of average and high end properties for all our cities, shows definite buying opportunities for both, in their "saw-tooth" chart. The last best-buy chance was just last year, in 2020 !
Looking further back, it bottomed at the end of 2011. Once more in early 2016 and again in 2019, after the slow decline from the mid 2017 peak which has now been topped by this crazy ( 2% interest rate) boom. None of those past peaks were sustainable and all but the 2017 one, fell sharply and very quickly, indeed. Perhaps the RBA's 2023 (?) rate rise will do it for this one.


----------



## Tyler Durden (28 June 2021)

dyna said:


> For the March quarter, Australian Bureau of Stats. reveal housing loans increased by $21 Billion for the period, but investor loans,  by a little over $3 Billion. That's just the second (quarterly) I.P. loan increase  since 2018. So, there's not likely to be a glut of rentals any time soon, by the look of it.




Does this indicate that investors are selling and home owners are buying?


----------



## Smurf1976 (6 July 2021)

https://www.domain.com.au/news/mortgage-repayments-could-rise-soon-than-expected-as-banks-forecast-earlier-cash-rate-hikes-1069649/?utm_campaign=strap-masthead&utm_source=the-age&utm_medium=link&utm_content=pos5&ref=pos1
		




> Home owners could face a rise in mortgage repayments of hundreds of dollars a month within two years, with the big banks predicting cash rate hikes well ahead of the Reserve Bank’s forecasts.




I don't have much to add beyond noting that this "warning" is published in an extremely mainstream source so far as real estate is concerned so anyone buying will very likely see it. Whether that influences their decisions is of course another matter.....


----------



## sptrawler (6 July 2021)

Tyler Durden said:


> Does this indicate that investors are selling and home owners are buying?



I'm not sure this is relevant, but a couple of my mates, who are very near retirement, have pulled their super, one to pay off the mortgage and the other to buy a house as he has always rented. Neither are expensive houses and are in lower cost suburbs, one in Mandurah, the other in outer Brisbane.
I wonder if it is a trend, as the baby boomers get close to retirement?


----------



## over9k (6 July 2021)

Boomers flogging their investment properties to fund caravan trips you say?


----------



## sptrawler (6 July 2021)

over9k said:


> Boomers flogging their investment properties to fund caravan trips you say?



No, boomers buying their first and most likely last house.


----------



## sptrawler (7 July 2021)

over9k said:


> Boomers flogging their investment properties to fund caravan trips you say?



Here is another indication that boomers aren't as big a part of the issue as some think.
A lot of boomers not only don't have the investment houses, but the trend to reverse mortgaging their PPR is increasing.
This may have a long term effect on house prices, as inheritances reduce.









						Retirees flock to reverse mortgages to tap equity in their homes
					

For those looking to give up some of the equity in their home to top-up their retirement income, the government-backed Pension Loans Scheme could be the answer.




					www.smh.com.au
				



From the article:
The Pension Loans Scheme (PLS) allows those who have reached age pension age to top-up their income, where their family home (or other real estate) is put up as collateral. When the house is sold, the loan is repaid from the proceeds.
However, the scheme has to approached carefully. As the loan is not repaid until the sale, interest is capitalised and over time the debt can grow to erode a large part of the property’s value.

The government-backed scheme is conservatively managed but, from the middle of next year, it will come with a “no negative equity guarantee”, meaning borrowers will not have to repay more than the market value of their property.
The maximum income that can be received under the scheme is 150 per cent of the full age pension. It is open not only to full and part-pensioners but also self-funded retirees.
It means a full-rate pensioner can receive a maximum income top-up that is equal to half of the age pension. For a self funded retiree, the maximum is equal to the 1.5 times the full age pension.
For part-pensioners, the cap is somewhere between, depending on how much part-pension is received.
The payments are not assessable for the age pension means test.


----------



## MovingAverage (7 July 2021)

sptrawler said:


> Here is another indication that boomers aren't as big a part of the issue as some think.
> A lot of boomers not only don't have the investment houses, but the trend to reverse mortgaging their PPR is increasing.
> This may have a long term effect on house prices, as inheritances reduce.
> 
> ...



Don’t you come around here presenting actual facts and data…who are the haters going to hate now 😂


----------



## sptrawler (7 July 2021)

MovingAverage said:


> Don’t you come around here presenting actual facts and data…who are the haters going to hate now 😂



Yes, I wonder how many millenials are mortgaging up to the hilt, on the expectations of a windfall, when their boomer parents fall off the perch. 🤣


----------



## over9k (7 July 2021)

Hah. 

My brother & his other half have just pulled the trigger on 200k of renovations (after buying 60k worth of cars) due to a combination of the government stimulus programs and 300k of inheritance being due very shortly. Horrible I know, but it's reality. 

I also can't blame a lot of boomers for using reverse mortgages. It's a classic case of being staggeringly asset rich but with very little cash and with interest rates at record lows and asset (house) prices at record highs...


----------



## dyna (9 July 2021)

In Auscap fund manager, Tim Carleton's video, he says the 180% household debt to income ratio, high by international standards, misses something very important. Last year's recession, unusually, showed disposable income grew at its greatest rate in a decade. More was saved  in the final 9 months of last year than in the previous three and a half years. Money has poured into mortgage off-set accounts, so that, in net terms, household debt has fallen back to 2004 levels, when the RBA's next-to-nothing cash rate was then over 5 % and mortgage rates were four times higher at about 8 %.
Similarly, ANZ economist Richard Yetsenga says consumer debt servicing costs are their lowest since 1985.


----------



## MovingAverage (9 July 2021)

dyna said:


> In Auscap fund manager, Tim Carleton's video, he says the 180% household debt to income ratio, high by international standards, misses something very important. Last year's recession, unusually, showed disposable income grew at its greatest rate in a decade. More was saved  in the final 9 months of last year than in the previous three and a half years. Money has poured into mortgage off-set accounts, so that, in net terms, household debt has fallen back to 2004 levels, when the RBA's next-to-nothing cash rate was then over 5 % and mortgage rates were four times higher at about 8 %.
> Similarly, ANZ economist Richard Yetsenga says consumer debt servicing costs are their lowest since 1985.



This is a very good point. Not sure if you remember but at Frydenburg's first financial outlook conference post the March meltdown this is the very point he was making--basically people were saving a whole lot more than they expected despite all the extra cash they were pumping into economy. Frydenburg and Co. were basically hoping all that extra disposable cash would be spent on stuff to keep the economy going but he admitted they didn't think people would be using a lot of their disposable cash to paydown personal debt. I guess the general public knows high interest rates will come again and using the current environment to shift that debt.


----------



## qldfrog (9 July 2021)

MovingAverage said:


> This is a very good point. Not sure if you remember but at Frydenburg's first financial outlook conference post the March meltdown this is the very point he was making--basically people were saving a whole lot more than they expected despite all the extra cash they were pumping into economy. Frydenburg and Co. were basically hoping all that extra disposable cash would be spent on stuff to keep the economy going but he admitted they didn't think people would be using a lot of their disposable cash to paydown personal debt. I guess the general public knows high interest rates will come again and using the current environment to shift that debt.



Funny how being actually responsible borrower is seen as bad for the economy.i still believe it is good, but obviously, if our rba decides that AUD is worth nothing, paying debt is just a waste of time and opportunities


----------



## MovingAverage (9 July 2021)

qldfrog said:


> Funny how being actually responsible borrower is seen as bad for the economy.i still believe it is good, but obviously, if our rba decides that AUD is worth nothing, paying debt is just a waste of time and opportunities



Yeah, all those economists chasing growth need everyone to spend their hard earned cash on stuff. Saving ain’t good for economic growth that’s for sure


----------



## wayneL (9 July 2021)

MovingAverage said:


> Yeah, all those economists chasing growth need everyone to spend their hard earned cash on stuff. Saving ain’t good for economic growth that’s for sure



In aggregate may be different from on an individual basis, no?


----------



## wayneL (9 July 2021)

wayneL said:


> In aggregate may be different from on an individual basis, no?



IOW, should one be a sheep or an eagle?

Sheep go where the rest of the sheep go, eagles go where there is food.


----------



## MovingAverage (9 July 2021)

wayneL said:


> In aggregate may be different from on an individual basis, no?




Yup, aggregate


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## MovingAverage (9 July 2021)

wayneL said:


> Sheep go where the rest of the sheep go, eagles go where there is food.



This is no doubt the logic that underpins the "buy on fear sell on greed" approach


----------



## dyna (10 July 2021)

Of the 106,500 houses sold last month in both Sydney and Melbourne, 61 % cost more than $800,000.  64% of units sold for less . Dodgy developers in this country and news of buildings falling down in the middle of the night, overseas, will probably lead to further falls in both cities apartment values. Rents have not fallen, though.
Sydney unit yields are 3.55% ( 2.9% for houses ) Melbourne unit yields are 3.95% ( 3.09% for houses)


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## qldfrog (10 July 2021)

dyna said:


> Of the 106,500 houses sold last month in both Sydney and Melbourne, 61 % cost more than $800,000.  64% of units sold for less . Dodgy developers in this country and news of buildings falling down in the middle of the night, overseas, will probably lead to further falls in both cities apartment values. Rents have not fallen, though.
> Sydney unit yields are 3.55% ( 2.9% for houses ) Melbourne unit yields are 3.95% ( 3.09% for houses)



These yield being i assume before costs: BC,rates,insurances maybe even waters and depreciation..these are loss making Investments only making sense with CG and negative gearIng


----------



## Warr87 (10 July 2021)

qldfrog said:


> These yield being i assume before costs: BC,rates,insurances maybe even waters and depreciation..these are loss making Investments only making sense with CG and negative gearIng




i never understood how people could tout how much they made (doubled in 10yrs etc), despite leaving out the obvious wear/tear, repears, rates, etc., that come with owning the home (making the already low CAGR slightly lower). i guess it also comes down to understanding of risk. i see that as a riskier investment as if i needed to sell the house its not always something you can sell immediately, unlike shares.

also, i don't own property (yet) but I'm not sure I could invest in something that only returns me 2.9 -3.95 % yield.

but i'm probably missing something, or my expectations of returns are skewed because of my trading.


----------



## MovingAverage (10 July 2021)

Warr87 said:


> also, i don't own property (yet) but I'm not sure I could invest in something that only returns me 2.9 -3.95 % yield.



I get the impression that a lot of residential property investors aren't chancing a positive yield on rent. I suspect a lot are happy with negative yield for the immediate tax benefits and longer term they are chasing capital growth.

But for commercial property, historically that has been chased for it's positive yield on rent but the downside is the lack of capital growth.


----------



## Warr87 (10 July 2021)

MovingAverage said:


> I get the impression that a lot of residential property investors aren't chancing a positive yield on rent. I suspect a lot are happy with negative yield for the immediate tax benefits and longer term they are chasing capital growth.
> 
> But for commercial property, historically that has been chased for it's positive yield on rent but the downside is the lack of capital growth.



i personally have a problem with purposefully putting myself into a debt in order to pay less tax. it just don't make sense to me. obviously works in some cases, but idelogically it doesn't sit well with me. people have, and will continue, to make money off that way so more power to them I guess. i sometimes have to remind myself that I am much more cash positive than most, but that is obviously driven by my stance on risk/debt.

may also be why I am more favourable to commerical property for future investments given your characterisation. (though initial capital needed is also greater).


----------



## MovingAverage (10 July 2021)

Warr87 said:


> i personally have a problem with purposefully putting myself into a debt in order to pay less tax. it just don't make sense to me. obviously works in some cases, but idelogically it doesn't sit well with me. people have, and will continue, to make money off that way so more power to them I guess. i sometimes have to remind myself that I am much more cash positive than most, but that is obviously driven by my stance on risk/debt.
> 
> may also be why I am more favourable to commerical property for future investments given your characterisation. (though initial capital needed is also greater).



A lot of SMSF's hold commercial property for that reason...chasing positive cash flow with better yields. While historically it has had reasonable yield like a lot of assets in recent times I think the yields on commercial properties are under downward pressure.


----------



## Warr87 (10 July 2021)

MovingAverage said:


> A lot of SMSF's hold commercial property for that reason...chasing positive cash flow with better yields. While historically it has had reasonable yield like a lot of assets in recent times I think the yields on commercial properties are under downward pressure.



i found a good calculator for property investment and found that i would need approx 40% down to be cash positive. i used scenarios like higher interest than now, and less than ideal occupancy level. though I think better yield's than above. kind of a worst-case scenario. that's a large amount of money around any major city.

holding property's in a SMSF is definitely one of my future investment strategies. i'm not against property investment but i haven't been comfortable with the climate of investment properties for a while.


----------



## MovingAverage (10 July 2021)

Warr87 said:


> i found a good calculator for property investment and found that i would need approx 40% down to be cash positive. i used scenarios like higher interest than now, and less than ideal occupancy level. though I think better yield's than above. kind of a worst-case scenario. that's a large amount of money around any major city.
> 
> holding property's in a SMSF is definitely one of my future investment strategies. i'm not against property investment but i haven't been comfortable with the climate of investment properties for a while.



yup, best to plan for the worst and hope for the best.


----------



## qldfrog (11 July 2021)

MovingAverage said:


> yup, best to plan for the worst and hope for the best.



With the current destruction of "value of money" not always mirrored in inflation figures, i believe RE allow you to access a relatively stable asset with limited supply: land.
So for houses, industrial warehouses, land and agricultural land, you get a relative safety...but you are non mobile and at risk of taxes/ Asset seizure.


----------



## MovingAverage (11 July 2021)

qldfrog said:


> but you are non mobile and at risk of taxes/ Asset seizure.




and at the risk of the ALP 😂


----------



## Warr87 (11 July 2021)

qldfrog said:


> With the current destruction of "value of money" not always mirrored in inflation figures, i believe RE allow you to access a relatively stable asset with limited supply: land.
> So for houses, industrial warehouses, land and agricultural land, you get a relative safety...but you are non mobile and at risk of taxes/ Asset seizure.



well the stability of having a piece of land you own is certainly more tangible than owning some shares. completely owning your own property is definitely something that would add stability to your life (whenever you eventually pay it off).


----------



## qldfrog (11 July 2021)

MovingAverage said:


> and at the risk of the ALP 😂



Same same🙁


----------



## MovingAverage (11 July 2021)

qldfrog said:


> Same same🙁



I was only being a smart arse by my ref to the ALP—right, left and centre, I think they all want to stick their hand in the cookie jar


----------



## qldfrog (11 July 2021)

MovingAverage said:


> I was only being a smart arse by my ref to the ALP—right, left and centre, I think they all want to stick their hand in the cookie jar



But usually the alp more,as they like punitive taxation. But most of the western parties moderate right and left follow a socialist agenda of bigger and bigger government,reduced rights and annihilation of middle class to benefit the empowered elite.


----------



## sptrawler (13 July 2021)

Albo selling off one of his investment properties, maybe a sign that things are getting toppy?








						Labor leader Anthony Albanese puts Marrickville investment property on the market - realestate.com.au
					

Federal Labor leader Anthony Albanese is set for an eye-watering payday as he takes advantage of Sydney’s booming housing market by listing one of his investment properties.



					www.realestate.com.au


----------



## dyna (13 July 2021)

That will be the ex wanting out. Probably not on the top marginal tax bracket, like the shadow P.M....  Neg- geared to the max. Super at pollies' rates of 15% . Go Anthony!


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## over9k (13 July 2021)

Shadow P.M?


----------



## basilio (13 July 2021)

Now this is a house.. Check out the $1.3 m (US)  TV that is part of the outside entertainment area.








						Stunning new mega-mansion in the Hamptons comes with 2.5m-tall $1.3m TV - realestate.com.au
					

This newly build mega-mansion has a home theatre, gym and nine bedrooms — but the crown jewel is the giant outdoor TV which will make you the favourite host for any sporting final parties.



					www.realestate.com.au


----------



## gartley (13 July 2021)

sptrawler said:


> Albo selling off one of his investment properties, maybe a sign that things are getting toppy?
> 
> 
> 
> ...



Maybe RBA chief whispering to him about the real future of IR.....


----------



## wayneL (13 July 2021)

gartley said:


> Maybe RBA chief whispering to him about the real future of IR.....



Perhaps he realises he should own nothing and be happy?


----------



## over9k (13 July 2021)

gartley said:


> Maybe RBA chief whispering to him about the real future of IR.....



Doubtful. There's too much debt and too many incoming expenses for them to raise rates. 

They'll let inflation run hot, mark my words.


----------



## wayneL (13 July 2021)

over9k said:


> Doubtful. There's too much debt and too many incoming expenses for them to raise rates.
> 
> They'll let inflation run hot, mark my words.



I agree. There is no other way to diminished the debt without sparking civil unrest.

Contrary to that are pretty convincing arguments about transitory inflation followed by a deflationary bust.

Probably a similar result for the average schmuck who doesn't know what the hell is going on, though the speed of which may differ.

I guess the defining factor is how much the central Banks can control proceedings?


----------



## over9k (13 July 2021)

Yeah, that's the thing - let inflation run hot, destroy the purchasing power of wages etc etc and while you might have a recession in real terms, you avoid it on paper. 

You can also then just let bracket creep do its thing as your voterbase (retired boomers) no longer care about income tax rates. 

Your only hot potato politically is cutting government spending but you can field that pretty easily by going "oh well I know that other thing is important but the healthcare system is the most important" and you're basically fine. 


"Elegant" solution don't you think?


----------



## sptrawler (13 July 2021)

over9k said:


> Yeah, that's the thing - let inflation run hot, destroy the purchasing power of wages etc etc and while you might have a recession in real terms, you avoid it on paper.
> 
> You can also then just let bracket creep do its thing as your voterbase (retired boomers) no longer care about income tax rates.



The retired boomers will be hurt the most with inflation, most will be relying on the pension and that doesn't move much. The last jump in pension rates, came with the increased retirement age, so from a Government point of view rampant inflation will be good.
The result will be more boomers will have to reverse mortgage to enjoy a reasonable retirement, as most boomers have minimal super, that in turn will reduce the amount of intergenerational wealth transfer which both major parties have been concerned about for quite some time.
It is hard enough to get people to work already, if they inherit properties worth millions, they will all retire early. 
It will be either reverse mortgage, or a re introduced inheritance tax IMO.
Then who collects the garbage.


----------



## wayneL (13 July 2021)

over9k said:


> Yeah, that's the thing - let inflation run hot, destroy the purchasing power of wages etc etc and while you might have a recession in real terms, you avoid it on paper.
> 
> You can also then just let bracket creep do its thing as your voterbase (retired boomers) no longer care about income tax rates.
> 
> ...



Elegent, but cynical.


----------



## over9k (13 July 2021)

sptrawler said:


> The retired boomers will be hurt the most with inflation, most will be relying on the pension and that doesn't move much. The last jump in pension rates, came with the increased retirement age, so from a Government point of view rampant inflation will be good.
> The result will be more boomers will have to reverse mortgage to enjoy a reasonable retirement, as most boomers have minimal super, that in turn will reduce the amount of intergenerational wealth transfer which both major parties have been concerned about for quite some time.
> It is hard enough to get people to work already, if they inherit properties worth millions, they will all retire early.
> It will be either reverse mortgage, or a re introduced inheritance tax IMO.
> Then who collects the garbage.



Depends on which ones obviously, but I know more than one with an IP that's to fund their retirement.


----------



## sptrawler (13 July 2021)

over9k said:


> Depends on which ones obviously, but I know more than one with an IP that's to fund their retirement.



Most people I know are from a blue collar background and none have an IP, most will have to use some of their super to pay off their PPR, some are hoping on an inheritance to get a PPR as their parents are very elderly.


----------



## over9k (13 July 2021)

sptrawler said:


> Most people I know are from a blue collar background and none have an IP, most will have to use some of their super to pay off their PPR, some are hoping on an inheritance to get a PPR as their parents are very elderly.



Mmm my parents are from opposite ends of society (oddest couple I've ever known but different discussion).

The upper-middle boomers all have at least one, some have 2-3. And a holiday home/shack they can sell if they get really desperate.

That's what my grandparents did - sold the family shack for 5x what they bought it for and spent the money on caravan trips. My grandmother still had 100k of it left when she died a decade after my grandfather did.


----------



## gartley (13 July 2021)

over9k said:


> Doubtful. There's too much debt and too many incoming expenses for them to raise rates.
> 
> They'll let inflation run hot, mark my words.



They can only do so much.  Ultimately what happens in the long term will be dictated by the global debt markets.


----------



## over9k (13 July 2021)

gartley said:


> They can only do so much.  Ultimately what happens in the long term will be dictated by the global debt markets.



This is worth a watch:


----------



## sptrawler (13 July 2021)

over9k said:


> Mmm my parents are from opposite ends of society (oddest couple I've ever known but different discussion).
> 
> The upper-middle boomers all have at least one, some have 2-3. And a holiday home/shack they can sell if they get really desperate.
> 
> That's what my grandparents did - sold the family shack for 5x what they bought it for and spent the money on caravan trips. My grandmother still had 100k of it left when she died a decade after my grandfather did.



A lot depends on where the family is located, if say for example a family live in the Latrobe Valley and their parents lived and worked there, it is probable that they won't be in the same situation as a family who's origins are in Sydney or Melbourne.
The family house in the Latrobe valley may not have appreciated much, similar to what happens in most country towns which are built around cyclical economic fortunes or a dying industry.
That is where drawing a conclusion, built on the most fortunate circumstances, seldom is reflective of the population as a whole.
Some families who have lived for generations in the goldfields, have seen their wealth, rise and fall numerous times, as with most mining and farming communities.


----------



## over9k (13 July 2021)

wayneL said:


> I agree. There is no other way to diminished the debt without sparking civil unrest.
> 
> Contrary to that are pretty convincing arguments about transitory inflation followed by a deflationary bust.
> 
> ...



And here it is, your recession in real terms that is avoided on paper: 




If the political opposition weren't so incompetent they'd be able to absolutely crucify them with this kind of stuff. But nope.


----------



## gartley (13 July 2021)

over9k said:


> This is worth a watch:




Thanks. Seen it, don't follow macro guys much but Ray Dalio is simply the best


----------



## Gunnerguy (13 July 2021)

over9k said:


> Mmm my parents are from opposite ends of society (oddest couple I've ever known but different discussion).
> 
> The upper-middle boomers all have at least one, some have 2-3. And a holiday home/shack they can sell if they get really desperate.
> 
> That's what my grandparents did - sold the family shack for 5x what they bought it for and spent the money on caravan trips. My grandmother still had 100k of it left when she died a decade after my grandfather did.



You lost me there in the second paragraph ..... interpreted as, if I read correctly, ALL middle class boomers have 2 additional properties in addition to their PPR. That’s simply not true, I’m a ‘ middle class boomer’ and I don’t have 2 additional properties to my PPR. For all your contributions and good/strong discussions, your argument goes down in my eyes with that statement when I know it’s incorrect. I don’t have 2 additional properties. 
I enjoy reading your contributions and they are very thought provoking, however when ‘facts’ presented are known not to be fact, unfortunately your arguments diminish in their validity, which is a pity as generally they seem reasonable.
Gunnerguy
(please play nicely children, robust and none demeaning discussions are great)


----------



## over9k (13 July 2021)

Gunnerguy said:


> You lost me there in the second paragraph ..... interpreted as, if I read correctly, ALL middle class boomers have 2 additional properties in addition to their PPR. That’s simply not true, I’m a ‘ middle class boomer’ and I don’t have 2 additional properties to my PPR. For all your contributions and good/strong discussions, your argument goes down in my eyes with that statement when I know it’s incorrect. I don’t have 2 additional properties.
> I enjoy reading your contributions and they are very thought provoking, however when ‘facts’ presented are known not to be fact, unfortunately your arguments diminish in their validity, which is a pity as generally they seem reasonable.
> Gunnerguy
> (please play nicely children, robust and none demeaning discussions are great)



Please re-read. I said upper-middle. And I don't know a single upper-middle boomer that doesn't have at least one IP. Not one. My parents are currently looking at getting a fourth. 


There's also data out there on this kind of stuff, particularly related to negative gearing.


----------



## sptrawler (13 July 2021)

over9k said:


> My parents are currently looking at getting a fourth.



Well IMO if they live in Sydney, as you do, that would make them wealthy not upper middle class.
It would suggest they own their PPR and three investment properties, which would indicate that is at least in the $4m to $5m ballpark with the option to buy a fourth investment property, IMO that could hardly be classed as middle class.
Not many people in country towns, could ever hope to get any where near that asset base, yet they are included in the 'middle class'.
As I keep trying to explain, comparing Sydney/Melbourne property with the rest of Australia isn't comparing apples with apples.

_








						The rich, the comfortable middle and the rest: Australia’s wealth and income ladder revealed
					

New research compares the upper, middle and lower rungs of wealth and income.




					www.smh.com.au
				



From the article:
The richest tenth of households owns almost half Australia’s private wealth followed by a “comfortable middle" of 30 per cent with 38 per cent, leaving the lowest 60 per cent - who tend to be younger – with 16 per cent of household wealth.

The average net worth of the richest ten per cent reached $4.75 million in 2017-18, underpinned by substantial property assets and a disproportionate share of stocks and business investments. That group owns 46 per cent of household wealth._

The next wealth rung – the comfortable middle – had average household net worth of just under $1.3 million. About half of that group’s wealth is tied up in their own home although investment properties (with a net value of $104,000 on average) and superannuation also make substantial contributions.

The bottom 60 per cent of Australian households had average wealth of $277,000, with owner-occupied housing and superannuation the biggest assets.

The average wealth in households with a reference person aged 65 years and over was $1.38 million - 1.5 times that of younger age groups (with an average of $904,000).

Income is more equally distributed than wealth. The best-paid 20 per cent of households had an average pre-tax income of just under $300,000 a year, the middle 20 per cent $116,000, and the bottom 20 per cent $41,000.


----------



## Smurf1976 (13 July 2021)

over9k said:


> You can also then just let bracket creep do its thing as your voterbase (retired boomers) no longer care about income tax rates.



They may not care about income tax rates but they most certainly will care about living costs.

Not so much house prices but definitely things like food, energy, insurances, rates, car rego and so on if those go up then it has a very real impact on anyone not having a high income since they're basically unavoidable expenses without crippling someone's lifestyle.


----------



## over9k (14 July 2021)

Smurf1976 said:


> They may not care about income tax rates but they most certainly will care about living costs.
> 
> Not so much house prices but definitely things like food, energy, insurances, rates, car rego and so on if those go up then it has a very real impact on anyone not having a high income since they're basically unavoidable expenses without crippling someone's lifestyle.



Interest rates dictate p/e which dictates asset prices and retirees by definition live off of assets.

They'll be fine.


----------



## over9k (14 July 2021)

sptrawler said:


> Well IMO if they live in Sydney, as you do, that would make them wealthy not upper middle class.
> It would suggest they own their PPR and three investment properties, which would indicate that is at least in the $4m to $5m ballpark with the option to buy a fourth investment property, IMO that could hardly be classed as middle class.
> Not many people in country towns, could ever hope to get any where near that asset base, yet they are included in the 'middle class'.
> As I keep trying to explain, comparing Sydney/Melbourne property with the rest of Australia isn't comparing apples with apples.
> ...



Fair point, but I did say upper-middle. 

In my mind, upper-middle is anyone in the higher earning professions - engineers, doctors, lawyers, tax accountants, uni prof's, senior public servants etc that are doing well for themselves. 

_All _the ones I know in that group from gen X onwards have at least one IP.


----------



## sptrawler (14 July 2021)

over9k said:


> Fair point, but I did say upper-middle.
> 
> In my mind, upper-middle is anyone in the higher earning professions - engineers, doctors, lawyers, tax accountants, uni prof's, senior public servants etc that are doing well for themselves.
> 
> _All _the ones I know in that group from gen X onwards have at least one IP.



That is what I keep trying to show you, using Sydney as a guide to how the rest of Australia lives distorts the reality, a house in Sydney can probably be used as collateral for quite a big loan, which then has a compounding effect.
Most country towns in W.A have an average price of about $150k to $400k so it is hard to gear a large loan against that.
Your idea of 'upper middle class', in reality is wealthy, in the average 'middle class' Australians eyes.
An average house in Sydney, would probably buy a motel, in a lot of country towns.


----------



## over9k (14 July 2021)

sptrawler said:


> That is what I keep trying to show you, using Sydney as a guide to how the rest of Australia lives distorts the reality, a house in Sydney can probably be used as collateral for quite a big loan, which then has a compounding effect.
> Most country towns in W.A have an average price of about $150k to $400k so it is hard to gear a large loan against that.
> Your idea of 'upper middle class', in reality is wealthy, in the average 'middle class' Australians eyes.
> An average house in Sydney, would probably buy a motel, in a lot of country towns.



Sure but we have data on incomes, house prices etc etc. 

Nobody considers a 200k house in a country town in the middle of nowhere as middle class. 

A very simple example is to look at what the real estate dev's are building & selling as "middle-income". That's about the 400-500k mark last I checked.


----------



## sptrawler (14 July 2021)

I guess it is what it is, if $3 to $4 million is middle class, that makes most tradespeople on wages, very lower class.

As for data, I posted that about 5 posts ago, your upper middle class is actually the top 10% of wealth in Australia, like I said they are wealthy.

The middle class has assets of about $1.3m. 
The top 10% have average assets of about $4.5m give or take, the uber rich are included in that statistic. 
So lets say the top 10% start at about $2m and top out at Gina, Twiggy, Packer etc in the $billions, where does upper middle class fit? Somewhere between rich and wishing they had more?


----------



## sptrawler (14 July 2021)

over9k said:


> Sure but we have data on incomes, house prices etc etc.
> 
> Nobody considers a 200k house in a country town in the middle of nowhere as middle class.
> 
> *A very simple example is to look at what the real estate dev's are building & selling as "middle-income". That's about the 400-500k mark last I checked.*



And the middle income family wage is about $120k, that makes the "middle income" house and land package, about 4 times the average wage.
But if someone wants to relocate to a country town, say a teacher, nurse, sparkie etc, they could buy a house for closer to $200k and enjoy the increase in disposable income, life is about choices and compromises.
All my siblings live in country towns (brother and two sisters), their houses a much bigger than mine and nicer, but mine is worth more due to its proximity to the city. 
They enjoy their choice, I enjoy mine, life isn't a competition and when it is over we all end up equal.


----------



## over9k (14 July 2021)

sptrawler said:


> And the middle income family wage is about $120k, that makes the "middle income" house and land package, about 4 times the average wage.
> But if someone wants to relocate to a country town, say a teacher, nurse, sparkie etc, they could buy a house for closer to $200k and enjoy the increase in disposable income, life is about choices and compromises.
> All my siblings live in country towns (brother and two sisters), their houses a much bigger than mine and nicer, but mine is worth more due to its proximity to the city.
> They enjoy their choice, I enjoy mine, life isn't a competition and when it is over we all end up equal.



No, median wage is around 78k last I checked. 

And that's for the workforce as a whole, not people in their late 20's looking to buy a place/start a family. 

Some jobs exist in country towns, many do not.


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## sptrawler (14 July 2021)

over9k said:


> No, median wage is around 78k last I checked.
> 
> And that's for the workforce as a whole, not people in their late 20's looking to buy a place/start a family.
> 
> Some jobs exist in country towns, many do not.




It may help if you read the article below, which was posted a few posts back.
Middle class is middle income earners, not median income earners, there are a lot more lower paid than higher paid workers e.g retail sales.



sptrawler said:


> _
> 
> 
> 
> ...


----------



## over9k (14 July 2021)

Median is by definition the point at which half are earning more and half are earning less, so, the middle.

And again, there's no breakdown by age, family status and so on. It's just households, not young households trying to buy a house/start a family.

We DO have data on how many landlords there are in this country, number of negatively geared properties and so on. Top two google results:









						Negatively geared landlords lowest in 14 years
					

The proportion of Australia's 2.2 milion landlords who are negatively geared fell to 60 per cent in fiscal 2017, the lowest level since 2003, the latest Tax Office statistics show.




					www.afr.com
				




https://www.aph.gov.au/About_Parlia...brary/FlagPost/2018/December/Negative_gearing


Both of those are a few years old now but 2.2 million landlords (so there's obviously going to be more than 2.2 million IP's) is a LOT.

If there were 10 million houses in the country at the time: https://quickstats.censusdata.abs.gov.au/census_services/getproduct/census/2016/quickstat/036

Then 22% (as a bare minimum figure) of the existing housing stock being "investment properties" is absolutely ridiculous. Considering how many own more than one, I think it fair to say that a full quarter of the housing stock is now being used to bleed the rest of the populace dry. 



Home ownership rates are dropping for a reason.


----------



## over9k (14 July 2021)

Alright so here's something from a piece I wrote for uni for one of my masters a few years ago:




*What’s the issue?*

There is no metric by which Australian house prices can not be measured to be at their highest level in history:

Final dollar figure:




Multiples of income:








Multiples of rent:




Multiples of GDP per person:





Or versus the inflation rate (Consumer price index):







*What’s the consequence? *

Home ownership rates have declined for the first time in nearly two generations, especially so for the young and the poor:







*Government response(s): *

The current Liberal government has established the National Housing Finance and Investment Corporation. How it came into being and what its purpose and plans are as follows:

_On 7 January 2016, the Australian Government announced the establishment of an Affordable Housing Working Group (‘the Working Group’) following a request from Treasurers at the CFFR meeting in October 2015 for further work on housing affordability. 

The Working Group focused primarily on investigating ways to boost the supply of affordable rental housing through innovative financing models… 

The Working Group’s report, Innovative Financing Models to Improve the Supply of Affordable Housing, recommended the establishment of a bond aggregator taskforce to design a proof of concept for a bond aggregator model to provide for greater private and institutional investment in affordable housing… 

In the 2017-18 Budget, the Australian Government announced the establishment of the NHFIC to operate a bond aggregator and the NHIF… *The $1 billion NHIF will help to finance critical infrastructure to increase the stock of housing, particularly affordable housing, and to bring forward the supply of such housing.*_

(NHFIC Explanatory Memorandum).

In plain English: The government has set up a corporation with the purpose of building “affordable housing” and seeks to raise a billion dollars in funding from investors with which to do it.



*Critique of the government response: *

Whilst a billion dollars may sound like a lot of money (and it is), it is a drop in the ocean compared to the total value of Australia’s housing stock. A billion dollars would buy less than 900 houses at Sydney’s median house price.

The key problem with the government’s policy is that it _“Focused primarily on investigating ways to boost the supply of affordable rental housing through innovative financing models”. _

There are two premises in that statement: Firstly that the problem is a supply-side one, and secondly that it is caused through the inability of affordable housing suppliers to raise the necessary funds to increase said supply.

The reality is that this is completely false. Real estate remains one of the lowest-risk of any investments and private housing investors can, even now, borrow at a 95% leverage ratio (19x savings) to invest in housing from any number of private lenders (RAMS financial). A real estate investment is literally the easiest class of investment to finance – NO other investment class allows such high leverage ratios. None.

Moreover, *the governmental response is one which only focuses on attempting to deal with the symptom and does not lend a single syllable to the actual cause of this problem. 





Analysis of the issue:*

A cursory glance at the graphs shown at the start of this submission will show a divergence point of the data by all metrics in approximately 1999, a levelling out in 2004, and then a return to that path of divergence from that point onwards.

The question therefore becomes: Why did this happen? Why did the data diverge so much in 1999 and then again when it looked like levelling out in 2004?

The answer is actually threefold:

Firstly, in 1999 the then Prime Minister John Howard halved the tax rate on capital gains of asset sales from 30% to 15%. What this effectively did was increase the yield on a capital gain, and the prices of assets such as housing were bid up to such a level as to return it to its previous level.

Every government since Howard has retained this discount.

Secondly, 2004 saw Howard increase immigration levels to record levels:




And as you can see, every government since Howard has continued to run enormous immigration levels, at some points at up to *three times* previous *record *levels.

This isn’t a problem if infrastructure is built in congruence with the population increase, but it hasn’t been.

Chief Economist of _The Australia Institute, _Richard Denniss, explains what has happened as follows:

_“Since the Sydney Olympics, Australia’s population has grown by the population of Sydney. Australia is one of the fastest growing countries in the developed world and our infrastructure isn’t keeping up. It isn’t keeping up now and hasn’t kept up for the last 10 years, and it’s not budgeted to keep up in the next 10. What politicians are doing is every year they announce record spending on this and a new that, but what they don’t point out is that on a per person basis, per person we are spending less on health, per person we’ve got less access to transport, per person the reason the queues in the hospital keeps getting longer is because we are not building hospitals as fast as we are growing our population. *They all know it, they just don’t say it*”. _(Dennis, 2015).

What this does is place _land _that is close to existing services at an absolute premium, and the data bears it out:




As you can see, it is not a lack of trade qualified labour driving up house price construction, it is the cost of the _land _that has tripled in the past 20 years that is actually the chief contributor to the increase in housing costs.

This lack of infrastructure spending cannot be blamed on state governments either:

_“Because of the vertical fiscal imbalances embedded in Australia’s federal system, the Commonwealth collects 82% of total tax revenue versus the state’s and territories’ 15%, and local government’s 3%. This has left the states critically starved of funds to cope with the population influx foisted upon them by the federal government, which controls immigration policy”. _(Van Onselen, 2018).



Finally, there is actually some truth to the notion that the Australian government needs to build more social housing.

The thing is that the proposed billion dollars to be spent on building it via the NHIF that this submission is for is woefully inadequate.

Saul Eslake’s submission to the senate in 2013 explains why:

_Between 1947 and 1961, the housing stock increased by 50% -compared with a 41% increase in Australia’s population over this period. The Commonwealth and State Governments directly contributed 221,700, or 24% of the total increase in the housing stock over this period… 

During this period, the home ownership rate increased from 53.4% to 70.3% -the largest increase in home ownership in Australia’s history.

Between 1961 and 1976, the housing stock increased by a further 46% -again outstripping the 33% increase in Australia’s population over this period. During this period, the Commonwealth and State Governments directly added a further 299,000 dwellings to the housing stock, equivalent to 23% of the increase in the total housing stock over this period.

During this period, the home ownership rate fluctuated between 68% and 71%, but remained at a high level by international standards.

Even between 1976 and 1991, the housing stock increased at a much faster rate – 41% than the population – 23% -although only 9% of dwelling completions during this period were by the public sector.

But the relationship between growth in the housing stock and population growth began to change after the early 1990s. Between 1991 and 2001, Australia’s population grew by 11.5% , while the housing stock grew by only 18.3% -less than 9 pc points more than the population. *And between 2001 and 2011, while the population grew by 15.9%, the housing stock grew by only 15.2%. That is, over the past decade, the housing stock has grown at a slower rate than the population – for the first time since the end of World War II.* _(Eslake, 2013).

What this shows us is that it took governments providing approximately ¼ of the housing stock in a given period in order to actually increase home ownership rates.

Australia currently builds approximately 200,000 houses per year (HIA, 2015). This means that the government would need to build approximately 70,000 homes per year (7/27=0.259) in order to contribute ¼ of the supply.

70,000 x sydney’s median house price is nearly 90 billion dollars.



*This is approximately two and a half times the entire national defence budget.






What about negative gearing? *

Negative gearing is the act of running an investment at a net loss (in this case, rental income after loan repayments, rates, so on and so forth) and claiming this loss back against your taxable income.

Negative gearing is not actually a principal contributor to the increase in housing affordability of the past two decades – the ability to claim rental losses back against taxable income has been possible since the 1980’s. This is a very widespread misconception.



*Proposed solutions: *

In order to understand what a possible solution could be, we must first understand what is NOT a solution.

As demonstrated in the previous section, a return to the social housing policies of decades past would require an almost 90 billion dollar outlay.

Every year.



Infrastructure investment is also not feasible for the same reason – Australia’s population is currently increasing by almost 2% year on year (400,000 people) between births + immigration levels (ABS).

*This would require the building of a new city the size of Canberra every year. *



Despite the fact that negative gearing is not a _principal _contributor, its abolition would actually improve housing affordability and the government’s bottom line.

Proponents of negative gearing such as Treasurer Scott Morrison state that the majority of people who take advantage of negative gearing are “normal” people “like police and nurses” (Morrison, 2018).

This is true, the majority of people who “negatively gear” earn less than $80,000 per year.

However the majority of the BENEFIT of negative gearing has been shown by John Daley, now head of the Grattan Institute, to go to the *uppermost echelons* of the income hierarchy and this looks as follows:






However negative gearing was calculated by May et al to “only” cost the budget approximately 3 billion dollars last financial year (May, 2017).

Research commissioned by the Australian Labor Party shows that the abolition of negative gearing combined with the abolition of the capital gains tax discount would net the federal budget approximately 10 billion dollars per year (ALP.org.au, 2018).

There is obviously no way to know for sure exactly what house prices would return to should these two policies be adopted, but should house prices return to their (likely) pre-2000 trajectory levels then this would result in an approximate *halving* of current house prices.



The most obvious solution to reduce pressure on Australia’s housing stock is to simply reduce the enormous increase in demand for it. Van Onselen has completed significant work demonstrating the enormous pressure Australia’s three-times-previous records immigration intake is placing on the existing housing stock (2015, 2017, 2018, 2018, 2018, 2018) and has even made personal submissions to senate inquiries on this matter, and other voices such as Dick Smith are now self-funding large scale campaigns in order to attempt to raise awareness of this fact.

However, with neither party having a policy to even so much as reduce immigration, let alone reduce it to zero and allow the country a “breather” and infrastructure spending etc to catch up, the political likelihood of this happening is virtually non-existent, despite how depressingly easy it would be to do.





The principal obstacle to improving Australian house price affordability is the sheer scale of the problem. To build the necessary infrastructure and social housing stock that improved home ownership rates in the manner in which they did in the past would literally be a several _trillion _dollar investment.

Governmental programs and policies promising a billion dollars in social housing funds, or abolishing negative gearing (to raise three billion dollars) therefore become drops in the metaphorical ocean when we start talking about a problem of this magnitude.

*This is a problem that is simply too big to be solved with a supply-side solution, not least of all because it is not being caused by a supply side problem. It is an artificially created demand side problem, namely, immigration. 


If you think enriching property owners at the expense of everyone else is not the very purpose of Australia's immigration policy, you're an idiot.  *



Like John Howard infamously said:

"Nobody's ever complained to me about *their *house price going up".


----------



## againsthegrain (14 July 2021)

over9k said:


> Alright so here's something from a piece I wrote for uni for one of my masters a few years ago:
> 
> 
> 
> ...




I would vote 4 u if that was part of your campaign... maybe make Australia great again or something along those lines


----------



## over9k (14 July 2021)

To be honest, the hard part is convincing the leftards that they're getting played. In their minds, they're too smart for anyone to get the better of. 

I mean most people would have some kind of cause for pause if 80% of their political positions were shared by goldman sachs, but not these people. The lack of self awareness is stupefying.


----------



## Smurf1976 (14 July 2021)

So far as governments and social housing is concerned, I've no idea what the other states did but decades ago Tasmania had what was effectively a government-owned building company.

So they employed tradesmen and so on and the purpose was to build public housing. With the workers employed directly, all the houses built to the same design at any given time and all materials bought in bulk the cost was kept down.  It was a very production line sort of approach which brings efficiencies.

The houses were built solidly, they haven't fallen down or anything like that, and it all seemed to work at the time financially.

A different era back then though.


----------



## sptrawler (14 July 2021)

Smurf1976 said:


> So far as governments and social housing is concerned, I've no idea what the other states did but decades ago Tasmania had what was effectively a government-owned building company.
> 
> So they employed tradesmen and so on and the purpose was to build public housing. With the workers employed directly, all the houses built to the same design at any given time and all materials bought in bulk the cost was kept down.  It was a very production line sort of approach which brings efficiencies.
> 
> ...



W.A was exactly the same in the 60's and 70's, most people lived in a state housing commission home, then they started selling them off.
Now we have a mess, as usual, when a perfectly well run Government essential service is farmed out just so that a politician can't be blamed for having a crap portfolio.
Now the go to answer is, that is a contract service, contact the private operator, we only supply the bond and rental assistance, not my problem. 🤣


----------



## explod (14 July 2021)

Smurf1976 said:


> So far as governments and social housing is concerned, I've no idea what the other states did but decades ago Tasmania had what was effectively a government-owned building company.
> 
> So they employed tradesmen and so on and the purpose was to build public housing. With the workers employed directly, all the houses built to the same design at any given time and all materials bought in bulk the cost was kept down.  It was a very production line sort of approach which brings efficiencies.
> 
> ...



Thatcherism (private enterprise) have stolen from the ordinary people.  World is stuffed


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## qldfrog (14 July 2021)

explod said:


> Thatcherism (private enterprise) have stolen from the ordinary people.  World is stuffed



Socialism(public services ) have stolen from the ordinary people. World is stuffed  
There is nothing wrong with private enterprise but a lot very wrong with cronyism with is the distorsion of capitalism by a clique of power enabled (Public servants, politicians elected or not) directing preferences, markets, corruptions to [usually] conglomerates (only big fish are able to pay the direct or indirect bribes requested.)


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## Dona Ferentes (14 July 2021)

over9k said:


> Please re-read. I said upper-middle. And I don't know a single upper-middle boomer that doesn't have at least one IP. Not one. My parents are currently looking at getting a fourth.




you need to get out more.


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## over9k (14 July 2021)

Dona Ferentes said:


> you need to get out more.



No idea what you're actually trying to say here.


----------



## MovingAverage (15 July 2021)

Gunnerguy said:


> You lost me there in the second paragraph ..... interpreted as, if I read correctly, ALL middle class boomers have 2 additional properties in addition to their PPR. That’s simply not true, I’m a ‘ middle class boomer’ and I don’t have 2 additional properties to my PPR. For all your contributions and good/strong discussions, your argument goes down in my eyes with that statement when I know it’s incorrect. I don’t have 2 additional properties.
> I enjoy reading your contributions and they are very thought provoking, however when ‘facts’ presented are known not to be fact, unfortunately your arguments diminish in their validity, which is a pity as generally they seem reasonable.
> Gunnerguy
> (please play nicely children, robust and none demeaning discussions are great)



I can't see who you're responding too as he has blocked me. But, I'm pretty certain I know who it is and his constant criticisms of boomers and blaming them for his lack of whatever it is he wants is boring to say the least.


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## qldfrog (15 July 2021)

MovingAverage said:


> I can't see who you're responding too as he has blocked me. But, I'm pretty certain I know who it is and his constant criticisms of boomers and blaming them for his lack of whatever it is he wants is boring to say the least.



Funny, can not see either so must be in my blocked list.and... i am no boomer..


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## Dona Ferentes (15 July 2021)

Lucky guys @MovingAverage , @qldfrog . Fancy the forum's newest ultracrepidarian doing something like that.


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## over9k (15 July 2021)

The deployment of several-syllable words that absolutely nobody ever uses is universally done only by midwits trying to make themselves sound much smarter than they actually are. Snarks are a universal tell of a combination of both snivelling conceit and repressed envy manifesting as resentment. 

You're not intelligent, you're a pseudointellectual trying to masquerade as an actual intellectual, and are as mistaken as you are transparent. 


Let me guess, arts degree? 




Blocked.


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## MovingAverage (15 July 2021)

qldfrog said:


> Funny, can not see either so must be in my blocked list.and... i am no boomer..



We are in great company frog 😂


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## MovingAverage (15 July 2021)

Dona Ferentes said:


> ultracrepidarian .



That's a big word...had to look that up


----------



## Dona Ferentes (15 July 2021)

MovingAverage said:


> I can't see who you're responding too as he has blocked me. But, I'm pretty certain I know who it is and his constant criticisms of boomers and blaming them for his lack of whatever it is he wants is boring to say the least.



Shucks, me too.  This is a movement? Or, maybe not, doesn't blocked mean constipated?

Two more words : prolix and discursive.


----------



## MovingAverage (15 July 2021)

Dona Ferentes said:


> doesn't blocked mean constipated?



maybe, i'll ring my plumber and ask him to fix my constipated drain pipe


----------



## qldfrog (15 July 2021)

MovingAverage said:


> maybe, i'll ring my plumber and ask him to fix my constipated drain pipe



A boomer issue i am sure 😂


----------



## Warr87 (15 July 2021)

over9k said:


> Let me guess, arts degree?




what's wrong with my B.A.?


----------



## Gunnerguy (15 July 2021)

Warr87 said:


> what's wrong with my B.A.?



Nothing wrong with BA. It was probably my first ever share purchase in the early ‘90’s. Ops, that means I’m a boomer.
Gunnerguy


----------



## sptrawler (18 July 2021)

This article shows how ridiculously out of step Sydney and Melbourne are, when compared to the rest of Australia. To try and use them as an example as to the unfairness of the property market, shows a lack of common sense, blind Freddy can see there is a problem with the price to income in both Sydney and Melbourne..








						The places in Australia where it's currently cheaper to buy than rent a house
					

Record low interest rates and work from home have pushed up rents across regional Australia and that has made mortgage repayments cheaper than renting across much of the country especially in regional Northern Territory and Western Australia.




					www.abc.net.au
				



From the article:


----------



## greggles (19 July 2021)

Even in this hot market there are still plenty of bargains out there for those willing to get their hands dirty and pick up a hammer and a paint brush... at least near Brisbane.

3 Bedroom house at Dinmore near Ipswich on 909m2 for $299,000: https://www.realestate.com.au/property-house-qld-dinmore-136804830

It's no Buckingham Palace, but it's very livable has has a huge back yard. Set back off the street too.

A tidy looking 3 Bedroom brick home at Dinmore on 594m2 with two sheds for $289,000+: https://www.realestate.com.au/property-house-qld-dinmore-136792998


----------



## sptrawler (30 July 2021)

Why people would want to live in Sydney/Melbourne, when they could live in Perth for a fraction of the cost is beyond me.
Perth better climate, better job prospects, better value for money housing.
Sydney/Melbourne, great place to visit, but who would want to live there? $600 return airfare from Perth.
Keep the ponzi East Coast scheme running IMO, the last thing W.A needs is runaway house prices. 









						This city has the most affordable capital city homes in Australia, but desperate buyers can't crack the market
					

Susannah Morcombe has spent almost a year trying to find a home to buy in Perth without success, and is finding little relief in the fact Perth now has the lowest median house price of all capital cities for the first time in 28 years.




					www.abc.net.au


----------



## sptrawler (31 July 2021)

It looks as though owner occupiers are still the ones driving the market.









						Australian mortgage growth launches
					

The Reserve Bank of Australia (RBA) has released its private sector credit aggregates data for the month of June. Quarterly mortgage credit growth continued to firm, rising for the 11th consecutive month to 1.8% – the highest rate of growth since 2015: Owner-occupiers continue to drive mortgage...




					www.macrobusiness.com.au
				




From the article:
Again, this growth is being driven by owner-occupiers, whose annual mortgage growth was 7.2% in the year to May 2021, versus only 2.0% growth in investor mortgages:


----------



## MovingAverage (31 July 2021)

sptrawler said:


> It looks as though owner occupiers are still the ones driving the market.
> 
> 
> 
> ...



No wonder the ALP recently walked away from their position on NG--investors just aren't driving the recent market surge. Probably explains why all those folks who've been blaming investors and OS investment as the cause of our capital city real-estate woes are being very quiet. Hopefully people are waking up to the fact that cheap money is the cause


----------



## divs4ever (31 July 2021)

sptrawler said:


> It looks as though owner occupiers are still the ones driving the market.
> 
> 
> 
> ...



 that is an unfair comparison , given various interventions  , in home lending ( either subtle pressures put on banks by the regulators ) or incentives give to certain home-buyers 

 and what is doesn't show  are buyers ( investors or intending home-owners ) who do not need to take out a mortgage 

 the other game i am aware of   are owner-occupiers that intend to shift residence in say 5 years  converting the property into a rental    or a property for sale ( 'fixer-upper' )


----------



## MovingAverage (31 July 2021)

sptrawler said:


> Sydney/Melbourne, great place to visit, but who would want to live there?
> 
> 
> 
> ...




That's a bit harsh isn't it. I've lived in both Melb and Syd and both are great cities to live in with lots to offer. Not saying it's easy to get ahead, but have to admit I wouldn't live anywhere else. Like all big cities they have their problems, but having been fortunate enough to have also lived in a few big European and US cities--Melb and Syd are great places. Just glad I'm not young and trying to get ahead in those cities.


----------



## over9k (31 July 2021)

Yeah I'm pretty confident most of the programs only require you to live in the place for 12 months to get the free cash etc.

Pretty simple way of gaming the system really, and I think you can actually rent out the other rooms you're not personally living in during that period too (though not sure of that).


----------



## sptrawler (31 July 2021)

MovingAverage said:


> That's a bit harsh isn't it. I've lived in both Melb and Syd and both are great cities to live in with lots to offer. Not saying it's easy to get ahead, but have to admit I wouldn't live anywhere else. Like all big cities they have their problems, but having been fortunate enough to have also lived in a few big European and US cities--Melb and Syd are great places. Just glad I'm not young and trying to get ahead in those cities.



It was a bit tongue in cheek, I do love the amenity of both Melbourne and Sydney, but on balance the weather, the cost of housing and the availability of high paying jobs, always made Perth the choice for me.
I suppose if I was a multi millionaire I would live in Sydney or Melbourne, but life is all about compromises, unless you are born with a silver spoon in your mouth, or have extreme talent, or rich parents. 
Unfortunately I don't fall into any of the above categories and I don't buy lotto. 🤣


----------



## MovingAverage (31 July 2021)

sptrawler said:


> It was a bit tongue in cheek,



i know it was


----------



## sptrawler (31 July 2021)

divs4ever said:


> that is an unfair comparison , given various interventions  , in home lending ( either subtle pressures put on banks by the regulators ) or incentives give to certain home-buyers
> 
> and what is doesn't show  are buyers ( investors or intending home-owners ) who do not need to take out a mortgage
> 
> the other game i am aware of   are owner-occupiers that intend to shift residence in say 5 years  converting the property into a rental    or a property for sale ( 'fixer-upper' )



In W.A I'm seeing a lot of investors getting out of RE, I'm guessing the moratorium on rents and evictions last year, showed how easily a seemingly safe investment can be turned to mush.
Also as you say, there is a lot of incentives both Federal and State being pumped into RE, add to that boomers who will be cashing in on the recent surge and downsizer incentives.
As you say, there are a lot of issues, that will be skewing the figures ATM.


----------



## wayneL (31 July 2021)

sptrawler said:


> In W.A I'm seeing a lot of investors getting out of RE, I'm guessing the moratorium on rents and evictions last year, showed how easily a seemingly safe investment can be turned to mush.
> Also as you say, there is a lot of incentives both Federal and State being pumped into RE



Extremely small sample size but of the two property investors that I have currently on my books both are underwater still after many years of ownership and desperate to get out.

for both of them that is not just the capital loss but the hassle of being a landlord, damages and all that sort of thing.

Mrs has 7 figures lobbing into her bank account in the very near future and after examining everything, traditional RE investing is the last thing she is interested in.

about the only in real estate we are interested in is a cave as far away from any government bureaucrat as possible


----------



## divs4ever (31 July 2021)

COFFEE WITH LYNETTE ZANG & MARTIN NORTH


----------



## sptrawler (31 July 2021)

At the 9 minute mark, they said exactly what I think is going to happen and have said so in the bitcoin thread on numerous occasions.
I'm not saying it is right, but from my back to basic logics, it is the only answer I can come up with, a universal digital currency.
From the 29 minute mark, he starts talking about the cashless society, which we have a thread on the ASF forum on already, interesting listen. Good post @divs4ever


----------



## Smurf1976 (31 July 2021)

sptrawler said:


> From the 29 minute mark, he starts talking about the cashless society



When's the last time you made any significant purchase, or indeed any purchase at all, using cash?

For me, last time I can recall buying anything at all with cash was just before the pandemic so very early 2020 and that was a trivial amount. 

Can't remember the last time I used an ATM but it was more than 3 years ago before I moved. I don't even know where the nearest one is actually, they're simply not something I pay attention to anymore. 

Only reason I can think of why I'd use cash these days is if I wanted the purchase to be untraceable or it's something like an ice cream van that doesn't do EFTPOS.


----------



## divs4ever (31 July 2021)

Smurf1976 said:


> When's the last time you made any significant purchase, or indeed any purchase at all, using cash?
> 
> For me, last time I can recall buying anything at all with cash was just before the pandemic so very early 2020 and that was a trivial amount.
> 
> ...



i would rather not say

 i don't hire security  ,  and use   my less than pristine appearance to deter everyone even the beggars

 a little habit i picked up  plying the race-courses as a teen ( when the 'legal age' was 21  )


----------



## qldfrog (31 July 2021)

Smurf1976 said:


> When's the last time you made any significant purchase, or indeed any purchase at all, using cash?
> 
> For me, last time I can recall buying anything at all with cash was just before the pandemic so very early 2020 and that was a trivial amount.
> 
> ...



We use cash at every market and that means all fresh non processed foods...
This morning: avos, plants....and earrings for Froglette.


----------



## sptrawler (1 August 2021)

Smurf1976 said:


> When's the last time you made any significant purchase, or indeed any purchase at all, using cash?



Even my 90 year old mother in law, who doesn't have a mobile phone, has now got a debit card and pays bills over the landline.
Before covid, she did everything in cash, like you said ages ago smurf this has moved technology along 10 years.


----------



## wayneL (1 August 2021)

Smurf1976 said:


> When's the last time you made any significant purchase, or indeed any purchase at all, using cash?
> 
> For me, last time I can recall buying anything at all with cash was just before the pandemic so very early 2020 and that was a trivial amount.
> 
> ...



We pay cash for *every non business purchase, food, clothes, petrol, booze, everything... *especially if they say card only. They always take the cash.


----------



## sptrawler (1 August 2021)

wayneL said:


> We pay cash for *every non business purchase, food, clothes, petrol, booze, everything... *especially if they say card only. They always take the cash.



Enjoy it while you can IMO. 
I don't think cash will stop, just big denomination notes.
Like I said a couple of years ago, I was surprised in Norway, when it was 15% dearer to use cash.


----------



## qldfrog (1 August 2021)

sptrawler said:


> Enjoy it while you can IMO.
> I don't think cash will stop, just big denomination notes.
> Like I said a couple of years ago, I was surprised in Norway, when it was 15% dearer to use cash.



I forgot a big cash spending.
Aldi makes you pay the extra card fee if you pay by card.so we always pay fully cash and that's usually above the 100$...
Save a couple of bucks a week ,   so that the Frog can blow $20k a month on his system trading...
no comment please..i am well aware


----------



## MovingAverage (1 August 2021)

Smurf1976 said:


> When's the last time you made any significant purchase, or indeed any purchase at all, using cash?



I reckon I haven’t used cash in over 3 years—in fact I’ve got about $100 cash in my wallet and pretty certain those notes have been there for years.

I put absolutely everything on my Amex—from the smallest transaction like a few bucks for a coffee through to bigger ticket purchase, I purchased a motorbike on my Amex.

I pay my card off diligently so not paying interest. I get 45 days interest free on my card’s balance plus I get points which add up quickly when you put everything through the card. No way I pay cash for anything


----------



## qldfrog (1 August 2021)

MovingAverage said:


> I reckon I haven’t used cash in over 3 years—in fact I’ve got about $100 cash in my wallet and pretty certain those notes have been there for years.
> 
> I put absolutely everything on my Amex—from the smallest transaction like a few bucks for a coffee through to bigger ticket purchase, I purchased a motorbike on my Amex.
> 
> I pay my card off diligently so not paying interest. I get 45 days interest free on my card’s balance plus I get points which add up quickly when you put everything through the card. No way I pay cash for anything



As most of our expenses now are rates and utilities, insurances etc, i actually use bpay more as these guys make you pay the fees and it is not worth the points. My big amounts on card have  decreased.more or less the same as 10y ago but all cafe etc on paywave so cash for markets and Aldi, paywave for others day to day, direct credit or bpay for amounts above 300 400 dollars


----------



## MovingAverage (1 August 2021)

qldfrog said:


> As most of our expenses now are rates and utilities, insurances etc, i actually use bpay more as these guys make you pay the fees and it is not worth the points. My big amounts on card have  decreased.more or less the same as 10y ago but all cafe etc on paywave so cash for markets and Aldi, paywave for others day to day, direct credit or bpay for amounts above 300 400 dollars



Wow…all my rates, household utilities, insurance etc all accept Amex with no credit card fee. Same with car expenses etc. I’m struggling to think when I was last change a transaction fee for payment by credit card 🤔


----------



## qldfrog (1 August 2021)

MovingAverage said:


> Wow…all my rates, household utilities, insurance etc all accept Amex with no credit card fee. Same with car expenses etc. I’m struggling to think when I was last change a transaction fee for payment by credit card 🤔



Just recently council rates water and electricity...my place  plus IP, all fees on Credit card
and usually no amex.i had an amex and i think a visa with cba for years..was very hard to be able to use the amex.and was not a drama when cba moved to just a master card.
I somehow suspect you are in Sydney or Melbourne......😁


----------



## MovingAverage (1 August 2021)

qldfrog said:


> Just recently council rates water and electricity...my place  plus IP, all fees on Credit card
> and usually no amex.i had an amex and i think a visa with cba for years..was very hard to be able to use the amex.and was not a drama when cba moved to just a master card.
> I somehow suspect you are in Sydney or Melbourne......😁



Sydney


----------



## qldfrog (1 August 2021)

MovingAverage said:


> Sydney



😊


----------



## MovingAverage (1 August 2021)

qldfrog said:


> 😊



I know…explains a lot right 😂


----------



## qldfrog (1 August 2021)

MovingAverage said:


> I know…explains a lot right 😂



😊I have the belief that sydney rate payment system is more used to amex payments than Noosa or Sunshine coast....


----------



## MovingAverage (1 August 2021)

qldfrog said:


> 😊I have the belief that sydney rate payment system is more used to amex payments than Noosa or Sunshine coast....



Probably. Here’s the strange thing, there are several regular household bills we get that don’t accept Amex, but will happily take PayPal 🙄 Guess what, my PayPal is linked to my Amex so just pay them via PayPal. No skin off my nose. But those clowns are probably paying a higher merchant fee via PayPal than they are by taking Amex direct. 🙄


----------



## qldfrog (1 August 2021)

MovingAverage said:


> Probably. Here’s the strange thing, there are several regular household bills we get that don’t accept Amex, but will happily take PayPal 🙄 Guess what, my PayPal is linked to my Amex so just pay them via PayPal. No skin off my nose. But those clowns are probably paying a higher merchant fee via PayPal than they are by taking Amex direct. 🙄



Probably, i often use PayPal which goes to Mastercard for online purchase, but as you say they do not accept CC direct..whatever, it suits us👍


----------



## sptrawler (3 August 2021)

Interesting article:








						Melburnians head for the country and Brisbane in wake of virus
					

A record number of people have moved out of the nation’s capitals, with Melbourne losing many to regional Victoria and states such as Queensland.




					www.theage.com.au
				



From the article:
Melburnians are leaving the city and heading for cheaper housing and lockdown-free life in the state’s regions and other parts of the country as the coronavirus pandemic up-ends migration across the country.
A record net 11,800 people left the nation’s capital cities in the three months to the end of March, the Australian Bureau of Statistics reported on Tuesday, with Sydney and Melbourne feeling the pandemic-fuelled drain.
Since the start of the pandemic, a net 22,651 people have left Melbourne for other parts of Victoria. In total, Melbourne has lost a net 34,366 residents, including 3682 who have made the move to Brisbane.
In the March quarter, a net 8300 people left Greater Melbourne compared to 8500 in the final three months of 2020. It was the second-largest quarterly drop in internal migration for Melbourne this century.

Victoria failed to make a net gain of residents from any state or territory over the three months, with its biggest loss, of 2900, to Queensland.
People in the prime of their working years are the biggest group moving out of Melbourne.
A net 2500 people aged between 25 and 44 left the city in the March quarter while 2800 aged between 45 and 64 took flight. They took with them 1800 children under the age of 14.

While Sydney and Melbourne shed residents, Brisbane and Perth are increasingly attractive to internal migrants. Brisbane has gained 16,300 people from other parts of the country since the start of the pandemic while Perth has gained 5072.

The ABS figures pre-date the latest Greater Sydney lockdown.


----------



## qldfrog (4 August 2021)

Will be interesting to see how many leave the country as soon as they open the doors..i hope they will one day


----------



## divs4ever (4 August 2021)

i am surprised they aren't sneaking out  now  in dinghies , canoes and other small craft ( especially if they are crypto fans  a couple of USB sticks can carry a lot )

 there are hint's several super-rich  have already retreated to their yachts and the open ocean


----------



## qldfrog (4 August 2021)

divs4ever said:


> i am surprised they aren't sneaking out  now  in dinghies , canoes and other small craft ( especially if they are crypto fans  a couple of USB sticks can carry a lot )
> 
> there are hint's several super-rich  have already retreated to their yachts and the open ocean



Only the peons are stuck here, every uber person is jetting in and mostly out, i could probably tweak the system via my company too but not so easy for Frogette😊


----------



## divs4ever (4 August 2021)

don't want to leave but would very happy if you took most of the state and federal parliament on a one way trip ( and confiscated their passports )


----------



## qldfrog (4 August 2021)

divs4ever said:


> don't want to leave but would very happy if you took most of the state and federal parliament on a one way trip ( and confiscated their passports )



No thanks, not interested to carry the problem with me 😊


----------



## divs4ever (4 August 2021)

you can always leave them  along the way


----------



## qldfrog (4 August 2021)

divs4ever said:


> you can always leave them  along the way



mid air....


----------



## divs4ever (4 August 2021)

as long as the parachutes are NOT golden


----------



## wayneL (17 August 2021)

Since moving back to WA we got lucky to be able to rent an ideal property for a year, (at vast expense mind you). 

I always thought that property may cool a bit but have been increasingly nervous that that I might have been wrong.  We have a few things coming to fruition later this year so we are buying a property come what may... Have done sufficiently well in other stuff to compensate anyway.

But... I think starting to change? Easter cantillon effect starting to come to an end? Are people slowly starting to realise that this is insane?

Whadaya think?


----------



## sptrawler (17 August 2021)

W.A is always boom and bust, as it follows the mining employment, this time the house price run has been supported by the State and Federal housing handouts plus the FIFO's relocating here.
Once the mining boom is over and the interstate FIFO recommences, 100,000 people move back to Sydney/ Melbourne and Perth's property market dives again.
After the last mining boom, 60,000 people moved back over East. While the boom was on, Perth median price was higher than Sydney.
Wash, rinse, repeat.


----------



## wayneL (17 August 2021)

sptrawler said:


> W.A is always boom and bust, as it follows the mining employment, this time the house price run has been supported by the State and Federal housing handouts plus the FIFO's relocating here.
> Once the mining boom is over and the interstate FIFO recommences, 100,000 people move back to Sydney/ Melbourne and Perth's property market dives again.
> After the last mining boom, 60,000 people moved back over East. While the boom was on, Perth median price was higher than Sydney.
> Wash, rinse, repeat.



Quite a few of the client's I've picked up over here invested in the FOMO boom of the last decade. They say they are still under water (one of which is bro in law).

It still seems pretty damned expensive over here in my opinion. The house we are in is on the market for 1.7 million... A tad aspirational in my opinion, but still.


----------



## sptrawler (17 August 2021)

wayneL said:


> Quite a few of the client's I've picked up over here invested in the FOMO boom of the last decade. They say they are still under water (one of which is bro in law).
> 
> It still seems pretty damned expensive over here in my opinion. The house we are in is on the market for 1.7 million... A tad aspirational in my opinion, but still.



20 year old caravans are selling for what they were new, when people can fly again, they will be worth FA. It is what it is unfortunately, ATM isn't a great time to be buying in Perth, but it is a magic time to be selling a house or a caravan. 
I'll put it another way, go for a drive from the top end of the freeway, down to Mandurah and come back up the coastal route, check out how many new land releases and houses are being built. There was a glut pre covid, IMO there will be a bigger glut, post covid.
Just my opinion.


----------



## wayneL (17 August 2021)

sptrawler said:


> 20 year old caravans are selling for what they were new, when people can fly again, they will be worth FA. It is what it is unfortunately, ATM isn't a great time to be buying in Perth, but it is a magic time to be selling a house or a caravan.
> I'll put it another way, go for a drive from the top end of the freeway, down to Mandurah and come back up the coastal route, check out how many new land releases and houses are being built. There was a glut pre covid, IMO there will be a bigger glut, post covid.
> Just my opinion.



Second hand cars are the same.

We picked up a 2003 defender 90 in April 2020... It is a great specimen and we paid 25 grand for it. It was a bit of nostalgia because Mrs grew up in Kenya and spent almost half her childhood in one of those damn things... I thought we have a paid but it was a bit of a nostalgia buy.... and **** it, we've done pretty well recently and you can't take the money with you. (IOW I had no choice in the matter LOL)

Just before we came over here we were offered 40K for it and most recently 50k.

WTF?

I'm pretty pleased with that but now misses think she's a hetrodox investing guru. LMAO

I want to flog it but of course she thinks it will go further. (And I don't think she would sell it anyway to be honest)

But I degress...


----------



## sptrawler (17 August 2021)

wayneL said:


> Second hand cars are the same.
> 
> We picked up a 2003 defender 90 in April 2020... It is a great specimen and we paid 25 grand for it. It was a bit of nostalgia because Mrs grew up in Kenya and spent almost half her childhood in one of those damn things... I thought we have a paid but it was a bit of a nostalgia buy.... and **** it, we've done pretty well recently and you can't take the money with you. (IOW I had no choice in the matter LOL)
> 
> ...



Absolutely, a mate had a 9 year old Turbo Falcon really low K's, a year ago couldn't get $20k for it, sold it to a Ford dealership recently for well over $30k. Go figure.
It isn't the first time I've seen house prices do this in W.A and I'm sure it won't be the last, as long as I don't pop off in the next 10 years.


----------



## Humid (17 August 2021)

sptrawler said:


> Absolutely, a mate had a 9 year old Turbo Falcon really low K's, a year ago couldn't get $20k for it, sold it to a Ford dealership recently for well over $30k. Go figure.
> It isn't the first time I've seen house prices do this in W.A and I'm sure it won't be the last, as long as I don't pop off in the next 10 years.



If he could get 30k from a dealership he traded it or is stupid


----------



## sptrawler (17 August 2021)

Humid said:


> If he could get 30k from a dealership he traded it



Not really, he just didn't use it and he tried selling it several times over the past few years, but there were only tyre kickers looking. 
So last month he went to the dealership, said what will you give me, they said $x and he said magic.
The same guy when we were working together in 2009, came to work one night and said I've been offered $1.2m for my block of land what do you reckon, I said sell it.
Long story short he sold it and retired at the same time, he was 55, now the same block would be worth with the current boom about $800k.
So he ain't stupid.


----------



## divs4ever (17 August 2021)

sptrawler said:


> Not really, he just didn't use it and he tried selling it several times over the past few years, but there were only tyre kickers looking.
> So last month he went to the dealership, said what will you give me, they said $x and he said magic.
> The same guy when we were working together in 2009, came to work one night and said I've been offered $1.2m for my block of land what do you reckon, I said sell it.
> Long story short he sold it and retired at the same time, he was 55, now the same block would be worth with the current boom about $800k.
> So he ain't stupid.



 i would suggest $1.2mill isn't enough to retire on  , if my prediction of inflation is correct 

 HOWEVER  that nest egg is a great base to invest from 

 a little bit of learning and thinking now  ,  it all might work out very well for him


----------



## Humid (17 August 2021)

sptrawler said:


> Not really, he just didn't use it and he tried selling it several times over the past few years, but there were only tyre kickers looking.
> So last month he went to the dealership, said what will you give me, they said $x and he said magic.
> The same guy when we were working together in 2009, came to work one night and said I've been offered $1.2m for my block of land what do you reckon, I said sell it.
> Long story short he sold it and retired at the same time, he was 55, now the same block would be worth with the current boom about $800k.
> So he ain't stupid.



So you think the dealership are selling it for 30k
They need 40k to break even


----------



## sptrawler (17 August 2021)

divs4ever said:


> i would suggest $1.2mill isn't enough to retire on  , if my prediction of inflation is correct
> 
> HOWEVER  that nest egg is a great base to invest from
> 
> a little bit of learning and thinking now  ,  it all might work out very well for him



I would agree, but in 2009 you were getting 5 year 10% term deposits and he still doesn't qualify for any pension and isn't looking like he ever will.
The World has changed since then and $1m isn't what it was back then, but no one lives forever.


----------



## Humid (17 August 2021)

sptrawler said:


> Not really, he just didn't use it and he tried selling it several times over the past few years, but there were only tyre kickers looking.
> So last month he went to the dealership, said what will you give me, they said $x and he said magic.
> The same guy when we were working together in 2009, came to work one night and said I've been offered $1.2m for my block of land what do you reckon, I said sell it.
> Long story short he sold it and retired at the same time, he was 55, now the same block would be worth with the current boom about $800k.
> So he ain't stupid.



So in 12 years the block went backwards $400k ......tell me more


----------



## sptrawler (17 August 2021)

Humid said:


> So you think the dealership are selling it for 30k
> They need 40k to break even



Well if you want I will PM you where it is and you can buy it, my mate was happy with the money he got. getting 60% return on a car after 9 years isn't bad IMO.
When the new speed limiting rules come in, it will be worth Jack $hit IMO.


----------



## Humid (17 August 2021)

Humid said:


> So in 12 years the block went backwards $400k ......tell me more



What area?


----------



## Humid (17 August 2021)

sptrawler said:


> Well if you want I will PM you where it is and you can buy it, my mate was happy with the money he got. losing $20k on a car over 9 years isn't bad IMO.
> When the new speed limiting rules come in, it will be worth Jack $hit IMO.



Why cant you just post it here


----------



## Humid (17 August 2021)

Humid said:


> Why cant you just post it here



I imagine its a G6e


----------



## sptrawler (17 August 2021)

Humid said:


> Why cant you just post it here



Why would I do that? I have no right to disclose someone's personal information on a public forum, that is just weird.
I was just giving real life examples, of how the market for everything changes, depending on the social and economic dynamics that are prevalent at the time.
By the way, your post are becoming weird, have you been busted? 🤣


----------



## sptrawler (17 August 2021)

Humid said:


> So in 12 years the block went backwards $400k ......tell me more



The block went backwards more than that, four years ago it would have probably gone for nearer $600k, it has only been in the last 8 months that $800k would be gettable.


----------



## sptrawler (17 August 2021)

Humid said:


> So in 12 years the block went backwards $400k ......tell me more



By the way, you shouldn't look at it as going backwards $400k that isn't relative, it went backwards 30% from its peak.
It actually nearly went back 50% from the 2009 boom and has recovered to 70% of its peak, if you want to look at it from an investment perspective.
Another way of looking at it, which probably fits better with you would be, if he hadn't sold it he probably would have had to keep working to 65( lucky he is old, or it would have been 67) and then would  have had to sell it at about $700k because he wouldn't have qualified for a pension under the assets test. YEH


----------



## Humid (17 August 2021)

sptrawler said:


> Why would I do that? I have no right to disclose someone's personal information on a public forum, that is just weird.
> I was just giving real life examples, of how the market for everything changes, depending on the social and economic dynamics that are prevalent at the time.
> By the way, your post are becoming weird, have you been busted? 🤣



Yeah real life examples with no real life examples


----------



## Humid (17 August 2021)

Humid said:


> Yeah real life examples with no real life examples



So where was this fictitious block of land is it near the fictitious car yard or is it the same block of land and he sold it to the dealership?


----------



## sptrawler (17 August 2021)

Humid said:


> Yeah real life examples with no real life examples



Again that is weird, do you want people to put up names and addresses, I have a lot of mates that socialise together.
If I put up the car the price he received for it and the area he lives in, how would that look? Get a grip sunshine, you don't know who is reading the forum and who can identify who you are talking about.
Maybe facebook is a better fit for your trolling, or you IQ, or both. 🤣
You certainly haven't added much to an investment forum, other than childish one liners, that would generally fit better on the donga toilet block. But hey whatever rows your boat, I've battled wits, with unarmed people before.


----------



## Beaches (17 August 2021)

wayneL said:


> Since moving back to WA we got lucky to be able to rent an ideal property for a year, (at vast expense mind you).
> 
> I always thought that property may cool a bit but have been increasingly nervous that that I might have been wrong.  We have a few things coming to fruition later this year so we are buying a property come what may... Have done sufficiently well in other stuff to compensate anyway.
> 
> ...







I learnt many cycles ago never to buy WA property in the middle of a mining boom.

There is a 30 year history of WA property prices following the mining cycles.
Cycles always turn


----------



## Humid (17 August 2021)

sptrawler said:


> Again that is weird, do you want people to put up names and addresses, I have a lot of mates that socialise together.
> If I put up the car the price he received for it and the area he lives in, how would that look? Get a grip sunshine, you don't know who is reading the forum and who can identify who you are talking about.
> Maybe facebook is a better fit for your trolling, or you IQ, or both. 🤣
> You certainly haven't added much to an investment forum, other than childish one liners, that would generally fit better on the donga toilet block.



If it was where he lived it wouldnt effect his pension so just keep the B/S going its gold


----------



## Humid (17 August 2021)

Beaches said:


> I learnt many cycles ago never to buy WA property in the middle of a mining boom.
> 
> There is a 30 year history of WA property prices following the mining cycles.
> Cycles always turn



I learnt many cycles ago not to believe stuff on forums


----------



## sptrawler (17 August 2021)

Humid said:


> If it was where he lived it wouldnt effect his pension so just keep the B/S going its gold



Well you obviously aren't single and live in W.A, but I did say you were a kiwi, a long time back. 

By the way numb nuts, if it was where he lived, it wouldn't have been a block of land, it would have been a house and land. 🤪


----------



## Humid (17 August 2021)

sptrawler said:


> Well you obviously aren't single and live in W.A, but I did say you were a kiwi, a long time back.
> 
> By the way numb nuts, if it was where he lived, it wouldn't have been a block of land, it would have been a house and land. 🤪



Do you have anymore bedtime stories


----------



## Humid (17 August 2021)

sptrawler said:


> Again that is weird, do you want people to put up names and addresses, I have a lot of mates that socialise together.
> If I put up the car the price he received for it and the area he lives in, how would that look? Get a grip sunshine, you don't know who is reading the forum and who can identify who you are talking about.
> Maybe facebook is a better fit for your trolling, or you IQ, or both. 🤣
> You certainly haven't added much to an investment forum, other than childish one liners, that would generally fit better on the donga toilet block. But hey whatever rows your boat, I've battled wits, with unarmed people before.



Well its not his address then is it if its a block of land dick head


----------



## sptrawler (17 August 2021)

Humid said:


> Do you have anymore bedtime stories



If I do, I would suggest you get one of your kids to read it to you, you obviously have trouble understanding common sense. 🤣


----------



## sptrawler (17 August 2021)

Humid said:


> Well its not his address then is it if its a block of land dick head



Try punctuation, or remedial English. 🤣
I never said he lived there, I said he came to work and said someone had offered him $1.2m for his block of land, he bought it as an investment for $200k. 🤪


----------



## Humid (17 August 2021)

sptrawler said:


> Try punctuation, or remedial English. 🤣
> I never said he lived there, I said he came to work and said someone had offered him $1.2m for his block of land, he bought it as an investment for $200k. 🤪



And you feared his identity would be revealed by knowing the area you moron.....but the truth is you made the lot up to to make yourself relevant to your fictitous internet friends.
Anyway I must get up early to pay some tax to provide for the boomers medical bills


----------



## sptrawler (17 August 2021)

Humid said:


> And you feared his identity would be revealed by knowing the area you moron.....but the truth is you made the lot up to to make yourself relevant to your fictitous internet friends.
> Anyway I must get up early to pay some tax to provide for the boomers medical bills



Sounds to me like the more sleep you get the better, if you are the same at home as you are on the forum, the family will welcome the break. 🤣
By the way if I wanted an internet friend, I would be like you and add nothing but rubbish, which would attract all the other muppets of the same ilk. 
By the way his identity would be known if someone from the area is on the forum, the real estate agents still talk about it and he still lives in the same area and it isn't a suburb. 🤣


----------



## Country Lad (18 August 2021)

wayneL said:


> Since moving back to WA we got lucky to be able to rent an ideal property for a year, (at vast expense mind you).
> 
> I always thought that property may cool a bit but have been increasingly nervous that that I might have been wrong.  We have a few things coming to fruition later this year so we are buying a property come what may... Have done sufficiently well in other stuff to compensate anyway.
> 
> ...



Up till recently, it was thought that the increasing property prices were driven by migration. Now we have no migration but significantly increasing prices.  It seems obvious that the catalyst is now only the low interest rates in general and in the regional areas a mix of interest rates and demand from people exiting the capital cities.
So the question will remain, what happens to property prices when interest rates start slowly moving up in two to three years or so with low migration?


----------



## Tyler Durden (4 September 2021)

Country Lad said:


> Up till recently, it was thought that the increasing property prices were driven by migration. Now we have no migration but significantly increasing prices.  It seems obvious that the catalyst is now only the low interest rates in general and in the regional areas a mix of interest rates and demand from people exiting the capital cities.
> So the question will remain, what happens to property prices when interest rates start slowly moving up in two to three years or so with low migration?




But where are people getting the money from? Increase in prices means more money from these buyers, in the middle of a pandemic where job losses seems like the trend. Are we seeing the effects of government money printing?


----------



## qldfrog (4 September 2021)

Tyler Durden said:


> But where are people getting the money from? Increase in prices means more money from these buyers, in the middle of a pandemic where job losses seems like the trend. Are we seeing the effects of government money printing?



Yes to the last point.


----------



## Country Lad (4 September 2021)

qldfrog said:


> Yes to the last point.



And the banks are lending like there is no tomorrow apparently with loose credit checks. Ring any bells?


----------



## againsthegrain (4 September 2021)

Country Lad said:


> And the banks are lending like there is no tomorrow apparently with loose credit checks. Ring any bells?




We all know it just don't want to believe it


----------



## divs4ever (4 September 2021)

againsthegrain said:


> We all know it just don't want to believe it



 oh i believe it , i just haven't loaded up on 'easy credit '   i have also reduced my exposure to the big 4 banks ( and hoping to reduce it even )

 i  have reduced my exposure to debt  ( both as a buyer and as a customer ) my main debt play is CCP although i hope CCV will eventually come good as well 

 interesting times 

 when this all unravels  , who will be left to pay the taxes ( many will be absolutely broke )


----------



## againsthegrain (4 September 2021)

That is easy, mass immigration what has and always will be the answer to all our problems


----------



## divs4ever (4 September 2021)

Country Lad said:


> Up till recently, it was thought that the increasing property prices were driven by migration. Now we have no migration but significantly increasing prices.  It seems obvious that the catalyst is now only the low interest rates in general and in the regional areas a mix of interest rates and demand from people exiting the capital cities.
> So the question will remain, what happens to property prices when interest rates start slowly moving up in two to three years or so with low migration?



 i disagree we still have migration  , but it is more obvious it is internal migration  , more heading for a 'tree-change ' some heading towards the city  chasing hopes and dreams .

 i think property prices will move more in time with employment and wages ( you still have to pay your rent/mortgage  , eventually  , or be 'homeless ' )

 if enough are 'homeless ' or in shared accommodation  there will be less upward pressure from demand , but maybe more pressure from inflation


----------



## divs4ever (4 September 2021)

againsthegrain said:


> That is easy, mass immigration what has and always will be the answer to all our problems



 but certain people  ( politicians and bureaucrats ) aren't leaving the nation it big enough numbers  , so the problem isn't being reduced


----------



## Country Lad (4 September 2021)

divs4ever said:


> i disagree we still have migration  , but it is more obvious it is internal migration  , more heading for a 'tree-change ' some heading towards the city  chasing hopes and dreams .



Yes, that's migration but as it is internal, it is more like churn.


----------



## divs4ever (4 September 2021)

churn , mostly because  reproduction rates are falling , indeed correct 

 now previously the recent trend was to outsource that reproduction  chore  to third world nations , which we helpfully  assisted to plunge into war , making them unpleasant places to stay , and accepting some new wonderfully cheap labour ( no matter qualifications and skills they already possessed )


 HOWEVER  that 'outsourced population increase  machine '  has been paused currently and MIGHT be restricted permanently  depending on how the world navigates the current financial  event ( which most think is about a virus )

 will Australia need international migration , if automation  is ramped up ( like say at RIO  or even at WOW and COL distribution centres )


----------



## MovingAverage (4 September 2021)

divs4ever said:


> outsource that reproduction



Interesting perspective...never thought of it as "outsourced", but does make sense


----------



## divs4ever (4 September 2021)

MovingAverage said:


> Interesting perspective...never thought of it as "outsourced", but does make sense



 i always knew i was ' wired different ' it does nothing for my popularity , but sometimes  creates an extra profit 

 now IF you look at fundamental  biology  , the removal of survival pressure  also reduces the urge to reproduce ( excessively )

 if the powers that be , really wanted to reduce the global population  , all that has to happen is to raise the world to middle class  ,  and large numbers of people  would reduce the reproduction  to 'replacement rates '

but where is the 'god-like status ' when everybody  can afford a mid-range BMW  and a reliable broadband ( or better ) and a Super fund that will cover your later years healthcare


----------



## qldfrog (4 September 2021)

divs4ever said:


> i always knew i was ' wired different ' it does nothing for my popularity , but sometimes  creates an extra profit
> 
> now IF you look at fundamental  biology  , the removal of survival pressure  also reduces the urge to reproduce ( excessively )
> 
> ...



You forget the ideological and religious "win by number" factor:
Islam and Africa, India Pakistan and Bangladesh..nor forgetting Indonesia..next door


----------



## divs4ever (4 September 2021)

that USED to be the mantra of one particular Christian sect also , until they realized the faithful dying without heirs were more likely to  remember the church in the will ,  and they love money as well as power 

 a lesser known fact is several African  tribes have been Christian for a very long time   maybe even before the start of the British Empire


----------



## qldfrog (4 September 2021)

divs4ever said:


> that USED to be the mantra of one particular Christian sect also , until they realized the faithful dying without heirs were more likely to  remember the church in the will ,  and they love money as well as power
> 
> a lesser known fact is several African  tribes have been Christian for a very long time   maybe even before the start of the British Empire



Well..in my youth former African colonies were Catholic mostly. Now they are muslim... 1 generation


----------



## moXJO (5 September 2021)

Talking to a real estate acquaintance the other day and he told me a industrial zoned land parcel that was on market for $3mill ended up being bid up by two developers that disliked one another to $6mill.

Seller was obviously ecstatic.

China is about to pop its property bubble. Will make it interesting for us.


----------



## MovingAverage (5 September 2021)

divs4ever said:


> i always knew i was ' wired different ' it does nothing for my popularity , but sometimes  creates an extra profit
> 
> now IF you look at fundamental  biology  , the removal of survival pressure  also reduces the urge to reproduce ( excessively )
> 
> ...




Who gives a **** about popularity....no good comes from appealing to the masses unless you're a bloody politician.

I hear you on survival pressure...it's through adversity that we grow.


----------



## MovingAverage (5 September 2021)

Country Lad said:


> And the banks are lending like there is no tomorrow apparently with loose credit checks. Ring any bells?



and people think negative gearing is the root of all our property problems...hahaha. People need to take a good hard look at the elephant in the room that is easy monetary policies and cheap easy money.


----------



## divs4ever (5 September 2021)

well in my humble opinion   , ' easy money ' helps you to lose respect for money , and the effort required to earn it 

 and that leads you into a dangerous vortex


----------



## sptrawler (6 September 2021)

I wonder if the covid driven migration to the bush can be sustained?








						Work, rest and play in regions: Mars calls for sweeteners to help young people go bush
					

COVID-19 and big-city costs of living are making the regions more attractive to young people. Now the maker of Mars and Snickers says we need to invest more in skills and bush infrastructure.




					www.theage.com.au
				



From the article:
The overall number of people working in manufacturing has barely changed over the past two years, but in food manufacturing it has climbed 6 per cent to more than 222,000. Many of those jobs are in regional areas.
Mars, which has production sites in towns such as Wodonga and Ballarat in regional Victoria, has conducted survey work to find out if people – particularly STEM-trained young Australians – are prepared to move to the regions.

Its survey of 1000 people studying or working in manufacturing, trade or STEM (science, technology, engineering and maths) careers found up to 79 per cent of Millennials were open to the idea of moving bush.
Loading
The main reasons for moving were the cost of living (cited by 49 per cent), housing prices (48 per cent) and a change in lifestyle pace (45 per cent).
People living in NSW (56 per cent) and Victoria (53 per cent) were more open to a tree change than people in other parts of the country.
COVID-19 was mentioned by 69 per cent of Victorian survey members and by 63 per cent of those from NSW as a reason to consider moving.

The federal government’s peak infrastructure agency, Infrastructure Australia, last week released a major report in which it noted the largest exodus of people to regional areas from major cities since the 19th century required a rethink of how infrastructure is put in place.
That exodus has been partly driven by high house prices.

The median house value in Sydney has climbed by $307,000 over the past year, or $843 a day. Melbourne’s median house value has jumped by $173,000 over the same period, while in Hobart it has increased by $169,000.
In some areas, such as regional NSW and regional Tasmania, prices have increased more in percentage terms than capitals. But they are still far cheaper.
And in all regions, the proportion of monthly income used to pay the mortgage is substantially lower than in a capital city.


----------



## qldfrog (6 September 2021)

sptrawler said:


> I wonder if the covid driven migration to the bush can be sustained?
> 
> 
> 
> ...



How can we still pretend we have hardly any inflation when people with 0 productivity, can make that much in what is the "de facto" capital of Australia, so a huge number of owners got that extra wealthy.
I was feeling lucky that with all RE in the sunshine coast, i made a killing wealth wise but this is nothing..and not right..not a moral issue, but an economic one.an economy self destroyed and a pretence of booming wealth.


----------



## divs4ever (6 September 2021)

they will pretend for as long as they think they will be re-elected


----------



## againsthegrain (7 September 2021)

Cities plan to use new law to block investors from housing market - DutchNews.nl
					

Most local councils will be banning private investors from buying up cheap and mid-priced homes in certain areas of their cities when a new rule comes into effect next year, a NOS survey among ten local councils shows. A third of all houses sold in the four big cities last year ended up in the...




					www.dutchnews.nl
				




Netherlands going to start banning property investment


----------



## qldfrog (7 September 2021)

againsthegrain said:


> Cities plan to use new law to block investors from housing market - DutchNews.nl
> 
> 
> Most local councils will be banning private investors from buying up cheap and mid-priced homes in certain areas of their cities when a new rule comes into effect next year, a NOS survey among ten local councils shows. A third of all houses sold in the four big cities last year ended up in the...
> ...



You will own nothing but be happy
Stalag life Reset style


----------



## againsthegrain (18 September 2021)

All right blokes,  so what is the next predicted rabbit out of the hat to keep pumping RE with IO getting pissed on by china?


----------



## qldfrog (18 September 2021)

againsthegrain said:


> All right blokes,  so what is the next predicted rabbit out of the hat to keep pumping RE with IO getting pissed on by china?



Well we lost coal 4 China but thanksfully price ultra high due to woke green push so we can try to extend that..risky..


----------



## MovingAverage (18 September 2021)

againsthegrain said:


> IO getting pissed on by china?



Genuine question...is IO Interest Only and if so what's China got to do with that?


----------



## qldfrog (18 September 2021)

MovingAverage said:


> Genuine question...is IO Interest Only and if so what's China got to do with that?



IO for iron ore..
Last week saw a drastic fall of OO price and so billions of export dollars for australia went in smoke on a matter of hours..days..and this followed up a similar exercise with coal a few months earlier.
How can RE survive in a bankrupt economy is the question.
Hope it helps


----------



## againsthegrain (18 September 2021)

qldfrog said:


> IO for iron ore..
> Last week saw a drastic fall of OO price and so billions of export dollars for australia went in smoke on a matter of hours..days..and this followed up a similar exercise with coal a few months earlier.
> How can RE survive in a bankrupt economy is the question.
> Hope it helps




I was actually confused too I thought he was asking is Iron Ore Interest only.... yeah as they say all we do here is serve coffee,  provide international education and sell rocks (iron ore) 

scratch the last 2 off the list and we are just selling fancy latte to each other


----------



## Smurf1976 (18 September 2021)

qldfrog said:


> IO for iron ore..
> Last week saw a drastic fall of OO price



OO? 

Owner Occupied?


----------



## divs4ever (19 September 2021)

now one new local glitch  will be the Evergrande contagion  where SOME will be nervous buying off the plan ( or under construction ) possibly even in Australia  and POSSIBLY make some lenders more nervous as well 

CHINA HOUSING MARKET BUBBLE BURSTING? ANOTHER WORLD DEBT CRISIS/?​


 now i disagree this is ONLY a Chinese thing  , i bet companies in other nations  have the same gaps in regulations 

 but if more lenders get nervous ( globally ) .....


----------



## qldfrog (19 September 2021)

Smurf1976 said:


> OO?
> 
> Owner Occupied?



iO ..a typo..
For Iron Ore


----------



## qldfrog (19 September 2021)

The point of interest is: do we actually have Evergrande or linked chinese real estate projects here in Australia.
3y ago, i chatted with an investor in Shenzhen and his construction group was being 1 sizeable residential development project in Melbourne areaare we going to see A Current affair special on: i still do not have a home, i paid 300k, and interest weekly, there is just this slab and the contractors are not paid either


----------



## divs4ever (19 September 2021)

qldfrog said:


> The point of interest is: do we actually have Evergrande or linked chinese real estate projects here in Australia.
> 3y ago, i chatted with an investor in Shenzhen and his construction group was being 1 sizeable residential development project in Melbourne areaare we going to see A Current affair special on: i still do not have a home, i paid 300k, and interest weekly, there is just this slab and the contractors are not paid either



directly related to Evergrande , unknown ( to me )
because of the Evergrande situation    .. a sudden loss of confidence in pay early  occupy later  system  , rather likely

 because it has happened many times before  , whether it is banks tightening up credit availability , or hiking rates , contractors unwilling to  work/buy materials  hoping to be paid later ,  buyers being suddenly cautious and nervous ( or just squeezed  by higher costs   ) and don't forget these 'at whim' virus restrictions and possible worker  shortage and waiting times on materials 

 have seen this all before via several colleagues  , who fled the building industry while they still had assets and cash  ,( before the next downturn )


----------



## greggles (21 September 2021)

When will the current property market take a breather? I thought things were bad back in 2019, but the market has been red hot for the entirety of this year and I'm trying to figure out what could cause a pause and a pullback.

I am starting to feel for those on lower incomes who will probably never own their own home, even something as simple as a unit or townhouse. It's just getting too far out of reach for many.

With a federal election on the horizon, it seems that nothing is likely to change in the short term.


----------



## MovingAverage (21 September 2021)

greggles said:


> When will the current property market take a breather? I thought things were bad back in 2019, but the market has been red hot for the entirety of this year and I'm trying to figure out what could cause a pause and a pullback.



A rise in interest rates should see buyers enthusiasm tempered, but no way the reserve will do that in the current environment


----------



## sptrawler (22 September 2021)

Still plenty of cash being stashed.








						Aussie household savings balloon to $230b
					

The June quarter national accounts showed that Australian households were flush with savings, accumulating a whopping $162.5 billion of household income in the year to June 2021 – double the previous peak of $80.5 billion saved by households in 2015: Commonwealth Bank estimates that household...




					www.macrobusiness.com.au
				



From the article:
The June quarter national accounts showed that Australian households were flush with savings, accumulating a whopping $162.5 billion of household income in the year to June 2021 – double the previous peak of $80.5 billion saved by households in 2015:




Commonwealth Bank estimates that household savings will swell to $230 billion by the end of the year, which should prop-up consumer spending and bolster the economy once it emerges from lockdowns:


----------



## againsthegrain (22 September 2021)

sptrawler said:


> Still plenty of cash being stashed.
> 
> 
> 
> ...




Be interesting to see if there is a geographic relationship.  Melbourne and Sydney alot of people would be burning through savings,  but then there is all those public servants working form home 🤔


----------



## qldfrog (22 September 2021)

againsthegrain said:


> Be interesting to see if there is a geographic relationship.  Melbourne and Sydney alot of people would be burning through savings,  but then there is all those public servants working form home 🤔



You mean:
Xxxx "working from home"..😂


----------



## againsthegrain (22 September 2021)

qldfrog said:


> You mean:
> Xxxx "working from home"..😂



that is correct, too late to edit now


----------



## qldfrog (22 September 2021)

againsthegrain said:


> that is correct, too late to edit now



The emphasis was on the ", not the actual typo i noticed later...


----------



## againsthegrain (22 September 2021)

qldfrog said:


> The emphasis was on the ", not the actual typo i noticed later...




I see now,  at first glace I assumed xxxx is just a brief of what was said before,  but its a 4-5 letter word now that I look closer.. 😂  totally there with you.  Didn't want to chuck extra emotion behind my original post so didn't mention names, did cross my mind lol ... but we all in it together... "working"


----------



## MovingAverage (23 September 2021)

sptrawler said:


> Still plenty of cash being stashed.
> 
> 
> 
> ...



I bet old mate Gerry Harvey would love this


----------



## sptrawler (29 September 2021)

Looks like lending is going to tighten up.




__





						Australia is set to restrict home loans to new borrowers in a bid to lower risks in the hot property market
					





					www.msn.com


----------



## MovingAverage (29 September 2021)

sptrawler said:


> Looks like lending is going to tighten up.
> 
> 
> 
> ...



Completely de-bunks the myth that negative gearing is the root of all evil...it's only taken us how long to get to this point


----------



## wayneL (29 September 2021)

Foooookin hell. I was just about to splurge on10 acres, established property, nice house within 30 minutes of Perth CBD.

Price was a little over the odds in my opinion but now I'm getting cold feet... We are cash buyers with at least 6 months up our sleeve so.... Hmmm


----------



## moXJO (29 September 2021)

No timber to build still. Delivery is up about 40%. Houses selling before it even is advertised. No rentals in good areas. People are paying above listed rental price or 6 months down.


----------



## gartley (14 October 2021)

IR in early stages of new bull. Looks like banks maybe forced to act soon before RBA.


----------



## moXJO (15 October 2021)

I heard banks tightened lending a few weeks back


----------



## Smurf1976 (15 October 2021)

MovingAverage said:


> it's only taken us how long to get to this point



Well it's 34 years since negative gearing was re-introduced in 1987, having been abolished in 1985.


----------



## over9k (15 October 2021)

Negative gearing is an utter irrelevance. Classic misdirect.


----------



## againsthegrain (16 October 2021)

A recent survey by Finder.com.au found a majority of polled economists expected the big four banks to lift their standard lending rates out of cycle with the Reserve Bank within the next 12 months.


----------



## Dona Ferentes (16 October 2021)

I posted this in the Ingenia (INA) thread, but worthy of here. A mill for a box on a site in a caravan park


> _The other thing that’s happening is a residential property boom which means the grey nomads are cashed up. They’ve been selling at record prices and consequently, they’ve been paying record prices for manufactured housing estate homes._* In Port Stephens, a manufactured housing estate home was sold for a million dollars.*


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## qldfrog (16 October 2021)

Dona Ferentes said:


> I posted this in the Ingenia (INA) thread, but worthy of here. A mill for a box on a site in a caravan park



Real question is: what is the real value of an AUD in 2021?


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## againsthegrain (16 October 2021)

qldfrog said:


> Real question is: what is the real value of an AUD in 2021?




What will be worth less twice as much in 22 then it was worth in 20 but once less then 21


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## qldfrog (16 October 2021)

againsthegrain said:


> What will be worth less twice as much in 22 then it was worth in 20 but once less then 21



Sunshine coast auction this weekend
Property purchased 1.5m in october 21.sold in auction 3.1 today.
Double..and have to say that we are lucky being in the same boat valuation wise for our ppor..
This is really crazy here in noosa shire.
We jump from Qld price to Sydney price in 12m.


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## Smurf1976 (17 October 2021)

over9k said:


> Negative gearing is an utter irrelevance.



To the price of property perhaps but it does serve a major role of avoiding political debate on the actual drivers of property prices.

It's akin to the magician waving their hand or otherwise diverting your attention so that you don't look at what they're actually doing right in front of you, seeing only the result.


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## sptrawler (17 October 2021)

It is starting to look like people are expecting rampant inflation and their buying power dropping, so buy hard assets.
I hope they have called it right, because if wages don't sky rocket, house prices can only go one way.


----------



## qldfrog (17 October 2021)

sptrawler said:


> It is starting to look like people are expecting rampant inflation and their buying power dropping, so buy hard assets.
> I hope they have called it right, because if wages don't sky rocket, house prices can only go one way.



Yes and no,
Look at Sydney average price for the last 20y: up up up..in my opinion, impossible to buy at these levels for the average worker yet it went up.
There is a lot of established money: wealth and we are risking hyperinflation : people want asset protection
These Noosa prices i am talking about are within 30min from hasting street..a very small pocket of wealth coming from 3 different states and where hardly anyone is actually working on a wage.
It's in my opinion a rebalancing of locations and priorities the new world coming.why bother working and doing a new business with the Reset on its way.lets enjoy life where you can..and that is not in Melbourne...
And that growth is not universal.you have inflation linked house prices national wide,but the house i sold in Brisbane 12m ago is valued around 10% more, great but just in line with inflation, it did not double..
Pocket of growth making headlines, but overall growth just inflation...after all,what is more indexed to inflation than a house: land,raw material,services,red tape,services and workers wages/tradies rates all embedded


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## over9k (17 October 2021)

Smurf1976 said:


> To the price of property perhaps but it does serve a major role of avoiding political debate on the actual drivers of property prices.
> 
> It's akin to the magician waving their hand or otherwise diverting your attention so that you don't look at what they're actually doing right in front of you, seeing only the result.



Hence the term misdirect


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## dyna (17 October 2021)

Westpac bank is predicting a further 20+ % Sydney house price increase for next year. This country is still 4th in the world for rising house prices, though. NZ is in front of us. Half the population in dear ole' Deutschland , just rent. It's about 85% in Berlin.


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## MovingAverage (17 October 2021)

qldfrog said:


> Sunshine coast auction this weekend
> Property purchased 1.5m in october 21.sold in auction 3.1 today.
> Double..and have to say that we are lucky being in the same boat valuation wise for our ppor..
> This is really crazy here in noosa shire.
> We jump from Qld price to Sydney price in 12m.




That is just insane.

Sydney property has been good to me over the past 15 years, but things have just been crazy here for the past 18 months. It cannot continue and for me I'm taking all my chips of the table and cashing them in--can't help but think things will be very different once the reality of higher interest rates kick in--and they will.


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## againsthegrain (17 October 2021)

MovingAverage said:


> That is just insane.
> 
> Sydney property has been good to me over the past 15 years, but things have just been crazy here for the past 18 months. It cannot continue and for me I'm taking all my chips of the table and cashing them in--can't help but think things will be very different once the reality of higher interest rates kick in--and they will.



imagine everybody else did this too now...


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## Dona Ferentes (17 October 2021)

there is a sale in Redcliffe Qld reported.... Postwar fibro, original condition. Nice block of land, close to the water.


*What did you think it would go for? *
_Somewhere in the $700[000]s._

*What was surprising about it? *
_That it sold with only a sign as the only advertising and with multiple offers. We didn’t have to put it online. The board was up on the Thursday arvo. It was all signed on the Friday evening.
It was going to have an open home on the Saturday, but there was a tenant in there.
We had the two offers plus five calls. It’s not even a busy road. That’s what people are doing now – driving around, looking for houses._

Got $806,000. Cash buyer.

_The house was fibro inside, in original condition. These guys [are] buying to knock down and build. To save money, I suggested they could look at selling the house off.
They put it on [Facebook] Marketplace and got 70 inquiries to take the house away. They’re saving $20,000 in demolition costs and someone’s recycling the house._


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## sptrawler (17 October 2021)

Dona Ferentes said:


> _They put it on [Facebook] Marketplace and got 70 inquiries to take the house away. They’re saving $20,000 in demolition costs and someone’s recycling the house._



That's how I bought my first house 40 years ago, the best move I ever made, owned it outright but took a lot of work to make its sellable.


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## MovingAverage (17 October 2021)

againsthegrain said:


> imagine everybody else did this too now...



Yup...and thankfully everybody else isn't doing this at the moment. I've got two IP's (houses) in the inner west and there is very little on the market for sale despite there being a lot of buyer demand. I haven't seen it like this in my time (very little supply and a lot of demand), which is why I'm offloading both properties now. Sell on greed buy of fear


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## sptrawler (19 October 2021)

The findings are in on rampant property prices, apparently.








						Want to improve housing affordability? Here’s the solution
					

The federal government should provide incentive payments to state and local governments prepared to reform their planning systems and build more housing.




					www.theage.com.au
				



From the article:
State and federal governments give billions of dollars to first-home buyers, ostensibly to improve affordability. But like other demand-side subsidies, these do not reduce overall housing costs. They improve housing access for the favoured recipients but bid up prices, making it more expensive for everyone else.

Unless something is done to boost supply, these subsidies just reshuffle a fixed housing stock.

Many submissions to the federal housing inquiry now underway argue for removal of tax concessions like negative gearing and the capital gains discount. This is a non-issue. Apart from being politically dead, it just doesn’t make much difference to affordability.
Research estimates the effect of these concessions on housing prices is tiny – about 1 to 4 per cent.

The main cause of high prices is land use restrictions — often called planning or zoning — as has been found in a string of official reports. The most recent of these reports were the NSW Productivity Commission’s White Paper and the surveys of the Australian economy by the OECD and IMF. The reason official reports keep saying that the problem is planning is because this is what the research clearly shows, both in Australia and overseas.
Planning restrictions boost prices by limiting the amount of housing that can be supplied. Apartments and townhouses are prohibited on most of our urban land, which is reserved for detached houses. Where apartments are permitted, height restrictions limit the number of dwellings they can provide. Like any other restriction on supply — for example taxi licences or import quotas — this pushes up the price.

However, land use restrictions are primarily a state and local government responsibility. What can the federal government do?

A new idea gaining wide support is that Canberra should provide incentive payments to state and local governments that reform their planning systems and build more housing.


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## againsthegrain (11 December 2021)

‘Miserable’: Woman slams $260k job
					

Kate Thomas* makes a whopping $260,000 a year, yet she likens her salary to “golden handcuffs” leaving her trapped in a job that makes her “miserable” because she needs to pay off a mega mortgage.




					www.news.com.au
				




With articles like this the market sure is looking toppy,  don't think the can can be kicked for much longer.


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## Warr87 (11 December 2021)

againsthegrain said:


> ‘Miserable’: Woman slams $260k job
> 
> 
> Kate Thomas* makes a whopping $260,000 a year, yet she likens her salary to “golden handcuffs” leaving her trapped in a job that makes her “miserable” because she needs to pay off a mega mortgage.
> ...



I want to believe that, though I thought the same thing 10 years ago. It eventually has to come down. But I also agree with the comment in there that there is an obsession within Australia to own a house. I still get weird looks or negative comments when I say I am willing to rent and wait right now instead of plunging into the market. Apparently having such views is just odd, at the very least.


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## MovingAverage (11 December 2021)

againsthegrain said:


> ‘Miserable’: Woman slams $260k job
> 
> 
> Kate Thomas* makes a whopping $260,000 a year, yet she likens her salary to “golden handcuffs” leaving her trapped in a job that makes her “miserable” because she needs to pay off a mega mortgage.
> ...



Just trying to work this out…are we suppose to feel sorry for this woman?


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## qldfrog (11 December 2021)

MovingAverage said:


> Just trying to work this out…are we suppose to feel sorry for this woman?



Lol, MA, i think the idea is when your "battler" is on  $260k a year and miserable 🥴, we have reached a level of craziness which can not carry on..even with inflation, 270k is not bad and i would be very happy with just a quarter of that nowadays..retired..
This year i am in negative figures.  :-(


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## sptrawler (11 December 2021)

qldfrog said:


> Lol, MA, i think the idea is when your "battler" is on  $260k a year and miserable 🥴, we have reached a level of craziness which can not carry on..even with inflation, 270k is not bad and i would be very happy with just a quarter of that nowadays..retired..
> This year i am in negative figures.  :-(



Let's not forget, the article says her partner works as well.


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## againsthegrain (11 December 2021)

MovingAverage said:


> Just trying to work this out…are we suppose to feel sorry for this woman?






> Not only does she feel unchallenged, but her morals and values don’t align with the business’




She sure does have some unrealistic expectations from a job... 260k job that is


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## MovingAverage (11 December 2021)

qldfrog said:


> Lol, MA, i think the idea is when your "battler" is on  $260k a year and miserable 🥴, we have reached a level of craziness which can not carry on..even with inflation, 270k is not bad and i would be very happy with just a quarter of that nowadays..retired..
> This year i am in negative figures.  :-(




Agree.

Feel free to call me an unsympathetic cold mofo, but I have absolutely no sympathy for this woman's extreme first world problem. Oh, poor old me I earn $260k and feel trapped  Give me a f'ing break.


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## Warr87 (11 December 2021)

MovingAverage said:


> Just trying to work this out…are we suppose to feel sorry for this woman?




I think they hint at that. I also don't understand why selling the 2.6mil house is out of the question? Why not downsize? Sounds self-imposed. They don't have my sympathy as they've chosen to take up on the extra income and not have a fulfilling job. Losing out on $40k/yr is obviously a lot, but her income would still be above $200k/yr .... again, not sure why downsizing is not an option if a fulfilling job is such a priority for her. It's apparently very easy to sell a house these days so no issues there.



qldfrog said:


> Lol, MA, i think the idea is when your "battler" is on  $260k a year and miserable 🥴, we have reached a level of craziness which can not carry on..even with inflation, 270k is not bad and i would be very happy with just a quarter of that nowadays..retired..
> This year i am in negative figures.  :-(




This was probably more what they were trying to do. Tow the line between battler and crazy despite the wealth. I think it rings hollow though. Also, in the article, while its stated that her partner works they still couldn't afford the mortgage if she took a $40k/yr paycut to work where she wants. What happens when interest rates rise? If she's in such dire straits she should really consider downsizing to a more managable level because its sounding more and more like a disaster.

perhaps the article should be, $260k/yr doesn't give you sound financial acumen .....


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## MovingAverage (11 December 2021)

Warr87 said:


> What happens when interest rates rise?



Exactly, if she thinks she has stress now...just wait until she sees her mortgage interest rate rise just a mere 1%. She is probably just one person of 10,000s in that position. Talk about a house of cards


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## Warr87 (11 December 2021)

MovingAverage said:


> Exactly, if she thinks she has stress now...just wait until she sees her mortgage interest rate rise just a mere 1%. She is probably just one person of 10,000s in that position. Talk about a house of cards




Exactly. A 1% increase on a 2.6mil house is likely going to hurt. 

I was curious so a quick calc, assuming they borrowed most of it and at the current average of 2.3% the monthly repayments are around $10,500/month. If those went up by 1%, it's now $12,200.

I honestly can't imagine paying $10,000/month for a mortgage. But then I'm definitely not on $260k/yr, lol.


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## over9k (11 December 2021)

Textbook case of lifestyle creep. More news at 11.


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## MovingAverage (11 December 2021)

Warr87 said:


> Exactly. A 1% increase on a 2.6mil house is likely going to hurt.
> 
> I was curious so a quick calc, assuming they borrowed most of it and at the current average of 2.3% the monthly repayments are around $10,500/month. If those went up by 1%, it's now $12,200.
> 
> I honestly can't imagine paying $10,000/month for a mortgage. But then I'm definitely not on $260k/yr, lol.




At $10.5k per month that is $126k after tax dollars per year!. They would no doubt be on the highest marginal tax rate of 45% so just do the pre tax earning calculation to determine before tax salary required to service that...yikes


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## Warr87 (11 December 2021)

over9k said:


> Textbook case of lifestyle creep. More news at 11.




Yup. I recently got an increase as I changed jobs. I was very cognisant of life-style creep. Will admit the temptation was there to have a better car, better place to live, etc. But I'd rather not be worse off after getting a better job. But I guess not everyone thinks like that.



MovingAverage said:


> At $10.5k per month that is $126k after tax dollars per year!. They would no doubt be on the highest marginal tax rate of 45% so just do the pre tax earning calculation to determine before tax salary required to service that...yikes



Yup. after tax her income is approx $14k/month. Certainly no wiggle room, unless shes living on 1min noodles, lol.


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## over9k (11 December 2021)

Warr87 said:


> Yup. I recently got an increase as I changed jobs. I was very cognisant of life-style creep. Will admit the temptation was there to have a better car, better place to live, etc. But I'd rather not be worse off after getting a better job. But I guess not everyone thinks like that.
> 
> 
> Yup. after tax her income is approx $14k/month. Certainly no wiggle room, unless shes living on 1min noodles, lol.



Yeah, vanishingly few people use wage increases, promotions etc to make their current life easier. Almost everyone simply continue having a very hard time but now paying an audi off rather than a kia or whatever.


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## Warr87 (11 December 2021)

over9k said:


> Yeah, vanishingly few people use wage increases, promotions etc to make their current life easier. Almost everyone simply continue having a very hard time but now paying an audi off rather than a kia or whatever.




That's very true. I understand wanting to spend money and have nicer things but I think people take it too far. There's a myriad of reasons, but obviously looking good to friends is one of them. Probably the same reason they don't want to downsize the house, don't want the 'friends' to think you're having a hard time because you can't pay the mortgage of a 2.6mil house. I mean.....how scandalous. 

I admittedly spent my undergraduate years poor AF and working multiple jobs. I have no interest in returning to days of worrying so much about finances, particularly if its self-imposed like this situation.

But to bring it back to the article, as it's been mentioned they won't be the only one. Will this be one of the sparks to set it off? Who knows. But its probably indicative of a larger portion of people--even in the upper echelons.


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## qldfrog (11 December 2021)

no sure if due to Noosa proximity, but a house : nice but just on 10 steep acres today appeared on the market and offered at 3.6m, with my wife thinking they must have done a typo..so basically, for local and informed of the market people, we are not sure if a house is valued at 2.xx or 3.xx..that's a bloody big amount to save or borrow, even when earning a bit of coins...
my view just below 3m, my wife below 2m...will keep you posted.Had  agents looking at our place this past week


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## Warr87 (11 December 2021)

It's crazy. Unless there is a massive correction in prices I don't forsee myself getting a house any time soon.

My super is going good though. Will probably have enough money for a house from that when I eventually retire haha.


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## over9k (11 December 2021)

Warr87 said:


> That's very true. I understand wanting to spend money and have nicer things but I think people take it too far. There's a myriad of reasons, but obviously looking good to friends is one of them. Probably the same reason they don't want to downsize the house, don't want the 'friends' to think you're having a hard time because you can't pay the mortgage of a 2.6mil house. I mean.....how scandalous.
> 
> I admittedly spent my undergraduate years poor AF and working multiple jobs. I have no interest in returning to days of worrying so much about finances, particularly if its self-imposed like this situation.
> 
> But to bring it back to the article, as it's been mentioned they won't be the only one. Will this be one of the sparks to set it off? Who knows. But its probably indicative of a larger portion of people--even in the upper echelons.



At the end of the day, it's simple effort/sacrifice vs reward. My brother just turned a promotion down because of the very simple fact that it was 15% more money for about 40% more work. He knew what doing so meant for him/his family.

(They're not exactly short of money though so he was in the position of being able to say no, which a lot of people really can't)


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## divs4ever (12 December 2021)

qldfrog said:


> no sure if due to Noosa proximity, but a house : nice but just on 10 steep acres today appeared on the market and offered at 3.6m, with my wife thinking they must have done a typo..so basically, for local and informed of the market people, we are not sure if a house is valued at 2.xx or 3.xx..that's a bloody big amount to save or borrow, even when earning a bit of coins...
> my view just below 3m, my wife below 2m...will keep you posted.Had  agents looking at our place this past week



 that depends on the ( Noosa ) house  , i used to work with an architect student  who went on to designing some very interesting ( and expensive ) houses on the QLD North Coast  , what doesn't attract you might  a 'must-have ' feature for others ( i am very negative on pools  but  they can be a key feature for other buyers  , those bloody hot tubs  seem to be another deal-clincher for some )


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## wayneL (12 December 2021)

The 260k p/a woman kinda reminded me of some of my readings of the Stoics:

"If you live in harmony with nature you will never be poor; if you live according what others think, you will never be rich." .... Lucius Annaeus Seneca

Our friend Seneca had many other thoughts along these lines too.


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## over9k (12 December 2021)

wayneL said:


> The 260k p/a woman kinda reminded me of some of my readings of the Stoics:
> 
> "If you live in harmony with nature you will never be poor; if you live according what others think, you will never be rich." .... Lucius Annaeus Seneca
> 
> Our friend Seneca had many other thoughts along these lines too.



Women are far more materialistic than men though. Once you get to a certain point with (a lot of) men, the money is nothing other than keeping score with other men.

I personally don't care - the money is simply to keep my kids and wife in a decent life. I literally do not think about what everyone else have.

Meanwhile, my neighbour's wife quite literally only wants a new porsche SUV because it's the most expensive one. You try telling her that the cheaper range rover is better...

One of my friends can't even convince his mrs that a 2nd hand car, even of the same model she wants to buy new, can be perfectly good. She's utterly convinced that they *have* to buy a new one.


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## Smurf1976 (12 December 2021)

over9k said:


> . My brother just turned a promotion down because of the very simple fact that it was 15% more money for about 40% more work. He knew what doing so meant for him/his family.



At various times I've been in every marginal tax bracket from below the threshold to the highest rate. 

No doubt so have many so to be clear that's not a boast, just saying "been there, seen that".

If the source of income is employment then at either end you are owned.

At the top well if you're being paid big $ there's a reason for that, there's almost certainly some serious responsibility that comes with it and whoever's paying expects results. 

At the bottom well if you're on minimum wages then you're easily replaced.

At either end someone owns you. Not a problem if you're happy with that, big problem if not.


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## Smurf1976 (12 December 2021)

FWIW I note that, using NAB's online calculator, a 3% rise in interest rates adds just under 41% to monthly repayments on a 30 year loan.

That there is the elephant in the room in my view.

Inflation is rising that's a fact.

Will there be a forced increase in interest rates? If so well that's where the real pain starts I expect.


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## over9k (12 December 2021)

Smurf1976 said:


> FWIW I note that, using NAB's online calculator, a 3% rise in interest rates adds just under 41% to monthly repayments on a 30 year loan.
> 
> That there is the elephant in the room in my view.
> 
> ...



Yeah, and then you torpedo your economy. 


It's almost as if there's only so long you can kick a can down the road for.


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## wayneL (12 December 2021)

over9k said:


> Yeah, and then you torpedo your economy.
> 
> 
> It's almost as if there's only so long you can kick a can down the road for.



Incoming torpedo?


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## sptrawler (12 December 2021)

If you are in your 60's, you have seen enough booms and busts, to realise this is shaping up to be a big one IMO.
It will be quite interesting IMO to see how it unfolds, especially in Melbourne /Sydney massive mortgages dependent on massive wages and low interest rates, that sounds as though the elastic band is stretched about as far as it will go.


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## againsthegrain (12 December 2021)

sptrawler said:


> If you are in your 60's, you have seen enough booms and busts, to realise this is shaping up to be a big one IMO.
> It will be quite interesting IMO to see how it unfolds, especially in Melbourne /Sydney massive mortgages dependent on massive wages and low interest rates, that sounds as though the elastic band is stretched about as far as it will go.



Back in the days a 30k first buyer grant would fix things right up,  add another 0 now sir, sink more bad tax dollars into the black hole

p.s corona virus demonstrated to us the population can be pushed quiet far and do sht all about it, especially in aus.  Now that the govt knows aus population will quiet happily eat sht and say thanx let it rip


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## sptrawler (12 December 2021)

againsthegrain said:


> Back in the days a 30k first buyer grant would fix things right up,  add another 0 now sir, sink more bad tax dollars into the black hole



Well there is nothing better in a time of massive change, which we definitely are entering into, than a scared and money hungry workforce. As @ humid has said on numerous occasions there is great money in FIFO work, but not many are interested, well if this transition to renewables is going to cause a huge amount of work in the outback, we will need a huge amount of workers to make it happen in a relative short period of time.
Let's see what happens, when it becomes the money, or the house. 🤣 Try explaining to the missus, but honey I won't be home all the time, can't we just downsize and tighten the belt, maybe you get a second job instead?


----------



## againsthegrain (12 December 2021)

sptrawler said:


> Well there is nothing better in a time of massive change, which we definitely are entering into, than a scared and money hungry workforce. As @ humid has said on numerous occasions there is great money in FIFO work, but not many are interested, well if this transition to renewables is going to cause a huge amount of work in the outback, we will need a huge amount of workers to make it happen in a relative short period of time.
> Let's see what happens, when it becomes the money, or the house. 🤣 Try explaining to the missus, but honey I won't be home all the time, can't we just downsize and tighten the belt, maybe you get a second job instead?




More economically viable to downgrade the missus 😂


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## sptrawler (12 December 2021)

againsthegrain said:


> More economically viable to downgrade the missus 😂



Interesting times coming, if you read in the future of generation and storage thread, over in general chat, the amount of remote work is going to be incredible.
With covid and restrictions on importing labour, this is going to cause a huge headache, as Australians historically over the last 20 years, have been reluctant to work outside the cities.
How the government reverses that trend will be interesting, but they are very upbeat about unemployment numbers dropping and huge household mortgages are a very good motivator.

_AEMO’s step change model showed the amount of electricity across the energy grid would nearly double by 2050 from 180 to 330 terawatt hours, as coal exits, petrol and diesel cars are replaced by electric vehicles and gas-fired industrial processes are electrified_.

No matter how you look at it that is a lot of work, feet on the ground stuff, to not only put in enough new renewables to replace the existing power stations, but also double that.
Then add to that the feet on the ground to change over from a fossil fueld car fleet to a BEV car fleet and all the infrastructure required, this all to happen in the next 30 years.
Well someone's going to be busy, it is either 457's or barristers from Sydney/Melbourne.


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## qldfrog (12 December 2021)

againsthegrain said:


> More economically viable to downgrade the missus 😂



2 young ones swap?😂


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## Smurf1976 (12 December 2021)

sptrawler said:


> If you are in your 60's, you have seen enough booms and busts, to realise this is shaping up to be a big one IMO.



I suspect something many are unaware of is just how long it all takes.

Those who weren't born at the time will no doubt have heard reference to the 1991 recession.

What they probably don't realise is that unemployment started rising rapidly from the second half of 1989 and didn't even start to come down until the end of 1993. It took the whole of the 1990's to overcome in practice and throughout that time "any job is a good job" was very much the thinking.

Then there's interest rates. They trended up throughout the whole of the 1970's and 80's with the final push up, from about 13% to 17% on mortgages, being during 1988 and 89 and blowing up the economy once again, it having also gone bust at the start of the 1980's.

So the "1991" recession was a full decade of economic misery in practice for many. Once the genie gets out of the bottle, it's a massive task to put it back in.


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## sptrawler (12 December 2021)

@Smurf1976 my oldest is 43, he has never seen how difficult things can get, it just appears to me that there are too many coincidences lining up ATM.
I'm not a great believer in coincidences.


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## wayneL (12 December 2021)

sptrawler said:


> @Smurf1976 my oldest is 43, he has never seen how difficult things can get, it just appears to me that there are too many coincidences lining up ATM.
> I'm not a great believer in coincidences.



Yep I can see Albo doing a speech in a few months time about the "recession we had to have" (by then Scotty will probably be the Oz ambassador to the WEF  or perhaps the trade commissioner for Hawaii)


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## sptrawler (12 December 2021)

wayneL said:


> Yep I can see Albo doing a speech in a few months time about the "recession we had to have" (by then Scotty will probably be the Oz ambassador to the WEF  or perhaps the trade commissioner for Hawaii)



And Josh with his feet up on the opposition bench, hands behind head, saying thank god for that.


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## moXJO (14 December 2021)

How are they going to get immigration on a grand scale if there are no houses to rent or buy? 

I think it's time the rba jacked up rates. This shts gone on long enough.


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## sptrawler (14 December 2021)

moXJO said:


> How are they going to get immigration on a grand scale if there are no houses to rent or buy?
> 
> I think it's time the rba jacked up rates. This shts gone on long enough.



A lot of wage slaves on the interest treadmill atm, squeeze time might be here, very soon.


----------



## over9k (14 December 2021)

Smurf1976 said:


> At various times I've been in every marginal tax bracket from below the threshold to the highest rate.
> 
> No doubt so have many so to be clear that's not a boast, just saying "been there, seen that".
> 
> ...



I'm just quoting this for emphasis. Working for a living is a complete fool's errand in this day & age. If there's one thing I'll be drumming into my kids' heads from the day they get their first part time jobs it is that in two thousand and current year you must, you absolutely MUST own at least *something* or you are absolutely boned.


----------



## over9k (14 December 2021)

moXJO said:


> How are they going to get immigration on a grand scale if there are no houses to rent or buy?
> 
> I think it's time the rba jacked up rates. This shts gone on long enough.



Only get worried when the politicians start selling their **** off. Until then, the rocket's still running.


----------



## sptrawler (14 December 2021)

over9k said:


> I'm just quoting this for emphasis. Working for a living is a complete fool's errand in this day & age. If there's one thing I'll be drumming into my kids' heads from the day they get their first part time jobs it is that in two thousand and current year you must, you absolutely MUST own at least *something* or you are absolutely boned.



I read somewhere recently, the Government is going to make reverse mortgages,  more and more attractive. 
IMO the intergenerational transfer is worrying them.


----------



## over9k (14 December 2021)

sptrawler said:


> I read somewhere recently, the Government is going to make reverse mortgages,  more and more attractive.
> IMO the intergenerational transfer is worrying them.



The age pension, healthcare expenditure etc requirements of the boomers is a depression-causing chicken coming home to roost that they're trying to do anything to get out from under the thumb of.

They do NOT want to pay for the boomers' retirements. They also know that housing is, shall we say, very high. Hence why they've been floating the idea of inheritance taxes - anything to get the boomers' retirements *somehow* paid for with their own assets (even if it's retroactively).

There is simply no way the budget expenditure can blow out like it's going to without causing a massive and prolonged recession under the current tax etc structure. It simply cannot be done.

So they're left trying to wriggle and squirm and just think of *something* they can do and keep coming back to using housing in one way or another because where the hell else are they going to get the money from?

The piper's going to have to be paid eventually. If they had their way all the entitlements would simply go but getting rid of them is a political impossibility so we're once again back to having to tax or reverse mortgage or whatever in order to fund the spending.

There's simply no other purse, asset, nest egg etc LEFT to raid at this point. Most industries were laid waste to 30 years ago, any public asset not nailed down was flogged by howard & co 20 years ago, there's just nothing else left now.


----------



## Bill M (20 December 2021)

The Malabar house on Austral St was expected to sell for around the $1.6 million-$1.7 million mark, but strong competition from two committed bidders pushed the price to $2,505,000.​​Sydney auctions: Malabar dump next to Long Bay prison sells for $900k over reserve​
https://www.realestate.com.au/news/...-long-bay-prison-sells-for-900k-over-reserve/


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## Warr87 (21 December 2021)

honestly don't get it, lol.


----------



## wayneL (21 December 2021)

over9k said:


> The age pension, healthcare expenditure etc requirements of the boomers is a depression-causing chicken coming home to roost that they're trying to do anything to get out from under the thumb of.
> 
> They do NOT want to pay for the boomers' retirements. They also know that housing is, shall we say, very high. Hence why they've been floating the idea of inheritance taxes - anything to get the boomers' retirements *somehow* paid for with their own assets (even if it's retroactively).
> 
> ...



There is still high/hyperinflation, as discussed before, though not without its own set of consequences.


----------



## rcm617 (21 December 2021)

Easiest way to cut back on pension would be to include house values in the assets test. Might also help to put a lid on runaway house prices. How to bring it in without losing votes will be the problem.


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## over9k (21 December 2021)

rcm617 said:


> Easiest way to cut back on pension would be to include house values in the assets test. Might also help to put a lid on runaway house prices. *How to bring it in without losing votes will be the problem.*



Bingo. 

Until enough boomers die, this is what we're stuck with.


----------



## qldfrog (21 December 2021)

rcm617 said:


> Easiest way to cut back on pension would be to include house values in the assets test. Might also help to put a lid on runaway house prices. How to bring it in without losing votes will be the problem.



With runaway inflation, pension just need to un indexed and it becomes a non issue


----------



## sptrawler (21 December 2021)

rcm617 said:


> Easiest way to cut back on pension would be to include house values in the assets test. Might also help to put a lid on runaway house prices. How to bring it in without losing votes will be the problem.



Just extend the reverse mortgage facility, to be like a superannuation pension, with minimum withdrawals.
Then when the person passes away it is taken out of the estate. Just a thought.
Pretty easy really, property is valued, if the person wants to stay in it and have a pension, then that pension is fixed at a % of the value of the property + interest and the pension drawdown is indexed every year with their birthday and life expectancy.
In the end the person enjoys the reward of their endeavours and the Government gets its money back with interest.


----------



## Warr87 (21 December 2021)

i would not be surprised if it takes a more global event (like mortgage defaults in other countries) or similar to trigger a bit of fear, and then see a spooked/downward spiral. i've said it in other posts, but i dare say it will be a tinderbox though I still hope it wont be.

until then, its a game of hot potato for whoever is currently the government in power.


----------



## sptrawler (21 December 2021)

Warr87 said:


> i would not be surprised if it takes a more global event (like mortgage defaults in other countries) or similar to trigger a bit of fear, and then see a spooked/downward spiral. i've said it in other posts, but i dare say it will be a tinderbox though I still hope it wont be.
> 
> until then, its a game of hot potato for whoever is currently the government in power.



I think it depends how it is sold, in the past it has been a case of demonizing old people and saying they should be chucked out of their home or lose the pension, then the other side says why should they have to lose the house they have lived in for years just because it has gone up in value.
This way the person can stay in their house, but they have to fund their pension through it and it isn't just a basic pension it is a pension the same as if they had the equivalent in super and it has an interest component as they are borrowing against it.
Then they can decide, if they want to sell it and downsize, because in the end they lose it anyway and it solves the intergenerational wealth transfer.
It would be interesting how they would set it up eg, house value $5m $1.6m max pension benefit so pays say 5% 67 year old $80k less interest, $3.4m deemed as in accumulation phase at 15%, therefore tax payable on the increase in value each year payable annually.
Basically just treating the home as though it was money in super, so year one the person has say approx $100k against the estate, pension + interest + tax owing on valuation.


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## Warr87 (21 December 2021)

my memory must be short (or I'm too young) because I don't remember people being demonised. I'm sure you are right though (I just dont remember this talk but I'm only in my 30s). I could see that argument if people had large houses worth millions and yet still managed to draw on the pension or other benefits with careful accounting tricks. that never looks good to the public if someone is struggling to get the pension but has no assets vs someone with mass amounts of assets and pension. but honestly not too sure how it's all done these days as I'm a fair ways off from needing it. I do understand to some extent the accumulation phase and how that is generally structured.

I'll be honest, I don't have a general solution to suggest for all of this. i'm sure if they wanted to solve it, they could make some headway. no shortage of smart people with knowledge in taxation and economics. it'd be more the political appetite. not just to suggest policy, but its likely-hood of passing through.


----------



## sptrawler (21 December 2021)

You are right, it was floated quite a few years ago, probably 20_30 years actually, because $1m homes were called homes of the very rich then, now in Melbourne/Sydney they are common place.


----------



## Warr87 (21 December 2021)

I remember 15years ago that a 1mil house was a big thing. But as you say now ... pretty common place. (for now, who knows if the house of cards folds)


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## Smurf1976 (22 December 2021)

sptrawler said:


> $1m homes were called homes of the very rich then,




Just one generation ago someone having $1 million was quite something, a notable achievement, no matter what assets it consisted of. At that time the actual definition of high income in Australia as per the applied Income Tax rates was $35k a year.

Today $1 million won't even buy an average suburban house in Sydney and $35k is below the minimum wage for full time employment.

Such is the extent of inflation that in the space of a single generation the same $ amount has gone from bona fide high income to below the minimum wage and from truly rich to inadequate to buy a basic house.

Always remember this when someone says inflation is low.


----------



## Warr87 (22 December 2021)

Smurf1976 said:


> Just one generation ago someone having $1 million was quite something, a notable achievement, no matter what assets it consisted of. At that time the actual definition of high income in Australia as per the applied Income Tax rates was $35k a year.
> 
> Today $1 million won't even buy an average suburban house in Sydney and $35k is below the minimum wage for full time employment.
> 
> ...



true. but isn't part of the point that house prices have risen far steeper and quicker than other metrics as well. inflation for a number of years was technically low, but in comparison to those timelines you mention, it is a stark contrast.

i look at houses around 5 x my annual salary as a guide. that was feasible before. hardly the case now even with the grow in the 'typical' wage.


----------



## sptrawler (22 December 2021)

Warr87 said:


> true. but isn't part of the point that house prices have risen far steeper and quicker than other metrics as well. inflation for a number of years was technically low, but in comparison to those timelines you mention, it is a stark contrast.
> 
> i look at houses around 5 x my annual salary as a guide. that was feasible before. hardly the case now even with the grow in the 'typical' wage.



The problem is, it isnt Australia wide, it is an issue that has really centralised on Sydney and Melbourne and that is what makes it hard to tackle it really requires a Sydney Melbourne answer.
Which probably goes back to interest rates, hiking them up puts a lot of financial stress on those with the biggest loans, but maybe it is the only way to bring the ponzi scheme to an end?


----------



## Warr87 (22 December 2021)

sptrawler said:


> The problem is, it isnt Australia wide, it is an issue that has really centralised on Sydney and Melbourne and that is what makes it hard to tackle it really requires a Sydney Melbourne answer.
> Which probably goes back to interest rates, hiking them up puts a lot of financial stress on those with the biggest loans, but maybe it is the only way to bring the ponzi scheme to an end?




I would say that it is concentrated around Sydney and Melbourne. I think other cities feel the effects to some extent. Though the problem is as you stated, how do you tackle a problem that is primarily around 2 cities? I'm not sure local governments want to take that on though. I mean, don't they get more income the higher those house prices are? Better to let the federal government look like the bad guy.

I'm not opposed to raising interest rates though.


----------



## qldfrog (22 December 2021)

Smurf1976 said:


> Just one generation ago someone having $1 million was quite something, a notable achievement, no matter what assets it consisted of. At that time the actual definition of high income in Australia as per the applied Income Tax rates was $35k a year.
> 
> Today $1 million won't even buy an average suburban house in Sydney and $35k is below the minimum wage for full time employment.
> 
> ...



And always remember this when doing the sums when retiring...Seems my timing is always wrong


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## gartley (6 January 2022)

IR pattern continues to build, expect IR to be back to 2019 levels within 1-2 years. Greedy bulls that don't liquidate soon will be in for a surprising dissapointment


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## sptrawler (27 January 2022)

Social housing flats, wasn't this done in the 1960's and they became multistory slums and hives of crime? I know I lived in one in my early days in Perth, it had that bad a name, the council ended up changing it. Which is a shame, it was aptly named Battle Street. 🤣









						National Affordable Housing Alliance: New coalition calls for $20bn to address social housing shortfall - realestate.com.au
					

A newly formed coalition of powerful Australian industry groups is calling for a $20bn federal government intervention to help fight a widening social housing crisis around the nation.



					www.realestate.com.au
				




Mirvac getting into the build to rent scene.








						New concept could end big rental gripes – but there’s a catch
					

It’s one of the biggest frustrations from roiled renters: the hefty bond that sits in limbo and then has all or part of it withheld by the agent to pay for a cleaner, despite you spending days scrubbing every dusty crevice. One in three renters don’t get their full bond back.




					www.news.com.au


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## SirRumpole (29 January 2022)

Workers on average incomes can't afford to either buy or rent, so they sleep in their cars.

Shows what happens when we have governments that smile when the rich get richer.









						'Never thought I'd be homeless': Garry sleeps in his van because his pay doesn't cover rent and food
					

Instead of driving home from work, Garry Wallis sets up his van in a suburban car park and settles in for the night. The 59-year-old says despite working all his life, he's homeless.




					www.abc.net.au


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## againsthegrain (29 January 2022)

SirRumpole said:


> Workers on average incomes can't afford to either buy or rent, so they sleep in their cars.
> 
> Shows what happens when we have governments that smile when the rich get richer.
> 
> ...




Im sure those people in the article,  its somehow their fault. Yeah thats right some politician will find a perfectly good explanation why they are solely at blame for the situation they are in.... get a better job eh?


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## Smurf1976 (29 January 2022)

SirRumpole said:


> Shows what happens when we have governments that smile when the rich get richer.



As a technicality it's not the rich getting richer that's the problem, it's the many who are becoming poorer in real terms that's the problem. A few people being rich isn't a problem if the rest are also doing OK.

Real terms being what you can afford to buy physically, as distinct from $ in an account or on a screen.

Go back 50 years and one adult, with nothing more than a high school education, could obtain full time work the income from which was adequate to buy a house, run at least one car and support a wife and children. Make that two cars for those with a better education and job.

Today two adults, both with a university education and both working full time, struggle to afford a house, car and kids.

That's an epic decline in real terms but bizarrely, most seem rather blind to it.

Why? Well in short we offshored most of our value adding industry that formed the basis of that situation 50 years ago and kept the game going by running up debt and debasing the the currency. That's not creating real wealth and the effects are now all too apparent. 

There's a few who saw what was coming and were concerned about it back in the 1980's or 90's but they failed to get the message through to the public. It's not that they didn't try but that the public and government just didn't want to hear it.


----------



## wayneL (29 January 2022)

againsthegrain said:


> Im sure those people in the article,  its somehow their fault. Yeah thats right some politician will find a perfectly good explanation why they are solely at blame for the situation they are in.... get a better job eh?



It's all those smashed avocados


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## SirRumpole (29 January 2022)

Smurf1976 said:


> As a technicality it's not the rich getting richer that's the problem, it's the many who are becoming poorer in real terms that's the problem. A few people being rich isn't a problem if the rest are also doing OK.




While I agree with the general thrust of your post, in the specific case of property prices where negative gearing benefits those who have money to invest in rental property at the expense of those looking to buy their first home, I think you can say that the (relatively) rich are getting richer while the majority in the home buying market certainly are not.


----------



## sptrawler (29 January 2022)

SirRumpole said:


> While I agree with the general thrust of your post, in the specific case of property prices where negative gearing benefits those who have money to invest in rental property at the expense of those looking to buy their first home, I think you can say that the (relatively) rich are getting richer while the majority in the home buying market certainly are not.



I have said it numerous times over the years, houses are really non productive investment IMO, if you want to help first home buyers let them have a tax deduction on their interest to a certain value.
Also with negative gearing, it should only be allowed to a certain value, the whole point in an investment is for it to become positive geared, that seems to have been lost somewhere in the journey. IMO an investment shouldn't stack up, just as a tax reduction strategy.


----------



## againsthegrain (29 January 2022)




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## SirRumpole (29 January 2022)

sptrawler said:


> I have said it numerous times over the years, houses are really non productive investment IMO, if you want to help first home buyers let them have a tax deduction on their interest to a certain value.
> *Also with negative gearing, it should only be allowed to a certain value, the whole point in an investment is for it to become positive geared, that seems to have been lost somewhere in the journey. IMO an investment shouldn't stack up, just as a tax reduction strategy.*



Exactly.

Go back to the previous system where deductions are only allowed against the income that the investment produces, then it's up to the investor to decide whether the investment is profitable.


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## qldfrog (29 January 2022)

SirRumpole said:


> While I agree with the general thrust of your post, in the specific case of property prices where negative gearing benefits those who have money to invest in rental property at the expense of those looking to buy their first home, I think you can say that the (relatively) rich are getting richer while the majority in the home buying market certainly are not.



@SirRumpole , i invite you to reread what you have just written and try to find your logic:
I summarise for you and let's try to break the old record
So negative gearing is favoring the rich bastards who buy investment properties for rental ,preventing people to buy their own house, and that is why this 60y old can not find a rental.....got it?
You see the issue
I now understand why 50% of people can believe that crap news of their ABC and News ltd
i would even go further
a 3bedroom house purchased by its owner will house a family
The same house on rental will probably be shared and so accomodate more people..
basically the complete opposite of your point.and labour has been saying that crap for decades.
Here in Noosa shire, there is a critical shortage of rental..and guess what is the reason? IP being sold to new owners who live there..
NOT enough IP is the issue 
You know , IP, 2% return , laws after laws preventing you from expelling bad tenants, forcing you to accept pets, adding regulations after regulation,higher rates and when covid comes well , tenants do not pay but obviously the horrible landlords still pay rates,BC and maintenance...
If anyone is genuinely trying to solve that issue, either the gov build social housing and bear the costs or you release the private sector: less tenant rights,easier building processes. Which requires the removal of most of the council rackets :zonings, certification etcwould also lower corruption in this country which is starting to get worrying

As is usual in Australia, we follow the bad examples of 20y ago Europe and are surprised to have the same results.
In my humble opinion, buying an IP house to put it on rental in 2022 in Australia is not a very bright idea and as it get worse, slowly rentals will disappear


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## qldfrog (29 January 2022)

qldfrog said:


> @SirRumpole , i invite you to reread what you have just written and try to find your logic:
> I summarise for you and let's try to break the old record
> So negative gearing is favoring the rich bastards who buy investment properties for rental ,preventing people to buy their own house, and that is why this 60y old can not find a rental.....got it?
> You see the issue
> ...



And in French:








						Laisser un logement vacant va devenir une infraction en Belgique
					

Dès le 1er septembre, des mesures seront prises en Wallonie, région belge, pour lutter contre les logements vides et permettre aux ménages de se loger.




					immobilier.lefigaro.fr
				



Google translate but in Belgium and france, leaving a house unit empty is now unlawful..owners prefer leaving units empty than risking a tenant..
Give 1 more labour/green gov..and we will have to do similar...as noone will dare renting..but sure negative gearing.....


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## SirRumpole (29 January 2022)

qldfrog said:


> @SirRumpole , i invite you to reread what you have just written and try to find your logic:
> I summarise for you and let's try to break the old record
> So negative gearing is favoring the rich bastards who buy investment properties for rental ,preventing people to buy their own house, and that is why this 60y old can not find a rental.....got it?
> You see the issue
> ...





The basis of retirement security is home ownership. If people are still renting at retirement age they are in big trouble financially. One of the reasons people can't afford houses is that investors have taken over the market . There needs to be a swing in the other direction towards home ownership or there will be a lot more people living on the streets.


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## Smurf1976 (29 January 2022)

If the situation is to be fixed then as with anything it’s the disease which needs to be cured not simply the symptoms.

Shift the focus back to productive industry creating real wealth with houses just something for living in and the rest of the problems ultimately go away.

Anything else is akin to taking Panadol to cure cancer. At best it might dull the symptoms for a while.


----------



## qldfrog (29 January 2022)

SirRumpole said:


> The basis of retirement security is home ownership. If people are still renting at retirement age they are in big trouble financially. One of the reasons people can't afford houses is that investors have taken over the market . There needs to be a swing in the other direction towards home ownership or there will be a lot more people living on the streets.



Sp you expect everyone ar retirement age to own his her home?
I looked for a socialist Scandinavian heaven: 
Sweden: where less than 40pc of people own their houses
Australian situation of very high ownership is an anomaly and the Reset coming is making sure we will go back in rank...

https://www.statista.com/statistics...ority of,were rented multi-dwelling buildings.


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## divs4ever (29 January 2022)

sptrawler said:


> If you are in your 60's, you have seen enough booms and busts, to realise this is shaping up to be a big one IMO.
> It will be quite interesting IMO to see how it unfolds, especially in Melbourne /Sydney massive mortgages dependent on massive wages and low interest rates, that sounds as though the elastic band is stretched about as far as it will go.



 yes , HOWEVER we have seen governments ALREADY unleash ( previously ) unimaginable levels of stimulus , and rent/mortgage moratoriums  , they might resort to those measures  again , or reach for broader support measures ,

 a BIG one , yes .. but WHEN ( will the government be forced to buy all those delinquent mortgages ,  and become  the lender of last resort )


----------



## divs4ever (29 January 2022)

i probably should point out  a modern ( newly-built ) house  differs in many areas of an eighties built house 

  having lived ( shared rental ) in an AV Jennings  award-winning home  , which had some interesting design features ( flaws ??) i shudder to think  how building economics  has changed in the last 40 years  .. ( oh damn i don't have to , i did several house  cleans  prior to the owner moving in to a new home .. or refusing to settle at the last minute )

 interesting times are a coming  ( so is your newly built million dollar home well-built , or just conveniently located )


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## SirRumpole (29 January 2022)

divs4ever said:


> interesting times are a coming ( so is your newly built million dollar home well-built , or just conveniently located )




Yes, that is another factor in rising house prices, developers who want to build McMansions from the start, instead of more modest homes that can be expanded as the family and income grows.


----------



## sptrawler (29 January 2022)

qldfrog said:


> Sp you expect everyone ar retirement age to own his her home?
> I looked for a socialist Scandinavian heaven:
> Sweden: where less than 40pc of people own their houses
> Australian situation of very high ownership is an anomaly and the Reset coming is making sure we will go back in rank...
> ...



The reality is frog, Australia is an anomaly, where we have copious amounts of land, a small population and an amazing amount of wealth through minerals.
The problem is all this excess wealth is being swallowed up, in purchasing an over valued tiny bit of land with a  brick shed on it, for a stupid price. 
This then ties that wage earner and their partner up for years, so all that money is not productive in any way.
Ridiculous house prices, is actually going to send Australia broke.
All that money tied up in a non productive shed, rather than building businesses that manufacture somefhing and provide employment for generations.


----------



## sptrawler (29 January 2022)

divs4ever said:


> yes , HOWEVER we have seen governments ALREADY unleash ( previously ) unimaginable levels of stimulus , and rent/mortgage moratoriums  , they might resort to those measures  again , or reach for broader support measures ,
> 
> a BIG one , yes .. but WHEN ( will the government be forced to buy all those delinquent mortgages ,  and become  the lender of last resort )



It wont happen, we will just keep importing buyers, we have plenty of land.
The real issue is how many uber drivers and baristas do we need? We need to fckn smarten up and go back to the future, where Australians were smart, rather than now where everyone thinks they're smart because they have a degree.


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## sptrawler (29 January 2022)

SirRumpole said:


> Yes, that is another factor in rising house prices, developers who want to build McMansions from the start, instead of more modest homes that can be expanded as the family and income grows.



Yes and the builder advertises in the newspaper, that has climate change and global warming, filling the first 5 pages.
Then McMansions filling tbe other half of the paper. Lol


----------



## Smurf1976 (29 January 2022)

Central planning versus free markets. A somewhat ideological debate that's been around a long time now.

Personally I'll argue that free markets do a better job of just about everything with the notable exception of single integrated systems such as power grids, road networks or water supply where technocrat central planners have the advantage and markets are problematic at best.

But we're here to talk about housing not how to make the traffic flow or keep the lights on so why am I mentioning that? For good reason actually and it's because regardless of which side of the fence someone's on with that debate, one thing I think we'd all agree on is that either beats neither. However imperfect a centrally planned supermarket or market designed city streets might be, they beat having nothing at all.

Trouble is right now we don't have either system working as intended and that goes not just for housing but for just about everything. There are very few instances where a true free market is in operation without someone meddling in it meanwhile there are also no technocrat central planners tasked with meeting society's needs. With few exceptions that's across the economy, it's not unique to housing although that's one of the worst areas.

With nobody in charge with a plan, and no free market as an alternative, it's pretty much inevitable that it's going to be chaotic and that is indeed the outcome. Both approaches can only work if they're allowed to actually work.


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## qldfrog (29 January 2022)

sptrawler said:


> The reality is frog, Australia is an anomaly, where we have copious amounts of land, a small population and an amazing amount of wealth through minerals.
> The problem is all this excess wealth is being swallowed up, in purchasing an over valued tiny bit of land with a  brick shed on it, for a stupid price.
> This then ties that wage earner and their partner up for years, so all that money is not productive in any way.
> Ridiculous house prices, is actually going to send Australia broke.
> All that money tied up in a non productive shed, rather than building businesses that manufacture somefhing and provide employment for generations.



I agree ..but saying negative gearing is the cause of 60y old persons sleeping in their car...hum...
Dissolve council, remove brakes to building and this will be sorted
As for house prices too high, just a compounded result of QE and never ending money printing.we just worsen the issue with manufactured limitation,regulations and brainless measures


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## SirRumpole (29 January 2022)

Smurf1976 said:


> Central planning versus free markets.




The best system imo is neither of the above, but a sensible mix of them both.


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## qldfrog (29 January 2022)

Smurf1976 said:


> Central planning versus free markets. A somewhat ideological debate that's been around a long time now.
> 
> Personally I'll argue that free markets do a better job of just about everything with the notable exception of single integrated systems such as power grids, road networks or water supply where technocrat central planners have the advantage and markets are problematic at best.
> 
> ...



100pc agree.but this is a country where a state is playing North Korea against omicron and people wear masks in own cars and stockpile toilet paper while meat shelves are empty as we prevent able people from working...good luck ..this gentleman will not find a roof soon.


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## qldfrog (29 January 2022)

sptrawler said:


> Yes and the builder advertises in the newspaper, that has climate change and global warming, filling the first 5 pages.
> Then McMansions filling tbe other half of the paper. Lol



Don't worry,the millenials are being sold the new posh version of trailer park living: tiny house
They will own nothing and be happy


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## sptrawler (29 January 2022)

qldfrog said:


> I agree ..but saying negative gearing is the cause of 60y old persons sleeping in their car...hum...
> Dissolve council, remove brakes to building and this will be sorted
> As for house prices too high, just a compounded result of QE and never ending money printing.we just worsen the issue with manufactured limitation,regulations and brainless measures



I never said negative gearing is the cause for a 60 year old living in a car, a 60 year old living in a car in Australia is hard to fathom, are they living in a car in Sydney or Dubbo?


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## Humid (30 January 2022)

sptrawler said:


> I never said negative gearing is the cause for a 60 year old living in a car, a 60 year old living in a car in Australia is hard to fathom, are they living in a car in Sydney or Dubbo?



Mandurah


----------



## sptrawler (30 January 2022)

It's cheaper to buy a unit in Mandurah, than to rent one. 🤣
The other issue is of course, isn't a 60 year old one of those fat cat baby boomers? You know the ones who are all sitting on millions, maybe the guy is living in GG's Arnage.


----------



## qldfrog (30 January 2022)

sptrawler said:


> I never said negative gearing is the cause for a 60 year old living in a car, a 60 year old living in a car in Australia is hard to fathom, are they living in a car in Sydney or Dubbo?



No you did not but Sir Rumpole was.
I am getting increasingly frustrated to see the same old records played by politicians. And supported by the electorate..
baseless economically nonsensical theories which should be urban myths used as pretexts to do nothing progressive ( not used in the left right way)
20 to 30y behind in mentaly..fair..but also acts..dangerous
This is valid for housing talks but true in so many more areas,technically, medically..look at bloody covid here
We have been living in a society of free credit and globalism with socialism and cronysm for 1 or 2 generations at least.
This leads to severe actual wealth reduction(socialism), debasing currency and so increasing real assets aka land PM , smashing middle class and pushing wealth to the 2 extremes: cronies .and not discussed on the abc, the poorer..
i would bet anything that someone deciding not to work or on invalidity disability pension nowadays is better off now than 30y ago..
Australia was lucky and rode a couple of crisis on the back of the billion of chinese workers.. getting cheap stuff wo working...but that is obviously non sustainable.
Ultimately this collapses and what is left? Land: mines, real estate,agriculture and sun..maybe power
This is a very caricatural extreme on purpose of the Australian economy
Mining with heavy automated process extract ore/coal, 
pay royalties and taxes, 
Taxes pays for public servants
Taxes pay NDIS,welfare
Recipients buy Chinese stuff cheap and coffees with backpacker/chinese baristas
Australian businesses can not compete and close.
Lost jobs move into welfare or baristas
Now, who do you think was the landlord in the above...most probably the Australian business owner yep not the barista, or the PS
Australia is getting poorer regardless of GDP or average house price all denominated in a fiat currency with limited shef life.


----------



## JohnDe (30 January 2022)

The usual pessimists posting the same gruel for the past 10+ years. It almost always comes from those that have not travelled, or kept themselves up-to-date and informed with a wide enough or varied enough information source.




> _....millennials are being sold the new posh version of trailer park living.... baseless economically nonsensical theories which should be urban myths used as pretexts to do nothing progressive.... living in a society of free credit and globalism with socialism and cronyism for 1 or 2 generations at least.... Australian businesses can not compete and close.... Lost jobs move into welfare or baristas.... Australia is getting poorer regardless of GDP or average house price all denominated in a fiat currency with limited shef life._





Life may not be all roses at the moment but when has it ever been?

As long as I can remember there has been people complaining about governments, house prices, poverty, the cost of groceries. If I had listened to and believed it all I would never have purchased my home, investments, and business.

Look past the negative, behind it is the positives and the good. Don't believe me? Go and catch up with you r history, have a look at what life was like 100 or 150 years years ago. Look at the inventions and science that is developed every year, even last month. Ask a new Australian why they want to live here.


----------



## Humid (30 January 2022)

sptrawler said:


> It's cheaper to buy a unit in Mandurah, than to rent one. 🤣
> The other issue is of course, isn't a 60 year old one of those fat cat baby boomers? You know the ones who are all sitting on millions, maybe the guy is living in GG's Arnage.



I usually close the windows and keep driving


----------



## sptrawler (30 January 2022)

Humid said:


> I usually close the windows and keep driving



Oh well, @IFocus and I have to be thankful for small mercies. 😂


----------



## Smurf1976 (30 January 2022)

JohnDe said:


> The usual pessimists posting the same gruel for the past 10+ years. It almost always comes from those that have not travelled, or kept themselves up-to-date and informed with a wide enough or varied enough information source.



Compare now versus any time in your own life.

So far as the ability of an average worker to afford a house is concerned, the situation has gone backwards that's undeniable. What a manual labourer could easily achieve 50 years ago is now almost out of reach for a qualified professional.

As an investment housing's been great for many but from a societal and national economic perspective there's a problem most certainly.

I'm in a situation that many are in. I own outright, I'm doing fine, but it would be pretty much impossible for anyone to take the same path today that got me there.

To the extent I'm concerned, it's concern about others and the future of the economy more broadly, it's not a personal complaint.


----------



## qldfrog (30 January 2022)

Smurf1976 said:


> Compare now versus any time in your own life.
> 
> So far as the ability of an average worker to afford a house is concerned, the situation has gone backwards that's undeniable. What a manual labourer could easily achieve 50 years ago is now almost out of reach for a qualified professional.
> 
> ...



No personal grief either just to be fully honest: i own house and land,
If gov does not want me to work? I stop.not a bad life guys..i recommend
If they ramp taxes i will **** off..obviously not easy but hey better work on this than for a salary, better ROI too
Do not fight governments and narratives..ride them ir take actions


----------



## JohnDe (30 January 2022)

Smurf1976 said:


> Compare now versus any time in your own life.
> 
> So far as the ability of an average worker to afford a house is concerned, the situation has gone backwards that's undeniable. What a manual labourer could easily achieve 50 years ago is now almost out of reach for a qualified professional.
> 
> ...




My work allows me to meet a lot of people each day from all sorts of backgrounds. Young adults living with parents and others moving out, new Australian citizen's, workers, business owners, retired, and so on. Buying a home has always been the biggest and hardest purchase.

There are several differences today that influences a persons capability to purchase a property.  
Negative gearing has allowed older generations to purchase investment properties, they can get loans easier and for larger amounts using their current home as collateral. This reduces the number of saleable properties available, which increases prices.

The other issue, people wanting to have all the mod cons; the dishwasher, gourmet kitchen, landscaping and so on.

Another issue is location, many want to live in or near established suburbs. There are many low cost homes in other suburbs, which can be used as a stepping stone.

toys; people spend their money on new phones with expensive plans, streaming services, expensive cars, boats. holidays.

Previous generations have sacrificed to be able to buy a home and look after a family. There are still people quietly getting on with buying a property while sacrificing luxuries and location.


----------



## sptrawler (30 January 2022)

qldfrog said:


> No personal grief either just to be fully honest: i own house and land,
> If gov does not want me to work? I stop.not a bad life guys..i recommend
> If they ramp taxes i will **** off..obviously not easy but hey better work on this than for a salary, better ROI too
> Do not fight governments and narratives..ride them ir take actions



My guess is personal income taxes are on a downward trajectory, the only tax they really have that can cover this mess is GST, the States have to agree but I don't think there are many options with the deficit trajectory. 
It is either hit everybody with more GST, or hit the mining companies with a volumetric materials tax, my money's on GST.😂
Nothing else will raise enough money to scratch the surface of the deficit.


----------



## qldfrog (30 January 2022)

sptrawler said:


> My guess is personal income taxes are on a downward trajectory, the only tax they really have that can cover this mess is GST, the States have to agree but I don't think there are many options with the deficit trajectory.
> It is either hit everybody with more GST, or hit the mining companies with a volumetric materials tax, my money's on GST.😂
> Nothing else will raise enough money to scratch the surface of the deficit.



Leave inflation at 10pc, do not change IR, do not change tax brackets or GST, and the deficit is a non issue in 10y...


----------



## sptrawler (30 January 2022)

qldfrog said:


> Leave inflation at 10pc, do not change IR, do not change tax brackets or GST, and the deficit is a non issue in 10y...



Put me down for some of that. Yipee at last a return on my survival term deposit stash.


----------



## qldfrog (30 January 2022)

sptrawler said:


> Put me down for some of that. Yipee at last a return on my survival term deposit stash.



IR on your TD will not change i am afraid... everyone will be creamed.
Loan ir will go up but not TD,unless you loan peer to peer


----------



## sptrawler (30 January 2022)

qldfrog said:


> IR on your TD will not change i am afraid... everyone will be creamed.
> Loan ir will go up but not TD,unless you loan peer to peer



Is the p2p still going?


----------



## qldfrog (31 January 2022)

sptrawler said:


> Is the p2p still going?



As far as i know yes.🥴getting my 6.5 pc return monthly but i reduced heavily my exposure..from memory down to around 10k .was very cautious iinitially but so far has been a great return and unexpected investment.m8ne was the green energy loans and sold as gov protected


----------



## MovingAverage (31 January 2022)

sptrawler said:


> I read somewhere recently, the Government is going to make reverse mortgages,  more and more attractive.
> IMO the intergenerational transfer is worrying them.



Another step in the government's push to make retirees "unlock the capital in the PPOR" and wean folks off old age pensions.


----------



## Jeda (31 January 2022)

JohnDe said:


> My work allows me to meet a lot of people each day from all sorts of backgrounds. Young adults living with parents and others moving out, new Australian citizen's, workers, business owners, retired, and so on. Buying a home has always been the biggest and hardest purchase.
> 
> There are several differences today that influences a persons capability to purchase a property.
> Negative gearing has allowed older generations to purchase investment properties, they can get loans easier and for larger amounts using their current home as collateral. This reduces the number of saleable properties available, which increases prices.
> ...




My nephew bought a block of land in a new suburb a way from his family. then he build a home and nothing else. when he and his girlfriend had some more savings they put in a driveway and a garden shed. soon after they put in a rear garden with an area for their son and a vegetable patch. last week they finished the front yard with lawn and a path. On friday they celebrated thier second sons birth. all happy as Larry


----------



## MovingAverage (31 January 2022)

sptrawler said:


> Also with negative gearing, it should only be allowed to a certain value, the whole point in an investment is for it to become positive geared, that seems to have been lost somewhere in the journey. IMO an investment shouldn't stack up, just as a tax reduction strategy.




You've overlooked one major point. Not all investments (shares, houses, emu farms etc etc) are about generating income so on many occasions an investment is not about being positively geared. Lots of investments are about capital growth--which is what a lot (not all) of housing investors are chasing. What is often overlooked in the debate about negative gearing in investment properties is the CGT you pay on the way out.

I have recently offloaded an investment property in Sydney which was negative geared for many years (I'm very pro negative gearing and see nothing wrong with it). We have had relatively low interest rates for many many years with climbing rental yields so the fact is the negative gearing has been hardly worth the trouble. But trust me I am paying a truck load of CGT in July. The CGT I will be paying will more than offset any negative gearing "hand outs" the government has given me over the years.


----------



## SirRumpole (31 January 2022)

qldfrog said:


> No personal grief either just to be fully honest: i own house and land,




So do I. 

Don't pay rent. House is not that great but I get by. 

My concern is for the future generations and the condition of the government's balance sheet.

The more people that own their own homes and are not dependent on the pension, the better.

Agree ?


----------



## JohnDe (31 January 2022)

MovingAverage said:


> You've overlooked one major point. Not all investments (shares, houses, emu farms etc etc) are about generating income so on many occasions an investment is not about being positively geared. Lots of investments are about capital growth--which is what a lot (not all) of housing investors are chasing. What is often overlooked in the debate about negative gearing in investment properties is the CGT you pay on the way out.
> 
> I have recently offloaded an investment property in Sydney which was negative geared for many years (I'm very pro negative gearing and see nothing wrong with it). We have had relatively low interest rates for many many years with climbing rental yields so the fact is the negative gearing has been hardly worth the trouble. But trust me I am paying a truck load of CGT in July. The CGT I will be paying will more than offset any negative gearing "hand outs" the government has given me over the years.



 Sounds similar to my situation, except even with the CGT I am long way in front.

Negative gearing is a wealth growth tool, that’s why it was introduced. It’s so good that there are people that build a large portfolio of properties which reduce the number of saleable homes,  which is why Labour tried to change the rules to reduce CGT benefits for investors with the idea of allowing first home buyers into the market, but that backfired when the millions of negatively gear voters rebelled.


----------



## qldfrog (31 January 2022)

SirRumpole said:


> So do I.
> 
> Don't pay rent. House is not that great but I get by.
> 
> ...



yes but unrealistic, you can not expect widespread house ownership when cost of house is 30% at least fees and extra gov parasiting costs 
And the issue was the absence of rental..which is triggered by the move out of IP..the very one you blame
we do not have enough houses filling the demand that is as simple as that; not enough in the right places of what people want.if people wanted small houses, they would get it


----------



## qldfrog (31 January 2022)

qldfrog said:


> yes but unrealistic, you can not expect widespread house ownership when cost of house is 30% at least fees and extra gov parasiting costs
> And the issue was the absence of rental..which is triggered by the move out of IP..the very one you blame
> we do not have enough houses filling the demand that is as simple as that; not enough in the right places of what people want.if people wanted small houses, they would get it



basically focus should not be on welfare social housing but on providing ways for people to earn decent living vs costs, and that is going down the drain even faster than taxes rises


----------



## SirRumpole (31 January 2022)

qldfrog said:


> yes but unrealistic, you can not expect widespread house ownership when cost of house is 30% at least fees and extra gov parasiting costs
> And the issue was the absence of rental..which is triggered by the move out of IP..the very one you blame
> we do not have enough houses filling the demand that is as simple as that; not enough in the right places of what people want.if people wanted small houses, they would get it




I agree with your statement about parasitic governments.

Perrotet had an idea of replacing up front stamp duty with 'Land Tax'. As long as that doesn't apply to currently owned houses it might be worth considering.

*if people wanted small houses, they would get it*

Not necessarily, developers basically dictate the size of the houses to make it more profitable for them, ie the bigger the better so they can inflate the price. What they should do is build more modular houses that are easier to extend later.


----------



## sptrawler (31 January 2022)

MovingAverage said:


> You've overlooked one major point. Not all investments (shares, houses, emu farms etc etc) are about generating income so on many occasions an investment is not about being positively geared. Lots of investments are about capital growth--which is what a lot (not all) of housing investors are chasing. What is often overlooked in the debate about negative gearing in investment properties is the CGT you pay on the way out.
> 
> I have recently offloaded an investment property in Sydney which was negative geared for many years (I'm very pro negative gearing and see nothing wrong with it). We have had relatively low interest rates for many many years with climbing rental yields so the fact is the negative gearing has been hardly worth the trouble. But trust me I am paying a truck load of CGT in July. The CGT I will be paying will more than offset any negative gearing "hand outs" the government has given me over the years.



I don't disagree with you, I have owned plenty of investment properties and capital gain is what everyone is after.
But that is what is driving the prices and is soaking up a lot of wealth, that could be deployed into more productive investments.
Negative gearing just helps the system keep rolling along IMO, people can't rant and rave about the cost of property and in the next breath support the tax advantage that promotes the capital gain.
As with you I have sold out of investment property, it isn't an investment I was happy carrying in retirement, equities are a lot less trouble. 😂


----------



## MovingAverage (31 January 2022)

JohnDe said:


> Sounds similar to my situation, except even with the CGT I am long way in front.
> 
> Negative gearing is a wealth growth tool, that’s why it was introduced. It’s so good that there are people that build a large portfolio of properties which reduce the number of saleable homes,  which is why Labour tried to change the rules to reduce CGT benefits for investors with the idea of allowing first home buyers into the market, but that backfired when the millions of negatively gear voters rebelled.




Another populist brain fart idea from the ALP to tackle housing prices. There is absolutely no way dropping the CGT discount (which is what I assume you're referring to) will resolve the affordability issue and take the heat out of the property market. Without the CGT discount you can still make enough money out of investment properties to make it a worthwhile investment and that will continue to attract investors.


----------



## JohnDe (31 January 2022)

sptrawler said:


> I don't disagree with you, I have owned plenty of investment properties and capital gain is what everyone is after.
> But that is what is driving the prices and is soaking up a lot of wealth, that could be deployed into more productive investments.
> Negative gearing just helps the system keep rolling along IMO, people can't rant and rave about the cost of property and in the next breath support the tax advantage that promotes the capital gain.
> As with you I have sold out of investment property, it isn't an investment I was happy carrying in retirement, equities are a lot less trouble. 😂



Perfectly put.


----------



## MovingAverage (31 January 2022)

sptrawler said:


> I don't disagree with you, I have owned plenty of investment properties and capital gain is what everyone is after.
> But that is what is driving the prices and is soaking up a lot of wealth, that could be deployed into more productive investments.
> Negative gearing just helps the system keep rolling along IMO, people can't rant and rave about the cost of property and in the next breath support the tax advantage that promotes the capital gain.
> As with you I have sold out of investment property, it isn't an investment I was happy carrying in retirement, equities are a lot less trouble. 😂




Agree.

The problem I have is that if our governments really believed investors were the major driver of our spiraling house prices (I'm not entirely convinced the issue is that simple) and the governments actually gave a crap about first home buyers and affordability then why don't they just stop people buying investment properties? Either they believe investors aren't the problem, are making money out of investors or don't care about first home buyers.


----------



## wayneL (31 January 2022)

MovingAverage said:


> Agree.
> 
> The problem I have is that if our governments really believed investors were the major driver of our spiraling house prices (I'm not entirely convinced the issue is that simple) and the governments actually gave a crap about first home buyers and affordability then why don't they just stop people buying investment properties? Either they believe investors aren't the problem, are making money out of investors or don't care about first home buyers.



"The government" is primarily made up of property investors, so is the opposition so no real difference who's in.

therefore the only thing that the government is interested in is continuing rising property prices.

And that's all she wrote folks.


----------



## sptrawler (31 January 2022)

MovingAverage said:


> Agree.
> 
> The problem I have is that if our governments really believed investors were the major driver of our spiraling house prices (I'm not entirely convinced the issue is that simple) and the governments actually gave a crap about first home buyers and affordability then why don't they just stop people buying investment properties? Either they believe investors aren't the problem, are making money out of investors or don't care about first home buyers.



It's simple really, the reason Governments don't want to do anything about investors and negative gearing is, if investors don't supply and look after social housing the Government has to.
The last thing Governments want to do is get back into looking after tenants, they then have to supply maintenance crews, account keeping and last but not least newspapers full of bitching tenants, it took 30 years for Governments in Australia to sell and move tenants into the private sector the last thing they want is to get them back. 😂
The worst tenant in Australia, will have no trouble getting bond and rent assistance.
Also if there was no tax offset and no capital gain, the last gig I would get into is being a landlord.


----------



## MovingAverage (31 January 2022)

wayneL said:


> "The government" is primarily made up of property investors, so is the opposition so no real difference who's in.
> 
> therefore the only thing that the government is interested in is continuing rising property prices.
> 
> And that's all she wrote folks.



Spot on.

Too many people have too much wealth tied up in property. Like it or not--it is now the Australian dream for a lot of Australians to own an investment property or two. Talk from all political parties about fixing the issue is nothing more than populist lip service so they can tick the "we are concerned" box.


----------



## SirRumpole (31 January 2022)

wayneL said:


> "The government" is primarily made up of property investors, so is the opposition so no real difference who's in.
> 
> therefore the only thing that the government is interested in is continuing rising property prices.
> 
> And that's all she wrote folks.




You have perfectly stated the essence of the problem.   

However, what did you make of Labor's negative gearing proposals at the last election ?


----------



## JohnDe (31 January 2022)

MovingAverage said:


> Agree.
> 
> The problem I have is that if our governments really believed investors were the major driver of our spiraling house prices (I'm not entirely convinced the issue is that simple) and the governments actually gave a crap about first home buyers and affordability then why don't they just stop people buying investment properties? Either they believe investors aren't the problem, are making money out of investors or don't care about first home buyers.




That is what the Labor party tried to articulate at the last election, it didn't work out because there are a lot of voters that have benefitted or want to benefit from negative gearing.

AS sptrawler said - _"Negative gearing just helps the system keep rolling along IMO, people can't rant and rave about the cost of property and in the next breath support the tax advantage that promotes the capital gain."_


----------



## SirRumpole (31 January 2022)

sptrawler said:


> It's simple really, the reason Governments don't want to do anything about investors and negative gearing is, if investors don't supply and look after social housing the Government has to.




Do you REALLY think that investors are going to 'look after' social housing ?

Where's the return in leasing out expensive properties to single mothers or low income earners ?

C'mon, get real.


----------



## sptrawler (31 January 2022)

SirRumpole said:


> You have perfectly stated the essence of the problem.
> 
> However, what did you make of Labor's negative gearing proposals at the last election ?



The problem with Labor's proposal last election was, they weren't getting rid of negative gearing, they were making it so only the rich who could afford to negative gear. It was only stopping negative gearing on established houses, so it would have distorted the market IMO, the rich would have bought up cheap housing stock and land banked it. 
Then built to rent, which would have controlled supply and prices IMO.
The end result with Labor's policy IMO, would have been, the gap between rich and poor would have become a chasm because the price difference between established and new build would have widened.  
As usual with Labor, I think the intent was good, but I think the implementation would have ended up a disaster.


----------



## MovingAverage (31 January 2022)

sptrawler said:


> The problem with Labor's proposal last election was, they weren't getting rid of negative gearing, they were making it so only the rich who could afford to negative gear. It was only stopping negative gearing on established houses, so it would have distorted the market IMO, the rich would have bought up cheap housing stock and land banked it.
> Then built to rent, which would have controlled supply and prices IMO.
> The end result with Labor's policy IMO, would have been, the gap between rich and poor would have become a chasm because the price difference between established and new build would have widened.
> As usual with Labor, I think the intent was good, but I think the implementation would have ended up a disaster.



Their proposal was nothing more than putting lipstick on a pig...still a pig.


----------



## sptrawler (31 January 2022)

SirRumpole said:


> Do you REALLY think that investors are going to 'look after' social housing ?
> 
> Where's the return in leasing out expensive properties to single mothers or low income earners ?
> 
> C'mon, get real.



The best return for investors, is buying 10 middle class houses for $300k and renting them for $400/wk. 
It isn't buying one $3m house and renting it for $1,500/wk.
That's getting real.


----------



## SirRumpole (31 January 2022)

sptrawler said:


> The problem with Labor's proposal last election was, they weren't getting rid of negative gearing, they were making it so only the rich who could afford to negative gear. It was only stopping negative gearing on established houses, so it would have distorted the market IMO, the rich would have bought up cheap housing stock and land banked it.
> Then built to rent, which would have controlled supply and prices IMO.
> The end result with Labor's policy IMO, would have been, the gap between rich and poor would have become a chasm because the price difference between established and new build would have widened.
> As usual with Labor, I think the intent was good, but I think the implementation would have ended up a disaster.




Maybe they should have just put a limit of one negatively geared property per taxpayer. That would cut down on the 'rich getting richer' problem, but still leave the way open for a steady supply of rentals.


----------



## MovingAverage (31 January 2022)

If we ever get proper tax reform in this country (I put a million dollars on the fact we won't) then maybe, just maybe, this issue will get some proper attention and not just superficial lip service come election season.


----------



## sptrawler (31 January 2022)

SirRumpole said:


> Maybe they should have just put a limit of one negatively geared property per taxpayer. That would cut down on the 'rich getting richer' problem, but still leave the way open for a steady supply of rentals.



Now you are talking, Labor not only was suggesting only negative gearing new builds, but also paying an annual bonus for renting at 20% below market rate, all that would have done is drive up the market rate by 20%.
As someone has already said negative gearing is a wealth creator, putting a lid on the value of property that can be negative geared would fix it, but why do politicians go into politics? Money and perks?
If they put a dollar value on how much can be negative geared, or made it so that negative gearing can only offset the rental earnings, that would sort it out.IMO


----------



## MovingAverage (31 January 2022)

SirRumpole said:


> That would cut down on the 'rich getting richer' problem



I think if this issue is to be properly addressed then the class warfare narrative has to stop. The issue is making housing affordable NOT about stopping the rich from getting richer.


----------



## sptrawler (31 January 2022)

MovingAverage said:


> I think if this issue is to be properly addressed then the class warfare narrative has to stop. The issue is making housing affordable NOT about stopping the rich from getting richer.



Absolutely, the only problem is Sydney/Melbourne has become the best investment vehicle in Australia, if not the World. Then it becomes about, what is the underlying business, the taxpayer is subsidising .
When a person can purchase a $2m property at 5% and have $100k interest, rent say $20k, nice offset against personal income tax. 
Now if that person could only claim the $20k offset against the rent, the $80k interest shortfall would come out of the investors pocket, I'm sure the investor wouldn't pay $2m on those numbers.


----------



## qldfrog (31 January 2022)

SirRumpole said:


> Maybe they should have just put a limit of one negatively geared property per taxpayer. That would cut down on the 'rich getting richer' problem, but still leave the way open for a steady supply of rentals.



I am afraid you are (all)  looking at this with the rear mirror; look at Europe for a look at the future, then decide you want any rental property in your portfolio;
Get out while you can irrespective of actual asset value IMHO


----------



## sptrawler (31 January 2022)

qldfrog said:


> I am afraid you are (all)  looking at this with the rear mirror; look at Europe for a look at the future, then decide you want any rental property in your portfolio;
> Get out while you can irrespective of actual asset value IMHO



So true.


----------



## MovingAverage (31 January 2022)

qldfrog said:


> I am afraid you are (all)  looking at this with the rear mirror; look at Europe for a look at the future, then decide you want any rental property in your portfolio;
> Get out while you can irrespective of actual asset value IMHO




Knowing very little about the EU market, is there anything specifically you see in Europe as being the harbinger of doom for the Australian market?


----------



## sptrawler (31 January 2022)

MovingAverage said:


> Knowing very little about the EU market, is there anything specifically you see in Europe as being the harbinger of doom for the Australian market?











						France to simplify squatter eviction for second home owners
					

Evicting illegal squatters from your property is set to become easier in France as the government works to simplify and speed up the process for both main and second homes.




					www.connexionfrance.com
				



Second homes​The aim is not only to enable property owners to evict illegal squatters more quickly - within around 72 hours - but also to remove the legal differences between main homes and second homes. Currently, the law only allows the eviction process to be fast tracked if the property in question is the owner’s main home.

In contrast, under the current laws, if a second home is squatted for more than 48 hours - which is more likely, as second homes are more often left empty for longer periods of time - the legal process of eviction can take months, and cost several thousands.









						Squatters in Spain
					

A building occupied by squatters / okupas in Barcelona. When squatters move in, everything else goes downhill. Squatters in Spain, known as Okupas in




					www.spanishpropertyinsight.com


----------



## qldfrog (31 January 2022)

MovingAverage said:


> Knowing very little about the EU market, is there anything specifically you see in Europe as being the harbinger of doom for the Australian market?



Yes pro tenant/pro squatter legislation to a point people here can not even comprehend , higher taxes..already started here where rental property attract higher rates,vetc..do not own to rent


----------



## sptrawler (31 January 2022)

qldfrog said:


> Yes pro tenant/pro squatter legislation to a point people here can not even comprehend , higher taxes..already started here where rental property attract higher rates,vetc..do not own to rent



The say South Africa is fun, I used to work with a few SA guys, they were pleased to be out.




__





						Loading...
					





					www.legalwise.co.za
				



5. What will the court consider before granting an eviction order?​
The court will consider whether the occupier is in fact an _unlawful occupier_ and whether the landlord has followed the procedure provided for in the PIE Act.
If the unlawful occupier has been in occupation of the property for LESS than six months, the court will also consider the following:
all relevant circumstances, including the rights of the elderly, children, disabled persons and households headed by women; and
whether it will be just and equitable to grant an eviction order.

If the unlawful occupier has been in occupation of the property for MORE than six months, the court will also consider the following:
all relevant circumstances including, the rights of the elderly, children, disabled persons and households headed by women;
whether alternative accommodation has been made available or can reasonably be made available by a municipality, organ of state or an owner of property, for the relocation of the unlawful occupier; and
whether it will be just and equitable to grant an eviction order.

After considering the above and if the unlawful occupier/s has no valid defense, an eviction order may be granted by the court and will specify:
the date on which the unlawful occupier/s must vacate the property;
the date on which the sheriff must evict the unlawful occupier/s from the property, if s/he has not yet vacated the property on the date determined by court.


----------



## JohnDe (31 January 2022)

sptrawler said:


> So true.




I have family in Europe, property investing can be profitable just as it can be here. Of course they have rules that we don’t understand or think frustrating, but it’s all about knowing the market.


----------



## sptrawler (31 January 2022)

JohnDe said:


> I have family in Europe, property investing can be profitable just as it can be here. Of course they have rules that we don’t understand or think frustrating, but it’s all about knowing the market.



Spot on everything is relative, I have a cousin in England, I suggested he come out here for wages and conditions. He laughed and said he is one of the high paid long haul truck drivers, on 27,000 pound, so he was killing the pig.
Guess it all depends on what you are used to.


----------



## wayneL (31 January 2022)

sptrawler said:


> Spot on everything is relative, I have a cousin in England, I suggested he come out here for wages and conditions. He laughed and said he is one of the high paid long haul truck drivers, on 27,000 pound, so he was killing the pig.
> Guess it all depends on what you are used to.



I still have lots of friends and family over in the UK, so have kept a few tabs on the market there. Some people have done very well but I don't know of many who have crashed and burnt.

it is the typical story, similar to here, over leveraging and all that sort of thing. Mainland Europe is a whole another set of tenancy laws so it's not so sure about there.


----------



## sptrawler (31 January 2022)

wayneL said:


> I still have lots of friends and family over in the UK, so have kept a few tabs on the market there. Some people have done very well but I don't know of many who have crashed and burnt.
> 
> it is the typical story, similar to here, over leveraging and all that sort of thing. Mainland Europe is a whole another set of tenancy laws so it's not so sure about there.



40% death duties puts a lid on UK property investment. Lol


----------



## wayneL (31 January 2022)

SirRumpole said:


> You have perfectly stated the essence of the problem.
> 
> However, what did you make of Labor's negative gearing proposals at the last election ?



To be honest I don't know what to make it, apart from it may have been one of those promises to be broken... As happens with every campaign weather the incumbent or the opposition.


----------



## wayneL (31 January 2022)

sptrawler said:


> 40% death duties puts a lid on UK property investment. Lol



My wife's side of the family is acutely aware of that :O


----------



## Gunnerguy (31 January 2022)

sptrawler said:


> 40% death duties puts a lid on UK property investment. Lol



But only over about AUD$1.3M.


----------



## JohnDe (31 January 2022)

Gunnerguy said:


> But only over about AUD$1.3M.




£679000 ?


----------



## sptrawler (31 January 2022)

Gunnerguy said:


> But only over about AUD$1.3M.



It would be interesting if they re started it here. 😂 
My guess is it will be re introduced at some time, it will just require a Government that can't lose, or is certain to lose.

That isn't many houses. 
Also you may find the $1.3m includes the PPR. So christ knows how it helps much.


----------



## divs4ever (31 January 2022)

MovingAverage said:


> Another step in the government's push to make retirees "unlock the capital in the PPOR" and wean folks off old age pensions.



 awesome .. wean the voters away from major parties  ( maybe the government super entitlements need trimming as well  )


----------



## sptrawler (31 January 2022)

MovingAverage said:


> Another step in the government's push to make retirees "unlock the capital in the PPOR" and wean folks off old age pensions.



Not to mention, reducing intergenerational wealth transfer, for the plebs.


----------



## divs4ever (31 January 2022)

SirRumpole said:


> You have perfectly stated the essence of the problem.
> 
> However, what did you make of Labor's negative gearing proposals at the last election ?



 considering  how many ALP big-wigs are property-owners/landlords , i was surprised  that proposal  survived  passing over the trash can


----------



## SirRumpole (31 January 2022)

divs4ever said:


> considering  how many ALP big-wigs are property-owners/landlords , i was surprised  that proposal  survived  passing over the trash can




Maybe it tells you more about the Labor Party than you care to admit.


----------



## qldfrog (31 January 2022)

SirRumpole said:


> Maybe it tells you more about the Labor Party than you care to admit.



I like your unrepentant trust and belief .it must be a comforting feeling but i have the belief that underneath, you keep having this endless nag of reality stabbing you again and again.
The good thing with you SirRumpole is i am sure you are a true believer, not the case for many of the woke leftist here.i admire that even if i believe you are a generation too late and have not grasped yet what labour and socialism represent in 2020.
Socialists like Trudeau, Macron or Jacinta...and whoever will be the labour 3.0 in Australia at the next election.
She will probably win so we will see what becomes of negative gearing then👍


----------



## SirRumpole (31 January 2022)

qldfrog said:


> I like your unrepentant trust and belief .it must be a comforting feeling but i have the belief that underneath, you keep having this endless nag of reality stabbing you again and again.
> The good thing with you SirRumpole is i am sure you are a true believer, not the case for many of the woke leftist here.i admire that even if i believe you are a generation too late and have not grasped yet what labour and socialism represent in 2020.
> Socialists like Trudeau, Macron or Jacinta...and whoever will be the labour 3.0 in Australia at the next election.
> She will probably win so we will see what becomes of negative gearing then👍




Labor is quite capable of making mistakes Froggy, the thing is that the current lot have made too many to ignore, so why not give the other side a chance to stuff things up in new and exciting ways.


----------



## Jeda (31 January 2022)

qldfrog said:


> I like your unrepentant trust and belief .it must be a comforting feeling but i have the belief that underneath, you keep having this endless nag of reality stabbing you again and again.
> The good thing with you SirRumpole is i am sure you are a true believer, not the case for many of the woke leftist here.i admire that even if i believe you are a generation too late and have not grasped yet what labour and socialism represent in 2020.
> Socialists like Trudeau, Macron or Jacinta...and whoever will be the labour 3.0 in Australia at the next election.
> She will probably win so we will see what becomes of negative gearing then👍




Why so fearful? deriding past present and future governments, sounds confusing. remember it was Hawke, Keating governemnt that pulled us out of the financial muck setting us up for 30+ years of prosperity. most of your wealth came from the Hawke labor government acheievements


----------



## sptrawler (31 January 2022)

SirRumpole said:


> Labor is quite capable of making mistakes Froggy, the thing is that the current lot have made too many to ignore, so why not give the other side a chance to stuff things up in new and exciting ways.



That is the whole issue, neither Labor or Liberal in Australia, are hard left or hard right. 
They can't be, we have entrenched welfare system and public services, at best they are slightly left of centre or slightly right of centre. 
It doesn't make a huge difference who gets in, it has to be funded how they fund it is what people should be thinking about. 
IMO being a Labor supporter or a Liberal supporter is nonsense. 😂 
It's like people getting all out of shape about losing penalty rates, for those who only work on weekends, my wife used to.
But in the next breath, cheering on fanatically, those that raised the pension age and made it near impossible to get disability.🤪
Like I said it makes very little difference, minor tweaks here and there, just chose which tweaks you prefer.


----------



## sptrawler (31 January 2022)

Jeda said:


> Why so fearful? deriding past present and future governments, sounds confusing. remember it was Hawke, Keating governemnt that pulled us out of the financial muck setting us up for 30+ years of prosperity. most of your wealth came from the Hawke labor government acheievements



We are getting off topic, but just to give *a workers point of view*, who lived and worked through that period.

1. It wasn't Hawke and Keating that pulled us out of the muck, it was the workers who pulled Australia out of the muck, because of the     'wages accord' real wages were cut by about 18%.
    These days, you hear endlessly that there has been no wages growth, it has only kept up with CPI, with the accord wages growth was             actively kept under cpi.

2. They floated the dollar and it dropped from being worth US $1.25 to US 50cents, so if you like a drop in buying power, try that one.

3. The Button plan was introduced and tariffs were reduced on imported products, that were there to protect our manufacturing, by the time Keating left the job most tariffs were down to 5% and the steady demise of our manufacturing commenced.
Now everyone goes on about the fact we don't manufacture anything, how could we, when our workers had to compete with products being imported with no tariffs from third world countries and we are talking back in the 1980's, 1990's.

I'm not saying it didn't change Australia, but to hold it up as something miraculous, is a bit rich IMO.
It just supercharged Asia's manufacturing growth and changed our economy from a manufacturing/ agricultural base, to a mining based economy which supplies the raw materials to Asia's growing manufacturing base.
Now our economy is similar to a South American economy and Asian economies are becoming similar to Europe and North America, fortunately we have a small population unlike Brazil.
But like I said probably getting off topic.


----------



## Jeda (31 January 2022)

sptrawler said:


> We are getting off topic, but just to give *a workers point of view*, who lived and worked through that period.
> 
> 1. It wasn't Hawke and Keating that pulled us out of the muck, it was the workers who pulled Australia out of the muck, because of the     'wages accord' real wages were cut by about 18%.
> These days, you hear endlessly that there has been no wages growth, it has only kept up with CPI, with the accord wages growth was             actively kept under cpi.
> ...




 yes all the workers got together and said we'll show these mungrul politicians how its done. no more strikes fellas no more go slows no more s equipment failures to persuade those bastard bosses, we'll get this country back on its feet


----------



## qldfrog (31 January 2022)

Jeda said:


> Why so fearful? deriding past present and future governments, sounds confusing. remember it was Hawke, Keating governemnt that pulled us out of the financial muck setting us up for 30+ years of prosperity. most of your wealth came from the Hawke labor government acheievements



that is why I stress the difference, do you genuinely Keating or Hawke would have been in bed with the giant techs, would have destroyed the country with the covid scam, or let us be screwed by the Chinese in every trade talk for the last 20y ??
The left of the 80s and 90s was a different stature and at least well that is my belief, were genuine.


----------



## qldfrog (31 January 2022)

SirRumpole said:


> Labor is quite capable of making mistakes Froggy, the thing is that the current lot have made too many to ignore, so why not give the other side a chance to stuff things up in new and exciting ways.



no thanks as the socialists are even less opposed to the Reset than the other bunch; this is a fight to the death to defend our western society against the 1984's nightmare, and while I do not trust the liberals to defend our model too much, too much interests on the big corporate who got power on the LNP, as opposed to the socialists, they do not push for it...
Isn't the response to covid a clear demonstration of the ideology ?


----------



## qldfrog (31 January 2022)

qldfrog said:


> no thanks as the socialists are even less opposed to the Reset than the other bunch; this is a fight to the death to defend our western society against the 1984's nightmare, and while I do not trust the liberals to defend our model too much, too much interests on the big corporate who got power on the LNP, as opposed to the socialists, they do not push for it...
> Isn't the response to covid a clear demonstration of the ideology ?



But let's go back to the thread:
and the Reset is clear: ownership is gone, "you will have nothing and be happy", no ownership, no landlords and you will have  camps of tiny houses in "paradises areas with communal garden and a shared EV charging point...what has been called trailer park trash for generations will be renamed as minimalist sustainable social housing communities..


----------



## Humid (31 January 2022)

sptrawler said:


> That is the whole issue, neither Labor or Liberal in Australia, are hard left or hard right.
> They can't be, we have entrenched welfare system and public services, at best they are slightly left of centre or slightly right of centre.
> It doesn't make a huge difference who gets in, it has to be funded how they fund it is what people should be thinking about.
> IMO being a Labor supporter or a Liberal supporter is nonsense. 😂
> ...



Run me through how they funded jobkeeper boss


----------



## sptrawler (31 January 2022)

Jeda said:


> yes all the workers got together and said we'll show these mungrul politicians how its done. no more strikes fellas no more go slows no more s equipment failures to persuade those bastard bosses, we'll get this country back on its feet



No actually it was Bill Kelty and the ACTU, that signed us up, you should read up a bit before you blow your toes off. 🤪
I've been at union meetings, where we were told if we striked the union wouldn't back us and you would face civil court proceedings.
Obviously your a young bloke.








						Australian politics explainer: the Prices and Incomes Accord
					

The Prices and Incomes Accord was a series of agreements between Labor and the ACTU where unions would moderate their wage demands in exchange for improvements in the ‘social wage’.




					theconversation.com


----------



## wayneL (31 January 2022)

qldfrog said:


> But let's go back to the thread:
> and the Reset is clear: ownership is gone, "you will have nothing and be happy", no ownership, no landlords and you will have  camps of tiny houses in "paradises areas with communal garden and a shared EV charging point...what has been called trailer park trash for generations will be renamed as minimalist sustainable social housing communities..



They did talk about The dissidents who would live outside the cities though 

We will have real food and will be happy. Might half to pick off a few of the weak, pasty, intellectual zombies from the dystopia if they escape and wander into our areas though.


----------



## sptrawler (31 January 2022)

Humid said:


> Run me through how they funded jobkeeper boss



They haven't, your yet to pay for it son, same as jobseeker and the $50 increase to the dole.😂

Anyway enough frivolity, back on thread.


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## SirRumpole (31 January 2022)

sptrawler said:


> No actually it was Bill Kelty and the ACTU, that signed us up, you should read up a bit before you blow your toes off. 🤪
> I've been at union meetings, where we were told if we striked the union wouldn't back us and you would face civil court proceedings.
> Obviously your a young bloke.
> 
> ...




I'm old enough to remember the petrol strikes, rail strikes, airline strikes and every union and their dogs vying to cause the most disruption.

Thankfully those days are over, but we have gone in the other direction with Work'choices' and outsourcing destroying our way of life.

Surely there has to be a middle ground.


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## sptrawler (31 January 2022)

SirRumpole said:


> I'm old enough to remember the petrol strikes, rail strikes, airline strikes and every union and their dogs vying to cause the most disruption.
> 
> Thankfully those days are over, but we have gone in the other direction with Work'choices' and outsourcing destroying our way of life.
> 
> Surely there has to be a middle ground.



You probably find that we are pretty close to the middle ground with regard employment opportunities, reasonable wages and conditions now.
During those strike times I worked construction, mining and regional power system, the workers swings were 5 weeks on one week off, my son who is an underground sparkie is 8days on 6 days off. Back then a lot of conditions were terrible, and change was hard fought for, now with the shortage of workers, wages and conditions are much better, all we can hope for is that it continues.
Will people stop complaining? Never admit you have got it good, things can always be better. Just ask the farmers 😂
The airline strike that was a beauty, the only time the military have been brought in to strike break and the only time a P.M has said that none of the pilots who went on strike should ever be employed in Australia again.
They were the days, no room for the faint hearted. https://en.wikipedia.org/wiki/1989_Australian_pilots'_dispute
By the way work choices in 2006, Howard out 2007 and Labor in 2007, it really didn't get much traction.  Everybody makes it sound as though a whole generation of factory workers were thrashed to death with it.😂 Just the words strike fear into the heart of children.

Ah memory lane, lets get back onto property prices and all these young people who can't afford a $3m home in Sydney/Melbourne and how we can help them out.


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## Gunnerguy (31 January 2022)

JohnDe said:


> £679000 ?



360,000 x2 when using deceased partners allowance otherwise just 360,000.


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## sptrawler (31 January 2022)

Gunnerguy said:


> 360,000 x2 when using deceased partners allowance otherwise just 360,000.



Hi Gunerguy, does it include the family home? Or just investment properties.


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## Gunnerguy (31 January 2022)

sptrawler said:


> Hi Gunerguy, does it include the family home? Or just investment properties.



Entire Estate of the deceased. In the UK there is no segregation of PPOR or investments (property). Purely based on what the deceased ‘owned’


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## sptrawler (1 February 2022)

Gunnerguy said:


> Entire Estate of the deceased. In the UK there is no segregation of PPOR or investments (property). Purely based on what the deceased ‘owned’



Well that would have an effect on prices IMO, the price goes up, the more the family pays in tax when you kick the bucket.
Easier not to bid up the prices, less tax to pay.


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## qldfrog (2 February 2022)

Some interesting experience for woke minded movie stars facing..the real world








						The Pitts: How Hollywood star's green housing dream turned nightmare
					

Brad Pitt, who took credit for launching low cost housing in 2007 has argued through lawyers that he could not be sued over the housing development’s failings.




					theqldr.com.au
				



To the risk of raising the hire of my leftist fellows, what i discovered with experience among multiple country is that housing is mostly a reflection of the inhabitants.
You can have clean slums and government housing which would be classed as luxury for 80% of the world population treated like dumps.
Obviously, hard to have a nice suburb above the smoking tip of mumbai, .


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## noirua (3 February 2022)

If you have this house then if you want to move it to a different position you can. Too hot in summer then move it to a shady spot. If you don't like one neighbour then move away from them.


Or this one:


Hardly got two coins to rub together then this is your cabin:


Or a shipping container or two:


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## qldfrog (3 February 2022)

noirua said:


> If you have this house then if you want to move it to a different position you can. Too hot in summer then move it to a shady spot. If you don't like one neighbour then move away from them.
> 
> 
> Or this one:
> ...




As ij mentioned before, when you go into social engineering and make people believe that a new version of trailer park is an aspiration.
Why mobile? Because of bloody local council regulations and because you can not afford to buy the land
Why small? Because  you need a police escort to drive anything wider on our roads...
And because the average young dink can not afford even a shack on a 750 sqr meter block.
The slow descent of Australia down the ladder parading as a lifestyle.
I am actually a fan of these upscaled caravans, following the various dedicated shows etc...
But make no mistake as to the aim.
Rabbit hutches."you will have nothing and be happy"
I offer the culmination of decluttering and sustainability with recyclable cardboard:


But seriously, look at the way these tiny houses are presented. Now imagine when it is raining or blisteringly hot..or freezong cold the type of life a young couple will have there....and when the toddler is around
Seriously think about the social engineering taking place, is it "progress"?
These tiny house are what our trendy Noosa shire offers as the answer to rental crisis in the shire..









						Tiny homes to help solve big problem – Noosa Shire Council
					

Tiny homes to help solve big problem




					www.noosa.qld.gov.au
				



not God forbid allowing anyone to build a cottage for rental on a 50+ acres block ..bloody koala killers


----------



## Stockbailx (6 February 2022)

In that context, a key question for property investors is — just how fast will rates climb?

The NAB economics team have pencilled in the RBA’s first rate hike for November this year.

That’s slightly less hawkish than Commonwealth Bank, which is holding to its forecast of an August 2022 rate hike following a busy week of RBA updates.

For now, the central bank remains confident that while we can expect to watch inflation climb through the middle of the year, it’s not at risk of making a dovish policy mistake that will see CPI growth run out of hand.

In NAB’s view, the housing market won’t really hit the brakes until rates start to rise.

Between November 2022 and February 2023, NAB forecasts interest rates will rise from 0.1% to 0.65%, before “a steady series of increases over 2023 and 2024”.

I think that's a lot of skepticism, we don't need for now. Rates haven't risen  as yet. But it puts a prospective on future prices. a good time to sell but perhaps a better time to buy late in future!


----------



## sptrawler (6 February 2022)

We have talked about the Singapore housing model on this thread several times, over the years, it is good to see it getting a bit of airplay in the mainstream media.








						This academic has an idea to make housing more affordable. Is it worth a try?
					

A Sydney University economist is proposing a radical solution to dramatically improve housing affordability for first home buyers and, while other experts have doubts, they generally agree something like it might be worth a shot.




					www.abc.net.au


----------



## JohnDe (6 February 2022)

I feel that property prices are about to drop, not a lot but enough to make a difference. 

World travel is back on the agenda, interest rates will go up, cost of living is going up and is being felt by all.

I've been looking for a property to replace one that I sold last year, looking for over 3 years, prices are stupidly high. I'm in no hurry so we keep watching and looking, even put in some offers and currently waiting on a couple of offers we made.

Yesterday a property went for auction in a suburb that when a house goes up for sale it is like gold and all the mad bidders come out of the woodwork. Fort the first time in years a property did not make reserve and was not sold at auction. I'm taking this as a sign.


----------



## basilio (13 February 2022)

I was visiting a friend in Middle Park yesterday.  Just up the street I noticed an open house and, naturally, decided to have a sticky beak.

Anyway for those on ASF whose boat has come in (and it isn't a tinny) perhaps this  stylishly updated property could be in your sights.
Naturally you have to start talking at the $5M mark.

On the other hand  after seeing 95 Hambleton st you might like to create your own individual sanctuary.  It so happens that next door is a virtually identical property which is very ripe for renovation. According to  the markets $3.5M should secure this opportunity.  The current owner bought it in 1977 for $37k 

It is very, very well done.  But I wonder what the owners of the place  42 years ago would say. ? They sold it for  $49.5K



			https://www.realestate.com.au/property/95-hambleton-st-middle-park-vic-3206
		




			https://www.realestate.com.au/property/93-hambleton-st-middle-park-vic-3206


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## basilio (13 February 2022)

Going back in time.

I was playing with the website I quoted in my last post. When I went down the street and checked out other properties  one could see the pictures taken at each sale or attempted sale point. Interesting to see the renovations.

And of course the price increases



			https://www.realestate.com.au/property/91-hambleton-st-middle-park-vic-3206


----------



## sptrawler (22 March 2022)

My gut is telling me, my lazy money in the term deposit, might be deployed into property in the next 12 months, I might be wrong but my tummy says geared up property owners strap yourselves in.


----------



## wayneL (22 March 2022)

sptrawler said:


> My gut is telling me, my lazy money in the term deposit, might be deployed into property in the next 12 months, I might be wrong but my tummy says geared up property owners strap yourselves in.



I've resisted for a long time but I am starting to warm to the idea of an Austrian crack up boom.... Not just high inflation but a crack up in the true sense.

If so it would seem to me that hard assets including property will be a good idea.... Not so sure about the relative returns but certainly in hedging sense, yes.

I'm kind of thinking some sort of productive land also... And still ruminating on exactly what shape that might be.


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## moXJO (22 March 2022)

Price rises with inflation must be having an affect on people's ability to pay. I have noticed everyone jacking prices up in sync. Once it reaches a point people simply stop buying.

I'm guessing all the frivolous expenditures are about to get the arse. 
Gyms, nails, electronics etc. Those in turn can't make payment and it flows down the line.


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## qldfrog (22 March 2022)

I understand that hedging bit,if you have property it stays there and will not be eaten by inflation at 10% or more a year BUT
With labour and watermelons soon back, in a world of wokeness and universal income, do you want to own a rented unit/house?
Please look at what happens in europe or woke US states with IP to get a view at what's ahead here.
So industrial property? But you need some businesses to fill it!
Maybe ok if you have a couple of millions and buy a medical center or one with a woolies or IGA..but not your SME warehouse...
Holiday unit? When people have trouble putting food on the table,they do not splash on holidays or week ends away for the anniversary
Productive agricultural land..yes but not easy
Lastly, there is nothing more inflexible than land and RE.
And i do not even mention the nightmares of ownerships
Historically, this is what you lose in upheaval times. Wars, revolutions or just depressions due to taxation, seizure or sheer destruction.
I hope we will have a burst up as i intend to decrease exposure to RE which are too big a component of captive wealth for us.


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## Smurf1976 (22 March 2022)

moXJO said:


> Price rises with inflation must be having an affect on people's ability to pay. I have noticed everyone jacking prices up in sync. Once it reaches a point people simply stop buying.
> 
> I'm guessing all the frivolous expenditures are about to get the arse.
> Gyms, nails, electronics etc. Those in turn can't make payment and it flows down the line.



That essentially is the classic recession setup.

Essential costs rise rapidly > non-essential spending is cut > workers laid off or businesses collapse outright > down we go.


----------



## sptrawler (22 March 2022)

moXJO said:


> Price rises with inflation must be having an affect on people's ability to pay. I have noticed everyone jacking prices up in sync. Once it reaches a point people simply stop buying.
> 
> I'm guessing all the frivolous expenditures are about to get the arse.
> Gyms, nails, electronics etc. Those in turn can't make payment and it flows down the line.






Smurf1976 said:


> That essentially is the classic recession setup.
> 
> Essential costs rise rapidly > non-essential spending is cut > workers laid off or businesses collapse outright > down we go.



Both my daughters are talking about budgeting, I've never heard them say those words before.


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## sptrawler (22 March 2022)

qldfrog said:


> I understand that hedging bit,if you have property it stays there and will not be eaten by inflation at 10% or more a year BUT
> With labour and watermelons soon back, in a world of wokeness and universal income, do you want to own a rented unit/house?
> Please look at what happens in europe or woke US states with IP to get a view at what's ahead here.
> So industrial property? But you need some businesses to fill it!
> ...



I think there will be a major property bust, not boom and I think it will happen soon, interest rates up, cost of living up, statutory costs up, ability to meet the mortgage down.


----------



## wayneL (22 March 2022)

Much food for thought,. Great discussion gents.

It might sound a little bit contradictory but I am on board with both the bust and crack up boom hypotheses. It's just a matter of time frame.

But 100% agree with @qldfrog re "cash" returns on both resi and industrial. I think that those relying on those incomes will probably be taken to the woodshed.

More ruminations for me.


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## moXJO (23 March 2022)

Government splashing cash again is of course the great "can kicker".


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## JohnDe (23 March 2022)

sptrawler said:


> My gut is telling me, my lazy money in the term deposit, might be deployed into property in the next 12 months, I might be wrong but my tummy says geared up property owners strap yourselves in.




The market is crazy. If governments do nothing the price could easily keep going up for years due to current circumstances. However, if the whispers going around are true and governments restrict the number of properties investors can have in their portfolio there could be a an increase of stock released.

I'm hoping for the later, I'm not greedy and have no plans to have 10+ properties


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## wayneL (23 March 2022)

The little things that I have in the back of my mind, which others have mentioned above, is that almost all politicians are property investors.

To me this explains why they have so aggressively propped up the property market in past crises.

Do we have any reason to believe they won't do so again?


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## moXJO (23 March 2022)

Well we haven't been running in immigration like we have been. So that's got to dampen the market. Watching immigration intake in the 'new world' will give a guideline.  We still have overseas students to fully come back yet. That's most likely to add pressure to rentals.


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## basilio (23 March 2022)

I 'm still bewildered by the property market.

There are still hundreds/thousands of apartments being built and finished. Yet we have had no immigration for 2 years now . International students are still not returning in the pre covid numbers.  I suspect our Chines overseas students will never return to previous levels given the political climate.  The current world wide economic pressures induced by the Ukraine war is also going to affect O/s students.This  will depress demand for inner city apartments as well as economic activity overall.

So where is the effective demand coming from?  I can certainly see a  big move to the country which  is putting  upward pressure on regional prices. But back in the cities I can only guess that a small section of very affluent people are driving up demand and prices. What could be happening is that this small wealthy sliver is pushing up headline prices for property and the less affluent are desperately  cobbling together whatever they can to get into the market.  What happens when interest rates rise by 1% (which is effectively a 50% jump on the current 2% rate)  doesn't bear thinking.

Currently ordinary people  are  being badly  squeezed by petrol prices rises and general increases in food, insurance and groceries. This can't be good news for business and banks.

Frankly I think the economic fall out from the floods, rising fuel costs and any rise in interest rates is going to be savage.


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## JohnDe (23 March 2022)

basilio said:


> I 'm still bewildered by the property market.
> 
> There are still hundreds/thousands of apartments being built and finished. Yet we have had no immigration for 2 years now . International students are still not returning in the pre covid numbers.  I suspect our Chines overseas students will never return to previous levels given the political climate.  The current world wide economic pressures induced by the Ukraine war is also going to affect O/s students.This  will depress demand for inner city apartments as well as economic activity overall.
> 
> ...




Demand is coming from adult  children leaving home and looking for homes with room to overcome lockdowns. There is also overseas Aussies returning home, a lot more than you think. And then there are the investors, buying up anything because they get loans easily.

Property developers own a lot of homes and land, they demolish and build slowly so as to not flood the market. Apartment blocks get built but they don't sell all the apartment's at once, they release 3 or 4 at a time to keep pricing high.


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## moXJO (23 March 2022)

So far there's always been something that saves the property market. Rentals round Sydney, Newcastle, Wollongong are near impossible to find. It still seems like a seller's market.


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## TechnoCap (23 March 2022)

Employment and affordability will drive property prices quite simply supply and demand at play. I'm a Buyers Agent and see no softening occurring in solid investable locations and they consist of strong regional markets.


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## sptrawler (23 March 2022)

JohnDe said:


> The market is crazy. If governments do nothing the price could easily keep going up for years due to current circumstances. However, if the whispers going around are true and governments restrict the number of properties investors can have in their portfolio there could be a an increase of stock released.
> 
> I'm hoping for the later, I'm not greedy and have no plans to have 10+ properties



I would think that the easiest way to make property investment sensible, would be to only allow the interest component to offset against the income generated by the property, then the cost to the Government is minimal while still making rentals a valid financial investment. The current system is such, that the rental value of the property which is the only actual reflection of true value, is not even taken into consideration the only reason people are buying investment properties in Melb/Syd is for guaranteed capital gain.
Whereas the system is supposed to help investors carry the loan, until it becomes positively geared, which will never happen  therefore the loan is speculative and the interest should only be able to be offset up to the amount of income it generates, the rest shouldn't be a deduction against other tax obligations. IMO


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## MovingAverage (23 March 2022)

JohnDe said:


> restrict the number of properties investors can have in their portfolio




I'm still not convinced property investors amassing properties is the root cause of the recent price growth. I know people always like to blame investors, but in my inner Sydney suburb the dominate agent in the area tells me almost all sales over the past two years are going to owner occupiers.

Appreciate that my local agent does not speak to all of Australia, but certainly my area is one of those that has seen massive growth in recent years. Would love to see some data that shows property investors are the problem.

Only reason a political party would do this is because it's some easy political point scoring because everyone loves to blame property investors and negative gearing.

Just my 2 cents worth.


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## sptrawler (23 March 2022)

MovingAverage said:


> I'm still not convinced property investors amassing properties is the root cause of the recent price growth. I know people always like to blame investors, but in my inner Sydney suburb the dominate agent in the area tells me almost all sales over the past two years are going to owner occupiers.



Absolutely agree, I just think that property investment should be based on sound reasoning, which is that it shows a sensible return on capital. I think the only reason property in Syd/Melb is bought is with the expectation of a capital gain and the rate of income return isn't a factor.
Yet the bigger the loss on income, the bigger the tax offset, it just doesn't make for a rational market. All it does is develop into a ponzi scheme that the tax payer funds the losses.
From a NSW, Vic perspective it is great, because the stamp duty collected is proportional to the price gain, it is very much like the casinos the more punters put in, the more the State government get. 
The problem I see is that the tax payers in the less fortunate States, that don't have the fabulous property price gains, it is their taxes as well that cover the Syd/Melb speculators tax offset.


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## MovingAverage (23 March 2022)

sptrawler said:


> Absolutely agree, I just think that property investment should be based on sound reasoning, which is that it shows a sensible return on capital. I think the only reason property in Syd/Melb is bought is with the expectation of a capital gain and the rate of income return isn't a factor.
> Yet the bigger the loss on income, the bigger the tax offset, it just doesn't make for a rational market. All it does is develop into a ponzi scheme that the tax payer funds the losses.
> From a NSW, Vic perspective it is great, because the stamp duty collected is proportional to the price gain, it is very much like the casinos the more punters put in, the more the State government get.
> The problem I see is that the tax payers in the less fortunate States, that don't have the fabulous property price gains, it is their taxes as well that cover the Syd/Melb speculators tax offset.



I can definitely see your point on that. Regarding your point on stamp duty collected by the government—here in NSW the government is allowing owner occupiers to opt for stamp duty or an annual land tax. To me that speaks volumes about their view of the future—sales will drop off so too will their cash cow that is stamp duty. Of course the more people move to a annual land tax means they get their money regardless of whether house sales drop off


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## MovingAverage (23 March 2022)

TechnoCap said:


> I'm a Buyers Agent



Over the past two years what have you clients been--owner occupiers or folks looking for an IP?


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## qldfrog (23 March 2022)

MovingAverage said:


> I'm still not convinced property investors amassing properties is the root cause of the recent price growth. I know people always like to blame investors, but in my inner Sydney suburb the dominate agent in the area tells me almost all sales over the past two years are going to owner occupiers.
> 
> Appreciate that my local agent does not speak to all of Australia, but certainly my area is one of those that has seen massive growth in recent years. Would love to see some data that shows property investors are the problem.
> 
> ...



100% with youliving in the Noosa shire,we have seen a price explosion.
And most if not all the properties are sold to owners moving in.
As a result, there are no rental available, and the headlines from the FB and papers are on how bad the investors are for selling to owner occupied.
As irony has long been lost in the woke side, we are missing on some entertainment.
If  neg gearing disappeared from IP, we would see an explosion of rent price.
Current rental market is hardly covering ongoing costs,they would have to probably triple to cover depreciation and fees, taxes not to mention bank rates going up.
So even if prices fall.. they will not be slashed that hard in valuation$ with inflation, i actually expect rent to  go thru the roof...
And a lot of ABC headlines and government panicking


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## MovingAverage (23 March 2022)

qldfrog said:


> If  neg gearing disappeared from IP, we would see an explosion of rent price.



Yup, I’ve been of the mindset for a long time that neg gearing is just government rent subsidies


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## sptrawler (28 March 2022)

I find it interesting, that even though coastal erosion is always a hot topic on the news, it doesn't seem to reduce the demand for coastal properties in high risk areas. 

https://www.smh.com.au/property/new...isk-from-coastal-erosion-20220325-p5a82d.html
From the article:
The top 10 suburbs with the most value at risk are spread across the east coast, often in popular residential neighbourhoods or holiday towns with low elevation, high property values and a fast-receding coastline.
Paradise Point on the Gold Coast has $1.467 billion of property at risk due to its canals, the most of any suburb in Australia. About 20 per cent of the suburb is at high risk, the report said.

Cronulla in Sydney’s south ranked second with $486.4 million of property at risk, followed by Port Melbourne with $483.8 million.


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## sptrawler (28 March 2022)

MovingAverage said:


> Yup, I’ve been of the mindset for a long time that neg gearing is just government rent subsidies



Spot on IMO and the last thing the Governments want to do, is get back heavily into public housing, much easier to subsidise the private sector to sort the tenant, maintenance and rent collection problems.
Back in the 1950's and 60's, there used to be a huge amount of State housing, that was sold off, negative gearing arrived and bond assistance became the norm.
The State Governments would have given a huge sigh of relief IMO.


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## wayneL (3 April 2022)

Some not so trivial trivia:


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## sptrawler (3 April 2022)

Just shows how well off people are, there were no immigrants in the last couple of years and Sydney/Melbourne prices went ballistic.
Yet everyone can't stop complaining, jeezuz we must have taken over from the poms, as the biggest wingers in the World.


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## wayneL (4 April 2022)

sptrawler said:


> Just shows how well off people are, there were no immigrants in the last couple of years and Sydney/Melbourne prices went ballistic.
> Yet everyone can't stop complaining, jeezuz we must have taken over from the poms, as the biggest wingers in the World.



Huge boots to fill


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## sptrawler (4 April 2022)

wayneL said:


> Huge boots to fill



We are giving it a flcking good go though.


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## Humid (4 April 2022)

Alan Kohler: Soaring house prices have changed society for the worse
					

The disaster of Australian house prices over the past 40 years has not just reshaped the economy but fundamentally transformed society, writes Alan Kohler.




					thenewdaily.com.au
				




How long can this go on?


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## sptrawler (4 April 2022)

Humid said:


> Alan Kohler: Soaring house prices have changed society for the worse
> 
> 
> The disaster of Australian house prices over the past 40 years has not just reshaped the economy but fundamentally transformed society, writes Alan Kohler.
> ...



How long can it go on, until people stop buying them.
As you know buying a house in W.A isn't an issue, like it is in Sydney/Melbourne, but W.A doesn't exist to most people who live over East.
That's why we had to bring in 457 workers, I have no sympathy for people who want to pay stupid prices for a house, rather than move to another area.
If people said stuff it we are not going to buy, prices would fall, but they all want a piece of the action, who cares if we pay top dollar we will double our money. Dumb.
From your article:
_And most of the wealth is concentrated in Sydney, where the median house value is $1.1 million, double Perth’s and regional Australia’s._


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## JohnDe (4 April 2022)

sptrawler said:


> How long can it go on, until people stop buying them.
> As you know buying a house in W.A isn't an issue, like it is in Sydney/Melbourne, but W.A doesn't exist to most people who live over East.
> That's why we had to bring in 457 workers, I have no sympathy for people who want to pay stupid prices for a house, rather than move to another area.
> If people said stuff it we are not going to buy, prices would fall, but they all want a piece of the action, who cares if we pay top dollar we will double our money. Dumb.
> ...




That's a bit paranoid.

Every educated Australian knows about all the states and territory's, including Western Australia..

As for 457 workers, WA has not been the only state to use that scheme. However, WA did shut their borders longer and harder than any other state, which caused the problem of people trying to get into the state from the rest of Australia and OS.


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## sptrawler (4 April 2022)

JohnDe said:


> That's a bit paranoid.
> 
> Every educated Australian knows about all the states and territory's, including Western Australia..
> 
> As for 457 workers, WA has not been the only state to use that scheme. However, WA did shut their borders longer and harder than any other state, which caused the problem of people trying to get into the state from the rest of Australia and OS.



I don't think we have had 457's in for a number of years, the period I was referring to was the last mining boom back around 2010-2015, when we were bringing in thousands.
As for every Australian knowing about W.A, well then a lot of those whinging about the cost of housing in Sydney/Melbourne, should maybe get their school books out and head over here cheap housing, plenty of jobs and no floods.
That then would reduce the demand on Sydney/Melbourne housing and possibly bring prices down.
Also I don't know what you mean by paranoid? paranoid of what.
It just seems strange to me that people say the cost of housing in Sydney is too high, yet people are taking on more debt to buy them at a higher and higher price, then complain about it.
In todays paper:








						Why are property prices falling sooner than expected?
					

Conventional wisdom said a rise in official interest rates would be the trigger for housing prices to fall because it would reduce the amount of money that buyers can borrow. So what changed?




					www.smh.com.au
				



_Sydney and Melbourne home values have started to edge lower before any change to interest rates, as buyers reach the limits of what they can afford, banks reduce how much they will lend, and more homes are listed for sale_.

And what do people say, we need higher wages so we can borrow more, to pay more for the house. What a great way of running a competitive economy. 😂
Put up the wages, which puts up the prices of the goods they make, so that they can keep the Sydney/Melbourne housing ponzi scheme running. Magic


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## JohnDe (4 April 2022)

sptrawler said:


> I don't think we have had 457's in for a number of years, the period I was referring to was the last mining boom back around 2010-2015, when we were bringing in thousands.
> As for every Australian knowing about W.A, well then a lot of those whinging about the cost of housing in Sydney/Melbourne, should maybe get their school books out and head over here cheap housing, plenty of jobs and no floods.
> That then would reduce the demand on Sydney/Melbourne housing and possibly bring prices down.
> Also I don't know what you mean by paranoid? paranoid of what.
> It just seems strange to me that people say the cost of housing in Sydney is too high, yet people are taking on more debt to buy them at a higher and higher price, then complain about it.




Maybe there is some truth in your previous comment "_biggest wingers in the World_."

WA has only recently opened their border to the rest of Australia, do you really expect a flood of people that quick? First WA government need to give the youth of Australia confidence that they're not going to hard shut the borders again, then they need to have the right jobs to replace the ones that the youth would be leaving behind.


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## sptrawler (4 April 2022)

JohnDe said:


> Maybe there is some truth in your previous comment "_biggest wingers in the World_."
> 
> WA has only recently opened their border to the rest of Australia, do you really expect a flood of people that quick? First WA government need to give the youth of Australia confidence that their not going to hard shut the borders again, then they need to have the right jobs to replace the ones that the youth would be leaving behind.



People not wanting to come to W.A isn't a recent phenomena, that is why we are always struggling for workers.
The other part about careers, most young people today, will have to change their career path many times in their working life.
One would think there is a better chance for a young Sydney person earning good money in W.A, than trying to forge a career and buy a house in Sydney, but i could be wrong.
i suppose there is always the chance in Sydney, if you can just manage to get the minimum deposit to get you on the housing ponzi, then you are made.   
A bit like the pokies really.


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## JohnDe (4 April 2022)

sptrawler said:


> People not wanting to come to W.A isn't a recent phenomena, that is why we are always struggling for workers.
> The other part about careers, most young people today, will have to change their career path many times in their working life.
> One would think there is a better chance for a young Sydney person earning good money in W.A, than trying to forge a career and buy a house in Sydney, but i could be wrong.
> i suppose there is always the chance in Sydney, if you can just manage to get the minimum deposit to get you on the housing ponzi, then you are made.
> A bit like the pokies really.




WA is not the only state to have trouble enticing youth and workers. SA and Tasmania have been losing their youth and brain trust for years, but I don't recall much whining about it. Instead they try to come up with ways to entice people over, most livable city, etc. It's a centuries old problem, young people are attracted to adventure and big cities.


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## sptrawler (4 April 2022)

JohnDe said:


> WA is not the only state to have trouble enticing youth and workers. SA and Tasmania have been losing their youth and brain trust for years, but I don't recall much whining about it. Instead they try to come up with ways to entice people over, most livable city, etc. It's a centuries old problem, young people are attracted to adventure and big cities.



And spend the rest of their lives whining about the cost of housing, in the big cities.
I never hear people in Perth winging about the cost of housing, yet the whinging from Sydney/Melbourne never stops.


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## JohnDe (4 April 2022)

sptrawler said:


> And spend the rest of their lives whining about the cost of housing, in the big cities.




I think the whining is more from the media, and parents. Most people get on with their lives, knowing that they are responsible for their own expenses. In my daily life I deal with 100's of people each week from many states, some complain about the price of housing but most of those are people with adult kids. Many more people are happy at the price that their property is worth.  Housing prices is just one of the many factors that young people think about when it comes to planning their future.


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## Iron Triangle (4 April 2022)

sptrawler said:


> ...I have no sympathy for people who want to pay stupid prices for a house, rather than move to another area...




It's not that simple. My young blokes want to buy in Sydney but cannot afford so they are happy to pay $750 a week rent for a 3 bedroom house 60km west of the city in Western Sydney. I suggested go regional , buy a cheap house and fix it , then start a family and have a comfortable life in fresh air but they not interested as  ; 
a/  Moving away from family and friends isnt worth the cheaper house.
b/  Regional doesnt pay what sydney does in income or O/T opportunities.  
c/  Regional areas compared to greated sydney dont have as many facilities or specialsts health care.
d/  Decent houses in good areas in major regionals are not that cheap as you think especially if you want something newish. 

Its insanity the prices imo in Western Sydney , ol mate bought a house in Riverstone about 4 years , nice house and very small back yard in a new estate approx on 550sqm land for 820k , the other day they got it valued at 1.2 mill,  they made 400k in just a few years. They didnt complain or whinge they more gloated about what they paid , crazy !


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## MovingAverage (4 April 2022)

Iron Triangle said:


> ol mate bought a house in Riverstone about 4 years , nice house and very small back yard in a new estate approx on 550sqm land for 820k , the other day they got it valued at 1.2 mill,  they made 400k in just a few years. They didnt complain or whinge they more gloated about what they paid , crazy !



Living in Sydney this line is getting trotted out all the time...bought for 850k got it valued and now worth 1.2 mill--made $400k in a few years. I find this logic extremely frustrating...if he sold for 1.2 mill tomorrow, guess what he'd be paying that and some for a new house. So reality is most people are buying and selling in the same market and odds are people will make nothing and probably just extend their mortgage further to "up size" to a bigger, better and shinier house. Not having a crack at your statement more expressing my general frustration with Sydney folks who are obsessed with real estate prices and trot out this flawed logic at every BBQ they go to.


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## Humid (4 April 2022)

Pick up something cheap waterfront in Bondi soon..


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## againsthegrain (4 April 2022)

MovingAverage said:


> Living in Sydney this line is getting trotted out all the time...bought for 850k got it valued and now worth 1.2 mill--made $400k in a few years. I find this logic extremely frustrating...if he sold for 1.2 mill tomorrow, guess what he'd be paying that and some for a new house. So reality is most people are buying and selling in the same market and odds are people will make nothing and probably just extend their mortgage further to "up size" to a bigger, better and shinier house. Not having a crack at your statement more expressing my general frustration with Sydney folks who are obsessed with real estate prices and trot out this flawed logic at every BBQ they go to.




You still got cgt, agents fees and somehow the forgotten interest paid to the bank so far. It is a profit but its the govt and the other pests in line who are really making the bigger killing


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## MovingAverage (4 April 2022)

againsthegrain said:


> You still got cgt, agents fees and somehow the forgotten interest paid to the bank so far. It is a profit but its the govt and the other pests in line who are really making the bigger killing




Agree--conga line of downstream people wanting to clip the tick, that's for sure.

My comment was more in relation to folks bragging about how much they've made on their PPOR--so sell that and you've got to buy another PPOR to live in.


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## greggles (4 April 2022)

Lots of talk about a housing shortage since COVID-19, but I can't recall a lot of talk about it before. With most foreigners on work visas having left once COVID-19 hit, is all this demand coming from returned ex-pats?


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## MovingAverage (4 April 2022)

greggles said:


> Lots of talk about a housing shortage since COVID-19, but I can't recall a lot of talk about it before. With most foreigners on work visas having left once COVID-19 hit, is all this demand coming from returned ex-pats?



Can't believe that many ex-pats have returned to move the market the way it has over the past two years.


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## greggles (4 April 2022)

MovingAverage said:


> Can't believe that many ex-pats have returned to move the market the way it has over the past two years.




So, it is just renters deciding to buy? Has COVID-19 done something to our collective psyche? It's worth noting that real estate prices have spiked in many other countries after the pandemic hit. There must be some psychological underpinning to it all.


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## MovingAverage (4 April 2022)

greggles said:


> So, it is just renters deciding to buy? Has COVID-19 done something to out collective psyche? It's worth noting that real estate prices have spiked in many other countries after the pandemic hit. There must be some psychological underpinning to it all.



Based on some discussions with a few of the prominent local agents in my area and lot of the sales were going to first/second home owner occupiers (generally younger) who, in the first 18 months following the covid outbreak, were being driven by FOMO of rapidly rising prices with not a lot of properties on the market. Certainly were I am the big price increase was driven my high buyer demand but not a lot of properties on the market. But since December last year there has been a noticeable increase in properties coming onto the market so no doubt the drop off in clearance rates and drop in median prices is the direct result of greater supply. Interestingly a lot of the properties that have come on the market here in the last 3 months have been long term rentals so maybe investors are cashing in around here.  Probably worth noting that my comment is with reference to inner Sydney city areas and I have no doubt different areas of Australia were being driven by different factors.


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## wayneL (4 April 2022)

againsthegrain said:


> You still got cgt, agents fees and somehow the forgotten interest paid to the bank so far. It is a profit but its the govt and the other pests in line who are really making the bigger killing



Plus stamp duty... That's a biggy


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## againsthegrain (4 April 2022)

wayneL said:


> Plus stamp duty... That's a biggy




Yeah when you are up sizing or downsizing.  Unless you live in a car and just stare at your profits on your banking app


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## JohnDe (4 April 2022)

MovingAverage said:


> Living in Sydney this line is getting trotted out all the time...bought for 850k got it valued and now worth 1.2 mill--made $400k in a few years. I find this logic extremely frustrating...if he sold for 1.2 mill tomorrow, guess what he'd be paying that and some for a new house. So reality is most people are buying and selling in the same market and odds are people will make nothing and probably just extend their mortgage further to "up size" to a bigger, better and shinier house. Not having a crack at your statement more expressing my general frustration with Sydney folks who are obsessed with real estate prices and trot out this flawed logic at every BBQ they go to.




I think that you'll find that most people get excited when they hear that their property is worth a lot more than what they paid for it. It's the same as when someone buys a car for significantly less than the sticker price, or re-sells it for more than it is really worth. Human nature.

I'm wit you on the idea of selling for a huge profit but having to buy another for a huge expense, doesn't make sense. Unless you're the type of person that doesn't mind where you live, and selling in a sort after suburb only to buy in a no-name suburb or further out.


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## wayneL (4 April 2022)

againsthegrain said:


> Yeah when you are up sizing or downsizing.  Unless you live in a car and just stare at your profits on your banking app



As I've said elsewhere we have just bought a PPOR (otherwise would have been living in the car... long story).

Close to $70k in stamp duty, ouchies


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## MovingAverage (4 April 2022)

JohnDe said:


> I'm wit you on the idea of selling for a huge profit but having to buy another for a huge expense, doesn't make sense. Unless you're the type of person that doesn't mind where you live, and selling in a sort after suburb only to buy in a no-name suburb or further out.




Folks moving from a sort after suburb to a no-name suburb are definitely not the norm (not saying someone hasn't done it, they are just very much the exception to the norm). The vast majority of people are aspirational and want to move up.


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## Warr87 (4 April 2022)

I'll admit I'm one of those people who whinges about the market. I just don't get it and how it's still been up so high. I remember thinking 10years ago that it had to collapse sometime soon. I was obviously wrong then. My main bemoanment these days is more how it gets prop'ed up and touted as the only smart investment. I was lucky enough to find myself in a better paying job starting last year, above the regions average wage, but I definitely can't afford a house in my area. I also hate those articles that say 'bought for x in 2011 and now its worth almost twice as much!'. They don't take into account council rates, capital spent for upkeep, or the interest paid while holding it. Even with those figures I'm not sure the ivnestment really stacks up for the risk that is involved. The longer it keeps going up and incentivised to go up, the worse it'll be when it comes down. It's just a 'hot potateo' right now waiting for it to go off (passing it to the next gov in the hope it blows up in their face, not their own).

Anyway .... end rant. lol


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## JohnDe (4 April 2022)

Warr87 said:


> I'll admit I'm one of those people who whinges about the market. I just don't get it and how it's still been up so high. I remember thinking 10years ago that it had to collapse sometime soon. I was obviously wrong then. My main bemoanment these days is more how it gets prop'ed up and touted as the only smart investment. I was lucky enough to find myself in a better paying job starting last year, above the regions average wage, but I definitely can't afford a house in my area. I also hate those articles that say 'bought for x in 2011 and now its worth almost twice as much!'. They don't take into account council rates, capital spent for upkeep, or the interest paid while holding it. Even with those figures I'm not sure the ivnestment really stacks up for the risk that is involved. The longer it keeps going up and incentivised to go up, the worse it'll be when it comes down. It's just a 'hot potateo' right now waiting for it to go off (passing it to the next gov in the hope it blows up in their face, not their own).
> 
> Anyway .... end rant. lol




I did ok with property.

My father helped me buy a home nearby when I got my first job, by opening my mind to thinking forward. Our suburb was in a good location but nothing special, prices were low, I rented it out while I lived at home and working low paid jobs.
I soon got married and we moved in. Several years later, while still having a mortgage, I had an itch to buy a second property and negative gear it.
Most of the tenants were good but we did have one family that trashed it and ran. I took some time off of work while we had a 3 and 2 year old, and repaired the rental property.
About 10 years later the next door neighbour offered us her house, we took out another loan and rented that out.
Property prices started to go crazy, we decided to bulldoze the first rental and build two stylish homes on the large block. Sold one and kept one.
Last year my son decided he wants to buy a house, he and his girlfriend are quite serious. He couldn't touch anything near us but said that he'd like a little bit of land, and started looking out places about 45-60 min away. Even there, prices were ridiculous for shabby houses.
My wife and I had a discussion and decided to offer him the house next door for what it cost us plus taxes. Rent had been good for us and the bank still owned some of it.
In September he and his girlfriend move in when the current lease is over, they both have good jobs and are aiming to pay off the loan quickly.
We didn't get rich from property but we were comfortable and had some great experiences and best of all we helped our son into the property market.
Hopefully my son can do the same for his offspring, help them into the property market

Morale of the story, everyone has a different story to tell. Some good, some bad, and some neutral. The thing about property is that it is finite. Infrastructure and maintaining it is expensive. Yes people can buy cheap property but those cheap properties are long distances from work and amenities, away from the support of friends and family.


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## Warr87 (4 April 2022)

There are definitely different stories to tell. I've known of a few who, while on apprentice wages, bought a house. They did it up, lived on nothing, and similar story to you were able to eventually buy a second. They're not rich but they are comfortable. I'm not saying its not possible to buy a house right now, but I think policy that has been engineered to keep the prices inflating along with almost any metric, shows that it's at a crazy level right now. (Even thinking of getting together 20% deposit is a tall order for most, especially with the average $900k house ...)

I think a lot of negative stories are yet to come. All of us here know that profits can't indefinitely go up. There is always a correction.


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## MovingAverage (4 April 2022)

Warr87 said:


> I'll admit I'm one of those people who whinges about the market. I just don't get it and how it's still been up so high. I remember thinking 10years ago that it had to collapse sometime soon. I was obviously wrong then. My main bemoanment these days is more how it gets prop'ed up and touted as the only smart investment. I was lucky enough to find myself in a better paying job starting last year, above the regions average wage, but I definitely can't afford a house in my area. I also hate those articles that say 'bought for x in 2011 and now its worth almost twice as much!'. They don't take into account council rates, capital spent for upkeep, or the interest paid while holding it. Even with those figures I'm not sure the ivnestment really stacks up for the risk that is involved. The longer it keeps going up and incentivised to go up, the worse it'll be when it comes down. It's just a 'hot potateo' right now waiting for it to go off (passing it to the next gov in the hope it blows up in their face, not their own).
> 
> Anyway .... end rant. lol



Talking of risk…wouldn’t want to be holding an IP when the ALP get in. They’ll be looking for some quick wins and knowing the ALP they’ll be sizing up a slap down of owners of IPs—after all, investors are the root of all evil, right 😂


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## moXJO (4 April 2022)

There are literally a handful of houses for sale round my area. Some suburbs have nothing for sale and maybe 1 or 2 to rent at ridiculous prices.

Industrial properties are insane prices and super low stock. There's nothing decent for sale anywhere.




MovingAverage said:


> Living in Sydney this line is getting trotted out all the time...bought for 850k got it valued and now worth 1.2 mill--made $400k in a few years. I find this logic extremely frustrating...if he sold for 1.2 mill tomorrow, guess what he'd be paying that and some for a new house. So reality is most people are buying and selling in the same market and odds are people will make nothing and probably just extend their mortgage further to "up size" to a bigger, better and shinier house. Not having a crack at your statement more expressing my general frustration with Sydney folks who are obsessed with real estate prices and trot out this flawed logic at every BBQ they go to.



Agree with this as well. Unless you are buying 6 hours drive away you ain't trading up.


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## moXJO (4 April 2022)

MovingAverage said:


> Talking of risk…wouldn’t want to be holding an IP when the ALP get in. They’ll be looking for some quick wins and knowing the ALP they’ll be sizing up a slap down of owners of IPs—after all, investors are the root of all evil, right 😂



I'd hate to see rents if they touch it.


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## Humid (5 April 2022)

MovingAverage said:


> Talking of risk…wouldn’t want to be holding an IP when the ALP get in. They’ll be looking for some quick wins and knowing the ALP they’ll be sizing up a slap down of owners of IPs—after all, investors are the root of all evil, right 😂



Probably got more IPs than the libs


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## Warr87 (5 April 2022)

Rents are certainly crazy in my area. Certainly a lot of people trying to cash in. I got into a place before it went too nuts and thankfully the landlord hasn't tried to screw me (I keep ahead in rent, place is always spotless, report any issues). When I've advertised for a flatmate to share the costs, the number of applicants is crazy (and overwhelming). I'm lucky that I can survive without a flatmate if needed, but having one allows me to save some extra cash. I'm not going to try and put together a house deposit right now though, the extra money will be used for my trading.

The way the market is I will probably use my super to buy a retirement house, preferrably have that sorted before I retire. For those that follow my journal for my super account, it should be doable .

People do have different preferences for investments too. I lean more towards more liquid and mobile asset classes than something like RE. Not to say it's not a sound investment, but certainly different risks. Either way, I think everyone (if they could) would like to own a house at some point in their life. I would say the annoyance with my generation is what seems to be an ever increasing place out of reach for even the well-paid individual. I wont lose sleep over it though. I would hope that a cultural change will come though, i.e. a change in the belief that owning a house is the only smart investment and way to capture wealth. Having lived overeas before, it strikes me very abruptly that we have an obsession with home ownership. I think this cultural aspect, exacerbated by politics, has helped create the current situation (and something that crosses party lines).


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## MovingAverage (5 April 2022)

moXJO said:


> Industrial properties are insane prices and super low stock.



I get the feeling that there has been increased interest in industrial properties particularly from the SMSF sector. Relative to residential properties--commercial properties certainly provide a good yield (particularly in this low interest environment) and commercial leases are much more in favour of the landlord.


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## moXJO (5 April 2022)

MovingAverage said:


> I get the feeling that there has been increased interest in industrial properties particularly from the SMSF sector. Relative to residential properties--commercial properties certainly provide a good yield (particularly in this low interest environment) and commercial leases are much more in favour of the landlord.



Factories/warehouses seem to be the grab. Mate of mine can't build enough of them. We are talking 20 lots at a time and they sell out before built.


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## Humid (5 April 2022)

moXJO said:


> Factories/warehouses seem to be the grab. Mate of mine can't build enough of them. We are talking 20 lots at a time and they sell out before built.



Small business owner buys it with his super and his company rents it back off him?


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## moXJO (5 April 2022)

Humid said:


> Small business owner buys it with his super and his company rents it back off him?



A lot of small online businesses seem to be buying them. I the tax perks help.
The other thing is rents are ridiculous and it's not much different to loan repayments.


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## Warr87 (5 April 2022)

For a while I thought that commercial/industry RE isn't a bad option for investment. Especially if you're like me and think the residential RE is overpriced. Though the entry requirements into commercial/industrial is different. Those are definitely things I have thought about when I can eventually add in some RE to my portfolio. Plenty of diversification with trading (stocks, different countries, etfs, futures) but have some RE isn't a bad idea either.


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## sptrawler (5 April 2022)

It may be different over East, due to the much higher density population, but here in the West commercial property can sit vacant for a very long time. As @Humid said business owners buying the property into their SMSF, makes a lot of sense, but guys I've known over the years who invested in commercial property didn't do very well.


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## qldfrog (5 April 2022)

Warr87 said:


> For a while I thought that commercial/industry RE isn't a bad option for investment. Especially if you're like me and think the residential RE is overpriced. Though the entry requirements into commercial/industrial is different. Those are definitely things I have thought about when I can eventually add in some RE to my portfolio. Plenty of diversification with trading (stocks, different countries, etfs, futures) but have some RE isn't a bad idea either.



My own experience was not flashy for industrial RE:
Went for niche small Warehouse, starting, sme, reseller emptying container etc
Great return in % then one by one, all sme failed and took 2 years with no income or nearly to sell 
Never again in Australia.
We are NOT going toward a SME society.
So yes if you have a few millions for a medical centers etc otherwise be very careful.
Too many built and bought by investors for not enough customers imho.
Obviously depending on areas but was in a high growth area.thanks to RE growth, no loss and some profit but happy to be out


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## Humid (5 April 2022)

moXJO said:


> A lot of small online businesses seem to be buying them. I the tax perks help.
> The other thing is rents are ridiculous and it's not much different to loan repayments.



Need to keep more stock to guarantee supply due to pandemic


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## Humid (5 April 2022)

Warr87 said:


> For a while I thought that commercial/industry RE isn't a bad option for investment. Especially if you're like me and think the residential RE is overpriced. Though the entry requirements into commercial/industrial is different. Those are definitely things I have thought about when I can eventually add in some RE to my portfolio. Plenty of diversification with trading (stocks, different countries, etfs, futures) but have some RE isn't a bad idea either.



Worst case park a caravan in there and turn up the music with no neighbours at night


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## wayneL (5 April 2022)

qldfrog said:


> My own experience was not flashy for industrial RE:
> Went for niche small Warehouse, starting, sme, reseller emptying container etc
> Great return in % then one by one, all sme failed and took 2 years with no income or nearly to sell
> Never again in Australia.
> ...



Spot on. I know some people that have done exceptionally well from commercial real estate but also a lot that mirrors your experience.

What is missing in a lot of real estate investment, both commercial & residential use and adequate *risk premium*... Especially now at such astronomically high valuations.

Friend of a friend last year during shut down in Queensland lost everything after many years of doing extraordinarily well in CRE.


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## Warr87 (5 April 2022)

wayneL said:


> Spot on. I know some people that have done exceptionally well from commercial real estate but also a lot that mirrors your experience.
> 
> What is missing in a lot of real estate investment, both commercial & residential use and adequate *risk premium*... Especially now at such astronomically high valuations.
> 
> Friend of a friend last year during shut down in Queensland lost everything after many years of doing extraordinarily well in CRE.




I 100% agree that the risk premium probably isn't there. It more leads to something inherent in some of my other comments, and that is, an understatement of the true risks involved in RE. Cherry picking the success and selling the story leads to people either forgetting about the risks, not truely understanding the risks, or understating them. This isn't an equity vs RE comment, but I like equity's because I know my risk metrics. I code and backtest to make sure I've covered my risks and understanding what is on the line when I put in a new trade.

lack of knowledge of the risks, or acknowledging the risks, is always the downfall of many. RE wont be any different.


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## moXJO (5 April 2022)

qldfrog said:


> My own experience was not flashy for industrial RE:
> Went for niche small Warehouse, starting, sme, reseller emptying container etc
> Great return in % then one by one, all sme failed and took 2 years with no income or nearly to sell
> Never again in Australia.
> ...



This was my experience about 7ish years ago.  Not sure if it's the growth in this area or what.


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## Value Collector (5 April 2022)

sptrawler said:


> It may be different over East, due to the much higher density population, but here in the West commercial property can sit vacant for a very long time. As @Humid said business owners buying the property into their SMSF, makes a lot of sense, but guys I've known over the years who invested in commercial property didn't do very well.




I think the best way to get exposure to commercial property is by buying a stake in a diversified portfolio portfolio of properties, something like CLW or one of Charter halls direct property funds like Dif4.

That way you still get the decent net rental return of 6% or so (at todays prices), and you are diversified by geography, property type and tenant.


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## macca (5 April 2022)

MovingAverage said:


> I get the feeling that there has been increased interest in industrial properties particularly from the SMSF sector. Relative to residential properties--commercial properties certainly provide a good yield (particularly in this low interest environment) and commercial leases are much more in favour of the landlord.




At present you are right but we have been living in an artificial boom for the past 20 years.

When the shyte hits the fan, commercial can be empty for years, hence the higher yields


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## JohnDe (5 April 2022)

macca said:


> At present you are right but we have been living in an artificial boom for the past 20 years.
> 
> When the shyte hits the fan, commercial can be empty for years, hence the higher yields




How many years before “an artificial boom” becomes good management and hard work?


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## wayneL (5 April 2022)

JohnDe said:


> How many years before “an artificial boom” becomes good management and hard work?



When the boom can stand up without government and central bank interference.


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## JohnDe (5 April 2022)

wayneL said:


> When the boom can stand up without government and central bank interference.




Isn’t part of a government’s role to maintain economic security of the nation and its people?



> What is a government and what are its basic functions?
> 
> A government is an institution through which leaders exercise power to make and enforce laws.
> A government’s basic functions are providing leadership, maintaining order, providing public services, providing national security, providing economic security, and providing economic assistance.


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## macca (5 April 2022)

JohnDe said:


> How many years before “an artificial boom” becomes good management and hard work?




If we look at the USA we see inflation at 8%pa, the current Fed interest rate should be 5% at least. 

With the incalculable actual debt in the world they want hyper inflation to start happening ASAP, something like 20% will suit.

Then they will jack the interest rates up to 10% so they look to be doing something and all the plebs will be smashed.

No more SMEs, everyone works for the conglomerates and they do whatever the hell they want.

After a generation has passed we have a new generation that has not been burned and they will start taking risks again.

So, to answer your question, 20 years after the Shyte hits the fan


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## Warr87 (5 April 2022)

JohnDe said:


> Isn’t part of a government’s role to maintain economic security of the nation and its people?




most definitely. arguably one of its main role. I hope wayne's point was more than the gov is prop'ing up RE in a way that doesn't provide economic security and is more for political gain to whomever is in power. Long term sustainability would be the policy solution to provide economic security -- indefinite growth has never been part of such a solution.


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## wayneL (5 April 2022)

JohnDe said:


> Isn’t part of a government’s role to maintain economic security of the nation and its people?



Yeah but that shouldn't involve kicking the can down the road.

Productivity should be the goal rather than unproductive monetism(sp?). 

Eventually, it will catch up to us, I don't know when and it may still take a fair while. but it will catch up to us.


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## macca (5 April 2022)

JohnDe said:


> Isn’t part of a government’s role to maintain economic security of the nation and its people?




In theory Yes it is, but the Reserve Bank could/should have punctures the RE boom Loooong ago.

To allow housing to become so expensive is very poor management as it forces people to invest in RE so they don't miss out on the CG but they then owe squillions just to have somewhere to live.

Far too many immigrants over a 5 year span, infrastructure could not keep up and we have a bubble develop in our major cities.

We have young families that will never be able to invest in anything else as they will be paying their house off forever.

They do have their Super which will be in the Market but when they lose a job while they look for another they will be sinking deeply into debt.

It compels couples to both work which does effect the children in many ways, the obvious one is that Mum and Dad are both tired, stressed and rarely home.

The USA has poisoned the world by allowing unlimited funny money to be printed, flooding the world with cash looking for a home and distorting other countries economic policies.

The Govt has had to do things they may not have wanted to do just to combat the USA flood and we then have Covid on top of that.

We have a massive debt that in the current climate was hard to avoid but we cannot ignore it, we need to adjust peoples expectations of the Govt doing and paying for everything.

We need people to start accepting the fact that bad things happen in life and people need to be more responsible for their own poor decisions.


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## sptrawler (5 April 2022)

JohnDe said:


> Isn’t part of a government’s role to maintain economic security of the nation and its people?



There doesn't seem to be a lack of economic security in the population, many are borrowing up to their eyeballs, to get into the Sydney/Melbourne property market, so confidence isn't an issue.
If they didn't have economic security, there would be a reluctance to borrow and spend IMO.

The issue is what people see as an investment, the only way to financial security for a worker is to have money that will replace their wages and provide them an income, as several have said your house doesn't earn you money other than saving you rent.

Your PPR only keeps the weather off you and your family, it has to be paid for with after tax dollars and there no tax breaks until you sell it.
Pouring all your earnings into your PPR for 30 years, isn't my idea of a clever move, but everyone to their own we all do things differently and come from various backgrounds one size doesn't fit all.


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## Smurf1976 (5 April 2022)

Warr87 said:


> it strikes me very abruptly that we have an obsession with home ownership.



Past discussion on another forum has taught me that if you want a peaceful life then there are two things you should avoid having anything at all to do with.

One is "real estate" in the context of that term referring to an agency renting you a property. 

The other is "strata" from which you should run like hell and not look back.

Rent an apartment and you'll find yourself living under the control, and control is exactly what it is, of both and that's a damn good reason to want your own house.

I could say some harsher words but I don't want anyone to take it personally.....


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## JohnDe (5 April 2022)

I’m 55 this year, I’ve been involved in property since I was 12 years old and my dad would bring me along to work on a investment property that he purchased. I did this many times and in all those years gone not once do I recall someone say ‘jeese houses are cheap’. Nor do I recall house prices drop dramatically, I do remember the 1990’s recession that we ‘had to have’, when there was hardly any work and interest rates at 17+%. Even then there weren’t too many places where house prices dropped significantly, most just stagnated.

Wages were different all through those years, and there wasn’t as much to spend spare cash on as there is today.

The wise youth of all generations get on with it and buy the property that the complainers leave alone.

To many complain these days.


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## sptrawler (5 April 2022)

JohnDe said:


> The wise youth of all generations get on with it and buy the property that the complainers leave alone.



Never have truer words been said, I had many an argument with my wife in the early years, usually over why can't we have what the 'Joneses' have.


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## Smurf1976 (5 April 2022)

macca said:


> At present you are right but we have been living in an artificial boom for the past 20 years.
> 
> When the shyte hits the fan, commercial can be empty for years, hence the higher yields



It probably doesn't happen in Sydney or Melbourne (just an assumption on my part) but in the smaller capitals and regional areas things can sit empty for an extremely long time.

Extremely long as in skipping an entire decade or even more. It ends up shut longer than it was ever open in its previous use.

No doubt everyone in Adelaide will be well aware of what's simply referred to as "the Le Cornu site" - suffice to say the shop closed down in *1988* and it has taken until 2022 to not put a new tenant in the building but to start building apartments on the land. Countless proposals have come and gone in that time.

Quite a few I can think of in other places too where something sat empty for an extended period once the previous use ended. Particularly so with anything for which there's only fairly limited possible uses - cinemas, new car dealerships or other large showroom type buildings, nightclubs, department stores, large industrial sites and so on. Can take an extremely long time to find a new tenant once it's empty and often anything that goes in doesn't last long. Even things like take away food shops are a problem if the shop existed largely due to surrounding industry which has ceased to exist and only ever had limited business from the wider public.


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## wayneL (5 April 2022)

JohnDe said:


> I’m 55 this year, I’ve been involved in property since I was 12 years old and my dad would bring me along to work on a investment property that he purchased. I did this many times and in all those years gone not once do I recall someone say ‘jeese houses are cheap’. Nor do I recall house prices drop dramatically, I do remember the 1990’s recession that we ‘had to have’, when there was hardly any work and interest rates at 17+%. Even then there weren’t too many places where house prices dropped significantly, most just stagnated.
> 
> Wages were different all through those years, and there wasn’t as much to spend spare cash on as there is today.
> 
> ...



There is no question that it has been a successful strategy over the last 30 or 40 years... or more.

And who knows, it may just be just as successful over the next 30 or 40 years.... For the young'uns in my extended family I hope so.

I wouldn't be betting on it personally but, whatever.

Maybe it's got a bit to go, but how far can you kick a can?


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## over9k (5 April 2022)

wayneL said:


> There is no question that it has been a successful strategy over the last 30 or 40 years... or more.
> 
> And who knows, it may just be just as successful over the next 30 or 40 years.... For the young'uns in my extended family I hope so.
> 
> ...



Helicopter money is next (and has actually already started, see: the latest budget)


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## qldfrog (6 April 2022)

https://www.smh.com.au/property/new...-are-zero-homes-for-sale-20220404-p5aaml.html
Mr @sptrawler  is at long last going to join us in the merry world of RE forever?😉


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## gartley (6 April 2022)

I don't know how the RBA is gonna handle IR and  they obviously have miscalculated here. How many times have we as traders seen these patterns of trend over the years!!. The result is always the same, an abrupt and sharp move in the opposite direction back to the base of the wedge,. In this case expect a very fast move ( it's already started) to a cash rate of around 7% by end 2023 or early 2024!!! on the 2 Yr


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## sptrawler (6 April 2022)

qldfrog said:


> https://www.smh.com.au/property/new...-are-zero-homes-for-sale-20220404-p5aaml.html
> Mr @sptrawler  is at long last going to join us in the merry world of RE forever?😉



It is an interesting suburb Winthrop, a couple of my ex workmates live there, it isn't close to the river, Fremantle, or Perth CBD. It is about the same distance South of the CBD as the suburb, I live in and is a similar distance West of the freeway as I am East of the freeway.
When the suburb was first released, it was an instant hit with affluent Asians and became fairly expensive quite quickly, also being a new and comparatively expensive suburb I don't think social housing was very prevalent. A lot of the people who bought there, couldn't afford the nearby suburbs of Booragoon and Mount Pleasant, from memory.
I personally never liked the suburb, it has a somewhat sterile feel about it, that I don't particularly like. I would say  it is still popular with the Asian community.


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## Humid (6 April 2022)

sptrawler said:


> It is an interesting suburb Winthrop, a couple of my ex workmates live there, it isn't close to the river, Fremantle, or Perth CBD. It is about the same distance South of the CBD as the suburb, I live in and is a similar distance West of the freeway as I am East of the freeway.
> When the suburb was first released, it was an instant hit with affluent Asians and became fairly expensive quite quickly, also being a new and comparatively expensive suburb I don't think social housing was very prevalent. A lot of the people who bought there, couldn't afford the nearby suburbs of Booragoon and Mount Pleasant, from memory.
> I personally never liked the suburb, it has a somewhat sterile feel about it, that I don't particularly like. I would say  it is still popular with the Asian community.



Worked with a lot of Korean welders who lived there.
Some like areas where it gives them access to public schools not full of disruptive bogans.....not speaking from experience ....


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## sptrawler (6 April 2022)

Humid said:


> Worked with a lot of Korean welders who lived there.
> Some like areas where it gives them access to public schools not full of disruptive bogans.....not speaking from experience ....



Yes the suburb I'm in Riverton, is starting to take off as Asians and Indians move in to be able to send their kids to Rossmoyne senior high. Indians and Asians place a lot of importance on their children's education, so are prepared to pay top dollar, to get into a certain schools catchment area.


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## wayneL (6 April 2022)

Disruptive bogans eh?

I wonder if Keating's prophecy will come true.


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## sptrawler (8 April 2022)

Well it looks as though the RBA is coming out of its slumber, if this article is correct.








						Prospective homebuyers urged to heed the RBA's warning of rising rates and falling prices
					

The Reserve Bank is confident most borrowers will be able to cope with rising interest rates, but it also warns recent buyers in particular should brace for falling property prices.




					www.abc.net.au
				



From the article:
The bank's twice-yearly Financial Stability Review (FSR) reported that, on the whole, Australian mortgage borrowers are in a much better position to deal with rising interest rates than they were before the pandemic.

"Most indebted households have benefited from strong growth in housing prices over the past year and, coupled with higher mortgage repayments in excess of scheduled requirements, the vast majority have accumulated substantial additional equity in their homes," the report noted.

The RBA estimated that only around 5 per cent of loans now have an outstanding loan-to-value ratio (LVR) greater than 75 per cent, compared to almost a quarter at the beginning of 2020.
This means that for 95 per cent of borrowers, it would take more than a 25 per cent drop in home prices to send them into negative equity, the dangerous position where the borrower owes more to the bank than their home is worth.

"The share of loans in negative equity is also estimated to be exceptionally low, at less than 0.25 of a per cent, down from 2.25 per cent in January 2020," the review added.
The improvement in both of these metrics has been mainly driven by the exceptional surge in housing values during the pandemic, with property prices surging by almost a quarter over the past year in the steepest growth seen since the late-1980s. 

However, the RBA also warned that much of that gain is likely to be unwound over the next couple of years as interest rates rise.

"Estimates using a model of the housing market that takes into account historical relationships between interest rates and both demand and supply factors suggest that a 200-basis-point increase in interest rates from current levels would lower real housing prices by around 15 per cent over a two-year period," the FSR noted.


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## MovingAverage (8 April 2022)

So it isn’t the foreign investors driving our expensive housing (media loved that a few years ago). So who’s being blamed these days 









						Foreign investment in Australian homes falls to 15-year low
					

Residential homes may have been shunned but the falls were offset by a surge in commercial real estate investment.




					www.theage.com.au


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## MovingAverage (8 April 2022)

wayneL said:


> Disruptive bogans eh?
> 
> I wonder if Keating's prophecy will come true.



What was Keating’s prophecy? That we’d become a banana republic full of bogans…we’re getting there


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## MovingAverage (8 April 2022)

JohnDe said:


> I did this many times and in all those years gone not once do I recall someone say ‘jeese houses are cheap’.




A lot of people today would do very well to remember this.


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## wayneL (8 April 2022)

MovingAverage said:


> What was Keating’s prophecy? That we’d become a banana republic full of bogans…we’re getting there



Paraphrasing.... That we would become the white trash of Asia.


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## MovingAverage (8 April 2022)

wayneL said:


> Paraphrasing.... That we would become the white trash of Asia.



Go on a holiday to Fiji or Bali and you’d be forgiven for thinking this is true


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## sptrawler (9 April 2022)

The new answer to social housing, "build to rent" it's a brand new idea apparently a block of apartments are built with the sole reason of renting out, what a great  idea sounds a bit like the old state housing commission flats from the 1960's to me.
https://www.macrobusiness.com.au/2022/04/beware-the-booming-build-to-rent-model/
From the article:
Build-to-rent (BTR) describes the development of an apartment complex with the express intention of retaining all those dwellings to lease them out. It’s a well-established model in the United States and the United Kingdom but is still in its infancy in Australia – but not for long.

A recent report from EY estimates BTR in Australia will produce 175,000 new homes over the next 10 years…









						What is build to rent and how does it work?
					

Build to rent may be a growing global phenomenon but it’s still relatively new in Australia. So, what is build to rent and how does it work?




					www.bmtqs.com.au
				




Hopefully the wash, rinse, repeat works better this time round. Just my thoughts.








						Brownlie Towers went from being a utopian paradise to a hotbed of crime
					

The housing complex in Perth promised so much, but it soon degenerated into a notorious ghetto of crime and violence that left a lasting impact on its former residents.




					www.abc.net.au


----------



## 3 hound (9 April 2022)

Renting out investment properties obviously makes a lot of money and sense for a lot of people but geez the few insights I have had hearing about bad tenants I would not go near it with a 10 foot pole. 

A guy I work with, an old Boomer, bought each of his kids a house and rented them out until the kids became adults and then he got rid of the tenants and gave the houses to his kids. He did not increase the rents in 20 years because he said he would happily charge no rent to good tenants than have bad tenants. His theory was the value was in appreciation of the house and land, the rent was an extra bonus.


----------



## sptrawler (9 April 2022)

3 hound said:


> Renting out investment properties obviously makes a lot of money and sense for a lot of people but geez the few insights I have had hearing about bad tenants I would not go near it with a 10 foot pole.
> 
> A guy I work with, an old Boomer, bought each of his kids a house and rented them out until the kids became adults and then he got rid of the tenants and gave the houses to his kids. He did not increase the rents in 20 years because he said he would happily charge no rent to good tenants than have bad tenants. His theory was the value was in appreciation of the house and land, the rent was an extra bonus.



That guy new exactly what he was taking about, renting out property is a young persons game, there is no way older people want to do it.
I off loaded my rental properties 10 years ago, I would be divorced if I hadn't.
The Governments State and Federal will give all sorts of incentives, to make sure social housing stays in the private sector.
My own opinion on buying a rental property would be, buy something you want to move into later, because you will basically get Government assistance to buy it.
If you are only buying it to make money, you are buying a lot of heartache and work, to save the Government doing it, on the hope you make money.
Then if you are lucky enough to make money on it, the Government gets a cut of your profit with CGT, win/ win for them with no downside.


----------



## 3 hound (9 April 2022)

sptrawler said:


> That guy new exactly what he was taking about, renting out property is a young persons game, there is no way older people want to do it.
> I off loaded my rental properties 10 years ago, I would be divorced if I hadn't.




My area is getting more populated with "complex families" that are 100% dependent on welfare. The cop that lived up the street got a promotion and left town and rented the home out. 

I will just say the house came on the market for a very, very affordable price not long after. Some speculators bought it straight from the internet, it looked good on a webpage.

Thank god there are people that are willing to own rental property, bless you and thank you for your service.


----------



## MovingAverage (10 April 2022)

sptrawler said:


> Your PPR only keeps the weather off you and your family, it has to be paid for with after tax dollars and there no tax breaks until you sell it.
> Pouring all your earnings into your PPR for 30 years, isn't my idea of a clever move, but everyone to their own we all do things differently and come from various backgrounds one size doesn't fit all.



Absolutely agree with this. One of the best moves I made a few decades ago (now I sound old) was to get very focused on debt recycling.


----------



## Gunnerguy (2 May 2022)

https://www.abc.net.au/news/2022-05...-stress-interest-rate-rise-election/101026362

The banks just keep doing it .....

But also a single mum of 4 kids borrowing 6x her income.

From the article .......

More than half of respondents, or 55 per cent, that had taken out a mortgage with ANZ in the six months to December 2021 indicated that they had lied in their application documentation.

Gunnerguy


----------



## sptrawler (2 May 2022)

Gunnerguy said:


> https://www.abc.net.au/news/2022-05...-stress-interest-rate-rise-election/101026362
> 
> The banks just keep doing it .....
> 
> ...



Who is at fault and would you have done it? 
The bank isn't lending money to 12 year olds, these people are applying for the loans and are lying on their applications, unless the bank can breach the customer's privacy, how do they decide other than by guidelines and the applicants honesty?


----------



## Warr87 (2 May 2022)

sptrawler said:


> Who is at fault and would you have done it?
> The bank isn't lending money to 12 year olds, these people are applying for the loans and are lying on their applications, unless the bank can breach the customer's privacy, how do they decide other than by guidelines and the applicants honesty?




I agree. The only cavet is if the bank knows and/or suspects but turns an eye in order to collect fees now, and then make a profit when they re-posses later on. I wouldn't put that kind of predatory behaviour past the banks. People are still adults though and they bought into the hype of 'never going to go down. you can't lose'.


----------



## 3 hound (2 May 2022)

Warr87 said:


> I agree. The only cavet is if the bank knows and/or suspects but turns an eye in order to collect fees now, and then make a profit when they re-posses later on. I wouldn't put that kind of predatory behaviour past the banks. People are still adults though and they bought into the hype of 'never going to go down. you can't lose'.



Is it really worth the hassle for a bank to sign someone up if the bank has then go thru the task or repossession and then selling.

I can't see how it is financially worth the exercise let alone the bad public relations.

In short I don't think this is viable predatory behaviour.


----------



## MovingAverage (2 May 2022)

Gunnerguy said:


> https://www.abc.net.au/news/2022-05...-stress-interest-rate-rise-election/101026362
> 
> The banks just keep doing it .....
> 
> ...



So at what point do we say a single mum borrowing 6x her income is just f'ing ridiculous???? At some point these folks need to learn (the hard way) that just because you can doesn't mean you should. Of course somehow these fools will just blame the LNP for their own stupidity. F' me the world is full of bloody idiots


----------



## sptrawler (2 May 2022)

Warr87 said:


> I agree. The only cavet is if the bank knows and/or suspects but turns an eye in order to collect fees now, and then make a profit when they re-posses later on. I wouldn't put that kind of predatory behaviour past the banks. People are still adults though and they bought into the hype of 'never going to go down. you can't lose'.






3 hound said:


> Is it really worth the hassle for a bank to sign someone up if the bank has then go thru the task or repossession and then selling.
> 
> I can't see how it is financially worth the exercise let alone the bad public relations.
> 
> In short I don't think this is viable predatory behaviour.



I agree with both of you, but the banks can't be given access to all your personal information, we don't even like giving the Government that sort of access.
So if someone is going to give false information, the bank can't say "no we wont give you a loan because we don't believe you", these people are adults they are asking to be treated as adults, then when it goes pear shaped they want to blame someone else for the mess.
This is how Australia is changing, everyone is looking for someone else to take the responsibility, it will be interesting if there is a property market crash. 
No one jumps up and down for share market investors, when there is a market crash and margin loans get called in.


----------



## MovingAverage (2 May 2022)

3 hound said:


> Is it really worth the hassle for a bank to sign someone up if the bank has then go thru the task or repossession and then selling.
> 
> I can't see how it is financially worth the exercise let alone the bad public relations.
> 
> In short I don't think this is viable predatory behaviour.



when was the last time you heard of a bank repossessing and selling a house in Australia. This place is in for a serious reality check


----------



## 3 hound (2 May 2022)

MovingAverage said:


> So at what point do we say a single mum borrowing 6x her income is just f'ing ridiculous???? At some point these folks need to learn (the hard way) that just because you can doesn't mean you should. Of course somehow these fools will just blame the LNP for their own stupidity. F' me the world is full of bloody idiots



There is an entire location, (I would say suburb but there are no services other than roads) that is comprised of mainly single mothers and other 100% welfare recipients on up to 5 acre blocks they have mortgages for. Corrupt old farmers that ran the council gave all the approvals to subdivide their most worthless farmland for housing. 

The people came, it is a social disaster soaking up endless amounts of government services from mental health to child protection to police...etc.

The farmers took the loot and retired to the coast.

It is not an uncommon trick in semi-rural areas.  

The social cost and negative impact across so many sectors would blow middle class Australian's minds.


----------



## 3 hound (2 May 2022)

sptrawler said:


> No one jumps up and down for share market investors, when there is a market crash and margin loans get called in.




Have you not heard of the phrase "too big to fail"?  

I interpret that as the biggest private investors don't take responsibility for their own actions do expect everyone else thru government to bail them for their mismanagement.


----------



## 3 hound (2 May 2022)

MovingAverage said:


> when was the last time you heard of a bank repossessing and selling a house in Australia. This place is in for a serious reality check



I honestly don't know, I don't really follow that side of things.

What are the rough figures on that?


----------



## Warr87 (2 May 2022)

sptrawler said:


> I agree with both of you, but the banks can't be given access to all your personal information, we don't even like giving the Government that sort of access.
> So if someone is going to give false information, the bank can't say "no we wont give you a loan because we don't believe you", these people are adults they are asking to be treated as adults, then when it goes pear shaped they want to blame someone else for the mess.
> This is how Australia is changing, everyone is looking for someone else to take the responsibility, it will be interesting if there is a property market crash.
> No one jumps up and down for share market investors, when there is a market crash and margin loans get called in.




Well yes and no. While they don't have access to your personal info (and great!) but you can reasonably suspect that someone isn't being entirely truthful. You can apply for a loan, but they are not obligated to give it to you. You are not entitled to a loan. Is this happening on a large scale? Don't know. But the financial industry certainly has a past of bankers conveniently not pressing for more information when they should reasonably suspect someone isn't presenting all the facts, all in the name of pursing profit. That may seem like a strange criticism to make on a forum like this who are trying to maximise profit, but the distinction being that we aren't being predatory or unethical.

Of course, if it isn't obvious that people are lying and they continue to do so, then lose it all. Well no sympathy from me. I don't know all the facts, my position before was more adding a qualifier to the statement. I am cynical and wouldn't put it past the banks. It's certainly been long enough since 2008 for people to have forgotten what contributed to that crash. A crash effects everyone, not just homeowners.

And you are right about the responsibility. I think the propaganda like info pushed about the housing market being the only smart investment, always going up, followed by gov policies to prop it up, along with easy money. I wonder if the people pushing that info the hardest will take responsibility, or will they just say 'well, they should've made allowances for their own situation.'


----------



## MovingAverage (2 May 2022)

3 hound said:


> (I would say suburb but there are no services other than roads)



Your reference sounds like a lot of the the housing developments being built in outer western sydney. lack of social planning, infrastructure and services is embarrassing to say the least.


----------



## 3 hound (2 May 2022)

MovingAverage said:


> Your reference sounds like a lot of the the housing developments being built in outer western sydney. lack of social planning, infrastructure and services is embarrassing to say the least.



There to, i was referring to a different state.

Clearly this unethical behaviour is wider spread than I thought. I think the requirement is you need small corrupt boss hog style councils in remote areas to do the approvals.

I doubt this could happen in areas where there are more educated residents that understand law and finance. The council's wouldn't try it.


----------



## MovingAverage (2 May 2022)

sptrawler said:


> but the banks can't be given access to all your personal information,



I doubt very much the banks want that type of access anyway....that way they reserve the right to just step in whenever they like on the premise that you lied to them. Giving banks full access to your info is not good for their business.


----------



## Gunnerguy (2 May 2022)

The article generated a lot of responses in a short amount of time.

The phrase that comes to my mind is .....

Individual Financial Education, and the lack of it.

The other side of the coin has phrases like ......

Too big to fail. Commissions. Unethical. Dishonesty. Consumerism. Keeping up with the Jones’s. Entitlement. 

I believe both sides are to blame, the borrowers and the lenders. I just think the proportion of the blame fluctuates.

Gunnerguy.


----------



## 3 hound (2 May 2022)

Gunnerguy said:


> The article generated a lot of responses in a short amount of time.
> 
> The phrase that comes to my mind is .....
> 
> ...



I want to throw in duty of care, high powered advertising and marketing work, there has to be some empathy and understanding that people with nothing can have difficulties resisting social pressure and predatory bank practices.

You would rightly allocate a good portion of blame to bar staff that kept serving a drunk (in fact it's illegal) so banks need to have a similar duty of care toward vulnerable people that are easy to exploit due to lack of IQ/knowledge/education/entitlement etc.

I ran a horse riding business for tourists, lots of people overestimated their abilities and lied about their experience. I wouldn't let them end up in a spinal injury ward just because they lied. Duty of care needs to built into the financial world like in every other industry otherwise it is just predatory.


----------



## Warr87 (2 May 2022)

Gunnerguy said:


> I believe both sides are to blame, the borrowers and the lenders. I just think the proportion of the blame fluctuates.



Yes




3 hound said:


> [...] banks need to have a similar duty of care toward vulnerable people that are easy to exploit due to lack of IQ/knowledge/education/entitlement etc.



Agreed. We don't think that kind of behaviour is acceptable in other parts of our society, so why finances? 

Plenty of blame to go around, obviously.


----------



## sptrawler (2 May 2022)

Gunnerguy said:


> The article generated a lot of responses in a short amount of time.
> 
> The phrase that comes to my mind is .....
> 
> ...



I want to throw in, asking for a loan that they really shouldn't be asking for, I never made a zillion dollars on a deal, mainly because I never borrowed more than I could afford to pay even if I lost my job.
Boring I know, but it did serve me well, i never worried about losing what I had already accumulated.
But my first house was 50 years old, chopped in half, loaded on two trucks and transported 200klm to a rural town block, then re stumped and nailed back together. 🤪


----------



## Smurf1976 (3 May 2022)

On one hand I agree that banks shouldn't lend to people who can't repay the debt and so on. 

On the other hand we're talking about grown adults borrowing serious amounts of money and making the largest financial decisions most people will ever make here and doing so in a world where practically everyone has access to all manner of information via the internet.

We're talking about people aged 25+, in many cases substantially older than that. People who've had various jobs, relationships, in many cases have tertiary education, some have children and so on. That is, broad life experience. If they're not grasping the seriousness of what they're doing then as a society we're going wrong in more ways than just with housing or lending money.

I knew in primary school that advertising of any kind is simply about business trying to convince people to spend money and that whilst it might be true as such, it needs to be treated with extreme caution always. Doesn't everyone know this stuff? Just because someone says it's a good deal doesn't mean it is.


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## againsthegrain (3 May 2022)

Smurf1976 said:


> On one hand I agree that banks shouldn't lend to people who can't repay the debt and so on.
> 
> On the other hand we're talking about grown adults borrowing serious amounts of money and making the largest financial decisions most people will ever make here and doing so in a world where practically everyone has access to all manner of information via the internet.
> 
> ...




reminds me of that woman on current affair back years ago who was shaking a fist at the banks that her interest repayment only period ended and has to start paying principle + interest. Apparently she never read or understood the contract and thought will be repaying interest only for eternity.

Those evil banks!  {shakes fist}


----------



## 3 hound (3 May 2022)

All points are above are true but would you apply the same logic to the medical profession, engineering.....etc.

For example a patient is convinced they need a surgical operation - the doctor will make a lot of money from it. The doctor knows it's unnecessary, the doctor should do it anyway??

In fact according to the logic some are displaying illicit street drug dealers selling heroin to adults have no responsibility or liability.

Heroin would be the ultimate capitalist commodity.


----------



## moXJO (3 May 2022)

Government intervention is about to trickle through again. Either scomos "first buyers" bribe, or albos "Government buyout". Either way it's going to help prop prices. Unless they really ramp rates.

one of the reasons why it just keeps going up is all the stupid government intervention over the years.


----------



## sptrawler (3 May 2022)

3 hound said:


> All points are above are true but would you apply the same logic to the medical profession, engineering.....etc.
> 
> For example a patient is convinced they need a surgical operation - the doctor will make a lot of money from it. The doctor knows it's unnecessary, the doctor should do it anyway??
> 
> ...



When a person goes to a doctor or an engineer, they usually have a problem they want to have solved, if it is say major surgery or major engineering works they should get a second opinion, I know I did before having both knees and a hip replaced(not at the same time).
But if the patient wants the operation to relieve chronic pain, but can still walk,  is it up to the doctor to say you don't need it because you are still walking?
Then when the patient demands it and finds after the operation the pain is bad(because it is), should the patient be able to turn around and say the doctor should have refused to do the operation?
Where does responsibility, accountability and rights begin and end? These days we want to have the right to decide, but we don't want to take responsibility if the outcome isn't favourable.
The same with the single mother in the earlier post, if her house goes up in value and she sells and makes a lot of money, it was a great decision on her part, if interest rates go up and she loses everything it's the Banks fault for lending her the money.


----------



## 3 hound (3 May 2022)

sptrawler said:


> having both knees




Full replacement???

How did that go, I need to get same.

You more mobile now, pain free??


----------



## sptrawler (3 May 2022)

3 hound said:


> Full replacement???
> 
> How did that go, I need to get same.
> 
> You more mobile now, pain free??



PM me otherwise we will send the thread off topic. I had may joints replaced 15,12 and 9 years ago.


----------



## basilio (7 May 2022)

The issue of people being "creative" with their loan applications has been around for many years.  It has been boosted by the advent of mortgage brokers who make it clear that "of course they can get a loan for their clients but we have to be smart about it."

Those with slightly longer memories may recall the days of 105%  property loans !  One could borrow $525k on a $500k property.  Yes that was happening with  subprime loans in the past but the option is still available today.  (All you have to do is find a guarantor for the loan...)









						Liar loans: how mortgage brokers are putting clients at risk
					

Studies say almost 40% of loan applications completed through mortgage brokers contain at least one factually incorrect statement




					www.slatergordon.com.au
				











						How to get a home loan when you have a small deposit - Mortgage House
					

You can get a home loan. Though, there are certain things to be aware of, especially when your home deposit is under 20%.




					www.mortgagehouse.com.au
				











						Can Your Parents Help You Get A Home Loan?
					

Guarantor home loans are the only way to buy a property with no deposit in Australia. Pay no Lenders Mortgage Insurance (LMI) and borrow up to 110% of the property value. Do you qualify?



					www.homeloanexperts.com.au


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## basilio (7 May 2022)

On the bigger picture what are the consequences of ever accelerating property prices. ? 

Consider these points.









						Seven downsides to Australia’s dangerous property obsession | Satyajit Das
					

Home ownership creates unbalanced growth and deceptive prosperity while contributing to structural problems




					www.theguardian.com


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## basilio (7 May 2022)

I can appreciate the observations of posters around lack of financial literacy etc with home buyers.

Having said that check out the stories from Home Loan experts.  They ceratin seem genuine about delivering Home Loan solutions to everybody.  

At what cost ? 









						Home Loan Experts | Specialist Mortgage Brokers
					

Our award-winning mortgage brokers will find you the right home loan for your situation. Get a FREE assessment today!



					www.homeloanexperts.com.au


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## Cam019 (7 May 2022)

basilio said:


> At what cost ?



What do you mean?


----------



## basilio (7 May 2022)

Cam019 said:


> What do you mean?




Firstly. What are the direct charges that make their way onto clients repayment costs ?
Secondly.  The risk of clients having a unsustainable house loan because  the loan parameters have been seriously fudged.


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## 3 hound (7 May 2022)

Cam019 said:


> What do you mean?



I assume it means the social and economic costs if home affordability becomes out of reach for too many people.

I thought a 25 year mortgage was absurd the first time I heard of it as a kid, then I went to Europe and met families renting the same house for generations and home owners paying a house off over generations.  Kicking a renter out of your home was basically impossible, After seeing all of that a 25 year mortgage seems like childsplay.

I am guessing house price increases will eventually cause gov to build more public housing and to allocate more land for housing development. Both will put downward pressure on house prices and people who bought homes and property as  retirement investments will lose money.

I am also seeing a lot more squatters, urban encampments and people occupying vacant land than ever. Councils and police seem to ignore it, locals don't because we now go on Sunday walks together picking up used needles and other hazardous rubbish where local  children are meant to play.


----------



## chemist (7 May 2022)

3 hound said:


> All points are above are true but would you apply the same logic to the medical profession, engineering.....etc.
> 
> For example a patient is convinced they need a surgical operation - the doctor will make a lot of money from it. The doctor knows it's unnecessary, the doctor should do it anyway??
> 
> ...




True, all drugs should be legal. You're living in fairy land if you think money doesn't influence doctors. Cosmetic surgery is one of the most lucrative medical business lines and how much of that is necessary? Who gets to decide what is necessary? If a woman decides enormous gazongas are necessary to her would you be brave enough to argue?


----------



## basilio (7 May 2022)

What has happened with property prices in 10 years around Geelong ?









						Geelong sellers see double as property bubble grows - realestate.com.au
					

Nearly two-thirds of Geelong suburbs and towns have seen median home prices double this decade as the region rides a wave of population growth. SEE THE FULL LIST



					www.realestate.com.au


----------



## sptrawler (7 May 2022)

3 hound said:


> I assume it means the social and economic costs if home affordability becomes out of reach for too many people.
> 
> I thought a 25 year mortgage was absurd the first time I heard of it as a kid, then I went to Europe and met families renting the same house for generations and home owners paying a house off over generations.  Kicking a renter out of your home was basically impossible, After seeing all of that a 25 year mortgage seems like childsplay.
> 
> ...



The Government building social housing would be a last resort, the costs associated with repairs and rent arrears/evictions just balloons out massively, that was why they started building state housing suburbs and flats to keep all the repairs in one location.
But that brought about its own social problems, so then they started helping the private sector supply the housing with negative gearing and bond assistance, rent assistance etc.
You only have to watch a t.v programme where someone in social housing is complaining about the mess it is in, as though the mess fairy came in the night and wrecked it.
Pre election all parties say they are going to supply more social housing and it never seems to happen.


----------



## sptrawler (7 May 2022)

basilio said:


> What has happened with property prices in 10 years around Geelong ?
> 
> 
> 
> ...



It's a coastal town 1hr from Melbourne, with good road and rail transport access, simple logics really.


----------



## 3 hound (7 May 2022)

chemist said:


> If a woman decides enormous gazongas are necessary to her would you be brave enough to argue?




Bad example, who's gonna say no to "enormous gazongas", can't be done.


----------



## 3 hound (7 May 2022)

sptrawler said:


> The Government building social housing would be a last resort, the costs associated with repairs and rent arrears/evictions just balloons out massively, that was why they started building state housing suburbs and flats to keep all the repairs in one location.
> But that brought about its own social problems, so then they started helping the private sector supply the housing with negative gearing and bond assistance, rent assistance etc.
> You only have to watch a t.v programme where someone in social housing is complaining about the mess it is in, as though the mess fairy came in the night and wrecked it.
> Pre election all parties say they are going to supply more social housing and it never seems to happen.




Are you referring to this suburb??


----------



## 3 hound (7 May 2022)

sptrawler said:


> It's a coastal town 1hr from Melbourne, with good road and rail transport access, simple logics really.




My grandparents were forced to live in the most run down crime ridden part of Brisbane where only people with no other options were forced into.

They took the worst jobs and worked tirelessly and started buying all the houses that nobody else wanted in the street. They (and people like them)  then turned the forgotten derelict suburb into flats, businesses and thriving communities.

That suburb has now been for some time now one of the trendiest prime real estate locations in SEQ full of elite rich hipsters, a thriving artistic community and massive investment in top tier units  and office space.

QLD'ers guess the suburb.


----------



## sptrawler (7 May 2022)

3 hound said:


> My grandparents were forced to live in the most run down crime ridden part of Brisbane where only people with no other options were forced into.
> 
> They took the worst jobs and worked tirelessly and started buying all the houses that nobody else wanted in the street. They then turned them into flats, businesses and thriving communities.
> 
> ...



Even the trendy suburbs can have bad areas, in the 1970's I lived in the Battle Street flats in Mosman Park Perth, it was a State housing war zone. The State housing sold off the flats and changed the street name to Murray Avenue.
The good thing about living there was, you never had to phone the police, they were always on site. 😂


----------



## 3 hound (7 May 2022)

sptrawler said:


> Even the trendy suburbs can have bad areas,




I think it's a prerequisite, the drugs bring in young people, artists, musicians etc who are followed by 20 something year old professionals with money looking to see what's going on in the underground, restaurant owners and social venues follow, then the hipsters, followed by speculative property developers sensing the next big thing ......then rich old people buy up all property and start complaining about the noise, the drugs, the music venues, art...etc all the things that made the place trendy and attractive in the first place.....the hip young elite professionals leave and the cycle starts again somewhere else and you are left with another overdeveloped, generic looking suburb full of overpriced housing, generic franchise businesses and no life.


----------



## basilio (7 May 2022)

Another  (tongue in cheek) historical  perspective on housing prices.

* “But interest rates were 17% in my day!” complains man who bought house for $67,000    * 



A 63 year old man who bought his first inner-city four-bedroom house for under $70k in the 1980s says young people complaining about interest rate rises don’t know how good they’ve got it.

“Back then we had to save up for weeks, just to get enough for a deposit!” John Bradly from the eastern Melbourne suburb of Camberwell said.                                                                               

“And then, once we had our house, my generation didn’t have anyone helping us to pay off the mortgage. It was just us and our salaries, which were only about one fifth of the value of the average home back then!

“It took my more than seven years to pay off my first house. Seven years! I was practically in my thirties by the time I was debt free. Can you imagine? Being beholden to a bank for your entire twenties! I’m pretty sure no-one in their twenties these days has to go through that”.

Bradly said young people simply didn’t know what hard worked looked like. “Try managing tenants across eleven investment properties scattered around Melbourne and Sydney during a global pandemic. That’s what hard work is!”









						“But interest rates were 17% in my day!” complains man who bought house for $67,000
					

"We had to save up for weeks just to get a deposit!"




					www.theshovel.com.au


----------



## qldfrog (7 May 2022)

3 hound said:


> My grandparents were forced to live in the most run down crime ridden part of Brisbane where only people with no other options were forced into.
> 
> They took the worst jobs and worked tirelessly and started buying all the houses that nobody else wanted in the street. They (and people like them)  then turned the forgotten derelict suburb into flats, businesses and thriving communities.
> 
> ...



New farm,?


----------



## basilio (7 May 2022)

For those interested in how Melbournes property prices have grown in the last 50 years.

Goes to 2010 so clearly current prices jump off the graph.




 The Changing Patterns of Housing Prices in Melbourne​As *Camberwell* has become increasingly higher cost relative to the rest of Melbourne, the corresponding trend has been a disappearance of sales in the second and, more noticeably, third *price* quartile. In 1976, 27.4% of *Camberwell* *houses* sold in the third quartile and 12.1% in the second quartile. By 2009 this percentage was negligible, at 3.0%.


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## 3 hound (7 May 2022)

Given this is a money oriented forum shouldn't house prices be irrelevant compared to affordability, employment rate etc 

What percentage of your pay repayments are, living costs, job stability, transport.....it's everything other than the dollar value of a house is the only way to compare affordability to own a home or not, price is misleading.


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## 3 hound (7 May 2022)

qldfrog said:


> New farm,?



 Holy crap, was it that obvious, what gave it away??

You sir are correct on first guess.


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## JohnDe (7 May 2022)

3 hound said:


> Given this is a money oriented forum shouldn't house prices be irrelevant compared to affordability, employment rate etc




True, though I see more complaining, reminiscing and conspiracy fears than "money oriented" investment discussions.


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## 3 hound (7 May 2022)

JohnDe said:


> True, though I see more complaining, reminiscing and conspiracy fears than "money oriented" investment discussions.



Agree fully, I said it here not long after I joined...I have learnt rather quickly there is a high correlation between what gets discussed on forums like this and what gets discussed on prepper forums.

Many famous money gurus with huge public profiles and experience in share trading are the most vocal and  extreme of doomsday thinkers.

I was shocked to be honest.


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## qldfrog (7 May 2022)

3 hound said:


> Holy crap, was it that obvious, what gave it away??
> 
> You sir are correct on first guess.



Left Brisbane less than 2y ago and spent 20y based there.
I worked in New farm..before and then after revival...


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## qldfrog (7 May 2022)

3 hound said:


> Agree fully, I said it here not long after I joined...I have learnt rather quickly there is a high correlation between what gets discussed on forums like this and what gets discussed on prepper forums.
> 
> Many famous money gurus with huge public profiles and experience in share trading are the most vocal and  extreme of doomsday thinkers.
> 
> I was shocked to be honest.



Maybe it could be a telltale sign that the western whole economy by all objective views is f***ed...
I wish one could tell you put everything in VAS and you will make a killing


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## 3 hound (7 May 2022)

qldfrog said:


> Maybe it could be a telltale sign that the western whole economy by all objective views is f***ed...
> I wish one coukd tell you pit everything in VAS and you will make a killing



VAS??


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## 3 hound (7 May 2022)

qldfrog said:


> Maybe it could be a telltale sign that the western whole economy by all objective views is f***ed...
> I wish one coukd tell you pit everything in VAS and you will make a killing



What other system did you have in mind, the western liberal system has proven to be the best so far, nothing else comes close. Are you talking about living a traditional indigenous way? Not enough land and to many people for that not to be a disaster.


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## qldfrog (7 May 2022)

3 hound said:


> VAS??



Vanguard Australian Shares Index ETF
ASX: VAS
basically, an index etf on aussie share market..you buy, you get the fividends and travel to the Caraïbes..which are not overated...so if you can..go


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## qldfrog (7 May 2022)

3 hound said:


> What other system did you have in mind, the western liberal system has proven to be the best so far, are you talking about living a traditional indigenous way. Not enough land and to many people for that not to be a disaster.



The west from the 70s with elected representatives, not chosen by media or deep state, and were decisions are made by technically competent personnel, not narratives.
What we used to call western democracies...


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## 3 hound (7 May 2022)

qldfrog said:


> Vanguard Australian Shares Index ETF
> ASX: VAS
> basically, an index etf on aussie share market..you buy, you get the fividends and travel to the Caraïbes..which are not overated...so if you can..go




That's a huge relief, when you said we're all going to be F'ed and to start investing in Vas I took it to literally and thought you meant Vaseline.


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## 3 hound (7 May 2022)

qldfrog said:


> The west from the 70s with elected representatives, not chosen by media or deep state, and were decisions are made by technically competent personnel, not narratives.
> What we used to call western democracies...



I thought the 70's were an economic disaster with inflation, fuel shortages...etc.


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## qldfrog (7 May 2022)

3 hound said:


> That's a huge relief, when you said we're all going to be F'ed and to start investing in Vas I took it to literally and thought you meant Vaseline.



I said i wish I could tell you to invest all in VAS.
Yes we are f***ed and no, do not put everything in VAS😊


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## 3 hound (7 May 2022)

qldfrog said:


> I said i wish I could tell you to invest all in VAS.
> Yes we are f***ed and no, do not put everything in VAS😊



That's what the stock exchange is for isn't it; the worst possible times are the best possible time......to invest.


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## Warr87 (7 May 2022)

basilio said:


> On the bigger picture what are the consequences of ever accelerating property prices. ?
> 
> Consider these points.
> 
> ...




some pretty good points, IMO


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## Warr87 (7 May 2022)

3 hound said:


> Given this is a money oriented forum shouldn't house prices be irrelevant compared to affordability, employment rate etc
> 
> What percentage of your pay repayments are, living costs, job stability, transport.....it's everything other than the dollar value of a house is the only way to compare affordability to own a home or not, price is misleading.




that's actually how I think .... what % of my income am I spending on rent? what % can I afford for my car repayments, etc. The % value makes more sense to me. Even with all of this talk of 'I bought for $xxx and its now worth $xxx' is meaningless to me most times. I want to know what the CAR is on that. Even then, that return doesn't reflect all of the capital injects into upgrading/maintaining the house, or the associates taxes/fees for owning the property/land. An index fund tends to return the same or better but without the massive overhead. But I am admittedly biased towards trading shares over owning property.


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## 3 hound (7 May 2022)

Warr87 said:


> that's actually how I think .... what % of my income am I spending on rent? what % can I afford for my car repayments, etc. The % value makes more sense to me. Even with all of this talk of 'I bought for $xxx and its now worth $xxx' is meaningless to me most times. I want to know what the CAR is on that. Even then, that return doesn't reflect all of the capital injects into upgrading/maintaining the house, or the associates taxes/fees for owning the property/land. An index fund tends to return the same or better but without the massive overhead. But I am admittedly biased towards trading shares over owning property.




Are you currently renting??

Some argue rents can be just as much as mortgage repayments so why not build the equity in the house.


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## wayneL (7 May 2022)

3 hound said:


> Holy crap, was it that obvious, what gave it away??
> 
> You sir are correct on first guess.



I was going to say Paddo/Bardon, but not many flats there

Similar story though


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## 3 hound (7 May 2022)

wayneL said:


> I was going to say Paddo/Bardon, but not many flats there
> 
> Similar story though



Yes very similar stories, I think New Farm is worth more in total property value tho.


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## sptrawler (7 May 2022)

3 hound said:


> Given this is a money oriented forum shouldn't house prices be irrelevant compared to affordability, employment rate etc
> 
> What percentage of your pay repayments are, living costs, job stability, transport.....it's everything other than the dollar value of a house is the only way to compare affordability to own a home or not, price is misleading.



That is so true, but it is the narrative the media run, it is as though aliens are coming here and pushing up the house prices in Melbourne and Sydney, or some house price fairy is doing it.
People are just stupid they follow the media narrative like sheep, they blame immigrants, then house prices still go up when there are no immigrants.
Then they blame investors, when investors make up a small part of the buyers, but they always use Sydney/Melbourne as the norm, when it isn't.
Why don't people start and look at themselves, there are other things to invest in other than houses in Sydney and Melbourne, but no they have to keep bidding them up and complaining about what they have to pay.
FFS if they were share investors and complained endlessly about buying at the top of the market, everyone would laugh at them.
Like you say this is an investment forum, if you can't see a bad investment from a good investment, best you get into something else rather than going on about it endlessly on here.
Would I buy a house in Melbourne or Sydney if I couldn't afford it? No, would I buy it as an investment? No, why not? because it is just keeping the weather off someone, it makes nothing it derives income from hoping someone wants to live in it and pay me a stupid amount of rent to do so..
There is an old rule of thumb, of 100 people only 6 will become rich, the majority will be poor because they make poor life decisions.
Should we subsidies the people who decide to buy houses in Sydney/ Melbourne, if there is a housing crash, if yes is the answer, why don't we subsidise share investors that lose money?


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## Warr87 (7 May 2022)

3 hound said:


> Are you currently renting??
> 
> Some argue rents can be just as much as mortgage repayments so why not build the equity in the house.




It can be. Though when using 4-5x my salary, I would likely have to live within a place that I just wouldn't want to live in. Or perhaps go for an apartment (though owning an appartment carries its own issues). I'm not particularly precious either as I've lived in all kinds of places in my life. Typically, I have a rather mobile life as well (moving between different states and countries due to my careers), which also means a house is less suitable.

There is no one size fits all. Not everyone has the time or inclination to learn how to trade shares. And as you mention, some can get a mortgage for roughly the same amount they pay in rent, in which case it makes sense.


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## sptrawler (7 May 2022)

Warr87 said:


> It can be. Though when using 4-5x my salary, I would likely have to live within a place that I just wouldn't want to live in. Or perhaps go for an apartment (though owning an appartment carries its own issues). I'm not particularly precious either as I've lived in all kinds of places in my life. Typically, I have a rather mobile life as well (moving between different states and countries due to my careers), which also means a house is less suitable.
> 
> There is no one size fits all. Not everyone has the time or inclination to learn how to trade shares. And as you mention, some can get a mortgage for roughly the same amount they pay in rent, in which case it makes sense.



If you have some mates, wouldn't it be better to share a house? You can usually get a much better and bigger house for @1,000/wk that $500/wk


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## 3 hound (7 May 2022)

Warr87 said:


> It can be. Though when using 4-5x my salary, I would likely have to live within a place that I just wouldn't want to live in. Or perhaps go for an apartment (though owning an appartment carries its own issues). I'm not particularly precious either as I've lived in all kinds of places in my life. Typically, I have a rather mobile life as well (moving between different states and countries due to my careers), which also means a house is less suitable.
> 
> There is no one size fits all. Not everyone has the time or inclination to learn how to trade shares. And as you mention, some can get a mortgage for roughly the same amount they pay in rent, in which case it makes sense.



Mobility is a huge issue, you better like where and who you live with when buying a house.  Definately losses of freedom getting a mortgage but you do gain other freedoms for example I can collect more things and set up more things within the stability of owning a house. I built a massive obstacle course for my dogs in the back yard I also use for body weight exercises it cost bugger all using scrap materials but I doubt you would do it in a rental. Hell you are lucky to have a pet rock let alone a pack of monster dogs in rentals.  Even something as simple as planting a tree or garden or building a shed or outdoor pizza oven is work you will get to enjoy the benefits of for years. I can't imagine you get that renting.


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## sptrawler (7 May 2022)

3 hound said:


> Mobility is a huge issue, you better like where and who you live with when buying a house.  Definately losses of freedom getting a mortgage but you do gain other freedoms for example I can collect more things and set up more things within the stability of owning a house. I built a massive obstacle course for my dogs in the back yard I also use for body weight exercises it cost bugger all using scrap materials but I doubt you would do it in a rental. Hell you are lucky to have a pet rock let alone a pack of monster dogs in rentals.  Even something as simple as planting a tree or garden or building a shed or outdoor pizza oven is work you will get to enjoy the benefits of for years. I can't imagine you get that renting.



In my early days of property investment, I went halves with a really good mate, we shared the load and when the pot was worth enough that we both could move on independent of each other, we did.
We started by buying lawn mowers from garage sales, doing them up and onselling, then moved on to picking up cars from auctions, hone, new rings, big ends, bog and respray, then flip them. 😂
Jeez today you couldn't sell a lawn mower and better cars than we bought at the auctions are left on the side of the freeway with orange abandoned stickers on them, but people are doing it so tough.


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## 3 hound (7 May 2022)

sptrawler said:


> In my early days of property investment, I went halves with a really good mate, we shared the load and when the pot was worth enough that we both could move on independent of each other, we did.
> We started by buying lawn mowers from garage sales, doing them up and onselling, then moved on to picking up cars from auctions, hone, new rings, big ends, bog and respray, then flip them. 😂
> Jeez today you couldn't sell a lawn mower and better cars than we bought at the auctions are left on the side of the freeway with orange abandoned stickers on them, but people are doing it so tough.



Sounds like a fun time that paid off. Probably harder to replicate now for a young guy.


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## sptrawler (7 May 2022)

3 hound said:


> Sounds like a fun time that paid off. Probably harder to replicate now for a young guy.



Certainly would be, most these days seem to want it to just happen, because "hey I'm special".
Here is my first house, bought for cash and after two years of hard work tripled my money, had a wife and three kids in there, while I was making it first liveable and then sellable. It didn't come with a bathroom and had a 2.5mx 2.5m hole in the middle of the house because they don't transport the bricks, so the lounge fire and kitchen stove chimney and base didn't come. 😂 
Probably hard to replicate now for a young guy, because it is Flucking hard work and a lot of sacrifice, arguments and tears.
By the way it was pizzing down when it arrived with no roof on, so all the old plaster was sagging and falling down, it was two years of hard work to make $30k profit.


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## 3 hound (7 May 2022)

sptrawler said:


> Certainly would be, most these days seem to want it to just happen, because "hey I'm special".
> Here is my first house, bought for cash and after two years of hard work tripled my money, had a wife and three kids in there, while I was making it first liveable and then sellable.
> Probably hard to replicate now for a young guy, because it is Flucking hard work and a lot of sacrifice, arguments and tears.
> By the way it was pizzing down when it arrived with no roof on, so all the old plaster was sagging and falling down, it was two years of hard work to make $30k profit.
> ...



It's those memories and struggles that make life worth living.

Incidentally a guy down the road from me has a old house buying, moving and re-stumping business, weird way to make a living.


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## sptrawler (7 May 2022)

3 hound said:


> It's those memories and struggles that make life worth living.
> 
> Incidentally a guy down the road from me has a old house buying, moving and re-stumping business, weird way to make a living.



You're dead right and it makes you a bit cynical when young people tell you they can't afford a house, there are a lot of these sort of houses that are now free, just pay the jinkering cost. I paid $14,000 in 1982 for the house, that was about twice the cost of a Commodore, so say $60 - 100k today, then I paid the jinkering cost on top.


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## 3 hound (7 May 2022)

sptrawler said:


> You're dead right and it makes you a bit cynical when young people tell you they can't afford a house, there are a lot of these sort of houses that are now free, just pay the jinkering cost. I paid $14,000 in 1982 for the house, that was about twice the cost of a Commodore, so say $60 - 100k today.




Haven't looked into it enough to make a decision but I could buy an old house from the guy less than 5km down road and have him install it on my property as a guest house or buy one those. brand new fairly luxurious transportable homes with all the mod cons commonly seen on mining sites. I'm yet to work out the pricing.


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## againsthegrain (7 May 2022)

sptrawler said:


> You're dead right and it makes you a bit cynical when young people tell you they can't afford a house, there are a lot of these sort of houses that are now free, just pay the jinkering cost. I paid $14,000 in 1982 for the house, that was about twice the cost of a Commodore, so say $60 - 100k today.




I sit right in the middle on this, from one side I see some of this as being out of touch from the boomers point of view, but from the other side I definately think the "young" people or majority of them have ridiculous expectations.  Is there any normal people left in this country? 😂  But if there is still any normal people that don't have high expectations I still think it is very hard for them and not easy to pack up your family and leave melb or syd, but this argument goes in circles,  im no longer that passionate on it anyway.

What I do agree on here is why we need to keep bailing out and babying those in melb and syd.  Saw some chick on news saying how ohhh nooo her mortgage payments are up and food bills are already high...  "ahh then get a better job mate"


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## sptrawler (7 May 2022)

againsthegrain said:


> I sit right in the middle on this, from one side I see some of this as being out of touch from the boomers point of view, but from the other side I definately think the "young" people or majority of them have ridiculous expectations.  Is there any normal people left in this country? 😂  But if there is still any normal people that don't have high expectations I still think it is very hard for them and not easy to pack up your family and leave melb or syd, but this argument goes in circles,  im no longer that passionate on it anyway.
> 
> What I do agree on here is why we need to keep bailing out and babying those in melb and syd.  Saw some chick on news saying how ohhh nooo her mortgage payments are up and food bills are already high...  "ahh then get a better job mate"



Absolutely, if getting an easy comfortable life didn't include any sacrifice, that would be great.
Everyone would be given a house and be on welfare, so who pays for it and who takes out the rubbish and collects it, who goes to work, why bother?
Way too many high paid media personalities telling people life should be easy, like they have it, talk $hit on T.V for 3 hrs a day for $3m a year yep life's good.
There is a huge shock coming for Australia, sooner or later.


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## Warr87 (7 May 2022)

sptrawler said:


> If you have some mates, wouldn't it be better to share a house? You can usually get a much better and bigger house for @1,000/wk that $500/wk




I have looked and that is what I have thought about too. Rent out the other rooms to help. But I also don't count on those things. I also share my current rental to save more on costs (I save the money and will put it to starting up new systems to trade).

But you are definitely correct. I also see the market as just being well over-valued so right now I can rarely justify it. It's also only up to this time year that I left my job that had me move every year or two for work. Now that I am in a stable location and job, I'll start looking more seriously.


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## Warr87 (7 May 2022)

3 hound said:


> Mobility is a huge issue, you better like where and who you live with when buying a house.  Definately losses of freedom getting a mortgage but you do gain other freedoms for example I can collect more things and set up more things within the stability of owning a house. I built a massive obstacle course for my dogs in the back yard I also use for body weight exercises it cost bugger all using scrap materials but I doubt you would do it in a rental. Hell you are lucky to have a pet rock let alone a pack of monster dogs in rentals.  Even something as simple as planting a tree or garden or building a shed or outdoor pizza oven is work you will get to enjoy the benefits of for years. I can't imagine you get that renting.




That's what I would love. The freedom to make changes to the house. I also love pets, but in a rental I'm just not willing to do that. All your points are valid (pizza oven, makeshift upgrades to the place, etc.). It's why I will eventually own, but in the meantime it just hasn't been viable. If the market finally cools then I will look more seriously.

Certainly not disputing what you're saying but it hasn't been right time with my particular circumstances.

And agian, I prefer putting my money into shares and trading systems. lol


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## sptrawler (7 May 2022)

Warr87 said:


> I have looked and that is what I have thought about too. Rent out the other rooms to help. But I also don't count on those things. I also share my current rental to save more on costs (I save the money and will put it to starting up new systems to trade).
> 
> But you are definitely correct. I also see the market as just being well over-valued so right now I can rarely justify it. It's also only up to this time year that I left my job that had me move every year or two for work. Now that I am in a stable location and job, I'll start looking more seriously.



Open your mind to options, car sharing and living further out, going tenants in common in a house, ask your employer if you can salary sacrifice the rent and they pay fringe benefits, there is a multitude of options if you open your mind.
One of the richest guys i've known rented, he was worth zillions, but only invested in shares, not my bag but I'm not worth zillions.


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## Warr87 (7 May 2022)

sptrawler said:


> Open your mind to options, car sharing and living further out, going tenants in common in a house, ask your employer if you can salary sacrifice the rent and they pay fringe benefits, there is a multitude of options if you open your mind.




I'm open to options. But I can assure you, the path I have taken in life wouldn't have allowed it prior to the past few years. And owning a house isn't the be-all,end-all.

If I had 100k for a house deposit, or 100k for trading a system, I would go the system. I'm sure that's a contentious position in this thread, despite the forum lol.


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## sptrawler (7 May 2022)

If I was in your shoes, I would do exactly the same.


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## Warr87 (7 May 2022)

sptrawler said:


> If I was in your shoes, I would do exactly the same.




Be sure to follow my ASX300 Super thread. Will eventually transfer that to a SMSF and then use the gains from that system to invest in a house to use in my retirement .

Shameless plug I know. But I couldn't resist haha.


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## sptrawler (7 May 2022)

Warr87 said:


> Be sure to follow my ASX300 Super thread. Will eventually transfer that to a SMSF and then use the gains from that system to invest in a house to use in my retirement .
> 
> Shameless plug I know. But I couldn't resist haha.



I've been running my SMSF since 2007 and retired in 2011 at 55, so will watch your progress with interest.
By the way left school at 15 and always worked for wages, plus didn't inherit or rip off anyone for anything.


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## 3 hound (7 May 2022)

againsthegrain said:


> I sit right in the middle on this, from one side I see some of this as being out of touch from the boomers point of view, but from the other side I definately think the "young" people or majority of them have ridiculous expectations.  Is there any normal people left in this country? 😂  But if there is still any normal people that don't have high expectations I still think it is very hard for them and not easy to pack up your family and leave melb or syd, but this argument goes in circles,  im no longer that passionate on it anyway.
> 
> What I do agree on here is why we need to keep bailing out and babying those in melb and syd.  Saw some chick on news saying how ohhh nooo her mortgage payments are up and food bills are already high...  "ahh then get a better job mate"




When you are young and healthy you move to where the work is and you work. It's not out of touch to say youngsters don't want to work as much, the data on job vacancies prove it.

Organisation have no choice but to employ foreigners in all manner of skilled and unskilled work just to get someone to do the job.

My entire family was invited by the Australian government to do work here and the government


Warr87 said:


> That's what I would love. The freedom to make changes to the house. I also love pets, but in a rental I'm just not willing to do that. All your points are valid (pizza oven, makeshift upgrades to the place, etc.). It's why I will eventually own, but in the meantime it just hasn't been viable. If the market finally cools then I will look more seriously.
> 
> Certainly not disputing what you're saying but it hasn't been right time with my particular circumstances.
> 
> And agian, I prefer putting my money into shares and trading systems. lol




Yeah timing is an issue, I bought at the tip of the last peak and for the last 10 years I would have got less than I paid for it. If I was forced to sell it would have been a financial disaster and who knows what would have happened to the dogs. It was anxiety inducing knowing you were paying a mortgage on something that was worth less than you bought it for. 

Fast forward to COVID when everybody lost their job and businesses went broke, somehow that triggered a housing boom here and things have gone batshit crazy. Every vacant block is sold, builders are booked out 4 years in advance and has prices are climbing. COVID lock downs  alone caused that boom....go figure.

From that cycle I learnt the only time the house price matters is the day you buy it and the day you sell it. All that matters in between is your ability to make monthly payments and you will still be making payments anyway no matter what you do. Living in a frikkin van is even hella expensive, I have friends living in vans to have the van life experience and they say it's definitely cheaper to rent a flat than live in a van.


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## 3 hound (7 May 2022)

sptrawler said:


> I've been running my SMSF since 2007 and retired in 2011 at 55, so will watch your progress with interest.
> By the way left school at 15 and always worked for wages, plus didn't inherit or rip off anyone for anything.



What's an SMSF?


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## sptrawler (7 May 2022)

3 hound said:


> From that cycle I learnt the only time the house price matters is the day you buy it and the day you sell it. .



From a very early age I told my kids you don't make money on a car when you sell it, you make all the money when you buy it, that goes for most things but especially so on depreciating assets, if you can buy a demo for $10k less, when you sell it you will get the same price as if you had bought it new.


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## sptrawler (7 May 2022)

3 hound said:


> What's an SMSF?



Taking responsibility for your own destiny.


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## 3 hound (7 May 2022)

sptrawler said:


> From a very early age I told my kids you don't make money on a car when you sell it, you make all the money when you buy it, that goes for most things but especially so on depreciating assets, if you can buy a demo for $10k less when you sell it you will get the same price as if you had bought it new.



Funny, my old man stopped buying cars and just leases them. He constantly pays the same payment but keeps getting a brand new car every few years.

Could never figure how it works TBH.

I buy my vehicles outright and drive them until they literally fall a apart. My last three cars are still sitting in my yard unregistered and have not been started in 12 years.


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## Warr87 (7 May 2022)

sptrawler said:


> I've been running my SMSF since 2007 and retired in 2011 at 55, so will watch your progress with interest.
> By the way left school at 15 and always worked for wages, plus didn't inherit or rip off anyone for anything.




It's a long story, but no money left to me or inheritance. Even spent some time destitute. Worked several jobs while at uni. Worked 30hrs a week even while I was in highschool. I'm only paying off my HECS-HELP debt this year, despite graduating from that degree in 2008, lol. Certainly no silver spoon or gifts here, lol.

If it works how I want, the trading within super should work well. It's already returned me more than a fund manager would've given me. I have a high super for people my age so I must be doing something right. I hope to be able to retire early, but honestly, even if I had the money I probably wouldn't. Retiring at 55 would be the goal.

Will probably be a few years before the super can afford to put a deposit on a house, but the trading should be entertaining enough .


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## Warr87 (7 May 2022)

3 hound said:


> Funny, my old man stopped buying cars and just leases them. He constantly pays the same payment but keeps getting a brand new car every few years.
> 
> Could never figure how it works TBH.
> 
> I buy my vehicles outright and drive them until they literally fall a apart. My last three cars are still sitting in my yard unregistered and have not been started in 12 years.




Best not to segway too much from the thread, but I am always weary of leases. It can help in some circumstances, and I know some who make it work for them financially, but I've seen more being burnt from it than benefiting. 

Like you, I buy outright and run it into the ground. I had to upgrade my car finally last year, didn't even come close to my limit. Would rather save the money for something else. But I've never been too into cars anyway, so there is that.


----------



## sptrawler (7 May 2022)

3 hound said:


> Funny, my old man stopped buying cars and just leases them. He constantly pays the same payment but keeps getting a brand new car every few years.
> 
> Could never figure how it works TBH.



A really close friend of mine did that, but I couldn't see any sense in it, basically you are taking a car on hire purchase and also paying for the the leasers lunch.
A car is a depreciating asset, the lower the loss the better, but at the end of the day unless you are lucky there is a loss.
The only time I leased a car was when I could salary sacrifice it and the fuel, maintenance etc and I was on the top tax scale.


----------



## sptrawler (7 May 2022)

You guys seem to have your $hit together, stay simple, don't buy into the hype, be logical.
The herd is never predictable, so have your own long term plan.


----------



## Smurf1976 (8 May 2022)

againsthegrain said:


> I sit right in the middle on this, from one side I see some of this as being out of touch from the boomers point of view, but from the other side I definately think the "young" people or majority of them have ridiculous expectations.



On one hand housing is overpriced and that's bad in terms of broader economic consequences both to individuals and the nation. For anyone who says otherwise, just compare price versus wages in the past with today's figures and it's readily apparent.

On the other hand though, well it's a strange world where houses better than the one I lived in as a kid are now routinely sold as fit for nothing other than demolition meanwhile overseas travel is seen as a right. That mentality is one that not so long ago only the rich could afford, not the middle class and certainly not anyone just starting out.

I think a point often missed is that those with success mostly weren't born with it. I don't idolise celebrities, not by a long shot, but they're a good example simply because plenty of information is readily available about them. Pick an actor or singer, do some research into their background, and odds are you'll find some pretty humble jobs completely unrelated to the acting or singing and you'll find their first work in that field wasn't particularly glamorous either. In most cases it took them years to achieve actual success.


----------



## Smurf1976 (8 May 2022)

3 hound said:


> What's an SMSF?



Self Managed Super Fund.


----------



## againsthegrain (8 May 2022)

Smurf1976 said:


> Self Managed Super Fund.



I thought we were playing the game of describing it without naming it ☺


----------



## 3 hound (8 May 2022)

Smurf1976 said:


> Self Managed Super Fund.




K, seems obvious now duh


----------



## 3 hound (8 May 2022)

Geez just talking to a friend in Caloundra, his neighbour bought his house 5 years ago for around $580 000 sold it last week for 1.2 million. The house is over 40yo.

No house on the street was bought for a million, now every house on the market gets a minimum of a million and they are selling like hotcakes.

Why is anyone wasting time and money on the stock exchange, show me where you can get 100% gain in 5 years in any share market.

Housing has gone nuts.


----------



## JohnDe (8 May 2022)

3 hound said:


> Geez just talking to a friend in Caloundra, his neighbour bought his house 5 years ago for around $580 000 sold it last week for 1.2 million. The house is over 40yo.
> 
> No house on the street was bought for a million, now every house on the market gets a minimum of a million and they are selling like hotcakes.
> 
> ...




That’s inflation for you, with the added bonus of extremely low interest rates and low unemployment.

As for making money from it, like anything it’s all in the timing.


----------



## againsthegrain (8 May 2022)

3 hound said:


> Geez just talking to a friend in Caloundra, his neighbour bought his house 5 years ago for around $580 000 sold it last week for 1.2 million. The house is over 40yo.
> 
> No house on the street was bought for a million, now every house on the market gets a minimum of a million and they are selling like hotcakes.
> 
> ...




So he only doubled his money? in 5 years?

Speaking in hindsight is a easy thing but looking back wouldn't be hard to find many stocks that more then doubled in price... and of course if you bought 580k of bitcoin 5 years ago...


----------



## qldfrog (8 May 2022)

Noosa hinterland prices more than double in 2y.i have been lucky, compensate for my share losses


----------



## 3 hound (8 May 2022)

A lot of the neighbours know each other and a lot of the houses being sold the owners have paid off their mortgages so the street is full of new millionaires. Remember when that was a rare thing.

This is the what's driving my area up, people selling on the sunny coast for over a million then moving inland and buying an acreage with a nice view and house for less than half that and retiring early.

Where is the economic doomsday crisis the finance gurus never stop bleating about - it never happens, people are getting richer everywhere, even the unemployed.


----------



## bluekelah (8 May 2022)

qldfrog said:


> Sp you expect everyone ar retirement age to own his her home?
> I looked for a socialist Scandinavian heaven:
> Sweden: where less than 40pc of people own their houses
> Australian situation of very high ownership is an anomaly and the Reset coming is making sure we will go back in rank...
> ...



From 1960 to 2020 the population of Sweden increased from* 7.48 m to 10.35 m people*. This is a growth by 38.3 percent in 60 years. The highest increase in Sweden was recorded in 2017 with 1.36%.

In contrast Aussie population has gone from *10.28 million (1960) to 25.69m in 2020 (~150% increase). Sydney had close to *5m in 2020 thats half of Swedish Pop in one city.

Perhaps extreme high population growth and absolute total population concentrated per capital city is driving up property demand and hence prices. you could say infrastructure has not kept up with the OVERPOPULATION...


----------



## bluekelah (8 May 2022)

3 hound said:


> A lot of the neighbours know each other and a lot of the houses being sold the owners have paid off their mortgages so the street is full of new millionaires. Remember when that was a rare thing.
> 
> This is the what's driving my area up, people selling on the sunny coast for over a million then moving inland and buying an acreage with a nice view and house for less than half that and retiring early.
> 
> Where is the economic doomsday crisis the finance gurus never stop bleating about - it never happens, people are getting richer everywhere, even the unemployed.



I am in QLD as well. We have been lucky as recent crazy spikes in coal prices and gas prices have created a money boom here. Same with perth with iron ore and coal prices going nuts past few years.

In addition, All the foreign money pouring into sydney/melb has also been pouring into Brisbane in recent year. My suburb in southern brisbane has gone from 800k for a stanfard 4 bedder on 600sqm to 1.3m this year (most snapped up by cashed up interstate migrants from down south aka the Mexicans)

coupled with easy monetary policy its another 2003-2004 boom time all over again.

But i reckon the music is ending soon. RBA will likely have to hike fast, probably to 10% at least if it wants to have any chance of beating inflation. As in US, our CPI numbers are rigged, many items up in price, even 2L milk costs 20% more, some veges 100%. Rent price up , thats if you are even lucky enough to grab a rental. Higher rates will definitely see a fast reversal in prices as many investors will start to run for the exits or be unable to afford repayments. a 2% rate rise on a 2%+ variable mortgage means double repayments, most young buyers are leveraged to their eyeballs will have to sell up and go back to live with mom and pops.

very interesting year ahead for aussie property, i would predict lower prices as RBA continues to hike post election.


----------



## divs4ever (9 May 2022)

3 hound said:


> Geez just talking to a friend in Caloundra, his neighbour bought his house 5 years ago for around $580 000 sold it last week for 1.2 million. The house is over 40yo.
> 
> No house on the street was bought for a million, now every house on the market gets a minimum of a million and they are selling like hotcakes.
> 
> ...



 but where else do you put a million dollars without your investment being eroded by inflation   ... stocks ?? MAYBE but that might involve a bit of luck ( even if buying something like WES or BHP )

there is a CHANCE ( not a certainty ) that the Caloundra property will hold it's relative value long term


----------



## divs4ever (9 May 2022)

3 hound said:


> A lot of the neighbours know each other and a lot of the houses being sold the owners have paid off their mortgages so the street is full of new millionaires. Remember when that was a rare thing.
> 
> This is the what's driving my area up, people selling on the sunny coast for over a million then moving inland and buying an acreage with a nice view and house for less than half that and retiring early.
> 
> Where is the economic doomsday crisis the finance gurus never stop bleating about - it never happens, people are getting richer everywhere, even the unemployed.



 YEP i would rather be living on a decent hillside  ( despite the fact i am not as spry as i used to be )

but don't worry that doomsday WILL come eventually  , it could be a slow  boil or a massive meltdown  ( say banks calling in mortgages prematurely )


----------



## Smurf1976 (9 May 2022)

3 hound said:


> Geez just talking to a friend in Caloundra, his neighbour bought his house 5 years ago for around $580 000 sold it last week for 1.2 million. *The house is over 40yo*.




Emphasis mine.

In the current circumstances I'd be extremely cautious about buying a brand new place, anything in the past few years.

Sure there are good, honest builders and tradies but with the market as it is there's a huge incentive to pump houses out as fast as can possibly be done and that's not conducive to high quality workmanship. Doubly so given the backdrop of materials shortages and inflation, pandemic and so on.


----------



## moXJO (9 May 2022)

Smurf1976 said:


> Emphasis mine.
> 
> In the current circumstances I'd be extremely cautious about buying a brand new place, anything in the past few years.
> 
> Sure there are good, honest builders and tradies but with the market as it is there's a huge incentive to pump houses out as fast as can possibly be done and that's not conducive to high quality workmanship. Doubly so given the backdrop of materials shortages and inflation, pandemic and so on.



I've been called out of retirement by some old customers to look at some of these dodgy built homes. Lots of defects everywhere. 
Just the basics are even screwed up.


----------



## over9k (9 May 2022)

3 hound said:


> A lot of the neighbours know each other and a lot of the houses being sold the owners have paid off their mortgages so the street is full of new millionaires. Remember when that was a rare thing.
> 
> *This is the what's driving my area up, people selling on the sunny coast for over a million then moving inland and buying an acreage with a nice view and house for less than half that and retiring early.*
> 
> Where is the economic doomsday crisis the finance gurus never stop bleating about - it never happens, people are getting richer everywhere, even the unemployed.



And this is why price rises have been fastest/steepest in rural and coastal areas.


----------



## moXJO (9 May 2022)

3 hound said:


> A lot of the neighbours know each other and a lot of the houses being sold the owners have paid off their mortgages so the street is full of new millionaires. Remember when that was a rare thing.
> 
> This is the what's driving my area up, people selling on the sunny coast for over a million then moving inland and buying an acreage with a nice view and house for less than half that and retiring early.
> 
> Where is the economic doomsday crisis the finance gurus never stop bleating about - it never happens, people are getting richer everywhere, even the unemployed.



I was lucky enough to turn from bear to bull on property a while back by a member of this forum. Ended up making me a lot of money. Documented on this thread somewhere.

Imo there was never a better time in history to become a millionaire then the last 20 years. Multiple avenues, new industries. It's been a crazy ride.

Right now it feels like it's about to contract. These things take time and often play out over years, not one sudden drop. It's hard to pick the roll-over. But it looks like its heading that way now.

Government intervention and its a bull all over again though.


----------



## greggles (9 May 2022)

Smurf1976 said:


> Emphasis mine.
> 
> In the current circumstances I'd be extremely cautious about buying a brand new place, anything in the past few years.
> 
> Sure there are good, honest builders and tradies but with the market as it is there's a huge incentive to pump houses out as fast as can possibly be done and that's not conducive to high quality workmanship. Doubly so given the backdrop of materials shortages and inflation, pandemic and so on.




Old houses were built to last. A lot of the hardwood from way back was sourced from the best hardwood species when there was a lot of choose from. Try putting a nail in it now after it's been seasoning for 60 or 70 years. It's as tough as granite. Builders took pride in what they built, now it all about cutting costs and maximising profit. Give me an old hardwood house any day.


----------



## JohnDe (9 May 2022)

greggles said:


> Builders took pride in what they built, now it all about cutting costs and maximising profit. Give me an old hardwood house any day.




That's not necessarily so. I knew a few old builders (now passed away) and they told me some interesting stories about short cuts that was common in their day, and shortage of materials which required interesting solutions to be used.


----------



## over9k (9 May 2022)

greggles said:


> Old houses were built to last. A lot of the hardwood from way back was sourced from the best hardwood species when there was a lot of choose from. Try putting a nail in it now after it's been seasoning for 60 or 70 years. It's as tough as granite. Builders took pride in what they built, now it all about cutting costs and maximising profit. Give me an old hardwood house any day.



QFT


----------



## greggles (9 May 2022)

JohnDe said:


> That's not necessarily so. I knew a few old builders (now passed away) and they told me some interesting stories about short cuts that was common in their day, and shortage of materials which required interesting solutions to be used.




Well there are always exceptions, but in general old houses were built better and intended to last longer than they are now. Workmanship these days leaves a lot to be desired. I have owned an old hardwood house and it was as sold as a rock 80 years later.


----------



## JohnDe (9 May 2022)

greggles said:


> Well there are always exceptions, but in general old houses were built better and intended to last longer than they are now. Workmanship these days leaves a lot to be desired. I have owned an old hardwood house and it was as sold as a rock 80 years later.




I think that nostalgia plays a part in what people perceive as quality and longevity.

My home was build in the late 1800's, I purchased it in 1988 and moved in 1990. The previous owner had done a lot of work, upgrades and replaced water pipes and added an extension.

My partner and I have also had to upgrade and replace parts of the house, and we added another extension.

Maintenance is the trick to a home lasting many years. And with that maintenance we find things that need to be repaired or replaced.

Building regulations have come a long way in the past 50 plus years. Planning has improved sewerage and storm water piping, plaster and concrete are tougher than they were, especially since there are standards now.

I love my 130+ year home, double brick is a better insulator and sound proofer. But the walls aren't quite square, the floor boards not quite true, the ceiling needs gaps repaired every decade.

A well built new home, like the couple of investments I had built 6 years ago, can last a very long time, with the benefit of having square and level walls and floors  

*So, How long will a new house last?*​​This is largely debated within the construction industry as it is really dependant on the materials that are used, the quality of the workmanship and the maintenance that is required and followed through on. On average, the generally expected and acceptable lifespan of a home should last at least 60 years. However, many believe that the lifespan of a home is much longer than that reaching well over 100 years."​








						How Long Will A New House Last? |
					

Unsure How Long A New House Will Last? We've Got All The Information So You Can Predict The Lifespan Of Your New Build.




					propertyregistry.com.au


----------



## over9k (9 May 2022)

JohnDe said:


> Maintenance is the trick to a home lasting many years.



Also worth noting that an ounce of prevention is worth a pound of cure here - $1000/year in maintenance avoided for a decade will be a $50,000 repair bill 10 years later, not a $10,000 one.


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## wayneL (9 May 2022)

greggles said:


> Old houses were built to last. A lot of the hardwood from way back was sourced from the best hardwood species when there was a lot of choose from. Try putting a nail in it now after it's been seasoning for 60 or 70 years. It's as tough as granite. Builders took pride in what they built, now it all about cutting costs and maximising profit. Give me an old hardwood house any day.



The house on the property I just bought is 80 years old and can attest 
to what you say. 

Someone put a lot of love and effort into building this place and though it's going to need us to give it some TLC to bring it back to its former glory there's not a whole lot to do really.... Nothing structural at all.


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## 3 hound (9 May 2022)

greggles said:


> Well there are always exceptions, but in general old houses were built better and intended to last longer than they are now. Workmanship these days leaves a lot to be desired. I have owned an old hardwood house and it was as sold as a rock 80 years later.



I do see some beautiful old homes here, the outclass and outsole any new ones but the maintenance costs are off the scale like using a grinder to bring the exterior surface back to bare wood, oil, paint.... love to own one but not going to invest the time and money into that.


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## sptrawler (9 May 2022)

greggles said:


> Well there are always exceptions, but in general old houses were built better and intended to last longer than they are now. Workmanship these days leaves a lot to be desired. I have owned an old hardwood house and it was as sold as a rock 80 years later.



I posted a picture of a house I bought in Midland a suburb of Perth in 1982, it was at least 40-50 years old then and it was chopped in half carted on two truck for 200klm in a storm and then restumped and the two halves nailed back together and the roof put back on.
Now 40 years later it is still there and still being used as a residence, so yes the old hardwood houses were solid and do last and it did have 13' ceilings so it did cop a lot of wind and weather when relocated.


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## Dona Ferentes (9 May 2022)

_Built to a standard, not to a price_


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## Smurf1976 (9 May 2022)

JohnDe said:


> I think that nostalgia plays a part in what people perceive as quality and longevity



Agreed it does.

For any construction or even major maintenance work though it's the old triangle:

Time

Cost

Quality

Pick whichever two you want and the other will be sacrificed to do it. No you can't have all three.

Under present circumstances builders have a huge incentive to get it done quickly so it's not time they're likely to sacrifice.


----------



## Mohammed Hazabig'un (16 May 2022)

There's still going to be areas of appreciating value even as IRs rise. I cashed in my ASX etc holdings mid 2021 before that August peak, bought a Property in August, promptly realised it's aging would cost me a bundle so sold it in March for almost a 20% gain (6 months!).
Affordability is the number one driver of property values don't they say.


----------



## wayneL (19 May 2022)

No surprises here, but ample evidence of why g'mint will continue to pump property values by any means.









						Politician Property Moguls: Real Estate owned by Aussie MPs, Senators
					

It can be revealed that most politicians are in a class of their own when it comes to property, many with sizeable real estate portfolios.



					www.realestate.com.au


----------



## JohnDe (19 May 2022)

wayneL said:


> No surprises here, but ample evidence of why g'mint will continue to pump property values by any means.
> 
> 
> 
> ...




An average of 2 homes each, with 65% owning 3 properties. As long as the investments are legal and above board I have no problem with our MPs being smart enough to be able to invest. It would be worrying if our MPs left their wages in the bank, or spent it all and had no investments.





__





						Register of Members' Interests – 47th Parliament
					

Register




					www.aph.gov.au


----------



## sptrawler (19 May 2022)

wayneL said:


> No surprises here, but ample evidence of why g'mint will continue to pump property values by any means.
> 
> 
> 
> ...



It does kind of lend itself to a conflict of interest, like they will agree to halve the value of their investments, in order to sell them to someone else cheaper.
You would wonder about their intelligence, but admire their benevolence, at their sacrifice for the greater good.
Sounds like a politician, who is there for the good of the country and its constituents, nah they wouldn't last 5 minutes their backs would look like a knife block. 🤣


----------



## 3 hound (19 May 2022)

wayneL said:


> No surprises here, but ample evidence of why g'mint will continue to pump property values by any means.
> 
> 
> 
> ...




Keep pumping up that bubble when you have skin in the bubble.

it's like the Pelosi family where one is a lawmaker and by pure chance the other seems to know the exact perfect time to invest or dump investments...two things are unrelated and it's a conspiracy theory  to think otherwise.

Kind of funny that Labour polly's running as the social justice warriors fighting the greedy capitalists have no problem making themselves lords of the land.

BLM the proud "trained communists" also have a taste for million dollar property investments while they burn down small businesses.


----------



## wayneL (19 May 2022)

3 hound said:


> Keep pumping up that bubble when you have skin in the bubble.
> 
> it's like the Pelosi family where one is a lawmaker and by pure chance the other seems to know the exact perfect time to invest or dump investments...two things are unrelated and it's a conspiracy theory  to think otherwise.
> 
> ...



Cynicism should be the first response to anything that is done in the clown world.


----------



## over9k (19 May 2022)

JohnDe said:


> An average of 2 homes each, with 65% owning 3 properties. As long as the investments are legal and above board I have no problem with our MPs being smart enough to be able to invest. It would be worrying if our MPs left their wages in the bank, or spent it all and had no investments.
> 
> 
> 
> ...



The problem is when they start changing/stacking the system to favour those very investments, which they have.


----------



## divs4ever (19 May 2022)

JohnDe said:


> An average of 2 homes each, with 65% owning 3 properties. As long as the investments are legal and above board I have no problem with our MPs being smart enough to be able to invest. It would be worrying if our MPs left their wages in the bank, or spent it all and had no investments.
> 
> 
> 
> ...



 it would be interesting to see the mortgage status of those houses  ( that would be a BIG incentive  to manipulate official interest rates  , in some cases )


----------



## divs4ever (19 May 2022)

over9k said:


> The problem is when they start changing/stacking the system to favour those very investments, which they have.



that is human nature , and it is the rare person who can resist that completely  ( i doubt we could find 60 senators like that )


----------



## againsthegrain (19 May 2022)

divs4ever said:


> it would be interesting to see the mortgage status of those houses  ( that would be a BIG incentive  to manipulate official interest rates  , in some cases )



Easier to give themselves a raise 😉


----------



## divs4ever (19 May 2022)

wayneL said:


> Cynicism should be the first response to anything that is done in the clown world.



 well given the number of Federal Reserve officials observed doing similar , i would suggest the cynicism is warranted


----------



## divs4ever (19 May 2022)

againsthegrain said:


> Easier to give themselves a raise 😉



 but the wage rises are decided by an independent 😉 panel   and MIGHT affect the politician's popularity( elect-ability )


----------



## over9k (19 May 2022)

"independent"


----------



## qldfrog (20 May 2022)

Not mentioned much here








						WSJ News Exclusive | China Insists Party Elites Shed Overseas Assets, Eyeing Western Sanctions on Russia
					

An internal Communist Party directive bars senior officials from owning property abroad or stakes in overseas entities, whether directly or through spouses and children.




					www.wsj.com
				



A key role in Australian RE pricing


----------



## divs4ever (20 May 2022)

qldfrog said:


> Not mentioned much here
> 
> 
> 
> ...



 don't just think of accommodation ( housing ) properties  , the sanctions of Russia will have a LOT of smart people thinking  ( Indians , folks of Middle Eastern ethnics  , etc. etc.  , anyone with big juicy assets  there to steal OOPS , i mean freeze/seize )


----------



## divs4ever (20 May 2022)

did you see the Italians seized a luxury yacht  owned by a Russian who was NOT on any sanctions list  
 seems he was in  a photo with a billionaire  who was photographed ( in a different photo ) with Putin 

 close enough for the Italians


----------



## againsthegrain (20 May 2022)

divs4ever said:


> did you see the Italians seized a luxury yacht  owned by a Russian who was NOT on any sanctions list
> seems he was in  a photo with a billionaire  who was photographed ( in a different photo ) with Putin
> 
> close enough for the Italians



source?


----------



## qldfrog (20 May 2022)

divs4ever said:


> don't just think of accommodation ( housing ) properties  , the sanctions of Russia will have a LOT of smart people thinking  ( Indians , folks of Middle Eastern ethnics  , etc. etc.  , anyone with big juicy assets  there to steal OOPS , i mean freeze/seize )



Remember they are seizing assets of russians with double nationalities as well..better make sure France behaves otherwise my 12y old ute goes straight to the ato to reimburse former french colonies or whatever...
I am in a frantic move to put some assets outaide the moronic west, so if i was Indian or middle eastern, or obviously asian, no way would i bring all my assets here...


----------



## qldfrog (20 May 2022)

divs4ever said:


> did you see the Italians seized a luxury yacht  owned by a Russian who was NOT on any sanctions list
> seems he was in  a photo with a billionaire  who was photographed ( in a different photo ) with Putin
> 
> close enough for the Italians



In France, all russian names were locked from banks account frozen in out and they had to get a meeting to an agency to release..i am talking migrants clercks etc working in France for decades etc..but the french banks were scared to let something go..so they blocked the lot.
From reading the figaro .a month ago..


----------



## 3 hound (20 May 2022)

Seizing assets from rich people in the east by rich people in the west is the 2020's version of the crusades and colonisation combined.

Not much changes at the fundamental human level really.


----------



## divs4ever (20 May 2022)

againsthegrain said:


> source?












						Watch Police Seize $578 Million Superyacht Linked To Russian Billionaire
					

The “Sy A” was seized in Trieste, Italy, amid a crackdown on oligarch wealth to pressure Vladimir Putin to halt Russia’s war on Ukraine.




					www.huffpost.com
				




Italy’s financial police (@GDF) has just frozen “SY A” - a sailing yacht worth ~€530m located in the Port of Trieste. The yacht could be linked indirectly to Andrey Igorevich Melnichenko - an individual in the EU sanctions list.

 key words are 'could be ' and ' indirectly '  .. it doesn't matter if the sanctioned person was Putin himself or even Osama bin Laden  once you start using 'wiggle words like that ' ...


----------



## divs4ever (20 May 2022)

and there is this one 









						Italian Police seize world's biggest sailing yacht owned by oligarch
					

Italian police seized Sailing Yacht A today in Trieste, placing the £450m vessel into a dry dock so it cannot be moved. The yacht is owned by Russian oligarch Andrey Melnichenko and sails under a UK flag.




					www.dailymail.co.uk
				




 China had better start cranking up their luxury goods  manufacture   because to customers will be coming SOON


----------



## divs4ever (20 May 2022)

i hope the Europeans  aren't thinking of usual  business agreements  with these sanctioned oligarchs  , i sure they will now include 'special provisions ' for deals tn the EU ( like payments in gold  by the less vindictive oligarchs )


----------



## sptrawler (21 May 2022)

Just had a bit of a lightbulb moment with the missus while watching the giro d italia, I just mentioned in passing that I'm worried about the situation the kids are getting in spending rather than paying down debt, she said that's because I wouldnt be happy if I was in the same situation, but they have every right to chose what they want to do.
I have to stop trying to tell them what to do, they are 40+ years old, maybe she is right again. Lol


----------



## over9k (21 May 2022)

sptrawler said:


> Just had a bit of a lightbulb moment with the missus while watching the giro d italia, I just mentioned in passing that I'm worried about the situation the kids are getting in spending rather than paying down debt, she said that's because I wouldnt be happy if I was in the same situation, but they have every right to chose what they want to do.
> I have to stop trying to tell them what to do, they are 40+ years old, maybe she is right again. Lol



No, she's right, if you know interest rates are going to increase you want to pay your debts down ASAP.


----------



## divs4ever (21 May 2022)

sptrawler said:


> Just had a bit of a lightbulb moment with the missus while watching the giro d italia, I just mentioned in passing that I'm worried about the situation the kids are getting in spending rather than paying down debt, she said that's because I wouldnt be happy if I was in the same situation, but they have every right to chose what they want to do.
> I have to stop trying to tell them what to do, they are 40+ years old, maybe she is right again. Lol



 well you have tried , and i think you were right to try  , you are fighting society's conditioning , and you might not win 

now your wife has a point in saying 'nagging' is often counter-productive , some people just have to learn by first-hand experience 

 if you decide to step back , and let them experience consequences  , what do you do next ?

 the temptation is to become 'the bank of mum and dad ' but is that the right solution  ( to  the long-term wisdom of your children ) ??

 ( whatever you choose  has consequences ,  the character of the children will affect the outcome )

 cheers


----------



## Knobby22 (21 May 2022)

divs4ever said:


> Watch Police Seize $578 Million Superyacht Linked To Russian Billionaire
> 
> 
> The “Sy A” was seized in Trieste, Italy, amid a crackdown on oligarch wealth to pressure Vladimir Putin to halt Russia’s war on Ukraine.
> ...



Well if the ownership is so convoluted, trust fund and companies ect. yet an oliarch is the guy living on it and holding parties then go for it.

My attitude is if you haven hidden ownership to such an extent then you don't own it anymore. And if it takes 3 years to work through the ratnest then it takes 3 years. Bad luck.

I am sure everyone involved knows the ogliarch owns it in reality.


----------



## sptrawler (30 May 2022)

The banks are starting to prepare for the wreckage.








						‘No appetite’: ANZ and NAB tighten higher risk lending
					

Two of Australia’s major banks are cutting back on new lending to the most highly-indebted borrowers.




					www.smh.com.au
				



Two of Australia’s major banks are cutting back on new lending to more highly indebted borrowers, as financial institutions and regulators prepare for the impact of rising interest rates on mortgage customers.
As money markets bet on a series of interest rate rises this year, ANZ Bank this week said it would no longer accept loan applications from borrowers with total debts more than 7.5 times their income. Previously, the bank was prepared to consider applications from customers with debt-to-income (DTI) ratios of up to nine times.


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## Warr87 (30 May 2022)

sptrawler said:


> The banks are starting to prepare for the wreckage.
> 
> 
> 
> ...




The fact they were willing to take up to 9 times is crazy. Even 7.5 is high and I thought rather risky already.


----------



## dyna (1 June 2022)

From today's AFR:
APRA considers a debt to income ratio of more than 6 times  as being high and the growth of high debt : income within the big 4 banks, to be not widespread. It is concentrated in just a few ( unnamed ) banks .
CBA's  Matt Comyn says the bank's economists predict a peak RBA cash rate of just 1.6% , about half what money markets are pricing in right now.


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## Warr87 (1 June 2022)

6 is high but i feel is managable in most circumstances. interesting point on where the debt is. and also where the banks are predicting cash rates. 1.6% does seem low to me. but i'm definitely no economist. it will be an ever changing space tbh as it is complex.


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## 3 hound (1 June 2022)

If your not on a very secure or fixed income/salary it doesn't matter if it s 2 or 10 if/when the economy goes south because your 6 could become a 2 overnight and your screwed.

That's why landlords and lenders around my area rather deal with someone on full welfare payments than much higher paid workers.


----------



## MovingAverage (3 June 2022)

Enthusiasm certainly seems to be coming out of the housing market: was reported today that April home loans down 7% (consensus was expecting a drop of circa 1% so 7% is very unexpected) and investment home loans for the same period down 4.8%. These are MoM figures.


----------



## againsthegrain (8 June 2022)

here we go the sensational articles about whinging are in.

A Sydney couple who pay $3400 a month for their mortgage, have been left reeling by the mammoth interest rate hike and predict things could get “difficult”.

Are these people from mars?  they could of predicted it with a mortgage calculator before they took the loan out. 

I am beginning to think these are the people that are responsible for the runaway prices, vicious circle that is eating itself alive. 

And now they want everyone else to chip in right? 



			https://www.news.com.au/finance/economy/interest-rates/sydney-couple-with-840k-mortgage-fear-difficult-financial-impact-of-interest-rate-rise/news-story/c8d0bd34a7213eaa30c469f238befdce


----------



## MovingAverage (8 June 2022)

againsthegrain said:


> here we go the sensational articles about whinging are in.
> 
> A Sydney couple who pay $3400 a month for their mortgage, have been left reeling by the mammoth interest rate hike and predict things could get “difficult”.
> 
> ...




This crap really makes my blood boil -- picture an old man yelling at clouds and that is pretty much me.

I was reading an article from a well known economist recently arguing that the RBA needs to be very mindful about the impact increasing interest rates will have on recent home buyers who are heavily leveraged. While I have a level of sympathy for those with massive mortgages I certainly hope the RBA makes its future decisions on rate rises that are in the best interests of broader economy even if that means those carrying huge mortgages feel significant pain.


----------



## Warr87 (8 June 2022)

MovingAverage said:


> This crap really makes my blood boil -- picture an old man yelling at clouds and that is pretty much me.
> 
> I was reading an article from a well known economist recently arguing that the RBA needs to be very mindful about the impact increasing interest rates will have on recent home buyers who are heavily leveraged. While I have a level of sympathy for those with massive mortgages I certainly hope the RBA makes its future decisions on rate rises that are in the best interests of broader economy even if that means those carrying huge mortgages feel significant pain.




As I've mentioned I have some sympathy. But the RBA has a job to do. The key point there is *highly leveraged*. Where else would you get people trying to argue for leniency with a highly leveraged product? Can I borrow 9x my income to buy shares/futures and then whinge when it's difficult? lol. RBA is working for the economy not for individuals who should've known better, and quite frankly, probably new it would be difficult if rates raised. They took a chance that they could pay down enough before that would be an issue, or assumed there pay would raise at a greater rate. Not all gambles work out ....


----------



## MovingAverage (8 June 2022)

Warr87 said:


> As I've mentioned I have some sympathy. But the RBA has a job to do. The key point there is *highly leveraged*. Where else would you get people trying to argue for leniency with a highly leveraged product? Can I borrow 9x my income to buy shares/futures and then whinge when it's difficult? lol. RBA is working for the economy not for individuals who should've known better, and quite frankly, probably new it would be difficult if rates raised. They took a chance that they could pay down enough before that would be an issue, or assumed there pay would raise at a greater rate. Not all gambles work out ....




Now my sample size is not exact relevant, but having attended a few auctions in my local area over the past few years I'm often blown away that there are folks out there who have openly said to me "things have changed in the economy and we will never see high interest rates again". Yup, a few people have actually said that to me. So to your point "individuals who should've known better"....I'm not so sure the masses are that smart. Hope I'm wrong, but I remain unconvinced that people should have known better. I guess it won't be long before we see who is standing naked as the tide runs out


----------



## againsthegrain (8 June 2022)

MovingAverage said:


> This crap really makes my blood boil -- picture an old man yelling at clouds and that is pretty much me.
> 
> I was reading an article from a well known economist recently arguing that the RBA needs to be very mindful about the impact increasing interest rates will have on recent home buyers who are heavily leveraged. While I have a level of sympathy for those with massive mortgages I certainly hope the RBA makes its future decisions on rate rises that are in the best interests of broader economy even if that means those carrying huge mortgages feel significant pain.




I'll join you and throw some rocks too just watch out when they come back down 😂


----------



## Warr87 (8 June 2022)

MovingAverage said:


> Now my sample size is not exact relevant, but having attended a few auctions in my local area over the past few years I'm often blown away that there are folks out there who have openly said to me "things have changed in the economy and we will never see high interest rates again". Yup, a few people have actually said that to me. So to your point "individuals who should've known better"....I'm not so sure the masses are that smart. Hope I'm wrong, but I remain unconvinced that people should have known better. I guess it won't be long before we see who is standing naked as the tide runs out




Well I partially agree. I pay closer attention to American politics and yet I've heard about interest rates here. (And no, not just from this site.) Talk of interest rates--up or down--have been in the news to some degree. That sounds like wishful thinking or ignorance. I've mentioned in other posts that I think the government has a part to play by implementing policies to prop up and move the momentum up which it showed signs of correcting. Admittedly there has been a lot in the news, and by people pushing the RE market (brokers, or these 'gurus' who wrote a book, banks, etc.) but a believe in interest rates never going up just beggars belief tbh. 

I am also not surprised at all that there are now articles coming out about it. Media was always going to find at least some who are in this 'trouble' lol. It's an easy article to write and sell lol.


----------



## divs4ever (8 June 2022)

Knobby22 said:


> Well if the ownership is so convoluted, trust fund and companies ect. yet an oliarch is the guy living on it and holding parties then go for it.
> 
> My attitude is if you haven hidden ownership to such an extent then you don't own it anymore. And if it takes 3 years to work through the ratnest then it takes 3 years. Bad luck.
> 
> I am sure everyone involved knows the ogliarch owns it in reality.



 but on ( the obvious ) paper the billionaire  only leases it or rents it   from a holding company/trust structure .

 just because i stayed for 3 years in a hotel room  didn't mean  i owned it ( the insurance company was bungling house repairs )  and YES certain people owned or long-term leased their rooms/apartments 

 it will be interesting to see if legal suits arise out of these seizures ( after all nearly all of them are worth more than $US 2 billion each  and many of them got that by NOT being nice )


----------



## divs4ever (8 June 2022)

Warr87 said:


> As I've mentioned I have some sympathy. But the RBA has a job to do. The key point there is *highly leveraged*. Where else would you get people trying to argue for leniency with a highly leveraged product? Can I borrow 9x my income to buy shares/futures and then whinge when it's difficult? lol. RBA is working for the economy not for individuals who should've known better, and quite frankly, probably new it would be difficult if rates raised. They took a chance that they could pay down enough before that would be an issue, or assumed there pay would raise at a greater rate. Not all gambles work out ....



 and who facilitated those high leverage rates ?? 

 ( hint - one group were just removed from government  and the other ones are busy calculating interest rate rises )

 remember all those 'first-home buyer incentives , the very folks who are less likely to understand what steep rate-rises and falling property prices  mean to THEM 

 and what about the 'reverse mortgage advice ' to retirees 

 last i heard  a margin loan now requires you to do a test  to understand the subtleties of a market plunge  and how it will affect the portfolio 

 yeah sure they should have known better , but heck they are the same folks guided by RBA policy ( and believed that crap ) even the banks got lettuce-slapped for similar  'customer-guidance ' after 2018

 by the way since schools have time to teach children about gender identity , how about some lessons in fiscal responsibility ( 'cos there aren't many paper rounds to teach them that any more )


----------



## Warr87 (8 June 2022)

divs4ever said:


> and who facilitated those high leverage rates ??
> 
> ( hint - one group were just removed from government  and the other ones are busy calculating interest rate rises )
> 
> ...




There's a few hands in there who helped high leverage rates. And I think you're right that some people who were marketed with the first-home buyer incentives probably had less financial acumen than others to understand the market/rate rises.

Reverse mortgages always sounded idiotic to me, lol.

And you are correct! With IB you do a test and state your level of experience in order to get a margin account. And even then it is limited to certain products (mostly shares, but are products are separated so you need to do the same thing with questions/experience, and an income/wealth threshold too).

I have no issues with proper teaching of sex & gender in schools. I am also in favour in lessons for fiscal responsibility, basic money handling concepts, etc. Nothing too intense, but basic adult/life skills.


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## divs4ever (8 June 2022)

Yellen says inflation to stay high, Biden likely to up forecast

https://www.investing.com/news/econ...ls-of-inflation-yellen-tells-senators-2834401

https://www.britannica.com/biography/Janet-Yellen

 didn't she say ' no inflation in my lifetime ' ?


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## Knobby22 (8 June 2022)

divs4ever said:


> but on ( the obvious ) paper the billionaire  only leases it or rents it   from a holding company/trust structure .
> 
> just because i stayed for 3 years in a hotel room  didn't mean  i owned it ( the insurance company was bungling house repairs )  and YES certain people owned or long-term leased their rooms/apartments
> 
> it will be interesting to see if legal suits arise out of these seizures ( after all nearly all of them are worth more than $US 2 billion each  and many of them got that by NOT being nice )



If you can't nominate an owner, then you don't have an ownership!

If its owned by a trust fund which is in turn by a second trust fund based in Monaco which is owned by a third shelf company based in the Caribbean by an entity that is based in Namibia that doesn't list the directors then bad luck. You can bet you can trace where the money is coming from to pay all the bills.


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## divs4ever (8 June 2022)

Knobby22 said:


> You can bet you can trace where the money is coming from to pay all the bills.



 maybe , but if you have earned the billions yourself  , there is a good  chance you have an expert organizing the books 

 the BIG question now , is how many billionaires will structure their paper-work now like a master criminal  ( as opposed to somebody  just  minimizing their tax-obligations )

 remember the best brains in finance and accounting DON'T work for the governments ( for long ) the BIG pay-packets lurk elsewhere


----------



## 3 hound (8 June 2022)

Aren't interest rates still incredibly low??


Geez if there are issues now I would hate to see what happens if interest rates get legit high.


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## divs4ever (8 June 2022)

3 hound said:


> Aren't interest rates still incredibly low??
> 
> 
> Geez if there are issues now I would hate to see what happens if interest rates get legit high.



 YES , however they might rise VERY quickly  ( some are thinking the RBA rates will get to 3% by Xmas  , still  historically low , but are they affordable to those with loans , now )

and some are uncomfortably leveraged ( IMO )  even at May rates  , but the trouble doesn't really start  until prices DROP ,  then you still owe more than the market price of the property and THAT makes lenders VERY nervous ( even if you have a spotless record of repayments )


----------



## divs4ever (8 June 2022)

3 hound said:


> Aren't interest rates still incredibly low??
> 
> 
> Geez if there are issues now I would hate to see what happens if interest rates get legit high.



watch normal family homes  become 'boarding houses' with either homeless rellies  or folks renting rooms to help pay the costs of the home ( power , water , mortgage , rates etc )


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## MovingAverage (8 June 2022)

divs4ever said:


> then you still owe more than the market price of the property



And you only have to look to the US and the crash of 07/08 to see what happened then…people just walked away from the houses and defaulted on their mortgages. In some states like NV banks became the largest holder of properties as they repossessed properties. Wasn’t pretty.


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## divs4ever (9 June 2022)

MovingAverage said:


> And you only have to look to the US and the crash of 07/08 to see what happened then…people just walked away from the houses and defaulted on their mortgages. In some states like NV banks became the largest holder of properties as they repossessed properties. Wasn’t pretty.



but that was the US and it will possibly happen again ( over there )

 but Australia it isn't so simple  , worse the problem might hit most of the developed  world ( UK , EU , US , Australia )  , i don't have enough info on India  , and Mexico   ,  if that happened you are looking at several major banks in several large nations  all in trouble at the same time  .. now sure governments can print  more BUT who will buy those extra bonds  ( won't be Russia , probably won't be China , maybe Mexico , but maybe not , how many more can Japan buy ) and even worse after the sanctions on Russia , who will even trust their own government , let alone foreign ones  .. maybe they won't seize them just make them perpetual ( no maturity date  , so you never get your capital back and get pathetic interest )


----------



## Smurf1976 (9 June 2022)

divs4ever said:


> just because i stayed for 3 years in a hotel room didn't mean i owned it ( the insurance company was bungling house repairs )



3 _years _to fix a house? What on earth happened to it? Fell into a sinkhole or something?


----------



## divs4ever (9 June 2022)

it started with  water leaking into the ceiling in 2014  , in 2016 it rained HARD again  causing the gutters  to overflow again ( internally this time )   , they started  to replace the ceiling and the 2014 repairs  were found to be asbestos ( but not the usual stuff ) so by the time them had removed this stuff unsafely .. ( didn't LOOK like the usual asbestos  so dust and fragments were spread the 30 metres to the bin ....)  now in replacing the ceiling they put thin fibreboard to protect the ceramic tile floors ( unsuccessfully ) the tiles were 35 years old so no replacements ( well  , not enough ) so 80% of the floors has to be jack-hammered out ( shame about the gyprock interior walls )   started patching the walls  and found the mould that had been growing from 2014 

 to cut it short the kitchen was replaced 3 times , the bathroom 4 times , was majorly rewired 3 times  , the hot water system replaced  ,   most  walls replaced twice , as were the tile floors ( except the bathroom they were replaced four times including new water jackets )  the tile roof was fine  but it was pressure cleaned anyway to make sure no leaks and  new protective coating applied

 a damn good thing it was brick veneer  they held the roof up  for weeks at a time 

 if you have ever watched the old movie 'The Plank '  it was much worse than that  every crazy thing from no rubber grommets on the exterior lights ( discovered after a bout of heavy rain AFTER the repairs were underway )  ,  to a tradie blocking the toilet to the extent it had to be replaced  and about 10 metres of sewerage pipe  

  AND the house contents was taken away to be cleaned ( two containers full ) 75% of it came back ... eventually ( it took so long to fix the house they lost track of the containers ) , and of course the odd delays  a kitchen bench top a month late and then broke  when fitting the plumbing  , could  not get enough of the replacement tiles  for a while , etc etc etc 

 OH OH  and at one stage the bathroom drained  into the central hall   causing the newly  replaced walls to be damaged ( sigh ) again


----------



## qldfrog (9 June 2022)

divs4ever said:


> it started with  water leaking into the ceiling in 2014  , in 2016 it rained HARD again  causing the gutters  to overflow again ( internally this time )   , they started  to replace the ceiling and the 2014 repairs  were found to be asbestos ( but not the usual stuff ) so by the time them had removed this stuff unsafely .. ( didn't LOOK like the usual asbestos  so dust and fragments were spread the 30 metres to the bin ....)  now in replacing the ceiling they put thin fibreboard to protect the ceramic tile floors ( unsuccessfully ) the tiles were 35 years old so no replacements ( well  , not enough ) so 80% of the floors has to be jack-hammered out ( shame about the gyprock interior walls )   started patching the walls  and found the mould that had been growing from 2014
> 
> to cut it short the kitchen was replaced 3 times , the bathroom 4 times , was majorly rewired 3 times  , the hot water system replaced  ,   most  walls replaced twice , as were the tile floors ( except the bathroom they were replaced four times including new water jackets )  the tile roof was fine  but it was pressure cleaned anyway to make sure no leaks and  new protective coating applied
> 
> ...



Material for a movie...now i know why insurances premium are so high.😂
can you now see any humour in this or is it still painful memories.?
Hardly believable. wahoo....


----------



## Smurf1976 (9 June 2022)

divs4ever said:


> if you have ever watched the old movie 'The Plank '



Seen that one a very long time ago.  

Your builder's name didn't happen to be Frank Spencer by any chance did it?

1970's TV reference for anyone who doesn't get the joke.



Seriously, if that had been me in your situation then I'd have been rather less than friendly with them by that point. Mistakes are one thing but that sounds like, well, something from a comdey show yes.....


----------



## divs4ever (9 June 2022)

qldfrog said:


> Material for a movie...now i know why insurances premium are so high.😂
> can you now see any humour in this or is it still painful memories.?
> Hardly believable. wahoo....



 neither was the bill , in fact investigations into the overrun   , extended accommodation costs  etc etc  ( including the asbestos ( two government departments involved  about that ) ( since nobody worked out what the stuff was until after remover and sitting in the dumpster )

 at a quick guess  it was almost  cheaper to demolish the house and rebuild ( the price of the new slab  and plumbing probably  made the difference ) for instance think of the costs of the porta potty alone  because they sure didn't plan for the repairs to even last six months ( it started as a big wet patch in the ceiling after all  , much like 2014 ( and most of the building damage was poor remediation from 2014  , let grow in all the wall cavities  , )  including behind the built in wardrobes  .. but it was a half-assed check here , a quick patch  there  UNTIL THEY TRIED TO REPAINT STUFF THE FIRST TIME   , some paint wouldn't stick , some wouldn't dry , some let the black mould bleed through ( because the gyprock was still well months later )  and after most of it was finally repainted  they lifted the floor protection  to find broken tiles in almost every room , so in comes the jack-hammer to rip up the tiles ( and the gyprock walls had no chance ( they didn't even think to hang up bed-sheets  to protect the walls )

 they tradies got really annoyed about the integrity of the slab under the bathroom ( something about jack-hammering the floor 4 times in 3 years had me concerned ( after all the slab was over 35 years old at the time )   i did suggest they just make it an in-ground sauna  .

 i probably should mention   that project managers were replaces , contractors were replaced  , even the assessor  it wasn't just one inept crew  , in fact  the final painter , was a Polish engineer ( and he got it right except for painting the bottom of the bathroom door )

 and yes that saga did NOT include the bathroom door that needed to be replaced later ( absorbed the humidity from the bathroom and swelled up )

 but the silver lining is sometimes  a full replacement policy  is worth the money


----------



## divs4ever (9 June 2022)

Smurf1976 said:


> Seen that one a very long time ago.
> 
> Your builder's name didn't happen to be Frank Spencer by any chance did it?
> 
> ...




 no but the English electrician was the one that actual discovered the missing grommets in the outside lights  .. after realizing they had all most likely had water through them over the previous  2 years  ..  tested them  and 10 new flouro light fittings were added to the bill  , but the comedy show was the first year  , after that it was just a drama series   ,   AND the car park from hell  ( at times 2 x 40 foot shipping containers  + a pod  ,  a skip bin  , the porta potty ,   various tradesmen vehicles  , and other claim related visitors  ,   and all i can say is THANK GOODNESS THE GRANNY FLAT WAS UNDAMAGED  'cos that is the back corner  so spare stuff was put in there ( there is only so much fits in a hotel room  thank goodness the room came with washer/dryer  stove/fridge etc etc )

 am i get the impression  the insurer did the 'less than friendly ' bit after the bill blew past $250,000    roughly halfway through  the saga


----------



## divs4ever (9 June 2022)

anyway now that you are all cheered up , was anyone else keeping an eye on the US Treasuries ( and auction ) ??

 that might be a market mover for us  ( guess what happens when the buyer of last resort  isn't buying )


----------



## sptrawler (11 June 2022)

Yep the baby boomers are making it hard for the younger generation, I just wish I had the same problems these younger people had.








						‘Overpaid a tiny bit’: Doctors spend $3.295 million on Lane Cove first home
					

They outbid a dozen others at the auction where buyers were reluctant to place bids from beginning to end.




					www.smh.com.au
				



From the article:
Bidding further slowed after the $3 million mark, and two agents fought tooth and nail for every increase from the two remaining bidders. The home eventually sold for $3,295,000 to the first home buyer couple who are renting in North Ryde.

The pair, both doctors in their 30s who declined to be named, said they felt they overpaid for the property a “tiny bit”. The reserve was $2.8 million.
Selling agent Julia Sikora of McGrath Lane Cove said it was a stand-out result for a market where many homes are selling prior to auction due to the lack of competition. She noted the vendors’ expectations had been in line with buyer feedback.

The Reserve Bank’s decision to lift the official cash rate another 0.5 per cent on Tuesday, was “definitely a talking point and buyers are taking that into consideration”, Sikora said.


----------



## MovingAverage (11 June 2022)

sptrawler said:


> Yep the baby boomers are making it hard for the younger generation, I just wish I had the same problems these younger people had.
> 
> 
> 
> ...



3.29 million to first home buyers…yup I’m a cold heartless old man, but would have no sympathy for them should they experience mortgage stress.


----------



## qldfrog (12 June 2022)

MovingAverage said:


> 3.29 million to first home buyers…yup I’m a cold heartless old man, but would have no sympathy for them should they experience mortgage stress.



They are doctors, out of the actual economic cycle with gov garanteed income. Directly via bulk billing and indirectly with mandated private health cover..only a really incompetent GP would ever have money issue in this country


----------



## 3 hound (12 June 2022)

sptrawler said:


> Yep the baby boomers are making it hard for the younger generation, I just wish I had the same problems these younger people had.
> 
> 
> 
> ...



Members (students) of the association of medical students have not even graduated and they are already publicly complaining that they will have to work to hard when the get a job.


----------



## MovingAverage (12 June 2022)

qldfrog said:


> They are doctors, out of the actual economic cycle with gov garanteed income. Directly via bulk billing and indirectly with mandated private health cover..only a really incompetent GP would ever have money issue in this country



As young doctors they will no doubt still have a massive loan for that property (unless of course they have have used the bank of Mum and dad. Agree with what you say but with a big loan from a bank even young doctors will feel mortgage pain


----------



## qldfrog (12 June 2022)

MovingAverage said:


> As young doctors they will no doubt still have a massive loan for that property (unless of course they have have used the bank of Mum and dad. Agree with what you say but with a big loan from a bank even young doctors will feel mortgage pain



If inflation is 10%, they will probably get 10% extra income soon enough and rates might go to what 1%😊
Unless they are really reckless i would not worry too much for them


----------



## againsthegrain (12 June 2022)

qldfrog said:


> If inflation is 10%, they will probably get 10% extra income soon enough and rates might go to what 1%😊
> Unless they are really reckless i would not worry too much for them




They will be fine, should be rite, pick up a few extra shifts and sleep in the hospital.  Who cares they will never spend time in the mcmansion Its about the bragging rights in the lunch room anyway right?


----------



## MovingAverage (12 June 2022)

againsthegrain said:


> They will be fine, should be rite, pick up a few extra shifts and sleep in the hospital.  Who cares they will never spend time in the mcmansion Its about the bragging rights in the lunch room anyway right?



Reality is you’re aren’t far from the truth


----------



## 3 hound (12 June 2022)

againsthegrain said:


> They will be fine, should be rite, pick up a few extra shifts and sleep in the hospital.  Who cares they will never spend time in the mcmansion Its about the bragging rights in the lunch room anyway right?




Have you worked with many millennials??

You are lucky to get them TO the job let alone pick up extra shifts and sleep at their workplace.


----------



## againsthegrain (12 June 2022)

3 hound said:


> Have you worked with many millennials??
> 
> You are lucky to get them TO the job let alone pick up extra shifts and sleep at their workplace.




Can't say I have,  in that case with a 3m mortgage seems like somebody's balls are in a vice then 😂


----------



## 3 hound (12 June 2022)

againsthegrain said:


> Can't say I have,



As a millennial co-worker explained to me, that how I lived for my job where his job is just to support his lifestyle and the job will treated in direct proportion to how it meets his needs.

Had to concede he was correct on many levels.


----------



## againsthegrain (12 June 2022)

3 hound said:


> As a millennial co-worker explained to me, that how I lived for my job where his job is just to support his lifestyle and the job will treated in direct proportion to how it meets his needs.
> 
> Had to concede he was correct on many levels.




I can't say I don't agree, can't stop the wheels of time and progress whatever direction may be heading.  Thinking and habits change with each generation.


----------



## divs4ever (12 June 2022)

againsthegrain said:


> I can't say I don't agree, can't stop the wheels of time and progress whatever direction may be heading.  Thinking and habits change with each generation.



 the education system had a part to play in that thinking 

 i hope they remember that when it all derails


----------



## Belli (20 June 2022)

Loud is the cry for introducing land tax all for the good of those who are living in houses beyond their needs aka, I want it so you should move in order I can have it.

Well, while my home is a nominal four-bedroom, it isn't any longer as rooms have been repurposed (guitars and associated equipment, study for my PC and associated equipment, entertainment room with TV and, yes, associated equipment.)  Plus there are no steps, it's inexpensive to run with solar systems installed, my outlook cannot be built out due to the location, my garden provides privacy at the front, large front and back decks, which in Summer when house is open avoids the need for air-con although I have it just in case, double glazing which provides for a subdued environment and it is in a cul de sac so traffic is minimal.

To any accusation my home is inappropriate to me needs my response is two words, the first is three letters and starts with a "G", the second is six letters and starts with an "F."


----------



## Belli (2 July 2022)

Very rarely do I bother about property, especially prices, but one thing has surprised me in regard to my home.  Bought in 1996, four-bed room on 894sqm and, with throwing a lot of money to tradies, now built out to the building line and can go no further unless I go up which is not on.

The surprising thing to me is the present Unimproved Capital Value is just under twice what we actually paid for the house.  Bizarre.


----------



## dyna (6 July 2022)

From today's AFR :

A Melbourne property manager, whose dream home with $ 400,000 still outstanding on its 2021 mortgage, says she's sold one of two investment properties, to put into the couple's off-set account.
That $440 a week 4 bed rental now goes for $ 550 a week.
Melbourne house prices are expected to fall 13% while it could be a bit more like, 17% in Sydney.

AMP's chief economist Shane Oliver predicts house price falls of 20%, nationwide.
CoreLogic, on the other hand, says not so much, but does concede current price falls are becoming faster and sharper than the last tightening-led housing downturn of 2017- 19.


----------



## divs4ever (6 July 2022)

i would expect  an uneven slide  , quality properties ( not mansions ) well located  will hold the value better as both investors  and  high paid staff   will be able to afford  a 'fair price ' and service any loans  without a lot of duress 

 the top end ( mansions ) and lower end  will face more pressure  from  slower credit markets 

 also worth remembering was the over-heating in the market right up to the end of 2021


----------



## Dona Ferentes (6 July 2022)

divs4ever said:


> i would expect  an uneven slide  ,
> -- quality properties ( not mansions ) well located  will hold the value better
> -- the top end ( mansions ) and lower end  will face more pressure  from  slower credit markets



There is a well located property near us, city views , harbour views, (negatives are S facing and next to anodyne walk-up apartment blocks).

It underwent a hugely complex upgrade optimising the block, modern extension, award winning suspended floors, top of the line fit-out, etc

Came on market with a price range $15mill with the usual high-end marketing at the start of year. Passed in at auction, then listed forTrade Sale. Then we walked past the other day, and the removalists were taking everything out and a sign on the gate stating it was repossessed. Clearly someone is blowing a lot of money.


----------



## againsthegrain (6 July 2022)

Anz and Cba both passing on the full rate...

ANZ has become the second of the major banks to hike interest rates in response to yesterday’s decision, announcing it will increase variable interest rates across its Australian home loans by 0.50 per cent p.a.

with the cherry on top:

ANZ will also increase the bonus interest rate on Progress Saver accounts and ANZ Plus accounts by 0.50 per cent pa.


----------



## Trader X (6 July 2022)

againsthegrain said:


> ANZ will also increase the bonus interest rate on Progress Saver accounts and ANZ Plus accounts by 0.50 per cent pa.



Until the interest rate on savings deposits at least meets or exceeds the rate of inflation, cash is still trash.  Those who do not pay down debt or fixed loans at artificially low interest rates deserve no sympathy.


----------



## divs4ever (6 July 2022)

Dona Ferentes said:


> There is a well located property near us, city views , harbour views, (negatives are S facing and next to anodyne walk-up apartment blocks).
> 
> It underwent a hugely complex upgrade optimising the block, modern extension, award winning suspended floors, top of the line fit-out, etc
> 
> Came on market with a price range $15mill with the usual high-end marketing at the start of year. Passed in at auction, then listed forTrade Sale. Then we walked past the other day, and the removalists were taking everything out and a sign on the gate stating it was repossessed. Clearly someone is blowing a lot of money.




 yes that owing lots of money will be  the problem ( even if you are not behind in the coming  scenario )

 once the lender gets stressed    bad things follow


----------



## againsthegrain (6 July 2022)

Trader X said:


> Until the interest rate on savings deposits at least meets or exceeds the rate of inflation, cash is still trash.  Those who do not pay down debt or fixed loans at artificially low interest rates deserve no sympathy.






Interest on savings is slowly creeping up on rental yields, looks like not many places u can hide and exceed the rate of inflation on your investment.


----------



## sptrawler (6 July 2022)

Trader X said:


> Until the interest rate on savings deposits at least meets or exceeds the rate of inflation, cash is still trash.  Those who do not pay down debt or fixed loans at artificially low interest rates deserve no sympathy.



I tend to think the rise and fall of inflation will be as they are expecting, very fast.
Talking to a neighbour who works in a pie shop, they were saying the owner had to put up the price of their takeaways, but once they hit a certain price people just stop or reduce the amount they buy.
At the moment $5 seems to be the magic number, if they go above that sales reduce, maybe that is only temporary but apparently that is what's happening ATM where she works.


----------



## divs4ever (6 July 2022)

againsthegrain said:


> Interest on savings is slowly creeping up on rental yields, looks like not many places u can hide and exceed the rate of inflation on your investment.



 YEP , that is how i remember the '70's  you were always chasing the increases  hoping for break-even 

 hopefully those shares  i was buying cheap will help ( the div. yields look pathetic at current share prices  , but i was buying at less than a quarter of the current share prices )

 property if you need to put in the bucks for maintenance  and renos   doesn't  look so attractive to me


----------



## divs4ever (6 July 2022)

sptrawler said:


> I tend to think the rise and fall of inflation will be as they are expecting, very fast.
> Talking to a neighbour who works in a pie shop, they were saying the owner had to put up the price of their takeaways, but once they hit a certain price people just stop or reduce the amount they buy.
> At the moment $5 seems to be the magic number, if they go above that sales reduce, maybe that is only temporary but apparently that is what's happening ATM where she works.



 yes in most cases that is what happens  , cash-strapped folks   will come to work with pre-cut sandwiches ( made at home ) and stuff like that  , and such buyer resistance can last for years 

 the shop keeper will either have to spectacularly lift the quality and sell a $10 pie ( sell less pies but twice the price )  , or cut costs on the existing pies


----------



## Trader X (6 July 2022)

againsthegrain said:


> Interest on savings is slowly creeping up on rental yields, looks like not many places u can hide and exceed the rate of inflation on your investment.



There are quite a few income stocks paying dividend percentages in excess of inflation but of course this entails varying degrees of risk.  As the "risk free" (using this term with caution) rate of return rises though, this will exert downward pressure on the share price of such companies.


----------



## againsthegrain (6 July 2022)

Trader X said:


> There are quite a few income stocks paying dividend percentages in excess of inflation but of course this entails varying degrees of risk.  As the "risk free" (using this term with caution) rate of return rises though, this will exert downward pressure on the share price of such companies.




I was making that comment more in relation to the thread,  don't think there would be a big % of mum and dad investors willing to pour life savings into a decent stock generating 5-6% div returns.

Term deposit or property would seem like the 2 only cushy safe options


----------



## Trader X (6 July 2022)

againsthegrain said:


> Term deposit or property would seem like the 2 only cushy safe options



Unclear if leveraged property or REIT investments will be a safe haven if forecast falls of up to 20% eventuate in major metro areas.  But yes, most see term deposits and property as safe options.


----------



## againsthegrain (6 July 2022)

Trader X said:


> Unclear if leveraged property or REIT investments will be a safe haven if forecast falls of up to 20% eventuate in major metro areas.  But yes, most see term deposits and property as safe options.




I hold a small amount of clw gone down since my initial buy in however with ~6% div the way I see it I will get back my paper loss eventually.  Since its commercial leases the rent increases in theory will cover the valuation of the decreased property value... well at 20% who knows.

For residential property won't be that easy either. 

But im mostly in cash and pm collecting the puny interest however having my powder dry.


----------



## JohnDe (10 July 2022)




----------



## divs4ever (10 July 2022)

againsthegrain said:


> I was making that comment more in relation to the thread,  don't think there would be a big % of mum and dad investors willing to pour life savings into a decent stock generating 5-6% div returns.
> 
> Term deposit or property would seem like the 2 only cushy safe options



 the 'dividend theme ' make the BIG  banks and TLS widely held  , 

 and of course  the patient mum & dad investor  could have bought WOW for $30 back in 2015 ( and scored so bonus EDV on the journey ) or  WES  under $40 in 2015  scoring a bonus  COL on the way  or WES in 2018 ( without the COL spin-off for $31.25 )

 HOWEVER to those small investors trying to park that money NOW ( at good div. returns ) will have to dig deep and research carefully  to find robust companies that are capable of paying reliable returns .

 trying to park your 'life-savings '  currently  at good returns is very problematic as even term  deposits don't offset  official inflation


----------



## againsthegrain (10 July 2022)

divs4ever said:


> the 'dividend theme ' make the BIG  banks and TLS widely held  ,
> 
> and of course  the patient mum & dad investor  could have bought WOW for $30 back in 2015 ( and scored so bonus EDV on the journey ) or  WES  under $40 in 2015  scoring a bonus  COL on the way  or WES in 2018 ( without the COL spin-off for $31.25 )
> 
> ...




I think at the moment nobody knows anything, term deposit you know you are getting 2% and giving back another 6%? to inflation or around there.

Get 2% rental yield but possibly see 10% value drop (in short/mid term anyway)

I remember buying fmg at 14 around a year ago but bought at 17 then 16 and so on until got the bottom at 14. This time think ill take my time.

Oh yeah there were guys saying last chance to pick up btc under 100k aud mark get your hedge get your hedge here.


----------



## gartley (10 July 2022)

againsthegrain said:


> I think at the moment nobody knows anything, term deposit you know you are getting 2% and giving back another 6%? to inflation or around there.



True, inflation erases any gains from deposit interest. But on the flip side without holding or raising cash we are not able to swoop on the bargains when the opportunities finally present.....

Then again if things get really bad, it's not  a matter of deposit interest but rather have your funds in a safe bank......


----------



## wayneL (10 July 2022)

gartley said:


> ...but rather have your funds in a safe bank......



Is there such a creature?


----------



## gartley (10 July 2022)

wayneL said:


> Is there such a creature?



Probably not!! So under the matress or the back yard might be a better option!!  In the great depression something like 5000 institutions went belly just in the USA alone....

Just trying to append some EW labels to the AUS 2yr yield chart. looks like this leg up seen the best of the gains but might consolidate here before putting in one last high. The bottom two charts before are the 2 year yield count as it stands now, and last year what was expected to play out


----------



## divs4ever (10 July 2022)

wayneL said:


> Is there such a creature?



 aah ! the trillion dollar question 

 will there be bail-ins  this time ( instead of bail-outs )

 i wonder what the current status of the government deposit guarantee is  ?? ( they wouldn't need it if they were assured there would be no run on banks )


----------



## gartley (10 July 2022)

divs4ever said:


> aah ! the trillion dollar question
> 
> will there be bail-ins  this time ( instead of bail-outs )
> 
> i wonder what the current status of the government deposit guarantee is  ?? ( they wouldn't need it if they were assured there would be no run on banks )



Look what happened in Cyprus and Greece just 10 years ago......


----------



## wayneL (10 July 2022)

G'mint has denied bail-ins are possible under the legislation, but were pretty slippery about it. And their refusal of  Senator Robert's simple amendment to clarify, probably tells us all we need to know....

Bastids!


----------



## divs4ever (10 July 2022)

gartley said:


> Look what happened in Cyprus and Greece just 10 years ago......



 i remember it well , and took  the opportunity  to trim my interest-bearing securities ( ESPECIALLY in banks ) to absolutely   trivial exposure  ( and cross term deposits  on my investment options list  .

 i have been ALMOST out of interest-bearing securities since the end of 2016  , previously they had been close to 20% ( including property assets )


----------



## divs4ever (10 July 2022)

wayneL said:


> G'mint has denied bail-ins are possible under the legislation, but were pretty slippery about it. And their refusal of  Senator Robert's simple amendment to clarify, probably tells us all we need to know....
> 
> Bastids!



 the IMF , and World Bank ( and other international  entities ) say they  have plans and provisions for bail-ins  , in fact that is what Basel III is about  ( how much pain a bank can take  before the bail-ins are needed )

 now AUSTRALIA  can say whatever  , but who did the hatchet-job on Greece and Cyprus  ( hint it was NOT the National governments )


----------



## gartley (10 July 2022)

divs4ever said:


> i remember it well , and took  the opportunity  to trim my interest-bearing securities ( ESPECIALLY in banks ) to absolutely   trivial exposure  ( and cross term deposits  on my investment options list  .
> 
> i have been ALMOST out of interest-bearing securities since the end of 2016  , previously they had been close to 20% ( including property assets )



It's still not time to be in interest bearing deposits yet.  The worst in the markets IMO is a long way off.  We have further upside in this current rally and god only knows how far up it carries, whatever the case it will be choppy and shake most pundits out. You know what reversals are like, they can be either very abrupt or we can get multiple re tests of former highs. I beleive the former in this case because a 40 year bull market does not reverse like that. Good news for traders


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## divs4ever (10 July 2022)

gartley said:


> It's still not time to be in interest bearing deposits yet.  The worst in the markets IMO is a long way off.  We have further upside in this current rally and god only knows how far up it carries, whatever the case it will be choppy and shake most pundits out. You know what reversals are like, they can be either very abrupt or we can get multiple re tests of former highs. I beleive the former in this case because a 40 year bull market does not reverse like that. Good news for traders



 depends  on what discount you buy them at 

 many years back  i bought MBLHB at  ( about ) $62.50  ( $100 face value ) a few years back MQG  redeemed them @ $100 plus interest due   now sure at face value  the returns weren't that flash ,  but at MY buying price  the returns still beat a term deposit .

 but yes it is very entertaining to watch the Basel III 'stress tests '  on the big international banks  ( if say two were to implode , contagion would most likely follow  , am particularly watching Deutsche and Credit Suisse , but the Japanese have some contenders as well )

 am more an investor that takes passing opportunities ( in one or two shares it almost looks like trading )


----------



## againsthegrain (10 July 2022)

wayneL said:


> Is there such a creature?



burried in gg's backyard


----------



## Belli (10 July 2022)

All this hand wringing over increases in interest rates and the impact on property buyers.  Is the media regurgitating the stories from the late 1980's and early 1990's?  Probably saves them time trying to think of something new I suppose.


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## sptrawler (10 July 2022)

Belli said:


> All this hand wringing over increases in interest rates and the impact on property buyers.  Is the media regurgitating the stories from the late 1980's and early 1990's?  Probably saves them time trying to think of something new I suppose.



Absolutely spot on, after the next banks reporting season, it will be back to giving the Govt heaps, wash, rinse, repeat.


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## gartley (12 July 2022)

Belli said:


> All this hand wringing over increases in interest rates and the impact on property buyers.  Is the media regurgitating the stories from the late 1980's and early 1990's?  Probably saves them time trying to think of something new I suppose.



Probably!!  But whenever the stories make the press or even catches the attention of the government, then most likely that particular leg of the trend is close to an end or at least a pause..


----------



## divs4ever (12 July 2022)

one problem i see coming this time ,  is the folks  who only paid  a 5%  deposit  and borrowed close to the maximum ( and weren't aggressively paying down the mortgage  in 'the good times ' )

 lenders tend to get very nervous when the borrower owes more than the current value of the asset


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## greggles (12 July 2022)

Housing affordability issues is creating innovation in assembly line pre-fab housing. Companies like Boxabl are springing up in the USA and I think it's only a matter of time until we start seeing them here.


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## againsthegrain (12 July 2022)

This is amazing people are crying end of the world and property is collapsing but it is still 20% or 30% up pre covid.  Using some ridiculous guilt tactics on rba.  Sounds like a bunch of selfish whinghers to me... there is no buyers its the end of the world quick inflate and destroy the dollar more so a few investors balls deeps can survive at the cost of the whole population.

_Auctioneer Tom Panos has called on the RBA to consider the impact of its aggressive rate hikes on the real estate market, which continued to fall last month led by declines in Sydney and Melbourne._



			https://www.news.com.au/finance/real-estate/selling/stressed-auctioneer-says-almost-no-buyers-showed-up-on-the-weekend/news-story/2b7830b14cb5b065e5d2d87a23fb772f


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## divs4ever (12 July 2022)

againsthegrain said:


> This is amazing people are crying end of the world and property is collapsing but it is still 20% or 30% up pre covid.  Using some ridiculous guilt tactics on rba.  Sounds like a bunch of selfish whinghers to me... there is no buyers its the end of the world quick inflate and destroy the dollar more so a few investors balls deeps can survive at the cost of the whole population.
> 
> _Auctioneer Tom Panos has called on the RBA to consider the impact of its aggressive rate hikes on the real estate market, which continued to fall last month led by declines in Sydney and Melbourne._
> 
> ...




 ah !! but what about the ( outstanding ) debt obligations   in the public sphere and the  overall economy 

 yes i basically agree  , BUT the general public  has been loaded up with excessive debt in one way or another


----------



## Belli (16 July 2022)

againsthegrain said:


> Auctioneer Tom Panos has called on the RBA to consider the impact of its aggressive rate hikes on the real estate market, which continued to fall last month led by declines in Sydney and Melbourne.




 “We’ll all be rooned,” said Hanrahan,
 “If interest rates don’t drop this week.”

Apologies to John O'Brien.


----------



## Belli (18 July 2022)

Belli said:


> “We’ll all be rooned,” said Hanrahan,




Don't know about "rooned" but certainly rooted.  Just got the UCV and it has jumped 29% over last year.  Boo Hiss.


----------



## noirua (22 July 2022)

Room for Rent.  Must be very slim and agile. Preferably an acrobat and double jointed. Rope ladder fire escape.
Excellent views.


----------



## Dona Ferentes (22 July 2022)

And there seem to be a lot of headlice with a similar message.


_A 38-level Perth block won’t be built after construction costs *surged *30 per cent in a less than year._
_Melbourne developer Central Equity has abandoned plans to build a $500 million apartment tower in Surfers Paradise on the Gold Coast over concerns that *surging *construction costs will make the project unprofitable._
_Residential construction costs nationally *jumped *10 per cent, the highest annual rate of growth since the introduction of the goods and services tax at the turn of the century pushed costs up 10.2 per cent in the year to March 2001, new figures from data provider Cordell show._
_The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index showed new orders were down by 7.5 points even before Tuesday’s interest rate rise, with the downward trend attributed to earlier rate rises_.
Supply and demand.


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## sptrawler (17 August 2022)

I wonder if this is the fallout from the covid inspired moratorium on evictions for non payment of rent? Maybe a lot of landlords decided renting out property isn't the easy money they thought it was and sold out, into a rising property market.
For every action there is a consequence.









						Australia's rental crisis screams Code Red
					

CoreLogic has released rental listings data, which shows that the number of properties listed for rent across the combined capital cities has plummeted to just 80,000 – around 50,000 (40%) less than were available for rent in July 2018 and July 2021: In turn, the rental vacancy rate has...




					www.macrobusiness.com.au
				



CoreLogic has released rental listings data, which shows that the number of properties listed for rent across the combined capital cities has plummeted to just 80,000 – around 50,000 (40%) less than were available for rent in July 2018 and July 2021:

In turn, the rental vacancy rate has collapsed to just 1.3% across the combined capital cities and 1.0% across the combined regions. This has driven rental growth to its highest level in decades: 9.1% across the combined capital cities and 10.8% across the combined regions:
The outlook for Australia’s rental market is poor. Residential construction rates are tipped to plunge next year as the pipeline from the HomeBuilder stimulus is finally worked-off. Dwelling approvals have already fallen sharply, which should continue amid rising interest rates and the various cost pressures afflicting the construction industry:

At the same time, the Albanese Government is expected to ramp-up immigration to its highest ever level following next month’s _Jobs & Skills Summit_, with the permanent non-humanitarian migrant intake expected to be lifted to 200,000 for the first ever time.

The obvious question needs to be asked: with Australia’s rental market already experiencing record tightness and rents soaring at near double-digit rates, where will the hundreds of thousands of migrants entering Australia every year live?

The logical outcome from the Albanese Government’s immigration influx will be more shrinking of rental vacancies, higher rents, and increased homelessness as tenants compete like the Hunger Games for housing.


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## divs4ever (17 August 2022)

noirua said:


> Room for Rent.  Must be very slim and agile. Preferably an acrobat and double jointed. Rope ladder fire escape.
> Excellent views.
> View attachment 144380



 are you allowed to put holes in the ceiling   to mount the widescreen TV  ( and tape the HDMI  cable from the laptop to the wall )

 looks fantastic   , think of the savings in heating and cleaning


----------



## JohnDe (17 August 2022)

sptrawler said:


> I wonder if this is the fallout from the covid inspired moratorium on evictions for non payment of rent? Maybe a lot of landlords decided renting out property isn't the easy money they thought it was and sold out, into a rising property market.
> For every action there is a consequence.
> 
> 
> ...




The return on residential rental investment has been low for a very long time, and the risk high. 

Most renters think that the landlord is super rich and owes them something, the renter will call when a light bulb goes out, or a tap drips. 

The landlord pays the council rates, water and sewerage rates, maintenance and repairs and high insurance fees. 

The renter may or may not look after the garden, signs an agreement with a no pet clause, and then buys a puppy that lives inside.

Commercial rental investments offer higher returns and less risk. Most of the people I know that invest in properties have sold off their residential portfolio and built a commercial investment property portfolio. All are happier and wealthier.


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## againsthegrain (17 August 2022)

confirms what everybody is saying 



			https://www.news.com.au/national/landlord-on-the-brink-of-offloading-properties-amid-tenant-favouritism/news-story/99d2a7cc9412ba1c8eff158fe06cefa5


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## againsthegrain (17 August 2022)

Not a very interesting scenario,  
- loans are expensive 
- investors starting to see re as bad investment 
- surplus stock for sale 
- low rental stock 
- increasing supply of renters

tent city here we come


----------



## sptrawler (19 August 2022)

Looks like the Sydney property bubble might be deflating, at last the ponzi might be over.

Chinese sell off luxury homes as vacancy tax bites​There’s been a dramatic shift in the luxury home market, particularly in Sydney and Melbourne, with wealthy overseas Chinese owners selling up.


----------



## againsthegrain (19 August 2022)

sptrawler said:


> Looks like the Sydney property bubble might be deflating, at last the ponzi might be over.
> 
> Chinese sell off luxury homes as vacancy tax bites​There’s been a dramatic shift in the luxury home market, particularly in Sydney and Melbourne, with wealthy overseas Chinese owners selling up.




I wonder if any if them are worrying what will happen to their "investments" if china does go to war over Taiwan


----------



## qldfrog (19 August 2022)

againsthegrain said:


> I wonder if any if them are worrying what will happen to their "investments" if china does go to war over Taiwan



Definitively part of the move me think


----------



## moXJO (19 August 2022)

So migration of 200k a year might prop up housing to a degree. While also lowering wages and standards in the building industry.


----------



## qldfrog (19 August 2022)

moXJO said:


> So migration of 200k a year might prop up housing to a degree. While also lowering wages and standards in the building industry.



And ensuring ALP and woke in power for the next 50y..
European history repeating.
invest in security systems  and welfare providers, get out of cities, out of IP , move money overseas..you have a few decades


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## sptrawler (19 August 2022)

moXJO said:


> So migration of 200k a year might prop up housing to a degree. While also lowering wages and standards in the building industry.



This has a definite feel of the 1980's about it, the next few years aren't going to be nice for workers IMO, but we get through and a new norm is found.
Does this article sound familiar? Ah being old, at least you get to see quite a few once in a lifetime events. It's funny how many are actually repeats.





__





						Recession of 1981–82
					

Explore the Federal Reserve's history



					www.federalreservehistory.org
				




This headline says it all.








						The Scott Morrison horror show will continue to flare, burning the opposition
					

Scott Morrison leaves casualties all over the place. His own legacy is, of course, the biggest casualty of all.




					www.smh.com.au
				




The Morrison scandal has to take centre stage, while the real action is happening backstage.


----------



## dyna (21 August 2022)

That  "Fed Reserve History of the 1982 USA Recession" is interesting reading for me, as I was living in the land of the free for most of that year. It really was a grim time for the unemployed , in numbers not seen since the great depression.  For all their faults , Americans, I found then, and still believe now, are a far tougher and resilient people than us. No sissies and crybabies anywhere. They all come into this world ,knowing full well, that mom and dad are not going to hold their hand forever and the government sure  ain't gonna do it, either.
life is easier and sweeter, here, though. I ain't goin' nowhere, no matter how "wokey" it  all gets.


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## divs4ever (21 August 2022)

againsthegrain said:


> Not a very interesting scenario,
> - loans are expensive
> - investors starting to see re as bad investment
> - surplus stock for sale
> ...



 the US is seeing  an uptick ( more than other vehicle types ) of 'vans '  , now i am taking that  as panel vans and light trucks  , which MIGHT translate to 'mobile accommodation '  ( rather than dedicated 'mobile homes 'and  caravans )

 i wonder if that trend is reflected here ,
 there was years back a surplus of inner-city apartments ( in Brisbane )

 but now we appear to have this work from home trend ... not so beneficial to renters of inner-city apartments 

 now that MIGHT still be okay for construction/developers/landlords  that chose  a retail/commercial/residential mix  building .

 now 'tent city'  doesn't seem to be cheering up FWD ( now specializes  in module/demount-able buildings  albeit mainly at mining sites )

 might be worth watching SUL ( includes A-Mart and a fishing and camping  chain ) KMD and BGP  for indications 

 ( i hold FWD  deeply underwater , and SUL nicely up  , i also hold APE  who hasn't spotlighted a similar trend , a rise in van sales  and APZ )

 i was thinking 'tent city'  starting in 2013 and so far have been disappointed


----------



## divs4ever (21 August 2022)

againsthegrain said:


> I wonder if any if them are worrying what will happen to their "investments" if china does go to war over Taiwan



 China is already at war with Taiwan , and it is a financial/economic/trade war 

 China would prefer Taiwan intact and compliant  , so is less likely to choose a 'hot war ' 

 now other Pacific nations ( like Guam)  should be wary of being complacent  , and China still remembers Japan unfavorably ,  abandoning  it's non-aggression stance could be costly 

 Australia reacting to a 'war ' against China  will invoke a logistical nightmare ( in Australia )

 would the Australian Government do it ??

 ( hint they fumble bush-fires and floods regularly  AND we should be about due for a decent cyclone season in the coming year  , they have had plenty of practice dealing with them )


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## divs4ever (21 August 2022)

Three opportunities in property in Australia and APAC​








						Three opportunities in property in Australia and APAC
					

Rising interest rates and occupancy threats have reduced the share prices of many property companies and trusts, but the selling underestimates the strong pockets of demand and robust earnings from good tenants.




					www.firstlinks.com.au


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## SirRumpole (23 August 2022)

moXJO said:


> So migration of 200k a year might prop up housing to a degree. While also lowering wages and standards in the building industry.




Agreed.

We already have a housing shortage, so why are builders going broke ?

Not because of a lack of demand but because of price increases that are pushing new buildings beyond affordability.

That won't change with increased demand unless builders cut costs and reduce quality.

Governments need to take a more holistic approach to skills shortages instead of the knee jerk reaction of increased immigration.


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## qldfrog (23 August 2022)

SirRumpole said:


> Agreed.
> 
> We already have a housing shortage, so why are builders going broke ?
> 
> ...



As long as you understand that immigration is the leftist woked wrapped implementation of the reset: suppression of nationalism, garantee of left and so mondialist electorate, levelling of income on a world level and increase of profits for big multi national corporatism..
Anyone opposed is labelled as racist, ensuring  splitting of societal fabric.
France Sweden and soon Germany are perfect study boards of effects, who benefits and the overall collapse of the nations.
With alp and the watermelons in control, we are speeding the pace but make no mistake the lnp are playing the same game,bprobably less willingly or less aware


----------



## againsthegrain (23 August 2022)

qldfrog said:


> As long as you understand that immigration is the leftist woked wrapped implementation of the reset: suppression of nationalism, garantee of left and so mondialist electorate, levelling of income on a world level and increase of profits for big multi national corporatism..
> Anyone opposed is labelled as racist, ensuring  splitting of societal fabric.
> France Sweden and soon Germany are perfect study boards of effects, who benefits and the overall collapse of the nations.
> With alp and the watermelons in control, we are speeding the pace but make no mistake the lnp are playing the same game,bprobably less willingly or less aware



Nothing like increasing the importation of votes under the cover of fixing the economy and "helping people"


----------



## gartley (23 August 2022)

SirRumpole said:


> Governments need to take a more holistic approach to skills shortages instead of the knee jerk reaction of increased immigration.




Absolutely but don't for one minute think that their policies are to fill the void for the the skills shortage. The main reason ( which was never the main driver anyway despite what many think) was to prop up property prices in their government sposored ponzi.
Only problem is that increasing migration again may not save property prices this time in Australia as well as many other western economies. A fundamental shift in trend is now taking place that is reversing decades long trends not just in real eastate but also the stock markets.


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## againsthegrain (23 August 2022)

gartley said:


> Absolutely but don't for one minute think that their policies are to fill the void for the the skills shortage. The main reason ( which was never the main driver anyway despite what many think) was to prop up property prices in their government sposored ponzi.
> Only problem is that increasing migration again may not save property prices this time in Australia as well as many other western economies. A fundamental shift in trend is now taking place that is reversing decades long trends not just in real eastate but also the stock markets.




It will also increase the strain and maybe further breakdown the medical and welfare system among others


----------



## SirRumpole (23 August 2022)

againsthegrain said:


> It will also increase the strain and maybe further breakdown the medical and welfare system among others




Especially if the forecasts of recession are correct.


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## Value Collector (23 August 2022)

againsthegrain said:


> It will also increase the strain and maybe further breakdown the medical and welfare system among others



Have you been to a hospital lately? You would be surprised at the large percentage of medical workers who are either immigrants or the children of immigrants.

If anything I think Immigration in the last 20 years has propped up our medical industry, not caused a breakdown.

Same with the building industry, its grown massively over the years because of immigration.

Check out "Highrise Harry", responsible for building more housing in Australia than anybody else. If you we had denied him entry because we were worried about housing, we would have made a huge mistake.


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## SirRumpole (23 August 2022)

Value Collector said:


> Have you been to a hospital lately? You would be surprised at the large percentage of medical workers who are either immigrants or the children of immigrants.
> 
> If anything I think Immigration in the last 20 years has propped up our medical industry, not caused a breakdown.
> 
> ...




Probably a large number of patients in hospitals are immigrants or their children, parents or associated relatives, so I think the benefits of immigration has to take into account the costs as well.


----------



## wayneL (23 August 2022)

Value Collector said:


> Have you been to a hospital lately? You would be surprised at the large percentage of medical workers who are either immigrants or the children of immigrants.
> 
> If anything I think Immigration in the last 20 years has propped up our medical industry, not caused a breakdown.
> 
> ...












						Fooled by Randomness by Nassim Nicholas Taleb
					

Buy Fooled by Randomness at Angus & Robertson with Delivery - <p><strong>Everyone wants to succeed in life. But what causes some of us to be more successful than others?</strong></p><p>Is it really down to skill and strategy - or something altogether more unpredictable?  This book is the...




					www.angusrobertson.com.au


----------



## qldfrog (23 August 2022)

wayneL said:


> Fooled by Randomness by Nassim Nicholas Taleb
> 
> 
> Buy Fooled by Randomness at Angus & Robertson with Delivery - <p><strong>Everyone wants to succeed in life. But what causes some of us to be more successful than others?</strong></p><p>Is it really down to skill and strategy - or something altogether more unpredictable?  This book is the...
> ...



Not read the book but luck is something you trigger with tries.
If you have a 1/3 chance of failing in a new business within 3y, well try 3 times... not purely exact but you get the idea
I retired in my 50s by saving, but also going independent then starting ventures 2 failed after years of efforts in parallel to contract work, the 3rdvwas reasonably successful until covid rules ended my role.
But gave me a smooth path out.
I think i have been quite unlucky!!!
Some close their noses and benefit from rotten business going provate,some work hard to get a system or a company out of the ground.
Luck has a play but far far less than many think IMHO.


----------



## wayneL (23 August 2022)

qldfrog said:


> Not read the book but luck is something you trigger with tries.
> If you have a 1/3 chance of failing in a new business within 3y, well try 3 times... not purely exact but you get the idea
> I retired in my 50s by saving, but also going independent then starting ventures 2 failed after years of efforts in parallel to contract work, the 3rdvwas reasonably successful until covid rules ended my role.
> But gave me a smooth path out.
> ...



Agreed. You have to make good decisions to get the luck. You can't sit on your @ss and end up with a great business.

Taleb's point is that if people take similar decisions, some will still do massively better than others, due to random factors.


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## againsthegrain (23 August 2022)

Value Collector said:


> Have you been to a hospital lately? You would be surprised at the large percentage of medical workers who are either immigrants or the children of immigrants.
> 
> If anything I think Immigration in the last 20 years has propped up our medical industry, not caused a breakdown.
> 
> ...




Honestly I don't go doctors much at all but my son had a ear infection few months ago and every place (public) we tried to go or even get a teleconsulation was all full and booked out. 

My wife also had some minor procedure done this year for which she was waiting over 1 year public as well. 

Private was the only way to go with my son, that is my personal experience so not a big % of the population. 

Back when I was a kid the doctor used to check the tonsils,  listen to your chest make you caugh.  The public doctors I have been to with my kids used google images for 'comparison and demonstration' purposes.


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## Value Collector (23 August 2022)

againsthegrain said:


> Honestly I don't go doctors much at all but my son had a ear infection few months ago and every place (public) we tried to go or even get a teleconsulation was all full and booked out.
> 
> My wife also had some minor procedure done this year for which she was waiting over 1 year public as well.
> 
> ...



That might be due to liberals under investment in the sector, but I can tell you, if we subtracted all the immigrant workers out of the medical system it would be worse, not better.


----------



## Value Collector (23 August 2022)

wayneL said:


> Fooled by Randomness by Nassim Nicholas Taleb
> 
> 
> Buy Fooled by Randomness at Angus & Robertson with Delivery - <p><strong>Everyone wants to succeed in life. But what causes some of us to be more successful than others?</strong></p><p>Is it really down to skill and strategy - or something altogether more unpredictable?  This book is the...
> ...



I have read it.


----------



## Value Collector (23 August 2022)

SirRumpole said:


> Probably a large number of patients in hospitals are immigrants or their children, parents or associated relatives, so I think the benefits of immigration has to take into account the costs as well.



Yes, but given that skills are a factor in whether a person is able to migrate, I believe that the average skill level of migrants is higher than locals.

Not to mention that the unskilled migrants tend to fill a lot of jobs that the average Aussie doesn’t want to do, on balance I think Australia has done very well from our immigrants, I myself am Australian born but from parents that migrated here in 1980, My father like many immigrants made his way by out working the “Aussies” and often for lower pay.


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## qldfrog (23 August 2022)

wayneL said:


> Agreed. You have to make good decisions to get the luck. You can't sit on your @ss and end up with a great business.
> 
> Taleb's point is that if people take similar decisions, some will still do massively better than others, due to random factors.



yes but you will find the "successful lucky" ones, will try again, and again.
I tend to hate these books as they basically lead to :
that is not fair he was lucky being rich so I am entitled to as much as him/her/them/it


----------



## moXJO (23 August 2022)

Value Collector said:


> Yes, but given that skills are a factor in whether a person is able to migrate, I believe that the average skill level of migrants is higher than locals.
> 
> Not to mention that the unskilled migrants tend to fill a lot of jobs that the average Aussie doesn’t want to do, on balance I think Australia has done very well from our immigrants, I myself am Australian born but from parents that migrated here in 1980, My father like many immigrants made his way by out working the “Aussies” and often for lower pay.



Who's arguing for zero migration?
Why is the assumption of either zero migration or record numbers the only two options when talking about the level of migration?


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## moXJO (23 August 2022)

gartley said:


> Absolutely but don't for one minute think that their policies are to fill the void for the the skills shortage. The main reason ( which was never the main driver anyway despite what many think) was to prop up property prices in their government sposored ponzi.
> Only problem is that increasing migration again may not save property prices this time in Australia as well as many other western economies. A fundamental shift in trend is now taking place that is reversing decades long trends not just in real eastate but also the stock markets.



It's not just property prices. 
It holds up the building industry and all those leech industries attached to it. Bankers, planning and council fees/rates, licensing, insurance, safety industry, realestate. It's a regular gorgefest. 
Pollies make a mint.


----------



## Value Collector (23 August 2022)

moXJO said:


> Who's arguing for zero migration?
> Why is the assumption of either zero migration or record numbers the only two options when talking about the level of migration?



The proposed number of 190,000 per year has been in place since 2012, and has been stable at that over that time except for 2020 and 2021 due to covid, and the majority of the 190,000 have been skilled.

So it’s not so much about “record high”, it’s more about getting back to normal.


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## gartley (23 August 2022)

No matter how many they bring in it will only fill some temporary skill shortages.  The following is an unemployemt chart  from 2007. This chart suggests that an Elliot Wave  five wave structure to the downside has traced out from 2020 and a sharp reversal to the upside is imminent and could start as early as next year. It's fitting that the heading on the chart by Commsec says "Heading toward Full employment" as this is an extreme in government optimism and projecting the current trend into the future.  These are perfect ingredients in terms of social mood for this reversal to occur and unemployment rate will at the very least shoot back up to 5.5% quite quickly. Notice they make mention of 22 year high ( close to the fibonacci number of 21) and 13 year low, which is in itself a fibonacci number.




Looking at a very long term chart there was a nice 5 wave structure down from 1991 till 2009. What happens after a 5 wave structure? A counter trend rally ofcourse, and as such a nice upward abc zigzag pattern from 2009 till 2021. This preceded the last 5 wave move down of the last few years. The entire move down from 1991 till 2022 is itself a zigzag of larger degree. So taking these charts at EW face value, unemplyment may shoot up to 7.5% in the years ahead before it finds resistance and then pulls back most liekly to make a higher low thereafter....


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## divs4ever (24 August 2022)

SirRumpole said:


> Agreed.
> 
> We already have a housing shortage, so why are builders going broke ?
> 
> ...



 according to a buddy doing an extension  ( because his long time family friend can't get enough PROPER tradies  )
 materials is a biggie ( both cost and availability  )   ,  the afore-mentioned  staff problems 

 the skill shortage will remain a problem  it starts at the education-system level  ( so they need to clean house there  FIRST ) and that might be very hard to do  many quality tradesmen have retired   ( either filthy rich  or broke and crippled ) and would be hard to lure into an instructor role 

 immigration the way the government does it will NOT solve the problems    the last painter at a mate's house was a Polish Engineer  but Australia wouldn't honor the engineering degree .. so ...  ,  and i could add plenty more   ( like 'skilled tradesmen' imported  after that skill shortage was  solved  so they drive taxis or a 7-11 counter )

 but don't worry the quality is already reducing   starting at the wholesaler ( sadly the prices aren't falling in sympathy )  , ( tools , wood , fastenings  , fittings )


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## divs4ever (24 August 2022)

Value Collector said:


> Yes, but given that skills are a factor in whether a person is able to migrate, I believe that the average skill level of migrants is higher than locals.



 migrants  from SOME nations   yes i agree , however some seem to have  non-genuine  certification  , maybe they need a accreditation test  before being granted a visa  ( so even if you don't get a genuine tradesman/skilled worker  they can up-skill on the job  , and get the desired outcome )


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## gartley (24 August 2022)

According to Chris Joye who predicted the 20% rise in real estate prices during Covid and due to falling IR, Australia headed for its worst housing collapse since records began in the early 1980s.









						Australia braces for "record housing collapse"
					

Coolabah Capital’s Chris Joye gave another dissertation on Australia’s housing market, which he says is headed for a “record collapse” that is “only likely to get worse” as the Reserve Bank of Australia’s (RBA) aggressive rate hikes bite: The entire east coast of Australia, which accounts for...




					www.macrobusiness.com.au


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## SirRumpole (24 August 2022)

Value Collector said:


> The proposed number of 190,000 per year has been in place since 2012, and has been stable at that over that time except for 2020 and 2021 due to covid, and the majority of the 190,000 have been skilled.
> 
> So it’s not so much about “record high”, it’s more about getting back to normal.




I keep asking the question, "where are these people going to live ?".

Demand for housing is at record highs and builders are going broke, so an increase in demand is only going to make the situation worse.

People are living in shipping containers because they can't find or afford accommodation  , and more people imports is going to make it even harder.


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## Value Collector (24 August 2022)

SirRumpole said:


> I keep asking the question, "where are these people going to live ?".
> 
> Demand for housing is at record highs and builders are going broke, so an increase in demand is only going to make the situation worse.
> 
> People are living in shipping containers because they can't find or afford accommodation  , and more people imports is going to make it even harder.



We build about 50,000 new dwellings every three months in Australia, I don’t know about where you live, But hear in Brisbane there is new apartments going up all over the place, and house and land packages every where.

During the pandemic Australia’s population went down for the first time, we actually rely on immigration to maintain the population.


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## Value Collector (24 August 2022)

divs4ever said:


> migrants  from SOME nations   yes i agree , however some seem to have  non-genuine  certification  , maybe they need a accreditation test  before being granted a visa  ( so even if you don't get a genuine tradesman/skilled worker  they can up-skill on the job  , and get the desired outcome )



Actually the majority are skilled.

When you say “some nations” it sounds like you want to base immigration on race.


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## SirRumpole (24 August 2022)

Value Collector said:


> We build about 50,000 new dwellings every three months in Australia, I don’t know about where you live, But hear in Brisbane there is new apartments going up all over the place, and house and land packages every where.
> 
> During the pandemic Australia’s population went down for the first time, we actually rely on immigration to maintain the population.




We might build them but they are so expensive that many people can't afford to live in them.


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## moXJO (24 August 2022)

Value Collector said:


> The proposed number of 190,000 per year has been in place since 2012, and has been stable at that over that time except for 2020 and 2021 due to covid, and the majority of the 190,000 have been skilled.
> 
> So it’s not so much about “record high”, it’s more about getting back to normal.



Plus temporary visas. What are they currently running at 550k?

It's housing stock and rentals that are the problem. Nation wide rentals were something like 28,000. 
We have building completion driving up stock. But in reality it will keep the shortage going.

 No rentals have just as real a cost to the economy as well.


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## moXJO (24 August 2022)

SirRumpole said:


> We might build them but they are so expensive that many people can't afford to live in them.



This is the problem. All those low skilled jobs they can't fill is a big part due to the cost of housing in regional areas. Fuel prices, sht pay and travelling 2 hours is off the agenda for many. Guess it's back to packing 10 to a 2 bedroom.

So unless you are building low cost housing where it's needed, mass immigration is a lazy and scattershot approach that may end up having unintended consequences.


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## Value Collector (24 August 2022)

SirRumpole said:


> We might build them but they are so expensive that many people can't afford to live in them.



I am pretty sure they are not just sitting empty, when they are completed they will be sold or leased, both the sale and lease prices are set by the market, and will be determined by market forces, as long as sale and lease prices are high, the market will be trying to produce as many as they can. (provided the government doesn't scare investors away)

It all comes back to supply and demand, if we build more they price will drop, if we have more skilled labour the price of building will drop.

But also there is currently local migration happening, we have plenty of land in Australia, in my opinion we just need to move the population out to more regional areas, with the work from home trend this is slowly happening.


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## Value Collector (24 August 2022)

moXJO said:


> Plus temporary visas. What are they currently running at 550k?
> 
> It's housing stock and rentals that are the problem. Nation wide rentals were something like 28,000.
> We have building completion driving up stock. But in reality it will keep the shortage going.
> ...



Yep, a strong rental market will keep the demand up in the building industry, and keep the big wheels turning, its all good news for the economy, As some one with investments in Iron Ore, Banking and Real estate its all good news IMO.


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## SirRumpole (24 August 2022)

Value Collector said:


> Yep, a strong rental market will keep the demand up in the building industry, and keep the big wheels turning, its all good news for the economy, As some one with investments in Iron Ore, Banking and Real estate its all good news IMO.




What do you call a strong rental market ?

Plenty of renters for limited housing, therefore higher rents for you ?


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## Value Collector (24 August 2022)

SirRumpole said:


> What do you call a strong rental market ?
> 
> Plenty of renters for limited housing, therefore higher rents for you ?



I mean low vacancy rates, eg investors can feel confident bringing more product to market knowing that they will be able to rent it out swiftly and at a decent enough return.

At the end of the day, if you think new properties are going to sit vacant for 6 months after they are completed and the rents are going to be low you aren't going to be rushing to bring new product to market.

Its the age old rule of business, if wheat prices are high farmers will plant more wheat, if wheat prices are low they might skip a season.


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## SirRumpole (24 August 2022)

Value Collector said:


> I mean low vacancy rates, eg investors can feel confident bringing more product to market knowing that they will be able to rent it out swiftly and at a decent enough return.




I think in normal times this would be true, but these days with increasing costs affordable buildings simply can't be built at a margin that builders would find worthwhile to do hence builders are going broke.

There has to be a change in worldwide economic and political conditions long term, or in the short term the government has to get into cheaper housing or pass tax laws that make it easier to buy a house to live in than it is to be landlords. (Sorry about that).


----------



## sptrawler (24 August 2022)

SirRumpole said:


> I keep asking the question, "where are these people going to live ?".
> 
> Demand for housing is at record highs and builders are going broke, so an increase in demand is only going to make the situation worse.
> 
> People are living in shipping containers because* they can't find or afford accommodation * , and more people imports is going to make it even harder.



That is IMO, the crux of the issue, they can't afford accommodation, why?
Because most are in the service industries on low wages.

So why don't we encourage more skills training to higher paying jobs, rather than import skilled migrants?
Because the Governments no longer want to pay for training people or be responsible for supplying essential services e.g cadetships, apprenticeships in Government owned power stations, government owned and operated main roads dept's, government owned and operated railway workshops, govt owned state housing commission building and maint dept's
And the private sector wants ready to go workers not spoon feeding some trainee for four years.

So another example of a failing, where all our manufacturing that was a nursery for the skills we need has been offshored and now we import trained people and make our kids baristas to serve at the table of the imported workforce.

The clever country, where the few who are fortunate enough to get ahead, can build their investment property and still have enough left over to help fund the unemployed Australian youth.

The sad state of Australian politics, that is focused on the next election, rather than the next century. It is time the State Governments bit the bullet and took responsibility for social housing again.
If they are not going to take responsibility for supplying our kids with work opportunities to improve their skill set, then they should take responsibility for the unfortunate financial situation a lot of the kids find themselves in and build some affordable public housing, which will also put downward pressure on private rental costs.
If they started the State housing commissions again, they could actually again train drafting people, civil engineers, all the trades etc. But no that would entail having a brain, which unfortunately isn't a prerequisite for a politician, much easier just to sign cheques to companies and offload the responsibilities.
It a shame the media doesn't put as much emphasis on these issues, as they do on social engineering.
My rant for month.


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## Value Collector (24 August 2022)

SirRumpole said:


> There has to be a change in worldwide economic and political conditions long term, or in the short term the government has to get into cheaper housing or pass tax laws that make it easier to buy a house to live in than it is to be landlords. (Sorry about that).




I don't know if there is any real fix besides increasing supply, which a big part of increasing supply is increasing supply of labour.

There are 5 main things that determine the cost of production of new dwellings.

1, Cost of purchasing the land content.
2, Cost of purchasing the materials.
3, Cost of employing skilled Labour.
4, Cost of capital.
5, Government fee's and red tape.

The sum of these costs represent the bare minimum break even price of bringing projects to market.

Of course, no developer is going to start a project unless they believe they will earn a decent enough margin above that base level cost of production, So the market has to be strong enough to encourage market prices above this break even levels.

--------------------------------

Now of course some of those 5 costs also have there own supply demand pricing, eg the cost of tradies is very high at the moment due to developers competing to get trades on their projects, materials are also high due to supply chain issues and general high demand, cost of land is high in the cities this can't be helped etc to move more projects out to regional areas with cheaper land.

Bringing in an immigrant tradesman of course increases demand by 1 dwelling, but his/her presence in the market also should put downward pressure on the market price of tradesman, which contributes to lower costs of completing developments, which encourages more developers to deploy capital.


----------



## SirRumpole (24 August 2022)

Value Collector said:


> Bringing in an immigrant tradesman of course increases demand by 1 dwelling, but his/her presence in the market also should put downward pressure on the market price of tradesman, which contributes to lower costs of completing developments, which encourages more developers to deploy capital.




I'd suggest that the marginal effect of one migrant tradesman on the price of tradesmen does not even begin to compensate for one dwelling being taken off the market.

If you can produce any data to the contrary I may change my mind.


----------



## Value Collector (24 August 2022)

SirRumpole said:


> I'd suggest that the marginal effect of one migrant tradesman on the price of tradesmen does not even begin to compensate for one dwelling being taken off the market.
> 
> If you can produce any data to the contrary I may change my mind.



It would because over that tradies working life they will produce a lot more dwellings than they use for themself, so he or she will be contributing more dwellings to the supply side than they consume from the demand side.

think about it, bakers produce more bread than they eat, tradies produce more projects than they live in, it literally has to be that way, if over his working life a tradie produced less dwellings than he consumed he would starve too death because he wouldn't be able to trade with the baker to buy bread, all of his efforts would have to go to purchasing his own home or paying rent, however if you look at most tradies, they have quite large disposable incomes.

The Reserve bank is currently in the process of increasing the price of item 4 on my above list though, eg the cost of capital so that will be increasing the cost of building dwellings, and will offset any reductions in the other 4 cost items for a while.


----------



## SirRumpole (24 August 2022)

Value Collector said:


> It would because over that tradies working life they will produce a lot more dwellings than they use for themself, so he or she will be contributing more dwellings to the supply side than they consume from the demand side.




Maybe but the problem is that their demand is immediate but their production is long term, in the meantime you still have people living in shipping containers.

The best solution is train local workers and use temporary migration visas (max 5 years) to fill in the gaps.


----------



## divs4ever (24 August 2022)

SirRumpole said:


> I keep asking the question, "where are these people going to live ?".
> 
> Demand for housing is at record highs and builders are going broke, so an increase in demand is only going to make the situation worse.
> 
> People are living in shipping containers because they can't find or afford accommodation  , and more people imports is going to make it even harder.




 that is a logical question ....

 STOP IT  .. stop it NOW   ( or the government will silence you ) you know how they feel about critical thinking 

 now  since some states are building 'quarantine camps '  one might think they would be useful for current citizens  no longer in the work-force  ( since there is little  manufacturing  near those accommodation centres  )

 new workers should ideally be housed near their current employment  ( or at least  near the company HQ )

 paranoia you say  ?? maybe but i see  the slow creep towards Communism/Totalitarianism


----------



## sptrawler (24 August 2022)

SirRumpole said:


> Maybe but the problem is that their demand is immediate but their production is long term, in the meantime you still have people living in shipping containers.
> 
> The best solution is train local workers and use temporary migration visas (max 5 years) to fill in the gaps.



It's cheaper for the Government to import workers and tax their wages, which then helps pay the unemployment bill.
As was proven during covid, when there was no immigration, people still weren't interested in jobs.
As  posted back then the daughter in law who runs the office for a road repair company couldn't get lollipop attendants for traffic control and she ended up getting all her tickets + HR, HC, EWP and all the traffic control tickets.
So she could fill the gaps and make sure the contracts were completed.
Driving down Roe highway (Perth ring road) on Tuesday, there is a big lit up billboard at the South Metropolitan bus depot, saying drivers wanted all training supplied. I've never seen that before.
Yet there are still plenty of young people, sitting out the front of the shops, with the begging cardboard.


----------



## divs4ever (24 August 2022)

Value Collector said:


> however if you look at most tradies, they have quite large disposable incomes.



 only the ( financially ) clever ones , i learned from several over the years that went bankrupt a couple of times   when THE BIG FISH ( insurer or developer or banker ) got squeezed and turned off the money-tap to the minions 

 but yes i overall agree with your reasoning 

 take as an example  the latest telecommunication technician to visit  ( from Liberia , of all places !! ) a fairly young guy  , deliberately chose to work as an employee  for the contractor  , rather than turn contractor or sub-contractor   after calculating the over-all costs  of each path , 

 i assume after he had all his ducks in place  , he would be financially cashed up  for a future path  ( say working inside the server farms ) .. he did know his stuff  unlike the five locals before him 

 another example  was a carpenter/builder  , who had such 'liquidity moments '  and finally decided after finishing two profitable homes  to quit the game and buy a cycle retailer/repairer  that made enough to set up his two oldest sons in their own cycle outlets   and the boys   soon had a chain of cycle shops throughout the state  ( so three carpenters left the industry )


----------



## SirRumpole (24 August 2022)

divs4ever said:


> new workers should ideally be housed near their current employment ( or at least near the company HQ )




Maybe employers who apply for overseas migrants should have to guarantee their accommodation.

Or is that too Totalitarian ?


----------



## divs4ever (24 August 2022)

SirRumpole said:


> What do you call a strong rental market ?
> 
> Plenty of renters for limited housing, therefore higher rents for you ?



 every chance a government facing an election ( or civil unrest ) will bring in price caps ( including on rents )

 look at how many brought in rent or eviction moratoriums during the virus saga 

 that is very likely to happen again when politically expedient


----------



## divs4ever (24 August 2022)

SirRumpole said:


> Maybe employers who apply for overseas migrants should have to guarantee their accommodation.
> 
> Or is that too Totalitarian ?



 and the government missing out on  controlling accommodation ??

 i grew up in an area  of 4 housing commission estates ( i would not wish that on anyone , not even a crappy landlord as punishment )

 but employers guaranteeing  accommodation  hints at the problems encountered by the fruit-pickers ( and the farmers )

 MAYBE we should just limit University and Tertiary college places  and have more young adults available for the work-force


----------



## Value Collector (24 August 2022)

SirRumpole said:


> Maybe but the problem is that their demand is immediate but their production is long term, in the meantime you still have people living in shipping containers.
> 
> The best solution is train local workers and use temporary migration visas (max 5 years) to fill in the gaps.



With birth rates dropping, and Australia’s population ageing, we need to have immigration.

It’s also not just building, we have an immediate demand for people in other industries such as the medical field, I don’t think we can tell Doris she has to wait until her 14 year nephew finishes his medical degree before she can have a hip replacement.


----------



## SirRumpole (24 August 2022)

Value Collector said:


> With birth rates dropping, and Australia’s population ageing, we need to have immigration.
> 
> It’s also not just building, we have an immediate demand for people in other industries such as the medical field, I don’t think we can tell Doris she has to wait until her 14 year nephew finishes his medical degree before she can have a hip replacement.




Birth rates are dropping because couples can't afford to have a house and children as well.

Make housing affordable again and the birth rate problem will be fixed.


----------



## qldfrog (24 August 2022)

SirRumpole said:


> Birth rates are dropping because couples can't afford to have a house and children as well.
> 
> Make housing affordable again and the birth rate problem will be fixed.



The only place where birth figures are not a problem are the places to avoid like hell, aboriginal communities, migrants slums like France, bangladesh and pakistan, Nigeria and generally Muslims hellholes


----------



## againsthegrain (24 August 2022)

qldfrog said:


> The only place where birth figures are not a problem are the places to avoid like hell, aboriginal communities, migrants slums like France, bangladesh and pakistan, Nigeria and generally Muslims hellholes



Makes you wonder how come they don't fix those places up if they are so skilled


----------



## sptrawler (24 August 2022)

SirRumpole said:


> Maybe employers who apply for overseas migrants should have to guarantee their accommodation.
> 
> Or is that too Totalitarian ?



The problem with that, as happened in mining towns, when fringe benefit taxes were introduced by Uncle Paul the house become a tax liability so they were sold off and FIFO started.
So the chances of employers organising accommodation, would be very low IMO.


----------



## Value Collector (24 August 2022)

divs4ever said:


> every chance a government facing an election ( or civil unrest ) will bring in price caps ( including on rents )
> 
> look at how many brought in rent or eviction moratoriums during the virus saga
> 
> that is very likely to happen again when politically expedient



The problem with price caps is that it suppresses production.

Higher prices promote more production, where as lower prices discourage new investment.

If prices are temporarily out of whack due to war, weather or something else I guess short term price caps can work if they are also accompanied with rationing.

However if the pricing is high due to genuine long term supply demand imbalances, capping the price will only make things worse.

Eg if there is a shortage of wheat, you want the wheat price to rise so farmers are encouraged to plant more wheat. You don’t want to cap the price of wheat, because then farmers have no incentive to plant additional acres especially if the cap price is below their break even.

Most of the time the cure for high prices is high prices.


----------



## Value Collector (24 August 2022)

SirRumpole said:


> Birth rates are dropping because couples can't afford to have a house and children as well.
> 
> Make housing affordable again and the birth rate problem will be fixed.



Women in general are deciding to have less kids regardless of their wealth, in fact the richer people generally have less children.

I could afford to have 30 kids housed in 10 houses, but I choose to have zero.


----------



## divs4ever (24 August 2022)

Value Collector said:


> The problem with price caps is that it suppresses production.
> 
> Higher prices promote more production, where as lower prices discourage new investment.



 but there is what is sensible ... and what is politically  expedient 

 in an era devoid  of statesmen  , you can only dream of what might have been 

 but  don't be surprised  if a politician  rants on about 'pent-up demand ' ( without explaining how that demand built up )


----------



## SirRumpole (24 August 2022)

divs4ever said:


> but there is what is sensible ... and what is politically  expedient
> 
> in an era devoid  of statesmen  , you can only dream of what might have been
> 
> but  don't be surprised  if a politician  rants on about 'pent-up demand ' ( without explaining how that demand built up )




Indeed so. No politician is going to tell homeowners that the value of their properties have to fall to give others a chance to get into the market, so the prices are kept artificially high.


----------



## divs4ever (24 August 2022)

Value Collector said:


> Women in general are deciding to have less kids regardless of their wealth, in fact the richer people generally have less children.
> 
> I could afford to have 30 kids housed in 10 houses, but I choose to have zero.



 that depends on your choice of the first wife  , some are very adept at redistributing the wealth 

 but enjoy your retirement  it sounds like it will be fully-funded   , when you decide to take the 'big holiday '


----------



## wayneL (24 August 2022)

Value Collector said:


> The problem with price caps is that it suppresses production.
> 
> Higher prices promote more production, where as lower prices discourage new investment.
> 
> ...




On the one hand you are applying pure Austrian economic theory to house prices. This I can agree with and agree with all the points you made there.

However I would add one pretty major caveat in that you are applying said theory to a highly manipulated and regulated market.

This introduces massive artefact to price outcome.

I don't claim to know the answer, but I do observe that the property market is FUBAR with or commentator speaking from a position of extreme bias, according to their financial position in the market (no criticism there, it is a normal human trait).

Vis a vis, if high prices are the solution to high prices, then our property market would have self corrected a long time ago. It didn't, it progressed into a point of absolute insanity, as measured on a historical real basis.


----------



## Value Collector (24 August 2022)

divs4ever said:


> that depends on your choice of the first wife  , some are very adept at redistributing the wealth
> 
> but enjoy your retirement  it sounds like it will be fully-funded   , when you decide to take the 'big holiday '



I am already “retired” from having a job, I quit full time work when I was 36, now my only “work” is investing, and I try to holiday as often as possible, don’t really want to be held down by kids.


----------



## Value Collector (24 August 2022)

wayneL said:


> On the one hand you are applying pure Austrian economic theory to house prices. This I can agree with and agree with all the points you made there.
> 
> However I would add one pretty major caveat in that you are applying said theory to a highly manipulated and regulated market.
> 
> ...



If you go back to the list of 5 costs I posted, some of them can not self correct easily, for example land prices, unless people are willing to move to areas where land is cheaper, and councils allow this cheaper land to be subdivided.

But, the others will self correct to an extent and fluctuate with supply and demand.

It’s hard to know what the exact base level price of housing would be in Australia, but as I said it’s the sum of those 5 main costs I listed.

It’s not really correct to compare different countries prices and decide one is cheap and one is expensive, because they all have different taxes and circumstances, for example if housing is subject to large annual property taxes like in parts of the USA, then it’s purchase price will be artificially suppressed, and look cheap compared to a country like Australia almost no property taxes.


----------



## SirRumpole (24 August 2022)

Value Collector said:


> Actually the majority are skilled.
> 
> When you say “some nations” it sounds like you want to base immigration on race.



Well, let's face I t, some countries award an Engineering Degree at about the same level as a Higher School Certificate here. Do we want them building our houses and bridges ?


----------



## Dona Ferentes (24 August 2022)

another one bites the dust. I feel sorry for those hitched to the narrative, and now trapped and losing out!! Plus the subbies, of course.
Oracle Homes goes into liquidation owing $14m and leaving 300 homes incomplete​








						Oracle Homes collapses, leaving hundreds of homes incomplete and scores out of work
					

A building watchdog says it is a "very sorry day" for those affected by the company's announcement, including about 300 home owners and 70 employees.




					www.abc.net.au


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## divs4ever (24 August 2022)

Value Collector said:


> I am already “retired” from having a job, I quit full time work when I was 36, now my only “work” is investing, and I try to holiday as often as possible, don’t really want to be held down by kids.



 good for you  !!

 enjoy  !!


----------



## Macquack (24 August 2022)

Value Collector said:


> Women in general are deciding to have less kids regardless of their wealth, *in fact the richer people generally have less children*.



That is "generally" why they are richer.


----------



## Value Collector (24 August 2022)

SirRumpole said:


> Well, let's face I t, some countries award an Engineering Degree at about the same level as a Higher School Certificate here. Do we want them building our houses and bridges ?



That’s why we have skills assessing authorities for each of the skill sets we are accepting, also we have a big foreign student industry here, so some of these “immigrants” have literally studied at Australian schools past their course and shortly after applied for citizenship. 






						Assessing authorities
					

A list of all current assessing authorities and their contact details. Applicants must contact these assessing authorities to obtain valid skills assessment.




					immi.homeaffairs.gov.au


----------



## Value Collector (24 August 2022)

Macquack said:


> That is "generally" why they are richer.



Actually it’s not just that they are richer because they have less kids, basically it comes down to education and income generation, the higher the level of education women receive the less kids they have on average, they also tend to delay having children longer when they are earning higher incomes, which leads to them having less children.

You can see this play out by the breeders in the welfare class having many more kids on average than the middle class. 

—————————
I would not be surprised if birth rates of western females continue to plummet, It could just be my wife’s tik tok algorithm, but it seems like the younger generation are really open to the idea of having no kids.

Probably about 10% of my wifes tik tok feed seems to be videos from women in their 30’s listing reasons either why they don’t want kids, regret having kids or wish society was more open about how terrible the whole process is.


----------



## againsthegrain (24 August 2022)

Value Collector said:


> Actually it’s not just that they are richer because they have less kids, basically it comes down to education and income generation, the higher the level of education women receive the less kids they have on average, they also tend to delay having children longer when they are earning higher incomes, which leads to them having less children.
> 
> You can see this play out by the breeders in the welfare class having many more kids on average than the middle class.
> 
> ...



There is going to be alot of angry 50 yo women high on menopause in 20 or so years saying how tick tock and men in general ruined their lives 😂


----------



## moXJO (24 August 2022)

againsthegrain said:


> There is going to be alot of angry 50 yo women high on menopause in 20 or so years saying how tick tock and men in general ruined their lives 😂



I've already started a kitten farm in anticipation of future growth.


----------



## qldfrog (24 August 2022)

SirRumpole said:


> Well, let's face I t, some countries award an Engineering Degree at about the same level as a Higher School Certificate here. Do we want them building our houses and bridges ?



Yes had the same feeling when i arrived here🤣


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## moXJO (24 August 2022)

The argument seems to keep coming back to "cheap workers". The problem is still the same, because the problem is: expensive housing where cheap workers are needed.

That has its own problems like public transport neglect. Mass immigration is a very lazy option.


----------



## Dona Ferentes (24 August 2022)

againsthegrain said:


> There is going to be alot of angry 50 yo women high on menopause in 20 or so years saying how tick tok and men in general ruined their lives 😂



they've socialised themselves into that nonsense. But hey, declining birthrates, fecundity vs fertility, have been around for quite a while.


----------



## Value Collector (24 August 2022)

againsthegrain said:


> There is going to be alot of angry 50 yo women high on menopause in 20 or so years saying how tick tock and men in general ruined their lives 😂



Or a lot of free and empowered 50 year old women living their best lives.


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## SirRumpole (24 August 2022)

Value Collector said:


> Or a lot of free and empowered 50 year old women living their best lives.



I don't know about t 'a lot. The maternal instinct is still pretty strong. Probably quite a  few of these women object to men rather than kids.


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## Value Collector (25 August 2022)

SirRumpole said:


> I don't know about t 'a lot. The maternal instinct is still pretty strong. Probably quite a  few of these women object to men rather than kids.



No, the ones I am talking about on my wife’s TikTok feed are definitely objecting to the having kids mainly because either

1, they don’t want to destroy their bodies.
2, they don’t want to go through the pain of child birth.
3, they just don’t want to be tied down with kids.

These aren’t crazy stereotype anti man feminists, they are rational young women going about their business planning out their lives, and a growing number coming to the realisation that they have a choice, and are choosing less or no kids.

I seriously think the days of expecting western women to continue delivering 3 kids each is over, so will but the majority are going to have 2 or less and a growing number aren’t going to be having any.


----------



## Smurf1976 (25 August 2022)

Dona Ferentes said:


> another one bites the dust.



Just an observation but a series of business collapses big enough to be newsworthy is one of the hallmarks of impending recession.

Others are rising interest rates, rising consumer prices especially energy, a widespread political focus on social and other non-economic matters and a media narrative that foresees ongoing low unemployment.

All are now clearly in place.


----------



## SirRumpole (25 August 2022)

Value Collector said:


> No, the ones I am talking about on my wife’s TikTok feed are definitely objecting to the having kids mainly because either
> 
> 1, they don’t want to destroy their bodies.
> 2, they don’t want to go through the pain of child birth.
> ...




So your answer is to import a lot of women from less developed countries who don't have the independence that our women have to be the breeders ?


----------



## SirRumpole (25 August 2022)

Smurf1976 said:


> Just an observation but a series of business collapses big enough to be newsworthy is one of the hallmarks of impending recession.
> 
> Others are rising interest rates, rising consumer prices especially energy, a widespread political focus on social and other non-economic matters and a media narrative that foresees ongoing low unemployment.
> 
> All are now clearly in place.



Another reason not to import large numbers of people to go onto the welfare queues.


----------



## againsthegrain (25 August 2022)

SirRumpole said:


> So your answer is to import a lot of women from less developed countries who don't have the independence that our women have to be the breeders ?



They will start watching tick tock too


----------



## againsthegrain (25 August 2022)

Back to property thread, proposal to freeze rents for 24 months.. that won't help prices at all but would they actually implement this? 



			https://www.news.com.au/national/politics/proposal-to-freeze-out-of-control-rents-put-forward-ahead-of-jobs-and-skills-summit/news-story/7db7bacfe4a6c2322c7aa312d6349eea


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## Value Collector (25 August 2022)

SirRumpole said:


> So your answer is to import a lot of women from less developed countries who don't have the independence that our women have to be the breeders ?



No, My answer is to Allow immigration of Men, Women and children from any country not just under developed ones.

There will still be lots of Australian women having children, it just won’t be enough to maintain our population, so it makes sense to allow people from more crowded countries to come here and live the good life.


----------



## SirRumpole (25 August 2022)

Value Collector said:


> No, My answer is to Allow immigration of Men, Women and children from any country.
> 
> There will still be lots of Australian women having children, it just won’t be enough to maintain our population, so it makes sense to allow people from more crowded countries to come here and live the good life.





What good life ?

Unaffordable housing, unaffordable power prices, unaffordable medicines, unaffordable groceries etc etc.

Fix those first then let more people in if necessary.


----------



## wayneL (25 August 2022)

Value Collector said:


> No, My answer is to Allow immigration of Men, Women and children from any country.
> 
> There will still be lots of Australian women having children, it just won’t be enough to maintain our population, so it makes sense to allow people from more crowded countries to come here and live the good life.



@qldfrog do wanna tell him, or should I?


----------



## Value Collector (25 August 2022)

wayneL said:


> @qldfrog do wanna tell him, or should I?



It would be better for you tell me because The frog has blocked me, so I don’t get to see his ramblings.


----------



## gartley (25 August 2022)

Smurf1976 said:


> Just an observation but a series of business collapses big enough to be newsworthy is one of the hallmarks of impending recession.
> 
> Others are rising interest rates, rising consumer prices especially energy, a widespread political focus on social and other non-economic matters and a media narrative that foresees ongoing low unemployment.
> 
> All are now clearly in place.



Yep flow on effects will build and who knows how many other business's will collapse.
Media narrative about low unemployment is a good signal low unemployment has reached an extreme and this will change dramatically imo moving forward.


----------



## Value Collector (25 August 2022)

SirRumpole said:


> What good life ?
> 
> Unaffordable housing, unaffordable power prices, unaffordable medicines, unaffordable groceries etc etc.
> 
> Fix those first then let more people in if necessary.



I guess you haven’t travelled that much?

Unaffordable medicines? Even our American friends have more trouble accessing medicine and affordable health care than us, we have it pretty good.

As for the other things, you mentioned they are much cheaper here than other countries.

How much groceries can you buy with 1 day labour in Bangladesh vs 1 day labour here? What sort of house can you rent in Bangladesh with a week wages vs here?


----------



## SirRumpole (25 August 2022)

Value Collector said:


> I guess you haven’t travelled that much?
> 
> Unaffordable medicines? Even our American friends have more trouble accessing medicine and affordable health care than us, we have it pretty good.
> 
> ...




While you and I may be comfortably off , the same doesn't apply to large areas of the country.

Talking about travel, maybe your should get out more in this country instead of taking trips to Disneyland. 

Comparing us with Third World countries is not particularly valid. Did you ever ask yourself why they are so poor with the high level of population they have ? If population was the answer , India and Bangladesh would be among the richest countries in the world.

Proper wealth distribution is one of the answers to a successful economy and a high standard of living. Until that is achieved packing the country with more people is just a road to ruin.


----------



## wayneL (25 August 2022)

SirRumpole said:


> While you and I may be comfortably off , the same doesn't apply to large areas of the country.
> 
> Talking about travel, maybe your should get out more in this country instead of taking trips to Disneyland.
> 
> ...



And we can look to European countries for examples, @Value Collector

1/*High* immigration creates ethnic and cultural ghettos which do not serve the immigrants themselves.

2/It can also negatively affect/displace the local population in terms of culture and crime

3/It creates a brain drain from their own countries and inhibits the development of a "good life" there. It is stealing the benefits of their education system.

Immigration can be beneficial if judiciously applied, we have seen that, but mass immigration can do more harm than good. That is the lesson from both Europe and North America.


----------



## againsthegrain (25 August 2022)

Value Collector said:


> I guess you haven’t travelled that much?
> 
> Unaffordable medicines? Even our American friends have more trouble accessing medicine and affordable health care than us, we have it pretty good.
> 
> ...



Australia is 250~ years old,  look what we have built and how far we have got in those 250 years vs how old and how far Bangladesh got. 

There is many reasons why one works well and the other one doesn't,  simply distributing the population from A to C will not fix the problem, it will rather bring us closer to B. 

If you really want to help and improve the 3rd world invest in their infrastructure and education back there.  After all they have alot of skilled and educated workers there which can improve their life standard as well


----------



## Value Collector (25 August 2022)

SirRumpole said:


> While you and I may be comfortably off , the same doesn't apply to large areas of the country.
> 
> Talking about travel, maybe your should get out more in this country instead of taking trips to Disneyland.
> 
> ...



I don’t think the USA is a third world country, and let me tell you If I had to be poor, I would rather be poor in Australia than poor in the USA.

Australia has it very good, other wise immigrants wouldn’t want to come here in the first place, that’s the ultimate test.


----------



## Value Collector (25 August 2022)

againsthegrain said:


> Australia is 250~ years old,  look what we have built and how far we have got in those 250 years vs how old and how far Bangladesh got.
> 
> There is many reasons why one works well and the other one doesn't,  simply distributing the population from A to C will not fix the problem, it will rather bring us closer to B.
> 
> If you really want to help and improve the 3rd world invest in their infrastructure and education back there.  After all they have alot of skilled and educated workers there which can improve their life standard as well



And we have relied on immigrants for that whole 250 year period.


----------



## Value Collector (25 August 2022)

wayneL said:


> And we can look to European countries for examples, @Value Collector
> 
> 1/*High* immigration creates ethnic and cultural ghettos which do not serve the immigrants themselves.
> 
> ...



Stealing the benefits of their education system???

Australia punches well above its weight when it comes to training international students, I think the Net effect is not a brain drain, we are priming the brain pump.


----------



## SirRumpole (25 August 2022)

Value Collector said:


> I don’t think the USA is a third world country, and let me tell you If I had to be poor, I would rather be poor in Australia than poor in the USA.
> 
> Australia has it very good, other wise immigrants wouldn’t want to come here in the first place, that’s the ultimate test.




Yes, people do want to come here to take advantage of our welfare system.

So poor people are coming here when we need people like Musk instead.

So what are we going to do to attract entrepreneurs ? The brain drain has been from Australia to the US and bringing in relatively uneducated people who are a drain on resources is not going to fix that.


----------



## againsthegrain (25 August 2022)

Value Collector said:


> And we have relied on immigrants for that whole 250 year period.



Nobody is denying that, I never said immigration is bad and we need to stop it. 

The key difference between what we are saying is the numbers, quality and mindset of who we chose to bring. If you truly believe the current proposed numbers and that indeed majority are honestly skilled that is ok, but I disagree and it is a major friction point today. 

It has all been said before and will be said after anyway,  some believe the government truly wants to help and fix things and some believe the government wants to help themselves


----------



## Value Collector (25 August 2022)

againsthegrain said:


> Nobody is denying that, I never said immigration is bad and we need to stop it.
> 
> The key difference between what we are saying is the numbers, quality and mindset of who we chose to bring. If you truly believe the current proposed numbers and that indeed majority are honestly skilled that is ok, but I disagree and it is a major friction point today.
> 
> It has all been said before and will be said after anyway,  some believe the government truly wants to help and fix things and some believe the government wants to help themselves



If you spend a bit of time reading through the offical government website on it, it clearly says that the majority are skilled, and as I linked above there is assessment boards that decide the qualifications and which industries are favoured.

If you remember the government tried the “Baby Bonus” in the last to boost birth rates, I don’t think it had any real effect because as I have said there is a large structural shift in the way women want to live and how many children they want (which is good).

We can accept a shrinking and aging population if we want, but I doubt we will be able to provide the number of workers needed, and would probably need to resort to larger immigration rates in the future if we delay the process.


----------



## Value Collector (25 August 2022)

SirRumpole said:


> Yes, people do want to come here to take advantage of our welfare system.
> 
> So poor people are coming here when we need people like Musk instead.
> 
> So what are we going to do to attract entrepreneurs ? The brain drain has been from Australia to the US and bringing in relatively uneducated people who are a drain on resources is not going to fix that.



I don’t think that is true at all, I think the vast majority of immigrants end up have productive Working lives, every where I look I see hard working immigrants.

I actually think they are less likely to be on welfare than the average Aussie, my Dad has been in Australia since 1980 and wasn’t on welfare a day in his life, he retired in 2020 self funded not on the pension. 

Just yesterday I had two immigrants from New Zealand plastering a house I am renovating, I bought sushi today from a new sushi opened by a lady I can tell is an immigrant, a bed and breakfast I stayed at on the week end had a Mouri bloke from Hawkes bay NZ working around the property, as I said I see immigrants working everywhere.


----------



## Value Collector (25 August 2022)

wayneL said:


> @qldfrog do wanna tell him, or should I?



Hang on! Isn’t the Qldfrog an immigrant himself???

Maybe we should hear from him about why he shouldn’t have been allowed in hahahaha


----------



## SirRumpole (25 August 2022)

Value Collector said:


> I don’t think that is true at all, I think the vast majority of immigrants end up have productive Working lives, every where I look I see hard working immigrants.




Do you think your sample is statistically valid ?

This may give a better statement of the facts. 

Unemployment rate​While the overall unemployment rate was higher for recent migrants and temporary residents than for people born in Australia (5.9% vs 4.7%), it varied across the different migrant groups:

3.3% for migrants with Australian citizenship
4.8% for temporary residents
9.2% for migrants on a permanent visa (Table 2 and Graph 1)

Female recent migrants and temporary residents had a higher unemployment rate than males (8.3% vs 3.9%). (Table 3)


----------



## Value Collector (25 August 2022)

SirRumpole said:


> Do you think your sample is statistically valid ?
> 
> This may give a better statement of the facts.
> 
> ...



Does the “recent migrant” number include refugees and other humanitarian reasons for migration, because it’s understandable that the number could be inflated by that group who rightly take more time to adjust.

However the discussion is about skilled migrants.

Also, if we bring in a surgeon that ends up paying $100k a year in tax, that would more than off set a family off refugees that cost $50k a year for 3 years while they adjust.

From the link

Key messages
The literature review found that while there may be short-term costs as refugees are resettled and adjust to their new surroundings, after successful integration they make permanent cultural, social and economic contributions.
• Humanitarian entrants are often entrepreneurial as they establish themselves in a new environment – in the year 2000, five of Australia’s eight billionaires were people whose families had originally come to the country as refugees.
• Their impact has been positive in regional and rural Australia through providing labour and stimulating economic growth and service delivery.
• Available sources point to above average rates of success in education and employment for children of Humanitarian entrants.
• Informal volunteering plays an important role in building social capital, and volunteers from ethnic communities provide the greater part of their services to benefit society as a whole rather than their own ethnic group.



> https://immi.homeaffairs.gov.au/settlement-services-subsite/files/economic-civic-social-contributions-refugees-humanitarian-entrants-literature-review_access.pdf


----------



## SirRumpole (25 August 2022)

Value Collector said:


> However the discussion is about skilled migrants.




I have no objection to skilled migrants where they are needed and it's proved that their qualifications are equivalent to our standards.

Unskilled migrants I'm not so sure about. OK to import some for fruit picking etc, but out of season they should go home.


----------



## qldfrog (25 August 2022)

wayneL said:


> 3/It creates a brain drain from their own countries and inhibits the development of a "good life" there. It is stealing the benefits of their education system.



And to add to 3, extra migrant create a braindrain as native skilled move out.France a case in point with nowadays a massive outflow of 5y+ uni kids while massive influx of illiterate migrants.
The frog would not be here had France started its immigration suicide in the 1980.
VC might object as i did not exactly favour his ethics, but i brought massive wealth here, no education health cost, massive taxes and all jobs i had were bringing USD back in australia.
Gor that to work, you need to attract the right people: good life and that means vontrolled migration,low crime, good education and housing, reward for effort aka low taxes otherwise why bother.the attitude of the gov preventing migrants to travel OUT has created unprecedented damage to the image of Australia in expats and really skilled migrants.i would not recommend anyone of any value migrate here anymore.
But for loosers, it is a land of bounties with a very naive attitude that can be leveraged to the max in welfare, racism cries and colour skin plays


----------



## wayneL (25 August 2022)

Value Collector said:


> Hang on! Isn’t the Qldfrog an immigrant himself???
> 
> Maybe we should hear from him about why he shouldn’t have been allowed in hahahaha



I'm an immigrant too, as is my wife.

I think you must have missed the numerous times above where the point was made that immigration in itself is not a bad thing.

Debate is not productive when you intentionally miss the point, bro.


----------



## Value Collector (25 August 2022)

SirRumpole said:


> I have no objection to skilled migrants where they are needed and it's proved that their qualifications are equivalent to our standards.
> 
> Unskilled migrants I'm not so sure about. OK to import some for fruit picking etc, but out of season they should go home.



Unskilled migrants make up the smaller part of the total number, and are limited to 

1, Humanitarian reason eg refugees
2, Family of citizens
3, Investors


----------



## Value Collector (25 August 2022)

wayneL said:


> Debate is not productive when you intentionally miss the point, bro.



Well I am talking about bringing in skilled migrants, and you bring up crime rates etc. So I am not sure I am the one missing the point.


----------



## SirRumpole (25 August 2022)

Value Collector said:


> Unskilled migrants make up the smaller part of the total number, and are limited to
> 
> 1, Humanitarian reason eg refugees
> 2, Family of citizens
> 3, Investors



Well, number 2 is a problem.

It seems an open ended scheme to me. They should have to stand on their own merits, not be let in because they have family here.


----------



## Value Collector (25 August 2022)

SirRumpole said:


> Well, number 2 is a problem.
> 
> It seems an open ended scheme to me. They should have to stand on their own merits, not be let in because they have family here.



as I said it still makes up a smaller part of the total, only 60,000 entries per year and is subject to limitations, and long processes, preferences is given to Partners, Dependent children and dependent parents, other non dependent family members can apply under the family sponsored program such as siblings, aunts and uncles etc, but they may have to show that they have a skill and can only apply for permanent status after 5 years, in the meantime the family have to sponsor them.

My neighbors were a husband and wife that were both dentists from Hong Kong, they worked here for about 7 years before they had a baby, when the baby was born they applied to bring the husbands mother over from china to help care for the baby while they worked as dentists, I see nothing wrong with that.

I am only learning about all this stuff today, but I am actually surprised about all the rules and regs and how thorough the program seems to be.






						Family Sponsorship
					

Bring your family to Australia. Australian citizens, permanent residents and eligible New Zealanders may sponsor family members to join them Australia.



					www.immigrationdirect.com.au


----------



## InsvestoBoy (25 August 2022)

Value Collector said:


> I am actually surprised about all the rules and regs and how thorough the program seems to be.



Obvious that none of the goobers commenting about how immigration should work have even the remotest clue how it currently works, par for the course of course.


----------



## SirRumpole (25 August 2022)

InsvestoBoy said:


> Obvious that none of the goobers commenting about how immigration should work have even the remotest clue how it currently works, par for the course of course.




So, let us have the fruits of your wisdom.


----------



## qldfrog (25 August 2022)

InsvestoBoy said:


> Obvious that none of the goobers commenting about how immigration should work have even the remotest clue how it currently works, par for the course of course.



Sure with 2 of us involved at the least migrants themselves,sure you know better🥴


----------



## wayneL (25 August 2022)

qldfrog said:


> Sure with 2 of us involved at the least migrants themselves,sure you know better🥴



@InsvestoBoy, being the **suppository of all knowledge, surely knows better than all of us goobers.***

Notes:
** Malapropism both intentional and fitting

*** Sarcasm.


----------



## SirRumpole (25 August 2022)

wayneL said:


> @InsvestoBoy, being the **suppository of all knowledge, surely knows better than all of us goobers.***
> 
> Notes:
> ** Malapropism both intentional and fitting
> ...




Maybe he does, but he doesn't appear keen to share.


----------



## qldfrog (25 August 2022)

So a migrant in Paris is playing 550 euros a month for his appartement 
A magestic 4sqr meter ..no typo..in Paris...
Bloody winging aussies
Bring more migrants say Labor 😭😭😭
The source https://immobilier.lefigaro.fr/arti...mineuse_95c01ad2-2387-11ed-8c87-3773a1c1bbba/

Can not wait to see more migrants rapes and beheadings daily on the news and great 4sqr meters studios for rent


----------



## Macquack (2 September 2022)

Value Collector said:


> I actually think they are less likely to be on welfare than the average Aussie, my Dad has been in Australia since 1980 and wasn’t on welfare a day in his life, he retired in 2020 self funded not on the pension.



Does that mean your father retired after you retired?

That is an example of the lucky country, right there!


----------



## Value Collector (2 September 2022)

Macquack said:


> Does that mean your father retired after you retired?
> 
> That is an example of the lucky country, right there!



Yep, my mum beat me by a year though.

My dad was semi retired for a few years before he stopped completely though, he had reduced his work load down to part just working for his two favourite clients.


----------



## sptrawler (6 September 2022)

The last thing you need in a downturn, your council finding reasons not to buy.  









						Sydney home owners fear premium hikes, hit to property values after shock flood rating
					

Thousands of residents were blindsided by an official notification from their council warning their properties were at risk of flooding.




					www.smh.com.au
				




Thousands of eastern Sydney home owners fear higher insurance premiums and lower property values after they were blindsided by a formal notification that their properties are at increased risk of flooding.

The backlash to a flood study conducted chiefly by Waverley Council will have implications for councils throughout NSW, who have primary responsibility for managing floodplain development under the state’s flood-prone land policy.


----------



## againsthegrain (6 September 2022)

sptrawler said:


> The last thing you need in a downturn, your council finding reasons not to buy.
> 
> 
> 
> ...



Multimillion dollar Sydney beach view properties, im sure its just chump change to them, they will be right


----------



## qldfrog (22 September 2022)

Our own stalin wannabe is at it again, frustrated at having been beaten to the best dictator on the blick by Victoria and even losing 2nd place to Western Australia shaking boots, she decided to act against cockroaches:
https://www.afr.com/policy/economy/queensland-s-land-tax-dog-whistle-20220724-p5b458
Free currently but google search for affiliated sites if it get blocked.
This will ensure absence of rentals for many more :dumb, or just dumber?


----------



## moXJO (22 September 2022)

qldfrog said:


> Free currently but google search for affiliated sites if it get blocked.



Just stop the page loading before the wall goes up. If on phone just hit the x before page is halfway loaded


----------



## againsthegrain (22 September 2022)

moXJO said:


> Just stop the page loading before the wall goes up. If on phone just hit the x before page is halfway loaded



or use a free proxy redirector web page
e.g  https://www.croxyproxy.com/
https://hide.me/en/proxy


----------



## Cam019 (24 September 2022)

qldfrog said:


> Free currently but google search for affiliated sites if it get blocked.



Additionally you can you use 12ft.io



			https://12ft.io/https://www.afr.com/policy/economy/queensland-s-land-tax-dog-whistle-20220724-p5b458


----------



## lindsayf (26 September 2022)

A friend of mine in a rather good financial position wants to buy a house and pay for it with forward payments from loans on her 2 other properties and then sell one of these to fund the new one.  It is in a regional centre where prices are currently holding up ok.  This will mean carrying about 700k debt between settlement dates..starting next week.  I have  suggested that it is a risky proposition going into  ( for her) huge debt at a time when there is a risk of credit tightening, property prices falling and that I would not do it like this.  Not to mention that cash could be very handy to have to buy into lower shares or indexes over the next say 6 months.  Any thoughts on this from a regional Vic context?


----------



## lindsayf (26 September 2022)

lindsayf said:


> A friend of mine in a rather good financial position wants to buy a house and pay for it with forward payments from loans on her 2 other properties and then sell one of these to fund the new one.  It is in a regional centre where prices are currently holding up ok.  This will mean carrying about 700k debt between settlement dates..starting next week.  I have  suggested that it is a risky proposition going into  ( for her) huge debt at a time when there is a risk of credit tightening, property prices falling and that I would not do it like this.  Not to mention that cash could be very handy to have to buy into lower shares or indexes over the next say 6 months.  Any thoughts on this from a regional Vic context?



This should probably be in the Property Prices thread ..apologies...please move it if appropriate.


----------



## gartley (26 September 2022)

Interesting times in the credit markets. The 2 year yield putting the finishing touches on this first leg 16/6/2021 all time low.  Currently tracing out subwave blue 3 within red wave 5. This might top out before xmas in which case we will have falling rates for most of next year retracing and correcting somewhere between 0.50 to 0.618 of the entire move.  The real problems will start after that pullback finishes.


----------



## SirRumpole (4 October 2022)

Brisbane Council to increase rates for airBnB landlords to ease rental crisis.

Just when people think they have a good thing going, governments put the boot in.









						Brisbane to charge Airbnb hosts higher council rates to tackle housing availability
					

Landlords who rent out their entire property for longer than 60 days a year will pay 50% more in rates from July




					www.theguardian.com


----------



## qldfrog (4 October 2022)

SirRumpole said:


> Brisbane Council to increase rates for airBnB landlords to ease rental crisis.
> 
> Just when people think they have a good thing going, governments put the boot in.
> 
> ...



and asking for the good aussie spirit:
Never such a better leftist than a dobber








						Brisbane residents urged to dob in a short-stay property as council rolls out rates hike
					

Owners of homes used for short-term accommodation in Brisbane are being urged to register themselves for a 50 per cent rates hike, or be prepared for a neighbour to do it.




					www.abc.net.au


----------



## SirRumpole (4 October 2022)

qldfrog said:


> and asking for the good aussie spirit:
> Never such a better leftist than a dobber
> 
> 
> ...




The good old Aussie spirit would be to go to your neighbour the landlord first and demand a cut of the profits before you dob them in.


----------



## SirRumpole (25 October 2022)

'Huge' falls in Sydney and Melbourne property prices.









						Over $100,000 wiped from Sydney property prices as rates bite
					

Property prices are plunging fast as rising interest rates push down property prices, leaving the market mired in uncertainty.




					thenewdaily.com.au


----------



## moXJO (26 October 2022)

SirRumpole said:


> 'Huge' falls in Sydney and Melbourne property prices.
> 
> 
> 
> ...



I'm seeing $300+k that's been wiped since the peak.


----------



## basilio (2 November 2022)

Two bobs worth to this conversation.
My brother was  talking to a Real Estate agent in Brunswick on the weekend.
Apparently  the agent  has 8  mortagee sales on his books. The pips are being squeezed.


----------



## againsthegrain (2 November 2022)

basilio said:


> Two bobs worth to this conversation.
> My brother was  talking to a Real Estate agent in Brunswick on the weekend.
> Apparently  the agent  has 8  mortagee sales on his books. The pips are being squeezed.



I was randomly looking at house prices on re website in my area and came accords 1 mortgagee auction,  never saw one by chance before


----------



## Sdajii (2 November 2022)

Did someone say two bobs?


----------



## SirRumpole (2 November 2022)

basilio said:


> Two bobs worth to this conversation.
> My brother was  talking to a Real Estate agent in Brunswick on the weekend.
> Apparently  the agent  has 8  mortagee sales on his books. The pips are being squeezed.




It's a sad fact  and a consequence of past policies that have pushed prices up to the un-affordable level.


----------



## Belli (2 November 2022)

SirRumpole said:


> It's a sad fact  and a consequence of past policies that have pushed prices up to the un-affordable level.




Have been hearing on the grapevine two things.

First, there has been an increase in applications for personal loans mainly from property investors and, second, same with credit card applications overall.

Hey people, you're already swimming in debt so let's go even further into the deep end.

Debt can be a good servant but a very bad master.

To me, it's bizarre based on a FOMO to get a $1.5m PPOR on 10% deposit with IO.  Doing that I feel you're already on the losing end with the slightest increase in mortgage rates which would have likely applied once the IO period finishes.  However, we had an aversion to debt at that level.  We purchased an el cheapo in the crappier end of town.  I have to acknowledge though it was different times and houses were not as expensive relative to wages unlike now.


----------



## basilio (2 November 2022)

againsthegrain said:


> I was randomly looking at house prices on re website in my area and came accords 1 mortgagee auction,  never saw one by chance before




Frankly mortgagee actions are not shouted from the rooftops. I suspect these were more liked "forced sales" without the bank actually taking over the loans.  Looks better for all concerned.

-----------------------------------------------------------------------------------------------------------------------------------

Having said that I did come across this website in my research. You have to wonder what sort of dropkicks can't spell or  bother to spellcheck.





						Find Mortgagee Properties for Sale | Mortgagee Auction Listings
					

Mortgagee sale & auctions can help you save big $$$. REDA's search presents filtered listings for mortgagee properties for sale. Sign up for 30 day free trial.



					www.realestatedealsaustralia.com.au


----------



## wayneL (2 November 2022)

basilio said:


> You have to wonder what sort of dropkicks can't spell or  bother to spellcheck.



Your average journalist and apparently, their editors.

Especially "The Grauniad". (Sorry couldn't resist  )


----------



## basilio (3 November 2022)

wayneL said:


> Your average journalist and apparently, their editors.
> 
> Especially "The Grauniad". (Sorry couldn't resist  )



Random drive by  troll shots.  Well done Wayney. You go boyo


----------



## sptrawler (8 November 2022)

You know the juornos are hurting when these articles are posted.




__





						How long after missing a mortgage payment does a home get repossessed? A financial counsellor says it doesn't have to come to that  - ABC News
					






					amp.abc.net.au


----------



## divs4ever (8 November 2022)

sptrawler said:


> You know the juornos are hurting when these articles are posted.
> 
> 
> 
> ...



liable to get a lot worse , depending on your job security ,

 and yes Journos are one group that change companies and/or locations

 but maybe ABC journos still think they have a 'job-for-life '  , and have bought a home ( via a mortgage )


----------



## sptrawler (8 November 2022)

Mate I'm in Sydney today in the pub and talking to some tradies, they're worried they are 50 years old and renting, I asked how much rent they paid $250/ wk.
That is unsustainable IMO and Im talking about a pub up the top end of George St near the station.
If they are the normal tradies, Sydney is in for a hell of a shock IMO.


----------



## againsthegrain (8 November 2022)

sptrawler said:


> Mate I'm in Sydney today in the pub and talking to some tradies, they're worried they are 50 years old and renting, I asked how much rent they paid $250/ wk.
> That is unsustainable IMO and Im talking about a pub up the top end of George St near the station.
> If they are the normal tradies, Sydney is in for a hell of a shock IMO.



250 per week?  are they renting just a room?


----------



## sptrawler (8 November 2022)

Yep, I cant see how it will work out, they were on construction at $50/hr and they were Australian.
So how that is going to work out,  I certainly dont know.


----------



## qldfrog (8 November 2022)

againsthegrain said:


> 250 per week?  are they renting just a room?



you do not get a room for that price here in the sunny coast..think about this with basic rule-> 250$ a week for a 250k asset value..in Sydney...So yes a room shared in a small 2 or 3 bedroom flat...


----------



## sptrawler (8 November 2022)

qldfrog said:


> you do not get a room for that price here in the sunny coast..think about this with basic rule-> 250$ a week for a 250k asset value..in Sydney...So yes a room shared in a small 2 or 3 bedroom flat...



Like I said, I dont know how this is going to work out, you have some people thinking that things will return to how they were, where a normal wage earner can get a house.
I dont think that will happen on the East Coast.
Way too much overseas money and people coming in to support the prices IMO.
Just wish I wasnt as conservative 15 years ago. Lol


----------



## rcw1 (8 November 2022)

sptrawler said:


> Like I said, I dont know how this is going to work out, you have some people thinking that things will return to how they were, where a normal wage earner can get a house.
> I dont think that will happen on the East Coast.
> Way too much overseas money and people coming in to support the prices IMO.
> Just wish I wasnt as conservative 15 years ago. Lol



Hi sptrawler,
Yes difficult it is, but we got through it.  Just helped out a grandson today, wants to get a loan for his first house, he is married...  Went around home, a carton of beer in the fridge and packet smokes on the table x 2.  Said, sunshine lolly pops, that nice but you want coin in the bank, you need to stop with the cigarettes, beer well ... as you do...   But save yourself a small fortune on them $50 packet of cancer sticks....

Wonder if them blokes you run into at the pub had a durry in their gobs... ? 

Have a very nice night.

Kind regards
rcw1


----------



## moXJO (8 November 2022)

sptrawler said:


> Mate I'm in Sydney today in the pub and talking to some tradies, they're worried they are 50 years old and renting, I asked how much rent they paid $250/ wk.
> That is unsustainable IMO and Im talking about a pub up the top end of George St near the station.
> If they are the normal tradies, Sydney is in for a hell of a shock IMO.



This is the story of a lot of tradies. Generally divorce wipes them out and they will give the wife and kids the house and walk. 
Then rent a room in a share house near the city and away you go. Cheap eating out and plenty to do.


----------



## sptrawler (21 November 2022)

A few interesting facts about the property market.








						Federal MPs have snouts planted in property trough
					

The biggest beneficiaries of the 20-year boom in Australian property values are clearly Australia’s federal MPs, with new analysis from News Corp showing that the share of federal MPs with three or more properties has soared by more than half since 2001: This has come as property ownership among...




					www.macrobusiness.com.au
				



The biggest beneficiaries of the 20-year boom in Australian property values are clearly Australia’s federal MPs, with new analysis from News Corp showing that the share of federal MPs with three or more properties has soared by more than half since 2001:

This has come as property ownership among the general population has fallen 5.7% over the same period.

The biggest increase in MPs owning three or properties has come from the Labor Party, which overtook the Coalition for the first time after the 2019 election when 37.6% of Labor MPs owned at least three properties compared to 36.3% of Coalition members:



Eighteen Labor MPs in the current parliament own four or more properties, compared to just four MPs in 2001.

Australian federal MPs (including their spouses) own 526 properties, or 2.32 per person, compared to 426 in 2001 (1.88 per person):



Commenting on the result, Australian National University political scientist Patrick Leslie noted the shift represents Labor’s abandonment of its working class roots and its embrace of neoliberalism:



> “Labor used to be a social democratic movement long ago and it’s shifted,” Dr Leslie said. “They’re more neoliberal than they are social democratic.”



Dr Leslie also noted that the explosion in MP property portfolios is a troubling development:



> “It’s certainly the case that as MPs become wealthier than the typical Australian, they might not have the same level of a sense of shared stakes with the people they’re representing when it comes to things like housing reform.”



If you have ever wondered why Australia’s politicians never implement genuine policies to improve housing affordability, you only need to follow the money.


----------



## Dona Ferentes (21 November 2022)

qldfrog said:


> you do not get a room for that price here in the sunny coast..think about this with basic rule-> 250$ a week for a 250k asset value..in Sydney...So yes a room shared in a small 2 or 3 bedroom flat...



Too true. A relative, lives on the Goldie/ Tweed, says the same. Among his peers, he says the bigger rental properties , say 4-5-6 bedrooms are not airBnB, but with short-term tenants, each room on a 3 month arrangement. Often even the garage has has someone ... the last in. So with a room at $250 a week, then the take by the owner is higher than a regular 12 month rental to a family unit. He also said the demographic is usually the displaced older and separated singles. Bathroom and fridge fights not uncommon. All this has come about because smaller and once affordable places just no longer exist. And the 3 months means an inability to settle.


----------



## Dona Ferentes (21 November 2022)

sptrawler said:


> If you have ever wondered why Australia’s politicians never implement genuine policies to improve housing affordability, you only need to follow the money.



one aspect is that a MP/ Senator has to make a statement of assets

Members' Interests Statements​


> _Within 28 days of making an oath or affirmation, each Member is required to provide to the Registrar of Members' Interests a statement of the Member’s registrable interests. The registrable interests of which the Member is aware of the Member’s spouse/partner and any children wholly or mainly dependent on the Member for support must also be included in the statement_.







__





						Register of Members' Interests – 47th Parliament
					

Register




					www.aph.gov.au
				




Imagine how easy it would be to be caught out with a share portfolio. A lot easier just to have one asset (or a few) that is not beholden to some perceived interest such as a property; if you owned some BHP or Bank or other company, what a field day for the rabbits at Question Time.


----------



## wayneL (26 November 2022)

Tarric is a pretty handy financial analyst for a journalist (and that's not a  sarcastic disparagement, I really do like his work).

Here he raises the spectre of the fixed rate cliff.

Thoughts gents, gentesses, gxnts?



			https://www.news.com.au/finance/economy/australian-economy/rate-of-variable-mortgages-makes-australia-one-of-the-worst-places/news-story/69c448e9febeb5a083e2f7a15d056da2


----------



## Dona Ferentes (26 November 2022)

Everyone in Aust has been used to floating rate mortgages and it is hard to believe the rest of the world operates differently.

When cash rates dropped, it seems the RBA allowed lending of $188 billion of three-year fixed-rate loans to the banking system at an annual cost of between 0.1 and 0.25 per cent during the pandemic, the share of fixed-rate mortgages surged to almost 40 per cent of the stock.

The RBA estimates that around 23 per cent of all Aussie home loans – worth almost $500 billion worth – are fixed rate and will switch to variable rate by the end of 2023. And then the repayments will cruel these recent owners/ refinancers.

There was a popular model when house prices were rising, as pimped around by so-called Investment Clubs, to take out fixed rate borrowings because the repayments, being interest only and not attacking the principal, were lower. The idea was to build wealth by continually adding to the portfolio as soon as LVRs were down to 70-80%, whatever the lender would allow.

I think this model of wealth creation isn't working that well now!!

For lenders, in October 2021, APRA lifted the minimum repayment test buffer for banks to 3 percentage points. (Most non-bank lenders still use a 2.5 percentage point buffer.)  But even this will likely prove to be inadequate to cope with the circa 350-400 basis point interest rate shock that the RBA is telegraphing.

 EDIT .... Recent home buyers are going to get squeezed, because they have paid the highest prices in the fag-end of the boom, and, if on a finite fixed rate period, it will be doubly so.


----------



## sptrawler (26 November 2022)

wayneL said:


> Tarric is a pretty handy financial analyst for a journalist (and that's not a  sarcastic disparagement, I really do like his work).
> 
> Here he raises the spectre of the fixed rate cliff.
> 
> ...



Tending to be stating the obvious, many have borrowed more than they can afford, on historically low interest rates.
Will it be more difficult for them if interest rates go up, yes, will they manage? Some will some wont.
Has anything changed, yes, people are less risk averse because they have lived through 20 years of relative growth.
Is it different to the U.S, yes the U.S basic wage is lower than ours in general and their lending criteria is different, also they have a larger more mature economy and pool of workers.
So IMO Australia will have another recession it 'has to have', then the ball starts rolling again as the immigration picks up, wash rinse repeat. 
The RBA wants inflation at about 2-3%, long term interest rates and growth are around 7%, will it go back there? very probably.


----------



## wayneL (26 November 2022)

sptrawler said:


> Tending to be stating the obvious, many have borrowed more than they can afford, on historically low interest rates.
> Will it be more difficult for them if interest rates go up, yes, will they manage? Some will some wont.
> Has anything changed, yes, people are less risk averse because they have lived through 20 years of relative growth.
> Is it different to the U.S, yes the U.S basic wage is lower than ours in general and their lending criteria is different, also they have a larger more mature economy and pool of workers.
> So IMO Australia will have another recession it has to have, then the ball starts rolling again as the immigration picks up, wash rinse repeat.



Vested interests have too much interest vested in the property market to let it turn to shyte without some resolute attempts to keep it *somewhat propped up imo.... This, in spite of the best interests of the overall economy.

It won't be obvious, but something like increased immigration perhaps, as you mentioned?


----------



## sptrawler (26 November 2022)

wayneL said:


> Vested interests have too much interest vested in the property market to let it turn to shyte without some resolute attempts to keep it *somewhat propped up imo.... This, in spite of the best interests of the overall economy.
> 
> It won't be obvious, but something like increased immigration perhaps, as you mentioned?



They have already said they are increasing skilled immigration by 185,000 add to that the extended families, then add to that lifting the salary cap for skilled backpackers.
Will there be a shock for some? Join the dots. 🤣
Interest rates up, competition for jobs up, mortgage stress up?.😭
Plenty of wealthy people circling. 🥳 

Wash, rinse, repeat.


----------



## againsthegrain (26 November 2022)

sptrawler said:


> They have already said they are increasing skilled immigration by 185,000 add to that the extended families, then add to that lifting the salary cap for skilled backpackers.
> Will there be a shock for some? Join the dots. 🤣
> Interest rates up, competition for jobs up, mortgage stress up?.😭
> Plenty of wealthy people circling. 🥳
> ...



But deliveroo went bust where are they going to use their 'skills'


----------



## qldfrog (26 November 2022)

againsthegrain said:


> But deliveroo went bust where are they going to use their 'skills'



The average Aussie still see migration as at worst job competition.
As any trip to Europe will tell you, once socialism is in charge, migrants are not a threat to your job, you will keep working and pay more taxes, they will keep sucking the benefits and pensions.
So the RE market will be kept alive by renters paying with your tax money.No MP seeing anything wrong with that I guess..untill the renters decides not to pay..but we have to wait roughly 10y to see this here
It is not rince and repeat;  it is : 
look at Europe 20y ago, and now, and you  have your crystal ball :-(


----------



## wayneL (26 November 2022)

qldfrog said:


> The average Aussie still see migration as at worst job competition.
> As any trip to Europe will tell you, once socialism is in charge, migrants are not a threat to your job, you will keep working and pay more taxes, they will keep sucking the benefits and pensions.
> So the RE market will be kept alive by renters paying with your tax money.No MP seeing anything wrong with that I guess..untill the renters decides not to pay..but we have to wait roughly 10y to see this here
> It is not rince and repeat;  it is :
> look at Europe 20y ago, and now, and you  have your crystal ball :-(



And it's intentional.


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## Value Collector (26 November 2022)

qldfrog said:


> The average Aussie still see migration as at worst job competition.
> As any trip to Europe will tell you, once socialism is in charge, migrants are not a threat to your job, you will keep working and pay more taxes, they will keep sucking the benefits and pensions.
> So the RE market will be kept alive by renters paying with your tax money.No MP seeing anything wrong with that I guess..untill the renters decides not to pay..but we have to wait roughly 10y to see this here
> It is not rince and repeat;  it is :
> look at Europe 20y ago, and now, and you  have your crystal ball :-(



Go to any hospital in Sydney and try to find a doctor who’s parents were born in Australia, and I think you will find they are very thin on the ground, our medical system would collapse if you took out all the people that are either migrants or the children of migrants.


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## Value Collector (26 November 2022)

wayneL said:


> And it's intentional.



Low birth rate makes migration a necessity.


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## wayneL (26 November 2022)

Value Collector said:


> Go to any hospital in Sydney and try to find a doctor who’s parents were born in Australia, and I think you will find they are very thin on the ground, our medical system would collapse if you took out all the people that are either migrants or the children of migrants.



What does that tell us?


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## Dona Ferentes (26 November 2022)

wayneL said:


> What does that tell us?



That the GPs are aspirational, and the specialists are a different demographic?


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## Value Collector (26 November 2022)

wayneL said:


> What does that tell us?



Two things I think.

1. That we rely on skilled migration to fill the gap in certain critical industries.

2. That it’s a fallacy that migrants aren’t contributing to our society and are simply going on the dole.

Until we have much better robots that can provide all the skilled labour we need, our low birth rate and ageing population will require that we allow a certain level of immigration.


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## againsthegrain (26 November 2022)

Value Collector said:


> Low birth rate makes migration a necessity.



It doesn't solve the cause of the problem tho


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## qldfrog (26 November 2022)

Value Collector said:


> Two things I think.
> 
> 1. That we rely on skilled migration to fill the gap in certain critical industries.
> 
> ...



Migrants get old too...
As for point 2, visit Europe, look at figures there.
But we are different...yes we were, we used to have selective migration based on skills..real....and controlled..
As i said before, long lost time.
Why the hell would anyone qualified migrate here in 2022 if he she has a choice.
The covid lockedin  situation, tax regime and real estate/cost of living does not play in our favour.
I moved here more than 2 decades ago and it was a good if not the best move.rerun this in 2022 and i would not do the same nor would i recommend it to a qualified enterprising young boy/girl...
Feeding low level workers and welfare seekers..for humanitarian reasons ...does not build an economy.
Nor doctors or medical specialists.they might fill needed gaps but do not generate gdp/ increase wealth of the nation..and the Brits or Irishs doing landscaping or roofing jobs are not really required, just pushing other aussies toward welfare..
As for asian migration, it is a serious political risk
Anyway, will create demand for RE,stuff and tax subsidies..great news for our leaders


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## Smurf1976 (26 November 2022)

Value Collector said:


> Two things I think.
> 
> 1. That we rely on skilled migration to fill the gap in certain critical industries.
> 
> 2. That it’s a fallacy that migrants aren’t contributing to our society and are simply going on the dole.



3. There's something seriously wrong with our education and training systems.

We seem to be short on pretty much any trade or profession that's of a "hard" nature and by that term I don't mean necessarily difficult but simply that hard facts are involved, it's right or wrong and fancy words won't get you out of it. 

We're great at training people who can argue the point or write a contract. Not so great at training people who can tell you why the machine stopped or why it hurts and then fix those problems. Hence we're short on anything requiring hard technical skills be that medical, mechanical or whatever.


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## InsvestoBoy (26 November 2022)

againsthegrain said:


> It doesn't solve the cause of the problem tho




The existing inhabitants just aren't sexually attractive enough to each other to attract a mate.

Immigration allows us to import sexier people into the country to offset the overall paucity of spunks, after a while the amount of reoowrrr in the Australian gene pool will go high enough to reach a steamy equilibrium and solve the problem.

The uggos are a genetic dead end.


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## sptrawler (26 November 2022)

againsthegrain said:


> But deliveroo went bust where are they going to use their 'skills'



Taking any job outside of Sydney and Melbourne, that no one else wants. Lol
The Sydney / Melbourne people can try and maintain the bubble through Uber jobs and their huge manufacturing base.Lol


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## Value Collector (26 November 2022)

againsthegrain said:


> It doesn't solve the cause of the problem tho



Is it a problem though? 

I understand we want to maintain the population, and especially have enough different age distribution, and allowing young people to migrate does this.

Long term if the global population begins to slowly decline, it’s not a bad thing it’s probably a good thing.


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## Value Collector (26 November 2022)

InsvestoBoy said:


> The existing inhabitants just aren't sexually attractive enough to each other to attract a mate.




No, we have just learned that sexual activity doesn’t have to equal impregnation, and that and that less kids (or even no kids) is a viable option.


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## wayneL (26 November 2022)

InsvestoBoy said:


> The existing inhabitants just aren't sexually attractive enough to each other to attract a mate.
> 
> Immigration allows us to import sexier people into the country to offset the overall paucity of spunks, after a while the amount of reoowrrr in the Australian gene pool will go high enough to reach a steamy equilibrium and solve the problem.
> 
> The uggos are a genetic dead end.



Speak for yerself, Champ.


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## Value Collector (26 November 2022)

Smurf1976 said:


> 3. There's something seriously wrong with our education and training systems.
> 
> We seem to be short on pretty much any trade or profession that's of a "hard" nature and by that term I don't mean necessarily difficult but simply that hard facts are involved, it's right or wrong and fancy words won't get you out of it.
> 
> We're great at training people who can argue the point or write a contract. Not so great at training people who can tell you why the machine stopped or why it hurts and then fix those problems. Hence we're short on anything requiring hard technical skills be that medical, mechanical or whatever.



Yep, although we do seem to be good at training international students in all sorts of things, including medical, then we offer them jobs.

Maybe the “Aussies” are getting lazy.


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## Value Collector (26 November 2022)

qldfrog said:


> Migrants get old too...
> As for point 2, visit Europe, look at figures there.
> But we are different...yes we were, we used to have selective migration based on skills..real....and controlled..
> As i said before, long lost time.
> ...




Off-course migrants get old, just as Aussies born here would too, that’s not the point, the point is it takes 2 births per woman to maintain the population, but you can have a birth rate of less than 2 if you bring in people from over seas. 

So if we have a birth rate of 1.5 per woman, but allow 0.5 people to migrate per woman we will have a stable, even as people age.

I am unsure why you think medical doesn’t contribute to GDP, how many people are sick or injured and because of medical treatment recover and return to productivity? How many people would not have survived birth without medical treatment but went on to have productive careers generating GDP.


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## sptrawler (27 November 2022)

Value Collector said:


> Yep, although we do seem to be good at training international students in all sorts of things, including medical, then we offer them jobs.
> 
> Maybe the “Aussies” are getting lazy.



Yep, we have just found a million ways to excuse it.


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## wayneL (27 November 2022)

Value Collector said:


> Maybe the “Aussies” are getting lazy.




In a sense, I think they are.

I can't get a decent apprentice for love nor money.

This is a well over 100k trade for a good practitioner. But it's hard Yakka and the skills pretty difficult and specialised.... much easier to FIFO and sit in a nice air conditioned haulpak for pretty good coin too.


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## Dona Ferentes (27 November 2022)

InsvestoBoy said:


> The existing inhabitants just aren't sexually attractive enough to each other to attract a mate.
> 
> Immigration allows us to import sexier people into the country to offset the overall paucity of spunks, after a while the amount of reoowrrr in the Australian gene pool will go high enough to reach a steamy equilibrium and solve the problem.
> 
> The uggos are a genetic dead end.



as they say down the farm, _Hybrid Vigour_


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## wayneL (27 November 2022)

Dona Ferentes said:


> as they say down the farm, _Hybrid Vigour_



We actually call it mongrel vigour  

Tomaytoes, tomahtoes I guess


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## qldfrog (27 November 2022)

wayneL said:


> We actually call it mongrel vigour
> 
> Tomaytoes, tomahtoes I guess



Or more exactly
reversed Darwinian..in a word: welfare
We are actually experiencing a dumber and dumber mankind as per IQ and other tests..
A walk to the shopping center..or better world travelling explains it all


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## wayneL (27 November 2022)

qldfrog said:


> A walk to the shopping center..or better world travelling explains it all




I truly despair sometimes, I really do...

... actually almost all the time.


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## rcw1 (27 November 2022)

wayneL said:


> I truly despair sometimes, I really do...
> 
> ... actually almost all the time.



Good morning wayneL,
The sport of kings changes all that 

Have a very nice Sunday.

Kind regards
rcw1


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## rcm617 (27 November 2022)

I think the problem is we have had it good for far to long. Unless the job pays a fortune and the work is not too taxing Australians just aren't interested. Everyone is more concerned with work life balance with the emphasis on life, than building a solid future. In a lot of ways it is migrants and work visa holders that are sustaining our standard of living.


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## qldfrog (27 November 2022)

rcm617 said:


> I think the problem is we have had it good for far to long. Unless the job pays a fortune and the work is not too taxing Australians just aren't interested. Everyone is more concerned with work life balance with the emphasis on life, than building a solid future. In a lot of ways it is migrants and work visa holders that are sustaining our standard of living.



Actually, i think it is more millions of Chineses sweating in their factories 6 days a week more than the fruit pickers, indians with a laptop bag or baristas fresh from the plane...
But yes, you got the point.


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## Knobby22 (27 November 2022)

And that is a good example of thread drift. 

The questions are:
1. How many citizens are over invested?

2. How high will interest rates go? We seem to be tracking the US.

3. Will we escape a recession as we often do, or not? 
If not and employment stays high then history shows a property crash will not occur, just a correction.

To me the balls are very much in the air.


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## wayneL (27 November 2022)

Knobby22 said:


> And that is a good example of thread drift.
> 
> The questions are:
> 1. How many citizens are over invested?
> ...



McStalin has come out predicting a recession next year, FWIW



			https://www.news.com.au/finance/economy/australian-economy/wa-premier-mark-mcgowan-warns-recession-is-coming-next-year/news-story/39256b00296c9f615c6770fc2d0880ce


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## Knobby22 (27 November 2022)

wayneL said:


> McStalin has come out predicting a recession next year, FWIW
> 
> 
> 
> https://www.news.com.au/finance/economy/australian-economy/wa-premier-mark-mcgowan-warns-recession-is-coming-next-year/news-story/39256b00296c9f615c6770fc2d0880ce



I have feeling you agree.


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## wayneL (27 November 2022)

Knobby22 said:


> I have feeling you agree.



I think the odds are in favour, but prediction is a mug's caper.


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## wayneL (28 November 2022)

wayneL said:


> I think the odds are in favour, but prediction is a mug's caper.




More grist for the mill... RBNZ torpedoing their economy to control inflation, predicts recession... wayneL wonders if global factors will be more important in the inflation game?









						Orr: 'We're sorry'; but also concedes RBNZ deliberately engineering a recession
					

Reserve Bank Governor says the central bank is sorry that New Zealanders are being buffeted by significant shocks and inflation is above target; inflation is no one’s friend and causes economic costs




					www.interest.co.nz


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## sptrawler (28 November 2022)

wayneL said:


> More grist for the mill... RBNZ torpedoing their economy to control inflation, predicts recession... wayneL wonders if global factors will be more important in the inflation game?
> 
> 
> 
> ...



The bubble can't just keep expanding, that is the flaw in a capitalist system and is the reason that it has to be pricked occasionally.


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## wayneL (28 November 2022)

sptrawler said:


> The bubble can't just keep expanding, that is the flaw in a capitalist system and is the reason that it has to be pricked occasionally.



Agree totally. But I do think it is better if the market does it itself, rather than with CB intervention.


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## sptrawler (28 November 2022)

So now we are blaming the RBA, for saying that interest rates are likely to stay low until 2024 and people rushing out and borrowing up to the hilt now find themselves under duress.
Well if the RBA had actually known that Russia was going to invade Ukraine, they may have said something else, the fact people borrowed more than they can afford will happen no matter what the interest rates go to.
If a couple of % increase, is the difference between being able to afford to keep a house or not, it sounds like the people were either speculating, have very poor risk management skills or the media are doing what they do best making a story from nothing. IMO









						Reserve Bank governor apologises for interest rate comments
					

Lowe said the RBA had failed by not making clear that its commentary about steady interest rates was heavily conditional on the state of the economy.




					www.watoday.com.au
				




Reserve Bank governor Philip Lowe has apologised to the thousands of Australians who took out mortgages expecting interest rates to stay unchanged until 2024 amid early signs consumers may already be feeling the pain of higher mortgage repayments.
Lowe, giving evidence to a Senate estimates committee for the first time, said the RBA had failed by not making clear that its commentary about steady interest rates was heavily conditional on the state of the economy.


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## sptrawler (12 December 2022)

Interesting article on the unaffordable housing in Sydney, by an expert, who is from overseas.









						Australia warned of its American-style mistake on housing
					

After four years running the Committee for Sydney think tank, American Gabriel Metcalf leaves the city he loves.




					www.smh.com.au
				




In January, Metcalf will return to San Francisco after four years at the helm of the Committee for Sydney, an urban policy think tank. Back in California, he will be confronted by an eerily similar political environment, where housing affordability is a wicked problem and property ownership is the great social divide.
Superlative though he generally is in his appraisal of Sydney, Metcalf says that’s the one aspect of life here that came as an unpleasant surprise.
“Australia has made essentially the same mistake as the US ... it has created a system where all the current homeowners are terrified of housing becoming more affordable because that means their primary asset is not increasing in value the way they want,” he says.

“If there’s anything that most strikes at the heart of this beautiful Australian idea of the fair go, it is the rising cost of housing - and for Australia, that is a dire contradiction with its core ideals.”
California is embroiled in an ongoing tussle between so-called Not In My Backyard (NIMBY) forces opposed to higher density development, and a Yes In My Backyard (YIMBY) counter-movement that is trying to rework housing laws and repair a crisis it says has been “forced” on the state by a vocal minority.
Metcalf notes the contradiction between what people say at a macro level (they want their children to be able to afford a home, they want walkable communities instead of endless sprawl) and what they say at a micro level (they don’t want tall buildings next to them).

He says the solution might be simple: stop consulting residents about what gets built near them.
“The best way to democratically determine what gets built is through electing your member of parliament,” Metcalf says. “[That] has much greater legitimacy than listening to whoever happens to show up at a community meeting.”


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## Trader X (27 December 2022)

IMF sees potential for imminent ‘sizeable’ bust in Australia’s housing market

“The IMF noted that Australia’s housing and rental markets are among the most misaligned compared with similar economies...”

Other factors are at play in the Aus property market price "misalignment", pop QE (immigration), land banking, FHOG schemes, shared equity, foreign investment, short stay rentals and various local, state and federal interventions are key supports for elevated prices.  Under such circumstances, predicting a bust has proven to be just wishful forecasting in the past.

When I scan the city apartment buildings near me in the Melbourne CBD at night, as many as half are dark and seemingly vacant.  In my high rise, the $1.4 million apartment next door is vacant, has been for 6 months now and never listed for rent (even though the body corporate fees are $3500/quarter).  Of the 377 apartments here, I would estimate at least one third appear vacant.  An enormous amount of money is parked in our market by offshore entities due to favorable foreign ownership laws.


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## Dona Ferentes (27 December 2022)

Trader X said:


> When I scan the city apartment buildings near me in the Melbourne CBD at night, as many as half are dark and seemingly vacant.  In my high rise, the $1.4 million apartment next door is vacant, has been for 6 months now and never listed for rent (even though the body corporate fees are $3500/quarter).  Of the 377 apartments here, I would estimate at least one third appear vacant.  An enormous amount of money is parked in our market by offshore entities due to favorable foreign ownership laws.



Well, that's an obsolete business model, if the plan is to sell into a stronger market. Only the nimble will survive.

 If owned by overseas entities, its often a form of insurance, somewhere down the track it may serve a purpose (bolthole) like gold or diamonds, whilst ticking the FIRB guidelines.


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## Trader X (27 December 2022)

Dona Ferentes said:


> If owned by overseas entities, its often a form of insurance, somewhere down the track it may serve a purpose (bolthole) like gold or diamonds, whilst ticking the FIB guidelines.



Many off-the-plan projects are marketed primarily to offshore investors and compliant with FIRB rules.  Take the apartment tower project at the The Glen shopping complex in Glen Waverley.  The sales center and materials were clearly pitched to Asian (Chinese) investors and staffed accordingly.  Many other such examples of course but yes, used as a vehicle safely domicile funds even if the ultimate ROE is negative.


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## qldfrog (28 December 2022)

Trader X said:


> Many off-the-plan projects are marketed primarily to offshore investors and compliant with FIRB rules.  Take the apartment tower project at the The Glen shopping complex in Glen Waverley.  The sales center and materials were clearly pitched to Asian (Chinese) investors and staffed accordingly.  Many other such examples of course but yes, used as a vehicle safely domicile funds even if the ultimate ROE is negative.



When currencies play yo-yo as they do in the last few years, you do not invest in a flat ,overseas to gain local currency profit or a pathetic 2% return for renting..you just keep it sparkling new, untenanted as you would for a lump of gold.
This is the Chinese model BTW.
Even well before covid, most brand new apartments were purchased..and locked there.


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## divs4ever (28 December 2022)

sptrawler said:


> A few interesting facts about the property market.
> 
> 
> 
> ...



interesting  , i thought properties per MP might have been higher ( even allowing for the independents who are mostly less affluent )


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## SirRumpole (29 December 2022)

Do short term rentals distort the property market ?











						'Crying crocodile tears': The impact of Airbnb as Australia's rental crisis bites
					

Exclusive data shared with the ABC shows the number of short-term rentals such as Airbnb in Australia has dropped dramatically. But experts say it is still a major problem in some areas.




					www.abc.net.au


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## Trader X (29 December 2022)

SirRumpole said:


> Do short term rentals distort the property market ?



No doubt this is the case for the rental market in certain locales.  Places like the Gold Coast, Byron Bay and other popular beachside communities seem to be where short stay rentals have a significant impact on the local rental market.  Once stayed in an Airbnb place in Byron Bay managed by a young couple whose sole occupation was managing Airbnb rentals for local owners.  From memory, they managed over 40 properties at that point in time (pre-Covid).  Then again, here in Melbourne, a nice upmarket apartment building in St. Kilda where I rented for a year had 5 apartments that were used solely as Airbnb rental accommodation.


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## JohnDe (3 January 2023)

Big discrepancy in prices between the states.

Steep rises in interest rates have seen the biggest fall in home prices since the global financial crisis in 2008.


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